Welcome to the inaugural edition of Macro Musings, a slightly irreverent commentary on the state of the markets and the world at large.

The primary goal of Macro Musings is to deliver insights you won't find elsewhere. Rather than try to cover everything - which would be impossible anyway - we'll focus on digging deep into one or two key themes each time.

The secondary goal of Macro Musings is to lighten things up a little. After all, there's no rule that says top-down analysis can't be fun. Think of it as your weekly shot of commentary espresso - a subtle yet flavorful blend of the Financial Times and National Lampoon. Mmm, smell that aroma. We vacuum pack for freshness.

So without further ado, let's get started.

Irony and Hypocrisy

"My mother never saw the irony in calling me a son of a bitch."

-Jack Nicholson

Vladimir Putin and Jack Nicholson's mother may have something in common. As silly as it sounds for Mrs. Nicholson to question her own son's bona fides, it is sillier still for Russia's iron-fisted president to call the United States a ruthless bully. Yet that is essentially what Mr. Putin did at an international conference in Germany earlier this month.

Here are a few excerpts from Putin's forceful remarks:

"Today we are witnessing an almost uncontained hyper use of force - military force - in international relations . . . We are seeing a greater and greater disdain for the basic principles of international law . . . The United States has overstepped its national borders in every way . . . and of course this is extremely dangerous. It results in the fact that no one feels safe."

This is more than just the pot calling the kettle black. This is the soot-covered black cat hiding in a coal bin in a dark corner of the basement calling the kettle black.

How so? Let us count the ways.

Gazprom, the publicly traded oil and gas behemoth that is nevertheless a de facto arm of the Kremlin, could easily be characterized as employing a "hyper use of force" in its dealings with Western neighbors. Gazprom does not wield bombs or missiles - but energy is a weapon too, as Putin knows all too well.

Regarding "disdain for the basic principles of international law," one need only ask Royal Dutch Shell how it feels to get strong-armed into the back seat of a $22 billion oil and gas project via state-sanctioned mafia tactics.

As for "feeling safe," one can imagine that Putin's political opponents are not feeling too safe at all, what with the contract killings and exotic poisonings going around. The safest thing to do in Russia these days (and London too, for that matter) is keep your mouth shut. Roman Shleinov, chief investigative reporter for the Novaya Gazeta, sums up the mood nicely: "Even if we were to publish pictures of Putin receiving suitcases of money at the Kremlin door, no one would care."

On top of all that, the Associated Press recently reported that "Russia's defense minister . . . laid out an ambitious plan for building new intercontinental ballistic missiles, nuclear submarines and possibly aircraft carriers." What was that about military force again?

Mr. Putin is no dummy. Chances are he understood the hypocrisy of his remarks full well . . . and delivered them with gusto anyway.

But why?

For the same reason, perhaps, that a mafia boss pays mocking respect for the chief of police: because he can. A display of blatant hypocrisy can be a display of power under the right circumstances. Putin may have calculated that he would not be called out . . . that the West would merely hem and haw in the face of his blunt aggression.

If so, he calculated correctly - and a powerful point was made.

Russia's dominance in oil and gas, combined with the world's unquenchable thirst for fossil fuels, has consolidated serious power in the Kremlin's hands. Now Putin wants the world to know: The Bear is Back. Russia is a force to be reckoned with once again. This was just another way to say it loud and clear.

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Off With Her Head!

You have probably heard the old joke about lies, damned lies and statistics. You may have also heard that bad statistics are already up 7.2% this year.

But have you heard the one about the Argentinean inflation index?

The Economist reports:

"When a dash for economic growth produces double-digit inflation, most governments change their policies. But not that of Argentina: it has opted to keep the policies and change the inflation numbers. Last month, it sacked the head of the consumer-prices section of the National Statistics and Census Institute (INDEC), replacing her with Beatriz Paglieri, a trade specialist at the economy ministry. Five days later the institute announced that January's inflation was 1.1%. Private economists estimate that the real figure was between 1.5% and 2%."

Nestor Kirchner, the President of Argentina, is hoping to get reelected later this year. But after a long stretch of aggressive growth, inflation has become a thorn in Argentina's side. Apparently Kirchner decided the only option left was to fudge the numbers. When the resident statistician objected, he had her yanked off stage with all the subtlety of a cartoon cane around the neck.

The US government, of course, would never try such a ridiculous stunt. Or would it?

Some would argue the difference is merely a matter of experience and finesse. US officials have had more experience in discreetly massaging the numbers, and any conscientious objectors at the Bureau of Labor Statistics have long been weeded out. (Shadowstats.com makes a good case for this point of view.)

Kirchner forgot, or perhaps never knew in the first place, that a key aspect of the monetary policy game is avoiding unnecessary sudden movements. Any clear sign of panic means the game is already forfeit. Running around like the Red Queen and lopping off people's heads is certainly not the way to go.

As we have said in the past, the Chairman of the Federal Reserve is a bit like a jockey riding an elephant. As long as things are calm, the jockey maintains the illusion of control. But what little control the jockey has is purely and completely psychological. Reins mean nothing in a time of genuine crisis; if the elephant takes it in his head to roll or stampede, there is nothing the jockey can do.

This is one reason central bankers hate gold so much. It stands as a testament to their ultimate lack of control. While statistics can be manipulated and markets soothed, the price of gold is like a naked thermometer for all to see. It's hard to stay cool when the temperature is clearly rising.

For example: Ten days or so ago, Chairman Bernanke said that "inflation pressures are beginning to diminish." Gold's recent sprint towards the psychologically critical $700 level was the market's way of responding, "Liar, liar, pants on fire."

Recent events in Argentina lend support to gold's point of view. Things are bad enough in Venezuela and Zimbabwe for prison sentences to be imposed on any merchant who breaks the mandatory price controls. In a place that's more important than those three countries put together, there are now ominous signs that India's economy is in danger of overheating.

And finally, as icing on the asset-inflationary cake, Goldman Sachs is expected to raise an eye-watering $19 billion this month for a new private equity fund - and Marc Faber observes that payouts to the top five i-banks were roughly equal to the GDP of Vietnam last year. Dollars, dollars everywhere.

Equity bulls have expressed the hope that things are accelerating. Perhaps they should think twice about what they're wishing for.

Justice Litle