• Germany Is About To Sell Zero-Coupon 10 Year Bonds For The First Time Ever

  When the financial media says that governments get paid to issue negative yielding debt, that is not exactly true: most sovereign issuers still pay out a cash coupon, a modest as it may be, while they pocket the negative amortization on a bond issued above par for the life of the bond resulting what ultimately ends up being a negative yield for the buyer net of all cashflows at maturity. However, the lower – or more negative – yields get, the less the need for an issuer to actually pay a cash coupon: after all with a negative yield, it is essentially superfluous.

  Still, while no sovereign has issued bond with negative cash coupons yet, some are starting to issue zero-coupon ten years: bonds which pay no cash coupons at all.

  This is precisely what Germany is about to do in a few hours.

  According to Bloomberg, on Wednesday morning Germany will sell 10-year bonds with a zero coupon for the first time, as a rally in fixed-income securities pushes investors to forgo annual interest payments in order to hold the safest assets.

  The nation is selling €5 billion of zero percent bonds due in August 2026 on Wednesday, after yields in the secondary market dropped to an all-time low of minus 0.205% last week.

  

  Then again, with a rather vicious snapback higher in yields over the past two days now that Japanese helicopter money looks increasingly probable, Germany may not be able to continue this experiment for much longer, and may have to revert back to its 0.5% coupon issued until now.

  Of course, once this latest modest spike in yields subsides and the world reverts back to its deflationary trendline (a move which will eventually prompt every other central bank, not just Japan – to proceed with helicopter money), and German yields are deeply negative, Germany can then proceed to, if only in theory, issue “negative” coupons, demanding that bond buyers pay Germany. Of course, while in practice this is impossible, it would present the world with such an interesting thought experiment as the “inverse” bankruptcy: a state in which the creditor to the debtor “defaults” because it is unable to make a payment on a bond they lent to the same debtor.

  Yes, the new normal sure is interesting. If only in theory.

  

• "Bring It On!"

  Submitted by Robert Gore via StraightLineLogic.com,

  Five words are important now: failure, exposure, rejection, repression, and war. The status quo has failed on multiple fronts. Its failures and corruption are being exposed, its governance and legitimacy questioned and rejected. The response is all too predictable: repression at home, war abroad. The Clintons represent the toxic confluence, the maelstrom’s vortex, and Hillary Clinton will press the powers’ response.

  Anything but free market economics is a redistributive shell game with a sell-by date. Government debt, spending, and programs, redistribution, and central bank debt monetization and interest rate suppression have passed their expiration, leaving mountains of IOUs that will never be repaid and prostrate economies in the first thralls of a deflationary contraction that will be one for the ages. Particular rancid: illusory, credit-based wealth has gone to a small, well-connected coterie who access microscopic interest rates for financial engineering and speculative fun and games. Left behind: honest producers and savers, who have seen their incomes shrink and the economy wither.

  Not content to lay waste to their own countries, the powers have visited their destructive and murderous mayhem upon wide swathes of the globe. Seeking to impose order they have instead promoted chaos, failed states, refugee flows, and the spread of terrorism. Stuck in costly and inconclusive quagmires in second-tier states, the US war lobby seems intent on provoking decidedly first-tier Russia and China, with a concomitant escalation of negative consequences. You can’t get any bigger, or potentially more suicidal, than war with the second and third largest nuclear-armed powers.

  Propaganda, indoctrination, a captive press, and widespread obliviousness and passivity will only take the incompetent and corrupt governing class so far. There’s too much to be swept under the rug. Eventually notice is taken of the telling details. The economy is going nowhere. The US has been in Afghanistan for fifteen years and in Iraq for thirteen. The capital is an overflowing cesspool; the Clintons being the most visible and malodorous turds floating by on that river of filth. The Internet has shone a light on failure and corruption, but even the mainstream media take note, if only in passing, before it exculpates those responsible.

  Exposure and anger concern the powers—they threaten the façade of legitimacy—but outright rejection would be intolerable. Never has an aristocracy exercised such power, lived so opulently, and received such publicity, adulation, and deference. Popular discontent given full vent and expression would threaten all that, and could lead to prison, or worse.

  Hillary Clinton embodies the power, wealth, and corruption of the aristocracy, which confronts the most serious threat yet to the world order it erected after World War II. It embraces her not merely because she is emblematic, but because she will implement naked repression and wage wars, its last resorts to hold on to power. She’s never met a “national security” measure or war she didn’t love. The FBI’s refusal to recommend charges despite Hillary’s obvious criminality appears to be the aristocracy’s take-off-the-kid-gloves moment.

  In their folly, the rulers have isolated themselves from the ruled. Never underestimate the former’s stupidity, born of isolation and arrogance, nor the intelligence and resourcefulness of the latter. Resort to repression and war is weakness, not strength, and in so doing, the aristocracy is taking a gamble it cannot win.

  It is a curious sort of tyranny that extracts its sustenance from the tyrannized, must borrow from them, and relies on them to accept its intrinsically valueless scrip as a medium of exchange. How strong can a tyranny be if it can be brought to its knees if the tyrannized were to stop working, lending, or accepting its scrip? If that seems farfetched, observe the frantic exertions the powers undergo to stop systemic runs on banks and other financial institutions. Why? Because all financial institutions are leveraged speculators, and if what they hold as assets decline in price sufficiently, their equity is gone and they are bankrupt. Bankrupts by definition cannot pay all their liabilities, and those liabilities are the public’s assets.

  As we saw in 2008, once enough assets are meaningfully impaired (as they inevitably will be, again), the whole scrip-based financial system unravels. Ultimately governments backstop much of the financial system’s scrip-based liabilities with…scrip based liabilities! The only thing that gives those liabilities any value are people’s willingness to accept them and an implicit and often broken promise by politicians and central bankers not to create too many of them. Right now, they are breaking that promise and doing everything possible to undermine the value of their own scrip. That’s Alice in Wonderland, not 1984.

  If the aristocracy’s dreams come true, they will destroy what’s left of the illusion of value of their scrip and consequently, destroy their ability to acquire resources outside commandeering them, or theft. That’s a one-off, as Venezuela has demonstrated. People stop producing; businesses close or flee. Totalitarianism isn’t free. Prisons, concentration camps, weapons, soldiers, surveillance, and police cost money, and the expense is only partially offset by slave labor, which, once all its costs are properly accounted for, confers very little, if any, economic benefit.

  But, never underestimate the stupidity of the aristocrats. Let’s say the US government descended into full-on totalitarianism. This is the same government that couldn’t subdue Vietnamese in Vietnam, Afghans in Afghanistan, Iraqis in Iraq, Syrians in Syria, Libyans in Libya, or Yemenis in Yemen. Nevertheless, it will attempt to subdue Americans in America, who collectively are far better armed (thank you, NRA) than any of the insurgencies in those other countries.

  Of course, many Americans are sheep so the resistance would be a subset, but the daunting math of fighting insurgents on their own territory, according to military expert Richard Maybury, is about 20 military personnel for each domestic guerrilla fighter. So even if only a million US insurgents resist, probably a low estimate, it would require 20 million government personnel to suppress them, not to mention what would be necessary to maintain order should any collateral chaos and violence, including racial and ethnic animosities, erupt. Currently, there are a little over 2 million active and reserve personnel in the military, and about 1.1 million in law enforcement, and some of both are administrative personnel who would not participate in suppression or combat. The government is stockpiling weaponry, but where does it find at least 17 million recruits to pull the triggers and drive the MRAPS, and with what will it pay them?

  Pity the police and the military. They will be caught between the dictates of an aristocracy that couldn’t care less about them and an insurgency bent on killing them. They would be ordered to fire on fellow Americans: neighbors, friends, and family members. There are plenty of praetorian thugs who would do so, but some would quit. Some might join the resistance, providing expertise and leadership. Already retired police and military, disgusted by the current state of affairs, would be another potential resistance recruiting pool.

  Incidentally, today’s command and control systems require computers. The Chinese and Russians have hacked sensitive government computers with impunity. If the US government went after its own people, would there be any shortage of home-grown hackers volunteering to bring down its systems?

  To paraphrase John F. Kennedy, if the aristocrats make peaceful and necessary change impossible, they will make violent resistance inevitable. It’s not a war they can win, but if it’s a war they are too foolish and arrogant to avoid, bring it on.

  

  

• Where The 'Richest' Live

  To be considered in a top 1% earner in the United States, the magic number that must be reached is $521,411 per household.

  However, as VisualCapitalist's Jeff Desjardin explains, it turns out that on a county level, the income of the Top 1% varies wildly based on location.

  For example, if you want to be in the “1% Club” in New York City, you’re going to have work extremely hard, get very lucky, or preferably, manage some incredible combination of those two things.

  Meanwhile, if you want to be in the crème de la crème of the social scene in Jackson, Kentucky or Chattahoochee, Georgia, things might seem a little more realistic. In fact, if you’re doing well for yourself, you may even be able to do it based on your income today.

   

  

  Courtesy of: Visual Capitalist

   

  The above map by HowMuch.net, a cost information site, shows the average income of the top 1% by county.

  Here’s the breakdown by county:

  Richest Counties by Average Income of Top 1%

  1. Teton, Wyoming – Average Income: $28,163,786
  2. New York, New York – Average Income: $8,143,415
  3. Fairfield, Connecticut – Average Income: $6,061,230
  4. La Salle, Texas – Average Income: $6,021,357
  5. Pitkin, Colorado – Average Income: $5,289,153
  6. McKenzie, North Dakota – Average Income: $4,709,883
  7. Shackelford, Texas – Average Income: $4,585,725
  8. Westchester, New York – Average Income: $4,326,049
  9. Collier, Florida – Average Income: $4,191,055
  10. Union, South Dakota – Average Income: $4,106,670

  Poorest Counties by Average Income of Top 1%

  1. Quitman, Georgia – Average Income: $127,425
  2. Taliaferro, Georgia – Average Income: $139,439
  3. Wade Hampton, Alaska – Average Income: $149,639
  4. Robertson, Kentucky – Average Income: $152,637
  5. Chattahoochee, Georgia – Average Income: $158,749
  6. Glascock, Georgia – Average Income: $169,027
  7. Shannon, South Dakota – Average Income: $174,433
  8. McCreary, Kentucky – Average Income: $177,132
  9. Menifee, Kentucky – Average Income: $177,192
  10. Jackson, Kentucky – Average Income: $178,917

  MAKING THE TOP 1%

  Taking the top spot by a long mile is Teton, Wyoming – the county home to the affluent Jackson Hole ski area, and 40.4% of the famous Yellowstone National Park. The Top 1% that live near Old Faithful are particularly well-off, making an average of $28.2 million each year!

  New York City is another place that needs Gordon Gekko-like income to make it into the top ranks. An income of $8.1 million will put you on par with the average one percenter there.

  Meanwhile, you don’t need a private jet to be one of the wealthiest people in counties in Georgia, Alaska, Kentucky, or South Dakota. If you make $180,000 per year, you are actually doing better than the average member of the Top 1% in many of those places.

  The rural county of Quitman, Georgia, has the lowest average 1% income at $127,425 per year.

  

  

• If The Shooting Of Dallas Police Surprises You; You Haven't Been Paying Attention

  Submitted by Dan Sanchez via The Foundation for Economic Education,

  Five police officers were killed and six were injured in Dallas lasst week when reportedly a lone sniper opened fire during a protest of the recent police killings of Philando Castile and Alton Sterling. This mass shooting was a despicable act of murder.

  It was also blowback.

  “Blowback” is a term generally reserved for foreign policy. It refers to the reverberating ill effects of foreign interventions. Ron Paul famously and persuasively characterized the 9/11 attacks as blowback from decades of US warfare and imperialism in the Greater Middle East.

  In the 1980s, American support for the anti-Soviet Mujahideen in Afghanistan helped lay the groundwork for what would become Osama bin Laden’s jihadist network, Al Qaeda. And in the 1990s, further US interventions in the Middle East spurred the jihadis to turn on their former sponsors and to wage a terrorist war on the west that culminated in the attacks on September 11, 2001.

  The outrage elicited by those attacks provided cover for a massive US-led war for the Greater Middle East that rages to this day. That Long War has only served to plummet the entire region into chaos and carnage, which has caused the number of jihadis and would-be terrorists to grow exponentially. As a result, western civilians continue to suffer blowback in the form of terror attacks in San Bernardino, Orlando, Paris, Brussels, etc. These attacks are fueling Islamophobia and driving calls for further violence and repression against Muslims.

  Collective Punishment

  The motor of this spinning cycle of reciprocal bloodshed is collectivism. Seeing fellows attacked prompts fear and anger. Fear and anger focused by the lens of reason pinpoints individual offenders for the delivery of justice. But refracted through the lens of collectivism and primal reaction, fear and anger disperses into indiscriminate terror and hate, which scatters to cover whole populations who are ascribed collective guilt and prescribed collective punishment.

  This collective punishment of innocents then prompts fear and anger among the targeted population. If they too are afflicted with collectivism, some of them will also succumb to terror and hate, which will be expressed in retaliatory indiscriminate violence: blowback. This collectivist retaliation begets further collectivist retaliation, and the cycle of violence spins out of control.

  The Home Front

  But this phenomenon is by no means restricted to international affairs. It can characterize civil unrest as well. Again, what we saw last week in Dallas was, if not something even more diabolical, blowback.

  The American people feel under siege. Different populations feel besieged by different forces. Black Americans especially have suffered decades of persecution by the American “justice” system: police brutality and harassment, mass incarceration, being nickel-and-dimed by tickets and fines, etc. And especially since the summer of 2014, they have been seeing a litany of viral photos and videos of black Americans having been gunned down, throttled, and broken by the police.

  This violence too is driven by collectivism. Law enforcement officers are granted an exceptional status in society: a special dispensation to mete out violence with impunity. This caste privilege has instilled deep tribalism in many police officers, which is amplified by training and police union propaganda. Cops are trained to be obsessed with “officer safety” and to effectively treat those outside the “blue tribe” (whom they ostensibly “protect and serve”) as an enemy population: as if every American they detain is a potential quick-draw gunman ready to shoot them down in a millisecond. This paranoia, combined with the impunity of the badge, is what makes an encounter with the police so potentially lethal: especially for black civilians.

  Take the collectivism of “blue” tribalism explained above and add, for some individuals, the collectivism of racial terror (irrational, hateful prejudice that every black male is a potential super-predator), and you begin to understand the epidemic of police violence against American blacks.

  Hate and Terror

  This police violence has elicited thoroughly justified fear and anger. Virtually all of this emotional response has expressed itself in peaceful protest, led by the Black Lives Matter movement.

  However, for some already-unstable individuals, it can boil over into terror, hate, and indiscriminate violence: blowback. Ismaaiyl Abdullah Brinsley was filled with hate when he killed two off-duty NYPD officers in 2014 following the killing of Michael Brown and Eric Garner. So was whoever killed five police officers in Dallas yesterday following the killing of Philando Castile and Alton Sterling.

  True justice is always individual and never collective. Badges do not grant extra rights, but neither do they negate the human rights of officers. Victims of police violence have a right to protect themselves from current attacks with proportional defensive force against actual perpetrators. They or their heirs also have a right to secure restitution from the specific individuals who violated their rights. But collectivist “retribution” is neither defense nor restitution.

  Just as international terrorism is often blowback from international war and occupation, the sniper attack on cops in Dallas last week was blowback from American police acting as a domestic army of occupation. And just as the victims of terror attacks do not deserve to be killed for the crimes of war-making politicians, the victims of yesterday’s shootings did not deserve to be killed for the crimes of other cops.

  This police violence has elicited thoroughly justified fear and anger. Virtually all of this emotional response has expressed itself in peaceful protest, led by the Black Lives Matter movement.

  However, for some already-unstable individuals, it can boil over into terror, hate, and indiscriminate violence: blowback. Ismaaiyl Abdullah Brinsley was filled with hate when he killed two off-duty NYPD officers in 2014 following the killing of Michael Brown and Eric Garner. So was whoever killed five police officers in Dallas yesterday following the killing of Philando Castile and Alton Sterling.

  True justice is always individual and never collective. Badges do not grant extra rights, but neither do they negate the human rights of officers. Victims of police violence have a right to protect themselves from current attacks with proportional defensive force against actual perpetrators. They or their heirs also have a right to secure restitution from the specific individuals who violated their rights. But collectivist “retribution” is neither defense nor restitution.

  Just as international terrorism is often blowback from international war and occupation, the sniper attack on cops in Dallas yesterday was blowback from American police acting as a domestic army of occupation. And just as the victims of terror attacks do not deserve to be killed for the crimes of war-making politicians, the victims of yesterday’s shootings did not deserve to be killed for the crimes of other cops.

  Collectivist retaliatory violence is not justice. It is despicable warfare and murder. That does not change the fact that refraining from collectivist violence is not only the right thing to do, but is also the best way to avoid collectivist retaliatory violence: that is, to avoid blowback. We are not “blaming the victim” when we counsel a foreign policy of peace. It is not only right; it is also the best way to be safe from terrorism. Neither is it “blaming the victim” to counsel a domestic policy of justice. It is not only right; it is also the best way to be safe from civil unrest and domestic terrorism.

   That does not change the fact that refraining from collectivist violence is not only the right thing to do, but is also the best way to avoid collectivist retaliatory violence: that is, to avoid blowback. We are not “blaming the victim” when we counsel a foreign policy of peace. It is not only right; it is also the best way to be safe from terrorism. Neither is it “blaming the victim” to counsel a domestic policy of justice. It is not only right; it is also the best way to be safe from civil unrest and domestic terrorism.

  

  

• Peak Polarization – Why Investors Should Really Worry About The Next Election

  It will come as no surprise to anyone that the relative polarization within America's body politik is at its highest ever (in both the The House and Senate)…

  

   

  but while the decision-making process remains mired in quagmired partisanship (with no party able to dominate)…

  

   

  The Federal Reserve is there to ensure that politicians do not have to "go back to work," no matter how pissed off the peasantry gets…

  

   

  However, with the uncertainty surrounding the upcoming election near record highs there is one scenario that US equity investors should be very afraid of with regard the President/Senate/House combination…

  

   

  Simply put, as JPMorgan details, if Trump wins in November (Republican president) but control of The Senate is lost (to the Democrats) while Republicans maintain control of The House, then US equity investors may want to take cover. Ironically a Hillary victory and the status quo of Republican House and Senate has historically been the most 'bullish' for US equity investors.

  Source: JPMorgan

  

  

• Did Citi Just Confiscate $1 Billion In Venezuela Gold

  Just over a year ago, cash-strapped Venezuela quietly conducted a little-noticed gold-for-cash swap with Citigroup as part of which Maduro converted part of his nation’s gold reserves into at least $1 billion in cash through a swap with Citibank.

  As Reuters reported then, the deal would make more foreign currency available to President Nicolas Maduro’s socialist government as the OPEC nation struggles with soaring consumer prices, chronic shortages and a shrinking economy worsened by low oil prices. Needless to say, the socialist country’s economic situation is orders of magnitude worse now.

  According to El Nacional, “the deal was for $1 billion and was struck with Citibank, which is owned by Citigroup.”

  As Reuters further added:

  “former central bank director Jose Guerra and economist Asdrubal Oliveros of Caracas-based consultancy Ecoanalitica said in separate interviews that the operation had been carried out.  A source at the central bank told Reuters last month it would provide 1.4 million troy ounces of gold in exchange for cash. Venezuela would have to pay interest on the funds, but the bank would most likely be able to maintain the gold as part of its foreign currency reserves.”

  On paper yes – very much as any comparable gold leasing operation conducted by sovereign nations with central banks – but the actual physical gold would be transferred to an unknown vault of Citi’s choosing where it would become an asset controlled by the bailed out US bank.

  We note this peculiar gold swap case because something curious took place overnight. On the same day that Venezuela announced it would seize a local Kimberly-Clark factory after the US consumer-products giant announced it would shutter its Venezuela operations after years of “grappling with soaring inflation and a shortage of hard currency and raw materials”, Venezuela’s President Nicolas Maduro said on Monday that Citibank planned to shut his government’s foreign currency accounts within a month, denouncing the move by one of its main foreign financial intermediaries as part of a “blockade.”

  Among the many reasons why the sudden departure is surprising is that due to strict currency controls in place since 2003, the government relies on Citibank for foreign currency transactions, meaning that suddenly Venezuela’s financial “blockade” is indeed about to get worse.

  “With no warning, Citibank says that in 30 days it will close the Central Bank and the Bank of Venezuela’s accounts,” Maduro said in a speech, adding that the government used the U.S. bank for transactions in the United States and globally.

  

  In typical bluster, Maduro added: “Do you think they’re going to stop us with a financial blockade? No, gentlemen. Noone stops Venezuela.”

  What Maduro did not mention is that among the central bank accounts closed by Citi will be at least one, rather prominent, gold swap launched just over a year earlier.

  Reuters adds that Citibank, could not immediately be reached for comment about the purported measure against Venezuela’s monetary authority and the Bank of Venezuela which is the biggest state retail bank. 

  With the OPEC nation’s economy immersed in crisis, various foreign companies have been pulling out or reducing operations. However, few of them held over $1 billion in Venezuela gold as hostage.

  So during his next address, perhaps someone inquire Maduro if as part of its “blockade” Citi also absconded with a substantial portion of the country’s gold reserves, and if so, which other banks have comparable “swap” arranagements with the insolvent nation?

  Meanwhile, Hugo Chavez, who spent the last years of his life repatriating Venezuela’s gold is spinning in his grave.

  

  

  

• The "Mystery" Of Who Is Pushing Stocks To All Time Highs Has Been Solved

  One conundrum stumping investors in recent months has been how, with investors pulling money out of equity funds (at last check for 17 consecutive weeks) at a pace that suggests a full-on flight to safety, as can be seen in the chart below which shows record fund outflows in the first half of the year – the fastest pace of withdrawals for any first half on record…

  

   

  … are these same markets trading at all time highs?  We now have the answer.

  Recall at the end of January when global markets were keeling over, that Citi’s Matt King showed that despite aggressive attempts by the ECB and BOJ to inject constant central bank liquidity into the gunfible global markets, it was the EM drain via reserve liquidations, that was causing a shock to the system, as net liquidity was being withdrawn, and in the process stocks were sliding.

   

  

  Fast forward six months when Matt King reports that “many clients have been asking for an update of our usual central bank liquidity metrics.”

  What the update reveals is “a surge in net global central bank asset purchases to their highest since 2013.”

  

  And just like that the mystery of who has been buying stocks as everyone else has been selling has been revealed.

  But wait, there’s more because as King suggests “credit and equities should rally even more strongly than they have done already.”

  

  More observations from King:

  The underlying drivers are an acceleration in the pace of ECB and BoJ purchases, coupled with a reversal in the previous decline of EMFX reserves. Other indicators also point to the potential for a further squeeze in global risk assets: a broadening out of mutual fund inflows from IG to HY, EM and equities; the second lowest level of positions in our credit survey (after February) since 2008; and prospects of further stimulus from the BoE and perhaps the BoJ.

  His conclusion:

  While we remain deeply skeptical of the durability of such a policy-induced rally, unless there is a follow-through in terms of fundamentals, and in credit had already started to emphasize relative value over absolute, we suspect those with bearish longer-term inclinations may nevertheless feel now is not the time to position for them.

  And some words of consolation for those who find themselves once again fighting not just the Fed but all central banks:

  The problems investors face are those we have referred to many times: markets being driven more by momentum than by value, and most negatives being extremely long-term in nature (the need for deleveraging; political trends towards deglobalization; a steady erosion of confidence in central banks). Against these, the combination of UK political fudge (and perhaps Italian tiramisu), a lack of near-term catalysts, and overwhelming central bank liquidity risks proving overwhelming – albeit only temporarily.

  Why have central banks now completely turned their backs on the long-run just to provide some further near-term comfort? Simple: as Keynes said, in the long-run we are all dead.

  

  

• An Ordained African-American Minister Asks "What If Whites Strike Back?"

  Authored by Mychal Massie, originally posted at Mychal-Massie.com,

  It would serve race mongers well to consider that even a docile old dog will bite you if you mistreat it often enough and long enough. Tangential to same is the reality of the “laws of unintended consequences.”

  I’m tired of seeing, reading, and hearing white people blamed for everything from black boys not being able to read to whites being privileged because of the color of their skin. If I am tired of these Americans being used as scapegoats to further the agenda of race mongers, then it is a sure bet that those being unjustly vilified are especially weary of same.

  This isn’t 1860 and it certainly isn’t 1955. There are no slaves in America and there are no Jim Crow laws dictating access based on skin color. Specific to that point it is time to remind people like Obama, Al Sharpton, and the New Black Panther Party that the racial discord they are fomenting can become the harbinger of their own peril.

  Obama foments racial unrest and a racial divide to further his neo-Leninist agenda. Sharpton foments racial unrest for personal gain. The New Black Panther Party foments racial hostilities and the demonization of whites in the foolish belief they can bring about a Western version of apartheid where blacks rule.

  Too many blacks have lost sight of the fact that it was Africans who were responsible for the enslavement of other Africans. It was war, invasion, conquest, and various caste systems that contributed to slavery. And although one would be hard-pressed to believe it from the invented myths that masquerade as fact, persons of color were not the only slaves.

  From Genesis to the Sudan of today, slavery has been a staple around the world. And it should be noted that given the first opportunity in America, the former slaves of color became owners of those whose skin color matched theirs.

  But unlike the rest of the world, America had the good sense and decency to end slavery. In America, there is no caste system, and yet at every turn we are bombarded with how bad blacks have it because of whites and how unfair the so-called “white system” is to blacks.

  All people, including those who are here illegally, have it better in America than they would have it anywhere else on earth. And yet blacks are encouraged to blame their ills on whites.

  Therein the “laws of unintended consequences” come into play. America has shed the blood of her people on her own soil to ensure the freedom of all Americans. Americans joined hands with blacks to end Jim Crow. And, to the detriment of all concerned, political correctness and guilt have contributed to discrimination against whites vis-a`-vis race-based affirmative action initiatives.

  Still the bastardization of whites continues. White law enforcement personnel are labeled racist for defending themselves against black criminals, especially when bad things happen to the black criminals.

  To put it succinctly, the single greatest non-biblical truth today is that many times the majority of blacks are their own worst enemies. Many blacks go through life with a chip on their shoulder and bad attitudes toward whites. Many blacks growing up in dysfunctional single parent or no parent homes are loathe to realize that their lives are the result of bad decisions made by their families that adversely affect their adulthood – its not the white man.

  But as I said, there is a thing called “the laws of unintended consequences.” To that end, sooner or later a pendulum reaches its arc and starts to swing back in the other direction.

  How long before white people, many of whom are growing increasingly resentful at being falsely maligned, decide to respond in kind? How much longer will whites stand by and allow the likes of Sharpton and Obama to continually cast them as racist villains?

  If the 1915 silent movie, The Birth of a Nation by D.W. Griffith, which depicted blacks as unintelligent and sexual predators of white women, (which was a lie) gave rise to the resurrection of the Ku Klux Klan, what can we expect to be brought about by the heathen behavior of many blacks today?

  Many blacks are quick to attack those of us who condemn the untoward, barbaric behavior of some blacks. They curse us for not glossing over their behavior and for not engaging in “blame whitey.” But if a phony movie was able to give rise to at least two generations of condemnation of blacks, what will the in-your-face belligerent hostilities so many of them exhibit today ultimately result in?

  America has figuratively bent over backward to assuage its perceived guilt but for many blacks that is not good enough. They accuse and self-alienate but do nothing to incorporate the greatness of America into their lives.

  How much longer will America allow blacks to vilify those who have done them no harm – even as blacks attack, terrorize, and condemn those who truly do just want to get along?

  *  *  *

  

  About Mychal Massie

  Mychal S. Massie is an ordained minister who spent 13 years in full-time Christian Ministry. Today he serves as founder and Chairman of the Racial Policy Center (RPC), a think tank he officially founded in September 2015. RPC advocates for a colorblind society. He was founder and president of the non-profit “In His Name Ministries.” He is the former National Chairman of the conservative Capitol Hill think tank, Project 21; and a former member of its parent think tank, the National Center for Public Policy Research. Read the entire Bio here

  

  

• Caught On Tape: State Department Refuses To Answer Any Questions On Arming Syrian Rebels

  Submitted by Mike Krieger via Liberty Blitzkrieg blog,

  If for some bizarre reason you still have any faith left in the U.S. government, this should take care of it.

  "Thanks for the question… and we have no comment because there is an ongoing investigation.." rinse. repeat.

  Why hold a press conference at all?

  

  

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• Here's How Much Europe Depends On The UK

  Via MauldinEconomics.com,

  Euroskeptiscism is on the rise in Europe. Countries like Poland and Hungary have actively sought to limit the EU’s influence and ignore its rules—most recently with regard to refugee policies.

  Even the most Euroskeptic governments, however, campaigned against Brexit. While European nations may want to limit the EU’s role and influence at home, both economic and security interests led them to support the UK’s membership in the EU (read our free special report on Brexit implications).

  This opposition to Brexit is an example of why interests—much more than ideology—matter in geopolitics.

  European powers depend on exports to the UK

  European nations are heavily invested in their relationship with the UK. The UK is the fourth-largest importer in the world, and the EU needs British import demand.

  EU member states’ trade ties with the UK vary, but several European economies send a significant amount of their exports to Britain.

  Nearly 14% of Irish exports went to the UK in 2015. 9% of the Netherlands’ exports and 7.4% of Germany’s exports also went to this nation in 2015.

  

  With countries like Germany facing reduced global demand for their goods, European governments cannot afford to lose access to British customers.

  The UK was a major contributor to the EU’s budget

  12.6% of the EU’s revenues came from the UK in 2015. When less developed countries joined the EU, the older members took on a greater financial burden. They hoped that expansion would boost investment opportunities and enhance the bloc’s security in the long term.

  The UK was one of only 10 net contributors to the EU budget – along with Germany, France, the Netherlands, Italy, Sweden, Austria, Denmark, Finland, and Ireland. For these wealthy European economies, a British exit means an increased financial burden.

  Eastern Europe needs access to UK labor markets

  British job opportunities and remittance flows are highly significant for Eastern Europe. Eastern Europe has enjoyed low unemployment rates—in large part because millions of Eastern Europeans work in other EU countries… most notably, the UK.

  Over 740,000 Polish citizens and over 160,000 Lithuanian citizens resided in the UK in 2014 according to Eurostat. There are also reportedly over 500,000 Hungarians abroad, with an estimated 300,000 in the UK.

  

  Britain and the EU are likely to reach a trade deal. Nevertheless, if this deal is bilateral, there are no guarantees that workers from Central Europe could continue working in the UK.

  Brexit is more than just an economic threat to Europe

  Europe’s unease is about more than economics. Some countries see Brexit as a threat to the region’s security interests. The Kremlin has been working to split the Western alliance, while the EU has been fragmenting under the weight of internal challenges and diverging interests.

  Eastern European nations fear that Western Europe may abandon them. Countries like Poland know that a more divided Europe is even less likely to act rapidly and cohesively to aid allies in the east.

  The UK is a highly strategic ally for European nations. Britain boasts one of Europe’s most powerful militaries, despite some downsizing and a reduction in overseas operations over the years.

  

  Plus, The Royal Navy remains the second-largest navy in NATO, after the US Navy.

  All of this confirms that Europe can’t afford a break-up with Britain. The EU and Britain, therefore, are likely to reach a trade deal and maintain close economic and military ties despite the Brexit vote.

  

  

• Europe’s Economic Crisis Has Spread from the Periphery to the Core

  We’ve noted for more than 5 years that the European crisis would spread in the following order … more or less:

  Greece → Ireland → Portugal → Spain → Italy → UK

  We also warned that the EU’s approach to economic problems in the periphery would lead the cancer to spread to the core. For example, we’ve repeatedly warned that:

  • Bailing out the big European banks would just transfer the risk to the people

  • Propping up stocks and asset prices won’t get Europe out of the crisis

  • Covering up fraud by the European banks would sink the economy

  Now, the IMF is forecasting that Italy could be in recession for two decades … and that it’s weakness could spread to the rest of the system.

  Britain is – of course -in trouble.  But it’s not just Brexit …

  Europe has been stuck in a downturn worse than the Great Depression for years.  The former Bank of England head Mervyn King said recently that the “depression” in Europe “has happened almost as a deliberate act of policy”. Specifically, King said that the formation of the European Union has doomed Europe to economic malaise.

  He points out that Greece is experiencing “a depression deeper than the United States experienced in the 1930s”.

  

  (Indeed, some say that the UK was smart to get out while it could.)

  Even Germany’s largest bank, and the bank with the highest exposure to derivatives anywhere in the world – Deutsche Bank – is in big trouble.

  Here’s its stock price:

  And here’s its market capitalization:

  In May, Moody’s downgraded Deutsche to a mere 2 notches above junk.

  And credit default swaps – bets that a company is in risk of failing – against Deutsche have absolutely skyrocketed:

  

  Deutsche Bank’s chief economist just said:

  Europe is extremely sick and must start dealing with its problems extremely quickly, or else there may be an accident.

  He’s calling for a $166 billion dollar bailout of European banks.

  Similarly:

  BlackRock Inc. Vice Chairman Philipp Hildebrand said earlier this month the European Commission should allow governments to take temporary equity stakes in their banks, similar to what the U.S. did with its Troubled Asset Relief Program during the 2008 crisis.

  Europe has made bad choices since the 2008 crisis … so Europe’s economic crisis has spread from the periphery to the core.

  

• Don't Just Blame The Cops: Who Is Responsible For America’s Killing Fields?

  Submitted by John Whitehead via The Rutherford Institute,

  “I could never again raise my voice against the violence of the oppressed in the ghettos without having first spoken clearly to the greatest purveyor of violence in the world today: my own government. For the sake of those boys, for the sake of this government, for the sake of the hundreds of thousands trembling under our violence, I cannot be silent.”—Martin Luther King Jr.

  The latest shootings—in Texas, Minnesota, Louisiana, Illinois, New York, Missouri and every other state in the nation—are symptomatic of a psychotic outbreak by a nation that has been waging a war against its own citizens for too long.

  We have long since passed the stage at which a government of wolves would give rise to a nation of sheep. As I point out in my book Battlefield America: The War on the American People, what we now have is a government of psychopaths that is actively breeding a nation of psychopathic killers.

  We’re getting distracted, people.

  Instead of focusing our ire on the architects of the American police state, who are responsible for turning the streets into mini-war zones, we’re getting distracted by the many voices eager to play the blame game by pointing their fingers at someone else.

  Police groups are blaming President Obama and the Justice Department for failing to prosecute “cop killers.” Texas Republicans are blaming the Black Lives Matter movement for fomenting a “war on cops” mindset. Gun control advocates are blaming “gun lovers and their mouthpieces at the National Rifle Association” for America’s gun violence, reasoning that if all Americans were unarmed, police would not have to treat them as potential threats.

  News outlets such as Rolling Stone and Mother Jones have concluded that racial bias is to blame for the “disproportionately high number of African-Americans among police shooting victims.” The Drug Enforcement Administration has suggested that illegal steroid use could be responsible for “police officers who exhibit rage, aggression and/or poor judgment (all symptoms of possible steroid abuse) in confrontations with citizens.”

  Human Rights Watch blames police misconduct and excessive use of force on a systemic lack of accountability within law enforcement agencies and the criminal justice system. And civil rights advocates are blaming police militarization and the abundance of laws (overcriminalization) pushed by lawmakers for the nation’s over-policing, over-jailing and over-killing.

  Yet in the midst of all this finger pointing, no one is stepping forward to take responsibility for the violence that is tearing the nation apart, deepening racial tensions, heightening police tensions, justifying all manner of civil liberties abuses, and pushing us ever closer to a state of lockdown.

  Shame on President Obama for not taking personal responsibility for the blowback resulting from America’s endless wars abroad, the militarization of local police, and the ramifications of allowing police to use battlefield equipment such as drones, assault weapons, tanks, etc. How telling that the first domestic killing of an American citizen by a drone (in this case, a bomb-equipped police robot) should be carried out during the final term of a president whose targeted drone killings abroad have resulted in the deaths of thousands of innocent civilians.

   

  Shame on Congress and the countless federal and state policy-making bodies for not taking responsibility for the overabundance of laws that have turned law-abiding citizens into criminals and police into the inflexible enforcers of a legal code that benefits the corporate elite at the expense of the working classes.

   

  Shame on Corporate America, particularly the military industrial complex, for not taking responsibility for having militarized America’s police forces and subjected its citizenry to the tyranny of a heavily armed police state.

   

  Shame on the various government agencies, from the FDA and Social Security Administration to the Department of Education, for not taking responsibility for ratcheting up tensions by using military firepower to advance their bureaucratic agendas.

   

  Shame on Republicans and Democrats for not taking responsibility for having sidelined legitimate matters of concern such as police misconduct in favor of party politics and campaign contributions from special interest groups and unions.

   

  Shame on the courts for not taking responsibility for allowing government agents to hide behind the shield of qualified immunity, rather than being held accountable for their actions.

   

  Shame on law enforcement agencies for advancing the notion that the lives—and rights—of police should be valued more than citizens. Shame on them for not taking responsibility for allowing blind allegiance to the so-called “thin, blue line” to trump the constitutional rights afforded to every American equally.

   

  Shame on communities for not taking responsibility for using SWAT teams that are armed to the teeth and ready for action to deliver mere search warrants, terrorizing and killing American citizens.

   

  Shame on those who embrace violence as an answer to what ails America for not taking responsibility for their part in contributing to an environment that is growing increasingly tense with every new shooting. It’s a vicious cycle in which the police are becoming more hypersensitive, twitchy and quick to shoot at the slightest provocation, and the populace is growing more fearful, outraged and unconvinced that if they “just obey,” all will be fine.

   

  Shame on the religious community for not taking responsibility for its deafening silence in the face of what can only be termed evil, despite its historic lineage of dissenters such as Jesus, Gandhi, Martin Luther King Jr. who dared to speak truth to power.

   

  Shame on white Americans, black Americans, brown Americans and every other skin tone in between for not taking responsibility for their part in allowing racism, prejudice and bigotry to dictate justice in America.

   

  And shame on so-called “patriotic” Americans who equate good citizenship with blind obedience to government authority and adulation of the military for not taking responsibility for holding their government officials accountable to the nation’s founding principles. Remember, “we the people” were entrusted with the power to make and unmake the government whenever it ran afoul of its primary purpose, which is to protect our lives, freedoms and property.

  Clearly, there’s more than enough blame to go around, but the real question is what can “we the people” do about it? What can average Americans do to stay alive and counter the violence being inflicted on our communities? What can you do to push back against the power of the police state?

  For starters, let’s all agree that violence can never be the answer. Violence will only give rise to more violence.

  Stop buying into the “us vs. them” rhetoric being pushed by politicians, police unions and those who use the race card as a justification for bloodshed. No matter what color your skin is, what politics you subscribe to, how much money you’ve got, whom you love, where you live, whom you worship, what school you attend, where you work, or any other superficial label that is used to divide us: we all bleed red.

  Put your prejudices behind you and stop dealing in stereotypes. Not all police are bloodthirsty. Not all young black men are thugs. Not all people who challenge government authority want anarchy.

  In a police state, you’re either the one with your hand on the trigger or you’re staring down the barrel of a loaded down. In other words, we’re all in this together. The oppression and injustice—be it in the form of shootings, surveillance, fines, asset forfeiture, prison terms, roadside searches, etc.—will come to all of us eventually.

  Stop allowing yourself the luxury of distraction and the sin of neutrality. These things happen—the madness and the mayhem—because good people stood by and did nothing.

  The only real power we have to push back against the police state is as a unified body.

  So what can you do on a practical level?

  For starters, find common ground on the issue of gun control, especially as it pertains to government agents. Demilitarize the police. It’s worked in other countries.

  Demand that police be held financially responsible for official misconduct.

  Put your taxpayer dollars to work for you instead of against you for a change. Tell your elected representatives to stop investing in militarization, wars and weaponry that will only be used against you eventually. Instead, apply the same funds being wasted on endless wars abroad on badly needed infrastructure here at home. By putting more Americans to work rebuilding our communities and our economy, we’ll also strike at the heart of the poverty that drives crime.

  Get informed about the workings of government. Get outraged about the corruption that has rotted our republic from the core. Get vocal about the need for transparency, accountability and reform. There are so many issues in need of attention. Pick just one to start with and raise hell about it. For instance, why has the government been spending three times more on jails and prisons than schools for the past 30 years?

  Finally, take it upon yourself to interfere. Pay attention to what’s going on around you. Use those cell phones that are never far from your side and record police interactions in order to hold them accountable to playing by our rules, the rules of the Constitution. Most important of all, take a stand for freedom and humanity. “Neutrality,” as Holocaust survivor Elie Wiesel reminded us, “helps the oppressor, never the victim. Silence encourages the tormentor, never the tormented. Sometimes we must interfere. When human lives are endangered, when human dignity is in jeopardy, national borders and sensitivities become irrelevant. Wherever men and women are persecuted because of their race, religion, or political views, that place must – at that moment – become the center of the universe.”

  

  

• The Chinese Will Need Another Bailout

  Here we go again. China is primed for more bailouts as their corporations and State Owned Enterprises (SOE) continue burning through billions of yuan. At the turn of the month we learned Sinopec manipulated revenues. As Reuters reported at the time, some 12 subsidiaries of Sinopec had fake invoices among other faults. Chinese companies are loading up on debt and they are investing it terribly. 

  Reuters also said 10 state-owned firms had "huge losses" driven primarily from bad investment decisions. Sinopec subsidiaries blew cash on 14 unused chemical plants as well acquiring two dozen fuel stations illegally. 

  "China's national audit department reviewed the financials of the 10 largest state-owned companies including Aluminium Corporation of China (CHALCO), Sinopec and China National Offshore Oil Corporation (CNOOC), exposing huge losses in these firms as a result of low efficiency and bad investment decisions. The auditing office also pointed to wasted investments Sinopec's subsidiaries made, such as 14 unused chemical plants, and raised red flags on two dozen "illegally acquired" fuel stations."

  Oh yeah, these guys are real winners when it comes to running business and making investments. As Citi pointed out, China's SOE's have Pre-tax Profit Margins and Liability-to-Asset ratios that do not appear to reflect wise decision making:

  

  China's corporations are horrible with investment. We are not shocked by this. We expect many more Chinese bailouts to come as the country's money-gods lose total control of the monster they have unleashed through reckless monetary policy.

  The investment decisions have become so bad that a source told Bloomberg that up to 10 SOE's may require a bail out:

  China is considering providing about 10 of its state-owned enterprises with an aid package, people familiar with the matter said. Sinosteel Corp. is among those that may receive help, one of the people said

  In an effort to throw the kitchen sink plus more at the equity market, China will now be deferring a portion of a $300 billion pension fund into the Chinese market. A wise choice?  Perhaps not, especially since the Chinese have painted themselves into another bailout corner.

  With malinvestment as we saw re: Sinopec, to China's need to backstop at least 10 failing state-owned enterprises, and now the clear desperation of getting pension money exposed to the equity market, presumably ahead of more central bank stimulus, it's becoming evident that the Chinese are running out of options. Once the entire nation is invested in stocks and the central bank is buying hand over fist, the Chinese market manipulation will have jumped the shark, because their explosive Debt-to-GDP didn't seem to mark a turning point in the Chinese economic story as of yet:

  

  But don't worry, the National Council for Social Security Fund in China that will manage the pension fund investments has an appreciation from the Chinese people akin to what some believe American's have for Warren Buffett, reportedly:

  The NCSSF has "such a good reputation in being a value investor that if they take the lead, the signaling effect is actually quite strong," said Hong, who had predicted the start and peak of China’s equity boom last year. "It’s almost like Warren Buffett saying he is buying a stock."

  Which is unique because frequent Zero Hedge readers may recall a different Chinese version of Warren Buffett:

  On Thursday, we learn that yet another high profile businessman has apparently vanished and this time, it’s none other than “China’s Warren Buffett,” Guo Guangchang (worth some $7 billion at last count) whose conglomerate Fosun International is morphing into an insurance-focused investment group. Fosun spent more than $6 billion buying stakes in 18 overseas companies between February and July.

  China just burning cash and it is amazing they have lasted this long.  How much longer will the cash pile burn? Maybe MOAR cash infusions is the answer…

  

  

  

• Harvard Study Finds No Racial Bias In Police Shootings

  A very recently published Harvard study on racial bias in police use of force finds that, as the mainstream narrative proffers, black men and women are treated differently in the hands of law enforcement. However, in what the (African-American) author of the study calls "the most surprising result of my career," when it comes to the most lethal form of force – police shootings – the study finds no racial bias, contradicting the mental image of police shootings that many Americans hold.

  As The NY Times reports, the study did not say whether the most egregious examples — the kind of killings at the heart of the nation’s debate on police shootings — are free of racial bias. Instead, it examined a much larger pool of shootings, including nonfatal ones. It focused on what happens when police encounters occur, not how often they happen. (There’s a disproportionate number of tense interactions among blacks and the police when shootings could occur, and thus a disproportionate outcome for blacks.) Racial differences in how often police-civilian interactions occur have been shown reflect greater structural problems in society.

  Black men and women are treated differently in the hands of law enforcement. They are more likely to be touched, handcuffed, pushed to the ground or pepper-sprayed by a police officer, even after accounting for how, where and when they encounter the police…

  

  But Roland G. Fryer Jr., the African-American author of the study and a professor of economics at Harvard – which examined more than 1,000 shootings in 10 major police departments, in Texas, Florida and California, was "surprised" to find that when it comes to the most lethal form of force — police shootings — the study finds no racial bias.

  

  Mr. Fryer said his anger after the deaths of Michael Brown and Freddie Gray and others drove him to study the issue. “You know, protesting is not my thing,” he said. “But data is my thing. So I decided that I was going to collect a bunch of data and try to understand what really is going on when it comes to racial differences in police use of force.”

  In officer-involved shootings in these 10 cities, officers were more likely to fire their weapons without having first been attacked when the suspects were white. Black and white civilians involved in police shootings were equally likely to have been carrying a weapon. Both of these results undercut the idea that the police wield lethal force with racial bias.

  …

  However, for Mr. Fryer, who has spent much of his career studying ways society can close the racial achievement gap, the failure to punish excessive everyday force is an important contributor to young black disillusionment.

  “Who the hell wants to have a police officer put their hand on them or yell and scream at them? It’s an awful experience,” he said. “I’ve had it multiple, multiple times. Every black man I know has had this experience. Every one of them. It is hard to believe that the world is your oyster if the police can rough you up without punishment. And when I talked to minority youth, almost every single one of them mentions lower level uses of force as the reason why they believe the world is corrupt.”

  

  

• Kyle Bass Was Right: Here Is SocGen's Primer How To Trade The Biggest Yuan "Depreciation Wave" Yet

  For a few months in early 2016 it was cool to make fun of Kyle Bass’ career bet on Yuan devaluation; now that the Yuan is back to 6 year lows and sliding as China once again quietly loses control of its capital outflows, it is not so cool any more.

  

  And with every passing day, it is only going to get worse because despite all the rhetoric, China’s economy is getting worse by the day.  As SocGen puts it, “there have been signs of reviving capital outflow pressure since early 2Q. If the deprecation continues apace, capital outflow pressure will build up further and potentially quite quickly. The fact that the PBoC keeps stepping up capital controls despite the innocuous official flow data seems to suggest that it is also expecting an uphill battle.“

  And speaking of SocGen’s outlook for China’s currency , this is what the French bank – which just cut its Yuan forecast from 6.80 to 7.10 – thinks will happen next.

  A New Normal for the RMB

   

  We revise our peak forecast for USD-CNY to 7.10 from 6.80. Similar to immediately following the August devaluation, consensus is too complacent on the ability and willingness of policymakers to arrest the nearly three-year-old depreciation trend.

   

  The new normal in recent months is gradual RMB depreciation that doesn’t create a negative feedback loop to other currencies or broader market sentiment. This could embolden policymakers to keep pushing the limits of depreciation, especially if speculative positioning stays subdued. Implied volatility, risk reversal, forward points, and the forward curve have all been unresponsive to the recent RMB weakness. This is partly due to the reluctance of speculative investors to add exposure after being burned by the RMB depreciation trade in January, but also because intervention remains ongoing despite not showing up in headline reserves or the forward book.

   

  

   

  The best solution remains for policymakers to let the RMB find its market clearing price. This is not an exact science and we can only guesstimate what the level would be – 6.80 was our previous assumption but 7.10 now seems more realistic. The recent depreciation at a time when the dollar has not been strengthening suggests policymakers are increasingly giving in to capital flow pressures and are willing to the test the limits of depreciation. Further depreciation could reinforce capital outflows in the short term but should eventually help capital flows reach equilibrium.

   

  

   

  7.10 peak – our base case, 80% probability

   

  The next wave of RMB depreciation will see USD-CNY trade up to 7.10 by mid-2017. Since USD-CNY bottomed in early 2014, there have been five waves of depreciation and each has followed a predictable pattern: three to five months of USD-CNY increasing (+3.5% on average), followed by modest gains (+1%) spanning an equivalent time span, before another round of depreciation ensues. The predictability is  suboptimal from a policy perspective, but it appears to be the PBoC’s standard playbook. While there could be some consolidation or modest strength after the current depreciation phase ends (3.6% since April), the ensuing wave and medium-term path should see USD-CNY reach 7.10 over the next year.

   

  Cumulative depreciation of 6% over the next year would be similar to what has been experienced since October. This would not be an atypical base case for a country in a structural slowdown, with perceptible credit and banking sector risks, an imbalance in the supply-demand of capital, a tenuous reserve adequacy position, and local residents harbouring a strong desire for FX diversification.
  We continue to believe that consensus is underestimating the chances of CNY depreciation, both from the ability and willingness of policymakers to prevent further depreciation. Consensus is at 6.80 in one year, which was our prior out-of-consensus call immediately following the August devaluation (back in late August consensus was at 6.50).

   

  

   

  A gradual and controlled depreciation with periods of stability and bouts of accelerated weakness is still the most likely scenario (80% probability). A move to 7.10 may continue to be absorbed by investors without disturbances to broader market sentiment occurring, and as such we see no need to revise our EM forecasts, which currently entail modest spot depreciation that broadly matches the forwards.

   

  Importantly, the USD-CNH trading pattern since 2014, of only retracing a portion of its gains and never revisiting the lows after an up move, should remain in place. Coupled with little fundamental justification for a stronger CNH over a 12-month horizon and fairly neutral speculative positioning, it is unlikely that USD-CNH will trade below the 6.50-6.55 area.

   

  8.0 – the new risk scenario, 20% probability

   

  Back in January (CNY7.50 World) we identified USD-CNY trading up to 7.50 as the risk scenario for the currency. Given ongoing capital outflows, the ability of the market to absorb recent depreciation without negative consequences, the policy decision to weaken the renminbi when the USD has been stable, and our new forecast of 7.10, the risk scenario for CNY is now much higher.

   

  The new risk scenario for CNY is 8.0 (20% increase in USD-CNY). We assign 20%  probability to this scenario. The caveat is that the pain threshold for the market appears to be much higher than before and the implications for the global financial markets will primarily depend on the speed of depreciation. We believe that it would take significantly more pressure on capital flows than what we have seen over the past few years, or an economic hard landing, for our risk scenario to unfold. Note that we have a 30% probability of a hard landing of the Chinese economy. We think that an economic hard landing might not necessarily trigger a sharp devaluation, as the authorities would most likely respond with strict capital controls amid concerns over capital flight.

   

  Within the risk scenario, the path to 8.0 could be abrupt (not likely), slow (more likely), or fast (most likely).  

  • Scenario 1: one-off devaluation (<10% probability): A one-off move (i.e. step devaluation) where the PBoC then chooses to defend the new level. There would be enormous political backlash with the  appearance of any active pursuit of devaluation. This would also be too risky for Beijing’s taste given that no one can say for sure how much depreciation is enough to equilibrate supply and demand. However,  we assign it a nonzero probability because the authorities might ultimately decide it is the best way to realign expectations and halt domestic capital outflows.

  • Scenario 2 (free float over the next year – >70% probability): The PBoC fast-tracks currency reforms through a big-bang approach to currency flexibility because either: a) capital outflows remain large and the depletion of FX reserves too great; or b) it deems the domestic and global financial markets able to absorb the shock.
  • Scenario 3 (slow and steady move – 20% probability): The current strategy of steady depreciation picks up pace and intervention is used to limit overly destabilising volatility. The risk to a steady creep higher in USD-CNY is a build-up in speculative pressures and resident outflows that creates a vicious cycle of depreciation.

  Finally, here is SocGen with its best ways to trade the coming Yuan devaluation:

  Long USD-CNH: In our view, over a one-year horizon, being long USD-CNH has attractive risk-return characteristics on a 6% spot move, 2.5% negative carry, and limited potential for CNH to strengthen on a sustained basis. However, the entry point is critical to achieving a favourable PnL outcome and it might be prudent to wait until CNH consolidates or strengthens modestly to enter long USD-CNH positions.

   

  Vanilla calls or call spreads are too expensive: Both these structures are too expensive when considering the probability-weighted terminal value of CNH a year from now. For example, a one-year 25d USD-CNH call has a breakeven at 7.37 while a 25d/10d call spread needs to see a move to the 7.50 area for risk-return to be attractive.

   

  Buy 1-year call spread (6.85/7.20 strikes) and sell 1y-year 6.55 put: Under the premise that USD-CNH only retraces a modest portion of the recent gains (similar to past experience) coupled with no strong arguments for sustained appreciation on fundamental grounds, selling downside optionality can cheapen the cost of the call spread quite significantly. For example, the indicative cost of a 6.85/7.20 call spread is 1.43%, compared with a cost of 0.42% in a structure that buys the same call spread and also sells a 6.55 put. The 70% cost reduction entails unlimited losses below 6.55 but the position can be delta-hedged.

   

  But 1-year 6.85 USD-CNH call with a knock-out at 8.0: Owning a 1-year 6.85 call option is quite expensive (indicative cost of 3% of notional) and has a poor breakeven (7.05). Whereas owning a 1-year 6.85 call with a knock out at 8.0 (our risk scenario) entails a 60% cost reduction over the vanilla call. The risk is limited to the premium paid. Positive PnL at expiry accrues above 6.90, but if the barrier level (8.0) is hit at any point over the life of the trade the structure is knocked out and the premium is lost. The structure has risk-reward of 10-1.

   

  Short RMB against an abridged CFETS basket: Whether the CNY stabilises against the USD, depreciates modestly in an orderly and controlled manner (our base case), or experiences stronger depreciation (our risk scenario), the trade-weighted basket will be at best stable and could continue to fall. To mitigate fluctuations in the USD-CNY exchange rate, investors can short the trade-weighted exchange rate. An abridged CFETS index that includes the USD (36% weight), EUR (325), JPY (13%) and AUD (19%) is able to track the larger thirteen currency CFETS index very closely (link). The abridged basket is highly liquid and has similar negative carry as being long USD-CNH (22bp/month).

  And with that, good luck in catching up to Kyle Bass.

  

  

• One Year After Surpassing Walmart, Amazon Is Now Bigger Than Berkshire

  Jeff Bezos has marked another milestone. Nearly one year to the day following Amazon’s surpassing of Walmart’s market capitalization on the heels of a great report on AWS (Amazon Web Services) growth numbers, Amazon has surpassed another American business icon’s market capitalization, that of Warren Buffett’s Berkshire Hathaway…

  

   

  Notably tomorrow is Amazon Prime Day 2016.

  Leaving the big question – when does Amazon rise to Apple’s market cap level or will Apple fall to Amazon’s market cap level? Place your bets…

  

   

  Charts: Bloomberg

  

  

• Why Gundlach Thinks It's Going To Get Worse, And Why He Is "Pretty Sure That Trump Will Win"

  Yesterday, when referring to the latest interview Jeff Gundlach gave Barron’s, we presented the bearish DoubleLine “bond king’s” portfolio which he broke down as follows: “high-quality bonds, gold, and some cash.” He promptly added the following rhetorical response to inbound inquiries: “People say, “What kind of portfolio is that?” I say it’s one that is outperforming everybody else’s. I mean, bonds are up more than 5%, gold is up substantially this year [28%], and gold miners have had over a 100% gain. This is a year when it hasn’t been that tough to earn 10% with a portfolio. Most people think this is a dead-money portfolio. They’ve got it wrong. The dead-money portfolio is the S&P 500.”

  

  Today, the market is doing its best to prove Gundlach wrong, with the S&P breaking out to new all time highs while gold takes a modest leg lower.

  But while the market remains entirely reliant on the actions of central banks, and as we noted earlier, the latest push higher appears to have come from Bernanke whispering in Abe and Kuroda’s ear about the fringe benefits of helicopter money, Gundlach does not see the gains in the market trickling down into the broader economy. Just the opposite, because in another part of the same Barron’s interview, when asked if things are going to get worse – both in the economy and society – Gundlach responds as follows:

  What is really happening here is that there’s massive technological change, and big changes almost always lead to political instability. People who benefit from the old construct are loath to see it change, because they don’t want to lose their power and economic advantage. And so they dig their heels in even harder. That’s what we’re seeing in Britain right now. People who remember the good old days when they had factory jobs and made a good living—that’s been taken away, and they want to do something about it… Robots are taking an awful lot of jobs. Driverless cars are coming; just think about how many jobs that is going to take away. Think of all the taxi drivers; think of all the Uber drivers who have found a source of income. How about the truck drivers? How about the livery people? A lot of people are out there driving around and getting paid for it. You get a driverless car, and all of a sudden they’re unemployed. Not all of them, of course, and not all at once. This is all part of this process.

  It’s not just technology, though. Gundlach is just as worried about slumping demographics, not only :

  One of the big problems in parts of Europe is a collapsing labor force. In Italy, the fertility rates are so low, and the baby-boom piece so big, that their labor force will plunge, absent immigration. Demographics are a problem that takes a generation to go away. And then you’ve got the robots, and they’re never going away. And you’ve got all this debt—the world’s debt-to-gross-domestic-product ratio is 240%—so you’re already putting a big headwind onto economic growth. Pair that with the demographics, and you get slow global growth.

  When asked if he expects more political risk in the market, Gundlach responds as follows: “This is a train that’s moving down the tracks, and I don’t see it stopping until substantial change occurs. Minor fixes—like raising the top tax bracket to 39% from 36%—are not going to create an enduring solution. We are going to see it in the U.S., in our presidential election.”

  Which finally brings Gundlach to the topic of Trump, and why he thinks The Donald will be America’s next president.

  One of the reasons I believe Trump might win is that Brexit won. The parallels are far too great to be coincidental. They are identical in time. They are identical in mood, in the attitude of “I’m not doing what you say anymore.” People don’t want to admit that they support Trump. They hide it. A lot of people in Britain didn’t want to admit that they were voting to leave. My suspicion is that if Trump is even within the margin of error come November, he’ll win by a few percentage points.

   

  * * *

   

  The establishment media is putting out a lot of scare pieces about how Trump is going to destroy the world economy; that [his presidency] could lead to protectionism, noncooperation, tariffs, and stuff like that. And, in Europe, you are having a new uptrend in noncooperation. But I’m pretty sure that if Trump wins—and I do think he is going to win—he is going to increase the deficit. He talks about building up the military, building walls. These things cost money. And if the deficit goes up, which it would under a President Trump, that will give a short-term bump to economic growth. So maybe it is not as scary as people think.

  Perhaps Gundlach is right, and if indeed Japan is the Gunniea pig for Helicopter money, who better to have on top of the US economy than a president who will follow closely in Japan’s footsteps, and boost fiscal spending, expand the deficit, and in the process greenlight the Fed to do even more QE, courtesy of hundreds of billions in more Treasurys that someone has to backstop will be bought in the coming years.

  

  

• Japanese Savers Flood Into Gold Fearing The Endgame Is Close

  For all the talk about the surging yen as the biggest threat to Japan’s embattled economy, the truth is that there is another soaring currency (and asset) that is far more troubling for Shinzo Abe.

  Gold.

  

  While in past decades, the natural instinct of Japanese savers when faced with financial uncertainty has been to rush into the “safety” of cash (after all why allocate funds to government bonds that yield almost, or less, than nothing) as we recently showed in Safes Sell Out In Japan and Demand For Big Bills Soars As Japan Stuffs Safes With 10,000-Yen Notes, now something has changed. That something is increasing loss of faith in Japan’s currency.

  Take the case of Tetsushi Kudo, a 50-year-old office worker, who as Bloomberg writes, bought a one-ounce gold coin this month for the first time. With stocks slumping and zero percent interest on savings, he says it won’t be the last.

  “I want to buy gold every year as a birthday present for my daughter,” Kudo said at a store in Tokyo’s posh Ginza district where he made the 162,000 yen ($1,600) purchase. “She will thank me for the gift when she grows up because gold will have value wherever she goes.”

  What a delightful epiphany: if ordinary, 50-year-old Japanese citizens can get it why not Nobel-prize winning economists? 

  Ignore that please.

  Individual investors like Kudo drove a 60% jump in sales of the precious metal in June from May at Tanaka Holdings Co., the operator of Japan’s largest bullion retailer, as the yen’s rebound against the dollar made it more affordable. Why the surge into gold? Because far behind the glitzy facade of Abenomics, which is really just the BOJ intervening daily in the USDJPY via trust banks, and manipulating the Nikkei to give the impression that all is well, the people have checked out. According to Bloomberg, while Prime Minister Shinzo Abe’s ruling party scored a convincing victory in July 10 upper house elections, confidence in his economic policies is crashing. A July 2-3 Asahi newspaper poll showed 55% of those surveyed support a new direction versus 28% for maintaining course.

  While both gold and the Yen have soared in 2016, it has been for oddly similar reasons. The yen’s 20% gain this year, slightly less than that of USD-denominated gold, has been a reflection of Japanese investors fleeing from overseas markets due to pessimism about global growth rather than confidence in their own economy. As for the reason why Japanese interest in gold has soared, it is an even simpler one: fear that the days of the Yen as a stable currency are numbered.  Gold in yen terms has risen 7.5% this year, compared with the 28% jump in the dollar-based price of the metal

  

  Gold sales more than tripled at Tanaka’s shops on June 24, when the Japanese currency jumped to an almost three-year high against the dollar after the U.K. decided to exit the European Union. Japan’s Topix stock gauge dropped the most in five years the day after the Brexit referendum, while 10-year sovereign bond yields tumbled further below zero.

  “For investors, buying gold is similar to casting a no-confidence vote,” saidItsuo Toshima, 68, an investment adviser and former regional manager for the World Gold Council in Tokyo. “Gold is the unprintable currency, unlike the yen. The yen’s appreciation in spite of the adoption of the negative-rate policy has kindled skepticism about the policy’s benefits. It’s also led to investors seeking to protect their assets in case Abenomics fails.”

  Another traditional lament said about gold is that it pays no dividend. Well, when the return on other “safe assets” is negative – as it the case in Japan – gold does have a relative real return. Indeed, gold’s lack of yield isn’t a big draw-back for investors at a time when almost 90% of Japanese government bonds have yields below zero, according to Eiichiro Kato, a general manager at Tanaka’s precious metals retail department. The benchmark 10-year JGB yield was at minus 0.28 percent on Monday.

  And then there are the philosophical questions.

  “We don’t know who will take responsibility for reducing Japanese government debt,” said Akihiro Morishige, a senior economist at Mitsubishi Research Institute.

  What reduction in Japanese government debt?

  “If trust in Japan’s fiscal policy decreases, Japanese long-term interest rates may soar towards 5 percent by 2030.”

  Make that 500%.

  What makes Japan’s gold rush more unique than in most countries is that many are not only buying gold as protection against a crash, they are storing it abroad as protection against confiscation as we reported last week.  Japanese buyers of gold to store in Switzerland jumped 62% in the first six months from the second half of 2015 because of negative interest rates and concern the yen will eventually weaken, according to BullionVault Ltd., an online trading and storage company. Also: due to fears that Abe will pull an “Executive Order 6102”, and force gold confiscation from the population.

  Meanwhile, as they flood into gold, Japanese investors are retreating from riskier assets as the nation’s shares plunge. Households’ holdings of equities decreased 9.9% from a year earlier at the end of March and investment trusts fell 3.7 percent while their cash and bank deposits rose 1.3 percent to 894 trillion yen, the second-highest amount on record, according to BOJ data.

  “Gold is attractive because its prices don’t move much, compared with other assets,” said Kudo, the buyer of the coin in Ginza. “I may lose lots of money if I buy stocks without doing much research on them.”

  Come to think of it, he is 100% right; making things worse, he may – and likely will – lose lots of money even if he buys stocks having done lots of research on them.

  The good thing about gold: no research required for it to “work.” Only lots and lots of stupid politicians and economists. Luckily, we have more than enough of those.

  

  

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• Brexit Ironies Mount: Belgian Premier Warns EU Won't Help UK Out Of "Black Hole"

  Submitted by Michael Shedlock via MishTalk.com,

  The move to punish the UK picks up steam even though such actions will damage the EU far more than the UK. Belgium is the latest country bound and determined to punish the UK.

  Please consider EU will not help UK out of ‘black hole’, Belgian premier warns.

  Britain’s vote to leave the EU has opened a political “black hole” in Westminster and Europe’s leaders will not bend to help it out, Belgium’s prime minister has warned.

   

  Charles Michel’s caustic views on the unreal “dreams” of Brexiters, outlined in an hour-long interview with the Financial Times, speak to the difficulties Britain faces in reaching an exit trade deal that satisfies all 27 EU leaders and their parliaments.

   

  Before the referendum, the liberal leader doggedly resisted giving Britain a special deal on its EU membership terms. He is now showing similar resolve over any Brexit deal, pushing the UK to start the divorce promptly and telling it to expect no big concessions on migration or market access.

   

  “The truth is it’s a very negative situation for the UK, there is no doubt,” he said.

  The Truth

  The truth is Brexit is very bad for the EU, and punishing the UK will make matters worse, possibly even starting a global trade war.

  Facts of the Matter

  • “Italian Gov’t Collapse More Than Just a Possibility”
  • The EU Cannot Survive as a Prison
  • Spain’s Social Security Program Will Go Bust in 2018
  • Austria’s Constitutional Court Orders Rerun of Presidential Election.
  • Four Countries Blame Jean-Claude Juncker for Brexit, Two Seek His Ouster

  Risk of Global Trade Collapse

  Please consider “No Cherry Picking” Says Merkel; Risk of Global Trade Collapse says Mish

  

  Bluff or Stupidity?

  Germany exports €50,963,643 to the UK than it takes back in imports.

  Instance the UK must abide by migration rules when that's the reason the UK left the EU is blatant stupidity given balance of trade numbers

  — Mike Shedlock (@MishGEA) July 10, 2016

   

  Another irony in this madness is Marine le Pen is the leading candidate in French polls.

  Le Pen stated “This Is the Beginning of the End of the European Union“.

  For details please see Hollande Lectures US About Trump.

  The final irony in this mess is that it’s the EU on the verge of falling into an economic black hole, and punishing the UK is one sure way to make that happen.

  

  

  

• The Prospects For Money

  Submitted by Alasdair Macleod via GoldMoney.com,

  In my view, this new bout of turmoil in financial markets is the prelude to the final demise of government currency.

  If I’m right, a long-expected collapse in the purchasing power, and of the very concept of fiat currency, will evolve from current events. The purpose of this article is to explain why monetary theory predicts a currency collapse.

  The question at the heart of today’s market instability is the validity of fiat currency; that is to say, forms of money issued and sanctioned by individual governments, with no backing other than faith in those governments’ creditworthiness, and the enforcement of its use by law. The risks they impose on all of us will be evidenced one day by both the speed of the fall in each individual fiat money’s purchasing power, and inevitably by their comparison with gold’s more stable purchasing power. Essentially, an awareness of the dangers of unsound money will gradually become evident to every economic actor.

  So far, or at least since the days when fiat money was freely exchangeable for gold, central banks have managed to enforce upon us their currencies as money, originally on the basis they were gold substitutes. That pretence was finally dropped in 1971. The purchasing power of fiat currencies has never been seriously challenged since, except in relatively few extreme cases, such as Zimbabwe and Venezuela. Not even the financial crisis eight years ago threatened a collapse in fiat currencies, when banks had to be rescued with unlimited extra quantities of money and credit.

  The current crisis has commenced while there are determined efforts to stop the purchasing power of the major currencies from rising, even leading to the deployment of negative interest rates in this quest. None of the central banks’ policies appear to have worked. The increasing purchasing power of the yen, despite all attempts to lessen it, is the clearest example of the abject failure of a central bank to achieve its monetary objectives. The same can be said of the ECB and the euro, a currency even more synthetic than those it replaced. It is clear that the central banks are setting monetary policy more in hope than in a true appreciation of their own hopelessness.

  They place an undue emphasis on empirical evidence. That’s why charts and statistics are so important to them and all their epigones. When you don’t understand and cannot explain something, you turn to the so-called evidence. And when very few people actually have a reasonable grasp of what money is about, you can rely on empirical evidence being unchallenged. For monetary policy, this tells us two things: central banks are clueless about monetary theory, and in the event of a second systemic crisis, they will be misguided by their experiences of the last one.

  Today’s empirical evidence reflects the bail-out of the global banking system in 2008/09. Neo-classical monetarists were initially worried by the potential for price deflation in the wake of the banking system’s rescue, and so central bankers expanded narrow money by unprecedented quantities to counter credit deflation, real and anticipated. These were intended to be short-term measures, to be replaced with more normal monetary policies as soon as the immediate crisis was over. These short term measures are still in place today eight years later.

  The impact on the gold price

  After the Lehman shock, which led to a temporary flight into both money and short-term government debt, the purchasing power of currencies relative to that of gold rose, with the gold price falling from $930 to $690. Subsequently, when it became apparent that monetary expansion had succeeded in curbing deflationary forces, this trend reversed, taking the gold price to over $1900. That then changed in September 2011, following concerted central bank intervention to supress the gold price.

  The dollar-gold relationship has now turned once again, signalling that the tide of confidence is moving against currencies. The purchasing power of currencies measured against that of gold is now falling. We now have a banking crisis in the making, if the share prices of major banks are any indication. The UK’s decision by referendum to leave the EU points to Europe’s political disintegration. Increasing market volatility tells us that another systemic crisis may well be imminent, and government bonds reflect a continuing flight to safety.

  Already, the Bank of England has announced that a further £250bn in monetary support will be made available to the banks, and that additional swap lines have been agreed between the major central banks. We can take this as evidence that the central banks, relying on empirical evidence, are preparing a new round of monetary expansion as the solution to any future crisis, confirmed in their belief that the risk to the credibility of their currencies is unlikely to be a problem.

  This is not what gold, when priced in these currencies, is telling us. To understand why and where the central bankers are mistaken, we must consider some fundamental points about how money actually works.

  The theory of money and its purchasing power

  To prepare our minds for a comprehensive understanding of monetary theory, we must at the outset dispense with any idea that statistical analysis is relevant. It is not, because there are no constants involved. Valid statistics require at least one constant, usually the purchasing power of money. In the whole field of economics, let alone money, there are none. The purchasing power of money is to a large degree independent of its quantity, and depends on a fluctuating acceptance that it is exchangeable for goods. Quack monetarists that believe in the equation of exchange, despite all evidence it does not work, overlook the subjective factors that qualify something as money.

  When we set out to understand money, we must acknowledge there are three major influences at work, besides a general acceptance that a particular form of money is exchangeable for goods. There is the subjective value of the goods for which an exchange is considered, there are the fluctuations in the relative quantities of goods and money in the exchange process, and there is the balance of relative desires in the population as a whole to increase or decrease the quantity of money held, relative to goods. All these factors are the unknowable decision of every single economic actor, and fluctuate accordingly.

  This self-evident truth continually risks undermining the very function of any particular form of money, which in order to be acceptable to the parties in any transaction must have a commonly accepted value, even though one party will want money more than the other at a given price. This commonly accepted value has been described by the economist, von Mises, as money’s objective exchange value. It is the one thing that parties to a transaction can agree upon. A dollar is a dollar, a euro is a euro, and so on, even though different individuals will want these forms of money more or less than other individuals.

  So far, we have addressed only one out of four dimensions of the money problem. A second dimension is that demand for some goods is always greater than demand for other goods, so money’s purchasing power will differ for every good and class of good exchanged for it. It is never sufficient to just assume that, for instance, the price of housing is rising solely due to demand for housing. It also rises because people place a lower value on money than they do on bricks and mortar. On reflection, this truth should be self-evident. But it also holds true for every other good for which any particular form of money is exchanged, and it is too simplistic to assume that changes in price come from the goods side alone.

  A third dimension to consider is that the products and quantities of goods and services purchased yesterday will not be the same as the products bought tomorrow. Besides making the point again, that statistics are wholly irrelevant to understanding money, we can also add that what money will be used to buy tomorrow and in what proportions cannot be predicted, beyond perhaps some broad generalisations, such as people will buy food, they will use energy, and they will enjoy some leisure time. Such platitudes are of no practical value to understanding monetary theory, and disqualify the use of price indices and aggregates such as gross domestic product.

  The fourth dimension is one of time. The injection of money into an economy will start at a point, typically the banks creating loans, or governments through unfunded spending. Money therefore enters an economy unevenly, benefitting some at the expense of others. This is known as the Cantillon effect, and is universally ignored by the neo-classical economic community.

  The problem today

  The reader should now have a grasp as to why attempts to discern future purchasing powers for money are futile, and why monetary policies of central banks never succeed, except perhaps by pure chance.

  As if the four dimensions cited above were not enough, there is a further problem. Most fiat money is produced not by central banks, as is commonly supposed, but by commercial banks, which lend money into existence. Bank credit is essentially temporary money, and is regularly extinguished in credit cycles. It is the obvious potential for this bank credit to contract which concerns central bankers most. When bank credit contracts, businesses that are over-reliant on debt for their capital requirements, and companies that have borrowed to finance unprofitable production go bankrupt. This is the bust of the credit cycle. In recent decades, the bust has been deferred and deferred and deferred, but hasn’t gone away.

  The failure of central bank monetary policies appears to have reached an inflection point. This is what the share prices of systemically-important banks are telling us. This is what the political disintegration of Europe, upon which the new synthetic euro is based, is telling us. This is what the cul-de-sac of permanently zero and negative interest rates are telling us. This is what wildly over-priced government bonds are telling us. This is what the greatest indicator of all, the price of gold is now telling us.

  The inflection point, I believe, is the marker for a potentially catastrophic decline in the purchasing power of paper currencies that are unbacked by exchangeable gold. The faith and credit-standing of issuers of paper money, and not the known and suspected inadequacies of commercial finance, is the last rotten pit-prop supporting the system. We can easily see how a new round of monetary expansion designed to save the global banking system from its nemesis will lead, not to a Lehman-style outcome, but to a collapse of paper currencies.

  This, apart from the implied forecast for gold in the paragraph before last, is the only truly subjective statement in this article on a truly subjective subject.

  

  

• "I Do Not Like This Uncle Sam…"

  With markets and monetary policy already reduced to Seussian fantasy, and the average insta-American incapable of comprehending anything but snapchat-‘memes’, we thought the following summed up the state of US politics perfectly…

   

  

   

  Source: The Burning Platform

  

  

• Warmongers Delight: Abe Hits Super-Majority With Sweeping Victory In Japan Election

  Submitted by Michael Shedlock via MishTalk.com,

  The warmongers and gun manufacturers are cheering today as Shinzo Abe Wins Sweeping Victory in Japan Elections.

  Shinzo Abe has won a sweeping victory in elections to Japan’s upper house, leaving him within reach of a parliamentary supermajority that would allow the government to revise Japan’s pacifist constitution.

   

  With seven proportional representation seats left to declare on Sunday night, Mr Abe’s ruling Liberal Democratic party and its allies had won 72 out of the 78 seats they need for a two-thirds majority.

   

  Toru Takigishi, a 76-year-old chemistry professor in Tokyo and a long-time LDP supporter, said he voted for the Communist party for the first time. “I’m happy with the current constitution and I want peace to be maintained. At least there is a checking mechanism for constitutional change under the Communist party,” Mr Takigishi said.

  Japan Election Boosts Shinzo Abe’s Bid to Revise Constitution

  The Wall Street Journal reports Japan Election Boosts Shinzo Abe’s Bid to Revise Constitution

  With most results in, Mr. Abe’s Liberal Democratic Party and its junior partner, Komeito, were on track to win nearly 70 of 121 seats that were up for grabs in the 242-seat upper house. A handful of seats remained undecided early Monday.

   

  The coalition parties plus smaller opposition parties and unaffiliated lawmakers who favor constitutional revision were likely to control two-thirds of Parliament’s upper house after the election, projections by Japanese media showed. Revision requires two-thirds of both houses of Parliament, after which the changes must be approved by a majority of voters in a national referendum. The coalition already controls two-thirds of the lower house, which wasn’t up for election, meaning Mr. Abe has the votes to start the revision process.

   

  Any move to change the constitution is likely to spark a divisive battle. Last year, Mr. Abe’s government enacted a bill allowing Japanese troops to fight overseas along with the country’s allies, following a controversial reinterpretation of one article of the constitution.

   

  The move prompted months of protests, some attracting tens of thousands of people. Though the security bill was passed by both houses of Parliament, experts testified that it was unconstitutional.

   

  With the election over, Mr. Abe will likely focus on passing the stimulus package, a task that has gained urgency since the U.K.’s decision last month to leave the European Union cast further uncertainty over the global economy.

   

  Mr. Abe hasn’t disclosed any details, but the stimulus program is expected to be a multiyear effort to upgrade the nation’s transport infrastructure, expand child care and nursing-care services and create scholarships for students.

   

  Meanwhile, the Bank of Japan is widely expected to expand its efforts to stoke growth and inflation when its policy board meets July 28-29. Its most likely options are increasing the size of its unprecedented asset-purchase program and pushing a key interest rate on bank reserves further into negative territory.

  For further discussion of warmongering possibilities, please see Japan’s Abe Angling for War with China? Could the US be Drawn In?

  

  

• The Federal Reserve's Grand Scheme Exposed (In 1 Simple Chart)

  For 138 years, consumer prices in America slightly declined. After The Federal Reserve was created, things changed…

  The 'scheme' exposed…

  

  Source: VisualizingEconomics.com

  But, not satisfied with that shift, in 1971, Nixon unhooked American economics from any rationality, because – as we detailed previously – 'The 1%' hate the Gold Standard… between 1930 and 1970, it was only the "bottom 90%" that saw their incomes rise, as can be seen on the next chart.

  

  In other words, the ascent of the non-1% peaked when the Deep State forced Nixon to depart from the gold standard's constraint on largesse.

  Which should also clarify just why to the "1%", including their protectors in the "developed market" central banking system, their tenured economist lackeys, their purchased politicians and their captured media outlets, the topic of a return to a gold standard is the biggest threat conceivable.

  

  

• Theory Of "Conspiracy Theorists"

  Submitted by Marcus Godwyn via OrientalReview.org,

  It seems to have become one of the most popular ways of ridiculing somebody’s argument or position, calling into question someone’s sanity or even somebody’s right to their very own existence in recent years are “You’re a conspiracy theorist!”, “That sounds like a conspiracy theory to me!”  We hear such accusations let fly in TV and radio debates all too often as soon as anyone begins to question a perceived, generally excepted “truth”.  The accuser always seems supremely confident that this accusation is enough to immediately put the accused beyond the pale of all human reason and that all participants and viewers of the debate should be expecting men in white coats to arrive at any moment and the accused to be led away in the interests of all for “corrective treatment”.

  The definition of conspiracy of the on-line dictionaries insists on the “evil, harmful, bad” side of things.  In other words; in the English language, it is impossible to conspire to do good.  This is one of the reasons why the accusation of being a conspiracy theorist remains an effective put down as it implies that the accused believes that their government, company bosses and colleagues, military or police commanders, friends and acquaintances or even members of their own family and partaking in secret, evil deeds and plots for harmful ends which have happened or are going to happen and hence at best implies lack of good faith and paranoia and at worst, extreme negativity, treachery; being a fifth columnist.  All labels with which most of us would wish not to be tarnished.

  Here however are some alternative definitions of “conspiracy theorist”:

  • someone who has seen through the bullshit (David Icke);
  • someone who questions the statement of known liars (unknown).

  It is clearly not possible to see these definitions as morally negative unless we are creators of bullshit or known liars.

  Could it be that the time has come for a reappraisal of the definition of the word conspiracy because the following is palpably undeniable.  Every development in politics and affairs of state, every war, every campaign within a war, every attack and counter attack, every putsch, every terrorist act, every revolution and even every democratic election manifesto and campaign, every new bill passed, every budget or construction project proposed on a national or local level ad infinitum, throughout human history has been born of human planning, plotting or conspiracy depending upon which side we were or are on or how you view the proposals!  Effected to a lesser or greater extent by chance undoubtedly and maybe borne on a current of destiny as well!  The latter I will not discuss further here.  Not because I dismiss it. Heaven forbid.  Simply it is not important for the points I want to make.  One of the most important of which is this, in short: our history is littered with and shaped from, not conspiracy theories but conspiracy facts!  One of the earliest and most famous that springs to mind is that of The Trojan Horse.   A very cunning plot by the Greeks which broke the stalemate of the long siege of Troy and enabled them to conquer and ransack the city but by the current English definition, a conspiracy only from the point of view of the Trojans as for them it was “bad and harmful” but not for the Greeks.  But who amongst us now really sees one side or the other as the “evil” one?  So was it a conspiracy or not?

  

  A Nazi soldier gets ready to murder two Soviet Slavic women during Operation Barbarossa, summer 1941. This incident probably took place in the Ukraine or Belarus.

  There are times in history, usually more recent history, (examine and discuss) when there seems to have clearly been a good and evil side.  One such example I would posit is Operation Barbarossa.  Hitler’s attack on the Soviet Union!  While this was of course a life saving event for Great Britain, even the most diehard anti communist must surely see that the invasion of Nazi forces into the USSR was unequivocally bad and harmful for the peoples of that empire as it promised no liberation at all;  only abject slavery or total oblivion whatever their position in Soviet society. It was clearly planned or plotted in advance but according to the English language, it was only a conspiracy from the point of view of the peoples of the USSR and the Soviet government, not from the point of view of Nazi Germany and her allies as they perceived that attack as beneficial to them at the time which, of course, is why they contrived and went ahead with it.

  What about Operation Overlord- The Normandy landings or D-Day?  This massive military undertaking was literally years in the planning or plotting.  Was it a conspiracy?  According to the current English definition, only for the rulers of Nazi Germany as it can be argued that it was actually beneficial even for most Germans not actively involved in the Nazi hierarchy as it lead to their liberation as well as to that of the other nations of western Europe.  In spite of this, the German army fought like tigers on the western front to the bitter end but I digress.  I will however be returning to the D Day landings a little later for reasons that will become clear.

  Surely therefore, it is obviously undeniable that the accusation of being a conspiracy theorist is in fact totally subjective and because of that, totally spurious from an objective, truth seeking point of view concerning any, as yet, unsolved or disputed events in human history or actuality and hence it follows that those using this accusation to discredit the ideas or theories of others have an agenda for doing so.  This agenda maybe conscious or subconscious but it is always there.

  The purpose of this article is neither to prove or disprove any famous conspiracy theories and, although I, like anybody else, have my own ideas and suspicions, I am not putting them forward here.   What I am putting forward here is the fact that if you hear someone publicly dismissing somebody else’s ideas as conspiracy theories and especially if the “dismisser” is a western journalist, government spokesperson or a politician they are trying to prevent you thinking about something by ridiculing you into not delving further..  The unconscious agenda of such accusers I mentioned earlier is the cognitive dissonance caused when presented with information that contradicts long held and emotionally charged beliefs. The conscious agenda is of course blatant lying in order to cover up the truth.

  

  Let us look at a concrete example.  In Toronto Canada there is a high profile televised political discussion called the Munk Debate. Here is the link to the particular episode I’m going to concentrate on.

  The motion proposed on this occasion was “Be it resolved, The West should engage, not isolate Russia”.  As you can see this motion assumes that Russia is somehow wrong and the only question is how best to deal with Russia’s wrongness.  Given this obvious slant from the beginning the pro team of Vladimir Pozner and Stephen F. Cohen did a reasonable job but were unable to fend off the barrage of 100% truth inversions (all of which conforming to the strictly controlled and censored Canadian mass media slant) from the rabid, foaming at the mouth, jumping up & down, Jihadi anti- Putin and Russia team of Anne Applebaum and Garry Kasparov.  At around the 16^th minute Applebaum starts to speak about the Kremlin’s “massive” investment in their multi-language media “disinformation machine” including RT television.  At around 17.12 minutes in this recording she then states that “When Malaysian airliner MH17 was shot down by a “Russian missile” over Ukraine this media machine immediately came up with all sorts of crazy conspiracy theories such as planes taking off already full of dead people” and explains that this is done deliberately by Russia and only by Russia  in order to cloud people’s minds until “they” don’t know what to think any more.  Well!  Sure!  Planes taking off full of dead people does sound pretty crazy doesn’t it.  I couldn’t believe my ears when I first heard that one actually but let’s look more closely at what she said before coming back to that.  How many conspiracy theories does she mention?  One?  Well, I count three and a half.  The above mentioned plus two and a half  more.  The statement that Russian media is disinformation is also a conspiracy theory as is the position that they alone came up with all these conspiracy theories.  Many of them are proposed and published  by westerners.  The accusation that MH17 was shot down by a Russian missile is also a conspiracy theory as well as propaganda because all weapons at that time on both sides were either Russian made or Soviet made.  Who is using them, how and why is the pertinent question which the western media always seeks to obfuscate. And yes, well, okay, true. I admit that the last sentence I’ve just written is another conspiracy theory at least for some of you.  Are you beginning to see how deep the rabbit hole goes and how ridiculous the allegation of conspiracy theorist is under any circumstances?

  Fact.  The “official” version of 9/11 is every bit as much a conspiracy theory as all the others!

  Especially as it has proved impossible to prove over the years and seems indeed, ever easier to disprove.  When governments and the mainstream media tell us a version of events after a terrorist act or invasion or murder etc they then accuse anybody who voices doubts or proposes another version of events of being conspiracy theorists but the governments and main stream media are themselves conspiracy theorists until, I repeat, there emerges incontrovertible proof and evidence to confirm one of the conspiracy theories as the conspiracy fact.

  

  Back to Applebaum’s “planes taking off full of dead people”. When I first heard that one I was literally seething at the sheer stupidity of such an insane theory being voiced almost immediately after the disaster.  At the time I was still only just emerging from an umbilically wet, comforting “womb warmth” world where our western governments were working for our best interests but were just rather incompetent at doing it.   In the immediate aftermath of that tragedy I reluctantly assumed that the self defense forces had mistaken it for a US backed Kiev bomber or that a guided missile had locked on to the airliner by error or evil destiny.  After all at the time, they were being attacked by the air-force of the US installed Kiev government everyday and, in spite of having no aircraft themselves had been increasingly successful in downing their attackers.  Then came the immediate barrage of western press headlines.   From Britain for example: The Sun:  PUTIN’S MISSILE  and PUTIN’S LOOTERS ROB BRIT VICTIM  The Daily Mail:  PUTIN’S KILLED MY SON    The Daily Mirror:  PUTIN’S VICTIMS to name but a few.   US Secretary of State John Kerry claimed that the US had proof of exactly what kind of missile was used and where it was fired from.  He stated, as reported by The Guardian, that “all the evidence surrounding the downed Malaysian airlines flight MH17 points towards pro-Russia separatists in eastern Ukraine being to blame.”    Well.  All those newspaper headlines are simply conspiracy theories and as it turns out, more insane than the dead-bodies-taking-off idea.  While Kerry’s accusations could have seemed feasible at the time, the fact that not one jot of “all that evidence” has been made public twenty two months later reduces his words to a conspiracy theory too.  The headlines are totally insane because of the lack of motive.  The fact is, after taking into account the ill fated crew and passengers of MH17 and their families, loved ones and friends there is simply not one human being on earth out of all seven billion of us who had less motive to get involved in shooting down a passenger plane anywhere in the world, let alone over Eastern Ukraine than Russian president Vladimir Putin and his government followed by The Donetsk Republic’s armed forces who were and are fighting at home, on their own land for their very existence.  In the shock of the immediate aftermath, European governments some of whom had been resisting US pressure to impose sanctions on Russia as punishment for having saved Crimea, at the behest of Crimeans, from invasion by ultra racist Ukrainian US backed rebels bent on their eradication one way or another, caved in and sanctions were imposed.  Anyone placing themselves in the position of detective would see straight away, that the new Ukrainian government had massive motive for and massive profit to gain from MH17’s downing if it could be pinned on Russia, followed by those governments who had plotted and helped the coup in Kiev -the US, UK, Dutch, Polish, Swedish and EU baron’s to name the main players.  That in itself is of course not proof that they were complicit but it would be one of the areas where any real investigation would concentrate a lot of effort and inquiry.

  

  In the Munk Debate, broadcast on the 11^th April 2015, more than eight months after the tragedy, Applebaum is careful to avoid pointing the blame specifically at Putin personally while using language that generally insinuates instead.  Could it just be that legal advice has something to do with that.  Another video, which judging by its title indicates that she “apparently” knew all the details of what happened, seems to have disappeared completely from the net:    “Anne Applebaum: MH17 attack | what happened. How it happened and who was responsible.”  If anybody saw it or has a transcript it would be great to know what she actually said here.

  Meanwhile as more and more theories as to how this tragedy occurred were coming forth , spurred on by the lack of any evidence being made public, including the content of the black boxes, some aspects of the plane full of already dead people theory were beginning to seem, well, just slightly less insane.  On March 8^th 2014 Malaysian airlines flight MH370 disappeared on route from Kuala Lumpur to Beijing.  It’s fate remains a mystery to this day.   Such a story is the very oxygen of conspiracy theorists, some well intentioned and some undoubtedly less so and the internet and You Tube is not lacking in explanations.  Many posit the idea that the plane was hi-jacked to the closed US military island base of Diago Garcia and many, made and published before the downing of MH17 and all those I saw, none of which were made by Russians or the Russian media, predict that this missing plane would turn up being used in a future false flag event.  After the downing of MH17, it didn’t take long for the idea to gain circulation that it was in fact the missing MH370 and that it had been transported to Donbass and blown up on the ground maybe with the preserved bodies of the ill fated passengers of MH370 inside or that it had even taken off from Amsterdam with the bodies inside etc!  Well dear reader, maybe you, like me find all these theories pretty far fetched if not ridiculous or maybe in very bad taste.  The fact however is that neither you nor I can absolutely rule them out no matter how far fetched they seem because there is a small window of possibility.  The US and her allies have the means to pull off such an operation and the motive.  We would do well to remember the film of an explosion on the horizon that was broadcast by all the world’s mainstream media, including Russian, as the explosion of MH17 hitting the ground.  As many quickly pointed out, a plane, still over half full of fuel, blown up at high altitude by a ground to air or air to air missile would have left smoke trails in the sky as it fell.  That seems beyond all scientific doubt but absolutely no traces in the sky appear in that video so that would seem to suggest that either it does not show the impact of MH17 but something else (more likely in my opinion) or, well yes, the plane was in fact blown up on the ground. There has also been a historical precedent for such an idea albeit on a much smaller scale physically but, nonetheless of great historical significance.

  Operation Mincemeat which was made famous as a book and a film called The Man Who Never Was.  This was a plan executed in April 1943 to fool the Germans into thinking that the allied invasion of Sicily would in fact happen in Greece.  A dead body was procured, dressed up in a British officer’s uniform, given a false identity and a briefcase chained to his wrist containing “top secret” documents about the allied invasion of Greece not Sicily.  The dead body was made to look like the victim of a plane crash of the coast of nominally neutral but in fact pro German Spain.  In reality however his body was delivered to the area by a submarine.    The plan worked so well that when the actual allied invasion of Sicily began the German’s thought it was just a diversion and didn’t respond having transferred the majority of their forces to Greece.  When, the following year, just after the D Day landings, the Nazis found genuine top secret plans in an abandoned landing craft, they refused to believe them being sure it was another such ruse as operation Mincemeat.  Here’s a link (now promise not to laugh) to a Daily Mail article on the whole subject.  It does just suggest that the idea of already dead bodies in planes might have a certain feasibility after all which is something Anne Applebaum, among many others, doesn’t want you to think about.

  I repeat that I am not supporting or debunking any conspiracy theories here.  I cannot prove, or disprove just as you cannot prove or disprove any of the above mentioned theories or, for example, that Aliens exist or that they don’t exist therefore we cannot dismiss or confirm one hundred percent those theories involving aliens either.  It really is that simple.

  

  As for the conscious or unconscious agendas I talked about earlier, I would, in spite of his virulence, put Garry Kasparov in the unconscious camp.  He so often loses control of his emotions and his discourse which is clearly out of all reality.  I wonder if he has ever asked himself why he thinks and feels that which he does, I very much doubt it.  Berezovsky was someone with a very similar mind set in my opinion.  Anne Applebaum on the other hand seems to be squarely in the conscious camp.  In other words, she is deliberately lying in order to, not distort the truth but totally reverse it in true Orwellian style.  I don’t claim to know exactly what her motive is.  Due to the fact that her husband was the Polish foreign secretary (he was one of the EU politicians who brokered and signed the ill fated deal with the Yanukovych government in Kiev that didn’t even last twenty four hours), her finances had to be made public and, as many pointed out, she benefited from a huge spike in earnings as soon as the Ukrainian crisis began in 2013 followed by an ongoing scandal concerning the disclosure of their earnings in subsequent years but I find it hard to believe somehow that her motive is solely financial.  Maybe simply anti-Russian racism and/or a commitment, ideological and self interested, to financial world takeover of the US, western debt based fractional reserve banking system.  Whatever the reason is, it has to be admitted that she is a very effective propagandist who’s discourse remains coherent, controlled, pointed but utterly premeditated and false.  In fact her tirade in the Munk Debate against Russia since Putin became president is in reality one of the most concise and accurate descriptions of today’s USA and also post putsch Ukraine that I’ve ever heard.  Her total insistence that the western media is truthful and objective is also a 100% truth inversion.   Russian media has become infinitely more truthful and objective than its western counterpart which has descended into out and out double speak.   I have never seen or heard her lose her temper or be overtaken by emotions of any kind.  It must be said however that I’ve never seen her in debate against someone who actually takes her apart as it would be eminently possible to do.  That, of course, is anything but coincidence.

  “Truth is by nature self-evident. 
  As soon as you remove the cobwebs
  of ignorance that surround it,
  it shines clear”  – Mahatma Gandhi.

   As many of us have already noticed it is not a comfortable experience when our emotionally charged, often, long held beliefs are challenged by adverse, contradictory information which we are unable to ignore.  It takes the kind of courage not given to all to accept and analyse the cognitive dissonance that comes in such situations and to ask why it is happening and many people, including plenty that I know personally, simply refuse to believe anything that contradicts the, invariably “cozy” world  which they have allowed to be constructed for themselves.  Such people often become defensive and sometimes down right aggressive when pressed.  This is because they can’t ignore the information, only smother it or block it from their conscious mind.  The reason that some information is impossible to ignore is a very important phenomenon as basically this means that it is fundamental truth or at the very least the grain of truth that can lead us out of the pit of lies.   If, for example, somebody tells you or I that the Earth is flat, we are not going to feel any surge of panic or cognitive dissonance of any kind for obvious reasons but try telling an American who comes from a staunch, traditionally Democrat family and has a deeply entrenched – indoctrinated belief that the Democrats are “the good guys”, the ones who care about other people and the poor at home and abroad and are anti-war etc, that, in fact, Obama and Clinton are among the most dangerous warmongers in history, responsible for illegal invasions and that they are just puppets of the military, industrial complex, Wall Street and “some people” called the Illuminati and sparks will certainly fly.   There is an excellent video on-line called “Confronting Cognitive Dissonance – The Eyeopener”:

  At 5.11 an American lady begins to describe her physical reaction when she understood that she was receiving very uncomfortable information about 9-11 which, much as she wanted to, she just could not ignore.  Her reaction is courageous and very moving and anyone who dismisses her as a conspiracy theorist can only be mal-intentioned or seized by cognitive dissonance themselves.  It is our intuition or as some like to say “our gut”; in truth, our connection to universal intelligence, that tells us whether such information is real or not.  This is the same phenomenon as the moment of inspiration that artists and scientists have when a new scientific understanding or invention, poem, novel, song, symphony is born.  First the moment of inspiration and insight; then starts the hard work of creation, building, experiment, investigation, trial and error and bringing forth.  Every single human being is connected to universal intelligence, not just an elite few, but intuition, just like any other human faculty, becomes stronger the more we use it.  The vital fact here is that we all know the truth when we here or see it whether we like it or not.  Again, “Truth is by nature self-evident.  As soon as you remove the cobwebs of ignorance that surround it, it shines clear”.

  We live in a time of massive change where the world seems to have been turned upside down at such lightning speed that many of us feel that we can’t keep up which is of course disturbing.  I use words like “seems” and “feels” because this is an illusion.  In fact this situation has been growing for a long time.  Centuries in fact and some would say millennia.  This particular moment in history started, was started (examine & discuss) at the beginning of the 1990s.  I would liken it to a wave that as it comes in slowly to shore, grows and swells inexorably until it finally crashes leaving that which was on the top, on the bottom.  That which seemed democratic and free, undemocratic and tyrannical, that which seemed to be built on solid foundations, built on quicksand, that which seemed good, evil and vice versa.  Above all, there are no ideologies left although for those with the aforementioned long held emotional attachment to this or that ideology = products of Man’s ego, this is pretty hard to accept.  What’s left on the shore as the wave recedes is simply right or wrong, good or evil, truth or falsehood.   In fact a world of fundamental polar opposites.  Many.  Especially in the western world lulled by the media bubble of unreality are seemingly, on the surface, unaware of these massive shifts.   My own awakening only came with the Ukrainian crisis as I have already documented in “NATO Through the Looking Glass”.  I now live in a totally different world and it is much more frightening than the one I was living in up to three years ago but I’m getting used to it and in no way want to return to unconsciousness.  I now question everything and am exercising my intuition and faith, in the true sense of the word, every day.  What this reveals is infinitely more terrifying than the cozy “womb warmth” I used to live in but the payback is that things line up and actually make sense and I feel much healthier for it.  The many layered onion skins that were enveloping my perception are falling away one after another and I’m very aware that this process is very far from over but the idea of crawling back into my former mind set is impossible for me.  It would be akin to committing suicide.  I’m also very aware that, thank God, I am very far from being the only one undergoing this process.

  Of course, like so many others during these times, I’ve got used to being called a conspiracy theorist which is probably why I was moved to write this article. I am proud to be in the camp  inhabited and moved by people such as the lady in the “Confronting Cognitive Dissonance” video who states that she felt physically sick when she understood that her government, which she had more or less trusted up until that moment might have been behind 9-11. Such people are searching for truth and discovering themselves.  The other kind of conspiracy theorists are those who invent or propagate conspiracy theories for money and power and, or because they want to convince us that their particular prejudice is the one and only true prejudice whoever it be directed against.  “It’s all the fault of the people I’ve learned to hate and you must agree with me.”  Perennially popular targets remain: The blacks, the Jews, Monarchs, business people, immigrants and Russians to name but a few and these conspiracy theorists are of course the 100% polar opposite of the former.  One looking for the truth and the other, deliberately trying to destroy it. The American Lady reluctantly facing up to her realization that the official government conspiracy theory about 9-11 doesn’t hold water and the fear of looking into what seems to be at first glance, the darkness of the abyss or:   Anne Applebaum’s constantly and professionally reiterated conspiracy theories about Putin being a tyrannical dictator and mafiosi obsessed with world domination who has to be stopped by the “free, democratic” West before he, followed by his “brainwashed” millions in Russia will march in “good old” WWII style to enslave us all.  I leave you to contemplate these two examples.  These two absolute, polar opposites.  The seeker for truth and the bald faced liar for gain!

  

  

• "The World Is Walking From Crisis To Crisis" – Why BofA Sees $1,500 Gold And $30 Silver

  With both stocks and US Treasury prices at all time highs the market is sensing that something has to give, and that something may just be more QE, which likely explains the move higher in gold to coincide with both risk and risk-haven assets. As of moments ago, gold rose above $1,370, and was back to levels not seen since 2014. Curiously, the move higher is taking place after Friday’s “stellar” jobs report, suggesting that someone does not believe the seasonally-adjusted numbers goalseeked by the BLS.

  

   

  And while we reported last week that one way investors are rushing into the anti-QE safety of gold is by buying paper gold derivatves such as ETFs, which rose above 2,000 tons for the first time since 2013, many others have bypassed paper claims on gold such as GLD entirely, and are rushing into physical.

  Case in point, Japanese savers who, fearing domestic confiscation, have been accumulating gold in Switzerland. It’s not just the Japanese: as Nick Laird shows, the past week saw the second largest ever increase in physical gold holdings, as the total published holdings of physical funds rose by 2.5 million ounces to 85.8 million, second only to the 4 million ounce increase in early 2009.

  

   

  Finally, with even the sellside starting to turn, there may be more upside as the slow money starts to move in. In a whimsical note released on Friday, Bank of America’s metals team writes “Gold: always believe in your soul. Glad you are bound to return. You’re indestructible.”

  Yes, we were surprised too, but it’s true.

  

  Strange golden “poetry” aside, this is why BofA thinks gold is going to $1,500 and silver’s next stop is an “overshoot” to $30.

  The world has been walking from crisis to crisis and we see risks that this may not change. The importance of that dynamic for the precious metals is mirrored by the high correlation between potential US GDP growth and gold quotations. Many of the underlying issues affecting the global economy are structural, with Brexit merely a symptom of the problems many countries are facing. To that point, we called a bottom in gold in February and Brexit reinforces our view. As such we are upgrading next year’s gold price forecast from $1,325/oz to $1,475/oz. We called a bottom in silver in April on supply and demand dynamics; an overshoot of prices to $30/oz is possible.

   

  Gold heading for $1,500/oz

   

  After a weak US labour market report earlier in June, the risk of Brexit added to the gold price rally ahead of the vote (Chart 11) and after. In our view, Brexit has affected gold through various transmission channels. On the fixed income side, US Treasuries and German bunds have benefited from a flight to quality; the current uncertainty also suggests that an accelerated rate hiking cycle is unlikely, so interest  rates globally are set to remain low, which in turn reduces the opportunity costs of holding a non-yielding asset like gold. Given this dynamic, we believe gold prices could rise to $1,500/oz near-term.

   

   

   

  The world will keep on walking from crisis to crisis

   

  Switching tack slightly, macroeconomic uncertainty in the UK, Eurozone and US remains elevated; the high correlation between US potential GDP growth and gold (Chart 12) highlights how important this is for the precious metal. While the underlying ills are nuanced between countries, an increasing polarization of politics and a rise in populism have been common by-products; to that point, wealth generation/wealth distribution, immigration and sovereignty have caused contentious debates. Of course, this has not helped confidence and did not make it easier for governments to implement the measures necessary to put economies on a more sustainable footing. As a result, a host of countries has moved through a series of mini-crises in recent years, which we believe is unlikely to change. Hence, we reinforce our view first published in February 2016 that gold prices have bottomed.

   

  Silver can overshoot to $30/oz

   

  Gold has been the market’s focus through most of 2016, although silver has outperformed the yellow metal of late. The rally does not necessarily come as a surprise, a point made in April, when we highlighted that silver is bottoming out (Global Metals Weekly: Silver has a silver lining 25 April 2016).

   

  Chart 13 shows the model behind our rationale. That analysis assumes that investors are the marginal buyers, so we ask how strong non-commercial demand needs to be to balance the silver market at $15/oz, $20/oz and $25/oz. Our analysis suggests the following:

  • For silver to trade at or below $15/oz, non-commercial market participants would need to reduce purchases further compared to 2015. This is not our base case.
  • Silver can average $20/oz if investors increased their purchases slightly, which we believe is likely.
  • A sustained rally towards $25/oz would require an increase of non-speculative demand to the tune of 30% YoY. While possible, this looks a tall order.

  

   

  Taking a closer look at investment demand, Chart 14 shows that silver coin sales in the US, an important demand segment, have been strong YTD. Having said that, we note that coin premia (an indicator for market tightness; Chart 15), but also prices in China have not rallied as much as international spot quotations (Chart 16). This is an indication that the rally in the past few days, which was largely based on the  paper market, may not necessarily have the underpinnings of physical buying.

   

  

  

  

• China To Use Pension Funds As $300 Billion "Plunge Protection Team"

  One of the more troubling stories to hit the tape last week was that despite, or rather due to, roughly $100 billion in losses in the past 5 quarters, Japan’s gargantuan $1.4 trillion state pension fund, the GPIF, which has desperately been selling Japan’s best performing asset – Japanese Government Bonds – in order to buy local stocks and the Nikkei at its decade highs only to see its equity investment plunge, is now forced to buy even more stocks, i.e. double down, as part of a ridiculous rebalancing which will lead to even more losses.

  Japan is not alone.

  After China did everything to prop up its own stock market, including arresting hedge funders, sellers, “rumormongers”, halting short selling, eliminating futures trading, and ultimately culminating with the “Buttonwood SPV” in which the PBOC finally threw in the towel and admitted it was directly buying stocks,  we now learn that Chinese pensioners are about to become unwitting stock funds.

  As Bloomberg reports, “China’s pension funds are about to become stock investors.”

  The country’s local retirement savings managers, which have about 2 trillion yuan ($300 billion) for investment, are handing over some of their cash to the National Council for Social Security Fund, which will oversee their investments in securities including equities. The organization will start deploying the cash in the second half, according to China International Capital Corp. and CIMB Securities.

  For the rhetorical answer to the rhetorical question of “what can possibly go wrong” here is the one-title answer, also from Bloomberg:

  

   

  Why is China – for whom social stability is absolutely paramount and thus gambling with people’s retirement funds is truly a foolish initiative – doing this? Simple: whereas in the US legions of clueless investors buy any and every stock mentioned by such “legends” of crony capitalism as Warren Buffet, in China it is the pension fund. To wit:

  For the nation’s equity markets – which are dominated by retail investors and among the world’s worst performers this year – the state fund’s presence is even more valuable than its cash, said Hao Hong, chief China strategist at Bocom International Holdings Co. The NCSSF has “such a good reputation in being a value investor that if they take the lead, the signaling effect is actually quite strong,” said Hong, who had predicted the start and peak of China’s equity boom last year. “It’s almost like Warren Buffett saying he is buying a stock.”

  China’s “Warren Buffett” may be about to have a very rude awakening. According to Bloomberg, China’s NCSSF, which oversees 1.5 trillion yuan in reserves for China’s social security system, has returned an average 8.8% a year since 2000, the Securities Daily reported earlier this year, citing official data. Truly a remarkable number, and one which is alas just too good to be true when one considers that the larger pension system has been locally managed and made just 2.3% annually through 2014, the newspaper said. This also ignores China’s epic stock market wipe out in 2015.

  Here is the official spin:

  The organization’s entry will come as Shanghai stocks begin a gradual recovery that has pared their losses for the year to 16 percent from as much as 25 percent. While yuan depreciation concerns are pressuring Chinese assets lower, the economy is showing some signs of stabilizing. The nation’s foreign-exchange reserves unexpectedly climbed in June in a sign of slowing outflows, while a measure of services rose.

   

  The entry “will be a positive event in terms of sentiment but the actual impact won’t be drastic,” said Ben Bei, an analyst at CIMB Securities in Hong Kong. “The fund will tend to be prudent and the progress may be very gradual — that is, it will enter the market over the next several years.”

  The unofficial one is simpler: to boost confidence that China’s openly rigged and manipulated markets are once again safe:

  Venturing into China’s volatile stock markets — where a crash erased $5 trillion of value last year — isn’t without its risks for funds traditionally focused on more stable assets. Japan’s government pension fund, the world’s largest, may have lost about $43 billion in the second quarter, Morgan Stanley MUFG Securities Co. estimated. This adds fuel to criticism over the Government Pension Investment Fund’s decision to boost equity allocations in 2014.

  The problem, however, is that like in Japan and the rest of the world, pension funds simply have no choice than to swing for the fences when it comes to returns. Especially in China.

  Low returns are a challenge for China’s pension system, which is already facing pressure from a rapidly aging population. The country’s old-age dependency ratio — a measure of those 65 or over per 100 people of working age — is set to triple to 39 by 2050. The NCSSF didn’t respond to an e-mail seeking comment. The pension funds are more likely to buy blue-chip firms, said CIMB’s Bei, while Bocom’s Hong said they’ll probably seek out shares of state-owned enterprises with low valuations. With the market down for the year, the timing is right for entry, said Hong.

  The only silver lining on this latest foray into risk assets by a pension fund is that the exposure will be capped. Up to 30% of Chinese pension investments’ net value can be allocated to stocks, while the cap for bonds is 135 percent. While that means the funds can theoretically inject 600 billion yuan into shares – compared with the Shanghai market’s 25.9 trillion yuan size – CICC estimates that purchases this year will be limited to about 100 billion yuan. This means less than $20 billion in buying power: hardly impactful at all to push stocks much higher.

  * * *

  But the real reason why this latest $300 billion in stock buying “dry powder” is being activated can be summarized in just two words: plunge protection. Bloomberg explains:

  Giving the NCSSF more ammunition may serve one more purpose: helping stabilize markets during the next rout. During last year’s tumble, policy makers armed state-run investing company China Securities Finance Corp. with more than $480 billion to try and limit declines. “Their mandate is to make a return and make sure the fund doesn’t have a deficit,” said Hong. “But in times of crisis when they’re called upon by the state, I think it will be difficult to refuse the request.”

  Too bad China does not know how to use HFTs like Citadel who, in collaboration with entities like the NY Fed, unleash massive upside momentum on very little capital to prevent market routs as has been the case in the US at every major inflection point during the past 7 years. That China has not yet gotten to the most modern method of market manipulation – with or without the Fed’s blessing – is troubling and suggests that at least one more major round of pain is in store for Chinese stocks.

  

  

  

• The Unlikely Story That A Panty Theft Sparked The Dallas Shooter's Downfall

  Exactly how Micah Johnson came to be the man who murdered five police officers in Dallas remains unsolved. Johnson, a mid-twenties man (much like Bin Laden's son), apparently had taken his love for the ladies a little too far when he was serving in the Army Reserves. The killer who "stated that he wanted to kill white people, especially white officers", as we posted, had an apparent fetish for women's panties. 

  As The Daily Beast reports, Johnson was kicked out of the Army for stealing panties, returned home as a soldier who fell from grace, was exposed to Eric Garner's July murder and Michael Brown's August murder, all while trying to negotiate a deal with his lawyer regarding his panty heist. 

  Johnson’s military lawyer, Bradford Glendening, says that a female corporal mentioned Victoria’s Secret underthings when she filed a sexual harassment complaint against his client. The lawyer further reports that the corporal was worried enough to seek an order of protection against Johnson and to recommend that he receive mental health treatment.

  And…

  Down in Texas, Micah Johnson waited for his lawyer to work out some kind of deal with the Army. Family friend Myrtle Booker noted that along with becoming withdrawn, Johnson had developed an increased interest in firearms, as might befit a onetime panty stealer who found himself lacking.

  Johnson's bad luck began shortly after the President visited Bagram Air Base in Afghanistan on a surprise visit to Johnson's group and others in 2014.

  

  Imagine knowing that you are about to be discharged for stealing panties and now you have to help set up for a surprise pep-speech from the President.  Furthermore, imagine being in the group, with other proud soldiers surrounding you, and hearing the President say:

  …I’m also here representing 300 million Americans who want to say thank you as well. (Applause.) I know sometimes when you're over here, away from home, away from family, you may not truly absorb how much the folks back home are thinking about you. So I just want you to know when it comes to supporting you and your families, the American people stand united. We support you. We are proud of you. We stand in awe of your service.

  Johnson, likely very worried about what would come of his panty theft, learned in August of 2014 after arriving back in the US, that his Mesquite home, where he went to highschool and graduated in 2009, was broken into and two guns were stolen.

  

  At this point it has become clear that the story-line being spun to the public is one focused on the details.  The people of Dallas and the rest of the world are to believe:

  • an Army Reserve recruit stole panties,
  • saw two high profile murders play out on American media,
  • felt bad in the juxtaposition of Presidential praise in the midst of a possible discharge,
  • had two guns stolen from him,
  • then turned into a Dallas sniper much like Lee Harvey Oswald.

  As we highlighted just hours ago, Johnson has links to Leftist Revolutionary Groups and the Nation of Islam. As we've shown, Johnson's ties have been consciously made and clearly part of a deeper slide into a world where unapologetic calls for the murder of fireman and cops are regular propaganda.  On the African American Defense League (AADL) Facebook back, founder Dr. Mauricelm-Lei Millere wrote:

  The white­man wants your blood! How many of us has he killed and enslaved? Trillions!…We need the action that makes them pay atten­tion. An eye for an eye phi­los­o­phy! Arm your­self in Fer­gu­son, Mis­souri and across Amer­ica! A life for a life!" He con­tin­ued, "Also, we must go to their com­fort­able neigh­bor­hoods and raid those stores. It is time to LOOT & BURN those stores…

  At this point we're beginning to wonder if "Johnson's Panties" will be the "Benghazi Youtube Video" or the "Syrian Chemical Attacks Video" of American constitutional repression efforts. Remember, for all the talk we've heard about gun control lately, there seems to be a lack of discussion surround Attorney General Eric Holder's gun smuggling operation with the Mexican drug cartels that killed a US border agent. Those are details we need though. 

  Will the average American believe the narrative of a botched panty heist sparking a downfall that dragged Johnson through sensationalized US media coverage of murder, to a home invasion, all the while feeling ashamed about his own disgrace as the US President heaps praise upon his group?

  * * *

  Draw your own conclusions.

  

  

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• Is Another 9/11 Necessary To Re-Direct American Anger?

  Via The Daily Bell,

  America’s Anger Is Out of Control, Jeffrey Kluger … After the September 11 attacks, TIME’s Lance Morrow wrote a powerful essay titled, “The Case for Rage and Retribution,” in which he argued:

   

  “For once let’s have no fatuous rhetoric about ‘healing.’ A day cannot live in infamy without the nourishment of rage. Let’s have rage. What’s needed is a unified, unifying, Pearl Harbor sort of purple American fury—a ruthless indignation that doesn’t leak away in a week or two…”

   

  – TIME

  As we can see from the above statement, Jeff Kluger has in mind another convulsive episode like Pearl Harbor or 9/11 that will unify the “anger” that Americans feel.

  Kluger seems to imply that this anger is stemming from current elections. His concern is that it is spilling over into other areas of life.

  If every offensive, unjust or insulting incident turns into a jolt of high-fructose fury mainlined straight to the brain’s amygdala, what’s left when there’s a truly right and righteous reason to rise up in anger? And those important moments do occur. 

  Kluger seems to be saying that anger has become fashionable and applying anger liberally trivializes it.

  Also, if Americans are angry about many things, that makes for a dysfunctional society rather than a unified one.

  Kluger obviously wants a unified America. In order for rage to be unifying it needs to be a “purple American fury.”

  This is actually a somewhat cynical assessment of how to manipulate anger in our view.

  Why do we need another Pearl Harbor or 9/11 just so Americans can feel unified?

  Why should “Americans” feel unified anyway? And, really, what is an “American?”

  Because the “anger in America” meme is ubiquitous in the mainstream media at the moment, there are many other commentaries on it.

  Here’s one from CNN by Michael Smerconish:

  Are the voters really mad as hell? … voters, many of them in the GOP, have outsized weight in politics … The anger that threatens Washington based on partisanship is metastasizing. Now is the time to take back control of our political debate.

   

  Remember, when Howard Beale asked Americans to shout outside that they were “mad as hell”, many followed. It’s time for the rest of us to close our windows.

  CNN is asking us to “close our windows” and not listen to people who are “angry” about the state of America’s politics and economy.

  TIME is hopeful that this anger can be channeled into some horrible, outsized event that will unify the current emotional anarchy.

  Both of these editorials seem frightened by anger. But the description trivializes what is going on.

  People aren’t just “angry.” Many are extraordinarily upset about certain events taking place in the USA. It’s not simply an inchoate emotion.

  Millions upon millions are angry over the reduction in freedoms and the rise of the fedgov political class.

  They are worried and anxious about police shootings, gun confiscation and a general trend toward increased authoritarianism all around them.

  They don’t recognize America anymore. It feels like a fascist or socialist country.

  Like Kluger’s article, Smerconish’s CNN piece suggests ways that the electorate’s anger can be reduced.

  His solution to American anger is to change voting laws so that “silent ones” have more impact and are more noticeable.

  That would make the anger less visible. Eventually, people would calm down.

  We don’t believe in either of these solutions.

  It is not a good idea to root for another major national tragedy in order to resolve American anger. And  changing voter laws to empower people who are not angry surely does not address the causes of the anger.

  Conclusion: What will make people less angry in this case is more freedom. But freedom is rarely given and mostly manipulated. If you want to be free, you will have to do it yourself. Get out of debt. Store gold and silver. Find alternative living arrangements in case of an emergency. Don’t leave it up to mainstream punditry to determine how to deal with what you feel. Inevitably, their solutions will not lessen problems but increase them.

  

  

• Entire US Cyber Network Is Already Compromised, Clinton Emails Are The Least Of Our Worries

  Hillary Clinton's emails and server misconduct are the least of our worries. The fact that her server was receiving files that passed through or originated on the State Department servers is enough to know she exposed her private system to hackers. The US system is/was/has been compromised, for years, since before Hillary tapped in her new network. Michael McCaul, a Texas Congressman and Chairman of The House Committee On Homeland Security called Clinton "careless" and said she "potentially did harm" to national security. Earlier this week McCaul said this:

  One thing is clear from FBI Director Comey’s announcement today—Secretary Clinton was not fully honest in her representation of her use of email to the American people. She was careless with classified and sensitive information and potentially did harm to the United States and our national security. Secretary Clinton will still have to answer to and be held accountable by the American people.

  Congressman McCaul has good reason to think that way. According to his website, the Congressman has been:

  • The Chief of Counter Terrorism & National Security in the US Attorney's office, TX
  • The Led on a Joint Terrorism Task Force charged with detecting, deterring and preventing terrorist activity,

  Recall FBI Director Comey commenting "…we asses it is possible that hostile actors gained access to Secretary Clinton's personal email account".  With that in mind, listen carefully to this 2011 comment from Michael McCaul, Chairman of the US House of Representatives Committee on Homeland Security speaking at a Cyber Security roundtable hosted by the Council on Foreign Relations (comment at 52:08) in which he responds to a question saying:

  This is what keeps you up at night…the intellectual theft is awful and espionage, but the cyber warfare piece can be, the consequences far more damaging than a one-to-two man ISIS operation in the United States. This could literally bring down, you know, the energy grid, you know, the banking institutions, I mean, the stock exchange…cause chaos and enormous damage. I would argue they've [foreign governments] infiltrated many of our data systems already and can turn the switch off. That's the power that they have.

  Allow us to repeat that one more time for dramatic effect for that is a heavily weighted comment buried an hour into a video with only 4,319 views:

  This could literally bring down, you know, the energy grid, you know, the banking institutions, I mean, the stock exchange…cause chaos and enormous damage. I would argue they've [foreign governments] infiltrated many of our data systems already and can turn the switch off. That's the power that they have."

  That's huge! When Hillary began transferring files and connecting emails with the State Department system, she was already compromised. No matter how she felt, what she thought, nothing matters. The open US system is likely why Marcel Lazar, aka Guccifer, said Hillary's server "was like an open orchid on the Internet."

  Mind you, as we reported in May, Lazar had been focusing on US political actors for some time:

  Lazar was indicted in 2014 on nine felony charges stemming from his alleged hack into the emails of several prominent Americans, including former Secretary of State Colin Powell, a relative of former President George W. Bush and George H.W. Bush, and former Clinton adviser Sidney Blumenthal. A set of Blumenthal's emails were published online in 2013, disclosing a private email address Clinton used. She later changed the address.

  What is concerning is that the breached systems, thus far, have only been "patched", like a pothole being covered up. The US and other unsuspecting nations, have made it easy to hack their systems and execute unauthorized directives.  In response there appears to be a focus on whether blockchain will be the answer we all are looking for when it comes to verified security around transmission of messages. As Zero Hedge detailed just last month, Blythe Masters is hard at work using HyperLedger as a way to embed herself into the new central banking messenger platform. What we said:

  The SWIFT rebuild will likely require the insights of an outlet such as Hyper Ledger, run by longtime Zero Hedge CDS and commodity trading icon, Blythe Masters. Hyper Ledger works with a consortium of organizations and corporations tasked with developing systems to offer protection for messages sent between the world's central banks, which will be based on blockchain technology. A rebuild is still likely 2 years away according to well-placed Zero Hedge sources, which opens new concerns about the current integrity of the SWIFT platform and what problems may be lurking within it that we have yet to discover. The question that remains unanswered currently is: Who still has access to the central banking SWIFT system and is capable, right now, of monitoring message flow between institutions? Something to keep in mind as the EU experiment unravels.

  Good question: Who still has access to the central banking SWIFT system and is capable, right now, of monitoring message flow between institutions? Again, we cannot stress this enough, according to Michael McCaul, Chairman of the US House of Representatives Committee on Homeland Security, our cyber systems are already compromised beyond our control. That is scary! We have mass global hacking going on and in the US, the very systems that support the US citizen's day-to-day existence, are believed to be compromised by the Chairman of the US House of Representatives Committee on Homeland Security.

  The US is so far behind their adversaries it is shocking that US citizens are not in an uproar over how exposed they are as a nation. Many of us are aware of the typical response to a slow WiFi, screaming and smashing things wondering "why isn't this connecting faster!?". Imagine the vacuum that would form around the US workforce skills-set if they could not use Google Search for a day, let alone weeks, months, or years, because the US power grid was taken down in a coordinated attack and Google's service couldn't reach the end user. Imagine if Citadel had no way to power their orders?  Armageddon.

  It is time the US citizens stop armchair quarterbacking government through mainstream media cues and begin utilizing the resources available to them to get ahead of the game. The global population would be wise to gather a better understanding of the risks surrounding the Internet of Things and full automation (emails, news, Tesla cars, coffee, etc). Knowing what Michael McCaul thinks about American cyber security protection brings an entire new perspective to the Hillary Clinton email case.  

  No matter what we learn about Hillary's fate, the simple fact that the US systems are already compromised means Hillary's server was exposed the entire time and more importantly, the entire nation continues to leave the back open for cyber-attacks. The only question remaining is…those hackers that are in the US systems already, why are they waiting to "turn the switch off"?

  

  

• How To Fix The FBI's History Of Political Abuse – Abolish It!

  Submitted by Ryan McMaken via The Mises Institute,

  Like all employees of the FBI, James Comey lives off the sweat of the American taxpayer. His large salary, upon retirement, will be converted into a very generous pension. Like most federal employees in a high ranking position like his, Comey continues to look forward to decades of living at a standard of living far above what is experienced by ordinary people in the private sector. 

  To maintain this life of comfort, all he had to do was agree to look the other way as a powerful politician clearly — by Comey's own admission — broke federal law. 

  Naturally, this same treatment would never be afforded to an ordinary taxpayer, who would likely be looking at years in federal prison for offenses similar to that which Hillary Clinton has apparently committed. Moreover, Comey even went out of his way to do his best to ensure no federal prosecutor would proceed with charges when he claimed that "no reasonable prosecutor" would proceed with charges. It wasn't enough for Comey to simply not recommend charges. He had to pre-emptively condemn any prosecutor who might proceed with charges.

  Some have claimed that Comey was forced to cave to Obama administration pressure in order to protect his family. Of course, Comey could have resigned his position rather than take a position he regarded as unethical. Then the task of clearing Clinton would have fallen to Comey's successor. There are precedents for this. When ordered by Nixon to fire the special prosecutor in the Watergate scandal, Attorney General Elliot Richardson resigned rather than do what the president mandated. Comey could have done the same, but then he would have had to give up some of his comforts and privileges. To find work, he might have had to move to an unexciting place like Indianapolis or Albuquerque. 

  Nevertheless, Comey has accidentally done us a great service by publicly exhibiting the true nature of the FBI: it is a political organization that expands the reach and prerogatives of the federal government over citizens and taxpayers, while protecting the powerful.

  Of all federal police forces, the FBI is the most romanticized, and every FBI agent is assumed to be the modern embodiment of a fictionalized version of Eliot Ness: incorruptible, professional, and efficient. Decades of pop culture has driven this home with TV series and movies such as The Untouchables, The FBI Story, and This Is Your FBI have long perpetuated the idea that when local police fail, the FBI will step in to be more effective and simply better than every other law enforcement agency. Corruption cannot touch the FBI, we are told, and they apply the law equally to everyone. 

  A History of Abuse

  This was always obviously untrue to anyone not suffering from crippling naïvete, but Comey has helped make the political nature of the Bureau plain for all to see. 

  The reality and the romance, of course, have always been two totally different things, and it's helpful to remind ourselves that it was the FBI that was in charge of the Waco massacre where 26 children were killed. It was the FBI that led the raid on Randy Weaver's house where an FBI sniper shot a woman dead while she was holding a 10-month old baby. It was the FBI that spied on Martin Luther King, Jr., and targeted peaceful anti-war organizations for political reasons during the 1960s and 70s. It was the FBI that came of age arresting opponents of the First World War. 

  Naturally, in all of these cases, the FBI has actively covered up the facts and denied wrongdoing. 

  James Bovard reported in his 2012 article "A Stasi for America": 

  A ripple of protest swept across the Internet in late March after the disclosure that the Federal Bureau of Investigation was teaching its agents that “the FBI has the ability to bend or suspend the law to impinge on the freedom of others.” This maxim was inculcated as part of FBI counterterrorism training. The exposure of the training material—sparked by a series of articles by Wired.com’s Spencer Ackerman—spurred the ritual declaration by an FBI spokesman that “mistakes were made, and we are correcting those mistakes.” No FBI officials were sanctioned or fired for teaching lawmen that they were above the law…At least the FBI has been consistent. Since its founding in 1908, the bureau has rarely let either the statute book or the Constitution impede its public service. Tim Weiner, the author of a superb exposé of the CIA (Legacy of Ashes) has delivered a riveting chronology of some of the FBI’s biggest crimes with his new book, Enemies.

  Violating the rights of ordinary people has been standard policy at the FBI for decades. But, who can be surprised that the FBI now seeks to protect powerful politicians from the same laws that the FBI would enthusiastically use to prosecute and imprison ordinary citizens?

  The FBI Is Unconstitutional and Ineffective

  Thanks to the enduring view that federal police would tip the balance too far in favor of the federal government, many Americans opposed federal agencies like the FBI throughout the nineteenth century. It was feared that federal police would turn into secret police forces such as those known to be used in imperial Russia. Certainly, the Constitution does not mandate any federal police force. Consequently, it was not until the twentieth century that federal agencies like the FBI gained traction, thanks to a rising tide of pro-federal sentiment brought on by war and hysterical fear of "anarchists." 

  Thanks to war hysteria during World War I, the FBI rose to prominence as Woodrow Wilson's shock troops against "dissidents" (i.e., peaceful opponents of the war). Indeed, persecuting and prosecuting political enemies of the American state would become something of the forte of the FBI, with the role of the agency being expanded ever more during times of perceived national crisis. The idea of the FBI as a crime-fighting organization — the primary message of fawning treatments of the FBI such as The Untouchables and The FBI Story — for decades served as cover for the FBI's political activities. As Foreign Policy pointed out in 2014, though, the FBI quietly dropped its claims of being a crime fighting organization and began declaring itself a "national security" organization. Down the memory hole goes the FBI's original claimed raison d'etre. In its current Q and A, the FBI now acts as if it had never claimed to be a crime fighting organization at all: 

  Is the FBI a type of national police force?

  No. The FBI is a national security organization that works closely with many partners around the country and across the globe to address the most serious security threats facing the nation.

  No longer tied down by the need to waste its valuable time — as the FBI sees it — on mundane, real, and concrete crime such as kidnapping, the FBI can now focus on the far-more-amorphous "national security." Never mind the fact, of course, that the FBI's record on preventing terrorist acts such as 9/11 and the Orlando shooting is abysmal, and the terrorist plots it has "prevented" in recent years were actually facilitated by the FBI itself. Predictably, after the FBI was criticized in the wake of the Orlando shooting, James Comey declared to the press that the FBI did a fine job: 

  "We are also going to look hard at our own work to see whether there is something we should have done differently,” Comey said. “So far, the honest answer is: I don’t think so."

  The FBI Was Created to Compete with Successful Private Agencies 

  It should be noted that the FBI was not created to fill a hole in law enforcement needs. On the contrary, it was created to usurp and displace a highly-efficient and effective private police force that already existed: the Pinkerton National Detective Agency. 

  Writing in Private Investigation and Security Science: A Scientific Approach, Frank Machovec notes that "The FBI, founded in 1908, was modeled from Pinkerton's organization and methods," while Marie Gottschalk writes in The Prison and the Gallows that "In its early years, the FBI modeled itself after the Pinkertons and other private police agencies."

  In fact, government-run police organizations had long been shown to be inefficient and prone to corruption, which is why the private sector turned to private security instead. Gottschalk continues: 

  The unreliability of metropolitan police, with their strong local and partisan ties, prompted major businesses and industrialists to establish the Pinkertons and other private police forces. The Pinkertons ultimately functioned as a de facto national detective and policing service until the 1920s, when the FBI finally came into its own.

  By the early twentieth century, the Pinkertons and other private investigative organizations had established themselves as reliable and effective. It's why the Pinkertons repeatedly show up in popular culture as the highly-efficient and dangerous enemies of beloved Old-West outlaws like Butch Cassidy. 

  As early as 1857, politicians were already noting the public's favorable perceptions of private police over public police, with Chicago mayor John Wentworth noting: 

  Our police system has been gradually falling into disrepute; and it is a lamentable fact that, whilst our citizens are heavily taxed to support a large police force, a highly respectable private police is doing a lucrative business. Our citizens have ceased to look to the public police for protection, for the detection of culprits or the recovery of stolen property.

  The federal government, however, wanted a similar force that it could directly control, and thus turned to a federal police force instead. The desire to present the new agency as like the Pinkertons can be seen in the decision to call FBI investigators "agents" just as many private sector investigators were addressed (as opposed to "deputy" or "officer").

  The Pinkertons were primarily interested in property crime with actual victims (i.e., train robbing). The FBI, however, could be used to go after political enemies, protesters, supposed draft dodgers and others who ran afoul of government regulations created to benefit the government itself. Over time, the FBI would crowd out the Pinkertons as a national police force (although, unfortunately, government organizations were known to contract with the Pinkertons). 

  This was all to the good according to many critics of the Pinkertons who wanted a government-controlled national police force that could be used against the private sector, rather than be controlled by it. 

  The FBI Is a Product of Anti-Capitalist Movements 

  Indeed, the rise of the FBI is very much the product of left-wing and labor unionist movements to curb the power of the Pinkertons in favor of the FBI and similar agencies.

  A recent example of this line of thought can be found in Elizabeth Joh's 2006 article "The Forgotten Threat: Private Policing and the State." 

  As explained by Joh, the left was highly critical of the Pinkertons in the late nineteenth and early twentieth centuries for their role in combating striking workers and for being employed by private organizations. While federal police forces such as the FBI would work only in the "public interest" it was assumed, organizations like the the Pinkertons functioned at the morally base level of seeking "profit." 

  The Pinkerton's however, never functioned with the sort of firepower, manpower, and legal immunity enjoyed by federal agencies today. Indeed, in some cases, the Pinkertons surrendered to their "victims" as in the case of the Homestead Riot of 1892 where, according to Joh, "[o]utnumbered, the Pinkerton guards surrendered, and were beaten by an angry mob." 

  Three workers were killed in the melee, making the Homestead Riot a peaceful affair by FBI standards. Under the leadership of the FBI, federal agents killed 17 times as many people at Waco, including children. However, unlike Waco, which produced no sanctions or sustained public reactions against the FBI, the Homestead Riot became the high tide for anti-Pinkerton scrutiny and a flashpoint for action against private security agencies. For example, following an investigation of private security agencies at the time, the US Senate's investigatory committee declared that private security is illegitimate and that "use of private armed men is an assumption [that is, usurpation] of the State's authority by private citizens." Indeed, the Senate committee declared, the use of private arms to secure private property will lead to "anarchy."

  For decades afterward, government committee and pro-labor groups worked together to condemn, investigate, and discredit private security agencies. Government agencies, it was maintained, would be responsive to elected officials and the public at large. If private policing agencies could be done away with, the public was told, no more would police organizations function in their own self-interest.

  Such views have always been impressively naïve, although the public has long fallen for these claims. Moreover, one of the primary benefits of private security has been that it is subject to a totally separate and often hostile (to private security) legal system. Unlike the FBI, which enjoys a variety of government-granted immunities from responsibility for abuses and wrongful deaths, private security is legally subject to the same laws as everyone else. Even worse, agencies like the FBI can directly tap into nearly limitless funds through their taxpayer-funded budgets. Unlike private security firms that are constrained by real-world budgets, government prosecutors and police agencies face no such limitation. Obviously, this places defendants at an even more lopsided economic disadvantage than when dealing with powerful private firms. 

  Today, federal police organizations, federal courts, and federal prosecutors are all part of a single organization. Naturally, these organizations tend to favor each other in their proceedings. On the other hand, if there is a distrust of private security within the court system (or vice versa) that's all for the best, since as a result of this tension, checks and balances are likely to actually mean something. The same cannot be said for the current system which unifies policing and court proceedings within a single organization and in which a sizable number of government judges are former government prosecutors. 

  The Triumph of Federal Police in Public Opinion 

  The war on private security has now been so successful that few Americans would even entertain the idea of doing away with federal police agencies like the FBI in favor of private security organizations. It is now simply accepted that federal police officers may function unimpeded in every community in America, independent of local law enforcement (such as democratically-elected sheriffs), with powers to enforce everything from laws on what we eat, what we grow in our backyards, and whom we can hire. The FBI functions with an immense amount of insulation from the voting public and requires only the approval of the president and the attorney general to function unimpeded. The Hillary Clinton affair has shown how easy it is to choose between serving the White House, or serving the public, which has no power over the FBI. 

  Nevertheless, the FBI continues to benefit from decades of pop culture and government whitewashing which portrays the FBI and other federal agencies as professional and effective. Always a product of left-wing and Progressive desires for more government intervention and a weakened private sector, the FBI continues to benefit from the perception that it functions in the service of the "public." 

  With James Comey's recent demonstration of the FBI's political motivations and origins, we have gained yet another insight into how the FBI works, and public service has very little to do with it.

  

  

• Charting The Epic Collapse Of The World's Most Systemically Dangerous Bank

  It’s been almost 10 years in the making, but the fate of one of Europe’s most important financial institutions appears to be sealed.

  After a hard-hitting sequence of scandals, poor decisions, and unfortunate events,Visual Capitalist's Jeff Desjardins notes that Frankfurt-based Deutsche Bank shares are now down -48% on the year to $12.60, which is a record-setting low.

  Even more stunning is the long-term view of the German institution’s downward spiral.

  With a modest $15.8 billion in market capitalization, shares of the 147-year-old company now trade for a paltry 8% of its peak price in May 2007.

   

  

  Courtesy of: Visual Capitalist

   

  THE BEGINNING OF THE END

  If the deaths of Lehman Brothers and Bear Stearns were quick and painless, the coming demise of Deutsche Bank has been long, drawn out, and painful.

  In recent times, Deutsche Bank’s investment banking division has been among the largest in the world, comparable in size to Goldman Sachs, JP Morgan, Bank of America, and Citigroup. However, unlike those other names, Deutsche Bank has been walking wounded since the Financial Crisis, and the German bank has never been able to fully recover.

  It’s ironic, because in 2009, the company’s CEO Josef Ackermann boldly proclaimed that Deutsche Bank had plenty of capital, and that it was weathering the crisis better than its competitors.

  It turned out, however, that the bank was actually hiding $12 billion in losses to avoid a government bailout. Meanwhile, much of the money the bank did make during this turbulent time in the markets stemmed from the manipulation of Libor rates. Those “wins” were short-lived, since the eventual fine to end the Libor probe would be a record-setting $2.5 billion.

  The bank finally had to admit that it actually needed more capital.

  In 2013, it raised €3 billion with a rights issue, claiming that no additional funds would be needed. Then in 2014 the bank head-scratchingly proceeded to raise €1.5 billion, and after that, another €8 billion.

  A SERIES OF UNFORTUNATE EVENTS

  In recent years, Deutsche Bank has desperately been trying to reinvent itself.

  Having gone through multiple CEOs since the Financial Crisis, the latest attempt at reinvention involves a massive overhaul of operations and staff announced by co-CEO John Cryan in October 2015. The bank is now in the process of cutting 9,000 employees and ceasing operations in 10 countries. This is where our timeline of Deutsche Bank’s most recent woes begins – and the last six months, in particular, have been fast and furious.

  Deutsche Bank started the year by announcing a record-setting loss in 2015 of €6.8 billion.

  Cryan went on an immediate PR binge, proclaiming that the bank was “rock solid”. German Finance Minister Wolfgang Schäuble even went out of his way to say he had “no concerns” about Deutsche Bank.

  Translation: things are in full-on crisis mode.

  In the following weeks, here’s what happened:

  • May 16, 2016: Berenberg Bank warns that DB’s woes may be “insurmountable”, noting that DB is more than 40x levered.
  • June 2, 2016: Two ex-DB employees are charged in ongoing U.S. Libor probe for rigging interest rates. Meanwhile, the UK’s Financial Conduct Authority says there are at least 29 DB employees involved in the scandal.
  • June 23, 2016: Brexit decision hits DB hard. The bank is the largest European bank in London and receives 19% of its revenues from the UK.
  • June 29, 2016: IMF issues statement that “DB appears to be the most important net contributor to systematic risks”.
  • June 30, 2016: Federal Reserve announces that DB fails Fed stress test in US, due to “poor risk management and financial planning”.

  Doesn’t sound “rock solid”, does it?

  Now the real question: what happens to Deutsche Bank’s derivative book, which has a notional value of €52 trillion, if the bank is insolvent?

  Source: Visual Capitalist

  

  

• 3 Things stock investors need to know about FX

  

  The stock market cap in the United States is about $22 Trillion.  The amount of money in Managed Currency strategies is unknown, but it’s very small, even by CTA standards.  According to data based on CTAs listed with Barclay Hedge, there’s about 19 Billion in Currency Strategies.  That’s a lot of money, but not a drop in the bucket when compared with equities.  And remember that although money in equities isn’t all ‘managed’ – all money in equities is an investment of some kind – because people don’t need equities like they need FX.  To contrast it with FX, all money in FX is NOT managed, to the contrary – most money in FX is hedged, or transactional.  FX as an asset class per se is a growth emerging asset class, and may be the ‘stock market’ of the 21st century, what the stock market was to the 20th century.  But at the moment, the idea of investing in FX as an asset class – is just in its infancy.  The more problems associated with stocks, the more that will change.  And while the Fed’s been doing a great job propping the stock market, inflating assets artificially usually doesn’t end well.

  

  Here’s the 3 most important things stock investors need to know about FX:

  1) No one has to buy a stock.  Businesses need FX.  There’s a huge difference.  

  2) Rich families, old money, always has FX in their portfolio.  Yes, it’s partly because of their international exposures, but Soros family office made a hefty mutli-billion profit on “Brexit Day.”  

  3) Big Wall St. firms that everyone perceives as ‘credible’ – make huge profits in FX.  In the case of many banks, not to name names – their FX profits have kept them alive.  Some of these banks are being eaten alive like a cancer from the inside, with losses on complex derivatives that no one understands exept a few quants, unable to grow in an environment of ZIRP and NIRP (Negative Interest Rate Policy). In many cases, their FX profits have literally kept them afloat.  And to put the icing on the FX cake, many of their FX profits can be flexible for their accounting departments to use them in times of need (i.e. “Currency Headwinds”).

  Brexit and its aftermath should be a wake up call to equity people.  Some FX traders reported making 9% during Brexit and more.

  To learn more about FX as an emerging asset class, checkout the book Splitting Pennies – Understanding Forex – or Dive in! Open an account!

  

• Beautiful Brexit & The Five Stages Of Grief

  Submitted by Raul Ilargi Meijer via The Automatic Earth blog,

  The post-Brexit ‘conversation’ in Britain is taking on grotesque proportions. Nobody seems to know how to react, at least not in a rational manner. They all look to be stuck in phase one of Kübler Ross’s Five Stages of Grief, i.e. Denial. Phase two is supposed to be Anger, and while there’s plenty of that, the shape it takes makes one think Angry Denial, instead of a progression between phases.

  That is to say, I don’t think I’ve seen one voice expressing anger at themselves. It’s all somebody else’s fault. And it just keeps going. After Farage, Johnson, Gove et al had been blamed for all there’s wrong with everyone else’s lives, now the anger is pointed at the two women who are supposed to be competing for the poisoned chalice of UK prime minister. That both belong to the clique which has just been voted down 2 weeks ago doesn’t seem to bother anyone. That is not smart.

  But if you must insist on calling 17 million of your neighbors ‘racist’ and ‘stupid’ just to feel better about yourself, perhaps there’s no denying that the Five Stages insist on taking their time. Problem with that is there is no such time, before you know what’s happened the nation will be stuck with another ‘leader’ that far too many people are not going to be listening to. A game of ‘who said what about whom’ is not helping.

  A main issue would seem to be the Anglo(-Saxon) disease version 2.0, as I label it: whereas numerous countries around the world have seen new political parties rise to the fore, Britain, the US, Australia etc. are sticking with the same old same old, even if that makes them essentially ungovernable. What Britain needs is Podemos or a Five-Star movement, and so do the US, Canada, Australia.

  The global economic system is now collapsing so overtly that nothing incumbent powers do can hide it any longer. A more flexible system, and a less ‘let’s stick with what we got’ view of life, can be very helpful during times like these, because they can ease the friction of established powers losing their power, no matter how painful that process still will be.

  In many if not most countries there is hardly any difference anymore between what used to be right and left in politics. Barack Obama, Tony Blair and soon perhaps Hillary Clinton were voted in by what used to be the left wing of their countries, but they might just as well have come from the other side of the aisle. They all represent the establishment, not the people.

  That has worked to an extent so far, but now it is over, simply because too many people have too little left to feel comfortable in their lives. In that regard it’s interesting to see how Labour leader Jeremy Corbyn gets treated by his own party for wanting to take it ‘too far’ to the left, i.e. to represent the people. This may split up the party after all, and Corbyn would and should be happy to be rid of the right wing of the party, but he has caught Anglo Disease 2.0 too.

  If Bernie Sanders or Jeremy Corbyn, even Donald Trump for that matter, were Italian, Spanish or even German, they would have started another party, not try to ‘reform’ an existing one. It doesn’t work, or it’s too much trouble trying. The disconnection is too great, between what the parties once stood for and stand for now, and between what they say and what they do.

  Anglo Disease 1.0, by the way, is the government-induced blowing of housing bubbles in London, Vancouver, Sydney, Auckland etc etc. Take a good look at this graph and you can see what Beautiful Brexit (think I should patent the term?) is set to do to UK home prices: make then affordable again. Why do so many people apparently think that’s a terrible thing?

  

  And Anglo Disease 1.0 is plenty contagious. Look at private debt levels in the Netherlands, where in the years after the graph below, 2015-6, home prices have kept rising and so have sales. Private debt at 800% (900% now?) of GDP is not a healthy thing no matter how you twist it, but they’ll all tell you they’re making smart investments and money hand over fist.

  
  EA=Euro Area

  Government and/or central bank induced bubbles are criminal. They make an economy look better temporarily, but people will have hefty prices to pay when they pop. And pop is just what Brexit does with the UK housing bubble. Whether that’s a good or a bad thing is perhaps up to one’s own personal judgment, but no thinking body would say yes when asked if they prefer living in a bubble.

  For me, sitting inside a 10-year central bank liquidity bubble, I’m mostly afraid for those who have ever less left. The jobless, pensioners, anyone relying on benefits or fixed income, have yet to realize how much worse off they will be, but they will. ‘Homeowners’ with huge mortgages, even if they’re at low rates, will see ‘values’ plunge to the point where lenders will come with margin calls. And what then? More bank bail-outs?

  Central banks and governments have been blowing their bubbles with one goal in mind: to keep incumbent powers in place. That part has succeeded, but it’s the only part, and the price to be paid by everyone else will be horrendous. And in the end the incumbents will be gone regardless, albeit with many pockets full of loot.

  The last move the ‘rulers’ have left up their sleeves is perhaps to go to war with Russia, but I don’t see the people of Europe, despite 10+ years of heavy anti-Putin propaganda, allowing it. Europe might instead come to resemble the US, where people have another sort of battle to fight, a domestic one, which if not properly approached could lead to -more and increasing- very ugly confrontations.

  Trump may not be the best person to lead his country into that, but the establishment, represented by Hillary, looks a much worse choice. Trump doesn’t owe nearly as much to those behind the curtains who have so much to lose. Hey, I wish there were better people available, but they’re not. Bernie Sanders has been outpropagandized and outmaneuvered, and he’s not perfect either.

  America, too, will have to reinvent itself, just like so many nations across the planet. At least Trump will give the country a shot at not being dragged down into another war it can’t win, in or with Russia or China. Still, the art of propaganda on all sides and in all media has reached such dizzying heights and contortions that not a lot will seem obvious anymore.

  One thing will though: increasing poverty. That will be the main factor to drive out the old and vote in the new. But the new will have two faces, one of which is Podemos, Sanders, Grillo or Corbyn, and one of which is some form or another of extreme right wing voices. Who come with their own Denial and Anger and other never completed Five Stages of Grief.

  *  *  *

  Elizabeth Kübler Ross: On Death and Dying – 1969

  1 – Denial. Denial is a conscious or unconscious refusal to accept facts, information, reality, etc., relating to the situation concerned. …
  2 – Anger.
  3 – Bargaining.
  4 – Depression. Also referred to as preparatory grieving. …
  5 – Acceptance.

  

  

• Obama Blames "Easy Access To Guns" For Surge In Violence Between Police And Minorities

  Some were wondering how Obama would spin the surge in violence between police and minorities into yet another push for gun control.

  We didn’t have long to wait.

  Speaking in a news conference in Poland, the US president made the claim that contrary to all evidence, “racial relations have improved during his presidency”, to wit:

  Now, when it comes to crime, generally, I think it’s just important to keep in mind that our crime rate today is substantially lower than it was five years ago, 10 years ago, 20 years ago, 30 years ago.  Over the last four or five years, during the course of my presidency, violent crime in the United States is the lowest it’s been since probably the 1960s, maybe before the early 1960s.  There’s been an incredible drop in violent crime.

   

  So that doesn’t lessen, I think, people’s understandable fears if they see a video clip of somebody getting killed.  But it is important to keep in perspective that in places like New York, or Los Angeles, or Dallas, you’ve seen huge drops in the murder rates.  And that’s a testimony to smarter policing, and there are a range of other factors that have contributed to that.

  Reading from a teleprompter, Obama said he’s tried to get all Americans to listen to each other on matters of race, and added that he believes his voice has “been true in speaking about these issues.” Oddly enough it would appear that all Americans have not listened. What he didn’t say is that under his divisive, race/class/ethnicity-baiting presidency, whether due to his social politics or his disastrous economic agenda which has let the Fed’s market boosting, monetary policy as the only game in town, and led to record wealth redistribution that has transferred trillions from the future to the richest 0.01% now (one look at a chart of the $19.3 trillion in US debt should be sufficient evidence) gun sales under Obama have been absolutely unprecedented, as even the NYT has shown:

  

  As we reported two weeks ago, under Obama, background checks for guns reached 141.4 million through the end of May, amounting to sales of about 52,600 a day, according to the FBI… And 2016 is on pace to surpass last year’s record.

  But ignore all that. Instead, Obama pledged on Saturday to seek ways to calm racial tensions and reduce divisions between police and minorities during his final months in office, but he warned that easy access to guns nationwide exacerbated the problem. “The proliferation of guns among the U.S. citizenry contributes to lethal encounters between minorities and police, heightening the danger law enforcement officers face in even routine interactions with the public,” Obama said.

  Odd: no comments about “Obama’s city”, Chicago, where “only” 10 people being shot on any given weekend is considered a victory. The same Chicago which has ultra strict gun laws, that is.

  Just like Hillary Clinton, Obama also blamed YouTube clips:

  “with respect to, finally, the issue of police shootings, there’s no doubt that the visual records that we’re seeing have elevated people’s consciousness about this. And the fact that we’re aware of it may increase some anxiety right now, and hurt and anger.  But it’s been said, sunshine is the best disinfectant.  By seeing it, by people feeling a sense of urgency about it, by the larger American community realizing that, gosh, maybe this is a problem — and we’ve seen even some very conservative commentators begin to acknowledge this is something maybe we need to work on — that promises the possibility of actually getting it done.  So, it hurts, but if we don’t diagnose this we can’t fix it. “

  It hurts even more if the president makes a disastrously wrong diagnosis of what is causing it – a diagnosis that conveiently ignores Obama’s own contribution to this soaring social violence.

  As Reuters adds, Obama spoke at the end of a week in which five policemen were killed by a sniper in Dallas and two black men were killed by police in Minnesota and Louisiana. He said he would bring together civil rights and law enforcement leaders for talks at the White House next week after returning from a trip to Europe.

  Continuing his push to pivot from last week’s events to another push for more gun control, Obama said that “part of what’s creating tensions between communities and the police is the fact that our police have a really difficult time in communities where they know guns are everywhere,” Obama said adding that “If you care about the safety of our police officers, then you can’t set aside the gun issue and pretend that’s irrelevant.“

  Like in Obama’s native and very strictly gun-controlled Chicago, for example?

  * * *

  Ok fine, lots of guns, we get it. But is that the disease or the symptom of something far more rotten inside US society?

  Not according to the president, who said that the violence isn’t a sign of deeper divisions in the U.S. “America is not as divided as some have suggested.”

  So there you have it: guns kill people, not tens of millions of desperate, unemployed people who increasingly have nothing to live for

  Obama’s comments came one day after Donald Trump said that “racial divisions have gotten worse, not better” during Obama’s eight years in office.  “Too many headlines flash across our screens every day about the rising crime and rising death tolls in our cities,” Trump said in a video message. 

  Sticking to his only strong suit, rhetoric written by others, Obama preached unity in the face of rising anger sparked by the killings of black men at the hands of police in Louisiana and Minnesota, and a massacre of five law enforcement officers in Dallas one day later: a combustible escalation from which there is no way out, and certainly which empty words will do nothing to resolve.

  “Americans of all races and all backgrounds are rightly outraged by the inexcusable attacks on police, whether it’s in Dallas or anyplace else,” Obama said. “We cannot let the actions of a few define all of us,” he said, calling the shooter in Dallas a “demented individual” without using his name.

  Obama said that it was “very hard to untangle the motives” of Dallas shooter Micah Johnson, a 25-year-old military veteran who told a police negotiator he was upset by police killings of black men, including those in the past week.

  Actually no, Johnson’s motives were quite clear – he told police he wanted to kill white people and especially white police officers, even though the police officer who killed Philando Castile, Jeronimo Yanez, was hispanic. Johnson was then quickly killed by a bomb delivered by drone.

  Obama noted that protests against the police in many cities over the killings of Alton Sterling in Louisiana and Philando Castile in Minnesota have been “almost uniformly peaceful” and that “you’ve seen, uniformly, police handling those protests with professionalism.”

  Indeed, if one sticks their head in the sand and ignores the numerous and rapidly rising incidents across the country where either cops of blacks were shot in just the past 24 hours, then Obama is correct.

  Perhaps the most troubling part of Obama’s message was the following: “You’re not seeing riots and you’re not seeing police go after” peaceful protesters, he said, drawing a contrast with civil unrest of the 1960s. All else equal, we would expect the number of riots to surge.

  * * *

  After delivering this speech, Obama cut his foreign trip short and elected to return to Washington on Sunday night after visiting Spain. He will visit Dallas early next week, with the goal of bridging divisions between police and minority communities, the White House said.

  Obama’s full press conference below, and the full transcript can be found here:

  

  

• Deutsche Bank Gives Up: "We Can't Think Of A Time The S&P Was More Disjointed From Everything"

  When sellside strategists, such as Deutsche Bank’s David Bianco, throw in the towel and the best they can come up with is a 100 word admission that nothing makes sense anymore, and that the S&P has never been “more disjointed from other assets”, it’s either a time to sell everything… or buy anything.

  From DB:

  For many years we’ve watched a set of market based indicators across seven major asset classes to help gauge cyclical conditions and S&P reward/risk. We can’t think of a time the S&P was more disjointed from these other asset class price moves than in recent days. While we believe interest rates have shifted structurally and thus discount falling rates and a flatter curve as signs of recession, indeed many of our signal criteria need recalibration, recent swings across asset classes still warrant caution and do have direct negative implications for S&P EPS. Offsetting PE upside is unlikely until norms are reestablished and the economic relationships better understood.

  And here are some random charts to make it seems like there is some signal in the infinite noise that the Fed has created with its constant meddling.

  

  

  

   

  And this is what DB’s 7 cross-asset “signals” indicate:

  

  

  

• End All The Myths – The Demise Of Draghi's Self-Delusion

  Submitted by Jeffrey Snider via Alhambra Investment Partners,

  As it turns out, Mario Draghi is no stranger to blanket promises. In October 2008 as head of the Bank of Italy, Draghi joined Italian Finance Minister Giulio Tremonti in promising “as much as necessary” for Italian banks via a 5-year government guarantee of their bonds. The government standby would be available all the way through the end of 2009, giving Italian banks sufficient time and financial cover, it was thought, to get control in their own balance sheets. On the monetary side, Draghi’s central bank added €40 billion in Italian government bills for use in bank refis against failed collateral for eurosystem liquidity; a telling sum as to the scale of Italian banking missteps.

  Suffice to say, it didn’t work.

  Not quite four years later, Italian banks were again in a lot of trouble. Joined by their “southern” cousins around the PIIGS part of Europe, the threat was judged universally to be existential to the euro. Despite the massive “money printing” of the LTRO’s earlier in 2012, it still seemed as if Europe was destined for a monetary-themed breakup. And so Draghi made another blanket promise.

  What he actually said in late July 2012 was, “within our mandate, the ECB is ready to do whatever it takes to preserve the euro. And believe me, it will be enough.” It was the second sentence more than the first that got everyone’s attention; the (assumed) power behind the promise. The technicality, however, cannot be overlooked in the first part; “within our mandate.” What Draghi meant by that he explicitly stated:

  To the extent that the size of the sovereign premia (borrowing costs) hamper the functioning of the monetary policy transmission channels, they come within our mandate.

  In other words, to save the euro the ECB would do whatever it takes to bring down interest rates all over Europe so that transmission channels would open and full and healthy recovery would begin. It was always full-throated recovery that would permanently hold together the currency union. There can be no doubt as to success in the first part of that equation; bond yields all through Europe are lower now than they have ever been. But that is the problem even if the media and indeed policymakers don’t know it, or at least will not admit it.

  Just one year after making his promise, Draghi congratulated himself, saying, “It’s really very hard not to state that the OMT has been probably the most successful monetary policy measure undertaken in recent time.” Again, however, he was only speaking to the first half of the stated goal – sovereign interest rates. The rest remained to be seen, but no matter what it was taken as a matter of faith. Just six months after that, former euro-skeptics like Paul Krugman were praising Draghi. In January 2014, Krugman gushed,

  Draghi did the bulk of it. It’s pretty clear that the ECB has been decisive in alleviating the European situation.

  In the context of 2016, these are pretty damning statements. What did they actually do? It is an article of orthodox faith that low interest rates mean “stimulus” and success, but history is proving yet again otherwise.

  Though it had been under criticism for not taking to full-blown QE fast enough, in reality the ECB has been in almost constant motion. Whether in accommodation via liquidity, or in unused promises like Draghi’s July 2012 declaration, the ECB was never short of busy. Yet, the effects of all that busyness stopped far short of its full achievement. There is the clear interest rate effect, but then nothing.

  

  One technical note for the chart above: ECB QE actually takes place on the National level, meaning that the effect on Net Autonomous factors is to skew it deeply negative as bonds purchased via the PSPP are shipped to the required NCB for holding (credit risk born by individual nations of the bonds purchased). To get at least some sense of both QE and the CBPP3 (and now the Corporate Bond Purchase Program) since 2014 we have to filter out the movement between the NCB’s and the ECB:

  

  

  The chart immediately above isn’t a completely accurate statement of “liquidity” per se, but it does offer a sufficient representation of the ECB’s level of activity in banking and bank reserves. What you’ll notice is that sovereign interest rates weren’t very much affected by the first two groupings, the 2008-10 activity and then the LTRO’s; though the initial decline in rates did begin coincident to the announcement of the LTRO’s in late 2011.

  

  There was an initial positive response but then throughout the rest of the first half of 2012 another threatening backup in rates occurred despite all the “liquidity.” It wasn’t until Draghi’s promise that sovereign benchmark yields began their multi-year descent in Italy and elsewhere. In the context of that promise, it was all taken as “stimulus” when that may never have been the case. Draghi, at best, might have removed the default risk of Italy or even the greater risk of the euro’s breakup, but that wasn’t the same as “stimulus” in monetary terms as implied within his promise.

  The “tight money” regime that followed stands in sharp contrast to the ECB’s activities (including what all flows over to the NCB’s in QE). This is easily observed by the behavior and size of the Italian banks themselves. Bank balance sheets here bear no resemblance to monetary policy, including the expansion in the size and depth of Italy’s mammoth NPL problem.

  

  

  

  In July 2012, the total assets reported by the combined Italian banking system were €3.54 trillion. In April 2016, the latest data available, total assets were €3.48 trillion. Worse for Draghi, of those assets, Italian banks have nearly doubled their holdings of government securities. In other words, the ECB through his promise did not actually encourage monetary expansion into credit expansion but rather front-running into government debt at the expense of total lending. The reason for that is obvious; with Draghi’s promise in their pocket, Italian banks as banks all over Europe found an outlet for “risk free” profit in buying government bonds at huge discounts. It was not an economic consideration. The mechanism for making good on Draghi’s promise was, in essence, a (deeply) negative factor on the further expected monetary transmission!

  Once again we find this dichotomy between what the ECB classifies as liquidity expansion and the lack of true money expansion in the real economy. The interest rate fallacy holds; lower rates are accompanied by visibly “tight” banking/money conditions regardless of the level, acceleration or promises for ECB activity.

  

  Orthodox economics takes so much of itself on faith alone that it cannot distinguish negative signals from its own self-delusions. Draghi congratulated himself on a job well done without ever considering whether that was actually the case, or what was actually happening. He took low rates as if they were the foregone conclusion of all his blustery magic. Instead, no matter how high the ECB piles its various connected balance sheet factors, the real economy never responds. The most charitable economic description is that Europe has experienced an absence of further recession so far, but given the trillions spent intent on something far better than that it adds up to a colossal failure.

  For almost eight years, Italy has been saying that it is going to fix its banks; Draghi included in all those promises. Four years ago, the end of the threat to the euro was taken as proof nothing more was necessary. Yet, here we are all over again with Italian banks plastered as headlines all over the world for all the same wrong reasons. Nothing ever changes no matter how big or in what monetary form.

  

  And it is the very same failure that we find all over the world. There is no money in monetary policy, but central bankers still don’t seem to realize what they are missing. The economy, however, sure does; a fact that bond markets have been increasingly pricing.

  

  

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• How George Soros Singlehandedly Created The European Refugee Crisis – And Why

  By David Galland and Stephen McBride, Garret/Galland Research

   

  How George Soros Singlehandedly Created the European Refugee Crisis – And Why

  George Soros is trading again.

  The 85-year-old political activist and philanthropist hit the headlines post-Brexit saying the event had “unleashed” a financial-market crisis.

  Well, the crisis hasn’t hit Soros just yet.

  He was once again on the right side of the trade, taking a short position in troubled Deutsche Bank and betting against the S&P via a 2.1-million-share put option on the SPDR S&P 500 ETF.

  More interestingly, Soros recently took out a $264 million position in Barrick Gold, whose share price has jumped over 14% since Brexit. Along with this trade, Soros has sold his positions in many of his traditional holdings.

  

  Soros had recently announced he was coming out of retirement, again.

  First retiring in 2000, the only other time Soros has publicly re-entered the markets was in 2007, when he placed a number of bearish bets on US housing and ultimately made a profit of over $1 billion from the trades.

  Since the 1980s, Soros has actively been pursuing a globalist agenda; he advances this agenda through his Open Society Foundations (OSF).

  What is this globalist agenda, and where does it come from?

  The Humble Beginnings

  The globalist seed was sowed for young George by his father, Tivadar, a Jewish lawyer who was a strong proponent of Esperanto. Esperanto is a language created in 1887 by L.L. Zamenhof, a Polish eye doctor, for the purpose of “transcending national borders” and “overcoming the natural indifference of mankind.”

  Tivadar taught young George Esperanto and forced him to speak it at home. In 1936, as Hitler was hosting the Olympics in Berlin, Tivadar changed the family name from Schwartz to Soros, an Esperanto word meaning “will soar.”

  George Soros, who was born and raised in Budapest, Hungary, benefited greatly from his father’s decision.

  Allegedly, in 1944, 14-year-old George Soros went to work for the invading Nazis. It is said that until the end of the war in 1945, he worked with a government official, helping him confiscate property from the local Jewish population.

  In an 1998 interview with 60 Minutes, Soros described the year of German occupation as “the happiest time in my life.”

  Soros’s Venture into Finance

  When the war ended, Soros moved to London and in 1947 enrolled in the London School of Economics where he studied under Karl Popper, the Austrian-British philosopher who was one of the first proponents of an “Open Society.”

  Soros then worked at several merchant banks in London before moving to New York in 1963. In 1970, he founded Soros Fund Management and in 1973 created the Quantum Fund in partnership with investor Jim Rogers.

  The fund made annual returns of over 30%, cementing Soros’s reputation and putting him in a position of power—one he utilizes to this day to advance the agenda of his mentors.

  The Currency Speculations That Threw Britain and Asia into Crisis

  In the 1990s, Soros began a string of large bets against national currencies. The first was in 1992, when he sold short the pound sterling and made a $1 billion profit in a single day.

  His next big currency speculation came in 1997. This time Soros singled out the Thai baht and, with heavy short-selling volume, destroyed the baht’s artificial peg to the US dollar, which started the Asian financial crisis.

  “Humanitarian” Efforts

  Today, Soros’s net worth stands at $23 billion. Since taking a back seat in his company, Soros Fund Management, in 2000, Soros has been focusing on his philanthropic efforts, which he carries out through the Open Society Foundations he founded in 1993.

  So who does he donate to, and what causes does he support?

  During the 1980s and 1990s, Soros used his extraordinary wealth to bankroll and fund revolutions in dozens of European nations, including Czechoslovakia, Croatia, and Yugoslavia. He achieved this by funneling money to political opposition parties, publishing houses, and independent media in these nations.

  If you wonder why Soros meddled in these nations’ affairs, part of the answer may lie in the fact that during and after the chaos, he invested heavily in assets in each of the respective countries.

  He then used Columbia University economist Jeffrey Sachs to advise the fledgling governments to privatize all public assets immediately, thus allowing Soros to sell the assets he had acquired during the turmoil into newly formed open markets.

  Having succeeded in advancing his agenda in Europe through regime change—and profiting in the process—he soon turned his attention to the big stage, the United States.

  The Big Time

  In 2004, Soros stated, “I deeply believe in the values of an open society. For the past 15 years I have been focusing my efforts abroad; now I am doing it in the United States.”

  Since then, Soros has been funding groups such as:

  • The American Institute for Social Justice, whose aim is to “transform poor communities through lobbying for increased government spending on social programs”

  • The New America Foundation, whose aim is to “influence public opinion on such topics as environmentalism and global governance”

  • The Migration Policy Institute, whose aim is to “bring about an illegal immigrant resettlement policy and increase social welfare benefits for illegals”

  Soros also uses his Open Society Foundations to funnel money to the progressive media outlet, Media Matters.

  Soros funnels the money through a number of leftist groups, including the Tides Foundation, Center for American Progress, and the Democracy Alliance in order to circumvent the campaign finance laws he helped lobby for.

  Why has Soros donated so much capital and effort to these organizations? For one simple reason: to buy political power.

  Democratic politicians who go against the progressive narrative will see their funding cut and be attacked in media outlets such as Media Matters, which also directly contribute to mainstream sites such as NBC, Al Jazeera, and The New York Times.

  Apart from the $5 billion Soros’s foundation has donated to groups like those cited above, he has also made huge contributions to the Democratic Party and its most prominent members, like Joe Biden, Barack Obama, and of course Bill and Hillary Clinton.

  Best Friends with the Clintons

  Soros’s relationship with the Clintons goes back to 1993, around the time when OSF was founded. They have become close friends, and their enduring relationship goes well beyond donor status.

  According to the book, The Shadow Party, by Horowitz and Poe, at a 2004 “Take Back America” conference where Soros was speaking, the former first lady introduced him saying, “[W]e need people like George Soros, who is fearless and willing to step up when it counts.”

  Soros began supporting Hillary Clinton’s current presidential run in 2013, taking a senior role in the “Ready for Hillary” group. Since then, Soros has donated over $15 million to pro-Clinton groups and Super PACs.

  More recently, Soros has given more than $33 million to the Black Lives Matter group, which has been involved in outbreaks of social unrest in Ferguson, Missouri, and Baltimore, Maryland, in 2015. Both of these incidents contributed to a worsening of race relations across America.

  The same group heavily criticized Democratic contender Bernie Sanders for his alleged track record of supporting racial inequality, helping to undercut him as a competitive threat with one of Hillary Clinton’s most ardent constituencies.

  This, of course, greatly enhances the clout Soros wields through the groups mentioned above. It is safe to assume that he is now able to drive Democratic policy, especially in an administration headed by Hillary Clinton.

  Simply, what Soros wants, he gets. And it’s clear from his history that he wants to smudge away national borders and create the sort of globalist nightmare represented by the European Union.

  In recent years, Soros has turned his attention back to Europe. Is it a coincidence that the continent is currently in economic and social disarray?

  Another Home Run: the Ukrainian Conflict

  There’s no doubt about Soros’s great influence on US foreign policy. In an October 1995 PBS interview with Charlie Rose, he said, “I do now have access [to US Deputy Secretary of State Strobe Talbott]. There is no question. We actually work together [on Eastern European policy].”

  Soros’s meddling reared its ugly head again in the Russia-Ukraine conflict, which began in early 2014.

  In a May 2014 interview with CNN, Soros stated he was responsible for establishing a foundation in the Ukraine that ultimately led to the overthrow of the country’s elected leader and the installation of a junta handpicked by the US State Department, at the time headed by none other than Hillary Clinton:

  CNN Host: First on Ukraine, one of the things that many people recognized about you was that you during the revolutions of 1989 funded a lot of dissident activities, civil society groups in Eastern Europe and Poland, the Czech Republic. Are you doing similar things in Ukraine?

  Soros: Well, I set up a foundation in Ukraine before Ukraine became independent of Russia. And the foundation has been functioning ever since and played an important part in events now.

  The war that ripped through the Ukrainian region of Donbass resulted in the deaths of over 10,000 people and the displacement of over 1.4 million people. As collateral damage, a Malaysia Airlines passenger jet was shot down, killing all 298 on board.

  But once again Soros was there to profit from the chaos he helped create. His prize in Ukraine was the state-owned energy monopoly Naftogaz.

  Soros again had his US cronies, Secretary of the Treasury Jack Lew and US consulting company McKinsey, advise the puppet government of Ukraine to privatize Naftogaz.

  Although Soros’s exact stake in Naftogaz has not been disclosed, in a 2014 memo he pledged to invest up to $1 billion in Ukrainian businesses, but no other Ukrainian holdings have since been reported.

  His Latest Success: the European Refugee Crisis

  Soros’s agenda is fundamentally about the destruction of national borders. This has recently been shown very clearly with his funding of the European refugee crisis.

  The refugee crisis has been blamed on the civil war currently raging in Syria. But did you ever wonder how all these people suddenly knew Europe would open its gates and let them in?

  The refugee crisis is not a naturally occurring phenomenon. It coincided with OSF donating money to the US-based Migration Policy Institute and the Platform for International Cooperation on Undocumented Migrants, both Soros-sponsored organizations. Both groups advocate the resettlement of third-world Muslims into Europe.

  In 2015, a Sky News reporter found “Migrant Handbooks” on the Greek island of Lesbos. It was later revealed that the handbooks, which are written in Arabic, had been given to refugees before crossing the Mediterranean by a group called “Welcome to the EU.”

  Welcome to the EU is funded by—you guessed it—the Open Society Foundations.

  Soros has not only backed groups that advocate the resettlement of third-world migrants into Europe, he in fact is the architect of the “Merkel Plan.”

  The Merkel Plan was created by the European Stability Initiative whose chairman Gerald Knaus is a senior fellow at none other than the Open Society Foundations.

  The plan proposes that Germany should grant asylum to 500,000 Syrian refugees. It also states that Germany, along with other European nations, should agree to help Turkey, a country that’s 98% Muslim, gain visa-free travel within the EU starting in 2016.

  Political Discourse

  The refugee crisis has raised huge concern in European countries like Hungary.

  In response to 7,000 migrants entering Hungarian territory per day in 2015, the Hungarian government reestablished border control in order to keep the hordes of refugees from entering the country.

  Of course this did not go down well with Soros and his close allies, the Clintons.

  Bill Clinton has since come out and accused both Poland and Hungary of thinking “democracy is too much trouble” and wanting to have a “Putin-like authoritarian dictatorship.”

  Seeing through Clinton’s comments, Hungarian Prime Minister Viktor Orbán responded by saying, “The remarks made about Hungary and Poland … have a political dimension. These are not accidental slips of the tongue. And these slips or remarks have been multiplying since we are living in the era of the migrant crisis. And we all know that behind the leaders of the Democratic Party, we have to see George Soros.”

  He went on to say that “although the mouth belongs to Clinton, the voice belongs to Soros.”

  Soros has since said of Orbán’s policy toward the migrants: “His plan treats the protection of national borders as the objective and the refugees as an obstacle. Our plan treats the protection of refugees as the objective and national borders as the obstacle.”

  It’s hard to imagine that he could be any clearer in his globalist intentions.

  The Profit Motive

  So why is Soros going to such lengths to flood Europe with hordes of third-world Muslims?

  We can’t be sure, but it has recently come to light that Soros has taken a large series of “bearish derivative positions” against US stocks. Apparently, he thinks that causing chaos in Europe will spread the contagion to the United States, thus sending US markets spiraling downward.

  The destruction of Europe through flooding it with millions of unassimilated Muslims is a direct plan to cause economic and social chaos on the Continent.

  Another example of turmoil equaling profit for George Soros, who seems to have his tentacles in most geopolitical events.

  We all understand correlation is not causation. However, given Soros’s extraordinary wealth, political connections, and his long track record of seeing and profiting from chaos, he is almost certainly a catalyst for much of the geopolitical turmoil now occurring.

  He is intent on destroying national borders and creating a global governance structure with unlimited powers. From his comments directed toward Viktor Orbán, we can see he clearly views national leaders as his juniors, expecting them to become puppets that sell his narrative to the ignorant masses.

  Soros sees himself as a missionary carrying out the globalist agenda taught to him by his early mentors. He uses his vast political connections to influence government policy and create crises, both economic and social, to further this agenda.

  By all appearances, Soros is conspiring against humanity and is hell-bent on the destruction of Western democracies.

  To any rational thinker, some global events just don’t make sense. Why, for example, would Western democracies take in millions of people whose values are completely incompatible with their own?

  When we look closely at the agenda being actively promoted by the leading globalist puppet master, George Soros, things become a little clearer.

  Want to read more? If you haven’t done so already, sign-up for your free subscription to The Passing Parade from Garret/Galland Research.  It’s a rousing weekly romp on economics and markets, with a dose of politics and other follies. It’s free and you can cancel at any time. Click here now to start subscription today!

  On Soros & Gold

  David, again.

  While I’m not a conspiracy theorist per se, I do believe there is a naturally occurring and constant collaboration about shared interests occurring amongst the heads of governments, corporations, investment managers and all of the bottom feeders that survive off their scraps.

  What I find most interesting about Soros is that he is so obvious in his intentions and persistent in their pursuit. Given the consequences of his actions, it is also clear he’s a believer in moral relativism and that the ends justify the means.

  That he turns a nice buck in his crusade for what certainly rhymes with a one-world government is a Soros hallmark.

  “It allows me the money needed to fund my philanthropies” he might answer to the charges he is profiting from blood in the streets he was instrumental in spilling.

  Going forward when something big is happening geopolitically, I am going to start my analysis by checking under rocks for signs of Soros.

  At the beginning of this article we noted that Soros has gone big into American Barrick (ABX), a leading gold producer. As of the end of March it was his single largest holding at 7.36% of his overall portfolio.

  As telling, he has dumped a lot of his more conventional stocks in recent months.

  Given the man’s inside track – and active manipulations – you might want to take the hint and pick up some physical gold as an insurance policy against a systematic shock.

  If you already own gold, I probably wouldn’t chase it here as it has had a good run of late. Ditto silver which is up 46% year to date. But if you don’t own some, adding precious metals to your portfolio as a long-term holding, even at today’s prices, makes sense.

  Per last week, I continue to believe the gold stocks have probably gotten ahead of themselves and could be in for a pretty significant correction. If so, I would be inclined to up my allocation to the sector to 20% of my total portfolio.

  That said, no one can predict the future and gold could continue to power ahead, with the gold shares a more leveraged way to play the sector.

  As always with gold shares, it is important to remember a few things:

  • In most cases, these are speculations. That’s because their financial metrics often don’t line up with anything looking like a good value. What you are really betting on is a revaluation of the ounces of gold or silver a company is sitting on.  Thus, if a company is sitting on one million ounces of gold and gold goes up by $100, the company just got a lot more valuable.
     
  • Never fall in love with a gold stock.  Set a rational return goal and once hit, at least scrape your original investment off the table. That way you are playing with the casino’s money.

    Also per my article last week, keep in mind that should gold stocks buck the trend in a future global equities correction, the money managers who own big positions in gold stocks will almost certainly dump their holdings in order to dress up the rest of their portfolios. As the trading volume in precious metals share is relatively thin, you want to beat them out the door.
     

  • Embrace the volatility. The low trading volume of most of these stocks is a key reason they have such explosive upside. Any significant uptick in investor interest can send a stock soaring.

    However, the flipside is also true. In the bear market that started in 2011, the majority of the precious metals stocks lost upwards of 75% of their value and many simply dried up and went away. Enjoy the ride, but don’t stay too late at the party.

  Earlier this week I commented to a friend that if the EU was going to remain relevant, there had to be some major financial pain dished out post-Brexit. To let that seminal event pass with nothing more than the equivalent of a global shrug would entirely change how people view the European Union.

  The bottom line, I’m expecting some volatility, perhaps triggered by Soros taking a second run at crushing the British pound, the source of much of his fortune and fame.

  It’s promising to be a long, hot summer.

  Here Come the Clowns

  Nothing comes close to the Get Out of Jail card handed by the clowns at the FBI to Hillary over her private email servers. This despite pretty much no one disputes she broke any number of federal laws of the sort which would have landed a lesser clown in jail.

  To quote FBI Director James Comey, “Although there is evidence of potential violations of the statutes regarding the handling of classified information, our judgment is that no reasonable prosecutor would bring such a case.”

  There is nuance in that statement. For starters, that there is evidence of violations. But also the stark political reality that no “reasonable prosecutor” would enforce the laws, considering who the perp is: the standard bearer for the Democrats going into this election.

  Besides, going after Clinton means crossing swords with Soros and no “reasonable prosecutor” would want to do that.

  Just saying…

   

  

  

• A Portrait Of Quantitative Failure

  Simply put, it's not working stupid!

   

  

   

  Especially in Japan…

  

   

  But, as BofAML's Michael Hartnett notes, the details of what has been done and the consequences of those actions is, simply put, just embarrassing for all the central planners…

  • Dec’17: first FOMC meeting which market assigns >40% probability of rate hike
  • 659: number of global rate cuts since Lehman bankruptcy
  • $12.9tn: outstanding amount of bonds currently yielding <0% (= 29% of total)
  • $24.6tn: outstanding amount of global central bank holdings of financial assets
  • -1.1%: the most negative bond yield in the world (3-year Swiss government bond)
  • 107 years: time it takes to double your savings in 1-year US deposit account
  • 1387 years: time it takes to double your savings in 1-year German deposit account
  • 6932 years: time it takes to double your savings in 1-year Japanese deposit account
  • 5.7%: level of investor cash as % AUM (Jul’16 FMS), highest since Nov’01
  • $1.6tn: level of cash at US corporate sector, near record high
  • 1978: the year US labor market participation rate was as low as it is today
  • 21,084,000: current number of unemployed men and women in Europe
  • 49%, 45%, 39%: youth unemployment rate in Greece, Spain & Italy

  

  • 0.16%: the infinitesimal increase in Japan’s real GDP in the past 8 years
  • 25%: annualized YTD return from global government bonds in 2016, a 30-year high

  Eisteinian Yellenian madness… "doing the same thing over and over again and expecting different results."

  

  

• 26 Million Americans Are Now "Too Poor To Shop" Study Finds

  A new study finds that roughly 26 million Americans remain "too poor to shop". The study, performed by America's Research Group, found that about 26 million Americans work on average two or three jobs at a time which, when added together, nets just shy of $30,000 in annual income. All while supporting anywhere from two to four children.

  The chairman of ARG, Mr. Britt Beemer, said in an interview with the NY Post that he first started looking into data when he was tracking a different indicator. Beemer first started tracking a group and surveying roughly 15,000 people to determine who had not finished Christmas shopping in 2014. During that year, the number was 21 percent but recently ran as high as 29%. From there Beemer decided to analyze the data further and learned American's are seeing increasing numbers of fellow citizens who are simply just too poor to shop.

  Beemer told the Post: "The poorest Americans have stopped shopping, except for necessities" and "It's scary when you start to see things that you've never seen before"…"People are so pessimistic about their future"

  Just this past April we wrote: "most Americans' savings continue to decline, and millions of US households not only don't have any money left over to save away, but are forced to resort to credit to fund day to day expenses."

  

  Recall from January the piece from the Atlantic that review that weak state of American's finances. The Atlantic learned that nearly 50% of Americans were not in a position to find $400 to pay of a doctor visit without reaching out to friends So not only are 26 million Americans too poor to shop, there are also 2/3 of Americans who have no savings.

  "Various surveys that I have talked about in the past have found that more than 60 percent of all Americans are living to paycheck to paycheck, but I didn’t realize that things were quite this bad for about half the country. If you can’t even come up with $400 for an unexpected emergency room visit, then you are just surviving from month to month by the skin of your teeth. Unfortunately, about half of us are currently in that situation."

  As The NY Post details, retailers have blamed the weather, slow job growth and millennials for their poor results this past year, but a new study claims that more than 20 percent of Americans are simply too poor to shop.

  These 26 million Americans are juggling two to three jobs, earning just around $27,000 a year and supporting two to four children — and exist largely under the radar, according to America’s Research Group, which has been tracking consumer shopping trends since 1979. “The poorest Americans have stopped shopping, except for necessities,” said Britt Beemer, chairman of ARG.

   

  Beemer has been tracking this subgroup for two years, ever since his weekly surveys of 15,000 consumers picked up that 21 percent of consumers did not finish their Christmas shopping in 2014 due to being too busy working.

   

  That number grew to 29 percent last year, and Beemer dug in to learn more about them, calling them on holidays. He estimates that this group has swelled from 6 million households four years ago, because their incomes have not kept pace with expenses like medical costs.

   

  Nearly half of all Americans have not seen an increase in salary over the last five to seven years, and another 28 percent have seen their take-home pay reduced by higher medical insurance deductions or switching to part-time jobs, ARG found. “It’s scary when you start to see things that you’ve never seen before,” said Beemer.

   

  “People are so pessimistic about their future.” Most of those living on the edge — 68 percent are women between the ages of 28 and 38 — work in retail or in call centers, according to Beemer.

   

  Another sign that a chunk of the population has pulled back its spending is that discounters like Walmart and the Dollar Store have been “holding their own,” said Richard Church, managing director of Discern Securities.

  The story of the increasing difficulty facing Americans in maintaining their standard of living continues… even after almost 10 years of Federal Reserve market-based intervention.

  

  

• Breakdown Of US Citizens Killed By Cops In 2016

  In the U.S. a total of 509 citizens have been killed this year alone by police. The body count for the previous year stands at a grand total of 990 people shot dead, according to the Washington Post. As the below infographic from Statista shows, most of those killed by police are male and white. 123 of those shot were Black Americans. This is a relatively high share, keeping in mind that close to 13 percent of Americans belong to that ethnic group.

  
  You will find more statistics at Statista

  What’s also disturbing is that according to the data compiled by the Washington Post a big proportion of those killed obviously showed signs of mental illness. Of the 509 killed this year at least 124 were thought to be suffering from such conditions.

  Many of those killed carried guns according to police records. In at least 22 cases officers mistook toy guns for the real thing.

  

  

• From Cops To Clinton: Impunity Corrupts

  Submitted by Dan Sanchez via AntiWar.com,

  Wednesday, two shocking videos of police officers fatally shooting civilians (Alton Sterling and Philando Castile) surfaced. The day before, many were appalled to hear the Director of the FBI announce that Hillary Clinton would not be charged for mishandling classified information. The two events may seem unrelated, but at bottom, they concern the same fundamental problem: impunity.

  Impunity is the essence of power. What, after all, is power? Is it simply the capacity to exert unjust force? The ability to impress one’s will upon the flesh or belongings of another? No, it’s more than that.

  Most anyone can wield unjust force. Anyone could walk out onto the street right now and exert their will on somebody weaker: say, pushing over an old lady or stealing candy from a baby. And the toughest, or most heavily-armed guy in town can strong-arm just about any other single person.

  But isolated incidents of aggression do not constitute power. The “reign” of the rogue rampager is generally short-lived. It only lasts until the community recognizes him as the menace to society that he is and neutralizes him.

  Power isn’t simply about the exertion of unjust force. It is about what happens next, after the exertion. Does the perpetrator generally get away with, or not? Systematically getting away with it – or impunity – is where power truly lies. And that is what makes agents of the State different from any other bully. State agents can violate rights with reliable impunity because a critical mass of the public considers the aggression of state agents to be exceptionally legitimate. Impunity is power, and as Lord Acton said, power corrupts.

  The Impunity of the Badge

  State impunity is at the root of the problem of police violence. As agents of the exalted State, the police are seen as paladins of public order. The populace grants cops a special dispensation to commit violence that would be considered criminal if perpetrated by anybody else. This privilege is enshrined in law most clearly as the doctrine of “qualified immunity.” As Evan Bernick of the Institute for Justice wrote:

  In the 1967 case of Pierson v. Ray, the Supreme Court held that police officers sued for constitutional violations can raise ‘qualified immunity’ as a defense, and thereby escape paying out of their own pockets, even if they violated a person’s constitutional rights.

  When victims of police violence or their heirs seek redress and are awarded monetary payments, it is taxpayers, and not the cops, who pick up the tab. Police officers are rarely even prosecuted for violence inflicted while they’re on the clock. The worst that an offending officer can generally expect to face is getting fired, but he will more likely just get a paid suspension.

  Thus insulated from responsibility, officer treatment of “mundanes” is predictably often grossly irresponsible. Confident in being sheltered from consequences by their “blue privilege,” officers are far more prone to indulge in lethal cowardice: to place “officer safety” so far above civilian rights that they are willing to gun down a stranger at the slightest whiff of potential danger. Alton Sterling and Philando Castile each carried a gun, as they have the natural right to do. Neither threatened the officers with his weapon, or even brandished it. Yet in both cases, merely becoming aware of the guns sent a cop into a murderous panic. Both Sterling and Castile were fatally shot multiple times in the chest.

  The Impunity of High Office

  State impunity not only corrupts the regime’s low-level enforcers, but its elite policy makers as well. The FBI let Hillary Clinton off the hook for secrecy violations she committed as Secretary of State, even though these were much more egregious than violations that have earned lower-level personnel decades in prison. She used technology that was more open to being compromised by spies and hackers, while at the same less open to legal and public scrutiny.

  But the kinds of activities she was hiding are far more criminal than the fact that she hid them. As Secretary of State, Hillary Clinton played a key role in bringing war to such places as Libya, Syria, and Honduras, and in escalating the war in Afghanistan. She is complicit in causing untold death and misery.

  Yet, thanks to her connections and her position in the state power apparatus, she faces no consequences for her crimes, and is free to acquire even more immunity and power as a likely President of the United States.

  It is the “sovereign immunity” she enjoys as an officeholder that has made Hillary Clinton so reckless and cavalier about the havoc she has wreaked around the world. If she thought she might ever be held accountable for upending entire countries, she would have likely been far less warlike in her policies.

  From policing to foreign policy, impunity corrupts, and absolute impunity corrupts absolutely.

  

  

• What Happens When This Chart Hits Zero?

  Nothing good will come of this…

   

  

  Source: The Burning Platform

  

  

• The Decline & Fall Of The Biggest Bond Market In The World Has Only One Inevitable Ending

  Government bonds are themselves becoming more illiquid, most particularly, as CLSA's Chris Wood notes, in a country like Japan where the Bank of Japan has been buying more than the net issuance. Monthly trading of JGBs by lenders and insurers has collapsed from a peak of ¥123tn in April 2012 to a record low of ¥15tn in May 2016.

  

   

  This raises the pertinent issue of whether the Bank of Japan has reached the practical limit of its government buying programme in terms of its current purchase programme of ¥80tn relative to estimated annual JGB net new issuance of ¥34tn.

  In this respect, the Japanese central bank has from a potentially monetisation standpoint always defended the integrity of its JGB purchase programme by stressing that it only buys JGBs in the secondary market, which means that the seller of the JGB to the BoJ forfeits a claim to that asset. This is contrasted to what would happen if the BoJ bought JGBs in the primary market on an open-ended basis.

  Such a process would be highly inflationary and, sooner or later, would be viewed by the market as such.

  And as Wood concludes, the next step is obvious…

  This is why Japan, as well as America, is also a candidate for monetisation of infrastructure stimulus or for what Bernanke has called a “money-financed fiscal programme”, or what has been called in other quarters “overt monetary financing”. This is because Bank of Japan governor Haruhiko Kuroda is now looking for a new alternative form of monetary easing, given he has probably reached the practical limits of responsible JGB buying, as already discussed, while his initial move to impose negative rates in January led to the opposite market reaction than expected (ie, a stronger yen and a weaker stock market, see Figure 8) while also proving politically very unpopular. This probably explains why Kamikaze Kuroda has not expanded the negative rate policy further since January even though inflation and inflation expectations have moved in the opposite direction of what he has been targeting.

   

  …

   

  The latest data will make it harder for Kuroda to do nothing at the next BoJ policy meeting due to be held on 28-29 July given the stress he has put on monitoring inflation expectations. That is unless he just admits he has failed!

   

  

   

  Given the unattractive options of buying still more JGBs or ETFs, or risking an undoubtedly unpopular expansion of negative rates, Kuroda and indeed Abe will be looking for a new approach. Monetisation of infrastructure stimulus may be the option.

   

  Meanwhile, in an effort to calm potential concerns about the integrity of the fiscal budget central bankers implementing such a future monetisation of infrastructure spending will doubtless be at pains to describe the process as a “one off” though, as the ever theoretical Bernanke stated in his blog: "To have its full effect, the increase in the money supply must be perceived as permanent by the public."

   

  …

   

  a policy of “helicopter money” is only likely to work if it is done on an ongoing basis and in continuing and growing amounts. But at that point the risk of a policy mistake grows exponentially, in terms of a potentially destabilising pickup in inflation expectations and a related pickup in velocity.

  The above discussion on how future experiments with unconventional policy could impact markets is far from theoretical since all the evidence is that central bankers are not prepared to acknowledge the overwhelming empirical evidence that their policies are not working and, indeed, are having the opposite effect of what is intended. Instead they remain obsessed with policy frameworks influenced by inflation targeting and monitoring inflation expectations. It is, therefore, critical for investors to focus on what could be the next version of the monetary laboratory experiment with the obvious catalyst for that turning point market realisation that the Federal Reserve is not going to be able to normalise monetary policy.

  Source: CLSA's Greed & Fear

  

  

• When Narratives Go Bad

  By Ben Hunt Of Epsilon Theory

  When Narratives Go Bad (pdf link)

   

  How many things served us yesterday as articles of faith, which today are fables for us?

  – Michel de Montaigne, The Complete Essays (1580)

  * * *

  That same night, I wrote my first short story. It took me thirty minutes. It was a dark little tale about a man who found a magic cup and learned that if he wept into the cup, his tears turned into pearls. But even though he had always been poor, he was a happy man and rarely shed a tear. So he found ways to make himself sad so that his tears could make him rich. As the pearls piled up, so did his greed grow. The story ended with the man sitting on a mountain of pearls, knife in hand, weeping helplessly into the cup with his beloved wife’s slain body in his arms.

  – Khaled Hosseini, The Kite Runner (2003)

  A fable for our times, the ultimate disposition of extraordinary monetary policy. Bad news is good news until bad news is all we know. Global growth is the wife.

  * * *

  The idea of negative interest rates strikes many people as odd. Economists are less put off by it. … The anxiety about negative interest rates seen recently in the media and in markets seems to me to be overdone. Logically, when short-term rates have been cut to zero, modestly negative rates seem a natural continuation; there is no clear discontinuity in the economic and financial effects of, say, a 0.1 percent interest rate and a -0.1 percent rate.

  – Former Fed Chair Ben Bernanke, “What Tools Does the Fed Have Left?”, March 18, 2016

  Bernanke is right – economists are not put off by the idea of negative rates. And that’s exactly the problem. There’s a huge discontinuity between a 0.1 percent interest rate and a -0.1 percent interest rate, but economists don’t see it because it’s a BEHAVIORAL discontinuity. Positive rates permit investing behaviors based on fundamentals and compounding. Negative rates require investing behaviors based on hope for a greater fool.

  * * *

  My Sunday school teachers had turned Bible narrative into children’s fables. They talked about Noah and the ark because the story had animals in it. They failed to mention that this was when God massacred all of humanity. 

  – Donald Miller, Blue Like Jazz: Nonreligious Thoughts on Christian Spirituality (2003). The condescension of modern status quo Narrative construction is staggering. It’s a mistake to do this with kids, and it’s a bigger mistake to do this with voters and investors

  * * *

  A major European power, a longtime defender of liberal democracy, pluralism and free markets, falls under the sway of a few cynical politicians who see a chance to exploit public fears of immigration to advance their careers. They create a stark binary choice on an incredibly complex issue, of which few people understand the full scope — stay in or quit the E.U.

  – New York Times columnist Tom Friedman, doing his part to create a status quo protecting Narrative post-Brexit, where government “unforgivably” abdicated its responsibility by “allowing” foolish citizens who can’t possibly know their own self-interest to vote on something that’s “incredibly complex” and can only be understood by wise men … like Tom Friedman.

  * * *

  He spotted the entourage and security personnel that signaled another important person’s plane. With the temperature over 103 degrees, Mr. Clinton, rather than chatting on the scorching cement, climbed aboard to say hello to Attorney General Loretta E. Lynch.

  – New York Times “reporter” Amy Chozick, in a yeoman effort to maintain the status quo protecting Narrative. Nothing to see here folks, move along, just a sociable man trying to get out of the heat.

  * * *

  Stooges:  Simple Simon met a pieman,
                 Going to the fair;
                 Says Simple Simon to the pieman,
                 Let me taste your ware.
                 Said the pieman to Simple Simon,
                 Show me first your penny.
                 Said Simple Simon to the pieman:

  Moe: Scram! Ya don’t get any! [throws pie in face]

  You can learn a lot about political Narrative creation by looking at dominant forms of satire and comedy. Satire today is as arch and elitist as the status quo institutions it defends, in sharp contrast to the populist, slapstick comedy of the Marx Brothers or the Three Stooges. I’ll bet there’s a 99% correlation between UK Leave voters and people who think Benny Hill is funny, and the same between UK Remain voters and people who think John Oliver is funny. For the Tom Friedmans of the world, the solution is simple: “educate” people that John Oliver is hilarious, but you’re a racist dope if you laugh at Benny Hill. Yeah, that’ll work.

  * * *

  I wrote my way out of hell.
  I wrote my way to revolution.
  I was louder than the crack in the bell.
  I wrote Eliza love letters until she fell.
  I wrote about The Constitution and defended it well.
  And in the face of ignorance and resistance,
  I wrote financial systems into existence.
  And when my prayers to God were met with indifference,
  I picked up a pen, I wrote my own deliverance.
  – Lin-Manuel Miranda, Hamilton (2015)

  Why does Hamilton work? Because it’s not arch and it’s not elitist. Because it takes one of the most powerful and long-lived Narratives in modern history — the Founding Fathers — and tells the story without irony, without condescension, and without the (literal) whitewashing of other storytellers.
  The Old Stories still work when you play them straight. Thank you, Lin-Manuel.

  * * *

  Choronzon: I am a dire wolf, prey-stalking, lethal prowler.
  Morpheus: I am a hunter, horse-mounted, wolf-stabbing.
  Choronzon: I am a horsefly, horse-stinging, hunter-throwing.
  Morpheus: I am a spider, fly-consuming, eight legged.
  Choronzon: I am a snake, spider-devouring, poison-toothed.
  Morpheus: I am an ox, snake-crushing, heavy-footed.
  Choronzon: I am an anthrax, butcher bacterium, warm-life destroying.
  Morpheus: I am a world, space-floating, life-nurturing.
  Choronzon: I am a nova, all-exploding… planet-cremating.
  Morpheus: I am the Universe — all things encompassing, all life embracing.
  Choronzon: I am Anti-Life, the Beast of Judgment. I am the dark at the end of everything. The end of universes, gods, worlds … of everything. Sss. And what will you be then, Dreamlord?
  Morpheus: I am hope.

  ? Neil Gaiman, The Sandman, Vol. 1: Preludes and Nocturnes (1991)

  There was a tale he had read once, long ago, as a small boy: the story of a traveler who had slipped down a cliff, with man-eating tigers above him and a lethal fall below him, who managed to stop his fall halfway down the side of the cliff, holding on for dear life. There was a clump of strawberries beside him, and certain death above him and below. What should he do? went the question.

  And the reply was, Eat the strawberries.

  The story had never made sense to him as a boy. It did now.

  – Neil Gaiman, American Gods (2001)

  The fin of any siècle is almost always a rough ride, even if we end up dreaming a better dream. In investing as in life there’s never enough time, and we are beset on all sides. Eat the strawberries

  * * *

   

  Here’s my most basic view on everything that’s happening in the world right now, politically, economically, socially … all of it: the Fix is still in, but it’s getting harder and harder to maintain.

  The Fix is the status quo, and it goes by different labels of identity depending on what you’re talking about. “European Union” is one of those labels. “Central Banking” is one. “Clinton” is another. They aren’t real things at all, but are statements of shared identity that channel our behavior in highly predictable patterns that are, in turn, highly useful to The Powers That Be, and are maintained by expressions of Common Knowledge such as “everyone knows that everyone knows that Brexit was a grievous mistake” or “everyone knows that everyone knows that low interest rates spur the economy.” Those expressions of Common Knowledge are also called Narratives, and the Narratives are dying.

  And yes, I know that this all sounds suspiciously philosophical and divorced from our investing reality, but bear with me for a moment, because the punchline here is going to be that I think what I’m describing is the ONLY thing that matters for our investing reality. Our reality is not determined by the antics of the flesh-and-blood Hillary Clinton or Donald Trump, but by the status quo ideas and institutions represented by and threatened by the human-shaped cartoons we call “Hillary Clinton” and “Donald Trump”. To figure out what’s next for markets, we have to figure out why “Clinton” – shorthand for globalism (it’s not called The Clinton Global Initiative for nothing) and a sort of technocratic, condescending, principle-less, democracy-suspicious manner of governing – is failing. We have to figure out why Bill Clinton’s stroll across the Phoenix tarmac to chat up the Attorney General was a) reported at all, and b) greeted by derision and despair within his own party. If you don’t like my use of the label “Clinton” or if you think I’m being too political, replace it with “Brussels” or “Beijing”. It’s all the same thing, just three different shades of gray.

  And I really couldn’t care less, professionally at least, what actually transpired between Bill Clinton and Loretta Lynch, or what Hillary Clinton actually believed about her email security classifications. What I care deeply about, however, is how the Narrative around these events is being shaped and reshaped, because that Narrative will determine the path and outcome of every election and every market on Earth. And what I can tell you is that I am shocked by the diminishing half-life of status quo protecting Narratives, by the inability of Big Institutions and Big Money and Big Media and Big War and Big Academia to lock down an effective story that protects the State, even when their competition is primarily comprised of clowns (dangerous clowns, but clowns all the same) like Donald Trump and Nigel Farage. There’s a … tiredness … to the status quo Narratives, a Marie Antoinette-ish world weariness that sighs and pouts about those darn peasants all the way to the guillotine.

  We’ve seen this before. History is littered with failed Narratives, once-powerful arrays of Common Knowledge that somehow lose their ability to compel human behavior and eventually become mere myth. That’s where Narratives go to die. They become fables, stories that we chuckle at, stories that we shake our heads at and ask “did people really believe in all that?” Michel de Montaigne – who invented the essay as a literary form and was the first blogger, albeit more than 400 years before Al Gore invented the Internet – wrote about the devolution of faith to fable back in the 16^th century. It’s a phenomenon as old as humanity itself. Manifest Destiny … Cultural Revolution … these were Narratives every bit as powerful in their day as European Union or Clinton in ours. Now they’re historical curiosities, something you come across on a Wikipedia bender.

  The rarity isn’t the Narrative that dies and fades into myth, but the Narrative that survives by re-inventing itself, by finding its words and stories repurposed and retold for a modern ear. For example, the Narrative of the American Founding Fathers is as potent today as it was 100 years ago, maybe more so, and that was before Hamilton gave it a new telling and a new power chord.

  Why are the status quo protecting Narratives faltering so badly? I think it’s because status quo political and economic institutions – particularly Central Banks – have failed to protect incomes and have pushed income and wealth inequality past a political breaking point. They made a big bet: we’re going to bail-out/paper-over the banks to prevent massive losses in the financial sector, we’re going to inflate the stock market so that the household sector feels wealthier, and we’re going to make vast sums of money available for the corporate and government sectors to borrow really cheaply. And as the McKinsey chart here shows, by Q2 2014 they had largely succeeded on all counts, certainly in getting the corporate and government sectors to borrow trillions in new debt.

  

   

  The result, or so the thinking went, of all this pump-priming or bridge-building or whatever metaphor you please would be for all four basic sectors of the global economy – households, corporations, governments, and financial institutions – to consume more and invest more and fail never, which would in turn create a virtuous, self-sustaining cycle of risk taking, real growth, and real wealth creation.

  

  It was a reasonable bet to make. But the bet failed. Why? There’s a book or two to write on this, but I’ll sum it up this way: you can no more force corporations to invest for growth if they don’t believe it’s safe than you can force people to watch John Oliver if they don’t think he’s funny. Sure, they’ll tell you that they think he’s funny, because everyone knows that everyone knows that John Oliver is funny, and they need to go along with the Common Knowledge to be successful social animals. But in their heart of hearts, they don’t think John Oliver is funny. Now to be clear, I’m picking on John Oliver to make a point. Personally, I think he’s funny. Some of the time. Well … kind of funny. I guess. Okay, I don’t really think he’s very funny. Sorry. And the truth is that if you paid me to watch HBO, just as Central Banks are basically paying corporations to borrow money, I’m going to watch 20 Game of Thrones re-runs before I watch a single episode of Last Week Tonight with John Oliver, just as corporations are going to buy back stock and hoard cash 20 times more than invest in new jobs or new equipment.

  So what does this have to do with incomes? Two things.

  First, little of the increased corporate or government borrowing trickled down into jobs or wage income growth. We’ve all seen the charts. Real wage growth is nonexistent in the Western world. Second, to make it feasible for corporations and governments to borrow these trillions of dollars in the first place, every bit of Central Bank balance sheet expansion (buying bonds) and balance sheet “twist” (buying longer duration bonds) and expansion of allowable securities for purchase (buying more kinds of bonds) and imposition of negative rates (charging you interest if you don’t buy longish-term bonds) was designed to – you guessed it – buy more bonds and thus drive up bond prices and drive down interest rates, particularly longish-term bond prices and longish-term interest rates. That’s great if you’re an investor looking for a percentage return on your bond portfolio. That’s terrible, however, if you’re an investor looking for an income from your bond portfolio. Over the past seven years, Central Banks have rewarded the return-seeking bond buyer many times over, and they’ve done nothing but punish the income-seeking bond buyer.

  Put these two income squelchers together – zero wage income growth because corporations aren’t investing for growth and less-than-zero investment income growth because Central Banks have crushed rates – and you have a vast swath of the voting public in every developed nation on Earth that (rightfully!) feels aggrieved and left behind by the gleaming economic recovery that the status quo Narrative Missionaries tout at every turn. Notably, the failure of wage income growth skews younger and Democrat/left. The failure of investment income growth skews older and Republican/right. The status quo Narratives could survive (and have many times) an assault from one wing of the electorate or the other. But from both simultaneously? It’s going to be a close call.

  But here’s the even larger problem lurking in the not-so distant future, and it’s found in the behavioral WHY of return-seeking bond buyers versus income-seeking bond buyers. These are two entirely different investor populations from a behavioral perspective, with different languages and different investment genotypes. When I hear an investor or financial advisor ask, “Why in the world would I buy a Swiss bond with a -0.5% interest rate?” I know that I’m talking to an income-seeking bond buyer. The return-seeking bond buyer, on the other hand, says “Hey, if you’re right about the world, those Swiss bonds currently yielding -0.5% are going to -1.0%, which means that the price is going up. Where can I buy one of those?”

  The only rational owner of a negative rate bond is a pure return seeker; there are zero income seekers holding negative rate bonds. Why is this a problem? Because income seekers will continue to own bonds even if the price goes down (for a while, anyway; at the very least, they are sticky owners). Return seekers, on the other hand, are not sticky owners at all. They will only own a bond if they think that the price is going up – meaning in this case that yields will continue to become even more negative, i.e., that there’s a greater fool (probably in the form of a Central Bank) willing to pay higher and higher prices for these income-destroying bonds – and they will sell in a heartbeat if they think this dynamic is changing.

  There is, to cop a phrase from the People’s Bank of China, a massive “one-way bet” on negative rate sovereign debt today. The momentum trade has crystallized to perfection in negative rate bonds, which has grown to become a $10+ trillion (yes, that’s trillion with a T) asset class. I think it’s the most crowded trade in the world from a behavioral or investment DNA perspective, and the moment you get even a whiff of the ECB or BOJ backing down from or reaching its limit of greater foolishness, you are going to get a rush to the exit on ALL sovereign bonds that will shake global capital markets to their core. It’ll be good times till then, as it always is, and I am seeing zero signs of Central Bankers backing down from their greater foolishness. But we have once again set up the global financial system as an inverted pyramid, with a $10 trillion asset class poised on a single, solitary piece of Common Knowledge —– what everyone knows that everyone knows. In 2008, the $10 trillion asset class of residential mortgage backed securities (RMBS) was entirely based on the Common Knowledge that it was impossible to have a nationwide decline in U.S. home prices. When that Narrative failed, the entire inverted pyramid came crashing down. In 2016, the $10 trillion asset class of negative rate sovereign bonds is entirely based on the Common Knowledge that there is no limit to the greater foolishness of Central Banks. If this Narrative fails, the entire inverted pyramid will come crashing down again. Hence my punchline: monitoring this and related status quo protecting Narratives (like the concerted effort to paint Brexit as a one-off blunder, just like Bear Stearns was painted in 2008) is the only thing that really matters for our investment reality.

  What to do? Convexity, convexity, convexity. Our portfolios should minimize the maximum risk the world actually presents, not maximize the reward our crystal ball models predict. Timing, timing, timing. We need to pay attention to what matters, and right now that’s all policy and all Narrative all the time. In a negative rate world, you’ve got to think in terms of catalysts, not “stocks for the long haul”. And one more thing. To paraphrase Groucho Marx in Duck Soup, if a four-year-old can’t understand what you’re doing in your portfolio, don’t do it. For me, that means real assets and real yield, fractional ownership in real companies with real cash flows from real economic activity with real people. You know, what a stock market used to mean before it became a Central Bank casino. For more on all these points, I’d point you directly to the recent Epsilon Theory notes “Hobson’s Choice“ and “Cat’s Cradle“.

  I know that this all comes across as very negative about the world and our investing future, and that’s because it is. To use a poker analogy, we were dealt some bad cards, the Central Banks waaay overplayed the hand, and now we’ve got to figure out how to extricate ourselves without losing our entire stake. But is this a hopeless situation? No. The most important lesson I ever learned from my mentors in this business is this: always live to fight another day. We can do that. It won’t be fun and it won’t be pretty and we’ll have some scars to show for it, but we can do that. The useful lesson from the Biblical Flood Narrative isn’t a pleasant fable about Noah saving the cute and cuddly animals. The useful lesson is that hubris must be confronted, hope is always present, and that preparation and honest actions will see us through any storm. Yes, we can do that.

   

  

  

• Dramatic Footage Shows Dallas Shooter Engage In Firefight With Policeman

  As more and more video emerges following Thursday night’s deadly Dallas shoot out, we get a new understanding of just how intense last night was.

  The video embedded below is 1:16 in length and shows an SUV with flashers on in the foreground.  The suspect in the background is distracted with someone who starts out off camera and eventually comes into the scene.  The suspect appears to hide behind a pillar while looking off to the right hand side of the shot:

  

  A few moments pass and coming in off the right hand side of the shot we see a person in black clothing appear before a shootout begins:

  

  A close range shootout takes place, with sparks from shots hitting metal spraying in the background.  It is unclear though if this shootout involved a police officer or an armed citizen providing some line of defense:

  

  * * *

  FULL VIDEO:

  

  

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• Lagarde Flip-Flops Again On Brexit, Warns Of "Disastrous" Trump-Style Protectionism

  Submitted by Michael Shedlock via MishTalk.com,

  Ahead of the vote on Brexit, IMF head Christine Lagarde warned of a prolonged period of uncertainty.

  After the vote, Largarde said Brexit provided the EU a better opportunity for reform.

  Today Largarde is certain of disastrous consequences if another large county turns protectionist. In doing so, she pointed her finger at Donald Trump.

  

  Lagarde Points Finger at Trump

  Please consider Lagarde Warns Trump-Style Protectionism Would Hit World Economy.

  Britain’s vote to leave the EU is already casting a shadow over international growth, the International Monetary Fund chief said in an interview, adding that the imposition of new trade barriers in another large economy could have ruinous effects.

   

  “I think it would be quite disastrous, actually. Well I don’t think I should say disastrous because that is an excessive word and I should refrain from excessive words. But it would certainly have a negative impact on global growth,” she told the Financial Times.

   

  [Mish Comment: So is it quite disastrous or simply negative? Her meaning is uncertain]

   

  Any uncertainty surrounding a Trump presidency would probably yield more instability in financial markets, similar to the upheaval in the wake of last month’s UK referendum, she said in response to a question. But the IMF chief took care to avoid singling out any politician or referring to Mr Trump by name.

   

  [Mish comment: Lagarde took care to avoid singling out Trump, while singling out Trump]

   

  Ms Lagarde said “waves of protectionism” in the past had “preceded many wars” and that protectionism “hurts growth, hurts inclusion and hurts people”.

   

  Ms Lagarde said she did not want to get involved in the political debate in the US, the IMF’s biggest shareholder. But she made clear her dim view of the policies of Mr Trump, who has proposed punitive tariffs on goods from China and Mexico and ripping up US trade pacts such as the North American Free Trade Agreement.

   

  [Mish comment: Lagarde does not want to get into the political debate in the US, but hands Hillary campaign talking points on a silver platter]

   

  The IMF’s assessment of the impact of the Brexit vote on the UK economy depends heavily on what sort of trade relationship with the EU a new government would be able to negotiate, she said.

   

  Should a deal preserve access to the single market — such as Norway now enjoys — then the UK economy would be only 1.5 per cent smaller by 2019 than would be the case if Britain remained part of the EU. Were a deal to lead to the UK’s access to the EU’s 27 other economies being subject to tariffs under World Trade Organisation rules, it would cost the UK 4.5 per cent growth.

   

  The IMF had not modelled the economic impact of a scenario in which the UK’s exit from the EU drags on and uncertainty continues for a year or more, Ms Lagarde said, but the political crisis set off by the vote could make such events likely.

   

  [Mish comment: The IMF warned of a prolonged period of uncertainty but did not model the result even though the “political crisis set off by the vote could make such events likely”. How likely? The following paragraph provides the answer]

   

  “Do we have a forecast and scenario with prolonged uncertainty, total lack of clarity, no triggering of Article 50 [the official notification required to leave the EU], things staying in limbo for a long period of time? No. We don’t have that. We doubt that it would be sustainable politically, geopolitically,” she said.

   

  [Mish comment: Prolonged uncertainty is both likely and unlikely]

   

  For the July 19 update of the IMF’s World Economic Outlook, Ms Lagarde said the organisation was looking at presenting a variety of possible scenarios for the global economy depending on the outcome of Brexit discussions — a departure from its usual format.

   

  [Mish comment: I can hardly wait. Until then, the uncertainty is nearly killing me]

  Waves of Protectionism

  If Lagarde wanted to make a positive contribution she should have embraced free trade, totally and completely.

  She is correct on one thing. And it’s a very big thing: “Waves of protectionism in the past had preceded many wars. Protectionism hurts growth, hurts inclusion and hurts people“.

  The solution is so simple it’s beyond Lagarde’s comprehension.

  The EU, US, and Asia ought to work out a genuine free trade agreement not a mind-numbing set of rules and regulations that encompass the EU, nor secret agreements like Obama’s proposed Trans Pacific Partnership (TPP) that has little to do with free trade.

  A genuine free trade agreement would consist of a single statement: “Effective immediately, all tariffs and subsidies, on all goods and services, are removed.”

  For more on TPP, Tariffs, the WTO, and free trade, please see …

  • April 7, 2015: Obama’s Trans-Pacific Partnership Fiasco vs. Mish’s Proposed Free Trade Alternative; How Will TPP Function in Practice?
  • April 11, 2015: Legacy Skills and Capital; Sugar and Steel; Turning TPP to TP
  • May 30, 2016: Stacked Deck: US Bullies WTO, TPP Revisited

  Lagarde finally issued a statement on trade that made sense. But it was buried in a series of flip-flops and conflicting ideas that makes it clear she really does not understand what free trade means.

  Nonetheless, her warning about trade is correct. A global trade war could indeed have disastrous consequences. And it’s not just Trump who could start one.

  Clinton, Trump and Sanders have all made similar statements on trade. For details, please see Today’s Quiz: Donald Trump, Bernie Sanders, Hillary Clinton – Who Said It?.

  

  

• What Are You Going To Do About It?

  Authored by StraightLineLogic's Robert Gore via The Burning Platform blog,

  Even small children recognize injustice, especially when they are its victims. “No fair” is the common schoolyard refrain. A sense of justice undoubtedly serves a host of evolutionary purposes. Imagine a world where the unjust, the wrong, always triumphed. Thieves prospered as crime went unpunished, the few stalwarts hewing to honesty and rectitude were marginalized or eliminated, and this social order evoked commendation rather than condemnation. How long would such a society survive? Cynics will say we are there now. That’s overblown, but they have a point.

  A desire for political change that becomes an actual movement drip-feeds on perceived injustices. No political movement of consequence fails either to wrap its objectives in the mantle of justice or portray its opponents as evil. The Declaration of Independence is a transcendently important work of political philosophy, but it’s also a laundry list of grievances against King George. The aggrieved, not the political theorists, propel revolutions. The straw that breaks the camel’s back is often relatively minor, even trivial. However, it generally has disproportionate symbolic importance. The tea tax exacted on the colonists was a pittance, but it inspired the Boston Tea Party and the revolutionaries’ “No taxation without representation” slogan.

  Eric Hoffer noted that: “What starts out here as a mass movement ends up as a racket, a cult, or a corporation” (The Temper of Our Time, 1967). The government birthed after the revolution has indeed degenerated into a racket, and those not in on it increasing recognize its injustices. It still tries to wrap its objectives in the mantle of justice, but the sole objective of government has become more government.

  When the American welfare state got started during the Depression, it was sold as a humanitarian response to that crisis. That sentiment may have animated some of those who paid for the New Deal back then; those who pay now know they’re getting fleeced. The government is a giant redistributive mechanism (with a substantial portion redistributed to the government), and most of those on the receiving end are not “needy.” They are, however, desirable sources of votes and payola.

  Between the low-class grifts of phony disability and unemployment and the high-class swindles of government contracting, labor racketeering, influence peddling, subsidies, tax breaks, regulatory machinations, spurious litigation, and all the other ways the denizens of America’s richest metropolitan area line their and their cronies’ pockets, those stout souls who still engage in honest and productive labor know they’re being robbed blind. Beneath the shrugs and resignation, fires of anger burn, and cauldrons of resentment bubble.

  Fires and cauldrons dot the landscape. Nobody has forgotten who got bailed out in the last financial crisis—banks, other large financial institutions, and a couple of car companies—and who didn’t—millions of homeowners with underwater homes and foreclosed mortgages. It requires no great perspicacity to recognize who has benefitted from central bank policies since the crisis—leveraged speculators—and who has not—everybody else, with particular harm suffered by savers and those living on fixed incomes. Burn and bubble.

  We’re all supposed to be blind to race, gender, ethnicity, sexual preference, and every other characteristic held to be irrelevant to human worth, except when it comes to government contracting, employment, and admission to institutions of learning. Might that rile those excluded because they didn’t have the right set of irrelevant characteristics? Proponents of such exclusion are invited to make their case directly to the excluded, and are advised to be careful when they do so. Victims don’t like being told they’re being screwed for the greater good.

  That would include the victims of Obamacare, who have seen their medical and insurance choices shrink as their premiums and deductibles rise. Trite homilies that they are helping fund insurance and care for those who previously had none do nothing to assuage their anger, and undoubtedly increase it. Access to quality medical care is a significant concern for the nation’s aging population, and the law’s destructive absurdity, blessed by tortured Supreme Court rationalizations, is now obvious. As the quality of the US medical system deteriorates, people will suffer needlessly, or die when they should have lived. Victims and their survivors will be understandably perturbed.

  Justice and equality are inseparable. Equality here does not mean the fatuous and impossible equality of outcomes that animates collectivists, but equality before the law. Equality of outcomes in all its collectivist guises obliterates equality before the law, the foundation of which is the concept of individual rights. For that concept to have any meaning, each individual must have the same rights, which receive the same protection from the government. Individual, equal rights must be the basis of the law, and when they are not, no justice is possible.

  Law instead becomes a tool wielded by those who control the government against everyone else. This week’s announcement by FBI Director James Comey that the FBI would recommend against charging Hillary Clinton in the email matter is the government wielding the law to protect its own. The fix has been in since at least 1913, when it gave itself permission to steal its constituents’ money (the income tax) and to begin the process of profitably substituting its scrip for gold (the Federal Reserve Act). The Clinton fix is business as usual. The exempt-from-the-law class expect outrage and contemptuously ignore it. Indeed, disclosure of the Loretta Lynch-Bill Clinton meeting may have been designed to rub the noses of the not-exempt in it. Yes, it looks terrible, but we run things, you don’t. You don’t like it? Tough shit, what are you going to do about it?

  The not-exempt are left with the thin gruel of cynicism and the even thinner gruel of resignation. Are we without recourse? There are those burning fires and boiling cauldrons, fueled by Mt. Saint Helens’ magma-builds of righteous rage. Comey’s decision notches up the temperature. As important, there are the manifest weaknesses of the exempt, not the least of which is their arrogance and inability to even recognize, much less acknowledge, them. A not exhaustive list: debt; their anachronistic command and control philosophy; an imperial, costly, stupidly counterproductive, and unsustainable foreign policy; an economy held together by central bank baling wire and illusion; a hollowed-out industrial base; stagnant incomes; a bought off class of savages that must stay bought off to forestall chaos; immigration; terrorism, and cities on the verge of financial collapse.

  King George and cohorts enacted the tea tax with the same insouciance with which the exempt have once again exempted Hillary. They had no idea they were lighting the fuse of revolution. What are we the outraged, the disgusted, the cynical, and yes, even the resigned, to do about this latest depredation? That last, one-too-many evil of the exempt turns ordinary citizens into nothing-to-lose revolutionaries. Don’t say it can’t happen; it has happened, repeatedly throughout history. Power’s inevitable corruption, oppression, and the best of humanity’s refusal to live their lives in chains has extinguished, against daunting odds, many an evil regime… and will continue to do so. Revolutions require revolutionaries. It would be altogether fitting and proper if this travesty—announced one day after Independence Day—was the tea tax to a Boston Harbor-style rebuke of the Clintons and their criminal class come November, and served as a rallying cry for a revolt that doesn’t end until the entire lot of them are overthrown.

  

  

• What To Expect From Tomorrow's Jobs Report And One Troubling Chart

  Remember all those hyperbolic warnings over the years that “this is the most important jobs report” ever? Well, the one due out tomorrow may not be that, but it certainly is one of the most important ones in the past year, and one that will certainly have an impact if not on the Fed’s future actions then certainly on the market’s (once again erroneous) expectations of what Yellen may do, especially if it is a +/- 60,000 outlier from the consensus estimate of 180,000.

  Recall last month’s “shocking” jobs print, when only 35,000 new jobs were created, the lowest number since September 2010?

  

  Well, that one print was sufficient to convince the market there would be no more rate hikes in 2016 and most of 2017. A few weeks later, first the capitulatory June Yellen press conference and shortly after the just as “shocking” Brexit, effectively killed the rate hike cycle, with the market now pricing in one full rate hike (that is 0.25bps) all the way in 2018. As LIesman raged, “The Fed Is As Close To Capitulation As I’ve Ever Seen Them.”

  But maybe there is some hope still. If so, it will be revealed in tomorrow’s payrolls report. As Bloomberg says, “the June jobs report will take on even more importance than usual. Economists and policy makers will use it to determine whether the strongest part of the economy slowed sharply even before concerns over global growth intensified, or if the labor market was merely hit by a temporary soft patch.” Ignoring that jobs are among the most lagging economic indicators known, the general (confused) consensus about what payrolls indicate suggests an outsized market response may be forthcoming.

  “There is a potential for a big reassessment on Friday for the outlook,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics Ltd. in Valhalla, New York. “Given how much views changed after the last report, I get the sense that the anticipation level going into this one is unusually high.”

  Wall Street consensus expects 180,000 jobs to be added in June following the abysmal 35,000 in May. One benefit will come from the return to work of striking employees at Verizon. 35,100 Verizon employees ended their almost seven-week work stoppage on May 31. Once the strikers are factored out, “that does imply some net slowing of the trend,” O’Sullivan said. Still, that rate of hiring “remains more than strong enough to keep the unemployment rate trending down.”

  Another “good” datapoint will be unemployment rate, expected to rise to 4.8% after falling to a more than eight-year low of 4.7% in May. This however was due to an exodus of workers from the labor force, as the participation rate resumed its plunge.

  Earnings will also be closedly watched, with average hourly earnings expected to rise 0.2% in June from the month before and 2.7% Y/Y. However, if that again comes at the expense of yet another decline in hours worked it will be a clear stagflationary sign for the economy. Furthermore, since the wage number weakened in June 2015, a bigger bounce this year may be expected due to a base effect. Looking past that, there still seems to be a nascent acceleration in pay, said Ethan Harris, head of global economics research at BofA.

  There is also the strawman of the Brexit effect. Bloomberg paints it as follows: “Brexit complicates things. With U.S. economic data now being pored over for signs of weakness, there’s extra downside risk associated with a bad payrolls number — anything under 100,000, Harris said. Unfortunately, the report will offer little clarity on how employers reacted to the U.K.’s decision to leave the EU. With the referendum held June 23, any immediate impact to U.S. employment may have been limited, even as investors grew concerned that the global economy’s growth prospects have dimmed.”

  All of this is bunk, as Brexit will have had zero impact on US hiring (and firing) intentions for US corporations in the middle of last month, when the widely accepted probability of an actual Brexit outcome was virtually nil. Indeed, as the latest ISM surveys showed, producers expected a ‘negligible’ impact on their business due to Brexit and signaled they would probably not pare headcounts as a result of the vote.

  And speaking of ISMs, except for the non-manufacturing ISM report, all of the service sector employment surveys declined or were unchanged in June, including the Markit PMI (-0.1 to 52.4), the New York Fed’s Business Leaders survey (-0.2 to +2.0, after our seasonal adjustment), the Dallas Fed services survey (-2.5 to +2.0), and the Richmond Fed services survey (unchanged at +18.0). Today’s collapse in manufacturing jobs per the ADP report was the worst since 2010.

  

  Then again, and it goes without saying, when one cuts through the chase, the only thing that will matter is what instructions the guy who mans the BLS’ goalseek function is given.

  * * *

  What to expect from the market reaction? Here is a handy breakdown from one of the few voices on Wall Street we respect, BofA’s Michael Harnett:

  • Payroll risk is strong payroll (>225k) which causes relative outperformance of banks at the expense of bonds & quality stocks; strong US labor market & consumer data (note that US mortgage refi activity has been slowly creeping higher) that raises Fed hike expectations from the dead would lead to a short-term unwind of some very extended pair-trades across the world.
  • In contrast, a weak payroll (<125k) removes “terra firma” of US expansion, would in absolute terms be best for gold & volatility, and would ultimately cause further barbell outperformance.

  * * *

  But perhaps the best indicator of what may be really coming tomorrow is the following chart showing the complete collapse in online help wanted ads: as shown below, the Conference Board’s Help Wanted Online (HWOL) report showed another sharp drop in job posting in June, with the index now down 16% from its highs late last year.

  

   

  On its face, this chart would suggest a collapse in payrolls, incidentally something that we have seen in recent months. But fear not: the intrepid economists at the Federal Reserve who are always and everywhere able, willing and ready to explain away any negative data point, already have a ready explanation – the collapse in online help wanted ads is due to… rising prices for Craigslist ads.

  About 60 percent of online advertised vacancies are posted on only five of the largest job boards (?ahin et al., 2014). One of these five boards is Craigslist, which has used a particular business strategy in order to dominate the market for online vacancies. In particular, while its competitors like CareerBuilder or Monster typically charge $250-$500 for a 1-2 month job ad, Craigslist initially entered all geographical markets by allowing employers to advertise job postings for free. As a result, Craigslist “rose from near obscurity in 2005 to become a major contender, if not the leader, in online job posts by 2007” (Kroft and Pope, 2014). However, over time Craigslist gradually moved away from the model of free online vacancies and began charging $25 for a job ad in many metropolitan areas (Table 1). Moreover, at the end of 2015 Craigslist raised fees from $25 to $35 or $45 in selected metropolitan areas. All told, the average price for Craigslist job ads rose substantially, and roughly doubled since the end of 2012 (Figure 2), coinciding with the period when online vacancy posting as measured by HWOL noticeably underperformed the JOLTS vacancy growth.

   

  In this note, we suggest that interpreting the measure of job vacancies from HWOL data requires careful consideration of changes in the quickly-evolving market for online job postings. We have analyzed one such change–rising prices for Craigslist job postings–which explains an important part of the recent divergence between JOLTS and HWOL vacancies. Our finding is reminiscent of similar concerns about the now obsolete Help Wanted Advertising Index of print ads, which was affected by changes in advertising practices and changes in competition within the newspaper industry (Abraham, 1987). Given the critical nature of HWOL data in tracking the health of the US labor market, we believe the adjustments proposed here are a step towards improving analysts’ ability to interpret these data and can lead to a fuller understanding of labor market developments in real time.

  In short, if tomorrow’s jobs report is another epic disaster, we expect that the following blog post on the federal reserve website will mysteriously disappear. On the other hand, if June payrolls soar by 200,000 or more, well, just blame the greedy capitalists at Craigslist.

  

  

• 1 Suspect In Custody After Snipers Kill 4 Cops, Wound 7 More In Downtown Dallas – Live Feeds

  Update – 0055ET: Oakland protesters block main freeway 880…

  Protesters in #Oakland have marched onto both lanes of I-800 and set off fireworks. https://t.co/elLHLkem8Phttps://t.co/518p0Dsrlf

  — ABC7 News (@abc7newsbayarea) July 8, 2016

  Police update on suspect…

  Update: pic.twitter.com/ukWSZJeZo3

  — Dallas Police Depart (@DallasPD) July 8, 2016

  Caught on tape: 1 Shooter kills an officer…

  #Dallas raw footage of suspect firing on police pic.twitter.com/RTdIlQI6yR

  — Anhkiet Travis Vo (@_TVo_) July 8, 2016

   

  *  *  *

  Update – 0033ET: 1 Suspect in custody – found with suspicious package, person of interest whose picture was displayed turned himself in.

   

  UPDATE via #Dallas PD: pic.twitter.com/gcAGF0CGog

  — Chris Martinez (@ChrisMartinezTV) July 8, 2016

   

  *  *  *

  Update 4 – 1155ET

   

  With heavy hearts, we are devastated to report a fourth officer has been killed.

  — Dallas Police Depart (@DallasPD) July 8, 2016

   

  Person of Interest Identified…

  

  Warn of possible bomb…

  BREAKING: Suspect in Dallas sniper shootings threatened to place bomb downtown: police chief pic.twitter.com/2GvnajmPu1 (NBC News) #3News

  — Frank Macek (@frankmacekwkyc) July 8, 2016

   

   

  BREAKING: 11th officer shot in downtown Dallas in exchange of gunfire with a suspect – chief

  — BNO News (@BNONews) July 8, 2016

   

  *  *  *

  Update 3 – 1130ET – Police Chief confirms 10 Police Officers shot by snipers in Dallas, with at least 3 dead, 2 in surgery, and 3 in critical condition.

  

   

  First Seconds: Protest Erupts into Gunfire https://t.co/TKuiwOpebK #dallas pic.twitter.com/RF7XnAYxIO

  — Dallas News Now (@dallasnewsnow) July 8, 2016

   

   

  This image from tonight's chaos in #Dallas just breaks my heart. pic.twitter.com/QfNrGaQA0i

  — Matthew Armstrong (@mattarmstrongj) July 8, 2016

  Video from a protestor as the shooting began. Jesus. Disturbing content. #Dallas #DallasPoliceShooting pic.twitter.com/yhPTI9KC2g

  — Andy Cole (@AndyCole84) July 8, 2016

   

  • BREAKING NEWS: POLICE CHIEF CONFIRMS 10 POLICE OFFICERS SHOT IN DALLAS, TEXAS.
    

    STATEMENT: 10 OFFICERS SHOT IN DALLAS pic.twitter.com/NxFIyNq6OA

    — Michael van Poppel (@mpoppel) July 8, 2016

  *  *  *

  Update 2: According to Breaking 911, the Dallas gunman has been described as a black male wearing green ballistic vest with a long gun. Fox adds that 3-6 officers have been "gravely wounded" while according to the International Spectator there is an active situation at the Omni Hotel in Dallas. There are reports of two suspects.

  "There are three to six officers who are gravely wounded, according to my sources inside the Dallas Police Department," KDFW's Shaun Robb reported, adding, "This is going to be an international story."

  One was a Dallas police officer and the second officer was a Dallas Area Rapid Transit officer, KDFW is reporting. KDFW also reports that police are in negotiations with a second suspect.

  Local Fox-affiliate KTVT relayed police commands that the suspect was armed with a rifle in a nearby alley, after previously, the station had reported that at least one suspect was down, following SWAT officers with shields storming a parking garage.

  * * *

  Update 1: amazing video footage from the scene of the shooting

  * * *

  Earlier today we said that we expected violent retaliations during tonight's numerous rallies to protest the shooting of Philando Castile, and sadly just a few hours later, we were proven right. According to local news sources, several Dallas police officer have been reportedly shot down during a protest, causing the demonstrators to run out to clear the area. The armed suspect is reportedly on the loose, and police are urging people to avoid the area.

  The extent of the injuries are not known.

  The shootings took place as a rally and march in downtown was ending that showed solidarity for communities affected by officer-involved shootings this week in Louisiana and Minnesota.  Several hundred people gathered at Belo Garden Park in Dallas and marched to the Old Red Courthouse near Main and Market streets, where the rally ended just before the shots rang out nearby at about 9 p.m.

  There is no word on whether any civilians have been shot. Police have not released information on any possible suspects in the shooting. DART public transportation service is suspended in downtown due to police activity.

  As KDFW reports, an officer on the scene confirmed that at least two officers were shot but their conditions are unknown. The shooting happened just before 9 p.m. as the protesters were marching near Lamar and Main St.

  A uniformed officer confirmed that two officers were shot, a Fox News reporter on the scene has reported. G.J. McCarthy of the Dallas Morning News caught video just after shots were fired.

  #BREAKING: Our cameras captured several shots ring out during a protest in Downtown Dallas pic.twitter.com/OWOBOOI8Jg

  — FOX 4 NEWS (@FOX4) July 8, 2016

  Holy fuck pic.twitter.com/tB9V4beKav

  — Trash Panda (@WhoAteMyPizza) July 8, 2016

  #BREAKING: An officer on scene confirms at least two Dallas police officers have been shot. pic.twitter.com/rdfNO9mRzS

  — FOX 4 NEWS (@FOX4) July 8, 2016

  BREAKING UPDATE: Police are reporting shots fired during the protest march in downtown Dallas. We are working to confirm.

  — WFAA-TV (@wfaachannel8) July 8, 2016

  Update – This shooting occurred during a large demonstration/protest of recent police involved shootings. 1000+ were marching in downtown.

  — DFW Scanner (@DFWscanner) July 8, 2016

  Update – At least one suspect fled, possibly near El Centro College per scanner traffic. Armed with long gun. AVOID THE AREA.

  — DFW Scanner (@DFWscanner) July 8, 2016

  Update – No confirmation on who/how many people shot, but at least one transported to Baylor Dallas. Hospitals notified.

  — DFW Scanner (@DFWscanner) July 8, 2016

  Update – Officers now reporting more shots have been fired. Again – AVOID downtown Dallas, specifically area of El Centro College.

  — DFW Scanner (@DFWscanner) July 8, 2016

  Update – DPD officers report suspect is at El Centro College. Again – completely avoid the area near El Centro in downtown Dallas.

  — DFW Scanner (@DFWscanner) July 8, 2016

  This is a little bit cleaner clip. Shots fired at the #blacklivesmatter protest. pic.twitter.com/DAJVkCll32

  — G.J. McCarthy (@gjmccarthy) July 8, 2016

  Witness at Dallas protests tells KTVT: “I heard about 20 gunshots in rapid succession.” Watch CNN: https://t.co/HAhU3MmiMf

  — CNN Breaking News (@cnnbrk) July 8, 2016

  Update – Scanner traffic does indicate at least one officer injured in this shooting, transported to a local hospital.

  — DFW Scanner (@DFWscanner) July 8, 2016

  Media please refrain from live broadcasting officer positions. #dallasshooting

  — Maj. Max Geron (@MaxDPD) July 8, 2016

   

  Live feeds below

   

  

  

• As Gun Violence Drives Sales, Shooting Ranges May Aid Local Education Efforts

  Emotions are running high in the US following a recent spate of violence at home and abroad. The gun debate, as exhausting as it has been, continues to rage on. Data shows us that the percent of total households who claim to have a gun has been declining, down to 36% in June from 53% back in January 1994.  

  

   

  At the same time, we have been witnessing YoY increases to the number of FBI background checks, aka NICS. Even though some polls show ownership rates are declining, it's not surprise to see gun sales increasing.  As we have covered in prior posts, using the FBI background checks – or NICS as they are known – we can reasonably deduce the demand for weapons in the US (excusing the fact that the dataset is incomplete given that we cannot track private gun sales which account for a material amount of overall sales).

  

  We have an increase of repeat buyers. And this cycle only grows as each violent event brings about increased government chatter of more regulation which then sparks fear in gun-owners and results in a spike in background checks and typically boosts sales.

  This morning Bloomberg noted the surge in background checks following the Orlando nightclub shooting:

  

  They also supplied an annotated chart of seasonally adjusted background checks:

  

  The rub here lies within education and maintenance of self-defense awareness. In 2015 IBIS published a report on shooting ranges in the US. Oddly, the areas with a greater concentration of shooting ranges relative to the population concentration in that region there was a lower degree of gun-related violence.  

  The following image shows regional concentration in percent of the total population of Establishments (shooting ranges) and the US population.  

  The southeast has roughly 25% of the US population concentrated there but only about 22% of the total Establishment (shooting range) population in the US is located in that same region. New England, Plains, Rocky Mountains all have a greater concentration of the total Establishments (shooting ranges) relative to their overall concentration of the US population.  

  

  Compared that with the next chart from the LA Times, one wonders if proper gun-owner education is what we should all be discussing since the areas with a higher human population and lower relative shooting range population appear have a higher level of gun violence:

  

  It is not as if the ranges lack use either.  Shooting ranges bring in about $1.3 billion in revenue annually and there are about 2100 businesses operating. Those are locations where education should and often does take place. People are influenced by other responsible gun-owners and safety always comes first. These are the places on the corner of your neighborhood near the county thruway maybe or in the commercial district just minutes away from a neighborhood. Amid swelling gun interest and sales, we have a way to not only control the upside insanity to what is legally allowed to be sold, but also have a way to work with those already packing heat and can help promote intelligent self-defense if only the current population of localized shooting ranges could be used more efficiently.

  

  

• What's Starting Now Will Overturn The Entire System: "Complete Collapse of Everything"

  Submitted by Mac Slavo via SHTFPlan.com,

   

  “There’s too much of everything…” The debt, the currency collapse, the global economy, and the institutions we’ve all taken for granted.

  All of it is head for prolonged collapse, and revolution.

  

  Michael Krieger of Liberty Blitzkrieg warns about the immense scale of the problems that have been triggered by the Brexit – and could lead to the complete disintegration of the European Union.

  The status quo is being disrupted, and a major, major event is coming. This one may well be big enough to wipe everyone out, that is those who aren’t able to duck out and survive.

  As Michael Krieger tells Greg Hunter at USA Watchdog:

  Former Wall Street analyst and journalist Michael Krieger contends the recent so-called “Brexit” chaos is signaling something much bigger than coming economic trouble. Krieger explains, “I think the biggest thing with Brexit, and I think it is far bigger than an economic downturn, is the disintegration and ultimately the overthrow of the entire status quo regime, the entire post WWII establishment. That’s way bigger than an economic decline. It’s way bigger than the economic decline in 2008 and 2009. When you think about it, since 1945, we’ve had all kinds of economic declines. We’ve had bear markets and bull markets, but the status quo, the establishment, the basic principles that have been guiding the world for, let’s say 80 years now, those are what are going to be overthrown, and that is a way bigger deal than an economic downturn, in my opinion.”

   

  On the odds of a financial crash, Krieger contends, “In my writings, when I first came out of Wall Street, I focused on debt, I focused on economics and I focused on financial markets. I did all of that stuff, but I stopped doing that for one simple reason.

   

  It was obvious to me . . . that this thing had only one way to go, which is a complete collapse of everything. We’re going to need to start over. There’s too much debt. There’s too much corruption. There’s too much BS. There’s too much war. There’s too much everything that is bad in this world, and debt is one aspect of it. Are we going to have to wipe out the debts one way or the other? Of course, we will. I guess the reason I have stopped talking about that and writing about that is because it is so obvious. So, what I have been doing over the last three years is getting people aware and engaged on everything, not just the economics, but the political corruption. Every single industry in this world is basically hitting peak corruption, peak shadiness, peak violence and peak everything. So, it’s not just the debt or the economies that are going to collapse, it’s everything, the political establishment and the social fabric. All of these things we have been living under our entire lives will be replaced by something else. . . . The only question is, are we going to get something better or are we going to get something worse?”

  Things have reached fever pitch, and the populists are fed up with the system, and ready to revolt. Technology has changed all the arrangements, and literally everything, not only in economics, but in politics, and throughout society, is about to change in a transformative way.

  

  

• Europe's Bank Crisis Arrives In Germany: €29 Billion Bremen Landesbank On The Verge Of Failure

  When most recently reporting on the latest European banking crisis, yesterday we observed a surprising development involving Deutsche Bank, namely the bank’s decision to quietly liquidate some of its shipping loans. As Reuters reported, “Deutsche Bank is looking to sell at least $1 billion of shipping loans to lighten its exposure to the sector whose lenders face closer scrutiny from the European Central Bank. 

  “They are looking to lighten their portfolio and this includes toxic debt. It makes commercial sense to try and sell off some of their book,” one finance source said. Deutsche Bank, which has around $5 billion to $6 billion worth of total exposure to the shipping sector, declined to comment.”

  This confirms what had long been speculated, if not confirmed, namely that German banks have been some of the biggest lenders to the shipping sector, a sector which has since found itself in significant trouble as a result of the ongoing slowdown in global trade.

  And now, it appears that some shipping loans gone very bad could be the catalyst for Europe’s banking crisis to finally breach the most impenetrable border of all, that of Germany.

  Because it is in Germany where we find what may be the next domino to fall as part of Europe’s latest banking crisis incarnation: Bremen Landesbank.

  Several weeks ago, the FT reported that the German Landesbank NordLB was considering taking full control of its smaller peer Bremer Landesbank (BLB), which is struggling under the weight of a portfolio of bad shipping loans. BLB, in which NordLB already owns 54.8%, warned last week that it would have to take a €400m writedown on its shipping portfolio, and that as a result it was facing a “mid-triple-digit million loss” this year.

  As the FT added, the admission prompted concerns about the health of the Bremen-based bank, which had €29bn in assets at the end of 2015, and BLB’s owners have since been holding talks on how to bolster the stricken lender’s capital position.

  In a statement made one month ago, NordLB’s chief executive, Gunter Dunkel, and Bremen’s finance minister, Karoline Linnert, said that BLB’s owners — NordLB, the city of Bremen, and the savings banks association in Northrhine Westphalia — had agreed to keep BLB’s capital “intact at an appropriate level”. “The form and size of the capital increase are currently being intensively discussed,” NordLB and the city of Bremen said. “The necessary decisions will be carried out by the end of 2016.”

  The market quickly read, and internalized the news, then promptly moved on: after all, with a bigger backer set to rescue the bank, there is nothing to worry about.

  Just one problem: that may no longer be the case.

  In an article released moments ago by Germany’s Handelsblatt titled a “Capital increase for ailing Landesbank is questionable“, the German paper writes that “shipping loans have brought Bremer LB into distress and the bank can not survive without government help, but a direct capital injection from Lower Saxony now looks unlikey.”

  The punchline, and where the narrative veers dramatically from the smooth sailing scenario presented last month by the FT, is that according to “Lower Saxony’ President Stephen Weil, a capital increase by his state and Bremen for the ailing bank is currently not realistic. “The classic method, namely when partners provide the necessary capital, does not seem to work,” the Prime Minister said to the “Weser-Kurier”. But, he added, “we will make every effort to save the Bremer Landesbank.“

  Bremer LB’s sudden fall from bailout grace appears to be the latest result of political conflict, because as Handelsblatt notes, Weil was responding to remarks by his colleague Carsten Sieling (SPD), who excluded capital support for the BLB. In a scenario that Italy is all too familiar with, Sieling said that such an action would not be in line with EU requirements.

  In other words, Germany may now find itself in the ironic situation that its own bailout intransigence will force it to engage in a bail in for one of its bigger banks.

  To be sure, it is possible that a solution is found, and Merkel will need to concede to not only a Bremen LB bailout, but one of Italy as well, as the two would go hand in hand. On the other hand, it just may be the case that Germany refuses to save even one of its own.

  And while the final outcome remains uncertain, the market quickly read between the lines and responded in preparation for a worst-case outcome: in intraday trading the bank’s “equity-like” 9.5% Contingent Convertible bond of 2049 has plunged by almost half from 120 to 73 in minutes, a move which has likewise spooked broader global markets.

  

  

  

• The Number One Goal to Own Gold and Silver is NOT What You Think It Is

  The number one reason to buy physical gold and physical silver (not paper gold and paper silver, which is not the same thing) is very likely not what you think it is. I can deduce the number one reason why most people buy gold and silver simply from the disproprotionate amount of questions I receive about buying gold and silver whenever gold and silver prices are rising significantly versus when gold and silver prices are falling. In other words, most people believe that that top reason they should buy gold and silver is to profit from rising prices. However, this is far from the best reason to buy physical gold and physical silver. The number one reason to buy physical gold and silver, bar none, is the global currency rot that is happening today, that is relentless, and that Central Bankers are now helpless to stop (though they are responsible for creating it). Of course, some may say that benefiting from rising fiat currency prices of gold and silver is the same reason as protecting onself against currency rot, but in reality, these two reasons for buying gold and silver are as different as night and day, and here’s why. Of those that want to benefit from rising fiat currency prices of gold and silver, the vast majority are looking for a quick score, and they buy gold and silver for this reason without even taking the time to truly understand the value of gold and silver. Those seeking a quick profit from ownership of gold and silver typically fail to understand that:

  (1) the true value of gold and silver is immutable and defined by its weight in grams or troy ounces;

  (2) that gold and silver should never even be priced in terms of illegitimate fiat currencies; and

  (3) during periods of time when fiat currency prices of gold and silver drop, a dropping fiat currency price is only indicative of an incredible opportunity to buy similar values (weights) of gold and silver while spending less fiat currencies to do so.

  As an example of this incorrect mindset, a the end of this past May, I informed a couple of friends that gold was making a short-term low at about $1200 and silver was doing likewise at $16. Because both PMs have risen considerably in fiat currency prices since then, one of these friends incredulously asked me at the start of this week if he should sell his gold and silver because both PMs had moved significantly higher in such a short time-span. In hearing this inquiry, I realized that he didn’t understand the number one reason to buy physical gold and physical silver in the first place – the protection it affords all of us against Central Banker-induced global currency rot.

   

  Everywhere you look, there are stories from every continent in the world regarding currency collapse and the hundreds of millions of lives ruined by Central Banker-created currency rot. Of course, you will never hear of this critical global issue promoted by the  banker-bought-and-paid-for mainstream media even though these unfolding tragedies should be front and center on page 1 as these are critical stories of which everyone should be aware. And because these stories are largely ignored by the banker-bought-and-paid-for mainstream financial media, this is the number one reason most people are shockingly unaware of the global currency rot that is happening right now. Fortunately, with a tiny bit of effort and just a little bit of research online, one can easily track down and uncover these stories.

   

  If you haven’t been asleep for the last five years, if one knows nothing else about this super important story of global currency rot,  the main story of currency rot everyone knows about is the rapid collapse of the Russian ruble from about mid-2014 to the end of 2015. Since then, the ruble has recovered slightly, but not enought to save anyone that stored large amounts of their wealth in rubles during this time period. Many times, people make the mistake of thinking that because their domestic currency has only devalued slightly up until now, that there will always be time to exit the currency and move to a sound currency like physical gold and physical silver. Thus, they endlessly delay executing strategies they know they should have executed at least a year ago, due to this “slow burn” that can be quite deceptive. For example, from early 2012 to the end of 2013, over 2 years, the Russian ruble lost 3% of valuation against the US dollar, a “slow burn” that tricked many Russians into remaining complacent about their faith in an unsound fiat currency. And in the first 7 months of 2014, the ruble lost another 3%. Again, many Russians were unhappy with the devaluation of the ruble, but they felt as though they could live with such devaluation and would take action if it became necessary, thinking they could front-run the event, even though warning after warning and red flag after red flag in the form of ongoing devaluations had already occurred that should have prompted every ruble-owning Russian to convert their fiat currencies into the sound money of physical gold that was far more stable. Then, while most Russians were still ignoring all the previous warning signs from July to the end of the year in 2014, the ruble fell off a cliff and collapsed, rapidly lost a massive 50% in purchasing power, and unfortunately, for the procrastinators,  rapidly destroyed their savings in the process. In other words, by the time the “event” happened for which Russians were waiting to trigger action, it was already too late to act. What about those that converted rubles to gold in mid-2013 because they had the foresight to plan for the time in which Central Bankers would ruin the ruble fiat currency? From mid-2013 to present day, their gold, priced in rubles, has risen by about 120%, more than enough to preserve their purchasing power in their home country and more than enough to help them avoid the fate of most of their fellow countrymen that lost much of their life savings in a very short period of time.

   

  Though there are literally dozens more examples I can provide that are comparable to the story above and I will provide one more example in this article of a failing emerging market fiat currency, people that live in industrialized nations tend to believe that there domestic currencies are “safe” because they fail to understand that Central Bankers are ruining currencies in every single country in the world today. They make a huge mistake of thinking “I don’t live in an emerging market, and that problem in Russia is an emerging market and third world country problem that will never happen in my country.” They further mistakenly believe, “A 50% devaluation of my fiat currency in 6 months can never happen. That is a problem of emerging markets and not industrialized, ‘modern’ markets.” Thus, they mistakenly conclude, with great confidence, that the process of fiat currency devaluation in their country will be much less volatile, and therefore provide them with much more time to react to the problem when it develops.  In other words, they believe that there is no need to plan because they can just react to warning signs in the future without realizing that multiple red flags and warning signs are already here. The free fall in purchasing power of the Ukranian hyrvnia, the Russian ruble, the Venezuelan bolivar and the very significant 20% to 30% devaluations of fiat currencies in several industrialized nations and dozens of other emerging markets ARE the red flags for which residents of industrialized countries are waiting, but have failed to identify.

   

  Let’s use Canada as an example to make my point. No one ever thinks of Canada as anything but a modern, industrialized nation that would not suffer the same fiat currency problems as an emerging market country, and indeed, if you are not Canadian, you may be entirely unaware of the real and very significant struggles that have afflicted the Canadian dollar, or looney, in recent years. Like the Russian ruble, for the past two years, the Canadian dollar suffered some fairly significant swings in value against the US dollar but nothing that concerned most Canadians, though these swings should have been massive red flags to all Canadians of the already unstable nature of the looney. In 2011, the Canadian dollar swung 5% higher and nearly 7% lower from its starting point against the USD during the year but by year’s end was nearly unchanged, so most Canadians did not believe there was any need to diversify out of the Canadian dollar into a sound form of money like physical gold. The following year in 2012, during the course of the year, more red flags materialized as the volatility of 2011 continued, but again, the year closed with the Canadian dollar nearly unchanged against the USD, so most Canadians continued to ignore the massive red flag of currency volatility and instability, falsely believing that they still had time to respond reactively, instead of proactively, to the unstable Canadian dollar. However, as was the case with the Russian ruble, the fall came quick and hard for the Canadian dollar and in just 2-1/2 years, from mid-2013 to the end of 2015, the Canadian dollar plunged by more than 30% against the USD. Again, for those Canadians that understood that Central Bankers are destroying fiat currency valuations in ALL countries and consequently moved out of the Canadian dollar into gold before this significant currency rot happened, their gold appreciated significantly in Canadian dollars over this same time period, helping to preserve their purchasing power versus the substantial losses in purchasing power they would have suffered had they continued to hold devaluing Canadian dollars. If one needs to be reminded of how quickly a “strong” fiat currency (an oxymoron of word association) can unravel, merely recall the successful Brexit vote last month that caused the British pound fiat currency to plunge to 31-year lows in a single day.

   

  Next, let’s look at the currency disaster that has afflicted citizens of Venezuela to provide a warning to everyone as to what they need to do to preserve their wealth during the continuing great currency rot and worldwide fiat currency collapse that is currently under way. In 2002, a USD could be exchanged for 1.6 Venezuelan bolivars. In April of 2016, many media sources reported that a dollar could be exchanged for more than 1,000 Venezuelan bolivars on the Venezuelan black market. Here’s how such a steep and rapid devaluation translates into real world problems. As of April 2016, Venezuelan media reported that a one kg bag of rice cost two days of wages for the average wage earner. And as of last month, the dailycoin.org reported that the average Venezuelan worker,  if they wished to buy a plane ticket to leave the country to escape this massive currency rot, would need to save two years of wages to purchase such a ticket! In other words, fiat currency collapse has ruined the life of the average Venezuelan. But what about those Venezuelans that took their cues from the currency rot events that had already been unfolding all around them and exchanged their bolivars into gold?  Within the past 5-1/2 years, gold priced in Venezuelan bolivars has soared by more than 444%, and this is just in terms of “official” government-set forex rates, which due to multiple “official” exchange rates, bizarrely range from 9 or 10 bolivars to several hundred bolivars per dollar. However, because the black market rate, as of Q1 2016, frequently reached in excess of 1000 bolivars per dollar, in essence, if one had changed bolivars into physical gold in Venezuela, and then sold some of this gold for US dollars to later be exchanged back into Venezuelan bolivars, not only would one be totally unaffected by the collapse of the Venezuelan bolivar, one would be prospering in such an environment of fiat currency collapse simply by having had the foresight to exchange intrinsically near-worthless bolivars into gold before the bolivar collapsed. And if no one wants Venezuelan bolivars, which is quite common, then one still owns gold, accepted as a universal money everywhere, or one can exchange gold into another fiat currency that is accepted. With the Venezuelan bolivar, this fiat currency is merely in the process of returning to its intrinsic value of zero, as is the destiny of all fiat currencies. In case one believes one is safe from our current orgy of Central Banker-induced fiat currency implosion by holding US dollars, remember two points.

   

  One, the strongest option among a bunch of bad options is not a good option, and two, the destiny of all fiat currencies is to return to their intrinsic value of nothing, including the US dollar.

   

  As I’ve stated above, procrastination is the enemy of wisdom, as procrastination in exchanging fiat currencies into sound money literally translated into an extreme difference between financial suffering and misery and financial prosperity in Venezuela today in less than a 6-year time span. Who will be the next country to become the next Venezuela? Most likely it will be another emerging market, but this probability does not negate the likely probability that these same problems will find their way back home to the industrialized nations that started these very problems as well (well, at least to the nations of the Central Bankers that rule these industrialized nations). And when it does, as we have all learned from the example of Venezuela above, you will either be prepared for it before it happens or try to react as it happens, but react too late,  and be wiped out financially.

   

  The Central Banker destruction of all fiat currencies in every country of the world today demands a proactive approach and a reactive approach will fail.  

   

  The example of Venezuela has taught us that we all have been provided ample and adequate warning to prepare for currency rot before it truly escalates in our own nation, but that shockingly, only a few among us will take the necessary actions  to survive it when currency rot rapidly escalates in our own country. Unfortunately, even those that see the beginning and intermediate stages of what has happened in Venezuela happening in their own countries, as is the currently the case in Canada, Australia, the UK, Portugal, Greece, Italy, Spain, Ireland, Kenya, Brazil, and on and on, likely will still ignore these red flags, simply because banker propaganda has prevented most of us from realizing the simplest of solutions – converting fiat currencies into the sound money of physical gold and physical silver.

   

  In other words, not only is it human nature to not believe something can happen until it actually does happen,but it is also human nature to incredibly discredit an event as it unfolds before us, as long as it does not directly impact us significantly, until it invades our own personal space, directly affects us and denial of the truth is no longer plausible.

   

  If you have read this article and are still skeptical, I urge you to study the current cases of fiat currency collapse that have happened/ and are happening right now in Venezuela, Russia, Mexico, Colombia, Argentina and Brazil. Studying and understanding the timeline of these currency collapses should truly awaken you to the very sobering probability of severe fiat currency devaluation and/or collapse in your country, no matter where you live.  Please refer to our prior two articles, “Three Charts that Show We’re Just Getting Started in the Second Leg Higher For All Gold and Silver Assets”, and “Why Intelligent Gold and Silver Mining Company CEOs are Deferring Sales of Current Production” to gain a fuller understanding of the global currency crisis.

   

  To listen to a recent interview about where silver is heading, given by our Managing Director, JS Kim, to the SGT Report, click here.  Click here to learn more about the best junior gold and silver mining stocks in our Platinum Membership (mainly for accredited investors) and click here to learn about our flagship Crisis Investment Opportunities portfolio, up more than 16% in just the past month (3 June to 6 July). To be informed of our articles when we first release them (we originally released the above article on our website on 2 July 2016), please subscribe to our SmartKnowledgeU RSS feed. For occasional unpublished content, similar to this article, and unavailable anywhere else, sign up for our free newsletter.

  

• Measuring America – 30-Year-Olds: Then & Now

  A lot has changed for 30-year-olds in the last 40 years… apart from median incomes…

  

   

  In 1975, nearly 3 in 4 30-year-olds had married, had a child, had left school, and lived on their own. In 2015, just 1 in 3 30-year-olds have these characteristics.

  And as Census.gov details, that's not all…

  

  [Source: U.S. Census Bureau]

  

  

Digest powered by RSS Digest

• Meanwhile In Greece, Homeless Family Of 5 Lives In Carton Boxes

  Just when you think, you’ve seen and heard everything possible and impossible in Greece with regard austerity and the crisis… there comes this incredible human story: a family of five living in carton boxes in the city of Patras in western Greece.

  As KeepTalkingGreece.com details, the family ended up on the streets after a labor accident of the father. The family has no income. For the last 8 months, the two adults and the three children live in a provisional “shelter” made of carton boxes they have places in a corner of an abandoned and half-constructed building.

  

  The parents need to feed two toddlers aged 1.5 and 3.5 years old and an older child from the father’s previous marriage.

  

  The family receives no disability pension or any allowance from the state that can help them make a living.

  “They tell their children that living in boxes is a game,” local media TheBest.gr reports.

  The father is unable to work. The family’s relatives cannot help them as they are also in dire economic situation.

  They get meals from the local church, a neighbor to the building gives them from time to time the opportunity to take a bath.

  

  Basic sanitary conditions are non-existent, the smell where these people live is beyond any description.

  The father has been unemployed for the last 3.5 years. His leg was badly cut during works with a chainsaw.

  Speaking to thebest.gr, the father said, he wished to have space in a plot to put a tent for his family and two hens in order to have something to feed his children.

  And a job. “Anything that will help me be back on track.”

  

  

• “Italian Government Collapse More Than Just A Possibility”

  Submitted by Mish Shedlock of MishTalk

   

  Four new polls show comedian Beppe Grillo’s Five Star Movement (M5S) ahead of prime minister  Matteo Renzi’s Democratic Party (PD) were an election held today.

  The next election will be no later than May 23, 2018. Renzi promised to step down if he fails a constitutional reform referendum later this year.

  The reform referendum will likely be held no later than this October.

   

  Beppe Grillo – Comedian Founder of Five Star Movement

  

  Renzi Rocked Yet Again

  Please consider Renzi Rocked as Five Star Surges in Polls.

  The populist Five Star Movement has emerged as Italy’s leading political party, overtaking Matteo Renzi’s ruling Democratic party (PD) in four separate opinion polls that have exposed the growing vulnerability of the country’s centre-left prime minister.

   

  The primacy of the Five Star Movement, which is led by the sardonic comedian Beppe Grillo and has called for a referendum on ditching the euro, reflects a shift in public opinion against Mr Renzi that will heighten fears of a return to political instability and uncertainty in the single currency’s third largest economy.

   

  “A government collapse is more than just a possibility, it is a scenario that we are looking at very closely,” said Federico Santi, an analyst at the Eurasia Group consultancy. “The trend has been clearly bad for the ruling party and favourable to the Five Star Movement, driven by issues — like migration, the banking troubles and corruption scandals — that are not going to go away. It’s hard to see what it could take for Renzi and the PD to make a comeback at this point.”

   

  According to polls released on Wednesday by Ipsos, the Five Star Movement is supported by 30.6 per cent of Italians, compared with 29.8 per cent for the PD. Similar polls in January had Mr Renzi’s party leading the Five Star Movement by nearly six percentage points. In the 2014 European elections, shortly after Mr Renzi took office, the PD defeated the Five Star Movement by nearly 20 percentage points.

   

  Three other surveys taken after the Brexit vote also showed the Five Star Movement ahead, with the next national elections due in early 2018.

   

  One by Demos released on July 1 showed the party ahead by a margin of 32.3 per cent to 30.2 per cent over Mr Renzi’s PD. Others by Euromedia and EMG showed the Five Star Movement with narrower leads of 0.5 and 0.4 percentage points. Another poll showed the Democratic party hanging on to a narrow lead.

   

  The polls look even darker for Mr Renzi if the likelihood of a run-off between the two largest parties — which is called for under Italy’s new electoral law if no party exceeds 40 per cent — is taken into account. In those scenarios, the Five Star Movement would defeat the PD by as much as ten percentage points, as right-wing voters would coalesce around the protest party.

   

  Beneath the surface, there is increasing talk of what might happen should his efforts fail. Most likely, said Mr Santi, a technocratic government would have to take charge, rather than a quick move to fresh elections. But no clear candidate has yet emerged who would take the reins.

  Credibility of the Italian Political Class at Stake.

  Renzi asked voters to stick with him and promised an aggressive campaign in favor of the referendum.

  His rationale is laughable: “The referendum is not crucial for the destiny of an individual, but for the future credibility of the Italian political class,” said Renzi.

  Are voters really supposed to rally around the notion of saving the credibility of the ruling political class?

  Wow! The statement is so ridiculous one has to wonder if Renzi secretly wants the referendum defeated.

  40% the New Majority

  The referendum would shrink the Italian senate and give a majority of parliament to any political party that could achieve 40% of the vote in national elections.

  If no party achieved 40%, a runoff would take place and the winner would automatically receive a majority of parliament.

  Curiously, M5S is against this reform although it may the best way for Grillo to get the vote he seeks on leaving the Euro.

  Renzi Stung in Mayoral Elections

  In recent mayoral elections Renzi’s party went down in defeat in in Rome, Turin, Naples and Trieste. Rome and Turin went to the Five Star Movement.

  For mayoral details and details of the constitutional referendum, please see Stinging Defeat of Renzi in Italian Mayoral Elections; 40% the Proposed New Majority

  Italian Banking System Near Collapse

  Monte dei Paschi, the oldest bank in the world, and Italy’s third largest is so woefully undercapitalized that even the ECB recognizes that fact.

  On July 4, I commented the ECB Triggers Another Bank Shares Selloff, Tells Monte dei Paschi to Shed More Assets.

  German Chancellor Angela Merkel and the ECB are at odds with Renzi over how to fix €360 billion in nonperforming loans in the Italian banking system.

  Merkel rebuffed Renzi’s request for state sponsored bank bailouts on four occasions.

  On June 30, I asked Italy’s Zombie Banks on Death Bed, Bail-Ins Coming?

  Merkel chastised Renzi, “We wrote the rules for the credit system, we cannot change them every two years.”

  Under a bail-in scheme bondholders and depositors will take a huge hit. Voters are already angry over the bail-in of bondholder of much smaller Banca Etruria last December.

  In Italy, individual investors own close to €200 billion in Italian bank bonds. Imagine the anger should they lose even a portion of their investments.

  This is why Italy Threatens to Defy Merkel, Brussels Over bank Bailouts.

  Italy on the Euro

  What has the Euro done for Germany vs. Italy?

  

  Voters Hold the Key

  Yesterday I asked Can the EU Survive as a Prison? Who Has the Keys?

  The short answer is voters hold the key, and they are already mad as hell. If bail-ins happen, it will be the end of the Renzi government for sure.

  Renzi Slams Deutsche Bank

  ZeroHedge has an excellent article out today on the state of Deutsche Bank through the eyes of Renzi.

  Please consider A Furious Italian Prime Minister Slams Deutsche Bank As Europe’s Most Insolvent Bank

  In a surprising admission of reality, none other than Italy’s prime minister Matteo Renzi, “went there” and slammed Deutsche Bank as the true “derivative problem” facing Europe.

   

  As Reuters adds, speaking at a joint news conference with Swedish Prime Minister Stefan Lofven, Renzi said other European banks had much bigger problems than their Italian counterparts.

   

  “If this non-performing loan problem is worth one, the question of derivatives at other banks, at big banks, is worth one hundred. This is the ratio: one to one hundred,” Renzi said

  So just like that the Mutually Assured Destruction doctrine is activated, because now that Deutsche Bank’s dirty laundry has been exposed for all to see, Renzi’s gambit is clear: if Merkel does not relent on bailing out Italian banks, the collapse of Italian banks will assure the failure of Deutsche Bank in kind.

  Also see Diving Into Deutsche Bank’s “Passion to Perform” Balance Sheet.

  This kind of insanity is precisely why the euro is doomed.

  Get Out Now!

  I repeat my warning from last December: Get Your Money Out of Italian Banks Now!

  

  

• SeRVeRGaTE FoR FRiNGe LoWBRoWS…

  

   

  He released TOP SECRET INFORMATION to expose how the gubmint is illegally spying on all of us…

   

   

  .
  

   

  She released TOP SECRET INFORMATION because she is an extremely careless and lazy assed pig…

   

  .
  

   

  He did it to her in a private jet.

  She does not understand the meaning of : “A lawyer shall avoid the mere appearance of impropriety.”

   

  .
  

   

  He is a clown.

   

  .
  

   

  He ate the HillBilly Investigation.

   

  .
  

   

  He is going to have a field day in the debates.

  

• Globalists Are Now Openly Demanding New World Order Centralization

  Submitted by Brandon Smith via Alt-Market.com,

  I have said it many times in the past – when elitist criminals start openly admitting to their schemes it means that they are ready to pull the plug on the current system. They simply don’t care anymore who knows their plans because they think that victory is inevitable.

  There have been more subtle and less prominently published calls for a "new world order" in the past, to be sure.  However, at no other time have I seen international financiers and their puppet political mouthpieces so brazen about calling for global centralization than in the wake of the successful Brexit referendum. It is as if the Brexit flipped a switch in the existing narrative and set loose a flood of new propaganda, all aimed at convincing the general public that central banks must combine forces and act as one institution in order to combat an economic crisis that isn’t even visible to laymen yet.

  Though I predicted the activation of this propaganda campaign in my article “Brexit: Global Trigger Event, Fake Out Or Something Else?,” published before the referendum vote took place, the speed at which it is developing is truly astonishing.

  Now, under the current circumstances of the previous week’s market rally post-Brexit (driven by hopes of central bank intervention and extremely low trading volume) one would think that the globalist calls for total centralization of financial policy management don't make much sense. Where is this “crisis” that the bankers keep warning about?

  As I outlined in great detail in recent articles, I believe the Brexit to be a partial trigger event for a future market disaster that has been engineered for many years. That is to say, a worldwide financial calamity has been deliberately staged in advance, and the Brexit is meant to act as a scapegoat for it.  The fundamentals of the global economy have been increasingly negative since 2008, and the only "indicator" left to appear positive has been stocks.

  There are plenty of people out there who assume that equities have escaped without consequence after the UK referendum because of the pre-4^th of July rally. However, I would suggest they not get too comfortable with the hollow low volume spike in stocks at this early stage.

  These kinds of rallies should not be a surprise. They were common during the derivatives and credit crash that struck in 2008 after Bear Sterns and Lehman. Ultimately, stocks are an irrelevant faith driven indicator, and the fundamentals will always win in the end.

  As Forbes notes in a surprisingly honest analysis — the “Lehman moment” of 2008 was not really a “moment” at all. The derivatives crash was driven by numerous frailties within the debt bubble structure; Lehman was just a higher profile element of a more chaotic mess. When Lehman’s bankruptcy went public, equities took a considerable dive, rather similar in velocity to that which occurred right after the Brexit referendum. But, only a week later stocks had rallied back near the exact highs seen before Lehman had folded.

  The psychology of market investors is to always first go with what they are familiar with and what they have been conditioned to do, much like Pavlovian dogs. Investors today, as then, were conditioned to “buy the dip no matter what”. Of course, once reality and the fundamentals set in, stocks were back in free-fall only two weeks later.

  The Brexit is not going away, and the negative effects it heralds are still barely visible to the mainstream. This process is going to be actively weighing on the markets for months as investors continue to lose their blind faith in the system. We haven’t even begun the party yet, and this is assuming there are no other catalyzing moments around the corner.

  Beyond the mechanics of the economy, the elites themselves are often a good litmus test for predicting what is about to take place within the stock casino and outside the stock casino.

  The fact that the mainstream financial media is now awash in calls for extreme measures in central bank coordination and numerous elites warning of greater crisis should be of some concern to the public. Just as the Bank of International Settlements (BIS) and International Monetary Fund (IMF) warned of a crash back in 2007 and early 2008 and were proven “correct,” they have also been warning of a crash in 2016. Post-Brexit, the chorus of “warnings” from the elites has exploded. They are rarely wrong about economic crisis exactly because they are the people that create the conditions for crisis in the first place.

  George Soros continues to claim that the Brexit has “accelerated a financial-market crisis” even after the latest stock rally.

  Bloomberg, in support of European Central Bank President Mario Draghi, published an article titled “Draghi Wishes For A New World Order Populists Will Love To Hate.” Bloomberg later removed the word “New” from the title.

  The article repeats a rising call by central bankers around the world to stop concerning themselves with “domestic” policies and problems and start coordinating globally to deal with “global problems.” The BIS ALREADY controls the policy making decisions of all other central banks as admitted in the infamous Harpers expose on the BIS titled “Ruling The World Of Money.” But this is never mentioned by Draghi or Bloomberg.

  Interestingly, the BIS is now arguing not only for global policy coordination, but also GLOBAL RULES for all central banks. If the BIS already controls the policy decisions of the Federal Reserve, the ECB, and every other central bank member, then why do they want “global rules” put in place for those same central banks?

  They are doing this because the goal, the end game, is for the general masses to accept and even demand a global central bank, either in the form of the BIS or the IMF, or perhaps both of them combined into a single entity. Once again, the elites are using the Hegelian problem-reaction-solution strategy to manipulate the public into wanting globalist control.

  The BIS has been building up to this moment for quite some time.  In May, for example, BIS chief economist Claudio Borio argued that a "new global monetary order" was needed to replace the dollar system.  This new system would prevent crisis by reigning in all national central banks under rules which would force them to act in a coordinated fashion, apparently under the administration of the BIS itself.  Now it would seem the central bankers have the beginnings of their "crisis" which they clearly plan to put to good use.

  In yet another recent article Bloomberg calls for central banks to “kiss their domestic bias goodbye”; arguing that national economies are now so “intertwined” that central banks all need to work off a single set of guidelines in support of the global economy rather than individual national economies.

  On the day after the Brexit vote, China stated its desire for the Asian Infrastructure Investment Bank (AIIB) to work closely with World Bank. For years I have been pointing out that the Chinese never had any intention for the AIIB to become a counter-system to the IMF or World Bank and that the Chinese were working with the globalists, not against them. Now we have open confirmation.

  The Chinese premier also warned of a “butterfly effect” leading to crisis after the Brexit, and called for “enhanced coordination” among all the economies of the world.

  European Union officials are going for broke as they suggest the formation of a European “super state” in the wake of the UK referendum. This system would essentially erase political boundaries and sovereign borders to make the EU a single entity in every capacity up to and including a single European army.

  The amplified calls for total centralization and a “New World Order” go on and on, and I believe they are a blaring signal that something very ugly is about to happen.

  Consider this: Central banks will never gain public support for globally centralized policy or a global economic authority unless they are proven right and a crash does indeed take place. The crash does not necessarily need to be immediate and “total”, as some liberty movement activists assume. It is more likely to be gradual and micromanaged, though still resulting in a level of suffering in certain regions not seen since the Great Depression.

  More bank coordination requires more chaos and examples of “conflicting policies,” which will probably take the form of “currency wars” among certain nations. The elites must conjure a theater in which some central banks work at cross purposes and muck up any potential recovery. They can then argue to the public that a single internationally recognized and obeyed global banking authority is needed to prevent this sort of thing from ever happening again.

  The concept of central banks “working globally” rather than domestically could only be sold to the masses if a fiscal disaster was triggered on a global scale that outmatched the needs of any single nation state. Each central banker initiative suggested after the Brexit requires a financial implosion in order to be justified.

  In my next article I will be listing the many reasons why I believe the globalist plan for centralization and a NWO is destined to fail. This does not mean, though, that extensive effort and sacrifice will not be necessary in the near future on our part. For now, vigilance is our best defense. The elites are telling us exactly what is about to happen through their very behavior and statements. It is time for those who are aware of the bigger picture to start listening if they are not already, and prepare accordingly.

  

  

• US Marines To Accept Chubbier Women

  In an effort to maintain the new status quo of cutting standards everywhere in the name of equality and "progress", the Marine Corps announced major changes over the Fourth of July holiday weekend regarding how much it will allow service members to weigh, and the biggest shift comes for women: going forward "larger" ladies will be allowed to defend the country while also standards used within the physical fitness test will also be relaxed.  

  In a document released by USMC Fitness division, the new height and weight standard took effect on July 1, 2016 and is relaxing regulations to increase the pool of potential parties. Think of it as a covenant lite loan in a way… only "heavy."  Why would the US do this?  One could be excused for understandably saying that the US is becoming more progressive and is accommodating those who have the heart to serve but not necessary the physical capability.

  

   We see a different reason for the US to be relaxing admission tests, which is this chart highlighting weak capacity from the Heritage US Military Strength Index:

  

  What's changing? According to the Washington Post, the Marine Corps will now allow chubbier women to, so to say, slip through the cracks.

  "Female Marines will be allowed to weigh five to seven pounds more than before for each inch of their height, according to new guidelines published by the service. A 5-foot-6 woman, for example, was previously allowed to weigh up to 155 pounds, but can now be 161. A 5-foot-9 woman was allowed to be up to 169 pounds, but can now be 176."

  The Corps is also relaxing the rules on pull-ups. The new rule will eliminate fixed-arm hanging as an alternative choice to pull-ups for women. In place of fixed-arm hanging women, and men, will have the option to choose push-ups instead. The incentive remains skewed toward the more demanding pull-up, as Military.com explains:

  "'Push-ups become an option on the PFT, but Marines are incentivized toward pull-ups, as these are a better test of functional, dynamic upper body strength and correlate stronger to physically demanding tasks,' Marine Corps Commandant Gen. Robert Neller said in an administrative message to the Corps released Friday. 'Push-ups are also a valid exercise and good test; however maximum points can only be earned by executing pull-ups.'"

  Explaining the new physical fitness test requirements, Military.com went on to say:

  "The hybrid pull-up option is the Marines' solution to a four-year conundrum of how to promote pull-ups for all Marines without making it impossible for women to succeed."

  As we march further into a state of "gender equality" there is nothing wrong with admitting rules need to be eased but when it comes to defending a nation, is the best answer really to just relax the standards?  When we observe banking institutions do that with their prequalification requirements, the results are virtually always disastrous and in the last prominent case, led to a bailout of the entire financial system.

  Who will bailout the US military if pudgy push comes to shove.

  Either way, these are the new rules.  We have reported extensively on robots replacing workers and as that trend spreads deeper into the workforce, expect the American military to relax admission requirements even further to "help" accomodate even greater enlistment numbers by those who have been recently displaced by a robotic "Johnny 5" barrista.

  Full message from Gen. Robert Neller:

  R 011230Z JUL 16

  ALMAR 022/16

  MSGID/GENADMIN/CMC WASHINGTON DC DMCS//

  SUBJ/CHANGES TO THE PHYSICAL FITNESS TEST (PFT), COMBAT FITNESS TEST (CFT), AND BODY COMPOSITION PROGRAM (BCP)//

  REF/A/ALMAR 030/15 REVIEW OF PHYSICAL FITNESS AND BODY COMPOSITION STANDARDS// GENTEXT/REMARKS/

   

  1.  Last November we began a comprehensive review of physical fitness and body composition standards.  Subsequent efforts focused on developing a physical fitness program that incentivizes behavior toward an end state of a healthy and fit force able to better answer the call in any clime and place.  The review was a collaborative effort that drew from fitness experts and Marines, and provided wide-ranging options for consideration.

   

  2.  As a result, a number of PFT and CFT changes are being implemented that ensure standards are relevant, challenging, and also allow for greater distinction between Marines of different fitness levels and age groups.  There are significant adjustments to the PFT and CFT scoring tables, requiring most Marines to demonstrate greater performance to meet the new minimum and maximum standards.  A major change to the PFT is the elimination of the Flexed Arm Hang for females and incorporation of a push-up / pull-up hybrid event for all Marines, recruits, and officer candidates.  Push-ups become an option on the PFT, but Marines are incentivized toward pull-ups, as these are a better test of functional, dynamic upper body strength and correlate stronger to physically demanding tasks.  Push-ups are also a valid exercise and good test; however maximum points can only be earned by executing pull-ups.  These changes go into effect 1 Jan 2017.

   

  3.  Performance on the PFT and CFT will also be a consideration in BCP decisions.  Marines scoring 285 and higher on both the PFT and CFT will be exempt from weight and body fat (BF) limits.  Marines scoring 250 and higher on both the PFT and CFT will be afforded an additional 1 percent BF.  However, all Marines are still subject to the requirements of the Military Appearance Program.  These changes also go into effect 1 Jan 2017.

   

  4.  Other changes to BCP include modifying the maximum allowable weight limits for female Marines, use of more precise tape measuring devices and de-centralizing BCP waiver granting authority from Manpower and Reserve Affairs (Manpower Management) to the first General Officer in a Marine’s chain of command.  These BCP changes go into effect immediately.

   

  5.  Additional details, including the new PFT/CFT scoring tables, physical fitness training recommendations, and BCP adjustments are available at:  https:(slash)(slash)fitness.usmc.mil.  Follow-on MARADMINS will further address administrative details and the associated Marine Corps Orders will be updated accordingly.

   

  6.  America expects its Marine Corps to be the most ready when the Nation is least ready.  Collectively, these are the biggest changes to the PFT since 1972 and CFT since 2009.  We will monitor the effects of these adjustments for two years and then adjust if required to ensure our standards continue to contribute to the effectiveness of our force and enhance our ability to respond when our Nation calls.

   

  7.  Robert B. Neller, General, U.S. Marine Corps, Commandant of the Marine Corps.//

  

  

• A Period Of Major Civil Unrest Looms – How To Win An Inevitable Confrontation With The Status Quo

  Submitted by Mike Krieger via Liberty Blitzkrieg blog,

  At this point I’d like to remind everyone that crime in the U.S. has been dropping since the 1990’s. So why has domestic police force militarization been growing exponentially since then? Ostensibly, it is for the “war on terror” and to keep us safe. In reality, we know this is bullshit. Just like the NSA’s unconstitutional spying hasn’t stopped a single terrorist attack, turning local cops into a domestic army hasn’t done a single thing to make us safe. To the contrary, it is creating an environment where the general public harbors increased resentment and skepticism toward police, and the police view the citizenry as the “enemy.” This takes the societal tinderbox that already exists and makes it downright explosive. Ferguson is just the latest example of the tension bubbling to the surface, but there will likely be many more in the future.

   

  – From the 2014 post: “A Good Time Was Had By All” – The Obamas Dance the Night Away as Ferguson, Missouri Burns

  Last spring, I highlighted the egregious and barbaric shooting of Walter L. Scott as he fled from a South Charleston, South Carolina police officer. In light of recent events, it’s crucial to recall the sordid details of this case. As such, here’s a excerpt from the post, South Carolina Cop to Be Charged with Murder for Shooting Man 8 Times in the Back as He Ran Away:

  The video at the end of this story is really hard to watch. Not just because we see a police officer gunning down a man as he ran away, but because he repeatedly yells at a dead body to “put his hands behind his back,” and then seemingly plants his taser by the corpse to cover up the crime.

   

  Just like with banker theft, unless people are held accountable with serious jail time, the criminality will not only continue, it will get worse. The rule of law must be restored and applied equally to the rich and powerful, or we are truly doomed as a society.

   

   

  Although I haven’t been as focused on police brutality and murder this year, that doesn’t mean the problem’s gone away. Just yesterday, a very disturbing incident occurred in Baton Rouge, Louisiana that once again looks a lot like straight up police murder. As is often the case, the victim was a marginalized black man merely trying to make a buck in an incredibly corrupt and rigged economy.

  Here’s the tragic case of Alton Sterling, as reported by the New York Times:

  Scores of protesters gathered in Baton Rouge, La., on Tuesday night after a black man was fatally shot in an encounter with police officers earlier in the day, an incident that was captured in a graphic cellphone video that began circulating on social media.

   

  The victim, Alton Sterling, 37, was killed in a shooting at about 12:35 a.m. on Tuesday, the Baton Rouge police said in a statement. The police had received a call from someone who reported having been threatened by an armed man wearing a red shirt who was selling CDs outside a store in the eastern part of the city, the statement said.

   

  A police spokeswoman reached early Wednesday said that she could not comment beyond the statement, which provided no details of what it called an “altercation” between Mr. Sterling and the two officers who responded.

   

  William Clark, the coroner of East Baton Rouge Parish who is known as Beau, said that Mr. Sterling had died at the scene from multiple gunshot wounds to the chest and back.

   

  A cellphone video shot by a bystander, which was released later in the day, showed Mr. Sterling being tackled by a police officer. He is then held to the ground by two officers, and one of the officers appears to hold a gun above Mr. Sterling’s chest.

  In a Twitter post early Wednesday, the Rev. Jesse L. Jackson called the shooting a “legal lynching.”

  Before you accuse Mr. Jackson of exaggeration, watch the video below and make up your own mind.

  I think it’s quite fitting that the shameless police murder above occurred on the exact same day that Hillary Clinton was set free by the top cops in the nation thanks solely to her position of power and influence. Benjamin Dixon said it perfectly last month in the following tweet:

  May need to say this every day for next 4 years, but real white privilege is being under FBI investigation & still free to run for President

  — Benjamin Dixon (@TheBpDShow) June 10, 2016

  None of this will be lost upon a citizenry which is already seething with rage and very close to a tipping point. Increasingly, the general public is coming to the very unpleasant realization that they live in a corporate oligarchy in which they are subjects rather than citizens. The more they are pushed into a corner, the sooner they will lash out in all sorts of ways.

  The generational level revolts I anticipate have been a long time coming and will emanate from both rural, largely white America, as well from inner city communities populated mostly by minorities. The key thing we must all bear in mind going into the turbulent times ahead is that we are all in this together. 

  The status quo doesn’t care whether you are black, white, Jewish, Muslim, Christian, male, female, straight, gay or transgender. To the status quo we are all expendable peasants — cannon fodder. The establishment loves to play up the differences between us in order to divide us, but they don’t care about any of us. They will allocate all their energy and efforts into dividing and conquering the public in the period of civil unrest to come. If we fall for this trap we will have only ourselves to blame for the failure to turn grassroots protests into genuine, systemic change.

  The other key variable as to whether the forthcoming rebellions result in any positive change will revolve around what form they take. When I say civil unrest, I am well aware that this likely means some degree of violence and looting; however, such expressions of frustration will do far more harm than good. We must recognize that as it stands the status quo has no actual legitimacy, and therefore can only succeed if it’s able to portray the abused public as the bad guys, and sell us on the idea that the U.S. government is the only thing standing between us and violent mobs.

  If you want to win this battle, you need to be smart. Winning the hearts and minds of the general public is absolutely critical, and shouldn’t be difficult in an environment in which the establishment discredits itself on a daily basis.

  To summarize, I think the activist community across American needs to do two things:

  1. Stick together. Black, white, rural, urban, we are all in this together. Don’t allow yourselves to become divided — we have the same opponent. Never forget that.

   

  2. Keep things non-violent. If violence happens, always make sure the government fires the first shots. If the general public perceives you to be out there looking for a fight as opposed to reacting to state aggression, you will lose. Think outside the box, be creative and employ non-violent civil disobedience whenever possible.

  A perfect example of what not to do was seen earlier this year in Oregon. See: A Stupid Standoff but a Just Cause – My Thoughts on the Hammond Situation.

  John Lennon had it absolutely right. If we’re going to achieve real paradigm-level positive change we must always remember his words:

  

  

  

• China To Boost "Economic Growth" By Changing Definition Of GDP

  In the summer of 2013, at a time when the topic of soaring US debt was still paramount to the US public (total debt is now a far more ludicrous, and gargantuan, $19.3 trillion but nobody cares since all the central banks are monetizing global debt at an unprecedented pace and investors are happy to frontrun them, thus keeping yields low) the US surprised everyone by “increasing” GDP, and thus reducing the debt/GDP ratio which was at about 100%, in a very simple way: it changed the definition of GDP, in the process boosting GDP by about $500 billion, or 3%, with the flip of an Excel spreadsheet switch.

  This is what we reported at the time:

  The US economy will officially become 3 per cent bigger in July as part of a shake-up that will see government statistics take into account 21st century components such as film royalties and spending on research and development. Billions of dollars of intangible assets will enter the gross domestic product of the world’s largest economy in a revision aimed at capturing the changing nature of US output. Brent Moulton, who manages the national accounts at the Bureau of Economic Analysis, told the Financial Times that the update was the biggest since computer software was added to the accounts in 1999.

  Fast forward three years later, when the biggest fabricator of economic data in the world, China, finally realized that its lowly disciple, the US Bureau of Economic Analysis, has overtaken it. And since China will never rest if it is upstaged in this particular area, China has announced that it too was about to adopt new methodology to assess the economic contribution of the various new sectors of the economy, said Xu Xianchun, a deputy head of the National Bureau of Statistics, cited by China Securities Journal. China’s official GDP growth has been underestimated due to the emergence of this “new economy,” he said.

  Specifically, the NBS announced on July 5 that it will adopt the current System of National Accounts (SNA) 2008 standard by treating R&D expenditure as part of capital formation, or in other words, China will do in 2016 what the US did in 2013.

  The outcome: billions in “economic output”, retroactively created out of thin air as a result of growth that had previously not been accounted for.

  How much growth is China about to add from a mere change in definitions? As it turns out not much (as China’s GDP is measured in terms of Y/Y growth and not in absolute amount), but it will be sufficient to, as Goldman puts it, “eases stimulus pressures on the margin.“

  Or, just like in the case of the US, China will have suddenly grown more than it actually grew, even when in reality it may well have been contracting.

  Here is the explanation of Goldman’s Yu Song. 

  Under the new method, the size of the economy is larger than previously estimated; 2015 GDP was revised up by 1.3% to 11tn USD, the Real growth rate was also revised up (rates vary from year to year and averaged 0.06% (6 bps) over the past 5 years). The upward revision is because China’s R&D expenditure growth has been consistently faster than that of overall GDP–though the difference the change makes to the GDP growth rate is small as R&D is a small part of the economy. The NBS announced 1Q real growth was revised up by 0.04% (4bps), but it did not specify whether the growth rate is now 6.8% yoy or remains at 6.7% yoy. We believe the latter case is slightly more likely as an upward revision would have been highlighted. A higher trend level would mean 2Q GDP growth should be higher as well. As a result, we revise our Q2 real GDP growth forecast to 6.7% yoy from 6.6% yoy previously with slight upside risk to our full-year forecast of 6.6% yoy.

   

  Many other economies have already adopted the new method; we note China had been expected to do so as well though the change has come later than expected. As the new method is in accordance to the latest international standard, we do not expect it to have an incremental impact to sentiment around methodology/data credibility. We see this move as beneficial for the economy on the margin as it makes it slightly easier to quantify statistically how to achieve the target of doubling real income by 2020; the method provides added flexibility to pursing potentially necessary reforms. We note that sometimes reform can have a negative impact on short-term growth and the need to meet short-term growth targets can distract policy makers from reform initiatives leading to the potential risk of overstimulating the economy beyond its potential growth rate.

   

  Judging from the rise in inflation since the start of the year, the current level of potential growth is no higher than the recent actual level of around 6.7% yoy. This level is likely to moderate further in the coming years, because of the demographic headwind and modest pace of reform implementation. While the magnitude of the changes to growth rates appear to be small, we believe these seemingly small changes are relatively more important when growth is right around the target level, as opposed to when the economy is overheating or in recession. Furthermore, the move to the new standard opens room for further adjustment as self-owned housing services should now also be captured in GDP according to the SNA 2008 standard, potentially leading to a modestly higher growth rate. Other “new economy” activities such as sharing economy are also being considered according to news reports. In 2018, the government will also conduct the next economic census. As the new sectors in the economy are potentially underestimated by the standard methodology, which is relatively strong with the accounting of the production of tangible goods, previous census typically led to upward revisions to historical data. With further upward revisions, which appear likely, there should be incrementally lower pressures to reach the growth targets in the coming years.

   

  Real GDP growth was revised up marginally because R&D expenditure has been growing consistently faster than overall GDP

  

  Goldman’s conclusion is somewhat troubling for the world’s liquidity addicts as it means that instead of relying on trillions in new credit creation, China may tone it down to just hundreds of billions, and fill the gap with “optics.” This means that as a result of this “non-GAAP” GDP adjustment, China will be able to get away with an even faster true growth slowdown as long as it can fabricate enough numbers to get away with it.

  of course, it won’t end there, because in the new normal, where the world may have already hit its debt capacity (as Citi recently speculated), when all else fails, one’s economy will “grow” simply as a result of definition changes, changes which in the case of China, almost certainly make a minus sign into a plus.

  

  

• It's Over: DOJ Won't File Charges Against Hillary, Ends Probe

  Well that didn’t take long… HILLARY CLINTON WILL NOT BE CHARGED FOR E-MAILS, LYNCH SAYS

  
  

  Bloomberg headlines

  • *ATTY GENERAL LYNCH SAYS SHE MET TODAY WITH FBI’S COMEY
  • *DOJ’S LYNCH ISSUES E-MAILED STATEMENT AFTER MEETING WITH COMEY
  • *LYNCH ACCEPTING RECOMMENDATION NOT TO CHARGE CLINTON ON E-MAILS
  • *LYNCH ACCEPTED FBI’S COMEY, AGENTS’ UNANIMOUS RECOMMENDATION

  Note: “unanimous“

  As AP reports,

  Attorney General Loretta Lynch says the Hillary Clinton email investigation is being closed without any criminal charges.

   

  Lynch announced the Justice Department decision Wednesday, one day after FBI Director James Comey recommended against any prosecution.

   

  The decision was largely a formality given Comey’s public statement on the case.

   

  Lynch said last week that she intended to accept whatever recommendations and findings were presented by the FBI and by her career prosecutors.

  Here is the full statement from the US Attorney General Loretta Lynch regarding the State Department’s email investigation:

  “Late this afternoon, I met with FBI Director James Comey and career prosecutors and agents who conducted the investigation,” Lynch said in a statement. “I received and accepted their unanimous recommendation that the thorough, year-long investigation be closed and that no charges be brought against any individuals within the scope of the investigation.”

  As The Hill adds, Lynch largely relinquished her role overseeing the investigation following outrage that she met privately with former President Bill Clinton, Hillary Clinton’s husband, on the tarmac at Phoenix’s airport, in what she has described as a purely social but nonetheless inappropriate encounter. After facing backlash last week, Lynch said she would defer to the FBI and prosecutors’ recommendations. Which, incidentally, may have sparked an even greater flame of public anger.

  The Justice Department’s decision Wednesday nonetheless formally closes the book on the investigation into Clinton, which began with a referral from inspectors general at the State Department and intelligence agencies one year ago. The issue has loomed over Clinton’s campaign for longer, and criticism will likely continue to haunt her through the presidential election in November.

  Some critics questioned Comey’s decision to get out in front of Justice Department lawyers since prosecutors — not the FBI — ultimately decide whether to press ahead with charges. As such, his public announcement of his recommendation could be seen as tipping the scales.

  “I disagree with the FBI necessarily telling the prosecutors, ‘Here’s what you should do,’” Senate Intelligence Committee Chairman Richard Burr (R-N.C.) told The Hill off the Senate floor on Wednesday. “That should be left up to the Justice Department.”

  Burr nonetheless maintained that he had faith in the FBI’s “thorough” investigation, he said.

  The decision has inflamed criticism on Capitol Hill, where Republican lawmakers questioned how Clinton escaped indictment despite Comey’s scolding of her behavior as “extremely careless.”

  Comey will testify before the House Oversight and Government Reform Committee on Wednesday to respond to critics’ allegations and defend the FBI’s efforts. Not like that will change anything, of course, because “what difference at this point does it make.” Incidentally, none at all. All that matters is that “justice” has again been served:

  

  .@realDonaldTrump: “We have a crooked system, we have a rigged system, we have a dishonest press.” #SpecialReport pic.twitter.com/rbdaxlPpyu

  — Fox News (@FoxNews) July 6, 2016

  

  

• "Crazy" – The Complete Story Of Debt, In A 40 Minute Video

  Real Vision TV’s Grant Williams offers a true look into what is known as an absurd debt level and unimaginable central bank manipulation.  Less than a week ago we highlighted Grant’s comments on commodities.  Although the information contained in the video below is nothing new to Zero Hedge, we do enjoy the way the information is presented.  Set aside some time to listen as Grant tells a story about debt and the current investment landscape.

  Grant sees people “with more power than you can possibly imagine” as the ones responsible for experimental economics that led the world down a path of self destruction.  

  “I don’t think there is any argument about whether or not the central bankers of the world should have done something in 2008.  The question is ‘should they still be doing it 8 years later‘?”

  We recommend viewing the entire clip

  ********

   

  

  

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• Surprise: Refugees Are Making The Military Industrial Complex Even Richer

  Via TheAntiMedia.org,

  As Europe comes to terms with a Brexit vote fueled in large part by anti-immigrant hate-mongering, a new report exposes how war profiteers are influencing EU policy to make money from unending Middle East conflicts as well as the wave of refugees created by that same instability and violence.

  The report (pdf), Border Wars: The Arms Dealers Profiting from Europe’s Refugee Tragedy, released jointly by the European Stop Wapenhandel and Transnational Institute (TNI) on Monday, outlines arms traders’ pursuit of profit in the 21st century’s endless conflicts.

  “There is one group of interests that have only benefited from the refugee crisis, and in particular from the European Union’s investment in ‘securing’ its borders,'” the report finds. “They are the military and security companies that provide the equipment to border guards, the surveillance technology to monitor frontiers, and the IT infrastructure to track population movements.”

   

  The report shows that “far from being passive beneficiaries of EU largesse, these corporations are actively encouraging a growing securitization of Europe’s borders, and willing to provide ever more draconian technologies to do this.”

  In the past decade, the report says, corporate players have viewed intractable Middle East warfare as a windfall: “Several large international arms companies cited instability in the Middle East to assure investors about future prospects for their business. The arms companies are assisted by European governments, which actively promote European arms in the region and are very reluctant, to say the least, to impose stricter arms export policies.”

  Indeed, “from 2005 to 2014, EU member states granted arms exports license to the Middle East and North Africa worth over 82 billion euros,” according to the report.

  The report details how a steady flow of arms from outside the Middle East supplies all players in multi-part conflicts, such as Syria’s civil war, with an endless supply of high-tech weaponry—thus ensuring that those conflicts endure.

  And as these wars create more and more refugees who seek asylum in Europe, the very same corporations are lobbying the EU to ‘securitize’ its borders against them—thus creating additional profit for those in the business of militarization.

  Moreover, Stop Wapenhandel and TNI found “industry representatives, government officials and military and security personnel meet around the year at conferences, fairs and round tables.”

  The report quotes Nick Vaughan-Williams, international security professor at the University of Warwick, saying: “At these events it is possible to identify a cyclical culture whereby the presentation of new technologies not only responds to, but also enables and drives the formulation of new policies and practices in the field of border security and migration management.”

  And these “special fairs and congresses on border security are relatively new,” the report notes. “They all started within the last decade.”

  “I believe the influence of the military and security industry on the shaping of the [EU’s] border security policy is quite big, especially on the securitization and militarization of these and on the expanding use of surveillance technology and data exchange,” Stop Wapenhandel’s Mark Akkerman told Common Dreams. “Industry efforts include regular interactions with EU’s border institutions (including high ranking officials and politicians), where ideas are discussed that later turn up in new EU policy documents.”

   

  “For example, the industry has been pushing for years to upgrade [EU border agency] Frontex to a cross-European border security agency,” Akkerman added. “The new European Border and Coast Guard Agency the European Commission has proposed, which has a lot more powers (has its own equipment, direct interventions in member states, binding decisions forcing member states to strengthen border security capacities) than Frontex has now, is exactly that.”

   

  “If the establishment of the European Border and Coast Guard Agency proceeds,” the report notes, “this would mean a fundamental shift to an EU-controlled system of border security, with the possibility of bypassing the member states and forcing them to strengthen controls and purchase or upgrade equipment.”

   

  “It is not hard to predict that this will lead refugees to use increasingly dangerous routes, strengthening the business case for traffickers. For the military and security industry, however it means the prospect of more orders from the agency itself and from member states,” the report continues.

  Akkerman pointed out the EU’s stunning dismissal of human rights in this profit-motivated process:

  The human rights of refugees play no real role in this thinking, except for promotional purposes. Both the policy makers and the industry sometimes try to sell the increase in and militarization of border security as a humanitarian effort, in terms of strengthening search and rescue capacities. The EU has repeatedly tried to put all the blame for refugee deaths on traffickers. This has resulted in narrowing its response to ‘taking away the business model of smugglers’, with even more military means to try to accomplish this.

   

  This creates a downward spiral: the greater the controls and the more the repression, the greater the risks refugees are forced to take resulting in more deaths. Experts (academics) and human rights organizations have been warning about this for years, but they have been ignored.

  As death tolls rise and a record number of people are displaced by conflict, it seems that the fear-mongering and profiteering—and devastating human rights abuses—will only continue.

  *  *  *

  Full report below…

  Border Wars Report Web

  

  

• This Is How They Protect Us!

  Authored by Paul Craig Roberts,

  The Latest TSA Horror

  “These people think they are God. They think they can do anything they want.”

  A partially blind, partially deaf young woman returning home from treatment for a brain tumor was brutally smashed to the ground by goon tug TSA “security” while her mother, a nurse, was shoved away.

  

  The goon thugs responsible should get at least 30 years in a maximum security prison for assault with intent to kill. But nothing will happen to them. Their corrupt bosses always cover up for the psychopaths who occupy so many “security” and police positions from which they exercise unaccountable brutality over those of us forced to pay their salaries.

  This is America today. We are forced to pay for our own brutilization by a criminal element that has taken refuge in “security” that “protects us.” We are in far more danger from the security forces allegedly protecting us than we are from terrorists. Indeed, the security forces are the terrorists.

  Remember, during eight years of the Iraq War, US police killed more Americans than the US lost troops in combat. We needed our soldiers at home protecting us from the police, not over there “protecting” us from Iraqis who were not bothering us at all.

  The only way to stop the continuous murder and brutalization of American citizens by “security” is to give the same jail sentences to the psychopaths, who comprise a large percentage of police, as are given to criminals without badges to hide behind. Until this happens, no one is safe, not even a handicapped young women traveling home from a hospital with her mother.

  The same prison sentences should be given to executive branch officials who initiate wars of aggression on the basis of lies and fraud. These officials are criminals, not “world leaders.”

  Read the article from the Guardian and weep for your lost country in which we are far less safe from “our” government than we were under King George. Indeed with Washington’s record of destroying seven countries in 15 years, no one in the world is safe from the government of “the land of liberty.”

  America is now justice-proof. “Security” has so thoroughly inoculated us against justice that justice cannot happen in America. Winning some taxpayer money in a civil lawsuit is not justice. Justice is prison for the goon thug criminals with badges.

  

  

• Some Refugees Are Being Sold For Organs

  While there have been numerous headlines and stories that have come out of the immigrant crisis over the past year and a half, one recent revelation is particularly disturbing.

  Migrants traveling from Africa to Europe who are unable to pay smugglers for their journey are being sold and killed for their organs the Independent reports.

  

  Nuredein Wehabrebi Atta, a people smuggler who has been sentenced to five years in prison for his involvement in moving migrants, told Italian police that migrants who couldn't pay for journeys across the Mediterranean "were sold for €15,000 to groups, particularly Egyptians, who are equipped for harvesting organs."

  Atta's testimony helped break open a transnational network dedicated to migrant trafficking with Italian police confirming they have detained 38 people suspected of being involved: 25 Eritreans, 12 Ethiopians and one Italian. Interior Minister Angelino Alfano said the group used Rome for its financial transactions hub, and the arrests have dealt a "harsh blow" to the criminal network.

  

  Atta had been granted witness protection in Italy in exchange for a confession, and an Eritrean man arrested in 2014 had collaborated with authorities in order to provide for the first time a complete picture of the trafficking operations.

  From the Independent

  Palermo police said in a statement that an Eritrean man who was arrested in 2014 collaborated with authorities, providing for the first time "a complete reconstruction of criminal activities" of migrant trafficking involving operations both in North Africa and Italy.

   

  Mr Atta is the first foreigner to be granted witness protection in Italy. He said the shocking number of deaths among migrants attempting to cross the sea is what led him to confess, specifically the death of 360 due to a boat sinking in Lampedusa, though he said he was not involved in the incident.

   

  "The deaths that we were aware of were a small part of it," Mr Atta told police, according to local media. "In Eritrea alone there have been victims in eight out of 10 families."

   

  He said that migrants who can not afford to pay the smugglers are then sold to organ traffickers.

  * * *

  The number of refugees displaced by conflict was estimated to have reached a global total of 65 million, a record high, at the end of 2015. Sadly, much of this crisis (if not all) is driven by countries such as the United States meddling in other people's affairs and creating an even worse situation than was previously the case. Unfortunately, we don't believe this will cease being the case any time soon.

  

  

  

• In Clinton Case, Obama Administration Nullifies 6 Criminal Laws

  Authored by Eric Zuesse,

  When the Obama Administration, on July 5th, ruled that in regard to Hillary Clinton’s privatized email system while she was Secretary of State, "Our judgment is that no reasonable prosecutor would bring such a case” to a grand jury, because “We cannot find a case that would support bringing criminal charges,” they ignored the following six U.S. criminal laws, each of which undeniably describes very well what she did:

  18 U.S. Code § 2232 — Destruction or removal of property to prevent seizure

  (a) Destruction or Removal of Property To Prevent Seizure

  Whoever, before, during, or after any search for or seizure of property by any person authorized to make such search or seizure, knowingly destroys, damages, wastes, disposes of, transfers, or otherwise takes any action, or knowingly attempts to destroy, damage, waste, dispose of, transfer, or otherwise take any action, for the purpose of preventing or impairing the Government’s lawful authority to take such property into its custody or control or to continue holding such property under its lawful custody and control, shall be fined under this title or imprisoned not more than 5 years, or both.

  (b) Impairment of In Rem Jurisdiction

  Whoever, knowing that property is subject to the in rem jurisdiction of a United States court for purposes of civil forfeiture under Federal law, knowingly and without authority from that court, destroys, damages, wastes, disposes of, transfers, or otherwise takes any action, or knowingly attempts to destroy, damage, waste, dispose of, transfer, or otherwise take any action, for the purpose of impairing or defeating the court’s continuing in rem jurisdiction over the property, shall be fined under this title or imprisoned not more than 5 years, or both.

  18 U.S. Code § 1512 — Tampering with a witness, victim, or an informant

  (c) Whoever corruptly

  (1) alters, destroys, mutilates, or conceals a record, document, or other object, or attempts to do so, with the intent to impair the object’s integrity or availability for use in an official proceeding; or

  (2) otherwise obstructs, influences, or impedes any official proceeding, or attempts to do so,

  shall be fined under this title or imprisoned not more than 20 years, or both.

   

  18 U.S. Code § 1519 — Destruction, alteration, or falsification of records in Federal investigations and bankruptcy

  Whoever knowingly alters, destroys, mutilates, conceals, covers up, falsifies, or makes a false entry in any record, document, or tangible object with the intent to impede, obstruct, or influence the investigation or proper administration of any matter within the jurisdiction of any department or agency of the United States or any case filed under title 11, or in relation to or contemplation of any such matter or case, shall be fined under this title, imprisoned not more than 20 years, or both.

   

  18 U.S. Code § 2071 — Concealment, removal, or mutilation generally

  (a) Whoever willfully and unlawfully conceals, removes, mutilates, obliterates, or destroys, or attempts to do so, or, with intent to do so takes and carries away any record, proceeding, map, book, paper, document, or other thing, filed or deposited with any clerk or officer of any court of the United States, or in any public office, or with any judicial or public officer of the United States, shall be fined under this title or imprisoned not more than three years, or both.

  (b) Whoever, having the custody of any such record, proceeding, map, book, document, paper, or other thing, willfully and unlawfully conceals, removes, mutilates, obliterates, falsifies, or destroys the same, shall be fined under this title or imprisoned not more than three years, or both; and shall forfeit his office and be disqualified from holding any office under the United States. As used in this subsection, the term “office” does not include the office held by any person as a retired officer of the Armed Forces of the United States.

   

  18 U.S. Code § 641 — Public money, property or records

  Whoever embezzles, steals, purloins, or knowingly converts to his use, or the use of another, or without authority, sells, conveys or disposes of any record, voucher, money, or thing of value of the United States or of any department or agency thereof, or any property made or being made under contract for the United States or any department or agency thereof, …

  Shall be fined not more than $10,000 or imprisoned not more than ten years or both. …

   

  18 U.S. Code § 793 — Gathering, transmitting or losing defense information …

  (f) Whoever, being entrusted with or having lawful possession or control of any document, writing, code book, signal book, sketch, photograph, photographic negative, blueprint, plan, map, model, instrument, appliance, note, or information, relating to the national defense, (1) through gross negligence permits the same to be removed from its proper place of custody or delivered to anyone in violation of his trust, or to be lost, stolen, abstracted, or destroyed, or (2) having knowledge that the same has been illegally removed from its proper place of custody or delivered to anyone in violation of its trust, or lost, or stolen, abstracted, or destroyed, and fails to make prompt report of such loss, theft, abstraction, or destruction to his superior officer —  

  Shall be fined not more than $10, 000 or imprisoned not more than ten years, or both. (g) If two or more persons conspire to violate any of the foregoing provisions of this section, and one or more of such persons do any act to effect the object of the conspiracy, each of the parties to such conspiracy, shall be subject to the punishment provided for the offense which is the object of such conspiracy.

  Those laws are consequently null and void, by Executive action. When Congress (which is supposed to be the Legislative branch of the government) passed those laws, what were they describing, if not this? Of course, they did describe there what Clinton has, in fact, done.

  If we are a nation “of laws, not of men” (as that old basic description of democracy phrased it), then Ms. Clinton will be prosecuted, at least through the grand jury stage, on (at least) those grounds. The decision regarding her innocence or guilt will be made by jurors (first by the grand jurors, of course, and if they find there to be a case, then by a trial jury), not by the broader public – and also not by the nation’s Executive: the President and his appointed Administration. That is what it means for a government to be a functioning democracy. Any government which violates this principle – that it is “of laws, not of men [including women]” – is not functioning as a democracy: it’s something else.

  In addition to these criminal laws, there are also federal regulations against these matters, but violations merely of federal regulations (such as these) are far less serious than are actions that violate alsofederal criminal laws (such as the six laws that are listed above).

  She isn’t even being sanctioned for the violations the the State Department’s own regulations (or “rules”).

  This is not a partisan issue. I was until recently an active Democrat, and I joined with millions of other Democrats who expressed condemnation when George W. Bush was allowed to get away with many severe crimes (such as this) while he was in office; and one of the reasons why I was trying to find someone to contest against President Obama in Democratic primaries for the 2012 Democratic Presidential nomination was that Obama had refused to prosecute his predecessor’s crimes against this nation. But now this same Obama is nullifying at least these six laws in order to win as his successor Hillary Clinton, who surely will not prosecute Obama for his many crimes (such as this and this) while he has been leading this nation and destroying our democracy.

  I parted company from the Democratic Party when I gave up on both Parties in 2012 as they and the government they operate have been since at least 1980 — not at all democratic, but instead aristocratic: holding some persons to be above the law (that researcher there called the U.S. an “oligarchy,” which is simply another word for the same thing — rule by the top wealth-holders, not by the public: not a “democracy").

  There can be no excuse for Obama’s depriving the public, via a grand jury decision, of the right to determine whether a full court case should be pursued in order to determine in a jury trial whether Hillary Clinton’s email system constituted a crime (or several crimes) under U.S. laws. The Obama Administration’s ‘finding’ that “clearly intentional and willful mishandling of classified information” would need to have been proven, in order for her to have been prosecuted under any U.S. criminal law, is a flagrant lie: none of the above six U.S. criminal laws requires that, but the only way to determine whether even that description (“clearly intentional and willful mishandling of classified information”) also applies to Clinton would be to go through a grand jury (presenting the above-cited six laws) and then to a jury case (to try her on those plus possibly also the charge that there was “clearly intentional and willful mishandling of classified information”). But now, those six laws are effectively gone: anyone who in the future would be charged with violating any one of those six laws could reasonably cite the precedent that Ms. Clinton was not even charged, much less prosecuted, for actions which clearly fit the description provided in each one of those U.S. criminal laws. Anyone in the future who would be charged under any one of these six laws could prove discriminatory enforcement against himself or herself. (In the particular case discussed there, discriminatory enforcement was ruled not to have existed because the enforcement of the criminal law involved was judged to have been random enforcement, but this condition would certainly not apply in Clinton’s case, it was clearly “purposeful discrimination” in her favor, and therefore enforcement of the law against anyone else, where in Clinton’s case she wasn’t even charged — much less prosecuted — for that offense, would certainly constitute discriminatory enforcement.) So: that’s the end of these six criminal laws. The U.S. President effectively nullified those laws, which were duly passed by Congress and signed into law by prior Presidents

  And that’s the end, the clear termination, of a governemnt “of laws, not of men”.

  *  *  *

  Investigative historian Eric Zuesse is the author, most recently, of  They’re Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010, and of  CHRIST’S VENTRILOQUISTS: The Event that Created Christianity.

   

  

  

• Time To Take The Fed's Warning Seriously: CMBS Has "Greatest Ever Monthly Delinquency Increase"

  With three UK-based property funds, among them Standard Life, Aviva and M&G, all “freezing” assets in the past 2 days and suspending redemptions over fears of a swoon in UK housing prices, spreading panic shockwaves around the globe that the Brexit dominoes have come home to roost (to mix and match metaphors), it may not be a bad time time to jump across the Atlantic and look at US real-estate and in particular, commercial properties. As CMBS specialist Trepp wrote today in its weekly TreppWire commentary, the “Trepp CMBS delinquency rate moved noticeably higher in June, as the rate was pushed up by loans that reached their maturity date but were not paid off.” It was the fourth straight month that the rate has crept higher following two large decreases in January and February. The delinquency rate for US commercial real estate loans in CMBS is now 4.60%, an increase of 25 basis points from April. 

  This is in line with recent warnings from the Fed which just two weeks ago cautioned not only about another stock bubble when on June 21 it said that “forward price-to-earnings ratios for equities have increased to a level well above their median of the past three decades” but again warned that commercial real estate remains the most troubled sector: “valuation pressures have remained notable in the commercial real estate sector, to which some small banks have substantial exposures.” This includes not just bricks and mortar malls, which are losing bankrupt retail tenants by the hour, but also the collapse in the shale sector.  It also includes a sudden spike in vacant office space.

  Over the weekend, the Fed’s warning was validated not just by Trepp, but also by Morgan Stanley, whose Richard Hill looked at the latest CMBS 2.0 remittance reports and observed that in June, “delinquent loans rose by $142MM, including a potential reps breach.” As Hill puts it, “this delinquency increase was the greatest ever.” The silver lining: so too was the decline in specially serviced and watchlist loans, as near insolvent loans rolled off to delinquent status.

  Here is the key highlight from MS’ summary of newly delinquent loans:

  15 loans totaling $221MM became newly delinquent in June. In total, 71 loans with a balance of $760.6MM were delinquent in June, resulting in a delinquency rate of 32bp. The $142MM month-over-month increase in the volume of delinquent loans was the greatest ever – it eclipses the $116MM increase in March 2016 and compares to an average monthly increase of $40.7MM.

  

  
  

  Some other observations on the state of CMBS 2.0:

  • Specially serviced: There were four loans totaling $43.3MM that were newly transferred to ‘specially serviced’ this month, but the volume of loans declined by the most ever to $1B, resulting in a specially serviced rate of 42bp. There are currently 13 loans totaling $206MM that are delinquent but not specially serviced, including the largest loan to become newly delinquent this month. Looking forward, we expect the two CMBS 2.0 loans totaling $293MM to be imminently transferred to special servicing, given their exposure to JQ Hammons Hotels, which filed for bankruptcy on Sunday.
  • Watchlist: 206 loans totaling $2B were added to the watchlist in June, but the volume of loans declined to $17.5B, resulting in a watchlist rate of 7.37%. The month-over-month decline in balance of specially serviced loans was the greatest ever and compares to a 12-month average increase of $580MM. However, the outstanding balance remains higher than what was observed in February 2016.
  • Appraisal reductions: 21 loans totaling $161MM realized Apprisal Reduction Amounts (ARA) this month. 10 of these loans totaling $62.1M were first-time appraisal reductions while 11 totaling $99.3M were updated appraisals. Seven of the ten loans with first-time ARAs are secured by properties located in ‘oil boom’ regions.
  • Prepayments: 29 loans totaling $456MM paid off in June and, in total, 424 loans with a balance of $9.2B have now been paid off. The largest pay-off this month was the $85MM loan secured by the Keystone Marquee Office Portfolio (DBUBS 2011-LC2A) at its maturity date.
  • Defeasance: 22 loans with a balance of $345.5MM were defeased in June. In total, 291 loans with a balance of $5.8B have now been defeased, of which 213 loans totaling $3.4B remain outstanding. The largest loan to defease this month was the $1655MM loan secured by One South Wacker Drive (WFRBS 2013-C11 WFRBS 2013-C12), which is scheduled to mature on 1/1/2018

  So is it time to start worrying about US commercial real estate? Well, with massive retail and shale bankruptcies, vacant malls around the nation, and rapidly evacuating offices, absolutely. Only in this day and age worrying means buying as much risk assets as one can afford, because the worse things are the greater the likelihood of an imminent bailout: of even a 1% correction in stocks by central banks. Case in point: frontrunning.

  • JAPAN’S 20-YEAR GOVT BOND YIELD FALLS TO ZERO FOR FIRST TIME
  • JAPAN’S 30-YEAR YIELD FALLS TO RECORD 0.03%

  And while we have been joking for the past 7 years that algos will push the S&P to +? in case World War III breaks out (on 1 offerless contract), this is looking increasingly more likely with every passing day. And now that Hillary is assured of being the next president, it just may happen in the not too distant future.

  

  

• Martin Armstrong: "James Comey Had No Problem Keeping Me In Prison Without Any Charges"

  Submitted by Martin Armstrong via ArmstrongEconomics.com,

   

  

  To indict someone, the criteria is supposed to be “intent.” Comey has used that to pretend there is no evidence that Hillary “intentionally” erased anything. Comey also stated that Hillary’s lawyers erased her emails using a keyword search program and they did not “read” the emails. He added that he would not recommend charges against Hillary or her aides.

  “Although we did not find clear evidence that Secretary Clinton or her colleagues intended to violate laws governing the handling of classified information, there is evidence that they were extremely careless in their handling of very sensitive, highly classified information,” Comey declared.

  It was Comey who indicted Frank Quattrone for claiming he instructed his people to erase emails in his technology-industry banking group at Credit Suisse Group’s Credit Suisse First Boston, based upon a single email that read “clean up those files” in December 2000. That was more than enough for his “intent” requirement to obstruct justice. This further illustrates the double standard of justice for them vs. us.

  Comey has said that he could not find anyone else who had been prosecuted for such a thing, but then added after clearing Hillary that this is not to say everyone in the government can do this or that they would not prosecute someone else for the same thing. Comey said,“[O]ur judgment is that no reasonable prosecutor would bring such a case.”

  Comey presented a scathing rebuke of Hillary’s conduct that anyone else would have certainly been indicted for. For Obama to have announced in advance he would campaign for Hillary, it was clear that this was a cover-up and he knew the results before today. For Comey to say, “Although we did not find clear evidence [of any intentional misconduct] there is evidence that they were extremely careless of very sensitive, highly classified information.” It is the jury’s role to determine if there is any evidence and the case should have been presented for a Grand Jury to decide if she should have been indicted. That, of course, is off limits as well.

  Comey went on to all but acknowledge that Russia hacked Hillary’s emails:

  “With respect to potential computer intrusion by hostile actors, we did not find direct evidence that Secretary Clinton’s personal e-mail domain, in its various configurations since 2009, was successfully hacked. But, given the nature of the system and of the actors potentially involved, we assess that we would be unlikely to see such direct evidence. We do assess that hostile actors gained access to the private commercial e-mail accounts of people with whom Secretary Clinton was in regular contact from her personal account. We also assess that Secretary Clinton’s use of a personal e-mail domain was both known by a large number of people and readily apparent. She also used her personal e-mail extensively while outside the United States, including sending and receiving work-related e-mails in the territory of sophisticated adversaries. Given that combination of factors, we assess it is possible that hostile actors gained access to Secretary Clinton’s personal e-mail account.”

  For Comey to claim neither the Department of Justice nor the White House knew what he was going to announce, seriously undermines his trustworthiness in this matter. Of course, Obama knew or he would not have scheduled to campaign for Hillary since, if indicted, she would have had to be on bail to stay out of jail to even campaign. This is by no means credible. But nobody would have expected Hillary to be indicted when the Democrats control the executive branch. Had Hillary been indicted, she could not have run for office, for even that statute says such a person would be disqualified for such an office. The entire election would have been a fiasco and the Democratic Party would have collapsed. This is what Bernie was holding out for and why he had his talk with Obama who informed him forget it — there would be no indictment for Hillary.

  “From the group of 30,000 e-mails returned to the State Department, 110 e-mails in 52 e-mail chains have been determined by the owning agency to contain classified information at the time they were sent or received. Eight of those chains contained information that was Top Secret at the time they were sent; 36 chains contained Secret information at the time; and eight contained Confidential information, which is the lowest level of classification. Separate from those, about 2,000 additional e-mails were “up-classified” to make them Confidential; the information in those had not been classified at the time the e-mails were sent,” Comey said.

  Then, Comey contradicted Lynch in making it clear that the final decision was her’s: “As a result, although the Department of Justice makes final decisions on matters like this, we are expressing to Justice our view that no charges are appropriate in this case.”

  
   

  James Comey was the chief prosecutor in the Southern District of New York between 2003 and 2005. He had no problem keeping me in Federal Prison on contempt of court without any charges, indictment, or a civil complaint describing any crime whatsoever that they even admitted openly in court. There were never any charges or complaint filed, and they publicly stated, “[T]here is no description of criminal liability.” Yet, Comey allowed me to be held in prison, entirely arbitrarily, with absolutely nothing whatsoever; Comey completely violated my civil rights, those of my family, and all 240 employees. So he is not someone who upholds the Constitution when it goes against government or the banks. As they say, the Department of Justice is really “Just Us” in reality. He has proven that once again.

  

  Comey also allowed a LIFETIME GAG ORDER on me to prevent me from providing any assistance to my clients in Japan to sue the bankers. Now the State Department has asked for a two-year stay in turning over any of Hillary’s emails. Why  would they do that if there is nothing criminal? This only proves that this is a cover-up, as always, because the Democratic Party cannot allow Hillary to go down for they would lose everything. Sorry, but Comey has a track record of defending the banks even when they stole billions and pleaded criminally guilty before having to pay them back. He kept me in prison on contempt to turn over assets for a “possible” restitution, but when I got into the Supreme Court, I was released and no such charges were ever filed nor did I ever have any restitution. They then tried to prevent “The Forecaster” from being shown in the USA.

  So much for any honesty from the Department of Justice. It is the Department of “Just Us,” as they say.

  

  

• Domino #3: M&G Suspends Trading In $6 Billion UK Property Fund

  Things are getting bad fast in Britain…

  Domino #1: *STANDARD LIFE INV PROPERTY DROPS 15%; TRADING IN FUND SUSPENDED

  In a stark flashback to the catalytic event that ultimately brought down Bear Stearns in 2008, and subsequently unleashed the greatest financial crisis in history, last night we reported that Standard Life, has been forced to stop retail investors selling out of one of the UK’s largest property funds for at least 28 days after rapid cash outflows were sparked by fears over falling real estate values.

   

  As we further noted, citing an analyst, “given the outflows the sector seems to be experiencing, this could well put downward pressure on commercial property prices,” said Laith Khalaf, senior analyst at Hargreaves Lansdown. “The risk is this creates a vicious circle, and prompts more investors to dump property, until such time as sentiment stabilises.”

   

  As we concluded, whie Brexit is not a Humpty Dumpty event, where all the Fed’s horses and all the Fed’s men can’t glue the eggshell back together, it is an event that forces investors to wake up and prepare their portfolios for the very real systemic risks ahead. And, indeed, if Standard Life was the first domino, moments ago the second domino also tumbled when as Bloomberg reported that Aviva Investors Property Trust is as of this moment "frozen" citing "extraordinary" market conditions.

  Domino #2: *AVIVA SUSPENDS TRADING ON AVIVA INVESTORS PROPERTY TRUST

  As the FT adds, Aviva Investments said it had prevented retail investors from selling out of its £1.8bn UK Property Trust since Monday afternoon.

   

  Cited by Bloomberg, Aviva said in an email that "market circumstances, which are impacting the wider industry, have resulted in a lack of immediate liquidity" adding that "we have acted to safeguard the interests of all our investors by suspending dealing in the fund with immediate effect…. Suspension of dealing will give Aviva Investors greater control in managing cash flows and conducting orderly asset sales in order to meet our obligations to investors.”

  And now Domino #3: *M&G SUSPENDS TRADING IN M&G PROPERTY PORTFOLIO FUND

  As Bloomberg reports, M&G suspends trading in property portfolio, feeder funds, according to statement on website.

   

  "Investor redemptions in the fund have risen markedly because of the high levels of uncertainty in the U.K. commercial property market since the outcome of the European Union referendum.

   

  Redemptions have now reached a point where M&G believes it can best protect the interests of the funds’ shareholders by seeking a temporary suspension in trading."

  The plunge before the freeze…

  

   

  As Laith Khalaf, a senior analyst at Hargreaves Lansdown cited above, put it, “the dominoes are starting to fall in the U.K. commercial property market, as yet another fund locks its doors on the back of outflows precipitated by the Brexit vote. It’s probably only a matter of time before we see other funds follow suit."

  We could not have said it better ourselves.

  

  

• Yahoo Finance Editor-In-Chief Is Sad: "We're Suffering The Consequences Of Too Much Democracy"

  Following James Traub's mind-numbingly-elitist rebuttal of the democratic rights of "we, the people" in favor of allowing "they, the elite" to ensure the average joe doesn't run with scissors, "It's time for the elites to rise up against the ignorant masses."

  

  The Brexit has laid bare the political schism of our time. It’s not about the left vs. the right; it’s about the sane vs. the mindlessly angry…

  The Guardian's David Van Reybrouck appears willing to take the fight for elite survival even further…proclaiming "our voting system worked well for decades, but now it is broken. There is a better way to give voice to the people…. you do not ask everyone to vote on an issue few people really understand, but you draft a random sample of the population and make sure they come to the grips with the subject matter in order to take a sensible decision. A cross-section of society that is informed can act more coherently than an entire society that is uninformed."

  

  Brexit is a turning point in the history of western democracy. Never before has such a drastic decision been taken through so primitive a procedure – a one-round referendum based on a simple majority. Never before has the fate of a country – of an entire continent, in fact – been changed by the single swing of such a blunt axe, wielded by disenchanted and poorly informed citizens.

  But this is just the latest in a series of worrying blows to the health of democracy, and Yahoo Finance Editor-in-Chief, Andy Serwer took to his Tumblr, to explain why, in his opinion, Democracy, you could argue, is pretty much like sunshine, cold beer and ice cream. They’re all great —until you have too much.

  Too much democracy? That’s not possible, is it?

  In fact it may be. Some economists and political scientists are suggesting as much in the wake of the Brexit vote and the subsequent wave of “Leave the EU” sentiment that’s sweeping across Europe. And you can look to a big honking use case right here in the US to make that argument.

  It’s way too early to tell how Brexit will affect the economy of the UK at this point — although early days have been rocky enough with the crashing pound, stumbling stock market, and political chaos. But I would argue the biggest negative of Brexit will be the messiness and uncertainty that ensues. The UK will be forced to rewrite tax rules, as well as draft and implement new legislation. It will have to craft a new relationship with Europe. And the UK will more than likely haggle over referendums in Scotland and Northern Ireland. An OECD report says Brexit could cost the UK 3.3% of its GDP by 2020.

  Despite those headaches and risks, “Leavers” across Europe — including those in France, the Netherlands, Italy, Hungary, Austria and Finland— have taken up the call. A Citibank note says “… political risks in Europe are high and probably rising, in our view, and ‘referendum risk’ contributes significantly to these risks …” Those risks include outright withdrawal from the EU, scuttling of EU policies, and shying away from EU-centric policies that could bolster local economies. Citi notes that Italy and Hungary will likely both have referendums on matters pertaining to the EU this year.

  So what does this have to do with the US, besides the collateral damage of a potentially basket-case Europe — (no small thing that, by the way)? Because while referendums are actually rare in the UK, (the Brexit vote is only the third to cover the whole UK), they are much more common in the US.

  Twenty-six states — mostly Western ones — plus Washington, D.C., allow for initiatives and referendums. And over the years, there have been various successes and failures, never mind wackiness. (One of my favorites was the 2006 Arizona Voter Reward Act which would give a single Arizona citizen $1 million in every general election. It was defeated.) But other ballot initiatives of course are more serious, and in some states referendums and such have had real teeth, nowhere more so than in California, where they have been elevated to a powerful form of governance, with high-profile propositions.

  For those of you old enough to remember, the watershed moment of the California Proposition movement was 1978 with the passage of Proposition 13, which capped real estate taxes. (Remember Howard Jarvis — the leader of the movement — on the cover of Time Magazine: Tax Revolt!)

  The success of that vote ushered in a golden age of referendums for the Golden State, although that may be a mischaracterization. Since then the state has voted on hundreds of referendums on gun control, abortion, marijuana and the death penalty. But mostly the initiatives have tended towards the fiscal: i.e., taxes, budgets and bond issues. To some this has been a shining era of democracy. Others are not so sanguine, saying Prop. 13, for example, helped lead to the gutting of education budgets.

  One thing that is undoubtedly true is that this so-called direct democracy model has made governing more difficult. The Economist delved into this in great length in a 2011 special report:

  “This citizen legislature has caused chaos. Many initiatives have either limited taxes or mandated spending, making it even harder to balance the budget. Some are so ill-thought-out that they achieve the opposite of their intent: for all its small-government pretensions, Proposition 13 ended up centralizing California’s finances, shifting them from local to state government. Rather than being the curb on elites that they were supposed to be, ballot initiatives have become a tool of special interests, with lobbyists and extremists bankrolling laws that are often bewildering in their complexity and obscure in their ramifications. And they have impoverished the state’s representative government. Who would want to sit in a legislature where 70-90% of the budget has already been allocated?”

  The best evidence of the effects of this dysfunction perhaps is that during this period, California experienced a precipitous decline in its credit rating. In 1980, California had an AAA rating. By the early 1990s it had fallen to single A, and it bounced around that level for decades until as recently as 2014, when it was the second-lowest rated state in the nation. (This is a state, of course, with Silicon Valley, Hollywood, oil and gas, timber, minerals and the richest farmland in the nation.) Say what you will about Jerry Brown (twice!), Arnold Schwarzenegger and Pete Wilson, but it ain’t all the governors’ fault. In fact it may be Jerry Brown’s multiterm experience with government by referendum that has allowed him get a handle on the state’s finances and help boost its credit rating back up to AA (from S&P), its highest rating since 2001. But that’s hardly consolation.

  Direct democracy does have a shining example of efficacy, and that is Switzerland, though there certainly are reasons particular to that country — homogeneity being one — that explain why it has worked there.

  Otherwise, I would argue that direct democracy is best used sparingly, for local initiatives perhaps. A big drawback of direct democracy is that those who want change — no matter its validity — are much more fired up than those who want to maintain the status quo, and therefore many more of the “Changers” go to the polls, as was perhaps the case in the Brexit vote. Think about the consequences of that.

  I know it sounds horribly anachronistic, but checks and balances, branches of government, and slow, messy and deliberate governance actually have their place. It is true that both in the case of Britain’s relationship with the EU and with real estate taxes in California in the 1970s, real change was needed. In cases like this, and probably just in general, politicians need to step up more briskly than they are typically comfortable doing. But putting the onus all back on the people may not be the answer. One thing’s for sure, it certainly has its consequences.

  

  

• Chinageddon – Gold Spikes As USDJPY, Yuan, Bond Yields Plunge

  For the first time since March 2014, Gold is back above $1370, spiking higher as China opens. While silver has been celebrating way above Brexit spike highs, gold's initial reaction was far bigger and that spike high has now been taken out.

  

   

  Across Asia things are moving fast. Bond yields in Taiwan are breaking to record lows, JGBs are at fresh record lows with 20Y yields reaching zero for the first time…

  • *JAPAN'S 30-YEAR YIELD FALLS TO RECORD 0.015%
  • *JAPAN'S 10-YEAR YIELD FALLS TO RECORD MINUS 0.27%
  • *TAIWAN 10-YEAR GOVT BOND YIELD FALLS TO RECORD-LOW 0.695%

  

   

  And USDJPY plunged to a 100 handle again…

  

   

  And then China devalued The Yuan fix significantly…to the weakest agaionst the USD since Nov 2010

  

   

  Which is rippling through to US Equity futures… Dow -230 from earlier highs..

  

  

  

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• From Monica To Loretta – The Clintons Corrupt Absolutely

  Authored by Michael Goodwin, originaly posted at The New York Post,

  She can’t help herself. Even yesterday, with the political world fixated on her meeting with FBI agents, Hillary Clinton had her flack mislead the public.

  A spokesman said she gave a “voluntary” interview, which is true only because she agreed to talk instead of waiting to be subpoenaed. The flack also said she was “pleased” to assist the gumshoes.

  Who believes she was “pleased” to be interviewed by the FBI in a criminal investigation that could upend her life?

  But that’s the way the Clintons roll.

  Wherever they go, whatever they do, ethics are trashed and suspicions of criminal conduct follow them like night follows day.

  It’s who they are and it’s self-delusional to believe another stint in the White House would make the Clintons better people. Power exacerbates rather than cures an absence of integrity.

  Yet there’s another dimension to their chronic crookedness, and it gets insufficient attention even though it might be more important to the nation’s well-being.

  It is that, in addition to being personally corrupt, the Clintons are corrupters. They are piggish users, with the people and institutions around them inevitably tarnished and sometimes destroyed even as the Clintons escape to their next scam.

  Monica Lewinsky is a prime example, and Loretta Lynch is the latest. The attorney general’s dumbfounding decision to meet privately with Bill Clinton while the FBI investigates Hillary’s handling of national secrets stained Lynch’s reputation and added to public mistrust of the Justice Department.

  Lynch didn’t create that mistrust — she was supposed to be the antidote. Her predecessor, Eric Holder, was a left-wing activist who used his role as the nation’s chief law-enforcement officer to further his and Obama’s political agenda.

  That role earned Holder an undesired distinction. His refusal to cooperate with Congress on the disastrous Fast and Furious gun sting led to a bipartisan vote in the House holding him in criminal contempt, the first time in history a sitting Cabinet member ever faced such a censure.

  Lynch, as his successor, was handily confirmed by the Republican-controlled Senate, with her steady, firm demeanor and solid record as a prosecutor carrying the day.

  Yet her lifetime of good work and the hope for a fresh start at Justice are now overshadowed. She acknowledges the meeting with Bill Clinton was a mistake, and pledged to accept the recommendation of FBI agents and career prosecutors on whether Hillary should face charges.

  That’s not enough, not nearly enough, given the circumstances and stakes.

  While Lynch offers no explanation as to why in the world she agreed to the 30-minute meeting on a plane in Phoenix, perhaps she felt she owed the former president something. Remember, he first nominated her to be the US attorney in Brooklyn in 1999, a promotion that changed her life.

  After his presidency, she went to a top private law firm, and became a member of the Federal Reserve Bank of New York. Bill Clinton had been very, very good to her, and without his boost, she probably wouldn’t even have been a candidate to replace Holder.

  And now her patron wanted a private meeting. Both had to know it was wrong, but he had nothing to lose and didn’t care about her reputation or the Justice Department’s.

  That was her responsibility. And it doesn’t really matter if they didn’t discuss the case. Just his being there was reminder enough that she owes him.

  Lynch also had to know that an FBI agent who socialized with the spouse of a suspect in a criminal case probably would be investigated and fired. Yet she agreed to the meeting anyway.

  Despite Lynch’s vow to let others make the call, her refusal to recuse herself means she will remain in charge. That was never ideal because Obama endorsed Hillary and all but exonerated her, but there seemed no way to argue for a special prosecutor without more evidence that the outcome was rigged. There was also FBI Director James Comey’s reputation as an independent straight shooter to provide some reassurance that the case would be handled on the merits.

  Now Lynch has broken that fragile confidence, and the need for a special prosecutor is obvious.

  The explosive result shows the Clintons haven’t lost their touch for leaving destruction and chaos in their wake. The remarkable events also serve as a clear reminder that while the Clintons enriched themselves over the years, they were helping to bankrupt the public trust in its government and institutions. And they won’t stop until they’re stopped.

  

  

• Istanbul Turns Into A Ghost Town As Tourism Collapses

  In the aftermath of the tragic suicide bomber attacks at Istanbul's Ataturk Airport, Turkey's biggest city now feels like a ghost town.

  

  Restaurants sit empty in the Sultanahmet tourist district, and five-star hotel rooms can be booked for bargain prices. As AFP reports, in better times, the queues outside the Hagia Sophia (a former mosque and church that is now a museum) might have stretched an hour or longer at this time of year, today you can walk straight in and share the place with just a smattering of other visitors.

  "It's disastrous. All my life I've been a tour guide, most of us have come to a turning point where we don't know if we can go on. It's tragic." said Orhan Sonmez, hopelessly offering tours of the Hagia Sophia.

  Analysts say the attack on Istanbul's airport may have been a deliberate attempt to weaken the Turkish state by hitting its tourist industry, and it appears to be working. The United States, Germany and several other countries have warned their nationals against threats in Turkey, and to make matters worse, the TAK, a radical Kurdish group that has carried out several attacks in Turkey this year has also warned foreign tourists to stay away.

  This development comes at a time when Turkey had just suffered its worst drop-off in visits in 22 years in the month of May, which was down 35% from a year ago. The tourism industry, which according to AFP brings in over $33 billion a year, is now in a free fall.

  Part of the downturn was driven by a Russian ban on Turkish package holidays, but the ban has since been lifted, providing at least a small relief for the industry.

  Those that are still visiting say they are enjoying the peace and quiet, while taking a more philosophical approach as AFP puts it. "This could happen in any city, it's an unlucky lottery. The people are really friendly, and I really think I'll come back and spend some more time here." said Nessa Feehan, a visitor for Ireland.

  However, the situation is still dire for many who depend on tourism to make a living.

  "If it goes on like this, many shops will close. I'm thinking of moving to America, I can't make money here." said Ismail Celebi, an owner of a jewellery shop. Even though large Chinese tour groups are still arriving, Celebi says "It's not enough, we need Americans, we need Europeans."

  "Even I'm afraid to come to work here" Celebi went on to say.

  * * *

  These recent security concerns as well as the economic hits that Turkey has endured as a result of the attacks and overall tension in the region are key factors in President Recep Tayyip Erdogan's pivot to a softer approach in an attempt to strengthen diplomatic ties. As we reported last week, Erdogan even apologized to Vladimir Putin for the death of a Russian pilot, and even called Russia a "friend and a strategic partner."

  

  

• "China Is Headed For A 1929-Style Depression"

  Authored by Sue Chang via MarketWatch.com,

  Andy Xie isn’t known for tepid opinions.

  The provocative Xie, who was a top economist at the World Bank and Morgan Stanley, found notoriety a decade ago when he left the Wall Street bank after a controversial internal report went public. Today, he is among the loudest voices warning of an inevitable implosion in China, the world’s second-largest economy.

  Xie, now working independently and based in Shanghai, says the coming collapse won’t be like the Asian currency crisis of 1997 or the U.S. financial meltdown of 2008.

  In a recent interview with MarketWatch, Xie said China’s trajectory instead resembles the one that led to the Great Depression, when the expansion of credit, loose monetary policy and a widespread belief that asset prices would never fall contributed to rampant speculation that ended with a crippling market crash.

  

   

  China in 2016 looks much the same, according to Xie, with half of the country’s debt propping up real-estate prices and heavy leverage in the stock market — indicating that conditions are ripe for a correction.

  “The government is allowing speculation by providing cheap financing,” Xie told MarketWatch. China “is riding a tiger and is terrified of a crash. So it keeps pumping cash into the economy. It is difficult to see how China can avoid a crisis.”

  A longtime critic of Chinese economic growth

  Xie’s viewpoints have at times attracted unwelcome attention. In 2006, when he was a star Asia economist at Morgan Stanley, a leaked email to colleagues in which he said money laundering was bolstering growth in Singapore led to his abrupt departure from the bank.

  In early 2007, he termed China’s surging markets a “bubble” that could lead to a banking crisis,” and in 2009 he likened them to a “Ponzi scheme.”

  Xie, who is from China but was educated at — and earned a Ph.D. from — Massachusetts Institute of Technology, has said Chinese authorities have tried to characterize him as an American spy sent to disrupt their markets after his 2007 prediction. China’s consulate general in San Francisco and its embassy in Washington did not reply to requests for comment.

  While he now works independently, Xie’s opinions on Asian affairs remain influential. He writes regularly for the South China Morning Post, among other publications, in May saying China is running a “gigantic monetary bubble that has corrupted virtually every corner of the economy.”

  Xie “is a respected economist,” said Huawei Ling, managing editor of Caixin Weekly and a John S. Knight Journalism Fellow at Stanford University. “I appreciate his consistency and his analysis on China’s economic issues,” she said.

  His 2007 forecast, meanwhile, turned out correct. Soon after his prediction, the Shanghai Composite Index started plunging. After hitting a peak of 6,092 on Oct. 19, 2007, it fell below 2,000 over the next 12 months.

  

  Years before hedge-fund managers like Kynikos Associates founder Jim Chanos turned bearish and George Soros predicted a hard landing, Xie was a dissenting voice amid a chorus of prognosticators enamored with China’s late 20th Century emergence from poverty.

  In an interview with this reporter more than a decade ago, Xie warned of a lack of depth in China’s dazzling rise, saying the rapid growth on the country’s coastal cities masked the fact that many inner areas of the country were stuck in the “Stone Age.”

  Concerns about China’s economy are more commonplace now. Two camps have formed in 2016: those like Templeton Emerging Markets Group Executive Chairman Mark Mobius, who believe a resilient China is experiencing temporary growing pains, and those who, like Soros, foresee an imminent collapse.

  Xie is firmly in the latter camp.

  “China grew too fast,” Xie said. “The government is using its power to stop the unraveling but not address the issue. It is just buying more time.”

  Fresh worries about China after the Brexit vote

  Xie’s criticism coincides with fresh worries about China after the U.K.’s vote to quit the European Union, which triggered an across-the-board selloff in risky assets as investors sought cover in safe-haven assets. Global markets have rebounded somewhat, but uncertainty remains.

  Subsequent strength in the U.S. dollar has prompted analysts to predict an accelerated weakness in the Chinese yuan. The yuan slumped to a nearly six-year low against the greenback this week, according to FactSet.

  More broadly, fissures have started to appear in the world’s second largest economy. After years of expanding at a blistering pace. China’s gross domestic product grew 6.9% in 2015, its slowest pace in a quarter-century.

  For 2016, Beijing has set a GDP target of 6.5% to 7%; The latest spate of global uncertainties prompted Bank of America Merrill Lynch and Deutsche Bank to trim their forecasts to 6.4% and 6.6%, respectively.

  The export sector, long a driver of Chinese growth, is sputtering due to global saturation and household consumption is barely 30% of China’s GDP, Xie said. In the U.S., household consumption accounted for more than 68% of GDP in 2014, according to the World Bank.

  China’s stock market last year dove in June, losing more than 30% in a month as regulators tightened margin-trading and short selling rules, making it more difficult for investors to borrow money to invest in stocks. A belief that the government was not properly responding to the economic slowdown also weighed on sentiment.

  Then in August, authorities unexpectedly devalued the yuan in a bid to support the flagging economy, sparking unprecedented capital flight.

  Xie and other observers say the surest way to get China out of its rut is to boost consumption, marking a deliberate turn away from a manufacturing-focused economy. Efforts are under way to move China in that direction, but analysts say the process could take years or even decades — during which China could reach a breaking point.

  Total social financing, a broad measure of funds secured by households and nonfinancial companies, topped $22 trillion in March, more than twice China’s $10.4 trillion GDP, according to official data.

  There’s no equivalent metric in the U.S., but household debt stood at $14.3 trillion while nonfinancial debt totaled $13 trillion at the end of the first quarter, according to the Federal Reserve. The combined tally of $27.3 trillion is roughly 1.5 times the U.S. GDP.

  Torsten Slok, chief international economist at Deutsche Bank said in May that China’s credit bubble is worse than the U.S. subprime buildup that led to the last financial crisis. “It is clear that in China in recent years more and more capital has been misallocated and not resulted in higher GDP growth,” said Slok.

  

   

   

  Kyle Bass of Hayman Capital Management, who was among the few on Wall Street to correctly predict the subprime mortgage crisis, shorted the Chinese yuan earlier this year, warning investors in a 13-page February letter that China is making the same mistakes the U.S. did 10 years ago.

  “The unwavering faith that the Chinese will somehow be able to successfully avoid anything more severe than a moderate economic slowdown by continuing to rely on the perpetual expansion of credit reminds us of the belief in 2006 that U.S. home prices would never decline,” Bass wrote.

  Xie, meanwhile, says he is doubtful of the Communist’s Party’s ability to manage and grow China’s economy — but believes that, if they become more hands-off, the country could become the world’s leading economic force. At the core of Xie’s concerns about China is the contention that the government is doing more harm than good.

  “If government takes a step back instead of dominating the economy so much, China can be twice as big as the U.S. in 20 years,” he said.

  ‘The Communist Party isn't compatible with the future of China’

  Today’s regime in China recalls the U.S.-backed Chinese National Party, or Kuomintang, that ruled the country until its defeat at the hands of the Communist rebels in 1949, according to Xie.

  The Nationalists, he says, flooded the economy with easy money to support speculation that led to runaway inflation. That, in turn, shifted public sentiment in favor of the Communists, who drove the Nationalists out of the country.

  “It was very similar to what is going on right now,” said Xie. “If you keep on printing money to use for speculation, you will have hyperinflation and a currency crash,” he said. “The Communist Party isn't compatible with the future of China.”

  Xie’s criticism of the government hasn't resulted in his arrest although he was not certain whether that will not change in the future. Chinese officials have started to muzzle analysts and journalists who have published pessimistic reports on the economy, The Wall Street Journal has reported.

  And his research reports are not currently distributed in China. “There are safety mechanisms to stop someone like me reaching the ordinary people,” said Xie.

  Despite his frustration, however, he occasionally belies immense pride in his country and bemoans the fact that the global community may be underestimating China’s potential.

  “The economists in the West who say that China isn't very important are wrong,” he said. “China isn't an emerging economy. It is the only country that caught up with the West, and it will shape the path of the global economy in the future.”

  

  

• War Of Words Erupts As Italy's PM Slams Mario Draghi: "You Could Have Done More To Help Italian Banks"

  Italy’s Prime Minister, Matteo Renzi, is getting desperate, and with good reason.

  As we reported this morning, the rally in European stocks fizzled and Italian banks tumbled after Italy’s 3rd largest (and the world’s oldest) bank, Monte Paschi cratered after it confirmed receipt of a letter from the ECB which had asked the troubled lender to cut its bad debts by 40% within three years,  or to €14.6 billion 2018 from €24.2 billion at the end of 2015.

  

  

  And since there are no natural buyers for these NPLs (at least not at the prices demanded by the insolvent bank), the ECB has effectively heaped even more pressure on Rome to stabilize its banking system at a time when Rome itself was hoping that Europe would help bail out its banks. This means that instead of being allowed to inject public – or rather European – funds into its banks while bypassing the much dreaded bail-in which could result in a panicked bank run as depositors scramble to avoid haicuts, Italian banks may have no choice but to dilute themselves to death, hence today’s abysmal price action which saw Monte Paschi’s stock price drop to an all time low.

  All of this appears to have been too much for Renzi, and Italy’s troubled premier, who  as Citi wrote over the weekend is now facing a very shaky future as a result of the upcoming October constitutional referendum…

  

   

  … has lashed out at Mario Draghi, the very man who was supposed to be on Renzi’s side and protect him from the animosity of Merkel et al, in what Reuters dubs a very rare instance of public criticism.

  As Reuters reports, Matteo Renzi criticized European Central Bank Governor Mario Draghi for not having done more to resolve Italy’s banking woes when he held a key Treasury job in Rome in the 1990s.

  After taking power in 2014, Renzi’s government introduced reforms aimed at strengthening the country’s cooperative banks, but several are struggling to stay afloat and a bailout fund took control of Veneto Banca last week after the ECB said it had to raise capital or close.

   

  “If the measures concerning the cooperatives had not been taken by us but by the centre-left government that first put them forward, but was not strong enough to enact them in 1998 … then we would not have this problem,” Renzi said.

   

  The prime minister said that Draghi was director general of the Treasury at that time, with Carlo Azeglio Ciampi serving as economy minister.

  But the punchline, and the most damning quote was Renzi’s unexpected outburst saying that “if people had the strength and intelligence to keep politics out of the banking system a bit before we did it … we would not have had cases like Monte dei Paschi di Siena,” Renzi told a meeting of his centre-left Democratic Party (PD).

  In short, just as we explained last week, a failure by any one major Italian bank, or the entire banking system, will be seen not so much as a failure of Renzi, but of Draghi, who not only had a key role in Italy’s Treasury, but between 2005 and 2011 was head of the Bank of Italy, making the financial plight of Italy’s banks from bad to worse.

  Meanwhile, Monte dei Paschi has been in crisis mode for years, hit by a disastrous acquisition on the eve of the financial crisis, losses from risky derivatives trades and bad debts accumulated during Italy’s worst recession since the Second World War. And, as many suspect, somewhere in there are Draghi’s fingerprints all over the events that have doomed the bank. As such its failure would only accelerate the discovery of the fact that highlight it was Draghi’s failure all along to fix Italy’s banking sector, whose insolvency has ironically been re-exposed in the aftermath of Brexit – an event Renzi had hoped to use as a scapegoat for more bailouts yet which backfire massively after Merkel said “nein.”

  Then again, Merkel’s position on the matter has been clear all along. What we are far more interested in is how the sudden scandal between Renzi and Draghi will play out, and whether in the coming days we may not all witness the modern version of the “Night of the Long Knives.” The only question is who will go down and just who will have oredered said night…

  

  

• Three Charts Show How Precious Brexit Is for Gold and Silver

  Gold and silver have been the standout winners in the fallout from Britain’s decision to leave the European Union according to Bloomberg. They have compiled three charts showing how “precious” Brexit is for gold and silver.

  

  Investors seeking a haven from volatile currencies and equities pushed prices of the metals to a two-year high. With central banks pledging more stimulus to prop up markets (the Bank of England may cut interest rates within months and traders have reduced odds on the Federal Reserve raising rates), the appeal of owning non-yielding assets like precious metals has increased.

  Gold has climbed 6.2 percent and silver 11 percent since the June 23 referendum, outperforming global stocks, bonds and currencies, including those also often bought as a haven.

  “Macroeconomic risk and geopolitical risk were already setting gold and silver up for a good year – the Brexit fall out has just been the icing on the cake,” said Mark O’Byrne, a director at brokerage GoldCore Ltd. in Dublin. “These metals will continue to outperform as market conditions remain unstable.”

  See full article here

  

   

  Gold and Silver News
  Gold Climbs 1.3% on Week and Silver Soars 10.1% (Coin News)
  Gold inches up, silver passes $20 threshold at near 2-yr highs (Reuters)
  Gold Posts Longest Run of Gains in Two Years on Stimulus Bets (Bloomberg)
  Silver scores biggest weekly jump in almost 3 years (DJ Marketwatch)
  Gold heads for fifth week of gains and silver soars (Reuters)

  Best And Worst Performing Assets In June And Q2 (Zerohedge)
  How the UK’s vote affected Irish shares, sterling, bond prices and safe-haven gold (Irish Times)
  Precious Metal Pandemonium – Silver Spikes Limit-Up, Gold Surges As China FX Basket Hits Record Low (Zerohedge)
  500 Tons of Gold That Show Global Rise in Investor Angst (Bloomberg)
  Read More Here

  Gold Prices (LBMA AM)
  04 July: USD 1,348.75, EUR 1,213.07 & GBP 1,016.42 per ounce
  01 July: USD 1,331.75, EUR 1,199.51 & GBP 1,001.34 per ounce
  30 June: USD 1,317.00, EUR 1,183.59 & GBP 976.82 per ounce
  29 June: USD 1,318.00, EUR 1,191.64 & GBP 984.36 per ounce
  28 June: USD 1,312.00, EUR 1,185.79 & GBP 985.84 per ounce
  27 June: USD 1,324.60, EUR 1,200.49 & GBP 996.36 per ounce
  24 June: USD 1,313.85, EUR 1,181.28 & GBP 945.58 per ounce

  Silver Prices (LBMA)
  04 July: USD 20.36, EUR 18.31 & GBP 15.36 per ounce
  01 July: USD 19.24, EUR 17.29 & GBP 14.48 per ounce
  30 June: USD 18.36, EUR 16.48 & GBP 13.61 per ounce
  29 June: USD 18.21, EUR 16.42 & GBP 13.55 per ounce
  28 June: USD 17.57, EUR 15.84 & GBP 13.17 per ounce
  27 June: USD 17.70, EUR 16.06 & GBP 13.40 per ounce
  24 June: USD 18.04, EUR 16.32 & GBP 13.18 per ounce

  Recent Market Updates
  – BREXIT Day – Markets Becalmed – Gold Panic Prelude – Trading Hours
  – Gold Lower Despite “Panic” Due To “Supply Issues” In Inter Bank Gold Market
  – Gold Slips Despite UK Gold Demand Surging – Investors “Seek Stability”
  – Gold Prices Surge to Highest in Nearly Two Years On FED and Brexit Haven Demand
  – Gold Bullion Has Little Downside, Brexit Or Not, Says HSBC
  – Central Bank of Ireland Warns Risks are Debt, Brexit, Geopolitical Tensions and Migration
  – Gold In Euros Surges 6.5% In June and 17% YTD On BREXIT Concerns
  – Soros Buying Gold On BREXIT, EU “Collapse” Risk
  – UK Gold Demand Rises On BREXIT “Nerves”
  – Pensions Timebomb in “Slow Motion Detonation” In UK, EU, U.S.
  – Silver – Perfect Storm Brewing in the Market
  – Martin Wolf: There Will Be Another “Huge” Financial Crisis

  

• Not Even Death Will Help You With Student Loans

  Student loans are incredibly difficult to discharge, even through bankruptcy, this is widely known. However in New Jersey, it appears as though student loans are still expected to be paid, even if someone gets cancer or even dies.

  This is something that Marcia DeOliveira-Longinetti learned when trying to close out a list of things to take care of after her son's unsolved murder last year. When Marcia called about federal loans that her son had taken out for college, an administrator offered condolences and assured her that the balance would be written off. However, the New Jersey Higher Education Student Assistance Authority gave a quite a different response.

  

  "Please accept our condolences on your loss. After careful consideration of the information you provided, the authority has determined that your request does not meet the threshold for loan forgiveness. Monthly bill statements will continue to be sent to you." a letter from the agency read.

  Of course Marcia was shocked, and even though she co-signed the loans was left confused. However, as a joint investigation by ProPublica and the New York Times discovered, this was not an isolated case.

  According to the NYT, New Jersey's loans, which total $1.9 billion, come with extraordinarily stringent rules that can lead to financial ruin.

  As the NYT explains

  New Jersey’s loans, which currently total $1.9 billion, are unlike those of any other government lending program for students in the country. They come with extraordinarily stringent rules that can easily lead to financial ruin. Repayments cannot be adjusted based on income, and borrowers who are unemployed or facing other financial hardships are given few breaks.

   

  The loans also carry higher interest rates than similar federal programs. Most significant, New Jersey’s loans come with a cudgel that even the most predatory for-profit players cannot wield: the power of the state. New Jersey can garnish wages, rescind state income tax refunds, revoke professional licenses, even take away lottery winnings — all without having to get court approval.

   

  “It’s state-sanctioned loan-sharking,” Daniel Frischberg, a bankruptcy lawyer, said. “The New Jersey program is set up so that you fail.”

   

  The authority, which boasts in brochures that its “singular focus has always been to benefit the students we serve,” has become even more aggressive in recent years. Interviews with dozens of borrowers, who were among the tens of thousands who have turned to the program, show how the loans have unraveled lives.

   

  The program’s regulations have destroyed families’ credit and forced them to forfeit their salaries. One college graduate declared bankruptcy at age 26 after struggling to repay his debt. The agency filed four simultaneous lawsuits against a 31-year-old paralegal after she fell behind on her payments.

  Chris Gonzalez is another example of how strict the state is. Gonzalez got non-Hodgkin's lymphoma and was eventually laid off by Goldman Sachs (after three years of cancer treatments – nice bunch over there). While the federal government allowed him to suspend his payments because of hardship, New Jersey sued him, seeking $266,000 in payments, and seized a state tax refund he was owed.

  One reason that is given for the tactics is that that the state depends on Wall Street investors to finance student loans through tax-exempt bonds, and the state needs to satisfy those investors by keeping the loans to a minimum. Also, loan revenues cover about half the agency's administrative budget. Governor Chris Christie declined to respond to questions, but Christie appointed its executive director Gabrielle Charette, and Christie also has the power to appoint at least 12 of the agency's 18 board members, and can veto any action taken by the board.

  Marcia DeOliveira-Longinetti continues to pay on her son's loans, having made 18 payments to New Jersey in the amount of $180 a month, with about 92 payments to go. "We're not going to be poor because of this, but every time I have to pay this thing, I think in my head, this is so unfair." Marcia said.

  As the NYT explains, for decades states served as middlemen for federal student loans, but in 2010 Congress and the Obama administration effectively eliminated the role of state agencies by having only the federal government lend directly to students. Some states decided to downsize and transfer their federal loan portfolios, but New Jersey went a different direction.

  For decades, states served as middlemen for federal student loans. Most of the loans were made by banks and were handled and backed by regional and state-based agencies as well as by the federal government. The arrangement was unwieldy, expensive and marked by scandal.

   

  After Pennsylvania’s student loan agency lost a public records lawsuit in 2007, documents revealed that the agency had spent nearly $1 million on things like fly-fishing, facials and falconry lessons.

   

  That same year, New Jersey’s agency was caught in what amounted to a kickback scheme. The state attorney general found that the agency had improperly pushed one company’s loans in exchange for annual payments of $2.2 million. A subsequent investigation by the state’s inspector general found that the agency was in “disarray.”

   

  In 2010, Congress and the Obama administration decided to effectively eliminate the role of state agencies by having only the federal government lend directly to students.

   

  Some states, like California, decided to downsize and transferred their federal loan portfolios. Others, such as Pennsylvania, won contracts from the federal government to service debt from the federal loan program.

   

  New Jersey chose a different path. In the years leading up to the end of the federal program, New Jersey sharply expanded its loan program, slowly replacing the federal loans it once handled with state loans. From 2005 to 2010, loans from the agency nearly tripled, to $343 million per year. Since then, the agency has reduced its loans by half, but its outstanding portfolio has remained roughly the same, about $2 billion.

   

  Ms. Karrow said the growth of New Jersey’s program was simply a result of both the increasing number of students and the rising cost of tuition. But in fact, college enrollment and tuition have not grown as rapidly as the program’s size.

  In contrast to New Jersey, Massachusetts, which is the next largest program with $1.3 billion in outstanding loans, automatically cancels debt if a borrower dies or becomes disabled, something many other states do also according to the NYT.

  New Jersey's solution to the problem is to encourage students to buy life insurance in case they die to help co-signers repay. How very nice of them.

  When consumer lawyers protested the program's onerous conditions at a 2014 agency meeting, the agency said that giving borrowers a break would make the bonds sold to finance loans "less attractive to the ratings agencies and investors." Which according to Moody's is an accurate assessment, as Moody's cited the authority's "administrative wage garnishing, which it uses aggressively for significantly higher collections" compared with other programs.

  * * *

  "I felt so comfortable because it was the State of New Jersey. It's the state, my government, trying to help me out and achieve my American dream. It turns out they were the worst ones" Gonzalez said. Indeed, when Wall Street is a key source of funding and the bond issuer dares not push back, apparently death nor cancer can't get you out of your student loan payment.

  Read the full article here.

  

  

• "All Out Of Gummy Bears" – Marijuana Store Survey & Industry Outlook Q2 2016

  Via ConvergEx's Nick Colas,

  This report marks the 2-year anniversary of our quarterly survey on the legal recreational marijuana market in Colorado. We’ve picked up a couple more states since then, now covering prices and business developments in Washington and Oregon. We survey numerous stores’ managers to track how a new market matures and how its cost structure and product mix evolves. Each state reported downward pressure in pricing, but has seen it steady over the past couple of months. An eighth of retail cannabis in Colorado sells for an average range of $25 to $45, but our contacts said they are running more sales of $25 eighths during the week and $20 on the weekends. In Washington, we reported the price of a gram dropped to $10 three months ago; some contacts said it’s now as low as $8. A gram sells for about $10 to $15 in Oregon as well.

   

  Foot traffic is starting to pick up as we carry forward into summer, as the industry benefits from tourism. As for sales, Colorado stores brought in $69.4 million during April, setting a monthly record; sales total $242 million this year thru April. Washington stores garnered $229.6 million in revenue, and Oregon stores have sold nearly $60 million. Expect Oregon’s figure to jump in the months ahead, as stores can now sell edibles/concentrates/extracts as of this month.

   

  Bottom line, Colorado and Washington posted double digit growth in sales relative to 2015 every month of this year. Make no mistake, this is a fast growing industry with massive upside potential with as many as nine states possibly voting on marijuana-related measures this fall. Including California…

  Note from Nick: We can’t be “All Brexit, all the time” so today we bring to you Jessica’s quarterly note on the state of the U.S. marijuana business. Simply put, it is going gangbusters. Read on for the details…

  As of July 1st, you can’t buy one of retail marijuana stores’ top selling products in Colorado: gummy bears. Or gummy worms or chewy candies in the shape of animals or fruits for that matter. Governor Hickenlooper recently signed a bill into law that bans marijuana-infused edibles in shapes attractive to children.

  We’ve conducted a quarterly survey on the recreational marijuana industry in Colorado for two years now, and one of our main contacts said gummies outsell all his store’s other products. He doesn’t see this change as “too big of a deal,” however, as vendors can make gummies that aren’t in kid friendly shapes. So how are cannabusinesses faring in Colorado these days? Here’s a breakdown of our usual price/units/product mix analysis:

  #1 – Price: Stores can still sell an ounce of recreational cannabis for an average range of $150 to $350, and an eighth for $25 to $45. Our contacts said they continue to experience price drops, however, due to more competition and as bigger companies put pressure on smaller stores by cutting prices. Some respondents said the lowest they’ve seen larger players reduce the price of an ounce was to $100. Most stores run discounts, and our contacts said they have been selling more eighths for $25 during the week, and even $20 on the weekends. They don’t forecast prices falling too much further. One store said a full price eighth is still $40, but wouldn’t be surprised if it declines to $30 within the next six months or year.

  #2 – Units/Traffic: The average transaction size has dropped slightly to about $40 to $50 dollars from $50 to $60. One store has successfully brought transaction sizes back up by prepackaging flower in eighths for some strains, rather than just half eighths to encourage customers to buy in larger quantities. Around 150 to 350 customers still visit our contacts’ stores each day, although some report there was greater foot traffic six months ago than the past three. This has to do with the time of year, as stores are busiest during the winter and summer since tourists make up about 50% of their customer base. One store even said the trend is moving towards more tourists, speculating that a greater number of locals may have decided to grow their own. All in all, respondents expect a bump in customers as students come back from college.

  Stores are also gearing up for July 4th by planning some specials like a buy one edible get another half off sale. Our contacts typically experience an uptick in sales around holidays. July 4th falls on a Monday, so they expect customers to stock up on the prior Friday and Saturday. The biggest day of the year is always on April 20th, the so-called national holiday for marijuana. One of the largest festivals for the day relocated to California this year, but it didn’t stop stores from besting last year’s sales figures. Dispensaries were eager to beat last year’s comp and they did. Not only did our contacts say they outpaced sales from the previous year, but MarketWatch reported retail sales jumped 53% year over year to $7.3 million on April 20th according to BDS Analytics. Another plus, our contacts said they have been better prepared to deal with such high volumes due to learning from their experiences last year.

  #3 – Mix: Our contacts still report a 50/50 split between flower and edibles/concentrates/accessories. They said numerous vendors continue to ask them to try out new products like concentrates or cartridges. The influx of vendors also puts downward pressure on wholesale prices, which contributes to lower prices at their stores. Overall, concentrates and cartridges are still the hottest products growing in popularity due to their discretion and ease of use.

  In short, we’ll let the numbers do the talking on the success of the marijuana industry in Colorado. Stores brought in $69.4 million from recreational sales just in April, based on tax data from the Colorado Department of Revenue. That’s up 58.2% y/y and marks a monthly sales record since stores first started selling retail cannabis in January 2014. Dispensaries have already generated $242 million in retail sales from January thru April (latest available data), almost half the sales garnered in 2015 ($575.8 million) in just the first four months of this year.

  So how are the economic and business developments shaping up in Washington and Oregon? Here’s the scoop:

  Prices in Washington and Oregon abated slightly, down to an average range of $25 to $50 for an eighth from $25 to $60 three months ago. Prices continued to contract especially for grams. A gram of recreational cannabis sells for an average of $10 to $15, but some stores said it now sells for as low as $8. One Washington contact said “it used to be a $10 gram market,” but over the past three months it’s now “an $8 a gram market.” He also said his store is reluctant to raise prices due to the hefty sales tax of 37% on recreational cannabis. These stores run daily and weekly discounts just like in Colorado, such as “take $4.20 off an 1/8th or more of the strain of the day!”

   

  In regards to Washington, medical growers and stores are not currently licensed or regulated, unlike the retail market. They will merge on July 1st, in which only recreational stores licensed under I-502 can remain in operation. Those who want products intended for medical use can buy them at retail stores that are medically endorsed. The Washington State Liquor and Cannabis Board (WSLCB) raised the retail store cap of 334 to 556 for the merger, but medical marijuana stores that don’t receive a license will have to shut down. Our contacts are generally happy about the merger as they are licensed and would appreciate more defined regulations. We asked the WSLCB what this would mean for prices. They said prices would likely continue to drop as there will still be plenty of licensed stores in operation and more will open; licensed stores will continue to compete against each other with their retail products as opposed to the medicinal products sold by unlicensed stores.

   

  Average transaction sizes for both states are similar to Colorado at about $45. The number of daily customers is also similar at around 200 on average, although we received a wide range of answers all the way up to as many as 600 per day; many contacts also noted increases in foot traffic over the past month likely due to the time of year. In terms of 420 for Washington, one store manager said it was a “madhouse” and “absolutely crazy.” MarketWatch reported impressive figures compared to last year just like Colorado, as the state doubled the amount of sales on April 20th to $5.5 million according to Headset. They’re also getting ready for July 4th. Now it’s about beating 2015’s comps during this year’s holidays. There will be plenty of specials consequently, like a gram of retail cannabis for just $5 or pre rolls for $3. In Oregon, one contact expects a successful weekend for the 4th of July because her community’s payday is on that Friday.

   

  Washington stores’ product mix is similar to Colorado in terms of selling about 50% flower and 50% edibles/concentrates. Our contacts said popular products include vape pens and pre rolls. While medical stores in Oregon have been able to sell flower since last fall (recreational stores don’t open until later this year), they haven’t been able to sell recreational edibles and extracts until this month. These new options have increased sales at our contacts stores across the board. With that said, some respondents noted the potency is too low. While one dose of cannabis-infused edible can have up to 15 milligrams of THC, the state wants to bring that figure down to 5 milligrams which is half of what’s allowed in Colorado. Washington received tourists from Oregon before it could sell edibles, but given the low potency in that state our Washington contacts said they still get customers from Oregon. One Oregon store manager even said he’s seen customers walk out of his store and complain that’s not what they were looking for in terms of edibles. For Oregon stores, however, they’re just thrilled they can sell recreational marijuana with one contact claiming it was “life-saving in terms of business sustainability.” The ability to sell edibles is still an added bonus.

  Sales at Washington retail marijuana stores are growing at an impressive clip, even though they are outpaced by their Colorado counterparts. So far this year thru May, they’ve brought in $229.6 million compared to $357.6 million last year, according to data provided by WSLCB. Here are the numbers for each month: January ($39.6 million, +202% y/y), February ($42.3 million, +163% y/y), March ($46.7 million, +119% y/y), April ($49.1 million, +97% y/y), and May ($51.9 million, +71% y/y).

  As for Oregon, the state’s Department of Revenue said it received $14.9 million in recreational tax payments as of May 30th. Only 57% of the 319 dispensaries in Oregon that have made at least one monthly tax payment have filed a quarterly tax return, however. With a tax rate of 25%, that suggests retail stores gained almost $60 million in revenue during the first five months of this year. It also implies stores have been bringing in about $12 million on average each month. By comparison, Colorado stores received $90.2 million and sales averaged about $18 million per month during the first five months it was sold legally. Nevertheless, Oregon’s figures will likely increase when recreational stores open later this year and now that they can sell edibles, concentrates, and extracts.

  Even with money flowing in, the legal marijuana industry has its fair share of challenges. Regulations on products, packaging, and potency limits, for example, keep changing and are continually up for debate. These states still have a lot to figure out as the industry is still in its infancy, which gives stores a level of uncertainty. One of the most pressing issues is that the drug is still illegal on a federal level, making banks largely inaccessible to store operators. One store manager said he would love to accept debit and credit cards, but only makes cash transaction to avoid any complications and puts ATMs in all of his stores. Currently, marijuana is a Schedule I narcotic, but the U.S. Drug Enforcement Agency could reschedule the drug to allow medical use with a prescription or deschedule it to allow recreational use. Some reports suggest the DEA may reclassify the drug this summer. We’ll keep you posted.

  This fall’s elections could put pressure on the DEA. There are as many as nine states in which people will potentially vote on cannabis measures this fall, most likely including California as it secured the necessary number of signatures to put the Adult Use of Marijuana Act on the ballot. Despite the possibility of losing some tourist activity, store managers across Colorado, Washington, and Oregon hope the ballot in California passes this fall. One contact said “every state that checks off another going recreational is a win” in his book and that it’s another in line until they get them all. They also said California already has the infrastructure in place since medical marijuana is legal.

  In short, continue paying attention to this fast growing industry and we’ll keep you updated. If California legalizes recreational marijuana in the fall, it will likely produce a domino effect. And now voters and states can see the benefits from the ongoing successful case studies we laid out in this note. In the words of Donald Trump – also likely on the ballot in November – “It’s gonna be huge.”

  

  

• Senator Admits The FBI Is "About To Ask Putin For His Copies Of Hillary's Emails"

  It is well known that the FBI still does not have roughly 30,000 emails that Hillary Clinton deleted from her private server due to Clinton categorizing them as personal and not work related. We have also reported that Russia may be in possession of those emails, and according to Judge Andrew Napolitano, there is a debate going on in the Kremlin about whether or not to release them.

  Given that the FBI still doesn't have the emails, Arkansas Republican Senator Tom Cotton (of the US is "under-incarcerated" fame), who is a Trump supporter and also serves on the Senate Intelligence Committee, has become so frustrated that Cotton suggests the FBI is about to ask Putin for his copies. Cotton also took a jab at Bill Clinton's meeting with Loretta Lynch, saying that his plane was also on the tarmac, and he thought Bill Clinton may be waiting to climb on board to talk with him as well.

  

  As Breitbart reports

  A combat veteran of Iraq and Afghanistan, Sen. Thomas Cotton (R.-Ark.) said he was glad to make it on time for his speech after a series of travel delays.

   

  “We were on the tarmac, I thought Bill Clinton might be boarding my plane to talk to me,” said the former Army Airborne Ranger officer.

   

  Cotton said it was shocking, but not shocking to him, that the former president would meet with Attorney General Loretta Lynch — whose department is investigating both his wife and himself for his handling of the Clinton Foundation.

   

  Clinton’s decision to conduct all her official business on her own private email account on her own private server and the way she has handled official and media inquires about it was just teaser of how her administration will approach transparency and national security, Cotton said.

   

  The FBI still does not have 30,000 emails the expected Democratic nominee for president claimed to have deleted.

   

  “It has gotten so bad, the FBI is on the verge of asking Vladimir Putin for his copies of Hillary’s emails,” Cotton said.

   

  In addition to the criminal nature of the former first lady scheme, he said, conducting official and classified business on an unsecured server exposed American national security to our enemies.

   

  Americans should not be surprised that the former secretary of state would put America at risk, he said. Working with President Barack Obama, Clinton oversaw a foreign policy that treated allies as troublemakers and our enemies as victims with legitimate complaints about the United States. Chief among the enemies is the Islamic Republic of Iran, which Obama-Clinton empowered by lifting sanctions, thawing frozen assets, and ignoring Iran’s support of violent terrorism.

  * * *

  Truth be told, it may not be a bad idea.

  

  

• Goldman Reveals How China Is Covering Up Hundreds Of Billions In Capital Outflows

  In order to mask the tremendous capital outflows leaving its country – in order to prevent and/or delay a depositor panic – China has resorted to various gimmicks: back in October, we reported that the first one involved the PBOC gradually shifting from FX spot intervention to the using forwards as a preferred mechanism of market intervention as it is not as obvious, or as transparent to detect, to wit: “we need to take account not only of the PBoC’s non-spot market intervention efforts in the offshore market, but also of banks’ forward books if we want to get a better read on capital outflows in China.”

  Then, when Wall Street figured out how to back into the true capital outflow numbers, China stopped reporting key capital flow data outright. As SCMP reported in February, “sensitive data was missing from a regular central bank report in China amid concerns about the flow of cash out of the country as its economy slows and currency weakens.” FT added that the People’s Bank of China removed the data category “Position for forex purchase”, which tracked total foreign exchange purchases by both the central bank and other financial institutions. In its place, a separate series that captures only central bank forex purchases is substituted. A rise in forex purchases is considered a sign of capital inflows, while a drop suggests outflows.

  However, not even this was enough to mask the massive outflow of capital leaving China’s economy and being parked offshore.

  So what did China do? Why it resorted to the oldest trick in the book: fabricating data outright. Only… it was caught again. As Goldman calculates, cross-border yuan flow in recent months could have masked the true level of outflow pressure in China. According to the bank, SAFE data on onshore FX settlement show outflow of about $2b in May; was also $24b in RMB flow to offshore, meaning underlying outflow in May could be $26b, analysts including MK Tang and Maggie Wei write in a note released overnight.

  More notably, they calculate that since October total net FX outflow has been about $500 billion, which is 50% above $330b implied by SAFE’s onshore FX settlement data.

  They adds that there are no obvious market forces to explain RMB flow in recent months, adding that non-commercially driven factors seem a more likely explanation.  They note that it is possible that offshore clearing banks or Chinese entity have been buying CNH and selling back onshore; this is justified by near-daily anecdotes of frequent CNH smoothing operations by Chinese institutions. As a result, flow to offshore doesn’t show in foreigners’ holdings of CNH assets.

  Goldman also observes that since the August yuan “reform”, CNH has been generally weak; but this hasn’t led to net flow from offshore to onshore. “In a stark contrast, the relationship is in total reverse since October last year – the cheaper the CNH (vs CNY), the greater the net flow of RMB from onshore to offshore.”

  Here are the details from Goldman’s MK Tang:

  China capital flows update—sources how cross-border RMB flow might mask outflow pressures

  • We have updated our estimates of sources of China’s capital n outflows. Our analysis suggests net capital outflows at $123bn in Q1 (vs. $504bn in Q3-Q4 combined last year).
  • Of the Q1 net outflows, about 70% was due to Chinese residents’ accumulation of foreign assets; 40% to repayment of FX liabilities; and -10% to foreigners’ demand for RMB assets (i.e., foreigners were a source of net inflows in Q1). This composition is broadly similar to our earlier estimates for 2015 H2.
  • Separately, we flag a large $170bn net RMB flow from onshore to offshore since last October, which has helped reduce FX reserve drawdown and put downward pressure on CNH forward points. This flow  cannot be readily explained by marketbased factors in our view, and did not seem to result in an increase in foreigners’ CNH holdings. We think it might have masked the true FX outflow pressure in China, on the order of some $20bn (or 50%) per month in recent months.
  • Going forward, we think it will be important to also track cross-border RMB movement to get a fuller picture on China’s underlying flow situation.

  For those not intimately familiar with China’s capital outflow battle over the past year, here is a quick recap from Goldman:

  We have updated our estimates of sources of China’s capital outflows based on the framework we introduced in January. In Q1 this year and 2H last year, the big picture was the same as we estimated in the  piece – Chinese residents accumulating foreign assets remains the dominant source of total capital outflows. The mix of the different sources appears slightly different though, and we will discuss in more detail in the following session.

  • Corporates paying down FX debt: By our estimate, outflows driven by Chinese corporates paying down FX debt were US$156bn in 2H 2015, and around US$60bn in Q1 this year. As exhibit 1 and 2 show, we break down Chinese corporates FX debt into four major segments, namely trade liabilities, offshore banks’ claims on Chinese nonbanks, FX bonds issued by Chinese corporates, and FX loans lent out by onshore banks (such as Industrial and Commercial Bank of China etc.) to domestic Chinese nonbank sectors.
  • Chinese residents’ cumulating FX assets: There were around US$372bn outflows driven by Chinese residents demand for foreign assets in 2H last year, and another US$108bn outflows in Q1 this year based on our calculation. In the headline reported data, Chinese residents cumulating FX assets include outward direct investment, portfolio investment assets and other investment assets. These three channels saw around US$ 268bn outflows in 2H last year and US$69bn outflows in Q1 this year. We also add “net errors and omissions” (NEO) as part of the outflows motivated by Chinese residents buying FX assets—as we’ve been discussing for a while3., we think the negative numbers in NEO might represent disguised capital outflows (Exhibit 3).
  • Foreigners reducing RMB assets: This driver has become less obvious in Q1 this year, compared with 2H last year. Around US$7.4bn outflows were driven by foreigners reducing RMB assets in 2H last year, and in Q1 this year situation actually reversed, i.e. on net basis, foreigners accumulated around US$19.6bn RMB assets rather than reducing, mainly helped by inbound FDI and the relatively stable holding of offshore CNH (more on this in the second part of the report).

  

  Goldman sums it up as follows:

  Summing up different sources of outflows, in Q1 this year, of the total net capital outflows of $123bn, Chinese residents buying foreign assets accounted for around 70% of the outflows, and Chinese corporates paying down FX debt explained another 40% of the outflows. Foreigners’ adding RMB assets helped mitigate outflows by around 10%. In 2H last year, according to our calculation based on factual data, residents buying FX assets accounted for 70% of the outflows, FX debt repayment was another 29%, and foreigners reducing RMB assets only represented 1% of the outflows. This was broadly in line with our analysis in the January’s work (we estimated the split at 60%/30%/10%), although the final official data suggests that foreigners reducing RMB assets was an even less important driver, while residents buying FX assets was more important than what we found based on our estimates of some BOP and FX debt data.

  So far so good: a modest $123 billion in Q1 outflows. There is just one problem: the real number is vastly greater. Here is Goldman’s explanation:

  While according to the BOP the pace of capital outflows has slowed in Q1, it might not have in fact slowed by as much as the data suggest. We have in the past discussed various caveats to interpreting official flow and reserve data, and in the following we add one more, in light of a large unusual cross-border RMB flow in recent months that we believe could have masked the true outflow pressure in China.

  A $170bn flow of RMB to offshore…

   

  Specifically, since October last year we have seen a large net flow of RMB from onshore to offshore, primarily due to trade settlement in RMB (i.e., Chinese importers pay for the imports in RMB). This totaled $170bn through May or about $20bn per month on average (Exhibit 4). This flow has helped lessen the overall outflow pressure faced by China because it means that importers did not have to buy as much FX to pay for imports (since they just used RMB). This also helps explain in our view the general decline in CNH forward points (or equivalently, CNH interest rates) in the last few months (Exhibit 5), despite market perception of large-scale CNH smoothing operations by state-related entities (more on this below).

   

  

   

  Compared to previous actions, this is somewhat unusual. In the past, net crossborder flow of RMB had typically been driven by offshore RMB sentiment, e.g., when offshore RMB sentiment is strong, CNH tends to be more expensive than CNY ($/CNH is below $/CNY), naturally driving a net flow of RMB from onshore to offshore (e.g., for trade settlement) to satisfy high RMB demand; and vice versa.

   

  However, especially since the August 2015 RMB reform, offshore RMB has been generally weak. While the CNH-CNY gap has narrowed in the last few months, CNH has still been usually cheaper than CNY ($/CNH above $/CNY). Therefore, the typical market-driven relationship would have suggested a net flow of RMB from offshore to onshore instead. Indeed, in a stark contrast, the relationship is in total reverse since October last year—the cheaper the CNH (vs. CNY), the greater the net flow of RMB from onshore to offshore. This is more consistent with a supply-push pattern (an exogenous push of RMB from onshore to offshore, which causes CNH to trade cheaper), rather than a market driven demand-pull relationship.

   

  In short, we cannot point to any obvious market forces that could explain the RMB flow in the last several months; non-commercially driven factors seem to be a more likely explanation, in our view.

   

  … that does not seem to result in any increase in foreigners’ CNH holdings

   

  Another interesting observation is that this large amount of net RMB flow to offshore does not seem to show up in foreigners’ holdings of CNH assets. In general, if the RMB is received by foreign non-banks, that would likely end up as CNH deposits; and if it is received by foreign banks, that would show up as an increase in banks’ holdings of CNH assets. However, CNH deposits in Hong Kong and Taiwan, two key CNH centers, have been on a decline in the last several months (Exhibit 7); and Hong Kong banks’ spot position of “other currencies” has also been falling (Exhibit 8).

   

  

   

  More broadly, overseas entities’ holdings of onshore RMB deposits (which include placement of CNH by offshore banks to onshore banks) have as recently, sharply deviated from the hitherto synchronized pattern with the cumulative net flow of RMB from onshore to offshore, and have been even surpassed by the latter in absolute level (Exhibit 9).

  What does this mean? In simple terms, China is masking massive capital outflows, far greater than the $123 billion reported for the first three months.

  These various official data pieced together are consistent with either of the following two possibilities:

  1. Some offshore RMB clearing banks buy RMB in the offshore market and sell the RMB back in the onshore FX market. In this scenario, it is unlikely that most of the RMB is sold to PBOC, because in the last few months PBOC’s FX reserve data have been roughly in line with the onshore demand for FX as suggested by SAFE’s onshore FX settlement data (i.e., it does not suggest that PBOC has used much of their reserves to meet offshore clearing banks’ demand for FX). In other words, in this scenario, it is likely that banks (or other non-PBOC participants of the onshore FX market) used their own FX position to buy the RMB. and in doing so, banks have likely suffered losses as CNY has generally weakened in the last few months. In late April, SAFE relaxed the regulatory floor on onshore banks’ FX net open position, expanding further their scope to short FX by $100bn.
  2. A Chinese entity (possibly state-backed) that has access to both
     offshore and onshore markets buys RMB (with FX) in the offshore market
     and invests the RMB in onshore assets. Since this entity is Chinese, its
     RMB assets would not be reflected in foreigners’ holdings of RMB assets

  Goldman notes that in this context, “there have been market anecdotes on frequent offshore CNH smoothing operations by Chinese institutions.” Actually, not anecdotes: those are all too daily, all too real interventions by “large banks” who keep a barrier on both the CNY and CNH from moving far beyond 6.65. It is precisely in these “streamlining” operations that this massive “outflow” is hidden.

  Summing it all up, the reality is that instead of $330 billion in FX outflows since October, the real number is 50% greater, or half a trillion, which also suggests that instead of getting better, China’s capital outflow situation is as bad as it has been, and not only that, but the government is now actively covering up the reality. Here’s Goldman:

  Given the discussion above, it is possible that the actual underlying FX flow situation (i.e., FX/RMB demand by Chinese corporates/households and foreigners) has been less encouraging than even the SAFE data on onshore FX settlement imply10. (e.g., according to that data alone, FX outflow was about $2bn in May.), but there was also $24bn in RMB flow to offshore during the month—if we assume that that flow was not market-driven and that it was not subsequently held by foreigners, then the underlying FX outflow could instead be $26bn in May. In the eight months since last October, this approach would have suggested a total net FX outflow of about $500bn, or 50% above the $330bn implied by SAFE’s onshore FX settlement data.

  

  All of this is bad news for the PBOC, now that the market is on to it:

  Going forward, we believe also tracking the data on cross-border RMB flow (released monthly by SAFE) will be important to coming to a more comprehensive view on the underlying flow picture. For the time being, we will be incorporating this into our measure of net FX flow (Exhibit 10 shows this modified version

  This means that either China’s central bank will have to disclose the truth, or further cover up the true nature of China’s capital outflows, in the process unleashing even more skepticism, even more outflows, and even more concerns about China’s economy (and banking system), to the point where these concerns reflame the same cross-asset (and market) contagions that led to the December/January swoon and which have been temporarily brushed under the rug while the Shanghai Accord still forces central banks to avoid major market moves in response to the sweeping capital outflows undertaken by China. 

  For now, however, we will be content to watch how the narrative that China’s capital outflows are “moderating” crashes and burns, and how long it takes other capital markets to realize that far from fixed, China is furiously burning through virtually any and all liquid reserves it still has access to, only doing so in a way that only a handful of central bankers were aware of it. Well, now everyone else knows as well thanks to Goldman…. which brings us tothe Goldman note from a month ago, in which Goldman revealed the FX doom loop…

  

  … and in which the bank openly declared war on the Yuan, which it expects will crash in the coming months. To be sure, no better way to achieve that than by actually revealing the truth.

  

  

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• Precious Metal Pandemonium – Silver Spikes Limit-Up, Gold Surges As China FX Basket Hits Record Low

  Update: Silver just exploded above $21 – up almost 8% – its biggest single day surge since September 2013. Silver is limit up on SHFE as Gold is also surging back towards Brexit highs near $1360… China's CFETS Renminbi basket just hit a record low..

  

  

  All of this is happening as China's currency collapses to a record low since it began being published against a broad basket of majors…

  

   

  Notably silver's strength has unwound all of gold's post-QE3 gains…

  

  *  *  *

  As we detailed earlier, following silver's best week since August 2013, dramatically catching up to gold's recent performance, it appears, despite the volumeless meltup in stocks, that Brexit has sparked huge demand for the safety of precious metals.

  

   

  For a second straight week, funds boosted their net-long futures and options positions in the two metals to the highest since the data begins in 2006.

  

   

  Money managers have been piling in on demand for havens and speculation that interest rates will stay low as central bankers around the world struggle to contain the economic fallout from the U.K.’s vote to quit the European Union.

  But what happens next?

  

   

  As a reminder, on April 21st PIMCO's Harley Bassman suggested "The Fed should monetize gold"…

  In "Rumpelstiltskin at the Fed", Bassman goes down the well-trodden path of proposing Fed asset purchases as the last ditch panacea for the US economy, however instead of buying bonds, or stocks, or crude oil, Bassman has a truly original idea: "the Fed should unleash a massive Fed gold purchase program that could echo a Depression-era effort that effectively boosted the U.S. economy."

  He is of course, referring to FDR's 1933 Executive Order 6102, which made it illegal for a citizen to own gold bullion or coins. Americans promptly sold their gold to the government at the official price of $20.67, with the resulting hoard of gold was then placed in Fort Knox.

  The Gold Reserve Act of 1934 raised the official price of gold to $35.00, a near 70% increase. It also resulted in an implicit devaluation of the US dollar. As Bassman points out, over the three years from January 1934 to December 1936, GDP increased by 48%, the Dow Jones stock index rose by nearly 80%, and most salient to our topic, inflation averaged a positive 2% annually, despite a national unemployment rate hovering around 18%.

  In short, a brief economic nirvana which was unleashed by the devaluation of the dollar confiscation of gold. In fact, we have frequently hinted in the past that another Executive Order 6102 is inevitable for precisely these reasons. However this is the first time when we see a "respected economist" openly recommend this idea as a matter of monetary policy.

  Bassman says that the Fed should "emulate a past success by making a public offer to purchase a significantly large quantity of gold bullion at a substantially greater price than today’s free-market level, perhaps $5,000 an ounce? It would be operationally simple as holders could transact directly at regional Federal offices or via authorized precious metal assayers."

  What would the outcome of such as "QE for the goldbugs" look like? His summary assessment:

  A massive Fed gold purchase program would differ from past efforts at monetary expansion. Via QE, the transmission mechanism was wholly contained within the financial system; fiat currency was used to buy fiat assets which then settled on bank balance sheets. Since QE is arcane to most people outside of Wall Street, and NIRP seems just bizarre to most non-academics, these policies have had little impact on inflationary expectations. Global consumers are more familiar with gold than the banking system, thus this avenue of monetary expansion might finally lift the anchor on inflationary expectations and their associated spending habits.

   

  The USD may initially weaken versus fiat currencies, but other central banks could soon buy gold as well, similar to the paths of QE and NIRP. The impactful twist of a gold purchase program is that it increases the price of a widely recognized “store of value,” a view little diminished despite the fact the U.S. relinquished the gold standard in 1971. This is a vivid contrast to the relatively invisible inflation of financial assets with its perverse side effect of widening the income gap.

  And it seems someone is front-running that moment…

  

  Source: Bloomberg

  

  

• U.N. Official 'Accidentally' Crushes Own Throat Right Before Testifying Against Hillary Clinton

  Submitted by Mac Slavo via SHTFPlan.com,

  Call it conspiracy theory, coincidence or just bad luck, but any time someone is in a position to bring down Hillary Clinton by testifying they wind up dead. In fact, there’s a long history of Clinton-related body counts, with scores of people dying under mysterious circumstances.

  Perhaps the most notable is Vince Foster. Foster was a partner at Clinton’s law firm and knew the inner workings of the Clinton Machine.  Police ruled that death a suicide, though it is often noted that Foster may have been suicided.

  Now, another official has found himself on the wrong end of the Clintons. That John Ashe was a former President of the United Nations General Assembly highlights the fact that no one is safe once in their sights.

  

  And as you might have guessed, there are major inconsistencies with Ashe’s death. It was not only conveniently timed because Ashe died just a few days before being set to testify against Clinton in a corruption case, but official reports indicated he died of a heart attack.

  The problem, however, is that police on the scene reported Ashe died when his throat was crushed during a work-out accident.

  The New York Post’s Page Six reported that after Ashe was found dead Wednesday, the U.N. claimed that he had died from a heart attack. Local police officers in Dobbs Ferry, New York, later disputed that claim, saying instead that he died from a workout accident that crushed his throat.

   

  Adding to the mysterious nature of Ashe’s death was the fact that he had been slated to be in court Monday with his Chinese businessman co-defendant Ng Lap Seng, from whom he reportedly received over $1 billion in donations during his term as president of the U.N. General Assembly.

   

  And then there was this: During the presidency of Bill Clinton, Seng illegally funneled several hundred thousand dollars to the Democrat National Committee.

   

  Source: The Conservative Tribune via The Daily Sheeple

  It must be coincidence, right?

  If former Secret Service agent Gary Byrne is to be believed, this is business as usual for the Clintons. Excerpt via Zero Hedge:

  BYRNE: I feel so strongly that people need to know the real Hillary Clinton and how dangerous she is in her behavior. She is not a leader. She is not a leader.

   

  SEAN: She does not have the temperament?

   

  BYRNE: She doesn’t have the temperament. She didn’t have the temperament to handle the social office when she was First Lady, she does not have the temperament.

   

  SEAN: She’s dishonest.

   

  BYRNE: She’s dishonest, she habitually lies, anybody that can separate themselves from their politics and review her behavior over the past 15 years…

  Byrne is the author of the newly published book Crisis Of Character – a first-hand Clinton exposé.

  

  

• Suicide Bomber Blows Himself Up In Front Of US Consulate In Saudi Arabia

  After last night’s massive suicide bombing in Baghdad which killed over 100, and which ISIS took responsibility for, we doubt the Islamic State will be just as quick to take credit for tonight’s latest terrorist attempt, this time in the Saudi Arabian city of Jeddah, where a suspected suicide bomber was killed in front of the US consulate.

  

  As the Saudi Gazette reports, security authorities have raised the alert in Jeddah to the maximum after a suicide bombing attempt in which an individual blew himself up inside a car in front of the US Consulate in Jeddah.

  #BreakingNews Suicider blown up his explosive belt in front of #USA consulate in Jeddah.. #Saudi pic.twitter.com/ZjFqUdmHfc

  — Rami (@RamiAILoIah) July 4, 2016

  A photo circulated today of suicide bomber near US consulate in Jeddah shows man was shot before blowing himself up. pic.twitter.com/gMcUFcxpNT

  — Wael Mahdi (@WaelMahdi) July 4, 2016

  According to Sabq sources two diplomatic security personnel were injured in the blast. They were rushed to the hospital. Security forces in Jeddah surrounded the area and enforced a lockdown where the consulate is located. Security forces are following up on the situation.

  BBC adds that two policeman were reportedly injured in the incident and the attacker is said to be dead. The attack came in the early hours of US Independence Day. The Jeddah consulate was the scene of a militant attack in 2004, which left nine people dead.

  The attack coming on July 4 is hardly a coincidence.

  For now, the market is not reading too much into it, with WTI up just 2 cents; if anything it is silver which is surging which as of moments ago just hit limit up in Shanghaim, surging by 6%.

  

  

• Old Men Start Wars, Young Men Die In Them

  Submitted by Laurence Vance via LewRockwell.com,

  “Older men start wars, but younger men fight them.” ~ Albert Einstein

   

  “Older men declare war. But it is the youth that must fight and die.” ~ Herbert Hoover

   

  “I’m fed up to the ears with old men dreaming up wars for young men to die in.” ~ George S. McGovern

  One hundred years ago – on July 1, 1916 – thousands of young men died after older men decided, again, to send them to war. On the first day of the Battle of the Somme, the British army suffered 57,470 casualties, of which 19,240 were deaths, the French had 1,590 casualties, and the Germans had over 10,000. It was the single greatest day for casualties in British military history. By the time the Battle of the Somme ended in November, the British had around 420,000 casualties, the French about 200,000, and the Germans about 500,000.

  One would think that when almost 20,000 of your young men in the prime of their life die in one battle on one day that the British would simply say “enough is enough” and just tell the army to quit fighting and go home. But no, the British army continued to execute men for desertion like the hundred or more that suffered that fate in the two years before the Battle of the Somme.

  It is senseless slaughter like the Battle of the Somme that led Ernest Hemingway, who was an ambulance driver in Italy toward the end of World War I, to say:

  They wrote in the old days that it is sweet and fitting to die for one’s country. But in modern war there is nothing sweet nor fitting in your dying. You will die like a dog for no good reason.

   

  Never think that war, no matter how necessary, nor how justified, is not a crime.

  Over 115,000 American soldiers would go on to die like dogs for no good reason after the United States foolishly and senselessly entered World War I in April of 1917. The thousands of U.S. troops who in more recent times died in Iraq and Afghanistan likewise senselessly died in vain and for a lie.

  How do you prevent such senseless slaughter? How do you stop young men from dying in vain? How do you prohibit young men from dying for a lie? How do you stop making widows and orphans? How do you thwart young men dying like dogs? How do you stop young men from dying for no good reason? How do you end the war once and for all?

  It is an uphill battle.

  Governments, presidents, politicians, and military officers will continue to send young men to fight and die.

  The military establishment will continue to want more money and more weapons of war to try out.

  Legislatures will continue to fund bloated military budgets.

  Defense contractors—merchants of death—will continue to lobby for more armaments, more military interventions, and more wars.

  Uber-patriots, neocons, armchair warriors, just war theorists, progressive hawks, reich-wing nationalists, red-state fascists, pro-lifers for mass murder, and bloodthirsty conservatives will continue to cheer on the military.

  Christian Coalition moralists, Old Testament Christians, evangelical warvangelicals, theocon Values Voters, imperial Christians, nuclear Christians, Religious Right warmongers, God and country Christian bumpkins, sniper theologians, and members of the Christian axis of evil—all claiming to worship the prince of peace—will continue to support the troops no matter what.

  Some libertarians will continue to write me and say that although they agree with everything I say about the follies of U.S. foreign policy and military interventions none of it is the fault of the troops and I should quit criticizing them even though they enlisted in the U.S. war machine of their own free will.

  So, how do you end the war once and for all? Easy. Young men simply need to stop joining the military. It is just as Einstein said:

  Nothing will end war unless the people themselves refuse to go to war.

  The pioneers of a warless world are the youth who refuse military service.

  “War has never been possible,” writes Robert Meagher in Killing from the Inside Out: Moral Injury and Just War, “ unless men have been willing to kill each other and, while they’re at it, possibly to be killed.” And as I have said over and over again: you can’t have a war without soldiers. It is only by young men not enlisting or refusing to enlist that war can be ended once and for all.

  

  

• Upon Completing The World's Largest Radio Telescope, China Will Now Be Listening For Aliens

  When GDP is falling and the global economy is weak, there are normally many let's say, "out of the box" ideas on how to stimulate growth again – aside from central planners tripping over each other to see who can print money the fastest that is.

  For China, one would assume that more ghost cities are being built, or new projects are being constructed in order to stop Beijing from sinking, but one project that has taken place that many may not have known about is the construction of the world's largest radio telescope.

  As RT reports, China has now completed construction on the world's largest radio telescope. The Single-Aperture Spherical Radio Telescope (FAST) as it is known, is an enormous dish made up of 4,450 reflector panels with a diameter of a half a kilometer, which is larger than the previous record holder, Puerto Rico's Arcibo Observatory.

  It was completed in southwestern China's Guizhou Province on Sunday, when the last reflector was fitted into a natural bunker, which is situated among the mountains of Pingtang County.

  The task of the telescope? According to RT, it is to be used to look for intelligent life in deep outer space. Once operational, FAST will be able to detect radio signals from as far away as one thousand light years – evidently that's where the aliens are.

  Work began on the project in March of 2011, and was completed Sunday, ahead of the originally planned September date. The project displaced some local residents, who were given $1,800 in compensation and moved to a newly built accommodation.

  In total, RT reports that the project cost just over $105 million – while it isn't quite the Death Star we were looking for, this is an excellent start.

  Enjoy…

  via GIPHY

  

  

  

  

  

  

  

  

  

  

• The Curse Of Socialist Highways – How Government Ruins July 4th Travel

  Submitted by Tho Bishop via The Mises Institute,

  At its best, Independence Day is a celebration of American secession and a testament to individual liberty. At its worst, Independence Day is still a day where government offices are closed, American grills are lit and the evening sky is full of fireworks, which is still pretty good (at least in my subjective value.)

  Unfortunately the travel before and after the 4^th of July is a different story, with it widely considered one of the worst travel days of the year. While the desire to take advantage of the holiday to enjoy friends and family is a natural product of humans being inherently social creatures, the degree to which this congestion leads to headache and misery rests solely with the institution responsible for them during the rest of the year – the government.

  The Curse of Socialist Highways

  The question “who will build the roads?” has become such a statist cliché that it’s perhaps the only libertarian internet meme bigger than “taxation is theft” and Ron Paul informing us that “it’s happening.” It has earned that designation because the entire idea of roads and highways has become so synonymous with government that even Joe McCarthy voted for this form of socialism.

  Of course, the purpose for the current American interstate system had nothing to do with consumer demand and everything to do with military transportation throughout the country. While some may defend such a project on that basis, it shouldn’t be a surprise that interstates designed to transport tanks and weapons aren’t always the best at facilitating family travel.

  As Walter Block has long argued, much of the congestion on these highways is a direct result of their being in the control of government and therefore being unable to have proper pricing. In his article Congestion and Road Pricing, Dr. Block rebuts various arguments defending public management of highways, as well as government-based solutions (such as automobile bans that were in vogue at the time). Block identifies how free market solutions would solve the problem of congestion, such as enabling “travel entrepreneurs” to design and fund higher-cost toll roads for travelers who don’t mind paying extra for a quicker drive. Not only would such a system obviously cut down the congestion for these “luxury drivers”, but their absence from more commonly used roads means less congestion for those who don’t use them. 

  We have seen this play out when governments have tried to imitate this highway pricing mechanism with the construction of various higher-cost toll roads across the country. While so called “Lexus lanes” do offer alternatives to traditional highways and thus make some impact on congestion, they still suffer from the same problem inherent with government infrastructure in its lack of real economic calculation. Government allowing taxi’s to charge more when picking up from airports isn’t a replacement for Uber surge pricing, and the USPS charging more for overnight deliver isn’t a replacement for Fed Ex.

  While there are a few examples of genuine private roads in America — the Orchard Pond Parkway, Florida’s first privately funded toll road, opened up earlier this year – as long as government roads enjoy the privilege of being subsidized by gasoline taxes over private investment, the highways system will continue to be commanded with all the efficiency of Soviet central planners.

  It’s also worth noting the irony that this government project which is often held up by the left as an example of the necessity of government, is also the greatest hindrance to the progressive desire to eliminate gas-burning cars. As libertarians have long pointed out, the Federal highway project was a massive government subsidy to the automobile industry at the expense of alternative travel options – including trains and airplanes. Of course since the government has its own ways of controlling both rails and airspace, we’d likely be suffering from a whole other set of government-caused issues anyway.

  Government’s Unfriendly Skies

  Speaking of air travel, we would be amiss without highlighting some of the ways government has destroyed the fun of flying.

  Some of these are obvious, especially given the number of headlines this spring highlighting how the TSA’s security theater had created unprecedented wait times throughout the country. American Airlines alone reported having 70,000 missed flights due to TSA complications. Even more appalling are the numerous examples of the TSA failing to treat customers with basic human dignity, such as the most recent example of a disabled 19-year old left bloodied after trying to go through airport security in Memphis.

  Americans have good reason to be even more livid at these issues than those caused by highway congestion. While government roads have their share of problems, they will at least manage to get you where you need to go. The TSA, on the other hand, doesn’t even succeed at achieving its stated mission. If there is a silver lining to be found in the TSA’s spectacularly incompetence, it’s that the performance has been so abysmal that even government-managed airports are having to seriously consider alternatives.

  Subsidizing Terrible Airlines

  While the TSA represents an obvious example of government ruining flying, there are a variety of others ways government can ruin air travel. While it may be difficult to rally the public around Murray Rothbard’s calls to abolish the FAA at this time, another program that should infuriate tax payers is the Essential Air Service program. While billed as a way to ensure airlines maintain flights in “underserved” rural communities, in practice it serves as a way for poorly operated airlines to make money in spite of how well they serve their clients.

  One airline that received near $18.5 million dollars is Silver Airlines, which recently left my hometown of Panama City Beach, FL and is perhaps the worst company I’ve ever done business with.

  During their time in PCB, my family attempted to fly with them four different times for eight different flights. Of those eight times, only two operated without problem. Two flights were cancelled without any notice and the other four suffered delays ranging from three-six hours. While delays and flying weight concerns are part of the operational hazard of flying, Silver Airlines compounded the issue with poor customer service and vouchers that did not adequately cover the expenses of delay. An attempt to resolve these complaints with company management is directed to an automated system as useful as the TSA.

  Ludwig von Mises described capitalism as “a social system of consumers’ supremacy.”

  As such, following our last experience with Silver, my family agreed to never use them again, the taxes we pay are still going to pad their bottom line.  While Silver’s abysmal record is not an indictment on all the other airlines that utilize the EAS program, it is an example of what happens when government intervention serves to enrich terribly operated companies regardless of consumer demand.

  So if you find yourself wasting hours stuck in holiday traffic or at the airport this 4^th of July, remind yourself that the solution to your headache can be found within the reason for this particular season. If we were to claim independence from the modern-day royalty of the beltway, the markets will ensure better holidays in the future.

  

  

• Merkel To Get Rid Of Jean-Claude Juncker "Within The Next Year"

  In the aftermath of the Brexit fiasco, the biggest fissure that emerged was not between the economies of the UK and Europe, nor between the stock markets of the UK and Europe, both of which have spiked on the back of another round of central bank liquidity promises, but between Angela Merkel, and the alcohol-afficionado who erroneously believes is the head of Europe, Jean-Claude Juncker. Unfortunately for the latter, he is now on his way out because as the Telegraph reports, citing a Sunday Times interview with a German government minister, Merkel has finally decided to oust Europe’s federalist chief Jean-Claude Juncker “within the next year.”

  The catalyst for those who have been following the Brexit fallout should not come as a surprise: as we first reported a week ago in ‘More Confusion: EU Tells Cameron To Hurry Up With Article 50 As Merkel Says No Need To Rush“, the German chancellor’s frustration with the European Commission chief came as Europe split over whether to use the Brexit negotiations as a trigger to deepen European integration or take a more pragmatic approach to Britain as it heads for the exit door.

  “The pressure on him [Juncker] to resign will only become greater and Chancellor Merkel will eventually have to deal with this next year,” an unnamed German minister told The Sunday Times, adding that Berlin had been furious with Mr Juncker “gloating” over the UK referendum result. Look no further than “Juncker Lashes Out At British Lawmakers: “Why Are You Here?”” for an example of just that.

  Furthermore, Juncker’s constant and unabashed calls for “more Europe” – many of which have come in an intoxicated or outright drugged state – has led to several of Europe other dissenting members – including Poland, Hungary and the Czech Republic – to lay some of the blame for Brexit at his door.

  Even before he was appointed President of the European Commission – against the wishes of David Cameron – concerns were raised about Mr Juncker’s alchohol consumption which were dismissed as a “smear campaign” by his officials. It was, however, all true: at the time The Telegraph and several other newspapers reported officials worrying about Mr Juncker having “cognac for breakfast” and rolling through long negotiations fortified with large quantities of claret and brandy. 

  

  Some have had enough of Europe’s most humiliating alcoholic, and since the June 23 vote both the Czech and Polish foreign ministers have called publicly for Mr Juncker to resign, moves that one senior EU official dismissed last week as “predictable”. However, the rumblings from Berlin now represent a much more serious threat to Mr Juncker’s tenure. The split also offers a glimmer of hope for British negotiators who are preparing for fractious EU-UK divorce talks and are desperate to avoid a repeat of February’s failed negotiations which – controlled as they were by Mr Juncker and the Commission – left David Cameron without enough ‘wins’ to avoid Brexit.

  Meanwhile, Juncker’s European Commission is being shut down by members:

  “Everyone is determined that this negotiation is handled in the European Council – i.e. between the 27 heads of government – and not by the Commission, the eurocrats and the EU ‘theologians’ in Brussels,” a senior UK source told The Telegraph.

  In a signal that battle has partly already been won, Mrs Merkel pointedly met with French and Italian leaders in Berlin last week, excluding Mr Juncker from the conversation. As the Telegraph adds, British strategists hope that creating a much broader negotiation that includes the UK’s role in keeping Europe geopolitically relevant through its deep Nato ties, defence contributions and links to Washington, they can avoid a narrow tit-for-tat negotiation on trade where the UK has only very limited leverage.

  At its core, Merkel’s anger reflects a growing schism in Europe between the likes of Juncker and the French and Belgian leaders, who want to see “more Europe” after Brexit, and those, like Merkel and her powerful finance minister Wolfgang Schäuble who believe that would be “crazy”, according to the Times. Prior to the Brexit vote senior European Commission officials were privately jubilant about the opportunity that a British ‘leave’ vote would present to complete the European project, sucking reluctant countries like Poland into the Euro “within five years”.

  Since the Brexit vote, French ministers have been far less conciliatory to the UK than German, openly salivating at the prospect of UK-based financial businesses relocating to Paris. If so, the French will be disappointed as we hinted in “Is This Where All Those Companies “Leaving England” Will Go.” After all, few companies are so insane to leave the stability London for the socialist purgatory of Paris.

  

  

• Black Trump Supporter Exposes Truth About "The Black Vote"

  Submitted by Kristin Campbell via ConservativeTribune.com,

  Republican presidential hopeful Donald Trump and his supporters have been accused of being “racist,” which isn’t exactly an uncommon label given to Republicans by liberals.

  However, one black Trump supporter recently dropped an epic truth bomb about what black voters really want out of the American dream, and if true, it should have them lining up to vote Republican in massive numbers.

  Podcaster and blogger Sonnie Johnson told Breitbart that many black voters fully understand and support Trump’s message of wealth over poverty.

  “This message is very simple,” Johnson said. “It is wealth over poverty. If you do not think that blacks understand that message, you have lost your entire mind.”

  The outspoken conservative explained that black Americans were “tired of living in poverty.”

  “We want greatness. We do not want to be dependent. We do not want free s***,” she said. “We want to be able to operate in the American system, just the way every other American operates, and that takes wealth.”

  Johnson said she believed that Republicans had an opportunity this year to “crack this progressive shell,” which has already sustained some cracks from Trump’s campaign.

  In fact, she insisted that black people have already begun to realize that the presumptive GOP nominee’s message was one for all Americans, not just white voters – even if the media doesn’t portray his growing support in the black community.

  “If you go back, if you look on Twitter right now, to see all of the blacks that are in support of Donald Trump, every stat they show, shows that that support doesn’t exist. Every person they put on says that black people will not support Trump,” Johnson explained.

  The blogger considered this election this “chance of a lifetime” when it comes to recruiting black voters to the GOP, but said Republicans must put forth the right message in order to do so.

  “If we can … start talking about the American Dream — what it has to offer, what we as the right wing have to offer!” she said. “Freedom, liberty, financial independence, those are things that we can sell.”

  Many polls have reported that the black vote comprised a mere 1 percent of Trump’s overall support — something Johnson strongly rejected.

  “No way,” she said. “They poll Democrats. They poll people that are used to voting for Democrats and just put their name down. They did not poll average black people.”

  These “average black people” are listening to the Republican message of conservative values through Trump, she argued.

  You can listen to the entire interview here:

  Johnson is right — the Republican Party has more to offer anyone searching for “freedom” or “financial independence.” While Democrat policies have sought to keep black people dependent and on the government dole, conservatism offers the proven concept that smaller government equals more freedom.

  

  

• German Arms Exports Nearly Double In 2015

  The US isn't the only country to can crank up its sales of weapons around the world. As we have pointed out previously, Germany is also a relatively large exporter in the global arms trade.

  

  It turns out that Germany had a booming arms export business in 2015, because as Reuters reports, German arms exports almost doubled last year to their highest level since the beginning of this century. The value of individual approvals granted for exporting arms was €7.86 billion last year compared to €3.97 billion in 2014. Exports were boosted by a the approval of four tanker aircraft for Britain worth €1.1 billion, and a controversial approval of battle tanks and howitzers along with munitions to be sent to Qatar.

  

  From Reuters

  Newspaper Welt am Sonntag said the value of individual approvals granted for exporting arms was 7.86 billion euros ($8.75 billion) last year compared with 3.97 billion euros worth of arms exports in 2014.

   

  It said the Economy Ministry had pointed to special factors that boosted arms exports such as the approval of four tanker aircraft for Britain worth 1.1 billion euros.

   

  It also pointed to the approval of battle tanks and tank howitzers along with munitions and accompanying vehicles worth 1.6 billion euros for Qatar – a controversial deal that the report said was approved in 2013 by the previous government.

   

  The Economy Ministry declined to comment on the report.

   

  In February German Economy Minister Sigmar Gabriel said preliminary figures showed that Germany had given approval for around 7.5 billion euros worth of arms shipments in 2015.

   

  The Federal Office for Economics and Export Control (Bafa), a subsidiary of the economy ministry, is responsible for licensing arms export deals and Gabriel had promised to take a much more cautious approach to licensing arms exports, especially with regard to the Middle East.

   

  Germany is one of the world's main arms exporters to EU and NATO countries and has been cutting its sales of light weapons outside those states.

   

  Last year the government rejected 100 applications for arms export approvals – the same number as in the previous year, Welt am Sonntag reported. It said Berlin had given 12,687 applications the green light in 2015 – 597 more than in the previous year.

  According to Deutsche Welle, Qatar, a Gulf Arab state has been labeled by German opposition parties as an alleged source of funding for ISIS, which is why the receipt of tanks and heavy artillery, as well as ammunition and accompanying vehicles makes it a controversial sale.

  From DW

  Qatar, a Gulf Arab state panned by German opposition parties as an alleged source of funding for the "Islamic State" (IS) terror militia, received combat tanks and heavy artillery, as well as ammunition and accompanying vehicles worth 1.6 billion euros.

   

  Economy Minister Sigmar Gabriel, who heads the Social Democrats, had tried to stop the delivery to Qatar but was outvoted by other ministers on Germany's Federal Security Council.

   

  That deal had already been cleared in 2013 by Chancellor Angela Merkel's previous coalition, which then comprised her conservatives and the pro-business liberal Free Democrats (FDP).

   

  Disclosure in February of that sale prompted renewed outcries from church-based lobby groups and charities such as Pax Christi and Misereor.

  

  * * *

  Exporting weapons and war appears to be something that the western world is still quite strong in, despite the rest of the world seeing global trade slumping. Also, when it comes to the €1.6 billion sale to Qatar, is it really a surprise to anyone – €1.6 billion is a lot of cash to pass up, and money talks as we have all come to learn.

  

  

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