Truth Has Been Murdered — Paul Craig Roberts

Truth Has Been Murdered

Paul Craig Roberts

The Obama regime and its neocon monsters and European vassals have resurrected a Nazi government and located it in Ukraine. Read this statement by Elena Bondarenko, a member of the Ukrainian parliament: http://slavyangrad.org/2015/04/18/statement-by-elena-bondarenko-peoples-deputy-of-verkhovna-rada-of-ukraine/

The Western media has created a fictional account of events in Ukraine. The coup organized by the Obama regime that overthrew the elected democratic government in Ukraine is never mentioned. The militias decked out in Nazi symbols are ignored. These militias are the principle source of the violence that has been inflicted on the Russian populations, resulting in the formation of the break-away republics. Instead of reporting this fact, the corrupt Western media delivers Washington’s propaganda that Russia has invaded and is annexing eastern and southern Ukraine. British and European politicians parrot Washington’s lies.

The Western media is complicit in many war crimes covered up with lies, but the false story that the Western media has woven of Ukraine is the most audacious collection of lies yet. Truly, truth in the Western world has been murdered. There is no respect for truth in any Western capital.

The coup in Ukraine is Washington’s effort to thrust a dagger into Russia’s heart. The recklessness of such a criminal act has been covered up by constructing a false reality of a people’s revolution against a corrupt and oppressive government. The world should be stunned that “bringing democracy” has become Washington’s cover for resurrecting a Nazi state.

Today’s News May 1, 2015

  • Who’s Crazy Now? American Psychological Association Supported Torture “At Every Critical Juncture”

    While most psychologists are good people, tyrannies have always deployed corrupt psychologists to punish dissenters, and label them “crazy”.

    The Nazi government substantially supported psychologists … many of whom, in turn, espoused extermination of the people they considered to be “racially and cognitively compromised”.

    Soviet psychiatrists famously aided Stalin in applying fake insanity diagnoses to political dissenters.  The official explanation was that no sane person would declaim the Soviet government and Communism.

    And authoritarian American psychologists are eager to label anyone “taking a cynical stance toward politics, mistrusting authority, endorsing democratic practices, … and displaying an inquisitive, imaginative outlook” as worthy of a trip to the insane asylum. (Those traits may also get one labeled as a potential terrorist.)  Indeed, Americans are literally being thrown in the loony bin after they question those in power.

    As prominent forensic psychiatrist James Knoll – psychiatry professor at SUNY-Syracuse and director of a forensic fellowship program – writes in the Psychiatric Times:

    When psychiatric science becomes co-opted by a political agenda, an unhealthy alliance may be created. It is science that will always be the host organism, to be taken over by political viruses…. [P]sychiatry may come to resemble a new organism entirely — one that serves the ends of the criminal justice system.

    Indeed, American psychologists created the American program of torture which was specially-crafted to produce false confessions to justify U.S. military policy.

    Ironically – given the background of psychologists deployed by Stalin to crush dissent – the type of torture used by the CIA was a Communist torture technique .  And see this.  (In reality, we’ve known for 2,000 years that all torture produces false confessions. And we’ve known for a very long time that torture reduces our national security.)

    It wasn’t just rogue psychologists: the American Psychological Association was central to the torture program.

    Pulitzer-prize winning journalist James Risen reports today in the New York Times:

    The American Psychological Association secretly collaborated with the administration of President George W. Bush to bolster a legal and ethical justification for the torture of prisoners swept up in the post-Sept. 11 war on terror …

     

    “The A.P.A. secretly coordinated with officials from the C.I.A., White House and the Department of Defense to create an A.P.A. ethics policy on national security interrogations which comported with then-classified legal guidance authorizing the C.I.A. torture program,” the report’s authors conclude.

     

    ***

     

    The involvement of health professionals in the Bush-era interrogation program was significant because it enabled the Justice Department to argue in secret opinions that the program was legal and did not constitute torture, since the interrogations were being monitored by health professionals to make sure they were safe.

     

    ***

     

    The American Psychological Association “clearly supports the role of psychologists in a way our behavioral science consultants operate,” said Dr. William Winkenwerder, then the assistant secretary of defense for health affairs, describing to reporters why the Pentagon relied more on psychologists than psychiatrists at the prison at Guantánamo Bay, Cuba.

     

    ***

     

    By June 2004, the Bush administration’s torture program was in trouble. The public disclosure of the images of prisoners being abused at the Abu Ghraib prison earlier that year prompted an intense debate about the way the United States was treating detainees in the global war on terror, leading to new scrutiny of the C.I.A.’s so-called enhanced interrogation program, which included sleep deprivation and waterboarding, or simulated drowning. Congress and the news media were starting to ask questions, and there were new doubts about whether the program was legal.

     

    ***

     

    In early June 2004, a senior official with the association, the nation’s largest professional organization for psychologists, issued an invitation to a carefully selected group of psychologists and behavioral scientists inside the government to a private meeting to discuss the crisis and the role of psychologists in the interrogation program.

     

    Psychologists from the C.I.A. and other agencies met with association officials in July, and by the next year the association issued guidelines that reaffirmed that it was acceptable for its members to be involved in the interrogation program.

     

    To emphasize their argument that the association grew too close to the interrogation program, the critics’ new report cites a 2003 email from a senior psychologist at the C.I.A. to a senior official at the psychological association. In the email, the C.I.A. psychologist appears to be confiding in the association official about the work of James Mitchell and Bruce Jessen, the private contractors who developed and helped run the enhanced interrogation program at the C.I.A.’s secret prisons around the world.

    In the email, written years before the involvement of the two contractors in the interrogation program was made public, the C.I.A. psychologist explains to the association official that the contractors “are doing special things to special people in special places.”

     

    ***

     

    “In 2004 and 2005 the C.I.A. torture program was threatened from within and outside the Bush administration,” [Stephen Soldz, a clinical psychologist and professor at the Boston Graduate School of Psychoanalysis] said by email. “Like clockwork, the A.P.A. directly addressed legal threats at every critical juncture facing the senior intelligence officials at the heart of the program. In some cases the A.P.A. even allowed these same Bush officials to actually help write the association’s policies.”

     

    ***

     

    The critics frequently criticized the 2005 findings of an association committee, the Presidential Task Force on Psychological Ethics and National Security, or PENS, which concluded that it was appropriate for psychologists to remain involved with interrogations, to make sure they remained safe, legal, ethical and effective.

    Like Nazi and Soviet psychologists, these quack American psychologists have lent their hand to tyranny.



  • One Bubble at a Time: 3D-Printing Stocks Implode

    Wolf Richter   www.wolfstreet.com   www.amazon.com/author/wolfrichter

    3D printing popped on the scene a few years ago, and soon it was everywhere. The media were raving about it. Companies were formed and attracted VC money, and the hype bloomed, and soon IPOs of even the tiniest outfits flew off the shelf in the US and Europe. Valuations soared, and everyone was in heaven. Even The Economist jumped on the bandwagon with its article, “A Third Industrial Revolution.” A new world had begun.

    But not everyone was a true believer. Among these unwelcome detractors and party poopers was Terry Gou, founder and president of Foxconn, one of world’s largest electronics manufacturing companies. It makes the iPhone and other gadgets. In June 2013, when the Taiwanese media pushed him on 3D printing, he retorted, “3D printing is a gimmick” with no “real commercial value.”

    Foxconn has been using 3D printing for nearly 30 years, he said. But the technology wasn’t suitable for mass production. You could print a phone, he said, but it would be a useless phone because the technology could not assemble electronic components. That process still required humans or specialized machines.

    The modernization of 3D printing didn’t mean “the advent of a third industrial revolution,” he said, debunking The Economist. It was just one of many useful technologies.

    His insights were too mundane for the money that went looking for a spiritual place to go. Terry Gou, ultimate industry insider, was ignored (even though I wrote about it at the time, ha!). And valuations skyrocketed.

    But at the end of 2013, the phenomenal bubble began to hiss hot air. And since then, it has been tough.

    On Wednesday, Stratasys (SSYS), the largest player in the space, warned on revenues and earnings, after having already warned three months ago. For the year, it now expects revenues of $800 million to $860 million. Analysts expected $943 million. Its loss, stuffed with all kinds of write-offs, could reach $245 million, or $4.79 per share. It would be twice as large as its loss in 2013 and 10 times larger than its loss in 2012.

    It blamed the “decline in relevant capital spending… particularly in North America”; “a slower than expected channel ramp up” in Asia; and the usual suspects, such as the strong dollar.

    Its flagship product, MakerBot – “leading the next industrial revolution,” the company said not long ago – is in deep trouble. Sales plunged 18%. There will be an impairment charge of up to $200 million. Job cuts have already been launched. Capital expenditures and operating expenses will be slashed. Shares plunged 22% on Wednesday and another 6% today, to $37.45, down 73% from their peak at the end of December 2013.

    The second largest player, 3D Systems (DDD), is facing a similar scenario. At its peak in early January 2014, the company was worth over $10 billion. Its shares traded at 72 times hoped-for forward earnings. Those hoped-for earnings have since crashed. While revenues increased by 27% to $654 million, profit slumped 73% to $11.6 million.

    So it gets worse. On April 24, 3D Systems warned on its outlook, predicting a net loss “in the range of $0.13 per share to $0.15 per share.” The company was “surprised and disappointed by the abrupt interruption in customer demand late in the quarter.” It blamed “macroeconomic pressures,” the dollar, and among other culprits, “the aftershock of lower oil prices,” which “caused the majority of its aerospace, automotive and healthcare customers to curb new printer purchases during the quarter and curtail their materials and service purchases.” Its shares trade at $25.10, down 74% from their peak in early January 2014.

    These top two guns are followed in the distance by a gaggle of tiny outfits in the US, Europe, and elsewhere.

    There’s Materialise (MTLS). Revenues in 2014 grew 18% to €81 million. Net profits plunged 45% to €1.8 million, but at least it’s a profit. After it went public last summer in the US, its stock soared to a high of nearly $15 a share, then bunny-hopped down 50%.

    Then there’s ExOne (XONE) with $44 million in revenues in 2014, up 10%, generating $22 million in red ink. Its shares topped out in August 2013 at $68.50 and have since crashed 80%.

    Sweden-based Arcam (ARCM) saw revenues grow 70% to $40 million in 2014. It’s actually profitable. After a parabolic ascent, its shares peaked in November 2013 at 1,073 Swedish Krona but have since plunged 88%.

    Germany’s SLM Solutions (XETRA: AM3D), which is into metals-based 3D printing, came in with €36 million in revenues, up 55%, but booked a $5 million net loss. Its shares peaked at €22 in July 2014 shortly after going public and have since dropped only 20% – “only” because that’s a miracle in this space.

    Alphaform (ETR:ATF), a German prototyping service, with $30 million in sales and over $3 million in net losses, peaked at nearly €4 per share in Feb 2014 and has since dropped 36%.

    Voxeljet (NYSE:VJET), with $20 million in revenues and $5 million in losses, spiked to $59 a share in November 2013, then plunged 86%.

    They get smaller as you go, including such stalwarts as Graphene 3D Lab (GPHBF), with a great name, no sales, and only losses. It went public on a wing and a prayer last September while it still could as the bubble was already imploding. Shares made it up all the way to $2.12 but then quickly skittered down 71%.

    You get the idea.

    After having totally slept through the bubble, even Hewlett-Packard (HPQ) woke up and wants to muscle into the space with some 3D printing products of its own to goose its shares with the “third industrial revolution.” That should be fun.

    Manias, like the 3D-printing stock bubble, do something funny to the human brain. Valuations don’t follow rational concepts. Instead, hocus-pocus prevails. New metrics are invented. Conversations over beer or cocktails go haywire. The media love to reproduce the hype without asking questions. Share prices are whipped up by Wall Street and the VC community because it makes them rich. But when these folks exit, the big wealth transfer begins, from those who’re bamboozled into buying the shares to those who dump them. Many billions of dollars have already been transferred. And the bloodletting doesn’t appear to be over.

    Other companies too are struggling with crummy revenues and earnings. But heck, they’re redoubling their efforts to get their stocks up. Read… Record Financial Engineering Will Goose Stocks: Goldman



  • Baltimore As A Microcosm Of America

    Submitted by Mike Krieger via Liberty Blitzkrieg blog,

    Screen Shot 2015-04-30 at 10.25.59 AM

    In these drug-saturated neighborhoods, they weren’t policing their post anymore, they weren’t policing real estate that they were protecting from crime. They weren’t nurturing informants, or learning how to properly investigate anything. There’s a real skill set to good police work. But no, they were just dragging the sidewalks, hunting stats, and these inner-city neighborhoods — which were indeed drug-saturated because that’s the only industry left — become just hunting grounds. They weren’t protecting anything. They weren’t serving anyone. They were collecting bodies, treating corner folk and citizens alike as an Israeli patrol would treat Gaza, or as the Afrikaners would have treated Soweto back in the day. They’re an army of occupation. And once it’s that, then everybody’s the enemy. The police aren’t looking to make friends, or informants, or learning how to write clean warrants or how to testify in court without perjuring themselves unnecessarily. There’s no incentive to get better as investigators, as cops.

     

    – From the excellent Marshall Project article: David Simon on Baltimore’s Anguish

    Baltimore, Maryland is in many ways the perfect microcosm for these United States of America. If you still don’t get that, you’ll be in for a rude awakening in the years ahead.

    A gradual erosion of the Constitution and the civil rights of the citizenry, the abuse of power by people in authority, perverse financial incentives that lead to horrible outcomes, zero accountability, and a ubiquitous surveillance state apparatus; Baltimore has it all. Yet all of these troubling traits have also come to characterize early 21st century America.

    As tends to be the case, the populations that have been victimized the longest and most systemically — in Baltimore and across the U.S. — are the poor, weak and disenfranchised.  Like a cancer, corruption, theft, and blatant abuse of the citizenry by the powerful will spread and spread until it consumes everything unless the tumor is removed. It has now spread so deeply and so dangerously throughout American life, the general public will soon have no choice but to confront it and do something about it, or face a total extinction of opportunity and suffer the same desperate fate as the people out in the streets of Baltimore.

    David Simon, creator of the excellent hit HBO series “The Wire,” recently sat down for an interview with former New York Times reporter Bill Keller to explain the situation in Baltimore as he sees it; its origins and what is needed to fix it. As you read, think about the many parallels to the U.S. economy in general; the endless criminal maneuverings within the centers of power in Washington D.C. and Wall Street, the forever spinning revolving door of corruption, the marauding gangs of cronies making impossibly large piles of money based on connections, fraud and rigged markets as opposed to adding value, the idiocy of the war on drugs, the fraudulent accounting, and the overbearing surveillance state. Increasingly, when America looks in the mirror Baltimore and Ferguson are staring right back. We just haven’t admitted it yet.

    Now, from the Marshall Project:

    Bill Keller: What do people outside the city need to understand about what’s going on there — the death of Freddie Gray and the response to it?

     

    David Simon: I guess there’s an awful lot to understand and I’m not sure I understand all of it. The part that seems systemic and connected is that the drug war — which Baltimore waged as aggressively as any American city — was transforming in terms of police/community relations, in terms of trust, particularly between the black community and the police department. Probable cause was destroyed by the drug war.

     

    Probable cause from a Baltimore police officer has always been a tenuous thing. It’s a tenuous thing anywhere, but in Baltimore, in these high crime, heavily policed areas, it was even worse. When I came on, there were jokes about, “You know what probable cause is on Edmondson Avenue? You roll by in your radio car and the guy looks at you for two seconds too long.” Probable cause was whatever you thought you could safely lie about when you got into district court.

     

    Then at some point when cocaine hit and the city lost control of a lot of corners and the violence was ratcheted up, there was a real panic on the part of the government. And they basically decided that even that loose idea of what the Fourth Amendment was supposed to mean on a street level, even that was too much. Now all bets were off. Now you didn’t even need probable cause. The city council actually passed an ordinance that declared a certain amount of real estate to be drug-free zones. They literally declared maybe a quarter to a third of inner city Baltimore off-limits to its residents, and said that if you were loitering in those areas you were subject to arrest and search. Think about that for a moment: It was a permission for the police to become truly random and arbitrary and to clear streets any way they damn well wanted.

     

    How does race figure into this? It’s a city with a black majority and now a black mayor and black police chief, a substantially black police force.

     

    What did Tom Wolfe write about cops? They all become Irish? That’s a line in “Bonfire of the Vanities.” When Ed and I reported “The Corner,” it became clear that the most brutal cops in our sector of the Western District were black. The guys who would really kick your ass without thinking twice were black officers. If I had to guess and put a name on it, I’d say that at some point, the drug war was as much a function of class and social control as it was of racism. I think the two agendas are inextricably linked, and where one picks up and the other ends is hard to say. But when you have African-American officers beating the dog-piss out of people they’re supposed to be policing, and there isn’t a white guy in the equation on a street level, it’s pretty remarkable. But in some ways they were empowered.

     

    Back then, even before the advent of cell phones and digital cameras — which have been transforming in terms of documenting police violence — back then, you were much more vulnerable if you were white and you wanted to wail on somebody. You take out your nightstick and you’re white and you start hitting somebody, it has a completely different dynamic than if you were a black officer. It was simply safer to be brutal if you were black, and I didn’t know quite what to do with that fact other than report it. It was as disturbing a dynamic as I could imagine. Something had been removed from the equation that gave white officers — however brutal they wanted to be, or however brutal they thought the moment required — it gave them pause before pulling out a nightstick and going at it. Some African American officers seemed to feel no such pause.

    This is another fascinating microcosm considering how Barack Obama has done absolutely nothing to help the black community or poor in this country. It took a black President to so shamelessly hand everything to a handful of oligarchs and further oppress black communities.

    What the drug war did, though, was make this all a function of social control. This was simply about keeping the poor down, and that war footing has been an excuse for everybody to operate outside the realm of procedure and law.

     

    “The drug war began it, certainly, but the stake through the heart of police procedure in Baltimore was Martin O’Malley.”

    In case you aren’t aware, Martin O’Malley was the ambitious Mayor of Baltimore who had his eyes dead set on the Governor’s seat. So much so that he cooked the crime books of Baltimore to create a crime “miracle,” and destroyed city police work in the process. Mr. O’Malley has recently discussed possibly running against Hillary in the 2016 Democrat primary.

    But that wasn’t enough. O’Malley needed to show crime reduction stats that were not only improbable, but unsustainable without manipulation. And so there were people from City Hall who walked over Norris and made it clear to the district commanders that crime was going to fall by some astonishing rates. Eventually, Norris got fed up with the interference from City Hall and walked, and then more malleable police commissioners followed, until indeed, the crime rate fell dramatically. On paper.

     

    How? There were two initiatives. First, the department began sweeping the streets of the inner city, taking bodies on ridiculous humbles, mass arrests, sending thousands of people to city jail, hundreds every night, thousands in a month. They actually had police supervisors stationed with printed forms at the city jail – forms that said, essentially, you can go home now if you sign away any liability the city has for false arrest, or you can not sign the form and spend the weekend in jail until you see a court commissioner. And tens of thousands of people signed that form. 

    Unsurprisingly, the rule of law often dies at the hands of an ambitious politician.

    The situation you described has been around for a while. Do you have a sense of why the Freddie Gray death has been such a catalyst for the response we’ve seen in the last 48 hours?

     

    Because the documented litany of police violence is now out in the open. There’s an actual theme here that’s being made evident by the digital revolution. It used to be our word against yours. It used to be said — correctly — that the patrolman on the beat on any American police force was the last perfect tyranny. Absent a herd of reliable witnesses, there were things he could do to deny you your freedom or kick your ass that were between him, you, and the street. The smartphone with its small, digital camera, is a revolution in civil liberties.

     

    In these drug-saturated neighborhoods, they weren’t policing their post anymore, they weren’t policing real estate that they were protecting from crime. They weren’t nurturing informants, or learning how to properly investigate anything. There’s a real skill set to good police work. But no, they were just dragging the sidewalks, hunting stats, and these inner-city neighborhoods — which were indeed drug-saturated because that’s the only industry left — become just hunting grounds. They weren’t protecting anything. They weren’t serving anyone. They were collecting bodies, treating corner folk and citizens alike as an Israeli patrol would treat Gaza, or as the Afrikaners would have treated Soweto back in the day. They’re an army of occupation. And once it’s that, then everybody’s the enemy. The police aren’t looking to make friends, or informants, or learning how to write clean warrants or how to testify in court without perjuring themselves unnecessarily. There’s no incentive to get better as investigators, as cops. There’s no reason to solve crime. In the years they were behaving this way, locking up the entire world, the clearance rate for murder dove by 30 percent. The clearance rate for aggravated assault — every felony arrest rate – took a significant hit. Think about that. If crime is going down, and crime is going down, and if we have less murders than ever before and we have more homicide detectives assigned, and better evidentiary technologies to employ how is the clearance rate for homicide now 48 percent when it used to be 70 percent, or 75 percent?

     

    Because the drug war made cops lazy and less competent?

     

    How do you reward cops? Two ways: promotion and cash. That’s what rewards a cop. If you want to pay overtime pay for having police fill the jails with loitering arrests or simple drug possession or failure to yield, if you want to spend your municipal treasure rewarding that, well the cop who’s going to court 7 or 8 days a month — and court is always overtime pay — you’re going to damn near double your salary every month. On the other hand, the guy who actually goes to his post and investigates who’s burglarizing the homes, at the end of the month maybe he’s made one arrest. It may be the right arrest and one that makes his post safer, but he’s going to court one day and he’s out in two hours. So you fail to reward the cop who actually does police work. But worse, it’s time to make new sergeants or lieutenants, and so you look at the computer and say: Who’s doing the most work? And they say, man, this guy had 80 arrests last month, and this other guy’s only got one. Who do you think gets made sergeant? And then who trains the next generation of cops in how not to do police work? I’ve just described for you the culture of the Baltimore police department amid the deluge of the drug war, where actual investigation goes unrewarded and where rounding up bodies for street dealing, drug possession, loitering such – the easiest and most self-evident arrests a cop can make – is nonetheless the path to enlightenment and promotion and some additional pay. That’s what the drug war built, and that’s what Martin O’Malley affirmed when he sent so much of inner city Baltimore into the police wagons on a regular basis.

    So much of what was said there characterizes the perverted culture in Washington D.C. and on Wall Street. People are financially incentivized to commit fraud, crime and deceive customers. Those people are then promoted and train the next class. And the beat goes on…

    The second thing Marty did, in order to be governor, involves the stats themselves. In the beginning, under Norris, he did get a better brand of police work and we can credit a legitimate 12 to 15 percent decline in homicides. Again, that was a restoration of an investigative deterrent in the early years of that administration. But it wasn’t enough to declare a Baltimore Miracle, by any means.

     

    What can you do? You can’t artificially lower the murder rate – how do you hide the bodies when it’s the state health department that controls the medical examiner’s office? But the other felony categories? Robbery, aggravated assault, rape? Christ, what they did with that stuff was jaw-dropping.

    Now for the accounting fraud. Looks like Baltimore authorities learned well from Wall Street.

    So they cooked the books.

     

    Oh yeah. If you hit somebody with a bullet, that had to count. If they went to the hospital with a bullet in them, it probably had to count as an aggravated assault. But if someone just took a gun out and emptied the clip and didn’t hit anything or they didn’t know if you hit anything, suddenly that was a common assault or even an unfounded report. Armed robberies became larcenies if you only had a victim’s description of a gun, but not a recovered weapon. And it only gets worse as some district commanders began to curry favor with the mayoral aides who were sitting on the Comstat data. In the Southwest District, a victim would try to make an armed robbery complaint, saying , ‘I just got robbed, somebody pointed a gun at me,’ and what they would do is tell him, well, okay, we can take the report but the first thing we have to do is run you through the computer to see if there’s any paper on you. Wait, you’re doing a warrant check on me before I can report a robbery? Oh yeah, we gotta know who you are before we take a complaint. You and everyone you’re living with? What’s your address again? You still want to report that robbery?

     

    They cooked their own books in remarkable ways. Guns disappeared from reports and armed robberies became larcenies. Deadly weapons were omitted from reports and aggravated assaults became common assaults. The Baltimore Sun did a fine job looking into the dramatic drop in rapes in the city. Turned out that regardless of how insistent the victims were that they had been raped, the incidents were being quietly unfounded. That tip of the iceberg was reported, but the rest of it, no. And yet there were many veteran commanders and supervisors who were disgusted, who would privately complain about what was happening. If you weren’t a journalist obliged to quote sources and instead, say, someone writing a fictional television drama, they’d share a beer and let you fill cocktail napkins with all the ways in which felonies disappeared in those years.

     

    I mean, think about it. How does the homicide rate decline by 15 percent, while the agg assault rate falls by more than double that rate. Are all of Baltimore’s felons going to gun ranges in the county? Are they becoming better shots? Have the mortality rates for serious assault victims in Baltimore, Maryland suddenly doubled? Did they suddenly close the Hopkins and University emergency rooms and return trauma care to the dark ages? It makes no sense statistically until you realize that you can’t hide a murder, but you can make an attempted murder disappear in a heartbeat, no problem.

     

    But these guys weren’t satisfied with just juking their own stats. No, the O’Malley administration also went back to the last year of the previous mayoralty and performed its own retroactive assessment of those felony totals, and guess what? It was determined from this special review that the preceding administration had underreported its own crime rate, which O’Malley rectified by upgrading a good chunk of misdemeanors into felonies to fatten up the Baltimore crime rate that he was inheriting. Get it? How better than to later claim a 30 or 40 percent reduction in crime than by first juking up your inherited rate as high as she’ll go. It really was that cynical an exercise.

     

    So Martin O’Malley proclaims a Baltimore Miracle and moves to Annapolis. And tellingly, when his successor as mayor allows a new police commissioner to finally de-emphasize street sweeps and mass arrests and instead focus on gun crime, that’s when the murder rate really dives. That’s when violence really goes down. When a drug arrest or a street sweep is suddenly not the standard for police work, when violence itself is directly addressed, that’s when Baltimore makes some progress.

    But nothing corrects the legacy of a police department in which the entire rank-and-file has been rewarded and affirmed for collecting bodies, for ignoring probable cause, for grabbing anyone they see for whatever reason. And so, fast forward to Sandtown and the Gilmor Homes, where Freddie Gray gives some Baltimore police the legal equivalent of looking at them a second or two too long. He runs, and so when he’s caught he takes an ass-kicking and then goes into the back of a wagon without so much as a nod to the Fourth Amendment.

     

    So do you see how this ends or how it begins to turn around?

     

    We end the drug war. I know I sound like a broken record, but we end the fucking drug war. The drug war gives everybody permission to do anything. It gives cops permission to stop anybody, to go in anyone’s pockets, to manufacture any lie when they get to district court. You sit in the district court in Baltimore and you hear, ‘Your Honor, he was walking out of the alley and I saw him lift up the glassine bag and tap it lightly.’ No fucking dope fiend in Baltimore has ever walked out of an alley displaying a glassine bag for all the world to see. But it keeps happening over and over in the Western District court. The drug war gives everybody permission. And if it were draconian and we were fixing anything that would be one thing, but it’s draconian and it’s a disaster.

    This is true about the drug war, but even more true about the “war on terror.” Also endless, also used to justify anything.

    Medicalize the problem, decriminalize — I don’t need drugs to be declared legal, but if a Baltimore State’s Attorney told all his assistant state’s attorneys today, from this moment on, we are not signing overtime slips for court pay for possession, for simple loitering in a drug-free zone, for loitering, for failure to obey, we’re not signing slips for that: Nobody gets paid for that bullshit, go out and do real police work. If that were to happen, then all at once, the standards for what constitutes a worthy arrest in Baltimore would significantly improve. Take away the actual incentive to do bad or useless police work, which is what the drug war has become.

    So much of what’s been happening in Baltimore for decades is now also business as usual within the highest corridors of American power. As I’ve said time and time again, incentives are the key variable here. If you’re rewarded for fraud and white collar crime, you will get more of it. If you jail the perpetrators of it, you’ll get less of it. TBTF Wall Street execs and private equity guys don’t want to sit in a jail cell for a decade, believe me. They’d sell 50 Picassos and 30 sharks soaked in formaldehyde before that ever happened.

    The sad part is we aren’t even trying to change the incentive structure of status quo criminality. This is because the current generation of power players were trained and molded by the same types before them. This is all they know. Money and power are their gods. Crime is their religion. We have no choice but to stop them.

    *  *  *

    For related articles, see:

    The U.S. Department of Justice Handles Banker Criminals Like Juvenile Offenders…Literally

    Tim Geithner Admits “Too Big To Fail” Hasn’t Gone Anywhere (and that’s the way he likes it)

    Meet Mary Jo White: The Next SEC Chief and a Guaranteed Wall Street Patsy

    Some Money Launderers are “More Equal” than Others



  • One More Reason Why The Student Debt Bubble Is About To Get A Lot Larger

    In “The Treasury’s Worst Case Scenario: Over $3.3 Trillion In Student Loans In A Decade,” we presented the following rather disturbing graphic which shows that in the event unemployment “edges up” after 2017 and the gap between unemployment and underemployment doesn’t narrow between now and then, the size of the government’s direct loan program will balloon to $3.3 trillion by 2025.

     

    Based on the real delinquency rate for student borrowers — which, as we have shown on dozens of occasions, is around 30% — some $1 trillion in student loans will be on their way to default in the space of 10 years, and that number could be much higher depending on how many former students opting to enroll in IBR payment plans end up with calculated payments of zero due to their financial circumstances. Note also that extrapolating from “delinquent” to “default” isn’t as much of a stretch as it once was and is in fact becoming less of a stretch by the year because we pointed out earlier this month, the percentage of borrowers delinquent by 90 days or less who eventually make a payment is falling steadily

    With tuition rates rising by a staggering 24% every five years, just about the last thing the government (and by extension, the taxpayer) needs is another reason to suspect that the student debt bubble is going to start growing even faster than it already is. Unfortunately, new evidence suggest that just might be the case. 

    Via WSJ:

    Parents are having a harder time saving for college, a report released Wednesday shows.

     

    Fewer American parents are saving for college and the average sum that families who are saving have accumulated to pay college costs has fallen, according to a report by the country’s largest private student-loan lender SLM Corp., better known as Sallie Mae, and market-research company Ipsos Public Affairs.

     

    Forty-eight percent of parents with children under age 18 are saving for college this year, down from 51% last year and a peak of 62% in 2009, the report says. On average, those families that are saving have $10,040 set aside for college, down 25% from $13,408 in 2014.

     

    The findings come as college costs continue to rise. The average annual cost of tuition, fees and room and board at private nonprofit four-year colleges and universities totaled $42,419 for the current 2014-15 academic year, up 3.6% over a year prior and up 21% from 2009-10, according to data from the College Board. At public four-year colleges, that figure was $18,943 for in-state students, up 3% and

    24.3%, respectively.

     

    Parents feel overwhelmed about how to save for college costs, according to the Sallie Mae-Ipsos report, with 20% of parents saving for college and 38% of those not saving sharing that feeling.

    And from the report:

    Although parents value college and are willing to stretch financially to obtain the opportunity of college for their children, college savings are decreasing. Even amidst continued signs of economic recovery and rising income levels, the amount of money families saved is lower than it was the prior year?both in total and for college. This year, the aggregate amount of savings that families reported for all purposes is $98,867, a 14 percent decrease compared to last year’s $115,604…

     

    Parents are allocating approximately 10 percent of their total savings for their children’s college, a rate that has remained stable over the past three years. However, since savings overall are down, the dollar amounts being saved for college are also lower. On average, parents have saved $10,040 for college, a decrease from the previous year but similar to 2013’s $10,503. The average college savings amount is at the lowest level in three years. 

     

    Overall, more than two out of five parents not currently saving for college plan to begin saving in the near future (43%); 21 percent plan to begin within the next year, and 22 percent plan to begin within the next five years. However, another 2 out of 5 parents (41%) are not sure when or if they will begin saving for their child’s future college education. Another 16 percent of parents currently have no plans to begin saving for college.

    And of course, ZIRP is a part of the problem, because nearly 40% of parents use general savings accounts — where their money earns no interest — as their vehicle of choice…

    Parents are most likely to have started saving for college in a general savings account. Among those who use multiple vehicles to save for college, 24 percent started saving for college that way, and 37 percent named it as their first or second type of account. About 1 in 10 parents started saving for college either through a piggy bank (12%), a 529 plan (12%), or a checking account (11%).

    The following graphic sums up the situation nicely: nearly half of those surveyed have neither saved any money for their kids’ college tuition nor are planning to in the future, a figure which doesn’t match up well with the 93% of respondents who believe their children will attend college. We think it goes without saying that the gap will be filled by federal loans.



  • Inching Toward Conflict: US Navy To Escort Cargo Ships In Persian Gulf; Iran Refuses To Back Down

    Stocks took a nasty fall on Tuesday when Al Arabiya erroneously reported that Iran had captured a cargo ship with a crew of Americans on board. It also sent oil surging. Things promptly normalized when it was revealed that the “confiscated” ship was merely one with a Marshall Island flag, at which point its fate was quickly forgotten (it may still be held by Iran, or not). But one thing is certain: both Iran and the US are itching for a provocation, whether a direct one or the far more traditional false flag type.

    Earlier today, Iran’s Navy Commander Rear Admiral Habibollah Sayyari said that presence of the 34th fleet of the Iranian Navy in the Gulf of Aden is in accordance with international law to protect Iranian trade vessels against pirates.

    Quoted by Iran’s IRNA news agency, Sayyari, who was speaking to reporters on the sidelines of a ceremony to mark the National Teacher’s Day, said that the Iranian Navy has maintained a continuous presence in the Gulf of Aden, Bab el-Mandeb Strait and western India since 2008 Sayyari

    He added that claims that Iranian warships have been warned and that they have left this region are not correct.

    The Navy commander reiterated that the Iranian fleet does not enter territorial waters of other countries and is only present in international waters to ensure security for Iranian trade vessels.

    Sayyari said that the 34th fleet of the Iranian Navy has also helped other countries in protecting their ships against pirates.

    A laughable excuse of course, but no less laughable than the one provided by the US navy offered ten days ago when we learned that a US Navi aircraft carrier and a warship are being dispatched to intercept Iranian weapons shipment to Yemeni rebels.

    And, as expected, moments ago there was yet another step up in the Persian Gulf naval escalation when CNN reported that the U.S. Navy will escort U.S.-flagged cargo ships through Strait of Hormuz in wake of Iran seizure this week, a US official says. Specifically, the Navy will henceforth accompany ships on concern that Iran’s Revolutionary Guard may seize them, CNN’s Jim Sciutto says in Twitter post, citing CNN’s Barbara Starr.

    As a reminder the Straits of Hormuz is one of the busiest shipping lanes in the world, one which is transited by 35% of all seaborne traded oil.

    This takes place just a day after the Pentagon said that the U.S. would “be able to respond” if necessary to help a Marshall Islands-flagged ship that was diverted, and boarded, a day earlier by Iran — though it remains unclear how far the U.S. Navy might be willing to go if the tense situation escalates. 

    Pentagon spokesman Col. Steve Warren said a U.S. guided-missile destroyer, the USS Farragut, is in the area and “keeping an eye on things,” and in close enough proximity to the ship that they “will be able to respond if a response is required.”

    When pressed on what kind of incident aboard the ship would elicit a U.S. Navy response, he was vague, saying: “These [U.S. military] assets give commanders options.” He said he didn’t know “what the possibilities are,” and the U.S. government is “in discussions with the Marshall Islands on the way ahead.”

    It is unclear what happens if either the accompanied cargo ship, or the US Navy warship leaves international waters, and enters Iran territory, which as the Bab el-Mandeb Strait is virtually assured: a strait which as the US Naval update map below shows has become as busy for US traffic as the 405 Freeway during rush hour.



  • Guess Who Predicted The Failure Of QE

    Janet Yellen:

    As Japan found during its quantitative easing program, increasing the size of the monetary base above levels needed to provide ample liquidity to the banking system had no discernible economic effects aside from those associated with communicating the Bank of Japan’s commitment to the zero interest rate policy.

     

    I think my views on this mirror those that you expressed in your opening comments, Mr. Chairman.”

    – FOMC Minutes from Dec 2008

     

    How did that work out?

    We assume principles go out the window when the orders come down from the banker-owners on high…

    *  *  *

    However, today we get more total hypocrisy from the newly found bond guru and hedge fund adviser via his blog…

    Responding to The Wall Street Journal’s questioning the efficacy of monetary policy (specifically ZIRP and QE), Bernanke scoffs:

    Where [monetary policy] can be helpful is in supporting the return to full employment, and there the record has been reasonably good. Indeed, it seems clear that the Fed’s aggressive actions are an important reason that job creation in the United States has outstripped that of other industrial countries by a wide margin.

     

    The WSJ also argues that, because monetary policy has not been a panacea for our economic troubles, we should stop using it. I agree that monetary policy is no panacea, and as Fed chairman I frequently said so. With short-term interest rates pinned near zero, monetary policy is not as powerful or as predictable as at other times. But the right inference is not that we should stop using monetary policy, but rather that we should bring to bear other policy tools as well.

    So while in 2008, QE had no discernible economic effects… in 2015 it is a powerful tool for lowering unemployment rates? What a farce!?



  • The War On Cash: Transparently Totalitarian

    Submitted by Nick Giambruno via Doug Casey's International Man blog,

    George Orwell once wrote “If you want a picture of the future, imagine a boot stamping on a human face—forever.”

    Not exactly a cheery thought, and one I don’t agree with.

    While the forces pushing for centralization of power have been prevailing for decades, they haven’t won a total victory yet. Technologies that empower the individual and that tend toward decentralization—including the Internet, encryption, 3D printing, and cryptocurrencies—offer a powerful ray of hope, reasons to be optimistic about the future.

    So the tug of war between the collectivists and the rest of us continues.

    One thing that would tip the scales heavily in favor of the collectivists would be victory in the War on Cash. Their goal is to eliminate the use of hand-to-hand currency, so that governments can document, control, and tax everything.

    It’s exactly like what Ron Paul said: “The cashless society is the IRS’s dream: total knowledge of, and control over, the finances of every single American.”

    One way they are waging the War on Cash is to lower the threshold at which reporting a cash transaction is mandatory or at which paying in cash is simply illegal. In just the last few years…

    • Italy made cash transactions over €1,000 illegal;
    • Switzerland has proposed banning cash payments in excess of 100,000 francs;
    • Russia banned cash transactions over $10,000;
    • Spain banned cash transactions over €2,500;
    • Mexico made cash payments of more than 200,000 pesos illegal;
    • Uruguay banned cash transactions over $5,000; and
    • France made cash transactions over €1,000 illegal, down from the previous limit of €3,000.

    I recently spoke about this with Dr. Joe Salerno, an Austrian economist with the Mises Institute. Joe is the best chronicler of the global War on Cash and is here to offer an Austrian rebuttal to the economic nonsense peddled by advocates of this war.

    I am happy to bring you his informed insight.

    Until next time,

    *  *  *  *

    Nick Giambruno: What is the War on Cash?

    Joe Salerno: The War on Cash is the attempt by governments to phase cash out of their economies. Governments hate cash because they hate the financial privacy cash makes possible. And they prefer that you keep your money in a bank to help prop up an unsound fractional reserve banking system.

    Nick: How did you get interested in this topic?

    Joe: I noticed that every time there was a war on something—a war on crime, a war on drugs, a war on terror and so forth—the more the government encroached on financial privacy. The US government has long been waging a hidden war on cash.

    One symptom of the war is that the largest denomination of US currency is the $100 note. US currency used to be issued in denominations running up to $10,000 (including also $500; $1,000; $5,000 notes). The US government stopped printing large denomination notes in 1945 and officially discontinued their issuance in 1969, when the Fed began removing them from circulation.

    Since then, the largest currency note available has a face value of $100. But since 1969, the inflationary monetary policy of the Fed has caused the US dollar to depreciate by over 80%, so that a $100 note today has less purchasing power than a $20 bill in 1969.

    So in addition to lowering the nominal size of the largest bill, they also reduced the bill’s purchasing power through inflation.

    Despite this enormous depreciation, the Federal Reserve has steadfastly refused to issue notes of larger denomination. This has made large cash transactions extremely inconvenient and has forced the American public to make much greater use than is optimal of electronic-payment methods. Of course, this is precisely the intent of the US government.

    Nick: Looking around, what are the latest examples of the War on Cash?

    Joe: One right here in the United States occurred in 2011. It flew under the radar for a while. The State of Louisiana banned “secondhand dealers” from making more than one cash transaction per week. The term has a broad definition and includes Goodwill stores, specialty stores that sell collectibles like baseball cards, flea markets, garage sales and so on. Anyone deemed a “secondhand dealer” is forbidden to accept cash as payment. They are allowed to take only electronic means of payment or a check, and they must collect the name and other information about each customer and send it to the local police department electronically every day.

    Nick: What about Europe?

    Joe: In France recently, the limit on cash transactions was lowered from €3,000 to €1,000. The reason given was the attacks on Charlie Hebdo. It turns out that those attacks were financed in part by cash. Well, what a big shock that criminals use cash to finance their operations. They also use, of course, public sidewalks and automobiles, they buy clothing and so on. So this whole thing is ridiculous. It’s just a way of obscuring the government’s true goal, which is to get rid of financial privacy. Governments don’t really think that by lowering the limit of legally allowable cash payments that it’s somehow going to cut down on terrorist attacks. That’s just the narrative we’re given.

    Nick: What is the mindset of someone who would advocate the elimination of cash?

    Joe: Let me give you an example. Recently Willem Buiter—a prominent economist for Citibank—came out with a proposal to abolish cash. The reason is to enable the Fed to push interest rates into negative territory. He suggested that we could have avoided a lot of the problems with the financial crisis if the Fed could have set the interest rate at negative 6%.

    But of course the availability of hand-to-hand currency would get in the way of that plan. People would say “I’m not going to put my money in the bank and have them take 6% every year.” They would avoid the bite of negative interest rates simply by holding hundred-dollar bills.

    This really shocked me, that a prominent economist would make a case for abolishing cash, so that the central bank could set interest rates at a negative level. This is really crazy thinking, but it’s their mindset. It’s nuts.

    Nick: Harvard economist Kenneth Rogoff made a similar argument. Did you hear about that?

    Joe: Yes, I did. In fact, Buiter took his cue from Rogoff. But there are a number of hyper-Keynesian economists who want to remove all barriers to negative interest rates, so that you’ll hurry up and spend whatever cash you have. But the only way they can do that is to corral everyone’s money in to the banking system.

    It’s absurd, and they’ve gone way beyond Keynes with this craziness.

    Nick: It reminds me of how Paul Krugman advocated for faking a space alien invasion as an excuse for the government to waste money on countering it. Or how he later supported minting a trillion-dollar coin. The real scary part is that he—and his juvenile solutions—are taken seriously by many people. Krugman, Buiter, Rogoff and their ilk have the government’s ear, they are presented respectfully by the mainstream media and are given Nobel prizes in economics. How do people not see what they are advocating, like eliminating cash, as transparently totalitarian?

    Joe: I think that harkens back to the progressive era, from 1900 or so to the end of World War I. Government-employed experts supposedly were disinterested and dispassionate and would apply their knowledge and skills to do what was best for society. They would be the technocrats.

    That’s how they pulled the wool over the American people’s eyes, by saying, well, you know, we are fixing the economy’s problems. This has nothing to do with politics. This has nothing to do with totalitarianism. We are trying to make the economy better for you and for everyone else.

    That was just a bunch of nonsense, and it still is. People who believe it are still living in the 1930s, always worried about deflation, rather than worrying about the real problem, which is, of course, the Fed’s monopoly control of money and the inflation the Fed promotes.

    Nick: What is the response of Austrian economists to this way of thinking?

    Joe: Fortunately, the free market provides the prospect of an escape from the fiscal police state that seeks to stamp out the use of cash through either depreciation of central-bank-issued currency combined with unchanged currency denominations or direct legal limitation on the size of cash transactions. As Carl Menger, the founder of the Austrian School of economics, explained over 140 years ago, money emerges not by government decree but through a market process driven by the actions of individuals who are continually seeking a means to accomplish their goals through exchange most efficiently.

    Every so often history offers up another example that illustrates Menger’s point. The use of sheep, bottled water, and cigarettes as media of exchange in Iraqi rural villages after the US invasion and collapse of the dinar is one recent example. Another example was Argentina after the collapse of the peso, when grain contracts priced in dollars were regularly exchanged for big-ticket items like automobiles, trucks, and farm equipment. In fact, Argentine farmers began hoarding grain in silos to substitute for holding cash balances in the form of depreciating pesos.

    Austrian economists would think that the War on Cash is really absurd and unscientific. We would say, allow people to choose the form of payment they want to use, whether that be cash, gold, debit card, or something else. We want to remove all barriers to people using different kinds of currency, take all excise taxes, sales taxes, capital gains taxes off gold and silver and off foreign currencies. And also get rid of all legal tender laws. You can keep the dollar in existence, but allow people to use currencies that compete with the dollar.

    So we want to move in the exact opposite direction from abolishing cash. In fact, we want to encourage people to withdraw money from banks they don’t trust. Fractional reserve banking, apart from the ethical question, is unsound economically.

    Nick: We recently published an article from Doug Casey on sound and unsound banking.

    If you look at all the skirmishes in the War on Cash in recent years in so many different countries and map it all out, it looks like there is coordination among those governments. Is that right?

    Joe: Formation of the Better than Cash Alliance in 2012 is one piece of evidence. The partners in the Better than Cash Alliance include the Ford Foundation, USAid, Citibank, MasterCard, Visa, and a number of UN agencies. They want to abolish the use of cash and force all payments to be made electronically, especially in emerging nations. These are international organizations that influence almost every government in the world. They could be the basis of coordinated efforts to discourage the use of cash.

    They are promoting the idea that the use of cash excludes poor people from the economy. But that’s nonsense. Poor people don’t have checking accounts or credit cards; they depend on cash.

    Also, so deeply ingrained is cash in the Italian culture that over 7.5 million Italians do not even have checking accounts. The Italian government will continue to attempt to dragoon these “bankless” Italians into the banking system. That way the notoriously corrupt Italian government can more easily spy on them and invade their financial privacy.

    Nick: What happens next?

    Joe: I don’t see any end in sight. What keeps this movement going are wars—made-up wars—like the war on terror, the war on organized crime, the war on poverty, war on drugs. That’s what allows governments to ratchet up the intrusiveness into our financial affairs. So I don’t see an end in sight to that. I see the US right now with its Russia policy, for example, goading Russia and inviting more hostility. This feeds a warlike atmosphere in the US so that people just give in, time after time, as the laws become more despotic and intrusive.

    What might save us is that we’re due for another crash, we’re due for another financial crisis. In the aftermath, politicians might be forced to move to more free-market-oriented policies. I don’t think that’s a done deal, but I’m hopeful.

    Nick: What can International Man readers do to protect themselves from the sociopaths waging the War on Cash?

    Joe: I think keeping a good part of your assets outside the banking system is extremely smart. Keeping some cash in a safe is also smart, especially in an era when financial crises are likely. I wouldn’t encourage that as a strategy for earning income, but as a way of protecting yourself and your family.

    Nick: One solution I like is the 1,000 Swiss franc note (picture below). It’s the most purchasing power you can pack into a single bill of a relatively sound currency. So if you want to hold cash outside the banking system, having a stash of these might make sense. Any last thoughts?

    Joe: The War on Cash reflects the desperation of governments. They want to squeeze every last penny out of their citizens. And they are at wits’ end on how to cure the stagnation of the global economy that began in the 2008 financial crisis. So it really says that they are bankrupt, both literally, in the sense that they can’t pay what they’ve promised, and intellectually.

    Nick: I completely agree. Joe, thank you for your time.

    Joe: My pleasure.

    *  *  *

    Editor’s Note: International diversification is the best way to protect yourself from the destructive actions of a desperate government.

    Wealthy families have been doing it for centuries. Today, with modern communications, international diversification is within everyone’s reach.

    You don’t even have to leave your living room to do it.

    Our free video crash course is a great way to get up to speed on the best strategies.



  • Saudis, Russians No Longer Buying Gold In Dubai As Oil Slump Curbs Precious Metals Shopping

    Over the course of the oil price slump we’ve documented the far-reaching effects of falling crude. Leaving aside the capital markets for now, the downturn has rippled through oil boom towns both in the US and Canada. Take Fort McMurray (in oil-rich Alberta) for instance, where home sales fell 66% in February or Sidney, Montana where the collapse in oil revenue has left law enforcement and schools strapped for cash in the face of rising crime and crumbling infrastructure. Then there is of course Texas which, until recently, was America’s job creation engine but which shed a recession-like 24,500 non-farm jobs in March alone. 

    Blue collar workers in North America aren’t the only one’s feeling the pain however. Sliding crude has also taken its toll on precious metals vendors in Dubai whose customer base is drying up now that fewer Saudis and Russians are going on gold shopping sprees in the country’s Dubai Gold Souk marketplace. 

    Here’s Bloomberg:

    Under streets and alleys covered by roofs to protect window shoppers from the intense desert sun, more than 300 stores peddle everything from ingots to Bedouin jewelry. The Dubai Gold Souk had become one of the largest such marketplaces, offering tax-free precious metal, as Persian Gulf oil wealth ballooned in the past few decades.

     

    Now, with the plunge in crude throttling economies across the Middle East, gold buyers are harder to find. Demand for the metal is slowing in the region and Dubai has seen a drop-off in some visitors. Shopkeepers say sales are declining because tourists from Saudi Arabia and Russia have less cash to spend. Sellers offer discounts for gold that two years ago fetched a premium.

     

    “The market is dead,” Jeffrey Rhodes, who has spent 27 years in Dubai’s gold industry and founded Rhodes Precious Metals Consultancy DMCC, said by telephone on April 21. “There’s no real demand here”…

     

    Even with fewer shoppers in the market, which rose to prominence in the 1940s and is spaced across two buildings as high as six floors, Dubai is still a major trading hub. The weight of all the gold jewelry on display comes to about 25 metric tons, the same as five Indian elephants, according to an association representing the vendors.

     

    Shopping trips from the Middle East “are fewer and shorter, and they spend less,” Gerhard Schubert, founder of Schubert Commodities Consultancy DMCC and a member of the Dubai Multi Commodities Centre’s responsible sourcing committee, said by telephone from Dubai on April 28. “This will be even worse after Ramadan, during the Eid holiday when you normally have a million Saudis coming over. I’m sure the numbers will be down this year”…

     

    “We are still surviving, but everyone is worried about the future.” 

    Yes, everyone is worried about the future for all of the poor souls who can now only afford to go tax-free gold shopping in Dubai four times a year as opposed to say six times, but who knows, with the US Navy now escorting US flagged cargo ships through the Strait Of Hormuz (as a precautionary measure of course), one errant pot shot across the bow could be just what the doctor ordered for still-depressed crude prices and by extension, for the poor gold vendors of Dubai.



  • "Purge" Night 4: Baltimore Quiet As Tensions Rise In Philadelphia – Live Feed

    A heavy National Guard presence and a draconian curfew have ended the rioting in Baltimore, but, as RT reports, the popular uprising against police brutality has spread across the US. Peaceful protests are taking place in Baltimore and several major cities and on the heels of last night's New York City protests, tonight it is Philadelphia that is seeing clashes between police and civilians…

    As Fox29 reports,

    Protesters organized a demonstration at Philadelphia's City Hall to draw parallels between the death of a man shot during a traffic stop and a death in police custody that sparked riots in Baltimore. The protesters are currently at Broad and Vine Expressway. Protesters are currently trying to get on Vine Street Expressway. According to FOX 29's Dave Kinchen the march is no longer peaceful and fights are breaking out.

     

    Organizers of the "Philly is Baltimore" Demonstration compare the December shooting death of Brandon Tate-Brown in Philadelphia to the April 19 death of Freddie Gray in Baltimore.

     

    The district attorney isn't pressing charges in Tate-Brown's death, saying evidence indicates that he was reaching into his car for a loaded pistol. A lawsuit filed Tuesday alleges that officers planted the gun. Police say city lawyers will respond in court.

    *  *  *

    Live Feed:

    Broadcast live streaming video on Ustream

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    *  *  *

    Meanwhile, it's quiet in Baltimore for now…

    And then there's Al Sharpton…



  • The Pentagon's "Long War" Pitches NATO Against China, Russia, & Iran

    Authored Op-Ed by Pepe Escobar, originally posted at SputnikNews.com,

    Whatever happens with the nuclear negotiations this summer, and as much as Tehran wants cooperation and not confrontation, Iran is bound to remain – alongside Russia – a key US geostrategic target.

    As much as US President Barack Obama tried to dismiss it, the Russian sale of the S-300 missile system to Iran is a monumental game-changer. Even with the added gambit of the Iranian military assuring the made in Iran Bavar 373 may be even more efficient than the S-300.

    This explains why Jane's Defense Weekly was already saying years ago that Israel could not penetrate Iranian airspace even if it managed to get there. And after the S-300s Iran inevitably will be offered the even more sophisticated S-400s, which are to be delivered to China as well.

    The unspoken secret behind these game-changing proceedings actually terrifies Washington warmongers; it spells out a further frontline of Eurasian integration, in the form of an evolving Eurasian missile shield deployed against Pentagon/NATO ballistic plans.
     
    A precious glimpse of what's ahead was offered at the Moscow Conference on International Security (MICS) in mid-April.
     
    Here we had the Iranian Defense Minister, Brigadier-General Hussein Dehghan, openly stating that Iran wanted BRICS members China, India, and Russia to jointly oppose NATO's uncontrolled eastward expansion, and characterizing NATO's for all practical purposes offensive missile shield as a threat to their collective security.
     
    We also had Russian Defense Minister Sergey Shoigu and Chinese Defense Minister Chang Wanquan emphasizing their military ties are an "overriding priority"; plus Tehran and Moscow stressing they're strategically in synch in their push towards a new multipolar order. 
     
    Tearing up the New Iron Curtain
     
    Washington's Maidan adventure has yielded not only a crystallization of a new Iron Curtain deployed from the Baltics to the Black Sea. This is NATO's visible game. What's not so visible is that the target is not only Russia, but also Iran and China.
     
    The battlefield is now clearly drawn between NATO and Russia/China/Iran. So no wonder they are getting closer. Iran is an observer at the CSTO (Collective Security Treaty Organization) and is bound to become a member of the SCO (Shanghai Cooperation Organization) by 2016.

    Russia providing S-300 systems to Iran; S-400 systems to China (with new, longer-range guided missiles); and developing the S-500 systems, which are capable of intercepting supersonic targets, for itself, all point to an ultra high-tech counterpunch. And NATO knows it.

    This budding military Eurasia integration is a key subplot of the New Great Game that runs parallel to the Chinese-led New Silk Road(s) project.

    As a counterpunch to encroachment, it was bound to happen; after all Beijing is confronted by US encroachment via the Asia-Pacific; Russia by encroachment via Eastern Europe; and Iran by encroachment via Southwest Asia.

    Washington would also go for encroachment via Central Asia if it had the means (it doesn't, and especially now with the New Silk Roads bound to crisscross Central Asia). 

    Eurasian geopolitics hinges on what happens next with Iran. Some selected Washington factions entertain the myth that Tehran may "sell out" to the US — thus ditching its complex Russia/China strategic relationships to the benefit of an expanded US reach in the Caucasus and Central Asia.

    The Supreme Leader as well as President Rouhani have already made it clear that won't happen. They know Washington trying to seduce Iran away from Russia and turn it into a client state does not mean Washington ever accepting Iran's expanded sphere of influence in Southwest Asia and beyond.

    So the multi-vector Russia-China-Iran strategic alliance is a go. Because whatever happens with the nuclear negotiations this summer, and as much as Tehran wants cooperation and not confrontation, Iran is bound to remain — alongside Russia — a key US geostrategic target.

    That long and winding road

    And that brings us — inevitably — to GWOT (Global War on Terror). 

    The Pentagon and assorted US neo-cons remain deeply embedded in their strategy of actively promoting Sunni-Shi'ite Divide and Rule with the key objective of demonizing Iran. Yemen is just yet another graphic example.  

    Only fools would believe that the Houthis in Yemen could get away with mounting a power play right in front of a CIA drone-infested US military base in Djibouti.

    Once again, this is all proceeding according to the Divide and Rule playbook. Washington did absolutely nothing to "protect" its Yemeni puppet regime from a Houthi offensive, while immediately afterwards providing all the necessary "leading from behind" for the House of Saud to go bonkers, killing loads of civilians  — all in the name of fighting "Iranian expansion". US corporate media, predictably, has gone completely nuts about it. 

    Nothing new under the sun. This was already foreseen way back in 2008 by the RAND Corporation report Unfolding the Future of the Long War.

    Yes, this is the good ol' Pentagon Long War as prosecuted against enemies, fabricated or otherwise, all across the "Muslim world".

    What RAND prescribed has become the new normal. Washington supports the petrodollar GCC racket whatever happens, always in the interest of containing "Iranian power and influence"; diverts Salafi-jihadi resources toward "targeting Iranian interests throughout the Middle East," especially in Iraq and Lebanon, hence "cutting back… anti-Western operations"; props up al-Qaeda — and ISIS/ISIL/Daesh — GCC sponsors and "empowers" viciously anti-Shi'ite Islamists everywhere to maintain "Western dominance".

    The Long War was first formulated in the "axis of evil" era by the Highlands Forum, a relatively obscure, neo-con infested Pentagon think tank. Not accidentally the RAND Corporation is a major "partner".

    It gets even juicier when we know that notorious Long War practitioners such as current Pentagon supremo "Ash" Carter, his deputy Robert Work, and Pentagon intelligence chief Mike Vickers are now in charge of the self-described "Don't Do Stupid Stuff" Obama administration's military strategy.

    What the Pentagon — with customary hubris — does not see is Moscow and Tehran easily identifying the power play; the US government's hidden agenda of manipulating a "rehabilitated" Iran to sell plenty of oil and gas to the EU, thus undermining Gazprom.

    Technically, this would take years to happen — if ever. Geopolitically, it's nothing but a pipe dream. Call it, in fact, a double pipe dream. 

    As much as Washington will never "secure" the Middle East with Iran as a vassal state, thus enabling it to transfer key US military assets to NATO with the purpose of facing the Russian "threat", forget about going back to 1990s Russia under disaster capitalism, when the military industrial complex had collapsed and the West was looting Russia's natural resources at will.  

    The bottom line: the Pentagon barks, and the Russia/China/Iran strategic caravan goes on.

     



  • First Blythe Masters, Now Goldman Investing In Bitcoin

    When Bitcoin first appeared, its proponents valiantly claimed that the revolutionary new digital currency was nothing more than a modernized version of a legacy non-fiat currency such as gold or silver, one which would allow global transactions seamlessly and without tracking by monetary authorities, but one which was more convenient than gold as one would never actually have to hold it – the “bitcoin” could be stored safely in virtual vaults that could be accessed anywhere in the world. Most importantly, it would be a libertarian statement of non-compliance with the fiat status quo.

    Then MtGox happened and “unexpectedly” thousands of Bitcoin users found out they had been corzined, and their digital “money” – which supposedly was tracable – had disappeared forever.

    Of course, fraud happens, so this humiliating incident to what was once the biggest bitcoin exchange was promptly brushed off.

    But when a little over a month ago we reported that none other than former head of JPM’s commodities head, Blythe Master, had reemerged from the shadows as chief executive of the Bitcoin startup Digital Asset Holdings, then all those who valiantly clung to the belief that Bitcoin is some aspiration to a libertarian, anti-status quo contrarianism, were promptly quieted.

    As the FT reported then, the startup aims to be a venue for buyers and sellers of financial assets to meet and transact, switching currencies into bitcoin in order to cut the cost and time of settlement and make use of the decentralised “block chain” as a secure record of transactions.”

    There is a school of libertarian ‘visionaries’ who want to imagine a world without big banks, big governments,” said Ms Masters, who left JPMorgan last April. “That’s nice, but completely irrelevant to this business model. We don’t imagine a world in which big banks and big governments don’t exist.”

     

    “They say they want the world to change, but the world will change by adopting new technology to do a better job,” she said. Reducing the frictional costs of financial transactions is “one of the great challenges of our time”.

    She was right.

    And just to hammer the point that Bitcoin has become the playground of precisely those who also control fiat money in all its infinitely dilutable permutations, earlier today we learned thart Goldman Sachs Group Inc. is one of two lead investors in a $50 million funding round for bitcoin startup Circle Internet Financial Ltd.

    As WSJ reports, Goldman adds its name to a growing list of Wall Street institutions exploring digital-currency technology’s potential to provide faster and cheaper financial transactions and payments.

    Circle, based in Boston, uses bitcoin-based systems to allow customers to digitally store money and transfer it to and from other people and merchants.

     

    The new $50 million injection comes on top of $26 million in prior financing founds for Circle and, according to people familiar with the deal, values the startup at around $200 million.

     

    Goldman declined to comment about its investment beyond a brief statement in the news release from Tom Jessop, managing director of the investment bank’s Principal Strategic Investments Group. He said the investment bank sees “significant opportunities in companies and solutions that have the promise to transform global markets through technical innovation.”

    It wasn’t just Goldman: “Goldman’s commitment to Circle follows investments by the New York Stock Exchange, Spain’s Banco Bilbao Vizcaya Argentaria SA and USAA Bank in San Francisco startup Coinbase, which runs a bitcoin exchange and competes with Circle in the market for bitcoin wallets, with which users store and send digital currency.”

    And if it appears that bitcoin has become a free-for-all for the TBTF banks, that’s probably because it is. Earlier this month UBS said it would establish a special research lab to explore financial uses for the core technology underlying bitcoin—its so-called “blockchain” digital ledger.

    And then there was the Fed, whose researcher recently said that “people see that in the long run the supply of bitcoin is capped and they see it’s demand growing, so in the long run you have to expect that it might be a good investment vehicle,” he said. “You might think the same about gold, but just because something’s a good investment vehicle does not make it a good currency.”

    Yes, we definitely know how the Fed and the BIS feel about gold.

    The good news for those who still hold bitcoins is that with the benefit and full backing of the Fed-insured Goldman, Blythe and so on, the price of Bitcoin has nowhere to go but up: after all, the venture investments of the TBTF banks must be allowed to flourish. And with  documented instances of bitcoin manipulation, BTC is just the latest risk asset in the hands of a big bank.

    The bad news is that any hopes and aspirations of making a libertarian statement against the status quo by transacting with a monetary medium that now has the full backing and endorsement not only of the biggest commercial banks, but the Fed itself, is now history.



  • Is Your State Racist?

    With the topic of racial division increasingly top of mind in America, The Washington Post reports a new study suggests that the rural Northeat and South are the most racist regions of America. The study, based on Goggle searches for race-related phrases, shows racist people in the U.S. appear to be clustered along the Appalachian Mountains from Georgia, through New York and all the way up to Vermont.

     

     

    Think Google Searches for the “n-word” are irrelevant? Think again…

    “Results from our study indicate that living in an area characterized by a one standard deviation greater proportion of racist Google searches is associated with an 8.2% increase in the all-cause mortality rate among Blacks,” the authors conclude.

    Other hotbeds of racist searches appear in areas of the Gulf Coast, Michigan’s Upper Peninsula, and a large portion of Ohio.

    Perhaps on a bright note,

    But the searches get rarer the further West you go.

     

    West of Texas, no region falls into the “much more than average” category.

    So America could be less divided that some think… perhaps.



  • Well That Hasn't Happened Before – Exhibit 5

    We have never, ever, seen more trades per second in stocks than at the peak of yesterday’s post-FOMC reaction…

     

    One glance at this chart shows the ‘arms war’ under way in the so-called markets – this frequency of trading is 10 times higher than 2010 averages… and just keeps getting higher.

     

    This burst of high-frequency-trading – 864,000 trades per second – coincided with the short-term top post-FOMC as the machines “gave it all they could, Cap’n” to prove The Fed has a bloody clue what it is doing now…

     

    It appears the ‘oomph;’ of HFT is running out of gas.

     

    Chart: Bloomberg and Nanex

    *  *  *

    See Exhibit 1 here

    See Exhibit 2 here

    See Exhibit 3 here

    See Exhibit 4 here



  • Cost Obsessions Around the World

    Authored Raul via Fixr.com,

    Google’s autocomplete function provides suggestions derived from common Google searches by other users. Comparing autocomplete results for searches on different countries reveals how certain places are perceived by people around the World.

    It turns out that Google searches for the cost of something vary widely depending on the country of interest. For example, people are most interested in the cost of a passport or a patent in North America. As for Europe, many are concerned about practical things like the cost of living, studying, or buying a beer. Google users are interested in basic necessities such as food, livestock, and fuel in Africa. But if you look closely, you will find some more controversial search results, such as prostitution in Brazil, Ukraine, Hong Kong, and Latvia; slaves in Mauritania; a kidney in Iran; in vitro fertilization in Australia; and rhinoplasty in Korea.

    Intrigued by the results of our U.S. state-by-state analysis of Google autocomplete results, we decided to see what the worldwide results look like. We began by googling a simple question for each country:
    full-map

     

    The results were then recorded and put into an infographic to see how countries and continents compare. Here are the results by continent:

     

    full-map

    Life in North America appears relatively boring. So boring that Canadians are chiefly interested in the cost of a passport for leaving the country. Better to go to Mexico where everyone has great abs.

    full-map

     

    Panama hats are popular in Ecuador. Prostitution is of interest in Brazil and Uruguay. And in Chile, the price of coke is of prime importance … we’re not sure which kind.

    full-map

     

    Some quirky search results for Europe include Rolexes in Switzerland, mooring a yacht in Monaco, nose jobs in Albania, and flying a MiG (a Russian fighter aircraft) in Russia.

     

    full-map

    For Asia there is a wide range of results, reflecting the diversity of cultures within the continent. The biggest financial concern for people searching about Lebanon appears to be the cost of a PS3; for Kuwait it is Lamborghinis, carpets for Armenia, and watermelons for Japan.

    full-map

     

    Google users are mostly concerned about the necessities of life in Africa. But apparently in the case of Sierra Leone people are more concerned about buying diamonds, and for Mauritania they are more concerned about purchasing slaves.

    full-map

     

    Apparently New Zealanders are a frisky lot, with great interest in vasectomies, while their Australian neighbors are concerned about the cost of in vitro fertilization. Quite the paradox.

     

    full-map

    The most common search about costs in Antarctica is for the cost of land. While the land there may not be terribly hospitable, there sure is a lot of it.

    Looking at some of the most popular Google searches throughout the World reveals some cultural differences, but also many key similarities. It also provides insights into the sometimes-strange things people think about when they are alone.

    Want to see more of the most popular goods and services whose prices people search for across the country? Sign up below for a future update from Fixr on the release of its super-detailed cost of living analysis, based on geography and demographics.



  • Do You Want to Know a Secret?

    I hate tech bubbles.

    No, that’s not the secret. Everyone knows that. The secret I am referring to is a company named, literally, Secret. And the existence of this company, as well as the easy $6 million its co-founders pocketed when they shuttered the place, is absolutely symptomatic of this bubble-of-bubbles we are living in (the third one of the past fifteen years, incredibly).

    I didn’t even know Secret existed, because I’m too old to spend my time worrying about every new little app that comes along that lets teenagers engage in cyber-bullying and exchange  dick pics. It’s just not my cup of tea. But I happened to stumble across this article yesterday, which was headlined:

    0430-secret1

    Now a startup shutting down isn’t any bigger news than someone finishing a satisfying lunch somewhere, but the “Ferrari” mention intrigued me, so I read further.

    Turns out a chap named David Byttow (whose profile picture looks exactly like the sort of person who would do such a thing) started the company way, way, way back in October 2013. He was able to get $35 million – – that’s $35,000,000 – – in funding for his app. The elevator pitch for this thing was: “Share anonymously with friends, co-workers and people nearby. Find out what your friends are really thinking and feeling.”

    I dunno, but when I want to know what my friends are thinking and feeling………I ask them. But, then again, I didn’t raise $35 million, so who am I to judge?

    The media had some pretty ugly things to say about Secret, but in the Silicon Valley, which is where I live, stupid apps getting tens of millions in funding with no prospect of profits is commonplace. What got my attention was that, as the app’s popularity was cratering, the co-founders managed to raise more cash and – – astonishly – – pocket $6 million from selling a portion of their own holdings to these new investors.

    During this time (when, in retrospect, it is obvious that the app was a flash in the pan, and users had lost interest), the message from the company was that it might “pivot”, which is Silicon-Valley-speak for a product that has failed and, before it is carted off to its grave, will pretend to be something else. Color.com, about which I wrote endlessly on Slope, “pivoted” several times before its $41 million was considered a lost cause.

    So Byttow’s syrupy post about closing the firm “with a heavy heart” doesn’t really delve into the fact that, in exchange for 18 months of work that resulted in a completely failed endeavor, he and his buddy scored $6 million (out of which he bought himself a Ferrari), on top of whatever handsome salaries they felt they deserved.

    So am I bitter about this? Well, no. Bitter isn’t the right word. I’d say I’m simply…….pissed off. Because my own high-tech start-up, Prophet, is something I worked thirteen years to build, and when I finally sold it (for all of $8 million), it was a growing, profitable firm with happy employees, fantastic products, and a very satisfied buyer. Its products are in use to this day, ten years hence. Prophet, you see, wasn’t an overly-funded clown-show where we blew through the cash and just decided we were all fuck-ups and might as well close the place down swiftly. Oh, and pocket the cash.

    The quantity of these dim-witted, overly-funded outfits that are going to enter bankruptcy is going to explode over the next few years (Clinkle is bound to be a likely contender…….) In the meantime, keep our anti-nausea medication handy.



  • No More Greater Fools: Retail Traders Are "Pretty Fully Invested" In Stocks, TD CEO Says

    “Margin loans at high levels, client cash at low levels and account holders at the firm logging in frequently.”

    If you didn’t know any better, you might think the above is yet another example of someone describing one of the dynamics driving China’s self-feeding equity mania. After all, the country’s “world-beating” rally has everyone from housewives to banana vendors opening stock trading accounts by the millions while piling on margin debt and trading so often that the computers tracking volume literally give up and shut themselves down.

    Alas, the quote featured above is actually from TD Ameritrade CEO Fred Tomczyk and he’s describing America’s own legion of day-trading BTFDers who are apparently all-in at just the wrong time:

    A broad look at the 6.5 million customer accounts at TD Ameritrade indicates that retail investors are “pretty fully invested” in stocks, the online brokerage’s CEO said Thursday.

     

    Fred Tomczyk cited several signs of this: margin loans at high levels, client cash at low levels and account holders at the firm logging in frequently. “It’s usually a good indication that people are very engaged in the markets and watching their investments closely,” he said on CNBC’s ” Squawk Box .”

     

    But Tomczyk acknowledged the potential pitfalls of these trends and what they may portend for stocks. “I wouldn’t be surprised if we have a correction here. We’ve had six [or] 6½ years of up markets here.”


    Ultimately then, the greater fool theory of investing whereby it doesn’t matter how much you pay as long as the next guy is willing to pay more — the same greater fool theory of investing that China’s regulators have warned has taken hold in Chinese stocks — may have just run out of fools, but we suspect that’s fine as long as price-insensitive corporate management teams can issue new debt and plow the proceeds back into their own stock.



  • 25 Years Of US Monetary Policy Explained (In 1 Cartoon)

    While Bernanke claims that “Fed actions didn’t favor Wall Street over Main Street,” we suspect the following chart clarifies the effect of his and his predecessors actions on the average American…

     

     

    h/t @FedPorn



  • 16 Signs That The Economy Has Stalled Out And The Next Economic Downturn Is Here

    Submitted by Michael Snyder via The Economic Collapse blog,

    If U.S. economic growth falls any lower, we are officially going to be in recession territory.  On Wednesday, we learned that U.S. GDP grew at a 0.2 percent annual rate in the first quarter of 2015.  That was much lower than all of the “experts” were projecting.  And of course there are all sorts of questions whether the GDP numbers the government feeds us are legitimate anyway.  According to John Williams of shadowstats.com, if honest numbers were used they would show that U.S. GDP growth has been continuously negative since 2005.  But even if we consider the number that the government has given us to be the “real” number, it still shows that the U.S. economy has stalled out.  It is almost as if we have hit a “turning point”, and there are many out there (including myself) that believe that the next major economic downturn is dead ahead.  As you will see in this article, a whole bunch of things are happening right now that we would expect to see if a recession was beginning.  The following are 16 signs that the economy has stalled out and the next economic downturn is here…

    #1 We just learned that U.S. GDP grew at an anemic 0.2 percent annual rate during the first quarter of 2015…

    The gross domestic product grew between January and March at an annualized rate of 0.2 percent, the U.S. Commerce Department said, adding to the picture of an economy braking sharply after accelerating for much of last year. The pace fell well shy of the 1 percent mark anticipated by analysts and marked the weakest quarter in a year.

    #2 If you strip a very unusual inventory buildup out of the GDP number, U.S. GDP would have actually fallen at a -2.5 percent annual rate during the first quarter…

    The only good news: the massive inventory build, the largest since 2010, boosted GDP by nearly 3.0%. Without this epic stockpiling of non-farm inventory which will have to be liquidated at some point (and at a very low price) Q1 GDP would have been -2.5%.

    #3 Our trade deficit with the rest of the planet is absolutely killing our economic growth.  According to the Reality Chek Blog, U.S. economic growth would have been a total of 8 percent higher since the end of the last recession if we actually had balanced trade with other nations…

    As of the new first quarter figures, the worsening of the trade deficit has reduced the cumulative real growth of the U.S. economy by 7.99 percent since the current recovery began in the second quarter of 2009.

    #4 According to numbers that were just released by the Bureau of Labor Statistics, in one out of every five American families nobody has a job.  So how in the world can the “unemployment rate” be sitting at “5.5 percent” when everyone is unemployed in 20 percent of all families in the United States?  It doesn’t make any sense.

    #5 The rate of homeownership in the United States has just hit a brand new 25 year low.  How can anyone claim that the middle class is “healthy” when the percentage of Americans that own a home is the lowest that it has been in more than two decades?

    #6 Back in 2013, 31 percent of all Americans said that they did not anticipate buying a home “for the foreseeable future”.  Just two years later, that number has risen to 41 percent.

    #7 The student loan bubble is clearly bursting.  According to Bloomberg, only 37 percent of all student loan borrowers are actually up to date on their payments and reducing their balances…

    With borrowers increasingly struggling to repay their student loans, Moody’s Investors Service is warning it may take investors longer than promised to get their money back. The credit grader said this month it may lower rankings on $3 billion of top-rated debt as investors face the threat of slowing principal payments or even receiving no interest.

     

    The concern underscores the fallout from a record $1.2 trillion in U.S. student loans that’s spreading to everything from the housing market and consumer spending to taxpayers. As a sluggish economic recovery forces borrowers to miss payments or tap relief programs, only 37 percent are current and reducing their balances, according to a Federal Reserve Bank of New York presentation this month.

    #8 Procter & Gamble has announced that it will be cutting up to 6,000 more jobs from their payroll.  Why would they be doing this if the economy is “getting better”?

    #9 McDonald’s plans to permanently shut down 700 “poorly performing” restaurants over the course of 2015.  Why would they be doing this if the economy is “getting better”?

    #10 It is being projected that half of all fracking companies in the United States will be either “dead or sold” by the end of 2015.

    #11 Retail sales in the U.S. have not dropped this rapidly since the last recession.

    #12 Wholesale sales in the U.S. have not dropped this rapidly since the last recession.

    #13 Factory orders in the U.S. have not dropped this rapidly since the last recession.

    #14 Credit requests are being declined at a rate that we haven’t seen since the last recession.

    #15 U.S. export growth has gone negative for the first time since the last recession.

    #16 As the U.S. economy begins to head into another downturn, most Americans are completely unprepared for it.  In fact, one recent survey discovered that 62 percent of all Americans are currently living paycheck to paycheck.

    Don’t let this next recession take you by surprise.

    Back in 2008 and 2009, millions of Americans suddenly lost their jobs or businesses because of the sharp economic downturn.  Because most of them were living paycheck to paycheck, all of a sudden a whole lot of Americans could not make their mortgage payments and foreclosures surged to unprecedented heights.  Millions of families that thought they were operating on a solid foundation saw their middle class lifestyles evaporate in just a matter of a few months.

    That is why it is so vital to prepare yourself financially, mentally, emotionally, physically and spiritually for the great storm that is coming ahead of time.  Over the past couple of years, I have been working on a new book entitled “Get Prepared Now” which talks about how to make these preparations.  On Wednesday, it was finally released to the public.  I hope that you will check it out.

    The past few years have been a period of relative stability for the U.S. economy.  A lot of people have been lulled into a false sense of security during that time.  These people have become convinced that our problems have been fixed.  But they haven’t been fixed at all.  In fact, our problems are far, far worse than they were just prior to the last financial crisis.

    When the next great financial crisis strikes, we are going to see a spike in the suicide rate just like we did during the last one.  Millions will be blindsided by what is coming and will give in to depression and despair.  But that doesn’t have to happen to you.  It is empowering to know what is coming and to understand why it is coming.  It is empowering to get prepared in advance for turbulent times.  It is empowering to have a plan for the years ahead.

    Even though I write about all of the horrible things that are coming to this country every day, I live my life with no fear, and that is what I want for all of you as well.

    Do you want to know who will be giving in to fear and panic when things start to go really crazy?

    It will be the people that had no idea what was coming and made no preparations whatsoever.

    Yes, the times ahead are going to be extremely challenging, but they can also be the best times of your life.

    It is all going to come down to how you respond to a world that is going completely insane.

    The choice is up to you.



  • LInkedIn Crashes 25% After Missing Revenues, Cutting Outlook

    LNKD has collapsed 27% on the back of missed revenues and lowered outlooks for Q2 and 2015 drastically. What is most dramatic – just as was seen with YELP and TWTR is the velocity of repricing which indicates just how far expectations for growth in the tech sector are from reality… and strongly suggests all is not well as El-Erian’s “wedge” between markets and fundamentals snaps shut…

     

    Just totally ugly:

    • *LINKEDIN SEES 2Q REV. $670M-$675M, EST. $718.3M
    • *LINKEDIN SEES 2Q ADJ. EBITDA ABOUT $120M, EST. $197.1M
    • *LINKEDIN SEES 2Q ADJ. EPS ABOUT 28C, EST. 74C
    • *LINKEDIN SEES 2015 ADJ. EBITDA ABOUT $630M, EST. $815.9M REV.
    • *LINKEDIN SEES 2015 ADJ. EPS ABOUT $1.90, EST. $3.03

    The result…

     

    Which means LNKD has done nothing for over 2 years…

     

    and th elatest exuberance is all as margin debt soars.

     

    Charts: Bloomberg



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Ten Wonderful Things I’m Grateful For (Irony Alert)

Charles Hugh Smith

Being grateful boosts your happiness. Ten wonderful things I’m grateful for.

Since every volume on the nearly endless shelf of pop psychology self-help books recommends working up some gratitude as the key to happiness, I’ve conjured up a list of what I’m grateful for. (Please turn your irony setting on.)

1. I’m grateful that our choice of president has been reduced to two equally detestable dynasties or their proxies. This greatly simplifies the process of selecting a warmongering figurehead for the Empire and its bankers.

2. I’m grateful that I can watch a full spectrum of entertainment, ranging from depraved to dreadfully unfunny on any device at anytime. This white noise helps block out any troubling clarity of thought or urge to ask what I might feel if I wasn’t constantly distracted.

3. I’m grateful that there are so many opportunities to borrow money, because if I couldn’t borrow more, I might miss an astounding opportunity to consume more of something I don’t really need.

4. I’m grateful that every food item in the store now contains sugar in one form or another, or a sugar substitute. This simplifies the process of maintaining my addiction to sugar, as all I need to do is eat anything produced by Corporate America’s food sector.

5. I’m grateful I live in a country where the government can trample on the rights of its citizens behind a thin veil of legitimacy. After all, what terrible thing might happen if the government couldn’t arrest those horrible people tearing up their front yard lawn to plant a vegetable garden?

6. I’m grateful for our national obsession with fostering phony self-esteem that has no basis in accomplishment, dedication or sacrifice for others, as the self-absorbed, entitled populace will still feel good about themselves as the bloated, dysfunctional status quo implodes.

7. I’m grateful that we have institutionalized moral hazard as the unspoken law of the land, so financiers can gamble billions of dollars without worrying about the potential losses, as they know the taxpayers will foot the bill while they get to keep any gains.

8. I’m grateful our financial markets are now dominated by Federal Reserve manipulation, high frequency trading and dark pool shadow banking. This guarantees that all we commoners need to do to make a lot of money playing the stock market is to buy the dips.

9. I’m grateful that money can buy political influence so transparently, as this informal auction is open to anyone with tens of millions of dollars who wants to protect and expand their wealth and power.

10. I’m grateful that our mainstream media is owned by a handful of corporations, as the homogenized message they broadcast is reassuringly uniform. If every outlet is repeating that unemployment and inflation are low and the rising stock market is making us all wealthier, it must be true.

Today’s News April 30, 2015

  • USDJPY, Nikkei Tumble After Bank Of Japan Disappoints

    Japanese stocks and USDJPY are back below the lows of the US day-session following The Bank of Japan’s decision not to stimulate further (despite all the collapsing economic evidence one might need to do such a thing). Investors were clearly hoping for moar (even if economists weren’t). With GDP expectations collapsing, BoJ still voted 8-1 not to increase QQE keeping monetary base growth expectations flat. The result is a 500 point drop in The Nikkei from this morning’s highs and around 1 handle drop in USDJPY… for now.

     

    Even with GDP expectations plummeting…

     

    The BoJ was boxed into not reaching for the punchbowl just one more time.

    The BOJ refrained from boosting monetary stimulus even after inflation came to a halt, with Governor Haruhiko Kuroda betting price gains will re-emerge as the impact from cheaper oil fades.

     

    The central bank kept a plan to expand the monetary base at an 80 trillion yen ($672 billion) annual pace.

     

    “It’s looking doubtful that the U.S. will be able to raise rates this year,” Mitsushige Akino, an executive officer at Ichiyoshi Asset Management Co. in Tokyo, said by phone. “I don’t expect any major changes from the BOJ. There might be some selling from disappointment, but it’ll be minimal.”

    And the result…

     

    It seems everyone waiting on The Fed to move first…

     

    Charts: @Not_Jim_Cramer and Bloomberg



  • Going Rogue: 15 Ways To Detach From The System

    Submitted by Tess Pennington via SHTFPlan.com,

    I am inspired by the very definition of self-reliance: to be reliant on one’s own capabilities, judgment, or resources. Ultimately, it is the epitome of independence and lays the groundwork of what we are all striving for – to live a life based on our personal principles and beliefs.

    It is a concept rooted in the groundwork  that made America great. Being dependent on our own capabilities and resources helped create a strong, plentiful country for so long. That said, the existing country as it is now is entirely different than when it began.

    Why Are We So Dependent?

    It is much too complicated to get into how the “system” was created. That said, the purpose is to enslave through debt and to create an interdependence that will force you and your family to never truly find the freedom you are seeking. It manipulates and convinces you to continue purchasing as a sort of status symbol to make you think you are living the good life; while all along, it has enslaved you further. Wonder why we have all of these holidays where you have to buy gifts? The system needs to be fed and forces you into further enslavement. If you don’t buy into this facilitated spending spree, you are socially shamed.

    Collectively speaking, the contribution from our easy lifestyle and comfort level has created rampant complacency and a population of dependent, self-entitled mediocres. We no longer count on our sound judgement, capabilities and resources. The system keeps everything in working order so we don’t have to depend on ourselves, and furthermore, don’t want to.  I realize that many of the readers here do not fall into this collectivism, as you see through the ideological facade and know that the system is fragile and can crumble.

    Breaking away from the system is the only way to avoid the destruction of when it comes crumbling down. When you don’t feed into the manipulation tactics of the system, or enslave yourself to debt, and possess the necessary skills to sustain yourself and your family when large-scale or personal emergencies arise, you will be far better off than those who were dependent on the system. Those who lived during the Great Depression grew up in a time when self-reliance was bred into them and were able to deal with the blow of an economic depression much easier. Which side of this would you want to be on? Those who had the patience to learn the necessary skills, ended up surviving more favorably compared to others who went through the trying times of the Depression.

    Develop Personal Dependence

    Now is the time to get your hands dirty, to practice a new mindset, skills, make mistakes and keep learning. Developing personal dependence is no easy feat and requires resolute will power to continue on this long and rambling path. To achieve this you have to begin to break away from the confines of the system. You don’t have to run off to the woods to be the lone wolf. Simply by asking yourself, “Will your choices and the way you spend your time lead to more independence down the road, or will it lead to greater dependence?”, will help you gain a greater perspective into being self-reliant. As well, consider ignoring the convenient system altogether. This will help you to detach yourself from complacency and stretch your abilities and your mindset.

    Most of us can’t move to an off grid location. We have responsibilities that keep us from doing so. Therefore, live according to what is best for you and your family (common sense, I know) and do what you can. My family and I moved to the rural countryside four years ago to pursue a more self-reliant lifestyle. We learned many lessons along the way and are proud of where we are. Am I 100% self-reliant? No. But, I am venturing closer to living more self-reliantly with each skill I learn. Many of my little homesteading, off-grid ventures can be read about here.

    Here’s What You Can Do:

    1. Inform Yourself – Understand that there are events on the horizon, some large-scale and some personal that could wreak havoc on your quest toward a self-reliant lifestyle. Informing yourself and planning for them will be your best in staying ahead of the issue.

    4 Things You Must Eat to Avoid Malnutrition

    Most Likely Ways to Die in a SHTF Event

    End of an Era: Prospects Look Bleak For Slowing the Coming Food Crisis

    Collapse Survivor: “There Was Little Room For Error… Either You Learn Fast Or End Up Dead”

    The Perfect Storm: Grow Local or Grow Hungry?

    GMO Labeling: Will Congress Keep Us in the DARK?

    2. Learn Skills – When you can depend on your skills to support you and your family’s life, then the outside world doesn’t affect you as much. When large groups of people in a general area possess self-reliant skills, it makes your community stronger.

    Doing the Stuff Network

    10 Skills Necessary For Survival

    49 Outdoor Skills and Projects to Try

    As well, look into these DIY projects found on Ready Nutrition

    3. Get Out of Debt – It is paramount that each of us begin actively practicing economic self-discipline. Many believe that because of the ease in money confiscations from the banks, you shouldn’t have all of your money stashed there. Diversifying your money and investing in long-term ways to preserve your wealth will ensure you have multiple ways to pay the bills.

    How To Break Up With Your Bank

    Buy Commodities at Today’s Lower Prices, Consume at Tomorrow’s Higher Prices

    Money and Wealth Preservation During Times of Uncertainty and Instability

    How to Use Ebay to Find the Most Affordable Silver

    Silver Bullion or Junk Silver for Long-term Bartering?

    5 Reasons Why There Is Security In Seeds

    4. Store food – Having a supply of food to subsist on in times of dire circumstances ensures that you are not dependent on having your basic needs met by someone else. This gives you the control of what food to put in your body and how you want to live.

    25 Must Have Survival Foods: Put Them In Your Pantry Now

    11 Emergency Food Items That Can Last a Lifetime

    Best Practices For Long Term Food Storage

    Meet Your Emergency Food’s Worst Enemies

    Buy The Prepper’s Cookbook

    Creating a Bug Out Meal Plan

     5. Start raising your own food – With the high prices of meat at the store these  days, many are turning to raising their own meat sources. Rabbits, chickens and fish can easily be started in backyard homesteads.

    How Micro Livestock Can Be Used For Suburban and Rural Sustainability

    What to Feed Your Livestock

    Child-Friendly Livestock

    Waste Not, Want Not: How To Use EVERY Single Part Of An Animal

     6. Prepare for emergencies – Preparing for the unlikely emergencies is a way to insulate yourself from the aftermath. The simplest way to begin preparing is to prepare for the most likely events that can affect you, and go from there.

    FREE Emergency Preparedness Guide: 52-Weeks to Preparedness

    Anatomy of a Breakdown

    SHTF Survival: 10 Survival Tools That Should Be In Your Survival Pack

    5 Reasons You Should be Preparing

    Buy The Prepper’s Blueprint: A Step-By-Step Guide to Prepare You For Any Disaster

    Six Ways You Can Keep Yourself Alive With Animal Bones

    7. Repurpose – We must take steps to stop being a throw away society and get back to a population who makes do with what they have.

    50 Things You Should Stop Buying and Start Making

    5 Ways to Make Candles from Household Items

    Survival Uses for Household Items

    SHTF Planning: 7 Ways to Use The Items Around You To Adapt and Survive

    Composting 101

    8. Make Your Own Supplies – You have everything around you to survive, but many can’t look outside of the box to see how they can use what they have to survive. Having versatile preparedness supplies saves space and can serve multiple uses that can double up as ingredients to make soaps, medical supplies, etc.

    Make soap

    3 Ways to Naturally Make Yeast

    10 Dehydrator Meals for Your Prepper Pantry

    Make Your Own MREs

    SHTF Survival: How to Prevent Infections

    7 Kitchen Essentials That Deserve To Be On Your Preparedness Shelves

    9. Use Up What You Already Have or Find Another Use – Being self-reliant means using up what already have. This is a crucial principle of being self-dependent. Saving leftover construction supplies, food, clothing, etc., can be reused for another day.

    Why Everyone Should Have a Rag Bag

    8 Slow Cooker Meals Made From Leftovers

    10 Household Products You Never Have To Buy Again

    Complementing Your Food Storage Pantry with Dehydrated Foods

    Five Essential Tools for Fixing Your Clothes on the Cheap

    10. Live More Naturally – Life is chaotic these days and many of us feel we have to keep up with everyone else. It’s time to forget that and start living more simply and naturally.

    Simply Simplify

     7 Off Grid Projects for Survivalists

    Self-Reliance in 4 Steps

    Five Eco Friendly Alternatives For Emergency Preparedness

    11. Grow Your Own Medicine – With the vast medical advancements in the Western world, we are turning our backs on the first medicine – natural medicine. It’s time we begun exploring a more mindful, natural existence.

    30 Most Popular Herbs for Natural Medicine

    Step-By-Step Guide to Making Colloidal Silver

    Essential Oils for SHTF Medical Care

    How to Make Dakin’s Solution for SHTF Medical Care

    12. Grow Your Own Food – The cost of making healthy decisions about the food we put into our body is eating our budgets alive. We want the very best foods for our family, but buying solely organic products can be costly. All the while, you are questioning the legitimacy of this produce. Is it genetically modified? Where was this grown? Was it exposed to salmonella or another food-borne pathogens? What was the type of water used to grow it? There comes a time when you want to throw your hands up and shout, “That’s it, I’m doing this myself.”

    7 Laws of Gardening

    25 Survival Seeds You Need For Your Garden

    10 Foods You Should Not Feed Your Chickens

    Medicinal Plants for the Survival Garden

    6 Essential Food Types To Grow Your Own Food Pantry

    Make Your Own Herbal Tea Blends

    13. Be Flexible – I often tell those who are preparing that the single most important thing you can do is continue to be flexible in your preparedness efforts. Doing so gives you leeway in your planning and backup planning, as well as helps you move more fluidly through the aftermath. This concept can be applied in non-emergencies, as well. Self-reliance can help us be more flexible in our life and our decisions.

     Survival of the Most Adaptable

    8 Prepper Principles For a Prepared Mind

    Blending In: The Secret to Keeping The Target Off Your Back

    5 Survivor Traits That Make a Prepper Successful

    5 Steps to Become the Smartest Person in the Woods

    14. Barter Better – Bartering for goods and services was the first currency that went around. Let’s be honest, everyone is up for a good deal. Using self-reliant skills, you can use these as leverage in bartering. As well, having a surplus of survival/preparedness items can also help you make good bartering deals.

    The Barter Value of Skills

    A Free Falling Economy Makes Bartering Go Boom

    100 Must Have Survival Items

    15. Teach Your Kids – We must teach our children how to be more mindful and self-reliant. After all, we do not want to continue the cycle of having a dependent, self-entitled population. By informing them, we are setting them upon a self-sustaining path for life.

     How Farmers Markets Can Teach Your Kids the Values of Local Food and Community Building

    *  *  *

    We must come to the understanding that there is no true safety net for us to fall into; it’s up to ourselves to get us out trouble. How easily you land depends on how reliant you were to begin with. Adopting certain concepts as your new life’s code will help you on your path.

    Many of us share a common goal: to be free from the shackles of the system. This goal doesn’t come over night. You have to work at it, invest in it and ultimately, change your way of thinking. The point is, we are all at different places in our preparedness efforts, so don’t get discouraged! Continue on the pace, keep learning and step-by-step, you inch closer and closer to that goal.



  • Forget Rigged Markets: Here's How To Hack A Military Drone By Spoofing GPS

    As Sarao faces charges for crashing the US market for "spoofing" stocks, there is another seemingly much graver 'hack' that is now publicly available for all to utilize (and has been). As SputnikNews reports, the information necessary to hack a military drone is freely available to the public via a simple Google search that explains how to successfully "spoof" GPS signals. NATO has admitted this is possible in a 2013 report, and as we have previously noted Iran has already allegedly brought down and reverse-engineered a US drone.

     

     

    As SputnikNews reports,

    The information necessary to hack a military drone is freely available to the public, in academic publications and online documents, according to an Israeli defense manufacturer.

     

    One such paper was published just a month before Iran claimed it downed a CIA stealth drone in 2011, Esti Peshin said Monday at the Defensive Cyberspace Operations and Intelligence conference in Washington DC. Peshin is the director of cyber programs for Israel Aerospace Industries.

     

    A 2011 study, titled "The Requirements for Successful GPS Spoofing Attacks," explains how to fool GPS sensors like those in drones by mimicking GPS signals. 

     

    There's no way to know, Peshin said, if this report in fact directly informed the Iranians, but it does go to show how easily available this information is.

     

    "It’s a PDF file… essentially, a blueprint for hackers," Peshin said. "You can Google, just look up 'Tippenhauer' — it’s the first result in Google. Look up 'UAV cyberattacks' — it’s the third one. 'UAV GPS spoofing attacks' — the first one."

     

    The study explains how to feed the GPS system fake signals so the drone ends up "losing the ability to calculate its position."  The study then goes on to describe ways to prevent these kinds of attacks as well.

     

     

    A 2013 assessment from NATO itself detailed the risk of drones being hacked and commandeered.

     

    "At the end of the article, as if this was not enough, they listed several UAVs and said these are riskier than others by the way," Peshin said.

     

    Included in that short list are the MQ-9 Reaper and the RQ-170 Sentinel, the drone Iran claimed it commandeered and captured.

    *  *   *

    So with iran already having achieved success in hacking a drone… and now looking to unleash suicide drones, it seems cyber-attacks and spoofing just took a turn for the much more serious.

    GPS Spoof paper can be found here (PDF)



  • Why Is This A Circle?

    It’s no secret that today’s US job market is tough and that having a degree doesn’t necessarily guarantee you high-paying, stable, full-time employment. In fact, Moody’s recently cited “sluggish economic growth and high unemployment rates among recent graduates” as factors in the ratings agency’s decision to put some $3 billion in student loan-backed ABS on review for downgrade.

    Still, we thought that at least the federal government would be interested in keeping the employment dream alive for the millions of students to whom it has loaned hundreds of billions of dollars in tuition money, which is why we assume the following graphic is simply the result of someone making a very poor design choice because if not, the government has just admitted that in the event you can’t find a job after school, your only choice may be to take out more student loans and go back to school, thus staving off the harsh realities of the real world for another few years. 

    Put differently: why is this a circle? 



  • 12 Unanswered Questions About The Baltimore Riots That They Don’t Want Us To Ask

    Submitted by Michael Snyder via The Economic Collapse blog,

    Why did the Baltimore riots seem like they were perfectly staged to be a television event?  Images of police vehicles burning made for great television all over the planet, but why were there abandoned police vehicles sitting right in the middle of the riot zones without any police officers around them in the first place?  Why was the decision made ahead of time to set a curfew for Tuesday night and not for Monday night?  And why are Baltimore police officers claiming that they were ordered to “stand down” and not intervene as dozens of shops, businesses and homes went up in flames?  Yes, the anger over the death of Freddie Gray is very real.  Police brutality has been a major problem in Baltimore and much of the rest of the nation for many years.  But could it be possible that the anger that the people of Baltimore are feeling is being channeled and manipulated for other purposes?  The following are 12 unanswered questions about the Baltimore riots that they don’t want us to ask…

    #1 Why are dozens of social media accounts that were linked to violence in Ferguson now trying to stir up violence in Baltimore?…

    The data mining firm that found between 20 and 50 social media accounts in Baltimore linked to the violence in Ferguson, Mo. is now reporting a spike in message traffic in Washington D.C., Philadelphia and New York City, with “protesters” trying to get rides to Baltimore for Tuesday night.

     

    The firm, which asked to remain anonymous because it does government work, said some of the suspect social media accounts in Baltimore are sending messages to incite violence. While it is possible to spoof an account, to make it look like someone is one place and really is in another, that does not fully explain the high numbers.

    #2 Who was behind the aggressive social media campaign to organize a “purge” that would start at the Mondawmin Mall at precisely 3 PM on Monday afternoon?…

    The spark that ignited Monday’s pandemonium probably started with high school students on social media, who were discussing a “purge” — a reference to a film in which laws are suspended.

     

    Many people knew “very early on” that there was “a lot of energy behind this purge movement,” Baltimore City Councilman Nick Mosby told CNN on Tuesday. “It was a metaphor for, ‘Let’s go out and make trouble.'”

    #3 Even though authorities had “credible intelligence” that gangs would be specifically targeting police officers on Monday, why weren’t they more prepared?  On Tuesday, the captain of the Baltimore police tried to make us believe that they weren’t prepared because they were only anticipating a confrontation with “high schoolers”

    Police Capt. John Kowalczyk said the relatively light initial police presence was because authorities were preparing for a protest of high schoolers. A heavy police presence and automatic weapons would not have been appropriate, he said. Kowalczyk said police made more than 200 arrests — only 34 of them juveniles.

    #4 Where were the Baltimore police on Monday afternoon when the riots exploded?  During the rioting, CNN legal analyst Jeffrey Toobin said that the “disappearance of the police for hours this afternoon is something that is going to haunt this city for decades”.

    #5 Why are police officers in Baltimore claiming that they were instructed to “stand down” during the rioting on Monday afternoon?…

    Police officers in Baltimore reportedly told journalists that they were ordered by Mayor Stephanie Rawlings-Blake not to stop looters during yesterday’s riots.

     

    Rawlings-Blake, who waited 5 hours before even making a statement on the unrest, was already under intense critcism for saying that violent mobs were provided with “space” to “destroy” during riots which took place on Saturday.

    One Baltimore shopkeeper said that he actually called the police 50 times asking for help and never got any assistance at all.  Other business owners reported similar results.  This is so similar to what we saw back during the Ferguson riots.

    #6 Why was the decision made ahead of time to set a curfew on Tuesday night but not on Monday night?

    #7 Why were so many police vehicles conveniently parked along the street in areas where the worst violence happened?  After the destruction of a number of police vehicles on Saturday night, the Baltimore police had to know that they were prime targets.  So why were there even more police vehicles available for rioters to destroy on Monday?  And where were the cops that should have been protecting those vehicles?

    #8 Why is an organization funded by George Soros stirring up emotions against the police in Baltimore?

    #9 Why is CNN bringing on “commentators” that are promoting violence in Baltimore?…

    Marc Lamont Hill, a Morehouse College professor and regular CNN commentator, embraced radical violence in the streets during an interview Monday on CNN.

    “There shouldn’t be calm tonight,” Hill told CNN host Don Lemon as riots raged in the streets of Baltimore.

     

    “Black people are dying in the streets. We’ve been dying in the streets for months, years, decades, centuries. I think there can be resistance to oppression.”

    #10 Why did Baltimore Mayor Stephanie Rawlings-Blake initially tell reporters that a decision was made on Saturday to give “those who wished to destroy space to do that”?

    #11 Why were rioters given hours to cause mayhem before a state of emergency was finally declared on Monday?  Maryland Governor Larry Hogan seems to think that Mayor Rawlings-Blake waited far too long to declare a state of emergency.  Just check out what he told one reporter

    I‘ve been in daily communication with the mayor and others in the city and our entire team has been involved from day one. Frankly, this was a Baltimore city situation. Baltimore city was in charge. When the mayor called me, which quite frankly we were glad that she finally did, instantly we signed the executive order. We already had our entire team prepared.

     

    We were all in a command center and second floor of the state house in constant communication and we were trying to get in touch with the mayor for quite some time. She finally made that call and we immediately took action. 

    #12 Does the fact that the mayor of Baltimore has very close ties to the Obama administration have anything to do with how events unfolded during the riots?  The following is from Infowars.com

    Rawlings-Blake was one of three mayors who provided broad input into President Obama’s Task Force on 21st Century Policing, which advocates the federalization of police departments across the country by forcing them to adhere to stricter federal requirements when they receive funding.

     

    “The federal government can be a strong partner in our efforts in build better relationships between the police and community,” she said in written testimony before the task force.

     

    That would explain her inaction to stop the rioting when it began: by allowing it to spiral out of control, the mayor and her friends at the Justice Dept. could use the unrest to justify the expansion of federal power into local law enforcement, which would also allow her to receive more funding.

    And why did it take Barack Obama several days to publicly condemn the violence in Baltimore?  Why didn’t he stand up and say something on Monday when the riots were at their peak?

    Something doesn’t smell right about all of this.  Much of the violence could have been prevented if things had been handled differently.

    In the end, who is going to get hurt the most by all of this?  It will be the African-American communities in the heart of Baltimore that are already suffering with extremely high levels of unemployment and poverty.

    I wish that we could all just learn to come together and love one another.  Over the past few days, I have seen a whole lot of “us vs. them” talk coming from all quarters.  This kind of talk is only going to reinforce the cycle of mistrust and violence.

    Sadly, I believe that this is just the beginning of what is coming to America.  The following are some tweets that show the mayhem and destruction that we have been witnessing in Baltimore the past few days…



  • "Purge" Night 3: Protests Spread Across Nation, Over 60 Arrested In New York City – Live Feed

    Live Feed #1

    Watch the latest video at video.foxnews.com

     

    Update: Protests have spread across the nation's cities…

    In Los Angeles, six people protesting against police brutality were arrested Monday night when they failed to disperse, reported CNN affiliate KABC. About 50 people marched, KABC said.

     

    In Chicago, hundreds of protesters marched Tuesday from police headquarters at 35th and Michigan through the Southside, CNN affiliate WGN reported. Police made one arrest, for reckless conduct.

     

    About 100 people marched Monday night in Oakland in support of Baltimore protesters, reported CNN affiliate KABC.

     

    A protest is planned for Thursday in Cincinnati, reported CNN affiliate WXIX. Philly.com said a "Philly is Baltimore" protest will be held Thursday at Philadelphia City Hall.

    * *  *

    *  *  *

     

     

    *  *  *

    Is the so-called "purge" spreading? Hundreds have now gathered in Union Square in New York in a show of solidarity with the protesters in Baltimore who have demanded justice for the death of Freddie Gray. More from NBC

    Organizers had urged various activist groups to rally at Union Square "to show the people of Baltimore that we stand in solidarity with them and with their resistance because their resistance is for justice and their justice is our justice," according to one press release. 

     

    The demonstrations were being held simultaneously as the ones in Baltimore, which were mostly peaceful compared to the violent rioting that rocked the city the day of

    Gray's funeral Monday…

     

    Umaara Elliott, one of the New York rally organizers, said she encouraged the message protesters in Baltimore were trying to send. 

    Live feed..

    Watch the latest video at video.foxnews.com

    …and the visuals…

     

    And finally – once again to diffuse some tension…



  • The Financial Markets Now Control Everything

    Submitted by Charles Hugh-Smith of OfTwoMinds blog,

    The entire economic and political structure is now dependent in one way or another on the continued expansion of financial markets.

     
    The financial markets don't just dominate the economy–they now control everything. In 1999, the BBC broadcast a 4-part documentary by Adam Curtis, The Mayfair Set ( Episode 1: "Who Pays Wins" 58 minutes), that explored the way financial markets have come to dominate not just the economy but the political process and society.
     
    In effect, politicians now look to the markets for policy guidance, and any market turbulence now causes governments to quickly amend their policies to "rescue" the all-important markets from instability.
     
    This is a global trend that has gathered momentum since the program was broadcast in 1999, as The Global Financial Meltdown of 2008-09 greatly reinforced the dominance of markets.
     
    It's not just banks that have become too big to fail; the markets themselves are now too influential and big to fail.
     
    Curtis focuses considerable attention on the way in which seemingly "good" financial entities such as pension funds actively enabled the "bad" corporate raiders of the 1980s by purchasing the high-yield junk bonds the raiders used to finance their asset-stripping ventures.
     
    This increasing dependence of "good" entities on players making risky bets and manipulating markets has created perverse incentives to keep the financial bubble-blowing going with government backstops and changing the rules to mask systemic leverage and risk.
     
    The government must prop up markets, not just to insure the cash keeps flowing into political campaign coffers, but to save pension funds and the "wealth effect" that is now the sole driver of "growth" (expanding consumption) other than debt.
     
    To maintain the illusion of growth and rising wealth, the financial markets must continually reach greater extremes: extremes of debt, leverage, obscurity and valuations. These extremes destabilize markets, first beneath the surface and then all too visibly.
     
    The technological advances of the past decade have enabled a host of financial schemes that together have the potential to destabilize the markets globally.Technology enables high-frequency (HFT) traders to only suffer one losing day per year, complex reverse-repo swaps/trades, huge derivative bets and shadow banking, where all the risks generated by these activities can pool up outside the view and control of regulators.
     
    The entire economic and political structure is now dependent in one way or another on the continued expansion of financial markets.
     
    This spells the end of the electoral-political control of the economy, as politicians of all stripes quickly abandon all their ideologies and policies and rush to "save" the markets from any turmoil, because that turmoil could destabilize not just the financial markets but the economy, pensions and ultimately the government's ability to finance its own profligate borrowing and spending.
     
    This dependence on the markets is pushing central banks and states into ever-more extreme policies, even as the risks of complex swaps and trades is rising beneath the surface.
     
    A case can be made that the technologically-enabled complexity of the shadow-banking markets is now beyond the control of the state or central bank, which leads to a sobering conclusion: the next crisis will not be controllable, and destabilized markets will not be "saved" by tricks such as lowering interest rates to zero and increasing liquidity.
     
    The structural problem with everyone and everything now depending on the speculative returns of the financial markets is there can never be any market clearing event that exposes phantom collateral and forces the liquidation of bad debt and excess credit.
     
    I explain the danger of continually 'saving" the markets from any market clearing event in The Yellowstone Analogy and The Crisis of Neoliberal Capitalism (May 18, 2009).
     
    When a forest is never allowed to burn away the accumulation of dead branches and underbrush with a limited fire, the forest eventually catches fire anyway. The deadwood (of bad debt, excessive credit and leverage and phantom collateral) is now piled so high, the entire forest burns down to ashes.
     
    This is the eventual cost of never allowing any clearing of financial deadwood because everyone is now so dependent on financial markets that the slightest swoon will bring down the entire system. This vulnerability only increases with every "save" and every new bubble.
     

    All the "saves" have done is guarantee the financial system will burn down in a conflagration ignited by a seemingly trivial spark somewhere in the vast global system of phantom collateral

     



  • Prove You're Not A Terrorist

    Submitted by Jeff Thomas via Doug Casey's International Man blog,

    Prove You’re Not a Terrorist

    Recently, France decided to crack down on those people who make cash payments and withdrawals and who hold small bank accounts. The reason given was, not surprisingly, to “fight terrorism,” the handy catchall justification for any new restriction governments wish to impose on their citizens. French Finance Minister Michel Sapin stated at the time, “[T]errorism feeds on fraud, money laundering, and petty trafficking.”

    And so, in future, people in France will not be allowed to make cash payments exceeding €1,000 (down from €3,000). Additionally, cash deposits and withdrawals totaling more than €10,000 per month will be reported to Tracfin—an anti-fraud and money laundering agency.

    Currency exchange will also be further restricted. Anyone changing over €1,000 to another currency (down from €8,000) will be required to show an identity card.

    Do you need to make a deposit on a car? That might be suspect. Did you just deposit a dividend you received? It might be a payment from a terrorist organisation. Planning a holiday and need some cash? You might need to be investigated for terrorism.

    And France is not alone. In the US, federal law requires banks to file a “suspicious activity report” (SAR) on their customers whenever a customer requests a suspicious transaction. (In 2013, 1.6 million SAR’s were submitted.)

    As to what may be deemed “suspicious,” it may be any transaction of $5,000 or more, but it may also mean a series of transactions that, together, exceed $5,000.

    The reader may be saying to himself, “But that’s just normal, everyday banking business—that means anybody, any time, could be reported.” If so, he would be correct. Essentially, any banking activity the reader conducts could be regarded as suspect.

    • In Italy, in 2011, Prime Minister Mario Monti began working to end the right of landlords, tradesmen, and small businesses to perform large transactions in cash, which critics say help them evade taxation. In December of that year, his government reduced the maximum allowed cash payment from €2,500 euros to €1,000.
    • Spain has outlawed cash transactions over €2,500. The justification? “To crack down on the black market and tax evaders.”
    • In Sweden, the country where the first banknote was created in 1661, the use of cash is being steadily eliminated. Increasingly, expenses are paid and purchases made by cellphone text message, and many banks have stopped handling cash altogether.
    • Denmark’s central bank, Nationalbanken, has another justification for ending its use of banknotes—producing paper money and coinage is not cost effective.
    • Israel also seeks to end the use of cash. Prime Minister Benjamin Netanyahu’s chief of staff has announced a three-phase plan to “all but do away with cash transactions in Israel.”
    • Individuals and businesses would initially continue to be allowed to make small cash transactions, but eventually, all transactions would be converted to electronic forms of payment. The justification being used in Israel is that “cash is bad,” because it encourages an underground economy and enables tax evasion.
    • Across the Atlantic, banks and governments are on a similar campaign. A 2012 law in Mexico bans large cash transactions, with a maximum penalty of five years in prison.
    • In August 2014, Uruguay passed the Financial Inclusion Law, which limits cash transactions to US$5,000. In future, all transactions over that amount will be required to be performed electronically. The crying need for such a law? The stated reason was to improve the country’s credit ratings.

    The Elimination of Paper Currency

    In recent years, in commenting on the inevitability of currency collapse in those countries that are indebted beyond the possibility of repayment, I’ve made the prediction that governments and banks would jointly resort to the elimination of paper currency and replace it with an electronic one.

    Some readers have understandably regarded the prediction as “alarmist.” After all, the idea is so farfetched—paper currency may be conceptually flawed, but it’s been around for a long time.

    But banks and governments seek total control of money, and this can only be achieved if they possess a monopoly on the flow of money.

    If a worldwide system can be implemented in which currency transactions can only take place electronically through banking institutions, the banks will then have total power over the ability of a people to function economically.

    But why would any government allow the banks such dictatorial monetary control? The answer is that governments would then realise a long-held, but heretofore impossible dream: to have access to a record of every monetary transaction that takes place for every single individual.

    Governments have been both more proactive and bolder than I had anticipated and are simply imposing the restrictions worldwide under the justifications previously stated. As yet, there hasn’t been any backlash, and it may be that people worldwide may simply swallow the pill, not understanding what it means to their economic liberty.

    If the public are not treating the new system as serious business, governments most assuredly are. Bankers on both sides of the Atlantic have forcibly become unpaid government spies. If they don’t comply, they can be fined and/or lose their banking charter. Directors can be imprisoned.

    The US Justice Department already wants to take this overreach even further. Banks are now being asked to call the authorities whenever something “suspicious” occurs, presumably so that immediate action may be taken.

    What we are witnessing is the creation of totalitarian control of your finances. The implication that you may have some sort of terrorist involvement is a smokescreen.

    As the above information attests, if for any reason you object to any of these measures, you have already been forewarned—you may be suspected of money laundering, tax evasion, or even terrorism. If you use cash for any reason—to pay your rent, to buy a used car, or (soon) to pay for your lunch—you may trigger an investigation. (The onus of proof that you are not guilty good will be on you.)

    The take-away from this discussion? Totalitarian control of currency is an inevitability, and it will take place sooner rather than later. The only question is whether the reader can retain some control of his wealth. Fortunately, wealth may still be held in land and precious metals, but these are only safe if they’re held outside a country that seeks totalitarian rule over its people.

    The ability to retain wealth still exists and, as always, internationalisation remains a key element to its continuation.

    *  *  *

    Editor’s Note: The ultimate way to diversify your savings internationally is to transfer it out of the immediate reach of your home government. And we've put together an in-depth video presentation to help you do just that. It's called, "Internationalizing Your Assets." 

    Our all-star panel of experts, with Doug Casey and Peter Schiff, provide low-cost options for international diversification that anyone can implement – including how to safely set up foreign storage for your gold and silver bullion and how to move your savings abroad without triggering invasive reporting requirements. This is a must watch video for any investor and it's completely free. Click here to watch Internationalizing Your Assets right now.

     



  • New Saudi King Consolidates Power To Maintain Current Oil Policy

    Less than four months into his reign, Bloomberg reports that Saudi Arabia’s King Salman is consolidating power with a major reshuffle of succession lines and government officials. "The new king has proved consistent in his determination to elevate members of his close family to key positions," noted one analyst. As the world’s top oil exporter plays a more prominent role in the region’s power struggles, it apears Salman wants family close. Oil policy is unlikely to change, notes Bloomberg's Julian Lee, as this brings younger men into top government positions, paving way for transfer of power to new generation of princes.

    As we noted 3 months ago,

    The Saud dynasty views itself as the rightful leader of the Muslim world, but Iran has challenged that leadership for several decades. Although Saudi Arabia has a Sunni majority, its rulers fear Iran’s potential influence over a sizable, and sometimes-restive, Shi’ite population concentrated in the kingdom’s oil-rich Eastern Province.

     

    Any new leader is unlikely to change the larger contours of Saudi foreign policy — or the kingdom’s use of oil to enforce its interests and try to keep Iran at bay. But the new king and his inner circle will face decisions on succession that could reshape the ruling family and the monarchy’s future for generations to come.

    And sure enough, as Bloomberg reports, changes have been made…

    The monarch elevated Muhammad Bin Nayef to crown prince after Prince Muqrin, the king’s brother, asked to step down, the royal court said on Wednesday. Prince Mohammed Bin Salman, Salman’s son and current defense minister, was named as deputy crown prince and therefore second in line to the throne.

     

    “The new king has proved consistent in his determination to elevate members of his close family to key positions,” said Crispin Hawes, managing director of research firm Teneo Intelligence in London. “The elevation of the king’s own son reinforces his rapid rise to become one of the two or three most powerful men in the kingdom.”

     

     

    The changes come as Saudi Arabia’s new leadership heads a bombing campaign against Shiite Houthi rebels in Yemen and adopts a tougher stance on confronting Islamic State extremists. The appointments put power in the hands of a younger generation of princes who will have to prevent instability from spilling across the country’s borders as they develop new policies to manage the conflicts in Syria and Iraq.

     

    The decision to promote Prince Mohammed Bin Salman will surprise some given his youth — he is thought to be in his 30s — and relative inexperience, said Fahad Nazer, a political analyst at JTG Inc. in Virginia.

     

    “Few seem to know that much about him and he rarely speaks in public,” said Nazer, who worked at the Saudi embassy in Washington. “That will likely change going forward.”

     

     

    King Salman has made substantial changes to the government since ascending to the throne in January. He set up new committees to oversee security, political affairs and economic development, removed senior princes from their positions and changed the governors in provinces.

     

    Prince Mohammed bin Salman “is more than capable and qualified to take on heavy responsibilities” that are required by his new role, the royal court said. This is “evident to everyone through his work and his fulfillment of all the tasks he was entrusted with,” it said.

     

    His appointment was supported by the majority of the allegiance council, according to the decree.

     

    Diplomats in Riyadh had speculated how much further the king’s son would rise after being made defense minister, head of the royal court and the economic affairs council.

     

    “King Salman is creating an impetus for the younger generation to be involved in the state of affairs,” said John Sfakianakis, the Riyadh-based director of the Middle East at U.K. investment manager Ashmore Group Plc. “There was a lot criticism about Saudi Arabia appointing only octogenarians in senior positions. Now the grandsons of the founder of the country are in the number two and three slots.”

     

    King Salman also replaced Prince Saud al-Faisal, one of the world’s longest-serving foreign ministers, with Adel Al-Jubeir, who is the country’s ambassador to the U.S. He also appointed Adel Faqih as economy minister. Hamad al-Suwailim was named as new head of the royal court.

     

    Al-Jubeir’s appointment “implicitly suggests a desire to have a key voice in Washington,” said James Dorsey, a senior fellow in international studies at Nanyang Technological University in Singapore. Al-Jubeir has “an understanding of how Washington works that few in the kingdom can match,” he said.

     

    As the new generation of princes rose to power, Saudi Arabia abandoned a tradition of cautious cash-backed diplomacy with an activist policy. The kingdom started using its armed forces last month to defend its perceived interests in Yemen against Iran, and has built a predominately Sunni-Muslim coalition to support its efforts.
    In addition, it’s clamped down on Islamic State militants with a series of arrests within the kingdom.

     

    The appointments “could serve as an indication of a new Saudi strategy for Syria and Yemen,” Ibrahim Sharqieh Frehat, a conflict resolution professor at Georgetown University in Qatar, said by e-mail. “Escalation, whether in Yemen or Syria, could be a main feature of the kingdom’s new regional strategy.”

    *  *  *
    It appears Saudi stocks, after initial weakness, liked the news as The Tadawul surged when the West caught on to the headlines…

    There was some mild volatility in Crude when the headlines hit but that has been dominated by European and US opening swings…

    This reshuffle appears to be US-friendly (from a diplomatic perspective) and oil-unfriendly (from a production, crush non-OPEC perspective).

    *  *  *

    As OilPrice's Andy Tully notes, the Saudis have been oin a sales offensive in Asia

    Saudi Oil Minister Ali al-Naimi says his country, which is already pumping oil at a near-record pace, is prepared to produce even more to satisfy what appears to be a rising demand in Asia, particularly China.

    “Asian demand for oil remains strong, and we are ready to supply whatever is required,” al-Naimi, quoted by the Saudi Press Agency, said in a speech on April 27 in Beijing. “As the Asian population grows and as the middle class expands, so the demand for energy will increase. Oil will retain its preeminent position and Saudi Arabia will remain the number one supplier.”

    Al-Naimi’s words are backed up by analysis issued by the energy news service Platts, which reported that Chinese demand for oil in March was 44.73 million metric tons, or 10.58 million barrels a day on average, 6.5 percent higher than in the same month in 2014.

    Still in Beijing the next day, al-Naimi repeated his message of increased demand for oil by Asia’s growing economies, but he added the caveat that “sudden rises or falls in the cost of oil are not welcome.”

    Al-Naimi said such drops in oil prices, even when followed by small rallies, complicates the energy business in the long run, especially by stunting investments in the industry. “Oil is a long-term business, requiring long-term plans and investment,” he said.

    Nevertheless, it is al-Naimi who is seen as the driving force behind the persistence of oil’s low price. The average global price of oil peaked at over $110 per barrel in late June 2014, but began to fall primarily because of a boom in US shale oil production, which often requires relatively expensive hydraulic fracturing, or fracking.

    At its November meeting in Vienna, OPEC had the opportunity to cut production and was urged to do so by some of its members, but under al-Naimi’s leadership, the cartel decided to maintain output at 30 million barrels a day. Later al-Naimi stated the strategy was to regain market share by keeping prices low long enough to make US shale production unprofitable.

    Saudi Arabia has adhered closely to al-Naimi’s plan. In March it produced a near-record 10.3 million barrels of oil per day, and the minister said output will probably stay at or near that level for some time, indicating, at least to some extent, that the Saudi strategy is working: It’s gradually restoring market share and making sure it has the supply to match demand.

    “Saudi Arabia is a consistent, stable and reliable supplier of quality oil,” al-Naimi: “We are the most reliable supplier on earth. Quality and quantity is assured. We have proved over many years to be a reliable partner for China as its energy demands have increased. We remain committed to this partnership, and to this friendship.”

    If al-Naimi’s words sound like a hard sell, they are. Saudi Arabia appears determined to go out and drum up more business rather than wait for customers to come calling. For example, last week he was in Seoul, doing his best to sell the South Koreans on the value – and quantity – of Saudi oil whenever they want it.



  • The Third And Final Transformation Of Monetary Policy

    Submitted by John Mauldin via MauldinEconomics.com,

    Thoughts from the Frontline: The Third and Final Transformation of Monetary Policy

    The law of unintended consequences is becoming ever more prominent in the economic sphere, as the world becomes exponentially more complex with every passing year. Just as a network grows in complexity and value as the number of connections in that network grows, the global economy becomes more complex, interesting, and hard to manage as the number of individuals, businesses, governmental bodies, and other institutions swells, all of them interconnected by contracts and security instruments, as well as by financial and information flows.

    It is hubris to presume, as current economic thinking does, that the entire economic world can be managed by manipulating one (albeit major) subset of that network without incurring unintended consequences for the other parts of the network. To be sure, unintended consequences can be positive or neutral or negative. This letter you are reading, which I’ve been writing for over 15 years and which reaches far more people than I would have ever dreamed possible, is partially the result of a serendipitous unintended consequence.

    But as every programmer knows, messing with a tiny bit of the code in a very complex program can have significant ramifications, perhaps to the point of crashing the program. I have a new Microsoft Surface Pro 3 tablet that I’m trying to get used to, but somehow my heretofore reliable Mozilla Firefox browser isn’t playing nice with this computer. I’m sure it’s a simple bug or incompatibility somewhere, but my team and I have not been able to isolate it.

    However, that’s a relatively minor problem compared to the unintended consequences that spill from quantitative easing, ZIRP, and other central bank shenanigans. We have discussed the problem of how the Federal Reserve has pushed dollars on the rest of the world and is playing havoc with dollar inflows and outflows from emerging markets. More than one EM central banker is complaining aggressively.

    My good friend Dr. Woody Brock makes the case that an unintended consequence of QE is that the Federal Reserve’s normal transmission of monetary policy through periodic changes in the fed funds rate has been vitiated. He contends that soon we will no longer care about the fed funds rate and will be focused on other sets of rates.

    This is an important issue and one that is not well understood. Woody has given me permission to reproduce his quarterly profile. For Woody, this is actually a fairly short piece; but as usual with Woody’s work, you will probably want to read it twice.

     

    The Fed Funds Rate: R.I.P.?? The Third and Final Transformation of Monetary Policy

    By Woody Brock, Ph.D.
    Strategic Economic Decisions, Inc.

    The policy announcements of the US Federal Reserve Board are dissected and analyzed more closely than any other global financial variable. Indeed, during the past thirty years, Fed?Watching became a veritable industry, with all eyes on the funds rate. Within a few years, this term will rarely appear in print. For the Fed will now be targeting two new variables in place of the funds rate. One result is that forecasting Fed policy will be more demanding.

    To make sense of this observation, a bit of history is in order. During the last nine years, US monetary policy has been transformed in three ways. To date, only the first two have been widely discussed and are now well understood. The third development is only now underway, and is not well understood at all. To review:

    First, the Fed lowered its overnight Fed funds rate to essentially zero, not only during the Global Financial Crisis of 2008–2009, but throughout nearly six years of economic recovery thereafter. The average level of the funds rate at the current stage of recovery was about 4% during the past dozen business cycles. It was never 0% as it is in this cycle. In past essays, we have argued that this overutilization of “ultra?easy monetary policy” reflected the failure of the government to utilize fiscal policy correctly (profitable infrastructure spending with a high jobs multiplier), and to introduce long?overdue incentive structure reforms. It was thus left to monetary policy to pick up the pieces after the global crisis of 2008. This development was true in most other G?7 nations, not just in the US.

     

    Second, the Fed inaugurated its policy of Quantitative Easing whereby it increased the size of its balance sheet five?fold from $900 billion to $4,500 billion. Such an expansion would have been inconceivable to Fed watchers during the decades prior to the Global Financial Crisis. In the US, QE is now dormant, and the only remaining question (answered below) is how and when the Fed will shrink its bloated balance sheet back to more normal levels.

     

    Third, the way in which the Fed conducts standard monetary policy (periodic changes in the funds rate) is currently undergoing a complete makeover. In particular, the traditional tool of changing the funds rate via Open Market operations carried out by the desk of the New York Fed no longer works. For as will be seen, the vast expansion of the size of its balance sheet (bank reserves in particular) has rendered traditional policy unworkable. From now on, therefore, the Fed will conduct monetary policy via two new tools that were not even on the drawing board of the Fed prior to 2008.

    Summary: In this PROFILE, we explain in Part A why traditional (non?QE) monetary policy has been vitiated by QE. In Parts B and C respectively, we discuss the two new tools that will be used in the future to conduct standard (non?QE) monetary policy: what exactly are these tools, and how do they work? In Part D, we discuss why these new tools will not be required by the European Central Bank, which has a different institutional structure than the US Fed. Finally, in Part E, we turn to QE and discuss when and how the Fed will shrink its balance sheet back to a more traditional size in the years ahead.

    In this write?up, we largely rely on the remarks set forth in a recent paper by Fed Vice Chairman Stanley Fischer, formerly chief economist of the IMF, Governor of the Central Bank of Israel, and professor of economics at MIT. We also benefitted from clarifications by Professor Benjamin Friedman at Harvard University.

    Part A: So Long to Setting the Funds Rate via Open Market Operations

    Prior to the financial crisis, bank reserve balances with the Fed averaged about $25 billion. With such a low level of reserves, a level controlled solely by the Fed, minor variations in the amount of reserves via Fed open market sales/purchases of securities sufficed to move the Fed funds rate up or down as desired. Analytically, the market for bank reserves (Fed funds) consisted of a demand curve for bank reserves reflecting the nation’s demand for loans, and a supply curve reflecting the supply of reserves by the Fed. The so?called Fed funds rate is the point of intersection of these two curves (the interest rate). If the Fed targeted, say a 2% funds rate, it achieved and maintained this rate by shifting the supply curve left or right by adding to/subtracting from the quantity of reserves. As the Fed was a true monopolist in the creation/extinction of reserves, it could always target and sustain any funds rate it chose.

    These operations constituted “monetary policy” for many decades. But this is no longer the case, as was first made clear in a FOMC policy pronouncement of September 2014. To quote Dr. Fischer in his 2015 speech, “With the nearly $3 trillion in free bank reserves (up from pre?crisis reserves averaging $25 billion), the traditional mechanism of adjustments in the quantity of reserve balances to achieve the desired level of the Federal funds rate may not be feasible or sufficiently predictable.” What new mechanisms will replace it? There are two.

    Part B: The Use of Interest Rates Paid by the Fed on Free Bank Reserves

    “Instead of the funds rate, we will use the rate of interest paid on excess reserves as our primary tool to move the Fed funds rate.” The ability of the Fed to pay banks an interest rate on their free reserves dates back to legislation of October 2008. This rate has been set at 0.25% during the past few years. (“Excess” or “free” bank reserves are defined as the arithmetic difference between total reserves and required reserves. Currently, as of March 30, required reserves were $142 billion, and total reserves were $2.79 trillion.)

    The Logic: Whatever the level of the reserve interest rate that the Fed chooses, banks will have little if any incentives to lend to any private counterparty at a rate lower than the rate they can earn on their free reserve balances maintained at the Fed. The higher the reserve remuneration rate is, the greater will be the upward pressure on a whole range of short?term rates.

    Part C: The Use of the Reverse Repo Rate

    “Because not all institutions have access to the excess reserves interest rate set by the Fed, we will also utilize an overnight reverse repurchase purchase agreement facility, as needed. In a reverse repo operation, eligible counterparties may invest funds with the Fed overnight at a given interest rate. The reverse repo counterparties include 106 money market funds, 22 broker?dealers, 24 depository institutions, and 12 government?sponsored enterprises, including several Federal Home Loan Banks, Fannie Mae, Freddie Mac, and Farmer Mac.”

    The Logic: Fischer continues: “This facility should encourage these institutions to be unwilling to lend to private counterparties in money markets at a rate below that offered on overnight reverse repos by the Fed. Indeed, testing to date suggests that reverse repo operations have generally been successful in establishing a soft floor for money market interest rates.”

    Summary

    Due to the explosion of the size of its balance sheet (bank reserves in particular), the Fed has been forced to abandon management of the Fed funds rate via traditional open market operations. This activity is now being replaced by two new policy tools, both of which are somewhat “softer” than the older tool. First, bank’s free reserves now earn an interest rate on excess bank reserves which is available to banks with access to the Fed’s reserve facility. Second, financial institutions such as money market funds lacking access to the reserve facility will be able to lodge funds overnight (not necessarily merely one night) at the Fed and receive the reverse repo rate offered by the Fed.

    Part D: Irrelevance of these Developments to the European Central Bank

    Interestingly, the European Central Bank does not need and will probably not implement the policy innovations now being implemented by the US Fed. The reason is that in Europe, lending is dominated by banks far more than here in the US. Moreover, most all European financial institutions can in effect deposit funds with the central bank. Finally, the ECB has long been able to vary the reserve remuneration (interest) rate that it pays for excess reserves. As a result, the ECB does not need to utilize the reverse repo rate tool that the Fed is introducing.

    One final point should be made. Whereas Professor Fischer above asserts that the primary tool of the Fed will be variations in the reserve remuneration rate applicable to banks, other scholars believe it is the reverse repo rate that will be the primary tool of US monetary policy. This is partly because of the ongoing reduction of the role of banks in lending to private sector borrowers, a longstanding development that has accelerated with the new regulations imposed on banks since the Global Financial Crisis.

    Part E: Will the Fed Shrink its Balance Sheet Back Down? If So, How?

    Professor Fischer answers this point directly. Yes, the Fed will shrink its balance sheet, but not to the size of yesteryear. More specifically:

    “With regard to balance sheet normalization, the FOMC has indicated that it does not anticipate outright sales of agency mortgage?backed securities, and that it plans to normalize the size of the balance sheet primarily by ceasing reinvestment of principal payments on our existing securities holdings when the time comes… Cumulative repayments of principal on our existing securities holdings from now through the end of 2025 are projected to be $3.2 trillion. As a result, when the FOMC chooses to cease reinvestments of principal, the size of the balance sheet will naturally decline, with a corresponding reduction in reserve balances.”

    Hopefully these remarks have helped clarify past and future changes in Fed policy—changes that amount to a thoroughgoing transformation of US monetary policy that would have been unimaginable a decade ago.

    In the future, we suspect that the press will refer to the Fed’s targeting of the “reverse repo rate” in place of the Federal funds rate when analyzing prospective monetary policy.

    *  *  *

    To continue reading this article from Thoughts from the Frontline – a free weekly publication by John Mauldin, renowned financial expert, best-selling author, and Chairman of Mauldin Economics – please click here.



  • Texas College Teacher Fails Entire Class After Being Told To "Chill Out"

    It’s a tough time to be involved in higher education. If you’re a student, there’s a good chance you’re weighed down under at least $25,000 in student loans and although there are a couple of options you can pursue if you don’t ever intend to pay the money back (IBR payment plan is one and hoping The White House allows you to discharge your debt in bankruptcy is another), it’s rather disheartening to know that one factor being cited by ratings agencies in downgrading billions in student-loan backed paper is “high unemployment rates among recent graduates.” If you’re a teacher, you’d better hope you’re not part time, because if you’re an adjunct faculty member, statistics indicate there’s a 25% chance you and your family are receiving public assistance just to get by. The outlook may be a bit brighter for tenured faculty, but even those supposedly unassailable positions are now under fire as large state schools like LSU are set to draw up bankruptcy plans that could allow them to fire tenured faculty. 

    While we don’t know if any of the above factored into the following story, what we do know beyond a shadow of a doubt is that Texas A&M Professor Irwin Horwitz was sick and tired of the students in his Strategic Management course and so he did what many a college professor across the country has at one time or another dreamed of doing: he failed the entire class. Here’s an excerpt from the e-mail he sent to his students:

    “Since teaching this course, I have caught and seen cheating, been told to ‘chill out,’ ‘get out of my space,’ ‘go back and teach,’ [been] called a ‘fucking moron’ to my face, [had] one student cheat by signing in for another, one student not showing up but claiming they did, listened to many hurtful and untrue rumors about myself and others, been caught between fights between students. 

     

    None of you, in my opinion, given the behavior in this class, deserve to pass, or graduate to become an Aggie, as you do not in any way embody the honor that the university holds graduates should have within their personal character. It is thus for these reasons why I am officially walking away from this course. I am frankly and completely disgusted. You all lack the honor and maturity to live up to the standards that Texas A&M holds, and the competence and/or desire to do the quality work necessary to pass the course just on a grade level…. I will no longer be teaching the course, and all are being awarded a failing grade.”

    Here’s more from InsideHigherEd:

    The same day Horwitz sent a similar email to the senior administrators of the university telling them what he had done, and predicting (correctly) that students would protest and claim he was being unfair. The students are “your problem now,” Horwitz wrote.


    The university has said that Horwitz’s failing grades will not stand.

     

    A spokesman for the university said via email that “all accusations made by the professor about the students’ behavior in class are also being investigated and disciplinary action will be taken” against students found to have behaved inappropriately. The spokesman said that one cheating allegation referenced by Horwitz has already been investigated and that a student committee cleared the student of cheating.

     

    However, the spokesman said that the across-the-board F grades, which were based on Horwitz’s views of students’ academic performance and behavior, will all be re-evaluated. “No student who passes the class academically will be failed. That is the only right thing to do,” he said.

     

    In an interview, Horwitz said that the class was his worst in 20 years of college-level teaching. The professor, who is new to Galveston, relocated (to a non-tenure-track position) because his wife holds an academic job in Houston, and they have had to work hard to find jobs in the same area. He stressed that the students’ failings were academic as well as behavioral. Most, he said, couldn’t do a “break-even analysis” in which students were asked to consider a product and its production costs per unit, and determine the production levels needed to reach a profit.

     

    In most of his career, he said, he has rarely awarded grades of F except for academic dishonesty. He said he has never failed an entire class before, but felt he had no choice after trying to control the class and complaining to administrators at the university.

    And for your viewing pleasure:

    Horwitz did propose one possible solution: he offered to teach only the good students…

    Asked if the decision to fail every one of the 30-plus enrollees was fair to every student, Horwitz said that “a few” students had not engaged in misbehavior, and he said that those students were also the best academic performers. Horwitz said he offered to the university that he would continue to teach just those students, but was told that wasn’t possible.

     




  • Three Hurricanes Are Headed Our Way (And There's Nowhere To Hide)

    Submitted by Jim Quinn via The Burning Platform blog,

    There are three financial hurricanes hurtling towards our country and most people are oblivious to the coming catastrophe. The time to prepare is now, not when the hurricane warnings are issued.

    Hussman makes his usual solid case that stocks and bonds are as overvalued as they have ever been in the history of investing. People are under the false impression that bonds are always a safe investment. The fact that you are already getting a negative real return on bonds doesn’t seem to compute with math challenged Americans. Over the next ten years you will absolutely lose money in bonds.

    Liquidity in both the stock and bond markets is thinning considerably. In bonds, quantitative easing by global central banks has resulted in a scarcity of available collateral, a collapse in repo liquidity, and increasing frequency of delivery failures, all of which is shorthand for a bond market that is becoming less liquid and more fragile to any credit event. Meanwhile, risk premiums are minuscule. Avoiding a negative total return on 10-year bonds now requires that interest rates must not rise by even one percentage point over the next three years. Bond yields have historically covered investors against a meaningful change in yields before resulting in negative total returns. On a one-year return horizon, bond yields presently cover investors for a yield change amounting to only about 0.25 standard deviations – matching mid-2012 as the lowest level of yield coverage in history.

    The fragility of the economic, financial, and social systems of the U.S. is at extreme levels. The median American household has less real income than they had in 1989. The social fabric of the country is tearing as we speak, with Baltimore and Ferguson as the warning shots of coming chaos and civil strife. The ruling elite control the monetary system, so the rigged financial markets continue to rise and have reached bubble proportions. An unexpected pin will be along shortly to pop the bubble. The next crash will make 2008 look like a walk in the park. It may be decades until markets reach these levels again.

    Market crashes always reflect two features: extremely thin risk premiums in an environment where investors have shifted toward greater risk-aversion, and lopsided selling into an illiquid market. Under present conditions, we observe the precursors for both. That doesn’t force or ensure a crash, but it creates the underlying fragility that allows one.

    Last week, the Nasdaq Composite finally clawed its way to breakeven, 15 years after its spectacular bubble peak in 2000. It’s a testament to the overvaluation of technology stocks in 2000 that it has required the third equity bubble in 15 years to reclaim that 2000 high, at least briefly. As you may remember, the Nasdaq Composite reached its intra-day high of 5132.52 in March 2000, plunging to 795.25 (down -78%) by October 2002. The Nasdaq 100, representing the most glamourous of the group, peaked at 4816.25 in March 2000, plunging to 795.25 (down 83%) by October 2002. Even a decade later, in 2010, both indices were still 60-65% below their 2000 highs. The 2000-2002 decline also took the S&P 500 down by half, wiping out the entire total return of the S&P 500 – in excess of Treasury bill returns – all the way back to May 1996.

     

    The S&P 500 presently teeters near its all-time high at 2,115. Its fair value, based upon multiple historically accurate valuation models is 940. Therefore, this market would have to drop 56% to reach fair value. In the real world, crashes often exceed fair value to the downside. Is there anyone you know prepared for a 50% to 60% decline in the stock market?

    On the basis of valuation measures best correlated with actual subsequent market returns, we can say with a strong degree of confidence that the S&P 500 would presently have to drop to the 940 level in order for investors to expect a historically normal 10-year total return of 10% annually. That 940 figure for the S&P 500 would not represent some extreme, catastrophic outcome. It’s not a level that would even represent undervaluation from a historical perspective. It’s the level that we would associate with average, historically run-of-the-mill long-term equity returns. As we observed at the 2000 peak, “if you understand values and market history, you know we’re not joking.”

    Many will call Hussman a prophet of doom or the little investment adviser who cried wolf. But, he has been here before. He didn’t buckle to peer pressure in 2000 or 2007. He analyzed the data and reached a logical conclusion. We all know bubbles can grow to epic proportions based on delusion, hope, and lies. Hussman was right in 2000. Hussman was right in 2007. And Hussman will be right this time.

    You’ll recall we also made similarly “preposterous” comments in April 2007 (see Fair Value – 40% Off). Though our measures of market internals would finally turn negative in late-July of that year (see Market Internals Go Negative), the S&P 500 was already within 10% of its pre-collapse high of 1565 by April. At the time, we estimated reasonable valuations to be “about 40% below current levels,” adding:

    “Again, that doesn’t imply that stocks have to actually suffer a decline of that magnitude. Nor do we need such a decline in order to justify an unhedged investment stance. It’s just that investors should not expect the S&P 500 to reliably deliver long-term returns of 10% annually or better until it does. You’ll note that there are also points in history when the S&P 500 traded substantially below that 10% valuation line. Those were points where stocks were priced to deliver long-term returns reliably above 10% annually, and in fact, they did exactly that.”

    By late-October 2008, the S&P 500 had indeed declined by well over 40% from its peak, at which point we observed that stocks were no longer overvalued (see Why Warren Buffett is Right and Why Nobody Cares).

    The numbers speak for themselves. There is no new paradigm. The Fed is not infallible. The economy is already in recession. Corporate revenues and profits are falling. The consumer isn’t consuming. The market is being elevated by nothing but Wall Street hot air and HFT computers. This time is not different.

    To fully understand the present valuation extreme, recognize that the market cap/GDP ratio is currently about 1.29 versus a pre-bubble norm of just 0.55, with “secular” lows such as 1982 taking the ratio to about 0.33. To fully understand the present valuation extreme, recognize that the S&P 500 price/revenue ratio is currently about 1.80, versus a pre-bubble norm of just 0.8, with “secular” lows taking the ratio to about 0.45.”

    As for other investors, the worst mistake they made prior to the 2000-2002 collapse was to believe Wall Street’s claims that stocks were not in a bubble, and that this time was different. The worst mistake that other investors made prior to the 2007-2009 collapse was to believe Wall Street’s claims that stocks were not in a bubble, and that this time was different. The worst mistake that other investors are making today is to believe Wall Street’s claims that stocks are not in a bubble, and that this time is different.

    Even brilliant investors can lose their nerve and capitulate to the trend and to peer pressure. Don’t be stupid. Don’t believe Wall Street. Don’t let them screw you again. Get your money out of the market.

    Last month, Stan Druckenmiller recounted his own experience with capitulation and performance chasing when he was the lead portfolio manager for George Soros and the Quantum Fund:

    “I’ll never forget it. January of 2000 I go into Soros’ office and I say I’m selling all the tech stocks, selling everything. This is crazy… Just kind of as I explained earlier, we’re going to step aside, wait for the next fat pitch. I didn’t fire the two gun slingers. They didn’t have enough money to really hurt the fund, but they started making 3 percent a day, and I’m out. It’s driving me nuts. I mean, their little account is like up 50% on the year. I think Quantum was up seven. It’s just sitting there.

    “So like around March I could feel it coming. I just – I had to play. I couldn’t help myself. And three times during the same week I pick up a – don’t do it. Don’t do it. Anyway, I pick up the phone finally. I think I missed the top by an hour. I bought $6 billion worth of tech stocks, and in six weeks I had left Soros and I had lost $3 billion in that one play. You ask me what I learned. I didn’t learn anything. I already knew I wasn’t supposed to do that. I was just an emotional basket case and couldn’t help myself. So maybe I learned not to do it again, but I already knew that.”

    Hussman doesn’t address real estate in his weekly letter, but that is the third hurricane headed our way. Despite home ownership reaching three decade lows, stagnant real wage growth, and an economy that has never truly come out of the 2008/2009 recession, home prices have somehow risen 30% since 2012. The combination of keeping foreclosures off the market, the Wall Street hedge fund buy and rent scheme, Chinese billionaires parking their ill-gotten gains in US high end houses, FHA, Fannie, and Freddie encouraging low down payment mortgages, and the return of flippers has produced an echo bubble in the housing market. Home prices are only 18% from the 2006 all-time high. This bubble will burst congruently with the stock and bond bubbles. Anyone who has bought a house with a low down payment since 2012 is going to be deeply underwater in the next few years. Book it. 

    Hussman, myself and a few other bloggers will be scoffed at for our warnings. That’s alright. I have thick skin. I don’t really give a shit what anyone thinks about me or my opinions. I deal with facts. As Hussman wrote in 2000, the question now is only about when. It isn’t years. It’s months, weeks or days.

    “The issue is no longer whether the current market resembles those preceding the 1929, 1969-70, 1973-74, and 1987 crashes. The issue is only – are conditions more like October of 1929, or more like April? Like October of 1987, or more like July? If the latter, then over the short term, arrogant imprudence will continue to be mistaken for enlightened genius, while studied restraint will be mistaken for stubborn foolishness. We can’t rule out further gains, but those gains will turn bitter… Let’s not be shy: regardless of short-term action, we ultimately expect the S&P 500 to fall by more than half, and the Nasdaq by two-thirds. Don’t scoff without reviewing history first.”

    – Hussman Econometrics, February 9, 2000

    Read Hussman’s Weekly Letter



  • The Greek Modest Proposal To Savers: Please Bring Your Cash Home

    Earlier today we reported that after a €2.5 billion outflow in March, Greek deposits have hit their lowest level since 2005 and have fallen by some €27 billion (or 16%) since December. A few other rather disconcerting data points: although the Greek banking system only comprises a little over 1% of eurozone assets, it accounts for nearly a fifth of ECB facility usage while nearly a third of Greek banking assets are now funded by the central bank. 

    In the midst of this decidedly untenable situation, and as Tsipras does his best to shakedown municipalities and pension funds for excess cash (“Where’s the money Lebowski?!), FinMin Varoufakis has a new proposal for all Greeks who have taken the very rational step of moving their cash elsewhere to avoid being Cyprus’d: bring your money back and we won’t tax it at 50%. Here’s more from Reuters:

    Greece is to allow money held abroad by its taxpayers to be declared without penalty and taxed at a discount rate, a move to help overcome a cash crunch threatening the country with bankruptcy.

     

    “The government will table a bill to allow citizens to voluntarily declare their deposits abroad,” Finance Minister Yanis Varoufakis told reporters after meeting Swiss officials in Athens.

     

    Greeks have sent billions of euros abroad since the debt crisis exploded in 2010, fearing that the country may crash out of the euro zone. The deposit flight has strained its banks which have become dependent on central bank funding for liquidity.

     

    A portion of the money has fled to Swiss banks.

     

    Under the planned law, the deposits may be taxed at a rate of 15 to 20 percent, a senior finance ministry official said, an incentive for those who have sent money abroad but have not reported it as income to Greek tax authorities.

     

    Depositors who have evaded reporting incomes would otherwise face a 46 percent tax rate and 46 percent in penalties if caught.

     

    Varoufakis said that once the bill is passed by parliament, a political agreement will be signed between Greece and Swiss authorities to exchange information on Greek deposits held in Swiss banks.

    This may sound like a good idea in principle, but we’re not entirely sure why this represents a compelling value proposition for those who are storing their euros in the safe confines of Swiss bank accounts. That is, why would anyone want to bring cash back to Greece and pay a 20% tax only to face the very real chance that those deposits will be converted to drachma or some equally worthless scrip in the not-so-distant future? 

    Here’s what UBS had to say on the subject of redenomination risk earlier this month (we think it applies here):

    Even if a depositor thinks that there is only a 1% chance their country will exit the Euro, why take a 1% chance that your life savings are forcibly converted into a perceived worthless currency if by acting quickly (and withdrawing deposits) one can have 100% certainty that your life savings remain in Euros?

    As a reminder, here is the deposit situation in Greece:



  • 1,100 Foreign Donors To Clinton Foundation Never Disclosed & Remain Secret

    Submitted by Mike Krieger via Liberty Blitzkrieg blog,

    As a condition of becoming Secretary of State, Hillary Clinton signed a memorandum of understanding with the Obama Administration to disclose the donors to the Clinton Foundation due to the obvious potential conflicts of interest. Sounds good, but everyone knows the Clintons don’t pay by the rules, and they just went ahead and didn’t disclose 1,100 foreign donors to the faux charity.

    Interestingly, these 1,100 donors funneled the money through the Canadian wing of the Clinton slush fund, the Clinton Giustra Enterprise Partnership (CGEP). This subsidiary of the Clinton Foundation was co-founded by Canadian businessman Frank Giustra, who’s sizable donations to the “charity” have been linked to getting a pass on human rights abuses in Colombia and crony uranium deals in Kazakhstan.

    If these United States were anything close to a Democracy or a Republic, Hillary Clinton would have withdrawn from the Presidential race five scandals ago, but we all know what America really is, so the machine chugs along.

    Screen Shot 2015-02-20 at 1.43.43 PM

    From Bloomberg:

    Giustra strenuously objects to how he was portrayed. “It’s frustrating,” he says. And because the donations came in through the Clinton Giustra Enterprise Partnership (CGEP)—a Canadian affiliate of the Clinton Foundation he established with the former president—he feels doubly implicated by the insinuation of a dark alliance.

     

    “We’re not trying to hide anything,” he says. There are in fact 1,100 undisclosed donors to the Clinton Foundation, Giustra says, most of them non-U.S. residents who donated to CGEP.  “All of the money that was raised by CGEP flowed through to the Clinton Foundation—every penny—and went to the [charitable] initiatives we identified,” he says.

    Every penny went to what, travel expenses and salaries?

    Screen Shot 2015-04-27 at 3.14.34 PM

    The reason this is a politically explosive revelation is because the Clinton Foundation promised to disclose its donors as a condition of Hillary Clinton becoming secretary of state. Shortly after Barack Obama was elected president in 2008, the Clinton Foundation signed a “memorandum of understanding” with the Obama White House agreeing to reveal its contributors every year. The agreement stipulates that the “Clinton Giustra Sustainable Growth Initiative” (as the charity was then known) is part of the Clinton Foundation and must follow “the same protocols.”

     

    It hasn’t.

     

    Giustra says that’s because Canada’s federal privacy law forbids CGEP, a Canadian-registered charity, from revealing its donors. A memo he provided explaining the legal rationale cites CGEP’s “fiduciary obligations” to its contributors and Canada’s Personal Information Privacy and Electronic Disclosure Act. “We are not allowed to disclose even to the Clinton Foundation the names of our donors,” he says. 

    Sounds like a reasonable excuse. Except it’s total bullshit, which is to be expected from the Clintons.

    Canadian tax and privacy law experts were dubious of this claim. Len Farber, former director of tax policy at Canada’s Department of Finance, said he wasn’t aware of any tax laws that would prevent the charity from releasing its donors’ names. “There’s nothing that would preclude them from releasing the names of donors,” he said. “It’s entirely up to them.”

     

    Mark Blumberg, a charity lawyer at Blumberg Segal in Toronto, added that the legislation “does not generally apply to a registered charity unless a charity is conducting commercial activities… such as selling the list to third parties.”

     

    With millions of dollars and 1,100 donors shrouded in mystery, CGEP has caught the attention of journalist and authors, including Peter Schweizer, whose forthcoming book, Clinton Cash: The Untold Story of How and Why Foreign Governments and Businesses Helped Make Bill and Hillary Rich, details Giustra’s financial relationship with Bill Clinton and posits nefarious intentions. The fact that the Clinton Foundation promised something that Giustra feels he can’t supply—the identity of his donors—has put him in an even worse spot.

    An anonymous way to buy influence was created using a Canadian charity (the Clinton Giustra Enterprise Partnership was started in June 2007, just as Hillary was getting ready for her first run for President). Yes, I’m sure the advantages of this structure were never considered by the Clintons.

    Meanwhile, as most of you know by now, the Clinton Foundation is refiling at least five years of taxes due to mistakes. Yes, mistakes happen, particularly with the preposterously complex U.S. tax code, but it appears the extent of the Clinton mistakes are anything but normal.

    From Reuters:

    Some experts in charity law and taxes said it was not remarkable for a charity to refile an erroneous return once in a while, but for a large, global charity to refile three or four years in a row was highly unusual.

     

    “I’ve never seen amendment activity like that,” said Bruce Hopkins, a Kansas City lawyer who has specialized in charity law for more than four decades, referring to the CHAI filings.

    But…

    Screen Shot 2015-04-09 at 12.09.13 PM

    *  *  *

    For related articles, see:

    Senior Fellow at Sunlight Foundation Calls the Clinton Foundation “A Slush Fund”

    Hillary Clinton Exposed Part 1 – How She Aggressively Lobbied for Mega Corporations as Secretary of State

    Hillary Clinton Exposed Part 2 – Clinton Foundation Took Millions From Countries That Also Fund ISIS

    Clinton Foundation’s Deep Financial Ties to Ukrainian Oligarch Who Pushed for Closer Ties to EU Revealed

    This is How Hillary Does Business – An Oil Company, Human Rights Abuses in Colombia and the Clinton Foundation

    More Hillary Cronyism Revealed – How Cisco Used Clinton Foundation Donations to Cover-up Human Rights Abuse in China

    More Clinton Foundation Cronyism – The Deal to Sell Uranium Interests to Russia While Hillary was Secretary of State

     



  • Texas Governor Calls Up State Guard To Counter Jade Helm "Federal Invasion" Fears

    We’ve mentioned the upcoming Jade Helm military exercises on a few occasions lately (here and here). In short, Jade Helm is an eight-week joint military and Interagency Unconventional Warfare exercise conducted throughout Texas, New Mexico, Arizona, California, Nevada, Utah and Colorado. Here’s the official press release:

    FORT BRAGG, N.C. (USASOC News Service, March 24, 2015) – Members of U.S. Army Special Operations Command will train with other U.S Armed Forces units July 15 through Sept. 15 in a multi-state exercise called Jade Helm 15.

     

    USASOC periodically conducts training exercises such as these to practice core special warfare tasks, which help protect the nation against foreign enemies. It is imperative that Special Operations Soldiers receive the best training, equipment and resources possible.

     

    While multi-state training exercises such as these are not unique to the military, the size and scope of Jade Helm sets this one apart. To stay ahead of the environmental challenges faced overseas, Jade Helm will take place across seven states. However, Army Special Operations Forces (ARSOF) will only train in five states: Texas, Arizona, New Mexico, Utah and Colorado. The diverse terrain in these states replicates areas Special Operations Soldiers regularly find themselves operating in overseas. 

     

    The training exercise will be conducted on private and public land with the permission of the private landowners, and from state and local authorities.  In essence, all exercise activity will be taking place on pre-coordinated public and private lands.

     

    The public can expect nothing much different from their day-to-day activities since much of exercise will be conducted in remote areas. The most noticeable effect the exercise may have on the local communities is an increase in vehicle and military air traffic and its associated noise. There will also be economic gain: an increase in the local economy, in fuel and food purchases and hotel lodging.

     

    This exercise is routine training to maintain a high level of readiness for ARSOF since they must be ready to support potential missions anywhere in the world at a moment’s notice. 

     

    During this eight-week period, ARSOF soldiers will use this opportunity to further develop tactics, techniques and procedures for emerging concepts in Special Operations warfare.

     

    USASOC intends to conduct the exercise safely and courteously while providing the best possible training available for the nation’s Army Special Operations Forces. State and local officials are being informed of the scope of Jade Helm and will continue to be updated as the exercise progresses.

    Got it. So essentially, from July 15 to September 15 some military personnel are going to take a trip out west and pretend like they are conducting covert operations overseas. Doesn’t sound too exciting — but that’s just the press release. The devil, as they say, is always in the details which is why we took some time to look over the Jade Helm presentation (embedded below) to see if we could discern more about the drills. Here are some highlights we found interesting/humorous.

    First, there’s the rather amusing state classification map wherein Texas and Utah are deemed “hostile” and where New Mexico is “leaning hostile.” California is “permissive” (we suppose this means the populace has resigned itself to what was probably, were this real, a unilateral invasion by the US military), but unfortunately, there appears to be an insurgency brewing in San Diego. 

     

    Next is the section entitled “Why Texas?” wherein the US Army Special Operations Command first explains how patriotic Texans generally are, then hilariously proceeds to suggest (in as polite a manner as possible) that the Lone Star state 1) resembles the type of desert wasteland soldiers might expect to encounter in a modern overseas conflict, 2) is just underdeveloped enough in many areas to give trainees an idea of what it might be like to be operating undercover in a hostile Middle Eastern country, 3) is home to the type of xenophobia which will make the locals approximately as skeptical of “outsiders” as the inhabitants of an occupied country might be but who are at the same time just gullible enough to be tricked into trusting the “invaders,” and best of all 4) is home to social and economic conditions that any normal American would consider “unfamiliar.” Here are some excerpts:

    Why Texas?

    The United States Special Operations Command (USSOCOM) has conducted numerous exercises in Texas, because Texans are historically supportive of efforts to prepare our soldiers, airmen, marines and sailors to fight the enemies of the United States. 

     

    To hone advanced skills, the military and Interagency require large areas of undeveloped land with low population densities with access to towns… 

     

    Operating in and around communities where anything out the ordinary will be spotted and reported (Locals are the first to notice something out of place). The opportunity to work with civilians to gain their trust and an understanding of the issues…

     

    Adapting to unfamiliar terrain, social and economic conditions. 

    Basically then, 1,200 special ops soldiers are going to conduct a fake, covert infiltration of Texas because the US Special Operations Command thinks that in a lot of ways, Texas resembles Afghanistan. 

    That’s ok though, because as the government notes in the informational slide deck, the operation will have a dramatic impact on the local economy thanks to the injection of a staggering $150,000 via the purchase of “food, gas, lodging, and services” for the pretend invaders. That figure may sound small, but remember, we’re suspending reality here and one dollar equals 57 afghanis, so if we stick with the Afghanistan analogy, the government is actually injecting 8,550,000 in local currency.

    While we’re certainly concerned about the creeping militarization of American communities (as discussed in detail here), we’re clearly employing a bit of sarcasm in our analysis of Jade Helm, but as one might imagine, many Texans are finding the operation to be no laughing matter. Here’s more via The Washington Post:

    At an information session in Bastrop on Monday, command spokesman Lt. Col. Mark Lastoria fielded questions about whether Jade Helm 15 will involve bringing foreign fighters from the Islamic State to Texas, whether U.S. troops will confiscate Texans’ guns and whether the Army intends to implement martial law, according to the Austin American-Statesman.

     

    “It’s the same thing that happened in Nazi Germany: You get the people used to the troops on the street, the appearance of uniformed troops and the militarization of the police,” Bastrop resident Bob Wells told the Statesman after the meeting.

     

    “They’re gathering intelligence. That’s what they’re doing. And they’re moving logistics in place for martial law. That’s my feeling. Now, I could be wrong. I hope I am wrong. I hope I’m a ‘conspiracy theorist.’”

     

    According to the Statesman, Lastoria attempted to assuage residents’ concerns, saying the operation in Bastrop County will take place almost entirely on private land leased to the Army by the owner. And participants won’t be trying to sneak through the population undetected — everyone involved will wear uniforms or orange armbands signaling that they are part of the exercise, he said.

     

    Meanwhile, some websites which The Post describes as being “of varying repute” have gone so far as to posit a link between Wal-Mart’s recent “plumbing” problems and Jade Helm. 

    We’ll leave it to readers to decide for themselves how far-fetched any or all of this is or isn’t, but surely the punchline to the entire story is that now, Texas Governor Greg Abbott has ordered the Texas State Guard to monitor the Jade Helm exercises. Here is the letter from Abbott to Major General “Jake” Betty:

    Abbott Jade Helm

     

    This surely marks Jade Helm’s “full retard” moment, as you now have a Texas governor pitting the Texas Guard against the US Special Operations Command amid fears the federal government — possibly in conjunction with Wal-Mart — is using special forces to gather intelligence on the way to taking over the state. Only in America. 

    Jade Helm Presentation



  • Apple Admits Watch Shortage Due To Defective Supply, Not Demand

    Apple fan-boys have proclaimed the Apple Watch a screaming success as Tim Cook explained he was “generally happy” with the launch. The big driver of the impression of awesomeness was how hard it was to get one… i.e. so much demand that supply copuld not keep up. However, as The Wall Street Journal reports, it was not demand, it was instead defects that forced the company to limit supply.

    It’s been weak post-earnings…

     

    And getting worse in the after-hours…

     

    Apple Inc. is said to have found a defect in a key component of its watch during production, forcing the company to limit supply of the new device,. As The Wall Street Journal reports,

    A key component of the Apple Watch made by one of two suppliers was found to be defective, prompting Apple Inc. to limit the availability of the highly anticipated new product, according to people familiar with the matter.

     

    The part involved is the so-called taptic engine, designed by Apple to produce the sensation of being tapped on the wrist. After mass production began in February, reliability testing revealed that some taptic engines supplied by AAC Technologies Holdings Inc., of Shenzhen, China, started to break down over time, the people familiar with the matter said. One of those people said Apple scrapped some completed watches as a result.

     

     

    Apple last week told some watch suppliers to slow production until June, without explaining why, according to people familiar with Apple’s supply chain. Suppliers were surprised because Apple recently said that Watch inventory was insufficient, these people said.

    *  *  *

    On Monday, Apple Chief Executive Tim Cook said “demand is greater than supply” for the Watch, but didn’t disclose sales or orders.

    In a memo to retail-store employees earlier this month, Apple retail chief Angela Ahrendts said stores won’t get watches to sell until the end of May because of “high global interest combined with our initial supply.” New online orders will be delivered in June, Apple says on its website.

    Which is true of course when you only have a handful to sell…

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  • IT HaPPeNeD IN BaLTiMoRe…

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  • Fed Fails To Spark Buying Frenzy; Stocks, Bonds, Dollar Drop

    The message from the Fed appears to be…

     

    Which is a problem for stocks…(post-FOMC) – Small Caps worst…

     

    And cash indices on the day tried to ramp to green but failed…

     

    Futures show the early weakness during the European session…

     

    Leaving the cash indices all in the red for the week…

     

    Crazy day in vol too…

     

    Treasuries were weak once again going in (the daily 8am selling resumed), weakened after an initial rally after GDP, then were unchanged post-FOMC…

     

    The USDollar was spanked lower after GDP and recovered modestly after The FOMC Statement…

     

    Dollar weakness helped commodities a bit but in general gold, silver, and copper ended unch on the day…

     

    Crude pumped on a Cushing inventory draw, dropped after NYMEX Close…

     

    EURUSD soared today – pressing up towards 1.12 before The FOMC Statement pulled back some gains…

     

    And finally it is worth looking at the carnage in Europe today (specifically Germany)…

     

    Charts: Bloomberg

    Bonus Chart: Yeah, him again…



  • Meanwhile, In Baltimore

    The Baltimore riots may have calmed down but their aftermath remains, and nowhere is it more tangible than what is taking place in Orioles Park right now.

    Major League Baseball had already canceled the first two games of the Orioles’ series with the Chicago White Sox. And the Orioles’ weekend series with the Tampa Bay Rays was moved to Florida.

    Wednesday’s game was scheduled to be played under the lights, but the league moved it to the afternoon and closed it to the public. Major League Baseball’s official historian, John Thorn, said it had never happened before.

    As NBC recounts, the Baltimore Orioles played a ballgame on Wednesday with nobody in the stands. The low murmur of a weekday afternoon crowd was replaced with eerie silence.

    “Baseball history will be made here today,” Orioles play-by-play broadcaster Gary Thorne said to the TV camera at the start of the game. But it wasn’t the kind of history anybody wanted to make: it was so quiet at first pitch that you could hear the click of camera shutters.

    And the fans were on the wrong side of the gates.

    At a pregame press conference, Orioles outfielder Adam Jones tried to help a healing city.

    My prayers have been out for all the fans, all the kids out there,” he said. “They’re hurting. And I think the big message is to stay strong, Baltimore. Stay safe. Continue to be the city, the great city, that I’ve grown to love over the last eight years.”

    Rob Manfred, the commissioner of baseball, said that the decision was made “in the best interests of fan safety and the deployment of city resources.”

    * * *

    As a reminder, this is what John, son of the majority owner Peter Angelos, said a few days ago about the riots:

    “Brett, speaking only for myself, I agree with your point that the principle of peaceful, non-violent protest and the observance of the rule of law is of utmost importance in any society. MLK, Gandhi, Mandela, and all great opposition leaders throughout history have always preached this precept. Further, it is critical that in any democracy investigation must be completed and due process must be honored before any government or police members are judged responsible.

     

    That said, my greater source of personal concern, outrage and sympathy beyond this particular case is focused neither upon one night’s property damage nor upon the acts, but is focused rather upon the past four-decade period during which an American political elite have shipped middle class and working class jobs away from Baltimore and cities and towns around the U.S. to third-world dictatorships like China and others, plunged tens of millions of good hard-working Americans into economic devastation, and then followed that action around the nation by diminishing every American’s civil rights protections in order to control an unfairly impoverished population living under an ever-declining standard of living and suffering at the butt end of an ever-more militarized and aggressive surveillance state.


    The innocent working families of all backgrounds whose lives and dreams have been cut short by excessive violence, surveillance, and other abuses of the Bill of Rights by government pay the true price, an ultimate price, and one that far exceeds the importance of any kids’ game played tonight, or ever, at Camden Yards. We need to keep in mind people are suffering and dying around the U.S., and while we are thankful no one was injured at Camden Yards, there is a far bigger picture for poor Americans in Baltimore and everywhere who don’t have jobs and are losing economic civil and legal rights, and this makes inconvenience at a ball game irrelevant in light of the needless suffering government is inflicting upon ordinary Americans.”

     

    And here’s a bit of levity as Orioles players sign fake autographs and wave to fake fans…



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Truth Is Washington’s Enemy — Paul Craig Roberts

Truth Is Washington’s Enemy

Paul Craig Roberts

US Representative Ed Royce (R, CA) is busy at work destroying the possibility of truth being spoken in the US. On April 15 at a hearing before the House Committee on Foreign Affairs of which Royce is chairman, Royce made use of two minor presstitutes to help him redefine all who take exception to Washington’s lies as “threats” who belong to a deranged pro-Russian propaganda cult.http://www.prisonplanet.com/bloggers-compared-to-isis-during-congressional-hearing.html

Washington’s problem is that whereas Washington controls the print and TV media in the US and its vassal states in Europe, Canada, Australia, Ukraine, and Japan, Washington does not control Internet sites, such as this one, or media, such as RT, of non-vassal states. Consequently, Washington’s lies are subject to challenge, and as people lose confidence in Western print and TV media because of the propaganda content, Washington’s agendas, which depend on lies, are experiencing rougher sledding.

Truth is bubbling up through Washington’s propaganda. Confronted with the possibility of a loss of control over every explanation, Hillary Clinton, Ed Royce, and the rest are suddenly complaining that Washington is “losing the information war.” Huge sums of taxpayers’ hard earned money will now be used to combat the truth with lies.

What to do? How to suppress truth with lies in order to remain in control? The answer says Andrew Lack, Royce, et alia, is to redefine a truth-teller as a terrorist. Thus, the comparison of RT and “dissident” Internet bloggers to the Islamist State and the designated terror group, Boko Haram.

Royce expanded the definition of terrorist to include dissident bloggers, such as Chris Hedges, John Pilger, Glenn Greenwald and the rest of us, who object to the false reality that Washington creates in order to serve undeclared agendas. For example, if Washington wants to pour profits into the military/security complex in exchange for political campaign contributions, the politicians cannot say that. Instead, they claim to protect America from a dangerous enemy or from weapons of mass destruction by starting a war. If politicians want to advance American financial or energy imperialism, they have to do so in the name of “bringing freedom and democracy.” If the politicians want to prevent the rise of other countries, such as Russia, President Obama has to depict Russia as a threat comparable to the Ebola virus and the Islamist State.

Noam Chomsky summed it up when he said that Washington regards any information that does not repeat Washington’s propaganda to be intolerable.

Washington’s assault on truth as a threat helps to make sense of the gigantic National Security Agency spy system exposed by William Binney and Edward Snowden. One of the purposes of the spy network is to identify all “dissidents” who challenge Big Brother’s “Truth.”

There is, or will be, a dossier on every “dissident” with all of the dissident’s emails, Internet searches, websites visited, phone calls, purchases, travels. The vast amount of information on each dissident can be combed for whatever can be taken out of context to make a case against him, if a case is even needed. Washington has already successfully asserted its power over the Constitution to indefinitely detain without charges and to torture and to murder US citizens.

It was a couple of years ago that Janet Napolitano, head of Homeland Security, said that the department’s focus had shifted from terrorists to domestic extremists. Lumped into the category of domestic extremists are environmental activists, animal rights activists, anti-war activists which includes disillusioned war veterans, and people who believe in states’ rights, limited government and accountable government. Consequently, many dissidents, America’s best citizens, will qualify as domestic extremists on several accounts. Chris Hedges, for example, is an advocate for animals (seehttp://www.opednews.com/articles/Choosing-Life-by-Chris-Hedges-Animals_Cattle_Corporate_Dairy-150420-878.html ) as well as concerned about the environment and Washington’s never-ending wars.

The spying and the coming crackdown on “dissidents” might also explain the $385 million federal contract awarded to a subsidiary of Dick Cheney’s firm, Halliburton, to build detention camps in the US. Few seem to be concerned with who the camps are to detain. There is no media or congressional investigation. It seems unlikely that the camps are for hurricane or forest fire evacuees. Concentration camps are usually for people regarded as unreliable. And as Lack, Royce, et alia have made clear, unreliable people are those who do not support Washington’s lies.

A perceived need by Washington, and the private power structure that Washington serves, to protect themselves from truth could also be the reason for the very strange military exercises in various of the states to infiltrate, occupy, and round-up “threats” among the civilian population. (see http://www.zerohedge.com/news/2015-04-16/signs-elites-are-feverishly-preparing-something-big ) Even the presstitute CNN reported that the National Guard troops sent to Ferguson, Missouri, were programmed to view the civilian protesters as “enemy forces” and “adversaries,” and we know that the state and local militarized police are trained to view US citizens as threats.

As far as I can discern, not many Americans, whether Democrat or Republican, liberal, conservative, or super-patriot, educated or not, understand that Washington with the cooperation of its presstitute media has defined truth as a threat. In Washington’s opinion, truth is a greater threat than Ebola, Russia, China, terrorism, and the Islamic State combined.

A government that cannot survive truth and must resort to stamping out truth is not a government that any country wants. But such an undesirable government is the government that Clinton-Bush-Cheney-Obama-Hillary-Lack-Royce have given us.

Does it satisfy you? Are you content that in your name and with taxes on your hard-earned and increasingly scarce earnings, Washington in the 21st century has murdered, maimed, and displaced millions of peoples in eight countries, has set America on the path to war with Russia and China, and has declared truth to be an enemy of the state?

Today’s News April 29, 2015

  • Turning America Into A Battlefield: A Blueprint For Locking Down The Nation

    Submitted by John Whitehead via The Rutherford Institute,

    In the councils of government, we must guard against the acquisition of unwarranted influence, whether sought or unsought, by the military industrial complex. The potential for the disastrous rise of misplaced power exists and will persist. We must never let the weight of this combination endanger our liberties or democratic processes. We should take nothing for granted. Only an alert and knowledgeable citizenry can compel the proper meshing of the huge industrial and military machinery of defense with our peaceful methods and goals, so that security and liberty may prosper together.

    – President Dwight D. Eisenhower, 1961

    A standing army – something that propelled the early colonists into revolution – strips the American people of any vestige of freedom. How can there be any semblance of freedom when there are tanks in the streets, military encampments in cities, Blackhawk helicopters and armed drones patrolling overhead?

    It was for this reason that those who established America vested control of the military in a civilian government, with a civilian commander-in-chief. They did not want a military government, ruled by force. Rather, they opted for a republic bound by the rule of law: the U.S. Constitution.

    Unfortunately, with the Constitution under constant attack, the military’s power, influence and authority have grown dramatically. Even the Posse Comitatus Act of 1878, which makes it a crime for the government to use the military to carry out arrests, searches, seizure of evidence and other activities normally handled by a civilian police force, has been weakened by both Barack Obama and George W. Bush, who ushered in exemptions allowing troops to deploy domestically and arrest civilians in the wake of alleged terrorist acts.

    Now we find ourselves struggling to retain some semblance of freedom in the face of police and law enforcement agencies that look and act like the military and have just as little regard for the Fourth Amendment, laws such as the NDAA that allow the military to arrest and indefinitely detain American citizens, and military drills that acclimate the American people to the sight of armored tanks in the streets, military encampments in cities, and combat aircraft patrolling overhead.

    Making matters worse, we find out that the military plans to use southwestern states as staging grounds for guerilla warfare drills in which highly-trained military troops equipped with all manner of weapons turn American towns and cities in quasi-battlefields. Why? As they tell us, it’s so that special operations forces can get “realistic military training” in “hostile” territory.

    They’ve even got a name for the exercise: Jade Helm 15.

    Whether or not Americans have anything to fear from Jade Helm 15, a covert, multi-agency, multi-state, eight-week military training exercise set to take place this summer from July 15 through Sept. 15, remains to be seen.

    Insisting that there’s nothing to be alarmed about, the Washington Post took great pains to point out that these military exercises on American soil are nothing new. For instance, there was Operation Bold Alligator, in which in which thousands of Marines and sailors carried out amphibious exercises against “insurgent” forces in Georgia and Florida. Operation Robin Sage had Green Beret soldiers engaging in guerrilla warfare in North Carolina. And Operation Derna Bridge sends Marine special forces into parts of South Carolina and the National Forest.

    Yet if Americans are uneasy about this summer’s planned Jade Helm 15 military exercises, they have every right to be.

    After all, haven’t we been urged time and time again to just “trust” the government to respect our rights and abide by the rule of law only to find that, in fact, our rights were being plundered and the Constitution disregarded at every turn?

    Let’s assume, for the moment, that Jade Helm 15 is not a thinly veiled military plot to take over the country lifted straight out of director John Frankenheimer’s 1964 political thriller Seven Days in May, as some fear, but is merely a “routine” exercise for troops, albeit a blatantly intimidating flexing of the military’s muscles.

    The problem arises when you start to add Jade Helm onto the list of other troubling developments that have taken place over the past 30 years or more: the expansion of the military industrial complex and its influence in Washington DC, the rampant surveillance, the corporate-funded elections and revolving door between lobbyists and elected officials, the militarized police, the loss of our freedoms, the injustice of the courts, the privatized prisons, the school lockdowns, the roadside strip searches, the military drills on domestic soil, the fusion centers and the simultaneous fusing of every branch of law enforcement (federal, state and local), the stockpiling of ammunition by various government agencies, the active shooter drills that are indistinguishable from actual crises, the economy flirting with near collapse, etc.

    Suddenly, the overall picture seems that much more sinister. Clearly, as I point out in my new book Battlefield America: The War on the American People, there’s a larger agenda at work here.

    Seven years ago, the U.S. Army War College issued a report calling on the military to be prepared should they need to put down civil unrest within the country. Summarizing the report, investigative journalist Chris Hedges declared, “The military must be prepared, the document warned, for a ‘violent, strategic dislocation inside the United States,’ which could be provoked by ‘unforeseen economic collapse,’ ‘purposeful domestic resistance,’ ‘pervasive public health emergencies’ or ‘loss of functioning political and legal order.’ The ‘widespread civil violence,’ the document said, ‘would force the defense establishment to reorient priorities in extremis to defend basic domestic order and human security.’”

    At what point will all of the government’s carefully drawn plans for dealing with civil unrest, “homegrown” terrorism and targeting pre-crime become a unified blueprint for locking down the nation?

    For instance, what’s the rationale behind turning government agencies into military outposts? There has been a notable buildup in recent years of SWAT teams within non-security-related federal agencies such as Department of Agriculture, the Railroad Retirement Board, the Tennessee Valley Authority, the Office of Personnel Management, the Consumer Product Safety Commission, the U.S. Fish and Wildlife Service and the Education Department. As of 2008, “73 federal law enforcement agencies… [employ] approximately 120,000 armed full-time on-duty officers with arrest authority.” Four-fifths of those officers are under the command of either the Department of Homeland Security (DHS) or the Department of Justice.

     

    What’s with all of the government agencies stockpiling hollow point bullets? For example, why does the Department of Agriculture need .40 caliber semiautomatic submachine guns and 320,000 rounds of hollow point bullets? For that matter, why do its agents need ballistic vests and body armor?

     

    Why does the Postal Service need “assorted small arms ammunition”? Why did the DHS purchase “1.6 billion rounds of hollow-point ammunition, along with 7,000 fully-automatic 5.56x45mm NATO ‘personal defense weapons’ plus a huge stash of 30-round high-capacity magazines”? That’s in addition to the FBI’s request for 100 million hollow-point rounds. The Department of Education, IRS, the Social Security Administration, and the National Oceanic and Atmospheric Administration, which oversees the National Weather Service, are also among the federal agencies which have taken to purchasing ammunition and weaponry in bulk.

     

    Why is the federal government distributing obscene amounts of military equipment, weapons and ammunition to police departments around the country? And why is DHS acquiring more than 2,500 Mine-Resistant Armored Protection (MRAP) vehicles, only to pass them around to local police departments across the country? According to the New York Times:

     

    [A]s President Obama ushers in the end of what he called America’s “long season of war,” the former tools of combat — M-16 rifles, grenade launchers, silencers and more — are ending up in local police departments, often with little public notice. During the Obama administration, according to Pentagon data, police departments have received tens of thousands of machine guns; nearly 200,000 ammunition magazines; thousands of pieces of camouflage and night-vision equipment; and hundreds of silencers, armored cars and aircraft. The equipment has been added to the armories of police departments that already look and act like military units.

     

    Why is the military partnering with local police to conduct training drills around the country? And what exactly are they training for? In Richland, South Carolina, for instance, U.S. army special forces participated in joint and secretive exercises and training with local deputies. The public was disallowed from obtaining any information about the purpose of the drills, other than being told that they might be loud and to not be alarmed. The Army and DHS also carried out similar drills and maneuvers involving Black Hawk helicopters in Texas, Florida, and other locations throughout the U.S., ostensibly in order to provide local police with “realistic” urban training.

     

    What is being done to protect the American populace from the threat of military arms and forces, including unarmed drones, being used against them? Policy analysts point to Directive No. 3025.18, “Defense Support of Civil Authorities” (issued on Dec. 29, 2010), as justification for the government’s use of military force to put down civil unrest within the United States.

     

    Why is FEMA stockpiling massive quantities of emergency supplies? On January 10, 2014, FEMA made a statement enlisting the service of contractors who could “supply medical biohazard disposal capabilities and 40 yard dumpsters to 1,000 tent hospitals across the United States; all required on 24-48 hour notice.” This coincides with other medical requests seeking massive amounts of supplies, such as “31,000,000 flu vaccinations,” “100,000 each of winter shirts and pants and the same for summer” and other goods and services requests as well like tarps, manufactured housing units, and beverages. And why does the TSA need $21,000 worth of potassium chlorate, a chemical compound often used in explosives?

     

    Why is the Pentagon continuing to purchase mass amounts of ammunition while at the same time preparing to destroy more than $1 billion worth of bullets and missiles that are still viable?

     

    Moreover, what is really being done to hold the Pentagon accountable for its doctored ledgers, fraud, waste and mismanagement, which has cost the taxpayer trillions of dollars? According to Reuters, “The Pentagon is the only federal agency that has not complied with a law that requires annual audits of all government departments. That means that the $8.5 trillion in taxpayer money doled out by Congress to the Pentagon since 1996, the first year it was supposed to be audited, has never been accounted for. That sum exceeds the value of China's economic output.”

     

    Given the similarities between the government’s Live Active Shooter Drill training exercises, carried out at schools, in shopping malls, and on public transit, which can and do fool law enforcement officials, students, teachers and bystanders into thinking it’s a real crisis, how much of what is being passed off as real is, in fact, being staged by DHS for the “benefit” of training law enforcement, leaving us none the wiser? These training exercises come complete with their own set of professionally trained Crisis Actors playing the parts of shooters, bystanders and victims in order to help schools and first responders create realistic drills, full-scale exercises, high-fidelity simulations, and interactive 3D films.

     

    Given that Americans are 110 times more likely to die of foodborne illness than in a terrorist attack, why is the government spending trillions of dollars on “national security”? How exactly is the $75 billion given to various intelligence agencies annually to keep us “safe” being spent? And why is the DHS giving away millions of dollars’ worth of federal security grants to states that federal intelligence agencies ruled have “no specific foreign or domestic terrorism threat”?

     

    Why is the government amassing names and information on Americans considered to be threats to the nation, and what criteria is the government using for this database? Keep in mind that this personal information is being acquired and kept without warrant or court order. It’s been suggested that in the event of nuclear war, the destruction of the U.S. Government, and the declaration of martial law, this Main Core database, which as of 2008 contained some 8 million names of Americans, would be used by military officials to locate and round up Americans seen as threats to national security, a program to be carried about by the Army and FEMA.

    Taken individually, these questions are alarming enough. But put them together and they add up to the kind of trouble that the American founding fathers not only warned against but from which they fought to free themselves.

    Indeed, when viewed collectively, they leave one wondering what exactly the U.S. government is preparing for and whether American citizens shouldn’t be preparing, as well, for that eventuality when our so-called “government of the people, by the people, for the people” is no longer answerable to “we the people.”



  • Goldman Paid Bill Clinton $200K Before Lobbying Hillary On Export-Import Bank

    As documented here on several occasions of late, there are new questions surrounding charitable contributions to the Clinton Foundation. Most notably, a Reuters investigation revealed that the Clinton family charities may have suffered what we called a “Geithner moment” when they failed to report tens of millions in contributions from foreign governments on tax documents. The foundation will now refile five years worth of returns and hasn’t ruled out the possibility that it may need to amend returns dating back some 15 years. 

    This prompted acting CEO Maura Pally to pen a lengthy blog post in which she explains the “mistakes” and attempts to reassure the public that the Clinton Foundation is taking special care to guard against “conflicts of interest” as Hillary begins her run for The White House. Pally also notes that similar measures were taken when Clinton was Secretary of State although, as we noted, the charity accepted donations from the likes of Kuwait, Qatar and Oman while she was the nation’s top diplomat. 

    Now there are new questions as IBTimes suggests there may be a connection between a $200,000 payment made to Bill Clinton by Goldman Sachs in 2011, and the bank’s efforts to lobby the State Department ahead of legislation involving the Export-Import Bank which was set to provide a loan that would end up financing the purchase of millions of dollars in aircraft from a company partially owned by Goldman. Here’s more: 

    Goldman Sachs paid former President Bill Clinton $200,000 to deliver a speech in the spring of 2011, several months before the investment banking giant began lobbying the State Department, then headed by Hillary Clinton, federal records reviewed by International Business Times show.

     

    Goldman’s objective in lobbying the State Department could not be immediately discerned. The lobbying disclosure filings note only that Goldman sought to “monitor deficit reduction issues” — specifically, a bill known as the Budget Control Act — and the bank declined to answer questions about the precise nature of its interests…

     

    In recent days, attention to overlapping interests that have donated to the Clinton family’s private interests while also allegedly seeking to influence State Department policy has reached a fever pitch amid leaks from a forthcoming book on the subject, “Clinton Cash,” by Peter Schweizer.

     

    The involvement of Goldman Sachs seems certain to amplify that scrutiny. The bank brings a reputation as uniquely well-connected in Washington given that many of its former executives have landed in the uppermost ranks of the Treasury Department…

     

    State Department records show that Bill Clinton’s $200,000 Goldman Sachs speech was delivered April 11, 2011, to “approximately 250 high level clients and investors” at a United Nations dining room in New York.

     

    In federal disclosure documents, the Duberstein Group is listed as lobbying the Clinton State Department on behalf of Goldman Sachs between July and September 2011. Goldman Sachs paid the Duberstein Group $100,000 during that time.

     

    Those records show that the firm was specifically lobbying the department on “proposed legislation” linked to a series of budget bills. One bill continued congressional authorization for the Export-Import Bank, a government-backed lender whose financing was critical for the prospects of a company in which Goldman owned a stake. 


    The original budget bill was introduced in July and did not include an extension of the Export-Import Bank, but the bank reauthorization was added in late September, during the same period Goldman was lobbying the State Department on the bill.

     

    In August 2011, the bank authorized a $75 million loan enabling a Chinese firm to purchase aircraft from Beechcraft (known before emerging from bankruptcy in February 2013 as Hawker Beechcraft), a company that was part-owned by Goldman. Beechcraft had lobbied the Clinton State Department on issues relating to foreign military sales in 2009 and 2010, according to its lobbying disclosures.

    Readers can draw their own conclusions here, and we don’t think it’s any surprise that Wall Street lobbyists wield considerable power in Washington, but the takeaway is that, as we’ve said on a number of occasions recently, you can expect to learn much, much more in the coming months about the degree to which the Clinton Foundation — and any other avenue through which foreign governments, Vampire squids, and a whole host of other state and non-state actors can channel money — is used as a means of buying influence with America’s maybe next President.

    And because we can’t help ourselves, here is how we imagine Hillary would respond to the above:



  • 2 Choices: Legislation Redestribuing Wealth Or Revolution Distributing Poverty

    Submitted by Simon Black via Sovereign Man blog,

    One of my favorite historians is a guy named Will Durant.

    Durant is unfortunately no longer with us, but he and his wife Ariel made history more interesting than all the soap operas my mother used to watch when I was a kid.

    I thought about something he wrote this morning when I glanced at the paper and saw a headline about the riots in Baltimore.

    In Durant’s seminal work on Louis the XIV, he wrote that “the men who can manage men manage the men who can manage only things, and the men who can manage money manage all.”

    Now if the quote is confusing, just focus on the last eight words.

    And Durant was right. There are people out there on one side, and they’re angry. They’re looting, they’re rioting.

    On the other side you have the state trying to stop them. Police and national guard units with their urban tactics and weapon systems.

    They are the ultimate expression of men managing men managing things.

    But is the men who manage money, who are managing all.

    In our system, we have an unelected central banking elite managing the money.

    Their policies have enriched a tiny percentage of wealthy individuals while utterly vanquishing untold millions.

    Those in the middle class find that they’re not able to keep up with the rising cost of living.

    Those little emergencies in life that we never plan on now completely wipe people out.

    And the dream of retirement has now become almost an immature fantasy rather than a realistic and achievable goal.

    People that are even lower on the socio-economic totem pole have it even worse.

    There’s a great social despair that falls when people feel resigned to their economic station with no hope of advancement.

    Hope is the most powerful of human emotions. More than fear.

    It’s the reason why many politicians get elected.

    When hope becomes crushed by the system, all you’re left with is fear and anger. That’s what we’re seeing in Baltimore.

    Everybody has a breaking point. And more and more people are starting to reach theirs.

    This isn’t just about racism.

    We’ve been force-fed a toxic monetary system that has destroyed any hope of upward mobility and long-term security.

    And it’s as if the collective immune system of the middle-class is simultaneously having a violent reaction to this financial poison.

    The objective data out there shows us that wealth inequality and income inequality are the highest they’ve been in modern times. And that’s really saying something.

    Now, inequality is entirely natural. There will always be those that are stronger and swifter, whether among humans or in the wild.

    Engineering economic despair as a matter of policy, however, is entirely unnatural. It’s immoral. Destructive. And as history shows, it’s dangerous.

    Plutarch tells us of Ancient Greece being on a knife’s edge in the 6th century B.C. until Solon came to power.

    Facing a peasant revolution, he devalued the currency, forgave debt, taxed the rich, established numerous social welfare programs, and even confiscated private property for redistribution.

    Durant himself tells us that anger and inequality become so great that nature has a way of correcting itself, either “by legislation redistributing wealth or by revolution distributing poverty”.

    This is happening all across the West, whether the anger in Baltimore or the neo-Nazi politicians being elected in Europe.

    The world’s not coming to an end, it’s changing. And sometimes that change can bring some difficult transition.

    We can’t stop it from happening. But we can take every sensible step to ensure that we are watching it from the sidelines.



  • How Will Greece Default? Let Us Count The Ways

    What was once anathema has become conventional wisdom, and lately the only question when discussing the fate of Greece is not if but when it will default. Actually, there is another question: how? Because as the following UBS flow chart shows, when it comes to the matter of picking an obligation on which to not make a payment, Greece has a truly 5 star menu selection.

    Ths is what UBS says:

    We do not believe that Greece will leave the euro in our base case scenario. However, were it to happen, we think it would probably do so via one of two main routes:

    (1) The fast route: A rapid deposit withdrawal from the banking system, if the Eurosystem refused to finance it through expansion of the ELA facility. The government would then need to refinance (and probably recapitalise) the banking system by creating a new currency to do so. However, this could probably be slowed with the imposition of capital controls limiting deposit withdrawal.

    (2) The slow(er) route: The government, running out of funds, could substitute IOUs for euros in some of its payments. Starting with payments to suppliers (including for pharmaceuticals, as in 2011), and then – in theory – progressing on to public sector salaries and pensions over time. As current Greek debt obligations are not valued at their face value by the bond market, nor would these notes be, meaning that their purchasing power would likely be lower than that of the euro. In this way, the parallel currency would already be devalued.

    The more of these notes that were issued, the greater the need would be for the banking system to clear payments in them. The need would also increase for businesses and citizens to use them to pay taxes. As this continued, it would be likely that more euros would leak out of the Greek banking system and the economy would rely on the new currency to a greater extent.

    Nominally, Greece could (in theory, and just conceivably) remain in the euro under these circumstances, but there would come a point in this process at which it had in a practical sense already left.

    Below we look at the likely impact of impairment of some of the Greek government’s obligations, were any to take place.

    IMF loans

    The IMF has a “timetable of remedial measures” for overdue payments which we reproduce in the annex at the bottom of this note. As the cross-default clause in the bond documentation only refers to impairment of other securities, we doubt that non-payment to the IMF would accelerate bond repayments.

    However, it is possible that non-payment to the IMF causes an acceleration of amounts due to the EFSF, which in turn could accelerate repayment of bonds if as would seem likely they were also left unpaid.

    According to the “Master Financial Assistance Facility Agreement” between the EFSF and Greece, the EFSF may “declare the aggregate principal amount of any or all Financial Assistance made and outstanding… immediately due and payable, together with accrued interest” if (among other clauses) “the Beneficiary Member State does not make timely repurchases from the IMF in relation to the IMF Arrangement of any outstanding purchases… or has overdue charges on outstanding purchases”.

    It is important to note that the EFSF also states that it “may, but is not obliged to, exercise its rights under this Clause”.

    Were the EFSF to exercise this right, it is likely that bond repayments would also be accelerated. The documentation for the PSI bonds (those issued in exchange in the 2012 restructuring) cites as an event of default if amounts due to the EFSF “are declared to be due and payable prior to their scheduled maturity”. However, it should be noted that this clause does not appear in the prospectuses for the 2017 and 2019 bonds issued by the Greek government last year.

    Government bonds and bills

    The normal consequences of a failure to make a payment on a sovereign bond or bill are relatively well-known: the bonds enter into default and in due course CDS is triggered after a decision of the ISDA determinations committee. Additionally, in the case of non-payment on the “New Greek Bonds” (PSI bonds), the EFSF could decide to accelerate amounts due to it as with non-payment to the IMF (see above).

    It is possible (though for a variety of reasons very unlikely) that an attempt is made to restructure privately-held bonds at some point in the near-medium term. However, no bonds have been issued to the private sector under Greek law since before the 2012 restructuring, meaning that any restructuring within the law would have to take place via investor votes as per collective action clauses. As the investor base is mostly composed of hedge funds and foreign asset managers, it is reasonable to infer that such a restructuring attempt would be unsuccessful.

    Bilateral and EFSF loans

    No interest or principal payments are due on the loans made in the first and second Greek aid programmes until 2020. As a result, and unless the Greek government were formally to repudiate its debt obligations under these programmes, impairment would seem unlikely.

    * * *

    So now that you know your options Greece, choose. And remember: your last check should always bounce, or at least be written in a currency that will soon no longer exist.



  • The First Rule Of Holes

    Submitted by Michael Lebowitz via 720Global.com,

    “Promoted by the intellectual glitterati of the central banks, our economic system has become addicted to all forms of debt, much of which has been unproductive”

     

    – The Humility of Rates and the Arrogance of Equities – 720 Global 4/20/2015

    The quote above from our recent article failed to acknowledge that it is not just central banks promoting misguided policies of exorbitant debt accumulation but also renowned economists from Wall Street and the world’s distinguished universities. Brad DeLong, a P.H.D. economist from Harvard, former Deputy Assistant Secretary for Economic Policy at the U.S. Department of Treasury, visiting scholar at the Federal Reserve Bank of San Francisco and University of California- Berkeley professor of economics casts a wide sphere of influence that includes the Federal Reserve and other central banks.

    At the IMF’s “Rethinking Macro” conference on April 15th and 16th 2015, DeLong made the following comments;

    “But how do we fix this risk-bearing capacity mobilization market failure? And isn’t the point of the market economy to make things that are valuable? And isn’t the debt of reserve-currency issuing sovereigns an extraordinarily valuable thing that is very cheap to make? So shouldn’t we be making more of it?”

    Click for link to Delong’s speech.

    What Mr. DeLong is arguing for is a marked increase of sovereign debt. In fairness, Delong prefaced his comment saying “I resist this logic.” However, in a startling contradiction, he goes on to promote that very logic, arguing such policy carries “relatively small danger”.

    In his book Economics in One Lesson, the late New York Times and Wall Street Journal columnist Henry Hazlitt writes,

    “Now all loans in the eyes of honest borrowers, must eventually be repaid. All credit is debt. Proposals for an increased volume of credit, therefore, are merely another name for proposals for an increased burden of debt. They would seem considerably less inviting if they were habitually referred to by the second name instead of by the first.”

    Intellectual rationalizations like Delong’s, which support ever expanding debt loads, highlight an uncomfortable paradox for our economy. On one hand, the lack of discipline accompanying calls for the expansion of debt is partially based upon experiential evidence from the recent financial crisis. As the economy witnessed in 2008, unless the parabolic expansion of debt continues, our economy will suffer mightily. At the same time, the on-going expansion of debt will eventually involuntarily stop precisely because the debt load will become unserviceable. Our economy will be faced with the inevitable Minsky Moment of a Ponzi finance system.

    720 Global disagrees with Delong.

    The seemingly universal agreement that the prerequisite for a healthy economy is the growth of debt at all costs highlights both a lack of discipline and an aversion to consider different ideas on the part of economic policy-makers.

     

     

    Leadership fails to grasp what truly constitutes a healthy economy and the longer-term consequences of their short term actions. A change in mindset does not demand a unique level of creative ingenuity, but it does require rejection of the destructive approach currently being employed.

     

    A much different approach to economic policy is ultimately required.

    The first rule of holes – when you are in one, stop digging.



  • If Gold Is Not Money… Why Do Clearinghouses and Former Fed Chairs Say It Is?

    Everything that has happened since 2007, every Central Bank move, ever major political decision regarding the big banks, every trend, have all been focused solely on one issue.

     

    That issue is collateral.

     

    What is collateral?

     

    Collateral is an underlying asset that is pledged when a party enters into a financial arrangement.  It is essentially a promise that should things go awry, you have some “thing” that is of value, which the other party can get access to in order to compensate them for their losses.

     

    You no doubt are familiar with this concept on a personal level: any time you take out a bank loan the bank wants something pledged as collateral should you fail to pay the money back. In the case of property, the property itself is usually the collateral posted on the mortgage. So if you fail to pay your mortage, the bank can seize the home and sell it to recoup the losses on the mortgage loan (at least in theory).

     

    In this sense, collateral is a kind of “insurance” for any financial transaction; it is a way that the parties involved mitigate the risk of their deal not working out. 

     

    As many of you know, our entire global financial system is based on leverage or borrowed money. Collateral is what allows this to work. Without collateral, there is no trust between financial institutions. Without trust there is no borrowed money. And without borrowed money, money does not enter the financial system.

     

    In this sense, collateral is the “reality” underlying the “imaginary” or “borrowed” component of leverage: the asset is real and can be used to back-stop a proposed deal/ trade that has yet to come to fruition.

     

    For finacial firms, at the top of the corporate food chain, sovereign bonds are the senior-most form of collateral.

     

    Modern financial theory dictates that sovereign bonds are the most “risk free” assets in the financial system (equity, municipal bond, corporate bonds, and the like are all below sovereign bonds in terms of risk profile). The reason for this is because it is far more likely for a company to go belly up than a country.

     

    Because of this, the entire Western financial system has sovereign bonds (US Treasuries, German Bunds, Japanese sovereign bonds, etc.) as the senior most asset pledged as collateral for hundreds of trillions of Dollars worth of trades.

     

    Indeed, the global derivatives market is roughly $700 trillion in size. That’s over TEN TIMES the world’s GDP. And sovereign bonds… including even bonds from bankrupt countries such as Spain… are one of, if not the primary collateral underlying all of these trades.

     

    How did the world get this way?

     

    Back in 2004, the large banks (think Goldman, JP Morgan, etc.) lobbied the SEC to allow them to increase their leverage levels. In very simple terms, the banks wanted to use the same collateral to backstop much larger trades. So whereas before a bank might have $1 worth of collateral for every $10 worth of trades, under the new regulation, banks would be able to have $1 worth of collateral for every $20, $30, even $50 worth of trades.

     

    Another component of the ruling was that the banks could abandon “mark to market” valuations for their securities. What this means is that the banks no longer had to value what they owned accurately, or based on what the “market” would pay for them.

     

    Instead, the banks could value everything they owned, including their massive derivatives portfolios worth tens of trillions of Dollars using in-house models… or basically make believe.

     

    This is getting a bit technical so let’s use a real world example. Imagine if you had $100,000 in savings in the bank. Then imagine that the bank let you use this $100,000 to buy millions and millions of dollars worth of real estate. Then imagine that the bank told you, “we aren’t going to have our analysts independently value your real estate, you can simply tell us what you think it’s worth.”

     

    In this set up, you would potentially buy $10 million worth of real estate or more… using just $100,000. But what if your newly purchased real estate drops in value to $5 million? No worries, you could simply tell the bank, “my analysis indicates that the properties are worth $20 million.”  The bank believes you so you continue to buy more properties.

     

    This sounds completely ludicrous, but that is precisely the environment that banks operated in post-2004. As a result, today US banks alone are sitting on over $200 TRILLION worth of derivates trades. These are trades that the banks can value at whatever valuation they want.

     

    Now, every large bank/ broker dealer knows that the other banks/dealers are overstating the value of their securities. As a result, these derivatives trades, like all financial instruments, require collateral to be pledged to insure that if the trades blow up, the other party has access to some asset to compensate it for the loss.

     

    As a result, the ultimate backstop for the $700+ trillion derivatives market today is sovereign bonds.

     

    When you realize this, the entire picture for the Central Banks’ actions over the last five years becomes clear: every move has been about accomplishing one of two things:

     

    1)   Giving the over-leveraged banks access to cash for immediate funding needs (QE 1, QE 2, QE3 and QE 4 in the US… and LTRO 1, LTRO 2 in the EU.)

    2)   Giving the banks a chance to swap out low grade collateral (Mortgage Backed Securities and other garbage debts) for cash that they could use to purchase higher grade collateral (QE 1’s MBS component, Operation Twist 2 which lets bank their long-term Treasuries and buy short-term Treasuries, QE 3, etc).

     

    All of this is a grand delusion meant to draw attention away from the fact that the financial system is on very, very thin ice due to the fact that there is very little high quality collateral backstopping the $700+ trillion derivatives market.

     

    Indeed, if you want further evidence that the financial elites are already preparing for a default from Spain and a collateral crunch, you should consider that the large clearing houses (ICE, CEM and LCH which oversee the trading of the $700+ trillion derivatives market) have ALL begun accepting Gold as collateral.

    Gold as Collateral Acceptable for Margin Cover Purposes

     

    From 28 August 2012 unallocated Gold (Loco London) will be accepted by LCH.Clearnet Limited (LCH.Clearnet) as collateral for margin cover purposes.

     

    This addition to acceptable margin collateral will be subject to the following criteria;

     

    Available for members clearing OTC precious metals forwards (LCH EnClear Precious Metals division) or precious metals contracts on the Hong Kong Mercantile Exchange. Acceptable to cover margin requirements for all markets cleared on both House and ‘Segregated’ omnibus Client accounts.

     

                http://www.lchclearnet.com/member_notices/circulars/2012-08-21.asp

     

                CME Clearing Europe to Accept Gold as Collateral on Demand

     

    CME Clearing Europe will accept physical gold as collateral, extending the list of assets it’s prepared to receive as regulators globally push more derivatives trading through clearing houses.

     

    CME Group Inc. (CME)’s European clearing house, based in London, appointed Deutsche Bank AG (DBK), HSBC Holdings Plc and JPMorgan Chase & Co. as gold depositaries. There will be a 15 percent charge on the market value of gold deposits and a limit of $200 million or 20 percent of the overall initial margin requirement per clearing member based on whichever is lower, Andrew Lamb, chief executive officer of CME Clearing Europe, said today.

     

    “We started with a narrow range of government securities and are now extending that,” Lamb said in an interview today. “We recognize there will be a massive demand for collateral as a result of the clearing mandate. This is part of our attempt to maintain the risk management standard and to offer greater flexibility to clearing members and end clients.”

     

    http://www.bloomberg.com/news/2012-08-17/cme-clearing-europe-to-accept-gold-as-collateral-on-demand-1-.html

     

    It is no coincidence that this began only when the possibility of a sovereign default from Greece or Spain began. The large clearinghouses see the writing on the wall (that defaults are coming accompanied by a mad scramble for collateral) and so are moving away from paper (sovereign bonds) into hard money to attempt to stay afloat.

     

    The most telling item is that clearinghouses now view Gold as money. Indeed, you can see this fact in other stories indicating that various entites are concerned about having their gold stored “inhouse” if the stuff ever hits the fan.

     

    Heck, even the Alan Greenspan, the man most responsible for the 2008 financial crisis, has admitted that “gold is money.” Of course, he couldn’t admit this until he’d left the Fed. But this is a man who knows all too well just how the financial system works.

     

    Take note, Gold is officially money for the most powerful entities in the world. They are not only accepting Gold as collateral but are openly trying to insure that they have their own Gold in safe custody.

     

    If you’ve yet to take action to prepare for the second round of the financial crisis, we offer a FREE investment report Financial Crisis "Round Two" Survival Guide that outlines easy, simple to follow strategies you can use to not only protect your portfolio from a market downturn, but actually produce profits. Gold is just a part of this.

     

    You can pick up a FREE copy at:

     

    http://www.phoenixcapitalmarketing.com/roundtwo.html

     

     

    Best Regards

     

    Graham Summers

     

    Phoenix Capital Research

     

     

     



  • Baltimore "Purge" Continues: National Guard Presence Builds As Curfew Arrives With "No Sign Of Crowd Thinning" – Live Feed

    Update: So much for the 10pm Curfew…

     

     

    *  *  *

    It's not over yet. On the heels of a choatic Monday night in Baltimore that saw rioters burn buildings, loot stores, and clash with SWAT following the funeral of Freddie Gray, tensions are running high once again, and as you can see from the images and video below, it appears as though the situation could well escalate into the evening.

    Live Feed #1:

    Live Feed #2

    Broadcast live streaming video on Ustream

     

    Broadcast live streaming video on Ustream

    And as the militarization of American cities continues, the humvees are on their way…



  • It's Official: Being Poor Makes People Unhappy

    Not long ago we noted that contrary to the old adage, money can indeed buy happiness. Given this, it stands to reason that the converse is likely true as well. That is, no money probably contributes to unhappiness.

    Sure enough, a study from Brookings finds that “poverty equals pain, worry, sadness, stress, and anger,” all things one might fairly equate with acute unhappiness. Here’s more:

    *  *  *

    The Cost of American Poverty

    Reported stress levels are higher on average in the U.S. than in Latin America. Importantly, the gap between the levels of the rich and poor is also much greater, with the U.S. poor reporting the highest levels of stress of all cohorts. Of course ‘stress’ is a complex phenomenon, however: “Good” stress is associated with the pursuit of goals, while “bad” stress is associated with struggling to cope. Bad stress, which is associated with an inability to plan ahead, lower life satisfaction levels, and worse health outcomes, is more common at the bottom of the distribution.

    Pain, worry, sadness, and anger (reported as experienced the day before or not) are also all significantly higher among low income cohorts than among wealthy ones, while reported satisfaction with life as a whole is significantly lower, according to our analysis of Gallup data:

    The cost and pain of poverty in the U.S. less about basic goods like water and electricity than nonmaterial factors: insecurity, stress, lack of opportunity and discrimination. Many of our policies, such as decent quality education, health insurance or savings incentives can help individuals to move out of poverty; they can also help to reduce the costs of being poor.

    *  *  *

    As a reminder, here is the proof that money buys happiness:

    This of course is bad news for America, where, as the St. Louis Fed has recently shown, the Middle Class is disappearing as Fed policy inflates the assets most likely to be concentrated in the hands of the wealthy and as wage growth remains elusive for 80% of the country’s workers even as the nation’s “supervisors” enjoy higher pay.



  • Was Your Apple Watch "First Day" Experience Comparable To This?

    As the de minimus supply of Apple Watches meets the stupendous demand from wrists everywhere, The Daily Mash offers one satirically-conjured man’s perspective of his first day wearing the device…

    Sales manager Tom Logan’s new Apple Watch has been unexpectedly ridiculed by his work colleagues.

     

    32-year-old Logan felt confident that his futuristic timepiece would attract admiring glances rather than unflattering Knight Rider comparisons.

     

     

    He said: “I had it all planned out – not saying anything about it, but then somebody just notices and goes ‘is that the new Apple Watch?’. I would respond simply with a wry Clooney-esque smile and they would mouth the word ‘awesome’.

     

    “What actually happened is somebody said ‘what the fuck’s that weird-looking thing?’

     

    “I explained that it was the brand new Apple Watch and they went ‘HAHAHA’ in a really deliberately hurtful way. The accounts assistant said it was the opposite of a fanny magnet and everyone cracked up.

     

    “Then everyone started pretending to talk into their watches, saying things like ‘come in KITT, I am a massive tosser, please help’.”

     

    By 10am Logan had removed the watch. He explained: “It wasn’t because people were being sarcastic, I just had a hot wrist, everyone gets a hot wrist sometimes.

     

    “People get jealous of early adopters.”

    But it gets worse… Do not drop your up-to-$17,000 watch… ever!

     

    Especially not from your wrist!



  • How To Play The "Common Knowledge Game" Effectively

    Submitted by Ben Hunt via Salient Partners' Epsilon Theory blog,

     

     

    The more I practice, the luckier I get.
    – Gary Player (b. 1935)

     

     

    Luck is the residue of design.
    Branch Rickey (1881 – 1965)

    I've found that you don't need to wear a necktie if you can hit.
    – Ted Williams (1918 – 2002)

     

     

     

     

     

     

     

     

     

     

    They say that nobody is perfect. Then they say that practice makes perfect. I wish they'd make up their minds.
    Wilt Chamberlain (1936 – 1999)

    It took me 17 years to get 3,000 hits in baseball. I did it in one afternoon on the golf course.
    Hank Aaron (b. 1934)

    Talent is cheaper than table salt. What separates the talented individual from the successful one is a lot of hard work.
    Stephen King (b. 1947)

    At one time I thought the most important thing was talent. I think now that – the young man or the young woman must possess or teach himself, train himself, in infinite patience, which is to try and to try and to try until it comes right. He must train himself in ruthless intolerance. That is, to throw away anything that is false no matter how much he might love that page or that paragraph. The most important thing is insight, that is … curiosity to wonder, to mull, and to muse why it is that man does what he does. And if you have that, then I don't think the talent makes much difference, whether you've got that or not.
    William Faulkner (1897 – 1962)

    Talent is its own expectation, Jim: you either live up to it or it waves a hankie, receding forever.
    David Foster Wallace, "Infinite Jest" (1996)

    What is most vile and despicable about money is that it even confers talent. And it will do so until the end of the world.
    Fyodor Dostoyevsky (1821 – 1881)

    Talent is a long patience, and originality an effort of will and intense observation.
    Gustave Flaubert (1821 – 1880)

    There is nothing more deceptive than an obvious fact.
    Arthur Conan Doyle, "The Boscombe Valley Mystery" (1891)

    Sheriff Metzger:

    Mrs. Fletcher! Can I see you for a minute? [pause] Do me a favor, please, and tell me what goes on in this town!

    Jessica Fletcher:

    I'm sorry, but …

    Sheriff Metzger: I've been here one year, and this is my fifth murder. What is this, the death capital of Maine? On a per capita basis this place makes the South Bronx look like Sunny Brook farms!

    Jessica Fletcher:

    But I assure you, Sheriff …

    Sheriff Metzger:

    I mean, is that why Tupper quit? He couldn't take it anymore? Somebody really should've warned me, Mrs. Fletcher. Now, perfect strangers coming to Cabot Cove to die? I mean look at this guy! You don't know him, I don't know him. He has no ID, we don't know the first thing about this guy.

    "Murder, She Wrote: Mirror, Mirror, on the Wall: Part 1" (1989)


    Dr. Yen Lo: His brain has not only been washed, as they say … It has been dry cleaned.
    "The Manchurian Candidate" (1962)

    Dickie Greenleaf:

    Everyone should have one talent. What's yours?

    Tom Ripley:

    Forging signatures, telling lies … impersonating practically anybody.

    Dickie Greenleaf:

    That's three. Nobody should have more than one talent.

    "The Talented Mr. Ripley" (1999)

    My singular talent is seeing patterns that others don’t. That’s not a boast, but a fact, and frankly it’s been as much a source of alienation in my life as a source of success. As my father was fond of saying, “You know, Ben, if you’re two steps ahead it’s like you’re one step behind.” I can’t explain how I see the patterns – they just emerge from the fog if I stare long enough. It’s always been that way for me, for as far back as I have memories, and whether I’m 5 years old or 50 years old I’m always left with the same realization: I only see the pattern when I start asking the right question, when I allow myself to be, as Faulkner said, “ruthlessly intolerant” of anything that proves false under patient and curious observation.

    For example, I think the wrong question for anyone watching “Murder, She Wrote” is: whodunit? The right question is: how does Jessica Fletcher get away with murder this time? Once you recognize that it's a Bayesian certainty that the woman is a serial killer, that she controls the narrative of Cabot Cove (both figuratively as a crime novelist and literally as a crime investigator) and thus the behavior of everyone around her, you will discover a new appreciation for both the subliminal drivers of the show’s popularity as well as the acting genius of Angela Lansbury. Seriously, go back and watch the original “Manchurian Candidate” and focus on Lansbury. She’s a revelation.

    Or take the Masters tournament earlier this month. I was lucky enough to attend Wednesday’s practice round, and I was sitting in a shady spot on the 10th green watching the players come by and try their luck at 15 foot putts. At first, like the other spectators, my question was: how are they such good putters? This was “the obvious fact,” to quote Sherlock Holmes, and I watched for any clues that I could adopt for my laughable game – a forward tilt of the wrist, a stance adjustment … anything, really. We all watched carefully and we all dutifully oohed and aahed when the ball occasionally dropped in the cup. But suddenly, a new pattern emerged from the fog, and I realized that we were all asking the wrong question. Instead, I started to ask myself, why are they such poor putters?

    Now I realize that I just alienated at least half of the reading audience, but bear with me. I’m not saying that professional golfers are poor putters compared to you or me. Of course not. They are miracle workers compared to you or me. But it’s a stationary ball with a green topography that never changes. The speed of the greens is measured multiple times a day to the nth degree. These players have practiced putting for thousands of hours. They have superior eyesight, amazing muscular self-awareness, and precision equipment. And yet … after charting about 50 putts in the 12 – 15 foot range, the pattern of failure was unmistakable. These professional golfers were aiming at a Point A, but they would have sunk exactly as many putts if the cup had actually been located 6 inches to the right. Or 6 inches to the left. Or 12 inches back. Or 12 inches forward. The fact that a putt actually went in the hole from a distance of 12 – 15 feet was essentially a random event within a 15 x 30 inch oval, with distressingly fat probabilistic tails outside that oval. This from the finest golf players in the world. I saw Ben Crenshaw, a historically great putter who was playing in something like his 44th Masters and probably knows the 10th green better than any other living person, miss a long putt by 6 feet.

    But here’s the thing. When a player took a second putt from the same location, or even close to the same location, his accuracy increased by well more than an order of magnitude. Suddenly the ball had eyes. So I went to the practice green, where I saw Jordan Spieth putt ball after ball from exactly the same location about 10 feet from the hole. He made 50 in a row before I got tired of watching. Now granted, Spieth is a wizard with the putter, a lot like Tiger was at the same age. See it; make it. But then I watched one of the no-name amateurs for a while, a guy who had no chance of making the cut, and it was exactly the same thing – putt after putt after putt rolled in from the same spot at a considerable distance.

    The best golfers in the world are surprisingly poor aimers. Surprising to me, anyway. They are pretty miserable predictors of where a de novo putt is going to end up, even though we all believe that they are wonderful at this activity. But they are phenomenally successful and adaptive learners, even though we rarely focus on this activity.

    I think the same pattern exists in other areas of the sports world. Take basketball free throws. I’d be willing to make a substantial bet that whatever a professional’s overall free throw shooting percentage might be – whether it’s DeAndre Jordan at 50% or Steph Curry at 90% – their shooting percentage on the second of two free throws is better at a statistically significant level than their shooting percentage on the first of two free throws. I have no idea where to access this data, but with the ubiquitous measurement of every sports function and sub-function I’m certain it must exist. Someone give Nate Silver or Zach Lowe a call! 

    I think the same pattern exists in the investing world, too.

    We are remarkably poor aimers and predictors of market outcomes, even though we collectively spend astronomical sums of money and time engaged in this activity, and even though we collectively ooh and aah over the professional who occasionally sinks one of these long putts. True story … in 2008 the long/short equity hedge fund that I co-managed was up nicely, and we were deluged by investors and allocators asking the wrong question: how did you have such a great year? At no point did anyone ask the right question: given your fundamental views and avowed process, why weren’t you up twice as much? Most investors, just like the spectators at Augusta, are asking the wrong questions … questions that conflate performance with talent, and questions that underestimate the role of process and learning in translating talent into performance.

    I’m not saying that idiosyncratic talent doesn’t exist or that it isn’t connected to performance or that it can’t be identified. What I’m saying is that it’s as rare as Jordan Spieth. What I’m saying is that the talents that are most actionable in the investment world are not found in the predictions and the aiming of a single person. They are found within the learned and practiced behaviors that exist across a broad group of investment professionals. Jordan Spieth is a very talented putter and he works very hard at his craft. But there is no individual golf pro, not even Jordan Spieth, who I would trust with my life’s savings to make a single 15 foot putt. On the other hand, I would absolutely put my life’s savings on the line if I could invest in the process by which all golf pros practice their putting. I am far more interested in identifying the learned behaviors of a mass of investment professionals than I am in identifying a specific investment professional who might or might not be able to sink his next long putt.

    What’s the biggest learned behavior of professionals in the investing world right now? Simple: QE works. Not for the real economy– I don’t know any professional investor who believes that the trillions of dollars in Fed balance sheet expansion has done very much at all for the real economy – but for the inflation of financial asset prices. This is what I’ve called the Narrative of Central Bank Omnipotence, the overwhelmingly powerful common knowledge that central bank policy determines market outcomes. The primary manifestation of this learned behavior today is to go long Europe financial assets … stocks, bonds, whatever. QE worked for US markets – that’s the lesson – and everyone who learned that lesson is applying it now in Europe. China, too. Here’s a great summary of this common knowledge position from a market Missionary, Deutsche Bank’s Chief International Economist Torsten Slok:
     

    In my view, every asset allocation team in the world should have this chart hanging on their wall. Based on forward OIS curves the market expects the Fed to hike in March 2016 and the ECB to hike in December 2019. A year ago, the expectation was that the Fed and the ECB would both hike in November 2016. This discrepancy has significant relative value implications for FX, equities and rates. EURUSD should continue to go down and European equities will look attractive for many more years. Another consequence of this chart is that with ECB rates at zero for another five years, many European housing markets should continue to do well. The investment implication is clear: Expect that the benefits we have seen of QE in the US over the past 3 to 5 years will be playing out in Europe over the coming 3 to 5 years. Torsten Slok, Deutsche Bank Chief International Economist, April 9, 2015

    Just as a recap on how to play the Common Knowledge Game effectively, the goal here is to read Torsten’s note for its description and creation of common knowledge (information that everyone thinks that everyone has heard), not to evaluate it for Truth with a capital T. That’s the mistake many investors make when they read something like this … they start thinking about whether or not they personally agree with the Fed hike expectations embodied in forward OIS curves, or whether or not they personally agree with Torsten’s macroeconomic predictions on things like the European housing market, or whether or not they personally agree with the social value of the Fed or ECB policies that are impacting markets. In the Common Knowledge Game, fundamentals – whether they are of the stock-picking sort or the macroeconomic sort – don’t matter a whit, and your personal view of those fundamentals matters even less. The only thing that matters is whether or not the QE-works lesson has been absorbed by the learning process of investment professionals, and that’s driven by the lesson’s transformation into common knowledge by Missionaries like Torsten.

    From that perspective I don’t think there’s any doubt that what Torsten is saying is true, not with a capital T but with a little t, and that the long-Europe-because-of-ECB-QE trade has got a lot of behavioral life left to it. 

    One last point … I know that I’m a broken record in the fervency and persistence of my belief that Big Data is going to rock the foundations of the investment world, but this topic of talent, learning, and asking the right question is just too on-point for me to let it slide. I started this note with the alienating observation that I don’t believe that professional golfers are particularly good putters, certainly not in their ability to size up and sink a de novo putt from 15 feet or more. On the other hand, I am pretty certain that with a few months and a few million dollars, it’s possible to build a mobile robotic system with the appropriate sensors and mechanical tolerances that would sink pretty much every de novo putt it took from a distance of 15 feet. Or a robotic system that would hit 99% of its free throws. Machines are far more accurate aimers and more precise estimators of the environment than humans, and that’s a useful observation whether we’re talking about sports or investing.

    But that’s not my point about Big Data. My point about Big Data is that such systems are ALSO better than humans at learning. They are ALSO better than humans at pattern recognition. I can remember when this wasn’t the case. As recently as 20 years ago you could read artificial intelligence textbooks that praised the computer’s ability to process information quickly with various backhanded compliments … yes, isn’t it amazing how wonderfully a computer can sort through a list, but of course only a human brain can perform tasks like facial recognition … yes, isn’t it amazing how many facts a computer can store in its memory chips, but of course only a human brain can truly learn those facts by placing them within the proper context. We have entire social systems – like sports and markets – that are designed to reward humans who are superior learners and pattern recognizers. Why in the world would we believe that clever and observant humans will continue to maintain their primacy in these fields when challenged by non-human intelligences that are, quite literally, god-like in their analytical talents and ruthless intolerance of what is false? At least in sports it’s illegal to have non-human participants … honestly, I can see a day where investing is reduced to sport, where we maintain human-only markets as part of a competitive entertainment system rather than as a fundamental economic endeavor. In some respects I think we’re already there. 

    I’ll close with a teaser. There’s still a path for humans to maintain an important role, even if it’s not a uniformly dominant role, within markets that we share with non-human intelligences. Humans are more likely than non-human intelligences to ask the right question within social systems, like markets, that are dominated by strategic interactions (i.e., games). That’s not because non-human intelligences are somehow thinking in an inferior fashion or aren’t asking questions at all. No, it’s because Big Data systems are giant Induction Machines, designed to ask ALL of the questions. The distinction between asking the right question and asking all of the questions is always interesting and occasionally vital, depending on the circumstances. More on this to come in future notes, and hopefully in a future investment strategy …

     


  • Goldman Asks "Should Stocks Fear Rate Hikes?" (Spoiler Alert: Yes)

    While day after day we are bombarded with musings from talking-heads proclaiming that no matter what happens in the future, buying stocks and buying moar stocks is the way to go, the data has a different story to tell. As Goldman Sachs notes, at a forward PE of 17.5x, the equity market looks more expensive today than it was during any of the last four cycles. Furthermore, as Goldman puts it, we find it more challenging to rationalize the current high PE multiples.

    Via Goldman Sachs,

    The PE ratio for the S&P 500 based on a 4-quarter trailing sum of earnings currently stands at 18.1x. This compares to values of 13.6x, 16.1x, 29.0x and 19.1x at the start of the last four hiking cycles, respectively. When the PE ratio is based on an estimated 4-quarter forward sum – which is the valuation metric preferred by our equity strategists – equities look even more expensive. At a forward PE of 17.5x, the equity market looks more expensive today than it was during any of the last four cycles except for hikes than began during the tech bubble of the late 1990s.

    In contrast to Treasury term premia, for which it is easy to tell “fundamental” stories that can explain why the term premia are low (even if we declined to attempt this empirically), we find it more challenging to rationalize high PE multiples. A fundamentally-based argument would need to argue that relative to past rate-hike cycles, some combination of the following three factors would presumably need to hold true: that expected growth is higher, equity risk premia are lower, and/or risk-free discount rates are lower.

    Of these three possible arguments for high PEs, the latter is the easiest to make, because long-run risk-free interest rates are, in fact, extraordinarily low. Indeed, it is common to hear that equities are the “least-bad” investment option in such a low-yield world, which is just the colloquial version of the valuation math. That said, if term premia are low due to low and falling inflation risk, and if equities hedge inflation risk better than fixed-coupon bonds, then the drop in term premia doesn’t necessarily imply higher equity PE multiples. The links between bond premia and equity premia are subtle; one needn’t imply the other.

    The remaining ways to justify a high PE are to argue either that long-run potential growth rates for real GDP or that equity risk premia are higher today than in past rate-hike cycles. While growth expectations are difficult to judge, it’s our view that the poor growth performance of the post-crisis period has done more to foster pessimism than optimism; “secular stagnation” is the theme du jour.

    *  *  *

    Translation: Stocks are anything but cheap and are anything but prepared for a rate hike.



  • Cyber-Attacks Are The New Cold War

    Via Scotiabank's Guy Haselmann,

    The Invisible Enemy

    Earlier this month President Obama declared foreign cyber-threats a “national emergency”.   During the State of the Union address, he said that “if the US government does not improve cyber defenses, we leave our nation and our economy vulnerable”.  This past weekend the TV program 60 Minutes ran a special on cyber security, particularly pertaining to the importance of our nation’s satellite systems.

    In the April issue of CIO Magazine, the President and CEO of IDG Communications wrote an article about cybersecurity, stating “significant data breaches at Anthem, Sony, Home Depot, eBay, JPMorgan Chase, Target and many more have caused headline-grabbing business upheavals that worry customers, affect profit margins, and derail corporate careers”.   It seems there are now daily news articles about sinister cyber-activity.

    Cyber-threats or crimes can be orchestrated in various ways.   Targets can be aimed at critical infrastructure, manufacturing, power grids, or water supplies.   They could be aimed at disrupting the availability of websites and networks, or at stealing trade secrets and financial information.  Others could be driven by espionage, vandalism, terrorism, sabotage, or any form of criminality.   Activities of the US and British governments have focused on surveillance and hacking of telecommunications.

    It is difficult to fight cyber-activity, because the enemy is often invisible and their home address typically unclear.  Building defenses are challenging while continuous ‘patchwork’ is a deficient solution.  Threats morph and change quickly.  For corporations many threats are internal and could come from rogue employees or from senior managers with weak passwords who have access to sensitive files.  Some companies are now even looking into having retaliatory capabilities. 

    Warfare today (and in the future) is (and will be) fought differently.  In the 1950’s with the creation of more destructive bombs and weaponry, the idea was ‘Mutually Assured Destruction’ (MAD).   The movie War Games helped us learn that there are no winners.  The warfare ideology today is ‘Multilateral Unconstrained Disruption’ (MUD).  This unrestrictive warfare is meant to disrupt societal functioning; to ‘poison’ information to elevate distrust of all computer information.

    Cyber-activity is the new ‘cold war’.   Here are some random facts.

    • 95% of all computers are non-governmental.
    • It is estimated that 40% of all computers are run by pirated copies, and 17% run no antivirus protection.   
    • There are over 6 million known unique Malware viruses.
    • According to a Mandiant report, attackers had free range in a breached system for a median of 205 days in 2014 and 69% of breaches where learned from an outside entity.

    The scariest fact I learned in reading up on this topic is that 100% of all microprocessors and chips are produced overseas.   In other words, it is hard to be certain what is really on them.  Like the Stuxnet virus, computers can have a ‘zero-day’ where they are taught to do the wrong thing.

    KCS Group, one of the world’s leading strategic intelligence and risk companies, reports a significant increase in cyber-attacks from Iran directed against Saudi Arabia and the US.  The combination of Saudi policies (Yemen), the general rise in Middle East tensions, and the Stuxnet attack on Iran nuclear facilities are all likely motivations.  The virus that infected Saudi state oil company Aramco’s IT system in 2012, for example, erased data on three-quarters of their PC’s, and replaced emails and documents with an image of the US flag in flames.

    There is a positive correlation between cyber-attacks and the rise of geopolitical tensions.  Pricing these heightened risks into markets however is impossible.  ‘Event risk’ always exists, but handicapping it appropriately is a futile exercise.  Markets participants do not try, because of improvements in data mining and due to the speed of news when there is something concrete to react to.

    • In a similar manner, markets are not reacting to the threats or rumors of a Greece default or a Fed rate hike, because those threats have been delayed time and time again.  Markets have learned to react only to concrete news.

    At this point, you might be wondering why I bothered writing this note and how can these factors can help in terms of financial risk management.  Well, I believe good traders, portfolio managers, and business managers should try to think through every conceivable contingency.   In doing so ahead of time, managers should have a better handle on how to proceed should one of these events occur.  They will be two steps ahead.

    It might be helpful to analyze what happened to the stock prices of the companies mentioned above when they were hacked.  How deeply were the firms impacted?  How long did the impacts last?  Some may have ultimately been left stronger as weaknesses were exposed and then stronger processes implemented.   Oil traders should know if oil prices were affected by the Aramco attack?

    Game plans are not just applicable to portfolio exposures, but directly to individuals personally.   Corporate managers should have a plan B, contingency plans, and a disaster recovery site.  I heard Jamie Dimon of JPM say at a conference that his firm is doubling the amount they spend on computer security in 2015 to $1.2 billion.

    On June 5 in New York City, I am attending the Information Security Summit to hear more from industry experts in this area.  Simply waiting for an event to react to may be too costly.  I hope to obtain some suggestions for being proactive.   The experts may even have some good suggestions for preventative medicine.  At a minimum, I recommend that you encourage your firm’s Chief Security Officer to attend.  Welcome to 2015.

    “Never trust a computer you can’t throw out a window.” – Steve Wozniak



  • WalMart's Mysterious Store Closure Devastates California City

    Earlier this month, we brought you the short history of worker protests at the Pico Rivera, CA Wal-Mart location. The store has been at the forefront of pickets, walkouts, and sit-ins for some time, with workers staging demonstrations every year since 2012, the latest of which came in November of last year and resulted in the arrest of two dozen workers. The employees — whose grievances generally revolve around wages, working conditions, and retaliation — have been supported by The United Food and Commercial Workers International Union or, UFCW, which last year prevailed in a Canadian Supreme Court case against the retailer stemming from a decade-old incident in Quebec when Wal-Mart closed a location after workers voted for UFCW representation. 

    Given the store’s history, one can hardly be blamed for wondering if Wal-Mart’s recent decision to close the location for “plumbing issues” was in fact an excuse to shutter a “problem” store. The plight of the Pico Rivera location is of course part of a larger story wherein Wal-Mart — in what we have suggested is an attempt to cut costs — has closed multiple stores nationwide (laying off some 2,200 employees in the process) to fix what the company says are “clogs and leaks.” The absence of plumbing permits, the company’s express desire to rein in costs on the back of an across-the-board wage hike, and the history of the Pico Rivera location led us to suggest that factors unrelated to pipes and drains may be at play. 

    Sure enough, just days after our Pico Rivera story ran, the UFCW filed a complaint with the National Labor Relations board alleging that the California store was closed to punish employees for worker activism.

    In the latest from Pico Rivera, the city now says the company’s decision to close the location could have a decisively deleterious effect on tax revenue, 10% of which came from the local Wal-Mart. Here’s more via LA Times:

    “It’s a severe blow to our community, certainly, with the local economy, the homes and families, in terms of those people that were counting on those paychecks,” mayor Gregory Salcido said.

     

    With 530 workers, the Wal-Mart store is the city’s second-biggest employer, topped only by the El Rancho Unified School District. Pico Rivera’s nearly 64,000 residents have a median household income of almost $57,000, about average for the county.

     

    Salcido estimated that Pico Rivera receives about $1.4 million a year in tax revenue from the retailer, potentially 10% of the city’s sales tax revenue. City officials, he said, are trying to figure out how to deal with the lost revenue if the store remains closed for at least six months, as Wal-Mart Stores Inc. has announced…

     

    The Wal-Mart was built on the grounds of two prior Pico Rivera employment giants…

    The city then helped develop a portion of the site into the Pico Rivera Towne Center, a 630,000-square-foot open-air shopping center.

     

    When Wal-Mart arrived, the low prices were an immediate hit in the largely Latino town. It was open 24 hours; the aisles were often jammed.

     

    The store was renovated in 2007 to become a Wal-Mart Supercenter that sold groceries and underwent further remodeling in 2014 (ZH: hold this thought)

     

    Jenny Mills, a nine-year Pico Rivera Wal-Mart employee, lives in her car with her husband and their cat in the parking lot of her former store. The couple lost their apartment in Monterey Park about a year ago when the rent was raised and they couldn’t make payments.

     

    She’s now part of the National Labor Relations Board filing and said she hopes to get her job back.

     

    The Pico Rivera Towne Center has become an “economic engine” for the city in terms of retail, Salcido said. Other tenants in the center include Lowe’s, Marshalls, PetSmart and Panera Bread.

     

    But the loss of the Wal-Mart store, even temporarily, Salcido said, “is significant, no doubt about it.”

    Meanwhile, the LA Times also notes that the Pico Rivera location underwent a half-million dollar refurbishment last year that included some of the very same plumbing issues (see embedded document below) cited in the closure of the store this year, which begs two rather obvious questions: 1) why weren’t the problems fixed during the refurbishment and 2) why was WalMart able to complete last year’s plumbing work without closing the doors? 

    For reference, here is the complaint sent to the Labor Relations Board:

    Dear Regional Director:

     

    Enclosed is a Charge we are filing on behalf of OUR Walmart.

     

    This charge arises out of the well-publicized decision by Walmart to suddenly close five stores on the pretext of a “plumbing”problem in each of the stores. Walmart’s action was intended to target the Pico Rivera store, which has been the focal point of activity by Associates for better working conditions.

     

    This case warrants immediate relief under Section1Q(j). Approximately 2200 Walmart Associates around the country have been thrown out of their jobs. Although Walmart has offered WARN Act payments, the employees are being asked to sign severance agreements in order to receive additional severance pay.

     

    Thus, Walmart is attempting to weed out many of the activists in the Pico Rivera store as well as the other stores who are subject to this sudden and wholly unexplained “closure” because of unexplained “plumbing problems.”

     

    We are prepared to present a number of workers immediately to the Region who worked in the Pico Rivera store. They will describe the activity which has gone on in that store and elsewhere since at least 2012.

     

    The Region is already familiar with much of this because of Case 21-CA-10541, as well as other consolidated cases which are pending in various Regions or before various Administrative Law Judges.

     

    Please assign this immediately to a Board Agent who can begin taking statements in the next day or so.

     

    We will be presenting additional evidence in support of this.

     

    We expect that Walmart will come up with some pretextual argument that there was a “plumbing problem.” No one in the City Administration of Pico Rivera  was aware of any plumbing problem. No permits have been pulled or sought. This, in fact, is true of all five of the stores as far as we can tell. 

     

    And here is the permit for last year’s refurbishments:

    Pico Rivera Permitfinal



  • Dear CFTC: Here Is Today's Illegal "Spoofing" In Gold Futures

    Dear CFTC,

    It’s us again and as promised, we’re here to lend you a helping hand in your very serious quest to eliminate all vesitges of illegal manipulation from our beloved markets. Today, we bring you 3 examples of spoofing in gold futures which, you’ll note, aren’t difficult to spot if one is willing to expend the tiniest effort. 

    Without further ado, here (courtesy of Nanex) are several examples in the June 2015 Comex Gold Futures this morning. All times are Eastern Daylight. In each of these cases, no trades (or a tiny few) executed against the large “spoof” order. You can see how prices were influenced by the sudden appearance (and disappearance) of these large, outsized orders.

    1. June 2015 Comex Gold

    Note how large buy and sell orders push prices up and down.

    2. Another set of instances appear about 50 minutes after the first set (shown in chart 1).

    3. Another set of spoofing instances appear about an hour after the second set (shown in chart 2).

    You’re welcome CFTC — it’s the least we can do.

    Best wishes,

    Zero Hedge

    Reminder: We won’t stop this until you are forced to address the glaring hypocrisy and utter incompetence of everyone involved in the regulation of market microstructure.



  • Crude Slides On Bigger-Than-Expected API Inventory Build (Small Cushing Draw)

    Against expectations of a 3.3mm bbl build, API reported a 4.2mm bbl build – the 16th weekly build in a row (and record streak). Cushing saw a small draw of 162k bbls.

     

    WTI Crude fell back below $57…

     

    Charts: Bloomberg



  • Why Markets Are Manic – The Fed Is Addicted To The "Easy Button"

    Submitted by David Stockman via Contra Corner blog,

    Later this week another Fed meeting will pass with the policy rate still pinned to the zero bound. The month of May will make the 77th consecutive month of ZIRP—–an outcome that would have been utterly unimaginable even a decade ago; and most especially not with the unemployment rate at 5.5% and after 23 quarters had elapsed since the official end of the recession.

    There never was an Armageddon-like crisis in 2008 that justified all this; it all happened because two emotionally unstable and misguided high officials—-Ben Bernanke and Hank Paulson—-panicked Washington into the utterly false fear that Great Depression 2.0 was at hand.

    I debunked this urban legend by chapter and verse in The Great Deformation, but suffice it to say here that not withstanding all the crony capitalist larceny that this financial terrorism enabled, it is impossible with the stock market at 2100—-50% above its pre-crisis level—that there remains any justification for maintaining these “extraordinary policies” seven years later.

    In fact, the Fed’s cowardly dithering for yet another meeting this week has precious little to do with the so-called Great Financial Crisis—-the ostensible reason why we ended up with perpetual free money subsidies for financial market speculators. Instead, it is a product of a policy ideology and insular culture that has been building at the Fed and most other major central banks for more than two decades.

    Central bankers now have their big fat thumbs perpetually on the Easy Button because they are addicted to it. In the case of the Fed, it has been in a rate cutting or rate holding mode during 80% of the time since 1990. Stated differently, during 240 of the last 304 months, the Fed has been riding the Easy Button.

    The Fed's Addiction To The 'Easy Button': Rates Falling Or Flat 80% Of The Time Since 1990 - Click to enlarge

    The Fed’s Addiction To The ‘Easy Button': Rates Falling Or Flat 80% Of The Time Since 1990 – Click to enlarge

    This is not just a case of an excess of zeal or too much of a good thing. In fact, the above chart constitutes just one more piece of evidence that world’s financial system is being destroyed by a few hundred central bankers and a couple of brigades of PhD’s and policy apparatchiks which populate their bounteous payrolls. Over the last two decades, this infinitesimal slice of mankind has engaged in a campaign of mission creep that dwarfs all prior aggrandizements of state power.

    The result is that free market price discovery has been extinguished. The central nervous system of capitalism—-the markets for money, debt and other capital securities—-now goose-steps to the pegged prices and monumental liquidity infusions of the central bankers.

    The truly diabolical aspect of this development is that central banks have seized an enormous aggregation of power that is utterly unaccountable. As a result, an increasingly threadbare ideology of self-justification goes unchallenged.

    Moreover, this exemption from accountability insulates the actions and theories of central bankers in a manner that is different than all other institutions of the modern world. Namely, central banks are flat-out exempt from the discipline of both the market and the democratic process. Indeed, they are the most unaccountable concentrations of power since the era of absolute monarchy.

    It is not hard to understand why this astonishing coup d’état has been so easily achieved. It suits the politicians just fine because the resulting massive monetization of the public debt has enabled nearly pain-free fiscal profligacy. The ancient threat of rising interest rates “crowding out” private investment has been eliminated long ago, thereby making “kick the can” the fiscal policy of choice.

    Likewise, the central bank coup has generated its own praetorian guard in the financial system. That is, a giant class of speculators now exists in the form of hedge funds, traders, money managers and investment bankers which would not have a fraction of their current girth in an honest, at-risk financial system.

    Needless to say, this giant speculative class is showered with immense windfalls in the casino system that inexorably supplants traditional financial markets under a regime of modern Keynesian monetary policy. The speculative class, in turn, returns the favor in the form of political support for the so-called “independence” of the Fed and via embracing the self-justifying ideology of the central bank usurpers.

    At its most protean level, this central bank ideology holds that capitalism is chronically prone to accidents and under-performance. Indeed, it is claimed to exhibit  a suicidal tendency for recession and depression absent the wise ministrations and counter-cyclical management skills of either the high priests or the monetary politburo——depending upon whether you prefer religious or secular metaphors—-who run the central banks.

    This core central bankers’ proposition is absolute hogwash. Every one of the 10 business cycle downturns since 1950 have been caused by Washington, not the inherent tendencies of market capitalism.

    Two were caused by abrupt but temporary economic cooling spells consequent to the end of an economic mobilization for war, as in the downturns after the Korean and Vietnam wars. The other eight cycles were caused by the Fed itself after it enabled a runaway increase in household and business credit that resulted in too much inventory accumulation and phony aggregate demand based on unsound credit extensions.

    Later this week we will present chapter and verse with respect to these ten so-called business cycles, but the essence of the mater is this: When the war demobilizations were finished after the Korean and Vietnam downturns and after the Fed had brought to a halt the excessive credit growth rates it had first enabled during the other cycles, the nation’s capitalist economy recovered on its own.

    In none of the cycles since 1950—including the so-called “deep” recessions of 1975, 1982 and 2008-2009—- was the US economy sliding into an economic black-hole that was self-feeding and irreversible save for the external intervention of the central bank.

    In fact, all of these downturns were quite shallow—-once you set aside the inventory liquidation component, which is inherently self-limiting. To wit, when businesses over-invest in inventory owing to a central bank induced credit boom, they do not commit suicide in the process of adjusting their levels of raw, intermediate and finished goods. Instead, the heaviest portion of the inventory liquidation occurs quickly during the course of two or three quarters and then its done.

    So the real measure of business cycle downturn is not the inventory fattened oscillations of the GDP number, but the change in real final sales.  In not one case since 1950—-not even the so-called Great Recession—has real final sales declined by more than 3%, and, on average, it dropped barely 1% over the ten post-1950 cycles.

    There is no reason to believe that the US economy would not have “recovered” on its own after these shallow downturns in real final sales—-downturns which were caused by central bank induced credit booms in the first place. So all along, then, the Fed has been fighting a bogeyman.

    More importantly, it has been claiming powers of economic recuperation that do not exist. In fact, the Fed’s historical “counter-cycle” stimulus measures amounted to little more  than a cheap parlor trick. That is, slashing interest rates to induce a temporary spurt of credit growth that does not  actually generate sustainable gains in real wealth, but merely steals spending from the future by hocking balance sheets and imposing preemptive claims on future incomes.

    In any event, by the time of the 2008 crisis the Fed’s cheap parlor trick was over and done because American households had reached a condition of “peak debt”. The proper measure of household leverage is the ratio of debt to wage and salary income because sooner or later debt will demand a normalize interest rate that reflects an economic return; and because the Keynesian focus on “disposable personal income” (DPI) as the denominator fails to recognize that 25% of the latter consists of transfer payments including Medicare and Medicaid, and that borrowing by transfer recipients doesn’t amount to a hill of beans in the scheme of things anyway. The preponderant share of the household debt of America is owed by wage and salary workers.

    Needless to say, the true peak of household leverage was reached in 2008 after nearly tripling from the pre-1970 level. It has now begun to slowly retrace, but still has a long way to go. Other than the special case of the $1.3 trillion of student loans, which are really education stipends with a lifetime lien, and junk debt financed auto loans, there has been no expansion of household leverage during this cycle.

    Household Leverage Ratio - Click to enlarge

    Household Leverage Ratio – Click to enlarge

    As a matter of fundamental economics, therefore, when households don’t ratchet up their leverage ratios against income there is no Fed “stimulus”. The massive amounts of new cash that the Fed pumps into the financial system—-and the only thing it is really capable of doing is minting new cash out of thin air by depositing self-manufactured credit into the bank accounts of dealers selling securities to its open markets desk—-never leaves the canyons of Wall Street.

    Instead, it ends-up bidding up the price of financial assets–that is, inflating financial bubbles. And this is exceedingly perverse because sooner or later financial bubbles burst when they reach utterly irrational levels and the last sucker is fleeced in the casino. Bursting bubbles, in turn, cause a sharp retrenchment of household and business confidence, resulting in lower spending and intense liquidation of excess inventories and labor accumulated by bullish businesses during the financial bubbles apex.

    Needless to say, the central bankers and their Wall Street shills then say I told you so——claiming that the economy is now caught in a circular swirl toward the drain. It can only be “saved” if our indispensable central bankers have the “courage” to crank up the printing presses for another cycle of rinse and repeat.

    By now this is getting tiresome as we tip-toe near the edge of the third central bank generated financial bust of this century. But there is absolutely no way of stopping the crash landing just ahead.

    The fast money dealers and traders in the inner circle of the casino have now learned to hedge their speculations with downside insurance (i.e. S&P “puts” and like instruments) that is inherently dirt cheap owing to ZIRP and the Fed’s safety nets under the market. Accordingly, they will get out of harms’ way quickly when the break finally arrives, collect their hedging insurance gains and wait for a new round of bottom fishing 40-60% below today’s levels for the market averages and at even lower entry points for the momo names, ETF’s and sectors.

    Once upon a time, the proprietors of the central bank might have taken preemptive action in the face of the absolutely lunatic speculation now evident in the stock and bond markets. Back in 1958, for example, Fed Chairman William McChesney Martin, actually began to raise interest rates and increase stock market margin requirements within six months of the recession’s end, arguing that its was the Fed’s job to lean against the wind, dampen speculation and take away the punch bowl before the gamblers got out of hand.

    Needless to say, Martin grew up in the Roaring Twenties, experienced the 1929 crash first hand and ran the New York Stock Exchange during the dismal era of the 1930s when they were still trying to pick up the pieces. And on that score, even Alan Greenspan, as late as December 1996, worried in public about “irrational exuberance” and actually did make a tepid effort to raise rates and cool speculation in March 1997.

    By contrast, the current Fed will complete another meeting this week without moving interest rates one iota off the zero bound. That will mark 77 straight months of ZIRP.  It will occur at a time when the S&P 500 is priced in the nose bleed section of history at 21X reported earnings; when the Russell 2000 is at 70X reported profits; and when margin debt is at an all-time high in absolute terms and near the 1929 peaks relative to GDP.

    Margin-Debt-SP500-Events-042715

    You might think they would know better by now, but that fails to appreciate the true evil of the central banks’ sweeping usurpation of power. Namely, that they are so caught up in their own self-justifying group think that they are utterly incapable of seeing the massive financial derangement all about them.

    A few days ago, the Boston Fed published a note that starkly reflects the intellectual enfeeblement that exists inside the politburo. The note suggested that maybe QE is destined to become a permanent tool of policy because in a world of low-inflation ZIRP is not enough.

    But the argument presented as to why the world needs to be afflicted permanently by QE was astonishing. Written by a PhD economist from Johns Hopkins, Michelle Barnes, it argued the following:

    During the onset of a very severe financial and economic crisis in 2008, the federal funds rate reached the zero lower bound (ZLB). With this primary monetary policy tool therefore rendered ineffective, in November 2008 the Federal Reserve started to use its balance sheet as an alternative policy tool when it began the large-scale asset purchases.

    C’mon!

    How do you think the Fed stair-stepped the funds rate down from 8.0% to zero between 1990 and 2008? Well, it wasn’t purely by means of Alan Greenspan’s mumbling or Ben Bernanke’s scary stories to Congressmen in the aftermath of the Lehman meltdown. No, it was accomplished in the same way central banks have always manipulated and pegged interest rates at non-market clearing levels. Namely, by buying securities and expanding their balance sheets.

    During the 18 years between 1990 and the eve of the financial crisis, the Fed expanded its balance sheet from $240 billion to $800 billion or by 7% annually. Obviously, that rate is far greater than the sustainable growth capacity of the US economy.

    So there is no difference in the Fed’s fundamental policy tool—monetization of the public debt and other existing assets—- before and after QE. It is only a question of magnitude and the degree to which the resulting injections of fiat credit into the financial system falsify financial prices.

    Needless to say, the sweeping deformations that have now accumulated in the financial systems of the world owing to this kind of heavy-handed central bank market manipulation have reached an acute stage. Every day there is more evidence that we are approaching a blow-off top—-evidenced once again last night by the Shanghai stock market’s explosive rise on the news that the government is looking for newer and even more ingenious ways to keep it $28 trillion credit bubble expanding.
    ^SSEA Chart

    ^SSEA data by YCharts

    But the table below is surely the smoking gun. It shows that central bank financial repression has totally deformed the US corporate sector as represented by the S&P 500. The rewards for speculation—-including speculation in the C-suite via rampant financial engineering—-have now become so powerful and insidious that big business is consuming its cash flow and balance sheet borrowing capacity in a mindless pursuit of M&A deals and cash disgorgement to the casino in the form of share buybacks and dividends.

    During 2014 virtually 100% of S&P 500s reported profits of $1 trillion were disgorged as shareholder distributions to meet the clamoring demand from the casino and the sheer greed of top executives determined to pocket maximum possible stock option winnings before the system blows.

    Even Goldman has warned that this form of slow financial liquidation will not have a happy ending. As shown in one of its tables below, the S&P 500 companies have devoted $4.2 trillion to financial engineering—-M&A, stock buybacks and dividends—-during the last four years (including estimates for 2015) or almost 60% of their cash dispositions during that period.

    That amounts to 160 percent of their gross CapEx during this four year period and the emphasis is on “gross”. The fact is, the S&P 500 companies’ CapEx barely equals current year depreciation. So in truth, the 500 largest US based companies are spending virtually nothing on plant and equipment expansion versus more than $4 trillion on financial engineering.

    Likewise, total spending for the S&P companies on research and development over this same four year period is just $930 billion or only 22% of the outlays for financial engineering. In all, it is hard to imagine a set of figures which embodies a more perverse campaign of eating the seed corn of the US business economy.

    In short, there is a reason that honest price discovery is essential to capitalist prosperity. It is the miraculous mechanism by which capital is raised from savers and investors and efficiently allocated among producers, entrepreneurs and genuine market-rate borrowers.

    What the central banks have generated, instead, is a casino that is blindly impelled to churn the secondary capital markets and inflate the price of existing assets to higher and higher levels—-until they ultimately roll-over under their own weight. That is, the central banks have fostered an unstable and destructive system of speculative finance that everywhere and always is the enemy of genuine capitalist prosperity.

    The Easy Button addiction of our central bankers is thus not just another large public policy problem. It is the very economic and social scourge of our times.



  • Gold & Silver Surge As Schizophrenic Stocks Slump-And-Pump

    As the world hopes for "no comment" from The Fed tomorrow, anxiety in markets remains very evident… This about sums it up!

     

    Stocks continued yesterday's weakness overnight… ramped obdeiently into the open in NY… then plunged on bad data and Iran Ship Seizure headlines before v-shape-recovering thanks to someone's generosity in selling massive amounts of protection (VIX) just as you would ahead of any FOMC??!!

     

    Stocks clung to modest gains somehow despite weakness in Biotechs and AAPL… but Nasdaq unhderperformed…

     

    Some may have missed the fact that once again the broken market was used to slow the descent of markets… Nasdaq feeds were down for 7 minutes and that enabled some rescue among the VWAP-mongers…

     

    All thanks to the Kathmandu Pattern in VIX…

     

    Because nothing says Sell Vol to 2015 lows like an FOMC meeting…

     

    and AAPL ended at its lows… $140 Billion is just not enough – just ask Icahn

     

    Biotech bounced but could not hold it…

     

    TWTR "accidentally" released earnings before the bell… and turmoil ensued

     

    Oops…

     

    Treasury yields leaked higher all day long – as they somewhat ubiquitously do ahead of FOMC meetings… (and despite a strong 5Y Auction) 30Y Yields blew 9bps higher – 3rd biggest move this year

     

    The USDollar slid lower from the early start ofthe US session with huge AUD strength…

     

    Dollar weakness helped extend gains in commodities but gold and silver were the big movers… Gold's biggest 2-day move in 3 months, Silver's biggest 2-day rise in 5 months

     

    Crude's reaction to the Iran ship seizure news is evident here but disappeared quickly as The Pentagon confirmed it was a non-US Ship…

     

    Gold and Silver have quite a couple of days… that will never be allowed aftwer the FOMC surely…

     

    Charts: Bloomberg



  • The Beginning Of The End Of Social Media? The Case Of Twitter

    One look at the charts below and one should start wondering just how viable is social media any more as a business model.

     

    Which brings us to to what we reported a week ago were the prophetic words of Snapchat CEO Evan Spiegel, who just may have missed his IPO window…

    When  the market for tech stocks cools, Facebook market cap will plummet, access to capital for unproven businesses will become inaccessible, and ad spend on user acquisition will rapidly decrease – compounding problems for Facebook and driving stock even lower. Instagram may be only saving grace if they are able to ramp advertising product fast enough. Total internet advertising spend cannot justify outsized valuations of social media products that derive revenue from advertising. Feed-based advertising units will plummet in value (in the case of Twitter, advertising spend may not move beyond experimental dollars) similar to earlier devaluing of Internet display advertising.

    Facebook… or any other “social media”stock.

    Source



  • ActionAlertPLUS!

    Posted 24 hours ago at TheStreet.com. No comment necessary.

    Insight from TheStreet’s Research Team:

    Twitter is a core holding of Jim Cramer’s Action Alerts PLUS Charitable Trust Portfolio. During the most recent weekly roundup, this is what Jim Cramer, Portfolio Manager & Jack Mohr, Director of Research – Action Alerts PLUS had to say about the stock:

    Twitter (TWTR:NYSE; $50.82; 1,400 shares; 2.69%; Sector: Technology): The shares traded higher this week following strong performance and underlying trends seen in both Facebook’s (FB) and Google’s (GOOGL) results. We believe Twitter is partially out of the sentiment doghouse heading into first-quarter 2015 results next week, but is still largely under-owned relative to most large-cap Internet stocks.

     

    Twitter has likely the greatest array of company-specific catalysts of any company in its sphere this year, including Periscope, core monthly active user (MAU) acceleration from the Google partnership, and new core features like embedded video. Industry channel checks point to solid uptake of Twitter’s new targeting features and formats in the first quarter, but the greatest lever the company can pull, in our view, is the pace of on-boarding of new advertiser demand. For some perspective, we estimate that Google generates half of its revenue from smaller advertisers who spend less than $250k per year, which make up 95% of the 8 million-plus AdWords accounts, so building out the “tail” should allow Twitter to grow well-above average over the next several years. With a global ad load between 1% to 2% and 85% from mobile, we think TWTR has more revenue runway than any other company in the Internet space. Our target is $55.

         – Jim Cramer and Jack Mohr, ‘Weekly Roundup’ originally published 4/24/2015 on ActionAlertsPLUS.com.



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What Makes Brussels More Equal Than Everyone Else?

Dutch daily Algemeen Dagblad ran a little article recently that we’re surprised no other news organization picked up. It concerned a proposal in the European Parliament in which theparliamentarians got to vote on raising their own paycheck (always a good idea). The best thing about the story is that not everyone voted in favor.

Most did though. It much amused me to see that apparently it was Angela Merkel’s party, the German Christian Democrats, which was behind the proposal. Initially, they had even wanted double what they actually got. Here’s some numbers and details – and please forgive me for not being a math wizard -.

A Member of the European Parliament (MEP), according to the article, receives the following for their valiant and entirely selfless efforts at public service:

  • Salary: €8000+
  • Expenses: €4300
  • A per diem allowance of €300 for every day a meeting is attended.

Per year that adds up to: €147.600 + €30,000 if 100 meetings are attended. Let’s say €180,000.

On top of that, the Parliament pays into MEPs pension funds, but we’ll leave that alone for now.

There are 751 MEPs, so total ‘salary’ costs are €135,180,000. But that’s just the start.

And we’re not yet adding translation costs, which apparently can add up to over €120,000 per day (!), or perhaps some €30-40 million per year.

Nor are we taking into account the estimated at least €200 million per year it takes to have the entire Parliament (MEPs, assistants, translators, employees, in total about 4000 people) move between Brussels and Strasbourg every month, an oddity that springs from a drawn-out power poker play between Germany and France. Do note: the constant move costs way more than all 751 MEP’s base salary + expenses.

No, the proposal discussed, concerns the added expense accounts MEPs receive for their assistants. At present, the amount involved is over €21,000 per month, and according to the people who receive it – and vote on raising it -, that’s not enough.

Typically, says the Dutch paper, an MEP has 3 assistants, all of whom get paid €2500 a month. They’re also in a special low Brussels income tax bracket. This means each MEP receives €252.000 per year in ‘assistant costs’, and spends €90,000 in salary costs, leaving €162,000 for food and lodging. Since there are 751 MEPs, the total adds up to €15,771,000 per month or €189,252,000 per year.

And they want more.

The original proposal called for another €3000 per month. Because some MEPs protested against this, it was reduced to €1500. Or €18,000 per year per MEP, times 751, a cool €13,518,000. Just in extra costs they voted in all by themselves.

There are many many stories about people living the high life once they get voted into the Brussels/Strasbourg traveling circus. The majority have lucrative jobs at home. They stay in swanky hotels. They collect per diems for meetings they don’t actually attend. They lay the basis for lucrative corporate careers after they exit the Parliament. It’s democracy in theory but not in practice.

Brussels/Strasbourg is no stranger to corruption, or whatever word you would want to to use to describe what goes on. Still, there are lots of MEPs who are completely on the up and up, and many who even pay back a lot of their ‘compensation’ into either the Parliament itself or into their own – national – part coffers, because they say the payments are exorbitant. But they don’t speak up. At least not outside of the confines of the Parliament itself.

But these are also – all of them put together – the people who uphold the EU policies versus Greece, where there are really many children who are hungry, and seniors who can’t get proper health care. Faced with a situation like that, one would think a proper parliament of a proper union wouldn’t dare raise its own expenses – which have to be paid by member countries’ taxpayers – before and until all children in the union are properly fed, and all grandmas properly taken care off by qualified medical personnel.

One would think. These are also the people responsible for the EU support that allows the Kiev army’s mass killings of its own people. And for the continuation of the anti-Russia and anti-Putin stance that’s become so popular across the western world. They may not be the daily executives of the circus, but they still are the responsible at the end of the day.

They are also the people who voted to cut down the budget for the Mediterranean refugee patrol missions, money saved that, if you want to take a cynical enough view, was freed to raise their own stipends. As thousands drown.

And so again we would like to raise that question: why would anyone, any country, want to have these people take their decisions for them? What would make you think when you live in Greece that these traveling circus clowns would be better at protecting and defending your interests than your own people, who live where you live, who see what you see on a daily basis?

It’s fine, and it’s perhaps even logical, at first glance, for Greeks and Italians to want to remain part of the euro. But when you look closer, you can’t avoid the notion that by being part of the euro, you give up the autonomy you also crave. And that the price you pay for being a part of the euro, and of the EU, makes you a serf to greater and richer interests that care about you about as much as they care about flies on their walls.

This one story about what MEPs vote themselves is but one example. Why not send us an example of where and how you feel Brussels protects your interests better than your own governments? We’re really curious to know. Because we don’t see it.