- Introducing The London Kleptocracy Bus Tour
Submitted by Mike Krieger via Liberty Blitzkrieg blog,
The City is a semi-offshore state, a bit like the UK’s crown dependencies and overseas territories, tax havens legitimised by the Privy Council. Britain’s financial secrecy undermines the tax base while providing a conduit into the legal economy for gangsters, kleptocrats and drug barons.
Even the more orthodox financial institutions deploy a succession of scandalous practices: pension mis-selling, endowment mortgage fraud, the payment protection insurance con, Libor rigging. A former minister in the last government, Lord Green, ran HSBC while it engaged in money laundering for drug gangs, systematic tax evasion and the provision of services to Saudi and Bangladeshi banks linked to the financing of terrorists. Sometimes the UK looks to me like an ever so civilised mafia state.
– From last year’s post: Guardian Op-Ed – The City of London Has Turned Britain Into a “Civilized Mafia State”
This is too good not to cover.
Via Yahoo News:
A black bus winds its way through some of London’s most expensive neighbourhoods for a sightseeing tour with a difference — a guided visit around luxury houses bought by shady international tycoons and officials.
The “Kleptocracy Tour” was set up by anti-corruption campaigner Roman Borisovich, who aims to expose dirty money fuelling the high-end London property market and the teams of British “enablers” who make it happen.
“The idea behind the tour is to attract public attention to the fact of massive money laundering through properties in London,” Borisovich told AFP on the tour this week, ahead of an international anti-corruption summit being hosted by Prime Minister David Cameron.
More than 36,000 properties in London are owned through offshore firms, which own a total £122 billion (154 billion euros, $176 billion) worth of property across England and Wales.
Buying properties through offshore companies can be a way of hiding the true owners and avoiding taxes.
More than £180 million worth of property in Britain was investigated as suspected proceeds of corruption between 2004 and 2014, according to Transparency International, which says this figure is just the “tip of the iceberg”.
Luke Harding, a journalist with The Guardian newspaper who helped analyse the Panama Papers, said the shock for him was the realisation of the extent of the enabling role played by British intermediaries.
“The UK has become Monaco with fog,” he said, after addressing the bus tour.
Liberty Blitzkrieg readers will be familiar with this theme as I’ve been referring to London real estate as the world’s criminal oligarch money laundering capital of the world for quite some time.
Here are a few previously published articles on the topic:
London Bubble Trouble – Visas Issued to Wealthy Foreigners Plunge 84%
The Luxury Housing Bubble Pops – Overseas Investors Struggle to Sell Overpriced Mansions
Guardian Op-Ed – The City of London Has Turned Britain Into a “Civilized Mafia State”
- The Washington Post Accuses Stingy Americans Of Ruining Obama's Recovery
Every year it’s the same: some legacy mainstream media mouthpiece muses on how great Obama’s recovery would be… if only it wasn’t for stingy US consumers refusing to spend like the drunken sailors of days gone by. Last June, it was the WSJ’s Jon Hilsenrath who actually wrote a letter to American consumers, confused by their unwillingness to spend and explicitly accused them of being “stingy” even as the “Federal Reserve was counting” on them to spend, spend, spend. For those who have forgotten this absolute pearl, here it is again:
Dear American Consumer,
This is The Wall Street Journal. We’re writing to ask if something is bothering you.
The sun shined in April and you didn’t spend much money. The Commerce Department here in Washington says your spending didn’t increase at all adjusted for inflation last month compared to March. You appear to have mostly stayed home and watched television in December, January and February as well. We thought you would be out of your winter doldrums by now, but we don’t see much evidence that this is the case.
You have been saving more too. You socked away 5.6% of your income in April after taxes, even more than in March. This saving is not like you. What’s up?
We know you experienced a terrible shock when Lehman Brothers collapsed in 2008 and your employer responded by firing you. We know stock prices collapsed and that was shocking too. We also know you shouldn’t have taken out that large second mortgage during the housing boom to fix up your kitchen with granite countertops. You’ve been working very hard to pay off this debt and we admire your fortitude. But these shocks seem like a long time ago to us in a newsroom. Is that still what’s holding you back?
Do you know the American economy is counting on you? We can’t count on the rest of the world to spend money on our stuff. The rest of the world is in an even worse mood than you are. You should feel lucky you’re not a Greek consumer. And China, well they’re truly struggling there just to reach the very modest goal of 7% growth.
The Federal Reserve is counting on you too. Fed officials want to start raising the cost of your borrowing because they worry they’ve been giving you a free ride for too long with zero interest rates. We listen to Fed officials all of the time here at The Wall Street Journal, and they just can’t figure you out.
Please let us know the problem. You can reach us at any of the emails below.
Sincerely,
The Wall Street Journal’s Central Bank Team
-By Jon Hilsenrath
In retrospect, we can’t help but chuckle at the part about “Fed officials want to start raising the cost of your borrowing because they worry they’ve been giving you a free ride for too long with zero interest rates.”
That said, one year later, it’s the turn of that other administration mouthpiece (owned no less by the man who has converted US consumerism into a business empire, Amazon’s Jeff Bezos) the Washington Post, to dwell on precisely the same topic: why are Americans so paralyzed from fears over a recession that ended so long ago, that instead of spending, American consumers are rushing to save in the process preventing Obama’s wonderful recovery from blooming.
While it does not go so far as Hilsenrath in explicitly accusing consumers of being “stingy”, it does so indirectly when the author of what appears to be a hit piece aimed at the US middle class, or all those who no longer believe in maxing out their credit card, Robert Samuelson says that the real drag in the US economy is “us“, by which he means all those Americans refusing to go out and buy “stuff” (well, maybe not Samuelson: we are confident Samuelson is well compensated by Jeff Bezos to inspire even more AMZN bottom-line boosting consumerism). As a result, “American consumers aren’t what they used to be …. and that helps explain the plodding economic recovery.“
You see, dear American consumers, it’s all your fault. Not soaring, record rents, not spiking health insurance premiums that are eating away at your last disposable dollar, not that the so many of the “jobs created” in recent years have been part-time or minimum wage, not the fact that under ZIRP you can’t generate any interest income and are forced to save even more for retirement, not that as a result of central bank policy pension and retirement funds are unveiling cuts to retiree benefits, not that real disposable incomes have gone nowhere in the past decade, not even that a third of US households can no longer even afford the basics of food, rent and transportation…
It’s your unwillingness to spend; it is – in the words of the WaPo author – “the surge in saving that is the real drag on the economy.“
Really. Here is the full article:
American consumers aren’t what they used to be — and that helps explain the plodding economic recovery. It gets no respect despite creating 14 million jobs and lasting almost seven years. The great gripe is that economic growth has been held to about 2 percent a year, well below historical standards. This sluggishness reflects a profound psychological transformation of American shoppers, who have dampened their consumption spending, affecting about two-thirds of the economy. To be blunt: We have sobered up.
This, as much as any campaign proposal, may shape our economic future. There’s an Old Consumer and a New Consumer, divided by the Great Recession. The Old Consumer borrowed eagerly and spent freely. The New Consumer saves soberly and spends prudently. Of course, there are millions of exceptions to these generalizations. Before the recession, not everyone was a credit addict; now, not everyone is a disciplined saver. Still, vast changes in beliefs and habits have occurred.
A Gallup poll shows just how vast. In 2001, Gallup began asking: “Are you the type of person who more enjoys spending money or who more enjoys saving money?” Early responses were almost evenly split; in 2006, 50 percent preferred saving and 45 percent favored spending. After the 2008-2009 financial crisis, the gap widened spectacularly. In 2016, 65 percent said saving and only 33 percent spending.
What’s happening is the opposite of the credit boom that caused the financial crisis. Then, Americans skimped on saving and binged on borrowing. This stimulated the economy. Now, the reverse is happening. Americans are repaying old debt, avoiding new debt and saving more. Although consumer spending has hardly collapsed, it provides less stimulus than before. (A conspicuous exception: light-vehicle sales, which hit a record 17.4 million in 2015).
Consider the personal savings rate: the difference between Americans’ after-tax income and their spending. If a household has income of $50,000 and spends $45,000, its savings rate is 10 percent. Here are actual figures. From 1990 to 2005, the savings rate dropped from 7.8 percent to 2.6 percent. Since then, the savings rate has risen; it was 5.1 percent in 2015.
Federal Reserve figures on debt tell a similar story. From 1999 to 2007, household borrowing (mainly home mortgages and credit card debt) increased nearly 10 percent annually, far faster than income gains. People mistakenly believed that they could safely borrow against the inflated values of their homes and stocks. Now, borrowing is subdued. In 2015, household debt of $14 trillion was unchanged from 2007. While many consumers borrowed, others repaid or defaulted.
The surge in saving is the real drag on the economy. It has many causes. “People got a cruel lesson about [the dangers] of debt,” says economist Matthew Shapiro of the University of Michigan. Households also save more to replace the losses suffered on homes and stocks. But much saving is precautionary: Having once assumed that a financial crisis of the 2008-2009 variety could never happen, people now save to protect themselves against the unknown. Research by economist Mark Zandi of Moody’s Analytics finds higher saving at all income levels.
In theory, it’s easy to replace lost consumer demand. In practice, it’s not so easy. Businesses could build more factories and shopping malls. But with weaker consumer spending, do we need them? More exports would help, but economies abroad are weak.
Government policies are also frustrated. The Fed’s low interest rates don’t work if people don’t want to borrow. Ditto for tax cuts. During the Great Recession, Congress enacted several temporary tax cuts to boost consumer spending. The effect was modest, as studies by Shapiro and his collaborators found. Take the case of the two-percentage-point suspension of the Social Security payroll tax in 2011 and 2012. Two-thirds of the tax cut went to saving and repaying debt — not spending.
The horror…
There is more but we’ll cut off here, wondering why the WaPo article did not have a disclaimer that it is owned by the world’s largest retailer by market capitalization, and will instead add to the scorn.
Yes, dear broke American consumers which once made up the world’s most vibrant middle class: please stop being such a nuisance and source of confusion to nice Op-Ed columnists at the WaPo, the WSJ and, of course, the Fed and their $4.5 trillion in direct injections into the offshore bank accounts of America’s wealthiest 1%, and instead go ahead and splurge all your savings on trinkets, gadgets and gizmos you don’t need.
Only that way will Obama’s recovery be truly complete.
- American Horror Story: The Shameful Truth About The Government's Secret Experiments
Submitted by John Whitehead via The Rutherford Institute,
“Of all tyrannies a tyranny sincerely exercised for the good of its victims may be the most oppressive. It may be better to live under robber barons than under omnipotent moral busybodies. The robber baron’s cruelty may sometimes sleep, his cupidity may at some point be satiated; but those who torment us for our own good will torment us without end for they do so with the approval of their own conscience.”—C.S. Lewis
Fool me once, shame on you.
“You” in this case is the government that keeps violating the sacred trust of its citizenry.
Fool me twice, shame on me.
“Me” in this case is the collective “we the people” who should have learned early on that a government that repeatedly lies, breaks the laws, overreaches its authority and abuses its power can’t be trusted.
Fool me over and over and over again, shame on both of us.
Shame on every politician, bureaucrat and technician who is a shill for the U.S. government’s abuses and lies, and shame on every gullible American who keeps buying into the government’s propaganda, believing that it has our best interests at heart.
Unfortunately, as I point out in my book Battlefield America: The War on the American People, the government has seldom had our best interests at heart.
The government didn’t have our best interests at heart when it propelled us into endless oil-fueled wars and military occupations in the Middle East that wreaked havoc on our economy, stretched thin our military resources and subjected us to horrific blowback.
There is no way the government had our best interests at heart when it passed laws subjecting us to all manner of invasive searches and surveillance, censoring our speech and stifling our expression, rendering us anti-government extremists for daring to disagree with its dictates, locking us up for criticizing government policies on social media, encouraging Americans to spy and snitch on their fellow citizens, and allowing government agents to grope, strip, search, taser, shoot and kill us.
Certainly the government did not have our best interests at heart when it turned America into a battlefield, transforming law enforcement agencies into extensions of the military, conducting military drills on domestic soil, distributing “free” military equipment and weaponry to local police, and desensitizing Americans to the menace of the police state with active shooter drills, color-coded terror alerts, and randomly conducted security checkpoints at “soft” targets such as shopping malls and sports arenas.
It would be a reach to suggest that the government had our best interests at heart when it locked down the schools, installing metal detectors and surveillance cameras, adopting zero tolerance policies that punish childish behavior as harshly as criminal actions, and teaching our young people that they have no rights, that being force-fed facts is education rather than indoctrination, that they are not to question governmental authority, that they must meekly accept a life of censorship, round-the-clock surveillance, roadside blood draws, SWAT team raids and other indignities.
One would also be hard-pressed to suggest that the American government had our best interests at heart when it conducted secret experiments on an unsuspecting populace—citizens and noncitizens alike—making healthy people sick by spraying them with chemicals, injecting them with infectious diseases and exposing them to airborne toxins. The government reasoned that it was legitimate to experiment on people who did not have full rights in society such as prisoners, mental patients, and poor blacks.
The mindset driving these programs has, appropriately, been likened to that of Nazi doctors experimenting on Jews. As the Holocaust Museum recounts, Nazi physicians “conducted painful and often deadly experiments on thousands of concentration camp prisoners without their consent.” These unethical experiments ran the gamut from freezing experiments using prisoners to find an effective treatment for hypothermia, tests to determine the maximum altitude for parachuting out of a plane, injecting prisoners with malaria, typhus, tuberculosis, typhoid fever, yellow fever, and infectious hepatitis, exposing prisoners to phosgene and mustard gas, and mass sterilization experiments.
It’s easy to denounce the full-frontal horrors carried out by the scientific and medical community within a despotic regime such as Nazi Germany, but what do you do with a government that claims to be a champion of human rights all the while allowing its agents to engage in the foulest, bases and most despicable acts of torture, abuse and human experimentation?
In Alabama, for example, 600 black men with syphilis were allowed to suffer without proper medical treatment in order to study the natural progression of untreated syphilis. In California, older prisoners had testicles from livestock and from recently executed convicts implanted in them to test their virility. In Connecticut, mental patients were injected with hepatitis.
In Maryland, sleeping prisoners had a pandemic flu virus sprayed up their noses. In Georgia, two dozen “volunteering” prison inmates had gonorrhea bacteria pumped directly into their urinary tracts through the penis. In Michigan, male patients at an insane asylum were exposed to the flu after first being injected with an experimental flu vaccine. In Minnesota, 11 public service employee “volunteers” were injected with malaria, then starved for five days.
In New York, dying patients had cancer cells introduced into their systems. In Ohio, over 100 inmates were injected with live cancer cells. Also in New York, prisoners at a reformatory prison were also split into two groups to determine how a deadly stomach virus was spread: the first group was made to swallow an unfiltered stool suspension, while the second group merely breathed in germs sprayed into the air. And in Staten Island, children with mental retardation were given hepatitis orally and by injection to see if they could then be cured.
As the Associated Press reports, “The late 1940s and 1950s saw huge growth in the U.S. pharmaceutical and health care industries, accompanied by a boom in prisoner experiments funded by both the government and corporations. By the 1960s, at least half the states allowed prisoners to be used as medical guinea pigs … because they were cheaper than chimpanzees.”
Moreover, “Some of these studies, mostly from the 1940s to the '60s, apparently were never covered by news media. Others were reported at the time, but the focus was on the promise of enduring new cures, while glossing over how test subjects were treated.”
Media blackouts, propaganda, spin. Sound familiar? How many government incursions into our freedoms have been blacked out, buried under “entertainment” news headlines, or spun in such a way as to suggest that anyone voicing a word of caution is paranoid or conspiratorial?
Unfortunately, these incidents are just the tip of the iceberg when it comes to the atrocities the government has inflicted on an unsuspecting populace in the name of secret experimentation.
For instance, there was the U.S. military’s secret race-based testing of mustard gas on more than 60,000 enlisted men. As NPR reports, “All of the World War II experiments with mustard gas were done in secret and weren't recorded on the subjects' official military records. Most do not have proof of what they went through. They received no follow-up health care or monitoring of any kind. And they were sworn to secrecy about the tests under threat of dishonorable discharge and military prison time, leaving some unable to receive adequate medical treatment for their injuries, because they couldn't tell doctors what happened to them.”
And then there was the CIA’s MKULTRA program in which hundreds of unsuspecting American civilians and military personnel were dosed with LSD, some having the hallucinogenic drug slipped into their drinks at the beach, in city bars, at restaurants. As Time reports, “before the documentation and other facts of the program were made public, those who talked of it were frequently dismissed as being psychotic.”
Now one might argue that this is all ancient history and that the government today is different from the government of yesteryear. But has the U.S. government really changed?
Has the government become any more humane, any more respectful of the rights of the citizenry? Has it become any more transparent or willing to abide by the rule of law? Has it become any more truthful about its activities? Has it become any more cognizant of its appointed role as a guardian of our rights?
Or has the government simply hunkered down and hidden its nefarious acts and dastardly experiments under layers of secrecy, legalism and obfuscations? Has it not become wilier, more slippery, more difficult to pin down? Having mastered the Orwellian art of Doublespeak and followed the Huxleyan blueprint for distraction and diversion, are we not dealing with a government that is simply craftier and more conniving that it used to be?
Consider this: after revelations about the government’s experiments spanning the 20th century spawned outrage, the government began looking for human guinea pigs in other countries, where “clinical trials could be done more cheaply and with fewer rules.”
In Guatemala, prisoners and patients at a mental hospital were infected with syphilis, “apparently to test whether penicillin could prevent some sexually transmitted disease.” More recently, U.S.-funded doctors “failed to give the AIDS drug AZT to all the HIV-infected pregnant women in a study in Uganda even though it would have protected their newborns.” Meanwhile, in Nigeria, children with meningitis were used to test an antibiotic named Trovan. Eleven children died and many others were left disabled.
The more things change, the more they stay the same.
Case in point: it has just been announced that scientists working for the Department of Homeland Security will begin releasing various gases and particles on crowded subway platforms as part of an experiment aimed at testing bioterror airflow in New York subways.
The government insists that these gases being released into the subways by the DHS are nontoxic and do not pose a health risk. It’s in our best interests, they say, to understand how quickly a chemical or biological terrorist attack might spread. And look how cool the technology is—say the government cheerleaders—that scientists can use something called DNATrax to track the movement of microscopic substances in air and food. (Imagine the kinds of surveillance that could be carried out by the government using trackable airborne microscopic substances you breathe in or ingest…)
Mind you, this is the same government agency that has been likened to a “wasteful, growing, fear-mongering beast” by the Washington Post.
This is the same government that in 1949 sprayed bacteria into the Pentagon’s air handling system, then the world’s largest office building. In 1950, special ops forces sprayed bacteria from Navy ships off the coast of Norfolk and San Francisco, in the latter case exposing all of the city’s 800,000 residents. In 1953, government operatives staged “mock” anthrax attacks on St. Louis, Minneapolis, and Winnipeg using generators placed on top of cars. Local governments were reportedly told that “‘invisible smokescreen[s]’ were being deployed to mask the city on enemy radar.” Later experiments covered territory as wide-ranging as Ohio to Texas and Michigan to Kansas. In 1965, the government’s experiments in bioterror took aim at Washington’s National Airport, followed by a 1966 experiment in which army scientists exposed a million subway NYC passengers to airborne bacteria that causes food poisoning.
And this is the same government that has taken every bit of technology sold to us as being in our best interests—GPS devices, surveillance, nonlethal weapons, etc.—and used it against us, to track, control and trap us.
So when so-called conspiracy theorists—including the late rock musician Prince and civil rights activist Dick Gregory—suggest that those streaks crisscrossing the sky are chemtrails laced with behavior-modifying chemicals, you might want to tamp down on that kneejerk reaction that chalks them up as nuts. After all, the government has done it before, lacing the fog over San Francisco with bioweapons (delivered by Navy ships moored nearby). In fact, not that long ago, the Obama administration declared by way of executive order that federal agencies are now authorized to conduct behavioral experiments on U.S. citizens in order to advance government initiatives?
Are you getting my drift yet?
What kind of government perpetrates such horrific acts on human beings, whether or not they are citizens? Is there any difference between a government mindset that justifies experimenting on prisoners because they’re “cheaper than chimpanzees” and a government that sanctions jailhouse strip searches of individuals charged with minor infractions simply because it’s easier on a jail warden’s workload?
And when all is said and done, what kind of people rationalize, write off, or just turn a blind eye to such monstrous acts of inhumanity?
Shame on the government, yes, but shame on us for blindly trusting that the government’s motives and priorities have changed.
Shame on us for believing that the government’s bloody wars on terror are keeping us safe in any way. Shame on us for placing greater value on the government’s phantom promises of security over our own hard-won freedoms. Shame on us for allowing our government, our freedoms and the rule of law to be held hostage at the end of a military-issued gun.
Shame on us for letting ourselves be played for fools by individuals who care nothing for us, our our health, our happiness, our welfare, our livelihood, our property or our freedoms. Shame on us for letting ourselves be bamboozled about the war on terror, deceived about the need to trade our freedoms for greater security, and conned into believing that turning America into a battlefield will actually make us safer. Shame on us for letting ourselves be double-crossed by politicians who promise change and reform and hoodwinked into believing that politics is the answer to what ails the nation. Shame on us for not doing a better job of ensuring that future generations have some hope for a better, freer future.
Most of all, shame on us that even after being repeatedly tricked, deluded, misled, swindled and betrayed by government officials, even after learning about the many ways in which we have been duped and deluded, shame on us for still falling for the government’s trickery, chicanery, hocus-pocus, scams and lies.
Shame on us, yes, but still, the question remains: why? What’s in it for the government?
Perhaps the answer lies in The Third Man, Carol Reed’s influential 1949 film starring Joseph Cotten and Orson Welles. In the film, set in a post-WW II Vienna, rogue war profiteer Harry Lime has come to view human carnage with a callous indifference, unconcerned that the diluted penicillin he’s been trafficking underground has resulted in the tortured deaths of young children.
Challenged by his old friend Holly Martins to consider the consequences of his actions, Lime responds, “In these days, old man, nobody thinks in terms of human beings. Governments don’t, so why should we?”
“Have you ever seen any of your victims?” asks Martins.
“Victims?” responds Limes, as he looks down from the top of a Ferris wheel onto a populace reduced to mere dots on the ground. “Look down there. Tell me. Would you really feel any pity if one of those dots stopped moving forever? If I offered you twenty thousand pounds for every dot that stopped, would you really, old man, tell me to keep my money, or would you calculate how many dots you could afford to spare? Free of income tax, old man. Free of income tax – the only way you can save money nowadays.”
In other words, we are citizens of a government that has dehumanized us and reduced us to little more than faceless numbers, statistics and economic units.
What’s in it for the government? Money and power. Or as John Lennon summed it up, “I think we’re being run by maniacs for maniacal ends and I think I’m liable to be put away as insane for expressing that.”
- Goldman Closes "Short Gold" Recommendation With 4.5% Loss; Will Continue Buying Gold From Its Clients
Back on February 15, just as the USD was about to plunge unleashing a global risk-on rally as a result of “Yuan stability”, Goldman triumphantly announcecd its latest trading recommendation: short gold (at $1,205) with a target of $1000 and a 7% stop loss.
This being Goldman – the one hedge fund whose prop traders immediately take the other side of all trades pitches to clients – said clients were immediately and brutally taken to the cleaners as the consequence of a tumbling dollar (another trade that Goldman got disastrously wrong) was soaring gold. And that is precisely what happened. After that, unofficially, it took just two and a half months for Goldman to get stopped out of its short gold recommendation, which as we first noted, happened on April 29, when its the price soared above $1,300 breaching Goldman’s stop. Officially, Goldman’s Jeff Currie decided to take his time, although he too finally threw in the towel today admitting Goldman was wrong yet again with one more trading recommendation (recall that Goldman had earlier been stopped out and lost money on 5 of its Top 6 trades for 2016 in just over a month).
But instead of doing the right thing and also admitting it has zero idea how to trade gold, where it will go next or what the catalysts are, Goldman decided to change its price targets, and instead of predicting $1,100/oz in three months, Goldman has generously pushed its price target by $100 higher to $1200 (and $1,050 over 12 months), even as gold traded just shy of $1300 a few days ago and only dropped as a result of the recent USD rally.
In other words, Goldman admits it was wrong, but still remains indirectly short as it is still hoping to skewer even more muppets on the very same trade it has gotten wrong for the past 3 months… and in the process buy their gold if possible.
Here is the “explanation”
Our US economists recently reduced their forecast for Fed funds rate hikes over the next 12 months from 100 bp to 50 bp. Corresponding with this, our global rates team has lowered its forecast profile for 10-year US real rates over the same period. As a result, we reduce the downside to our gold price forecast, raising the 3/6/12 month forecast profile to $1,200/1,180/1,150/oz from $1,100/1,050/1,000/oz. Our new year average price forecasts are $1,202/1,150/1,150/oz from $1,124/1,000/1,050/oz. Though we forecast that gold prices will decline from spot over the next 3-12 months (with c.5%-9% downside), for reasons which we detail below, the changes to our economists’ rates forecasts act to reduce the degree of downside to our modelled gold price profile and thus change the risk-reward of our previously implemented short gold trade recommendation (published February 15), which we close as a result at a c.4.5% loss.
Or, you could have simply remembered that you had a 7% stop and that you were stopped out 2 weeks ago, which any trader would know very well if he actually had the trade on instead of just using it as bait for clients to unload their gold. Perhaps Mr. Currie can also tell us what Goldman’s “flow” trader P&L was on the “short gold” trade.
On the other hand, since nothing could have been more bearish for gold than Goldman going outright long the metal, we are delighted that Goldman is still buying gold – as it asks its clients to sell it their gold – because it means that the upside for gold remains unlimited. This is also the opposite of what Goldman has tried to – yet again – convince the handful of Kermits who bother to even listen to the taxpayer bailed out hedge fund with the worst trading recommendation record since Tom Stolper (incidentally another former Goldmanite) and of course Dennis Gartman.
For those who care, this is what else Currie said – it is mostly a verbatim copy of what he said in mid-February with the exception that he now admits he was wrong then, and that he is “rising” his target price by $100.
In our view, the gold rally during 1Q16 was driven primarily by concerns about the ability of US policy rates to diverge, corresponding Fed dovishness, and US real rates weakness, as well as a depreciating US dollar (both against the G10 currencies as well as against the EM currencies, the latter on the back of a transitory China credit stimulus). Furthermore, we have seen the largest ever increase in gold net speculative positioning over the past three months, with net speculative length now near its post global financial crisis peak.
Looking ahead, we see limited upside for gold pricing given the limited room for the Fed to surprise to the downside (the market is pricing c.16 bp by end of 2016 and less than one 25 bp Fed Funds rate hike over the next 12 months), limited room for the dollar to depreciate (net speculative positioning is the shortest it has been since early 2013, Exhibit 1, please see Global Markets Daily: The Dollar Bottom, published May 10, for details), and limited room for China to drive EM currency strength to contribute to dollar weakness.
While the upside risks to gold pricing appear relatively limited from here, we see a number of catalysts for gold prices to moderate, including a more hawkish Fed and ultimately US policy rate divergence (Exhibit 3), corresponding with gradual dollar appreciation over the next 3-12 months. Indeed, while Friday’s jobs report was a modest disappointment, with a 160k rise in nonfarm payrolls, some downward revisions to prior months, and declines in both household employment and labor force participation that reversed some of the big gains of the prior six months, the bigger picture, in our view, is still one of gradual acceleration as the US labor market moves to full employment and temporary factors such as the weakness in energy, import, and healthcare costs become less important as we move through 2016. As such, we still see the economy on a path that will prompt the FOMC to restart the normalization process before too long—most likely in September but perhaps as early as July. After the soggy numbers of the past two quarters, we expect GDP growth to rebound to a 2¼% pace as the drag from the earlier FCI tightening (Exhibit 5)—which by our estimates has subtracted about one per centage point from growth recently—abates and the fundamentals for domestic demand, especially housing and consumption, remain favorable.
This next sentence is our favorite:
In addition, there are reasons to believe that the risk off environment which contributed to gold’s outperformance at the beginning of this year is less likely to repeat in the near future as confidence in Chinese growth, Chinese currency stability, and the potential for a collapse in oil prices is much reduced.
Why is it our favorite? Because just a few hours earlier another Goldman report warned that in its quest to keep the bond market stable, central banks may unleash “Financial Turbulence” and “Rate Shock.” We can only assume that Currie had no idea. It’s almost as if Goldman doesn’t even bother to pretend to have a coherent story when ripping clients off.
As for Goldman’s vapid, deja vu conclusion…
In terms of risks surrounding our bearish gold view, we view them as broadly balanced. An upside risk to our forecast is that lower-than-expected Chinese growth significantly impacts US equities, consumer confidence, and growth, thereby resulting in lower increases in real rates relative to our forecast profile. A downside risk relative to our base case is a large reduction in the pace of Chinese and Russian central bank buying (since mid last year, buying has been running at a very high rate of c.450 tonnes per annum).
… it is missing just one thing: what is Goldman’s next stop loss, because that is where gold is really headed next.
- Obama's Toilet Revolution
Submitted by Mark Hanna via AmericanThinker.com,
As a Western revolutionary, Obama has been relentless in his efforts over the last seven years to use all the machinery and influence of government, whether illegally (since 2012, the U.S. Supreme Court has unanimously ruled 13 times that Obama’s actions have been unconstitutional) or legally, to fundamentally transform America into the neo-Marxist democracy he and his father have long dreamed about.
His most recent stunt to this end is to use North Carolina’s “bathroom” law, or House Bill 2, as a springboard for the U.S. Justice Department to issue a sweeping dictate in the name of social fairness and civil rights. House Bill 2, which requires individuals to use the public bathrooms and showers that correspond to their birth sex, was drafted and passed in order to negate an unconstitutional Charlotte city ordinance that forced different sexes to share public accommodations.
What’s most ominous about Obama’s latest maneuver is that the letter sent by the Justice Department to North Carolina governor Pat McCrory stakes out a position for the federal government that would apply to every business in America, as well as all universities and colleges that receive federal funds, that are subject to Title VII of the Civil Rights Act of 1964.
According to Gov. McCrory, the demand letter (read the letter here) sent to top North Carolina officials should be understood as follows:
One thing the nation has to realize is this is no longer just a North Carolina issue. This order, this letter by the Justice Department, is saying that every company in the United States of America that has more than 15 employees are going to have to abide by the federal government’s regulations on bathrooms. So now the federal government is going to tell almost every private sector company in the United States who can or cannot come into their bathrooms, restrooms, their shower facilities for their employees. And they’re also telling every university in the United States of America — it’s not just North Carolina — they’re now telling every university that accepts federal funding that boys who may think they’re a girl can go into a locker room or a restroom or shower facility.
Barack Obama and his militant Justice Department don’t care at all about individuals confused or rebellious about their gender. As with all revolutionary activity, the goal is to seize upon crisis in order to further the aggrandizement of the State, and its control over every competing area of society.
Obama’s response to North Carolina is a classic leftist maneuver of setting up a straw man, or transgender in this case, to ensure and continue to expand federal power over the states. From a revolutionary perspective, states with their 10th Amendment constitutional sovereignty are antithetical to the long-term objective of an international socialist system.
It is critical now for states to recognize their pivotal constitutional power and determine to use every available resource to counter, correct, and ultimately crush the left’s war against the Constitution and the 10th Amendment. Recall the efforts made by the revolutionary left to force a Supreme Court ruling on gay marriage and tear down state marriage laws. Their attack on North Carolina is not at all different in both tactic and objective.
Gov. McCrory seems to recognize the enormous significance of this fight and has bravely turned the table on Obama and his comrades at Justice by announcing today that North Carolina will sue. Time will tell if his response will work. In the interim, however, other governors from states across the country should quickly join McCrory in making this a national fight for the 10th Amendment and state sovereignty.
The bullying left and their fellow-traveling mega-corporations such as Apple, Facebook, PayPal, and Wells Fargo are convinced that the threat of economic warfare against the states will tame them. But instead of cowering as other Republican governors have before him, Gov. McCrory launched a counterrevolution and pushed back with the support of many other companies and organizations that are not part of Obama’s not so new economic and social policies of revolution.
- Hillary Clinton Son-In-Law's Hedge Fund Shuts Down Greek Fund After 90% Loss
Despite having Goldman Sachs CEO Lloyd Blankfein as an investor and being Bill and Hillary Clinton’s son-in-law, Marc Mezvinsky (and two former colleagues from Goldman Sachs who manage Eaglevale Partners hedge fund) told investors in a letter last February they had been “incorrect” on Greece, generating staggering losses for the firm’s main Eaglevale Hellenic Opportunity, a/k/a the “Greek recovery” fund during most of its life. By ‘incorrect’ the Clinton heir apparent meant the $25 million Eaglevale Greek fund had lost a stunning 48% in 2014.
Which is not to say the larger fund it was part of is doing any better: as of last February, Eaglevale had spent 27 of its 34 months in operation below its high-water mark. We are confident that 13 months later the numbers are 40 out of 47, respectively.
As a reminder, 2013, Institutional Investor proclaimed Mezvinsky “a hedge fund rising star“…
In late 2011, Marc Mezvinsky co-founded New York-based, macro-focused hedge fund firm Eaglevale Partners with Bennett Grau and Mark Mallon, two Goldman Sachs Group proprietary traders whom he’d gotten to know when they all worked at the bank. Best known as the husband of Chelsea Clinton, Mezvinsky, 35, who has a BA in religious studies and philosophy from Stanford University and an MA in politics, philosophy and economics from the University of Oxford, has been quietly building his finance career. Before launching his own firm, the longtime Clinton family friend was a partner and global macro portfolio manager at New York- and Rio de Janeiro-based investment house 3G Capital. Eaglevale manages more than $400 million.
Alas, he was anything but, and instead of having a real grasp of macroeconomic events, or how to – you know – hedge, he decided to dump millions in Greece just before the country entered a death spiral that culminated with its third bailout, capital controls, insolvent banks and a terminally crippled economy.
Meanwhile, things went from terrible to abysmal for both the clueless hedge fund manager and his LPs, and as the NYT reports, Hillary Clinton’s son-in-law is finally shutting down the Greece-focused fund, after losing nearly 90% of its value. Investors were told last month that Eaglevale Hellenic Opportunity would finally be put out of its misery and would shutter.
The closure comes as the worst possible time: we are confident that Donald Trump will be quick to work it into his political attack routine.
Mr. Chelsea Clinton and his partners began raising money in 2011 from investors for the firm’s flagship fund. Since then, that portfolio has posted uneven performance. A Stanford University graduate, Mr. Mezvinsky worked at Goldman for eight years before leaving to join a private equity firm. He left that job to form Eaglevale with two longtime Goldman partners, Bennett Grau and Mark Mallon. The hedge fund firm is named after a bridge in Central Park.
As noted above, some of the firm’s earliest investors were Goldman partners, including Lloyd C. Blankfein, Goldman’s chief executive officer, who let Eaglevale use his name in marketing the flagship fund. Ironically this is in addition to the hundreds of thousands of dollars that Goldman paid to Marc’s mother-in-law. One almost wonders who “benefits” Goldman was seeking to get out of this particular relationship.
But on a less sarcastic note, we agree with the NYT that it is not at all clear why Eaglevale waited until this year to close the Hellenic fund, which already had lost about 40% of its value by early last year.
Perhaps it was just hope that the Greek people would simply pick up and rebuild the devastated economy from scratch, ideally without getting paid (the word slavery comes to mind), thereby miraculously rescuing his investment. In letters to investors in 2014, Mezvinsky and his partners expressed confidence that Greece would soon be on the path to a “sustainable recovery.” But by the end of that year, Eaglevale’s leaders began to acknowledge that their perspective on the situation in Greece may have been wrong. The fund had earlier stopped taking in new money.
We will conclude by stealing the NYT’s tongue in cheek humor:
The one silver lining for the fund’s investors from all of this is that they will have a somewhat larger tax loss on investments to claim next year.
True: it’s all funny if one assumes that none of the people who were invested in Mezvinsky’s pet fund actually needed the cash (we doubt Blankfein will lose sleep over a few million). For all those others who actually did, the joke’s on them.
- API Reports Another 3.5 Million Barrel Build in Oil Inventories (Video)
By EconMatters
The EIA Report is tomorrow, but under any interpretation of the API numbers the Bulls will still be waiting for their big Drawdown EIA Report. It looks like we just keep replacing US Production with OPEC Production, namely Saudi Arabia, Iraq and Iran excess production.
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- The War In Afghanistan Has Turned A Generation Of Children Into Heroin Addicts
Submitted by Michaela Whitton via TheAntiMedia.org,
One of the many catastrophic legacies left behind by the longest war in U.S. history is that Afghanistan produces 90% of the world’s opium. As with most parts of the world, the most vulnerable pay the heaviest price of war, and the country has faced a harrowing escalation in the number of child heroin addicts.
“What’s happened in Afghanistan over the last 13 years has been the flourishing of a narco-state that is really without any parallel in history,” Kabul-based journalist Matthieu Aikins told Democracy Now back in 2014.
Adding that all levels of Afghan society are involved in the flourishing trade — which became undeniably worse after the U.S.-led invasion — Aikins accused both the Taliban and government-linked officials of profiting from the crisis. He claimed the U.S., in its quest for vengeance against the Taliban and Al Qaeda, not only cooperated with warlords but ignored corruption by criminals whose human rights abuses created the conditions that led to the rise of the Taliban in the first place.
As a result, Afghanistan now produces twice as much opium as it did in the year 2000, and the booming trade now accounts for 50% of the country’s GDP. Since the cartels began refining their poppy harvests into addictive and profitable heroin, the street price for “powder,” as it is known, is the cheapest in the world — and it costs less than food in the war-torn country.
Lost childhoods
The psychological damage of war, together with the flood of cheap heroin, has led to a doubling in addiction rates over the last five years. In the Channel 4 documentary, Unreported World, Ramita Naval explores a harrowing escalation in child addiction. In the ravaged country, where access to drug treatment is severely limited, she visits a rehabilitation centre where children as young four or five — haunted by horrors they have witnessed — attempt to regain lost childhoods.
The only treatment centre in Kabul to help children, it was originally set up to treat women. The 20-bed unit, which forces kids off the drugs by making them go cold turkey is, ironically, funded by the U.S. State Department. Naval is introduced to a number of very small children who are at varying stages of the 45-day treatment programme.
At one point, the reporter finds it hard to contain her dismay at being in a room full of drug-addicted children. One describes becoming addicted after taking the drug for toothache, while another became hooked after inhaling his father’s smoke. Doctor Latifa Hamidi said in the past two years she has seen a 60% increase in the number of child addicts at the centre. Claiming the future of the country is at stake, she added, “There is going to be a future generation of drug addicts that need help and aren’t going to be able to work.”
The problem is so severe among the child population that many are taking desperate measures to fund their habits. Naval spoke to a 13-year-old boy at a safe house who began using when his parents were killed by shelling. From the age of eight, he was paid by drug addicts to guard them while they smoked. Unsurprisingly, he then developed his own habit, which he funds with child prostitution. Many addicted children sell their bodies, as there are no jobs or work.
Fifteen-year-old Ali has been using heroin for the past two years. His mother is dead and his father fled to Iran. He smoked a gram of heroin, which cost £1, on camera as he explained how he became addicted.
The young boy’s trauma began when, after witnessing a suicide bomb attack in Kabul, he went to stay with relatives in the countryside. While he was there, U.S. forces bombed his village, killing dozens of people; he described seeing bodies scattered everywhere. The young boy and other villagers had to pick up the body parts and put them in plastic bags. Claiming the war breaks his heart — and making his descent into drug use more understandable — he said, “I’d rather not live, than live through this war.”
Behind closed doors
With drug use haram, or forbidden, in Islam, addiction is seen as shameful. Consequently, many of society’s most vulnerable are often too ashamed to ask for help. As a result, a hidden epidemic has arisen, affecting thousands of parents and children behind closed doors. Naval accompanies a medical team of doctors and social workers who are frequently attacked and beaten during their work:
“More and more children are becoming addicted because the country is awash with opium,” the doctor said. “If the government doesn’t do anything about this situation, Afghanistan is going to face another disaster,” she added.
Claiming that of 130, 000 families in the area, 60% are addicted to drugs, the doctor explained many men pick up their addictions while working in neighbouring Iran and Pakistan. After using drugs as a stimulant to help them work longer hours, they return, bringing their addictions with them — often passing their new habits on to entire families.
Opium is also part of daily life in Afghanistan’s refugee camps, where the internally displaced are left to fend for themselves. Government doctors rarely visit, and agencies are ill-equipped to deal with child addicts — many whom have fled fighting in other provinces and are left with devastating injuries as a result of the war. Locals claim that even if painkillers were available, opium is much cheaper and more effective.
Three-year-old Zarima lost her arm when her village was attacked during fighting between the government and insurgents. With no doctors or medicine, her father had no option but to give her opium. He had tried to stop the treatment a number of times, but she suffered severe withdrawal symptoms. Other locals described being forced to perform amputations due to lack of medical help.
Cheaper than food
Entire villages of people are addicted to opium, and Naval visits one family where three out of six of children are addicted. One little boy, who began smoking at the age of three, was sprawled out next to his father, completely out of it. He explained that he needs to smoke three times a day or he suffers painful withdrawals. When asked if he ever goes out and plays with other kids, he shook his head.
The boy’s mother originally gave him opium to cure a stomach ache. Now the family uses the drug for a very different reason. “There is not enough food to feed the whole family,” his mother said.“When you smoke you lose your appetite,” she added, explaining that while food for the family of nine costs £3 a day, a day’s worth of opium costs £2.
Summing up the hidden side of the devastation in the war-ravaged country, Naval was frank and said that while the world is focused on the fight against the Taliban, the country is being consumed from within — by an equally serious and long-term threat.
- Caught On Tape: This Is What Happened When An MEP Tried To Read The TTIP Text
Submitted by Mike Krieger via Liberty Blitzkrieg blog,
TTIP is just one of several phony “trade” deals written by corporate lawyers and lobbyists, and negotiated in secret between the Obama administration and various world leaders. This particular scam involves the U.S. and Europe, and it has seen increased public resistance and attention as of late, something I highlighted in the post, Leaked Documents Expose the TTIP Trade Deal as a Subversive Imperial Scam.
Now watch what happened when a MEP (member of European parliament) tried to read the thing. It’s very blurry, but you’ll get the point.
Democracy this is not.
Noam Chomsky recently summarized the true purpose of these so-called “trade” deals eloquently in the following paragraph:
In the contemporary global order, the institutions of the masters hold enormous power, not only in the international arena but also within their home states, on which they rely to protect their power and to provide economic support by a wide variety of means. When we consider the role of the masters of mankind, we turn to such state policy priorities of the moment as the Trans-Pacific Partnership, one of the investor-rights agreements mislabeled “free-trade agreements” in propaganda and commentary. They are negotiated in secret, apart from the hundreds of corporate lawyers and lobbyists writing the crucial details. The intention is to have them adopted in good Stalinist style with “fast track” procedures designed to block discussion and allow only the choice of yes or no (hence yes). The designers regularly do quite well, not surprisingly. People are incidental, with the consequences one might anticipate.
Thanks for playin’ everyone.
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