- Arizona Governor Ducey Vetoes Gold
by Keith Weiner
In my testimony in support of the gold legal tender bill this year, I discussed failing pension funds. Retirees who count on their pension checks are being told that their monthly check will be reduced by up to 60%. This is devastating to them, obviously. What isn’t obvious is the cause. In the news coverage of this, the angry pensioners are blaming the union, the fund manager, and Wall Street in general.
None of them point the finger where it needs to be pointed. The Fed has centrally planned our interest rate downwards, ever downwards, for 35 years. Now a 10-year bond pays a mere 1.7 percent interest. Pension funds are designed to invest and earn a real return on the money collected from workers’ paychecks. This breaks down when the interest rate collapses.
There is no cure for zero interest rates (and negative in Europe and Japan). The central banks have created a monster, a Frankenstein that is now ravaging the economy and especially those who depend on fixed income.
It is no longer possible to earn a yield on paper money, without taking undue risk of precisely the sort that retirement funds should not take.
The only antidote to zero yield on paper is a positive yield on gold.
I explained to the legislators that this bill would not fix the problem in itself. It is a necessary but not sufficient step.
I made a different argument to Governor Ducey. Most legislation creates winners and losers. Those who will be hurt by a new law of course lobby against it, and may become enemies of the governor for signing it. This bill created no losers. No one would be hurt by recognizing gold as money. It would have been good for the state, adding jobs, and even tax revenue.
Unpersuaded by either the plight of the pensioners or the prospect of business growth in Arizona, Ducey vetoed gold. This is his second time to shoot down gold.
I have just two points to make about this. One, let’s stop perpetuating the myth that Republicans—or even pro-business Republicans as Ducey brands himself—are for gold. This is a big reason cited by Democrats for why they are against gold.
Two, Governor Ducey knew he could get away with this veto because few people care. While our monetary system drowns under zero interest and runaway debt, people are worried about the Kardashians and the gender of Bruce-now-Caitlyn Jenner.
You had better start letting your government know that you want to start removing the roadblocks and start moving towards the only honest money: gold. No one knows how much time you have, but it is not that long.
- 'Guccifer' And The Kremlin's 20,000 Hacked Emails – In The Eye Of Hillary's Perfect Storm
Submitted by Andrew Napolitano via LewRockwell.com,
The bad legal news for Hillary Clinton continued to cascade upon her presidential hopes during the past week in what has amounted to a perfect storm of legal misery. Here is what happened.
Last week, Mrs. Clinton’s five closest advisors when she was Secretary of State, four of whom remain close to her and have significant positions in her presidential campaign, were interrogated by the FBI. These interrogations were voluntary, not under oath, and done in the presence of the same legal team which represented all five aides.
The atmosphere was confrontational, as the purpose of the interrogations is to enable federal prosecutors and investigators to determine whether these five are targets or witnesses. Stated differently, the feds need to decide if they should charge any of these folks as part of a plan to commit espionage, or if they will be witnesses on behalf of the government should there be such a prosecution; or witnesses for Mrs. Clinton.
In the same week, a federal judge ordered the same five persons to give videotaped testimony in a civil lawsuit against the State Department which once employed them in order to determine if there was a “conspiracy” — that’s the word used by the judge — in Mrs. Clinton’s office to evade federal transparency laws. Stated differently, the purpose of these interrogations is to seek evidence of an agreement to avoid the Freedom of Information Act requirements of storage and transparency of records, and whether such an agreement, if it existed, was also an agreement to commit espionage — the removal of state secrets from a secure place to a non-secure place.
Also earlier this week, the State Department revealed that it cannot find the emails of Bryan Pagliano for the four years that he was employed there. Who is Bryan Pagliano? He is the former information technology expert, employed by the State Department to problem shoot Mrs. Clinton’s entail issues.
Pagliano was also personally employed by Mrs. Clinton. She paid him $5,000 to migrate her regular State Department email account and her secret State Department email account from their secure State Department servers to her personal, secret, non-secure server in her home in Chappaqua, New York. That was undoubtedly a criminal act. Pagliano either received a promise of non-prosecution or an actual order of immunity from a federal judge. He is now the government’s chief witness against Mrs. Clinton.
It is almost inconceivable that all of his emails have been lost. Surely this will intrigue the FBI, which has reportedly been able to retrieve the emails Mrs. Clinton attempted to wipe from her server.
While all of this has been going on, intelligence community sources have reported about a below the radar screen, yet largely known debate in the Kremlin between the Russian Foreign Ministry and the Russian Intelligence Services. They are trying to come to a meeting of the minds to determine whether the Russian government should release some 20,000 of Mrs. Clinton’s emails that it obtained either by hacking her directly or by hacking into the email of her confidante, Sid Blumenthal.
As if all this wasn’t enough bad news for Mrs. Clinton in one week, the FBI learned last week from the convicted international hacker, who calls himself Guccifer, that he knows how the Russians came to possess Mrs. Clinton’s emails; and it is because she stored, received and sent them from her personal, secret, non-secure server.
Mrs. Clinton has not been confronted publicly and asked for an explanation of her thoughts about the confluence of these events, but she has been asked if the FBI has reached out to her. It may seem counter-intuitive, but in white collar criminal cases, the FBI gives the targets of its investigations an opportunity to come in and explain why the target should not be indicted.
This is treacherous ground for any target, even a smart lawyer like Mrs. Clinton. She does not know what the feds know about her. She faces a damned-if-she-does and damned-if-she-doesn’t choice here.
Any lie and any materially misleading statement — and she is prone to both — made to the FBI can form the basis for an independent criminal charge against her. This is the environment that trapped Martha Stewart. Hence, the standard practice among experienced counsel is to decline interviews by the folks investigating their clients.
But Mrs. Clinton is no ordinary client. She is running for president. She lies frequently. We know this because, when asked if the FBI has reached out to her for an interview, she told reporters that neither she nor her campaign had heard from the FBI; but she couldn’t wait to talk to the agents.
That is a mouthful, and the FBI knows it. First, the FBI does not come calling upon her campaign or even upon her. The Department of Justice prosecutors will call upon her lawyers — and that has already been done, and Mrs. Clinton knows it. So her statements about the FBI not calling her or the campaign were profoundly misleading, and the FBI knows that.
Mrs. Clinton’s folks are preparing for the worst. They have leaked nonsense from “U.S. officials” that the feds have found no intent to commit espionage on the part of Mrs. Clinton. Too bad these officials — political appointees, no doubt — skipped or failed Criminal Law 101. The government need not prove intent for either espionage or for lying to federal agents.
And it prosecutes both crimes very vigorously.
- A Little Market Insight Into How The Game Is Played (Video)
By EconMatters
Every Game involves learning the rules of the game in order to be successful, the financial markets are the ultimate 4 dimensional futuristic chess game. There are different levels operating within the financial markets, the Game within the Game if you will. The Power Players at the top of the Food Chain run the show all things being equal.
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- Washington's Military Addiction (And The Ruins Still To Come)
Submitted by Tom Engelhardt via TomDispatch.com,
There are the news stories that genuinely surprise you, and then there are the ones that you could write in your sleep before they happen. Let me concoct an example for you:
“Top American and European military leaders are weighing options to step up the fight against the Islamic State in the Mideast, including possibly sending more U.S. forces into Iraq, Syria, and Libya, just as Washington confirmed the second American combat casualty in Iraq in as many months.”
Oh wait, that was actually the lead sentence in a May 3rd Washington Times piece by Carlo Muñoz. Honestly, though, it could have been written anytime in the last few months by just about anyone paying any attention whatsoever, and it surely will prove reusable in the months to come (with casualty figures altered, of course). The sad truth is that across the Greater Middle East and expanding parts of Africa, a similar set of lines could be written ahead of time about the use of Special Operations forces, drones, advisers, whatever, as could the sorry results of making such moves in [add the name of your country of choice here].
Put another way, in a Washington that seems incapable of doing anything but worshiping at the temple of the U.S. military, global policymaking has become a remarkably mindless military-first process of repetition. It’s as if, as problems built up in your life, you looked in the closet marked “solutions” and the only thing you could ever see was one hulking, over-armed soldier, whom you obsessively let loose, causing yet more damage.
How Much, How Many, How Often, and How Destructively
In Iraq and Syria, it’s been mission creep all the way. The B-52s barely made it to the battle zone for the first time and were almost instantaneously in the air, attacking Islamic State militants. U.S. firebases are built ever closer to the front lines. The number of special ops forces continues to edge up. American weapons flow in (ending up in god knows whose hands). American trainers and advisers follow in ever increasing numbers, and those numbers are repeatedly fiddled with to deemphasize how many of them are actually there. The private contractors begin to arrive in numbers never to be counted. The local forces being trained or retrained have their usual problems in battle. American troops and advisers who were never, never going to be “in combat” or “boots on the ground” themselves now have their boots distinctly on the ground in combat situations. The first American casualties are dribbling in. Meanwhile, conditions in tottering Iraq and the former nation of Syria grow ever murkier, more chaotic, and less amenable by the week to any solution American officials might care for.
And the response to all this in present-day Washington?
You know perfectly well what the sole imaginable response can be: sending in yet more weapons, boots, air power, special ops types, trainers, advisers, private contractors, drones, and funds to increasingly chaotic conflict zones across significant swaths of the planet. Above all, there can be no serious thought, discussion, or debate about how such a militarized approach to our world might have contributed to, and continues to contribute to, the very problems it was meant to solve. Not in our nation’s capital, anyway.
The only questions to be argued about are how much, how many, how often, and how destructively. In other words, the only “antiwar” position imaginable in Washington, where accusations of weakness or wimpishness are a dime a dozen and considered lethal to a political career, is how much less of more we can afford, militarily speaking, or how much more of somewhat less we can settle for when it comes to militarized death and destruction. Never, of course, is a genuine version of less or a none-at-all option really on that “table” where, it’s said, all policy options are kept.
Think of this as Washington’s military addiction in action. We’ve been watching it for almost 15 years without drawing any of the obvious conclusions. And lest you imagine that “addiction” is just a figure of speech, it isn’t. Washington’s attachment — financial, tactical, and strategic — to the U.S. military and its supposed solutions to more or less all problems in what used to be called “foreign policy” should by now be categorized as addictive. Otherwise, how can you explain the last decade and a half in which no military action from Afghanistan to Iraq, Yemen to Libya worked out half-well in the long run (or even, often enough, in the short run), and yet the U.S. military remains the option of first, not last, resort in just about any imaginable situation? All this in a vast region in which failed states are piling up, nations are disintegrating, terror insurgencies are spreading, humongous population upheavals are becoming the norm, and there are refugee flows of a sort not seen since significant parts of the planet were destroyed during World War II.
Either we’re talking addictive behavior or failure is the new success.
Keep in mind, for instance, that the president who came into office swearing he would end a disastrous war and occupation in Iraq is now overseeing a new war in an even wider region that includes Iraq, a country that is no longer quite a country, and Syria, a country that is now officially kaput. Meanwhile, in the other war he inherited, Barack Obama almost immediately launched a military-backed “surge” of U.S. forces, the only real argument being over whether 40,000 (or even as many as 80,000) new U.S. troops would be sent into Afghanistan or, as the “antiwar” president finally decided, a mere 30,000 (which made him an absolute wimp to his opponents). That was 2009. Part of that surge involved an announcement that the withdrawal of American combat forces would begin in 2011. Seven years later, that withdrawal has once again been halted in favor of what the military has taken to privately calling a “generational approach” — that is, U.S. forces remaining in Afghanistan into at least the 2020s.
The military term “withdrawal” may, however, still be appropriate even if the troops are staying in place. After all, as with addicts of any sort, the military ones in Washington can’t go cold turkey without experiencing painful symptoms of withdrawal. In American political culture, these manifest themselves in charges of “weakness” when it comes to “national security” that could prove devastating in the next election. That’s why those running for office compete with one another in over-the-top descriptions of what they will do to enemies and terrorists (from acts of torture to carpet-bombing) and in even more over-the-top promises of “rebuilding” or “strengthening” what’s already the largest, most expensive military on the planet, a force better funded at present than those of at least the next seven nations combined.
Such promises, the bigger the better, are now a necessity if you happen to be a Republican candidate for president. The Democrats have a lesser but similar set of options available, which is why even Bernie Sanders only calls for holding the Pentagon budget at its present staggering level or for the most modest of cuts, not for reducing it significantly. And even when, for instance, the urge to rein in military expenses did sweep Washington as part of an overall urge to cut back government expenses, it only resulted in a half-secret slush fund or “war budget” that kept the goodies flowing in.
These should all be taken as symptoms of Washington’s military addiction and of what happens when the slightest signs of withdrawal set in. The U.S. military is visibly the drug of choice in the American political arena and, as is only appropriate for the force that has, since 2002, funded, armed, and propped up the planet’s largest supplier of opium, once you’re hooked, there’s no shaking it.
Hawkish Washington
Recently, in the New York Times Magazine, journalist Mark Landler offered a political portrait entitled “How Hillary Clinton Became a Hawk.” He laid out just how the senator and later secretary of state remade herself as, essentially, a military groupie, fawning over commanders or former commanders ranging from then-General David Petraeus to Fox analyst and retired general Jack Keane; how, that is, she became a figure, even on the present political landscape, notable for her “appetite for military engagement abroad” (and as a consequence, well-defended against Republican charges of “weakness”).
There’s no reason, however, to pin the war-lover or “last true hawk” label on her alone, not in present-day Washington. After all, just about everyone there wants a piece of the action. During their primary season debates, for instance, a number of the Republican candidates spoke repeatedly about building up the U.S. Sixth Fleet in the Mediterranean, while making that already growing force sound like a set of decrepit barges.
To offer another example, no presidential candidate these days could afford to reject the White House-run drone assassination program. To be assassin-in-chief is now considered as much a part of the presidential job description as commander-in-chief, even though the drone program, like so many other militarized foreign policy operations these days, shows little sign of reining in terrorism despite the number of “bad guys” and terror “leaders” it kills (along with significant numbers of civilian bystanders). To take Bernie Sanders as an example — because he’s as close to an antiwar candidate as you’ll find in the present election season — he recently put something like his stamp of approval on the White House drone assassination project and the “kill list” that goes with it.
Mind you, there is simply no compelling evidence that the usual military solutions have worked or are likely to work in any imaginable sense in the present conflicts across the Greater Middle East and Africa. They have clearly, in fact, played a major role in the creation of the present disaster, and yet there is no place at all in our political system for genuinely antiwar figures (as there was in the Vietnam era, when a massive antiwar movement created space for such politics). Antiwar opinions and activities have now been driven to the peripheries of the political system along with a word like, say, “peace,” which you will be hard-pressed to find, even rhetorically, in the language of “wartime” Washington.
The Look of “Victory”
If a history were to be written of how the U.S. military became Washington’s drug of choice, it would undoubtedly have to begin in the Cold War era. It was, however, in the prolonged moment of triumphalism that followed the Soviet Union’s implosion in 1991 that the military gained its present position of unquestioned dominance.
In those days, people were still speculating about whether the country would reap a “peace dividend” from the end of the Cold War. If there was ever a moment when the diversion of money from the U.S. military and the national security state to domestic concerns might have seemed like a no-brainer, that was it. After all, except for a couple of rickety “rogue states” like North Korea or Saddam Hussein's Iraq, where exactly were this country’s enemies to be found? And why should such a muscle-bound military continue to gobble up tax dollars at such a staggering rate in a reasonably peaceable world?
In the decade or so that followed, however, Washington’s dreams turned out to run in a very different direction — toward a “war dividend” at a moment when the U.S. had, by more or less universal agreement, become the planet’s “sole superpower.” The crew who entered the White House with George W. Bush in a deeply contested election in 2000 had already been mainlining the military drug for years. To them, this seemed a planet ripe for the taking. When 9/11 hit, it loosed their dreams of conquest and control, and their faith in a military that they believed to be unstoppable. Of course, given the previous century of successful anti-imperial and national independence movements, anyone should have known that, no matter the armaments at hand, resistance was an inescapable reality on Planet Earth.
Thanks to such predictable resistance, the drug-induced imperial dreamscape of the Busheviks would prove a fantasy of the first order, even if, in that post-9/11 moment, it passed for bedrock (neo)realism. If you remember, the U.S. was to “take the gloves off” and release a military machine so beyond compare that nothing would be capable of standing in its path. So the dream went, so the drug spoke. Don’t forget that the greatest military blunder (and crime) of this century, the invasion of Iraq, wasn’t supposed to be the end of something, but merely its beginning. With Iraq in hand and garrisoned, Washington was to take down Iran and sweep up what Russian property from the Cold War era still remained in the Middle East. (Think: Syria.)
A decade and a half later, those dreams have been shattered, and yet the drug still courses through the bloodstream, the military bands play on, and the march to… well, who knows where… continues. In a way, of course, we do know where (to the extent that we humans, with our limited sense of the future, can know anything). In a way, we’ve already been shown a spectacle of what “victory” might look like once the Greater Middle East is finally “liberated” from the Islamic State.
The descriptions of one widely hailed victory over that brutal crew in Iraq — the liberation of the city of Ramadi by a U.S.-trained elite Iraqi counterterrorism force backed by artillery and American air power — are devastating. Aided and abetted by Islamic State militants igniting or demolishing whole neighborhoods of that city, the look of Ramadi retaken should give us a grim sense of where the region is heading. Here’s how the Associated Press recently described the scene, four months after the city fell:
“This is what victory looks like…: in the once thriving Haji Ziad Square, not a single structure still stands. Turning in every direction yields a picture of devastation. A building that housed a pool hall and ice cream shops — reduced to rubble. A row of money changers and motorcycle repair garages — obliterated, a giant bomb crater in its place. The square’s Haji Ziad Restaurant, beloved for years by Ramadi residents for its grilled meats — flattened. The restaurant was so popular its owner built a larger, fancier branch across the street three years ago. That, too, is now a pile of concrete and twisted iron rods.
“The destruction extends to nearly every part of Ramadi, once home to 1 million people and now virtually empty.”
Keep in mind that, with oil prices still deeply depressed, Iraq essentially has no money to rebuild Ramadi or anyplace else. Now imagine, as such “victories” multiply, versions of similar devastation spreading across the region.
In other words, one likely end result of the thoroughly militarized process that began with the invasion of Iraq (if not of Afghanistan) is already visible: a region shattered and in ruins, filled with uprooted and impoverished people. In such circumstances, it may not even matter if the Islamic State is defeated. Just imagine what Mosul, Iraq’s second largest city and still in the Islamic State's hands, will be like if, someday, the long-promised offensive to liberate it is ever truly launched. Now, try to imagine that movement itself destroyed, with its “capital,” Raqqa, turned into another set of ruins, and remind me: What exactly is likely to emerge from such a future nightmare? Nothing, I suspect, that is likely to cheer up anyone in Washington.
And what should be done about all this? You already know Washington’s solution — more of the same — and breaking such a cycle of addiction is difficult even under the best of circumstances. Unfortunately, at the moment there is no force, no movement on the American scene that could open up space for such a possibility. No matter who is elected president, you already know more or less what American “policy” is going to be.
But don’t bother to blame the politicians and national security nabobs in Washington for this. They’re addicts. They can’t help themselves. What they need is rehab. Instead, they continue to run our world. Be suitably scared for the ruins still to come.
- Here Come A Lot Of Angry Teamsters: One Of America's Largest Pension Funds Demands A Taxpayer Bailout
Over the past few months, we have covered the unfolding saga (here and here) of the Central States Pension Fund, which handles retirement benefits for current and former Teamster union truck drivers across various states including Texas, Michigan, Wisconsin, Missouri, New York, and Minnesota, and is one of the largest pension funds in the nation, all the way through Kenneth Feinberg’s rejection of the proposal to cut benefits on behalf of the Treasury.
When the proposal was rejected, we said that the final resolution will be in the form of an inevitable taxpayer-funded bailout
If the Treasury won’t allow any pension cuts, and the government created safety net won’t be there to keep the benefits flowing, how will the cash continue to flow to members? With the precedent now set by the Treasury that no cuts will be allowed, the answer will likely come in the form of a massive bailout.
As it turns out, that is precisely what fund director Thomas Nyhan believes as well. Nyhan said the rejection means the CSPF likely won’t be able to offer another proposed fix without getting funding from Congress, either directly or through the Pension Benefit Guaranty Corp.
However with the PBGC also on its way to insolvency, and unable to shoulder the additional burden in world of zero and negative rates, that leaves us with… drum roll please… the US taxpayers, aka Congress, footing the bill.
“There are only two solutions. Either the plan receives more money or has to have fewer benefits. I’m hopeful that come probably 2017, we can actually all get to work on something that can provide a solution. If there is no legislation at any time, we’re going to end up going to insolvency.” Nyhan said.
The full-court press is now on, as now everyone involved is calling on congress to step in. Visitors to CSPF’s website this morning were greeed with a banner directing to a rescue plan website.
Before you could enter the rescue site a pop-up message is shown, simply saying that since congress effectively shut down the proposal, they can now stand up and pass legislation to bail the fund out.
“Central States strongly urges these members to act now to pass legislation that protects the pension benefits of the over 400,000 participants of Central States Pension Fund”
With the Treasury denying the possibility of pension cuts, the ball is now in Congress’ court to initiate a bailout.
When it does, because it will, the flood gates will be open for the rest of the insolvent funds to come knocking with their hands out, and we can formally welcome the arrival of helicopter money – whether Yellen wants it or not – in the United States.
What follows is Tom Nyhan testifying before congress back in 2013, laying it out in very plain terms that without funding, or significant benefit cuts, the game is over.
“Unless the fund substantially reduces its liabilities, or receives a large influx of assets, it’s projected become insolvent within ten or fifteen years, and at this point our options are very limited.”
Nobody listened, and now – in this bold new age of pension fund crushing zero and negative interest rates – it is game over.
- OPEC Politics: Russian King, Iranian Crown Prince?
Submitted by Eugen von Bohm-Bawek via Bawerk.net,
Another month, another OPEC meeting beckons for 2nd June. But unlike typical meetings on the Danube (let alone dust filled haze of Doha), the producer group might just have a new King in town. It comes in the form of Russia; the number one global producer that’s not even technically a member of the cartel. Confused? Don’t be. The argument is quite simple.
Unlike Doha where the outgoing Saudi Oil Minister, Ali Naimi was lining up a Saudi led deal to leave Iran outside the tent as the odd man out refusing to join the 17 country ‘freeze’, this time round, it’s very likely Russia will come back to the table with exactly the same deal, but one they’ve directly brokered with Iran, where the Islamic Republic is conveniently claiming they’ve already hit the magic 4mb/d production targets to bring a ‘freeze agreement’ back into play. Rest assured, if Russia and Iran are on the same page, everyone else will ‘sign on the line’ given their current fiscal difficulties where every petro-dollar counts for self-preservation purposes. That potentially leaves Saudi Arabia outside the ‘freezing tent’ as the latest renegade of the petro-state world – or worse still for Riyadh – signing up to a retro-engineered Russo-Iranian deal, where Saudi Arabia has conceded strategic leadership of the producer.
No matter how much Saudi screams and shouts their previous intransigence brought Iran to the table, this is no longer their deal to sell. If Putin goes in for the kill in Vienna, strategic control of the producer group has effectively passed to Moscow, at least on an interim basis. On all fronts, this is entirely up to the Kremlin how they want to spin things. Not only does a Russo-Iranian deal make sense for a ‘resurgent’ Moscow playing the OPEC ‘King’; giving Iran a geopolitical leg up to become the number one ‘cartel princeling’ makes sense for broader Russian geo-strategic interests. Iran remains the most vital co-ordinate on Mr. Putin’s post-Soviet map.
No doubt that will put a wry smile Mr. Naimi’s face given the Kingdom had its chance to remain the OPEC lynchpin in Doha, but opted to bump off the old man for internal power grabs instead. But we still need to be very careful to strip out what remain two totally separate debates here around OPEC political theatrics on the one hand vs. any actual market impact any so called freeze would have on the other. Unsurprisingly, we expect exactly the same Doha bluff to come through in Vienna, in what’s essentially a ‘license to pump’ agreement all round.
Kuwait will claim it can do 3.2mb/d; Iraq will keep pitching 4.8mb/d;
Venezuela will ‘hold firm’ at 2.6mb/d. All numbers grounded in political fantasies, not physical realities.
Most importantly, Iran’s probably not quite back at 4mb/d, which ironically reinforces why a June freeze agreement remains absolutely ‘no regrets’ for the Islamic Republic to game. Claim 4mb/d targets are hit; keep making incremental gains over the next few months; but do so scoring lots of diplomatic points against Saudi Arabia along the way.
To cap things off, Russia will obviously pitch its tent towards 11.5mb/d given Moscow’s currently ramming through tax tweaks to keep production at 11.2mb/d.
Everyone gets to pump. Nobody has to ‘formally’ cheat. The price doesn’t really go anywhere, beyond a short term Viennese waltz. But most of all, it leaves Saudi Arabia with a major petro-diplomacy decision to make: Either accept it’s no longer calling the OPEC shots when it comes to producer ‘co-operation’ or completely bulk at Russo-Iranian overtures, and put their head back in the volumetric sands to ramp as far and fast as they can. OPEC gets left in its wake.
Unfortunately for the Kingdom, that’s the real rub here: It’s far from clear Riyadh still holds the volumes based crown either in OPEC. For all the noise coming out of the Kingdom they can do 11.5mb/d, 12mb/d, 12.5mb/d or even ‘20mb/d’ if they ‘wanted to’, the acid test will come over the summer months when domestic demand will be through the roof. Unless everyone sees ‘total’ Saudi production going well above 11mb/d to maintain its stakes in the volumes game, the working assumption the Kingdom can always pump at will simply isn’t credible. If the ‘King’s dead so be it, but Riyadh should know better than anyone else, there’s also someone willing to take your place. Odds on Russia will wear that regal crown, at least for short term political posturing. While Iran can assume its logical role as the new Crown Prince.
- Fed Nemesis & Mysterious Treasury Bond Buyer Exposed
The monotonous drone from The Eccles Building continues to pontificate that bond bulls are fools but stock buyers are the smart ones for the miracle hockey-stick of Keynesian dreams is just around the corner and rate-hikes right along with it. Three decades of factual dismissal of this bullshit propaganda are of course proving that line of reasoning simply false and while Rosengren, Bullard, et al. bloviate that 'investors' should be selling bonds, it is shockingly ironic that their bond-buying nemesis is Mrs. Watanabe in the land of failed Keynesian policy piling into Treasuries at a record pace since The BoJ went NIRP.
As UBS Rate strategists detail, since the BoJ launched its negative interest rate policy, Japanese investors have been significant net buyers of foreign assets, mainly DM government bonds. Weekly flow data suggests that this trend has continued beyond the turn of the Japanese fiscal year, albeit at a slightly slower pace (since April, Japan net purchases of overseas bonds amount to ¥2tn vs. ¥4.3tn in Mar-16 and ¥3.1tn in Feb-16). Today’s data of overseas purchases by destination for March highlights which markets have benefitted so far.
DM: Record appetite for US Treasuries in March; dwarfed other markets
Treasuries normally make up most of Japanese investors' foreign bond purchases. This was certainly true in March, with the ¥4.8tn of net purchases of USTs (largest since at least 2005) accounting for 87% of the overall net flow
And that Fed-frustrating bid for bonds is not about to stop…
Investment plans point to continued strong demand; should weigh on yields
Our take on Japanese life insurers’ and asset managers’ investment plans for FY16-17 is that a vast majority plans to boost their foreign bond holdings further, often at the expense of JGBs.
While most still seem to favour FX-hedging overseas bonds, some look to also up unhedged purchases. However, others appear sceptical of the prospects for a yen turnaround, and will only consider altering hedging ratios if they grow more confident that the JPY will weaken. We remain of the view that liquid and highly rated markets offering an attractive FX-hedged yield pickup vs. JGBs, like USTs and OATs, should be key beneficiaries.
So the next time Eric Rosengren says that the bond market is way too pessimistic about growth or how awesome The Fed is – tell him to blame his Keynesian frontrunning fools in Japan for "reaching for yield" into USTs and dumping JGBs – if Eric really wants to saee what happens to his bond market, maybe try NIRP – just as Yellen said was on the table tonight.
- "Screw The Next Generation" Anonymous Congressman Admits To "Blithely Mortgaging The Future With A Wink & A Nod"
A shockingly frank new book from an anonymous Democratic congressman turns yet another set of conspiracy theories into consirpacy facts as he spills the beans on the ugly reality behind the scenes in Washington. While little will surprise any regular readers, the selected quotes offered by "The Confessions Of Congressman X" book cover sheet read like they were ripped from the script of House of Cards… and yet are oh so believable…
A devastating inside look at the dark side of Congress as revealed by one of its own! No wonder Congressman X wants to remain anonymous for fear of retribution. His admissions are deeply disturbing…
"Most of my colleagues are dishonest career politicians who revel in the power and special-interest money that's lavished upon them."
"My main job is to keep my job, to get reelected. It takes precedence over everything."
"Fundraising is so time consuming I seldom read any bills I vote on. Like many of my colleagues, I don't know how the legislation will be implemented, or what it'll cost."
The book also takes shots at voters as disconnected idiots who let Congress abuse its power through sheer incompetence…
"Voters are incredibly ignorant and know little about our form of government and how it works."
"It's far easier than you think to manipulate a nation of naive, self-absorbed sheep who crave instant gratification."
And, as The Daily Mail so elqouently notes, the take-away message is one of resigned depression about how Congress sacrifices America's future on the altar of its collective ego…
"We spend money we don't have and blithely mortgage the future with a wink and a nod. Screw the next generation."
"It's about getting credit now, lookin' good for the upcoming election."
Simply put, it's everything that is enraging Americans about their government's dysfunction and why Trump is getting so much attention.
- "What Could Have Possibly Raised Your Costs" – Hillary Can't Answer Why Obamacare Costs Are Soaring
Hillary Clinton’s strategy to get in front of voters and answer one-on-one type questions is not working out very well.
First, Clinton couldn’t explain to an unemployed West Virginian why she was promising to put a lot of coal miners out of work. Now, Hillary can’t explain why Obamacare fees are higher than promised, and are set to explode even higher next year.
During a recent town hall event, a small business owner explained to the Democratic front-runner that her health insurance has gone up so significantly for her family that the thought of providing benefits to her employees is secondary at this point.
“As a small business owner, not only are you trying to provide benefits to your employees, you’re trying to provide benefits to yourself. I have seen our health insurance for my own family, go up $500 dollars a month in the last two years. We went from four hundred something, to nine hundred something. We’re just fighting to keep benefits for ourselves. The thought of being able to provide benefits to your employees is almost secondary, yet to keep your employees happy, that’s a question that comes across my desk all the time. I have to keep my employees as independent contractors for the most part really to avoid that situation, and so I have turnover”
“We do not qualify for a subsidy on the current health insurance plan. My question to you is not only are you looking out for people that can’t afford healthcare, but I’m someone that can afford it, but it’s taking a big chunk of the money I bring home.“
To which Hillary responded, to make a long story short, that she knows healthcare costs are going up, and doesn’t understand why that would ever be the case.
“What you’re saying is one of the real worries that we’re facing with the cost of health insurance because the costs are going up in a lot of markets, not all, but many markets and what you’re describing is one of the real challenges.”
“There’s a lot of things I’m looking at to try to figure out how to deal with exactly the problem you’re talking about. There are some good ideas out there but we have to subject them to the real world test, will this really help a small business owner or a family be able to afford it. What could have possibly raised your costs four hundred dollars, and that’s what I don’t understand.“
* * *
While we don’t have all of the answers as to why the cost of insurance has skyrocketed under the Obamacare regime (actually scratch that, we know very well) we do know that more government subsidies will only continue to drive the costs up, and families and small businesses will continue to get burned as the government continues to tinker with the healthcare market, especially as more insurance providers finally do the math and pull out of Obamacare states as the largest American health insurer, UnitedHealth, has done in recent weeks.
Also, Clinton does have a good point in saying that ideas should be subjected to real world tests before being implemented. Perhaps the all-knowing planners should have tried that before spending billions on the Obamacare roll out, which is currently crumbling beneath its own weight.
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