Today’s News 15th March 2016

• Making Sense of Cents

  Forex remains to be the largest market in the world and the least understood.  Central banks have more influence on global markets than any other force.  In other words, monetary policy is the ONLY economic indicator(s) investors should be watching, because let’s face it, if the Fed raised rates to 10% like they should do and called in all that QE money, stocks would collapse.

  But yet Forex remains a mystery, something that someone may have mentioned or you heard about.. wait FX is a TV channel?  or graphics?  a movie?

  One has to wonder who is more stupid, is it the clowns that worked for the big FX banks getting fined, jailed, or fired for misbehavior – or PBOC who seems intent to destroy not only any hope of becoming a ‘real’ currency (let alone a world reserve currency) but killing their trade markets as well:

  In September last year, Chinese regulators stepped on the throat of a ‘fair’ market in equity futures trading and for all intent and purpose killed the Chinese equity market. Tonight – after 2 days of Yuan weakness – having warned everyon from Soros to Kyle Bass that “betting against the Yuan can’t possibly work,” The PBOC just unleashed plans for so-called “Tobin Tax” on FX transactions (which implicitly taxes each transaction, reducing liquidity, raising margins and reducing leverage).

  Meanwhile, there is a real world demand for Forex, and the CME group is reporting record volumes, even 6% more than the previous record:

  CME Group (NASDAQ:CME), one of world’s leading derivatives marketplaces, announced that on March 10 it reached record trading volumes for forex futures and options. The record 2 517 334 contracts were traded on the Chicago Mercantile Exchange (CME). The number is 6% higher than the previous record of March 6, 2010. Also on March 10, were traded the record 2 350 478 forex futures contracts, exceeding by 142 061 the previous record of 2 208 417 contracts from May 6, 2010. 

  The record volumes were driven by the Euro FX Futures (EUR/USD) trade: $127.13 billion in notional value in futures and $18.5 billion in options.

  As central banks become more and more like big hedge funds, and Forex markets become more volatile, there will be a growing need for Forex for any investment portfolio.

  More and more public companies report ‘currency headwinds’ – the most notable recent report comes from Toys R Us:

  Toys “R” Us Inc. said revenue slipped 2.6% in the latest quarter as the retailer faced currency headwinds over the holiday period.

  The foreign exchange volatility was partially offset by the rise of same store sales of 2.3% in the fourth quarter. Currency woes, however, had a negative $169 million impact.

  For the year, the toy store’s same store sales increased a modest 0.9%.

  “Throughout the year, and especially during the holiday season, we focused on improving our execution to deliver a positive and memorable shopping experience to our customers,” said Dave Brandon, chief executive officer. “We significantly improved our performance, but we can and will make further progress on our quest to achieve flawless execution in every aspect of our operations.”

  It must take a multi-million dollar salary to make such a bombastic statement… losing millions because of a lack of internal financial controls (i.e. no Forex hedging) and at the same time, state that we are on a ‘quest to achieve flawless execution in every aspect of our operations.’  Or maybe ‘flawless’ is executive-speak for misplacing a few million in the Forex market.  This guy should run for political office!

  But it shouldn’t be alarming, in the meetings leading to the “Nixon Shock” and the modern free floating Forex system, genius statesman Henry Kissinger admitted honestly “Economics is not my Forte.”

  Secretary Kissinger: But if they ask what they’re doing—let me just say economics is not my forte. But my understanding of this proposal would be that they—by opening it up to other countries, they’re in effect putting gold back into the system at a higher price.

  Mr. Enders: Correct.

  Secretary Kissinger: Now, that’s what we have consistently opposed.

  Mr. Enders: Yes, we have. You have convertibility if they—

  Secretary Kissinger: Yes.

  Mr. Enders: Both parties have to agree to this. But it slides towards and would result, within two or three years, in putting gold back into the centerpiece of the system—one. Two—at a much higher price. Three—at a price that could be determined by a few central bankers in deals among themselves.

  So, in effect, I think what you’ve got here is you’ve got a small group of bankers getting together to obtain a money printing machine for themselves. They would determine the value of their reserves in a very small group.

  There are two things wrong with this.

  Secretary Kissinger: And we would be on the outside.

  We want money printing machine! We want money printing machine! (childish dancing and yelling)  

  If The Fed had any sense, they would immediately raise rates to 10%, the US Dollar would soar.  Prices of imports would plummet.  Money would flow to USA like a river.  Exports, would need to be managed – but anyway the USA is a net-importer and it costs us nothing to print money and buy from foreigners.  

  It’s amazing, the lack of understanding out there for the most important market in the world – the global money markets; FOREX.  On the one hand, our money is worth less and less every year (most economic actors are Forex losers).  On the other hand, Forex hedging is simple to use; and it’s possible to even make money by trading Forex.  

  Elite E Services, Inc. published a book for those who want to know more about Forex “Splitting Pennies” on sale on kindle and in print from Lulu.  

  

  

  

  

  

• Peter Pan(demonium) Erupts As BoJ "Disappoints", Signals Early End Of NIRP

  USDJPY was in full chaos mode ahead of tonight's BOJ statement. With only 5 of 40 economists expecting further actions by Kuroda (and close Abe advisor Hamada suggesting "I think the BOJ wouldn't take further action right now… probably it will be a wise decision," The BoJ decide to stay put – holding rates flat at -10bps, holding QQE buying flat, and maintaining its ETF buying program at expected levels. The biggest surprise though was a language change suggesting the end of NIRP. After 'mixed' results following its NIRP bomb in January, perhaps it is wise to give the 'economy' time to absorb the craziness as Japan's Peter-Pan-ic continues. The initial reaction was weaker Nikkei and stronger JPY.

  USDJPY algos were utterly confused by every headline before the release:

  

   

  And then the chaos erupted:

  • *BOJ MAINTAINS MONETARY BASE TARGET AT 80T YEN
  • *BOJ MAINTAINS POLICY BALANCE RATE AT MINUS 0.100%
  • *BOJ:FROM APRIL, ETFS TO INCREASE AT 3.3T YEN ANUALLY AS PLANNED
  • *BOJ SAYS IT NEEDS TO BE MINDFUL OF RISK TO PRICE TREND
  • *BOJ'S BOARD VOTES 7-2 TO KEEP NEGATIVE RATE UNCHANGED
  • *BOJ CITES RISKS TO DELAY IN CHANGING DEFLATIONARY MINDSET

  So nothing for now – more is always possible – and the board is split. Of course while expectations were for no change (from economists) the market seems disappointed…

  

   

  The bigggest surprise, however, was:

  • BOJ REMOVES LANGUAGE FROM ITS STATEMENT THAT IT WILL CUT INTEREST RATES FURTHER INTO NEGATIVE TERRITORY IF JUDGED NECESSARY
  • KIUCHI SAID NEGATIVE RATES IMPAIR FUNCTION OF FINANCIAL MARKETS
  • BOJ'S KIUCHI SAID NEGATIVE RATES IMPAIR JGB MARKET STABILITY

  which sparked more chaos…

  

  *  *  *

  Since Kuroda unleashed NIRP, things have been mixed…

  Stocks are 'just' unchanged, JPY is stronger…

  

   

  But the good news is yields have collapsed…

  

   

  Bear in mind, this is the central bank that conjured the concept of Peter Pan to represent its efforts:

  I trust that many of you are familiar with the story of Peter Pan, in which it says, "the moment you doubt whether you can fly, you cease forever to be able to do it." Yes, what we need is a positive attitude and conviction.

  In other words – you have to believe to receive – or the entire ponzi collapses.

  Perhaps alternative forms of stimulation are required:

  

   

  Charts: Bloomberg

  

  

  

  

  

• Having Killed Their Equity Market, China Unleashes "Tobin Tax" For FX Market

  In September last year, Chinese regulators stepped on the throat of a 'fair' market in equity futures trading and for all intent and purpose killed the Chinese equity market. Tonight – after 2 days of Yuan weakness – having warned everyon from Soros to Kyle Bass that "betting against the Yuan can't possibly work," The PBOC just unleashed plans for so-called "Tobin Tax" on FX transactions (which implicitly taxes each transaction, reducing liquidity, raising margins and reducing leverage).

  Deputy central bank governor Yi Gang raised the possibility of implementing a Tobin tax late last year in an article written for China Finance magazine, and now, as Bloomberg reports, it is on!

  China’s central bank has drafted rules for a Tobin tax on currency trading, according to people with knowledge of the matter.

   

  Rules are aimed at curbing speculative trading, say the people, who asked not to be identified as the discussions are private

   

  An initial tax rate may be set at zero so as to allow authorities time to set up rules without immediately implementing the levy, people say

   

  Tax is not designed to disrupt hedging and other FX transactions undertaken by companies, people say

   

  Rules still need final approval by central government and it’s not clear how quickly they may be implemented, people say

   

  People’s Bank of China doesn’t immediately respond to faxed request seeking comment

  What happens next? Well that's easy… This!~

  

  NOTE: Yes that is real… and Yes there is 'some' volume there

  Good luck unwinding those levered shorts… and even if the hedgies are profitable, we suspect the tax will be tiered to enable the maximum pain to be extracted from so-called speculators.

  “The Tobin tax can be considered as a form of capital control,” says Andy Ji, a foreign-exchange strategist and economist at CBA in Singapore.

   

  “The levy will hurt market sentiment and cause investors more panic, as this shows that the existing capital controls are not enough to curb outflows,” Ji says; “Now is not a good time to roll out Tobin tax as the market is already concerned about whether China will be able to increase capital account convertibility in the coming years, and this is another step backward to achieve that goal”

  Simply put this imposition of a Tobin Tax suggests PBOC is expecting a lot of volatility and is trying to minimize any possibility of momentum ignition and speculation as much as possible.

  Charts: Bloomberg

  

  

  

  

  

• America's Gestapo: The FBI's Reign Of Terror

  Submitted by John Whitehead via The Rutherford Institute,

  “We want no Gestapo or secret police. The FBI is tending in that direction. They are dabbling in sex-life scandals and plain blackmail. J. Edgar Hoover would give his right eye to take over, and all congressmen and senators are afraid of him.”—President Harry S. Truman

  “Don’t Be a Puppet” is the message the FBI is sending young Americans.

  As part of the government’s so-called ongoing war on terror, the nation’s de facto secret police force is now recruiting students and teachers to spy on each other and report anyone who appears to have the potential to be “anti-government” or “extremist.”

  Using the terms “anti-government,” “extremist” and “terrorist” interchangeably, the government continues to add to its growing list of characteristics that could distinguish an individual as a potential domestic terrorist.

  For instance, you might be a domestic terrorist in the eyes of the FBI (and its network of snitches) if you:

  • express libertarian philosophies (statements, bumper stickers)
  • exhibit Second Amendment-oriented views (NRA or gun club membership)
  • read survivalist literature, including apocalyptic fictional books
  • show signs of self-sufficiency (stockpiling food, ammo, hand tools, medical supplies)
  • fear an economic collapse
  • buy gold and barter items
  • subscribe to religious views concerning the book of Revelation
  • voice fears about Big Brother or big government
  • expound about constitutional rights and civil liberties
  • believe in a New World Order conspiracy

  Despite its well-publicized efforts to train students, teachers, police officers, hairdressers, store clerks, etc., into government eyes and ears, the FBI isn’t relying on a nation of snitches to carry out its domestic spying.

  There’s no need.

  The nation’s largest law enforcement agency rivals the NSA in resources, technology, intelligence, and power. Yet while the NSA has repeatedly come under fire for its domestic spying programs, the FBI has continued to operate its subversive and clearly unconstitutional programs with little significant oversight or push-back from the public, Congress or the courts. Just recently, for example, a secret court gave the agency the green light to quietly change its privacy rules for accessing NSA data on Americans’ international communications.

  Indeed, as I point out in my book Battlefield America: The War on the American People, the FBI has become the embodiment of how power, once acquired, can be easily corrupted and abused.

  When and if a true history of the FBI is ever written, it will not only track the rise of the American police state but it will also chart the decline of freedom in America.

  Owing largely to the influence and power of the FBI, the United States—once a nation that abided by the rule of law and held the government accountable for its actions—has steadily devolved into a police state where justice is one-sided, a corporate elite runs the show, representative government is a mockery, police are extensions of the military, surveillance is rampant, privacy is extinct, and the law is little more than a tool for the government to browbeat the people into compliance.

  The FBI’s laundry list of crimes against the American people includes surveillance, disinformation, blackmail, entrapment, intimidation tactics, harassment and indoctrination, governmental overreach, abuse, misconduct, trespassing, enabling criminal activity, and damaging private property.

  And that’s just based on what we know.

  Whether the FBI is planting undercover agents in churches, synagogues and mosques; issuing fake emergency letters to gain access to Americans’ phone records; using intimidation tactics to silence Americans who are critical of the government; recruiting high school students to spy on and report fellow students who show signs of being future terrorists; or persuading impressionable individuals to plot acts of terror and then entrapping them, the overall impression of the nation’s secret police force is that of a well-dressed thug, flexing its muscles and doing the boss’ dirty work of ensuring compliance, keeping tabs on potential dissidents, and punishing those who dare to challenge the status quo.

  The FBI was established in 1908 as a small task force assigned to deal with specific domestic crimes. Initially quite limited in its abilities to investigate so-called domestic crimes, the FBI has been transformed into a mammoth federal policing and surveillance agency. Unfortunately, whatever minimal restrictions kept the FBI’s surveillance activities within the bounds of the law all but disappeared in the wake of the 9/11 attacks. The USA Patriot Act gave the FBI and other intelligence agencies carte blanche authority in investigating Americans suspected of being anti-government.

  As the FBI’s powers have grown, its abuses have mounted.

  The FBI continues to monitor Americans engaged in lawful First Amendment activities.

   

  COINTELPRO, the FBI program created to “disrupt, misdirect, discredit, and neutralize” groups and individuals the government considers politically objectionable, was aimed not so much at the criminal element but at those who challenged the status quo—namely, those expressing anti-government sentiments such as Martin Luther King Jr. and John Lennon. It continues to this day, albeit in other guises.

   

  The FBI has become a master in the art of entrapment.

   

  In the wake of the 9/11 terrorist attacks the FBI has not only targeted vulnerable individuals but has also lured them into fake terror plots while actually equipping them with the organization, money, weapons and motivation to carry out the plots—entrapment—and then jailing them for their so-called terrorist plotting. This is what the FBI characterizes as “forward leaning—preventative—prosecutions.”

   

  FBI agents are among the nation’s most notorious lawbreakers.

   

  In addition to creating certain crimes in order to then “solve” them, the FBI also gives certain informants permission to break the law, “including everything from buying and selling illegal drugs to bribing government officials and plotting robberies,” in exchange for their cooperation on other fronts. USA Today estimates that agents have authorized criminals to engage in as many as 15 crimes a day. Some of these informants are getting paid astronomical sums: one particularly unsavory fellow, later arrested for attempting to run over a police officer, was actually paid $85,000 for his help laying the trap for an entrapment scheme.

   

  The FBI’s powers, expanded after 9/11, have given its agents carte blanche access to Americans’ most personal information.

   

  The agency’s National Security Letters, one of the many illicit powers authorized by the USA Patriot Act, allows the FBI to secretly demand that banks, phone companies, and other businesses provide them with customer information and not disclose the demands. An internal audit of the agency found that the FBI practice of issuing tens of thousands of NSLs every year for sensitive information such as phone and financial records, often in non-emergency cases, is riddled with widespread violations.

   

  The FBI’s spying capabilities are on a par with the NSA.

   

  The FBI’s surveillance technology boasts an invasive collection of spy tools ranging from Stingray devices that can track the location of cell phones to Triggerfish devices which allow agents to eavesdrop on phone calls.  In one case, the FBI actually managed to remotely reprogram a “suspect’s” wireless internet card so that it would send “real-time cell-site location data to Verizon, which forwarded the data to the FBI.”

   

  The FBI’s hacking powers have gotten downright devious.

   

  FBI agents not only have the ability to hack into any computer, anywhere in the world, but they can also control that computer and all its stored information, download its digital contents, switch its camera or microphone on or off and even control other computers in its network. Given the breadth of the agency’s powers, the showdown between Apple and the FBI over customer privacy appears to be more spectacle than substance.

   

  James Comey, current director of the FBI, knows enough to say all the right things about the need to abide by the Constitution, all the while his agency routinely discards it. Comey argues that the government’s powers shouldn’t be limited, especially when it comes to carrying out surveillance on American citizens. Comey continues to lobby Congress and the White House to force technology companies such as Apple and Google to keep providing the government with backdoor access to Americans’ cell phones.

   

  The FBI’s reach is more invasive than ever.

   

  This is largely due to the agency’s nearly unlimited resources (its minimum budget alone in fiscal year 2015 was $8.3 billion), the government's vast arsenal of technology, the interconnectedness of government intelligence agencies, and information sharing through fusion centers—data collecting intelligence agencies spread throughout the country that constantly monitor communications (including those of American citizens), everything from internet activity and web searches to text messages, phone calls and emails.

   

  Today, the FBI employs more than 35,000 individuals and operates more than 56 field offices in major cities across the U.S., as well as 400 resident agencies in smaller towns, and more than 50 international offices. In addition to their “data campus,” which houses more than 96 million sets of fingerprints from across the United States and elsewhere, the FBI is also, according to The Washington Post, “building a vast repository controlled by people who work in a top-secret vault on the fourth floor of the J. Edgar Hoover FBI Building in Washington. This one stores the profiles of tens of thousands of Americans and legal residents who are not accused of any crime. What they have done is appear to be acting suspiciously to a town sheriff, a traffic cop or even a neighbor.”

   

  If there’s one word to describe the FBI’s covert tactics, it’s creepy.

   

  The agency’s biometric database has grown to massive proportions, the largest in the world, encompassing everything from fingerprints, palm, face and iris scans to DNA, and is being increasingly shared between federal, state and local law enforcement agencies in an effort to target potential criminals long before they ever commit a crime.

   

  This is what’s known as pre-crime.

  If it were just about fighting the “bad guys,” that would be one thing. But as countless documents make clear, the FBI has no qualms about using its extensive powers in order to blackmail politicians, spy on celebrities and high-ranking government officials, and intimidate dissidents of all stripes.

  It’s an old tactic, used effectively by former authoritarian regimes.

  In fact, as historian Robert Gellately documents, the Nazi police state was repeatedly touted as a model for other nations to follow, so much so that Hoover actually sent one of his right-hand men, Edmund Patrick Coffey, to Berlin in January 1938 at the invitation of Germany’s secret police. As Gellately noted, “[A]fter five years of Hitler’s dictatorship, the Nazi police had won the FBI’s seal of approval.”

  Indeed, so impressed was the FBI with the Nazi order that, as the New York Times revealed, in the decades after World War II, the FBI, along with other government agencies, aggressively recruited at least a thousand Nazis, including some of Hitler’s highest henchmen, brought them to America, hired them on as spies and informants, and then carried out a massive cover-up campaign to ensure that their true identities and ties to Hitler’s holocaust machine would remain unknown. Moreover, anyone who dared to blow the whistle on the FBI’s illicit Nazi ties found himself spied upon, intimidated, harassed and labeled a threat to national security.

  So not only have American taxpayers been paying to keep ex-Nazis on the government payroll for decades but we’ve been subjected to the very same tactics used by the Third Reich: surveillance, militarized police, overcriminalization, and a government mindset that views itself as operating outside the bounds of the law.

  This is how freedom falls, and tyrants come to power.

  The similarities between the American police state and past totalitarian regimes such as Nazi Germany grow more pronounced with each passing day.

  Secret police. Secret courts. Secret government agencies. Surveillance. Intimidation. Harassment. Torture. Brutality. Widespread corruption. Entrapment. Indoctrination. These are the hallmarks of every authoritarian regime from the Roman Empire to modern-day America.

  Yet it’s the secret police—tasked with silencing dissidents, ensuring compliance, and maintaining a climate of fear—who sound the death knell for freedom in every age.

  

  

  

  

  

• Central Banks – The New Nukes?

  You know something is strange when "the riskiest" country in the world is the nation whose central bank everyone is relying on to 'save the world' and "the safest" stock market in the world is from a nation whose neighbor is actively test-firing nuclear missiles? It appears activist central banks – following Draghi's "kitchen sink" – have become the new normal's 'nukes'.

  As Goldman notes,  Brazil & Japan vol is highest and Korea lowest on %-ile basis

  

  Mises' Ryan McMaken warns,

  The obsession with deflation among central banks is leading them to try the same thing over and over again with nothing to show for it, but continued economic stagnation.

   

  On the other hand, an interesting thing is happening. As the ECB and the Bank of Japan have loosened the easy-money spigot even more, their respective currencies have actually gained on other currencies. The reasoning is apparently that the latest moves represent the bottom to how low the central banks are willing to go. That is, investors are betting that after this, the central banks will start to tighten.

   

  Maybe. But we’ll see. Right now, we’re only talking about “bazookas” and “kitchen sinks.” We haven’t even started talking about “heavy artillery” or “going nuclear.”

   

  It ain’t over ’til it’s over, and as George Magnus wrote today, “helicopter money” may be next: “If today’s kitchen sink episode ends with a whimper, as seems likely, and governments continue to stand aside from the economic fray, Europeans may demand still more of their central bank.”

  How does this end well?

  

  

  

  

  

• 343,916 Reasons Why The Fed Is Anything But Independent

  Just a week ago we were surprised to find that current Federal Reserve Governor Lael Brainard gave $750 in three contributions to Clinton’s campaign between November and January, according to Federal Election Commission records.

  And while Fed officials sometimes identify with either major political party, as Bloomberg correctly notes, "donations to a presidential candidate by a senior policy maker are unusual, particularly at a time when the central bank is trying to guard its independence from politics. The Fed’s authority has been criticized during the campaign, and both Democratic and Republican lawmakers have questioned decisions about regulation and monetary policy."

   

  And here is the Republican soundbite for when the Trump campaign shifts to important things like the Fed:

  At a time when Federal Reserve officials are making the case that monetary policy needs to be non-partisan and independent, a sitting governor has given money to Hillary Clinton.

   

  Hardly a glowing endorsement for the apoliticalness, or for that matter intelligence, of the Fed and as Bloomberg's Craig Torres writes, Brainard’s donations "could provide fuel for Republican narratives about the proximity of the Fed and the board to the Obama administration," said Sarah Binder, a senior fellow at the Brookings Institution who is writing a book about politics and the central bank.

  But it is not a "one-off" – very far from it…

  Since the 2004 Presidential election, Bloomberg reports that individuals listing the Fed as their employer have made legally capped donations totaling $436,555 to federal candidates, parties and partisan political action committees. Of that, $343,916, or 79 percent, went to Democrats.

  And Zero went to Donald Trump…

  

   

  The partisan preference has grown stronger since the 2012 presidential election. Through January, Fed employees in this cycle have contributed $54,235, with 88 percent going to Democrats.

  The falling Republican support comes at a time when the central bank is trying to protect its independence from critics in Congress and the top Republican candidates are calling for more scrutiny of the institution.

   

  Trump, Rubio and Cruz have all backed legislation that would subject monetary-policy decisions to increased congressional scrutiny. Fed officials have said that would politicize deliberations that should focus purely on economics.

   

  “I always felt that sustaining the institution against the political arena was the important thing,” said Robert Smith, who retired in 2011 after working for 43 years at the Dallas Fed.

  Another former Fed employee mostly agreed, but added that political outlook can sway economic research.

  “If a person leans to being on the liberal side of the political spectrum they’re more likely to favor intervention,” said Daniel Thornton, a former economist at the St. Louis Fed and now an adjunct scholar at the conservative Cato Institute. “You’d like to say it’s all based on facts, but when you talk about macro-economics, the facts are pretty fungible.”

  An Un-independent Fed and "fungible facts" – just what we need to centrally-plan an economy!

  

  

  

  

• The Liquidity Endgame Begins: Whiting's Revolver Cut By $1.2 Billion As Banks Start Slashing Credit Lines

  Earlier today we reminded readers about the circular (and why note fraudulent conveyance) scheme hatched by JPMorgan to reduce its secured loan exposure to Weatherford, when just two weeks ago none other than JPM underwrote an WFT equity offering in which it sold equity in the company, and which proceeds were promptly used by the company to repay the JPMorgan revolver.

  We then showed that it wasn’t just Weatherford: most of the “uses of funds” from the recent record surge in oil and gas equity offerings, have been used to repay the secured debt/revolver facilities, thereby eliminating funded and unfunded balance sheet exposure of major US banks.

  

  But while lender banks are all too eager to take advantage of the brief surge in equity prices just so they can “help” their clients dilute their shareholder base so to repay the very same lender banks, they know quite well that the equity offering window is rapidly closing; in fact it will slam shut as soon as the price of oil resumes its downward trajectory.

  That does not mean they are out of options to reduce their exposure to US shale, however. Quite the contrary, and in fact the “exposure reduction” is about to begin in earnest. We hinted at what it would look like in early January when we reported that already some 25 of the most distressed shale companies have seen their revolving bases slashed by as much as 50%.

  

   

  These were just the beginning. As Bloomberg wrote earlier, U.S. exploration and production companies must brace for further cuts to their borrowing-base credit lines this spring, as part of the spring 2016 borrowing base redeterminations.

  According to Bloomberg, Royal Bank of Canada estimated that cuts to U.S. borrowing-base credit lines last fall averaged only 6%, while – ironically enough – JPMorgan predicts that the average cut may reach 20% over the next several months. JPMorgan expects some credit lines to be chopped by as much as 50%.

  What is ironic is that the credit lines with the biggest cuts will be those issued by JPMorgan.

  At least 10 E&P companies had fully utilized their credit lines by the end of February, either because their capacities were cut or because they borrowed the remaining amount available to build liquidity. Bloomberg adds that companies nearing current borrowing base limits may be most affected by any further reductions. Those include Vanguard Natural Resources (95 percent), Legacy Resources and Atlas Resource Partners (both at 85 percent), Memorial Production and Breitburn Energy.

  

  “The cuts we saw in 2015 were less than what the market expected, which may imply that the banks were trying to give these companies time to find other ways to address their balance sheet problems,” Bloomberg analyst Spencer Cutter said in a telephone interview on March 12.

  One company that expects significant borrowing base cuts is Memorial Production whose treasurer, Martyn Willsher, said in an e-mail on March 12 that his company expects its borrowing base to be reduced. Memorial is generating $70 million to $80 million of positive cash flow this year and has “other liquidity measures that will ensure we do not have to change our strategy due to a lack of liquidity,” Willsher said.

  Despite its recent rebound above $35 a barrel, oil is still below where it was when borrowing bases were reset in the fall. It has averaged $32 a barrel in 2016, versus $45 in September.

  When oil fell below $30 a barrel in January, “that fundamentally altered the mindset for everyone in the industry, including the banks,” Cutter said.

  Furthermore, with banks facing increasing scrutiny about their exposure to the industry, “they may not be as patient this time,” he said. After all, it was the Dallas Fed which made it very clear to banks to do everything in their power to reduce their exposure to energy companies without unleashing a default tsunami in the process. Most banks are confident they have held up to their end of the bargain, and now the revolver slashing will begin.

  Nowhere is this reduction in bank exposure more evident than in shale giant Whiting Petroleum. Jim Volker, the CEO of Whiting, which recently announced a halt to all fracking in the Bakken shale, said last Thursday that he expects his company’s credit line to be cut by more than $1 billion in an early May loan review, in a move which Reuters dubbed “the latest industry fallout from low oil prices crimping margins and fueling massive spending cuts.”

  For those unfamiliar, the semi-annual review of credit access for small- and medium-sized oil companies is critical in determining not only the market value of their working capital but more importantly their accessible liquidity as a result; because loans tends to be backed by the value of oil reserves, falling crude prices erode the underlying collateral and force a redetermination.

  Whiting is the canary in the coalmine: the company’s massive credit line cut  would prove to be one of the biggest of this price downturn and be larger than executives themselves expected as recently as last month.

  Whiting, the largest oil producer in North Dakota’s Bakken shale formation, had $2.7 billion left on a loan revolver at the end of 2015. Its CEO Volcker said on Thursday he expects Whiting will have “at least $1.5 billion” left on the loan after the redetermination, implying a cut of $1.2 billion.

  What is most troubling is that as recently as late February, or just a few weeks ago, Volker said he expected a cut of no more than 30 percent, which would have been roughly $800 million.

  What this suggests is that even as the price of oil has surged since the February lows, the banks have suddenly gotten far more aggressive about trimming their unfunded (and funded in the case of Weatherford) exposure.

  To be sure, Whiting is trying to put a favorable spin on it: “I’m sure we’ll still have lots of liquidity after our next borrowing base redetermination,” Volker said at the DUG Rockies conference in Denver. In Whiting’s case, its strong position in North Dakota as well as Colorado, combined with hedges for nearly half of its 2016 production, likely worked in its favor as it met with lenders earlier this month.

  As we reported previously, aware that it would lose billions in liquidity, Whiting entered cash hibernation mode: last month the company slashed its 2016 capital budget by 80 percent and suspended fracking; as part of that, Whiting plans to build a backlog of 168 wells this year that are drilled but not brought online, a step should help Whiting save $530 million this year, Volker said.

  “Delaying these completions will afford us optionality to resume growth as oil prices begin to rebound,” Volker said.

  Unfortunately, if only judging by the lenders’ sudden hardball, the price of oil is not going to rebound; quite the contrary and banks are taking every opportunity of the current bounce to reduce or outright eliminate all secured exposure.

  And while Whiting may be big enough to get funding even when the next leg lower in crude hits, others won’t be nearly as lucky and in a few short weeks, once redetermination season is over, we will have the full list of companies whose liquidity is collapsing alongside the plunging price of oil in what will be the most toxic feedback loop of 2016.

  * * *

  But what is most ironic in this whole situation is who is on the other side of Whiting revolver cut. The bank which is rapidly slashing its oil and gas exposure, first to Weatherford and now to Whiting is shown below.

  

  

  

  

  

  

• Jean-Claude Van Damme On The Rockefellers, The Rothschilds, & Ted Cruz

  You know The Deep State has over-stepped its boundaries when none other than "the god of cloud karate" knows there is something wrong. While speaking about US elections and Ted Cruz, on the French TV show Le Grand Journal, Jean-Claude Van Damme hijacked the narrative and explained how the Rothschild and Rockefeller families control the politicians and run the world from behind the scenes.

  Speaking about Ted Cruz and Donald Trump, Van Damme asserted, “Well, they are not going to win”.

   

  “You still have the Rockefeller, people like the Rothschild, those big families that dominate continents….these are families that rise in 1827, a family with five sons that expands, it’s above everything we’re talking (about) tonight,” stated the actor.

   

  He went on to make a distinction between “lobbyists” that control the other candidates and “people like Donald Trump,” who is self-funded.

   

  Finally, JCVD warns that “globalists” were the problem and that “to get out of globalism is to leave the world alone”.

  JCVD unleashes his inner conspiracy fears…

   

  Of course, the mainstream will shrug, and brush off JCVD's comments…

  

   

  But who would doubt a man that could do this…

  

  

  

  

  

• Fight For Freedom Or Humbly Accept Submission

  Submitted by Jeff Thomas via InternationalMan.com,

  Submission to the state is a time-honoured tradition, a concept supported by governing bodies since time immemorial.

  In days of yore, men submitted to whichever member of the tribe was the mightiest in battle. By doing so, they stood a better chance of succeeding in battle, thereby diminishing the likelihood of their own death or enslavement.

  Later on, as tribes became more tied to the land and communities sprang up, the idea of a strong leader still made sense. Not only might he do the best job of leading the protection of the town or village, he might also travel outside the community to attack other communities, bringing back spoils for all to benefit from. (Not too civilised, maybe, but still, the reasoning behind submission to the leader made sense.)

  Later, settlements grew larger and, increasingly, many villages and towns would find themselves joined together collectively, under a national banner, with a single army to protect them. And, again, the leader would most likely be a fierce and formidable warrior. But a significant change was taking place. Whilst the warrior leader was away (sometimes for years), invading other communities, it was necessary to have leadership at home – administrative leadership. Predictably, this leadership also sought the loyalty and submission of the people.

  There was a new wrinkle at this juncture as the administrative leadership did not have to prove itself repeatedly in battle to gain submission. It was expected merely due to the fact that the leaders held power over the people. 

  The expectation of loyalty and submission to a government simply because it is the government is an unnatural and invalid one.

  Today, most leaders are primarily political rather than military, and even those who wear a military uniform almost never take part in actual battle, let alone lead the charge. For this reason, the original reason for loyalty and submission should be outmoded.

  Why, then, does it persist? Well, in fact, it generally persists as long as there is prosperity and a people are prepared to tolerate dominance. However, should prosperity diminish dramatically, obeisance tends to diminish accordingly. At some point, the leaders conclude that they may be losing the submission of the people and need to reinforce it. This is done by one of two methods and, on occasion, both at the same time.

  The first is force. An increased police state can create a greater assurance of submission through fear of those in uniform.

   

  The second is inspiration. A condition of warfare often succeeds as a method of inspiring people to give up some of their rights and fall in behind a leader. Although, in the modern world, we never see a national leader actually suiting up for battle, the mere fact that he’s in charge of the fight from a safe distance often works to inspire people to be more submissive to an administrative government.

  Following the English Revolution of 1688, we Britons found that our political leaders made the decision for us as to what our relationship should be to our new leaders at the time. They declared to the new joint monarchs, William and Mary, “We do most humbly and faithfully submit ourselves, our heirs and posterities, forever.”

  Quite a mouthful. It certainly left no doubt as to the intent of Parliament – that the people of England were never again to question their rulers and, further, that regardless of any possible changes in policies, laws, and edicts by future kings, the people swore submission … permanently.

  This did not sit well with all Englishmen – not surprisingly since they hadn’t been asked whether they wished to make such a declaration of submission. In 1774, an Englishman named Thomas Paine (on the advice of his American friend Benjamin Franklin) immigrated to the Pennsylvania colony and began writing pamphlets that dealt directly with the concept of “unquestioned loyalty and submission”, a concept with which he heartedly disagreed. Perhaps he stated it best in his book, The Rights of Man, first published in 1791:

  “Submission is wholly a vassalage term, repugnant to the dignity of freedom.”

  Mister Paine’s pamphleteering in the late eighteenth century did not actually create the consciousness that brought on the American Revolution, but his phrasings did provide focus for the colonists in stating their grievances against King and Parliament.

  Although Mister Paine’s pamphlets served as guidebooks to liberty and his input contributed to the framing of the US Constitution, he’s not remembered today as one of the seven founders of the United States. But one of those who is recognised today as a founder, Thomas Jefferson, took a very similar view to that of Thomas Paine:

  “When the Government fears the people, there is liberty. When the people fear the government, there is tyranny.”

  Both men believed that it was (and is) essential to assure that any government be reminded continually that it exists to represent the people who pay for its existence. They each echoed a view taken 2,100 years earlier by Aristotle, who commented,

  “[G]overnment should govern for the good of the people, not for the good of those in power.”

  Although these words were not quoted in either the Declaration of Independence or the Constitution, Aristotle’s principles were well-known to all of the Founding Fathers and were frequently the basis of clauses written in each of the US’s founding documents.

  Another quote from Jefferson suggests that it’s entirely predictable that any government is likely to continually work toward increasing its own power over a people. That being the case, from time to time, any government needs to be slapped down and reminded that its task is to serve the people, not to subjugate them:

  “Whenever any form of government becomes destructive of these ends, life, liberty, and the pursuit of happiness, it is the right of the people to alter or abolish it, and to institute new government.”  

  Here’s a final thought to consider:

  The concept of government is that the people grant to a small group of individuals the ability to establish and maintain controls over them. The inherent flaw in such a concept is that any government will invariably and continually expand upon its controls, resulting in the ever-diminishing freedom of those who granted them the power.   

  In reviewing all of the above, it should be clear that it’s the nature of all governments to seek to increase their power over those that they are sworn to represent. It should also be understood that they will not give up this power willingly. At some point, they become successful enough in establishing submission that the populace must either toss out the people in the government, toss out the governmental system, or take exit from the system. The last of these may be chosen in order to more peacefully regain liberty.

  Each of these possible choices requires dramatic change, although the last of these entails less upheaval or danger to the individual.

  The alternative to making such a choice, and the one that the great majority of people in any culture, in any era, choose, is to humbly accept submission. Only a very small minority will actually take positive action to attain freedom over tyranny through internationalisation.

  

  

  

  

  

• Sheriff Refuses To Charge Trump With Inciting "Riot-Like" Conditions At Rally

  Update: Despite the stern protests of such legal luminaries as Cruz and Rubio, Clinton and Sanders, Romney and MSNBC, that “clearly” trump was guilty of inciting violence at his rallies, moments ago BuzzFeed reported that Sheriff’s officials in North Carolina said that Donald Trump will not face charges for possibly inciting riot-like conditions at a rally where one of his supporters punched a protester.

  The Cumberland County Sheriff’s Office had been looking into “the potential of whether there was conduct on the part of Mr. Trump or the Trump campaign which rose to the level of inciting a riot” in Fayetteville, a statement said. But later in the day, investigators determined there wasn’t enough evidence to pursue the case.

   

  In a statement, the sheriff’s office said “legal counsel advised, and the sheriff concurred, that the evidence does not meet the requisites of the law as established under the relevant North Carolina statute and case law to support a conviction of the crime of inciting a riot.”

   

  The lead attorney for the Cumberland County Sheriff’s Office, Ronnie Mitchell, had earlier said charges were unlikely.

  And now, we expect more provocations and more attacks and assaults, until finally a sympathetic enough sheriff is found, one who will charge Trump with something, even if that something is a “panicking” establishment which these days means virtually every other candidate.

  * * *

  Previously

  Over the past week, all anyone wants to talk about in the political arena is who’s to blame for escalating violence at Donald Trump rallies.

  Trump blames protesters. Once upon a time the GOP frontrunner relished the jeers from the back of the arenas he packed, saying getting the cameras on them was the only way that the media would show how large his crowds are. 

  More recently, he’s gotten frustrated after being nearly attacked on stage and after having to cancel a rally in Chicago. He now says he may press charges against protesters and have them jailed so they can explain to their “moms and dads” why they can’t get a job.

  In last night’s Democratic town hall event, both Hillary Clinton and Bernie Sanders decried Trump for intentionally getting both his supporters and his detractors riled up to the point that both sides resort to physical confrontation. He even suggested he would pay the legal bills of a supporter that punched a protester. 

  On Monday, WRAL – a local North Carolina station – reports that Cumberland County Sheriff’s Office investigators are now considering filing a charge of inciting a riot against Trump.

  Here are the excerpts from the story: 

  Last week, Trump visited Concord and Fayetteville in rallies that attracted thousands of attendees. During the rally in Fayetteville, a protester was assaulted as he was escorted from Crown Coliseum by police. A Linden man was later charged in the incident, and Cumberland County Sheriff’s Office investigators said Monday that they are considering filing a charge of inciting a riot against Trump.

   

  
  

   

  The Fayetteville incident preceded an even uglier scene at a Trump rally in Chicago. He canceled an event planned for Saturday evening after supporters and protesters who packed a hall at the University of Illinois at Chicago clashed

   

  The protests weren’t as vocal Monday, and Trump supporters quickly drowned out demonstrators with shouts of “USA” and “Trump.”

   

  Trump addressed the issue by denying suggestions that he incites or even condones violence at his rallies, calling the events “love fests.”

  And so, if this wasn’t already a circus, it certainly is now, with Trump threatening to press charges against protesters for essentially inciting riots at his rallies and a North Carolina Sherriff’s Office prepared to possibly file charges against Trump for doing the exact same thing.

  Aparently, however, there are conflicting reports. Here’s The Daily Beast: 

  WRAL first reported Monday that the department is reviewing whether to nail the Republican frontrunner after a protester was beaten by the candidate’s supporters during a rally last week. According to department spokesman Sgt. Sean Swain, the sheriff appeared on a local radio show earlier in the dayand was asked whether the department had looked into applying the state’s riot laws against Trump—it was something “they had looked at,” Joyce reportedly said. However, Swain told The Daily Beast on the record, Trump’s actions ultimately did not fit the statute. “We would have made the charges by now” if that were the case, the spokesman added.

   

  One hour later, the department issued a statement, under Swain’s name, saying that “We are continuing to look at the totality of these circumstances… including the potential of whether there was conduct on the part of Mr. Trump or the Trump campaign which rose to the level of enciting a riot.”

  Cumberland County Sheriff Office just confirmed it’s looking at possible charges against Trump for inciting a riot

  — Rhys Blakely (@rhysblakely) March 14, 2016

  Cumberland County Sheriff’s statement on Trump (McGraw = Trump supporter who punched a protestor in the head) pic.twitter.com/55v8gzo6el

  — Rhys Blakely (@rhysblakely) March 14, 2016

  If anyone thinks they’ve seen Trump incite a riot thus far, just wait until you see what will happen at the GOP convention if they try to rob him of the nomination in front of a crowd in broad daylight.

  As Bloomberg put it earlier today, describing the hypothetical scene: “Trump supporters within the arena who see the vise closing on his chances to be nominated could respond in rage. Trump himself will likely be egging on an insurrection, from within the hall and amplified by his running commentary on Twitter and in broadcast interviews.”

  

  

  

  

  

• BeWaRe THe IDeS OF TRuMP…

  

  

  

  

  

• Al-Qaeda Robs US-Armed Syrian Rebels (Again), Takes TOWs, Ammo, Tank

  In September, a funny thing happened.

  Gen. Lloyd Austin, head of the U.S. Central Command and Undersecretary of Defense for Policy Christine Wormuth ended up in front of Congress to discuss how the now infamous “train and equip” program for Syrian rebels was going. Specifically, they were asked how many of the fighters that had participated in the program were still operating on the ground.

  Austin’s answer: “four or five.”

  That was just slightly lower than the 5,400 that The Pentagon had hoped to field by the end of 2015, but hey, at least both figures have a four and a five in them.

  “Let’s not kid ourselves, that’s a joke. This is just a total failure,” Sen. Kelly Ayotte (R-N.H.) and Sen. Jeff Sessions (R-Ala.) said.

  Well, a few days after Austin and Wormuth’s embarrassing testimony, whatever remained of the US-trained rebels reportedly got robbed (or we suppose “extorted” is the better term) by al-Nusra when, according to a statement by Colonel Patrick Ryder, a spokesman for U.S. Central Command, the fighters surrendered a quarter of their issued equipment including six pickup trucks and some ammunition to the al-Qaeda affiliate in exchange for “safe passage” from Turkey into Syria. 

  After that revelation, the train and equip program was mothballed.

  Before that, in July, al-Nusra kidnapped the commander of US-trained Division 30, and several of his compatriots. “We warn soldiers of (Division 30) against proceeding in the American project,” Nusra said in a statement distributed online. “We, and the Sunni people in Syria, will not allow their sacrifices to be offered on a golden platter to the American side.”

  Well on Sunday, US-backed rebels suffered another humiliating setback when al-Nusra effectively took over Maarat Numan where Division 13 – one of the first “vetted” groups to be given access to American-made TOWs – maintains a presence.

  “Al-Qaida militants swept through a rebel-held town in northern Syria in a display of dominance Sunday, arresting U.S.-backed fighters and looting weapons stores belonging to the Free Syrian Army,” AP reports. “The FSA’s 13th Division said on Twitter Sunday that Nusra fighters were going door to door in the town of Maarat Numan and arresting its cadres after Nusra, alongside fighters from the Jund al-Aqsa faction, seized Division 13 posts the night before.”

  Lost in the fighting, according to sources: “anti-tank missiles, armored vehicles, a tank, and other arms.”

  Apparently, al-Nusra has sought to suppress demonstrations in Idlib province since the ceasefire (which the group is not a party to) took hold late last month. “Nusra supporters stormed a demonstration in Maarat Numan Friday, carrying black banners, but were drowned out by the protesters,” AP goes on to report. When Division 13 tried to drive them out of the city, Nusra simply took it over. Or at least that’s certainly how it sounds.

  “In tweets posted in the morning on March 13, Division 13 said it had failed to push back an attack by al-Qaeda’s Syrian affiliate, al-Nusra Front, and allied faction Jund al-Aqsa,” AFP said on Sunday.

  “They raided all our bases and looted our weapons and equipment,” the group said, flatly.

  “We congratulate [al-Nusra chief Mohammad] al-Jolani on this conquest!” the group exclaimed, sarcastically on Twitter.  

  Of course the tweets are far more amusing after Bing tries to translate them in their entirety. The following tweet (presumably the full version of the last one mentioned above) translates as: “All our offices raided and looted weaponry wish not this weapon in a prostitute to another faction and blessed llgolani this conquest!”

  ????? #????_?????? ???? ??????? ????? ?????? ???????
  ????? ?? ???????? ??? ?????? ?? ????? ??? ???? ???
  ?????? ???????? ??? ????? !

  — ?????? 13 (@13alferqa13) March 13, 2016

  And here’s another, in which Division 13 appears to call Jolani a “punk.” 

  ????? #??????_13 ????? ?????? ?????? ?? ?????? ?? ??? ????? ????????
  ??? ???? ?????
  ??? ???? ??????
  ???? ?????
  ???? ????
  ????? ????

  — ?????? 13 (@13alferqa13) March 13, 2016

  But the only “punks” on Sunday were the FSA fighters. Around 40 members of Division 13 were reportedly kidnapped.

  Meanwhile, Gen. Austin wants to restart the train and equip program in order to “fight ISIS”. He now says Cent Command would focus on fewer soldiers and train them on “specific skills.” 

  “I think the train and equip program was so fundamentally broken that it likely can’t be salvaged,” Sen. Chris Murphy (D-Conn.) told The Hill. “We, with an enormous amount of oversight and lots of U.S. personnel on the ground, still couldn’t stop the weapons from getting into the hands of the wrong people. I just don’t think anything has changed on that front.” 

  No, probably not. 

  You’re also reminded that back in November, Nusra released a video literally thanking the FSA commanders for supplying them with TOWs. So apparently, al-Jolani’s forces are going to get their hands on American-made anti-tank weapons supplied to the FSA whether the FSA just gives them up, or whether Nusra simply has to take them by force.

  “If it’s going to be the same conditions that were available last time, no,” Sen. Lindsey Graham(R-S.C.) added. “I’d like to know, what — are we going to limit their fighting just to ISIL?” 

  Graham and John McCain don’t want to limit the rebels to just attacking ISIS – they want to give them the leeway to fight Assad as well. “Oh, we’re telling them their first priority is ISIS or something like that. I know what they’re doing,” McCain said, in a thinly veiled swipe at The Pentagon and Obama for trying avoid angering the Russians.

  Of course with Russia pulling out and with the ceasefire in place, it’s not clear there’d be any need to shoot at Assad. Despite his skepticism, McCain said he wouldn’t block a proposal to restart the program. “I am extremely skeptical, because I’ve seen the movie before,” he said. “But for me to say no, you can’t do any arm and train? That’s not right.”

  Are you sure John? Perhaps you should ask yourself who trained Omar the Chechen in Georgia and then rethink your position.

  

  

  

  

  

• The Cashless Society – Keynesian "Stability" Vs Trumpian Turmoil

  Submitted by Thomas DiLorenzo via The Mises Institute,

  In this article, Claudio Grass, Managing Director at Global Gold Switzerland, talks to economist and Mises Institute Senior Fellow Thomas DiLorenzo. This exclusive interview covers central bank monetary policies, Keynesian economics, the economic“recovery,“ political correctness, and much more.

  Claudio Grass: Thomas, it is an honor to have this opportunity to talk to you. I am also pleased to announce that you will be delivering the keynote speech at the BFI Inner Circle Wealth Forum in Florida on April the 18th and 19th. Let’s get started! Given the limited impact of loose monetary policy thus far, where do you think we are headed on the central bank front? Do you think it is likely that the Fed moves interest rates into negative territory, like many central banks across the globe have already done? What would the implications of such a step be?

  Tom DiLorenzo: On the central bank front, we are headed where Japan has been over the past twenty years or so: more and more easy money in a quixotic quest to push interest rates into negative territory, a truly crazy idea. The craziness of this stems from the fact that the entire academic economics profession abandoned Keynesianism in the 1970s. Its failure to explain stagflation was considered to be the final nail in the Keynesian coffin. Franco Modigliani’s presidential address to the American Economic Association in the late '70s was a remarkable white-flag-of-surrender speech by one of the prominent Keynesians. He confessed that Keynesian “stabilization policy” had been a failure. Then, like a bad horror movie, Keynesianism reared its ugly head fifteen or twenty years later as though it had never been discredited. Thus we now have the crazed policy of negative interest rates based on the thoroughly-discredited idea that only “aggregate demand” matters, and if we can just have the central bank push interest rates low enough, people will spend more and businesses will invest more, and all will be good. After the crash of 2008, caused by these same Fed policies, I recall the old Keynesian propagandist/economist Alice Rivlin on TV advising everyone to go out and spend wildly on anything. “It doesn't matter what you spend it on,” she said, “just spend it.”

  In reality, what this new policy — which is the same as the old policy — does is induce businesses to invest more on durable goods like cars and houses, which is why there are new bubbles in these markets, at least in some regions. The price-per-square-foot of Las Vegas real estate, for example, is now higher than it was just before the crash of 2008. There’s also a student debt bubble and a stock market bubble, in my opinion, thanks to the Fed’s single-minded and very simple policy of print, print, and print some more. Rather than reducing some of the wild and reckless speculation on Wall Street, the government bailouts of the speculators created a “moral hazard problem” that will encourage even more reckless speculation. If the speculative investments pay off, they keep the profits; when they go bust, they can count on another round of “too-big-to-fail” bailouts.

  CG: The only way it seems feasible to move interest rates substantially into negative territory would be to either ban or at least massively restrict the use of cash. In our view, there is a clear “war on cash” being promoted in the media. Do you have any thoughts on the issue and are we headed toward a cashless society?

  TD: Yes, there is a war on cash being promoted by the Fed, in particular, and the government, in general (and its lapdog supporters in the media). The main reason for this is that if people can hold cash, it makes it more difficult for the Fed to centrally plan the economy. Also, Keynesianism has always been at war with savings since its principle tenet is that savings are bad, consumption is good (there you have all of Keynesianism in a nutshell). This began with the silly theory of the “paradox of thrift” that said that savings is harmful to the economy; therefore, the more we save now, the poorer we will all become, and the less able we will be to save (and consume) in the future. The Keynesian central planning authorities at the Fed and elsewhere would like to see a cashless society because keeping cash can be a form of savings instead of consumption. I think we are headed toward a cashless society unless the public wakes up and begins to protest this.

  CG: What do you think the implications of a cashless society are when we combine this with other legislation like the PATRIOT Act? Do you think we are headed toward a totalitarian state in the US, where private property rights will no longer be protected?

  TD: An important reason why the state would like to see a cashless society is that it would make it easier to seize our wealth electronically. It would be a modern-day version of FDR’s confiscation of privately-held gold in the 1930s. The state will make more and more use of “threats of terrorism” to seize financial assets. It is already talking about expanding the definition of “terrorist threat” to include critics of government like myself. The American state already confiscates financial assets under the protection of various guises such as the PATRIOT Act. I first realized this years ago when I paid for a new car with a personal check that bounced. The car dealer informed me that the IRS had, without my knowledge, taken 20 percent of the funds that I had transferred from a mutual fund to my bank account in order to buy the car. The IRS told me that it was doing this to deter terrorism, and that I could count it toward next year’s tax bill.

  Property rights in the US have been under assault for a very long time and the assault is proceeding at an accelerated rate with such monstrosities as “Obamacare,” which forces Americans to buy government-prescribed “health insurance,” and all the Soviet-style regulation and regimentation of financial markets in the wake of the government-created Great Recession of 2008.

  CG: We believe that history doesn’t repeat itself, but rather rhymes (Mark Twain). Do you think there are historical parallels to be found in US history to the current situation (economic socialism, restrictions on private gun ownership, etc.)?

  TD: I don't know if history rhymes, but there are some things that are true of all governments at all times. One thing is a deep distrust, resentment, or even hatred of Adam Smith’s “invisible hand”: the idea that individuals, in pursuing their self-interest in the free market, coincidentally benefit the rest of society in most instances without any “czar” or central planning authority involved. Peaceful, voluntary trade leaves little room for politicians to plan everyone’s life and make themselves rich and famous through plunder. Thus, they are eternal enemies of free enterprise in particular, and freedom in general, with very few modern-day exceptions, such as former Congressman Ron Paul. So despite hundreds of years of miserable failures of socialism and government “planning” of every other kind, governments ignore this history because it is in their self-interest to do so.

  With regard to gun ownership, all governments have promoted, to some degree, the idea that only the government’s police and military should have guns. This policy has been less successful in America than in any other country, thank God. The main reason for the Second Amendment’s right to bear arms in the US Constitution, according to the “father of the Constitution” James Madison, was so that an armed population could defend itself from a future government that wanted to enslave them.

  CG: Why do you believe the economic recovery has been so weak? What impact do you think this will have on precious metals and other assets with real value?

  TD: The recovery has been so weak because of (1) Fed policy and (2) most other government policies. The bright side to any recession is that businesses are finally forced to liquidate bad investments and do everything they can to become more profitable. The Fed delayed and interfered with this process by continuing the same easy-money policies that caused the recession in the first place. This resulted in significantly more bad investments and the creation of another bubble economy. Much of the rest of government policy has created tremendous uncertainty, what economist Robert Higgs calls “regime uncertainty.” Businesses still have only a vague idea of what Obamacare will cost them, for example. A high degree of uncertainty makes it difficult, if not impossible, to plan for the future so many businesses simply stay where they are until the government steps back. This is what happened after FDR’s death. There were no longer constant threats of new taxes, regulations, or confiscations of gold and other assets, and so capital investment finally began to increase after being negative throughout the 1930s. In this atmosphere, which I don’t see as changing very significantly, the smart investors will include more gold and precious metals in their portfolios.

  CG: You often talk about the dangers of political correctness (PC) in your articles. We believe that under the guise of PC, free speech as we know it is being limited and PC is being used to try to implement a sort of “thought control.” Would you share your views on the topic?

  TD: Most Americans do not realize that the academic elite at most universities are what are known as “cultural Marxists.” After the worldwide collapse of socialism in the late ‘80s and early ‘90s, the academic Marxists redefined themselves. They largely abandoned the old “class struggle” rhetoric involving the capitalist and worker “classes” and replaced them with an oppressor and an oppressed class. The oppressed includes women, minorities, LGBT, and several other mascot categories. The oppressor class consists of white heterosexual males who are not ideological Marxists like them. Another branch of the Marxist Left decided to continue promoting socialism under the guise of “saving the planet.” I call these people “watermelons” — green on the outside, red on the inside.

  The cultural Marxists have adopted the advice of the philosopher Herbert Marcuse, who is really the “godfather” of cultural Marxism. He preached that free speech is really a tool of oppression because it leads to critiques of “utopia,” by which he meant communism. This is where all the vicious crackdowns on campus free speech come from: the cultural Marxists will say that they are doing the morally-correct thing to censor speech by conservatives or libertarians, for such speech may be critical of their ideology. They are totalitarian-minded, fascist thought control police and dominate almost all university administrations in the US. It is creating a real dumbing down of American youth, for much of their university education is now indoctrinated in left-wing platitudes rather than the development of critical thinking. The big exceptions, however, are the students who stick to studying business, economics, engineering, math, etc., and largely ignore the PC circus.

  CG: Now to the presidential election in the US. Who do you think will be the likely winner of this race? It is believed that if Trump wins the election that the US will move toward a more isolationist foreign and economic policy. What are your thoughts on Trump?

  TD: Right now my money is on Donald Trump being the next president. If that happens, there will be a less “isolationist” foreign policy, for Trump does not want to risk starting World War III, unlike all of the “neoconservatives” who run both of the main political parties. That is why he is so hated and despised by the Republican Party establishment. He would like to do more business with countries like Russia rather than start a nuclear war with the Russians. They, on the other hand, want to see endless military aggression in the Middle East and elsewhere. This is why they will do everything possible to defeat Trump, including putting all of their Big Money behind Hillary Clinton or whomever the Democrat Party nominee is. If I were Donald Trump I would also double or triple my personal security detail.

  As for economic policy, Trump could hardly be worse than Obama or his predecessor. He has said that he hates taxes and does everything in his power to minimize his own tax burden, which is certainly a good instinct. Since he’s a billionaire, he can’t be bought off on any policy, which is really the main reason why the GOP oligarchs hate him with a red-hot passion. But if he wins and becomes a politician, there is always the chance that he will succumb to a more interventionist economic policy so that the media will say nicer things about him. Vanity seems to be one of the man’s hallmarks.

  

  

  

  

  

• The "Surprising" Answer What Energy Companies Have Spent Their Newly Issued Equity Proceeds On

  One week ago, as confirmation that the recent oil rally is merely being used by banks to force debtor companies to sell equity and to repay as much secured loans as possible, we showed the case study of Weatherford International and its primary banker, JPMorgan.

  As we laid out, Weatherford had been in talks with JP Morgan Chase, its key lender, to re-negotiate its revolving credit facility – the only thing keeping the company afloat. “However, in a move that shocked the financial markets, JP Morgan led an equity offering that raised $565 million for Weatherford. Based on liquidation value Weatherford is insolvent. The question remains, why would JP Morgan risk its reputation by selling shares in an insolvent company?“

  “According to the prospectus, at Q4 2015 Weatherford had cash of $467 million debt of $7.5 billion. It debt was broken down as follows: [i] revolving credit facility ($967 million), [ii] other short-term loans ($214 million), [iii] current portion of long-term debt of $401 million and [iv] long-term debt of $5.9 billion.”

  But the biggest surprise was that JP Morgan is also head of a banking syndicate that has the revolving credit facility.

  It was a surprise because JP Morgan also happened to be the lead underwriter on Weatherford’s equity offering.

  The punchline: the proceeds from the offering are expected to be used to repay JP Morgan’s revolving credit facility.

  Our friends from the New York Shock Exchange summarized this circular cash flow best:

  “in effect, JP Morgan is raising equity in a company with questionable prospects and using the funds to repay debt the company owes JP Morgan. The arrangement allows JP Morgan to get its money out prior to lenders subordinated to it get their $401 million payment. That’s smart in a way. What’s the point of having a priority position if you can’t use that leverage to get cashed out first before the ship sinks?”

  We explained the market implications from this as follows: “as a result of this coordinated lender collusion to prop up the energy sector long enough for the affected companies to sell equity and repay secured debt, the squeeze may last a while; as for the bad news: the only reason the squeeze is taking place is because banks are looking to get as far from the shale patch and the companies on it, as possible.“

  * * *

  But while the Weatherford example was indeed grotesque and extreme in its inherent conflicts of interest, some readers wondered if this was perhaps an isolated case. The answer: a resounding no.

  Here is Credit Suisse’ James Wicklund with the detail:

  We have been paying close attention to E&P equity raises over the past few weeks, looking specifically at the size and proceeds of the deals. So far in 2016, NAM E&Ps have raised $9.3B in equity, down from $16.0B for full-year 2015. Proceeds are similar to 2015 as E&Ps proceeds are going to pay down debt and, in some cases, fund capex.

  … but mostly to pay down debt, and almost exclusively secured, revolver debt as the following table shows.

  

  Which goes back to what MatlinPatterson’s Michael Lipsky said some time ago: “we always assume that secured lenders would roll into the bankruptcy become the DIP lenders, emerge from bankruptcy as the new secured debt of the company. But they don’t want to be there, so you are buying the debt behind them and you could find yourself in a situation where you could lose 100% of your money.“

  For the answer why banks are scrambling to get out, ask the Dallas Fed.

  And since the Dallas Fed won’t answer, the question remains: if the secured banks “don’t want to be there”, why are new unsecured equity investors so desperately eager to take their place, and just what do the banks know that these new equity buyers clearly don’t?

  

  

  

  

  

• The 19-Year-Old Who Outperformed 99% Of Hedge Funds In 2012 Shares Her "Trading Secrets"

  Remember Rachel Fox? For those who do not, here is a reminder courtesy of this blast from the February 2013 past interview of the then-16 year old Desperate Housewives “TV star” who became a “star trader” using her acting money, and after returning 30% in 2012 and outperforming 99% of hedge funds, was promptly interviewed by CNBC, unleashing the whole “17 year old hedge fund manager” meme:

  Forget Ackman, Einhorn, Bass, And Hendry. There is only one name in the world of equity market performance in 2012 – Rachel Fox, of ‘Desperate Housewives’ fame.

   

  With a 30%-plus performance, the day-trading debutante has turned from actress to activist as she day-trades her way through the day. The 16-year-old actress who made 338 trades last year, based mostly on technicals, “…fell in love with the idea and the concept of being able to just buy something, have it go up, or have it go down, depending on which way you bet it and have it make you money. I thought, oh, my, gosh, that’s amazing, and so easy, I have to do this.”

   

  If ever there was a sign of the extreme bubble that central planning has re-created for us – it has to be this.

   

  Her advice: “you have to really just trade on your own instincts and not just be like, oh, this person says this is great, let me just go for it.”

   

  Our advice: next time readers are discussing stock tips with a random employee of Hustler Club, Scores or Spearmint Rhino – don’t just stare, listen! Said ‘random employee’ is almost certainly outpeforming the “smart money”, and the broader market, by a wide margin. Thank you Ben.

   

   

  Three years later Rachel is back, all grown up at the ripe old age of 19, and still a star trader according to her latest interview this time not with CNBC but with ABC’s Good Morning America.

  

   

  In it she “shares her financial secrets“, such as the following.

  “When I was 16 I was like, I understand a lot about, you know, companies,” the “Desperate Housewives” actress told “Good Morning America” co-anchor Amy Robach. “And … how they IPO on the stock exchange. I had this understanding and know-how. I had the skill of managing money….”

  Armed with this skillset she not only generated a 30% return in 2012, nearly double the return on the S&P’s paltry 16%, but put to shame virtually all hedge funds.

  How did she do it?

  “I have a couple different strategies,” she said. “… With other investments, I will definitely pay attention to what’s going on in pop culture a lot … you can often take that information and kind of, arbitrage it before Wall Street knows about it. So, being a young investor, actually, has huge advantages and nobody even knows about that, because pop culture and, you know, all the things that influences certain companies to do very well, is right at your fingertips.”

  So for all those worried about fundamentals, technicals, and which central bank will buy junk bonds next, here is what you’ve been looking for: be young, ideally between the ages of 16 and 19; failing that, just keep an eye on the “pop culture” that fascinates young people and you are guaranteed to outperform the market.

  “… If you’re curious about something, just let that drive you and just go with it,” Fox said. “Just let the enthusiasm take you ’cause that’s what I did and I was like … ‘There’s no females in this industry or this world, but I’m gonna do it anyway.'”

  The last thing we would like to do is temper the young star trader’s enthusiasm, but we would like to advise young Ms. Fox that the most prominent hedge fund manager (in the U.S. and the world) just happens to be female, and her name is Janet Yellen.

  Her full array of “trading secrets” are revealed in the interview below.

  

  

  

  

  

• The Chart Every 25-Year-Old Should Ignore

  Submitted by Lance Roberts via RealInvestmentAdvice.com,

  There are two primary reasons Millennials aren’t saving like they should. The first is the lack of money to save, the second is the lack of trust in Wall Street. A recent post from JP Morgan, via Andy Kiersz, got me to thinking on this issue.

  “JPMorgan shows outcomes for four hypothetical investors who invest $10,000 a year at a 6.5% annual rate of return over different periods of their lives:

  • Chloe invests for her entire working life, from 25 to 65.
  • Lyla starts 10 years later, investing from 35 to 65.
  • Quincy puts money away for only 10 years at the start of his career, from ages 25 to 35.
  • Noah saves from 25 to 65 like Chloe, but instead of being moderately aggressive with his investments he simply holds cash at a 2.25% annual return.”

  

  There are two main problems with this entire bit of analysis.

  Saving Is Problem

  First, while saving $10,000 a year sounds great, the real problem is that median incomes in the U.S. for 80% of wage earners is $42,564 (via the Census Bureau, 2014 most recent data).

  

  The problem, of course, is JP Morgan assumes that these young individuals are able to save an astounding 25% of their annual incomes. This is not a realistic assumption given that many of the Millennial age group are struggling with student loan and credit card debts, car notes, apartment rent, etc.

  But it really isn’t just the Millennial age group that are struggling to save money but the entirety of the population in the bottom 80% of income earners. According to a Bankrate.com survey, 63% of American’s do not have enough savings to pay for a $500 car repair or a $1000 emergency room bill. However, as noted, it even covers a large number of higher income individuals as well.

  “While savings predictably increase with income and education, even 46% of the highest-income households ($75,000+ per year) and 52% of college graduates lack enough savings to cover a $500 car repair or $1,000 emergency room visit.”

  How are Chloe, Lyla, Noah and Quincy to save $10,000 a year when Chole works as a nursing assistant, Lyla waits tables, Noah is a bartender and Quincy works retail? (These are the jobs that have made up a bulk of the employment increases since 2009. They are also in the lower wage paying scales which makes the problem of savings for difficult.)  This is also why Millennials are setting new records for living with their parents.

  “Young people started moving out mid-century as they became more economically independent, and by 1960 only 24% of young adults total—men and women—were living with mom and dad. But that number has been rising ever since, and in 2014, the number of young women living with their parents eclipsed 1940s—albeit by less than a percentage point. And last year 43% of young men were living at home, which is the highest rate since 1940.”

  

  “But Lance, wages have been rising recently. That helps, right?”

  While we have, at long last, seen an uptick in wages recently, the growth rate of wages remains well behind levels seen prior to the financial crisis. Wage growth remains woefully behind levels of rising healthcare, food and other related living costs that eat up a substantial portion of incomes reducing the ability to save.

  

  Stocks Do Not Deliver Compound Rates Of Return

  The second major problem with JPM’s analysis is the assumption that stocks deliver compounded returns over the long-term. This is one of the biggest fallacies perpetrated by Wall Street on individuals in the effort to entice them to sink their money in “fee-based” investment strategies and forget about them.

  Compound returns ONLY occur in investments that have a return of principal function and an interest rate such as CD’s or Bonds (not bond funds.)  This is not the case with stocks as I have explained previously:

  “First, while over the long-term (1900-Present) the average rate of return may have been 10% (total return), the markets did not deliver 10% every single year.  As I discussed just recently, a loss in any given year destroys the ‘compounding effect:’

   

  Let’s assume an investor wants to compound their investments by 10% a year over a 5-year period.”

  

  “The ‘power of compounding’ ONLY WORKS when you do not lose money. As shown, after three straight years of 10% returns, a drawdown of just 10% cuts the average annual compound growth rate by 50%.

   

  Furthermore, it then requires a 30% return to regain the average rate of return required. In reality, chasing returns is much less important to your long-term investment success than most believe.”

  Secondly, while JPM’s assessment shows a nice smooth acceleration of wealth for the four individuals, there is a huge difference that occurs when accounting for the variability of returns during a long-term investment period.  To wit:

  “Here is another way to view the difference between what was ‘promised,’ versus what ‘actually’ happened. The chart below takes the average rate of return, and price volatility, of the markets from the 1960’s to present and extrapolates those returns into the future.”

  

  “When imputing volatility into returns, the differential between what investors were promised (and this is a huge flaw in financial planning) and what actually happened to their money is substantial over the long-term.”

  Lastly, and probably the most critical point, is valuation level of the market when these individuals began the saving and investing program.

  The problem for Chloe and her friends is that valuation levels are currently at some of the highest levels recorded in market history. The chart below shows REAL rolling returns for stock-based investments over 20-year time frames at various valuation levels throughout history.

  

  Of course, none of this even includes the negative impacts to individuals and their savings due to the emotional and psychological impact of market volatility over time. As I discussed previously in “Dalbar: Why Investors Suck:” 

  “In 2014, the average equity mutual fund investor underperformed the S&P 500 by a wide margin of 8.19%. The broader market return was more than double the average equity mutual fund investor’s return. (13.69% vs. 5.50%).”

  

  Why is this? Well, according to Dalbar, there are three primary reasons:

  • 25% Lack of capital to invest (Chloe can’t save $10,000 a year)
  • 25% Capital needed for something else. (Noah is paying off student loan debt.)
  • 50% Were directly related to psychological and emotional factors.

  Of course, after years of watching their parents slaughtered by two massive bear markets, which Wall Street never warned of and were directly responsible for, is it any wonder that “trust” is a major issue? 

  

  See the problem here for Wall Street?

  What Millennial’s, and everyone else, is starting to figure out is that Wall Street is not there to help you, but only to help themselves. “Long-term” and “buy-and-hold” investment strategies are good for Wall Street’s bottom lines as the annuitized revenue stream accrues each year. Unfortunately, for individuals, the results between what is promised and what actually occurs continues to be two entirely different things and generally not for the better. 

  Don’t misunderstand me. Should individuals invest in the financial markets? Absolutely. However, it should be done with a solid investment discipline that takes into account the importance of managing volatility and psychological investment risks. There are many great advisors that do exactly that, unfortunately, they generally aren’t found on the front pages of investment publications or in the financial media.

  Of course, the problem to solve first is getting Millennial’s out of their parents basements and back into the work force. Having a job makes it easier to start investing to begin with.

  

  

  

  

  

• JPM Looks At Draghi's "Package," Calls It "Solid," But Underwhelming

  Earlier this month, JPMorgan’s Jan Loeys revealed that the bank is underweight equities “for the first time this cycle.”

  Why? Well, allow Jan to explain it to you:

  The fundamentals of growth, earnings and recession risk have not improved, and if anything have worsened. We remain wary of the near-empty ammo box of policy makers. Our 12-month-out US recession odds have risen to 1/3. But even with no recession this year or next, we see US earnings rising only slowly by low single digits and see little to boost multiples. The eventual recession should bring US stocks down some 30%, creating a strong downward risk skew to returns over the next few years.

  That came just a day after Mislav Matejka suggested one reason to avoid buying this market: namely that even as equities were down 3% on the year going into March, multiples were actually higher than they were on January 1.

  On Monday, we get the latest from Matejka. His advice: fade the ECB. To wit:

  Having advocated for a tradeable rebound since 15th February, we called last week to start fading the bounce, looking for the rally to peter out. We reiterate the view that one should be using the latest announcement of additional ECB stimulus as an opportunity to cut exposure, a case of “travel and arrive”.

  While Draghi made every effort to atone for disappointing markets in early December by throwing the Keynesian kitchen sink at things last week, JPM thinks the outlook for inflation (which is of course still abysmal) and less focus on the currency wars makes Draghi’s “package” “solid” but ultimately underwhelming:

  ECB clearly tried to put last December’s disappointment behind it by moving deeper into negative rates territory, offering four additional TLTROs and increasing the pace and scope of asset purchases. On the negative side, the forward inflation targets were downgraded substantially, ECB didn’t address the issue of capacity constraints, and the shift in focus away from facilitating further currency depreciation will, in our view, end up being a negative for region’s equity market. Overall, we believe the latest package is far from a game changer.

   

  
  

  And besides, the bank goes on to point out, so far NIRP has done… well… not much of anything:

  Looking at past examples of negative interest rates, in Switzerland, Japan, Sweden and Denmark, the impact on economic activity was muted, with no boost to consumer confidence or IP. Credit growth also failed to strengthen once negative interest rates were introduced. Equity markets typically struggled to perform in the backdrop of negative interest rates. Inflation metrics remained subdued, the direction of bond yields was down and the shape of the yield curve flattened. At the sector level, Banks unsurprisingly showed a consistently poor performance in the NIRP backdrop in every region that implemented it.

  There’s nothing good about any of that if you’re central banks experimenting in NIRPdom. Here’s a look at how “effective” NIRP has been across countries:

  

  As JPM goes on to note, “both IP and consumer confidence are weaker today than they were when NIRP was announced, in most cases, PMIs have also weakened in most places since NIRPs started, [and] only Danish stocks have moved up since the deposit rate was cut to negative territory.”

  So how should you play Draghi’s new “package,” you ask? European insurers. Why? Simple. They have quite a bit of corporate debt on their books and Draghi is about to drive a rally in IG: 

  ECB purchases are likely to lead to tighter spreads, which should help asset values and reduce default potential through cheaper refinancing. Insurance is the sector displaying the largest inverse correlation to IG spreads.

  
  

  

  So don’t expect the ECB’s kitchen sink to do much for equities at the index level. Or for the economy. Or for inflation. And on balance it’s likely to be bad for banks given the observed propensity for flatter yield curves under NIRP. 

  But if you’re so inclined, you can play the insurers in hopes Draghi can drive significant spread compression. Then again, maybe by buying corporate debt, the ECB can unleash a buyback bonanza in Europe. Perhaps that would help index returns under NIRP.

  Of course it still won’t do much for the real economy or inflation. Just ask Janet Yellen.

  

  

  

  

  

• Loretta Lynch And The Government War On Free Speech

  Submitted by Ron Paul via The Ron Paul Institute for Peace & Prosperity,

  During her appearance before the Senate Judiciary Committee last week, Attorney General Loretta Lynch admitted that she asked the FBI to examine whether the federal government should take legal action against so-called climate change deniers. Attorney General Lynch is not responding to any criminal acts committed by climate change skeptics. Instead, she is responding to requests from those frustrated that dissenters from the alleged climate change consensuses have successfully blocked attempts to create new government programs to fight climate change.

  These climate change censors claim that the argument over climate change is settled and the deniers’ success in blocking congressional action is harming the public. Therefore, the government must disregard the First Amendment and silence anyone who dares question the reigning climate change dogma. This argument ignores the many reputable scientists who have questioned the magnitude, effects, and role of human action in causing climate change.

  If successful, the climate change censors could set a precedent that could silence numerous other views. For example, many people believe the argument over whether we should audit, and then end, the Federal Reserve is settled. Therefore, the deniers of Austrian economics are harming the public by making it more difficult for Congress to restore a free-market monetary policy. So why shouldn’t the government silence Paul Krugman?

  The climate change censorship movement is part of a larger effort to silence political speech. Other recent examples include the IRS’s harassment of tea party groups as well as that agency’s (fortunately thwarted) attempt to impose new rules on advocacy organizations that would have limited their ability to criticize a politician’s record in the months before an election.

  The IRS and many state legislators and officials are also trying to force public policy groups to hand over the names of their donors. This type of disclosure can make individuals fearful that, if they support a pro-liberty group, they will face retaliation from the government.

  Efforts to silence government critics may have increased in recent years; however, the sad fact is the US Government has a long and shameful history of censoring speech. It is not surprising that war and national security have served as convenient excuses to limit political speech. So-called liberal presidents Woodrow Wilson and Franklin Roosevelt both supported wartime crackdowns on free speech.

  Today, many neoconservatives are using the war on terror to justify crackdowns on free speech, increased surveillance of unpopular religious groups like Muslims, and increased government control of social media platforms like Facebook and Twitter. Some critics of US foreign policy have even been forbidden to enter the country.

  Many opponents of government restrictions on the First Amendment and other rights of Muslims support government actions targeting so-called “right-wing extremists.” These fair-weather civil liberties defenders are the mirror image of conservatives who support restricting the free speech rights of Muslims in the name of national security, yet clam to oppose authoritarian government. Defending speech we do not agree with is necessary to effectively protect the speech we support.

  A government that believes it can run our lives, run the economy, and run the world will inevitably come to believe it can, and should, have the power to silence its critics. Eliminating the welfare-warfare state is the key to protecting our free speech, and other liberties, from an authoritarian government.

  

  

  

  

  

• Wedbush Warns "A Trump Victory Will Send Stocks Down 50%"

  "The Fed has consistently missed every recession and every depression" says Wedbush's Ian Winer, as he explains to BNN why watching the bond market and not this week's FOMC "dot plot" is more insightful, "expecting the economy to be mired in modest growth with at most 2 rate hikes this year."

  But then Winer goes full bear-tard as he opines on tomorrow's super-super-super-Tuesday noting that "people are very concerned about any outcome other than Hillary Clinton," ominously warning that "if Trump wins Florida and Ohio then the market will get very nervous."

  "If Trump or Bernie Sanders wins, I would pretty much go live anywhere but here [in the US]… if either of these two become President, buy canadian real estate… and be nervous of Florida and Arizona real estate."

   

  "If [Trump] sticks to his word and his 3rd grade economics, then we would be in trouble…"

   

  "If Trump becomes President of this country, The S&P will go to 1,000… people are brushing it off but there is absolutely no way that this market and this economy does not get pounded."

  Full interview (via BNN)…

  

  

  

  

  

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