- Government Officials Admit to ECONOMIC False Flag Operations
False flag attacks don’t just involve physical deaths and wars …
They also involve faked economic events and financial casualties.
For example, two officials of the International Monetary Fund said last month that they needed the threat of an imminent financial catastrophe to force other players into accepting its measures such as cutting Greek pensions and working conditions, and – as the Greek government put it (via Bloomberg) – the IMF was “considering a plan to cause a credit event in Greece and destabilize Europe.”
High-level officials also admitted to intentionally destroying their own nations’ economies in order to “justify” structural economic reforms.
For example, Japanese Prime Minister Junichiro Koizumi and Japanese central bank officials admitted that they kept Japan’s economy in a deflationary crisis to promote “structural reform” which would allow the Japanese economy to be looted by foreign interests. Japanese central bank officials admitted the same thing.
Japan Times noted in 2003:
Official statements by BOJ executives [reveal]: The BOJ can be helpful by not being helpful. The princes recognized that such structural change was so opposed to the special and general interests of most Japanese — citizens, businessmen, bureaucrats and politicians — that it could be achieved only by crippling the economy and preventing its recovery.
Something similar happened in Thailand and the EU.
Indeed, the former head of the Bank of England said last month that the depression in the EU was more or less a “deliberate” policy choice.
And an economist at insurance giant AIG – and former head of the European Commission’s unit responsible for the European Monetary System and monetary policies – said in 2008 that what European leaders wanted was to create a crisis to force introduction of “European economic government.”
Indeed, Greece (more), Italy, Ireland (and here) and other European countries have all lost their national sovereignty to the ECB and the other members of the Troika.
ECB head Mario Draghi said in 2012:
The EU should have the power to police and interfere in member states’ national budgets.
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“I am certain, if we want to restore confidence in the eurozone, countries will have to transfer part of their sovereignty to the European level.”
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“Several governments have not yet understood that they lost their national sovereignty long ago. Because they ran up huge debts in the past, they are now dependent on the goodwill of the financial markets.”
Threats of Economic Terrorism
The Saudis said they would sell $750 billion in U.S. treasury securities and other assets in the United States if an investigation of Saudi involvement in 9/11 is allowed to occur. This sound like the mafioso who asks: “We wouldn’t want anybody to get hurt, now would you?”
American banks have carried out the same type of terrorist blackmail. For example, the Tarp bank bailouts in the U.S. were passed using apocalyptic – and false – threats. And they were not used for the stated purpose.
As I’ve previously reported:
The New York Times wrote last year:
In retrospect, Congress felt bullied by Mr. Paulson last year. Many of them fervently believed they should not prop up the banks that had led us to this crisis — yet they were pushed by Mr. Paulson and Mr. Bernanke into passing the $700 billion TARP, which was then used to bail out those very banks.
Indeed, Congressmen Brad Sherman and Paul Kanjorski and Senator James Inhofe all say that the government warned of martial law if Tarp wasn’t passed:
That is especially interesting given that the financial crisis had actually been going on for a long time, but – instead of dealing with it – Paulson and the rest of the crew tried to cover it up and pretend it was “contained”, and that it was obvious to world leaders months earlier that it was not a liquidity crisis, but a solvency crisis (and see this).
Bait And Switch
The Tarp Inspector General has said that Paulson misrepresented the big banks’ health in the run-up to passage of TARP. This is no small matter, as the American public would have not been very excited about giving money to insolvent institutions.
And Paulson himself has said:
During the two weeks that Congress considered the [Tarp] legislation, market conditions worsened considerably. It was clear to me by the time the bill was signed on October 3rd that we needed to act quickly and forcefully, and that purchasing troubled assets—our initial focus—would take time to implement and would not be sufficient given the severity of the problem. In consultation with the Federal Reserve, I determined that the most timely, effective step to improve credit market conditions was to strengthen bank balance sheets quickly through direct purchases of equity in banks.
So Paulson knew “by the time the bill was signed” that it wouldn’t be used for its advertised purpose – disposing of toxic assets – and would instead be used to give money directly to the big banks?
Senator McCain also says that Paulson pulled a bait-and-switch:
Sen. John McCain of Arizona … says he was misled by then-Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke. McCain said the pair assured him that the $700 billion Troubled Asset Relief Program would focus on what was seen as the cause of the financial crisis, the housing meltdown.
“Obviously, that didn’t happen,” McCain said in a meeting Thursday with The Republic‘s Editorial Board, recounting his decision-making during the critical initial days of the fiscal crisis. “They decided to stabilize the Wall Street institutions, bail out (insurance giant) AIG, bail out Chrysler, bail out General Motors. . . . What they figured was that if they stabilized Wall Street – I guess it was trickle-down economics – that therefore Main Street would be fine.”
Even the New York Times called Paulson a liar in 2008:
“First [Paulson’s Department of Treasury] says it has to have $700 billion to buy back toxic mortgage-backed securities. Then, as Mr. Paulson divulged to The Times this week, it turns out that even before the bill passed the House, he told his staff to start drawing up a plan for capital injections. Fearing Congress’s reaction, he didn’t tell the Hill about his change of heart.Now, he’s shifted gears again, and is directing Treasury to use the money to force bank acquisitions. Sneaking in the tax break isn’t exactly confidence-inspiring, either.”
What tax breaks is the Times talking about? The article explains:
A new tax break [pushed by Treasury], worth billions to the banking industry, that has only one purpose: to encourage bank mergers. As a tax expert, Robert Willens, put it: “It couldn’t be clearer if they had taken out an ad.”
The giant banks also essentially threatened to blow up the American economy if any of them were prosecuted for their massive, economy-destroying fraud.
- FiGHTiNG FoR US!
- Blowout Victory For Donald Trump In New York Primary; Hillary Defeats Bernie: Live Stream
New York Election Night – Live Streams:
The results are in and as expected, Donald Trump has been immediately projected the GOP winner in New York in what was a blowout victory one in which Ted Cruz will finish third; the only question is by how much and whether he will have (well) over 50% of the vote, although judging by the early results which see him with over 60% of support, he will have little trouble to sweep the majority in most districts.
Thank you New York! I love you!#MakeAmericaGreatAgain #Trump2016 pic.twitter.com/T1J0aUwMXl
— Donald J. Trump (@realDonaldTrump) April 20, 2016
On the democrat side, the results were initially far closer with exit polls putting Hillary just 4 points ahead of Bernie, however as the votes came in it became clear that Hillary's lead was insurmountable, and moments ago CNN declared Hillary Clinton the winner of the democratic primary.
And with that we have tonight's two winners, the only question remaining is how much total delegates will Trump pick up as he strives to avoid a contested convention.
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Update 3: with voting set to close shortly, here is a reminder of what the most recent polls said: Hillary Clinton has a 15 point lead over Bernie Sanders, according to the most recent poll coming out of the weekend. That's more than RealClear Politics average of 12 points, but it's also a relatively small sample size. Betting markets have Clinton at a 95 percent chance of winning.
Not a lot of suspense on the GOP side. Coming out of the weekend, Donald Trump has a 34 point lead with a 98 percent chance of winning according to betting markets.
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Update 2: an exit poll among Republican voters
And one of democrats:
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Update 1: according to Reuters, with just over an hour left until polling ends, voting in New York has been marred by voting irregularities, following official confirmation that more than 125,000 people were missing from New York City voter rolls and reports of other irregularities.
New York City Comptroller Scott Stringer ordered an audit of the city elections board after it confirmed the names had been removed from voter rolls. The city has roughly 4 million voters considered active for the presidential primaries.
Stringer complained in a letter to the board that it was "consistently disorganized, chaotic and inefficient." He cited faulty ballot scanners, late-opening polling stations and scant staffing.
It was unclear what the vote rigging was like on the GOP side.
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The race for the Presidential nomination runs through the "must win" state of New York today, where Republican Donald Trump will look to sweep his home state and widen his lead over Ted Cruz and John Kasich. For the Democrats, Hillary Clinton will be trying to fend off Bernie Sanders, who's been on an impressive run as of late and seems to have significant momentum heading into this important primary.
Here is what the delegate breakdown currently looks like.
For the Republicans
And the Democrats
Here are the most recent poll results in New York, which are currently showing Trump and Clinton as double digit favorites.
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Here are five things to watch for, courtesy of The Hill
The GOP delegates battle by congressional district
Trump is carrying a 30-point lead in the polls heading into election day, according to the RealClearPolitics average. He has had over 50 percent support in nearly every poll of the state taken in the last month.
The GOP front-runner is all but certain to finish in first place statewide, earning him 14 of the state’s 95 delegates.
But Trump needs to maximize the number of delegates he can squeeze out of the state.
The remaining 81 delegates will be allocated based on the results in each of the state’s 27 congressional districts.
If any candidate finishes with more than 50 percent of the vote in a district, he’ll take all of the available delegates there.
Cruz and Kasich will be looking to keep Trump below the 50 percent mark and finish above 20 percent themselves, which would allow them to at least split the delegates at the congressional district level.
Every delegate matters for Trump at this point in the race.
Analysts are forecasting that Trump will finish somewhere close to the 1,237 delegates he needs to clinch the nomination before the Republican National Convention in July.
If Trump falls short of that mark, even by a few delegates, his path to the nomination will become exponentially more difficult at a contested convention.
Taking only two-thirds of New York’s delegates would be a disappointment for him. A clean sweep of the state would be a huge victory.
Can Clinton put Sanders away?
Public polling indicates that Clinton is poised for a double-digit victory in New York .
Surveys in the state have consistently shown Clinton holding a lead of somewhere between 10 and 17 points in the state. Sanders has yet to climb to within single digits of Clinton in any poll of New York so far this cycle.
Clinton’s allies have said they hope to have put the nomination out of Sanders’s reach by the end of the month.
She begins Tuesday with a lead of over 240 pledged delegates. With 247 additional pledged delegates up for grabs, Clinton can put a significant amount of space between her and Sanders if she wins big.
But perhaps more important, a convincing victory would allow Clinton to shift her gaze to the general election.
The Democratic race has taken a nasty turn in recent weeks, and the sooner Clinton can move on, the better it will be for her.
Sanders’s quest for a game-changing victory
Sanders has so far won in places where he was expected to do well but lost badly in most of the states where Clinton has been the favorite.
A victory in a state where he’s the underdog would allow him to be seen as a serious challenger going forward.
While polls show Clinton maintaining a healthy lead in New York, Sanders has at least succeeded in making the contest appear close.
Sanders, who previously shied away from harsh criticism, has ratcheted up his attacks against the front-runner recently.
And he has attracted tens of thousands of supporters to rallies around New York City while high-profile surrogates Spike Lee, Rosario Dawson and Harry Belafonte have been out in force on his behalf.
A victory on Tuesday could upend the dynamic of the race. A close finish, within a few points of Clinton, would legitimize his insistence on seeing the race through to its conclusion at the Democratic National Convention in July.
Still, Sanders’s reliance on young voters and independents could doom him.
The New York primary is closed to independents, and the deadline to register as a Democrat was in October.
Will Cruz’s microtargeting pay off?
Cruz is on a mission to block Trump from reaching 1,237 delegates.
That means contesting every single delegate, even if he has to venture into unfriendly territory, something he has done on multiple occasions while campaigning in New York.
Earlier this month, Cruz campaigned in the liberal borough of the Bronx. The headlines he drew were largely negative. Hecklers greeted Cruz, who was put on the defensive for disparaging “New York values.”
And a speech Cruz gave at the New York City Republican gala last week drew an icy response from attendees there, further evidence that Northeast Republicans seem to have little interest in Cruz’s brand of conservatism.
But Cruz is playing a long game, hoping that his efforts in liberal precincts where Republicans rarely tread will help him cut into Trump’s delegates haul at the congressional district level.
Even a few delegates could mean the difference between Trump winning on the first ballot at the convention and Cruz winning on the second or third.
Cruz identified pockets within the state where he believes his message could resonate. Cruz notably rolled matzo dough at a bakery in Brooklyn, reaching out to the city’s Orthodox Jewish community.
He will find out on Tuesday whether those efforts pay off.
Time for Kasich to prove his worth
Kasich has justified his presence in the race by saying he’ll do better than Cruz with moderate voters in Northeastern states where the electorate is more liberal.
New York will test that logic.
Most polls show Kasich running slightly ahead of Cruz in the state.
He has been campaigning in the state for a full two weeks and has picked up endorsements from The New York Times and the New York Daily News.
Picking off a substantial number of delegates at the congressional district level would will go a long way to convincing skeptical Republicans that he’s not just sucking support from Cruz and that he’s able to contribute to the anti-Trump efforts.
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One important thing to note, as we pointed out earlier, is that New York has one of the most archaic primaries in the nation. New York is a closed primary, meaning that you have to be registered as a member of one of the two parties in order to participate.
As a reminder, 27% of New York State's active voters were not registered in either party as of April 2016, and have missed the March 25th deadline to register. This means they will have no say in the primary.
From the article
Unless you’ve been living in a cave, you’ll know that New Yorkers go to the primary voting booths on April 19th. Unfortunately, only a small sliver of the population will actually be able to vote. First, it’s a closed primary, so you have to be registered as a member of one of the two corrupt political parties in order to participate. As the Guardian recently reported, 27% of New York state’s active voters were not registered in either party as of April 2016, meaning these people will have no say in the primary. Even worse, what about all those residents who aren’t active voters, but would very likely vote in this particular election given the increased turnout seen in other states? They’re iced out as well.
New York has one of the most archaic primaries in the nation. Not only is it one of only 11 states with closed primaries, but if you are a registered voter who wanted to change your party affiliation in order to vote in next week’s primary, you would’ve had to do it by last October. In contrast, if you weren’t yet a registered voter you had until March 25th to register under one of the two parties in order to vote in the primary. So if you live in New York and haven’t registered by now, you can’t vote.
The polls close at 9pm Eastern, and we will provide updates as they become available.
- Paul Craig Roberts: How The American Neocons Destroyed Mankind's Hopes For Peace
Authored by Paul Craig Roberts,
When Ronald Reagan turned his back on the neoconservatives, fired them, and had some of them prosecuted, his administration was free of their evil influence, and President Reagan negotiated the end of the Cold War with Soviet President Gorbachev. The military/security complex, the CIA, and the neocons were very much against ending the Cold War as their budgets, power, and ideology were threatened by the prospect of peace between the two nuclear superpowers.
I know about this, because I was part of it. I helped Reagan create the economic base for bringing the threat of a new arms race to a failing Soviet economy in order to pressure the Soviets into agreement to end the Cold War, and I was appointed to a secret presidential committee with subpeona power over the CIA. The secret committee was authorized by President Reagan to evaluate the CIA’s claim that the Soviets would prevail in an arms race. The secret committee concluded that this was the CIA’s way of perpetuting the Cold War and the CIA’s importance.
The George H. W. Bush administration and its Secretary of State James Baker kept Reagan’s promises to Gorbachev and achieved the reunification of Germany with promises that NATO would not move one inch to the East.
The corrupt Clintons, for whom the accumulation of riches seems to be their main purpose in life, violated the assurances given by the United States that had ended the Cold War. The two puppet presidents – George W. Bush and Obama – who followed the Clintons lost control of the US government to the neocons, who promptly restarted the Cold War, believing in their hubris and arrogance that History has chosen the US to exercise hegemony over the world.
Thus was mankind’s chance for peace lost along with America’s leadership of the world. Under neocon influence, the United States government threw away its soft power and its ability to lead the world into a harmonious existance over which American influence would have prevailed.
Instead the neocons threatened the world with coercion and violence, attacking eight countries and fomenting “color revolutions” in former Soviet republics.
The consequence of this crazed insanity was to create an economic and military strategic alliance between Russia and China. Without the neocons’ arrogant policy, this alliance would not exist. It was a decade ago that I began writing about the strategic alliance between Russia and China that is a response to the neocon claim of US world hegemony.
The strategic alliance between Russia and China is militarily and economically too strong for Washington. China controls the production of the products of many of America’s leading corporations, such as Apple. China has the largest foreign exchange reserves in the world. China can, if the government wishes, cause a massive increase in the American money supply by dumping its trillions of dollars of US financial assets.
To prevent a collapse of US Treasury prices, the Federal Reserve would have to create trillions of new dollars in order to purchase the dumped financial instruments. The rest of the world would see another expansion of dollars without an expansion of real US output and become skeptical of the US dollar. If the world abandoned the US dollar, the US government could no longer pay its bills.
Europe is dependent on Russian energy. Russia can cut off this energy. There are no alternatives in the short-run, and perhaps not in the long run. If Russia shuts off the energy, Germany industry shuts down. Europeans freeze to death in the winter. Despite these facts, the neocons have forced Europe to impose economic sanctions on Russia. What if Russia responded in kind?
NATO, as US military authorities admit, has no chance of invading Russia or withstanding a Russian attack on NATO. NATO is a cover for Washington’s war crimes. It can provide no other service.
Thanks to the greed of US corporations that boosted their profits by offshoring their production to China, China is modernized many decades before the neocons thought possible. China’s military forces are modernized with Russian weapons technology. New Chinese missiles make the vaunted US Navy and its aircraft carriers obsolete.
The neocons boast how they have surrounded Russia, but it is America that is surrounded by Russia and China, thanks to the incompetent leadership that the US has had beginning with the Clintons. Judging from Killary’s support in the current presidential primaries, many voters seem determined to perpetuate incompetent leadership.
Despite being surrounded, the neocons are pressing for war with Russia which means also with China. If Killary Clinton makes it to the White House, we could get the neocon’s war.
The neocons have flocked to the support of Killary. She is their person. Watch the feminized women of America put Killary in office. Keep in mind that Congress gave its power to start wars to the president.
The United States does not have a highly intelligent or well informed population. The US owes its 20th century dominance to World War I and World War II which destroyed more capable countries and peoples. America became a superpower because of the self-destruction of other countries.
Despite neocon denials that their hubris has created a powerful alliance against the US, a professor at the US Navy War College stresses the reality of the Russian-Chinese strategic alliance.
Last August a joint Russian-Chinese sea and air exercise took place in the Sea of Japan, making it clear to America’s Japanese vassal that it was defenceless if Russia and China so decided.
The Russian defense minister Sergey Shoigu said that the joint exercise illustrates the partnership between the two powers and its stabilizing effect on that part of the world.
Chinese Foreign Minister Wang Yi said that Russian-Chinese relations are able to resist any international crises.
The only achievements of the American neoconservatives are to destroy in war crimes millions of peoples in eight countries and to send the remnant populations fleeing into Europe as refugees, thus undermining the American puppet governments there, and to set back the chances of world peace and American leadership by creating a powerful strategic alliance between Russia and China.
This boils down to extraordinary failure. It is time to hold the neoconservatives accountable, not elect another puppet for them to manipulate.
- London's Rich See The Writing On The Wall: Stop Buying, Start Renting
When the going gets tough, the rich get going first… and the rest should pay attention. While the smorgasbord of well-heeled wealthy elites will continue to proclaim that all is well in the world at any and every opportunity – for fear of the revolt of the masses – two disturbing headlines from one of the world's centers of money should have the 99% nervous.
Demand for London homes under construction slumped by 33%, according to Bloomberg, with "very few higher-end expensive sold in the central areas this year."
The number of homes sold prior to completion in the U.K. capital fell to 5,947 from a record high of 8,927 a year earlier, according to data compiled by Molior London that was seen by Bloomberg News. Molior declined to comment.
“Affordability is still a huge issue for domestic buyers,” said Faisal Durrani, head of research at broker Cluttons LLP. “New builds in the higher price echelons normally appeal to international investors, but lots of uncertainties in their own economies — such as currency issues and the drop in oil prices — have led to a slowdown in purchases from a year ago.”
Demand has fallen for new homes in London after the government raised sales taxes, introduced a capital-gains levy for overseas buyers and said it plans to cut tax breaks for the wealthiest landlords. Developers in central London are offering institutional investors discounts of as much as 20 percent on bulk purchases as the tax changes limit demand from private individuals.
“There have been very few higher-end expensive sold in the central areas this year,” said Matthew Jackson, an associate director at real estate broker Chestertons. “Some of the volume has been taken up in the lower price ranges, where we have got investors who are looking well beyond the center.”
Investors who acquired apartments before construction commenced, betting they would rise in value, are seeking to sell the properties before they’re completed and stamp duty has to be paid.
“Developers are competing against their own customers in the presale market, so someone has to either pull back or discount,” Colin Sheridan, an analyst at J&E Davy Holdings Ltd., said by e-mail.
About 6,379 new homes were started in the first three months of the year, 39 percent less than a year earlier and the lowest number for seven quarters, the Molior data shows.
And then there is this…
At the same time The FT reports, the number of rental deals on homes worth more than $15m rose almost a third in the year to March 2016 from the previous year.
After stamp duty increased on expensive homes and prices began falling in the capital’s wealthiest areas, potential buyers of homes worth more than £10m are increasingly opting to become tenants instead.
Agents said uncertainty over the UK’s referendum on EU membership and concerns about the use of offshore companies for property purchases following the Panama Papers leak may add to the shift.
The number of lettings deals on homes worth more than £10m each year has more than doubled since 2011, and rose almost a third in the year to March 2016 from the previous year, according to figures from Knight Frank, an estate agency.
“No one is predicting that homes at the top end will be worth 10 per cent more in the near future and most people think they will be worth less,” said Henry Pryor, a buying agent. “It is much easier to make a decision to rent and make sure that if you do buy it’s something you really want.”
Translation: Rent, Don't Buy, something is coming… and the elites know it.
- People As Poultry
We live in a lunatic asylum .. the lunatics being us.
For believing we ever lived in a “free” country. As long ago as the reign of His Rotundity – the second president of the United (at bayonet-point) States – people were being dragooned off the street and roughly thrown into cages for having annoyed the powers-that-be. Or who were deemed “dangerous” by the powers-that-be. This was more than 200 years before The Chimp came along with his squinty-eyed pronouncements about “the enemies of freedom” and being either “with us” or “against us.”
Not much is taught in government schools (for the obvious reason) about the Alien and Sedition Acts – or other such clear evidence of a disconnect between what we are told and what actually is.
For example, why should a free man have to worry about prosecution for “possessing” anything? In what way does the mere fact of “possession” entail a harm caused to some other person?
How is it that a free man can be told – at gunpoint – what he may not put into his body?
I refer, of course, to the lunacy that is the “war” on some (arbitrarily decided upon) “drugs.”
Of all the many things wrong with America, this is perhaps the most obvious – and yet, the one most people seem to have trouble appreciating. A cop who drinks alcohol – who possesses and consumes this drug – is legally empowered to throw people in a cage for possessing or consuming that drug.
Or even if not.
In the video above, a salesman from California traveling through Wichita County, TX is followed by police for nearly half an hour before he is pulled over for a minor traffic violation. One so minor, in fact, the cop who pulls him over initially states that he will only be issuing a warning. But then things escalate – and the driver is advised that a drug-sniffing dog will be brought out and that if this dog “alerts” to the supposed presence of arbitrarily illegal “drugs,” the driver’s vehicle will be searched.
No surprise, the dog “alerted” – and that was sufficient probable cause for a pair of Drug Warriors to rummage through the man’s vehicle and his personal property in the hopes of finding some arbitrarily illegal “drugs.” Which would have not only resulted in the arrest of the driver but also the likely forfeiture (read, the stealing) of his vehicle, a common practice employed by Drug Warriors and a financial incentive for them to be particularly aggressive in their truffle pig-like sussing out of these arbitrarily illegal “drugs.”
None were discovered – fortunately for the victim. That is to say, the driver, whose only crime appears to have been that he was an out-of-state driver. This, by itself, is enough to draw the attention of the Drug Warriors. They will ride your ass for as long as it takes for you to let your tire touch the yellow line – or perhaps signal a left turn not quite 100 feet from the road you’re turning onto. Maybe your windows are “tinted.”
They will find a reason – and then it’s open season.
The next step is to bring out a dog and let him leap up on your doors and scratch your vehicle’s paint with his claws. Then, like Dr. Doolittle – his handler will converse with the canine and he (the canine) will, through some inscrutable doggy pantomime of yelps and body gyrations, convey to his handler that he smells arbitrarily illegal drugs.
That’s all it takes. The “word” of… a dog.
This is considered adequate probable cause to remove you from your vehicle and to then root around through your vehicle and its contents in search of … well… whatever they find.
Or, plant.
You not only have no right to confront/cross-examine this “witness” against you… it is an inter-species impossibility. Except for the handler, naturlich – who tells us (and we must believe him) what the dog is thinking (and saying) and whose “testimony” is accepted at face value… both by the side of the road and later on, when you are before a judge.
You – the defendant – might try yelping and rolling on your back to “question” the “witness.” But the answers are inadmissible.
All of this over the possession of a substance decreed – arbitrarily – to be verboten to possess. Not even the pretext is offered that some actual harm has been caused to anyone. Or even might be. The government – that is, the people who have somehow assumed ownership over us – simply tell us what we may and may not posses, what we may and may not put into “our” bodies.
Few people stop to think about it. Ponder the nature of this business.
Grown men – who themselves possess and consume various “drugs” decreed (arbitrarily) to be legal – think nothing of siccing dogs on people, taking their property, throwing them in cages… because they possess or consume some other “drug” just as arbitrarily decreed to be illegal. And are not ashamed or even slightly embarrassed.
It is husbandry.
I restrict what my animals may consume – and control what they do – because I own them. They are my property, to do with as I see fit.
We stand in the same relation to the state as my chickens.
- China Launches Yuan Gold Fix To "Exert More Control Over Price Of Gold"
Overnight a historic event took place when China, the world’s top gold consumer, launched a yuan-denominated gold benchmark as had been previewed here previously, in what Reuters dubbed “an ambitious step to exert more control over the pricing of the metal and boost its influence in the global bullion market.” Considering the now officially-confirmed rigging of the gold and silver fix courtesy of last week’s Deutsche Bank settlement, this is hardly bad news and may finally lead to some rigging cartel and central bank-free price discovery. Or it may not, because China would enjoy nothing more than continuing to accumulate gold at lower prices.
The first Chinese benchmark price, derived from a 1 kg-contract traded by 18 participants on the Shanghai Gold Exchange (SGE), was set at 256.92 yuan ($39.69) per gram on Tuesday, equivalent to $1,234.50/ounce.
China’s gold benchmark is the culmination of efforts by China over the last few years to reform its domestic gold market in a bid to have a bigger say in the bullion industry, long dominated by London where the global spot benchmark price is currently set. As is well known, as the world’s top producer, importer and consumer of gold, China has balked at having to depend on a dollar price in international transactions, and believes its market weight should entitle it to set the price of gold.
The new benchmark may not be an immediate threat to London, but industry players say over time China could set the price of the metal, especially if the yuan become fully convertible.
Cited by Reuters, Pan Gongsheng, deputy governor of the People’s Bank of China which has been disclosing gold purchases every month since last summer, said that “the Shanghai gold benchmark will provide a fair and tradable yuan-denominated gold fix price … will help improve yuan pricing mechanism and promote internationalization of the Chinese gold market.”
The mechanics of the Shanghai fix are comparable to those of London: the benchmark price will be set twice a day based on a few minutes of trading in each session. The London benchmark, quoted in dollars per ounce, is set via a twice-daily auction on an electronic platform with 12 participants.
The 18 trading members in the yuan price-setting process includes China’s big four state-owned banks, foreign banks Standard Chartered and ANZ, the world’s top jewelry retailer Chow Tai Fook and two of China’s top gold miners.
When discussing the Chinese gold fix previously, World Gold Council CEO Aram Shishmanian said that “it is a stepping stone to a new multi-axis trading market consisting of London, New York and Shanghai and signals the continuing shift in demand from West to East.”
“As the market expands to reflect the growing interest in gold by Chinese consumers, so too will China’s influence increase on the global gold market.”
It may already be working: according to Reuters, one reason for today’s spike in silver is due to “heavy buying of silver in Shanghai, and that has triggered buying in gold as well,” said Ronald Leung, chief dealer at Lee Cheong Gold Dealers in Hong Kong.
Finally, when Chinese capital capital flight into Canadian real estate and offshore tax havens is curbed, we expected that gold could well follow the path of bitcoin, which has doubled since our article presenting it as an attractive alternative to avoiding Chinese capital controls.
- "Swimming Naked" – Chinese Corporate Bond Market Worst Since 2003
A week ago we highlight the "last bubble standing" was finally bursting, and as China's corporate bond bubble deflates rapidly, it appears investors are catching on to the contagion possibilities this may involve as one analyst warns "the cost has built up in the form of corporate credit risks and bank risks for the whole economy." As Bloomberg reports, local issuers have canceled 61.9 billion yuan ($9.6 billion) of bond sales in April alone, and Standard & Poor’s is cutting its assessment of Chinese firms at a pace unseen since 2003. Simply put, the unprecedented boom in China’s $3 trillion corporate bond market is starting to unravel.
As Bloomberg notes, China’s leaders face a difficult balancing act.
On one hand, allowing troubled companies to default forces money managers to pay more attention to credit risk and accelerates government efforts to curb overcapacity.
The danger, though, is that investor panic leads to tighter credit conditions, dealing a blow to President Xi Jinping’s plan to keep the economy growing by at least 6.5 percent over the next five years.
However, as we pointed out previously, economic figures for March reveal a growing dependence on debt. China’s aggregate financing — a broad measure of credit that includes corporate bonds – grew by over $1 trillion in Q1…
And yet even that wasn’t enough to save the seven Chinese companies that reneged on bond obligations this year. Three of those were part-owned by China’s government, seen not long ago as a provider of implicit guarantees for bondholders.
The reaction has been swift in China’s 18.8 trillion yuan corporate bond market (a figure that excludes certificates of deposit). The extra yield investors demand to hold seven-year onshore corporate bonds with top ratings over similar-maturity government notes has jumped by 28 basis points from an almost nine-year low in January, to 91 basis points as of Monday.
At least 64 Chinese firms have postponed or scrapped planned note sales this month, six times more than the same period a year earlier.
“As more and more issuers default, lenders and investors will reassess their portfolio and lending, and that will cause yields to rise,” said Christopher Lee, chief ratings officer for Greater China at Standard & Poor’s in Hong Kong. “If the onshore market has any dislocation, that will have a spillover effect in the offshore market.”
Rising defaults are actually healthy for China’s bond market, said Xia Le, the chief economist for Asia at Banco Bilbao Vizcaya Argentaria SA in Hong Kong.
“It shows the government is taking away the implicit guarantee,” Xia said. “Now risk awareness is rising, so we will see which issuers are swimming naked.”
While bond yields in China are still well below historical averages, a sustained increase in borrowing costs could threaten an economy that’s more reliant on cheap credit than ever before. The numbers suggest more pain ahead:
Listed firms’ ability to service their debt has dropped to the lowest since at least 1992, while analysts are cutting profit forecasts for Shanghai Composite Index companies by the most since the global financial crisis.
As Qiu Xinhong, a Shenzhen-based money manager at First State Cinda Fund Management Co. said…
“The spreading of credit risks is only at its early stage in China."
We leave it to Xia Le to conclude,
"The equity rout merely reflects worries about China’s economy, while a bond market crash would mean the worries have become a reality as corporate debts go unpaid," said Xia Le, the chief economist for Asia at Banco Bilbao. "A Chinese credit collapse would also likely spark a more significant selloff in emerging-market assets."
"Global investors are looking for signs of a collapse in China, which itself could increase the chances of a crash… This game can’t go on forever."
- Stocks Are In "A Far More Precarious State Than Was Ever Truly Believed Possible"
Submitted by Jeffrey Snider via Alhambra Investment Partners,
As the major stock indices overtake or threaten psychological round numbers again (S&P 500 2,100; DJIA 18,000), they have done so with the same problem as occurred in 2015. Stocks have been overvalued for some time in historical comparison especially after QE3 and QE4, but it was supposed to be in anticipation of the full recovery that QE would make. For the longest time, that narrative actually seemed plausible at least in earnings. In June 2014, analysts estimated that total as-reported earnings for the calendar year of 2015 would close out around $144 per share. At an index level of 2,100, it would represent a seemingly low valuation multiple of 14.5 (low because, we were told, low discounting from historically low interest rates, favorable fixed income comparisons, and then high expected growth especially in areas like tech and consumer-related industries).
Analysts’ estimates are always overly optimistic and have the hardened habit of being lowered as each particular quarter draws closer, but what happened with 2015 was something else entirely. Instead of $144 per share, 2015 ttm EPS for the index is going to be about $86.50. Rather than leave stock investors assured in their valuations, it meant the S&P 500 was trading around 24 times actual EPS. Worse, than that, the downdraft in earnings wasn’t apparent to analysts until it actually happened (believing in “transitory” as they did) and companies reported.
As late as March 2015, analysts had been mugged by the events of late 2014 and the first parts of last year but were still predicting that earnings would grow by about 9% for the full year, including a return to “normal” growth by Q4. Even in November 2015, though the downtrend had been established in almost perfect uniformity, analysts were still expecting Q4 and then Q1 2016 to start a very strong turnaround.
From that perspective you can understand why stock investors suddenly became more than a little nervous where only certainty and confidence had existed. On the whole, it was figured that the economy would provide a solid if not historically so valuation floor for stocks that would be pushed up relentlessly by the recovery that economists and the FOMC were describing all the way into the middle of 2015 – only to find by the end of the year that the stock market may have been overvalued by as much as 40% to actual earnings (assuming a multiple of 15 represents “fair value”).
As optimism returns again, all that nasty business and “unexpected” uncertainty is being left behind as nothing more than scholarly conjecture suitable only for historians; 2016 is again on the march, or so it might seem. The surge in stocks during this “dollar” interregnum seems to be (outside of raw momentum and risk chasing) resurrecting the same assumptions as early 2015. “Transitory” has regained form only refashioned from a few months deviation to more than a year – but still to the same effect with only a delay in reaching the long-promised recovery.
Reality still intrudes, however, on two fronts.
Despite analysts’ renewed faith (which sets aside all doubts that should have been their working guesses this whole time) in where earnings will fly in 2016 that still doesn’t recreate the recovery that was once the hardened baseline for projections. The current ttm EPS for 2016 is not even $110 whereas last year was supposed to be $144. It is a huge disappointment even though in relative circumstances $110 is better than $86 – and that is where the focus has returned though it should remain on the recovery’s now nearing permanent disappointment (and thus overvaluation).
The second problem is the familiar downgrade which is already severe, more so than “usual” (though less, so far, than 2015). In other words, $110 may be better than $86 but a year ago it was thought to be $124. The difference in valuation is again quite striking.
A forward PE using March 2015 estimates would have been somewhat expensive at about 17 times earnings but is already now more than 19 even as EPS continues to fall. Over just the last month (March to April), 2016 ttm EPS has dropped by almost $3 which again suggests that when all is completed this year a multiple of 19 will be almost certainly the best and least likely case. That would mean the assumed valuation floor is far lower for a second consecutive year, and we still have no idea just how low it may yet reach.
Where the S&P 500 may have been overvalued by perhaps 40% or more based on actual, as-reported 2015 EPS, the current annual EPS estimates suggest only a return to the 1,600 range not 2,100 or better (for the full year 2016 EPS; current estimates still plug “fair value” as something like 1,330 on the index meaning it will take a surge in earnings growth later this year just to get “fair value” back to 1,600!). As you can plainly observe above, had the 2014 version of recovery worked out the actual trajectory of the index would have been at “fair value” (though in this counterfactual it is very likely that the index and all stocks would have kept going up and up rather than sideways to lower these past nearly two years now) or close to it. Instead, the “transitory” weakness in 2015 has opened a gulf that only entrenches the high degree of overvaluation even under scenarios where 2016 isn’t so bad. That would leave stocks especially vulnerable to any further swings in sentiment as the assumed valuation “floor” quite “unexpectedly” remains quite distant.
While momentum and risk chasing take about pushing the various indices in the near term, longer term (actual) investors will be forced to reckon with this huge disparity – that prices surged after QE4 in anticipation of the recovery happening and justifying what would have been only temporary overvaluation due to the giddiness of actual discounting. The fact that earnings are now nowhere near vindicating those expectations is a fundamentally different proposition altogether, including that QE was itself a lie. I believe it is this incongruence that explains the very curious and conspicuous sideways behavior in stocks as remnants of the old QE-driven hopes remain but are no longer in such unison or enjoy such widespread support.
Doubt is the operative condition now, though especially variable in its short run expressions. It is in shorter supply today but that is no more the case than November 3 when the S&P last closed above 2,100 (just days before more “unexpected” hit) or even August 17 with the S&P 500 at 2,102 and already a week past the great Chinese warning of the intensified “dollar” run and only a week before the mini-crash of August 24 that run fulfilled.
Even if the events of 2015 and early 2016 turn out to be the end of it, it still means that full recovery in earnings and the real economy has been pushed several years farther into the future – a far more precarious state than was believed to ever be truly possible. To figure, then, that there is now much, much more than a trivial chance of still more disruption and contraction does not mix well with such durable overvaluation.
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