Sep 21

Today’s News 21st September 2016

  • Could Germany Ever Allow Deutsche Bank To Go Under?

    Via Golem XIV blog,

    Deutsche Bank, one of Europe’s behemoths, is in very deep trouble having lost 90% 0f its share price value since 2007, has been falling sharply all this last year (48% loss this year) and, with its $42 Trillion in Derivatives exposure was singled out by the IMF, as the bank which ,

    “appears to be the most important net contributor to systemic risks…”

    Of course Deutsche agues the standard ‘derivatives-aren’t-a-problem’ line, that this 42 trillion all nets out and their real exposure is a fraction of that vast figure. Which is fine as long as you think that in the event of Deutsche coming unstuck, 42 trillions-worth of derivatives contracts can be held in abeyance for the time it would take for all those contracts to be netted out.  As I’ve said before netting out is akin to getting a rowing boat full of people to all change places  without the boat overturning.

    And now Deutsche has been threatened by the US DoJ with a $14 billion fine for its crimes for selling knowingly over-valued RMBS (Residential Mortgage Backed Securities) in the build up to the financial crash of 2007.

    Deutsche cannot pay $14 billion without raising a great deal of cash. Deutsche has put aside $5.5 billion for paying fines. A mere 9 billion short. So could Deutsche go down? Financially yes it could. But politically, I doubt it. And it’s the tension between these two answers, between the parlous financial state and the huge political significance of Deutsche, that I find interesting.

    Deutsche is Germany’s only G-SIB (Global Systemically Important Bank).

    Deutsche is Germany’s financial flag carrier. It stands at the centre of Germany’s long held desire to have Frankfurt eclipse London as Europe’s financial centre. Although Germany also has Allianz as a G-SII (Global systemically Important Insurer), without Deutsche Bank Germany ceases to be a globally significant financial nation (G-SFN – OK I made that one up). Without Deutsche Germany would not sit at the top table of global finance. France would. France has three G-SIBs. The balance between France and Germany within Europe would shift. Maintaining that balance between France and Germany, at the heart of Europe, has been critical in European affairs since WWI.

    Could Germany ever allow Deutsche Bank to go under?

    Officially the global framework for G-SIFI resolution in bankruptcy has been laid down by the FSB and agreed by all. And interestingly, though they are touted as the result of new thinking since the financial crisis, they are not. I recently received an EU document marked ‘Secret’, entitled  “Overview of Financial Stability Resolution Issues” and dated Feb 2008 which describes pretty much what the FSB has now settled upon now. I mention this because almost every word in it was completely ignored once the crisis hit and each country viewed the imminent demise of their major, flag-carrying banks. Which leads me to wonder why I should believe it would be any different next time? I think this question is particularly critical to Germany because Deutsche is its only G-SIB. In the next massive implosion of debts, France could afford to let one of its G-SIBs go down and still have two seats at the top table. England could do the same.

    How will G-SIBs  be wound down?

    The not-so-new rules for how a G-SIB should be wound down begin by stating that,

    Resolution should be initiated when a firm is no longer viable or likely to be no longer viable, and has no reasonable prospect of becoming so.

    But no one has wanted to state exactly what the trigger is, for deciding that a bank is no longer viable. Except to say the global regulators will leave it to national regulatory authorities to decide. So Germany will decide when Deutsche is no longer viable. Sure, that’ll be grand.

    Should an authority take the fatal stop of admitting one of their G-SIBs is no longer viable then things are supposed to move with wonderful efficiency. Resolution of netting out is to be speedily concluded (in as little as two days!) No sniggering please. And then as the gruesome business of sorting the living from the dead parts of the bank gets going  the authorities must definitely NOT rely

    …on public solvency support and not create an expectation that such support will be available;

    Instead the dead parts will inflict losses first on share holders and then on bond holders in the time honoured order of unsecured first. And then those parts which are not completely dead and might be cut away to live again in a different body, are to be sold off by means of sale or merger.

    1. As a last resort and for the overarching purpose of maintaining financial stability, some countries may decide to have a power to place the firm under temporary public ownership and control in order to continue critical operations, while seeking to arrange a permanent solution such as a sale or merger with a commercial private sector purchaser.

    So public bail outs are supposed to be strictly temporary. No holding 80% of RBS for most of a decade. Really? But that’s not the point which is important for Deutsche Bank. The important point is that in any sale of the viable parts of Germany’s only G-SIB, the brutal fact of the matter is that there is no other German financial institution that could afford to buy any of it. Commerzbank? Allianz? Letting an insurer buy a bank? So imagine the situation for Germany. They lose their seat at the top table and then they watch as France, England, American or perhaps China buy the crown of German financial might.

    So I don’t think it will ever happen.  Or at least it will only happen when Germany is truly out of any other options.

    So if Deutsche is not going to be declared “no longer viable” what are the alternatives?

    One option is the UniCredit route. UniCredit was a trillion euro bank. It was Italy’s flag carrier. It had bought Bavaria’s banks and some of Austria’s as well. And yet it’s share price was always   paltry.  Just 7.6 Euros at the market top in May ’07.  And since then it has been a hollow and enfeebled giant. Lumbering and ineffectual. It has been the laughing stock of European banks. But Italy doesn’t seem to mind. They seem content to let UniCredit be the quintessential Zombie bank. Would Germany be as sanguine to leave Deutsche to go the same way?  This would, I suggest, be almost  as injurious to German pride and industrial policy as letting Deutsche go down completely.

    But if Germany decided it could not face the financial consequences of obeying the letter of the resolution law nor leave the bank to be a bloated and useless zombie then the alternatives bring in their train even greater political upheavals.  Imagine the German government decides that not bailing out Deutsche just inflicts too much damage on Germany – potentially reducing Germany from the front rank of globally significant nations to  something lesser. It becomes a matter of national pride if not of survival.

    So Germany ignores all the FSB rules and regulations and bails Deutsche bringing it into government ownership/protection –  call it what you like. In so doing it demolishes the entirety of European policy regarding bail outs, government debts and austerity. Where then all the German insistence on fiscal discipline it has forced upon Greece, Ireland, Portugal, Spain and Italy? The Bundesbank, Berlin and the ECB would have no authority at all. Every country would have a green light to do the same for their flag carriers.

    It would be the end the European experiment. Or the European system would have to try to continue without Germany. And that could only happen if all debts to Germany were repudiated.

    I realise all this is speculation. But Deutsche has lost 90% of its value. Only RBS has lost more.  Deutsche has 7000 legal cases against it. Frau Merkel is losing her grip, Brexit rocked the complacent rulers of Euroland and  Madame Marine Le Pen would like to push France to do the same.

    And on top of it all NOTHING has been fixed financially at all. There is more debt more leverage, more and more liquidity achieving less and less, interest rates are negative, pensions  are going nowhere, insurers are grasping for risk even as they fear what it will do to them when the next crisis hits and governments are all, every one of them, preparing their armed forces for widespread civil unrest.

     

  • Bank Of Japan Maintains Bond-Buying Pace With "Yield Curve Control", Leaves Rates Unchanged, But Offers Hope For Moar

    With SocGen and Goldman expecting nothing, but many others desperately hoping for more (2Y pricing in moar negative rates), tonight's Japanese trade deficit disappointment (11th monthly decline in a row) did nothing to help the chaos… and The BoJ waited the longest since 2014 to release its statement. Markets did their usual turmoiling bit with JPY dropping and Nikkei rallying from 2300ET… (on no news whatsoever) before the big decision was unveiled.

     

    The BoJ waited the longest since 2014…

    10/07/2014 12:57
    10/31/2014 12:44
    11/19/2014 11:24
    12/19/2014 11:28
    01/21/2015 11:29
    02/18/2015 10:49
    03/17/2015 11:04
    04/08/2015 11:36
    04/30/2015 12:04
    05/22/2015 10:49
    06/19/2015 11:04
    07/15/2015 11:18
    08/07/2015 11:18
    09/15/2015 11:07
    10/07/2015 11:00
    10/30/2015 11:22
    11/19/2015 11:17
    12/18/2015 11:50
    01/29/2016 11:38
    03/15/2016 11:35
    04/28/2016 11:01
    06/16/2016 10:45
    07/29/2016 11:44

     

    Since the last policy action (in Jan)…

     

    Bonds were expecting a lot…

    *  *  *

    And then the decision hit:

    Disappointment on rates (no change)

    • *BOJ MAINTAINS POLICY BALANCE RATE AT -0.100%

    But it appears BoJ unleashes its reverse twist idea…

    • *BANK OF JAPAN TAKES ADDITIONAL ACTION
    • *BOJ TO INTRODUCE QQE WITH YIELD CURVE CONTROL
    • *BOJ SCRAPS AVG MATURITY TARGET OF JGB HOLDINGS
    • *BOJ TO BUY JGBS IN LINE WITH CURRENT PACE (disappointing)

    And ups it ETF-buying…

    • *BOJ: 2.7T YEN OF ETF BUYS FOR ETFS THAT TRACK TOPIX

    Will do more jawboning…

    • *BOJ TO ENHANCE FOWARD GUIDANCE
    • *BOJ TO EXPAND MONETARY BASE UNTIL INFLATION STABLE ABOVE 2%
    • *BOJ BOARD VOTES 7-2 ON GUIDELINES FOR MARKET OPERATIONS

    So the bottom line is – bigger ETF buying, maintains rates (no easing), maintains bond-buying (no easing), unveils "yield curve control" (steepens curve but crushes bank balance sheets through long bond MTM losses)

    But then they dropped the final tape-bomb…

    • *BOJ: MONETARY BASE MAY FLUCTUATE TO ACHIEVE YIELD-CURVE CONTROL

    In other words – QQE size may increase… which the market liked…

     

    And the yield curve is steepening notably…

     

    And banks are outperforming on the steepening…

     

    "Whatever it takes" moment…

    • *BOJ: COMMITTED TO EXPANDING MONETARY BASE UNTIL CPI EXCEEDS 2%

    But as Enda Curran, Bloomberg's  Chief Asia Economics Correspondent, notes,

    there's a risk of disappointment here. It's far from the shock and awe we've seen before from the BOJ and the moves to control the yield curve appear modest, at first glance.

    And one can see the disappointment in the market's response… 150 NKY points and one big fugure in JPY?

    The BOJ says it will buy JGBs "more or less in line with the current pace" of 80 trillion yen. Most observers would have said such a change in commitment meant the BOJ was tapering, and would have anticipated gains in the yen. That may still be the interpretation and reaction in time.

    And as far as the policy review, Bloomberg's Ken McCallum remarks,

    Quick read through BOJ policy review suggests, surprise! It thinks the policy is doing a good job. Says expansion of monetary base has led to a rise in inflation expectations, while negative rates have pushed down the yield curve.

    *  *  *

    Finally, because it's been a long night (and tomorrow will just make it longer), here is a littel humor (or not) as to where this leads…

    h/t @Colgo

  • With Trump Regaining North Carolina Lead, Hillary Unexpectedly Postpones Local Fundraiser "Without Reason"

    If there was a time Hillary needed to make a public appearance in the key battleground state of North Carolina to drum up voter support, it was today, if for no other reason than a just released Elon University poll finding Trump now has a modest 44% advantage among likely voters in the Tar Heel State, with 43% going to Clinton.

     

    According to the poll, most voters felt Trump would be better for rich people, white people and men, while most believe Clinton would be better for poor people, women and minorities.  “This election is so tight right now, that small swings of a few points should be expected between now and November,” said Jason Husser, assistant professor of political science at Elon and director of the Elon University Poll. “North Carolina has been extremely important over the last several election cycles with very tight election outcomes. These numbers suggest that will continue to be the case, and both campaigns would do well to continue to focus on the Old North State.”

    It’s not just the closeness of the poll that makes NC so critical; it’s also Trump’s recent rebound, which as shown in the following chart from Real Clear Politics has him taking the lead for the first time since late June.

    Which is why we find it surprising that with Hillary’s desperately needing to make an appearance, overnight CBS reported that Clinton campaign officials said that a Tuesday fundraiser in Chapel Hill was postponed.

    The Clinton event was billed as “lunch with Hillary Rodham Clinton” and had four donation levels to attend. Those contribution levels were described as $100,000, which featured “chair reception with Hillary,” $33,000, which included a “host reception with Hillary,” $5,000, which included “preferred seating” and $2,700.

    No reason was given for postponement of the Clinton event, which was planned to take place at the home of Betty Craven and Michael Warner.

    Is Hillary’s health once again becoming an issue?

    We don’t know, although based on a video recording of Hillary during a speech last night in Philadelphia, some neurological issues may have returned. As The American Mirror reported, “Hillary’s eyes appeared not in-sync with one another.” A montage of Hillary’s eye-catching moments before a small group of Temple University students can be seen below in footage by The American Mirror.

     

    Whatever the reason, Trump would take full advantage of Hillary’s absence to build on his momentum in the state: a small Eastern North Carolina town is preparing for Donald Trump’s appearance Tuesday. Trump will hold a rally in Kenansville Tuesday just two weeks after making a stop in Greenville. The rally will be held at the Duplin County Event Center and it is likely to be the largest event ever held in Kenansville, with a population of about 855.

    For Trump’s event, Between 7,000 and 10,000 people are expected to attend the rally, which could mean heavy traffic for the usually quiet town. Multiple law enforcement agencies in and around Duplin County are working together to prepare for the event.

    Pocket knives, handguns and other firearms are also not allowed in the event center. Sheriff Blake Wallace said there will be a designated area for any protesters as well. Doors for the event will open at 3 p.m. with Trump scheduled to speak at 5 p.m. Trump also plans to hold a rally in High Point around noon on Tuesday.

    Trump also took the opportunity to take a jab at Clinton’s over today’s surprising fundraiser “postponement.”

     

    Has Hillary’s health deteriorated again to the point where she can’t make public appearances due to pneumonia? We should know soon: her next public appearance is scheduled for tomorrow, when she is due to speak at a rally in Orlando, Florida.

  • Police Unleash Tear-Gas To Quell Riots In Charlotte After Police Shoot, Kill Black Male – Live Feed

    Large protests are taking place in Charlotte…

    As ABC30 reports, protesters gathered in Charlotte on Old Concord Road and police in riot gear are on the tense scene after police shot and killed a person carrying a gun Tuesday afternoon at a Charlotte apartment complex, officials said.

    The member of the Charlotte-Mecklenburg Police Department that was involved in the shooting has been identified as Officer Brentley Vinson. As is standard procedure with any officer involved shooting, Vinson has been placed on paid administrative leave. Vinson has been employed with the CMPD since July 21, 2014 and is currently assigned to the Metro Division.

     

    The man fatally shot was identified as Keith Lamont Scott. His family has been notified of his death. Both the officer and the dead man were identified by police as African-American.

     

    Charlotte-Mecklenburg police officers were at the complex about 4 p.m. looking for a suspect with an outstanding warrant when they encountered the person – not the suspect they were looking for – inside a car, the department said in a statement.

     

    The person exited the car with a gun, and then got back in, the statement said. When officers approached the car, the person got out of the car with the gun again.

     

    At that point, officers considered the person a threat and fired their weapons. Police Chief Kerr Putney told reporters at the scene that at least one officer shot the person.

    At least 100 protesters gathered to demonstrate the shooting Tuesday night. Police blocked access to the area, which is about a mile from the campus of the University of North Carolina at Charlotte. As Charlotte Observer reports,

    Police fired tear gas late Tuesday at several hundred people protesting an officer-involved fatal shooting in the University City area earlier in the day.

     

    Several dozen police officers in riot gear faced off with the shouting protesters on Old Concord Road at Bonnie Lane.

     

    A CMPD helicopter was circling very low over the crowd with a searchlight illuminating the protesters. Old Concord Road was shut down, with people standing in the middle of the road.

    At 10:53, police donned gas masks after a half-dozen water bottles were thrown. Tear gas was soon deployed.

    Live Feed:

    Alternate Live Feed:

     

    This just about summed it up…

  • U.S. Big Banks: A Culture of Crime

     

     

     

    U.S. Big Banks: A Culture of Crime

    Written by Jeff Nielson


     

    Organized crime. This phrase is now a precise synonym for big-banking in the United States. These Big Banks commit big crimes; they commit small crimes. They cheat their own clients; they swindle outsiders. They break virtually every financial law on the books. What do all these crimes have in common? The Big Banks commit all these crimes again and again and again – with utter impunity.


    These fraud factories commit their serial mega-crimes, year after year, because the Big Banks know that they will never, ever be punished. On rare occasions, their crimes have been so egregious that U.S. ‘justice’ officials could no longer pretend to be oblivious to them. In such cases, there was a token prosecution, there was a settlement where the law-breaking banks didn’t even have to acknowledge their own criminality, and there was a microscopic fine – which didn’t even force the felonious financial institutions to disgorge all of their profits from these crimes.


    Criminal sanctions, by definition, are supposed to deter criminal conduct. The token prosecutions against U.S. Big Banks didn’t deter Big Bank crime, they encouraged it. But even these wrist-slaps were becoming embarrassing for this crime syndicate, so they dealt with this problem. The Big Bank crime syndicate told its lackeys in the U.S. ‘justice’ department that they were not allowed to prosecute one of its tentacles, ever again.


    The lackeys, as always, obeyed their Masters, and issued a new proclamation. The U.S. ‘Justice’ Department would never prosecute a U.S. Big Bank ever again – no matter what crimes it committed, no matter how large the crimes, no matter how many times the same Big Banks committed the same crimes. Complete, legal immunity; totally above the law. A literal culture of crime.


    What happens when you create a culture of crime in (big) banking? Not only the banks break laws – with impunity – their bank employees do so as well. Case in point: Warren Buffett’s favorite Big Bank – Wells Fargo. Wells Fargo employees came up with a good idea for boosting their salaries: stealing money directly out of the accounts of the bank’s clients.


    Consider how large this crime became, in just one of these tentacles of organized crime.


    L.A City Attorney Mike Feuer announced a $185 million settlement reached with Wells Fargo, after thousands of bank employees siphoned funds from their customers to open phony checking and savings accounts raking in millions in fraudulent fees. [emphasis mine]


    Thousands of bank employees stealing millions of dollars from bank customers, in tiny, little increments, again and again and again. But the story gets much worse. Why was a lowly city attorney involved with the prosecution of this organized crime?


    So where is the FBI? Where is the Department of Justice? How about California Attorney General Kamala Harris? Too busy campaigning for the Senate to notice? How about L.A. District Attorney Jackie Larry?


    Only City Attorney Mike Feuer took action, and he only has the authority to prosecute misdemeanors…


    There are only two ways in which the non-action of the U.S. pseudo-justice system can be explained:


    1. All of the layers of “justice” above the City Attorney, are completely bought-off, and refuse to prosecute one of the corporate fronts of their (real) Masters.
    2.  All of the layers of “justice” above the City Attorney considered this systemic crime by Wells Fargo’s employees to be nothing more than a misdemeanour.

     

    Take your pick. The U.S. pseudo-justice system is used to seeing so many multi-billion dollar mega-crimes being committed by these fraud factories that the systemic crime at Wells Fargo (which was ‘only’ in the $millions) didn’t even attract their attention. Or, the entire U.S. pseudo-justice system is completely bought-off and corrupt – and they refuse to prosecute Big Bank organized crime.


    A culture of crime.


    It gets still worse. Thousands of Wells Fargo employees stole millions of dollars, from countless clients. They were caught. But not even one banker was sent to jail. In a real justice system, systemic crime of this nature would/could only be prosecuted in one of three ways. Either every Wells Fargo criminal would be prosecuted to the full extent of the law (given the egregious nature of the crime), or Wells Fargo management would be prosecuted – because they would have/should have known about this crime-wave. Or else both.


    Bankers stealing money, directly and brazenly, right out of customer accounts, but no one goes to jail? A culture of crime.


    Understand that endemic, cultural changes of this nature don’t originate at the bottom of the corporate ladder. They originate at the top. In the case of the Wall Street crime syndicate; we already know that their management personnel are criminals, because they have admitted to being criminals.


    Many Wall Street executives says [sic] wrongdoing is necessary: survey


    If the ancient Greek philosopher Diogenes were to go out with his lantern in search of an honest man today, a survey of Wall Street executives on workplace conduct suggests he might have to look elsewhere.


    A quarter of Wall Street executives see wrongdoing as a key to success, according to a survey by whistleblower law firm Labaton Sucharow released on Tuesday.


    In a survey of 500 senior executives in the United States and the UK [New York and London], 26 percent of respondents said they had observed or had firsthand knowledge of wrongdoing in the workplace, while 24 percent said they believed financial services professionals may need to engage in unethical or illegal conduct to be successful… [emphasis mine]


    One-quarter of Big Bank management admitted that they “need” to commit crimes. A culture of crime. More needs to be said about the rampant, disgusting criminality among upper management in the Big Banks of the U.S. (and UK).


    A known whistleblower was conducting a public survey, asking known criminals how many of them were engaging in criminal behavior. What percentage of respondents would lie when answering such a survey? Three-quarters sounds about right. One-quarter of Wall Street executives admitted that committing crimes was a way of life. The other three-quarters lied about their criminal acts.


    Monkey see; monkey do. The lower level foot soldiers see their Bosses breaking laws, with impunity, on a daily basis. Their reaction, at Wells Fargo? “Me too.”


    Most if not all of the Wall Street fraud factories conduct detailed “personality testing” on their bank personnel. Are they looking to weed-out those with criminal (if not psychopathic) inclinations? Of course not. They conduct this personality testing to find which employees have no reservations about engaging in criminal conduct – so they can be fast-tracked for promotion.


    There is no other way in which the systemic criminality of senior banking personnel can be reconciled with the detailed personality-testing in which they participated, in order to reach that level of management. The Wall Street fraud factories look for the most amoral criminals which they can find. And with the exorbitant, ludicrous “compensation” they award to these criminals for their systemic crimes, they end up with (literally) the best criminals that money can buy.


    A culture of crime.


    As a final note; the U.S. system of pretend-justice already has a powerful weapon in its arsenal to fight organized crime: the “RICO” act. This anti-racketeering statute was created for one, precise purpose: to not merely prosecute/punish organized crime, but to literally dismantle the crime infrastructure which supports the organized crime.


    Not only does the statute confer strong (almost limitless) powers in gathering evidence of organized crime, it also permits mass seizures of assets – anything/everything connected to the organized crime of the entity(ies) in question. In the case of the Big Bank crime syndicate, where all of its operations are directly/indirectly tied into criminal operations of one form or another, if RICO was turned loose on these fraud factories, by the time the dust had settled there would be nothing left.


    Oh yes. If the U.S. ‘Justice’ Department ever went “RICO” on U.S. Big Banks, lots and lots and lots of bankers would go to prison, for a very, long time.

     

     

     


    Please email with any questions about this article or precious metals HERE

     

     

     

     

    U.S. Big Banks: A Culture of Crime

    Written by Jeff Nielson

  • Protecting America's Children From Police-State Goons, Bureaucratic Idiots, & Mercenary Creeps

    Submitted by John Whitehead via The Rutherford Institute,

    When an opponent declares, ‘I will not come over to your side,’ [Hitler] said in a speech on November 6, 1933, “I calmly say, ‘Your child belongs to us already.’”

    -As reported by historian William L. Shirer

    It’s not easy being a parent in the American police state.

    Danger lurks around every corner and comes at you from every direction, especially when Big Brother is involved.

    Out on the streets, you’ve got the menace posed by police officers who shoot first and ask questions later. In the schools, parents have to worry about school resource officers who taser teenagers and handcuff kindergartners, school officials who have criminalized childhood behavior, school lockdowns and terror drills that teach your children to fear and comply, and a police state mindset that has transformed the schools into quasi-prisons.

    In your neighborhoods, you’ve got to worry about the Nanny State and its network of busybodies turning parents in for allowing their children to walk to school alone, walk to the park alone, play at the beach alone, or even play in their own yard alone.

    And now in the last refuge for privacy—one’s home—parents are being put through the grinder, their actions scrutinized and judged by government goon squads armed with outrageous, overreaching, egregious laws that subject families to the hyped-up, easily offended judgment of the Nanny State.

    The latest slap in the face comes from the Arizona Supreme Court whose 3-2 ruling in Arizona v. Holle paves the way for parents to be charged as child molesters or sexual abusers for such innocent acts as changing their children’s diapers or taking baths with their kids.

    Now the court is not fully to blame for this idiotic ruling.

    That prize goes to the well-meaning idiots in the Arizona legislature who drafted legislation that criminalizes any contact between an adult and a child’s genitals, whether or not improper sexual intent was involved.

    By allowing this legislation to go unchallenged, however, the Arizona Supreme Court has created a paradigm in which parents are de facto sexual predators who, if formally charged, have the burden of proving their innocence “after a lengthy, expensive, and reputation-tarnishing trial,” as legal reporter Mark Joseph Stern writes for Slate.

    Not only would a parent accused under this law have to prove his or her innocence to the jury “by a preponderance of the evidence,” but they could be forced to spend an undetermined amount of time in jail just waiting to prove their innocence.

    The message is chillingly clear: your children are not your own but are, in fact, wards of the state who have been temporarily entrusted to your care. Should you fail to carry out your duties to the government’s satisfaction, the children in your care will be re-assigned elsewhere.

    In other words, the government believes it knows better than you – the parent – what is best for your child.

    This criminalization of parenthood has run the gamut in recent years from parents being arrested for attempting to walk their kids home from school to parents being fined and threatened with jail time for their kids’ bad behavior or tardiness at school.

    This doesn’t even touch on what happens to your kids when they’re at school—especially the public schools—where parents have little to no control over what their kids are taught, how they are taught, how and why they are disciplined, and the extent to which they are being indoctrinated into marching in lockstep with the government’s authoritarian playbook.

    The harm caused by attitudes and policies that treat America’s young people as government property is not merely a short-term deprivation of individual rights. It is also a long-term effort to brainwash our young people into believing that civil liberties are luxuries that can and will be discarded at the whim and caprice of government officials.

    This draconian mindset that sees young people as wards of the state is in keeping with the government’s approach towards individual freedoms in general.

    Surveillance cameras, government agents listening in on your phone calls, reading your emails and text messages and monitoring your spending, mandatory health care, sugary soda bans, anti-bullying laws, zero tolerance policies, political correctness: these are all outward signs of a government—i.e., a monied elite—that believes it knows what is best for you and can do a better job of managing your life than you can.

    This is tyranny disguised as “the better good.”

    Indeed, this is the tyranny of the Nanny State: marketed as benevolence, enforced with armed police, and inflicted on all those who do not belong to the elite ruling class that gets to call the shots. This is what the world looks like when bureaucrats not only think they know better than the average citizen but are empowered to inflict their viewpoints on the rest of the populace on penalty of fines, arrest or death.

    Unfortunately, even in the face of outright corruption and incompetency on the part of elected officials, Americans in general remain relatively gullible, eager to be persuaded that the government can solve the problems that plague us—whether it be terrorism, an economic depression, an environmental disaster, how or what we eat or even keeping our children safe.

    We have relinquished control over the most intimate aspects of our lives to government officials who, while they may occupy seats of authority, are neither wiser, smarter, more in tune with our needs, more knowledgeable about our problems, nor more aware of what is really in our best interests. Yet having bought into the false notion that the government does indeed know what’s best for us and can ensure not only our safety but our happiness and will take care of us from cradle to grave—that is, from daycare centers to nursing homes—we have in actuality allowed ourselves to be bridled and turned into slaves at the bidding of a government that could care less about our freedoms or our happiness.

    The lesson is this: once a free people allows the government inroads into their freedoms or uses those same freedoms as bargaining chips for security, it quickly becomes a slippery slope to outright tyranny.

    Nor does it seem to matter whether it’s a Democrat or a Republican at the helm anymore, because the bureaucratic mindset on both sides of the aisle now seems to embody the same philosophy of authoritarian government, whose priorities are to remain in control and in power. 

    Having allowed the government to expand and exceed our reach, we find ourselves on the losing end of a tug-of-war over control of our country and our lives. And as long as we let them, government officials will continue to trample on our rights, always justifying their actions as being for the good of the people.

    Yet the government can only go as far as “we the people” allow. Therein lies the problem.

    The choice before us is clear, and it is a moral choice.

    It is the choice between tyranny and freedom, dictatorship and autonomy, peaceful slavery and dangerous freedom, and manufactured pipedreams of what America used to be versus the gritty reality of what she is today.

    Most of all, perhaps, as I point out in my book Battlefield America: The War on the American People, the choice before us is that of blindly obeying, never questioning, and marching in lockstep with the police state OR asking hard questions, challenging injustice, standing up to tyranny, and owning up to our responsibilities as citizens, no matter how painful, risky or uncomfortable.

    As Franklin D. Roosevelt observed, “We cannot always build the future for our youth, but we can build our youth for the future.”

  • Money Laundering Scheme Exposed: 14 Pro-Clinton Super PACs & Non-Profits Implicated

    Submitted by Andrew Kerr via The Citizens Audit,

    This is serious.

    • David Brock operates over a dozen pro-Clinton organizations from his office in Washington DC.
    • Uncovered records expose a constant flow of money between his organizations.
    • Brock’s unregistered Professional Solicitor, the Bonner Group, receives a 12.5% cut every time money is moved.

    There’s a reason why David Brock chooses to house an unregistered Professional Solicitor in his office to raise money for his conglomerate of Super PACs and non-profits.

    Professional Solicitors are required to disclose their active solicitation contracts.  Brock wants his unregistered solicitor, the Bonner Group, to keep their client list hidden for a very specific reason.

     

    David Brock is laundering money

    David Brock has 7 non-profits, 3 Super PACs, one 527-committee, one LLC, one joint fundraising committee, and one unregistered solicitor crammed into his office in Washington DC.

    Uncovered records expose a constant flow of money between these organizations.

    The Bonner Group, his professional solicitor, works off a commission.  Every time money gets passed around, Bonner receives a 12.5% cut.

     

    Follow the money

    Nonprofits are required to disclose who they give cash grants to.

    But they aren’t required to disclose who gave them cash grants.

    This weak system of one way verification is being abused by Brock.  He’s been cycling money between his organizations for years, and the Bonner Group’s 12.5% commission gets triggered after every pass.

    In 2014, Media Matters for America raised $10,021,188.

    The Bonner Group was credited for raising these funds.  Media Matters paid them a $1,147,882 commission.

    media-matters-bonner-commission

     

    That same year, Media Matters gave a $930,000 cash grant to David Brock’s Franklin Education Forum, an organization that shares office space with Media Matters.

    media-matters-grant-to-franklin-education-forum

    In 2014, the Franklin Education Forum reported $994,000 in total contributions.  93.6% of that total came from Media Matters!

     

    Surprisingly, though, the Franklin Education Forum gave full credit to Bonner for raising that money.  They paid the fundraiser a $124,250 commission in 2014!

    franklin-education-forum-bonner-commission

     

    Notice what happened?

    1. David Brock’s Media Matters gave a $930,000 cash grant to David Brock’s Franklin Education Forum
    2. David Brock’s Franklin Education Forum credited the Bonner Group for raising those funds, triggering the 12.5% commission
      • David Brock paid the Bonner Group a $124,250 commission to solicit a cash grant … from himself!

     

    It doesn’t stop there

    After the Franklin Education Forum retained $869,750, they sent a $816,224 cash grant to David Brock’s The Franklin Forum:

    franklin-education-forum-grant-to-franklin-forum

    Note: The ‘Franklin Education Forum’ is a 501(c)3, and ‘The Franklin Forum’ is a 501(c)4. They are not the same company.

    Since The Franklin Forum 501(c)4 paid Bonner a commission in 2013, it’s safe to assume fundraiser received a $102,028 commission in 2014. Unfortunately, it’s hard to tell for sure. They still haven’t filed their taxes for 2014!

     

    Let’s recap

    Say, for example, you donate $1,062,857 to Media Matters for America.   This is how David Brock would have used your charitable donation in 2014:

    1.  Media Matters would receive your $1,062,857 donation
      • The Bonner Group would earn a $132,857 commission
      • Media Matters would retain $930,000
    2. Next, Media Matters would give what’s left of your entire donation, $930,000, to the Franklin Education Forum
      • The Bonner Group would ‘earn’ a $116,250 commission
      • The Franklin Education Forum would retain $813,750
    3. The Franklin Education Forum would then forward the remaining $813,750 to The Franklin Forum
      • The Bonner Group would ‘earn’ a $101,718 commission
      • The Franklin Forum would retain $712,031

    In the end, Brock’s solicitor would have pocketed $350,825, almost a third of your initial donation! That’s a far cry from the advertised 12.5% commission.

    As bizarre as that scenario may sound, this is exactly what David Brock did in 2014.

     

    How can we be sure this is intentional?

    David Brock is the Chairman for each of these organizations!  How could he not know what’s going on?

    He’s a hands-on Chairman.  According to their tax returns, Brock allocates time, weekly, to his organizations:

    • Media Matters: 31.50 hours per week
    • Franklin Education Forum: 3 hours per week
    • The Franklin Forum: 1 hour per week

    Furthermore, the New York Times reports that David Brock shares a summer rental in the Hamptons with Mary Pat Bonner, the President of the Bonner Group!

    David Brock will have a hard time claiming ignorance on this.  These transfers are intentional.  He vacations with his solicitor.  Case closed.

     

    Still not convinced?

    David Brock didn’t even bother to give his organizations different phone numbers.  They all share the same phone number!

    same-phone-number

     

    What if…?

    We even located the Bonner Group’s solicitation agreement with Media Matters on Florida’s Gift Givers’ Guide.  Clarification on their commission can be found on page 2:

    bonner-contract-snip

    In English:  Contractually, David Brock has the option to exclude certain contributions from triggering the commission.  In spite of this option, he intentionally chooses to trigger the 12.5% commission for money grants between his organizations.

    Note: Yes, we are making the assumption that all of Brock’s organizations have the same solicitation agreement with the Bonner Group.  Given that his organizations share the same address, board members, and telephone number, we feel it’s safe to assume they also share the same solicitation agreement.

     

     

    This barely scratches the surface

    Utilizing public facing tax returns, along with records submitted to the FEC, we mapped out all the significant money transfers from 2014 that took place in Brock’s office:

    brock-transfers-2014-part-1

    brock-transfers-2014-part-2

    This is all from just one year!  No further commentary required.

    We understand this may be hard to believe.  We first came across this in July, and are still having a hard time wrapping our heads around it.

    All of the data referenced in this article originated from publicly accessible sources.  Check for yourself – we provided links to the source material in our article exposing the organizations operating in Brock’s office,  This data has been sitting out in the open, gathering dust for years! 

     

    Summary

    If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck.

    We’ve spent months trying to find some sort of loophole to justify this activity.  But there aren’t any loopholes.  David Brock has something to hide.  Just last week, The Daily Caller reported the following:

    “Brock’s former long-time live-in boyfriend William Grey (whom Brock has thanked in several of his books) threatened to go to the IRS with damaging information about how Brock was running his Media Matters empire.  What did Brock do? He paid Grey $850,000 to keep quiet. Brock reportedly had to sell his home in Rehoboth, Delaware to come up with the money. This certainly seems to indicate that Brock was terrified about what the authorities would uncover.”

    Adding to this, Fox News reported the following:

    “Grey accused Brock of “financial malfeasance” and threatened to undermine Brock’s fundraising efforts.

    “Next step is I contact all your donors and the IRS,” Grey wrote in an email dated May 19, 2010. “This is going to stink for you if you do not resolve this now.””

    We believe that the information presented in this article is what has Brock so terrified.  We feel confident in saying, with close to absolute certainty, that David Brock is laundering money through his Media Matters conglomerate.

    Look at the argument we’ve been making on The Citizens Audit:

  • "We Haven't Seen This Since The Great Depression" – Gallup CEO Destroys The "Recovery" Lie

    By Jim Clifton, Chairman and CEO at Gallup

    The Invisible American

    I’ve been reading a lot about a “recovering” economy. It was even trumpeted on Page 1 of The New York Times and Financial Times last week.

    I don’t think it’s true.

    The percentage of Americans who say they are in the middle or upper-middle class has fallen 10 percentage points, from a 61% average between 2000 and 2008 to 51% today.

     

    Ten percent of 250 million adults in the U.S. is 25 million people whose economic lives have crashed.

    What the media is missing is that these 25 million people are invisible in the widely reported 4.9% official U.S. unemployment rate.

    Let’s say someone has a good middle-class job that pays $65,000 a year. That job goes away in a changing, disrupted world, and his new full-time job pays $14 per hour — or about $28,000 per year. That devastated American remains counted as “full-time employed” because he still has full-time work — although with drastically reduced pay and benefits. He has fallen out of the middle class and is invisible in current reporting.

    More disastrous is the emotional toll on the person — the sudden loss of household income can cause a crash of self-esteem and dignity, leading to an environment of desperation that we haven’t seen since the Great Depression.

    Millions of Americans, even if they themselves are gainfully employed in good jobs, are just one degree away from someone who is experiencing either unemployment, underemployment or falling wages. We know them all.

    There are three serious metrics that need to be turned around or we’ll lose the whole middle class.

    1. According to the U.S. Bureau of Labor Statistics, the percentage of the total U.S. adult population that has a full-time job has been hovering around 48% since 2010 — this is the lowest full-time employment level since 1983.
    2. The number of publicly listed companies trading on U.S. exchanges has been cut almost in half in the past 20 years — from about 7,300 to 3,700. Because firms can’t grow organically — that is, build more business from new and existing customers — they give up and pay high prices to acquire their competitors, thus drastically shrinking the number of U.S. public companies. This seriously contributes to the massive loss of U.S. middle-class jobs.
    3. New business startups are at historical lows. Americans have stopped starting businesses. And the businesses that do start are growing at historically slow rates.

    Free enterprise is in free fall — but it is fixable. Small business can save America and restore the middle class.

    Gallup finds that small businesses — startups plus “shootups,” those that grow big — are the engine of new economic energy. According to the U.S. Small Business Administration, 65% of all new jobs are created by small businesses, not large ones.

    Here’s the crisis: The deaths of small businesses recently outnumbered the births of small businesses. The U.S. Census Bureau reports that the total number of business startups and business closures per year crossed for the first time in 2008. In the nearly 30 years before that, the U.S. consistently averaged a surplus of almost 120,000 more business births than deaths each year. But from 2008 to 2011, an average of 420,000 businesses were born annually, while an average of 450,000 per year were dying.

    Bottom line: The two most trusted institutions in the U.S. are the military and small business. Most people know about our military’s importance, but not as many appreciate the role small business plays in creating the majority of new jobs and in national security itself.

    America needs small business to boom again. Small businesses are our best hope for badly needed economic growth, great jobs and ultimately accelerated human development. When we get small business to boom, we can save America, restore our middle class and once again lead the world.

  • Metals Producer Is China's First State-Owned Company To Liquidate In Bankruptcy

    After a struggle to repay its debts since 2015, Guangxi Nonferrous Metals Group, a regional Chinese state-owned metal producer, has finally been declared bankrupt by a Chinese court, becoming the country’s first interbank bond issuer to fail. It is also China’s first bankruptcy case in which a state-owned company has liquidated.  As Caixin first reported, nine months after the state-owned Guangxi first filed for bankruptcy, a Nanning court on Sept. 12 granted the company’s application to liquidate.

    What makes this bankruptcy unique is that while several state-owned enterprises have already gone bankrupt in the past two years due to a failure to repay bank or corporate debt, until recently an unheard of event in China, Guangxi Nonferrous is the first SOE to fail after defaulting in the highly liquid interbank bond market.

    The implications will be substantial in a market in which the central bank “put” when it comes to bond issues, had been pervasive until recently.

    According to Caixin, the bankruptcy will likely deter foreign investors from China’s bond markets, which are facing increasing risks of default as the country embarks on supply-side reform to cut industrial overcapacity. More than 30 bonds have defaulted as of June, according to data provider Wind. Dongbei Special Steel, a producer of alloys for automakers and other manufacturers, defaulted on seven bonds with a combined value of 3.1 billion yuan between March 28 and late July.

    The Guangxi Nonferrous bankruptcy had been closely followed as a case study of how China will resolve complex bankruptcies that mixed private and public funding.

    Based in the southern Guangxi region, the company succumbed after three years of losses and, despite government subsidies, failure to repay its debt. Problems started to surface in June 2015 when the metals company said it was having trouble repaying rmb 1.3 billion of principal and rmb 62.92 million of interest on its private placement note.

    Despite a subsequent bailout by its lender, China Development Bank, one of the country’s three policy banks which later stepped in to rescue Guangxi Nonferrous, the metals maker defaulted, again, just a few months later on three other bond payments that were due in November, February and most recently in April, when it missed payment on a rmb 500 million yuan 3 year private placement note with a 5.56% coupon (which was rated BB). The metals producer cited in the notice “consecutive losses and the fact that it has already entered bankruptcy reorganization procedures” as reasons for the missed payment.

    Which is a valid point: you can’t go more bankrupt if you are already bankrupt.

    Based on company filings, Guangxi Nonferrous owed a total of rmb 14.51 billion to 108 creditors, including China Development Bank, Minmetals International Trust and Shanghai Pudong Development Bank.

    Founded less than a decade ago in 2008 by the SOE regulator State-owned Assets Supervision & Administration Commission (SASAC) in Guangxi, the company engaged in mineral exploration and mining development. But its troubles started long ago, when it reported a combined loss of rmb 2.29 billion from 2012 to 2014 as the industry was struggling with declining demand and a supply glut amid an economic slowdown. “The nonferrous metal industry has been in a downturn, and also the company faced limited returns from previous investments,” said a person close to the firm cited by Caixin, adding the two factors eventually led to a negative cash flow.

    Despite its second default in early 2016, the company was once again given a 6-month leeway by the government to find a way to continue as a going concern, preferably with a vastly deleveraged balance sheet. In a February statement to the Shanghai Clearing House, a government financial institution for the interbank market, the metals company said it filed an application for bankruptcy in Nanning Intermediate People’s Court in December. However, the court gave the company a grace period of six months and set up a committee made of local government and party officials to restructure the debts.

    However, the third time would not be the charm for the insolvent, cash-bleeding SOE: a person inside Guangxi Nonferrous told Caixin that the committee reached out to more than 100 investors to bail out the firm, but only five expressed interest. No deals were reached.

    Creditors apparently were dissatisfied with the results of the negotiations and blamed their failure on the local SOE regulator. “As far as we know, Guangxi SASAC did not provide any detailed plans or give any promises to potential investors,” one creditor said. “Inviting investors was just a formality.”

    In August, creditors submitted a written complaint to the National Association of Financial Market Institutional Investors, which oversees the interbank bond market, accusing the reorganization committee of ignoring creditors’ interests. “The committee did not follow rules to reveal information regarding the restructuring to the public; neither did it communicate with creditors.”

    “The key question now is how much money bondholders can claim,” said Ivan Chung, managing director and head of China credit research at Moody’s Investors Service in Hong Kong. Citic’s Ming expects that the “the claim ratio for creditors will not be high.”

    And thus concludes China’s ad hoc attempt to implement Chapter 11 reorgnization in a corporate culture that has rarely if ever dealth with multiple stakeholders seeking to split apart a bankrupt entity. In liquidation disaster.

    According to Caixin, it is not clear how Guangxi Nonferrous Metals will be liquidated. According to China’s Company Law, the court will administer a bankruptcy auction to sell the company’s assets. The gains will be used to pay employees first, then taxes and eventually creditors. The restructuring committee estimated that the company will need to raise 16 million yuan from the auction to pay around 110 employees. The payment is calculated based on how long an employee worked at the firm and the average salary for the 12 months before the bankruptcy, the person inside the company said. The decision has upset some employees because the company reduced the average salary by almost 50 percent at the beginning of this year.

    Where it will get hairy is once the company’s already unhappy workers realize there is no more job for them. “Employees are still calm, but once the liquidation plan becomes clear, I’m afraid the conflict between the company and the workers increase,” the Caixin source said.

    And while one liquidation of a SOE will be manageable, even if it means all workers have to be transplanted elsewhere, what happens next, now that the seal has been broken, and many more state-owned companies follow in Guangxi’s footsteps. Can China keep a lid on all the upcoming “conflicts between company and workers”, which as we have said since 2013, is the main reason why China is so terrified of terminal corporate failure.

Digest powered by RSS Digest