Today’s News 28th January 2016

• Circus Politics: Will Our Freedoms Survive Another Presidential Election?

  Submitted by John Whitehead via The Rutherford Institute,

  “Never has our future been more unpredictable, never have we depended so much on political forces that cannot be trusted to follow the rules of common sense and self-interest—forces that look like sheer insanity, if judged by the standards of other centuries.” ? Hannah Arendt, The Origins of Totalitarianism

  Adding yet another layer of farce to an already comical spectacle, the 2016 presidential election has been given its own reality show. Presented by Showtime, The Circus: Inside the Greatest Political Show on Earth will follow the various presidential candidates from now until Election Day.

  As if we need any more proof that politics in America has been reduced to a three-ring circus complete with carnival barkers, acrobats, contortionists, jugglers, lion tamers, animal trainers, tight rope walkers, freaks, strong men, magicians, snake charmers, fire eaters, sword swallowers, knife throwers, ringmasters and clowns.

  Truly, who needs bread and circuses when you have the assortment of clowns and contortionists that are running for the White House?

  No matter who wins the presidential election come November, it’s a sure bet that the losers will be the American people.

  Despite what is taught in school and the propaganda that is peddled by the media, the 2016 presidential election is not a populist election for a representative. Rather, it’s a gathering of shareholders to select the next CEO, a fact reinforced by the nation’s archaic electoral college system.

  Anyone who believes that this election will bring about any real change in how the American government does business is either incredibly naïve, woefully out-of-touch, or oblivious to the fact that as an in-depth Princeton University study shows, we now live in an oligarchy that is “of the rich, by the rich and for the rich.”

  When a country spends close to $5 billion to select what is, for all intents and purposes, a glorified homecoming king or queen to occupy the White House, while 46 million of its people live in poverty, nearly 300,000 Americans are out of work, and more than 500,000 Americans are homeless, that’s a country whose priorities are out of step with the needs of its people.

  As author Noam Chomsky rightly observed, “It is important to bear in mind that political campaigns are designed by the same people who sell toothpaste and cars.”

  In other words, we’re being sold a carefully crafted product by a monied elite who are masters in the art of making the public believe that they need exactly what is being sold to them, whether it’s the latest high-tech gadget, the hottest toy, or the most charismatic politician.

  As political science professor Gene Sharp notes in starker terms, “Dictators are not in the business of allowing elections that could remove them from their thrones.”

  To put it another way, the Establishment—the shadow government and its corporate partners that really run the show, pull the strings and dictate the policies, no matter who occupies the Oval Office—are not going to allow anyone to take office who will unravel their power structures. Those who have attempted to do so in the past have been effectively put out of commission.

  So what is the solution to this blatant display of imperial elitism disguising itself as a populist exercise in representative government?

  Stop playing the game. Stop supporting the system. Stop defending the insanity. Just stop.

  Washington thrives on money, so stop giving them your money. Stop throwing your hard-earned dollars away on politicians and Super PACs who view you as nothing more than a means to an end. There are countless worthy grassroots organizations and nonprofits working in your community to address real needs like injustice, poverty, homelessness, etc. Support them and you’ll see change you really can believe in in your own backyard.

  Politicians depend on votes, so stop giving them your vote unless they have a proven track record of listening to their constituents, abiding by their wishes and working hard to earn and keep their trust.

  Stop buying into the lie that your vote matters. Your vote doesn’t elect a president. Despite the fact that there are 218 million eligible voters in this country (only half of whom actually vote), it is the electoral college, made up of 538 individuals handpicked by the candidates’ respective parties, that actually selects the next president.

  The only thing you’re accomplishing by taking part in the “reassurance ritual” of voting is sustaining the illusion that we have a democratic republic. What we have is a dictatorship, or as political scientists Martin Gilens and Benjamin Page more accurately term it, we are suffering from an “economic élite domination.”

  Of course, we’ve done it to ourselves.

  The American people have a history of choosing bread-and-circus distractions over the tedious work involved in self-government.

  As a result, we have created an environment in which the economic elite (lobbyists, corporations, monied special interest groups) could dominate, rather than insisting that the views and opinions of the masses—“we the people”—dictate national policy. As the Princeton University oligarchy study indicates, our elected officials, especially those in the nation’s capital, represent the interests of the rich and powerful rather than the average citizen. As such, the citizenry has little if any impact on the policies of government.

  We allowed our so-called representatives to distance themselves from us, so much so that we are prohibited from approaching them in public, all the while they enjoy intimate relationships with those who can pay for access—primarily the Wall Street financiers. There are 131 lobbyists to every Senator, reinforcing concerns that the government represents the corporate elite rather than the citizenry.

  We said nothing while our elections were turned into popularity contests populated by individuals better suited to be talk-show hosts rather than intelligent, reasoned debates on issues of domestic and foreign policy by individuals with solid experience, proven track records and tested integrity.

  We turned our backs on things like wisdom, sound judgment, morality and truth, shrugging them off as old-fashioned, only to find ourselves saddled with lying politicians incapable of making fair and impartial decisions.

  We let ourselves be persuaded that those yokels in Washington could do a better job of running this country than we could. It’s not a new problem. As former Senator Joseph S. Clark Jr. acknowledged in a 1955 article titled, “Wanted: Better Politicians”: “[W]e have too much mediocrity in the business of running the government of the country, and it troubles me that this should be so at a time of such complexity and crisis… Government by amateurs, semi-pros, and minor-leaguers will not meet the challenge of our times. We must realize that it takes great competence to run a country which, in spite of itself, has succeeded to world leadership in a time of deadly peril.”

  We indulged our craving for entertainment news at the expense of our need for balanced reporting by a news media committed to asking the hard questions of government officials. The result, as former congressman Jim Leach points out, leaves us at a grave disadvantage: “At a time when in-depth analysis of the issues of the day has never been more important, quality journalism has been jeopardized by financial considerations and undercut by purveyors of ideology who facilely design news, like clothes, to appeal to a market segment.”

  We bought into the fairytale that politicians are saviors, capable of fixing what’s wrong with our communities and our lives, when in fact, most politicians lead such sheltered lives that they have no clue about what their constituents must do to make ends meet. As political scientists Morris Fiorina and Samuel Abrams conclude, “In America today, there is a disconnect between an unrepresentative political class and the citizenry it purports to represent. The political process today not only is less representative than it was a generation ago and less supported by the citizenry, but the outcomes of that process are at a minimum no better.”

  We let ourselves be saddled with a two-party system and fooled into believing that there’s a difference between the Republicans and Democrats, when in fact, the two parties are exactly the same. As one commentator noted, both parties support endless war, engage in out-of-control spending, ignore the citizenry’s basic rights, have no respect for the rule of law, are bought and paid for by Big Business, care most about their own power, and have a long record of expanding government and shrinking liberty.

  Then, when faced with the prospect of voting for the lesser of two evils, many simply compromise their principles and overlook the fact that the lesser of two evils is still evil.

  Perhaps worst of all, we allowed the cynicism of our age and the cronyism and corruption of Beltway politics to discourage us from believing that there was any hope for the American experiment in liberty.

  Granted, it’s easy to become discouraged about the state of our nation. We’re drowning under the weight of too much debt, too many wars, too much power in the hands of a centralized government, too many militarized police, too many laws, too many lobbyists, and generally too much bad news.

  It’s harder to believe that change is possible, that the system can be reformed, that politicians can be principled, that courts can be just, that good can overcome evil, and that freedom will prevail.

  So where does that leave us?

  Benjamin Franklin provided the answer. As the delegates to the Constitutional Convention trudged out of Independence Hall on September 17, 1787, an anxious woman in the crowd waiting at the entrance inquired of Franklin, “Well, Doctor, what have we got, a republic or a monarchy?” “A republic,” Franklin replied, “if you can keep it.”

  What Franklin meant, of course, is that when all is said and done, we get the government we deserve.

  A healthy, representative government is hard work. It takes a citizenry that is informed about the issues, educated about how the government operates, and willing to make the sacrifices necessary to stay involved, whether that means forgoing Monday night football in order to attend a city council meeting or risking arrest by picketing in front of a politician’s office.

  Most of all, it takes a citizenry willing to do more than grouse and complain.

  We must act—and act responsibly—keeping in mind that the duties of citizenship extend beyond the act of voting.

  The powers-that-be want us to believe that our job as citizens begins and ends on Election Day. They want us to believe that we have no right to complain about the state of the nation unless we’ve cast our vote one way or the other. They want us to remain divided over politics, hostile to those with whom we disagree politically, and intolerant of anyone or anything whose solutions to what ails this country differ from our own.

  What they don’t want us talking about is the fact that the government is corrupt, the system is rigged, the politicians don’t represent us, the electoral college is a joke, most of the candidates are frauds, and, as I point out in my book Battlefield America: The War on the American People, we as a nation are repeating the mistakes of history—namely, allowing a totalitarian state to reign over us.

  Former concentration camp inmate Hannah Arendt warned against this when she wrote, “No matter what the specifically national tradition or the particular spiritual source of its ideology, totalitarian government always transformed classes into masses, supplanted the party system, not by one-party dictatorships, but by mass movement, shifted the center of power from the army to the police, and established a foreign policy openly directed toward world domination.”

  Clearly, “we the people” have a decision to make.

  Do we simply participate in the collapse of the American republic as it degenerates toward a totalitarian regime, or do we take a stand at this moment in history and reject the pathetic excuse for government that is being fobbed off on us?

  

  

  

  

  

• These Stunning Images Depict The Destruction Of Homs, Syria's Third Largest City

  Last week we brought you drone footage from Homs, Syria’s third-largest city.

  The clip was just the latest bit of evidence to support the contention that when the US and its allies seek to bring about regime change in the Mid-East, the results are very often far worse than whatever the political “problem” was in the first place.

  What began a decade ago as a covert effort to usurp the Alawite government by playing on the sectarian divide, mushroomed over the years into an overt effort to overthrow Bashar al-Assad. Now, much like Libya, Syria is a lawless wasteland. Its infrastructure is destroyed. Its people have fled (the ones who are still alive). Its resources have been commandeered by extremists. Its cultural heritage lays in ruin.

  And it’s not over yet.

  With the stakes now higher than ever as the US inserts SpecOps and Russia continues to bombard rebel positions, we wonder if they’ll be anything left of the country by the end of the year. Underscoring the extent of the destruction are the following images, also from Homs.

  Somehow we doubt the city would bear any resemblance to these indelible visuals were it not for Washington’s support of the “peaceful, democratic resistance.”

  

  

  

  

  

  

  

  
  

  
  

  

  

  

  

• Germany Has Repatriated Over 366 Tonnes Of Gold From New York And Paris

  Submitted by Ronan Manly of BullionStar

  Update on Bundesbank Gold Repatriation 2015

  Deutsche Bundesbank has just released a progress report on its gold bar repatriation programme for 2015 – “Frankfurt becomes Bundesbank’s largest gold storage location“.

  During the calendar year to December 2015, the Bundesbank claims to
  have transported 210 tonnes of gold back to Frankfurt, moving circa 110
  tonnes from Paris to Frankfurt, and just under 100 tonnes from New York
  to Frankfurt.

  As a reminder, the Bundesbank is engaged in an unusual multi-year
  repatriation programme to transport 300 tonnes of gold back to Frankfurt
  from the vaults of the Federal Reserve Bank of New York (FRBNY), and
  simultaneously to bring back 374 tonnes of gold back to Frankfurt from
  the vaults of the Banque de France in Paris. This programme began in
  2013 and is scheduled to complete by 2020. I use the word ‘unusual’
  because the Bundesbank could technically transport all 674 tonnes of
  this gold back to Frankfurt in a few weeks or less if it really wanted
  to, so there are undoubtedly some unpublished limitations as to why the
  German central bank has not yet done so.

  

  Given the latest update from the German central bank today, the
  geographic distribution of the Bundesbank gold reserves is now as
  follows, with the largest share of the German gold now being stored
  domestically:

  • 1,347.4 tonnes, or 39.9%, stored in New York;
  • 196.4 tonnes, or 5.8%, stored in Paris;
  • 434.7 tonnes or 12.9% stored at the Bank of England vaults in London;
  • 1402.5 tonnes, or 41.5% now stored domestically by the Bundesbank at its storage vaults in Frankfurt, Germany

  In January 2013, prior to the commencement of the programme, the
  geographical distribution of the Bundesbank gold reserves was 1,536
  tonnes or 45% at the FRBNY, 374 tonnes or 11%, at the Banque de France,
  445 tonnes or 13% at the Bank of England, and 1036 tonnes or 31% in
  Frankfurt.

  The latest moves now mean that over 3 years from January 2013 to
  December 2015, the Bundesbank has retrieved 366 tonnes of gold back to
  home soil (189 tonnes from New York (5 tonnes in 2013, 85 tonnes in
  2014, and between 99-100 tonnes in 2015), as well as 177 tonnes from
  Paris (32 tonnes in 2013, 35 tonnes in 2014, and 110 tonnes in 2015).
  The latest transfers still leave 110 tonnes of gold to shift out of New
  York in the future and 196.4 tonnes to move the short distance from
  Paris to Frankfurt.

  In the first year of operation of the repatriation scheme during
  2013, the Bundesbank transferred a meagre 37 tonnes of gold in total to
  Frankfurt, of which a tiny 5 tonnes came from the FRBNY and only 32
  tonnes from Paris. Whatever those excessive limitations were in 2013,
  they don’t appear to be so constraining now. In 2014, 85 tonnes were let
  out of the FRBNY and 35 tonnes made the trip from Paris. See Koos
  Jansen’s January 2015 blog titled “Germany Repatriated 120 Tonnes Of Gold In 2014” for more details on the 2014 repatriation.

  Those who track the “Federal Reserve Board Foreign Official Assets Held at Federal Reserve Banks” foreign earmarked gold table
  may notice that between January 2015 and November 2015 , circa 4
  million ounces, or 124 tonnes of gold, were withdrawn from FRB gold
  vaults. Given that the Bundesbank claims to have moved 110 tonnes from
  New York during 2015, this implies that there were also other
  non-Bundesbank withdrawals from the FRB during 2015. Unless of course
  other gold was withdrawn from the FRB, shipped to Paris, and then became
  part of the Paris withdrawals for the account of the Bundesbank. The
  FRB will again update its foreign earmarked gold holdings table this
  week with December 2015 withdrawals (if any) which may show an even
  larger non-Bundesbank gold delta for year-end 2015.

  Notably, the latest press release today does not mention whether any
  of the gold withdrawn from the FRBNY was melted down / recast into Good
  Delivery bars. Some readers will recall that the Bundesbank’s updates
  for 2013 and 2014 did refer to such remelting/recasting events.

  Today’s press release does however include some ‘assurances’ from the
  Bundesbank about the authenticity and quality of the returned bars:

  “The Bundesbank assures the identity
  and authenticity of German gold reserves throughout the transfer process
  – from when they are removed from the storage locations abroad until
  they are stored in Frankfurt am Main. Once they arrive in Frankfurt am
  Main, all the transferred gold bars are thoroughly and exhaustively
  inspected and verified by the Bundesbank. When all the inspections of
  transfers to date had been concluded, no irregularities came to light
  with regard to the authenticity, fineness and weight of the bars.”

  But why the need to for such a general comment on the quality of the
  bars while not providing any real details of the bars transferred, their
  serial numbers, their refiner brands, or their years of manufacture?
  Perhaps remelting/recasting of bars was undertaken during 2015 and the
  Bundesbank is now opting for the cautious approach after getting some
  awkward questions last year about these topics – i.e. the Bundesbank’s
  approach may well be “don’t mention recasting / remelting and maybe no
  one will ask”.

   

  Source: Bundesbank

  Limited Hangout

  This bring us to an important point. Beyond the Bundesbank’s
  hype, its important to note that the repatriation information in all of
  the press releases and updates from the Bundesbank since 2013  has
  excluded most of the critical information about the actual gold bars
  being moved. So, for example, in this latest update concerning the 2015
  transport operations, there is no complete bar list (weight list) of the
  bars repatriated, no explanation of the quality of gold transferred and
  whether bars of various purities were involved, no comment on whether
  any bars had to be re-melted and recast, no indication of which
  refineries, if any, were used, and no explanation of why it takes a
  projected 7 years to bring back 300 tonnes of gold that could be flown
  from New York to Frankfurt in a week using a few C-130 US transporter
  carriers.

  There is also no explanation from the Bundesbank as to why these 100
  tonnes of gold were available from New York in 2015 but not available
  during 2014 or 2013, nor why 110 tonnes of gold somehow became available
  in Paris during 2015 when these bars were not available in 2014 or
  2013.

  The crucial questions to ask in my view are where the repatriated
  gold that has so far been supplied to the Bundesbank from New York and
  Paris has been sourced from, what were the refiner brands and years of
  manufacture for the bars, what was the quality (fineness) of the gold,
  and are these bars the same bars that the Bundesbank purchased when it
  accumulated its large stock of gold bars during the 1950s and especially
  the 1960s.

  In essence, all of these updates from Frankfurt could be termed
  ‘limited hangouts’, a term used in the intelligence community, whereby
  the real behind the scenes details are left unmentioned, and questions
  about the real information is invariably left unasked by the mainstream
  media. Overall,  it’s important to realise that the Bundesbank’s
  repatriation updates, press releases, and interviews since 2013 are
  carefully stage-managed, and that the German central bank continually
  dodges genuine but simple questions about its gold reserves and the
  physical gold that is being transported back to Frankfurt.

  For example, in October 2015, the Bundesbank released a partial
  inventory bar list/weight list of it gold holdings. At that time, on 8
  October 2015, I asked the Bundesbank:

  Hello Bundesbank Press Office, 

  Regarding the gold bar list published by the Bundesbank yesterday (07 October https://www.bundesbank.de/Redaktion/EN/Topics/2015/2015_10_07_gold.html), could
  the Bundesbank clarify why the published bar list does not include,for
  each bar, the refiner brand, the bar refinery serial number, and the
  year of manufacture, as per the normal convention for gold bar weight
  lists, and as per the requirements of London Good Delivery (LGD) gold
  bars? 

  Bundesbank bar list:https://www.bundesbank.de/Redaktion/EN/Downloads/Topics/2015_10_07_gold.pdf?__blob=publicationFile 

  From the London Good Delivery Rules, the following attributes are required on LGD bars http://www.lbma.org.uk/good-delivery-rules

  “Marks:   

  Serial number (see additional comments in section 7 of the GDL Rules)    

  Assay stamp of refiner    

  Fineness (to four significant figures)    

  Year of manufacture (see additional comments in section 7 of the GDL Rules)”

   “The marks should include
  the stamp of the refiner (which, if necessary for clear identification,
  should include its location), the assay mark (where used), the fineness,
  the serial number (which must not comprise of more than eleven
  digits or characters) and the year of manufacture as a four digit
  number unless incorporated as the first four digits in the bar number.
  If bar numbers are to be reused each year, then it is strongly
  recommended that the year of production is shown as the first four
  digits of the bar number although a separate four digit year stamp may
  be used in addition. If bar numbers are not to be recycled each year
  then the year of production must be shown as a separate four digit number.”http://www.lbma.org.uk/assets/market/gdl/GD_Rules_15_Final.pdf

  Best Regards, Ronan Manly

   

  The Bundesbank actually sent back two similar replies t the above email:

  Answer 1:

  “Dear Mr Manly, 

  Thank you for your query. Information
  on the refiner and year of production are not relevant for storage or
  accounting purposes, which require the weight data, the fineness and a
  unique number identifying each bar or melt. The Bundesbank has all of this information for each of its gold bars. By contrast, particulars relating to the refiner and year of production merely provide supplementary information. They tell us part of the gold bar’s history but do not describe its entire ‘life cycle’.”

  Yours sincerely,

  DEUTSCHE BUNDESBANK Communication

   

  Answer 2:

  “Dear Mr Manly,

  The crucial data for storage and
  accounting purposes are the weight, the fineness and a unique number
  identifying each bar or melt. The Bundesbank has all of this information
  for each of its gold bars, which it records electronically and also
  makes available to the public. In addition to the data on weight and
  fineness, the Bundesbank, the Bank of England and the Banque de France
  identify gold bars exclusively on the basis of internally assigned
  inventory numbers and not using the serial numbers provided by the
  refiners. These custodians do not classify the bar numbers stamped onto
  the gold bars by the refiner as individual inventory criteria. They do
  not use the refiner’s bar numbers as these are not based on a unique
  numbering system that can be used for identification purposes. Stating
  the refiner and the year of production is not required for storage or
  accounting purposes.”
  

  Yours sincerely, 

  DEUTSCHE BUNDESBANK Communication

   

  Even the large gold ETFs produce detailed weight lists of their bar
  holdings, so you can see from the above answers that the Bundesbank is
  resorting to flimsy excuses in its inability to explain why it is not
  following standard practice across the gold industry.

  For additional Bundesbank’s prevarications on its gold bars, please see my blog “The Keys to the Gold Vaults at the New York Fed – Part 3: ‘Coin Bars’, ‘Melts’ and the Bundesbank” in a section titled “The Curious Case of the German Bundesbank”.

  Finally, see BullionStar guest post from 8 October 2015 by Peter Boehringer, founder of the ‘Repatriate our Gold’ campaign – “Guest Post: 47 years after 1968, Bundesbank STILL fails to deliver a gold bar number list“.
  This guest post adeptly takes apart the Deutsche Bundesbank’s
  stage-managed communication strategy in and around its gold repatriation
  exercise, and asks the serious questions that the mainstream media fear
  to ask.

  

  

  

  

  

• Ammon Bundy Admits Defeat, Calls On Remaining Oregon Occupiers To "Stand Down, Go Home"

  The story of Ammon Bundy and his not so merry band of Federal Wildlife Refuge occupiers is about to come to its end.

  Following the overnight arrest of the Oregon militia leader and six of his associates by the FBI, as well as deadly shooting during a confrontation with federal authorities of Robert “LaVoy” Finicum, spokesperson for the militiamen occupying the Malheur National Wildlife Refuge, moments ago Portland’s KATU reported that Ammon Bundy, through his attorney, asked the remaining armed occupiers at the Malheur National Wildlife Refuge to stand down and go home.

  Bundy and the others were taken to Portland and booked into the Multnomah County Jail and made their first appearance in federal court on felony charges.

  It was here that Bundy decided to stand down.

  “I’m asking the federal government to allow the people at the refuge to go home without being prosecuted,” Bundy said through his attorney Mike Arnold, who stood outside court to read Bundy’s statement. “To those remaining at the refuge, I love you. Let us take this fight from here. Please stand down. Please stand down. Go home and hug your families. This fight is ours for now in the courts. Please go home.”

  Earlier, the handful of remaining armed occupiers tried to convince more people to join them via a YouTube livestream and told any would-be occupiers that if the federal authorities “stop you from getting here, KILL THEM!”

  The occupiers took over the refuge Jan. 2.

  In addition to Bundy, those arrested were Ryan Bundy, Brian Cavalier, Shawna Cox and Ryan W. Payne. They were taken into custody during a traffic stop. Joseph Donald O’Shaughnessy and online talk-show radio host Peter Santilli were arrested in Burns. Jon Ritzheimer was arrested after surrendering to authorities in his home state of Arizona.

  

  Top row from left are Ammon Bundy, Ryan Bundy, Brian Cavalier and Shawna Cox. Bottom row from left are Joseph Donald O’Shaughnessy, Ryan Payne, Jon Eric Ritzheimer and Peter Santilli. (Multnomah County Sheriff’s Office/Maricopa County Sheriff’s Office via AP)

  KATU adds that a federal judge ordered the seven defendants in Portland to stay in federal custody. The judge ruled there’s a risk they wouldn’t show up in court, and those under arrest pose a danger to the community because the occupation at the wildlife refuge continues.

  Defense attorneys argued that none of those under arrest have significant criminal records, but the judge agreed with prosecutors that all should remain in custody until a detention hearing scheduled for Friday.

  None of the seven defendants entered any plea on the charge of impeding federal wildlife officers from doing their job, although the outcome of the legal process at this point is virtually assured: prison, of the Federal kind.

  

  

  

  

• How The Rothschilds Made America Into Their Private Tax Fraud Backyard

  Back in September 2012 we first presented “the world’s biggest hedge fund nobody had ever heard of”: a small, previously unknown company called Braeburn Capital which, however, managed more cash than even Ray Dalio’s Bridgewater, the world’s largest hedge fund.

  

  How had the little firm operating out of a non-descript office building in Nevada achieved this claim to fame? By managing the cash hoard (now well over $200 billion) of the world’s biggest and most valuable company: Apple.

  But what was perhaps more notable is where Braeburn was physically located: Reno, Nevada.

  We explained the company’s choice for location with one simple word: “taxes”, or rather the full, and very much legal, avoidance thereof.

  Three and a half years later we encounter this quiet Nevada town once again, and once again it is Reno’s aura of tax evasion that brings is to the world’s attention courtesy of a Bloomberg report discussing “The World’s Favorite New Tax Haven.”

  Only instead of Apple this time, the focus falls on a far more notorious company: the Rotschilds.

  As Bloomberg writes, “last September, at a law firm overlooking San Francisco Bay, Andrew Penney, a managing director at Rothschild & Co., gave a talk on how the world’s wealthy elite can avoid paying taxes.  His message was clear: You can help your clients move their fortunes to the United States, free of taxes and hidden from their governments. Some are calling it the new Switzerland.”

  Ah, the rich irony: years after Obama single-handedly destroyed the secrecy-based Swiss banking model, the U.S. itself has taken over the role of the world’s biggest, if no longer very secret, tax haven, and the epicenter is this modest Nevada city located next to lake Tahoe, which has become the favorite city, if only for tax purposes, for such names as Apple and the Rothschild family.

  The Swiss are not amused:

  After years of lambasting other countries for helping rich Americans hide their money offshore, the U.S. is emerging as a leading tax and secrecy haven for rich foreigners. By resisting new global disclosure standards, the U.S. is creating a hot new market, becoming the go-to place to stash foreign wealth. Everyone from London lawyers to Swiss trust companies is getting in on the act, helping the world’s rich move accounts from places like the Bahamas and the British Virgin Islands to Nevada, Wyoming, and South Dakota.

   

  “How ironic—no, how perverse—that the USA, which has been so sanctimonious in its condemnation of Swiss banks, has become the banking secrecy jurisdiction du jour,” wrote Peter A. Cotorceanu, a lawyer at Anaford AG, a Zurich law firm, in a recent legal journal. “That ‘giant sucking sound’ you hear? It is the sound of money rushing to the USA.”

  It will probably come as no surprise, that the firm at the center of it all is the (in)famous financial institution: Rotschild & Company.

  Rothschild, the centuries-old European financial institution, has opened a trust company in Reno, Nev., a few blocks from the Harrah’s and Eldorado casinos. It is now moving the fortunes of wealthy foreign clients out of offshore havens such as Bermuda, subject to the new international disclosure requirements, and into Rothschild-run trusts in Nevada, which are exempt.

   

  The firm says its Reno operation caters to international families attracted to the stability of the U.S. and that customers must prove they comply with their home countries’ tax laws. Its trusts, moreover, have “not been set up with a view to exploiting that the U.S. has not signed up” for international reporting standards, said Rothschild spokeswoman Emma Rees.

  And where the Rothschilds are to be found, everyone else quickly arrives: “Geneva-based Cisa Trust Co. SA, which advises wealthy Latin Americans, is applying to open in Pierre, S.D., to “serve the needs of our foreign clients,” said John J. Ryan Jr., Cisa’s president.”

  Trident Trust Co., one of the world’s biggest providers of offshore trusts, moved dozens of accounts out of Switzerland, Grand Cayman, and other locales and into Sioux Falls, S.D., in December, ahead of a Jan. 1 disclosure deadline.

   

  “Cayman was slammed in December, closing things that people were withdrawing,” said Alice Rokahr, the president of Trident in South Dakota, one of several states promoting low taxes and confidentiality in their trust laws. “I was surprised at how many were coming across that were formerly Swiss bank accounts, but they want out of Switzerland.”

  Next comes the need to legitimize US hypocrisy and to justify how America, in demanding everyone else opens their books, is ignored when not only does it keep its own books closed but is openly welcoming all those millionaires and billionaires whose offshore accounts were closed as a result of US intervention!

  Rokahr and other advisers said there is a legitimate need for secrecy. Confidential accounts that hide wealth, whether in the U.S., Switzerland, or elsewhere, protect against kidnappings or extortion in their owners’ home countries. The rich also often feel safer parking their money in the U.S. rather than some other location perceived as less-sure.

   

  “I do not hear anybody saying, ‘I want to avoid taxes,’ ” Rokahr said. “These are people who are legitimately concerned with their own health and welfare.”

  Picture that: nobody wants to admit they are intent on evading taxes to their financial advisor. How quaint.  But the greatest thing about US-based tax evasion is that it is taking place right under the nose of the world’s allegedly biggest tax-fraud chaser. It also happens to be perfectly legal.

  There’s nothing illegal about banks luring foreigners to put money in the U.S. with promises of confidentiality as long as they are not intentionally helping to evade taxes abroad. Still, the U.S. is one of the few places left where advisers are actively promoting accounts that will remain secret from overseas authorities.

  Put all that together, and one company has realized there are billions in “fees” to be made by taking advantage of what is now officially the biggest hypocrite in the world: the United States of America. And adding insult to irony is that the “not easy to find” Rothschild Reno office is located just 6 floors away from the U.S. attorney’s office!

  Rothschild’s Reno office is at the forefront of that effort. “The Biggest Little City in the World” is not an obvious choice for a global center of capital flight. If you were going to shoot a film set in Las Vegas circa 1971, you would film it in Reno. Its casino hotels tower above the bail bondsmen across the street, available 24/7, as well as pawnshops stocked with an array of firearms. The pink neon lights at casinos like Harrah’s and the Eldorado still burn bright. But these days, their floors are often empty, with travelers preferring to gamble in Las Vegas, an hour’s flight away.

   

  The offices of Rothschild Trust North America LLC aren’t easy to find. They’re on the 12th floor of Porsche’s former North American headquarters building, a few blocks from the casinos. (The U.S. attorney’s office is on the sixth floor.) Yet the lobby directory does not list Rothschild. Instead, visitors must go to the 10th floor, the offices of McDonald Carano Wilson LLP, a politically connected law firm. Several former high-ranking Nevada state officials work there, as well as the owner of some of Reno’s biggest casinos and numerous registered lobbyists. One of the firm’s tax lobbyists is Robert Armstrong, viewed as the state’s top trusts and estates attorney, and a manager of Rothschild Trust North America.

  A little history: the trust company was set up in 2013 to cater to international families, particularly those with a mix of assets and relatives in the U.S. and abroad, according to Rothschild. It caters to customers attracted to the “stable, regulated environment” of the U.S., said Rees, the Rothschild spokeswoman.

  “We do not offer legal structures to clients unless we are absolutely certain that their tax affairs are in order; both clients themselves and independent tax lawyers must actively confirm to us that this is the case,” Rees said.

  Reread that sentence again, and this time try not to laugh: imagine a world in which both clients and tax lawyers, who are both conflicted and incentivized monetarily to lie, affirmatively confirm that they are not tax cheats? This is almost as good as Wall Street policing itself.

  The managing director of the Nevada trust company is Scott Cripps, an amiable California tax attorney who used to run the trust services for Bank of the West, now part of French financial-services giant BNP Paribas SA. Cripps explained that moving money out of traditional offshore secrecy jurisdictions and into Nevada is a brisk new line of business for Rothschild.

   

  “There’s a lot of people that are going to do it,” said Cripps. “This added layer of privacy is kicking them over the hurdle” to move their assets into the U.S. For wealthy overseas clients, “privacy is huge, especially in countries where there is corruption.”

  Here are some examples of families whose affairs are in order (after active self-confirmation of just that):

  One wealthy Turkish family is using Rothschild’s trust company to move assets from the Bahamas into the U.S., he said. Another Rothschild client, a family from Asia, is moving assets from Bermuda into Nevada. He said customers are often international families with offspring in the U.S.

  America’s gain is Switzerland’s, that centuries-old tax haven’s, loss: Switzerland has been the global capital of secret bank accounts. That may be changing. In 2007, UBS Group AG banker Bradley Birkenfeld blew the whistle on his firm helping U.S. clients evade taxes with undeclared accounts offshore. Swiss banks eventually paid a price. More than 80 Swiss banks, including UBS and Credit Suisse Group AG, have agreed to pay about $5 billion to the U.S. in penalties and fines.

  Guess who was among them? why yes, Rothschild Bank AG last June entered into a nonprosecution agreement with the U.S. Department of Justice. The bank admitted helping U.S. clients hide income offshore from the Internal Revenue Service and agreed to pay an $11.5 million penalty and shut down nearly 300 accounts belonging to U.S. taxpayers, totaling $794 million in assets.

  Well, Rothschild is doing it all over again, only this time in Uncle Sam’s back yard. Wait, you mean paying a $11.5 million penalty didn’t teach it a lesson? No way.

  But even more tragicomic is the US push for tax transparency, known as the FATCA. Well, a push everywhere except in the US itself.

  The U.S. was determined to put an end to such practices. That led to a 2010 law, the Foreign Account Tax Compliance Act, or Fatca, that requires financial firms to disclose foreign accounts held by U.S. citizens and report them to the IRS or face steep penalties. Inspired by Fatca, the OECD drew up even stiffer standards to help other countries ferret out tax dodgers. Since 2014, 97 jurisdictions have agreed to impose new disclosure requirements for bank accounts, trusts, and some other investments held by international customers. Of the nations the OECD asked to sign on, only a handful have declined: Bahrain, Nauru, Vanuatu—and the United States.

   

  “I have a lot of respect for the Obama administration because without their first moves we would not have gotten these reporting standards,” said Sven Giegold, a member of the European Parliament from Germany’s Green Party. “On the other hand, now it’s time for the U.S. to deliver what Europeans are willing to deliver to the U.S.”

  As it turns out the US had no qualms about implementing global tax disclosure standards… as long as it itself would be exempt and benefit from the entire world parking its criminal money on US territory:

  The Treasury Department makes no apologies for not agreeing to the OECD standards. “The U.S. has led the charge in combating international tax evasion using offshore financial accounts,” said Treasury spokesman Ryan Daniels. He said the OECD initiative “builds directly” on the Fatca law.

   

  “To the extent non-U.S. persons are encouraged to come to the U.S. for what may be our own ‘tax haven’ characteristics, the U.S. government would likely take a dim view of any marketing suggesting that evading home country tax is a legal objective,” he said.

  And since the US now openly welcome all forms of hot, laundered, embezzled, or otherwise misappropriated money, there are countless banks willing to provide the service of parking that money in the US… for a commission. What amounts are we talking about?

  Well, trillions.

  At issue is not just non-U.S. citizens skirting their home countries’ taxes. Treasury also is concerned that massive inflows of capital into secret accounts could become a new channel for criminal money laundering. At least $1.6 trillion in illicit funds are laundered through the global financial system each year, according to a United Nations estimate.

  And most of those funds are now being parked in the US, where a key portal is Rothshild’s Reno, NV office.

  But what makes this particular case of tax evasion particularly abominable is that it is nothing less than a symbiosis between proven and charged tax evaders and a U.S. government which has once again proven it can be bought for pennies on the dollar by banks like Rothschild, and legislate to make sure the bank continues pocketing billions in fees for the foreseeable future.

  We dare readers to read the following several concluding sections without sending their blood pressure to dangerously homicidal levels:

  For financial advisers, the current state of play is simply a good business opportunity. In a draft of his San Francisco presentation, Rothschild’s Penney wrote that the U.S. “is effectively the biggest tax haven in the world.” The U.S., he added in language later excised from his prepared remarks, lacks “the resources to enforce foreign tax laws and has little appetite to do so.”

   

  Rothschild says it takes “significant care” to ensure account holders’ assets are fully declared. The bank “adheres to the legal, regulatory, and tax rules wherever we operate,” said Rees, the Rothschild spokeswoman.

  Except in cases like Switzerland where it didn’t exactly “adhere to the legal, regulatory, and tax rules.” This time will be different though.

  Penney, who oversees the Reno business, is a longtime Rothschild lawyer who worked his way up from the firm’s trust operations in the tiny British isle of Guernsey. Penney, 56, is now a managing director based in London for Rothschild Wealth Management & Trust, which handles about $23 billion for 7,000 clients from offices including Milan, Zurich, and Hong Kong. A few years ago he was voted “Trustee of the Year” by an elite group of U.K. wealth advisers.

   

  In his September San Francisco talk, called “Using U.S. Trusts in International Planning: 10 Amazing Feats to Impress Clients and Colleagues,” Penney laid out legal ways to avoid both U.S. taxes and disclosures to clients’ home countries.

   

  In a section originally titled “U.S. Trusts to Preserve Privacy,” he included the hypothetical example of an Internet investor named “Wang, a Hong Kong resident,” originally from the People’s Republic of China, concerned that information about his wealth could be shared with Chinese authorities.

  Instead Wang will buy, sight unseen a Manhattan duplex for call it $50 million or whatever amount the seller demands, using a Nevada LLC with which to shield his purchase. In the process Wang’s purchase, under the sage advice of Rothschild’s Mr. Penney, assures that the luxury US housing bubble grows so big, and real estate prices rise so high, not a single law-abiding US citizen can afford to buy any form of luxury real estate.

  Putting his assets into a Nevada LLC, in turn owned by a Nevada trust, would generate no U.S. tax returns, Penney wrote. Any forms the IRS would receive would result in “no meaningful information to exchange under” agreements between Hong Kong and the U.S., according to Penney’s PowerPoint presentation reviewed by Bloomberg.

  Keep in mind: all of this is legal, and with the express permission of a US government, which one can rightly say is as criminal as any of the advisors who are merely explaining to their wealthy clients how to cheat the system best.

  There was a catch: not all western governments are muppets for the Rothschilds of the world:

  “Penney offered a disclaimer: At least one government, the U.K., intends to make it a criminal offense for any U.K. firm to facilitate tax evasion.”

  Of course not the US, even though with that line it makes it very clear that what the US is doing is encouraing the criminal offense of facilitating tax evasion. Or maybe not.

  Rothschild said the PowerPoint was subsequently revised before Penney delivered his presentation. The firm provided what it said was the final version of the talk, which this time excluded several potentially controversial passages. Among them: the U.S. being the “biggest tax haven in the world,” the U.S.’s low appetite for enforcing other countries’ tax laws, and two references to “privacy” offered by the U.S.

   

  “The presentation was drafted in response to a request by the organizers to be controversial and create a lively debate among the experienced, professional audience,” Rees said. “On reviewing the initial draft, these lines were not deemed to represent either Rothschild’s or Mr. Penney’s view. They were therefore removed.”

  And that was that.

  * * *

  While none of the above should come as a surprise to anyone who has been following our series since 2012 showing how US real estate has been used by foreign oligarchs to park illegal cash, what we would find very interesting in the next and final expose in this series, is for Bloomberg’s Jesse Drucker to find how many billions (or maybe only millions – the US government is a very cheap whore) were paid under the table by Rothschild et al to bribe the US government to enable this kind of circular, incestuous legalized tax fraud on US soil, one for which Rothschild will collect billions in financial advisory fees for the indefinite future, and which blatantly steals from those who do pay their taxes: the middle class.

  

  

  

  

  

• China Injects Another $50 Billion Liquidity As Mysterious Panic Buyer Reappears In Offshore Yuan

  The PBOC FX intervention team continue to be busy in offshore Yuan this week as for the 4th time in 3 days, a mysterious panic-buyer lifted CNH between 5 and 10 handles higher for no good reason other than to show George Soros (and Bill Ackman) who is boss (i.e. drive away the shorts). In keeping with the recent "stability" the Yuan fix was flat but another 340bn Yuan was injected – except China CDS pushes to Aug 2015 wides indicating severe stress and suggesting devaluation looms.

   

  Offshore Yuan in all its manipulated glory…It would appear 6.61 is the number to bet against!!

  

  Mystery solved – USD/CNH sold near 6.6160 by large-sized Chinese banks, according to North Asia-based FX traders.

  PBOC to the rescue.

  Stability… or is it artificial (as CDS signals anything but)

  

  But more liquidity…

  • *PBOC TO INJECT 340B YUAN WITH REVERSE REPOS: TRADERS
  • *PBOC TO INJECT 260B YUAN WITH 28-DAY REVERSE REPOS: TRADER
  • *PBOC TO INJECT 80B YUAN WITH 7-DAY REVERSE REPOS: TRADER

  This week’s two auction windows were used to add a net 590 billion yuan, the most since February 2013, data compiled by Bloomberg show.

  We look forward to the post China New Year unwind of all that liquidity.

  You can only hold the big balloon under water for so long…

  

   

  Stocks are not loving the FX intervention. It appears that the PBOC cannot figure out to manipulate both at the same time…

  • *SHANGHAI COMPOSITE INDEX DECLINES 1.3% AT OPEN
  • *CHINA'S CSI 300 INDEX SET TO OPEN DOWN 0.7% TO 2,909.33

   

  Charts: Bloomberg

  

  

  

  

  

• The Empire Has No Clothes

  Via EconomicNoise.com,

  Hans Christian Andersen told the story of “The Emperor’s New Clothes” as part of his  Fairy Tales Told for Children collection. The tale is almost two hundred years old. Most know how a little boy was the first to announce that the emperor had no clothes. Andersen’s tale is being re-written today and should be entitled “The Empire Has No Clothes.” This story is one occurring around the world.

  Governments are in disrepair and disrepute everywhere. They are increasingly viewed as exploitive, ineffective and catering to privilege. Public interest, the idealistic goal of government, never was real in the sense that it overrode the private needs and wants of officeholders. “Public servants” were never better stewards of public interest than private citizens pursuing their own self-interest. Indeed, once the returns to power increased, self-selection made most politicians inferior in morality and public interest than the typical citizen.

  The discomfort and turn against government occurs not because any of its behavior is new. Government has always been dishonest and a scam. What changed over time is the magnitude of government and its burden on citizens. The pain of tolerating it has apparently reached that threshold where people are no longer willing to ignore it.

  Governments around the world have become leviathans, meddling in the most minute and personal decisions of its citizens. Supporting government in its infancy required no taxation. Today the average citizen pays more than 40% of his production as tribute and support to the empire. Few believe they get much of value in return.

  Even with such confiscatory theft, governments are spending themselves and their citizens into bankruptcy. Capital that entrepreneurs need to start and grow businesses is now consumed by government vote-buying schemes and stupidity. As a result, economic growth cannot occur, jobs are lost and the standard of living declines.

  The current political contest in the United States reflects the attitude of citizens against government. Outsiders are either winning or gaining popularity in the primaries. The public is fed up with government as shown by polls such as this one. The political establishment still has not grasped the real reasons for their unpopularity.

  The Empire

  

  The phrase “limited government” is used to differentiate a so-called government “of, by and for the people” from government that is not limited or “of, by and for the people.” Arguably Abraham Lincoln’s description was the best piece of Statist propaganda ever delivered to the public. It was not true when he said it and it is implausible to even utter such a sentiment today without being ridiculed.

  “Limited government” is a clever phrase that is both untrue and impossible. It is akin to describing cancer as “limited cancer.” Left alone, cancer grows and kills. So too does government. A more accurate but less flattering description of government is “limited tyranny.” Limited government is merely a euphemism for limited tyranny. Unfortunately neither government nor tyranny can be limited.

   

  Power is like cancer. It grows and eventually destroys whatever it preys upon. The only way to constrain power is with greater power. But therein lays the insoluble problem. Government was an attempt to provide order to society. It was granted power over others to keep order. But granting such power and controlling it was not possible. Who was to constrain the power? No entity with power willingly limits its power. Setting up another layer of government or power to do so only worsens the situation. Ultimately all power succumbs to Lord Acton’s undeniable truth:

  Power corrupts and absolute power corrupts absolutely.

  Power granted is always limited yet it always grows and is abused. Power, even in small doses, qualifies as tyranny. Idealists may not recognize it as such until it becomes so great that the tyranny can no longer be denied or ignored. The notion of limited government is fantastical. It is the belief in unicorns, tooth fairies and Santa Claus! Only the young or naive believe in such things.

  History provides no examples of government staying within the bounds granted. All governments grow and become increasingly oppressive. The passage of time and human nature ensure such outcomes.

  Is Civilization At An Inflection Point?

  The current disgust with government is palpable. It is the reason why a braggart like Donald Trump can challenge for and likely win the Republican nomination for president. It is also the reason why a septuagenarian Socialist can challenge an anointed Democrat candidate. Both political contests reflect  hatred toward the political class. The voters are saying STOP! They turn to outsiders out of desperation.

  Is this merely a political phase that can be remedied? Is it merely a normal ebb and flow of the political process? It is easy to answer in the affirmative to both of these questions. History shows few exceptions and the few are usually bloody and violent. It is easy to be influenced by a form of confirmation bias when assessing such conditions. However, my personal judgment is that this dissatisfaction is not something temporary that will self-repair.

  Regardless of who is nominated and elected in the next presidential race, it is my opinion that this outcome is meaningless. This country and likely other so-called advanced democracies seem to be at an inflection or turning point. History is typically not useful in identifying such times.

  If my guess is correct, none of us alive today will see its occurrence. The process will likely be lengthy and contested. It will take decades before a final determination can be made.

  Donald Trump is not a politician although he is likely to be elected. Voting for Donald Trump (or Bernie Sanders) is a protest vote against government. It is the nation’s Howard Beale moment:

  I don’t have to tell you things are bad. Everybody knows things are bad. It’s a depression. Everybody’s out of work or scared of losing their job. The dollar buys a nickel’s worth, banks are going bust, shopkeepers keep a gun under the counter.

   

  

   

  Punks are running wild in the street and there’s nobody anywhere who seems to know what to do, and there’s no end to it. We know the air is unfit to breathe and our food is unfit to eat, and we sit watching our TV’s while some local newscaster tells us that today we had fifteen homicides and sixty-three violent crimes, as if that’s the way it’s supposed to be. We know things are bad – worse than bad. They’re crazy. It’s like everything everywhere is going crazy, so we don’t go out anymore.

   

  We sit in the house, and slowly the world we are living in is getting smaller, and all we say is, ‘Please, at least leave us alone in our living rooms. Let me have my toaster and my TV and my steel-belted radials and I won’t say anything. Just leave us alone.’ Well, I’m not gonna leave you alone. I want you to get mad! I don’t want you to protest. I don’t want you to riot – I don’t want you to write to your congressman because I wouldn’t know what to tell you to write. I don’t know what to do about the depression and the inflation and the Russians and the crime in the street. All I know is that first you’ve got to get mad. You’ve got to say, ‘I’m a HUMAN BEING, God damn it! My life has VALUE!’ So I want you to get up now. I want all of you to get up out of your chairs. I want you to get up right now and go to the window. Open it, and stick your head out, and yell, ‘I’M AS MAD AS HELL, AND I’M NOT GOING TO TAKE THIS ANYMORE!’ I want you to get up right now, sit up, go to your windows, open them and stick your head out and yell – ‘I’m as mad as hell and I’m not going to take this anymore!’ Things have got to change. But first, you’ve gotta get mad!… You’ve got to say, ‘I’m as mad as hell, and I’m not going to take this anymore!’ Then we’ll figure out what to do about the depression and the inflation and the oil crisis. But first get up out of your chairs, open the window, stick your head out, and yell, and say it: “I’M AS MAD AS HELL, AND I’M NOT GOING TO TAKE THIS ANYMORE!”

  It will be the first shot fired against the Empire. It will be ineffective but will be the first signal that the process of citizens taking back their country has begun.

  Donald Trump (or Bernie) is a sign of how frustrated the electorate has become. Voters don’t know how to stop what is happening to them and their country but they are mad as hell and are not going to take this anymore. The upcoming election will change nothing. The best that the public can hope for is to elect a wrecking ball that will dent or damage some of the government apparatus. That is probably a foolish hope, almost certainly one that will not be fulfilled.

  The ballot box will be ineffective in satisfying the public. Other means will be tried. The Empire will not stand idly by while its power is threatened. It will strike back at any attempt to slow its growth or rate of plunder. It will become truly vicious, not unlike a wounded and cornered animal. Power is never relinquished willingly.

  Government, more properly called The State, has always been dependent on a myth. That myth is that society cannot be orderly without government and that all perceived ills can be solved by it. The reality is that society preceded government and that the State is little more than an Al Capone with better PR and no Eliot Ness.

  

  Our founders did their best with The Constitution. Few believed it could be preserved easily. Thomas Jefferson knew as much when he stated:

  Every generation needs a new revolution.

  I suspect he thinks less of us for not honoring his solution — yet!

  

  

  

  

  

• Former House Majority Leader Claims FBI Is "Ready To Indict" Hillary Clinton

  Submitted by Rachel Blevins via TheAntiMedia.org,

  Democratic presidential candidate Hillary Clinton has been under investigation by the FBI for several months, and former U.S. House Majority leader Tom DeLay said Monday that the FBI is “ready to indict” her for using a private email server to conduct government business.

  During an interview on “The Steve Malzberg Show,” DeLay, a Republican from Texas, said he has friends in the FBI who tell him “they’re ready to indict” the former Secretary of State.

  “They’re ready to recommend an indictment and they also say that if the attorney general does not indict, they’re going public,” DeLay said.

  Clinton’s use of personal email on a private server during her tenure as Secretary of State was revealed in March 2015, and while she has maintained that she never sent or received any classified information on the server, her claims have been contradicted by the Intelligence Community.

  Intelligence Community Inspector General I. Charles McCullough III sent a letter to Congress on Jan. 14, revealing that not only did “several dozen” of Clinton’s emails contain classified information, but some of the information was classified as SAP or “special access programs,” which is beyond top secret.

  “To date, I have received two sworn declarations from one [intelligence community] element,” McCullough wrote. “These declarations cover several dozen emails containing classified information determined by the IC element to be at the confidential, secret, and top secret/sap levels. According to the declarant, these documents contain information derived from classified IC element sources.”

  DeLay said he believes Clinton is “going to have to face these charges” eventually, whether it’s through an FBI indictment or through the “public eye.”

  “One way or another either she’s going to be indicted and that process begins, or we try her in the public eye with her campaign,” DeLay said. “One way or another she’s going to have to face these charges.”

  

  

  

  

  

• DeVry Plunges As FTC Says School Lied About How Many Of Its Students Become Waiters And Bartenders

  “The real question now is whether continued pressure on for-profit colleges will result in further closures and more petitions from hundreds of thousands of students with tens of billions of loans they now know can be legally discharged.”

  That’s what we said last May when disgruntled students from the now defunct Corinthian Colleges began to press the Department of Education for debt relief after the government accused the for-profit institution of using fraudulent recruiting practices.

  Long story short, students are entitled to have their debt expunged if they can prove that they’ve been defrauded. When the government forces a school to close its doors, it’s obviously quite difficult to deny students’ claims, which means that if Congress is serious about going after the for-profit college space, they’re effectively setting the stage for a massive taxpayer bailout of the schools’ students.

  At issue are claims the schools make about things like graduation rates and job placements. As WSJ wrote last week, “thousands” of students are now “flooding the government” with appeals to have their loans discharged on the grounds they’ve been the victims of fraud.

  The problem for the government is that the obscure law which allows students to apply for loan relief is short on specifics. That is, it doesn’t spell out what qualifies as “fraud” which means that while there are some clear-cut cases, there’s also quite a bit of ambiguity – especially when it comes to the for-profits.

  “They promised us to get jobs in the field, and most of us ended up at Office Depot,” one former Art Institutes student told the Journal, describing his less than satisfactory experience at the school, where he studied to be a video game designer.

  “In short, it’s just a matter of time before the ‘thousands’ of appeals flooding the Department of Education turn into tens and hundreds of thousands as recent graduates suddenly discover the harsh realities of America’s waiter and bartender economy,” we said.

  Well you can add DeVry students to the list of those who will very shortly be sending the Education Department a mountain of discharge requests because the FTC has now accused the school of deceiving prospective students about the employment success of graduates.

  “The Federal Trade Commission—one of several federal agencies investigating the for-profit school industry—took aim at DeVry advertisements claiming 90% of its graduates who sought jobs found them in their field of study within six months of graduation,” WSJ reports. “In a suit filed in a California federal court, the FTC is asking a judge to provide monetary remedies to allegedly deceived students, including refunds and restitution.”

  Needless to say, shares of DeVry had a rough session:

  

  For its part, the school says the FTC has no legal basis to file the complaint. “DeVry Education Group intends to vigorously contest a complaint filed by the Federal Trade Commission, challenging the employment and earnings outcomes of DeVry University graduates,” a statement from the company reads.

  But again, someone will end up having to pay these students restitution (i.e. their debt will be expunged one way or the other whether it’s through a refund from DeVry or federal debt relief). As a reminder, most students at for-profit schools receive federal aid, which means that if DeVry ends up successfully contesting the idea that it’s responsible for refunding students’ tuition, the students can just appeal to the government for debt relief. After all, it’s not exactly like the Department of Education could refuse after the FTC sued the school for fraud. 

  But the reall punchline is this, again from WSJ: “[The FTC] accuses the school of including workers in low-paying retail jobs as finding work in their field of study, such as a business administration major working as a restaurant server.“

  And there you have it America. The “waiter and bartender recovery” is confirmed … by none other than the US government.

  

  

  

  

  

  

• A Whole New Level Of Moral Hazard: China Will Use Public Funds To Cover Venture Capital Losses

  It should surprise nobody that when it comes to perpetuating the global central bank “put”, China – which is at daily danger of having its house of trillions in non-performing loan card collapse at any moment – has perfected moral hazard better than any western central banker. However, even the staunchest cynics will be stunned by the latest development out of the Shanghai government where starting next month, venture capital firms which invested in high-tech startups since the beginning of 2015 can apply for government compensation if their investment loses money.

  In other words, while until now the government had bailed out corporate bond and bank loan investors, and was actively micromanaging the burst stock bubble (unsuccessfully), it will now enter the venture capital and private equity arena in what may be the grossest misallocation of capital unleashed by China to date.

  The policy is laid out in a regulation dated December 29 that the city’s Science and Technology Commission put on its website on January 21. Under the regulation, if the sale of a VC’s stake in a startup fails to cover its original investment, it can ask the government for a payout amounting to 30 or 60 percent of the shortfall depending on the size and revenue of the firm it backed. 

  The most any VC firm can receive in one year is 6 million yuan. The limit on individual investment projects is 3 million yuan although we are confident both these limitations will be breached grossly and repeatedly.

  Shanghai is not the first Chinese city to implement this lunacy: an investor with a financial institution in Shanghai said the city did not invent the idea of subsidizing high-risk private financial investment. Other local governments in China have implemented similar rules but none of them offer quite as much compensation, he said.

  With other local governments it was more of an ad hoc arrangement, he said. “You go to the government’s public finance bureau, asking for money, and they will tell you to wait as they go over their budget. Usually they’ll return and say there are no funds left, so you’ll have to wait until the next year and see.”

  According to Caixin, the payout offer is intended to encourage private VC investment to support innovation and the development of Shanghai as a global high-tech center, the document says. The policy is to last for two years. 

  Of course, what it will encourage instead is another round of massive fraud, and investing in idiotic projects that have zero hope of recovery let alone return, because when one is spending with a full government backstop – like during episodes of QE – the last thing one cares about is trivial concepts like “risk.” There is only the guarantee of return and as Allan Meltzer put it best, “Capitalism without failure is like religion without sin. It doesn’t work.”

  What it does do is assure that an even greater bust will take place once this particular bubble bursts, however in the process billions in taxpayer funds will be “allocated” to a handful of individuals who will promptly abuse China’s capital controls and end up purchasing luxury apartments in Manhattan.

  Surprisingly, instead of keeping their mouth shut and just accepting the government’s risk-free money, some have dared to speak out against this idea which can only be classified as sheer idiocy:

  The idea will have a “disastrous” impact on the principles of the capital market, said Andrew Y. Yan, managing partner of private equity investment firm SAIF Partners.

   

  “A fundamental principle of the market economy is the match between risk and return,” he said. “VC investments are extremely risky and limited to only a very few people and institutions. The negative consequences of using public money to compensate investment losses will be unimaginable.”

   

  Xie Zuoqiang, vice president of the PE firm Prosperity Investment, said the new policy provides no clear standards and procedures on calculating losses, leaving loopholes that can be abused to cheat tax payers’ money. He also said the two-year life of the regulation creates uncertainties because VC investments often last longer than that. “The policy may be well-intentioned,” he said, “but supporting an industry is a long-term initiative.”

  Actually the policy is beyond idiotic, however it is clearly designed to enrich a handful of “venture capitalists” who like U.S. bankers have purchased local government puppets to do their bidding for them.

  That said, there may be a silver lining: very soon the infamous “zero-corn” Theranos may liquidate in the US only to be reconsistuted in Shanghai, where its fraud will guarantee massive taxpayer funds are spent to boost the bank accounts of every criminal involved.

  

  

  

  

  

• Brazil's Easy-Money Problem

  Submitted by Lukas Vez via The Mises Institute,

  Brazil is undergoing what is considered its worst economic crisis in seventy years, and there is usually no agreement when it comes to the causes of this situation. President Rousseff and the Labor Party say that it was the corollary of the “International Crisis,” a ghost of the 2008 depression created in their minds. The reality, however, is different. Since ex-president Lula Da Silva of the Labor Party entered office in 2003, the government has clung to the typical Keynesian project of growth-by-government-spending. Interest rates were lowered constantly, the amount of loans grew to an unprecedented level, savings per capita dropped, and government spending continued to grow.

  For the advocates of government intervention, the country’s economy was heaven on earth. It should be of no surprise that Paul Krugman, the defender of America’s Quantitative Easing, said that Brazil was not a vulnerable country. However, those policies so strongly defended by some economists and by bureaucrats led the country toward the terrible situation in which it is now.

  From the Brazilian government’s point of view, it could hardly get any worse: the country is facing an economic depression that is likely to last at least two more years, the country’s rating was downgraded to junk by Standard & Poor’s, and a corruption scandal may lead to the impeachment of the country’s president, Dilma Rousseff. We must recognize, however, that even though this was the result of the government’s action, it simply put in practice the most prevalent ideologies of the country, which is a mixture of Marxism in politics and in the universities with Keynesianism in economics. This national ideology praises, in general, a complete dependence of the people on the government. The fact that “Brazil’s tax burden already amounts to 36 per cent of GDP” is held with pride by professors and economists throughout the country, who spread the word that public policies will create jobs and contribute to people’s welfare.

  Brazil and the Austrian Business Cycle Theory

  In order to grasp what is happening to Brazil, and to understand why some economists have long ago predicted the current disaster, it is crucial to understand Austrian business cycle theory, since it yields a concrete critique of government’s involvement with currency and credit expansion — two factors that the Brazilian government used as tools for economic growth — and its misuse is what generated the crisis.

  As Mises pointed out, “the cyclical fluctuations of business are not an occurrence originating in the sphere of the unhampered market, but a product of government interference with business.”

  Indeed, those “boom-bust” cycles, as the one that happened in Brazil, are generated by monetary intervention in the market in the form of bank credit expansion. Thus, they are an outcome of central planning and government intervention, the very opposite of a free market.

  It is, however, important to make the distinction between bank credit expansion in the form of loans to business and other forms of credit expansion. The former is usually a method that government uses to boost the economy of the country, lowering the interest rates “below the height at which the free market would have fixed it,” and this is why it is so important in our analysis.

  On the graph below we can see the absurd rise in the amount of loans (given in millions of reais, the Brazilian currency) made to businesses, especially since 2006 (and reinforced from 2008 on, as a way to “fight” the international crisis) when the government tried to generate an unsustainable boom. (The red line represents the loans given by public banks and the blue line the loans given by private banks.)

  

  Figure 1. Amount of Credit Lent to Business in Brazil Over Time

  This new type of credit that would not be available without the interference of the government generating the so-called “boom.” This boom caused businessmen to, as described by Rothbard in America’s Great Depression, “take their newly acquired funds and bid up the prices of capital and other producers’ goods, and this stimulate[d] a shift of investment from the ‘lower’ (near the consumer) to the ‘higher’ orders of production (furthest from the consumer) — from consumer goods to capital goods industries.”

  This shift of investment from consumer to capital goods is a characteristic mark of the boom and explains, as opposed to other theories, why capital goods’ industries are affected first in the beginning of the depression. We can see on the next graph how those industries were affected in the Brazilian scenario. The green line represents the capital goods industries, and the slump that we see happened during the very early stages of the depression, in the end of 2013.

  

  Figure 2. Index of Industrial Production and Key Components

  It is also worth noticing that this slump happened right after the government started to raise the interest rates again, which occurred after a period of an all-time low in the interest rates of the country. As we can see below the Brazilian government lowered the interest rates to an unprecedented low level, and when the government tried to raise interest rates to curb the inflation generated by its “easy money” policies, the boom came to an end. 

  

  Figure 3. Brazil’s Interest Rates Over Time (Source: Financial Times.)

  As Murray Rothbard observed (again from America’s Great Depression),

  businessmen were misled by bank credit inflation to invest too much in higher-order capital goods, which could only be prosperously sustained through lower time preferences and greater savings and investment; as soon as the inflation permeates to the mass of the people, the old consumption — investment proportion is reestablished, and business investments in the higher orders are seen to have been wasteful. Businessmen were led to this error by the credit expansion and its tampering with the free-market rate of interest.

  As observed by Mises in his essay “Middle-of-the-Road Policy Leads to Socialism,” we must pay attention to the fact that “the attempts to lower interest rates by credit expansion generate, it is true, a period of booming business,” which in Brazil’s case occurred mostly between 2006 and 2013. “But the prosperity thus created is only an artificial hot-house product and must inexorably lead to the slump and to the depression. People must pay heavily for the easy-money orgy of a few years of credit expansion and inflation.” The depression that is currently happening in the country is, therefore, not an evil that should be fought against with more and more government policies. The depression is the cure.

  As we have seen, most of what the Austrian business cycle theory described can be well applied to Brazil. It is important to admit that other factors also played important roles, such as the price of the dollar relative to the real and the slowdown of China’s demand on Brazilian commodities, but most of them were usually, and to some extent, only a consequence of the policies that we have already analyzed. The bottom line is that the country went through a major credit and money supply expansion, together with years of low interest rates. It is crucial to note that, contrary to other explanations, “Mises’s theory of the trade cycle … meshes closely with a general theory of the economic system. The Mises theory is, in fact, the economic analysis of the necessary consequences of intervention in the free market by bank credit expansion.”

  Consequently, we can see how Brazil’s current crisis is nothing but an outcome of government’s meddling with the market. The scenario of the country’s economy is indeed scary, but we have reason to believe that Brazil’s intellectual situation is going through a new and promising change. It may be true, as Lord Keynes said, that “in the long run we are all dead,” but if we are to get out of this terrible crisis, to prosper and to enjoy a constant improvement in our standard of living, “it is high time to transform the country’s state capitalism into a free market system.”

  

  

  

  

  

• "Let Them Eat CaQE": Yellen Abandons Markets; Stocks Plunge

  "F'ed Up"

  Fed vs the markets today:

  This A hole. pic.twitter.com/3VtIp9uf6Z

  — People Are Jerks (@Peepsarejerks) January 26, 2016

   

  Let's start with the obvious – The Fed f##ked up… as September is now the next meeting when rates are evenb "maybe" expected to hike.

  

   

  Post-Fed – things did not go well…

  

   

  Nasdaq was the worst today, crushed by AAPL but The Dow was double-whammied by Boeing also… Dow lost 121 points from BA (-77) and AAPL (-44)

  

   

  All those dead cat bubble gains gone from yesterday…

  

   

  Absolute chaos in the volatility complex as The Fed statement hit…

  

   

  It's not over yet…

  

   

  Apple was a de-brainer disaster… biggest single day drop sicne Jan 2014 and lowest close since July 2014… AAPL lost over 3 TWTRs today

  

   

  And Boeing was battered – we're gonna need more Ex-Im Bank…

  

   

  FANGs are FUBAR – NFLX and TSLA are now down 20% year-to-date… FANGs are now down 12.6% from their highs in December

  

   

  Seriously! – once again stocks followed crude… until The fed broke it… Good news – fundamentals matter again, oh wait!

  

   

  Treasury yields collapsed after The Fed statement…

  

   

  The USD Index dropped on The FOMC Statement, extending losses on the week

  

   

  Commodities all rose on the USD weakness but crude and copper slipped after The Fed and PMs rallied…

  

   

  Russia-OPEC discussion pumped oil higher to run stops above yesterday's highs – despite surging inventories…

  

   

  Gold jumped once again, nearing its 200DMA…

  

   

  So in summary – if you have any questions about buying the dip or what to do next…

  Is anyone else confused why the Fed hiked in December when as it admits "economic growth slowed"

  — zerohedge (@zerohedge) January 27, 2016

  Charts: Bloomberg

  Bonus Chart: #DamnItJanet!

  Speaking of Policy Errors pic.twitter.com/vlmAMKnFgt

  — Not Jim Cramer (@Not_Jim_Cramer) January 27, 2016

  

  

  

  

• China Says Soros "Hasn't Done His Homework," May Be "Partially Blind"

  On Tuesday, the People’s Daily laughed at George Soros.

  Literally.

  On the heels of comments Soros made in Davos last week about China’s “hard landing,” the Party mouthpiece ran an “op-ed” that carried the title “Declaring War On China’s Currency? Ha, Ha.”

  It’s not clear that George Soros intends to “declare war” on the RMB. However, he did say he was betting against Asian currencies and because his reputation precedes him when it comes to breaking central banks, the Chinese apparently wanted to get out ahead of what the PBoC assumes will be an attack on the yuan. “Given how people know Soros and what he did in 1992 and during the 1997-1998 Asian crisis, he’s too important to ignore, so China felt that they had to counter any negative comments,” Tommy Xie, a Singapore-based economist at Oversea-Chinese Banking told Bloomberg.“They have to reassure local savers and show them a willingness that the government is looking after them and their savings.”

  “Soros’s war on the renminbi and the Hong Kong dollar cannot possibly succeed — about this there can be no doubt,” the People’s Daily continued, before calling the aging billionaire a “crocodile” and a “predator.”

  As we noted yesterday, “China won’t be able to arrest Soros and beat a confession out of him like Beijing is fond of doing to others suspected of launching ‘malicious’ short attacks, but the brash commentary does indicate that Chinese authorities are becoming increasingly sensitive to suggestions that a steeper RMB devaluation is a foregone conclusion.”

  Of course a steeper RMB depreciation is a foregone conclusion because as we’ve outlined on several occasions, the days of China sitting idly by while the dollar peg saps the country’s export competitiveness are long gone and Beijing now seems determined not only to participate in the ongoing global currency wars, but in fact to win.

  But China is keen on orchestrating a controlled depreciation (despite the fact that getting it over with at once might be the better option if Beijing wants to limit capital flight) which means keeping hold of the narrative and using the captive Chinese media to fight back against those who, like the “crocodile” Soros, would seek to employ “malicious” tactics to spark a panic.

  Against this backdrop we get another hilarious “commentary” piece out of the Politburo on Wednesday, this time via Xinhua. The piece, presented in its entirety below, explains why Soros and the ubiquitous “short-sellers” “make claims that run counter to reality.”

  *  *  *

  From Xinhua

  China has ample reasons to stay confident in face of speculators. Far from some speculators’ claims, China is not a source of trouble but an important engine of global economic growth with its growing demand and investment.

  Here are the numbers. China registered a growth rate of 6.9 percent last year amid a sluggish global economy, contributing more than 25 percent of global economic growth.

  Chinese tourists spent 1.2 trillion yuan (182.4 billion U.S. dollars) overseas, while the country’s investors pumped 735 billion yuan (111.7 billion dollars) into other economies.

  Speculators claimed they see a hard landing for China. It is true that the growth of the world’s second largest economy is experiencing a relative slowdown compared with the blistering growth of the past decade. But as we know, decision makers have now opted for a slower pace in order to make the country’s growth more sustainable in the future.

  Moreover, a growth rate of 6.9 percent is the envy of most other economies. China’s added economic output last year was more than the GDP of Sweden or Argentina.

  George Soros, who recently claimed he saw a hard landing for China at the World Economic Forum in Davos, Switzerland, has made the same prediction several times in the past.

  It’s an exaggeration to say that China increases global deflationary risks. Imagine the world without the demand and growth from China, global economic growth would have been much worse, possibly at higher risk of deflation.

  The world economy is having trouble because of the sluggish growth and slow recovery of many economies. International investor Jim Rogers said recently that the monetary policies of the U.S. Federal Reserve and the expansion of government debt are the original sources of the problems.

  Meanwhile, China’s economic transformation is currently underway.

  Figures show that foreign investment in China’s service sector saw robust growth in 2016, and the country attracted 136 billion U.S. dollars of foreign direct investment.

  Thanks to government policies encouraging innovation and the streamlining of procedures, entrepreneurship is flourishing and bringing fundamental change to Chinese society. In the first half of 2015, the number of newly registered businesses exceeded 10,000 on a daily basis.

  Employment creation is strong too, which, coupled with a sound growth rate and strong capital formation and innovation, means that the world’s second largest economy is unlikely to experience a hard landing.

  So why do speculators make claims that run counter to reality? Analysts said it is because either the short-sellers haven’t done their homework or that they are intentionally trying to create panic to snap profits.

  *  *  *

  Yes, “analysts” say Soros hasn’t done his “homework” and just wants to “create panic” on the way to “snapping profits.” Xinhua also says Soros’ views may indicate he’s “partially” blind.

  Unfortunately for the Chinese, Soros probably has “done his homework” and his claims do not “run counter to reality.” The “reality” here is that China’s economy is decelerating and in all likelihood, the yuan will continue to move lower as the currency shoulders the burden of the hard landing.

  This won’t be the first time Soros squares off against Asian officials over flagging currencies. As Bloomberg also points out, former Malaysian PM Mahathir Mohamad (known as the founding father of modern Malaysia) once called the billionaire a “moron” for helping to trigger the ringgit’s collapse.

  So strap in, because the PBoC is in for a bumpy ride in 2016 as everyone from domestic depositors to nefarious, predatory, “speculators” bets on continued yuan weakness. 

  We close with a quote from Michael Every, head of financial markets research at Rabobank in Hong Kong:  

  “They can write as many op-eds as they want, but two plus two doesn’t make five.”

  

  

  

  

  

• How Do You Know When Your Society Is In The Midst Of Collapse?

  Submitted by Brandon Smith via Alt-Market.com,

  As economic turmoil worldwide becomes increasingly apparent, I have been receiving messages from readers expressing some concerns on the public “perception” of collapse. That is to say, there are questions on the average person’s concept of collapse versus the reality of collapse. This is a vital issue that I have discussed briefly in the past, but it deserves a more in-depth analysis.

  What is collapse? How do we define it? And, are some of the notions of collapse in the public consciousness completely wrong?

  It’s funny, because skeptics opposed to the idea of a U.S. collapse in particular will most often retort with a question they think I cannot or will not answer – “So, Mr. Smith, when specifically is this supposed collapse going to take place? What day and time?”

  My response has always been – “We’re in the middle of a collapse right now; you really can’t see it right in front of your sneering face?”

  The reason these people are incapable of grasping this kind of answer is in large part due to the popular mainstream conceptions of systemic collapse. These are conceptions that are for the most part delusional and not in line with the facts. The public idea of collapse comes predominantly from Hollywood, and not from personal experience. For the masses (and some preppers, unfortunately), a collapse is an “event” that happens visibly and usually swiftly. You wake up one morning and behold; the television and phones don’t work anymore and zombies are at your doorstep! Yes, it’s childish and cartoonish, but anything less than a Walking Dead/Mad Max scenario and many people act as if all other threats are benign.

  This is the driving reason why many Americans are absolutely oblivious to the economic instability that is rampant and blatant within our system the past few months. They might see the same signals that alternative analysts see, but these signals do not register in their brains as dangers.

  Look at it this way; say you told a person their whole life that a tiger is a 10-foot tall behemoth with four heads that breath fire while urinating flesh-rending acid. Say you make movies and TV shows about it and they never have any experience to the contrary. When they finally come across a real tiger, they might try to pet the damn thing instead of running in terror or searching for a means of defense.

  To use another vicious animal analogy, when I encounter skeptics with false assumptions of what a collapse actually is, I am often reminded of that woman in Anchorage, Alaska who jumped an enclosure fence at the zoo to get a closer picture of Binky the polar bear. These people have been made so inept when it comes to identifying threats that they will continue arguing with you as the animal takes a football-sized bite out of their meaty thigh.

  So what is the root of the problem beyond Hollywood fantasies? Well, the problem is that social and economic collapse is not a singular event, it is a PROCESS. Collapse is a series of events that sometimes span years. Each event increases in volatility over the last event, but as time goes on these events tend to condition the masses. The public develops a normalcy bias towards crisis (like the old “frog in a boiling pot” analogy). They lose all sense of what a healthy system looks like.

  It is not uncommon for a society to wade through almost a decade or more of violent decline before finally acknowledging the system is imploding on a fundamental level. It is also not uncommon for societies to endure years of abuse by corrupt governments before either organizing effectively to rebel, or caving in and submitting to totalitarianism.

  But how does one recognize a failing system? How does a person know if they are in the middle of a collapse rather than on the “verge” of collapse? Here are some signals I have derived from research of various breakdowns in modern nations and why they indicate we are experiencing collapse right now…

  The Criminals Openly Admit To Their Crimes

  The surest way to know if your society is in the midst of disintegration is to see if the criminals who created the instability in the first place are openly discussing a collapse scenario or warning that one is imminent.

  A year ago, central bankers presented little more than a chorus of recovery propaganda. Today, not so much. The Royal Bank of Scotland is now warning investors to “sell everything” ahead of a “cataclysmic” year in markets.

  The Federal Reserve’s Richard Fisher has admitted that the Fed “frontloaded” (manipulated) stock markets into a bubble and that payment is about to come due in the form of severe economic volatility (up to 20% crash in equities).

  The Bank for International Settlements, the central bank of central banks, has a track record of warning the public about collapse conditions – right before they happen, leaving little or no time for people to prepare. They have followed their habit by warning in September and December that a Fed rate hike would “shatter” the uneasy calm in markets.

  The former Chief Economist of the BIS now says the economy is in worse shape than it was in 2008 and is headed for a larger fall.

  What happened between last year and this year and why are these internationalists suddenly so forthcoming about our economic reality? The fact that central bankers are the cause of our current collapse leads me to believe that such admissions are designed to deflect guilt. If they put out a few warnings now, they can then later claim they are prognosticators rather than culprits, and that they were trying to “help us.” Beyond that, the reality is that our situation was just as dire in 2014/2015 as it is today; the difference is that now we are about to enter a new phase in the ongoing collapse, a much more detrimental phase, but still a phase of a breakdown that has been progressing since at least 2008.

  The Fundamentals Break Through The Manipulation Barrier

  Governments and central banks do not have the capacity to artificially create demand for goods or a supply of well-paying jobs in a crashing economy. What they can do, though, is hide the visible problems in supply and demand with false numbers.

  I examined such false economic statistics in great detail last year in a six-part series titled “One Last Look At The Real Economy Before It Implodes.” I will not cover them all again here. I would only point out that recently the fundamentals of supply and demand have begun to break through the deceit of manipulated numbers, and this is a sign that the collapse is about to move from one stage to the next.

  With global shipping and trucking freight in steep decline, with retail inventories in stasis and current oil consumption falling to levels not seen since 1997 despite a larger population, the mainstream can no longer deny that consumer demand is crumbling. If demand is falling dramatically, then the financial system is in the middle of falling dramatically; there is simply no way around this truth.

  Stocks And Commodities Become Violently Erratic

  Let's be clear, if stock markets represent anything at all, they are merely lagging indicators of economic instability.  Stock markets are NOT predictive indicators of anything useful.  Therefore, any person who does nothing but track equities each day is going to be completely oblivious to the bigger picture behind the economy until it is too late.  They will be so mesmerized by the green numbers and red numbers and lines on minute-to-minute graphs that they will lose all sense of reality.

  Violent swings in stocks are a sign of a financial system that is at the middle or end of the collapse process, not the beginning.

  It is also important to note that extreme shifts in stocks and commodity values to the upside are just as much a signal of instability as shifts to the downside.  For instance, if you witnessed the recent 9% explosion in oil markets and thought to yourself "Ah, the markets are being stabilized again and nothing is different this time…", then you are an idiot.

  Of course, the next day oil markets lost almost all of the gains they made the day before.  And this is how markets behave when they are about to die; they expand and implode chaotically each day on nothing more that meaningless news headlines rather than hard data.  This heart attack in equities inevitably trends downwards as the weeks and months pass.  Keep in mind, equities are down nearly 10% from their recent highs, and oil is down approximately 50% in the past six months.  Every time there is a dead cat bounce in stocks skeptics come out of the woodwork to call alternative analysts "doomers", yet they are nowhere to be found when markets come crashing back down.  They are not looking at the overall trend because their short attention spans hinder them.  Again, extreme swings in markets, whether up or down, are a sign of progressing collapse.

  Deterioration Of Cultural Values, Heritage And Identity

  I have written extensively over the years about the Cloward-Piven strategy; a strategy used by collectivists to destabilize social systems by dumping overt numbers of foreign immigrants into the population without demand for integration. This process has been obvious in the U.S. and Europe for quite some time, but only now is it peaking to the point that collapse is seen as an inevitable result by the public. Europe is worse off than the U.S. in this regard as millions upon millions of Muslim immigrants are injected into the EU’s already dying body; immigrants that intend to transplant their culture from their own failed societies rather than adopting the values and principles of the societies that have invited them in.

  Natural-born Americans and legal immigrants with aspiration of integration appear to be fighting back against the Cloward-Piven strategy with some success by holding onto traditional American values despite being labeled “barbarians” and “racists.” Illegal immigration, though, is still completely unchecked.

  In the EU, the long campaign of cultural Marxism has made natural-born Europeans perhaps the most self-hating people on the planet as well as the most passive and weak. Organized opposition to massive immigration programs in the EU should have taken place years ago. Now it is far too late, and the European system is finishing a social implosion which should have already been obvious to average citizens.

  Open Discussion Of Totalitarian Measures

  When corrupt leadership moves from quiet totalitarianism to more open totalitarianism, your society is in the FINAL stages of collapse, not the beginning of a collapse. The U.S. in particular has been slowly strangled with subversive legal directives and political policies ever since the so called “War on Terror” began. However, there are now multiple signals of a much deeper and open tyranny in the works.

  A few recent examples stand out, including Barack Obama’s insistence that the office of the president has the legal authority to issues executive orders that affect constitutional protections such as the 2^nd Amendment. As many liberty movement activists are aware, there is absolutely no constitutional precedent for the use of executive orders and such powers are not mentioned anywhere in the document. They were simply created out of thin air to be used by the federal government and sometimes state governments to supersede normal checks and balances.

  While numerous presidents have issued executive orders, including some that were outright tyrannical, like Franklin Delano Roosevelt’s unconstitutional internment of Japanese Americans into concentration camps, George W. Bush and Barack Obama have been the most subversive in their bypassing of the Constitution. Obama, in particular, has tried to hide the number of executive actions he has taken by issuing hundreds of “presidential memorandums,” which are basically the same dirty play by another name.

  These actions have been progressively setting the stage for the removal of checks and balances entirely in the name of crisis management. They are so broad in their nature and vague in their definitions and applications that they could be interpreted by federal authorities to mean just about anything in any given situation.

  If executive actions are not scary enough, corrupt politicians are now becoming blunt in their demands for dominance. Two Republican Senators, Mitch McConnel and Lindsay Graham, are calling for unlimited AUMF-style (authorization of use of military force) war powers to be given to the president. Such powers would allow the president to project U.S. military forces anywhere in the world for any reason without review or time limits. This includes the use of military forces on U.S. soil.

  The rationale for this is, of course, the threat of ISIS. The same group of terrorists the U.S. government helped to create.

  And finally, if you want perhaps the most nonchalant admission of future tyranny in recent days, check out former General Wesley Clark’s call for “disloyal” Americans to be placed in internment camps through the duration of the war on terror, a war that could ostensibly go on forever.

   

  One could argue that all of these measures are meant only to deter “Islamic extremism.” I would point out that government officials could have stemmed that tide at any time by enforcing existing immigration laws, or, by stopping all immigration for a period of years until the problem is handled. Instead, they have allowed open borders to remain, and have even imported potential terrorists while focusing Department of Homeland Security efforts more on evil white guys with guns.

  If we accept the violation of the constitutional rights of any group of citizens, if we allow the concept of "thought crime" to become commonplace, then we leave the door open to the violation of our own rights someday. And that is how tyrants trick populations through incremental collapse; by applying despotism to a claimed dangerous minority, then expanding it to everyone else.

  America is sitting near the end of the spectrum in terms of economic collapse and in the middle of the spectrum in terms of social collapse.  While more violent events are certainly gestating and are likely to be triggered in the near term, we should not overlook the reality that collapse is happening in stages all around us.  This process gives us at least some time.  All is not lost yet, and the steps we take to organize and prepare today will affect how the collapse process unfolds tomorrow. People who continue to ignore the outright evidence of collapse based on false assumptions of what collapse should look like are only preventing themselves from taking proper action until it is too late. Make no mistake, our system is dying. We cannot allow our false perceptions of this death to cloud the reality of it, or our response to it.

   

  

  

  

  

  

• These Two Commodity "Experts" May Not Have Long To Live

  There is reason for the saying “never say never”, as demonstrated vividly by these two energy experts:

  Mark Fisher:

  

   

  And Dennis Gartman:

  

   

  Perhaps it is not too late to buy life insurance on behalf of one – or both – of these world-renowned commodity gurus? If so, hurry because according to the oil strip, Gartman’s expiration date is Summer 2018.

  

  h/t @GreekFire23

  

  

  

  

  

• Refugee Murders 22-Year-Old Swedish Woman In Knife Attack

  As you might have heard, the European Union is on the brink of collapse.

  The bloc has been inundated with asylum seekers from the war-torn Mid-East and the influx of refugees now threatens to shatter the Schengen dream. Some European officials (most notably Angela Merkel) are fighting to preserve Europe’s open borders but others have reached their breaking point with what they see as a hostile foreign invasion.

  Far-right Dutch politician Geert Wilders even went so far as to call Arab migrants “Islamic testosterone bombs” who need to be “locked” in asylum centers to prevent them from waging a “sexual jihad” on Dutch women.

  Wilders was referencing widespread reports of sexual assaults allegedly perpetrated by men and male teenagers “of Arab origin.” These attacks began to make international headlines after eyewitnesses in Cologne, Germany went public with accounts of an apparent sexual melee that unfolded in the city center on New Year’s Eve. Women, the reports indicated, were assaulted by “gangs” of refugees who groped them and in some cases robbed them.

  Once the Cologne attacks became big news, Nyheter Idag released an investigative report alleging prominent Swedish daily Dagens Nyheter sought to conceal from the public a wave of sexual assaults at a youth festival and concert in central Stockholm’s Kungsträdgården last August. Dagens Nyheter denied the allegations, saying it was in fact Swedish police that were responsible for the coverup.

  Swedish politicians promised a thorough investigation into the matter and voiced their disgust for the alleged attacks.

  “This is a very big problem for those affected and for the whole of our country,” Prime Minister Stefan Löfven said. “We will not budge an inch, and we should not look away.”

  Well if Löfven thought roving gangs of teenage refugees groping girls at concerts was a “big problem,” he has an even bigger issue now because on Monday, 22-year-old Alexandra Mezher was stabbed to death by a 15-year-old migrant at an asylum center.

  “Mezher began working at an asylum center in the city of Molndal, helping unaccompanied minor migrants adapt to life in their adopted home,” The Washington Post writes. “She was killed by one of those young migrants.”

  

  “It is so terrible. She was a person who wanted to do good,” Mezher’s cousin said “And then he murdered her when she was doing her job.”

  She had only worked at the center for “a few months” according to Expressen, who adds that “the company that runs [the Molndal house] has many similar places throughout western Sweden.” Here’s more the Daily Mail:

  Alexandra, of Lebanese Christian origin, lived with her parents Boutros, 46, and Chiméne Mezher, and her two younger brothers in Borås, some 40 miles from Molndal. 

   

  Her father came to Sweden from Beirut, Lebanon, in 1989 and her mother moved there three years later. 

   

  It has now emerged that Miss Mezher had been working alone at the housing in Mölndal, which is home to ten unaccompanied minors.

   

  Despite rules that the staff should work in pairs, Miss Mezher had been working a night shift all by herself and was attacked just half an hour before daytime staff were due to take over, it is claimed. 

   

  
  

   

  A colleague speaking on condition of anonymity said that staff had previously complained about having to work alone overnight.

   

  ‘Everyone cried and someone said that this was something we had brought up before, that no one should work alone.’

   

  The teenage migrant accused of murdering a young Swedish social worker at a refugee centre will stand trial as an adult, MailOnline has learnt.

   

  Authorities in Sweden have taken the unusual step of keeping the 15-year-old suspect in police custody due to the serious nature of the crime. 

   

  Youngsters are normally sent to a secure children’s home following arrest, but the teenager is being held behind bars due to public outrage follow the brutal knife killing of Alexandra Mezher.

   

  And he will be held in an adult prison until he goes on trial.

   

  ‘A person is criminally responsible when they reach 15-years-old in Sweden,’ a Gothanburg Police spokesman told MailOnline.

   

  ‘The boy is being held at the police station.

   

  ‘But it is very unusual that children to be kept in custody by the police.

   

  ‘However the public prosecutor has deemed this as a special case due to the nature of the crime and will ask for the boy to be held in prison until he goes to trial.’

  
  This is a “terrible crime” PM Löfven said, after visiting the scene. “It was messy, of course, a crime scene with blood,” police spokesman Thomas Fuxborg recalled. 

  

  

  

  “The symbolism of Mezher’s slaying was not lost on the country’s politicians,” WaPo continues, noting that Löfven took to the air waves following the young woman’s death to acknowledge the country’s growing disaffection with the refugee situation. “I believe that there are quite many people in Sweden who feel a lot of concern that there can be more cases of this kind,” he told Radio Sweden.

  Yes Mr. Löfven, we “believe” that you are correct and make no mistake, if European politicans do not find an effective way to get the situation under control, the public will remove them – either with the ballot or with the torches and pitchforks. 

  On that note we close with one more quote from Mezher’s relatives:

  “It is the Swedish politicians’ fault that she is dead.”

  

  

  

  

  

• Is China About To Drop A Devaluation Bomb?

  Submitted by Raul Ilargi Meijer via The Automatic Earth blog,

  Though she had no intention of being funny, we laughed out loud, as undoubtedly many did with us, when incumbent and wannabe IMF head Christine Lagarde said last week in Davos that China has a communication issue. Of course, Lagarde knows full well that Beijing has much bigger problems than communication ‘with the market’. Or, to put it differently, if Xi and Li et al would ‘improve’ their communication by telling the truth about their economy, nobody would be talking about communication anymore.

  Mixed signals from China, which is attempting to shift its economy away from exports and investment to a consumer-driven model, have deepened concerns about the outlook for world growth, she said. Uncertainty is “something that markets do not like”, Ms Lagarde told a panel of business leaders and economic regulators in the snow-blanketed Swiss ski resort. Investors have struggled with “not knowing exactly what the policy is, not knowing exactly against what the renminbi is going to be valued”, she said, referring to China’s currency. “I think better and more communication will certainly serve that transition better.”

   

  The world’s second-largest economy this week announced its 2015 GDP growth as 6.9%, its slowest in a quarter of a century. The figure cast a shadow over the summit, where IHS chief economist Nariman Behravesh told AFP that Chinese policymakers had “fumbled” and had “added to the uncertainty and the volatility by their behaviour”. Mr Fang Xinghai, the vice-chairman of China’s securities regulator, said at the same panel that “in terms of communication, we should do a better job”. “We have to be patient because our system is not structured in a way that is able to communicate seamlessly with the market,” he added.

  The real issue is what people would think if Beijing announced a more realistic 2% or less GDP growth number. The thought alone scares Lagarde as much as anyone, including the Politburo. The sole option seems to be to keep lying as long as you can get away with it. But how and where the yuan will be valued by China itself has become entirely inconsequential compared to how markets value the currency.

  The PBoC spent a fortune trying to straighten the offshore and onshore yuan(s), only to see the two diverge sharply again, as Shanghai stocks posted the biggest loss on Tuesday, at 6.4%, since the ‘unfortunate’ circuit breaker incident. That puts additional pressure on the Hong Kong dollar peg, and ultimately on the mainland China peg to whatever it is they’re trying to peg to.

  Beijing might solve some of these problems by devaluing the yuan by 30%, or even 50%, but it would invite a large amount of other problems in the door if it did. Like a full-blown currency war. Still, it’s just a matter of time till Xi and Li either do it voluntarily or are forced to by ‘the market’.

  What they are trying very hard NOT to communicate is how much pain their Ponzi debt burden has put them in. It’s not even fully clear to what extent Xi himself is aware of this, but he knows at least enough to keep his mouth shut on the topic. It’s quite possible that some of his top aides dare not reveal the real tally to their boss for fear of their jobs and heads.

  In concert with denial and obfuscation, pride and hubris may be clouding the image the Chinese have of themselves and their economy. The rest of the world has followed them in that to a large degree, but it’s got to wake up at some point. If what the WSJ quotes a Beijing-based investor as saying is halfway true, and Xi realizes the opportunity it provides him, a huge devaluation may be imminent after all, if Shanghai shares keep falling the way they are.

  Yuan’s Fall Is Just ‘Noise’ Amid Deeper China Woes

  The country is already littered with “zombie” factories, empty apartment blocks that form ghostly suburbs, mothballed power stations and other infrastructure that nobody needs. But yet more wasteful projects are in the pipeline, even as the government talks about cutting industrial overcapacity. “That’s the misalignment—everything else is noise,” says Rodney Jones, the Beijing-based principal of Wigram Capital Advisors, who was a partner at Soros Fund Management during the 1990s. If debt keeps piling up at the current rate, China faces an eventual financial crisis, perhaps leading to years of subpar growth, mirroring the fate of Japan after its bubble burst in the early 1990s.

   

  Mr. Jones argues that global equity markets haven’t property adjusted to this risk, even after a 16% decline in U.S. dollar terms from their May peak. “The world will have to learn to live without demand from China,” he says. “It’ll come as a shock.” A sharp devaluation won’t fix these distortions, and might even make matters worse if, as likely, it were to trigger financial mayhem in China’s trading partners. An alternative—further clamping cross-border currency controls—would be a humiliating retreat from Beijing’s policy of making the yuan more international.

  If China imports continue to fall the way they have recently, a development that has already relentlessly hammered global commodities markets and exporting emerging nations, the advantages of a large devaluation could become irresistible even for a proud president. With capital flight in 2015 estimated at $1 trillion, and a roughly equal chunk of foreign reserves thrown at attempts to ‘stabilize’ the yuan, that pride is getting costly.

  

  ..

  

  But it occureed to me today that perhaps I simply haven’t been cynical enough yet when pondering the matter. The support for a strong yuan, the one thing that is constantly ‘communicated’ to the world, may be just another facade. Beijing may have long decided to go for the jugular. China will have to adjust to the popping of its growth fairy tale and Ponzi economy no matter what it tries to do to prevent it.

  Might as well swallow the bitter pill in one go then and get it over with?! It would make exports much more attractive at a time when more expensive imports are much less of an issue. As nice example is the very disappointing sales of iPhones in the country, prompting this comment from Apple CEO Tim Cook today: “We’re seeing extreme conditions unlike anything we’ve experienced before just about everywhere we look.” I think he might want to consider that what happened before was extreme, not what is now.

  Beijing did a few things recently that triggered my cynicism radar. First, they targeted George Soros.

  China Accuses George Soros Of ‘Declaring War’ On Yuan

  Chinese state media has stepped up a salvo of biting commentaries against George Soros and other currency traders as the yuan comes under pressure, with the billionaire investor accused of “declaring war” on the unit. At the annual World Economic Forum in Davos last week, Soros told Bloomberg TV that the world’s second-largest economy was heading for more troubles. “A hard landing is practically unavoidable,” he said. Soros [..] pointed to deflation and excessive debt as reasons for China’s slowdown.

   

  [..] Soros “publicly ‘declared war’ on China”, the paper said, citing the 85-year-old as saying that he had taken positions against Asian currencies. But some readers questioned whether the official rhetoric could fuel Chinese investors’ fears. “They say a lot of loud slogans, but do official media even know that Chinese investors are in hell?” said one poster on social media network Weibo. “I’m afraid that Chinese investors will die in a stampede before Soros even shows his hand.”

  And I’m thinking: why should you go after Soros in a very public way when you know the whole world will take note and there’s nothing you can do other than stomp your feet and thump your chest? “Look, everyone, the world’s most notorious and successful short seller is after us, but we’re so much smarter!” Maybe they think Chinese mom and pop investor juggernauts will fall for their ‘whatever it takes’ tale, but they have to deal with the entire planet here.

  Could this be simple stupidity? At a certain point that gets hard to believe. An even better example, and one that is really brow-raising, was the announcement of an inquiry into China’s statistics chief:

  Head Of China’s Statistics Bureau Investigated For Corruption

  The head of China’s statistics bureau is being investigated for corruption, the country’s watchdog said on Tuesday. “Wang Baoan is suspected of severe disciplinary violations, he is currently under investigation,” the Central Commission for Discipline Inspection said in a one-line statement on its website, using a phrase that is usually used to refer to corruption. The announcement came just hours after Wang appeared at a media briefing in Beijing on China’s economy in 2015. Last week the National Bureau of Statistics released data that showed China’s economy grew at the slowest pace in 25 years. Wang reiterated on Tuesday that the country’s GDP calculations were reliable, Chinese media reported, despite widespread criticism of the data.

  Here’s a guy seeking to soothe his audience, which in present circumstances includes the whole globe, and you cut him off at the knees just hours after? He says all’s fine, and then you sent a message to the world that he can’t be trusted?

  The timing seems crucial here. They could have waited a week, or two, so the connection between the two events (Wang’s statement and the inquiry announcement) would have been much less obvious. They could also, of course, have had the inquiry but kept it hush-hush. Instead, as in the Soros case, there’s a big public declaration.

  Wang is head of a statistics bureau that, says the NYT, is tasked with:

  Inquiry in China Adds to Doubt Over Reliability of Economic Data

  The statistics bureau has a variety of responsibilities that are hard to balance even in the best of times. The bureau is supposed to provide China’s leaders with an unvarnished assessment of the country’s economic strengths and weaknesses, even while reassuring the public about growth and maintaining consumer confidence. It is also supposed to release enough detailed and accurate information for investors and corporate leaders to make sound decisions about economic and financial prospects.

  That leads us right back to the start of this article. Wang must provide “enough detailed and accurate information” for investors”, but how can he do that if the real numbers are as bad as I strongly think they are? In that case, accurate information would drive most investors away and drive others towards shorting the yuan.

  He must also “provide China’s leaders with an unvarnished assessment of the country’s economic strengths and weaknesses”, and perhaps he screwed up there (too much varnish). Xi may have found out something real bad that Wang didn’t tell him about. But even then, the fact stands that Xi risks triggering exactly what he pretends to want to prevent, by taking this to the press.

  To summarize: yes, it’s possible that Beijing has a communication problem. I’ve never had the idea that Xi understands that now his power dream has come true, he finds that power is not absolute, if and when he wishes to have a financial market that allows for China to get richer through trade. That he realizes the price to pay for that is having much less than total control.

  Still, after glancing through this stuff, I wouldn’t be at all surprised if the decision for a very substantial devaluation of the yuan has already been taken. It would be a panic move, with largely unpredictable consequences, but then Beijing has plenty to panic about.

  And I can’t wait to see what Lagarde has to say when she figures out her new currency basket baby turns around to bite her in the ass.

  PS: Something I scribbled last week: Time and again, I see ‘experts’ claim that the fact that the Chinese services sector now makes up half of GDP, is a positive. But, even if we forget for now that much of its growth is due to financial services, the real meaning is the opposite. The services sector has been able to become so important simply because the manufacturing sector is plunging as badly as it is.

  

  

  

  

  

• Beating A Dead Unicorn: Theranos Lab Poses "Immediate Jeopardy To Patient Safety" CMS Warns

  Confirming what we detailed earlier this week, queen of the unicorns Elizabath Holmes is in big trouble…

  

  • *THERANOS 'NOT IN COMPLIANCE' WITH GOVERNMENT RULES, AGENCY SAYS
  • *CENTERS FOR MEDICARE AND MEDICAID SERVICES COMMENTS IN LETTER
  • *THERANOS HAD 'DEFICIENT PRACTICES' AT LABORATORY, CMS SAYS
  • *PRACTICES POSED 'JEOPARDY TO PATIENT HEALTH AND SAFETY'

  As Bloomberg reports,

  Deficiencies at a laboratory run by medical testing startup Theranos Inc. “pose immediate jeopardy to patient health and safety,” U.S. government regulators said in a letter to the company released Wednesday.

   

  Theranos violated at least five regulations governing clinical laboratories that operate medical diagnostics used to do things like test blood levels or assess disease, the U.S. said in the letter, which is dated Jan. 25.

   

  Theranos has 10 days to show the Centers for Medicare and Medicaid Services it is taking action to immediately fix the issues.

  Full CMS statement below:

  *  *  *

  This deficiency report is critical to Theranos future relationship with its main retail partner Walgreens Boots Alliance,

  The drugstore operator has 41 blood-drawing “wellness centers” in stores in Arizona and California, which are Theranos’s primary access to consumers. Walgreens had aimed to expand the sites nationwide but has suspended those plans until Theranos answers questions about its technology, said the people familiar with the matter.

   

  In recent weeks, Walgreens has debated whether to close the wellness centers, and the results of the latest inspection by CMS could lead the retailer to take an even harder look at what remains of its partnership with Theranos, these people said.

   

  Since October, Walgreens representatives have met a number of times with Theranos Chief Executive Elizabeth Holmes and her executive team but were dissatisfied with their responses, the people added.

   

  An earlier review of the contract led Walgreens officials to conclude that it would be difficult to exit the agreement, but the inspection findings could alter that conclusion, according to people familiar with the matter.

  Just what does this say about the following 12 members of the Theranos board?

  

   

  Or perhaps that was the idea…

  This is a board that may have made sense (twenty years ago) for a defense contractor, but not for a company whose primary task is working through the FDA approval process and getting customers in the health care business. (Theranos does some work for the US Military, though like almost everything else about the company, the work is so secret that no one seems to know what it involves.)

   

  The only two outside members that may have had the remotest link to the health care business were Bill Frist, a doctor and lead stockholder in Hospital Corporation of America, and William Foege, worthy for honor because of his role in eradicating small pox. My cynical reaction is that if you were Ms. Holmes and wanted to create a board of directors that had little idea what you were doing as a business and had no interest in asking, you could not have done much better than this group of septuagenarians.

   

  

  

  

  

• Mainstream Media, Economists Mock "Cash Hoarding" Canadian 'Savers'

  With grocery prices surging, amid the collapsing currency, the powers that be appear to have turned to their mainstream media puppets to initiate the 'mocking' propaganda of the banks against an increasingly fearful Canadian citizenry (especialy those under 35) who are hoarding cash.

   

  With the Canadian people losing faith in their government's ability to save their corner of the world as their currency loses value by the day, it is perhaps unsurprising that the always supportive of the status quo media comes out with a somewhat mocking "cash hoaring on the sidelines is foolish" puff piece… (via Financial Post)

  

   

  Cash positions have been rising since the 2008 recessions, so the recent increase comes on top of what Canadians were already sitting on in their portfolios.

  The result is the largest hoarding of cash in Canadian history.

  

   

  So, FinancialPost explains, if you are holding on to that cash out of fear rather than need, you should consider jumping back in and benefiting from what is essentially a 20 per cent discount on stock prices.

  But what if you need cash right now, because you’ve just hit your retirement years, or you need to liquidate some of your registered education savings plans because your child will soon be starting a university or college program?

  The short answer is that you should have planned ahead: You want to have a certain amount of cash in your portfolio to meet more immediate needs so you’re not cashing out your investments at the bottom of the market.

  It appears Canadians are ignoring the "sage" advice of CIBC World Markets: "While holding cash can guard against short-term spikes in volatility, it’s certainly a long-term drag on portfolio returns," and moving to cash rather than have their capital destroyed by unwinding carry trades and deflating bubbles blown by their central bank overlords…

  

   

  CIBC World Markets economists Benjamin Tal and Royce Mendes note that while they don't have a crystal ball for when markets will recover, but says that by the time they do,  “it will be way too late” for Canadians on the sidelines to take advantage, because most recoveries happen in the early stages.

  *  *  *

  There – do you get the message Canadians – pile all that cash into the stock market – fear is for losers.

  

  

  

  

  

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