- USDJPY, Nikkei Tumble After Bank Of Japan Disappoints
Japanese stocks and USDJPY are back below the lows of the US day-session following The Bank of Japan’s decision not to stimulate further (despite all the collapsing economic evidence one might need to do such a thing). Investors were clearly hoping for moar (even if economists weren’t). With GDP expectations collapsing, BoJ still voted 8-1 not to increase QQE keeping monetary base growth expectations flat. The result is a 500 point drop in The Nikkei from this morning’s highs and around 1 handle drop in USDJPY… for now.
Even with GDP expectations plummeting…
The BoJ was boxed into not reaching for the punchbowl just one more time.
The BOJ refrained from boosting monetary stimulus even after inflation came to a halt, with Governor Haruhiko Kuroda betting price gains will re-emerge as the impact from cheaper oil fades.
The central bank kept a plan to expand the monetary base at an 80 trillion yen ($672 billion) annual pace.
“It’s looking doubtful that the U.S. will be able to raise rates this year,” Mitsushige Akino, an executive officer at Ichiyoshi Asset Management Co. in Tokyo, said by phone. “I don’t expect any major changes from the BOJ. There might be some selling from disappointment, but it’ll be minimal.”
And the result…
It seems everyone waiting on The Fed to move first…
Charts: @Not_Jim_Cramer and Bloomberg
- Going Rogue: 15 Ways To Detach From The System
Submitted by Tess Pennington via SHTFPlan.com,
I am inspired by the very definition of self-reliance: to be reliant on one’s own capabilities, judgment, or resources. Ultimately, it is the epitome of independence and lays the groundwork of what we are all striving for – to live a life based on our personal principles and beliefs.
It is a concept rooted in the groundwork that made America great. Being dependent on our own capabilities and resources helped create a strong, plentiful country for so long. That said, the existing country as it is now is entirely different than when it began.
Why Are We So Dependent?
It is much too complicated to get into how the “system” was created. That said, the purpose is to enslave through debt and to create an interdependence that will force you and your family to never truly find the freedom you are seeking. It manipulates and convinces you to continue purchasing as a sort of status symbol to make you think you are living the good life; while all along, it has enslaved you further. Wonder why we have all of these holidays where you have to buy gifts? The system needs to be fed and forces you into further enslavement. If you don’t buy into this facilitated spending spree, you are socially shamed.
Collectively speaking, the contribution from our easy lifestyle and comfort level has created rampant complacency and a population of dependent, self-entitled mediocres. We no longer count on our sound judgement, capabilities and resources. The system keeps everything in working order so we don’t have to depend on ourselves, and furthermore, don’t want to. I realize that many of the readers here do not fall into this collectivism, as you see through the ideological facade and know that the system is fragile and can crumble.
Breaking away from the system is the only way to avoid the destruction of when it comes crumbling down. When you don’t feed into the manipulation tactics of the system, or enslave yourself to debt, and possess the necessary skills to sustain yourself and your family when large-scale or personal emergencies arise, you will be far better off than those who were dependent on the system. Those who lived during the Great Depression grew up in a time when self-reliance was bred into them and were able to deal with the blow of an economic depression much easier. Which side of this would you want to be on? Those who had the patience to learn the necessary skills, ended up surviving more favorably compared to others who went through the trying times of the Depression.
Develop Personal Dependence
Now is the time to get your hands dirty, to practice a new mindset, skills, make mistakes and keep learning. Developing personal dependence is no easy feat and requires resolute will power to continue on this long and rambling path. To achieve this you have to begin to break away from the confines of the system. You don’t have to run off to the woods to be the lone wolf. Simply by asking yourself, “Will your choices and the way you spend your time lead to more independence down the road, or will it lead to greater dependence?”, will help you gain a greater perspective into being self-reliant. As well, consider ignoring the convenient system altogether. This will help you to detach yourself from complacency and stretch your abilities and your mindset.
Most of us can’t move to an off grid location. We have responsibilities that keep us from doing so. Therefore, live according to what is best for you and your family (common sense, I know) and do what you can. My family and I moved to the rural countryside four years ago to pursue a more self-reliant lifestyle. We learned many lessons along the way and are proud of where we are. Am I 100% self-reliant? No. But, I am venturing closer to living more self-reliantly with each skill I learn. Many of my little homesteading, off-grid ventures can be read about here.
Here’s What You Can Do:
1. Inform Yourself – Understand that there are events on the horizon, some large-scale and some personal that could wreak havoc on your quest toward a self-reliant lifestyle. Informing yourself and planning for them will be your best in staying ahead of the issue.
4 Things You Must Eat to Avoid Malnutrition
Most Likely Ways to Die in a SHTF Event
End of an Era: Prospects Look Bleak For Slowing the Coming Food Crisis
Collapse Survivor: “There Was Little Room For Error… Either You Learn Fast Or End Up Dead”
The Perfect Storm: Grow Local or Grow Hungry?
GMO Labeling: Will Congress Keep Us in the DARK?
2. Learn Skills – When you can depend on your skills to support you and your family’s life, then the outside world doesn’t affect you as much. When large groups of people in a general area possess self-reliant skills, it makes your community stronger.
10 Skills Necessary For Survival
49 Outdoor Skills and Projects to Try
As well, look into these DIY projects found on Ready Nutrition
3. Get Out of Debt – It is paramount that each of us begin actively practicing economic self-discipline. Many believe that because of the ease in money confiscations from the banks, you shouldn’t have all of your money stashed there. Diversifying your money and investing in long-term ways to preserve your wealth will ensure you have multiple ways to pay the bills.
How To Break Up With Your Bank
Buy Commodities at Today’s Lower Prices, Consume at Tomorrow’s Higher Prices
Money and Wealth Preservation During Times of Uncertainty and Instability
How to Use Ebay to Find the Most Affordable Silver
Silver Bullion or Junk Silver for Long-term Bartering?
5 Reasons Why There Is Security In Seeds
4. Store food – Having a supply of food to subsist on in times of dire circumstances ensures that you are not dependent on having your basic needs met by someone else. This gives you the control of what food to put in your body and how you want to live.
25 Must Have Survival Foods: Put Them In Your Pantry Now
11 Emergency Food Items That Can Last a Lifetime
Best Practices For Long Term Food Storage
Meet Your Emergency Food’s Worst Enemies
5. Start raising your own food – With the high prices of meat at the store these days, many are turning to raising their own meat sources. Rabbits, chickens and fish can easily be started in backyard homesteads.
How Micro Livestock Can Be Used For Suburban and Rural Sustainability
Waste Not, Want Not: How To Use EVERY Single Part Of An Animal
6. Prepare for emergencies – Preparing for the unlikely emergencies is a way to insulate yourself from the aftermath. The simplest way to begin preparing is to prepare for the most likely events that can affect you, and go from there.
FREE Emergency Preparedness Guide: 52-Weeks to Preparedness
SHTF Survival: 10 Survival Tools That Should Be In Your Survival Pack
5 Reasons You Should be Preparing
Buy The Prepper’s Blueprint: A Step-By-Step Guide to Prepare You For Any Disaster
Six Ways You Can Keep Yourself Alive With Animal Bones
7. Repurpose – We must take steps to stop being a throw away society and get back to a population who makes do with what they have.
50 Things You Should Stop Buying and Start Making
5 Ways to Make Candles from Household Items
Survival Uses for Household Items
SHTF Planning: 7 Ways to Use The Items Around You To Adapt and Survive
8. Make Your Own Supplies – You have everything around you to survive, but many can’t look outside of the box to see how they can use what they have to survive. Having versatile preparedness supplies saves space and can serve multiple uses that can double up as ingredients to make soaps, medical supplies, etc.
3 Ways to Naturally Make Yeast
10 Dehydrator Meals for Your Prepper Pantry
SHTF Survival: How to Prevent Infections
7 Kitchen Essentials That Deserve To Be On Your Preparedness Shelves
9. Use Up What You Already Have or Find Another Use – Being self-reliant means using up what already have. This is a crucial principle of being self-dependent. Saving leftover construction supplies, food, clothing, etc., can be reused for another day.
Why Everyone Should Have a Rag Bag
8 Slow Cooker Meals Made From Leftovers
10 Household Products You Never Have To Buy Again
Complementing Your Food Storage Pantry with Dehydrated Foods
Five Essential Tools for Fixing Your Clothes on the Cheap
10. Live More Naturally – Life is chaotic these days and many of us feel we have to keep up with everyone else. It’s time to forget that and start living more simply and naturally.
7 Off Grid Projects for Survivalists
Five Eco Friendly Alternatives For Emergency Preparedness
11. Grow Your Own Medicine – With the vast medical advancements in the Western world, we are turning our backs on the first medicine – natural medicine. It’s time we begun exploring a more mindful, natural existence.
30 Most Popular Herbs for Natural Medicine
Step-By-Step Guide to Making Colloidal Silver
Essential Oils for SHTF Medical Care
How to Make Dakin’s Solution for SHTF Medical Care
12. Grow Your Own Food – The cost of making healthy decisions about the food we put into our body is eating our budgets alive. We want the very best foods for our family, but buying solely organic products can be costly. All the while, you are questioning the legitimacy of this produce. Is it genetically modified? Where was this grown? Was it exposed to salmonella or another food-borne pathogens? What was the type of water used to grow it? There comes a time when you want to throw your hands up and shout, “That’s it, I’m doing this myself.”
25 Survival Seeds You Need For Your Garden
10 Foods You Should Not Feed Your Chickens
Medicinal Plants for the Survival Garden
6 Essential Food Types To Grow Your Own Food Pantry
Make Your Own Herbal Tea Blends
13. Be Flexible – I often tell those who are preparing that the single most important thing you can do is continue to be flexible in your preparedness efforts. Doing so gives you leeway in your planning and backup planning, as well as helps you move more fluidly through the aftermath. This concept can be applied in non-emergencies, as well. Self-reliance can help us be more flexible in our life and our decisions.
Survival of the Most Adaptable
8 Prepper Principles For a Prepared Mind
Blending In: The Secret to Keeping The Target Off Your Back
5 Survivor Traits That Make a Prepper Successful
5 Steps to Become the Smartest Person in the Woods
14. Barter Better – Bartering for goods and services was the first currency that went around. Let’s be honest, everyone is up for a good deal. Using self-reliant skills, you can use these as leverage in bartering. As well, having a surplus of survival/preparedness items can also help you make good bartering deals.
A Free Falling Economy Makes Bartering Go Boom
15. Teach Your Kids – We must teach our children how to be more mindful and self-reliant. After all, we do not want to continue the cycle of having a dependent, self-entitled population. By informing them, we are setting them upon a self-sustaining path for life.
How Farmers Markets Can Teach Your Kids the Values of Local Food and Community Building
* * *
We must come to the understanding that there is no true safety net for us to fall into; it’s up to ourselves to get us out trouble. How easily you land depends on how reliant you were to begin with. Adopting certain concepts as your new life’s code will help you on your path.
Many of us share a common goal: to be free from the shackles of the system. This goal doesn’t come over night. You have to work at it, invest in it and ultimately, change your way of thinking. The point is, we are all at different places in our preparedness efforts, so don’t get discouraged! Continue on the pace, keep learning and step-by-step, you inch closer and closer to that goal.
- Forget Rigged Markets: Here's How To Hack A Military Drone By Spoofing GPS
As Sarao faces charges for crashing the US market for "spoofing" stocks, there is another seemingly much graver 'hack' that is now publicly available for all to utilize (and has been). As SputnikNews reports, the information necessary to hack a military drone is freely available to the public via a simple Google search that explains how to successfully "spoof" GPS signals. NATO has admitted this is possible in a 2013 report, and as we have previously noted Iran has already allegedly brought down and reverse-engineered a US drone.
The information necessary to hack a military drone is freely available to the public, in academic publications and online documents, according to an Israeli defense manufacturer.
One such paper was published just a month before Iran claimed it downed a CIA stealth drone in 2011, Esti Peshin said Monday at the Defensive Cyberspace Operations and Intelligence conference in Washington DC. Peshin is the director of cyber programs for Israel Aerospace Industries.
A 2011 study, titled "The Requirements for Successful GPS Spoofing Attacks," explains how to fool GPS sensors like those in drones by mimicking GPS signals.
There's no way to know, Peshin said, if this report in fact directly informed the Iranians, but it does go to show how easily available this information is.
"It’s a PDF file… essentially, a blueprint for hackers," Peshin said. "You can Google, just look up 'Tippenhauer' — it’s the first result in Google. Look up 'UAV cyberattacks' — it’s the third one. 'UAV GPS spoofing attacks' — the first one."
The study explains how to feed the GPS system fake signals so the drone ends up "losing the ability to calculate its position." The study then goes on to describe ways to prevent these kinds of attacks as well.
…
A 2013 assessment from NATO itself detailed the risk of drones being hacked and commandeered.
"At the end of the article, as if this was not enough, they listed several UAVs and said these are riskier than others by the way," Peshin said.
Included in that short list are the MQ-9 Reaper and the RQ-170 Sentinel, the drone Iran claimed it commandeered and captured.
* * *
So with iran already having achieved success in hacking a drone… and now looking to unleash suicide drones, it seems cyber-attacks and spoofing just took a turn for the much more serious.
GPS Spoof paper can be found here (PDF)
- Why Is This A Circle?
It’s no secret that today’s US job market is tough and that having a degree doesn’t necessarily guarantee you high-paying, stable, full-time employment. In fact, Moody’s recently cited “sluggish economic growth and high unemployment rates among recent graduates” as factors in the ratings agency’s decision to put some $3 billion in student loan-backed ABS on review for downgrade.
Still, we thought that at least the federal government would be interested in keeping the employment dream alive for the millions of students to whom it has loaned hundreds of billions of dollars in tuition money, which is why we assume the following graphic is simply the result of someone making a very poor design choice because if not, the government has just admitted that in the event you can’t find a job after school, your only choice may be to take out more student loans and go back to school, thus staving off the harsh realities of the real world for another few years.
Put differently: why is this a circle?
- 12 Unanswered Questions About The Baltimore Riots That They Don’t Want Us To Ask
Submitted by Michael Snyder via The Economic Collapse blog,
Why did the Baltimore riots seem like they were perfectly staged to be a television event? Images of police vehicles burning made for great television all over the planet, but why were there abandoned police vehicles sitting right in the middle of the riot zones without any police officers around them in the first place? Why was the decision made ahead of time to set a curfew for Tuesday night and not for Monday night? And why are Baltimore police officers claiming that they were ordered to “stand down” and not intervene as dozens of shops, businesses and homes went up in flames? Yes, the anger over the death of Freddie Gray is very real. Police brutality has been a major problem in Baltimore and much of the rest of the nation for many years. But could it be possible that the anger that the people of Baltimore are feeling is being channeled and manipulated for other purposes? The following are 12 unanswered questions about the Baltimore riots that they don’t want us to ask…
#1 Why are dozens of social media accounts that were linked to violence in Ferguson now trying to stir up violence in Baltimore?…
The data mining firm that found between 20 and 50 social media accounts in Baltimore linked to the violence in Ferguson, Mo. is now reporting a spike in message traffic in Washington D.C., Philadelphia and New York City, with “protesters” trying to get rides to Baltimore for Tuesday night.
The firm, which asked to remain anonymous because it does government work, said some of the suspect social media accounts in Baltimore are sending messages to incite violence. While it is possible to spoof an account, to make it look like someone is one place and really is in another, that does not fully explain the high numbers.
#2 Who was behind the aggressive social media campaign to organize a “purge” that would start at the Mondawmin Mall at precisely 3 PM on Monday afternoon?…
The spark that ignited Monday’s pandemonium probably started with high school students on social media, who were discussing a “purge” — a reference to a film in which laws are suspended.
Many people knew “very early on” that there was “a lot of energy behind this purge movement,” Baltimore City Councilman Nick Mosby told CNN on Tuesday. “It was a metaphor for, ‘Let’s go out and make trouble.'”
#3 Even though authorities had “credible intelligence” that gangs would be specifically targeting police officers on Monday, why weren’t they more prepared? On Tuesday, the captain of the Baltimore police tried to make us believe that they weren’t prepared because they were only anticipating a confrontation with “high schoolers”…
Police Capt. John Kowalczyk said the relatively light initial police presence was because authorities were preparing for a protest of high schoolers. A heavy police presence and automatic weapons would not have been appropriate, he said. Kowalczyk said police made more than 200 arrests — only 34 of them juveniles.
#4 Where were the Baltimore police on Monday afternoon when the riots exploded? During the rioting, CNN legal analyst Jeffrey Toobin said that the “disappearance of the police for hours this afternoon is something that is going to haunt this city for decades”.
#5 Why are police officers in Baltimore claiming that they were instructed to “stand down” during the rioting on Monday afternoon?…
Police officers in Baltimore reportedly told journalists that they were ordered by Mayor Stephanie Rawlings-Blake not to stop looters during yesterday’s riots.
Rawlings-Blake, who waited 5 hours before even making a statement on the unrest, was already under intense critcism for saying that violent mobs were provided with “space” to “destroy” during riots which took place on Saturday.
One Baltimore shopkeeper said that he actually called the police 50 times asking for help and never got any assistance at all. Other business owners reported similar results. This is so similar to what we saw back during the Ferguson riots.
#6 Why was the decision made ahead of time to set a curfew on Tuesday night but not on Monday night?
#7 Why were so many police vehicles conveniently parked along the street in areas where the worst violence happened? After the destruction of a number of police vehicles on Saturday night, the Baltimore police had to know that they were prime targets. So why were there even more police vehicles available for rioters to destroy on Monday? And where were the cops that should have been protecting those vehicles?
#8 Why is an organization funded by George Soros stirring up emotions against the police in Baltimore?
#9 Why is CNN bringing on “commentators” that are promoting violence in Baltimore?…
Marc Lamont Hill, a Morehouse College professor and regular CNN commentator, embraced radical violence in the streets during an interview Monday on CNN.
“There shouldn’t be calm tonight,” Hill told CNN host Don Lemon as riots raged in the streets of Baltimore.
“Black people are dying in the streets. We’ve been dying in the streets for months, years, decades, centuries. I think there can be resistance to oppression.”
#10 Why did Baltimore Mayor Stephanie Rawlings-Blake initially tell reporters that a decision was made on Saturday to give “those who wished to destroy space to do that”?
#11 Why were rioters given hours to cause mayhem before a state of emergency was finally declared on Monday? Maryland Governor Larry Hogan seems to think that Mayor Rawlings-Blake waited far too long to declare a state of emergency. Just check out what he told one reporter…
I‘ve been in daily communication with the mayor and others in the city and our entire team has been involved from day one. Frankly, this was a Baltimore city situation. Baltimore city was in charge. When the mayor called me, which quite frankly we were glad that she finally did, instantly we signed the executive order. We already had our entire team prepared.
We were all in a command center and second floor of the state house in constant communication and we were trying to get in touch with the mayor for quite some time. She finally made that call and we immediately took action.
#12 Does the fact that the mayor of Baltimore has very close ties to the Obama administration have anything to do with how events unfolded during the riots? The following is from Infowars.com…
Rawlings-Blake was one of three mayors who provided broad input into President Obama’s Task Force on 21st Century Policing, which advocates the federalization of police departments across the country by forcing them to adhere to stricter federal requirements when they receive funding.
“The federal government can be a strong partner in our efforts in build better relationships between the police and community,” she said in written testimony before the task force.
That would explain her inaction to stop the rioting when it began: by allowing it to spiral out of control, the mayor and her friends at the Justice Dept. could use the unrest to justify the expansion of federal power into local law enforcement, which would also allow her to receive more funding.
And why did it take Barack Obama several days to publicly condemn the violence in Baltimore? Why didn’t he stand up and say something on Monday when the riots were at their peak?
Something doesn’t smell right about all of this. Much of the violence could have been prevented if things had been handled differently.
In the end, who is going to get hurt the most by all of this? It will be the African-American communities in the heart of Baltimore that are already suffering with extremely high levels of unemployment and poverty.
I wish that we could all just learn to come together and love one another. Over the past few days, I have seen a whole lot of “us vs. them” talk coming from all quarters. This kind of talk is only going to reinforce the cycle of mistrust and violence.
Sadly, I believe that this is just the beginning of what is coming to America. The following are some tweets that show the mayhem and destruction that we have been witnessing in Baltimore the past few days…
Tense moments witnessed by one photographer as protests turned to looting. #BaltimoreRiots http://t.co/in2gyPFcHo pic.twitter.com/c4krNsR9Dp
— CNN iReport (@cnnireport) April 28, 2015
The CVS destroyed in #BaltimoreRiots — complete devastation. More photos as we get them here: http://t.co/YtmVvz53Nm pic.twitter.com/SkoSWTi21p
— CNN International (@cnni) April 28, 2015
Mayors' office: Nearly 200 arrests, 144 vehicle fires, 15 structure fires in #Baltimoreriots: http://t.co/aJJkwahrhM pic.twitter.com/F5DKZnZySY
— ABC News (@ABC) April 28, 2015
#BaltimoreRiots latest http://t.co/qn0U3ILGgq – State of emergency – Week-long night curfew – 15 officers injured pic.twitter.com/MwuiEmZ26r
— BBC Breaking News (@BBCBreaking) April 28, 2015
Remember, according to the feds it's those dangerous right-wingers who we really have to worry about! #BaltimoreRiots pic.twitter.com/g484ZyPDus
— Paul Joseph Watson (@PrisonPlanet) April 28, 2015
- "Purge" Night 3: Protests Spread Across Nation, Over 60 Arrested In New York City – Live Feed
Live Feed #1
Watch the latest video at video.foxnews.com
Update: Protests have spread across the nation's cities…
In Los Angeles, six people protesting against police brutality were arrested Monday night when they failed to disperse, reported CNN affiliate KABC. About 50 people marched, KABC said.
In Chicago, hundreds of protesters marched Tuesday from police headquarters at 35th and Michigan through the Southside, CNN affiliate WGN reported. Police made one arrest, for reckless conduct.
About 100 people marched Monday night in Oakland in support of Baltimore protesters, reported CNN affiliate KABC.
A protest is planned for Thursday in Cincinnati, reported CNN affiliate WXIX. Philly.com said a "Philly is Baltimore" protest will be held Thursday at Philadelphia City Hall.
* * *
Still marching strong in #NYC in solidarity with #Baltimore – #BaltimoreUprising – watch live http://t.co/MnRANvOLXq pic.twitter.com/ZMynP0OmC1
— Revolution News (@NewsRevo) April 30, 2015
* * *
* * *
Is the so-called "purge" spreading? Hundreds have now gathered in Union Square in New York in a show of solidarity with the protesters in Baltimore who have demanded justice for the death of Freddie Gray. More from NBC:
Organizers had urged various activist groups to rally at Union Square "to show the people of Baltimore that we stand in solidarity with them and with their resistance because their resistance is for justice and their justice is our justice," according to one press release.
The demonstrations were being held simultaneously as the ones in Baltimore, which were mostly peaceful compared to the violent rioting that rocked the city the day of
Gray's funeral Monday…
Umaara Elliott, one of the New York rally organizers, said she encouraged the message protesters in Baltimore were trying to send.
Live feed..
Watch the latest video at video.foxnews.com
…and the visuals…
Scuffle between front line of #nypd and protestors north of #UnionSquare pic.twitter.com/t5m6N1zAcD
— lorenzo ferrigno (@lorenzoferrigno) April 29, 2015
Still more being loaded into police vans here on 17th near Union Square, NYC #BlackLivesMatter #FreddieGray pic.twitter.com/Fki34kUTPb
— Brian Ries (@moneyries) April 29, 2015
THOUSANDS gathered at Union Square for #BaltimoreUprising solidarity march in #NYC https://t.co/UpIx6N3zeD
— JamesFromTheInternet (@JamesFTInternet) April 29, 2015
And finally – once again to diffuse some tension…
#BaltimoreRiots #Baltimore #ToyaGraham pic.twitter.com/ft2OFv7hww
— Stephanie (@AttyStephanie) April 30, 2015
- The Financial Markets Now Control Everything
Submitted by Charles Hugh-Smith of OfTwoMinds blog,
The entire economic and political structure is now dependent in one way or another on the continued expansion of financial markets.
The financial markets don't just dominate the economy–they now control everything. In 1999, the BBC broadcast a 4-part documentary by Adam Curtis, The Mayfair Set ( Episode 1: "Who Pays Wins" 58 minutes), that explored the way financial markets have come to dominate not just the economy but the political process and society.In effect, politicians now look to the markets for policy guidance, and any market turbulence now causes governments to quickly amend their policies to "rescue" the all-important markets from instability.This is a global trend that has gathered momentum since the program was broadcast in 1999, as The Global Financial Meltdown of 2008-09 greatly reinforced the dominance of markets.It's not just banks that have become too big to fail; the markets themselves are now too influential and big to fail.Curtis focuses considerable attention on the way in which seemingly "good" financial entities such as pension funds actively enabled the "bad" corporate raiders of the 1980s by purchasing the high-yield junk bonds the raiders used to finance their asset-stripping ventures.This increasing dependence of "good" entities on players making risky bets and manipulating markets has created perverse incentives to keep the financial bubble-blowing going with government backstops and changing the rules to mask systemic leverage and risk.The government must prop up markets, not just to insure the cash keeps flowing into political campaign coffers, but to save pension funds and the "wealth effect" that is now the sole driver of "growth" (expanding consumption) other than debt.To maintain the illusion of growth and rising wealth, the financial markets must continually reach greater extremes: extremes of debt, leverage, obscurity and valuations. These extremes destabilize markets, first beneath the surface and then all too visibly.The technological advances of the past decade have enabled a host of financial schemes that together have the potential to destabilize the markets globally.Technology enables high-frequency (HFT) traders to only suffer one losing day per year, complex reverse-repo swaps/trades, huge derivative bets and shadow banking, where all the risks generated by these activities can pool up outside the view and control of regulators.The entire economic and political structure is now dependent in one way or another on the continued expansion of financial markets.This spells the end of the electoral-political control of the economy, as politicians of all stripes quickly abandon all their ideologies and policies and rush to "save" the markets from any turmoil, because that turmoil could destabilize not just the financial markets but the economy, pensions and ultimately the government's ability to finance its own profligate borrowing and spending.This dependence on the markets is pushing central banks and states into ever-more extreme policies, even as the risks of complex swaps and trades is rising beneath the surface.A case can be made that the technologically-enabled complexity of the shadow-banking markets is now beyond the control of the state or central bank, which leads to a sobering conclusion: the next crisis will not be controllable, and destabilized markets will not be "saved" by tricks such as lowering interest rates to zero and increasing liquidity.The structural problem with everyone and everything now depending on the speculative returns of the financial markets is there can never be any market clearing event that exposes phantom collateral and forces the liquidation of bad debt and excess credit.
I explain the danger of continually 'saving" the markets from any market clearing event in The Yellowstone Analogy and The Crisis of Neoliberal Capitalism (May 18, 2009).When a forest is never allowed to burn away the accumulation of dead branches and underbrush with a limited fire, the forest eventually catches fire anyway. The deadwood (of bad debt, excessive credit and leverage and phantom collateral) is now piled so high, the entire forest burns down to ashes.This is the eventual cost of never allowing any clearing of financial deadwood because everyone is now so dependent on financial markets that the slightest swoon will bring down the entire system. This vulnerability only increases with every "save" and every new bubble.All the "saves" have done is guarantee the financial system will burn down in a conflagration ignited by a seemingly trivial spark somewhere in the vast global system of phantom collateral
- Prove You're Not A Terrorist
Submitted by Jeff Thomas via Doug Casey's International Man blog,
Prove You’re Not a Terrorist
Recently, France decided to crack down on those people who make cash payments and withdrawals and who hold small bank accounts. The reason given was, not surprisingly, to “fight terrorism,” the handy catchall justification for any new restriction governments wish to impose on their citizens. French Finance Minister Michel Sapin stated at the time, “[T]errorism feeds on fraud, money laundering, and petty trafficking.”
And so, in future, people in France will not be allowed to make cash payments exceeding €1,000 (down from €3,000). Additionally, cash deposits and withdrawals totaling more than €10,000 per month will be reported to Tracfin—an anti-fraud and money laundering agency.
Currency exchange will also be further restricted. Anyone changing over €1,000 to another currency (down from €8,000) will be required to show an identity card.
Do you need to make a deposit on a car? That might be suspect. Did you just deposit a dividend you received? It might be a payment from a terrorist organisation. Planning a holiday and need some cash? You might need to be investigated for terrorism.
And France is not alone. In the US, federal law requires banks to file a “suspicious activity report” (SAR) on their customers whenever a customer requests a suspicious transaction. (In 2013, 1.6 million SAR’s were submitted.)
As to what may be deemed “suspicious,” it may be any transaction of $5,000 or more, but it may also mean a series of transactions that, together, exceed $5,000.
The reader may be saying to himself, “But that’s just normal, everyday banking business—that means anybody, any time, could be reported.” If so, he would be correct. Essentially, any banking activity the reader conducts could be regarded as suspect.
- In Italy, in 2011, Prime Minister Mario Monti began working to end the right of landlords, tradesmen, and small businesses to perform large transactions in cash, which critics say help them evade taxation. In December of that year, his government reduced the maximum allowed cash payment from €2,500 euros to €1,000.
- Spain has outlawed cash transactions over €2,500. The justification? “To crack down on the black market and tax evaders.”
- In Sweden, the country where the first banknote was created in 1661, the use of cash is being steadily eliminated. Increasingly, expenses are paid and purchases made by cellphone text message, and many banks have stopped handling cash altogether.
- Denmark’s central bank, Nationalbanken, has another justification for ending its use of banknotes—producing paper money and coinage is not cost effective.
- Israel also seeks to end the use of cash. Prime Minister Benjamin Netanyahu’s chief of staff has announced a three-phase plan to “all but do away with cash transactions in Israel.”
- Individuals and businesses would initially continue to be allowed to make small cash transactions, but eventually, all transactions would be converted to electronic forms of payment. The justification being used in Israel is that “cash is bad,” because it encourages an underground economy and enables tax evasion.
- Across the Atlantic, banks and governments are on a similar campaign. A 2012 law in Mexico bans large cash transactions, with a maximum penalty of five years in prison.
- In August 2014, Uruguay passed the Financial Inclusion Law, which limits cash transactions to US$5,000. In future, all transactions over that amount will be required to be performed electronically. The crying need for such a law? The stated reason was to improve the country’s credit ratings.
The Elimination of Paper Currency
In recent years, in commenting on the inevitability of currency collapse in those countries that are indebted beyond the possibility of repayment, I’ve made the prediction that governments and banks would jointly resort to the elimination of paper currency and replace it with an electronic one.
Some readers have understandably regarded the prediction as “alarmist.” After all, the idea is so farfetched—paper currency may be conceptually flawed, but it’s been around for a long time.
But banks and governments seek total control of money, and this can only be achieved if they possess a monopoly on the flow of money.
If a worldwide system can be implemented in which currency transactions can only take place electronically through banking institutions, the banks will then have total power over the ability of a people to function economically.
But why would any government allow the banks such dictatorial monetary control? The answer is that governments would then realise a long-held, but heretofore impossible dream: to have access to a record of every monetary transaction that takes place for every single individual.
Governments have been both more proactive and bolder than I had anticipated and are simply imposing the restrictions worldwide under the justifications previously stated. As yet, there hasn’t been any backlash, and it may be that people worldwide may simply swallow the pill, not understanding what it means to their economic liberty.
If the public are not treating the new system as serious business, governments most assuredly are. Bankers on both sides of the Atlantic have forcibly become unpaid government spies. If they don’t comply, they can be fined and/or lose their banking charter. Directors can be imprisoned.
The US Justice Department already wants to take this overreach even further. Banks are now being asked to call the authorities whenever something “suspicious” occurs, presumably so that immediate action may be taken.
What we are witnessing is the creation of totalitarian control of your finances. The implication that you may have some sort of terrorist involvement is a smokescreen.
As the above information attests, if for any reason you object to any of these measures, you have already been forewarned—you may be suspected of money laundering, tax evasion, or even terrorism. If you use cash for any reason—to pay your rent, to buy a used car, or (soon) to pay for your lunch—you may trigger an investigation. (The onus of proof that you are not guilty good will be on you.)
The take-away from this discussion? Totalitarian control of currency is an inevitability, and it will take place sooner rather than later. The only question is whether the reader can retain some control of his wealth. Fortunately, wealth may still be held in land and precious metals, but these are only safe if they’re held outside a country that seeks totalitarian rule over its people.
The ability to retain wealth still exists and, as always, internationalisation remains a key element to its continuation.
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- New Saudi King Consolidates Power To Maintain Current Oil Policy
Less than four months into his reign, Bloomberg reports that Saudi Arabia’s King Salman is consolidating power with a major reshuffle of succession lines and government officials. "The new king has proved consistent in his determination to elevate members of his close family to key positions," noted one analyst. As the world’s top oil exporter plays a more prominent role in the region’s power struggles, it apears Salman wants family close. Oil policy is unlikely to change, notes Bloomberg's Julian Lee, as this brings younger men into top government positions, paving way for transfer of power to new generation of princes.
The Saud dynasty views itself as the rightful leader of the Muslim world, but Iran has challenged that leadership for several decades. Although Saudi Arabia has a Sunni majority, its rulers fear Iran’s potential influence over a sizable, and sometimes-restive, Shi’ite population concentrated in the kingdom’s oil-rich Eastern Province.
Any new leader is unlikely to change the larger contours of Saudi foreign policy — or the kingdom’s use of oil to enforce its interests and try to keep Iran at bay. But the new king and his inner circle will face decisions on succession that could reshape the ruling family and the monarchy’s future for generations to come.
And sure enough, as Bloomberg reports, changes have been made…
The monarch elevated Muhammad Bin Nayef to crown prince after Prince Muqrin, the king’s brother, asked to step down, the royal court said on Wednesday. Prince Mohammed Bin Salman, Salman’s son and current defense minister, was named as deputy crown prince and therefore second in line to the throne.
“The new king has proved consistent in his determination to elevate members of his close family to key positions,” said Crispin Hawes, managing director of research firm Teneo Intelligence in London. “The elevation of the king’s own son reinforces his rapid rise to become one of the two or three most powerful men in the kingdom.”
The changes come as Saudi Arabia’s new leadership heads a bombing campaign against Shiite Houthi rebels in Yemen and adopts a tougher stance on confronting Islamic State extremists. The appointments put power in the hands of a younger generation of princes who will have to prevent instability from spilling across the country’s borders as they develop new policies to manage the conflicts in Syria and Iraq.
The decision to promote Prince Mohammed Bin Salman will surprise some given his youth — he is thought to be in his 30s — and relative inexperience, said Fahad Nazer, a political analyst at JTG Inc. in Virginia.
“Few seem to know that much about him and he rarely speaks in public,” said Nazer, who worked at the Saudi embassy in Washington. “That will likely change going forward.”
…
King Salman has made substantial changes to the government since ascending to the throne in January. He set up new committees to oversee security, political affairs and economic development, removed senior princes from their positions and changed the governors in provinces.
Prince Mohammed bin Salman “is more than capable and qualified to take on heavy responsibilities” that are required by his new role, the royal court said. This is “evident to everyone through his work and his fulfillment of all the tasks he was entrusted with,” it said.
His appointment was supported by the majority of the allegiance council, according to the decree.
Diplomats in Riyadh had speculated how much further the king’s son would rise after being made defense minister, head of the royal court and the economic affairs council.
“King Salman is creating an impetus for the younger generation to be involved in the state of affairs,” said John Sfakianakis, the Riyadh-based director of the Middle East at U.K. investment manager Ashmore Group Plc. “There was a lot criticism about Saudi Arabia appointing only octogenarians in senior positions. Now the grandsons of the founder of the country are in the number two and three slots.”
King Salman also replaced Prince Saud al-Faisal, one of the world’s longest-serving foreign ministers, with Adel Al-Jubeir, who is the country’s ambassador to the U.S. He also appointed Adel Faqih as economy minister. Hamad al-Suwailim was named as new head of the royal court.
Al-Jubeir’s appointment “implicitly suggests a desire to have a key voice in Washington,” said James Dorsey, a senior fellow in international studies at Nanyang Technological University in Singapore. Al-Jubeir has “an understanding of how Washington works that few in the kingdom can match,” he said.
As the new generation of princes rose to power, Saudi Arabia abandoned a tradition of cautious cash-backed diplomacy with an activist policy. The kingdom started using its armed forces last month to defend its perceived interests in Yemen against Iran, and has built a predominately Sunni-Muslim coalition to support its efforts.
In addition, it’s clamped down on Islamic State militants with a series of arrests within the kingdom.The appointments “could serve as an indication of a new Saudi strategy for Syria and Yemen,” Ibrahim Sharqieh Frehat, a conflict resolution professor at Georgetown University in Qatar, said by e-mail. “Escalation, whether in Yemen or Syria, could be a main feature of the kingdom’s new regional strategy.”
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It appears Saudi stocks, after initial weakness, liked the news as The Tadawul surged when the West caught on to the headlines…
There was some mild volatility in Crude when the headlines hit but that has been dominated by European and US opening swings…
This reshuffle appears to be US-friendly (from a diplomatic perspective) and oil-unfriendly (from a production, crush non-OPEC perspective).
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As OilPrice's Andy Tully notes, the Saudis have been oin a sales offensive in Asia…
Saudi Oil Minister Ali al-Naimi says his country, which is already pumping oil at a near-record pace, is prepared to produce even more to satisfy what appears to be a rising demand in Asia, particularly China.
“Asian demand for oil remains strong, and we are ready to supply whatever is required,” al-Naimi, quoted by the Saudi Press Agency, said in a speech on April 27 in Beijing. “As the Asian population grows and as the middle class expands, so the demand for energy will increase. Oil will retain its preeminent position and Saudi Arabia will remain the number one supplier.”
Al-Naimi’s words are backed up by analysis issued by the energy news service Platts, which reported that Chinese demand for oil in March was 44.73 million metric tons, or 10.58 million barrels a day on average, 6.5 percent higher than in the same month in 2014.
Still in Beijing the next day, al-Naimi repeated his message of increased demand for oil by Asia’s growing economies, but he added the caveat that “sudden rises or falls in the cost of oil are not welcome.”
Al-Naimi said such drops in oil prices, even when followed by small rallies, complicates the energy business in the long run, especially by stunting investments in the industry. “Oil is a long-term business, requiring long-term plans and investment,” he said.
Nevertheless, it is al-Naimi who is seen as the driving force behind the persistence of oil’s low price. The average global price of oil peaked at over $110 per barrel in late June 2014, but began to fall primarily because of a boom in US shale oil production, which often requires relatively expensive hydraulic fracturing, or fracking.
At its November meeting in Vienna, OPEC had the opportunity to cut production and was urged to do so by some of its members, but under al-Naimi’s leadership, the cartel decided to maintain output at 30 million barrels a day. Later al-Naimi stated the strategy was to regain market share by keeping prices low long enough to make US shale production unprofitable.
Saudi Arabia has adhered closely to al-Naimi’s plan. In March it produced a near-record 10.3 million barrels of oil per day, and the minister said output will probably stay at or near that level for some time, indicating, at least to some extent, that the Saudi strategy is working: It’s gradually restoring market share and making sure it has the supply to match demand.
“Saudi Arabia is a consistent, stable and reliable supplier of quality oil,” al-Naimi: “We are the most reliable supplier on earth. Quality and quantity is assured. We have proved over many years to be a reliable partner for China as its energy demands have increased. We remain committed to this partnership, and to this friendship.”
If al-Naimi’s words sound like a hard sell, they are. Saudi Arabia appears determined to go out and drum up more business rather than wait for customers to come calling. For example, last week he was in Seoul, doing his best to sell the South Koreans on the value – and quantity – of Saudi oil whenever they want it.
- The Third And Final Transformation Of Monetary Policy
Submitted by John Mauldin via MauldinEconomics.com,
Thoughts from the Frontline: The Third and Final Transformation of Monetary Policy
The law of unintended consequences is becoming ever more prominent in the economic sphere, as the world becomes exponentially more complex with every passing year. Just as a network grows in complexity and value as the number of connections in that network grows, the global economy becomes more complex, interesting, and hard to manage as the number of individuals, businesses, governmental bodies, and other institutions swells, all of them interconnected by contracts and security instruments, as well as by financial and information flows.
It is hubris to presume, as current economic thinking does, that the entire economic world can be managed by manipulating one (albeit major) subset of that network without incurring unintended consequences for the other parts of the network. To be sure, unintended consequences can be positive or neutral or negative. This letter you are reading, which I’ve been writing for over 15 years and which reaches far more people than I would have ever dreamed possible, is partially the result of a serendipitous unintended consequence.
But as every programmer knows, messing with a tiny bit of the code in a very complex program can have significant ramifications, perhaps to the point of crashing the program. I have a new Microsoft Surface Pro 3 tablet that I’m trying to get used to, but somehow my heretofore reliable Mozilla Firefox browser isn’t playing nice with this computer. I’m sure it’s a simple bug or incompatibility somewhere, but my team and I have not been able to isolate it.
However, that’s a relatively minor problem compared to the unintended consequences that spill from quantitative easing, ZIRP, and other central bank shenanigans. We have discussed the problem of how the Federal Reserve has pushed dollars on the rest of the world and is playing havoc with dollar inflows and outflows from emerging markets. More than one EM central banker is complaining aggressively.
My good friend Dr. Woody Brock makes the case that an unintended consequence of QE is that the Federal Reserve’s normal transmission of monetary policy through periodic changes in the fed funds rate has been vitiated. He contends that soon we will no longer care about the fed funds rate and will be focused on other sets of rates.
This is an important issue and one that is not well understood. Woody has given me permission to reproduce his quarterly profile. For Woody, this is actually a fairly short piece; but as usual with Woody’s work, you will probably want to read it twice.
The Fed Funds Rate: R.I.P.?? The Third and Final Transformation of Monetary Policy
By Woody Brock, Ph.D.
Strategic Economic Decisions, Inc.The policy announcements of the US Federal Reserve Board are dissected and analyzed more closely than any other global financial variable. Indeed, during the past thirty years, Fed?Watching became a veritable industry, with all eyes on the funds rate. Within a few years, this term will rarely appear in print. For the Fed will now be targeting two new variables in place of the funds rate. One result is that forecasting Fed policy will be more demanding.
To make sense of this observation, a bit of history is in order. During the last nine years, US monetary policy has been transformed in three ways. To date, only the first two have been widely discussed and are now well understood. The third development is only now underway, and is not well understood at all. To review:
First, the Fed lowered its overnight Fed funds rate to essentially zero, not only during the Global Financial Crisis of 2008–2009, but throughout nearly six years of economic recovery thereafter. The average level of the funds rate at the current stage of recovery was about 4% during the past dozen business cycles. It was never 0% as it is in this cycle. In past essays, we have argued that this overutilization of “ultra?easy monetary policy” reflected the failure of the government to utilize fiscal policy correctly (profitable infrastructure spending with a high jobs multiplier), and to introduce long?overdue incentive structure reforms. It was thus left to monetary policy to pick up the pieces after the global crisis of 2008. This development was true in most other G?7 nations, not just in the US.
Second, the Fed inaugurated its policy of Quantitative Easing whereby it increased the size of its balance sheet five?fold from $900 billion to $4,500 billion. Such an expansion would have been inconceivable to Fed watchers during the decades prior to the Global Financial Crisis. In the US, QE is now dormant, and the only remaining question (answered below) is how and when the Fed will shrink its bloated balance sheet back to more normal levels.
Third, the way in which the Fed conducts standard monetary policy (periodic changes in the funds rate) is currently undergoing a complete makeover. In particular, the traditional tool of changing the funds rate via Open Market operations carried out by the desk of the New York Fed no longer works. For as will be seen, the vast expansion of the size of its balance sheet (bank reserves in particular) has rendered traditional policy unworkable. From now on, therefore, the Fed will conduct monetary policy via two new tools that were not even on the drawing board of the Fed prior to 2008.
Summary: In this PROFILE, we explain in Part A why traditional (non?QE) monetary policy has been vitiated by QE. In Parts B and C respectively, we discuss the two new tools that will be used in the future to conduct standard (non?QE) monetary policy: what exactly are these tools, and how do they work? In Part D, we discuss why these new tools will not be required by the European Central Bank, which has a different institutional structure than the US Fed. Finally, in Part E, we turn to QE and discuss when and how the Fed will shrink its balance sheet back to a more traditional size in the years ahead.
In this write?up, we largely rely on the remarks set forth in a recent paper by Fed Vice Chairman Stanley Fischer, formerly chief economist of the IMF, Governor of the Central Bank of Israel, and professor of economics at MIT. We also benefitted from clarifications by Professor Benjamin Friedman at Harvard University.
Part A: So Long to Setting the Funds Rate via Open Market Operations
Prior to the financial crisis, bank reserve balances with the Fed averaged about $25 billion. With such a low level of reserves, a level controlled solely by the Fed, minor variations in the amount of reserves via Fed open market sales/purchases of securities sufficed to move the Fed funds rate up or down as desired. Analytically, the market for bank reserves (Fed funds) consisted of a demand curve for bank reserves reflecting the nation’s demand for loans, and a supply curve reflecting the supply of reserves by the Fed. The so?called Fed funds rate is the point of intersection of these two curves (the interest rate). If the Fed targeted, say a 2% funds rate, it achieved and maintained this rate by shifting the supply curve left or right by adding to/subtracting from the quantity of reserves. As the Fed was a true monopolist in the creation/extinction of reserves, it could always target and sustain any funds rate it chose.
These operations constituted “monetary policy” for many decades. But this is no longer the case, as was first made clear in a FOMC policy pronouncement of September 2014. To quote Dr. Fischer in his 2015 speech, “With the nearly $3 trillion in free bank reserves (up from pre?crisis reserves averaging $25 billion), the traditional mechanism of adjustments in the quantity of reserve balances to achieve the desired level of the Federal funds rate may not be feasible or sufficiently predictable.” What new mechanisms will replace it? There are two.
Part B: The Use of Interest Rates Paid by the Fed on Free Bank Reserves
“Instead of the funds rate, we will use the rate of interest paid on excess reserves as our primary tool to move the Fed funds rate.” The ability of the Fed to pay banks an interest rate on their free reserves dates back to legislation of October 2008. This rate has been set at 0.25% during the past few years. (“Excess” or “free” bank reserves are defined as the arithmetic difference between total reserves and required reserves. Currently, as of March 30, required reserves were $142 billion, and total reserves were $2.79 trillion.)
The Logic: Whatever the level of the reserve interest rate that the Fed chooses, banks will have little if any incentives to lend to any private counterparty at a rate lower than the rate they can earn on their free reserve balances maintained at the Fed. The higher the reserve remuneration rate is, the greater will be the upward pressure on a whole range of short?term rates.
Part C: The Use of the Reverse Repo Rate
“Because not all institutions have access to the excess reserves interest rate set by the Fed, we will also utilize an overnight reverse repurchase purchase agreement facility, as needed. In a reverse repo operation, eligible counterparties may invest funds with the Fed overnight at a given interest rate. The reverse repo counterparties include 106 money market funds, 22 broker?dealers, 24 depository institutions, and 12 government?sponsored enterprises, including several Federal Home Loan Banks, Fannie Mae, Freddie Mac, and Farmer Mac.”
The Logic: Fischer continues: “This facility should encourage these institutions to be unwilling to lend to private counterparties in money markets at a rate below that offered on overnight reverse repos by the Fed. Indeed, testing to date suggests that reverse repo operations have generally been successful in establishing a soft floor for money market interest rates.”
Summary
Due to the explosion of the size of its balance sheet (bank reserves in particular), the Fed has been forced to abandon management of the Fed funds rate via traditional open market operations. This activity is now being replaced by two new policy tools, both of which are somewhat “softer” than the older tool. First, bank’s free reserves now earn an interest rate on excess bank reserves which is available to banks with access to the Fed’s reserve facility. Second, financial institutions such as money market funds lacking access to the reserve facility will be able to lodge funds overnight (not necessarily merely one night) at the Fed and receive the reverse repo rate offered by the Fed.
Part D: Irrelevance of these Developments to the European Central Bank
Interestingly, the European Central Bank does not need and will probably not implement the policy innovations now being implemented by the US Fed. The reason is that in Europe, lending is dominated by banks far more than here in the US. Moreover, most all European financial institutions can in effect deposit funds with the central bank. Finally, the ECB has long been able to vary the reserve remuneration (interest) rate that it pays for excess reserves. As a result, the ECB does not need to utilize the reverse repo rate tool that the Fed is introducing.
One final point should be made. Whereas Professor Fischer above asserts that the primary tool of the Fed will be variations in the reserve remuneration rate applicable to banks, other scholars believe it is the reverse repo rate that will be the primary tool of US monetary policy. This is partly because of the ongoing reduction of the role of banks in lending to private sector borrowers, a longstanding development that has accelerated with the new regulations imposed on banks since the Global Financial Crisis.
Part E: Will the Fed Shrink its Balance Sheet Back Down? If So, How?
Professor Fischer answers this point directly. Yes, the Fed will shrink its balance sheet, but not to the size of yesteryear. More specifically:
“With regard to balance sheet normalization, the FOMC has indicated that it does not anticipate outright sales of agency mortgage?backed securities, and that it plans to normalize the size of the balance sheet primarily by ceasing reinvestment of principal payments on our existing securities holdings when the time comes… Cumulative repayments of principal on our existing securities holdings from now through the end of 2025 are projected to be $3.2 trillion. As a result, when the FOMC chooses to cease reinvestments of principal, the size of the balance sheet will naturally decline, with a corresponding reduction in reserve balances.”
Hopefully these remarks have helped clarify past and future changes in Fed policy—changes that amount to a thoroughgoing transformation of US monetary policy that would have been unimaginable a decade ago.
In the future, we suspect that the press will refer to the Fed’s targeting of the “reverse repo rate” in place of the Federal funds rate when analyzing prospective monetary policy.
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To continue reading this article from Thoughts from the Frontline – a free weekly publication by John Mauldin, renowned financial expert, best-selling author, and Chairman of Mauldin Economics – please click here.
- Texas College Teacher Fails Entire Class After Being Told To "Chill Out"
It’s a tough time to be involved in higher education. If you’re a student, there’s a good chance you’re weighed down under at least $25,000 in student loans and although there are a couple of options you can pursue if you don’t ever intend to pay the money back (IBR payment plan is one and hoping The White House allows you to discharge your debt in bankruptcy is another), it’s rather disheartening to know that one factor being cited by ratings agencies in downgrading billions in student-loan backed paper is “high unemployment rates among recent graduates.” If you’re a teacher, you’d better hope you’re not part time, because if you’re an adjunct faculty member, statistics indicate there’s a 25% chance you and your family are receiving public assistance just to get by. The outlook may be a bit brighter for tenured faculty, but even those supposedly unassailable positions are now under fire as large state schools like LSU are set to draw up bankruptcy plans that could allow them to fire tenured faculty.
While we don’t know if any of the above factored into the following story, what we do know beyond a shadow of a doubt is that Texas A&M Professor Irwin Horwitz was sick and tired of the students in his Strategic Management course and so he did what many a college professor across the country has at one time or another dreamed of doing: he failed the entire class. Here’s an excerpt from the e-mail he sent to his students:
“Since teaching this course, I have caught and seen cheating, been told to ‘chill out,’ ‘get out of my space,’ ‘go back and teach,’ [been] called a ‘fucking moron’ to my face, [had] one student cheat by signing in for another, one student not showing up but claiming they did, listened to many hurtful and untrue rumors about myself and others, been caught between fights between students.
None of you, in my opinion, given the behavior in this class, deserve to pass, or graduate to become an Aggie, as you do not in any way embody the honor that the university holds graduates should have within their personal character. It is thus for these reasons why I am officially walking away from this course. I am frankly and completely disgusted. You all lack the honor and maturity to live up to the standards that Texas A&M holds, and the competence and/or desire to do the quality work necessary to pass the course just on a grade level…. I will no longer be teaching the course, and all are being awarded a failing grade.”
Here’s more from InsideHigherEd:
The same day Horwitz sent a similar email to the senior administrators of the university telling them what he had done, and predicting (correctly) that students would protest and claim he was being unfair. The students are “your problem now,” Horwitz wrote.
The university has said that Horwitz’s failing grades will not stand.
A spokesman for the university said via email that “all accusations made by the professor about the students’ behavior in class are also being investigated and disciplinary action will be taken” against students found to have behaved inappropriately. The spokesman said that one cheating allegation referenced by Horwitz has already been investigated and that a student committee cleared the student of cheating.
However, the spokesman said that the across-the-board F grades, which were based on Horwitz’s views of students’ academic performance and behavior, will all be re-evaluated. “No student who passes the class academically will be failed. That is the only right thing to do,” he said.
In an interview, Horwitz said that the class was his worst in 20 years of college-level teaching. The professor, who is new to Galveston, relocated (to a non-tenure-track position) because his wife holds an academic job in Houston, and they have had to work hard to find jobs in the same area. He stressed that the students’ failings were academic as well as behavioral. Most, he said, couldn’t do a “break-even analysis” in which students were asked to consider a product and its production costs per unit, and determine the production levels needed to reach a profit.
In most of his career, he said, he has rarely awarded grades of F except for academic dishonesty. He said he has never failed an entire class before, but felt he had no choice after trying to control the class and complaining to administrators at the university.
And for your viewing pleasure:
Horwitz did propose one possible solution: he offered to teach only the good students…
Asked if the decision to fail every one of the 30-plus enrollees was fair to every student, Horwitz said that “a few” students had not engaged in misbehavior, and he said that those students were also the best academic performers. Horwitz said he offered to the university that he would continue to teach just those students, but was told that wasn’t possible.
- Three Hurricanes Are Headed Our Way (And There's Nowhere To Hide)
Submitted by Jim Quinn via The Burning Platform blog,
There are three financial hurricanes hurtling towards our country and most people are oblivious to the coming catastrophe. The time to prepare is now, not when the hurricane warnings are issued.
Hussman makes his usual solid case that stocks and bonds are as overvalued as they have ever been in the history of investing. People are under the false impression that bonds are always a safe investment. The fact that you are already getting a negative real return on bonds doesn’t seem to compute with math challenged Americans. Over the next ten years you will absolutely lose money in bonds.
Liquidity in both the stock and bond markets is thinning considerably. In bonds, quantitative easing by global central banks has resulted in a scarcity of available collateral, a collapse in repo liquidity, and increasing frequency of delivery failures, all of which is shorthand for a bond market that is becoming less liquid and more fragile to any credit event. Meanwhile, risk premiums are minuscule. Avoiding a negative total return on 10-year bonds now requires that interest rates must not rise by even one percentage point over the next three years. Bond yields have historically covered investors against a meaningful change in yields before resulting in negative total returns. On a one-year return horizon, bond yields presently cover investors for a yield change amounting to only about 0.25 standard deviations – matching mid-2012 as the lowest level of yield coverage in history.
The fragility of the economic, financial, and social systems of the U.S. is at extreme levels. The median American household has less real income than they had in 1989. The social fabric of the country is tearing as we speak, with Baltimore and Ferguson as the warning shots of coming chaos and civil strife. The ruling elite control the monetary system, so the rigged financial markets continue to rise and have reached bubble proportions. An unexpected pin will be along shortly to pop the bubble. The next crash will make 2008 look like a walk in the park. It may be decades until markets reach these levels again.
Market crashes always reflect two features: extremely thin risk premiums in an environment where investors have shifted toward greater risk-aversion, and lopsided selling into an illiquid market. Under present conditions, we observe the precursors for both. That doesn’t force or ensure a crash, but it creates the underlying fragility that allows one.
Last week, the Nasdaq Composite finally clawed its way to breakeven, 15 years after its spectacular bubble peak in 2000. It’s a testament to the overvaluation of technology stocks in 2000 that it has required the third equity bubble in 15 years to reclaim that 2000 high, at least briefly. As you may remember, the Nasdaq Composite reached its intra-day high of 5132.52 in March 2000, plunging to 795.25 (down -78%) by October 2002. The Nasdaq 100, representing the most glamourous of the group, peaked at 4816.25 in March 2000, plunging to 795.25 (down 83%) by October 2002. Even a decade later, in 2010, both indices were still 60-65% below their 2000 highs. The 2000-2002 decline also took the S&P 500 down by half, wiping out the entire total return of the S&P 500 – in excess of Treasury bill returns – all the way back to May 1996.
The S&P 500 presently teeters near its all-time high at 2,115. Its fair value, based upon multiple historically accurate valuation models is 940. Therefore, this market would have to drop 56% to reach fair value. In the real world, crashes often exceed fair value to the downside. Is there anyone you know prepared for a 50% to 60% decline in the stock market?
On the basis of valuation measures best correlated with actual subsequent market returns, we can say with a strong degree of confidence that the S&P 500 would presently have to drop to the 940 level in order for investors to expect a historically normal 10-year total return of 10% annually. That 940 figure for the S&P 500 would not represent some extreme, catastrophic outcome. It’s not a level that would even represent undervaluation from a historical perspective. It’s the level that we would associate with average, historically run-of-the-mill long-term equity returns. As we observed at the 2000 peak, “if you understand values and market history, you know we’re not joking.”
Many will call Hussman a prophet of doom or the little investment adviser who cried wolf. But, he has been here before. He didn’t buckle to peer pressure in 2000 or 2007. He analyzed the data and reached a logical conclusion. We all know bubbles can grow to epic proportions based on delusion, hope, and lies. Hussman was right in 2000. Hussman was right in 2007. And Hussman will be right this time.
You’ll recall we also made similarly “preposterous” comments in April 2007 (see Fair Value – 40% Off). Though our measures of market internals would finally turn negative in late-July of that year (see Market Internals Go Negative), the S&P 500 was already within 10% of its pre-collapse high of 1565 by April. At the time, we estimated reasonable valuations to be “about 40% below current levels,” adding:
“Again, that doesn’t imply that stocks have to actually suffer a decline of that magnitude. Nor do we need such a decline in order to justify an unhedged investment stance. It’s just that investors should not expect the S&P 500 to reliably deliver long-term returns of 10% annually or better until it does. You’ll note that there are also points in history when the S&P 500 traded substantially below that 10% valuation line. Those were points where stocks were priced to deliver long-term returns reliably above 10% annually, and in fact, they did exactly that.”
By late-October 2008, the S&P 500 had indeed declined by well over 40% from its peak, at which point we observed that stocks were no longer overvalued (see Why Warren Buffett is Right and Why Nobody Cares).
The numbers speak for themselves. There is no new paradigm. The Fed is not infallible. The economy is already in recession. Corporate revenues and profits are falling. The consumer isn’t consuming. The market is being elevated by nothing but Wall Street hot air and HFT computers. This time is not different.
To fully understand the present valuation extreme, recognize that the market cap/GDP ratio is currently about 1.29 versus a pre-bubble norm of just 0.55, with “secular” lows such as 1982 taking the ratio to about 0.33. To fully understand the present valuation extreme, recognize that the S&P 500 price/revenue ratio is currently about 1.80, versus a pre-bubble norm of just 0.8, with “secular” lows taking the ratio to about 0.45.”
As for other investors, the worst mistake they made prior to the 2000-2002 collapse was to believe Wall Street’s claims that stocks were not in a bubble, and that this time was different. The worst mistake that other investors made prior to the 2007-2009 collapse was to believe Wall Street’s claims that stocks were not in a bubble, and that this time was different. The worst mistake that other investors are making today is to believe Wall Street’s claims that stocks are not in a bubble, and that this time is different.
Even brilliant investors can lose their nerve and capitulate to the trend and to peer pressure. Don’t be stupid. Don’t believe Wall Street. Don’t let them screw you again. Get your money out of the market.
Last month, Stan Druckenmiller recounted his own experience with capitulation and performance chasing when he was the lead portfolio manager for George Soros and the Quantum Fund:
“I’ll never forget it. January of 2000 I go into Soros’ office and I say I’m selling all the tech stocks, selling everything. This is crazy… Just kind of as I explained earlier, we’re going to step aside, wait for the next fat pitch. I didn’t fire the two gun slingers. They didn’t have enough money to really hurt the fund, but they started making 3 percent a day, and I’m out. It’s driving me nuts. I mean, their little account is like up 50% on the year. I think Quantum was up seven. It’s just sitting there.
“So like around March I could feel it coming. I just – I had to play. I couldn’t help myself. And three times during the same week I pick up a – don’t do it. Don’t do it. Anyway, I pick up the phone finally. I think I missed the top by an hour. I bought $6 billion worth of tech stocks, and in six weeks I had left Soros and I had lost $3 billion in that one play. You ask me what I learned. I didn’t learn anything. I already knew I wasn’t supposed to do that. I was just an emotional basket case and couldn’t help myself. So maybe I learned not to do it again, but I already knew that.”
Hussman doesn’t address real estate in his weekly letter, but that is the third hurricane headed our way. Despite home ownership reaching three decade lows, stagnant real wage growth, and an economy that has never truly come out of the 2008/2009 recession, home prices have somehow risen 30% since 2012. The combination of keeping foreclosures off the market, the Wall Street hedge fund buy and rent scheme, Chinese billionaires parking their ill-gotten gains in US high end houses, FHA, Fannie, and Freddie encouraging low down payment mortgages, and the return of flippers has produced an echo bubble in the housing market. Home prices are only 18% from the 2006 all-time high. This bubble will burst congruently with the stock and bond bubbles. Anyone who has bought a house with a low down payment since 2012 is going to be deeply underwater in the next few years. Book it.
Hussman, myself and a few other bloggers will be scoffed at for our warnings. That’s alright. I have thick skin. I don’t really give a shit what anyone thinks about me or my opinions. I deal with facts. As Hussman wrote in 2000, the question now is only about when. It isn’t years. It’s months, weeks or days.
“The issue is no longer whether the current market resembles those preceding the 1929, 1969-70, 1973-74, and 1987 crashes. The issue is only – are conditions more like October of 1929, or more like April? Like October of 1987, or more like July? If the latter, then over the short term, arrogant imprudence will continue to be mistaken for enlightened genius, while studied restraint will be mistaken for stubborn foolishness. We can’t rule out further gains, but those gains will turn bitter… Let’s not be shy: regardless of short-term action, we ultimately expect the S&P 500 to fall by more than half, and the Nasdaq by two-thirds. Don’t scoff without reviewing history first.”
– Hussman Econometrics, February 9, 2000
- The Greek Modest Proposal To Savers: Please Bring Your Cash Home
Earlier today we reported that after a €2.5 billion outflow in March, Greek deposits have hit their lowest level since 2005 and have fallen by some €27 billion (or 16%) since December. A few other rather disconcerting data points: although the Greek banking system only comprises a little over 1% of eurozone assets, it accounts for nearly a fifth of ECB facility usage while nearly a third of Greek banking assets are now funded by the central bank.
In the midst of this decidedly untenable situation, and as Tsipras does his best to shakedown municipalities and pension funds for excess cash (“Where’s the money Lebowski?!), FinMin Varoufakis has a new proposal for all Greeks who have taken the very rational step of moving their cash elsewhere to avoid being Cyprus’d: bring your money back and we won’t tax it at 50%. Here’s more from Reuters:
Greece is to allow money held abroad by its taxpayers to be declared without penalty and taxed at a discount rate, a move to help overcome a cash crunch threatening the country with bankruptcy.
“The government will table a bill to allow citizens to voluntarily declare their deposits abroad,” Finance Minister Yanis Varoufakis told reporters after meeting Swiss officials in Athens.
Greeks have sent billions of euros abroad since the debt crisis exploded in 2010, fearing that the country may crash out of the euro zone. The deposit flight has strained its banks which have become dependent on central bank funding for liquidity.
A portion of the money has fled to Swiss banks.
Under the planned law, the deposits may be taxed at a rate of 15 to 20 percent, a senior finance ministry official said, an incentive for those who have sent money abroad but have not reported it as income to Greek tax authorities.
Depositors who have evaded reporting incomes would otherwise face a 46 percent tax rate and 46 percent in penalties if caught.
Varoufakis said that once the bill is passed by parliament, a political agreement will be signed between Greece and Swiss authorities to exchange information on Greek deposits held in Swiss banks.
This may sound like a good idea in principle, but we’re not entirely sure why this represents a compelling value proposition for those who are storing their euros in the safe confines of Swiss bank accounts. That is, why would anyone want to bring cash back to Greece and pay a 20% tax only to face the very real chance that those deposits will be converted to drachma or some equally worthless scrip in the not-so-distant future?
Here’s what UBS had to say on the subject of redenomination risk earlier this month (we think it applies here):
Even if a depositor thinks that there is only a 1% chance their country will exit the Euro, why take a 1% chance that your life savings are forcibly converted into a perceived worthless currency if by acting quickly (and withdrawing deposits) one can have 100% certainty that your life savings remain in Euros?
As a reminder, here is the deposit situation in Greece:
- 1,100 Foreign Donors To Clinton Foundation Never Disclosed & Remain Secret
Submitted by Mike Krieger via Liberty Blitzkrieg blog,
As a condition of becoming Secretary of State, Hillary Clinton signed a memorandum of understanding with the Obama Administration to disclose the donors to the Clinton Foundation due to the obvious potential conflicts of interest. Sounds good, but everyone knows the Clintons don’t pay by the rules, and they just went ahead and didn’t disclose 1,100 foreign donors to the faux charity.
Interestingly, these 1,100 donors funneled the money through the Canadian wing of the Clinton slush fund, the Clinton Giustra Enterprise Partnership (CGEP). This subsidiary of the Clinton Foundation was co-founded by Canadian businessman Frank Giustra, who’s sizable donations to the “charity” have been linked to getting a pass on human rights abuses in Colombia and crony uranium deals in Kazakhstan.
If these United States were anything close to a Democracy or a Republic, Hillary Clinton would have withdrawn from the Presidential race five scandals ago, but we all know what America really is, so the machine chugs along.
From Bloomberg:
Giustra strenuously objects to how he was portrayed. “It’s frustrating,” he says. And because the donations came in through the Clinton Giustra Enterprise Partnership (CGEP)—a Canadian affiliate of the Clinton Foundation he established with the former president—he feels doubly implicated by the insinuation of a dark alliance.
“We’re not trying to hide anything,” he says. There are in fact 1,100 undisclosed donors to the Clinton Foundation, Giustra says, most of them non-U.S. residents who donated to CGEP. “All of the money that was raised by CGEP flowed through to the Clinton Foundation—every penny—and went to the [charitable] initiatives we identified,” he says.
Every penny went to what, travel expenses and salaries?
The reason this is a politically explosive revelation is because the Clinton Foundation promised to disclose its donors as a condition of Hillary Clinton becoming secretary of state. Shortly after Barack Obama was elected president in 2008, the Clinton Foundation signed a “memorandum of understanding” with the Obama White House agreeing to reveal its contributors every year. The agreement stipulates that the “Clinton Giustra Sustainable Growth Initiative” (as the charity was then known) is part of the Clinton Foundation and must follow “the same protocols.”
It hasn’t.
Giustra says that’s because Canada’s federal privacy law forbids CGEP, a Canadian-registered charity, from revealing its donors. A memo he provided explaining the legal rationale cites CGEP’s “fiduciary obligations” to its contributors and Canada’s Personal Information Privacy and Electronic Disclosure Act. “We are not allowed to disclose even to the Clinton Foundation the names of our donors,” he says.
Sounds like a reasonable excuse. Except it’s total bullshit, which is to be expected from the Clintons.
Canadian tax and privacy law experts were dubious of this claim. Len Farber, former director of tax policy at Canada’s Department of Finance, said he wasn’t aware of any tax laws that would prevent the charity from releasing its donors’ names. “There’s nothing that would preclude them from releasing the names of donors,” he said. “It’s entirely up to them.”
Mark Blumberg, a charity lawyer at Blumberg Segal in Toronto, added that the legislation “does not generally apply to a registered charity unless a charity is conducting commercial activities… such as selling the list to third parties.”
With millions of dollars and 1,100 donors shrouded in mystery, CGEP has caught the attention of journalist and authors, including Peter Schweizer, whose forthcoming book, Clinton Cash: The Untold Story of How and Why Foreign Governments and Businesses Helped Make Bill and Hillary Rich, details Giustra’s financial relationship with Bill Clinton and posits nefarious intentions. The fact that the Clinton Foundation promised something that Giustra feels he can’t supply—the identity of his donors—has put him in an even worse spot.
An anonymous way to buy influence was created using a Canadian charity (the Clinton Giustra Enterprise Partnership was started in June 2007, just as Hillary was getting ready for her first run for President). Yes, I’m sure the advantages of this structure were never considered by the Clintons.
Meanwhile, as most of you know by now, the Clinton Foundation is refiling at least five years of taxes due to mistakes. Yes, mistakes happen, particularly with the preposterously complex U.S. tax code, but it appears the extent of the Clinton mistakes are anything but normal.
From Reuters:
Some experts in charity law and taxes said it was not remarkable for a charity to refile an erroneous return once in a while, but for a large, global charity to refile three or four years in a row was highly unusual.
“I’ve never seen amendment activity like that,” said Bruce Hopkins, a Kansas City lawyer who has specialized in charity law for more than four decades, referring to the CHAI filings.
But…
* * *
For related articles, see:
Senior Fellow at Sunlight Foundation Calls the Clinton Foundation “A Slush Fund”
Hillary Clinton Exposed Part 2 – Clinton Foundation Took Millions From Countries That Also Fund ISIS
- Texas Governor Calls Up State Guard To Counter Jade Helm "Federal Invasion" Fears
We’ve mentioned the upcoming Jade Helm military exercises on a few occasions lately (here and here). In short, Jade Helm is an eight-week joint military and Interagency Unconventional Warfare exercise conducted throughout Texas, New Mexico, Arizona, California, Nevada, Utah and Colorado. Here’s the official press release:
FORT BRAGG, N.C. (USASOC News Service, March 24, 2015) – Members of U.S. Army Special Operations Command will train with other U.S Armed Forces units July 15 through Sept. 15 in a multi-state exercise called Jade Helm 15.
USASOC periodically conducts training exercises such as these to practice core special warfare tasks, which help protect the nation against foreign enemies. It is imperative that Special Operations Soldiers receive the best training, equipment and resources possible.
While multi-state training exercises such as these are not unique to the military, the size and scope of Jade Helm sets this one apart. To stay ahead of the environmental challenges faced overseas, Jade Helm will take place across seven states. However, Army Special Operations Forces (ARSOF) will only train in five states: Texas, Arizona, New Mexico, Utah and Colorado. The diverse terrain in these states replicates areas Special Operations Soldiers regularly find themselves operating in overseas.
The training exercise will be conducted on private and public land with the permission of the private landowners, and from state and local authorities. In essence, all exercise activity will be taking place on pre-coordinated public and private lands.
The public can expect nothing much different from their day-to-day activities since much of exercise will be conducted in remote areas. The most noticeable effect the exercise may have on the local communities is an increase in vehicle and military air traffic and its associated noise. There will also be economic gain: an increase in the local economy, in fuel and food purchases and hotel lodging.
This exercise is routine training to maintain a high level of readiness for ARSOF since they must be ready to support potential missions anywhere in the world at a moment’s notice.
During this eight-week period, ARSOF soldiers will use this opportunity to further develop tactics, techniques and procedures for emerging concepts in Special Operations warfare.
USASOC intends to conduct the exercise safely and courteously while providing the best possible training available for the nation’s Army Special Operations Forces. State and local officials are being informed of the scope of Jade Helm and will continue to be updated as the exercise progresses.
Got it. So essentially, from July 15 to September 15 some military personnel are going to take a trip out west and pretend like they are conducting covert operations overseas. Doesn’t sound too exciting — but that’s just the press release. The devil, as they say, is always in the details which is why we took some time to look over the Jade Helm presentation (embedded below) to see if we could discern more about the drills. Here are some highlights we found interesting/humorous.
First, there’s the rather amusing state classification map wherein Texas and Utah are deemed “hostile” and where New Mexico is “leaning hostile.” California is “permissive” (we suppose this means the populace has resigned itself to what was probably, were this real, a unilateral invasion by the US military), but unfortunately, there appears to be an insurgency brewing in San Diego.
Next is the section entitled “Why Texas?” wherein the US Army Special Operations Command first explains how patriotic Texans generally are, then hilariously proceeds to suggest (in as polite a manner as possible) that the Lone Star state 1) resembles the type of desert wasteland soldiers might expect to encounter in a modern overseas conflict, 2) is just underdeveloped enough in many areas to give trainees an idea of what it might be like to be operating undercover in a hostile Middle Eastern country, 3) is home to the type of xenophobia which will make the locals approximately as skeptical of “outsiders” as the inhabitants of an occupied country might be but who are at the same time just gullible enough to be tricked into trusting the “invaders,” and best of all 4) is home to social and economic conditions that any normal American would consider “unfamiliar.” Here are some excerpts:
Why Texas?
The United States Special Operations Command (USSOCOM) has conducted numerous exercises in Texas, because Texans are historically supportive of efforts to prepare our soldiers, airmen, marines and sailors to fight the enemies of the United States.
To hone advanced skills, the military and Interagency require large areas of undeveloped land with low population densities with access to towns…
Operating in and around communities where anything out the ordinary will be spotted and reported (Locals are the first to notice something out of place). The opportunity to work with civilians to gain their trust and an understanding of the issues…
Adapting to unfamiliar terrain, social and economic conditions.
Basically then, 1,200 special ops soldiers are going to conduct a fake, covert infiltration of Texas because the US Special Operations Command thinks that in a lot of ways, Texas resembles Afghanistan.
That’s ok though, because as the government notes in the informational slide deck, the operation will have a dramatic impact on the local economy thanks to the injection of a staggering $150,000 via the purchase of “food, gas, lodging, and services” for the pretend invaders. That figure may sound small, but remember, we’re suspending reality here and one dollar equals 57 afghanis, so if we stick with the Afghanistan analogy, the government is actually injecting 8,550,000 in local currency.
While we’re certainly concerned about the creeping militarization of American communities (as discussed in detail here), we’re clearly employing a bit of sarcasm in our analysis of Jade Helm, but as one might imagine, many Texans are finding the operation to be no laughing matter. Here’s more via The Washington Post:
At an information session in Bastrop on Monday, command spokesman Lt. Col. Mark Lastoria fielded questions about whether Jade Helm 15 will involve bringing foreign fighters from the Islamic State to Texas, whether U.S. troops will confiscate Texans’ guns and whether the Army intends to implement martial law, according to the Austin American-Statesman.
“It’s the same thing that happened in Nazi Germany: You get the people used to the troops on the street, the appearance of uniformed troops and the militarization of the police,” Bastrop resident Bob Wells told the Statesman after the meeting.
“They’re gathering intelligence. That’s what they’re doing. And they’re moving logistics in place for martial law. That’s my feeling. Now, I could be wrong. I hope I am wrong. I hope I’m a ‘conspiracy theorist.’”
According to the Statesman, Lastoria attempted to assuage residents’ concerns, saying the operation in Bastrop County will take place almost entirely on private land leased to the Army by the owner. And participants won’t be trying to sneak through the population undetected — everyone involved will wear uniforms or orange armbands signaling that they are part of the exercise, he said.
Meanwhile, some websites which The Post describes as being “of varying repute” have gone so far as to posit a link between Wal-Mart’s recent “plumbing” problems and Jade Helm.
We’ll leave it to readers to decide for themselves how far-fetched any or all of this is or isn’t, but surely the punchline to the entire story is that now, Texas Governor Greg Abbott has ordered the Texas State Guard to monitor the Jade Helm exercises. Here is the letter from Abbott to Major General “Jake” Betty:
This surely marks Jade Helm’s “full retard” moment, as you now have a Texas governor pitting the Texas Guard against the US Special Operations Command amid fears the federal government — possibly in conjunction with Wal-Mart — is using special forces to gather intelligence on the way to taking over the state. Only in America.
- Apple Admits Watch Shortage Due To Defective Supply, Not Demand
Apple fan-boys have proclaimed the Apple Watch a screaming success as Tim Cook explained he was “generally happy” with the launch. The big driver of the impression of awesomeness was how hard it was to get one… i.e. so much demand that supply copuld not keep up. However, as The Wall Street Journal reports, it was not demand, it was instead defects that forced the company to limit supply.
It’s been weak post-earnings…
And getting worse in the after-hours…
Apple Inc. is said to have found a defect in a key component of its watch during production, forcing the company to limit supply of the new device,. As The Wall Street Journal reports,
A key component of the Apple Watch made by one of two suppliers was found to be defective, prompting Apple Inc. to limit the availability of the highly anticipated new product, according to people familiar with the matter.
The part involved is the so-called taptic engine, designed by Apple to produce the sensation of being tapped on the wrist. After mass production began in February, reliability testing revealed that some taptic engines supplied by AAC Technologies Holdings Inc., of Shenzhen, China, started to break down over time, the people familiar with the matter said. One of those people said Apple scrapped some completed watches as a result.
…
Apple last week told some watch suppliers to slow production until June, without explaining why, according to people familiar with Apple’s supply chain. Suppliers were surprised because Apple recently said that Watch inventory was insufficient, these people said.
* * *
On Monday, Apple Chief Executive Tim Cook said “demand is greater than supply” for the Watch, but didn’t disclose sales or orders.
In a memo to retail-store employees earlier this month, Apple retail chief Angela Ahrendts said stores won’t get watches to sell until the end of May because of “high global interest combined with our initial supply.” New online orders will be delivered in June, Apple says on its website.
Which is true of course when you only have a handful to sell…
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- IT HaPPeNeD IN BaLTiMoRe…
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- Fed Fails To Spark Buying Frenzy; Stocks, Bonds, Dollar Drop
The message from the Fed appears to be…
Which is a problem for stocks…(post-FOMC) – Small Caps worst…
And cash indices on the day tried to ramp to green but failed…
Futures show the early weakness during the European session…
Leaving the cash indices all in the red for the week…
Crazy day in vol too…
Treasuries were weak once again going in (the daily 8am selling resumed), weakened after an initial rally after GDP, then were unchanged post-FOMC…
The USDollar was spanked lower after GDP and recovered modestly after The FOMC Statement…
Dollar weakness helped commodities a bit but in general gold, silver, and copper ended unch on the day…
Crude pumped on a Cushing inventory draw, dropped after NYMEX Close…
EURUSD soared today – pressing up towards 1.12 before The FOMC Statement pulled back some gains…
And finally it is worth looking at the carnage in Europe today (specifically Germany)…
Charts: Bloomberg
Bonus Chart: Yeah, him again…
- Meanwhile, In Baltimore
The Baltimore riots may have calmed down but their aftermath remains, and nowhere is it more tangible than what is taking place in Orioles Park right now.
The view from center field at Oriole Park. pic.twitter.com/mW5Bt0vC2R
— MLB (@MLB) April 29, 2015
Orioles match has started with no public pic.twitter.com/cTuk6qxwpt
— Andrés Benedicto (@_abenedicto) April 29, 2015
Major League Baseball had already canceled the first two games of the Orioles’ series with the Chicago White Sox. And the Orioles’ weekend series with the Tampa Bay Rays was moved to Florida.
Wednesday’s game was scheduled to be played under the lights, but the league moved it to the afternoon and closed it to the public. Major League Baseball’s official historian, John Thorn, said it had never happened before.
As NBC recounts, the Baltimore Orioles played a ballgame on Wednesday with nobody in the stands. The low murmur of a weekday afternoon crowd was replaced with eerie silence.
“Baseball history will be made here today,” Orioles play-by-play broadcaster Gary Thorne said to the TV camera at the start of the game. But it wasn’t the kind of history anybody wanted to make: it was so quiet at first pitch that you could hear the click of camera shutters.
And the fans were on the wrong side of the gates.
At a pregame press conference, Orioles outfielder Adam Jones tried to help a healing city.
“My prayers have been out for all the fans, all the kids out there,” he said. “They’re hurting. And I think the big message is to stay strong, Baltimore. Stay safe. Continue to be the city, the great city, that I’ve grown to love over the last eight years.”
Rob Manfred, the commissioner of baseball, said that the decision was made “in the best interests of fan safety and the deployment of city resources.”
* * *
As a reminder, this is what John, son of the majority owner Peter Angelos, said a few days ago about the riots:
“Brett, speaking only for myself, I agree with your point that the principle of peaceful, non-violent protest and the observance of the rule of law is of utmost importance in any society. MLK, Gandhi, Mandela, and all great opposition leaders throughout history have always preached this precept. Further, it is critical that in any democracy investigation must be completed and due process must be honored before any government or police members are judged responsible.
That said, my greater source of personal concern, outrage and sympathy beyond this particular case is focused neither upon one night’s property damage nor upon the acts, but is focused rather upon the past four-decade period during which an American political elite have shipped middle class and working class jobs away from Baltimore and cities and towns around the U.S. to third-world dictatorships like China and others, plunged tens of millions of good hard-working Americans into economic devastation, and then followed that action around the nation by diminishing every American’s civil rights protections in order to control an unfairly impoverished population living under an ever-declining standard of living and suffering at the butt end of an ever-more militarized and aggressive surveillance state.
The innocent working families of all backgrounds whose lives and dreams have been cut short by excessive violence, surveillance, and other abuses of the Bill of Rights by government pay the true price, an ultimate price, and one that far exceeds the importance of any kids’ game played tonight, or ever, at Camden Yards. We need to keep in mind people are suffering and dying around the U.S., and while we are thankful no one was injured at Camden Yards, there is a far bigger picture for poor Americans in Baltimore and everywhere who don’t have jobs and are losing economic civil and legal rights, and this makes inconvenience at a ball game irrelevant in light of the needless suffering government is inflicting upon ordinary Americans.”
And here’s a bit of levity as Orioles players sign fake autographs and wave to fake fans…
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