Today’s News July 16, 2015

• The Future Costs Of Politically Correct Cultism

  Submitted by Brandon Smith via Alt-Market.com,

  

  I rarely touch on the subject of political correctness as a focus in my writings, partially because the entire issue is so awash in pundits on either side that the scrambling clatter of voices tends to drown out the liberty movement perspective. Also, I don’t really see PC cultism as separate from the problems I am always battling against: collectivism and the erasure of the individual in the name of pleasing society. Political correctness is nothing more than a tool that collectivists and statists exploit in order to better achieve their endgame, which is conning the masses into believing that the group mind is real and that the individual mind is fiction.

  Last year, I covered the PC issue in my article “The Twisted Motives Behind Political Correctness.” I believe I analyzed the bulk of the issue extensively. However, the times are changing at a pace that boggles the mind; and this is by design. So, it may be necessary to square off against this monstrosity once again.

  In order to better examine the true insanity of what many people now term “social justice warriors,” I must study a few aspects of that strange movement separately. First, let’s take a brief look at the mindset of your average social justice circus clown so that we might better understand what makes him/her/it tick.

  Rebel Without A Legitimate Cause

  I spent several years (up until 2004, when I woke up from the false paradigm madness) as a Democrat. And before anyone judges that particular decision, I would suggest they keep in mind the outright fascist brothel for the military-industrial complex the Republican Party had become at that point and remains to this day. Almost every stepping stone that Barack Obama is using today to eradicate the Constitution was set in place by the Bush dynasty, including the Authorization Of Military Force, which was the foundation for the National Defence Authorization Act and the legal precedence for indefinite detention without trial of ANY person (including an American citizen) accused of terrorism by the president of the U.S., as well as the use of assassination by executive order and the implementation of mass electronic surveillance without warrant.

  But, hell, these are real issues — issues that many of my fellow Democrats at the time claimed they actually cared about. Today, though, liberal concerns about unconstitutional actions by the federal government have all but vanished. Today, the left fights the good fight against flags on the hoods of cars from long-canceled television shows and battles tooth and nail for the “right” of boys wearing wigs and skirts to use the girl’s bathroom. Today, the left even fights to remove the words “boy” and “girl” from our vocabulary. Yes, such noble pursuits as these will surely be remembered as a pinnacle in the annals of societal reform.

  Maybe I realize the ideological goals of the social justice machine are meaningless on a surface level; and maybe you realize this, too. But these people live in their own little universe, which doesn’t extend far beyond the borders of their college campuses, the various Web forums they have hijacked and a trendy Marxist wine-and-swinger party here and there in New York or Hollywood. They actually think that they are on some great social crusade on par with the civil rights movements of the mid-1900s. They think they are the next Martin Luther King Jr. or the next Gandhi. The underlying banality and pointlessness of their cause completely escapes them. The PC cult is, in many respects, the antithesis of the liberty movement. We fight legitimate threats against legitimate freedoms; they fight mostly imaginary threats and seek to eradicate freedoms.

  Don’t get me wrong; sometimes our concerns do align. For instance, liberty proponents fight back against the militarization of police just as avidly as leftists do, if not more so. But our movements handle the problem in very different ways. Look at Ferguson, Missouri, where anyone with any sense should be able to admit that the government response to protests was absolutely a step toward tyranny, ignoring violent looters while attacking peaceful activists. Leftists and PC cultists decided to follow the Saul Alinsky/communist playbook, busing in provocateurs from Chicago to further loot and burn down businesses even if they belonged to ethnic minorities. In the meantime, the liberty movement and Oath Keepers sent armed and trained men to defend those businesses REGARDLESS of who owned them and defied police and federal agents who tried to stop them.

  The left gave the police and government a rationale for being draconian, while we removed the need for police and government entirely by providing security for the neighborhood (killing two birds with one stone). Either their methods are purely ignorant and do not work, or their methods are meant to achieve the opposite of their claims. In the end, the PC movement only serves establishment goals toward a fully collectivist and centralized society.  Their publicly stated intentions are otherwise pointless.

  Your average PC drone does not understand the grander plan at work, nor does he want to. All he cares about is that he has found a “purpose” — a fabricated purpose as a useful idiot for power brokers, but a purpose nonetheless.

  People Must Be Forced To Bake Gay Cakes

  I personally do not care if two people of the same gender want to be in a relationship, but I do find the issue of gay marriage (and marriage in general) a rather odd conflict that misses the whole point. Marriage has been and always will be a religious institution, not federal; and I find government involvement in this institution to be rather despicable. When the Supreme Court’s decision on gay marriage came down, I felt a little sorry for all the joyfully hopping homosexuals on the marbled steps of the hallowed building, primarily because they essentially were fighting for the state to provide recognition and legitimacy for their relationships. Frankly, who gives a rip what the state has to say in terms of your relationships or mine? The state is an arbitrary edifice, a facade wielding illusory power. If a relationship is based on true and enduring connection, then that is all that matters, whether the Supreme Court dignifies it or not.

  The only advantage to solidifying gay marriage in the eyes of the state is the advantage of being able to then use the state as an attack dog in order to force religious institutions to accept the status of gays in the same way the government does. And unfortunately, this is exactly what the PC cult is doing.  What they do not seem to understand is that recognition by the state does not necessarily translate to recognition by religious organizations, nor should it.

  Should an individual, organization or business be allowed to refuse service to anyone for any reason? Should the state be allowed to force people into servitude to one group or another even if it is against their core values?

  PC champions desperately try to make these questions a matter of “discrimination” alone. But they are more about personal rights and personal property and less about “hate speech.” Under natural law, as well as under the constitution, an individual has every right to refuse association with any other person for ANY reason. If I do not like you, the government does not have the authority to force me to be around you or to work for you. But this line has been consistently blurred over the years through legal chicanery. As I’m sure most readers are familiar, the issue of gay cakes seems to arise over and over, as in cases in Colorado and Oregon in which religiously oriented business owners were punished for refusing to provide service for gay customers.  Keep in mind, these businesses did not refuse outright service to gays.  What they did refuse, was to make gay wedding cakes.  To do so would have been in outright conflict with their religious principles.

  Punishments have included crippling fines designed to put store owners out of business and have even included gag orders restricting the freedom of businesses to continue speaking out against the orientation of customers they have refused to do business with.

  In order to validate such actions, leftists will invariably bring up segregation as a backdrop for the gay cake debate. “What if the customers were black,” they ask. “Is it OK for a business to be whites only?”

  My response?  Yes, according the dictates of individual liberty, yes it is okay.

  First, to be clear, I am talking specifically about private individuals and businesses, not public institutions as in the argument explored during Brown v. Board of Education. Private and public spaces are different issues with different nuances. I personally believe it is ignorant to judge someone solely on the color of his skin, and sexual orientation is not necessarily an issue to me. But it is equally ignorant for someone to think that the state exists to protect his feelings from being hurt. I’m sorry, but discrimination is a fact of life and always will be as long as individualism exists. The PC cultists don’t just want government recognition of their status; they want to homogenize individualism, erase it, and force the rest of us to vehemently approve of that status without question. This is unacceptable.

  Your feelings do not matter. They are not superior in importance to the fundamental freedom of each individual to choose his associations.

  If a business refuses to serve blacks, or gays, or Tibetans, then, hey, it probably just lost a lot of potential profit. But that should absolutely be the business’s choice and not up to the government to dictate. And in the case of “gay discrimination,” I think it is clear that the PC crowd is using the newfound legal victim group status of gays as a weapon to attack religiously based organizations. Make no mistake, this will not end with gay cakes. It is only a matter of time before pressure is brought to bear against churches as well for “discrimination.” And at the very least, I foresee many churches abandoning their 501(c)(3) tax exempt status.  Again, marriage has been and always will be a religious institution.  The PC crowd will not be happy with government recognition alone.  They want to force recognition from everyone.

  If a group wants fair treatment in this world, that is one thing. I believe a gay person has every right to open HIS OWN bakery and bake gay marriage cakes to his little heart’s content. I believe a black person has every right to dislike white people, as some do, and refuse to associate with them or or do business with them if that’s what he/she wants. I also believe that under natural and constitutional law, a religious business owner is an independent and free individual with the right to choose who he will work for or accept money from. If he finds a customer’s behavior to be against his principles, he should not be forced to serve that person, their feelings be damned.

  This is fair.

  What is not fair is the use of government by some groups to gain an advantage over others based on the legal illusion of victim group status. PC cultists want us to think that choice of association is immoral and damaging to the group. I have to say I find them to be far more intolerant and dangerous than the people they claim to be fighting against, and this attitude is quickly devolving into full bore tyranny under the guise of “humanitarianism.”

  Gender Bending Does Not Make You Special

  A man shaves his head and eyebrows, straps a plastic bottle to his face, and has his feet surgically modified to resemble flippers: Does this make him a dolphin, and should he be given victim group status as trans-species? I’m going to be brief here because I covered this issue in a previous article, but let’s lay everything on the table, as it were…

  PC cultists are clamoring to redefine the scientific FACT of gender as an “undefinable” and even discriminatory social perception. No one, no matter how dedicated, will EVER be able to redefine gender, unless they have the ability to change their very chromosomes. Nature defines gender, not man; and a man who undergoes numerous surgeries and body-changing steroid treatments will always have the genetics of a man even if he gives the appearance of a woman. Take away the drugs, and no amount of make-up will hide the chest hair growth and deepening voice.

  This might be deemed a “narrow” view of gender, and I don’t care. Nature’s view of gender is the only one that counts. Psychological orientations are irrelevant to biological definitions. Are you a man trapped in a woman’s body? Irrelevant. A woman trapped in a man’s body? Doesn’t matter. If we are talking about legal bearings, then biological definitions are the only scale that makes sense. I realize that gender bending is very trendy right now, and Hollywood sure seems to want everyone to jump on that freaky disco bandwagon, but there is no such thing as gender-neutral people. They are not a group, let alone a victim group, and do not necessitate special attention or government protection. There are men, and there are women; these are the only gender groups that count. Whether they would like to be the opposite does not change the inherent genetic definition. Period. To make such foolishness into an ideology or a legal battle is to attempt to bewilder man’s relationship to nature, and this will only lead to social distraction and disaster.

  There Is No Such Thing As ‘White Privilege’

  A person determines his success in life by his character and his choices. Color does not define success, as there are many people of every color who are indeed successful. Do you have to work harder to gain success because you are brown, or black, or neon green? I’ve seen no concrete evidence that this is the case. I know that people who identify as “white” are still around 70% of the American population, thus there are more white people in successful positions only due to sheer numbers.

  I know that I personally grew up in a low-wage household and had little to no financial help as I entered the working world. Everything I have accomplished in my life to this point was done alongside people of color, some of whom had far more advantages than I did. I cannot speak for other people’s experiences, but I can say that being white was never more important in my life than being stubborn and dedicated.

  I also find it a little absurd that most PC cultists who harp about so-called white privilege are often white themselves and haven’t the slightest experience or insight on what it is to be a person of color anyway.  All of their concepts of discrimination are based purely on assumption. White privilege seems to be the PC cult’s answer to the argument that racism is a universal construct. Only whites can be racist, they claim, because only whites benefit from racism. I defy these jokers to show any tangible proof that an individual white person has more of a chance at success than a person of color due to predominant racism. Or are we just supposed to have blind faith in the high priests of PC academia and their morally relative roots?

  The Cost Of Cultural Marxism

  Marxism (collectivism) uses many vehicles or Trojan horses to gain access to political and cultural spaces. Once present, it gestates like cancer, erasing previous models of heritage and history in order to destroy any competing models of society.  If you want to understand what is happening in America today, I suggest you research the Chinese Cultural Revolution of the 1960's.  We are experiencing the same Marxist program of historical and social destruction, only slightly slower and more strategic.

  Younger generations are highly susceptible to social trends and are often easily manipulated by popular culture and academic authority, which is why we are seeing PC cultism explode with the millennials and post-millennials. In my brief participation on the left side of the false paradigm, political correctness was only beginning to take hold. A decade later, the speed of the propaganda has far accelerated, and we now have a bewildering manure storm on our hands. The result is a vast division within American society that cannot be mended. Those of us on the side of liberty are so different in our philosophies and solutions to social Marxists that there can be no compromise.  The whole carnival can end only one way: a fight. And perhaps this is exactly what the elites want: left against right, black against white, gay against religious and straight, etc. As long as the PC movement continues to unwittingly do the bidding of power brokers in their efforts toward the destruction of individual liberty, I see no other alternative but utter conflict.

  

  

  

  

  

• China-Led Bank Will "Keep America Honest," Provide Alternative To IMF, Nomura Says

  The membership drive and subsequent launch of the Asian Infrastructure Investment Bank has been a favorite topic of ours since the UK threw its support behind the China-led venture in March.

  London’s move to join the bank marked a diplomatic break with Washington, where fears about the potential for the new lender to supplant traditional US-dominated multilateral institutions prompted The White House to lead an absurdly transparent campaign aimed at deterring US allies from supporting Beijing by claiming that the AIIB would not adhere to international standards around governance and environmental protection. 

  In the weeks and months following the UK’s decision, dozens of countries (including many traditional US allies) expressed interest in the new lender and by the time the bank officially launched late last month, the US and Japan (who dominate the IMF and ADB, respectively) were the only notable holdouts. 

  

  As we never tire of discussing, the reason the AIIB matters is that it represents far more than a new foreign policy tool for Beijing to deploy on the way to cementing its status as regional hegemon.

  The lender’s real significance lies in the degree to which it represents a shift away from the multilateral institutions that have dominated the post-war world economic order. In short, it’s a response not only to the IMF’s failure to provide the world’s most important emerging economies with representation that’s commensurate with their economic clout, but also to the perceived shortcomings of the IMF and ADB. The AIIB isn’t alone in this regard. Indeed, the BRICS bank can be viewed through a similar lens. 

  It’s against this backdrop that we bring you the following insight from Nomura’s Richard Koo, who suggests that the Greek experience with the IMF shows how the institution sometimes fails to deliver and by extension, how important it is for the countries in need to have more than one option when it comes to securing crucial aid.

  *  *  *

  AIIB a way around western opposition to IMF and World Bank reforms

  In light of US and European opposition to IMF and World Bank reforms, few should have been surprised that China decided it made more sense to create a new institution than to stand around waiting for the status quo to change. Eventually it announced the creation of the AIIB.

  Europe quickly declared that it would participate in the new institution. I see this as an attempt to smooth over relations with China after its earlier reluctance to allow the nation a more prominent role at the IMF.

  The US administration, while arguing China’s voting rights needed to be expanded to make the IMF a truly global institution, ultimately faced opposition from the legislative branch of government. The end result was a significant loss of US influence with both Europe and China.

  AIIB gives alternative to countries in need of help

  The US sought to expand China’s voting rights and thereby maintain the IMF and World Bank’s central positions in the global economy because allowing the creation of a similar institution would give cash-strapped countries more than one “lender of last resort” to turn to.

  Until now the IMF was the only choice for countries in need of financial assistance, which meant they had no choice but to accept the economic and fiscal reforms it demanded.

  But if the IMF has competition, countries in need of help will most likely shop around for the institution offering the easiest terms, which means necessary reforms may be delayed.

  China may also create an alternative to IMF

  In its current form, at least, the AIIB has a different role from the IMF; it is designed to provide development funds, much like the World Bank or Asian Development Bank (ADB). Given that the World Bank and the IMF were created as a pair under the postwar Bretton-Woods regime, US officials may be concerned that China will come up with a sister institution to the AIIB that has an intended role similar to that of the IMF.

  If the IMF’s rival is heavily under China’s influence, countries receiving its support will rebuild their economies under what is effectively Chinese guidance, increasing the likelihood they will fall directly or indirectly under that country’s influence.

  Lending of development funds to the countries of Asia by a Chinese-led AIIB will also bring about an increase in the nation’s influence throughout the region. That would be of concern to the US, which has succeeded in extending its own influence in the area via the World Bank and IMF.

  IMF and the US fundamentally misread Asian currency crisis

  There is something to be said for the US argument that there should be only one refuge for economically troubled nations which takes responsibility for ensuring they carry out necessary reforms. However, that view is based on the underlying assumption that the US and the IMF will correctly diagnose the problems it encounters.

  In reality, the US and the IMF completely misread the Asian currency crisis that began in 1997, and their errors caused tremendous damage to crisis-struck countries in the region.

  The decision of many Asian countries to participate in the AIIB is probably due in part to a distrust of the US born during the currency crisis.

  In that sense, I think the AIIB may come to play an important role in keeping America honest.

  It is difficult to say at this point whether the AIIB will have a negative or a positive impact on the global economy. At the very least, however, I think the emergence of an international institution with a viewpoint different from that of western creditors will help enhance the quality of debate over emerging economies’ debt problems. 

  

  

  

  

  

• China Stocks Slump Over 10% Post-Intervention: Derivatives Dealers Reveal $150 Billion In "Questionable" Exposure

  "Right now, dealers are going through their books trying to work out what their positions are worth," explains a major participant in the Asian derivatives market as Reuters reports the suspension of hundreds of mainland China stocks has created disputes between banks and their clients over the valuation of billions of dollars of equity derivatives. "In the end, someone is going to have to call the value of those deals, and someone else will lose out," and with over 1000 stocks still suspended, and Chinese stocks now 12% off post-intervention highs, ISDA – the body that represents the world's largest dealers – is worried that at least $150 billion of outstanding OTC equity derivatives on mainland-listed shares may not have the appropriate language to deal with these events. After 3 days of "you will never learn" rises, margin debt declined following China's great data last night and the continued good news is bad news sell off today.

  • *PBOC TO INJECT 20B YUAN WITH 7-DAY REVERSE REPOS: TRADER

  Post-intervention, there is some "malicious selling" going on…

  • *FTSE CHINA A50 JULY FUTURES DECLINE 0.6%

  China's "Dow"…

  

   

  And CSI-300 (China's "S&P 500") is now down over 12% from the post-intervention highs…

  

   

  As after 3 days of "you will never learn" rises…

  • *SHANGHAI MARGIN DEBT DECLINES FIRST TIME IN FOUR DAYS

  And last night's data pushed China's debt-to-GDP to record highs…

  

   

  But a far bigger risk looms, as Reuters reports,

  The suspension of hundreds of mainland China stocks during a market plunge from mid-June could lead to disputes between banks and their clients over the valuation of billions of dollars of equity derivatives.

   

  Banks dealing in derivatives are concerned that valuation terms covering market disruptions in other Asian markets, such as trading halts when stocks move up or down by the exchange's daily range limits, might not apply to the wave of stock suspensions in China.

   

  …

   

  Dealers have written at least $150 billion of outstanding over-the-counter (OTC) equity derivatives on mainland-listed shares, according to estimates by Shanghai-based investment consultancy Z-Ben Advisors.

   

  "It's not yet clear if the existing disruption event language for other Asian jurisdictions can be applied to China or how the existing disruption definitions for limit-up, limit-down would apply to suspended stocks," said Keith Noyes, regional director, Asia Pacific, at the International Swaps and Derivatives Association (ISDA), which represents the world's largest derivatives dealers.

  And for those who proclaimed the surge in China stocks a victory, think again…

  "There could be wrangling over issues such as whether the Shanghai composite index closing price, which would generally be the easiest to use to value contracts, is a good price or a disrupted price, given that so many stocks are now suspended," said Noyes.

   

  "Right now, dealers are going through their books trying to work out what their positions are worth," said Adam Sussman, head of execution and quantitative services at international brokerage Liquidnet. "In the end, someone is going to have to call the value of those deals, and someone else will lose out."

  *  *  *

  We know who…

  

  

  

  

  

  

• Forget Stocks – China Is Trying To Centrally Plan Its Way Out Of Another Black Hole

  Submitted by Simon Black via SovereignMan.com,

  It’s here in southwestern China’s postcard-perfect Yunnan province that the mighty Mekong River rises.

  From its source in a nearby mountain range, the river proceeds south, cutting its way across Southeast Asia’s fertile lands through Burma, Laos, Thailand, Vietnam, and Cambodia.

  The Mekong is hugely important; its waters irrigate million of acres of land and provide untold quantities of fish, both of which support tens of millions of people in the region.

  So it’s a major concern that China appears to be unilaterally diverting the Mekong to support its own needs.

  We’ve discussed China’s worrisome drought several times in the past.

  It would not be the slightest overstatement to say that China’s water situation is rapidly approaching crisis levels.

  Even China’s Agriculture Ministry is sounding the alarm bells.

  The numbers they’re reporting show that China already has to import more water than the United States imports oil.

  And this is creating major problems for their food security– for without staggering food imports, China cannot feed itself.

  If you add up all the acres of farmland that it takes to grow the amount of food China must now import each year, the total area is larger than the entire state of California.

  And this problem is only getting bigger.

  Here in Yunnan, the scenic countryside stretches to the horizon with beautiful farms and vast walnut groves, benefiting from the province’s gentle climate.

  Yunnan is actually one of the biggest walnut producing regions in China, which itself is the largest walnut producer in the world.

  But this won’t last. It can’t. They simply don’t have enough water.

  That’s actually the reason I’m here– walnuts.

  One of the two major focuses of our Chilean agriculture business is walnuts– something we chose precisely because of the long-term water crisis in China (not to mention the water crisis in California, another major walnut producer).

  As Chinese production declines, the resulting shortage should boost prices and substantially benefit our firm.

  For now, China’s government is doing everything they can to stem their food security and water crises from getting worse. And that includes commandeering the Mekong.

  Over the last few years, the Chinese government has built several massive dams along the Mekong River in Yunnan province.

  The Nuozhadu and Xiaowan dams are so large, in fact, that their combined reservoirs have enough capacity to cover the entire state of Maryland in five feet of water.

  In addition to providing bountiful hydroelectricity for Chinese industry, these dams are also being used to hoard water.

  China has a long history of trying to tame rivers.

  It goes back to the days of Mao when legions of engineers did everything they could to alter and divert natural rivers for the betterment of farmers.

  (Even China’s former President Hu Jintao started off as an engineer for SinoHydro…)

  It didn’t work. And combined with the rest of Mao’s absurd central planning, millions of people starved to death.

  Trying to fight nature always ends badly. But governments never learn.

  This is exactly what the Chinese government is trying to do right now with its bubbly stock markets.

  Like their water crisis, this is a force of nature. When a market bubble gets too inflated, its natural course is to pop.

  No amount of clever engineering can prevent this. Delay, perhaps. But never prevent.

  China’s response to their financial emergency has been the same as their water emergency: deceit and desperation.

  They suspended trading, encouraged small investors to mortgage themselves to the hilt, pushed bank balance sheets onto even shakier ground, and published the most insane propaganda worthy of the Pulitzer Prize for fiction.

  They even took a suggestion from Shakespeare’s Henry VI: “The first thing we do, let’s [imprison] all the lawyers.” And yes, they actually did throw a bunch of lawyers in jail for ‘encouraging dissent.’

  But like their water crisis, this isn’t something they can out-engineer.

  It would be like expecting a bunch of bureaucrats to centrally plan their way out of a black hole.

  It’s just not going to happen– nature is too powerful a force, like an unstoppable train.

  And fundamentally in this world, there are two kinds of people: those who see it coming, and those who don’t.

  For those who see it coming, you have options. You have freedom.

  You can choose, at a minimum, to simply get out of the way, and ensure that the train doesn’t hit you or your family.

  Or you might even choose to find a way to profit from it, just as we are doing with China’s water crisis.

  Undoubtedly, whenever a nation as large and populous as China’s experiences such severe financial gyrations, there’s money to be made; if nothing else, potentially some great bargains for patient investors.

  The other type of person is the one who doesn’t see it coming and must suffer the consequences of ignorance and inaction.

  Being one or the other isn’t random. It’s a choice– a decision to be ignorant. Or a decision to be educated and prepared.

  Which one will you decide?

  

  

  

  

  

• "Subsidizing Scroungers" – The Germans Knew How 'Europe' Would End Back In 1997

  In 1997, Arnulf Baring (of the German-British family of Baring bankers) unleashed the following ‘Nostradamus’-like prediction of how the euro would end (from a German perspective)…

  “They will be subsidizing scroungers, lounging in cafes on the Mediterranean beaches.

   

  Monetary union, in the end, will result in a gigantic blackmailing operation.

   

  When we Germans demand monetray discipline, other countries will blame their financial woes on that same discipline, and by extension, on us. More they will perceive us as a kind of economic policeman.

   

  We risk once again becoming the most hated people in Europe.“

  It appears that Arnulf pretty much ‘nailed it’.

  h/t @DanHannanMP and @K_Niemietz

  

  

  

  

  

• Japan's Economic Disaster: Real Wages Lowest Since 1990, Record Numbers Describe "Hard" Living Conditions

  Submitted by Mike Krieger via Liberty Blitzkrieg blog,

  With so much attention rightly focused on China at the moment (see: Chinese Authorities Arrest Over 100 Human Rights Activists and Lawyers in Desperate Crackdown on Dissent), people aren’t paying enough attention to the budding economic calamity unfolding in Japan.

  While “Abenomics” has succeeded in boosting the stock market and food prices, it has utterly failed to raise wages. In fact, wages adjusted for inflation have plunged to the lowest since 1990. As such, a record number of households now describe their living conditions as “somewhat hard” or “very hard.”

  From Bloomberg:

  Prime Minister Shinzo Abe came to power vowing to drag Japan out of deflation and stagnation. His logic was that rising prices would drive higher salaries and increased consumption. More than two years on, prices are rising, but wages adjusted for inflation have sunk to the lowest since at least 1990.

   

  

   

  A record 62 percent of Japanese households described their livelihoods as “hard” last year in a survey on incomes. A sales-tax increase in 2014 helped drive up living costs faster than wage gains.  At the same time, the Bank of Japan’s quantitative easing drove down the currency, boosting the cost of imported energy.

   

  
  

  Not that verifiable proof of failed economic policies will convince the central planners in Japan or anywhere else to change course. These people are simply dangerously insane and can’t help themselves.

  In case you missed it the first time, here’s my most recent important post on Japan:

  The Stock Market Myth and How the Japanese Middle Class is on the Precipice Thanks to Abenomics

  

  

  

  

  

• Banking "Explained" In 6 Minutes

  Banks are a riddle wrapped up in an enigma (as we just described what unsound banking is). Everyone kind of knows that they do stuff with money we don’t understand, while the last crisis left a feeling of deep mistrust and confusion. We try to shed a bit of light onto the banking system. Why were banks invented, why did they cause the last crisis and are there alternatives?

   

  

  

  

  

  

• "The Stock Market Is Too Important To Leave To The Vagaries Of An Actual Market"

  Submitted by Babar Rafique of Setter Capital,

  As equity markets have become increasingly critical to the global financial and economic system, we're actively subverting them into meaninglessness.

  Equity markets are efficient, rational, and accurately reflect the value of assets, we're told. Sure, there might be bouts of euphoria or panicked selling, but those are short-term anomalies in an otherwise rational system.

  The simplicity of this idea is undeniably appealing — if we can trust in markets to broadly be an efficient allocator of value and accurately representative of short-term economic potential, then we can use it for a range of economic decision-making. An investor who wants exposure to a particular country can buy ETFs linked to that country's stock market(s), for example, with the confidence that the investment outcome will bear a meaningful relationship with that of the economy invested in.

  This requires, of course, that the price numbers on global stock indices mean something. The trouble is, to an increasing degree, they mean nothing at all. And we are busy creating more meaningless stock markets precisely because we need the ticker numbers to be more and more meaningful.

  The equity market is a leading indicator for an economy, we're told, and from TV talking-heads to academics to wealth managers, we all conduct ourselves as if that's the case. A rising stock market thus means that confidence is improving and economic performance should shortly be rising as well. By that measure, the US economy should be doing fantastically well, matching or at least meaningfully correlated with the eye-popping performance of its major stock indices since 2008. Unfortunately, that's just not the case — labour force participation remains appallingly low, wages remain depressed with lackluster wage growth, more and more wealth has become concentrated at the very top of the income scale, etc. In reality, while US markets have galloped ahead, the actual economy has been sleepwalking since the 'Great Recession'.

  This begs the question then — if US markets don't meaningfully reflect the American economy, what do they reflect? To an increasing degree, they represent the fact and perception of central bank intervention into the markets. All major US indices share a meaningful correlation with the capital flows of the Fed's successive QE programs, and speculation on the Fed's future actions as communicated in various Fed meetings and press announcements move the markets in a big way. I'm certainly not saying that the Fed is all that matters for the US markets, but the market does listen to the Fed a lot more then it should and it sure seems like the Fed listens back. It's worth noting here that the Fed's dual mandate is to promote maximum employment and price stability, not manage market expectations — theoretically, they shouldn't directly impact stock markets in the short term at all.

  The story is much the same in the other major financial centres of the world, where the numbers on the big boards seem to be less and less meaningful as well. Broad European indices have been reaching for the heavens — after the ECB has reintroduced us to the pleasures of ZIRP and NIRP and launched a massive QE program of its own. Japanese intervention into their equity markets went even further, with the Bank of Japan directly buying ETFs to help keep the Nikkei going in the right direction.

  The Chinese take the cake here though, with their level of intervention into their equity markets made abundantly transparent after the recent popping of the Shanghai SSE Composite Index bubble. After more conventional tools failed to stem the tide of panicked selling, the authorities deemed selling to be unpatriotic, halted trading in about half of the market, ordered companies to buy their own shares and generally made it clear that there was a preferred direction for the stock market to be moving in. Going against that direction would have you risk a lot more then what any definition of a halfway efficient market would suggest.

  What has brought global equity markets to the point of becoming increasingly decoupled from their respective economies? I think it's our need to have stock and stock index prices be meaningful that ultimately has driven the shift towards meaninglessness. From a top-down perspective, an example here is that politicians point to the stock market as proof of what a good job they're doing in managing the economy and in some countries even derive their legitimacy from the continued performance of the local stock markets. Also, hundreds of millions of investors of all sizes have invested in stock markets through all sorts of financial instruments and stand to lose heavily in a market crash — that didn't go over too well the last time around and we're still struggling to recover.

  From a bottom-up perspective, an example is company boards that partially link executive compensation to the performance of the company's stock (which usually will have a positive correlation with the overall stock market). As a sidenote, Roger Martin, ex-Dean of Rotman School of Management (where I'm currently a student) has written extensively about this kind of executive compensation being problematic for the integrity of the markets as well — although he may not see it as a small symptom of a much larger threat to market integrity, as I do.

  The stock market is just too important to leave to the vagaries of an actual market now. Too much depends on good-looking numbers now. It must be guided and controlled, or else the stilts on which our global financial system balances become shakier and more visible. The market must be rendered increasingly meaningless simply because it's too meaningful to our current economic system.

  

  

  

  

  

• Paul Singer Blasts "Manipulated" Markets, Says China Collapse "Way Bigger Than Subprime"

  This week, dozens of billionaire fund managers, institutional investors, and financial market luminaries descended on that “iconic flagship of Taj Hotels on New York’s Fifth Avenue” The Pierre with a mission to “deliver alpha” for conference host CNBC, a network which, incidentally, very often has a difficult time “finding alpha.”

  On the guest list was Elliott Management’s Paul Singer, who was on hand Wednesday to discuss the perils of investing in a world dominated by Keynesian central planners, paper money, the “craziness” of China’s margin-fueled equity bubble, and “connecting the dots.” 

  Here are some notable bullets via Bloomberg:

  • ELLIOTT’S SINGER: CHINA CRASH ‘WAY BIGGER THAN SUBPRIME’
  • SINGER ISN’T OPTIMISTIC ABOUT GREEK SITUATION
  • SINGER SAYS GREECE SHOULD HAVE PULLED OUT OF EURO

  And here’s a recap, followed by a short video excerpt: 

  China’s government “encouraged” an equities boom, and the “craziness” of the country’s stock market echoes the late 1920s in the United States, hedge fund manager Paul Singer said Wednesday. 

   

  “It’s not just a bull market, it’s wild,” the founder and president of Elliott Management said at the Delivering Alpha conference presented by CNBC and Institutional Investor.

   

  Activity in China, which has included government efforts to ease policy and ramp up economic growth, reflects an “ever-growing” trend toward intervention, Singer said. He contended that bond-buying and easy interest rates in many corners of the world make it difficult to quantify how much markets are really worth.

   

  China’s Shanghai composite index, for instance, has climbed more than 80 percent in the last year. 

   

  “The prices are manipulated by governments,” he said, adding that investors “can’t trust” the value of some equities.

   

  Singer also criticized the central banks in the United States and Europe, as he decried the risks of continued near-zero interest rate policy from the Federal Reserve. A recession in the U.S. or Europe amid loose monetary policy would turn “truly ugly” for global markets, he said.

   

  A downturn in either area could lead to additional quantitative easing, bringing even more uncertainty into bonds.

  

  

  

  

  

• July 5: Greek Independence Day; July 15: Greek In Dependence Day

  The Greek parliament just voted, in a 229 for and 64 against landslide, to implement the austerity Europe demands to grant Greece the funds for Bailout #3 so that Greece can then repay European creditors (as opposed to facing up to the pain imminently and suffering through a Grexit) implicitly giving up their sovereignty and sending their 61% “Oxi” voting citizenry into what will inevitably be an even deeper economic depression.

  • *GREEK GOVERNMENT HAS VOTES TO APPROVE BAILOUT BILL, TALLY SHOWS

  

  As Bloomberg reports,

  A majority of 229 Greek lawmakers voted in favor of bill which includes prior actions demanded by creditors for a bailout agreement that the govt has applied for, Parliament Speaker says.

   

  64 lawmakers voted against bill, 6 abstained, in Greece’s 300-seat chamber

   

  Bill titled “urgent measures for the negotiation and signing of an agreement with the European Stability Mechanism”

   

  38 lawmakers of governing Syriza party, including former finance minister Yanis Varoufakis, former deputy Finance Minister Nadia Valavani, and Energy Minister Panagiotis Lafazanis didn’t support bill

   

  Out of 149 Syriza MPs, 32 voted against bill, 6 abstained, 1 didn’t show up

  More to the point, with 38 defections, Syriza has now officially lost its majority and a cabinet reshuffle is imminent as the drama goes on.

  #Greece significant ‘loss’ for SYRIZA NO 32 (Mainly Left Platform) + Present 6

  — Keep Talking Greece (@keeptalkingGR) July 15, 2015

  And as noted:

  #Greece Parliament votes YES but #Tsipras has lost his government majority.

  — Maxime Sbaihi (@MxSba) July 15, 2015

  But the biggest surprise of the night was that the former finance minister and Tsipras’ right-hand man, Yanis Varoufakis, voted against the bailout.

  And his Energy Minister (who also voted No)…

  • *GREECE’S ENERGY MINISTER LAFAZANIS SAYS HE SUPPORTS GOVERNMENT
  • *LAFAZANIS SAYS `WE ‘RE THE HEART AND SOUL OF SYRIZA’
  • *LAFAZANIS SAYS HE DOESN’T WANT SNAP ELECTIONS
    

  In summary – this just happened:

  

   

  @zerohedge New Greek Flag pic.twitter.com/RMgqpGRyQu

  — Ludwig W (@LudWitt) July 15, 2015

   

  And because all the algos know is to buy when the elites get their way, S&P futures are rallying

  

  

  

  

  

  

• Unholy Alliance: Blythe Masters Named Chairman Of Subprime Auto Lender

  Earlier today, on the way to presenting data from the NY Fed which shows that auto loan rejection rates hit an all-time low of just 3.3% in June, we said that if one wanted to understand the circumstances that led to the housing bubble in the US, a good place to start would be the modern day auto loan market where the “originate to sell” model that characterized pre-crisis mortgage lending is alive and well. We also recommended reading a bit about the history of the GSEs, and taking “a hard look at Blythe Masters and the wizards who created the credit default swap.”

  We’re not exaggerating when we say that just minutes after we penned those words – which drew an explicit link between the dynamics driving the auto loan market, the “originate to sell model” that fed Wall Street’s pre-crisis securitization machine, and the financial weapons of mass destruction that Blythe Masters helped to create – the following headline hit the wires: 

  • BLYTHE MASTERS NAMED CHAIRMAN OF SANTANDER CONSUMER USA HOLDING

  That’s right, dear readers. The mother of the credit default swap is now the chairman (err.. chairwoman) of Santander Consumer, the largest subprime auto lender in the country.

  You cannot make this stuff up. 

  For those unfamiliar with Santander Consumer, they are the lender who, as of Q4 2014, had $15 billion in oustanding subprime auto loans on the books. Here’s a peek into the company’s recent trials and travails:

  Santander Consumer — a unit of one of only two banks to receive the dubious honor of failing the Fed’s stress tests yesterday and the market leader in subprime auto lending — allegedly ignored a law that requires lenders to obtain a court order before repossessing cars from members of the military and will now pay $9.35 million to settle the issue with the government. Apparently, Santander illegally repoed nearly 800 vehicles from active service members over the course of 5 years and then attempted to extract fees from some 350 additional soldiers in connection with repossessions the bank didn’t even execute. 

   

  This is the same Santander Consumer that was subpoenaed last year by the Justice Department in connection with its packaging of subprime auto loans into ABS and whose lending practices also got the attention of the New York Dept. of Consumer Affairs. 

   

  Don’t think for a second that any of this is slowing down the Santander Consumer subprime auto securitization machine though. The company, which leads all other lenders when it comes to the total amount of subprime auto loan debt outstanding, has already done a deal this year worth $1.2 billion which accounts for nearly 25% of all subprime auto ABS issuance YTD.

   

  
  

  That’s from March. 

  And for those unfamiliar with Masters, we encourage you to simply Google her name along with “credit default swap” and “JP Morgan” (and throw in “Boca Raton“, “BISTRO“, and “Demchak” if you really want to take a trip down the “shit that sounded good in principle but almost destroyed the financial universe” rabbit hole), but that’s ancient history now, so here’s a useful summary of Masters’ more recent activities:

  About a year ago we wrote that the “farce is complete” when we learned that the former head of JPM’s commodities group – Blythe Masters – the person caught red-handed in trying to pull off Enron 2.0, and responsible for manipulating electricity prices in California, was about to join the CFTC: yes, the person who created perhaps the most important derivative product of the pre-crash period, the massively levered Credit Default Swaps, was about to become an advisor to the very agency tasked with regulating all derivatives. Just 24 hours later, following a furious public backlash against what is perhaps the most corrupt regulators in the US, the CFTC, Masters withdrew her candidacy from the CFTC. Not surprisingly, following the humiliating CFTC episode, Blythe disappeared completely from the public radar. Now, with a one year delay, she has finally reappeared. That’s not the surprising part. What is shocking is the capacity in which she has reappeared. According to the FT, the former JPM commodities head has re-emerged as chief executive of the Bitcoin startup, Digital Asset Holdings.

  That’s also from March. 

  Finally, here’s The NY Times on Santander Consumer’s “curious choice“: 

  Facing regulatory pressure related to its governance and lending practices, the subprime auto lender Santander Consumer USA has appointed Blythe Masters, a former longtime executive at JPMorgan Chase, its chairwoman.

   

  Ms. Masters, 46, who left JPMorgan last year and now heads a Bitcoin-related start-up, joins the board of Santander Consumer less than two weeks after it announced abruptly that its chief executive had resigned.

   

  Santander Consumer — a unit of the Spanish giant Banco Santander that is based in Dallas — has faced questions about its oversight after regulatory stumbles with the Federal Reserve and an investigation into its securitization of its auto loans.

   

  One of the company’s founders, Thomas Dundon, stepped down as chairman and chief executive at the start of the month, taking home more than $900 million as part of his exit.

   

  Masters is credited with helping to pioneer credit default swaps, financial instruments that contributed to the 2008 financial crisis. Most recently, Ms. Masters ran JPMorgan’s giant commodities unit. She left the bank in April 2014 among struggles in the commodities business broadly.

   

  While known for her stellar financial acumen and innovative thinking, in some ways Ms. Masters seems a curious choice for chairwoman of Santander Consumer USA, which, like Santander Holdings USA, its parent company, is seeking to improve its regulatory status. Santander Holdings has failed the Federal Reserve’s annual stress test for two consecutive years.

   

  While running the commodities business at JPMorgan, Ms. Masters came under regulatory scrutiny from the Federal Energy Regulatory Commission in 2013 for statements she made about some problematic trading activity. At the time, the bank disputed that Ms. Masters had acted inappropriately.

  For now, we’ll refrain from speculating on what it says about Masters’ career that she has gone from capo in the “Morgan Mafia” to bitcoin CEO and chairman of a subprime auto lender, but we would note that this unholy alliance between the king of a subprime prime auto market that’s driven by Wall Street’s ABS machine and the mother of the credit default swap may not be as “curious” as The NY Times believes.  

  

  
  

  

  

  

  

  

• Presenting The "Greek Terms Of Surrender" As Annotated By Yanis Varoufakis

  The Greek “deal” has already been dubbed “a new Versailles Treaty” for good reason: for Greece, the agreement which effectively abdicates sovereignty to Germany, is precisely that.

  And while few if any in Greece – and certainly its parliament – have carefully read the actual contents of the Summit statement, and instead rushed to pass the deal shortly after 1am Athens time, with hopes that just approving its contents may lead to the ECB blessing a prompt reopening of banks so Greeks can resume withdrawing their frozen deposits before the public realizes it was betrayed by its rulers once again, one person who has read it is the former finance minister Yanis Varoufakis.

  And not only that: just hours before what may be the most critical vote in Greek history, he has released an annotated version of what the Euro Summit statement really means for Greece.

  In his words: The Euro Summit statement (or Terms of Greece’s Surrender – as it will go down in history) follows, annotated by yours truly. The original text is untouched with my notes confined to square brackets (and in red). Read and weep… [For a pdf copy click here.]

  Full annotated statement:
  

  Euro Summit Statement Brussels, 12 July 2015

  The Euro Summit stresses the crucial need to rebuild trust with the Greek authorities [i.e. the Greek government must introduce new stringent austerity directed at the weakest Greeks that have already suffered grossly] as a pre- requisite for a possible future agreement on a new ESM programme [i.e. for a new extend-and-pretend loan].

  In this context, the ownership by the Greek authorities is key [i.e. the Syriza government must sign a declaration of having defected to the troika’s ‘logic’], and successful implementation should follow policy commitments.

  A euro area Member State requesting financial assistance from the ESM is expected to address, wherever possible, a similar request to the IMF This is a precondition for the Eurogroup to agree on a new ESM programme. Therefore Greece will request continued IMF support (monitoring and financing) from March 2016 [i.e. Berlin continues to believe that the Commission cannot be trusted to ‘police’ Europe’s own ‘bailout’ programs].

  Given the need to rebuild trust with Greece, the Euro Summit welcomes the commitments of the Greek authorities to legislate without delay a first set of measures [i.e. Greece must subject itself to fiscal waterboarding, even before any financing is offered]. These measures, taken in full prior agreement with the Institutions, will include:

  By 15 July

  • the streamlining of the VAT system [i.e. making it more regressive, through rate rises that encourage more VAT evasion]and the broadening of the tax base to increase revenue [i.e. dealing a major blow at the only Greek growth industry – tourism].

  • upfront measures to improve long-term sustainability of the pension system as part of a comprehensive pension reform programme [i.e. reducing the lowest of the low of pensions, while ignoring that the depletion of pension funds’ capital due to the 2012 troika-designed PSI and the ill effects of low employment & undeclared paid labour].

  • the safeguarding of the full legal independence of ELSTAT [i.e. the troika demands complete control of the way Greece’s budget balance is computed, with a view to controlling fully the magnitude of austerity it imposes on the government.]

  • full implementation of the relevant provisions of the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union, in particular by making the Fiscal Council operational before finalizing the MoU and introducing quasi-automatic spending cuts in case of deviations from ambitious primary surplus targets after seeking advice from the Fiscal Council and subject to prior approval of the Institutions [i.e. the Greek government, which knows that the imposed fiscal targets will never be achieved under the imposed austerity, must commit to further, automated austerity as a result of the troika’s newest failures.]

  By 22 July

  • the adoption of the Code of Civil Procedure, which is a major overhaul of procedures and arrangements for the civil justice system and can significantly accelerate the judicial process and reduce costs [i.e. foreclosures, evictions and liquidation of thousands of homes and businesses who are not in a position to keep up with their mortgages/loans.]

  • the transposition of the BRRD with support from the European Commission.

  Immediately, and only subsequent to legal implementation of the first four above-mentioned measures as well as endorsement of all the commitments included in this document by the Greek Parliament, verified by the Institutions and the Eurogroup, may a decision to mandate the Institutions to negotiate a Memorandum of Understanding (MoU) be taken [i.e. The Syriza government must be humiliated to the extent that it is asked to impose harsh austerity upon itself as a first step towards requesting another toxic bailout loan, of the sort that Syriza became internationally famous for opposing.]

  This decision would be taken subject to national procedures having been completed and if the preconditions of Article 13 of the ESM Treaty are met on the basis of the assessment referred to in Article 13.1. In order to form the basis for a successful conclusion of the MoU, the Greek offer of reform measures needs to be seriously strengthened to take into account the strongly deteriorated economic and fiscal position of the country during the last year [i.e. the Syriza government must accept the lie that it, and not the asphyxiation tactics of the creditors, caused the sharp economic deterioration of the past six months – the victim is being asked to take the blame by the on behalf of the villain.]

  The Greek government needs to formally commit to strengthening their proposals [i.e. to make them more regressive and more inhuman] in a number of areas identified by the Institutions, with a satisfactory clear timetable for legislation and implementation, including structural benchmarks, milestones and quantitative benchmarks, to have clarity on the direction of policies over the medium-run. They notably need, in agreement with the Institutions, to:

  • carry out ambitious pension reforms [i.e. cuts] and specify policies to fully compensate for the fiscal impact of the Constitutional Court ruling on the 2012 pension reform [i.e. cancel the Court’s decision in favour of pensioners] and to implement the zero deficit clause [i.e. cut by 85% the secondary pensions that the Syriza government fought tooth and nail to preserve over the past five months] or mutually agreeable alternative measures [i.e. find ‘equivalent’ victims] by October 2015;

  • adopt more ambitious product market reforms with a clear timetable for implementation of all OECD toolkit I recommendations [i.e. the recommendations that the OECD has now renounced after having re-designed these reforms in collaboration with the Syriza government], including Sunday trade, sales periods, pharmacy ownership, milk and bakeries, except over-the-counter pharmaceutical products, which will be implemented in a next step, as well as for the opening of macro-critical closed professions (e.g. ferry transportation). On the follow-up of the OECD toolkit-II, manufacturing needs to be included in the prior action;

  • on energy markets, proceed with the privatisation of the electricity transmission network operator (ADMIE), unless replacement measures can be found that have equivalent effect on competition, as agreed by the Institutions [i.e. ADMIE will be sold off to specific foreign vested interests at the behest of the Institutions.]

  • on labour markets, undertake rigorous reviews and modernisation of collective bargaining [i.e. to make sure that no collective bargaining is allowed], industrial action [i.e. that must be banned] and, in line with the relevant EU directive and best practice, collective dismissals [i.e. that should be allowed at the employers’ whim], along the timetable and the approach agreed with the Institutions [i.e. the Troika decides.]

  On the basis of these reviews, labour market policies should be aligned with international and European best practices, and should not involve a return to past policy settings which are not compatible with the goals of promoting sustainable and inclusive growth [i.e. there should be no mechanisms that waged labour can use to extract better conditions from employers.]

  • adopt the necessary steps to strengthen the financial sector, including decisive action on non-performing loans [i.e. a tsunami of foreclosures is ante portas] and measures to strengthen governance of the HFSF and the banks [i.e. the Greek people who maintain the HFSF and the banks will have precisely zero control over the HFSF and the banks.], in particular by eliminating any possibility for political interference especially in appointment processes. [i.e. except the political interference of the Troika.] On top of that, the Greek authorities shall take the following actions:

  • to develop a significantly scaled up privatisation programme with improved governance; valuable Greek assets will be transferred to an independent fund that will monetize the assets through privatisations and other means [i.e. an East German-like Treuhand is envisaged to sell off all public property but without the equivalent large investments that W. Germany put into E. Germany in compensation for the Treuhand disaster.] The monetization of the assets will be one source to make the scheduled repayment of the new loan of ESM and generate over the life of the new loan a targeted total of EUR 50bn of which EUR 25bn will be used for the repayment of recapitalization of banks and other assets and 50 % of every remaining euro (i.e. 50% of EUR 25bn) will be used for decreasing the debt to GDP ratio and the remaining 50 % will be used for investments [i.e. public property will be sold off and the pitiful sums will go toward servicing an un-serviceable debt – with precisely nothing left over for public or private investments.] This fund would be established in Greece and be managed by the Greek authorities under the supervision of the relevant European Institutions [i.e. it will be nominally in Greece but, just like the HFSF or the Bank of Greece, it will be controlled fully by the creditors.] In agreement with Institutions and building on best international practices, a legislative framework should be adopted to ensure transparent procedures and adequate asset sale pricing, according to OECD principles and standards on the management of State Owned Enterprises (SOEs) [i.e. the Troika will do what it likes.]

  • in line with the Greek government ambitions, to modernise and significantly strengthen the Greek administration, and to put in place a programme, under the auspices of the European Commission, for capacity-building and de-politicizing the Greek administration [i.e. Turning Greece into a democracy-free zone modelled on Brussels, a form of supposedly technocratic government, which is politically toxic and macro-economically inept] A first proposal should be provided by 20 July after discussions with the Institutions. The Greek government commits to reduce further the costs of the Greek administration [i.e. to reduce the lowest wages while increasing a little the wages some of the Troika-friendly apparatchiks], in line with a schedule agreed with the Institutions.

  • to fully normalize working methods with the Institutions, including the necessary work on the ground in Athens, to improve programme implementation and monitoring [i.e. The Troika strikes back and demands that the Greek government invite it to return to Athens as Conqueror – the Carthaginian Peace in all its glory.] The government needs to consult and agree with the Institutions on all draft legislation in relevant areas with adequate time before submitting it for public consultation or to Parliament [i.e. Greek Parliament must, again, after five months of short-lived independence, become an appendage of the Troika – passing translated legislation mechanistically.] The Euro Summit stresses again that implementation is key, and in that context welcomes the intention of the Greek authorities to request by 20 July support from the Institutions and Member States for technical assistance, and asks the European Commission to coordinate this support from Europe;

  • With the exception of the humanitarian crisis bill, the Greek government will reexamine with a view to amending legislations that were introduced counter to the February 20 agreement by backtracking on previous programme commitments or identify clear compensatory equivalents for the vested rights that were subsequently created [i.e. In addition to promising that it will no longer legislative autonomously, the Greek government will retrospectively annul all Bills it passed over the past five months.]

  The above-listed commitments are minimum requirements to start the negotiations with the Greek authorities. However, the Euro Summit made it clear that the start of negotiations does not preclude any final possible agreement on a new ESM programme, which will have to be based on a decision on the whole package (including financing needs, debt sustainability and possible bridge financing) [i.e. self-flagellate, impose further austerity upon an economy crushed by austerity, and then we shall see whether the Eurogroup will grave you with another toxic, unsustainable loans.]

  The Euro Summit takes note of the possible programme financing needs of between EUR 82 and 86bn, as assessed by the Institutions [i.e. the Eurogroup conjured up a huge number, well above what is necessary, in order to signal the debt restructuring is out and that debt bondage ad infinitum is the name of the game.] It invites the Institutions to explore possibilities to reduce the financing envelope, through an alternative fiscal path or higher privatisation proceeds [i.e. And, yes, it may possible that pigs will fly.] Restoring market access, which is an objective of any financial assistance programme, lowers the need to draw on the total financing envelope [i.e. which is something the creditors will do their utmost to avoid, e.g. by ensuring that Greece will only enter the ECB’s quantitative easing program in 2018, once quantitative easing is… over.]

  The Euro Summit takes note of the urgent financing needs of Greece which underline the need for very swift progress in reaching a decision on a new MoU: these are estimated to amount to EUR 7bn by 20 July and an additional EUR 5bn by mid August [i.e. Extend and Pretend gets another spin.] The Euro Summit acknowledges the importance of ensuring that the Greek sovereign can clear its arrears to the IMF and to the Bank of Greece and honour its debt obligations in the coming weeks to create conditions which allow for an orderly conclusion of the negotiations. The risks of not concluding swiftly the negotiations remain fully with Greece [i.e. Once more, demanding that the victim takes all the blame in behalf of the villain.] The Euro Summit invites the Eurogroup to discuss these issues as a matter of urgency.

  Given the acute challenges of the Greek financial sector, the total envelope of a possible new ESM programme would have to include the establishment of a buffer of EUR 10 to 25bn for the banking sector in order to address potential bank recapitalisation needs and resolution costs, of which EUR 10bn would be made available immediately in a segregated account at the ESM [i.e. the Troika admits that the 2013-14 recapitalisation of the banks, which would only need a top up of at most 10 billion, was insufficient – but, of course, blames it on… the Syriza government.]

  The Euro Summit is aware that a rapid decision on a new programme is a condition to allow banks to reopen, thus avoiding an increase in the total financing envelope [i.e. The Troika closed Greece’s banks to force the Syriza government to capitulate and now cries out for their re-opening.] The ECB/SSM will conduct a comprehensive assessment after the summer. The overall buffer will cater for possible capital shortfalls following the comprehensive assessment after the legal framework is applied.

  There are serious concerns regarding the sustainability of Greek debt [N.b. Really? Gosh!] This is due to the easing of policies during the last twelve months, which resulted in the recent deterioration in the domestic macroeconomic and financial environment [i.e. It is not the Extend and Pretend ‘bailout’ loans of 2010 and 2012 that, in conjunction with GDP-sapping austerity, caused the debt to scale immense heights – it was the prospect, and reality, of a government that criticized the the Extend and Pretend ‘bailout’ loans that… caused Debt’s Unustainability!]

  The Euro Summit recalls that the euro area Member States have, throughout the last few years, adopted a remarkable set of measures supporting Greece’s debt sustainability, which have smoothed Greece’s debt servicing path and reduced costs significantly [i.e. The 1^st & 2^nd ‘bailout’ programs failed, the debt skyrocketing as it was always going to since the real purpose of the ‘bailout’ programs was to transfer banking losses to Europe’s taxpayers.] Against this background, in the context of a possible future ESM programme, and in line with the spirit of the Eurogroup statement of November 2012 [i.e. a promise of debt restructure to the previous Greek government was never kept by the creditors], the Eurogroup stands ready to consider, if necessary, possible additional measures (possible longer grace and payment periods) aiming at ensuring that gross financing needs remain at a sustainable level. These measures will be conditional upon full implementation of the measures to be agreed in a possible new programme and will be considered after the first positive completion of a review [i.e. Yet again, the Troika shall let the Greek government labour under un-payable debt and when, as a result, the program fails, poverty rises further and incomes collapse much more, then we may haircut some of the debt – as the Troika did in 2012.]

  The Euro Summit stresses that nominal haircuts on the debt cannot be undertaken [N.b. The Syriza government has been suggesting, since January, a moderate debt restructure, with no haircuts, maximizing the expected net present value of Greece’s repayments to creditors’ – which was rejected by the Troika because their aim was, simply, to humiliate Syriza.] Greek authorities reiterate their unequivocal commitment to honour their financial obligations to all their creditors fully and in a timely manner [N.b. Which can only happen after a substantial debt restrucuture.] Provided that all the necessary conditions contained in this document are fulfilled, the Eurogroup and ESM Board of Governors may, in accordance with Article 13.2 of the ESM Treaty, mandate the Institutions to negotiate a new ESM programme, if the preconditions of Article 13 of the ESM Treaty are met on the basis of the assessment referred to in Article 13.1. To help support growth and job creation in Greece (in the next 3-5 years) [N.b. Having already destroyed growth and jobs for the past five years…] the Commission will work closely with the Greek authorities to mobilise up to EUR 35bn (under various EU programmes) to fund investment and economic activity, including in SMEs [i.e. Will use the same order of magnitude of structural funds, plus some fantasy money, as were available in 2010-2014.] As an exceptional measure and given the unique situation of Greece the Commission will propose to increase the level of pre-financing by EUR 1bn to give an immediate boost to investment to be dealt with by the EU co-legislators [i.e. Of the headline 35 billion, consider 1 billion as real money.] The Investment Plan for Europe will also provide funding opportunities for Greece [i.e. the same plan that most Eurozone ministers of finance refer to as a phantom program].

  

  

  

  

  

• The Oldest Trick In The Accounting Book: The Reason For Intel's Massive EPS Beat In One Chart

  Moments ago, INTC reported EPS of $0.55 which solidly beat expectations $0.50, with revenue of $13.2 billion printing just above consensus, if a substantial 5% drop compared to the $13.8 billion one year ago.

  This has sent the stock soaring in the after hours by about 6%. This is also despite the company lowering it full year revenue guidance from flat to -1%, with the bulls saying just look at that massive EPS beat.

  

   

  So for all those wondering just how INTC did it, here’s the reason for Intel’s beat in one simple chart:

  

   

  In other words, it is only thanks to the oldest trick in the accounting book, an artificially low tax rate, that INTC was able to make its plunging operating income, which was down 25% from a year ago, better than expected and make its EPS of $0.55 equal to the $0.55 reported one year ago.

  Crashing Operating Income:

  

   

  And yet, flat EPS:

  

   

  If INTC had used a 29% tax rate – the same as last year – EPS would have been $0.43, a 7 cent loss and that’s even using a more modern trick in the accounting book, some $700 million in stock buybacks!
  

  And that is how you use report unchanged EPS from a year ago despit sliding revenues and plunging earnings.

  

  

  

  

  

• Unsound Banking: Why Most Of The World’s Banks Are Headed For Collapse

  Submitted by Doug Casey via InternationalMan.com,

  You’re likely thinking that a discussion of “sound banking” will be a bit boring. Well, banking should be boring. And we’re sure officials at central banks all over the world today—many of whom have trouble sleeping—wish it were.

  This brief article will explain why the world’s banking system is unsound, and what differentiates a sound from an unsound bank. I suspect not one person in 1,000 actually understands the difference. As a result, the world’s economy is now based upon unsound banks dealing in unsound currencies. Both have degenerated considerably from their origins.

  Modern banking emerged from the goldsmithing trade of the Middle Ages. Being a goldsmith required a working inventory of precious metal, and managing that inventory profitably required expertise in buying and selling metal and storing it securely. Those capacities segued easily into the business of lending and borrowing gold, which is to say the business of lending and borrowing money.

  Most people today are only dimly aware that until the early 1930s, gold coins were used in everyday commerce by the general public. In addition, gold backed most national currencies at a fixed rate of convertibility. Banks were just another business—nothing special. They were distinguished from other enterprises only by the fact they stored, lent, and borrowed gold coins, not as a sideline but as a primary business. Bankers had become goldsmiths without the hammers.

  Bank deposits, until quite recently, fell strictly into two classes, depending on the preference of the depositor and the terms offered by banks: time deposits, and demand deposits. Although the distinction between them has been lost in recent years, respecting the difference is a critical element of sound banking practice.

  Time Deposits. With a time deposit—a savings account, in essence—a customer contracts to leave his money with the banker for a specified period. In return, he receives a specified fee (interest) for his risk, for his inconvenience, and as consideration for allowing the banker the use of the depositor’s money. The banker, secure in knowing he has a specific amount of gold for a specific amount of time, is able to lend it; he’ll do so at an interest rate high enough to cover expenses (including the interest promised to the depositor), fund a loan-loss reserve, and if all goes according to plan, make a profit.

  A time deposit entails a commitment by both parties. The depositor is locked in until the due date. How could a sound banker promise to give a time depositor his money back on demand and without penalty when he’s planning to lend it out?

  In the business of accepting time deposits, a banker is a dealer in credit, acting as an intermediary between lenders and borrowers. To avoid loss, bankers customarily preferred to lend on productive assets, whose earnings offered assurance that the borrower could cover the interest as it came due. And they were willing to lend only a fraction of the value of a pledged asset, to ensure a margin of safety for the principal. And only for a limited time—such as against the harvest of a crop or the sale of an inventory. And finally, only to people of known good character—the first line of defense against fraud. Long-term loans were the province of bond syndicators.

  That’s time deposits. Demand deposits were a completely different matter.

  Demand Deposits. Demand deposits were so called because, unlike time deposits, they were payable to the customer on demand. These are the basis of checking accounts. The banker doesn’t pay interest on the money, because he supposedly never has the use of it; to the contrary, he necessarily charged the depositor a fee for:

  1. Assuming the responsibility of keeping the money safe, available for immediate withdrawal, and

  1. Administering the transfer of the money if the depositor so chooses by either writing a check or passing along a warehouse receipt that represents the gold on deposit.

  An honest banker should no more lend out demand deposit money than Allied Van and Storage should lend out the furniture you’ve paid it to store. The warehouse receipts for gold were called banknotes. When a government issued them, they were called currency. Gold bullion, gold coinage, banknotes, and currency together constituted the society’s supply of transaction media. But its amount was strictly limited by the amount of gold actually available to people.

  Sound principles of banking are identical to sound principles of warehousing any kind of merchandise, whether it’s autos, potatoes, or books. Or money. There’s nothing mysterious about sound banking. But banking all over the world has been fundamentally unsound since government-sponsored central banks came to dominate the financial system.

  Central banks are a linchpin of today’s world financial system. By purchasing government debt, banks can allow the state—for a while—to finance its activities without taxation. On the surface, this appears to be a “free lunch.” But it’s actually quite pernicious and is the engine of currency debasement.

  Central banks may seem like a permanent part of the cosmic landscape, but in fact they are a recent invention. The US Federal Reserve, for instance, didn’t exist before 1913.

  Unsound Banking

  Fraud can creep into any business. A banker, seeing other people’s gold sitting idle in his vault, might think, “What is the point of taking gold out of the ground from a mine, only to put it back into the ground in a vault?” People are writing checks against it and using his banknotes. But the gold itself seldom moves. A restless banker might conclude that, even though it might be a fraud on depositors (depending on exactly what the bank has promised them), he could easily create lots more banknotes and lend them out, and keep 100% of the interest for himself.

  Left solely to their own devices, some bankers would try that. But most would be careful not to go too far, since the game would end abruptly if any doubt emerged about the bank’s ability to hand over gold on demand. The arrival of central banks eased that fear by introducing a lender of last resort. Because the central bank is always standing by with credit, bankers are free to make promises they know they might not be able to keep on their own.

  How Banking Works Today

  In the past, when a bank created too much currency out of nothing, people eventually would notice, and a “bank run” would materialize. But when a central bank authorizes all banks to do the same thing, that’s less likely—unless it becomes known that an individual bank has made some really foolish loans.

  Central banks were originally justified—especially the creation of the Federal Reserve in the US—as a device for economic stability. The occasional chastisement of imprudent bankers and their foolish customers was an excuse to get government into the banking business. As has happened in so many cases, an occasional and local problem was “solved” by making it systemic and housing it in a national institution. It’s loosely analogous to the way the government handles the problem of forest fires: extinguishing them quickly provides an immediate and visible benefit. But the delayed and forgotten consequence of doing so is that it allows decades of deadwood to accumulate. Now when a fire starts, it can be a once-in-a-century conflagration.

  Banking all over the world now operates on a “fractional reserve” system. In our earlier example, our sound banker kept a 100% reserve against demand deposits: he held one ounce of gold in his vault for every one-ounce banknote he issued. And he could only lend the proceeds of time deposits, not demand deposits. A “fractional reserve” system can’t work in a free market; it has to be legislated. And it can’t work where banknotes are redeemable in a commodity, such as gold; the banknotes have to be “legal tender” or strictly paper money that can be created by fiat.

  The fractional reserve system is why banking is more profitable than normal businesses. In any industry, rich average returns attract competition, which reduces returns. A banker can lend out a dollar, which a businessman might use to buy a widget. When that seller of the widget re-deposits the dollar, a banker can lend it out at interest again. The good news for the banker is that his earnings are compounded several times over. The bad news is that, because of the pyramided leverage, a default can cascade. In each country, the central bank periodically changes the percentage reserve (theoretically, from 100% down to 0% of deposits) that banks must keep with it, according to how the bureaucrats in charge perceive the state of the economy.

  In any event, in the US (and actually most everywhere in the world), protection against runs on banks isn’t provided by sound practices, but by laws. In 1934, to restore confidence in commercial banks, the US government instituted the Federal Deposit Insurance Corporation (FDIC) deposit insurance in the amount of $2,500 per depositor per bank, eventually raising coverage to today’s $250,000. In Europe, €100,000 is the amount guaranteed by the state.

  FDIC insurance covers about $9.3 trillion of deposits, but the institution has assets of only $25 billion. That’s less than one cent on the dollar. I’ll be surprised if the FDIC doesn’t go bust and need to be recapitalized by the government. That money—many billions—will likely be created out of thin air by selling Treasury debt to the Fed.

  The fractional reserve banking system, with all of its unfortunate attributes, is critical to the world’s financial system as it is currently structured. You can plan your life around the fact the world’s governments and central banks will do everything they can to maintain confidence in the financial system. To do so, they must prevent a deflation at all costs. And to do that, they will continue printing up more dollars, pounds, euros, yen, and what-have-you.

  

  

  

  

  

• White House Cuts 2015 GDP Outlook By 33%

  Despite President Obama’s hubris over the ‘recovery’, his crowing about the jobs record, and his insistence that while “there’s more to be done,” everything is awesome, The White House just took the meat-cleaver to its US economic growth forecasts…cutting 2015 growth from 3% to 2%. That was not all though as their forecasts see no recession until at least 2025, unemployment under 5.0% for at least the next decade, stable inflation for 10 years, and last but not least – a 3-month T-Bill rate of over 3% within the next few years.

   

  So growth is going to drop… but there’ll be no rise in unemployment, rates will surge but there will be no inflation outbreak, and trend growth now appears to be just 2.3%…

  

   

  As The Wall Street Journal reports,

  The White House said it sees U.S. growth rising by just 2% this year before rebounding to 2.9% in 2016 – down from its earlier forecast of 3% growth for both 2015 and 2016 released in February – after the economy stalled during the first quarter.

   

  The new estimate came Tuesday in the White House budget office’s “Mid-Session Review,” which updates the economic and budget projections it made at the beginning of the year. The new growth forecast largely reflects the current thinking among private economists.

   

  The economy contracted at a 0.2% seasonally adjusted annual rate in the first quarter.

  *  *  *

  Full report here (link)

  This should make things a little awkward for Janet…

  

  

  

  

  

• Live Webcast: Greek Parliament Votes On Bailout

  Update: And Tsipras is speaking now.

  It is almost 1:00am Athens time, and as of this moment the speaker of the Parliament, Zoi Konstantopoulou is at the podium, blasting the terms of the Third Greek bailout. She may or may not be the last speaker, although there is some speculation that PM Tsipras, who has been absent from the entire session so far, may follow her. Whether he does or not, the parliamentarians will vote shortly in a paradoxical vote in which the Opposition will support a law brought on by a European proxy government whose majority will vote against its own proposal, a proposal it swore to fight as its primary electoral campaign.

  So, in a nutshell, confusion reigns. But then again, this is Greece or as it will soon be known: the Greek vassal state of Europe.

  Watch the live, and translated, webcast below as the moment when Greece votes to hand over its sovereignty to Brussels will surely be a historic moment if only for some 11 million Greeks and a few European oligarchs who plot the expansion of “Empire Europe.”

  

  

  

  

  

• Hillary Clinton Blasts High Frequency Trading Ahead Of Fundraiser With High Frequency Trader

  Submitted by Mike Krieger via Liberty Blitzkrieg blog,

  One of the most entertaining angles of the imperial spectacle known as the 2016 U.S. Presidential campaign, has been watching Hillary Clinton, the consummate insider, pretend to be an outsider. The fact that anyone eats this up is a testament to the epic stupidity and ignorance of the American public.

  In her latest attempt at faux populism, Her Highness was found criticizing high frequency traders, as well as other Wall Street “fat cats,” with whom she is extremely cozy, during a speech at the New School. Her next stop? A fundraiser thrown by a high frequency trader.

  From the Weekly Standard:

  Today, in an economic speech at the New School in Manhattan, Hillary Clinton spoke out against short-term traders.

   

  “The problems are not limited to the big banks that get all the headlines. Serious risks are emerging from institutions in the so-called shadow banking system, including hedge funds, high-frequency traders, non-bank finance companies,” said the Democratic presidential candidate. 

  That’s Hillary the pantsuit rebel singing to the gullible plebs. Now here’s the real Hillary.

  Raj Fernando, the CEO of high-frequency trading firm Chopper Trading, is hosting a fundraiser for Clinton next week.

   

  “Hillary Clinton is coming to Chicago for a private fundraiser July 21 hosted at the home of Raj Fernando, CEO of Chopper Trading, a high-frequency trading firm that recently was purchased by Chicago-based DRW,” Chicago Business reports.

  Are you ready?

  

  

  

  

  

  

• Auto Loan Rejection Rate Falls To Lowest Level On Record

  If you were interested in learning about the conditions that conspired to create the great American housing bubble which burst in spectacular fashion in 2008 and brought the entire global financial system to its knees, you might start by reading the history of Fannie and Freddie, or you might take a hard look at Blythe Masters and the wizards who created the credit default swap, or, if you wanted to save yourself quite a bit of time and effort, you could just look at the current market for subprime auto loans. 

  You see, the much maligned “originate to sell” model – which was instrumental in making the American homeownership dream a reality for underqualified borrowers in the lead up to the crisis – is alive and well and is ‘in the driver’s seat’ so to speak when it comes to auto sales in America. 

  As we noted last month, in the consumer ABS space (which encompasses paper backed by student loans, credit cards, equipment, auto loans, and other, more esoteric types of consumer credit) auto loan-backed issuance accounts for half of the market and a quarter of auto ABS is backed by loans to subprime borrowers.

  The push to feed the securitization machine begets more competition among lenders for a shrinking pool of creditworthy borrowers and when that pool dries up, well, the definition of “creditworthy” must necessarily be relaxed, otherwise the securitization machine stalls for lack of fuel. For those who missed it, here are three charts which tell you everything you need to know about the market for auto loan-backed ABS:

  First, note that auto ABS issuance is set to hit record highs in 2015.

  

  Next, consider that the percentage of prime loans backing new supply is now at an all-time low. 

  

  Finally, here’s a look at the percentage of new financing extended to non-prime borrowers. As BofAML observes, the prime segements are losing share.

  

  Now, the NY Fed is out with what is perhaps the most shocking statistic yet (with the possible exception of the 137% average LTV ratio we highlighted earlier this month) on auto loans in America.

  As the following graphic shows, the rejection rate for auto loans was just 3.3% in June – the lowest on record:

  

  And here’s Bloomberg’s take on why virtually anyone who wants a car, gets a car:

  One reason for the looser credit has been the renewed appetite for securities backed by automobile debt, including to the riskiest borrowers, with subprime loans feeding about $13.2 billion of bond sales on Wall Street this year, according to data compiled by Bloomberg.

  Finally, to drive the point home, we’ll leave you with a set of statistics which speaks volumes about why this will certainly not end well.

  Q1 data from Experian:

  • Average loan term for new cars is now 67 months — a record.
  • Average loan term for used cars is now 62 months — a record.
  • Loans with terms from 74 to 84 months made up 30%  of all new vehicle financing — a record.
  • Loans with terms from 74 to 84 months made up 16% of all used vehicle financing — a record.
  • The average amount financed for a new vehicle was $28,711 — a record.
  • The average payment for new vehicles was $488 — a record.
  • The percentage of all new vehicles financed accounted for by leases was 31.46% — a record.

  

  

  

  

  

• A Complete Farce: Ex-Obamacare Head To Lead Health Insurance Lobby

  If there was any doubt just who Obamacare was created to serve from day one (spoiler alert: it was never America’s population), we now have the answer and it is so simple, even a 5-year-old can get it. Moments ago Politico reported that former Medicare chief Marilyn Tavenner, and the infamous former administrator of the Centers for Medicare and Medicaid Services who was responsible for writing many of Obamacare’s rules and regulations for the insurance industry, only to be fired following the disastrous rollout of the HealthCare.gov enrollment website, has been hired as the new CEO of America’s Health Insurance Plans, the “powerful K Street lobbying group.“

  Cited by Politico, AHIP board chairman Mark Ganz in a statement that”There is no better individual than Marilyn to lead our industry through the increasingly complex health care transformation that is underway. She has the respect and trust of policymakers and stakeholders from all sides, and a personal commitment to advance meaningful solutions for improving access to quality, affordable care for all Americans.”

  Well, maybe for some Americans: those who are shareholder or employees of US health insurance companies, which as it now emerges, are the biggest benefactors of Obamacare because from the very beginning, they had their own operative setting up the rules and regulations of the biggest US healthcare overhaul in history to benefit, drum roll, them.

  And now the same insurance companies, just to benefit some more, are poised or already in process of hiking insurance premiums across America and crush the spending power of ordinary Americans, those who were supposed to benefit from Obama’s socialized healthcare dream.

  The Affordable Care Act has been a mixed bag financially for insurers, said Robert Laszewski, an industry consultant. The expansion of Medicaid and the continued growth of private Medicare plans have been a boon for insurers, he noted. But the law’s new health insurance exchanges have been more troublesome for health plans, many of which are seeking greater rate hikes in 2016.

   

  “They’re getting creamed,” Laszewski said of plans in the exchange business. “Any time you see a rate increase above 7, 8, 9 percent, they’re losing money.”

  Actually, that’s bullshit: any time you see a 9% increase (or much more), it means there is cartel pricing in action, and thanks to the Supreme Court’s ruling supporting Obamacare, healthcare is now a tax on Americans and one has no choice but to pay whatever premium incueases are imposed on them.

  It gets even more comical:

  Tavenner can push the group’s agenda in Congress, but she will face a ban on direct communications with the agency that she oversaw. That restriction shouldn’t present too much of a hurdle to being an effective advocate for the industry, said Meredith McGehee, policy director for the Campaign Legal Center.

  It won’t be a hurdle, but in the meantime, Tavenner will be paid about 20 to 30 times more than when we was a mere government lackey (and quite incompetent considering the billions spent to rollout a broken healthcare.gov) available for hire to the highest bidder, unprecedented conflicts of interest notwithstanding.

  And just to show how extensive the revolving door is, Tavenner is replacing AHIP’s longtime head Karen Ignagni, who left the group to run EmblemHealth, a big New York insurer. Her departure was soon followed the announcement that UnitedHealth Group, the country’s largest insurer, would leave AHIP.

  So for any 5 year old who are still confused: the insurance industry wrote the rules of Obamacare, and is now set to profit from it, which incidentally was obvious to anyone who has been following the stock prices of publicly traded insurance companies, which if the recent merger mania is any indication will shortly roll up into one monopoly enterprise, thus concluding Obama’s dream of a single-payer health system.

  And just like that, the corporations win again.

  

  

  

  

  

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