- Supply And Demand In The Gold And Silver Futures Markets
Authored by Paul Craig Roberts and Dave Kranzler,
This article establishes that the price of gold and silver in the futures markets in which cash is the predominant means of settlement is inconsistent with the conditions of supply and demand in the actual physical or current market where physical bullion is bought and sold as opposed to transactions in uncovered paper claims to bullion in the futures markets. The supply of bullion in the futures markets is increased by printing uncovered contracts representing claims to gold. This artificial, indeed fraudulent, increase in the supply of paper bullion contracts drives down the price in the futures market despite high demand for bullion in the physical market and constrained supply. We will demonstrate with economic analysis and empirical evidence that the bear market in bullion is an artificial creation.
The law of supply and demand is the basis of economics. Yet the price of gold and silver in the Comex futures market, where paper contracts representing 100 troy ounces of gold or 5,000 ounces of silver are traded, is inconsistent with the actual supply and demand conditions in the physical market for bullion. For four years the price of bullion has been falling in the futures market despite rising demand for possession of the physical metal and supply constraints.
We begin with a review of basics. The vertical axis measures price. The horizontal axis measures quantity. Demand curves slope down to the right, the quantity demanded increasing as price falls. Supply curves slope upward to the right, the quantity supplied rising with price. The intersection of supply with demand determines price. (Graph 1)
A change in quantity demanded or in the quantity supplied refers to a movement along a given curve. A change in demand or a change in supply refers to a shift in the curves. For example, an increase in demand (a shift to the right of the demand curve) causes a movement along the supply curve (an increase in the quantity supplied).
Changes in income and changes in tastes or preferences toward an item can cause the demand curve to shift. For example, if people expect that their fiat currency is going to lose value, the demand for gold and silver would increase (a shift to the right).
Changes in technology and resources can cause the supply curve to shift. New gold discoveries and improvements in gold mining technology would cause the supply curve to shift to the right. Exhaustion of existing mines would cause a reduction in supply (a shift to the left).
What can cause the price of gold to fall? Two things: The demand for gold can fall, that is, the demand curve could shift to the left, intersecting the supply curve at a lower price. The fall in demand results in a reduction in the quantity supplied. A fall in demand means that people want less gold at every price. (Graph 2)
Alternatively, supply could increase, that is, the supply curve could shift to the right, intersecting the demand curve at a lower price. The increase in supply results in an increase in the quantity demanded. An increase in supply means that more gold is available at every price. (Graph 3)
To summarize: a decline in the price of gold can be caused by a decline in the demand for gold or by an increase in the supply of gold.
A decline in demand or an increase in supply is not what we are observing in the gold and silver physical markets. The price of bullion in the futures market has been falling as demand for physical bullion increases and supply experiences constraints. What we are seeing in the physical market indicates a rising price. Yet in the futures market in which almost all contracts are settled in cash and not with bullion deliveries, the price is falling.
For example, on July 7, 2015, the U.S. Mint said that due to a “significant” increase in demand, it had sold out of Silver Eagles (one ounce silver coin) and was suspending sales until some time in August. The premiums on the coins (the price of the coin above the price of the silver) rose, but the spot price of silver fell 7 percent to its lowest level of the year (as of July 7).
This is the second time in 9 months that the U.S. Mint could not keep up with market demand and had to suspend sales. During the first 5 months of 2015, the U.S. Mint had to ration sales of Silver Eagles. According to Reuters, since 2013 the U.S. Mint has had to ration silver coin sales for 18 months. In 2013 the Royal Canadian Mint announced the rationing of its Silver Maple Leaf coins: “We are carefully managing supply in the face of very high demand. . . . Coming off strong sales volumes in December 2012, demand to date remains very strong for our Silver Maple Leaf and Gold Maple Leaf bullion coins.” During this entire period when mints could not keep up with demand for coins, the price of silver consistently fell on the Comex futures market. On July 24, 2015 the price of gold in the futures market fell to its lowest level in 5 years despite an increase in the demand for gold in the physical market. On that day U.S. Mint sales of Gold Eagles (one ounce gold coin) were the highest in more than two years, yet the price of gold fell in the futures market.
How can this be explained? The financial press says that the drop in precious metals prices unleashed a surge in global demand for coins. This explanation is nonsensical to an economist. Price is not a determinant of demand but of quantity demanded. A lower price does not shift the demand curve. Moreover, if demand increases, price goes up, not down.
Perhaps what the financial press means is that the lower price resulted in an increase in the quantity demanded. If so, what caused the lower price? In economic analysis, the answer would have to be an increase in supply, either new supplies from new discoveries and new mines or mining technology advances that lower the cost of producing bullion.
There are no reports of any such supply increasing developments. To the contrary, the lower prices of bullion have been causing reductions in mining output as falling prices make existing operations unprofitable.
There are abundant other signs of high demand for bullion, yet the prices continue their four-year decline on the Comex. Even as massive uncovered shorts (sales of gold contracts that are not covered by physical bullion) on the bullion futures market are driving down price, strong demand for physical bullion has been depleting the holdings of GLD, the largest exchange traded gold fund. Since February 27, 2015, the authorized bullion banks (principally JPMorganChase, HSBC, and Scotia) have removed 10 percent of GLD’s gold holdings. Similarly, strong demand in China and India has resulted in a 19% increase of purchases from the Shanghai Gold Exchange, a physical bullion market, during the first quarter of 2015. Through the week ending July 10, 2015, purchases from the Shanghai Gold Exchange alone are occurring at an annualized rate approximately equal to the annual supply of global mining output.
India’s silver imports for the first four months of 2015 are 30% higher than 2014. In the first quarter of 2015 Canadian Silver Maple Leaf sales increased 8.5% compared to sales for the same period of 2014. Sales of Gold Eagles in June, 2015, were more than triple the sales for May. During the first 10 days of July, Gold Eagles sales were 2.5 times greater than during the first 10 days of June.
Clearly the demand for physical metal is very high, and the ability to meet this demand is constrained. Yet, the prices of bullion in the futures market have consistently fallen during this entire period. The only possible explanation is manipulation.
Precious metal prices are determined in the futures market, where paper contracts representing bullion are settled in cash, not in markets where the actual metals are bought and sold. As the Comex is predominantly a cash settlement market, there is little risk in uncovered contracts (an uncovered contract is a promise to deliver gold that the seller of the contract does not possess). This means that it is easy to increase the supply of gold in the futures market where price is established simply by printing uncovered (naked) contracts. Selling naked shorts is a way to artificially increase the supply of bullion in the futures market where price is determined. The supply of paper contracts representing gold increases, but not the supply of physical bullion.
As we have documented on a number of occasions, the prices of bullion are being systematically driven down by the sudden appearance and sale during thinly traded times of day and night of uncovered future contracts representing massive amounts of bullion. In the space of a few minutes or less massive amounts of gold and silver shorts are dumped into the Comex market, dramatically increasing the supply of paper claims to bullion. If purchasers of these shorts stood for delivery, the Comex would fail. Comex bullion futures are used for speculation and by hedge funds to manage the risk/return characteristics of metrics like the Sharpe Ratio. The hedge funds are concerned with indexing the price of gold and silver and not with the rate of return performance of their bullion contracts.
A rational speculator faced with strong demand for bullion and constrained supply would not short the market. Moreover, no rational actor who wished to unwind a large gold position would dump the entirety of his position on the market all at once. What then explains the massive naked shorts that are hurled into the market during thinly traded times?
The bullion banks are the primary market-makers in bullion futures. They are also clearing members of the Comex, which gives them access to data such as the positions of the hedge funds and the prices at which stop-loss orders are triggered. They time their sales of uncovered shorts to trigger stop-loss sales and then cover their short sales by purchasing contracts at the price that they have forced down, pocketing the profits from the manipulation
The manipulation is obvious. The question is why do the authorities tolerate it?
Perhaps the answer is that a free gold market serves both to protect against the loss of a fiat currency’s purchasing power from exchange rate decline and inflation and as a warning that destabilizing systemic events are on the horizon. The current round of on-going massive short sales compressed into a few minutes during thinly traded periods began after gold hit $1,900 per ounce in response to the build-up of troubled debt and the Federal Reserve’s policy of Quantitative Easing. Washington’s power is heavily dependent on the role of the dollar as world reserve currency. The rising dollar price of gold indicated rising discomfort with the dollar. Whereas the dollar’s exchange value is carefully managed with help from the Japanese and European central banks, the supply of such help is not unlimited. If gold kept moving up, exchange rate weakness was likely to show up in the dollar, thus forcing the Fed off its policy of using QE to rescue the “banks too big to fail.”
The bullion banks’ attack on gold is being augmented with a spate of stories in the financial media denying any usefulness of gold. On July 17 the Wall Street Journal declared that honesty about gold requires recognition that gold is nothing but a pet rock. Other commentators declare gold to be in a bear market despite the strong demand for physical metal and supply constraints, and some influential party is determined that gold not be regarded as money.
Why a sudden spate of claims that gold is not money? Gold is considered a part of the United States’ official monetary reserves, which is also the case for central banks and the IMF. The IMF accepts gold as repayment for credit extended. The US Treasury’s Office of the Comptroller of the Currency classifies gold as a currency, as can be seen in the OCC’s latest quarterly report on bank derivatives activities in which the OCC places gold futures in the foreign exchange derivatives classification.
The manipulation of the gold price by injecting large quantities of freshly printed uncovered contracts into the Comex market is an empirical fact. The sudden debunking of gold in the financial press is circumstantial evidence that a full-scale attack on gold’s function as a systemic warning signal is underway.
It is unlikely that regulatory authorities are unaware of the fraudulent manipulation of bullion prices. The fact that nothing is done about it is an indication of the lawlessness that prevails in US financial markets.
- The End Draws Near For Syria's Assad As Putin's Patience "Wears Thin"
Early last month in, “The Noose Around Syria’s Assad Tightens” we outlined the latest developments in the country’s prolonged civil war. Here’s what we said then:
The US-led alliance realizes very well that as long as Assad has to fight three fronts: i.e., the Nusra Front in the northwestern province of Idlib and ever closer proximity to Syria’s main infrastructure hub of Latakia, ISIS in the central part of the nation where militants recently took over the historic town of Palmyra, and the official “rebel” force in close proximity to Damascus, Assad’s army will either eventually be obliterated or, more likely, mutiny and overthrow the president, putting the Ukraine scenario in play.
In short, the US and its Middle Eastern allies are simply playing the waiting game; watching for the opportune time to charge in and “liberate” Syria from whatever army manages to take Damascus first, at which point a puppet government will be promptly installed.
And make no mistake, the new, U.S.-backed regime will present itself as fiercely anti-militant and will be trotted out as Washington’s newest “partner” in the global war on terror. Of course behind the scenes the situation will likely resemble what happened in Yemen (Obama’s “model of success”) where, according to one account, Abdullah Saleh and his lieutenants not only turned a blind eye to AQAP operations, but in fact played a direct role in facilitating al-Qaeda attacks even as the government accepted anti-terrorism financing from the US government.
Of course no one in Washington will care to know the details, as long as the new regime in Syria is receptive to things like piping Qatari natural gas to Europe via a long-stalled pipeline, a project which will do wonders for breaking Gazprom’s energy stranglehold and robbing Vladimir Putin of quite a bit of leverage in what is becoming an increasingly tense standoff with the EU over Ukraine.
On Sunday, Assad gave a speech in which he attempted to address concerns about the recent setbacks his army has suffered at the hands of the various groups fighting for control of the country. Here’s more from the LA Times’ Special correspondent Nabih Bulos reporting from Beirut:
Syrian President Bashar Assad delivered a sober assessment of the state of his forces on Sunday, acknowledging a manpower shortage and conceding troop withdrawals from some areas, but asserting that the military was not facing collapse.
“Are we giving up areas?” Assad asked as he posed a series of questions about the government’s strategy. “Why do we lose other areas? … And where is the army in some of the areas?”
The Syrian president endeavored to provide answers. But it was an open question whether his responses would reassure loyalists worried that the government could be losing its hold on the embattled country.
The president also thanked his allies — notably Iran — while taking the West to task for supporting “terrorists,” the Syrian government’s standard term for the armed opposition fighting to wrest control of the country.
The core areas under government control include the capital, Damascus, and the strategic corridor north to the cities of Homs and Hama and west to the Mediterranean coast, a pro-government stronghold.
Syrian authorities have been actively seeking to increase military recruitment in recent months, a sign of the shortage of fighters across a sprawling battlefield that stretches from the country’s northern fringes to its southern tip, and from its western borders to its eastern frontier.
In Damascus and other cities, prominent recruiting billboards depict stern-looking young men and women in full military gear exhorting others to enlist.
“Our army means all of us,” declares one billboard.
Other signs posted prominently depict soldiers providing vital security for children and families.
Another billboard takes a more confrontational approach, asking a man who is watching a computer screen: “Sitting there and looking? What are you waiting for?”
The presidential speech comes as the thinly stretched Syrian army has suffered a string of setbacks in the last few months, squeezing government forces into defensive positions in Syria’s northwest and in the south.
Assad blamed the retreats on a lack of manpower, asserting that steps would need to be taken “to raise the [capacity] of the armed forces… primarily through calling the reserves in addition to recruits and volunteers.”
One such step, Assad said, was the granting of an amnesty on Saturday to soldiers who had defected, so long as they had not joined armed opposition groups. The amnesty was also extended to draft dodgers, many of whom have left Syria to escape military service.
Despite conceding setbacks, Assad maintained a confident tone, insisting that Army recruitment numbers had increased in the last few months and that “there is no collapse… and we will be steadfast and will achieve the missions.”
“Defeat … does not exist in the dictionaries of the Syrian Arab army,” he insisted.
Maybe not yet, but that could change quickly, especially if Assad were to lose the support of his most important ally, Vladimir Putin.
As we noted last month, the key outstanding question is this: what is the maximum pain level for Russia, which has the greatest vested interest in preserving the Assad regime?
We could have an answer to that very soon, as slumping commodities prices, falling demand from China (which was recently cited as the reason for “indefinite” delays to the Altai pipeline joint venture which would have delivered 30 bcm/y of Siberian gas to China), and economic sanctions from the West are squeezing Moscow and may ultimately prompt Putin to “consider the acceptability of other candidates” for the Syrian Presidency. Here’s WSJ with more:
And with Russia’s economy battered by a plunge in oil prices and Western sanctions, the government may be considering both the strategic and economic benefits of changing its stance on Mr. Assad.
But Fyodor Lukyanov, chairman of a Kremlin foreign-policy advisory council, said Russian policy makers are likely considering possible alternatives to the Syrian president.
“They are looking at the acceptability of other candidates at this point,” he said, adding that he had not heard any names.
If Moscow does provide an opening to broker a negotiated exit for Mr. Assad, it would be a dramatic turn in the conflict.
Mr. Assad’s other major international backer, Iran, shows no signs of wavering in its crucial military and financial support for the Syrian regime. But the long-sought nuclear deal between Iran and six world powers reached earlier this month has also opened up the possibility of broader political cooperation between Tehran and the West on other regional issues such as the war in Syria.
Hadi al-Bahra, a senior member of the Turkey-based opposition umbrella group the Syrian National Coalition, said his alliance discussed Mr. Assad’s political fate with Russian officials for the first time in a meeting last month led by Russia’s Deputy Foreign Minister Mikhail Bogdanov. Ahmed Ramadan, another senior coalition member, also attended that meeting in the Turkish capital Ankara.
“We have been speaking with the Russians from the very beginning and we have not heard one word of criticism of Assad,” Mr. Ramadan said. “But now, the Russians are discussing the alternatives with us.”
In addition to the Syrian opposition, Mr. Assad’s regional adversaries such as Saudi Arabia and Turkey have argued his ouster is essential to resolve the Syrian conflict and halt the spread of Islamic State militants.
The Obama administration recently has pursued Russian cooperation on its goal of ousting the Assad regime based on intelligence assessments that the Syrian president is weakening. President Barack Obama spoke with Russian President Vladimir Putin on June 25 and July 15 on an array of issues including Syria.
An exchange in a meeting last month between Mr. Putin and Syrian Foreign MinisterWalid al-Moallem suggested Moscow’s patience with Damascus might be running thin.
According to an official Russian transcript carried on the Kremlin’s website, Mr. Putin pointed out the regime’s recent military setbacks and suggested Mr. Assad join forces with regional rivals Saudi Arabia and Turkey. Mr. Moallem said the idea was farfetched.
Russia has financial and political incentives to change course on backing Mr. Assad. The country has been politically isolated by Western sanctions. Lower oil prices and sanctions have taken a toll on the economy.
So, as the Assad regime weakens in the face of dwindling manpower and is forced to resort to a military recrutiment drive complete with billboards designed to shame men into taking up arms against the various armies competing to conquer Damascus, Russia has not only seen the writing on the wall, but may be prepared to finally cut Assad loose. As for what happens next, see here.
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Full Assad speech from Sunday
- Drivers, Beware: The Costly, Deadly Dangers Of Traffic Stops In The American Police State
Submitted by John Whitehead via The Rutherford Institute,
“The Fourth Amendment was designed to stand between us and arbitrary governmental authority. For all practical purposes, that shield has been shattered, leaving our liberty and personal integrity subject to the whim of every cop on the beat, trooper on the highway and jail official. The framers would be appalled.”—Herman Schwartz, The Nation
Trying to predict the outcome of any encounter with the police is a bit like playing Russian roulette: most of the time you will emerge relatively unscathed, although decidedly poorer and less secure about your rights, but there’s always the chance that an encounter will turn deadly.
The odds weren’t in Walter L. Scott’s favor. Reportedly pulled over for a broken taillight, Scott—unarmed—ran away from the police officer, who pursued and shot him from behind, first with a Taser, then with a gun. Scott was struck five times, “three times in the back, once in the upper buttocks and once in the ear — with at least one bullet entering his heart.”
Samuel Dubose, also unarmed, was pulled over for a missing front license plate. He was reportedly shot in the head after a brief struggle in which his car began rolling forward.
Levar Jones was stopped for a seatbelt offense, just as he was getting out of his car to enter a convenience store. Directed to show his license, Jones leaned into his car to get his wallet, only to be shot four times by the “fearful” officer. Jones was also unarmed.
Bobby Canipe was pulled over for having an expired registration. When the 70-year-old reached into the back of his truck for his walking cane, the officer fired several shots at him, hitting him once in the abdomen.
Dontrell Stevens was stopped “for not bicycling properly.” The officer pursuing him “thought the way Stephens rode his bike was suspicious. He thought the way Stephens got off his bike was suspicious.” Four seconds later, sheriff’s deputy Adams Lin shot Stephens four times as he pulled out a black object from his waistband. The object was his cell phone. Stephens was unarmed.
If there is any lesson to be learned from these “routine” traffic stops, it is that drivers should beware.
At a time when police can do no wrong—at least in the eyes of the courts, police unions and politicians dependent on their votes—and a “fear” for officer safety is used to justify all manner of police misconduct, “we the people” are at a severe disadvantage.
According to the Justice Department, the most common reason for a citizen to come into contact with the police is being a driver in a traffic stop. On average, one in 10 Americans gets pulled over by police. Black drivers are 31 percent more likely to be pulled over than white drivers, or about 23 percent more likely than Hispanic drivers. As the Washington Post concludes, “‘Driving while black’ is, indeed, a measurable phenomenon.”
As Sandra Bland learned the hard way, the reason for a traffic stop no longer matters. Bland, who was pulled over for allegedly failing to use her turn signal, was arrested after refusing to comply with the police officer’s order to extinguish her cigarette and exit her vehicle. The encounter escalated, with the officer threatening to “light” Bland up with his taser. Three days later, Bland was found dead in her jail cell.
“You’re doing all of this for a failure to signal?” Bland asked as she got out of her car, after having been yelled at and threatened repeatedly. Had she only known, drivers have been pulled over for far less. Indeed, police officers have been given free range to pull anyone over for a variety of reasons.
This approach to traffic stops (what I would call “blank check policing,” in which the police get to call all of the shots) has resulted in drivers being stopped for windows that are too heavily tinted, for driving too fast, driving too slow, failing to maintain speed, following too closely, improper lane changes, distracted driving, screeching a car’s tires, and leaving a parked car door open for too long.
Motorists can also be stopped by police for driving near a bar or on a road that has large amounts of drunk driving, driving a certain make of car (Mercedes, Grand Prix and Hummers are among the most ticketed vehicles), having anything dangling from the rearview mirror (air fresheners, handicap parking permits, troll transponders or rosaries), and displaying pro-police bumper stickers.
Incredibly, a federal appeals court actually ruled unanimously in 2014 that acne scars and driving with a stiff upright posture are reasonable grounds for being pulled over. More recently, the Fifth Circuit Court of Appeals ruled that driving a vehicle that has a couple air fresheners, rosaries and pro-police bumper stickers at 2 MPH over the speed limit is suspicious, meriting a traffic stop.
Unfortunately for drivers, not only have traffic stops become potentially deadly encounters, they have also turned into a profitable form of highway robbery for the police departments involved.
As The Washington Post reports, “traffic stops for minor infractions such as speeding or equipment violations are increasingly used as a pretext for officers to seize cash from drivers.” Relying on federal and state asset forfeiture laws, police set up “stings” on public roads that enable them to stop drivers for a variety of so-called “suspicious” behavior, search their vehicles and seize anything of value that could be suspected of being connected to criminal activity. Since 2001, police have seized $2.5 billion from people who were not charged with a crime and without a warrant being issued.
“In case after case,” notes The Washington Post, “highway interdictors appeared to follow a similar script. Police set up what amounted to rolling checkpoints on busy highways and pulled over motorists for minor violations, such as following too closely or improper signaling. They quickly issued warnings or tickets. They studied drivers for signs of nervousness, including pulsing carotid arteries, clenched jaws and perspiration. They also looked for supposed ‘indicators’ of criminal activity, which can include such things as trash on the floor of a vehicle, abundant energy drinks or air fresheners hanging from rearview mirrors.”
If you’re starting to feel somewhat overwhelmed, intimidated and fearful for your life and your property, you should be. Never before have “we the people” been so seemingly defenseless in the face of police misconduct, lacking advocates in the courts and in the legislatures.
So how do you survive a police encounter with your life and wallet intact?
The courts have already given police the green light to pull anyone over for a variety of reasons. In an 8-1 ruling in Heien v. North Carolina, the U.S. Supreme Court affirmed that police officers can pull someone over based on a “reasonable” but mistaken belief about the law.
Of course, what’s reasonable to agents of the police state may be completely unreasonable to the populace. Nevertheless, the moment those lights start flashing and that siren goes off, we’re all in the same boat: we must pull over.
However, it’s what happens after you’ve been pulled over that’s critical. Survival is the key.
Technically, you have the right to remain silent (beyond the basic requirement to identify yourself and show your registration). You have the right to refuse to have your vehicle searched. You have the right to film your interaction with police. You have the right to ask to leave. You also have the right to resist an unlawful order such as a police officer directing you to extinguish your cigarette, put away your phone or stop recording them.
However, as Bland learned the hard way, there is a price for asserting one’s rights. “Faced with an authority figure unwilling to de-escalate the situation, Bland refused to be bullied or intimidated,” writes Boston Globe contributor Renee Graham. “She understood her rights, but for African-Americans in encounters with police, the appalling price for asserting even the most basic rights can be their lives.”
So if you don’t want to get probed, poked, pinched, tasered, tackled, searched, seized, stripped, manhandled, arrested, shot, or killed, don’t say, do or even suggest anything that even hints of noncompliance when it comes to interactions with police.
One police officer advised that if you feel as if you’re being treated unfairly, comply anyhow and contest it in court later. Similarly, black parents, advising their kids on how to deal with police, tell them to just obey the officer’s orders. “The goal,” as one parent pointed out, “is to stay alive.”
It seems that “comply or die” has become the new maxim for the American police state.
Then again, not even compliance is a guarantee of safety anymore. “Police are specialists in violence,” warns Kristian Williams, who has written extensively on the phenomenon of police militarization and brutality. “They are armed, trained, and authorized to use force. With varying degrees of subtlety, this colors their every action. Like the possibility of arrest, the threat of violence is implicit in every police encounter. Violence, as well as the law, is what they represent.”
In other words, in the American police state, “we the people” are at the mercy of law enforcement officers who have almost absolute discretion to decide who is a threat, what constitutes resistance, and how harshly they can deal with the citizens they were appointed to “serve and protect.”
As I point out in my book Battlefield America: The War on the American People, this mindset that any challenge to police authority is a threat that needs to be “neutralized” is a dangerous one that is part of a greater nationwide trend that sets the police beyond the reach of the Fourth Amendment. Moreover, when police officers are allowed to operate under the assumption that their word is law and that there is no room for any form of disagreement or even question, that serves to chill the First Amendment’s assurances of free speech, free assembly and the right to petition the government for a redress of grievances.
Frankly, it doesn’t matter whether it’s a casual “show your ID” request on a boardwalk, a stop-and-frisk search on a city street, or a traffic stop for speeding or just to check your insurance. If you feel like you can’t walk away from a police encounter of your own volition—and more often than not you can’t, especially when you’re being confronted by someone armed to the hilt with all manner of militarized weaponry and gear—then for all intents and purposes, you’re under arrest from the moment a cop stops you.
Sad, isn’t it, how quickly we have gone from a nation of laws—where the least among us had just as much right to be treated with dignity and respect as the next person (in principle, at least)—to a nation of law enforcers (revenue collectors with weapons) who treat us all like suspects and criminals?
Clearly, the language of freedom is no longer the common tongue spoken by the citizenry and their government. With the government having shifted into a language of force, “we the people” have been reduced to suspects in a surveillance state, criminals in a police state, and enemy combatants in a military empire.
- Chinese Stocks Rise After Government Injects $100bn Into Sovereign (Rescue) Fund; Sell-off 'Blame' Shifts To Hong Kong
Despite the reassurances from western media and talking heads that China is unimportant (both its stock market and economy), Asian economies continue to show signs of contagion from China's slowdown as Thai exports weaken and Hong Kong trade tumbles. But it is the blame game that is top of mind tonight as Chinese regulators switch attention to Hong Kong brokers in their "investigation into malicious sellers." As SCMP's George Chen notes, first they blame a "foreign force," and now they blame Hong Kong, always careful not to blame themselves. After 3 down days, Chinese stocks look are opening slightly higher as there is little follow-through from yesterday's PPT rescue or today's panic-buying in US markets especilaly in light of an additional $100bn injection into the sovereign (rescue) fund.
Just throw another 100bn at it…
BREAKING: Chinese Gov injects US$100B to sovereign fund's direct investment subsidiary to buy assets abroad – Caixin pic.twitter.com/Y3OzOUfBEv
— George Chen (@george_chen) July 29, 2015
As a reminder, China closed on the weaker side overnight…
But it appears the PPT save overnight and extension through the US session is not helping China at the open…
- *CHINA'S CSI 300 STOCK-INDEX FUTURES LITTLE CHANGED AT 3,683
Update: Buying pressure arrived shortly after the open ..
- *CHINA'S CSI 300 INDEX SET TO OPEN UP 0.8% TO 3,839.96
- *CHINA SHANGHAI COMPOSITE SET TO OPEN UP 0.7% TO 3,689.82
Not exactly the follow-through they would have hoped for…
But here is the chart everyone is looking at…
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As SCMP's George Chen explains, blame continues to project outward…
Though as we saw yesterday,. any strength is being used by locals to sell (not short) into government strength as one farmer exclaimed – fighting back tears, "I have have ruined my entire family… I will nevere touch stocks again."
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Furthermore, while Western media continues to stress how unimportant Chinese stocks (and the Chinese economy now apparently) is to US stocks and the US economy… it is, as Gavekal Capital explains, crucially important and more evidence is building of a slowing Chinese economy permeating the rest of Asia…
Today’s edition of our diary of weak Asian economic stats focuses on the recently released trade and industrial production numbers out of Thailand and the trade numbers from Hong Kong. The Thai economy is feeling the pain of the Chinese slowdown acutely even in the most high level economic statistics.
Meanwhile the Hong Kong trade figures, which we view more as a proxy for Chinese trade given its intermediary port position connecting China with the rest of the world…
…paint the picture of the weakest trade by volume since 2013.
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But apart from that – everything is awesome judging by US equities.
- Ron Paul Slams Gen. Wesley Clark: Is He Kidding, Internment Camps?
Submitted by Ron Paul via The Ron Paul Institue for Peace & Prosperity,
Last week, Retired General Wesley Clark, who was NATO commander during the US bombing of Serbia, proposed that “disloyal Americans” be sent to internment camps for the “duration of the conflict.” Discussing the recent military base shootings in Chattanooga, TN, in which five US service members were killed, Clark recalled the internment of American citizens during World War II who were merely suspected of having Nazi sympathies. He said: “back then we didn’t say ‘that was freedom of speech,’ we put him in a camp.”
He called for the government to identify people most likely to be radicalized so we can “cut this off at the beginning.” That sounds like “pre-crime”!
Gen. Clark ran for president in 2004 and it’s probably a good thing he didn’t win considering what seems to be his disregard for the Constitution. Unfortunately in the current presidential race Donald Trump even one-upped Clark, stating recently that NSA whistleblower Edward Snowden is a traitor and should be treated like one, implying that the government should kill him.
These statements and others like them most likely reflect the frustration felt in Washington over a 15 year war on terror where there has been no victory and where we actually seem worse off than when we started. The real problem is they will argue and bicker over changing tactics but their interventionist strategy remains the same.
Retired Army Gen. Mike Flynn, who was head of the Defense Intelligence Agency during the US wars in Afghanistan and Iraq, told al-Jazeera this week that US drones create more terrorists than they kill. He said: “The more weapons we give, the more bombs we drop, that just … fuels the conflict.”
Still Washington pursues the same strategy while expecting different results.
It is probably almost inevitable that the warhawks will turn their anger inward, toward Americans who are sick of the endless and costly wars. The US loss of the Vietnam war is still blamed by many on the protesters at home rather than on the foolishness of the war based on a lie in the first place.
Let’s hope these threats from Clark and Trump are not a trial balloon leading to a clampdown on our liberties. There are a few reasons we should be concerned. Last week the US House passed a bill that would allow the Secretary of State to unilaterally cancel an American citizen’s passport if he determines that person has “aided” or “abetted” a terrorist organization. And as of this writing, the Senate is debating a highway funding bill that would allow the Secretary of State to cancel the passport of any American who owes too much money to the IRS.
Canceling a passport means removing the right to travel, which is a kind of virtual internment camp. The person would find his movements restricted, either being prevented from leaving or entering the United States. Neither of these measures involves any due process or possibility of appeal, and the government’s evidence supporting the action can be kept secret.
We should demand an end to these foolish wars that even the experts admit are making matters worse. Of course we need a strong defense, but we should not provoke the hatred of others through drones, bombs, or pushing regime change overseas. And we must protect our civil liberties here at home from government elites who increasingly view us as the enemy.
- Trump Is "The Best Thing To Happen To Politics In A Long Time," Mark Cuban Says
Make no mistake, Donald Trump has made an enormous splash in the early days of the race for the GOP Presidential nomination.
Need proof? You could check out the polls…
..or just have a look at the cover of the latest New Yorker…
…or simply tune in to the nightly news where you’re sure to hear the latest sound bite from the incorrigible billionaire, whose main advantage may be that he is simply “gaffe proof“, which would explain why a series of statements which would have likely amounted to political suicide for anyone else, have only served to boost his popularity.
In any event, it appears as though Trump can now count on the support of a fellow billionaire because as The Hill reports, Mark Cuban now says “The Donald” is “the best thing to happen to politics in a long time.” Here’s more from Cuban:
Up until Trump announced his candidacy the conventional wisdom was that you had to be a professional politician in order to run. You had to have a background that was politically scrubbed. In other words, smart people who didn’t live perfect lives could never run. Smart people who didn’t want their families put under the media spotlight wouldn’t run. The Donald is changing all of that. He has changed the game and for that he deserves a lot of credit.
And here’s Trump’s response:
Thank you @mcuban for your nice words. I am rapidly becoming a @dallasmavs fan!
https://t.co/sLXkCh9qfg— Donald J. Trump (@realDonaldTrump) July 28, 2015
And just to prove that this is truly a man for whom the traditional rules of politics absolutely do not apply, we’ll close with the following two tweets:
A nation WITHOUT BORDERS is not a nation at all. We must have a wall. The rule of law matters. Jeb just doesn’t get it.
— Donald J. Trump (@realDonaldTrump) July 28, 2015
.@realDonaldTrump leads w/ Hispanics. Huckabee & Christie – who supported in-state tuition 4 illegals -scrape bottom. http://t.co/9TofdCJLPz
— Ann Coulter (@AnnCoulter) July 28, 2015
- The True Minimum Wage Is $0 Per Hour
Submitted by Jeffrey Snider via Alhambra Investment Partners,
The minimum wage is not what is commonly referred, as is being proven again as parts of the US experiment directly with this boundary. In New York, fast food workers have been given a $15 per hour minimum wage which is being celebrated by the same fast food workers who will bear the brunt of the experimentation. Some of them will be happy with the results, but there will be clear losers – the full wrath of redistribution is usually unseen which is why it persists.
Twitter had been having fun on the other side of the country with a similar minimum wage diktat, as the University of California system mandates also a $15 per hour rate. Professors, who overwhelmingly lean in a favorable direction, are being shown this mathematical reductionism up close. One physics professor who in one tweet reiterated his support took the next to realize the logic of it.
Napolitano raises University of California minimum hourly wage to $15. It's a good thing but I cannot pay $15 to my undergrad researchers!
— Asantha Cooray (@acooray) July 22, 2015
I now pay six undergrads/year starting at $9-$10/hour with raises maxing out around $13 as seniors. At $15 it'll be 3-4 students.
— Asantha Cooray (@acooray) July 22, 2015
He currently pays $9-$10 per hour for six undergrad assistants now, but in order to conform to the new “minimum wage” command he will only be able to afford four, maybe three. In other words, the true minimum wage is $0 per hour.
To think it is any different for a fastfood restaurant is naïve. Business owners paying their workers more by arbitrary government setting will not bring in offsetting revenue (a very close microcosm of all that belies “aggregate demand”). The cost of the law will be felt by fewer hours being worked, leading to rationing of the business operations (checkouts and those cooking in the back, meaning longer wait times and worse service) and, where possible, rising prices. None of this is surprising or especially insightful.
And yet in 2015, six years into recovery, there is still a huge and heavy undercurrent of discontent that breaks out into this kind of nonsensical “solution.” There has been a resurgent trend toward Marxism already (dating back to Occupy Wall Street that survived in sentiment beyond that pitiful outbreak) that flares up here and there with the next great Marx replica (Picketty being the last, global vestige). In a real recovery, none of this counterproductive meandering would stand a chance. If the labor market were growing as it should, in sharp contrast to how it has been presented over the past year, minimum wage laws would be the furthest from the mainstream.
The same goes with the sudden outbreak of robot envy/fear. In the case of fastfood workers, they may find themselves actually staring into that reality as beyond the short-term automated technology may be more cost-effective, and productive, than unskilled at $15. But by and large, in the overall economy, this raging tinge of disgruntlement about technology and jobs is of the same deficient impulse. In a truly functioning economy robots are quite welcome. Instead, what we have now, and have had for a decade and a half or more, gives way to this:
The bleakest news involves manufacturing and service jobs. He reports that Foxconn, the primary maker of Apple products, plans to deploy up to 1 million robots in its factories. A chief Nike executive, meanwhile, thinks the solution to rising wages in Indonesia is “engineering the labor out of the product.” This would not only be more affordable, it might also silence criticism about horrendous working conditions in international factories that make beloved American products. Self-checkout aisles at the grocery store, Redbox movie rental kiosks, and touchscreen ordering at restaurants are all examples of the same trend.
For those who claim that these changes simply move jobs from one sector of the economy to another, Ford points to statistics. Blockbuster once employed roughly 60,000 employees nationally. Redbox, in the entire Chicago area, has a staff of seven. A comparison between Google and General Motors is another instructive example. After adjusting for inflation, General Motors earned a profit of around $11 billion in 1979, when it employed 840,000 workers. Google, in 2012, earned almost $14 billion and employed fewer than 38,000 people. He offers many other examples suggesting that not every job lost in one area is gained in another.
The relevant comparison is not GM to Google but rather GM to first Japan and then China, with all of Google, Silicon Valley and the like added to Wall Street and its legions of mathematicians, accountants, lawyers and offshoot day traders and house flippers (along with the burger flippers, bartenders and hospitality workers “serving” asset inflation) to pick up the “slack.” Monetary redistribution is entirely the problem, not shipping off low wage jobs overseas (and getting lower price products in return) and having the government artificially price the entirety of the bottom rungs.
Innovation is the spur to all of it, so long as it doesn’t become entangled in exactly these kinds of socialist misdirections. In other words, the fear of robots is somewhat justified right now but only because innovation has run aground in the decades since financialism re-charted the overall economic course. The last time machines were “taking jobs” in such huge numbers it worked out very well not just for Americans but the rest of the world. There was once background fear of tractors as farming industrialized and reconstituted the entire workforce.
In 1820, out of the estimated 2.88 million American workers, 2.07 million (72%) were farm workers. By 1880, non-farm workers outnumbered those in agriculture; in 1910, the number of farm workers in the US peaked in absolute numbers, amounting to then just less than a third of all labor; today, very few are employed in agriculture. Innovation through industrialization absorbed labor into new and once “impossible” endeavors, industry and products that were prior scarcely believed realistic and certainly beyond the reach of all but the richest. True economic growth, labor specialization as its core, should be welcomed even though it is highly messy and dynamic. The general upheaval is, over time, unquestionably received in higher living standards for everyone.
The fear today should not be ATM’s removing tellers from bank branches, just as there are no more elevator operators working in moving cages amongst the nation’s taller buildings. The anxiety now is instead really about the serious lack of innovation that suddenly appeared right around the time hard money, and thus financial restraint, was banished so that various control elements could endeavor upon their utopian ideals of redistribution.
In other words, across now more than a century of monetary recalculations, the object remains the same – to become what Marx called that “third party”, to be the wielder of a mathematical code that will break the conventions of the past and lead to a more or even most perfect economic existence. The problem, universally, is that value is not just some convention to be deciphered, it is essential and immutable. Monetarists have believed that money was that object, pliable and a perfect substitute across ages, but money is just the expression of a much deeper ethos, a physical stand-in for the dimension of value. Political socialism is to transform individuals into a cohesive singular entity; monetary socialism is to do the same, centered always on redefining value. We live today not with free market capitalism, or even a functioning eurodollar standard anymore, but what looks very much like the inevitable end of the third age of socialist monetary experimentation. Value, beaten, battered and bastardized, so far survives.
Each of these ages of socialist economic direction has pressed further and further into the economic foundation. Where once an entire system of economy was redistributed by market forces into global modernism, we now live in communal fear of every form of job being “taken” toward even the slightest difference (what would have been slight hyperbole just a few years ago isn’t so much now). Perhaps the greatest rebuttal of these socialist ages is that now workers cling to mostly stasis of every kind (fastfood jobs are now as careers?), as job and labor opportunities are almost ancient concepts applied only to past remembrances of what it all used to be like (especially among the millennials; how must the economy look to all those stuck in school, endeavoring as college-educated baristas and living at home with mom and dad until after 30). There is no economic confidence because there has been no reason for it; the more that this is planned out by these kinds of intrusions into economic inner-workings the farther away from the utopian agenda (but not the totalitarian offshoot) we “progress.”
The economy has shrunk and with it the means to be hopeful about what should be natural – opportunity. Robots are not the problem, per se, and the minimum wage will always be zero; it is this “secular stagnation” of serial asset bubbles that have robbed the economy of its organic and natural vitality and spreadable vigor. Fix the obvious incongruity, monetarism most especially, of redistribution by government directive and economic growth will engulf and subsume what is really unnatural economic angst expressed in all these various and quickening counterproductive “solutions.”
Some disquiet about the uneven progress of market beneficence has always been present, but what is unique about especially the past six to eight years is its pervasiveness and persistence. In other words, there will always be some that fear dynamism because, again, the widespread benefits aren’t readily apparent right away; but when so many are convinced in the opposite something is very, very wrong. The first step is to stop making the economy shrink and let opportunity, real opportunity not linked to asset market gambling and the fake recovery efforts, again take hold.
- Caught On Tape: The Moment Diver Discovers $1 Million In Gold From 300-Year-Old Spanish Shipwreck
Following the latest mass media assault on gold, capped with such trollbait pearls as “Gold is doomed” or the classic “Let’s Be Honest About Gold: It’s a Pet Rock” by the inimitable Jason Zweig (imitable perhaps only by the September 2011 version of Jason Zweig when, days after gold hit its all time high just shy of $2000, he famously said “Is Gold Cheap? Who Knows? But Gold-Mining Stocks Are“… since then gold-mining stocks are down 80%) we were more shocked that someone would actually bother to look for the worthless pet rocks (of which China allegedly just bought 600 tons) than actually finding them during a random dive in the sea.
Which is precisely what happened.
For several weeks the Schmitt family had a million-dollar secret on their hands. Last month, it recovered $1 million worth of sunken Spanish coins and jewels off the Florida coast.
The Schmitts are subcontractors to 1715 Fleet-Queens Jewels LLC which since 2010 has the salvaging rights to a fleet of Spanish ships, aka the “1715 Fleet“, that wrecked off the Florida coast some 300 years ago. While $50 million has been pulled in from the fleet’s resting place so far, this is so far the biggest single haul.
“One of the most amazing recoveries in 1715 Fleet History. Congratulations to the entire Schmitt family and the crew of the Aarrr Booty,” said 1715 Fleet on its Facebook page Monday.
Some more details from the Fleet Society’s website: “Gold and silver in great quantity was homeward bound to Philip V when a hurricane destroyed his fleet along Florida’s coast. Some recovery in the aftermath still left much to be recovered beginning in the 1960’s and ongoing to this day.”
“The treasure was actually found a month ago,” said Brent Brisben of 1715 Fleet-Queens Jewels LLC. Keeping the news under wraps was “particularly hard for the family that found it. They’ve been beside themselves.”
The timing of 1715 Fleet’s announcement coincides with the 300th anniversary of the Spanish treasure fleet’s shipwrecks off the coast of Florida.
Among the precious items recovered:
- 51 gold coins
- 40 feet of ornate gold chain
- A single coin called a Royal made for the king of Spain, Phillip V. Only a few are known to exist, and the coin — nicknamed “Tricentennial Royal” — is dated 1715. Brisben said the extremely rare silver-dollar-sized coin is worth “probably around half a million dollars itself.”
Queens Jewels owner Brent Brisben told the Daily News this discovery is of the biggest single hauls taken from the ship.
Or, as the WSJ would call it, a whole bunch of pet rocks.
Brisben gives 20% of everything found to the state of Florida and then splits the remaining treasure equally with the contractor that finds it. Brisben said he and his family will keep everything they have and save it for a special collection for the public.
It’s believed there is still $400 million worth of treasure located below, he said.
As the WSJ’s sister publication, MarketWatch adds, “the discovery comes almost 300 years to the day that the fleet wrecked. As for the history, the ships were sent to America to fetch gold and silver and under pressure to get back quickly, as the Spanish crown needed to replenish its coffers to finance wars. Sailing from Havana, Cuba on July 24, 1715, the ships crashed during a hurricane a week later near present-day Vero Beach, Fla. The Spaniards returned a few times, salvaging a great chunk of that treasure.”
Three hundreds years later wars are financed by long strings of 1s and 0s, backed by the full faith of a government whose total unfunded obligations amount to over 5x the total amount of goods and services produced by said government.
Back to the discovery, whose key components are shown below.
Fifty-one gold coins and 40 feet of gold chains were found from a Spanish ship of the 1715 Fleet
The total value of the haul is more than $1 million.
About $50 million worth of treasure has been discovered since the 1960s.
* * *
But the biggest drama was the actual moment when Schmitt discovered the gold, captured conveniently in the video below.
- Today's Anti-Capitalists Ignore The Fundamental Problems Of Socialism
- The Rise Of The Yuan Continues: LME To Accept Renminbi As Collateral
As far-fetched as the notion may be to those who are wedded – by choice, by misguided beliefs, or by virtue of being completely beholden to the perpetuation of the status quo – to idea that the dollar will forever retain its status as the world’s reserve currency, the yuan is set to play a critical role in global finance, investment, and trade going forward.
We’ve long argued that the BRICS bank, the AIIB, and to an even greater extent, the Silk Road Fund, will help to usher in a new era of yuan hegemony in international investment and trade. A number of recent developments support this, including Beijing’s push for the renminbi to play an outsized role in loans doled out through the AIIB, the denomination of loans from the BRICS bank in yuan, and China’s aggressive investment in Pakistan and Brazil via the Silk Road initiative (here and here).
As for financial markets, China recently confirmed the impending launch of a yuan denominated gold fix which conveniently dovetailed with the LBMA’s acceptance of the first Chinese banks to participate in the twice-daily auction that determines London gold prices.
Now, in the latest sign of yuan proliferation and penetration, the renminbi will be accepted as collateral by the LME along with the dollar, the euro, the pound, and the yen.
Here’s WSJ with more:
China’s domestic stock market may be in turmoil but the country’s currency, known as the yuan or renminbi, is making a seemingly relentless push deeper into the global financial system.
The latest step: the London Metal Exchange, the world’s largest venue for trading metals where $15 trillion of metals was traded last year, is set to accept yuan as collateral for banks and brokers that trade on its platform.
The Chinese currency joins the U.S. dollar, the euro, the British pound and Japan’s yen, which are all currently permissible as collateral on the LME’s platform.
“In the commodities area, it makes absolute sense to start providing renminbi-denominated services,” said Trevor Spanner, chief executive of the LME’s clearing house business. “The renminbi is on its way to becoming one of the world’s most widely used currencies” he said.
While largely a technical change, the LME move marks another milestone for China’s currency.
The yuan is now the fifth most used currency for international payments, ranking number seven a year ago, according to data from the Society for Worldwide Interbank Financial Telecommunication, a provider of payments services.
A Bank of England survey on Monday showed that trading in yuan rose 25% in London in the six months to April this year, even as trading volumes in other currencies fell by 8% on average over the same period.
The takeaway: irrespective of any damage China’s recent interventions into its domestic equity markets may have on the country’s SDR push, and regardless of whether the PBoC cash injection into CSF spooks the market and serves to accelerate short-term capital outflows, the internationalization of the yuan isn’t likely to be meaningfully derailed.
We’ll leave you with the following quote from Dan Marcus, CEO of London-based currency trading platform ParFX who spoke to WSJ:
“The rise of China’s currency on global markets is arguably the most significant development in currency trading since the introduction of the euro in 1999.”
- There May Be Hope For The U.S. Yet: Caitlyn Jenner's Reality Show "No Ratings Bonanza"
While (hopefully) not high on the agenda of readers more interested in what Janet Yellen will say tomorrow (and thus leak today) one of the more anticipated media events of recent days was Caitlyn Jenner’s new reality TV show “I am Cait” which premiered last night on E! and which supposedly chronicles former Bruce Jenner’s adjustment to life as a woman and transgender spokesperson.
And while many were expecting blowout numbers from an America addicted to brain candy and passive-aggressive exhibitionism, the results were enough to inspire confidence that there may be some hope yet left for the United States.
On one hand, TVline reports that “I Am Cait” topped Sunday cable rating with 2.7 million total viewers and a 1.2 demo rating – on par with Keeping Up With the Kardashians‘ most recent season premiere and leading the night in the demo (tying Adult Swim’s 11 pm Family Guy rerun).
On the other, according to Reuters, despite its impressive Sunday-night cable topping viewership, the number of people who tuned in was a vast drop from the 17 million people who watched the former Olympic champion come out as a transgender woman in an April TV interview.
It adds that “the first episode was no ratings bonanza. According to Nielsen data, almost three times as many Americans watched “Celebrity Family Feud” on ABC that night. The audience for “I am Cait” also suffered a marked drop from the almost 8 million people who watched the ESPY awards show on television two weeks ago on which Jenner, 65, was presented the Arthur Ashe courage award.”
Not surprisingly, according to Nielsen Talent Analytics, which surveys about 1,000 Americans on a weekly basis, Jenner’s transition has not been universally welcomed, especially among older Americans. Then again using shock value to further a (well paid) personal agenda is nothing new: Donald Trump is currently using it with great effect and crushing the presidential primary field where nobody is quite sure how to respond to what some have said is the biggest trolling of the country by a presidential candidate in history. Which considering how broken the left-right political model is, may have come just on time to force America to re-evaluate just how applicable a “representative” political model that mainly panders to corporations and bankers actually is.
And back to Bruce, pardon Cait, her “offensiveness” rating has gone from 16 percent to 26 percent since the initial coming-out interview in April, according to Nielsen, although those under 34 years old were more likely to consider Jenner successful (38 percent to 42 percent) and a role model (13 percent to 19 percent) now than a year ago.
So maybe not hope for all, but some hope still.
But don’t cry for Bruce: his show is sure to eventually become a monetary goldmine rivaling that other exercise in celebrity trolling, “Keeping Up With the Kardashians.” According to Business Insider, a 30 second ad spot in the premiere cost between $90,000 and $200,000, approaching the $344,000 which category killer “Big Bang Theory” charges for 30 seconds of its ad time.
This means that Caitlyn’s take home from each episode is certainly in the hundreds of thousands of dollars, if not higher.
- 3-Year-Old London Child Deemed "Extremist"; Placed In Government Reeducation Program
Submitted by Mike Krieger via Liberty Blitzkrieg blog,
The United Kingdom has gone batshit crazy. There’s simply no other way to put it. I warned about Britain’s “war on toddler terrorists” earlier this year in the post: The War on Toddler Terrorists – Britain Wants to Force Nursery School Teachers to Identify “Extremist” Children. Here’s an excerpt:
Nursery school staff and registered childminders must report toddlers at risk of becoming terrorists, under counter-terrorism measures proposed by the Government.
The directive is contained in a 39-page consultation document issued by the Home Office in a bid to bolster its Prevent anti-terrorism plan.
The document accompanies the Counter-Terrorism and Security Bill, currently before parliament. It identifies nurseries and early years childcare providers, along with schools and universities, as having a duty “to prevent people being drawn into terrorism”.
Never fear good citizens of Great Britain. While your government actively does everything in its power to protect criminal financial oligarchs and powerful pedophiles, her majesty draws the line at toddler thought crime. We learn from the Independent:
A three-year-old child from London is one of hundreds of young people in the capital who have been tipped as potential future radicals and extremists.
As reported by the Evening Standard, 1,069 people have been put in the government’s anti-extremism ‘Channel’ process, the de-radicalization program at the heart of the Government’s ‘Prevent’ strategy.
The three-year-old in the program is from the borough of Tower Hamlets, and was a member of a family group that had been showing suspect behavior.
Since September 2014, 400 under 18s, including teenagers and children, have been referred to the scheme.
The fact that this story broke on the same day that chairman of the UK’s Lords Privileges and Conduct Committee, Lord John Sewel, was caught on video snorting cocaine off the breast of a prostitute with a £5 note, is simply priceless. You just can’t make this stuff up.
From the BBC:
Lord Sewel is facing a police inquiry after quitting as House of Lords deputy speaker over a video allegedly showing him taking drugs with prostitutes.
The footage showed him snorting powder from a woman’s breasts with a £5 note.
In the footage, Lord Sewel, who is married, also discusses the Lords’ allowances system.
As chairman of committees, the crossbench peer also chaired the privileges and conduct committee, and was responsible for enforcing standards in the Lords.
Lord Sewel served as a minister in the Scotland office under Tony Blair’s Labour government.
Tony Blair, why am I not surprised:
He has been a member of the Lords since 1996, and is a former senior vice principal of the University of Aberdeen.
Here’s a clip, in the event you’re interested:
The UK government is so far gone that it insists on protecting the public from toddlers, rather than protecting toddlers from powerful sexual predators. In case you need a reminder:
In Great Britain, Powerful Pedophiles are Seemingly Everywhere and Totally Above the Law
In Great Britain, Protecting Pedophile Politicians is a Matter of “National Security”
Former BBC Host “Sir” Jimmy Savile Exposed as Major Player in Massive Pedophile Ring
- Could Trump Win?
Submitted by Patrick Buchanan via Buchanan.org,
The American political class has failed the country, and should be fired. That is the clearest message from the summer surge of Bernie Sanders and the remarkable rise of Donald Trump.
Sanders’ candidacy can trace it roots back to the 19th-century populist party of Mary Elizabeth Lease who declaimed:
“Wall Street owns the country. It is no longer a government of the people, by the people, and for the people, but a government of Wall Street, by Wall Street, and for Wall Street. The great common people of this country are slaves, and monopoly is the master.”
“Raise less corn and more hell!” Mary admonished the farmers of Kansas.
William Jennings Bryan captured the Democratic nomination in 1896 by denouncing the gold standard beloved of the hard money men of his day: “You shall not press down upon the brow of labor this crown of thorns, you shall not crucify mankind upon a cross of gold.”
Sanders is in that tradition, if not in that league as an orator. His followers, largely white, $50,000-a-year folks with college degrees, call to mind more the followers of George McGovern than Jennings Bryan.
Yet the stagnation of workers’ wages as the billionaire boys club admits new members, and the hemorrhaging of U.S. jobs under trade deals done for the Davos-Doha crowd, has created a blazing issue of economic inequality that propels the Sanders campaign.
Between his issues and Trump’s there is overlap. Both denounce the trade deals that deindustrialized America and shipped millions of jobs off to Mexico, Asia and China. But Trump has connected to an even more powerful current.
That is the issue of uncontrolled and illegal immigration, the sense America’s borders are undefended, that untold millions of lawbreakers are in our country, and more are coming. While most come to work, they are taking American jobs and consuming tax dollars, and too many come to rob, rape, murder and make a living selling drugs.
Moreover, the politicians who have talked about this for decades are a pack of phonies who have done little to secure the border.
Trump boasts that he will get the job done, as he gets done all other jobs he has undertaken. And his poll ratings are one measure of how far out of touch the Republican establishment is with the Republican heartland.
When Trump ridicules his rivals as Lilliputians and mocks the celebrity media, the Republican base cheers and laughs with him.
He is boastful, brash, defiant, unapologetic, loves campaigning, and is putting on a great show with his Trump planes and 100-foot-long stretch limos. “Every man a king but no man wears a crown,” said Huey Long. “I’m gonna make America great again,” says Donald.
Compared to Trump, all the other candidates, including Hillary Clinton and Jeb Bush, are boring. He makes politics entertaining, fun.
Trump also benefits from the perception that his rivals and the press want him out of the race and are desperately seizing upon any gaffe to drive him out. The piling on, the abandonment of Trump by the corporate elite, may have cost him a lot of money. But it also brought him support he would not otherwise have had.
For no group of Americans has been called more names than the base of the GOP. The attacks that caused the establishment to wash its hands of Trump as an embarrassment brought the base to his defense.
But can Trump win?
If his poll numbers hold, Trump will be there six months from now when the Sweet 16 is cut to the Final Four, and he will likely be in the finals. For if Trump is running at 18 or 20 percent nationally then, among Republicans, it is hard to see how two rivals beat him.
For Trump not to be in the hunt as the New Hampshire primary opens, his campaign will have to implode, as Gary Hart’s did in 1987, and Bill Clinton’s almost did in 1992.
Thus, in the next six months, Trump will have to commit some truly egregious blunder that costs him his present following. Or the dirt divers of the media and “oppo research” arms of the other campaigns will have to come up with some high-yield IEDs.
Presidential primaries are minefields for the incautious, and Trump is not a cautious man. And it is difficult to see how, in a two-man race against the favorite of the Republican establishment, he could win enough primaries, caucuses and delegates to capture 50 percent of the convention votes.
For almost all of the candidates who will have dropped out by then will have endorsed the last man standing against Trump. And should Trump be nominated, his candidacy would make Barry Goldwater look like the great uniter of the GOP.
Still, who expected Donald Trump to be in the catbird seat in the GOP nomination run before the first presidential debate? And even his TV antagonists cannot deny he has been great for ratings.
- Twitter Surges, Then Fades After Hours On User Growth Confusion: The Full Quarter In 6 Charts
- *TWTR’S NOTO: THIS IS BOTH A PRODUCT ISSUE AND A MARKETING ISSUE
- *TWTR: DOESNT SEE SUSTAINED GROWTH IN MAUS UNTIL REACH MASS MKT
With many expecting Twitter to disappoint yet again after several quarters in which the company’s stock had a step-down reaction to earnings, moments ago TWTR beat virtually all-non-GAAP estimates, from revenue, to EPS, to EBITDA:
- TWITTER 2Q REV. $502.4M, EST. $481.9M
- TWITTER INC 2Q ADJ. EPS 7C, EST. 4C
- TWITTER 2Q ADJ. EBITDA $120M, EST. $103.3M
More importantly, everyone was focusing on user growth which on a headline basis was not bad…
- TWITTER 2Q AVG. MAUS 316M INCL SMS FAST FOLLOWERS,VS 308M IN 1Q
However, just like on previous quarters, TWTR decided to use a gimmick when counting users, to wit:
“Average Monthly Active Users (MAUs) were 316 million for the second quarter, up 15% year-over-year, and compared to 308 million in the previous quarter. The vast majority of MAUs added in the quarter on a sequential basis came from SMS Fast Followers. Excluding SMS Fast Followers, MAUs were 304 million for the second quarter, up 12% year-over-year, and compared to 302 million in the previous quarter.”
It took algos a few minutes to digest this fact, and as a result what was initially a solid 10% spike after hours, fizzled almost entirely, and as of this moment the stock had cut its after hours gains notably.
Going back to the quarter, the non-GAAP numbers were generally not bad as follows.
But are they good enough to justify a $25 billion market cap, especially when one remembers that virtually all the “profit” is in solidly in the non-GAAP arena.
- American Enterprise in a Nutshell
- 'Investors' Panic-Buy Stocks After Confidence Collapse Sparks Biggest Short-Squeeze In 6 Months
China closes weak… Europe weak… US Consumer Confidence collapses… Energy credit risk increases dramatically… and stocks rip led by Energy in yet another epic short squeeze…
We can't help but think this happens…
It seems some think China was up last night… sure it was up off the lows… but is this really the backbone of a face-ripping rally in US Stocks…?
And Japanese stocks hit a 2-week low…
US Stocks traded weaker into the open… but once Consumer Confidence collapsed, Energy stocks went into full short squeeze mode and exploded everything higher…
With cash indices all soaring…
Getting everything back to green from Friday briefly… before Nasdaq and Small Caps faded back…and then a final ramp to get Nasdaq green on the week!
As the big triple short squeeze hit…
This was the biggest short squeeze in 6 months
Much was made of the ramp in Energy stocks… best day for Energy sector since Dec 2014…
Well we've seen this before… BTFD once, shame on me… Energy Credit ain't buying it…
And neither is WTI Crude!!!
Yet another breadth indicator flashes red…
Treasury yields rose on the day but rallied after the weak confidence data…
The USDollar closed higher but once again flipped its regime at the EU close…
Commodities all rose on the day with Copper and Crude popping most…
WTI Crude tested a $46 handle overnight before its mini melt-up ahead of API tonight…
Charts: Bloomberg
Bonus Chart: No Corrections Allowed…
Here are all the pullbacks in the $SPX since 1928. Been awhile without a 10% correction, but it can go longer. $SPY pic.twitter.com/00klDVOVrJ
— Ryan Detrick, CMT (@RyanDetrick) July 28, 2015
Bonus Bonus Chart: The Collapse in Confidence Is Not Good News…
Bonus Bonus Bonus Chart: You Are Here…
- China and Greece Signal a New Round of Deflation
Stocks rallied today because the Fed meets today and tomorrow and traders are conditioned to play for a rally into Fed meetings. Also, stocks had fallen for four days straight prior to this and so we were oversold in the near-term.
The larger picture concerns the bursting of China’s stock bubble as well as the ongoing 3rd Greek bailout drama.
Regarding China, anyone who actually bothered performing real analysis could have seen that the economic data coming out of that country was totally bogus. Indeed, back in 2007, current First Vice Premiere of China, Li Keqiang, admitted to the US ambassador to China that ALL Chinese data, outside of electricity consumption, railroad cargo, and bank lending is for “reference only.”
With that in mind, China’s rail volumes had been collapsing at a pace not seen since the Asia Financial Crisis!
Despite this, 99% of analysts believed China’s GDP was growing at 7%+. Those people piled into Chinese stocks and commodities… and they’ve since been eviscerated as the Chinese stock bubble burst and commodity prices plunged to 13-year lows.
China has been the largest driver of global economic growth since 2009. With that country flirting with outright deflation, it's only a matter of time before global GDP tanks.
As for Greece… the negotiations regarding a third bailout have officially begun. However, things have grown more complicated as former Greek Finance Minister Yanis Varoufakis revealed that Greece had a “Plan B” in place that would allow it to switch from the Euro to the Drachma “at the flip of a switch.”
Germany was already fed up with Greece’s debt problems before this. Now that it’s clear Greece is ready to pull the nuclear option and leave the Euro, Germany’s economic council has backed a plan to kick out “uncooperative” Eurozone members.
When both sides in a negotiation begin to believe that not agreeing is the best solution, it’s only a matter of time before things break down in a serious fashion. This is why for many investment banks, a Grexit remains the “base case” scenario for this situation.
At the end of the day, both China and Greece are signaling that a new round of deflation has begun in the markets. Stocks are bouncing today, but a tectonic shift has begun.
It is now clear that Central Banks have lost control of some markets… and this loss of control will be spreading in the coming months, culminating in a market Crash that will make 2008 look like a picnic.
If you've yet to take action to prepare for this, we offer a FREE investment report called the Financial Crisis "Round Two" Survival Guide that outlines simple, easy to follow strategies you can use to not only protect your portfolio from it, but actually produce profits.
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Best Regards
Phoenix Capital Research
- Why Your Portfolio Does Not Perform Like The Indices (In 1 Simple Chart)
The average S&P 500 stock is no longer keeping pace with the market’s moves… as breadth becomes focused on a shrinking pool of FOMO stocks.
Just add this to the list of charts that are flashing bright red “it’s over” signals…
- Greece's Biggest Mistake Explained (In 1 Cartoon)
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