Today’s News May 19, 2015

• SocGen Bosses Knew 'Rogue Trader' Kerviel Was Taking Massive Risks

  Bosses at French banking giant Societe Generale were aware of the activities of "rogue trader" Jerome Kerviel, a top detective working on the case reportedly told an investigating judge, according to France24. The French investigative news website, Mediapart, quoted Nathalie Le Roy as telling judge Roger Le Loire she was "certain" that Kerviel's superiors "could not have been unaware" he was taking wildly risky bets on derivatives. However, as Bloomberg reports, SocGen, in a statement released on Monday, that several judicial decisions have assigned exclusive criminal responsibility to Kerviel, adding "it’s just the opinion of a person and not based on the discovery of new documents."

   

  

   

  Having been hung out to dry by his bank after Jerome Kerviel allegedly brought Societe Generale to its knees in 2008 with losses of nearly five billion euros ($5.7 billion) from unwinding his trades of up to 50 billion euros ($57 billion). As we explained previously, something did not add up abiout his single-handed scapegoating…

  From 2005 through 2007, Kerviel made increasingly large trades, and as his profits rose, he became more confident. It was “intoxicating,” he said. At the end of every day, his direct supervisor came by and asked how much he’d made and encouraged him. And the hierarchy set his ever growing objectives based on profits from the prior year. In 2007, he made €55 million for the bank, which became the basis for his 2008 objective. He was so successful that the hierarchy suggested in an email that the bank “adopt the system Kerviel.”

   

  In the trading room of about 100 traders, word of the magnitude and profits of his positions “circulated.” Société Générale traders in Asia called Kerviel the “fat one” (le gros) because of his positions. His boss in the trading room knew that he was risking up to €50 billion; emails between his supervisors and “control services” have emerged that discussed his outsized trades—one of them for €17 billion. But none of this was accepted by the court. “Incomprehensible,” Kerviel groaned.

   

  On the plaintiff’s side, it was the opposite. Its “witnesses came and lied,” Koubbi said; and when challenged, the judge said that plaintiff’s witnesses had “a right to lie.” When Koubbi asked one of Kerviel’s supervisors what he knew about his trades, he replied: “I cannot answer that question because if I answered that question, I’d have to pay back the money I already received.” He’d signed a contract with the bank that prevented him from talking about the case. And the judge let it go.

  And now, as France24 reports, bosses at French banking giant Societe Generale were aware of the activities of "rogue trader" Jerome Kerviel, a top detective working on the case reportedly told an investigating judge, according to Mediapart.

  The French investigative news website quoted Nathalie Le Roy as telling judge Roger Le Loire she was "certain" that Kerviel's superiors "could not have been unaware" he was taking wildly risky bets on derivatives.

   

  …

   

  "From different hearings and different documents that I've seen, I had the feeling, then I was certain, that Jerome Kerviel's bosses could not be unaware of the positions he was taking," Mediapart cited Le Roy as saying during her hearing.

   

  She cited interviews she herself had carried out with an employee in the operational risk department of Societe Generale, who told her that "Jerome Kerviel's activities were known."

  Societe Generale said in a statement it was "surprised" by the report.

  "The case surrounding the fraudulent activities of Jerome Kerviel go back now more than seven years and there have been several court decisions which have always shown the sole criminal responsibility of Jerome Kerviel," the bank said.

   

  "Societe Generale is surprised by the declarations apparently made by a police officer to a judge in charge of a case brought by Jerome Kerviel given that he (Kerviel) himself told detectives questioning him in 2008 that he had acted alone and without his superiors' knowledge," added the statement.

   

  The bank also stressed that it did not have access to the legal documents from which these declarations were taken.

  *  *  *
  As Bloomberg concludes, managers missed at least 1,071 bogus trades, a special committee of the bank’s board found seven years ago. His supervisors failed to react to the size of his trading gains, cash flows and brokerage expenses, and overlooked warnings from Eurex AG, Europe’s biggest futures exchange, as the former trader amassed his positions, the committee found.

  Kerviel has argued at every trial that Societe Generale stealthily sold unprofitable subprime mortgage investments as it liquidated his positions, exaggerating the losses.

  

  

  
  
  

  

• Republicans, Democrats and Independents ALL Hate NSA Spying … Think the Patriot Act Should NOT Be Reauthorized

  A poll released today shows that Americans across the political spectrum hate the Patriot Act and NSA spying.

  The bipartisan polling team – made up of Global Strategy Group and G Public Strategies – found (edited for readability):

  • By nearly a 2:1 margin (60% modify, 34% preserve), Americans believe the Patriot Act should not be reauthorized in its current form. With broad, bipartisan support across all ages, ideologies and political parties, voters are rejecting the argument that the Patriot Act should be preserved with no changes because of potential terrorist threats. Millennials (65% modify) and Independent men (75% modify), in particular, are driving the push for modification to limit government surveillance.

  • By more than 4:1 (82% concerned, 18% not concerned), voters find it concerning that the United States government is collecting and storing the personal information of Americans, including 31% who are extremely concerned and 25% who are very concerned.

  • Over three quarters of voters found four different examples of government spying personally concerning to them. The government accessing personal communications, information or records without a judge’s permission (83%) and using that information for things other than stopping terrorist attacks (83%) were the two most concerning examples to voters.

  • Specific arguments made in favor of adding more protections for Americans around privacy, also proved to be convincing to voters. 84% of voters said it was a convincing argument that local police and the FBI should have a warrant to search phone and email records, further confirming that Americans believe that individual privacy rights should be more strongly protected. Additionally, 81% of voters were convinced more protections were needed on account of companies providing loopholes in their services to make surveillance easier for the government.

  This jibes with previous polls showing that Americans:

  • Value privacy over anti-terror protections

  • Don’t believe the NSA

  • And are now more afraid of our own government than terrorists

  

  
  
  

  

• Chris Christie Calls Snowden Supporters "Civil Liberties Extremists" In His Latest Desperate Neocon Diatribe

  Submitted by Mike Krieger via Liberty Blitzkrieg blog,

  Chris Christie is a uniquely American embarrassment. Only a person so completely consumed with his own bullshit and narcissism could miss the fact that he characterizes the word coward. He’s created a national presence for himself as a warrior against corruption, yet he only punches downward, and exclusively picks on the weak. While he rails against entitlements and takes particular pleasure in attacking teachers, he never dares go after the real entitlement criminals. Wall Street bailout babies, and the multi-national corporations constantly sucking on the taxpayer teat via corporate welfare are never the focus of his ire. That’s because he’s 100% completely full of shit with regard to pretty much every topic he addresses.

  Chris Christie is the consummate authoritarian, and he worships at the altar of the rich and powerful. He loves war, the surveillance state and political control. He’s the type of person who would chop off the hand of a poor person caught stealing a cookie, while happily offering a deferred prosecution agreement to a financial oligarch stealing billions. The fact that anyone takes him seriously after all his scandals and previous examples of verbal diarrhea is a testament to how deranged and damaged our political system really is.

  The good news is that not many people take Christie seriously, which is perhaps why he decided to elevate his rhetoric in New Hampshire today in a desperate attempt to earn some shekels from Sheldon Adelson, since the casino oligarch seems to have christened a new favorite poodle in Marco Rubio. Here is some of what he had to say courtesy of the Star Tribune:

  MERRIMACK, N.H. — Making the case for a more active U.S. presence overseas, New Jersey Gov. Chris Christie will call for a larger military and a boost in defense spending while defending the government’s intelligence-collection efforts, in a speech Monday setting forth his foreign policy approach.

   

  The likely Republican presidential contender will also use an appearance in New Hampshire to criticize President Barack Obama’s handling of the surging Islamic State group and the emerging nuclear deal with Iran.

   

  “Iran might not have the bomb right now — but their influence is absolutely radioactive to the world,” the New Jersey governor says in prepared remarks released by his political action committee. “So we need to contain it with our moderate Sunni Arab allies, while at the same time rolling back the shadow of ISIS,” he said, using another acronym for Islamic State.

  Iran is radioactive! How clever Christie, did you come up with that on your own or did you actually pay a speechwriter to come up with that idiotic soundbite?

  Christie, who served as a U.S. attorney before he was elected governor, will also seek to distance himself from the crowded Republican field by offering an unapologetic defense of the U.S.’s intelligence-collection efforts.

   

  He will specifically take aim at former National Security Agency contractor Edward Snowden, who in 2013 leaked thousands of documents to journalists. Among Snowden’s revelations: NSA had for years been secretly collecting millions of Americans’ phone records. Christie has previously said that program should continue.

   

  “When Edward Snowden revealed our intelligence secrets to the world in 2013, civil liberties extremists seized that moment to advance their own narrow agenda,” he will say, according to the excerpts. “They want you to think that there’s a government spook listening in every time you pick up the phone or Skype with your grandkids. They want you to think of our intelligence community as the bad guys, straight out of the Bourne Identity or a Hollywood thriller. And they want you to think that if we weakened our capabilities, the rest of the world would love us more.”

  Well the founding fathers were also “civil liberties extremists” with a narrow agenda. That agenda was laid out in a little something called the Constitution.

  The most dangerous part of Christie’s language is calling Snowden defenders “extremists.” Christie knows exactly what that term has come to mean, and he deliberately used it.

  Currently, almost all Western governments are aggressively trying to crack down even further on civil liberties in the name of fighting the “extremists.” In the recent post, The Mindset of UK Prime Minister David Cameron – It’s Not Enough to Follow the Law, You Must Love Big Brother, David Cameron specifically used the word “extremist” to describe the core problem.

  The measures would give the police powers to apply to the high court for an order to limit the “harmful activities” of an extremist individual. The definition of harmful is to include a risk of public disorder, a risk of harassment, alarm or distress or creating a “threat to the functioning of democracy”.

  If that isn’t enough for you, in the post from earlier this year, The “War on Terror” Turns Inward – DHS Report Warns of Right Wing Terror Threat, we learned that the U.S. Department of Homeland Security considers “domestic extremists” a core focus. Here’s an excerpt:

  A new intelligence assessment, circulated by the Department of Homeland Security this month and reviewed by CNN, focuses on the domestic terror threat from right-wing sovereign citizen extremists and comes as the Obama administration holds a White House conference to focus efforts to fight violent extremism. 

   

  The government says these are extremists who believe that they can ignore laws and that their individual rights are under attack in routine daily instances such as a traffic stop or being required to obey a court order.

  So Christie is deliberately using language that essentially calls Edward Snowden supporters domestic terrorists. We can therefore be certain that a President Christie wouldn’t hesitate for a second in using mass surveillance on segments of the population he disagrees with politically. After all, they are in his words “extremists.”

  Naturally it doesn’t matter to Christie that bulk collection hasn’t stopped a single terror attack. As the Star Tribune itself noted:

  Independent reviews have found that the bulk collection program did not foil a single terrorist attack.

  In fact, all of the thwarted terrorist plots you hear about on the news aren’t real terrorist plots at all. Rather, they are all FBI created setups. Don’t believe me? Read the following:

  The FBI Busts Up Another of its Own Terrorist Plots and Politicians Rush to Blame the First Amendment

  Manufactured Terrorism – U.S. Officials Claim Credit for Stopping Another Terror Attack Created by the FBI

  A hundred years ago a real statesman named Teddy Roosevelt suggested America should “speak softly and carry a big stick.” A century later we have a New Jersey governor who chooses to: “speak loudly and carry a Big Mac (preferably paid for by the taxpayer)”

  How times have changed.

  

  

  
  
  

  

• Peak Picasso – Did The Art Market Just Flash A "Sell" Signal For Stocks

  “Like any trend in an unhinged market, it’s next to impossible to predict when the confidence will peak. Based on previous peaks, it could (should) be any time,“ warns Jason Goepfert, president of Sundial Capital Research.

  As Bloomberg reports, Goepfert’s recent note, analyzing the relationship between record art sales and the stock market, strongly suggests, “previous bouts of expensive art sales have indicated over-confident conditions in the stock market as well.”

  There is broad overlap between the markets, now more than ever. Wealth concentration is near an all-time high, and with stocks doing so well, it has helped to fuel massive confidence in other “greater fool” markets like art.

   

  …The market is relatively isolated and a plateau in art prices wouldn’t have much affect on broader assets, though it would likely be coincident with a plateau in stock and bond markets.

  

  With the art market hitting a new milestone last week, perhaps it is time to consider reducing exposure to the exuberance.

  Read more at Sundial Capital Research

  

  

  
  
  

  

• 9 Killed, 18 Injured, 192 Arrested After "True Biker Shootout" At Texas "Breastaurant"

  It’s not everyday that a “true biker shootout” happens, but according to police and eyewitness accounts, a “simmering feud” between rival biker gangs reached the boiling point at Twin Peaks Sports Bar and Grill in Waco Texas on Sunday afternoon. 

  Twin Peaks — a so-called “breastaurant” where “eats and drinks” are all “served by friendly and attentive Twin Peaks Girls, offering their signature ‘Girl Next Door’ charisma and playful personalities to ensure that your adventure happens at the Peaks” — erupted into chaos after a dispute which Reuters reports “may have been over a parking lot” spilled from a bathroom, to the restaraunt, and then into the parking lot, where five rival biker gangs “attacked each other with guns, knives, brass knuckles, clubs and motorcycle chains.” 

  Police soon joined the shootout and when all was said and done, 9 people were dead and 18 were hospitalized (presumably all bikers) while 192 were arrested. Authorities say they adopted the standard ‘deadly biker shootout rules of engagement’ by only firing once fired upon: 

  “Yesterday’s events was bad guys on bad guys. When our officers arrived, those bad guys turned their guns on our officers.” Waco Police Sergeant Patrick Swanton said.

  Unfortunately for local patrons who enjoy having their “eats” and “drinks” served by “playful girls next door,” the Waco Twin Peaks location was shut down by the Texas Alcoholic Beverage Commission due to … well, due to the threat that high noon biker shootouts pose to the public.

  Police also say the franchise operator was notified ahead of time that “there might be trouble,” and as Reuters notes, there’s some concern that the various gangs may circle back to exact some measure of revenge:

  Some area businesses closed early Sunday after police warned people to stay away from the area. Swanton said police had received intelligence that other gang members might be coming to the area for “payback.”

  Here’s more color from a local ABC affiliate:

  The investigation continues after nine people were killed and multiple others were injured in a shooting at Twin Peaks on Sunday. Shortly after noon, Waco police were at Twin Peaks monitoring at least two motorcycle clubs gathering there. The two groups had reportedly planned to meet in the safety of a public place to mediate a previous fight between two members of the rival gangs. The conflict began with an argument inside the restaurant, which then escalated and moved into the parking lot. Multiple weapons were involved in the conflict, including chains, knives, bats, clubs, and firearms. A total of eight people were shot and killed at the scene and another died at the hospital. Eighteen people were transferred to local hospitals with gunshot and stab wounds. Two of them were transported to other hospitals due to the severity of their injuries. Police said Monday they are still working to process the crime scene, which is littered with bullets, blood and other evidence.

  More visuals:

  

  

  

  

  

  

  

  
  
  

  

• Obama Flip-Flops: Plans To De-Militarize His Militarized Police

  Having enabled billions of dollars worth of militarized equipment to be unloaded into every police department in the nation – only to have alienated the very Americans that hoped for change the most – it appears President Obama is ready to uncross another red line. Following unrest in U.S. cities over the deaths of black men at the hands of police officers, Reuters reports, during his triup to Camden NJ, Obama announced his plans to put in place new restrictions on the use of military equipment by police departments.

   

  Just six months ago, President Obama was discussing increasing the funding for the militarization of America's police force.

  

  Now, after various riots, deaths, and police excess, he appears to be flip-flopping away from that idea…

  As Reuters reports,

  Obama will ban police use of equipment such as explosive-resistant vehicles with tracked wheels like those seen on army tanks, the White House said in a fact sheet. For other types of equipment, such as MRAP (mine-resistant ambush protected) vehicles and riot shields, departments will have to provide added justification for their use.

   

  …

   

  In the aftermath of the Baltimore riots, Obama has been speaking out more about race, including in a speech in the Bronx on increasing opportunity for young minority men and during a panel discussion on poverty in Washington.

   

  "Race issues have been more present over the past year for this country. We've seen, since Ferguson, issues that have been bubbling up in communities becoming much more present," said Rashad Robinson, executive director of colorofchange.org, a group that aims to strengthen the black community's political voice in America.

  Obama's remarks in Camden will be the fourth time in as many weeks that he has held an event to discuss his ideas for improving life for poor black communities. Obama, the country's first black president, has often been reticent about discussing race issues.

  "We’ve seen how militarized gear sometimes gives people a feeling like they are an occupying force as opposed to a part of the community there to protect them," Obama said during remarks in Camden, N.J. "Some equipment made for the battlefield is not appropriate for local police departments."

  The nation's largest police union denounced the president's move, saying he has overstated the problem, but as his base appears to be alienated by his actions, The Washington Post reports,

  “The issue of militarization has been really kind of exaggerated almost to the point that I don’t recognize it at times,” said James Pasco, executive director of the national Fraternal Order of Police. “The vast majority of the equipment that civilian law enforcement gets from the military is administrative stuff or defensive in nature.”

   

  The ban on items will take effect immediately, White House officials said, while the restrictions on other gear will be phased in so that local law enforcement agencies can be briefed about the new requirements.

   

  "The idea is to make sure we strike the right balance of providing equipment that is appropriate and important, while at the same time put standards in place that give a clear reason for the transfer of that equipment, with clear training and safety provisions in place," Cecilia Muñoz, the White House director of domestic policy, told reporters in a conference call on Sunday.

   

  …

   

  As he has over the past months, Obama sought to tread a careful line between calling on police officers and members of the community to do more to improve the relationship between them. The president emphasized that pervasive hopelessness in the inner city is driven in large part by a lack of educational and economic opportunities.

  *  *  *
  Meanwhile, anti-police brutality and law enforcement reform groups were more measured, praising the move by the Obama administration but painting it as a small step in what they believe will be a long process to reform American policing.

  “We know that reforming 1033 or putting limits on military equipment is not going to be enough,” said Dante Barry, executive director of Million Hoodies Movement for Justice, one of the groups born in response to the shooting of Trayvon Martin in Florida in 2012. “Any reform done to policing must be systemic and transformative," said Barry, who has played a role in organizing the Black Lives Matter protests that have occurred nationwide since Michael Brown was killed. "Militarized police culture, surveillance technologies and equipment must all be looked at if we are to see an end of police militarization in our communities.”

  

  

  
  
  

  

• Puerto Rico Faces Default, Government Shutdown On July 1

  Late last month we outlined what is an increasingly desperate fiscal crisis in Puerto Rico. The commonwealth faces a July 1 payment of $630 million on its GO bonds and without furloughing some public sector employees, it’s not clear that the payment can be made, setting up a possible default.

  “They really aren’t going to have the cash. There’s no tax you can legislate today that will generate enough income by the time you need it,” Sergio Marxuach, public-policy director at the Center for a New Economy in San Juan, told Bloomberg earlier this month.

  In total, Puerto Rico owes some $73 billion, the result of persistently covering deficits with debt even as economic activity continued to slow. On the heels of last month’s failed attempt to push through tax reform, lawmakers and Governor Alejandro Garcia Padilla are now scrambling to pass a new proposal that calls for a sales tax increase and $500 million in spending cuts as part of a 2016 budget which Puerto Rico desperately needs to pass by a July 1 deadline in order to resurrect a $2.9 billion oil-tax bond offering. The proceeds from the proposed deal would go towards repaying a loan from the Government Development Bank which may run out of money by the end of September if the new issue doesn’t materialize. 

  Budget cuts aren’t very popular these days, especially among students, as the recent protests in Montreal and Quebec make clear. In essence, the anti-austerity bug has spread outward from Europe and was on full display last week in Puerto Rico when college students took to the streets of San Juan. 

  Here’s a clip:

  As unpopular as the current set of measures looks to be, Bloomberg reports that further belt-tightening will likely be needed to bring the situation under control. Here’s more:

  Official projections of economic growth haven’t panned out. An index tracking monthly economic activity has registered 27 consecutive year-over-year declines. March unemployment, at 11.8 percent, was more than double the U.S. rate. With revenue well below forecasts, the commonwealth has a $191 million budget gap it must close by June 30. Procter & Gamble Co. plans to close its only plant on the island within 12 months, Jeff LeRoy, a spokesman for the consumer-product maker, said in an interview. The facility employs 230 people.

   

  The May 14 proposal by Governor Alejandro Garcia Padilla and legislative leaders to cut spending also would raise the sales tax temporarily to 11.5 percent from 7 percent. Even if the legislature approves the measure, it won’t be enough. The commonwealth, the largest employer on the island, needs to shrink the government and boost private-sector jobs, said Secretary of Economic Development Alberto Baco Bague.

   

  The island must exercise financial self-reliance as yields on its general obligations surpass 10 percent, effectively blocking access to capital markets. The Government Development Bank, which lends to the commonwealth and its localities, may run out of cash by Sept. 30 unless it can sell $2.9 billion of oil-tax bonds, according to its latest quarterly filing. The filing said the government may place a moratorium on debt payments in fiscal 2016 if it can’t cut spending or generate more revenue.

  If lawmakers are unable to pass a 2016 budget by the end of next month, Puerto Rico faces a government shutdown, but perhaps more importantly, will likely have trouble convincing hedge funds to purchase its bonds. The commonwealth has become increasingly reliant on hedge fund financing as traditional investors fear a looming default. 

  For his part, Jeff Gundlach is optimistic. The DoubleLine chief doubled his Puerto Rico GO bond holdings in Q1, but later told Reuters that the position still did not qualify as a “big bet.” Perhaps that’s a good thing, because as the following chart shows, the market seems to believe the commonwealth is about as credit worthy as Greece.

  

  

  

  
  
  

  

• 79 Members Of Congress Have Been In Office For At Least 20 Years

  Submitted by Michael Snyder via The End of The American Dream blog,

  No wonder Washington never changes – 79 members of Congress have been there since Bill Clinton’s first term in the White House.  This list includes names such as Reid, Feinstein, McConnell, McCain, Pelosi, Boehner, Rangel and Boxer.

  In this article, I am going to share with you a complete list of the members of Congress that have been “serving” us for at least 20 years.  They believe that they are “serving” us well, but without a doubt most Americans very much wish that true “change” would come to Washington.  In fact, right now Congress has a 15 percent approval rating with the American people, and that approval rating has been consistently below 20 percent since mid-2011.  So of course we took advantage of the 2014 mid-term election to dump as many of those Congress critters out of office as we possibly could, right?  Wrong.  Sadly, incumbents were re-elected at a 95 percent rate in 2014.  This just shows how broken and how corrupt our system has become.  The American people absolutely hate the job that Congress is doing, and yet the same clowns just keep getting sent back to Washington again and again.

  Our founders never intended for service in Congress to become a career, but that is precisely what it has become for many of our “public servants”.  As of this moment, there are 79 members of Congress that have been in office for at least 20 years, and there are 16 members of Congress that have been in office for at least 30 years.

  No wonder so many Americans are advocating term limits these days.  When there are dozens of members of Congress that know that they are going to be sent back to Washington over and over again no matter how the American people feel about things, that can cause them to become extremely callous toward the will of the people.  Instead, often these politicians become increasingly responsive to the needs of their big donors, because it takes big money to win campaign after campaign.  I am sure that if George Washington, John Adams and Thomas Jefferson were running around today, they would be absolutely disgusted by how our system has evolved.

  The following is a list from rollcall.com of the Republicans in the U.S. Senate that have served for at least 20 years and the dates when they first took office…

  • Orrin G. Hatch, Utah Jan. 4, 1977
  • Thad Cochran, Miss. Dec. 27, 1978
  • Charles E. Grassley, Iowa Jan. 5, 1981
  • Mitch McConnell, Ky. Jan. 3, 1985
  • Richard C. Shelby, Ala. Jan. 6, 1987
  • John McCain, Ariz. Jan. 6, 1987
  • James M. Inhofe, Okla. Nov. 30, 1994

  The following is a list from rollcall.com of the Democrats in the U.S. Senate that have served for at least 20 years and the dates when they first took office…

  • Patrick J. Leahy, Vt. Jan. 14, 1975
  • Barbara A. Mikulski, Md. Jan. 6, 1987
  • Harry Reid, Nev. Jan. 6, 1987
  • Dianne Feinstein, Calif. Nov. 4, 1992
  • Barbara Boxer, Calif. Jan. 5, 1993
  • Patty Murray, Wash. Jan. 5, 1993

  The following is a list from rollcall.com of the Republicans in the U.S. House of Representatives that have served for at least 20 years and the dates when they first took office…

  • Don Young, Alaska March 6, 1973
  • Jim Sensenbrenner, Wis. Jan. 15, 1979
  • Harold Rogers, Ky. Jan. 5, 1981
  • Christopher H. Smith, N.J. Jan. 5, 1981
  • Joe L. Barton, Texas Jan. 3, 1985
  • Lamar Smith, Texas Jan. 6, 1987
  • Fred Upton, Mich. Jan. 6, 1987
  • John J. Duncan Jr., Tenn. Nov. 8, 1988
  • Dana Rohrabacher, Calif. Jan. 3, 1989
  • Ileana Ros-Lehtinen, Fla. Aug. 29, 1989
  • John A. Boehner, Ohio Jan. 3, 1991
  • Sam Johnson, Texas May 18, 1991
  • Ken Calvert, Calif. Jan. 5, 1993
  • Robert W. Goodlatte, Va. Jan. 5, 1993
  • Peter T. King, N.Y. Jan. 5, 1993
  • John L. Mica, Fla. Jan. 5, 1993
  • Ed Royce, Calif. Jan. 5, 1993
  • Frank D. Lucas, Okla. May 10, 1994
  • Rodney Frelinghuysen, N.J. Jan. 4, 1995
  • Walter B. Jones, N.C. Jan. 4, 1995
  • Frank A. LoBiondo, N.J. Jan. 4, 1995
  • Mac Thornberry, Texas Jan. 4, 1995
  • Edward Whitfield, Ky. Jan. 4, 1995

  The following is a list from rollcall.com of the Democrats in the U.S. House of Representatives that have served for at least 20 years and the dates when they first took office…

  • John Conyers Jr., Mich. Jan. 4, 1965
  • Charles B. Rangel, N.Y. Jan. 21, 1971
  • Steny H. Hoyer, Md. May 19, 1981
  • Marcy Kaptur, Ohio Jan. 3, 1983
  • Sander M. Levin, Mich. Jan. 3, 1983
  • Peter J. Visclosky, Ind. Jan. 3, 1985
  • Peter A. DeFazio, Ore. Jan. 6, 1987
  • John Lewis, Ga. Jan. 6, 1987
  • Louise M. Slaughter, N.Y. Jan. 6, 1987
  • Nancy Pelosi, Calif. June 2, 1987
  • Frank Pallone Jr., N.J. Nov. 8, 1988
  • Eliot L. Engel, N.Y. Jan. 3, 1989
  • Nita M. Lowey, N.Y. Jan. 3, 1989
  • Jim McDermott, Wash. Jan. 3, 1989
  • Richard E. Neal, Mass. Jan. 3, 1989
  • José E. Serrano, N.Y. March 20, 1990
  • David E. Price, N.C. Jan. 7, 1997 Also served 1987-95
  • Rosa DeLauro, Conn. Jan. 3, 1991
  • Collin C. Peterson, Minn. Jan. 3, 1991
  • Maxine Waters, Calif. Jan. 3, 1991
  • Jerrold Nadler, N.Y. Nov. 3, 1992
  • Jim Cooper, Tenn. Jan. 7, 2003 Also served 1983-95
  • Xavier Becerra, Calif. Jan. 5, 1993
  • Sanford D. Bishop Jr., Ga. Jan. 5, 1993
  • Corrine Brown, Fla. Jan. 5, 1993
  • James E. Clyburn, S.C. Jan. 5, 1993
  • Anna G. Eshoo, Calif. Jan. 5, 1993
  • Gene Green, Texas Jan. 5, 1993
  • Luis V. Gutierrez, Ill. Jan. 5, 1993
  • Alcee L. Hastings, Fla. Jan. 5, 1993
  • Eddie Bernice Johnson, Texas Jan. 5, 1993
  • Carolyn B. Maloney, N.Y. Jan. 5, 1993
  • Lucille Roybal-Allard, Calif. Jan. 5, 1993
  • Bobby L. Rush, Ill. Jan. 5, 1993
  • Robert C. Scott, Va. Jan. 5, 1993
  • Nydia M. Velázquez, N.Y. Jan. 5, 1993
  • Bennie Thompson, Miss. April 13, 1993
  • Sam Farr, Calif. June 8, 1993
  • Lloyd Doggett, Texas Jan. 4, 1995
  • Mike Doyle, Pa. Jan. 4, 1995
  • Chaka Fattah, Pa. Jan. 4, 1995
  • Sheila Jackson Lee, Texas Jan. 4, 1995
  • Zoe Lofgren, Calif. Jan. 4, 1995

  As you looked over those lists, you probably noticed that they contain many of the members of Congress that Americans complain about the most.

  Unfortunately, because the vast majority of these individuals come from states or congressional districts that are basically a lock to vote a certain way, there is very little hope of ever removing them.  That means that most of these Congress critters are going to get to keep coming back for as long as they want.

  No matter which political party you prefer, this should greatly disturb you.

  Our founders certainly never intended for a permanent class of elitists to rule over us.

  But that is what we have.

  We are supposed to have a government of the people, by the people and for the people, but instead we have a government of the elite, by the elite and for the elite.  Most people do not realize this, but today most members of Congress are actually millionaires.  The disconnect between members of Congress and average Americans has never been greater than it is right now, and I think that is a very troubling sign for the future of this nation.

  So is there a solution to this problem?

  

  

  
  
  

  

• Revealing The Identity Of The Mystery "Belgian" Buyer Of US Treasurys

  A little over a year ago, we showed something quite unexpected: in the span of just a few months, the tiny nation of Belgium had become the third largest foreign holder of US Treasurys.

  

  Of course, the buying wasn’t Belgium doing so for its own account, but someone using the custody services of Belgium-domiciled Euroclear. This is what we said last April.

  it is quite clear that Belgium itself is not the buyer. What is not clear is who the mysterious buyer using Belgium as a front is. Because that same “buyer”, who to further explain is not China, just bought another whopping $31 billion in Treasurys in February, bringing the “Belgian” total to a record $341.2 billion, cementing “it”, or rather whoever the mysterious name behind the Euroclear buying rampage is, as the third largest holder of US Treasurys, well above the hedge fund buying community, also known as Caribbean Banking Centers, which held $300 billion in March.

   

  In summary: someone, unclear who, operating through Belgium and most likely the Euroclear service (possible but unconfirmed), has added a record $141 billion in Treasurys since December, or the month in which Bernanke announced the start of the Taper, bringing the host’s total to an unprecedented $341 billion!

  And while there had long been speculation that the mystery buyer using anonymous Belgian custody accounts is none other than China, the same nation which previously had used UK accounts precisely for the purpose of masking its purchases, there was never any proof.

  Further confounding the analysis was that while “Belgium” was massively adding to its Treasury holdings over the past year, mainland China was telegraphing that it was dumping Treasurys. It got to the point that in February Japan officially surpassed China as the largest official US foreign creditor.

  

   

  Then, on Friday we finally got if not direct, then certainly indirect, evidence from this month’s TIC data that “Belgium” was merely a front for China.

  First, note that after dropping for 6 consecutive months, official Chinese holdings had a major countertrend move and rebounded in March, jumping by $37 billion to $1.261 trillion and regaining the top US creditor spot from China.

  

   

  Even more curious was the Belgian Treasury holdings update, which after flatlining in the mid-$300 billion range for one year, also had a sharp countertrend move as they suddenly tumbled by $93 billion in the month of March, a 27% of the total “Belgian” holdings.

  

   

  But the real surprise emerges when stacking the monthly Chinese and Belgian holdings on top of each other. One gets the following chart, which in itself is hardly shocking…

  

   

  … but becomes so when one also overlays China’s offically reported monthly Forex reserves on top of the consolidated China+Belgium treasury holdings. Here one can easily see that indeed Belgium was nothing but an “anonymous” front for Chinese Treasury buying…

  

   

  … and as the case has recently become, selling.

  Because while we have previously commented on the dramatic capital outflow from China in recent months, which also explains why China is desperate to slam its currency but will not do it over fears of accelerating capital outflow, the combined Chinese and Belgian Treasury holdings reveal the true extent of China’s USD-denomination liquidation conundrum.

  As the next and final chart shows, in March the monthly drop across China’s official and “anonymous” i.e., Belgian holdings, was the biggest on record!

  

   

  So as a result of the latest TIC data we know know with almost complete confidence that:

  i) “Belgium” is, or rather, was a front for China: either SAFE, CIC, or the PBOC itself.

  ii) That Belgium’s holdings, after soaring as high as $381 billion a year ago, have since tumbled back to only $2532 billon as China has dumped the bulk of its Euroclear custody holdings, and that once this number is back to its historical level of around $170-$180 billion, “Belgium” will again be just Belgium.

  iii) China’s foreign reserves tumbled and this was offset by a the biggest quarterly drop in Chinese pro-forma treasury holdings, which dropped by a record $72 billion in the month of March, and a record $113 billion for the quarter.

  So why mask its offshore holdings? So when China proceeds to liquidate nearly $100 billion via its custody account, the US didn’t feel compelled to chastise Beijing. After all there is no official confirmation that Belgium is indeed China, and likely won’t be – it was merely a buffer account which China used to build up TSY holdings in, and now – to rapidly liquidate.

  A better question perhaps is what is the use of funds of these tens of billions of liquidations: because what was once invested in the form of Treasurys is now invested in the form of something else… most likely real estate in San Francisco, Beverly Hills, or New York City, with a few billion left over to buy stocks.

  Finally, the last thing China would want the world to know, is just how acute its capital flight truly is: a capital flight which is the only thing that is preventing the Politburo and the PBOC from cutting rates even more aggressively and/or engaging in even more outright QE than it currently does because should the chart above be matched with a comparably sharp drop in the Renminbi, and suddenly the VIX closing the day at 12 will be a very distant memory.

  

  

  
  
  

  

• Graphing The Evolution Of The World's Debt Addiction

  It’s no secret that the world is addicted to debt.

  China for instance, has an astounding $28 trillion debt load that amounts to 282% of GDP, while the country’s local governments are now undertaking a multi-trillion yuan refi initiative in order to cut the debt servicing costs on a mountain on high interest loans they acquired off balance sheet in an effort to skirt official borrowing limits.

  In Europe, a series of fiscal crises nearly brought the currency bloc to its knees in 2012 and indeed, the drama continues today with Greece sliding ever closer to insolvency as government revenues are woefully inadequate to cover the country’s obligations. 

  Japan had its credit rating cut by Fitch late last month with the agency citing the “high and rising level of government debt” which Fitch projects will rise to 244% of GDP by the end of the year, “by far the highest ratio of any rated sovereign.”

  Of course the US has its own debt woes, not the least of which is the well-documented $1.3 trillion student loan bubble which is, for the most part, underwritten by the American taxpayer. 

  The following graphic shows the evolution of the world’s debt addiction from 2000 to 2014. Note that the y-axis is debt-to-GDP while the x-axis is GDP-per-person, meaning that a line which slopes up and backwards is the worst case scenario as it generally indicates a contraction in GDP and an increase in debt burden. Each line is a country and you can find the full interactive graphic from The Economist here. 

  

  Here are some country-by-country highlights:

  

  

  

  

  More color from The Economist:

  The borrowings of governments, households, companies and financial firms have risen in almost every big country around the world since the year 2000, relative to their GDP. As economies develop they naturally build a bigger stock of financial assets, including debt. But plenty of countries have gone out on a limb. Some are financial centres, such as Singapore and Ireland. Their debts are inflated because they host the subsidiaries of many global banks and companies. Others have economies that are driven by debt-fueled investment, or which are stagnant. China has similar debt levels to America, despite being only 20% as rich as it per person. Portugal has similar leverage to Sweden, which is almost twice as wealthy as it. Troubled Greece’s debt-to-GDP is on a par with that of prosperous Norway’s. Countries with disproportionately high debts are more prone to crises. But working out how to shrink-debt to GDP without causing a slump is tough—as China is discovering.

  

  

  
  
  

  

• The End Of Meaningful Work: A World Of Machines And Social Alienation

  Submitted by Daniel Drew of Dark Bid

  The End of Meaningful Work: A World of Machines and Social Alienation

  Many activists are clamoring for a higher minimum wage. That’s an admirable goal, but is that where the worst problem is? Even at the abysmally low wages of the present moment, we still have 938,000 people being turned away from McDonald’s because there aren’t enough McJobs. The real problem is the lack of meaningful work. In a world of machines and social alienation, meaningful work is as scarce as water in the drought-stricken California Central Valley.

  One cause of the employment crisis is relentless outsourcing to foreign countries. However, even more insidious has been the replacement of human workers by machines. For hundreds of years, the Protestant work ethic lauded hard work and efficiency as ideals to strive for. It’s not easy to object to those principles. But what happens when efficiency means eliminating humans? It’s doubtful the early Protestants ever imagined that could be a possibility.

  Even up to the present day, many view new technology and efficiency as the main drivers of human progress. For awhile, it seemed like this was indisputable. In his book Rise of the Robots, Martin Ford describes the 25 years after World War II as the “golden age” of the American economy. Productivity, employment, and wages were increasing in synchrony. As with many trends, economists assumed they would continue indefinitely. It was the glorious free market at work.

  Then it all came crashing down at the turn of the century.

  

  This time, it really is different. The shift happened when machines transformed from mere tools to actual workers.

  Martin Ford explained, “In 1998, workers in the US business sector put in a total of 194 billion hours of labor. A decade and a half later, in 2013, the value of the goods and services produced by American businesses had grown by about $3.5 trillion after adjusting for inflation – a 42 percent increase in output. The total amount of human labor required to accomplish that was…194 billion hours. Shawn Sprague, the BLS economist who prepared the report, noted that ‘this means that there was ultimately no growth at all in the number of hours worked over this 15-year-period, despite the fact that the US population gained over 40 million people during that time, and despite the fact that there were over thousands of new businesses established during that time.'”

  If this trend continues a few more years, it will be two lost decades, which means an entire generation has gone by with no net new jobs created. This might be somewhat permissible if the population had stagnated or declined, but with 40 million new people, it sets the stage for a national disaster.

  It is truly a new era. Ford confirmed, “There has never been a postwar decade that produced less than a 20 percent increase in the number of available jobs. Even the 1970s, a decade associated with stagflation and an energy crisis, generated a 27 percent increase in jobs. This new reality is nothing less than the end of progress and the Protestant work ethic. Efficiency can no longer be held up as something that is unambiguously good. The Protestants were wrong. There is something much more important than efficiency: survival.

  In a world without sufficient work, some have argued in favor of a broader social safety net. In a New York Times op-ed called “Sympathy for the Luddites,” Paul Krugman said more education is not the answer, and it never was. Indeed, education is probably the biggest national scam in history. Nothing turns the average person into a debt slave the way college does. Krugman said instead of more education, we should provide everyone with a basic minimum income – kind of like Social Security, except for all ages. Krugman claims it’s the “only way” to have a middle-class society. He’s not the first one to suggest this. Ironically, the biggest libertarians of all, economists Friedrich Hayek and Milton Friedman, agreed that a basic universal income was prudent policy.

  Another proposed solution is broad-based capital ownership. The basic concept is to mimic the way rich kids get an inheritance. Everyone would get an inheritance, and it would be courtesy of Uncle Sam. The initial implementation of such a project would require an enormous one-time expenditure, probably $100 trillion if the individual amounts were meaningful in any sense. It would be like a lump sum version of Social Security. It would be the ultimate quantitative easing, possibly the QE Infinity that some have referred to. Unlike prior quantitative easings, this one would actually benefit the average person because everyone would be a capitalist.

  The idea for widespread capital ownership can be traced to the Founding Fathers. George Washington, Thomas Jefferson, John Adams, and James Madison all believed men should have their own farms and be self-sustaining citizens. Abraham Lincoln supported the idea with the Homestead Act of 1862, which granted citizens 160 acres of government land to cultivate.

  

  In his book The Citizen’s Share, economic sociologist Joseph Blasi said, “business capital has replaced land as the source of wealth creation.”

  Blasi told Fortune Magazine, “We could have a future where technology creates a low feudal serf class – people with low wages or flat wages or high structural unemployment. Or, we could have a future where we have a smaller workweek and citizens broadly have more capital ownership.”

  Blasi explained to PBS, “John Adams favored distribution of public lands to the landless to create broad-based ownership of property, then the critical component of business capital in the largely agricultural U.S. Current levels and trends in inequality would almost certainly have terrified the founders, who believed that broad-based property ownership was essential to the sustenance of a republic.”

  James Madison warned that inequality in property ownership would “subvert liberty” by fostering class warfare.

  Blasi raises compelling points about the Founders. This information completely defies the critics who think socialist capital redistribution is inherently Un-American. As the Founding Fathers argued, such socialist policies are necessary to ensure a republic where the “common man” is not merely a concept, but a reality as well.

  Nonetheless, the compelling scheme of broad-based capital ownership is not without problems. First of all, there is the whole feasibility issue. If we want to give every American a stock portfolio, it would require an unprecedented one-time expense. Second, unless there were some kind of “reload” option, it could create a society where there are no second chances. Investing is basically a gamble, and if you blew your entire government inheritance on a biotech stock, would you be permanently homeless? In the new dystopia, you wouldn’t be able to “work” to get the money back because the machines would do all the labor. The money would be lost forever. On the other hand, this reality might make people extremely risk-averse, and we could have an even more severe situation than we have now, with government bonds trading at negative interest rates.

  Whether it’s guaranteed income like Social Security or a broad-based capital ownership program, what both “handout” solutions fail to do is restore the dignity of work. Even if work is routine or inefficient, the mere act of working and contributing to society creates meaning in the worker’s life. No one wants to receive a handout. People want to feel like they earned it. This is what workers in the Civilian Conservation Corps felt like during The Great Depression.

  

  The History Channel explains, “Formed in March 1933, the Civilian Conservation Corps, CCC, was one of the first New Deal programs. It was a public works project intended to promote environmental conservation and to build good citizens through vigorous, disciplined outdoor labor. Close to the heart of President Franklin D. Roosevelt, the CCC combined his interests in conservation and universal service for youth. He believed that this civilian ‘tree army’ would relieve the rural unemployed and keep youth ‘off the city street corners.'”

  With 938,000 people being turned away from McDonald’s jobs and riots in the streets, there has never been a time since The Great Depression when we could use something like the Civilian Conservation Corps as much as now.

  Even an ambitious work project like this does not eliminate the threat of machines whose primary advantage is efficiency. Are human beings inefficient? You better believe it. Are we loud, obnoxious, smelly, and unsanitary creatures that are huge liabilities? Yes we are. But for thousands of years, those were accepted realities. Only now, when mechanical options present themselves, are these realities being questioned.

  Nothing captures the humans vs. machines debate as well as Agent Smith’s interrogation of Morpheus in the 1999 movie The Matrix. Ironically, the film was released at the turn of the century, just when efficiency was about to diverge from human employment. In eerie prescience, Agent Smith calls it the peak of our civilization. According to him, human beings are like the dinosaurs, about to be wiped out and replaced by machines. He is dressed like the MBA automatons that dominate corporate America. Sometimes, it’s not clear if this is entertainment or reality.

  One writer named Hayley Krischer shared a frightening story about her five-year-old daughter:

  The other day, I pointed out the pink sunset between the cluster of bare winter trees behind our house to my five-year-old daughter, and she turned to me, her face blank and said,

  “Is that real?”

  “What do you mean, honey? It’s the sunset.”

  “No, I mean is that fake, like is this something we see on TV, or is it actually happening?”

  When our children don’t even know if a sunset is real, we have a problem. What happens when we can’t even tell if a human is real? Aiko Chihira is the name of the new receptionist at the Mitsukoshi Nihonbashi department store in Tokyo. She’s not made from the same stuff as you and me.

  

  One way we can halt creepy, degrading mechanical intrusions into our social experience is through a new series of incentives. In the same way we have “sin taxes” on alcohol and tobacco products, we could have a sin tax on companies that use a machine to completely eliminate human interaction, which would be defined as face-to-face interaction or vocal communication, but not text or pictures. Conversely, we could provide subsidies for companies that create new human interaction in their business transactions. For example, banks that use ATMs when human tellers are available would have to pay the technological sin tax. If they created a new policy where all ATMs were shut down during normal business hours, they would have to hire more tellers, which would boost employment and create more human interaction. Both of these results would be good for society.

  The goal of these policies would be to eliminate the increasing mechanical alienation that pervades every aspect of life. Anyone who has been to a party where everyone was using a cell phone can attest to this reality. Susan Greenfield, a neuroscientist at Oxford University, says modern technology is already rewiring the way the human brain works. UCLA scientists found that sixth-graders who went five days without any digital screen exposure did substantially better at reading human emotions than sixth-graders from the same school who spent hours every day looking at their electronic devices. When a New York Times reporter asked Steve Jobs how his kids liked the iPad, he said, “They haven’t used it. We limit how much technology our kids use at home.”

  It’s clear that technology has intruded far enough into our lives. If we do not act now, we will lose our ability to communicate with each other and the ability to enjoy meaningful employment. We will degenerate into an idiocracy. If you agree, you can sign this petition to President Obama to promote the responsible use of technology in the work environment.

  Despite the clear data and obvious dangers of being replaced by machines, being a Neo-Luddite is not easy. Critics abound. The Information Technology & Innovation Foundation hands out annual Luddite Awards to make fun of tech critics who wish to “smash the engines of innovation.” According to them, technology is unambiguously good; it is “the wellspring of human progress.” Because nothing says “progress” like no net new jobs created in 15 years when the American population increased by 40 million. There is nothing unscientific about demanding a technology policy that promotes moral responsibility. If science has bioethics, technology can have technoethics.

  Some critics will argue that we shouldn’t create incentives with sin taxes because it interferes with the “free market.” The free market evangelists at Forbes write columns that are filled with quotes like, “The market always wins, you cannot stop it.” It’s simply not true. The free markets brought us slavery, monopolies, dangerous working conditions, and unsafe consumer products. Contrary to what you heard from Gordon Gekko, greed is not good, and it does not work. The backwards belief that greed somehow benefits society with one giant invisible handshake is one of the greatest lies ever perpetuated by the economics profession.

  

  Even Adam Smith, the author of The Wealth of Nations and the one who popularized the Invisible Hand, said, “When the regulation, therefore, is in support of the workman, it is always just and equitable; but it is sometimes otherwise when in favour of the masters…No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.”

  Economist Joseph Stiglitz said, “The reason the Invisible Hand often seemed invisible was because it wasn’t there.”

  The free market has certainly failed us. We are left with a society that has no work to offer 40 million new citizens. We prefer to spend most of our days staring at screens rather than at actual human faces. We jump at the chance to avoid human contact. Text messaging is basically a regression to an earlier mode of communication: the telegraph. Instead of Morse code, we use emoticons – artificial digital faces to express emotions we can barely convey across our actual faces. Now, it is considered an accomplishment rather than an abomination to create a humanoid robot receptionist. The free market brought us slavery. Now, it wants to purge everyone of our humanity and make us all more like robots.

  Am I a silly Neo-Luddite? Why don’t you ask Aiko Chihira for her opinion. She might not have an opinion now, but she will some day.

  

  

  
  
  

  

• Mapping Marijuana Prices In The US

  Want cheap weed? Don’t go to North Dakota, where you’ll pay nearly $400 an ounce. You’re far better off in Orgeon where the going rate is just $204. And while some evidence indicates that the tax-related markup on legal, recreational marijuana has driven buyers back into the black market, the average price per ounce looks to support the idea that legalization drives down prices. 

  As you can see from the map below, the mean price for an ounce of marijuana in the United States is $324, according to the subtly named “PriceOfWeed.com”, a site which crowdsources average prices from users across the US, Canada, Europe, and Australia. Not coincidentally, the states where prices are lowest are also the states where recreational use is legal.

  

   

   

  As a side note on taxation and legal marijuana, it appears that while some legal weed proprietors are happy to pay their fair share, the inconsistencies between state and federal laws make the reality anything but equitable.

  Via NY Times:

  Dispensary owners who once feared raids by drug enforcement agents say they take pride in paying taxes like any other business. They say it brings them out of the shadows and distinguishes them from the black market. Marijuana advocates trumpet tax-collection numbers to show that the industry is pouring millions of dollars into state budgets.

   

  “It is the last domino that has to fall for us to be treated like any other business in the country,” said Tim Cullen, a co-owner of five marijuana shops in Colorado. “We’re not a black-market cocaine dealer. We’re totally on board and on the level. We’d like to be treated as such.”

  A normal business, for example, might pay a 30 percent federal rate on its taxable income, which would represent its gross income minus deductible business expenses. A marijuana business, on the other hand, might pay the same federal rate on all of its gross income because it cannot take these deductions. The difference can raise the rate on a marijuana business to 70 percent or more of its profits.

  Whatever the case may be, we suspect the widespread legalization of marijuana wouldn’t be the worst thing that could happen to the US right now because although the $53 million in tax revenue Colorado took in during the first year of legalization was underwhelming by some estimates,  the massive underfunded pension liabilities and gross fiscal mismanagement that plague the country’s state and local governments seem to suggest that every little bit of incremental revenue would help especially if legalization saves on drug enforcement costs.

  

  

  
  
  

  

• DEA Strikes Again: Seize Man's Life Savings Under Civil Asset Forfeiture Without Charges

  Submitted by Mike Krieger via Liberty Blitzkrieg blog,

  All the money – $16,000 in cash – that Joseph Rivers said he had saved and relatives had given him to launch his dream in Hollywood is gone, seized during his trip out West not by thieves but by Drug Enforcement Administration agents during a stop at the Amtrak train station in Albuquerque.

   

  Rivers, 22, wasn’t detained and has not been charged with any crime since his money was taken last month.

   

  That doesn’t matter. Under a federal law enforcement tool called civil asset forfeiture, he need never be arrested or convicted of a crime for the government to take away his cash, cars or property – and keep it.

   

  Rivers was left penniless, his dream deferred.

   

  From the Albuquerque Journal article: DEA to Traveler: Thanks, I’ll Take That Cash

  In the “land of the free” you might be innocent until proven guilty, but your assets aren’t.

  In one of the most uncivilized and preposterous loopholes in America, federal agents are allowed to steal citizens’ assets; cars, cash, even homes, based on suspicion alone. I’ve covered this barbaric and backward practice on many occasions, but here’s a quick refresher from the first post I wrote on the subject in 2013, Why You Should Never, Ever Drive Through Tenaha, Texas:

  In a nutshell, civil forfeiture is the practice of confiscating items from people, ranging from cash, cars, even homes based on no criminal conviction or charges, merely suspicion. This practice first became widespread for use against pirates, as a way to take possession of contraband goods despite the fact that the ships’ owners in many cases were located thousands of miles away and couldn’t easily be prosecuted. As is often the case, what starts out reasonable becomes a gigantic organized crime ring of criminality, particularly in a society where the rule of law no longer exists for the “elite,” yet anything goes when it comes to pillaging the average citizen.

   

  One of the major reasons these programs have become so abused is that the police departments themselves are able to keep much of the confiscated money. So they actually have a perverse incentive to steal. As might be expected, a program that is often touted as being effective against going after major drug kingpins, actually targets the poor and disenfranchised more than anything else.

  Fortunately, civil asset forfeiture became a major issue last year, and while many states are moving to halt or crack down on the practice, this apparently doesn’t stop federal agents from continuing to ruin people’s lives. In today’s post, the culprits are DEA agents, recently best known for using drug cartel and taxpayer money to pay for orgies with prostitutes, as well as wrongfully locking up a California student for days without food and water until he had to drink his own urine to survive.

  If those stories weren’t sufficient to convince you that the war on drugs is a useless fraud, perhaps the following will. From the Albuquerque Journal:

  Maybe he should have taken traveler’s checks.

   

  But it’s too late for that now. All the money – $16,000 in cash – that Joseph Rivers said he had saved and relatives had given him to launch his dream in Hollywood is gone, seized during his trip out West not by thieves but by Drug Enforcement Administration agents during a stop at the Amtrak train station in Albuquerque.

   

  An incident some might argue is still theft, just with the government’s blessing.

   

  Rivers, 22, wasn’t detained and has not been charged with any crime since his money was taken last month.

   

  That doesn’t matter. Under a federal law enforcement tool called civil asset forfeiture, he need never be arrested or convicted of a crime for the government to take away his cash, cars or property – and keep it.

   

  Agencies like the DEA can confiscate money or property if they have a hunch, a suspicion, a notion that maybe, possibly, perhaps the items are connected with narcotics. Or something else illegal.

  The most amazing part is that any society can be stupid and passive enough to allow this policy to persist.

  Or maybe the fact that the person holding a bunch of cash is a young black man is good enough.

   

  It happened, Rivers said, to him on April 15 as he was traveling on Amtrak from Dearborn, Mich., near his hometown of Romulus, Mich., to Los Angeles to fulfill his dream of making a music video. Rivers, in an email, said he had saved his money for years, and his mother and other relatives scraped together the rest of the $16,000.

   

  Rivers said he carried his savings in cash because he has had problems in the past with taking out large sums of money from out-of-state banks.

   

  A DEA agent boarded the train at the Albuquerque Amtrak station and began asking various passengers, including Rivers, where they were going and why. When Rivers replied that he was headed to LA to make a music video, the agent asked to search his bags. Rivers complied.

   

  Rivers was the only passenger singled out for a search by DEA agents – and the only black person on his portion of the train, Pancer said.

   

  Rivers was left penniless, his dream deferred.

   

  Other travelers had witnessed what happened. One of them, a New Mexico man I’ve written about before but who asked that I not mention his name, provided a way for Rivers to get home, contacted attorneys – and me.

   

  Sean Waite, the agent in charge for the DEA in Albuquerque, said he could not comment on the Rivers case because it is ongoing. He disputed allegations that Rivers was targeted because of his race.

   

  Waite said that in general DEA agents look for “indicators” such as whether the person bought an expensive one-way ticket with cash, if the person is traveling from or to a city known as a hot spot for drug activity, if the person’s story has inconsistencies or if the large sums of money found could have been transported by more conventional means.

   

  “We don’t have to prove that the person is guilty,” Waite said. “It’s that the money is presumed to be guilty.”

  Again, what kind of idiotic civilization conducts its business like this?

  DEA agents may choose to ask the person whether his or her possessions can be searched in what is called a “consensual encounter.” If the subject refuses, the bags – but not the person – can be held until a search warrant is obtained, he said.

   

  Waite said that he could not provide exact figures on how often seizures occur in Albuquerque but that last week the DEA had five “consensual encounters” that resulted in seizures.

   

  Whatever is seized is held during an internal administrative process (read: not public) while a case is made to connect the property to narcotics. Subjects can file a claim to have the items returned – and then they wait, sometimes forever.

  This is not what freedom looks like.

  While travelers like Rivers still have to worry about DEA agents, state and local law enforcement in New Mexico no longer has these virtually unlimited seizure powers. Five days before Rivers’ encounter in Albuquerque, Gov. Susana Martinez signed into law a bill that bars state and local law enforcement from seizing money or property under civil asset forfeiture. The law takes effect in July.

   

  But the new state law won’t supersede the federal law, meaning federal agencies such as the DEA are still free to take your cash on arguably the flimsiest of legal grounds.

  Drugs are everywhere. The “war on drugs” has been a monumental failure that has achieved absolutely nothing other than erode the civil liberties of average Americans, and provide an efficient avenue for police and federal agent to steal citizens’ hard earned assets with no due process. It’s long past time to put an end to the war on drugs, civil asset forfeiture and the DEA.

  

  

  
  
  

  

• Meet "The Most Bearish Investment Manager You Will Find Today"

  "Maybe there's someone hiding in their basement who's more bearish than I am," says Mark Spitznagel, but I'm "the most bearish investment manager that you will find today."

  The billionaire founder of Universa Investments exclaims, "stocks are the side show of the world. They shouldn't matter that much. They matter too much. They're the realm of punters, the realm of hair-trigger traders, flashing, colorful lights, blips and bleeps of Bloomberg terminals… What does matter is investment in capital, investment in the the tools of greater productivity, of really the progress of civilization."

  Predicting the end of this bubble is impossible "because it's entirely Fed-driven.. and you're relying on liquidity," what we don't understand about markets is there's a buyer for every seller, there's a seller for every buyer, "the market doesn't owe you liquidity."

  Some key exceprts…

  "The beautiful thing about the business is when the markets get really rich, really overvalued, really distorted like today, the cost of insurance goes way down. There's incredible complacency. People are selling (tail insurance). This is another one of those carry trades that are so popular today. We're back to this Great Moderation. There's a religious belief that the Fed is our savior. And it's priced into the market."

   

  "We're at an extreme point today. We're as extreme as we've been n the last hundred years except for 2000. You can read into that what you want. (The year) 2000 was one of the great bubbles in human history. So here we are today just shy of that."

   

  "(Predicting when this bubble will end) would be impossible, because it's entirely being driven by the Fed and we don't know what they're willing to do next. I don't know what lever they're going to pull next."

   

  "Giant liquidity holes are a part of market dynamics. If you think you're going to lean on these buy orders (in order to get out) is the height of naivete."

   

  "Stocks are the side show of the world. They shouldn't matter that much. They matter too much. They're the realm of punters, the realm of hair-trigger traders, flashing, colorful lights, blips and bleeps of Bloomberg termnals…(awkward silence).

   

  What does matter is investment in capital, investment in the the tools of greater productivity, of really the progress of civilization."

  And finally to FOMO, and the consensus, Bloomberg asks "If the ECB is buying, and trying to inflate the prices of risk assets, OWN THOSE RISK SSETS."

  Spitznagel: "Right, this is what the entire world is doing, what you're describing. Don't fight the Fed, go with the Fed. But, of course, the problem there is we're relying on our ability to change our mind, change our position. Is there an exit to this idea for us?

   

  You're relying on liquidity, of course. What we don't understand about markets is there's a buyer for every seller, there's a seller for every buyer. The market doesn't owe you liquidity."

  

  

  
  
  

  

• Welfare Nation: From EBT… To AMG

  In America, where work is punished, it’s only fair… an AMG in every driveway.

   

  

   

  h/t @Stalingrad_Poor

  

  

  
  
  

  

• Abolishing Cash – The New Age Of Economic Totalitarianism

  Submitted by Martin Armstrong via Armstrong Economics,

  Europe is moving full speed ahead to eliminate all cash.

  

   

  Instead of reforming and tackling the economic problems, government always seeks to maintain the same course of thinking that now leads us to the totalitarian approach coming from Brussels.

  To maintain the euro, they must maintain the banks. However, the bank reserves are debts of all member states. As government becomes insolvent as in Greece, the banking system is undermined. The only way to prevent the banking collapse is to prevent people from withdrawing cash.

  Hence, we see this trend is surfacing in all the mainstream press to get the people ready for what is coming after 2015.75 – the elimination of cash. We are even starting to see this advocated in parts of Germany. We will not be able to buy or sell anything without government approval. That is where we are going, and it may be the major event that erupts after 2015.75.

  

   

  The bail-in that took place in Cyprus managed to get away without bloodshed. The people just took it.

  This has encouraged governments everywhere, since now they know they can safely do the same thing and the people are like sheep – dumb and stupid.

  

   

  Just how much will society take before they say no?

  

  

  
  
  

  

• City Secure? Baltimore Is Averaging 1.3 Murders Per Day Since Riot

  The widespread riots, looting, and indiscriminate arson may have subsided in Baltimore, but the violence has not. The vivid yet surreal images of a burning city along with real-time footage of stores being cleaned out with no intervention from law enforcement were set against the chilling rumor that the chaos began with a social media message calling for a citywide “purge” (after the film of the same name). By the early morning hours of April 28, the city lay in ashes and America’s race relations had suffered their most severe setback in years. 

  Three weeks later and most of America has moved on, believing that the drama is for the large part over, now that charges have been handed down against six officers and the Baltimore skyline is no longer ablaze. The reality on the ground however, is that since the riots, the murder rate in the city has skyrocketed, with 23 homicides in the last 18 days alone.

  Here’s The Washington Post with more:

  Although riots and protests after the death of Freddie Gray, who was injured in police custody, brought national attention to the city, the slayings have attracted little notice. They come as Baltimore works to recover from the unrest, with a police force demoralized by the arrests of six of its members — three of whom face murder or manslaughter charges in Gray’s death — and under the scrutiny of the Justice Department…

   

  The protests and riots that roiled this city in the aftermath of Gray’s death quieted after the police officers were charged. But even as shops were looted and burned and 3,200 Maryland National Guard troops came to restore order, another type of violence was consuming Baltimore.

   

  From mid-April to mid-May, 31 people were killed, and 39 others were wounded by gunfire. Twice, 10 people were shot on a single day. As of Friday, the deadly burst has pushed the city’s homicide count to 91, 21 above last year at the same time.

   

  In the District, 40 people had been slain as of Friday, not including four people found dead Thursday in cases police said are being investigated as homicides but are awaiting a ruling by the medical examiner.

  The spike since the riots has been remarkable…

  

  …and most of the violence has occurred in West Baltimore…

  

  *  *  *

  But out of sight, out of mind for the rest of the country and we imagine that just as high crime rates and a generalized sense of despair were ignored before the riots, so too will they be ignored now that the media spectacle has died down … at least until the next “purge.” 

  We’ll close with the following quote from the police commissioner on April 28:

  “The citizens are safe. The city is stable”

  Indeed.

  

  

  
  
  

  

• Young & American? You're Out Of Luck

  Submitted by Bill Bonner via Bonner & Partners,

  Old age and treachery will always triumph over youth and skill. At least, that is the way it looks.

  Our speech to the Class of 2015 (you can catch up here and here) left out some important points. The jobs picture, for example, is even bleaker. And depriving young people of jobs is like depriving pandas of bamboo shoots: It’s all they have. Older people can watch their stocks, real estate, and bonds go up in price. A young person can only look at the “Help Wanted” ads… and hope for a break.

  20 Million Fewer Jobs

  In 2000, 56% of the working-age population was employed. That was an all-time high. It has fallen ever since… and is now down to 46%. The working-age population is about 200 million people. This suggests there are about 20 million fewer people with jobs today than there were at the start of the century. Guess who those people are?

  People with all their teeth, all their hair, and all their wits.

  Since the stock market bottomed in 2009, only one group has added jobs – people 55 and older. Every other age group has lost out.

  Why?

  New businesses hire young people. Old businesses hire old ones. Imagine a new company – Uber, Snapchat, or Pinterest – recruiting gray-haired workers.

  They won’t. The older generation wouldn’t understand. They’d be out of place.

  But the rate of new business start-ups has fallen sharply. And fewer new businesses means fewer places for new workers to get work.

  Also, older workers might like to retire and give their jobs to younger workers. But they can’t afford to. They are squeezed by their own economy.

  Now they must hang on to their jobs as long as they can.

  Wasted Youth

  This leaves young people with no way to get on the bottom rungs of the ladder. To get ahead in the business/employment world, you have to get started. Then you work hard… you learn… you progress. But today, young people mill around, wasting their time in college, flipping burgers and parking cars while they wait for a “real” job opening.

  Then it is too late.

  They go for a job interview at 25, 30, or 35… and employers want to know what the heck they’ve been doing for the last few years.

  They may never get onto the bottom rung, never learn a real trade or profession, and never be able to play their part in the adult, debt-soaked, middle-class economy.

  The Atlantic magazine looked at the situation. It concluded there was “nothing uniquely wrong with the youth job market.” But something is wrong.

  It is not nearly as bad in America as it is in France, for example. But every labor rule drives employers to protect themselves. Hire a young person and who knows what you get? He has no work experience; he cannot prove that he won’t cause trouble. Instead, you look for a résumé with familiar assurances: “Oh, he worked for 10 years at the Ford Motor Company,” you tell yourself. “Then, he’ll be fine here.”

  Callow youths entering the workforce have few skills. They should be cheap. But as the cost of hiring these new people goes up – costs imposed by the older generation – the price of older workers, relatively, goes down.

  Entry-level jobs are scarce partly because old people – using the police power of their government – have made them more expensive.

  A Stacked Deck

  The declining availability of income opportunities is just one way the older generation has stacked the deck against the young. You have no doubt heard about how today’s highly financialized U.S. economy favors the rich over the poor. You might just as well say it favors the old over the young.

  Financial assets – stocks and bonds – have gained value. Jobs have not. Incomes have been flat for an entire generation, as capital gains have soared. The old have gotten richer; the young have gotten poorer.

  In 2013, for example, there were 50 million people in the U.S. who earned an average of just $6,000. Who were they? Disproportionately, they were young people.

  This is where it gets really interesting… The “financial economy” – roughly the value of stocks and bonds – has gone up 15 times in the last generation, an increase from $6 trillion to $95 trillion.

  But do young people own stocks and bonds?

  Nope. Financial assets are owned, in the main, by old, well-connected, skilled, and successful people. Young people have little but their own time.

  When you are starting out in life, you need to trade your time and energy for money… and gradually accumulate financial assets. You need an economy in which you can work… and earn money.

  But that economy – the economy of work and wages – grew only five times during the same period (as measured by GDP).

  “The financial sphere,” explains former Reagan administration budget adviser David Stockman, “occupied 212% of GDP in 1981… now, [it] weighs in at 537%.”

  In short, the geezers have done much better than the under-30 crowd.

  Although average wages have barely risen at all, the value of America’s corporate equity has gone up 28 times since Jimmy Carter was president.

  Was this just an accident? Was this just an honest market economy at work?

  No, the fix was in…

  

  

  
  
  

  

• Volumeless VIXtermination Fuels Stock-Buying Frenzy To Record Highs

  There can be only one clip for today…

  Because it's all about the fundamentals… and funnily enough the day when consensus GDP hopes collapsed also..

  

   

  And volume doesn't matter…

  

   

  Futures give us a glimpse at the dip-buying euphoria that began early on…

  

   

  But cash indices just would not stop… Small Caps ripped as AAPL pumped Nasdaq higher

  

   

  With shorts squeezed even more… (2nd biggest rise in "most shorted" stocks in 4 months)

  

   

  As VIX collapsed (this is front-month futures smashed below 15)…

  

   

  Crucially SPY took out its December fat finger spike highs… freeing any long lost longs remaining…

   

   

  But credit was nmot happy with rising rates – so how are you CFO muppets gonna fund yr cheap buybacks noiw?

  

   

  Treasuries were sold aggressively… roundtripping Friday's gains…

  

   

  Even as Bunds were "managed"… the smallest range since Gross and Gundlach spoke..

  

   

  The dollar soared over 1% on EUR and CAD weakness… This is the best day for the Dollar in 2 months… worst day for EUR in 2 months (notice this is a complete roundtrip of Friday's losses with Swissy well offered

  

   

  The Loonie had its worst day in 4 months against the USD today…

  

   

  Despite the USD strength, Silver and gold gained on the day, copper lost ground but crude was a financialized joke…

  

   

  Trade those "fundamentals"…

  

   

  So – to summarize – US stocks soared relentlessly on no volume to record highs as traders monkey-hammered VIX futures lower… on a day when Bunds were well managed but TSYs traded out of control, FX markets were carnaging and commodities whipped up and down like a whore's drawers…

  Charts: Bloomberg

  

  
  
  

  

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