- Everything That Is Wrong With Banking Today
Here is the latest SmartKnowledgeU Podcast #5: “Everything Wrong With Banking Today”.
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all of our downloadable podcasts for free. To be informed of when we release future podcasts, merely subscribe to our YouTube channel here or subscribe to our podcast channel on iTunes.The topic of our upcoming Podcast #6 next week will be “Deciphering the Language of Lies”, in which we address why the use of the world “failure” and “mistake” in association with our global financial and political leaders most definitely muddies and obscures the truth about them, and why it is of utmost importance to stop using these two words in conjunction with them if we want the truth about their deliberately engineered path of economic destruction and collapse to take root and eventually go viral among the masses.
- Florida Man Faces 15 Year Sentence For Sex On A Beach (But Still No Bankers In Jail)
Submitted by Mike Krieger via Liberty Blitzkrieg blog,
A jury Monday found a couple guilty of having sex on Bradenton Beach after only 15 minutes of deliberation.
The convictions carry a maximum prison sentence of 15 years.
Both Caballero and Alvarez will now have to register as sex offenders.
Ronald Kurpiers, defense attorney for the couple, said his clients were “devastated,” by the verdict.
Though Dafonseca hinted that they’d be speaking with the judge about whether or not 15 years was appropriate for Caballero, Kurpiers said the judge would have no discretion.
“That’s what he’ll get,” Kurpiers said.
– From the Miami Herald article: Couple Found Guilty of Having Sex on Florida Beach
This is what “justice” looks like in the Oligarch States of America. If you’re a pleb who gets caught having consensual sex on the beach, you’re immediately convicted and face up to 15 years in the gulag. Meanwhile, if you’re a banking executive responsible for crashing the global economy, you’re rewarded with trillions in taxpayer bailouts and backstops and given free reign to continue your crime spree. Criminal charges are never considered, despite the extreme negative impact your actions have on society at large, and you’re always given a slap on the wrist via deferred prosecution agreements, or DPAs. Don’t believe me? Let’s look at an excerpt from last year’s post titled, The U.S. Department of Justice Handles Banker Criminals Like Juvenile Offenders…Literally:
These agreements were created 100 years ago to give juvenile defendants and first-time offenders a chance to for rehabilitate themselves. Only in the last 20 years have DPAs migrated to the field of corporate criminals, treating them like kids who’ve just gone down a bad path in life.
The Justice Department is leaning on these toothless agreements more and more. Of the DoJ’s 283 deferred prosecution agreements since 2000, half have come since 2010, Reilly found in a working paper for BYU Law Review.
Why has the DoJ been so keen on deferred prosecution since 2010? It coincides exactly with investigations into the 2008 financial crisis.
With that in mind, let’s take a look at what 40-year old Jose Caballero faces in Florida for “sex on the beach.” From the Miami Herald:
A jury Monday found a couple guilty of having sex on Bradenton Beach after only 15 minutes of deliberation.
The convictions carry a maximum prison sentence of 15 years.
Jose Caballero, 40, and Elissa Alvarez, 20, were charged with two counts each of lewd and lascivious behavior for having sex on a public beach on July 20, 2014.
Video played in the courtroom during the 1- 1/2-day-long trial showed Alvarez moving on top of Caballero in a sexual manner in broad daylight. Witnesses testified that a 3-year-old girl saw them.
Both Caballero and Alvarez will now have to register as sex offenders.
The state will ask for jail time for Alvarez and prison time for Caballero. Dafonseca said due to Caballero being out of prison less than three years before committing another felony, he’s looking at serving the maximum time of 15 years.
Ronald Kurpiers, defense attorney for the couple, said his clients were “devastated,” by the verdict. Though Dafonseca hinted that they’d be speaking with the judge about whether or not 15 years was appropriate for Caballero, Kurpiers said the judge would have no discretion.
“That’s what he’ll get,” Kurpiers said.
Ed Brodsky, elected state attorney for the 16th judicial district, joined Defonseca in prosecuting the case. When asked why the case was an important one to the state attorney, Dafonseca said it was important that the community knew what wouldn’t be tolerated on public beaches.
“We’re dealing with basically tourists, that came from Brandon and Riverview and West Virginia, and they’re here on the beaches of Manatee County, our public beaches,” Dafonseca said, referring to the witnesses. “So you want to make sure that this isn’t something that just goes by the wayside. And that it is well known to the community, what will be tolerated and what won’t be.”
So this is where Florida draws the line, how brave! In reality, Florida is known for tolerating and encouraging some of the most statist behavior in America, which is why the state is so often highlighted on this site. Recall:
Girl Gang Raped during Spring Break in Florida as Crowds Stand Around and Do Nothing to Stop It
Protecting and Serving – Florida Police Raid 90-Year-Old Woman’s Home; Find No Drugs but Wreck Home
90-Year-Old WW2 Veteran and Two Clergymen Face 60 Days in Jail for Feeding the Homeless in Florida
Florida Cop Rapes 20-Year Old Woman at Gunpoint While on Duty
I could go on, but let’s go back to the Miami Herald.
Family members of the couple defended the two outside the courthouse, saying the crime did not deserve this kind of attention.
“He’s a great person,” said Caballero’s mother of her son, declining to give her name. “There are other things out there we need to worry about, and they’re still loose, people who have done worse stuff.”
Indeed.
This story demonstrates how completely and totally broken the U.S. justice system is. Should this couple have been having sex in public and in broad daylight? Absolutely not. Should there be some sort of punishment? Absolutely.
That said, the punishment should fit the crime in a just civilization, and 15 years behind bars for public sex is more akin to what you’d expect in Saudi Arabia. It’s particularly appalling when compared with the license to commit fraud and steal, which politically connected oligarchs have been granted. After all, who was really harmed by this couple’s act? Sure, some tourists may have had their day temporarily ruined or inconvenienced. A three-year-old girl may have seen something, but would probably have no way of understanding what it was. On the other hand, criminal bankers have demonstrably ruined the lives of hundreds or millions, if not billions, of people across the globe. Yet not a single TBTF executive has been prosecuted. They were bailed out instead.
Meanwhile, what about the pastor who faces only four months for molesting a little girl. Yes, you read that right. Our society is so completely fucked up, that two people irresponsibly making love in public will have their lives ruined, while a religious authority caught molesting a little girl receives a slap on the wrist. From RawStory:
A northern California pastor will serve no more than four months in jail for molesting a 9-year-old girl multiple times.
Venije Singkoh, a pastor at churches in San Francisco and Concord who also held services at his Daly City home, pleaded no contest to a misdemeanor count of child sexual annoyance.
He had initially been charged with three felony counts of child molestation after investigators said he held the girl on his lap and kissing her inappropriately.
The girl told her mother and father that the 70-year-old Singkoh used his tongue while kissing her, and the family called a church meeting to confront the pastor.
Examples of the criminal application of “justice” is an everyday occurrence in America today. I’ve outlined too many examples to list them all, but here are a few:
The U.S. Department of Justice Handles Banker Criminals Like Juvenile Offenders…Literally
- Wynn Calls "Big" Recovery "Complete Dream" As Gaming Revenues Collapse
Last month, courtesy of Andrew Zatlin’s Vice Index, we flagged the disturbing Q1 rise in traveling hookers. We call the trend disturbing not because we have a prima facie inclination to look with disdain upon all things escort-related but because, as Zatlin notes, when escorts are forced to take their show on the road it means the phones have stopped ringing locally, and if you’re inclined to believe that trends in all-cash businesses are a good leading indicator for trends in consumer spending in general, depressed spending on gambling, alcohol, and other “fun” things does not bode well for economic growth going forward. As you can see from the graph below, The Vice Index hit its lowest level in more than a year in March:
Given this — and given the fact that whatever discretionary income Americans do have is apparently being chanelled into TD Ameritrade accounts — it should perhaps come as no surprise that gaming revenue on the Las Vegas strip fell nearly 10% in March after sliding 4.4% in February.
Meanwhile, the situation in Macau continues to deteriorate at a rather remarkable pace, as gaming revenue fell 39% last month, the eleventh consecutive monthly decline which looks good only in comparison to March’s 39.4% decline and February’s 49% drop. Of course in the deluded minds of China’s millions of newly-minted day traders, a 39% decline represents “stabilization” and so, as Bloomberg reports, casino shares rose in Hong Kong on the news:
Wynn Macau Ltd. rose 4.8 percent to HK$16.54 by the close of trading, the biggest gain since April 9. Sands China Ltd. gained 3.3 percent and Galaxy Entertainment Group Ltd. advanced 3.1 percent, while the Hang Seng Index was little changed.
Gross gaming revenue in the world’s largest gambling hub fell 39 percent to 19.2 billion patacas ($2.4 billion) last month, meeting a median estimate of a 39 percent decline from eight analysts surveyed by Bloomberg. The drop has slowed for a second consecutive month.
“Investors are really just focused on trying to find stabilization or a bottoming,” said Vitaly Umansky, an analyst at Sanford Bernstein. “As long as things aren’t deteriorating, things seemed to be fairly consistent, that’s probably a decent sign from an investor’s perspective.”
Right. As long as things “aren’t deteriorating” and revenues are only falling by 40% that’s a “decent sign.” Unfortunately, some industry heavyweights don’t seem to share the view that the market is set to turn the corner any time soon. Take Steve Wynn for instance who, on the way to slashing WYNN’s dividend by nearly 70%, had the following to say about the company’s outlook for Vegas and Macau and about the so-called “recovery” in the US economy:
Well, the numbers in the first quarter are out. I think the trends in Macau were beginning to be very visible in the fourth quarter, but our hopes for an improvement in the Chinese New Year turned out to be incorrect. And the repositioning of the market and the degradation of the volumes in VIP, have continued even into April. Most of my remarks now are going to include what we’ve seen in the first four months, not just the first three months, because the trends that were clear in January, February and March have continued into April and as we look at the whole year in Las Vegas and Macau, certain simple truths emerge.
It is no secret that there’s been a change in mainland China in attitudes towards a number of things that have impacted Macau. That has not – nothing has changed since this all began last October. And the depression of the VIP market continues…
So as we look backwards for the fourth quarter and especially during the last four months, and understand what’s happening, both in Las Vegas because of the Asian impact on Baccarat, and we look back and then we extrapolate and try predict the future, or at least understand what most likely will be the future, it is foolhardily and immature and unsophisticated to issue dividends on borrowed money. We only distribute money that’s free cash flow based upon our earnings that trail…
If you were to ask me, since we’re making forward-looking statements, what will the second quarter look like in Las Vegas? Weak. Do you hear me? Weak. So I’m trying to lower expectations here. This notion of a big recovery is a complete dream. I don’t think Las Vegas is experiencing a great recovery. I think it’s still very patchy and I think that that’s probably our non-casino revenue in the first quarter was flat. I’d be thrilled if it was flat in the second quarter.
Besides being a stinging indictment of the pitiable state of the US economy, that’s a fairly unambiguous message from someone who knows a thing or two about this industry and even as the likes of Deutsche Bank called the Las Vegas commentary “overdone”, the bank had the following to say about the outlook for the gaming industry:
[With] market trends showing very limited signs of improving, and more headwinds than tail winds on the horizon (potential visitor traffic curbs, a full smoking ban, and uncertainty around table allocations), visibility is worse than ever in our view.
Despite the malaise and despite the fact that, as we noted earlier this year, Beijing’s corruption crackdown has likely motivated China’s habitual (and filthy rich) gamblers to move permanently away from the dark-lit Macau gambling parlors to multiple-monitor lit trading desks, there will always, always be BTFDers — especially when you’re talking about Hong Kong-listed shares. With that in mind, we’ll close with this quote provided to Reuters by Matthew Ossolinski, chairman of Ossolinski Holdings:
“What is the worst that could happen? [Gaming] stocks go down before they go up. But they will go up. We are preparing for a 100 percent increase in shares within the next three years.”
- Hong Kong 'Loophole' May Have Flooded China With Radioactive Japanese Foods
And the ‘incidents’ just keep coming for Japan. Lax safety checks at Kwai Chung container terminal – the only sea entry point for food from overseas – have allowed banned imports from Japan to enter Hong Kong, according to Democratic Party lawmaker Helena Wong Pik-wan. As The South China Morning Post reports, radioactive contaminated food may have been entering the city unnoticed for years because of deficiencies in safety controls on fresh produce since the ban following the Fukushima nuclear power plant incident in 2011.
Democratic Party lawmaker Helena Wong Pik-wan said, as The Soth China Morning Post reports, food safety surveillance was too relaxed at the Kwai Chung container terminal – the only sea entry point for food from overseas – as it relied heavily on the importer taking the initiative.
Radioactive contaminated food may have been entering the city unnoticed for years because of deficiencies in safety controls on fresh produce brought in by sea.
Food imported by sea does not go through routine checks at the dock as the Food and Environmental Hygiene Department has no food inspection checkpoint at the terminal. Food imported by air, however, is tested for radiation at the airport.
Food imported by sea is inspected by health officers only when it is moved to storage areas by importers, according to the department. This would allow some food importers to avoid inspection, Wong said.
She cited a case in January, when 10 boxes of Japanese carrots from Chiba, one of five prefectures from which imports of vegetables and fruits have been banned since the Fukushima nuclear power plant incident in 2011, entered the city by sea.
One box was sold and two other boxes were found for sale in the Yau Ma Tei wholesale fruit market when food safety officers acted on a complaint.
“It has exposed… loopholes in our food safety system,” Wong said. “We do not know if there is more banned food being sold in the city that has not been discovered by the government.”
The loophole is significant…
Since importers are only required to complete the import declarations within 14 days after the importation under the Import and Export Ordinance, “some small importers” would not bother to alert food inspectors and simply sell their perishable produce before health officers obtained the details of the declaration, a source said.
“If the health officers want to conduct checks after getting the details of the import declaration, but the imported food is already distributed in the market for sale, how can the health officers trace the food and conduct checks?” the source said.
Hong Kong imported 15,093 tonnes of vegetables and fruit from Japan by sea last year, about 0.8 per cent of total vegetables and fruit imports by sea.
Since March 2011, the department had stepped up surveillance of fresh produce imported from Japan such as milk, vegetables and fruits, to examine radiation levels, a spokesman said.
Kowloon Fruit and Vegetable Merchants Association vice-chairman Cheung Chi-cheung said importers had to notify the department for inspection whenever they picked up the goods. He also did not comment on whether there might be a loophole in the inspection system.
* * *
Once again it seems Japanese falsehoods are at the center of another potential international issue… no we are not devaluing our currency… no Fukushima is safe… no radiation leaks are under control… no the economy is proceeding on a moderate pace of recovery… no the US alliance is not antagonistic, we are pacifists… and now no the food we sent you is not radioactive…
- The Mistake Everyone Is Making About Fed Rate Hikes
Submitted by Lance Roberts via STA Wealth Management,
With the Federal Reserve now indicating that they are "really serious" about raising interest rates, there have come numerous articles and analysis discussing the impact on asset prices. The general thesis is based on averages of historical tendencies as discussed recently by David Rosenberg in his daily commentary:
"Equity bull markets never die simply of old age. They die of excessive Fed monetary restraint – but the Fed hasn't even started to raise rates yet.
In the past six decades, the average length of time from the first tightening to the end of the business cycle is 44 months; the median is 35 months; and the lag from the initial rate hike to the end of the bull equity market is 38 months for the average, 40 months for the media."
So, why fear a Fed rate hike at this point? According to Rosenberg, there are still at least three years left to the current business cycle. Right? Maybe not.
First, averages and medians are great for general analysis but obfuscate the variables of individual cycles. To be sure the last three business cycles (80's, 90's and 2000) were extremely long and supported by a massive shift in financial engineering and credit leveraging cycle. The post-Depression recovery and WWII drove the long economic expansion in the 40's, and the "space race" supported the 60's.
Currently, employment and wage growth is extremely weak, 1-in-4 Americans are on Government subsidies, and the majority of American's living paycheck-to-paycheck. This is why Central Banks, globally, are aggressively monetizing debt in order to keep growth from stalling out. If the Fed starts hiking rates in September and the next recession doesn't occur for another three years, as David suggests, this would be the single longest economic expansion in history based on the weakest economic fundamentals.
Secondly, what David's analysis misses is the level of economic growth at the beginning of interest rate hikes. The Federal Reserve uses monetary policy tools to slow economic growth and ease inflationary pressures by tightening monetary supply. For the last six years, the Federal Reserve has flooded the financial system to boost asset prices in hopes of spurring economic growth and inflation. Outside of inflated asset prices there is little evidence of real economic growth as witnessed by an average annual GDP growth rate of just 1.2% since 2008, which by the way is the lowest in history….ever.
While David is statistically correct in his analysis, it is based on nominal GDP. The chart and table below compares real, inflation-adjusted, GDP to Federal Reserve interest rate levels. The vertical red bars denote the quarter of the first rate hike to beginning of the next rate decrease or onset of a recession.
If I look at the underlying data, which dates back to 1943, and calculate both the average and median for the entire span, I find:
- The average number of quarters from the first rate hike to the next recession is 11, or 33 months.
- The average 5-year real economic growth rate was 3.08%
- The median number of quarters from the first rate hike to the next recession is 10, or 30 months.
- The median 5-year real economic growth rate was 3.10%
However, note the BLUE arrows. There have only been TWO previous points in history where real economic growth was below 2% at the time of the first quarterly rate hike – 1948 and 1980. In 1948, the recession occurred ONE-quarter later and THREE-quarters following the first hike in 1980.
The importance of this reflects the point made previously, the Federal Reserve lifts interest rates to slow economic growth and quell inflationary pressures. There is currently little evidence of inflationary pressures outside of financial asset prices, and economic growth is weak to say the least.
Therefore, rather than lifting rates when average real economic growth was at 3%, the Fed will not start this process at less that half that rate.
Think about it this way. If it has historically taken 11 quarters to go fall from an economic growth rate of 3% into recession, then it will take just 1/3rd of that time at a rate of 1%, or 3-4 quarters. This is historically consistent with previous economic cycles, as shown in the table to the left, that suggests there is much less wiggle room between the first rate hike and the next recession than currently believed.
Recessions & Bear Markets
Rosenberg's premise is that if historical averages hold, and since major bear markets in equities coincide with recessions, that the current bull market in equities has three years left to run. But this also may be a bit overly optimistic.
Another David, David Bianco, weighed in on this issue previously. To wit:
"'Stocks typically sell-off on the first of a series of rate hikes, but the magnitude and duration of the sell-off depend on conditions. During early cycle hikes the initial sell-off was generally small, quickly recovered and further S&P gains came in next three months and longer (like 2004, 1983, 1972). But many sell-offs on late cycle hikes became corrections or even bear markets. Unfortunately, it's only in hindsight do we know where we are in the cycle."
While the markets, due to momentum, may ignore the effect of "monetary tightening" in the short-term, the longer-term has been a different story.
As shown in the table below, the bulk of losses in markets are tied to economic recessions. However, there are also other events such as the Crash of 1987, the Asian Contagion, Long-Term Capital Management, and others that led to sharp corrections in the market as well.
The point is that in the short-term the economy and the markets (due to momentum) can SEEM TO DEFY the laws of gravity as interest rates begin to rise. However, as rates continue to rise they ultimately act as a "brake" on economic activity. Think about the all of the areas that are NEGATIVELY impacted by rising interest rates:
1) Debt servicing requirements reduce future productive investment.
2) The housing market. People buy payments, not houses, and rising rates mean higher payments. (Read "Economists Stunned By Housing Fade" for more discussion)
3) Higher borrowing costs which leads to lower profit margins for corporations.
4) Stocks are cheap based on low-interest rates. When rates rise, markets become overvalued very quickly.
5) The economic recovery to date has been based on suppressing interest rates to spur growth.
6) Variable rate interest payments for consumers
8) Corporate share buyback plans, a major driver of asset prices, and dividend issuances have been done through the use of cheap debt.
9) Corporate capital expenditures are dependent on borrowing costs.
Well, you get the idea. If real economic growth was near historical norms of 3%, then I would completely agree with Mr. Rosenberg. However, at current levels, the window between a rate hike and recession has likely closed rather markedly.
Lastly, it isn't just recessions that have impacted stocks prices in the past. This is something that I addressed more deeply in "Don't Fear Rising Interest Rates? Really?"
"Do Rising Interest Rates Lead To Higher Stock Prices? This claim falls into the category of 'timing is everything.' The chart below has been circulated quite a bit to support the "don't fear rising interest rates" meme. I have annotated the chart to point out the missing pieces.
While rising interest rates may not "initially" impact asset prices, it is a far different story to suggest that they won't. In fact, there have been absolutely ZERO times in history that the Federal Reserve has begun an interest rate hiking campaign that has not eventually led to a negative outcome.
What the majority of analysts fail to address is the "full-cycle" effect from rate hikes. While equities may initially provide a haven from rising interest rates during the first half of the rate cycle, they have been a destructive place to be during the last half.
What is clear from the analysis is that bad things have tended to follow the Federal Reserve's first interest rate increase. While the markets, and economy, may seem to perform okay during the initial phase of the rate hiking campaign, the eventual negative impact will push most individuals to "panic sell" near the next lows. Emotional mistakes are 50% of the cause as to why investors consistently underperform the markets over a 20-year cycle.
For now the bullish trend is still in place and should be "consciously" honored. However, while it may seem that nothing can stop the markets current rise, it is crucial to remember that it is "only like this, until it is like that." For those "asleep at the wheel,"there will be a heavy price to pay when the taillights turn red.
- China Faces End Of "Migrant Miracle" As Demographic Ceiling Imperils Economy
Exactly four years ago we began to discuss the idea that China is fast approaching its so-called “Lewis Turning Point,” which is defined simply as the moment in time when surplus rural labor is fully absorbed into the urbanizing economy leading to rising wages and falling productivity. At the time, SocGen suggested that “China [was] still some time away from reaching the type of urbanisation rates that characterised Lewis turning points in Japan and South Korea during their most rapid periods of industrialisation and wage growth.”
We revisited the issue in 2013, and began to discuss the idea that although urbanization had indeed contributed to productivity gains, the country faced offsetting demographic headwinds in the form of a shrinking working-age population. Additionally, we pointed to research from SocGen which suggested that from 2015 forward, the labor force in China is expected to contract.
Here we are in 2015 and sure enough, demographics in China are once again set to become a talking point, as the two trends mentioned above (urbanization and a decline in the working age population) play out against — and feed into — slumping economic growth. Here’s FT with more:
China’s labour force is shrinking and the “migrant miracle” that powered its industrial rise is mostly exhausted, removing the factors that propelled the country’s meteoric development, according to leading economists.
The transformation will lead to slower growth, reduced investment and a loss of export competitiveness, they warn, increasing the urgency of implementing ambitious economic reforms aimed at finding new sources of expansion.
“Now we are at the so-called Lewis inflection point. I made this forecast in 2006, and today there is no need to change it,” said Ha Jiming, chief investment strategist for private wealth management at Goldman Sachs in Hong Kong…
“The working-age share of China’s population peaks this year at 72 per cent, then it will start to fall rapidly, even more rapidly than what we saw in Japan in the 1990s,” he added.
Cai Fang, vice-president of the Chinese Academy of Social Sciences, a think-tank that advises the government, estimates that China’s potential gross domestic product growth decreased from 9.8 per cent in 1995-2009 to 7.2 per cent in 2011-15 and 6.1 per cent from 2016-20.
A shrinking labour force is one of the main drivers. Since Deng Xiaoping launched market reforms in 1978, 278m migrant workers from rural villages have moved to work in the cities.
But reallocating labour from farm to factory — resulting in higher overall growth as workers’ productivity soars — is now mostly complete.
“From 2005 to 2010, the growth rate of migrant workers was 4 per cent. Last year it was only 1.3 per cent. Maybe this year it will contract,” said Mr Cai.
For China’s economy — which, you’re reminded, may be growing far less rapidly than the official numbers suggest even as the official figures represent the slowest growth rate in six years — the above has serious ramifications. First it stands to reason that as the supply of new low wage workers shrinks, wages will rise, an eventuality which forces producers to pass higher costs on to customers thus undercutting export competitiveness at a time when exports are already under pressure from slumping global demand and the yuan’s link to the dollar.
This dynamic is exacerbated by a projected decline in the overall number of working-age citizens. Here’s FT again:
The dwindling flow of migrants is one aspect of China’s shrinking labour force. But the slowdown in urbanisation is coinciding with a rapid ageing of the population, another key shift underlying the Lewis Turning Point.
China’s one-child policy created a “demographic dividend” for the economy between roughly 1980 and 2014. Now that dividend is turning into a deficit. The population of Chinese aged between 15 and 64 peaked in 2013, Mr Cai notes. The ratio of children and elderly to working-age Chinese — the dependency ratio — began rising in 2011.
The one-child policy was introduced in 1979, but the birth rate kept rising into the 1980s. Annual births in China hit 25m in 1987 and have steadily dropped ever since, hitting about 20m a year by 1997 and falling to 16m last year.
“Starting in two or three years, you’re going to see another substantial, precipitous drop in young labour entering the labour market,” says Wang Feng, an expert on Chinese demographics at the University of California Irvine and Fudan University in Shanghai.
Putting all of this together, China is faced with a new reality wherein the very conditions that have supported the country’s rapid economic growth may now be set for a wholesale reversal, as rising wages and a shrinking labor pool transform the industry-based economy (previously characterized by large trade surpluses and widespread inequality) into a service and consumption-based economy characterized by declining export competitiveness and falling rates of savings and investment. FT notes that the acceleration of economic reforms can help to ameliorate what is likely to be a painful transition and as you’ll see in the video below, the suggested solutions echo those we highlighted two years ago — namely, the creation of a sustainable social safety net, and the facilitation of labor mobility.
- What Happens If You Defy Curfew: A Shocking 90-Second Clip From The Streets Of Baltimore
Submitted by Mike Krieger via Liberty Blitzkrieg blog,
On Saturday night, a man whose name still seems to be unknown, but who was wearing a “F##k the Police” t-shirt, came out in front of police past the official curfew. This is what happened next:
As Mike noted previously, the situation in Baltimore is very serious and all Americans should be paying very close attention; but Baltimore is just a Microcosm of America.
Baltimore, Maryland is in many ways the perfect microcosm for these United States of America. If you still don’t get that, you’ll be in for a rude awakening in the years ahead.
A gradual erosion of the Constitution and the civil rights of the citizenry, the abuse of power by people in authority, perverse financial incentives that lead to horrible outcomes, zero accountability, and a ubiquitous surveillance state apparatus; Baltimore has it all. Yet all of these troubling traits have also come to characterize early 21st century America.
As tends to be the case, the populations that have been victimized the longest and most systemically — in Baltimore and across the U.S. — are the poor, weak and disenfranchised. Like a cancer, corruption, theft, and blatant abuse of the citizenry by the powerful will spread and spread until it consumes everything unless the tumor is removed. It has now spread so deeply and so dangerously throughout American life, the general public will soon have no choice but to confront it and do something about it, or face a total extinction of opportunity and suffer the same desperate fate as the people out in the streets of Baltimore.
David Simon, creator of the excellent hit HBO series “The Wire,” recently sat down for an interview with former New York Times reporter Bill Keller to explain the situation in Baltimore as he sees it; its origins and what is needed to fix it. As you read, think about the many parallels to the U.S. economy in general; the endless criminal maneuverings within the centers of power in Washington D.C. and Wall Street, the forever spinning revolving door of corruption, the marauding gangs of cronies making impossibly large piles of money based on connections, fraud and rigged markets as opposed to adding value, the idiocy of the war on drugs, the fraudulent accounting, and the overbearing surveillance state. Increasingly, when America looks in the mirror Baltimore and Ferguson are staring right back. We just haven’t admitted it yet.
Now, from the Marshall Project:
Bill Keller: What do people outside the city need to understand about what’s going on there — the death of Freddie Gray and the response to it?
David Simon: I guess there’s an awful lot to understand and I’m not sure I understand all of it. The part that seems systemic and connected is that the drug war — which Baltimore waged as aggressively as any American city — was transforming in terms of police/community relations, in terms of trust, particularly between the black community and the police department. Probable cause was destroyed by the drug war.
Probable cause from a Baltimore police officer has always been a tenuous thing. It’s a tenuous thing anywhere, but in Baltimore, in these high crime, heavily policed areas, it was even worse. When I came on, there were jokes about, “You know what probable cause is on Edmondson Avenue? You roll by in your radio car and the guy looks at you for two seconds too long.” Probable cause was whatever you thought you could safely lie about when you got into district court.
Then at some point when cocaine hit and the city lost control of a lot of corners and the violence was ratcheted up, there was a real panic on the part of the government. And they basically decided that even that loose idea of what the Fourth Amendment was supposed to mean on a street level, even that was too much. Now all bets were off. Now you didn’t even need probable cause. The city council actually passed an ordinance that declared a certain amount of real estate to be drug-free zones. They literally declared maybe a quarter to a third of inner city Baltimore off-limits to its residents, and said that if you were loitering in those areas you were subject to arrest and search. Think about that for a moment: It was a permission for the police to become truly random and arbitrary and to clear streets any way they damn well wanted.
How does race figure into this? It’s a city with a black majority and now a black mayor and black police chief, a substantially black police force.
What did Tom Wolfe write about cops? They all become Irish? That’s a line in “Bonfire of the Vanities.” When Ed and I reported “The Corner,” it became clear that the most brutal cops in our sector of the Western District were black. The guys who would really kick your ass without thinking twice were black officers. If I had to guess and put a name on it, I’d say that at some point, the drug war was as much a function of class and social control as it was of racism. I think the two agendas are inextricably linked, and where one picks up and the other ends is hard to say. But when you have African-American officers beating the dog-piss out of people they’re supposed to be policing, and there isn’t a white guy in the equation on a street level, it’s pretty remarkable. But in some ways they were empowered.
Back then, even before the advent of cell phones and digital cameras — which have been transforming in terms of documenting police violence — back then, you were much more vulnerable if you were white and you wanted to wail on somebody. You take out your nightstick and you’re white and you start hitting somebody, it has a completely different dynamic than if you were a black officer. It was simply safer to be brutal if you were black, and I didn’t know quite what to do with that fact other than report it. It was as disturbing a dynamic as I could imagine. Something had been removed from the equation that gave white officers — however brutal they wanted to be, or however brutal they thought the moment required — it gave them pause before pulling out a nightstick and going at it. Some African American officers seemed to feel no such pause.
This is another fascinating microcosm considering how Barack Obama has done absolutely nothing to help the black community or poor in this country. It took a black President to so shamelessly hand everything to a handful of oligarchs and further oppress black communities.
What the drug war did, though, was make this all a function of social control. This was simply about keeping the poor down, and that war footing has been an excuse for everybody to operate outside the realm of procedure and law.
“The drug war began it, certainly, but the stake through the heart of police procedure in Baltimore was Martin O’Malley.”
In case you aren’t aware, Martin O’Malley was the ambitious Mayor of Baltimore who had his eyes dead set on the Governor’s seat. So much so that he cooked the crime books of Baltimore to create a crime “miracle,” and destroyed city police work in the process. Mr. O’Malley has recently discussed possibly running against Hillary in the 2016 Democrat primary.
But that wasn’t enough. O’Malley needed to show crime reduction stats that were not only improbable, but unsustainable without manipulation. And so there were people from City Hall who walked over Norris and made it clear to the district commanders that crime was going to fall by some astonishing rates. Eventually, Norris got fed up with the interference from City Hall and walked, and then more malleable police commissioners followed, until indeed, the crime rate fell dramatically. On paper.
How? There were two initiatives. First, the department began sweeping the streets of the inner city, taking bodies on ridiculous humbles, mass arrests, sending thousands of people to city jail, hundreds every night, thousands in a month. They actually had police supervisors stationed with printed forms at the city jail – forms that said, essentially, you can go home now if you sign away any liability the city has for false arrest, or you can not sign the form and spend the weekend in jail until you see a court commissioner. And tens of thousands of people signed that form.
Unsurprisingly, the rule of law often dies at the hands of an ambitious politician.
The situation you described has been around for a while. Do you have a sense of why the Freddie Gray death has been such a catalyst for the response we’ve seen in the last 48 hours?
Because the documented litany of police violence is now out in the open. There’s an actual theme here that’s being made evident by the digital revolution. It used to be our word against yours. It used to be said — correctly — that the patrolman on the beat on any American police force was the last perfect tyranny. Absent a herd of reliable witnesses, there were things he could do to deny you your freedom or kick your ass that were between him, you, and the street. The smartphone with its small, digital camera, is a revolution in civil liberties.
In these drug-saturated neighborhoods, they weren’t policing their post anymore, they weren’t policing real estate that they were protecting from crime. They weren’t nurturing informants, or learning how to properly investigate anything. There’s a real skill set to good police work. But no, they were just dragging the sidewalks, hunting stats, and these inner-city neighborhoods — which were indeed drug-saturated because that’s the only industry left — become just hunting grounds. They weren’t protecting anything. They weren’t serving anyone. They were collecting bodies, treating corner folk and citizens alike as an Israeli patrol would treat Gaza, or as the Afrikaners would have treated Soweto back in the day. They’re an army of occupation. And once it’s that, then everybody’s the enemy. The police aren’t looking to make friends, or informants, or learning how to write clean warrants or how to testify in court without perjuring themselves unnecessarily. There’s no incentive to get better as investigators, as cops. There’s no reason to solve crime. In the years they were behaving this way, locking up the entire world, the clearance rate for murder dove by 30 percent. The clearance rate for aggravated assault — every felony arrest rate – took a significant hit. Think about that. If crime is going down, and crime is going down, and if we have less murders than ever before and we have more homicide detectives assigned, and better evidentiary technologies to employ how is the clearance rate for homicide now 48 percent when it used to be 70 percent, or 75 percent?
Because the drug war made cops lazy and less competent?
How do you reward cops? Two ways: promotion and cash. That’s what rewards a cop. If you want to pay overtime pay for having police fill the jails with loitering arrests or simple drug possession or failure to yield, if you want to spend your municipal treasure rewarding that, well the cop who’s going to court 7 or 8 days a month — and court is always overtime pay — you’re going to damn near double your salary every month. On the other hand, the guy who actually goes to his post and investigates who’s burglarizing the homes, at the end of the month maybe he’s made one arrest. It may be the right arrest and one that makes his post safer, but he’s going to court one day and he’s out in two hours. So you fail to reward the cop who actually does police work. But worse, it’s time to make new sergeants or lieutenants, and so you look at the computer and say: Who’s doing the most work? And they say, man, this guy had 80 arrests last month, and this other guy’s only got one. Who do you think gets made sergeant? And then who trains the next generation of cops in how not to do police work? I’ve just described for you the culture of the Baltimore police department amid the deluge of the drug war, where actual investigation goes unrewarded and where rounding up bodies for street dealing, drug possession, loitering such – the easiest and most self-evident arrests a cop can make – is nonetheless the path to enlightenment and promotion and some additional pay. That’s what the drug war built, and that’s what Martin O’Malley affirmed when he sent so much of inner city Baltimore into the police wagons on a regular basis.
So much of what was said there characterizes the perverted culture in Washington D.C. and on Wall Street. People are financially incentivized to commit fraud, crime and deceive customers. Those people are then promoted and train the next class. And the beat goes on…
The second thing Marty did, in order to be governor, involves the stats themselves. In the beginning, under Norris, he did get a better brand of police work and we can credit a legitimate 12 to 15 percent decline in homicides. Again, that was a restoration of an investigative deterrent in the early years of that administration. But it wasn’t enough to declare a Baltimore Miracle, by any means.
What can you do? You can’t artificially lower the murder rate – how do you hide the bodies when it’s the state health department that controls the medical examiner’s office? But the other felony categories? Robbery, aggravated assault, rape? Christ, what they did with that stuff was jaw-dropping.
Now for the accounting fraud. Looks like Baltimore authorities learned well from Wall Street.
So they cooked the books.
Oh yeah. If you hit somebody with a bullet, that had to count. If they went to the hospital with a bullet in them, it probably had to count as an aggravated assault. But if someone just took a gun out and emptied the clip and didn’t hit anything or they didn’t know if you hit anything, suddenly that was a common assault or even an unfounded report. Armed robberies became larcenies if you only had a victim’s description of a gun, but not a recovered weapon. And it only gets worse as some district commanders began to curry favor with the mayoral aides who were sitting on the Comstat data. In the Southwest District, a victim would try to make an armed robbery complaint, saying , ‘I just got robbed, somebody pointed a gun at me,’ and what they would do is tell him, well, okay, we can take the report but the first thing we have to do is run you through the computer to see if there’s any paper on you. Wait, you’re doing a warrant check on me before I can report a robbery? Oh yeah, we gotta know who you are before we take a complaint. You and everyone you’re living with? What’s your address again? You still want to report that robbery?
They cooked their own books in remarkable ways. Guns disappeared from reports and armed robberies became larcenies. Deadly weapons were omitted from reports and aggravated assaults became common assaults. The Baltimore Sun did a fine job looking into the dramatic drop in rapes in the city. Turned out that regardless of how insistent the victims were that they had been raped, the incidents were being quietly unfounded. That tip of the iceberg was reported, but the rest of it, no. And yet there were many veteran commanders and supervisors who were disgusted, who would privately complain about what was happening. If you weren’t a journalist obliged to quote sources and instead, say, someone writing a fictional television drama, they’d share a beer and let you fill cocktail napkins with all the ways in which felonies disappeared in those years.
I mean, think about it. How does the homicide rate decline by 15 percent, while the agg assault rate falls by more than double that rate. Are all of Baltimore’s felons going to gun ranges in the county? Are they becoming better shots? Have the mortality rates for serious assault victims in Baltimore, Maryland suddenly doubled? Did they suddenly close the Hopkins and University emergency rooms and return trauma care to the dark ages? It makes no sense statistically until you realize that you can’t hide a murder, but you can make an attempted murder disappear in a heartbeat, no problem.
But these guys weren’t satisfied with just juking their own stats. No, the O’Malley administration also went back to the last year of the previous mayoralty and performed its own retroactive assessment of those felony totals, and guess what? It was determined from this special review that the preceding administration had underreported its own crime rate, which O’Malley rectified by upgrading a good chunk of misdemeanors into felonies to fatten up the Baltimore crime rate that he was inheriting. Get it? How better than to later claim a 30 or 40 percent reduction in crime than by first juking up your inherited rate as high as she’ll go. It really was that cynical an exercise.
So Martin O’Malley proclaims a Baltimore Miracle and moves to Annapolis. And tellingly, when his successor as mayor allows a new police commissioner to finally de-emphasize street sweeps and mass arrests and instead focus on gun crime, that’s when the murder rate really dives. That’s when violence really goes down. When a drug arrest or a street sweep is suddenly not the standard for police work, when violence itself is directly addressed, that’s when Baltimore makes some progress.
But nothing corrects the legacy of a police department in which the entire rank-and-file has been rewarded and affirmed for collecting bodies, for ignoring probable cause, for grabbing anyone they see for whatever reason. And so, fast forward to Sandtown and the Gilmor Homes, where Freddie Gray gives some Baltimore police the legal equivalent of looking at them a second or two too long. He runs, and so when he’s caught he takes an ass-kicking and then goes into the back of a wagon without so much as a nod to the Fourth Amendment.
So do you see how this ends or how it begins to turn around?
We end the drug war. I know I sound like a broken record, but we end the fucking drug war. The drug war gives everybody permission to do anything. It gives cops permission to stop anybody, to go in anyone’s pockets, to manufacture any lie when they get to district court. You sit in the district court in Baltimore and you hear, ‘Your Honor, he was walking out of the alley and I saw him lift up the glassine bag and tap it lightly.’ No fucking dope fiend in Baltimore has ever walked out of an alley displaying a glassine bag for all the world to see. But it keeps happening over and over in the Western District court. The drug war gives everybody permission. And if it were draconian and we were fixing anything that would be one thing, but it’s draconian and it’s a disaster.
This is true about the drug war, but even more true about the “war on terror.” Also endless, also used to justify anything.
Medicalize the problem, decriminalize — I don’t need drugs to be declared legal, but if a Baltimore State’s Attorney told all his assistant state’s attorneys today, from this moment on, we are not signing overtime slips for court pay for possession, for simple loitering in a drug-free zone, for loitering, for failure to obey, we’re not signing slips for that: Nobody gets paid for that bullshit, go out and do real police work. If that were to happen, then all at once, the standards for what constitutes a worthy arrest in Baltimore would significantly improve. Take away the actual incentive to do bad or useless police work, which is what the drug war has become.
So much of what’s been happening in Baltimore for decades is now also business as usual within the highest corridors of American power. As I’ve said time and time again, incentives are the key variable here. If you’re rewarded for fraud and white collar crime, you will get more of it. If you jail the perpetrators of it, you’ll get less of it. TBTF Wall Street execs and private equity guys don’t want to sit in a jail cell for a decade, believe me. They’d sell 50 Picassos and 30 sharks soaked in formaldehyde before that ever happened.
The sad part is we aren’t even trying to change the incentive structure of status quo criminality. This is because the current generation of power players were trained and molded by the same types before them. This is all they know. Money and power are their gods. Crime is their religion. We have no choice but to stop them.
- Rant Time
May 5 – Gold $1193.80 up $6.20 – Silver $16.56 up 14 cents
Rant Time
“When wealth is lost, nothing is lost; when health is lost, something is lost; when character is lost, all is lost.” … Billy Graham
GO GATA!
As is almost always the case, the price of gold was leaned on at the standard PLAN A time in London when The Gold Cartel traders reported for work, but their nudge was thwarted pretty quickly. Gold took off again going into the Comex trading hours and managed to reach $1200 where it was stopped dead in its tracks. James Mc early this morning…
Rules are rules
Bill,
Yesterday’s circled number was $1186.30, and while gold slightly exceeded it, and the 1% rule at the end of the day there was a clear gravitational pull bringing it back. After the 6:00 PM access trade opened it was clearly being held in check for the next 7 hours right around $1186. Cartel rule #1 is also apparent today; with the high tick so far exactly today’s circled number of $1198.70. As of 10:10 AM gold is getting the kitchen sink thrown at it at +1%. As always any big nearby number such as $1200 is irrelevant. It’s all about control, and the fact that $1200 is nearby is just coincidence. The cartel has proven over and over they will stop gold rallies at ANY number, as long as it is the prescribed percentage.As tiresome as it is to talk about there are 2 big looming potholes for gold. The first arrives this week in the form of NFP Friday which is usually a cartel biggie. The next one arrives 3 weeks from today on May 26th, which is June option expiration. If history is a guide I am issuing a full Washington General warning for both days. Fleecing idiots trading paper gold and executing MOPE to perfection has been the winning formula for the crooks. Never mind an exploding trade deficit (with the implications of negative GDP leading to QE-MOAR) or any other bullish news for gold. For the cartel rules are rules.
The outrageous manipulation on a daily basis has rendered all analysis akin to being on a ride through a carnival funhouse. The cartel’s use of distorted mirrors, strobe lights and smoke make any critical examination virtually useless. Is COT data accurate? Is Comex warehouse inventory data accurate? What % of Comex trading is merely HFT algos disrupting flow? What % of the commercials are cartel banks, and what portion are true hedgers and/or mines? Who is behind the gigantic O.I. in silver? Who is behind the enforcement of the cartel rules? Just what the hell is going on at Ft. Knox, or anywhere gold is allegedly stored? As CP pointed out years ago gold secrets are a higher priority than even nuclear secrets.
James McThe silver action is intriguing, when not annoying. Much focus here of late on that price action and what it all might mean. The biggie today is that it was stopped again, like yesterday, right at its massive downtrend line…
After making a $16.68 high, JPM and allies put the damper on the price for the rest of the Comex session, like they did yesterday. CLEARLY, it must blow through $16.70 to BEGIN to do what so many of us are waiting for. To get back into the big leagues silver must then take out $18.50, with the next stop at $22. Once those objectives have been cleared, silver will have completed one of the largest bases imaginable, which should support a MOON SHOT.
The next three hours of trading on the Comex will be a predictable yawn … you can take that one to the bank. The good news is that this week has been a winner so far and each time the bums slam the gold/silver prices, they refuse to stay down.
The AM Fix: $1187.40. The PM Fix: $1197.
The gold open interest fell 9002 contracts to 401,699. The silver open interest was down 2436 contracts to 175,374.
With hours to kill as gold and silver have no chance of getting anywhere further, it is rant time.
Another six degrees of separation story that might hit home with some Café members. First off…
Six degrees of separation is the theory that everyone and everything is six or fewer steps away, by way of introduction, from any other person in the world, so that a chain of “a friend of a friend” statements can be made to connect any two people in a maximum of six steps. It was originally set out by Frigyes Karinthy in 1929 and popularized by a 1990 play written by John Guare.
***
Perhaps this ramble may be of assistance and value to Café members. There is no doubt that Six Degrees theory is valid in so many different ways.
Friday night I began to have a pain in my abdomen and it was hard to sleep. On Saturday morning the pain was intense on the lower right side of the abdomen and appeared to be spreading. As a former pro football athlete, you are trained to overcome pain and move on. Figuring it would go away, I lifted weights for an hour and then walked a few miles to pick up a pair of new sneakers (sorely needed).
After having some trouble sleeping Saturday night, the pain was worse when I got up early on Sunday. I wished I could call my superb doctor of many years (still a competitive rower and only a few years younger than me). That is what I would have done if he was open, but not the case on Sunday.
I hate going to hospitals and seeing doctors … did not even have health insurance until a few years ago. But, had nothing else to do on Sunday morning, so I thought I should go to Baylor Hospital’s Emergency room after all the whackos had cleared out from too much nonsense on Sat night.
Never have been to an emergency room in my life. Was clueless what to expect. Figured to be hanging around for hours waiting to be seen … was prepared for anything. Never was so surprised … the efficacy of their operation at Baylor was THE BEST. Was seen after 15 minutes. No filling out a zillion pieces of paper, just the basics of who I was and on to what my so-called emergency was.
They got me a room quickly, which had to be rearranged because the last patient was a psycho and they had taken most everything out of the room that the nutcase could use to hurt the staff. It was amusing watching the orderly move so much back in to make it feel more than a detention cell.
When taking my shirt off to put on my nightgown, the attending nurse (who had been asking me numerous health questions) noticed a rash on my lower back on the right side. “What rash?” I queried. She showed me. Immediately, she said, “SHINGLES,” which made no sense to me. The pain was in my abdomen, but it WAS only on my right side.
This cool young doctor came in and told me what the drill would be … an MRI and all blood tests imaginable, and that it would take hours. So, I ended up watching Law and Order on the tube and enjoyed the morning after being wheeled around to get MRI’d in this big tube thing.
Thought I was handling it all quite well … possibly in wait for the doctor to come back and tell me I have an inoperable cancer of the stomach, or that I would need to be admitted immediately for some other urgent surgery. Handling it well, right?…
*My blood pressure was sky high on the first go around and the doctor was concerned (it went back down to a normal area, which it has been for some time).
*Then could not get into the men’s room near me because of a lady in distress, so I went to the next one. Got lost coming out and ended up at the other side of the ER layout. When asking where to go, I kept getting sent to another room, where this lady was dealing with her own issue. What the heck? Turns out she was a Murphy too. What are the odds of that?
After a few laughs, I was led back to my room and waited for the doctor. The first few words out of his mouth could change my life forever and there was nothing to do but wait to hear what the pain was all about.
Before I could think “the dread” further, he opened the door and quickly said, “All your tests are NORMAL.” They were the sweetest words I ever heard. BUT, he said he thought the nurse was right that it was SHINGLES, so he gave me some medicine to be taken immediately.
No matter, I was not going on Death Row and didn’t have to quickly go home and get my laptop to do my daily commentary when I woke up from a surgery. (I actually almost brought it to the ER when I first went in anticipation of the worst.)
Now, I know how painful shingles is supposed to be. Everyone, for the right reasons, shudders on hearing of it because it is so painful … BUT compared to hearing my pancreas, appendix, liver, or kidney was blowing up, this news was a delight to hear.
Trying to keep this as short as possible, the doctor gave me two meds (pills) for shingles, which I began to take immediately. One was a steroid of sorts. What an eye opener. Feeling very good yesterday, I went to my gym. My weightlifting was the strongest in memory. My bike ride was the fastest in a long time. No wonder some of these famous athletes hit so many home runs. No wonder Lance Armstrong did what he did. What I took were three rinky-dink pills and I could feel the new strength in 24 hours. What a stunner!
On my way out of the gym, I ran into this sharp lawyer whom I have gotten to know and we did the usual cordial hellos and “How are you doing?” This time when he did his friendly query, I responded by saying I spent four hours in the ER at Baylor on Sunday. Naturally, he scrambled over to find out what was going on.
So glad I brought it up. He then told me that his wife, whom I have met briefly, had the same thing … shingles, and that the pain was nowhere near where her rash was, just like me if that is what I have. He went on to say how painful it was, but she beat it. And, if that is what I have, so will I … no matter what lifestyle changes that requires.
While in purgatory here, waiting to find out really what I have, my hope it is that it is SHINGLES, because that is something I can deal with and it is up to me to beat any immune issues that caused the problem.
What I have learned in this process and perhaps might be of help down the road to some Cafe member…
*Go to Google about any ailing symptoms you might have. When it came to what to do about stomach pain, they said follow your gut about whether to go to an emergency room. What a true hoot that was. The Google drill can give you some greater clarification of what you are dealing with and how to respond without wasting time.
*When you have terrible, unexplained pain, deal with it and don’t wish it away. The faster we confront our health demons, which we all have, the better chance of a satisfactory outcome.
*Don’t be afraid of the ER at a major hospital, silly as that may sound to most of you. I was shocked at how good the experience was. Baylor got right to my ER issue.
*Thank goodness for quality health insurance. How lucky I was all those years with my own self insurance program. That could have been a distant memory, very quickly. My entire ER experience cost $69.
That’s it. If all I have is SHINGLES, I am a lucky guy. It can be beat. Perhaps that old football slogan of “no pain, no gain,” learned all too well making it to a starting wide receiver with the Patriots so long ago, will take on a new meaning after all these years.
As for Six Degrees of Separation … when I can be directed into another patient’s room by mistake twice, another Murphy, how can this not relate so quickly to all of us and confirm that fabulous notion. Most important to me is that it appears that I will be around to do all I can on behalf of GATA to defeat The Gold Cartel and their heinous price suppression, market manipulation maneuvers.
On that note, it is ironic that the more GATA is proved correct, the more we are shunned. It appears that Jack Nicholson’s famous quote, “You can’t handle the truth!!” in the movie A Few Good Men, is so apropos for the mainstream media gold world, leading gold/silver company executives, and most of the entire gold/silver industry.
And that is the way it appears it will be until this market manipulation nonsense blows up and the decimated U.S. public is clamoring for answers. An essence of what GATA has had to say all along is that interference in the free market process, by manipulating the prices of gold and silver, was going to end badly because it has ruined free market price discovery. It has been deliberate and nefarious.
GATA was initiated back early in 1999 to expose the price manipulation scheme, to inform the public in a myriad of ways … one of those being going to Congress numerous times. Can you say House Speaker Hastert, or James Saxton of the Joint Economic Committee, or Ron Paul? We have been there and done that …including a visit with James Silvia of the Senate Banking Committee.
The meeting with Hastert was on May 10, 2000, nearly 15 years ago…
GATA Delegation Makes Significant Progress in Washington
On Wednesday at 11:30, the Gold Anti-Trust Action Committee consisting of Chris Powell, Reginald Howe, Frank Veneroso, a State Senator and myself met with one of the most powerful politicians in Washington. It was only going to be a 15 minute meeting. It lasted 45 minutes.
At the end of the meeting, we were excused from the room for several minutes. When the people we met with returned, we were told that they were going to try and set up a meeting with another influential politician at 2 o’clock, but that we would have to call at 1:30 to confirm.
We were stunned to learn at 1:30 that this politician had said, “I am aware of the issue,” and that he wanted to meet with the GATA delegation. The meeting took place and six members of his staff also attended. What was most remarkable is that this politician left the floor of Congress to attend our hastily arranged, unscheduled meeting.
This politician asked many questions and was very focused on what we had to say. So much so, that he was annoyed when a staff member left to deal with some other pending issue, saying that this was more important. He told us he had read our biographies before coming to the meeting and was a bit taken aback when he was handed the “Gold Derivative Banking Crisis” document to him with his name and state on it.
This knowledgeable politician said that he and his staff would look into our contentions and suggested that we might meet again. After this very intense one hour meeting, he returned to Congress which was in session.
From there, we went on to meet with Dr. John Silvia, the Chief Economist of the Senate Banking Committee. I could tell he had spent some time on our presentation because he had highlighted material that I had sent to him. Frank, Reg and Chris did a terrific job (as they did in all the meetings) explaining what we have learned through our extensive research. That meeting also lasted an hour and Dr. Silvia took copious notes.
Yesterday, I passed out 88 of the documents to the staff of all the Senators and Representatives on the banking committees. They were told to look for an open letter to all of them in Monday’s Roll Call.
That was some schlep. For the Senate I went to the Dirksen, Russell and Hart buildings. For the House I went to the Rayburn, Longworth and Cannon buildings. It took me the entire day, but was well worth it. Congressman Lee Terry of Nebraska could not have been nicer and said he would read the document on his way back to his native state this weekend.
I was struck by how different all the buildings were. AND HOW BIG. Most were about 100 yards long and were circular for traffic flow. I made the mistake of buying new shoes for the trip. Now, my feet are all blistered. Big booboo.
My last stop was the Rayburn Building and I smiled as I went by The Gold Room.
It was the opinion of the entire Gold Anti-Trust Action Committee delegation that the trip was far more fruitful than any one of us dreamed possible. However, as we all know, that was just our first salvo. There is much to be done to win the day and we are already planning our next course of action.
When our adversaries realize how far we have come, we know that they will go all out to discredit us. If yesterday’s meetings were any indication of making a serious impact on those who count in Washington, the other side has their work cut out for them!
Bill Murphy
***
Our afternoon meeting was with Spencer Bachus, Chairman of the House Subcommittee on Domestic and International Monetary Policy at the time.
So where are we now, almost 15-years later? That will depend on who you talk to.
Taking on the richest and most powerful people in the world is not an easy task. Never in my wildest dreams did I believe GATA could have come up with so much documentation about how valid our claims are and have it so ignored. No one in the world could have done a better job at documenting the evidence of the gold price suppression scheme than Chris Powell. No finer guy than him, or more dedicated and diligent in getting the facts out there.
Think about it. GATA has held four incredibly successful conferences; in Durban, South Africa; in Dawson City in The Yukon; right outside of Washington, D.C.; and in London at the Savoy Hotel, which 400 people attended from 38 countries. To a person they said it was the finest conference they ever attended.
Little did all of us know at the time what The Gold Cartel had in mind, as that was in August of 2011. One month later, gold soared more than $260 to over $1900 and has been going down ever since.
At the same time, other asset prices have soared due to money creation. What no one EVER asks in the mainstream Muppet world is why would gold and silver get bombed at the same time other assets as stocks, diamonds, real estate, and art took off? The incongruity of it all makes no sense, unless you know what GATA knows and the enormous effort that The Gold Cartel is doing to affect their own reality. That (their) reality will go on until the blowup, which is only a matter of time.
So, GATA carries on to win the day on all this nonsense, which is going to hurt so many innocent people who have no idea what the rich and powerful have done to enrich their own fortunes. Few seem to care at the moment what GATA has to say, BUT THEY WILL when all heck breaks loose.
GATA will win the day in the end and we need your support to carry on. What we are dealing with is historic… and will DWARF the Madoff and Enron scandals, etc. in terms of the enormity of it all.
At some point GATA’s efforts are going to prove out by revealing how thwarting the free market process was disastrous. You never know exactly when our efforts will pay off for all of us who believe in exposing the truth about the financial world’s machinations. With all so copacetic for the moment, few care. As said, that is all going to change.
GATA needs your help to spread awareness about what is really going on behind the scenes. Most everyone is clueless. Despite what we are encountering, GATA intends to carry on … and, as we do, it will expose the biggest financial scandal in American history.
The facts could not be clearer right now of what GATA explained when we went to Washington in 2000. Back then this topic was not even on the radar screen. To win the day we need your support to keep on keepin’ on. Having stayed on this obvious mission for so long, it is only a matter of time now before the importance of what GATA has claimed for so long makes it to center stage. The rich and powerful will not change their stance, but as things get ugly for the regular people like you and me, they are going to demand answers to the dramatic chaos.
We need some firepower to deliver that message to the world as it manifests itself. The world will want to know what happened and why, hopefully so it does not happen again. From what I know, all of us support various causes because we believe it will make a difference. While so few care now, thanks to the decimation of the gold/silver industry, courtesy of the antics of The Gold Cartel, GATA is still standing tall and telling it like it is.
If you agree and want to support GATA’s efforts, go here:
http://www.gata.org/node/16Going to send this to zerohedge because it is a prominent truth teller and a brilliant resource. May this be another feather in their cap. If anyone in zerohedge land would like to chat further on this monumental issue, you can reach me at midasnh@aol.com.
***
As expected many hours ago, it was a vintage Gold Cartel day … total lockdown … and that was despite a weak dollar, oil rising above $60 per barrel, and a stock market that was crushed. As usual, nothing matters except what The Gold Cartel can get away with. James Mc had it pegged at 9:30 this morning.
The shares didn’t like the action either. The XAU lost .53 to 72.93. The HUI lost 1.30 to 178.71.
Guess it was a good day for a rant.
MIDAS
Bill Murphy
www.Lemetropolecafe.com
- CFR Says China Must Be Defeated And TPP Is Essential To That
Submitted by Eric Zuesse
CFR Says China Must Be Defeated And TPP Is Essential To That
Wall Street’s Council on Foreign Relations has issued a major report, alleging that China must be defeated because it threatens to become a bigger power in the world than the U.S.
This report, which is titled “Revising U.S. Grand Strategy Toward China,” is introduced by Richard Haass, the CFR’s President, who affirms the report’s view that, “no relationship will matter more when it comes to defining the twenty-first century than the one between the United States and China.”
Haass gives this report his personal imprimatur by saying that it “deserves to become an important part of the debate about U.S. foreign policy and the pivotal U.S.-China relationship.” He acknowledges that some people won’t agree with the views it expresses.
The report itself then opens by saying: “Since its founding, the United States has consistently pursued a grand strategy focused on acquiring and maintaining preeminent power over various rivals, first on the North American continent, then in the Western hemisphere, and finally globally.” It praises “the American victory in the Cold War.” It then lavishes praise on America’s imperialistic dominance: “The Department of Defense during the George H.W. Bush administration presciently contended that its ‘strategy must now refocus on precluding the emergence of any potential future global competitor’—thereby consciously pursuing the strategy of primacy that the United States successfully employed to outlast the Soviet Union.”
The rest of the report is likewise concerned with the international dominance of America’s aristocracy or the people who control this country’s international corporations, rather than with the welfare of the public or as the U.S. Constitution described the objective of the American Government: “the general welfare.”
The Preamble, or sovereignty clause, in the Constitution, presented that goal in this broader context: “in order to form a more perfect union, establish justice, insure domestic tranquility, provide for the common defense, promote the general welfare, and secure the blessings of liberty to ourselves and our posterity.”
The Council on Foreign Relations, as a representative of Wall Street, is concerned only with the dominance of America’s aristocracy. Their new report, about “Revising U.S. Grand Strategy Toward China,” is like a declaration of war by America’s aristocracy, against China’s aristocracy. This report has no relationship to the U.S. Constitution, though it advises that the U.S. Government pursue this “Grand Strategy Toward China” irrespective of whether doing that would even be consistent with the U.S. Constitution’s Preamble.
The report repeats in many different contexts the basic theme, that China threatens “hegemonic” dominance in Asia. For example:
“China’s sustained economic success over the past thirty-odd years has enabled it to aggregate formidable power, making it the nation most capable of dominating the Asian continent and thus undermining the traditional U.S. geopolitical objective of ensuring that this arena remains free of hegemonic control.”
The report never allows the matter of America’s “hegemonic control” to be even raised. Thus, “hegemony” is presumed to be evil and to be something that the U.S. must block other nations from having, because there is a “traditional U.S. geopolitical objective of ensuring that this arena remains free of hegemonic control.” In other words: the U.S. isn’t being “hegemonic” by defeating aspiring hegemons. The report offers no term to refer to “hegemony” that’s being practiced by the U.S.
The report presents China as being supremacist, such as what (to quote again from the report) “historian Wang Gungwu has described as a ‘principle of superiority’ underwriting Beijing’s ‘long-hallowed tradition of treating foreign countries as all alike but unequal and inferior to China.’ Consistent with this principle, Henry Kissinger, describing the traditional sinocentric system, has correctly noted that China ‘considered itself, in a sense, the sole sovereign government of the world.’” America’s own ‘Manifest Destiny’ or right to regional (if not global) supremacy is not discussed, because supremacism is attributed only to the aristocracies in other countries, not to the aristocracy in this country.
Rather than the “general welfare,” this document emphasizes “U.S. Vital National Interests,” which are the interests of America’s aristocrats, the owners of America’s large international corporations.
This report urges:
“The United States should invest in defense capabilities and capacity specifically to defeat China’s emerging anti-access capabilities and permit successful U.S. power projection even against concerted opposition from Beijing. … Congress should remove sequestration caps and substantially increase the U.S. defense budget.”
In other words: the Government should spiral upward the U.S. debt even more vertically (which is good for Wall Street), and, in order to enable the increased ‘defense’ expenditures, only ‘defense’ expenditures should be freed from spending-caps. Forget the public, serve the owners of ‘defense’ firms and of the large international corporations who rely on the U.S. military to protect their property abroad.
The report says that China would have no reason to object to such policies: “There is no reason why a China that did not seek to overturn the balance of power in Asia should object to the policy prescriptions contained in this report.” Only a “hegemonic” China (such as the report incessantly alleges to exist, while the U.S. itself is not ‘hegemonic’) would object; and, therefore, the U.S. should ignore China’s objections, because they would be, by definition ‘hegemonic.’ Or, in other words: God is on our side, not on theirs.
“Washington simply cannot have it both ways—to accommodate Chinese concerns regarding U.S. power projection into Asia through ‘strategic reassurance’ and at the same time to promote and defend U.S. vital national interests in this vast region.”
The authors make clear that U.S. President Obama is not sufficiently hostile toward China: “All signs suggest that President Obama and his senior colleagues have a profoundly different and much more benign diagnosis of China’s strategic objectives in Asia than do we.”
Furthermore, the report ends by portraying Obama as weak on the anti-China front: “Many of these omissions in U.S. policy would seem to stem from an administration worried that such actions would offend Beijing and therefore damage the possibility of enduring strategic cooperation between the two nations, thus the dominating emphasis on cooperation. That self-defeating preoccupation by the United States based on a long-term goal of U.S.-China strategic partnership that cannot be accomplished in the foreseeable future should end.”
The report’s “Recommendations for U.S. Grand Strategy Toward China” urges Congress to “Deliver on the Trans-Pacific Partnership, … as a geoeconomic answer to growing Chinese economic power and geopolitical coercion in Asia,” but it fails to mention that the Obama Administration has already embodied the authors’ viewpoint and objectives in the TPP, which Obama created, and which cuts China out; it could hardly be a better exemplar of their agenda. The authors, in fact, state the exact opposite: that Obama’s objective in his TPP has instead been merely “as a shot in the arm of a dying Doha Round at the World Trade Organization (WTO).” They even ignore that Obama had cut China out of his proposed TPP.
Furthermore, here is what President Obama himself told graduating West Point cadets on 28 May 2014:
“Russia’s aggression toward former Soviet states unnerves capitals in Europe, while China’s economic rise and military reach worries its neighbors. From Brazil to India, rising middle classes compete with us, and governments seek a greater say in global forums.” He was saying that these future military leaders will be using guns and bombs to enforce America’s economic dominance. This is the same thing that the CFR report is saying.
His speech also asserted: “I believe in American exceptionalism with every fiber of my being. … The United States is and remains the one indispensable nation. That has been true for the century passed and it will be true for the century to come.” (That even resembles: “Henry Kissinger, describing the traditional sinocentric system, has correctly noted that China ‘considered itself, in a sense, the sole sovereign government of the world.’” Obama is, in a sense, saying that America is the “sole sovereign government in the world.”)
He made clear that China is “dispensable,” and that the U.S. must stay on top.
However, there is a difference between Obama and the CFR on one important thing: Obama sees Russia as the chief country over which the U.S. must dominate militarily, and China as the chief country to dominate economically. But in that regard, he is actually old-line Republican, just like his 2012 opponent Mitt Romney is. The only difference from Romney on that is: Obama wasn’t so foolish as to acknowledge publicly a belief that he shared with Romney but already knew was an unpopular position to take in the general election.
Furthermore, whereas the CFR report ignores the public’s welfare, Obama does give lip-service to that as being a matter of concern (just as he gave lip-service to opposing Romney’s assertion that Russia is “our number one geopolitical foe”). After all, he is a ‘Democrat,’ and the authors of the CFR report write instead as if they were presenting a Republican Party campaign document. No ‘Democrat’ can be far-enough to the political right to satisfy Republican operatives. The pretense that they care about the public is therefore far less, because the Republican Party is far more open about its support of, by, and for, the super-rich. Mitt Romney wasn’t the only Republican who had contempt for the lower 47%. But even he tried to deny that he had meant it. In that sense, the CFR’s report is a Republican document, one which, quite simply, doesn’t offer the public the lip-service that Obama does (and which he politically must, in order to retain support even within his own party).
Perhaps on account of the CFR report’s condemning Obama for not being sufficiently right-wing — even though he is actually a conservative Republican on all but social issues (where China policy isn’t particularly relevant) — the report has received no mention in the mainstream press, ever since it was originally issued, back in March of this year. For whatever reason, America’s ‘news’ media ignored the report, notwithstanding its importance as an expression of old-style imperialistic thinking that comes from what many consider to be the prime foreign-affairs mouthpiece of America’s aristocracy — the CFR. The report’s first coverage was on 2 May 2015 at the World Socialist Web Site, which briefly paraphrased it but didn’t even link to it. Then, two days later, Stephen Lendman wrote about the CFR report. He briefly paraphrased it and passionately condemned it. He did link to the report. But he didn’t note the WSWS article, which had first informed the public of the CFR report’s existence — an existence which, until the WSWS article, all of America’s ‘press’ had simply ignored.
The present article is the first one to quote the CFR report, instead of merely to paraphrase and attack it. The quotations that were selected are ones presenting the report’s main points, so that readers here can see these points stated as they were written, rather than merely as I have interpreted them. My interpretation is in addition to, rather than a substitute for, what the report itself says.
Investigative historian Eric Zuesse is the author, most recently, of They’re Not Even Close: The Democratic vs. Republican Economic Records, 1910-2010, and of CHRIST’S VENTRILOQUISTS: The Event that Created Christianity, and of Feudalism, Fascism, Libertarianism and Economics.
- Is the Next Round of the Crisis at Our Doorstep?
Stocks have officially entered their worst period of the year.
The old adage “sell in May and go away” does have some merit. According to the Ned Davis (NDR) database, had you invested $10,000 in the S&P 500 every May 1st starting in 1950 and sold October 31 of the same year, your initial position would only be worth $10,026 as of 2008. Put another way, by investing only from May through October, a $10,000 stake invested in 1950 would have only made $26 in 57 years.
In contrast, $10,000 invested in the S&P 500 on November 1st and sold April 30th over the same time period would have grown to $372,890. Out of 58 years, you would have had 45 positive and only 13 negative.
Put simply: the period from May to November has historically been a very weak one for stocks. All traders and trading models know this. It is not surprising that after failing to force stocks to breakout to the upside before May, we’re now seeing a sharp sell-off.
The S&P 500 is now at the lower trendline for the bearish rising wedge pattern that it has been carving out since November. This is critical support and we need to hold here otherwise 2050 comes into play very quickly.
The Fed’s FOMC meeting has come and gone, and the Fed has pretty much broadcast that any rate hikes that might be coming will do so later this year, i.e. not in June. This leaves verbal intervention to hold stocks up. Look for some Fed official to come forward with a blatantly dovish comment in the next few days.
The bigger issue concerns the fact that bond yields are rising across the board. The UK’s Gilts, US Treasuries, and German Bunds have all dropped sharply in the last month, pushing their yields higher.
Remember, the biggest issue for global Central Banks is containing the $100 trillion bond bubble. Most developed nations need rates to remain next to zero for their debt loads to be serviceable.
So if bond yields begin to rise, it can very quickly become a real mess. Indeed, we fully believe that when this happens we will have officially entered the second round of the Great Crisis that began in 2008.
Watch this situation closely!
If you’ve yet to take action to prepare for the second round of the financial crisis, we offer a FREE investment report Financial Crisis "Round Two" Survival Guide that outlines easy, simple to follow strategies you can use to not only protect your portfolio from a market downturn, but actually produce profits.
You can pick up a FREE copy at:
http://www.phoenixcapitalmarketing.com/roundtwo.html
Best Regards
Phoenix Capital Research
- US Economic Confidence Crashes Most Since July To Lowest Since December
Despite record-er stock prices, weather excuses for current economic weakness, and The Fed promising that growth is here and everything will be awesome, it appears the message has not reached the US Consumer. Gallup's U.S. Economic Confidence Index plunged 9 points last week (the largest week-to-week drop since last July) to its lowest weekly score since December. The main driver was a collapse of hope as 'outlook' fell to November lows.
Americans' Ratings of Current Conditions, Economic Outlook Both Down
Gallup's Economic Confidence Index is the average of two components: Americans' ratings of current economic conditions and their views of whether the economy is improving or getting worse. The theoretical maximum of the index is +100, if all Americans say the economy is "excellent" or "good" and "getting better." The theoretical minimum is -100, if all Americans say the economy is "poor" and "getting worse."
For the week ending May 3, 24% of Americans said the economy is excellent or good while 29% said it is poor, resulting in a current conditions score of -5 — down four points from the previous week and the lowest current conditions score since December. The economic outlook score saw a sharper drop of eight points, to -12 — its lowest reading since November. The latest outlook score is the result of 42% of Americans saying the economy is getting better, and 54% saying it is getting worse.
The recent dip in Americans' economic confidence — which is being dragged down largely by the lower economic outlook component — is likely the culmination of a variety of economic factors.
Though stocks rebounded by last Friday, the previous week had been fraught with market losses in the Dow Jones industrial average and Standard & Poor's 500 market indexes. Meanwhile, the prices Americans were paying for gas increased in the latter half of April, with the U.S. Energy Information Administration reporting an increase of 17 cents per gallon over two weeks. Gallup has found that Americans' confidence in the economy is related to how much they pay at the pump. Additionally, the recent report that the nation's GDP grew a lackluster 0.2% in the first quarter — a disappointing figure compared with previous quarterly growth — may have dampened consumers' economic hopes.
- OFFiCiaL BLoGGeR BeN SeaL AND FiLe PHoTo..
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- SEC Commissioner Furious At Deutsche Bank's "Decade Of Lying, Cheating, And Stealing"
Last week we commented on the latest travesty in the legal system when Deutsche Bank paid $2.5 billion to settle charges that it had manipulated LIBOR, EURIBOR and various other -BORs. As usual in situations such as this one, not a single banker went to prison, but there was some hope that Deutsche Bank’s gross criminal conduct would at least land it on the SEC’s “bad actors” list, which is like the Dodd-Frank equivalent of ‘time out’ and restricts the offender from participating in exempt securities offerings.
Not to worry: as we reported as part of its settlement, Deutsche Bank, as well as every other criminal financial institution, had – deep in the fine print – inserted language that exempted the offender from such stigma. As the WSJ noted, “the language allows the banks to avoid asking the SEC for a waiver—a process that has become fraught with uncertainty amid commissioner disagreements over whether to allow financial firms to avoid a “bad actor” ban…”
We concluded that “It’s good to be TBTF” because clearly no matter how many laws are violated and how much money is stolen (LIBOR was the reference security for nearly $1 quadrillion in global rate-sensitive derivatives), i) nobody ever goes to prison, ii) there are absolutely no negative consequences, and iii) the cost of running a criminal organization is tiny – the settlement usually amounts to far less than 1% of the gains reaped from years of illegal activities.
Frankly, at this point one should just sit back and watch in amusement, because until the revolution and/or war predicted by Paul Tudor Jones arrives and the guillotines start working overtime, nobody in a position of wealth or power will be held accountable.
That same message was, in rough terms, what prompted SEC commissioner Kara Stein, a Democrat, to write her “dissenting statement” regarding granting Deutsche Bank the waiver for ineligible issuer status.
Here are the choice excerpts:
I respectfully dissent from the Commission’s Order (“Order”), approved on May 1, 2015, by a majority of the Commission. The Order grants Deutsche Bank AG a waiver from ineligible issuer status triggered by a criminal conviction of its subsidiary, DB Group Services (UK) Ltd. (collectively with Deutsche Bank AG, “Deutsche Bank”), for manipulating the London Interbank Offered Rate (“LIBOR”), a global financial benchmark. This waiver will allow Deutsche Bank to maintain its well-known seasoned issuer (“WKSI”) status, which would have been automatically revoked as a result of its criminal misconduct absent a Commission waiver.
With these WKSI advantages comes a modicum of responsibility. WKSIs must meet the very low hurdle of not being ineligible. This means that, among other things, they have not been convicted of certain felonies or misdemeanors within the past three years. In granting this waiver, the Commission continues to erode even this lowest of hurdles for large companies, while small and mid-sized businesses appear to face different treatment.
This criminal scheme involving LIBOR manipulation was designed to inflate profits, and it was effective. It created the impression that Deutsche Bank was more creditworthy and profitable than it actually was. Accordingly, the conduct affected its financial results and disclosures. Because LIBOR plays such an important role in the worldwide economy, manipulation of it goes to the heart of many aspects of Deutsche Bank’s disclosures. Interest rates represented to clients and the public also were clearly false. Based on this conduct, I do not find any basis to support the assertion that Deutsche Bank’s culture of compliance is dependable, or that its future disclosures will be accurate and reliable.
Even the SEC is shocked that the CFTC is an organization that caters exclusively to keeping criminal bankers out of prison, rather than getting them in it:
In addition, the Commission adopted rules disqualifying felons and other “Bad Actors” from Rule 506 offerings on July 10, 2013. Based on the criminal conduct in this case, I expected to receive a request from Deutsche Bank AG for a waiver from the automatic disqualification contained in Rule 506. After all, the final CFTC order was “based on a violation of any law that prohibits fraudulent, manipulative, or deceptive conduct.” It should therefore trigger an automatic disqualification absent a waiver.
However, based on a loophole contained in Rule 506(d)(2)(iii), the CFTC has intervened and prevented the bad actor disqualification question from even coming before the Securities and Exchange Commission. The CFTC saw fit to opine on the SEC’s Rule 506 jurisprudence about whether Deutsche Bank AG should receive a waiver from automatic disqualification under SEC rules. It is unclear to me what, if any, analysis went into this decision and what prompted the CFTC to insert language into its final order stating that a bad actor disqualification “should not arise as a consequence of this Order.”The implications of the CFTC’s actions here — and in other actions — are deeply troubling. The Commission should closely review this provision and how it is being used.
Don’t worry: former CFTC chief Gary Gensler will soon be US Treasury Secretary – then it will be his job to make sure no criminal with a net worth over a few million dollars ever has to face the US “judicial” system.
In the meantime, the CFTC will never do its actual jobs and root out maniupulation and rigging in precious metal markets…
The @CFTC Closes Investigation Concerning the Silver Markets. http://t.co/JZRliwfW6P
— CFTC (@CFTC) September 25, 2013
… instead leaving it to fringe blogs):
As for the piece de resistance:
Deutsche Bank’s illegal conduct involved nearly a decade of lying, cheating, and stealing. This criminal conduct was pervasive and widespread, involving dozens of employees from Deutsche Bank offices including New York, Frankfurt, Tokyo, and London. Deutsche Bank’s traders engaged in a brazen scheme to defraud Deutsche Bank’s counterparties and the worldwide financial marketplace by secretly manipulating LIBOR. The conduct is appalling. It was a complete criminal fraud upon the worldwide marketplace.
Dear Kara, are you really confused why “complete criminal fraud” by a bank goes unpunished? Here is a hint: go to OpenSecrets, type in Deutsche Bank, and you will find just who the German bank paid off to avoid any true penalty. To your great surprise you may even find that the biggest beneficiary of DB’s generosity in 2014 is, drumroll, the Democratic National Convention…
… not to mention over $3 million donated in the last two decades to America’s “two” parties (of which 61% went to democrats).
- 96% Of Americans Expect More Civil Unrest In U.S. Cities This Summer
Submitted by Michael Snyder via The Economic Collapse blog,
Are you ready for rioting, looting and mindless violence in major U.S. cities all summer long? According to a brand new Wall Street Journal/NBC News poll, 96 percent of all Americans believe that there will be more civil unrest in America this summer. That leaves only 4 percent of people that believe that everything will be just fine. In this day and age, it is virtually impossible to get 96 percent of Americans to agree on anything. So the fact that just about everyone agrees that we are going to see more civil unrest should really tell you something.
The anger that has been building under the surface for so many years in this country has finally started to erupt. If you have been following us for a while, you know that this is something that I have been warning about for a very long time. Many people may have thought that I was exaggerating when I talked about the civil unrest that was coming to American cities. But I was not exaggerating at all. In fact, if anything I was downplaying it. In the years to come, we are going to see things happen in our cities that are going to absolutely shock the world.
Ever since the violence first erupted in Baltimore, what has surprised me more than anything has been the level of hate that I am seeing all over the Internet. I am seeing white people openly proclaim how much they hate black people. I am seeing black people openly proclaim how much they hate white people. I am seeing things said about the police that are absolutely horrifying. Yes, there has been a tremendous amount of police brutality in this nation. In fact, I have been one of the leaders in writing about it. But most police officers are just trying to serve their communities the very best that they can. So why is there so much hate for anyone that is a police officer these days?
If all of this hate continues to grow, it is going to eat our nation alive. Why can’t we just learn to forgive one another, love one another and work together to rebuild our once great nation?
I know that what I just said is going to mostly fall on deaf ears. But it needs to be said.
I wish that we could change course as a nation and avoid all of the rioting, looting and senseless violence that is coming. Unfortunately, I don’t see that happening, and neither does the rest of the country…
Americans are bracing for a summer of racial disturbances around the country, such as those that have wracked Baltimore, with African Americans and whites deeply divided about why the urban violence has occurred, a new Wall Street Journal/NBC News poll has found.
A resounding 96% of adults surveyed said it was likely there would be additional racial disturbances this summer, a signal that Americans believe Baltimore’s recent problems aren’t a local phenomenon but instead are symptomatic of broader national problems.
What happened in Ferguson set the precedent, and now what has happened in Baltimore has provided the spark for a national movement. Similar “demonstrations” are popping up all over the nation, and a number of them have already turned violent.
For example, check out what happened in Seattle on Friday night…
Demonstrations turned violent in Seattle after night fell, with police reporting that protesters hurled rocks and wrenches at officers and damaged 25 vehicles. Police reported that an “explosive device” was thrown at officers, and a trash bin was pushed down a hill toward police.
Three officers were injured, two seriously enough that they were taken to a hospital, Seattle police said on Twitter. At least 16 people were arrested Friday night, police said.
And just down the coast in Portland, we also witnessed some very ugly violence…
One Portland, Oregon, police officer was injured by a protester, according to police. Portland Police reported on Twitter that protesters were throwing “projectiles” and “incendiary devices” at officers.
Police used pepper spray on protesters who tried to march on a bridge Friday afternoon and later sheriff’s deputies used stingballs, filled with tiny rubber balls, on protesters who were throwing chairs at police, according to the department.
These protesters are just copying what they saw in Baltimore. And things would not have ever gotten so bad in Baltimore if the police had not been ordered to stand down and let the riots spiral out of control. Now, we have learned that many police officers were so outraged by this that they want Baltimore Mayor Stephanie Rawlings-Blake to immediately resign…
During a Baltimore-based radio talk show on Thursday, a man who identified himself as a Baltimore police officer named “Jeff” called into the program and said fellow police officers were organizing to push out the city’s mayor.
“There is right now over 50 of us officers who are immediately asking for [Baltimore Mayor] Stephanie Rawlings-Blake to step down for what she did to us Monday,” the caller told WBAL radio host Derek Hunter.
The Baltimore mayor has denied giving “stand down” orders and blamed the media for misinterpreting her comments about providing “a space” for protesters to loot.
“Any other time in my career, if somebody were to throw a brick or a block at me, we would take immediate actions to pull our weapons on them. Numerous times on Monday when our officers were being injured, our commanders are telling us ‘stand down, stand down.’ You had no idea what it did to us as police officers to sit there,” said the self-described “21-year veteran” of the Baltimore police department.
Scenes of protesters attacking police were broadcast all over the nation, and it was inevitable that we would start to see “copycat attacks” against the police start to happen. In New York City, a plainclothes police officer was shot in the head on Saturday…
A plainclothes New York City police officer was shot in the head and critically injured while in an unmarked police car Saturday as he and his partner attempted to stop and question a man they suspected of carrying a gun, officials said.
Officer Brian Moore and his partner, Erik Jansen, noticed Demitrius Blackwell “walking and adjusting an object in his waistband” when they pulled up on him in their car, exchanging words with him before he turned and suddenly fired at least two rounds into the car, police Commissioner William Bratton said.
“The man immediately removed the firearm from his waistband and turned in the direction of the officers and deliberately fired several times at the vehicle, striking Officer Moore in the head,” Bratton said at a press conference at a Queens hospital. The 25-year-old Moore was undergoing surgery but listed in stable condition.
We are seeing the same thing when it comes to racially-motivated violence. This is something that we witnessed in Baltimore, and now all over the nation people are being attacked just because of the color of their skin.
For instance, one young man in California attacked a random passerby with a baseball bat…
A Fontana man accused of beating a passerby with a bat in an apparently random attack in Rialto, leaving the victim with life-threatening injuries that he was not expected to survive, was charged Wednesday with attempted murder allegedly committed as a hate crime.
Jeremiah Ajani Bell, 22, was arrested Monday, a day after a daylight assault on 54-year-old Armando Barron, who was walking down the street when he was attacked.
So why did this happen? Well, apparently it was because the passerby had the wrong skin color…
“It appears he was targeting anybody who wasn’t black,” Rialto police Detective Sgt. Paul Stella said Wednesday.
We witnessed an even more disturbing example of racially-motivated violence just the other day in South Carolina…
Witnesses and police say a mob of 60 black teens took to the streets of Charleston, South Carolina, to unleash attacks on unsuspecting drivers and pedestrians, all but one of whom were white.
And of course police in some areas of the country are also using unnecessary violence. Just consider what happened to a group of peaceful protesters in Denver on Wednesday…
With much of the nation focused on the police abuse protests happening in Baltimore and New York City, the Denver police and their actions against a group of protesters on Wednesday has largely gone unnoticed.
But police were dressed for war. Paramilitary style. And they weren’t going home without using a few cans of pepper spray and filling up a paddy wagon.
Video that surfaced shows a group of about 100 protesters walking the streets of downtown Denver where they were met with line of motorcycle cops who forced the group on to the sidewalk. One overzealous officer can be seen breaking away from the pack chasing down pedestrians, using his motorcycle as a large weapon.
It’s war on the streets of America, and this is only just the beginning.
As we enter the next major economic downturn, people are going to become angrier and even more desperate. And desperate people do desperate things. The next few years are not going to be a good time to be living in urban areas. Even if you only have peace and love in your heart, that doesn’t mean that you won’t get caught in the crossfire as the violence escalates.
For years, most of our politicians have been preaching hate and division. For years, the mainstream media has been preaching hate and division. For years, Hollywood has been preaching hate and division.
Now we have a nation that is deeply, deeply divided and that is filled with hate.
Things didn’t have to turn out this way, but they did. I hope that you are getting ready for what comes next.
- Israeli Soldiers Describe How They "Shot Innocent Civilians Because They Were Bored"
On July 12 of 2014 we reported that “after conducting countless sorties and bombing raids aimed at Hamas operatives in Gaza during the fifth day of Operation Protective Edge, but resulting in well over a hundred innocent civilian deaths in the past week, Israel, realizing it is not generating any brownie points with the international “humanitarian” media, finally did what it had threatened to do over the last few days – launch a ground assault.”
The ground assault promptly led to a mini-war in the Gaza Strip that left more than 2,100 Palestinians dead, of which 80% civilians, and reduced vast areas to rubble: a “war” which many speculated was a predetermined massacre by highly skilled, trained, and ethically drained Israeli soldiers who used civilians for target practice.
Yesterday we got confirmation of that when a group of Israeli veterans released what the WaPo describes as “sobering testimony from fellow soldiers that suggests permissive rules of engagement coupled with indiscriminate artillery fire contributed to the mass destruction and high numbers of civilian casualties in the coastal enclave.”
In a 242-page report titled “This is How We Fought in Gaza 2014” which was accompanied by videotaped confessions that aired on Israeli TV, the organization of active and reserve duty soldiers, called Breaking the Silence, gathered testimonies from more than 60 enlisted men and officers who served in Gaza during Operation Protective Edge.
What they described was nothing short of mass butchery of civilians and a flaunting of the Fourth Geneva Convention: among the actions described by the soldiers are “reducing Gaza neighborhoods to sand, firing artillery at random houses to avenge fallen comrades, shooting at innocent civilians because they were bored and watching armed drones attack a pair of women talking on cellphones because they were assumed to be Hamas scouts.”
According to the Washington Post, the director of the group, Yuli Novak, called the rules of engagement in the offensive “the most permissive” it has seen and amounted to an “ethical failure . . . from the top of the chain of command.” Novak called for an independent investigation.
Some more details from the narrative that may have been fit for a barbaric middle-age crusade but has no place in our “civilized” times:
The soldiers said they were told by commanders to view all Palestinians in the combat zones as a potential threat, whether they brandished weapons or not. Individuals spotted in windows and rooftops — especially if they were speaking on cellphones — were often considered scouts and could be shot.
A first sergeant serving in the Mechanized Infantry in Gaza told the group, “If we don’t see someone waving a white flag, screaming, ‘I give up’ or something — then he’s a threat and there’s authorization to open fire.”
The Israeli army, the IDF, promptly tried to downplay the claims stating that the testimonies in the report are anonymous and impossible to independently verify. The Israel Defense Forces (IDF) declined to address details in the report and said that Breaking the Silence “does not provide IDF with any proof of their claims.”
“This pattern of collecting evidence over an extended period of time and refusing to share it with the IDF in a manner which would allow a proper response, and if required, investigation, indicates that contrary to their claims this organization does not act with the intention of correcting any wrongdoings they allegedly uncovered,” the Israeli military stated.
Just like in the case of Edward Snowden, the natural response was to attack the messenger: members of Breaking the Silence are viewed by many Israelis as “anti-military”, which it appears is a bad thing.
The group says its mission is to tell the Israeli public what the IDF hides and what serving in the occupied West Bank and in wars in Gaza and Lebanon is really like. After graduating from high school, all Israeli men and women — except those who get deferments because of religious study or for medical reasons — must serve in the military.
Develop a conscience, however, is clearly frowned upon.
In an interview with The Washington Post, a young tank gunner whose testimony is included in the report described how he and others fired cannon and machine gun bursts at random travelers on a main Gaza highway simply because they were bored and wanted to prove how good their aim was.
“I am ashamed of this,” said the 21-year-old, who served in a Hamas hot spot near the town of Al Bureij in central Gaza.
The gunner said he fired his Browning machine gun at a man pedaling a bicycle but missed because of the distance.
“War crime is a big word,” he said in an interview at a Tel Aviv apartment Sunday. “I didn’t rape and kill anybody, but yeah, I shot at random civilian targets sometimes, just for fun, so yeah.”
The same soldier said a friend in his unit was killed by shrapnel to the neck from a Palestinian mortar round and described how a burst of small-arms fire once breezed by his head.
Yehuda Shaul of Breaking the Silence conceded that Gaza was a dangerous,
chaotic landscape for Israeli troops. But he said the military had
contributed to needless death and destruction with “a guiding military
principle of minimum risk to our forces, even at the cost of harming
innocent civilians.”In other words, all out, brutal war, without the pleasantries of sparing civilians – a war passed on by countless generations, and in which both sides have no interest in taking the first step to end. Which is why it never will.
Below is a sampling of the soldiers’ quotes explaining how they fought in Gaza:
- “If you shoot someone in Gaza it ?s cool, no big deal”
- “The lives of our soldiers come before the lives of enemy civilians”
- “Rules of engagement were, in effect, to shoot to kill upon any identification”
- “The instructions are to shoot right away… Be they armed or unarmed, no matter what”
- “The civilian was laying there, writhing in pain”
- “I really, really wanted to shoot her in the knees”
- “We expect a high level of harm to civilians”
- “Go ahead – his wife and kid are in the car too? Not the end of the world”
- “People that look at you from the window of a house, to put it mildly, won ?t look anymore”
- “We want to make a big boom before the ceasefire”
- “They were fired at – so of course, they must have been terrorists…”
- “Lots of innocent people were hurt in that incident, lots”
- “What the hell, why did you have to shoot him again?”
Full report (pdf)
- "We Will Evolve Through Crisis, Not Proactive Change…"
Submitted by Raul Ilargi Meijer via The Automatic Earth blog,
I very rarely read back any of the essays I write. But maybe that’s not always a good thing. Especially when they deal with larger underlying issues beneath the problems we find ourselves in, why these problems exist in the first place, and what we can and will do to deal with them. Not all of these things can and perhaps should be re-written time and again. Commentary on daily events calls for new articles, but attempts to define the more in-depth human behavior behind these events should, if they are executed well, be more timeless.
Not that I would want to judge my own work, I’ll leave that to others, but I can still re-read something and think: that’s something I would like to read if someone else had written it. Since a friend yesterday sent me an email that referenced the essay below, I did go through it again and thought it’s worth republishing here. It’s from New Year’s Day 2013, or almost 2.5 years old, which should be a long enough time gap that many present day readers of The Automatic Earth haven’t read it yet, and long enough for those who have to ‘enjoy’ it all over again.
I am not very optimistic about the fate of mankind as it is, and that has a lot to do with what I cite here, that while our problems tend to evolve in exponential ways, our attempts at solving them move in linear fashion. That is true as much for the problems we ourselves create as it is for those that – seem to – ‘simply happen’. I think it would be very beneficial for us if we were to admit to our limits when it comes to solving large scale issues, because that might change the behavior we exhibit when creating these issues.
In that sense, the distinction made by Dennis Meadows below between ‘universal problems’ and ‘global problems’ may be very useful. The former concerns issues we all face, but can -try to – solve at a more local level, the latter deals with those issues that need planet-wide responses – and hardly ever get solved if at all. The human capacity for denial and deceit plays a formidable role in this.
I know that this is not a generally accepted paradigm, but that I put down to the same denial and deceit. We like to see ourselves as mighty smart demi-gods capable of solving any problem. But that is precisely, I think, the no. 1 factor in preventing us from solving them. And I don’t see that changing: we’re simply not smart enough to acknowledge our own limitations. Therefore, as Meadows says: “we are going to evolve through crisis, not through proactive change.” Here’s from January 1 2013:
* * *
Ilargi: I came upon this quote a few weeks ago in an interview that Der Spiegel had with Dennis Meadows, co-author of the Limits to Growth report published by the Club of Rome 40 years ago. Yes, the report that has been much maligned and later largely rehabilitated. But that’s not my topic here, and neither is Meadows himself. It’s the quote, and it pretty much hasn’t left me alone since I read it.
Here’s the short version:
[..] … we are going to evolve through crisis, not through proactive change.
And here it is in its context:
‘Limits to Growth’ Author Dennis Meadows ‘Humanity Is Still on the Way to Destroying Itself’
SPIEGEL ONLINE: Professor Meadows, 40 years ago you published “The Limits to Growth” together with your wife and colleagues, a book that made you the intellectual father of the environmental movement. The core message of the book remains valid today: Humanity is ruthlessly exploiting global resources and is on the way to destroying itself. Do you believe that the ultimate collapse of our economic system can still be avoided?
Meadows: The problem that faces our societies is that we have developed industries and policies that were appropriate at a certain moment, but now start to reduce human welfare, like for example the oil and car industry. Their political and financial power is so great and they can prevent change. It is my expectation that they will succeed. This means that we are going to evolve through crisis, not through proactive change.
I don’t really think that Dennis Meadows understands how true that is. I may be wrong, but I think he’s talking about a specific case here . While what he makes me ponder is that perhaps this is all we have, and always, that it’s a universal truth. That we can never solve our real big problems through proactive change. That we can only get to a next step by letting the main problems we face grow into full-blown crises, and that our only answer is to let that happen.
And then we come out on the other side, or we don’t, but it’s not because we find the answer to the problem itself, we simply adapt to what there is at the other side of the full-blown crisis we were once again unable to halt in its tracks. Adapt like rats do, and crocodiles, cockroaches, no more and no less.
This offers a nearly completely ignored insight into the way we deal with problems. We don’t change course in order to prevent ourselves from hitting boundaries. We hit the wall face first, and only then do we pick up the pieces and take it from there.
Jacques Cousteau was once quite blunt about it:
The road to the future leads us smack into the wall. We simply ricochet off the alternatives that destiny offers: a demographic explosion that triggers social chaos and spreads death, nuclear delirium and the quasi-annihilation of the species… Our survival is no more than a question of 25, 50 or perhaps 100 years.
Without getting into specific predictions the way Cousteau did: If that is as true as I suspect it is, the one thing it means is that we fool ourselves a whole lot. The entire picture we have created about ourselves, consciously, sub-consciously, un-consciously, you name it, is abjectly false. At least the one I think we have. Which is that we see ourselves as capable of engineering proactive changes in order to prevent crises from blowing up.
That erroneous self-image leads us to one thing only: the phantom prospect of a techno-fix becomes an excuse for not acting. In that regard, it may be good to remember that one of the basic tenets of the Limits to Growth report was that variables like world population, industrialization and resource depletion grow exponentially, while the (techno) answer to them grows only linearly.
First, I should perhaps define what sorts of problems I’m talking about. Sure, people build dams and dikes to keep water from flooding their lands. And we did almost eradicate smallpox. But there will always be another flood coming, or a storm, and there will always be another disease popping up (viruses and bacteria adapt faster than we do).
In a broader sense, we have gotten rid of some diseases, but gotten some new ones in return. And yes, average life expectancy has gone up, but it’s dependent entirely on the affordability and availability of lots of drugs, which in turn depend on oil being available.
And if I can be not PC for a moment, this all leads to another double problem. 1) A gigantic population explosion with a lot of members that 2) are, if not weaklings, certainly on average much weaker physically than their ancestors. Which is perhaps sort of fine as long as those drugs are there, but not when they’re not.
It’s quite simple, isn’t it? Increasing wealth makes us destroy ancient multi-generational family structures (re: the nuclear family, re: old-age homes), societal community structures (who knows their neighbors, and engages in meaningful activity with them?), and the very planet that has provided the means for increasing our wealth (and our population!).
And in our drive towards what we think are more riches, we are incapable of seeing these consequences. Let alone doing something about them. We have become so dependent, as modern western men and women, on the blessings of our energy surplus and technology that 9 out of 10 of us wouldn’t survive if we had to do without them.
Nice efforts, in other words, but no radical solutions. And yes, we did fly to the moon, too, but not flying to the moon wasn’t a problem to start with.
Maybe the universal truth I suspect there is in Meadows’ quote applies “specifically” to a “specific” kind of problem: The ones we create ourselves.
We can’t reasonably expect to control nature, and we shouldn’t feel stupid if we can’t (not exactly a general view to begin with, I know). And while one approach to storms and epidemics is undoubtedly better than another, both will come to back to haunt us no matter what we do. So as far as natural threats go, it’s a given that when the big one hits we can only evolve through crisis. We can mitigate. At best.
However: we can create problems ourselves too. And not just that. We can create problems that we can’t solve. Where the problem evolves at an exponential rate, and our understanding of it only grows linearly. That’s what that quote is about for me, and that’s what I think is sorely missing from our picture of ourselves.
In order to solve problems we ourselves create, we need to understand these problems. And since we are the ones who create them, we need to first understand ourselves to understand our problems.
Moreover, we will never be able to either understand or solve our crises if we don’t acknowledge how we – tend to – deal with them. That is, we don’t avoid or circumvent them, we walk right into them and, if we’re lucky, come out at the other end.
Point in case: we’re not solving any of our current problems, and what’s more: as societies, we’re not even seriously trying, we’re merely paying lip service. To a large extent this is because our interests are too different. To a lesser extent (or is it?) this is because we – inadvertently – allow the more psychopathic among us to play an outsize role in our societies.
Of course there are lots of people who do great things individually or in small groups, for themselves and their immediate surroundings, but far too many of us draw the conclusion from this that such great things can be extended to any larger scale we can think of. And that is a problem in itself: it’s hard for us to realize that many things don’t scale up well. A case in point, though hardly anyone seems to realize it, is that solving problems itself doesn’t scale up well.
Now, it is hard enough for individuals to know themselves, but it’s something altogether different, more complex and far more challenging for the individuals in a society, to sufficiently know that society in order to correctly identify its problems, find solutions, and successfully implement them. In general, the larger the scale of the group, the society, the harder this is.
Meadows makes a perhaps somewhat confusing distinction between universal and global problems, but it does work:
You see, there are two kinds of big problems. One I call universal problems, the other I call global problems. They both affect everybody. The difference is: Universal problems can be solved by small groups of people because they don’t have to wait for others. You can clean up the air in Hanover without having to wait for Beijing or Mexico City to do the same.
Global problems, however, cannot be solved in a single place. There’s no way Hanover can solve climate change or stop the spread of nuclear weapons. For that to happen, people in China, the US and Russia must also do something. But on the global problems, we will make no progress.
So how do we deal with problems that are global? It’s deceptively simple: We don’t.
All we need to do is look at the three big problems – if not already outright crises – we have right now. And see how are we doing. I’ll leave aside No More War and No More Hunger for now, though they could serve as good examples of why we fail.
There is a more or less general recognition that we face three global problems/crises. Finance, energy and climate change. Climate change should really be seen as part of the larger overall pollution problem. As such, it is closely linked to the energy problem in that both problems are direct consequences of the 2nd law of thermodynamics. If you use energy, you produce waste; use more energy and you produce more waste. And there is a point where you can use too much, and not be able to survive in the waste you yourself have produced.
Erwin Schrödinger described it this way, as quoted by Herman Daly:
Erwin Schrodinger [..] has described life as a system in steady-state thermodynamic disequilibrium that maintains its constant distance from equilibrium (death) by feeding on low entropy from its environment — that is, by exchanging high-entropy outputs for low-entropy inputs. The same statement would hold verbatim as a physical description of our economic process. A corollary of this statement is an organism cannot live in a medium of its own waste products.
The energy crisis flows seamlessly into the climate/pollution crisis. If properly defined, that is. But it hardly ever is. Our answer to our energy problems is to first of all find more and after that maybe mitigate the worst by finding a source that’s less polluting.
So we change a lightbulb and get a hybrid car. That’s perhaps an answer to the universal problem, and only perhaps, but it in no way answers the global one. With a growing population and a growing average per capita consumption, both energy demand and pollution keep rising inexorably. And the best we can do is pay lip service. Sure, we sign up for less CO2 and less waste of energy, but we draw the line at losing global competitiveness.
The bottom line is that we may have good intentions, but we utterly fail when it comes to solutions. And if we fail with regards to energy, we fail when it comes to the climate and our broader living environment, also known as the earth.
We can only solve our climate/pollution problem if we use a whole lot less energy resources. Not just individually, but as a world population. Since that population is growing, those of us that use most energy will need to shrink our consumption more every passing day. And every day we don’t do that leads to more poisoned rivers, empty seas and oceans, barren and infertile soil. But we refuse to even properly define the problem, let alone – even try to – solve it.
Anyway, so our energy problem needs to be much better defined than it presently is. It’s not that we’re running out, but that we use too much of it and kill the medium we live in, and thereby ourselves, in the process. But how much are we willing to give up? And even if we are, won’t someone else simply use up anyway what we decided not to? Global problems blow real time.
The more we look at this, the more we find we look just like the reindeer on Matthew Island, the bacteria in the petri dish, and the yeast in the wine vat. We burn through all surplus energy as fast as we can find ways to burn it. The main difference, the one that makes us tragic, is that we can see ourselves do it, not that we can stop ourselves from doing it.
Nope, we’ll burn through it all if we can (but we can’t ’cause we’ll suffocate in our own waste first). And if we’re lucky (though that’s a point of contention) we’ll be left alive to be picking up the pieces when we’re done.
Our third big global problem is finance slash money slash economy. It not only has the shortest timeframe, it also invokes the highest level of denial and delusion, and the combination may not be entirely coincidental. The only thing our “leaders” do is try and keep the baby going at our expense, and we let them. We’ve created a zombie and all we’re trying to do is keep it walking so everyone including ourselves will believe it’s still alive. That way the zombie can eat us from within.
We’re like a deer in a pair of headlights, standing still as can be and putting our faith in whoever it is we put in the driver’s seat. And too, what is it, stubborn, thick headed?, to consider the option that maybe the driver likes deer meat.
Our debt levels, in the US, Europe and Japan, just about all of them and from whatever angle you look, are higher than they’ve been at any point in human history, and all we’ve done now for five years plus running is trust a band of bankers and shady officials to fix it all for us, just because we’re scared stiff and we think we’re too stupid to know what’s going on anyway. You know, they should know because they have the degrees and/or the money to show for it. That those can also be used for something 180 degrees removed from the greater good doesn’t seem to register.
We are incapable of solving our home made problems and crises for a whole series of reasons. We’re not just bad at it, we can’t do it at all. We’re incapable of solving the big problems, the global ones.
We evolve the way Stephen Jay Gould described evolution: through punctuated equilibrium. That is, we pass through bottlenecks, forced upon us by the circumstances of nature, only in the case of the present global issues we are nature itself. And there’s nothing we can do about it. If we don’t manage to understand this dynamic, and very soon, those bottlenecks will become awfully narrow passages, with room for ever fewer of us to pass through.
As individuals we need to drastically reduce our dependence on the runaway big systems, banking, the grid, transport etc., that we ourselves built like so many sorcerers apprentices, because as societies we can’t fix the runaway problems with those systems, and they are certain to drag us down with them if we let them.
- Government Using Subprime Mortgages To Pump Housing Recovery – Taxpayers Will Pay Again
Submitted by Jim Quinn via The Burning Platform blog,
It seems hard to believe, but your government is purposely recreating the mortgage debacle of 2007 and putting you on the hook for the billions in losses coming down the road. In their frantic effort to generate the appearance of economic recovery they are willing to gamble with taxpayer’s money while luring unsuspecting blue collar folks into buying houses they can’t afford. During the previous housing bubble, greedy Wall Street bankers, deceitful mortgage brokers, and corrupt rating agencies colluded to commit the greatest control fraud in the history of mankind. This time it is your government, aided and abetted by the Federal Reserve, that is actively promoting the lending of money to people incapable of paying it back. And again, you the taxpayer will be on the hook when it predictably blows up.
The FHA, created during the first Great Depression, is supposed to be self-sustaining through mortgage insurance premiums charged to homeowners, just like Fannie, Freddie, Medicare, Social Security, and student loan lending were supposed to be self- sustaining through taxes, fees, and interest. This agency was supposed to promote homeownership for lower income Americans, but has been used by politicians as a tool to capture votes, payoff crony capitalist benefactors, and as a Keynesian stimulus tool designed to kindle a fake housing recovery. They entered the fray at the tail end of the last Fed/Wall Street created housing bubble, insuring a huge number of subprime mortgage loans from 2007 through 2009. The taxpayer has already had to bail out this incompetent, politically motivated, joke of an agency to the tune of $1.7 billion in 2014.
Edward J. Pinto, a former Fannie Mae official, estimates that under standard accounting practices the agency is already insolvent to the tune of $25 billion. Mark to fantasy accounting hasn’t just benefitted the criminal Wall Street cabal, but also the bloated pig government housing agencies – Fannie, Freddie and the FHA. The FHA’s share of new loans with mortgage insurance stood at 16.4% in 2005 and currently stands at 44.3%. This is a ridiculously high level considering the percentage of first time home buyers is near all-time lows and low income buyers have lower real median household income than they had in 2005. Distinguished congresswoman Maxine Waters, who once declared: “We do not have a crisis at Freddie Mac, and particularly Fannie Mae, under the outstanding leadership of Frank Raines.”, prior to them imploding and costing taxpayers $187 billion in losses, thinks the FHA is doing a bang up job. Her financial acumen is unquestioned, so you can expect another bailout in the near future.
“Above all, we must strive to have a healthy, viable FHA that can continue to facilitate homeownership for first-time and low-income home buyers, while standing ready in the unfortunate event of another housing downturn.”
How could politically motivated government apparatchiks insuring subprime mortgages with down payments of 3.5%, using weak underwriting standards, easing restrictions on borrowers with past foreclosures, in a housing market poised to drop by 20% when this next Fed/Wall Street housing bubble pops possibly go wrong? The entire faux housing recovery, which has driven average home prices up 30% since 2012, has been driven on the high end by The Wall Street hedge fund buy foreclosures in bulk and rent scheme, along with hot money cash from Chinese and Russian oligarchs, while the low end is being propped up by Fannie, Freddie, and the FHA with their brilliant idea to insure 3.5% down payment mortgages to future foreclosure aspirants.
We have the employment to population ratio at 35 year lows. We have had stagnant real wage growth since 2008 as low paying service Obama jobs have replaced higher paying production jobs. We have real median household income at 1989 levels and still 9% below the 2008 peak. We have mortgage applications 56% below the 2005 peak and hovering at 1996 levels. We still have 4 million homeowners underwater in their mortgages. We have housing starts languishing 40% below the long-term average. We have the home ownership rate of 63.8% at quarter of a century lows. We have mortgage rates at all-time lows. And we have home prices soaring far above the inflation rate and wages because the Federal Reserve, in collaboration with the Federal government decided to create another housing bubble (along with stock and bond bubbles) to rectify the disastrous consequences of their last housing bubble.
This is the absolute perfect point in time when the FHA thinks it is necessary for them to lure low income, low IQ, credit challenged dupes into the housing market. Risky mortgages are increasingly being underwritten by thinly capitalized non-banks and guaranteed by the FHA. In 2012 the large Wall Street banks represented 65.4% of FHA-backed loans. That number is now 29.6%, as even the risk seeking Wall Street criminal banks have come to their senses and realize loaning money to people that won’t be able to repay them will end badly – AGAIN. In their place, dodgy mortgage brokers (non-banks) now represent 62.2% of the FHA lending. Of course, once these low life mortgage brokers make the loans, Wall Street will package them, get a AAA rating from their bitches at S&P or Moodys, and then peddle them to yield seeking pension plans and life insurance companies. Sound familiar?
If you thought the FHA was supposed to help young, employed, first time home buyers who have a limited credit history, you would be badly mistaken. There is a reason first time home buyers only make up 29% of all home buyers, near the all-time low. Over history, when the housing market was not being manipulated by warped Federal Reserve monetary policies and government intervention, first time home buyers accounted for 40% to 45% of all home sales. Even with all-time low mortgage rates, courtesy of the Fed’s ZIRP, the lack of jobs, crushing student loan debt, low wages, and over-priced homes has kept traditional young buyers out of the market. But, the FHA’s goal is to convince anyone who can fog a mirror to get into the housing market before it’s too late.
To get some perspective on how the FHA is actively creating the next multi-billion dollar taxpayer bailout, you need to understand FICO credit scoring. Here are the categories:
• Excellent Credit: 781 – 850
• Good Credit: 661-780
• Fair Credit: 601-660
• Poor Credit: 501-600
• Bad Credit: below 500The average FICO score of all Americans is 687, barely above the Fair Credit level. The average for Americans getting a mortgage is 724, down from 750 in 2012, as the reckless mortgage brokers have taken share from the banks. It is only rational that people with good credit should be the only people borrowing hundreds of thousands of dollars for 30 years. Not in the eyes of the FHA and their politician overseers, who buy votes by doling out free shit to their constituents. Why not houses? You can get an FHA loan with a credit score as low as 500, so long as you have a 10% down payment. And once you hit a 580 credit score, you only need a 3.5% down payment. Credit scores below 600 mean that you have significant derogatory information on your credit report. In other words, you have proven to be a deadbeat. Credit scores below 600 are the result of missing multiple payments on credit cards and auto loans; having multiple collection items or judgments; and potentially having a very recent bankruptcy or foreclosure. Sounds like someone I’d loan money to.
After financial institutions lost hundreds of billions (covered by American taxpayers at the point of a gun through TARP) by peddling low or no down payment mortgages for $500,000 McMansions to deadbeats with no willingness or means of repaying, the percentage of low down payment mortgages rationally plunged from 77% to 60% for first time buyers. Low down payment mortgage loans are a high risk proposition. It wasn’t that long ago when a borrower had to put up 10% to 20%. If you can’t save enough for a 10% down payment then you probably shouldn’t own a house. If your down payment is less than 8%, you are immediately underwater as the costs to sell a home usually total 8% of the selling price. The percentage of first time buyer mortgages with a low down payment mortgage has risen to 66% in the last year and is headed higher, as the FHA is pushing hard on their 3.5% down payment loans.
As a general risk guideline, your monthly mortgage payment, including principal, interest, real estate taxes and homeowners insurance, should not exceed 28% of your gross monthly income. Total debt to income generally cannot exceed 43% of your gross monthly income. These guidelines have worked for decades in assessing whether a borrower can afford a mortgage. Why would an arrogant bureaucratic agency, controlled by politicians like Mel Watt and Maxine Waters, follow standard industry risk standards when they are only gambling with taxpayer funds? The FHA is exempt from the qualified mortgage requirement of a 43% debt-to-income ratio. Many loans have a debt-to-income ratio above 55%. Even worse, the FHA only looks at mortgage payments in their calculation. What do you think the odds are of a borrower with a 580 credit score, making $3,000 per month with a $1,500 monthly mortgage payment, of defaulting? They would be high under normal circumstances, and will be off the charts after the next financial bubble bursts and millions are put out of work again.
People who are serial defaulters with 580 credit scores cannot expect to get the lowest rates. They should expect to see interest rates that are at least three percent higher than interest rates awarded to borrowers with good credit. Even the 3.5% down payment requirement is flexible for the FHA. The FHA is perfectly willing to accept a gift or inheritance as a down payment. So, you could have no savings, a 580 FICO, a 50% debt-to-income ratio and a gift from your parents and that would be sufficient to get you a loan. And it gets better. The transaction can be designed with the buyer paying a higher price but getting a credit for closing costs that covers the 3.5% down payment and other fees. Therefore, a serial deadbeat can purchase a house with a government guarantee without putting up one dime of their own cash. Sounds like a great deal for the taxpayer.
I have personal experience with a current FHA mortgage transaction as my 79 year old widowed mother is in the midst of selling the 900 square foot row home that she has lived in for 58 years in the first ring of suburbs outside of Philadelphia. It was once a vibrant middle class neighborhood of working folk, but has been gradually decaying as the old guard dies off and is replaced by lower class Section 8 tenants. She is selling ten years too late as prices have dropped 30% since 2005. She asked $72,900 and received an offer within two weeks of $66,000, with a $4,000 closing credit. My siblings and I didn’t expect her to get an offer in the 60s, as the dump next door was sold for $30,000 and went Section 8 a couple years ago. Anyone buying this house is destined for another 30% loss over the next ten years. So we told her to take the offer before it was too late.
My brother and I met the realtor at her house after work a couple weeks ago. We sat around the dining room table that had seen so many family gatherings over the last half century and discussed the particulars of the deal and the buyer’s background. It was an enlightening glimpse into the Federal government’s futile attempt to engineer a housing recovery on the backs of hard working tax payers with good credit. The buyer is a 20 something guy living with his parents, with a girlfriend and a young kid. He reportedly makes $29,000 per year. His girlfriend was not on the mortgage application. The only logical explanation is she has bad credit. He is putting 3.5% down and getting an FHA guaranteed mortgage. The $4,000 closing credit will cover his 3.5% down payment and closing costs. He evidently has no money to put down when purchasing this home. Sounds promising.
As a high risk borrower he will be lucky to get a 5.5% rate mortgage. In a world where risk mattered, it should be 7.5%. He should thank Ben and Janet for encouraging this type of mal-investment across the country with their 0% interest rate policy. His monthly cost to own this home would be approximately $800, or about 33% of his monthly gross income. Of course, no one brings home their gross income. The $800 would be about 40% of his take home pay after taxes. He did arrive at the house in a nice car, so it is very likely he has at least one auto loan of $20,000 or more. If he doesn’t have a dime to put down on the house, he is likely acting like a true American and rolling a $10,000 credit card balance at 17% interest. His total debt payments assuming a six year auto loan at 3% and making the minimum payments on his credit card would total at least 55% of his monthly gross income. Lucky for him, the FHA doesn’t worry about his non-mortgage debt payments.
So this guy comes home each month with about $2,000 of income and pays out $1,300 in debt payments, leaving him $700 to pay for health insurance, food, utilities, cable, cell phones, entertainment, and any vices he and his baby momma may have. If this isn’t a recipe for default, nothing is. No bank in their right mind would loan this man $66,000 for 30 years at 5.5%. That’s where the crooked nonbank mortgage companies enter the scene, just as they did when their patron saint Angelo “the tan man” Mozilo was roaming the land doling out billions in subprime mortgages while cashing in his stock options in 2005. Remember back in the glory days from 2002 through 2007 when mortgage company fronts, staffed by used car salesmen, pizza delivery guys, and convicted criminals peddled no-doc, negative amortization, liar loan, subprime slime to every Juan, Bubba and Lakeisha, filling the derivative pipeline for Wall Street to destroy the financial system? They’re back.
These parasites don’t worry about individual risk, financial risk, or systematic risk. They care about upfront fees and their ability to package their toxic subprime mortgages and dump the risk on someone else before it all blows up again. They are willing to issue mortgages to people unlikely to repay because there is a big difference between the risk that faces the company, and the risk that faces the blood sucking founder of the mortgage front. It’s a perfect opportunity for shysters and scumbags. You set up a mortgage company, and take extraordinarily opulent commissions on all loans you book. In this Fed created paradise of low interest rates, investors are desperate for yield. An FHA loan provides the opportunity for an investor to receive a good yield and a guarantee from the Federal government – aka YOU THE TAXPAYER.
The conscienceless CEO and executives of these MBS machines revel in the vast commission revenue as the loans are booked. These companies retain little or no capital on their balance sheets. Instead, they pay dividends to the owners as quickly as possible, before the bottom drops out. When the next Fed induced financial crisis happens the mortgage company will go bankrupt, but the slimy owners will walk away unscathed. These fly by night operations are booking as much business as possible before the music stops playing. When the music stops, the taxpayer will be on the hook again, as the FHA will need a $25 billion to $50 billion bailout. The FHA is flying under the radar, still in the shadow of equally insolvent Fannie and Freddie. Their mission is supposedly to help lower income people achieve the American Dream, but their politically motivated actions today will lead to millions of borrowers experiencing an American Nightmare and taxpayers footing the bill for their crackpot Keynesian scheme, aided and abetted by the Janet Yellen and her Fed cronies.
The FHA has $64 billion of liabilities on their balance sheet supported by $3 billion of capital. They are currently accelerating their guarantees to subprime borrowers with 3.5% down mortgages. Fannie and Freddie will purchase mortgages with only 3% down payments. Wall Street issued $1 trillion of mortgage backed securities last year, with the Fed buying 20% of the issuance as part of QE3. If this sounds like a replay of the waning days of the last Fed induced housing bubble, it’s because it is. Both debacles have been fueled by the mal-investment created by an easy money, excessively low interest rate environment, designed to benefit bankers, billionaires, politicians and mega-corporations. The Fed already has $1.7 trillion of Wall Street generated toxic mortgage debt on its bloated balance sheet. By the time this imminent catastrophe runs its course, there will be another trillion of toxic mortgages polluting their insolvent balance sheet.
To paraphrase H.L. Mencken, anyone who wants the government and Federal Reserve to create a housing recovery, deserves to get it good and hard, like a four by four to the side of their head. Subprime mortgages, subprime auto loans, and subprime student loans driven by preposterously low interest rates are the liquefying foundation of this fake economic recovery. Most rational people would agree that loaning money to people who will eventually default is not a good idea. But it is the underpinning of everything the Fed and government apparatchiks have done to keep this farce going a little while longer. It will not end well – Again.
- Following "Terrorist-Fighting" Ban On Cash, France Passes "Le Patriot Act"
In its efforts to 'protect' its citizens from terrorists, France deemed it necessary in March to "fight against the use of cash and anonymity in the French economy," and drastically reduced the public's freedom and privacy to spend. Today, that freedom and privacy took another blow as the French government passed "Le Patriot Act" dramatically beefing up the government's spying powers.
First a ban on cash… French Finance Minister Michel Sapin brazenly stated that it was necessary to "fight against the use of cash and anonymity in the French economy." He then announced extreme and despotic measures to further restrict the use of cash by French residents and to spy on and pry into their financial affairs.
These measures, which will be implemented in September 2015, include:
Prohibiting French residents from making cash payments of more than 1,000 euros, down from the current limit of 3,000 euros.
Given the parlous state of the stagnating French economy the limit for foreign tourists on currency payments will remain higher, at 10,000 euros down from the current limit of 15,000 euros.
The threshold below which a French resident is free to convert euros into other currencies without having to show an identity card will be slashed from the current level of 8,000 euros to 1,000 euros.
In addition any cash deposit or withdrawal of more than 10,000 euros during a single month will be reported to the French anti-fraud and money laundering agency Tracfin.
French authorities will also have to be notified of any freight transfers within the EU exceeding 10,000 euros, including checks, pre-paid cards, or gold.
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And now, as Bloomberg reports, a 'ban' on personal privacy…
A proposed French law beefing up the government’s spying powers following the Charlie Hebdo terrorist attacks in Paris sailed through the lower house of parliament.
The National Assembly said 438 lawmakers voted in favor, 86 against, and 42 abstained. The bill now goes to the Senate which can suggest amendments but not overturn the assembly’s vote.
The wide margin of victory came even as mounting opposition to the bill united business leaders, the Communist Party, Internet activists and lawyers. The country’s two main parties — the ruling Socialists and former President Nicolas Sarkozy’s UMP — back it as necessary to combat terrorism, even though some prominent members of both parties voted against it.
The bill has generated heated rhetoric: the head of the Paris Bar and a former head of the country’s business lobby said it will seriously undermine constitutional liberties while Prime Minister Manuel Valls accused opponents of being naive about the threats facing France. The fallout from the disclosure in 2013 of massive surveillance by U.S. authorities, and the enduring negative reputation of George W. Bush’s 2001 “Patriot Act” have added to the controversy.
“This law doesn’t go as far as the Patriot Act because that was never its founders’ intention and because even if they wanted to copy their American counterparts, the French services lack the means to listen to everyone permanently,” said Eric Denece, director of the French Center for the Study of Intelligence.
The proposed law sets rules on how investigators can tap phone lines, locate people through mobile phones, intercept e-mails, take secret photographs and enter homes to place microphones without preliminary approval of a judge. It also creates a new independent body overseeing surveillance activities. And for the first time, it gives France’s top administrative court the power to order an end to surveillance.
Opponents have focused on its supposed lack of effective oversight, its wide definition of threats facing France, and the use of algorithms to analyze communication patterns.
“Serious flaws include expansive powers for the prime minister to authorize surveillance for purposes far beyond those recognized in international human rights law; lack of meaningful judicial oversight; requirements for private service providers to monitor and analyze user data and report suspicious patterns; prolonged retention periods for some captured data; and little public transparency,” Human Rights Watch said in a April 6 statement.
Don't forget – it's for your own protection.. and if you do not agree – you're a terrorist too:
Valls rejected the criticism in his speech to parliament.
“The law is strictly focused on preventing serious threats,” he said. “The criticisms and postures that evoke a French Patriot Act or a police state are irresponsible lies.”
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Feel safer now?
- Oil Rises After API Reports First Inventory Draw In 16 Weeks
For the first time since the first week of January, API reports a 1.5 million barrel inventory draw (against last week’s 4.2mm build). This also comes with a 336k draw from Cushing following on from last week’s 162k draw. Oil prices have responded by pushing higher, though it appears most of this was priced in.
If DOE confirms this draw, then this will be the first draw since the first week of Jan…
Which appears to have been largely priced in today…
Charts: Bloomberg
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