Monday, August 3, 2020

Barcelona Grapples with its Housing Crisis

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by Don Quijones, Wolf Street:

Local tenants vs. global capital in search of assets.

Spain has become a difficult country for many tenants. In the most populous provinces rents are rising ten times faster than salaries. In its two biggest cities, Madrid and Barcelona, they’re rising 30 times faster. In 2017 alone 36,138 rental contracts at an average monthly price of €873 were signed in Barcelona, a city where 65% of under-30-year-olds earn less than €1,000 a month.

Barcelona City Council – which is run by the leftist mayor Ada Colau, a former housing activist – has decided that enough is enough. The council has halted renovation works on two buildings on grounds that the developers were carrying out major reworks without requesting the appropriate authorisation. Both developers — an investment fund and a real estate company — began the work with permits only for minor alterations when in fact they were completely renovating the buildings.

In one case the new owners also appeared to be violating the rights of tenants, said the city councilor in charge of housing, Josep Maria Montaner. “Barcelona will not accept these snide attempts to dodge the rules. Legislation and the rights of residents and local people must be respected.”

In the last year or so, over 75 apartment blocks have been bought up by investment funds, many of them from overseas. They are systematically targeting what have come to be known as “vertically owned” properties — apartment buildings that have been owned exclusively by a local person or family for generations.

Here’s how it works: First, a building’s mail boxes are bombarded with flyers offering to buy flats within the building or buy up the entire building itself. The flyers claim to be from an individual person with an innocuous sounding name like Miguel or Silvia but in reality the sender is an investment fund most likely domiciled in a tax haven like Panama or the Cayman Islands.

If the owner of the building takes the bait and sells up, the fund quickly moves into action: The first thing it does is to alert all the building’s tenants that the next time their contract runs its course, it will not be renewed or the rent will be increased by 50-100%. Many tenants will promptly start looking for somewhere else to live, especially if the building becomes a hive of loud, hugely disruptive building activity.

Naturally, some tenants will decide to stick it out until the end of their contract. In response some funds resort to “real estate mobbing” — the use of distinct forms of harassment and intimidation — to try to “clear” the apartment. According to a study published by the City Council in November 2017, the occupants of as many as 38 buildings in Barcelona are being “pressured” by funds to leave their homes.

In one neighborhood alone, the once staunchly middle class district of Sant Antoni, an estimated 3,500 families are at risk of losing the flats they live in during the next couple of years, either through termination of contract or a massive hike in their rent.

The public backlash has already begun. In May 2017 the city saw the launch of its first ever tenants union, modeled on the associations already in existence in other European countries. The City Mayor, Ada Calau, applauded the initiative, describing it as “in sync” with her own policies, which include occasionally fining banks hundreds of thousands of euros for keeping properties they own empty.

The union’s stated goal is to serve as a “voice to defend housing as a right in the face of those who consider it merchandise.” The group says it will defend rent control and longer leases, and offer its members technical and legal advice. It is not ruling out a city-wide rental strike as happened in Barcelona in the tumultuous 1930s.

Barcelona’s rental market is red-hot for a number of reasons, including a surge in demand for rental properties in the wake of the collapse of the real estate bubble in 2008, the massive growth of Barcelona’s tourist boom, and the subsequent strain that growing numbers of apartments that have been converted to vacation rentals are putting on the city’s housing stock.

Government regulation has hardly helped matters. In its Urban Leasing Act of 2013, Spain’s central government reduced the minimum duration of rental contracts from five to three years and eliminated any caps on rental hikes when a contract comes up for renewal. The law also exempted real estate investment trusts (REITs or in Spanish, SOCIMIs) from having to pay corporation tax while offering them the chance of a 95% refund on the capital transfer tax. Once the law was passed global banks and private equity funds began piling in to the market to pick up the juiciest real estate assets being auctioned off by Spain’s publicly subsidized bad bank, Sareb.

Read More @ WolfStreet.com

Yesterday’s Stock Market Plunge Saw Indiscriminate Dumping of Stocks

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by Pam Martens and Russ Martens, Wall St On Parade:

The Dow Jones Industrial Average (Dow) has now had two days of losses of more than 1,000 points in the last four trading sessions: Monday and yesterday. The Dow consists of some of the oldest companies in America and, to a large degree, what are regarded as the safest stocks to hold by investors because of their liquidity, large capitalization and steady dividends.

The Nasdaq, on the other hand, consists primarily of much younger companies, many in the roller-coaster technology field, and far shorter histories of paying dividends.

Typically, in a market panic, one would expect the Nasdaq to show a deeper dive than the Dow. But as the top chart above indicates, on Monday and Tuesday it was actually the Dow that saw a deeper selloff. Then yesterday, Thursday, February 8, the two widely disparate markets traded in almost complete lockstep. (See second chart above.) Why would a far riskier market trade in lockstep with the far safer Dow during a market panic? Surely memories are not so short that they can’t recall how the Nasdaq fared versus the Dow in the dot.com bust that began in March 2000. (See third chart above.)

Logic suggests that what we saw yesterday was the indiscriminate, wholesale dumping of stock portfolios by traders desperate to raise cash any way they could. That then raises the next question: is there something out there that regulators and the public can’t see that is fueling a mass liquidation of stocks by traders who made a wrong-way bet on volatility, interest rates or some other trading strategy.

The monster difference between the volume of advancing stocks versus the volume on declining stocks also suggests wholesale dumping. Dow Jones’ MarketWatch reports that yesterday the New York Stock Exchange (NYSE) saw 2,683 stocks decline while only 342 stocks advanced. Similarly, Nasdaq saw 2,525 stocks decline while 453 advanced. Trading volume was swamped by declining shares. On the NYSE, declining share volume reached 4.74 billion while advance volume came in at a meager 556.45 million. Nasdaq’s volume tallied out at 2.35 billion in decliners versus 363.15 million in advancers.

Exchange-traded products that have shorted the volatility index known as VIX have been widely blamed for causing at least some of the stock market rout. But their cumulative size is minuscule compared to the dollar amount of selling we are seeing in the stock market. Hedge funds, however, may have mimicked that strategy to a far larger degree and taken on massive amounts of leverage to do so. If hedge funds are liquidating stock portfolios to meet margin calls, that would help to explain the inability of the stock market to sustain a rally.

Another big problem is likely the so-called risk-parity funds that weight their portfolios in different asset classes according to the measure of volatility each class is experiencing. It is believed that these funds have been dumping stocks as the VIX has climbed and rebalancing into lower volatility holdings.

Read More @ WallStOnParade.com

HUGE VOLATILE DAY: YOUR KEY INDICATORS PREDICTING TROUBLE AHEAD: USA 10 YR TREASURY BOND YIELD: 2.85612

by Harvey Organ, Harvey Organ Blog:

CLOSING PRICE OF VIX: 28.85 BOTH AT DANGEROUS LEVELS/GOLD DOWN $4.70 TO $1312.60/SILVER DOWN 18 CENTS TO $16.20/USA PASSES A 2 YR BUDGET DEAL WHICH WILL ADD 2 TRILLION DOLLARS TO ITS DEFICIT/MOODY’S WARNS THE USE THAT IT MIGHT DOWNGRADE USA DEBT/CHINA ANNOUNCES THAT IT WILL COMMENCE ITS OIL YUAN CONTRACT SHORTLY AS WELL AS THE FUTURES CONTRACT WHICH WILL BEGIN ON MARCH 23.

GOLD: $1312.60 DOWN $4.70

Silver: $16.20 DOWN 18 cents

Closing access prices:

Gold $1316.80

silver: $16.36

SHANGHAI GOLD FIX: FIRST FIX 10 15 PM EST (2:15 SHANGHAI LOCAL TIME)

SECOND FIX: 2:15 AM EST (6:15 SHANGHAI LOCAL TIME)

SHANGHAI FIRST GOLD FIX: $1329.50 DOLLARS PER OZ

NY PRICE OF GOLD AT EXACT SAME TIME: $1318.00

PREMIUM FIRST FIX: $9.80

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SECOND SHANGHAI GOLD FIX: $1329.52

NY GOLD PRICE AT THE EXACT SAME TIME: $1320.25

Premium of Shanghai 2nd fix/NY:$9.27

SHANGHAI REJECTS  NY /LONDON PRICING OF GOLD

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LONDON FIRST GOLD FIX: 5:30 am est $1316.05

NY PRICING AT THE EXACT SAME TIME: $1315.80

LONDON SECOND GOLD FIX 10 AM: $1314.10

NY PRICING AT THE EXACT SAME TIME. $1314.20

For comex gold:

FEBRUARY/

NUMBER OF NOTICES FILED TODAY FOR FEBRUARY CONTRACT: 141 NOTICE(S) FOR 14100 OZ.

TOTAL NOTICES SO FAR:1733 FOR 173300 OZ (5.3903 TONNES),

For silver:

jANUARY

0 NOTICE(S) FILED TODAY FOR

nil OZ/

Total number of notices filed so far this month: 199 for 995,000 oz

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Bitcoin: BID $8297/OFFER $8368: up $93(morning)

Bitcoin: BID/ $8311/offer $8381: UP $107  (CLOSING/5 PM)

 

end

 

FOR THOSE OF YOU WHO THINK THAT MARKETS ARE NOT MANIPULATED, I HAVE A WONDERFUL PIECE OF PROPERTY IN THE EVERGLADES TO SELL

 

TODAY, THE MANIPULATION WAS SO OBVIOUS.

Let us have a look at the data for today\

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In silver, the total open interest FELL BY A HUGE SIZED 9371 contracts from 202,505  FALLING TO 193,135 DESPITE  YESTERDAY’S SMALL 8 CENT GAIN IN SILVER PRICING.  WE  HAD CONSIDERABLE COMEX LIQUIDATION. HOWEVER, WE WERE AGAIN NOTIFIED THAT WE HAD ANOTHER HUGE SIZED NUMBER OF COMEX LONGS TRANSFERRING THEIR CONTRACTS TO LONDON THROUGH THE EFP ROUTE:  3215 EFP’S FOR MARCH AND AND 0 EFP’S FOR MAY AND ZERO FOR ALL  OTHER MONTHS  AND THUS TOTAL ISSUANCE OF 3215 CONTRACTS.  WITH THE TRANSFER OF 3215 CONTRACTS, WHAT THE CME IS STATING IS THAT THERE IS NO SILVER (OR GOLD) TO BE DELIVERED UPON AT THE COMEX AS THEY MUST EXPORT THEIR OBLIGATION TO LONDON. ALSO KEEP IN MIND THAT THERE CAN BE A DELAY OF 24 HRS IN THE ISSUING OF EFP’S. THE 3215 CONTRACTS TRANSLATES INTO 16.08 MILLION OZ.  WITH THE HUGE DROP IN OPEN INTEREST AT THE COMEX. WE SHOULD EXPECT BIGGER GAINS IN EFP TRANSFERS IN THE NEXT FEW DAYS WITH THE LARGE LOSS AT THE COMEX AS LONGS GAVE UP SEEKING METAL AT THIS EXCHANGE.

ACCUMULATION FOR EFP’S/SILVER/ STARTING FROM FIRST DAY NOTICE/FOR MONTH OF FEBRUARY:

24,531 CONTRACTS (FOR 8 TRADING DAYS TOTAL 24,531 CONTRACTS OR 122.655 MILLION OZ: AVERAGE PER DAY: 3066 CONTRACTS OR 15.331 MILLION OZ/DAY)

TO GIVE YOU AN IDEA AS TO THE HUGE SUPPLY THIS MONTH IN SILVER:  SO FAR THIS MONTH:  122.655 MILLION PAPER OZ HAVE MORPHED OVER TO LONDON. THIS REPRESENTS AROUND 17.5% OF ANNUAL GLOBAL PRODUCTION

ACCUMULATION IN YEAR 2018 TO DATE SILVER EFP’S:  357.59 MILLION OZ.

ACCUMULATION FOR JAN 2018: 236.879 MILLION OZ

RESULT: A HUGE SIZED LOSS IN OI SILVER COMEX DESPITE THE SMALL  8 CENT GAIN IN SILVER PRICE.  WE HOWEVER HAD A GOOD SIZED EFP ISSUANCE OF 3215 CONTRACTS WHICH EXITED OUT OF THE SILVER COMEX AND TRANSFERRED THEIR OI TO LONDON AS FORWARDS. SPECULATORS CONTINUED THEIR INTEREST IN ATTACKING THE SILVER COMEX FOR PHYSICAL SILVER . FROM THE CME DATA 3214 EFP’S  FOR  MONTHS MARCH AND MAY WERE ISSUED FOR TODAY  FOR A DELIVERABLE FORWARD CONTRACT OVER IN LONDON WITH A FIAT BONUS.  WITH YESTERDAY’S TRADING WE LOST  6156 OI CONTRACTS i.e. 3215 open interest contracts headed for London (EFP’s) TOGETHER WITH A DECREASE OF 9371  OI COMEX CONTRACTS. AND ALL OF THIS HAPPENED WITH THE SMALL RISE IN PRICE OF SILVER OF  8 CENTS AND A CLOSING PRICE OF $16.38 WITH RESPECT TO YESTERDAY’S TRADING. YET WE STILL HAVE A FAIR AMOUNT OF SILVER STANDING AT THE COMEX.

In ounces AT THE COMEX, the OI is still represented by just UNDER 1 BILLION oz i.e. 0.965 BILLION TO BE EXACT or 138% of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT FEBRUARY MONTH/ THEY FILED: 0 NOTICE(S) FOR NIL OZ OF SILVER

In gold, the open interest FELL  BY ANOTHER CONSIDERABLE 7,499 CONTRACTS DOWN TO 519,362  DESPITE THE GOOD SIZED RISE IN PRICE OF GOLD WITH YESTERDAY’S TRADING ($5.20).HOWEVER, IN ANOTHER DEVELOPMENT, WE RECEIVED THE TOTAL NUMBER OF GOLD EFP’S ISSUED FOR TODAY AND IT TOTALED A HUGE SIZED  14,716 CONTRACTS OF WHICH  APRIL SAW THE ISSUANCE OF 14,716 CONTRACTS AND  JUNE SAW THE ISSUANCE OF 0 CONTRACTS AND THEN ALL OTHER MONTHS ZERO.    The new OI for the gold complex rests at 517,708. ALSO REMEMBER THAT THERE WILL BE A DELAY IN THE ISSUANCE OF EFP’S.  THE BANKERS REMOVE LONG POSITIONS OF COMEX GOLD IMMEDIATELY.  THEN THEY ORCHESTRATE THEIR PRIVATE EFP DEAL WITH THE LONGS AND THAT COULD TAKE AN ADDITIONAL 48 HRS SO WE GENERALLY DO NOT GET A MATCH WITH RESPECT TO DEPARTING COMEX LONGS AND NEW EFP LONG TRANSFERS. DEMAND FOR GOLD INTENSIFIES GREATLY AS WE CONTINUE TO WITNESS A HUGE NUMBER OF EFP TRANSFERS TOGETHER WITH THE MASSIVE INCREASE IN GOLD COMEX OI  TOGETHER WITH  THE TOTAL AMOUNT OF GOLD OUNCES STANDING FOR FEBRUARY COMEX. EVEN THOUGH THE BANKERS ISSUED THESE MONSTROUS EFPS, THE OBLIGATION STILL RESTS WITH THE BANKERS TO SUPPLY METAL BUT IT TRANSFERS THE RISK TO A LONDON BANKER OBLIGATION AND NOT A NEW YORK COMEX OBLIGATION. LONGS RECEIVE A FIAT BONUS TOGETHER WITH A LONG LONDON FORWARD. THUS, BY THESE ACTIONS, THE BANKERS AT THE COMEX HAVE JUST STATED THAT THEY HAVE NO APPRECIABLE METAL!! THIS IS A MASSIVE FRAUD: THEY CANNOT SUPPLY ANY METAL TO OUR COMEX LONGS BUT THEY ARE QUITE WILLING TO SUPPLY MASSIVE NON BACKED GOLD (AND SILVER) PAPER KNOWING THAT THEY HAVE NO METAL TO SATISFY OUR LONGS. LONDON IS NOW SEVERELY BACKWARD IN BOTH GOLD AND SILVER (BIG RISE IN BOTH GOFO AND SIFO) AND WE ARE WITNESSING DELAYS IN ACTUAL DELIVERIES. IN ESSENCE TODAY DESPITE YESTERDAY’S TRADING IN GOLD,  WE HAVE A GAIN OF 7217  CONTRACTS: 7499 OI CONTRACTS DECREASED AT THE COMEXAND A STRONG SIZED  14,716 OI CONTRACTS WHICH NAVIGATED OVER TO LONDON.(7219 oi gain in CONTRACTS EQUATES TO 22.45 TONNES)

YESTERDAY, WE HAD 13,622 EFP’S ISSUED.

ACCUMULATION OF EFP’S/ GOLD(EXCHANGE FOR PHYSICAL) FOR THE MONTH OF FEBRUARY STARTING WITH FIRST DAY NOTICE: 91,370 CONTRACTS OR 9,137,000  OZ OR 284.19 TONNES (8 TRADING DAYS AND THUS AVERAGING: 11,421 EFP CONTRACTS PER TRADING DAY OR 1,142,100 OZ/DAY)

TO GIVE YOU AN IDEA AS TO THE HUGE SIZE OF THESE EFP TRANSFERS :   SO FAR THIS MONTH IN 8 TRADING DAYS: IN  TONNES: 284.19 TONNES

TOTAL ANNUAL GOLD PRODUCTION, 2017, THROUGHOUT THE WORLD EX CHINA EX RUSSIA: 2200 TONNES

THUS EFP TRANSFERS REPRESENTS 284.19/2200 x 100% TONNES =  12.91% OF GLOBAL ANNUAL PRODUCTION SO FAR IN FEBRUARY ALONE.

ACCUMULATION OF GOLD EFP’S YEAR 2018 TO DATE:  917.72 TONNES

ACCUMULATION OF GOLD EFP’S FOR JANUARY 2018: 653.22  TONNES

Result: A  HUGE SIZED DECREASE IN OI AT THE COMEX DESPITE THE GOOD SIZED RISE IN PRICE IN GOLD TRADING YESTERDAY ($5.20). IT IS WITHOUT A DOUBT THAT MANY OF THE DEPARTED COMEX LONGS  RECEIVED THEIR PRIVATE EFP CONTRACT  FOR EITHER  APRIL OR JUNE. HOWEVER, WE HAD ANOTHER GOOD SIZED NUMBER OF COMEX LONG TRANSFERRING TO LONDON THROUGH THE EFP ROUTE: 14,716 AS THESE HAVE ALREADY BEEN NEGOTIATED AND CONFIRMED.   THERE OBVIOUSLY DOES NOT SEEM TO BE MUCH PHYSICAL GOLD AT THE COMEX AND YET WE ALSO OBSERVED A HUGE DELIVERY MONTH FOR THE MONTH OF DECEMBER. I GUESS IT EXPLAINS THE HUGE ISSUANCE OF EFP’S…THERE IS HARDLY ANY GOLD PRESENT AT THE GOLD COMEX FOR DELIVERY PURPOSES. IF YOU TAKE INTO ACCOUNT THE 14,716 EFP CONTRACTS ISSUED, WE HAD A NET GAIN IN OPEN INTEREST OF 7217 contracts ON THE TWO EXCHANGES:

14,716 CONTRACTS MOVE TO LONDON AND  7499 CONTRACTS DECREASED AT THE COMEX. (in tonnes, the GAIN in total oi equates to 22.45 TONNES).

we had: 141 notice(s) filed upon for 14100 oz of gold.

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With respect to our two criminal funds, the GLD and the SLV:

GLD

WITH TODAY’S TURMOIL, THE CROOKS WITHDREW ANOTHER 2 TONNES OF GOLD FROM THE GLD/INVENTORY RESTS AT 826.31

Inventory rests tonight: 826.31 tonnes.

SLV/

NO CHANGES IN SILVER INVENTORY AT THE SLV/ AGAIN WITH TODAY’S TURMOIL   NO CHANGE IN INVENTORY

/INVENTORY RESTS AT 314.045 MILLION OZ/

can someone please explain why GLD behaves differently to SLV????

end

First, here is an outline of what will be discussed tonight:

1. Today, we had the open interest in silver FELL BY A GIGANTIC 9371 contracts from 202,506 DOWN TO 193,135 (AND now A LITTLE FURTHER TO THE NEW COMEX RECORD SET ON FRIDAY/APRIL 21/2017 AT 234,787) DESPITE  THE GOOD SIZED  RISE  IN PRICE OF SILVER  (8 CENTS WITH RESPECT TO  YESTERDAY’S TRADING).   OUR BANKERS USED THEIR EMERGENCY PROCEDURE TO ISSUE ANOTHER GOOD 3215 PRIVATE EFP’S FOR MARCH AND 0 EFP CONTRACTS OR MAY  (WE DO NOT GET A LOOK AT THESE CONTRACTS AS IT IS PRIVATE BUT THE CFTC DOES AUDIT THEM) AND 0 EFP’S FOR ALL OTHER MONTHS .  EFP’S GIVE OUR COMEX LONGS A FIAT BONUS PLUS A DELIVERABLE PRODUCT OVER IN LONDON. WE HAD SOME COMEX SILVER COMEX LIQUIDATION. IF WE TAKE THE  OI LOSS AT THE COMEX OF  9371 CONTRACTS TO THE 3215 OI TRANSFERRED TO LONDON THROUGH EFP’S, SURPRISINGLY WE OBTAIN A LOSS OF 6156  OPEN INTEREST CONTRACTS DESPITE YESTERDAY’S GAIN IN SILVER PRICE.  WE STILL HAVE A GOOD AMOUNT OF SILVER OUNCES THAT ARE STANDING FOR METAL IN JANUARY (SEE BELOW). THE NET LOSS TODAY IN OZ ON THE TWO EXCHANGES:  30.78 MILLION OZ!!!

RESULT: A HUMONGOUS SIZED DECREASE IN SILVER OI AT THE COMEX DESPITE THE GOOD SIZED RISE OF 8 CENTS IN PRICE (WITH RESPECT TO YESTERDAY’S TRADING ). BUT WE ALSO HAD ANOTHER GOOD 3215 EFP’S ISSUED TRANSFERRING COMEX LONGS OVER TO LONDON. TOGETHER WITH THE GOOD  SIZED AMOUNT OF SILVER OUNCES STANDING FOR FEBRUARY, DEMAND FOR PHYSICAL SILVER INTENSIFIES AS WE WITNESS MAJOR BANK SHORT COVERING ACCOMPANIED BY INCREASES IN GOFO AND SIFO RATES INDICATING SCARCITY.

(report Harvey)

.

2.a) The Shanghai and London gold fix report

(Harvey)

2 b) Gold/silver trading overnight Europe, Goldcore

(Mark O’Byrne/zerohedge

and in NY: Bloomberg

3. ASIAN AFFAIRS

i)Late THURSDAY night/FRIDAY morning: Shanghai closed DOWN 132.19 points or 4.05% /Hang Sang CLOSED DOWN 943.85 or 3.10% / The Nikkei closed DOWN 508,24 POINTS OR 2.32%/Australia’s all ordinaires CLOSED DOWN 0.96%/Chinese yuan (ONSHORE) closed UP at 6.3041/Oil DOWN to 60.47 dollars per barrel for WTI and 64.30 for Brent. Stocks in Europe OPENED DEEPLY IN THE RED .   ONSHORE YUAN CLOSED UP AGAINST THE DOLLAR AT 6.3040. OFFSHORE YUAN CLOSED DOWN AGAINST  THE ONSHORE YUAN AT 6.3244//ONSHORE YUAN A LOT STRONGER AGAINST THE DOLLAR/OFF SHORE A LOT STRONGER TO THE DOLLAR/. THE DOLLAR (INDEX) IS  MUCH STRONGER AGAINST ALL MAJOR CURRENCIES EXCEPT CHINA YUAN.  CHINA IS NOT TOO  HAPPY TODAY.(INTERVENTION STRONGER CURRENCY AND WEAK MARKETS IN CHINA AND THROUGHOUT THE GLOBE

i

Read More @ HarveyOrganBlog.com

Mass exodus from ‘Mad Max violence’ in Venezuela: Thousands flee across bridge to Colombia amid desperate hunger and soaring crime following economic crisis

by Keiran Southern, Daily Mail:

  • Thousands of desperate Venezuelans are trying to enter Colombia through the border crossing of Cucuta
  • They are fleeing hunger, inflation and the political crisis threatening to engulf the South American country
  • Colombia – along with neighbour Brazil – has sent extra soldiers to patrol their porous border with Venezuela
  • The crisis shows no sign of easing and Colombian lawmakers are beginning to tighten their border controls

The dire economic conditions have led to lawlessness in parts of Venezuela’s capital Caracas, with truck drivers subjected to ‘Mad Max’ violence as looters target heavy goods vehicles carrying food.
 

 These incredible images show the thousands of desperate Venezuelans trying to flee the crisis-hit country by pouring into neighbouring Colombia
These incredible images show the thousands of desperate Venezuelans trying to flee the crisis-hit country by pouring into neighbouring Colombia
 Refugees trying to flee hunger, inflation and the political crisis threatening to engulf the country. Many people are struggling to feed their families
Refugees trying to flee hunger, inflation and the political crisis threatening to engulf the country. Many people are struggling to feed their families
 In reaction to the crisis, Colombian lawmakers have begun to take steps to tighten their border controls. The new measures could make it more difficult for Venezuelan migrants to cross into the country illegally
In reaction to the crisis, Colombian lawmakers have begun to take steps to tighten their border controls. The new measures could make it more difficult for Venezuelan migrants to cross into the country illegally

According to Reuters, there were 162 lootings across Venezuela in January, including 42 robberies of trucks.

That is compared to just eight lootings, including one truck robbery, 12 months ago. 

Last month,  eight people were killed in lootings. 

Venezuela has one of the world’s highest murder rates and the attacks are pushing up food and transport costs. 

The truckers are not allowed to carry guns so have resorted to forming convoys to protect themselves. They text each other warnings about potential trouble spots and keep moving as fast as possible. 

Massive numbers of Venezuelans have been driven from their homes by a dire financial crisis that has seen many struggling to feed themselves. 

Read More @ DailyMail.co.uk

BRILLIANT: Russian Embassy NAILS the British media with one simple tweet

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by Vladimir Rodzianko, The Duran:

People all over the world are delighted to see the US and Russia joining together to call out the globalists on their blatant hypocrisy.

“A Russian company spends 72p on Facebook ads: interference, hybrid war, parliamentary inquiry Soros spends £400K on bringing down UK Government: nothing to worry about.”

The Russian Embassy’s tweet is in reference to a Telegraph story that George Soros is financing a campaign that would overturn the Brexit referendum – yet the British government is more interested in spreading fake news that the Russian government influenced the Brexit vote:

The investor is one of three senior figures linked to the Remain-supporting campaign group Best for Britain who plan to launch a nationwide advertising campaign this month, which they hope will lead to a second referendum to keep Britain in the EU.

The campaign is trying to recruit major Tory donors in an attempt to undermine Theresa May.

It also plans to target MPs and convince them to vote against the final Brexit deal to trigger another referendum or general election, according to a strategy document leaked from a meeting of the group.

The document says the campaign, which will begin by the end of this month, must “wake the country up and assert that Brexit is not a done deal. That it’s not too late to stop Brexit”.

Read More @ TheDuran.com

Is A Massive Stock Market Reversal Upon Us?

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by Brandon Smith, Alt Market:

I have been saying it for years and I will say it again here — stocks are the worst possible “predictive” signal for the health of the general economy because they are an extreme trailing indicator. That is to say, when stock markets do finally crash, it is usually after years of negative signs in other more important fundamentals.

Of course, whether we alternative analysts like it or not, the fact of the matter is that the rest of the world is psychologically dependent on the behavior of stock markets. The masses determine their economic optimism  (if they are employed) according to the Dow and the S&P and, to some extent, by official and fraudulent unemployment statistics. When equities start to dive, society takes notice and suddenly becomes concerned about fiscal dangers they should have been worried about all along.

Well, it may have taken a couple months longer than I originally predicted, but it would seem so far that a moment of revelation (that slap in the face I discussed a couple weeks ago) is upon us. In less than a few days, most of the gains in global stocks for 2018 have been erased. The question is, will this end up as a “hiccup” in an otherwise spectacular bull market bubble? Or is this the inevitable death knell and the beginning of the implosion of that bubble?

After I predicted the election of Donald Trump, I also predicted that central banks would begin pulling the plug on life support for equities markets. This did in fact take place with the Fed’s continued program of interest rate increases and the reduction of their balance sheet, which effectively strangles the flow of cheap credit to banking and corporate institutions that fueled stock buybacks for years. Without this constant and ever expansionary easy fiat, there is nothing left to act as a crutch for stocks except perhaps blind faith. And blind faith in the economy always ends up being smacked down by the ugly realities of mathematics.

I believe the latest extraordinary dive in stocks is NOT a “hiccup,” but a sign that “contagion” is still a thing, and also a trailing sign of instability inherent in our fiscal system. Here are some reasons why this trend is likely to continue.

Historic Corporate Debt Levels

As mentioned above, artificially low interest rates have allowed corporations incredible leeway to manipulate stock markets at will using stock buybacks and other methods.  However, there are still consequences for this strategy.  For example, corporate debt levels are now at historic annual highs; far higher even than debt levels just before the crash of 2008.

If this doesn’t illustrate the falseness of the so called “economic recovery”, I don’t know what does.  Beyond that, what happens as the Fed continues to raise interest rates and all that debt held by the “too big to fails” becomes vastly more expensive?  Well, I think we are seeing what happens.  Over time, faith in the corporate ability to prop up equities will erode, and a considerable decline is built directly into the farce.

Price To Earnings Ratio

In some of her final statements upon stepping down as the head of the Federal Reserve, Janet Yellen had some choice comments about the state of equities markets. These included statements that stock market valuations were high and that the price-to-earnings ratio of the S&P 500 (the ratio of stock values versus actual corporate earnings per share) were at a historical peak. This fits exactly with the policy shift I warned about in 2017, and my assertion that Jerome Powell will be the Fed chairman to oversee the final crash of the post-bailout market bubble.

The spike in P/E ratios is not only taking place in U.S. markets. For example, the same trend can be observed in countries like India.  Meaning, there are equities valuation problems around the world.

The issue here is that corporate earnings do not justify such high stock prices. Therefore, something else must be inflating those prices. That something was, of course, central bank stimulus, and now that party is almost over, whether the “buy the f’ing dippers” want to admit it yet or not.

10-Year Treasury Yield Spike

Have spiking Treasury bond yields actually been a signal for an “accelerating economy” as mainstream economists often suggest? Not really. In the era of central bank monetary manipulation, it is more likely that yields were spiking because markets are anticipating the arrival of Jerome Powell as Fed chair and accelerating interest rate hikes rather than an accelerating economy.

The notion that the economy itself might be “overheating” in 2018 is a rather new and nefarious propaganda meme being used by central bankers to set a particular narrative. I believe that narrative will be the claim that “inflation” is a key concern rather than deflation and that central banks must act to temper inflation with more aggressive rate increases. In reality, what we are seeing is not “inflation” in a traditional sense, but stagflation. That is to say, we are seeing elements of price inflation in necessary goods and services and well as property markets, but continued deflation in the rest of the economy.

The Fed in particular will continue to ignore negative fundamentals because they are seeking to deliberately pop the market bubble they have created.

The spike in 10-year bond yields seems to be correlating closely to the recent volatility in stocks. This volatility increased exponentially as yields neared the 3% mark, which appears to be the magical trigger point for equities failure.  Though yields suffered a modest decline as stocks tumbled this week, I still recommend keeping an eye on this indicator.

Dollar Weakness

As I have mentioned in recent articles, there has been a strange disconnect between interest rates and the U.S. dollar. As the Fed continues its policy of hiking interest rates, generally the dollar index should rise in response. Instead, the dollar has been swiftly falling, only stalling in the past couple of trading sessions. If the dollar index continues to fall even as stocks decline and rates increase, this may suggest a systemic risk to the dollar itself.

Such risk could include a dollar dump by foreign central banks in favor of a wider basket of currencies, or the SDR trading basket created by the IMF.

Balance Sheet Reductions Accelerating

The Fed’s most recent release of data on its balance sheet reduction program shows a drop in holdings of $18 billion; this is far higher that the originally planned $12 billion slated by the Fed.  Meaning, the Fed is dumping its balance sheet holdings much faster than it told the public initially.

Why is this important?  Well, if you have been tracking the behavior of stocks over the past few years as well as the increases in the Fed’s balance sheet, you know that stock markets have risen in direct correlation with that balance sheet.  In other words, the more purchases the Fed made, the higher stocks climbed.

If this correlation is directly linked, then as the Fed reduces its balance sheet, stocks should fall.

So, the fed announces its latest round of balance sheet reductions on January 31st, the reduction is much higher than anticipated, and within a week we witness the largest two day market drop in years.  You would think this observation might just be important, but if you look at the mainstream economic media, almost NO ONE is mentioning it.  Instead, they are searching for all sorts of random explanations for what just happened, none of which are very logically satisfying.

I believe that the Fed will not only continue its program of interest rate increases even if stocks begin to flounder, but that they will also unload their balance sheet as quickly as possible.

Corporate Investor Comments

Major corporate investment firms are beginning to raise their voices about the potential not only for stock devaluations, but also the amount that they might fall. Sydney-based AMP capital suggested a rather moderate 10% pullback in equities, which I think will become the talking point for most of the mainstream media over the next couple weeks. At least, until the whole thing comes crashing down much further than that.

Read More @ Alt-Market.com

Really Bad Ideas, Part 6: Money That “Rots And Rusts”

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by John Rubino, Dollar Collapse:

In the next downturn (which may have started last week, yee-haw), the world’s central banks will face a bit of poetic justice: To keep their previous policy mistakes from blowing up the world in 2008, they cut interest rates to historically – some would say unnaturally — low levels, which doesn’t leave the usual amount of room for further cuts.

Now they’re faced with an even bigger threat but are armed with even fewer effective weapons. What will they do? The responsible choice would be to simply let the overgrown forest of bad paper burn, setting the stage for real (that is, sustainable) growth going forward. But that’s unthinkable for today’s monetary authorities because they’ll be blamed for the short-term pain while getting zero credit for the long-term gain.

So instead they’ll go negative, cutting interest rates from near-zero to less than zero — maybe a lot less. And their justifications will resemble the following, published by The Economist magazine last week.

 

Why sub-zero interest rates are neither unfair nor unnatural

When borrowers are scarce, it helps if money (like potatoes) rots.

DENMARK’S Maritime Museum in Elsinore includes one particularly unappetising exhibit: the world’s oldest ship’s biscuit, from a voyage in 1852. Known as hardtack, such biscuits were prized for their long shelf lives, making them a vital source of sustenance for sailors far from shore. They were also appreciated by a great economist, Irving Fisher, as a useful economic metaphor.

Imagine, Fisher wrote in “The Theory of Interest” in 1930, a group of sailors shipwrecked on a barren island with only their stores of hardtack to sustain them. On what terms would sailors borrow and lend biscuits among themselves? In this forlorn economy, what rate of interest would prevail?

One might think the answer depends on the character of the unfortunate sailors. Interest, in many people’s minds, is a reward for deferring gratification. That is one reason why low interest rates are widely perceived as unjust. If an abstemious sailor were prepared to lend a biscuit to his crewmate rather than eating it immediately himself, he would deserve more than one biscuit in repayment. The rate of interest should be positive—and the sharper the hunger of the sailors, the more positive it would be.

In fact, Fisher pointed out, the interest rate on his imagined island could only be zero. If it were positive, any sailor who borrowed an extra biscuit to eat would have to use more than one biscuit in the future to repay the loan. But no sailor would accept those terms because he could instead eat one more piece from his own supply, thereby reducing his future consumption by one, and only one, piece. (A sailor who had already depleted his supplies, leaving him with no additional hardtack of his own to eat today, would be in no position to repay borrowed biscuits either.)

That was bad news for thrifty seafarers. But worse scenarios were possible. If the sailors had washed ashore with perishable figs rather than imperishable hardtack, the rate of interest would have been steeply negative. “[T]here is no absolutely necessary reason inherent in the nature of man or things why the rate of interest in terms of any commodity standard should be positive rather than negative,” Fisher concluded.

Two years ago, when the Bank of Japan (BoJ) began charging financial institutions for adding to their reserves at the central bank, its negative-rate policy was harshly criticised for unsettling thrifty households, jeopardising bank profitability and killing growth with “monetary voodoo”. Behind this fear and criticism was perhaps a gut conviction that negative rates upended the natural order of things. Why should people pay to save money they had already earned? Earlier cuts below zero in Switzerland, Denmark, Sweden and the euro area were scarcely more popular.

But these monetary innovations would have struck some earlier economic thinkers as entirely natural. Indeed, “The Natural Economic Order” was the title that Silvio Gesell gave to his 1916 treatise in favour of negative interest rates on money. In it, he span his own shipwreck parable, in which a lone Robinson Crusoe tries to save three years’ worth of provisions to tide him over while he devotes his energies to digging a canal. In Gesell’s story, unlike Fisher’s, storing wealth requires considerable effort and ingenuity. Meat must be cured. Wheat must be covered and buried. The buckskin that will clothe him in the future must be protected from moths with the stink-glands of a skunk. Saving the fruits of Crusoe’s labour entails considerable labour in its own right.

Too many Crusoes
Even after this care and attention, Crusoe is doomed to earn a negative return on his saving. Mildew contaminates his wheat. Mice gnaw at his buckskin. “Rust, decay, breakage…dry-rot, ants, keep up a never-ending attack” on his other assets.

Salvation for Crusoe arrives in the form of a similarly shipwrecked “stranger”. The newcomer asks to borrow Crusoe’s food, leather and equipment while he cultivates a farm of his own. Once he is up and running, the stranger promises to repay Crusoe with freshly harvested grain and newly stitched clothing.

Crusoe realises that such a loan would serve as an unusually perfect preservative. By lending his belongings, he can, in effect, transport them “without expense, labour, loss or vexation” into the future, thereby eluding “the thousand destructive forces of nature”. He is, ultimately, happy to pay the stranger for this valuable service, lending him ten sacks of grain now in return for eight at the end of the year. That is a negative interest rate of -20%.

If the island had been full of such strangers, perhaps Crusoe could have driven a harder bargain, demanding a positive interest rate on his loan. But in the parable, Crusoe is as dependent on the lone stranger, and his willingness to borrow and invest, as the stranger is on him.

In Japan, too, borrowers are scarce. Private non-financial companies, which ought to play the role, have instead been lending to the rest of the economy, acquiring more financial claims each quarter than they incur. At the end of September 2017 they held ¥259trn ($2.4trn) in currency and deposits.

Gesell worried that hoarding money in this way perverted the natural economic order. It let savers preserve their purchasing power without any of the care required to prevent resources eroding or any of the ingenuity and entrepreneurialism required to make them grow. “Our goods rot, decay, break, rust,” he wrote, and workers lose a portion of their principal asset—the hours of labour they could sell— “with every beat of the pendulum”. Only if money depreciated at a similar pace would people be as anxious to spend it as suppliers were to sell their perishable commodities. To keep the economy moving, he wanted a money that “rots like potatoes” and “rusts like iron”.

The BoJ shuns such language (and, in the past, has at times seemed determined to keep the yen as hard as a ship’s biscuit). But in imposing a negative interest rate in 2016 and setting an inflation target three years before, it is in effect pursuing Gesell’s dream of a currency that rots and rusts, albeit by only 2% a year.

The “rot and rust” referred to here is of course inflation. And the economists proposing aggressive inflation as a desirable kind of public policy cite a lack of demand for borrowing as their rationale. Which is wrong for a variety of reasons, including:

1) Most forms debt are soaring in most places, making the idea of a borrower shortage look kind of silly. Global debt has about doubled in the past two decades to $233 trillion, or a record 330% of GDP. And US per capita consumer credit – the proceeds from which are spent in large part on Japanese stuff — is rising at an apparently accelerating rate, which implies robust demand for credit.

2) The idea that a rapidly-depreciating currency is a force for stability is, well, crazy, because people aren’t stupid. When we see a currency losing value we naturally front-run the process by borrowing as much as possible and spending the money on stuff that we otherwise wouldn’t buy. This will indeed generate growth in the short term. But long-term it leads to an over-leveraged society that is vastly less stable than it was before the debt binge. Like today’s, in other words.

Read More @ DollarCollapse.com

The B.S. About ‘Valuations’

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by Karl Denninger, Market Ticker:

One of the common chestnuts is that stocks are “not that expensive” on a forward P/E basis, especially with the recent drop that took about 1 point off that P/E.

While those forward numbers remain above historical averages, down is down and thus this is a buying opportunity, right?

Not so fast.

One must look first at how the earnings numbers we have today are being made.

Let’s look quickly at one example from last night: Disney.

In percentage terms all of their business segments lost operating profits except one: Theme parks, which were up big (21%).  The theme park business has seen utterly-monstrous ticket price increases, both on a gross and “best deal” basis over the last several years.  In fact they’re gone up 116% for some people (like Florida Residents) over the last decade.  We used to be able to buy Play Four Days tickets that were good from early January until June 30th, were park hoppers, good for any four days during that period of time, and were $100 each.  That’s $25/day, per person, and got you into any or all of the Disney parks in Orlando except the waterparks (which were not included.)

Today the “best deal” for a Florida Resident is $179, which sounds fairly comparable except they’re not hoppers!  To be able to go between parks the price is $216.50, which is well more than a clean double.

It’s just as bad if you want to attend any of the other Orlando parks.  Universal has gotten downright extortionate since their Harry Potter stuff opened up, in that now to really enjoy it you have to buy the two-park ticket because they cleverly put part of it in each of Universal and Islands of Adventure.  So if you only want to do the amusement park sort of ride thing — no real Potter deal for you. Never mind one-day ticket prices that are now well north of $100 and that’s before you pay the daily parking fee and buy a $10 hotdog that cost them fifty cents.

Now take Disney’s other businesses.  Films were down by a couple percent, consumer product sales off 4%, and broadcast TV license fees down an utterly-enormous 25%.  But for people buying overpriced park tickets — a clearly-discretionary purchase that they’ve ratcheted up enormously to get higher and higher “ARPU”s Disney would be cooked.

They’re not alone in this.

Note that virtually all of the so-called “high flyers” measure, in some form or another, their success by rising ARPU. (Average revenue per user.)  Hotels, for example, measure their “success” based on the increase in price paid per night, which of course means prices are being jacked.  Hilton, which owns Hampton Inn, has become one of the masters of this; I used to stay in their properties almost-exclusively, but their price increases have gotten so extortionate over the last few years, well north of 50% at most properties over the last three to five years and in some cases nearing or even exceeding a double while the quality and amenities offered have not increased materially at all and in some cases, such as their “free” WiFi, quality has been reduced to scrap in an attempt to force you to pay a daily fee for actual working WiFi, that I no longer think they’re worth it.  As such my room nights on their properties have gone to an effective zero over the last three years, with the exception being the few properties where (probably) they have found themselves with a near-empty hotel and thus are being more-reasonable.

Obviously I’m not in the majority of opinion on this as Hilton’s stock has more than doubled over the last couple of years.

What makes this sort of thing possible?

Big spreads where companies and individuals can borrow nearly-unlimited amounts of money for non-productive purpose, whether that be consumption in the case of individuals on their credit cards and car loans, stock buybacks and dividends and other purposes that do not result in net investments being made in productive capacity.

This is especially telling when it comes to banks and other financial firms that have seen stock prices double or more since they can borrow for 1% but your credit card interest is still 14%, 18% or even 24%!  Gee, that’s a nice spread!  But, in the case of Wells Fargo, even that wasn’t enough for their “desired” equivalent to “ARPU” as they ripped off even more money via scamming customers repeatedly.

And that goes to the next issue, which is that sort of scam.  Wells just plain robbed people.  But Apple, which also has had a big rise in their stock price, appears to have done the same thing by effectively trying to force people to buy new $700-1,000 phones instead of $25 batteries.  They’ve gotten away with it too for quite some time; it was only recently they got caught.

And then there’s the last part of it: Even when caught ripping people off on a blatant basis, say much less by deception, nobody gets indicted and goes to prison.

Of course Apple denies any wrongdoing.

As I have repeatedly noted this sort of ripoff is literally the business model of everything.  Just take one tiny little example, like the find I recently made with regards to Xylitol and how using it as a toothpaste appears to materially improve oral health.  The selective activity of it on “bad” mouth bacteria is published and has been known for quite some time — years, in fact in formal, medical literature — yet there have been no studies by the NIH or dental research groups that I can find on this as a specific modality compared against other (very profitable for the dental industry) options, no studies by private groups either and when informed of the cause of improvement the standard dentist’s reply is that they cannot recommend doing that for legal reasons as it hasn’t been studied in that way.

Well, yeah — you won’t study it because there’s no money to be had from using a commonly-available plant extract as a toothpaste where if someone doesn’t do that and ultimately requires surgery or you recommend very expensive implanted antibiotic treatments you make thousands.  Worse, for the dentists, if such a study was ever conducted and found it to be materially effective then all the money currently being made by the dental and periodontal practices pushing temporary “fixes” that wind up being an effective forced subscription model that costs the patient thousands a year would go “poof” like a fart in a church and lots of class-action lawsuits would be likely to immediately follow.

The same is true for Type II diabetes. I’ve literally lost count of the people who have reported on this very site that they were either Type II diabetic formally (diagnosed) or knew damn well they would be if they went to the doctor, stopped eating carbs and within days their blood sugar normalized.  Not only is there plenty of evidence that the medical system knows this works and has deliberately ignored it for decades (indeed it was the only option for severe diabetes before insulin was isolated and produced – and doctors were well aware of itthere is a formal association, the ADA, that recommends the exact opposite.  Just as with gingivitis progression being sold as an “inevitably progressive disease” the same is said about Type II diabetes.  Allowing medical practitioners to run this crap results in literally $400 billion or more of spending by the government on Medicare and Medicaid for diabetes and related medical issues alone, and likely double that in total when private medical spending is included.

All of the government spending is financed since we run huge deficits that would be nearly erased if we cut that crap out and a huge part of private spending is as well.  How much of the so-called “earnings” in the market today is a direct consequence of not just these two areas but the dozens if not hundreds of similar schemes and the near-zero cost of late in financing all that crap?

Read More @ Market-Ticker.org