Wednesday, July 17, 2019

Economics Is Dead

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by The Mogambo Guru, Goldseek:

Alas, all my dreams of achieving immortality through my Staggering Mogambo Brilliance (SMB) in economics are turning to bitter dust.   This is probably because I am not very bright have never had an original thought in my whole life. For the record, though, I am officially blaming this outrage on everybody but me.

Yet, in my deep despair, I can still delight in childishly upstaging real geniuses, like Albert Einstein, who said something to the effect that compound interest was a miracle.

Here is where I haughtily say, with a delicious hint of condescending disdain in my voice, “Einstein? Ha! What does a theoretical physicist know about economics? If he was so smart, he would have known that the biggest miracle is a fiat currency! Taa daa! Who’s your daddy now, chump?”

I breezily say this, like I toss off stellar bon mots like this all the time, is because to acquire wealth through compound interest, like Einstein says, unfortunately takes a long, long time. 

Too long, in fact. All during this protracted period of your Hobbesian nasty, brutish and short life, you are busily squirreling away every dime you can get your grubby hands on, feverishly buying gold and silver because those are the only two classical hedges against rampant monetary insanity, every day being scared out of your mind about the horrible outcome of Federal Reserve monetary lunacy started by the demonic Alan Greenspan, and then thrown into high gear by Ben Bernanke, and now Janet Yellen.

Alas, you are not lauded as a hero by your adoring family for your wise reaction to the Federal Reserve blithely creating dangerous scads of cash and credit, day after day, week after week, month after month, year after year, decade after unbelievable freaking decade. And is now actually acquiring common assets, committing the ultimate monetary sin!!!!

Four exclamation points!  Yikes!

Instead, you have, as your reward, to listen Every Freaking Day (EFD) to your family constantly whining “Please, daddy! Spend money on us! We need food and clothing and urgent medical attention!”

So, trust me when I say that Einstein’s “miracle” of compound interest, then, comes bundled with the constant irritation of complaining malcontents, spending most of their time plotting against you (and probably robbing you of fame for your Staggering Mogambo Brilliance (SMB)!) which, you have to agree, is NOT a customary part of your everyday, genuine miracles.

But with a fiat currency? Now, THAT’S a miracle! You can have unimagined wealth, instantly, and totally pain-free!

And more, wonderfully more, more, more!  Anytime you want it!

Well, rudely wresting your attention away from degenerate daydreams involving the forbidden delights afforded by instant wealth, thanks to the evil Federal Reserve, banks and governments gorging themselves on an abused fiat currency, I bring this up because of the Founding Fathers, Einstein and Janet Yellen (chairwoman of the evil Federal Reserve.)

The Founding Fathers were, of course, Thomas Jefferson and the rest of the smart guys who wrote the Constitution of the United States.

As an aside, they could have saved a lot of time if they had looked at the Mogambo Scrolls Of Cosmic Truisms (MSOCT), there to find such pearls of wisdom as “It’s about the money, jerks. Everything is ALWAYS about the money.  So make money from gold and/or silver, which makes control of the growth of the money supply easier, which makes controlling price inflation easier, and makes it harder for the greedy, corrupt banks to screw things up, although they always end up doing it anyway.  It’s always the banks, ya morons!”

Another little-known historical fact is that this exact quote would have, believe it or not, actually been IN the Constitution, except that I wasn’t even born for another 170 years, and none of these hotshots wanted to wait, which shows what bunch of impatient, preening hotheads these Founding Fathers actually were.

The good news is that, even without me helping them along, they got the requirement that only gold and silver could be money into the Constitution, so as to limit the money supply, so as to limit inflation in prices, so as to prevent the destruction of the economy because the people can’t afford to buy anything, where it (believe it or not!) sits to this day.

Unfortunately, the demonic Franklin Delano Roosevelt found himself in the economic depression that he and Keynesian madness insured. What he desperately wanted was an expanded money supply, so as to “buy prosperity.”

So he extorted compliance from the Supreme Court to allow money to be, not gold and silver per the Constitution, but paper.  And every Supreme Court since 1937 has upheld this treasonous decision at every challenge.

Now, here is where it gets interesting, as even I have to admit I’ve been rambling more than usual, and things have been a boring snooze so far.

So, it doesn’t take someone with ESP to know that you are thinking “I am sooOOOoo bored! To perhaps pique my interest and keep me from switching to another channel, Mister Smarty-Pants Mogambo (MSPM), tell me what can I, and I’m talking me personally and yours truly, can do with this information to quickly make a humongous butt-load of money, with minimal investment, and zero risk?”

I’m glad you asked, because it bring us back to miracle of un-Constitutional fiat currency that can be created, in any amount, at will, by any lowlife central bank stupid enough to do it. 

This brings us to Janet Yellen. As a lifelong critic of the evil Federal Reserve and a pesky blowhard about the treacherous Keynesian lowlifes who infest it, I am surprised, as you surely are, to find myself agreeing with Janet Yellen when she said that we have learned a lot about monetary policy.

The main thing we learned, as far as monetary policy is concerned, is that that no matter how many hundreds of millions people we graduate from high schools, colleges and universities across the nation, smugly erecting expensive bastions of expensive education from sea to shining sea, amber fields of grain and all, nobody is going to raise a peep about this suicidal, bizarre bastardization of Keynesian economics, a monstrous monetary death-cult that preaches “More money and debt for everyone! Everywhere! All the time!”

Read More @ Goldseek.com

Whiff of Reality at Crazy Super High-End Housing Market?

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by Wolf Richter, Wolf Street:

BS asking prices meet the ax.

No, Cantor Fitzgerald CEO Howard Lutnick didn’t “save” $81 million when he bought the most expensive listing in New York City, the 12,000-square-foot, 16-room triplex penthouse on the 41st, 42nd, and 43rd floors of The Pierre, a co-op tower on Fifth Avenue dating from 1930s. By the way, the owner also pays monthly maintenance charges for the apartment of $51,840).

Asking price was $125 million when it was first listed in March 2013. In December that year, the price was slashed to $95 million. In 2015, it was cut to $63 million. That’s half of the original asking price. But it still didn’t sell. So it was taken off the market. After it underwent a modern redesign, it was re-listed in April 2016 for $57 million. It still didn’t sell. But on August 2, Page Sixreported that Lutnick bought it for $44 million. At 65{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} below asking.

“Cantor Fitzgerald CEO buys iconic triplex at $81M discount,” said the Page Sixheadline.

“Best Real Estate Headline Ever,” said Jonathan Miller, real-estate appraiser and author of the Elliman Report series, in his Housing Notes.

Miller has a word for this phenomenon of enormous blue-sky asking prices that trigger subsequent massive and serial price reductions until finally someone bites: “Aspirational pricing.”

The very idea that a home seller would discount their home by $81 million to make the sale is an insane thought. This speaks to the concept I call “aspirational pricing.” The asking price was set to a price so ridiculous that it would literally sit on the market for years and the market would unlikely catch up in a lifetime. More importantly, it serves as misdirection for other high-end properties coming to the market by influencing them to also wildly over price as well.

The 6,800-square-foot fully furnished penthouse occupying the top floor of the beachfront condo tower at 321 Ocean in South Beach, Miami Beach, was listed for sale in December 2015 for $53 million. The sellers had bought it when the building was completed six months earlier, for $20 million.

“Financier Aims for Ambitious $53 Million Miami Penthouse Flip,” The Wall Street Journal said at the time. The hopeful flippers are Boris Jordan and Elizabeth Jordan:

Founder of the private-equity and advisory firm the Sputnik Group, Mr. Jordan previously served as chief executive of the state-controlled Russian media conglomerate Gazprom-Media, and as head of the Russian television network NTV.

But the hot air has come out of the condo market in Miami Beach. In the second quarter, after years of soaring, the median sale price for non-distressed condos dropped 7.5{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}, and the average price plunged 15.2{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}, according to the Elliman Report. The median price per square foot dropped 12.5{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}.

So the hoped-for flip hasn’t worked so far. And price cutting has commenced. Recently, the price was cut to $39.5 million. And still no takers. So the condo flippers changed their listing agents from ONE Sotheby’s International Realty to Douglas Elliman Real Estate. And a few days ago, the price was cut again, this time to $34,999,999.

That’s a very hopeful number, all these nine’s. Like a car on a car lot. And it’s down 32{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} or $18 million from the original asking price. The new listing agents told the Wall Street Journal that the previous asking prices, despite the reductions, had been too high.

Food for additional and perhaps amusing thought: Zillow’s estimated price – the infamous “Zestimate” – is $7.6 million.

The agents blamed factors such as Brexit, the US election, and currency fluctuations for the trouble in the high-end market in Miami Beach last year. These factors deterred international buyers, they said.

If this foreign buyer doesn’t materialize with an acceptable offer, the flipper might become the end user.

Read More @ WolfStreet.com

Russia To Cut Dependence On U.S. Dollar, Payment Systems

from ZeroHedge:

Russia will speed up work on reducing its dependence on U.S. payment systems and the dollar as a settling currency in response to U.S. sanctions, Deputy Foreign Minister Sergei Ryabkov said on Monday.

Quoted by Reuters, Ryabkov said that “we will of course intensify work related to import substitution, reduction of dependence on U.S. payment systems, on the dollar as a settling currency and so on. It is becoming a vital need.” The reason for that is that “the US is using its dominating role in the monetary and financial system to impose pressure on foreign business, including Russian companies.”

As a reminder, three years ago the MasterCard payment system stopped serving clients of seven Russian banks without warning after Washington imposed its first set of sanctions on Moscow in 2014. In response, the Russian government ordered the creation of a national payment system. With the support of the country’s banking system, the Mir charge card was introduced in 2015, although there is no information on what its adoption rate has been in the following years.

As we discussed previously, as part of the latest set of Russian sanctions the US has imposed new restrictions on the Russian banking and energy sectors: the ban targets already sanctioned Russian firms, limiting the financing period for them to 14 and 60 days. Additionally, the new law will punish individuals for investing more than $5 million a year or $1 million at a time in Russian energy export pipeline projects or providing such enterprises with services, technology or information support, a provision that has drawn strong condemnation from Washington’s European allies.

US energy companies criticized the tightening of already existing sanctions as damaging for business. At the same time, the European Union expressed concerns the new penalties may undermine the bloc’s energy security. European Commission head Jean-Claude Juncker pledged to prepare an “adequate” response and “within days” if the measure hurt the interests of European companies. So far Europe has to elaborate on what, if any, retaliation to the sanctions it will unveil.

Read More @ ZeroHedge.com

The Dow Closes At A Record High For The 9th Straight Time But Experts Warn That A Stock Market Crash Could Be Imminent

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by Michael Snyder, The Economic Collapse Blog:

The bigger they come, the harder they fall.  On Monday, the Dow Jones Industrial Average closed at a record high for the ninth straight session.  It has been a remarkable run, but many experts are pointing out that big trouble is brewing under the surface.  As you will see below, 79 components of the S&P 500 have already dropped more than 20 percent below their 52-week highs, and it is mostly just a handful of high flying tech stocks that are still propping up the market at this point.  Over the past several weeks, I have been documenting so many of the prominent voices that are loudly warning about an imminent stock market crash, and in this article you will hear some more of these warnings.  There is no way that stock prices can keep going up like this, and when the inevitable correction does arrive it is going to be exceedingly painful for millions of investors.

When the market is about to turn in a major way, one of the key things to watch is market breadth, and according to Brad Lamensdorf market breadth has now turned “exceedingly negative”

Market breadth, a measure of how many stocks are rising versus the number that are dropping, has turned “exceedingly negative,” according to Brad Lamensdorf, a portfolio manager at Ranger Alternative Management. Lamensdorf writes the Lamensdorf Market Timing Report newsletter and runs the AdvisorShares Ranger Equity Bear ETF HDGE, -0.70{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} an exchange-traded fund that “shorts” stocks, or bets that they will fall.

“As the indexes continue to produce a series of higher highs, subsurface conditions are painting an entirely different picture,” Lamensdorf wrote in the latest edition of the newsletter.

When Lamensdorf uses the phrase “exceedingly negative”, he is not exaggerating at all.  As I mentioned above, 79 components of the S&P 500 are already in a bear market

According to an analysis of FactSet data, 79 components of the S&P 500 are trading at least 20{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} below their 52-week high; a bear market is typically defined as a 20{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} drop from a peak.

Another key measure that I like to keep my eye on is Robert Shiller’s cyclically adjusted price-to-earnings ratio.  At this point, it is roughly at the same level as it was just before the stock market crash of 1929, and the only time it has been higher was during the peak of the dotcom bubble.

This is why so many investors are making extremely large bets that a major correction is imminent.  History tells us that stocks are likely to only go down from here.  And when stocks do start falling, the price action could become quite violent.  In fact, Barry James is comparing this current market to the Yellowstone supervolcano

Warning: A correction in the market is “inevitable” and there are three key factors that could spark chaos on Wall Street, according to James Advantage Fund president Barry James.

The investor likened the market to Yellowstone National Park’s famous supervolcano, which many believe is close to eruption.

Of course not everyone agrees with James.  Michael Wilson of Morgan Stanley insists that everything is just fine and that “there continues to be a level of skepticism that seems out of whack with what is actually happening”.

In the end, we will see how the coming months play out.

Over the past several years, there have been two primary trends that have been relentlessly driving up stock prices.  One of these trends has been an unprecedented level of stock buybacks.  And so far this year, hundreds of billions of dollars worth of stock buybacks have already been announced

Through May, some $390 billion in buybacks have been announced this year, $13 billion more than at this time in 2016, according to figures compiled by Jeffrey Yale Rubin at Birinyi Associates, a stock market research firm.

June 28 was the biggest single buyback announcement day in history. That was when 26 banks disclosed buybacks worth $92.8 billion, largely a response to having just passed the stress tests administered by the Federal Reserve Board. That figure blew past the previous record of $56.4 billion announced on July 20, 2006.

Secondly, central banks have been pumping trillions upon trillions of dollars into the global financial system, and this has perhaps been the biggest reason for the surge in stock prices.  But now central banks are starting to pull back, and that could mean big trouble very soon.  The following comes from Matt King

With asset prices displaying a high degree of correlation with central bank liquidity additions in recent years, that feedback loop makes the economy, upon which both corporate profitability and bank net interest margins depend, more reliant on central banks holding markets together than almost ever before. That delicate balance may well be sustained for the time being. But with central banks beginning to move, however gingerly, towards an exit, is it really worth chasing the last few bp of spread from here?

Throughout our history we have seen financial bubbles come and go, but we never seen to learn from our mistakes.  Right now, Warren Buffett is sitting on nearly 100 billion dollars in cash in anticipation of being able to buy up financial assets for a song after a crash happens, but meanwhile multitudes of ordinary Americanscontinue to pour vast quantities of money into stocks even at such absurd valuations.

Despite all of the warnings, many will be caught unprepared when the music stops playing.  Just like all of the other financial manias in our history, this one will come to a bitter end too.  The following comes from the New York Times

In the late 1960s the mania was for the “nifty 50” American companies like Disney and McDonald’s, which had been the “go-go” stocks of that decade. In the late 1970s it was for natural resources, from gold to oil. In the late 1980s it was stocks in Japan, and in the late 1990s it was the dot-com boom. Last decade, investors flocked to mortgage-backed securities and big emerging markets from Brazil to Russia. In every case, many partygoers were still in the market when the crash came.

In life, timing is everything, and those that got out of the market in time are going to end up being very happy that they did so.

Read More @ TheEconomicCollapseBlog,com

Audioblog #205-Fiat VS. Crypto-The Ultimate Monetary “Death Cross”

by Andy Hoffman, Miles Franklin:

Andrew (“Andy”) Hoffman, CFA joined Miles Franklin as Marketing Director in October 2011. For more than a decade, he was a U.S.-based buy-side and sell-side analyst, most notably as an II-ranked oil service analyst at Salomon Smith Barney from 1999 through 2005. Since 2002, his investment focus has been entirely on Precious Metals – and since 2006, has written free, public missives regarding gold, silver, and macroeconomics.  Prior to joining the company, he spent five years working as an Investor Relations officer or consultant to numerous junior mining companies. 

Click HERE to listen.

GOLD UP 30 CENTS/SILVER DOWN 3 CENTS/U.N. SANCTIONS NORTH KOREA WITH A 15-0 VOTE (VOTE IN THE AFFIRMATIVE BY CHINA AND RUSSIA)

from Harvey Organ, Harvey Organ Blog:

NORTH KOREA OFFERS AN ANGRY RESPONSE TO THE ADDITIONAL SANCTIONS/SOUTH AFRICA TO HAVE A NON CONFIDENCE VOTE ON ZUMA TOMORROW/TED BUTLER REPORTS ON SILVER/USA STUDENT LOANS, AUTO LOANS AND REVOLVING CREDIT AT RECORD LEVELS

In silver, the total open interest SURPRISINGLY FELL BY ONLY 146 contracts from  204,833 DOWN TO 204,687 DESPITE THE HUGE FALL IN THE PRICE THAT SILVER TOOK WITH RESPECT TO FRIDAY’S TRADING (DOWN 34 CENT(S). SIMPLE EXPLANATION: THE BANKERS SUPPLIED THE NECESSARY PAPER BUT MORE NEWBIE SILVER LONGS ENTERED THE ARENA WITH THE REMAINING SILVER LONGS REMAINING STOIC AGAIN AND REFUSING TO BUDGE FROM THE SILVER TREE.

 In ounces, the OI is still represented by just OVER 1 BILLION oz i.e.  1.025 BILLION TO BE EXACT or 146{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of annual global silver production (ex Russia & ex China).

FOR THE NEW FRONT MAY MONTH/ THEY FILED: 1 NOTICE(S) FOR 5,000OZ OF SILVER

In gold, the open interest FELL by A CONSIDERABLE 9,501 WITH the FALL in price of gold ($10.50 LOSS ON FRIDAY.)  The new OI for the gold complex rests at 448,278. WITH THE RAID ON FRIDAY, THE BANKERS WERE SUCCESSFUL IN COVERING SOME OF THEIR SHORTFALL AS NEWBIE SPECS FLED FROM THE SCENE.

we had: 73 notice(s) filed upon for 7300 oz of gold.

xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx

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

GLD:

Today, no changes in gold inventory:

Inventory rests tonight: 787.14 tonnes

IN THE LAST 17 DAYS: GLD SHEDS 50.1 TONNES YET GOLD IS HIGHER BY $44.85 . 

SLV

Today: : WE NO CHANGES IN SILVER INVENTORY TONIGHT:

INVENTORY RESTS AT 339.606 MILLION OZ

 

end

Read More @HarveyOrganBlog.com

Mysterious Trader With “Nearly Unlimited Bankroll” Said To Manipulate, Dominate Price Of Bitcoin

from ZeroHedge:

It was over three years ago, back in May 2014, when we wrote “How Bots Manipulated The Price Of Bitcoin Through “Massive Fraudulent Trading Activity” At MtGox” in which we first demonstrated one of the more striking observed “bot-driven” bitcoin manipulation schemes, in this case related to the infamous collapse of the now defunct Mt.Gox bitcoin exchnage.

As we wrote at the time, a number of traders began noticing suspicious behavior on Mt. Gox. Basically, a random number between 10 and 20 bitcoin would be bought every 5-10 minutes, non-stop, for at least a month on end until the end of January, by what appeared to be two algos, named later as “Willy” and “Markis.” Each time, (1) an account was created, (2) the account spent some very exact amount of USD to market-buy coins ($2.5mm was most common), (3) a new account was created very shortly after. Repeat. In total, a staggering ~$112 million was spent to buy close to 270,000 BTC – the bulk of which was bought in November.

“So if you were wondering how Bitcoin suddenly appreciated in value by a factor of 10 within the span of one month, well, this is why. Not Chinese investors, not the Silkroad bust – these events may have contributed, but they certainly were not the main reason. But who did it? and why?”

Of course, in the end this alleged manipulation did not help Mt.Gox which eventually collapsed in what has been the biggest case of cryptocoin fraud in history.

We bring up this particular blast from the past, because in the latest case of bitcoin market abuse – with Bitcoin trading at all time highs above $3,000 – Cointelegraph reports of rumors swirling about a trader “with nearly unlimited funds who is manipulating the Bitcoin markets.” This trader, nicknamed “Spoofy,” received his “nom de guerre” because of his efforts to “spoof” the market, primarily on Bitfinex.

Of course, spoofing is what Navinder Sarao pled guilty of last year, when regulators inexplicably changed their story, and instead of blaming a Waddell and Reed sell order for the May 2010 flash crash, decided to scapegoat the young trader who allegedly crashed the market due to his relentless spoofing of E-mini futures (and also making $40 million in the process of spoofing stock futures for over five years).

It now appears that a spoofer has once again emerged, only this time in Bitcoin.

For those unfamiliar, spoofing is simple: it is the illegal practice of placing a large buy order just below other buy orders, or a large sell order just above other sell orders, then cancelling if it appears that the order is about to be hit or lifted. The idea is to make traders think that somebody with deep pockets is getting ready to buy or sell, in hopes of moving the market. If traders see a sell order of 2000 Bitcoin they may rush to panic sell before the whale crashes the price. And vice versa on the bid-side.

As an example of Spoofy’s trading pattern, here is a breakdown of a typical “trade” by the mysterious entity as noted by BitCrypto’ed who first spotted the irregular activity: Spoofy is a regular trader (or a group of traders) who engages in the following practices:

  • Places large bids ($2 million and up) for Bitcoin, usually just under a smaller bid order, only to remove them once someone starts to sell. These orders usually have a lifetime of minutes, or sometimes as short as 5–10 seconds to manipulate the price up (more common)
  • Places large asks ($2 million and up), for Bitcoin when he wants the price to go down, or stop going up (less common)
  • Occasionally ‘Spoofy’ will allow orders deep in the orderbooks to remain for a few hours, usually $50–$100 below the current price. For example, during the recovery above $2,000, he had roughly 4,000 BTC of false orders in the $1,900 range that were unlikely to execute, and ultimately were never executed.

As noted above, spoofing is actually illegal – as ultimately the trader has no intention of ever executing the publicized trade – but as Bitcoin markets are largely unregulated, it’s a very common practice.

What is unusual in this case is the nearly unlimited bankroll that Spoofy has at his disposal: He regularly places orders approaching $60 million.

Read More @ ZeroHedge.com

We Can’t Do Anything About…..

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by Karl Denninger, Market Ticker:

…. (stupendously high medical prices | ridiculous college costs | cops shooting unarmed Australian women | etc)

Really?

We can’t do anything peaceful and lawful about it? Oh, I fully understand why these outrageous practices exist.  You see, the hospital administrator, doctor and pharma companies have no fear when they refuse to quote you a price or bill you at 10x what an insured person who has consumed their deductible would pay through their insurance, the college dean and provost have no fear when they cause your 18 year old son to rack up $50,000 a year in student loans and the cop has no fear when he shoots an unarmed Australian woman through the window of his cop car — and across the body of his partner.

Everyone seems to think that the concept of “fear” in this regard means doing something illegal and for which they’d immediately go to prison, which is why they’re not (obviously) interested.  Oh really?

I would like to put a different postulate forward:  You really don’t give a ****.

Seriously, you don’t.

In fact you approve of what they’re doing each and every day.

You don’t care that your 17 year old son is about to get bent over the table by a university in regard to college cost.  You in fact endorse your kid being forced to pay half the kid’s tuition sitting next to him in Calc class simply because you have more money than his parents do.  In fact you have already gone so far as to conspire with that administrator in screwing your own son by filling out a FAFSA form!

You don’t care that the guy down the street — or your own mother — is billed $7,500, their entire deductible on their Obamacare insurance policy, for five stitches they need when someone who has consumed their deductible or is on Medicare would be billed $400 for the same thing.

You don’t care that the Australian woman got shot and killed although unarmed in Minnesota.  After all, you’re not dead (yet.)  Never mind the cops who got caught planting drugs on people in Baltimore — more than once.

And the list goes on.  Wells Fargo, for instance — a company that not only opened up millions of un-requested accounts and purloined millions in fees by doing so they also force-placed car insurance on car loan customers who didn’t need it, bilking them and in some cases repossessing their cars for not paying that which they didn’t owe while destroying their credit. You in fact don’t care about the hundreds of thousands of Americans Wells screwed.

How do I know you don’t care?

Because there are dozens of things you could do about it that are perfectly legal if you did care.

You could, for example, refuse to associate with said people, defined as anyone who is such a person or is employed by and thus gains their livelihood through the antics of such an organization or company.

You could stick up the middle finger every time you saw them or any member of their family.

You could picket their house.

You could picket their employer.

You could make their life so miserable that they literally couldn’t associate with anyone in their hometown because everyone who chose to do so would also be shunned.

You could put Wells Fargo out of business by pulling all your money from said bank, refusing to do business with it, picketing it and refusing to associate with anyone who works there.   If you discovered that a business used them for their check processing (which is easy to determine from your canceled check stamps) you could tell that business you won’t shop there as long as they use Wells because you don’t want Wells Fargo to make money on your money.  In short you could refuse to pass money through the company to the extent possible and you could make working there a living hell for anyone who decided that their salary offer was reasonable given the firm’s conduct.

The same is true for the local hospital, the college in your town and more.

It’s not illegal to dislike someone.  It’s not illegal to flip someone off.  It’s not illegal to decide that you won’t associate with somebody on a personal basis.  In fact, unless your decision on a business basis is predicated on one of a handful of protected classes — race, sex, national origin and a few others it’s not illegal to tell someone to screw off in a business or professional context either.

Doctors are not a protected class.  Nor are hospital administrators.  Nor are bankers that work for a specific bank.  Nor are cops, dispatchers and others that work for a cop department that likes to hire trigger-happy Somalis.

Don’t talk to me about how “outraged” you are about these sorts of things.

You’re not even mildly pissed off.

It was not that long ago that a certain person who I knew decided to run a five-alarm line of crap with regard to immigrants in my presence while I was out drinking with friends.  He was never really all that close of a friend, but he seemed like an ok guy and we’d hang out and drink a beer or two once in a while together — right up until that point in time.

I’ve never spoken to him again and I now intentionally and quite-visibly avoid him. As far as I’m concerned he’s a ghost!

That’s not the first time I’ve decided that I will have nothing to do with a person, organization, business or anyone associated with same and it won’t be the last.

Does this, for example, apply to all cops?  No.  We have a local PD here that, at least in my experience, is quite reasonable.  I have no quarrel with them.  But with anyone employed by the PD in Baltimore, or in that particular jurisdiction in Minnesota?  Nope; they can all bite me.

Likewise there’s a local neighborhood with an association here that decided that a running group I hang out with didn’t like us running on the roads in their development.  It’s their right as a neighborhood association to make the collective decision for everyone who lives there.  But when they voiced this to our running group my response was that while I certainly respect their right to make such a decision and would, of course, honor same if anyone who lived in that development wanted me to work on their computer in the future, either at home or in their business, the price just went up by a factor of 10.  If they don’t like runners then I don’t like them — all of them!

The other people at the run that evening looked at me like I had six heads and four arms for making such a proclamation.  What?  We weren’t running on their lawns; we were on the sidewalks and paved streets and nowhere is there posted a “No Trespassing” sign nor is there a closed and latched gate making clear that they don’t want anyone without a code or key to come into their little enclave.  I respect their communal right to decide that a couple dozen people, not blocking traffic or in any way impeding their lives, running on a sidewalk for fitness and fun, is something they don’t want to see.  But my view is that such snobbish garbage has a price, and the price is that as a “prole” according to them they obviously don’t need said prole’s help.  If they solicit said help anyway they’re going to pay an outrageously high price and I will tell them why.

See, people band together into neighborhood associations, corporations and similar structures for the express purpose of limiting personal liability and at the same time making their decisions more forcefulthan one individual can express on their own. By doing so they decide to collectively act, and as such it is both perfectly reasonable and fair that the consequences of those actions also be collectively applied against every member of the group who benefits from same when other people don’t like what they’re doing!

Americans used to have this sort of constructive and very effective view toward behavior that they found outrageous.  It’s disappeared, except in places like Amish communities, where if you violate their view of sensibility you and your entire family will be shunned.

Read More @ Market-Ticker.org

Not All Capital Is Equal; Some Is Destructive

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by Charles Hugh Smith, Of Two Minds:

Financialization incentivizes hot money capital flooding into speculative credit-asset bubbles.

When we speak of capital investments and capital flows, it’s presumed all the capital being referenced is equal: a dollar is a dollar, wherever and whenever it’s put to use.

But not all capital is equal, and that is one reason why the global financial system is far more fragile than the mainstream media lets on. Metrics such GDP (gross domestic product) don’t reflect the differences in the capital sloshing around the global economy.

In the “happy story” of classical capitalism, capital flows to productive investments: the construction of needed homes, assembly of new factories, etc.–activity that returns a profit to the owners of capital and generates value and employment by filling scarcities or by increasing productivity and thus wealth.

In this “happy story” of classical capitalism, banks (and those with savings) distribute credit and saved capital to those with the most attractive creditworthiness for the lowest-risk, highest-return ventures–ventures that are presumed to be productive for end users and society at large.

Compare that “happy story” of capital seamlessly distributed to productive uses to “hot money” capital flooding into real estate in desirable cities such as Vancouver, Toronto, New York, San Francisco, Seattle, Paris, etc. This hot-money capital isn’t seeking productive investments; it’s seeking a safe place to park capital and a speculative gain from participating in a credit-asset bubble.

When the owner of capital buys a luxury flat in Paris, NYC, San Francisco, etc., the deployment of capital has no productive result; not one unemployed person is hired, not one new good or service is produced.

Rather, the deployment of global capital pushes the price of homes beyond what wage-earning residents (i.e. the bottom 95{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528}) can afford. This bubble distorts and disrupts the housing market, transforming shelter into a speculative bubble.

Much of this capital may well be borrowed. If someone lays down $1 million cash for a house in North America, who’s to say the money wasn’t borrowed overseas?

As I have often explained, when financiers and corporations can borrow enormous sums at near-zero rates of interest, they gain access to capital and can effectively outbid savers and everyone who does not have access to the central bank credit spigot.

Borrowed capital is intrinsically prone to being hot money: capital that flits around the world, seeking a quick return or a safe haven. The “happy story” of classical capitalism fails to recognize that in terms of risk and return, long-term productive investments that generate value, jobs and address scarcities are unattractive to hot money capital.

Why put capital at risk for long-term modest rates of return when short-term trades in speculative bubbles offer much higher returns and the promise of a quick exit?

Central bank-funded speculative credit-asset bubbles undermine the “happy story” of classical capitalism’s productive investing of capital. It’s no mystery why productivity has plummeted– investment in productivity-increasing assets and training has plummeted.

Rather than create new wealth for society at large, speculative credit-asset bubbles distort and disrupt markets for essentials such as shelter, price out the bottom 95{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} and concentrate wealth in the hands of the few with unlimited access to central bank-generated credit.

Financialization incentivizes hot money capital flooding into speculative credit-asset bubbles. It does not incentivize productive investments that generate jobs or address scarcities. In a fully financialized global economy, the only scarcities recognized by hot money capital are opportunities for bubblicious gains and quick exits, and safe-havens for speculative or ill-gotten gains skimmed by the few at the expense of the many.

Hot money capital is not productive; it is destructive. The naive belief that all capital is a priori productive blinds us to the havoc wreaked by the financialization monster that has the global economy by the throat.

Read More @ OfTwoMinds.com

BRICS countries strike FATAL BLOW on US dollar supremacy

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from Pravda Report:

The United States has declared a war of sanctions on Russia and continues putting trade pressure on China. It is not ruled out that the USA will restrict supplies of steel products from China. In return, Moscow and Beijing intend to abolish the US dollar in mutual settlements within the scope of the BRICS organization. The move will mark the end of the era of the undivided financial domination of the United States of America in the world.

As soon as the US Congress adopted a package of new sanctions against Russia, Deputy Foreign Minister of the Russian Federation Sergei Ryabkov issued a formidable warning to Washington. “US sanctions against Russia will only encourage Russia to create an alternative economic system, in which dollars will not be needed,” the Russian diplomat said.

Interestingly, the statement was made on the eve of the two-day summit of BRICS trade ministers, which opened on August 1, 2017 in Shanghai. This organization, which includes Brazil, Russia, India, China and South Africa, becomes a powerful counterweight to the Group of Seven.

Today, the BRICS countries account for 26{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of the Earth’s territory, 42{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of the world’s population (almost three billion people) and 27{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of world GDP. According to experts’ forecasts, the share of BRICS countries will account for more than 40{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of world GDP by 2050

However, BRICS trade ministers chose not to put the horse before the cart.

Russia’s Minister for Economic Development Maxim Oreshkin stated that BRICS countries, in particular Russia and China, may switch to settlements in national currencies already in the near future. The minister also said that the trade turnover between Russia and China may reach $200 billion by 2020.

Meanwhile, on the sidelines of the Shanghai summit, the ministers discussed opportunities for the creation of a new monetary system to exclude the use of the US dollar. In 2015, President Vladimir Putin said that Russia was opting for settlements in national currencies and created currency pools with several countries.

Read More @ PravdaReport.com

Dumb – And Dumber — Money Keeps Pouring In

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by John Rubino, Dollar Collapse:

Someday, stock, bond and real estate valuations will matter again. And the mechanism by which this return to sanity is achieved will probably be the torrent of money now flowing in from people who, for various reasons, don’t care about (or understand) the prices they’re paying.

Millennials, for instance, seem to have reached the “beginners’ mistakes” phase of their financial lives. They’re major buyers of recreational vehicles – see The Perfect Crash Indicator Is Flashing Red — and are now opening stock brokerage accounts at a startling pace:

 

Schwab: “New Accounts Are At Levels We Have Not Seen Since The Dot Com Bubble” As Millennials Rush Into Stocks

(Zero Hedge) – In its Q2 earnings results, [stock broker Charles] Schwab reported that after years of avoiding equities, Schwab clients opened the highest number of brokerage accounts in the first half of 2017 since 2000. This is what Schwab said on its Q2 conference call:

 

New accounts are at levels we have not seen since the Internet boom of the late 1990s, up 34{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} over the first half of last year. But maybe more important for the long-term growth of the organization is not so much new accounts, but new-to-firm households, and our new-to-firm retail households were up 50{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} over that same period from 2016.

In total, Schwab clients opened over 350,000 new brokerage accounts during the quarter, with the year-to-date total reaching 719,000, marking the biggest first-half increase in 17 years. Total client assets rose 16{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} to $3.04 trillion.

Schwab also adds that the net cash level among its clients has only been lower once since the depths of the financial crisis in Q1 2009:

“Now, it’s clear that clients are highly engaged in the markets, we have cash being aggressively invested into the equity market, as the market has climbed. By the end of the second quarter, cash levels for our clients had fallen to about 11.5{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of assets overall, now, that’s a level that we’ve only seen one time since the market began its recovery in the spring of 2009.”

But wait, there’s more: throwing in the towel on prudence, according to a quarterly investment survey from E*Trade, nearly a third of millennial investors are planning to move out of cash and into new positions over the coming six months. By comparison, only 19{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of Generation X investors (aged 35-54) are planning such a change to their portfolio, while 9{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of investors above the age of 55 are planning to buy in.

Furthermore, according to a June survey from Legg Mason, nearly 80{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of millennial investors plan to take on more risk this year, with 66{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} of them expressing an interest in equities. About 45{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} plan to take on “much more risk” in their portfolios.

In other words, little by little, everyone is going “all in.”

Here’s a related chart showing margin debt – money investors borrow against existing stock portfolios to buy more shares. Not surprisingly given the above, it’s at record levels and rising.

Corporations, meanwhile, continue to hoover up their own shares even as the market averages break records:

 

Big Pharma Spends on Share Buybacks, but R&D? Not So Much

(New York Times) – Under fire for skyrocketing drug prices, pharmaceutical companies often offer this response: The high costs of their products are justified because the proceeds generate money for crucial research on new cures and treatments.

 

It’s a compelling argument, but only partly true. As a revealing new academic study shows, big pharmaceutical companies have spent more on share buybacks and dividends in a recent 10-year period than they did on research and development. The working paper, published on Thursday by the Institute for New Economic Thinking, is entitled “U.S. Pharma’s Financialized Business Model.”

The paper’s five authors concluded that from 2006 through 2015, the 18 drug companies in the Standard & Poor’s 500 index spent a combined $516 billion on buybacks and dividends. This exceeded by 11 percent the companies’ research and development spending of $465 billion during these years.

The authors contend that many big pharmaceutical companies are living off patents that are decades-old and have little to show in the way of new blockbuster drugs. But their share buybacks and dividend payments inoculate them against shareholders who might be concerned about lackluster research and development.

While stock buybacks appear to be particularly troublesome among drugmakers, big companies in other industries — in sectors like banking, retail, technology and consumer goods, among others — are also buying back boatloads of their shares. Through May, some $390 billion in buybacks have been announced this year, $13 billion more than at this time in 2016, according to figures compiled by Jeffrey Yale Rubin at Birinyi Associates, a stock market research firm.

June 28 was the biggest single buyback announcement day in history. That was when 26 banks disclosed buybacks worth $92.8 billion, largely a response to having just passed the stress tests administered by the Federal Reserve Board. That figure blew past the previous record of $56.4 billion announced on July 20, 2006.

Note that last sentence: The previous record for corporate share repurchases occurred about a year before stock prices fell off a cliff.

Read More @ DollarCollapse.com

Continue to Beware the Job Numbers (Is it the Bureau of Labor Statistics or Bureau of Lying Statistics?)

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by David Haggith, The Great Recession Blog:

One reason I started my own economics blog was because of how tired I was of reading government-regurgitated half truths about the economy. Nothing has changed. As Newsmaxand other publications report this week that July was a bumper month for lower-wage earners, I continue to have to sift for myself through all the glitter to find the globs of buried ugly truths. First, the DayGlo report:

Eight years into the economic recovery,Americans on the lower rungs of the ladder are finally getting some relief in the job market, and there could be more to come.

Underneath a 209,000 gain in July payrolls that was stronger than forecast on Friday, significant shares of job growth were in lower-wage industries such as restaurants and home health-care services. As the overall labor-force participation rate ticked up 0.1 percentage point, the level for people age 25 or older without a high school degree surged to the highest since 2011. In leisure and hospitality, which typically carries lower pay, annual wage gains of 3.8 percent outpaced the average.

That’s wonderful, but parse between the lines and look for some background statistics, and a hideous picture of a continually deteriorating jobs market emerges. Parsing the lines: while the unemployment rate supposedly fell to 4.3{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} in July, all the job growth last month happened in part-time, mostly minimum-wage jobs. Looking deeper into statistics not included in that article, full-time jobs actually stepped backward by 54,000 in July. The headline should have been “Full-time Jobs on Retreat” because those are the jobs we care about. Part-time jobs, on the other hand, saw huge growth (+393k) (The numbers don’t reconcile because the 209k increase was from the BLS Establishment Survey of Nonfarm Payroll: The other numbers (+393k PT and -54k FT jobs) come from their “Household Survey” to give a broader picture.)

Said the late Henry Hazlitt, economics writer for the New York Times (back when it was in the news business):

The bad economist sees only what immediately strikes the eye; the good economist also looks beyond. The bad economist sees only the direct consequences of a proposed course; the good economist looks also at the longer and indirect consequences. The bad economist sees only what the effect of a given policy has been or will be on one particular group; the good economist inquires also what the effect of the policy will be on all groups. (Mises Institute)

Looking at the effect on various groups changes the picture substantially. July saw the biggest increase in part-time jobs in almost a year, but how many of those were full-time people losing those 54,000 FT jobs and scaling down?

As a result of such a big leap in PT jobs, minor wage increases should be expected in the part-time sector. However, even those wage increases may have only been due to parts of the country that have been raising their local minimum wage — a factor that would be hard to sift out. Certainly the noted wage increase happened entirely in the sector that has been receiving a lot of talk lately on minimum-wage increases. (Seattle being a prime example of a city that voted several years ago to graduate its minimum wage up to $15 an hour — a move that is still in progress.)

I doubt the statement that wages at that level grew 3.8{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} annually is what it appears, although that is still a minute increase when you are talking about wages that are so small in the first place. You cannot tell for sure from the way Newsmax wrote its article, but was that 3.8{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} increase the actual year-on-year gain, or is that the “annualized” figure of what last month’s increase would amount to if it continues for the next twelve months? If they meant the latter, that is a case that is unlikely to actually play out.

Either way, one would expect this sector to have the largest percentage increase because you are 1) talking about the smallest wages in the first place where every 1{5f621241b214ad2ec6cd4f506191303eb2f57539ef282de243c880c2b328a528} wage increase amounts to mere pennies and because 2) jobs are shifting from much better paying full-time jobs to lower-paying part-time jobs, giving room for companies to bump up the PT wages. What’s not included in that insignificant wage gain (as the reason why I call it “insignificant”) is the huge loss in benefits that almost certainly corresponded with this human migration downward from full-time jobs group with benefits to the part-time jobs group without benefits. Companies may be willing to pay a few shekels more in wages when they are saving hundreds of dollars on benefits. The transition is a net gain for the wealthy for certain.

So, that was the real story this month — full-time jobs actually declined as part-time jobs shot upward. That, to me, looks less like job improvement than like a tipping of the scale from one side of the economy to the other. What the government never measures (or, at least, it never gets reported) is the change in full-time equivalencies. Last month was probably a decline on that front also, but we cannot tell because we don’t know how part-time the part-time jobs were (three-quarter, half, one-quarter time, half a day a week?). We have no idea.

The way the figures are window-dressed in articles like this, which just parrot the government’s statistics, makes it sound like poor people finally got the boost they’ve been yearning for. Hallelujah! The wage gains are starting to trickle down! The real truth? More formerly full-time people became poorer part-time people. Oh. Sad.

This is the reporting baloney we have had to live with throughout the Great Recession and its aftermath because investigative reporting is dead. The numbers required to get the fuller picture just aren’t presented, except on alternative-media sites like Zero Hedge.

While the job market in July deteriorated significantly toward more part-time jobs, the news about jobs this month is even worse than that.

Insidious evil buried in the jobs data

The New York Fed reported the following for the past year, but you don’t see much about it in the derelict press either: Those with a high-school diploma or less saw their ratio of employed people to their population go up; while those with college educations, saw the percentage of those who are employed drop over the past year.

It would appear we’re adding a lot more bar-tenders, house-keepers and burger flippers. In fact, yes, statistics in July showed that almost all the jobs added were in those industries, which have been the hottest hiring sectors both last month and over the past seven years. “Food services and drinking places” saw the biggest increase in July’s job numbers. (That adds up since that is also an industry with a lot of part-time jobs.) No doubt, the nation needs more bartenders of late with all those people in retail who are losing jobs as 20,000 retail establishments shutter their doors this year next (many of them major retailers).

Read More @ TheGreatRecessionBlog.com