|
Wheelbarrow Economics ZeroHedge.com Submitted by Jeff Thomas via InternationalMan.com, In 2014, we published an article entitled “Watch the Movie Before It Is Filmed.” In that article, I described the situation in Venezuela at that time. The effects of fifteen years of collectivism were threatening to collapse the economy. The government was reacting by printing bolivares (Venezuelan currency) on a large scale—a knee-jerk solution that has been utilized by over twenty other countries in the last century—always with the same outcome: hyperinflation, resulting in economic collapse. At the time, I recommended to readers that they “watch the movie” as it was being played out in Venezuela, as it would offer them insight into what was on the way in their own country, should they reside in Europe or North America. The pattern followed by Venezuela is roughly the same as for the other jurisdictions; Venezuela is just a bit more advanced in the progression. Therefore, what we are observing in Venezuela is likely to be played out in other countries that have made the same mistake of taking on more debt than they can ever pay back. As predicted, Venezuela is now well along with regard to hyperinflation. The traditional definition of “inflation” is “the increase of the amount of money in circulation.” Today, we think of inflation as an increase in the cost of goods, but this is merely a predictable by-product of inflation. If the amount of money increases, the cost of goods will always rise to meet it. Therefore, the issuance of large amounts of paper money has only a very temporary positive effect. Ultimately, it creates an increase in the price of goods and services, which, in turn, calls for further printing. In 1922, Germany was up to its eyes in debt, to the point that it was beyond repayment. The government, in attempting to overcome the dire poverty that had developed, decided to print more paper banknotes. The printing didn’t (and couldn’t) solve the problem, so they printed more. Then more again. They kept up the printing, until, by the autumn of 1922, the reichsmark was worth so little that new bills were being delivered to the banks in boxcars. A story of the time describes a man bringing a wheelbarrow of reichsmarks to a baker to buy a loaf of bread. Whilst in the shop, making the deal with the baker, he was robbed—the wheelbarrow full of money that he had left out on the sidewalk had been stolen. The thief dumped the reichsmarks on the pavement and made off with the wheelbarrow. So, are the leaders of Venezuela learning from the mistakes of other countries that have followed this pattern? Far from it. Recently, they took delivery of over five billion banknotes—enough to fill three dozen 747 cargo planes. At the same time, Venezuela is selling off its gold in order to pay for the new currency and other debts. Venezuela will soon run out of real money to pay for the fiat money, and that will bring the charade to a disastrous end. The reader may say to himself, “When will people learn?” Sadly, they don’t. Incredibly, when the reichsmark collapsed in 1923, no one blamed the excessive printing. In fact, many people felt that if only the printing had continued just a bit longer, everything might have been all right. What we can take away from this is that what happened in Weimar Germany in 1922–1923 is happening now in Venezuela in 2016. (And has happened in some twenty other countries over the last hundred years, most recently in Argentina in 2000 and in Zimbabwe in 2008.) The same will occur in Europe and America in the fairly near future. That’s not a “Chicken Little” overreaction; it’s a virtual certainty. The same economic errors always bring the same catastrophic results. Ben Bernanke, just two years prior to being named head of the Federal Reserve, assured an audience that the Fed would react to any deflationary trend by printing as many currency notes as necessary. This was no idle threat. Remember, the owners of the Fed profit heavily from the hidden tax of inflation, but lose money if there is deflation. That assures us that, with the present unsustainable level of U.S. national debt (nominally, some nineteen trillion dollars, but actually some hundred trillion dollars, including unfunded liabilities), a collapse in the dollar is a given. And, of course, the severity of the crash is always commensurate with the level of the debt, which promises us that, since this debt load is by far the greatest the world has ever seen, the crash will be the greatest the world has ever seen. Those who have studied the histories of countries after they’ve experienced a hyperinflationary collapse will be aware of what’s headed their way, if they reside in Europe or North America. Those who have not undertaken such a study might choose instead to watch the movie—to observe what happens in Venezuela as its hyperinflation plays out and learn what their own fate might be. Our predicted outcome, which may have seemed hypothetical in 2014, is now right around the corner in Venezuela. This will be of value to the reader who watches as the collapse occurs, then observes what follows. The events that unfold will be essentially the events that will unfold in Europe and North America when their respective collapses occur. This “movie” is not meant to be entertainment at the expense of others’ suffering; watching it is a way to forewarn oneself as to what’s coming to those countries that are irrevocably on the same path, but have not yet reached the same point. By watching, the reader may be forewarned as to how to prepare himself so that, whilst his country may be headed toward economic collapse, he may take action to assure that the impact to himself, his family and his investments are diminished.
0 Comments
Guess What Occupation Is Most Frequently Cited In The Panama Papers?
ZeroHedge.com With all the anti-one-percenter rhetoric and tax-evading-evil-doer narratives spewing forth from the mainstream media mouthpieces of the establishment since The Panama Papers were exposed for all to see, it may come as a surprise to some to find out which cohort of the elites are the most populous among the tax-haven-creating documents... The Politicians! Source: WikiData Which makes us wonder if this leak was indeed a plot to blackmail/expose the West's ruling class? Nevertheless, one thing is very clear, as Luis Guillermo Valez explains via PanamPost, officials are hypocritically denouncing the strategies they practice themselves... Why can’t tax evasion be a legitimate form of self defense? In some countries and circumstances, it is. Despite what politicians want us to believe, tax havens exist because some countries have been turned into tax hellholes by officials bent on “social justice” and “income redistribution.” Sometimes, those same politicians top the list of “offshore” account holders trying to evade taxes. “The Wealth of Nations” by Adam Smith had something to say about this kind of government revenue, namely that taxes are a lesser evil overall than other forms of paying for public services. But to prevent taxes from harmful excess, Smith left to posterity the four principles of good taxation, which have been almost completely forgotten by politicians concerned with legislating taxation. Here is Smith’s wise warning: Excessive taxation is a powerful stimulus to evasion, so penalties to offenders grow proportionally to the temptation that causes it. Contrary to the principles of justice, the law first raises the temptation to infringe it and then punishes the violators. And if corruption and overspending is added to excessive taxation, the motives for tax evasion are complete. Once again Smith: In all countries where there is a corrupt government, and where there is suspicion that it incurs in great expense and government revenue is improperly used, very often these laws that protect contributions are little respected In the 1970s, I met a Canadian man called Bryan O’Connor. He used to deliver pizzas in Toronto and always carried a little notebook in which he religiously wrote down all the tips he received in his work, preventing the risk of missing a penny in his tax return. I’ve never met anyone else like Bryan. I think he and Immanuel Kant are probably the only people in human history who voluntarily paid all their taxes. I’m sure Bryan has. Nor do I believe that Jesus Christ was completely honest when answering the Pharisees about paying taxes. He said “give back to Caesar what is Caesar’s.” After all, the man had left behind the honorable carpentry work and did not seem to generate any taxable income. That’s probably why he was defeated in the famous vote competing with Barabbas, who– weapons in hand – had rebelled against the ominous tribute of Imperial Rome. Since ancient times people have rebelled against taxes. The Roman provinces were often faced uprisings against fiscal depredations and their leaders’ abuses. The peasant wars in Germany, of which Frederick Engels, Marx’s buddy, has left a vivid account were tax rebellions. The French Revolution began as the uprising of the Estates General against taxes, demanding a cheap government. Interestingly, the twentieth century, which saw a rapid growth in the size of governments and taxes, was free of riots and tax rebellions. And not because all taxpayers behaved like Bryan O’Connor. Panama Papers: What about Modern Governments? Though no less rapacious than prior ones, modern governments are more tempered and have given up on the most ominous tax collection practices: murder and torture. However, it is not shocking to the majority’s opinion that there are a few who punish tax evasion with imprisonment. This is the case of Mexico, Chile, and Peru, Colombia’s partners in the Pacific Alliance, and whose shameful example the Colombian government proposed to imitate in the last tax reform. Everyone, from the Leviathan-worshipping economists, politicians, and political scientists who serve them, to journalists, tax attorneys, and the public opinion sees the evader as a criminal and the government that punishes him as the defender of society, no matter how corrupt and abusive it may be. In illo tempore, the evader was seen as a hero who faced a thief state. The inverted values of current times have a background of hypocrisy that nobody can deny. In almost all countries, legislatures who enact taxes are composed mostly of professional politicians who, by granting special benefits, want to keep lobbyists and wealthy campaign donors happy. Interest groups and political operators are willing to grant each other benefits with the hope that the general coffers will bear the costs.Everything is a bargaining of crossed interests leading to casuistical and tangled tax regimes, completely away from the predicaments of solidarity, equity, and efficiency which ultimately are no more than a cover more for private interests. The economists, lawyers, tax experts, and other technicians who advise governments in the design of structural tax reforms – which are periodically announced but never arrive – are generally also company advisers and wealthy individuals looking to reduce their effective taxation rate. The middle class defends itself by under-invoicing or non-billing and making up liabilities and expenses on their tax returns. The poorest, who usually only are reached by indirect taxation, join the noisy protests of civil servants who live from taxes and always receive the support of politicians competing for their votes. That is the common background of what is called the state, from which everyone wants to get a lot and contribute little. But yes, everyone denounces tax evasion. Governments around the world – in their relentless fight against the tax evasion problem created by themselves with their fiscal voracity and performance – have unseemly decided to form an international coalition against so-called tax havens, while those same officials seek shelter for their good or ill-gotten fortune. This new and sinister Statist International will be a major threat to capital mobility and individual freedom. However, because supposedly the offshore world only affects the rich, everyone applauds in a universal expression of envy and hypocrisy. The problem of national and international evasion is not resolved with the creation of a universal tax police. Small, moderate, simple, and austere governments and fiscal systems adjusted to the four rules of Smith are the best antidote against tax evasion. But in the current state of public opinion where people accept and demand – as Walter Lippmann would say– a large government that administers their affairs for them instead of a government that administers justice among men who conduct their own affairs, it is at best an anachronism to invoke the wise old Smith. A third of cash is owned by 5 U.S. companies
Matt Krantz, USA TODAY 12:32 p.m. EDT May 20, 2016 The rising cash holdings of U.S. corporations is increasingly in the hands of a few U.S. companies, with just five tech firms having grabbed a third of it. And nearly three-quarters of cash held by non-financial U.S. companies is stashed overseas, outside the long arm of Uncle Sam. Apple (AAPL), Microsoft (MSFT), Alphabet (GOOGL), Cisco Systems (CSCO) and Oracle (ORCL) are sitting on $504 billion, or 30%, of the $1.7 trillion in cash and cash equivalents held by U.S. non-financial companies in 2015, according to an analysis released Friday by ratings agency Moody's Investors Service. That's even more cash concentration than in previous years, as these five companies held 27% of cash in 2014 and 25% in 2013. Apple alone is holding more cash and investments than eight of the 10 entire industry sectors. Corporate America's rising pile of cash is becoming increasingly important to investors as profit growth and the stock market stalls. The amount of cash held by U.S. companies rose 1.8% in 2015. Unfortunately for U.S. investors, 72% of total cash held by all non-financial U.S. companies is stockpiled outside the U.S., up from 64% in 2014 and 58% in 2013, as companies try to avoid paying U.S. tax rates. Investors are eyeing companies' growing cash piles as potential sources of dividend increases to maintain fat returns even if stock prices continue to go nowhere. Dividends rose 4% last year to a record high of $404 billion, while companies cut back on capital spending by 3% to $885 billion. Capital spending is the cash companies put into new plants and equipment with the hopes of driving higher profits in the future. Companies have also been pulling back from using cash to buy back their own stock. That is a maneuver that can reduce a company's number of shares outstanding and in theory should make each share more valuable. Stock buybacks, net of new stock issuance, fell 7% to $269 billion in 2015. Apple shows the strong disconnect between big cash balances and stock returns. The company is sitting on more cash than any other, yet investors have lost $240 billion in paper profits since the stock peaked. There's only so much companies can do with their giant wads of cash since a vast majority isn't in the U.S. U.S. non-financial companies have $1.2 trillion in cash outside the U.S., up from $1.1 trillion in 2014 and $947 billion in 2013. Moody's thinks the cash stored overseas will only grow. Some of the biggest holders of cash are also the same companies with much of their cash outside the U.S. Apple, Microsoft, Cisco, Alphabet and Oracle have $441 billion saved overseas, or 87% of their total cash. TOP 10 MOST CASH-RICH U.S. COMPANIES Company, symbol, Cash ($ billions*) Apple, AAPL, $215.7 Microsoft, MSFT, $102.6 Alphabet, GOOGL, $73.1 Cisco Systems, $60.4 Oracle, ORCL, $52.3 Pfizer, PFE, $39.3 Johnson & Johnson, JNJ, $38.4 Amgen, AMGN, $31.4 Intel, INTC, $31.3 Qualcomm, QCOM, $30.6 Source: Moody's Investors Service *as of end of 2015 Don't expect that cash to come home anytime soon, Moody's says. "We expect that overseas cash balances will continue to grow unless tax laws are changed to encourage companies to repatriate money," the Moody's report says. "There has been little progress toward corporate tax reform that would incentivize U.S. companies to permanently repatriate funds held overseas." TOP FIVE CASH HOARDERS PILE UP OVERSEAS* Company, 2014 % cash offshore, 2015 % cash offshore Apple, 88%, 93% Microsoft, 91%, 94% Cisco, 94%, 94% Alphabet, 60%, 59% Oracle, 90%, 87% Source: Moody's Investors Service *as of 2015 Billionaire George Soros dumps $3.5B in U.S. stocks, goes for gold
Now must be the time to get into gold, or at least Soros thinks so By Shepard Ambellas - (INTELLIHUB) — Elite billionaire George Soros scaled down on his holdings in the U.S. market by just over 37% or $3.5B in an effort to make more money off of China through gold. While Soros is a controversial globalist figure worth over $23 billion, certain people who know what he is capable of will take his recent move seriously as he likely has insight into what is coming down the pipe in the financial sector. Soros Fund Management “disclosed owning bearish options contracts on 2.1 million shares of the SPDR 500 ETF Trust, an exchange-traded fund that tracks the Standard & Poor’s 500 Index, with a face value of $431 million as of March 31,” according to Bloomberg. Bloomberg reported: “Soros also bought bullish options contracts on 1.05 million shares in the SPDR Gold Trust, which tracks the price of bullion. What’s more, the fund took a stake in the world’s biggest producer of the metal, Barrick Gold Corp., worth $264 million at the end of March, the filing showed. Soros acquired 1.7 percent of Barrick, making it the fund’s biggest U.S.-listed holding.” Barrick shares have more than doubled in 2016 Does George know something we don't??? Middle Class Destitution – A Devastating Tale From America's Heartland
From ZeroHedge.com Submitted by Mike Krieger via Liberty Blitzkrieg blog, He had made the drive enough times to already suspect what he might find. Stride Rite had left Huntington for Mexico at the tail end of the recession; Breyers Ice Cream had closed its doors after 100 years. In the weeks after each factory closing in his part of Indiana, Lewandowski had listened to politicians make promises about jobs — high-tech jobs, right-to-work jobs, clean-energy jobs — but instead Indiana had lost 60,000 middle-class jobs in the past decade and replaced them with a surge of low-paying work in health care, hospitality and fast food. Wages of male high school graduates had dropped 19 percent in the past two decades, and the wealth divide between the middle class and the upper class had quadrupled. “These jobs aren’t the solution so much as they’re part of the problem,” Lewandowski said, and now the result of so much churn was becoming evident all across Indiana and lately in Huntington, too. Fast-food consumption was beginning to tick up. Poverty was up. Foreclosures were up. Meth usage up. Heroin up. Death rate up. In Dan Quayle’s Middle America, one of the biggest news stories of the year had been the case of a mother who had let her three-week-old child suck heroin off her finger. “Despair is our business, and business is booming,” Lewandowski said… “This is how it feels to be sold out by your country.” “It’s pure greed.” “They wanted to add another 6 feet to their yachts.” “We’re becoming like a third-world country. We’re going to have nothing left but fast food.” "Fast food and hedge funds. That’s where we’re going.” – From the Washington Post article: From Belief to Outrage: The Decline of the Middle Class Reaches the Next American Town I write a lot about the middle class. It’s been one of the core themes here at Liberty Blitzkrieg since inception, yet my posts tend to be filled with statistics and sarcasm, and often lack the crucial element of heart. In order to truly connect with the public and shift their sentiments from apathy to action, it’s imperative to create a deep emotional connection. I admittedly have not done a great job in this regard. Fortunately for all of us, Eli Saslow of the Washington Post has done just that. I read a lot of articles, and I can’t remember anything that hit me as hard as what he published this past weekend. It tells the tale of the spirit-crushing decimation of the American middle class through the lens of eternal optimist, Chris Setser. Chris is a man who always went above and beyond in order to provide a good life for himself and his family. Working the graveyard shift at an Indiana United Technologies plant so that he could be home when his kids came home from school, Mr. Setser lived his entire life living by the mantra: “Things have a way of working in the end.” Until they didn’t. Chris’ transformation from an optimistic Democrat, to a pissed off, jaded Trump supporter, is a microcosm for what’s happening all across the country. Through his eyes, you witness a justified desperation, and a painful recognition that working hard and staying positive simply aren’t good enough in America’s current hollowed out, oligarch-owned, shell company of an economy. Below, I provide some excerpts from the article, but these select passages don’t do it justice. I think this piece is so important, it’s imperative you read it in full and share it with everyone you know. The future of America rests upon reversing this pernicious trend. From the Washington Post: HUNTINGTON, Ind. —Chris Setser worked a 12-hour graveyard shift while his children slept, cleaned the house while they were at school and then went outside to wait for the bus bringing them home. He stood on the porch as he often did and surveyed the life he had built. The lawn was trimmed. The stairs were swept. The weekly family schedule was printed on a chalkboard. A sign near the door read, “A Stable Home Is A Happy Home,” and now a school bus came rolling down a street lined by wide sidewalks and American flags toward a five-bedroom house on the corner lot. “Right on time,” Setser called out to the driver, waving to his children as they came off the bus. In came 14-year-old Ashley, holding a payment notice for a school field trip. “Are we going to become one of those families with a voucher?” she asked. “Don’t worry,” he said, handing her $20 from his wallet. All around him an ideological crisis was spreading across Middle America as it continued its long fall into dependency: median wages down across the country, average income down, total wealth down in the past decade by 28 percent. For the first time ever, the vaunted middle class was not the country’s base but a disenfranchised minority, down from 61 percent of the population in the 1970s to just 49 percent as of last year. As a result of that decline, confusion was turning into fear. Fear was giving way to resentment. Resentment was hardening into a sense of outrage that was unhinging the country’s politics and upending a presidential election. Setser had heard rumors earlier in the day that the company had decided to move its operations to Mexico, but he found them hard to believe. While dozens of other manufactures had left Northeast Indiana, his factory, United Technologies Electronic Controls, or UTEC, was still taking back contracts from China and winning president’s awards for performance. It was the area’s largest employer and also a rare place where America’s fraying social contract had remained mostly intact: Employees helped the factory’s parent corporation earn more than $6 billion in annual profit. In return they got a decent hourly salary with good overtime, bonuses for completing work-training programs, a turkey to take home on Thanksgiving and a ham on Christmas. “Successful businesses improve the human condition,” read one sign posted on the factory wall. But on that night in February, another announcement had come over the factory speakers, instructing all UTEC employees to report to the cafeteria. The factory manager was standing at the front of the room, holding a piece of paper and reading into a microphone. “A difficult decision,” he said. “Relocation is best,” he said. “Northern Mexico,” he said. “No questions,” he said, and then he told employees they would have an hour-long break in the cafeteria to process the news before returning to their lines. Together between his overtime and Bowers’s small salary at another manufacturer in Fort Wayne, they had remained firmly in the middle class by finding ways to make their money stretch. When they wanted to drive to Florida for their first overnight vacation in a decade, Setser could volunteer for more overtime to save up the cash. When they wanted a new TV, he could spend the 10 percent premium he earned for working third shift. He had cashed out part of his 401(k) account to pay for his daughter’s braces, purchased some of their basic household items with credit cards and taken out a no-money-down loan on their $95,000 house. He had made the drive enough times to already suspect what he might find. Stride Rite had left Huntington for Mexico at the tail end of the recession; Breyers Ice Cream had closed its doors after 100 years. In the weeks after each factory closing in his part of Indiana, Lewandowski had listened to politicians make promises about jobs — high-tech jobs, right-to-work jobs, clean-energy jobs — but instead Indiana had lost 60,000 middle-class jobs in the past decade and replaced them with a surge of low-paying work in health care, hospitality and fast food. Wages of male high school graduates had dropped 19 percent in the past two decades, and the wealth divide between the middle class and the upper class had quadrupled. “These jobs aren’t the solution so much as they’re part of the problem,” Lewandowski said, and now the result of so much churn was becoming evident all across Indiana and lately in Huntington, too. Fast-food consumption was beginning to tick up. Poverty was up. Foreclosures were up. Meth usage up. Heroin up. Death rate up. In Dan Quayle’s Middle America, one of the biggest news stories of the year had been the case of a mother who had let her three-week-old child suck heroin off her finger. “Despair is our business, and business is booming,” Lewandowski said. “Workers have lost all agency in their lives. They’ve based their lives on believing in something that turned out to be a lie. They work when they can, for what they can, for as long as they can until it ends.” As second shift finished in Huntington, several of those UTEC workers gathered at an Applebee’s that displayed construction hats on the wall. Earlier in the day, an employee had been suspended for taping a “Run for the Border” bumper sticker to one of the company’s roving robots — the biggest act of rebellion yet. A few employees had been trying to popularize a boycott of United Technologies products, and others had started using their regular 10-minute breaks to campaign for Trump in a traditionally Democratic factory. But for the most part their work was continuing unchanged, with attendance steady and factory production on the rise. They couldn’t risk losing their jobs or their UTEC severance packages, so the only way to vent was to come here, where the discussion on this night was of a country in decline. “This is how it feels to be sold out by your country.”“It’s pure greed.” “They wanted to add another 6 feet to their yachts.” “We’re becoming like a third-world country. We’re going to have nothing left but fast food.” “Fast food and hedge funds. That’s where we’re going.” “We’re getting to the point where there aren’t really any good options left,” he said. “The system is broken. Maybe its time to blow it up and start from scratch, like Trump’s been saying.” Krystal rolled her eyes at him. “Come on. You’re a Democrat.” “I was. But that was before we started turning into a weak country,” he said. “Pretty soon there won’t be anything left. We’ll all be flipping burgers.” “Fine, but so what?” she said. “We just turn everything over to the guy who yells the loudest?” “You said it always evens out,” she told him. “Maybe I was wrong,” he said, but now his voice was quiet. “You said things just have a way of working.” “Maybe not,” he said, because with each passing day he was seeing it more clearly. The town was losing its best employer, and all around him stability was giving way to uncertainty, to resentment, to anger, to fear. Haunting and heartbreaking. What’s worse, it’s not just in the manufacturing heartland where the middle class is getting pummeled. In fact, the middle class is getting squeezed so badly, many cities now see a need to roll out public housing projects targeting this formerly independent and relatively prosperous demographic. Although I previously reported on this as it pertained to the extremely affluent city of Palo Alto in the post, The New “Middle Class” – Making $250,000 a Year in Palo Alto Qualifies for Housing Subsidies, it appears this may be more of a trend than an anomaly. As the Wall Street Journal reports in the piece, Rising U.S. Rents Squeeze the Middle Class: Rising rents in cities across the nation are hurting the poorest residents, but those who are higher on the income ladder might be bearing the brunt of the pain. A study set to be released on Monday shows that a far bigger proportion of middle-class renters in New York were squeezed by rising rents than were the lowest-income renters. The study by New York University’s Furman Center examined rapidly gentrifying neighborhoods such as Brooklyn’s Williamsburg section and Harlem, where rents jumped 80% and 53%, respectively, between 1990 and 2014. While the share of the poorest families struggling to afford rent in those sections increased by 7.6 percentage points from 2000 to 2014, the share of middle-income households struggling to afford rent jumped 18 percentage points. In Boston, median asking rents have increased at an annual rate of 13.2% since 2010, far outstripping the 2.4% average annual increase in income. Mayor Marty Walsh has pledged to build 20,000 units of middle-income housing through a mix of initiatives such as rezoning neighborhoods further from the city center and offering tax breaks to developers who build more moderately priced housing. “We really do spend the vast majority of our resources on low-income families but we know we need to serve the middle income,” said Sheila Dillon, Boston’s chief of housing. Even in Atlanta, historically one of the most affordable cities for middle-class families, a rapid rise in rents has taken its toll on those families. The city last week passed a new ordinance requiring developers who receive tax breaks to set aside a portion of units aimed at lower-income earners. It is also considering requiring developers to include units targeted at slightly more affluent families, such as teachers and police officers. New York City has pledged to build or preserve 44,000 units for middle-income families over the next decade. Low-income households “have been straining to pay their rents in these neighborhoods for years, and, as rents continue to rise, households in higher-income tiers are having the same experience,” said a spokeswoman for New York City’s Housing Preservation and Development Department. I don’t know about you, but this isn’t the kind of country I want to live in. EXCLUSIVE: Anonymous Strikes the Heart of the Empire — Takes Down U.S. Federal Reserve Bank Jay Syrmopoulos May 16, 2016 7 Comments freethoughtproject.com After announcing a global call to arms against the “corrupt global banking cartel,” the hacker collective known as Anonymous, in conjunction with numerous other hacktivist groups, have taken over 20 central banks offline, including striking at the heart of the Western imperialist empire; the U.S. Federal Reserve Bank of Boston, the Bank of England and the Bank of France. A press release by Anonymous explained in the intentions behind the operation know as #OpIcarus: “The banks have been getting away with murder, fraud, conspiracy, war profiteering, money laundering for terrorists and drug cartels, have put millions of people out on the street without food or shelter and have successfully bought all our governments to help keep us silenced. We represent the voice of the voiceless. We are uniting to make a stand. The central banks which were attacked in recent days were attacked to remind people that the biggest threat we face to an open and free society is the banks. The bankers are the problem and #OpIcarus is the solution.” Operation Icarus was relaunched in conjunction with a video release announcing the beginning of a “30-day campaign against central bank sites across the world.” Since that time, the scope and magnitude of the attacks have increased exponentially, with Anonymous, Ghost Squad Hackers, a number of Sec groups and BannedOffline coordinating attacks — each focusing on separate financial institutions in an effort to maximize the number of targets hit. Some individuals have expressed reservations about Anonymous attacking the central banking system – thinking that this will in some way impact their individual accounts held in the banks. In an exclusive interview with The Free Thought Project, an Anonymous member explained that this operation is directed solely at the 1%: “We would just like to make it very clear that all targets of #OpIcarus have been Rothschild and BIS central owned banks. In fact most of the targets so far such as Guernsey, Cyprus, Panama, Jordan, British Virgin Isles, etc are in the top 10 places of tax havens for the elite. No on-line consumer accounts were harmed, no ATM’s were blocked and no personal client data was leaked. This has been a protest against the Central Banks and the 1% — no innocent or poor people were harmed” The operation began with an initial attack on the Central Bank of Greece and was quickly followed up with a similar DDoS attack on the Central Bank of Cyprus. Last weekend, hackers reportedly targeted the Central Bank of the Dominican Republic, the Dutch Central Bank, the Central Bank of Maldives, and Guernsey Financial Services Commission, according to the official @OpIcarus Twitter account, which has been taken offline — presumably by Twitter. The National Bank of Panama and the Central Bank of Kenya were also reportedly targeted a day later, according to hacking news publication HackRead. Additionally, reported Ghost Squad Hacker, s1ege also tweeted about taking the Central Bank of Bosnia-Herzegovina offline and provided a screenshot to verify. The Twitter account @BannedOffline also reported the Central Bank of Mexico had succumbed to a DDoS attack by the hacking collective. The online hacktivist groups have continued to conduct a series of high-powered distributed denial-of-service (DDoS) attacks, which forced the website of Central Bank of Jordan, Central Bank of South Korea, Bank of Compagnie, Monegasque and the Central Bank of Montenegro offline. On Saturday, hackers conducted a series of 250 Gbps DDoS attacks on the Bank of France, Central Bank of the United Arab Emirates, Central Bank of Tunisia, Central Bank of Trinidad and Tobago and Philippine National Bank. The recent attack, on Monday morning, took down the Central Bank of Iraq. Bank Of America Reveals Nine "Reasons To Worry" About A Big Market Drop ZeroHedge.com Over the weekend, we were surprised to read that none other than recent market cheerleader Goldman Sachs had come up with six reasons why its chief equity strategist believes the market is poised for a material draw down (read "big drop") in the coming weeks. Among these were the following:
Then, overnight, one of the few remaining optimists on the market, BofA's equity and quant strategist Savita Subramanian joined the "fiction peddling" dark side when she released an uncharacteristically bearish report titled "Put your shorts on…it’s summertime", in which she lays out not just six but nine "reasons to worry" about a summer slump. As she admits, "an increasing number of trends worry us as we head into summer. Of additional concern, May-October has historically been the seasonally weakest six-month period of the year. Why are we worried?" Her answer: the following big picture concerns: Warnings from fundamental, behavioral and credit signals An increasing number of charts in our work depict levels that are only prior to a bear market. The distress ratio is at levels that led the last two bear markets. Corporate buybacks, in aggregate, tend to top-tick the market, and the proportion of companies buying back shares is near all-time highs, at the same levels as the ‘07 peak. And the number of companies for which analysts forecast losses is at levels never seen without a bear market. Fed tightening into a profits recession doesn’t end well The Fed is in tightening mode despite a recession in corporate profits. Since 1971, the Fed has begun tightening during a bona fide profits recession only three other times – 1976, 1983, and 1986; two out of those three instances saw stocks drop over the next twelve months. The S&P is just 1% off its 12/16/15 level when the Fed initially hiked. Capital markets are tightening Even if the Fed stays on hold, other markets are tightening: equity IPOs year-to-date are near an all-time low (Chart 4), and Commercial & Industrial (C&I) lending standards have tightened for the last three quarters. Get ready for the second leg down in the oil price “W” Our house forecast for a W-shaped recovery in oil prices suggests seasonal weakness in 3Q with WTI falling over 15% before it recovers in the fourth quarter. The S&P has moved in lockstep with WTI, suggesting near-term downside (Chart 8). Politics at home…. Uncertainty is rarely good for markets, and as we move closer to November with many policy unknowns for both presumptive nominees Trump and Clinton, uncertainty is likely to be even higher than it is ahead of the average election. And there is a 44% correlation between the US Policy Uncertainty Index and the VIX (Chart 6). …and abroad The EU referendum is coming. Our UK team expects the UK to remain in the Eurozone, but uncertainty could roil the markets as June approaches (while the odds and many polls are in favor of “remain”, some are close to 50/50). Under our UK team’s risk scenarios, UK and European equities could see a 15% drop if the UK leaves, which on a beta-adjusted basis spells a 10%-ish pullback for the S&P 500. And here is the full list of nine explicit reasons why BofA is now selling rapidly in May and staying far, far away. 1) Stress in the HY market The high yield distress ratio—though it declined last month—is at levels well above those seen at prior market peaks and is a hair’s breadth from levels not seen without bear markets. 2) Buybacks are at levels last seen at the prior market peak Corporates have been propping up EPS growth via a near-record proportion of buybacks. 65% of companies in the S&P 500 have taken out share count vs. the previous year, the highest since when the market peaked in late 2007. 3) Tick-up in expected negative profits Similarly, the proportion of S&P 500 companies with negative expected (forward 12-month) EPS is at its highest levels since late 2009. While the majority of companies with negative expected EPS are concentrated in Energy, spikes in this indicator to current levels have historically led to a similar pick-up six months later in companies reporting negative actual EPS. 4) Risks around Fed tightening The Fed has only embarked on a tightening cycle during a profits recession three other times, which typically spelled downside for the S&P 500. Currently, the implied probability of a June hike is 4% vs. 17% in July, 34% in September, 37% in November and 53% in December. Our economists forecast the Fed will hike in September, though they have said that this summer is not off the table. 5) Weak capital markets backdrop Just 12 IPOs have occurred year-to-date (through 4/30), the lowest since 2009. And IPO proceeds (as a percentage of S&P 500 market cap) to date are below ’09 levels, and the lowest we’ve seen since ’03. 6) Tightening lending standards According to Senior Loan Officer Opinion Survey data, banks have reported tightening lending standards for three consecutive quarters—the last time we saw this happen was in late 2007/early 2008. 7) Seasonal weakness in oil While the market has risen along with the rebound in oil prices so far this year, our commodity strategists expect a W-shaped recovery in oil due to seasonal weakness. They forecast WTI will fall to $39/bbl in 3Q16 before recovering to $54/bbl by year-end. If the S&P 500 remains correlated with oil prices, this could suggest near-term risk to equities. 8) Uncertainty around the US election By February of this year, US policy uncertainty had increased to its highest levels since the 2013 US government shutdown (Chart 7). While uncertainty has come down since then (in tandem with the narrowing of the presidential candidate field), we expect uncertainty will pick up again closer to the election, as it typically has in prior election years (Chart 8). This is likely to result in higher volatility, particularly from September- November, before subsiding post-election. 9) Risks around the EU Referendum On June 23, a majority vote will decide whether the UK leaves or stays in the EU—an event around which we could see heightened market volatility. Polls are generally in favor of “stay”: the Financial Times’ “Brexit poll tracker” (which summarizes opinion polls) suggests a 46%/43% Stay/Leave split; WhatUKThinks.org—run by Britain’s leading independent social research agency—suggests 50%/50% based on opinion polls; and the odds (according to oddschecker.com) suggest 70%/30% in favor of “stay”. Our UK economists and strategists’ base case is for the UK to remain in the Eurozone, but have outlined possible risk scenarios and implications. They expect UK and European equities would see a 15% sell-off if the UK leaves, which we expect could translate into a 10%-15% (low teens) pullback for US equities. Central Bankers’ Wisdom Faulted as Gold Holdings Surge 25%
Ranjeetha Pakiam Bloomberg May 16, 2016 — 12:35 AM EDT Updated on May 16, 2016 — 4:32 AM EDT The great gold rush of 2016 is gathering pace. Holdings in exchange-traded funds have now surged by a quarter, with investors taking advantage of lower prices over the past two weeks to enlarge stakes on rising concern about central bank policy making worldwide. The holdings have increased to 1,822.3 metric tons, the most since December 2013, according to data compiled by Bloomberg, after bottoming at a seven-year low in January. In the past two weeks, as prices lost 1.6 percent, ETFs swelled 63.2 tons, rising every day. QuickTake Gold's Ups and Downs Gold is the best-performing major metal this year after silver amid rising concern over negative rates in Europe and Japan and whether the Federal Reserve will be able to tighten further. Demand jumped to the second-highest level ever in the first quarter, according to the World Gold Council, and billionaire hedge fund manager Paul Singer has said gold’s rally may just be beginning. Investors are being driven to gold on a structural shift in investment demand, according to Bernard Aw, a strategist at IG Asia Pte. “Firstly, the negative interest rate environment and quantitative-easing policies are reducing the pool of suitable investment options, and making gold less costly to hold,” Aw said by e-mail on Monday, adding that while there may be more U.S. rate hikes in the pipeline, prevailing rates remain very low. “Second, lingering fears of competitive currency devaluations and potentially fresh bouts of market volatility encourage safe-haven demand.” Rates Outlook After the Fed raised rates in December, investors have been scaling back expectations of further increases amid concern about the strength of the global recovery. The chances of a hike at next month’s policy meet are just 4 percent, down from 75 percent at the start of the year, according to Bloomberg data. Higher U.S. borrowing costs typically hurt gold prices while boosting the dollar. Bullion for immediate delivery has rallied 21 percent this year, gaining to $1,303.82 an ounce on May 2, the highest price since January 2015. The metal traded 0.7 percent higher at $1,282.40 an ounce at 4:30 p.m. in Singapore, according to Bloomberg generic pricing. Singer -- whose firm Elliott Management Corp. oversees about about $28 billion -- told clients last month that if investors’ confidence in central bankers’ “judgment continues to weaken, the effect on gold could be very powerful.” Stan Druckenmiller, the billionaire investor, said this month while the bull market in stocks is exhausted, gold is his largest currency allocation. Bankers Buying While central bank policies may have contributed to gold’s gains this year, some countries’ banks -- notably in China, Russia and Kazakhstan -- have also been substantial and consistent buyers. The World Gold Council estimates that nations are expected to buy 400 to 600 tons this year, compared with 566.3 tons in 2015, according to Alistair Hewitt, head of market intelligence. Even some the of leading bullion bears have had to backpedal this year as prices advanced and expectations for U.S. rates shifted. Goldman Sachs Group Inc. and Singapore-based Oversea-Chinese Banking Corp. beefed up their price forecasts last week, though both said they maintained their bearish views. UBS Group AG, which expects gold to drop over 12 months, has increased its short-term forecast, citing uncertainty surrounding the pace of Fed increases as well as next month’s U.K. referendum on its membership in the European Union. The upper end of its range was increased to $1,350 from $1,310, analysts at the wealth-management unit including Wayne Gordon wrote in a report dated May 14. |
Archives
December 2020
Categories |
RSS Feed
