Congratulations! Chicago Just Leapfrogged 4 Cities to America’s Highest Sales Tax rate; Graft Chicago Style

Listen to the chants from Chicago: We’re Number 1! We’re Number 1! We’re Number 1!
Chicago just leapfrogged past several other cities with the passage of a Cook County sales tax hike of one percentage point to 10.25%.
With that hike, Chicago Now has America’s Highest Sales Tax.
Chicago has long had a steep sales tax, but a vote by Cook County commissioners Wednesday night made the city’s rate the highest of any major city in the nation.
The commissioners approved a 1% hike, which bumped the sales tax rate in Cook County – where Chicago is located – from 9.25% to 10.25%. The increase passed with the minimum number of votes needed and is aimed at helping bail out the pension system for county workers.
Cook County Board President Toni Preckwinkle, who advocated for the hike, said the increase would generate an estimated $474 million more in sales tax per year and is necessary to ward off the ‘pension tsunami’ that’s closing in on the county. The retirement fund has a shortfall of $6.5 billion – a figure that’s growing by $360 million per year.

This post was published at Global Economic Analysis on August 18th, 2015.

The 8 Trillion Black Swan: Is China’s Shadow Banking System About To Collapse?

“Wealth management products in China have come under the spotlight after a series of missed payments raised concerns over the shadow banking sector that often directs credit to firms shut out from bank lending or capital markets,” Reuters said in February, after reporting that CITIC (China’s top brokerage), was looking at ways to repay investors after the issuer of one of the wealth management products the broker sold missed a $1.12 million payment to investors.
That news came a little over a year after the now infamous “Credit Equals Gold #1 Collective Trust Product” incident and a subsequent default scare on a similar product backed by loans to a struggling coal company.
Although wealth management products and CTPs (which differ from WMPs) are often described as “murky” and “opaque”, the basic concept is fairly simple. WMPs are marketed to investors as a way to get more bang for their buck (er.. yuan) than they would with bank deposits. Funds from these investors are then invested at a higher rate. If the assets investors’ money is used to fund run into trouble, that’s not good news for WMP investors. Simple.
The main issue here is the sheer size of the market. As FT notes, “in 2010, as regulators tried to rein in the explosion in bank credit resulting from the country’s Rmb4tn economic stimulus plan, banks turned to trusts to help them comply with lending controls.” So essentially, trusts helped banks offload credit risk at the behest of the PBoC. Here’s the process whereby banks use trusts to get balance sheet relief:

This post was published at Zero Hedge on 08/18/2015.

Warning: Silicon Valley Is Wrong About These High-Valued Private Companies

[Money Morning Editor’s Note: CNBC today was buzzing about the high valuations of private companies and what these big numbers mean for stocks. Our Chief Investment Strategist Keith Fitz-Gerald warned investors about this Aug. 5, in an alert to his Money Map Report subscribers. Take a look…] According to The Economist, the top 10 highest-valued private equity companies are valued at $156 billion despite having revenue of only $4 billion.
This makes each of the 19.5 thousand employees they have on staff worth $8 million, according to Zerohedge.com.
Naturally, Silicon Valley doesn’t see it this way, even as they crow the six most dangerous words in the English language: ‘It will be different this time.’
No it won’t.
Here’s how these high-valued private companies rank in valuation and funds raised:

This post was published at Wall Street Examiner by Keith Fitz-Gerald ‘ August 18, 2015.

If History Is Any Indication, Junk Bonds And Copper Are Telling Us Exactly Where Stocks Are Heading Next

Yields on the riskiest junk bonds are absolutely soaring and the price of copper just hit a fresh six year low. To most people, those pieces of financial news are meaningless. But if you understand history, and you are aware of the patterns that immediately preceded previous stock market crashes, then you know how howhuge both of those signs are. During the summer of 2008, junk bond prices absolutely cratered as junk bond yields skyrocketed. This was a very clear signal that financial markets were about to crash, and sure enough a couple of months later it happened. Now the exact same thing is happening again. The following comes from a Wall Street On Parade article that was posted on Tuesday entitled ‘Keep Your Eye on Junk Bonds: They’re Starting to Behave Like ’08’…
According to data from Bloomberg, corporations have issued a stunning $9.3 trillion in bonds since the beginning of 2009. The major beneficiary of this debt binge has been the stock market rather than investment in modernizing the plant, equipment or new hires to make the company more competitive for the future. Bond proceeds frequently ended up buying back shares or boosting dividends, thus elevating the stock market on the back of heavier debt levels on corporate balance sheets.
Now, with commodity prices resuming their plunge and currency wars spreading, concerns of financial contagion are back in the markets and spreads on corporate bonds versus safer, more liquid instruments like U. S. Treasury notes, are widening in a fashion similar to the warning signs heading into the 2008 crash. The $2.2 trillion junk bond market (high-yield) as well as the investment grade market have seen spreads widen as outflows from Exchange Traded Funds (ETFs) and bond funds pick up steam.
And right now we are seeing the most volatility in the junkiest of the junk bonds.
The following comes from Wolf Richter, and my jaw just about dropped to the floor when I first saw this…

This post was published at The Economic Collapse Blog on August 18th, 2015.

Vietnam Can’t Keep Currency Up – Devalues Dong 3rd Time This Year, Widened Trading Bands

Asian currency war contagion is spreading. Tonight’s victim is the Dong with Vietnam ‘devaluing’ the reference rate (for the 3rd time this year) by 1% to 21,890 and also widened the trading bands from 2% to 3% (since the recently widened 2% band was already broken)…
*VIETNAM CENTRAL BANK DEVALUES DONG BY 1% *VIETNAM DEVALUES DONG REFERENCE RATE TO 21,890 PER DOLLAR *VIETNAM CENTRAL BANK WIDENS DONG TRADING BAND TO 3% OF RATE

This post was published at Zero Hedge on 08/18/2015.

WSJ: U.S. Lacks Ammo for Next Economic Crisis

According to the Wall Street Journal, the U. S. Lacks Ammo for Next Economic Crisis
As the U. S. economic expansion ages and clouds gather overseas, policy makers worry about recession. Their concern isn’t that a downturn is imminent but whether they will have firepower to fight back when one does arrive.
Money has been Washington’s primary weapon in the decades since British economist John Maynard Keynes proposed aggressive government spending to battle the Great Depression. The U. S. generally injects cash into the economy through interest-rate cuts, tax cuts or ramped-up federal spending.

This post was published at Wall Street Examiner on August 18, 2015.

Jeff Berwick on Fall Financial Crisis, Why Socialism is Evil and Why Its Good Robots Take Our Jobs

The following video was published by TheDollarVigilante on Aug 18, 2015
Jeff is interviewed by Richie Allen on the Richie Allen Show, topics include: Life in Acapulco, the impending market crash and 7/49 year Shemitah cycles, in 2008 the problem was too much debt and money printing and we have had 7 more years of the same, the machinations of debt, the role of central banking in debt and the transfer of wealth to the top, if people understood the monetary system there would be revolution tomorrow, the US involvement in the middle east to institute central banking with aim to Iran and to establish global central banking, socialism and Hugo Chavez, the Chinese yuan devaluation, Christine Lagarde’s numerological speech on the number 7, voluntary society, welfare destroys communities, basic income immoral and an insanity, the beneficent aspect of capitalism and debunking anti capitalist propaganda.

How Asset Classes Have Responded To The First Rate Hike

Summary: How have different asset classes in the past responded when the FOMC has raised rates for the first time? Commodities were the best performing asset; they boomed. The dollar sold off. Equities usually rallied into the decision, then sold off, and then rallied again. Treasury yields rose. The total return for high yield bonds was usually positive. * * * On September 17, the FOMC will meet. And expectations are that the Fed will enact a 25bp rise in rates. This would be the first change in rates since December 2008, and the first rise in rates since June 2006 (here).
The question for investors is: how might various assets classes react? To answer, we can look at how they have reacted in the past.
Before looking at the data, consider this: a rate increase means that the economy is improving enough that employment and inflation are considered to be well on the path to being healthy. You would expect, therefore, that stocks would do well if the Fed felt comfortable raising rates. An improving economy also implies demand for commodities and lower default rates, meaning that commodity prices are rising and high yield bonds are at least stable.
And in fact, this is what usually happens when the Fed raises rates for the first time: stocks and commodities rise and high yield bonds have a positive return over the next year (the average length of time rates rose). The chart below covers the period after the first rate hikes in 1983, 1986, 1988, 1994, 1999 and 2004 (data from Allianz).

This post was published at Wall Street Examiner by Urban Carmel ‘ August 18, 2015.

Gold Is “Undervalued” For 1st Time In 6 Years, BofAML Says

With hedge funds net short for the first time ever, and Commercial Hedgers are holding the lowest net short position in gold futures since the launch of the gold bull market in 2001, we thought it interesting that – for the first time since 2009, BofAML’s fund managers’ survey finds Gold is “undervalued.” For the first time since records began, hedge funds are net short gold futures, according to CFTC data…

This post was published at Zero Hedge on 08/18/2015.

China’s Richest Traders Are Rushing To Dump Their Stocks To The Retail Masses, Just Like In The US

One of the things you will never hear on propaganda financial comedy TV, is that for all the endless prattle of cheap stocks and unlimited upside, the only purpose of pundit after pundit appearing inbetween commercials for incontinence diapers and get rich quick while trading options books (call now for a free copy while supplies last, for the next 3 years, is to sucker you, dear reader, in a casino that has been rigged by HFTs, and manipulated by central banks, into buying stocks so someone can collect a commission and someone else can offload a bag of overvalued toxic garbage to the infamous “dumb money” retail investor.
The only problem is that after the Lehman collapse which revealed to everyone just how rigged everything truly was, the “dumb money” refused to participate in this so-called bull market, forcing global central banks to monetize $13 trillion in risk assets, and corporations to buyback their own stock at a record pace since Joe Sixpack refuses to bid it up.
But who can blame the “dumb money” – here, as a reminder, is what the “smart money” has been doing not only in 2014…

This post was published at Zero Hedge on 08/18/2015.

Ron Paul On The Seamless Web Of Liberty

Many people think the Internal Revenue Service was violating civil liberties when it harassed tea party groups. After all, the groups were targeted because they wanted to exercise their civil liberty to challenge government policies. However, the specific issue in the IRS case was the groups’ application for tax-exempt status, which seems to be an aspect of economic liberty. In fact, the IRS case demonstrates that there is no meaningful distinction between civil and economic liberties. A true friend of the free society defends both civil and economic liberties.
Many ‘civil libertarians’ who oppose government laws interfering in the personal choices of consenting adults support laws preventing consenting adults from working for below the minimum wage. Other civil libertarians support government programs forcing consenting adults to purchase health insurance. Many liberals who join libertarians in opposing the NSA’s warrantless wiretapping fail to protest Obamacare’s assault on medical privacy. Even worse are those ‘First Amendment defenders’ who cheer on government actions preventing religious individuals from operating their businesses in accord with the teachings of their faith.
The hypocrisy of left-wing civil libertarians is matched by the hypocrisy of many ‘economic conservatives.’ y.

This post was published at Zero Hedge on 08/18/2015.

The US Has Zero Grain Reserves As The Global Economy Deteriorates – Episode 744a

The following video was published by X22Report on Aug 18, 2015
Greece is selling off bits and pieces of its country to the creditors. Greek deposits become eligible for bail-ins. Major retailer going out of business because of decline in sales and revenue. Building permits plunge in NYC as the property tax expires. Atlanta FED recalculates GDP to 1.3 as the auto industry increases production and channel stuffs dealerships. Bail-ins are coming to America and the FDIC will go after depositors. Global growth has slowed according to Moody’s and the US is not prepared for a major crisis, the US has no grain reserves since 2008.

AUGUST 18/THERE WILL BE A BAIL IN IN GREECE AFTER JAN 1 2016/MORE FALLOUT FROM THE CHINESE TOXIC EXPLOSION/WTI OIL FALLS AGAIN ON CUSHING OK INVENTORY BUILD/

Good evening Ladies and Gentlemen:
Here are the following closes for gold and silver today:
Gold: $1117.10 down $1.50 (comex closing time)
Silver $14.71 down 51 cents.
In the access market 5:15 pm
Gold $1117.80
Silver: $14.88
First, here is an outline of what will be discussed tonight:
At the gold comex today, we had a poor delivery day, registering 1 notice for 100 ounces Silver saw 0 notices for nil oz
Several months ago the comex had 303 tonnes of total gold. Today, the total inventory rests at 227.62 tonnes for a loss of 75 tonnes over that period.
In silver, the open interest fell by 1,719 contracts despite the fact that silver was up in price by 9 cents yesterday. The total silver OI continues to remain extremely high, with today’s reading at 17,790 contracts In ounces, the OI is represented by .865 billion oz or 124% of annual global silver production (ex Russia ex China). This dichotomy has been happening now for quite a while and defies logic. There is no doubt that the silver situation is scaring our bankers to no end as they continue to raid as basically they have no other alternative.
In silver we had 0 notices served upon for nil oz.
In gold, the total comex gold OI rests tonight at 430,947. We had 1 notice filed for 100 oz today.
We had no changes at the GLD today / thus the inventory rests tonight at 671.87 tonnes. The appetite for gold coming from China is depleting not only gold from the LBMA and GLD but also the comex is bleeding gold. I thought that 700 tonnes is the rock bottom inventory in GLD gold, but I guess I was wrong. However we must be coming pretty close to a level of only paper gold and the GLD being totally void of physical gold. In silver, we had no changes in silver inventory at the SLV tune of / Inventory rests at 324.968 million oz.
We have a few important stories to bring to your attention today…

This post was published at Harvey Organ Blog on August 18, 2015.

Cyanide Thunderstorms Feared As Mystery Deepens Around $1.5 Billion Tianjin Explosion

The story behind the chemical explosion that rocked China’s Tianjin port last Wednesday continues to evolve amid fears that the public could be at risk from the hundreds of tonnes of sodium cyanide stored at the facility.
More specifically, Monday’s heightened concerns were related to the possibility that rain could interactwith the water soluble chemical, releasing deadly hydrogen cyanide gas into the air. “First rain expected today or tonight. Avoid ALL contact with skin,” a text message purported to have originated at the US Embassy in Beijing read. The Embassy would later deny the message’s authenticity, perhaps at the behest of the Politburo which has kicked off the censorship campaign by shutting down hundreds of social media accounts for “spreading blast rumors.”
Despite efforts to preserve order and clamp down on discussion, the anger in China is palpable as citizens demand answers as to how a catastrophe of this magnitude could have happened and as it turns out, not only was Tianjin International Ruihai Logistics storing sodium cyanide in amounts that were orders of magnitude larger than what they were supposed to be storing, but they were apparently doing so without a license. “The company has handled hazardous chemicals during a period without a licence,” an unnamed company official said on Tuesday. Apparently, Ruihai received the licenses it needed to handle the chemicals just two months ago, BBC reports, citing Xinhua.

This post was published at Zero Hedge on 08/18/2015.

Default Wave Looms As Energy Sector Credit Risk Surges To Record High

With oil prices pushing cycle lows and Shale firms as loaded with debt as they have ever been, the spike in energy sector credit risk should come as no surprise as the hopes of the last few months are destroyed. At 1076bps, credit risk for the energy sector has never been higher. As UBS recently warned, more defaults are looming and, as we discussed this week, private equity is waiting to pick up the heavily discounted pieces.

This post was published at Zero Hedge on 08/18/2015.