Capitalism At Work – Paul Craig Roberts

Zero Hedge reports a story from ‘Keep Talking Greece’ that first appeared in The TimesAccording to the story, the plummeting living standards forced on the Greek people by German chancellor Merkel and the European banks have forced large numbers of young Greek women into prostitution. The large increase in the supply of women offering sexual services has dropped the price to 4 euros an hour. That’s $4.24, enough for a cheese pie or a sandwich, the value that bankster-imposed austerity has placed on an hour’s use of a woman’s body. The half hour price is $2.12. They don’t even get the minimum wage.
When one reads a story such as this, one hopes it is a parody or a caricature. Although the London Times has fallen a long way, it is not yet the kind of newspaper that can be purchased at grocery store checkout counters.
The story gains credence from the websites in the US on which female university students advertise their availability as mistresses to men who have the financial means to help them with their expenses. From various news reports, mistress seems to be a main occupation of female students at high-cost universities such as NYU.
The NYU girls have it far better than the Greek ones. The mistress relationship is monogamous and can be long-lasting and loving. Prudes make an issue of the disparity in ages, but disparity in age was long a feature of upper class marriages. Prostitutes have large numbers of partners, each possibly carrying disease, and they receive nothing in return except cash. In Greece, if the report is correct, the payment is so low that the women cannot survive on the money beyond lunchtime.

This post was published at Paul Craig Roberts on November 28, 2015.

The Fundamental Truth of the Market Matter

Originally posted at
When 2014 was coming to an end, we published our Market View for 2015. In that piece, we said our expectation for 2015 was that market gains would track closer to earnings per share (EPS) growth. At the time, analysts’ average estimate pegged 2015 EPS growth at 8.8%, according to S&P Capital IQ. Today the average estimate for 2015 EPS growth is… wait for it… -0.6%.
Cue the wah-wah-wah-wah sound when a contestant loses on a game show.
That’s right. The S&P 500 isn’t expected to deliver any EPS growth in 2015. The energy sector is the main reason why.
On January 1, analysts estimated earnings per share for the energy sector would decline 27.3% in 2015. Well, oil prices kept falling in 2015 and they took earnings estimates with them. Today, earnings per share for the energy sector are expected to be down 58.1% for all of 2015.

This post was published at FinancialSense on 11/23/2015.

How A Secretive Elite Created The EU To Build A World Government

Authored by Professor Alan Sked – original founder of UKIP, via The Telegraph,
Voters in Britain’s referendum need to understand that the European Union was about building a federal superstate from day one
As the debate over the forthcoming EU referendum gears up, it would be wise perhaps to remember how Britain was led into membership in the first place. It seems to me that most people have little idea why one of the victors of the Second World War should have become almost desperate to join this “club”. That’s a shame, because answering that question is key to understanding why the EU has gone so wrong.
Most students seem to think that Britain was in dire economic straits, and that the European Economic Community – as it was then called – provided an economic engine which could revitalise our economy. Others seem to believe that after the Second World War Britain needed to recast her geopolitical position away from empire, and towards a more realistic one at the heart of Europe. Neither of these arguments, however, makes any sense at all.
The EEC in the 1960s and 1970s was in no position to regenerate anyone’s economy. It spent most of its meagre resources on agriculture and fisheries and had no means or policies to generate economic growth.
When growth did happen, it did not come from the EU. From Ludwig Erhard’s supply-side reforms in West Germany in 1948 to Thatcher’s privatisation of nationalised industry in the Eighties, European growth came from reforms introduced by individual countries which were were copied elsewhere. EU policy has always been either irrelevant or positively detrimental (as was the case with the euro).
Nor did British growth ever really lag behind Europe’s. Sometimes it surged ahead. In the 1950s Western Europe had a growth rate of 3.5 per cent; in the 1960s, it was 4.5 per cent. But in 1959, when Harold Macmillan took office, the real annual growth rate of British GDP, according to the Office of National Statistics, was almost 6 per cent. It was again almost 6 per cent when de Gaulle vetoed our first application to join the EEC in 1963.

This post was published at Zero Hedge on 11/28/2015 –.

Sliding Down Laffer’s Curve

I favor flat taxes: the principle of the tithe. There is no “graduated tithe.”
The tithe is good enough for God. Ten percent should be more than enough for all the imitation gods — combined — that want to get their hands into our wallets.
I favor direct flat taxes on real estate, but only at the local level: the county and city (50/50 split). States should tax only cities and counties. The federal government should tax only states.
I favor local sales taxes because they are necessarily flat taxes. Also, many of them can easily be evaded: the Internet and UPS. Finally, they are collected from local businesses, not from individuals. I prefer to keep taxation away from individuals. I favor liberty for living, breathing individuals. I am less concerned about liberty for judicial, non-breathing individuals: corporations. Corporations should be taxed by the states in which they are incorporated. (I recommend Nevada.)
But wouldn’t my plan starve the federal government? No, but it would make it look more like Manute Bol than a sumo wrestler.
We can make it look like what it was as a percentage of the net private product (net national product minus government spending) in 1789. Then, if we work long and hard, maybe we can get it back to where it was in 1787. That would be good enough for me. I do not want to be thought of as a Utopian.
Arthur Laffer recently wrote a defense of the corporate VAT tax substitution being proposed by Rand Paul and Ted Cruz.
Dr. Laffer understands that there are conservative opponents of his flat VAT tax plan. He doesn’t seem to know why. I know why. The reason is expressed by Dr. Laffer.
The U. S. government should collect taxes in the most efficient way possible so as to do the least damage to the economy.

This post was published at Gary North on Gary North – November 27, 2015.

Matthew Mather’s Darknet Shows Reality Is Not Far From Fiction

Last week, Financial Sense interviewed Matthew Mather, a former tech CEO turned best-selling author of novels such as CyberStorm, Darknet, and most recently Nomad. Mather’s books explore the dark possibilities of new technologies, ranging from cyberwarfare, assassination networks, to ‘virtual corporations’ run by artificial intelligence. Although his plots are fictional in nature, Mather explained that much of the technology he writes about either exists or is currently in development.
In his novel, Darknet, Mather writes about a Wall Street broker, Jake O’Connell, who gets caught up in the invisible world of assassination markets, virtual currencies, and ‘chatbots’ that can fool people into thinking they are real human beings. While Mather invents his dystopian vision of the future in Darknet, the novel is ‘based on real-world technologies,’ says Mather, ‘whether or not the average person is aware of them.’
When it comes to the financial world, many hedge funds make immense amounts of money with varying types of AI and high-frequency trading technologies, and it appears less and less outlandish to imagine AI systems replacing humans on Wall Street, says Mather, as they have in recent years. Financial Sense host Cris Sheridan points out that just earlier this year, in an extremely rare and candid interview, the founder of one of the world’s most profitable investment firms, Renaissance Technologies, credited AI and pattern recognition technology for their phenomenal success.

This post was published at FinancialSense on 11/23/2015.

Can The Oil Industry Really Handle This Much Debt?

Submitted by Ekaterina Pokrovskaya via,
As the crude industry has been wrestling with low oil prices that declined by over 50 percent since its highest close at $107 a barrel in 2014, many exploration and production companies worldwide and in the U. S., in particular, have faced large shortfalls in revenue and cash flow deficits forcing them to cut down on capital expenditures, drilling and forego investments in new development projects.
High debt levels taken on by the U. S. oil producers in the past to increase production while oil prices soared, have come back to haunt oil and gas companies, as some of the debt is due to mature by the end of this year, and in 2016. Times are tough for U. S. shale oil producers: Some may not make it, especially given that this month, lenders are to reassess E&P companies’ loans conditions based on their assets value in relation to the incurred debt.

This post was published at Zero Hedge on 11/28/2015 –.

Alt-Market’s Reflections On Thanksgiving

Thanksgiving is my favorite holiday. While most holidays only require that we celebrate and immerse ourselves in reverie, Thanksgiving asks us to live in the moment and reflect on our situation; to find what is best in the present as well as accept that some things need to change.
Americans in particular have developed an entire cultural paradigm in which we desperately labor to AVOID reflecting on the moment. We have become a society that embraces distraction, every second of every day. Today we have digitized tunnel vision, absorbed in frivolous pursuits like texting, Facebook, Twitter or Tinder, etc. Multibillion dollar monstrosities all driven by our urge to avoid the present moment or to live in quiet for even an hour with ourselves and our own thoughts. I very much enjoy Louise CK’s take on this problem:

This post was published at Alt-Market on Thursday, 26 November 2015.

Market Talk – November 27, 2015

The spotlight was firmly on China today where the equity tumbled over 6%. News that market regulators are investigating suspected violation by some of the countries brokerages finance their clients stock purchases. Citic fell to its daily limit (-10%) before closing. Other non-financials also fell with notable Cathy Pacific, Petro-China and Sinopec were all down around 4%. All the core European Indices attempted the upside today but by the close all had fallen back into the red closing down around -0.5%. It really is not surprising that volumes in the west were so depressed today given the long weekend holidays in the States.

This post was published at Armstrong Economics on November 27, 2015.

Which Assets Have Priced In A Chinese Economic Collapse? Barclays Explains

On August 11, the day Beijing shocked the world by devaluing the yuan, a whole host of commentators suggested that the move was designed to bolster China’s bid for SDR inclusion.
To be sure, the timing would have been right. On at least two separate occasions in August the wires lit up with reports that the IMF was leaning towards making the RMB the fifth currency in the basket and with the official decision due in November, some believed China was simply trying to seal the deal by making it seem as though the market would play a greater role in determining the exchange rate going forward.
Of course that’s all nonsense. First, the market doesn’t play a greater role in the new FX regime. In fact, the market’s role is reduced. Previously, the PBoC manipulated the fix to control the spot, but now, the central bank manipulates the spot to control the fix and manipulating the spot means heavy-handed intervention.
Second, China’s deval has far more to do with a desperate attempt to boost the flagging export-driven economy.
Sure, the official headline GDP print can be whatever a bunch of Politburo central planners want it to be, but the reality (as measured by the Li Keqiang Index and by private economists outside of the bulge bracket) is that growth is nowhere near 7% and indeed, it might very well be that in times of rapidly declining commodity prices, China’s inability to accurately measure the deflator means real output would be materially overstated even if the NBS were putting out accurate figures otherwise.

This post was published at Zero Hedge on 11/28/2015 –.

Meanwhile In Greece, The Price Of A Prostitute Drops To 4 Per Hour

By Keep Talking Greece
Six years of crippling financial crisis have sent Greek students to the streets. However, not for anti-austerity protests but for sex. They allegedly ‘sell it very cheap,’ for the price of ‘a cheese pie or a sandwich,’ thus ‘offering the lowest prices of the industry across the Continent.’
‘Some women just do it for a cheese pie or a sandwich they need to eat because they are hungry,’ Gregory Lazos, professor of sociology at Panteion University in Athens told The Times and spoke about the results of a study he conducted.

This post was published at Zero Hedge on 11/28/2015 –.

“On The Cusp Of A Staggering Default Wave”: Energy Intelligence Issues Apocalyptic Warning For The Energy Sector

The Energy Intelligence news and analysis creator and aggregator is not one to haphazradly throw around hyperbolic claims and forecasts. So when it gets downright apocalyptic, as it did this week in a report titled “Is Debt Bomb About to Blow Up US Shale?”, people listen… and if they are still long energy junk bonds, they panic.
The summary:
“The US E&P sector could be on the cusp of massive defaults and bankruptcies so staggering they pose a serious threat to the US economy. Without higher oil and gas prices — which few experts foresee in the near future — an over-leveraged, under-hedged US E&P industry faces a truly grim 2016. How bad could things get?” The full report by Paul Merolli, a senior editor and correspondent at Energy Intelligence:
Debt Bomb Ticking for US Shale
The US E&P sector could be on the cusp of massive defaults and bankruptcies so staggering they pose a serious threat to the US economy. Without higher oil and gas prices – which few experts foresee in the near future – an over-leveraged, under-hedged US E&P industry faces a truly grim 2016. How bad could things get and when? It increasingly looks like a number of the weakest companies will run out of financial stamina in the first half of next year, and with every dollar of income going to service debt at many heavily leveraged independents, there are waves of others that also face serious trouble if the lower-for-longer oil price scenario extends further.
“I could see a wave of defaults and bankruptcies on the scale of the telecoms, which triggered the 2001 recession,” Timothy Smith, president of consultancy Petro Lucrum, told a Platts energy conference in Houston last week. Much has been made about the resiliency of US oil production in the face of low prices, but the truth is that many producers are maximizing their output – even unprofitable volumes – because they need the cash flow to service their debt (related). “As an industry, we’re at the point where every dollar of free cash flow now goes to paying back debt,” Angle Capital’s Steve Ilkay told the same conference. Ilkay, who advises North American producers on asset management, said during the boom years of 2012-14 about 55% of the sector’s free cash flow, which is calculated by subtracting capital expenditures from operating cash flow, was allocated toward debt repayment.

This post was published at Zero Hedge on 11/27/2015 –.

French Unemployment Rises Most in Three Years to Record Level

The recovery in France appears to have stalled already, and this is from employment data before the terrorist attacks. Via translation from Les Echos …
The number of Class A unemployed rose by 42,000 last month. This is the largest increase in nearly three years. Overseas included, France now has 3,810,000 unemployed, a new record.

This post was published at Global Economic Analysis on Saturday, November 28, 2015.

How Green Energy Really Works

After this week’s vaporization of $29 billion of liabilities ($230 million of which was owed to the US Taxpayer) amid Abengoa’s bankruptcy (Spain’s ‘Solyndra’), we thought it worth reminding the world’s greater fools just how “green” energy works…

This post was published at Zero Hedge on 11/28/2015 –.

Weekly Gold Market Review For November 27

In his weekly market review, Frank Holmes of the summarizes this week’s strengths, weaknesses, opportunities and threats in the gold market for gold investors. Gold closed the week at $1,057.98 down $19.90 per ounce (-1.85%). Gold stocks, as measured by the NYSE Arca Gold Miners Index, lost 0.03%. Junior miners outperformed seniors for the week as the S&P/TSX Venture Index climbed 0.14 percent. The U. S. Trade-Weighted Dollar Index gained 0.47 percent for the week.
Gold Market Strengths
Silver was the best performing precious metal this week with a slight decline of 0.6%. Short sellers apparently did not care if silver traded lower as over 18,000 gold contracts, or $1.9 billion notional, was dumped in overnight markets.

This post was published at GoldSilverWorlds on November 28, 2015.

The Unintended Consequences Of ‘Lift-Off’ In A World Of Excess Reserves

Submitted by Eugen von Bohm-Bawerk via,
Barring a disastrous NFP print this coming Friday the US Federal Reserve will change the target range for the Federal Reserve (Fed) Bank’s Funds rate from the current level of zero – 25bp to 25 – 50bp on December 16th. The Fed will effectively raise the overnight interbank rate of interest to around 30bp from an average of only 12bp in 2015. Ironically, that will be seven years, to the day, when the Fed first lowered rates to the current band.
During the period of ZIRP madness, the Fed’s balance sheet ballooned 6.2 times its pre-Lehman size to allow the central bank to add monetary ‘stimuli’ even at the zero lower bound. Consequently the financial system got stuffed with more cash than they knew what to do with; commercial banks thus ended up funding the very same assets they sold to the central bank through excess reserves held as deposits with the Federal Reserve bank itself

This post was published at Zero Hedge on 11/28/2015 –.

Was Black Friday A Bust?

‘We believe Thanksgiving shopping was a bust,’ said analysts at SunTrust Robinson Humphrey in a note. They conducted channel checks in the New York metro area, New England and the Southeast region starting on Thanksgiving Day and throughout the night into Black Friday. LINK
Retail sales fell .9% last December. Currently the trend is not the friend of the consumer retail sales bulls:

SunTrust retail analysts are already declaring Black Friday to be a bust. Of course, our first clue this was coming was when the ‘Black Friday’ sales events started two Mondays ago. Anecdotally, I did some ‘boots on the ground’ due diligence today (Black Friday) and found the stores to be eerily quiet. And Denver is considered to have one of the healthier regional economies.

This post was published at Investment Research Dynamics on November 28, 2015.

Local Taxation: A 50/50 County/City Tax Split

The primary agency of taxation, and therefore of political sovereignty in the United States, should be the county, as it was prior to the U. S. Constitution.
If a city incorporates, the county government must rebate half of its revenues within the geographical boundaries of the city. This places limits on county taxation. If it gets too high, taxpayers will vote to secede.
If the city adds taxes, half of the revenues must be rebated to the county government. This places limits on city government, which keeps only half of the revenue. If city taxes get too high, voters will throw out the incumbents.

This post was published at Gary North on November 27, 2015.

Shanghai Futures Exchange Appeals To Sellers: “Please Be Rational”

While it is nowhere close to Japan’s legendary advice to bond investors what they should do in case of a financial collapse (“please do not worry“), overnight the Shanghai Futures exchange, which has seen unprecedented declines in the prices of commodities transacted on it…

… so much so that the entire Chinese economy is now threatened by an unprecedented default wave if prices do not rebound, had some sage words of advice of its own.

This post was published at Zero Hedge on 11/28/2015.

BlackRock Spreads its Tentacles in Brussels

In Brussels there is one industry that is thriving better than just about any other: the bailout business. In the last five years, some of the world’s biggest financial consultancies have trousered tens of millions of euros apiece advising bailed-out governments and central banks how to reorganize their finances.
As Irish central bank governor Patrick Honohan said during Ireland’s 2011 bailout, ‘it’s amazing when you pay large sums of money, how the best consultants in the world can come flocking.’ Those firms include Alvarez and Marsal, Oliver Wyman and Pimco.
A Bright Future
Unlike many other industries in Europes crisis-ridden economy, the bailout business appears to have a bright future in store. As long as the continent’s banking industry remains prone to the occasional meltdown, the bailout business should remain a lucrative source of revenues and profits.
One firm that has proven particularly adept at carving out a niche in this sector is BlackRock Solutions, a small – in relative terms – advisory unit of BlackRock, the world’s largest asset management fund, with roughly 3 trillion under management. In 2011 the firm was hired by the Bank of Ireland to forecast how much Irish banks would risk losing and to carry out a ‘stress test’ on worst-case scenarios for the Irish banking system, which had just been bailed out to the tune of 85 billion.
Despite providing embarrassingly wayward forecasts, BlackRock Solutions pocketed 30 million for the job. The firm got a similar contract worth 12.3 million from the Bank of Greece and was also hired by the Bank of Cyprus to double-check the methodology used by Pimco to evaluate the recapitalization needs of the Cypriot banking sector.

This post was published at Wolf Street on November 28, 2015.