‘Debt TO Escape Velocity, NOT the Economy’ with Graham Mehl

My Two Cents
By Andy Sutton
One of the biggest buzz-terms of the falsetto, faux recovery has been ‘escape velocity’. If there are any NASA engineers left, they can correct me, but I believe the term was used in physics or perhaps rocket science to describe the velocity an object must reach to break the hold of the Earth’s gravity. And you think Economics has some formulas? I’d LOVE to see the one for the real escape velocity.
Getting back to the economic version of rocket science (don’t even tell me that isn’t funny), we have been hearing the term for the past several years. Ironically it started with the central banking crowdlthough they never quite told us what exactly the economy had to do to accelerate beyond the grasp of the ‘great recession’.
The point of this piece, however, is not to poke fun at seemingly benign policymakers and their silly words. The thrust of this article is going to be to demonstrate both visually and mathematically using some simple constructs that it is debt that has reached escape velocity and not the economy. Granted, myself and many others have written about this for years and if you’re reading this you probably have known it for that long.

This post was published at GoldSeek on Monday, 30 May 2016.

Spotlight on LPMCL: London Precious Metals Clearing Limited

Within the last 2 months, there have been a series of developments in the London Gold Market, each of which has involved Chinese-controlled banking group ICBC Standard Bank Plc.
On 4 April, the London Bullion Market Association (LBMA) announced that ICBC Standard Bank had been reclassified as a LBMA Market Making member for the OTC spot trading markets in gold and silver. On 11 April, ICE Benchmark Administration announced that ICBC Standard Bank had been approved for direct participation in the daily benchmark LBMA Gold Price auctions beginning on 16 May. On 3 May, the LBMA announced in its Alchemist magazine that ICBC Standard Bank had joined the LBMA’s Physical Committee. This committee is responsible for aspects of the physical bullion market such as the LBMA’s Good Delivery List and it also liaises with the LBMA’s Vault Managers Working Party. On 11 May, the relatively obscure but powerful London Precious Metals Clearing Limited (LPMCL)announced that ICBC Standard Bank had joined LPMCL, the first membership addition to London’s monopoly bullion clearing group since 2005. On 16 May, ICBC Standard Bank announced that it had agreed to acquire a London-based precious metals vault currently owned by Barclays. This precious metals vault was built by, and is operated by Brinks, on behalf of Barclays. ICBC Standard says that the vault acquisition will be completed by July 2016.

This post was published at Bullion Star on 30 May 2016.

Notes on the Libertarian Party convention

At the Mises Institute, we don’t support particular candidates for office or legislative policy proposals. We’re primarily interested in ideas and education. And many of our most ardent supporters don’t believe in voting or political activism at all (although no less than Walter Block does). But like Murray Rothbard, we of course maintain a “rooting interest” in seeing the most libertarian (i.e least statist) candidates prevail. And I’ve recently argued for “issue libertarianism” over movement libertarianism, in the face of a very tough political landscape for third parties.
Rothbard, who helped Lew Rockwell create the Institute, was a Libertarian Party stalwart for many years: speaking at conventions, writing planks for the platform, suggesting tactics, and generally urging the Party to move in a more hardcore direction. He loved the unruly nature of the LP and its infighting, just as he loved the intrigue and plot twists behind Republican and Democrat races– races he followed avidly and handicapped accurately. Lew himself was necessarily involved with the LP in 1988, helping Ron Paul secure the nomination after a surprising fight from the great (but not very libertarian) Lakota activist Russell Means. And many associates and fellow-travelers of the Institute, like the anti-war writer Justin Raimondo, have been deeply involved with the LP over the years.

This post was published at Ludwig von Mises Institute on May 30, 2016.

China Sends Yellen Another Warning, Fixes Yuan At Lowest In Over Five years

We got an early hint of what the PBOC would do tonight on Friday and Saturday, when as we reported, an unprecedented volume burst of bitcoin buying out of China, sent the digital currency soaring to the highest level since 2014.

To be sure, we had expected sailing would not be smooth for the FX market, when on Friday afternoon, after Yellen’s’ unexpectedly hawkish comments at Harvard, which sent the USD surging, we predicted a stormy sea for the Monday Yuan fix:
CNY will be interesting on Sunday night
– zerohedge (@zerohedge) May 27, 2016

This post was published at Zero Hedge on 05/29/2016 –.

The State of The US Housing Bubble

The idea that US housing prices are not in a bubble because they haven’t reached new highs on an inflation adjusted basis has become popular lately.
I have a couple of problems with that idea.
First, the proponents of this idea deflate house prices by CPI. They conclude that if CPI is inflating at less than 2% and house prices are inflating at 6%, the ‘real’ inflation rate of houses at twice or more than twice the CPI inflation rate is not a bubble. They argue that since real, ‘inflation’ adjusted adjusted existing home resale prices have yet to exceed their peak in 2005-06, therefore the current market is not in a bubble.
They may be right, but I don’t think so.

This post was published at Wall Street Examiner by Lee Adler ‘ May 29, 2016.

John Embry: The Next Big Financial Collapse Can Happen At Any Time

Every day that life goes by and there’s no disruption I consider that a bonus. – John Embry
We are currently sitting on the edge on another housing and commercial real estate market disaster. The financial system was never ‘fixed’ or ‘reformed.’ The banking sins which led up to the big housing bubble crash were merely erased with taxpayer funds and printed money. The laws passed were not designed to protect us from them but to better protect their ability to hide the continuation of the fraudulent banking activities that serve to transfer wealth from the general public to the elitists.
The Fed and U. S. Government have successfully succeeded in reflating the housing bubble. Housing prices have been fueled by low to no down payment Government sponsored mortgages and by the Fed’s near-zero interest rate policy. Go ahead raise rates, Janet, let’s see how quickly you explode the current housing bubble your people have blown.
The financial media heralded the announcement of Wells Fargo’s 3% down payment mortgage program like it was a new way to split to the atom. Lost in the hoopla was the fact that Wells Fargo’s program is just now catching up to the times. Fannie and Freddie have been sponsoring 3% down payment mortgages since early 2015. The Government agencies also signficantly reduced the required monthly ‘insurance’ payment on low down payment mortgages. Same with the FHA, which has been doing 3.5% down mortgages since 2008. Th Government has become the new version of Angelo Mozilo’s Countrywide Mortgage company.

This post was published at Investment Research Dynamics on May 29, 2016.

Fixing This Financial Mess Should Be Our Next President’s No. 1 Priority

This is a syndicated repost courtesy of Money Morning – We Make Investing Profitable. To view original, click here. Reposted with permission.
Whatever the outcome in November, our new president will be saddled with a tremendous economic mess.
The United States is drowning in debt, some $19.3 trillion right now. Entitlement spending is about to explode, including the costs of Obamacare that were conveniently delayed until its chief author left office. The cost of servicing what will soon be a $20 trillion federal deficit is heading higher and consuming a larger percentage of government spending. The United States’ fiscal situation is on an unsustainable trajectory.
The situation, however, is not hopeless. There are steps a new president can take to improve the situation.
But there’s one thing he – or she – absolutely must deal with right away.

This post was published at Wall Street Examiner by Michael E. Lewitt ‘ May 29, 2016.

Brad Friedman: Why To Be Suspicious Of Every Election

Electronic voting machines have opened up Pandora’s box
Long an ‘exporter of democracy’ to the rest of the world, there is ample evidence that the United States lacks even the most rudimentary, basic protections necessary to preserve voting integrity within its own borders.
Some of the evidence is circumstantial, some is statistical, and some is pretty direct and clear-cut. Taken together, a pattern that emerges strongly suggesting that ever since voting machines, electronic voting machines were introduced in the United States, we’ve had a string of suspect election results that frankly are not consistent with a free and fair voting outcome.
This week, we’re joined by Brad Friedman, election integrity analyst to understand better the systems and practices currently in place to collect and tally votes in America. As we gear up to elect our next president, it’s clear that numerous concerns exist about the state of ‘free and fair’ voting in our country: Trust is different than ‘verifiable’. Trust, frankly, has no place in elections. There is no reason to ever trust anybody. We need to be able to verify all of this.

This post was published at PeakProsperity on Sunday, May 29, 2016,.

Venezuela’s Gold Reserves Plunge To Lowest Ever As Maduro Repays Debt With Gold

Several months ago, as Venezuela’s hyperinflating, imploding economy was spinning in freefall, leading to the dramatic episodes of total social collapse such as those profiled in “Scenes From The Venezuela Apocalypse: “Countless Wounded” After 5,000 Loot Supermarket Looking For Food“, we wrote that the country which recently had “run out of money to print its own money” was preparing to liquidate its remaining gold holdings to pay coming debt maturities.
Then, courtesy of an analysis by our friends at Bullionstar, we found just how Venezuela was quietly exporting tons of its gold to Switzerland, as it prepared to conclude the transaction with whoever the end buyer of Venezuela’s bullion would end up being.

This post was published at Zero Hedge on 05/29/2016 –.

Millennials and living at home: For the first time on record the most common living arrangement for young adults is living with a parent.

The topic of young adults living at home is critical to the housing market since it will impact future home building, renting, buying, and purchasing behavior for the foreseeable future. It is interesting that Trump being the de facto candidate for one of our major parties is basically a real estate marketer/developer that pitches real estate that is ‘too great’ for most Americans. On the other end, we have Sanders who is essentially the direct opposite of Trump (i.e., free college tuition, break up the banks, etc). The billionaire and the non-billionaire – interesting. At this point, you have 3 candidates left standing and in many households, this divide is playing out. You haveTaco Tuesday baby boomers that essentially were fortunate to buy at a time when the housing playing field was easy. I even see this in neighborhoods I’m familiar with. These are people that bought and many don’t even have college degrees. In virtually every case, many would not be able to buy in their own hood today even if they took a time machine and came back with their similar educational training and inflation adjusted income to today’s hyper competitive arena. When a home goes for sale, it is bought by investors or by two working professionals (most common I have seen are tech couples made up of engineers and programmers). Parents may gripe but now many have their Millennial kids living at home. If it feels like a common trend it should be because this is now the most common living arraignment for young Americans.

This post was published at Doctor Housing Bubble on May 29, 2016.

Trickle-Down Crash? Trophy Assets Suddenly Tanking

One of the defining traits of the past few years’ ‘recovery’ has been the torrent of money flowing from big banks to favored clients, and from there into trophy properties like high-end real estate, superyachts, and fine art. This might be the first financial bubble to completely bypass the 99%.
And now it’s ending. Falling oil prices and negative interest rates (rich people own a lot of government bonds) seem to have sucked the animal spirits out of the 1%, leading to stories like this:
A Worrisome Pileup of $100 Million Homes (New York Times) – One of the latest symbols of the overinflated luxury housing market is a pink mansion perched above the Mediterranean on the French Riviera. The 13,000-square-foot property, built and owned by the fashion magnate Pierre Cardin, is composed of giant terra cotta orbs arranged in a sprawling hive. The home’s name befits its price. ‘Le Palais Bulles,’ or ‘the Bubble Palace,’ is being offered for sale at approximately $450 million.
The listing is part of a global pileup of homes listed for $100 million or more. A record 27 properties with nine-figure prices are officially for sale, according to Christie’s International Real Estate. That is up from 19 last year and about a dozen in 2014.

This post was published at DollarCollapse on MAY 29, 2016.

The Source of Failure: We Optimize What We Measure

Rather than measure consumption and metrics that incentivize debt, what if we measure well-being and opportunities offered in our communities? The problems we face cannot be fixed with policy tweaks and minor reforms. Yet policy tweaks and minor reforms are all we can manage when the pie is shrinking and every vested interest is fighting to maintain their share of the pie. Our failure stems from a much deeper problem: we optimize what we measure. If we measure the wrong things, and focus on measuring process rather than outcome, we end up with precisely what we have now: a set of perverse incentives that encourage self-destructive behaviors and policies. The process of selecting which data is measured and recorded carries implicit assumptions with far-reaching consequences. If we measure “growth” in terms of GDP but not well-being, we lock in perverse incentives to boost ‘growth” even at the cost of what really matters, i.e. well-being. If we reward management with stock options, management has a perverse incentive to borrow money for stock buy-backs that push the share price higher, even if doing so is detrimental to the long-term health of the company.

This post was published at Charles Hugh Smith on SUNDAY, MAY 29, 2016.

Last Time this Happened, the Housing Market Collapsed

‘The ultimate bubble signal.’ The most expensive home listed for sale globally is in Bel Air, a neighborhood in Los Angeles. Its main house is a 74,000-square-foot monstrosity. Among the special attributes: a 30-car garage. The compound, being erected by speculative builder Nile Niami, has an asking price of $500 million.
Seven of the world’s 10 most expensive listings are in the US. Four of them are in Los Angeles, including lesser abodes, such as a 38,000-square-foot mansion with a 5,300-square-foot master suite, several guesthouses, and staff housing, for $150 million.
Other countries have cool stuff for sale too, such as Pierre Cardin’s 13,000-square-foot ‘Le Palais Bulles’ (‘the Bubble Palace’) on the French Riviera, listed for about $450 million.
More supply of speculative super-homes is coming, including this gem, according to the New York Times: ‘Real estate agents and developers say a home under construction in Bel Air is likely to have more than 50,000 square feet of living space’ and ‘the world’s largest safe.’ It will be listed for ‘around $300 million.’

This post was published at Wolf Street on May 29, 2016.

You’ll Never Believe How Goldman Manipulated Tesla Stock

On May 18, Goldman Sachs upgraded Tesla stock from ‘Neutral’ to ‘Buy’… hours before being revealed as a co-lead in a $2 billion secondary underwriting of TSLA stock.
‘The first thing you need to know about Goldman Sachs is that it’s everywhere. The world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.’
The inimitable Matt Taibbi gets well-deserved credit for that exquisite description of Goldman Sachs Group Inc. (NYSE: GS) from his April 5, 2010, Rolling Stone expose titled ‘The Great American Bubble Machine.’
(If you never read the piece, you owe it to yourself.)

This post was published at Wall Street Examiner on May 26, 2016.

Gregory Mannarino-It’s All Going to Collapse at the Same Time

The following video was published by Greg Hunter on May 29, 2016
Financial analyst Gregory Mannarino says, ‘ I am just waiting to see what they will do to prop this up further, or at least stop it from making a precipitous plunge. That is coming no matter what they do. The debt market here is on fire. It’s in big trouble here. Another alarm is the yield curve. The yield curve is flattening. . . . This is a bad, bad omen. . . . It’s a very ominous sign that something is lurking just beyond the horizon.’
In closing, Mannarino says, ‘We’ve never seen anything like this in world history. It’s unbelievable. It’s collective collusion between world central banks and their respective governments to inflate this global bubble in debt in an attempt to stimulate growth. It has not worked. It’s very simple. If they could have fixed it, they would have fixed it by now. They can’t do it. 2008 was the ‘party over’ moment. We are existing now in a terminal side effect. . . . It’s all going to collapse at the same time.’

It’s Official: Trump Has Enough Delegates To Win The Republican Nomination

The presumptive Republican presidential candidates is now the official Republican presidential candidate.
Moments ago, AP calculated that Donald Trump on Thursday reached the number of delegates needed to clinch the Republican nomination for president, completing an unlikely rise that has upended the political landscape and sets the stage for a bitter fall campaign.
Trump was put over the top in the Associated Press delegate count by a small number of the party’s unbound delegates who told the AP they would support him at the convention. Among them is Oklahoma GOP chairwoman Pam Pollard.
“I think he has touched a part of our electorate that doesn’t like where our country is,” Pollard said. “I have no problem supporting Mr. Trump.”
It takes 1,237 delegates to win the Republican nomination for president. Trump has reached 1,238. With 303 delegates at stake in five state primaries on June 7, Trump will easily pad his total, avoiding a contested convention in Cleveland in July.
As AP adds, “millions of grassroots activists, many who have been outsiders to the political process, have embraced Trump as a plain-speaking populist who is not afraid to offend.”
Steve House, chairman of the Colorado Republican Party and an unbound delegate who confirmed his support of Trump to AP, said he likes the billionaire’s background as a businessman. “Leadership is leadership,” House said. “If he can surround himself with the political talent, I think he will be fine.”

This post was published at Zero Hedge on 05/26/2016.

Wow. Congress wants to prohibit the Fed from bailing out bankrupt states.

Just days ago, in the midst of the Puerto Rico debt morass, 24 members of Congress introduced the ‘No Bailouts for State, Territory, and Local Governments Act.’
The title pretty much sums it up.
Congress knows there’s a massive wave of defaults looming at the city and state level.
Detroit and Puerto Rico are just the tip of the iceberg.
Aside from a few top performers like Alaska, South Dakota, and Wyoming (which, ironically, have no state income tax), many US states have atrocious finances.
Illinois and Maine, for example, have dangerously low levels of cash relative to the debts and obligations they have to pay.

This post was published at Sovereign Man on May 25, 2016.