The Corrupt Origins of Central Banking

Central banking has been a corrupt, mercantilist scheme and an engine of corporate welfare from its very beginning in the late 18th century. The first central bank, the Bank of North America, was “driven through the Continental Congress by [congressman and financier] Robert Morris in the Spring of 1781,” wrote Murray Rothbard in The Mystery of Banking (p. 191). The Philadelphia businessman Morris had been a defense contractor during the Revolutionary War who “siphoned off millions from the public treasury into contracts to his own … firm and to those of his associates.” He was also “leader of the powerful Nationalist forces” in the new country.
The main objective of the Nationalists, who were also known as Federalists, was essentially to establish an American version of the British mercantilist system, the very system that the Revolution had been fought against. Indeed, it was this system that the ancestors of the Revolutionaries had fled from when they came to America. As Rothbard explained, their aim was
To reimpose in the new United States a system of mercantilism and big government similar to that in Great Britain, against which the colonists had rebelled. The object was to have a strong central government, particularly a strong president or king as chief executive, built up by high taxes and heavy public debt. The strong government was to impose high tariffs to subsidize domestic manufacturers, develop a big navy to open up and subsidize foreign markets for American exports, and launch a massive system of internal public works. In short, the United States was to have a British system without Great Britain. (p. 192)

This post was published at Ludwig von Mises Institute on Dec 4, 2017.

San Diego Continues Desperate Attempt To Control Hepatitis A Outbreak

San Diego is desperately trying to control a Hepatitis A outbreak brought on by the homeless problem plaguing the state of California. The city has now opened the first of three giant tents meant to contain the outbreak of the deadly virus.
The first of three industrial-sized tents to house the homeless as part of the city’s efforts to contain a hepatitis A outbreak. The outbreak itself stems from the deplorable conditions people were living in on the streets – mainly, the fecal matter that is left from those who live on the street. Of course, the government isn’t going to climb off the backs of their residents in California, instead, they will continue to raise taxes and create more homeless people while desperately and frantically trying to stop the problems that their overbearing government has caused.
About 20 people made their way to a bunk bed Friday in the tent that will house 350 single men and women. Two other giant tents will open later this month – one specifically for families and one for veterans. The tents will house a total of 700 people with an attempt to keep them from defecating on the street and spreading the Hepatitis A virus.
More than 3000 people are homeless in San Diego, and risk contracting the disease which has killed 20 people so far. The city had to divert $6.5 million budgeted for permanent housing to fund the operation of the tents for seven months. The tents will provide an array of services from mental health care to housing navigators. But the city still faces an acute housing shortage for the poor. Faulconer has earmarked more than $80 million in stolen (taxpayer) funds to address the problem. So the city wants to fix poverty by taking more from earners and creating more poverty. Bravo, California.

This post was published at shtfplan on December 4th, 2017.

UBS Unveils Its Top 5 Themes And 19 Trades For 2018

Coming in a little late to the game, UBS today released its top 5 themes and 19 trades for 2018. Not surprising from the bank whose base case S&P forecast is 2,900 one year from now (with potential upside to 3,200), and who just told CNBC that “valuations are still somewhat cheap”, the bank is optimistic, if not “rationally euphoric” and writes that it all boils down to one question: will the Kool-Aid party continue, or “will underlying macro shifts reveal fragilities in asset valuations” and more specifically, will the yield curve invert. To wit:
The key macro issue for investors in 2017 was the likelihood of “global reflation” and its form. At the time, we urged investors to invest in growth, but fade expectations of higher inflation. In 2018, the pivotal question is: Is there macro room for markets to grow, or will underlying macro shifts reveal fragilities in asset valuations? And before UBS clients get nervouse by this rhetorical question, the bank adds that it thinks “yes there is room to grow”, and “we remain broadly constructive risk assets.”
Solid growth, relatively low core inflation, and easy financial conditions imply a continuation of the low vol regime that has supported risk assets (Figures 1 & 2). Although many are concerned about the rise in P/Es, we have shown that high P/Es amid lower growth are a rational reflection of the low risk-free rate regime, not a source for concern. Although we remain constructive equities, given some potential slowing in global growth momentum, we see 10% returns as more likely in 2018 than a repeat of 2017’s nearly 20% return.

This post was published at Zero Hedge on Dec 4, 2017.

Heartache Tonight! Bank C&I Lending Falls To 1.2% YoY (Auto Loans Fall To 2.1% YoY, Real Estate Loans Fall To 5.1% YoY)

We’ve got a heartache tonight … in terms of bank lending. Particularly commercial and industrial lending (C&I) and auto loans. Particularly since bank lending is the primary transmission vehicle for Federal Reserve policies.
C&I lending growth fell to 1.2% YoY, which has historically meant that a recession is close at hand.

This post was published at Wall Street Examiner on December 4, 2017.

This Time Is Different, It Just Ends The Same

This past weekend, I was in Florida with Chris Martenson and Nomi Prins discussing the current backdrop of the markets, economic cycles, and future outcomes. A bulk of the conversations centered around the current ‘everything bubble’ that currently exists globally. Elevated valuations in stock prices, extremely low yields between in ‘junk bonds,’ or intense speculation around ‘cryptocurrencies’ all suggest we have entered once again into ‘bubble’ territory.’
Let me state this:
‘Market bubbles have NOTHING to do with valuations or fundamentals.’
Hold on…don’t start screaming ‘heretic’ and building gallows just yet. Let me explain.
Stock market bubbles are driven by speculation, greed, and emotional biases – therefore valuations and fundamentals are simply a reflection of those emotions.
In other words, bubbles can exist even at times when valuations and fundamentals might argue otherwise. Let me show you a very basic example of what I mean. The chart below is the long-term valuation of the S&P 500 going back to 1871.

This post was published at Zero Hedge on Dec 4, 2017.

How Passing the Senate’s Tax Bill Could Lead to a Record High for the Dow Jones Today

This is a syndicated repost courtesy of Money Morning – We Make Investing Profitable. To view original, click here. Reposted with permission.
Investors are optimistic about the Dow Jones today following the Senate’s passage of the largest overhaul of the American tax code in 30 years.
Dow Futures are up 246 points this morning after every Republican senator except for Bob Corker, of Tennessee, voted in favor of the reform bill. But not every investor is optimistic. Here’s the truth about the Senate’s tax bill you can’t afford to miss…
Here are the numbers from Friday for the Dow, S&P 500, and Nasdaq:
Index Previous Close Point Change Percentage Change Dow Jones 24231.59 -40.76 -0.17% S&P 500 2642.22 -5.36 -0.20% Nasdaq 6847.59 -26.39 -0.38%

This post was published at Wall Street Examiner by Garrett Baldwin ‘ December 4, 2017.

Anti-Trump FBI Agent Changed Language Of Hillary Email Scandal From “Grossly Negligent” To “Extremely Careless”

Over the weekend we noted that Special Counsel Robert Mueller’s top FBI investigator into ‘Russian meddling’, agent Peter Strzok, was removed from the probe due to the discovery of anti-Trump text messages exchanged with a colleague (a colleague whom he also happened to be having an extra-marital affair with).
Not surprisingly, the discovery prompted a visceral response from Trump via Twitter:
Tainted (no, very dishonest?) FBI ‘agent’s role in Clinton probe under review.’ Led Clinton Email probe. @foxandfriends Clinton money going to wife of another FBI agent in charge.
— Donald J. Trump (@realDonaldTrump) December 3, 2017

This post was published at Zero Hedge on Dec 4, 2017.

Trump Tax Plan Greatest Gift Establishment Ever Got

As soon as President Trump put his Goldman boys, Gary Cohn and Steven Mnuchin, in charge of his tax plan, I knew Trump’s tax plan would never fulfill his and his henchmen’s promises of helping the middle class and of not giving additional tax breaks to the rich. The Trump Tax plan, as it now exists, proves those conjoined promises to be the greatest lie Trump ever told.
After two decades with Goldman Sachs, Munchkin (as he shall hereinafter be known for he lives on the Goldman-bricked road) bought his own bank, IndyMac. He renamed it OneWest and turned it into a mega repo machine in 2009, whirring out hyuuge amounts of crash cash during the Great Recession. His revamped bank set a speed record for putting homeowners out on the street, foreclosing one home every thirty seconds. A vice president of OneWest even admitted in court she shortened her signature so that she could spend less than thirty seconds processing each foreclosure. As a result of this rush to foreclose, the court found the bank had frequently mishandled documents because it did not even read many of them before foreclosing.
Munchkin’s grim reaper of a bank closed its greedy grip on a whopping 35,000 homes during the Great Recession. The bank was even so unscrupulous as to instruct homeowners to stop making payments, ostensibly because it was going to modify the loans, but in reality in order to purify its argument for repossession. (For more on the Munchkin’s greed, read ‘U. S. Treasury Becomes a Laughing Stock.’)

This post was published at GoldSeek on 4 December 2017.

US Factory Orders Slide In October

Following the dismally weak preliminary durable goods orders drop (-1.2% MoM) as aircraft orders tumbled, October Factory Orders declined but were better-than-expected (-0.1% vs -0.4% exp) after an upwardly revised September (up from +1.4% to +1.7% MoM).
Overall Durable Goods orders werre also revised higher from their preliminary prints. Most notably, core capital goods orders were revised from a 0.5% MoM slump to a 0.3% gain.

This post was published at Zero Hedge on Dec 4, 2017.

The U.S. Government Creates and Exacerbates the Nuclear Threat

The whole situation is a ‘Catch 22’ scenario: damned if you do, and damned if you don’t. The problem: we’re American citizens and this is our country. The concurrent problem? It is our country that caused this predicament to occur with North Korea…in a pattern of American imperialism that has been going on actively for about a hundred years. The problem is twofold:
1. North Korea can strike the U. S. with an EMP (Electromagnetic Pulse) attack and/or nuclear missiles, yet:
2. The United States government, through the current and prior two administrations has set the stage for this…as either:
A purposefully-created ‘threat’ to give America a ‘bogeyman’/Emmanuel Goldstein to focus on in a ‘Two-Minutes Hate’ drill…keep the ‘threat level’ alive, or A threat of insignificance grown and nurtured for the express purpose of taking down the country…while reaping profits and power for the oligarchy all along. There is an American oligarchy. The oligarchy is not only made up of business and industrial magnates, but of politicos and religious leaders. The business magnates need the lawmakers and politicos to give them ‘carte blanche’ with tax breaks and incentives such as government contracts. The system needs the general populace (or the ‘proletariat’) to pay taxes and ‘grunt’ out spending on consumer goods and services that keeps the whole thing intact. As in the movie ‘THX-1138,’ there must be periods to pay the utilities, pay for the food, pay taxes on gasoline, taxes on property, taxes on consumer goods, yearly tax increases, and insurances…health, automobile, homeowner…required insurances…

This post was published at shtfplan on December 4th, 2017.

Key Events In The Coming Week: Jobs, Brexit, PMI, IP And More

The first full week of December is shaping up as rather busy, with such Tier 1 data in the US as the payrolls report, durable goods orders and trade balance. We also get UK PMI data and GDP, retail sales across the Euro Area, as well as central bank meetings including Australia RBA and BoC monetary policy meeting.
Key events per RanSquawk
Monday: UK PM May To Meet EU’s Juncker & Barnier Tuesday: UK Services PMI (Nov), RBA MonPol Decision Wednesday: BoC MonPol Decision, Australian GDP (Q3) Friday: US Payrolls Report (Nov), Japan GDP (Q3, 2nd) The week’s main event takes place on Friday with the release of November’s US labour market report. Consensus looks for the headline nonfarm payrolls to show an addition of 188K jobs, slowing from October’s 261K. Average hourly earnings growth is expected to slow to 0.3% M/M from 0.5%, while the unemployment rate and average hours worked are expected to hold steady at 4.1% and 34.4 respectively. Hurricane induced volatility should be absent from the November release, and consensus points to a headline print much more in-keeping with trend rate.
Other key data releases next week include the remaining October services and composite PMIs on Tuesday in Asia, Europe and the US, ISM non-manufacturing in the US on Tuesday, ADP employment report on Wednesday and China trade data on Friday.
Focus will also fall on Wednesday’s Bank of Canada (BoC) interest rate decision, with the majority looking for the Bank to leave its key interest rate unchanged at 1.00%, although 3 of the 31 surveyed by Reuters are looking for a 25bps hike. Following the BoC’s back-to-back rate hikes in Q3, interest rate markets were pricing in a 40-50% chance of a hike at the upcoming decision, that has now pared back to 25% as the BoC has sounded more cautious in recent addresses, highlighting that it expected the economy to slow (GDP growth moderated to 1.7% in Q3 on a Q/Q annualised basis, from 4.3% in Q2) while stressing that it remains data dependant. RBC highlights that ‘the BoC has been focused on the consumer’s reaction to the earlier hikes and is content to wait-and-see for the moment. Wage growth – another key metric for the central bank – has improved in recent employment reports (reaching the highest level of growth since April 2016 in November’s report). Despite its softer tone, the BoC continues to stress that ‘less monetary stimulus will likely be required over time’ and as a result the statement will be scoured for any changes in tone. At the time of writing, markets are pricing a 57.2% chance of a 25bps hike in January, with such a move 91.0% priced by the end of March.

This post was published at Zero Hedge on Dec 4, 2017.

BIS Issues An Alert: Tightening “Paradoxically” Leading To Excessive Risk Taking; Reminds What Happened Last Time

Valuations in asset markets are ‘frothy’ and investors are basking in the ‘light and warmth’ of the ‘Goldilocks economy’, believing that nothing can upset a future of ‘sustained growth and low interest rates’. We observe a heavy dose sarcasm from the media briefing coinciding with the Bank for International Settlements’ (BIS) latest quarterly review. Specifically, we wonder why is it always the BIS which warns its central bank members and investors about the risk of an approaching financial crisis…and why do most of them never listen. We’re not sure, but here we go again, with the BIS warning that conditions are similar to those before the crisis.
As The Guardian reports:
Investors are ignoring warning signs that financial markets could be overheating and consumer debts are rising to unsustainable levels, the global body for central banks has warned in its quarterly financial health check. The Bank for International Settlements (BIS) said the situation in the global economy was similar to the pre-2008 crash era when investors, seeking high returns, borrowed heavily to invest in risky assets, despite moves by central banks to tighten access to credit. The BIS was one of the few organisations to warn during 2006 and 2007 about the unstable levels of bank lending on risky assets such as the US subprime mortgages that eventually led to the Lehman Brothers crash and the financial crisis.

This post was published at Zero Hedge on Dec 4, 2017.

The Fed Might ‘Surprise’ Markets with its Hawkishness in 2018

The tax cuts and ‘elevated asset prices.’ Another rate hike is baked in for the Fed’s meeting next week, which will lift the target for the federal funds rate to a range between 1.25% and 1.50%. ‘A majority’ of economists now expect three rate hikes in 2018, up from two rate hikes just a few weeks ago, Reuters said this morning, based on its poll conducted just before the Senate passed the tax cuts.
The tax cuts are making economists rethink what the Fed will do next year. According to Reuters, ‘the forecast risks have shifted toward higher rates, and faster.’
But are expectations still too low? Could an increasingly hawkish Fed surprise the markets with more rate hikes?
The three rate hikes next year that economists are now expecting just put them in line with the Fed’s own projections, published well before the tax cuts had become a sure thing.

This post was published at Wolf Street on Dec 4, 2017.

Cable Soars After UK, Ireland Agree On Brexit Border Deal

As several sellside desks have summarized, today will be a binary one for GBP: either deal or no deal. And following an early swoon in cable after speculation rose that a deal would be elusive, the pound soared above 1.35 following a report that EU chief brexit negotiator Barnier told MEPs that a breakthrough is likely today. This was confirmed moments ago by the FT which said that “Britain is heading for a breakthrough on Brexit talks after reaching a compromise with Ireland on the border between the Republic and Northern Ireland, the issue that threatened to derail the negotiations.”
The draft refers to maintaining ‘regulatory alignment’ between Northern Ireland and the Republic after Brexit – a form of words that, according to a senior official involved in the talks, appears to meet Dublin’s deep concerns about a possible hard border on the island and has not raised objections in London. The wording is more comfortable for Britain than previous draft formulations that insisted on ‘no regulatory divergence’.
The BBC confirmed as much after its political editor Laure Kuenssberg said that ‘May and Juncker about to appear together – with a deal seeming to be on the table.”

This post was published at Zero Hedge on Dec 4, 2017.

Fed Chair Janet Yellen Urges Congress to Monitor U.S. Debt As She Steps Down (NOW A Warning??)

This is a syndicated repost courtesy of Snake Hole Lounge. To view original, click here. Reposted with permission.
Federal Reserve Chair Janet Yellen’s final speech to Congress (Joint Economic Commitee) reminded me of the scene in the movie Death Becomes Her where Meryl Streep swallows a magic potion and Isabella Rosselini then says ‘Now a warning.’
Yes, Yellen warned Congress that they should monitor the US debt load, now at $20.6 trillion, up from $9.5 trillion in Q2 2008. She also called on Congress to adopt policies that will promote investment, education and infrastructure spending.
Yes, US public debt outstanding has more than doubled since Team Bernanke/Yellen began quantitative easing (QE) back in September 2008.

This post was published at Wall Street Examiner on December 4, 2017.

Time Reveals Its “Person Of The Year” Finalists

Time Magazine has released its list of finalists for 2017’s “Person of the Year” issue – and what a list it is.
After Trump criticized Time for informing him that he was in the running to win “Person of the Year” for the second year in a row – an honor last achieved by former President Richard Nixon, who was named man of the year in 1972 and 1973 – it appears Trump was right once again: He is one of 10 contenders for the honor released to MSNBC – even though editors at Time claimed the phone call never happened (though how else would Trump have known he was in the running, other than a lucky guess?).
The other names on the list are: Amazon CEO and world’s richest man Jeff Bezos, the #MeToo movement, Kim Jong Un, Xi Jinping, Crown Prince Mohammed Bin Salman, Colin Kaepernick, the dreamers, Robert Mueller and Patty Jenkins (Jenkins directed the Hollywood blockbuster “Wonder Woman”).
Of the names on this year’s list, only Trump and Bezos have won the honor before (Bezos won it in 1999 at the height of the tech bubble.

This post was published at Zero Hedge on Dec 4, 2017.

Plunder Capitalism

I deplore the tax cut that has passed Congress. It is not an economic policy tax cut, and it has nothing whatsoever to do with supply-side economics. The entire purpose is to raise equity prices by providing equity owners with more capital gains and dividends. In other words, it is legislation that makes equity owners richer, thus further polarizing society into a vast arena of poverty and near-poverty and the One Percent, or more precisely a fraction of the One Percent wallowing in billions of dollars. Unless our rulers can continue to control the explanations, the tax cut edges us closer to revolution resulting from complete distrust of government.
The current tax legislation drops the corporate tax rate to 20%. This means that global corporations registered in the US will be taxed at a lower income tax rate than a licensed practical nurse making $50,000 per year. The nurse, if single, faces in 2017 a 25% marginal tax rate on all income over $37,950.
A single person is taxed at a rate of 33% on all income above $191,651. 33% was the top tax rate extracted from medieval serfs, and approaches the tax rate on US 19th century slaves. Such an upper middle class income as $191,651 sounds extraordinary to most Americans, but it is so far from the multi-million dollar annual incomes of the rich as to be invisible. In America, it is the shrinking middle and upper middle class incomes that bear the burden of income taxation. The rich with their capital gains from their equity holdings are taxed at 15%.

This post was published at Paul Craig Roberts on December 4, 2017.

Tax Deal Sends US Futures Soaring To New All Time High; Dollar, Yields, Global Stocks Follow

The dollar jumped the most in two weeks, pushing Treasury yields as much as 6bps higher (before easing back) with US equity indexes primed for a another record-setting day after Senate Republicans approved a reduction in the corporate tax rate as part of a sweeping overhaul, giving a boost to President Donald Trump’s stimulus plans. The key market catalyst was the US Senate passing the tax reform bill through a vote of 51 vs 49 just before 2am on Saturday morning. This now pushes the bill to the next phase in which the House and Senate will have to reconcile their 2 bills, while the House is said to vote on Monday night for motion to go to conference on tax bill reconciliation.

This post was published at Zero Hedge on Dec 4, 2017.