• Category Archives Government
  • Full “Faith” And Credit

    Everyone knows that our ‘official’ US debt is around $20T on our ‘cash basis’ of accounting. When taking all our promised future payments into account and running them back to their present worth then the real US debt is around $80 to $120 T. Considering the total US GDP for an entire year is only $18.5T these numbers are pretty unpayable – EVER. Of course this means only one thing which is default. Sir Alan Greenspan said that we could never default in that we could just print up more dollars, however, printing more dollars and making them worth less is indeed another indirect form of default. The big question is exactly how much longer can this go on?
    The bonds of the US government are backed by the ‘full faith and credit of the government’. It is the ‘faith in government’ that I want to talk about in this article
    There are many reasons that drive the price of gold up in terms of dollars, however, the number one reason that will drive it much higher is loss of confidence or ‘faith’ in the government.
    Well how is ‘faith’ in government playing out in 2017? Let’s look at just a few highlights:
    CONGRESSIONAL APPROVAL RATINGS
    The US congress has 100 senators and 435 representatives. Each senator has a staff budget of between $2.5M to $4M depending on state population. Each representative has a staff budget of around $1M and has about 18 employees (plus interns and part timers). Of course committee staffers are on a separate budget. So in addition to our 535 elected representatives in congress there are 12,000+ staff members to assist them in their duties. Before the 1860’s, members of congress didn’t even have offices or staff and worked at their desks in the capitol. Small wonder their approval rating is around 3% now.

    This post was published at GoldSeek on Monday, 26 June 2017.


  • ‘Not Guilty’ Cop’s City Just Agreed To Pay Philando Castile’s Family $3 Million

    After the not guilty verdict in the manslaughter case against Jeronimo Yanez, the cop who fatally shot Philando Castile, the family of slain man was in pain for the justice they never received. But the cop who ‘didn’t do anything wrong’ has now been fired from the police force and the city of St. Anthony has reached a $3 million settlement with Castile’s family.
    The taxpayers are now on the hook for the police shooting of Philando Castile. As if stealing their money and using it to pay the salary of cops who snuff out the life of civilians isn’t enough, St. Anthony is making sure the taxpayers take the punishment for Yanez’s horrible lapse in judgment. Philando Castile’s family did deserve money, and they also deserved justice, but the cop who killed him should be responsible, not the taxpayers. Unfortunately, this is everything that’s wrong with the government in a nutshell.

    This post was published at The Daily Sheeple on June 26, 2017.


  • Revenge: Watch As Programmer Floods IRS Phone Scam Hotline With Thousands Of Calls

    You’ve no doubt received calls from luxury vacation hotlines, an Internal Revenue Service representative seeking money, and perhaps even gotten an email or two from a twice-removed, long-lost cousin who happens to be a Nigerian prince looking to park money in your bank account.
    With advancements in technology, scammers these days have been successful in separating their targets from millions of dollars by targeting thousands upon thousands of victims daily.
    One programmer decided enough is enough and found a novel way to fight back.
    After receiving a call from someone with a foreign access claiming to be an IRS agent collecting back taxes, the founder of the Project Mayhem Youtube channel decided that payback was in order. So, he wrote a short auto-dialing script designed to flood the scammers’ phone number with so many calls – 28 calls per second – that they were no longer able to make calls to potential victims, get voice mails or even receive calls from ‘marks’ trying to contact the company to pay their supposed debts.
    The results are hilarious, with the scammers getting so frustrated that they start cussing up a storm and admitting they are scammers.

    This post was published at shtfplan on June 26th, 2017.


  • The Death Of America’s “Common Man”

    America’s Common Man exists no more – gone and forgotten. Once he was lauded as the salt of the earth – our country’s embodiment of what made us special, of what made the great democratic experiment successful, of what made of the United States the magnetic pole for the world’s masses. Politicians paid their rhetorical respects, poets exalted him in paeans of praise, Aaron Copeland composed an ‘Fanfare to the Common Man’ suite. It was an honorable term, an affective shorthand for the Working Man, the Artisan and the Shopkeeper, the clerk. All now passed from our language and from our consciousness. Instead, we are offered the ‘hard working middle class people who pay their taxes, obey the law and worry about their children’s future.’ The linguistic dross of the hackneyed stump speech.
    Loss of the Common Man is not due to progressive economic realities and a naturally evolving political culture. More educated Americans are caught in the grip of long-term stagnation than ever before, they have less likelihood of social mobility than ever before, more have every reasonable expectation that their children will be worse off than they are, more are politically marginalized by a party system that serves up a restricted menu of options which effectively disenfranchises 25% or so of voters. The Common Man has lost the attention as well as the concern of the country’s elites. He has been marginalized in every respect but one – he is sovereign audience for a pop culture that provides a heady brew of distractions. In that realm of fantasy he reigns supreme while the serious action which shapes his life takes place elsewhere.
    Today, to call a person common is an insult, just as we have degraded the term working class. The connotations are heavily pejorative -they’re failures, they’re losers, they had the American Dream within reach but lacked the will and the spirit to grab it. It is natural, and just, that they should live out their lives on scant rations. It’s their own fault. This Victorian ethic grounded in Social Darwinism has now been restored as part of the national creed. Fitted out in the post-modern fancy dress of market fundamentalist economics, Ayn Randish homilies of narcissistic ego-mania, and a parade of revivalist Christian sects that mix New Age Salvation with balm for anxious egos, this beggar-thy-neighbor ideology dominates our public discourse. It has put on the back foot those who still adhere to the enlightened humanism which propelled progressive thinking and policy for a century.
    All this is no accident. Powerful interests have orchestrated a relentless campaign for more than forty years to reconfigure American life in accord with their reactionary aims and principles. This is now obvious to anyone who cares to look. The key questions are: why have so few cared to look, and why the ease with which the crusade has won converts, fellow travelers and the acquiescence of the country’s elites.

    This post was published at Zero Hedge on Jun 26, 2017.


  • Theresa May Strikes $1 Billion Governing Deal With Northern Irish Party

    UK Prime Minister Theresa May has struck a so-called confidence and supply deal with Northern Ireland’s Democratic Unionist Party, one which will give the Conservatives sufficient votes to pass the Queen’s Speech and the budget, while Northern Ireland will get an extra 1 billion over two years as a result of the deal.
    Together, the Conservatives and the DUP will have 327 MPs, representing a tiny but sufficient working majority in the 650-member House of Commons. The two parties however do not have a majority in the House of Lords the upper chamber, which plays a revising role on legislation.
    The deal was preannounced on Monday morning, and was finalized at Downing 10 around noon on Monday, just over two weeks after talks began following the June 8 election. Arlene Foster, the DUP leader, held talks with Theresa May from 10.30am. Photos showed Gavin Williamson, the Conservative chief whip, and Sir Jeffrey Donaldson, the DUP chief whip, signing copies of the agreement.

    This post was published at Zero Hedge on Jun 26, 2017.


  • “Technology Is Replacing Brains As Well As Brawn” – Challenging The ‘Official’ Automation Narrative (& Social Order)

    Academics and economists have repeatedly underestimated the impact that immigration and automation would have on the labor market. As data on productivity gains and labor-force participation clearly show, the notion that innovation ultimately creates jobs by allowing workers to focus on higher-level problems is an illusion. If it were true, then why aren’t we already seeing more of the 20 million prime-age men who have inexplicably dropped out of the labor force welcomed back in?
    ***
    As we’ve noted time and time again, after decimating American manufacturing jobs in the 1990s, automation is now coming for service-industry workers like those in the retail and food-service industries. Earlier this week, we shared an analysis from Cowen that showed new kiosks being adopted by McDonald’s will result in the destruction of 2,500 jobs at its US eateries. And now, Bloomberg has published a ‘quick take’ questioning this ‘official’ narrative and pointing out the very real carnage that service sector workers are already facing. In it, the reporters noted how economists have repeatedly misjudged how our capacity to innovate would impact the labor market. For example, 13 years ago, two leading economists published a paper arguing that artificial intelligence would never allow a driverless car to safely execute a left turn because there are too many variables at work. Six years after that, Google proved it could make cars fully autonomous, threatening the livelihood of millions of taxi and truck drivers. And now Google, Uber, Tesla and the big car manufacturers are all exploring and testing this technology. Ford has said it plans to introduce a fully autonomous car by 2021.

    This post was published at Zero Hedge on Jun 26, 2017.


  • First India Bans Cash, Now It’s Targeting Gold

    In November of last year, India banned certain cash notes in a bold move to force businesses into the banking system to better harvest more taxes from its livestock.
    Now, under the guise of ‘improving transparency’ and forming a ‘common market,’ India has begun targeting gold with new taxes, regulation, and incentives for citizens to turn over their undeclared gold to the financial sector.
    Roughly 86% of India’s economic activity happened in cash at the time much of it was banned. Presumably that includes the $19-billion-per-year retail gold industry. Again, it appears that India’s government (central bankers) wants a bigger cut of the action and to better track the private assets of citizens.
    Bloomberg has been reporting that India’s government is teaming up with crony gold dealers to plan a complete revamp of its gold policy – which is always code for ‘control, regulate and tax.’
    Bloomberg reports:

    This post was published at Zero Hedge on Jun 25, 2017.


  • Japan’s Bond Market Grinds To A Halt: “We’ll Go Days When No Bonds Trade Hands

    The Bank of Japan may or may not be tapering, but that may soon be moot because by the time Kuroda decides whether he will buy less bonds, the bond market may no longer work.
    As the Nikkei reports, while the Japanese central bank ponders its next step, the Japanese rates market has been getting “Ice-9ed” and increasingly paralyzed, as yields on newly issued 10-year Japanese government bonds remained flat for seven straight sessions through Friday while the BOJ continued its efforts to keep long-term interest rates around zero.
    The 10-year JGB yield again closed at 0.055%, where it has been stuck since June 15m and according to data from Nikkei affiliate QUICK, this marks the longest period of stagnation since 1994,

    This post was published at Zero Hedge on Jun 25, 2017.


  • Russia Said To Recall Ambassador At Center of Trump Controversy: Report

    According to BuzzFeed, which cites three anonymous sources, Russia is reportedly recalling Ambassador Sergey Kislyak, the man who dared to do his job and talk to US politicians and visible public figures, and who according to The Hill had “emerged as a focal point in the FBI probe into Russia’s election meddling.” While the Kremlin has not confirmed the report, BuzzFeed adds that Kislyak is scheduled to leave Washington next month, following a July 11 going-away party at the St. Regis Hotel, two blocks away from the White House.

    This post was published at Zero Hedge on Jun 25, 2017.


  • America’s Unfolding Pension Crisis

    News headlines are reporting daily on a pension crisis unfolding in the US. To understand how we got here, there are five major factors that led us to this point:
    Generous payouts Inadequate contributions Low interest rates Longer life spans Overly optimistic return assumptions Lawrence McQuillan detailed how all of these are converging together in one hot mess for America’s largest and most underfunded state when he wrote his must-read book, California Dreaming: Lessons on How to Resolve America’s Public Pension Crisis.
    As he said to us at the time, during a book interview with FS Insider, the money just isn’t there and now politicians are ‘scrambling’:

    This post was published at FinancialSense on 06/23/2017.


  • Italian Taxpayers To Foot 17 Billion Bill As Rome Bails Out Another Two Insolvent Banks

    Two weeks after the first, and biggest, European bank bail-in took place under the relatively new European bank resolution mechanism, the EBRD, when Spain’s Banco Popular wiped out the holders of its most risky securities, including equity and AT bonds, and then selling what was left of the bank to Santander for 1 – a process that took place without a glitch – Italy may have just killed any hope of a European banking union, when the bailout of two small banks made a “mockery” of Europe’s new regulation.
    Late on Sunday, Italy passed a decree that will effectively sell the good part of the two banks to Intesa, Italy’s second-largest and best-capitalized bank. Intesa said last week that it would be willing to buy the best assets for a token price of 1 as long as the government assumed responsibility for liquidating the banks’ large portfolio of sour loans. As a result, Italy said it would commit as much as 17 billion in taxpayer funds to clean up the two failed “Veneto” banks in one of Italy’s wealthiest regions and support the takeover of their good assets by Intesa Sanpaolo SpA for a token amount. After an emergency cabinet meeting on Sunday, Finance Minister Pier Carlo Padoan said the Italian government will provide Milan-based Intesa with about 5.2 billion euros to allow it to take on Banca Popolare di Vicenza SpA and Veneto Banca SpA assets without hurting capital ratios, The European Commission, in a separate statement, said it approved the plan for the two banks and that it is in-line with state-aid rules.
    Unlike the Banco Popular bail-in by Santander, however, Intesa would only take on the good assets. PM Gentiloni said the lenders will be split into good and bad banks and that the firms, with taxpayers on the hook for the bad banks. The process was rushed to allow the failed banks to reopen on Monday and avoid a depositor panic and bank run. The intervention is necessary because depositors and savers were at risk, Gentiloni said. The northern region where they operate ‘is one of the most important for our economy, above all for small- and medium-size businesses.’

    This post was published at Zero Hedge on Jun 25, 2017.


  • Total Return With Floating Rate Bonds

    News headlines are reporting daily on a pension crisis unfolding in the US. To understand how we got here, there are five major factors that led us to this point:
    Generous payouts Inadequate contributions Low interest rates Longer life spans Overly optimistic return assumptions Lawrence McQuillan detailed how all of these are converging together in one hot mess for America’s largest and most underfunded state when he wrote his must-read book, California Dreaming: Lessons on How to Resolve America’s Public Pension Crisis.
    As he said to us at the time, during a book interview with FS Insider, the money just isn’t there and now politicians are ‘scrambling’:

    This post was published at FinancialSense on 06/23/2017.


  • Get Ready For “QT1”: A First Look At The Fed’s Hidden Policy

    The Federal Reserve is now setting out on a new path for quantitative tightening (QT) after nine years of unconventional quantitative (QE) easing policy. It is the evil twin of QE which was used to ease monetary conditions when interest rates were already zero.
    First, it is important to examine QE and QT in a broader context of the Fed’s overall policy toolkit. Understanding the many tools the Fed has, which of them they’re using and what the impacts are will allow you to distinguish between what the Fed thinks versus what actually happens.
    We have a heavily manipulated system. For years, if not decades, monetary policy has been flipping back and forth between how the economy actually works and what the Fed believes works.
    QE was a policy of printing money by buying securities from primary dealers and to ease monetary conditions when interest rates were at zero. QT takes a different approach.
    In QT, the Fed will ‘sell’ securities to the primary dealers, take the money, and make it disappear. This is an attempt to ultimately reduce the money supply and implement a policy of tightening money.
    There’s a bit of a twist to that selling. Today the Fed’s balance sheet stands at $4.5 trillion. It started at $800 billion in 2008 and has increased over five times that since the crisis. Now they’re going to try to get the balance sheet back to normal levels.

    This post was published at Zero Hedge on Jun 25, 2017.


  • Perfect Storm 2.0 – Will The Auto Industry Ever Be The Same Again?

    To better understand why the automotive industry is in the middle of a perfect storm, first go back and consider the also perfect set of events that led to a robust recovery and a record setting 2016 sales year.
    Our Last Recession
    In 2009, the automotive industry faced a great challenge. New light vehicle sales dropped to 10.4 million, GM and Chrysler went through bankruptcy reorganizations, retail dealers closed and many folks lost their jobs. The US government felt the need to act in order to support the very vital automotive industry (3% of GDP & 10% of manufacturing). The Fed also stepped in to help stimulate the overall economy by reducing interest rates.
    Consumer Purchasing Power
    For the purpose of this piece, the central focus will be placed on the purchasing power of the consumer. With no bottom in sight for falling new vehicle sales, our government attempted to stimulate demand by approving the 3 billion dollar Cash for Clunkers program beginning on July 1, 2009. Consumers received as much as $4,500 for trade vehicles that qualified for ‘clunker’ status. The trade value of $4,500 represented a $75-$90 reduction in monthly payment on a 60 month loan assuming good credit. The program would run until a specific end date or until the total approved funds ran out. Consumers responded very well to the stimulus and sales spiked sharp for a brief period till the program ended on August 24, 2009. This program also had an impact on the supply of used vehicles since all qualifying trades were destroyed as part of the transaction.


    This post was published at Zero Hedge on Jun 25, 2017.


  • Mad Hawk Disease Strikes Federal Reserve

    ‘A serious writer may be a hawk or a buzzard or even a popinjay, but a solemn writer is always a bloody owl.’
    – Ernest Hemingway
    ***
    Welcome to the new, improved, faster-to-read, better yet still-free Thoughts from the Frontline. My team and I have been doing a lot of research on what my readers want. The reality is that my newsletter writing has experienced a sort of ‘mission creep’ over the years. Bluntly, the letter is just a lot longer today than it was five or ten years ago. And when I’m out talking to readers and friends, especially those who give me their honest opinions, many tell me it’s just too much. There are some of you who love the length and wish it were even longer, but you are not the majority. Not even close. We all have time constraints, and I wish to honor those. So I am going to cut my letter back to its former size, which was about 50% of the length of more recent letters. (Note: this paragraph is going to open the letter for the next month or so, since not everybody clicks on every letter. Sigh. Surveys showed us it’s not because you don’t love me but because of demands on your time. I want you to understand that I get it.) Now to your letter…
    Longtime readers know I am not the Federal Reserve’s #1 fan. I can’t recall ever resting easy, confident that the Fed was ably looking out for our economy and banking system. However, I have experienced varying degrees of skepticism and distrust. I must also acknowledge that we are all still here despite the Fed’s many mistakes.
    Once or twice a year the Fed rekindles my frustration and concern with a particularly boneheaded statement or policy change. Last summer, the Fed’s annual Jackson Hole Economic Policy Symposium outraged and saddened me at the same time – which, given my emotional makeup, is quite an accomplishment. I shared my rage with readers in ‘Monetary Mountain Madness.’ Feel free to read it again if you enjoy a good rant. I would have been even more depressed if I had known that one of the academic presenters there, Marvin Goodfriend of Carnegie Mellon University, an unabashed cheerleader for NIRP, would appear on the short list of candidates for Donald Trump’s first two appointments to the Fed.
    Goodfriend is nominally a monetarist, but he doesn’t quack or waddle like any monetarist I know. The session that he presented was entitled ‘Negative Nominal Interest Rates.’ In the first paragraph of the first section of his paper, he says that ‘[M]y current paper makes the case for unencumbering interest rate policy so that negative nominal interest rates can be made freely available and fully effective as a realistic policy option in a future crisis.’

    This post was published at Mauldin Economics on JUNE 25, 2017.


  • Britain on the Edge of Collapse?

    So far, Prime Minister Theresa May has been unable to form a majority government. She is now officially on the clock and being unable to strike a deal means her government will fall apart. Negotiations with the Democratic Unionist Party, a far-right Northern Irish outfit whose support seems necessary for her to win the vote, have not gone well.

    This post was published at Armstrong Economics on Jun 25, 2017.


  • Gold Summer Doldrums

    Gold has spent most of June grinding lower on balance, damaging sentiment and vexing traders. Usual selling leading into the Fed’s latest rate hike contributed, but the summer doldrums are also in play. Gold has typically suffered a seasonal lull this time of year, on waning investment demand as vacations divert attention from markets. But these summer doldrums offer the best seasonal buying opportunities of the year.
    This doldrums term is very apt for gold’s summer predicament. It describes a zone in the world’s oceans surrounding the equator. There hot air is constantly rising, creating long-lived low-pressure areas. They are often calm, with little or no prevailing winds. History is full of accounts of sailing ships getting trapped in this zone for days or even weeks, unable to make any headway. The doldrums were murder on ships’ morale.
    Crews had no idea when the winds would pick up again, while they continued burning through their precious stores of food and drink. Without moving air, the stifling heat and humidity were suffocating on these ships long before air conditioning. Misery and boredom were extreme, leading to fights breaking out and occasional mutinies. Being trapped in the doldrums was viewed with dread, it was a very trying experience.
    Gold investors can somewhat relate. Like clockwork nearly every summer, gold starts drifting listlessly sideways. It often can’t make significant progress no matter what the trends looked like heading into June, July, and August. As the days and weeks slowly pass, sentiment deteriorates markedly. Patience is gradually exhausted, supplanted with deep frustration. Plenty of traders capitulate, abandoning ship.

    This post was published at ZEAL LLC on June 23, 2017.


  • The Unlisted Dead! ECB Deemed Veneto Banca and Banca Popolare di Vicenza Failing or Likely to Fail

    This is a syndicated repost courtesy of Confounded Interest. To view original, click here. Reposted with permission.
    Two Italian banks, Veneto Banca and Banca (Un)Popolare di Vicenza, have shut down due to lack of capital. Both bank’s stocks are unlisted.
    On 23 June, the European Central Bank (ECB) determined that Veneto Banca S.p. A. and Banca Popolare di Vicenza S.p. A. were failing or likely to fail as the two banks repeatedly breached supervisory capital requirements. The determination was made in accordance with Articles 18(1a) and 18(4a) of the Single Resolution Mechanism Regulation.
    The ECB had given the banks time to present capital plans, but the banks had been unable to offer credible solutions going forward.
    Consequently, the ECB deemed that both banks were failing or likely to fail and duly informed the Single Resolution Board (SRB), which concluded that the conditions for a resolution action in relation to the two banks had not been met. The banks will be wound up under Italian insolvency procedures.

    This post was published at Wall Street Examiner by Anthony B Sanders ‘ June 24, 2017.


  • The EU’s Greatest Achievements, According To Europeans

    A year on from the UK’s Brexit referendum, Prime Minister Theresa May is set to visit Brussels today and outline her government’s negotiating position on the future rights of EU citizens living in the UK.
    As Statista’s Niall McCarthy notes, a recently released Chatham House-Kantar survey found that freedom to live and work across the EU is considered one of the EU’s top three triumphs by its citizens.
    When polled about the EU’s greatest achievements to date, 29 percent of people in the UK said there were none, along with 17 percent in nine other countries.

    This post was published at Zero Hedge on Jun 24, 2017.


  • An Open Letter To The Fed’s William Dudley

    Authored by MN Gordon via EconomicPrism.com,
    Dear Mr. Dudley,
    Your recent remarks in the wake of last week’s FOMC statement were notably unhelpful.
    In particular, your excuses for further rate hikes to prevent crashing unemployment and rising inflation stunk of rotten eggs.
    Crashing Unemployment
    Quite frankly, crashing unemployment is a construct that’s new to popular economic discourse, and a suspect one at that.
    Years ago, prior to the nirvana of globalization, the potential for wage inflation stemming from full employment was the going concern. Now that the official unemployment rate’s just 4.3 percent, and wages are still down in the dumps, it appears the Fed has fabricated a new bugaboo to rally around. What to make of it?
    For starters, the Fed’s unconventional monetary policy has successfully pushed the financial order completely out of the economy’s orbit. The once impossible is now commonplace.

    This post was published at Zero Hedge on Jun 24, 2017.