• Tag Archives Law
  • London Bans Uber; Company Vows Court Challenge

    In a stunning blow to the world’s most valuable private company (purportedly worth some $70 billion), London’s taxi and livery car regulator has said it won’t renew Uber’s operating license once it expires at the end of the month. The regulator said Uber “is not fit and proper to hold a private hire operator license.”
    “TfL considers that Uber’s approach and conduct demonstrates a lack of corporate responsibilit in relation to a number of issues which have potential public safety and security implications. These include: It’s approach to reporting seriouis criminal offences. It’s approach to how medical certificates are obtained. It’s approach to how Enhanced Disclosure and Barring Service (DBS) checks are obtained. It’s approach to explaining the use of Greyball in London, software that could be used to block regulatory bodies from gianing full access to the app and prevent officials from undertaking regulatory or law enforcement duties.”

    This post was published at Zero Hedge on Sep 22, 2017.


  • A Look At How Nestle Makes Billions Selling You Groundwater In A Bottle

    A few weeks ago we shared with readers a lawsuit filed in Connecticut against Nestle Waters North America, Inc. alleging that the water they marketed as Poland ‘Natural Spring Water’ was actually just bottled groundwater…the same water that runs through the taps of many American households.
    Now a new investigation from Bloomberg Businessweek reveals how large water bottling companies choose their plant locations based not on the steady supply of pristine, natural drinking water, as their labels and other marketing campaigns would lead you to believe, but based on which economically depressed municipalities offer up the most tax breaks and have the most lax water laws.
    As an example, even in the drought stricken state of California, Bloomberg notes that Nestle was able to strike a sweetheart 20-year supply agreement with the U. S. Forest Service to pay roughly $0.000001 for the water in each bottle that consumers blindly drop a couple bucks to purchase.

    This post was published at Zero Hedge on Sep 21, 2017.


  • How Did Toys “R” Us Implode So Fast? The CEO Explains

    Reviewing first day motions from a company’s chapter 11 docket, and more specifically the CEO’s declaration, can be a great way to learn exactly what happened in the days/weeks leading up to a bankruptcy filing. The company spends millions of dollars every month on expensive lawyers (Kirkland & Ellis in the case of Toys “R” Us), investment bankers (Lazard), turnaround advisors (Alvarez & Marsal), claims administrators, etc., who all spend many sleepless nights in the days leading up to a filing trying to make sure the first day motions are as informative as possible.
    With those high expectations, you can imagine our surprise when we opened the Toys “R” Us CEO’s declaration to find this “preliminary statement”:

    Yes, Kirkland & Ellis was paid $800 an hour (ish) to type up the Toys “R” Us jingle in a court filing. Bravo!

    This post was published at Zero Hedge on Sep 20, 2017.


  • How Many of 2017’s Retail Bankruptcies Were Caused by Private-Equity’s Greed?

    According to S&P Global Market Intelligence, there have been 35 retail bankruptcies this year, almost double the 18 retail bankruptcies of last year. The filing by Toys ‘R’ Us this week was the latest.
    What many of these retailers have in common is that they were taken private in leveraged buyouts (LBOs) by private equity (PE) firms. Toys ‘R’ Us, Payless ShoeSource, The Limited, Wet Seal, Gymboree Corp., rue21, and True Religion Apparel were all LBOs. Gander Mountain can also be included in this list if you reach back to its 1984 LBO. Far too many LBOs are simply asset stripping operations by Wall Street vultures who load the company with enormous debt, then asset strip the cash from the company by paying themselves obscene special dividends and management fees.
    On June 12 of this year, the official committee of unsecured creditors to Payless, consisting primarily of Payless stores’ landlords and vendors, alleged in a filing in U. S. bankruptcy court that the private equity firms involved in the Payless LBO in 2012, Golden Gate Capital and Blum Capital, had ‘siphoned over $400 million out of Payless. Lawyers for the unsecured creditors wrote the following in their objection:
    ‘The Sponsor Group [Golden Gate Capital and Blum Capital] acquired the Debtors [Payless, et al] in October 2012 through a leveraged buyout (the ‘2012 LBO’) which increased the Debtors’ debt from approximately $125 million as of the fiscal year end immediately prior to the leveraged buyout to approximately $400 million. After the 2012 LBO, the Sponsor group siphoned over $400 million out of the Debtors…

    This post was published at Wall Street On Parade on September 20, 2017.


  • Toys ‘R’ Us Melts Down, Files for Bankruptcy, Bonds Collapse

    Another retailer owned by private equity firms goes bust. Toys ‘R’ Us filed for Chapter 11 bankruptcy late Monday in the US Bankruptcy Court in Richmond, Virginia. The bonds of the largest toy retail chain in the US have gotten crushed, as word was spreading that it was preparing to file for bankruptcy. Standard & Poor’s rates the bonds a merciful CCC-. This is deep into junk, but still two notches above D for ‘default.’
    The a $208 million issue of senior unsecured notes due in October 2018 with a coupon of 7.375% had plunged to 46 cents on the dollar on Friday, from 65 on Thursday. Today, they dropped below 21 cents on the dollar before the bankruptcy filing.
    They have now plunged 78% since September 4, when they were still trading at 97 cents on the dollar. The plunge of those notes began in earnest on September 6, when it became known that the company had hired law firm Kirkland & Ellis, whose bankruptcy-and-restructuring practice is considered a leader in the industry. That was the sign. At the time, ‘sources familiar with the situation’ said that bankruptcy was one of the options. And all heck broke loose for those bonds.

    This post was published at Wolf Street on Sep 18, 2017.


  • “This Is Where The Next Financial Crisis Will Come From”

    In an extensive, must-read report published on Monday by Deutsche Bank’s Jim Reid, the credit strategist unveiled an extensive analysis of the “Next Financial Crisis”, and specifically what may cause it, when it may happen, and how the world could respond assuming it still has means to counteract the next economic and financial crash. In our first take on the report yesterday, we showed one key aspect of the “crash” calculus: between bonds and stocks, global asset prices are the most elevated they have ever been.
    ***
    With that baseline in mind, what happens next should be obvious: unless one assumes that the laws of economics and finance are irreparably broken, a deep recession and a market crash are inevitable, especially after the third biggest and second longest central bank-sponsored bull market in history.
    But what will cause it, and when will it happen?
    Needless to say, these are the questions that everyone in capital markets today wants answered. And while nobody can claim to know the right answer, here are some excerpts from what DB’s Jim Reid, one of the best strategists on Wall Street, thinks will take place.

    This post was published at Zero Hedge on Sep 19, 2017.


  • Toys ‘R’ Us to File for Bankruptcy ‘as Soon as Today,’ Bonds Collapse

    Brick-and-mortar meltdown: another retailer owned by private equity firms goes bust.
    The bonds of Toys ‘R’ Us, the largest toy retail chain in the US, are getting crushed, as word is spreading that it is preparing to file for bankruptcy as soon as today, ‘according to people familiar with the situation,’ cited by Bloomberg. Standard & Poor’s rates the bonds a merciful CCC-. This is deep into junk, but still two notches above D for ‘default.’
    The a $208 million issue of senior unsecured notes due in October 2018 with a coupon of 7.375% had plunged to 46 cents on the dollar on Friday, from 65 on Thursday. Today, according to FINRA data, they dropped to 44 cents on the dollar.
    They have now plunged 55% since September 4, when they were still trading at 97 cents on the dollar. The plunge of those notes began in earnest on September 6, when it became known that the company had hired law firm Kirkland & Ellis, whose bankruptcy-and-restructuring practice is considered a leader in the industry [see… Brick & Mortar Meltdown: Toys ‘R’ Us Hires Bankruptcy Law Firm].
    At the time, ‘sources familiar with the situation’ said that bankruptcy was one of the options. And all heck broke loose for those bonds. Now bankruptcy seems to be the only option.

    This post was published at Wolf Street on Sep 18, 2017.


  • Top Financial Expert Warns Stocks Need To Drop ‘Between 30 And 40 Percent’ As Bankruptcy Looms For Toys R Us

    Will there be a major stock market crash before the end of 2017? To many of us, it seems like we have been waiting for this ridiculous stock market bubble to burst for a very long time. The experts have been warning us over and over again that stocks cannot keep going up like this indefinitely, and yet this market has seemed absolutely determined to defy the laws of economics. But most people don’t remember that we went through a similar thing before the financial crisis of 2008 as well. I recently spoke to an investor that shorted the market three years ahead of that crash. In the end his long-term analysis was right on the money, but his timing was just a bit off, and the same thing will be true with many of the experts this time around.
    On Monday, I was quite stunned to learn what Brad McMillan had just said about the market. He is considered to be one of the brightest minds in the financial world, and he told CNBC that stocks would need to fall ‘somewhere between 30 and 40 percent just to get to fair value’…
    Brad McMillan – who counsels independent financial advisors representing $114 billion in assets under management – told CNBC on Monday that the stock market is way overvalued.
    ‘The market probably would have to drop somewhere between 30 and 40 percent to get to fair value, based on historical standards,’ said McMillan, chief investment officer at Massachusetts-based Commonwealth Financial Network.

    This post was published at The Economic Collapse Blog on September 18, 2017.


  • Bitcoin is Precise but not Accurate

    Previously, we have discussed the issue of a currency’s backing. From comments and emails, we realize this topic could use a bit more illumination. And there are some related concepts that should be addressed at the same time.
    Let’s start with an analogy, the engineering concepts of accuracy and precision. These related words are oft-confused, but not the same thing. The former refers to how close a measurement gets to reality, and the latter refers the repeatability of the measurement. If you put 1kg mass on a scale and it says 1.9501kg it is not accurate. However, if you do it again and again, and it consistently reads 1.9501kg it is precise.
    There are three concepts pertaining to a currency: fiat, irredeemable, and unbacked. Let’s compare and contrast the dollar and bitcoin with respect to each.
    Fiat means law or force. It is a government decree. Obviously, the dollar is fiat and bitcoin is not. No one mistakes this, but confusion comes from substituting fiat for the other related concepts.
    Irredeemable means the currency is not redeemable. You cannot present the currency to its issuer, and demand that he take back his currency and hand over a fixed amount of gold. This amount is the size of the deposit. No one would hand an ounce or a ton of gold over to a bank, without a contractual obligation that the bank must return that ounce or ton. No one would agree to allow the bank to hand over a reduced amount, or to allow the bank to say ‘hey, just walk to the market down the street, sell our paper for whatever amount of gold it might be worth today.’ Both bitcoin and the dollar are irredeemable, and their value in an exchange market does not change this fact.

    This post was published at GoldSeek on Monday, 18 September 2017.


  • Johnny Appleseed: Land Speculator, Alcohol Dealer, Capitalist

    Similar to the English legend of Robin Hood, the character Johnny Appleseed has evolved over time into a progressive icon. In the former, the famed outlaw, made an enemy of the government by reclaiming unjust taxes, became a socialist folklore hero who ‘stole from the rich and gave to the poor.’ Johnny Appleseed, an American legend, is depicted as a selfless peripatetic, traveling the country planting apple trees so that nobody would go hungry. He lived an ascetic lifestyle, preached the gospel of Jesus Christ, and refused to hurt any of God’s creatures (one apocryphal tale claims that he angrily threw away his shoe out of guilt for having accidently stepped on a worm).
    Some of these fabled characteristics are based in truth. Johnny Appleseed did live well below his financial means, for example, giving people the false impression that he was a poor man. But Johnny Appleseed’s true accomplishments – the successful accumulation of wealth through entrepreneurial speculation and calculated claims to the private property he developed with his apple seeds – have been entirely omitted from the legends taught to schoolchildren. Accurately told, the life of Johnny Appleseed is a capitalist success story.
    Johnny Appleseed Brings Alcohol to the Frontier
    The legend of Robin Hood was a fiction born out of a different fiction, but the legend of Johnny Appleseed is a fiction born out of a real person. John Chapman was born on September 26, 1774, the son of a Revolutionary War veteran who would later encourage his son to become an orchardist.

    This post was published at Ludwig von Mises Institute on Sept 17, 2017.


  • Hurricane Equifax: 143 Million Impacted, 35% Loss In Equity Value, Suspicious 135 Strike Price Put Trades On Aug 21

    This is a syndicated repost courtesy of Snake Hole Lounge. To view original, click here. Reposted with permission.
    Recent hurricanes Harvey and Irman have caused massive destruction in Texas and Florida, respectively. And then we have Jose which may strike New York City. [Check Ventusky for the forecast map].
    But none of these hurricanes have the potential to impact as many people as Hurricane Equifax, the massive breach of 143 million Americans’ personal information (Social Security numbers, credit card numbers, birthdates and other information).
    According to the Washington Post, ‘The tale began on July 29, when the company’s security team detected suspicious network traffic associated with the software that ran its U. S. online-dispute portal. After blocking that traffic, the company saw additional ‘suspicious activity’ and took the portal’s software offline.
    At this point, Equifax’s retelling grows cloudy. The company said an internal review then ‘discovered’ a flaw in an open-source software package called Apache Struts used in the dispute portal, which it then fixed with a software patch. It subsequently brought the portal back online.

    This post was published at Wall Street Examiner by Anthony B Sanders ‘ September 17, 2017.


  • Facing Imminent Bankruptcy, Toys “R” Us Enters Death Spiral

    Last week’s news that Toys ‘R’ Us has hired bankruptcy lawyers Kirkland & Ellis to help restructure its heavy debt load, came as a shock to the company’s creditors, who promptly sent its bond crashing from nearly par at the start of the month to 43 cents on the dollar as of Friday.

    As Bloomberg first reported, K&E is focused on the $400MM in bond due 2018, while Toys ‘R’ Us has also retained Lazard to help with debt refinancing. They will have their hands full: in addition to shrinking sales and heightened competition, Toys ‘R’ Us has been burdened with debt from an LBO12 years ago as a result of which Toys ‘R’ Us’s private equity owners, Bain Capital, KKR and Vornado Realty Trust, loaded up the company with $7.5 billion in debt.
    Last year, the retailer extended maturities on some of borrowings, giving it more time to execute a turnaround plan by Chief Executive Officer Dave Brandon. As part of his comeback bid, he was looking to spruce up stores with more toy demonstrations and other experiences – seeking an edge on online sites such as Amazon. However, last week’s realization that the company is considering a debt-for-equity exchange, confirmed many worst fears that not only was the turnaround faltering but that underlying business was far weaker than expected.

    This post was published at Zero Hedge on Sep 16, 2017.


  • Pennsylvania Will Run Out Of Cash Tonight, Leaving $860MM Of Bills Unpaid

    As equity markets spike to all new highs with each passing day, the number of fiscal crises springing up within local and state governments around the country are reaching somewhat alarming levels, even if they’re being completely ignored by investors. As Reuters notes this morning, the state of Pennsylvania may become the latest example government failure when it runs out of cash later tonight leaving some $860 million worth of bills unpaid.
    Pennsylvania could run out of cash on Friday, leaving $860 million of bill payments up in the air as lawmakers continue to argue over a revenue package that is more than two months overdue.
    The state legislature passed a $32.5 billion spending plan on June 30, the end of the fiscal year and the deadline for the current year’s budget.
    But it failed to agree on a revenue package to pay for those expenses, and the state has been borrowing money from its own short-term investment pool.

    This post was published at Zero Hedge on Sep 15, 2017.


  • Big Trouble For The Silver Market If Mexico Monetizes Its Silver Libertad Coin

    Recently, there was a debate in the Mexican Congress on the proposal to monetize the Silver Libertad Coin. The debate took place during a forum for ‘The Promotion of Savings for Mexicans.’ If Mexico decided to monetize its Silver Libertad Coin, it could have a severe impact on the silver market and price.
    How much of an impact would the monetization of the Mexican Silver Libertad have on the market? There could be serious ramifications if we consider the vast amount of silver consumed by the minting of Mexican silver coins in the past. Before I get into that data, let’s look at the following text from the article, The Mexican Congress Debates the Monetization of the ‘Libertad’ Silver Ounce, on Hugo Salinas Price’s plata.com site;
    The central feature of the proposal is that the Central Bank of Mexico (Banxico) shall determine a value in pesos for the ‘Libertad’ silver ounce; and that this value shall be slightly higher (by a percentage that would be defined in the corresponding Law) than the price of silver in the international market, in order to provide Banxico with an assured profit in minting and placing these coins in monetary circulation.
    …. if the price of silver should shoot upward, Banxico would have to issue new, higher quotes for the ‘Libertad’ silver ounce (according to the formula to be established by Law). In this way, again, the coin will remain ‘in circulation’, and since it has no nominal price stamped on it, it will avoid ending up – like all the old silver coins that had stamped values – at the refineries.

    This post was published at SRSrocco Report on SEPTEMBER 15, 2017.


  • Trump Tower Meeting & Half Truths – Another Untold Story

    Bloomberg News is reporting that there is an ongoing criminal investigation into a client of the Russian lawyer, Natalia Veselnitskaya, who meet at Trump Tower with Donald Trump Jr., Jared Kushner, the president’s son-in-law and adviser, and Paul Manafort. The attorney Veselnitskaya also had a client with and undisclosed a U. S. criminal investigation into possible Russian money laundering, which began back in 2013 but went nowhere. The statute of limitations has run out by now, which is 5 years.
    TheMoney laundering was that involving Hermitage Capital, which Edmond Safra was the main share holder. That was the company Safra and his Republic National Bank was trying to get me to invest in but I declined.
    This involved the attempted takeover of Russia, Yeltsin was shown how to steal $7 billion from the IMF loans and wired the money to Geneva. Republic National Bank steered the wire through Bank of NY and then ran to the Feds to report Bank of NY did a $7 billionMoney laundering. The Feds rushed in and quickly found themselves trapped. I had a meeting with the prosecutors on that whole mess.

    This post was published at Armstrong Economics on Sep 16, 2017.


  • Canada’s Hunt for Taxes – Trudeau’s Destruction of the Canadian Economy

    The Canadian Prime Minister Justin Trudeau is doing his best to send Canada into the Dark Age. He is clearly a Marxist and has targeted small business which creates 70% of all employment. He said ‘I want to be clear,’ at the Liberal party’s recent caucus gathering in Kelowna. ‘People who make $50,000 a year should not pay higher taxes than people who make $250,000 a year.’
    These people who always seek to run governments have ZERO real world experience and totally fail to understand the economy no less how society functions. They believe that they can just decree some law and everything will function to the desires.

    This post was published at Armstrong Economics on Sep 14, 2017.


  • Gold and Bitcoin Surge on North Korea Fears

    If you’re familiar with ABC’s popular reality show Shark Tank, you should already be familiar with the concept behind the San Antonio Angel Network (SAAN). Select entrepreneurs and innovators pitch their startup ideas to accredited investors, who can choose to make early-stage investments in a potentially successful company.
    I attended an SAAN meeting last week at Ferrari of San Antonio, and what struck me the most was how fluid and seamless the whole thing is. Other professionals in attendance, including lawyers and CPAs, had a similar opinion, with some of them saying it was because there wasn’t any bureaucracy or red tape to hamstring the presenters.
    This is unlike the world of mutual funds, which I believe has become excessively regulated.
    As I’ve said numerous times before, regulation is essential, just as referees are essential to a basketball game. No one disputes that, because otherwise there would be chaos.
    Similarly, the new and very unregulated world of cryptocurrencies has grown dramatically, beyond bitcoin and ethereum. Did you know there are over 800 cryptocurrencies? These new initial coin offerings, called ICOs, are like initial public offerings (IPOs) but with little regulation or accountability. As I’ve commented before, if the refs get too powerful or too numerous, and the rules too complex, the game becomes nearly unplayable.

    This post was published at GoldSeek on Tuesday, 12 September 2017.


  • Who’s Going To Eat The Losses?

    Unsustainable.
    Many more people need to understand what that word really means, and how it applies to pretty much everything in the current human living arrangement. Especially the so-called ‘developed’ nations.
    Here’s the dictionary definition:

    Let’s take these three definitions one at a time.
    First: our entire economic model, which dependent on borrowing at a faster rate than income (GDP) grows, is something that simply cannot be maintained at its current rate or level. Check.
    Second: depleting species, soils and aquifers are all wildly unsustainable practices that are accelerating. Check.
    Last (and most glaring of all): the world’s leadership (and we use that term very loosely) continues to insist on adhering to the indefensible idea that infinite growth on a finite planet is possible Checkmate.
    Said another way, the daily comforting stories we are told about how all of this somehow makes sense are just a load of nonsense. Each is entirely unsupportable by the evidence, facts and data.
    What happens when a culture’s dominant narratives are not just unsatisfactory, but entirely unworkable?
    Well, for one thing, the younger generations that are being asked (goaded?) to step into an increasingly flawed future begin to resist. Which is completely understandable. They have nothing to gain if the status quo continues.

    This post was published at PeakProsperity on September 8, 2017.


  • In the Dark

    The stock market is zooming this morning on the news that only 5.7 million people in Florida will have to do without air conditioning, hot showers, and Keurig mochachinos at dawn’s early light Monday, Sept 11, 2017. I’m mindful that the news cycle right after a hurricane goes kind of blank for a day or more as dazed and confused citizens venture out to assess the damage. For now, there is very little hard information on the Web waves. Does Key West still exist? Hard to tell. We’ll know more this evening.
    The one-two punch of Harvey and Irma did afford the folks-in-charge of the nation’s affairs a sly opportunity to get rid of that annoying debt ceiling problem. This is the law that established a limit on how much debt the Federal Reserve could ‘buy’ from the national government. Some of you may be thinking: buy debt? Why would anybody want to buy somebody’s debt? Well, you see, this is securitized debt, i.e. bonds issued by the US Treasury, which pay interest, and so there is the incentive to buy it. Anyway, there used to – back in the days when the real interest rate stayed positive after deducting the percent of running inflation. This is where the situation gets interesting.
    The debt ceiling law supposedly set limits on how much bonded debt the government could issue (how much it could borrow) so it wouldn’t go hog wild spending money it didn’t have. Which is exactly what happened despite the debt limit because the ‘ceiling’ got raised about a hundred times though the 20th century into the 21st so that the accumulated debt stands around $20 trillion.

    This post was published at Wall Street Examiner on September 11, 2017.