Investors Now Paying Germany Premiums to Hold their Cash

Anyone who questions when I began warning that interest rates would go negative, well that day has arrived. Investors are now paying Germany to park their money. At the first auction of six-month German Treasury bills after the recent ECB rate cut, investors had to make do with a negative yield of 0.0934 percent on Monday. That’s a new record. Investors may therefore not as usual money from the federal government, but have to pay more themselves

This post was published at Armstrong Economics on September 8, 2014.

On A Clear Fund Raising Evening, Gov. Christie’s Pension Managers Can See Wall Street From Trenton

New Jersey investment officials have directed increasingly large slices of state pension money into riskier investments, such as hedge funds, touting their strategy as a means of limiting exposure to a volatile stock market. They’ve argued that their approach would maximize overall returns and justify the higher fees paid to Wall Street money managers.
But in seven of the eight years since the state began shifting pension funds into so-called alternative investments, returns have fallen well short of the broader stock market, an analysis of state financial records shows. In those seven years, New Jersey’s alternative investment portfolio has produced gains of just more than half of the S&P 500, the widely watched index seen as a proxy for shares of large corporations.
Since Gov. Chris Christie took office, he has nearly tripled the amount of retiree cash invested in alternative investment firms – many of whose employees have made financial contributions to political groups backing Christie’s election campaigns. In that time, the gap between New Jersey’s alternative portfolio and the broader market has rapidly expanded, costing taxpayers billions in unrealized returns and threatening the financial stability of the $78 billion pension system. The state’s pension funding shortfalls – which have been exacerbated by Christie’s market-trailing investment strategy – were one of the factors cited by Fitch Ratings in its decision last week to downgrade the state’s bond rating for the second time.

This post was published at David Stockmans Contra Corner on September 8, 2014.

Spot The Ticking Time-Bomb

One of these things is not like the other…
While fundamentals long ago lost any validity with regard the nominal level and risk of US equities, a disconnect in global asset-class volatility cannot last long in a globally-interconnected carry-trading world…

This post was published at Zero Hedge on 09/08/2014.

More Lost IRS E-Mails. The IRS Tells Congress: ‘Go Fish.

Congress is impotent.
The IRS knows Congress is impotent.
The IRS can safely thumb its nose at Congress in full public view.
Everyone knows the IRS did illegal things when it refused to grant the privilege of tax exemption to conservative groups. ‘Go fish.’ Everyone knows the IRS destroyed the incriminating e-mails. ‘Go fish.’ Everyone knows the IRS is lying when it blames a hard disk crash. ‘Go fish.’ Everyone knows Boehner & Co. has only one response with teeth: to cut the IRS’s budget next year in retaliation. Everyone knows that Congress dares not cut one agency’s budget, above all government agencies: the IRS’s. ‘Go fish.’
I suppose I should be outraged. ‘The arrogance of these people!’ But why get upset this late in the history of the American welfare-warfare state? This is nothing new. It goes back to – in round numbers – 1789. Executive agencies have done their best to thwart Congress since the beginning. It just gets worse over time.
Congress has two meaningful powers over the other branches of the federal government. It refuses to use either of them. First, it has the power of the purse. It can refuse to fund any agency at any time for any reason. It can, in short, shrink the power of the President. It never doers this. To do this would mean shrinking the federal government. It absolutely will not tolerate such a suggestion.
The other power is to lock the Supreme Court in a box. It can withdraw the Court’s jurisdiction on any judicial issue except those enumerated by the Constitution. The Constitution is clear.

This post was published at Tea Party Economist on September 6, 2014.

Small Business Ownership In America Is At An All-Time Low

According to the Federal Reserve, the percentage of American families that own a small business is at the lowest level that has ever been recorded. In a report that was just released entitled “Changes in U. S. Family Finances from 2010 to 2013: Evidence from the Survey of Consumer Finances“, the Federal Reserve revealed that small business ownership in America “fell substantially” between 2010 and 2013. Even in the midst of this so-called “economic recovery”, small business ownership in America has now fallen to an all-time low. If the economy truly was healthy, this would not be happening. And it isn’t as if Americans are flooding the labor market either. As I detailed yesterday, the labor force participation rate in this country is at a 36 year low. That would not be happening if the economy was actually healthy either. The truth is that the middle class in America is dying, and this new report from the Federal Reserve is more evidence of this very harsh reality.
In order to build wealth, middle class Americans either need to have their own businesses or they need good jobs. Sadly, the percentage of Americans that own a business continues to decline steadily. In the report that I mentioned above, the Federal Reserve says that the proportion of U. S. families that have an ownership interest in a small business fell from 13.3 percent in 2010 to a brand new all-time low of11.7 percent in 2013.
This is one of the factors that is increasing the gap between the extremely wealthy and the rest of us in this country. And of course another of the major factors is the steady decline in good paying jobs.
The U. S. Competitiveness Project at Harvard Business School is chaired by professors Michael E. Porter and Jan W. Rivkin. It just released a new report entitled “An Economy Doing Half Its Job”, and it addressed the fact that the middle class is deeply struggling even though many large U. S. corporations have been thriving. The following is an excerpt from an article in the Boston Globe about this report…

This post was published at The Economic Collapse Blog on September 8th, 2014.

China Hits ‘Inflow’ Panic Button- Strengthens Yuan Fixing By Most In 4 Years

The PBOC strengthened the CNY fixing by over 0.3% today – its biggest fixing move since June 2010 as the Yuan strengthens to 6-month highs against the USD. This seeming ‘panic’ move comes on the heels of last night’s record trade surplus – which as Goldman notes – was likely dominated by FX inflows thanks to over-invoicing. It is unclear the reasoning for the move in the CNY fixing but one wonders if, with industrial commodities continuing to plunge (CCFD collateral value dropping) and now PMIs rolling over, if further over-invoicing is being anticipated as cover for a notable slowdown in growth. One thing is clear – after today’s surge in the USD and decoupling with US stocks, something is changing.

This post was published at Zero Hedge on 09/08/2014.

These Kinds Of Market-Rigging “Practices” Will No Longer Be Allowed On The CME

It has been an interesting week for the CME: first it was revealed a week ago that in order to “stimulate” the market, the CME is willing to pay central banks a liquidity rebate in order for the world’s monetary authorities to “make markets” in the most important S&P 500 future, the E-Mini, confirming not only that central banks directly trade the S&P 500, but are incentivized to nudge it along the preferred central bank direction: up. Then last week, none other than the CME’s own 10-K proved that something changed in 2013, when for the first time central banks officially became counted as clients of the biggest US derivative exchange.
Today, the CME’s fall from efficient market grace accelerate when it advised the CFTC that the derivative market would be adopting a new Rule 575 to eliminate “Disruptive Practices Prohibited.”
The good news: starting September 15, 2014 the CME will no longer tolerate what is affectionately calls “Disruptive market practices.”
The bad news: the CME was not only tolerating and turning a blind eye toward such disruptive market practices until this point, in many cases it was compensating the “liquidity providing” perpetrators!

This post was published at Zero Hedge on 09/08/2014.

sept 8/ No change in Gold inventory at the GLD/No change in silver inventory at SLV/gold and silver whacked/Silver OI remains very high at 164,501/

Gold closed down $13.10 at $1252.70 (comex to comex closing time ). Silver was down 19 cents at $18.89
In the access market tonight at 5:15 pm
gold: $1255.50
silver: $19.05
GLD : no change in gold (inventory now at 785.72 tonnes)
SLV no change in silver inventory:/now 333.207 million oz.
As far as gold and silver is concerned, we had another raid today. It seems they are relentless in their attacks.
Today we have commentaries concerning the Ukraine, Russia, England/Scotland, and Argentina
We will discuss these and other stories
So without further ado………………
Let’s head immediately to see the data has in store for us today.
First: GOFO rates/
All months basically moved towards the positive needle (except one year out) as they must have found a few bars to lease
London good delivery bars are still quite scarce.
Sept 8 2014
1 Month Rate: 2 Month Rate 3 Month Rate 6 month rate 1 yr rate
.094000% .1040000% .11600% .13800% .230000%
Sept 5 .2014:
1 Month Rate 2 Month Rate 3 Month Rate 6 month Rate 1 yr rate
0800% .09000% .104000% .13400% .234000%
Let us now head over to the comex and assess trading over there today,

This post was published at Harvey Organ on September 8, 2014.

No! The US Is Not ‘Decoupling’

It’s that time of year again… when sell-side strategists and status-quo narrative defenders aggregate en masse around the ‘outperformance’ of the US economy compared the rest of the world (which – they note – explains why US stocks are outperforming as the US is the cleanest shirt) and declare – unequivocally – the US has decoupled.

This post was published at Zero Hedge on 09/08/2014.

US has Lost 1.4 Million Full Time Jobs Since 2008, Thanks To The Fed

Let’s cut to the chase: There were 1,446,000 fewer people working full time in August 2014 than in August 2008, according to the Bureau of Labor Statistics household survey (CPS).

That’s after an increase of 210,000 full-time jobs in August. That’s the actual count, not the seasonally adjusted abstraction. So we have to compare that with past Augusts to get an idea if its any good or not. August is a swing month, sometimes up, sometimes down. The average change over the prior 10 years, which included a couple of ugly years in the recession, was -63,000. So this number wasn’t bad. It was slightly better than August of last year and 2012, but come on….

This post was published at Wolf Street on September 8, 2014.

Interview with Ronald-Peter Stferle: Monetary Tectonics and Gold

My exclusive interview with Ronald-Peter Stferle, Incrementum Liechtenstein AG, co-author of the In Gold we Trust 2014 report.
‘We are currently on a journey to the outer reaches of the monetary universe. We believe that the monetary experiments currently underway will have numerous unintended consequences, the extent of which is difficult to gauge today. Gold, as the antagonist of unbacked paper currencies, remains an excellent hedge against rising price inflation and worst-case scenarios.
The tug-of-war between a deflationary debt liquidation and politically induced price inflation is well and alive. Last year we coined the term ‘monetary tectonics’ which describes the battle between these powerful forces. An excellent indicator for the interaction between inflation and deflation is the gold/silver ratio. One could therefore also refer to the gold-silver ratio as the ‘deflation/reflation’ ratio.’
We will be discussing these topics and much more with Mr. Stferle.

This post was published at Gold Broker on Sep 8, 2014.

Is Euro Gold Decoupling From Dollar Gold?

Gold reflects the value of a currency. That is the most basic and fundamental understanding of gold. Yes, there are drivers for the price of gold, including rising inflation, fear of war, growing ETF demand, etc. But the most fundamental driver is monetary devaluation.
There are plenty of examples which show that gold denominated in currencies that devalue, moves significantly higher. Think of recent cases in 2014 like the ones we wrote about:
Emerging markets devaluations like the ones in Turkey andVenezuela – read Gold Price Exploding In Emerging Markets Ukraine’s currency devaluation – read Gold Price In Ukraine 75% Higher In 2014 Argentine’s near hyperinflation – read Gold Trading At All-Time High In Argentine’s Currency The examples are related to developing markets, which is not too relevant to most of or readers. So let’s examine the situation of the major currencies. The first chart shows the price of 8 major currencies since June of this year. It is not difficult to spot the trend. The US Dollar is the big winner of the last months, and, unsurprisingly, the Euro is the big loser. Now, this is not to be confused with central bank language, as in this world of currency wars, a weakening currency is considered to be a positive for its country or region. So, Mr. Draghi is probably looking at a weakening Euro as a positive development, no matter if Europeans are losing purchasing powe

This post was published at GoldSilverWorlds on September 8, 2014.

Merkel Ally Slams Draghi’s Plan To “Buy Junk Paper”

While Italian and Spanish political (and business) leaders are lauding Mario Draghi’s plan to buy more assets and print more money, it appears not everyone is so excited. As Reuters reports, Christian Social Union chairman and Bavaria state premier Horst Seehofer (who is well known as an ally of Angela Merkel), blasted the ECB’s plan: “It’s only going to frighten a lot of people when ECB chief Mario Draghi opens up the central bank’s money tap and at the same time buys junk paper,” somewhat breaking the political taboo of criticizing the potential independence of the central bank.

This post was published at Zero Hedge on 09/08/2014.

Gold Seeker Closing Report: Gold and Silver Fall About 1%

The Metals:
Gold dropped down to $1251.56 at about 1PM EST before it bounced back higher at times, but it still ended with a loss of 1.04%. Silver slipped to as low as $18.916 and ended with a loss of 0.89%.
Euro gold fell to about 973, platinum lost $11 to $1395, and copper remained at about $3.17.
Gold and silver equities fell over 3% by midday and remained near that level for the rest of the day.

This post was published at GoldSeek on 8 September 2014.

Much Dollar Ado About Nothing In Stocks & Bonds

Today some very significant moves across asset-classes – despite the apparent close-to-close ‘blahness’ of stocks (Dow, S&P, Trannies small red, Nasdaq green) and bonds (30Y unch, 5Y 2bps) from Friday’s close. The USD surged to fresh 15-month highs, ripping another 0.6% higher as GBP, EUR (1.28xx), and JPY (106.xx) all faded dramatically. US equity markets entirely decoupled from JPY (in fact became negatively correlated) and US Treasury yields ripped higher – tick for tick with USDJPY’s rise. Gold and silver slipped 1% on the day, copper limped higher (after an early plunge) andoil rebounded to close with a small loss near $93 (Brent under $100 for first time in 14 months). Late-day news of ‘delayed’ sanctions sparked the standard post-EU-close buying panic, regained S&P 2,000 (and Futs hit VWAP), and ensured Friday’s bad-news-is-good-news jobs meme stands.

This post was published at Zero Hedge on 09/08/2014.

Gold Daily and Silver Weekly Charts – Abide

Gold and silver had the usual hit today, that was almost perfunctory in its routineness. That did not make it any less obvious. There is quiet panic in the banks and the boardrooms, make no mistake of that. Russia has them perplexed. China has them confused. The rest of the world holds them in contempt. Most with eyes open can see their falsehoods. Their fabrications grow increasingly transparent. Force is extended to make up for the weakness of the fraud. Their empire of deceits are pervasive and fearsome in their shamelessness. How and when this will end, no one can say. For now we must be waitful and watchful.

This post was published at Jesses Crossroads Cafe on 08 SEPTEMBER 2014.

Obama’s Former Chief Economist Calls For An End To US Dollar Reserve Status

There are few truisms about the world economy, but for decades, one has been the role of the United States dollar as the world’s reserve currency. It’s a core principle of American economic policy. After all, who wouldn’t want their currency to be the one that foreign banks and governments want to hold in reserve?
But new research reveals that what was once a privilege is now a burden, undermining job growth, pumping up budget and trade deficits and inflating financial bubbles. To get the American economy on track, the government needs to drop its commitment to maintaining the dollar’s reserve-currency status.
The reasons are best articulated by Kenneth Austin, a Treasury Department economist, in the latest issue of The Journal of Post Keynesian Economics (needless to say, it’s his opinion, not necessarily the department’s). On the assumption that you don’t have the journal on your coffee table, allow me to summarize.
It is widely recognized that various countries, including China, Singapore and South Korea, suppress the value of their currency relative to the dollar to boost their exports to the United States and reduce its exports to them. They buy lots of dollars, which increases the dollar’s value relative to their own currencies, thus making their exports to us cheaper and our exports to them more expensive.
In 2013, America’s trade deficit was about $475 billion. Its deficit with China alone was $318 billion.
Though Mr. Austin doesn’t say it explicitly, his work shows that, far from being a victim of managed trade, the United States is a willing participant through its efforts to keep the dollar as the world’s most prominent reserve currency.

This post was published at Zero Hedge on 09/08/2014.

New Jersey’s Debt is Downgraded by Fitch as Chris Christie Funnels Pension Money to Private Equity and Hedge Funds

David Sirota must be commended for his incredible work this year exposing the insidious relationship between public pension funds and ‘alternative asset managers,’ namely private equity firms and hedge funds. It is the private equity component that has captured my attention the most due to the industry’s notoriously opaque and seemingly illegal fees.
One example I highlighted earlier this year was: Leaked Documents Show How Blackstone Fleeces Taxpayers via Public Pension Funds. The reason this relationship between public pension money and private equity is so incredibly important is because so many in the private equity world are so incredibly shady. Let’s not forget what SEC official Drew Bowden said back in May:
At a private equity conference this week, Drew Bowden, a senior SEC official, told private equity fund managers and their investors in considerable detail about how the agency had found widespread stealing and other serious infractions in its audits of private equity firms.
Despite the at times disconcertingly polite tone, the SEC has now announced that more than 50 percent of private equity firms it has audited have engaged in serious infractions of securities laws. These abuses were detected thanks to to Dodd Frank. Private equity general partners had been unregulated until early 2012, when they were required to SEC regulation as investment advisers.
So how do public pensions fit in to this racket? Here’s how:

This post was published at Liberty Blitzkrieg on Sep 8, 2014.

Consumer Credit Surges Most In Three Years

If you like living beyond your means, you can keep on living beyind your means. US Consumer credit grew by over $26 billion in July – smashing expectations of $17.35bn – and rising by the most since 2011. As usual, the leap was led by non-revolving credit (rising $20.6 billion) as auto and student loans continue to surge.
Consumer credit grew at its fastest pace in three years.

This post was published at Zero Hedge on 09/08/2014.

SP 500 and NDX Futures Daily Charts – The Age of the Thing

“Greetings citizens. We are living in the age, in which the pursuit of all values other than money, success, fame, glamour have either been discredited or destroyed.
money, success, fame, glamour, for we are living in the age of the thing.
money, success, fame, glamour…”
Macaulay Culkin et al., Party Monster
The banality of evil is alive and well in our culture of death, that measures everything in dollars, and values nothing that is human for its own sake, whether it be truth, or beauty, or goodness.
That it is banal does not mean it cannot be noisy. That it wears a hand tailored suit instead of a uniform does not make it any less capable of causing great misery and destruction. That it speaks with sophistication or cleverness does not makes its words any less poisonous. That it will eventually destroy itself in the future does not detract from its power to taint and corrupt in the present. Markets moved sideways today, with the SP down a bit and the tech heavy NDX up a bit.

This post was published at Jesses Crossroads Cafe on 08 SEPTEMBER 2014.