Memorial Day and the Meaning of Freedom

Memorial Day provides the political class countless opportunities to ruin an otherwise thoroughly enjoyable holiday weekend. Like clockwork, local congressmen, mayors, city council members, et al. materialize at parades, picnics, and churches to give speeches about “freedom.”
But what does freedom really mean?
Just as we should repudiate Junk English in economics, we should demand precision when it comes to the language of political posturing! In other words, we should insist that politicians use defined terms (I’m not holding my breath).
In essence, freedom is the absence of state coercion. Nothing more, but certainly nothing less.
Dr. Ron Paul explains this coercive reality behind those invoking freedom while advocating state action:
Few Americans understand that all government action is inherently coercive. If nothing else, government action requires taxes. If taxes were freely paid, they wouldn’t be called taxes, they’d be called donations. If we intend to use the word freedom in an honest way, we should have the simple integrity to give it real meaning: Freedom is living without government coercion. So when a politician talks about freedom for this group or that, ask yourself whether he is advocating more government action or less.

This post was published at Ludwig von Mises Institute on May 29, 2017.

Goldman Sachs Accused of ‘Aiding and Abetting’ Venezuela’s ‘Dictatorial Regime’

A very risky deal with a huge yield.
It didn’t take long for sparks to fly after the Wall Street Journal reported on Sunday that, ‘according to five people familiar with the transaction,’ the asset management division of Goldman Sachs had bought Venezuelan bonds with a face value of $2.8 billion from the Central Bank of Venezuela that it had held as part of its international reserves.
The sale of the bonds – issued by state-owned oil company Petrleos de Venezuela S. A. (PDVSA) in 2014 and due in 2022 – was completed on Thursday, according to the sources. That day and on Friday, the central bank’s international reserves jumped by $749 million, to around $10.86 billion, Reuters reported today. According to Reuters’s sources, including one at Goldman – oh my, all these leaks – the negotiations took place via middlemen in Europe.
This cash, as the Wall Street Journal put it, is ‘a lifeline to President Nicols Maduro’s embattled government as it scrambles to raise funds in the midst of widening civil unrest.’ The Journal describers the economic and social situation the Maduro regime is presiding over this way:
Mr. Maduro’s increasing authoritarianism coupled with critical food and medicine shortages have spawned two months of almost-daily street demonstrations, costing at least 60 lives. The economy is also suffering, having shrunk 27% since 2013. Venezuela is saddled with what the International Monetary Fund estimates will be an inflation rate of 720% this year.

This post was published at Wolf Street on May 29, 2017.

The dollar store economy: Dollar General openings account for 80 percent of new stores in the US and largest occupation in US is in retail

The death of retail is a very real thing. Amazon and other online retailers are simply shifting the way people shop in dramatic fashion. Yet you have to realize that Amazon does have a minimum buy for free shipping and not everything is rock bottom cheap. Also, food is still marked up on Amazon so if you are on a tight budget this will not work. So what are Americans to do? Many are opting to shop at rock bottom priced stores like Dollar General. Really cheap items and food. The basics. What is telling is that Dollar General, the king of dollar stores accounted for a stunning 80 percent of new store openings in the US. While other retail outlets are dropping like flies Dollar General is growing to fit a new niche: the millions of broke Americans that still need food and need cheap goods.
The dollar economy
Traditional retail is going through an extinction event. Online retailers are taking them to task. This model was predicated on people doing the same thing as they did in the past but they are not. Americans are too broke to buy a home so buying big ticket items are not going to happen in the way they did in the past. Also, Americans would rather eat out than buy groceries should they have disposable income.
The number of stores closing is rather stunning:

This post was published at MyBudget360 on May 29, 2017.

Hong Kong’s Housing Market Has Become “A Sea Of Madness” Central Bank Warns

A HK new home sale site queues with over thousand of buyers.
Last time this happened in 1997.
— Simon Ting (@simonting) May 26, 2017

What a difference 16 months makes.
It was in February of 2016 when, looking at the latest trends in the Hong Kong housing market, we wrote that in January [2016] Hong Kong home prices tumbled the most since July 2013, and after a 12 year upcycle, prices were now down 10% from the recent peak just four months prior…
… while the local Centaline Property Agency estimated that total Hong Kong property transactions at the start of 2016 were on track to register the worst month on record.
Fast forward to today when that particular blip is long forgotten, swept away by the record credit injection unleashed by China in the interim, which has spilled over into the Hong Kong’s housing market where instead of concerns about a bubble bursting, the locals are preoccupied with chasing the latest, and biggest yet, housing bubble to form in Hong Kong, as crowds of people line up in hope of being the winning bidder for one of several properties for sales, some of which are oversubscribed as much as 15x.

This post was published at Zero Hedge on May 29, 2017.

5 Highly Respected Financial Experts That Are

If everything is going to be ‘just fine’, why are so many big names in the financial community warning about an imminent meltdown? I don’t think that I have seen so many simultaneous warnings about a market crash since just before the great financial crisis of 2008. And at this point, you would have to be quite blind not to see that stocks are absurdly overvalued and that a correction is going to happen at some point. And when stocks do start crashing, lots of fingers are going to start pointing at President Trump, but it won’t be his fault. The Federal Reserve and other central banks are primarily responsible for creating this bubble, and they should definitely get the blame for what is about to happen to global financial markets.
My regular readers are quite familiar with my thoughts on where the market is headed, so today let me share some thoughts from five highly respected financial experts…
#1 When Altair Asset Management’s chief investment officer Philip Parker was asked if a market crash was coming to Australia, he said that he has ‘never been more certain of anything in my life’. In fact, he is so sure that the investments that his hedge fund is managing are going to crash that a decision was made to liquidate the fund ‘and return ‘hundreds of millions’ of dollars to its clients’…

This post was published at The Economic Collapse Blog on May 29th, 2017.

Gold Data Science

The price of gold went up $12 this week, and that of silver $0.50. That’s not bad for gold and silver owners, and not good for the vast majority who are all-in on the dollar (though they don’t think of it that way).
Since we began publishing this Supply and Demand Report four and a half years ago, there have been several constants. One, we have focused on the supply and demand fundamentals, and the mechanics of the market.
Two, we have tried to show that short-term price moves are usually random. For example, we have documented many spike ups followed by let-downs whenever the Fed Chairman went on TV. And we all know that the long-term price trend is up (the mirror of the falling dollar). However, neither random short-term bursts nor the long-term trend is actionable for trading. In between, there is the fundamental which tends to pull the market price either up or down, depending on market conditions.
Three, there is no gain when the gold price goes up. This is because gold is not going anywhere. If you bought 100oz of gold 20 years ago, then you still have 100oz of gold now (minus storage costs). Sure, it’s worth more dollars but those dollars are worth proportionally less (and if you sell, the tax man will take a big chunk).
This may seem like mere semantics, but it’s an important principle. It’s the dollar which is volatile. And its gyrations can only get worse.

This post was published at GoldSeek on 29 May 2017.

Banco Popular’s Co-Co Bonds Plunge as Balance Sheet Chaos Revealed in Potential Forced Sale

‘This sales process is atypical, as the seller itself cannot at this point make a rough calculation of what the value of the entity is, and if they can’t, neither can we.’
By Don Quijones, Spain & Mexico, editor at WOLF STREET.
The current share price of Spain’s sixth biggest bank, Banco Popular, at 0.67, is just pennies above its lowest point ever. According to analysts at 20 different investment banks consulted by Bloomberg, the ‘objective’ value of those shares could be anything from 1.50 (Oddo & Cie) to 0.25 (Kepler Cheuvreux).
There’s good reason for this uncertainty: Popular’s books are filled with impaired real estate assets that date back to before the collapse of Spain’s gargantuan real estate bubble. They are now in varying stages of decomposition. And the prices at which they’ve been valued on the bank’s books appear to have little relation with today’s reality.
It now turns out that not even Popular’s management knows what’s really going on on Popular’s books.
Representatives of Banco Santander and majority state-owned Bankia, the two banks studying Popular’s books to decide whether or not to submit a binding offer for the bank before the deadline of June 10, are having serious difficulties trying to understand Popular’s accounts, according to Spain’s financial daily Expansin. Although there is ‘total collaboration’ from the struggling entity, Popular’s management has not yet completed its own review of the impaired assets on the bank’s balance sheets and therefore cannot offer a precise valuation of the bank.

This post was published at Wolf Street by Don Quijones/ May 29, 2017.

Millions Of Americans Just Got An Artificial Boost To Their Credit Score

Back in August 2014, we first reported that in what appeared a suspicious attempt to boost the pool of eligible, credit-worthy mortgage and auto recipients, Fair Isaac, the company behind the crucial FICO score that determines every consumer’s credit rating, “will stop including in its FICO credit-score calculations any record of a consumer failing to pay a bill if the bill has been paid or settled with a collection agency. The San Jose, Calif., company also will give less weight to unpaid medical bills that are with a collection agency.” In doing so, the company would “make it easier for tens of millions of Americans to get loans.”
Then, back in March of this year, in the latest push to artificially boost FICO scores, the WSJ reported that “many tax liens and civil judgments soon will be removed from people’s credit reports, the latest in a series of moves to omit negative information from these financial scorecards. The development could help boost credit scores for millions of consumers, but could pose risks for lenders” as FICO scores remain the only widely accepted method of quantifying any individual American’s credit risk, and determine how much consumers can borrow for a new house or car as well as determine their credit-card spending limit
Stated simply, the definition of the all important FICO score, the most important number at the base of every mortgage application, was set for a series of “adjustments” which would push it higher for millions of Americans.

This post was published at Zero Hedge on May 29, 2017.

One Sided Trade

A quiet week for stocks with the exception of Wednesday and Thursday after the Fed says a rate hike should come sooner than later, which increased the likelihood of a June rate hike.
Markets, stocks and metals enjoyed this outlook and took off higher, so there really is no choice but to be long, still, and looking into the future.
Metals continue to look great so let’s take a gander at their charts this long weekend.
Gold rose 1.16%, mostly on Friday.
The breakout Friday is great to see after a weeks consolidation, and it came on a nice pop in volume which gives the move more conviction.
We should see $1,300 on this move before any more real rest comes into play.

This post was published at GoldSeek on 29 May 2017.

This Strange Market Anomaly Only Happened Twice Before And It Didn’t End Well – Episode 1292a

The following video was published by X22Report on May 29, 2017
6 million people will be coming off of bankruptcy since the great recession and the central banks hopes they will borrow to spur the economy. JP Morgan sees no growth or employment as the economy collapses. In 1999 and 2006 we saw an anomaly that signaled the collapse of the market, we are seeing it again. Hedge fund manager says the market is to risky and decided to return all investment money to the customers. The next market crash will be blamed on Trump even thought the central bank is the real cause of it.

Ignore OPEC, It’s China That Dictates Oil Prices

The OPEC deal will lead to an ongoing tightening of the crude oil market, putting a floor beneath crude prices in the $50s per barrel in the second half of 2017, according to Helima Croft of RBC Capital Markets. She said that prices should ultimately ‘grind higher into the $60s’ by the fourth quarter, with an average price for WTI expected at $61. Political and economic pressure surrounding Saudi Aramco’s IPO and Russian elections – both of which are slated for 2018 – will ensure that OPEC and non-OPEC does ‘whatever it takes’ to keep oil prices stable and on the rise.
But there are a lot of factors outside of OPEC’s control. High up on that list is the role of China, a country that has received little attention in the oil world as of late amid all the furor over the OPEC vs. U. S. shale debate. But China could make or break the oil market this year and next, depending on what happens with its economy. “If you wanted to know where the downside risk is, it is not in OPEC’s decision or in U. S. driving demand or in global inventories rebalancing. I think China is the big source of concern,” Prestige Economics President Jason Schenker told CNBC.

This post was published at Zero Hedge on May 29, 2017.

Economists Puzzled By Unexpected Plunge In Saudi Foreign Reserves

The stabilization of oil prices in the $50-60/bbl range was meant to have one particular, material impact on Saudi finances: it was expected to stem the accelerating bleeding of Saudi Arabian reserves. However, according to the latest data from Saudi Arabia’s central bank, aka the Saudi Arabian Monetary Authority, that has not happened and net foreign assets inexplicably tumbled below $500 billion in April for the first time since 2011 even after accounting for the $9 billion raised from the Kingdom’s first international sale of Islamic bonds.
As the chart below shows, according to SAMA, Saudi net foreign assets fell by $8.5 billion from the previous month to $493 billion the lowest in six years, bringing the decline this year to $36 billion. Over the past three years, Saudi foreign reserves have dropped by a third from a peak of more than $730 billion in 2014 after the plunge in oil prices, prompting the IMF to warn that the kingdom may run out of financial assets needed to support spending within five years, according to Bloomberg.
Analysts were puzzled by the ongoing sharp decling in Saudi reserves, especially since Saudi authorities recently embarked on a very public and “unprecedented” plan to overhaul the economy and repair public finances.

This post was published at Zero Hedge on May 29, 2017.

A Problem Emerges With Europe’s “Recovery”: Companies Crippled By Soaring Payment Delays

With Mario Draghi praising the European economy in his quarterly speech at the European Parliament, albeit conceding that inflation is still too low for the ECB to remove its unprecedented monetary support, one would be left with the impression of a slow, steady European recovery, also explaining the recent record inflow into European stocks. Alas, as is often the case, the full story is just below the surface. And it is here that a big problem is emerging.
According to the 2017 European Payment Report compiled annually by Swedish debt collector Intrum Justitia AB, a growing number of small and medium-sized businesses in Europe have complained they face excessive delays in being paid for their work, with large parts of the sector seeking tougher laws to address the problem. First discussed by Bloomberg, the Justitia report reveals that 61% of the 10,468 small and medium-sized companies surveyed say they’ve been asked by counterparties to accept longer payment delays than they feel comfortable with. This is a staggering increase of over 30% in just one year: in 2016, that figure was 46%.
The surge is non-payments is perplexing as it takes place at a time when Europe is said to be actively recovering, with GDP rising, unemployment sliding, PMI surveys at or near post-crisis highs, and confidence at near record levels. The development is also ‘a growing concern’ according to Intrum Justitia’s Chief Executive Officer Mikael Ericson, who told Bloomberg ‘this clearly significantly affects both growth and investments in European companies.’

This post was published at Zero Hedge on May 29, 2017.

Turkey Bans Short-Selling, Online-Trading As Nation’s Best-Performing Stock Crashes

After soaring over 100% in the last 3 weeks, Sasa Polyster Sanayi – Turkey’s best-performing stock of the year – crashed 19% at the open after regulators admitted investigations into potentially fraudulent transactions.
The regulator cited trading irregularities between March 24 and May 23, when the stock more than doubled to become the top performer on the Borsa Istanbul 100 Index.

This post was published at Zero Hedge on May 29, 2017.

Asian Metals Market Update: May-29-2017

It is a big week for the US dollar as well as gold, silver and industrial metals. US May nonfarm payrolls will set the trend for the US dollar and also decide whether there will be more than one interest rate hike by the Federal Reserve this year. UK elections trends can result in safe haven demand for gold from the nation. India will decide the GST rate on gold sales and jewelry sales this week too.
Geopolitics gets a new nation in the form of Philippines. State versus ISIS war in a small region of the nation will greater chances of the same spreading to more parts of Philippines. The current situation in Philippines is similar to Syria of 2012. Assad’s war started with a small bunch of so called terrorists which has gulped the whole nation. I will be looking for clues whether Philippines will be converted into a Syria as state heads of both these nations do not bow to the whims and fancies of NATO leaders. (NATO and the UN have a history of ousting pro people leaders like Gadaffi, Assad, Hosni Mubarak to name a few). I am very confident that both gold and bitcoins will benefit if the situation in the Philippines turn to worse.
Philippines problems get aggravated by its neighbor, the most populous Islamic nation in the world ‘Indonesia’ and also Malaysia. Indonesia and Malaysia have a great percentage of population leaning towards the ISIS. The peaceful nation of Australia will also get affected if Philippines problems get aggravated. I am looking at the geopolitical developments in East Asia including the South China Sea.

This post was published at GoldSeek on 29 May 2017.

Time To Add Housing To The Bubble List?

Housing is hot again, but lately it’s been overshadowed by flashier bubbles in government debt, tech stocks and possibly cryptocurrencies.
Still, the warning signs are spreading. Today’s Wall Street Journal, for instance, reports that homeowners are back to using their houses as ATMs:
Homeowners Are Again Pocketing Cash as They Refinance Properties
Americans refinancing their mortgages are taking cash out in the process at levels not seen since the financial crisis.
Nearly half of borrowers who refinanced their homes in the first quarter chose the cash-out option, according to data released this week by Freddie Mac. That is the highest level since the fourth quarter of 2008.
The cash-out level is still well below the almost 90% peak hit in the run-up to the housing meltdown. But it is up sharply from the post-crisis nadir of 12% in the second quarter of 2012.

This post was published at DollarCollapse on MAY 29, 2017.