Shrinkflation – Real Inflation Much Higher Than Reported

Shrinkflation – Real inflation much higher than reported and realised Shrinkflation is taking hold in consumer sector Important consumer, financial, monetary and economic issue being largely ignored by financial analysts, financial advisers, economists, central banks and the media. Food becoming more expensive as consumers get less for price paid A form of stealth inflation, few can avoid it Brexit is the scapegoat for shrinkflation by the media and companies Consumers blame retailers rather than central banks Gold hedge has doubled in value since 2007 Editor: Mark O’Byrne
Shrinkflation: no one left untouched
600 new words entered our official lexicon this week as the Oxford English Dictionary announced the latest new additions to their online records.
One of the words reportedly up for consideration was shrinkflation. It did not make the final cut and as a result continues to be defined by the authority as ‘a portmanteau, made from combining shrink: ‘to become or make smaller in size’, with the economic sense of inflation: ‘a general increase in prices and fall in the purchasing value of money’.

This post was published at Gold Core on June 28, 2017.

How The “Enigma Network” Led To A Historic Crash In One Hong Kong Market

Yesterday morning we discussed the sudden crashes amid 17 small cap Hong Kong firms, which collectively lost over $6 billion in market cap, on what we dubbed was a marketwide margin call, as confidence in the entire sector vaporized instantly, sending the small cap Growth Enterprise Market (GEM) plunging by over 9%, with some stocks plunging over 90%. Quoted by Bloomberg, Francis Lun, the CEO of HK’s Geo Securities said ‘we’re seeing a domino effect; all the companies in the same network got cut. These shares are owned by the same group of people so they must be experiencing a liquidity crunch and they don’t have the money to support the share prices.”
It turns out there was more to this story, at the heart of which is a report issued six weeks ago titled ‘The Enigma Network: 50 stocks not to own’ by David Webb, a former director of the Hong Kong stock exchange, whose argument is that companies which crashed were entwined in a complex web of cross-shareholdings that had pushed their valuations to unsustainable levels. As Reuters adds, “Webb’s report mapped out a complex web of cross-shareholdings between companies listed on both the main board and its sibling, the Growth Enterprise Market, which he said created a breeding ground for volatility.”

This post was published at Zero Hedge on Jun 28, 2017.

Illinois Policymaker: “We Are About To Become The Financial Deadbeat Of The Nation”

One week ago, Illinois state comptroller, Susana Mendoza, gave a detailed explanation in her letter to Gov. Rauner and members of the state legislature – two parties that have been locked in a nearly three year long confrontation, preventing them from agreeing on a state budget – explaining why Illinois was on the verge of total collapse.
“The state can no longer function without a responsible and complete budget without severely impacting our core obligations and decimating services to the state’s most in-need citizens,” Mendoza wrote. “We must put our fiscal house in order. It is already too late. Action is needed now.” And unveiling the most dire language yet, in her letter Mendoza said “we are now reaching a new phase of crisis” perhaps in an attempt to prompt the Democrats and Republicans to sit down and come up with a compromise
Since then, despite all parties’ “best efforts” (actually, there have been no real efforts whatsoever) to reach a compromise after two years of failures, nothing has really changed, with the only difference that Illinois is now just three days away from financial armageddon, because come July 1 and the state has no budget for its third fiscal year, a downgrade of the state to junk – for the first time in US history – is assured, unleashing interest rate hell for future debt issues, and ultimately, bankruptcy.

This post was published at Zero Hedge on Jun 27, 2017.

The Federal Reserve Is A Saboteur – And The “Experts” Are Oblivious

I have written on the subject of the Federal Reserve’s deliberate sabotage of the U. S. economy many times in the past. In fact, I even once referred to the Fed as an “economic suicide bomber.” I still believe the label fits perfectly, and the Fed’s recent actions I think directly confirm my accusations.
Back in 2015, when I predicted that the central bankers would shift gears dramatically into a program of consistent interest rate hikes and that they would begin cutting off stimulus to the U. S. financial sector and more specifically stock markets, almost no one wanted to hear it. The crowd-think at that time was that the Fed would inevitably move to negative interest rates, and that raising rates was simply “impossible.”
Many analysts, even in the liberty movement, quickly adopted this theory without question. Why? Because of a core assumption that is simply false; the assumption that the Federal Reserve’s goal is to maintain the U. S. economy at all costs or at least maintain the illusion that the economy is stable. They assume that the U. S. economy is indispensable to the globalists and that the U. S. dollar is an unassailable tool in their arsenal. Therefore, the Fed would never deliberately undermine the American fiscal structure because without it “they lose their golden goose.”

This post was published at Alt-Market on Wednesday, 28 June 2017.

Chinese Satellite Data Hint At Ominous Manufacturing Slowdown

Chinese factory activity contracted last month for the first time in nearly a year when the Caixin PMI dipped below 50, the threshold for growth. And now, early indicators for the month of June – including one satellite-based measure – suggest that there’s more pain ahead for the manufacturing sector in the world’s second-largest economy.
A reading published by San Francisco-based SpaceKnow Inc. which uses commercial satellite imagery to monitor activity across thousands of industrial sites signaled deterioration in the country’s manufacturing sector for the first time since August. The gauge, known as the China Satellite Manufacturing Index, fell to 49.6, below the 50 break-even level. The index incorporates satellite data from thousands of industrial sites across China.
Satellite imagery has often proved eerily presceint in the recent past: In the US, satellite data analyzing activity in retailers’ parking lots pointed to significant activity weakness at core US retail locations, even as sentiment indicators were suggesting an uptick in sales following the election.

This post was published at Zero Hedge on Jun 27, 2017.

Proximity Is Destiny

Privilege is unearned proximity to power in all its manifestations. My friend G. F. B. recently coined an insightful maxim: Proximity Is Destiny. The power of this concept lies in its unification of physical proximity and abstract proximity. We all understand physical proximity can be consequential. As the Titanic settled lower in the ice-cold Atlantic, those close enough to the lifeboats to secure a seat (mostly the first and second class passengers) lived and those who were not died. College graduates seek internships at the most successful companies because they know the connections they make by working within the headquarters might lead to a job offer: physical proximity to movers and shakers (and those with the power to hire) is destiny. But proximity to abstract manifestations of power is even more consequential in an economy/society in which wealth and power are predominantly abstract. For example, getting an internship in the Federal Reserve doesn’t mean you can obtain proximity to the Fed’s money/credit spigot as a result of your physical proximity to the building or staff: the really powerful proximity–being close to the Fed’s money/credit spigot–is entirely abstract. Abstract proximity is structural, and often invisible. We can’t discern an individual’s proximity to money/ credit/ privileged-information spigots by their physical locale or appearance, though we may infer their income/wealth from various status signifiers.

This post was published at Charles Hugh Smith on TUESDAY, JUNE 27, 2017.

Yellen: “I Don’t Believe We Will See Another Crisis In Our Lifetime”

If there was any confusion why the Fed intends to keep hiking rates, even in the face of negative economic data and disappearing inflation, it was put to rest over the past 2 days when not one, not two , not three, but four Fed speakers, including the three most important ones, made it clear that the Fed’s only intention at this point is to burst the asset bubble.
First there was SF Fed president John Williams who said that “there seems to be a priced-to-perfection attitude out there’ and that the stock market rally “still seems to be running very much on fumes.” Speaking to Australian TV, Williams added that “we are seeing some reach for yield, and some, maybe, excess risk-taking in the financial system with very low rates. As we move interest rates back to more-normal, I think that that will, people will pull back on that,
Then it was Fed vice chairman Stan Fischer’s turn, who while somewhat more diplomatic, delivered the same message: “the increase in prices of risky assets in most asset markets over the past six months points to a notable uptick in risk appetites…. Measures of earnings strength, such as the return on assets, continue to approach pre-crisis levels at most banks, although with interest rates being so low, the return on assets might be expected to have declined relative to their pre-crisis levels–and that fact is also a cause for concern.”

This post was published at Zero Hedge on Jun 28, 2017.

For mainstream news agencies, gold’s flash crash on Monday in London must be somebody’s “mistake“

Gold sank like a stone at 9 a.m. in London after a huge spike in volume in New York futures that traders said was probably the result of a “fat finger,” or erroneous order.
Trade shot up to 1.8 million ounces of gold in just a minute, a level not reached even with the surprise election of U.S. President Donald Trump or Britain’s vote to leave the European Union.
“No one has a clue, apart from the unfortunate individual that pressed the wrong button,” David Govett, head of precious metals trading at Marex Spectron Group in London, said of the spike in volume. Thin activity and automated trading may exacerbate such moves, he said.

This post was published at bloomberg

Next global financial crisis to hit with a “vengeance“, warns BIS

The global economy is caught in a permanent trap of boom-bust financial cycles. This deformed structure is becoming ever more corrosive and dangerous as debt ratios rise to vertiginous levels, the world’s top monetary watchdog has warned.
The Bank for International Settlements said the rot in the global monetary system has not been cut out since the Lehman crisis in 2008.
The current ageing and unstable cycle could finish in much the same explosive way, contrary to the widespread belief that it was a once-in-a-century event caused by speculators.
‘The end may come to resemble more closely a financial boom gone wrong, just as the latest recession showed, with a vengeance,’ said Claudio Borio, the BIS’s chief economist.
The venerable Swiss-based institution says the financial system is about to be tested as the U.S. Federal Reserve steps up the pace of monetary tightening. A decade of ultra-loose…

This post was published at The Telegraph

After Puerto Rico’s Debt Crisis, Worries Shift to U.S. Virgin Islands

The United States Virgin Islands is best known for its powdery beaches and turquoise bays, a constant draw for the tourists who frequent this tiny American territory.
Yet away from the beaches the mood is ominous, as government officials scramble to stave off the same kind of fiscal collapse that has already engulfed its neighbor Puerto Rico.
The public debts of the Virgin Islands are much smaller than those of Puerto Rico, which effectively declared bankruptcy in May. But so is its population, and therefore its ability to pay. This tropical territory of roughly 100,000 people owes some $6.5 billion to pensioners and creditors.
Now, a combination of factors – insufficient tax revenue, a weak pension system, the loss of a major employer and a new reluctance in the markets to lend the Virgin Islands any more money – has made it almost impossible for the government to meet its obligations. In January, the Virgin Islands found itself unable to borrow and nearly out of funds for basic government operations.

This post was published at NY Times

The Ultimate Regulatory Reform: Abolish Fractional Reserve Banking!

Convocation of the Clueless The Trump Administration has presented the first part of its plan to overhaul a number of Wall Street financial regulations, many of which were enacted in the wake of the 2008 financial crisis. The report is in response to Executive Order 13772 in which the US Treasury Department is to provide findings ‘examining the United States’ financial regulatory system and detailing executive actions and regulatory changes that can be immediately undertaken to provide much-needed relief.’*
In release of the first phase of the report, Treasury Secretary Steven T. Mnuchin stated:
‘Properly structuring regulation of the U. S. financial system is critical to achieve the administration’s goal of sustained economic growth and to create opportunities for all Americans to benefit from a stronger economy. We are focused on encouraging a market environment where consumers have more choices, access to capital and safe loan products – while ensuring taxpayer-funded bailouts are truly a thing of the past.’**

This post was published at Acting-Man on June 28, 2017.

Myths Behind the War on Cash

The attacks on physical cash from a phalanx of economists, central bankers, commercial banks, and politicians have not diminished in recent years. On the contrary, in the face of the worldwide increase in terror attacks, particularly in Europe, and ongoing pressure on public budgets, the cash ban issue is increasingly dragged into the spotlight.
In a highly-recommended study entitled ‘Cash, Freedom and Crime. Use and Impact of Cash in a World Going Digital,’ Deutsche Bank Research demolishes numerous popular myths surrounding cash, inter alia in the context of crime and terrorism. Without cash there are no longer bank robberies at gun point, instead there are now electronic bank robberies. Fraud involving credit cards and ATM cards is massively increasing in Sweden, the country considered the pioneer of the cashless society. The argument that adopting a cashless payment system would facilitate the fight against terrorism doesn’t hold water either:
As regards terrorism in Europe, an analysis of 40 jihadist attacks in the past 20 years shows that most funding came from delinquents’ own funds and 75% of the attacks cost in total less than USD 10,000 to carry out – sums that will hardly raise suspicions even if paid by card.

This post was published at Ludwig von Mises Institute on June 28, 2017.