The Next Shock For Texans: Insurance Often Doesn’t Cover Floods

A complete assessment of the property damage wrought by Hurricane Harvey will take weeks, if not months, to deliver. But as the first disaster victims return to their homes, some are being forced to confront an unfortunate reality: Gaps in their homeowners’ insurance that will leave them on the hook for thousands of dollars’ worth of damages.
According to analytics firm CoreLogic, hundreds of thousands of affected residents in Texas and Louisiana aren’t insured for flooding damage. The firm estimated that residential flooding has caused $25 billion to $37 billion in damage spread across 70 counties in Texas and Louisiana hit by Harvey. Of that, about 70% – or $18 billion to $27 billion – is uninsured.
Scientists have confirmed that Harvey caused a “1-in-1,000-year flood” and that the total cost of property damage and lost productivity could be as high as $190 billion.

This post was published at Zero Hedge on Sep 2, 2017.

See no evil, speak no evil…

The Jackson Hole speeches of Janet Yellen and Mario Draghi last week were notable for the omission of any comment about the burning issues of the day: …where do the Fed and the ECB respectively think America and the Eurozone are in the central bank induced credit cycle, and therefore, what are the Fed and the ECB going to do with interest rates? And why is it still appropriate for the ECB to be injecting raw money into the Eurozone banks to the tune of $60bn per month, if the great financial crisis is over?i
Instead, they stuck firmly to their topics, the Jackson Hole theme for 2017 being Fostering a dynamic global economy. Both central bankers told us how good they have been at controlling events since the last financial crisis. Ms Yellen majored on regulation, bolstering her earlier-expressed belief that financial crises are now unlikely to happen again, because American banks are properly regulated and capitalised.

This post was published at GoldMoney on August 31, 2017.

“Ole Miss Goes Bananas”: Dear Parents, How’s This For A $40K A Year Education?

What new college campus PC outrage could top ESPN’s decision to remove an Asian announcer named Robert Lee from calling a UVA game? One might reasonably think, impossible! But campus snowflakes have done it again, and this time it’s a single discarded banana peel which sent a college fraternity event hosting campus “leaders” into meltdown and general panic.
As one prominent columnist put it, “Ole Miss Goes Bananas” – we truly wish this was merely an over the top parody featured in The Onion, but unfortunately the triggered victims’ tears are all to real. The Daily Mississippian broke the story this week, which quickly went viral:
This weekend, leaders from Ole Miss Greek life convened upon Camp Hopewell in Lafayette County for a three-day retreat designed to build leaders and bring campus closer together. The retreat was cut short Saturday night, however, after three black students found a banana peel in a tree in front of one of the camp’s cabins.
The students shared what they found with National Pan-Hellenic Council leaders, sparking a day’s worth of camp-wide conversation surrounding symbolism, intended or not. In the midst of the open and sometimes heated discussion, senior accounting major Ryan Swanson said he put the banana peel in the tree when he could not find a trashcan nearby.

This post was published at Zero Hedge on Sep 2, 2017.

A2A with Chris Powell of GATA

Chris Powell and Bill Murphy formed the Gold Anti-Trust Action Committee in 1998 and they’ve been stalwart allies in the fight against gold price suppression and manipulation ever since. What a pleasure it was today to get caught up with Chris and get his thoughts on the current state of the global market for gold.
As you listen, you’ll quickly be reminded that Chris is still one of the most informed and well-spoken advocates for our cause. Over the course of this webinar, he addresses a number of current issues including:
the most important lesson he’s learned in the 20 years he’s followed the gold market the strange occurrence of SecTreas Mnuchin visiting Ft Knox and the equally strange television interview of Terry Duffy, the CEO of the CME Group whether the US government would financially benefit from revaluing the price of gold how physical demand will paly a role in finally ending the tyranny of the central banks and bullion banks and much, much more!

This post was published at TF Metals Report on Thursday, August 31, 2017.

Want to Grow the Economy? Stop Listening to Clueless Economists

The great investor and writer Andy Kessler frequently points out that the failure rate among Silicon Valley start-ups is 90 percent. Every member of the economics profession would be wise to memorize the previous figure, and repeat it daily. If so, economists might come closer to understanding why they’re mystified by what they deem slow economic growth. And mystified they are. So much so that they’ve apparently given up.
According to New York Times reporter Binyamin Appelbaum, the theme that emerged from the Kansas City Fed’s Jackson Hole confab is that economists have ceased offering growth proposals. Appelbaum indicates that they’re playing defense now; floating ideas to allegedly ensure things don’t get worse. Having tried everything since 2008 (more on this in a bit), they’ve given up arguing about what they plainly don’t understand, or recognize. It almost renders the credentialed sympathetic in some weird, pathetic way.
And it’s encouraging. While the role of central banks (the Federal Reserve is the world’s #1 employer of economists) in the economy is vastly overstated either way, it’s good to see a routinely incorrect profession realize that it is nearly always incorrect. The first step to healing is recognition of the problem, or something like that.
While central bankers plainly don’t understand what drives economic growth, they need to realize that what they do has little to do with growth as is. Lest they or readers forget, central banks project their always overstated and rapidly shrinking economic influence through antiquated banks; banks arguably the least dynamic sources of credit in the world, and surely the least dynamic in the U. S. Going back to the Silicon Valley stat that begins this piece, does any sane person think banks have anything to do with the finance that drives this hotbed of innovation? This is a short way of saying that even if central bank economists actually had a clue, their doings would have little relevance to the economic sectors that actually power growth.

This post was published at Ludwig von Mises Institute on August 31, 2017.

Gold Back In Favor?

Those who favor gold usually do so in good and bad times. However, the question: Is gold back in favor? seems especially relevant these days.
Gold Back in Favor? For so-called gold bugs, gold is always in favor. For the rest of us, there are reasons to tilt toward the so-called ‘barbaric relic,’ regardless of whether we like or dislike it.
Some of these reasons are obvious:
Stock valuations seem extraordinarily high. Domestic politics appears to be going nowhere with a President who has both political parties against him. Geo-political events seem especially risky. Korea, China, Russia, Iran etc. all present real threats to peace. Afghanistan looks like it may be ratcheting up, including forays into Pakistan. The dollar, while still King, appears weak enough for dissidents to attack its claim to the throne. The world is awash in debt, debt that cannot possibly be honored in today’s dollars (or other currencies).

This post was published at Economic Noise on August 30, 2017.

Market Report: $1300 easily surmounted

Gold finally broke through the $1300 level on Monday, and did it in style. With London closed for a bank holiday, gold appeared to be edging better in quiet European trade, reflecting a lack of sellers rather than buying. When New York opened, the price rose towards the $1300 level, before roaring through it mid-morning. It closed $27 up at $1319.5 in very heavy Comex volume.

This post was published at GoldMoney on September 01, 2017.

Vault Containing $70 Billion In German Gold To Be Evacuated As Frankfurt Defuses Massive Bomb

Approximately 60,000 residents of Germany’s financial capital, Frankfurt, will be ordered to evacuate their homes on Sunday as the city’s emergency service staff will attempt to defuse a massive World War Two bomb, discovered recently at a local building site. The 1.4-tonne HC 4000 bomb dropped by the British air force during World War Two was uncovered on a building site on Wismarer Strasse in Frankfurt’s leafy Westend where many wealthy bankers live.
‘We have never defused a bomb of this size,’ bomb disposal expert Rene Bennert told Reuters, adding that it had been damaged on impact when it was dropped between 1943 and 1945.
Bomb disposal experts who examined it said the massive evacuation could wait until the weekend. ‘We are still working on the modalities of the evacuation plan,’ a spokeswoman for Frankfurt police said on Wednesday.
As a result, ahead of Sunday’s planned evacuation, more than 100 hospital patients, including premature infants and those in intensive care, were evacuated from two Frankfurt hospitals on Saturday, city councillor Markus Frank told Reuters television.

This post was published at Zero Hedge on Sep 2, 2017.

Precious Metals Outperform Markets In August – Gold +4%, Silver +5%

– All four precious metals outperform markets in August
– Gold posts best month since January, up nearly 4%
– Gold reaches highest price since US election, climbs due to uncertainty and safe haven demand
– S&P 500 marginally higher; Euro Stoxx, Nikkei lower for month
– Platinum is best performing metal climbing over 5%
– Palladium climbs over 4% thanks to seven year supply squeeze
– Fear, uncertainty and political sanctions are amongst biggest drivers for precious metals
– Never been a better time to diversify and rebalance portfolios with stocks and bonds near record highs and looking vulnerable
Editor: Mark O’Byrne
All four precious metals have made gains in the month of August.
Whilst platinum and palladium’s leading performances can largely be attributed to industrial factors they have also benefited from the safe haven demand which is driving gold and silver prices.
Safe haven demand really came into its own this last month. Issues with North Korea have stepped up a level whilst markets have finally begun to question the complacency they have been feeling in regard to the US political and financial situation, geopolitical risk and the increasingly uncertain outlook for the global economy.

This post was published at Gold Core on September 1, 2017.

Already Gone II: Minnesota’s Public Pensions Drop To 7th-worst Funded From 30th (Heartache Tonight?)

This is a syndicated repost courtesy of Snake Hole Lounge. To view original, click here. Reposted with permission.
The Eagles said it best in their song: (Minnesota’s public pensions are) already gone. They left out the part where Minnesota tax payers are on the hook for $33.4 billion in debt ($6,000 for every resident).
(Bloomberg) – Minnesota’s debt to its workers’ retirement system has soared by $33.4 billion, or $6,000 for every resident, courtesy of accounting rules.
The jump caused the finances of Minnesota’s pensions to erode more than any other state’s last year as accounting standards seek to prevent governments from using overly optimistic assumptions to minimize what they owe public employees decades from now. Because of changes in actuarial math, Minnesota in 2016 reported having just 53 percent of what it needed to cover promised benefits, down from 80 percent a year earlier, transforming it from one of the best funded state systems to the seventh worst, according to data compiled by Bloomberg.
‘It’s a crisis,’ said Susan Lenczewski, executive director of the state’s Legislative Commission on Pensions and Retirement.

This post was published at Wall Street Examiner on September 2, 2017.

Rickards: “There Are Three Things Going On With Gold Right Now”

Jim Rickards joined Kitco News and Daniela Cambone to discuss the latest news and analysis from gold markets, geopolitics and even bitcoin. The Wall Street veteran took on the bigger picture facing metals investors and what could be just around the corner in a bubbling market.
Jim Rickards is the editor of Strategic Intelligence and is the New York Times best-selling author of The Road to Ruin. Rickards’ worked on Wall Street for decades and has advised the U. S intelligence community on international finance, trade and financial warfare.

This post was published at Zero Hedge on Sep 1, 2017.

Moscow Furious Over US Plan To Search Russia Trade Mission, Calls It “Unprecedented Aggressive Action’

Yesterday, the San Francisco fire department scrambled a team of firefighters to the city’s Russian consulate (scheduled to be vacated today in the latest tit-for-tat diplomatic escalation between the US and Russia) following reports of “blowing smoke” emerging from the building, only to learn that the Russians were engaged in what appears to have been some last minute confidential document “redaction.”
Maria Zakharova, the spokeswoman for the Russian foreign ministry, explained that the smoke was part of a ‘mothballing’ according to Reuters.
‘In relation to this, the windows could be closed, the light could be turned off, the water could be drained out, the heating appliances could be turned off, the garbage could be thrown away, essential services could be turned off and many other things.”
Of course, what was really going on was 11th hour document destruction (albeit the old-fashioned way, one not involving a hammer, blackberries, and thousands of deleted emails) and as subsequent events have showed, the Russians had reason to be paranoid: on Saturday, the US unveiled its intention to search the soon to be vacant Russian trade mission in Washington, a move which has infuriated Moscow, prompting Russia to summon the deputy chief of mission of the US Embassy in Moscow to lodge a note of protest over the planned search.

This post was published at Zero Hedge on Sep 2, 2017.

How Welfare States Encourage Bad Economic Thinking

The greatest intellectual accomplishment of the laissez-faire liberal theorists was the recognition of the ‘hard’ and ‘soft’ institutions that are crucial prerequisites of productive accomplishment and material prosperity. The hard institutions include private property rights, market prices, and sound money. The soft institutions include those that reinforce values such as prudence, thrift, resourcefulness, innovative courage, and respect for success.
However, this accomplishment was accompanied by a proportionately great intellectual error – the belief that these institutions can be safeguarded exclusively by monopolistic apparatus of aggressive violence, commonly known as states. Since states necessarily parasitize on the productive output of market society, the belief that they are necessary for its emergence, let alone that they can remain ‘minimal’ after its emergence, is fatally misguided. On the contrary, it appears perfectly predictable that they will grow in step with the increase in market output.
Unfortunately, this is not the end of the story. As powerful as states may be in terms of sheer physical force, their survival is ultimately rooted in favorable public opinion, and the best way to secure such opinion is to share their plunder as widely as possible. Thus, with sufficiently wealthy hosts at their disposal, states invariably turn into ‘welfare’ states. And it is at this point that they start sawing off the branch on which they are sitting.
With productive achievement institutionally separated from consumption opportunities, the wealth-generating soft institutions start to erode particularly fast. When there is great abundance all around, but it seems that it can be enjoyed without putting in any productive effort, increasingly many of those who do not so enjoy it come to believe that abundance is a free good, and that the only reason why it is not free for them is because someone unfairly withholds it from them. In other words, the prevalence of welfare-statist ‘redistribution’ spells the death of economic thinking – that is, thinking in terms of resource scarcity, opportunity costs, and incentive structures. This temporarily strengthens the state even further – since at this point the state immediately steps in as an entity that is able and willing to punish the malevolent withholders – but it also further accelerates the death of the goose that lays its golden eggs.

This post was published at Ludwig von Mises Institute on September 2, 2017.

Trump Asks That $8 Billion Harvey “Down Payment” Be Added To Debt-Ceiling Bill

Shortly after President Trump backed away from his demand that $1.6 billion in funding for his border wall be included in a continuing-resolution bill to avert a government shutdown, the White House late Friday sent a request for $8 billion in emergency funding for the Hurricane Harvey cleanup effort, and asked that the money be tied to a bill to raise the US debt-ceiling limit. Trump’s request that the two legislative priorities be combined in one bill likely won’t go over well among Congressional Republicans, according to Bloomberg.
Rep. Mark Meadows of North Carolina, the leader of the House Freedom Caucus and perhaps Trump’s most intransigent political adversary, urged lawmakers on Thursday not to bundle the two legislative priorities. In a tweet, Meadows said it’d be ‘inappropriate’ and ‘would send the wrong message’ to use Harvey funds as leverage to force conservatives to vote for a debt-ceiling increase.

This post was published at Zero Hedge on Sep 2, 2017.

Colorado Scattershots

Ask a child what he or she wants to be when they grow up, and you’ll probably get a standard answer: firefighter, doctor, teacher – all occupations we learn to recognize at an early age. Rarely do you hear a young one say, ‘I want to be a writer.’ I don’t recall ever saying it. Yet here I am, with writing as one of my several occupations.
It may have been my very early love of reading and feeling the rhythm of the words on the page that put me on this road. One my real influences was the legendary sportswriter Blackie Sherrod. For decades he wrote a column for the Dallas Times Herald and later the Dallas Morning News. Reading him made me think of being a sportswriter, although that kind of writing is now is the farthest thing from my mind. But I did pick up a lot of style and storytelling tips from Blackie’s columns.
Blackie usually focused on one subject, but on occasion he would do what he called ‘scattershooting’ instead. The column would be a series of short paragraphs with no connection to each other and in no particular order. I loved those days. To me, they were a kind of sports buffet that let me sample a little bit of everything.
Today’s letter will be my version of Blackie Sherrod’s scattershooting. I’ve been in Colorado with Shane all week. Beaver Creek is stunningly beautiful in the summer, so it’s been hard to keep up with the news or check email.
Instead of delving deep into one subject, I’ll give you my quick thoughts on several different items. They aren’t connected to each other, nor do they build up to any sort of conclusion. They’re just what is on my mind as we wrap up summer 2017.
Now, let’s go scattershooting.
Economic Storm
The top-of-mind news is the havoc wreaked by Hurricane Harvey on South Texas and Louisiana. Houston is getting most of the publicity, but the affected area is much larger. As a lifelong Texan, I have many friends in that region. They’ve lived through many storms and normally take what natures throws at them in stride. Not this time. I am seeing headlines calling this a thousand-year flood. It seems that over 100,000 homes in Houston alone were flooded. Harvey meant business. Recovering from this storm will take a long time and a lot of resources.
Economically, Harvey will likely be big enough to actually show up in national data. The weird part is it may eventually look like growth instead of destruction, because of the way we measure GDP. Gross domestic product looks at what the nation produces. It doesn’t matter if we lost something else on the way there and are merely rebuilding to get it back.

This post was published at Mauldin Economics on SEPTEMBER 2, 2017.

The Working Class Can’t Afford The American Dream

For millions of middle- and working-class Americans, the “American Dream” is all but dead. Far from being able to afford their own homes, the Fed’s latest survey on the wellbeing of US households revealed that nearly a quarter of Americans are unable to pay their monthly bills on time, and nearly half have less than $400 in the bank…
But in what’s perhaps the most comprehensive analysis of the financial security of American workers, a study published by explores the true cost of living for working-class Americans in dozens of US cities.
What they found is hardly surprising. In most areas of the country, the average working-class household would be running a spending deficit. According to HowMuch’s methodology, the best place to live from a financial perspective on an Average Joe’s salary is Fort Worth, Texas, which would leave a working-class family with a $10,447 surplus at the end of the year. On the flip side, that same family would need an additional $91,184 just to break even in New York City.

This post was published at Zero Hedge on Sep 1, 2017.

Oil Tanker Logjam Grows To 54 Ships As Gulf Ports Remain Closed

On Tuesday, just as Hurricane Harvey was peaking, we reported that according to ship-tracking data compiled by Bloomberg, as well as MarineTraffic real-time tracking, at least 25 tankers carrying almost 17 million barrels of imported crude oil were drifting near Texas and Louisiana ports, unable to offload because of closures from Tropical Storm Harvey.
Since then the situation has deteriorated by more than double, and as of Friday evening, Bloomberg reports that 54 tankers with capacity more than 33 million barrels either to deliver imported crude from Latin America, Europe, Caribbean, Africa and Middle East or receive U. S. supplies are drifting off U. S. Gulf Coast as several key ports remain closed while others are open with restrictions.
The historic “tanker traffic jam”, last observed nearly two years ago as traders scrambled to store crude tankers in the same region in hopes of contango, can be seen on the Marine Traffic map below, only this time it has little to do with the shape of the oil strip, and everything to do with the logistical complications following Harvey :

This post was published at Zero Hedge on Sep 1, 2017.

Palladium Suddenly Spikes To 16-Year Highs

Amid hope for reinvigorated auto production (after Hurricane Harvey’s destruction) and yesterday’s escalation in US-Russia tensions (Russia being the world’s largest producer), spot Palladium is spiking today, hitting its highest since record highs in January 2001.
While the entire gamut of industrial and precious metals have been rising recently (the latter on the back of Chinese demand hype), Palladium prices exploded today out of nowhere (biggest jump in 7 months).
Pushing the precious metal to its highest in 16 years…
There appear to be a few catalysts for the recent trend and today’s spike…
1. China’s commodity panic-buying trend
There just appears to be blind panic-buying momentum from China in any and every industrial metal and along with gold prices surging amid North Korea and debt ceiling drama, we suspect Palladium is catching a bid on the back of that.

This post was published at Zero Hedge on Sep 1, 2017.

Venezuela Headed For “Messiest Debt-Restructuring In History” Thanks To US Sanctions

After being effectively shut out from global financial markets – a situation that was made more precarious by US sanctions prohibiting purchases of Venezuelan debt (unless you’re buying them off Goldman Sachs, should the bank’s asset-management arm desire to liquidate its $3 billion ‘hunger bond’ position) – Venezuela is drawing ever-nearer to what the Financial Times describes as potentially the ‘messiest debt restructuring in history.’
So far, Venezuela has managed to forestall a default by stripping assets from its state-owned oil company, Petroleos de Venezuela, commonly referred to as PVDSA, and shaking down local institutions of spare dollars – not to mention the explicit financial support of China and Russia. Recently, Rosneft, the largest Russian oil company, helped support its troubled ally, which enjoys the largest crude reserves in the world, by offering billions of dollars in advance payments for future crude supplies. Thanks to a deal brokered by deceased former President Hugo Chavez, Venezuela has for years been Rosneft’s largest foreign supplier of crude. Last year, the oil giant accepted a 49.9% stake in PVDSA’s US-based subsidiary, Citgo, as collateral for a $1.5 billion loan.

This post was published at Zero Hedge on Sep 1, 2017.