The Refi Boom Is Dead; Applications Drop To Lowest Since Lehman

The Fed’s QE efforts were – if one is to believe the words spewed from their ever-lying mouths – designed to aid the man on the street, to lower interest rates, and enable another refinancing-led housing boom/bubble which would maintain the status quo and confirm the ‘happily-ever-after’ dream of every taxpaying (and non-taxpaying American). Today’s data from the Mortgage Banker’s Association confirms – QE’s work is done and the refi boom is over. A 7% plunge on the week has pushed the refinancing activity index to its lowest levels since September 2008 – just before Lehman.



Chart: Bloomberg

via Zero Hedge Tyler Durden

You Pay For Tax Haven Bliss

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You don’t benefit from it, but you pay for it as a result of the government losing out. Yes, the government complacently sits back and does nothing while tax havens enable people to put their money hidden away in some secret off-shore excuse for a bank while at the very same time the taxpayer ends up paying for what the state is losing out on. Why is it that it’s the little guy stuck in the middle that gets pushed around, shoved into a corner for him to have his nose pummeled by the taxes levied on him, instead of the ones that are putting the money away in those off-shore financial generators? It’s not as if it’s just a couple of dollars per person. No, the sum that every American citizen ends up paying because of that works out to roughly $1,259 extra on their tax bill. Yes, the state is hardly going to allow the shortfall to go amiss and it’s the average American that end sup picking up the tab.

According to research carried out by US Public Interest Research Group in Boston, there are some $150 billion in federal revenue and $34 billion in state revenue that goes down the plug-hole into some off-shore banker’s vaults. It’s all stashed away by wealthy corporations and high-net-worth individuals that want to (and therefore have the financial ability to) avoid paying their taxes in the USA. Estimates show that corporations account for about $110 billion of the total that is lost and private individuals make up what’s left.

93% of the profit made for corporations between 2008 and 2013 was through off-shore companies, meaning that they were paying no tax in the USA. Great, so now we understand just why (well, one of the reasons apart from the Federal Reserve blunder on Quantitative Easing and the far-from-wise handling of the economy by Ben Bernanke and his pals) the economy hasn’t actually budged an inch in the right direction.

The loony loophole that we are all paying for is that any corporation can avoid paying federal income tax on offshore profits. Easy, and you can’t even call it a loophole. It’s a clear-cut measure to allow those corporations to benefit from the non-payment of taxation in the USA. Not only do those corporations manage to avoid paying taxes in the USA on a federal level, but they don’t have to pay tax in the states where they are operating. Nice! Why not let us all set up our own corporation, or even better all Americans should join forces, create the People’s Corporation, headquarter ourselves in the Cayman Islands and then refuse to pay both federal and state taxes since we will be based offshore, operating within the USA and exploiting the so-called loophole.

290 of the top Fortune 500 companies in 2013 held $1.6 trillion of their profits in accounts located in tax havens. That was an increase from $1.1 trillion in profits in 2009. Nice little earner this business, isn’t it?

If you live in California, New York and New Jersey, then you’re suffering the most since it’s in those states that there are the most tax dodgers.

But, it’s fighting a losing battle sometimes where all of this is concerned. Do we really believe that the people that earn the most, those that have their own savings in offshore accounts are really going to put an end to his? Taxes were never made to be fair. They were intended to share the money (that was the idea) and provide for those that needed it so that we had a better world. The real reason taxation might have been invented is to filter the money of the people through the hands of those that meet in the corridors of power. Ah! Well, as the humorist Will Rogers once said “it’s a good thing we do not get as much government as we pay for”. Always look on the bright side of life…

The average American ends up paying that shortfall in government revenue simply because without that money the state cuts spending, increases taxes and establishes an order of priority of who gets what and how much is dished out.

Remember as someone once said, you don’t pay taxes, they take taxes!

Originally posted: You Pay For Tax Haven Bliss

Day Trading Data Sheets Futures and Forex

via Zero Hedge Pivotfarm

Eric Sprott On The Implications Of The “Chinese Gold Vortex”

Submitted by Eric Sprott via Sprott Global Resource Investments,

After a long and agonizing winter which was attributed to the so-called “Polar Vortex”, we thought it would be appropriate to highlight for precious metal investors the implications of what we call the “Chinese Gold Vortex”. Over the past year, we have been very vocal about what we consider an aberration: the complete disconnect between gold supply and demand fundamentals and the actual price of the metal.

We have shown in February Markets at a Glance (MAAG) that, for all of 2013, demand from emerging markets, particularly China, was extremely strong, outstripping world mine supply by a fair amount. But this extreme tightness in the physical market was not reflected in gold prices. We have since then discussed many signs of manipulation in both the paper and physical gold markets (ETF flows, Indian intervention, LBMA fixings, to name a few).

This month’s Markets at a Glance presents an update on the demand dynamics in China, discussion around new evidence of manipulation and concludes with an illustrative example of the opportunity in gold equities.

Supply and Demand

While the year is still young, we have been able to gather a few data points from China and they are truly impressive. The table below shows Chinese net imports of gold for the first two months of 2014.1 So on average, each month this year, China has imported about 204 tonnes of gold, up from about 143 tonnes last year.2

Chinese data is taken from the Hong Kong Census and Statistics Department. Swiss data is taken from the Swiss Customs Administration, which started reporting gold exports to specific countries in 2014.

To put these numbers in perspective, for the full year 2013, total mine supply excluding China and Russia averaged 192 tonnes per month (see the February 2014 MAAG for details on the methodology).3 Basically, China is currently vacuuming, on a monthly basis, all of the world’s mine production plus an additional 10 tonnes. But that is only China; anecdotal evidence from other countries suggests that demand remains strong in other Emerging Markets, where Central Banks keep adding to their gold reserves. Moreover, whereas last year’s ETFs contributed (unsustainably) to supply, this year has so far seen net inflows into gold bullion ETFs.

What immediately comes to mind is: where does all this gold come from? As we have long argued, gold to Emerging Markets has been supplied by Western Central Banks for many years.4 Recent data substantiates this claim. A closer look at Swiss import and export data shows that it imports most of its gold from the US and the UK and exports most of it to China and Hong Kong. For example, in the first two months of 2014, the UK has exported over 233 tonnes of gold to Switzerland; this is more than half of the Chinese net imports over the same period (remember the UK doesn’t produce any gold). Similarly, the US, which has a monthly gold production of about 19 tonnes, has exported, in the month of January alone 56 tonnes, most of which went either to Switzerland or to Hong Kong directly.5 So where does all this gold come from? It is supplied by Western Central Banks, which according to our analysis have very little gold left.

While it is still early, the Chinese Gold Vortex is firing on all cylinders and data so far this year suggests that demand will far outstrip supply.


The topic of gold price manipulation seems to be making its way into the mainstream. Regulators in Germany made the first foray into gold manipulation with their investigations of the London Bullion Market Association (LBMA) now infamous Gold Fixing.6 Now, we hear that the CME Group (which owns the COMEX, where paper gold trades) has been sued by three traders for allegedly selling order information to HFTs ahead of the broader market.7

Simultaneously, academic studies have found evidence of manipulation in the gold market and a consultancy (Fideres) even claims that “global gold prices may have been manipulated 50% of the time between January 2010 and December 2013”.8

We have long suspected manipulation, but it is now clear to us that both the physical and paper bullion markets have been tampered with for quite some time, to the advantage of those that are naturally short gold (i.e. the bullion banks and other gold dealers). With the increasing amount of scrutiny from the public, academia, regulators and now lawyers, manipulators should have a progressively more difficult time preventing gold from reaching fair value.

The Opportunity

The stars are aligned in 2014 for a significant re-rating of the gold price. In our opinion, the best way to participate in a return of the gold price to fundamentals is to invest in junior gold miners. The tables below show EPS estimates under various gold price scenarios and the associated stock price targets, assuming a price-to-earnings ratio of 10x, for both a major (Barrick) and a junior (Crocodile) miner. From the table, it is obvious that junior gold miners have much more leverage to the price of gold.

Estimates are for FY2014. Price returns assume a P/E ratio of 10x. All figures in USD.
Source: Sprott Estimates and RBC Capital Markets
For illustrative purposes only, Eric Sprott and Sprott Asset Management Funds beneficially (directly or indirectly) may own in excess of 1% of one or more classes of the issued and outstanding securities of the above securities.

In summary, the tailwinds are twofold for gold: the Chinese Gold Vortex is putting an undeniable pressure on the physical market, while focus on price manipulation makes it progressively harder for price manipulators to operate. The reversal of this anomalous, yet explicable market dysfunction could provide astute investors with multi-hundred per cent returns.

Do not miss this Golden Opportunity!

via Zero Hedge Tyler Durden

What The Independents Saw at the Vape-in

mentioned here
yesterday, the Reason-co-sponsored
“Thank You for Vaping” event at the Museum of Sex’s club Play
Monday night was a good time for all, and got a lot of nice
write-ups. (In addition to the ones mentioned in the post, there
were others in the New York
Daily News
Fishbowl NY
, Eater
, and

The Independents was also there, and last night put
together this segment:

from Hit & Run

Wisdom From Steve Jobs On The Coming System Reset

Submitted by Simon Black via Sovereign Man blog,

Steve Jobs used to tell a very inspiring story about an article he read in Scientific American when he was a boy:



He said that the article measured the ‘efficiency of locomotion’ of various species– essentially how many calories different animals spend getting from Point A to Point B.


The most efficient of all? Not human beings. Not by a long shot. It was the condor. The condor expended the least amount of energy per meter or kilometer traveled. Human beings were pretty far down the list.


But as Jobs recounts, the authors had the foresight to also test the efficiency of a human being on a bicycle. And this absolutely blew all the other species away.


Jobs later said that this was incredibly influential on his thinking because he realized that human beings were fundamentally tool creators. We take our situation, however grim or rudimentary, and we make it better.

There’s undoubtedly a lot of bad news in the world these days. Some people realize it. Others refuse to believe it and stick their heads in the sand.

Our century-old monetary system is unraveling before our very eyes.


This absurd structure in which we award a tiny central banking elite with the dictatorial power to control the money supply in their sole discretion is now drowning the world in paper currency.


ALL financial markets are manipulated by central banks, predominantly the Federal Reserve. One woman– Janet Yellen– has the power to affect the prices of nearly everything on the planet, from the wholesale price of coffee in Colombia to the cost of a luxury flat in Hong Kong.


Moreover, politicians in some of the most ‘advanced’ economies in the world (Japan, the US, France, the UK, etc.) have accumulated so much debt that they have to borrow money just to pay interest on the money they have already borrowed.


They have indebted generations who will not even be born for decades.


They wage endless, costly wars. They spy on their citizens. They tell people what they can and cannot put in their bodies. They confiscate private property and wages at the point of a gun.


They abuse the population with legions of heavily armed government agents. They conjure so many codes, rules, regulations, laws, and executive orders that it becomes nearly impossible for an individual to exist without being guilty of some innocuous, victimless crime.

And they arrogantly masquerade the entire ruse as a free society.

This system is on the way out. It will reset.

Like feudalism before, our system will go the way of the historical dust bin. And future historians will look back (just as we view feudalism) and say “why did they put up with that nonsense…?

This reset is nothing to fear. Human beings are incredible creatures who have a long-term track record of growth. We rise. We progress.

via Zero Hedge Tyler Durden

Washington Court Rejects Legal Rationale for Medical Marijuana Dispensaries, but That’s Not Why Their Days Are Numbered

 state appeals court ruling
issued a month ago rejected the main legal theory under which
Washington’s medical marijuana dispensaries operate. But
that decision may not make much difference in practice, given the
various other factors that will determine whether these businesses
can continue to supply patients with marijuana—in particular, the
views of local officials and state legislators.

To understand the decision’s significance requires a
little background on medical marijuana in
In 1998 Washington voters
Initiative 692, which 
created an
affirmative defense against possession and cultivation charges for
patients who use marijuana to treat “terminal or debilitating
conditions” based on a medical recommendation. The law gave the
same defense to “any designated primary caregiver who assists a
qualifying patient in the medical use of marijuana.” But it offered
no clear option for 
patients who were not up to
growing their own medicine and could not find someone willing to do
it for them.

Until 2011 dispensaries in Washington operated based on a
model in which a given seller became the temporary “designated
provider” (as the role was renamed in 2007) for each patient who
bought cannabis from him. That year the legislature finally
approved a bill aimed at regulating the medical marijuana business.
But Gov. Christine Gregoire vetoed
most of the bill, citing advice from Jenny Durkan and Michael
Ormsby, Washington’s U.S. attorneys. In a letter to
Gregoire, Durkan and Ormsby warned that licensing and regulating
dispensaries would result in massive violations of the Controlled
Substances Act (CSA), that they could respond with “civil and
criminal legal remedies,” and that “
state employees
who conducted activities mandated by the Washington legislative
proposals would not be immune from liability under the

Gregoire, who had solicited the U.S. attorneys’ guidance and may
have been looking for an excuse to veto the bill, interpreted that
last sentence as a threat to prosecute state employees involved in
licensing and regulating medical marijuana suppliers. She therefore
vetoed all the provisions of the bill that would have put them in
that position. At the same time, the governor signed into law two
provisions that inadvertently created the current dispensary

One provision closed the “designated provider” loophole, saying
providers had to wait 15 days before switching from one patient to
another. The other provision let patients grow cannabis in
” rather than buy it from the state-licensed outlets
that were supposed to be the main source of medical marijuana. That
provision, which allowed up to 10 patients and 45 plants per
garden, became the new legal rationale for dispensaries. Today
medical marijuana suppliers in Washington typically operate as
collective gardens (or associations of collective gardens) with
rotating memberships: When a patient enters a dispensary, he
becomes a member for the length of the transaction.

State Sen. Jeanne Kohl-Welles (D-Seattle), the chief sponsor of
the 2011 bill, says that system is “very different” from what she
had in mind. “There’s nothing in statute expressly allowing
dispensaries or prohibiting them,” she says. “There’s been a lot of
innovative interpretation.” Martin Martinez, who in 1999 founded
Life Vine, Washington’s first medical marijuana collective, thinks
“all of these dispensaries basically are abusing the law.” But John
Schochet, deputy chief of staff in the Seattle City Attorney’s
Office, says state appeals courts have approved the idea of
collective gardens with rotating memberships. “I couldn’t give you
a clear answer as to whether it’s illegal under criminal law,” he
says, but “no one’s been convicted for selling marijuana illegally
using a collective garden in King County,” where Seattle is

At the end of March, however, the Washington State Court of
Appeals for Division I upheld a ban
on collective gardens in Kent, a city about 20 miles south of
Seattle. The court ruled that the legality of collective gardens
depends on a patient registry created by a provision of the 2011
law that Gregoire nixed. “As the plain language of the statute and
the governor’s veto message indicate,” the court said,
“collective gardens are not legal.”

The decision nevertheless seems to leave patients who grow
marijuana collectively with an affirmative
defense. “This case probably doesn’t mean anything,”
Douglas Hiatt, a Seattle attorney who helped
write the appeal brief. “
Basically they were trying to
punt. They were saying, ‘The city can do this, but you’re still
going to have an affirmative defense.’ And it’s unclear how the
city is going to move forward.” When it comes to enforcing a ban
with criminal penalties, Hiatt says, “
You can’t have
different standards for a collective garden defense in Kent than
you do in Spokane. It would be a huge equal protection

Steve Sarich, president of the Cannabis Action Coalition, says
he and the other plaintiffs in the case have not decided yet
whether to appeal to the Washington Supreme Court. He agrees that
the ruling does not affect the affirmative defense available to
patients with medical recommendations. “There was nothing in the
law that prohibited a collective garden prior to [the 2011
legislation],” he says. “What this did was [establish] additional
protections for people growing collectively.”

In any case, the viability of dispensaries has always hinged
more on the attitudes of local officials (as well as federal
prosecutors) than on the letter of the law. When it comes to the
“collective garden” rationale for dispensaries, Hiatt says, King
County Prosecuting Attorney Daniel Satterberg “essentially
bought off on it. He hasn’t brought any
What Satterberg knows is that they can’t
beat us in a jury trial in Seattle on medical marijuana. It’s just
not going to happen. So he’s not interested in charging this
stuff.” As John Davis, who operates two dispensaries in Seattle,
puts it, 
“It’s not the law that’s solid out here.
It’s the policy.”

For years Seattle’s policy has been to tolerate
dispensaries. But that changed after voters approved I-502, the
2012 initiative that legalized recreational use and charged the
Washington State Liquor Control Board with licensing and regulating
marijuana growers and retailers. Last year the Seattle City Council

an ordinance that limits dispensaries to 45 plants and
72 ounces per location unless they obtain state licenses by January
1, 2015. Washington does not currently license medical marijuana
outlets, and the state legislature
its 2014 session without agreeing on a bill to
incorporate them into the new system. So unless the city council
extends its deadline, dispensaries will be operating in violation
of local zoning law.

Even if medical marijuana suppliers get a reprieve, state
legislators may end up banning them in 2015, as several of the
bills considered this year would have done. Opponents of the
dispensaries cite the threat of a
federal crackdown
, noting that Durkan has
the current system “not tenable.” Legislators also have
an interest in maximizing marijuana tax revenue by eliminating
businesses that otherwise would compete with state-licensed pot
They’re going to get rid of
it all,” Hiatt predicts. “It’s gone. 

[story via
Canna Law Blog
; ruling text via
Mark Kleiman

from Hit & Run

Join Reason and Celebrate ‘Video Game Nation’ in Los Angeles, May 8

It's an interactive experience. The pages don't turn themselves, you know.Shall we play a game? That’s
not just a question, but a famous movie
that serves as a good early example of how video games
have been growing to be part of American culture. June’s issue of
Reason, appropriately titled “Video Game Nation,” explores
this now-fully-entrenched culture, examining its intersections with
politics, economics, the arts, and even philanthropy.

Video games are now more of a social environment than ever
(despite what critics would say about kids glued to monitors), so
Reason is opening up its Los Angeles office for a gathering and a
panel discussion with a couple of industry insiders about video
game innovations, what video games may accomplish, and what the
future holds. We’ll have food trucks, drinks, video games and free
valet parking. Here’s the basics:

  • When: Thursday, May 8, from 6:30 to 8:30 p.m.
  • Where: Reason’s Los Angeles headquarters, 5737 Mesmer Ave., Los
    Angeles, CA 90230 (Map)
  • Who will be there: Besides you lovely people, Reason
    magazine Editor-in-Chief Matt Welch will moderate a panel with our
    two industry guests. Craig Allen is the chief executive officer of
    , a Sherman Oaks-based game company that has produced
    several shooter games for consoles; he also previously worked with
    Jim Henson Interactive’s digital media activities. Joining him will
    be Tracy Fullerton, a
    University of Southern California associate professor and game
    designer. She wrote Game Design Workshop: A Playcentric
    Approach to Designing Innovative Games
    , and is currently
    working on an experimental game revolving around Henry David
    Thoreau’s experiences at Walden Pond.

at Eventbrite if you’re planning to attend and feel to
share our Facebook
event listing. We’re looking forward to seeing you and kicking your
ass at Street Fighter.

from Hit & Run

FAA Grounds All Flights From West Coast Due To Computer “Glitch”

Not much color for now, but the FAA has declared a "ground halt" on all flights at the following airports:


LAX is citing "computer issues" as the reason (and radar system crash across at least 3 Western states)





According to the FAA site, the following airports are also on ground halt…

  • BOS – General Edward Lawrence Logan International
  • BWI – Baltimore-Washington International
  • DCA – Ronald Reagan Washington National
  • EWR – Newark International
  • FLL – Fort Lauderdale/Hollywood International
  • JFK – John F Kennedy International
  • LAS – Las Vegas McCarran International
  • LAX – Los Angeles International
  • LGA – La Guardia
  • MCO – Orlando International
  • MIA – Miami International
  • PHL – Philadelphia International
  • TEB – Teterboro


via Zero Hedge Tyler Durden

IMF Approves Loan (To Pay Ukraine’s Gazprom Bill)

After ‘billing’ Ukraine this morning, Gazprom must be jubilant this evening as news exudes from Washington that…




So that won’t even cover the $3.49bn they already owe to Gazprom? (In fact, $2.2bn is approved for dissemination to Gazprom)

Remember we were already told by Ukraine that:


So – which is it? Won’t Pay or Can’t Pay?

As Bloomberg reports,

The government plans to use $2 billion from the first disbursement to support the budget as it seeks to trim the fiscal gap to 8.5 percent of gross domestic product this year and 6.1 percent in 2015, according to the document. The shortfall includes subsidies to state-run energy company NAK Naftogaz Ukrainy.


Part of the IMF money will help Ukraine settle $2.2 billion in back payments to Russian state-controlled OAO Gazprom for natural gas and pay for future imports. Gazprom said it will ask Ukraine to pay $485 per 1,000 cubic meters in the second quarter, more than the European market price.



After twice freezing loans to Ukraine since 2008, the fund is banking on the interim government’s resolve to tackle unpopular measures such as the phasing out of natural-gas subsidies.


The fund approval clears the way for additional aid from the European Union and the U.S. just as they widen sanctions against Russia for its actions in Ukraine.

“The authorities’ economic program supported by the fund aims to restore macroeconomic stability, strengthen economic governance and transparency, and launch sound and sustainable economic growth, while protecting the most vulnerable,” the Washington-based IMF said in an e-mailed statement today.

via Zero Hedge Tyler Durden