Month: August 2014

Submitted by Erico Tavares of Sinclair & Co.

The Hard Life of the First American

A forthcoming book titled “Kennewick Man: The Scientific Investigation of an Ancient American Skeleton” provides a very detailed account of what might have been the life of this remarkable American ancestor, who roamed Washington State 9,000 years ago. His skeleton was found by chance almost two decades ago, enabling scientists to glimpse into an era which is all but forgotten.

While genetic testing is still ongoing, the thin shape of his skull suggests that he is from Polynesian descent, not Native American as was previously thought. Some two thousand after the end of the last Ice Age humans were already crisscrossing the planet.

At 5ft 7 inches and 163 lbs (74 kg) the “First American” was very sturdy, going after big game animals such as deer, antelopes and sheep. However, he survived primarily on fish and marine mammals, drinking glacial melt-water. He was likely right handed.

But this man had a very hard life. He died at 40 for unknown reasons, after sustaining some major injuries during his lifetime, including major blows to the head, as well as broken ribs as a result of an impact trauma that never healed properly. His shoulder was damaged from the constant stress of throwing spears. And most incredibly, a spear lodged deep into his pelvis was also found, which must have been very painful to live with for several years.

His man-made injuries raise some interesting questions. While they may have resulted from an accident, like a spear gone astray during a hunting expedition, squaring off with patterns from other ancient tribes suggests that serious conflicts among humans must have been a regular fact of life back then. Our ancestors from that era lived in a world which was far less than idyllic.

And this legacy continued throughout the centuries. Native Americans appear to have been in a constant state of warfare, with many tribes becoming extinct well before the arrival of Columbus. Not only did these tribes have to compete for food but also genes, where problems associated with inbreeding likely led to the common practice of raiding one another for women and slaves. The arrival of the Europeans did not make things any better, and not before long they were also fighting among each other.

It took us 9,000 years – the equivalent of 225 Kennewick Man lives – to get to where we are today. Thankfully things are much better now. Cooperation, education, innovation and exploring new frontiers have proven to be incredibly more productive endeavors to our survival and quality of life than warfare and conflict.

And yet, as a species it appears we still have a lot to do here. If he were alive today, the First American might have agreed.

via Zero Hedge http://ift.tt/1u2n0wL Tyler Durden

 

“Central Banks Should Give Money Directly To The People” – Gold Bullish CFR Proposal

 

Helicopter Janet?

Last week, a very radical proposal appeared in the pages of the influential ‘Foreign Affairs’ magazine, the publication arm of the equally influential Council on Foreign Relations (CFR) think-tank based in New York.

 

An article “Print Less but Transfer More – Why Central Banks Should Give Money Directly to the People”, that has been picked up widely in the media argues that given that monetary stimulus measures such as quantitative easing and near zero central bank interest rates have failed to boost economic growth, a new radical monetary approach is needed.

That approach is to print currency and give the cash directly to consumers and households as required so as to remedy insufficient consumer spending and in order to prevent recessions.

 

The article is authored by Mark Blyth and Eric Lonergan. Blyth, originally from Scotland, is an economist at Brown University in Rhode Island. Lonergan, originally from Ireland, is a fund manager of global macro strategies at M&G Investments in London.

 

Although ‘Foreign Affairs’ publishes various sides of important debates, policy articles in ‘Foreign Affairs’ have tended to influence US economic and political policy over the years, so the ‘cash transfer proposal’ is worth watching.

 

Hoped For Benefits Of “Free Cash”
Blyth and Lonergan argue that the slow economic growth and low inflation rates being currently witnessed in Western developed economies call for more extreme government and policy maker approaches so as to get people spending again, thereby stimulating economic growth and encouraging inflation.

 

To them, deflation is a key threat that the unconventional low interest rates and quantitative easing has not managed to tackle. Therefore in their eyes this needs to be countered by directly making consumers spend more by actually handing over cash to them.

 

Blyth and Lonergan draw on Ben Bernanke and Milton Friedman to support their cash transfer argument and openly say that it is now “well past time” for policy makers in the US and also in other developed countries to try the helicopter cash drop approach.  

 

Helicopter Mark?

In 1998, after Japan suffered a lost decade of growth, Ben Bernanke, a then university economist at Princeton, advocated that Japan provide direct cash transfers to consumers in order to encourage them to spend more.

Previously, Milton Friedman had viewed direct money transfers as analogous to dropping cash from helicopters. This would go on to create the famous expression of Helicopter Ben (Bernanke) dropping cash from a helicopter.

 

Blyth and Lonergan advocate direct cash transfers either to all households equally, or possibly just to the lowest 80% of households. They say that lower income households would use this cash in a variety of ways, either to repay consumer debt, or to spend and consume, or to save. If a certain cash sum, say $1000, was not seen to be effective, households could, in their view, be given more, for example $3000 or $4000.

 

Blyth and Lonergan say that it’s hard to measure the direct impact on consumer spending of instruments such as lower interest rates, but that the impact of direct cash transfers are more measurable.

In their view, inflation won’t be an issue since central banks can continue inflation targeting.

 

Real Risks Of “Free Cash”

However, in our view, there are a number of flaws with this proposal.

Direct cash transfers have a danger of putting consumers further into debt. If a cash transfer is not effective, and an even bigger transfer is then handed out by governments, this will create the danger of consumer dependency on the cash transfer mechanism.

 

Helicopter Mario?

The argument that the level of inflation created by cash transfers can be controlled is untested. Since this direct cash transfer approach has never been used, it is in uncharted territory and could lead to unanticipated inflation. How the measurement of direct cash transfers is more accurate than the measurement of the effect of low interest rates and quantitative easing is unclear.

 

With economies already facing record money supply growth from expanded central bank balance sheets, new cash transfers flowing into the global economy could lead to an out of control velocity of money and possible hyperinflation. How would this extra liquidity ever be drained from the system again?

 

This new cash transfer money would also be printed out of thin air, thus diluting the existing money supply and eroding its purchasing power. Since all fiat currency is merely debt anyway, the creation of new money to finance the direct cash transfers would add to the existing debt burden of already struggling nation states.

 

GoldCore Conclusion
In many austerity hit countries, there are is an increasing tax burden with very high income taxes, sales taxes and many stealth taxes.

Does it make sense for central banks to be printing money that will in many cases be used to pay taxes, stealth taxes or even pay down credit card, loan and even mortgage debt?

This measure will likely further worsen the debt to GDP ratios in many already indebted industrial nations. With interest rates set to rise in the coming months and years, giving free money to consumers may bankrupt already vulnerable states.

Would it not be more prudent to have debt write offs and debt forgiveness at sovereign level so that countries can lower the tax burden on suffering citizens? Rather than compounding the problem by increasing sovereign debt levels through giving out “free” cash to indebted consumers?

There is a real risk that this could end up being another ‘soft bail-out’ for banks as much of the cash would probably end up being used to pay down the huge debts incurred in recent years  and would come full circle to banks in the form of debt repayments and governments in the form of taxes.

The real solution to the global debt crisis is not more debt in the form of “free currency” and increasing sovereign debt. The real solution remains to implement significant debt forgiveness for consumers and debt restructuring for institutions, banks and nations in a modern debt jubilee.

Were such an extreme scenario to be implemented and a further and deliberate debasement of currency, there is a real risk of significant inflation and stagflation. Even hyperinflation in a worst case scenario.

Alan Greenspan’s warning of “fiat money in extremis” becomes more real by the day. This underlines the vital importance of having an allocation to gold in a diversified portfolio.

Gold will maintain its purchasing power in the coming years, as it has always done throughout history.

by Ronan Manly, GoldCore Consultant. Editor Mark O’Byrne of GoldCore

 

via Zero Hedge http://ift.tt/1pwGSIR GoldCore

As we embark on yet another ever widening gyre of military violence, I would like to remind all of the truth and veracity of our overlords in these matters…

via Zero Hedge http://ift.tt/1pgK1q6 williambanzai7

The 9/11 Commission Co-Chairs – Lee Hamilton and Thomas Kean – have called for the 28-page section of the 9/11 Commission Report which is classified to be declassified. Kean said that 60-70% of what was classified shouldn't have been classified in the first place:

Congressman Thomas Massie read the 28 classified pages of the Joint Intelligence Committee Inquiry into 9/11 (the joint Senate and House investigation into 9/11) and immediately called for them to be released to the public:

A bipartisan bill – introduced by congressmen Walter B. Jones (Republican from North Carolina) and Stephen Lynch (Democrat from Massachusetts) – would declassify the 28 pages of the Joint Inquiry which implicate the Saudi government.

Former Congressman Ron Paul is also demanding the 28 pages be declassified:

The Co-Chair of the congressional investigation into 9/11 – Bob Graham – and 9/11 Commissioner and former Senator Bob Kerrey are calling for either a “permanent 9/11 commission” or a new 9/11 investigation to get to the bottom of it.

Senator Graham has lobbied Obama for years to release the 28 pages and to reopen the investigation, but Obama has refused. The former Chair of the Senate Intelligence Committee and 9/11 investigator has even resorted to filing Freedom of Information requests to obtain information, but the Obama administration is still stonewalling:

Graham said that like the 28 pages in the 9/11 inquiry, the Sarasota case is being “covered up” by U.S. intelligence. Graham has been fighting to get the FBI to release the details of this investigation with Freedom of Information Act (FOIA) requests and litigation. But so far the bureau has stalled and stonewalled, he said.

And high-level former NSA official Thomas Drake provided testimony to the 9/11 investigations documenting that the "official story" of 9/11 makes little sense, as the intelligence agencies had all of the information they needed to stop it. Drake's testimony has – for no real reason – been classified. Drake is seeking to declassify his testimony to the 9/11 Commission:

I would argue for declassification and release because the 9/11 Commission asked for it in the public interest, my testimony was given to Congress via testimony (oral and written) to investigators as a material witness and whistleblower, because of NSA’s coverup of its accountability for 9/11, and the coverup committed by NSA to obstruct official Congressional investigations, plus declassification is timely in terms of ongoing efforts to reform NSA by Congress and the President.

I do know that my testimony and evidence was fully suppressed and censored as a deep state secret – so secret that it was not included in the classified report of the 9/11 Joint Inquiry.

Still Urgent Today

Ancient history, you say? Graham notes:

Although it's been more than a decade ago when this horrific event occurred, I think [the questions of who supported the attacks] have real consequences to U.S. actions today.

As Graham told PBS:

We need to have this information now because it’s relevant to the threat that the people of the United States are facing today.

Postscript: People may not remember now, but – at the time – the supposed Iraqi state sponsorship of 9/11 was at least as important a justification for the Iraq war as the alleged weapons of mass destruction. This claim that Iraq is linked to 9/11 has since been debunked by the 9/11 Commission, top government officials, and even – long after they alleged such a link – Bush and Cheney themselves.

But 70% of the American public believed it at the time, and 85% of U.S. troops believed the U.S. mission in Iraq was "to retaliate for Saddam's role in the 9-11 attacks."

Only last year, John Glaser noted:

Significant portions of Americans still believe that Saddam and al-Qaeda were in cahoots and cooperated in the 9/11 attacks. The reason is simple: the administration told them this lie.

An investigation by a committee in the House of Representatives in 2004 identified “237 misleading statements about the threat posed by Iraq that were made by President Bush, Vice President Cheney, Secretary Rumsfeld, Secretary Powell, and National Security Advisor Rice. These statements were made in 125 separate appearances, consisting of 40 speeches, 26 press conferences and briefings, 53 interviews, 4 written statements, and 2 congressional testimonies.”

According to the committee, at least 61 separate statements “misrepresented Iraq’s ties to al-Qaeda.” A Senate investigation in 2006 also covered these lies.

Keeping this lie afloat took some work. The Bush administration, primarily Dick Cheney and Don Rumsfeld, “applied relentless pressure on interrogators to use harsh methods on detainees in part to find evidence of cooperation between al Qaida and the late Iraqi dictator Saddam Hussein’s regime,” McClatchy reported in 2009.

According to Lawrence Wilkerson, chief of staff to Bush’s Secretary of State Powell, “the administration authorized harsh interrogation” in 2002, and “its principal priority for intelligence was not aimed at pre-empting another terrorist attack on the U.S. but discovering a smoking gun linking Iraq and al-Qa’ida.”

Wilkerson is right.

In other words, the failure to conduct a real 9/11 investigation contributed to the Iraq war, torture, and the failure to fix fundamental weaknesses in – and threats to – America's national security.

Postscript … Further down the rabbit hole.

via Zero Hedge http://ift.tt/1tl9VAI George Washington

Submitted by Nick Giambruno via Casey Research's International Man blog,

Don’t be surprised to lose if you don’t make an effort at being competitive.

And if you go out of your way to make yourself less competitive, expect to lose.

If that sounds like simple common sense, that’s because it is.

But it’s also exactly what the US has been doing for years—enacting tax policies that sabotage its global economic competitiveness.

It’s like trying to get in shape for a marathon by going on an all-McDonald’s diet. (Speaking of McDonalds, check out this funny video spoof of what their commercials should really look like.)

Here are two major reasons why the US is lagging in the global economic marathon:

1. The US has the highest effective corporate income tax rate in the developed world (see chart below).

2. Unlike most other countries, which only tax domestic profits, the US taxes the earnings of foreign subsidiaries of US companies when the money is transferred back to the US. This has had the effect of US corporations keeping over $1.9 trillion in retained earnings offshore to avoid the crippling US corporate income tax.

These “worst in the developed world” tax policies are clearly hurting the global competitiveness of American companies.

Being deemed a “US Person” for tax purposes is like trying to swim with a lifejacket made of lead.

It should come as no surprise that an increasing number of productive people and companies are seeking to shed this burden so they can keep their heads above water.

At this point, it’s more than just a trickle—it’s an established trend in motion.

And I don’t see anything that would reverse it. On the contrary, given the political dynamics—ramped-up spending on welfare and warfare policies, as well as an “eat the rich” mood—taxes have nowhere to go but north. And that means the exodus will continue.

Three Cheers for Walgreens

Over the past couple of years, dozens of high-profile US companies have moved abroad (or seriously considered it) to lower their corporate income tax rate and to access their offshore retained earnings without triggering US taxes.

Among them are Medtronic, Liberty Global, Sara Lee, and Omnicom Group—the largest US advertising firm—to just name a few.

Earlier this year Pfizer, one of the world’s largest pharmaceutical companies, sought (but was ultimately rebuffed) to move abroad, which would have cut its tax bills by as much as $1 billion a year.

The strategy these companies are using is known as an inversion. It’s where a US company merges with a foreign company in a jurisdiction with lower taxes and then reincorporates there. Current US law allows for this if the foreign shareholders own at least 20% of the combined company (though some are trying to raise the minimum to 50%).

Now, despite the howls and shrieks from upset politicians and the mainstream media about these companies being “unpatriotic” and “un-American,” they’re doing absolutely nothing illegal. Inversions are totally acceptable within the current rules of the US Tax Code.

Chuck Grassley, a Republican senator from Iowa has said, “These expatriations aren’t illegal. But they’re sure immoral.”

I beg to differ.

Why would anyone want to give the destructive bureaucrats in DC a penny more than is legally required? As far as I’m concerned, not only is there nothing wrong with going where you’re treated best, there's also an ethical and moral imperative to starve the Beast.

And now the latest high-profile company to consider putting the Beast on a diet is Walgreens.

Walgreens is considering reincorporating in Switzerland as part of a merger with Alliance Boots, a European rival. The net effect for would be to reduce Walgreens’ tax rate to 20%, down from around 31% now. The move is estimated to save around $4 billion over the next five years.

What really has the politicians scared is that inversions have started to snowball.

The New York Times quoted an international tax lawyer stating that “it takes one company with enough public recognition to start [a] domino effect.”

Walgreens could be the company that triggers a domino effect. If Walgreens were to move, it would gain a significant competitive advantage against its rivals. CVS, Walgreens’ main competitor, paid a 34% tax rate in recent years. Can CVS really compete with Walgreens if the latter is paying 20%?

Probably not. And that will only lead to more inversions.

Another Way to Starve the Beast

Remember, US companies are not globally competitive because of these two unique burdens:

1. The US has the highest effective corporate tax rate in the developed world.

2. Unlike most countries, which only tax domestic profits, the US taxes the earnings of foreign subsidiaries of US companies when the money is transferred back to the US.

We have already seen how inversions can reduce #1, but they also offer huge benefits in terms of #2.

Reincorporating abroad allows companies to permanently avoid paying US taxes on foreign earnings. It also allows companies to access their retained earnings offshore in ways they couldn’t before without triggering punishing US taxes.

Medtronic, for example, has accumulated $20.5 billion of untaxed earnings in foreign subsidiaries. By reincorporating abroad, Medtronic can access that money without getting slapped with US corporate income taxes, which would save it billions.

For companies like Medtronic and Walgreens, reincorporating abroad seems like a no-brainer.

Contrary to the government propaganda, the villains in this story aren’t the companies seeking to diversify abroad to remain globally competitive. The villains are clearly the spendthrift politicians who enact these “worst in the developed world” tax policies, which create very compelling incentives for these companies to leave the US.

It’s Not Just Companies Saying Sayonara

While the US should be enacting policies that make it attractive for productive people and companies to come to the US—rather than driving them away—don’t hold your breath for positive change. It’s more likely that nothing but more taxes and regulations are coming.

But as we have seen with companies like Medtronic and Walgreens, companies have options too.

And it’s not just multibillion-dollar corporate entities that have options. Individuals operating on a modest scale can also reap enormous benefits by diluting the amount of control the bureaucrats in DC (or any country) wield over them. International diversification is the solution.

You do this by moving some of your savings abroad with offshore bank and brokerage accounts, physical gold held abroad, owning foreign real estate, and establishing an offshore company or trust.

Obtaining a second passport is an important part of the mix as well.

You probably can’t take all of these steps, and that’s fine. Even taking just one will go a long way to reducing your political risk and giving you more options. In many cases, you don’t even have to leave your living room.

Think of it as your own personal insurance policy against an out-of-control government.

However, things can change quickly. New options emerge, while others disappear. This is why it’s so important to have the most up-to-date and accurate information possible when formulating your international diversification strategy. That’s where International Man comes in.

To keep up with the best strategies, you might want to check out our Going Global publication, where they are discussed in great actionable detail.

via Zero Hedge http://ift.tt/1qVl093 Tyler Durden

As regular readers are well aware, when it comes to "more than arms length" equity market intervention in New Normal markets, the New York Fed's preferred "intermediary" of choice to, how should one say, boost investor sentiment aka "protect from a plunge", is none other than Chicago HFT powerhouse, Citadel. Recently we discovered that the true culprit behind the May 2010 Flash Crash was not Waddell & Reed, but quote stuffing. The most recent revelation for Citadel is that quote stuffing is not just some byproduct of some "innocuous" HFT strategy, as none other than the Nasdaq has now stated on the record, that the most leveraged hedge fund (at 9x regulatory to net assets), and the third largest after Bridgewater and Millennium, used quote stuffing as a "trading strategy." The following 2 clips give a sense of what goes on from day to day inside the firm that trades more volume than the NYSE every day…

 

HFT in action…

 

Is HFT a good thing or bad thing?

via Zero Hedge http://ift.tt/1ucNIBM Tyler Durden

Presented with little comment aside to suggest one scratch beneath the thinning veneer of record nominal stock prices every once in a while to take the temperature of the ugly reality that no one is talking about…

 

1) Stocks are at record highs because global growth is ‘improving’…

 

FACT: There is a record divergence between the ‘market’ and plunging growth expectations

*  *  *

2) Stocks are at record highs because employment is ‘improving’…

 

FACT: There is a record divergence between the ‘market’ and the employed population in America.

*  *  *

3) Stocks are at record highs because animal spirits are ‘improving’..

 

FACT: There is a record divergence between the exuberant ‘rich’ and crushed ‘middle class’

*  *  *

Bonus Chart:

Stocks are at record highs because… of The Fed!

 

And stocks have not been this far ahead of the Fed Balance Sheet since May 2013’s Taper Tantrum correction began…

via Zero Hedge http://ift.tt/Y2hFLf Tyler Durden