zerohedge – Page 18034

"A Market Likely To Suck Everyone In To Its Last Updraft "

From Sean Corrigan Of Diapason Commodities Management

Material Evidence

At present the whole world is happy to treat the post?Shutdown US as a Goldilocks fable. Herein, such good macro numbers as do occur are eitherdeemed an aberration soon to reversed as the supposed disruption of the budget dispute filters its way into the reckoning, or else they serve to underpin the assumptions of higher earnings to come. Weaker ones – like the just?released NFP – are also welcome for their prophylactic effect since they can only continue to disarm an already bedraggled flock of Fed hawks, leaving the rest of us hoarsely Yellen for more.

So, in the run?up to book closing, we may see everyone scramble out to their waiting Sopwith, silk scarf flapping jauntily in the slipstream of the ‘crate’s’ spinning propellers, to the exultant cryof, “Chocks away, Ginger!? Off will go our heroes, soaring not so much to a tumult in the clouds as to the wide, blue yonder of ever higher equity prices and ever fatter bonus cheques.

Ye Gods! Even that discredited old hack, Alan Greenspan ? the man who bears as much responsibility as anyone for the hypertrophy of state- supported finance and thus for the havoc it continues to wreak ? is at it, trying to tell us that because of a low ‘equity premium’ (read: ludicrously intervention?depressed bond yields), the ‘momentum’ of stocks ‘is still relatively up’.

Such a market is therefore likely to suck everyone in to its last, Plinian updraft no matter how stretched everything becomes and no matter how great the risk of being cast into perdition in the pyroclastic collapse to come. That said, one cannot fail to be tempted by the fact that margin debt is in the stratosphere (a new dollar high and a fraction of market cap only outdone in QI’00); sentiment is heavily bullish (the AAII Bull?Bear index is at levels only once beaten to any significant degree in the past since the start of 2006; while that same index multiplied by stock prices is in the 97th percentile of a quarter?century sample), put?call skews are high and vols are low.

In turn, this means that our favourite ‘Blue Sky’ indices (index levels divided by volatility measures, such as OEX/VXO) are off the charts. Indeed, that particular example is now 2.7 sigmas over a 28?year mean, in a 99th percentile which has only once been surpassed, at the start of 2007, before the first rumblings of the CDO cyclone and sub?prime tsunami were audible to any but the most perceptive listener. In Germany, the DAX/VDAX equivalent sits at a major, new 21?year high, a whopping 3.7 sigmas over its period mean.

There are one or two other technical signals, too. The S&P500 ex?financials has all but completed a handsome?looking long?term profile during the DDIE. The financials, meanwhile, have retraced 50% of their LEH?AIG meltdown. Nasdaq has been on one of Didier Sornette’s exponential accelerations, climbing more ever more rapidly on ever shorter timeframes up into the top few percent of another clean, projected top mapped out off the 2009 lows. Looking further back in time, since that same 2009 nadir, the DJIA has ascended by an amount only exceeded in the run up to 1920, 1929, 1937, 1987, and 2000 – all of them major tops. Juicy!

What we must caution here, however, is that anyone tempted to lean into this particular wind must have the patience to wait for signs of even a temporary exhaustion before setting shorts. Critical, too, will be the discipline to stop out if and when those initial selling ‘tails’ start to fill back in, for fear that this is a signal that the mania has not yet ended and that the buyers of dips are still all too dominant.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/wmfn3uwhSyU/story01.htm Tyler Durden

“A Market Likely To Suck Everyone In To Its Last Updraft “

From Sean Corrigan Of Diapason Commodities Management

Material Evidence

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/wmfn3uwhSyU/story01.htm Tyler Durden

Fire And Brimstone: John Mauldin Edition

Roughly five years ago, when we first started warning that the Fed’s QE program, which we predicted will never end (five years later this is as true as ever), instead of leading to a virtuous economic cycle would result in a world where the labor force is increasingly converted from full-time workers to part-time labor, in which spending on growth capital is entirely replaced with such short-term shareholder friendly actions as dividends and buybacks, where the government is more broken than ever and where, courtesy of monetary policy, Congress can just tell the Chairman to “get to work” any time there is a crisis, and in which the record wealth disparity between the wealthiest few (0.6% control 40% of the world’s wealth) and the poorest 99% (now that the middle class is on the path to extinction) will inevitably lead to a 18th century French outcome complete with guillotines, or worse, one of the more traditional financial pundits, John Maudlin, espoused the “Muddle Through” theory – in a nutshell, that all, even if at a far lowered output and standard of living, would be well, one which we (much to the chagrin of Cypriot – to start – depositors) refuted.

Some five years later, now that the prevailing mainstream media consensus has finally caught up with our “tinfoil” view, which for years was mocked by the same media, usually on an ad hominem basis, and even the Fed has realized (confirmed by the latest Jackson Hole symposium) it is in a trap as it understands it has to end the market’s dependency on monetary heroin but has no idea how to do it without in the process undoing five years of central planning, we have seen some spectacular opinion flip flops take place. Which aside from the occasional headscratcher such as David Rosenberg going bull-retard (we once again wonder: just what does Ray Dalio serve in his cafeteria?) have been almost exclusively from optimistic to pessimistic, or as we call it, realistic. And as the case may be, such as with John Mauldin and his latest missive to potential clients, A Code Red World, a very deep and red shade of pessimistic.

Some extracts from the man whose Muddle Through has now become the Fumble Through and Through:

The arsonists are now running the fire brigade. Central bankers contributed to the economic crisis the world now faces. They kept interest rates too low for too long. They fixated on controlling inflation, even as they stood by and watched investment banks party in an orgy of credit. Central bankers were completely incompetent and failed to see the Great Financial Crisis coming. They couldn’t spot housing bubbles, and even when the crisis had started and banks were failing, they insisted that the banks they supervised were well regulated and healthy. They failed at their job and should have been fired. Yet governments now need central banks to erode the mountain of debt by printing money and creating inflation.

Investors should ask themselves: if central bankers couldn’t manage conventional monetary policy well in the good times, what makes us think that they will be able to manage unconventional monetary policies in the bad times?

And if they don’t do a perfect job of winding down condition Code Red, what will be the consequences?

Economists know that there are no free lunches. Creating tons of new money and credit out of thin air is not without cost. Massively increasing the size of a central bank’s balance sheet is risky and stores up extremely difficult problems for the future. Central bank policies may succeed in creating growth, or they may fail. It is too soon to call the outcome, but what is clear (at least to us) is that the experiment is unlikely to end well.

The endgame for the current crisis is not difficult to foresee; in fact, it’s already underway. Central banks think they can swell the size of their balance sheet, print money to finance government deficits, and keep rates at zero with no consequences. Bernanke and other bankers think they have the foresight to reverse their unconventional policies at the right time. They’ve been wrong in the past, and they will get the timing wrong in the future. They will keep interest rates too low for too long and cause inflation and bubbles in real estate, stock markets, and bonds. What they are doing will destroy savers who rely on interest payments and fixed coupons from their bonds. They will also harm lenders who have lent money and will never be repaid in devalued dollars, if they are repaid at all.

We are already seeing the unintended consequences of this Great Monetary Experiment. Many emerging market stock markets have skyrocketed, only to fall back to earth at the hint of an end to Code Red policies. Junk bonds and risky commercial mortgage-backed securities are offering investors the lowest rates they have ever seen. Investors are reaching for riskier and riskier investments to get some small return. They’re picking up dimes in front of a steamroller. It is fun for a while, but the end is always ugly. Older people who are relying on pension funds to pay for their retirement are getting screwed (that is a technical economic term that we will define in detail later). In normal times, retirees could buy bonds and live on the coupons. Not anymore. Government bond yields are now trading below the level of inflation, guaranteeing that any investor who holds the bonds until maturity will lose money in real terms.
We live in extraordinary times.

When investors convince themselves central bankers have their backs, they feel encouraged to bid up prices for everything, accepting more risk with less return. Excesses and bubbles are not a mere side effect. As crazy as it seems, reckless investor behavior is, in fact, the planned objective. William McChesney Martin, one of the great heads of the Federal Reserve, said the job of a central banker was to take away the punch bowl before the party gets started. Now, central bankers are spiking the punch bowl with triple sec and absinthe and egging on the revelers to jump in the pool. One day the party of low rates and money printing will come to an end, and investors will make their way home from the party in the early hours of sunlight half dressed, with hangovers and thumping headaches.

The coming upheaval will affect everyone. No one will be spared the consequences – from savers who are planning for retirement to professional traders looking for opportunities to profit in financial markets. Inflation will eat away at savings; government bonds will be destroyed as a supposedly safe asset class; and assets that benefit from inflation and money printing will do well.

Such fire and brimstone , such a dramatic shift in perception? Well, better late then never, right… But one wonders – why now?

This book will provide a roadmap and a playbook for retail savers and professional traders alike. This book will shine a light on the path ahead. Code Red will explain in plain English complicated things like zero interest rate policies (ZIRP), nominal GDP targeting, quantitative easing, money printing, and currency wars. But much more importantly, it will explain how what is in store will affect your savings and offer insights on how to protect your wealth. Code Red will be an invaluable guide for the road ahead.

Code Red will be available on Amazon on Monday, Oct. 28.

… and suddenly it all makes sense.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/p7lZpsBruuc/story01.htm Tyler Durden

The REAL Reason U.S. Targets Whistleblowers

U.S. leaders have long:

Condemned China for spying and hacking our computers … But the Snowden leaks show that America is doing the same thing — on a much larger scale

Considered waterboarding to be a war crime and a form of torture, including when the Japanese did it in WWII (and see this). But when we did it, we insisted it was not torture

Proselytized other countries to follow free market capitalism. But we no longer follow free market capitalism in America. Instead, we have socialism for the rich and sink-or-swim capitalism for everyone else. Whether you call it crony capitalism, fascism, communist style socialism, kleptocracy, oligarchy or banana republicanism … it ain’t real capitalism

Labeled indiscriminate killing of civilians as terrorism. Yet the American military indiscriminately kills innocent civilians (and see this), calling it “carefully targeted strikes”. For example, when Al Qaeda, Syrians or others target people attending funerals of those killed – or those attempting to rescue people who have been injured by – previous attacks, we rightfully label it terrorism. But the U.S. government does exactly the same thing (more), pretending that it is all okay

Lambasted those who do not follow a rule of law as tin-pot tyrants. But the rule of law has broken down in America, and we now have less access to justice than in many parts of the world

Blasted oppressive regimes which do not allow free speech, a free press and other liberties for their people … But have discarded most of those same liberties in our homeland

Scolded tyrants who launch aggressive wars to grab power or plunder resources. But we ourselves have launched a series of wars for oil (and here) and gas

Said that those who support terrorists should be treated as terrorists. But the U.S. government has long supported terrorists for cynical political purposes.

Sought to “spread democracy” around the world. But democracy is not being honored at home (more here and here)

Said that we must stamp out terrorism. But we are doing the exact same things we accuse the terrorists of doing (or worse)

Can you spot a pattern of hypocrisy?

Indeed, the worse the acts by officials, the more they say we it must be covered up … for “the good of the country”.

For example, Elizabeth Goitein – co-director of the Liberty and National Security Program at New York University School of Law’s Brennan Center for Justice – writes:

The government has begun to advance bold new justifi
cations for classifying information that threaten to erode the principled limits that have existed — in theory, if not always in practice — for decades. The cost of these efforts, if they remain unchecked, may be the American public’s ability to hold its government accountable.

***

The government acknowledged that it possessed mug shots, videos depicting forcible extractions of al-Qahtani from his cell and videos documenting various euphemistically termed “intelligence debriefings of al-Qahtani.” It argued that all of these images were properly classified and withheld from the public — but not because they would reveal sensitive intelligence methods, the traditional justification for classifying such information. The government did not stake its case on this time-tested argument perhaps because the details of al-Qahtani’s interrogations have been officially disclosed through agency reports and congressional hearings. Instead, the government argued that the images could be shielded from disclosure because the Taliban and associated forces have previously used photos of U.S. forces “interacting with detainees” to garner support for attacks against those forces. Even more broadly, the government asserted that disclosure could aid in the “recruitment and financing of extremists and insurgent groups.”

***

The government’s argument echoed a similar claim it made in a lawsuit earlier this year over a FOIA request for postmortem photographs of Osama bin Laden. A CIA official attested that these images could “aid the production of anti-American propaganda,” noting that images of abuse at Abu Ghraib had been “very effective” in helping Al-Qaeda to recruit supporters and raise funds. The appeals court did not address this argument, however, resting its decision on the narrower ground that these particular images were likely to incite immediate violence.

The judge in al-Qahtani’s case showed no such restraint. She held that the photos and videos were properly classified because “it (is) both logical and plausible that extremists would utilize images of al-Qahtani … to incite anti-American sentiment, to raise funds, and/or to recruit other loyalists.” When CCR pointed out that this result was speculative, the judge responded that “it is bad law and bad policy to second-guess the predictive judgments made by the government’s intelligence agencies.” In short, the government may classify information, not because that information reveals tactical or operational secrets but because the conduct it reveals could in theory anger existing enemies or create new ones.

This approach is alarming in part because it has no limiting principle. The reasons why people choose to align themselves against the United States — or any other country — are nearly as numerous and varied as the people themselves. Our support for Israel is considered a basis for enmity by some. May the government classify the aid we provide to other nations? May it classify our trade policies on the basis that they may breed resentment among the populations of some countries, thus laying the groundwork for future hostile relations? May it classify our history of involvement in armed conflicts across the globe because that history may function as “anti-American propaganda” in some quarters?

Perhaps even more disturbing, this justification for secrecy will be strongest when the U.S. government’s conduct most clearly violates accepted international norms. Evidence of human rights abuses against foreign nationals, for instance, is particularly likely to spark hostility abroad. Indeed, the judge in the al-Qahtani FOIA case noted that “the written record of (al-Qahtani’s) torture may make it all the more likely that enemy forces would use al-Qahtani’s image against the United States” — citing this fact as a reason to uphold classification.

Using the impropriety of the government’s actions as a justification for secrecy is the very antithesis of accountability. To prevent this very outcome, the executive order that governs classification forbids classifying a document to “conceal violations of law” or to “prevent embarrassment to a person, organization, or agency.” However, a federal judge in 2008 interpreted this provision to allow classification of information revealing misconduct if there is a valid security reason for the nondisclosure. Together, this ruling and the judge’s opinion in the al-Qahtani FOIA case eviscerate the executive order’s prohibition: The government can always argue that it classified evidence of wrongdoing because the information could be used as “anti-American propaganda” by our adversaries.

Human rights advocates cannot rely on al-Qahtani to tell us what the photos and videos would reveal. The government asserts that his own knowledge of what occurred at Guantánamo — knowledge he gained, not through privileged access to government documents but through his personal experience — is a state secret. The words that Guantánamo detainees speak, once transcribed by their attorneys, are “presumptively classified,” and the government determines which of those words, if any, may be released. Legally, the government may classify only information that is “owned by, produced by or for, or is under the control of the United States Government.” Because the detainees are under the government’s control, so, apparently, are the contents of their memory.

That’s why high-level CIA whistleblower John Kiriakou was prosecuted him for espionage after he blew the whistle on illegal CIA torture.*

Obviously, the government wants to stop whistleblowers because they interfere with the government’s ability to act in an unaccountable manner. As Glenn Greenwald writes:

It should not be difficult to understand why the Obama administration is so fixated on intimidating whistleblowers and going far beyond any prior administration – including those of the secrecy-obsessed Richard Nixon and George W Bush – to plug all le
aks. It’s because those methods are the only ones preventing the US government from doing whatever it wants in complete secrecy and without any accountability of any kind.

But whistleblowers also interfere with the government’s ability to get away with hypocrisy. As two political science professors from George Washington University (Henry Farrell and Martha Finnemore) show, the government is so hell-bent to punish Manning and Snowden because their leaks are putting an end to the ability of the US to use hypocrisy as a weapon:

The U.S. establishment has often struggled to explain exactly why these leakers [Manning, Snowden, etc.] pose such an enormous threat.

***

The deeper threat that leakers such as Manning and Snowden pose is more subtle than a direct assault on U.S. national security: they undermine Washington’s ability to act hypocritically and get away with it. Their danger lies not in the new information that they reveal but in the documented confirmation they provide of what the United States is actually doing and why. When these deeds turn out to clash with the government’s public rhetoric, as they so often do, it becomes harder for U.S. allies to overlook Washington’s covert behavior and easier for U.S. adversaries to justify their own.

***

As the United States finds itself less able to deny the gaps between its actions and its words, it will face increasingly difficult choices — and may ultimately be compelled to start practicing what it preaches. Hypocrisy is central to Washington’s soft power — its ability to get other countries to accept the legitimacy of its actions — yet few Americans appreciate its role.

***

American commitments to the rule of law, democracy, and free trade are embedded in the multilateral institutions that the country helped establish after World War II, including the World Bank, the International Monetary Fund, the United Nations, and later the World Trade Organization. Despite recent challenges to U.S. preeminence, from the Iraq war to the financial crisis, the international order remains an American one. This system needs the lubricating oil of hypocrisy to keep its gears turning.

***

Of course, the United States has gotten away with hypocrisy for some time now. It has long preached the virtues of nuclear nonproliferation, for example, and has coerced some states into abandoning their atomic ambitions. At the same time, it tacitly accepted Israel’s nuclearization and, in 2004, signed a formal deal affirming India’s right to civilian nuclear energy despite its having flouted the Nuclear Nonproliferation Treaty by acquiring nuclear weapons. In a similar vein, Washington talks a good game on democracy, yet it stood by as the Egyptian military overthrew an elected government in July, refusing to call a coup a coup. Then there’s the “war on terror”: Washington pushes foreign governments hard on human rights but claims sweeping exceptions for its own behavior when it feels its safety is threatened.

***

Manning’s and Snowden’s leaks mark the beginning of a new era in which the U.S. government can no longer count on keeping its secret behavior secret. Hundreds of thousands of Americans today have access to classified documents that would embarrass the country if they were publicly circulated. As the recent revelations show, in the age of the cell-phone camera and the flash drive, even the most draconian laws and reprisals will not prevent this information from leaking out. As a result, Washington faces what can be described as an accelerating hypocrisy collapse — a dramatic narrowing of the country’s room to maneuver between its stated aspirations and its sometimes sordid pursuit of self-interest. The U.S. government, its friends, and its foes can no longer plausibly deny the dark side of U.S. foreign policy and will have to address it head-on.

***

The era of easy hypocrisy is over.

Professors Farrell and Finnemore note that the government has several options for dealing with ongoing leaks. They conclude that the best would be for the government to actually do what it says.

What a novel idea …

* Note: That may be why Guantanamo is really being kept open, and even prisoners that the U.S. government admits are innocent are still being blocked from release: to cover up the widespread torture by keeping the evidence – the prisoners themselves – in a dungeon away from the light of day.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/d_pIiAY8jZs/story01.htm George Washington

QE and Cheap Debt Benefit the Top of the Capital Food Chain and Few Others

Debt is not intrinsically evil. There is in fact good debt (debt which provides growth opportunities) and bad debt (debt which becomes a net drag on productivity).

We’ve crossed that line.

In the 1960s every new $1 in debt bought nearly $1 in GDP growth. In the 70s it began to fall as the debt climbed. By the time we hit the ‘80s and ‘90s, each new $1 in debt bought only $0.30-$0.50 in GDP growth. And today, each new $1 in debt buys only $0.10 in GDP growth at best.

Put another way, the growth of the last three decades, but especially of the last 5-10 years, has been driven by a greater and greater amount of debt. This is why the Fed has been so concerned about interest rates.

You can see this in the chart below. It shows the total credit market outstanding divided by GDP. As you can see starting in the early ‘80s, the amount of debt (credit) in the system has soared. We’ve only experienced one brief period of deleveraging, which came during the 2007-2009 era.

Bernanke couldn’t stomach this kind of deleveraging. The reason is simple: those who have accumulated great wealth as a result of this system are highly incentivized to keep it going.

Bernanke doesn’t talk to you or me about these things. He calls Goldman Sachs or JP Morgan. And most of the Wall Street wealth of the last 30 years has been the result of leverage (credit growth). Take away credit and easy monetary policy and a lot of very “wealthy” people suddenly are not so wealthy.

Let me put this in terms of real job growth (created by startups) vs the “job growth” of the last five years.

According to the National Bureau of Economic Research, startups account for nearly all of the US’s net job creation (total job gains minus total job losses). And smaller startups have a very different perspective of debt than larger more established firms.

The reason is quite simple. When a small business owner takes out a loan he or she is usually posting personal assets as collateral (a home, car or some other item). As a result, the debt burden comes with the very real possibility of losing something of great value. And so debt is less likely to be incurred.

This stands in sharp contrast to a larger firm, which can post collateral owned by the business itself (not the owners’ personal assets) and so feels less threatened by leveraging up. Thus, in this manner, QE and other loose monetary policies maintained by the Fed favor those larger firms rather than the real drivers of job creation: smaller firms and startups.

For this reason, the Fed’s policies, no matter what rhetoric the Fed uses, are more in favor of the stock market than the real economy. That is to say, they are more in favor of those firms that can easily access the Fed’s near zero interest rate lending windows than those firms that are most likely to generate jobs: smaller firms and start-ups.

This is why job growth remains anemic while the stock market has rallied to new all-time highs. This is why large investors like Bill Gross have applauded the Fed’s policies at first (when the deleveraging was about to wipe him out in 2008), but then turned against them in the last few years as a political move. This is why QE is so dangerous, because it increases concentration of wealth and eviscerates the middle class.

Guys like Warren Buffett or Larry Ellison of Oracle can take advantage of low interest rates to leverage up, acquiring more assets (that can produce income) by posting their current assets as collateral (Ellison commonly “lends” shares in Oracle to banks in exchange for bank loans).

Cheap debt is useful to them because the marginal risk of taking it on is small relative to that of a normal individual investor who would have to post a needed asset (his or her home) as collateral on a loan to leverage up.

This system works as long as debt continues to stay cheap. However, in the last 12 months the Fed has definitively crossed the point of no return with its policies. It is not just a matter of timing before this debt bubble bursts.

For a FREE Special Report outlining how to protect your portfolio a market collapse, swing by: http://phoenixcapitalmarketing.com/special-reports.html

Best

Phoenix Capital Research

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/x6xUroXkmL0/story01.htm Phoenix Capital Research

THeRe'S SoMETHiNG ABouT MuTTi…

“The Buck stops somewhere else…”

“Mongo only pawn in game of life…”

Ich bin ein Bull Shitter…

The classic German adolescent nitemare…

.

.

By: @blumaberlin

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/CXATTzTOPNo/story01.htm williambanzai7

THeRe’S SoMETHiNG ABouT MuTTi…

“The Buck stops somewhere else…”

“Mongo only pawn in game of life…”

Ich bin ein Bull Shitter…

The classic German adolescent nitemare…

.

.

By: @blumaberlin

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/CXATTzTOPNo/story01.htm williambanzai7

Legal Glitch "Has The Potential To Sink Obamacare"

As if the technological problems facing Obamacare were not enough, a potentially major “legal glitch” could cause the healthcare law to unravel in 36 states. As the LA Times reports, The Affordable Care Act proposes to make health insurance affordable to millions of low-income Americans by offering them tax credits to help cover the cost. To receive the credit, the law twice says they must buy insurance “through an exchange established by the state.” But 36 states have decided against opening exchanges for now. Critics of the law have seized on the glitch. They have filed four lawsuits that urge judges to rule the Obama administration must abide by the strict wording of the law, even if doing so dismantles it in nearly two-thirds of the states. And the Obama administration has no hope of repairing the glitch by legislation as long as the Republicans control the House…“This has the potential to sink Obamacare. It could make the current website problems seem minor by comparison,” noted on policy expert.

Via LA Times,

…

President Obama’s healthcare law also has a legal glitch that critics say could cause it to unravel in more than half the nation.

…

Apparently no one noticed this when the long and complicated bill worked its way through the House and Senate. Last year, however, the Internal Revenue Service tried to remedy it by putting out a regulation that redefined “exchange” to include a “federally facilitated exchange.” This is “consistent with the language, purpose and structure … of the act as a whole,” the Treasury Department said.

…

But critics of the law have seized on the glitch. They have filed four lawsuits that urge judges to rule the Obama administration must abide by the strict wording of the law, even if doing so dismantles it in nearly two-thirds of the states. And the Obama administration has no hope of repairing the glitch by legislation as long as the Republicans control the House.

…

“This is a problem,” said Timothy Jost, a law professor at Washington and Lee University. “This case could have legs,” although “it was never the intent of Congress to establish federal exchanges that can’t do anything. They were supposed to have exactly the same powers.”

Michael Carvin, the Washington lawyer leading the challenge, says the wording of the law is what counts. “This is a question of whether you believe in the rule of law. And the language here is as clear as it could possibly be,” he said.

…

“This has the potential to sink Obamacare. It could make the current website problems seem minor by comparison,” Cannon said.

Defenders of the law say the courts are being used as part of the political campaign against the law.

“This is definitely heating up. It is now the major focus of the Republican strategy for undoing the Affordable Care Act,” said Simon Lazarus, a lawyer for the Constitutional Accountability Center. “The lawsuits should be seen as preposterous,” he said, because they ask judges to give the law a “nonsensical” interpretation.

…

“They are betting on getting five votes at the Supreme Court,” Lazarus said. “I don’t think it will happen.”

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/txZcTK7Njyk/story01.htm Tyler Durden

Legal Glitch “Has The Potential To Sink Obamacare”

Via LA Times,

…

President Obama’s healthcare law also has a legal glitch that critics say could cause it to unravel in more than half the nation.

…

Apparently no one noticed this when the long and complicated bill worked its way through the House and Senate. Last year, however, the Internal Revenue Service tried to remedy it by putting out a regulation that redefined “exchange” to include a “federally facilitated exchange.” This is “consistent with the language, purpose and structure … of the act as a whole,” the Treasury Department said.

…

But critics of the law have seized on the glitch. They have filed four lawsuits that urge judges to rule the Obama administration must abide by the strict wording of the law, even if doing so dismantles it in nearly two-thirds of the states. And the Obama administration has no hope of repairing the glitch by legislation as long as the Republicans control the House.

…

“This is a problem,” said Timothy Jost, a law professor at Washington and Lee University. “This case could have legs,” although “it was never the intent of Congress to establish federal exchanges that can’t do anything. They were supposed to have exactly the same powers.”

Michael Carvin, the Washington lawyer leading the challenge, says the wording of the law is what counts. “This is a question of whether you believe in the rule of law. And the language here is as clear as it could possibly be,” he said.

…

“This has the potential to sink Obamacare. It could make the current website problems seem minor by comparison,” Cannon said.

Defenders of the law say the courts are being used as part of the political campaign against the law.

“This is definitely heating up. It is now the major focus of the Republican strategy for undoing the Affordable Care Act,” said Simon Lazarus, a lawyer for the Constitutional Accountability Center. “The lawsuits should be seen as preposterous,” he said, because they ask judges to give the law a “nonsensical” interpretation.

…

“They are betting on getting five votes at the Supreme Court,” Lazarus said. “I don’t think it will happen.”

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/txZcTK7Njyk/story01.htm Tyler Durden

A Closer Look At The Decrepit World Of Wall Street Rental Homes

Submitted by Michael Krieger of Liberty Bitzkrieg blog,

This new incursion by hedge funds and private equity groups into the American single-family home rental market is unprecedented, and is proving disastrous for many of the tens of thousands of families who are moving into these newly converted rental homes. In recent weeks, HuffPost spoke with more than a dozen current tenants, along with former employees who recently left the real estate companies. Though it’s not uncommon for tenants to complain about their landlords, many who had rented before described their current experience as the worst they’ve ever had.

A former inspector for American Homes 4 Rent who worked in the Dallas office said he routinely examined homes just prior to rental that were not habitable. Though it wasn’t his job to answer complaints, he said he fielded “hundreds of calls” from irate tenants.

– From the Huffington Post’s excellent article: Here’s What Happens When Wall Street Builds A Rental Empire

This is a topic that I have been writing extensively on since the beginning of the year. In fact, I don’t think there’s another topic I have focused so intently on in the whole of 2013, with the exception of the NSA revelations. It all started back in January with my post titled, America Meet Your New Slumlord: Wall Street, which received a huge amount of attention in the alternative media world.

I knew from the start that this whole “buy-to-rent” thing would be a disaster. Over the last decade or so, everything that Wall Street touched has turned into a scheme primarily focused on parasitically funneling wealth and resources away from society at large to itself. This is no different. They call it a “new asset class.” I call it Wall Street serfdom.

What makes this article even more interesting is that it’s not simply greed, it is also obvious that these Wall Street firms have no idea what the fuck they are doing. For example:

Former employees of the companies, who spoke on condition of anonymity because they worry about jeopardizing their careers, said their former colleagues can’t keep up with the volume of complaints. The rush to buy up as many homes as possible has stretched resources to the point of breaking, these people said.

My advice to people out there in the rental market, is they should try to avoid Wall Street rentals. The three main companies highlighted in this article are: Invitation Homes (owned by Blackstone), Colony American and American Homes 4 Rent. Unfortunately, it appears these companies may try to hide their presence in certain markets so you may have to do additional digging. For example, WRI Property Management is the local agent of Colony American in Georgia.