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London Bubble Trouble – Visas Issued to Wealthy Foreigners Plunge 84%

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It appears the music may have finally stopped for one of the world’s largest luxury real estate bubbles: London.

It’s well known that foreign oligarchs love London real estate as a means to launder funds, typically “earned” by soaking their host countries dry via corruption and fraud. This has caused absurd and irrational spikes in high-end residential real estate in the English capital, as well as a flood of new construction.

With emerging markets now completely collapsing, the seemingly endless flood of foreign money is drying up, and with it, London real estate.

So has the London real estate bubble popped? Probably.

– From the September 9, 2015 article: Luxury London Home Sales Plunge 26% – Has this Mega Real Estate Bubble Finally Burst?

London’s luxury property bubble seems to have popped sometime during the second half of last year, something I’ve written about repeatedly over the past several months.

One of the primary drivers behind the weakness in this “asset class” is a sharp reduction in the numbers of foreign criminals laundering money via London real estate. Just in case you still harbored any doubts about high-end London property being little more than bank accounts for shady foreign oligarchs, we learn the following from Bloomberg:

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Leonardo DiCaprio’s Oscar Climate Change Grandstand

DiCaprioOscar Actor Leonardo DiCaprio won the Oscar for best actor for his role in the snow hell movie, The Revenant. A long-time and vocal environmental activist, DiCaprio took the opportunity to spotlight his concern over man-made global warming in his acceptance speech. His foundation has committed to spending $15 million on environmental causes including on climate change activism. Citing surface temperature data, DiCaprio declared that humanity had “collectively felt in 2015 as the hottest year in recorded history.” On the other hand, satellite temperature data from climatologists at the University of Alabama in Huntsville suggest that 2015 was third warmest year since 1979 when satellite measurements began. The past year was particularly warm because of a large El Nino in the Pacific Ocean in which a massive amount of warm water sloshes toward South America from Asia. The phenomenon warms the atmosphere, but now appears to be fading which suggests that 2016 will be cooler than last year.

DiCaprio further asserted that climate change “is the most urgent threat facing our entire species, and we need to work collectively together and stop procrastinating.” DiCaprio is right that global average temperatures have been rising in recent years, but, as an article in Nature Climate Change just last week acknowledged, temperature has been rising much less rapidly than projected by most computer climate models. If this lower rate were sustained, it would substantially undercut claims that the world faces an urgent and impending climate catastrophe.

DiCaprio also stated, “Our production needed to move to the southern tip of this planet just to be able to find snow.” Apparently the original plan was to shot the entire movie in Canada, but a persistent high pressure ridge over the Pacific Coast of North America produced an unseasonably warm winter in the Western U.S. and Canada. On the other hand, the Eastern U.S. and Canada suffered through a “polar vortex” winter with plenty of snow. Perhaps the producers should have moved the filming from British Columbia and Alberta to Quebec and upstate New York.

In any case, the producers used southern Argentina as a snowy location. Originally the filming was reportedly supposed to wrap by March, 2015, but did not finish up until August, 2015 when it just so happens to be winter in Argentina and summer in Canada. Citing warmer than average temperatures in western North America for one specfic year as dispositive evidence for global warming makes as much sense as citing colder than average temperatures in eastern North America in the same year as evidence for global cooling.

DiCaprio expressed his concern for how climate change will deleteriously affect “indigenous people of the world, for the billions and billions of underprivileged people.” First, the good news is that the World Bank reports that absolute poverty (defined as living on less than $1.90 per day) has now fallen below 10 percent of the world’s population. The global rate of absolute poverty was 37 percent as recently as 1990. In large measure this amazing improvement in poverty rates stems from hundreds of millions of poor people gaining access to modern energy supplies. Total electric generating capacity has more than doubled since 1990 and most of that energy is produced by burning fossil fuels. DiCaprio would be better advised to direct his aid toward connecting the 1.2 billion underprivileged people who are still without electricity to modern power plants.

Finally, DiCaprio decried “big polluters” and the “politics of greed.” It is true that private energy production companies are guilty of trying to make profits for their shareholders. But DiCaprio should keep in mind that governments control over 90 percent of the world’s oil reserves and 50 percent of the world’s coal reserves.

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Was Middle-Class Retirement Just A Credit Bubble Fantasy?

Submitted by John Rubino via DollarCollapse.com,

One of the jarring — and until recently underreported — aspects of those seemingly-positive recent US jobs reports is the increasing skew towards older workers. Most new jobs have gone to people who in better times would be leaving to live off their savings. Now they’re coming back, frequently taking jobs they wouldn’t consider if money wasn’t so tight.

And it’s apparently a lot worse for older women:

How Older Women Are Reshaping U.S. Job Market

(Wall Street Journal) – More female workers delay retirement, a shift that’s helping to transform America’s economy.

Connie Blanchette, age 72, is a relative newcomer at the county social-services agency where she works part time, so her retirement plans differ from most longtime government workers. “I will work as long as I can,” she said.

Ms. Blanchette, who lost her job, home and savings after the financial crisis, is among a wave of older American women who are working or seeking work longer than any previous generation as they look ahead to more years of life than men their age and with less accumulated wealth.

Since the start of the most recent recession in December 2007, the share of older working women has grown while the percentage of every other category of U.S. worker—by gender and age—has declined or is flat.

In 1992, one in 12 women worked past age 65. That number is now around one in seven. By 2024, it will grow to almost one in five, or about 6.3 million workers, according to Labor Department projections.

“It’s really one of the most stunning developments that we’ve seen in the labor market over the last 50 years,” said Richard Johnson, director of the Urban Institute’s program on retirement policy.

While many Americans continue working late in life because they find their jobs rewarding, others, including Ms. Blanchette, find themselves approaching old age with more debt, less savings and with fewer of them receiving pensions than workers of previous generations.

From the end of World War II to the 1980s, the share of older Americans in the workforce fell every year. That reversed by the mid-1990s, as companies shifted from traditional pension plans—which paid fixed benefits at specific retirement ages—to 401(k) savings plans, which transferred the responsibility of funding retirement to employees.

The past recession made things worse, forcing many workers out of jobs before they could afford to retire. While older workers were less likely to lose their jobs in the recession than younger workers, the older workers who did, particularly women, were hit hardest, according to researchers at the Federal Reserve Bank of St. Louis.

As older workers keep a tight grip on their jobs, the proportion of Americans ages 25 to 54 who are working or looking for work has slipped to the lowest level in three decades. Many of these younger Americans fell out of the labor force in the recession: Some retired or enrolled in school. Others weren’t able to work or had to care for relatives at home. Many gave up looking.

The behavior of older workers are pieces of a puzzle that policy makers are examining to answer questions about sluggish wage growth. Wages are determined largely by the amount of idle capacity—known as slack—in the economy. When there are many more people than available jobs—lots of slack—wages stagnate. When employers face a shortage of workers, wages rise.

The U.S. unemployment rate fell below 5% last month, a level not seen since early 2008. That drop, which happened faster than many economists had expected, should trigger employers to offer higher wages as they chase fewer potential hires. But the textbook case is muddled by the shifting demographics of the U.S. workforce.

Older men and women are leaving the workforce more slowly than in the past, suggesting a greater potential labor supply—and more slack—than an unemployment rate below 5% would typically imply. Such economic slack must be cinched—by finding jobs for discouraged younger workers, for example—before wages can rise more broadly.

Some thoughts

Defined-benefit pension plans are both an artifact and a victim of the credit bubble that began when the US left the gold standard in 1971. Freed from monetary restraints, government spending soared and — as a result — interest rates were kept artificially low, encouraging the private sector to over-borrow as well.

All this leverage created a false sense of prosperity that led businesses and governments to offer pension plans designed to buy labor peace in return for huge future payouts — premised on the expectation that investment returns would stay high forever.

But since returns were artificially inflated by easy money, the end of the latter made the former unsustainable. So pensions are being shut down and/or scaled back everywhere, kicking one leg out from under the concept of long, comfortable, broad-based retirement.

Add in continuously-falling interest rates (as governments try to keep the charade of solvency going long enough for current leaders to retire), globalization that shifts factory jobs overseas, and technology that is now automating virtually everything from warehouses to finance (see The Robots Are Coming For Wall Street) and the result is a society where only two groups can reasonably expect to retire: the already-rich and those with skills that haven’t yet been automated.

Meanwhile, seniors taking jobs on pretty much any terms are pushing down wages for younger people, making it harder for them to simultaneously pay off student loans and save — thus putting their retirement even further out of reach.

In rich countries, this is a return to the way things were for the first 10,000 years of human history, when the idea of an able-bodied non-aristocrat just sitting around and relaxing in old age was absurd to the point of being inconceivable. It’s also a transition to the way things have always been for the rest of today’s world.

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St. Mark’s is Dead: “A Cycle of Bohemians Hating Each Other” (New at Reason)

“The hippies didn’t much like the Beatniks and they really hated the punks. The punks didn’t much like the hippies and they really hated the hardcore kids. So it’s been this cycle of bohemians hating each other,” says Ada Calhoun, author of the acclaimed book St. Mark’s is Dead: The Many Lives of America’s Hippest Street.

A native of the four-block-stretch in Manhattan’s East Village which has served as the nation’s capital of the counterculture for more than a hundred years, Calhoun spoke with Reason TV about her book which lovingly details the endless creative destruction that has kept St. Mark’s Place a vibrant home for everyone from early 20th century anarchists to Andy Warhol and the Velvet Underground, to the punk rockers of the CBGBs era, to the hardcore kids and skaters of the 80s, to the lamented NYU students of today.

It just so happens that one of St. Mark’s Place better-known institutions, the punk rock clothing store Trash and Vaudeville, closed up shop yesterday (temporarily, they’re moving two blocks away). Calhoun was quoted by the New York Times in a piece about the store’s last day on the street:

“The punk St. Marks Place?” she said. “I’m trying to think of what’s left. Not much. I think a couple of people with safety pins on stoops” — teenagers re-enacting the past.

In an area where the only constant is upheaval, Calhoun thinks it’s “sweet” that every generation of cultural iconoclasts that have set up shop on St. Mark’s is certain their time was the only “authentic” time, and that the area is still a “magical” place for young people even today.

Watch above, or click the link below for the full text, associated links, and downloadable versions of this video. Subscribe to Reason TV’s YouTube channel for daily content like this.

View this article.

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Global Anarchy: Woman Waves Severed Head, Man Stabs 10 Schoolchildren, Burnt Horse Head Found In Box

When we reviewed the most popular Zero Hedge posts of 2014, we weren’t entirely surprised to learn that civil unrest was one of the themes readers were most interested in discussing.

Indeed, polite society seems to be breaking down all over the world and in 2015, we got what certainly looks like evidence that anarchy beckons – even in the US, the supposed bastion of modernity and human “advancement”.

There were, for instance, the riots that reduced parts of Baltimore to smoldering ash in April…

In August, an apparently disgruntled news anchor murdered his former colleagues on live television.

That came on the heels of a horrific shooting at an African American church in Charleston perpetrated by a rather angry 17-year-old.

Since then, things have only gotten worse. In fact, the US has seen three mass shootings in the last week alone.

And the trend towards societal disintegration is a global phenomenon. The Paris attacks underscore the extent to which the chaos and outright depravity that characterizes everyday like in the Mid-East has spilled over into Western Europe. That spillover has in turn triggered feelings of intense nationalism in Germany, Sweden, Finland, and Norway (among other countries) where far-right political movements look set to invoke Europe’s troubled past.

On Monday, we got what might well be the surest sign yet that society is rapidly descending into a Hobbesian state of nature. In Moscow, a woman dressed in all black was arrested near a metro station screaming “I am a terrorist.” She also shouted the following:

“The end of the world is coming in a second…I’m your death. I hate democracy. I’m a terrorist.”

“I have been cursed and destroyed so many times.”

“I’m your suicide bomber… I’m going to die in a second…The end of the world.”

But believe it or not, that’s not the most disturbing part of this story. The woman, as you can see in the video below, was holding the severed head of a child.

An investigation revelaed the woman was a citizen of a “Central Asian country.” She apparently burned down the apartment where she was supposed to be caring for the child who was “three or four.” The child’s headless body was found in the charred remains of the building. The woman was identified as Gulchekhra Bobokulova from Uzbekistan. She beheaded the child, she said, because of her husband’s “betrayal.”

It wasn’t immediately clear what the connection was between the dead toddler and her alleged husband.

Meanwhile, in China, 45-year-old Li Sijun decided to stab 10 schoolchildren this morning for apparently no reason at all. As CNN reports, “the incident took place in Haikou, the capital city of the southern island province of Hainan.” Thankfully, all of the children survived. Li didn’t. He killed himself.

Finally, rounding out Monday’s news from our increasingly anarchic world, a woman strolling through Highbridge Park near 190th Street in New York found a box. With a “cooked horse head in it.”

“Cops,” The New York Post says, “are looking into whether the animal parts are tied to ‘voodoo.'”

So, a woman decapitates a toddler and displays the head while shouting about the end of the world, a man stabs ten schoolchildren for no reason, and a woman finds a baked horse’s head with possible ties to “voodoo” in Manhattan.

And that’s just in the past 24 hours.

If you have the means, it might be a good time to invest in a doomsday bunker…

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The Real Power of Cash Is Its Anonymity

In USA Today, Glenn Reynolds of Instapundit discusses the mad drive by former Treasury Secretary Larry Summers (and many other bright boys) to get rid of large-denomination currency notes.

What is a $100 bill worth now, compared to 1969? According to the U.S. Inflation Calculator online, a $100 bill today has the equivalent purchasing power of $15.49 in 1969 dollars. Likewise, in 1969, a $100 bill had the equivalent purchasing power of $645.55 in today’s dollars.

So even if we brought back the discontinued $500 bill, it wouldn’t have the purchasing power today that a $100 bill had in 1969, when larger denominations were discontinued. And carrying around a $100 bill today is basically like carrying around a $20 in 1969. As The New York Times put it after Summers’ announced his plan, “Getting rid of big bills will make it harder for criminals to do business and make it easier for law enforcement to detect illicit activity. …There is no need for large-denomination currency.”

To which Reynolds notes two things. First, inflation!

Reading this got me to thinking: What is a $100 bill worth now, compared to 1969? According to the U.S. Inflation Calculator online, a $100 bill today has the equivalent purchasing power of $15.49 in 1969 dollars. Likewise, in 1969, a $100 bill had the equivalent purchasing power of $645.55 in today’s dollars.

So even if we brought back the discontinued $500 bill, it wouldn’t have the purchasing power today that a $100 bill had in 1969, when larger denominations were discontinued. And carrying around a $100 bill today is basically like carrying around a $20 in 1969.

Second, anonymity!

Cash has a lot of virtues. One of them is that it allows people to engage in voluntary transactions without the knowledge or permission of anyone else. Governments call this suspicious, but the rest of us call it something else: Freedom.

I’m less taken with the inflation argument, not because inflation doesn’t matter but because overall purchasing power proceeds apace, thanks to technological innovation and gains in productivity. When you think of all the great crap that’s available to virtually everyone in today’s world, I’d much rather be middle class today than upper-middle-class in 1969. Somewhere on this page is a picture of some hippies selling LSD at Woodstock for $1.00 a hit (the brown acid cost less, I’m sure). That would be around $65 today, according to a straight-up inflation calculation. But as numerous folks on Twitter informed me, to the extent that acid is still around, it doesn’t cost anywhere near that much and is probably better quality (thanks drug war, for nothing but human misery!).

The anonymity argument strikes me as more meaningful, and not because I’m an international drug dealer or collector of rhino horns or anything like that. The right to do what you want without being tracked and followed or subject to someone else’s accounting—that’s a pretty good right and it’s one worth preserving or at least thinking through fully before getting rid of it. Privacy isn’t about hiding bad stuff. It’s about, well, privacy. And in many cases, as Reynolds notes, freedom flourishes in private settings and does less well in forced public settings.

Read the full article.

Related vid: Is Bitcoin the great libertarian hope or has it been co-opted by Wall Street?

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Donald Trump’s Authoritarian Fantasies: New at Reason

Trump Has America ever seen a more authoritarian presidential candidate than Donald Trump? Not since FDR—who seized coal mines and department stores, dictated wages and prices, and even weighed whether he should decree when Americans could eat meat.

But at least FDR had a reason: He was fighting a world war. What’s Trump’s excuse?

One of the great ironies of Trump’s success in the polls is that much of his support comes from people who profess to be angry over Barack Obama’s serial offenses against the Constitution and limited government. It turns out that many of them positively relish the idea of someone who will go even further than Obama has, writes A. Barton Hinkle.

View this article.

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“There’s never been a change this big, nor so many people unprepared.”

I had an amazing time this weekend sharing the stage at an investment conference in Miami, with other speakers like Robert Kiyosaki, Peter Schiff, and G. Edward Griffin among others.

During a panel on the future of money and banking we discussed how the financial system is rapidly losing control of its own product, i.e. money, in the same way that the music industry has lost control of its product.

In the past there used to be a handful of large record labels that controlled the distribution of music across the world.

In the same way, our financial system was set up for a handful of banks to tightly control the distribution of money across the world to the point that no financial transaction could occur without a bank inserting itself in the middle.

But like music, this model is rapidly changing.

Just as you can have now access an unlimited catalog of albums without ever setting foot in a record store, we are now in a position to conduct financial transactions entirely outside of the banking system.

Every single function of a bank, whether to save, borrow, exchange, or transfer money, can all be done better, cheaper, and more efficiently outside of the banking system.

Rather than going to a bank with hat in hand, you can now fund your startup through an online crowd-sourcing platform.

More importantly, dollar dominance is waning.

The dollar has been the dominant reserve currency since the end of WWII.

But the US government has abused this privileged position so many times, with constant bullying of other nations and threatening to excommunicate foreign banks from the US financial system.

So now other nations are quickly coming together to create an alternative system that no longer depends on America.

Jim Rickards, author of Currency Wars, spoke about a meeting that he had with senior officials at the US Department of Treasury.

Jim had expressed concerns about the dollar losing its status, or at least significant market share, as the world’s reserve currency.

And as I kept telling the audience this weekend, this isn’t a question of “what if?” it’s a question of “what is.”

The government of Iran, for example, has already decided to be paid in euros for oil instead of dollars.

And the government of Brazil almost immediately jumped on the bandwagon to trade with Iran outside of the US financial system.

These are major blows to the dollar, and all this just happened within the last couple of weeks.

Yet as Jim Rickards continued his story, senior officials at the Treasury Department refused to acknowledge that the US dollar would ever lose its status and power in the world.

Jim said he felt like he was in London in 1913, with British bureaucrats pounding the table about how the British pound sterling rules the world.

This is a total fantasy.

As we discussed in Friday’s analysis of the US government’s latest financial reports, the government is totally bankrupt to the tune of negative $18.2 trillion.

The Federal Reserve has printed itself into insolvency.

And the entire US financial system is underpinned by the greatest level of debt that has ever existed in the history of the world.

There is no nation and no currency entitled to the top spot forever. History shows that wealth and power routinely change.

And Robert Kiyosaki added that there’s never been a change this big, nor so many people unprepared.

I tend to agree. Just looking at the sheer size of the $200 trillion debt bubble, there’s never been a change of this magnitude.

And given that more than half of Americans have less than a thousand dollars in savings, it’s clear that too many people are unprepared.

In my own remarks, I discussed all the striking similarities between 2008 (when the world erupted in a massive financial crisis), and where we are today.

Our financial system is loaded with risk. Insolvent governments, insolvent central banks, dangerous levels of illiquidity, negative interest rates, early signs of capital controls.

Again- this isn’t “what if”. It’s “what is”.

G. Edward Griffin, author of the exceptional The Creature from Jekyll Island about the Federal Reserve quoted Sun Tzu, suggesting that if you “know your enemy and know yourself you need not fear the result of a hundred battles.”

I call this having a Plan B. It means understanding what the real risks are (and what they’re not). And taking sensible steps to do something about it.

After learning about the risks and solutions, and then creating a sensible Plan B, you’ll never find yourself complaining that your new bank is too safe.

Or that it’s too hard for the government to confiscate your assets.

Or that your tax bill is too low.

Or that your retirement plan is too exciting.

These are all things that make sense no matter what happens next. Or what doesn’t.

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“Extreme Downside Leadership”: Investech Shows Why This Is Just Another Bear Market Rally

When it comes to stock market, one thing never changes: price action determines the newsflow, and not the other way around and the recent 7% rebound off the 1812 lows two weeks ago which has pushed the S&P to nearly 1960 (or over 21x on a GAAP P/E basis as we showed this weekend) has been interpreted by many as an “all clear” to any imminent downward drop.

And yet, as Investech reports in their latest weekend note, there is nothing normal about this rebound, or rather, bear market short squeeze aka “rally”, for many reasons of which the most prominent one is that there has been absolutely no upside leadership through the entire bounce.

In fact, “extreme negative leadership readings of this duration generally only occur in bear markets”, which in addition to the PBOC’s panicked RRR cut overnight to halt the latest swoon in stocks, confirms that this is merely the latest bear market rally.

From Investech:

Over the past two weeks, equity markets have rebounded 6.7% off of their lows, yet downside leadership persists. Consequently, the “DISTRIBUTION” component of our Negative Leadership Composite remains locked at -100. Extreme negative leadership readings of this duration generally only occur in bear markets, which means our portfolio defenses will remain high until the technical picture changes.

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Treasury Yield Curve Collapses To Flattest Since Nov 2007

With the short-end underperforming today, the US Treasury yield curve is flattening once again. The spread between 2Y and 10Y yields has plunged to 93bps today – the lowest level since November 2007 – suggesting US financials have not seen the wost of it yet…

Which sends a long-term warning for US financials…

And short-term…

Charts: Bloomberg

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