Tag: finance

Submitted by Michael Snyder via The Economic Collapse blog,

Did you know that when you take the number of working age Americans that are officially unemployed (8.2 million) and add that number to the number of working age Americans that are considered to be “not in the labor force” (94.3 million), that gives us a grand total of 102.5 million working age Americans that do not have a job right now?  I have written about this before, but today I want to focus just on Americans that are in their prime working years.  When you look at only Americans that are from age 25 to age 54, 23.2 percent of them are unemployed right now.  The following analysis and chart come from the Weekly Standard…

Here’s a chart showing those in that age group currently employed (95.6 million) and those who aren’t (28.9 million):

 

 

“There are 124.5 million Americans in their prime working years (ages 25–54). Nearly one-quarter of this group—28.9 million people, or 23.2 percent of the total—is not currently employed. They either became so discouraged that they left the labor force entirely, or they are in the labor force but unemployed.

 

This group of non-employed individuals is more than 3.5 million larger than before the recession began in 2007,” writes the Republican side of the Senate Budget Committee.

Clearly, we have never recovered from the impact of the last recession.

But let’s try to put these numbers in context.

Below, I would like to share two charts with you.  They show what has happened to the inactivity rates for men and for women in their prime working years in the United States in recent years.

In order to be considered “inactive”, you can’t have a job and you can’t be looking for a job.  So this subset of people is smaller than the group that we were talking about above.  The 23.2 percent of Americans in their prime working years that are unemployed right now includes those that are looking for a job and those that are not looking for a job.

These next two charts do not include anyone that has a job or that is currently looking for a job.  These charts only cover “inactive” people in their prime working years that are not considered to be in the labor force.

As you can see in this first chart, the inactivity rate for men in their prime working years exploded higher during the last recession and then continued to go up even after the recession supposedly ended.  At this point, it is hovering near all-time record highs.  Does this look like an “economic recovery” to you?…

For women, we see a similar thing.  In this next chart, you can see that the inactivity rate for women in their prime working years rose during the last recession and then just kept on rising.  At this point, it is also hovering near all-time record highs…

What are we to make of all this?

For both men and women in their prime working years, the inactivity rate is even higher than it was during the last recession and is hovering near the all-time record.

All of these people neither have a job nor are they looking for one.

So what in the world is going on here?

Are they independently wealthy?

Have these people found rich spouses to marry so they don’t have to work?

No, the truth is that the middle class in America is steadily eroding and poverty is absolutely exploding.  Credit card debt has soared to a new record high, and 48 percent of all U.S. adults under the age of 30 believe that “the American Dream is dead”.

The issue isn’t that people don’t want to work.

The issue is that people cannot find enough work.

And even if you have a job, that does not mean that you are on easy street.  According to the Social Security Administration, 51 percent of all American workers make less than $30,000 a year.

Tens of millions of Americans are now among the ranks of “the working poor”.  So many families are watching their expenses soar while their paychecks go down or stagnate.  If you are in this situation right now, then you probably know how exceedingly stressful it can be.

Just look at what is happening to the cost of health insurance.  The following comes from Fox News…

Health insurance premiums have increased faster than wages and inflation in recent years, rising an average of 28 percent from 2009 to 2014 despite the enactment of Obamacare, according to a report from Freedom Partners.

And I am not exactly sure where they got those numbers.  Personally, I know that my health insurance rates have gone up far faster than that.

Two years ago, my health insurance company wanted to double the health insurance premiums for my family even though we never get sick.  So I switched to another insurance company that offered a policy that was only about 30 percent higher than my last one.  But then when it came time to renew, that insurance company wanted to raise my rate by another 50 percent.

Thanks to Obamacare, American families are being absolutely crippled by the cost of health care.  And of course we are seeing the rising cost of living so many other places as well.  Our paychecks are being squeezed harder and harder, and this is absolutely killing the middle class.  In fact, the middle class in America is now a minority for the first time ever.

And now for the real bad news – this is about as good as things are ever going to get in this country.  As you can see from what I have shared above, we never really had any sort of meaningful “economic recovery”, and now we have entered the early phases of the next major downturn.

So where do we go from here?  Unfortunately, our debt-fueled prosperity has provided us with a massively inflated standard of living that is not even close to sustainable.  As this bubble bursts, the economic pain is going to be absolutely unprecedented.

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The one catalyst most responsible for sending the price of oil from its 13 year lows hit in early February some 50% higher in the following month, has been the recurring rumor about an “imminent” OPEC production freeze meeting which was initially supposed to take place in early March, then on March 20, and now on April 17 (we expect this to be rescheduled shortly as well).

As a reminder, Qatar has invited all OPEC members and major producers from outside the exporting group to attend talks on April 17 on a deal to freeze output at January levels to support the global oil market, Qatar’s energy ministry said. “The need has become an urgent matter to bring back balance to the market and recovery to the global economy,” the ministry said in the invitation letter.

The ministry had said that around 15 OPEC and non-OPEC producers, accounting for about 73 percent of global oil output, are supporting the initiative. The problem is that all it takes is for one or two member nations to avoid the meeting and thus make any attempt at supply cuts moot.

So here is, according to Reuters, the latest summary of who is, may or won’t be attending next month’s Doha meeting:

 

And, as noted previously, should even one oil producing nation snub the meeting it is all for nothing. As Bloomberg explained last week, “The other 11 members of the Organization of Petroleum Exporting Countries have agreed to meet in the Qatari capital on April 17, officials from the respective countries have said. The absence of Iran and Libya, which are determined to restore supplies shuttered by conflict and sanctions, means any accord is unlikely to be effective, according to Commerzbank AG.”

“The meeting is turning more and more into a farce,” analysts at Commerzbank led by Eugen Weinberg said in a report. “It is hardly surprising that Libya is not interested in the Doha meeting. Like Iran, it first wants to increase output and then talk about a freeze.”

Just don’t tell the short squeeze and stop hunting algos.

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Back in December, New York-based China Beige Book International released what they called a “disturbing” set of data that pointed to pronounced weakness in the Chinese economy.

“National sales revenue, volumes, output, prices, profits, hiring, borrowing, and capital expenditure were all weaker than the prior three months,” the firm – whose CBB is modeled on the Fed’s survey of US economic conditions and is supposed to provide a more objective assessment of China’s economic health than the goalseeked figures that emanate from the NBS – remarked.

In the three months since the CBB’s last report, we haven’t seen a whole lot in the way of positive data that would have caused us to believe that things are looking up. Exports, for instance, cratered more than 20% in RMB terms last month and 25% in USD terms – the third worst performance in history.

Sure enough, the CBB’s latest quarterly read on the Chinese economy betrays more pervasive problems including a persistent lack of hiring and a disheartening dearth of capex. “Only 33% of firms reported capital expenditure growth in the first quarter, the lowest in the survey’s five-year history,” Reuters reports, adding that “the share of firms reporting capex growth has fallen by over 40 percent since the second quarter of 2014.”

The CBB’s survey, which includes 2,200 companies and 160 bankers, showed that although profits have risen, hiring has collapsed to a four-year low and that poses a very real problem for the Party which is perpetually concerned with optics. “The weakness in the job market hits at a paramount concern for the Chinese Communist Party,” WSJ notes, before quoting CBB president Leland Miller, who said the following in the report:

“The party cares very much about the state of the labor market. The first quarter may therefore be one of the rare occasions when investors see the data and react mostly with relief, while the results cause some mild panic back in Beijing.”

“Our data show that firms first stopped borrowing, then cut spending and now are becoming allergic to hiring,” Miller continues.

Right. And if there’s anything the politburo does not need in the current environment, it’s for firms to develop a hiring “allergy.”

As we’ve documented exhaustively of late, China is staring down what may end up being a catastrophic employment crisis as the government must choose between allowing an acute industrial overcapacity problem to sink the entire economy or else move to implement a massive restructuring of elephantine SOEs.

Reforming grossly inefficient government enterprises will likely cost hundreds of thousands if not millions of jobs and if Beijing can’t manage to mitigate the situation by reassigning workers or otherwise providing some manner of social safety net, they’ll be widespread social unrest.

Of course besides the whole “popular revolt”/ “angry coup” issue, mass layoffs also do not bode well for China’s nascent transition from a smokestack economy to an economic model that revolves around consumption and services. As we put it earlier this month, “if, as the PBoC says, China intends to depend on domestic consumption rather than exports to fuel growth, then someone had better get to explaining how exactly it is that hundreds of thousands of recently jobless factory workers are going to be able to power the hoped-for but still nascent transformation.”

On that note, we close with the following from WSJ’s take on the latest CBB survey:

The government’s bid to regear the economy toward consumption and services and away from manufacturing and investment is having mixed results, at least this quarter, the survey found. Revenue growth in services and in retail – especially furniture, appliances and clothing — slowed in the first quarter, while holding steady in manufacturing.

Mission accomplished?

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• Terror Network’s Web Sprawls Beyond Brussels and Paris (WSJ)
• Dollar firms, Asia stocks slip as U.S. data, Fed comments awaited (Reuters)
• Pakistanis hunt militants behind blast that killed at least 70 (Reuters)
• Biden-Clinton Friction Hangs Over Campaign (WSJ)
• Japan opens radar station close to disputed isles, drawing angry China response (Reuters)
• Google Search Technique Aided N.Y. Dam Hacker in Iran (WSJ)
• Brazilians Scrimp and Save in Unwelcome Surprise for Investors (BBG)
• Cruz, Trump Trade Blame for Latest Personal Attacks (WSJ)
• California lawmakers, unions reach $15 minimum wage deal (Reuters)
• Energy Companies Pay Up to Raise Cash (WSJ)
• More than 35,000 sign petition to allow guns at RNC (NBC)
• Japan’s NTT Data agrees to buy Dell’s IT services unit for $3 billion (Reuters)
• Belgium Charges More Terror Suspects as Attacks Death Toll Rises (BBG)
• Belgian police break up street protests as attack investigation widens (Reuters)
• Red Meat, It’s What’s for Dinner Again as Beef Prices Tumble (BBG)
• How a Venezuelan Opposition Leader Secretly Communicates From Solitary Confinement (BBG)

 

Overnight Media Digest

WSJ

– An Iranian charged with hacking the computer system that controlled a New York dam used a readily available Google search process to identify the vulnerable system, according to people familiar with the federal investigation. (http://on.wsj.com/1RmUiny)

– Avon Products Inc is nearing the settlement of a skirmish with activist investors that would enable the embattled beauty-products retailer to sidestep a proxy fight. The company plans to announce as early as Monday that it has reached an agreement with Barington Capital Group LP and NuOrion Partners AG, which will allow them to approve a new independent director for the company’s board, according to people familiar with the matter. (http://on.wsj.com/1qa6M7C)

– At least 65 people were killed and hundreds more injured in an apparent suicide bombing at a park in Pakistan, that an Islamic militant group said was aimed at Christians celebrating Easter. (http://on.wsj.com/1RmMh1V)

– The Syrian regime regained control of the city of Palmyra from ISIS, its first significant victory over the extremist group and one that was aided by heavy Russian air strikes. (http://on.wsj.com/1Uopkh4)

– California appears poised to raise its minimum wage to $15 an hour. Governor Jerry Brown’s administration told leaders in the Democratic-controlled state Legislature that he supports boosting the state’s minimum wage to $15 by 2022, a person familiar with the matter said. The approach would give the governor some control over an issue that looked set to be decided directly by voters in November. (http://on.wsj.com/1ZFIsXz)

 

FT

The British Bankers’ Association said a survey of its members found that 55 percent believe that the UK remaining in the EU would be in their best interests and 57 percent predicted Brexit would have a negative impact.

Banco Popolare Sc and Banca Popolare di Milano outlined on Thursday their merger plan to create Italy’s third biggest bank with a strong foothold in the country’s wealthiest northern regions.

UK government is weighing plans that could lead to the privatisation of Land Registry, the agency that records all land and property information in England and Wales.

 

Britain

The Times

– The British aerospace industry is stuck in a holding pattern as Boeing Co and Airbus Group SE, the world’s biggest aircraft manufacturers, signal a slowdown in deliveries this year. (http://thetim.es/1SfvbiF)

– GlaxoSmithKline Plc is working on a plan to give poor countries access to its cancer drugs by allowing competitors access to its intellectual property. (http://thetim.es/1Sfu2Yz)

The Guardian

– George Osborne’s budget is handing a tax cut averaging 3,000 pounds ($4,238.40) to some of the wealthiest people in the country who make up just 0.3 percent of the population, the shadow chancellor, John McDonnell, has said. (http://bit.ly/1SfuplQ)

– The value of Scottish commercial property transactions in the first quarter of this year is on course to rise by 33 percent to more than 662 million pounds ($935.27 million). (http://thetim.es/1SfuC8C)

The Telegraph

– The UK’s largest energy suppliers are under renewed pressure to double their recent tariff cuts as fresh data shows the latest round of reductions has done little to reduce fuel poverty. (http://bit.ly/1SfuSo6)

Sky News

– The embattled FTSE-100 mining group Anglo American Plc is drawing up plans to replace its veteran finance chief as it pursues a radical restructuring triggered by the rout in global commodity prices. (http://bit.ly/1SfvolZ)

The Independent

– Leaving the EU could cut the cost of Easter eggs, pro-Brexit campaigners claimed. Unilateral trade deals with chocolate-producing countries Indonesia, Nigeria and Brazil could remove “punitive tariffs” imposed by Brussels on imports of cocoa-based sweet treats, Vote Leave said. (http://ind.pn/1Sfv2vE)

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“Momentum is with us,” Bernie Sanders told CNN over the weekend. “A lot of these super-delegates may rethink their position with Hillary Clinton.”

The firebrand Vermont senator is pleased with himself following big wins on Saturday in Alaska, Washington, and Hawaii, where he dominated the former First Lady on the way to closing the delegate gap and serving notice that the race for the Democratic nomination isn’t over just yet.

Saturday’s “contests” were, quite frankly, a joke. Clinton didn’t even show up, as is clearly evident by Sanders’ margin of victory in all three states:

But make no mistake, Sanders’ contention that “the momentum” is with his campaign is all bluster. The well meaning senator will need to win two-thirds of the remaining delegates to catch Clinton who Reuters notes “will keep piling up delegates even when she loses under a Democratic Party system that awards them proportionally in all states.”

And the calendar is stacked against Sanders.

“Alaska and Washington had two characteristics that made them very friendly terrain for Sanders: They were caucuses in predominantly non-black states,” The Washington Post points out, adding that “Clinton has done worse in caucuses in both of her two presidential bids.”

Then there’s the African American vote. Here’s WaPo again: “Hawaii is 3 percent black. Alaska is four percent black; Washington, about the same. When the composition of the black Democratic electorate has been below seven percent for states where Democratic primary exit polling in 2008 or 2016 was available, Clinton has lost by an average of 30 points this year. Over that percentage? She’s won by 26.”

From here on out, there are five more caucuses, but only two of them are in US states (the others are Guam, the Virgin Islands, and Puerto Rico). “Also left on the calendar? A lot of big, diverse states holding primaries,” WaPo concludes, effectively writing Sanders’ electoral obituary. “His victories on Saturday were not unexpected,” The New York Times writes, reiterating WaPo’s assessment. “All three states have relatively low percentages of the black and the Latino voters who have bolstered Mrs. Clinton’s campaign, and Washington and Alaska held caucuses, the type of voting in which he has done well.”

Clinton leads Sanders 1,712 to 1,004 in the updated delegate count including super-delegates who can vote as they please at the DNC and could be persuaded to shift their allegiance to Sanders if the senator can prove that voters are in squarely in his corner. The next big test will be New York where 247 delegates are up for grabs on April 19. Sanders is particulary keen on ensuring that a debate planned for next month be held in New York – something Bernie’s campaign says Clinton has fought against. 

“We knew from day one that politically we were going to have a hard time in the Deep South,” Sanders said at a Saturday rally in Wisconsin (which holds a primary on April 5). “But we knew things were going to improve when we headed west.”

The senator also boasted of the high turnout and last week scored what some have jokingly said was an “edorsement from God” when a bird landed on his podium during a speech.

We would note that birds don’t always choose the best leaders…

In any event, you can show your support for either Clinton or Sanders by attending their respective fundraising dinners. It will cost you $15 for a seat at Bernie’s table. If you’d like to dine at Clinton’s George Clooney-sponsored event, you’ll need to come up $33,400, or “just” 2,226 times as much as what Bernie is charging.

Asked about the fee Clooney and Clinton are charging for the meal, Sanders said this: “It’s obscene.”

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With European markets closed across the continent on Monday as the Easter holiday continues, overnight Asia was busy with China Shanghai Composite letting off some steam, and closing down 0.7% at session lows on concerns the Shanghai and Shenzhen home bubble have been popped by the politburo, Japan was a different story with the Yen sliding following a report by the Sankei newspaper that Abe will announce in May his intention to delay the planned levy hike, coupled with additional reports that Japan will unveil a major fiscal stimulus (and just on Friday Abe said he is “not thinking at all about supplemental budget” at this time).

This turned out to be nothing but the latest Japanese market trial balloon, because hours after the report, Abe reiterated that Japan’s sales tax will be raised to 10% from 8% in April 2017 “barring a crisis like the one caused by the collapse of Lehman Brothers”, while cabinet secretary Suga said there is no truth in the report that the government has decided to delay the sales tax hike. By the time these denials hit, however, the FX momentum algos were engaged, and the USDJPY jumped, leading to seven straight days of Yen losses, the longest losing streak since October 23 and in the process sending the Nikkei higher by 0.8%.

And thanks to the low volume, illiquid futures market, U.S. equity index futures followed the Japanese rebound, with the E-Mini rising 0.3% to 2034.5 in the thin premarket trade. Dollar falls slightly, reversing earlier gains, while gold also declines. Oil rises for first day in 3. Traders are pricing in a 6% chance of a U.S. rate increase in April, and about 38% probability of a boost in June, according to Fed funds futures. Increasingly many strategists are concerned that the market is underplaying the risk of a June rate cut and as a result odds will have to rise substantially in the coming weeks so the Fed will avoid a “surprise.”

Markets Snapshot

• S&P 500 futures up 0.3% to 2035
• Stoxx 600 closed
• MSCI Asia Pacific up less than 0.1% to 128
• Nikkei 225 up 0.8% to 17134
• Hang Seng closed
• Shanghai Composite down 0.7% to 2958
• S&P/ASX 200 closed
• US 10-yr yield up less than 1bp to 1.91%
• Dollar Index down 0.06% to 96.22
• WTI Crude futures up 1.1% to $39.88
• Brent Futures up 0.8% to $40.78
• Gold spot down less than 0.1% to $1,216
• Silver spot up 0.3% to $15.23

Top Global News

• Japan’s NTT to Acquire Dell Units for $3.055b: NTT Data to acquire Dell Systems Corp. and other units related to IT services.
• Sanders Says He’s Seized Momentum After Crushing Caucus Wins: Sanders received 73% in Washington state, day’s biggest delegate prize, 70% in Hawaii, 82% in Alaska.
• Bull Market in U.S. Stocks Goes AWOL as History Rewards Patience: S&P 500 Index hasn’t seen a new high in 10 months, longest streak outside a bear market since 1995.
• Avon Activists Near Deal to Call Off Proxy Fight: WSJ: Deal would allow Barington Capital, NuOrion Partners to approve new independent director.
• Third Point Warns Seven & I Against Nepotism Deciding CEO: Seven & i CEO Toshifumi Suzuki, 83, is having chronic health problems; investors fear he may try to name his son, Yasuhiro Suzuki, to lead Seven?Eleven Japan, eventually become president of Seven & i, Loeb wrote.
• Microsoft Said to Meet With Possible Yahoo Bidders Seeking Funds: MSFT met with possible bidders for Yahoo! such as Verizon, private equity firms, who may seek backing from the software maker for their offers.
• Fed’s Williams Sees ’Huge Impact’ on U.S. From China, Brazil: “The real issue is the global financial and economic developments. There’s uncertainty about what’s happening around the world and how that feeds back to the dollar and the U.S. economy,” Williams, who doesn’t vote on monetary policy this year, told CNBC.
• ‘Batman v Superman’ Soars in Boost to Warner’s DC Franchise: Film opened with weekend sales of $170.1m in North American theaters, meeting estimates, giving studio a new foundation to build on.
• Qlik Tech Said to Hire Morgan Stanley for Possible Sale: Reuters: Co. has begun exploring strategic alternatives.
• Oil Halts Two-Day Slide After U.S. Rig Count Resumes Decline: Rigs targeting oil in the U.S. fell by 15 to 372, according to Baker Hughes.

Looking quickly at regional markets, we start in Asia where equities traded mixed with Topix, Nikkei 400 outperforming and CSI 300, Sensex 30 underperforming. As noted earlier the Chinese weakness was led by concerned about the potential bursting of the housing bubble: “developers are facing some headwinds as these measures are likely to cause immediate negative impact on the demand side,” said Wu Kan, fund manager at JK Life Insurance in Shanghai. “The market is in the stage of building a bottom so we’ll see lots of ups and downs.” 8 out of 10 sectors rise with health care, utilities outperforming and finance, energy underperforming.

Over the weekend, we got the latest China Jan.-Feb. Industrial Profit data, which rose 4.8% Y/y while China Feb. Diesel Stocks Increased 38.26% M/m; Shanghai New Home Sales Rise 48% on Week, Uwin Says.

Asian Top News

• Online Property Companies Soar on China’s Real Estate Recovery: Leju’s ADRs jump most on Bloomberg China-US Equity Index
• Woes Descend on Japanese IPOs as Stocks Tank on First Day: 6 of 21 cos. this year opened below their offer price
• Amazon to Flipkart Clash in India’s Nascent E-Commerce Market: Battlefield challenges accelerate pace of innovation
• Indian Paradox: As Economy Soars Modi Reforms Face Big Headwinds: IMF warns prosperity at risk without structural reforms
• Pakistan Vows to Hunt Terrorists After Easter Sunday Carnage: At least 65 people killed, death toll may rise further

European markets are closed today due to the Easter holiday.

European Top News

• Belgium Conducts More Raids in Aftermath of Terror Attacks: Authorities conducted 13 raids in Belgium on Sunday, detaining nine people as part of their efforts to prevent further terrorist attacks.
• Abengoa Wins Support of Creditors for Extension: Europa Press: Co. lined up enough support from creditors to ask court in Seville for an extension of several months in process of negotiation of financial restructuring; Abengoa Presents Standstill Request, Has 75% Creditor Support

Bulletin Headline Summary from Bloomberg

• Treasuries fall in overnight trading while European markets closed for holiday and Asian equity markets mixed; week’s U.S. auctions begin today with $26b 2Y notes, WI yield 0.87%, compares with 0.752% awarded in Feb., was 21st straight 2Y auction to stop through or even with WI yield at bidding deadline.
• Hedge funds are crowding into U.S. Treasuries, and that has bond traders bracing for more turbulence. While the Federal Reserve doesn’t break out hedge-fund ownership, a group seen as a proxy increased its holdings to a record $1.27 trillion
• Japanese primary dealers say negative bond yields are here to stay in 2016; bond investors are still trying to adjust to the conditions that have turned yields on 70% of the market negative; Japanese banks are sitting on profits made last year and can withstand the impact of negative rates, according to the Bank of Japan
• Gold has been thrown onto the defensive by a resurgent dollar, sinking to the lowest in more than a month as the U.S. currency’s rally hurts the allure of the metal that’s been the best-performing commodity of 2016
• Oil’s rebound to about $40 a barrel means some investors are nursing losses after betting that Saudi Arabia would abandon its three-decade-old currency peg
• It’s been barely a month since investors first started betting on a copper rally, and they’re already on the retreat. Money managers cut their wagers on price gains for a second week, pulling back just before futures capped the worst slump in a month
• Terrorism probes advanced across Europe in the wake of last week’s deadly bombings in Brussels, with suspects arrested in Italy and the Netherlands, and Belgium carrying out police raids in several areas
• Sovereign 10Y bond yields mostly unchanged; European equity markets closed, Asian mixed; U.S. equity-index futures rise. WTI crude oil higher; gold and copper fall

US Event Calendar

• 8:30am: Advance Goods Trade Balance, Feb., est. -$62.2b (prior -$62.228b)
• 8:30am: Personal Income, Feb., est. 0.1% (prior 0.5%)
  • Personal Spending, Feb., est. 0.1% (prior 0.5%)
  • Real Personal Spending, Feb., est. 0.1% (prior 0.4%)
  • PCE Deflator m/m, Feb., est. -0.1% (prior 0.1%)
  • PCE Deflator y/y, Feb., est. 1% (prior 1.3%)
  • PCE Core m/m, Feb., est. 0.2% (prior 0.3%)
  • PCE Core y/y, Feb., est. 1.8% (prior 1.7%)
• 10:00am Pending Home Sales m/m, Feb., est. 1.1% (prior -2.5%)
  • Pending Home Sales y/y, Feb., est. -0.5% (prior -0.9%)
• 10:30am: Dallas Fed Mfg Activity, March, est. -26 (prior -31.8)
• 11:00am: U.S. to announce plans for auction of 4W bills
• 11:30am: U.S. to sell $31b 3M bills, $26b 6M bills
• 1:00pm: U.S. to sell $26b 2Y bills

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Authored by Paul Craig Roberts,

An address delivered to the Libertarian Party of Florida on March 23, 2016 in Destin, Florida

To answer the question that is the title, we have to know of what the US consists. Is it an ethnic group, a collection of buildings and resources, a land mass with boundaries, or is it the Constitution. Clearly what differentiates the US from other countries is the US Constitution. The Constitution defines us as a people. Without the Constitution we would be a different country. Therefore, to lose the Constitution is to lose the country.

Does the Constitution still exist? Let us examine the document and come to a conclusion.

The Constitution consists of a description of a republic with three independent branches, legislative, executive, and judicial, each with its own powers, and the Bill of Rights incorporated as constitutional amendments. The Bill of Rights describes the civil liberties of citizens that cannot be violated by the government.

Article I of the Constitution describes legislative powers. Article II describes executive powers, and Article III describes the power of the judiciary. For example, Article I, Section 1 gives all legislative powers to Congress. Article I, Section 8 gives Congress the power to declare war.

The Bill of Rights protects citizens from the government by making law a shield of the people rather than a weapon in the hands of the government.

The First Amendment protects the freedom of speech, the press, and assembly or public protest.

The Second Amendment gives the people the right “to keep and bear arms.”

The Third Amendment has to do with quartering of soldiers on civilians, a large complaint against King George III, but not a practice of present-day armies.?

The Fourth Amendment grants “the right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures” and prevents the issue of warrants except “upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.” The Fourth Amendment prevents police and prosecutors from going on “fishing expeditions” in an effort to find some offense with which to charge a targeted individual.

The Fifth Amendment prohibits double jeopardy, self-incrimination, the taking of life, liberty, or property without due process and the prohibition of seizing property without just compensation.

The Sixth Amendment guarantees speedy and public trial, requires that a defendent be informed of the charge against him and to be confronted with the witnesses, to present witnesses in his favor, and to have the assistance of an attorney.

The Seventh Amendment gives the right of trial by jury to civil suits.

The Eighth Amendment prevents excessive bail and cruel and unusual punishments.

The Ninth Amendment says that the enumeration of certain rights in the Constitution does not deny or disparage others retained by the people. In other words, people have rights in addition to the those listed in the proscriptions against the government’s use of abusive power.

The Tenth Amendment reserves the rights not delegated to the federal government to the states.

The Tenth Amendment is a dead letter amendment. The Third Amendment protects against an abandoned abusive practice of government. The Seventh Amendment is still relevant as it allows damages in civil suits to be determined by a jury, once a protection against unfairness and today not always the case.

The other seven amendments comprise the major protections of civil liberty. I will examine them in turn, but first let’s look at Section 1 and Section 8 of Article I. These two articles describe the major powers of Congress, and both articles have been breached. The Constitution’s grant of “all legislative powers” to Congress has been overturned by executive orders and signing statements. The president can use executive orders to legislate, and he can use signing statements to render sections of laws passed by Congress and signed by the president into non-enforced status. Legislative authority has also been lost by delegating to executive branch officials the power to write the regulations that implement the laws that are passed. The right that Section 8 gives to Congress to declare war has been usurped by the executive branch. Thus, major powers given to Congress have been lost to the executive branch.

The First Amendment has been compromised by executive branch claims of “national security” and by extensive classification. Whistleblowers are relentlessly prosecuted despite federal laws protecting them. The right of assembly and public protest are overturned by arrests, tear gas, clubs, rubber bullets, water cannons, and jail terms. Free speech is also limited by political correctness and taboo topics. Dissent shows signs of gradually becoming criminalized.

The Fourth Amendment is a dead letter amendment. In its place we have warrantless searches, SWAT team home invasions, strip and cavity searches, warrantless seizures of computers and cell phones, and the loss of all privacy to warrantless universal spying.

The Fifth Amendment is a dead letter amendment. The criminal justice system relies on self-incrimination as plea bargains are self-incrimination produced by psychological torture, and plea bargains are the basis of conviction in 97% of all felony cases. Moreover, physical torture is a feature of the “war on terror” despite its illegality under both US statute and international law and is also experienced by inmates in the US prison system.

The Fifth Amendment’s protection against deprivation of life, liberty, and property without due process of law has been lost to indefinite detention, executive assassination, and property takings without compensation. The Racketer Influenced Corrupt Organizations Act (RICO) passed in 1970. The act permits asset freezes, which are takings. The Comprehensive Forfeiture Act passed in 1984 and permits police to confiscate property on “probable cause,” which often means merely the presence of cash.

The Sixth Amendment is a dead letter amendment. Prosecutors routinely withhold exculpatory evidence, and judges at prosecutors’ requests have limited attorneys’ ability to defend clients.The “war on terror” has introduced secret evidence and secret witnesses, making it impossible for a defendant and his attorney to defend against the evidence.

The Eighth Amendment’s prohibition of excessive bail and torture are routinely violated. It is another dead letter amendment.

It is paradoxical that every civil liberty in the Bill of Rights has been lost to a police state except for the Second Amendment, the gun rights of citizens. An armed citizenry is inconsistent with a police state, which the US now is.

Other aspects of our legal protections have been overturned, such as the long standing rule that crime requires intent. William Blackstone wrote: “An unwarrantable act without a vicious will is no crime at all.” But today we have crimes without intent. You can commit a crime and not even know it. See for example, Harvey Silverglate, Three Felonies A Day: How the Feds Target the Innocent.

Attorney-client privilege has been lost. The indictment, prosecution, and imprisonment of defense attorney Lynne Stewart is a good example. The DOJ prevailed on her to defend a blind Muslim regarded by the DOJ as a “terrorist.” She was informed that “special administrative measures” had been applied to her client. She received a letter from the federal prosecutor informing her that she and her client would not be permitted attorney-client privilege, and that she was required to permit the government to listen to her conversations with her client. She was told that she could not carry any communications from her client to the outside world. She regarded all this as illegal nonsense and proceeded to defend her client in accordance with attorney-client privilege. Lynne Stewart was convicted of violating a letter written by a prosecutor as if the prosecutor’s letter were a law passed by Congress and present in the US code. Based on a prosecutor’s letter, Lynne Stewart was sentenced to prison. No law exists that upholds her imprisonment.

Our civil liberties are often said to be “natural rights” to which we are entitled. However, in historical fact civil liberty is a human achievement that required centuries of struggle. The long struggle for accountable law that culminated in the Glorious Revolution in England in the late 17th century can be traced back to Alfred the Great’s codification of English common law in the 9th century and to the Magna Carta in the early 13th century. Instead of issuing kingly edicts, Alfred based law on the traditional customs and behavior of the people. The Glorious Revolution established the supremacy of the people over the law and held the king and government accountable to law. The United States and other former British colonies inherited this accomplishment, an accomplishment that makes law a shield of the people and not a weapon in the hands of the state.

Today law as a shield of the people has been lost. The loss was gradual over time and culminated in the George W. Bush and Obama regime assaults on habeas corpus and due process. Lawrence Stratton and I explain how the law was lost in our book, The Tyranny of Good Intentions. Beginning with Jeremy Bentham in the late 18th century, liberals saw the protective shield of law as a constraint on the government’s ability to do good. Bentham redefined liberty as the freedom of government from restraint, not the freedom of people from government. Bentham’s influence grew over time until in our own day, to use the words of Sir Thomas More in A man for All Seasons, the law was cut down so as to better chase after devils.

• We cut down the law so that we could better chase after the Mafia.
• We cut down the law so that we could better chase after drug users.
• We cut down the law so that we could better chase after child abusers.
• We cut down the law so that we could better chase after “terrorists.”
• We cut down the law so that we could better chase after whistleblowers.
• We cut down the law so that we could better cover up the government’s crimes.

Today the law is cut down. Any one of us can be arrested on bogus charges and be helpless to do anything about it.

There is very little concern in legal circles about this. The American Civil Liberties Union (ACLU) does attempt to defend civil liberty. However, just as often the ACLU is not defending the civil liberties in the Bill of Rights that protect us from the abuse of government power, but newly invented “civil rights” that are not in the Constitution, such as “abortion rights,” the right to homosexual marriage, and rights to preferential treatment for preferred minorities.

An attack on abortion rights, for example, produces a far greater outcry and resistance than the successful attack on habeas corpus and due process. President Obama was able to declare his power to execute citizens by executive branch decision alone without due process and conviction in court, and it produced barely audible protest.

Historically, a government that can, without due process, throw a citizen into a dungeon or summarily execute him is considered to be a tyranny, not a democracy. By any historical definition, the United States today is a tyranny.

via Zero Hedge http://ift.tt/1pT03PS Tyler Durden

As TVIX, the double-levered long VIX ETF unleashed in Nov 2010, decays to record low prices…

 

An unusual (and almost unprecedented) event has occurred. Just as we saw in Gold ETFs, and Oil ETFs, TVIX Shares Outstanding have exploded by a stunning 225% in the last 4 weeks… [the last 3 times TVIX has undeergone such an epic surge in demand marked a major turning point and led a violent surge in VIX]

 

with the largest inflows (bearish bets) on record in the last week…

 

The entire VIX complex is perturbed as the huge bearish TVIX flows contrast with the complacency of the steepest term structure since Nov 2014 (post Bullard-Bounce)…

 

And net speculative positioning at its shortest VIX (most bullish) in 2016…

 

We saw this kind of manic ETF creation recently in Blackrock's Gold ETF, which forced them to halt creation – for lack of supply…

 

 

In the case of the current scramble for TVIX units, forced buying of VIX futures (which explains the steepness of the futures curve) suggests VIX buying pressure is building…

As Barron's adds, volatility is back, but too few investors even know it.

Most are too focused on the CBOE Volatility Index's extraordinary collapse in recent weeks to 15 from about 28. When the VIX is low, as it is now, it tends to be interpreted as a green light to buy stocks. . .or a sign of investor complacency.

 

Not enough people realize that the VIX is just a 30-day snapshot of expected returns for the Standard & Poor's 500 index. A more meaningful, if esoteric, indicator is the VIX futures curve, which offers a long-term view of the stock market's perceived risk.

 

The curve has lately been flat, indicating little risk to owning stocks between now and more distant months. But the futures curve is now "upward sloping," as if sophisticated investors have suddenly regained visibility into what was an opaque stock market.

 

Nothing bores people more than nerdy derivatives measures, including VIX futures curves. But you should add this volatility gauge to your arsenal of indicators if you trade options or want to be a smarter stock investor.

Once again it appears the ETF tail is wagging the underlying market 'dog' as hedging with the 'cheapest' instrument – no matter how bad the basis – is the new normal. Remember, options markets are already medium term complacent and longer-term terrified.

 

As detailed previously, the VXV has been around only since 2007. Over that time, the VIX/VXV ratio has dropped to 78% on 4 prior distinct occasions:

• March 12-20, 2012 – The S&P 500 chopped sideways for a few weeks before falling some 9% over the next 2 months
• August 13-22, 2012 – The S&P 500 chopped sideways for a few weeks before rallying by as much as some 4% over the next few weeks. 2 months later, the index had lost that entire gain, and another 4%.
• December 5, 2014 – The S&P 500 immediately dropped 5% over the next 2 weeks before chopping sideways for several months.
• March 20, 2015 – The S&P 500 dropped 2.5% over the next week before moving sideways for several months.

Now there is no guarantee that stocks are about to hit an air pocket. However, given the (albeit limited) precedents, the track record in the short to intermediate-term following such readings has not been a positive one. In fact, following the prior 15 days with VIX/VXV readings below 79%, the S&P 500 was lower 3 months later 14 of the days by a median of -3.7%. The only positive return was the 1 point gain following the March 2015 occurrence.

All in all, this may not be a Defcon 5 level red flag for the market. However, for a rally that has seen scant evidence of exuberance, this is at least one of the first indications of complacency.

via Zero Hedge http://ift.tt/1Spz8UP Tyler Durden

Via OrientalReview.org,

Earlier this month while delivering a public lecture in Kiev, “The Challenges of an Ever-Changing World,” former US Secretary of State Condoleezza Rice made an inspiring remark for anyone who might have been thinking that life in Ukraine was bad:

“You should go to Liberia where the standard of living is much lower, and then you will be thankful.”

Ironically, Forbes Ukraine reacted to this with a slightly perplexed analysis that nonetheless led to a conclusion of flawless logic: “Although Liberia has one of the weakest economies in the world, it lags only slightly behind Ukraine with respect to a number of macroeconomic parameters,” and the magazine supported its argument with some anemic statistics (failing however to mention that Liberia’s 85% unemployment rate is far worse than Ukraine’s, even today).

The rapid deterioration of the Ukrainian economy over the past two post-Maidan years is no longer a taboo topic in the international press (the prominent US academic and former diplomat Nicolai Petro’s recent article in the Guardian made that crystal clear). But to make a long story short, the full picture looks even more depressing:

People are scrambling to get out of Ukraine. A Kiev-based headhunting agency claims that according to their polls, 70% of the population does not see any future in Ukraine. Ten out of eleven (!!!) Ukrainians are ready to leave the country if offered a job abroad. Forty percent of Kiev’s white-collar workers do not see a secure future for themselves nowadays. Another opinion poll shows that compared to the pre-Maidan period, public pessimism is on the rise. Only 19% of the respondents expected 2016 to bring positive changes for Ukraine (down from 42% in 2013).

These sentiments are quite understandable if we look at average incomes in Ukraine. According to official data from the finance ministry (as of March 2, 2016), the average salary in Ukraine is only 4,362 hryvnas per month (approximately 145 Euros). The minimum monthly wage is currently set at 1,378 hryvnas (46 Euros). Therefore, the vast majority of working people in Ukraine have to get by on a salary of 2,000-3,000 hryvnas (70-100 Euros) each month. And the number of employed is declining every day. In September 2015, Ukrainian Minister of Social Politics Valery Yaroshenko acknowledged that the unemployment rate had reached its highest point in the history of Ukraine as an independent country, with 23% of young Ukrainians unable to find work (in the parts of the Donetsk region that are controlled by Kiev the jobless rate does approach that of Liberia – 50%!).

 

Low wages and high unemployment are not the only challenges an ordinary Ukrainian has to cope with. To meet the requirements of the IMF, the Ukrainian government must increase the rates it charges for housing and public utility services at least twice per year. As a result, in January 2016 the average bill per household jumped to 1,250 hryvnas – an 80% increase from 695 hryvnas a year ago. Thus, theoretically (and often factually) a family supported by only one working member and living in a modest apartment might need to survive on the beggarly 128 hryvnas – barely more than 4 Euros (!) – that is left each month after housing and utility costs have been paid! Indeed, taking into account some difference in its latitude (and climate) today’s Ukraine might rightly be called a Northern Liberia!

Meanwhile the index of commodities prices in Ukraine rose 40.3% in 2015. And since this crisis coincided with a 15% cut in the pensions of retirees who work a side job (this “cost-saving measure” was announced by PM Yatsenyuk in January 2015), clearly the majority of elderly Ukrainians are now facing a disaster. So far they have managed to survive thanks to their personal savings, but that resource is drying up: according to the National Bank, in 2015 Ukrainians sold 2,233 billion USD and bought only 0.684 billion USD. Local experts estimate that Ukrainian citizens will exhaust their personal savings by the end of 2016.

So it’s no wonder that Ukrainians are leaving their country en masse for Europe, mostly headed to Poland (around 400,000 crossed that border last year), in a desperate attempt to find any paid job. There they are cheated, abused, and cynically exploited, but they prefer to stomach such treatment rather than trying to eke out a miserable existence at home:

Ukraine’s rapid deindustrialization is picking up speed. The abrupt severing of the traditional ties between Russian and Ukrainian businesses, due to suicidal Kiev-imposed regulations, resulted in a 10.7% decline in GDP in 2014 and another 13.4% drop in 2015. Foreign trade, both imports and exports, decreased by one-third. The naive expectations of the incumbent government in Kiev – that Ukrainian products could obtain access to European markets – have been torn to shreds (Nicolai Petro offers one anecdotal fact: Kiev’s biggest European export, under the agricultural quotas established by the EU-Ukraine Association Agreement, is honey).

This situation of social and economic degeneration, along with the ready availability of weapons smuggled out of what is known as the “ATO Zone,” has led to an unprecedented tsunami of criminal activity in Ukraine. In the two years since Maidan, the number of recorded criminal offenses has doubled there. In reality, marauding crowds, armed robberies, and street killings are becoming an everyday event and many incidents go unreported. According to the latest findings from the Hague Institute of Innovating Justice, 44% of Ukrainians do not trust their national judicial system or law-enforcement agencies. A number of nationalist gangs (volunteer battalions) seem to operate out of reach of the law and ignore any attempts by the public authorities to rein them in. The most recent scandals (amber-smuggling in the Rovno region, the blockade of Crimea, and the barriers set up to bar Russian transit trucks) are just the tip of the iceberg of the criminal activities of radical groups in Ukraine that have received media attention. Most criminal incidents do not make the headlines. For example there are around 100 cases currently languishing within the legal system against members of the Aidar battalion who have committed criminal offenses, including charges of serious war crimes in the Donbass, all of which are gathering dust in Ukrainian courts.

Dutch football fans who used to visit Euro-2012 in Ukraine and now thoughtlessly sharing #TakIsJa hashtag, should understand that the country they saw 4 years ago does not exist anymore.

There is effectively no state in Ukraine. The authorities are busy ingratiating themselves with every available power figure — the US Embassy, local oligarchs, Right Sector, and various Mafia groups — seeing in those the only keys to the government’s own legitimacy and ability to hold on to power. But one point that they apparently do not understand is that any government lacking public support on the ground and dependent on exterior agents is more vulnerable than they could ever imagine. Did the Liberian dictator Samuel Doe, who took power as a result of a US-backed coup d’etat in 1980, ever dream that in ten years he would be forced to eat his own ear and then be publicly executed by a rival tribe? The leaders of “Northern Liberia” may have their own political tracks, but not the final destiny…

*“The love of liberty brought us here” is the national motto of Liberia.

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

“Overall, I’d be rather cautious about investments in equities…”  the editor and publisher of the Gloom, Boom & Doom report told CNBC’s “Fast Money” traders this week.

However, “over the last 12 to 24 months, many sectors have had huge declines,…And I see here, there are some opportunities.”

“…US markets are over-valued.”

Faber also added that “I still think the mining sector has embarked on a new bull market.”

“[The U.S. dollar] is not a desirable currency,” Faber explains, “I think the most desirable currency will be gold, silver, platinum and palladium.”

“I don’t understand why the world is so enthusiastic about the US Dollar…in the long-run the US dollar will be a weak currency.”

Full interview below:

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