Tag: finance

“We Are From The Government And We Are Here To Offer You A No Risk, Guaranteed Return Investment Product”

And just like that, the MyRA propaganda goes full Goebbels retard. Unfortunately, due to time differences, neither Pravda, nor Izvestia or Moskovskij Komsomolets could reply with affirmative comments due to time constraints.

From the US Treasury:

A Look At What They’re Saying About myRA Across the Country

 

By: Brandi Hoffine

 
Last month in the State of the Union, President Obama laid out specific executive actions he will take to put more Americans back to work and expand opportunity so that every American can get ahead. Speaking about the importance of securing a dignified retirement, the President announced that he would direct Treasury to create a new way for working Americans to start their own retirement savings.  According to independent estimates, about half of all workers and 75 percent of part-time workers lack access to employer-sponsored retirement plans. That is why the Obama administration designed myRA (my Retirement Account) –  a simple, safe, and affordable retirement savings account that will be offered through employers to help low- and moderate- income Americans begin to save for retirement.

 

Below is a look at what newspaper editorial boards and financial columnists across the country are saying.

Source: US Treasury


    



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"We Are From The Government And We Are Here To Offer You A No Risk, Guaranteed Return Investment Product"

And just like that, the MyRA propaganda goes full Goebbels retard. Unfortunately, due to time differences, neither Pravda, nor Izvestia or Moskovskij Komsomolets could reply with affirmative comments due to time constraints.

From the US Treasury:

A Look At What They’re Saying About myRA Across the Country

 

By: Brandi Hoffine

 
Last month in the State of the Union, President Obama laid out specific executive actions he will take to put more Americans back to work and expand opportunity so that every American can get ahead. Speaking about the importance of securing a dignified retirement, the President announced that he would direct Treasury to create a new way for working Americans to start their own retirement savings.  According to independent estimates, about half of all workers and 75 percent of part-time workers lack access to employer-sponsored retirement plans. That is why the Obama administration designed myRA (my Retirement Account) –  a simple, safe, and affordable retirement savings account that will be offered through employers to help low- and moderate- income Americans begin to save for retirement.

 

Below is a look at what newspaper editorial boards and financial columnists across the country are saying.

Source: US Treasury


    



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Ukraine Slide Accelerates: AG Office Seized, Criminal Files Being Set On Fire; US To Hold Government Responsible

It’s getting form bad to worse in the Ukraine: either martial law will be announced any time soon or the proxy civil war becomes a real one. On the bright side, there is something to be said about having a nation’s criminal cases all in paper format: once there is a revolution, everyone’s slate gets wiped clean…

The US is, naturally, stoking the metaphorical, and literal, fire.

Why? Becase as a reminder, in Victoria Nuland’s own words, the US is the grand puppetmaster behind everything.


    



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Is Housing Set To Lift Off? (Spoiler Alert: No!)

Submitted by Lance Roberts of STA Wealth Management,

I have read several articles as of late suggesting that the housing recovery is likely to regain its footing in 2014 supporting further economic growth.  Gene Epstein penned the following for Barron's:

"Snow paralyzed the Eastern U.S. last week, but it won't put a chill on what could be the hottest economy since the late 1990s. That's the contrarian outlook of Applied Global Macro Research, an unusually rigorous and prescient group that expects 4% growth in economic output this year and next. The firm's three economists — Jason Benderly of Vail, Colo., and Carsten Valgreen and Niels-Henrik Bjørn of Copenhagen — cite the ongoing housing recovery for their bullish outlook, arguing that future demand for housing is understated."

The core premise is that there is a large amount of pent-up demand for housing that will continue to boost economic growth for quite some time into the future.  While this may indeed be the case in theory, it is based upon assumptions that "past is prologue".  However, given the current economic dynamics of stagnant wage growth, the structural employment shift and tighter lending standards it is unlikely that the consumer will be able to relever their balance sheet as in the past.  The chart below shows new home sales as compared to household debt as a percent of disposable income.

Home-New-HouseholdDebt-021814

As I have discussed previously in "What Has Been Forgotten:"

"There is no argument that housing has improved from the depths of the housing crash in 2010.  However, while the housing market remains at very recessionary levels, recent analysis assumes that this has been a natural, and organic, recovery.  Nothing could be further from the truth as analysts have somehow forgotten the trillions of dollars, and regulatory support, infused to generate that recovery. 

 

I recently penned an article showing the $30 trillion, and counting, that has been thrown at the economy, and financial system, to keep it afloat over the last 4 years.  Of that, trillions of dollars have been directly focused at the housing markets including HAMP, HARP, mortgage write downs, delayed foreclosures, government backed settlements of "fraud closure" issues, debt forgiveness and direct buying of mortgage bonds by the Fed to drive refinancing and purchase rates lower.  Of course, the Fed has also maintained its ZIRP (zero interest rate policy) during this same period with a pledge to keep it there until at least 2015.

 

The point here is that while the housing market has recovered – the media should really be asking 'Is that all the recovery there is?'  More importantly, why are economists, and analysts, not asking the question of 'What happens to the housing market when the various support programs end?'   With 30-year mortgage rates still near 4% we should be in the middle of the next housing bubble – not crawling along a bottoming process."

The chart below is the Total Housing Activity Index which is an index of all economically important housing activities from new and existing home sales, to permits and starts. 

Home-TotalActivityIndex-21814

(For more extensive analysis of the current housing market recovery read "An Update On The Housing Recovery")

The optimism over the housing recovery has gotten well ahead of the underlying fundamentals.  While the belief is that the current push in housing is a side-effect of a recovering economy, the reality may be a function of the speculative rush into buying rental properties for cash which created a temporary, and artificial, inventory suppression. 

If we take a look at actual loan demand, we find a much different picture of the real estate market.  The following two charts show that demand for loans have peaked and are now on the decline.  This leaves the hopes of an economic recovery based on housing somewhat at risk.

Home-RealEstateLoans-021814

Home-LoanDemand-021814

 The rising risk to the housing recovery story lies in the Fed's ability to continue to keep interest rates suppressed.  It is important to remember that individuals "buy payments" rather than houses.  With each tick higher in mortgage rates so goes the monthly mortgage payment.  With wages remaining suppressed, 1 out of 3 Americans no longer counted as part of the work force, or drawing on a Federal subsidy, the pool of potential buyers remains constrained.

While there are many hopes pinned on the housing recovery as a "driver" of economic growth in 2014, the data suggests otherwise.  The real driver of an economic recovery is full time employment that leads to rising wages and savings.  Unfortunately, this is something that eludes the current Administration that is focused on creating new regulations on the average of every 8 minutes, raising the cost of healthcare and increasing taxes.

Call me crazy, but maybe its time to try something different.

 


    



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Scary Chart Of The Day: Average Foreign Purchases Of US Securities Take Out Lehman Low

As we reported earlier today, for whatever reason China sold the second biggest amount of US Treasurys in December. However, that was only part of the story. In fact, as we also noted, while the two largest US foreign creditors were net sellers, total foreign bond holdings actually rose in the last month of 2013 and as the chart below confirms, when it comes to Long-Term Treasury paper, foreigners were actually buyers of some $18 billion in Treasurys. It is everything else that they sold in the month when the S&P hit its all time high: specifically, foreigners were net sellers of Agency securities ($15.4 billion), Corporate Bonds ($7.5 billion) and Corporate Equities ($13.7 billion) something which hardly fits with the narrative of the record stock market high generating confidence in even more buying down the line.

 

 

In the chart above it is the black line – gross purchases of US long-term securities – that is the most troubling, as its trend is hardly anyone’s friend.

So what happens when one smooths out the line to normalize for monthly fluctuations? This:

 

The chart is very disturbing: it shows that as the S&P rises higher and higher (on ever declining volumes), foreigners are buying fewer and fewer US securities. In fact, on a 12 Month Moving Average basis, foreigners bought less long-term US securities than they did when Lehman crashed! 

Luckily we live in a New Normal when price is no longer determined by simple supply and demand (and certainly not from retail investors who have long since given up on the fraudulent, broken US capital “markets”) but Fed jawboning of a record $2.5 trillion in bank excess reserves, corporate buybacks and HFT algos spurring momentum ignition and buying because others are buying.

And so we have come full circle, because while, understandably, nobody had any appetite for US securities around the Lehman crash when until the Fed stepped in and singlehandedly took over the US capital markets it was unclear if there even would be a US capital markets, now that five years later the S&P has risen to a level nearly three times the March 2009 lows thanks entirely to the Fed’s $4.1 trillion balance sheet backstop, the interest in US securities is… lower than it was in the days just after Lehman!

Source: TIC


    



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Higher Education: America’s Problem That Isn’t Being Solved

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

Once we accredit the student, not the institution, existing universities will compete directly with Nearly Free Universities not in issuing diplomas but in how much students actually learned and mastered.

One of the key insights from recent work in psychology is that humans tend to substitute easier problems rather than solve difficult problems. Daniel Kahneman explained this dynamic in his recent book Thinking, Fast and Slow.

To "solve" a difficult problem we are unfamiliar with, we substitute a lesser problem we already know the answer to, and then declare we've "solved" the original (often knotty, complex) problem.

The real problem then festers, unsolved and addressed, while the misguided "solution" only drains resources and exacerbates the real problem.

An excellent example of this dynamic is higher education: the real problems are soaring costs and sharply declining yields in actual learning and in the real-world value of a diploma.

Consider the study Academically Adrift: Limited Learning on College Campuses which concluded that "American higher education is characterized by limited or no learning for a large proportion of students."

These charts illustrate the costs and diminishing returns:

The yield (in earnings) on the increasingly unaffordable college degree is declining sharply:

The Status Quo has substituted two false "solutions" that completely ignore the real problems of soaring costs and diminishing returns: increasing student loans and hiring hundreds of thousands of non-teaching administrators.

While student loans have soared to over $1 trillion, with direct Federal loans ballooning from $115 billion to over $700 billion in a few short years, only 37% of freshmen at four-year colleges graduate in four years (58% finally graduate in six years), and 53% of recent college graduates under the age of 25 are unemployed or doing work they could have done without going to college.

New Analysis Shows Problematic Boom In Higher Ed Administrators:
 

In all, from 1987 until 2011-12–the most recent academic year for which comparable figures are available—universities and colleges collectively added 517,636 administrators and professional employees, according to the analysis by the New England Center for Investigative Reporting.

“There’s just a mind-boggling amount of money per student that’s being spent on administration,” said Andrew Gillen, a senior researcher at the institutes. “It raises a question of priorities.”

The ratio of nonacademic employees to faculty has also doubled. There are now two nonacademic employees at public and two and a half at private universities and colleges for every one full-time, tenure-track member of the faculty.

The number of employees in central system offices has increased six-fold since 1987, and the number of administrators in them by a factor of more than 34.

I have demonstrated in my book The Nearly Free University and The Emerging Economy: The Revolution in Higher Education that the tuition for a four-year bachelor's degree could (and should) cost $5,000, not $100,000 or $200,000.

The technology and tools already exist to accredit the student, not the institution and provide distributed courses, adaptive learning and real-world, workplace-based workshops for a tiny fraction of the ineffective, unaffordable system of higher education we are currently burdened with.

Once costs decline 95%, there is no need for student loans or the bloated bureaucracies currently overseeing the parasitic student-loan system.

Once we accredit the student, not the institution, existing universities will compete directly with Nearly Free Universities not in issuing diplomas but in how much students actually learned and mastered. If students can learn as much or more for $5,000 (including workshops in real-world workplaces) than they do for $160,000 in conventional universities, then the sectors of higher education that charge $160,000 for a 4-year degree will vanish.

In essence, technology has leapfrogged the existing higher education Status Quo, just as it has leapfrogged the banking sector.

Gordon T. Long and I discuss these issues in this 25-minute program:

 

Here is a taste of what we discuss:

THE LEGACY SYSTEM IS OBSOLETE

  • Media and knowledge are no longer scarce—both are essentially free
  • Students no longer need to be congregated in classrooms to hear oral lectures; the lectures can be distributed at almost no cost via the Internet
  • The factory model of teaching the same texts and curriculum no longer makes sense; every digital device is a library and a display for oral lectures
  • Lessons and methodologies of learning can now be tailored to individual students (adaptive learning) via interactive software
  • The need for live oral lectures as the primary (and presumed to be best) mode of teaching has vanished
  • Students learn mastery in workshops held in real-world workplaces, not classrooms

THE FUNDAMENTALS HAVE BROKEN

  • Colleges must separate Research and Educational funding
  • Education versus Occupational Training
  • Internships versus Apprenticeships; why corporations are no longer training
  • "Time is the New Competitive Dimension;" the educational systems needs to understand what this means
  • The New Economy requires Soft Skills such as Collaboration, Lifetime Learning, Continual Innovation and the full spectrum of Entrepreneurial Skills
  •  

 


    



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Higher Education: America's Problem That Isn't Being Solved

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

Once we accredit the student, not the institution, existing universities will compete directly with Nearly Free Universities not in issuing diplomas but in how much students actually learned and mastered.

One of the key insights from recent work in psychology is that humans tend to substitute easier problems rather than solve difficult problems. Daniel Kahneman explained this dynamic in his recent book Thinking, Fast and Slow.

To "solve" a difficult problem we are unfamiliar with, we substitute a lesser problem we already know the answer to, and then declare we've "solved" the original (often knotty, complex) problem.

The real problem then festers, unsolved and addressed, while the misguided "solution" only drains resources and exacerbates the real problem.

An excellent example of this dynamic is higher education: the real problems are soaring costs and sharply declining yields in actual learning and in the real-world value of a diploma.

Consider the study Academically Adrift: Limited Learning on College Campuses which concluded that "American higher education is characterized by limited or no learning for a large proportion of students."

These charts illustrate the costs and diminishing returns:

The yield (in earnings) on the increasingly unaffordable college degree is declining sharply:

The Status Quo has substituted two false "solutions" that completely ignore the real problems of soaring costs and diminishing returns: increasing student loans and hiring hundreds of thousands of non-teaching administrators.

While student loans have soared to over $1 trillion, with direct Federal loans ballooning from $115 billion to over $700 billion in a few short years, only 37% of freshmen at four-year colleges graduate in four years (58% finally graduate in six years), and 53% of recent college graduates under the age of 25 are unemployed or doing work they could have done without going to college.

New Analysis Shows Problematic Boom In Higher Ed Administrators:
 

In all, from 1987 until 2011-12–the most recent academic year for which comparable figures are available—universities and colleges collectively added 517,636 administrators and professional employees, according to the analysis by the New England Center for Investigative Reporting.

“There’s just a mind-boggling amount of money per student that’s being spent on administration,” said Andrew Gillen, a senior researcher at the institutes. “It raises a question of priorities.”

The ratio of nonacademic employees to faculty has also doubled. There are now two nonacademic employees at public and two and a half at private universities and colleges for every one full-time, tenure-track member of the faculty.

The number of employees in central system offices has increased six-fold since 1987, and the number of administrators in them by a factor of more than 34.

I have demonstrated in my book The Nearly Free University and The Emerging Economy: The Revolution in Higher Education that the tuition for a four-year bachelor's degree could (and should) cost $5,000, not $100,000 or $200,000.

The technology and tools already exist to accredit the student, not the institution and provide distributed courses, adaptive learning and real-world, workplace-based workshops for a tiny fraction of the ineffective, unaffordable system of higher education we are currently burdened with.

Once costs decline 95%, there is no need for student loans or the bloated bureaucracies currently overseeing the parasitic student-loan system.

Once we accredit the student, not the institution, existing universities will compete directly with Nearly Free Universities not in issuing diplomas but in how much students actually learned and mastered. If students can learn as much or more for $5,000 (including workshops in real-world workplaces) than they do for $160,000 in conventional universities, then the sectors of higher education that charge $160,000 for a 4-year degree will vanish.

In essence, technology has leapfrogged the existing higher education Status Quo, just as it has leapfrogged the banking sector.

Gordon T. Long and I discuss these issues in this 25-minute program:

 

Here is a taste of what we discuss:

THE LEGACY SYSTEM IS OBSOLETE

  • Media and knowledge are no longer scarce—both are essentially free
  • Students no longer need to be congregated in classrooms to hear oral lectures; the lectures can be distributed at almost no cost via the Internet
  • The factory model of teaching the same texts and curriculum no longer makes sense; every digital device is a library and a display for oral lectures
  • Less
    ons and methodologies of learning can now be tailored to individual students (adaptive learning) via interactive software
  • The need for live oral lectures as the primary (and presumed to be best) mode of teaching has vanished
  • Students learn mastery in workshops held in real-world workplaces, not classrooms

THE FUNDAMENTALS HAVE BROKEN

  • Colleges must separate Research and Educational funding
  • Education versus Occupational Training
  • Internships versus Apprenticeships; why corporations are no longer training
  • "Time is the New Competitive Dimension;" the educational systems needs to understand what this means
  • The New Economy requires Soft Skills such as Collaboration, Lifetime Learning, Continual Innovation and the full spectrum of Entrepreneurial Skills
  •  

 


    



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How the Mainstream Media Would Cover “Cash” if it Was a New Invention

Those of us involved in the Bitcoin world are no strangers to the consistent hyperbolic, fear-mongering so pervasive in the mainstream media’s coverage of Bitcoin.  None of that should be surprising since many of them simply do not understand it, and when you couple ignorance with a natural reflexive response to defend the status quo, you get some pretty terrible reporting.

The death of Bitcoin has been greatly exaggerated many times, including last fall when the Silk Road was shut down. Yet rather than being destroyed by the episode, it came out far stronger. Something I expect to be the case again after the Mt. Gox situation (read my thoughts on it) is behind us.

Meanwhile, if you are sitting on a lot of BTC and want to directly move it into other assets, such as gold and silver (which have been moving sharply higher in 2014), it is really easy to do. Amagi Metals is a Denver precious metals dealer and one of the first to accept BTC.

Now from Ledra Capital is a amusing article demonstrating how the mainstream media might portray cash if it were invented today. The piece is titled “Bizarre Shadowy Paper-Based Payment System Being Rolled Out Worldwide”, and I have provided some excerpts below:

World governments announced a plan today to allow citizens to anonymously carry parts of their wealth on their person and exchange it with others using small pieces of colorful paper printed with nationalistic and Masonic imagery along with numbers that purportedly represent the amount of wealth each piece of paper represents (if the paper is not a counterfeit). These pieces of paper are formally a “note” from each nation’s central bank, but they are also called “cash” by many – this is a technical matter that is too complex to cover in our basic primer; Suffice it to say, that it is representative of the complexity and user-unfriendliness of this new system. 

The launch of cash has provoked an immediate reaction from law-enforcement agencies worldwide that universally condemned the development.

“Cash is a 100% anonymous and untraceable payments technology.   It is like a weapon of mass destruction launched against law enforcement,” said Mike Smith, the recently confirmed FBI Director.  “It is the perfect payment mechanism for criminals, drug cartels, terrorists, prostitution rings and money launderers.   We don’t know how we will be able to combat such a technology and fully expect that a new generation of super-criminals will emerge, working in the shadows of a world where they can conduct their illicit affairs without leaving a trace.” 

Banking Superintendent of New York State, Mike Smith had the following to say: “I can’t think of any reason that a law-abiding individual would want to use cash. At a bare minimum, we believe there should be a licensing procedure for individuals or businesses that plan to use cash, a ‘Cash-License’ as it were. This license will limit ‘cash’ to trust-worthy individuals who keep detailed auditable records of all their cash transactions in order to keep New York safe from criminals.”

Though hard to imagine, cash operates with no consumer protection at all.   If your ‘bills’ are stolen or lost, they are gone forever.

continue reading

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This Is How Ukrainian Protesters Attack An Armored Personnel Carrier

Watch as sparks fly between a Ukrainian military APC, possibly the same one we revealed earlier, as it gets into some blazingly close encounters with the Kiev protesters. It is unclear who won however it is quite clear that at this point the proxy war in Ukraine between
Russia/Gazprom and the European Union/US State Dept/Saudi/Qatar can be upgraded to “hot.”

And the death and injury toll, which is rising by the hour:

  • 6 policemen dead
  • 6 protestors dead
  • Police HQ in Ternopli on fire
  • Police HQ in Lviv occupied
  • More than 150 injuries

Finally this:

  • KLITSCHKO ARRIVES AT YANUKOVYCH’S OFFICE FOR TALKS: REUTERS

In short: things have spiraled out of control, and the only possible outcome is another new all time high in the Spoos overnight.


    



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QE Trade Continues As Bonds, Bullion, And High-Beta Stocks Bounce

So Venezuela is collapsing, Thailand is crumbling, and Ukraine is for all intent and purpose under martial law, US macro data is dreadful (and no, it's not all the frigging weather), and German consumer confidence dumped again; and US stocks soar (8th day in a row for Nasdaq for first time since July) on the back of a BoJ move that was fully expected (and entirely under-utlized) but sprung USDJPY back above 102. S&P futures volume was 35% below average as the day-session range was extremely small. The Russell 2000 almost reached unchanged for 2014. The un-taper, QE balls-to-the-wall trade continues it would appear – Gold (and even more so silver – longest win-streak in 46 years) continue to surge; Treasury yields continue to slide; the USD slips lower (led by EUR strength); and of course, high-beta equities jump higher (as stodgy big caps underperform). Unfortunately, the EM crisis is far from over – as EM FX tumbled today. VIX also rose notably, disconnecting from stocks; and credit markets are wider today than Friday's close.

 

While stocks made the headlines, the real news was made in commodity-land with silver and crude oil surging…

 

Quite a mixed day – KO dragging the Dow down, Trannies weak but high beta honeys soared…

 

The Nasdaq is following a very similar path to July – the last time it tested its 100DMA – up 7.8% in the last 8 days – the most since Dec 2011

 

Despite some early weakness, stocks recovered to track the flatness in USDJPY… but EM FX kept sliding… look at the narrowness of the trading range this afternoon

 

Treasuries rallied along with stocks but soon after Europe closed, bonds started to sell-off modestly… the sell-off Friday has been eradicated…

 

FX markets overall were quite volatile though we note the knee-jerk of the BoJ is starting to fade. USD slipped lower as EUR strength dragged it down…

 

Year to date – the Nasdaq is in full bulltard mode; The Russell and S&P are closing in on unchanged for 2014

 

VIX decoupled from stocks today…

 

And credit markets are worse than Friday's close…

 

Charts: Bloomberg

Bonus Chart: WTI crude prices have risen at their fastest pace in 9 years (and are at their highest on record)…

 

Bonus Bonus Chart: The Nikkei got a little over-excited this afternoon as USDJPY slid lower…

 


    



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