Tag: finance

Authored by Caitlin Johnstone via Medium.com,

The Grayzone’s Aaron Maté has done an interview with his father titled “America in denial: Gabor Maté on the psychology of Russiagate”, and it is the single best and most insightful political video I’ve ever seen. In 27 minutes it essentially describes the fundamental problems of our times, not just with Russiagate but with world politics as a whole, from the overarching behaviors of globe-dominating forces all the way down to the ways our own inner reluctance to face reality objectively helps to prop up those forces. So it deserves its own article.

Back when I learned that Gabor was Aaron’s father my first thought was, “That makes so much sense.” Aaron had exploded onto the Russiagate debate scene seemingly out of nowhere and quickly became the most thorough and lucid voice on the subject, holding to strict principles of valuing facts and evidence over the aggressive pressure to conform from his media peers and the authoritative assertions of government agencies. Gabor I’d known of for years because of how widely respected he is in other circles I’ve moved in for his penetrating insights into the human psyche. It makes perfect sense that someone with the moral fortitude to swim against the groupthink current and speak the truth no matter what would have someone like that as part of his personal formation.

I highly recommend watching the full interview, but since I know many of my readers aren’t big on watching videos I’ll sum up what I consider the highlights here with excerpts from the Grayzone transcript, because I really do think it’s that good and that important.

The elder Maté talked about the public support for the Russiagate narrative, and the inevitable disappointment which followed after Robert Mueller failed to turn up any evidence of collusion between the Russian government and the 2016 Trump campaign, as the result of emotional investment.

“Now, disappointment means that you’re expecting something and you wanted something to happen, and it didn’t happen,” Maté said.

“So that means that some people wanted Mueller to find evidence of collusion, which means that emotionally they were invested in it. It wasn’t just that they wanted to know the truth. They actually wanted the truth to look a certain way. And wherever we want the truth to look a certain way, there’s some reason that has to do with their own emotional needs and not just with the concern for reality.”

Gabor explained that the reason for this emotional investment ensued from the trauma of seeing Trump elected. They had the choice between consciously feeling through the pain and fear of that trauma and then doing some serious examinations of the factors that led to Trump’s election, or blaming the whole thing on a foreign boogeyman and avoiding that self-confrontation altogether.

“You can look at that,” Maté explained. “Or you can say there must be a devil somewhere behind all this, and that devil is a foreign power, and his name is Putin, and his country is Russia. Now you’ve got a simple explanation that doesn’t invite you or necessitate that you explore your own pain and your own fear and your own trauma.”

“So I really believe that really this Russiagate narrative was, on the part of a lot of people, a sign of genuine upset at something genuinely upsetting,” Maté continued. “But rather than dealing with the upset, it was an easier way to in a sense draw off the energy of it in to some kind of a believable and comforting narrative. It’s much more comforting to believe that some enemy is doing this to us than to look at what does it say about us as a society.”

Maté went on to discuss Trump himself as not just traumatizing, but traumatized. Someone acting out his own inner issues in the world in a deeply unconscious way:

Donald Trump is the clearest example of a traumatized politician one could ever see. He’s in denial of reality all the time. He is self aggrandizing. His fundamental self concept is that of a nobody. So he has to make himself huge and big all the time and keep proving to the world how powerful and smart, what kind of degrees he’s got and how smart he is. It’s a compensation for terrible self image. He can’t pay attention to anything, which means that his brain is too scattered because it was too painful for him to pay attention.

What does this all come down to? The childhood that we know that he had in the home of a dictatorial child disparaging father… who demeaned his children mercilessly. One of Trump’s brothers drank himself to death. And Trump compensates for all that by trying to make himself as big and powerful and successful as possible. And, of course, he makes up for his anger towards his mother for not protecting him by attacking women and exploiting women and boasting about it publicly. I mean, it’s a clear trauma example. I’m not saying this to invite sympathy for Trump’s politics. I’m just describing that that’s who the man is.

Maté tied his observations about the refusal of Russiagaters to confront their inner trauma and Trump’s refusal to confront his to the refusal of Americans as a whole to confront the horrors that their own country has inflicted upon the world which dwarf even the most severe things the Russian government has been accused of doing to America.

“No serious student of history can possibly deny how the United States has interfered in the internal politics of just about every nation on earth,” Maté said, adding that this interference often consists of mass murder. “For example, in Chile, there’s an elected government that America cheerfully overthrows, even boasts about it. Not to mention the current interference in Venezuela, the internal politics. Not to mention, how as you’ve pointed out, many others have pointed out, and [Time] boasts about it on its cover, about how United States helped Boris Yeltsin get elected… Even if the worst thing that’s alleged about the Russians is true, it’s not even on miniscule proportion of what America has publicly acknowledged it has done all around the world.”

Maté talked about how “it’s always easier to see ourselves as the victims than as the perpetrators,” adding that “whether it’s Great Britain, or whether it’s France with their vast colonial empires, they’re always the victims of everybody else. The United States is always the victim of everybody else. All these enemies that are threatening us. It’s the most powerful nation on earth, a nation that could single handedly destroy the earth a billion times over with the weapons that are at its disposal, and it’s always the victim.”

“So this victimhood, there is something comforting about it because, again, it allows us not to look at ourselves,” Maté said.

“And I think there was this huge element of victimhood in this Russiagate process.”

Maté talked about how Mueller, despite his horrible track record of supporting the WMD lie in the lead-up to the Iraq invasion, has been made into a hero, because Hollywood has trained the public psyche to seek out “good guys” and “bad guys” in every intense situation. This is what led Putin to be depicted as an omnipotent supervillain capable of infiltrating the highest levels of the US government, and Mueller as a knight in shining armor who was going to rescue us all.

“Rather than saying, okay, there’s a big problem here. We’ve elected a highly traumatized grandiose, intellectually unstable, emotionally unstable, misogynist, self aggrandizer to power. Something in our society made that happen. And let’s look at what that was. And let’s clear up those issues if we can. And let’s look at the people on the liberal side who, instead of challenging all those issues, put all their energies into this foreign conspiracy explanation. Because to have challenged those issues would have meant looking at their own policies, which tended in the same direction.

“Rather than looking at how under Clinton, they’ve jailed hundreds of thousands of people who should never have been in jail. Looking at how under the Bushes and under Obama, there was this massive transfer of wealth upwards. Instead of asking why Barack Obama gets $400,000 for an hour speech to Wall Street, which means that maybe our faith in how our system operates needs to be shaken a bit so we can actually look at what’s really going on, let’s just put our attention on some foreign devil again.”

Maté talked about how Obama, despite being a warmonger like the other US presidents, represented a nice ideal in people’s minds, so the contrast between that ideal and Trump’s election made it especially traumatic. This made people unwilling to look at the actual root causes of Hillary Clinton’s loss, which taken together are far more threatening to democracy than anything Russia is accused of doing, even if those accusations are all 100 percent true.

In conclusion the younger Maté asked his father for his advice on what people can do going forward to avoid the mistakes that led to Trump’s election, and to the years of Russia hysteria that followed, or at least to deal with similar challenges in a more mature way.

“Well, first of all, I advise people to do something that I find hard to do myself, but I think it’s essential,” replied the elder Maté.

“Which is that when there’s hard emotions there, just own them. Just own that you’re hurt. Own that you’re confused. Just own it. Say I’m hurt, I’m confused, I’m terrified. And rather than try and find an explanation right away, just own the feeling. And then when you’re ready, then actually ask, what happened here? What actually happened here? What are the facts? What behaviors or beliefs on my part maybe contributed to the situation? So be curious. Be really curious.”

With regard to the press, Gabor advised to be objective and skeptical of the government agencies which have so consistently deceived America into wars:

“At least be objective. Don’t be so quick to jump on board. Don’t be so quick to assume that because almost the whole media is broadcasting, trumpeting a certain line, that that line represents reality. Learn from history. Learn from this one. Learn from this Russiagate thing that they were all saying for years that this is a given fact. All of a sudden it turns out not to be a given fact. Well, next time, don’t be so quick to believe them.”

Gabor pointed out that for all people’s efforts at avoiding the internal confrontations which necessarily come along with disillusionment, it is much better to be disillusioned than illusioned.

“Would you rather believe in something that’s false, which means to have an illusion? Or would you rather be disillusioned?” Maté asked. “In other words, to see the truth. And I’m saying that we should be glad to be disillusioned. So this Russiagate and this ignoble end to the Russiagate narrative, it’s a disillusionment for a lot of people, but that’s a good thing. If they say, okay, I had this illusion, this illusion I no longer have, which means I’ve been disillusioned, now I can actually look at the truth. So it’s good to be disillusioned.”

“So this could be a positive beginning for a lot of people if they take the right attitude,” Maté concluded.

Man, I really hope so.

*  *  *

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via ZeroHedge News http://bit.ly/2HhYLYS Tyler Durden

The Democratic stronghold of Oakland, California – which narrowly escaped Bankruptcy in 2009 – is planning to divert state gas tax revenues to keep the city’s lights on amid a $100 million annual shortfall projected in the the 2019-2020 fiscal year (74% worse than forecast just two years ago). 

The money, $2.9 million to be exact, was intended per the state’s constitution to be used for the “research, planning, construction, improvement, maintenance and operation of public streets and highways (and their related public facilities for nonmotorized traffic),” according to the San Francisco Chronicle. 

“Though cranes are rising across the skyline and Oakland’s revenues are growing at a steady rate due to the strong real estate market, the city’s expenses continue to rise faster than revenues,” said Mayor Libby Schaaf during a recent budget statement. “Particularly the cost of medical benefits and pensions — as well as insurance, utilities and fuel costs — are growing at two to three times the rate of inflation and revenue growth.”

“These structural problems threaten our ability to deliver core services to Oakland residents, including our youth,” Schaaf added. 

Meanwhile, the city is facing an estimated $25 million deficit in its operating fund this year. 

One of the most severe shortfalls is in the city’s Landscaping and Lighting Assessment District, which pays for a number of city services, including street lighting and park recreational facility maintenance.

Revenues collected by the special district, however, haven’t increased for more than 30 years, which has led to a sizable shortfall that could have meant choosing between keeping the city’s streetlights on or cutting into park funds.

Enter the state gas tax. –San Francisco Chronicle

Officials in Oakland say that the diversion of funds is too legit, hammering home the idea that based on the state controller’s recent guidelines, they can use the gas tax for the “furnishing of power for street or road lighting and traffic control devices,” according to mayoral spokesman Justin Berton. 

Meanwhile, there are more than 7,700 open service requests to fix potholes – which the city is somehow planning to fix by materializing a $100 million over three-years. 

“The state gas tax provides an incremental $7 million per year that we are directing toward that work,” said Oakland DoT spokesman Sean Maher. 

via ZeroHedge News http://bit.ly/2PYpUnC Tyler Durden

Via MassPrivateI blog,

Soon free speech will be a thing of the past in paranoid America.

DIGIT Lab’s “Hate Incident Reporting” app promises to turn complete strangers into secret, hate speech/bias spies.

Watch what you say, because the person sitting next to you could be reporting you to law enforcement.

Gone are the days when Americans were unafraid to voice their opinions or make snide comments in public. Because DIGIT Labs will turn smartphones into bias reporting devices.

According to a PHYS.org article, DIGIT LAB’s new app allows strangers to report someone for exercising their first Amendment rights.

“The first of its kind, the app accepts reports beyond crimes captured in police records. Users from around the country can document all incident types, from derogatory epithets written in bathrooms to slurs yelled from a car window in addition to violent assaults.”

This app will make swearing at a fellow motorist or flipping someone off: hate speech.

Where in our Constitution does it say that it is acceptable to report someone who has not committed a crime?

Since 9/11, Homeland Security has tried to turn the entire country into home-grown spies with their “See Something, Say Something” campaign that essentially does the same thing as DIGIT LAB’s Hate Reporting app. If someone see’s something or see’s someone acting suspiciously they are encouraged to report it to law enforcement.

But the University of Utah’s, Hate Incident Reporting app, promises to create a Federal free speech blacklist.

“The major problem we’re dealing with is that hate crimes are so underreported, not only to police, but from police to the federal government,” said Emily Nicolosi, researcher, and Richard Medina, professor of geography. (Nicolosi helped develop the app.)

Creating a national blacklist of people who use derogatory epithets and slurs will turn this country into a mirror image of China.

“We’d like to see it used nationally to get better hate incident statistics, and to understand why, how, and where people are active in hateful incidents, and how that offends or hurts people,” said Medina.

Although the PHYS article claims that all reporting is confidential and anonymous, the amount of detailed information a person is asked to provide would make it easy for law enforcement to identify someone.

The “Hate Incident Reporting” app. asks users to submit their location a photo or video of the so-called bias incident. It also asks them to classify it “out of multiple types of bias: religion, disability, gender, identity, race, ethnicity, sexual orientation and other.”

Handing pictures, videos and detailed descriptions of someone or something that offended them to law enforcement will essentially turn them into speech police.

Apps designed to report people because someone is easily offended will have a detrimental affect on free speech.

What makes this app and DHS’s See Something, Say Something program so disturbing is how it encourages people to report on one another.

If history is any indicator, it won’t be long before we find these apps bundled onto tomorrow’s smartphones.

With each passing year, one thing has become painfully obvious, America is moving closer and closer to adopting China’s social credit score.

via ZeroHedge News http://bit.ly/2VYzOL2 Tyler Durden

Mass arrests of ‘pill-mill’ doctors, dozens of investigations and lawsuits into opioid manufacturers and the wholesalers who distribute the pills to pharmacies and President Trump’s sweeping plan to combat the opioid crisis are finally starting to make a dent in the legal opioid trade.

According to Bloomberg, the volume of prescriptions for opioids fell the most in a quarter century last year as doctors have become increasingly cautious about prescribing the drugs for fear that they might be diverted to the black market. The YoY decline for 2018 was 17%.

Since 2011, when prescriptions for opioids peaked, prescriptions have dropped 43%.

But news about falling prescribing rates might distract from the fact that this is too little, too late. Most opioid addicts have long since switched from prescription drugs to heroin. Much of the heroin supply in the US has been cut with fentanyl, which has caused overdose deaths to skyrocket. Drug-overdose deaths reached an all-time high of 70,000 in 2017. Since the opioid crisis first started taking shape in the late 1990s, the number of deaths have surpassed 700,000.

And as former FDA head Scott Gottlieb said during an appearance on CNBC’s “Squawk Box” Thursday morning, all the attention given to the opioid crisis has distracted from the burgeoning crisis of methamphetamine use in the US. In both cases, much of these street drugs have been flowing into the US from Mexico.

Also, while Beijing has repeatedly pledged to curb illicit sales of fentanyl, there’s little evidence that the flow of the deadly synthetic opioid from China has at all abated.

And even with these declines, the volume of pills being prescribed is still huge: There were enough pills prescribed last year to give every adult in the US the equivalent of 34 pills (though that’s down from 72 in 2011). 

Experts attributed the decline to new state-level regulations that limit prescribing, and tighter federal guidelines that have improved oversight. Trump signed the STOP Act into law last year, a bill intended to crack down on drug trafficking that also asked the FDA to authorize opioids to be shipped in smaller quantities while toughening penalties on doctors and drug companies and expanding access to buprenorphine, a popular opioid addiction treatment.

And data from the first months of 2019 show that the prescription rate has continued to fall.

Still, as bodies continue to pile up, the crisis is clearly far from over.

via ZeroHedge News http://bit.ly/2DZG0se Tyler Durden

Authored by Daisy Luther via The Organic Prepper blog,

On March 5, a “cyber event” interrupted grid operations in parts of the western United States, but the hack was just disclosed to the public a few days ago. As of now, officials are not sure who perpetrated the cyber attack.

The attack marked a somber milestone for the US power sector: the unnamed utility company is the first to report a malicious event that disrupted grid operations.

“According to a cryptic report posted by the Department of Energy, the March 5 incident lasted from 9 a.m. until nearly 7 p.m. but didn’t lead to a power outage, based on a brief summary of the electric disturbance report filed by the victim utility,” E&E News reported on April 30.

Cyber attacks are a growing risk, experts say. Here’s what you need to know about them.

What exactly is a cyber attack?

A cyber attack is more than just shutting down the computer systems of a specified entity. It is defined as“deliberate exploitation of computer systems, technology-dependent enterprises, and networks. Cyber attacks use malicious code to alter computer code, logic or data, resulting in disruptive consequences that can compromise data and lead to cyber crimes, such as information and identity theft.”

Technopedia lists the following consequences of a cyber attack:

• Identity theft, fraud, extortion

• Malware, pharming, phishing, spamming, spoofing, spyware, Trojans and viruses

• Stolen hardware, such as laptops or mobile devices

• Denial-of-service and distributed denial-of-service attacks

• Breach of access

• Password sniffing

• System infiltration

• Website defacement

• Private and public Web browser exploits

• Instant messaging abuse

• Intellectual property (IP) theft or unauthorized access

Cyber attacks happen far more frequently than you might think. Check out this real-time map for a look at the almost constant siege.

How does a cyber attack affect you?

You may think that if you don’t spend your day working online, that an attack on our computer infrastructure isn’t that big of a deal. You may feel like it wouldn’t affect you at all.

Unfortunately, there are very few people in the country that would remain completely unaffected in the event of a major cyber attack. Our economy, our utility grids, and our transportation systems are all heavily reliant upon computers. This makes us very vulnerable to such an attack.

And by vulnerable, I mean that if it was done on a big enough scale, it could essentially paralyze the entire country.

Here are some of the systems that are reliant on computers.

In the event of a widespread cyberattack, the following could be either completely inoperable or breached. Keep in mind that a domino effect could occur that effects systems beyond the original target.

• Gas stations (most of the pumps are now digital and connect right to your bank)

• Banks (all of the records are online) would not be able to process electronic transactions. ATM machines would not function to allow customers access to cash.

• Utility systems (most power stations are run by computers)

• Water treatment facilities (these are automated too)

• Protection of personal information, including data about your finances, medical records, physical location, and academic records – everything a person would need to steal your identity

• Government operations, including dangerous identifying information about federal employees or members of the military

• Transportation systems (trains, subways, and planes are heavily reliant upon computers)

• Traffic management systems like stoplights, crosswalks, etc.

• Air traffic control

• Everyday trade – most businesses have a computerized cash register that communicates directly with banks. Many businesses are also reliant on scanning bar codes for inventory control and pricing. Point-of-sale systems would be down and people would not be able to pay using credit or debit cards.

• Telecommunications systems can be affected if cell towers are disabled or if the landline system were directly attacked. As more people rely on VOIP, taking down internet service would serve a dual purpose.

• SMART systems could be shut down or manipulated. All of those gadgets that automate climate control, use of utilities, or appliances through SMART technology are vulnerable.

Here’s a video from NATO that explains a little bit more about the dangers of cyber attacks.

Prepping to survive a cyber attack

Prepping for a cyber attack is not that different from prepping for other types of disasters that affect the grid. You want to be able to operate independently of public utilities, stores, or public transportation.

Click each item to learn more details.

1. Have a supply of water stored in case municipal supplies are tainted or shut down

2. Be prepared for an extended power outage.

3. Have a food supply on hand, as well as a way to prepare your food without the grid.

4. Keep cash in small denominations on hand in the event that credit cards, debit cards, and ATMs are inoperable.

5. Keep vehicles above halfway full of fuel, and store extra gasoline.

6. Be prepared for off-grid sanitation needs.

7. Invest in some communications devices like ham radio or one of these other options.

8. Be ready to hunker down at home to avoid the chaos that could come in the aftermath of a massive cyber attack. Be prepared to defend your home if necessary.

9. Remember that your prepper supplies and skills will see you through this disaster just like any other.

10. Protect your identity with a service like LifeLock (which will alert you to suspicious activity once things return to normal). Use some of these tips to keep your information locked down.

via ZeroHedge News http://bit.ly/2JuVRT4 Tyler Durden

Ask any banker (or analyst) what the difference is between a junk bond and a loan, and you’ll most likely get a blank start in response: starting with the size of the loan market, which is now virtually identical to that of the high yield bond market, continuing through the standardization of loan terms, the growth of secondary trading, and all the way through to “protections” granted to loan investors, which in an age of exclusively covenant-lite issuance, no longer exist, and one can argue that at least superficially, a loan is effectively the same as a junk bond. And yet, there is one critical difference between the two: junk bonds are securities, while  loans aren’t.

That difference, however, may not be true for much longer. As Bloomberg reports, a group suing JPMorgan Chase and other banks over a loan that went sour four years ago is alleging the underwriters engaged in securities fraud. If successful, the article contends correctly, the lawsuit will “radically transform the $1.2 trillion leveraged lending market” because should the plaintiff ultimately prevail in arguing that loans are de facto securities, it would dramatically alter how American companies raise debt, according to two industry groups that filed a brief supporting the defendants’ argument last week.

“There are absolutely enormous market consequences if a court determines that leveraged loans are securities,” J. Paul Forrester, a partner at Mayer Brown told Bloomberg. “Leveraged loans and lenders would be potentially subject to the same offering and disclosure requirements as securities and would face the same regulatory oversight and enforcement consequences.”

The lawsuit stems from a $1.8 billion loan that JPMorgan, together with Bank of Montreal, Citigroup Inc. and SunTrust Banks, arranged  in 2014 for Millennium Health LLC, then owned by private equity firm TA Associates, and which was sold to investors the same year. However, as Bloomberg reports, within just a few months, lenders saw the value of their loan plunge as the company disclosed that federal authorities were investigating their billing practices. Millennium quietly agreed to pay $256 million to resolve the probe, and then filed for bankruptcy.

And here’s why JPMorgan may be at fault: the bank knew officials were investigating Millennium when it sold the loan, but didn’t tell investors who were about to buy the debt, as Bloomberg reported in 2015. The bankers did not provide the information because Millennium told them it wasn’t material at the time; additionally since a loan is technically not a securities that is subject to the SEC Act, JPMorgan also did not have explicit underwriter diligence responsibilities to disclose everything that it knew about the issuing company as the assumption is the buyer is sophisticated enough to do their own due diligence.

Only in this case that was not the case; meanwhile the plaintiffs have an entirely different view of what JPM’s reporting obligations were:

“Styled as ‘leveraged loans,’ the debt obligations that defendants sold to the investors back in April 2014 have all the attributes of and, in fact, constituted credit agency-rated and tradeable debt ‘securities,’” the lender trustee wrote in the 2017 suit. As such, the defendants are liable “for sponsoring the materially false presentation of Millennium’s financial condition and business practices.”

Countering this interpretation, JPMorgan and Citi wrote in a memo last month that “The sophisticated entities that lent Millennium money now try to classify the loan as a ‘security’ and the loan syndication as a ‘securities distribution’ in an attempt to manufacture a securities fraud claim where none is viable, and to avoid the express language of the contracts into which they willingly entered.”

While the likelihood that it prevails is small, a ruling in favor of the plaintiff would additionally face numerous appeals as the decision works its way through the courts. As such, a fundamental transformation of the leveraged loan market is anything but imminent.  However, should the courts eventually decide that syndicated term loans are indeed securities, the consequences would be profound and widespread, as Bloomberg notes citing recent memos by the Loan Syndications and Trading Association and the Bank Policy institute.

Here are some ways that redefining loans as securities would affect the market:

• First, arranging loans would become more cumbersome and costly amid more stringent disclosure requirements according to Bloomberg. This would result in a slower funding process and would deprive borrowers of quick access to capital, while some may shy away from obtaining financing rather than make public confidential information.
• Second, an entire universe of non-bank loan issuers would suddenly be eliminated due to far more stringent reporting and regulatory requirements.
• Third, the market for collateralized loan obligations which as we previously reported provide the bulk of leveraged loan funding, would be thrown into chaos. Banks are key buyers of CLOs, but Volcker Rule restrictions bar them from investing in CLOs that own securities. Were loans deemed securities, banks could be forced to offload about $86 billion in existing CLO holdings in the absence of regulatory relief.

“A major disruption in the CLO market would risk reducing that flow of capital – which is a vital resource for a wide spectrum of American businesses – to a trickle,” the industry groups wrote. “Cutting off an important source of capital could have serious consequences for leveraged companies, as well as significant ripple effects throughout the economy.”

In an attempt to mitigate the implications of their case, the plaintiffs Wednesday countered that the case is “not a referendum on the application of federal or state securities law” to syndicated leveraged loans generally, but strictly to the Millennium syndication in particular, however if they prevail it is assured that any other party that finds itself in a similar situation would refer to this case going forward.

This particular lawsuit aside, Bloomberg notes that there’s a growing chorus warning that the loan market is becoming too risky and with virtually no regulatory oversight. This week, the Fed itself addressed the perils of leveraged lending in its bi-annual financial stability report this week, echoing the IMF, the BOE, and countless investing legends. And while the SEC may be tempted to intervene, lawsuit against JPM notwithstanding, the implications would be so momentous for the market that SEC head Robert Jackson Jr. said last month the regulator may need more power from Congress to police hazards manifesting in the market.

And while loans and junk bonds have merged into what is effectively the same funding product, whether it is a security or not notwithstanding, the two markets maintain several other notable distinctions, to wit:

Syndicated loans are only marketed to qualified, accredited investors, for starters. They’re typically secured by a lien on assets, making them less risky and lower yielding than a comparable bond. They almost always pay a floating coupon, and have more flexible prepayment options than bonds.

But more importantly, offering documents don’t provide nearly the same level of financial disclosure as found in bond prospectuses, and syndicate participants have historically relied on confidential, non-public information when determining whether to lend. This is the so-called “sophisticated buyer” loophole, and the defendants argue the investors knew this going into the transaction.

“A lender that becomes part of a syndicate does so on the express understanding that it is responsible for conducting its own due diligence,” the industry groups wrote in the brief. “Declaring syndicated term loans to be securities would upend the expectations of borrowers and lenders and wreak havoc in the large, and vitally important, market for those loans.”

via ZeroHedge News http://bit.ly/2LB0ygP Tyler Durden

North Korean state media is reporting that what was previously reported as “two short-range missile tests” by South Korea were actually long-range tests, which came on the same day US authorities seized a North Korean ship used to sell coal in violation of international sanctions.

State media announced early Friday (local time): “At the command post, Supreme Leader Kim Jong-un learned about a plan of the strike drill of various long-range strike means and gave an order of start of the drill,” the Korean Central News Agency (KCNA) said in English, as reported by Yonhap.

“The successful drill of deployment and strike designed to inspect the ability of rapid reaction of the defense units… showed the might of the units which were fully prepared to proficiently carry out any operation and combat,” the report added.

Kim stated he ordered the deeply provocative tests because “genuine peace and security of the country are guaranteed only by the strong physical force capable of defending its sovereignty,” KCNA reported.

The precise location of the drills is as yet unknown, but South Korea’s Yonhap News Agency gave the following details:

The KCNA did not elaborate on what “long-range strike” means. But South Korea’s military said the North is believed to have launched two short-range missiles [in the prior launch] from its northwestern region into the East Sea, which flew 420 kilometers and 270 km, respectively.

Kim has reportedly been angered by the lack of progress in talks with Washington, and also by America’s decision to re-start military exercises with South Korea.

No doubt, Thursday’s seizure of the pariah state’s largest coal ship was a factor in this latest (what appears to be) ballistic missile test, the second in under a week. 

It also comes as North Korean leader Kim Jong Un has insisted that Washington must come around to the notion of undoing some of the sanctions, or else the North might resume its ICBM tests — a threat it appears Kim is already busy making good on. 

Analysts said Thursday’s tests appeared to be ballistic missiles, according to the South China Morning Post, which is banned under UN resolutions. 

It appears Kim is showing Trump that he too is prepared to “negotiate from the extremes” and is ready to break off talks altogether is the US is unwilling to budge on sanctions relief. 

via ZeroHedge News http://bit.ly/2VuTHdl Tyler Durden

With just a few short hours until Washington unleashes the next round of tariffs, all it took was a tweet from Fox Business to spike futures…

Edward Lawrence tweeted that: “Exclusive: President Trump meeting with Treasury Secretary Steven Mnuchin & US Trade Representative Robert Lighthizer right now. They are talking about the trade talk progress ahead of tariffs being upped on the Chinese.“

Exclusive: President Trump meeting with Treasury Secretary Steven Mnuchin & US Trade Representative Robert Lighthizer right now. They are talking about the trade talk progress ahead of tariffs being upped on the Chinese. #china #trade

— Edward Lawrence (@NewsEdward) May 9, 2019

Not exactly earth-shattering, but enough for Johnny-5 and his algo friends to lift Dow futures 200 poinst…

Additionally, Vice President Mike Pence said Thursday the Trump administration is working “literally hour by hour” to reach a trade agreement with China, as the deadline loomed on a U.S. threat to raise tariffs on Chinese imports.

Larry Kudlow has been oddly quiet – perhaps they are resting him just in case of a bloodbath tomorrow?

 

 

via ZeroHedge News http://bit.ly/2HbRqKh Tyler Durden

Just over a month ago, when Lyft became the first decacorn to go public this year in what has since become a veritable cornucopia of private Silicon Valley companies scrambling to top-tick the market at its all time high and sell their stock to the general public, the IPO of the ride-sharing company was said to be massively oversubscribed. Just a few weeks later, one can barely find a motivated buyer with the stock of the grossly money-losing company – which just reported a record $1.14 billion LTM loss on $2.5 billion of revenue in tumbling from its first-day opening pop, and was last trading at $55, down from the mid $70s level at the start of April.

Predictably, as the bullish narrative was bulldozed and as more skeptical investors piled on, the short interest in the company has grown…. and grown… and grown. In fact, it has grown so vast that some are wondering if Lyft, on its way to insolvency, won’t first become the next Volkswagen: a company that saw its market cap briefly become the biggest in the world as a result of a legendary short squeeze as the number of shares shorted was greater than the entire float of the company.

While Lyft isn’t there yet, it’s getting there fast.

According to Bloomberg, quoting data from S3 research, shorting shares of Lyft Inc. has become so popular that the short interest in the stock is now above 80%! Specifically, short interest in the No. 2 ride-hailing company has risen to 27 million shares, while Lyft’s public float is about 33 million shares in total. At this rate, if the short interest surpasses the float, should a short squeeze be launched, it would mean that there is not enough shares out on borrow to meet demand to cover, and one or more investors will be forced to buy the stock at any price, potentially sending it into the triple or even quadruple digits.

But how is it possible that there are more shares on loan (for shorting) than there are shares available? Simple: according to S3 research head Ihor Dusaniwsky, that’s only possible with a significant amount of rehypothecation — or re-lending — happening at prime brokers, a practice that was made infamous during the 2008 financial crisis. “The risky transactions, known as rehypothecation, can last for as long as certain hedge funds remain bullish”, according to Bloomberg.

While it is more common in ETFs than stocks and more restricted since the 2008 financial crisis, rehypothecation – made notorious by China when it comes to commodity-backed loan collateral – is a process in which banks borrow a security and then lend it back out to other short sellers… usually several times over, in the process ensuring that a wholesale scramble for the underlying asset, in this case Lyft stock, would end in more demand than supply, potentially sending the price of the stock to +∞. Stated simply, “this means Lyft’s short sellers face a higher recall risk”, the same was Volkswagen shorts, who were ultimately proven right, faced what would in 2008 become the biggest short squeeze in history.

And, as Bloomberg adds, hedge funds that have been buying these shares and then lending them to prime brokers could spark a chain reaction of recalls if they turn bearish and decide to sell.

Meanwhile, not only do short sellers run the growing risk of a historic squeeze, they are also paying an annual interest rate of 14% to short Lyft, the highest price since the volatile days that immediately followed the company’s IPO. The spike came just one day before Uber made its stock market debut after pricing its IPO at the low end of the range. Lyft shares rose as much as 3.8% on Thursday, but remain about 24% below the March 28 IPO price.

What does this mean in practical terms? Keep an eye on Lyft’s short interest: the more hated the stock becomes, the more rehypothecated its short base, the greater the risk of a paradoxical Volkswagen-like short squeeze. And more explicitly, once the short interest rises 100% of the float, bears – who have correctly targeted this cash burning stock for extinction – will want to quietly cover and go long ahead of what may be the biggest fireworks in short covering history since Volkswagen and Herbalife.

via ZeroHedge News http://bit.ly/2WxNMRr Tyler Durden

Authored by Jeff Charles via Liberty Nation,

Perhaps honesty isn’t the best policy for Democrats after all…

The Democrats appear to be in an accidental truth-telling season lately. First, Rep. Eric Swalwell (D-CA) admitted that he wishes to enact a gun confiscation policy. Now, another progressive politician accidentally revealed the true reason the Democrats are pushing so hard to impeach President Donald Trump.

Of course, it’s not as if it is difficult to ascertain their true motivation, but the idea that an elected Democrat would just blurt it out is a bit shocking. And the real reason behind Operation: Impeach the Donald uncovers another interesting bit of insight.

Al Green

Al Green’s Accidental Admission

Rep. Al Green (D-TX) made an appearance on MSNBC and discussed the initiative to remove Trump from office. It’s not the first time he has broached the subject; in 2017, he introduced articles of impeachment in the House.

“I’m concerned if we don’t impeach this president, he will get re-elected,” he explained.

“He will say the Democrats had an overwhelmingly majority in the House and they didn’t take up impeachment.”

Well, there it is. Green announced what the Democrats probably wished the public didn’t already know: They want to impeach President Trump because they fear another crushing loss to a reality television star. How’s that for juicy gossip?

High Crimes And Misdemeanors

Green’s admission shows the Democrats may not be as confident in their chances for 2020 as they would have you believe. Perhaps they learned their lesson from the 2016 election, in which Hillary Clinton was supposed to give the Big Bad Trump a sound electoral drubbing and further validate the not-so-stellar legacy of Barack Obama.

While they managed to pull off a victory during the 2018 midterm elections by taking the House, their wins were in line with historical precedent. Not much of an accomplishment, right? The Democrats are well aware of the reality that they have an uphill road if they wish to defeat the president, given the state of the economy and the fact that the public isn’t buying their assertion that he is the second coming of Comrade Adolph Stalin Pol Pot Hussein.

Are The Democrats Afraid?

The Democrats are right to be afraid of another Trump victory. It seems like half their party is running for president, yet they still can’t find a candidate with much of a chance of beating him. Indeed, it seems they are shooting themselves in the foot with the campaign against Joe Biden, likely the only choice that would have a shot at winning, all because he scores a resounding goose egg on the intersectionality scale.

Put simply, the only other way for the Democrats to get their wish might be to remove Trump from office through the impeachment process. It is for this reason that they pivoted from collusion to obstruction when special counsel Robert Mueller failed to prove Trump was collaborating with Boris and Natasha to win in 2016. It’s also why they are targeting Attorney General William Barr for his refusal to recommend indictments against the president despite the lack of evidence of obstruction.

The Democrats’ reliance on impeachment is part and parcel of the progressive left’s approach to politics; if they can’t defeat their opponent through normal means, they must seek out other ways to gain power. It is why companies like Facebook and Twitter aren’t willing to allow debate, but rather shut down views that conflict with their ideology. The Democrats know that the American public isn’t on board with a far-left socialist agenda or hand-wringing over who is more oppressed than whom.

If the Democrats are afraid they cannot convince voters to swing their way, it is no surprise they hope for impeachment. Unfortunately for them, a GOP-controlled Senate is unlikely to vote to impeach Trump on scant evidence or the fact that he hurts people’s feelings. If the Democrats want victory, they will have to earn it the old-fashioned way.

via ZeroHedge News http://bit.ly/2Jvktv0 Tyler Durden