Month: May 2014

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

The Mobile Creative credo: trust the network, not the corporation or the state.

In America's Nine Classes: The New Class Hierarchy, I described a "wild card" new class of workers that doesn't fit the conventional paradigms: Mobile Creatives. I use the word mobile here not to suggest mobility between physical places (though that is one factor in this class's flexibility) but mobility between sectors, tools and ways of earning income.

The key characteristic of the Mobile Creative class is that they live by this credo: trust the network, not the corporation or the state. The essence of neofeudalism is debt penury and wage-slave loyalty to the New Nobility that owns the debt.

The essence of state-cartel capitalism (the dominant form of capitalism) is the state dismantles all social connections and wealth between the state and the atomized individual recipient of state welfare so the individual depends entirely on the state for his/her identity and essentials of life.

Where once existed a complex ecosystem of public life, social capital and networks of reciprocity and economic meaning, now lies a wasteland, stripmined by the state to leave nothing but the state and its ever-growing armies of dependents.

The global corporation profits from this same wasteland: the ideal arrangement to maximize debt-based consumption is an atomized individual who has no identity or self-worth other than consumerist worship of brands and corporate-supplied convenience, in other words, a permanent adolescent driven by insecurity, fear and impulse-driven consumption.

The Mobile Creative class operates outside these two states of dependency. It also operates outside the conventional labor-management divide of Marxism and socialism. Since global capital is mobile, and the state enforces central banking and cartel pricing, the class of "owners" and the state are one entity.

You either resist the entire state-cartel system or your resistance is nothing but meaningless gestures aimed at chimera.

Longtime correspondent Kevin Mercadante (Out of Your Rut) noted that being a Mobile Creative isn't just a different mode of livelihood–it's a different way of living, thinking and being.

"Mobile Creatives" describes me to the letter – I felt as if I was reading a script of my own life (at least since the financial meltdown). It also takes in a few of my friends, so it's a very real category.

This is beyond the scope of the article, but one of the things I've found to be a revelation is that the mobile creative lifestyle extends well beyond career and workstyle. Once you adopt it, everything else in your life falls in behind it.

Because of the creativity and independence that the lifestyle provides, there's less need for high cost entertainment. Vacations and weekends are less important – there's joy and adventure to be had every day. You're less concerned with retirement. You develop a sense that you'll survive what ever happens. You see more opportunities and fewer obstacles. At the same time, you're also painfully aware that things don't always work out. But you also learn that failure isn't terminal. That's huge.

Spending patterns change too. You find less expensive ways to do everything – to buy food and clothing, to fix your car, and even to entertain yourself. Free thought expands, and you find yourself drawn to other mobile creatives. Conversations with others are deeper and more meaningful – when you meet to discuss work, you're really paying attention, always on high alert for new opportunities and potential joint ventures.

On the surface, being a mobile creative is less secure than traditional careers, but I wouldn't trade it. I've been in so-called stable careers, only to discover that they're only secure until the big picture game changes. Being a mobile creative enables you to adapt to change, rather than getting rolled over by it.

By giving this emergent class a name, you're contributing to it's survival and growth. Mobile creatives could be the class that finally replaces the factory- and service-workers classes as the new "backbone" of American socio-economic life. That's what's been missing for at least 15 years. By giving the class a name you're formally declaring its existence, providing a framework for the lifestyle, and even establishing it as a legitimate goal.

Thank you, Kevin, for describing the Mobile Creative class better than I could. Who better to describe this way of living better than one who is living it every day?

In essence, my new book Get a Job, Build a Real Career and Defy a Bewildering Economy is a blueprint for becoming a Mobile Creative.

via Zero Hedge http://ift.tt/1nMV4vR Tyler Durden

Unless one has been living under a rock for the past several months, one knows that the latest manifestation of the global stock bubble is that US pharmaceutical companies, using their overvalued stock prices as currency, have engaged in an unprecedented M&A phrenzy (sic), buying up targets either to redomicile themselves abroad and thus avoid paying US corporate taxes, or simply to buy up assets before someone else snatches potential targets, in a classic case of FOMO (Fear Of Missing Out). And while this acquisition spree is a boon for shareholders, with the euphoric market rewarding both target and acquiror by sending their stock prices immediately higher, there is one group that is getting the shaft: employees.

As the WSJ reports, when it comes to drug mergers, the stock price may rise and fall, but one thing is certain – layoffs. Take the case of Pfizer: according to the WSJ, since 2005, Pfizer has eliminated more than 56,000 jobs world-wide—a number roughly equal to the population of a large suburb. It adds, correctly, that “More job losses could be on the way.”

Here is a chart of Pfizer’s headcount over the past 15 years:

And if indeed Pfizer pulls off its proposed headquarters-shifting acquisition of AstraZeneca, which is set to be the largest pharma M&A deal in history at well over $100 billion, especially considering the just announced sweetener overbid by Pfizer taking the purchase price to $106 billion, then the total workforce of the two companies is sure to be far smaller than the sum of the parts.

WSJ reports that the M&A activity has pharmaceutical employees nervous. A large number of layoffs over the past decade has already forced many big-pharma workers to seek jobs elsewhere.

More on the plight of pharma employees:

Some have found it hard going. Scott Nass, 49 years old, lost his job as an account manager for Roche Holding in Nutley, N.J., in 2009, when Roche gained full ownership of Genentech Inc. After a two-year stint helping Princeton University raise money to support academic research, Mr. Nass is now a substitute high-school teacher and looking for full-time work.

 

Mr. Nass said he finds it hard to get back into the health-care business. “I am quite bitter. It’s been a painful process and I am disillusioned as to how decisions are made in the industry,” he said.

 

Others have remained in the industry—often finding work in smaller drug companies or in contract research organizations, which conduct clinical trials for pharmaceutical companies.

 

* * *

 

“At big pharma, you struggle to have that feeling of being an owner and not just an employee,” he said.

You sure do, and soon enough, to make sure the company shareholders make even more (by paying less taxes) upon the move from NY to London, the employees will struggle even more, with the unemployment line.

Pfizer said Monday it would achieve “synergies” with the AstraZeneca deal if it comes to fruition, including in the combined companies’ businesses in cancer and cardiovascular drugs. Pfizer didn’t quantify the expected savings.

 

Pfizer has squeezed cost savings out of past megamergers. After its $68 billion acquisition of Wyeth in 2009, Pfizer closed six of 20 research sites world-wide, including in New Jersey, New York, North Carolina and the U.K. Pfizer currently has more than 77,000 employees.

Pfizer is not alone:

Job cuts also could result from other recently announced deals, including an exchange of assets between Novartis AG and GlaxoSmithKline and Novartis’s plan to sell its animal-health division to Eli Lilly

 

Some industry experts think pharmaceutical companies have already cut so much that further large layoffs are unlikely.

 

“I just don’t think that these companies are as fat as they were five years ago,” said Dan Mahony, a health-care fund manager at Polar Capital in London.

Unlikely? One actually doubts the ability of management teams to cut even more into the muscle in the name of the all important (non-GAAP) bottom line? Let’s follow up in one year.

The bottom line: “Since 2009, the pharmaceutical industry has announced more than 156,000 job cuts in the U.S. alone, according to Challenger Gray & Christmas, a company that big firms hire when they’re laying off employees, to help them find new jobs.”

And who is the driver of this epic “synergy-driven” headcut reduction? Why the Fed of course, because while on one hand it has made pharma stocks reach unseen highs (and thus server as great M&A currency) with its trillions in liquidity injections which have bypassed the economy entirely and made their way straight into the stock market, and on the other thanks to ZIRP, it has cut the cost of debt so low that if stock is not an attractive purchase currency, the acquiror can simply fund the deal with ultra-cheap debt, all Bernanke, and now Yellen, have done is enabled shareholders and management teams to slash and burn their way to M&A nirvana, in the process laying off hundreds of thousands.

But wait, wasn’t the whole point behind QE to stimulate job creation, not crush it?

Why, yes. Yes it way. Ain’t unintended consequences grand?

via Zero Hedge http://ift.tt/1fC0wz6 Tyler Durden

Submitted by Mike Krieger of Liberty Blitzkrieg blog,

I can’t say this is surprising. After all, with average peasants, I mean citizens, now priced out of the domestic housing market (Zillow recently showed 1 in 3 homes are unaffordable) due to billionaire financiers and foreign oligarchs buying up all real estate in cash purchases, American serfs now will find out where the “elites” think they belong. In trailer homes, naturally.

Oh, but the story gets better, a lot better. As is generally the case in the USSA these days, crony capitalist oligarchs have perfectly positioned themselves to benefit financially from the final transition of Americans to neo-feudalism. Recall that in my post from last October titled, Carlyle Group’s Latest Investment…Trailer Parks, it was noted that trailer park owners share the following attractive quality:

Our customers have no alternative shot at homeownership, nor do they [normally] even have the credit scores and quality to seek anything better…They never leave the park they are in, and the revenues are unbelievably stable as a result.

Sure, we know from the Dark Ages that peasants on the land stay put. Same concept here. However, it gets even better than this. America’s number one hypocritical, crony capitalist, Warren Buffett is also positioned to benefit.

From Bloomberg:

Want to buy a trailer park? Freddie Mac wants to give you a loan.

 

The unit of the government-owned mortgage giant that funds apartment buildings is set to begin financing manufactured-housing communities, the company said in a statement today.

 

The firm is broadening its reach in the multifamily segment of the housing market as it seeks to fulfill its mandate to provide affordable options for low-income families. The McLean, Virginia-based lender will work with established companies in the industry across the U.S., said David Brickman, the head of multifamily operations at Freddie Mac.

 

“It’s rounding out our ability to touch the affordable housing space,” Brickman said today in a telephone interview. “Manufactured housing is a big piece of rural affordable housing.”

 

Warren Buffett, the billionaire chairman of Berkshire Hathaway Inc., lamented the punitive rates charged to purchase factory-built homes in his 2009 annual letter to shareholders. Berkshire owns Clayton Homes Inc., a builder of manufactured housing.

 

Serfs up!

Full article here.

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It is somewhat ironic, actually make that criminal, that two days after new SEC head Mary Jo White (whose conflict of interest list is so vast courtesy of her prior position as defending every Wall Street from their criminal acts she now has to recuse herself from virtually every enforcement action) solemnly promised Congress under oath that the “markets are not rigged“, the SEC comes out swinging and slaps the wrist of the NYSE with an intolerable $4.5 million fine for allowing market rigging “for a period of time from 2008 to 2012.”

From the SEC complaint:

The Securities and Exchange Commission today announced an enforcement action against the New York Stock Exchange and two affiliated exchanges for their failure to comply with the responsibilities of self-regulatory organizations (SROs) to conduct their business operations in accordance with Commission-approved exchange rules and the federal securities laws.  Also charged was the NYSE exchanges’ affiliated routing broker Archipelago Securities.

The details:

“The order highlights instances where the exchanges conducted business without a rule in place due to weak or inadequate policies and procedures,” said Antonia Chion, an associate director in the SEC’s Division of Enforcement.  “In other instances, the exchanges did not operate in compliance with their effective rules.  Both failures reflect a troubling lack of compliance with the requirements and obligations imposed on securities exchanges.”

The violations detailed in the SEC’s order occurred during periods of time from 2008 to 2012.  The SEC’s order finds that the NYSE exchanges violated Section 19(b) and 19(g) of the Securities Exchange Act of 1934 through misconduct that included the following:

• NYSE, NYSE Arca, and NYSE MKT (formerly NYSE Amex) used an error account maintained at Archipelago Securities to assume and trade out of securities positions without a rule in effect that permitted such trading and in a manner inconsistent with their rules for the routing broker, which limited Archipelago Securities’ activity primarily to outbound and inbound routing of orders on behalf of those exchanges.
• NYSE provided co-location services to customers on disparate contractual terms without an exchange rule in effect that permitted and governed the provision of such services on a fair and equitable basis.
• NYSE operated a block trading facility (New York Block Exchange) that for a period of time did not function in accordance with the rules submitted by NYSE and approved by the SEC.
• NYSE distributed an automated feed of closing order imbalance information to its floor brokers at an earlier time than was specified in NYSE’s rules.
• NYSE Arca failed to execute Mid-Point Passive Liquidity Orders (MPLOs) in locked markets (where the bid and ask prices are the same) contrary to its exchange rule in effect at the time.

In addition, the SEC’s order finds that NYSE Arca accepted MPLOs in sub-penny amounts for National Market System stocks trading at over $1.00 per share, in violation of Rule 612(a) of Regulation NMS.

 

The SEC’s order further finds that Archipelago Securities failed to establish and maintain policies reasonably designed to prevent the misuse of material, nonpublic information in connection with error account trading.  Archipelago Securities also violated and failed to give the SEC timely notice of its violation of the net capital rule – a critical federal securities law provision intended to ensure that brokers and dealers remain solvent and can meet their financial obligations.  

Or in other words, the SEC is claiming that for 5 years the NYSE was aiding and abetting the very same rigged market that the SEC swears does not exist.

It. Just. Does. Not. Compute.

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

Back in December of 2012, the Fed, after two and a half failed attempts to stimulate the economy (via QE1, QE2 and Operation Twist), announced Open-Ended QE of an indefinite injection of $85 billion per month (which it currently is tapering at a pace of $10 billion per month on the realization that it has soaked up virtually all high quality collateral). Since then the Fed’s balance sheet has grown from $2.9 trillion to $4.3 trillion: a direct injection of $1.4 trillion in liquidity into the stock market, if not so much the economy, which as Wall Street is suddenly busy telling us following the latest disappointing construction spending data (the same Wall Street which initially expected Q1 GDP to be 2.75%), probably contracted for the first time in three years!

There’s even better news: if the next quarter shows the US economy contracting again – and with the “beneficial” impact of Obamacare fading, global trade stuck in the doldrums, and US consumers tapped out with near record low savings this is a distinct possibility – the US will officially enter a recession.

And this ignores the terrifying possibility of even more rain in the spring, not to mention the mortal threat of El Nino in the summer. Then the US is virtually assured an all out collapse into depression.

via Zero Hedge http://ift.tt/1kn4ms8 Tyler Durden

The Central Bank intervention fiasco continues to unravel before our eyes.

 

Globally all Central Banks have kept an eye on the Bank of Japan, which announced the single largest QE program relative to its GDP in history. That one single QE program announced in April 2013 is equal to over 20% of Japan’s GDP.

 

Japan experienced two brief quarters of improved economic activity, before things turned south again. Turns out that printing trillions of dollars to buy bonds doesn’t create growth.

 

The latest example is Sony, the Japanese electronics giant which just announced a 70% COLLAPSE in its profit outlook. Sony’s CEO had stated previously that a weak Yen, caused by the Bank of Japan’s QE program was actually a “disadvantage.”

 

We now have concrete proof as Sony’s profits outlook evaporates.

 

This is the death knell of QE. We now know for a fact that the Fed and other Central Banks are aware that QE doesn’t create jobs nor does it improve the broader economy.

 

All that leaves is stocks… which have benefitted enormously from QE, with the S&P 500 rising to new record highs boosted by the Fed’s money printing.

 

However, ultimately stocks react to profits. And as Sony has proven, QE hurts rather than helps profits. Indeed, Sony’s stock is down over 1.5% on the earnings outlook drop. And it’s essentially breakeven since the Bank of Japan announced its massive QE program.

 

 

The writing is on the wall. QE is good for very little these days. If the Bank of Japan can spend over $1.4 TRILLION and corporate profits fall while stocks go nowhere, it’s the end of the line for Central Bank money printing.
 

This concludes this article, swing by http://ift.tt/RQfggo for a FREE investment reports Protect Your Portfolio, which outlines how to protect your portfolio from bear market collapses.

 

Best Regards

 

Phoenix Capital Research

 

 

 

via Zero Hedge http://ift.tt/1u9jMrW Phoenix Capital Research

IMF approved the $17bn tranched loan to Ukraine last night, Gazprom gets paid; Ukraine gets its cash; and the door’s wide open for the US and EU to pour more ‘controlling influence’ into the divided nation… Except there’s one thing:

• IF UKRAINE GOVERNMENT LOSES EFFECTIVE CONTROL OVER EAST OF COUNTRY, $17 BLN IMF BAILOUT WOULD NEED TO BE REDESIGNED

Which, roughly translated, appears to mean go to war with pro-Russian forces (and thus Russia itself if Putin sees his apparent countrymen in trouble) or you don’t get your money!

Some other items of note include:

• *IMF URGES UKRAINE TO REACH PRICE ACCORD WITH GAZPROM BY SEPT
• *UKRAINE INFLATION MAY JUMP TO 16.2% THIS YEAR, IMF SAYS
• *RUSSIA’S GAS PRICE INCREASE MAY WEAKEN HRYVNIA: IMF STAFF

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