Month: July 2014

It’s different this time…

 

 

Source: Cagle

Some thoughts (submitted by Chris Moorman),

“Keep, ancient lands, your storied pomp!” cries she
With silent lips. “Give me your tired, your poor,
Your huddled masses yearning to breathe free,
The wretched refuse of your teeming shore.
Send these, the homeless, tempest-tost to me,
I lift my lamp beside the golden door!”

 

-The New Colossus by Emma Lazarus

Happy Birthday America!
 
238 years old. Quite a respectable age.
 
You’ve managed to stay upright and breathing through a Civil War which nearly ripped you in half. 
 
You fought on behalf of liberty in two World Wars which enveloped you from across the globe, and even in victory, you magnanimously invited the vanquished back into the global community with open arms.
 
You’ve welcomed, albeit occasionally with gritted teeth, the “huddled masses” and “wretched refuse” of immigrants unwanted in their native lands and assimilated them into a society which has grown to be the richest the world has ever seen.
 
You’ve dealt with modernization, urbanization and the mass media.
 
You faced down the threat of nuclear annihilation and the dehumanizing spectre of Communism largely with soft power instead of the destruction that total war brings.
 
For the better part of two and a half centuries, you’ve held true to those most sacrosanct of ideals espoused by your Founding Fathers, those mostly enlightened men, “who brought forth on this continent, a new nation, conceived in Liberty, and dedicated to the proposition that all men are created equal” and in doing so have been a source of hope for freedom loving people everywhere.
 
This isn’t to say that you’ve been blameless. No institution, no matter how grand its codified ideals (I’m looking at you Catholicism) can stay blameless forever. The stain of slavery, the dehumanization of those we found on this continent prior to European discovery, and the wars of choice fought over the past 60 years have fallen short of your commitment to those high minded ideals in favor of “realpolitik.”
 
***********
 
I should quit saying “you.” This isn’t a professional sports team I’ll never play for, this is America. This is the living breathing organism which has from my first breath, blessed me with freedom, safety and mobility to be whomever I choose to be.
 
I cannot pick those attributes of America with which I agree a la carte, leaving the less desirable remainders for others to choke down. I cannot look at my neighbor and say, “Oh no, this is YOUR President. I didn’t vote for him.”
 
Men and women who came before me gave their blood, sweat, tears and lives to vouchsafe my ability to make this MY America, one where each voice, no matter its wealth, social status, or color of skin has an equal part to play in maintaining the greatest engine of human freedom and prosperity that the world has ever seen.
 
Yet spending another 4th of July abroad, I find myself tired.

I am tired of trying to explaining away the past 14 years of leadership so comically unenlightened that our political system has devolved into a shouting match incapable of legislating.

 

I’m tired of trying to explain to the Europeans and the Vietnamese and everyone else who doesn’t share my passport cover that the policies of my government do not reflect Americans as individuals.

 

I’m tired of seeing my government encroaching further and further into the lives of its citizenry, of spying on even our allies, and systematically limiting the rights of the individual.

 

I’m tired of being called a “brainwashed moron” because I believe in the fundamental American right to bear arms, even in the face of yet another mass shooting.

 

I’m tired of seeing my fellow Americans try to pass themselves off as Canadians to attempt to shirk a history that while imperfect, is still as proud or prouder than any nation the world has ever seen.

For all the chest beating talk of “American Exceptionalism” I hear at home, I am tired of being in a room of foreigners and seen as the idiot because I am not “properly embarrassed” of my country.
 
I am an American, and God help me if even for a fleeting moment that I deny that enviable truth.
 
I stand here today embracing the fact that the problems of the nation which has given me so much are inseparable from my own.
 
************
 
I look to the members of the so called “Greatest Generation,” who sacrificed lives by the millions against a tyrannical force as twisted and corrupt as any seen in the course of human history, for guidance. 
 
They fought with a single mind against an enemy armed with weapons engineered to make the slaughter of innocents magnitudes more efficient than ever before. They had the same right to vote that I did. They did not shirk from their duty, or try to hide behind their broken political system. They stood and took the mantle of liberty upon their own shoulders and said, “Liberty will prevail, and America will make sure of it.”
 
What happened to that America? Are we going through some sort of national midlife crisis?
 
Why is my generation different from that of my grandparents? Has our democratic right to vote been taken away? Has our voice been silenced by statute or dictat? Do we find men with guns at our doors waiting to silence opposition?
 
No. The answer is much more humiliating.
 
We’ve merely disengaged. We’ve taken the spoils that our forebears won for us and squandered our inheritance on iPhones and TVs. On houses that would’ve made even the richest in generations past blush with the embarrassment.
 
We’ve taken “conspicuous consumption,” once a behavior to be avoided at all costs, and made it into a virtue.
 
We tear apart our politicians at the slightest misspoken word, while giving our hours and eyeballs to such enlightened television as “Teen Mom,” “Honey Boo-Boo,” and the countless shows devoted to the Kardashians, a family known only for the limited virtue of their fame seeking promiscuity.
 
We’ve taken capitalism, an engine of growth predicated on rewarding the hardest working and most creative among us, and corrupted it into a rigged game of three card monte through cronyism and financialization.
 
Americans have inherited a system which requires constant maintenance, and we’ve let it go on autopilot for nearly an entire generation. The results have been as bad as history would have predicted.
 
Our education system, once envied as the best in the world, now languishes along side such countries as Lithuania and the Slovak Republic, and behind those once “vanquished” foes, the Russians.
 
Our middle class has been systematically gutted, our rural communities left to wither on the vine both economically and socially, and our political class has partitioned themselves away from the people whom they are elected to represent, happy to bicker from their DC perches rather than associate with the lower classes in anything more meaningful than a photo-op.
 
The America that we live in and the freedoms we enjoy are not ours by divine right. It is, and will continue to be an ever evolving experiment, the results of which are determined daily by the diligent effort of those citizens who continue to maintain it through their individual efforts.
 
Our efforts determine the America that my children and yours will inherit.
 
It is the sacred duty of each of us to ensure that that inheritance is worth receiving.
 
America I haven’t given up on you. Far from it, my travels have merely galvanized my belief in that responsibility George Washington entrusted to Americans 227 years ago.
 
Let us raise a standard to which the wise and honest can repair
 
Generations of great men and women have both raised and maintained that standard, handing it to their sons and daughters in turn. It is the hallowed responsibility of mine to repair it to its former glory, not let it fall to a state beyond repair.
 
Happy Birthday America.
 
Enjoy it.
 
We’ve got work to do tomorrow.

via Zero Hedge http://ift.tt/1pOTbB1 Tyler Durden

Gold has held firmly above $1300 for over two weeks, confounding those who said it would never see that key level again, but as the constantly-bearish SocGen explains in this ‘astounding’ report, gold’s downturn is set to return… except their reasoning has a fatal flaw – it’s entirely factually incorrect.

 

 

As SocGen writes…

Gold holds firmly above $1,300/oz
After showing a lack of price direction in the first two months of this quarter, gold entered a new uptrend in June, gaining 6% in the first three weeks and hitting a two-month high of $1,322/oz (on an intra-day basis) on the 19. A much firmer tone in gold was supported by the June CFTC data, which showed a steady increase in the long-side speculative position, to reach its highest level since May 2013 in the last week of the month. It touched a high of just over $1,332/oz earlier this week but slipped thereafter, but continued to hold firmly above the $1,300/oz level.

[ZH – a big surprise to many that Gold was the best-performing asset in Q1]

Economic worries prompt safe-haven buying
Demand for safe-haven gold was sparked by fresh concerns about global economic recovery after the World Bank slashed its global growth forecast for this year, blaming severe weather conditions in the United States, financial market turmoil and the crisis in Ukraine. Similarly, the OECD cut its forecasts for global growth this year and next, citing slowing economic activity in emerging countries and concerns about the US Federal Reserve’s tapering. The escalation of violence in Iraq was among other factors supporting gold prices.

[ZH – yes]

But Gold’s downtrend to resume on improving US economy…
Looking ahead, we believe that gold’s current shine is unlikely to last and the downtrend, which started in 2013, is likely to resume as we move into the second half of the year. First, US economic data indicates that economic activity has picked up in recent months, pointing to stronger growth in the second quarter. This has been supported by further improvement in labour market conditions and upbeat manufacturing data. We are therefore likely to see continued tapering of the Fed’s asset purchase programme, and, later on, a gradual normalisation of the policy, weighing on gold’s safe haven appeal.

[ZH – improving US economy? Q1 GDP was worst in 5 years, Q2 GDP estimates are tumbling, and 2014 GDP expectations are now the lowest since forecasts began]

…Weak physical markets…
Second, support from the physical market remains weak, as there has been a lack of investment demand from key Asian markets. Gold’s recent rally, in addition to sustained yuan weakness, weighed on gold demand in China, which last year overtook India to become the world’s largest gold consumer. Gold imports from Hong Kong, the main channel for gold into the country, fell in May to the lowest level since January 2013, although some of this decline can be explained by increased volumes going through Shanghai. In addition, increased concerns about the use of gold to back loans, after Chinese authorities reportedly discovered billions of dollars of illegal gold financing transactions, have weighed on gold prices.

[ZH – actually the Chinese commodtity-financing-deals implies gold strength as forward/future hedges are unwound driving prices up and wagging the spot market’s tail higher]

Gold demand in India, the second largest consumer of the yellow metal, has been restrained by the government’s stringent measures introduced last year and aimed at reducing the country’s massive current account deficit by imposing restrictions on gold imports. While it is widely expected that the new government will cut the duty on gold imports at its upcoming annual budget in July, this is unlikely to drive imports significantly higher as the 80:20 rule is expected to remain in place for some time. In the meantime, while the gold industry is waiting for a possible easing of restrictions, demand for gold remains subdued.

[ZH – India just announced it would reduce tariffs and ‘swap’ its gold with the Bank of England – expectations that reduced tariffs would not bring back demand for India gold are baseless and the swap itself will be swallowed by a market desperate to transfer paper to physical. On a side note Gold ETF physical holdings are rising once again]

* …And easing geopolitical tensions
Third, geopolitical tensions have been providing a strong boost for gold prices so far this year. Gold’s safe haven appeal has been driven, among other factors, by continued violence in Iraq and the tense situation in Ukraine. However, once geopolitical tensions start easing, gold is likely to come under pressure.

[ZH – Easing geopolitical tensions?!!! Like Ukraine’s cessation of the cease-fire, like Kuwait’s burning, like Iraq’s turmoil?]

In the near term, it is possible to see gold prices edging even higher, as it will continue to benefit from geopolitical risks. The recent news that Singapore is planning to launch the first exchange-traded physically-backed gold kilobar contract in September has also provided additional boost to gold sentiment. However, without firm support from the physical market and in light of additional signs of economic recovery in the US, we are likely to see gold’s current rally falter sooner than later.

[ZH – so, in summary, SocGen thinks the trends that are supporting gold strength are all false or ending and, no matter what, their prediction of lower gold prices must hold – or else the entire dream of the return of the status quo is over]

*  *  *

Perhaps we should forward this report to SocGen’s Robin Bhar…

In Gold We Trust Report 2014

via Zero Hedge http://ift.tt/1mRTTp2 Tyler Durden

We’re going to need another meme… the great pretense of the great rotation as ‘investors’ dump bonds and buy stocks with both hands and feet as they realize growth has reached escape velocity and its time to BTFATH… has failed. As the following chart from JPMorgan shows, the brief period of net flows to stocks over bonds has ended. If a rally like this can’t get the animal spirits flowing in anyone but the C-Suite of your local share-buyback-ing corporation, when will it?

 

 

Source: JPMorgan

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

Today’s undisputed winner of the prestigous award for best use of the word “unwittingly” in the headline of an article about money-laundering goes to Bloomberg, for their brilliant…

 

Because when you help a foreign bank violate U.S. sanctions as French bank BNP did when it hid billions of dollars in transactions involving Sudan and Cuba and yet you somehow completely slip through the fingers of the US Department of Justice (sic), it can only be “unwittingly.”

Recall that “BNP Paribas, France’s largest bank, agreed June 30 to plead guilty to processing almost $9 billion in banned transactions involving Sudan, Iran and Cuba from 2004 to 2012. The company, which will pay a record $8.97 billion in penalties, will also be temporarily barred from handling some U.S. dollar transactions.” But certainly not all.

But how did JPM end up in the, yes yes unwitting, position of helping the biggest money laundering operation since HSBC decided to fund terrorist organizations around the world?

BNP Paribas turned to JPMorgan on the basis of legal advice from Cleary Gottlieb Steen & Hamilton LLP, said two people who asked not be named because the identities of the bank and the law firm haven’t been disclosed. The Paris-based lender relied on a legal memo that suggested using a U.S. bank might protect it from sanctions penalties, according to the statement of facts filed by prosecutors in New York.

Wait, so the name of JPM in the complaint hasn’t been revealed. Supposedly this is because of JPM’s “unwitting” innocence, as it would be uncouth to soil JPM’s fair name by appearing in a lawsuit whose main role is to punish France for opposing the US and delivering an amphibious assault ship to Russia.

JPMorgan is referred to as “U.S. Bank 1” while Cleary Gottlieb is identified as “U.S. Law Firm 1” in the court filings, the people said. Cleary Gottlieb later said such transactions may be illegal. Neither JPMorgan nor Cleary Gottlieb are accused of wrongdoing.

But wait, what if one actually, gasp, connects the dots as Bloomberg appears to have done:

In 2011, JPMorgan paid $88.3 million to settle an unrelated civil probe into transactions involving Cuba, Iran and Sudan. Investigators at the Treasury Department cited incidents in which JPMorgan managers and supervisors “recklessly failed to exercise a minimal degree of caution or care” in their sanctions obligations. The bank said at the time that none of the alleged violations was intentional.

In other words, the bank wired money to Cuba, Iran and Sudan accidentally. But… it doesn’t read so accidental to us:

BNP Paribas used a network of non-U.S. banks, including at least nine Arab banks, to disguise U.S. dollar transactions, according to court papers. “To the U.S. bank, it appeared that the transaction was coming from the satellite bank rather than a Sudanese bank,” according to the statement of facts filed in court, which BNP Paribas admitted to as part of its settlement.

 

BNP Paribas would transfer funds from a Sudanese bank to an account maintained by one of the satellite banks, according to the filing. The satellite bank would then transfer the money to the beneficiary by submitting the funds through JPMorgan without any mention of Sudan, according to the statement of facts, which identified the bank only as “U.S. Bank 1.”

But… that doesn’t sound unwitting to us. Not unwitting at all. Actually, it gets even worse:

The plan to use JPMorgan was put together by BNP Paribas executives in Paris and Geneva in the fall of 2004 after transactions involving overseas clients caught the attention of U.S. and state regulators, according to the statement of facts. BNP Paribas signed documents with the regulators in September of that year promising to improve its compliance systems.

 

Shortly thereafter, senior BNP Paribas executives met in Geneva to discuss how “embargoes against sensitive countries,” specifically Sudan, Libya and Syria, would affect the bank’s business, according to the statement of facts. They discussed using an unaffiliated U.S. bank to process payments involving countries subject to U.S. sanctions, the document states. Until then such transactions were being handled by BNP Paribas’s New York branch.

 

Following that meeting, BNP Paribas employees in Geneva were instructed to have U.S. dollar payments involving sanctioned entities cleared through “U.S. Bank 1” instead of BNP Paribas’s New York unit. “From 2004 through 2007, the vast majority of BNPP Geneva’s transactions involving Sudanese Sanctioned Entities were cleared through U.S. Bank 1 using a payment method that concealed from U.S. Bank 1 the involvement of Sanctioned Entities in the transactions,” according to the document.

Oh yes, because JPM did 3 years worth of billion dollar transactions without having a clue who was on the other end.  Well, the did one time:

In February 2006, JPMorgan rejected a transaction submitted on behalf of a Cuban credit facility after “back office employees had inadvertently made reference to Cuban entities,” the document states. Two other payments were also blocked by BNP Paribas’s New York branch. BNP Paribas resubmitted all three transactions after eliminating the references to the Cuban entity, according to the document.

And after any reference to Cuba was quietly stripped, all continued as per normal, with JPM wittingly not asking a single question where all this money is coming from, and certainly where it is going.

So in conclusion, it was “BNPP’s handling of these blocked payments was indicative of the bank’s cavalier — and criminal — approach to compliance with U.S. sanctions laws and regulations,” according to the statement of facts.

It definitely was not JPM’s “cavalier – and criminal – approach” for being the bank that enabled BNP’s money laundering in the US in the first place, something which resulted in a whopping $88.3 million fee charged to Jamie Dimon’s Congressional lobbying account. That was clearly unintentional. Because when transacting billions from two offshore accounts and never even pretending to care where the money comes from and goes to, as the US implies by not charging JPM as well, it can only be “unwitting.”

End result, for the same violation:

• JPM paid a settlement of $88.3 million and neither admitted nor denied anything
  
• BNP has so far paid a penalty of $8.97 billion and numerous people have lost their jobs (even if again nobody is going to prison, as they may sing and who knows which president, premier, congressman, minister, managing director or central banker will be named…)

Thus, new normal justice (sic).

via Zero Hedge http://ift.tt/1qW9NUy Tyler Durden

Submitted by Ron Paul via The Ron Paul Institute,

This week Americans will enjoy Independence Day with family cookouts and fireworks. Flags will be displayed in abundance. Sadly, however, what should be a celebration of the courage of those who risked so much to oppose tyranny will instead be turned into a celebration of government, not liberty. The mainstream media and opportunistic politicians have turned Independence Day into the opposite of what was intended.
 
The idea of opposing — by force if necessary — a tyrannical government has been turned into a celebration of tyrannical government itself!

The evidence is all around us.
 
How would the signers of the Declaration of Independence have viewed, for example, the Obama Administration’s “drone memo,” finally released last week, which claims to justify the president’s killing American citizens without charge, judge, jury, or oversight? Is this not a tyranny similar to that which our Founders opposed? And was such power concentrated in one branch of government not what inspired the rebellion against the English king in the first place?
 
The “drone memo,” released after an ACLU freedom of information request, purports to establish the president alone as the arbiter of who is or is not a terrorist subject to execution by the US government. There is no due process involved, just the determination of the president. Thus far the only American citizens killed by the president are Anwar al-Awlaki and his teenaged son, but the precedent has been established, according to the memo, that the president has the authority to kill Americans he believes are terrorists.
 
Even the New York Times, which generally backs whatever US administration is in power, is troubled by the White House’s legal justification to claim the authority to kill Americans. A Times editorial last week concluded that:

…the memo turns out to be a slapdash pastiche of legal theories — some based on obscure interpretations of British and Israeli law — that was clearly tailored to the desired result.

I agree with the New York Times’ conclusion that, “[t]his memo should never have taken so long to be released, and more documents must be made public. The public is still in the dark on too many vital questions.”
 
Coincidentally, in addition to the “drone memo” released last week, a broader study of the US use of drones was also released by the Stimson Center. The study, co-chaired by Gen. John Abizaid, former U.S. Central Command (CENTCOM) commander, concluded that contrary to claims that drones help prevent wider conflicts by targeting specific individuals, the use of drones “may create a slippery slope leading to continual or wider wars.”
 
In fact, the study concluded, the use of drones overseas is likely counterproductive. “Civilian casualties, even if relatively few, can anger whole communities, increase anti-US sentiment and become a potent recruiting tool for terrorist organizations,” the study found.
 
Seven years ago I wrote in an Independence Day column:

Only the safe-guards and limitations that are enshrined in a constitutionally-limited republic can prohibit a nation from lurching toward empire…I hope every person who reads or hears this will take the time to go back and read the Declaration of Independence. Only by recapturing the spirit of independence can we ensure our government never resembles the one from which the American States declared their separation.

On Independence Day we should remember the spirit of rebellion against tyranny that inspired our Founding Fathers to set out our experiment in liberty. We should ourselves celebrate and continue that struggle if we are to keep our republic.

Happy July 4th, Jefferson was 33 years old when he wrote it: http://ift.tt/1m0a4Fo

— GreekFire23 (@GreekFire23) July 4, 2014

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It appears concerns over Erste Bank are reducing investor risk appetites in Europe despite Draghi’s promise to catch every falling knife forever… EuroStoxx Banks closed down over 2% – their biggest drop in 7 weeks. This led to broad weaknes across European stocks (down 0.5% and closing at their lows led by Spain and Italy; and late weakness in Sweden’s OMX). Peripheral bond spreads nudged wider. Perhaps most notably the European financial credit spreads widened modestly but remain dramatically disconnected to financial stocks.

 

European Bank stocks trumbled…

 

and credit markets remain entirely dominated by Draghi carry technicals… for now…

 

And heading into the close, broad European stocks were accelerating lower

 

 

Charts: Bloomberg

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