Month: September 2014

When we first covered the Carmen Segarra lawsuit alleging the capture of the NY Fed by Goldman Sachs back in October 2013, we didn’t have much hope for justice to get done. We said that “while her allegations may be non-definitive, and her wrongful termination suit is ultimately dropped, there is hope this opens up an inquiry into the close relationship between Goldman and the NY Fed. Alas, since the judicial branch is also under the control of the two abovementioned entities, we very much doubt it.”

Sure enough, the lawsuit was dropped (and no inquiry was opened) but not before it became clear that the very judge in charge of the case, U.S. District Judge Ronnie Abrams, was herself conflicted, after it was revealed that her husband, Greg Andres, a partner at Davis Polk & Wardwell, was representing Goldman in an advisory capacity. Curiously, before she assumed her current office in March 2013, back in 2008 Abrams returned to Davis Polk herself as Special Counsel for Pro Bono. She had previously worked at the firm from 1994 to 1998. For the full, and quite amazing, story of how the “Judge” steamrolled Segarra’s objections reads this Reuters piece.

As a result of this fiasco, some wondered just how far do Goldman’s tentacles stretch not only at the money-printing (i.e., NY Fed) level, not only at the legislative level (see “With Cantor Down, Which Other Politicians Has Goldman Invested In?”), but at the judicial as well.

And then, on Friday, the Segarra case against the Federal Reserve branch of Goldman Sachs got a second wind, when as a result of another disclosure, ProPublica revealed “How Goldman Controls The New York Fed in 47.5 Hours Of “The Secret Goldman Sachs Tapes.” That is to say, nothing new was revealed per se, because as anyone who has read this website for the past 6 years knows just how vast Goldman’s network is not only at the Fed, but in that all important other continent too, Europe.

Sadly, just like a year ago, so this time too, we are reluctant to say anything will change. In fact, there is too much at stake, for Goldman to drop the reins and disassociate from the NY Fed: for pete’s sake, the president of the NY Fed is a former Goldman employee – does it get any more conflicted than that?!

But, wait, Goldman will do penance by “prohibiting its bankers from buying stocks“… the horror. Luckily at least purchasing politicians and Fed presidents is still perfectly allowed.

In fact, what has become clear to everyone is that aside from yet another dog and pony show (led by, you guessed, it the head dog and ponier herself, Elizabeth Warren), not only will nothing change, but in fact the best way to take advantage of a broken, corrupt, sinking system, is to join it. And the best summary of just that sentiment was released over the weekend by Nanex’ Eric Hunsader as follows:

After listening to http://t.co/zTZ3vCBy9U I’m putting everything in $GS – because these guys can do whatever the hell they want

— Eric Scott Hunsader (@nanexllc) September 26, 2014

Curious what made up Eric’s mind? Then fast forward to minute 24 to hear what it sounds like when a top Fed official “questions” Goldman Sachs:

 

But before we put this topic to bed, here is Raúl Ilargi Meijer explaining why “The US Has No Banking Regulation, And It Doesn’t Want Any“

* * *

It is, let’s say, exceedingly peculiar to begin with that a government – in this case the American one, but that’s just one example – in name of its people tasks a private institution with regulating not just any sector of its economy, but the richest and most politically powerful sector in the nation. Which also happens to be at least one of the major forces behind its latest, and ongoing, economical crisis.

That there is a very transparent, plain for everyone to see, over-sized revolving door between the regulator and the corporations in the sector only makes the government’s choice for the Fed as regulator even more peculiar. Or, as it turns out, more logical. But it is still preposterous: regulating the financial sector is a mere illusion kept alive through lip service. Put differently: the American government doesn’t regulate the banks. They effectively regulate themselves. Which inevitably means there is no regulation.

The newly found attention for ProPublica writer Jake Bernstein’s series of articles, which date back almost one whole year, about the experiences of former Fed regulator Carmen Segarra, and the audio files she collected while trying to do her job, leaves no question about this.

What’s going on is abundantly clear, because it is so simple. The intention of the New York Fed as an organization is not to properly regulate, but only to generate an appearance – or illusion – of proper regulation. That is to say, Goldman will accept regulation only up to the point where it would cut into either the company’s profits or its political wherewithal.

What the ‘Segarra Files’ point out is that the New York Fed plays the game exactly the way Goldman wants it played. Ergo: there is no actual regulation taking place, and Goldman will comply only with those requests from the New York Fed that it feels like complying with.

In the articles, the term ‘regulatory capture’ pops up, which means – individual – regulators are ‘co-opted’ by the banks they – are supposed to – regulate. But the capture runs much larger and wider. It’s not about individuals, it’s a watertight and foolproof system wide capture.

The government picks a – private – regulator which has close ties to the banks. The government knows this. It also knows this means that its chosen regulator will always defer to the banks. And when individual regulators refuse to comply with the system, they are thrown out.

In one of the cases Segarra was involved in during her stint at the Fed, the Kinder Morgan-El Paso takeover deal, Goldman advises one party, has substantial stock holdings in the other, and appoints a lead counsel who personally has $340,000 in stock involved. Conflict of interest? Goldman says no, and the Fed complies (defers).

The lawsuit Segarra filed against the NY Fed and three of its executives was thrown out on technicalities by a judge whose husband was legal counsel for Goldman in the exact same case. No conflict of interest, the judge herself decides.

This is not regulation, it’s a sick and perverted joke played on the American people, which it has been paying for it through the nose for years, and will for many years to come. Sure, Elizabeth Warren picks it up now and wants hearings on the topic in Congress, but she’s a year late (it’s been known since at least December 2013 that Segarra has audio recordings) and moreover, it was Congress itself that made the NY Fed the regulator of Wall Street. Warren has as much chance of getting anywhere as Segarra did (or does, she’s appealing the case).

The story: In October 2011, Carmen Segarra was hired by New York Fed to be embedded at Goldman as a risk specialist, and in particular to investigate to what degree the company complied with a 2008 Fed Supervision and Regulation Letter, known as SR 08-08, which focuses on the requirement for firms like Goldman, engaged in many different activities, to have company-wide programs to manage business risks, in particular conflict-of-interest. Some people at Goldman admitted it did not have such a company-wide policy as of November 2011. Others, though, said it did.

Let’s take it from there with quotes from the 5 articles Bernstein wrote on the topic over the past year. To listen to the Segarra files, please go to The Secret Recordings of Carmen Segarra at This American Life.

One last thing: Jake Bernstein’s work is of high quality, but I can’t really figure why he says things such as the audio files show: “a New York Fed that is at times reluctant to push hard against Goldman and struggling to define its authority”. Through his work, and the files, it should be clear that just ain’t so. Both the Fed’s policy and authority are crystal clear and ironclad.

via Zero Hedge http://ift.tt/1t9mI43 Tyler Durden

When we first covered the Carmen Segarra lawsuit alleging the capture of the NY Fed by Goldman Sachs back in October 2013, we didn’t have much hope for justice to get done. We said that “while her allegations may be non-definitive, and her wrongful termination suit is ultimately dropped, there is hope this opens up an inquiry into the close relationship between Goldman and the NY Fed. Alas, since the judicial branch is also under the control of the two abovementioned entities, we very much doubt it.”

Sure enough, the lawsuit was dropped (and no inquiry was opened) but not before it became clear that the very judge in charge of the case, U.S. District Judge Ronnie Abrams, was herself conflicted, after it was revealed that her husband, Greg Andres, a partner at Davis Polk & Wardwell, was representing Goldman in an advisory capacity. Curiously, before she assumed her current office in March 2013, back in 2008 Abrams returned to Davis Polk herself as Special Counsel for Pro Bono. She had previously worked at the firm from 1994 to 1998. For the full, and quite amazing, story of how the “Judge” steamrolled Segarra’s objections reads this Reuters piece.

As a result of this fiasco, some wondered just how far do Goldman’s tentacles stretch not only at the money-printing (i.e., NY Fed) level, not only at the legislative level (see “With Cantor Down, Which Other Politicians Has Goldman Invested In?”), but at the judicial as well.

And then, on Friday, the Segarra case against the Federal Reserve branch of Goldman Sachs got a second wind, when as a result of another disclosure, ProPublica revealed “How Goldman Controls The New York Fed in 47.5 Hours Of “The Secret Goldman Sachs Tapes.” That is to say, nothing new was revealed per se, because as anyone who has read this website for the past 6 years knows just how vast Goldman’s network is not only at the Fed, but in that all important other continent too, Europe.

Sadly, just like a year ago, so this time too, we are reluctant to say anything will change. In fact, there is too much at stake, for Goldman to drop the reins and disassociate from the NY Fed: for pete’s sake, the president of the NY Fed is a former Goldman employee – does it get any more conflicted than that?!

But, wait, Goldman will do penance by “prohibiting its bankers from buying stocks“… the horror. Luckily at least purchasing politicians and Fed presidents is still perfectly allowed.

In fact, what has become clear to everyone is that aside from yet another dog and pony show (led by, you guessed, it the head dog and ponier herself, Elizabeth Warren), not only will nothing change, but in fact the best way to take advantage of a broken, corrupt, sinking system, is to join it. And the best summary of just that sentiment was released over the weekend by Nanex’ Eric Hunsader as follows:

After listening to http://t.co/zTZ3vCBy9U I’m putting everything in $GS – because these guys can do whatever the hell they want

— Eric Scott Hunsader (@nanexllc) September 26, 2014

Curious what made up Eric’s mind? Then fast forward to minute 24 to hear what it sounds like when a top Fed official “questions” Goldman Sachs:

 

But before we put this topic to bed, here is Raúl Ilargi Meijer explaining why “The US Has No Banking Regulation, And It Doesn’t Want Any“

* * *

It is, let’s say, exceedingly peculiar to begin with that a government – in this case the American one, but that’s just one example – in name of its people tasks a private institution with regulating not just any sector of its economy, but the richest and most politically powerful sector in the nation. Which also happens to be at least one of the major forces behind its latest, and ongoing, economical crisis.

That there is a very transparent, plain for everyone to see, over-sized revolving door between the regulator and the corporations in the sector only makes the government’s choice for the Fed as regulator even more peculiar. Or, as it turns out, more logical. But it is still preposterous: regulating the financial sector is a mere illusion kept alive through lip service. Put differently: the American government doesn’t regulate the banks. They effectively regulate themselves. Which inevitably means there is no regulation.

The newly found attention for ProPublica writer Jake Bernstein’s series of articles, which date back almost one whole year, about the experiences of former Fed regulator Carmen Segarra, and the audio files she collected while trying to do her job, leaves no question about this.

What’s going on is abundantly clear, because it is so simple. The intention of the New York Fed as an organization is not to properly regulate, but only to generate an appearance – or illusion – of proper regulation. That is to say, Goldman will accept regulation only up to the point where it would cut into either the company’s profits or its political wherewithal.

What the ‘Segarra Files’ point out is that the New York Fed plays the game exactly the way Goldman wants it played. Ergo: there is no actual regulation taking place, and Goldman will comply only with those requests from the New York Fed that it feels like complying with.

In the articles, the term ‘regulatory capture’ pops up, which means – individual – regulators are ‘co-opted’ by the banks they – are supposed to – regulate. But the capture runs much larger and wider. It’s not about individuals, it’s a watertight and foolproof system wide capture.

The government picks a – private – regulator which has close ties to the banks. The government knows this. It also knows this means that its chosen regulator will always defer to the banks. And when individual regulators refuse to comply with the system, they are thrown out.

In one of the cases Segarra was involved in during her stint at the Fed, the Kinder Morgan-El Paso takeover deal, Goldman advises one party, has substantial stock holdings in the other, and appoints a lead counsel who personally has $340,000 in stock involved. Conflict of interest? Goldman says no, and the Fed complies (defers).

The lawsuit Segarra filed against the NY Fed and three of its executives was thrown out on technicalities by a judge whose husband was legal counsel for Goldman in the exact same case. No conflict of interest, the judge herself decides.

This is not regulation, it’s a sick and perverted joke played on the American people, which it has been paying for it through the nose for years, and will for many years to come. Sure, Elizabeth Warren picks it up now and wants hearings on the topic in Congress, but she’s a year late (it’s been known since at least December 2013 that Segarra has audio recordings) and moreover, it was Congress itself that made the NY Fed the regulator of Wall Street. Warren has as much chance of getting anywhere as Segarra did (or does, she’s appealing the case).

The story: In October 2011, Carmen Segarra was hired by New York Fed to be embedded at Goldman as a risk specialist, and in particular t
o investigate to what degree the company complied with a 2008 Fed Supervision and Regulation Letter, known as SR 08-08, which focuses on the requirement for firms like Goldman, engaged in many different activities, to have company-wide programs to manage business risks, in particular conflict-of-interest. Some people at Goldman admitted it did not have such a company-wide policy as of November 2011. Others, though, said it did.

Let’s take it from there with quotes from the 5 articles Bernstein wrote on the topic over the past year. To listen to the Segarra files, please go to The Secret Recordings of Carmen Segarra at This American Life.

One last thing: Jake Bernstein’s work is of high quality, but I can’t really figure why he says things such as the audio files show: “a New York Fed that is at times reluctant to push hard against Goldman and struggling to define its authority”. Through his work, and the files, it should be clear that just ain’t so. Both the Fed’s policy and authority are crystal clear and ironclad.

via Zero Hedge http://ift.tt/1t9mI43 Tyler Durden

When one of the most watched German channels – south German state TV channel ZDF – releases an 8+ minute satirical spoof of all the fabricated “news” surrounding the Ukraine “ïnvasion” by Russia and all the associated newsflow from the region (in which “any similarity to the current news is unintended and accidental, but absolutely inevitable“), you know that the time has come to double down on the propaganda effort because if ground zero of media indoctrination, Germany, is starting to see through the fog of endless media BS, then how long until the rest of the world follows?

Make sure to activate the English subtitles when watching the following clip.

via Zero Hedge http://ift.tt/10axctd Tyler Durden

When one of the most watched German channels – south German state TV channel ZDF – releases an 8+ minute satirical spoof of all the fabricated “news” surrounding the Ukraine “ïnvasion” by Russia and all the associated newsflow from the region (in which “any similarity to the current news is unintended and accidental, but absolutely inevitable“), you know that the time has come to double down on the propaganda effort because if ground zero of media indoctrination, Germany, is starting to see through the fog of endless media BS, then how long until the rest of the world follows?

Make sure to activate the English subtitles when watching the following clip.

via Zero Hedge http://ift.tt/10axctd Tyler Durden

There is a saying that you don’t ring bells at the top.

 

It’s not really true. Every time the market forms a major peak, at least in the last 15 years, there are usually a preponderance of signs of excessive speculation and leverage.

 

Today we are seeing bells ringing throughout the markets.

 

For instance, today, we have:

 

1)   Corporate debt is at 2007 peak levels.

2)   Investor bullishness is at extremes not seen since the 2007 top.

3)   Margin debt (money borrowed to buy stocks) is closing in on its record high.

4)   Over 70% of household net worth is based in financial assets. As ZH has noted previously, every time this has happened historically, asset prices have crashed soon after.

5)   The Bank of International Settlements and the IMF have both warned of excessive risk taking and market fragility.

6)   Market volume is at an absolute trickle, with most volume coming from HFT firms.

 

Aside from this, we have countless examples of the “smart money” preparing:

 

1)   Billionaires are sitting on record amounts of cash.

2)   Warren Buffett is sitting on over $50 billion in cash.

3)   George Soros has taken out a record put position to profit from a market collapse.

4)   Carl Icahn has warned of a “big drop” coming in stocks.

5)   Jeremy Grantham has commented that we are in a “fully-fledged equity bubble.”

6)   Corporate insiders are selling stock at a pace not seen since 2000.

7)   Financial institutions as well as hedge funds have been net sellers of stocks since 2014 began.

 

There are literally bells everywhere today. Does this mean that the market will take a nosedive this week? Not necessarily. Tops can take much longer to form that anyone expects.

 

However, there are clear signs of excessive speculation, leverage, and the like. And the smart money is heading for the exits.

 

Are you?

 

This concludes this article. If you’re looking for the means of protecting yourself from what’s coming, you can pick up a FREE investment report titled Protect Your Portfolio at http://ift.tt/170oFLH.

 

This report outlines a number of strategies you can implement to prepare yourself and your loved ones from the coming market carnage.

 

Best Regards

 

Phoenix Capital Research

 

 

 

 

via Zero Hedge http://ift.tt/1ntXt08 Phoenix Capital Research

Submitted by Mark St. Cyr

The Shot Heard Round The Valley World

The greatest issue facing Silicon Valley is the one thing many newly minted and aspiring entrepreneurs have taken for granted: the money.

Many believe this gravy train of a never-ending Venture Capital/Angel Investor class will not only always be there, but the ranks will swell becoming even larger with burgeoning pocketbooks filled with their own newly minted IPO greenbacks.

Problem is for a great many, they have never seen the real Jeckyll and Hyde personality of “investor funding.”

Initial Public Offerings (IPO) has been the rallying cry for many over the last 5 years to the detriment of what it really means to be an entrepreneur. (i.e., creating something that becomes bigger than one’s self)

The term has now morphed into something akin to: I’m going to push this idea, get it funded, IPO it, and cash out! Rinse – repeat. For I’m a “Trep!” (For those not familiar with the term, it’s the newest self-appointed moniker for the person who seems to be following this pattern of entrepreneurship.)

For what it’s worth, this style of thinking about entrepreneurship from my perspective is very worrisome. The reason? It’s only about the “Benjamins.”

Is there anything wrong with that? Absolutely not. However: If your purpose was to bring a real company, (what ever the field,) run and grow it to its full potential you’ll find too your detriment – money alone will not do it. Regardless of how much.

And, if your sole focus for your existence hasn’t been on sales, customers, and net profit. Or, you’ve been lackadaisical in any other manner because the dominating thought in your mind is – “I just need to get another round, then I can IPO and be through with this?” Your time is probably up.

Come this October the Federal Reserve will make its final tranche of QE available. The amount assumed by many is that it will be 50% larger than what we’ve seen over these last years. ($15 Billion as opposed to $10)

One may see an increased flurry of buying into anything and everything that has even the slightest possibility of making a profit. Or, what Wall Street cares about even more; a growth story that can be perpetuated via financial engineering that sticks during earnings seasons.

But, one shouldn’t read into this as “confirmation” the risk appetite story is not only alive but growing. For that is all about to change.

Once the Fed shuts down the section of QE that has been pumping Billions upon Billions of dollars every month – it’s over for a great many of today’s Wall Street darlings.

Think of it this way: Who is going to fund your next round when they no longer have access to the Fed.’s piggy bank? Let alone pump more money into older start-ups that just haven’t produced any real money (as in net profit,) but have produced nothing more than great new employee digs or benefits?

Tack along side this the culture shock in what will seem near instantaneous with the shunning that will take place of any business resembling the, 3 employee, menial customer base, Zero if not negative profit margin businesses formed with the implicit intent as to be bought up or “acquired” for Billion dollar pay days.

These will be the first to go. That formulation is going way of the now infamous Pets dot-com sock puppet. This will be the first true shock to Silicon Valley culture that hasn’t been seen in many years. And it will be far from the only one.

Many will point directly at the darling of both Silicon Valley as well as the touchstone of riches for aspiring entrepreneurs; Facebook™ (FB) as proof this line of thinking is off base. And why shouldn’t they? The price has never been higher.

Yet, what many shield their eyes from and a great deal more turn their heads from entirely is what I and very few others have been arguing: “It’s all been possible via the Federal Reserve’s interventionist policies.” And the greatest source of that inflow of cash made available via “investors” is about to be shut down.

Let me go on the record here and point out what I believe will prove my point in the coming weeks and months.

Currently Zuck and crew have been lauded over with the prowess in its acquisition choices. You will know everything has changed when the calls to rescind Mark Zuckerberg’s authority in having carte blanche via not needing board approval for acquisitions going forward is demanded by Wall Street.

And that won’t be the only monumental shift coming. Maybe, one at an even faster pace: The meaning of IPO.

IPO is not going to have the same term of endearment it now has. I believe it will turn into the last and most dreaded three-letter acronym no one ever imagined in Silicon Valley.

The IPO screams of joy will turn into wails of terror when those VC “angels” meet at many “treps” desk and state – they’re IPO-ing.

No, not getting one set up for the big pay-day. No IPO will mean: “I’m pulling out.” i.e., “Have a nice day. Where’s the rest of my money?”

The once renowned purchases of “Billion dollar babies” will prove out not to be worth two cents in this environment.

Valuations will get crushed and people will be shocked at just how fast a company touted across the financial channels and other media as “fantastic buys” are flogged and fleeced when Wall Street comes back for their “investment.”

If the story or the numbers aren’t there – neither will these once darlings of Wall Street. Regardless of size or stature.

People will continue pointing at FB and others as proof that this whole idea of what I’m professing is off base. Again, they’ll point to the stock prices and say, “Look! During the recent sell off some they went higher! This proves, blah, blah, blah.”

What it proves is this in my opinion: It’s a last gasp effort to have exposure in these companies during this newest round of earnings season. i.e., As to have the possibility (more inline with hope) of any earnings windfall, whether it be real, or financially engineered. Because: There isn’t going to be another shot after this one. The money to take these stylized chances will no longer be there. Period.

I watched and read many viewpoints on what has now been circulated throughout Silicon Valley as the “tweet storm” unleashed by well-known Silicon Valley sage Marc Andreessen where he ended his views with the word “WORRY.” I believe he is spot on.

Many in the so-called “know” of any and all related to Silicon Valley pontificate that his alarm bells are a little “over the top.” Some have stated in rather condescending tones that “It’s not like the current crop of Silicon Valley has never had issues with funding. I mean, it was hard in 2009.”

Oh yes, it was – for about a week!

I would remind everyone to remember what took place in 2009? The birth of QE. Then it was off to the races. Or should I say “coding?” And as of today there has been no need to look back. Until now.

This next bout of what I believe to take place will not be limited to just the small-sized, or start-up class. It will be just as abrupt of a sea change for the current crop of Wall Street darlings that have produced what many have seen as “skeptical” results. e.g., FB, Twitter™, Pandora™, LinkedIn™, et al.

They are going to face harsh skepticism this earnings release period. Far more, and certainly more harsh or critical than any previous in my opinion.

The reasoning is: With no more “free money” pouring in from the Fed. for “investors” to slap around anywhere and everywhere in the hopes of something sticking. They’re going to do what anyone would do. Buy Nothing – Sell Anything and everything that isn’t making real money. For th
ey are well aware their bankers or margin clerks – don’t accept “likes” as legal tender for deposits in their accounts either.

One last thing: If you think all this “worry” stuff is just nonsense. Let me leave you with this one line…

Yahoo™ just announced it’s interested in AOL™.

Feel better now?

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

By Charles McFarlane of Modern Farmer

Why Is The USDA Buying Submachine Guns?

“Submachine guns, .40 Cal. S&W, ambidextrous safety, semi-automatic or 2 shot bur[s]t trigger group, Tritium night sights for front and rear, rails for attachment of flashlight (front under fore grip) and scope (top rear), stock-collapsib[l]e or folding, magazine – 30 rd. capacity.”

In May, the USDA’s Office of Inspector General filed a request for these weapons. But why exactly do they need them?

According to a USDA press rep, the guns are necessary for self-protection.

“OIG Special Agents regularly conduct undercover operations and surveillance. The types of investigations conducted by OIG Special Agents include criminal activities such as fraud in farm programs; significant thefts of Government property or funds; bribery and extortion; smuggling; and assaults and threats of violence against USDA employees engaged in their official duties,” wrote a USDA spokesperson.

Those seem like legitimate enforcement activities, but still: submachine guns? Not everyone believes the USDA being armed to the teeth is justifiable. On Aug. 2, the Farm to Consumer Legal Defense Fund launched a petition to support a bill that would curb the ability of agencies like the USDA to arm themselves. They see it as overkill and scare tactics, especially for smaller producers.

“What we have seen happen, with the FDA especially, is they have come onto small farms, raw milk producers, and raided the heck out of them with armed agents present,” says Liz Reitzig, co-founder of the Farm Food Freedom Coalition. “Do we really want to have our federal regulatory agencies bring submachine guns onto these family farms with children?”

The Farm to Consumer Legal Defense Fund petition focuses on two now infamous blows to the raw milk community – the 2010 and 2011 raids on Rawsome Food Club in Venice, California. These raids were carried out by armed federal agents, from the FDA and other agencies.

The OIG’s Investigation Development bulletins show there have been three incidents in the last year that involved firearms and two in which USDA agents were verbally threatened. Still, most of their enforcement operations surround white-collar fraud of government programs, often involving SNAP programs. “If there is fraud in the SNAP program, look at how it is implemented and make changes in the entire program,” says Reitzig. “Don’t bring machine guns onto farms.”

The Farm to Consumer Legal Defense Fund are not the only ones interested in taking guns out of the hands of USDA agents. Utah Congressman Chris Stewart is the sponsor of the bill on the FTCLDF petition. “At its heart it comes down to this: To myself, and for a lot of Americans, there is great concern over regulator agencies with heavy handed capabilities,” Rep. Stewart told Modern Farmer.

His bill, H.R. 4934, hopes “to prohibit certain federal agencies from using or purchasing certain firearms, and for other purposes.” When asked about the USDA’s plan for submachine guns, he said, “I can’t envision a scenario where what they are doing would require that.”

Another concern is simply accountability. The request for submachine guns from the USDA doesn’t say how many guns — asking them seems like a non-starter. “They have been very unhelpful in trying to find out any information about this,” said Rep. Stewart. “We couldn’t get answers — it doesn’t seem right to me.”

However, he also cautioned: “We have never argued that federal regulators don’t need to protect themselves.” But if USDA investigations were perceived to be potentially violent he suggested, “They should do what the rest of us do, call the local sheriff.”

via Zero Hedge http://ift.tt/YxrZdL Tyler Durden

The key event in the week ahead is the ECB meeting.  The ECB surprised many in early September by cutting
key interest rates.  We had anticipated it because although Draghi had
indicated their rate policy had been exhausted, he acknowledged there some
still scope for technical adjustments.  We
had thought it bolstered the chances of a successful TLTRO, as with a five bp
repo rate there could be little hope in lower rates later.  

 

Although many think that there can be no further interest
rate cuts, Draghi did point to the possibility of some adjustment in the rate
corridor. For example, it
is conceivable that the ECB could cut the lending rate, which is the top of the
corridor.   Still, it is unreasonable to expect a change in the rate
corridor this week.  Instead, the focus is on the “modalities”
or terms of the asset-backed purchase facility that Draghi in early September.
 

 

After the low takedown at the initial TLTRO, market
participants are anxious for details about the ABS and covered bond purchase
plans.  The idea being that the low TLTRO
borrowing points to a more aggressive asset purchase program.  The key is boosting the ECB’s balance sheet,
as Draghi indicated, back to levels in mid-2012, which is about one trillion
euros from current levels.  

 

The problem is the that the ABS market is relatively small.  The outstanding ABS at the end of
the 2013 was roughly one trillion euros.  Of this amount, only about half
is estimated to be in the market. The other half is being used for collateral
for funding at the ECB.   This is an important point about the potential
for the ABS purchase program, but also about the ECB’s experience in assessing
the risk and pricing such securities.  

 

There are four components to the ABS universe that is
relevant here.  The single biggest part by far in
the assets back by real estate mortgages.  That is roughly 60% of the ABS
market in Europe. The size of the remaining components shrink dramatically.
 Traditional ABS, backed by car loans, leases and that sort of activity,
is about 15% of the outstanding market.   Another 10% of the market are
ABS backed by loans to small businesses.  ABS backed by loans in the form
of collateralized debt obligations account for roughly the same amount.  

 

Of the existing stock of ABS securities, Netherlands
accounts for a little more than a quarter.  Italy and Spain together account for
about a third, which is evenly divided between the two.  It falls considerably
after these three.  Belgium accounts for about 8% and Germany 6%.
 Ireland is just shy of 4%, and France’s share is a tad lower, just below
3.5%.

 

There are three elements that investors want to know from
Draghi:  the size, components, and duration of the ECB’s purchase plan,
which will be conducted by an asset management firm. Reuters reported recently that the initial
plan for the ABS (and covered bond) purchase program anticipated up 500 bln
euros.  This suggests that the TLTROs
were anticipated to expand the balance sheet by another 500 bln euros).  
The risk is that the ECB does not announce the size of its program. This
preserves the most about of flexibility by not doing so.   

 

By telling the market the components of its ABS purchases,
investors can quick estimate the maximum the ECB could purchase of the existing
stock, and make judgments accordingly.   There are several other moving
parts here.  For example, it is not yet clear what Draghi meant by
“simple and transparent” ABS that the ECB would purchase.  The
ECB could also lower the rating of ABS that is is willing to accept.  This
would boost the securities available, of course, and assist the peripheral
banks more.  

 

Under QE3+, the Federal Reserve told the amount it would
buy of long-term securities, but left the duration of the program open-ended.  The ECB could turn this formulation
on its head.  It could indicate that it would make monthly ABS purchases
for the next two years.  This would encourage banks to
“manufacture” the securities the ECB will purchase, the same way they
are manufacturing the collateral the ECB was willing to accept.  

 

If the ECB limits itself to new securities only, the impact
will likely be small.  There was an estimated 240 bln euros
in ABS issued in 2013 and about 150 bln euros in H1 2014.  Much of this
may already sit with the ECB in the form of collateral.  Buying old
issuance may not offer a power incentive to increase current and future
lending, though it does help banks de-leverage.  

 

If the ECB wants a large program, it needs to provide banks
incentives to create more.  This implies a slow start.  If
the ECB wants to start quickly, it may find that its program will be small. It
may adopt other technical polici
es that will help augment the purchase program,
including collateral and credit rules.   

 

While the ECB meeting dominates
the agenda, it is, of course, not the only event of the week.  A second highlight is the US jobs
data. The market expects a large bounce back after the surprisingly weak August
non-farm payroll increase of 142k.  We
expect that the US economy loses some momentum seen in the middle two quarter
of he year.  Q2 GDP was revised to 4.6%
last week and Q3 appears to be tracking something a bit north of 3%.   Expectations will be fine tuned after this
week’s personal expenditure, construction spending, and trade balance reports. 

 

We suspect Q3 is ending on a
soft note and that payback will be seen in Q4. 
It is difficult to
envision US auto sales building on the strong 17.45 mln pace.  That said, GM, Ford and Chrysler likely
picked up market share. 

 

Weekly initial jobless claims
bottomed in mid-July, and although they have not deteriorated, the improvement
has stalled. Republicans
appear to have a strong chance to capture the Senate from the Democrats in November.
  This may freeze some private sector decision making
in anticipation of better legislative climate, including corporate tax
reform. 

 

The market may get the 215k
increase in non-farm payrolls the Bloomberg consensus shows.  However,
it may not be in quite the form it would like. 
Given historical patterns the August series is likely to be revised
higher. 

 

We do not expect this week’s
data in the US, Europe or Japan to influence the outlook for policy.  It
would be only mildly encouraging to see, for example, a tick up in the euro area
flash September CPI.  It is too early to
see expect the impact from the euro’s decline. 
The euro area PMIs will be interesting only for mapping relative
movement of the core and periphery. 

 

The UK’s three PMIs are unlikely
to alter the view of a BOE rate hike in Q1 15. 
The readings may be consistent with a moderation of activity, but they
are expected remain at elevated levels. 

 

Japan’s Tankan survey is
expected to show that corporate Japan is a bit less optimistic on balance.  The
sales tax increase is have a greater and longer impact than the government had
expected, and recently the government has downgraded its assessment.  It is little wonder that businesses do also
downgrade their assessment.  We suggest
the focus of the policy response will be on a supplemental budget rather than
the expanding the BOJ’s asset purchase program. 
We anticipate the the yen’s recent sharp decline will boost inflation in
the coming period. 

 

 

 

via Zero Hedge http://ift.tt/YxfOgR Marc To Market