[Infographic] The number of Americans renouncing just keeps going up

Today the IRS published the latest figures on renunciation, showing that yet another 1,158 Americans have renounced their citizenship in the first quarter of 2016.

While this may not be setting a record for a single quarter, the trend is quite clear.

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It finally happened: 500 euro notes will no longer be produced

Well, it finally happened.

After months of innuendo, the European Central Bank (ECB) announced last night once and for all that they will no longer produce the 500 euro note.

The 500 euro note is the highest denomination of physical currency in the euro zone, and they’ve been talking about phasing it out for quite some time.

(The next highest is the 200 euro note, then 100. These will still be produced… for now.)

Of course, according to their reasoning, only bad people who engage in criminal activity, tax evasion, and terror financing use 500 euro notes.

All of us law-abiding little people have no need for such high denomination cash.

That’s a very convenient view for the ECB to take given that they’ve led the crusade to make interest rates negative.

Right now the ECB’s negative interest rates predominantly apply to the wholesale banking system.

In other words, commercial banks are charged interest on the reserves they hold with the ECB.

This is an absolutely insane practice.

As a depositor, you WANT your bank to hold plenty of reserves with the central bank instead of gambling away your deposits on risky loans and investments.

But now if any bank in the Eurozone does choose to act conservatively, they have to pay penalty interest to the ECB.

Many banks in Europe are starting to pass on these negative interest rates to their customers, and it’s beginning to cause a breakdown in the financial system.

Think about it– who would willingly PAY for the privilege of depositing their funds in an extremely illiquid and potentially insolvent bank?

Rational people are already sensing the absurdity of this conundrum, and the solution is simple: hold physical cash.

We’ve talked about this before– there are entire banks and insurance funds that are choosing to hold portions of their reserves in physical cash.

And with 500 euro notes, they can store a LOT of savings in a compact space.

Even in a small safety deposit box, you could hold over 1.8 million euros worth of 500 euro notes. This is more than enough for most people.

But the ECB doesn’t want this.

The corrupt ruse of our modern banking system depends entirely on the public continuing to use it.

There simply isn’t enough physical cash in the banking system to support withdrawals of more than a few percent of total deposits.

So if more than a small percentage of depositors wanted cash, the banking system would be in trouble.

More importantly, the vast majority of bank deposits are held in various bond and loan portfolios.

So in the event of a significant uptick in cash withdrawals, banks would have to start dumping assets in order to free up the necessary funds for their customers.

And if multiple banks had to simultaneously dump assets to raise cash, that would cause a steep decline in the market prices of those assets.

Banks would suffer huge losses as a result. Many would go under.

Needless to say the financial establishment has every incentive to ensure this doesn’t happen.

Their solution? Start phasing the large denominations of cash that pose a threat to their system.

And the ECB started formalizing this with last night’s announcement.

To be clear, 500 euro notes are not ‘banned’. The ECB tells us that current 500 euro notes in circulation will still be honored as legal tender.

Again… that’s for now.

The next step for them would be to quietly take these bills out of circulation until one day there’s simply no more of them available.

Then they can rinse and repeat with the 200 and 100 euro notes.

All of this is tantamount to capital controls– a way for central banks to trap your savings inside a worthless financial system.

As we’ve talked about before, holding physical cash is a great tool in a Plan B to reduce your exposure to problems in the banking system.

If you hold cash and there’s another 2008-style panic, you’re going to be OK.

This is a smart solution no matter WHERE you are in the world– Europe, the US, etc.

Even here in Chile where the banks are well capitalized, I routinely stop by the ATM machine on my way to the office in the morning to withdraw physical cash.

But as I’ve written in the past, cash alone is no panacea. And this move by the ECB shows that cash does have limitations.

Real assets, and in particular gold and silver, are also important elements of a Plan B.

Don’t think about gold as an investment. Think about it as a form of money– one that doesn’t depend on a central bank, or even a solvent banking system to have value.

In many respects it’s an insurance policy. And with the risks this obvious and writing very clearly on the wall, it makes sense to have some for yourself.

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Why Are the Feds Using the Civil Rights Act to Stop N.C.’s Transgender Bathroom Law?

restroom signThe Department of Justice is attempting to intervene in North Carolina over the state’s passage of a law that (among other things) requires transgender people to use restrooms in government buildings and schools that matches the sex listed on their birth certificates.

DOJ Principal Deputy Assistant Attorney General Vanita Gupta has sent North Carolina Gov. Pat McCrory a letter warning him that the recently passed HB2 violates Title VII of the Civil Rights Act of 1964, saying the state is “engaging in a pattern of practice of discrimination against transgender state employees.”

It may seem a bit odd to try to claim North Carolina is violating the Civil Rights Act here. There is nothing in Title VII that directly offers protection on the basis of gender identity. Indeed, part of the push for the Equality Act is to add gender identity and sexual orientation to existing federal civil rights laws.

But there have been some court precedents that the Justice Dept. is attempting to bring into play here. The foundation is a Supreme Court decision from 1989, Price Waterhouse v. Hopkins. In that case, the Supreme Court ruled, 5-3, that “gender stereotyping” in the workplace could be considered as grounds for a sex discrimination complaint (it also reduced the threshold of evidence necessary to prove discrimination). The case involved a woman who claimed she was denied promotions because she didn’t behave femininely enough.

This, again, doesn’t seem like it would necessarily have anything to do with transgender accommodations, but subsequent to this decision there have been a handful of federal level cases that have built on the idea that discrimination against transgender people is fundamentally discrimination on the basis of whether somebody complies with gender stereotypes. Julian Sanchez wrote about a couple of these cases at Reason back in 2005, and they’re referenced in Gupta’s letter to McCrory.

Agencies like the Department of Justice and the U.S. Equal Employment Opportunity Commission (EEOC) have decided to push for this interpretation as the law. Note that thus far, the cases the Dept. of Justice refers to are all cases where government agencies are the ones accused of discrimination, everybody from the Library of Congress to the City of Cincinnati, to the Department of Justice itself under former Attorney General Eric Holder.

The Justice Dept. is attempting to force North Carolina to stand down by threatening federal funding, and giving the state until Monday to declare it won’t implement the law (which strikes me as opening up a completely different can of legal worms) or face a lawsuit.

At the moment it doesn’t appear that McCrory is going to fold, but pressure during an election year (he’s being challenged by the state’s Democratic attorney general, who is refusing to defend the law) can cause all sorts of things to happen.

It seems likely that, should the Justice Dept. and the EEOC keeping pushing the law the way they have been, this is going to have to end up before the Supreme Court. While it seems obvious that it was never the intent of the Civil Rights Act of 1964 when it was passed to protect transgender people, the differing opinions are begging for a high court interpretation.

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Surprise! Baltic Dry Index Plunges Most Since November As Commodity Bubble Bursts

Who could have seen this coming? Remember a week ago when TV entertainers crowed about the surge in The Baltic Dry Freight Index was a "clear signal" that 'China is back' baby and that escape velocity growth was just around the corner as global growth was destined to pick up…

 

Well, just as we warned very explicitly, the ramp in the index merely reflected the frenzied speculation in industrial metals by the Chinese and as authorities have cracked down on that idiocy, so the Baltic Dry has plunged by the most since November… as real demand punches back.

 

 

This was never going to end well.

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Russian Orchestra Performs In Syria’s Palmyra Ruins, Recently Held By ISIS – Live Webcast

In an surprising development for war-torn Syria, Russia’s famous Mariinsky Theatre Orchestra, is giving a concert on Thursday on the stage of Palmyra’s world-famous amphitheater, which until recently was under ISIS control and parts of which had been destroyed.

The orchestra, conducted by world-famous conductor Valery Gergiev, is holding a “Pray for Palmyra. Music Revives Ancient Ruins” concert on the stage of Palmyra’s historic amphitheater. Russian President Vladimir Putin said on Thursday during a videoconference with Syria’s city of Palmyra, liberated from Daesh terrorists, that the concert of Russia’s Mariinsky Theatre Symphony Orchestra in the historic city is a gratitude to everyone fighting against terrorism.

As reported previously, the Syrian armed forces, backed by militias and Russian forces, recaptured Palmyra from ISIS on March 27, nearly a year after terrorists  had taken hold of the city and destroyed much of the UNESCO World Heritage Site’s artifacts. According to preliminary estimates, some 20 percent of ancient Palmyra was destroyed, while many exhibits were looted from museums. It could take around five years to restore the city.

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Has The Long Yen Trade Run Its Course?

Submitted by Bryce Coward via Gavekal Capital blog,

Despite an unprecedented amount of monetary easing taking place at the Bank of Japan, the yen has – since the middle of 2015 – been on a consistently strengthening trend versus the USD. As paradoxical as it may seem in a period when the Fed talked about, and then did raise interest rates coincident to the BOJ firing off ever more arrows, the strengthening yen has been the reality. That reality may be about to take a breather, though, as too many investors have moved to the same side of the boat in betting on yen appreciation while the “smart money” is net short the yen.

In the chart below we show the net commercial trader positioning on yen options and futures contracts. Commercial traders are the “smart money” in that times of their extreme positioning often coincide with inflection points in the markets. They are the opposite of small speculators, who often have extreme positioning at inflection points as well, except that it’s the wrong positioning.

Pic1

 

At the moment, the “smart money” commercial traders are carrying a near record net short position on yen options and futures of about 68,000 contracts. Previous periods of positioning near this extreme level have usually coincided with with a pause in appreciation or a selloff of the yen.

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Paramount Objects to Klingon Language Amicus Brief by Language Creation Society

Paramount Pictures, which is embroiled in an expansive copyright lawsuit against Axanar Productions over the latter’s Star Trek fan film, has filed an objection to the Language Creation Society (LCS) filing an amicus brief regarding the copyrightability of the Klingon language.

Paramount argues (PDF) the LCS’s brief came too late in the process, was too long, and “attempts to have the Court resolve factual issues on a motion to dismiss based on inadmissible hearsay.” Hearsay, in this case, refers to the context provided by the LCS for how Klingon has become a “living language.”

“It is undisputed that Klingons are copyrightable characters, and have been depicted in the Star Trek Copyrighted Works in a distinct and recognizable manner,” Paramount argues in its formal opposition to the brief. Paramount insists that the fictional Klingon language “is part of the depiction” of copyrighted Klingon characters and that it’s “the use of the Klingon language in this context that will be before the Court… not the copyrightability of languages in general.”

Irrespective of that, Paramount adds, the issue of whether Klingon is copyrightable “is certainly not before the Court on the present motion to dismiss.”

In their response (PDF), the LCS’s attorneys, led by Marc Randazza, a First Amendment lawyer and friend of Reason who is representing the LCS pro bono, point out that the standard for the admissibility of an amicus is “simply whether it will assist the Court.”

“The evidence and arguments provided by Amicus Language Creation Society’s brief will assist the Court in determining the question of whether the Klingon language is entitled to copyright protection,” LCS’s reply argues. “It is not premature for the Court to make this determination at the motion to dismiss stage because this is a legal question; if a spoken language is not entitled to copyright protection as a matter of law, then Plaintiffs’ claims are properly dismissed insofar as they are based on Defendants’ use of the Klingon language.”

The LCS’s attorneys also dispute Paramount’s assertion that they are seeking an advisory opinion.

“Plaintiffs steadfastly assert that they ‘own’ the Klingon language,and there is no need for a fact-intensive ‘substantial similarity’ analysis, as Plaintiffs insist, to determine whether Klingon can belong to anyone,” the reply argues. “This issue is properly before the Court, and the Court may properly determine at this stage whether Klingon is copyrightable.”

The LCS also points out that between all of Paramount and Axanar’s motions, less than two pages focus on the issue of the copyright claim on the Klingon language. It argues that this makes the brief relevant to an issue before the court, and that even if the brief isn’t used now, it should be held “for use during later stages in the proceeding,” since the issue of Klingon’s copyrightability “will need to be dealt with (unless Plaintiff drops their claim to won Klingon) at some point in this case.”

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“Don’t Forget, I’m The King Of Debt, I Love Debt” – Trump Chimes In On Puerto Rico

In an interview with Wolf Blitzer, Donald Trump said that although he is the “king of debt”, and that he “loves debt”, he wouldn’t bail out Puerto Rico.

Responding to whether or not Trump would bail out Puerto Rico as president of the United States…

No I don’t believe they should, and I think frankly Puerto Rico is better if they don’t because they’ll cut the bonds, they’ll cut them way down there’s far too much debt. The problem with Puerto Rico is they are far, far too much in debt. Don’t forget, I’m the king of debt, I love debt

As far as how he would suggest Puerto Rico solve its debt issue, The Donald, of course, has a solution for that.

“As a very successful person, I would buy companies, throw them into a chapter, bankrupt it, negotiate, I would do great deals. I didn’t use them for myself, I used them as a business person like others do. I know more about debt than practically anybody, I love debt. I also love reducing debt, and I know how to do it better than anybody. Puerto Rico has too much debt, so you can’t just restructure it. You have to use the laws, you have to cut the debt way down, and get back to business.”


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It Sure Doesn’t Look Like Rep. Justin Amash Is Going to Fall In Behind Donald Trump

A series of Republicans who once were harshly anti-Trump are now lining up to kiss the Donald’s ring. But it doesn’t look like that line will include Michigan Rep. Justin Amash, the libertarian-leaning congressman who once suggested that Trump “presents a kind of threat to our system that is maybe in some ways bigger than what the Democrats present.” If you head over to Amash’s Twitter page right now, you’ll see that this is his most recent Tweet:

Hmm: What do you think he’s referring to? The item right below that—retweeted from Reason—certainly suggests that he isn’t about to jump on the Trump train:

And below that, a retweet from Sen. Ben Sasse, the anti-Trump Nebraska Republican who’s been calling for a third-party candidate to emerge:

I have reached out to Rep. Amash’s office to ask who, if anyone, he plans to support for the presidency this November, and I’ll update this post if/when I get a response.

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FDA Imposes a Slow-Motion Ban on E-Cigarettes

Today the Food and Drug Administration (FDA) announced what amounts to a slow-motion ban on e-cigarettes, ignoring the pleas of harm reduction advocates who say it makes no sense to prevent smokers from switching to nicotine products that are indisputably much less hazardous than the ones they are using now. The FDA rule, a preliminary version of which was published two years ago, effectively requires e-cigarette manufacturers to get their products approved as “new tobacco products,” an expensive, arduous, and time-consuming process that will be prohibitive for most, if not all, of them.

Each application is expected to cost $1 million or more, and a separate application will be required for each version of a product—an impossible burden for small businesses that sell vaporizers along with dozens of custom-made fluids. Even large companies that can afford to apply for approval may be unable to persuade the FDA that “permitting such tobacco product to be marketed would be appropriate for the protection of the public health,” a requirement set by the Family Smoking Prevention and Tobacco Control Act. Such appropriateness “shall be determined with respect to the risks and benefits to the population as a whole, including users and nonusers of the tobacco product, and taking into account (A) the increased or decreased likelihood that existing users of tobacco products will stop using such products; and (B) the increased or decreased likelihood that those who do not use tobacco products will start using such products.”

The “population as a whole” standard means the FDA may reject products even when they are clearly much less dangerous than conventional cigarettes (as e-cigarettes are), based on concerns about how nonsmokers might react to them. Will teenagers who otherwise never would have tried tobacco experiment with e-cigarettes, get hooked on nicotine, and then move on to smoking? There is very little evidence that is happening, but how can a company prove to the FDA it won’t happen? And when it comes to assessing the relative hazards of vaping and smoking, will the FDA be satisfied by the observation that e-cigarettes, as noncombustible, tobacco-free products, produce far fewer toxins in much smaller amounts than conventional cigarettes do? Or will it demand long-term research that is impossible given the short history and uncertain future of e-cigarettes?

The FDA’s press release, which parrots the CDC’s scientifically absurd position that increases in adolescent vaping wipe out the public health gains from decreases in adolescent smoking, does not bode well for companies that hope to meet the agency’s demands. “As cigarette smoking among those under 18 has fallen, the use of other nicotine products, including e-cigarettes, has taken a drastic leap,” says Health and Human Services Secretary Sylvia Burwell. “All of this is creating a new generation of Americans who are at risk of addiction. Today’s announcement is an important step in the fight for a tobacco-free generation.”

Burwell seems to think that what matters is the “risk of addiction,” as opposed to the risk of smoking-related disease. She also seems to believe that a “tobacco-free generation” is one that not only consumes no tobacco but does not dabble in e-cigarettes either—even the nicotine-free kind, by far the most popular choice among teenagers). If these are the principles that will guide the FDA’s regulatory decisions, the e-cigarette industry is well and truly screwed. 

But not immediately. “The FDA expects that manufacturers will continue selling their products for up to two years while they submit—and an additional year while the FDA reviews—a new tobacco product application,” the agency says. “The FDA will issue an order granting marketing authorization where appropriate; otherwise, the product will face FDA enforcement.”

An amendment approved by the House Appropriations Committee last month would protect the e-cigarette industry from that threat by allowing products currently on the market to stay there without winning approval as new tobacco products. (The current grandfather date is February 15, 2007, when the industry barely existed.) Even that solution would impede innovation and safety improvements by requiring pre-market approval for new products. The FDA’s regulatory scheme, in other words, privileges the most dangerous nicotine delivery devices (conventional cigarettes) while threatening to eliminate much safer alternatives and blocking the introduction of even better products. All in the name of public health. 

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