Month: September 2019

Authored by Michael Snyder via The Economic Collapse blog,

Why in the world does anyone still want to live in California? 

Great weather and good paying jobs are the two biggest positives that residents often point out, but the high cost of living and the absolutely ridiculous housing prices often eat up all of the extra money that Californians think that they are making. 

In fact, it was recently reported that it now takes approximately $350,000 a year to live a middle class lifestyle in the city of San Francisco.  If you have a ton of money, it can partially insulate you from the problems that are increasingly ravaging the state, but unless you never go out in public nothing is going to insulate you completely.  Cities all over the state are degenerating into drug-infested, crime-ridden hellholes that are literally being overrun by millions of rats.  California has some of the worst traffic in the entire world, unchecked illegal immigration is causing a whole host of social problems, and gang activity has become a massive problem.  On top of everything else, California is being constantly hit by wildfires, mudslides, earthquakes and other natural disasters.  In fact, scientists tell us that it is just a matter of time before “the Big One” hits, and that is probably one of the best reasons to leave California while you still can and never look back.

Yes, there are some California residents that continue to insist that it is a great place to live.

But if California is so wonderful, why have more than half of all California voters “considered leaving the state”?  The following comes from the Los Angeles Times…

Just over half of California’s registered voters have considered leaving the state, with soaring housing costs cited as the most common reason for wanting to move, according to a new poll.

Young voters were especially likely to cite unaffordable housing as a reason for leaving, according to the latest latest UC Berkeley Institute of Governmental Studies poll conducted for the Los Angeles Times. But a different group, conservatives, also frequently suggested they wanted to leave — and for a very different reason: They feel alienated from the state’s political culture.

With the way the state is being run, conservatives have been moving out of California in large numbers for years.  In fact, I have a number of really good friends that left the state for political reasons and will never return.

On the other hand, California’s reputation for handing out free goodies has been a magnet for another class of people.  Today, almost half of all homeless people in the entire nation live in the state of California, and this has become such a huge crisis that it literally makes headlines all over the globe.

For example, the following comes from an article in a British news source…

Cali Carlisle admits she is a heroin addict — ‘but in a healthy way,’ she insists, even if the visual evidence belies that claim.

Her nose is the brightest shade of red imaginable. She constantly picks at scabs all over her body. Her home is a makeshift bed beneath Interstate 80 in Sacramento.

And Monday was her 26th birthday. Not that you would ever guess. Anyone looking at her would think she is at least 15 years older.

This is the cold, hard reality of the glorious drug lifestyle that so many go to California to experience.

Every year, thousands upon thousands of young people that once had bright futures ahead of them end up on the streets, in prison or dead due to this raging epidemic.

And one of the places where it is the worst is in the capital of the state itself.  Not too long ago, a salon owner in Sacramento made headlines all over the nation when her rant about homelessness on social media went viral…

“I just want to tell you what happens when I get to work,” stated Liz Novak, a local salon owner, to the media about what she’s had to deal with trying to conduct business in Sacramento.

“I have to clean up the poop and the pee off of my doorstep. I have to clean-up the syringes. I have to politely ask the people who I care for – I care for these people that are homeless – to move their tents out of the way of the door to my business.”

She ultimately had to move her salon completely because it became clear that things were not going to get better any time soon.

In the state of California today, virtually everything has been defiled.

At one time, California was teeming with natural beauty.  But today the entire state has become a trash dumpster, and that includes California’s once pristine beaches.  Just check out what Dr. Drew Pinsky recently told Laura Ingraham…

“There is an organization out here called Heal the Bay which keeps tabs on safety of our beaches in Southern California, from Orange County to Ventura. Since the rains last Winter, [Heal the Bay] has been giving our beaches C’s to F’s, and F means completely overrun with fecal bacteria. What comes with that are other things like syringes, Hepatitis A and other infectious diseases.”

On top of everything else, seismic activity is a constant threat.

There have been more than 1,500 earthquakes in California and Nevada over the past 7 days, and these days that is considered to be a slow week.

Of course most of the earthquakes are very small, but scientists assure us that one of these days “the Big One” will hit the state.  When that day arrives, the geography of the state will be radically changed, and the death and destruction will be off the charts.

We live at a time when our planet is being greatly shaken, and many believe that what we have seen so far is just the beginning.

The coastline of the state of California lies directly along the infamous “Ring of Fire”, and scientists have been persistently warning us that the San Andreas fault is “locked and loaded” and could possibly “unzip all at once”.

It is such a shame what has happened to the state.  California should be one of the most beautiful, prosperous and enjoyable places to live in the entire world.  Unfortunately, Californians have been making exceedingly poor choices for decades, and the consequences of those decisions will be extremely bitter indeed.

Goldman’s attempt to court retail investors to its suite of consumer-banking products, including its Marcus consumer-loans and checking accounts, isn’t going as well as CEO David ‘DJ D-Sol’ Solomon probably hoped.

Three years in, the Marcus project has lost $1.3 billion, making it “a money pit,” according to WSJ. Apparently, despite the adoption of the ‘Marcus’ brand and its partnership with Apple, regular Americans simply don’t trust Goldman Sachs. In a lengthy feature about Goldman’s floundering consumer-banking efforts, WSJ details some of the embarrassing miscalculations, as well as other factors that have contributed to the unit’s troubles.

One of the earliest errors: The bank didn’t hire a team of debt collectors to retrieve delinquent debts from its Marcus consumer-lending customers. This led to higher-than-anticipated default rates in the early years.

Fortunately, the bank has realized that this model is untenable, and has decided to hire a team of debt collectors, despite misgivings about contributing to Goldman’s already-entrenched reputation as an aggressive bank that puts its own needs above its clients.

Marcus has also since pulled back on its non-collateralized consumer loans since they are often “the first to go bad in a recession.”

Meanwhile, the kind of loans Marcus offers are the first to go bad in a recession and aren’t backed by collateral, as home mortgages are. Goldman pulled back on consumer lending this year after losses were higher than expected, people familiar with the matter said.

Though the bank likes to tout the fact that it has attracted $50 billion in deposits to its online lending platform, a new source of low-cost funding (every $10 billion in deposits saves Goldman $100 million a year in funding costs, the bank says), Marcus hasn’t lived up to the promise of its conception, which occurred during an executive retreat in the Hamptons back in 2014.

At the time, the bank’s leadership decided that, with the loss in trading revenue likely to remain permanent, its best bet at guaranteeing growth going forward would be to try and outdo Bank of America.

Unfortunately, consumers simply haven’t been very responsive.

Even when it partnered with Apple to release Goldman’s first credit card, the Cupertino-based consumer-tech giant took great pains in its marketing of the card to try and minimize Goldman’s role – for fear of scaring off customers wary of the ‘Vampire Squid’.

When Apple unveiled the credit card on stage in March in Cupertino, Calif., it did so with a zinger: “Designed by Apple, not a bank” Mr. Solomon and other Goldman executives watched from the audience. The same line was repeated in ads that Apple ran promoting the card.

In what WSJ described as a ‘final snub’ against Goldman, Apple barred Marcus execs from overseeing the card’s launch.

In a final snub, Marcus executives weren’t allowed into a Tribeca loft that served as Apple’s command center in the days leading up to the card’s launch in August.

So far, Goldman’s first credit card has been a major drain on the bank’s resources, forcing its consumer-lending arm to delay other projects.

Even beyond the roughly $300 million Goldman spent to build it, the Apple card was a drain on the firm’s resources.

When early testing of the software this spring revealed a security vulnerability, Goldman reassigned thousands of engineers from around the firm to patch it, people familiar with the matter said.

Meanwhile, Goldman’s stock remains mired near 2014 levels.

But perhaps one reason Goldman’s consumer business hasn’t taken off is because retail investors are aware of how the bank treats its asset-management clients?

Goldman has been aggressively pitching me to manage my money for the last five years. They invited me to the premiere of Solo: A Star Wars Story, which is definitely worth 1% a year on my assets. So, as my new wealth managers, would Goldman have piled me into We stock if, on the IPO, they were able to get in at the low-low valuation of $47 billion? Is Goldman more focused on the short-term underwriting fees ($130 million) vs. serving as a fiduciary for their wealth management clients? Or are they just idiots? I’ve been trolling the worst after-hours lounges in Jersey City to track down CEO David Solomon / DJ D-Sol to find out. Mr. Solomon is an awful DJ, and a worse fiduciary.  

Authored by John Rubino via DollarCollapse.com,

Stock prices are high and fairly stable, while interest rates are low and fairly stable. A casual observer might infer from this that the global financial markets are experiencing one of those fabled Goldilocks moments where everything is just right.

But under the surface things are anything but just right.

Among the high (or low)-lights:

Banks have suddenly stopped lending to each other. One of the safest ways for a big bank to put money to work is to lend it for very short periods, say overnight, to other big banks. In normal times this kind of lending happens on a vast scale without drama of any kind. But lately banks have gotten cold feet, demanding ever-higher interest rates from their brethren and threatening to screw up all kinds of activities that depend on ready cash.

The Fed, as a result, was forced to dump tens of billions of dollars into the repo market each morning for the past week, a kind of baby QE that was as baffling as it was sudden. When asked why this was happening the best the Fed could come with was that are difficulties with the market’s “plumbing.”

As any good doctor knows, half the battle is giving the complaint a name, because a patient’s imagination is frequently much worse than the reality. Our inability to explain the sudden repo market seizure has participants wondering if they’re witnessing heartburn or full-on cardiac arrest. This is not conducive to frictionless lending. As a money manager told CNN:

 “If the Fed can’t maintain orderly cash markets in quiet times, what might happen during chaotic ones?”

Meanwhile, at the very opposite end of the risk spectrum, the IPO market is behaving a lot like the repo market, with deals being pulled and offerings that do happen trading down hard rather than up big.

Here’s an excerpt from an overview published today by Reuters

After WeWork debacle, IPO market slams brakes on unprofitable companies

Companies making their debut on the U.S. stock market are getting a rough welcome, especially if they are losing money, casting a shadow over the calendar for initial public offerings for the rest of the year.

The surprise postponement of the WeWork IPO has underscored how confidence is eroding in the market both for companies looking to raise capital and investors.

A more discerning market for initial public offerings continued to punish Peloton Interactive on Friday, a day after it began trading, as shares of the fitness startup fell 4% to $24.74. The company is now trading 15% below its Wednesday IPO price.

In the past, public market investors have typically expected companies to become profitable within 18 months or so of an IPO. This timeline has been relaxed with money managers eager to add businesses with fast-growing revenue to their portfolios.

Recent deals, however, suggest an uncertain economic outlook is pushing investors to be more selective about the loss-making companies they are willing to back.

Peloton reported rapid top-line growth of 110% during the fiscal year that ended June 30. But the company also showed negative operating leverage, with operating expenses surging 147% over the prior year.

Loss-making teeth-alignment company SmileDirectClub SDC.O earlier this month became the first U.S. IPO in three years to price above its target range and close down on its first trading day, according to research firm Renaissance Capital.

The average IPO return in 2019 is now about 9%, down from more than 30% at the end of June and more than 18% about two weeks ago.

The common theme here is that things requiring a leap of faith – like Citigroup avoiding a derivatives implosion in the next 24 hours or WeWork growing fast enough in 2020 to turn negative cash flow positive – are no longer comfortable bets for big players in the financial markets.

As Reuters notes, “a discerning market” might not be nearly as hospitable for current asset valuations and financial practices as was the past few years’ trusting one.

A judge ruled on Friday that Tesla committed a series of violations of the National Labor Relations Act in 2017, according to Bloomberg. And, surprisingly, this ruling didn’t even have anything to do with forcing people to build cars in tents. 

Rather, administrative law judge Amita Baman Tracy found that Tesla illegally threatened and retaliated against its employees. 

And among the key pieces of evidence in making the determination was – you guessed it – Elon Musk’s Twitter account. Musk Tweeted in May of 2018, suggesting that employees would surrender company-paid stock options if they chose to join a union. 

Nothing stopping Tesla team at our car plant from voting union. Could do so tmrw if they wanted. But why pay union dues & give up stock options for nothing? Our safety record is 2X better than when plant was UAW & everybody already gets healthcare.

— Elon Musk (@elonmusk) May 21, 2018

The judge’s order now calls for Tesla to offer both reinstatement and back-pay to a fired, pro-union employee. It also calls for the company to revoke a warning issued to another pro-union employee. 

But here’s the best part: the ruling also says that Musk must hold a meeting at the company’s Fremont assembly plant, and that either Musk or an agent with the labor board must read a notice to employees informing them that the NLRB concluded the company broke the law.

If that doesn’t trigger Elon, we’re not sure what will. We desperately hope that video of this mea culpa, especially if delivered by Musk, leaks. And why wouldn’t it – everything else seems to be leaking from the company lately?

While the NLRB can’t hold executives personally liable, nor can it assess punitive damages, the ruling will embolden UAW supporters who have been trying to tie EV subsidies to companies’ workplace practices. 

The ruling can be appealed to NLRB members who are presidential appointees in Washington and both sides have concluded that an appeal is already a foregone conclusion. 

“This will be appealed no matter what I decide,” the Judge said last year during the trial. 

Meanwhile, Tesla continues to fall back to the perfunctory and impotent defense that everyone in the world is out to get their visionary boy genius leader.

“This entire trial is an infomercial in an effort to place Mr. Musk and the company in a negative light,” Tesla’s attorney said at the start of the trial in June 2018.

Authored by Tom Elliott via Grabien.com,

On Wednesday Rep. Adam Schiff (D-Calif.) offered a compelling case for impeaching President Trump. Describing his actions as a “classic mafia shakedown of a foreign leader,” Schiff said Trump in a phone call with the Ukrainian president threatened to withhold aid if he didn’t produce comprising intelligence on his 2020 political rival, Joe Biden. 

“The president communicates to his Ukrainian counterpart that the United States has done a lot for Ukraine; we’ve done an awful lot for Ukraine, more than the Europeans or anyone else has done for Ukraine, but there’s not much reciprocity here. This is how a mafia boss talks. What have you done for us? We’ve done so much for you. But there’s not much reciprocity. I have a favor I want to ask you. And what is that favor? Of course the favor is to investigate his political rival, to investigate the Bidens.”

It sounds bad.

Schiff’s painting a picture — using invented dialogue, a trick he tried again in a subsequent congressional hearing — of a president manipulating U.S. foreign policy to wrest personal favors from foreign leaders. But as more evidence comes to surface, that picture is quickly fading.

Here are 10 ways Democrats’ original impeachment argument is coming apart:

1. No quid pro quo. Despite Democrats’ initial claim, there was no quid pro quo. The call transcript shows the topic of aid only came up in reference to how well the U.S. treats Ukraine, particularly as compared to Euro nations, most specifically Germany. At no point does Trump threaten to withhold anything, as even some of Trump’s media critics conceded. 

2. Ukrainians weren’t pressured. Democrats and the media have repeatedly insisted President Trump “acted like a mob boss” in applying pressure on President Volodymyr Zelensky. He, however, defended Trump, saying he felt no pressure. “ I think you read everything,” he told reporters in New York this week. “So I think you read text. I’m … I am sorry but I don’t want to be involved to democratic open, uh, hum… вибориe… elections of U.S.A. You’ve heard we had, um, I think good phone call. It was normal. We spoke about many things and I thought so. And I think and you read it that nobody push it, pushed me.” 

3. Timeline. Politico’s Ken Vogel reported that the Ukrainian delegation hadn’t even been made aware aid was held up until a month after the Trump call. It’s hard to see they could feel they’re being “extorted,” as Democrats keep saying, if they weren’t even aware of the pressure supposedly being applied.

4. No Illicit Favors. When the White House released the call transcript, readers noticed that after some initial mutual flattery, Zeleznsky brings up buying more Javelin missiles; President Trump then asks for a favor and requests additional information into 2016 election meddling. Rep. Adam Schiff suggested Trump’s request for a “favor” actually referenced wanting dirt on Joe Biden, but Biden only comes up later in the conversation, and in a separate context. Nonetheless, the major media almost uniformly reported the “favor” line from Trump’s call in the same inaccurate fashion.

5. Whistleblower Complaint Lacks Credibility. This complaint, which Democrats for some reason insisted was more important than the call transcript itself, was basically a version of that original call that had been run through a game of telephone. The report had the basic story reasonably accurate, but then supplemented that synopsis with additional accumulated gossip. At least three key details in the complaint have since been shown to be false. As the document is itself a product of hearsay — the self-described whistleblower admits at the beginning of his report that he never witnessed anything — and the fact it contains demonstrable inaccuracies, its importance should certainly be subjugated to the call transcript itself. 

6. Fake News, Bad Polls. The media outlets driving the story have thrown into question their credibility after a series of major mistakes. The Washington Post reported the director of National Intelligence, Joseph Maguire, threatened to resign if he weren’t allowed to speak publicly about the whistleblower report. Maguire responded and emphatically called the Post’s report untrue, repeating that insistence while under oath during subsequent congressional testimony. ABC News and Axios both reported that an adviser to the Ukraine president said their delegation was aware in advance that aid money was being used as leverage; unfortunately for these media outlets, their source wasn’t actually an adviser to the president and the outlets had to issue updates.

Democrats are pointing to a growing number of Americans supporting impeachment to buttress their argument, but it’s a safe bet these numbers will shift after the dust on this story starts to settle. 

7. Adam Schiff. Two weeks before Congress was notified of an intelligence community whistleblower report, Adam Schiff was already tweeting out the thrust of the accusation:

Trump is withholding vital military aid to Ukraine, while his personal lawyer seeks help from the Ukraine government to investigate his political opponent.

It doesn’t take a stable genius to see the magnitude of this conflict.

Or how destructive it is to our national security. https://t.co/X4yhTS2q1Z

— Adam Schiff (@RepAdamSchiff) August 29, 2019

How was Schiff made aware of this report before Congress? Who in the intelligence community was Schiff in contact with? Did he have any role in helping engineer the report’s entry into Congress? These are questions Americans deserve having answered before they can fairly consider the merits of impeaching President Trump.

8. Origins. The Federalist reported late Friday that the intelligence community adjusted rules related to whistleblower complaints so that hearsay evidence could now be accepted. Whereas historically a whistleblower actually has to witness the conduct to file a report about it, a month before this report was sent to Congress, the intelligence community dropped this long-standing requirement and the “whistleblower” was subsequently able to file his report. A spokesman for the DNI refused comment to the Federalist for why the change was made.

This awfully convenient timing surely requires further investigation before lawmakers can be expected to fairly adjudicate the accusations against Trump.

9. Rudy. It’s widely reported Rudy Giuliani was Trump’s go-to guy for actually carrying out this conspiracy. On his call, Trump told the Ukraine president to speak with Rudy (as well as AG Barr), about the investigation into an oil company on whose board sat Hunter Biden, the former vice president’s son. But Giuliani first communicated with his Ukrainian counterparts more than a year before Biden entered the race. Yes, it’s possible they anticipated Biden eventually entering the race; but it’s also possible Trump actually thought there might be legitimate corruption worthy of investigating. Giuliani tries to prove this point by noting the State Dept. was helping coordinate his communications. This may be unseemly, and perhaps even unethical, but it’s not entirely different from the role (as some have pointed out) Sidney Blumenthal played when Hillary Clinton was Secretary of State. At the least, a lot more information is needed before establishing Trump’s use of Rudy clearly demonstrates any kind of impeachable conduct.

10. Coverup? Democrats say the White House has engaged in a pattern of obstruction and coverup to hide their wrongdoing. But is this true? DNI’s Maguire only opted against releasing the report to Congress after the Department of Justice’s Office of Legal Counsel said the report did not concern conduct within the intelligence community and was thus “statutorily deficient.” Maguire was following the law, but Democrats rebelled, and ultimately the report was released anyway. The White House also released a transcript of the call itself. It’s hard to see how the White House is guilty of a coverup when they’ve already released the primary documents.

Other media speculators pointed toward the whistleblower report alleging the (now public) transcript having apparently been transferred to a “more secure” server. On Friday night, former National Security Adviser to President Obama, Susan Rice, said that the Obama Administration likewise moved occasionally transcripts to this server (though she said, somewhat unsurprisingly, that when they did it there was a compelling reason). CNN additionally reports that the Trump Administration has been placing all of these foreign call transcripts on this server for more than a year in an effort to contain leaks.

Democrats say they want to move as expeditiously as possible through this impeachment inquiry. And it’s no wonder why. As the more information comes out, the less credible the core of their original claim becomes. 

Last weekend, as the overnight funding crisis was peaking, we showed the distribution of $1.4 trillion in Fed reserves, also known simply as “cash”, across the banks that make up the US financial system.

One week later, with the dollar “plumbing” shock seemingly unclogged as we approach quarter end, following $162BN in various term and overnight repo operations…

… which helped push the overnight G/C repo rate back down to 2.00%, questions are still swirling over events in the past two weeks that briefly sent the repo rate soaring as high as 10% as one or more banks found themselves on the verge of a funding crisis.

• The first question is what happened to prompt the sudden liquidity panic: while we know of the immediate events that led to a sharp drop in bank cash (reserve) levels such as the accelerated rebuild of the Treasury’s General (cash) Account at the Fed, the mid-month tax remittance to the Treasury, and the bulk settlement of Treasury bills, the fact that repo strains remained well into the next week and forced the Fed to drastically expand its repo operations, indicates that something far more serious was afoot than one time cash drains.
• The second, and perhaps even more important question, is which were the banks the catalyzed the initial funding shortfall, which then spread rapidly across the entire US dollar funding market. Here, as a reminder, even the NY Fed appeared clueless, with John Williams noting last Friday that the York Fed was examining “why banks with excess cash failed to lend to the overnight money market, following a week that revealed cracks in the US’s financial plumbing.”

Setting aside what we don’t know – i.e., the immediate causes for the recent events and which specific banks were the catalysts – if we had to jot down what we do know, it is that it is now widely accepted that the level of “excess” reserves, at $1.4 trillion, is far too low for the financial system. As a result, first Goldman…

… and then JPMorgan now predict that the Fed will need to permanently inject billions in reserves – by way of Permanent Open Market Operations, i.e. purchases of Treasuries, i.e. QE 4 (just don’t call it QE 4 whatever you do) – starting some time in November, to elevate the overall level of reserves to roughly $1.7-$1.8 trillion.

Needless to say, a return of QE for a US Treasury whose fiscal 2019 deficit will be just around $1 trillion, and much more in 2020, and which needs to be funded in substantially by Treasury issuance, is just what the doctor ordered. In fact, as JPMorgan calculated, total secondary market purchases are likely to run at roughly $55bn per month through April 2020, and will represent almost all of Treasury’s net issuance over the period. In other words, the Fed is about to monetize the US deficit for the next six months, a handy backstop to the trade war should China decide to stop buying, or worse, dump its US Treasuries.

In fact, this line of thinking brings us back to what we said a little over a week ago: the real reason why the Fed needs to restart QE is simple: America’s exploding debt, and the need for someone to monetize it.

What is real reason for the Fed to restart QE as soon as today? This pic.twitter.com/P8c0fkTnLL

— zerohedge (@zerohedge) September 18, 2019

And all the Fed needed was a smokescreen, allowing it to resume the growth of its balance sheet, which for now is temporary and will, some time in November, turn permanent as Powell announces the resumption of direct Treasury purchases.

Here, a critical question as framed by Cumberland’s Bob Eisenbeis, remains unanswered, namely “the problem with proposals to increase the size of the balance sheet is that there is no guarantee that an increased amount of bank reserves would find their way into the various segments of the repo market where needed”, although we’ll cross that bridge when we get to it. 

Yet even as the big picture behind the events of the past two weeks gradually emerges, one key question still lingers: which banks, caught in an unprecedented funding squeeze, caused the repocalypse which sent the rate on overnight cash exploding higher as their reserves suddenly found themselves no good in the tri-party repo market, and forced the Fed to launch its first repo operation in over a decade.

The answer, understandably, will hardly be provided: after all, in a time when the repo operation is the functional equivalent of stigmatizing discount window use, any dealer that is exposed as having funding issues could immediately face a bank run as its depositors and counterparties pull their capital, resulting in a liquidity – and solvency – crisis. It may explain why for nearly two weeks, there has been no media report over the culprits of the repo crunch, even though it would likely be the most widely read financial article of the year.

Hey financial reporters: here is a Pulitzer story for you – find out which bank(s) are so starved for $75BN in cash they are using the Fed’s stigmatizing overnight repo operation

— zerohedge (@zerohedge) September 21, 2019

And yet one can made some observations courtesy of none other than the Fed, which in its latest H.8 statement (“Assets and Liabilities of Commercial Banks in the United States“) released yesterday, showed the level of various bank asset and liabilities as of Wednesday, September 18, just as the repo crisis was starting. And the one, most important item here is the amount of commercial bank cash, i.e. reserves, broken down as detailed as the H.8 statement allows, which unfortunately only goes to the domestic (large and small) bank and foreign bank level.

What this data shows is that on a non-seasonally adjusted basis (because we care for actual data, not the Fed’s smoothed take), cash at large domestic banks tumbled in the week ending Sept 18 by $55.3 BN to $714.8BN, the lowest total since April 2013, while cash at small domestic banks also dropped substantially, by $18.2BN to $272.9BN, for a combined $73.5BN drop in total domestic bank cash (from $1086.2BN to $1,012.7BN)

And so as cash levels, and reserves, tumbled, sharply draining liquidity out of the system, the Fed responded by announcing a liquidity injection almost precisely offsetting the $73.5BN total cash shortfall, in the form of a $75BN overnight repo operation after a decade-long hiatus, on Sept 19 one day after the Fed’s latest rate cut announcement.

The surprise? Whereas some had speculated that it was foreign banks behind the repo crunch, cash at foreign banks operating in the US rose by a respectable $13.6BN in the week ended Sept 18, to $537,8BN, in line with levels where foreign bank cash had been for much of the past two months.

In other words, to find the culprit for the latest repo shock, don’t look to Europe (those banks have enough pain on their plate with the ECB recently launching QEternity, to also have to worry about overnight funding in the US) but look for clues among domestic US banks.

Unfortunately, since the Fed’s data only goes through Sept 18, the full analysis of bank funding heading into quarter-end will need to wait until next Friday. Meanwhile, while we wait the question is: will the repo situation stabilize once we put September in the rearview mirror as so many rates strategists expect will happen once the quarter-end liquidity shortage fades, or will it persist confirming that something is well and truly broken in the dollar funding markets, and just what will the Fed do in response?

Authored by Martin Sieff via The Strategic Culture Foundation,

The US political, intelligence and media establishments have made even greater asses of themselves before the entire world by cooking up their latest wild concoction of a plot to topple President Donald Trump and – while they’re at it – knock his most plausible challenger former Vice President Joe Biden out of the race as well.

Washington has become a buffoonish theater of the absurd. It is politics according to Marx: But not Karl Marx. The latest scandal is pure Groucho Marx.

It is straight out of the Marx Brothers 1933 comic movie masterpiece “Duck Soup.”

Freedonia is a chaotic joke of a nation that has just gone bankrupt. This of course fits modern America perfectly. The country’s financial benefactor Mrs. Teasdale (obviously a stand in for the International Monetary Fund which had not been created yet) then insists that her favorite, the wild and ludicrous Rufus T. Firefly, a con man with no dignity whatsoever but a surprising amount of wit and street smarts becomes its president.

However, Firefly – a natural stand in for President Donald Trump – must then survive one sinister scheme to topple him from power after another. All of them ineptly executed.

Russiagate was such a scheme. A big lie of such staggering inherit absurdity lacking any hard evidence whatsoever that a six year old child with Downs’ Syndrome would not have been believed it. But around half the adult population of the United States apparently did.

Now, within weeks, hardly even days after absurd and now half-senile Special Prosecutor Robert Mueller (a perfect foil for the Marx Brothers to be played by any comic actor specializing in befuddlement) bit the dust in his own ludicrous congressional testimony, a new Outrageous Accusation has been thrown at Trump, even more non-existent than the previous one.

Right after being falsely accused of conspiring with Russia for the past two and a half years, Trump is suddenly accused of the opposite – of conspiring with Ukraine instead!

This Reversal of Fortune – and of accusations – demands that the American public be as stupid and brainwashed as the oppressed population of Oceania in George Orwell’s dark and prophetic classic dystopia “1984.”

“We are at War with Eurasia! We have always been at War with Eurasia!”

“No! We LOVE Eurasia! We are at War with EASTAsia! We have always been at war with Eastasia!”

Clearly, the readers and viewers of the New York Times, the Washington Post, MSNBC, CNN and all the rest of America’s media “Powers That Be” have already been well trained in Orwellian Doublethink and witless stupidity.

Suddenly, President Vladimir Putin of Russia is no longer the Evil Bad Guy plotting with Trump. Now it is new President of Ukraine Volodymyr Zelenskyy, himself a former professional comic actor on television. The Marx Brothers would have loved to co-star with him.

Perhaps after being forced out of the presidency Trump, himself a former hit TV star across America, could hire Zelenskyy as his sidekick in a revival of his famous reality television show “The Apprentice.”

As the late great British satirist Michael Wharton, who wrote under the nom de plume Peter Simple liked to say – the wilder the fantasy, the more rapidly it was bound to ‘collapse” into the realm which we naively and inaccurately describe as “reality.”

And what is the latest terrible crime that the President of the United States is now –suddenly and without warning – accused of? He dared to investigate whether Hunter Biden, the son of another eminent politician, former vice president Joe Biden was guilty of corruption.

Just think of the consequences if Trump and his officials were allowed to continue their investigation unhindered: They might – shockingly! – put some other corrupt former US politicians out of business.

Obviously, that would be the most terrible threat imaginable to the Home of the Brave and the Land of the Free.

No wonder the US Deep State hates Donald Trump!

But there is another goal for this concocted scandal.

It’s a twofer – a two for one scandal – intended to topple Trump and remove Biden from serious consideration at the same time, clearing the way for the Deep State’s True Candidate – Senator Elizabeth Warren.

The shamelessness of this latest concocted scandal would leave Josef Goebbels green with envy and laughing uncontrollably.

Unfortunately, it isn’t a joke.

While investigating a spate of mysterious deaths and hundreds of hospitalizations linked to vape pens, NBC News commissioned one of the nation’s top cannabis testing facilities to sample 18 THC vape cartridges obtained from legal dispensaries and unlicensed dealers. 

Three of the cartridges bought from legal dispensaries were found to contain no heavy metals, pesticides or residual solvents such as Vitamin E – which should not be inhaled. 

10 out of 15 samples from black market dealers, however, contained pesticides containing myclobutanil – a fungicide that converts to hydrogen cyanide when burned. 

“You certainly don’t want to be smoking cyanide,” said CannaSafe president of operations, Antonio Frazier. “I don’t think anyone would buy a cart that was labeled hydrogen cyanide on it.” 

According to David Downs, California bureau chief for online marijuana publication Leafly, “This all starts in China where you can get the empty cartridges both for the THC market and the nicotine market, as well as the additives, flavorings, and thickeners that are being put into these cartridges alongside the THC oil.” 

“It’s a very deep, mature, and advanced industry that starts in China and ends in our own backyard, he added. “I’ve been saying, ‘Look, if you buy a fake Gucci purse, it’s not going to give you a lung injury, but if you buy a fake vape cartridge, it just might.’”

The findings are “very disturbing,” according to NYU Winthrop Hospital pediatric pulmonologist, Dr. Melodi Pirzada, who said “it’s going to cause a very toxic effect on the lungs.”

The New York pulmonologist also expressed alarm about the presence of Vitamin E, which is also known to cause significant lung damage when inhaled, in the THC mixtures. “It should not be inhaled into your lungs,” she said.

Pirzada has treated four patients, all teenagers, suffering from vaping-related lung damage. She said testing conducted on the same vaping mixture used by one of her patients detected the presence of Vitamin E.

The 18-year-old boy arrived at the hospital with pneumonia-like symptoms. But within 48 hours, Pirzada said, his condition deteriorated rapidly and he was placed on a ventilator.

He spent five days on life support before he was able to breathe on his own and recover with the help of steroids. “He required very high levels of support to keep him alive,” Pirzada said. –NBC News

“We are dealing with a new epidemic,” according to Pirzada. 

The Centers for Disease Control and Prevention says most of the patients reported using vapes containing THC, the psychoactive ingredient in marijuana. Some state health officials have indicated that Vitamin E acetate, a solvent used to “cut” cannabis for use in vape pens, may be responsible for the outbreak.

But no single substance or product has yet been linked to all of the cases of vaping-related lung disease, the CDC says, leaving the medical community grappling with an exploding health crisis with an unknown cause.

At the same time, the FDA is struggling to police what has rapidly grown into a billion dollar industry with a booming black market, experts say. –NBC News

Over the summer, an 18-year-old girl who vaped tobacco and pot products every day for two years was taken to UCLA hospital with a bad cough, fever, nausea and labored breathing. Within two days, her lung function had deteriorated so much that she was sent to the ICU and placed on a respirator. Ultimately, she improved and was released from the hospital. 

“She got very sick, very fast,” said her pulmonologist, Dr. Kathryn Melamed. 

According to a Wednesday statement by acting FDA Commissioner Ned Sharpless, investigators are working to identify toxic products and “follow the supply chain to the source.”

“FDA is not pursuing any actions associated with personal use of any vaping products, our interest is in the suppliers,” he told the House Energy and Commerce subcommittee, which oversees the FDA. 

“But to be clear, if we determine that someone is manufacturing or distributing illicit, adulterated vaping products that caused illness and death for personal profit, we would consider that to be a criminal act.“