Category: zerohedge

The Fed has backed itself into a corner.

For seven years now we’ve been told the US is in a recovery. However, if this were the case, the Fed would have started raising rates years ago (likely in 2012). No other recovery on record saw the Fed maintaining ZIRP for so long.

There is simply no factually credible argument for why rates should be ZIRP if the economy is expanding. You cannot have claims of a “recovery” or expansion while ZIRP is in place. ZIRP is meant to be an emergency policy meant to pull the economy out of a severe recession, NOT a long-term program.

In pictoral form, the red line in the chart below negates the blue line. There is simply NO WAY that GDP expansion is even close to accurate if rates have to be kept at zero for six years after the recession “ended.”

Indeed, even the CPI data suggest the Fed is deceptive. Core CPI is well above the Fed’s “target” rate of 2%. Even a child could look at this chart and see the breakout occurring. The Fed claims to be “data dependent” but all of the data has hit levels at which the Fed claimed it would raise rates again!

Let’s be blunt. The folks running the Fed are not idiots. They know the expansion is nowhere has nowhere near the strength that the official data claims. That’s why they’ve maintained rates at zero for so long.

However, while the expansion is weak, inflation is increasing dramatically. Which is the dreaded stagflation the US experienced in the 1970s.

Put simply, the inflation genie is out of the bottle. Core inflation is already moving higher at a time when prices of most basic goods are at 19-year lows. Any move higher in Oil and other commodities will only PUSH core inflation higher.

The Fed is cornered. Inflation is back. And Gold and Gold-related investments will be exploding higher in the coming weeks.

We just published a Special Investment Report concerning a secret back-door play on Gold that gives you access to 25 million ounces of Gold that the market is currently valuing at just $273 per ounce.

The report is titled The Gold Mountain: How to Buy Gold at $273 Per Ounce

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Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

via Zero Hedge http://ift.tt/1pWYjo1 Phoenix Capital Research

Submitted by Thad Beversdorf of First Rebuttal

Why FINRA’s Private Court Just Got Served

Lately I’ve had a lot people reaching out to me asking “Why do you provide all this research around the marketplace for free, what’s the catch?”, and so I’ve decided to tell my story.  I’m about to provide a very candid account of how I went from a seven figure banking career to effectively unemployable without ever having breached so much as an employee handbook rule.  But let me make it very clear this is not a victim piece.  This is a public awareness announcement.

While the story reads like a Hollywood movie, my hope is that it shines a light and ignites some much needed discussion on the oft hidden, and thus ignored, graft that permeates our most fundamental societal institutions.  In this intricate account I describe the incestuous relationship between FINRA and the Banks.  The affects of which can be seen in the cocksure culture of management across the entire sector and that is about to get far worse. However, this is but one root in a forest of consequences impacting everyday people.

FINRA chairman Richard Ketchum

The NY Times recently published an in depth exposé on the increasing use, by corporations, of private courts to handle customer and employee disputes.  The waiving of one’s right to civil litigation in lieu of these private courts is typically buried in the fine print within customer agreements and is simply a non-negotiable part of all financial services sector employee contracts.

As a prospective employee you either waive your right to civil litigation in lieu of a private court or you don’t work in finance.  It’s that simple.  The NY Times investigation highlighted the injustice of being forced into these private courts and the chill effect they create from litigating even the most egregious corporate behaviour.

Now The NY Times piece did a great job explaining the broad issues.  But the broad issue discussions never do the depth of depravity the justice it deserves.  To really expose the level of corruption one needs to expose the devil in the details. And so I’m going to invite you inside my story so that you can see it first hand.  It’s the only way to persuade you that a serious problem truly does exist.  I implore you, especially those of you in the financial sector, do yourself a favour and take the 20 minutes to read this piece in its entirety.  I can guarantee, the ending will have you questioning whether this is real or fiction.  I assure you, to my dismay, this is all too real.

And look I was a banker for 15 years, I know many of you are rolling your eyes and saying to yourself “There’s no crying in banking” and trust me, I agree.  But when I found myself in a situation where my business was being locked down, my relationships were being destroyed and I was being threatened with a lawsuit if I breached my non-compete I had to stand up to it.  I had nothing more to lose, or so I thought.  And in the only industry that is allowed to magically generate profit on 9x the capital it actually has, for a management team to risk additional public ire by underlining the injustices of its kangaroo court seems to me not only self-defeating but to be encouraging a fight.  Well, they got one.

How The Wheels Came Off:

It all started back in early 2012 when my boss, over lunch, said to me “Hey Thad what would you think about transitioning our group to a new house”?  Now at the time our desk was generating about $100M top line for a top tier investment bank.  My response was “Well what are the numbers”? “Pretty good”, he said.  And with that simple exchange I began my journey down the proverbial rabbit hole.  Where I ended up, however, was far from Wonderland.

After a series of negotiations with the new bank we transitioned a roughly 30 man desk. But on my first day in the new bank our old bank filed a suit against the new bank for poaching our group.  Now this was not totally unexpected, but what was unexpected is how the new bank’s management team decided to handle the situation.  Their strategy against the suit, which had the potential to award a significant sum of money, was to bury our desk’s profitability in an attempt to negate claims of damages, something the COO at the time let slip to a revenue analyst that worked on my desk.  And this situation quickly spiraled out of control.

Ultimately our desk was being buried in indirect costs to the tune of tens of millions of dollars; black box items like ‘regional and corporate allocations’ that were not a part of our contract cost structure.  When we disputed the charges we were told to sue if we didn’t like it.  Initially I just tried to leave the bank.  I was offered a spot back at the old bank and was ready to accept it.

However, when I informed my boss I was heading back to our old house the new bank refused to release me from my non-compete.  They were worried I would help the old bank with its poaching suit and so wanted to keep me locked in.  Feeling a bit awkward heading back as it were, I felt compelled to decline their offer when I knew there would be non-compete issues delaying my transition back.

So there I was having costs loaded up against us, middle and back office were being instructed by management to ice all our new business and they wouldn’t let me out of my non-compete.  So essentially I was dead in the water and not only that but our clients were being strung along and beginning to realize it.  At that point I set a meeting with HR to figure out just what in the hell was going on.  None of this made any sense, let me do my business or let me leave.  HR’s official response was “We cannot comment”.

And then the Vice Chairman called me on my personal phone and indicated that the bank wanted me to get a lawyer.  When I asked why in god’s name would they want me to do that, he simply said that’s how they handle these things.  As hard as that is to believe I was smart enough to record the call with an App I had on my iPhone.  So I have a wave file of that conversation, which I furnished the bank and that eventually led to the Vice Chair being fired due, in part, to him exposing some morally repugnant actions by the bank’s lawyers – at some point this call will be made public.  And so I got a lawyer.

Initially I had no intention of following through with a suit I was just taking the Vice Chairman’s instruction hoping that it would all get worked out through some civil discourse.  But that didn’t happen.  What did ultimately happen is I was told to leave the building one day and not go back to my desk.  Now they weren’t allowing me to book any trades at this point anyway.  I was also informed that I was still under a non-compete and that they would sue me if I breached it.

There were just so many standard compromises that would have prevented this situation from spiraling out of control but it seemed like this management team was hell bent on making the situation worse at every juncture.  Now, for some context, this was the same management team that paid $500M, a few years ago, for a 130 year old commodities firm (that had survived 2 world wars and the Great Depression) and within two years had run it into the ground, essentially having to write off that half billion investment not to mention all those jobs.  But I digress.

In any case, it was at this point that I had to seriously consider actually filing a suit.  Now this is not a decision to take lightly.  And so before filing a suit I had to really think about the long term impact.  Never a good thing to have a lawsuit with a former employer on your record and we are all, at least anecdotally, aware of the kangaroo court that are these private arbitrations.

All that digested, I figured I had an impressive record of rising through the ranks from an internal auditor to a global director of (arguably) the world’s premier base metals desk (running up to 17% of all LME volume through our desk on any given day) in less than 8 years.  To boot, I hold an MBA from the University of Chicago (with four concentrations) and so even if banking no longer wanted me, opportunities would surely knock, right?

Given I was being totally shut down by the bank, I felt that I had very little further downside and no other viable counter move.  This management team was starving our 30 man desk (literally guys were facing losing their homes) to protect their own bonuses.  And on top of it all, the bank’s board had just made the CEO the highest paid banker on Wall Street, with a $78M payout.  It was all becoming too much to swallow.

And look, I grew up in a small Canadian town fighting just about every Wednesday through Saturday night as a teenager.  You learn to stand up for yourself even if it means getting your teeth knocked out once in a while.  And so there I was facing the prospects of a David and Goliath type fight against an investment bank and I’d have to fight them inside FINRA, on their home turf.  In the end and perhaps against all better judgement I filed suit against the bank.  And it quickly became apparent I had miscalculated the risks.

Enter FINRA Arbitration:

So my lawyer, Neal Mcknight – an incredibly bright but also scrappy guy from a small but well respected law firm in Chicago filed my claim against the bank (my now former employer) with FINRA Dispute Resolution, Inc..  When you enter this arbitration process you actually sign a contract with FINRA’s subsidiary arbitration firm.  This becomes important to the story later on.  It’s also important to understand the bank’s strategy (and this is true for any David and Goliath type litigation), which is to draw the process out until David runs out of money or has a heart attack.

Now for anyone who has never been through litigation, the first stage after filing the claim is called ‘Discovery’.  This is where both sides exchange all relevant evidence and it is generally done on a good faith basis as the penalties to withholding relevant evidence from the Discovery process are meant to be severe, at least in public litigation.  The idea being that truth is ultimately the goal and so Discovery is the mechanism for getting all of the facts out so that both sides can make their best argument to an impartial judge or panel who then decides which side is right and which is wrong.

The enforcement of this process is extremely important because the bank owns all of your work related materials meaning you are legally prohibited from having these materials maintained outside of a work environment.  This means all of the items you know exist, exist on the bank’s servers and the only way you can prove they exist is through Discovery.  So right from the start we found ourselves beholden to a private court to enforce a fair Discovery process, without which, we could not argue our case.

Our Discovery process began in January of 2014 and as of last month, some two years later, we had yet to receive the documentation owed us by the bank.  Now if you are the bank and you know you can get away with not producing damaging evidence well that’s exactly what you’ll do.  And that’s what happened.

The bank refused to fulfill its good faith obligation on Discovery and so we were forced to motion for the arbitrators to compel the bank to provide all relevant materials.  Eventually in July of 2015 we were given a Discovery hearing, where we formally requested that the arbitration panel (a three member panel of assigned ‘judges’) demand the bank provide an exhaustive list of relevant materials.  To our surprise, the panel strongly sided with us and ruled by imposing an explicit and significant list of items that the bank would have to provide to satisfy their obligation of Discovery.

At this point I was beginning to feel like maybe I would get a fair shot.  The deadline for the bank to fulfill the panel’s ruling was September.  Well September came and went and while we received a few additional documents the bank had essentially ignored the panel’s ruling.  And so we motioned the panel to sanction (penalize) the bank for ignoring the panel’s own ruling.  However, before the panel ruled on this motion to sanction, the bank responded by indicating that they couldn’t produce some of the items because they had destroyed that evidence.  The bank disclosed this in a manner as though it was a viable defense.

Turns out the evidence they destroyed were all of the phone calls in and out of my trading desk.  Now, not only does the bank have a good faith obligation to maintain these calls for litigation as well as a regulatory requirement to maintain these calls but at the outset of this arbitration we sent a formal letter demanding the bank maintain those calls as they were such a key component of our case.  And so upon realizing the bank had destroyed these calls we motioned for further sanctions against the bank for not only refusing to fulfill the panel’s ruling on Discovery but now for destroying key evidence.

About a month later we received the panel’s response to our motions for sanctioning the bank; “Motion denied”.  That’s right, the arbitration panel of judges was refusing to hold the bank accountable for disregarding the panel’s own ruling on Discovery and additionally, for destroying key evidence.  And the panel had denied the motion without so much as a one sentence explanation.  With that, all hopes for a fair and equitable arbitration had just disappeared.

I’ll be honest, for a moment I was quite literally stunned when my lawyers told me of the panel’s decision.  But then it struck me like lightening, my fight wasn’t with the bank.  The behaviour of the bank is just a symptom of a much deeper problem.  This management team didn’t have the smarts to do anything other than paint by numbers.  That is to say, they were working within the system that actually rewards abhorrent behaviour by way of absolute impunity.  We see it so often we no longer pay it any mind.  At this point I decided my fight needed to focus on the system itself and I was going to use the system’s own foundation of corruption to bury it.   And so my lawyers pushed for a second Discovery hearing, which we got this past December.

In this hearing I wanted my lawyers to essentially force an up or down vote by the panel on allowing an outside third party to conduct independent electronic Discovery of the bank’s data and electronic communications (something FINRA itself commonly uses when it is targeting a bank for review).  Alternatively we would accept the bank certifying (essentially swearing under oath) that what they had produced in Discovery was a complete and exhaustive furnishing of materials under the panel’s ruling (a standard part of any public litigation and was also added to FINRA arbitration customer disputes in 2013 – but not employee disputes).

The idea was to force the panel to declare on record that they either could or couldn’t order the imposition of a third party for Discovery or a certification by the bank.  Without either there was absolutely no reasonable expectation that we would ever receive all of the materials owed us for Discovery.  Remember, the bank failed initially on its good faith obligation for Discovery and then on its adherence to the panel’s ruling on Discovery.  They then admitted to destroying key evidence and they did so because they knew there would be no consequence to any of it.

And so there was simply no way the arbitration panel nor I could have any reasonable confidence that the bank would ever fulfill its obligations on Discovery without receiving some assurance.  Regulators get that certainty via the imposition and use of a third party electronic discovery. In public courts and trials, certification of the completeness of Discovery is provided through a number of tools including oaths and affirmations.  We were looking for the same sense of assurance.  And this is where the arbitration moved to a new level of sit-com-esque slapstick humour.

During the December (second) Discovery hearing my lawyers pressed the panel for an up or down decision on assurances and the panel literally stopped the proceeding at that point, explaining they needed input from FINRA staff.  This is akin to a judge stopping a hearing and reaching out to legislators for clarification of the law.  Mind boggling.  But this circus was just getting started.

The FINRA staff, after some discussion, declared that what we were asking simply was not within the panel’s authority to impose.  And so we were at stalemate.  I was claiming that without one of these options of assurance the arbitration was failing in its mandated obligation to provide a fair and equitable process.  If I can’t receive a full production of Discovery I can’t argue my case.  If I can’t argue my case the matter cannot be resolved.  And this is where FINRA breaches not only its own contract with me but breaches the Illinois state constitution, which constitutes the right to resolution.

My lawyers responded to the FINRA staff that the panel doesn’t need the authority if the bank is willing to volunteer to certify that they have completed the Discovery ruling in full.  My lawyers suggested this knowing the bank was aware that we could prove they hadn’t done so and thus couldn’t provide the certification.  As we expected, the bank refused to certify that their production of Discovery was a complete production in accordance with the panel’s ruling.

Now the bank’s law firm actually sent a founding partner of their firm to represent the bank at this Discovery hearing (indicative that we were beginning to break some barriers not meant to be broken).  This was a four decade veteran of the law and a Harvard Law graduate.  And at this point, in what could only be described as a procedural debacle, this guy stands up and declares that it isn’t so much they didn’t fulfill the panel’s ruling on Discovery as much as it is they were confused by it.

That’s right, this high powered law firm that specializes in these types of disputes was claiming it was confused by the panel’s explicit ruling (a simple list of items) on what items needed to be furnished for Discovery.  Perhaps the only thing more incredulous than this Harvard Law veteran claiming confusion on something as complex as an adolescent’s weekend chore list was the panel accepting this explanation and immediately ruling that my lawyers would need to help the bank’s law firm understand the panel’s ruling.  What?! Specifically, the panel was forcing me to pay my lawyers to educate the bank’s high powered law firm on how to go about interpreting the private court’s ruling on Discovery but while still giving them the right to disagree with us.  I shit you not.

So after 2.5 years of getting absolutely nowhere except six figures deep in legal costs against a large investment bank and its high powered law firm, the FINRA panel had just ruled that the bank’s Discovery obligations were now effectively my obligation.  That’s right, it was on me to finance a process to un-confuse a high powered law firm that wasn’t actually confused in the first place.  So not only was I being run in circles I was now being forced to pay someone to run me in circles.

I was honestly waiting for Ashton Kutcher to walk out with a “You Got Punked” hat on.  When he didn’t I decided I had to file suit against FINRA Dispute Resolution, Inc., which my lawyers have now done in Illinois state court.  Again, having grown up in Canada I’d never even thought about suing anyone, it just isn’t part of the culture.  But, in for a penny in for a pound.  I felt this was all such an audacious act of injustice carried out with such undisguised arrogance I quite literally could not sleep at night if I didn’t at least try to fight back.

I don’t expect FINRA to roll over.  We fully expect that FINRA will try to claim SRO immunity (just in January they merged the private arbitration subsidiary into the actual regulatory entity I can only assume to make a case for immunity when their blatant disregard for justice becomes all too apparent).  But if truth and fundamental fairness, as mandated in its own by-laws and by the spirit of justice are the objective, then why would FINRA not own its failure in this case and look to amend their rules, as they did for customer disputes in 2013?  By doing so ensuring sufficient authority to impose the same procedural assurances as the public courts.

There is only one answer to that question.  They won’t because fundamental fairness is the last thing the banks, and thus FINRA, is looking to achieve.  As long as the banks can maintain an advantage within the system, they will.  Without assurance on Discovery, no claimant can ever get a fair and equitable process to argue its case against an employer inside a FINRA arbitration, a fact supported by statistics presented in the NY Times investigation.  It means the result of my case could have far reaching implications.  In effect, my case calls into question the validity of all FINRA arbitrated employee disputes.  And that is a discussion that needs to happen.

These systematic advantages to corporations and other members of the power class are the antithesis of capitalism and democracy.  Using fraudulent private courts to curate such systematic advantages is grossly unethical and encroaching on criminal, but brilliant; so pervasive and yet unnoticeable to the masses.  It is imperative, however, not to allow such corruption to go unchallenged.

Look, I’m but one small dagger in their side, I get that.  But death can come by a thousand small cuts.  And well I’ve made a small cut.  Yet it hasn’t come without a price and I don’t mean the legal costs.  While I did very well in banking, I’m far too young and intense a personality to retire.  But 2.5 years on and I can’t get beyond an HR departments initial screening process, in any industry (thank you Google).

The real cost of standing up to a system not meant to be stood against is perhaps giving up one’s natural path.  It is a loss far greater than money.  An opportunity for the camaraderie and wit of being part of a smart and highly competitive group of my peers and in an environment that shares my obsession for being brighter and righter, seems to be slipping away.

And so despite having a highly successful professional track record, a top 5 Business School MBA and choosing to continue providing value to the sector – without compensation – (having publicly predicted the August crash on Aug 2, the January crash on Jan 4 and on Feb 26 calling for a major decline in VIX accompanied by a higher S&P price level ranging between 2000 – 2030 until May, give or take – not to mention an average Zero Hedge contributor rating of 4.8/5, being a member of David Stockman’s Contra Club and being regularly published on a slew of financial and public policy publications) – I will in all likelihood end up being the world’s most financially sagacious, barista.  And maybe, just maybe, that ain’t such a bad life if I can sleep at night knowing I fought the good fight.

But all of this is what it is for me, I’ll be fine.  My point is really much bigger than any one individual story and reaches far beyond the financial sector.  A society in which impunity is assumed and realized by the banks and other members of the power class absolutely guarantees  bad behaviour by those segments of society.  And bad behaviour guarantees bad results (refer to Iraq war and credit crisis and their respective festering wounds, etc.) but not for the actor, just for everyone else.  And so lessons aren’t learnt and corrective actions aren’t implemented.  The fraudulent arbitration process discussed is no different than the bailouts, which are no different than any of the systematic advantages designed for the power class.  You incentivize bad behaviour by shifting the financial and legal risks of bad behaviour and so you get bad behaviour.

And in the end, despite rarely if ever being discussed in mainstream media, there are millions of untold stories of everyday citizens who get stuck with the tab in some form.  Until we stop focusing and really even giving a shit about the problems surrounding the Ackmans of the world (which have zero relevance to 99.9% of us) and begin focusing on the real people problems, society will continue to implode.  Step back and look at the world today.  Do you like what you see?  Then give yourself a pinch, it’s time to wake up.

Anyone interested in discussing any parts of my story further can reach out to me via email: TB@thechicagoeconomist.com

via Zero Hedge http://ift.tt/1UNjdU2 Tyler Durden

From Morgan Stanley’s Matthew Hornbach

Unbeknownst to me at the time, I learned a valuable lesson at the start of my career that would resurface years later. Nearly 16 years ago, I began working in Tokyo as an analyst on the Japanese government bond trading desk at Morgan Stanley. It was August 2000 and the Bank of Japan raised its overnight policy rate by 25bp for the first time since initiating its zero interest rate policy, in February 1999.

The BoJ raised its policy rate by 25bp and 10-year JGB yields rose by a similar amount in the same month. But in the seven months that followed, I learned that what happens overseas sometimes matters more to the bond market and to the central bank than what happens at home. In those seven months, 10-year JGB yields proceeded to decline rather precipitously, by 100bp. The move to lower yields ended, temporarily, with the BoJ reversing course on its policy rate. The dot-com bubble had popped and equity markets began a multi-year decline.

Similar to the BoJ back then, the Fed is now finding itself subject to what is happening overseas. The outcome of the March FOMC meeting, with the median participant removing two rate hikes in 2016, and Fed Chair Yellen’s subsequent speech were much more dovish than expected by the market. Both referenced risks posed by global economic and financial developments. Presciently, our US economists had also removed two rate hikes from their 2016 outlook earlier that month. Their views on US growth and inflation are well below consensus – prompting us to deliver well below consensus Treasury yield forecasts.

We see 10-year Treasury yields ending 2016 at 1.75%, near current levels. But we see even lower yields catching investors off guard in the middle quarters of the year.

The lessons I learned in Japan leave me comfortable with this outlook. Years of staring at low JGB yields certainly immunized me from the sticker shock associated with low Treasury yields. And I know that investors tried to short JGBs mostly without success for years. But it wasn’t until I read Richard Koo’s tome, The Holy Grail of Macroeconomics: Lessons from Japan’s Great Recession, that I began to understand why yields got and remained so low.

Koo’s book changed the way I viewed the world and the way I interpret the message from government bond markets. Koo laid out the concept of a balance sheet recession so clearly that anyone with such an understanding ex ante would have never dared short the JGB market. The idea that credit demand could become inelastic with respect to price struck me as novel. That the price of credit, even government credit, could fall without a commensurate increase in demand perfectly explained the way the JGB market evolved during Japan’s lost decades.

The idea also explains the way global sovereign bond markets have evolved since the world emerged from the Great Financial Crisis. As our economists have suggested before, the world is dealing with demand deficiency. The decline in government bond yields globally suggests simply that the deficiency is growing. If the private sector is not willing or able to borrow and spend enough to generate a sustainable inflation impulse, despite the increasingly lower costs to do so, then the public sector should step in to prevent deflation.

Ultimately, that is the message from government bond markets today. The public sector, to the extent it can control its own money supply, needs to borrow and spend because the private sector is not spending enough. The situation has gotten so extreme that investors are willing to pay certain governments to do just that. In Japan, with a negative yield on 10-year JGBs, investors are paying the government to borrow out to a 10-year term and spend. If the public sector ignores these types of messages on a global scale and private demand globally remains deficient, those same investors will accept still lower yields on government bonds outside of Japan – our base case for the rest of 2016.

* * *

For more, read our August 2015 post: “Japan’s Dire Message To Yellen: “Don’t Raise Rates Soon”

via Zero Hedge http://ift.tt/1X94CzU Tyler Durden

via Zero Hedge http://ift.tt/1X94DDX williambanzai7

At least two people died and 30 suffered injuries when an Amtrak train collided with a backhoe on the tracks at approximately 7:53 am near Booth Street in Chester, causing the lead engine of the train to derail.  Service has been suspended along the Northeast Corridor in Pennsylvania and New Jersey. According to Amtrak, there were 341 passengers and seven crewmembers on board Palmetto train 89 at the time of the incident, which took place in Chester, Delaware County.

We are aware of the incident involving the Palmetto train 89 south of Philadelphia and we will provide update as they become available.

— Amtrak (@Amtrak) April 3, 2016

#BREAKING: Amtrak train crash near Philadelphia leaves 2 dead, others injured. https://t.co/6yy0DgFlzy http://pic.twitter.com/AB0tx0pISH

— NBC4 Columbus (@nbc4i) April 3, 2016

Deadly train crash: @Amtrak launches emergency call hotline: https://t.co/JAvGHvJ7wf #BREAKING http://pic.twitter.com/X4DzCs04L6

— NBC10 Philadelphia (@NBCPhiladelphia) April 3, 2016

#BREAKING: Amtrak passenger train derails heading to Savannah https://t.co/l925uv8aca details on Channel 2 this AM. http://pic.twitter.com/ut2QGJ23uZ

— WSB-TV (@wsbtv) April 3, 2016

Ambulances staging at 9th and Langley. Passengers filing into church with luggage. #Amtrak @6abc http://pic.twitter.com/RqDdCpLQ6K

— Trish Hartman (@TrishHartman) April 3, 2016

Officials confirmed two people have died on the train traveling from New York to Savannah, Georgia, without revealing the identities of the victims.

Just got to scene of @Amtrak crash in Chester. Medical Examiner on scene. Two confirmed dead.

— Trish Hartman (@TrishHartman) April 3, 2016

Wheel from crane that was apparently hit by Amtrak train in Chester. @PhilHeron http://pic.twitter.com/gYIpT3sTf5

— Pete Bannan (@PeteBannan) April 3, 2016

Amtrak has suspended service on the Northeast Corridor after an Amtrak train derailed during an accident in Chester. SEPTA has also suspended service on the Wilmington/Newark Line due to the incident.

Officials say Amtrak Train 89, operating from New York to Savannah, Ga., struck a backhoe that was on the tracks at approximately 7:53 a.m. Sunday morning near Booth St. in Chester, causing the lead engine of the train to derail.

“This morning, Amtrak Train 89, operating from New York to Savannah, Georgia, struck a backhoe that was on the tracks and derailed the lead engine south of Philadelphia,” Amtrak spokesman said, adding the cause of the crash is now being investigated.

Lines at rental car here at #PHL 30th St #Amtrak station, “we don’t know what happened” ticket agents say http://pic.twitter.com/iPKHx0sIcZ

— Max Smith (@amaxsmith) April 3, 2016

More details in this developing story.

Stephanie Burroughs, who in the 2nd car of the Amtrak train that crashed outside of Philly, shares what happened.https://t.co/b509aMasgy

— Fox&Friends Weekend (@ffweekend) April 3, 2016

Individuals with questions about their friends and family on train 89 should call Amtrak’s Emergency Hotline at 800.532.9101.

— Amtrak (@Amtrak) April 3, 2016

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When Hillary Clinton decided to run for President again, it is safe to assume that she didn’t spend much time (if any) worrying about whether or not a 74 year old Senator from Vermont named Bernie Sanders was going to get in her way. The polished ex-First Lady and her camp must have thought her nomination to represent the Democratic Party in the upcoming election was a mere formality. However, the road to her nomination has been anything but, and now that she has lost the last five consecutive states, she’s starting to get nervous.

As AP reports, Clinton has become increasingly irritated that Sanders’ surprising resilience is costing her time, money, and political capital. The differences are well documented between the two, and the man hell bent on exposing just how broken and dislocated Wall Street and Washington have become from normal Americans has finally struck a nerve with Clinton and her campaign. Sanders is doing exactly what he said he was going to do, which is tell the truth about the realities of crony capitalism, and how it impacts the everyday American. He has finally brought this fight directly to Hillary by bringing up the massive amounts of money she makes giving reassurance speeches to Wall Street. She is, therefore, quite vexed.

Per AP:

Her aides complain about Sanders’ rhetoric, claiming he’s broken his pledge to avoid character attacks by going after her paid speeches and ties to Wall Street

Hillary leads in the race to 2,383 delegates, but her concern has certainly shifted. It’s no longer Donald Trump that is the focus of the Clinton campaign, it’s simply whether or not Hillary can even win her self-proclaimed “home state” of New York on April 19th. 

For Bernie Sanders however, the road to the nomination has gone exactly how he has wanted it to. The momentum has swung his way, and his first rally in New York, the state causing Hillary to chew all of her fingernails wondering if she can win or not, had an estimated 15,000 person turnout. Sanders noted at the rally in the Bronx: “If we win here in New York, we are going to make it to the White House”. 

While we’re not sure about that, we are sure about this: Bernie’s support is growing, and he is breaking new ground in online campaign funding. He took in $44 million in March alone, surpassing a healthy $43.5 million dollar February. Sanders has raised $184 million dollars thus far, and according to The Hill, 97 percent of that was raised online. Sanders is having a great deal of success keeping himself funded through non-traditional methods, as he prides himself on not taking money from the wealthy and super-PACs.

And while Sanders is focused on upsetting Hillary, he does have a shot or two to send Donald Trump’s way. According to the Washington Post, at a rally in Wisconsin, after referencing a poll that showed him beating Donald Trump in a head to head match-up, Sanders said the following: “And that’s before he really began to expose what a nutcase he really is.”

The problem for Bernie: this is precisely the rhetoric that Trump thrives upon, because while the conventional gameplay may work, and even succeed against Hillary, the Vermont senator will need to dramatically overturn his strategy if and when he ends up facing the real estate mogul.

via Zero Hedge http://ift.tt/1ZW9CcV Tyler Durden

Submitted by Pepe Escobar via TheSaker.is,

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By Jody Chudley, originally posted on the Daily Reckoning

Simple Math Shows America Is Headed for an Economic Disaster

With so many voices streaming at us through our televisions and computers, a person can’t be blamed for tuning out.

For the most part, tuning out is exactly what we should do. But sometimes it is very important that we pay attention…

By listening to Jeremy Grantham, Jim Grant and a host of other investors, a person could have avoided and profited the crashing of the tech bubble of the late ’90s.

By listening to Kyle Bass, Michael Burry and Prem Watsa, an investor could have avoided and even profited from the crashing of the housing bubble in 2008.

Today is another time when we all need to be paying attention. This time, the man we need to be listening to is Stan Druckenmiller.

For 25 years as a hedge fund manager, Druckenmiller compounded money at an annualized rate of return of 30%. Incredibly, he did it without a single down year.

Druckenmiller has a dire warning for all of us. One that requires action.

There is nothing for Druckenmiller to gain from providing this warning. He isn’t talking his book or trying to gain investor support — he isn’t promoting anything. He doesn’t even have a political agenda.

He is spending his own time and money to try to bring this issue to light because he believes it is crucial for the United States.

Druckenmiller simply believes that America is heading for a disaster, and he is trying to use his high-profile position to get people motivated to stop it.

What you need to know about Stan Druckenmiller is that his incredible investing performance was rooted in his skills in making macroeconomic forecasts.

When describing how he was able to compound money at such a crazy rate and not have a single down year, Druckenmiller said:

How did we do it? Very simple. While others were focusing on the present, we looked and focused on the future in terms of analyzing unsustainable situations.

 

And when I look at the current picture of expected tax revenues combined with benefits promised to future generations, this is the most unsustainable situation I have seen ever in my career.

The disaster that Druckenmiller sees coming for the United States is all about changing demographics and entitlement spending. They don’t add up to a sustainable situation.

In 1940, entitlement payments, which include everything from disability payments to Social Security to Medicare, amounted to just over 20% of annual government spending in the United States.

Today, entitlement spending has swelled to nearly 70% of the annual federal budget.

Things are about to get a whole lot more complicated. The 20-year baby boom that took place after World War II is now beginning to result in a retiree boom.

For context, Druckenmiller points out that in 2030, the average age of an American citizen will be older than the average age of a resident of Florida today.

This demographic trend is going to create an entitlement spending catastrophe.

The way the system works, the current workforce provides the tax revenue to support the current senior population. A huge rise in the retiree population relative to the number of people working results in a funding dilemma.

Since 1980, the number of working-age people the country has had has outnumbered those age 65 and over by a count of 5-to 1.

The country has had enough workers generating tax revenue to support the number of retirees.

By 2030, that ratio is going to drop to 2.5-to-1.

By 2029, there will be 11,000 new seniors arriving every day and only 2,000 new adults being added to the workforce to pay for them.

There is just no way that the workforce at that time is going to be able to fund the entitlements of these seniors.

This is a problem because those are commitments that have been made and will have to be paid.

Corporations are required to disclose on their balance sheet the future defined pension obligations that their employees have earned.

Those are very real liabilities for companies that are going to have to be paid, so they should be included.

The balance sheet of the United States, meanwhile, doesn’t account for the future payments that it has promised to its senior citizens. Again, like defined benefit pension payments, these are very real obligations.

They should be recorded as liabilities of the United States.

Here is how much the U.S. debt would increase, assuming no change in tax rates, if those obligations were included:

Source: Stan Druckenmiller presentation

That chart makes the size of the problem abundantly clear. There are a lot of people already very concerned with the amount of debt the United States has. Imagine how they would feel if they were aware that with these liabilities conclude the number is 20 times larger.

This is a case of simple math.

Either tax rates increase in a massive way or the payments to seniors have to be cut significantly. The status quo doesn’t work. There just isn’t going to be anywhere close to enough money coming in to fund the payments going out.

The country can’t borrow its way out of a funding issue of this size.

This issue that Druckenmiller is so passionate about is a huge problem. One with no possible solution that will be popular with the American voters.

Either higher taxes or lower benefits. Likely some combination of both. Both very unattractive options for big percentages of the voter base.

You can hear the politicians kicking this can further down the road, can’t you?

Fixing this is going to require some real sacrifice by the American people. That doesn’t sound like a very appealing platform upon which to get re-elected.

The finances of the entire world are run by short-term thinkers. Central bankers have been dead set on trying to inflate economies for a decade now using more and more aggressive easy-money policies.

To try to make the short term a little better, these central bankers have been perfectly willing to roll the dice on the long term.

The issue that Druckenmiller has raised will have to be dealt with. I’m sure it will be dealt with far later than it should be as politicians do kick that can down the road.

By doing that, they are only going to make the corrective actions that the country has to take more severe.

It is crucial that all of us realize that our long-term financial well-being really needs to be taken care of by one person. That one person is the man or woman you look at in the mirror in the morning when you are brushing your teeth.

We have to make sure we protect our wealth diligently and invest in assets that will retain their value when the consequences of all of this short-term thinking arrive.

Because eventually, they will.

via Zero Hedge http://ift.tt/1UN0acy Tyler Durden

Source: hln.be

We have already reported back to you several times on how desperate the European Central Bank seems to be in its attempts to get the money circulation in the Eurozone going again. Unfortunately all of its previous ‘ideas’ didn’t really work out too well, and the ECB just continues to cut its most important interest rates to discourage the banks to deposit cash at the ECB in overnight deposits.

Nice theories don’t always work in the real world, and the idea of negative interest rates definitely didn’t help at all. But then, the ECB’s recent statements contained some interesting surprises. During the Q&A session with journalists, Mario Draghi confirmed ‘ helicopter money ’ is a real thing, and just one week later, one of the main board members of the ECB was quoted in an Italian newspaper saying helicopter money is interesting (and cannot be ruled out).

That would be quite unique, and we were very intrigued when we got our hands on a letter from a Belgian bank to an existing (business) client. In that letter, the bank offered the client an immediate credit facility of 3,750 EUR (which could immediately be expanded to 10,000 EUR upon request).

You might think that’s business as usual, but that’s not the case in Belgium.

The most intriguing part is that this bank is 100% government-owned, and that the client has never applied for a loan, nor does he need one. In fact, the company is perfectly healthy, has no net debt but a net cash position on the balance sheet, but still was offered to borrow money without any installment fees whatsoever. The business owner also confirmed to us he has been client at a larger non-government bank for a much longer period of time but has never ever even received just a request to find out what his capital needs are.

Source: letter provided to us, in Dutch.

Was this a publicity stunt? No. Included in the letter was a SIGNED CONTRACT by the bank’s credit department, stating the credit facility HAS ALREADY BEEN OPENED (the highlighted part in yellow states ‘this proposal will automatically turn into a contract from April 15 on’) and no further action was required. In fact, there was an accompanying letter promoting another credit facility of up to 22.5M EUR (keep in mind the business we’re talking about has a total annual revenue of less than half a million US Dollar) which could be made available upon a second check and after paying a 2,500 EUR installment fee. That’s right, a bank was proposing a substantial line of credit with an installment fee of 0.01% of the total amount that would be borrowed.

We don’t like to use the term ‘ helicopter money ’ loosely but in this case it certainly looks like this (again; government-owned) bank has gone in overdrive to force credit lines down people’s and company’s throats. Giving away credit lines with no end date looks pretty much like a ‘please borrow some money from us’ type of thing. And we have saved the best for last. Belfius Bank is nothing less but the nationalized part of Dexia, the bank that collapsed during the Global Financial Crisis and was nationalized in 2011 after more shit has hit the fan, and the cost to insure against a default of this bank more than hundredfolded, as you can see on the next image.

Source: zerohedge.com

Will this help the money circulation in the Eurozone? Let’s have a look at the evolution of the M1 Money Supply rate. The M1 supply rate is the ‘purest’ way to find out how much money there is in circulation, and when you pull up the chart, you’ll indeed notice there has been a tremendous increase in the money supply in the Eurozone.

Source: tradingeconomics.com

And that’s not it. Despite the sharp increase to 6,700 B EUR (up 21% in just two years), the consensus estimates for the further development of the M1 Money Supply Rate are calling for an additional 13% increase within the next 12 months and a 62% increase by the end of this decade.

Helicopter money no longer is a vague theoretical concept, and it’s becoming more realistic by the day.

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Submitted by Brandon Smith via Alt-Market.com,

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