We Need A Complete System Overhaul: 5 Charts That Blow Up The Status Quo

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

The promises made when there were 7 workers for every retiree cannot be kept when there are only 2 workers for every retiree.

In an auto-mechanic analogy, the Powers That be are assuring us those grinding noises under the hood and the black smoke chugging out of the tailpipe are no big deal and can be fixed with a minor tuneup. They're wrong; we need a total overhaul to avoid a total system breakdown.

The grinding noises and black smoke are telling us the engine of our economy is on its last legs. The Powers That Be (Federal Reserve, government at all levels, mainstream corporate media, etc.) have been masking the need for an overhaul with trickery for the past seven years, the financial equivalent of using heavy oil and spray-painting the battery to make it look new.

With the tranny and top end about to blow, the Status Quo keeps claiming everything's running great and the new set of sparkplugs and minor valve adjustment (i.e. zero-interest rate policy and more banking regulations) have restored the economy to top performance.

It's all lies, fantasy and propaganda. Nothing has been fixed. Automation has just started devouring human labor/jobs, corporate profits have peaked, the trick of pushing the stock market higher by borrowing money to buy back shares is finally falling apart, the trends of wealth and income inequality are roaring ahead full steam, and our entire system of taxation, entitlements and debt is about to blow up.

As I explain in my new books A Radically Beneficial World and Why Our Status Quo Failed and Is Beyond Reform, the big structural trends will destroy the status quo: automation/loss of jobs leads to lower profits and wages which means lower tax revenues while costs of an outsized generation retiring will soar for the next 30 years.

The promises made when there were 7 workers for every retiree cannot be kept when there are only 2 workers for every retiree. As automation commoditizes labor, goods and services, the ratio of full-time workers to retirees will continue to slip: it's already under two-to-one, as there are 123 million full-time jobs and 65.48 million Social Security beneficiaries.

Please glance at the following charts. The point here isn't to play doom-and-gloom; it's to accept the reality that the current set of promises and power arrangements is going to blow up and we'll need a complete overhaul of our system.

Chart 1: Medicare costs will continue skyrocketing for decades:

Chart 2: all three major entitlement programs–Medicare, Medicaid and Social Security–are expanding rapidly while tax revenues are stagnating (and could plummet in a systemic recession). (For context, the entire defense budget is around $700 billion.)

Chart 3: the inevitable consequence is soaring entitlement deficits for decades:

Chart 4: we are at the base of a steep mountain of government spending:

Chart 5: funding this mountain will require a doubling of federal taxes:

Toss in the crushing burden of skyrocketing debts and the rise of inflation (already running 20% hotter than official statistics) and the meltdown of the status quo is only a matter of time. Anyone who thinks taxes can double and the consumer-based economy will be just fine is delusional.

We need a complete system overhaul, and the sooner we face up to this sobering reality, the sooner we can start working on real solutions.

via http://ift.tt/1OlwETN Tyler Durden

DOJ Probing Whether Citadel Is Frontrunning Its Clients

Over two years ago, and just days after Michael Lewis released Flash Boys focusing attention on the ongoing criminal practice of orderflow frontrunning by such Fed intermediaries as Citadel (and many other now entrenched and recently IPOing names), none other than Citadel’s head of “Execution Services” which we supposed is the internal name of the firm’s client-facing HFT group, Jamil Nazarali, proclaimed that small investors have never been so fortunate and said, with regard to Michael Lewis’ now infamous book Flash Boys, “The most important thing that the market can do is stop… pointing fingers at everyone else.”

As we said back then “Citadel, who allegedly provides the NY Fed’s VIX trading capabilities, are among the very largest high-frequency traders in the market (and the most levered), so one would surely expect that Citadel would like us all to stop pointing fingers at them. As Bloomberg reports, Nazarali said yesterday during a panel discussion at the Milken Institute Global Conference in Beverly Hills, California, “things are much better today than they were 10 to 15 years ago.

Maybe for Citadel; for investors – who are tired if not disgusted of having their orders constantly frontrun by internalizers and wholesale market-maker venues such as Ken Griffin’s Citadel – not so much.

Which is why we were not surprised, though certainly delighted, to see that after years of railing against Citadel’s dominant position at the intersection of HFT trading and retail orderflow – recently Citadel was found to be the largest private US trading venue – this morning Reuters reports that Federal authorities are investigating the market-making arms of Citadel LLC and KCG Holdings looking into the possibility that the two giants of electronic trading are giving small investors a poor deal when executing stock transactions on their behalf.

According to Reuters, the DOJ has subpoenaed information from Citadel and KCG related to the firms’ execution of stock trades on behalf of clients. Not just Citadel, the DOJ is also looking at a number of high-speed trading firms that pay retail brokerages to sell them their flow of customer orders for stock trades. This segment of the industry is known as wholesale market making.

In the case of Citadel, authorities are examining internal data concerning the firms’ routing of customer stock orders through exchanges and other trading systems, to see whether they are giving customers unfavorable prices on trades in order to capture more profit on the transactions.

In other words, the DOJ is looking into whether Citadel is frontrunning its clients, something we have claimed for years.

As a reminder, Citadel is so big and its own private stock-trading platform is so large that, if it were an official exchange recognized by the Securities and Exchange Commission, it would one of the largest registered exchanges in the United States – bigger than Nasdaq Inc, according to data published last month by the Financial Industry Regulatory Authority. Citadel Execution Services, the firm’s wholesale market-making unit, executes 35 percent of all trades by retail investors in U.S.-listed stocks, according to the firm.

KCG was formed in December 2012 from the merger of New Jersey-based Knight Capital Group and Chicago-based high-frequency-trading firm Getco LLC. Knight was forced into the merger after an August 2012 computer trading glitch led to millions of accidental stock orders flooding the market in less than an hour, leaving the firm with a $468 million loss

The documents subpoenaed from KCG related to the firm’s market making activities from 2009 to 2011, Reuters adds. In 2012, the head of KCG’s electronic trading group, which included its wholesale market making arm, Jamil Nazarali, left the firm to join Citadel. Since then, Citadel’s own wholesale market maker has grown substantially under Nazarali. Nazarali is also the same person two after Flash Boys came out said that “small investors have never been so fortunate.” Let us guess: “because bid-ask spreads have fallen”, right? Well, first that’s wrong. And second, how fortunate has Citadel been to be able to frontrun billions of retail orders and generate billions in risk free profits.

And while we doubt anyone will go to prison, there is a small chance Citadel’s egregious frontrunning will at least be minimized for the time being: the inquiry is being driven by Justice Department authorities who previously investigated banks for alleged wrongdoing in the market for residential mortgage-backed securities. Making those cases, which yielded billions of dollars in penalties, required investigators to master some of finance’s most complex markets. The current undertaking presents similar technical challenges.

That said Reuters adds that it isn’t clear what sort of evidence the federal investigators may have compiled in their inquiries. And it is possible that no cases will result from the investigations. A spokesman for KCG declined to comment, as did a Justice Department spokesman. In an August 2015 filing with the SEC, KCG disclosed the existence of a Justice Department probe but provided no details. A spokeswoman for Citadel said she could neither confirm nor deny the firm’s involvement in the investigations, but said Citadel cooperates fully with any requests from enforcement agencies.

“As one of the largest market-makers and providers of liquidity in the U.S., we regularly receive inquiries from and work closely with a number of regulators and others regarding our business and market practices,” said Katie Spring, a spokeswoman for Citadel. “We cooperate fully with such requests, but as a matter of practice, we simply don’t confirm any particular inquiry.”

What happens if the DOJ does find what has been obvious to market participants for years?

If authorities do move ahead, they would be marching forcefully into the debate over high-speed trading. Critics have alleged that firms with the fastest trading technology are using speed to manipulate stock prices, giving investors a raw deal. The industry counters that its technology delivers cheaper and more transparent trades to investors.

It also delivers guaranteed profits to itself, because while on one hand Citadel is a massive market-maker, responsible for the biggest portion of retail flow traffic, on the other it happens to be the most leveraged hedge fund in the world in terms of regulatory to net assets

This means that the fund has massive prop capital at its disposal to take advantage of its knowledge of flow traffic. It also explains why Citadel’s “tactical trading” unit has been one of the best performing hedge funds for years even as the rest of the hedge fund industry has fallen behind.

Finally, it’s not just the DOJ: Citadel and KCG are among several firms being examined in a separate probe by the New York State Attorney General, Reuters reports. New York authorities are examining firms that buy and sell the flow of trading orders placed by investors, according to a person familiar with that investigation. The authorities are also looking at other practices in the world of high-speed stock trading that may disadvantage retail investors. Citadel and KCG declined to comment on that inquiry.

As noted above, we doubt that anyone will end up in prison, however we are curious if there is any connection between the existence of the probe which has  clearly put the firm’s frontrunning operations under the microscope, and Citadel’s recent underperformance. We are also curious if Citadel will have no choice but to minimize if not abolish outright its retail orderflow frontrunning as a behind the scenes settlement with the DOJ. If so, the market just may regain some semblance of normalcy. Now if only there was some way to eliminate central bank manipualtion and intervention as well…

via http://ift.tt/21Saro5 Tyler Durden

Frontrunning: May 10

  • World stock markets rise while yen falls back (Reuters)
  • Yen Falls a Second Day as Japan Reiterates Ability to Intervene (BBG)
  • Say goodbye to OPEC, Russia’s Sechin says (Reuters)
  • European Stocks Buoyed by Banks (WSJ)
  • Fed’s Dudley: More Reserve Currencies Would Make for Stronger Financial System (WSJ)
  • Dead-of-Night Reversal Puts Brazil Impeachment Back on Track (BBG)
  • The Recession’s Economic Trauma Has Left Enduring Scars (WSJ)
  • China angered by U.S. navy patrol in South China Sea (Reuters)
  • FDA Seeks to Redefine ‘Healthy’ (WSJ)
  • Pro-Clinton Super-PAC to Start Anti-Trump Ad Barrage Before June 8 (BBG)
  • Saudi Aramco to press ahead with oil expansion (FT)
  • The World’s Most Extreme Speculative Mania Unravels in China (BBG)
  • Credit Suisse Posts Loss as CEO Signals Cost-Cuts Progress (BBG)
  • Record-Breaking Container Ship Ends Brief U.S. Service (WSJ)
  • China Railway Materials says company will try to pay debts in time  (Reuters)
  • Berlin opens way to Greek debt relief talks (FT)

 

Overnight Media Digest

WSJ

– North Carolina and the Obama administration filed dueling lawsuits against each other Monday over the state’s bathroom law, in a legal showdown that some experts said could settle for good the question of whether the 1964 Civil Rights Act protects transgender people. (http://on.wsj.com/1T2thmF)

– Donald Trump sought Monday to clarify his views on fiscal and monetary policy, saying he was open to compromise on tax cuts but wouldn’t try to alter the terms of the nation’s $19 trillion in debt, which he called “absolutely sacred.” (http://on.wsj.com/1T2tnL6)

– Alonzo Knowles, who was accused of hacking email accounts of celebrities to steal unreleased scripts, personal information such as social security numbers and explicit photos and videos pleaded guilty in a New York federal court Monday to criminal copyright infringement and identity theft. (http://on.wsj.com/1T2tpTi)

– California Gov. Jerry Brown on Monday issued an executive order making permanent some temporary water restrictions imposed to help the state through a severe drought, despite a wet winter that eased some dry conditions. (http://on.wsj.com/1T2tzKk)

 

NYT

– Foreign investment is sprouting along Ukraine’s western borders, but the country’s recent history of strife has made some companies hesitant to move in. (http://nyti.ms/1T7fTD8)

– As Washington remains deadlocked over a solution to Puerto Rico’s rapidly worsening debt crisis, Treasury Secretary Jacob J. Lew traveled to the island on Monday to put human faces on the dry numbers underlying its woes, seeking to pressure Republicans in Congress to move quickly on a rescue package. (http://nyti.ms/1Wm6ad5)

– Takata, the Japanese airbag manufacturer at the center of the largest auto safety recall in history, revised its estimates of a profit in the latest fiscal year to a loss of $120 million as the costs of the crisis mounted. (http://nyti.ms/1T2sLVG)

– Facebook scrambled on Monday to respond to a new and startling line of attack by the website Gizmodo that accused the social network of suppressing stories from conservative news sources. (http://nyti.ms/1Ol84SX)

 

Canada

THE GLOBE AND MAIL

** Amid predictions the fire that drove the evacuation of Fort McMurray could burn for weeks or months, transportation companies that serve northern Alberta are adding flights and waiving some fees to help people get where they need to go. (http://bit.ly/1rPc3SJ)

** Canada Finance Minister Mike de Jong has issued a rare order under British Columbia’s Freedom of Information law to ensure that travel receipts and daily calendars for cabinet ministers and their senior officials are automatically made public. (http://bit.ly/1rPcGvs)

** Former radio host Jian Ghomeshi is expected to sign a peace bond on Wednesday that could preclude him going to trial a second time for sexual assault, the Globe and Mail has learned. (http://bit.ly/1rPdYXB)

** The Canada Revenue Agency has launched investigations into 45 Canadian taxpayers named in the Panama Papers, and the number is set to grow as federal auditors pore over the newly acquired data. (http://bit.ly/1rPdXCV)

NATIONAL POST

** Two major Canadian banks have signed on to Apple Pay, marking a significant expansion of the tech giant’s mobile wallet service in Canada. Starting Tuesday, debit and major credit cards issued by Royal Bank of Canada and Canadian Imperial Bank of Commerce will support Apple Inc’s payments technology. (http://bit.ly/1rPf0Tp)

** Despite having the highest degree of digital literacy in the world, Canadians are far less likely than others around the globe to badmouth companies online when they have had a negative customer experience, according to a new survey from Accenture. (http://bit.ly/1rPfBEE)

** As oilsands companies scramble to determine when they can start producing oil again in fire-ravaged northern Alberta, the industry is estimated to be losing C$70 million ($54 million) every day that production is off line. (http://bit.ly/1rPfJE3)

 

via http://ift.tt/1qb2T1T Tyler Durden

One Killed, Three Stabbed At German Train Station By Knife-Wielding Assailant Screaming “Allahu Akbar”

One man was killed, and three were stabbed A German national stabbed three passengers at a train station near Munich early on Tuesday, after a 27 year old knife-wielding assailant reportedly shouting “Allahu Akbar” attacked people at Grafing train station 32 km southeast of Munich at about 5 a.m. local time.

The attack might have an Islamist motive, officials said. “The perpetrator made remarks during the attack which point to there being a political motive,” Bavarian police said in a statement, adding he had been arrested and there were no further suspects.  Apart from “Allahu Akbar” the man was heard shouting “unbelievers,” Das Bild newspaper reported, citing local witnesses.

The prosecutor has confirmed the death of a 50-year-old man. He added that “two people are badly wounded, one is in critical condition.” The three injured are aged 58, 43 and 55. The “assailant made remarks at the scene of the crime that indicate a political motive – apparently an Islamist one,” Ken Heidenreich, spokesman for the prosecutor’s office, told AFP. “We are still determining what the exact remarks were.”

The 27-year-old German citizen stabbed a newspaper delivery man in the back, a firefighter told the Merkur paper. The attacker is reportedly from the city of Hesse in central Germany. He doesn’t have a migrant background, the ARD broadcaster said. According to German law enforcers, the alleged perpetrator was arrested on the spot. He has no criminal record. 

“The idea that people enter the station or deliver newspapers there and then become victims of a maniac is terrible. Hopefully they will recover completely,” the town’s mayor Angelika Obermayr told the Sueddeutsche Zeitung. “I am most grateful to the police, doctors, paramedics and our firefighters who reacted quickly on the scene.”

According to RT, the interior minister of the state of Bavaria, Joachim Herrmann, confirmed that the perpetrator was a German national, without providing details on the incident. “When it comes to revealing more about their background, or whether mental illness or drug addiction played a role, these are things that require further clarification. I think we will make further announcements on this later in the day.”

Bayerischer Rundfunk identified the attacker as Paul H., a young man with mental health problems. ARD cited sources claiming he was also a drug addict.

The station has been closed following the attack. “The station is a crime scene,” and specialists will be working there, a police spokesman told the Sueddeutsche Zeitung.

This is not the first knife attack in Germany that has an apparent Islamist motive. In February, a 15-year-old girl, Safia S., stabbed a police officer at the main train station in Hannover. According to prosecutors, the girl had “embraced radical jihadist ideology of the foreign terrorist group Islamic State of Iraq and Syria.” In September 2015, a 41-year-old, Rafik Y. of Iraqi origin, seriously injured a female officer in Berlin. The attacker was later revealed as a known Islamic extremist.

via http://ift.tt/1Oe9vYG Tyler Durden

Global Stocks Jump; Oil Rises As Yen Plunges After Another Japanese FX Intervention Threat

In what has been an approximate repeat of the Monday overnight session, global stocks and US futures rose around the world as oil prices climbed toward $44 a barrel, with risk-sentiment pushed higher by another plunge in the Yen which has now soared 300 pips since the Friday post-payroll kneejerk reaction, and was trading above 109.20 this morning. At the same time base metals regained some of Monday’s steep losses following Chinese CPI data that came in line while PPI declined for 50 consecutive months however showed a modest rebound from the prior month on the back of China’s recent, and now burst, speculative commodity bubble.

The weaker yen was the main driver of overnight action: “The weakening yen is acting as a boost to stocks,” Yoshihiro Okumura, general manager at Chiba-Gin Asset Management told Bloomberg. “We’re seeing some risk-on moves overall. The key going forward is whether we’ll get a sense that all the negative earnings are over with now.” The yen weakened for a second day after Japan’s Finance Minister said the government can intervene to stabilize foreign-exchange markets if necessary. Japan’s currency fell against all its Group-of-10 peers after Taro Aso, speaking in parliament in Tokyo Tuesday, reiterated that the U.S. doesn’t object to the Asian nation’s policy. His comments came a day after he said “it’s natural that Japan has means to intervene” in the foreign-exchange markets.

“The increase in Japan’s talk about intervention is drawing market attention,” said Sean Callow, a senior foreign-exchange strategist at Westpac Banking Corp. in Sydney. “Japanese officials run the risk being ‘the boy who cried wolf’ if they keep talking without acting.” Considering they have been crying wolf all of 2016 after the disastrous NIRP experiment, one would assume the market has had enough, and yet here we are with a 300 pip squeeze in two days.

The MSCI All Country World Index’s 0.4 percent gain was its biggest in three weeks as Credit Suisse Group AG boosted European banks and Japanese shares rose. Nickel led a rebound in a Bloomberg measure of raw-materials prices as Japan’s largest supplier forecast a widening shortage. Philippine’s peso jumped the most in six weeks after Rodrigo Duterte called for “healing” after claiming victory in a presidential election and trading Europe signaled Brazilian markets would rebound as the move to oust President Dilma Rousseff appeared back on track. Optimism was dented by the latest industrial output print in Germany which declined more than expected in March while France’s unexpectedly fell highlighted the uneven nature of the recovery.

Cited by Bloomberg, Michael Hewson, a London-based market analyst at CMC Markets said that”people are slightly less risk averse now than they were end of April. Credit Suisse earnings weren’t great, but they were better than the worst of expectations. Still, the optimism is a little premature. Economic data hasn’t been very convincing.” So not great, but better than the worst expectations, and the result is a 1.5% jump in Europe and a 0.6% bounce in US futures. As a reminder, on Monday morning Goldman cuts its Stoxx 600 and Eurostoxx 50 forecast. Now we know why.

Some more details: the Stoxx Europe 600 Index advanced 1.3 percent as of 10:31 a.m. London time, with all of its industry groups rising. Lenders led the gains. Greece’s ASE Index rose 2.7 percent for the biggest rally among western-European markets. S&P 500 futures added 0.6 percent after the gauge closed little changed on Monday. Credit Suisse rallied 4.8 percent after posting a smaller loss than analysts estimated. Pandora A/S jumped 9.8 percent after the maker of charm bracelets reported better-than-projected results and raised its full-year forecast.

Market Wrap

  • S&P 500 futures up 0.6% to 2066.5
  • Stoxx 600 up 1.3% to 337.5
  • Eurostoxx 50 +1.5%
  • FTSE 100 +0.8%
  • CAC 40 +1%
  • DAX +1.1%
  • IBEX +1.9%
  • FTSEMIB +2%
  • MSCI Asia Pacific up 0.7% to 127.4
  • Nikkei 225 up 2.2%
  • Hang Seng up 0.4%
  • Kospi up 0.7%
  • Shanghai Composite up 0%
  • ASX up 0.4%
  • Sensex up 0.3%
  • Euro up 0.01% to $1.1384
  • Italian 10Yr yield down 4bps to 1.42%
  • Spanish 10Yr yield down 3bps to 1.56%
  • US 10Yr yield up 2bps to 1.77%
  • German 10Yr yield up 0bps to 0.13%
  • Gold spot up 0.2% to $1265.9/oz

Global Top News

  • Republican Senators Nowhere Near Uniting Over Trump as Nominee: some hope to meet with party nominee and urge new approach
  • Duterte Claims Big Philippine Win Amid Doubts on Economic Smarts: vice presidential vote count remains too close to call
  • Credit Suisse Posts Loss as Thiam Signals Cost-Cutting Progress: says ‘subdued’ market conditions may persist for a while
  • Brexit Backers Close Gap on ‘Remain’ in BCC Poll of Businesses: support for Leaving EU up to 37% from 30%
  • Osborne Says Pent-Up Investment to Boom If U.K. Stays in EU: says delayed decisions will go ahead if Brexit rejected
  • Several People Injured in Knife Attack in Grafing Near Munich: 4 to 5 people were injured, one of them seriously
  • EnCap Said to Seek $1.5 Billion for ‘Stack’ Oil Explorer PayRock: according to people with knowledge of the matter
  • Emirates Profit Rises 50% on Fuel Windfall, Long-Haul Routes: hedging policy reaps full benefit of declining oil price
  • Pop. Emilia Weighs Bid for All 4 of Italy’s Rescued Banks: MF: MF report doesn’t cite anyone
  • LendingClub Founder Goes From Wall Street Darling to Unemployed: Renaud Laplanche resigns after allegations tied to loan sales

Looking at regional markets, Asian stocks traded mostly higher after encouraging Chinese inflation figures supported a turnaround in sentiment. Nikkei 225 (+2.2%) outperformed as JPY weakness bolstered exporter sentiment, while ASX 200 (+0.4%) rebounded off its worst levels as strength in financials offset commodity weakness in which WTI crude futures declined below USD 44/bbl and iron ore dropped around 6%. Shanghai Comp (flat) recovered from opening losses after the latest China data release inspired an improvement in sentiment. Finally, 10yr JGBs were mildly lower as firm gains in Japanese stocks dampened demand for safe-haven assets while today’s 10yr auction also saw a decline in the b/c from prior.

Top Asian News

  • China Said to Consider Curbs on Backdoor Listing Valuations: CSRC weighs deal quota for overseas-listed Chinese cos.
  • Hedge Funds Bullish on the Philippines as Duterte Wins Election: Civetta, F&H say they are encouraged by nation’s fundamentals
  • China April Retail Auto Sales Rise 6.4% on Year, PCA Says: China’s retail auto sales in April rose to 1.72m units
  • Mitsubishi Motors Pain Spreads With $3 Billion Exposure Risk: Trading co. Mitsubishi discloses potential impact of fraud
  • SoftBank Profit Misses Estimates on Continued Losses at Sprint: Reports net income of 474.2b yen for fiscal year ended March 2016 vs 576.5b yen est.
  • Japan’s Top Trading Houses Post First Net Losses as Prices Slump: Mitsubishi, Mitsui post combined losses of 232.8b yen
  • 1MDB Default Deters Funds as Malaysia Can’t Put Scandal to Bed: Political situation still one of “biggest hurdles,” PineBridge says

European equities trade higher this morning, benefiting from the upside seen in Asia, combined with some notable positive earnings pre-market. The most notable earnings release pre-market came from Credit Suisse, with the Swiss Bank leading the way this morning, trading higher by over 5% after announcing a smaller than expected loss. The strength in equities has contributed to some of the downside in fixed income markets, with Bunds trading lower today and slipping back below the 164.00 level. Bunds have also been impacted this morning by the auction calendar, with a number of countries coming to market today including the Netherlands, Austria, UK and Germany. Elsewhere, as mentioned yesterday EUR denominated corporate bond sales have picked up this week as companies look to take advantage of low interest rates after publishing their quarterly earnings.

Top European News

  • Thyssenkrupp Cuts FY Forecast on Steel Price; Beats 2Q Estimates: now sees FY adj. Ebit of at least EU1.4b, compared w/ previous guidance of EU1.6b-EU1.9b
  • Abertis Reaches Accord to Buy 51.4% of A4 Holding for EU594M: A4 Holding main assets are A4 Brescia-Padova, A31 highways in Italy
  • ING Profit Falls on Regulatory Costs, Loss at Markets Unit: regulatory losses jumped on levies, deposit insurance
  • Adecco CEO Says U.K. Finance Hiring Sputters on Brexit Vote: Dehaze tells Bloomberg TV France is slowly recovering
  • Munich Re Revises Annual Profit Target on Ergo, Investments: sets new profit target of EU2.3b vs previous target of EU2.3b-EU2.8b
  • Nokia Revenue Misses Estimates Amid Waning Carrier Spending: CEO Suri seeking growth after Alcatel-Lucent acquisition
  • Nordea CEO Says Headcount Must Fall to Meet Cost-Cut Goals: CEO says “low 40s” should be cost-to-income goal for Nordea
  • EasyJet Posts Loss as Terror Clips Demand, Weighs on Fares: over-capacity hurting European carriers on short-haul routes
  • Ditecsa Prepares Offer for Abengoa Unit, Expansion Reports: unit has 1,500 staff, revenue of ~EU400m

In FX, The yen slid 0.9 percent to 109.25 per dollar, adding to Monday’s loss of 1.1 percent. It declined versus all of its 16 major counterparts, except the South African rand. Bloomberg Dollar Spot Index fell 0.1 percent, after a five-day winning streak that marked its strongest run of gains in almost a year. The Philippine peso strengthened 0.8 percent as Duterte, the tough-talking mayor of Davao City, sought to calm markets and win over Filipinos and investors watching closely how he will manage the economy.  there has been plenty of data releases overnight but none which majorly influenced FX, or indeed any of the key markets. Malaysia’s ringgit slumped to a seven-week low and Russia’s ruble weakened as trading resumed following a slide in oil on Monday. South Korea’s won fell to the lowest in almost eight weeks.

German trade data showing an improvement in the surplus, while the equivalent UK stats revealed a tighter, but still wide deficit. French industrial and manufacturing production was notably weak, but for the EUR, it was another tight trading session against the USD. However, we did see the greenback giving back some of its recent gains vs the CAD, more modestly so against GBP, but vs the JPY, the positive sentiment in equities saw the lead spot rate tipping 109.00 , with the prospect for a move on towards 110.00 now very much on the cards. Some moderation also seen in AUD/USD, with dealers reporting strong bidding interest at .7300. The recovery has been slow, but in line with the risk on tide. Little on the US data slate, so focus on Wall Street on the JPY pairings, with CAD/JPY in focus given the underlying spot moves seen this morning — up over 1.5 JPY from yesterday’s lows.

In commodities, WTI and Brent have been pushing higher this morning with WTI heading toward the USD 44.00/bbl level. Gold has seen a slight reprieve from yesterday’s sell off up marginally 0.15% as the dollar index slows down. Silver is also trading in positive territory up 0.44%.Meanwhile in base metals copper and iron ore were mixed with the red metal edging a mild recovery while Singapore iron ore futures declined below USD 50/mt for the first time since March.

On today’s US calendar the main release of note is the March wholesale inventories and trade sales report. As well as that, we’ll get the NFIB small business optimism survey reading and March JOLTS job openings data. Fedspeak wise it is the turn of Dudley who is due to speak this morning in Zurich (at 8.15pm BST) on the international monetary system.

Bulletin Headline Summary from RanSquawk and Bloomberg

  • European equities trade higher across the board as a pick-up in risk sentiment continues to guide price action
  • This sentiment has filtered through to FX markets with USD/JPY reclaiming 109.00 to the upside
  • Looking ahead, highlights include US JOLTS and API Crude Oil Inventories

US Economic Calendar

  • 6am: NFIB Small Business Optimism Apr 93.6, est. 93.0 (prior 92.6)
  • 8:55am: Redbook weekly sales
  • 10am: Wholesale Inventories, m/m, Mar, est. 0.1% (prior -0.5%)
  • 4:30pm: API weekly oil inventories

DB’s Jim Reid concludes the overnight wrap

In terms of markets yesterday, caution was the name of the game as a steep selloff across the commodity complex kept investors sidelined. The S&P 500 did manage to close out with a modest +0.08% gain with performance for European markets slightly better (Stoxx 600 +0.47%). Credit markets were a smidgen tighter on both sides of the pond meanwhile. It was the moves for commodity markets which caught the eye though. Oil gets most of the attention and yesterday we saw WTI close back down below $44/bbl after falling -2.73%. However it was moves for metal markets which caught our eye though. Aluminium (-2.32%), Copper (-2.58%), Zinc (-2.81%), Nickel (-5.07%) and Iron Ore (-5.66%) were hammered and even Gold tumbled nearly 2% during yesterday’s session. We’ll touch on the moves in more detail below, along with what were some interesting developments in Greece and Brazil.

Before we do though, it’s straight to China where we’ve got some important inflation numbers to digest. China has reported CPI of +2.3% yoy in April which is both in line with March and relative to expectations. Food prices are again driving the number and were up +7.4% yoy with non-food prices currently +1.1% yoy. Meanwhile, PPI increased by nine-tenths last month and more than expected to -3.4% yoy (vs. -3.7%). That is actually the highest reading since December 2014 and further evidence prices at the factory gate may have bottomed out.

Bourses in China have been fairly muted in their reaction with the Shanghai Comp and CSI 300 +0.35% and +0.19% respectively. Elsewhere it’s been a broadly better day for Asian markets however. The Nikkei is +2.07% and benefiting from further weakening in the Yen, while the ASX (+0.26%) and Kospi (+0.47%) are also up. The Hang Seng (-0.05%) is the notable underperformer.

Staying with China, shortly after we went to print yesterday, an article from China’s People’s Daily was released which provided some important signals that China’s macroeconomic policy stance may turn from aggressive easing to a more neutral position soon in the eyes of our China economists. They note that the article indicates that the government is generally satisfied with the economic performance so far this year. It recognizes that structural challenges facing the economy will take time to resolve, and economic growth in the coming years will likely take an L-shaped path, rather than a V- or U-shaped one. The article also goes onto to say that the policy maker points out that adding leverage will not be effective in stimulating the economy at the current stage, and higher leverage could heighten systematic risks. With some focus also on the danger of indecisiveness when facing policy dilemmas, the context of the statement is a clear signal to our colleagues that the focus of the government will likely shift from promoting and stabilizing growth to control and the reduction of systematic risks in coming months. This leads

them to believe that the aggressive policy easing seen in the past few months may come to an end soon.
This to some extent then helps explain that broadly poor day for commodity markets yesterday. The move for Oil was more reflective of some changing weather patterns in and around the Alberta region which is fuelling hopes that the wildfires may be starting to come under control. However the China story probably had a bigger impact for metals yesterday and it now means that Aluminium, Copper and Nickel are down anywhere from 7-9% in May already. Iron ore is amazingly down 17% this month and has plummeted over $15/tn from the April highs too. Steel rebar futures were also limit down yesterday and there’s still a lot of concern in the market about the speculative trading on Chinese commodity exchanges. A Bloomberg article caught our eye yesterday noting some of the eye-watering numbers concerning this. The daily average market turnover on bourses in Dalian, Zhengzhou and Shanghai is said to have increased from about $78bn in February to a peak of $261bn on April 22nd which in contrast compares to peak turnover on the Nasdaq in early 2000 of $150bn. The same article also suggests that over 40% of volume in rebar futures in April came in the night session and once people returned from their day jobs, while the average holding period for a contract is said to be less than 3 hours. Recent measures by bourses to curb speculative trading is helping to keep a lid on turnover in the last couple of weeks and has resulted in metals prices declining from recent highs, but what started with trading in Chinese equity markets some 12 months ago and has now spread to commodity markets is a strong illustration of how quickly bubbles can form when there’s large amounts of leverage and huge amounts of credit in an economy.

Another one of the BRIC economies namely Brazil was also the focus of some attention yesterday too. It was a confusing day for the country however as mid-way through yesterday afternoon the acting head of the Lower House of Congress announced that he was to call for a new vote on the impeachment of President Rousseff. This was supposedly on the back of the vote on April 17th containing procedural irregularities. However later on in the evening, Brazil’s Senate confirmed that the impeachment proceedings would still move ahead despite the call from the Lower House, and that voting by the Senate on whether to put Rousseff on trial could begin as soon as Wednesday. All the headlines sent Brazilian assets into a tailspin however. The Real had weakened by as much as nearly 4.6% at one stage (the most since September 2011) before paring the vast bulk of that move to close just 0.41% weaker on the day. Meanwhile the Ibovespa plummeted nearly -3.5% post the early headline, before also retracing much of that to finish the day with a -1.41% loss.

Closer to home, there were some positive developments in Greece to highlight. After talks had effectively been in a standstill over the last few months, yesterday the IMF, European finance ministers and the Greek government came to an agreement on a path forward which should be workable and so as a result allow Greece to receive the funding its needs for bond payments due in July. DB’s resident expert George Saravelos noted that it was a substantial back down from the IMF which allowed for the important step forward. The fund has accepted a softer version of the initial contingency package of fiscal measures, with the Greek side now agreeing to vote on a vague ‘spending break’ that only imposes temporary across the board spending cuts the year a fiscal target is missed. A similar softer package on debt measures has also been agreed upon including short, medium and long term debt measures. A number of underlying issues still remain unresolved but it’s a positive step forward nonetheless in resolving near term risks of another Greek crisis.

Moving on, there was a bit of Fedspeak for us to take note of yesterday. The Chicago Fed President Evans came across as slightly dovish in his tone, saying that he is in favour of the Fed being in a ‘wait and see mode’ for now and that while the fundamentals for US growth continue to be good, ‘uncertainty and risks remain’. Meanwhile, Minneapolis Fed President Kashkari sounded a similar tone in comments yesterday. The Fed official said that in his view that Fed’s current stance on monetary policy is ‘about right’ and that ‘to me, just looking at the raw data, it says we should be accommodative’. Elsewhere, the ECB’s Constancio reiterated that patience is needed to judge the effects of the recent ECB measures, while also reiterating that the Bank will continue to do what is necessary to achieve its inflation goal.

Just wrapping up yesterday, it was a particularly quiet day for data with the only release in the US being the April labour market conditions index reading which revealed a third consecutive monthly worsening in conditions. The index printed at -0.9pts for last month following a -2.1pts reading in March. Meanwhile in Europe there was good news to be had in the latest German factory orders data. Orders printed at +1.9% mom for March (vs. +0.6% expected) to be up +1.7% yoy now. Elsewhere the Sentix investor confidence reading printed at 6.2pts for May which is half a point higher relative to April.

Looking at today’s calendar, the main focus this morning in Europe will be the various industrial reports out of Germany, France and Italy for March. German trade data is also due to be released while later this morning we’ll receive the March trade data for the UK. Over in the US this afternoon the main release of note is the March wholesale inventories and trade sales report. As well as that, we’ll get the NFIB small business optimism survey reading and March JOLTS job openings data. Fedspeak wise it is the turn of Dudley who is due to speak this morning in Zurich (at 8.15pm BST) on the international monetary system.

via http://ift.tt/1qaWTWS Tyler Durden

Comex Gold Open Interest

 

 

Comex Gold Open Interest

Posted with permission and written by Craig Hemke, TF Metals Report (CLICK HERE FOR ORIGINAL)

 

 

 

 

In defending their long held short positions, the Comex Banks have now issued enough new contracts to drive total open interest back to levels not seen since 2011. Will they be successful in capping price or are they about to get a religious experience? We’re about to find out.

 

Let’s start with the basics so that we’re all on the same page….

 

The Bullion Banks act as de facto “market makers” on the Comex. In doing so, they have the ability to create new futures contracts for trading across the board. In a sense, there are three possible transactions:

 

  • A Bank issues a new contract. A willing Spec buyer (long) takes one side and the Bank (short) takes the other. Net result = 1 new contract and total open interest increases by that one contract.
  • A Bank issues a new contract. A willing Spec seller (short) takes one side and the Bank (long) takes the other. Net result = 1 new contract and total open interest increases by that one contract.
  • A buyer and a seller meet ( the bid and ask/offer) and they exchange an existing contract at the current price. Net result = No change in total open interest as no new futures contract has been created.

 

On The Comex, where The Banks seek to manage and control the paper price, since time immemorial The Banks have been NET short and the Specs have been NET long the paper contracts. The degree to which The Banks are short and the Specs are long fluctuates daily and, once per week, the CFTC surveys all of the market participants to get their summary positions. This data is compiled and released every Friday as the “Commitment of Traders” report.

 

OK…so far so good?

 

Now here’s where the fraud begins. The Banks, acting in their capacity as “market makers”, have a virtually unlimited power to create from thin air as many Comex paper derivative contracts as they’d like. In doing so, The Banks take the risk of being short while the Specs, in taking the other side of the trade, take the risk of being long. The fraudulent game that The Banks play is in never being forced to deliver upon of their paper obligations. The Specs simply seek gold “exposure” so they buy the paper derivative contract and The Banks sell it to them. If prices go up, the Specs make fiat and The Banks lose fiat. If prices go down, The Banks make fiat and the Specs lose fiat.

 

Again, though, very little physical gold is ever delivered. Thus, the only price “discovered” is the price of the derivative itself, not the actual physical metal.

 

Having the unlimited ability to create new contract supply gives The Banks the nearly unlimited ability to control price, too. How? Think of it this way:

 

  • You call up your broker at Merrill Lynch and tell him to buy you 200 shares of Coca-Cola. A market order is submitted and someone, somewhere sells their existing 200 shares of Coca-Cola to you. The supply of Coca-Cola shares is finite on any given day so price must find an equilibrium where buyers and sellers meet.

 

However, as we laid out at the beginning of this post, that’s NOT how it works on The Comex. Oh sure, most of the volume each day is an exchange of existing contracts. However, volume is also supplied by The Banks simply creating new contracts to sell to buyers. Go back to the bullet point above. How fair and legal would it be if your broker, instead of finding a seller of existing Coca-Cola shares, decided instead to simply create some new shares out of the blue and sell them to you? You’d have your long exposure to Coke and your broker would take the risk of being short Coke.

 

Not only would this be patently illegal and fraudulent, think of the impact this would have on the price of the Coca-Cola shares. Since willing sellers wouldn’t need to be found for new buyers, price wouldn’t need to rise in order to entice sellers to sell. Your broker would simply take the risk of being short Coca-Cola, all with the hope and the plan of seeing you eventually give up and sell your Coca-Cola shares back to them, likely at a lower price and at a profit for your broker.

 

And, again, this is EXACTLY how The Comex operates.

 

Without having to supply any additional physical gold or other collateral, The Banks simply create new gold derivative contracts whenever demand for contracts exceeds available supply. This has the obvious effect of dampening price moves as “price” isn’t forced to find a true equilibrium between buyers and sellers. And this has played out for all to see here in 2016.

 

We’ve written about this before, most recently two weeks ago: http://ift.tt/1SkM64d However, open interest has expanded so dramatically in the two weeks since, it seemed we had to write about this again today.

 

Again, what is happening here is an overt attempt to contain and control price. If the total volume of available open interest on the Comex was anchored or tethered to a fixed amount of collateral, then the supply of derivative contracts would be relatively stable like the daily supply of available Coca-Cola shares. Instead, The Banks simply create new supply nearly every day and, in doing so, restrict and manage the daily movements of “price”. It looks like this:

 

DATE PRICE TOTAL OPEN INTEREST  TOTAL “COMMERCIAL” GROSS SHORT POSITION
1/26/16 $1121 385,350 175,176 contracts or 545 metric tonnes of paper gold
2/16/16 $1209 428,912 259,784 contracts or 808 mts of paper gold
3/8/16 $1264 499,110 311,865 contracts or 971 mts of paper gold
4/12/16 $1261 504,523 353,968 contracts or 1,101 mts of paper gold
4/26/16 $1243 497,994 356,553 contracts or 1,109 mts of paper gold

 

And now here’s where it gets particularly egregious. Over the past week, the price of “gold” has risen by $49 to Tuesday’s close of $1292. While that’s still a significant move of nearly 4%, how much higher would the price of gold had risen if the total open interest, which has already been inflated by over 25% over the past 90 days, wasn’t allowed to rise farther still? And, as of yesterday (Tuesday) it looks like this:

 

 

5/3/16

 

$1292

 

565,774

 

410,000 contracts at a minimum or 1,275 mts of paper gold

 

I’m going to stop here to let that sink in for a while….

 

So, to control/manage price and to keep the rally contained at just $170 or 15% in the past 100 days, The Comex Banks have issued a whopping 180,424 new paper derivative contracts, growing the total Comex open interest by 47%! Not only that, but 180,424 new contracts is the paper equivalent of over 18,000,000 ounces of “gold”, created from whole cloth and sold to the Speculators, all without additional capital or physical collateral requirements.

 

As noted above, the GROSS short position of The Comex Banks has more than doubled from 545 metric tonnes to as much as 1,100 metric tonnes today. This means that if The Banks were ever forced to make good on these paper short obligations, they’d have to physically deliver more than the entire stated holdings of Switzerland! Additionally, the entire Comex vaulting system only purports to hold 7,300,000 ounces of gold. So when The Banks are short 41,000,000 ounces of gold, aren’t they fraudulently selling something that they don’t own? (And please don’t give me that line of garbage about producers hedging and selling forward. That scheme ended years ago.)

 

At the end of the day, you must understand the implications. The Banks are doing everything in their power to manage price…and why wouldn’t they?!? When you’re short 40,000,000 ounces of gold, every $10 move “costs” you $400,000,000. A $100 up move from here generates paper losses of $4,000,000,000 so they are fighting tooth-and-nail to keep that from happening by doubling down and putting “bad money after good” in the same way that a blackjack player thinks he will eventually win a hand and get all of his lost money back.

 

The Banks hope that eventually they can spark a Spec selloff. Once the Specs head for the exits, this Spec selling will be utilized by The Banks. They’ll take the other side of the trade and buy their shorts back. The Banks will then “retire” those contracts and total open interest will decline. The Banks will hope to engender enough Spec selling to allow them to cover (buy back) up to 100,000 of their ill-gotten shorts and drop total open interest back to the 450,000 level. The question is: Will they be successful? While this has been a foolproof business plan since 2013, it hasn’t worked thus far in 2016 as Spec fiat has continually flowed into the paper gold derivative market.

 

So watch price and open interest very closely in the days and weeks ahead. The increasingly-desperate Banks are apt to openly raid price in their efforts to spur some Spec selling. The upcoming jobs report of this Friday being an obvious starting point.

 

In the end, however, I’ll leave you with one, final thought. Now that the Chinese have pricing power in gold, they quite literally have the ability to completely screw and hammer the Comex and London Banks. They can raise the Shanghai Fix and enable the immediate arbitrage. They could use this tool to drain whatever gold is left and utterly crush every big, western Bank.

 

But the time is nigh. If The Banks successfully rig the price back down, squeeze out all the Spec longs and close back up 150,000 contracts of OI, The Chinese will miss their opportunity. So, will they take it? Maybe. Maybe not. Maybe they’re not yet ready. We’ll just have to wait and see.

 

Again, watch price and open interest very closely in the days ahead. It’s crunch time and things are going to get increasingly volatile. Prepare accordingly.

 

 

 

Please email with any questions about this article or precious metals HERE

 

 

Comex Gold Open Interest

Posted with permission and written by Craig Hemke, TF Metals Report (CLICK HERE FOR ORIGINAL)

 

via http://ift.tt/24JxhmQ Sprott Money

The Wonder Years Are Over

Authored by Bill Bonner of Bonner & Partners, annotated by Acting-Man's Pater Tenebrarum,

Everybody Is Unhappy

PARIS – “France?”

We were in a cab on the way from Charles de Gaulle Airport yesterday. We had innocently asked our cab driver how things were going in the country. He had some thoughts…

 

Hollande 2

French president Francois Hollande: against all odds, he managed to attain the most powerful position in French society. And yet, even he is unhappy.

 

France is a mess. We have 5 million people unemployed. And because the employment laws are so strict, nobody wants to hire anyone.

 

“The authorities noticed, for example, that employers use short-term contracts to avoid hiring permanent employees. So the government’s going to tax the short-term contracts. As though making it even more expensive to hire someone will somehow increase employment!”

 

“There’s no way to do anything about it. We have to wait until the whole thing melts down. In the meantime, everybody’s unhappy…but nobody really wants to change.”

“Yes, that’s the strange thing,” Elizabeth added later. “I was reading a social commentary from France in the 19th century. People dreamed of having a country like today’s France. Back then, they didn’t have enough food to eat or clothes to wear or a place to live. They couldn’t imagine not being happy if they had those things.

“In today’s France, everybody has those things. It’s a worker’s paradise. If you don’t have a job, they give you money… and an apartment. And if you have a job, you almost can’t be fired. And yet, nobody is happy. Why not?

Helmut Schoeck wrote a marvelous book in the 1966 titled Envy. He explained why happiness is never just a matter of material wants or needs. We humans are wired to compare what we have to what others have… and to always try to find ways get one up on our neighbors.

 

Schoeck - Envy

Helmut Schoeck explains the politics of envy – and he’s hitting the nail on the head (a pdf version is available here).

 

If we earn more than the guy next door, we are tempted to try to make him feel bad by flaunting it. If he earns more than we do, we will want to take something away from him… to bring him down a peg.

That is the emotional foundation, says Schoeck, underlying socialist politics – envy, dressed up as social justice. But there’s more…

 

Wonder Years

The trouble with taking something away from your neighbor is that then he tries to take something away from you. Pretty soon, you are both spending so much of your time trying to enact rules and regulations that penalize one group and reward another that neither of you is producing more wealth.

One group gets a subsidy for its products. Another gets a government contract. Another gets medical coverage, paid for by “the government.” And still another gets a tax credit.

Then, they stand on tiptoes and look over the fence at the community next door… where people have been busy producing wealth rather than taking it from one another…and they are both even more envious.

 

ClaudeFrdricBastiat1801-1850

Bastiat’s famous quote explaining the major deficiency of the modern socialist democratic system

 

That is essentially what happened to the Soviet Union: After 70 years of envy-driven politics, people looked over the Berlin Wall and saw BMWs and Mercedes. For decades, the truth was hidden behind economic statistics and propaganda slogans.

And for decades, the response in the West was confused and foolish. Many U.S. economists believed that central planning actually worked (some still do!). And many economists and politicians wanted to rid the world of communism – apparently unaware that it was the communist creed that had put their biggest competitors out of business.

Only a few were shrewd enough to relax and enjoy those wonder years – when the U.S. and Europe were on top of the world… with little competition from abroad… and not yet ruined by the zombies and cronies within.

 

The BMW Effect

But by 1989, the jig was up. Everybody knew that a BMW built in West Germany was a whole lot better than a Trabant, built in the East. The “Trabbi” had an inefficient two-stroke motor. Owners had to mix oil and gas to fuel the car. Then, a long trail of smoke – nine times the average emissions of a car from the West – followed them around.

The car had a top speed of 62 miles per hour (a speed it took the driver 21 seconds to reach). And since it had no fuel pump, the gas had to be carried above the motor so it could drip into the cylinders. This made for some spectacular, fiery crashes!

 

trabant-images-213

The East German Trabant – buyers had to wait an average of 15 years between ordering one and actually getting it delivered. So much for central economic planning. Unfortunately, we seem to be well on our way to a similar paradise of equality…

Photo credit: Fsopolonezcaro

 

By the late 1980s, rich apparatchiks in Moscow and Beijing wanted to drive BMWs and Mercedes; the Wall had to come down. Now, the Chinese are making autos. The Russians are selling gas. The French aren’t happy. And judging by recent election results, neither are the Scots. Or the Austrians. Or the Germans. Or the Americans.

The latter say they want to “Make America Great Again,” by building a wall to keep out the Mexicans (who are already leaving the country faster than they are coming in).

Neither Europeans nor Americans are underfed. Very few spend nights out in the cold. Almost none walk around naked for lack of clothing. Why aren’t they happy? Because no matter how well off they are, others are better off.

 

socialism

The soundbite explanation of socialism… given that socialist policies have demonstrably failed over and over again, the only explanation that remains is that people would rather be seeing everyone wallow in poverty than having to bear the thought that someone could be better off than they are. As soon as their wishes threaten to come true, they are however still unhappy.

 

The rich! The “One Percent!” People who have more money, more sex, more hair!

Life just isn’t fair, we conclude. It’s set up that way. Since the expulsion from the Garden of Eden, it was first a struggle to survive; now it is a struggle to show off.

There’s always someone with a bigger, better car than you have…and if you have the bigger, better car…there’s always someone who wants to take it from you.

via http://ift.tt/24JfDQh Tyler Durden

Obamacare Update: Insurance Premiums Set To Explode Higher In 2017

Just recently we warned that thanks to Obamacare, insurers would be unveiling enormous premium increases to the public, ironically just one week before the presidential election.

As the Wall Street Journal reports, Oregon and Virginia are the first two states to make insurers’ premium proposals for 2017 public, and we are now able to see a glimpse of what will be coming regarding insurance premiums for next year [Spoiler alert: it’s ugly]. While it is noted that some of the subsidies provided by the federal government will help the lowest income consumers cover the bill, based on what we have learned from Virginia and Oregon, a vast majority of individuals will be googling “sticky wages” soon, as they scramble to figure out how they’re going to be able to afford such enormous increases. 


Starting in Virginia, Anthem Inc and Carefirst BlueCross BlueShield are proposing 15.8% and 25% increases respectively. In Oregon, the increases are stunning to say the least. Providence Health Plan, currently the largest insurer for people buying coverage through the Oregon health exchange, is seeking an average increase of 29.6%. Not to be outdone, Moda Health Plan Inc, another large insurer for the state, is proposing a premium increase of 32.3% – this is after a 25% hike last year. For some context as to how out of control premium increases will be for those enrolled in Oregon, Kaiser Foundation Health Plan of the Northwest is asking for an increase of 14.5%, the second lowest percentage increase in the state. Insurers seeking double digit rate increases are citing higher than expected medical costs (just as we said) incurred by their enrollees as factors in their decisions.

Oregon’s insurance commissioner has the authority to block proposed premium changes, but indicated that she wants to make sure the companis can cover insurance claims as well as making sure the plans are affordable for consumers.

“For the next two months, we will analyze the requested rates to ensure they adequately cover costs without being too high or too low” said commissioner Laura Cali.

Good luck with that Laura.

What was easy to predict is now happening, which is that Obamacare is doing absolutely nothing to help drive down costs of anyone’s premiums, and is in fact driving double digit increases. We look forward to learning how The Donald and presumably Hillary (if she’s still in the race) will deal with the public outrage as the sticker shock sets in right before the election. Whatever the strategy, we are sure that the message will certainly resonate with the public that the government works for those on main street, and its here to help.

via http://ift.tt/1ZzNap1 Tyler Durden

Caught On Tape: This Is What Happened When An MEP Tried To Read The TTIP Text

Submitted by Mike Krieger via Liberty Blitzkrieg blog,

TTIP is just one of several phony “trade” deals written by corporate lawyers and lobbyists, and negotiated in secret between the Obama administration and various world leaders. This particular scam involves the U.S. and Europe, and it has seen increased public resistance and attention as of late, something I highlighted in the post, Leaked Documents Expose the TTIP Trade Deal as a Subversive Imperial Scam.

Now watch what happened when a MEP (member of European parliament) tried to read the thing. It’s very blurry, but you’ll get the point.

Democracy this is not.

Noam Chomsky recently summarized the true purpose of these so-called “trade” deals eloquently in the following paragraph:

In the contemporary global order, the institutions of the masters hold enormous power, not only in the international arena but also within their home states, on which they rely to protect their power and to provide economic support by a wide variety of means. When we consider the role of the masters of mankind, we turn to such state policy priorities of the moment as the Trans-Pacific Partnership, one of the investor-rights agreements mislabeled “free-trade agreements” in propaganda and commentary. They are negotiated in secret, apart from the hundreds of corporate lawyers and lobbyists writing the crucial details. The intention is to have them adopted in good Stalinist style with “fast track” procedures designed to block discussion and allow only the choice of yes or no (hence yes). The designers regularly do quite well, not surprisingly. People are incidental, with the consequences one might anticipate.

Thanks for playin’ everyone.

via http://ift.tt/1VRmodL Tyler Durden

How Much Liberty Do Americans Have Left?

This post explains the liberties guaranteed in the Bill of Rights – the first 10 amendments to the United States Constitution – and provides a scorecard on the extent of the loss of each right.

http://ift.tt/11YqN3sPainting by Anthony Freda: www.AnthonyFreda.com

First Amendment

The 1st Amendment protects speech, religion, assembly and the press:

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.

The Supreme Court has also interpreted the First Amendment as protecting freedom of association.

However, the government is arresting those speaking out … and violently crushing peaceful assemblies which attempt to petition the government for redress.

A federal judge found that the law allowing indefinite detention of Americans without due process has a “chilling effect” on free speech. And see this and this.

There are also enacted laws allowing the secret service to arrest anyone protesting near the president or other designated folks (that might explain incidents like this).

Mass spying by the NSA violates our freedom of association.

The threat of being labeled a terrorist for exercising our First Amendment rights certainly violates the First Amendment. The government is using laws to crush dissent, and it’s gotten so bad that even U.S. Supreme Court justices are saying that we are descending into tyranny. (And the U.S. is doing the same things that tyrannical governments have done for 5,000 years to crush dissent.)

For example, the following actions may get an American citizen living on U.S. soil labeled as a “suspected terrorist” today:

And holding the following beliefs may also be considered grounds for suspected terrorism:

And see this. (Of course, Muslims are more or less subject to a separate system of justice in America.)

And 1st Amendment rights are especially chilled when power has become so concentrated that the same agency which spies on all Americans also decides who should be assassinated.

Additionally:

Despite the clear protections found in the First Amendment, the freedoms described therein are under constant assault. Increasingly, Americans are being arrested and charged with bogus “contempt of cop” charges such as “disrupting the peace” or “resisting arrest” for daring to film police officers engaged in harassment or abusive practices. Journalists are being prosecuted for reporting on whistleblowers. States are passing legislation to muzzle reporting on cruel and abusive corporate practices. Religious ministries are being fined for attempting to feed and house the homeless. Protesters are being tear-gassed, beaten, arrested and forced into “free speech zones.” And under the guise of “government speech,” the courts have reasoned that the government can discriminate freely against any First Amendment activity that takes place within a government forum.

Second Amendment

The 2nd Amendment states:

A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.

Gun control and gun rights advocates obviously have very different views about whether guns are a force for violence or for good.

But even a top liberal Constitutional law expert reluctantly admits that the right to own a gun is as important a Constitutional right as freedom of speech or religion:

Like many academics, I was happy to blissfully ignore the Second Amendment. It did not fit neatly into my socially liberal agenda.

 

***

 

It is hard to read the Second Amendment and not honestly conclude that the Framers intended gun ownership to be an individual right. It is true that the amendment begins with a reference to militias: “A well regulated militia, being necessary to the security of a free state, the right of the people to keep and bear arms, shall not be infringed.” Accordingly, it is argued, this amendment protects the right of the militia to bear arms, not the individual.

 

Yet, if true, the Second Amendment would be effectively declared a defunct provision. The National Guard is not a true militia in the sense of the Second Amendment and, since the District and others believe governments can ban guns entirely, the Second Amendment would be read out of existence.

 

***

 

More important, the mere reference to a purpose of the Second Amendment does not alter the fact that an individual right is created. The right of the people to keep and bear arms is stated in the same way as the right to free speech or free press. The statement of a purpose was intended to reaffirm the power of the states and the people against the central government. At the time, many feared the federal government and its national army. Gun ownership was viewed as a deterrent against abuse by the government, which would be less likely to mess with a well-armed populace.

 

Considering the Framers and their own traditions of hunting and self-defense, it is clear that they would have viewed such ownership as an individual right — consistent with the plain meaning of the amendment.

 

None of this is easy for someone raised to believe that the Second Amendment was the dividing line between the enlightenment and the dark ages of American culture. Yet, it is time to honestly reconsider this amendment and admit that … here’s the really hard part … the NRA may have been right. This does not mean that Charlton Heston is the new Rosa Parks or that no restrictions can be placed on gun ownership. But it does appear that gun ownership was made a protected right by the Framers and, while we might not celebrate it, it is time that we recognize it.

And George Mason University School of Law Professor Nelson Lund and UCLA Law School Professor Adam Winkler note:

Implicit in the debate between Federalists and Anti-Federalists were two shared assumptions. First, that the proposed new Constitution gave the federal government almost total legal authority over the army and militia. Second, that the federal government should not have any authority at all to disarm the citizenry. They disagreed only about whether an armed populace could adequately deter federal oppression.

 

***

 

The Amendment was easily accepted because of widespread agreement that the federal government should not have the power to infringe the right of the people to keep and bear arms, any more than it should have the power to abridge the freedom of speech or prohibit the free exercise of religion.

The gun control debate – including which weapons and magazines are banned – is still in flux …

However:

Americans remain powerless to defend themselves against SWAT team raids and government agents armed to the teeth with military weapons better suited for the battlefield than for a country founded on freedom. Police shootings of unarmed citizens continue to outrage communities, while little is really being done to demilitarize law enforcement agencies. Indeed, just recently, North Dakota became the first state to legalize law enforcement use of drones armed with weapons such as tear gas, rubber bullets, beanbags, pepper spray and Tasers.

Third Amendment

The 3rd Amendment prohibits the government forcing people to house soldiers:

No Soldier shall, in time of peace be quartered in any house, without the consent of the Owner, nor in time of war, but in a manner to be prescribed by law.

A recent lawsuit by a Nevada family – covered by (Mother Jones, Fox News and Courthouse News – alleges violation of the Third Amendment.

The military is also arguably quartering “digital” troops within our homes.

Gordon S. Wood – Alva O. Way University Professor and Professor of History Emeritus at Brown University – points out:

In its Declaration and Resolves on October 14, 1774, Congress protested the presence in a time of peace of a standing army and the quartering of troops in the colonies without their consent. Then in the Declaration of Independence of 1776, two of the many accusations Congress leveled against the king were his keeping “among us, in Times of Peace, Standing Armies, without the Consent or our Legislatures,” and his “quartering large Bodies of Armed Troops among us.”

 

***

 

Some legal scholars have even begun to argue that the amendment might be applied to the government’s response to terror attacks and natural disasters, and to issues involving eminent domain and the militarization of the police.

Indeed:

With the police increasingly training like the military, acting like the military, and posing as military forces—complete with military weapons, assault vehicles, etc.—it is clear that we now have what the founders feared most—a standing army on American soil. Moreover, as a result of SWAT team raids (more than 80,000 a year) where police invade homes, often without warrants, and injure and even kill unarmed citizens, the barrier between public and private property has been done away with, leaving us with armed government agents who act as if they own our property.

Indeed, the Founding Fathers fought the Revolutionary War partly to stop the type of militarized police that we now have.

 In America, Journalists Are Considered Terrorists
Painting by Anthony Freda: www.AnthonyFreda.com.

Fourth Amendment

The 4th Amendment prevents unlawful search and seizure:

The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no Warrants shall issue, but upon probable cause, supported by Oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.

But the government is spying on everything we dowithout any real benefit or justification (and see this).

By one estimate,  the average American going about his daily business on any given day will be monitored, surveilled, spied on and tracked in more than 20 different ways, by both government and corporate eyes and ears.

(And things are getting worse, and the government will greatly expand its spying in the near future.)

Indeed, experts say that the type of spying being carried out by the NSA and other agencies is exactly the kind of thing which King George imposed on the American colonists … which led to the Revolutionary War.

And many Constitutional experts – such as Jonathan Turley – think that the police went too far in Boston with lockdowns and involuntary door-to-door searches.

In reality:

The Fourth Amendment has suffered the greatest damage in recent years and been all but eviscerated by an unwarranted expansion of police powers that include strip searches and even anal and vaginal searches of citizens, surveillance and intrusions justified in the name of fighting terrorism, as well as the outsourcing of otherwise illegal activities to private contractors. Case in point: Texas police forced a 21-year-old woman to undergo a warrantless vaginal search by the side of the road after she allegedly “rolled” through a stop sign.

 

The use of civil asset forfeiture schemes to swell the coffers of police forces has also continued to grow in popularity among cash-strapped states. The federal government continues to strong-arm corporations into providing it with access to Americans’ private affairs, from emails and online transactions to banking and web surfing. Coming in the wake of massive leaks about the inner workings of the NSA and the massive secretive surveillance state, it was revealed that the government threatened to fine Yahoo $250,000 every day for failing to comply with the NSA’s mass data collection program known as PRISM. Meanwhile, AT&T has enjoyed a profitable and “extraordinary, decades-long” relationship with the NSA.

 

The technological future appears to pose even greater threats to what’s left of our Fourth Amendment rights, with advances in biometric identification and microchip implants on the horizon making it that much easier for the government to track not only our movements and cyber activities but our very cellular beings. Barclays has already begun using a finger-scanner as a form of two-step authentication to give select customers access to their accounts. Similarly, Motorola has been developing thin “digital tattoos” that will ensure that a phone’s owner is the only person who may unlock it. Not to be overlooked are the aerial spies—surveillance drones—about to take to the skies in coming years, as well as the Drive Smart programs that will spy on you (your speed, movements, passengers, etc.) while you travel the nation’s highways and byways.


Paintings by Anthony Freda: www.AnthonyFreda.com.

Fifth Amendment

The 5th Amendment addresses due process of law, eminent domain, double jeopardy and grand jury:

No person shall be held to answer for a capital, or otherwise infamous crime, unless on a presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.

But the American government has shredded the 5th Amendment by subjecting us to indefinite detention and taking away our due process rights.

The government claims the right to assassinate or indefinitely detain any American citizen on U.S. citizen without any due process. And see this.

For example, American citizens are being detained in Guantanamo-like conditions in Chicago … including:

  • Brutality
  • Being held in secret
  • Not even telling a suspect’s lawyer whether his client is being held?

And see this, this and this.

As such, the government is certainly depriving people of life, liberty, or property, without due process of law.

There are additional corruptions of 5th Amendment rights – such as property being taken for private purposes. And the right to remain silent is gone.

The percentage of prosecutions in which a defendant is denied a grand jury is difficult to gauge, as there is so much secrecy surrounding many terrorism trials.

HUNG LIBERTY (NYSE)Image by William Banzai

Sixth Amendment

The 6th Amendment guarantees the right to a speedy and public trial, by an impartial jury in the location where the crime allegedly occurred, to hear the criminal charges levied against us and to be able to confront the witnesses who have testified against us, as well as speedy criminal trials, and a public defender for those who cannot hire an attorney:

In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury of the State and district wherein the crime shall have been committed, which district shall have been previously ascertained by law, and to be informed of the nature and cause of the accusation; to be confronted with the witnesses against him; to have compulsory process for obtaining witnesses in his favor, and to have the Assistance of Counsel for his defence.

Subjecting people to indefinite detention or assassination obviously violates the 6th Amendment right to a speedy and public jury trial. In both cases, the defendants is “disposed of” without ever receiving any trial at all … let alone a speedy or public one. In neither case do they get a jury, a defense lawyer, or the right to call their own witnesses. And they often never even hear the charges against them.

Indefinite detentions usually don’t occur where the alleged crime occurred, but at a black site.

More and more commonly, the government prosecutes cases based upon “secret evidence” that they don’t show to the defendant … or sometimes even the judge hearing the case.

The government uses “secret evidence” to spy on Americans, prosecute leaking or terrorism charges (even against U.S. soldiers) and even assassinate people. And see this and this.

Secret witnesses are being used in some cases. And sometimes lawyers are not even allowed to read their own briefs.

Indeed, even the laws themselves are now starting to be kept secret. And it’s about to get a lot worse.

Moreover, government is “laundering” information gained through mass surveillance through other agencies, with an agreement that the agencies will “recreate” the evidence in a “parallel construction” … so they don’t have to admit that the evidence came from unconstitutional spying. This data laundering is getting worse and worse.

A former top NSA official says that this is the opposite of following the Fourth Amendment, but is a “totalitarian process” which shows that we’re in a “police state”. (A second former top NSA official agrees.)

And there are two systems of justice in America … one for the big banks and other fatcats, and one for everyone else. The government made it official policy not to prosecute fraud, even though fraud is the main business model adopted by Wall Street. Indeed, the biggest financial crime in world history, the largest insider trading scandal of all time, illegal raiding of customer accounts and blatant financing of drug cartels and terrorists have all been committed recently without any real criminal prosecution or jail time.

On the other hand, government prosecutors are using the legal system to crush dissent and to silence whistleblowers.

And some of the nation’s most powerful judges have lost their independence … and are in bed with the powers-that-be.

Constitutional lawyer John Whitehead explains:

The Fifth Amendment and the Sixth Amendment work in tandem. These amendments supposedly ensure that you are innocent until proven guilty, and government authorities cannot deprive you of your life, your liberty or your property without the right to an attorney and a fair trial before a civilian judge. However, in the new suspect society in which we live, where surveillance is the norm, these fundamental principles have been upended. Certainly, if the government can arbitrarily freeze, seize or lay claim to your property (money, land or possessions) under government asset forfeiture schemes, you have no true rights. That’s the crux of a case before the U.S. Supreme Court challenging the government’s use of asset forfeiture to strip American citizens of the funds needed to hire a defense attorney of their choosing.

Seventh Amendment

The 7th Amendment guarantees trial by jury in federal court for civil cases:

In Suits at common law, where the value in controversy shall exceed twenty dollars, the right of trial by jury shall be preserved, and no fact tried by a jury, shall be otherwise re-examined in any Court of the United States, than according to the rules of the common law.

But there are two systems of justice in Americaone for the big banks and other fatcats, and one for everyone else. So good luck going after the powers-that-be.

And the World Justice Project – a bipartisan, independent group with honorary chairs including numerous current and former Supreme Court Justices – released a report saying that Americans have less access to justice than most wealthy countries … and many developing nations. The report finds that Americans have less access to justice than Botswanans, and that only the wealthy have the resources to protect rights using the court system:

For example, Germans sue equally whether they are rich or poor … but in America, only the wealthy have the resources to protect rights using the court system:

(And the austerity caused by the highest levels of inequality in world history – which are in turn is caused by socialist actions by our government, which have destroyed the Founding Fathers’ vision of prosperity – is causing severe budget cuts to the courts, resulting in the wheels of justice slowing down considerably.)

Federal judges have also recently decided that they can pre-judge cases before the plaintiff even has the chance to conduct discovery … and throw cases out if they don’t like plaintiff’s case.

And:

The populace has no idea of what’s in the Constitution—civic education has virtually disappeared from most school curriculums—that inevitably translates to an ignorant jury incapable of distinguishing justice and the law from their own preconceived notions and fears. However, as a growing number of citizens are coming to realize, the power of the jury to nullify the government’s actions—and thereby help balance the scales of justice—is not to be underestimated. Jury nullification reminds the government that it’s “we the people” who can and should be determining what laws are just, what activities are criminal and who can be jailed for what crimes.

Painting by Anthony Freda: www.AnthonyFreda.com

Eighth Amendment

The 8th Amendment prohibits cruel and unusual punishment:

Excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted.

Indefinite detention and assassination are obviously cruel and unusual punishment.

The widespread system of torture carried out in the last 10 years – with the help of other countriesviolates the 8th Amendment. Many want to bring it back … or at least justify its past use.

While Justice Scalia disingenuously argues that torture does not constitute cruel and unusual punishment because it is meant to produce information – not punish – he’s wrong. It’s not only cruel and unusual … it is technically a form of terrorism.

And government whistleblowers are being cruelly and unusually punished with unduly harsh sentences meant to intimidate anyone else from speaking out.

Moreover:

A California appeals court is being asked to consider “whether years of unpredictable delays from conviction to execution” constitute cruel and unusual punishment. For instance, although 900 individuals have been sentenced to death in California since 1978, only 13 have been executed. As CBS News reports, “More prisoners have died of natural causes on death row than have perished in the death chamber.”

Ninth Amendment

The 9th Amendment provides that people have other rights, even if they aren’t specifically listed in the Constitution:

The enumeration in the Constitution, of certain rights, shall not be construed to deny or disparage others retained by the people.

We can debate what our inherent rights as human beings are. I believe they include the right to a level playing field, and access to non-toxic food and water. You may disagree.

But everyone agrees that the government should not actively encourage fraud and manipulation. However, the government – through its malignant, symbiotic relation with big corporations – is interfering with our aspirations for economic freedom, safe food and water (instead of arsenic-laden, genetically engineered junk), freedom from undue health hazards such as irradiation due to government support of archaic nuclear power designs, and a level playing field (as opposed to our crony capitalist system in which the little guy has no shot due to redistribution of wealth from the middle class to the super-elite, and government support of white collar criminals).

By working hand-in-glove with giant corporations to defraud us into paying for a lower quality of life, the government is trampling our basic rights as human beings.

Tenth Amendment

The 10th Amendment provides that powers not specifically given to the Federal government are reserved to the states or individual:

The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.

Two of the central principles of America’s Founding Fathers are:

(1) The government is created and empowered with the consent of the people

 

and

 

(2) Separation of powers

Today, most Americans believe that the government is threatening – rather than protecting – freedom. We’ve become more afraid of our government than of terrorists, and believe that the government is no longer acting with the “consent of the governed“.

And the federal government is trampling the separation of powers by stepping on the toes of the states and the people. For example, former head S&L prosecutor Bill Black – now a professor of law and economics – notes:

The Federal Reserve Bank of New York and the resident examiners and regional staff of the Office of the Comptroller of the Currency [both] competed to weaken federal regulation and aggressively used the preemption doctrine to try to prevent state investigations of and actions against fraudulent mortgage lenders.

Indeed, the federal government is doing everything it can to stick its nose into every aspect of our lives … and act like Big Brother.

Conclusion: While a few of the liberties enshrined in the Bill of Rights still exist, the vast majority are under heavy assault.

Other Constitutional Provisions … and The Declaration of Independence

In addition to the trampling of the Bill of Rights, the government has also trashed the separation of powers enshrined in the main body of the Constitution.

The government is also engaging in activities which the Founding Fathers fought against, such as taxation without representation (here and here), cronyism, deference to central banks, etc.

As the preamble to the Declaration of Independence shows, the American government is still carrying out many of the acts the Founding Fathers found most offensive:

He has kept among us, in times of peace, Standing Armies without the Consent of our legislatures. [Background here and here]

 

He has affected to render the Military independent of and superior to the Civil power. [Background here, here, here, here and here]

 

***

 

He has combined with others to subject us to a jurisdiction foreign to our constitution, and unacknowledged by our laws; giving his Assent to their Acts of pretended Legislation: [Background]

 

***

 

For transporting us beyond Seas to be tried for pretended offences [Background]

 

***

 

He is at this time transporting large Armies of foreign Mercenaries to compleat the works of death, desolation and tyranny, already begun with circumstances of Cruelty & perfidy scarcely paralleled in the most barbarous ages, and totally unworthy the

Head of a civilized nation. [Background]

 

***

 

He has abdicated Government here, by declaring us out of his Protection and waging War against us. [Background here, here and here]

via http://ift.tt/1Zzfecf George Washington