Category: zerohedge

Either the Volcker Rule is making Wall Street’s menu of investment choices so unbearably limited, or traditional assets are so overpriced Wall Street won’t even touch them with other people’s money, but when it comes to allocating capital the smartest conmen in the room are coming up with some truly unorthodox products. Such as investing in ex-convicts in the form of 2000 newly released prisoners.

According to Reuters, Merrill Lynch and U.S. Trust reached out to some high-powered clients this quarter to invest in a social-impact bond whose proceeds finance a program to lower recidivism rates among ex-convicts in New York.

“The project raised $13.5 million over 60 days from clients of the Bank of America Corp-owned brokerage and wealth management firms. Investors included former U.S. Treasury Secretary Lawrence Summers, Utah philanthropist James Sorenson, hedge fund founder Bill Ackman‘s Pershing Square Foundation and billionaire investor and oil trader John Arnold, according to the bank.”

Merely the presence of the bolded words in the above paragraph is enough to explain why this latest investment product will be an inevitable disaster. But at least in the meantime, it will allow people such as Larry Summers to purchase a clean conscience if only for a few months. And of course, let Merrill collect structuring and “advisory” fees.

“They are looking for new and creative ways … to have a more direct connection between the dollars they are investing and the impact it is having on a social problem that they care about,” Andy Sieg, head of global wealth and retirement solutions at Merrill Lynch said during a telephone news conference on Monday.

In an ideal world, however, where investing in ex-criminals has a happy ending, what kind of return can investors hope for? “Investors can realize annual returns of up to 12.5 percent over five-and-a-half years, although the probable return is in the high single digits, he said. Actual returns depend on the success of job-training programs for 2,000 newly released prisoners administered by the Center for Employment Opportunities. Success rates will be determined by Chesapeake Research Associates.”

Just what is a “social impact bond”:

The social impact bond is the first pay-for-success instrument in which Bank of America participated, and the first in which a state, New York, is participating. Reducing recidivism will help control prison costs, the fastest growing budget item in New York in 2012 after Medicaid, Gov. Andrew Cuomo said in a news release.

 

About 20 pay-for-success bonds have been issued in programs worldwide, but more than 10 U.S. states are considering the programs, said Tracy Palandjian, chief executive of Social Finance Inc, a nonprofit that structures such investments.

 

The new issue attracted an average order of $350,000 from 40 high-net-worth individuals and from family and other foundations. Capital from investors will come in two stages, this June and again in early 2016.

As for the lead investors, no surprises there:

The Rockefeller Foundation provided a $1.32 million guaranty that covers 10 percent of investors’ principal should it fail to repay 100 percent of their investment. The Robin Hood Foundation, a nonprofit with strong support from Wall Street and private equity, invested $300,000 in the project.

Supposedly the Reverse Robin Hood foundation was too busy using the proceeds from QE to inflate away the purchasing power of the few hundred people left in the middle class. As for Wall Street investing in ex-cons, why just think of all the money saved from not having to perform any diligence.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/ZfLivYXcZ0k/story01.htm Tyler Durden

We have extensively documented that the U.S. government is trampling virtually every single Constitutional right set forth in the Bill of Rights.

One of the few rights which we thought the government still respects is the the 3rd Amendment, which prohibits the government forcing people to house troops:

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.

But security expert Jacob Appelbaum notes that the NSA may be digitally violating the 3rd Amendment.

By way of background, this week Appelbaum was the main force behind an expose in Spiegel – and gave a must-watch talk – on the NSA’s systemic offensive programs to commandeer computers and computer systems, phone connections and phone systems, and communications networks of all types.

Appelbaum shows that the NSA has literally taken over our computer and our phones, physically intercepting laptop shipments and installing bugware before themselves shipping the laptop on to the consumer, installing special hardware that overcomes all privacy attempts, including “air gaps” (i.e. keep a computer unplugged from the Internet). Appelbaum also notes that spyware can suck up a lot of system resources on a computer or smartphone.

And he says this is the digital equivalent of soldiers being stationed in our houses against our will:

The parallel might not be as far-fetched as it may seem at first …

The NSA itself says that it’s in the middle of a massive cyber war. As such, malware, physical spying devices and offensive internet workarounds are literally the main troops in the NSA’s offensive cyber army.

Quartering meant that Colonial Americans had:

• No control over when the British troops came and went

• No say in what resources they consumed

• And no privacy even in their own castles

Similarly, mass NSA spying means that modern day Americans have:

• No control over when military presence comes or goes from our computer and phones (NSA is part of the Department of Defense)

• No say in what resources the spies suck up (remember, Applebaum says that spying can use a lot of resources and harm performance)

• And no privacy even in the deepest inner sanctuary of our electronic home base

Colonial Americans lost the quiet use and enjoyment of their homes. Modern Americans are losing the quiet use and enjoyment of our digital homes because the NSA is stationing digital “troops” inside our computers and phones.

Just as the Colonists’ homes were no longer theirs … our computers and phones are no longer ours.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/agLwcVU0IQE/story01.htm George Washington

Submitted by Michael Snyder of The Economic Collapse blog,

Is the U.S. consumer tapped out?  If so, how in the world will the U.S. economy possibly improve in 2014?  Most Americans know that the U.S. economy is heavily dependent on consumer spending.  If average Americans are not out there spending money, the economy tends not to do very well.  Unfortunately, retail sales during the holiday season appear to be quite disappointing and the middle class continues to deeply struggle.  And for a whole bunch of reasons things are likely going to be even tougher in 2014.  Families are going to have less money in their pockets to spend thanks to much higher health insurance premiums under Obamacare, a wide variety of tax increases, higher interest rates on debt, and cuts in government welfare programs.  The short-lived bubble of false prosperity that we have been enjoying for the last couple of years is rapidly coming to an end, and 2014 certainly promises to be a very "interesting year".

Obamacare Rate Shock

Most middle class families are just scraping by from month to month these days.

Unfortunately for them, millions of those families are now being hit with massive health insurance rate increases.

In a previous article, I discussed how one study found that health insurance premiums for men are going to go up by an average of 99 percent under Obamacare and health insurance premiums for women are going to go up by an average of 62 percent under Obamacare.

Most middle class families simply cannot afford that.

Earlier today, I got an email from a reader that was paying $478 a month for health insurance for his family but has now received a letter informing him that his rate is going up to $1,150 a month.

Millions of families are receiving letters just like that.  And to say that these rate increases are a "surprise" to most people would be a massive understatement.  Even people that work in the financial industry are shocked at how high these premiums are turning out to be…

"The real big surprise was how much out-of-pocket would be required for our family," said David Winebrenner, 46, a financial adviser in Lebanon, Ky., whose deductible topped $12,000 for a family of six for a silver plan he was considering. The monthly premium: $1,400.

Since Americans are going to have to pay much more for health insurance, that is going to remove a huge amount of discretionary spending from the economy, and that will not be good news for retailers.

Get Ready For Higher Taxes

When you raise taxes, you reduce the amount of money that people have in their pockets to spend.

Sadly, that is exactly what is happening.

Congress is allowing a whopping 55 tax breaks to expire at the end of this year, and when you add that to the 13 major tax increases that hit American families in 2013, it isn't a pretty picture.

This tax season, millions of families are going to find out that they have much higher tax bills than they had anticipated.

And all of this comes at a time when incomes in America have been steadily declining.  In fact, real median household income has declined by a total of 8 percent since 2008.

If you are a worker, you might want to check out the chart that I have posted below to see where you stack up.  In America today, most workers are low income workers.  These numbers come from a recent Huffington Post article…

-If you make more than $10,000, you earn more than 24.2% of Americans, or 37 million people.

-If you make more than $15,000 (roughly the annual salary of a minimum-wage employee working 40 hours per week), you earn more than 32.2% of Americans.

-If you make more than $30,000, you earn more than 53.2% of Americans.

-If you make more than $50,000, you earn more than 73.4% of Americans.

-If you make more than $100,000, you earn more than 92.6% of Americans.

-You are officially in the top 1% of American wage earners if you earn more than $250,000.

-The 894 people that earn more than $20 million make more than 99.99989% of Americans, and are compensated a cumulative $37,009,979,568 per year.

It is important to keep in mind that those numbers are for the employment income of individuals not households.  Most households have more than one member working, so overall household incomes are significantly higher than these numbers.

Higher Interest Rates Mean Larger Debt Payments

On Tuesday, the yield on 10 year U.S. Treasuries rose to 3.03 percent.  I warned that this would happen once the taper started, and this is just the beginning.  Interest rates are likely to steadily rise throughout 2014.

The reason why the yield on 10 year U.S. Treasuries is such a critical number is because mortgage rates and thousands of other interest rates throughout our economy are heavily influenced by that number.

So big changes are on the way.  As a recent CNBC article declared, the era of low mortgage rates is officially over…

The days of the 3.5% 30-year fixed are over. Rates are already up well over a full percentage point from a year ago, and as the Federal Reserve begins its much anticipated exit from the bond-buying business, I believe rates will inevitably go higher.

Needless to say, this is going to deeply affect the real estate market.  As Mac Slavo recently noted, numbers are already starting to drop precipitously…

The National Association of Realtors reported that the month of September saw its single largest drop in signed home sales in 40 months. And that wasn’t just a one-off event. This month mortgage applications collapsed a shocking 66%, hitting a 13-year low.

And U.S. consumers can expect interest rates on all kinds of loans to start rising.  That is going to mean higher debt payments, and therefore less money for consumers to spend into the economy.

Government Benefit Cuts

Well, if the middle class is going to have less money to spend, perhaps other Americans can pick up the slack.

Or maybe not.

You certainly can't expect the poor to stimulate the economy.  As I mentioned yesterday, it is being projected that up to 5 million unemployed Americans could lose their unemployment benefits by the end of 2014, and 47 million Americans recently had their food stamp benefits reduced.

So the poor will also have less money to spend in 2014.

The Wealthy Save The Day?

Perhaps the stock market will continue to soar in 2014 and the wealthy will spend so much that it will make up for all the rest of us.

You can believe that if you want, but the truth is that there are a whole host of signs that the days of this irrational stock market bubble are numbered.  The following is an excerpt from one of my recent articles entitled "The Stock Market Has Officially Entered Crazytown Territory"…

The median price-to-earnings ratio on the S&P 500 has reached an all-time record high, and margin debt at the New York Stock Exchange has reached a level that we have never seen before.  In other words, stocks are massively overpriced and people have been borrowing huge amounts of money to buy stocks.  These are behaviors that we also saw just before the last two stock market bubbles burst.

If the stock market bubble does burst, the wealthy will also have less money to spend into the economy in 2014.

For the moment, the stock market has been rallying.  This is typical for the month of December.  You see, the truth is that investors generally don't want to sell stocks in December because they want to put off paying taxes on the profits.

If stocks are sold before the end of the year, the profits go on the 2013 tax return.

If stocks are sold a few days from now, the profits go on the 2014 tax return.

It is only human nature to want to delay pain for as long as possible.

Expect to see some selling in January.  Many investors are very eager to start taking profits, but they wanted to wait until the holidays were over to do so.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/vhkCszawQ7Y/story01.htm Tyler Durden

Despite his various “nanny-state” failings (all of which have been prominently featured on these pages in the past) outgoing New York City mayor Mike Bloomberg has had an impressive track record: New York crime rates are at historic lows, the $72.7 billion budget is balanced, jobs are at an all-time high and a record 54 million tourists pumped money into the economy this year. Homicides have declined by almost 50 percent since Bloomberg became mayor in 2002, and this year’s total of 333 through Dec. 29 is 20 percent below last year’s record low. Of course, how much of this is due to Bloomberg’s own actions and how much due to the “rising tide” wealth effect resulting from the Fed’s actions that gentrified New York over the past 20 years thanks to Fed wealth-effect boosting policies and which have led to a perilously unstable financial system, is a different question. Regardless, as of midnight the billionaire mayor is no more. His replecament, Bill de Blasio, 52, is the first democrat to run City Hall in 20 years.

Bill de Blasio was sworn in as the 109th mayor of New York City on Wednesday, a few minutes after midnight, but his formal inauguration ceremony on the steps of City Hall is scheduled to begin at noon.

With the arrival of de Blasio to the city’s top post, it means that Democratic mayors will preside over Los Angeles; Chicago; Houston; Philadelphia; Phoenix; San Antonio; Dallas; San Jose, California; Austin, Texas; and Jacksonville, Florida.

And while de Blasio may have gained prominence in recent days following his proposal to ban horse carriages in Central Park with comments that “we are going to get rid of horse carriages, period,” adding that the practice is inhumane, this decision will hardly impact the country’s most populous city, his other choices will. Chief among them, pledging to reduce income inequality and restrain aggressive police tactics.

Who is de Blasio? Ironically, here is Bloomberg‘s take on the new mayor.

In de Blasio, New York voters chose a Cambridge, Massachusetts-bred Boston Red Sox fan who arrived in the city as a New York University undergraduate. He received a master’s degree in international relations from Columbia University. He then worked for a Catholic relief organization, for which he distributed food and medicine on a 10-day trip to Nicaragua.

 

De Blasio’s career in city politics began as an aide to former Mayor David Dinkins in 1990. He first won election as a Brooklyn school board member in 1999, and served two terms as City Councilman from 2002 to 2009, where he focused on child abuse and the homeless as chairman of its general welfare committee, before getting elected to the citywide watchdog post of public advocate in 2009.

The new mayor’s top priority: redistributing wealth.

De Blasio’s task, as he describes it, will be to focus on improving the lives of the 46 percent of New Yorkers with incomes at or below 150 percent of the city’s poverty level, or $46,000 for a four-person household in 2011. He seeks more income distribution in a city where the richest 1 percent took home 39 percent of all earnings in 2012, up from 12 percent in 1980, according to the Fiscal Policy Institute, a New York-based research group.

 

In a City Council with 48 Democrats among its 51 members, the overwhelming majority has expressed support for de Blasio’s agenda, including a resolution asking the state legislature to enact the tax increase. De Blasio defeated Republican Joseph Lhota in the mayoral race by 49 percentage points, the widest victory margin by a non-incumbent in city history.

 

Under de Blasio’s plan, the tax rate on incomes above $500,000 would rise to 4.4 percent from almost 3.9 percent. For the 27,300 city taxpayers earning $500,000 to $1 million, the average increase would be $973 a year, according to the Independent Budget Office, a municipal agency.

 

“We must first admit that the affordability crisis exists, and then resolve, together, to do something about it,” he said in an October speech to the Association for a Better New York, a group of corporate executives.

 

He’s also vowed to create 200,000 units of below-market “affordable housing” in the next 10 years, partly by using a $1 billion investment from city pension funds. On Dec. 23, he appointed Alicia Glen, the head of urban investment for Goldman Sachs Group Inc., as deputy mayor for housing and economic development to work out low-cost financing for the construction.

 

…

 

“Instead of pouring billions of dollars into unnecessary and overly generous tax incentives for big corporations, we need to invest in small businesses, in workforce training, and in the City University of New York — the most reliable pathways for those seeking a shot at entering the middle class,” de Blasio said in the speech to the business group.

Whether de Blasio will succeed where so many other wealth redistributors before him have failed remains to be seen. But first, here is his inauguration.  At noon, a ceremony on the steps of City Hall will feature former President Bill Clinton. Hillary Rodham Clinton, the former U.S. Secretary of State and a possible 2016 presidential candidate, also will attend. De Blasio worked in the Clinton administration as a regional director of Housing and Urban Development and managed Hillary Clinton’s successful 2000 campaign for U.S. senator from New York. Consistent with the themes de Blasio pushed during his campaign, he set aside 1,000 free tickets for the public for the ceremonial swearing-in.

Everyone else can watch it live below.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/46P4lRCBsVo/story01.htm Tyler Durden

When it comes to political assassinations, 2014 is starting off with a bang, literally. Moments ago news broke that following an explosion in Prague, the Palestinian ambassador to the Czech Republic has just been killed.

Firefighters search an area after an explosion in Prague January 1, 2014. The Palestinian ambassador to Czech Republic Jamal al-Jamal has died after an explosion at his residence in Prague on Wednesday, according to Czech police.

From AP:

Ambassador Jamel al-Jamal was in his apartment with his family at the time of the explosion on Wednesday, according to Palestinian Embassy spokesman Nabil El-Fahel. Al-Jamal was seriously injured and rushed to a hospital, where he died, according to police spokeswoman Andrea Zoulova.

 

The Palestinian Foreign Ministry said the blast occurred when the 56-year-old diplomat was moving an old office safe box. It was not immediately clear how the explosives got there, and the ministry said the blast was being investigated.

 

Prague rescue service spokeswoman Jirina Ernestova said al-Jamal was placed in a medically induced coma when he arrived at Prague Military Hospital.

 

She said a 52-year old woman was taken to a different hospital in Prague after suffering from shock.

 

The ambassador’s apartment is in Prague’s Suchdol neighborhood.

Once we see any news on who the alleged perpertrators are, we will update this post.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/XcpX3x6suo0/story01.htm Tyler Durden

Below follows the latest from Nom de Plumber on the act of full display public idiocy known as the Volcker Rule.  The American Bankers Association and Community Bankers have apparently backed down regulators when it comes to small bank holdings of preferred CDOs.  But what is really needed is a loud “Foxtrot Oscar” to regulators on the entire enterprise. The Volcker Rule is artibrary and capricious.  As Nom de Plumber argues, you cannot enforce a legal standard that cannot be accurately measured.  One man’s hedge is another man’s principal exposure.  The Volcker Rule is public evidence of the irrational madness that passes for serious thought in US public policy circles.  — Chris

Volcker Rule implementation:  Mission Impossible?

A hedge at a bank will be deemed allowable risk mitigation, and not forbidden proprietary trading—–but only if no material new risk arises, unless the hedge simultaneously protects against that too.   Yet, in reality, every hedge does NOT eliminate risk, but merely exchanges one risk type for ideally more-palatable risk types.   For instance, a bank could hedge the market risk of its Treasury bond portfolio, by shorting Treasury futures.   The bank thereby assumes these substantive new risks, instead:

* basis risk (cash versus futures tracking error)

* liquidity risk (margin calls, without offsetting asset cashflows)

* counterparty and operational risks ( http://www.bu.edu/econ/files/2012/01/Bernanke-RFS.pdf )

* regulatory risk (topic here, ironically).

 

So, how can any hedge truly be Volcker Rule-compliant? 

To prove having only client market-making and no proprietary exposures, a bank must attribute its daily trading P&L to particular risk factors (yield curves, prepayments, defaults, credit spreads, equity indices, dividend streams, option-implied volatility, IRR, asset cashflows, currency rates, etc.) and buy-sell activity.  It must then report all un-attributable P&L to regulators, for flagging non-client, proprietary risk positions.   Yet, in reality, almost every asset (except non-callable, fixed-rate, high-quality sovereign debt) trades strictly by market price……not by observable or consensus settings of underlying risk factors.   Because infinite permutations of risk factor movements can cause a specific asset price movement, no definitive anchor points will arise to bootstrap that mandated P&L attribution. 

So, how can a bank or regulator attribute daily P&L, to flag proprietary trading versus client market-making?

Bottom line:  The Volcker Rule will be remarkably hard, at best, to implement.

Moreover, a bank complying with Dodd-Frank originator risk retention could simultaneously be charged as a disguised version of non-compliant proprietary trading.

http://mortgagenewsclips.com/2011/07/14/dodd-frank-conundrum-can-lender-…

Thank you. 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/FntNOzKQFRU/story01.htm rcwhalen

Below follows the latest from Nom de Plumber on the act of full display public idiocy known as the Volcker Rule.  The American Bankers Association and Community Bankers have apparently backed down regulators when it comes to small bank holdings of preferred CDOs.  But what is really needed is a loud “Foxtrot Oscar” to regulators on the entire enterprise. The Volcker Rule is artibrary and capricious.  As Nom de Plumber argues, you cannot enforce a legal standard that cannot be accurately measured.  One man’s hedge is another man’s principal exposure.  The Volcker Rule is public evidence of the irrational madness that passes for serious thought in US public policy circles.  — Chris

Volcker Rule implementation:  Mission Impossible?

A hedge at a bank will be deemed allowable risk mitigation, and not forbidden proprietary trading—–but only if no material new risk arises, unless the hedge simultaneously protects against that too.   Yet, in reality, every hedge does NOT eliminate risk, but merely exchanges one risk type for ideally more-palatable risk types.   For instance, a bank could hedge the market risk of its Treasury bond portfolio, by shorting Treasury futures.   The bank thereby assumes these substantive new risks, instead:

* basis risk (cash versus futures tracking error)

* liquidity risk (margin calls, without offsetting asset cashflows)

* counterparty and operational risks ( http://www.bu.edu/econ/files/2012/01/Bernanke-RFS.pdf )

* regulatory risk (topic here, ironically).

 

So, how can any hedge truly be Volcker Rule-compliant? 

To prove having only client market-making and no proprietary exposures, a bank must attribute its daily trading P&L to particular risk factors (yield curves, prepayments, defaults, credit spreads, equity indices, dividend streams, option-implied volatility, IRR, asset cashflows, currency rates, etc.) and buy-sell activity.  It must then report all un-attributable P&L to regulators, for flagging non-client, proprietary risk positions.   Yet, in reality, almost every asset (except non-callable, fixed-rate, high-quality sovereign debt) trades strictly by market price……not by observable or consensus settings of underlying risk factors.   Because infinite permutations of risk factor movements can cause a specific asset price movement, no definitive anchor points will arise to bootstrap that mandated P&L attribution. 

So, how can a bank or regulator attribute daily P&L, to flag proprietary trading versus client market-making?

Bottom line:  The Volcker Rule will be remarkably hard, at best, to implement.

Moreover, a bank complying with Dodd-Frank originator risk retention could simultaneously be charged as a disguised version of non-compliant proprietary trading.

http://mortgagenewsclips.com/2011/07/14/dodd-frank-conundrum-can-lender-…

Thank you. 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/FntNOzKQFRU/story01.htm rcwhalen

Obamacare officially went live at midnight. This means that 2.1 million Americans (the latest enrollment number provided by the administration) will be given a chance to exercise their new plans at hospitals and clinics across the country (it was unclear what the latest number of Americans kicked off their existing plans was most recently: the tally was 4.0 million as of mid-November and it is fair to assume it has risen since then). And then the real glitches will begin.

We reported two weeks ago that navigating the healthcare.gov labyrinth successfully and “signing up” for Obamacare is one thing; actually activating coverage by making a payment is something totally different. We added that “if people don’t pay by Dec. 31, insurers may end up stuck with a disproportionate number of sicker and costlier customers.”

It is this “shock” realization that one’s Obamacare plan is not active until after the healthcare service has been rendered, that may hit as many as 50% of all enrollees, which means that of the 2+ million Americans who believe they have coverage, up to 1 million is about to be served with a bill which they can’t afford. This also happens to be the main story across various media outlets today.

First, The Hill:

Enrollment deadline delays and processing errors at HealthCare.gov have been an administrative nightmare for insurers, and may leave some consumers discovering that they don’t have the insurance they thought they purchased when they show up at the doctor’s office. 

 

It’s also likely that some people think they have insurance under ObamaCare but do not because they have yet to make their first premium payment. Until they do, they aren’t actually insured. 

 

In Washington and Nevada, only about 50 percent of enrollees have made their first premium payments. Those are the only states that provide the breakdown.

 

“The biggest risk now is people thinking that by picking a plan, that they’re insured, when in fact final step is paying the premium,” Larry Levitt, a senior vice president with the Kaiser Family Foundation, told The Hill. “I haven’t seen good numbers on how many people are paying premiums, so that to me is the uncertainty.”

Next, it’s Reuters’ turn:

“It will be difficult for us to actually verify coverage – that’s my concern,” said Dr. William Wulf, CEO of Central Ohio Primary Care, which has 250 primary care physicians.

 

The task could be made more difficult by decisions by the U.S. government and many states to push back enrollment deadlines toward the end of the year, and to allow some patients well into January to pay for coverage that is retroactive to the start of the year.

 

The late deadlines mean that many enrollees who seek care initially may lack insurance cards or other proof of coverage. Wulf said his physician offices will assume that an existing patient is covered if they claim to be when they come in for appointments and their coverage cannot be verified immediately. But if they require expensive tests, such as MRIs or heart-stress tests that can cost up to $700, the Ohio practice will check with insurers first to make sure the patient has coverage.

 

Similarly, Dr. Andy Chiou, CEO of Peoria Surgical Group Ltd in Illinois, said that if the practice finds a “significant minority” of its patients do not have coverage when they believe they do, it might delay elective surgeries for patients until their insurance is confirmed.

 

“For the protection of patients and us, we’ll have to say, ‘Sorry, you don’t have insurance,’” Chiou said.

That means 1 million Americans, some of whom are very ill, are about to get a big new year’s disappointment from their doctor.

To be sure, some stop gap measures have been implemented: the Hill reports that some big insurers “will allow consumers to pay their first premium by Jan. 10 and still be insured on Jan. 1. In addition, Walgreens and CVS Pharmacies announced this week that they will provide up to a month of no-cost medications to consumers that haven’t received their ObamaCare IDs yet, but can prove they enrolled.” However, for those who expected Obamacare to be a deus ex with zero payment at all, which appears to have been the case at nearly a majority level, no temporary measures will fix the situation that there is still a payment to be made: a payment which millions simply can not afford.

Needless to say, with 2014 an election year, the stakes for the administration are huge:

For the Obama administration, the political stakes are high in ensuring a smooth transition period for coverage, particularly after the website’s problems damaged the popularity of the Democratic president and the healthcare overhaul, his top domestic achievement.

 

Republicans who have called Obamacare a costly program that will rob many Americans of insurance choices have said they will make Obamacare’s problems their top issue in the November 2014 elections, when control of Congress will be at stake.

 

White House health policy adviser Phil Schiliro said on Tuesday that because of the intense focus on Obamacare, “problems that have never gotten attention before will get some attention now.”

The Hill adds:

There’s little doubt the success of the healthcare law will be a big factor in Democratic efforts to retain the Senate, where Republicans need to gain six seats to win back a majority.

 

Doing so would be a huge blow to Obama’s remaining years in office, virtually assuring him lame-duck status through the rest of his term.

 

So there’s a lot at stake for the administration to ensure things go smoothly, starting on New Year’s Day.

At this point, some opt out to fall back to a naive belief that things will be well:

John Holahan, a fellow at the non-partisan Urban Institute, said the idea that people will be blindsided is foolish. “If they don’t pay they don’t have insurance, that’s part of the deal, you’re not really enrolled,” he said. “But I assume anyone who goes through the trouble of enrolling will go ahead and pay.”

Actually, most who have the free time to go through the trouble of enrolling likely don’t have a source of disposable income.

A more realistic conclusion comes from Joe Antos of the conservative American Enterprise Institute, who predicted the flood of applications would be too much for the administration and the insurers to handle before the newly covered head out to exercise their plans. “There’s no way the insurance industry could hire enough people to process all that paperwork if the data was coming in correctly, and it’s not,” he said. “I think most people who think they have coverage will find some difficulty early in January.”

We will find out in the coming days if the next big embarrassment for the administration will unfold and if Obama’s ratings will tumble to fresh record lows as a result.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/qlxIzuaMur8/story01.htm Tyler Durden

Submitted by Jim Quinn of The Burning Platform blog,

In mid-January of this year I wrote my annual prediction article for 2013 – Apparitions in the Fog. It is again time to assess my inability to predict the future any better than a dart throwing monkey. As usual, sticking to facts was a mistake in a world fueled by misinformation, propaganda, delusion and wishful thinking. I was far too pessimistic about the near term implications of debt, civic decay and global disorder. Those in power have successfully held off the unavoidable collapse which will be brought about by their ravenous unbridled greed, and blatant disregard for the rule of law, the U.S. Constitution and rights and liberties of the American people. The day to day minutia, pointless drivel of our techno-narcissistic selfie showbiz society, and artificially created issues (gay marriage, Zimmerman-Martin, Baby North West, Duck Dynasty) designed to distract the public from thinking, are worthless trivialities in the broad landscape of human history.

The course of human history is determined by recurring cyclical themes based upon human frailties that have been perpetual through centuries of antiquity. The immense day to day noise of an inter-connected techno-world awash in inconsequentialities and manipulated by men of evil intent is designed to divert the attention of the masses from the criminal activities of those in power. It has always been so. There have always been arrogant, ambitious, greedy, power hungry, deceitful men, willing to take advantage of a fearful, lazy, ignorant, selfish, easily manipulated populace. The rhythms of history are unaffected by predictions of “experts” who are paid to spin yarns in order to sustain the status quo. There is no avoiding the consequences of actions taken and not taken over the last eighty years. We are in the midst of a twenty year period of Crisis that was launched in September 2008 with the worldwide financial collapse, created by the Federal Reserve, their Wall Street owners, their bought off Washington politicians, and their media and academic propaganda machines.

I still stand by the final paragraph of my 2013 missive, and despite the fact the establishment has been able to fend off the final collapse of their man made credit boom for longer than I anticipated, they have only insured a far worse outcome when the bubble bursts:              

“So now I’m on the record for 2013 and I can be scorned and ridiculed for being such a pessimist when December rolls around and our Ponzi scheme economy hasn’t collapsed. There is no disputing the facts. The economic situation is deteriorating for the average American, the mood of the country is darkening, and the world is awash in debt and turmoil. Every country is attempting to print their way to renewed prosperity. No one wins a race to the bottom. The oligarchs have chosen a path of currency debasement, propping up insolvent banks, propaganda and impoverishing the masses as their preferred course. They attempt to keep the masses distracted with political theater, gun control vitriol, reality TV and iGadgets. What can be said about a society where 10% of the population follows Justin Bieber and Lady Gaga on Twitter and where 50% think the National Debt is a monument in Washington D.C. The country is controlled by evil sycophants, intellectually dishonest toadies and blood sucking leeches. Their lies and deception have held sway for the last four years, but they have only delayed the final collapse of a boom brought about by credit expansion. They will not reverse course and believe their intellectual superiority will allow them to retain their control after the collapse.”

The core elements of this Crisis have been visible since Strauss & Howe wrote The Fourth Turning in 1997. All the major events that transpire during this Crisis will be driven by one or more of these core elements – Debt, Civic Decay, and Global Disorder.

“In retrospect, the spark might seem as ominous as a financial crash, as ordinary as a national election, or as trivial as a Tea Party. The catalyst will unfold according to a basic Crisis dynamic that underlies all of these scenarios: An initial spark will trigger a chain reaction of unyielding responses and further emergencies. The core elements of these scenarios (debt, civic decay, global disorder) will matter more than the details, which the catalyst will juxtapose and connect in some unknowable way. If foreign societies are also entering a Fourth Turning, this could accelerate the chain reaction. At home and abroad, these events will reflect the tearing of the civic fabric at points of extreme vulnerability – problem areas where America will have neglected, denied, or delayed needed action.” – The Fourth Turning – Strauss & Howe

My 2013 predictions were framed by these core elements. After re-reading my article for the first time in eleven months I’ve concluded it is lucky I don’t charge for investment predictions. Many of my prognostications were in the ballpark, but I have continually underestimated the ability of central bankers and their Wall Street co-conspirators to use the $2.8 billion per day of QE to artificially elevate the stock market to bubble level proportions once again. If I wasn’t such a trusting soul, I might conclude the .1% financial elite, who run this country, created QEternity to benefit themselves, their .1% corporate CEO accomplices and the corrupt government apparatchiks who shield their flagrant criminality from the righteous hand of justice.

Even a highly educated Ivy League economist might grasp the fact that Ben Bernanke’s QEternity and ZIRP, sold to the unsuspecting masses as desperate measures during a crisis that could have brought the system down, have been kept in place for five years as a means to drive stock prices and home prices higher. The emergency was over by 2010, according to government reported data. The current monetary policy of the Federal Reserve would have been viewed as outrageous, reckless, and incomprehensible in 2007. It is truly a credit to the ruling elite and their media propaganda arm that they have been able to convince a majority of Americans their brazen felonious disregard for the wellbeing of the 99% is necessary to sustain the .1% way of life. Those palaces in the Hamptons aren’t going to pay for themselves without those $100 billion of annual bonuses.       

Do you think the 170% increase in the S&P 500 has been accidently correlated with the quadrupling of the Federal Reserve balance sheet or has Bernanke just done the bidding of his puppet masters? Considering the .1% billionaire clique owns the vast majority of stock in this corporate fascist paradise, is it really a surprise the trickle down canard would be the solution of choice from these sociopathic scoundrels? Of course QE and ZIRP have impacted the 80% who own virtually no stocks in a slightly different manner. Do you think the 100% increase in gasoline prices since 2009 was caused by Bernanke’s QEternity?  

Do you think the 8% decline in real median household income since 2008 was caused by Bernanke’s QE and ZIRP policies?  

Do you think the $10.8 trillion stolen from grandmothers and risk adverse savers was caused by Bernanke’s ZIRP?

Was the $860 billion increase in real GDP (5.8% over five years) worth the $8 trillion increase in the National Debt and $3 trillion increase in the Federal Reserve balance sheet? Was it moral, courageous and honorable of the Wall Street plantation owners to syphon the remaining wealth of the dying middle class peasants and leaving the millennial generation and future generations bound in chains of unfunded debt to the tune of $200 trillion?

My assessment regarding unpredictable events lurking in the fog was borne out by what happened that NO ONE predicted, including: the first resignation of a pope in six hundred years, the military coup of a democratically elected president of Egypt – supported by the democratically elected U.S. president, the rise of an alternative currency – bitcoin, the bankruptcy of one of the largest cities in the U.S. – Detroit, a minor terrorist attack in Boston that freaked out the entire country and revealed the Nazi-like un-Constitutional tactics that will be used by the police state as this Crisis deepens, and revelations by a brilliant young patriot named Edward Snowden proving that the U.S. has been turned into an Orwellian surveillance state as every electronic communication of every American is being monitored and recorded. The Democrats and Republicans played their parts in this theater of the absurd. They proved to be two faces of the same Party as neither faction questions the droning of innocent people around the globe, mass spying on citizens, Wall Street criminality, trillion dollar deficits, a rogue Federal Reserve, or out of control unsustainable government spending.

My predictions for 2013 were divided into the three categories driving this Fourth Turning Crisis – Debt, Civic Decay, and Global Disorder. Let’s assess my inaccuracy.

Debt

• The debt ceiling will be raised as the toothless Republican Party vows to cut spending next time. The political hacks will create a 3,000 page document of triggers and create a committee to study the issue, with actual measures that slow the growth of annual spending by .000005% starting in 2017.

The government shutdown reality TV show proved to be the usual Washington D.C. kabuki theater. They gave a shutdown and no one noticed. It had zero impact on the economy. More people came to the realization that government does nothing except spend our money and push us around. The debt ceiling was raised, the sequester faux “cuts” were reversed and $20 billion of spending will be cut sometime in the distant future. Washington snakes are entirely predictable. I nailed this prediction.

• The National Debt will increase by $1.25 trillion and debt to GDP will reach 106% by the end of the fiscal year.

The National Debt increased by ONLY $964 billion in the last fiscal year, even though the government stopped counting in May. The temporary sequester cuts, the expiration of the 2% payroll tax cut, the fake Fannie & Freddie paybacks to the U.S. Treasury based upon mark to fantasy accounting, and the automatic expiration of stimulus spending combined to keep the real deficit from reaching $1 trillion for the fifth straight year. Debt to GDP was 104%, before our beloved government drones decided to “adjust” GDP upwards by $500 billion based upon a new and improved formula, like Tide detergent. I missed this prediction by a smidgeon.

• The Federal Reserve balance sheet will reach $4 trillion by the end of the year.

The Federal Reserve balance sheet stands at $4.075 trillion today. Ben is very predictable, and of course “transparent”. This was an easy one.

• Consumer debt will reach $2.9 trillion as the Feds accelerate student loans and Ally Financial, along with the other Too Big To Control Wall Street banks, keep pumping out subprime auto loans. By mid-year reported losses on student loans will soar and auto loan delinquencies will show an upturn. This will force a slowdown in consumer debt issuance, exacerbating the recession that started in 2012.

Consumer debt outstanding currently stands at $3.076 trillion despite the fact that credit card debt has been virtually flat. The Federal government has continued to dole out billions in loans to University of Phoenix wannabes and to the subprime urban entitlement armies who deserve to drive an Escalade despite having no job, no assets and a sub 650 credit score, through government owned Ally Financial. It helps drive business when you don’t care about being repaid. Student loan delinquency rates are at an all-time high, as there are no jobs for graduates with tens of thousands in debt. Auto loan delinquencies have begun to rise despite the fact we are supposedly in a strongly recovering economy. The slowdown in debt issuance has not happened, as the Federal government is in complete control of the non-revolving loan segment. My prediction has proven to be accurate.

• The Bakken oil miracle will prove to be nothing more than Wall Street shysters selling a storyline. Daily output will stall at 750,000 barrels per day and the dreams of imminent energy independence will be annihilated by reality, again. The price of oil will average $105 per barrel, as global tensions restrict supply.

Bakken production has reached 867,000 barrels per day as more and more wells have been drilled to offset the steep depletion rates of the existing wells. The average price per barrel has been $104, despite the frantic propaganda campaign about imminent American energy independence. Tell that to the average Joe filling their tank and paying the highest December gas price in history. My prediction was too pessimistic, but the Bakken miracle will be revealed as an over-hyped Wall Street scam in 2014.

• The home price increases generated through inventory manipulation in 2012 will peter out as 2013 progresses. The market has been flooded by investors. There is very little real demand for new homes. Young households with heavy student loan debt and low paying jobs will continue to rent, since the oligarchs refused to let prices fall to a level that would spur real demand. Mortgage delinquencies will rise as job growth remains stagnant, leading to an increase in foreclosures. Rent prices will flatten as apartment construction and investors flood the market with supply.

Existing home sales peaked in the middle of 2013 and have been in decline as mortgage rates have jumped from 3.25% to 4.5% since February. New home sales remain stagnant, near record low levels. The median sales price for existing home sales peaked at $214,000 in June and has fallen for five consecutive months by a total of 8%. First time home buyers account for a record low of 28% of purchases, while investors account for a record high level of purchasers. Mortgage delinquencies fell for most of the year, but the chickens are beginning to come home to roost as delinquent mortgage loans rose from 6.28% in October to 6.45% in November. Rent increases slowed to below 3% as Blackrock and the other Wall Street shysters flood the market with their foreclosure rental properties. My housing prediction was accurate.

 

• The disconnect between the stock market and the housing and employment markets will be rectified when the MSM can no longer deny the recession that began in 2012 and will deepen in the first part of 2013. While housing prices languish 30% below their peak levels of 2006, the stock market has prematurely ejaculated back to pre-crisis levels. Declining corporate profits, stagnant consumer spending, and increasing debt defaults will finally result in a 20% decline in the stock market, with a chance for losses greater than 30% if Japan or the EU begin to crumble.

And now we get to the prediction that makes me happy I don’t charge people for investment advice. Facts don’t matter in world of QE for the psychopathic titans of Wall Street and misery for the indebted peasants of Main Street. The government data drones, Ivy League educated Wall Street economists, and the obedient corporate media propaganda apparatus declare that GDP has grown by 2% over the last four quarters and we are not in a recession. If you believe their bogus inflation calculation then just ignore the collapsing retail sales, stagnant real wages, and rising gap between the uber-rich and the rest of us. Using a true measure of inflation reveals an economy in recession since 2004. Whose version matches the reality on the ground?

 

Corporate profits have leveled off at record highs as mark to fantasy accounting fraud, condoned and encouraged by the Federal Reserve, along with loan loss reserve depletion and $5 billion of risk free profits from parking deposits at the Fed have created a one-time peak. The record level of negative earnings warnings is the proverbial bell ringing at the top.

I only missed my stock market prediction by 50%, as the 30% rise was somewhat better than my 20% decline prediction. Bernanke’s QEternity, Wall Street’s high frequency trading supercomputers, record levels of margin debt, a dash of delusion, and a helping of clueless dupes have taken the stock market to another bubble high. My prediction makes me look like an idiot today. I’m OK with that, since I know facts and reality always prevail in the long-run. As John Hussman sagely points out, today’s idiot will be tomorrow’s beacon of truth:

“The problem with bubbles is that they force one to decide whether to look like an idiot before the peak, or an idiot after the peak. There’s no calling the top, and most of the signals that have been most historically useful for that purpose have been blazing red since late-2011. My impression remains that the downside risks for the market have been deferred, not eliminated, and that they will be worse for the wait.”

• Japan is still a bug in search of a windshield. With a debt to GDP ratio of 230%, a population dying off, energy dependence escalating, trade surplus decreasing, an already failed Prime Minister vowing to increase inflation, and rising tensions with China, Japan is a primary candidate to be the first domino to fall in the game of debt chicken. A 2% increase in interest rates would destroy the Japanese economic system.

Abenomics has done nothing for the average Japanese citizen, but it has done wonders for the ruling class who own all the stocks. Abe has implemented monetary policies that make Bernanke get a hard on. Japanese economic growth remains mired at 1.1%, wages remain stagnant, and their debt to GDP ratio remains above 230%, but at least he has driven their currency down 20% versus the USD and crushed the common person with 9% energy inflation. None of this matters, because the .1% have benefitted from a 56% increase in the Japanese stock market. My prediction was wrong. The windshield is further down the road, but it is approaching at 100 mph.

• The EU has temporarily delayed the endgame for their failed experiment. Economic conditions in Greece, Spain and Italy worsen by the day with unemployment reaching dangerous revolutionary levels. Pretending countries will pay each other with newly created debt will not solve a debt crisis. They don’t have a liquidity problem. They have a solvency problem. The only people who have been saved by the actions taken so far are bankers and politicians. I believe the crisis will reignite, with interest rates spiking in Spain, Italy and France. The Germans will get fed up with the rest of Europe and the EU will begin to disintegrate.

This was another complete miss on my part. Economic conditions have not improved in Europe. Unemployment remains at record levels. EU GDP is barely above 0%. Debt levels continue to rise. Central bank bond buying has propped up this teetering edifice of ineptitude and interest rates in Spain, Italy and France have fallen to ridiculously low levels of 4%, considering they are completely insolvent with no possibility for escape. The disintegration of the EU will have to wait for another day.

Civic Decay

• Progressive’s attempt to distract the masses from our worsening economic situation with their assault on the 2^nd Amendment will fail. Congress will pass no new restrictions on gun ownership and 2013 will see the highest level of gun sales in history.

Obama and his gun grabbing sycophants attempted to use the Newtown massacre as the lever to overturn the 2^nd Amendment. The liberal media went into full shriek mode, but the citizens again prevailed and no Federal legislation restricting the 2^nd Amendment passed. Gun sales in 2013 will set an all-time record. With the Orwellian surveillance state growing by the day, arming yourself is the rational thing to do. I nailed this prediction.

• The deepening recession, higher taxes on small businesses and middle class, along with Obamacare mandates will lead to rising unemployment and rising anger with the failed economic policies of the last four years. Protests and rallies will begin to burgeon.

The little people are experiencing a recession. The little people bore the brunt of the 2% payroll tax increase. The little people are bearing the burden of the Obamacare insurance premium increases. The number of employed Americans has increased by 1 million in the last year, a whole .4% of the working age population. The number of Americans who have willingly left the labor force in the last year because their lives are so fulfilled totaled 2.5 million, leaving the labor participation rate at a 35 year low. The anger among the former middle class is simmering below the surface, as Bernanke’s policies further impoverish the multitudes. Mass protests have not materialized but the Washington Navy yard shooting, dental hygenist murdered by DC police for ramming a White House barrier, and self- immolation of veteran John Constantino on the National Mall were all individual acts of desperation against the establishment.  

• The number of people on food stamps will reach 50 million and the number of people on SSDI will reach 11 million. Jamie Dimon, Lloyd Blankfein, and Jeff Immelt will compensate themselves to the tune of $100 million. CNBC will proclaim an economic recovery based on these facts.

The number of people on food stamps appears to have peaked just below 48 million, as the expiration of stimulus spending will probably keep the program from reaching 50 million. As of November there were 10.98 million people in the SSDI program. The top eight Wall Street banks have set aside a modest $91 billion for 2013 bonuses. The cost of providing food stamps for 48 million Americans totaled $76 billion. CNBC is thrilled with the record level of bonuses for the noble Wall Street capitalists, while scorning the lazy laid-off middle class workers whose jobs were shipped to China by the corporations whose profits are at all-time highs and stock price soars. Isn’t crony capitalism grand?

• The drought will continue in 2013 resulting in higher food prices, ethanol prices, and shipping costs, as transporting goods on the Mississippi River will become further restricted. The misery index for the average American family will reach new highs.

The drought conditions in the U.S. Midwest have been relieved. Ethanol prices have been flat. Beef prices have risen by 10% since May due to the drought impact from 2012, but overall food price increases have been moderate. The misery index (unemployment rate + inflation rate) has supposedly fallen, based on government manipulated data. I whiffed on this prediction.

• There will be assassination attempts on political and business leaders as retribution for their actions during and after the financial crisis.

There have been no assassination attempts on those responsible for our downward financial spiral. The anger has been turned inward as suicides have increased by 30% due to the unbearable economic circumstances brought on by the illegal financial machinations of the Wall Street criminal banks. Obama and Dick Cheney must be thrilled that more military personnel died by suicide in 2013 than on the battlefield. Mission Accomplished. The retribution dealt to bankers and politicians will come after the next collapse. For now, my prediction was premature. 

• The revelation of more fraud in the financial sector will result in an outcry from the public for justice. Prosecutions will be pursued by State’s attorney generals, as Holder has been captured by Wall Street.

Holder and the U.S. government remain fully captured by Wall Street. The states have proven to be toothless in their efforts to enforce the law against Wall Street. The continuing revelations of Wall Street fraud and billions in fines paid by JP Morgan and the other Too Big To Trust banks have been glossed over by the captured mainstream media. As long as EBT cards, Visas and Mastercards continue to function, there will be no outrage from the techno-narcissistic, debt addicted, math challenged, wilfully ignorant masses. Another wishful thinking wrong prediction on my part.   

• The deepening pension crisis in the states will lead to more state worker layoffs and more confrontation between governors attempting to balance budgets and government worker unions. There will be more municipal bankruptcies.

Using a still optimistic discount rate of 5%, the unfunded pension liability of states and municipalities totals $3 trillion. The taxpayers don’t have enough cheese left for the government rats to steal. The crisis deepens by the second. State and municipal budgets require larger pension payments every year. The tax base is stagnant or declining. States must balance their budgets. They will continue to cut existing workers to pay the legacy costs until they all experience their Detroit moment. With the Detroit bankruptcy, I’ll take credit for getting this prediction right.   

• The gun issue will further enflame talk of state secession. The red state/blue state divide will grow ever wider. The MSM will aggravate the divisions with vitriolic propaganda.

With the revelations of Federal government spying, military training exercises in cities across the country, the blatant disregard for the 4^th Amendment during the shutdown of Boston, and un-Constitutional mandates of Obamacare, there has been a tremendous increase in chatter about secession. A google search gets over 200,000 hits in the last year. The divide between red states and blue states has never been wider. 

• The government will accelerate their surveillance efforts and renew their attempt to monitor, control, and censor the internet. This will result in increased cyber-attacks on government and corporate computer networks in retaliation.

If anything I dramatically underestimated the lengths to which the United States government would go in their illegal surveillance of the American people and foreign leaders. Edward Snowden exposed the grandest government criminal conspiracy in history as the world found out the NSA, with the full knowledge of the president and Congress, has been conspiring with major communications and internet companies to monitor and record every electronic communication on earth, in clear violation of the 4^th Amendment. Government apparatchiks like James Clapper have blatantly lied to Congress about their spying activities. The lawlessness with which the government is now operating has led to anarchist computer hackers conducting cyber-attacks on government and corporate networks. The recent hacking of the Target credit card system will have devastating implications to their already waning business. I’ll take credit for an accurate prediction on this one.   

Global Disorder 

• With new leadership in Japan and China, neither will want to lose face, so early in their new terms. Neither side will back down in their ongoing conflict over islands in the East China Sea. China will shoot down a Japanese aircraft and trade between the countries will halt, leading to further downturns in both of their economies.

The Japanese/Chinese dispute over the Diaoyu/Senkaku islands has blown hot and cold throughout the year. In the past month the vitriol has grown intense. China has scrambled fighter jets over the disputed islands. The recent visit of Abe to a World War II shrine honoring war criminals has enraged the Chinese. Trade between the countries has declined. An aircraft has not been shot down, but an American warship almost collided with a Chinese warship near the islands, since our empire must stick their nose into every worldwide dispute. We are one miscalculation away from a shooting war. It hasn’t happened yet, so my prediction was wrong.

• Worker protests over slave labor conditions in Chinese factories will increase as food price increases hit home on peasants that spend 70% of their pay for food. The new regime will crackdown with brutal measures, but the protests will grow increasingly violent. The economic data showing growth will be discredited by what is happening on the ground. China will come in for a real hard landing. Maybe they can hide the billions of bad debt in some of their vacant cities.

The number of worker protests over low pay and working conditions in China doubled over the previous year, but censorship of reporting has kept these facts under wraps. In a dictatorship, the crackdown on these protests goes unreported. The fraudulent economic data issued by the government has been proven false by independent analysts. The Chinese stock market has fallen 14%, reflecting the true economic situation. The Chinese property bubble is in the process of popping. China will never officially report a hard landing. China is the most corrupt nation on earth and is rotting from the inside, like their vacant malls and cities. China’s economy is like an Asiana Airlines Boeing 777 coming in for a landing at SF International.

• Violence and turmoil in Greece will spread to Spain during the early part of the year, with protests and anger spreading to Italy and France later in the year. The EU public relations campaign, built on sandcastles of debt in the sky and false promises of corrupt politicians, will falter by mid-year. Interest rates will begin to spike and the endgame will commence. Greece will depart the EU, with Spain not far behind. The unraveling of debt will plunge all of Europe into depression.

Violent protests flared in Greece and Spain throughout the year. They did not spread to Italy and France. The central bankers and the puppet politicians have been able to contain the EU’s debt insolvency through the issuance of more debt. What a great plan. The grand finale has been delayed into 2014. Greece remains on life support and still in the EU. The EU remains in recession, but the depression has been postponed for the time being. This prediction was a dud.

• Iran will grow increasingly desperate as hyperinflation caused by U.S. economic sanctions provokes the leadership to lash out at its neighbors and unleash cyber-attacks on Saudi Arabian oil facilities and U.S. corporations. Israel will use the rising tensions as the impetus to finally attack Iranian nuclear facilities. The U.S. will support the attack and Iran will launch missiles at Saudi Arabia and Israel in retaliation. The price of oil will spike above $125 per barrel, further deepening the worldwide recession.

Iran was experiencing hyperinflationary conditions early in the year, but since the election of the new president the economy has stabilized. Iran has conducted cyber-attacks against Saudi Arabian gas companies and the U.S. Navy during 2013. Israel and Saudi Arabia have failed in their efforts to lure Iran into a shooting war. Obama has opened dialogue with the new president to the chagrin of Israel. War has been put off and the negative economic impacts of surging oil prices have been forestalled. I missed on this prediction.

• Syrian President Assad will be ousted and executed by rebels. Syria will fall under the control of Islamic rebels, who will not be friendly to the United States or Israel. Russia will stir up discontent in retaliation for the ouster of their ally.

Assad has proven to be much tougher than anyone expected. The trumped up charges of gassing rebel forces, created by the Saudis who want a gas pipeline through Syria, was not enough to convince the American people to allow our president to invade another sovereign country. Putin and Russia won this battle. America’s stature in the eyes of the world was reduced further. America continues to support Al Qaeda rebels in Syria, while fighting them in Afghanistan. The hypocrisy is palpable. Another miss.

• Egypt and Libya will increasingly become Islamic states and will further descend into civil war.

The first democratically elected president of Egypt, Mohammed Morsi, was overthrown in a military coup as the country has descended into a civil war between the military forces and Islamic forces. It should be noted that the U.S. supported the overthrow of a democratically elected leader. Libya is a failed state with Islamic factions vying for power and on the verge of a 2^nd civil war. Oil production has collapsed. I’ll take credit for an accurate prediction on this one.   

• The further depletion of the Cantarell oil field will destroy the Mexican economy as it becomes a net energy importer. The drug violence will increase and more illegal immigrants will pour into the U.S. The U.S. will station military troops along the border.

Mexican oil production fell for the ninth consecutive year in 2013. It has fallen 25% since 2004 to the lowest level since 1995. Energy exports still slightly outweigh imports, but the trend is irreversible. Mexico is under siege by the drug cartels. The violence increases by the day. After declining from 2007 through 2009, illegal immigration from Mexico has been on the rise. Troops have not been stationed on the border as Obama and his liberal army encourages illegal immigration in their desire for an increase in Democratic voters. This prediction was mostly correct.

• Cyber-attacks by China and Iran on government and corporate computer networks will grow increasingly frequent. One or more of these attacks will threaten nuclear power plants, our electrical grid, or the Pentagon.

China and Iran have been utilizing cyber-attacks on the U.S. military and government agencies as a response to NSA spying and U.S. sabotaging of Iranian nuclear facilities. Experts are issuing warnings regarding the susceptibility of U.S. nuclear facilities to cyber-attack. If a serious breach has occurred, the U.S. government wouldn’t be publicizing it. Again, this prediction was accurate.

I achieved about a 50% accuracy rate on my 2013 predictions. These minor distractions are meaningless in the broad spectrum of history and the inevitability of the current Fourth Turning sweeping away the existing social order in a whirlwind of chaos, violence, financial collapse and ultimately a decisive war. The exact timing and exact events which will precipitate the demise of the establishment are unknowable with any precision, but there is no escape from the inexorable march of history. While most people get lost in the minutia of day to day existence and supposed Ivy League thought leaders are consumed with their own reputations and wealth, apparent stability will morph into terrifying volatility in an instant. The normalcy bias being practiced by an entire country will be shattered in a reality storm of consequences. The Crisis will continue to be driven by the ever growing debt levels, civic decay caused by government overreach, and global disorder driven by resource shortages and religious zealotry. The ultimate outcome is unpredictable, but the choices we make will matter. History is about to fling us towards a vast chaos.

“The seasons of time offer no guarantees. For modern societies, no less than for all forms of life, transformative change is discontinuous. For what seems an eternity, history goes nowhere – and then it suddenly flings us forward across some vast chaos that defies any mortal effort to plan our way there. The Fourth Turning will try our souls – and the saecular rhythm tells us that much will depend on how we face up to that trial. The saeculum does not reveal whether the story will have a happy ending, but it does tell us how and when our choices will make a difference.”  – Strauss & Howe – The Fourth Turning

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/23xdVjZYJGQ/story01.htm Tyler Durden

Authored by Stephen Roach, originally posted at Project Syndicate,

China was hardly lacking in policy pronouncements in the final months of 2013. From the 60-point reform program issued by the Central Committee’s Third Plenum in early November to the six core tasks endorsed by the Central Economic Work Conference a month later, China’s leaders proposed a raft of new measures to address the daunting challenges that their country faces in the years ahead.

But, seen in their entirety, the risk of incoherence has become evident. The Third Plenum initiatives, for example, have a strategic focus: promoting the economy’s long-awaited pro-consumption structural rebalancing. While the Work Conference’s core tasks embody the spirit of these reforms, they also reflect a tactical focus: “keeping growth steady.” Given the likely tradeoffs between strategy and tactics – that is, between long-term reforms and short-term growth imperatives – can Chinese policymakers really accomplish all of their objectives?

Of course, such tradeoffs have long been evident in most economies – developed and developing alike. What has separated China from the pack has been its strong inclination to place greater emphasis on strategic objectives in charting its economic-development path.

Even so, new tensions between the Third Plenum’s policies and those of the latest Work Conference have raised the question of tradeoffs once again. The consumer- and services-led rebalancing initially proposed in the 12th Five-Year Plan and endorsed by the recently concluded Third Plenum implies slower GDP growth than the 10% average annual rate recorded from 1980 to 2010.

Yet slower growth need not be a bad thing. Employment in Chinese services is about 30% higher per unit of output than in the manufacturing and construction sectors, which means that an increasingly services-led China can accomplish its critical labor-absorption objectives – namely, rapid job creation and poverty reduction – with 7-8% annual growth.

For China, rebalancing and slower growth go hand in hand – and yield the additional benefits of less intensive resource demand, a more subdued rise in energy consumption, and related progress in addressing environmental pollution and income inequality. But the recent Work Conference failed to consider China’s growth slowdown in this strategic context, placing considerable weight instead on the macro-stabilization imperatives of “proactive fiscal and prudent monetary policies.”

Since the Work Conference was concluded, investors have been debating the 2014 growth target. Will the 7.5% objective set for 2013 be maintained next year, as a recent leak from senior Chinese officials seems to indicate, or do the recent pronouncements indicate further deceleration toward 7%?

The answer will be revealed at the National People’s Congress in March. But focusing on a near-term growth target, and fine-tuning fiscal and monetary policies in order to achieve it – to say nothing of yet another credit crunch roiling Chinese short-term funding markets – detract from the emphasis on strategic shifts that economic rebalancing now requires.

Indeed, most of the six major economic tasks for 2014 set by the recent Work Conference – including efforts aimed at ensuring food security, containing local-government debt, and improving coordination of regional development – have little or nothing to do with China’s strategic rebalancing imperatives. Though laudable, they seem disconnected from pro-consumption restructuring.

In fact, only two of the six major economic tasks identified by the Work Conference fit neatly with the Third Plenum’s strategic agenda. The call for enhanced social security is consistent with the Third Plenum’s proposal to allocate 30% of state-owned enterprises’ profits to fund safety-net programs such as pensions and health care. Likewise, the emphasis on markets’ “decisive role” in upgrading China’s industrial structure and eliminating excess capacity is compatible with the Third Plenum’s goal of achieving a market-based shift to a consumer society.

But what emerges from all of this is yet another example of the timeworn “kitchen sink” approach to Chinese economic policymaking – countless proposals, initiatives, and goals that are loosely connected at best, and that are often plagued by internal inconsistencies. A new approach is needed, and it will require three key changes to China’s economic-policy framework.

First, in keeping with global best practice, Chinese authorities need to be far more explicit (that is, transparent) in prioritizing, or ranking, their policy objectives. Setting different agendas on multiple platforms – Five-Year Plans, Third Plenums, and Work Conferences – is a recipe for confusion and potential conflict.

Second, economy-wide growth targets should be downplayed. Such targets smack of the legacy of a state-directed economy – a legacy that runs counter to policymakers’ new emphasis on the “decisive role” of markets.

Finally, there is a need to separate stabilization objectives from strategic imperatives. The former should be handled by an independent central bank with primary responsibility for monetary and currency policies, whereas the latter should be the responsibility of the new Central Leading Group on Reforms, which has just been established by the Third Plenum.

Chinese policymakers’ traditional emphasis on long-term strategy has enabled them to steer past the inevitable bumps on the road to economic development. Now, however, as the authorities set out on a new course aimed at sustaining China’s extraordinary progress, they should act quickly to achieve greater coherence in their policy agenda.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/Rxylw0X1cPk/story01.htm Tyler Durden