Category: zerohedge

The following charts are a summary taken from the “Money as you Grow” presentation prepared by the President’s Advisory Council on Financial Capability (created by executive order). What it highlights are “20 Things kids need to know to live financially smart lives” and is Barack Obama’s personal advice to children ages 3 through 18+ on how they should spend their money. The list, which includes among it such brilliant advice as “you may have to wait before you can buy something you want”, “it can be cost and dangerous to share information online” (with the NSA), “putting money in a savings account will protect and pay you interest“, “the sooner you save, the faster your money can grow from compound interest”, “your first paycheck may seem smaller than expected since money is taken out for taxes“, “you should use a credit card only if you can pay the money owed in full each month”, and of course “you need health insurance” has been pulled straight from Bizarro Day, and literally redefines New Normal humor since everything it recommends is the opposite of how the real world now works.

So who is issuing this indispensable advice?

The President’s Advisory Council on Financial Capability (PACFC) was created by Executive Order 13530, which was signed by President Barack Obama on January 29, 2010. Its charter is to advise the President on promoting and enhancing financial literacy and capability among the American people. While the President’s Advisory Council on Financial Capability cannot by federal statute become operational, it is charged with providing financial capability policy recommendations for the nation to the President of the United States. One of the key objectives of the President’s Advisory Council on Financial Capability is to find ways to improve the financial capability of young Americans.

The purpose of this website is to inspire families, community organizations, nonprofits, and businesses to embrace Money as You Grow as a tool to promote financial literacy. This website serves as a guide to learning about and using Money as You Grow. It is intended for reference only, and is not meant to endorse or promote specific initiatives.

QUESTIONS? COMMENTS? WANT TO GET INVOLVED? Email us: info@moneyasyougrow.org

via Zero Hedge http://ift.tt/1faUE97 Tyler Durden

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

Why is our government so incompetent? Short answer: because incompetence has been fully institutionalized in every branch, every agency and every nook and cranny of the state.

Though many may reckon the U.S. government (and its Deep State) are not so much incompetent as merely evil, I suggest incompetence sows the seeds of evil consequences.

It's easy to lay the responsibility for the state's incompetence on its staggering size and complexity, and there is much truth in the notion that no system of this scale and complexity can possibly be governable or accountable.

But I think we owe it to ourselves to dig a bit deeper than this to understand why our visible government (executive, Congress, regulatory agencies, the Federal Reserve, etc.) and the Deep State (everything that's decided and run behind closed doors) is so monumentally incompetent.

The policies and decisions of the past 15 years can be reduced to three catastrophic blunders: the discretionary war in Iraq and "nation-building" in Afghanistan; allowing those responsible for the 2008 financial meltdown to become even more invulnerable and predatory, i.e. enabling a "too big to fail" banking sector, and Obamacare, the Orwellian-named Affordable Care Act (ACA).
Each of these policy decisions has been enormously destructive to the nation, and the opportunities lost in their wake are irreversible.

I have covered the systemic reasons for incompetence and failure many times.These boil down to the accumulating sclerosis of bureaucracy and the ratchet effect.

I have addressed The Lifecycle of Bureaucracy on a number of occasions:

Our Legacy Systems: Dysfunctional, Unreformable (July 1, 2013)
The Way Forward (April 25, 2013)

When Escape from a Previously Successful Model Is Impossible (November 29, 2012)

Complexity: Bureaucratic (Death Spiral) and Self-Organizing (Sustainable) (February 17, 2011)

The ratchet effect can also be visualized as a rising wedge, in which costs and inefficiencies continue rising until any slight decrease in funding collapses the organization.

Dislocations Ahead: The Ratchet Effect, Stick-Slip and QE3 (February 14, 2011)

The Ratchet Effect: Fiefdom Bloat and Resistance to Declining Incomes (August 23, 2010)

I think we can add a few other factors:

1. That which is cheap and abundant will be squandered until it is no longer cheap or abundant. Our default programming is to squander what is easily available and abundant. This is true not just of resources such as food and energy but of health, trust, power and all sorts of other intangibles.

For example, when the Soviet Union collapsed, the U.S. was left with an abundance of soft and hard power on the global stage. The natural response was to squander it on misadventures instead of investing it wisely.

When we're young and healthy, we squander this reservoir of vitality rather than invest it wisely in habits that will maintain our health as we age.

There are countless examples of this dynamic. The irony of this dynamic is tragic: by the time we realize we've squandered an irreplaceable resource, it's too late.

2. The prime directive of any bureaucracy is to eliminate all accountability. The raison d'etre of bureaucracy, the very reason for its existence, is not to manage complex affairs but to dissipate accountability into a formless cloud so that no member of the bureaucracy will ever face any consequences for his/her actions.

In other words, the prime directive of any bureaucracy is to enforce the perfection of moral hazard, i.e. those making decisions suffer no consequences when the decisions are disastrous.

The entire structure of a bureaucracy boils down to this: we followed the rules, and therefore we are blameless.

Obamacare and the Pentagon are both perfections of this purposeful loss of accountability. I recently saw a video clip of a journalist who had asked 12 different government functionaries who was in charge of implementing the Obamacare website before its flawed launch and he'd received 12 different answers.

In other words, accountability had already been extinguished well before the site was even launched.

3. Bureaucracies are intrinsically prone to group-think. The more closed the bureaucracy, the greater this tendency to eliminate skeptics, heretics, independent thinkers, etc.: Who Gets Thrown Under the Bus in the Next Financial Crisis? (March 3, 2014).

The foundational group-think concepts behind each of the three policy disasters listed above have all been discredited, but only after group-think insured the destruction of vital national interests: for example, the neo-conservative "failed-state" concept that guided a decade of foreign policy misadventures: The Rise and Fall of the Failed-State Paradigm: Requiem for a Decade of Distraction (Foreign Affairs).

4. As correspondent Lew G. has pointed out, bureaucracies are not designed to be fail-safe; their complexity and lack of accountability lead not to resilience but to fragility and vulnerability.

5. One systems-level consequence of tightly connected, interactive complex systems is that they generate routinely failures known as "normal accidents," catastrophes that result from seemingly small miscalculations and miscues that cascade into systemic crises. When accountability has been lost, there are no feedback loops left to correct these "normal accidents," so the damage piles up within the organization until it collapses in a supernova model of accumulated incompetence.

6. The moral-hazard-riddled leadership of bureaucracies will choose whatever short-term politically expedient fix reduces the immediate political pain (also known as "kicking the can down the road") rather than risk shaking up the organization by imposing accountability and clearing out the deadwood. This dependence on short-term politically expedient "fixes" that ignore the real problems piles up more moral hazard, failed policies, ineffective deadwood and cost, increasing the system's fragility and vulnerability to any shock that cannot be dissolved with another short-term can-kicking "fix."

Why is our government so incompetent? Short answer: because incompetence has been fully institutionalized in every branch, every agency and every nook and cranny of both the visible state and the Deep State.

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

^{Source picture: Bloomberg}

It appears that the gold fanatics were right the whole time. For at least ten years, the price of gold has been manipulated. The banks are the bad guys once more, who would have thought?!

If you work at a bank and do your job the way you are supposed to, it might be smart regardless to not talk about your professional activities when you are at a party this week. Although there are ‘only’ 5 banks involved in the scandal this time, the image of the whole sector will suffer again.

The rumor that the gold price was being manipulated had been going around for quite some time and, surprise surprise, it was true! It would be impossible to draw a different conclusion after reading the demolishing report from New York University’s Stern School of Business Professor Rosa Abrantes-Metz and Moody’s Investors Service’s Managing Director Albert Metz. The words in the report were carefully chosen, leaving room for interpretation, although no one will be fooled.

If it looks like a duck, quacks like a duck, flies like a duck, well, it is a duck then, isn’t it.

 

Gold price: decades of fixing

The process of gold fixing, which is the setting of the gold price twice each business day, just screams for manipulation, conspiracy and corruption by the banks involved. And the empirical data that was used from 2001 to 2013, shows ‘inexplicable price movements’ from as far back as 2004 (!) during the midday fix. It probably won’t surprise you that those ‘inexplicable price movements’ most often were downward price movements. In 2010 for example, 92 percent (!) of the large price movements during gold fixing were negative.

Gold fixing is done twice each business day, at 10:30am and 3pm London time during a conference call. It used to be done face to face, but since 2004 it is just a conference call. The fixing in itself is still done, however, and is vulnerable to manipulation. These calls between the five banks that are involved usually last no longer than 10 minutes, but have lasted up to an hour or longer.

The similarities with the fixing of, for example, the Euribor and Libor interest rates are obvious. The damage done by those events is impossible to calculate, but you can take it from us that we are talking about billions of dollars. Regular citizens are often at the receiving end of all this manipulation, as governments and its tax payers are the ones who pick up the bill all too often.

 

Damage: unknown

It is still too early to make a sensible estimation of the damage that the manipulation of the gold price has caused. But the story will be the same: fines will be given without any further consequence. The current old-fashioned way of fixing the gold price has seen its days however, as confidence in the process has gone up in smoke. Another method will take its place, probably with greater control and supervision.

We are curious of course, how this whole ordeal will play out. The researchers of the report are calling for a deeper investigation of the matter. They obviously want to pass on this hot potato, which is understandable. Regardless of the above, further investigation is being done in Germany already.

We predict that there will be large fines, lots of accusations and a new method for gold fixing. That, or the investigators will not succeed at producing enough evidence: considering what is at stake here, it is impossible to exclude any scenario. It is hard to surprise us these days. Ultimately, true price discovery will take hold of the gold market. That is nature’s law, which can’t be fixed by a bunch of bankers.

Want to invest in gold? First read our GUIDE TO GOLD!

 

Sprout Money offers a fresh look at investing. We analyze long lasting cycles, coupled with a collection of strategic investments and concrete tips for different types of assets. The methods and strategies from Sprout Money are transformed into the Gold & Silver Report and the Technology Report.

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via Zero Hedge http://ift.tt/1nhUFPp Sprout Money

Moments ago, Reuters blasted the following headline:

DECREE MAKING CRIMEA PART OF RUSSIA HAS COME INTO FORCE FROM MOMENT OF ADOPTION; RUSSIAN ARMED FORCES ARE ONLY LEGITIMATE FORCES IN REGION -DEPUTY PRIME MINISTER OF CRIMEA

On the surface, this would mean that the Russian annexation of the Crimea if complete (and East Ukraine is coming). Especially when one considers that earlier Crimea also said it could adopt the Russian rouble as its currency and “nationalise” state property as part of plans to join the Russian Federation, a regional official was quoted as saying on Thursday.

The only problem as we reported earlier is that Kiev opened a criminal investigation against Crimean Prime Minister Sergei Askyonov, who was appointed by the region’s parliament last week. The Ukrainian government does not recognise his authority or that of the parliament. In other words, Kiev will not respect the Crimea’s popular choice, even if it is fully supported by Putin, which means that a showdown, one in which Russia proclaims it is defending the democracy of the Crimea against the Kiev government, is now almost inevitable.

via Zero Hedge http://ift.tt/MQtCgw Tyler Durden

The last time a leaked phone call out of Ukraine was released about a month ago ostensibly by the Russian NSA equivalent, one between US assistant sec state Victoria Nuland and the US envoy to the Ukraine, Geoffrey Pyatt, it was revealed that the real puppet masters behind the Maidan movement, and the true instigators of the Ukraine “revolution” were none other than the “developed” world superpowers, lead by the US. Also revealed were tensions between the US and EU strategies on how to overthrow the current government, culminating with the infamous “Fuck the EU.” Needless to say the US, which implicitly confirmed the recording, was angry at Russia and accused it of using dirty tricks.

That’s ironic, because when it comes to “dirty tricks” what is about to be presented, blows the top off anything Russia may or has done to date.

Earlier today an even more shocking recording has been “leaked” this time one between the always concerned about human rights EU foreign affairs chief Catherine Ashton and Estonian foreign minister Urmas Paet, in which it is revealed on tape that all those photos of horrifying deaths of Ukrainians by snipers during the last days of the Median stand off, were in fact caused not by Snipers controlled by Yanukovich, but that the snipers shot at both protesters and police in Kiev were allegedly hired by Maidan leaders!

Here is the key exchange, just after 8 minutes into the conversation :

Paet: “All the evidence shows that people who were killed by snipers from both sides, policemen and people from the streets, that they were the same snipers killing people from both sides. … Some photos that showed it is the same handwriting, the same type of bullets, and it is really disturbing that now the new coalition they don’t want to investigate what exactly happened. So there is now stronger and stronger understanding that behind the snipers, it was not Yanukovych, but it was somebody from the new coalition.”

Ashton: “I think we do want to investigate. I mean, I didn’t pick that up, that’s interesting. Gosh.”

Paet: “It already discreditates (sic) this new coalition.”

So first US orchestrates the Kiev overthrow, and now the new “leaders” of Ukraine are allegedly found to have fired against their own people – the same provocation they subsequently used to run Yanukovich out of the country and install a pro-Western puppet government. Of course, said pro-Western coalition has not been discreditated (sic) because Ms. Ashton has sternly refused to investigate, knowing quite well how horribly this would reflect on the new Ukraine “leadership” –  a government which shot its own people to fabricate the pretext under which it rose to power.

Is it any wonder then that Russia has responded the way it has?

As for at least one of the affected parties, Estonia, it has just confirmed the authenticity of the recording, and the ministry of foreign affairs has organized a press conference to answer media questions today at 5 pm. From the Valisministeerium:

No. 84-E Foreign Minister Urmas Paet and EU foreign policy chief Catherine Ashton uploaded to the Internet today, a phone call is authentic.

 

Paet and Ashton conversation took place on 26 February, following Estonia’s Foreign Minister’s visit to Ukraine, and immediately after the end of the street violence.

 

Foreign Minister Paet communicate what he had said about the meetings held in Kiev last day and expressed concern about the situation.

 

“It is extremely regrettable that such an interception is occurring at all”“said Paet., Including its call for today’s photos are not random,” he added.

Yes, it is truly regrettable that the people know the truth.

Full leaked recording below:

via Zero Hedge http://ift.tt/1e1uJkD Tyler Durden

Promises, promises. A lack of easing, aside from a promise of “lower for longer”, has driven EURUSD back above 1.38 as the market is once again disappointed by Draghi’s lack of exuberance.

• *DRAGHI SAYS UNEMPLOYMENT STABILIZING, REMAINS HIGH (umm, continues to rise every month?)
• *DRAGHI SAYS UPSIDE, DOWNSIDE INFLATION RISKS REMAIN LIMITED (umm, continues to plunge every month?)
• *DRAGHI SAYS RISKS TO ECONOMIC OUTLOOK ARE ON DOWNSIDE (umm, stocks are at record highs?)
  
• *DRAGHI SAYS REAL INCOME SUPPORTED BY LOWER ENERGY PRICES (umm, so no sanctions on Russia then?)

But apart from that, Draghi is “nailing it”…

 

 

We are sure a stronger currency will work wonders for the recovery…

Just how cornered is Draghi – well you decide – after these comments…

• *DRAGHI CITES LOW INFLATION, WEAK ECONOMY, SUBDUED CREDIT
• *DRAGHI SAYS ECB EXPECTS RECOVERY TO PROCEED AT A SLOW PACE

So why no “stimulus” – what’s he worried about?

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

Must be the weather… Initial jobless claims swung from the worst in 2014 last week to the best in over 3 months this week, with a 323k print (well below the 336 expectation). No states estimated claims this week but even the Labor Department suggests the series’ volatility is “coinciding” with winter storms. Overall claims dropped 8,000 to 2.91 million on the week but it is clear the descending trend is over for this series – which fits with ADP and ISM Services weakness.

 

From big miss and worst in 2014 to big beat and best in 2014…

 

 

Remember when initial claims was heralded as key support for stocks? Not so much anymore

 

Charts: Bloomberg

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

Dismally drifting towards deflation as credit creation is a long and distant thing of the past in the European Union, this morning’s decision to hold rates unchanged leaves a lot of “whatever it takes” hope left for the press conference. Whether he will ease lending standards, cut haircuts, enable more securitization, push direct lending (there’s no demand!), or “promise” open-ended QE – it’s all on the table but we suspect it will be more talk and “whatever” he is doing so far is working… stocks are near record highs and bond yields record lows – which must mean Europe is fixed…

 

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

While Janet Yellen fell back on the ubiquitous central banker statement that she “would do all that [she] can” it was Dallas Fed’s Richard Fisher who raised the most eyebrows yesterday. In a speech in Mexico City, the central banker said he was concerned about “eye-popping levels” of some stock market metrics warning that the Fed must monitor the signs carefully to ensure bubbles were not forming. While other Fed members have paid lip-service to bubbles, Fisher explicitly discussed stocks in the context of the dot-com boom of the late ’90s warning of “the ghost of ‘irrational exuberance'” and worried about corporate bonds too.

 

Via Fox,

In his speech in Mexico City, Fisher said some indicators like the price-to-projected forward earnings, price-to-sales ratios and market capitalization as a percentage of GDP, are at levels not seen since the dot-com boom of the late 1990s.

 

He noted that margin debt is pushing up against all-time records.

 

“We must monitor these indicators very carefully so as to ensure that the ghost of ‘irrational exuberance’ does not haunt us again,” Fisher said. While a few Fed officials have mentioned unease about stock prices, Fisher’s comments are the most pointed to date.

 

Fisher did not spare the bond market, saying that narrow spreads between corporate and Treasury debt “reflect lower risk premia on top of already abnormally low nominal yields.”

Seems like a good reason to BTFTAH to us…

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

Even though 14 out of the surveyed 54 economists expected a rate cut of some sort, and some were even calling for an outright QE any minute now, this time the majority of academics, or 40 of them, were right and the ECB proceeded with no changes to its various interest rates.

From the ECB:

At today’s meeting the Governing Council of the ECB decided that the interest rate on the main refinancing operations and the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.25%, 0.75% and 0.00% respectively.

 

The President of the ECB will comment on the considerations underlying these decisions at a press conference starting at 2.30 p.m. CET today.

Maybe Draghi will announce something more actionable at his press conference at 8:30 am but at this point it appears that the ECB’s hand are tied even as the continent continues to drift ever more into deflation.

via Zero Hedge http://ift.tt/1l5QiW1 Tyler Durden