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After a turbulent overnight session on Monday morning, this morning traders settle at their desks to find a relatively calmer environment, with US equity futures down 0.2% to 2,371.75, while European stocks fell for a third consecutive day, and Asian markets which closed mixed (China up, Nikkei down, MXAP up 0.2%). Basic metals continue to slide following another drop in copper as a result of the biggest inventory inflow to LME warehouses in 15 years, coupled with worries about China’s telegraphed slowdown.Some have also pointed out that the market topped just in time for the SNAP IPO, which after crashing yesterday to below its IPO break price of $24, continued to sink in the pre-market this morning.

In addition to hopes about an imminent Fed rate hike shifting to concerns, as reported yesterday JPMorgan warned that hawkish Fed rhetoric has increased the likelihood for a short-term pullback after stocks hit the bank’s year-end target of 2,400 the previous week. The dollar rose modestly as a surge in corporate bond issuance pushed up Treasury yields.

Markets appear to have topped off the relentless post-election surge, and are coming off recent peaks as investors start to contemplate what the upcoming March interest rate increase will mean for risk assets. They also have to contend with overnight headlines out of China where the “Two Sessions” are taking place, and where Premier Li Keqiang warned of larger challenges ahead during his work report to the annual National People’s Congress gathering in Beijing. In Europe, politics has become the main market driver as election campaigns in the Netherlands, France and Germany put the status quo under threat.

“The ‘pothole’ is a political one with far-right parties gaining ground in opinion polls ahead of both a Dutch and French ballots in spring,” Luca Paolini, chief strategist at Geneva-based Pictet, said in a research note. “We are scaling back exposure to European stocks, albeit retaining our overweight stance.”

Germany’s largest lender continued to grab attention and European stocks fell for a third consecutive day on Tuesday, once again dragged down by financials as Deutsche Bank shares slid again on deepening concern about its health after its $8.5 billion cash call. Deutsche shares dropped as much as 3% to a fresh 2017 low. They have lost more than 10% in the last few days since the bank said it would tap investors for $8.5 billion.

Furthermore, a batch of weak corporate earnings reports and the biggest fall in German industrial orders since the depths of the global financial crisis also disappointed investors, setting the tone for a lackluster session in Europe.  German industrial orders slumped 7.4 percent in January, the biggest fall since January 2009 and nearly three times as steep as the 2.5 percent fall expected by economists.

“Weak German industrial orders suggests it’s not a one-way ticket in Europe – there’s been a lot of bullishness around European equities lately but maybe this is a sign it’s not all positive. Deutsche Bank is not helping either,” Neil Wilson, senior market analyst at ETX Capital, told Reuters.

Across the Atlantic, S&P500 futures pointed to a slightly lower open on Wall Street, further cooling off last week’s record highs. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.4%, and Japan’s Nikkei closed down 0.2%.

In currencies, the dollar inched higher against a basket of trade-weighted peers. The dollar index rose 0.1 percent to 101.73 mirroring Monday’s slender gain. The Bloomberg Dollar Spot Index added 0.2 percent, headed for its sixth advance in seven days. A rate hike from the Federal Reserve next week is virtually fully priced into financial markets, so the dollar and U.S. bond yields might be vulnerable to a correction lower. But investors saw enough room to push the greenback and yields higher on Tuesday, lifting the 10-year yield for the fifth day in a row back above 2.50 percent and the two-year yield up a basis point to 1.32 percent, on what traders attributed to interest rate locks following another massive corporate issuance session.

The pound was the biggest mover on major FX markets, falling nearly a third of one percent against the dollar to a seven-week low of $1.2202. Britain’s House of Lords will on Tuesday try to force the government to give lawmakers a greater say over the terms of Britain’s exit from the European Union and final approval of an eventual deal with the block.

Analysts at Morgan Stanley said on Tuesday they expect the pound to snap back as high as $1.45 by the end of next year. “Sterling looks increasingly cheap in a historical context and our FX strategists (have) recently turned more bullish on the currency, targeting $1.28 for year end and $1.45 by the end of 2018,” they wrote in a note on Tuesday.

The euro was steady at $1.0575 and the dollar was flat against the yen at 113.90 yen. In commodities, U.S. oil CLc1 rose 0.3 percent to $53.55 a barrel, following Monday’s 0.2 percent drop, and Brent crude also rose 0.3 percent to $56.17 LCOc1.

Market Snapshot

• S&P 500 futures down 0.2% to 2,371.75
• STOXX Europe 600 down 0.03% to 373.16
• German 10Y yield fell 2.2 bps to 0.32%
• Euro down 0.06% to 1.0576 per US$
• Brent Futures up 0.3% to $56.16/bbl
• Italian 10Y yield rose 6.5 bps to 2.165%
• Spanish 10Y yield fell 2.6 bps to 1.702%
• MXAP up 0.2% to 144.63
• MXAPJ up 0.5% to 465.42
• Nikkei down 0.2% to 19,344.15
• Topix up 0.01% to 1,555.04
• Hang Seng Index up 0.4% to 23,681.07
• Shanghai Composite up 0.3% to 3,242.41
• Sensex down 0.2% to 28,997.87
• Australia S&P/ASX 200 up 0.3% to 5,761.39
• Kospi up 0.6% to 2,094.05
• Brent Futures up 0.3% to $56.16/bbl
• Gold spot down 0.09% to $1,224.14
• U.S. Dollar Index up 0.09% to 101.73

Top Overnight News

• Hellman & Friedman, GIC Buy Allfunds Bank for $1.9 Billion
• CSX Names Harrison CEO, Warns He’ll Exit Unless Paid $84 Million
• Fitbit Chief Business Officer to Leave, Samir Kapoor Promoted
• Copper’s Biggest Storage Rush in 15 Years Jeopardizes Rally
• Ford Not Planning Job Cuts as it Pares Europe Costs After Brexit
• Republicans Unveil Health Care Bill to Bridge Gaps in Party
• WhatsApp Joins Arsenal of Online Luxury Amid Race for Customers
• German Factory Orders Slump Most Since 2009 on Investment
• Turkey Imposes Anti-Dumping Levy on Kraftliner Paper From U.S.
• Dakota Access Pipeline Could See Oil by Week of March 13

Asian equity markets largely shrugged off the broad negative lead from Wall Stret to trade mixed as cautiousness remained ahead of the looming risk events. ASX 200 (+0.3%) recovered from early losses amid strength in healthcare and utilities, although upside was capped as participants awaited the RBA which kept rates unchanged and maintained a neutral tone, while Nikkei 225 (-0.2%) languished after USD/JPY failed to gain a footing above 114.00. Shanghai Comp. (+0.3%) was choppy as mainland sentiment was dampened following another weak PBoC liquidity injection and reports China is looking to slow borrowing using short term money markets, while the Hang Seng (+0.3%) was resilient after several encouraging operating updates. Finally, 10yr JGBs saw mild gains amid a lack of risk appetite in Japan, although upside has been limited following a mixed 30yr JGB auction in which accepted prices were higher and demand fell from prior.

Top Asian News

• China to Avoid Coal Mining Limits If Prices Remain ‘Reasonable’
• Japanese Double Bearish Yen Bets as Wall Street Cuts and Runs
• PAG to Replace Yingde Chairman, CEO If Takeover Is Completed
• Duterte Backs Environment Chief as Congress Weighs Endorsement
• Lupin CFO Says $1 Billion M&A War Chest Could Be Just The Start
• Traders Shun Hedges Before India Vote on Confidence in Modi Win

In European bourses, materials stocks are among the best performers amid a relatively flat session . Midcaps grabbed the attention given the number of earnings in an otherwise quiet session for large caps, with UK listed Intertek are at the top of the FTSE100 leader board after the company’s revenue and dividends both rose. Elsewhere, Paddy Power underperform after an uninspiring earnings update and this comes despite increased revenue past the GBP 1.5bIn mark during a “transformational” year. In Fixed Income markets, the German 2/10Y spread is nearly back to 119bps again after German factory orders fell short of expectation and many analysts are paying credence to the PSPP which has lifted the Shatz after strong buying yesterday.

• RAI Way Said to Consider Takeover of Berlusconi’s EI Towers
• U.K. House Price Growth Adds Weight to Predictions of a Slowdown
• Deutsche Bank Bets on Ex-Goldman Partner in Strategy Revamp
• EDF Begins $4.2 Billion Share Sale to Bolster Balance Sheet
• Million Migrants Fleeing Putin Score a Jackpot for Poland
• Norway Regional Survey Outlook Jumps to Highest in 4 Years
• Niel’s Iliad Boosts Profit After Luring Users With Discounts

In currencies, despite the range bound USD, there has been some movement in major pairs to keep traders busy ahead of the US payrolls on Friday, as well as (what could be) a lively ECB meeting on Thursday, Both USD/JPY and EUR/USD are still trading inside relatively tight ranges, but with UST yields firm, the former is retesting 114.00 again. For EUR/USD, there is little to get excited about until we retest 1.0500 lower down. German factory orders fell 7.4% compared to a more modest forecast of -2.5%, and this may have assisted the move back towards 1.0550. The Bloomberg Dollar Spot Index added 0.2 percent, headed for its sixth advance in seven days. The euro weakened 0.4 percent to $1.0585, the worst performer among major. The yen was at 113.895 per dollar. Some support is coming through EUR/GBP buying as we continue to probe into offers ahead of 0.8700. Pressure on GBP has been exacerbated by yet another potential hurdle for PM May’s proposed Brexit timetable, as the House of Lords are set to seek a more meaningful vote on the terms of exit. This delay would have been GBP supportive a few months ago, but with the government seemingly undermined, the uncertainty factor has pushed the cross rate higher and Cable below 1.2200 accordingly. 1.2150 the next level of support to note here.

In commodities the big story at present is the recent highs seen in base metals, where the growing stockpiles in China have been garnering greater attention. Copper prices have continued their move below USD2.70 to trade below USD2.65 today, with losses in Zinc and Nickel also impacted given supply issues in all cases (strikes/mine closures). Precious metals are also lower today as they follow in tight correlation to Treasuries. The USD has been a little more reluctant to follow, but enough to pull Gold back towards USD1220 again while Silver is still pressuring the recent lows around USD17.70.  Gold futures slumped 0.1 percent to settle at $1,225.50 an ounce in New York for a fifth day of losses. That’s the longest slump since November. Oil prices still in a range, with compliance and production/inventory levels ahead feeding near term support, but CERA week could prompt some volatility: speakers include Barkindo, Novak and Al-Falih. West Texas Intermediate crude slipped 0.2 percent to settle at $53.20 a barrel. Clashes between armed factions in Libya curbed crude output, while U.S. drilling increased.

Looking at the day ahead, we will get the January trade balance and then the January consumer credit reading in the evening. Away from the data, German Finance Minister Schaeuble is scheduled to speak this morning, while in the UK we are also expecting the House of Lords to complete its scrutiny of the Brexit bill.

* * *

US Event Calendar

• 8:30am: Trade Balance, est. $48.5b deficit, prior $44.3b deficit
• 3pm: Consumer Credit, est. $17.3b, prior $14.2b

DB’s Jim Reid concludes the overnight wrap

In terms of markets, yesterday felt like a day you rolled the dice and landed on someone’s property and had to pay a small unwelcome amount of rent after a good run of accumulating cash in the bank. Equities closed on the soft side led by Europe with financials and commodity names in particular having a rough start to the week. Coming off the back of a +1.41% gain last week which was the strongest week this year, the Stoxx 600 closed -0.52% and European banks finished -1.23%. Markets in the US were back peddling from the start although the S&P 500 (-0.33%) did manage to pare back heavier losses into the close. The Dow (-0.24%) did likewise but still closed back below the 21,000 level for the first time since passing it last week. There were similar losses across credit markets with CDX IG about 0.8bps wider and the iTraxx Main 1.5bps wider. Sub-financials in Europe did however outperform on a relative basis, with the iTraxx Sub-Fins index finishing just 0.5bps wider (compared to +1.5bps for iTraxx  Senior-Fins). It was a similar outperformance story in the cash credit market with EUR Fin Subs actually 1bp tighter (using Markit indices), compared to EUR Fin Sen which was just 0.5bps tighter.

On those moves for commodities, while Oil ended up little changed both precious and base metals struggled throughout the day. Gold (-0.77%), Silver (-1.07%), Iron Ore (-1.74%), Copper (-1.00%) and Aluminium (-0.82%) in particular all finished lower. A few potential reasons were discussed but it appears that a combination of the China NPC headlines from the weekend, rising Copper inventories and a stronger US Dollar in the face of geopolitical related headlines all contributed to some degree. The latter concerned the reports of North Korea firing missiles into the Sea of Japan – although in fairness there didn’t appear to be a huge reaction in EM FX or equity markets – while later on in the day we got confirmation that President Trump has signed a new travel order banning the entry of citizens from 6 countries (1 less than the initial January order) into the US for the next 90 days from March 16th. The new order will also see the US Refugee Admissions Program suspended for 120 days.

Elsewhere, all things considered Treasuries had a relatively calm day compared to the Fed-driven excitement of last week. 10y Treasury yields finished +2.2bps higher at 2.500% with the slight weakness reflecting a busy day for corporate issuance with over $22bn of IG sales coming, while short end yields ended little changed. A Fed rate hike next week also consolidated around 96% according to Bloomberg’s calculator. Meanwhile bond markets in Europe were busy digesting the latest French presidential election update. Indeed as hinted by the L’Obs press report over the weekend Juppe left the French elections for a second time as he ruled out a comeback in spite of the fragile nature of Fillon’s campaign. His speech didn’t endorse Fillon’s campaign and the Republicans have to choose soon whether to stick with a candidate who is losing support due to the recent allegations or to consider alternatives who weren’t part of the original run-off or who were earlier beaten. Bloomberg reports they have 10 days to file paperwork if they want to replace Fillon. French 10y yields climbed +2.3bps yesterday versus a -1.5bps fall in the German equivalent. The spread tightened 15.6bps last week and this gave up around a quarter of these gains.

Refreshing our screens this morning now. It’s been a fairly mixed but quiet start in Asia. While the Nikkei (-0.20%) and Shanghai Comp (-0.07%) are posting modest losses, the Hang Seng (+0.42%), Kospi (+0.64%) and ASX (+0.27%) are all firmer. In FX the Aussie Dollar has rallied +0.64% after the RBA left rates on hold, as widely expected. Our economists in Australia believe that the post meeting statement point to a firmly on hold RBA and expect no change in the cash rate through 2017 or 2018.

Moving on. The latest ECB CSPP data came out yesterday. The average daily run rate in the week to March 3rd was €339mn, a bit below the average of €365mn since the scheme started. In February 8.8% was bought in the primary market, lower than the 13.5% ratio since the scheme commenced and the lowest ratio since the summer. It’s too early to say whether the ECB are starting to prepare for taper but there seems to have been a reduction recently from peak purchases. We can’t extrapolate too much as there are many who think they’ll initially taper more on the government side rather than the corporate side. Anyway one to keep an eye on over the weeks ahead.

With regards to the rest of the data yesterday, in the US factory orders in January printed at +1.2% mom which was marginally ahead of consensus expectations for a +1.0% rise in orders. The final revisions to January durable and capital goods orders were also released. Headline durable goods orders were confirmed at +2.0% mom which was up two-tenths from the initial estimate while core capex orders were revised up three-tenths to -0.1% mom. Interestingly the two most followed GDP trackers have diverged significantly for Q1 GDP estimates.

The Atlanta Fed is now at 1.8% while the NY Fed is at 3.1%. It’s worth noting that over the past 4 quarters the NY Fed has tended to be the more accurate of the two although both have shown a tendency to have large errors during various quarters. Elsewhere and wrapping up, yesterday in Europe the most notable release was the Sentix investor sentiment reading for the Euro area which showed the index as rising 3.3pts in February to 20.7 and in the process reaching a new post financial crisis high. So a sign perhaps that improving data is overshadowing any potential political concerns for now.

Looking at the day ahead, this morning in Europe the early data comes from Germany where the January factory orders data is due. Shortly after that we’ll get the February Halifax house prices data in the UK before we then get the final Q4 GDP print for the Euro area. No change from the initial +0.4% qoq estimate is expected. This afternoon in the US we will get the January trade balance and then the January consumer credit reading in the evening. Away from the data, German Finance Minister Schaeuble is scheduled to speak this morning, while in the UK we are also expecting the House of Lords to complete its scrutiny of the Brexit bill.

 

 

 

via http://ift.tt/2mAgWAE Tyler Durden

With China’s “Two Sessions” currently taking place, and Beijing hard-pressed to report positive economic data (including banning the sale of stocks by some mutual funds according to Bloomberg), it was perhaps not surprising that overnight China reported that its foreign-currency reserves “unexpectedly” rose in February for the first time since June 2016, halting a seven-month decline, rebounding over the psychological $3 trillion level controls on capital outflows and a rally in the yuan. China’s foreign reserve holdings increased by $6.9 billion to $3.005 trillion last month the PBOC reported, exceeding the consensus estimate for a $30 billion decline to $2.969 trillion. According to Goldman calculations, after adjusting for currency valuation effects, reserves rose by about $19 billion.

Among the factors cited for the rebound in the world’s biggest FX reserve holdings are stronger economic growth, stricter capital controls and a stabilizing yuan. China’s reserves have shrunk by $1 trillion from a peak of $4 trillion in 2014 as Beijing has struggled to slow yuan depreciation. Following the positive data, the offshore yuan extended gains to rise as much as 0.17%, although it has since given up all gains and was little changed at 6.8975. With pressure on reserves easing in recent months, the onshore yuan has advanced 0.7% this year amid a decline in the Bloomberg Dollar Spot Index.

“The rebound is a surprise as there should have been a negative valuation effective given that the dollar gained in February,” said Zhou Hao, an economist at Commerzbank AG in Singapore. “The increase shows the PBOC probably hasn’t been doing much spot market intervention last month, given market sentiment was stable and onshore yuan trade volume has been lower than usual.”

“Strict capital controls have taken effect, as it has reduced outflows and helped market sentiment on the yuan,” Nomura’s Zhao Yang told Bloomberg. “Reserves still face pressures, as the nation won’t want to keep tight capital controls in place for the medium term as they create difficulties for firms and thus weigh on the economy.”

In recent months Chinese authorities have boosted efforts to prevent outflows since late 2016, as the yuan headed for the biggest annual loss in more than two decades. Measures include ordering banks to stop processing cross-border yuan payments until they balance inflows and outflows, and even cracking down on bitcoin. Additionally, China’s residents face tougher reporting requirements when they want to convert yuan into foreign currency.

“The fact that they showed the world that the reserves are stabilizing at a fairly high number is an important signal,” said Alicia Garcia Herrero, chief Asia-Pacific economist at Natixis SA in Hong Kong. “The realization that the leadership wants us to have is that China is out of the woods, it’s not losing reserves, and we’re back to normal.”

In a statement posted by China’s FX regulator, the State Administration of Foreign Exchange, it said that outflow pressures are expected to ease and reserves may gradually stabilize, however it added that global financial market uncertainties remain.

Meanwhile, in a note from Goldman, the bank warned that estimates of overall valuation effects can be noisy, pointing out that SAFE indicated that the market value of the reserve portfolio increased in Feb, which counteracted the negative currency valuation effect. That said, it is unclear exactly how large these effects were in Feb (and it has not always been obvious how the portfolio valuation effects are recorded). Therefore, as Goldman has traditionally cautioned, another dataset, the “PBOC’s FX position” (usually released in the middle of the month), will give us a much better sense of the PBOC’s FX sales net of valuation effects, as this dataset shows the PBOC’s FX assets recorded at book value. On several occasions in the past year this dataset has suggested a meaningfully different amount of FX sales by the PBOC than implied by the reserve data.

For reference, in January the PBOC’s FX position dataset showed a decline of US$30bn, even after a strong trade surplus of US$33bn (including merchandise and service trade). The trade surplus was likely not nearly as strong in Feb due to Chinese new year seasonality—in other words, the capital account dynamics would have needed to undergo a significant reversal for the PBOC to accumulate (rather than de-accumulate) FX assets in Feb.

In general, reserve data provide only partial information on the FX flow situation, and readers should await further SAFE and PBOC data to assess the underlying trend. In terms of the macro backdrop, the relatively subdued USD, which helped to stabilize USD/CNY even as the CNY continued to weaken moderately against the CFETS basket (by 0.4% in Feb, and cumulatively by 1% since end-‘16), has likely supported CNY sentiment. The various capital flow management measures introduced in the last few months have likely also helped slow outflows.

Looking farther ahead, recent policy signals and news suggest that the process of getting domestic bonds included in global bond indices has gathered pace. The amount of bond inflows following the SDR inclusion decision and more liberalized access to the domestic market by central bank-type investors has been fairly modest (about US$30bn over the past year) and may be less than hoped for. This has likely made the authorities keener to attract more bond inflows from private investors through the inclusion in the major global bond indices, which could potentially bring in significant foreign investment. This may not materialize any time soon and the precise timing is hard to predict, but continued news on this front bears close watching in the coming months.

via http://ift.tt/2me21td Tyler Durden

Last night, Tucker Carlson debated a rapidly blinking Rep. Jim Himes (D-CT) – a member of the House Intelligence Committee, on claims that former President Obama ordered a wiretap of Donald Trump’s administration during the election. Tucker went into the interview giving Himes the respect of an unfurrowed brow, which did not last long. While the entire interview was an insightful sparring match (you can see the whole thing here), a particularly interesting moment came when Himes effectively laid out the legal mechanism which would justify spying on members of Trump’s campaign, including incoming NSA director Mike Flynn – the fruits of which led acting Attorney General (and Obama appointee) Sally Yates warning the Trump administration that Flynn had not been truthful about his conversations with Russia, and could possibly be blackmailed. This knowledge, and the leak of the story leading up to Flynn’s eventual resignation, could only have been obtained through covert surveillance.

While responding to a question of whether or not Trump associates were spied on, and if so, why – Himes suggested that since it’s routine for US Intelligence to monitor foreigners “like the Russian ambassador” and “sometimes that Russian ambassador will be talking to US persons,” it’s reasonable to expect that in the normal course of surveillance of foreigners, Americans might be monitored as well.

Tucker Carlson debates House Intel Committee member Jim Himes (D-CT) – who justifies spying on Trump campaign. https://t.co/jSh60OMmqp http://pic.twitter.com/spstxToZ9k

— ZeroPointNow (@ZeroPointNow) March 7, 2017

This was a half-baked answer considering the well known scope and use of the surveillance in question as political weapons – leaked to various news organizations and spun into half-truths and wild accusations in an attempt to delegitimize Donald Trump. At the end of this rabbit hole of political slander, the FBI, NSA, and the CIA have all said that there was no evidence of collusion between the Trump campaign and the Russians.

On the topic of surveillance and slander:

The Tucker interview goes hand in hand with a well reasoned series of tweets made over the weekend by Michael Doran – Senior Fellow at the Hudson Institute and an expert on international politics of the Middle East. Doran laid out quite an interesting scenario – suggesting that while Trump’s phone may not have specifically been targeted, the Intel community may have indirectly targeted him similar to a “dolphin “accidentally” caught in a tuna net.” (#15 below). Doran also summed his tweets up in a WSJ article:

In mid-January both the BBC and McClatchy reported that on Oct. 15 a Foreign Intelligence Surveillance Act court approved an investigation into Russian activities in the U.S. that focused on nameless Trump associates—three of them, according to the BBC. Also in mid-January, the New York Times reported on “a broad investigation into possible links between Russian officials and associates of [Mr.] Trump.”

Stipulating that they were, the government would find itself monitoring all of Mr. Trump’s calls with one of his political advisers, his lawyer and his national security adviser. Transcripts of those intercepts would be available to the Obama administration’s senior national-security officials. In this scenario, the tapping of Mr. Trump’s calls would be extensive –WSJ

Below is the first tweet in case you want to jump over to Twitter and follow along – or scroll down and keep reading:

1. Why I Take Trump’s Claims of Wiretapping Seriously: An Essay in 30 Tweets

— Mike (@Doranimated) March 5, 2017

Why I Take Trump’s Claims of Wiretapping Seriously: An Essay in 30 Tweets

via http://ift.tt/2lXAyuT ZeroPointNow

As the President gets ready to sign a new immigration executive order today (see our note here:  “Trump To Sign New Executive Order On Travel Bans Today: Will Exclude Iraq, Green Card Holders“), a group of overly burdened federal immigration judges are wondering whether they’ll get additional support to tackle their already massive caseload which is sure to only balloon further under Trump’s new rules.

As the Associated Press points out, there are 58 immigration courts in 27 states around the country with a total of 301 judges.  The problem, of course, is that those 301 judges already face a mountain of 534,000 pending immigration cases which is likely to balloon even higher under Trump’s administration.

Of 374 authorized immigration judge positions, 301 are filled. Fifty more candidates are in various stages of the hiring process, which typically takes about a year, said Kathryn Mattingly, a spokeswoman for the Executive Office for Immigration Review.

 

In all, more than 534,000 cases were pending before immigration courts nationwide in February, according to a recent memo from Kelly.

The massive backlog means that processing errors are a common occurrence and ultimately just result in illegal immigrants getting a free pass to reside in the country even longer.

The backlog and insufficient resources are problems stretching back at least a decade, said San Francisco Immigration Judge Dana Marks, speaking as the president of the National Association of Immigration Judges.

 

“It would be a shame if the mistakes of the past continue to be repeated,” Marks said, citing previous attempts to ramp up enforcement without providing adequate resources to the courts.

 

When asked if adding more cases to the backlog could threaten the due-process rights of noncitizens, Marks said it is the job of immigration judges to make sure that doesn’t happen.

 

“But the pressures on the system certainly do allow more opportunities for errors to be made,” she said. “You try to do your best to hear things fairly but also quickly, and there is always a tension between how you strike that balance.”

 

Of course, one way to relieve the court burden is to simply increase deportations without using the court system at all, a strategy that has the American Civil Liberties Union Immigrants’ Rights Project, and the 1,000s of immigration lawyers that earn a living filing appeal after appeal, up in arms.

Advocates worry the Trump administration will increase the use of procedures that allow authorities to deport people without using the court system at all.

 

“Instead of actually trying to make the courts better, they just want to use them less, even though that obviously is deeply problematic from a due-process standpoint,” said Omar Jadwat, director of the American Civil Liberties Union Immigrants’ Rights Project.

 

Mehlman agrees the system is broken, but said advocacy groups and lawyers who keep filing new motions and appeals are part of the problem.

 

“They understand that time works to their benefit and that the longer you can drag this out, the more bites at the apple you can get, the greater the likelihood that you can find some plausible reason for remaining here in the United States,” he said.

Meanwhile, as Ira Mehlman of the Federation for American Immigration Reform notes, enforcing longer detention periods for illegal immigrants could also help clear out the case backlog as it would inevitably lead some people to view deportation as an attractive alternative to a lengthy trial.

The increased use of detention could also lead immigrants with valid claims for staying in the U.S. to accept deportation, just to avoid extended periods of time in detention, Jadwat said.

 

Ira Mehlman, spokesman for the Federation for American Immigration Reform, which pushes for strict immigration policies, said the greater threat of detention could deter people from coming to the U.S. or encourage some who are here to leave.

While it may cause the ACLU some heartburn, something tells us that the Trump administration will lean toward fewer trials as the preferred method for clearing out the case backlog facing the immigration courts as opposed beefing up bureaucracy…just a guess.

via http://ift.tt/2mdOt0J Tyler Durden

Via GEFIRA,

The Deep and Comprehensive Free Trade Agreement (DCFTA) between Ukraine and the European Union, which came into force on 1 January 2016, was aimed at helping the East European economy to recover; however, the results after the first year fell far short of Ukraine’s expectations. The former Soviet Republic lost €2.2 billion more than it lost in 2015 on trade with the EU. While imports from the EU have surged, exports have barely grown.

As Polish media reports, the European Union has flooded Ukraine with goods^, which is contrary to the aim of the free trade agreement: the document assumed the asymmetric openness of the markets in Ukraine’s favour. 

According to the Eurostat data, EU’s exports to Ukraine grew in 2016 by 17.6%, from €14bn to €16.5bn, whereas Ukraine’s exports to the EU increased by 1.9%, i.e. from €12.8bn to €13bn. As a result, Ukraine’s trade deficit with the EU has surged from €1.2bn to €3.43bn!

It seems that the Ukrainian economy was absolutely unprepared, especially in times of war in Donbass, to compete with Western enterprises. The GEFIRA team explains the problem of the destruction of Ukraine’s economy in the latest GEFIRA Bulletin. It is going to take years until Ukrainian businesses, particularly small- and medium-sized, are prepared to switch from Russian to Western orientation and it is going to be very costly if not lethal to Ukrainians.

On the other hand, Moldova was able to use the free trade agreement properly and has decreased its trade deficit with the EU by a half, even though, pro-Russian political forces continue to gain ground in the country.

via http://ift.tt/2n08esK Tyler Durden

Would you rather have one bitcoin, or a single ounce of gold?

As Visual Capitalist's Jeff Desjardins notes the answer used to be obvious. Even at the climax of the legendary 2013 rally, bitcoin was never able to reach unit-for-unit parity with gold.

However, since an off-year in 2014, the enigmatic cryptocurrency has steadily climbed in price to take the title of the best-performing currency in both 2015 and 2016. And today? After continuing its rally into 2017, the price of bitcoin has now passed this arbitrary, but psychologically important measure of parity with an ounce of gold.

How did we get here so fast?

 

Bitcoin: A Short History

Here are some of the most important events that have shaped the bitcoin market:

May 2010: The famous “Bitcoin Pizza” transaction takes place.
This is one of the first “real world” transactions, in which one man indirectly paid 10,000 BTC for two Papa John’s pizzas. That works out to a pretty steep price of over $6 million per pizza using today’s prices, but we are sure they were delicious. Today, May 22 is still celebrated as “Bitcoin Pizza Day” throughout the Bitcoin community.

February 2011: Bitcoin hits “dollar parity”.

October 2012: Bitpay says 1,000 merchants accept bitcoin payments.
Early adopters of the cryptocurrency included WordPress.com, Reddit, OKCupid, and The Pirate Bay.

Mar 2013: Cyprus bank bail-in.
Generally speaking, the European Debt Crisis was a major boon for bitcoin. However, this specific event really put the potential downsides of the banking system and centralized fiat currencies in the limelight.

Oct 2013: Silk Road Bust
As prices were soaring at the end of 2013, the FBI seized 26,000 BTC from Silk Road and its alleged owner, Ross Ulbricht.

Feb 2014: Mt. Gox files for bankruptcy protection
The world’s biggest exchange, which at one point controlled 70% of bitcoin transactions, was plagued with hacks and other problems. It finally went under in 2014.

Aug 2015: By this point, 160,000 merchants accept bitcoin payments

Dec 2016: Bitcoin is the world’s top performing currency for 2nd straight year
See our charts on this for 2015 and 2016.

Bitcoin’s Rise in Context

For enthusiasts and speculators that have followed the cryptocurrency since the beginning, the meteoric rise of bitcoin has been a wild ride.

However, despite the feat of reaching unit-for-unit parity with gold, it is important to take in some context.

Firstly, there are about 16.2 million BTC in circulation – and there are 5.6 billion oz of gold that have been mined throughout history. For that reason the value of the gold market is still more than 300x higher.

Next, while the value of the bitcoin market has soared exponentially since the early days, it is still only worth about $20 billion in total – this is about half of the value of the average company on the S&P 500 (~$40 billion). Compare the bitcoin market to an Apple or Google, and it seems even less extraordinary.

But for those people that follow the crypto markets closely, this above context actually represents the potential upside of the digital cryptocurrency. It means bitcoin still has lots of room to soar – and since bitcoin supply is limited and cannot be created out of thin air, there is nowhere for the price to go but up.

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Via Andrei Akulov of The Strategic Culture Foundation,

Russia and NATO balancing on the brink of military conflict has been a hot topic ever since 2014 when the bilateral ties were frozen as a result of the events in Ukraine. Heightened tensions, arms control erosion and a plethora of divisive issues negatively affect the bilateral relationship, with misunderstanding and frustration hindering any attempts to turn the tide.

War preparations are on the way. Last year, NATO rejected Russia’s initiatives to ease tensions in Europe. Some moves of NATO members aimed at boosting first strike capability go almost unnoticed by media, for instance, the acquisition by Poland of air-to-surface long-range cruise missiles. The US-initiated B-61-12 life extension program (LEP) puts into question the prospects for arms control in Europe.

Incidents caused by dangerous maneuvering and provocative exercises have become frequent. Last year, Frank-Walter Steinmeier, then Germany’s Foreign Minister, accused the alliance of «warmongering» against Russia. He spoke out against NATO military exercises in Poland and the Baltic States, describing them as «saber-rattling». «The one thing we shouldn’t do now is inflame the situation with loud saber-rattling and warmongering», the foreign minister told Bild am Sonntag newspaper. «Anyone who thinks a symbolic tank parade on the alliance’s eastern border will bring security is wrong», he noted.

The Vienna Document is the only security mechanism in place to control military activities in Europe at present, but it’s certainly not enough to curb the rising tensions. OSCE’s Treaty on Open Skies, too, is limited in application. Over twenty years of cooperation have never translated into the type of strategic relationship that NATO and Russia had hoped for.

Two major Russia-US arms control treaties are jeopardized. The Intermediate-Range Nuclear Forces Treaty (INF Treaty) has recently become a bone of contention with mutual accusations of non-compliance. The New START Treaty has been recently decried by the United States administration. The entire system of arms control and non-proliferation is eroding right in front of our eyes with dim prospects for stemming the process. Russia and the US have not had meaningful negotiations on this issue for almost three years, much like it was in the days of the Cold War when there were no contacts to discuss it in the period from 1983 to 1985.

The meetings of the NATO-Russia Council (NRC) convened last year.

But while it’s all doom and gloom today. There are some signs the situation may take a turn for the better.

On January 4, the Russian Foreign Ministry spoke out in favor of restoring relations with NATO. «We need to build normal relations with NATO and renew what we had before», Andrei Kelin, the Foreign Ministry’s head of the Department of European Cooperation. The emphasis on the need to restore the previous relationship made the statement acquire special importance.

The Russian Defense Ministry reported on March 3 that NATO Military Committee General Petr Pavel held a phone conversation with Chief of Russia’s General Staff, Valery Gerasimov – the first high-level official Russia-NATO contact since 2014. The sides discussed the prospects of restoring military contacts and working out steps to decrease tensions in Europe.

On February 28, General Sir Gordon Kenneth Messenger, UK’s Vice Chief of the Defence Staff met General Alexander Zhuravlev, Deputy Chief of Russia's General Staff. 

Russia has invited NATO to take part in the Moscow Security Conference scheduled to take place on April 26-27, 2017, reaffirming its persistent pursuit of open dialogue.

«Despite suspended cooperation in the military sphere, invitations to the forum have been sent to all member countries of the North Atlantic alliance and the European Union, as well as to the NATO leadership», said Deputy Defense Minister Aleksander Fomin. The conference is an annual event held since 2011 to provide a unique opportunity for international defense officials and organizations, as well as non-governmental experts and journalists to address key security issues.

Over 700 guests, including around 500 representatives of foreign countries, are expected to attend the event, including defense chiefs and delegations from 84 countries, over 130 foreign security experts and the heads of nine international organizations. The agenda comprises: «Global Security: Challenges of the 21^st Century», «European Security: Prospects and Trends», «Asia-Pacific Region: A Balance of Interests or Military Confrontation?» and «Defense Ministries’ Interaction: Regional Aspects». Four workshops will focus on the struggle against terrorism and radicalism in the Middle East, information space security, the problems of anti-missile defense and the provision of security in Central Asia. The conference will be highlighted by more than 200 Russian and foreign journalists.

The Moscow security conference is the first important international event to offer an opportunity to discuss the proposal recently put forward by Germany. Last August, Mr. Steinmeier, then foreign chief who was elected German president last month, put forward a security initiative to start discussions on a European arms control treaty to include regional caps on armaments, transparency measures, rules covering new military technology such as drones, and the ability to control arms even in disputed territories.

The proposal calls for taking into account new military capabilities, such as drones. It puts focus on reliable system of verification and inclusion of regions «whose territorial status is controversial». The minister suggested that the Organization for Security and Cooperation in Europe (OSCE) could be the forum for talks. In late 2016, the idea to start talks on a new security agreement received support of 15 European nations, including France and Italy.

It should be noted here that the initiative to relaunch the negotiation process does not belong to the West. In March 2015, Russia expressed its readiness for negotiations concerning a new treaty regarding the control of conventional weapons in Europe. And Moscow has never rejected further talk on Conventional Arms Control in Europe (CACE).

The security arrangements should take into consideration new realities. Any agreement on arms control arms control treaty should be expanded to new or emerging technologies, comprising long range conventional precision guided weapons, armed unmanned aerial vehicles (drones), offensive cyber capabilities, robots, and the weapons based on new physical principles. In the past it was a mistake to exclude naval forces from the process. This time sea-based weapons and carrier-based aircraft should become part of the arms control agenda.

The confidence-building and security measures (CBSMs) contained in the Vienna Document should be expanded to prevent dangerous military activities and excessive build-up of conventional arms. The Russia’s recent shift from nuclear to highly capable conventional forces is a factor to facilitate progress in the field of arms control.

The Russia-NATO dialogue should eventually feed into a broader conversation on the European security order. That’s what the OSCE was created for. Evidently, it has not done much so far. Its role and contribution could be enlarged to address the key issue – the creation of new security architecture.

Obviously Russia and NATO have plenty of possibilities for cooperation.

There are examples when Russia and NATO effectively cooperated. The parties joined together to conduct the peacekeeping operations in Bosnia (SFOR) and Kosovo.

In 1997, Russia and NATO signed the Founding Act on Mutual Relations, Cooperation and Security. The document remains the formal basis for NATO-Russia relations. It states that the parties do not see each other as adversaries, and are ready to join together in an effort to build «a lasting and inclusive peace in the Euro-Atlantic area on the principles of democracy and cooperative security». Against all the odds, the document is still in force.

The NATO-Russia Council (NRC) was established in 2002. This is a forum to enable Russia and NATO to discuss a mutually agreed security agenda.

The exchange of civilian and military personnel was extensive enough. Joint military exercises became routine. For instance, after the Kursk submarine accident, Russia and NATO signed an agreement on submarine crew rescue operations. Russia took part in three NATO-led search-and-rescue exercises in 2005, 2008 and 2011.

Russia, NATO and the EU task forces operated jointly to fight piracy off the Somalia’s coast. Russia also supported the NATO’s maritime counter-piracy operation in the Mediterranean Sea (Operation Active Endeavour).

Afghanistan is the place where real cooperation could start right now. Russia allowed land transit though its territory of non-military freight from NATO and non-NATO ISAF (International Security Assistance Force) contributors to the operation in Afghanistan. In 2010, NATO bought 31 Russian Mi-17 helicopters to refurbish them for the Afghan army.

Syria provides another example – joint planning of the first NRC joint maritime mission (2013) for the secure elimination of Syrian chemical weapons on the US vessel “Cape Ray” in support of the OPCW-UN joint mission, which was suspended early 2014 after the decision of several NATO member states.

With few overlapping interests and totally divergent worldviews, Russia and NATO need time to narrow the gap. The NRC could be turned into a confrontation management body to focus on arms control, dangerous military activities, the common fight against terrorism, the Middle East and North Africa, especially Libya.

Today, the European continent is facing significant internal as well as external challenges. Security is paramount. The time is right to launch a meaningful and comprehensive discussion on the continental security order. Respect for each other’s views and interests is a prerequisite for success.

With arms control and non-proliferation in doldrums, the tensions over Ukraine, the standoff between Russia and NATO and the failure to cooperate efficiently in Syria, the Russia-organized conference is an opportunity to make the world a better place and it should not be missed.

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Via John Whitehead of The Rutherford Institute,

“Rights aren’t rights if someone can take them away. They’re privileges. That’s all we’ve ever had in this country, is a bill of temporary privileges. And if you read the news even badly, you know that every year the list gets shorter and shorter. Sooner or later, the people in this country are gonna realize the government … doesn’t care about you, or your children, or your rights, or your welfare or your safety… It’s interested in its own power. That’s the only thing. Keeping it and expanding it wherever possible.” – George Carlin

My friends, we’re being played for fools.

On paper, we may be technically free.

In reality, however, we are only as free as a government official may allow.

We only think we live in a constitutional republic, governed by just laws created for our benefit.

Truth be told, we live in a dictatorship disguised as a democracy where all that we own, all that we earn, all that we say and do—our very lives—depends on the benevolence of government agents and corporate shareholders for whom profit and power will always trump principle. And now the government is litigating and legislating its way into a new framework where the dictates of petty bureaucrats carry greater weight than the inalienable rights of the citizenry.

We’re in trouble, folks.

Freedom no longer means what it once did.

This holds true whether you’re talking about the right to criticize the government in word or deed, the right to be free from government surveillance, the right to not have your person or your property subjected to warrantless searches by government agents, the right to due process, the right to be safe from soldiers invading your home, the right to be innocent until proven guilty and every other right that once reinforced the founders’ belief that this would be “a government of the people, by the people and for the people.”

Not only do we no longer have dominion over our bodies, our families, our property and our lives, but the government continues to chip away at what few rights we still have to speak freely and think for ourselves.

If the government can control speech, it can control thought and, in turn, it can control the minds of the citizenry.

The unspoken freedom enshrined in the First Amendment is the right to think freely and openly debate issues without being muzzled or treated like a criminal.

In other words, if we no longer have the right to tell a Census Worker to get off our property, if we no longer have the right to tell a police officer to get a search warrant before they dare to walk through our door, if we no longer have the right to stand in front of the Supreme Court wearing a protest sign or approach an elected representative to share our views, if we no longer have the right to protest unjust laws by voicing our opinions in public or on our clothing or before a legislative body—no matter how misogynistic, hateful, prejudiced, intolerant, misguided or politically incorrect they might be—then we do not have free speech.

What we have instead is regulated, controlled speech, and that’s a whole other ballgame.

Protest laws, free speech zones, bubble zones, trespass zones, anti-bullying legislation, zero tolerance policies, hate crime laws and a host of other legalistic maladies dreamed up by politicians and prosecutors are conspiring to corrode our core freedoms purportedly for our own good.

For instance, the protest laws being introduced across the country—in 18 states so far—are supposedly in the name of “public safety and limiting economic damage.”

Don’t fall for it.

No matter how you package these laws, no matter how well-meaning they may sound, no matter how much you may disagree with the protesters or sympathize with the objects of the protest, these proposed laws are aimed at one thing only: discouraging dissent.

In Arizona, police would be permitted to seize the assets of anyone involved in a protest that at some point becomes violent.

In Minnesota, protesters would be forced to pay for the cost of having police on hand to “police” demonstrations.

Oregon lawmakers want to “require public community colleges and universities to expel any student convicted of participating in a violent riot.”

A proposed North Dakota law would give drivers the green light to “accidentally” run over protesters who are blocking a public roadway. Florida and Tennessee are entertaining similar laws.

Pushing back against what it refers to as “economic terrorism,” Washington wants to increase penalties for protesters who block access to highways and railways.

Anticipating protests over the Keystone Pipeline, South Dakota wants to apply the governor’s emergency response authority to potentially destructive protests, create new trespassing penalties and make it a crime to obstruct highways.

In Iowa, protesters who block highways with speeds posted above 55 mph could spend five years in prison, plus a fine of up to $7,500. Obstruct traffic in Mississippi and you could be facing a $10,000 fine and a five-year prison sentence.

A North Carolina law would make it a crime to heckle state officials. Under this law, shouting at a former governor would constitute a crime.

Indiana lawmakers wanted to authorize police to use “any means necessary” to breakup mass gatherings that block traffic. That legislation has since been amended to merely empower police to issue fines for such behavior.

Georgia is proposing harsh penalties and mandatory sentencing laws for those who obstruct public passages or throw bodily fluids on “public safety officers.”

Virginia wants to subject protesters who engage in an “unlawful assembly” after “having been lawfully warned to disperse” with up to a year of jail time and a fine of up to $2,500.

Missouri wants to make it illegal for anyone participating in an “unlawful assembly” to intentionally conceal “his or her identity by the means of a robe, mask, or other disguise.”

Colorado wants to lock up protesters for up to 18 months who obstruct or tamper with oil and gas equipment and charge them with up to $100,000 in fines.

Oklahoma wants to create a sliding scale for protesters whose actions impact or impede critical infrastructure. The penalties would range from $1,000 and six months in a county jail to $100,000 and up to 10 years in prison. And if you’re part of an organization, that fine goes as high as $1,000,000.

Michigan hopes to make it easier for courts to shut down “mass picketing” demonstrations and fine protesters who block entrances to businesses, private residences or roadways up to $1,000 a day. That fine jumps to $10,000 a day for unions or other organizing groups.

Ask yourself: if there are already laws on the books in all of the states that address criminal or illegal behavior such as blocking public roadways or trespassing on private property—because such laws are already on the books—then why does the government need to pass laws criminalizing activities that are already outlawed?

What’s really going on here?

No matter what the politicians might say, the government doesn’t care about our rights, our welfare or our safety.

How many times will we keep falling for the same tricks?

Every despotic measure used to control us and make us cower and fear and comply with the government’s dictates has been packaged as being for our benefit, while in truth benefiting only those who stand to profit, financially or otherwise, from the government’s transformation of the citizenry into a criminal class.

Remember, the Patriot Act didn’t make us safer. It simply turned American citizens into suspects and, in the process, gave rise to an entire industry—private and governmental—whose profit depends on its ability to undermine our Fourth Amendment rights.

Placing TSA agents in our nation’s airports didn’t make us safer. It simply subjected Americans to invasive groping, ogling and bodily searches by government agents. Now the TSA plans to subject travelers to even more “comprehensive” patdowns.

So, too, these protest laws are not about protecting the economy or private property or public roads. Rather, they are intended to muzzle discontent and discourage anyone from challenging government authority.

These laws are the shot across the bow.

They’re intended to send a strong message that in the American police state, you’re either a patriot who marches in lockstep with the government’s dictates or you’re a pariah, a suspect, a criminal, a troublemaker, a terrorist, a radical, a revolutionary.

Yet by muzzling the citizenry, by removing the constitutional steam valves that allow people to speak their minds, air their grievances and contribute to a larger dialogue that hopefully results in a more just world, the government is deliberately stirring the pot, creating a climate in which violence becomes inevitable.

When there is no steam valve—when there is no one to hear what the people have to say, because government representatives have removed themselves so far from their constituents—then frustration builds, anger grows and people become more volatile and desperate to force a conversation.

Then again, perhaps that was the government’s plan all along.

As John F. Kennedy warned in March 1962, “Those who make peaceful revolution impossible will make violent revolution inevitable.”

The government is making violent revolution inevitable.

How do you lock down a nation?

You sow discontent and fear among the populace. You terrorize the people into believing that radicalized foreigners are preparing to invade. You teach them to be non-thinkers who passively accept whatever is told them, whether it’s delivered by way of the corporate media or a government handler. You brainwash them into believing that everything the government does is for their good and anyone who opposes the government is an enemy. You acclimate them to a state of martial law, carried out by soldiers disguised as police officers but bearing the weapons of war. You polarize them so that they can never unite and stand united against the government. You create a climate in which silence is golden and those who speak up are shouted down. You spread propaganda and lies. You package the police state in the rhetoric of politicians.

And then, when and if the people finally wake up to the fact that the government is not and has never been their friend, when it’s too late for peaceful protests and violence is all that remains to them as a recourse against tyranny, you use all of the tools you’ve been so carefully amassing—the criminal databases and surveillance and identification systems and private prisons and protest laws—and you shut them down for good.

As I make clear in my book Battlefield America: The War on the American People, once a government assumes power—unconstitutional or not—it does not relinquish it. The militarized police are not going to stand down. The NSA will continue to collect electronic files on everything we do. More and more Americans are going to face jail time for offenses that prior generations did not concern themselves with.

The government—at all levels—could crack down on virtually anyone at any time.

Martin Luther King saw it coming: both the “spontaneous explosion of anger by various citizen groups” and the ensuing crackdown by the government.

“Police, national guard and other armed bodies are feverously preparing for repression,” King wrote shortly before he was assassinated. “They can be curbed not by unorganized resort to force…but only by a massive wave of militant nonviolence….It also may be the instrument of our national salvation.”

Militant nonviolent resistance.

“A nationwide nonviolent movement is very important,” King wrote. “We know from past experience that Congress and the President won’t do anything until you develop a movement around which people of goodwill can find a way to put pressure on them… This means making the movement powerful enough, dramatic enough, morally appealing enough, so that people of goodwill, the churches, laborers, liberals, intellectuals, students, poor people themselves begin to put pressure on congressmen to the point that they can no longer elude our demands.

“It must be militant, massive nonviolence,” King emphasized.

In other words, besides marches and protests, there would have to be civil disobedience. Civil disobedience forces the government to expend energy in many directions, especially if it is nonviolent, organized and is conducted on a massive scale. This is, as King knew, the only way to move the beast. It is the way to effect change without resorting to violence. And it is exactly what these protest laws are attempting to discourage

We are coming to a crossroads. Either we gather together now and attempt to restore freedom or all will be lost. As King cautioned, “everywhere, ‘time is winding up,’ in the words of one of our spirituals, corruption in the land, people take your stand; time is winding up.”

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In 2004, the U.S. banned cigarettes in all federal prisons and it was pretty much the best thing that could have happened to the packaged mackerel industry (yes, you read that correctly…the packaged fish).

So how did a smelly package of fish become the gold standard of America’s federal prisons?  Well, for a variety of reasons (we’ll let your imagination run wild) prisoners are not allowed to possess actual currency.  Up until 2004, they used cigarettes as their currency of choice to purchase anything from illicit goods such as stolen food and home-brewed “prison hooch,” as well as services, such as shoeshines and cell cleanings.  But once cigarettes were banned, prisoners needed a replacement currency and the ‘mack’ was deemed to be the best choice because it was worth roughly $1 at the commissary and pretty much no one wanted to eat it.

As one prisoner notes in the Wall & Broadcast video below, the ‘mack’ was also “inherently inflationary” because its supply was limited to 14 macks per week per inmate….

“Mackerel had utility because it was inherently inflationary.  A certain amount of macks came into circulation every day.  Every inmate can only buy 14 mackerels per week.  14 times 500 inmates time 52 weeks is the amount of mackerels that are coming into circulation every year and that’s why it was a pretty good stable value of currency.”

 

“The reasons mackerel had value is because inmates believed it had value.  Perfect example of that was mackerels expire after three years. But, people didn’t jut throw them away, these became known as “money macks” and retained 75% of the value of “eating macks” because people believed that they still had value and they were still being used in transactions.”

…that is at least until prison guards confiscated a massive supply of macks from one prisoner and essentially flooded the market creating a hyper-inflationary environment.

“I’ll never forget the day where the macks lost all their value almost overnight.  Someone had a huge amount of money macks and they got confiscated and the administration left them sitting in a bucket.  They essentially introduced hyperinflation.  They flooded the market with money macks.”

Perhaps Yellen & Co. could learn a thing or two from this lesson in prison economics.

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