iftttwall

With Wall Street having bid real estate prices to the moon in the US (and become Spain’s biggest slumlord), and handed them happily over to willing Chinese ‘get-my-money-out-of-China’ buyer greater-fools, it would appear the Chinese (having colonized America) have found a new more attractive place to park their excess liquidity. As Bloomberg reports, at a property auction in Lisbon, Portugal last month, about 90% of the bidders for the government-owned apartments and stores on offer were Chinese. They ended up acquiring more than two-thirds of the 45 properties, with one money-launderer investor noting “Lisbon is cheap if you compare it with other cities.”

1-in-4 homes bought by foreigners in America in 2014 were by Chinese.. and Portugal is already at 1-in-5…

 

As Bloomberg reports,

Portugal is the latest target for Chinese investors who have been acquiring buildings around the world as China allows freer movement of funds in and out of the country.

 

The Chinese accounted for almost one in five foreign property purchases in Portugal during the first nine months, according to the Lisbon-based Portuguese Real Estate Professionals and Brokers Association. They already represent the biggest group of foreign buyers based on money invested, said Luis Lima, head of the association.

 

…

 

“Lisbon is cheap if you compare it with other cities,” he said. “The economy is improving and there are some good deals to be done here.”

 

…

 

For buyers from outside the European Union, there’s also the prospect of a visa. Chinese investors are the top beneficiaries of Portugal’s property-for-visa program, which enables buyers of property worth 500,000 euros or more to live in Portugal and travel freely within the EU.

 

…

 

Chinese bidders may be congratulating each other on their purchases for some time to come, unless Portugal’s economic recovery starts to pick up steam. An unemployment rate of 13.9 percent and years of tax increases mean that most local investors are unable to outbid their Chinese counterparts.

 

“It’s obvious that the Portuguese can’t compete with the Chinese investors at these auctions because they don’t have cash available to spend,” said Nuno Durao, the head of real estate company Fine & Country, which specializes in the sale of residential luxury real estate. “Lisbon property auction rooms would be empty if it wasn’t for foreign property buyers.”

*  *  *

What could possibly go wrong?

via Zero Hedge http://ift.tt/1xpLQL9 Tyler Durden

via Zero Hedge http://ift.tt/1x3ndTa williambanzai7

With gold already moving today on rumors of an increasingly positive tone towards Switzerland's referendum on the Gold Initiative, Axel Merk notes that it appears widely misunderstood and discusses implications for gold, the Swiss franc and Switzerland as a whole.

 

Authored by Axel Merk of Merk Investments,

On November 30th, the Swiss are voting whether to amend their country’s constitution on an initiative entitled ‘Save our Swiss Gold.’

The motivation

The initiators of the gold initiative appeal to Swiss citizens desire not to sell out the ‘family silver.’ In the late 90’s, the Swiss National Bank (SNB) owned 2,590 tons of gold; since then 1,550 tons have been sold at prices far lower than today’s prices. While the Swiss might like their gold, they are fiercely independent. That’s relevant because by imposing a ceiling of the Swiss franc versus the euro, the SNB has de facto imposed the euro on Switzerland, a step closer to joining the euro – something many Swiss object to. More importantly, many Swiss may find it inappropriate for what is supposed to be an apolitical body like the SNB to impose policies with major political ramifications.

Not surprisingly, the Swiss government – which opposes the initiative – does not frame the discussion this way, but instead talks about the flexibility the SNB needs to implement its policies. It also points to the ‘losses’ incurred in 2013 when the price of gold fell.

Let’s look at the initiative and arguments in more detail. The initiative would amend Switzerland’s constitution such that:

• Gold reserves of the SNB must not be sold;
• Gold reserves of the SNB must be held in Switzerland;
• Gold reserves of the SNB must be ‘significant’ and must not fall below 20%.

As transitional measures:

• Switzerland has 2 years to repatriate its gold;
• Switzerland has 5 years to phase in the 20% reserve requirement.

Central bank independence

The Swiss government states the SNB’s independence would be at risk if the initiative passed. Former Federal Reserve Chair Alan Greenspan had this to say about central bank independence: “I never said the central bank is independent.” He did not imply the government tells the Fed where to set policy on a daily basis, but made it clear that it is the government that sets the rules. He fought back against accusations that the Fed finances huge government deficits, arguing critics have it backwards, as the Fed merely goes along. He then added that the Fed’s policies are driven by ‘culture rather than economics.’

It should not be surprising that the Swiss government is against any outside restrictions imposed on the SNB, but not because it jeopardizes central bank independence, but because it reduces the flexibility the government has. But that, of course, is precisely the purpose of constitutional initiatives available in Switzerland.

Gold a risk for the SNB? The Swiss government claims that the sharp drop in gold prices in 2013 lead to heavy losses at the SNB. It’s sad when the official pamphlet representing the government’s view resorts to polemics. Let’s get a few things straight about central bank accounting:

• The gold held by the SNB was purchased at dramatically lower prices. If more gold were sold, no losses, but substantial gains would be recorded.
• In an effort to keep the Swiss franc from rising, the SNB has “printed” a great deal of money, as the chart below shows – almost as much as the Fed:

• Currency isn’t actually printed, but the Fed or SNB purchase securities from banks; they pay for these securities by crediting the account of banks with the stroke of a keyboard. Money is literally created ‘out of thin air.’
• What most are not aware of, however, is that the more money a modern central bank ‘prints,’ the more interest bearing securities it buys, the greater the “profit” of the central bank. That’s why central banks brag how ‘profitable’ their policies have been.
• However, while the Fed has only purchased domestic securities (US Treasuries and Mortgage Backed Securities), the Swiss National Bank has been buying Euro and U.S. dollar denominated securities. In doing so, the SNB has truly introduced massive currency risk.
• Except that central banks don’t really care about losses: the Bank of Israel, for example, has had a negative net worth for over 20 years. Losses for a central bank make for bad PR, but a central bank can simply ‘print’ money to pay for its obligations. Some central banks, such as the European Central Banks, have in their statues that member states must pay-in additional capital should the ECB suffer losses.

Gold sales needed in times of crises?

The Swiss government argues a central bank must be able to sell its gold in times of crisis. Let’s think about this: such a ‘crisis’ might occur when a bank is over-leveraged and must be rescued. To facilitate a ‘rescue’, the SNB is likely to provide “liquidity” (money printing with the promise that it’s only for the short-term). If a bank is insolvent rather than illiquid, it might require a capital injection. That capital has to come from somewhere. If gold is sold for this purpose, it is the people’s gold that’s being sold. The government likes to keep an option open to socialize losses.

We would argue that the very reason “too big to fail” exists is because governments play rescuers that are all too willing to sacrifice the wealth of the public. They say such measures are for the common good – because depositors might lose their money in a bank. Indeed, when a bank collapses, it is the savers that lose out, as the savers are the folks that have loaned money to the bank.

The way to protect savers, though, is through prudent policies that require those that take risks to be responsible for losses.

Gold is the people’s money

Gold is the people’s money, not the government’s money to splurge. If a currency is backed by gold, then the currency represents the gold. It’s not for the government to give away: that’s why the initiative argues against selling any of the gold, ever. It’s for that reason as well that the gold does not need to be kept abroad: gold is a store of value that ought to back the currency in circulation.

20% minimum backing of reserves

Marc Faber, for example, says he has been asked to publicly support the initiative, but has so far declined to do so because he argues it is a haphazard solution; only 100% backing would be worth supporting publicly. In our assessment, Marc is too quick in discarding the merits of the initiative. Combined with the requirement that the SNB will never, ever, be allowed to sell gold, there are major ramifications:

• Assume that 20% of the SNB’s assets are backed by gold and the price of gold drops. The SNB would be immediately required to purchase more gold. As such, over time, the SNB’s reserves would likely be above 20%. In our assessment, dynamics may well move them to be closer to 100% over time. Basically, whenever there is a crisis and the SNB might be tempted to ‘print money’ to bail out an institution, it would chip away at the SNB’s flexibility for future bailouts, more gold is held that cannot be sold.
• An activist SNB that continues to buy foreign securities may, over time, have a hard time defending a ceiling on its currency. That’s because a ceiling on its currency is akin to a bailout to the country (Switzerland) as a whole, arguing that debasing the currency is good for the country.

Competitive Swiss franc?

The Swiss government argues that the strong Swiss franc is a concern to exporters. No kidding. Other concerns are competitors – maybe we should get rid of those, too. And those pesky customers that don’t always feel like buying gadgets and services that are Swiss made. Kidding aside, we would argue that it is impossible for an advanced economy to compete on price. An advanced economy has to compete on value. Very few low-end consumer goods are exported from advanced economies.

Look at beer, as the one area where low advanced economies have tried to compete with what might be considered as a low-end product: first, beer is branded as a premium product these days. In order to have pricing power there has been massive consolidation in the brewing sector over recent decades in much of Europe; Switzerland has been left behind in this trend – but note that these are trends that have been firmly in place well before the financial crisis. A weaker Swiss franc wouldn’t fix these challenges. The alternative to scale is to then try to be profitable at the local level; indeed, microbreweries with no export market have succeeded in many high cost areas.

Swiss multi-nationals have long learned to have natural hedges in place, matching revenue and expenses in their export markets.

Switzerland usually retains the headquarters, possibly R&D. Switzerland has lots of seasonal workers; policy makers should think out of the box, such as paying seasonal workers in euros. It may be far better to pay workers in a depreciating currency than to throw away one’s gold reserves in order to attract more seasonal workers…

Switzerland has always had a tough market. It is said that because of how critical Swiss consumers are, that if someone can have a product succeed in Switzerland, it can succeed anywhere.

We live in a world drowning in debt. The U.S., European Union, Japan, to name a few, cannot afford to pay all the promises they have made. As Alan Greenspan recently said, a welfare state cannot support a gold standard. These other countries will debase their currencies over time in an effort to make their liabilities more affordable.

It won’t be easy to sell to countries that have put policies in place that we believe may impoverish their middle class. The solution, however, is not to impoverish Switzerland. It won’t be easy, but the sooner Switzerland embraces the reality that competitive devaluation is not in its interest, the better.

Back to reality

Having made the case for Switzerland’s gold initiative, note that passing the initiative would only be a first step. Unless policy makers embrace the spirit rather than the letter of the law, it may be an uphill battle. We have already received research reports how the SNB could circumvent its obligations by spinning off assets. The SNB might also engage in derivatives to undermine the spirit of the initiative should it pass.

Let’s also keep in mind that the SNB has five years to implement the 20% backing of its reserves by gold. That should allow the SNB to conduct purchases without disrupting markets. In the short-term, the signaling effect might be the most powerful one: the ceiling of the Swiss franc versus the euro may well get tested. Such ceilings are enforceable only when they represent an unconditional commitment. As soon as someone blinks, the market will test the resolve of policy makers. The passing of such tests may well qualify as resolve. The SNB may be well served to start buying gold from day one if they accelerate their purchases of euros.

Ultimately, people should never rely on their government to pursue a gold standard, but consider pursuing their own, personal gold standard. On that note, we will expand on our discussion of Switzerland’s vote to force the Swiss National Bank to hold a minimum of 20% of its reserves in our upcoming Webinar (click here to register), on November 20, 2014. As part of the webinar, we will also discuss how investors can build their personal gold standard.

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

When in the course of human events, a simple tweet observing the farce that America's centrally-planned economy and markets have become as a result of the relentless intervention of a few clueless economic hacks…

BULLARD: FED TO RAISE RATES IN 2015, TIMING DETERMINED BY DATA. Determined by DJIA he means

— zerohedge (@zerohedge) November 14, 2014

… Incites a response such as this by a taxpayer-funded peer of the abovementioned clueless economic hack, a peer who incidentally has never stepped a foot outside of academia in his entire "professional" career:

@zerohedge Ha ha, you are such a dickhead … it's wonderful!

— David Andolfatto (@dandolfa) November 14, 2014

… a person who is a "Vice President" at the St. Louis Fed, the same Bank whose president is singlehandedly responsible for the last 10% upswing in these here rigged "markets"…

… who counts among his "academic credentials" the following:

Ph.D. Economics
University of Western Ontario
1994

 

M.A. Economics
Simon Fraser University
1987

 

B.B.A. Commerce
Simon Fraser University
1985

… and who is the self-professed author of the following "research" papers:

Articles Published in Peer-Reviewed Journals

 

"Optimal Disclosure Policy and Undue Diligence"
with Aleksander Berentsen and Christopher J. Waller
Journal of Economic Theory, January 2014, 149, pp. 128-152.

 

"Information Disclosure and Exchange Media"
with Fernando M. Martin
Review of Economic Dynamics, July 2013, 16(3), pp. 527-539.

 

"Incentive-Feasible Deflation"
Journal of Monetary Economics, May 2013, 60(4), pp. 383-390.

 

"A Note on the Societal Benefits of Illiquid Bonds"
Canadian Journal of Economics, February 2011, pp. 133-47.

 

"Essential Interest-Bearing Money"
Journal of Economic Theory, July 2010, 145(4), pp. 1319-602.

 

"Money, Intermediation, and Banking"
with Ed Nosal
Journal of Monetary Economics, April 2009, 56(3), pp. 289-94.

 

"Rational Truth-Avoidance and Self-Esteem"
with Steeve Mongrain and Gordon Myers
Canadian Journal of Economics, February 2009, 42(1) pp. 141-54.

 

"Endogenous Debt Constraints in a Life-Cycle Model with an Application to Social Security"
with Martin Gervais
Journal of Economic Dynamics and Control, December 2008, 32(12), pp. 3745-59.

 

"Bank Incentives, Contract Design, and Bank-Runs"
with Ed Nosal
Journal of Economic Theory, September 2008, 142(1), pp. 28-47.

 

Federal Reserve Bank of St. Louis Publications

 

"Liquidity Shocks, Real Interest Rates, and Global Imbalances"
Federal Reserve Bank of St. Louis Review, May/June 2012, 94(3), pp. 187-195.

 

"Fiscal Multipliers in War and in Peace"
Federal Reserve Bank of St. Louis Review, March/April 2010, 92(2), pp. 121-27.

 

Other Federal Reserve Publications

 

"A Simple Model of Money and Banking"
with Ed Nosal
Federal Reserve Bank of Cleveland Economic Review, 2001, 37(3), pp. 20-28.

 

"Unemployment and Economic Welfare"
with Paul Gomme
Federal Reserve Bank of Cleveland Economic Review, 1998, 34(3), pp. 25-34.

 

Other Publications, Book Reviews and Edited Volumes

 

"Search Models of Unemployment"
in Steven N. Durlauf and Lawrence E. Blume, eds., The New Palgrave Dictionary of Economics, 2nd Edition, 2008, Palgrave Macmillan.

 

"Comment on 'The Expectation Trap Hypothesis' by Lawrence J. Christiano and Christopher Gust"
Proceedings of the Bank of Canada Conference on Money, Monetary Policy and Transmission Mechanisms, October 2000, pp. 394-402.

 

"Unemployment Insurance and Labor-Market Activity in Canada"
with Paul Gomme
Carnegie-Rochester Conference on Public Policy, June 1996, 44, pp. 47-82.

… It becomes all too clear why the centrally-planned states of America are so very fucked up.

And while we appreciate the understanding that Fed "professionals" spend their working "research" hours tweeting instead of actually, you know, "researching" one can't help but wonder what follows after ad hominem?

Finally, while we don't know if "dickhead" is a generally-accepted term of the central-planner's jargon, we do know that the last time we were graced with its "dickweed" derivative, the outcome was delightfully ironic for (almost) everyone.

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

Submitted by Mike Krieger via Liberty Blitzkrieg blog,

One attribute I like most about Glenn Greenwald is that he never pulls punches. One of his most prescient and cutting political lines came earlier this year when he made some observations on the upcoming 2016 Presidential election, in which two status quo, corrupt, bloodthirsty con-artists will compete for the Oval Office. While we don’t yet know which crony the GOP will put up, Hillary is pretty much a foregone conclusion for the Democrats. Greenwald observed:

Hillary is banal, corrupted, drained of vibrancy and passion. I mean, she’s been around forever, the Clinton circle. She’s a fucking hawk and like a neocon, practically. She’s surrounded by all these sleazy money types who are just corrupting everything everywhere. But she’s going to be the first female president, and women in America are going to be completely invested in her candidacy. Opposition to her is going to be depicted as misogynistic, like opposition to Obama has been depicted as racist. It’s going to be this completely symbolic messaging that’s going to overshadow the fact that she’ll do nothing but continue everything in pursuit of her own power. They’ll probably have a gay person after Hillary who’s just going to do the same thing.

You can read that and more in the post: Glenn Greenwald on the 2016 Elections – “They’ll Probably Have a Gay Person After Hillary.”

Well Greenwald is back, and this time he outlines exactly who’s excited about Hillary’s forthcoming run for the Presidency. Here are some excerpts from the Intercept:

It’s easy to strike a pose of cynicism when contemplating Hillary Clinton’s inevitable (and terribly imminent) presidential campaign. As a drearily soulless, principle-free, power-hungry veteran of DC’s game of thrones, she’s about as banal of an American politician as it gets. One of the few unique aspects to her, perhaps the only one, is how the genuinely inspiring gender milestone of her election will (following the Obama model) be exploited to obscure her primary role as guardian of the status quo.

 

But one shouldn’t be so jaded. There is genuine and intense excitement over the prospect of (another) Clinton presidency. Many significant American factions regard her elevation to the Oval Office as an opportunity for rejuvenation, as a stirring symbol of hope and change, as the vehicle for vital policy advances. Those increasingly inspired factions include:

 

Wall Street

 

Down on Wall Street they don’t believe (Clinton’s populist rhetoric) for a minute. While the finance industry does genuinely hate Warren, the big bankers love Clinton, and by and large they badly want her to be president. Many of the rich and powerful in the financial industry—among them, Goldman Sachs CEO Lloyd Blankfein, Morgan Stanley CEO James Gorman, Tom Nides, a powerful vice chairman at Morgan Stanley, and the heads of JPMorganChase and Bank of America—consider Clinton a pragmatic problem-solver not prone to populist rhetoric. To them, she’s someone who gets the idea that we all benefit if Wall Street and American business thrive. What about her forays into fiery rhetoric? They dismiss it quickly as political maneuvers. None of them think she really means her populism.

 

The Israel Lobby

 

Let’s be clear. When it comes to Israel, there is no Bill Clinton 2.0. The former president is probably unique among presidents for the depth of his feeling for Israel and his willingness to put aside his own frustrations with certain aspects of Israel’s behavior, such as settlements. But this accommodation applies to Hillary too. Both Bill and Hillary are so enamored with the idea of Israel and its unique history that they are prone to make certain allowances for the reality of Israel’s behavior, such as the continuing construction of settlements.

 

Interventionists (i.e., war zealots)

 

“I feel comfortable with her on foreign policy,” Mr. Kagan said, adding that the next step after Mr. Obama’s more realist approach “could theoretically be whatever Hillary brings to the table” if elected president. “If she pursues a policy which we think she will pursue,” he added, “it’s something that might have been called neocon, but clearly her supporters are not going to call it that; they are going to call it something else.”

Like what, the “Mook Mafia” platform? (you’ll catch that reference later on).

Old school neocons

 

After nearly a decade in the political wilderness, the neoconservative movement is back. . . . Even as they castigate Mr. Obama, the neocons may be preparing a more brazen feat: aligning themselves with Hillary Rodham Clinton and her nascent presidential campaign, in a bid to return to the driver’s seat of American foreign policy. . . .

 

Other neocons have followed [Robert] Kagan’s careful centrism and respect for Mrs. Clinton. Max Boot, a senior fellow at the Council on Foreign Relations, noted in The New Republic this year that “it is clear that in administration councils she was a principled voice for a strong stand on controversial issues, whether supporting the Afghan surge or the intervention in Libya.”

 

It’s easy to imagine Mrs. Clinton’s making room for the neocons in her administration. No one could charge her with being weak on national security with the likes of Robert Kagan on board. . . . Far from ending, then, the neocon odyssey is about to continue. In 1972, Robert L. Bartley, the editorial page editor of The Wall Street Journal and a man who championed the early neocon stalwarts, shrewdly diagnosed the movement as representing “something of a swing group between the two major parties.” Despite the partisan battles of the early 2000s, it is remarkable how very little has changed.

There’s quite a bit more to the post, which I suggest reading in full.

If for some strange reason that isn’t enough to get you jazzed up for oligarch-coddler Hillary Clinton’s campaign, perhaps some insight into the people who might run her presidential bid will change your mind. They refer to themselves as the “Mook Mafia,” and it’s basically a couple of power thirsty adolescents. Some of their emails were leaked to ABC News:

For the past five years, a prominent Democratic operative who is a leading contender to manage a Hillary Clinton presidential campaign has maintained a private email listserv for friends and associates that carries a provocative name: the “Mook Mafia.”

 

The listserv, which one member said reaches more than 150 fellow campaign veterans, has been a means for Robby Mook and a close friend Marlon Marshall to stay connected with many of the operatives who would likely populate a Democratic presidential campaign in 2016. Mook and Marshall have both been mentioned as possible Hillary Clinton campaign managers.

 

“I know many of you are out there on campaigns, crushing it mafia style,” Marshall wrote. “We unfortunately didn’t do a call this year, but Robby and I wanted to start a chain to acknowledge many in our great family who have been out there busting their tails for all that is right in the world.

 

“We also wanted you to know that this years reunion will actually be held early next year, January or February, and likely in New York for a weekend. Apologies for the late notice and for not sending anything out on a reunion. Please believe there will be one. The planning committee has just been a tad busy!”

 

The email was signed “MM,” with Marshall adding a hashtag: #mafia4life.

 

In the more substantive messages, though, Marshall emerges as the more aggressive of the duo. Writing in January 2010 to urge fellow “mafia” members to work hard on behalf of Massachusetts Senate candidate Martha Coakley, Marshall offered “an overall big thank you to everyone on this list who continues to fight the good fight.”

 

“F U Republicans. Mafia till I die,” he wrote. “If you have just a few minutes, hop on that activate and punish those voters!” (“Activate” is an apparent reference to a software program allowing volunteers to contact targeted voters by phone from anywhere in the country.)

 

The following year, in confirming news that he would be taking a new job that would include a move to Chicago, Marshall offered special thanks to Mook.

 

“First, the mafia never separates, it just continues to grow and expand and move into other states in order to destroy Republicans,” he wrote. “A special thanks to none other than the namesake himself, Deacon Robby Mook. Without him, there would be no mafia and I for sure know I would not have learned as much as I have in this business and have this opportunity.”

 

Mook responded by announcing “mandatory” attendance at a goodbye party for Marshall at a Capitol Hill bar.

 

“It’s true: Marlon Marshall is leaving our fold. Today is the day the grownassman [sic] grows up and leaves for America’s Second City. I know this prodical [sic] son will return to the mafia manger soon enough to smite Republicans mafia-style,” Mook wrote.

You can’t make this stuff up. I don’t know about you, but…

 

via Zero Hedge http://ift.tt/1sOy3XX Tyler Durden

RedHack – a Turkish hacker collective – has hacked the website of the Turkey Electricity Transmission Company, and, as TechWorm reports, claim to have deleted the pending bills of Turkish citizens amounting to Turkish Lira 1.5 trillion (a stunning $668.5 billion). The collective, which has many hacktivism projects against Turkey's internet censorship laws, posted a video of how they deleted the debt of millions of Turks.

 

As TechWorm reports,

RedHack the Turkey’s number one hacker collective today hacked into the website of the Turkey Electricity Transmission Company website.

 

They then did something which will cheer a lot of Turkish citizens who owe large amounts to the Electricity department.

 

They have claimed that they have deleted the pending bill of Turkish citizens amounting to Turkish Lira 1.5 trillion. 
 

Türkiye Elektrik ?letim A.?. http://t.co/XfzvGAk0od taraf?m?zca hacklenmi?tir ?ifreler: http://t.co/j4vdW8wPQA Kapanmadan girin BORÇ silin:)

— RedHack_EN ? (@RedHack_EN) November 14, 2014

Redhack, are a Turkish hacker collective.  They follow the Marxist–Leninist ideology and were founded in 1997. The RedHack has so far hacked several high profile Turkish websites like Council of Higher Education, Turkish police forces, the Turkish Army, Türk Telekom, and the National Intelligence Organization and many other websites.

 

…

 

It has also put up a video about how it deleted the debt of millions of Turkish electricity distribution company customers.

The video is given below :

 

via Zero Hedge http://ift.tt/1Bs5uIX Tyler Durden