Tag: finance

The CFTC has won a consent order against MF Global requiring it to pay $1.212 billion in restitution to customers and a further $100 million civil penalty:

• *MF GLOBAL TO PAY $1.2 BLN RESTITUTION, $100M PENALTY
• *CFTC:PENALTY TO BE PAID AFTER MF FULLY PAYS CUSTOMERS/CREDITORS
• *CFTC:LITIGATION CONTINUES VS CORZINE,O’BRIEN,MF GLOBAL HOLDINGS
• *CFTC: MF GLOBAL ADMITS TO ALLEGATIONS OF LIABILITY IN ORDER

The big question is – of course – where is the money coming from?

Full CFTC Statement:

The U.S. Commodity Futures Trading Commission (CFTC) obtained a federal court consent Order against Defendant MF Global Inc. (MF Global) requiring it to pay $1.212 billion in restitution to customers of MF Global to ensure customers recover their losses sustained when MF Global failed in 2011.

 

The consent Order, entered on November 8, 2013 by U.S. District Court Judge Victor Marrero of the U.S. District Court for the Southern District of New York, also imposes a $100 million civil monetary penalty on MF Global, to be paid after MF Global has fully paid customers and certain other creditors entitled to priority under bankruptcy law. The Trustee for MF Global obtained permission from the bankruptcy court to pay restitution in full to customers to remedy any shortfall with funds of the MF Global general estate.

 

The consent Order arises out of the CFTC’s complaint, filed on June 27, 2013, charging MF Global and the other Defendants with unlawful use of customer funds (see CFTC Press Release 6626-13, June 27, 2013). In the consent Order, MF Global admits to the allegations pertaining to its liability based on the acts and omissions of its employees as set forth in the consent Order and the Complaint. The CFTC’s litigation continues against the remaining defendants: MF Global Holdings Ltd., Jon S. Corzine, and Edith O’Brien.

 

Gretchen Lowe, Acting Director of the CFTC’s Division of Enforcement, stated, “Division staff have worked tirelessly to ensure that 100 percent restitution be awarded to satisfy customer losses. The CFTC will continue to ensure that those who violate U.S. commodity laws and regulations designed to protect customer funds will be vigorously prosecuted.”

The CFTC’s Complaint charged MF Global, a registered Futures Commission Merchant (FCM), with violating provisions of the Commodity Exchange Act and CFTC Regulations intended to protect FCM customer funds and requiring diligent supervision by registrants. Specifically, the Complaint charged that during the last week of October 2011, MF Global unlawfully used customer segregated funds to support its own proprietary operations and the operations of its affiliates. In addition to the misuse of customer funds, the Complaint alleged that MF Global

 

(i) unlawfully failed to notify the CFTC immediately when it knew or should have known of the deficiencies in its customer accounts,

 

(ii) made false statements in reports it filed with the CFTC that failed to show the deficits in the customer accounts,

 

(iii) used customer funds for impermissible investments in securities that were not considered readily marketable or highly liquid in violation of CFTC regulation, and

 

(iv) failed to diligently supervise the handling of commodity interest accounts carried by MF Global and the activities of its partners, officers, employees, and agents.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/mZ7BUuyO0sY/story01.htm Tyler Durden

The CFTC has won a consent order against MF Global requiring it to pay $1.212 billion in restitution to customers and a further $100 million civil penalty:

• *MF GLOBAL TO PAY $1.2 BLN RESTITUTION, $100M PENALTY
• *CFTC:PENALTY TO BE PAID AFTER MF FULLY PAYS CUSTOMERS/CREDITORS
• *CFTC:LITIGATION CONTINUES VS CORZINE,O’BRIEN,MF GLOBAL HOLDINGS
• *CFTC: MF GLOBAL ADMITS TO ALLEGATIONS OF LIABILITY IN ORDER

The big question is – of course – where is the money coming from?

Full CFTC Statement:

The U.S. Commodity Futures Trading Commission (CFTC) obtained a federal court consent Order against Defendant MF Global Inc. (MF Global) requiring it to pay $1.212 billion in restitution to customers of MF Global to ensure customers recover their losses sustained when MF Global failed in 2011.

 

The consent Order, entered on November 8, 2013 by U.S. District Court Judge Victor Marrero of the U.S. District Court for the Southern District of New York, also imposes a $100 million civil monetary penalty on MF Global, to be paid after MF Global has fully paid customers and certain other creditors entitled to priority under bankruptcy law. The Trustee for MF Global obtained permission from the bankruptcy court to pay restitution in full to customers to remedy any shortfall with funds of the MF Global general estate.

 

The consent Order arises out of the CFTC’s complaint, filed on June 27, 2013, charging MF Global and the other Defendants with unlawful use of customer funds (see CFTC Press Release 6626-13, June 27, 2013). In the consent Order, MF Global admits to the allegations pertaining to its liability based on the acts and omissions of its employees as set forth in the consent Order and the Complaint. The CFTC’s litigation continues against the remaining defendants: MF Global Holdings Ltd., Jon S. Corzine, and Edith O’Brien.

 

Gretchen Lowe, Acting Director of the CFTC’s Division of Enforcement, stated, “Division staff have worked tirelessly to ensure that 100 percent restitution be awarded to satisfy customer losses. The CFTC will continue to ensure that those who violate U.S. commodity laws and regulations designed to protect customer funds will be vigorously prosecuted.”

The CFTC’s Complaint charged MF Global, a registered Futures Commission Merchant (FCM), with violating provisions of the Commodity Exchange Act and CFTC Regulations intended to protect FCM customer funds and requiring diligent supervision by registrants. Specifically, the Complaint charged that during the last week of October 2011, MF Global unlawfully used customer segregated funds to support its own proprietary operations and the operations of its affiliates. In addition to the misuse of customer funds, the Complaint alleged that MF Global

 

(i) unlawfully failed to notify the CFTC immediately when it knew or should have known of the deficiencies in its customer accounts,

 

(ii) made false statements in reports it filed with the CFTC that failed to show the deficits in the customer accounts,

 

(iii) used customer funds for impermissible investments in securities that were not considered readily marketable or highly liquid in violation of CFTC regulation, and

 

(iv) failed to diligently supervise the handling of commodity interest accounts carried by MF Global and the activities of its partners, officers, employees, and agents.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/mZ7BUuyO0sY/story01.htm Tyler Durden

Two months ago I answered the query, Is There A Bubble In The Canadian Condo Market? for my subscribers. The missive started off like this: 

The Canadian condo market is running into a precarious over-supply situation with large inventories slated to be entering the market in 2014 and 2015. Major centers such as Vancouver, Montreal and Toronto are witnessing a rapid pace of condo construction, despite falling sales. The demand for housing overall is slowing down, with sales in the last few months of 2013 falling on y-on-y basis. In most major Canadian markets there is an increase in listings and decrease in sales (even though prices are still somehow rising, which should in and of itself be indicative of a problem). 

Well, the Financial Times is now weighing in on the issue… Canada’s housing market teeters precariously

Robert MacFarlane, a long-time crane operator, surveys his empire from the top of one of Toronto’s flashy new apartment buildings. “I can see more than 50 tower cranes,” said Mr MacFarlane, whose bird’s-eye photography from the country’s tallest crane has gained him online notoriety as interest in Toronto’s property sector escalates.

These cranes – which can offer clues to bubble-like conditions – emerged in response to lofty demand for condominiums from investors and homebuyers taking advantage of Canada’s ultra-low interest rates.

This is a fact. I’ve observed this in the bubble markets that I’ve personally experienced: Miama, NYC, DC – cranes and construction galore. In retrospect it appears virtually impossible for anyone NOT to realize we were in a bubble.

But as home prices rally and construction projects proliferate – particularly in Toronto, Montreal and Vancouver – industry analysts say the country’s property sector is perched precariously at its peak.

David Madani, economist at Capital Economics, believes the nation is on the verge “of what will prove to be a prolonged correction”.

“Canada’s housing market exhibits many of the symptoms that preceded disruptive housing downturns in other developed economies, namely overbuilding, overvaluation and excessive household debt,” he adds.

Mr Madani’s comments chime with a chorus of policy makers, rating agencies and hedge fund managers who have warned of the risks posed by Canada’s overheated housing market.

Alongside Norway and New Zealand, Canada’s overvalued property sector is most vulnerable to a price correction, according to a recent OECD report. It is especially at risk if borrowing costs rise or income growth slows.

And why in the world would borrowing costs rise with all of the world’s most powerful central banks pushing #ZIRP4EVA???

 

In its latest monetary policy report, the Bank of Canada, the nation’s central bank, noted: “The elevated level of household debt and stretched valuations in some segments of the housing market remain an important downside risk to the Canadian economy.”

The riskiest mortgages are guaranteed by taxpayers through the Canada Mortgage and Housing Corporation, somewhat insulating the financial sector from the sort of meltdown endured by Wall Street in 2007 and 2008. But a collapse in home sales and prices would be a serious blow to consumer spending and the construction industry that employs 7 per cent of Canada’s workforce.

But isn’t that a circular argument???

…the flipside of a low interest rate policy designed to buttress the economy has meant that household debt levels have hit record highs as homebuyers stretched themselves to jump into the housing market. That in turn propelled demand and prices.

… Household debt has risen to 163 per cent of disposable income, according to Statistics Canada, while separate data show a quarter of Canadian households spend at least 30 per cent of their income on housing. This is close to the 1996 record when mortgage rates were substantially higher.

On a price-to-rent basis, which measures the profitability of owning a house, Canada’s house prices are more than 60 per cent higher than their long-term average, the OECD says.

… Year-to-date new home sales in the Greater Toronto Area – an area accounting for a fifth of Canada’s home building activity – are down by half from two years ago, according to the Building Industry and Land Development Association.

… Mr Madani forecasts a market correction in home prices over the next few years, predicting a 25 per cent drop.

But those that are bullish on the market point to resilient regional data. October sales of existing homes rose 38 per cent in Vancouver and 19 per cent in Toronto.

“It’s a mistake to think that what happened in the US will happen in Canada,” said Gregory Klump, CREA’s chief economist said.

Yes, because this time it’s different!!!

… Mr MacFarlane too has yet to be convinced of an imminent slowdown. “In the past when things have slowed down, there has been a distinct ‘feeling’ from the boots on the ground perspective. I don’t really sense that right now.”

Nothing like that good ‘ole empirical forensic analysis to make an investor feel all warm and cozy, right?!

All paying subscribers, feel free to download.

More on this topic…

1.  
   

   1. The Canadian Real Estate Bubble? Featured –Jul 25, 2012 – Below is an email that I recieved from a reader: RIO Canada is one of the biggest reit’s in Canada I know some of there management and from 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/0MBFdj0m6CQ/story01.htm Reggie Middleton

Two months ago I answered the query, Is There A Bubble In The Canadian Condo Market? for my subscribers. The missive started off like this: 

The Canadian condo market is running into a precarious over-supply situation with large inventories slated to be entering the market in 2014 and 2015. Major centers such as Vancouver, Montreal and Toronto are witnessing a rapid pace of condo construction, despite falling sales. The demand for housing overall is slowing down, with sales in the last few months of 2013 falling on y-on-y basis. In most major Canadian markets there is an increase in listings and decrease in sales (even though prices are still somehow rising, which should in and of itself be indicative of a problem). 

Well, the Financial Times is now weighing in on the issue… Canada’s housing market teeters precariously

Robert MacFarlane, a long-time crane operator, surveys his empire from the top of one of Toronto’s flashy new apartment buildings. “I can see more than 50 tower cranes,” said Mr MacFarlane, whose bird’s-eye photography from the country’s tallest crane has gained him online notoriety as interest in Toronto’s property sector escalates.

These cranes – which can offer clues to bubble-like conditions – emerged in response to lofty demand for condominiums from investors and homebuyers taking advantage of Canada’s ultra-low interest rates.

This is a fact. I’ve observed this in the bubble markets that I’ve personally experienced: Miama, NYC, DC – cranes and construction galore. In retrospect it appears virtually impossible for anyone NOT to realize we were in a bubble.

But as home prices rally and construction projects proliferate – particularly in Toronto, Montreal and Vancouver – industry analysts say the country’s property sector is perched precariously at its peak.

David Madani, economist at Capital Economics, believes the nation is on the verge “of what will prove to be a prolonged correction”.

“Canada’s housing market exhibits many of the symptoms that preceded disruptive housing downturns in other developed economies, namely overbuilding, overvaluation and excessive household debt,” he adds.

Mr Madani’s comments chime with a chorus of policy makers, rating agencies and hedge fund managers who have warned of the risks posed by Canada’s overheated housing market.

Alongside Norway and New Zealand, Canada’s overvalued property sector is most vulnerable to a price correction, according to a recent OECD report. It is especially at risk if borrowing costs rise or income growth slows.

And why in the world would borrowing costs rise with all of the world’s most powerful central banks pushing #ZIRP4EVA???

 

In its latest monetary policy report, the Bank of Canada, the nation’s central bank, noted: “The elevated level of household debt and stretched valuations in some segments of the housing market remain an important downside risk to the Canadian economy.”

The riskiest mortgages are guaranteed by taxpayers through the Canada Mortgage and Housing Corporation, somewhat insulating the financial sector from the sort of meltdown endured by Wall Street in 2007 and 2008. But a collapse in home sales and prices would be a serious blow to consumer spending and the construction industry that employs 7 per cent of Canada’s workforce.

But isn’t that a circular argument???

…the flipside of a low interest rate policy designed to buttress the economy has meant that household debt levels have hit record highs as homebuyers stretched themselves to jump into the housing market. That in turn propelled demand and prices.

… Household debt has risen to 163 per cent of disposable income, according to Statistics Canada, while separate data show a quarter of Canadian households spend at least 30 per cent of their income on housing. This is close to the 1996 record when mortgage rates were substantially higher.

On a price-to-rent basis, which measures the profitability of owning a house, Canada’s house prices are more than 60 per cent higher than their long-term average, the OECD says.

… Year-to-date new home sales in the Greater Toronto Area – an area accounting for a fifth of Canada’s home building activity – are down by half from two years ago, according to the Building Industry and Land Development Association.

… Mr Madani forecasts a market correction in home prices over the next few years, predicting a 25 per cent drop.

But those that are bullish on the market point to resilient regional data. October sales of existing homes rose 38 per cent in Vancouver and 19 per cent in Toronto.

“It’s a mistake to think that what happened in the US will happen in Canada,” said Gregory Klump, CREA’s chief economist said.

Yes, because this time it’s different!!!

… Mr MacFarlane too has yet to be convinced of an imminent slowdown. “In the past when things have slowed down, there has been a distinct ‘feeling’ from the boots on the ground perspective. I don’t really sense that right now.”

Nothing like that good ‘ole empirical forensic analysis to make an investor feel all warm and cozy, right?!

All paying subscribers, feel free to download.

More on this topic…

1.  
   

   1. The Canadian Real Estate Bubble? Featured –Jul 25, 2012 – Below is an email that I recieved from a reader: RIO Canada is one of the biggest reit’s in Canada I know some of there management and from 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/0MBFdj0m6CQ/story01.htm Reggie Middleton

As Silk Road emerged from the “dark-web”, other sites have appeared offering services that are frowned upon by most. As Forbes reports, perhaps the most-disturbing is “The Assassination Market” run by a pseudnymous Kuwabatake Sanjuro. The site, remarkably, a crowdfunding service that lets anyone anonymously contribute bitcoins towards a bounty on the head of any government official–a kind of Kickstarter for political assassinations. As Forbes reports, NSA Director Alexander and President Obama have a BTC40 bounty (~$24,000) but the highest bounty – perhaps not entirely surprising – is BTC 124.14 (~$75,000) for none other than Ben Bernanke. Sanjuro’s raison d’etre is chilling, “as a few politicians gets offed and they realize they’ve lost the war on privacy, the killings can stop and we can transition to a phase of peace, privacy and laissez-faire.”

 

Via Forbes,

As Bitcoin becomes an increasingly popular form of digital cash, the cryptocurrency is being accepted in exchange for everything from socks to sushi to heroin. If one anarchist has his way, it’ll soon be used to buy murder, too.

 

…

 

For now, the site’s rewards are small but not insignificant. In the four months that Assassination Market has been online, six targets have been submitted by users, and bounties have been collected ranging from ten bitcoins for the murder of NSA director Keith Alexander and 40 bitcoins for the assassination of President Barack Obama to 124.14 bitcoins–the largest current bounty on the site–targeting Ben Bernanke, chairman of the Federal Reserve and public enemy number one for many of Bitcoin’s anti-banking-system users. At Bitcoin’s current rapidly rising exchanges rate, that’s nearly $75,000 for Bernanke’s would-be killer.

 

…

 

Sanjuro’s grisly ambitions go beyond raising the funds to bankroll a few political killings. He believes that if Assassination Market can persist and gain enough users, it will eventually enable the assassinations of enough politicians that no one would dare to hold office. He says he intends Assassination Market to destroy “all governments, everywhere.”

 

“I believe it will change the world for the better,” writes Sanjuro, who shares his handle with the nameless samurai protagonist in the Akira Kurosawa film “Yojimbo.” (He tells me he chose it in homage to creator of the online black market Silk Road, who called himself the Dread Pirate Roberts, as well Bitcoin inventor Satoshi Nakamoto.)  ”Thanks to this system, a world without wars, dragnet panopticon-style surveillance, nuclear weapons, armies, repression, money manipulation, and limits to trade is firmly within our grasp for but a few bitcoins per person. I also believe that as soon as a few politicians gets offed and they realize they’ve lost the war on privacy, the killings can stop and we can transition to a phase of peace, privacy and laissez-faire.”

 

…

 

Like other so-called “dark web” sites, Assassination Market runs on the anonymity network Tor, which is designed to prevent anyone from identifying the site’s users or Sanjuro himself.

 

…

 

As for technically proving that an assassin is responsible for a target’s death, Assassination Market asks its killers to create a text file with the date of the death ahead of time, and to use a cryptographic function known as a hash to convert it to a unique string of characters.

 

…

 

“I am a crypto-anarchist,” Sanjuro concludes. “We have a bright future ahead of us.”

Read more here…

Of course – this will likely be another reason for TPTB to ban bitcoin…

The reporter contacted the Secret Service and the FBI to ask if they’re investigating Assassination Market, and both declined to comment.

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

As Silk Road emerged from the “dark-web”, other sites have appeared offering services that are frowned upon by most. As Forbes reports, perhaps the most-disturbing is “The Assassination Market” run by a pseudnymous Kuwabatake Sanjuro. The site, remarkably, a crowdfunding service that lets anyone anonymously contribute bitcoins towards a bounty on the head of any government official–a kind of Kickstarter for political assassinations. As Forbes reports, NSA Director Alexander and President Obama have a BTC40 bounty (~$24,000) but the highest bounty – perhaps not entirely surprising – is BTC 124.14 (~$75,000) for none other than Ben Bernanke. Sanjuro’s raison d’etre is chilling, “as a few politicians gets offed and they realize they’ve lost the war on privacy, the killings can stop and we can transition to a phase of peace, privacy and laissez-faire.”

 

Via Forbes,

As Bitcoin becomes an increasingly popular form of digital cash, the cryptocurrency is being accepted in exchange for everything from socks to sushi to heroin. If one anarchist has his way, it’ll soon be used to buy murder, too.

 

…

 

For now, the site’s rewards are small but not insignificant. In the four months that Assassination Market has been online, six targets have been submitted by users, and bounties have been collected ranging from ten bitcoins for the murder of NSA director Keith Alexander and 40 bitcoins for the assassination of President Barack Obama to 124.14 bitcoins–the largest current bounty on the site–targeting Ben Bernanke, chairman of the Federal Reserve and public enemy number one for many of Bitcoin’s anti-banking-system users. At Bitcoin’s current rapidly rising exchanges rate, that’s nearly $75,000 for Bernanke’s would-be killer.

 

…

 

Sanjuro’s grisly ambitions go beyond raising the funds to bankroll a few political killings. He believes that if Assassination Market can persist and gain enough users, it will eventually enable the assassinations of enough politicians that no one would dare to hold office. He says he intends Assassination Market to destroy “all governments, everywhere.”

 

“I believe it will change the world for the better,” writes Sanjuro, who shares his handle with the nameless samurai protagonist in the Akira Kurosawa film “Yojimbo.” (He tells me he chose it in homage to creator of the online black market Silk Road, who called himself the Dread Pirate Roberts, as well Bitcoin inventor Satoshi Nakamoto.)  ”Thanks to this system, a world without wars, dragnet panopticon-style surveillance, nuclear weapons, armies, repression, money manipulation, and limits to trade is firmly within our grasp for but a few bitcoins per person. I also believe that as soon as a few politicians gets offed and they realize they’ve lost the war on privacy, the killings can stop and we can transition to a phase of peace, privacy and laissez-faire.”

 

…

 

Like other so-called “dark web” sites, Assassination Market runs on the anonymity network Tor, which is designed to prevent anyone from identifying the site’s users or Sanjuro himself.

 

…

 

As for technically proving that an assassin is responsible for a target’s death, Assassination Market asks its killers to create a text file with the date of the death ahead of time, and to use a cryptographic function known as a hash to convert it to a unique string of characters.

 

…

 

“I am a crypto-anarchist,” Sanjuro concludes. “We have a bright future ahead of us.”

Read more here…

Of course – this will likely be another reason for TPTB to ban bitcoin…

The reporter contacted the Secret Service and the FBI to ask if they’re investigating Assassination Market, and both declined to comment.

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

As reported earlier today, Paris was the latest city to succumb to a rogue shooter when a gunman shot a photographer at left-leaning French newspaper Liberation, following by a shooting near the headquarters of French bank SocGen.

The lone gunman is shown on the picture below.

How the Paris situation differs from numerous such incidents taking place recently in the US, however, is that so far the gunman has not been captured or otherwise “incapacitated.” And as the WSJ reports, Paris in now gripped in a manhunt for the gunman who is currently on the loose.

From the WSJ:

A manhunt was under way in central Paris Monday for a lone gunman who police suspect of two separate shootings and a brief hostage taking, in a series of events that Paris prosecutors are treating as a terrorist case, a spokeswoman said.

 

It was unclear what motivated the attacks—which sparked confusion across the French Capital—or what the possible thread was linking them, police said. The spokeswoman for the Paris prosecutor’s office didn’t provide any additional details. Paris Prosecutor François Molins is scheduled to hold a news conference later Monday.

 

In the first incident, a man opened fire Monday morning at the Paris headquarters of left-leaning newspaper Libération, leaving a 27-year old assistant photographer badly wounded. Shortly afterward, a gunman appeared outside the headquarters of French bank Société Générale SA in the business district of La Defense, a bank spokeswoman said. The man fired shots but there were no injuries or casualties at the bank.

 

The assailant then fled the business district, taking one man hostage and forcing him to drive to the Champs Élysées in central Paris before liberating him, a police officer said. A police helicopter was circling the famous Paris thoroughfare as officials seek to identify and capture the man.

 

Police are acting on the hypothesis that the same man is behind all events, police officials said. The police officer said the same bullets were used in both incidents on Monday morning. Witnesses said in both cases the shooter was wearing a dark coat, police said.

 

Many businesses in the areas where the man was sighted were tightening security.

That said, the most important component of the New Normal, confidence, has been preserved:

 Laurent Nunez, chief of staff for the Paris police head, said officials had no insights on the gunman’s motivations. He said police were conducting checks across Paris to try to capture him, including in the metro, the extensive underground transportation system that blankets the city.

 

“Very honestly, nobody has alerted to any sense of panic in the city,” said Mr. Nunez.

 

A spokeswoman for the RATP, which operates the metro, said traffic was moving normally. She said the company had not received any instructions from police to tighten security.

And some more confirmation that no matter what, Paris just refuses to panic:

A gunman next appeared in front of Société Générale’s skyscraper headquarters, located in western Paris.

 

“The man looked very calm and determined,” said Pierre-Albert Garcias, a community manager at the bank who witnessed the shooting. Mr. Garcias told French television all people present in the hallway immediately took shelter, fearing that the shooter would take aim at them, but that there were no scenes of widespread panic.

Truly admirable. Who would have though that none other than the Hitchhiker’s Guide to the Galaxy would become the normative directive of the New Normal.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/E2jUELn8TbM/story01.htm Tyler Durden

Today’s AM fix was USD 1,283.50, EUR 950.04 and GBP 797.01 per ounce.
Friday’s AM fix was USD 1,281.75, EUR 953.99 and GBP 797.65 per ounce.

Gold rose $0.10 or 0.01% Friday, closing at $1,287.80/oz. Silver slipped $0.06 or 0.29% closing at $20.75. Gold rose 0.03% while silver fell 3.26% for the week. Platinum fell $5.50 or 0.4% to $1,437.74/oz, while palladium dropped $6.50 or 0.9% to $729.72/oz.

Gold prices pulled back this morning as traders booked gains and stagnant physical demand had the yellow metal out of favour. Recent confirmation by Janet Yellen that she will continue Bernanke’s loose monetary policy lifted gold, but tapering appears priced into the metal already.

The McKinsey Global Institute recently reported on the effects of Quantitative Easing or QE on the UK economy or to be more precise the net transfer of £110 billion from UK households to the UK government. This is a wealth transfer game being played out across the world and the report from McKinsey shows that the hardest hit are elderly households on fixed income forms of savings.

Estimated Cumulative Change in Net Interest Income, 2007-12 ©McKinsey & Company

The Mckinsey chart above clearly shows that QE has been kind to governments and since the financial crisis began in 2007, those UK households that have increased their levels of savings have been severely penalised to the tune of £110 billion. This £110 billion is in effect removed from the UK high street and further deprives the UK economy of much needed consumer spending. At the same time the UK government has saved itself £120 billion of net interest payments.

The chart also shows the Eurozone and the U.S. are engaging in similar debt transfers from households to government. Those citizens that were prudent and wise are being unjustly penalised for their ability and desire to save.

The UK Prime Minister, David Cameron, has every reason to be worried as Paul Sykes has indicated that he will fund Nigel Farage’s UKIP to the tune of millions to do “whatever it takes” to help UKIP top the EU polls in May 2014.

Sykes, one of Britain’s wealthiest businessmen, was a keen supporter of the Tories under Margaret Thatcher but is determined to pull the UK out of the EU. Sykes and the UKIP party could not have asked for a powerful or more potent argument than the silent transfer of wealth from hard pressed UK households to their government.

As it stands the UKIP party currently has 13 seats in the European Parliament and estimates vary but it is believed that the UKIP would need to secure about 27 per cent in the elections in May to overtake the Tories as the largest UK party in the European Parliament.

It would be foolish to second guess what will happen in the UK EU elections come May 2014 but it appears that those households that save by placing cash on deposit will continue to lose out as the UK, the Eurozone and the U.S show no signs of easing their respective QE programmes.

The case for financial insurance or diversification into gold and silver is being reinforced by the actions of the UK, Eurozone and U.S governments.

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via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/DMoG9Q9E6BU/story01.htm GoldCore

China’s GDP is about to undergo the same magic that US GDP received earlier in the year. The “Chinese system of National Accounts” will see five significant adjustments that are expected to (surprise) boost the size of the nation’s estimate of its GDP. The National Bureau of Statistics is considering making the changes to reflect the latest economic and social developments and implement the reform guidelines unveiled at the 3rd Plenum recently. From the addition of research and development – intellectual properrty – (just as the US did) to including mark-to-market changes (read rises) in employee stock options and real estate in consumption data, the Chinese appear dead set on making a once-unbelievably goal-seeked number into an entirely fantastical representation of reality (which of course enables moar higher manipulation as to avoid any debt-to-gdp hurdles that the real world might see as a concern).

 

Via Xinhua,

The nation plans to give GDP readings and the revised historical figures of this indicator under new calculation method after the end of this year…

the U.S. revised its GDP data, the most important amendments is to research and development expenditures as well as entertainment, literary and artistic originals such as fixed capital formation expenditure included in GDP. This great repercussions in the international arena, in China also attracted relatively widespread concern, there has been speculation heated debate whether China’s national accounting system to do the appropriate amendments?

New accounting system will likely increase in total GDP:

The plan includes 5 key sections that change how the nation’s balance sheet and income (consumption) is calculated…

1. the introduction of the concept of intellectual property products, research and development expenditures will be included in GDP

 

2. the introduction of “economic ownership” concept, so that more reflect the actual accounting results

 

3. the rapid development of the real estate market, housing prices and rents are rising

 

4. land contract management rights transfer income to become an important part of farmers’ income

 

5. the employee stock options included workers compensation

Which leaves 3 critical aspects of make-believe for Chinese GDP statistsics:

1. Research and development expenditure will be included in GDP – based on best guesses, historical and current R&D will be “priced” into GDP data leaving plenty of scope for a goal-seeked guess at what the number needs to be.

 

2. Accounting of actual final consumption – this means that government-provided services – that improve people’s living standards – will be ‘valued’ and added to consumption data. This includes education, health, social security and other spending data. Furthermore, the mark-to-market gains from employee stock options will be included in final consumption data (so even more need to keep that stock market high for the PBOC)…

 

3. Gains (losses) from housing – the GDP data will include some adjustment based on the mark-to-market of home prices as a consumption-based positive. In other words, as the bubble grows, the rise in house/real estate prices will be included in GDP consumption calculations

 

In other words, China will be adding to its base GDP data all the bubble-driven aspects of the economy as the bubble continues to grow… one can only imagine what that will do to a) volatility, and b) the downswing when these ‘adjustments’ are forced the ‘wrong’ way…

On the bright side, this plan is not expected to be fully implemented until 2015 – and who knows what this will all look like by then…

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/3Q_yt0Ahgu8/story01.htm Tyler Durden

China’s GDP is about to undergo the same magic that US GDP received earlier in the year. The “Chinese system of National Accounts” will see five significant adjustments that are expected to (surprise) boost the size of the nation’s estimate of its GDP. The National Bureau of Statistics is considering making the changes to reflect the latest economic and social developments and implement the reform guidelines unveiled at the 3rd Plenum recently. From the addition of research and development – intellectual properrty – (just as the US did) to including mark-to-market changes (read rises) in employee stock options and real estate in consumption data, the Chinese appear dead set on making a once-unbelievably goal-seeked number into an entirely fantastical representation of reality (which of course enables moar higher manipulation as to avoid any debt-to-gdp hurdles that the real world might see as a concern).

 

Via Xinhua,

The nation plans to give GDP readings and the revised historical figures of this indicator under new calculation method after the end of this year…

the U.S. revised its GDP data, the most important amendments is to research and development expenditures as well as entertainment, literary and artistic originals such as fixed capital formation expenditure included in GDP. This great repercussions in the international arena, in China also attracted relatively widespread concern, there has been speculation heated debate whether China’s national accounting system to do the appropriate amendments?

New accounting system will likely increase in total GDP:

The plan includes 5 key sections that change how the nation’s balance sheet and income (consumption) is calculated…

1. the introduction of the concept of intellectual property products, research and development expenditures will be included in GDP

 

2. the introduction of “economic ownership” concept, so that more reflect the actual accounting results

 

3. the rapid development of the real estate market, housing prices and rents are rising

 

4. land contract management rights transfer income to become an important part of farmers’ income

 

5. the employee stock options included workers compensation

Which leaves 3 critical aspects of make-believe for Chinese GDP statistsics:

1. Research and development expenditure will be included in GDP – based on best guesses, historical and current R&D will be “priced” into GDP data leaving plenty of scope for a goal-seeked guess at what the number needs to be.

 

2. Accounting of actual final consumption – this means that government-provided services – that improve people’s living standards – will be ‘valued’ and added to consumption data. This includes education, health, social security and other spending data. Furthermore, the mark-to-market gains from employee stock options will be included in final consumption data (so even more need to keep that stock market high for the PBOC)…

 

3. Gains (losses) from housing – the GDP data will include some adjustment based on the mark-to-market of home prices as a consumption-based positive. In other words, as the bubble grows, the rise in house/real estate prices will be included in GDP consumption calculations

 

In other words, China will be adding to its base GDP data all the bubble-driven aspects of the economy as the bubble continues to grow… one can only imagine what that will do to a) volatility, and b) the downswing when these ‘adjustments’ are forced the ‘wrong’ way…

On the bright side, this plan is not expected to be fully implemented until 2015 – and who knows what this will all look like by then…

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/3Q_yt0Ahgu8/story01.htm Tyler Durden