Does Saudi Arabia Have $750 Billion In Assets To Sell?

As we reported over the weekend, based on NYT info, the Saudi finance minister said the kingdom would sell up to $750 billion in Treasury securities and other assets if Congress passed a bill that would allow the Saudi government to be held responsible for any role in the September 11, 2001 terror attacks. Senators Chuck Schumer of New York and John Cornyn of Texas introduced the “Justice Against Sponsors of Terrorism Act (JASTA) last fall, but the legislation seemed to gain some new traction after a related segment on 60 Minutes earlier this month.

The punchline, of course, was that Saudi officials indicated they would sell its dollar-denominated assets if the law passed to avoid having those assets frozen by American courts.

But does Saudi Arabia even have $750 billion of assets to sell?

For the answer we go to Stone McCarthy who note that while they can’t answer that question definitively – recall that the exact amount of Saudi Treasury holdings remains a mystery as it is not broken out separately – here’s what they do know from the Treasury International Capital (TIC) data.

First, the Treasury doesn’t specifically report Saudi Arabia’s holdings of U.S. securities. Instead, Saudi Arabia’s holdings are combined with the holdings of the following countries into a category called Asian exporters: Bahrain, Iran, Iraq, Kuwait, Oman, Qatar and United Arab Emirates.

 

At the end of January, Asian oil exporters held $563.6 billion of U.S. securities, with Treasuries and U.S. equities accounting for 92.2% of the total. Treasury holdings totaled $268.2 billion.

 

 

These figures reflect holdings that Treasury can directly attribute to the Asian oil exporting countries. Regular readers of our updates on the TIC data know that foreign investors often hold securities at custodial institutions in other countries. For example, in February, the five major custodial centers held $1.1 trillion of Treasury securities. It’s possible that Saudi Arabia has holdings of securities parked in custodial accounts, but there’s no way to know that for sure from the TIC data.

 

Also keep in mind that as we have previously reported, the Saudis were said to have been one of the most aggressive sellers of US-denominated assets in late 2015 and early 2016 to fund the country’s budget deficit as Petrodollar revenues collapsed.

So, in short, the answer is nobody knows for sure, but if the Saudis did have $750 billion several months ago, they probably have far less as of this moment.

via http://ift.tt/20YUTy9 Tyler Durden

The 2016 “Rage Fear & Anger” Election: Ron Paul’s Deep Dive Into The Real Issues

Ron Paul offers his detailed assessment of the 2016 presidential campaign this far. This is no candidate play-by-play, but a look at the strong undercurrents in society that are driving the debate. The people are very angry. But why? And what should be done about it?

 

Full Speech (via RonPaulLibertyReport.com), [yes it’s long but grab a glass of wine – or bottle of scotch – and comprehend what America faces]

THE MIDDLE-CLASS RAGE, FEAR AND ANGER

The middle class, which as defined by politicians now includes almost everyone, is angry, fearful, and filled with rage. When politicians address this group it’s frequently defined as “populism,” of which there are many varieties. Whether liberals, conservatives, libertarians, socialists, or authoritarians, when the people become restless and angry, demanding change, the politicians pay attention. This reflects a need to appeal to the masses, and a populist message is well received. But there is never real agreement on the analysis and suggested solutions to the problems. Instead, scapegoats are easily found. Economic understanding is not of high priority, and demagoguery is a useful tool for politically mobilizing the “victims.” Since there are real reasons given for the conditions that exist, competition arises among those who want to take charge of the crisis and benefit politically. This only increases the anxiety and anger of the people, who see themselves as victims of an unfair system.

Until the political economic crisis became readily apparent, most politicians were unaware of the rapidly increasing distortions in wealth distribution. The dangers are conveniently ignored because most people live for the short term. If one is doing well financially, even though the system is financed with the whole country living beyond its means, worrying about preparing for a rainy day seems like wasted energy. However the payment is now coming due, and because few plan or understand it, any threat to benefits – both earned and unearned – creates great anxiety. Fear of being squeezed out of a share of the benefits that come with government intervention becomes the driving force for the whole country. The one group that seems the least worried about current conditions is the “one percent” who are financially secure by living off the special interest financial system. This does not include the wealthy who are financially rewarded for providing products and services that consumers choose to buy.

But even the one percent who benefit from government programs and the monetary system are concerned that the current uprising will interfere with their privileged position.

The size, determination, and anger of the current populist uprising is signaling that huge changes are coming both politically and economically. This generates a competitive blame-game when politicians get involved and try to benefit from the chaos. Republicans blame the Democrats and the Democrats blame the Republicans for the problems. It’s never an issue of philosophy but rather partisanship, personalities, or simply blaming poor management. False perceptions are commonplace as a consequence of government-controlled education that steers people away from the sad realities of economic planning that the people have blindly accepted for many decades.

The fear and anger are only increased by the combination of a failed but never-questioned economic policy, and the demagogues, either ignorant or malicious, who provide magical promises to erase the injustices that are clearly visible.

Though the nature of the breakdown is an economic issue caused by excessive government, those suffering – and the politicians who claim they can restore prosperity – demand more government intervention in our lives and in the economy.

The entitlement mentality is now seen as a fundamental right even though it depends on government use of force to transfer wealth from one group to another. The liberal mantra has always been that the use of force backed up by guns is legitimate and moral. This is accepted as being morally superior to voluntarism for helping the poor. The irony is that it’s precisely this philosophy that impoverishes the middle class, increases the poverty of the poor, and provides the unearned benefits of the crony capitalists who were the recipients of the great bailout in 2009.

We are witnessing the end of an era, but since denial and ignorance prevails few are aware of it. The current special interest entitlement system is on its last legs, but the recipients and the political power brokers believe a change in leadership is all that is needed. It’s not the system that’s at fault, they argue, it’s only better management that is required. It is readily apparent that the failure of this approach is leading to more fear and anger. 

Too often the anger is thought to be a partisan issue. The claim is either that it’s all President Obama’s fault or George W. Bush’s fault – yet both parties have followed the same false philosophy of interventionism in both domestic Keynesianism and international empire-building, putting them both at fault.

The people searching for answers conclude the government constantly lies to them. It’s easy to see the system rewarding those who control political power. Concern and understanding the inequities in wealth distribution are not authentic. Ignorance prevails even for the well-intentioned, which results in a deadly erosion of middle class wealth. Debt and deficits are not a serious concern, and both parties continue the endless wasteful spending that only aggravates the pervasive economic inequities that drive the people’s fears.

Most Americans, now more than ever, have become aware of the terrible conditions the Federal Reserve has caused by its policies that result in ever more distortions in the transfer of wealth to the very wealthy at the expense of the middle class. Many people remain apathetic as to the details of Federal Reserve policy, but others recognize that the Fed is the financier of the welfare state and the endless wars that consume wealth. Our ability to issue the reserve currency of the world gives us a free ride for unlimited spending, debt, and borrowing. 

Middle class anger results because the evidence is now available that the system is failing and the politicians offer only vague platitudes and rash promises that few citizens believe. The factions that compete for government benefits become more competitive and angry as they see the financial pie shrinking and the ability of government to deliver on their promises failing.

When benefits, seen as entitlements, shrink, the recipients become fearful and angry and demand political action. This means more handouts, whether it’s for the rich or poor, without any understanding as to why the system is failing. The demagogues, who are aware of the problem, are quick to use this discord to gain greater political power while ignoring the true nature of the problem and the changes needed.

It’s easy for presidential candidates to respond to legitimate concerns that have prompted the anger and fear. But if there is little understanding of the true nature of the problem and the proposed solutions, this won’t help to quiet the disgruntled electorate. The groups that claim they are being mistreated more than others will continue to be varied and increasing in numbers.

Slogans and clichés, though they have been helpful to the politicians in the past, will not be believed and will only increase the anger. This leads the candidates to compete to be the most authoritarian in their promises to take care of everybody’s demands.

The problems have been developing for almost 100 years. Progressivism, which was accepted in the early part of the 20th century, cannot be reversed by any single election. Vague political promises to patch up the system currently being used will no longer suffice.

Real wages and the standard of living of the average American family have dropped in the 21st century and are almost where they were back in 1971 – the year we completely abandoned the gold standard. The ongoing crisis is deeply structural and not a management problem. Those who still spout the idea that stopping waste, fraud, and abuse in order to finance the perpetual demands of the people without a major overhaul of our political and economic system have no credibility and the people know it. Too many remain convinced that debt is not a problem and more debt and more monetary inflation is what is needed to restore economic growth. The masses have been taught and conditioned to believe that unlimited government spending and debt is the solution and not a cause of the crisis.

But, it is a problem. As long as our politicians and the American people remain in denial, the problems will get much worse, the anger will accelerate, and violence in our cities will increase.

The current ongoing destruction of the middle class and the anger it causes are the big issues we face. Economic conditions are the overriding issue, but the least understood. Most Americans are aware that the politicians are in over their heads and are not providing any sensible answers to the dilemma. Believing that a left or right wing noisy demagogue will save us is wishful thinking.

Ignorance of economics has allowed years of excessive spending, but that is coming to an end. The entitlement mentality claims it’s a strictly moral issue for the government to take care of people in need. A combination of bad economic policy and confused morality has created the conditions that are threatening us today – not only in the US but worldwide as well.

We must wake up and realize that much of the wealth the average American has enjoyed for decades has been an illusion, built on debt and a bizarre form of money. But the payment is now coming due and no one wants to accept the obvious: we are unable to pay for our extravagant spending on domestic welfare to both the rich and poor, while maintaining an unaffordable world empire. The result has only been anger. There is no understanding that market forces are now required and that the debt must be liquidated in order to restore economic growth to the system.

The question of who must pay is a major political and economic one. Currently the middle class is aware of a major problem, but doesn’t have the foggiest understanding as to the causes or the solutions. So far the penalty has fallen on the shoulders of the middle class with a loss of good jobs, inflation, and a lot lower standard of living – something the government is unwilling to acknowledge. The fact that there’s a lack of understanding of economic policy contributes to the growing socio-economic crisis and the fear and anger that continue to worsen.

The politicians are scurrying around searching for those they can blame for the crisis. Actual answers from the candidates are secondary to who achieves the political power to distribute a shrinking economic pie.

WHO’S TO BLAME?

Who gets blamed depends solely on the political persuasion of the accuser. If it comes from a leftist politician it’s always free markets, profits, not enough government transfer payments to the poor, not enough government spending, and of course, greed – regardless of how one’s money was earned. The solution is always to raise taxes.

If it comes from a right or populist politicians, it’s immigrants, China’s unfair trade and currency policies, threats of terrorism, Mexico border policies, and an urgent need to sacrifice liberty for safety, xenophobia, or not enough militarism. Too often the blame is couched only in partisan terms – it’s the Democrats fault; it’s the Republicans fault; or it’s all Obama’s fault or George W. Bush’s fault. Philosophic views are not important, only effective demagoguery is.

Too often it leads to a desire for a tyrannical type of government, coming from both the far left and the far right, that makes rash promises as to the ease with which the problems will be solved. We’re constantly being told that what we need is a new tougher boss who will get things done, without knowing exactly what policies will be pursued.

It’s easy to find scapegoats – either racially motivated or based on faulty economic thinking. Little blame is placed at the door of the Federal Reserve’s ridiculous monetary policy, which has been so destructive. Negative interest rates are not topics in the presidential debates or the campaigns. Simply, one side blames economic downturn on the free market and another side blames the lack of tariffs and too much labor competition. Political changes are much easier to bring about by placing blame than by getting people to understand the true cause of our economic problems. The sad part is, it’s the economic explanation of poverty and the unfair distribution of wealth that is the issue that drives all political rhetoric while searching for scapegoats. The answers are out there, but we have a long way to go to convince the citizens and the leadership in this country who claim that more government is the solution.

The fear of ISIS is used to justify the dangerous foreign policy we follow – a policy that has significantly contributed to the economic crisis, with trillions of dollars spent in recent decades on unwise militarism. Blaming foreign terrorism for our economic and debt crisis may have been a goal of Osama bin Laden, but only we can take the responsibility for the spending excesses for which we are now being forced to pay.

There’s been little disagreement among the candidates that sacrificing personal liberty under today’s circumstances is required to provide security. It’s easy for the politicians to blame too much liberty – both economic and civil – as the problem. There should be little doubt that our crisis does not come from too much freedom, yet this issue is of no concern for the candidates.

Some blame the crisis on inefficiency in government management and claim that ridding the system of waste, fraud, and abuse will be enough to solve our fiscal problems and control the deficits. Therefore nothing needs to be cut, or so they say. There’s no recognition that government by its very nature is based on theft, threat of violence, and control by the privileged few.

Blaming various social groups instead of flawed policies is a frequent exercise. Racial distinctions are convenient for gaining a special benefit and are the source of social and economic friction. There’s no incentive to objectively see cause-and-effect in the problems that generate fear and anger. This makes it very difficult to unemotionally solve the injustices that our system of government planning has generated.

Equal justice under the law is constantly being abused. It’s easy to blame racism for all the problems while ignoring the war on drugs and true causes of poverty, which are the major contributing factors to our dilemma.

The authoritarians cannot resist blaming free markets and sound money for our economic ills and they never make an effort to distinguish between free markets and crony capitalism in their accusations. Ignorance and a desire to increase the role of government in our everyday life provide a convenient argument for a bigger and more intrusive government. Today even declared socialists are well received with their promises of unlimited “free stuff.”

The defenders of central economic planning, a powerful central bank, sacrificing liberty for security, and foreign interventionism to maintain an empire will never blame themselves for their contributions to the crisis. Therefore, expect anger and fear to accelerate. Do not expect the 2016 election to enlighten the people or the politicians.

Big government enthusiasts are always looking outward and for others to blame. But without some introspection it is guaranteed that the social friction now building will get worse. False blame creates bad solutions.

Terrorism is a real threat. The consensus of both Republicans and Democrats is that the only cause is “radical Islam.” Any other suggestion elicits charges of un-Americanism and a willingness to ignore danger. It is suggested that any support for those who seek a peaceful resolution to international problems are unpatriotic and endangering our country. Claiming our foreign policy of occupation and preemptive war significantly contributes to the danger of terrorism is unthinkable, but suggesting that we carpet bomb countries in the Middle East draws loud cheers. This is hardly a setting for making our country safe from terrorism. Blaming others for our failed policy of maintaining a world empire while never looking at our own shortcomings is acceptable to most Republicans and Democrats.

Not only do the demagogues blame others for our foreign policy failings, they also blame others for our weak economy. The threat of terrorism, that we helped to create, is also used to justify our government’s attack on civil liberties here at home. The politicians never assume responsibility for our out-of-control budgets since neither party truly believes that deficits are a serious problem. In fact, both sides cooperate in spending and ignoring the deficits because both sides want to increase spending. Sometimes it’s for domestic welfare and other times the spending is for “rebuilding” the military; most of the time they want both.

The most significant economic problems we face today – the $210 trillion of unfunded liabilities, the $19 trillion national debt, along with our overblown foreign debt – are dealt with by ignoring them as the platitudes and excuses flow.

The financial markets will eventually make it clear that the debt has become the most significant issue. It’s crucial that proper blame is placed on the spenders and Keynesian apologists who argue it’s not a problem. Without proper blame, understanding how to achieve economic growth is impossible. The people are justified in being fearful and angry because the magnitude of the crisis is becoming more evident every day, and they no longer believe what the leaders of the country have been telling them. Wishful thinking for a political savior to rise up and rescue us is just that: wishful thinking.

Lack of knowledge and understanding of the crisis has ignited hatred between the factions seeking to take charge, escape blame, and satisfy the demands of the current victims. As the truth of the seriousness of our crisis becomes more apparent, only a few are reassured that there is a politician who has an answer. It has been suggested that the description of what we’re facing is that one party is a party of “know nothings” and the other is a party that knows all the “wrong things.”

REAL ISSUES IGNORED

Since there has been a lot of blame and no understanding, no serious solutions have been offered. The big problem is that in spite of different rhetoric coming from the two parties, there’s little difference in fundamental political and economic beliefs. With the dramatic personal charges being made by the candidates, the important issues are avoided. This must be on purpose. Since no one has answers, it’s best not to draw attention to their ignorance and to the total failure of both political parties to solve the problems.

The issues avoided are numerous, including especially the debt and the $210 trillion of unfunded liabilities. And even as our as our economy steadily weakens, no serious debate occurs. When the subject comes up it’s for narrow political reasons and no solutions are offered. It’s abundantly clear that to both sides, debt is not of enough concern to actually lead them to entertain the idea that spending should be reduced. That would be bad politics. Both sides support “rebuilding the military” by increasing military spending. Though there is no real threat, we continue to spend about as much as everyone else put together. Domestic welfare spending is treated the same way. Some will continue to claim that cutting waste, fraud, and abuse will provide the funds necessary to continue our spendthrift ways. That’s been talked about for decades to appease the people, without success. There are far too many “debt danger deniers” in Washington to expect spending limitations to emerge.

The US can still borrow from foreign sources since we are the issuer of the world’s reserve currency. Reality declares that this will come to an end – and soon if we yield to the temptation of placing exorbitant tariffs on our trading partners and starting a trade war.

For us to continue our spendthrift ways, it will require the Federal Reserve to monetize the debt at an accelerating rate without loss of confidence in the dollar. In the campaign there’s no talk of getting rid of our central bank, as Andrew Jackson did in 1833. Today the authoritarian big spenders on both sides are totally dependent on the Fed in the short run to constantly create massive amounts of new money out of thin air. Yet it’s the middle class that suffers the most from this policy. No one is talking about how the Fed created the crisis, nor do they realize what lies ahead for us as a consequence.

The ignorance regarding monetary policy makes it impossible to understand the problems of recessions, depressions, inflation, huge debt, massive mal-investments, unfair distribution of wealth between rich and poor, and how the cost of excessive government gets dumped on the middle class and increases the poverty rate. A lack of desire to help is not the problem. The problem is the politicians’ ignorance of the business cycle and their obsession with resisting corrections of the mistakes that are a natural consequence of interest rate manipulation by the Fed. One can only imagine the mistakes that will evolve from negative interest rates! The only saving grace will be that market forces will eventually overwhelm and the needed correction will come, but unfortunately with a lot more pain and suffering.

So far the only solutions that are offered are more of the same policies that have created this current crisis – a crisis that has generated anger and class warfare, more spending, more debt, more taxes, more regulations, and more warfare. This will lead to a lot less freedom for everyone. Without understanding the problem, anger will continue to build and will result in greater violent confrontations.

The systematic attack on our privacy, private property rights, and other civil liberties is not an issue getting any significant attention in the 2016 election. The politicians don’t talk about it because they have chosen to ignore it. It’s just not a serious problem from their perspective. Too many people have come to accept the principle that safety and security are far more important than worrying about personal liberty. The 9/11 attacks and a hyped-up fear of ISIS have pushed this false idea that sacrificing liberty for security is necessary. The American people for a long time have been accepting this principle and have come to believe that it’s a fair trade-off. 

The sad consequence of our foreign policy of interventionism, which has been supported by both Democrat and Republican politicians, has drawn no significant debate in 2016. The only argument has been over management style. No one makes the case for rejecting the notion that we have a moral duty to be the policeman of the world. Our military presence in over 130 countries is of little concern to the candidates. The burden of a $1 trillion per year military budget has elicited no warning that this spending is excessive and a tremendous economic burden to our economy.

The contest unfortunately is to see who can sound the toughest and most jingoistic regarding dealing with the al-Qaeda and ISIS. This has led to the xenophobic targeting of Islam and refusing to even consider that our bipartisan foreign policy of preemptive war, occupation, and sanctions is a contributing factor in stirring the hatred that indeed makes us all less safe.

Logic should tell us that continuing the same policy that has stirred up hate and retaliation, that serves as a recruiting tool for the radical jihadists, will only put us in greater danger. The financial burden, the attacks by our own government on our civil liberties, and the greater threat to our national security are all related to our radical interventionist foreign policy, which has been endorsed by both Republican and Democrats for decades.

There’s been no concern expressed about the collapse of the current Keynesian economic system. This huge financial and social event will significantly increase the fear and anger the American people are already experiencing. Therefore there is no reason to expect any positive changes as a consequence of this year’s election, regardless of who wins the presidency. Unrealistic promises and blaming various scapegoats for our problems will only result in more anger and violence. A better understanding of the problems we face is vital if we expect to preserve both liberty and prosperity.

Failing to recognize the significance of a major era ending is compounded by the lack of concern and ignorance regarding the “deep state” or the shadow government. This is the unidentifiable special interest groups and individuals who are actually in control of our government – regardless of whether the Republicans or Democrats are nominally in charge. If the American people understood this, they would realize that elections mean little more than pacifying the electorate with the false belief that the people actually have a say in the affairs of state.

Great concerns about the threat of al-Qaeda and ISIS help direct attention away from the real crimes committed within our borders, like the ill-conceived war on drugs and a justice system out of control. Asset forfeiture is ignored as a serious problem and is strongly supported by law enforcement agencies.

The original Constitution listed essentially six federal crimes. Today there are 4500 federal crimes on the books and over 400,000 regulations – most written illegally by the executive branch – and we hear nothing about this horrendous legal problem. Our courts do not provide equal justice, which justly infuriates the victims of this system of injustice. Militarization of the police and police brutality are out-of-control, yet the recipients of stolen goods known as “government benefits” have no compunction in demanding the use of violence to get what they have been taught they have a right to have. The result is that inner city violence is not going to be reduced with this election. 

As the economic crisis worsens and the cities explode, with different factions competing for the handouts, there will be calls for military force and initiating martial law. This is a non-issue in the current political debate and without understanding the significance of this problem will not be recognized. It will only get worse. Most of the candidates have indicated that they would use whatever military force is needed to quell domestic unrest regardless of the Constitution. 

If there’s a discussion of danger within the United States, the demagogues will say the threat comes from ISIS and is the reason they demand an increase in military spending. They remain in denial that our presence in the Middle East is precisely why there’s a threat here. Unfortunately the worse the conditions get here at home, the greater will be the demand for a more authoritarian leader to take charge and solve the problems they don’t understand. The campaign of 2016 will not bring about any significant improvement in the problems that precipitated the anger and generated our political and financial crisis that they have ignored.

THE ANSWER

A philosophic revolution is required. The American electorate is very angry and is demanding changes. Though the anger is justified, the exact cause and correction for it is poorly understood. Economic conditions are a driving force but are not recognized as such. There is no realization that the cataclysmic events that will be associated with an end to the current era require revolutionary changes in our economic and political thinking.

Since the problems are poorly understood it was guaranteed that a blame game by all concerned – the politicians, the voters, the victims, and the political parties – would result. Scapegoats are found and blamed – guilty or not. All this prompts a variety of answers with wild promises made by socialists and crony capitalists. Demagogues with magic solutions are everywhere to be found.

Ignorance, along with a struggle for power by those who claim they have the answers, ignores the actual causes of the social divide that are not readily apparent in the current election.  Some are pleased with this lack of discussion since it could identify those responsible for the mess and the failed ideas that need to be rejected.

A serious discussion about the role of government is needed in order to redirect the failed course upon which we find ourselves. Different types of governments reflect the degree to which the people choose to live in a free society. The form of government that was proposed by the Founders is no longer recognizable. This fact explains the conditions that have generated the anger and fear that is prevalent today. Nobody likes to hear it, but the answers are not available to us unless we change the people’s attitudes about the role the government should play in our lives, the economy, and in the world.

The only real answer to a failed interventionist/authoritarian system is to replace it with a system of nonintervention and voluntarism. It has to be based on the moral principle of liberty and non-aggression permitting all things peaceful. The false moral principle of government-directed “humanitarianism” must be intellectually refuted as a false God.

Utilitarianism and pragmatism are code words for avoiding all viewpoints held by those who love liberty and only want to be left alone. Unregulated non-violent voluntarism is rejected as not being beneficial to the “common good.” It is argued that government-mandated equality is superior to any desire for individualism and self-reliance.

Utilitarianism, pragmatism, and economic planning go together, which always leads to dependency and corruption of economic and political power. Sadly the result is that only the powerful and wealthy special interests thrive. A society that condones even a small amount of authoritarianism is compromised by rejecting the basic tenants of liberty. The system then grows like a cancer until that society is destroyed, which we are now in the process of doing to ourselves.

When virtue becomes a government mandate, it makes it impossible for individuals to achieve it, which further destroys the social and economic order. Instead the result is: taxes to force people to be charitable; torture to protect the state; drug wars to improve behavior; elimination of privacy to protect government secrecy; thousands of laws and regulations to monitor our every action, all of which are performed in a non-virtuous manner. Only when efforts to improve oneself and others are done in a voluntary and nonviolent manner does it represent virtue. Government efforts, whether it’s to improve one’s personal behavior, legislate economic fairness, or direct the affairs of other countries only serves to inhibit virtue. This leads to society’s collapse, along with war and poverty. For liberty to work society must have a virtuous people who reject the use of all aggressive force, especially when it’s used by government in the name of humanitarianism.

Even the 400,000 federal regulations and the 4500 federal laws cannot save a system of mandates that violates the moral standards that are vital to a moral society. Free markets are superior to government economic planning. Government rules on personal behavior cannot instill moral standards. Bombs, sanctions, and occupations of other countries cannot make the world safe or more prosperous.

All these efforts result in the loss of liberty. Under these conditions a republic cannot exist. The system will always fail and the people will suffer. The solution will then have to be in the form of a revolution, hopefully peaceful, and with the insistence on recognizing the natural right to life and liberty.

The worse the conditions get the louder the demagogues’ promises become. Competition between demagogues produces sharp rebuttals, and supporters of different candidates become overtly competitive and violence is threatened. With no understanding of the cause of the problems, arguments over solutions will vary. Since real evaluations and authentic solutions are absent it only incites more anger.

Since the 2016 election distracts from the real issues, the correct solutions will not be believable. The system is broken and not fixable. Attempts to do so only lead to frustration that further divides the people. Under these conditions the guilty don’t want to hear the truth and deny it if they do.

Whistleblowers like Edward Snowden and John Kariakou are despised for telling the truth and are more likely to be punished than those who were criminally negligent.

H.L. Mencken had it right: “The most dangerous man to any government is the man who is able to think things out for himself,” and come to recognize that, “the government he lives under is dishonest, insane, and intolerable.” But will the campaign of 2016 answer these concerns?  Remember that while living in an empire of lies, pursuing truth is considered treasonous.

Simple anger is not equivalent to understanding the predictable evil of authoritarian government. It’s the fear of losing the immoral benefits along with corrupt government that stirs their anger. The failure of the current system reveals the lies, the senseless wars, and the disdain for the people’s rights to life liberty, and property that generates the anger now being expressed by the masses.

If the people continue to deny that government by its very nature throughout the ages has been notoriously inept, immoral, and corrupt, a solution is not possible. The only result will be a new government based on the same immoral principles. Nothing positive will occur. Basic moral principles of liberty, self-reliance, and strict limits on government power, are required if progress for peace and prosperity is to be achieved.

This type of government cannot exist without a philosophical revolution regarding the proper role of government in a moral society. The election of 2016 will not guide us in that direction. It doesn’t even deal with the crucial issues of our time, and certainly not with the moral principles underpinning a free society. The conflict between candidates and parties is superficial and personal – without substance. The 2016 election will change nothing. It’s a great distraction from the policies that have delivered the current crisis to us. This is done on purpose since there is general agreement in both parties on the major issues and it’s not to their advantage for the people to understand this.

The major issues that both parties and their candidates agree upon include: the central bank’s monetary policy; welfarism; federal government involvement in education and medicine; the drug war; privacy abuse; preemptive war; foreign interventionism; and the US as the policeman of the world with increased spending for the military.

The 2016 election won’t make any difference in any of these areas. The American people continue to be deceived into believing elections are serious affairs that affect our future. The Deep State will remain in charge regardless of the outcome and few will even be aware of the invisible fist that rules over us.

The whole process is a charade and no policy of substance is debated. The election will turn out like all the rest. The momentum toward bigger and more intrusive government will continue. The process distracts from what is really going on; sometimes out of ignorance and sometimes just out of wishful thinking; sometimes on purpose. The process has everyone looking in all the wrong places for the answers. The answers can only be found in an intellectual revolution that refutes the authoritarians who sanction government-directed aggression in all areas of society. What we need is to define and endorse the proper role of government in a free society. There is no serious talk in the campaign of the crucial issues that need corrected if we expect to escape from the mess we’re in.

Following are a few of those concerns that should be addressed. 

There is:

  • No talk of liberty and its moral foundation;
  • No talk of how conservatives and liberal authoritarians are equally harmful;
  • No challenge to the entitlement mentality;
  • No challenge to the bipartisan support for empire;
  • No challenge to the unsustainable debt accumulation;
  • No challenge to government secrecy and the government’s violation of the people’s privacy;
  • No concern for the violation of private property rights;
  • No understanding of how our foreign policy endangers our security;
  • No understanding of how free markets regulate economic activity for the purpose of serving the consumers;
  • No concern for government aggression in controlling habits, people’s bodies, thoughts, economic choices, prices, or wages;
  • No condemnation of the current doctrine of preemptive war;
  • No concern for our participation in worldwide organizations that cede political power to the elites at the expense of national sovereignty;
  • No mention of why sanctions are a prelude to war;
  • No demands that the insane war on drugs be ended;
  • No understanding that personality clashes and name-calling is a substitute for dealing with the issues;
  • No awareness of the need for a philosophic answer to our crisis.

When it’s discovered that excessive government interference in voluntary and peaceful activities is the culprit, it will become clear that the solution can only come by successfully presenting the case for liberty. It will follow that reining in the government will be a necessity – not an option.

The awakening will arrive when we face a total societal breakdown – once it’s realized that the accumulation of massive debt is unsustainable and the dollar suffers the consequences, which will negatively affect all Americans and many throughout the world. But it also provides an opportunity to open the door to a free society. Without the cost of war and welfare in a new system that accepts the moral principle of free markets, sound money, private property, and voluntary contracts, prosperity and peace will break out.

The limited role for government in a republic is to provide equal justice for all, including the protection of life, liberty, and property. It becomes destructive when governments overreach and instead become the greatest threat to liberty and justice – something from which we are suffering today.

Sadly these issues will not cross the minds of the leaders of either major political party at this time in our history. But they will when an upcoming generation of young people, enthusiastic about the cause of liberty and with a growing awareness of the problems, concludes that:

?LIBERTY IS THE ANSWER!

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“Sleepy” ECB Preview: What Every Bank Thinks Draghi Will Do Tomorrow

Tomorrow’s ECB meeting “looks set to be sleepy” according to Saxo Bank’s Mads Koefed as Draghi is largely cornered into confirmation he will do “whatever it takes” and some additional details on the corporate bond purchase plan. Most of the sell-side’s research suggests the same, as Bloomberg notes, ECB will probably leave the door open for further cuts if needed; but any downside risk for the euro is seen limited, as Draghi stays on hold by reinforcing its dovish stance after the mix of easing measures announced in March with some defense of the efficiency of his policies after recent criticism by Germany.

The bund market appears to once again pricing in some further deposite rate cuts (deeper into negative territory), but has been disappointed twice now…

 

And as Saxo’s Mads Koefed notes, unlike the explosion of announcements that was the March ECB meeting, today’s meeting of the governing council promises to be dull.

Inflation has ticked up to 0% year-over-year in March from minus 0.2% when looking at the headline series while core inflation climbed back to 1% last month from a one-month visit to 0.8% in February.

Inflation
 
Economic activity has remained subdued since the last ECB meeting though the flash manufacturing PMI has climbed to 51.6 from 51.2. The services PMI index declined to 53.1 from 53.3 and overall data – for example, the EuroCOIN series – suggest GDP growth of around 0.3% q/q for Q1.
 
This comes on the back of a similar print of 0.3% in both Q3 and Q4 of last year.
 
Lending to households accelerated to 2.2% y/y in February from 1.9% in January with consumer credit climbing at a 5.2% annual rate, the highest level seen since early 2008. Lending to corporations, meanwhile, is evolving more tepidly with growth of just 0.6%.
 
The M3 measure of the money supply climbed 5% y/y through February, unchanged compared to January.
 
Lending

 
Turning to the markets, EURUSD has strengthened by 1.5% since the March 10 meeting to around 1.1340 following a 1.6% move higher on the day. More generally, however, the euro has traded sideways against a basket of currencies (EURJPY, for example, is down 1.9%), but this excludes the 1.2% move during March 10.
 
Stocks (STOXX50) are 4.8% higher while EURIBOR has fallen.
 
Taking it all into account, the meeting of the governing council looks to be a sleepy affair with not much new coming to the surface. We may get some additional details on the corporate sector purchase programme (part of the €80bn monthly purchases), but otherwise the stage is set for Draghi to reiterate that the ECB stands ready to combat low inflation while expressing confidence in the measures announced last month. 
 
The ECB meeting always has the potential to be a market-mover, but this particular one looks destined to be a non-event.
 
Will Draghi surprise? Again? Most of the sell-side thinks not…
 

Goldman Sachs (Dirk Schumacher)

  • ECB to keep rates unchanged, Draghi will express confidence that package unveiled in March will help steer CPI toward target
  • Draghi also likely to express ECB’s willingness to respond if downside risks to growth and CPI materialize
  • Draghi will also clarify that further rate cuts remain part of monetary toolbox after his comments in March were interpreted by many as closing the door for further rate cuts
  • Some further details on new CSPP may be published
  • Expects CSPP to be conducted in similar fashion to covered bond and asset-backed securities program, and purchases to take place in primary and secondary market; ECB will decide in discretionary way how much corporate debt to buy
  • Expects an extension of APP to Sept. 2017 from March 2017 currently

JPMorgan (Greg Fuzesi)

  • No action expected this week; see next round of easing to focus on extending QE program beyond March 2017
  • Chances of further rate cuts may be higher than initially thought
  • ECB concerned about pressure of negative rates on banks and about fueling currency war; that said, incremental deposit-rate cuts still seem possible, as does a tiered reserve charging system; Draghi is likely to clarify the message around this at this week’s press conference

BofAML (Gilles Moec, Athanasios Vamvakidis)

  • Expect Draghi to defend ECB this week; he could also remind markets that QE is open-ended and won’t stop as long as ECB is missing CPI target
  • Draghi also likely to clarify that another depo-rate cut remains available
  • Expect Draghi to sound dovish but do not see a sustained market impact
  • More sustained EUR weakness requires a critical mass of strong U.S. data and stable global markets allowing Fed to sound more confident
  • Continue to forecast EUR/USD at parity by end-2016, expecting two Fed hikes this year

BNP Paribas (Ken Wattret)

  • ECB should reiterate this week that it stands ready to take action to deliver on price-stability mandate
  • While expect the door to be left more open to further cut in policy rates than during Q&A session on March, there is limited room for maneuver
  • CSPP details possible but may take longer
  • Expect ECB to follow the template used for current asset-backed security and covered-bond purchase programs, suggesting no specific numeric target for monthly volume of purchases, buying in both primary and secondary markets, and opting for risk sharing

Citigroup (Guillaume Menuet)

  • Don’t expect any new measure this week
  • Look for more policy measures in coming months including a refi rate cut by 5bp each in Sept., Dec. and March 2017
  • Also expect a QE extension by another 6 months in Sept., adjustment to issue/issuer limit for PSPP to ~40% and 10bp depo-rate cut in March next year

HSBC (Karen Ward)

  • Draghi to convey the message that ECB can still do more
  • During Q&A, expect questions related to progress with Greece and IMF and on what might happen to Portugal’s access to QE if DBRS downgrades the country on April 29
  • Expects Draghi’s answers to be elusive

UBS (Reinhard Cluse)

  • Expects a debate on limits of monetary policy, ‘helicopter money’, corporate bond purchases and credit conditions at this week meeting
  • Base-case scenario remains that ECB is “done” now and that it won’t add more stimulus over coming months

Morgan Stanley (Elga Bartsch)

  • It might be too early yet to get full formal details on planned buying of corporate debt under new CSPP
  • Don’t expect any additional policy measures before 3Q
  • Expect another depo-rate cut of 10bp in 2H and see a near even chance of ECB upping and extending QE

Natixis (Johannes Gareis)

  • Draghi likely to address recent EUR strength by downplaying comments made at March meeting that policy rates may already have reached the lower bound
  • More details about future corporate-bond purchases and TLTROs in focus this week
  • ECB will take a wait-and-see approach over coming months; from a long-term perspective, CPI might be too weak for ECB to remain on hold; the most likely easing step is an extension of QE program beyond March 2017

UniCredit (Marco Valli)

  • ECB’s focus remains on implementing several measures already announced; expect a strong, open-hearted defense of ECB policies
  • This week’s meeting is unlikely to generate a meaningful impact on euro
  • ECB is very likely to be unhappy with stronger EUR; however, there is not much Draghi can do about it, at least for now

Commerzbank (Bernhard Gruenaeugl)

  • Probably too early to add substantial detail on CSPP with still about two months to go before the actual start of the program
  • The question of whether insurance corporations’ seniors could be bought or not should remain a matter of lively debate for now

Credit Suisse (Peter Foley)

  • ECB is likely to leave the door open to additional policy measures in future if economic situation deteriorates

Nordea (Aureljia Augulyte)

  • Keep long EUR/USD
  • Market is pricing close to a full 10bps cut in year ahead, so EUR needs a really big surprise to get knocked

ABN Amro (Nick Kounis)

  • Focus in April meeting will be on details of corporate- bond scheme; ECB will probably reveal a relatively large eligible universe of ~EU750b
  • It would include traditional non-financial corporates as well as “financial corporations other than credit institutions”
  • In this category, there are many funding entities of normal corporates, real-estate corporates and insurers
  • Expects ECB to also include floating-rate notes, bonds that mature within 1 year and those with an amount outstanding less than EU500m

ING (Petr Krpata)

  • Negative impact on EUR should be very limited as any strong pre-commitment to further easing should be absent
  • It’s increasingly difficult for ECB to materially weaken EUR
  • Despite no real action, there would probably be some dovish comments, whereby ECB stresses downside risks to economic outlook

BBVA (Roberto Cobo Garcia)

  • Draghi will likely stress that ECB keeps the door open to adopt further easing measures if needed; he will probably remark that further rate cuts aren’t out of the table
  • Expect ECB meeting outcome to be negative for EUR; also expect more details on CSPP

Credit Agricole (Manuel Oliveri, Valentin Marinov)

  • ECB may not mention EUR but will keep the door wide open to more accommodation
  • While EUR may recover in immediate aftermath, the longer-term risks for currency should be on downside

Finally we note that EURUSD did drop quite notably today…though still remains considerably stronger post-March meeting…

“The euro has looked a bit vulnerable,” said Shaun Osborne, chief foreign-exchange strategist at Bank of Nova Scotia in Toronto. “There has been some speculative selling ahead of the ECB on the view that Draghi will not do anything tomorrow policy-wise but might sound dovish, and could open the door to lower rates again.”

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The Shocking Reason For FATCA… And What Comes Next

Submitted by Nick Giambruno via InterntionalMan.com,

If you’ve never heard of the Foreign Account Tax Compliance Act (FATCA), you’re not alone.

Few people have, and even fewer fully grasp the terrible things it foreshadows.

FATCA is a U.S. law that forces every financial institution in the world to give the IRS information about its American clients. Complying with it is a huge financial and administrative burden, measured in hundreds of billions of dollars. It’s a paper shuffler’s dream come true.

FATCA is the reason the vast majority of banks, brokerages, and other financial institutions outside of the U.S. shun American clients.

I was just in Singapore, which has one of the soundest banking systems in the world. I can personally attest that banks there treat potential American clients as radioactive liabilities to be avoided.

This is how FATCA makes it much more difficult to move money outside of the U.S. Combined with other costly, extraterritorial U.S. regulations, the law amounts to de facto capital controls.

It’s no surprise so few people understand FATCA. Governments and institutions often give their most dangerous laws and schemes dull and opaque names to cloud their true purposes.

The Federal Reserve is an excellent example of this. After two central banking experiments failed to take root in the 1800s, anything associated with a central bank became deeply unpopular with the public. So, central bank advocates tried a fresh branding strategy.

Rather than call their new central bank the Third Bank of the United States (the previous two were named the First and Second Bank of the United States, respectively), they gave it a vague and boring name to hide it in plain sight from the average person. They named it the Federal Reserve.

Unfortunately, these smoke and mirrors worked pretty well. Nearly 100 years later, most Americans don’t have the slightest clue what the Federal Reserve is, what it does, or how it affects them.

I think the same dynamic is at work with FATCA.

Ostensibly, FATCA is about cracking down on offshore tax evasion. But I think the U.S. government has another, more sinister motive.

Let’s peel back the layers of this onion…

FATCA should bring in around $900 million per year, on average, and that’s an optimistic estimate. However, $900 million would only be a drop in the bucket (around 0.2%) next to the federal government’s $438 billion deficit.

Even if the U.S. moderately reduces the federal deficit, FATCA revenue would still be a small pittance in comparison.

This begs the question: Why would the U.S. government go to the enormous cost and trouble of implementing FATCA for such a relatively meager amount of money?

FATCA on Steroids

FATCA’s real purpose is not to collect money. It’s to pave the way for a global FATCA, informally known as GATCA.

You see, complying with FATCA often breaks privacy laws in other countries. To get around this, the U.S. government has negotiated bilateral agreements with pretty much every country in the world. But it’s not practical for each and every country to create its own version of FATCA and accompanying web of bilateral agreements. That would be slow and tedious.

So, the central economic planners at the G20 and OECD have devised a new “global standard” for the automatic exchange of financial information between governments. It’s called GATCA, and it’s modeled on FATCA.

In other words, bureaucrats from these supranational institutions are foisting a “FATCA on steroids” on the world.

This would have been impossible if the U.S. hadn’t cleared the path with FATCA. The G20 and OECD needed the U.S.—the sole financial superpower (for now at least)—to cram its privacy-killing measures down the throats of the rest of the world. No other country could have done it.

FATCA is only possible because the U.S. carries a big stick: the ability to refuse access to its financial system and the world’s premier reserve currency. Don’t sign up for FATCA, and your country can forget about the vast majority of international trade.

It didn’t take long for most of the world to fall in line.

When Russia and China signed on to FATCA, it became a fait accompli. There are no other meaningful countries left to resist it.

This set the stage for GATCA.

Unfortunately, GATCA will likely be an irreversible reality in the not-so-distant future. It’s also highly probably that the OECD, the G20, and other organizations will sanction or otherwise blackmail countries that don’t comply. That pressure would likely be too enormous for the vast majority of countries to bear.

In the end, this means a permanent record of every penny you have ever earned, saved, borrowed, or spent anywhere in the world will be instantly available for analysis and scrutiny by countless government agencies, regardless of any actual or suspected wrongdoing.

But wait, there’s more!

If FATCA wasn’t the end game, don’t expect GATCA to be either.

Let’s peel back the next layer of the onion.

What Comes Next

Did you really think all these governments would go through all the trouble of creating the architecture to gather all this financial data… and then just sit on it?

Of course not.

They’re going to leverage the data as much as possible. This will have terrifying consequences for the individual.

It’s no secret that advocates of big government have long fantasized about creating a global tax. Whether it’s the global carbon tax, a worldwide tax on financial transactions, or a UN tax on air and sea travel, all prior attempts haven’t really worked. The infrastructure wasn’t in place.

However, that could all change with GATCA, which could ultimately make the disturbing dream of a global tax a reality.

Bankrupt governments, like France and the UK, are also on board with GATCA. It would allow them to fleece and control their citizens more efficiently.

Strangely, you never hear financially sound countries, like Switzerland, Singapore, or Hong Kong, advocating for FATCA, GATCA, or a global tax. It’s only the failed welfare states drowning in debt. And that’s no coincidence.

Old Wine in New Bottles

The government is selling FATCA the same way it originally sold the income tax to Americans: as a measure targeted only at the “rich.”

Of course, once you give politicians an inch, they take a mile.

When the federal income tax was introduced in 1913, individuals making up to $20,000 (around $475,000 today) were only taxed at 1%. The top bracket kicked in at $500,000 (around $12 million today) with a tax rate of only 7%.

Of course, once the infrastructure was in place for the federal income tax, politicians naturally couldn’t resist ramping it up. Eventually, it snowballed into the monster we have today, which thoughtless Americans passively accept as “normal.”

Expect a similar dynamic and gradualism with FATCA, GATCA, and a global tax.

What You Can Do

The government used obscure and boring wording to conceal the true purpose of the Federal Reserve from the average American. It’s done the same thing with FATCA.

In reality, FATCA is all about setting up the architecture for a global tax.

Politicians around the world see citizens as milk cows… They merely exist to be squeezed to the last drop.

That’s why they’re so eager to kill financial privacy with FATCA and GATCA. They’re building a giant tax farm and erecting electric fences to keep the cows—and their milk—from escaping.

Welcome to the new feudalism.

Unfortunately, there’s little any individual can do to change the trajectory of this trend. You can only try to save yourself from the consequences of this stupidity.

Politicians around the world are working hard to build this emerging prison planet. But it’s still possible to escape.

We recently released a video to show you how. Click here to watch it now.

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The Smoking Gun: “Document 17” Links Saudi Embassy In Washington To Sept 11

With the topic of Saudi Arabia’s involvement in the Sept 11 attack on everyone’s lips, if certainly not those of president Obama who is currently in Riyadh where he is meeting with members of Saudi royalty in what may be his last trip to the Saudi nation as US president, many have been clamoring for the information in the suddenly notorious “28-pages” (following the recent 60 Minutes episode) to be released to the public so the US population can finally relegate all those “conspiracy theories” surrounding the real perpetrator behind the Sept 11 terrorist attack to the “conspiracy fact” pile.

It won’t have to wait that long.

As The Times writes today, new evidence has come to light of a definitive link between Saudi Arabian officials and the 9/11 terrorist attacks “further raising tensions as President Obama travels to the kingdom.”

According to the report, Ghassan Al-Sharbi, a Saudi who became an al-Qa’ida bomb maker, is believed to have taken flying lessons with some of the 9/11 hijackers in Arizona but did not take part in the attacks on New York and the Pentagon that killed 3,000 people in 2001.

He was captured in Pakistan in 2002 and has since been held at Guantanamo Bay. According to a US memo, known as document 17, written in 2003 and quietly declassified last year, the FBI learnt that he had buried a cache of papers shortly before he was captured.

Think of “Document 17” as a mini version of the “28 pages” whose content has yet to be revealed. The document was written by two US investigators examining the possible roles of foreign governments in the attacks.

One detail leapt out at the FBI agents from the papers that Sharbi had tried to hide: his US flight certificate was in an envelope from the Saudi embassy in Washington.

A car pulls into the Saudi Arabian embassy in Washington, AP Photo

 

And there is your smoking gun, which has been fully available to the US government for the pat 13 years. It should have also been available to the American public.

Understandably, Brian McGlinchey, the activist who uncovered document 17, asked a simple question: “The envelope points to the fundamental question hanging over us today: to what extent was the 9/11 plot facilitated by individuals at the highest levels of the Saudi government?”

Here is the problem. As the Times puts it, “president Obama is expected to meet on Wednesday with King Salman, whose kingdom is under pressure from low oil prices, an emboldened Iran and Washington’s tougher stance. The Saudi government threatened last week to dump $750 billion in US Treasury securities and other American assets if congress passes a bill that would clear a path for the families of 9/11 victims to file lawsuits against the kingdom.”

In other words, Obama will not ask any questions of King Salman, let alone the “fundamental” one.

So perhaps it is time to get a president who will ask the question: Hillary Clinton and Bernie Sanders, the Democratic presidential candidates, backed the bill, which Mr Obama has signaled he will veto. Donald Trump and Ted Cruz, the leading Republicans in the race, have warned Saudi Arabia that its relationship with the US must change. “Friends do not fund jihadists that are seeking to murder us,” Mr Cruz said.

Sp even as all of Obama’s potential replacements have at least promised to investigate further, we wonder: just why is Obama so terrified of the US public getting access to the truth?

If he is so worried about the Saudi liquidation threat, he shouldn’t be: after all the Fed would be deliriously happy at the opportunity to monetize another $750 billion in assets and inject three-quarters of a trillion in fresh “reserves” aka liquidity into the system.

Meanwhile, Obama has other problems: the US president also faces calls to release a redacted 28-page portion of a joint congressional report on the 9/11 attacks, produced in 2002 and thought to link senior Saudi figures to the plot. He suggested on Monday that a decision was imminent.

We are confident his “decision” in this matter will be to likewise prevent the truth from emerging, because as Congressman Thomas Massie, a Republican from Kentucky, said: “I had to stop every couple of pages … to rearrange my understanding of history.” No further comment necessary.

Meanwhile the lies go on.

Bob Graham, a former chairman of the US senate intelligence committee, has alleged that Saudi Arabia was the principal financier of 9/11. “The effect of withholding [the pages] has been to embolden Saudi Arabia to be a continuing source of financial and human terror resources,” he said.

Document 17, written by Dana Lesemann and Michael Jacobson, will deepen suspicions. Ms Lesemann is said to have been sacked from the 9/11 commission after she circumvented her boss to access the 28 pages.

Mr Jacobson was the principal author of the 28 pages, and document 17 hints at his suspicions. “How aggressively has the US government investigated possible ties between the Saudi government and/or royal family and the September 11th attacks?” it asks.

The answer: not at all. It’s about time the American people asked why not.

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The Cost Of Asylum: More Than 50% Of Sweden’s Unemployed Are Foreigners

The cost of Sweden’s generous asylum policy can now be seen in its unemployment data (not just the rising crime rate). While a reinvigorated economy is driving down the overall jobless rate, Bloomberg notes that recent arrivals are being left behind as the majority of Sweden’s unemployed are now foreigners, up from about 40% two years ago. 

Number of people born outside Sweden registered as unemployed was 188,000 in March vs total number of 372,000…

 

This share will likely continue to grow as only about 25 percent of refugees that have arrived over the past eight years have a full-time job.It appears hope in Sweden is fading fast and the “No Apartments, No Jobs, No Shopping Without A Gun” environment will only continue to worsen. As a reminder of what happens when young muslims have no jobs and no hope

 

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3 Reasons Interest Rates Will Stay Low Or Go Negative

Submitted by Tony Sagami via MauldinEconomics.com,

How long will interest rates stay low?

I expect the Fed to keep rates very low for a long, long time. After it raised rates in December, the Fed made it clear that future hikes will be gradual and data dependent. Apparently, the central bank hasn’t changed its position:

“In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its objectives of maximum employment and 2 percent inflation.“

The US’ economic reality hasn’t really changed since the first hike. We aren’t even close to the Fed’s inflation target-not to mention Yellen’s other ambitions.

Overall, here are the 3 main reasons why I think the Fed won’t lift rates anytime soon.

Reason #1: No Inflation

Before the Federal Reserve lifts interest rates further, it needs to see clear signs that inflation will hit its 2% target. However, cheap energy and falling commodity prices have kept inflation extremely low, and that isn’t going to change anytime soon.

The Fed will wait for “further improvement in labor market conditions and a return to 2 percent inflation” to go further with interest rates.

Reason #2: No Economic Recovery

The reason a central bank raises interest rates is to slow an overheating economy. Yet we have only scant signs of economic growth, much less overheating.

Example: The Fed’s March report on industrial production showed a 0.5% drop in February after increasing 0.8% in January.

Reason #3: No Wage Growth

The US is a consumer-oriented economy, but American wages have been stagnant for years. In fact, adjusted for inflation, the average yearly wage for American workers has not increased since 1973.

A big reason for the wage stagnation is the dramatic increase in employer-sponsored healthcare costs-while total compensation is rising, the take-home paychecks are not.  

Another round of QE is more likely

All of this will likely deter the Fed from raising rates any further.

I believe we’re much more likely to see another round of Quantitative Easing before we see a rate hike. John Williams of the San Francisco Fed hinted at this when he said the Fed could “clearly” lower rates again if needed, and use other tools “if necessary.”

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“This Is Going To Be A National Crisis” – One Of The Largest U.S. Pension Funds Set To Cut Retiree Benefits

A dark storm is brewing in the world of private pensions, and all hell could break loose when it finally hits.

As the Washington Post reports, the Central States Pension Fund, which handles retirement benefits for current and former Teamster union truck drivers across various states including Texas, Michigan, Wisconsin, Missouri, New York, and Minnesota, and is one of the largest pension funds in the nation, has filed an application to cut participant benefits, which would be effective July 1 2016, as it “projects” it will become officially insolvent by 2025. In 2015, the fund returned -0.81%, underperforming the 0.37% return of its benchmark.

Over a quarter of a million people depend on their pension being handled by the CSPF; for most it is their only source of fixed income.

Pension funds applying to lower promised benefits is a new development, albeit not unexpected (we warned of this mounting issue numerous times in the past). For many years there existed federal protections which shielded pensions from being cut, but that all changed in December 2014, when folded neatly into a $1.1 trillion government spending bill, was a proposal to allow multi employer pension plans to cut pension benefits so long as they are projected to run out of money in the next 10 to 20 years. Between rising benefit payouts as participants become eligible, the global financial crisis, and the current interest rate environment, it was certainly just a matter of time before these steps were taken to allow pension plans to cut benefits to stave off insolvency.

The Central States Pension Fund is currently paying out $3.46 in pension benefits for every $1 it receives from employers, which has resulted in the fund paying out $2 billion more in benefits than it receives in employer contributions each year.

As a result, Thomas Nyhan, executive director of the Central States Pension Fund said that the fund could become insolvent by 2025 if nothing is done. The fund currently pays out $2.8 billion a year in benefits according to Nyhan, and if the plan becomes insolvent it would overwhelm the Pension Benefit Guaranty Corporation (designed by the government to absorb insolvent plans and continue paying benefits), who at the end of fiscal 2015 only had $1.9 billion in total assets itself. Incidentally as we also pointed out last month, the PBGC projects that they will also be insolvent by 2025 – it appears there is something very foreboding about that particular year.

As the Washington Post writes:

Ava Miller, 64, and her husband, Ed Northrup, 68, could see their combined monthly pension income cut to about $3,000 from the nearly $7,000 they receive now, according to a letter they received from Central States in October.

 

If the cuts go through, Miller, who worked as a dispatcher in Flint, Mich., said they will need to dip into their savings to help cover their $1,300 mortgage payment, heating bills and trips to visit her 84-year old mother. Northrup, a retired car hauler, has started applying for truck driving jobs that could supplement their potentially smaller pension payments.

 

What makes the cuts more painful, Miller said, is that she took pay cuts so that the company could continue making contributions to the pension.

 

I did everything I was supposed to,” Miller said, adding that she and her husband made extra payments on their car loan to cut down on their monthly bills after they received letters in October informing them of the potential cuts.

All hope is not lost, however.

Democratic candidate Bernie Sanders has proposed a bill that would repeal the measure allowing cuts, and instead calls for the government to provide assistance to troubled pension funds.

In other words, another bailout.

Which brings us to the current juncture, where we remind everyone that the governments own safety net, the PBGC has itself become insolvent, and according to CNN, projects that more than 10% of the roughly 1,400 multiemployer plans, covering more than 1 million workers fits the current criteria to be able to apply for benefit cuts for participants.

“This is going to be a national crisis for hundreds of thousands, and eventually millions, of retirees and their families. It’s going to open the floodgates for other cuts.” said Karen Friedman, executive president of the Pension Rights Center.

 

We can’t help but wonder that as more pension funds become insolvent, and more and more participants are forced to take reductions in benefits, whether helicopter money won’t soon become a reality for the United States, even before it becomes one in Japan. Especially if it is spun by some opportunistic politicans as the “only hope” for America’s workers to preserve some of their retirement savings.

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Hundreds Evacuated After Massive Explosion Rocks Pemex Oil Facility In Mexico

Hundreds have been evacuated following a blast at a Pemex oil facility in southern Mexico. The blast occurred in in the port city of Coatzacoalcos.

According to Bloomberg, the explosion occurred at Clorados 3 petrochemicals unit of Pajaritos complex in the port of Coatzacoalcos in Veracruz state, says co. spokesperson Alfonso Villalobos on phone.  First responders are attending the emergency, according to tweet from Veracruz civil protection official twitter account.

 

As Breaking News adds, the explosion happened just before 4 p.m. CT on Wednesday at the Pajaritos complex near the Coatzacoalcos River, according to the Civil Protection agency in Veracruz. It said emergency services were at the scene.

Photos from the scene showed huge plumes of black smoke rising from the site, but details about the exact circumstances of the incident were not immediately known. Pemex reported that at least 3 workers had been injured.

The cause of the blast is unknown at this time.

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Fighting Recessions With Hot Air

Authored by Bill Bonner of Bonner & Partners (annotated by Acting-Man.com’s Pater Tenebrarum),

“Prepping” for Recession

Stocks are going up all over the world. Meanwhile, it appears to us that the U.S. economy is going down. Go figure.

For instance, a labor-market index created by Fed economists… and closely watched by Fed chief Janet Yellen… has fallen for three straight months. It’s the first time that’s happened since 2009.

 

1-labor market conditions

In spite of relatively strong payrolls data, the Fed’s labor market conditions index doesn’t look so hot – click to enlarge.

 

And the Atlanta Fed adds that GDP growth in the first quarter of 2016 was only 0.3%. That’s not quite recession territory (commonly defined as two back-to-back quarters of negative growth)… but it’s not far off.

If the recession doesn’t appear this year, it won’t be the first time we’ve been wrong… or early. But despite claims that the feds have mastered the business cycle, a recession is bound to come someday.

 

2-gdpnow-forecast-evolution

The Atlanta Fed’s GDPNow model for Q1 – up from a recent low of 0.1%, but still no higher than 0.3%. This time bad weather cannot be blamed – in fact, this winter was unseasonably warm due to El Nino.

 

And when it does, we’ll be ready… at least, here at the ranch. We still have 700 head of cattle – tough, but edible. We have a couple hundred bottles of Malbec wine stocked in the depósito (store room). We have corn and tomatoes in the garden. What else do we need?

We don’t know. But we’d rather not find out. And neither does anyone else. But bad stuff still happens. And it is unlikely that recessions have been completely banished. Then again, recessions are not bad things – not in our book.

They are nature’s way of clearing out mistakes. Recessions are when the destruction part of economist Joseph Schumpeter’s “creative destruction” comes into play.

The “creative” part follows. But you can’t have one without the other. Marginal businesses… bad investments… weak competitors – they all need to get out of the way so better uses can be found for the capital at work. Why?

Believe it or not, capital is limited. If you use it for bad projects, you get poorer, not richer. Which projects are good? Which are bad? Typically, a rise in real interest rates (increasing the cost of funding) is the way to find out. Higher rates “put the hurtin’” on company finances. The weak give way.

Recessions are not necessarily pleasant. But they are as necessary as growing pains and family budget discussions.

 

schumpeter_joseph_alois16

Get creative with Schumpeter! The young Schumpeter reminds us a bit of Max Schreck, who played Count Orlok in F.W. Murnau’s Nosferatu

 

Debt Bubble

But we are in a minority. Most economists fear recessions; they want to avoid them in the worst possible way. What’s the worst way to avoid a recession? Just throw some more money at it!

Most serious economists realize that we have a problem on our hands. Debt goes up and up… much faster than the economy that has to pay it. It is a “debt bubble,” floating around in a knife store.

In the last eight years, for example, the U.S. federal government added $9 trillion to the public debt – more than it had amassed in the previous 246 years. And total debt increased in the U.S. last year by $1.9 trillion… while GDP only went up $599 billion.

For the corporate sector, it was worse. Companies took on $793 billion of extra borrowings against just $161 billion of extra output – five times as much debt as growth.

 

3-non-fin corporate debt

Non-financial corporate debt – still in “parabolic blow-off” mode. It is hard to believe that the tiny dip in debt growth in 2008 was evidence of a crisis that nearly brought the system down. What if debt deflation strikes for real? – click to enlarge.

 

Some analysts, such as our friend Richard Duncan at Macro Watch, believe we have no choice but to keep inflating the credit bubble. He likens our situation to a man who has gone up in a hot air balloon. Suddenly, he realizes that the hot air is not taking him where he wants to go. But what can he do?

If he releases the hot air, the balloon will fall and he will die. To survive, he has to keep putting in more hot air. Other economists, such as Paul Krugman, believe in hot air, too. “Demand,” they call it. They cling to the balloon, hoping that more credit will increase growth and can make the debt more bearable.

 

More Hot Air

We think both Duncan and Krugman are wrong. An economic boom, based on nothing but hot air (phony credit, with no real resources behind it), is fraudulent. It will never take us to real growth. Just the contrary. The best thing to do is to pop the bubble…and then pick up the pieces. Besides, it will pop whether we want it to or not.

Heck, we believe in magic as much as the next guy. But the magic act is wearing a little thin. The smoke is dispersing. The rabbits have disappeared. All the glam and sparkle, the shock and awe, the claptrap and hokum – they’re all giving way to economic reality.

We are beginning to see more clearly: the Fed’s theory is nothing but hot air. Now, its funny money is doing something even funnier than it imagined: the exact opposite of what the central planners intended. In yesterday’s Market Insight, Chris showed how the “velocity of money” is plummeting.

 

4-M2 velocity

The “velocity” of M2. Actually, this is mainly telling us that the Fed has printed a huge amount of money and that surprise, surprise, it hasn’t produced much economic growth. When it begins to rise, it will mainly indicate that the demand to hold cash is declining as confidence in the currency is evaporating – when that happens, we will start to see wide-spread “price inflation” and even less real economic growth – click to enlarge.

 

This is serious. The velocity of money tracks how often each dollar is used to buy something in the economy. Falling velocity shows that consumers and business are pulling back… becoming more reluctant to spend and invest…downsizing… and holding onto dollars rather than spending them.

This has a similar effect as reducing the supply of money bidding for goods and services. Prices drop. Deflation, in other words. The bubble has developed a leak. The hot air is gushing out. Look out below…

via http://ift.tt/241OaFE Tyler Durden