Rand Paul Slams Obama’s ‘Illegal’ War on ISIS, Chides Congress

Rand PaulLibertarian Republican Sen.
Rand Paul
reiterated
his strong opposition to President Obama’s lawless
war against ISIS on Monday. He penned an op-ed for The Daily
Beast
accusing Obama of subverting the Constitution, the War
Powers Act, and the Federalist Papers by bombing ISIS
absent Congressional authorization.

Paul saved his harshest criticisms for lawmakers of both parties
who only show an interest in holding the White House accountable
when it is occupied by a political enemy:

Where have those Democratic protectors of the constitutional
authority of Congress gone? Was it always just a partisan attack on
Republican presidents?

If not, when will Democrats—who so vociferously opposed a
Republican president’s extraconstitutional war-making powers—stand
up and oppose President Obama’s unconstitutional usurpation of
war-making powers?

Now that the Republicans have full power in Congress, they are
responsible for upholding the Constitution and pressing Obama for
proper war authorization, wrote Paul:

Conservatives have rightly decried President Obama’s
unconstitutional executive action on Obamacare—and his promises to
do the same with immigration. With both branches of Congress now
under Republican control, we should act to halt those power grabs,
too.

But conservatives can’t simply be angry at the president’s
lawlessness when they disagree with his policies. They should end
their conspicuous silence about the president’s usurpation of
Congress’ sole authority to declare war—even if (especially if)
they support going after ISIS, as I do.

It should be noted that Paul does ultimately support bombing
ISIS, just not without a legal justification. Is that position good
enough for war-weary libertarians and other skeptics?
It depends on whom you ask.
 Still, Paul unarguably
deserves credit for using his post-election perch to insult
interventionists on both sides of the aisle. As Paul writes, “If
ever there was too much bipartisanship, it would be the bipartisan
acceptance of unlimited presidential war-making power.”

I wonder if
Democrat Hillary Clinton
—Paul’s likely rival in a presidential
showdown—would agree.

Read the op-ed
here
.

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Ronald Bailey Considers the Idea that the Way to Save Nature Is to Make It Worthless

High Yield FarmingOn Wednesday, at the “Making Nature
Useless,” seminar sponsored by the D.C.-based think tank Resources
for the Future, Iddo Wernick, a researcher at Rockefeller
University’s Program for the Human Environment, asked, “Can
improving efficiency and changing consumer preferences overwhelm
rising population and affluence to reduce the tons of material that
Americans use? The world?” To answer this question, Wernick and his
colleagues collected data about the consumption trends on 100
materials that have long been used in the U.S. economy.
Reason Science Correspondent Ronald Bailey considers the
idea that “the way we will save nature is by rendering it
economically worthless.”

View this article.

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One Of Largest Russian Gold Miners On Verge Of Bankruptcy

A little over a year ago, we showed the average cost curves of gold and the cost per mine for one reason: with the forced selling in paper gold, extracting physical gold is increasingly unprofitable for gold miners.

And while some companies, those lucky few which have no debt on their balance sheet, have the option to mothball projects and wait for the lack of supply to catch up with demand and also price (at least in a world in which physical supply and demand still have some bearing on trading of paper gold) others, those who have creditors breathing down their neck, whose extraction cash costs are above the spot price and who aren’t hedged, are essentially out of options.

One such company is Russian gold producer Petropavlovsk, which a few years ago was one of Russia’s biggest companies and whose Pioneer mine produced 314,850 oz of gold in 2013, and is one of the largest gold mines in the Russian Far East.

As Siberian Times reports, founded by Eton-educated Peter Hambro, Petropavlovsk was valued at more than $3 billion four years ago and was a potential candidate to move into the coveted FTSE100. But today the firm is now worth just $60 million and is in a perilous financial situation, with speculation it may even default on $310 million in convertible bonds in February.

A statement from Petropavlovsk said: ‘The company confirms it is continuing to talk to its senior lenders, bondholders, other stakeholders and third parties in order to complete a holistic refinancing of the group’s outstanding four per cent convertible bonds due February 2015.”

Further details on the gold-miner’s financial plight:

The Financial Times reported the consortium includes Russian Kirill Androsov, the managing partner of Altera Capital and former deputy chief of staff to Prime Minister Vladimir Putin. Shares in Petropavlovsk rose almost 20 per cent after news broke of the potential rescue deal, which has been put together by Amsterdam-based investment company Sapinda.

 

Petropavlovsk develops gold deposits in the Amur region at mines in Pokrovsky, Pioneer, Malomyr and Albyn. The company decreased gold production by four per cent to 741,000 ounces in 2013, and targets for 2014 are even lower at 625,000 ounces.

 

In the first half of this year the company did cut its net losses nearly 88 per cent to $95million, but was unable to post profits. The fall from grace for what was once one of Russia’s biggest companies is certain to be difficult for the man who built it up from nothing 20 years ago.

And yet for those hoping to see an avalanche of gold miner defaults, which would lead to a collapse in gold production just as demand for physical is surging, and an even greater imbalance between physical and paper prices, may have to wait: a bailout may be in the offing. Also from the Siberia Times: “Petropavlovsk is on the brink of a rescue package that could save the company following a turbulent period that saw billions wiped off its value. Directors of the firm, which commercially develops gold deposits in the Amur region of Siberia, have announced they are looking at ‘all options’ to stem the crisis.”

The company added that “as part of this ongoing process, the company has also been in receipt of
approaches by various potential third-party investors in recent months.
The company continues to examine all its options and is working towards
a solution in as expedient a manner as possible. No transaction has yet
been approved or agreed.”

Stressing that no deal has yet been done, in a statement they said they had received a number of proposals from third-party investors. The announcement came after the Financial Times newspaper said that consortium, of Russian, German and South African investors, was prepared to inject up to $250million in the company.

And while the future of the company’s current owner, Peter Hambro is clouded and bondholders may soon get control of the company, a better question is whether the company may not be the latest one to feel some pressure for additional proximity, courtesy of the Kremlin:

Meanwhile, it was also announced that Mr Maslovsky, who has been a Russian senator for the past three years, is rejoining the firm as chief executive.

All it would take is a phone call from Putin to make it clear that Russia would provide some rescue funding in addition to a majority stake. And will Putin stop there, or will he make it a mission to do the same to all other Russian gold miners?

Finally, here is the soon to be insolvent gold miner in its natural habitat.

Petropavlovsk was valued at more than $3billion four years ago. Picture: stepbystep.ru

Consortium featuring Russian businessman line up bid to invest in mine which develops deposits in Siberia

Consortium featuring Russian businessman line up bid to invest in mine which develops deposits in Siberia

Consortium featuring Russian businessman line up bid to invest in mine which develops deposits in Siberia

Gold mining in Yakutia. Pictures: stepbystep.ru

Consortium featuring Russian businessman line up bid to invest in mine which develops deposits in Siberia

Consortium featuring Russian businessman line up bid to invest in mine which develops deposits in Siberia

Malomyr and Pokrovsky mines. Pictures: Petropavlovsk 




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Obama: Government Should Regulate Internet to Keep it Free.

So President Obama has announced that the Internet should be
regulated as a public utility. He’s asking the Federal
Communications Commission (FCC) to reclassify internet service
providers (ISPs) from “information services” under Title I as
telecommunications providers under Title II regulatory guidelines.
(See
here for background on the distinction
.)

This is all being done in the name of “Net Neutrality,” keeping
the Internet free and open, prohibiting “fast lanes” for certain
services and sites, making sure no legal content is blocked, and
all other horribles that…have failed to materialize in the
absence of increased federal regulation.

Reason contributor and Clemson University economic historian
Thomas W. Hazlett defines Net Neutrality as “a
set of rules…regulating the business model of your local ISP.

The definition gets to the heart of the matter. There are specific
interests who are doing well by the current system—Netflix, for
instance—and they want to maintain the status quo. That’s
understandable but the idea that the government will do a good job
of regulating the Internet (whether by blanket decrees or on a
case-by-case basis) is unconvincing, to say the least. The most
likely outcome is that regulators will freeze in place today’s
business models, thereby slowing innovation and change. 

Obama is old enough to remember Ma Bell,
which was even worse to customers than today’s cable and Internet
providers. And he is smart enough to recognize the Orwellian
contradiction in introducing onerous new regulatory regimes in the
name of keeping anything “free.” The FCC has never been
particularly adept at acting in the “public interest.” The less
control it has over the Internet (and TV and anything else), the
better off we will all be. 

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NYPD Plans to Stop Arresting Cannabis Consumers. It Also Should Stop Charging Them With a Crime.

The New York Times reports
that the NYPD plans to stop arresting people for possessing small
amounts of marijuana “in public view.” Cops will instead issue
summonses requiring pot possessors to appear in court on the
misdemeanor charge. That means cannabis consumers, provided they
have ID, will no longer be handcuffed and taken to a police station
for processing.

In 2012, the Times notes, “more than half of those
arrested for marijuana were released a couple of hours after being
brought to a station house,” where they were “fingerprinted,
checked for warrants and issued a ticket demanding their appearance
in court six to eight weeks later.” The rest “were ‘put through the
system,’ meaning they were held for up to 24 hours before being
arraigned.”

Eliminating arrests for this petty offense would be a big
improvement, since cannabis consumers in New York City would no
longer have to endure the humiliation, inconvenience, and
deprivation of liberty that has been routinely inflicted on them
until now. But they would still be charged with a misdemeanor, even
though merely possessing up to 25 grams of marijuana (about
nine-tenths of an ounce) has not been a crime in New York state
since 1977, and they would still be subject to arrest if they did
not have ID or failed to appear in court. It does not sound like
the NYPD plans to change its practice of transforming a violation
into a misdemeanor by claiming that marijuana was possessed in
public view (often as a result of police instructions or
pat-downs).

Mayor Bill de Blasio
condemned
 such arrests during his campaign last year,
calling them “unjust and wrong.” He noted that pot busts
disproportionately affect minorities and can have
disastrous consequences for individuals and their
families,” since they “limit one’s ability to qualify for student
financial aid and undermine one’s ability to find stable housing
and good jobs.” But 
so far petty marijuana
arrests have been

just as frequent
under De Blasio as they were in 2013.
N
ow he apparently has decided that the arrests should
be replaced by misdemeanor summonses, which are not as bad but can
have the same “disastrous consequences” that he decried last
year.

This latest shift in policy is reminiscent of a change

announced
by De Blasio’s predecessor, Michael Bloomberg, in
February 2013:

Right now, those arrested for possessing small amounts of
marijuana are often held in custody overnight. We’re changing
that. Effective next month, anyone presenting an ID and
clearing a warrant check will be released directly from the
precinct with a desk appearance ticket to return to
court. It’s consistent with the law, it’s the right thing to
do, and it will allow us to target police resources where they’re
needed most. 

That change was welcome, but it raised the question of why
cops were bothering to arrest people for this trivial offense at
all, especially since Bloomberg said “Commissioner [Ray] Kelly and
I support Governor [Andrew] Cuomo’s proposal to make possession of
small amounts of marijuana a violation, rather than a misdemeanor,
and we’ll work to help him pass it this year.” Like De Blasio,
Cuomo
highlighted
“gaping racial disparities” in marijuana arrests,
saying he wanted to
 “save thousands of New
Yorkers, particularly minority youth, from the unnecessary and
life-altering trauma of a criminal arrest.” He regretted
the 
“countless man-hours wasted” on “what is
clearly only a minor offense.” But after De Blasio, a fellow
Democrat, was elected, Cuomo dropped the proposed legislative fix,

saying
“it’s not timely in the way it was last
year.” 

Either possessing small amounts of marijuana for personal
use should be a crime, or it shouldn’t. If it shouldn’t, the
legislature should eliminate the “public display” loophole. But
even if it doesn’t, De Blasio, like Bloomberg before him, has the
discretion to stop charging cannabis consumers with a crime that is
not supposed to exist anymore. 

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Alibaba Closing In On 6th Largest Company In The US

Alibaba is now the 6th largest company of all US-traded entities… and is the biggest non-US-domiciled corporation in the world (having added $80 billion in market cap in the last 3 weeks alone)

 

 

Alibaba has exploded past its other mega cap names in the last few weeks… adding $80 billion since Bullard's "QE4" sputtering

 

And as far as Dotcom 2.0 valuations – we are sure there is nothing to see here, move along!!!

 

This time is different, of course, because you see.. "they have revenues…"

Charts: Bloomberg




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Obama Administration Issues Stern Warning as Russian Tanks Penetrate Ukraine

Although a
two-month ceasefire is still technically in place, Russia’s
invasive ground war in Ukraine is escalating. The United States has
some stern words for Vladimir Putin over this incursion.

Yesterday U.S. National Security Council spokesperson Bernadette
Meeha issued
this statement
 on behalf of the White House:

We are very concerned by intensified fighting in eastern
Ukraine, as well as numerous reports, including from the Special
Monitoring Mission of the Organization for Security and Cooperation
in Europe (OSCE), that Russian backed and supplied separatists are
moving large convoys of heavy weapons and tanks to the front lines
of the conflict. We continue to call on all sides to strictly
adhere to the cease-fire. Any attempt by separatist forces to seize
additional territory in eastern Ukraine would be a blatant
violation of the Minsk agreements. We reiterate our call on the
Russian Federation to honor all of the commitments it made in
Minsk, including ending its military supply to the separatists and
the withdrawal of all of its troops and weapons from Ukraine.
Furthermore, Russia must enable the restoration of Ukrainian
sovereignty along the Ukrainian side of the international border,
to be monitored by the OSCE, and facilitate the release of all
hostages. We continue to stress that adherence to the framework
agreed upon in Minsk is the best chance of achieving a peaceful
resolution to the conflict in eastern Ukraine.


Secretary of State John
Kerry had an unofficial meeting with Russian Foreign Minister
Sergei Lavrov this weekend at the Asia-Pacific Cooperation summit
in Beijing. It appears Russia, which continues to deny any
involvement in the war despite enormous evidence to the contrary,
has the upper-hand and is framing the debate. “If Washington is
interested in contributing to the reconciliation of the situation
and creating dialogue between Kiev and the rebel leadership… I
think that would be a step in the right direction,” said
Lavrov.

Kerry stated, “We
do have some disagreements about some of the facts on the ground
with respect to Ukraine. We have agreed to exchange some
information between us regarding that. We have also agreed this is
a dialogue between us that will continue.”

President Barack Obama and Putin are supposed to have an
unofficial meeting at the summit, too.

Radio Free Europe
reports
that this weekend eastern Ukraine faced “some of the
most intense shelling since the cease-fire” began.

Whether Putin can sustain this war is yet to be seen. Russia’s
central bank is predicting three
years of economic stagnation
. The nation’s currency continues
to drop to record lows, and this weekend The Moscow Times

reported
“rising demand for foreign currency mean[ing] that
U.S. dollars and euros were unavailable at some Russian banks and
exchange points Friday as the ruble went into free fall during
morning trading.” Earlier in the year, Russia invaded and annexed
Crimea, which “is now Russia’s poorest region,” and will
cost tens
of billions of dollars
 on development.

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Still happening: Canada just became North America’s first offshore renminbi hub

china 2196985b Still happening: Canada just became North America’s first offshore renminbi hub

November 10, 2014
Santiago, Chile

It’s happening. With increasing speed and frequency.

The People’s Bank of China and the Canadian Prime Minister’s office issued a statement on Saturday stating that Canada will establish North America’s first offshore renminbi trading center in Toronto.

China and Canada agreed on a number of measures to increase the use of renminbi in trade, business, and investment. And they further signed a 200-billion renminbi bilateral currency swap agreement.

Moreover, just today, hot of the presses, the central banks of China and Malaysia announced the establishment of renminbi clearing arrangements in Kuala Lumpur, which will further increase the use of renminbi in South-East Asia.

This comes just two weeks after Asia’s leading financial center, Singapore, became a major renminbi hub, with direct convertibility established between the Singapore dollar and the renminbi.

Everyone is in on the trend. All across the world, the renminbi is quickly becoming THE currency for trade, investment, and even savings.

Renminbi deposits in South Korea, for example, surged 55-times in one single year. It’s stunning.

The government of UK just issued a renminbi bond, becoming the first foreign government to issue debt in renminbi.

Even the European Central bank is debating to include renminbi in its official reserves, while politicians the world over are sounding not-so-subtle warnings that a new non-dollar monetary system is needed.

Nothing goes up or down in a straight line. And given how volatile Europe and the global economy continue to be, the dollar may certainly be in for its surges and bumps in the coming months.

But over the long-term it’s glaringly obvious where this trend is going: the rest of the world no longer wants to rely on the US dollar, and they’re making it a reality whether the US likes it or not.

Right now there’s still time to buckle up. If you’re 100% exposed to the US dollar, consider diversifying your investments in real assets, or a currency like the Hong Kong dollar.

Hong Kong dollar is pegged to the US dollar. So if the US dollar surges, the Hong Kong dollar will strengthen accordingly. And because the peg is so tight, the currency volatility is minimal.

But if the US dollar takes a turn for the worse, Hong Kong would likely abandon this peg, thus eliminating your downside risk.

This is a very strong option to consider.

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Avoid this accident waiting to happen in investment markets

shutterstock 151408784 Avoid this accident waiting to happen in investment markets

November 10, 2014
London, England

[Editor’s note: This letter was written by Tim Price, London-based wealth manager and editor of Price Value International.]

In 1975, Charles Ellis, the founder of Greenwich Associates, wrote one of the most powerful and memorable metaphors in the history of finance.

His essay is titled ‘The loser’s game’, which in his view is what the ‘sport’ of investing had become by the time he wrote it. His thesis runs as follows:

Whereas the game of tennis is won by professionals, the game of investing is ‘lost’ by professionals and amateurs alike.

Whereas professional sportspeople win their matches through natural talent honed by long practice, investors tend to lose (in relative, if not necessarily absolute terms) through unforced errors.

Success in investing, in other words, comes not from over-reach, in straining to make the winning shot, but simply through the avoidance of easy errors.

Ellis was making another point. As far back as the 1970s, investment managers were not beating the market; rather, the market was beating them.

This was a mathematical inevitability given the over-crowded nature of the institutional fund marketplace, the fact that every buyer requires a seller, and the impact of management fees on returns from an index.

Ben W. Heineman, Jr. and Stephen Davis of the Yale School of Management asked in their report of October 2011, ‘Are institutional investors part of the problem or part of the solution?’

By their analysis, in 1987, some 12 years after Ellis’ earlier piece, institutional investors accounted for the ownership of 46.6% of the top 1000 listed companies in the US. By 2009 that figure had risen to 73%.

That percentage is itself likely understated because it takes no account of the role of hedge funds.

Also by 2009 the US institutional landscape contained more than 700,000 pension funds; 8,600 mutual funds (almost all of which were not mutual funds in the strict sense of the term, but rather for-profit entities); 7,900 insurance companies; and 6,800 hedge funds.

Perhaps the most pernicious characteristic of active fund management is the tendency towards benchmarking (whether closet or overt).

Since a capitalisation benchmark assigns the heaviest weightings in a bond index to the largest bond markets by asset size, and since the largest bond markets by asset size represent the most heavily indebted issuers – whether sovereign or corporate – a bond-indexed manager is compelled to have the highest exposure to the most heavily indebted issuers.

All things equal, therefore, it is likely that the bond index-tracking manager is by definition heavily exposed to objectively poor quality (most heavily indebted) credits.

There is now a grave risk that an overzealous commitment to benchmarking is about to lead hundreds of billions of dollars of invested capital off a cliff.

Why? To begin with, trillions of dollars’ worth of equities and bonds now sport prices that can no longer be trusted in any way, having been roundly boosted, squeezed, coaxed and manipulated for the dubious ends of quantitative easing.

The most important characteristic of any investment is the price at which it is bought, which will ultimately determine whether that investment falls into the camp of ‘success’ or ‘failure’.

At some point, enough elephantine funds will come to appreciate that the assets they have been so blithely accumulating may end up being vulnerable to the last bid – or lack thereof – on an exchange.

When a sufficient number of elephants start charging inelegantly towards the door, not all of them will make it through unscathed.

Corporate bonds, in particular, thanks to heightened regulatory oversight, are not so much a wonderland of infinite liquidity, but an accident in the secondary market waiting to happen.

We recall words we last heard in the dark days of 2008: “When you’re a distressed seller of an illiquid asset in a market panic, it’s not even like being in a crowded theatre that’s on fire. It’s like being in a crowded theatre that’s on fire and the only way you can get out is by persuading somebody outside to swap places with you.”

The beatings will continue until morale improves – and until bondholders have been largely destroyed. When will the elephants start thinking about banking profits and shuffling nervously towards the door?

Meanwhile, central bankers continue to waltz effetely in the policy vacuum left by politicians.

As Paul Singer of Elliott Management recently wrote, we inhabit a world of “fake growth, fake money, fake jobs, fake stability, fake inflation numbers”.

Top down macro-economic analysis is all well and good, but in an investment world beset by such profound fakery, only bottom-up analysis can offer anything approaching tangible value.

In the words of one Asian fund manager, “The owner of a[n Asian] biscuit company doesn’t sit fretting about Portuguese debt but worries about selling more biscuits than the guy down the road.”

So there is hope of a sort for the survival of true capitalism, albeit from Asian biscuit makers. Perhaps even from the shares of biscuit makers in Europe – at the right price.

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October Was A “Trailer” For Real Market Turmoil, Don’t Hold Your Breath For Policymakers

Excerpted from Paul Singer’s letter to investors,

Policymakers in the developed world do not seem to believe (as we do) that their complete reliance on zero-percent interest rate policy (ZIRP) and quantitative easing (QE) for propping up the global economy may be the unintended but proximate cause of the poor performance of the developed economies over the last six years, rather than the cure-all nostrum that they think it is. Indeed, Europe is in the process of actually doubling down on QE, with large asset purchases by the European Central Bank expected in the near future. ZIRP and QE were concocted as emergency strategies, but their persistence post-crisis has caused distortions that have seriously interfered with the proper functioning of the developed economies. Ironically, these policies also exacerbate the income and wealth inequality that has become a source of some resentment among the public at large, as well as considerable attraction as talking points for politicians.

Policymakers do not seem willing to believe that they need to unlock and promote economic expansion through pro-growth policies, the particulars of which we have described often in the last few years. Politicians are more than willing to delegate to central bankers the entire job of generating growth, so that they themselves do not have to take political risks. For their part, central bankers keep referencing inflation targets as if inflation is a proxy for growth. It is not. The reality is that inflation only has an indirect impact on growth, so the effectiveness of inflation as an expansionary tool is extremely limited, as evidenced by the economic malaise we have witnessed in the six years since the financial crisis.

Perhaps the recent October apprehension in the financial markets is only a “trailer” for the next period of real market turmoil. When the next such period arrives, it could resemble a “panic” or “crash” for a short period of time, before the inevitable “cavalry” (central banks and major governments) try to calm scared investors and encourage them to stop their selling and start their buying. On the other hand, there is a very real possibility that the cavalry’s thundering hooves will cause investors to get even more frightened and run away, perhaps having lost confidence in the effectiveness of the central bankers’ toolkit (essentially permanent policies of ZIRP, unlimited asset purchasing and market manipulation, and other – yet untried – policies supporting trillions of dollars of money creation).

The next period of real market turmoil may then turn into a severe financial crisis, the exact shape of which cannot be determined in advance. It is hard to imagine what the governments can do when the signaling effect of central bank activist intervention is no longer effective to stop the crisis from spreading – unless the politicians of the world are finally goaded into taking the serious and appropriate fundamental actions necessary to ameliorate the crisis.

Don’t hold your breath.




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