Last week
the U.S. Centers for Disease Control and Prevention
(CDC) noted with alarm that most
Americans say they have never discussed alcohol
consumption with a health professional. Physicians’ reluctance to
broach the subject is especially troubling, the CDC said,
because “at least 38 million adults in the U.S. drink too much.”
Most news outlets reported the latter claim as a fact, failing to
notice the value judgments embedded in it, says Senior Editor Jacob
Sullum. Contrary to what the CDC wants you to believe, Sullum
writes, the question of what it means to drink too much is a matter
of moral and medical dispute.
Last week
the U.S. Centers for Disease Control and Prevention
(CDC) noted with alarm that most
Americans say they have never discussed alcohol
consumption with a health professional. Physicians’ reluctance to
broach the subject is especially troubling, the CDC said,
because “at least 38 million adults in the U.S. drink too much.”
Most news outlets reported the latter claim as a fact, failing to
notice the value judgments embedded in it, says Senior Editor Jacob
Sullum. Contrary to what the CDC wants you to believe, Sullum
writes, the question of what it means to drink too much is a matter
of moral and medical dispute.
Lothar Matthaus played in 150
international soccer games for Germany, including five World Cups. And he’s
currently involved in a financial dispute with an ex-wife. But when
a Munich court sent legal documents to him, they were returned with
a stamp saying he is dead. Matthaus insists he is alive, pointing
to numerous appearances on TV and in public that he claims to have
made.
Lothar Matthaus played in 150
international soccer games for Germany, including five World Cups. And he’s
currently involved in a financial dispute with an ex-wife. But when
a Munich court sent legal documents to him, they were returned with
a stamp saying he is dead. Matthaus insists he is alive, pointing
to numerous appearances on TV and in public that he claims to have
made.
It would appear that the government, via its mortgage-financing subs Fannie Mae and Freddie Mac, is providing yet another $50 to $100 million fillip to banks – but this time at the expense of their ignorance. As Reuters reports, the FBI is investigating “unsophisticated tradecraft,” such as hand signals and special telephone ring tones, that some traders are conspiring to rig rates on large orders submitted by the GSEs – front running them in the interest rate swaps market. Of course, no one is surprised at yet another manipulation or malfeasance but the ‘high-level-employee’ whistleblower’s exposure is perhaps not surprising since the size of ‘hedging’ orders from the mortgage-managers provides an incentive for front-running ahead of the trades – “GSEs frequently submit large interest-rate swap trades, making them easy targets for front running and lucrative targets for market manipulation.”
Wall Street traders may be manipulating a key derivatives market and front running Fannie Mae and Freddie Mac, hurting the US-owned mortgage giants in the process, according to an FBI intelligence bulletin reviewed by Reuters.
Using what Federal Bureau of Investigation agents described as “unsophisticated tradecraft,” such as hand signals and special telephone ring tones, some traders are conspiring to rig rates on large orders submitted by Fannie Mae and Freddie Mac , or front running them in the interest rate swaps market, the document says.
The FBI said in the bulletin that the information came from a former high-level employee at a U.S. bank and an employee at a Canadian Bank, plus interviews with other bank workers conducted in 2012 and 2013. The former high-level employee at the U.S. bank estimated the front running had resulted in profits of $50 million to $100 million for the bank, the FBI said.
…
Front running occurs when someone with advance knowledge of another market participant’s plan to make a sizable transaction puts an order in first, often profiting from a market move that can occur once the big trade has gone through.
…
According to the bulletin, one employee at the U.S. bank and the Canadian bank employee reported that senior bankers at the two banks “planned and encouraged this behavior because it led to higher revenue for their respective parent banks.”
…
Fannie Mae and Freddie Mac, which are government-sponsored enterprises (GSEs), often submit large swap orders to hedge their huge holdings of home mortgages against swings in the bond market. The size of the orders provide an incentive for front running ahead of the trades.
“GSEs frequently submit large interest-rate swap trades, making them easy targets for front running and lucrative targets for market manipulation,” the FBI bulletin said.
…
U.S. and Canadian banks encouraged traders to listen in on calls with the investors to gain transaction information “which could be used to facilitate front running or market manipulation.”
They would then use hand signals to inform other traders of the details of the planned swaps, allowing these traders to also benefit, employees at the banks said, according to the bulletin.
Just add it to the list of banking malfeasance… a fine? sure… that’ll do it. Or is this just standard ‘flow’ trading on any desk (oh apart from the collusion and lack of Chinese walls you mean?)
Earlier we pointed out that mortgage origination at Wells Fargo – the bank’s bread and butter – is crashing at an unprecedented pace, and as per the conference call, Q1 isn’t looking any better. Naturally, it stood to reason that the bank would seek alternative business and product lines to supplant the declining revenue it used to generate when it would originate some $100 billion in mortgages every quarter, now half that number. However, not even in our wildest dreams did we predict just what this “alternative” product would be. Because, as the FT reports, Wells Fargo, the largest US bank by market cap, is currently exploring Bitcoin as just that revenue replacement source. Per the FT: “Wells’ anti-money laundering chief, Jim Richards, has launched a group to examine how it might safely offer Bitcoin-related services or banking arrangements to virtual currency entrepreneurs, according to people familiar with the initiative.”
More:
Wells chief executive John Stumpf said it was the bank’s practice to examine financial innovations.
“We have made enormous investments as a company and as an industry in a payments system that is secure, and we need to be sure we are up to speed with what other things are going on and their risks and rewards,” he said.
“We want to make sure we understand what it is, what it does and what it does not . . . . The world is changing and will continue to change. Whether Bitcoin will be a big part of that, who knows?”
As the FT accurately points out, “the difficulty in persuading financial institutions to offer bank accounts has become one of the biggest difficulties facing Bitcoin entrepreneurs in the US.” Which of course means it is also a great opportunity for the first entrant, such as what almost certainly appears to be Wells:
Wells’ public-private group, comprising more than a dozen members, was scheduled to meet in San Francisco on Tuesday to debate the security issues surrounding banking and Bitcoin. One possible aim would be to produce a set of anti-money laundering principles for established financial institutions to follow when dealing with virtual currency start-ups, according to a person familiar with the event.
Naturally, the US government’s desire to increasingly regulate Bitcoin has pushed it to scramble in clearing up what the legal status of Bitcoin is: “last month the Congressional Research Service circulated a report on virtual currencies for policy makers, setting out a list of areas where the legal and regulatory approach to Bitcoin remains unclear. These range from national tax issues, because Bitcoin profits are not recorded within the traditional financial system, to concerns among individual states.”
However, as HSBC and various other criminal banks have shown, if a client is willing to pay for a service, regulations and/or laws is the last thing banks are concerned with, so while the US Congress and Fed dither on how to treat Bitcoin first Wells and soon all other banks will provide some Bitcoin-related services.
Then the only question becomes whether the people who have used Bitcoin in the past precisely because it remained at more than arms length away from the big money centers, will continue to do so now that BTC is for all intents and purposes just another institutionalized asset, if not quite currency just yet.
via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/htp19C435D0/story01.htm Tyler Durden
Earlier we pointed out that mortgage origination at Wells Fargo – the bank’s bread and butter – is crashing at an unprecedented pace, and as per the conference call, Q1 isn’t looking any better. Naturally, it stood to reason that the bank would seek alternative business and product lines to supplant the declining revenue it used to generate when it would originate some $100 billion in mortgages every quarter, now half that number. However, not even in our wildest dreams did we predict just what this “alternative” product would be. Because, as the FT reports, Wells Fargo, the largest US bank by market cap, is currently exploring Bitcoin as just that revenue replacement source. Per the FT: “Wells’ anti-money laundering chief, Jim Richards, has launched a group to examine how it might safely offer Bitcoin-related services or banking arrangements to virtual currency entrepreneurs, according to people familiar with the initiative.”
More:
Wells chief executive John Stumpf said it was the bank’s practice to examine financial innovations.
“We have made enormous investments as a company and as an industry in a payments system that is secure, and we need to be sure we are up to speed with what other things are going on and their risks and rewards,” he said.
“We want to make sure we understand what it is, what it does and what it does not . . . . The world is changing and will continue to change. Whether Bitcoin will be a big part of that, who knows?”
As the FT accurately points out, “the difficulty in persuading financial institutions to offer bank accounts has become one of the biggest difficulties facing Bitcoin entrepreneurs in the US.” Which of course means it is also a great opportunity for the first entrant, such as what almost certainly appears to be Wells:
Wells’ public-private group, comprising more than a dozen members, was scheduled to meet in San Francisco on Tuesday to debate the security issues surrounding banking and Bitcoin. One possible aim would be to produce a set of anti-money laundering principles for established financial institutions to follow when dealing with virtual currency start-ups, according to a person familiar with the event.
Naturally, the US government’s desire to increasingly regulate Bitcoin has pushed it to scramble in clearing up what the legal status of Bitcoin is: “last month the Congressional Research Service circulated a report on virtual currencies for policy makers, setting out a list of areas where the legal and regulatory approach to Bitcoin remains unclear. These range from national tax issues, because Bitcoin profits are not recorded within the traditional financial system, to concerns among individual states.”
However, as HSBC and various other criminal banks have shown, if a client is willing to pay for a service, regulations and/or laws is the last thing banks are concerned with, so while the US Congress and Fed dither on how to treat Bitcoin first Wells and soon all other banks will provide some Bitcoin-related services.
Then the only question becomes whether the people who have used Bitcoin in the past precisely because it remained at more than arms length away from the big money centers, will continue to do so now that BTC is for all intents and purposes just another institutionalized asset, if not quite currency just yet.
via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/htp19C435D0/story01.htm Tyler Durden
In the global war for energy supremacy, Russia has won another victory over the United States.
This time, the battleground has been South Africa, where Russia's state-owned nuclear power company, Rosatom, has just signed an agreement to build eight new reactors. Once all of them are operational, South Africa's nuclear capacity will increase more than sixfold – from 1.8 gigawatts (GW) to 11.4 GW over the next 15 years.
This means that Russia will help develop the entirety of South Africa's nuclear energy sector, including financing and training.
And just as importantly, South Africa will be using Russia's nuclear fuel.
Rosatom has been busy signing these types of deals with other foreign countries as well—Finland, Turkey, Ukraine, even the United Kingdom—which guarantees that Russia will be able to keep a stranglehold on these countries' nuclear industries.
The strategy is clear: Rosatom is aiming to become the world's largest supplier of uranium in the coming years.
Remember what we said about the ongoing "Putinization" of Europe's oil and gas; how Russia is planning to leverage its control over Europe's energy to gain political and economic benefits?
The same thing is happening in uranium, except the stakes are even higher—because Putin is now looking to dominate the global nuclear market.
Russia and the former Soviet nations (colloquially called "the -stans") already control nearly half of the world's uranium supply:
Similarly, they hold more than half of the world's capacity for uranium enrichment, a necessary part of fuel fabrication:
Note that the United States only controls 3% of global uranium supply—and less than 15% of the enrichment capacity, despite the fact that it's the largest consumer of uranium in the world.
While nuclear energy powers one out of every five homes in America, the US currently imports more than 90% of the uranium required for its nuclear reactors.
So what happens when one day Rosatom says "Nyet" to the American utilities? You can be sure that they'll be scrambling to find any source of uranium they can get their hands on.
And they'll pay far more than the current spot price of US$34.50/lb. You should know that the price of uranium accounts for just 3% of the total costs of a nuclear power plant, so whether the utilities pay $100 or even $200 per pound of yellowcake is irrelevant, as long as they can keep the reactors running and the lights on in America.
As the US and other countries scramble to get out from under Putin's heavy thumb, for the right uranium producers outside of Russia's sphere of influence, this will be a bonanza for the history books.
***
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On the other hand, the sale of marijuana is still illegal under Federal law pursuant to the Controlled Substances Act, 21 U.S.C. § 801 et seq.
This is true even in California and other states which have allow medical or recreational marijuana. U.S. v. Oakland Cannabis Buyers’ Co-op (2001) 532 U.S. 483 (medical necessity is not an exception to 21 U.S.C., §841(a)(1) governing the federal prohibition against manufacture and distribution of marijuana).
Marijuana remains illegal under federal law, but that has not stopped a fuzzy industry of marijuana farms and dispensaries from rising to serve the 15 states that allow the drug to be used for medical purposes. Under President Obama, the federal government had seemed to make a point of paying little attention — until now.
***
As some states seek to increase regulation but also further protect and institutionalize medical marijuana, federal prosecutors are suddenly asserting themselves, authorizing raids and sending strongly worded letters that have cast new uncertainty on an issue that has long brimmed with tension between federal and state law.
***
In Washington, Ms. Gregoire asked for guidance from the state’s two United States attorneys, Mike Ormsby and Jenny Durkan. In a reply to the governor last month, they said the federal government would prosecute “vigorously against individuals and organizations that participate in unlawful manufacturing and distribution activity involving marijuana, even if such activities are permitted under state law.”
***
When the Legislature was drafting the bill it passed in its most recent regular session, Mr. Ormsby said, “No one consulted with me about what I thought of what they were going to do and did I think it ran afoul of federal law.”
Of the state’s current medical marijuana law, he added, “We believe, of course, under federal law no part of the state law is legal.”
***
Ms. Smith noted that the 2009 memo “says definitively that distribution continues to be a federal offense.”
But since the American government has backed the most dangerous and violent Muslim terrorists for decades – in order to “contain” rival Muslim factions – the government is partially to blame for this banking abomination as well.
via Zero Hedge http://ift.tt/1dOErq3 George Washington
"The Fed's policies have actually led to a lot of problems around the world," Marc Faber begins his discussion with Bloomberg TV's Trish Regan, especially "people in the lower income groups [who] spend say 30% of their income on energy, transportation, and so forth, electricity and gasoline." The Gloom, Boom & Doom Report author goes on to discuss everything from how the Fed is creating a two-class system around the world, the inexorable growth of governments, buying votes, Bitcoin, interest rates, wealth taxes, and overall market valuations. "We are in a gigantic financial asset bubble," Faber explains, "everybody's bullish," but he sees a slowing global economy (as do we e.g. Baltic Dry Index); "[The bubble] could burst any day. I think we are very stretched." Faber is on fire…
Take 10 minutes and listen…
Prepare yourself… "In China, if I say what I am saying about the USA, they would not let me in the country"
Faber on the Fed and how far the 'rubber band can be stretched':
"We have to distinguish between the financial economy, the financial sector, and the economy of the well-to-do people that benefit from rising asset prices, from rising prices of wines, and paintings and art, and bonds, and equities, and high-end properties in the Hamptons and West 15 here in New York and so forth — and the average person, the typical household, the so-called 'median household', or the working class people. And the Fed's policies have actually led to a lot of problems around the world in the sense that they're not only responsible, but partly responsible that energy prices are where they are, they're up from $10 or $12 in 1999 to now around $100 a barrel. Food prices are up and a lot of other prices are up. So on your income, energy prices have very little impact because you at Bloomberg – you, young man – you make so much money. But for the poor people, it has an impact. Some people in the lower income groups, they spend say 30% of their income on energy, transportation, and so forth, electricity and gasoline."
On whether the Fed is creating a two-class system:
"Correct, largely. The problem is then that you have people like Bill de Blasio, they come in and say: 'you know what's the problem? All these rich guys. Because of these rich people, you are poor. They take advantage of you. So, let's go and tax them.' The IMF has come out with a paper in Europe that essentially the well-to-do people should pay a 10% wealth task — a one-time wealth tax. I can assure you, a one-time wealth tax, 10%, will become an every-year's tax eventually."
On how to help the people on the lower end of the economic spectrum:
"This is the point I'd like to make. All of these professors and academics at the Fed who never really worked in the private sector a single day in their lives, and write papers nobody reads and nobody's is interested in. Why would they want not write about how you structure an economic system that lifts the standard of living of most people? You can't lift everybody."
"We had that in the 19th century in the U.S. because we had very small government at the time. The entire government — local, state federal — was less than 20% of the economy. Now it is close to 50% of the economy."
On whether the government is spending too much money:
"The larger the government becomes, the less economic growth you have and the more crony capitalism and corruptions you have. Because big corporations — and especially the money printers, they're the most powerful people in the world, they control the governments. The U.S. Treasury, the Federal Reserve, and the government is one and the same. The Fed, they finance the Treasury, so the government can go to war in Iraq and Afghanistan. Then they finance transfer payments to essentially buy votes so you can get elected."
On bitcoin:
"I prefer physical gold and silver, platinum to bitcoin. Bitcoin can have a lot of competition. Gold, silver, platinum — they have no competition. How do you value a bitcoin? I can value gold to some extent and compare say gold to the quantity of money that is floating around the world, to the wealth increase, and to the monetary base increase, to the credit increase, and so forth and so on, and to the production costs. So I have an idea of where gold should be. I'm not sure because prices overshoot. How do you value Netflix? Is it overpriced or underpriced? Is Tesla overpriced, underpriced?"
On interest rates:
"But one thing I wanted to show you and talk about because you said that lower interest rates help people. Well, if money trending helps everybody, then why does not everybody in the whole world always have zero interest rates? And everybody would be rich. You keep on printing money and you don't need to work here, you don't need to put on makeup. I could stay in bed the whole day and go drinking in the evenings. So, let's just print money and be all happy. It doesn't add up. One thing about the figures you showed: first of all, you live in New York. Do you really think that your cost-of-living increase is a 1.2% per annum? You really believe that? It doesn't feel like more, it feels like five times more, or even ten times more."
"Number two, by keeping interest rates at zero percent on the Fed fund rate — i want to emphasize that this is now going on in March of 2014 for five years. It is not something new. For five years this has happened. You penalize the income earners, the savers who save, your parents, why should your parents be forced to speculate in stocks and in real estate and everything under the sun?"
On his view of overvalued stocks, including Facebook:
"I think it is to a large extent a fad. People they go on Facebook – what they do is they put pictures on and the only people that watch these pictures are themselves. They all want to be stars. It is a very distractive kind of occupation. I can't imagine that this would have a lot of value. I would rather own – I don't own it because I think it is very highly priced – I would rather own a company like Alibaba or Amazon or Google, than Facebook, personally. This is my view. Other people have different views. That's what makes the market. Some people are buying it and some people are selling it.”
On overall market valuation concerns:
"I think we are in a gigantic financial asset bubble. But it is interesting that that despite of all the money printing, bond yields didn't go down. They bottomed out on July 25, 2012 at 1.43% on the 10-years. We went to over 3.0%. We're now at 2.85% or something thereabout. But we're up substantially. Now, this hasn't had an impact on stocks yet. In fact, it pushed money into the stock market out of the bond market. But if the 10-years goes to say 3.5% to 4.0%, then the 30-year goes to close to 5.0%, the mortgage rates go to 6.0%. That will hit the economy very hard."
"[The bubble] could burst before. It could burst any day. I think we are very stretched. Sentiment figures are very, very bullish. Everybody's bullish. The reality is they're very bullish because they think the economy will accelerate on the upside. But my view is very different. The global economy is slowing down, because the global economy's largely emerging economies nowadays, and there's no growth in exports in emerging economies, there's no growth, in the local economies. So, I feel that the valuations are high, the corporate profits have been boosted largely because of the falling interest rates."
