Well you buy what’s working, right? Don’t fight the Fed? Oh wait…
BTC just hit $670…
via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/Uce1y4IIZmY/story01.htm Tyler Durden
another site
For
the past few weeks, the Obama administration has been promising
that that the federal health insurance exchange portal run through
HealthCare.gov will work “smoothly” for the “vast majority” of
users by the end of the month. But the administration hasn’t
offered much detail about what that means.
For that, we
turn to The Washington Post, which explains that the
administration is focused internally on getting 80 percent of users
all the way through the enrollment process. In a detail that is
suggestive of the managerial failures that led to the disastrous
rollout of the exchanges, The Post also reports that the goal is
“the first concrete performance standard in the 31/2 years since
the government began to design the health exchange.” Prior to the
launch of the site, the administration had no internal definition
of what constituted a working site. And the contractors who built
the exchange system apparently did not have clear expectations
regarding their work either:
When HHS in 2011 invited contractors to bid on the chance to
build HealthCare.gov, the department’s “statement of work” did not
include requirements typical of many IT contracts in which
interested companies must spell out how the system would perform,
according to an industry representative close to the project, who
was granted anonymity in order to speak frankly. The agreement
that CGI
Federal, the company chosen as the main contractor, signed on
Sept. 30, 2011, also did not contain specific performance criteria,
success measures or response times.
Well, the site certainly behaved like one built without any
performance criteria.
The revelation of this metric leaves us with several big
questions. Is it achievable? And if so, how will we know whether it
has been achieved? An 80 percent success rate leaves room for just
enough failures that it will be hard to independently verify. And
given previous reports by the Post and others that the site is not
likely to improve enough to be working by the White House’s
end-of-month deadline, there’s reason to doubt that the goal can
actually be reached.
Even if it is achieved, will it be enough? The 80 percent target
is simply for users of the exchange to be able to get all the way
through the enrollment process. But it doesn’t say anything about
the accuracy of the enrollment or pricing data that is generated in
the process. That could be a big problem, given that the site has
been sending bad enrollment data to insurers and has also had
trouble with the subsidy calculator that determines premium prices
and subsidy levels.
Indeed, if the website becomes generally usable for those who
want to enroll but continues to generate bad enrollment and pricing
data, we could end up with large numbers of people who think they
are enrolled in one plan, at a particular price, but whose
enrollment information is never properly transmitted, resulting in
mass confusion once new coverage kicks in next year. Hitting this
particular goal, in other words, might not really fix anything, and
could make things even worse.
from Hit & Run http://reason.com/blog/2013/11/18/obamacares-website-gets-its-first-perfor
via IFTTT
Visitors to the IceHotel in the village of
Jukkasjärvi, Sweden, should consider themselves lucky. Well,
obviously, the hotel, which is exactly what the name suggests, is a
huge draw around the world and reservations aren’t exactly easy to
come by. Anybody who can afford a room there probably leads a
pretty lucky life. But visitors are also lucky that they all
haven’t perished in a roaring fire! It turns out the IceHotel has
been operating all this time (since 1990) with no smoke
detectors!
Authorities in Sweden have finally
put an end to this reckless endangerment by the company.
Courtesy of Agence France-Presse:
The Ice Hotel, located in the small Arctic town of Jukkasjarvi,
is following a request by authorities to guarantee the safety of
its guests.Hotel spokeswoman Beatrice Karlsson said the hotel was a little
surprised at first, but understood as “there are things that can
actually catch fire, like pillows, sleeping bags or reindeer
skins”.“To us the most important concern is the safety of our clients,
so we will comply,” she said.
Some may point out that fires that break out in pillows and
sleeping bags are unlikely to spread anywhere in a hotel made
entirely out of ice or produce enough smoke to cause serious
inhalation problems, but that’s not the point! The point is that
safety rules must be followed no matter what!
Plus, ice can totally catch on fire. As this little experiment
below shows, all they have to do is accidentally build the IceHotel
on top of a bunch of calcium carbide:
from Hit & Run http://reason.com/blog/2013/11/18/you-know-what-this-hotel-made-out-of-ice
via IFTTT
Bill Clinton
has said that he hopes there is a female president in his lifetime,
but added that he has “no idea” if his wife is planning on
running.
From
Politico:
Former President Bill Clinton said Monday he would like to see a
female president, but he has “no idea” if his wife, former
Secretary of State Hillary Clinton, will run in 2016.“I hope we have a woman president in my lifetime, and I think it
would be a good thing for the world as well as for America,”
Clinton said at a conference in China, according to Agence
France-Presse.
Although Bill Clinton claims to have “no idea” about his wife’s
plans for 2016, Democratic strategists and donors
are preparing for a what is widely considered as an
inevitable Hillary Clinton presidential campaign.
Follow this story and more at Reason
24/7.
Spice up your blog or Website with Reason 24/7 news and
Reason articles. You can get the widgets
here. If you have a story that would be of
interest to Reason’s readers please let us know by emailing the
24/7 crew at 24_7@reason.com, or tweet us stories
at @reason247.
from Hit & Run http://reason.com/blog/2013/11/18/bill-clinton-hoping-for-a-woman-preside
via IFTTT
Bill Clinton
has said that he hopes there is a female president in his lifetime,
but added that he has “no idea” if his wife is planning on
running.
From
Politico:
Former President Bill Clinton said Monday he would like to see a
female president, but he has “no idea” if his wife, former
Secretary of State Hillary Clinton, will run in 2016.“I hope we have a woman president in my lifetime, and I think it
would be a good thing for the world as well as for America,”
Clinton said at a conference in China, according to Agence
France-Presse.
Although Bill Clinton claims to have “no idea” about his wife’s
plans for 2016, Democratic strategists and donors
are preparing for a what is widely considered as an
inevitable Hillary Clinton presidential campaign.
Follow this story and more at Reason
24/7.
Spice up your blog or Website with Reason 24/7 news and
Reason articles. You can get the widgets
here. If you have a story that would be of
interest to Reason’s readers please let us know by emailing the
24/7 crew at 24_7@reason.com, or tweet us stories
at @reason247.
from Hit & Run http://reason.com/blog/2013/11/18/bill-clinton-hoping-for-a-woman-preside
via IFTTT
Somehow, Fed head Bill Dudley has managed to encompass the entire “we must keep the foot to the floor” premise of the Fed in one mind-bending sentence:
So – based on an “unforeseen” shock – which he “sees”, and while there are “nascent signs the economy may be doing better”, the Fed should remain as exceptionally easy just in case… (asteroid? alien invasion? West Coast quake?)
However, for all those “hopers”, clinging to Dudley’s confident projections, while:
He remains hopeful:
Fed’s Dudley: Economy’s ‘Soft Patch’ Is Temporary
“The weakness of real GDP growth in the first quarter probably will prove temporary,” Federal Reserve Bank of New York President William Dudley said. “There are many reasons to believe conditions are in place for stronger growth in the coming months in the nation and the region,” he said.
Finally, the following line caught our eye: “Key measures of household leverage have declined and are now near the lowest levels they have been in well over a decade“.
Uh, is Bill “edible iPads” Dudley looking at the following chart showing total consumer credit, including car and student loans, when he makes that assessment?
And investors really believe these guys have a clue?
Full Speech:
…
Regional Economic Conditions
Starting with the area’s economy, one of the greatest challenges in the City over the past year has been the massive disruption and destruction caused by Superstorm Sandy. While areas of the New York City metropolitan region were hard hit by the storm, the devastation was particularly severe along the waterfronts of Queens—and in particular in Far Rockaway. We saw and heard about the devastation of the storm first-hand from many of those affected, through a series of support clinics that we held in the storm’s immediate aftermath, as well as from many of our own employees who lived in some of the hardest hit areas.
The good news is that a little more than one-year later there has been a significant rebound in employment and economic activity across the five boroughs. New York City has continued to see pretty solid job creation through this past summer, and, in stark contrast with past economic expansions, this is happening without any direct contribution from the securities industry—or, more colloquially, Wall Street. So far this year, the city’s job gains have been broad-based, led by strong growth in industries such as education and health, advertising, computer services, leisure and hospitality, wholesale and retail trade, and, especially, construction.
Of course, while it is reassuring that most of the city has bounced back strongly from this historic natural disaster, it is important to remember that the hardest hit communities, and the residents and businesses there, who lost so much, are still struggling to recover. Many of those communities are right here in Queens: the whole Rockaway peninsula—from Breezy Point to Arverne—was completely flooded, as were neighborhoods like Howard Beach, Springfield Gardens, Lindenwood, and even parts of Flushing, Long Island City, Astoria and Maspeth. Still, Queens as a whole showed strong resilience—employment bounced back from Sandy fairly quickly, and as of early 2013 it had already surpassed its pre-Sandy level.
While many residents here commute to work in other boroughs, primarily Manhattan, Queens has a formidable industrial base of its own. Jobs are prevalent in industries ranging from medical care to construction, not to mention printing and a number of other manufacturing industries that benefit from being in a large population center. But Queens’ most concentrated industry is transportation—specifically air transportation which employs about 27,000 workers, about five percent of Queens’ jobs.
Education is another key industry in Queens and the city as a whole. And it is not just a job creator. The investment in human capital that education entails makes it a socially desirable activity. There is considerable value from a college education both to the person that has been educated and to society as a whole. The Great Recession and sluggish recovery that has followed has made it difficult for people to find jobs, and I’m sure you may be wondering about whether going to college will turn out to be a good investment, especially if faced with the burden of student debt, something we track quite closely.
Let me reassure you, the benefits of a college degree remain significant. Research we have undertaken at the New York Fed shows that young people with a college degree are more likely to have a job and they tend to earn considerably higher wages than those without degrees—and this is true even for those who may be underemployed initially when they first enter the labor market after graduation. Although the labor market has been challenging for college graduates in recent years, I am confident that most will find work and transition into higher-skilled jobs as they gain experience and as the labor market improves.
Now, I’d like to turn my attention to recent developments in the national economy.
National Economic Conditions
Let me begin by taking stock of where we are at the moment. Then I will address my expectations for the performance of the economy in 2014 and 2015.
Since the end of what is now called the Great Recession in mid-2009, the U.S. economy has experienced 17 consecutive calendar quarters of positive growth of real GDP. However, the compound annual rate of growth over that period has only been around 2 ¼ percent, close to prevailing estimates of the economy’s potential growth rate. Thus, we have made limited progress in closing the substantial output gap that was created during the recession.
A similar conclusion is drawn from an assessment of labor market conditions. Although the unemployment rate has declined by about 2 ¾ percentage points since peaking at 10 percent in October of 2009, a significant portion of that decline reflects the substantial decline of the labor force participation rate over that period. It should also be noted that since the previous business cycle peak at the end of 2007, the decline of the labor force participation rate has been more than accounted for by a decline in participation of people in the prime working age of 25 to 54.
The inflation data are also consistent with this overall picture of an economy operating well below its full potential. Total inflation, as measured by the personal consumption expenditures (PCE) deflator, has been quite volatile in recent years due to sharp fluctuations in energy prices. Core inflation, which excludes the volatile food and energy components and thereby may be a better guide as to underlying inflation, slowed from around 2 percent in early 2012 to just above 1 percent in mid-2013. In recent mo
nths it has shown signs of stabilizing, but remains well below the FOMC’s expressed goal of 2 percent for total inflation. Fortunately, inflation expectations remain relatively stable at levels somewhat above the current inflation rate. This stability should help prevent an undesirable further drop in inflation relative to our 2 percent objective.
That said, there are some nascent signs that the economy may be doing better. For example, based on the first estimate, which is subject to revision, real (gross domestic product) GDP increased at a 2.8 percent annual rate in the third quarter of 2013, above the trend of the past four years. And the most recent payroll employment report showed a pickup in the monthly pace of job gains. The 3-month moving average rose back above a 200,000 pace after slowing to about 150,000 as of July of this year. I hope that this marks a turning point for the economy.
But before we rush to this conclusion a few more cautionary comments are appropriate. With respect to GDP growth, it turns out that inventory investment contributed ¾ of a percentage point to that overall growth rate. Thus, because this impetus from inventories will likely reverse this quarter, the real GDP growth rate is likely to slow to around a 2 percent annual rate or a bit less in the fourth quarter. With respect to payroll employment, we have seen such bursts in payroll growth before over the past few years and have been disappointed when the pickups proved temporary and did not lead to a rise in the overall growth rate.
But, I have to admit that I am getting more hopeful. Not only do we have some better data in hand, but also the fiscal drag, which has been holding the economy back, is likely to abate considerably over the next few years at the same time that the fundamental underpinnings of the economy are improving.
The first thing to note is that federal fiscal policy in 2013 has been unusually contractionary. At the beginning of the year the payroll tax cut expired while tax rates on higher income households were raised, a series of taxes associated with the Affordable Care Act took effect, and spending was reduced due to the sequester and the gradual winding down of foreign military operations. According to the Congressional Budget Office, the cyclically-adjusted or full-employment budget balance increased by roughly 1 ¾ percentage points of GDP in fiscal year 2013. Over the past 50 years there have been only two other episodes of fiscal contraction of this order of magnitude, and both of those occurred when the unemployment rate was substantially lower than it has been of late. Under current law, the amount of federal fiscal restraint will decline in 2014 and then decline further in 2015. At the same time, the sustained contraction in spending and employment by state and local governments appears to be over.
The fact that the U.S. economy has continued to grow at around a 2 percent pace in 2013 despite this quite intense fiscal restraint provides evidence to the second key point, which is that the private sector of the economy has largely completed its healing process and is now poised to ramp up its level of activity. Key measures of household leverage have declined and are now near the lowest levels they have been in well over a decade. Household net worth, expressed as a percent of disposable income, has increased back to its average of the previous decade, reflecting rising equity and home prices and declining debt. Recently, banks have eased credit standards somewhat after a prolonged period of tightness. As a result, we are now experiencing a fairly typical cyclical recovery of consumer spending on durable goods. For example, sales of light-weight motor vehicles have increased steadily over the past four years, reaching an annual rate of 15.7 million in the third quarter of 2013, though sales in September and October have been somewhat below that average.
Similarly, after five years in which housing production was well below what is consistent with underlying demographic trends and the replacement demand for houses, it now appears that we have worked off the excess supply of housing built up during the boom years of the last decade. Housing market activity has begun to recover, and a widely followed national home price index is up 12 percent over the 12 months ending in September.1 Anecdotal reports suggest that this higher-than-expected increase in home prices is due to a relatively low number of homes for sale. Due to this shortness of supply, there is reason to expect increases in starts going forward.
Yet another bright spot on the horizon is the fact that growth prospects among our major trading partners have improved following a few years of lackluster performance which induced a sharp slowing of growth of U.S. exports. In particular, the euro area appears to have emerged from a protracted recession and is experiencing modest but positive growth.
To summarize, while growth in 2013 has been disappointing, I believe a good case can be made that the pace of growth will pick up some in 2014 and then somewhat more in 2015. The private sector of the economy should continue to heal, while the amount of fiscal drag should subside. Despite near-term concerns, growth prospects among our major trading partners will improve further next year. This combination of events is likely to create an environment in which business investment spending will strengthen. As growth picks up, I expect to see more substantial improvement in labor market conditions and a gradual updrift in inflation back towards the FOMC’s target rate.
However, the notion that the economy will grow more swiftly remains a forecast rather than a reality at this point. As is always the case, there is substantial uncertainty surrounding this forecast. Moreover, there is always the possibility of some unforeseen shock. Thus, we will continue to monitor U.S. and global economic conditions very carefully and will adjust our views on the likely path for growth, inflation and the unemployment rate accordingly.
via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/cdSTjeTFfKo/story01.htm Tyler Durden
Somehow, Fed head Bill Dudley has managed to encompass the entire “we must keep the foot to the floor” premise of the Fed in one mind-bending sentence:
So – based on an “unforeseen” shock – which he “sees”, and while there are “nascent signs the economy may be doing better”, the Fed should remain as exceptionally easy just in case… (asteroid? alien invasion? West Coast quake?)
However, for all those “hopers”, clinging to Dudley’s confident projections, while:
He remains hopeful:
Fed’s Dudley: Economy’s ‘Soft Patch’ Is Temporary
“The weakness of real GDP growth in the first quarter probably will prove temporary,” Federal Reserve Bank of New York President William Dudley said. “There are many reasons to believe conditions are in place for stronger growth in the coming months in the nation and the region,” he said.
Finally, the following line caught our eye: “Key measures of household leverage have declined and are now near the lowest levels they have been in well over a decade“.
Uh, is Bill “edible iPads” Dudley looking at the following chart showing total consumer credit, including car and student loans, when he makes that assessment?
And investors really believe these guys have a clue?
Full Speech:
…
Regional Economic Conditions
Starting with the area’s economy, one of the greatest challenges in the City over the past year has been the massive disruption and destruction caused by Superstorm Sandy. While areas of the New York City metropolitan region were hard hit by the storm, the devastation was particularly severe along the waterfronts of Queens—and in particular in Far Rockaway. We saw and heard about the devastation of the storm first-hand from many of those affected, through a series of support clinics that we held in the storm’s immediate aftermath, as well as from many of our own employees who lived in some of the hardest hit areas.
The good news is that a little more than one-year later there has been a significant rebound in employment and economic activity across the five boroughs. New York City has continued to see pretty solid job creation through this past summer, and, in stark contrast with past economic expansions, this is happening without any direct contribution from the securities industry—or, more colloquially, Wall Street. So far this year, the city’s job gains have been broad-based, led by strong growth in industries such as education and health, advertising, computer services, leisure and hospitality, wholesale and retail trade, and, especially, construction.
Of course, while it is reassuring that most of the city has bounced back strongly from this historic natural disaster, it is important to remember that the hardest hit communities, and the residents and businesses there, who lost so much, are still struggling to recover. Many of those communities are right here in Queens: the whole Rockaway peninsula—from Breezy Point to Arverne—was completely flooded, as were neighborhoods like Howard Beach, Springfield Gardens, Lindenwood, and even parts of Flushing, Long Island City, Astoria and Maspeth. Still, Queens as a whole showed strong resilience—employment bounced back from Sandy fairly quickly, and as of early 2013 it had already surpassed its pre-Sandy level.
While many residents here commute to work in other boroughs, primarily Manhattan, Queens has a formidable industrial base of its own. Jobs are prevalent in industries ranging from medical care to construction, not to mention printing and a number of other manufacturing industries that benefit from being in a large population center. But Queens’ most concentrated industry is transportation—specifically air transportation which employs about 27,000 workers, about five percent of Queens’ jobs.
Education is another key industry in Queens and the city as a whole. And it is not just a job creator. The investment in human capital that education entails makes it a socially desirable activity. There is considerable value from a college education both to the person that has been educated and to society as a whole. The Great Recession and sluggish recovery that has followed has made it difficult for people to find jobs, and I’m sure you may be wondering about whether going to college will turn out to be a good investment, especially if faced with the burden of student debt, something we track quite closely.
Let me reassure you, the benefits of a college degree remain significant. Research we have undertaken at the New York Fed shows that young people with a college degree are more likely to have a job and they tend to earn considerably higher wages than those without degrees—and this is true even for those who may be underemployed initially when they first enter the labor market after graduation. Although the labor market has been challenging for college graduates in recent years, I am confident that most will find work and transition into higher-skilled jobs as they gain experience and as the labor market improves.
Now, I’d like to turn my attention to recent developments in the national economy.
National Economic Conditions
Let me begin by taking stock of where we are at the moment. Then I will address my expectations for the performance of the economy in 2014 and 2015.
Since the end of what is now called the Great Recession in mid-2009, the U.S. economy has experienced 17 consecutive calendar quarters of positive growth of real GDP. However, the compound annual rate of growth over that period has only been around 2 ¼ percent, close to prevailing estimates of the economy’s potential growth rate. Thus, we have made limited progress in closing the substantial output gap that was created during the recession.
A similar conclusion is drawn from an assessment of labor market conditions. Although the unemployment rate has declined by about 2 ¾ percentage points since peaking at 10 percent in October of 2009, a significant portion of that decline reflects the substantial decline of the labor force participation rate over that period. It should also be noted that since the previous business cycle peak at the end of 2007, the decline of the labor force participation rate has been more than accounted for by a decline in participation of people in the prime working age of 25 to 54.
The inflation data are also consistent with this overall picture of an economy operating well below its full potential. Total inflation, as measured by the personal consumption expenditures (PCE) deflator, has been quite volatile in recent years due to sharp fluctuations in energy prices. Core inflation, which excludes the volatile food and energy components and thereby may be a better guide as to underlying inflation, slowed from around 2 percent in early 2012 to just above 1 percent in mid-2013. In recent months it has shown signs of stabilizing, but remains well below the FOMC’s expressed goal of 2 percent for total inflation. Fortunately, inflation expectations remain relatively stable at levels somewhat above the current inflation rate. This stability should help prevent an undesirable further drop in inflation relative to our 2 percent objective.
That said, there are some nascent signs that the economy may be doing better. For example, based on the first estimate, which is subject to revision, real (gross domestic product) GDP increased at a 2.8 percent annual rate in the third quarter of 2013, above the trend of the past four years. And the most recent payroll employment report showed a pickup in the monthly pace of job gains. The 3-month moving average rose back above a 200,000 pace after slowing to about 150,000 as of July of this year. I hope that this marks a turning point for the economy.
But before we rush to this conclusion a few more cautionary comments are appropriate. With respect to GDP growth, it turns out that inventory investment contributed ¾ of a percentage point to that overall growth rate. Thus, because this impetus from inventories will likely reverse this quarter, the real GDP growth rate is likely to slow to around a 2 percent annual rate or a bit less in the fourth quarter. With respect to payroll employment, we have seen such bursts in payroll growth before over the past few years and have been disappointed when the pickups proved temporary and did not lead to a rise in the overall growth rate.
But, I have to admit that I am getting more hopeful. Not only do we have some better data in hand, but also the fiscal drag, which has been holding the economy back, is likely to abate considerably over the next few years at the same time that the fundamental underpinnings of the economy are improving.
The first thing to note is that federal fiscal policy in 2013 has been unusually contractionary. At the beginning of the year the payroll tax cut expired while tax rates on higher income households were raised, a series of taxes associated with the Affordable Care Act took effect, and spending was reduced due to the sequester and the gradual winding down of foreign military operations. According to the Congressional Budget Office, the cyclically-adjusted or full-employment budget balance increased by roughly 1 ¾ percentage points of GDP in fiscal year 2013. Over the past 50 years there have been only two other episodes of fiscal contraction of this order of magnitude, and both of those occurred when the unemployment rate was substantially lower than it has been of late. Under current law, the amount of federal fiscal restraint will decline in 2014 and then decline further in 2015. At the same time, the sustained contraction in spending and employment by state and local governments appears to be over.
The fact that the U.S. economy has continued to grow at around a 2 percent pace in 2013 despite this quite intense fiscal restraint provides evidence to the second key point, which is that the private sector of the economy has largely completed its healing process and is now poised to ramp up its level of activity. Key measures of household leverage have declined and are now near the lowest levels they have been in well over a decade. Household net worth, expressed as a percent of disposable income, has increased back to its average of the previous decade, reflecting rising equity and home prices and declining debt. Recently, banks have eased credit standards somewhat after a prolonged period of tightness. As a result, we are now experiencing a fairly typical cyclical recovery of consumer spending on durable goods. For example, sales of light-weight motor vehicles have increased steadily over the past four years, reaching an annual rate of 15.7 million in the third quarter of 2013, though sales in September and October have been somewhat below that average.
Similarly, after five years in which housing production was well below what is consistent with underlying demographic trends and the replacement demand for houses, it now appears that we have worked off the excess supply of housing built up during the boom years of the last decade. Housing market activity has begun to recover, and a widely followed national home price index is up 12 percent over the 12 months ending in September.1 Anecdotal reports suggest that this higher-than-expected increase in home prices is due to a relatively low number of homes for sale. Due to this shortness of supply, there is reason to expect increases in starts going forward.
Yet another bright spot on the horizon is the fact that growth prospects among our major trading partners have improved following a few years of lackluster performance which induced a sharp slowing of growth of U.S. exports. In particular, the euro area appears to have emerged from a protracted recession and is experiencing modest but positive growth.
To summarize, while growth in 2013 has been disappointing, I believe a good case can be made that the pace of growth will pick up some in 2014 and then somewhat more in 2015. The private sector of the economy should continue to heal, while the amount of fiscal drag should subside. Despite near-term concerns, growth prospects among our major trading partners will improve further next year. This combination of events is likely to create an environment in which business investment spending will strengthen. As growth picks up, I expect to see more substantial improvement in labor market conditions and a gradual updrift in inflation back towards the FOMC’s target rate.
However, the notion that the economy will grow more swiftly remains a forecast rather than a reality at this point. As is always the case, there is substantial uncertainty surrounding this forecast. Moreover, there is always the possibility of some unforeseen shock. Thus, we will continue to monitor U.S. and global economic conditions very carefully and will adjust our views on the likely path for growth, inflation and the unemployment rate accordingly.
via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/cdSTjeTFfKo/story01.htm Tyler Durden
The CFTC has won a consent order against MF Global requiring it to pay $1.212 billion in restitution to customers and a further $100 million civil penalty:
The big question is – of course – where is the money coming from?
Full CFTC Statement:
The U.S. Commodity Futures Trading Commission (CFTC) obtained a federal court consent Order against Defendant MF Global Inc. (MF Global) requiring it to pay $1.212 billion in restitution to customers of MF Global to ensure customers recover their losses sustained when MF Global failed in 2011.
The consent Order, entered on November 8, 2013 by U.S. District Court Judge Victor Marrero of the U.S. District Court for the Southern District of New York, also imposes a $100 million civil monetary penalty on MF Global, to be paid after MF Global has fully paid customers and certain other creditors entitled to priority under bankruptcy law. The Trustee for MF Global obtained permission from the bankruptcy court to pay restitution in full to customers to remedy any shortfall with funds of the MF Global general estate.
The consent Order arises out of the CFTC’s complaint, filed on June 27, 2013, charging MF Global and the other Defendants with unlawful use of customer funds (see CFTC Press Release 6626-13, June 27, 2013). In the consent Order, MF Global admits to the allegations pertaining to its liability based on the acts and omissions of its employees as set forth in the consent Order and the Complaint. The CFTC’s litigation continues against the remaining defendants: MF Global Holdings Ltd., Jon S. Corzine, and Edith O’Brien.
Gretchen Lowe, Acting Director of the CFTC’s Division of Enforcement, stated, “Division staff have worked tirelessly to ensure that 100 percent restitution be awarded to satisfy customer losses. The CFTC will continue to ensure that those who violate U.S. commodity laws and regulations designed to protect customer funds will be vigorously prosecuted.”
The CFTC’s Complaint charged MF Global, a registered Futures Commission Merchant (FCM), with violating provisions of the Commodity Exchange Act and CFTC Regulations intended to protect FCM customer funds and requiring diligent supervision by registrants. Specifically, the Complaint charged that during the last week of October 2011, MF Global unlawfully used customer segregated funds to support its own proprietary operations and the operations of its affiliates. In addition to the misuse of customer funds, the Complaint alleged that MF Global
(i) unlawfully failed to notify the CFTC immediately when it knew or should have known of the deficiencies in its customer accounts,
(ii) made false statements in reports it filed with the CFTC that failed to show the deficits in the customer accounts,
(iii) used customer funds for impermissible investments in securities that were not considered readily marketable or highly liquid in violation of CFTC regulation, and
(iv) failed to diligently supervise the handling of commodity interest accounts carried by MF Global and the activities of its partners, officers, employees, and agents.
via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/mZ7BUuyO0sY/story01.htm Tyler Durden
The CFTC has won a consent order against MF Global requiring it to pay $1.212 billion in restitution to customers and a further $100 million civil penalty:
The big question is – of course – where is the money coming from?
Full CFTC Statement:
The U.S. Commodity Futures Trading Commission (CFTC) obtained a federal court consent Order against Defendant MF Global Inc. (MF Global) requiring it to pay $1.212 billion in restitution to customers of MF Global to ensure customers recover their losses sustained when MF Global failed in 2011.
The consent Order, entered on November 8, 2013 by U.S. District Court Judge Victor Marrero of the U.S. District Court for the Southern District of New York, also imposes a $100 million civil monetary penalty on MF Global, to be paid after MF Global has fully paid customers and certain other creditors entitled to priority under bankruptcy law. The Trustee for MF Global obtained permission from the bankruptcy court to pay restitution in full to customers to remedy any shortfall with funds of the MF Global general estate.
The consent Order arises out of the CFTC’s complaint, filed on June 27, 2013, charging MF Global and the other Defendants with unlawful use of customer funds (see CFTC Press Release 6626-13, June 27, 2013). In the consent Order, MF Global admits to the allegations pertaining to its liability based on the acts and omissions of its employees as set forth in the consent Order and the Complaint. The CFTC’s litigation continues against the remaining defendants: MF Global Holdings Ltd., Jon S. Corzine, and Edith O’Brien.
Gretchen Lowe, Acting Director of the CFTC’s Division of Enforcement, stated, “Division staff have worked tirelessly to ensure that 100 percent restitution be awarded to satisfy customer losses. The CFTC will continue to ensure that those who violate U.S. commodity laws and regulations designed to protect customer funds will be vigorously prosecuted.”
The CFTC’s Complaint charged MF Global, a registered Futures Commission Merchant (FCM), with violating provisions of the Commodity Exchange Act and CFTC Regulations intended to protect FCM customer funds and requiring diligent supervision by registrants. Specifically, the Complaint charged that during the last week of October 2011, MF Global unlawfully used customer segregated funds to support its own proprietary operations and the operations of its affiliates. In addition to the misuse of customer funds, the Complaint alleged that MF Global
(i) unlawfully failed to notify the CFTC immediately when it knew or should have known of the deficiencies in its customer accounts,
(ii) made false statements in reports it filed with the CFTC that failed to show the deficits in the customer accounts,
(iii) used customer funds for impermissible investments in securities that were not considered readily marketable or highly liquid in violation of CFTC regulation, and
(iv) failed to diligently supervise the handling of commodity interest accounts carried by MF Global and the activities of its partners, officers, employees, and agents.
via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/mZ7BUuyO0sY/story01.htm Tyler Durden
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