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Bankers are Behind the Wars

Image by Terry Robinson

Former managing director of Goldman Sachs – and head of the international analytics group at Bear Stearns in London (Nomi Prins) -  notes:

Throughout the century that I examined, which began with the Panic of 1907 … what I found by accessing the archives of each president is that through many events and periods, particular bankers were in constant communication [with the White House] — not just about financial and economic policy, and by extension trade policy, but also about aspects of World War I, or World War II, or the Cold War, in terms of the expansion that America was undergoing as a superpower in the world, politically, buoyed by the financial expansion of the banking community.

 

***

 

In the beginning of World War I, Woodrow Wilson had adopted initially a policy of neutrality. But the Morgan Bank, which was the most powerful bank at the time, and which wound up funding over 75 percent of the financing for the allied forces during World War I … pushed Wilson out of neutrality sooner than he might have done, because of their desire to be involved on one side of the war.

 

Now, on the other side of that war, for example, was the National City Bank, which, though they worked with Morgan in financing the French and the British, they also didn’t have a problem working with financing some things on the German side, as did Chase

 

When Eisenhower became president … the U.S. was undergoing this expansion by providing, under his doctrine, military aid and support to countries [under] the so-called threat of being taken over by communism … What bankers did was they opened up hubs, in areas such as Cuba, in areas such as Beirut and Lebanon, where the U.S. also wanted to gain a stronghold in their Cold War fight against the Soviet Union. And so the juxtaposition of finance and foreign policy were very much aligned.

 

So in the ‘70s, it became less aligned, because though America was pursuing foreign policy initiatives in terms of expansion, the bankers found oil, and they made an extreme effort to activate relationships in the Middle East, that then the U.S. government followed. For example, in Saudi Arabia and so forth, they get access to oil money, and then recycle it into Latin American debt and other forms of lending throughout the globe. So that situation led the U.S. government.

Indeed, JP Morgan also purchased control over America’s leading 25 newspapers in order to propagandize US public opinion in favor of US entry into World War 1.

And many big banks did, in fact, fund the Nazis.

The BBC reported in 1998:

Barclays Bank has agreed to pay $3.6m to Jews whose assets were seized from French branches of the British-based bank during World War II.

 

***

 

Chase Manhattan Bank, which has acknowledged seizing about 100 accounts held by Jews in its Paris branch during World War II ….”Recently unclassified reports from the US Treasury about the activities of Chase in Paris in the 1940s indicate that the local branch worked “in close collaboration with the German authorities” in freezing Jewish assets.

The New York Daily News noted the same year:

The relationship between Chase and the Nazis apparently was so cozy that Carlos Niedermann, the Chase branch chief in Paris, wrote his supervisor in Manhattan that the bank enjoyed “very special esteem” with top German officials and “a rapid expansion of deposits,” according to Newsweek.

 

Niedermann’s letter was written in May 1942 five months after the Japanese bombed Pearl Harbor and the U.S. also went to war with Germany.

The BBC reported in 1999:

A French government commission, investigating the seizure of Jewish bank accounts during the Second World War, says five American banks Chase Manhattan, J.P Morgan, Guaranty Trust Co. of New York, Bank of the City of New York and American Express had taken part.

 

It says their Paris branches handed over to the Nazi occupiers about one-hundred such accounts.

One of Britain’s main newspapers – the Guardian – reported in 2004:

George Bush’s grandfather [and George H.W. Bush's father], the late US senator Prescott Bush, was a director and shareholder of companies that profited from their involvement with the financial backers of Nazi Germany.

 

The Guardian has obtained confirmation from newly discovered files in the US National Archives that a firm of which Prescott Bush was a director was involved with the financial architects of Nazism.

 

His business dealings … continued until his company’s assets were seized in 1942 under the Trading with the Enemy Act

 

***

 

The documents reveal that the firm he worked for, Brown Brothers Harriman (BBH), acted as a US base for the German industrialist, Fritz Thyssen, who helped finance Hitler in the 1930s before falling out with him at the end of the decade. The Guardian has seen evidence that shows Bush was the director of the New York-based Union Banking Corporation (UBC) that represented Thyssen’s US interests and he continued to work for the bank after America entered the war.

 

***

 

Bush was a founding member of the bank [UBC] … The bank was set up by Harriman and Bush’s father-in-law to provide a US bank for the Thyssens, Germany’s most powerful industrial family.

 

***

 

By the late 1930s, Brown Brothers Harriman, which claimed to be the world’s largest private investment bank, and UBC had bought and shipped millions of dollars of gold, fuel, steel, coal and US treasury bonds to Germany, both feeding and financing Hitler’s build-up to war.

 

Between 1931 and 1933 UBC bought more than $8m worth of gold, of which $3m was shipped abroad. According to documents seen by the Guardian, after UBC was set up it transferred $2m to BBH accounts and between 1924 and 1940 the assets of UBC hovered around $3m, dropping to $1m only on a few occasions.

 

***

 

UBC was caught red-handed operating a American shell company for the Thyssen family eight months after America had entered the war and that this was the bank that had partly financed Hitler’s rise to power.

Indeed, banks often finance both sides of wars:

 

(The San Francisco Chronicle also documents that leading financiers Rockefeller, Carnegie and Harriman also funded Nazi eugenics programs … but that’s a story for another day.)

The Federal Reserve and other central banks also help to start wars by financing them .

And America apparently considers economic rivalry to be a basis for war, and is using the military to contain China’s growing economic influence.

Multi-billionaire investor Hugo Salinas Price says:

What happened to [Libya's] Mr. Gaddafi, many speculate the real reason he was ousted was that he was planning an all-African currency for conducting trade. The same thing happened to him that happened to Saddam because the US doesn’t want any solid competing currency out there vs the dollar. You know Gaddafi was talking about a gold dinar.

Senior CNBC editor John Carney noted:

Is this the first time a revolutionary group has created a central bank while it is still in the midst of fighting the entrenched political power? It certainly seems to indicate how extraordinarily powerful central bankers have become in our era.

 

Robert Wenzel of Economic Policy Journal thinks the central banking initiative reveals that foreign powers may have a strong influence over the rebels.

 

This suggests we have a bit more than a ragtag bunch of rebels running around and that there are some pretty sophisticated influences. “I have never before heard of a central bank being created in just a matter of weeks out of a popular uprising,” Wenzel writes.

Indeed, many claim that recent wars have really been about bringing all countries into the fold of Western central banking, and that the wars against Middle Eastern countries are really about forcing them into the dollar and private central banking.

The most decorated American military man in history said that war is a racket, and noted:

Let us not forget the bankers who financed the great war. If anyone had the cream of the profits it was the bankers.

The big banks have also been laundering money for terrorists. The big bank employee who blew the whistle on the banks’ money laundering for terrorists and drug cartels says that the giant bank is still aiding terrorists, saying:

The public needs to know that money is still being funneled through HSBC to directly buy guns and bullets to kill our soldiers …. Banks financing … terrorists affects every single American.

He also said:

It is disgusting that our banks are STILL financing terror on 9/11 2013.

And see this.

According to the BBC and other sources, Prescott Bush, JP Morgan and other leading financiers also funded a coup against President Franklin Roosevelt in an attempt – basically – to implement fascism in the U.S. See this, this, this and this.

Kevin Zeese writes:

Americans are recognizing the link between the military-industrial complex and the Wall Street oligarchs—a connection that goes back to the beginning of the modern U.S. empire. Banks have always profited from war because the debt created by banks results in ongoing war profit for big finance; and because wars have been used to open countries to U.S. corporate and banking interests. Secretary of State, William Jennings Bryan wrote: “the large banking interests were deeply interested in the world war because of the wide opportunities for large profits.”

 

Many historians now recognize that a hidden history for U.S. entry into World War I was to protect U.S. investors. U.S. commercial interests had invested heavily in European allies before the war: “By 1915, American neutrality was being criticized as bankers and merchants began to loan money and offer credits to the warring parties, although the Central Powers received far less. Between 1915 and April 1917, the Allies received 85 times the amount loaned to Germany.” The total dollars loaned to all Allied borrowers during this period was $2,581,300,000. The bankers saw that if Germany won, their loans to European allies would not be repaid. The leading U.S. banker of the era, J.P. Morgan and his associates did everything they could to push the United States into the war on the side of England and France. Morgan said: “We agreed that we should do all that was lawfully in our power to help the Allies win the war as soon as possible.” President Woodrow Wilson, who campaigned saying he would keep the United States out of war, seems to have entered the war to protect U.S. banks’ investments in Europe.

 

The most decorated Marine in history, Smedley Butler, described fighting for U.S. banks in many of the wars he fought in. He said: “I spent 33 years and four months in active military service and during that period I spent most of my time as a high-class muscle man for Big Business, for Wall Street and the bankers. In short, I was a racketeer, a gangster for capitalism. I helped make Mexico and especially Tampico safe for American oil interests in 1914. I helped make Haiti and Cuba a decent place for the National City Bank boys to collect revenues in. I helped in the raping of half a dozen Central American republics for the benefit of Wall Street. I helped purify Nicaragua for the International Banking House of Brown Brothers in 1902-1912. I brought light to the Dominican Republic for the American sugar interests in 1916. I helped make Honduras right for the American fruit companies in 1903. In China in 1927 I helped see to it that Standard Oil went on its way unmolested. Looking back on it, I might have given Al Capone a few hints. The best he could do was to operate his racket in three districts. I operated on three continents.”

 

In Confessions of an Economic Hit Man, John Perkins describes how World Bank and IMF loans are used to generate profits for U.S. business and saddle countries with huge debts that allow the United States to control them. It is not surprising that former civilian military leaders like Robert McNamara and Paul Wolfowitz went on to head the World Bank. These nations’ debt to international banks ensures they are controlled by the United States, which pressures them into joining the “coalition of the willing” that helped invade Iraq or allowing U.S. military bases on their land. If countries refuse to “honor” their debts, the CIA or Department of Defense enforces U.S. political will through coups or military action.

 

***

 

More and more people are indeed seeing the connection between corporate banksterism and militarism ….

Indeed, all wars are bankers’ wars.








FX: Ranges Persist, though Sterling is Exceptional

The US dollar rose against all the major currencies last week, except the British pound, which was lifted by a strong employment report and a tick up in wage growth. The greenback's gains are consistent with our caution last week against playing for a breakout as key support for the dollar had been approached.  

 

The issue remains the same for the week ahead. Assuming no exogenous shocks, such data or comments that require a significant reassessment of the macro-view, that is to say, the continued status quo favors continued range trading.  

 

In a world in which we may not have seen the peak in central bank balance sheets, and the first Fed hike is still move than a year away, incentives favor riskier assets and the chase of yield. Once one minimizes the redenomination risk (i.e., the break-up of EMU) and recognizes the reform efforts, the European periphery may still attract flows even if spreads are at multi-year lows (in the same way some credit quality spreads in the US have returned to pre-crisis levels).    

 

Many investors are cautious; however, fearing that the ECB may introduce a negative deposit rate and/or a QE program.   While understanding the logic, why QE, or and/or a negative deposit rate should weaken the euro, we wonder if it would work that way.  Not only are investors buying stocks and sovereign bonds, but other investors are buying bad loan portfolios.  These flows, coupled with a large current account surplus appear key drivers and rather than being disrupted by unorthodox policies, they may reinforce them.   

 

Many investors have been burned by the yen.  The consensus view coming into the year was the BOJ's QQE would continue to weigh on the yen and, along with new savings vehicles, would help lift Japanese equities.  Instead, the yen is one of the strongest of the major currencies, appreciating 2.8% against the dollar this year, eclipsed only by the New Zealand dollar and Australian dollars.  The Reserve Bank of New Zealand is raising rates and sentiment has swung away from another rate cut by the Reserve Bank of Australia.   For its part the Nikkei is the worst performing major bourse, off almost 11% this year.  

 

Euro:  Last week, the euro established a base just above $1.3780, which corresponds to a 20-day moving average.    The upper end of the narrow trade range is near $1.3865.  The month's high was set at $1.3900. The wider range is around a cent larger in both directions--$1.3680-$1.40. Continued range trading is consistent with lower implied volatility, which around 6% is back to pre-crisis levels.  Low volatility also encourages greater risk taking.  

 

Yen:  The dollar also appears range-bound against the yen.  The lower end of the range (JPY101.20-30) has been tested around eight times in the past two months.  The upper end of the range (JPY104) has only been tested twice.  The dollar is near the middle of that range now.  There is scope for it to trade toward JPY103, but probably not much more unless they're is a further backing up bond yields and/or a strong rally in equities. We note that the US-Japanese 10-year yield spread is also range-bound between about 200 bp and 217 bp.  It too is near the middle of the range.  

 

Sterling:  A strong employment report pushed UK rates higher and lifted sterling.  The implied yield of the June 2015 short-sterling futures contract rose 14 bp from last weeks lows to finish at 119 bp.  Sterling bucked the broader trend of US dollar gains and traded at its best level in 4 1/2 years just above $1.6840. The technical indicators we look at do not suggest a significant top is in place  We are more inclined to buy pullbacks that chase the market.  The magnitude of the pullback we have in mind is $1.6660-80.  On the upside, $1.70 beckons and then, perhaps $1.72.

 

Canadian dollar:  The Canadian dollar was the second best performing major currency against the US dollar last week:  it lost about 0.4% and finished on its lows.  The US dollar has been trending higher against its northern neighbor since testing the CAD1.0850 area on April 9. We suggested two targets last week, CAD1.1020 and CAD1.1070.  The first target has been met.  Technically,  we expect the US dollar to continue to trend high.   We note that trend following models may turn more negative the Canadian dollar as the greenback's five-day moving average is likely to cross about the 20-day early in the new week.  Above CAD1.1070, we look for CAD1.1120 and then, the old CAD1.12 nemesis.  

 

Australian dollar:  The Aussie is the strongest of the major currencies thus far this year, gaining 4.6% against the US dollar.  However, after reaching a peak near $0.9460 (the measuring objective of the large head and shoulders bottom is $0.9500), on April 10, the Australian dollar trended lower. Key support is seen in the $0.9290-$0.9300, a break of this area could see many late longs capitulate and send the currency down to $0.9200.  

 

The golden cross (or death cross) refers to the 50-day and 200-day moving averages.  As the Aussie recovered off the January low ($0.8660), there has been a convergence of these two moving averages.  The gap was a little more than a cent and a half apart at the end of March and is now a little more than 30 bp. The 50-day average could cross above the 200-day average next week, and some may emphasize this bullish technical development.  In the current context, with a deterioration in the near-term technical tone, we advise caution especially if the moving averages cross and the Aussie has sustained a break of that support mentioned above. 

 

Mexican peso:   Narrow trading ranges prevailed in recent sessions.  The attempt to push the dollar below MXN13.00 earlier this month could not be sustained, but the greenback's recovery has been modest.  The dollar's five-day average is likely to cross above the 20-day average in the coming days.  Late peso longs could get frustrated.  Technically, we think there is scope toward MXN13.1750-MXN13.20.

 

Observations from the speculative positioning in the CME currency futures:

 

1.  There were only two notable position adjustments.   The gross long euro position rose 13.6k contracts to 106.3k.  The net long position did not change as might as one may suppose, as the gross shorts rose by 9.2k contracts to 78.6k.  The gross short yen positions were reduced by 17.7k contracts to 83.1k.  This is the smallest gross short yen position since last October.  It is the second consecutive reporting period of short-covering.   Of the other 12 gross positions we track, ten were changed by less than 5k contacts.

 

2.  Speculators are only net short yen and Canadian dollar futures.  The net short yen position has been more than halved this year to -68.7k.  It finished last year near 144k.  The net short Canadian dollar position has barely changed over the past four weeks.  Since its net short positions was halved a month ago, it has remained stuck around 35k contracts.

 

3.  It is the second consecutive week that the net Australian dollar position has been long.  However, given the price action since the end of the reporting period, it would not be surprising if, in next week's report, the net position swung back to the short side.

 

4.  The gross long euro position of 106.3k contracts is the largest long position.  But the gross euro shorts are also substantial at 78.6k contacts.  It is second only to the yen's 83.1k gross short contracts.  Indeed the gap between the two has been dramatically reduced an is the smallest since the middle of last year.  It is possible, that like what happened last May, the gross euro shorts could surpass the gross yen shorts.








What Happened To The Middle Class? The Infographic

Restaurants like Olive Garden and Red Lobster are struggling, while high end dining is flourishing. At GE, demand for high-end dishwashers is racing ahead of sales growth for mass-market models. The increased wealth of highly skilled workers, the insane wealth of those with capital, and the outsourcing of lower skilled jobs have left us all asking, “what happened to the middle class?

 

Source: BestMSWPrograms.com








Are The Swiss Going Crazy? $25 Minimum Wage Referendum In May

Submitted by Pater Tenebrarum of Acting-Man blog,

Most of our readers probably know what we think of minimum wages, but let us briefly recapitulate: there is neither a sensible economic, nor a sensible ethical argument supporting the idea.

Let us look at the economic side of things first: for one thing, the law of supply and demand is not magically suspended when it comes to the price of labor. Price it too high, and not the entire supply will be taken up. Rising unemployment inevitably results.

However, there is also a different way of formulating the argument: the price of labor must not exceed what the market can bear. In order to understand what this actually means, imagine just for the sake of argument a world without money. Such a world is not realistic of course, as without money prices the modern economy could not exist. However, what we want to get at is this: workers can ultimately only be paid with what is actually produced.

As Mises has pointed out, most so-called pro-labor legislation was only introduced after enough capital per worker was invested to make the payment of higher wages possible – usually, the market had already adjusted wages accordingly.

However, unskilled labor increasingly gets priced out of the market anyway, which is where the ethical argument comes in. If a worker cannot produce more than X amount of  goods or services, it is not possible to pay him X+Y for his work. Under minimum wage legislation he is condemned to remain unemployed, even if he is willing to work for less.

In Switzerland, the unions have recently managed to get the demand for minimum wage legislation on one of the quarterly referendums in the country. An interesting point has been brought up by one of the opponents in the course of the debate, but first a little background information:

“Jasmin Eicher has already axed her sole full-time employee to keep afloat her shop selling cards, candles and paper in a Zurich suburb. If Switzerland approves what would be the world’s highest minimum wage, she says the only option would be to close her door.

 

The Swiss will vote in a national referendum May 18 on whether to create a minimum wage of 22 francs ($25) per hour, or 4,000 francs a month. While about 90 percent of workers in Switzerland already earn more than that, employers say setting Switzerland’s first national wage floor would push up salaries throughout the economy. When adjusted for currency and purchasing power, it would be the highest minimum in the world.

 

“We couldn’t pay it,” said Eicher, standing behind the counter in her shop in Schlieren. The employee she let go earned 3,500 francs a month. Now she’s by herself, working 10 hours a day, six days a week, and her hopes of hiring a cheaper helper would be dashed if the proposal passed.

 

“Of course I understand about people not earning enough, but not everyone is worth 4,000 francs. Here in Switzerland we’re already so well-off,” she said.

 

The chief backers of the proposal are Switzerland’s biggest trade unions, which argue that pay levels need to reflect the country’s prices – among the world’s highest.”

 

[…]

 

George Sheldon, professor of economics at the University of Basel, said the Swiss proposal would be counterproductive.

 

“Unemployment among the unskilled is increasing,” he said in a phone interview. “The solution to their problem can’t be to make them more expensive.”

(emphasis added)

So, 90% of all employees are already paid more than the proposed minimum wage. It turns out that virtually all the biggest companies pay salaries above what would be the world's highest minimum wage – but that is not the main problem.

 

Who Would Lose Out?

The point we actually wanted to get at is touched upon in the following excerpts:

“Despite being home to multinational corporations such as KitKat-candy-maker Nestle SA and drugmaker Novartis AG, Switzerland gets two-thirds of its employment from small and medium-sized enterprises.

 

The Association of Swiss Cleaning Companies, Allpura, opposes the minimum wage, saying it would lead to job cuts and worse working conditions. It says employees in the sector earn between 18.50 francs and 26.50 francs per hour.

 

Big companies including Nestle, Novartis and Swatch Group AG are against the measure too, saying it will hurt the economy.

 

“State intervention in the liberal economic system also goes against the market economy principles of our society that have been so successful to date,” Novartis spokesman Dermot Doherty said via e-mail.

 

At Nestle, the wages of all Swiss employees are above the proposed minimum, spokesman Philippe Aeschlimann said. “A higher cost of labor would however affect companies in our supply chain and our Swiss customers,” he said via e-mail.

 

[…]

 

“A minimum wage won’t stop poverty,” Economy Minister Johann Schneider-Ammann said at a press conference in Bern in February. “This new system could be counterproductive.”

 

According to Boris Zuercher, head of the Employment Directorate at the State Secretariat for Economic Affairs, the uniform wage would get passed on to consumers in the form of higher prices and will ultimately result in job losses among low-wage earners. Workers earning between 4,000 and 6,000 francs a month — 40 percent of the full-time workforce — will seek higher pay too, he said.

 

“The main criticism is that it’s an enormously high minimum wage — it would be the highest internationally,” Zuercher said, speaking by phone from Bern. “It’s not a question of Novartis or UBS not being able to afford to pay 4,000 francs, but some little company in a remote valley.”

 

By contrast, the Swiss Federation of Labor Unions says a minimum wage wouldn’t lead to higher unemployment because it would mostly affect domestically-oriented sectors where outsourcing isn’t possible.”

(emphasis added)

The first salient point is the fact that once this new minimum wage law is introduced, upward pressure on all wages would likely ensue. Note in this context that Switzerland is awash in newly created deposit money due to the ministrations of the SNB, which is manipulating the Swiss franc's exchange rate (a few charts on Swiss monetary inflation over recent years can be seen in our article 'How Safe is the Swiss Franc?'. The article is slightly dated, but it still serves to illustrate the point). So there is no brake on prices and wages due to  a lack of money supply inflation – rather the opposite. Naturally, wages would not be the only thing rising under these circumstances – prices would be adjusted accordingly, and in the end the purchasing power of the higher wages would not be greater than before.

The second important point is the one about which enterprises would suffer the most on account of such legislation. When the union official cynically comments that 'only businesses that cannot be outsourced will be hit' (i.e., those who cannot vote with their feet and simply flee), he forgets to mention that small and medium-sized companies as a rule cannot 'outsource' their operations either, almost regardless of what they are producing. We felt reminded of something a friend of ours mentioned to us recently: “The problem of today's form of capitalism is that there are not enough capitalists:”

Indeed, an individual entrepreneur running a small business has a very difficult life already, as every new imposition is much harder to overcome for a small business than it is for a large corporation. This is also why we often find that big corporations don't resist new regulations: they reckon they are likely to keep competition from upstarts at bay. It is laudable that several big Swiss corporations are evidently not following this trend.

If Swiss voters agree to introducing a new minimum wage law, they would end up doing incalculable damage to Switzerland's entrepreneurial culture. At the moment, Switzerland is still one of the freest economies in the world. It has been extremely successful so far and its achievements would clearly be put at risk. Hopefully Switzerland's voters won't be swayed by union's arguments.








Democrats Told "Don't Mention 'Economic Recovery' - It's A Political Loser"

Democratic strategists have made a blunt declaration in an election-year memo, according to AP, "Don't talk about the economic recovery. It's a political loser." Stan Greenberg, James Carville and others wrote that in head-to-head polling tests the mere mention of the word "recovery" is trumped by a Republican assertion that the Obama administration has had six years to get the economy moving and its policies haven't worked. But, but, but... stocks are at all-time highs?

 

As AP reports, Election-year memo to Democratic candidates: Don't talk about the economic recovery. It's a political loser.

"As a start, Democrats should bury any mention of the recovery. That message was tested ... and it lost to the Republican message championed by Karl Rove," they wrote.

 

So say Democratic strategists in a blunt declaration that such talk skips over "how much trouble people are in, and doesn't convince them that policymakers really understand or are even focusing on the problems they continue to face."

 

In addition, Stan Greenberg, James Carville and others wrote that in head-to-head polling tests the mere mention of the word "recovery" is trumped by a Republican assertion that the Obama administration has had six years to get the economy moving and its policies haven't worked.

Coincidentally or not, Democrats have largely shelved the "R" word.

President Barack Obama's only utterance of it in recent weeks was on April 8, and it was in the context of accusing Republicans of blocking progress on issues that "would help with the economic recovery and help us grow faster."

 

Additionally, at a news conference on March 26 where they announced a campaign-season agenda, neither Senate Majority Leader Harry Reid, D-Nev., nor most of the other five lawmakers present uttered the word "recovery."

By traditional measurements, an economic recovery has been underway since partway through Obama's first year in office.

The economy was shrinking when he was sworn in but turned positive in the third quarter of 2009. It has been growing since, although barely so at times. Unemployment, measured at 7.8 percent when Obama took office in January 2009, rose to 10 percent in October of that year until it began declining. It now stands at 6.7 percent, according to the Bureau of Labor Statistics.

 

At the same time, though, many of the jobs that have been created are lower-paying than the ones that preceded them. Long-term unemployment is at historically high levels, another factor that does little or nothing to reassure hard-pressed men and women that any recovery is helping their own pocketbooks.

 

Page Gardner of Women's Voices, listed as a co-author of the memo, said in an interview that for unmarried women and other key parts of the Democratic coalition, "a message about the benefits of a recovery doesn't really reflect their lives currently. The power of the women's economic agenda and talking about equal pay for equal work, paid sick leave, and messages that go to their ability to make it themselves and help their families make it is very powerful, and that's what they want to hear."

But that makes no sense? Initial jobless claims are at pre-crisis levels?

Oh yeah this... For all those curious why layoffs and departures are so low, the
answer is simple: hires are 1 million lower than they should be:

 

And stocks are at record highs?

Oh yeah this...

Still keep BTFD as it's all gonna be great soon - just wait until the weather is all hot and lovely across the US...








Hyper-Sensitive Illinois Mayor Orders Police Raid Over Parody Twitter Account

Submitted by Mike Krieger of Liberty Blitzkrieg blog,

Just yesterday, I wrote a post about how a South Carolina construction worker was fined $525 and lost his job for not paying $0.89 for a drink refill while working at the Ralph H. Johnson VA Medical Center in downtown Charleston. The point was to emphasize how the law comes down with a devastating vengeance when an average citizen commits a minor crime, yet allows the super rich to loot and pillage with zero repercussions. There is now a systemic two-tier justice system operating in these United States, and the result will unquestionably be tyranny if the trend continues unabated.

The latest example of a lowly citizen being subject to a disproportionate use of the law, is Jon Daniel of Peoria, Illinois. Jon was behind a parody Twitter account that mocked Peoria mayor Jim Ardis, and his biggest mistake was not making it clear that it was a parody. As a result, Twitter had already suspended the account weeks ago. Problem solved, right? Wrong.

The tough guy mayor was so offended that a plebe would dare criticize his royal highness that he ordered a police raid on the home of Jon Daniel and his roommates. Peoria native, Justin Glawe wrote an excellent article on the subject for Vice. He writes:

Jon Daniel woke up on Thursday morning to a news crew in his living room, which was a welcome change from the company he had on Tuesday night, when the Peoria, Illinois, police came crashing through the door. The officers tore the 28-year-old’s home apart, seizing electronics and taking several of his roommates in for questioning; one woman who lived there spent three hours in an interrogation room. All for a parody Twitter account.

 

Yes, the cops raided Daniel’s home because they wanted to find out who was behind @peoriamayor, an account that had been shut down weeks ago by Twitter. When it was active, Daniel used it to portray Jim Ardis, the mayor of Peoria, as a weed-smoking, stripper-loving, Midwestern answer to Rob Ford. The account never had more than 50 followers, and Twitter had killed it because it wasn’t clearly marked as a parody. It was a joke, a lark—but it brought the police to Daniel’s door. The cops even took Daniel and one of his housemates in for in-depth questioning—they showed up at their jobs, cuffed them, and confiscated their phones—because of a bunch of Twitter jokes.

 

So the police raid on Daniel’s house wasn’t an isolated incident; it was just another case of the cops acting shady—and naturally, many in this town are raising serious questions and concerns over the use of taxpayer resources and manpower to find out who ran @peoriamayor.

Fortunately, this story does have a silver lining. Daniel’s original Twitter account was actually pretty unsuccessful, with only 50 followers by the time it was shut down. Mayor Jim Ardis should’ve just left well enough alone, but he couldn’t do that, and as a result of all the attention this story has received in the blogosphere, new parody accounts have emerged. The most successful one is @NotPeoriaMayor and the avatar is Jim Ardis with a Hitler mustache. See below:

The best part is this account already has 7x the followers of the other one.

Lesson Learned: Don’t fuck with the Internet.

Full Vice article here.

The LA Times also covered the story, here.








De-Escalation Off: US Deploys Troops To Poland

So what part of "All sides must refrain from any violence, intimidation or provocative actions," did the US not understand when they decided that deploying troops to Poland was in keeping with the four-party deal? As WaPo reports, Poland and the United States will announce next week the deployment of U.S. ground forces to Poland as part of an expansion of NATO presence in Central and Eastern Europe in response to events in Ukraine.

 

Polish minister: U.S. troops are being deployed to Poland. http://t.co/42sifm1GsK

— Washington Post (@washingtonpost) April 18, 2014

 

Via The Washington Post,

Poland and the United States will announce next week the deployment of U.S. ground forces to Poland as part of an expansion of NATO presence in Central and Eastern Europe in response to events in Ukraine.

 

That was the word from Poland’s defense minister, Tomasz Siemoniak, who visited The Post Friday after meeting with Defense Secretary Chuck Hagel at the Pentagon on Thursday.

 

Siemoniak said the decision has been made on a political level and that military planners are working out details.

 

There will also be intensified cooperation in air defense, special forces, cyberdefense and other areas. Poland will play a leading regional role, “under U.S. patronage,” he said.

So is that an escalation? or a de-escalation? or is it different when the US moves troops towards another nation's borders?

 

As a reminder, we noted in December, Russia's placement of tactical nuclear-capable weapons near the Polish border which at the time sent a very clear message of escalation (despite the, at the time, lack of New Cold War headlines). We wrote at the time,

Russia quietly has come through on its threat issued in April 2012, when it warned it would deploy Iskander missiles that could target US missile defense systems in Poland. From RIA at the time:

Moscow reiterated on Tuesday it may deploy Iskander theater ballistic missiles in the Baltic exclave of Kaliningrad that will be capable of effectively engaging elements of the U.S. missile defense system in Poland.

 

NATO members agreed to create a missile shield over Europe to protect it against ballistic missiles launched by so-called rogue states, for example Iran and North Korea, at a summit in Lisbon, Portugal, in 2010.

 

The missile defense system in Poland does not jeopardize Russia’s nuclear forces, Army General Nikolai Makarov, chief of the General Staff of the Russian Armed Forces, said. 

 

“However, if it is modernized…it could affect our nuclear capability and in that case a political decision may be made to deploy Iskander systems in the Kaliningrad region,” he said in an interview with RT television.

 

But that will be a political decision,” he stressed. “So far there is no such need.”

Looks like a little over a year later, the "political decision" was taken as the need is there. But why does Russia need to send a very clear message of escalation at a time when the Cold War is long over, when globalization and free trade, promote game theoretic world peace (or "piece" as the Obama administration wouldsay), oh, and when Russia quietly has decided to reestablish the former USSR starting with the Ukraine.

We'll leave the rhetorical question logically unanswered.








What Collateral Shortage? Collectible Cars Used As "Hard Assets"

You know it's bad when... The central bank inspired nominal price surge in everything expensive has not quite exhausted the greater fool trend-chasing muppet "wealth-builders" yet. As HedgeCo reports, Classic Auto Funds Limited (CAF) is launching several investment partnerships using collectable classic cars as the "hard asset". Forget oil-wells, real estate, or precious metals, as Robert Minnick (senior managing partner at CAF) states confidently, "many investors are recognizing the rising returns in specific classic cars as a low-risk asset." A "low-risk" "investment" indeed... what could possibly go wrong?

 

As HedgeCo reports,

“Many investors are recognizing the rising returns in specific classic cars as a low-risk asset,” said Robert Minnick, Senior Managing Partner of CAF. “But they do not have the expertise to buy the right cars, nor do they wish to store and maintain them. We’re providing the investment vehicle for any individual who wants to own a piece of an Italian sports car, German sedan, or American muscle car as part of their financial portfolio.”

 

Similar to hard asset investments like fine art or wine, CAF operates by acquiring, storing, maintaining, and then selling the classic cars for its fund stakeholders. The first fund is already underway and is called “CAF/1: The Italian Restoration Fund”. CAF’s restoration team is currently hard at work refurbishing a 1971 Ferrari Dino 246 GT, a 1964 Ferrari 330 2+2, and a 1964 Maserati Mistral 3.5.

 

The Company also plans on having additional benefits for its members and fund investors by providing insider access to a wide range of car rallies, vintage racing, concours car shows and other special events that support the classic car lifestyle. “Regardless of your net worth, it takes time to become an insider,” said Michael Crenshaw, Executive Editor and Special Projects Manger for the Company. “CAF will provide a concierge-like service for members who want to enjoy their investments as a lifestyle and culture.”

Greatest Fool yet? Collateralized Tesla Obligations? Perhaps this is what Draghi intends to use to juice the European economy out of deflation? There's always some collateral left to bundle, securitize, and pitch to a willing (and incapable) investor community jealously regarding the 0.001% "wealth" gains...








Russia Confirms Troop Build-Up Near Ukraine; Warns West, More Sanctions "Absolutely Unacceptable"

For the first time, Russia has confirmed that it has built up its military presence on the Ukrainian border (according to Agence France Presse). On the heels of the de-escalation and the West's threat of tougher sanctions (if Russia failed to abide by the new 'deal'), Kremlin spokesman Dmirty Peskov told Rossiya TV that "we have troops in different regions, and there are troops close to the Ukrainian border. Some are based there, others have been sent as reinforcements due to the situation in Ukraine." Reuters also reports that Washington statements "are unlikely to help dialogue," and further sanctions would be "absolutely unacceptable." It seems the 'deal' has done little to calm anything but the US equity market as Peskov blasted "You can't treat Russia like a guilty schoolboy."

 

The Daily Mail's latest update on suspected (now confirmed) Russian troop build-up

 

As Al Arabiya reports, a Kremlin spokesman confirmed Friday that Russia has built up its military presence on the Ukrainian border, Agence France Presse reported, as the United States warned that Moscow would face tougher sanctions if it failed to abide by a new international deal on Ukraine.

"We have troops in different regions, and there are troops close to the Ukrainian border. Some are based there, others have been sent as reinforcements due to the situation in Ukraine," spokesman Dmitry Peskov told Rossiya 1 television, AFP reported.

 

...

 

Peskov said Russia would not be the only party held responsible for implementing the agreement on easing tensions in Ukraine, according to AFP.

 

He added that threats of further sanctions by Washington were "absolutely unacceptable.”

 

"Our Western colleagues are trying to push responsibility [for implementing the deal] toward our side. But it must be underlined: it is a collective responsibility," Peskov said.

Reuters adds that President Vladimir Putin's spokesman, Dmitry Peskov, said, "Statements like those made at a high level in Washington that the United States will follow in detail how Russia fulfils its obligations ... are unlikely to help dialogue,"

"You can't treat Russia like a guilty schoolboy who has to put a cross on a piece of paper to show he has done his homework," Peskov said in an interview with Russia's First Channel. "That kind of language is unacceptable."

Russia's Foreign Ministry accused U.S. officials of seeking to whitewash what it said was the use of force by the Ukrainian government against protesters in the country's mainly Russian-speaking eastern provinces.

"The blame for the Ukrainian crisis and its current aggravation is unreasonably being placed on Russia," the ministry said in a statement.

"The American side is once again stubbornly trying to whitewash the current actions of Kiev's authorities, who have embarked on a course for the violent suppression of protesters in the southeast who are expressing their legitimate indignation over the infringements of their rights."

De-Escalation off...








18 Stats That Prove That Government Dependence Has Reached Epidemic Levels

Submitted by Michael Snyder of The American Dream blog,

Did you know that the number of Americans getting benefits from the federal government each month exceeds the number of full-time workers in the private sector by more than 60 million?  In other words, the number of people that are taking money out of the system is far greater than the number of people that are putting money into the system.  And did you know that nearly 70 percent of all of the money that the federal government spends goes toward entitlement and welfare programs?  When it comes to the transfer of wealth, nobody does it on a grander scale than the U.S. government.  Most of what the government does involves taking money from some people and giving it to other people.  In fact, at this point that is the primary function of the federal government.

Just check out the chart below.  It comes from the Heritage Foundation, and it shows that 69 percent of all federal money is spent either on entitlements or on welfare programs…

So when people tell you that the main reason why we are being taxed into oblivion is so that we can “build roads” and provide “public services”, they are lying to you.  The main reason why the government taxes you so much is so that they can take your money and give it to someone else.

We have become a nation that is completely and totally addicted to government money.  The following are 18 stats that prove that government dependence has reached epidemic levels…

#1 According to an analysis of U.S. government numbers conducted by Terrence P. Jeffrey, there are 86 million full-time private sector workers in the United States paying taxes to support the government, and nearly 148 million Americans that are receiving benefits from the government each month.  How long can such a lopsided system possibly continue?

#2 Ten years ago, the number of women in the U.S. that had jobs outnumbered the number of women in the U.S. on food stamps by more than a 2 to 1 margin.  But now the number of women in the U.S. on food stamps actually exceeds the number of women that have jobs.

#3 The U.S. government has spent an astounding 3.7 trillion dollars on welfare programs over the past five years.

#4 Today, the federal government runs about 80 different “means-tested welfare programs”, and almost all of those programs have experienced substantial growth in recent years.

#5 Back in 1960, the ratio of social welfare benefits to salaries and wages was approximately 10 percent.  In the year 2000, the ratio of social welfare benefits to salaries and wages was approximately 21 percent.  Today, the ratio of social welfare benefits to salaries and wages is approximately 35 percent.

#6 While Barack Obama has been in the White House, the total number of Americans on food stamps has gone from 32 million to nearly 47 million.

#7 Back in the 1970s, about one out of every 50 Americans was on food stamps.  Today, about one out of every 6.5 Americans is on food stamps.

#8 It sounds crazy, but the number of Americans on food stamps now exceeds the entire population of the nation of Spain.

#9 According to one calculation, the number of Americans on food stamps is now greater than the combined populations of “Alaska, Arkansas, Connecticut, Delaware, District of Columbia, Hawaii, Idaho, Iowa, Kansas, Maine, Mississippi, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Dakota, Oklahoma, Oregon, Rhode Island, South Dakota, Utah, Vermont, West Virginia, and Wyoming.”

#10 According to a report from the Center for Immigration Studies, 43 percent of all immigrants that have been in the United States for at least 20 years are still on welfare.

#11 Back in 1965, only one out of every 50 Americans was on Medicaid.  Today, more than 70 million Americans are on Medicaid, and it is being projected that Obamacare will add 16 million more Americans to the Medicaid rolls.

#12 The number of Americans on Medicare is projected to grow from a little bit more than 50 million today to 73.2 million in 2025.

#13 Medicare is facing unfunded liabilities of more than 38 trillion dollars over the next 75 years.  That comes to approximately $328,404 for each and every household in the United States.

#14 If the number of Americans enrolled in the Social Security disability program were gathered into a single state, it would be the 8th largest state in the entire country.

#15 In 1968, there were 51 full-time workers for every American on disability.  Today, there are just 13 full-time workers for every American on disability.

#16 It is being projected that the number of Americans on Social Security will rise from about 62 million today to more than 100 million in 25 years.

#17 Overall, the Social Security system is facing a 134 trillion dollar shortfall over the next 75 years.

#18 According to the most recent numbers from the U.S. Census Bureau, an all-time record 49.2 percent of all Americans are receiving benefits from at least one government program each month.  Back in 1983, less than a third of all Americans lived in a home that received direct monetary benefits from the federal government.

Many will read this and will assume that I am against helping the poor.  That is completely and totally not true.  There will always be people that are impoverished, and this happens for many reasons.  In many cases, people simply lack the capacity to take care of themselves.  It is a good thing to take care of such people, whether the money comes from public or private sources.  In every society, those that are the most vulnerable need to be looked after.

But it is a very troubling sign that the number of people on government assistance is now far, far greater than the number of people with full-time jobs.  This is not a sustainable situation.  The federal government is already drowning in debt, and yet more people become dependent on the government with each passing day.

The long-term solution is to get more Americans working or starting their own businesses, but the federal government continues to pursue policies that are absolutely killing the creation of jobs and the creation of small businesses in this country.  So our epidemic of government dependence is going to continue to get worse.

And many of these programs are absolutely riddled with fraud and corruption.  Just check out the following excerpt from a recent Natural News article

To understand the extent of this fraudulent waste, go no further than Dr. Salomon Melgen, a Florida ophthalmologist who raked in $20.8 million from Medicare in 2012 alone. Dr. Melgen isn’t the only one bathing in the fraud of this crony government program. Medicare dished out over $1 million to almost 4,000 doctors in 2012, according to the new data release analyzed by The Washington Post.

 

Jonathan Blum, principal deputy administrator for the Centers for Medicare and Medicaid Services, is calling on the public for help in identifying fraud. He says, “The program is funded by and large by taxpayer dollars. The public has a right to know what it is paying for. We know there is fraud in the system. We are asking for the public’s help to check, to find waste, and to find potential fraud.”

Instead of fixing their own problems, they want us to help them do it.

Just great.

And of course they always want more of our money to help fund these programs.  In fact, according to Americans for Tax Reform, Barack Obama has proposed 442 tax increases since entering the White House…

-79 tax increases for FY 2010
-52 tax increases for FY 2011
-47 tax increases for FY 2012
-34 tax increases for FY 2013
-137 tax increases for FY 2014
-93 tax increases for FY 2015

 

Perhaps not coincidentally, the Obama budget with the lowest number of proposed tax increases was released during an election year: In February 2012, Obama released his FY 2013 budget, with “only” 34 proposed tax increases. Once safely re-elected, Obama came back with a vengeance, proposing 137 tax increases, a personal record high for the 44th President.

The more we feed the monster, the larger and larger it grows.

And yet poverty is not decreasing.  In fact, the poverty rate has been at 15 percent or greater for three years in a row.  That is the first time that has happened in decades.

Barack Obama promised to “transform” America, and yet poverty and government dependence have just continued to grow during his presidency.

Not that anyone really believes anything that he has to say at this point.  In fact, one recent survey found that only 15 percent of Americans believe that Barack Obama always tells the truth and 37 percent believe that he lies “most of the time”…

A Fox News poll released Wednesday shows that six out of every ten Americans believes that President Barack Obama lies to the American people, at least some of the time. A plurality – 37% – say that he lies “most of the time,” while another 24% say he lies “some of the time.” Another 20% say he lies once in awhile, while only 15% say that he never lies.

So what do you think?








Peak "Greatest Fool"

Confirming everything US "investors" already knew but were afraid to admit... earnings-less IPOs just hit peak greatest fool levels in the most uncomfortable deja vu moment of the 'recovery'...

 

 

We are sure, however, that Yellen and her compatriots will still not see any bubbles here...

 

Chart: sentimentrader.com








Consumer Confidence Collapses In Japan

Submitted by Pater Tenebrarum of Acting-Man blog,

As a little addendum to our recent ritual lambasting of Abenomics, here are the  latest news on Japan's consumer confidence – the reading, mind, is from March – before the introduction of the higher sales tax:

“Japan’s consumer confidence fell in March to the lowest level since August 2011, a reading that may tumble further this month after a sales-tax increase on April 1 sapped the public’s spending power.

 

 

The reading of 37.5, down from 38.5 in February, was released by the Cabinet Office in Tokyo today. About 90 percent of respondents to the survey expect prices to rise over the next 12 months, the highest in comparable data back to 2004.

 

Prime Minister Shinzo Abe risks the public souring on his campaign to sustain growth in the world’s third-biggest economy as prices start to rise while wages stay stagnant. Weaker sentiment could make it harder to drive a rebound from a contraction forecast this quarter, and raise the odds that the Bank of Japan adds to its already unprecedented easing.

 

“Consumer sentiment has been undermined to a large extent by rising prices,” Goldman Sachs Group Inc. economists Naohiko Baba and Yuriko Tanaka wrote in an e-mailed note before the release. “We expect a major retreat in sentiment from April as the tax hike drives inflation.”

 

The confidence reading was 39.9 when Abe took office in December 2012, and rose to 45.7 in May last year — the highest point during his current term as prime minister. The Topix index of stocks is down more than 10 percent this year after soaring 51 percent in 2013.

 

Confidence dropped in all five components in the survey, with willingness to buy durable goods dropping the most, down by 2 to 30.8.”

(emphasis added)

In light of yet more damning evidence of failure coming to light, we are moved to make a prediction about the near term future of Abenomics.

It isn't going to be abandoned just because it is failing. Instead, we are hereby confidently predicting a 'flight forward'. Instead of relieving the increasingly sapped and demoralized Japanese consumer from the scourge of rising prices, the pump priming effort will be increased even further. Fresh inflationary measures may well be announced at the next BoJ meeting already.

Anyone want to bet?








Guest Post: Why The West's Financial Warfare Against Russia May Lead To The Real Thing

Authored by Harold James, originally posted at European Voice,

The revolution in Ukraine and Russia's illegal annexation of Crimea have generated a serious security crisis in Europe. But, with Western leaders testing a new kind of financial warfare, the situation could become even more dangerous.

A democratic, stable, and prosperous Ukraine would be a constant irritant – and rebuke – to President Vladimir Putin's autocratic and economically sclerotic Russian Federation. In order to prevent such an outcome, Putin is trying to destabilise Ukraine, by seizing Crimea and fomenting ethnic conflict in the eastern part of the country.

At the same time, Putin is attempting to boost Russia's appeal by doubling Crimeans' pensions, boosting the salaries of the region's 200,000 civil servants, and constructing large, Sochi-style infrastructure, including a $3 billion (€2.2bn) bridge across the Kerch Strait. This strategy's long-term sustainability is dubious, owing to the strain that it will put on Russia's public finances. But it will nonetheless serve Putin's goal of projecting Russia's influence.

For their part, the European Union and the United States have no desire for military intervention to defend Ukraine's sovereignty and territorial integrity. But verbal protests alone would make the West look ridiculous and ineffective to the rest of the international community, ultimately giving rise to further – and increasingly far-ranging – security challenges. This leaves Western powers with one option: to launch a financial war against Russia.

As the former US Treasury official Juan Zarate revealed in his recent memoir “Treasury's war”, the US spent the decade after the 11 September 2001 terrorist attacks developing a new set of financial weapons to use against the United States' enemies – first Al Qaeda, then North Korea and Iran, and now Russia. These weapons included asset freezes and blocking rogue banks' access to international finance.

When the Ukrainian revolution began, the Russian banking system was already over-extended and vulnerable. But the situation became much worse with the toppling of Ukrainian President Viktor Yanukovych and the annexation of Crimea, which triggered a stock-market panic that weakened the Russian economy considerably and depleted the assets of Russia's powerful oligarchs.

In a crony capitalist system, threatening the governing elite's wealth rapidly erodes loyalty to the regime. For the corrupt elite, there is a tipping point beyond which the opposition provides better protection for their wealth and power – a point that was reached in Ukraine as the Maidan protests gathered momentum.

Putin's public speeches reveal his conviction that the EU and the US cannot possibly be serious about their financial war, which, in his view, would ultimately hurt their highly complex and interconnected financial markets more than Russia's relatively isolated financial system. After all, the link between financial integration and vulnerability was the main lesson of the crisis that followed the collapse of US investment bank Lehman Brothers in 2008.

In fact, Lehman was a small institution compared to the Austrian, French, and German banks that have become highly exposed to Russia's financial system through the practice of using deposits from Russian companies and individuals to lend to Russian borrowers. Given this, a Russian asset freeze could be catastrophic for European – indeed, global – financial markets.

Putin's plan for destabilising Ukraine is thus two-pronged: capitalise on linguistic or national animosities in Ukraine to foster social fragmentation, while taking advantage of Western – especially European – financial vulnerabilities. Indeed, Putin sometimes likes to frame it as a contest pitting him against the power of financial markets.

The arms race that preceded the First World War was accompanied by exactly the same mixture of military reluctance and eagerness to experiment with the power of markets. In 1911, the leading textbook on the German financial system, by the veteran banker Jacob Riesser, warned: “The enemy, however, may endeavour to aggravate a panic...by the sudden collection of outstanding claims, by an unlimited sale of our home securities, and by other attempts to deprive Germany of gold. Attempts may also be made to dislocate our capital, bill, and securities markets, and to menace the basis of our system of credit and payments”.

Politicians began to grasp the potential consequences of financial vulnerability only in 1907, when they faced a financial panic that originated in the US but that had serious consequences for continental Europe (and, in some ways, prefigured the Great Depression). That experience taught every country to make its own financial system more resilient to ward off potential attacks, and that attacks could be a devastating response to diplomatic pressure.

That is exactly what happened in 1911, when a dispute over control of Morocco spurred France to organise the withdrawal of 200 million Deutsche Marks invested in Germany. But Germany was prepared and managed to ward off the attack. Indeed, German bankers proudly noted that the crisis of confidence hit the Paris market much harder than markets in Berlin or Hamburg.

Countries' efforts to protect their financial systems often centred on increased banking supervision and, in many cases, enlarging the central bank's authority to include the provision of emergency liquidity to domestic institutions. Subsequent debates about financial reform in the US reflected this imperative, with some of the US Federal Reserve's founders pointing out the military and financial applications of the term “reserve”.

At that time, financial-reform efforts were driven by the notion that building up financial buffers would make the world safe. But this belief fuelled excessive confidence among those responsible for the reforms, preventing them from anticipating that military measures would soon be needed to protect the economy. Instead of being an alternative to war, the financial arms race made war more likely – as it may well be doing with Russia today.








China Wanted Capitalism But it Also Got Strikes

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Peering in from the outside or through the looking glass at what’s going down on the other side is always a distortion of reality. We sit here in the west looking at the development, the changes and the progress of China and then the stark reality kicks in. Yes, China got capitalist. It got controlled neo-liberalist (if that can ever exist). They have tried anyhow to make it as much. But, along with that opening up came the strike force of the labor market. Unhappy workers, the masses tired of drudging day-in and day-out to the factories and donning their uniforms to go down the coal mines to fuel the burners blazing away under Beijing. In March alone, according to China Labor Bulletin (based in Hong Kong) there were no fewer than 119 strikes that took place in the country.

119 strikes might not seem like a lot given the scope and the demography of the country; but, when was the last time you heard of over a hundred strikes in the country you are sitting in? Even the French couldn’t top that one; and they are renowned for downing tools and taking to the streets. There are tons of strikes that they like to do: sit-ins, by rota, partial, sympathy, wild-cat strikes, go-slow or work-to-rule. Call it what you will. The Chinese are now doing it and following suit.

Although there are no official government statistics, the labor-rights group in Hong Kong is just about the only thing we might be able to rely on. There’s no wonder that the strikes are taking place. The workforce has shrunk by 920 million (National Bureau of Statistics) since 2012. The one-child policy has meant that the active population has taken a beating and been weaned off the multitude of workers that the factories had to make do with less. Less is more? Hardly, they are paying the price of all of that today. Parents are also not prepared to allow their only child to work their hind legs off in some factory and they have looked for better alternatives to factory drudge.

• Factories had to respond to that hole and to attract the workers back to the factories. 
• Factory workers have had an increase that we haven’t ever seen in the West. 
• It took us hundreds of years to get what they got. 
• Since 2005, the official minimum wage in China has increased to 1, 3000 Yuan, or $210
• Wages have increased by 80% since the financial crisis hit. They have tripled since 2005
• The factories had to also provide perks. Yes, the Chinese workers wanted better. 
• They didn’t want ‘less is more’, they wanted just MOAR. 
• They got libraries and day-nurseries, they got sports facilities. 
• They got a 2008 law that protected their severance pay. 
• They got the 2011-social insurance law that strengthened the necessity for their employers to contribute on their behalf. 
• They are nearly there to getting collective bargaining rules. 
• Soon, China will be the workers’ paradise. 
• The idea is that wildcat strikes will be a thing of the past in China if the workers get collective bargaining.

Strikers are not protected by the law and there is no right to strike. When, it turns out of the factory gates and ends up on the streets, those striking workers can be arrested (in theory) and thrown in prison. But, they won’t be, the workers have too much power since they are so few and far between today to do anything to them. Even China has succumbed to the age-old laws of supply and demand that regulate the market.

A shoe factory in Dongguan has been on strike for the past ten days now. Wal-Mart is dealing with a strike at one of its stores (closed since last month) and is still sitting round the negotiating table talking things out.

The workers will change the face of the market in China. China Labor Bulletin believes that the majority of the cases involving strikes could have been resolved beforehand if the management had communicated better. It looks like managers in China are going to have to listen, talk and answer to workers in the future in China. The supply of workforce is not suddenly going to increase and can only shift the power to the workers’ side in the coming months and years even more.

Any country that goes through its industrial revolution ends up with striking workers on their hands that are tired of not being paid more, of not being better looked after and that aren’t prepared to bow their heads in silence. And look! It still hasn’t finished. Here’s just one example:

• In the UK in 2013250, 000 working days were lost due to industrial action.
• The highest reached 1.4 million lost working days in 2011
• The majority were in the public sector and defense industrial group (60% of the days lost).

Originally posted: China Wanted Capitalism But it Also Got Strikes

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"Holy Grail" HFT Firm Virtu Questioned By NY AG

Having the trade record of Bernie Madoff and the braggadocio of a WWF wrestler was just too much for New York Attorney General Eric Schneiderman to ignore. Rigged Market HFT Poster-child, and recent-delayed IPO, Virtu Financial has received a letter of inquiry from the AG's office requesting information about its business. As Bloomberg reports, a person with knowledge of the matter said this week that six high-frequency trading firms have received subpoenas as part of Schneiderman’s investigation and Virtu was asked for similar information in a letter of inquiry which could be escalated to a subpoena if the company doesn’t comply voluntarily.

 

As Bloomberg reports,

Virtu Financial Inc., the high-frequency trader trying to sell shares in an initial public offering, has grabbed the attention of New York’s attorney general as he investigates the industry.

 

The New York-based trading firm has received a letter of inquiry from Eric Schneiderman’s office requesting information about its business, according to a person familiar with the matter, who asked to not be identified because the process hasn’t been made public.

 

The request comes as Virtu attempts to go public, a process delayed after the March 31 publication of Michael Lewis’s latest book sparked unprecedented scrutiny of high-frequency traders. Schneiderman announced last month that he’s investigating services and technologies used by high-frequency traders, including faster data feeds that may give certain firms a split-second edge over others. The Federal Bureau of Investigation has begun its own industry examination.

 

A person with knowledge of the matter said this week that six high-frequency trading firms have received subpoenas as part of Schneiderman’s investigation, including Jump Trading LLC, Chopper Trading LLC and Tower Research Capital LLC. Virtu was asked for similar information in a letter of inquiry, according to the person with knowledge of the matter. This could be escalated to a subpoena if the company doesn’t comply voluntarily.

 

...

 

Following a decision two weeks ago to postpone the IPO, Virtu has now delayed the deal indefinitely because of market conditions, a person familiar with the matter said yesterday. The IPO filing hasn’t been withdrawn, the person said. Shares of Virtu’s rival KCG Holdings have tumbled 13 percent since the Lewis book, “Flash Boys,” was published.

What gave it away?

From the S-1: "The chart below illustrates our daily Adjusted Net Trading Income from January 1, 2009 through December 31, 2013. As a result of our real-time risk management strategy and technology, we had only one losing trading day during the period depicted, a total of 1,238 trading days. "

Let that sink in: one trading loss day and 1237 days of profits. And that, ladies and gentlemen, is the Holy Grail of the New Normal broken, manipulated markets.








Obama Administration Encouraged Insider Trading

Back in 2011, many people were outraged when it was revealed that two months before the US Treasury pushed the insolvent GSEs into bankruptcy, then Treasury Secretary, Goldman alum Hank Paulson held a secret meeting with various hedge funds (most of them headed by Goldman alumni themselves) in which he gave them advance warning about the imminent bankruptcy, and allowing them to trade appropriately on material, and certainly non-public information.

Since then the general population has gotten far more used to encouraged criminal activity and facilitated insider trading by the government so comparable revelations no longer generate the expected loathing and disgusts, which is perhaps why over the past week the Obama administration once again leaked material information, in effect allowing and encouraging frontrunning of public data, when it told "asset managers last week that it was planning additional sanctions against Russia over the conflict in Ukraine."

Bloomberg reports that the meeting, convened a week before talks with Russia in Geneva that ended yesterday, left managers grappling with the question of whether the government intended to follow through, or was trying to trigger asset sales through the threat of sanctions, said the person. Former administration officials have said forcing Russia out of global financial markets is the strongest tool President Barack Obama has at his disposal in trying to defuse the ongoing crisis between Russia and Ukraine.

Officials from the Treasury Department and the National Security Council met in Washington with mutual-fund and hedge-fund managers, according to a person who attended. Their comments sent a message that more sanctions are on the way and that investors, if they were concerned about the impact, should manage that risk, said the person, who asked not to be identified because the discussions weren’t public.

 

The meeting in Washington last week included several mutual-fund companies with large bond units, according to the person. Separately, the U.S. Securities and Exchange Commission has been asking U.S. asset managers about their investments in Russian securities, said the person.

 

The National Security Council is the president’s main forum for considering national security and foreign policy matters.

At least while Obama was happy leaking clearly material information to a select few, he didn't force them to sell Russian assets. At least not yet:

An administration official, who asked for anonymity to discuss internal deliberations, said there have been no specific requests made to investors not to invest in Russia. The official said the Department of Commerce and the Treasury do have conversations with the business community to explain what they’re doing, such as briefing executives after a sanctions announcement. The official said the government maintains open lines of communication so businesses understand what policy makers are doinga.

No, the perfectly public trading "reco" was left to Obama spokesman Jay Carney. We all know what happened after.

As for those who participated, their actions indicate quite clearly that when it comes to securities laws, there are "laws", or rather loopholes, for the chosen ones, and then there are laws for everyone else.

One bond manager at a large U.S. mutual-fund company, who also asked not to be named citing company policy, said the firm has been working to sell Russian debt and wasn’t inclined to return to the market in the near future. The person, who hadn’t heard of any government attempts to influence money managers, said the company perceives risk in Russia as having increased significantly.

So just in case those lovely anchors with ultra white tooth veneers of financial comedy TV are still confused why the general public has completely given up on the stock, and every other "market", it is not only the HFT parasites, it is not only the Fed's gross manipulation of every asset class known to man and economist. It is the fact that insider trading is not only condoned but encouraged from the very top, and what's worse - it benefits only those who no longer have to worry about money ever again.








Ukraine "De-escalation" Voided As Pro-Russia Militia Refuse To Vacate Occupied Buildings

If yesterday we had questions about the half life of the effectiveness of the latest diplomatic de-escalation of Ukraine tensions 'achieved' in Geneva, following news that both Ukraine would continue its anti-terrorist operation and that fighting had broken out in various east Ukraine locations after the agreement, today any questions have been swept aside following news that the Ukraine "separatist" milita, who after all is the primary object of Ukraine "anti-terrorist activities", has announced that they will only leave the occupied east Ukraine buildings if the interim government in Kiev resigns. Denis Pushilin, a spokesman of the self-appointed Donetsk People's Republic, told reporters that the insurgents do not recognize the Ukrainian government as legitimate.

Indeed, in an amusing twist, the militia has flipped the Geneva agreement on its head, alleging that if they are to abide by a signed document, so should the "illegitimate" government, which as a reminder took power following a US-assisted coup, even though an explicit agreement was signed on February 21 between Ukraine and western powers previously retaining Yanukovich as president of the country, and ushering in presidential elections later in 2014. Needless to say, that agreement was made null and void within hours of signing. It is only logical, and perfectly expected, that so should this one.

"This is a reasonable agreement but everyone should vacate the buildings and that includes Yatsenyuk and Turchynov," he said referring to the acting Ukrainian prime minister and president.

More from AP:

Ukraine and Russia on Thursday agreed to take tentative steps toward calming tensions along their shared border after more than a month of bloodshed. But Pushilin, speaking at the insurgent-occupied regional administration's building in Donetsk, said the deal specifies that all illegally seized buildings should be vacated and in his opinion the government in Kiev is also occupying public buildings illegally.

 

The deal calls for disarming all paramilitary groups and the immediate return of all government buildings seized by pro-Russian insurgents in eastern Ukraine as well as pro-West right-wing protesters in Kiev. But none of the government buildings seized across eastern Ukraine has yet been vacated, according to local media.

Needless to say, neither the Ukrainian government nor as the Right Sector movement, whose activists are occupying Kiev's city hall and a cultural center in the capital, have commented on the call for buildings in Kiev to be vacated. One can assume they will hardly comply.

So what is the militia's demand?

Pushilin on Friday reiterated the insurgents' call for a referendum that he said will allow "self-determination of the people."

Or precisely what Russia wanted all along: a Crimea-style endgame, where the people are 'given the right' to determine their own future, as long as that future means becoming part of Russia in the coming weeks or months.

Finally, for those who enjoy updates from the ground, here is a BBC producer on location:

America kills south east! Slogan outside #donetsk republic HQ on east #ukraine pic.twitter.com/o4s46LHoPb

— Dina Newman (@Dinanewman) April 18, 2014

#Donetsk republic HQ: slogans: no to fascism, no to EU, no to US. #Ukraine east pic.twitter.com/NpnP7UFgef

— Dina Newman (@Dinanewman) April 18, 2014

Molotov cocktails and bricks on the ready at #Donetsk republic HQ, East #Ukraine pic.twitter.com/3AuPQcUCp5

— Dina Newman (@Dinanewman) April 18, 2014

Glory to Berkut! (Special forces used against #Maidan) slogan on #donetsk republic HQ east #Ukraine pic.twitter.com/CNDfiSVP1H

— Dina Newman (@Dinanewman) April 18, 2014

Inside #donetsk republic HQ: ready to resist the storming of the building. east #ukraine pic.twitter.com/RNBBJrJexa

— Dina Newman (@Dinanewman) April 18, 2014

'I get 1000 Hr per month as my pension. I cannot pay the bills. Putin, please save us!' #Donetsk republic female volunteer is crying

— Dina Newman (@Dinanewman) April 18, 2014

'#Kiev junta want power. That's why they want early election" #donetsk republic activist in east #Ukraine

— Dina Newman (@Dinanewman) April 18, 2014

#Donetsk republic presser: "We do not trust Kiev. Remember 21 Feb? An agreement was signed with #Yanukovich but not honored"

— Dina Newman (@Dinanewman) April 18, 2014

#donetsk republic presser: "we will not vacate the building. We are getting calls from towns and villages who are joining the republic."

— Dina Newman (@Dinanewman) April 18, 2014

#Donetsk republic presser: "thinking about a confederation with #Kharkiv and Lugansk regions" in east #ukraine

— Dina Newman (@Dinanewman) April 18, 2014

#Donetsk republic presser: "we are the #Russian bear which is waking up. We've been patiently waiting for the past 24 years" east #Ukraine

— Dina Newman (@Dinanewman) April 18, 2014








BP Manager In Charge of Cleaning Up the Gulf Oil Spill Dumped $1 Million In BP Stock Before the Severity of Spill Was Discovered

The Securities and Exchange Commission announced today:

The Securities and Exchange Commission today charged a former 20-year employee of BP p.l.c. and a senior responder during the 2010 Deepwater Horizon oil spill with insider trading in BP securities based on confidential information about the magnitude of the disaster.  The price of BP securities fell significantly after the April 20, 2010 explosion on the Deepwater Horizon rig, and the subsequent oil spill in the Gulf of Mexico, resulted in an extensive clean-up effort.

 

According to the SEC’s complaint, filed in U.S. District Court for the Eastern District of Louisiana, BP tasked Keith A. Seilhan with coordinating BP’s oil collection and clean-up operations in the Gulf of Mexico and along the coast.  Seilhan, an experienced crisis manager, directed BP’s oil skimming operations and its efforts to contain the expansion of the oil spill

 

The complaint alleges that within days, Seilhan received nonpublic information on the extent of the evolving disaster, including oil flow estimates and data on the volume of oil floating on the surface of the Gulf.

Seilhan sold his family’s BP securities after he received confidential information about the severity of the spill that the public didn’t know,” said Daniel M. Hawke, chief of the Division of Enforcement’s Market Abuse Unit.

 

***

 

The complaint alleges that by April 29, 2010, in filings to the SEC, BP estimated that the flow rate of the spill was up to 5,000 barrels of oil per day (bopd).  The company’s public estimate was significantly less than the actual flow rate, which was estimated later to be between 52,700 and 62,200 bopd.  The information that Seilhan obtained indicated that the magnitude of the oil spill and thus, BP’s potential liability and financial exposure, was likely to be greater than had been publicly disclosed.

 

According to the complaint, while in possession of this material, nonpublic information, and in breach of duties owed to BP and its shareholders, Seilhan directed the sale of his family’s entire $1 million portfolio of BP securities over the course of two days in late April 2010.  The trades allowed Seilhan to avoid losses and reap unjust profits ….

Interestingly, the head of BP - Tony Hayward - sold 1.4 million pounds worth of BP shares a few weeks before the start of the Gulf oil spill.  While - at first glance - this sound like it could not possibly have been connected to the Gulf spill, BP actually had major problems with the Gulf well months before the spill. In other words, the spill hadn't yet happened ... but it should have been obvious to knowledgeable insiders that the well was highly dangerous and unstable.

Sadly, Mr. Seilhan, Mr. Hayward and the rest of the BP team made normal oil-skimming procedures impossible because they sunk the oil with Corexit dispersant … so the oil skimmers couldn’t get to it.

And it is beyond doubt that BP and the government blatantly low-balled the amount of oil spilled.

Indeed, most people still don’t understand that – while the well was “capped” in 2010 – top experts say that the oil spill could have increased  the amount of oil flowing form natural seeps in the area … so that more oil continues to leak into the Gulf for years.   Indeed,  large oil slicks have flowed for years after the BP well was capped (and BP’s explanations for this phenomenon don’t hold up to scrutiny.)

Postscript:  Some BP personnel were criminally indicted for manslaughter and lying to federal investigators.

But the U.S. has let BP back into the Gulf.  And BP is going to drill even deeper … with an even greater potential for disaster (and see this).








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