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Dutch Investigators End Another Ukraine Conspiracy: No Evidence Black Box Was Tampered With

Another day, another Ukraine conspiracy disproved by fact. Despite the Ukraine government's insistence that the Malaysian Airlines black-boxes had been taken (and possibly manipulated), the investigators from The Dutch Safety Board have issued a statement confirming, "no evidence or
indications of manipulation of the recorder was found."

Here's what they saod a week ago...

  • *UKRAINE'S HROISMAN SAYS BLACK BOXES MAY HAVE BEEN REMOVED
  • *UKRAINE GOVT DOESN'T HAVE BLACK BOXES, LYSENKO SAYS
  • *UKRAINE SAYS REMOVAL OF BLACK BOXES FROM COUNTRY IS ILLEGAL

And now we find out...

Via The Dutch SafetyBoard,

Data Flight Data Recorder MH17 downloaded

 

Following yesterday’s press release, the international investigation team led by the Dutch Safety Board, continued the work on the Cockpit Voice Recorder and the Flight Data Recorder today. The work took place at the Farnborough headquarters of the Air Accidents Investigation Branch (AAIB) in the United Kingdom. The international investigation team has conducted a thorough examination of the Flight Data Recorder. The Flight Data Recorder was slightly damaged but the memory module was intact. Furthermore, no evidence or indications of manipulation of the recorder was found. Following the examination, the data was successfully downloaded and the Flight Data Recorder contained valid data of the flight. The data from both recorders will be further analysed and combined.

 

A thorough analysis of the information obtained will take time and the results will be included in the investigation.

*  *  *

So which of the US/Ukraine "facts" are actually true?








‘Apocalypse’ Krugman Ignores History, Keynes And Lenin’s Warnings

Paul Krugman’s latest missive in The New York Times again attacks those who warn about the risks of a new debt crisis and the ramifications of radical, ultra loose monetary policies.

 



Krugman says that the recent concern about “debts and deficits” was a “false alarm.” He attempts to paint those who were concerned about the debt crisis as scare mongers. He sarcastically says that “the debt apocalypse has been called off.”

This is a meme that Krugman uses frequently as seen in headlines like ‘Addicted to the Apocalypse’, and ‘Apocalypse Fairly Soon.’ He uses this meme to try to link those concerned about the debt crisis and the current monetary response to it as alarmist doom and gloom merchants and irrational people who believe the “end of the world” is nigh.


It is a way to attack the straw man rather than sticking to the facts and having a more reasoned debate.


It is ironic as Krugman himself became quite apocalyptic in his warnings during the Eurozone debt crisis. He warned that “things are falling apart in Europe,” of a “gigantic bank run” and of an “emergency bank closing.”

Not only did he warn of a massive bank run and emergency bank holidays but he warned of the euro breaking up and Italy returning to the Italian lira and even warned of France returning to the French franc.

Krugman was wrong then, as indeed were many of the people he criticises. However, the crisis is far from over and reared its head in Portugal in recent days and there is a long way to go before this crisis reaches its conclusion.


He has also been quite apocalyptic himself regarding global warming. He has warned that “utter catastrophe” looks “like a realistic possibility,” and that the “rise in global temperatures that will be little short of apocalyptic.”

When it comes to the apocalypse, Krugman likes to have his apocalyptic cake and eat it too.

Krugman continues to advocate printing currency as one panacea to our economic ills. There is much groupthink on this topic amongst western central banks and policy makers and many share Krugman’s views.

 


Krugman is right that so far the record debt levels in the U.S. and throughout much of the western world and the currency printing response have not led to inflation or stagflation.

However, it is very premature to completely discount the risk. History clearly shows printing money on the scale that we have witnessed in recent years ultimately leads to inflation, and sometimes hyperinflation.

Lenin rightly warned that the "best way to destroy the capitalist system is to debase the currency.” History confirms this.

Krugman has great respect for Keynes and yet Keynes shared Lenin's concerns. "Lenin was certainly right. There is no subtler, no surer means of overturning the existing basis of society than to debauch the currency" warned Keynes.

In a time of cosy Keynesian consensus, plurality of opinion is important and it is worth remembering this important warning from the past.

Krugman, has been one of the most vocal gold bears in recent years and his opinion on gold has lacked nuance and ignored the academic and historical record.

As ever, a historical perspective and a long term perspective is important. Krugman has neither and completely ignores history for the sake of his loose money, inflatonist ideology.

It remains prudent to have an allocation to physical gold in allocated and most importantly segregated storage in the safest jurisdictions in the world. If you cannot have your individual coins and bars delivered to you in a few days you do not own bullion in the safest manner possible.

Singapore is becoming an emerging precious metals hub and a key player in the global bullion market. Against the very uncertain global macroeconomic and geopolitical backdrop, prudent private individuals and institutions are moving their physical bullion to one of the safest jurisdictions in the world. 

Read the Essential Guide To Storing Gold In Singapore here








Legal Tender Renders Planning Impossible

by Keith Weiner

 

There is much confusion over what the legal tender law does. I have read articles, written by people who are otherwise knowledgeable about economics, claiming that legal tender forces merchants to accept dollars under threat of imprisonment. Recently, I wrote a short article for Forbes clarifying how legal tender law works in the US.

Legal tender law has nothing to do with merchants. If you want to sell steak dinners in your restaurant for silver, you may legally have at it. Unfortunately, the tax code discourages your would-be customers as I wrote in another article.

The legal tender law targets the lender. It grants to debtors a right to repay a debt in dollars. In practice, this means that if you lend gold, the debtor gets a free put option at your expense. If the gold price rises, he can repay in dollars. If it falls, of course he will be happy to repay in gold. It’s a rotten deal for the lender.

The relationship between lender and borrower is mutually beneficial, or else it would not exist. The parties are exchanging wealth and income, creating new wealth and new income in the process. The government is displeased by this happy marriage, and busts it up by sticking a gun in the lender’s face. His right to expect his partner to honor a signed agreement is violated.

Because no lender will lend gold under such circumstances, gold is relegated to hoarding and speculation only. This strikes a blow to savers, because the best way to save is to lend and earn interest. Savers are forced to choose between hoarding gold, getting no yield, or holding dollars and getting whatever yield crumbs are dropped by the Fed.

If there’s no lending in gold, what takes its place? The Fed force-feeds credit in ever-larger amounts, and at ever-falling interest rates.

The Fed is supposed to make its credit decisions in order to optimize two variables. First, employment shouldn’t be too high or too low. Second, consumer prices shouldn’t rise too quickly or too slowly. The Fed has little ability to predict employment and prices, and even less control over them.

Most Fed critics focus on the quantity of money. Is there too much, or too little? Is the rate of increase too fast or too slow? Is monetary policy too tight or too loose? Lost in this noise is any discussion of who the lender is.

If you buy Treasury bonds, then you know you are lending to the government. You are enabling welfare spending, and a few cases of lending to such worthy activities as housing speculation.

What if you don’t? Well if you deposit dollars in a bank, you are funding the bank’s purchase of Treasury and other bonds. You know, or reasonably ought to know, that this money is being lent.

But suppose you don’t even do that. Suppose you keep a wad of dollar bills under the mattress. You are still lending. The dollar is the Fed’s credit paper. You are financing the Fed’s activities, which consist of buying Treasury bonds and various other bonds.

You’re the patsy. You are the lender.

Anybody who wants to earn dollars is bringing demand for dollars to the market—in other words, making a bid on dollars. With what do they bid? They bid with their labor, with tangible goods, and with land. All assets today are bidding on the dollar, though most people look at it inside out. They think that all assets are offered for sale at the right price.

In any case, this universal bid on the dollar provides credit to the Fed. By placing wealth in the Fed’s hands, everyone gives it their savings to lend out.

Forget about what this does to consumer prices. There are much more serious implications. In place of the delicate, mutually beneficial relationships involved in lending, the Fed sucks the savings from the people, and pumps it out at high pressure. The Fed’s indiscriminate deluge of credit is not a substitute for individual thinking, planning, acting, and lending.

The consequence is incalculable destruction.

The legal tender law does not attack the ability to do a trade here and now, “cash on the barrel head.” It attacks something subtler but just as important. It destroys your ability to plan long range, to prepare for the passage of time. Time is a universal in the human experience. We all work during our adulthood with urgency, because some day we will grow old and be unable to work. To plan for that day, we save while we work and lend our savings to earn interest.

The motivation to borrow also comes from planning for the passage of time. The entrepreneur wants to start or grow a business now, while he has the opportunity, and energy. That’s why he is willing to pay interest out of part of his profits.

In a loan, the borrower gets money immediately, but the lender gets paid later. Time is an integral part of the deal, as one party prefers to be paid later.

In the free market, nothing comes between the saver and the entrepreneur. In central banking, by contrast, the legal tender law attacks the very heart of the free market, like an insidious poison. It disenfranchises the saver, enabling the Fed to plunder his nest egg and undermine his retirement plans.

At the same time, the Fed abuses the hapless entrepreneur too. It lures him to borrow with the promise of low rates, and then like Lucy pulling the football out from under Charlie Brown, cuts the interest rate again. This drives down his profit margin and plunders his capital.

Legal tender law takes away your ability to plan for the future. It replaces a hundred million individual decisions whether or not to have tea, with a giant high-pressure fire hose that blasts hot wastewater indiscriminately. No matter whether they open the spigot further, or close it slightly, the scalding deluge of Fed credit is not in any way equivalent to the individual planning, saving, and borrowing that would go on if we had a free market.








It's Time For The BRICS To Act To Counter US Destabilization Efforts

Submitted by Ben Tanosborn of Tanosborn.com,

It had to happen!  The blame game on that horrendous airline incident, Malaysian Flight MH17, has reached the expected loud monotone of pointing fault, lock, stock and barrel at Russia… and, more specifically, to that villain ex-KGB Slav, Vladimir Putin.
 
US media barrage of grotesque and obscene propaganda against America’s former foe and competitor, whether filtering down from the top or randomly finding placement in the emotions of a brainwashed citizenry, has found a leader of this warring marching band in Barack Obama.  The neocon ruling forces in the US State Department together with the bellicosarians running the Pentagon have found a perfect mouthpiece in the president of the US, an unlikely candidate just a few years ago, to do their bidding in Leo Strauss’ messianic vision to rule the World.
 
America’s few leadership voices of dissent and reasonableness against such ill-conceived propaganda, those of Libertarian Ron Paul and Professor Stephen Cohen (NY University) uniquely standing out, are drowned in a sea of US-poisoned waters where an armada of sanctions is unjustly landing on a nation, Russia, which dares stand for a right to secure its own historic geopolitical status… doing so without expressed or implied ambitions to extend its power and influence over others in the world… as the US does.
 
If blame is to be directed at any nation for the downing of this aircraft, the investigation needs to be pointed at what has transpired during this past year in Ukraine.  It was not Russia, or separatists in Eastern Ukraine, that created Ukraine’s political chaos.  It was the United States using its money and influence over a subservient European Union that brought down the democratically elected government in Kiev and stirred the ultimate separatist unrest.  So, if anyone is deserving of the ultimate, root-cause blame for this sordid loss of life, it should be the United States Machiavellian players now running Washington.  However, we might honor the memory of these innocent victims of flight MH17 by reaching a modus operandi consensus so that incidents such as this do not occur again.
 
But how is the world to counter the power of any nation, or block of nations, running amok to establish some form of supremacy over the rest?
 
We are just a year short of seven decades having a world body as a go-to place where the world problems can be voiced, discussed and hopefully resolved.  But as its ill-fated predecessor, the League of Nations, the United Nations was the creation of victorious nations after a world war… and those major victorious nations, singly or in commonality of interests with allies and partners, always appear to maintain their veto-of-interest over what might be right or fair, regardless of voted-on resolutions, or findings.
 
Although in some areas the UN has provided mankind a measure of solace and benefit, in key areas of peace, human rights and universal justice, it has not netted the minimum passing grade, thus indicating to the world that its charter needs to either be revised (rewritten); or that the world at large must direct their hopes and expectations in other directions where arbitration and eventual resolution of problems rule the day.
 
When one sees in the news UN Secretary-General Ban Ki-moon standing side by side with US Secretary of State John Kerry, in an alliance unlikely to stop Netanyahu’s blood-letting in Gaza, we correctly assume it to be what it really is: another diplomatic ploy.  Ultimately placing the blame on Hamas for not agreeing to the peace-plan-du-jour offered by Egypt, and consented to by the Arab League, will not resolve the endless conflict in which Palestine has been mired since the creation of modern Israel in 1947.  All players involved in finding a solution for a peaceful Palestine have failed repeatedly, possibly – some would say precisely – because of the US prejudicial involvement in the entire affair, and the definitive Zionist control over American foreign policy.
 
If the UN is incapable to change or influence the hegemonic geopolitical behavior of the United States... where else can the world look to find resolution to conflicts such as we have in Gaza and Ukraine today?
 
Enter the BRICS group of nations; escorted by other smaller nations that prefer dignified independence to protection from a bully they mistrust.  Can this group bring a friendlier, more humane atmosphere where peace and international brotherhood prevail?  It’s certainly worth a try: a way for 80 percent of the world’s population to find their rightful place; and for the presently ruling 20 percent to become more humanized.
 
Will the BRICS nations take up the challenge?








China Manufacturing PMI Explodes To 18-Month High, Employment Drops 9th Straight Month

Having shown 11 awkward-to-explain charts of the Chinese economy, exposed the liquidity crisis that still lingers just under the surface, and exposed the "discrepancies that abound" in China's data, it was only right and proper in this new topsy-turvy normal that HSBC China Manufacturing PMI - after 8 months of missed expectations (but a very recent surge to the highest levels in 2014) - should smash expectations and surge to 52.0, its highest sicne Jan 2012 (and 2nd highest since the recovery began).

 

Despite this exuberant data...

Employment fell for the 9th straight month.

 

As an aside, this is the first time in 16 months that HSBC/Markit's PMI has topped the Government's official print (payback for a good IPO?) but we note below what has happened each time in the past that this has happened...

 

With Q2's massive 4x GDP growth surge in total social financing, and the huge 16.4% surge in local government spending in Q2 (6.1% in June alone) compared to a 4% decline in tax revenues; it appears the dragging forward of everything to ensure centrally-planned focused stimulus had the desired outcome has extended (for now) into July's preliminary data.

And just in case anyone gets too excited about what PMI means, here is what BofA research found: "In our view, these data get way too much air time. They give a timely, rough read on the economy, but should get little weight once hard data are released."

*  *  *

As we concluded previously, what is clear is that, taking the numbers at face value, debt levels are still rising with destructive rapidity in order to achieve even such spotty results as these.

   

Coming from the broadest perspective, Nominal GDP in the June quarter was an annualized CNY4.7 trillion greater than that of a year a year ago, but in that like period the stock of ‘total social financing' outstanding mounted almost four times as much, or by CNY17.7 trillion.

 

Chart: Bloomberg








David Stockman On The Real Evil Of Monetary Central Planning

Submitted by David Stockman of Contra Corner blog,

The 2008 Wall Street meltdown is long forgotten, having been washed away by a tsunami of central bank liquidity. Indeed, the S&P closed yesterday at 1,983—or up by nearly 200% from its March 2009 low. Yet four cardinal measures of Main Street economic health convey nothing like a 2X pick-up from the post-crisis bottom.

To wit, in June the count of breadwinner jobs was 68.5 million or 5% below where it stood as the crisis got underway. Likewise, business investment in real plant and equipment is still 5% below its late 2007 peak. So too with the real median family income at about $53k—its still down by 6%. And unlike past cycles where safety net programs like food stamps shed recipients as the recovery gained momentum, there are still nearly 47 million Americans in the program compared to 30 million in March 2009.

This juxtaposition has been explained away by Wall Street stock touts under the heading that “this time is different”. Markets have allegedly sprung loose from their moorings in the real economy owing to record corporate profits and an upward re-rating of PE multiples reflecting lower than historical interest rates. And, indeed, the raw facts can be marshaled to this end.

As shown in the stunning chart below, profits have doubled as a share of corporate net value added since the turn of the century. Likewise, when measured against GDP, profits are at 60-year highs.

This is just the trouble, however. The robust rate of profit growth during recent years reflects a one-time gain in the profit share of factor income. This gain in all probability cannot be replicated again during the next decade, and, in fact, is extremely vulnerable to the mean reversion so evident in the historical data above. Indeed, that may have already begun during the first quarter of 2014 when the profit share dropped sharply as shown in both charts above.

The same can be said of low interest rates. After an unprecedented 33-year descent, the yield on the 10-year treasury benchmark has nowhere to go but higher; and after hitting a QE induced rock bottom of 1.5% in mid-2012, the benchmark yield has, in fact, bottomed and begun a climb toward normalization. No amount of money printing and financial repression by the central banks can keep yields on the current massive trove of $12 trillion of publicly held treasury debt at a negative after-tax and after-inflation rate indefinitely.

This is just the trouble, however. The robust rate of profit growth during recent years reflects a one-time gain in the profit share of factor income. This gain in all probability cannot be replicated again during the next decade, and, in fact, is extremely vulnerable to the mean reversion so evident in the historical data above. Indeed, that may have already begun during the first quarter of 2014 when the profit share dropped sharply as shown in both charts above.

The same can be said of low interest rates. After an unprecedented 33-year descent, the yield on the 10-year treasury benchmark has nowhere to go but higher; and after hitting a QE induced rock bottom of 1.5% in mid-2012, the benchmark yield has, in fact, bottomed and begun a climb toward normalization. No amount of money printing and financial repression by the central banks can keep yields on the current massive trove of $12 trillion of publicly held treasury debt at a negative after-tax and after-inflation rate indefinitely.

This all adds up to a case for capitalizing corporate earnings at a rate well below the historical norms, not at the tippy-top of prior experience. But the Wall Street casino is so juiced-up on the Fed’s promise of endless liquidity and puts under the stock averages that it is uninterested in the fundamentals, and will keep buying the dips until some confidence shattering black swan comes flying in from out of the blue.

And that points to the real evil of monetary central planning and the serial financial bubbles that it inexorably produces. Bubbles are now only recognized after they burst into a flaming crash. The chart below regarding the $2.3 trillion private label market in securitized sub-prime mortgages created by Wall Street in the run up to the last bubble top says it all.

 

What were heralded to be money-good par securities because “that time was different” have ended up in a smoldering pile of toxic waste.








Goldman Goes Schizo On Gold: Boosts Price Target To $1200 Even As It Is "Selling It With Conviction"

Back in the beginning of 2014, Goldman loudly predicted that 2014 would be the year of normalization: the economy would grow by 3%, the S&P 500 would barely rise to 1900, and gold would tumble to $1066. By now it goes without saying that it has been dead wrong about the first with the economy set for a contraction in the first half of 2014 and the full year assured to have the worst GDP growth since Lehman, wrong about the second with the market now so clearly disconnected from any economic fundamentals nobody even pretends that it is anything but the Fed manipulating a rigged stock market, and has been painfully wrong about the third.

So with less than 6 months to go until the end of the year, with various gold ETFs suddenly seeing the biggest buying in years, and with gold continuing to outperform most asset classes YTD, what is Goldman to do? Why follow the trend of course, and just like David Kostin had no choice but to boost his S&P 500 price target using the idiotic Fed model as a basis, so earlier today Goldman just upgraded its gold price target from $1,066 to $1,200. Probably this means that after accumulating it for the first half of the year, Goldman is finally preparing to sell the precious metal. Not so fast: because while Goldman did just raised its price target, it continues to have a Conviction Sell rating on Gold, which is its second most hated commodity after iron ore. Go figure.

So without further ado, here is Goldman going full schizo.

Conviction views: Bearish on iron ore, gold and copper, bullish on nickel, zinc, aluminium and palladiumIn gold, we raise our LT price forecasts to $1,200/oz in $2014 terms from $1,066 earlier. Over long time horizons, the gold price has been relatively stable in real terms, keeping pace with inflation. Accordingly we use a flat real gold price forecast assuming gold is an effective inflation hedge and increase in nominal  gold prices should offset the impact from inflation. We believe iron ore (-21%), gold (-20%) and copper (-12%) are the mining commodities with the greatest downside on a 12-month view.

* * *

 

We have updated our long-term real gold price forecast to $1,200/oz in $2014 terms (was $1,066/oz) to make it more in-line with our marginal cost support level, see Exhibit 66. Currently gold is trading at a 9% premium to our LT real (inflation-adjusted) forecast but we believe on a long-term basis the price should revert back to the cost support level in-line with our estimates.

 

 

Marginal cost support at $1,200/oz level

 

In our view, the 90th percentile of all-in sustaining costs (defined as total by-product cash cost plus royalty expense, plus sustaining capex, exploration and corporate expenses) provides a good estimate of the floor price for gold, as it is the breakeven level for the marginal producer. At times of extreme declines in demand, it is possible for prices to fall below the marginal cost support level; however we believe such events are generally shortlived. Exhibit 67 shows our latest 2014 gold’s all-in sustaining cost curve.

 

 

Gold price relatively stable over the long term

 

Over long time horizons, the real gold price has been relatively stable, keeping pace with inflation. Exhibit 68 illustrates that the real price of gold was fairly constant until the early 1970s, after which it became highly volatile. Although the real price has experienced significant volatility post the 1970s, we highlight its tendency to a mean reversion trend. The real gold price fell back to the 1950s level in 2001 after peaking in 1980, and it is currently in decline again after peaking in 2011.

 

Where things get downright bizarre is the last paragraph where either Goldman had a humongous typo or merely pulled the boilerplate language from a prior report where for some inexplicable reason Goldman says it has a "$1050" price target even as the table above clearly says $1,200. Oh who cares: this whole report is merely for the benefit of Goldman's prop desk, which is clearly ramping up trading, to do the opposite of whatever Goldman's few remaining clients are doing.

We continue to remain bearish on gold in 2014

 

We expect gold prices to drop to $1,050/oz by the end of 2014, maintaining our previous forecast. Acceleration in the US economic recovery story remains the key driver behind our lower gold price forecast. While weak economic data due to cold weather and the onset of the Crimea crisis led to a sharp rally in gold prices between January and mid-March, sequentially better US activity and easing tensions pushed gold prices lower by early April. Since then, US economic releases have continued to point to acceleration in growth while tensions in Ukraine have escalated, keeping gold prices range bound near $1,300/toz.

Sure, why not.

That said, can Goldman please also advise if its suddenly very active prop group is buying or selling gold. We promise to do whatever they are doing.








Japanese Exports Tumble For 2nd Month In A Row, Worst Since Abenomics Began

Japanese exports have disappointed expectations for 6 of the last 7 months. June saw exports drop 2.0% (versus an expectation of a rise of 1.0%). This is the first consecutive month drop in exports since Dec 2012 (before Abenomics was unleashed). Despite eysterday's incessant bullshit from various BoJ member about the economy being on track for receovery etc. the adjusted trade balane has now been in deficit for 39 months in a row with June's unadjusted trade-deficit dramatically worse than expected at JPY822billion. For a sense of how much this disaster means to markets that have become so numbed thanks to central bank intervention, USDJPY fell 2 pips on the news... it's not the economy, stupid; it's the BoJ.

 

 

We leave it to none other than Goldman (who some may remember had banked on a J-Curve arriving in the middle of last year just as the textbooks said it would) to explain just how bad today's data really is...

Trade balance to remain in the red, sluggish export volume becoming an increasingly serious issue: We expect the trade balance to remain in the red in the long term. We see a gradual improvement over time in line with recovery in the US economy and elsewhere, but with the boost to export volumes from yen depreciation weakening and structural changes evident in imports, including higher electrical machinery imports, we believe the pace of that improvement will be far more modest than in past periods of yen weakness. There were some commentators who viewed that export volume was weak in January-March as manufacturers allocated the portion of products scheduled for exports for domestic use in response to the pre-tax-hike rush demand, and therefore expected a rebound from April. However, such view was apparently misleading.

 

Charts: Bloomberg








Congress Brings Socialism To America With This Proposed Law

Submitted by Simon Black of Sovereign Man blog,

Sadly today I am reporting to you yet another development that seems as if we are all living within the pages of Ayn Rand’s seminal work Atlas Shrugged.

You may recall from the book that John Galt, the enigmatic protagonist, started off as a young engineer at the Twentieth Century Motor Company.

When the owner of the company died, the heirs decided to run the business according to the new enlightened principles of the time.

Primarily, they let all the workers vote on how the factory was supposed to be run and how much everyone should be compensated.

And it was soon decided that “everybody in the factory would work according to his ability, but would be paid according to his needs.”

Naturally, bright hard-working employees soon left; they found themselves working around the clock for the benefit of others who felt entitled to contribute as little as possible.

John Galt was among the first out the door.

And not long after, the once successful company went bust. No surprise.

Unfortunately this is no longer fiction. Because in the Land of the Free, the United States Congress is striving to make Atlas Shrugged a reality.

Their latest brainchild is to set up a new government bank, stuff it full of taxpayer funds, and loan the money to American workers for the exclusive purpose to help them form collectives and buy the companies they work for.

It’s called the United States Employee Ownership Bank Act.

And, straight from the bill, they aim to provide “loan guarantees, direct loans, and technical assistance to employees to buy their own companies. . .”

The goal of this legislation, curiously, is to “preserve and increase employment in the United States” which is still problematic six years after the global financial crisis.

Since September 2008, the US government has increased its debt level over 50% to $17.6 trillion.

The US Federal Reserve has increased its balance sheet four-fold, conjuring $3.5 trillion out of thin air.

All of this was supposed to create jobs. And with each of these being a failed policy, Congress is now descending into outright socialism.

To be fair, people throw around the word socialism a lot. They’ll say “Obama’s a socialist” or something like that. Often it’s taken to exaggeration.

But this legislation– the government effectively sponsoring the communal takeover of private business– is textbook socialism: private property and the means of production owned by the community.

Socialist Yugoslavia actually tried the exact same thing: worker-owned cooperatives. And the consequent failure was absolutely epic.

But politicians never let pesky things like truth get in the way of a bad idea.

It’s time to wake up smell the reality. This isn’t about panic. It isn’t about doom and gloom. It’s about facts, not fear.

Any rational, thinking person has to look at this and ask a simple question: where is this trend headed?

The evidence is pretty clear. And more and more people are starting to realize it.

People all over the world are thinking: “This is not the country I grew up in. And I don’t like the trend.”

It’s unfolding right in front of our very eyes for anyone with the intellectual courage to pay attention.

Whether it happens today, tomorrow, or five years from now is irrelevant. It’s the TREND that is so important to pay attention to.

And with that simple premise in mind, does it make sense to hold everything you’ve worked your entire life to build in a place with such a negative trend?

Your livelihood. Your savings. Your retirement. Your family’s security.

Rational people look at facts objectively and have a plan B. What’s yours?








Why "The US Should Have Already Panicked," The Sectarian Divide Mapped Out

Meghan O’Sullivan, Harvard's Director of Geopolitics (and former deputy national security adviser for Iran and Afghanistan) warns, "The US should have already panicked." As she notes, major American economic and political interests are at stake. The erasure of the Syria-Iraq border by a group that is considered too radical for al-Qaeda, the takeover of Iraq’s second largest city by IS, the kidnapping of international diplomats, and the declaration of an Islamic caliphate in large parts of Iraq and Syria – each one of these should be a major signal about the gravity of the situation. The Sectarian Divide remains key...

 

 

O'Sullivan's conclusion...

First, the US needs to view Iraq and Syria as completely interwoven – perhaps two countries, but one theater in reality. It needs to view IS for what it is, a threat to US and regional interests, not just as a threat to the Iraqi government. This would suggest more military involvement to push back against IS. Both in Iraq and Syria, the crisis is ultimately a political one, not a military one, so changing the politics is also key. But the US should not think that it can sequence military help only to follow political reform – the two must come together given the urgency of the situation.

 

While the United States continues to deliberate about its next moves, others – Syria, Iran, Russia – have been filling the vacuum in ways that are not aligned with US interests. Along with political pressure, more US military assistance to Baghdad and even to the Kurds will give the US political leverage when it comes time to help the Iraqis renegotiate their political compact. The moment in which the US can make a difference and truly affect the outcome is narrowing dramatically every day.

Source: Goldman Sachs








Senate Democrats Push To Triple Israel's Iron-Dome Aid To $576 Million

U.S. Senate Democrats included $225 million for Israel's Iron Dome rocket interception system in an emergency funding bill on Tuesday, which, as Bloomberg reports, in addition to the $351 million that’s already under discussion for Iron Dome in fiscal 2015 would bring the potential new funding to $576 million, compared with the $176 million currently requested by the Pentagon. "Iron Dome has saved countless Israeli lives," Defense Secretary Chuck Hagel told Senate Majority Leader Harry Reid in a letter dated yesterday and while the Iron Dome system is built by Haifa-based Rafael Advanced Defense Systems Ltd, an agreement with Israel calls for more than half the funds the Pentagon provides for Iron Dome to be spent in the U.S..

 

As Reuters reports,

U.S. Senate Democrats included $225 million for Israel's Iron Dome rocket interception system in an emergency funding bill on Tuesday that also cut $1 billion from President Barack Obama's request for $3.7 billion to deal with thousands of undocumented child immigrants.

 

"Israel is an essential American ally and needs these assets to defend itself," said Maryland Democratic Senator Barbara Mikulski, chairwoman of the Senate Appropriations Committee, in a statement.

 

...

 

U.S. lawmakers tend to be heavily pro-Israel. However, the fate of the $225 million - and other funding in the legislation - is uncertain in the Republican-controlled U.S. House of Representatives, where there is stiff opposition to an increase in spending tied to the Democratic president's request.

This almost triples the aid for Israel (as Bloomberg reports),

The money -- which would be included in an emergency spending bill directed mostly at child-migration issues on the U.S.-Mexico border -- would be in addition to the $351 million that’s already under discussion for Iron Dome in fiscal 2015. It would bring the potential new funding to $576 million, compared with the $176 million requested by the Pentagon for the year that begins Oct. 1.

...

The added $225 million for the current fiscal year would be used “to accelerate production of Iron Dome components in Israel to maintain adequate stockpiles,” Hagel said in the letter.

“Iron Dome has saved countless Israeli lives,” Defense Secretary Chuck Hagel told Senate Majority Leader Harry Reid in a letter dated yesterday

An agreement with Israel calls for more than half the funds the Pentagon provides for Iron Dome to be spent in the U.S.

*  *  *
We can almost hear the teleprompter now that Republicans (should they block this spending) would have the blood of dead Israeli children on their hands...








Senate Democrats Push To Triple Israel's Iron-Dome Aid To $576 Million

U.S. Senate Democrats included $225 million for Israel's Iron Dome rocket interception system in an emergency funding bill on Tuesday, which, as Bloomberg reports, in addition to the $351 million that’s already under discussion for Iron Dome in fiscal 2015 would bring the potential new funding to $576 million, compared with the $176 million currently requested by the Pentagon. "Iron Dome has saved countless Israeli lives," Defense Secretary Chuck Hagel told Senate Majority Leader Harry Reid in a letter dated yesterday and while the Iron Dome system is built by Haifa-based Rafael Advanced Defense Systems Ltd, an agreement with Israel calls for more than half the funds the Pentagon provides for Iron Dome to be spent in the U.S..

 

As Reuters reports,

U.S. Senate Democrats included $225 million for Israel's Iron Dome rocket interception system in an emergency funding bill on Tuesday that also cut $1 billion from President Barack Obama's request for $3.7 billion to deal with thousands of undocumented child immigrants.

 

"Israel is an essential American ally and needs these assets to defend itself," said Maryland Democratic Senator Barbara Mikulski, chairwoman of the Senate Appropriations Committee, in a statement.

 

...

 

U.S. lawmakers tend to be heavily pro-Israel. However, the fate of the $225 million - and other funding in the legislation - is uncertain in the Republican-controlled U.S. House of Representatives, where there is stiff opposition to an increase in spending tied to the Democratic president's request.

This almost triples the aid for Israel (as Bloomberg reports),

The money -- which would be included in an emergency spending bill directed mostly at child-migration issues on the U.S.-Mexico border -- would be in addition to the $351 million that’s already under discussion for Iron Dome in fiscal 2015. It would bring the potential new funding to $576 million, compared with the $176 million requested by the Pentagon for the year that begins Oct. 1.

...

The added $225 million for the current fiscal year would be used “to accelerate production of Iron Dome components in Israel to maintain adequate stockpiles,” Hagel said in the letter.

“Iron Dome has saved countless Israeli lives,” Defense Secretary Chuck Hagel told Senate Majority Leader Harry Reid in a letter dated yesterday

An agreement with Israel calls for more than half the funds the Pentagon provides for Iron Dome to be spent in the U.S.

*  *  *
We can almost hear the teleprompter now that Republicans (should they block this spending) would have the blood of dead Israeli children on their hands...








Head Doctor Fighting Africa's "Out Of Control" Ebola Epidemic Contracts The Virus

A month ago we mapped the current state of the Ebola crisis in Africa, which has claimed over 600 lives in recent months, and which according to the director of operations of medical charity Médecins Sans Frontières, Bart Janssens, has grown into an "epidemic which is totally out of control." He added that "Ebola is no longer a public health issue limited to Guinea: it is affecting the whole of West Africa," urging WHO, affected countries and their neighbours to deploy more resources especially trained medical staff.

 

Tragically, the "out of control" epidemic has taken a major turn for the worse when the head doctor fighting the Ebola epidemic in Sierra Leone has himself caught the disease, the government said.

Health workers take blood samples for Ebola virus testing at a screening
tent in the local government hospital in Kenema, Sierra Leone, June 30, 2014.

According to Reuters, the 39-year-old Sheik Umar Khan, hailed as a "national hero" by the health ministry, was leading the fight to control an outbreak that has killed 206 people in the West African country. Ebola kills up to 90 percent of those infected and there is no cure or vaccine.

Khan, a Sierra Leonean virologist credited with treating more than 100 Ebola victims, has been transferred to a treatment ward run by medical charity Medecins Sans Frontieres, according to the statement released late on Tuesday by the president's office.

 

Health Minister Miatta Kargbo called Khan a national hero and said she would "do anything and everything in my power to ensure he survives".

 

Khan told Reuters in late June that he was worried about contracting Ebola. "I am afraid for my life, I must say, because I cherish my life," he said in an interview, showing no signs of ill health at the time.

 

"Health workers are prone to the disease because we are the first port of call for somebody who is sickened by disease. Even with the full protective clothing you put on, you are at risk."

The tragic escalation was not limited to Khan: three days ago, three nurses working in the same Ebola treatment centre alongside Khan died from the disease.

The only good news, if any, is that even as the epidemic which has raged for months, and now appears to be out of control, it has not spilled out of Africa into other continents yet. On the other hand both the US and now China appears to have a problem with a different viral scourge: bubonic plague. In any event, a deadly viral breakout across three continents may be just what the Keynesian doctor ordered to blast the global economy into that long-delayed "recovery."








China Seals Off Yumen City After Outbreak Of Bubonic Plague

With Colorado suffering from pneumonic plague, and the dreadfully sad report of Sierra Leone's chief Ebola doctor contracting the virus, it appears China is taking no chances. As Yahoo reports, Chinese officials have blocked off parts of Yumen, a city in northwest China, preventing about 30,000 of the city's people from leaving after one resident died from bubonic plague. About 150 people who had contact with the plague victim have been placed under quarantine but US experts are perplexed at the response, "there's something here that we don't know, because this seems a very expansive response to just one case."

As Yahoo reports,

A city in China has reportedly been sealed off after one resident died from bubonic plague, but this way of trying to contain the disease is puzzling to infectious disease experts, who say the response seems extreme given the information released about the case.

 

According to news reports, Chinese officials have blocked off parts of Yumen, a city in northwest China, preventing about 30,000 of the city's people from leaving.

 

A man in the city became ill after he handled a dead marmot (a large wild rodent), and died last week from bubonic plague. No other cases of the plague have been reported, according to the Guardian. About 150 people who had contact with the plague victim have been placed under quarantine.

But US experts are wondering if there is more going on...

Dr. William Schaffner, a professor of preventive medicine and infectious diseases at Vanderbilt University Medical Center in Nashville, Tennessee, said that sealing off a city is a rather extreme set of precautions to take for a single case of bubonic plague. "I feel there's something here that we don't know, because this seems a very expansive response to just one case," Schaffner said.

 

"We have cases of bubonic plague from time to time in the United States, and they don't require this kind of public health response," Schaffner said. In recent decades, there have been an average of seven cases of bubonic plague a year in the United States, the CDC says.

*  *  *
Schaffner wondered whether Chinese public health authorities had more information that they have not released, such as reason to suspect more cases. "I'm very puzzled at the circumstances here, and what the actual hazard is."








The Decline Of Influence

Submitted by James E Miller of Mises Canada,

The world is seemingly aflame in chaos right now. The Israeli military has invaded the Gaza strip after the breaking of an 18-month cease-fire agreement. Which side broke the accord is still an open question. A commercial airliner was shot down over Ukrainian airspace. Western media and politicians assume the indefensible act of violence was committed by Russian President Vladimir Putin in an effort to conquer the contiguous area. In Iran, the government is ostensibly pursuing nuclear arms, much to the consternation of globalist tinkerers. Next door, in the Devil’s playground of Iraq, radical Islamists are causing massive amounts of destruction, including destroying historic churches from the apostolic times.

All of this disorder is the fault of waning American prestige according to Robert Fulford. In his latest column for the National Post, Fulford laments the indifference on display by President Barack Obama as violence erupts in planet’s most dangerous corner. He writes that Washington is no longer viewed as a legitimate threat by much of the world. Under the Obama presidency, he attests, “U.S. policy has become erratic and half-hearted, subject to arbitrary change without notice.” Fulford notes the lack of a strong response to the Syrian civil war as just one example where America backed away from the limelight. If the U.S. doesn’t soon take back its leadership role on the global stage, the “future looks increasingly dire.”

Fulford is far from alone in his fault-finding. Journalists from both political camps have been critical of the President of late. Arch neoconservative Charles Krauthammer called Obama’s comments on the downed Malaysia Airlines jetliner “passive” and demonstrative of a governing philosophy of disinterest. James Kirchick – the token leftist warmonger who takes great pleasure in American might displayed abroad – demanded it’s finally time for “the West to stand up to Putin” starting with U.S.-backing of the Ukrainian military.

All of these critics assume that America is capable of flipping a switch and rearranging the world’s affairs to meet its own standards. They don’t recognize the path the U.S. imperial state is on is slowly coming apart. It’s no longer the 1950s. The ceiling on Washington’s budget is getting closer by the day. The national debt is $17 trillion and counting; an unfathomable number that is impossible to maintain in perpetuity. The domestic economy is still sluggish from the 2008 market crash. The time of America’s dominance may soon be coming to an end. And the truth has yet to hit the people employed in the business of imperium.

The talking heads who opine on Sunday morning talk shows are still stuck in Cold War-mode. They refuse to face the truth about foreign policy: that there are always too many functioning  gears for good and evil to be readily apparent; and that truth and fiction often trade places depending on one’s preconceived agendas. The so-called experts forget the advice of realist Walter Lippmann who noted that rational foreign policy “consists in bringing into balance, with a comfortable surplus of power in reserve, a nation’s commitments and the nation’s power.”

More importantly, the media chattering class doesn’t seem to realize the conflicts taking place today are not the result of warring factions. The people of Iran, Ukraine, Israel, Palestine, Russia, and every other country under the influence of Western power didn’t originate their gripes from out of thin air. The incessant meddling of governments, specifically Washington, have fomented the fights we see today. Many are the direct, or indirect, result of overanxious global planning with scant knowledge of possible unintended consequences. Should the Obama Administration heed the complaints of interventionists longing for action, the result could be more death, more violence, and less peace.

The clashes going on currently have the mark of U.S. government meddling all over them. In Ukraine, the conflict between nationalists and separatists sympathetic to Russia is an immediate consequence of the overthrowing of President Viktor Yanukovych. The coup was surreptitiously supported by Washington and its sock puppet batch of non-government organizations. The annexation of Crimea and ongoing violence in the area can be traced back to Western agitation of Russia.

Iraq is more of the same calamity. Former dictator Saddam Hussein was no angel, but under his rule, radical Islamic elements were kept largely at bay. His toppling by U.S. forces has left the birthplace of civilization anything but civilized. The country, which was arbitrarily formed by European colonial powers following World War I, is slowly lurching toward a three-way split along ethnic and religious lines.  Terrorists with allegiance to the Islamic State of Iraq and Syria are wreaking havoc across the country, a spillover effect of embattled nations such as Libya. The latter battlefield is, of course, the result of Western intervention financed primarily by the U.S. government.

The experiment where America takes up where the British Empire left off appears to be finally coming to an end. It was never designed to work in permanence. The contradictions in intervention are not bringing tranquility or even supremacy. The control freaks beside the Potomac have allowed hubris to take hold. Their grip on other countries is loosening due to the very disarray they created. The irony is about this new reality is the outcome was easy to predict. Arrogance over one’s own intelligence is always a human failing. It was never possible for a cabal of political actors to guide the world’s affairs smoothly. As Friedrich Hayek wrote, “[N]o human mind can comprehend all the knowledge which guides the actions of society.”

If I had to take a guess at what drives the yearning for worldwide dominance, I would say it’s ideology. Everyone has their own, but the fervor at which interventionists opine is more passionate than most. They don’t yearn for just control, but seek a complete transformation of other peoples and cultures so that a uniform attitude is adopted by the world’s populace. Much of the propagating is done under the guise of human rights. With everyone kowtowing to the same lies of democratic celebration, liberty is dissolved.

From Alexander the Great to British rule, history, if it has a lesson, teaches us that no group of men can conquer the world. It’s simply too big, too vast, and too complex. Humanity is far too restless to sit and take orders from dictators halfway across the globe. Likewise, the outcome of intervention does not exist in a vacuum. It often has far-reaching effects that can’t be known in advance. Those decrying the decline of American power on the global scene have yet to learn these valuable lessons.

The mindset that wishes one country to have an iron-grip on world affairs is horribly naïve. Empires are not free. Washington’s credit card can’t be charged to infinity. The need for prudence is growing larger by the day. For the sake of average Americans, and peaceful citizens across the world, let’s hope it gets here sooner than later.








Chart Of The Day: For Caterpillar The "Great Recovery" Is Just As Bad As The Great Financial Crisis

Earlier today, Caterpillar reported its monthly global OEM retail sales.

It didn't got any press coverage for one simple reason: the bellwether industrial company which has managed to repurchase it way to all time highs in recent months hardly wants the investing public to know the unpleasant truth, a truth which is shown in its simplest format in the chart below: starting in December 2012 and continuing through today, Caterpiller has reported 19 consecutive months of declining global year-over-year retail sales. The last, and only, time it had 19 consecutive months of such decline? The period starting in October 2008 just when Lehman filed for bankruptcy.

So if we are to call that first period of 19 consecutive months of CAT sales decline the "Great Financial Crisis", we are confused: is the proper name of this identical 19-month period of declines beginning in December 2012 the Great... "Recovery?"








IRA Contributions Hit Record High As Unpatriotic Americans "Save More, Pay Off Debt, Spend Less"

In what could be the most unpatriotic report ever, Fidelity reports that average IRA contributions for tax year 2013 reached $4,150 - an all-time high. That's great news, right? Not if you ask Janet Yellen as Fidelity notes younger investors, those in their 20s, 30s and 40s, are adopting the strongest savings behaviors as Americans are "saving more, paying off debt, and spending less." This is not acceptable in the new normal, don't they know debt is the bridge between hard work and play?

 

Fidelity Investments today released its second annual analysis of over seven million Individual Retirement Accounts (IRAs), which revealed that average contributions for tax year 2013 reached $4,1501, a 5.7 percent increase from tax year 2012 and an all-time high. Average balances were $89,100, a nearly 10 percent year-over-year increase.

“Saving more, paying off debt and spending less were the top three New Year financial resolutions cited in a recent Fidelity study and our IRA analysis indicates that Americans are taking those financial resolutions seriously,” said Ken Hevert, vice president, Fidelity Investments.

...Younger investors, those in their 20s, 30s and 40s, are adopting strong savings behaviors and have made strong increases with overall average contributions—3.9 percent, 6.7 percent and 6.2 percent, respectively from 2012 tax year to 2013 tax year.

*  *  *

We leave it to Steve Liesman to put these unpatriotic saving-not-spending young people straight...

"debt is always pointed out as a negative thing, when in fact debt is the great bridge between working hard and playing hard in this country."

 

"this country has been built on consumer debt," he proudly states

And for Mark Cuban to correct him!!!

. @CNBC you couldn't be any more wrong in your advice to millennials. First pay off debt. Then invest in yourself. The stockmarket is last

— Mark Cuban (@mcuban) July 23, 2014








Where Facebook's Second Quarter User Growth And Revenue Generation Was In Charts

Moments ago Facebook, unlike AT&T which missed on revenue and EPS, beat both the top line expectations of $2.81 billion print reporting $2.91 billion on EPS of $0.42, higher than the $0.32 expected.  Here is the full breakdown.

  • Daily Active Users: 829 million (Exp. 831MM)
  • Monthly Active Users: 1.317 billion (Exp. 1.31 billion)
  • Mobile Monthly Active Users: 1.07 billion (Exp. 1.07 billion)
  • Free cash flow: $873 million, down from $922 million in Q1 and down from $1.054 billion in Q2 2013

And visually, first the Daily Active Users:

 

Next monthly:

 

The Mobile users:

 

Revenue broken down by geography:

 

ARPU broken down by region:

 

Finally the magic of non-GAAP adjustment.

Of course, none of this matters until Yellen Capital Management opines if FaceBook is still a bubble or not...

Source








No Data, Mo War, No Worries: S&P Hits New Record High

On a day with no macro data and more warmongering, it only makes sense that stocks should continue to levitate. Aside from The Dow (troubled by weakness in Boeing dragging 20 points off the index), US equity markets rose with the S&P 500 breaking to new all-time record highs just shy of 1990 (2000 tomorrow?) Treasuries were very quiet, trading in a 2bps range and ending basically unch. Gold and silver limped lower (but were also quiet) as the USD pushed modestly higher (with AUD strength on the inflation print overnight the big story). Oil prices recovered yesterday's losses closing back above $103. Biotechs were a notable mover (on M&A hopes) as they retraced all Yellen's warning losses. This is the 3rd day in a row that "most shorted" stocks were snap-squeezed higher at the open.

 

The S&P 500 reaches new record highs

 

Today was all about the opening ramp... and the Dow just could not make it back into the green

 

Since the MH17 headlines hit, stocks haven't looked back...apart from the Dow...

 

This is the 3rd day in a row of an instant snap squeeze at the open...

 

Bonds don't seem to buy what ever stocks are drinking?

 

Something odd going on in credit markets... 2nd day in a row where HY spreads have blown wider as soon as Europe closes (and POMO ends)...

 

Commodities were flat to slightly lower (as the USD rose very modestly) but oil prices recovered yesterday's losses...

 

Treasury yields traded in a very narrow range - testing 2014's closing low yields...

 

AUD's strength following a hot inflation print was th emain news as the USD rose modestly all day...

 

Charts: Bloomberg

Bonus Chart: "Fight The Fed" in Biotechs...though it seems like the ETF got stuck at Yellen's levels...

 








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