Wednesday, April 16, 2014

Meltdown America: A Warning From Survivors

Jeff D. Opdyke
Activist Post

“Those who cannot remember the past are condemned to repeat it.” — George Santayana

There’s a perception in our country that America is so exceptional that the trials and tribulations — and outright social catastrophes — that rock other countries in the world simply cannot happen on our shores. We’re the biggest, the strongest, the richest. We are America. And we have divine immunity.

Ahh, the power of the mind to mask the facts we refuse to accept.

We are a deeply troubled nation, riven by political dysfunction, angst-ridden by social disquiet, addled by so much debt — more debt, $125 trillion, than ever accumulated in history — that we will never be able to completely repay it without radically devaluing the dollar or radically raising taxes and cutting government services.

Yet we watch meltdowns in other countries and never consider for an instant that, just maybe, something like that could happen here.

But we’re closer to that tipping point than you think.

Casey Research is launching a special video today called Meltdown America, which takes an in-depth look at three people who survived economic and political collapse in Yugoslavia, Zimbabwe and Argentina. Now, I know no one will think that America would ever devolve to such a degree that it would mimic the path of any of those three countries. But I will remind you that a century ago, America and Argentina were vying to hemispheric superiority … and Argentina lost because of asinine political choices within government.

I was invited by Casey Research to appear in the video to discuss the likelihood of a similar meltdown happening in America. As a nation, we have reached the point where we, too, are making asinine political choices in government, and those choices threaten the lifestyle that you and I know as normal. I want you to watch this video with an open mind. Do not immediately assume that none of this can happen to America. It can.

And it probably will.

To survive, you must be willing to see what you don’t want to accept … and willing to make moves that others will call crazy. Remember: It’s never those who stay behind that survive. It’s those who act to get out of the way of an unpleasant future that live to tell the stories of how it all fell apart.

To watch this unfolding tale of collapse and survival, click on the video link below.

Until next time, stay Sovereign …

UBS – Markets Wrong to Think Euro Crisis Over; Crisis Fatigue, Not Reality, Is Behind The Belief Europe Has Recovered

Jim Rickards: The Coming Crisis is Bigger Than The Fed And Will Arrive Within The Next 3-5 Years

And will arrive within the next 3-5 years
Full description and comments at:… 
James Rickards, financier and author of the excellent cautionary best-seller Currency Wars, has recently released a follow-on book: The Death of Money: The Coming Collapse of the International Monetary System. In it, Jim details how history provides plenty of precedent for the collapse that has begun amidst the major world currencies.The historical progression is predictable enough that Jim is comfortable claiming that the next economic crisis we face will be bigger than the ability of the Federal Reserve (and the other world central banks) to contain it. And that such a calamity will happen within the next five years.

Why You’re Paying Too Much In Taxes Today: Because Everyone from the Ultra-Rich to Illegal Immigrants Pay Nothing … Or Get Tax Refunds

Giant Corporations Scam Tax Refunds

Economics professor and former Secretary of Labor Robert Reich notes:
Many millionaires pay a lower federal tax rate than many middle-class Americans.
Some don’t pay any federal taxes at all.
Some also take advantage of tax loopholes that let them park some of their earnings in offshore tax havens like the Bahamas or the Netherlands Antilles.
Put these all together and you see why Warren Buffet, the second richest person in America, pays a lower tax rate than his secretary, as he readily admits.
State and local taxes are even more regressive. The poorest fifth of Americans pay an average state and local tax rate of over 11 percent, while the richest fifth pay only 5.6 percent. This isn’t small change. State and local taxes account for about 40 percent of all government revenues.
Pulitzer prize winning reporter David Cay Johnston reports that – in 16 states – giant companies pocket your “state income taxes”.
This includes foreign corporations.
Workers are never informed that their “state income taxes” are being pocketed. And states often refuse to make this information public, claiming that it is “proprietary information”.

In addition, big companies use a variety of international scams to avoid taxes
The Washington Post notes:
About two-thirds of corporations operating in the United States did not pay taxes annually from 1998 to 2005, according to a new report scheduled to be made public today from the U.S. Government Accountability Office…
In 2005, about 28 percent of large corporations paid no taxes…
Dorgan and Sen. Carl M. Levin (D-Mich.) requested the report out of concern that some corporations were using “transfer pricing” to reduce their tax bills. The practice allows multi-national companies to transfer goods and assets between internal divisions so they can record income in a jurisdiction with low tax rates…
[Senator] Levin said: “This report makes clear that too many corporations are using tax trickery to send their profits overseas and avoid paying their fair share in the United States.”
Indeed, as … Johnston documents, American multinationals pay much less in taxes than they should because they use a widespread variety of tax-avoidance scams and schemes, including:
  • Selling valuable assets of the American companies to foreign subsidiaries based in tax havens for next to nothing, so that those valuable assets can be taxed at much lower foreign rates
  • Pretending that costs were spent in the United States, so that the companies can count them as costs or deductions in the U.S. and pay less taxes to the American government
  • Booking profits as if they occurred in the subsidiary’s tax haven countries, so that taxes paid on profits are at the much lower safe haven rate
  • Working out sweetheart deals with certain foreign governments, so that the companies can pretend they paid more in foreign taxes than they actually did, to obtain higher U.S. tax credits than are warranted
  • Pretending they are headquartered in tax havens like Bermuda, the Cayman Islands or Panama, so that they can enjoy all of the benefits of actually being based in America (including the use of American law and the court system, listing on the Dow, etc.), with the tax benefits associated with having a principal address in a sunny tax haven.
  • And myriad other scams
And see this.
Indeed, some of the world’s biggest companies not only dodge all taxes, they actually enjoy a negative tax rate … where they are paid money by the U.S. government, just like the illegal immigrants discussed above.

The World’s Richest Hide $31 Trillion Dollars to Avoid Taxes

A new report from the former chief economist at the prestigious McKinsey firm – an expert on tax havens – concludes that
The Guardian notes:
A global super-rich elite has exploited gaps in cross-border tax rules to hide an extraordinary £13 trillion ($21tn) of wealth offshore – as much as the American and Japanese GDPs put together ….
James Henry, former chief economist at consultancy McKinsey and an expert on tax havens, has compiled the most detailed estimates yet of the size of the offshore economy in a new report, The Price of Offshore Revisited, released exclusively to the Observer.
He shows that at least £13tn – perhaps up to £20tn [i.e. $31 trillion dollars] – has leaked out of scores of countries into secretive jurisdictions such as Switzerland and the Cayman Islands with the help of private banks, which vie to attract the assets of so-called high net-worth individuals. Their wealth is, as Henry puts it, “protected by a highly paid, industrious bevy of professional enablers in the private banking, legal, accounting and investment industries taking advantage of the increasingly borderless, frictionless global economy”.
The detailed analysis in the report, compiled using data from a range of sources, including the Bank of International Settlements and the International Monetary Fund, suggests that for many developing countries the cumulative value of the capital that has flowed out of their economies since the 1970s would be more than enough to pay off their debts to the rest of the world.
“The problem here is that the assets of these countries are held by a small number of wealthy individuals while the debts are shouldered by the ordinary people of these countries through their governments,” the report says.
The sheer size of the cash pile sitting out of reach of tax authorities is so great that it suggests standard measures of inequality radically underestimate the true gap between rich and poor. According to Henry’s calculations, £6.3tn of assets is owned by only 92,000 people, or 0.001% of the world’s population – a tiny class of the mega-rich who have more in common with each other than those at the bottom of the income scale in their own societies.
“These estimates reveal a staggering failure: inequality is much, much worse than official statistics show, but politicians are still relying on trickle-down to transfer wealth to poorer people,” said John Christensen of the Tax Justice Network. “People on the street have no illusions about how unfair the situation has become.” [Remember that rampant inequality destroys economies. And conservatives or liberals are both offended by it.]
Al Jazeera reports:
Rich individuals and their families have as much as $32 trillion of hidden financial assets in offshore tax havens, representing up to $280bn in lost income tax revenues, according to research published on Sunday.
The study estimating the extent of global private financial wealth held in offshore accounts – excluding non-financial assets such as real estate, gold, yachts and racehorses – puts the sum at between $21 and $32 trillion.
John Christensen of the Tax Justice Network told Al Jazeera that he was shocked by “the sheer scale of the figures”.
“What’s shocking is that some of the world’s biggest banks are up to their eyeballs in helping their clients evade taxes and shift their wealth offshore,” said Christensen.
“We’re talking about very big, well-known brands – HSBC, Citigroup, Bank of America, UBS, Credit Suisse – some of the world’s biggest banks are involved… and they do it knowing fully well that their clients, more often than not, are evading and avoiding taxes.”
Much of this activity, Christensen added, was illegal.
The research estimates that since the 1970s, the richest citizens of these 139 countries had amassed $7.3 to $9.3 trillion of “unrecorded offshore wealth” by 2010.
Private wealth held offshore represents “a huge black hole in the world economy,” Henry said in a statement.

Either Eliminate Taxes – Or Tax Fairly – But Don’t Allow Fraud to Rob the Middle Class Blind

Some say that we could eliminate all taxes if we take away from the big banks the monopoly power to create credit, so that the government doesn’t have to pay trillions on interest for that credit.
Some say that income taxes are illegal, because they were never ratified by the states.
Some say that – since more than half of all government discretionary spending goes to imperial wars of adventure and most of the rest is thrown at the big banks so they can keep ripping us off – paying taxes is just propping up a destructive system.
Others – including some leading conservatives – say that the problem is that the wealthiest haven’t been forced to pay their fair share of taxes.
We’re not weighing in one way or the other. But one thing is for sure: either no one should pay taxes, or we should all – illegal immigrants, giant corporations and the super-rich – be subject to the same rules and pay our fair share.
Soaking the middle class is unfair, unjust … and unAmerican. Indeed, while the Boston Tea Party was a revolt against taxation without representation, it largely centered on the British government’sdisproportionate tax breaks towards the East India Company, the giant company which dominated the tea market and hurt small American business.

Illegal Aliens Scam Tax Refunds

For years, American taxpayers have been shelling out $4.2 billion dollars per year to pay for a scam.
A report by the Inspector General found that some 2 million illegal immigrants have been receiving large tax refunds by pretending that numerous dependents live with them … when, in fact, most of the dependents live in Mexico and have never lived in the United States.
Once whistleblowers called attention to this problem, their IRS bosses told them to ignore the fraud and look the other way:
WND notes
The problem was not a revelation to the Northern California IRS field-office worker who viewed the report: “The fraud has been going on for years,” he told WND. “Business as usual.”“As the video indicates the Service does nothing,” he said, asking WND not use his name to avoid reprisal.(The Federal Reserve has been bailing out foreign banks for years; but we assume that this is not a backdoor bailout for foreign nationals.)

INVESTOR ALERT: The Underlying Cause of The Banking Crisis Has Returned, Grave Adverse Effects Of The Ultra Loose Monetary Policy Everywhere In The World

Yet again, it seems, once senior political or economic figures leave their ‘public service’ the story changes from one of “you have to lie, when it’s serious” to a more truthful reflection on reality.As Finanz und Wirtschaft reports in this great interview, Bill White – former chief economist of the Bank for International Settlements (who admittedly has been quite vocal in the past) – warns of grave adverse effects of the ultra loose monetary policy everywhere in the world… “It all feels like 2007, with equity markets overvalued and spreads in the bond markets extremely thin… central banks are making it up as they go along.” Some very uncomfortable truths in this crucial fact-based interview.
The Underlying Cause of The Banking Crisis Has Returned
The world economy has not yet recovered from the last such implosion, and already we are on to another phase of unsustainable credit growth
As its name implies, the International Monetary Fund’s latest Global Financial Stability Report attempts to track developing risks within the financial system.
So the following statistic, contained in the report, should be of concern: high yield issuance among US corporates – junk debt in other words – over the past three years is more than double the amount recorded in the three years prior to the crisis.
What’s more, the trend is accelerating; gross issuance of high yield corporate bonds stood at a record $378bn (£225bn) last year. There were also $455bn of institutional leveraged loans issued in 2013, far exceeding the previous high in 2007, just ahead of the crisis.
Japan Risks Public Souring on Abenomics as Prices Surge
Prime Minister Shinzo Abe’s bid to vault Japan out of 15 years of deflation risks losing public support by spurring too much inflation too quickly as companies add extra price increases to this month’s sales-tax bump.
Chanos on China’s Credit Bubble
Why You Should Worry about China’s Economy: It Depends on $2.5 Trillion Worth of Debt Added Annually, Says Jim Chanos
IMF Holds High-Level Conference on Monetary Policy in the New Normal
IMF Managing Director Christine Lagarde set the tone as she opened the event: “The world is continuing to change. Monetary policy, and central banking, will not go back to what they used to be once the crisis is finally behind us.”
Flashing Red Warning: Q1 Earnings Growth Plunges To Lowest Since 2012
BofAML Warns VIX Complacency Suggest Stocks Fall Further
Fear and Greed Index
Investors are driven by two emotions: fear and greed. Too much fear can sink stocks well below where they should be. When investors get greedy, they can bid up stock prices way too far.
Another bearish wick in Bio Tech took place!
Bio Tech led on the way up and so far is been a leader on the way down!
Another bearish wick this past week took place in IBB.  Keep you eye on this leader and watch for its impact to the NDX 100 !!!
Is Nasdaq on Its Way Back to 3,000?
“The observation that company earnings will be very weak for the first quarter seems to be talked about and written more and more about as the results start to be released. Weak consumer spending will catch up to public companies which sell to consumers. In turn, businesses which supply consumer-based businesses will be hampered. The sharp cost cuts which happened during the recession cannot be duplicated. Public companies have run out of cost-savings tricks as their revenue improvement falters.”
Citi Mortgage Originations Drop To Record Low

Beef Prices Highest In Almost 30 Years

Rick Santelli: Government Is The Problem

Making Money the Measure of Politics – The US Supreme Court is Pushing Forward the Legalization of Bribery

U.S. pundits decry countries like Iran as undemocratic for having a screening process for candidates to high office. But U.S. politicians must pass muster with wealthy donors to be considered serious candidates, a system that the Supreme Court just made worse.
On April 2, the U.S. Supreme took another step toward the destruction of campaign finance reform with a five-to-four decision known as McCutcheon v. Federal Elections Commission.
One gets the feeling that this is part of a general campaign, waged by class-biased, ideologically committed conservatives, against government regulation, which they see as somehow a violation of their constitutional rights. As if to suggest that this is so, the Court majority rationalized its decision in the name of “free speech.”
What does this ruling do? First, the ruling removes limitations on overall campaign donations given in an election cycle. The wealthy can now sit down and write checks to unlimited numbers of candidates and political organizations and thereby make themselves indispensable in an electoral process dependent on the raising of large sums, particularly for television advertising.
Indeed, in this way the influence and demands of wealthy donors continue to be more powerful and persuasive than the solicitations of ordinary constituents whose interests the elected official is pledged to serve. In other words, McCutcheon vs. FEC pushed forward the process of legalizing bribery within our political system – a phenomenon which already is well along in its development.
Second, the ruling corrupts the notion of free speech by equating it with the use of money. Thus, the Court majority confuses free speech with that very act of bribery noted above. They seem to be pretending that we are dealing with the transparent efforts of constituents seeking to convince their political representatives of a certain point of view.
This is an illusion. We are dealing with donor individuals and organizations funneling millions of dollars to politicians in need of small fortunes just to maintain their professional positions, and to do so in exchange for political and legislative favors. That is the exercise of free speech only if you equate it with the suborning of elected officials.
It is hard to believe that the five Supreme Court justices who voted in the majority do not know this. And if they do, they are guilty of using the Constitution to rationalize criminal behavior.
Specific Flaws
Argument One -  “Contributing money to a candidate is an exercise of an individual’s right to participate in the electoral process through both political expression and political association.”
In taking this line of argument the justices ignore an established principle that operates in the social (as well as physical) realm: that is, quantity can shape quality and in so doing “act as a causal mechanism in social behavior.” For instance, you can say that contributing of money to campaigns and parties is an inherent part of the right to political participation. But the quality of that right, that is its consequence, is dependent on the quantity of the donation and its source.
Thus, this form of political participation has different consequences if a multitude of citizens give small amounts to various candidates and parties than if a few citizens, cleverly bundling their donations, give millions. The former is unlikely to skew an election through overwhelming, and often distorting, media advertising or to compromise the integrity of the candidate once elected.
The latter is almost certain to do these things. In other words, so much money coming from a few sources into an electoral process dominated by the need for money transforms donations into bribes and payoffs. This transformation is exactly what effective campaign finance reform is designed to prevent.
Argument Two – Restricting contributions is like restricting the number of endorsements a newspaper can make. “Government may no more restrict how many candidates or causes a donor may support than it may tell a newspaper how many candidates it may endorse.”
The problem with this assertion is that newspapers do not usually trade in favors. Big donors almost always do. Newspapers usually do not expect those they endorse to change the regulatory environment in which the newspaper operates. Big donors almost always do.
By making the comparison between newspaper endorsements and the actions of large donors, the justices are making a false analogy. They are mixing apples and oranges.
Argument Three -  “Spending large sums of money in connection with elections, but not in connection with an effort to control the exercise of an officeholder’s official duties, does not give rise to quid pro quo corruption. Nor does the possibility that an individual who spends large sums may garner ‘influence over or access to’ elected officials or political parties.”
This statement contains one dubious assumption and one misstatement of fact. First, assuming that “spending large sums of money in connection with elections” is not done in an “effort to control the exercise of an officeholder’s official duties” and therefore does not result in “quid pro quo corruption” is, at best, dangerously naive.
Do these justices really believe that the Koch brothers, Sheldon Adelson and a host of corporations and special interest organizations would spend millions of dollars in an election cycle apart from “an effort to control the exercise of an officeholder’s official duties”?
The claim that “an individual who spends large sums” does not “garner ‘influence over or access to’ elected officials or political parties” is just wrong. What do these justices think the American Rifle Association or the American Israel Public Affairs Committee is doing if not buying influence and access?
It is odd that these justices, who undoubtedly recognize that they live in a capitalist country where just about everything is up for sale, would so blatantly pretend that politicians and elections are not also available for purchase.
Formula for Disaster
Sen. John McCain, R-Arizona, one of the sponsors of the bipartisan Campaign Reform Act of 2002, predicts that the recent Supreme Court decision will result in “major scandals in campaign finance contributions” and these, in turn, “will cause reform.”
Scandals there are sure to be. But I am not sure about reform. Past “major scandals” have not necessarily led to reform. In the United States, numerous school shootings have shocked the public but not resulted in the reform of the nation’s gun laws. Recent financial crises have led to recession and government bailouts for savings and loans, banks and mortgage houses, but have not resulted in sufficient regulatory reform to prevent a recurrence of these problems.
Therefore, campaign finance scandals may not yield the reform Sen. McCain foresees. All these scandals do indicate one thing, though, and that is that the Supreme Court justices don’t know what they are talking about when they deny that big money contributions are not corrupting.
Let us keep in mind that the U.S. citizenry is largely estranged from politics and ignorant of the workings of their national economy. Such indifference and ignorance allows power to default to the minority who are unethical enough and wealthy enough to not only buy politicians, but to buy public opinion through the manipulation of the media – a particular specialty of people like Rupert Murdoch.
This concentration of power usually results in periods of wholesale deregulation of business and politics leading inevitably to political unrest and economic ruin of one degree or another. Yet it is only when these consequences become so disastrous (I am talking here on the scale of the 1929 depression or the race riots of the 1960s) that the public’s backlash brings about significant reform.
And even then the nature of such events is cyclical. We have forgotten the corruption of the Gilded Age and the hardship of the Great Depression. Some of us have even forgotten the racist nature of our politics prior to the Civil Rights Movement.
So you should let your children know they may see these troubles again in the near future. Maybe they will be able to handle them better than we are.
Lawrence Davidson is a history professor at West Chester University in Pennsylvania. He is the author of Foreign Policy Inc.: Privatizing America’s National Interest; America’s Palestine: Popular and Official Perceptions from Balfour to Israeli Statehood; and Islamic Fundamentalism.

US Household income continues to fall

US Household income continues to fall

- - US Household income continues to fall in midst of recovery
Posted by

US households continue to face a declining standard of living.  The first obvious item comes from falling incomes.  Some of this is being masked by renewed access to debt as banks are once again lending money to over stretched consumers.  Yet real wealth recovery this is not.

John Rubino–Is The Demise Of The PetroDollar Coming? 31.Mar.14

John Rubino sees big risks for the Dollar ahead. As it tries to punish Russia for the latter’s dismemberment of Ukraine, the West is discovering that the balance of power isn’t what it used to be. Russia is a huge supplier of oil and gas — traded in US dollars — which gives it both leverage over near-term energy flows and, far more ominous for the US, the ability to threaten the dollar’s reign as the world’s reserve currency. And it’s taking some big, active steps towards that goal.
This video was posted with permission from Kerry Lutz: 
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DISCLAIMER: The financial and political opinions expressed in this interview are those of the guest and not necessarily of “Finance and Liberty” or its staff.

Tories’ £570million housing scheme builds just 47 affordable homes in THREE YEARS

‘David Cameron’s flagship £570million scheme to tackle Britain’s housing crisis has built fewer than 50 affordable homes, damning figures reveal.
The Prime Minister claimed two years ago that his “Get Britain Building” project would see 16,000 new homes built and tens of thousands of new jobs created.
But of just 715 new properties which have been built so far, only 47 are affordable family homes .
Labour said it was a disgrace that just 7% of homes under the scheme were affordable.’
Read more: Tories' £570million housing scheme builds just 47 affordable homes in THREE YEARS

Predictably, Central Bankers Suggest the 'S-Word' ... Securitization

Why Europe needs the City's financial weapons of mass destruction ... There is very little chance of a market-led recovery taking hold in Europe without a revival in securitised lending to give it legs. America's sub-prime lending boom led to the banking crisis, yet securitisation is poised to make a comeback ... They were the "financial weapons of mass destruction" which blew up the world economy, yet perhaps surprisingly, they are poised to make a comeback – and what's more, it is with the active encouragement of Europe's new generation of central bank governors. – UK Telegraph
Dominant Social Theme: Wall Street does God's work after all.
Free-Market Analysis: So Europe's central bankers have decided that the only way to revitalize the European economy – especially Southern Europe – is via securitization of assets.
This we learn from Jeremy Warner, assistant editor of The Daily Telegraph, and author of the article excerpted above. Is it possible that Mr. Warner did not think up this thesis all by himself?
Is it possible that it was, ahem ... suggested to him?
As we have reported regularly, those charged with maintaining economic order are bound and determined to continue to support – and expand – the current stock market boom.
And so ... enter securitization. Of course, this financial strategy is widely held to have aggravated the 2008 financial crisis. But no matter. Five years is long enough. There is a market to stimulate and securitization provides the wherewithal.
Perhaps this is the reason we are now treated to a securitization "white paper" by Europe's central banking crowd. (See below.) And an article, as well.
Perhaps the groundwork is being laid. Directed history is about to welcome asset securitization back into the fold of reputable financial strategies.
You see, the problem is (according to the bankers) that credit from banks is not being extended. To some degree, reportedly, perpetually dampened interest rates are crowding out securitization.
This issue of low rates is obviously a big deal to central bankers. We wrote about it recently here:
IMF Misleads on Interest Rates – And So Does the Media
The idea would be that securitization can take the place of low interest rates. The ECB wants banks to increase lending while reducing leverage. If banks can bundle their loans via securitization, they can move those loans off the books.
Once the loans are off the books, the bank will have additional capital available for lending. Or so the thinking goes.
Here's more:
Could we so soon have forgotten the damage that these fiendishly complex instruments inflicted on the world? How could we be even thinking about inviting them back into the fold?
Well we are, and the reasons for it are sounder than you might think. Indeed, I would go further, and say that there is in fact very little chance of a broadly based, market-led recovery taking hold in Europe without a revival in securitised lending to give it legs.
... In the run-up to the crisis [of 2008], securitisation was one of the main mechanisms by which banks expanded their balance sheets and facilitated abundant credit. New lending, whether for mortgages, credit cards, car loans, commercial property or even straight SME finance, would be routinely packaged up and sold off to investors, thereby freeing up capital for yet more lending.
... The reality was that the risks were becoming progressively concentrated, through securities trading operations, on bank balance sheets, or in vehicles connected to banks, so that when the sub-prime crisis hit, and many "asset-backed securities" were found to be worthless, they undermined confidence in the entire banking system.
Why on earth would you want to bring back such collective madness? Some of the answers to this question are provided in a newly published joint paper by the Bank of England and the European Central Bank, a front runner to a more detailed consultation due to be issued next month on how to remove some of the blockages to a resurgent securitisation market.
Amusingly, the paper regurgitates many of the arguments in favour of securitisation that ahead of the crisis had lulled banking regulators into thinking it not just safe but, positively beneficial. The following sentence could have come straight from the mouth of Alan Greenspan circa 2006; a revival in asset-backed securities (ABS) issuance "could translate into a diversified funding source for banks and potentially transfer credit risk to non-bank financial institutions, thereby providing capital relief that could be used to generate new lending to the real economy".
But my intention is not to mock; rather, it is to praise. There is nothing wrong with securitisation per se, provided it is kept simple and transparent, and the wretched credit rating agencies are kept well away from the game, so that investors themselves can make up their minds about the risk, rather than abdicating responsibility to corrupted outside analysts.
The article concludes by pointing out that Europe "desperately needs new sources of market-based finance" and must re-adopt the securitization schemes of the City's "Anglo-Saxon alchemists."
The article even presents securitization as a political football. Central bankers "get it" while Brussels does not. In other words, Brussels is inclined toward strict regulation of securitized products while the banking community understands that the free market of financial instruments – maligned as they are – has a place as well.
Should we be worried about increased securitization? Not according to the article: "Properly contained, these 'financial weapons of mass destruction' are key to unlocking renewed growth and a well functioning economy."
This is where we depart from the article's analysis. The problem of modern Western economies is that they are central bank driven. Any single financial strategy is bound to blow up sooner or later because central-bank money printing inevitably creates great booms and busts.
During the "boom" period, economies expand dramatically and it seems that currency available to entrepreneurs and even average workers is inexhaustible.
During the "bust" period the reverse is true. Suddenly, companies are going bankrupt, employment is diminishing, stock markets are swooning and bankers are discovering that their balance sheets are hollowed out.
Depending on the size of the market distortion, the gradual realignment of the economy can take months or years.
The current economic crisis has been going on for at least a half-decade or more because there is a consensus among bankers and politicians that those firms – financial and industrial – that need to go bust ... won't.
The "crony capitalism" that has led to this state of affairs is responsible for the endless Great Recession as well. Money circulates only reluctantly because people don't know where to invest. Large companies and banks may yet be secretly bankrupt. No one knows.
The modern central-bank run business cycle also makes regulation irrelevant because whatever regulations are passed during a bust – not that they would be effective anyway in the long term – are unwound toward the top of the boom.
There are arguments by the "national socialist" wing of the alternative media claiming that central banks are not responsible for money creation and that it is the "private sector" via commercial banking that creates most money via lending.
But this is fairly nonsensical. There were around five central banks at the end of the 19th century and today, some 100 years later, there are about 150, including 70 or so that are under the direction of the BIS. It is central banks that provide the command-and-control mechanism for monetary creation. Central banks these days set the parameters for commercial bank loans. Not enough "capital" (central bank electronic digits) and no loans can occur.
It is central banks that set the pace when it comes to money creation via absurdly low interest rates that are maintained in order to stimulate another bubble. And we can gauge the desperation of the central banking crowd by their determination to bring back "private market" securitization.
The "free-market" that such securitization is supposed to stimulate remains both moribund and farcical. And if it were somehow stimulated by securitization the result would inevitably be the same boom-and-bust that occurred throughout the latter half of the 20th century.
Nonetheless, we anticipate these sorts of strategies will be tried. The globalist crowd is determined to further inflate equity markets for a variety of reasons, as we have long pointed out. The Wall Street Party that we have exhaustively analyzed is not a marketplace evolution but a massive manipulation that includes fiscal, monetary and regulatory elements.
In pursuit of this "party" internationalist bankers are now, once again, floating securitization as methodology of credit expansion.
They are wedded to an excessively expansionist stock market for a variety of reasons – as we have previously reported. These sorts of proposals are not random suggestions. If the globalists have anything to do with it, markets will continue to be pumped incessantly.

Axel Merk. “Too Much Debt.”

The Ukraine is a symptom. If they fix the Ukraine there will be trouble elsewhere. It looks like we are playing wac-a-mole, down the hole.
I hope so-it sure beats a nuclear war.


The IPO Scam & Why Stock Fundementals Lie

Listen in as Gareth Soloway and Nick Santiago grace the air waves with their expert insight into the markets and how you can profit now. They take about the latest IPO craze and what you need to know, among other things. Get right to the facts, check out the track record of calls they have given members over the past three years here and become part of the Elite already…

Palladium Soars to 32-Month High On Supply Fears


Palladium Soars to 32-Month High On Supply Fears

Palladium Soars to 32-Month High On Supply Fears – Palladium prices are on fire.
The price of the industrial metal has recently soared to its highest level since 2011 amid escalating tensions in Ukraine.
Why is the Ukraine crisis driving up palladium prices?
Because, the world’s biggest producer of palladium just so happens to be: Russia. As Moscow and the West face off in the sharpest war of words since the Cold War, investors are increasingly concerned that palladium supplies could become endangered amid growing threats of more economic sanctions.
Meanwhile in South Africa, the world’s second largest palladium producer, labor strikes by palladium miners continue to cause supply concerns.
Together, Russia and South Africa make up nearly 80% of the world’s palladium supplies. Given the current instability, investor concerns are primarily on the supply side.
However, one of palladium’s primary industrial uses is in automobiles, where it is widely used in catalytic converters. According to the latest forecast, global automakers will manufacture a record 72 million cars in 2014. Therefore, concerns over growing palladium demand also have investors buying the metal.
Put simply, growing geopolitical tensions with Russia, ongoing mining labor strikes in South Africa, and record global production of automobiles mean that palladium prices will possibly soar even higher in the days and weeks ahead.
So far in 2014, palladium is roaring higher.
Palladium is up 12.57% YTD.
Gold is up 10.14% YTD.
Platinum is up 6.43% YTD.
Silver is up 2.89% YTD.
Until tomorrow,
Jerry Robinson
ACTION POINT: In today’s trading idea, I offer a unique way to profit from the rising price of palladium. If prices continue higher, this stock could explode higher. See today’s trading idea here. Not a subscriber? Join today for less than $20!

Inside this Issue

Who Goes To Jail? Matt Taibbi on American Injustice Gap From Wall Street to Main Street

Christine Lagarde : IMF will address Inequality in the World

Triple Whammy Shocker: Goldman Shutting Down Sigma X?

Back on March 21, before the release of Michael Lewis' Flash Boys and before the infamous 60 Minutes interview, when Goldman COO Gary Cohn wrote his infamous WSJ Op-ed bashing HFT, it was clear that something was afoot. That something became promptly clear when it was revealed that Goldman is among the core backers of the pseudo dark-pool IEX exchange popularized as the protagonist in Flash Boys, and juxtaposed to the frontrunning, and faceless, HFT antagonist that Lewis maanged to demonize so well in the span of a few hundred pages, he promptly provoked a renewed investigation by the FBI, the SEC and DOJ into HFT.
A few days later, the shocker became a double whammy when Goldman announced that in addition to turning its back on HFT which had served it so well for years, the firm would also say goodbye to the NYSE and its designated market maker post, the last remaining legacy of its $6.5 billion Spear Ledds & Kellogg acquisition from 2000. That Goldman was asking mere pennies on the dollar for the residual assets also showed just how "highly" Goldman valued said legacy operation.
This is what we said at the time of the announcement:
... What is unexpected, is the complete transformation Goldman has undergone in in the past several weeks: first Goldman, the bank that everyone else on Wall Street always imitates, waving goodbye to HFT, and now departing the NYSE?

When the world's most intelligent FDIC-backed hedge fund, pardon, bank says the current market structure is no longer necessary to Goldman, people notice, and promptly imitate.

To be sure - if this is not indicative of a major storm coming for traditional "lit" market structure (as opposed to dark pools of which IEX, until recently, was one and where Goldman has nearly complete dominance with Sigma X), we don't know what is.
Moments ago we got the third and final "shocker" in this series of stunning disclosures by Goldman, this time involving Goldman's own "unlit" venue - one involving its own Dark Pool - the infamous, and market dominant Sigma X, which according to the WSJ, is about to be shut down!
Goldman Sachs Group Inc. is considering shutting down one of the world's largest private stock-trading venues, according to people familiar with the matter.

In conversations with market participants over the past several months, Goldman executives have broached the subject of closing its so-called dark pool trading operation, known as Sigma X, the people familiar with the matter said.

Goldman executives are weighing whether the revenue the firm generates from operating Sigma X is worth the risks that have been highlighted by a series of trading glitches and growing criticism of dark pools, the people said.

No decision is imminent, and Goldman could keep the business, according to people familiar with the discussions.
That this is a momentous development, if true, needs no explanation. Because while Sigma X may or may not be the top dark pool in the industry - a claim that Credit Suisse can possibly make alongside Goldman- Sigma X, which we have written about extensively over the past five years, certainly provides Goldman with not only extensive daily revenue but also gives the firm an inside look into what happens in the institutional marketplace, since the bulk of hedge funds and most mutual funds transact almost exclusively on dark pools now in an attempt to avoid precisely the parasitic HFT algos that have been the topic of so much discussion in recent days.
And if Goldman is willing to exit not only HFT, not only legacy lit markets entirely, but also its dark pool, then something truly big and transformational is coming to not only the existing market structure, but something that will be so disruptive, that for once we can't wait to find out just what Goldman has up its sleeves, sleeves which also happen to house the key lawmakers in the Beltway.
Why is Goldman doing this now? We don't know. It is worth noting however that on page 234 of Flash Boys, Michael Lewis cites Ron Morgan and Brian Levine, Goldman Partners and co-heads of Goldman's global stock markets, who said that "Unless there are some changes, there's going to be a massive crash, a flash crash times ten."

Goldman exiting virtually all venues except the upstart IEX is certainly a major change.
Another thing that is certain: take a long, hard look at the market as you know it today, because in less than a year it will be history.

Meet the secretive electronic trading pool Goldman Sachs is considering dumping

No, Sigma X is not a Goldman Sachs fraternity. It’s the electronic trading platform the bank may be about to shutter (paywall), the Wall Street Journal reported yesterday. (People familiar with Goldman’s thinking tell Quartz that the firm hasn’t made any decision on the platform.) Goldman uses Sigma X to help companies and hedge-fund clients sell big blocks of shares. Closing it wouldn’t be all that surprising, given recent events in the marketplace: Regulators including the Department of Justice have intensified their scrutiny of electronic trading and high-frequency traders in particular. After penning his latest novel Flash Boys, Michael Lewis created a relative storm of controversy on the Street by proclaiming the the markets “rigged.” Goldman president and COO Gary Cohn wrote an article in the Wall Street Journal backing curbs on HFTs, and the firm issued a memo supporting a Sigma X rival, IEX Group, featured in the aforementioned Flash Boys. Reports emerged that Goldman is in talks to sell its equity market-making unit, formerly known as Spear, Leeds & Kellogg, to a Dutch firm. So here’s the short history of Goldman’s dalliance with Sigma X more @

Close the Billionaire Tax Loophole

illionaires are exploiting a tax break to pass their fortunes along to their heirs and laying the groundwork for dynasties.

Chuck Collins 
RINF Alternative News
If our leaders want to balance the budget, here’s a suggestion: Congress can scrap a new “Paris Hilton” giveaway that’s draining billions of federal tax dollars.
This giveaway takes the form of a complex tax loophole designed to circumvent the federal estate tax, one of the few ways a democratic society can reduce extreme wealth inequality.
The estate tax is a levy on inheritances that multi-millionaires and billionaires leave behind when they pass away. It affects only the wealthiest two out of every thousand U.S. taxpayers — individuals with at least $5.34 million to their name, or $10.68 million for a couple.
Estate-tax levels have bounced around for decades. In 2013, the government officially pegged it at 40 percent, one of the lowest levels since 1930. The effective (real-life) rate paid by these deep-pocketed estates amounted to less than half of that.
Estate taxes have historically raised substantial revenue from Americans with the greatest capacity to pay. A century ago, President Theodore Roosevelt— who inherited and squandered a fortune of his own — joined with steel magnate and philanthropist Andrew Carnegie— one of the richest men in the world at the time — to support establishing the modern version of the estate tax.
TR and Carnegie shared a goal of slowing the build-up of wealth dynasties, which they believed would corrode our democracy.
Although they succeeded, their goal remains elusive. We’re living in a new period of increasingly extreme wealth inequality.
The wealthiest 1 percent of households now own over 38 percent of all private wealth andalmost half of all financial wealth, such as stocks and bonds. And our political system is being corrupted by billionaire political contributions facilitated by a string of Supreme Court rulings that toppled key campaign finance limits.
Perhaps you can recall that howling a decade back that it was time to “end the death tax”? An organized group of the super-wealthy spent millions lobbying to save themselves billions. The heirs of Wal-Mart founder Sam Walton, whose combined wealth exceeds $100 billion, were among those clamoring against this supposedly unjust tax. The heirs of the fortunes left behind by the founders of Gallo wine and Mars candy joined the fray.
These scions of extremely wealthy families lobbied to kill the law. When they failed, they got to work on a plan B: gutting it. And America’s plutocrats prevailed.
The wealthiest 1/10thof 1 percent are no longer complaining about the estate tax because of a loophole Congress gave them. This loophole is big enough that even the richest Americans can dodge estate taxes before they pass away.
Take casino mogul Sheldon Adelson, who is worth $30 billion and recently made headlines by meeting personally with all the leading GOP presidential hopefuls in what the media deemed to be his own private primary. Using this loophole, he’s already given his heirs $8 billion. This tax-free down payment on their inheritance will cost U.S. taxpayers $2.8 billion in estate taxes down the line.
How did he do that? Adelson used a scheme called the Granter Retained Annuity Trust (GRAT) to shuffle assets in and out of 30 trusts in order to game his taxes down. Other early adapters to the GRAT loophole include Facebook’s Mark Zuckerberg, Goldman Sachs CEO Lloyd Blankfein, Dish Networks’ Charles Ergen, fashion designer Ralph Lauren, and multiple Walton family members.
Richard Covey, the lawyer who pioneered the loophole, believes the GRAT resulted in $100 billion in lost revenue since 2001, according to a Bloomberg News interview.
Not all wealthy Americans advocate dodging estate taxes. Bill Gates Sr. argues that those with substantial wealth in our nation have disproportionately benefited from the public investments and property protections our society makes.
This Tax Day, let’s demand that Congress close the billionaire tax loophole. By gutting the estate tax, it’s building massive dynasties that will make inequality in America even worse.
Chuck Collins is a senior scholar at the Institute for Policy Studies where he directs the Program on Inequality and the Common Good (, and the author of the new book, 99 to 1: How Wealth Inequality Is Wrecking the World and What We Can Do about It. Chuck is also a co-founder of Wealth for the Common Good, a network of business leaders, high-income households and partners working together to promote shared prosperity and fair taxation.He is co-author of The Moral Measure of the Economy and with Bill Gates Sr. of Wealth and Our Commonwealth: Why America Should Tax Accumulated Fortunes

U.S. food prices up 19 percent in 2014; increasing inflation feared

Monday, April 14, 2014 by: J. D. Heyes (NaturalNews) Despite proclamations that the "economy is improving" and that "unemployment is down," one thing is evident and that is - for a number of reasons - food costs are soaring, and as they do, those most vulnerable, like the poor, the elderly and those earning the lowest wages, are being hurt the most. "We are sure the weather is to blame but what happens when pent-up demand (from a frosty east coast emerging from its hibernation) bumps up against a drought-stricken west coast unable to plant to meet that demand? The spot price (not futures speculation-driven) of US Foodstuffs is the best performing asset in 2014 - up a staggering 19 percent," notes Tyler Durden over at Zero Hedge. In February, the site gave voice to a sort of prelude to the aforementioned scenario, in publishing a post by Michael Snyder of The Economic Collapse blog: Did you know that the U.S. state that produces the most vegetables is going through the worst drought it has ever experienced and that the size of the total U.S. cattle herd is now the smallest that it has been since 1951? Just the other day, a CBS News article boldly declared that "food prices soar as incomes stand still," but the truth is that this is only just the beginning. If the drought that has been devastating farmers and ranchers out west continues, we are going to see prices for meat, fruits and vegetables soar into the stratosphere. A number of factors are leading to price increases Sure, prices are up because California's drought is limiting supply. Some have even said that commodities prices are being pushed upward by speculators on Wall Street; that may be happening to an extent. But there are a number of other factors that the government doesn't report as having much of an effect at all on food prices (and remember, the government doesn't include "volatile" food and energy prices in its monthly inflation reports). Speaking of energy, the price of a gallon of fuel, especially diesel fuel, has a lot to do with the prices you pay at the grocery store. Historically, food supplies were more much more local; transportation costs, therefore, were much reduced (and that was during the era of much cheaper fuel). Not anymore; the impact on prices that California's drought is having demonstrates how vast the U.S. food supply chain has become. With it has come higher transport costs. Kimberly Amadeo, a U.S. Economy Guide at notes: Food prices rise in response to high gas prices. That's because transportation is a large cost of food you buy at the store. When you notice prices at the pump rising, expect to see the same thing happen in about six weeks at the grocery store. High gas prices are, themselves, usually caused by high oil prices. Here again, it usually takes about six weeks for increases in oil futures to translate to the pump. Government policies don't help keep prices down Regulations and laws are also behind the increase. As NaturalNews has reported, with Americans hungry and hundreds of millions around the world starving, U.S. lawmakers have adopted an insane policy of burning up our food supply in the form of a corn-based ethanol fuel mandate (and by the way, ethanol-laced fuel gets much worse mileage, meaning you have to buy more of it to get where you're going). It's a policy that has never made much sense, but adopted more as a sop to Big Agriculture creating a market that otherwise would not have existed. Also, growing corn for ethanol reduces the available farm land to grow food crops. What's more, a recent Congressional Budget Office report concluded that the increased use of ethanol accounts for 10-15 percent of the increase in food prices. Speaking of inane government policy, ever-changing subsidies for certain crops (which creates shortages) and paying farmers in some regions not to grow crops are two more factors that enhance shortages. Sources for this article include:

Oligarchy, not democracy: Americans have ‘near-zero’ input on policy – report

Reuters / Amr Abdallah Dalsh
Reuters / Amr Abdallah Dalsh

The first-ever scientific study that analyzes whether the US is a democracy, rather than an oligarchy, found the majority of the American public has a “minuscule, near-zero, statistically non-significant impact upon public policy” compared to the wealthy.
The study, due out in the Fall 2014 issue of the academic journal Perspectives on Politics, sets out to answer elusive questions about who really rules in the United States. The researchers measured key variables for 1,779 policy issues within a single statistical model in an unprecedented attempt “to test these contrasting theoretical predictions” – i.e. whether the US sets policy democratically or the process is dominated by economic elites, or some combination of both.
"Despite the seemingly strong empirical support in previous studies for theories of majoritarian democracy, our analyses suggest that majorities of the American public actually have little influence over the policies our government adopts,” the researchers from Princeton University and Northwestern University wrote.
While “Americans do enjoy many features central to democratic governance, such as regular elections, freedom of speech and association,” the authors say the data implicate “the nearly total failure of 'median voter' and other Majoritarian Electoral Democracy theories [of America]. When the preferences of economic elites and the stands of organized interest groups are controlled for, the preferences of the average American appear to have only a minuscule, near-zero, statistically non-significant impact upon public policy."
The authors of “Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens” say that even as their model tilts heavily toward indications that the US is, in fact, run by the most wealthy and powerful, it actually doesn’t go far enough in describing the stranglehold connected elites have on the policymaking process.
“Our measure of the preferences of wealthy or elite Americans – though useful, and the best we could generate for a large set of policy cases – is probably less consistent with the relevant preferences than are our measures of the views of ordinary citizens or the alignments of engaged interest groups,” the researcher said.
“Yet we found substantial estimated effects even when using this imperfect measure. The real-world impact of elites upon public policy may be still greater.”
They add that the “failure of theories of Majoritarian Electoral Democracy is all the more striking because it goes against the likely effects of the limitations of our data. The preferences of ordinary citizens were measured more directly than our other independent variables, yet they are estimated to have the least effect.”
Despite the inexact nature of the data, the authors say with confidence that “the majority does not rule -- at least not in the causal sense of actually determining policy outcomes.”
“We believe that if policymaking is dominated by powerful business organizations and a small number of affluent Americans, then America’s claims to being a democratic society are seriously threatened,” they concluded.