Thursday, May 29, 2014

Federal Reserve Act

Section 7. Division of Earnings

(a) Dividends And Surplus Funds Of Reserve Banks.
  1. Stockholder Dividends.
    1. In General. After all necessary expenses of a Federal reserve bank have been paid or provided for, the stockholders of the bank shall be entitled to receive an annual dividend of 6 percent on paid-in capital stock.
    2. Dividend Cumulative. The entitlement to dividends under subparagraph (A) shall be cumulative.
  2. Deposit Of Net Earnings In Surplus Fund. That portion of net earnings of each Federal reserve bank which remains after dividend claims under subparagraph (1)(A) have been fully met shall be deposited in the surplus fund of the bank.
(b) Transfer For Fiscal Year 2000.
  1. In General. The Federal reserve banks shall transfer from the surplus funds of such banks to the Board of Governors of the Federal Reserve System for transfer to the Secretary of the Treasury for deposit in the general fund of the Treasury, a total amount of $3,752,000,000 in fiscal year 2000.
  2. Allocated By Fed. Of the total amount required to be paid by the Federal reserve banks under paragraph (1) for fiscal year 2000, the Board shall determine the amount each such bank shall pay in such fiscal year.
  3. Replenishment Of Surplus Fund Prohibited. During fiscal year 2000, no Federal reserve bank may replenish such bank's surplus fund by the amount of any transfer by such bank under paragraph (1).
[12 USC 289. As amended by acts of March 3, 1919 (40 Stat. 1314); June 16, 1933 (48 Stat. 163); Aug. 10, 1993 (107 Stat. 337); Sept. 23, 1994 (108 Stat. 2291); and Nov. 29, 1999 (113 Stat. 1501A-304), which added this subsection (b) but failed to redesignate existing subsection (b) (12 USC 290).]
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(b) Use of Earnings Transferred To The Treasury. The net earnings derived by the United States from Federal reserve banks shall, in the discretion of the Secretary, be used to supplement the gold reserve held against outstanding United States notes, or shall be applied to the reduction of the outstanding bonded indebtedness of the United States under regulations to be prescribed by the Secretary of the Treasury. Should a Federal reserve bank be dissolved or go into liquidation, any surplus remaining, after the payment of all debts, dividend requirements as hereinbefore provided, and the par value of the stock, shall be paid to and become the property of the United States and shall be similarly applied.
[12 USC 290. Part of original Federal Reserve Act; not amended. Designated subsection (b) by act of Aug. 10, 1993 (107 Stat. 337).]
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(c) Exemption From Taxation. Federal reserve banks, including the capital stock and surplus therein, and the income derived therefrom shall be exempt from Federal, State, and local taxation, except taxes upon real estate.
[12 USC 531. Part of original Federal Reserve Act. Designated subsection (c) by act of Aug. 10, 1993 (107 Stat. 338).]
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Unless You Want to Go to Prison, Read This Before Taking Money Out of Your Bank

Dave Hodges
May 28, 2014
What do they say about those people who fail to lose the lessons of history?
George Soros won’t go to prison for taking his money out of the bank, but you could, if you are not very careful.
In response to yesterday’s article which detailed how it is a good idea to monitor George Soros’ money movements, because they are predictive of future economic collapses as they have been so many times before. We should all be more a little more than nervous when Soros, in the first quarter of 2014, removed his money from three megabanks.
“Rick” wrote to me following the publication of yesterday’s article with some very pointed concerns and questions. Here is his response:
Ok, the idea of removing your money from the bank for me is a joke! I have a substantial amount in 3 different accounts. It’s VERY difficult to remove more than $8,000 or $9,000 at a time without extreme scrutiny from the IRS and the DEA. Plus, the banks will tell you that frequently they don’t have enough on hand to give you even $8,000. If you close your account, guess what? They give you a check, NOT cash! So you have to go to another bank WITH A CHECK once more!
So, how does one remove their money from the bank without causing  major transaction reports to be filed with the government about your banking activities????
Dave, thus, please give us tips on how to remove substantial amounts of cash without incurring the wrath of the government, and how to take out large amounts of cash to begin with, as the banks discourage taking out more than $1,000 to $3,000 dollars in any given transaction.”

At first glance, Rick appears to be correct. The odds are stacked against all average depositors. With all that is available to read on this topic, it is mind boggling regarding how few people are preparing to act to preserve what assets they have remaining by not removing their money from the bank. Because you have put your money in the bank, you no longer own your money.
The courts have ruled that once you deposit your money in the bank, the bank owns your money. You virtually are paid no interest for the hard earned money that you place in the bank. And if inflation is only at a modest 5% rate, your hundred thousand dollars is worth only $95,000 after one year. In a decade, your real buying power is reduced by about 50%. And where did the other 50% go? Because of fractional reserve banking, the biggest money scam in history, the banks can take $10,000 and turn it into at least $90,000 by doing absolutely nothing but adding some zeroes after your name, on a computer scree, and then loaning out the money, at interest, while you are paid a minuscule interest rate. This practice adds to the inflation rate and further erodes your savings.
All of the above, dictates that we should all take our money out of the bank. Why do I risk starting a run on my former and biggest holder of my money, Bank of America, by withdrawing my money and presuming that many fellow depositors will read this and rush to withdraw their money too? The very biggest reason to is because they pay me near zero interest. Also, even if there is an infinitesimal chance Bank of America will not repay me in full, whenever I ask, switches the cost-benefit conclusion from stay to flee.
The biggest reason to take your money out of the bank is because it has absolutely no protection. The FDIC has only about $25 billion in its deposit insurance fund, which is mandated by law to keep a balance equivalent to only 1.15% of insured deposits. If a banking collapse were to be on the near horizon, the banksters are not going to notify you because they would not want to incite a bank run. With only 1.15% of all deposits being insured by the FDIC, your money would be left vulnerable and only the elite would be warned as they quietly transfer their money to a safer haven. How do I know this? Because this is exactly what my research discovered on the money movements preceding the Gulf oil spill, as it was revealed that on the morning of the explosion, Goldman Sachs issued a “put option for preferred insiders” in Transocean (the owner of the Deep Water Horizon oil rig) and the elite had their stock profit margin guaranteed while everyone else took a financial bath! This is the undeniable pattern of the global elite.
Additionally, your bank account has been collateralized against the derivatives debt.
The bankruptcy reform laws stemming from the Bankruptcy Reform Act of 2005, derivatives counter-parties are given preference over all other creditors and customers of the bankrupt financial institution, including FDIC insured depositors. This gives what the experts call “super priority” in terms of the line of succession from which to collect bankruptcy monies. Bank of America has conspicuously co-mingled their derivatives debt with your savings account and as such they have every legal right use your money to cover their debt. Oh, they would never do that you say?  I have bad news for the uninformed, they already have done that very thing. In the MF Global debacle, the reason that MF Global  customers lost their segregated account funds was because the MF Global debt load was caused primarily because of their derivatives debt which, under bankruptcy laws, gave derivatives claimants super-priority in the bankruptcy proceedings. In short, you do not matter.

Times Have Changed

Taking what was your money out of the bank is no longer a matter of walking up to your friendly teller with a withdrawal slip and the teller cheerfully honors your request and you calmly exit the bank with your money in tow. In fact, your teller is trained to look for certain indicators in any cash withdrawal of any significance.
As you move to withdraw the bulk of your money, there are three federal banking laws that you should be cognizant of, namely, Cash Transaction Report (CTR), a Suspicious Activity Report (SAR) and structuring. Before proceeding with the planed withdrawal of your money, I would strongly suggest that you read the following federal guidelines as it relates to CTR’s as produced by the The Financial Crimes Enforcement Network (FinCEN). All the federal regulations contained in this article are elucidated in this series of federal reports.
Before withdrawing your money, there are three regulations to be concerned with.

CTR

Federal law requires that the bank file a report based upon any withdrawal or deposit of $10,000 or more on any single given day.The law was designed to put a damper on money laundering, sophisticated counterfeiting and other federal crimes.
To remain in compliance with the law, financial institutions must obtain personal identification, information about the transaction and the social security number of the person conducting the transaction.
Technically, there is no federal law prohibiting the use of large amounts of cash. However, a CTR must be filed in ALL cases of cash transaction regardless of the reason underlying the transaction. This means your cash transaction will be on the radar.

Structuring and SAR

There will undoubtedly be some geniuses whose math ability will tell them that all they have to do is to withdraw $9,999.99 and the bank and its protector, the federal government will be none the wiser. It is not quite that simple. Here are a few examples of structuring violations that one should be aware of:
 
1. Barry S. has obtained $15,000 in cash he obtained from selling his truck. He knows that if he deposits $15,000 in cash, his financial institution will be required to file a CTR. Instead he deposits $7,500 in cash in the morning with one financial institution employee and comes back to the financial institution later in the day to another employee to deposit the remaining $7,500, hoping to evade the CTR reporting requirement. Barry should have used multiple accounts to conduct this transaction.
2. Hillary C. needs $16,000 in cash to pay for supplies for her arts and crafts business. Hillary cashes an $8,000 personal check at a financial institution on a Monday. She subsequently cashes another $8,000 personal check at the bank the following day. Hillary is careful to have cashed the two checks on different days and structured the transactions in an attempt to evade the CTR reporting requirement. Hillary should have made irregular deposits on staggered days.
3. A married couple, Bill and Hillary, sell a vehicle for $12,000 in cash. To evade the CTR reporting requirement, Bill and Hillary structure their transactions using different accounts. Bill deposits $8,000 of that money into his and Hillary’s joint account in the morning. Later that day, Hillary deposits $1,500 into the joint account, then $2,500 into her sister’s account, which is later transferred to Bill and Hillary’s joint account at the same bank. Again, Bill and Hillary should have used multiple banks.
The aggregate total of the three transactions totals more than the $10,000 threshold, therefore, a SAR would be filed by the bank and you would be the subject of a federal investigation as all three of the above cases clearly violate the federal banking laws related to structuring. It is a federal crime to break up transactions into smaller amounts for the purpose of evading the CTR reporting requirement. In these instances, the bank is required to file a SAR which serves to notify the federal government of an individual’s attempt to structure deposits or withdrawals by circumventing the $10,000 reporting requirement.
Structuring transactions to prevent a CTR from being reported can result in imprisonment for not more than five years and/or a fine of up to $250,000. If structuring involves more than $100,000 in a twelve month period or is performed while violating another law of the federal government, the penalty is doubled.

Enforcement

Much like the enforcement of our tax laws, the federal government’s enforcement of its banking laws as it relates to CTR’s, SAR’s and subsequent structuring is quite draconian. Civilian asset forfeiture laws come into play. The government can seize your bank accounts while it determines if a crime has been committed. The government can literally seize your assets in perpetuity without an order of the court. Of course, you could try and sue but you will be up against the deep pockets of the federal government and the case could take years. By the time your case is decided, the financial banking crisis that you are so desperately trying to avoid by withdrawing your money, could be over.  So, proceed with caution.
If you ever become the target of a federal investigation, do not, under any circumstances, allow yourself to be interviewed by federal officials without an attorney present.In many cases, people go to jail and pay huge fines, not because they have committed a federal crime, but because federal officials state that they have lied or misled them. And if you do not have an attorney present, it is your word versus the federal government. This is how the federal government sent Martha Stewart to prison.

What to Do

The best way to avoid getting your money caught in the bank in the midst of a bank run would be to not let the lion’s share of your money ever cross the bank. Do not allow your employer to direct deposit your check to the bank. Keep some cash at home by taking out a large portion of the money you receive from your employer. Don’t  put cash in a safety box because the courts have also ruled that the banks own your safety boxes.
Use electronic transfers to buy into a mutual funds and also use checks to buy silver coins from several different companies
Open multiple banking accounts ranging from the big five megabanks to your local credit unions. You could withdraw much smaller amounts until the sum total of your accounts is greatly diminished and is in your possession. To open the accounts, simply write a personal check from your home bank. Of course, in these cases, the bank could hold the check for 15-30 days.
Use checks and case to pay all of your debts.
Prepay your taxes and some other obligations with checks. Make sure you only pay safe entities. Your local government is not going to disappear, even in a depression. Therefore, you can prepay property taxes.
Find a safer bank than the mega banks. Use credit unions as they are one level removed from the Federal Reserve.  .
Please add to the list with your comments.

Conclusion

I predict the Federal Reserve will steal your money by faking a cyber attack In fact, last year, FEMA and DHS actually practiced for this event on October 23rd and 24th of last year.
To people like “Rick” you probably will not be able to save everything, but rest assured, you can still save something to live on. The time to have acted was yesterday.
I can anticipate what some of you are now thinking, because I have thought the same thing!  If all of us attempt to take even just a portion out of the bank, the Federal Reserve and their servant, the federal government, will move to stop all cash withdrawals. Won’t that kind of move serve to expose the criminality of the Federal Reserve and the federal government for all to see? Awareness is the first step to action and we have the ability to force several issues out on the open at this time.

Has The Next Recession Already Begun For America’s Middle Class?

By David Stockman, Budget Director under President Reagan and author of the bestseller, The Great Deformation: The Corruption of Capitalism in America. This article originally appeared on David Stockman’s Contra Corner.
The ultimate evil of monetary central planning is that it distorts pricing signals in capital markets, thereby inducing vast malinvestments in the real economy – mistakes that eventually result in uneconomic returns and losses which must be written off. Accordingly, what is recorded as a boost to GDP by our Keynesian policy overlords in the front-end of the malinvestment cycle results in a reduction of national wealth when it’s all said and done.
If central-bank induced financial repression is carried on long enough, the level of capital market deformation and main street malinvestment can become monumental. In fact, there are four bell-ringer statistics among the macro-economic data that dramatize perhaps the greatest of these central-bank induced investment errors, but they are never published in the main street financial press – probably because they explain far too much in one glance.
The skunks in one of the nation’s greatest uneconomic woodpiles are: 100k, 1 million, 15 billion and 47 square feet. Those stats measure the collective girth of America’s shopping emporia, and designate, respectively, the number of shopping centers and strip malls across the land; the number of retail stores spread among them; the total retail space occupied by the nation’s shopping machinery; and the amount of space at present for every man, woman and child in the nation.
It does not take much analysis to see that these bell ringers do not represent sustainable prosperity unfolding across the land. Around 1990, for example, real median income was $56k per household and now, 25 years later, it’s just $51k. Main street living standards have plunged by about 9% during the last quarter century. But what has not dropped is the opportunity for Americans to drop shopping: square footage per capita during the same period more than doubled, rising from 19 square feet per capita at the earlier date to 47 at present.
This complete contradiction – declining real living standards and soaring investment in retail space – did not occur due to some embedded irrational impulse in America to speculate in real estate, or because capitalism has an inherent tendency to go off the deep-end. The fact that in equally “prosperous” Germany today there is only 12 square feet of retail space per capita is an obvious tip-off, and this is not a Teutonic aberration. America’s prize-winning number of 47 square feet of retail space per capita is 3-8X higher than anywhere else in the developed world!
When the aggregate level of shopping space is looked at during the above longer-term time frame, the aberration is even more apparent. At the time of the S&L fiasco around 1990, there were only about 5 billion square feet of shopping space in the nation; capacitytripled during the subsequent a quarter century. Yet this was a period when the real incomes of the middle class were essentially dead in the water. So what market signals could have possibly given rise to such a disconnect?
The answer is the relentless drive for yield among fixed income investors during a period when time and again the Fed intervened in financial markets to prevent the benchmark rate – the 10 year Treasury note – from finding its natural economic price/yield in what was becoming a savings parched economy. Accordingly, a massive tidal wave called “retail operating leases” developed that quenched this thirst for yield – helped along by accounting loopholes which allowed trillions of these operating leases to be kept off borrower balance sheets and which thrived on the illusion that the proliferating chains of new retail concepts served up by the Wall Street IPO machine were “national credit tenants.” These overnight sensations had such solid and sustainable “business models” as to imply blue chip credit status. They had such attractive terms (10-15 years) and interest rate spreads over benchmark rates that retail occupancy costs were dirt cheap relative to the true long-run economics and risks.
Operating leases and national credit tenant financing by banks and institutional fixed income investors like insurance companies and pension funds account for virtually all of the stupendous gain of 10 billion square feet of retail space since 1990. And all of the cheap debt which funded this vast deformation will not be found on the balance sheet of any known retailer.
One of the great “success” stories of retail during the last quarter century, for example, was the Walgreen Co. drug chain which grew from a few thousand outlets centered in the mid-west to more than 40,000  nationwide units today. What seems to be a financial miracle about this staggering growth –the fact that WAG has only $2 billion of net debt – actually is nothing of the kind. In truth, Walgreen’s stores are almost all on operating leases, and the latter represent a present value obligation in the range of $25 billion – or 25X its reported “debt.”
Self-evidently, were the Walgreen drugstore empire ever to falter due to any number of factors –demographics, economics, public policy, new technologies and delivery modalities, the “national credit tenant” myth would be blown sky-high. In fact, that is the true story materializing in the retail space today.
Like in every other case, the main stream financial press has a stunning case of recency bias with respect to retail. It remains obsessed with short term variations from analyst projections of quarter by quarter trends and is focused on a few high-end chains which service the top 10% of households. It thereby completely misses the drastically deteriorating trends just below the surface.
But a 40-year perspective can do wonders.  Since 1970 when the US economy became increasingly a creature of fiat central banking, real GDP per capita has doubled, but retail space has grown from 2 billion square feet to 15 billion or 7.5X, and by 5X per capita after accounting for population growth. Stated differently, a day of reckoning is coming for our massive over-built, debt-bloated retail sector.
In his usually trenchant and fact-driven manner, Jim Quinn (The Burning Platform) has laid out the overwhelming evidence just from the Q1 SEC filings that the retail party is already over, and that sales per square ftoot are falling in virtually every mall and big box based retailer in America. Quinn shows that these trends range from Wal-Mart to the “go to” names of just a few years ago like Target, Kohl’s, and JC Penney, to hapless basket cases like Sears, Staples, and Best Buy.
The obvious implication is that unless these trends reverse, the massive mountain of operating leases behind these names will become deeply impaired, and then the great retail leverage unwind will gain powerful, unstoppable momentum. Failing chains will enter Chapter 11, massive store closures will occur, and mall and power center traffic will continue to decline, thereby perpetuating the viscous financial cycle already underway.
Moreover, as Quinn further documents, the great baby boom retirement wave now underway -10,000 new retires per day each and every day until 2030 – will perform the coup de grace.  Retirees don’t go to malls in the first place, and won’t be able to afford it in any event. The statistics he presents on the lack of retirement savings among the overwhelming share of the population 50-64 is truly shocking.
Nor should bubblevision’s obsessive focus on the still positive results of a handful of high end chains like Michael Kors, Nordstrom, Tiffany, Saks, Ralph Lauren, etc. confuse the matter. The top dozen or so high end retail chains in America including the above and Whole Foods occupy hardly 50 million square feet or less than 1% of the total.
As the debt-burdened middle class continues to struggle with job insecurity, rising living costs, lack of savings and approaching retirements, shoppers will counting dropping from what will become even more dismal same-store “comps.” And as shoppers drop, so will the whole edifice of retail malinvestment and debt on which America’s 40 year consumption party was based.
By David Stockman. Check out his bestseller, The Great Deformation: The Corruption of Capitalism in America, and while at it, check out my 5-star review (in 2nd place). This article originally appeared on David Stockman’s Contra Corner.
Also by David Stockman: The monetary plumbers keep banging money-market rates to zero, thereby ignoring what the money market rate really is in a financialized, debt-ridden system: the price of hot money, the single most important price in all of capitalism. Read….The Hazardous Hunt For Carry – Why The EM Rebound Isn’t Real 


Why Retail Results In America Are Not Better Than Expected, But Worse Than Ever!

By David Stockman, Budget Director under President Reagan and author of the bestseller, The Great Deformation: The Corruption of Capitalism in America. This article originally appeared on David Stockman’s Contra Corner.
The ultimate evil of monetary central planning is that it distorts pricing signals in capital markets, thereby inducing vast malinvestments in the real economy – mistakes that eventually result in uneconomic returns and losses which must be written off. Accordingly, what is recorded as a boost to GDP by our Keynesian policy overlords in the front-end of the malinvestment cycle results in a reduction of national wealth when it’s all said and done.
If central-bank induced financial repression is carried on long enough, the level of capital market deformation and main street malinvestment can become monumental. In fact, there are four bell-ringer statistics among the macro-economic data that dramatize perhaps the greatest of these central-bank induced investment errors, but they are never published in the main street financial press – probably because they explain far too much in one glance.
The skunks in one of the nation’s greatest uneconomic woodpiles are: 100k, 1 million, 15 billion and 47 square feet. Those stats measure the collective girth of America’s shopping emporia, and designate, respectively, the number of shopping centers and strip malls across the land; the number of retail stores spread among them; the total retail space occupied by the nation’s shopping machinery; and the amount of space at present for every man, woman and child in the nation.
It does not take much analysis to see that these bell ringers do not represent sustainable prosperity unfolding across the land. Around 1990, for example, real median income was $56k per household and now, 25 years later, it’s just $51k. Main street living standards have plunged by about 9% during the last quarter century. But what has not dropped is the opportunity for Americans to drop shopping: square footage per capita during the same period more than doubled, rising from 19 square feet per capita at the earlier date to 47 at present.
This complete contradiction – declining real living standards and soaring investment in retail space – did not occur due to some embedded irrational impulse in America to speculate in real estate, or because capitalism has an inherent tendency to go off the deep-end. The fact that in equally “prosperous” Germany today there is only 12 square feet of retail space per capita is an obvious tip-off, and this is not a Teutonic aberration. America’s prize-winning number of 47 square feet of retail space per capita is 3-8X higher than anywhere else in the developed world!
When the aggregate level of shopping space is looked at during the above longer-term time frame, the aberration is even more apparent. At the time of the S&L fiasco around 1990, there were only about 5 billion square feet of shopping space in the nation; capacitytripled during the subsequent a quarter century. Yet this was a period when the real incomes of the middle class were essentially dead in the water. So what market signals could have possibly given rise to such a disconnect?
The answer is the relentless drive for yield among fixed income investors during a period when time and again the Fed intervened in financial markets to prevent the benchmark rate – the 10 year Treasury note – from finding its natural economic price/yield in what was becoming a savings parched economy. Accordingly, a massive tidal wave called “retail operating leases” developed that quenched this thirst for yield – helped along by accounting loopholes which allowed trillions of these operating leases to be kept off borrower balance sheets and which thrived on the illusion that the proliferating chains of new retail concepts served up by the Wall Street IPO machine were “national credit tenants.” These overnight sensations had such solid and sustainable “business models” as to imply blue chip credit status. They had such attractive terms (10-15 years) and interest rate spreads over benchmark rates that retail occupancy costs were dirt cheap relative to the true long-run economics and risks.
Operating leases and national credit tenant financing by banks and institutional fixed income investors like insurance companies and pension funds account for virtually all of the stupendous gain of 10 billion square feet of retail space since 1990. And all of the cheap debt which funded this vast deformation will not be found on the balance sheet of any known retailer.
One of the great “success” stories of retail during the last quarter century, for example, was the Walgreen Co. drug chain which grew from a few thousand outlets centered in the mid-west to more than 40,000  nationwide units today. What seems to be a financial miracle about this staggering growth –the fact that WAG has only $2 billion of net debt – actually is nothing of the kind. In truth, Walgreen’s stores are almost all on operating leases, and the latter represent a present value obligation in the range of $25 billion – or 25X its reported “debt.”
Self-evidently, were the Walgreen drugstore empire ever to falter due to any number of factors –demographics, economics, public policy, new technologies and delivery modalities, the “national credit tenant” myth would be blown sky-high. In fact, that is the true story materializing in the retail space today.
Like in every other case, the main stream financial press has a stunning case of recency bias with respect to retail. It remains obsessed with short term variations from analyst projections of quarter by quarter trends and is focused on a few high-end chains which service the top 10% of households. It thereby completely misses the drastically deteriorating trends just below the surface.
But a 40-year perspective can do wonders.  Since 1970 when the US economy became increasingly a creature of fiat central banking, real GDP per capita has doubled, but retail space has grown from 2 billion square feet to 15 billion or 7.5X, and by 5X per capita after accounting for population growth. Stated differently, a day of reckoning is coming for our massive over-built, debt-bloated retail sector.
In his usually trenchant and fact-driven manner, Jim Quinn (The Burning Platform) has laid out the overwhelming evidence just from the Q1 SEC filings that the retail party is already over, and that sales per square ftoot are falling in virtually every mall and big box based retailer in America. Quinn shows that these trends range from Wal-Mart to the “go to” names of just a few years ago like Target, Kohl’s, and JC Penney, to hapless basket cases like Sears, Staples, and Best Buy.
The obvious implication is that unless these trends reverse, the massive mountain of operating leases behind these names will become deeply impaired, and then the great retail leverage unwind will gain powerful, unstoppable momentum. Failing chains will enter Chapter 11, massive store closures will occur, and mall and power center traffic will continue to decline, thereby perpetuating the viscous financial cycle already underway.
Moreover, as Quinn further documents, the great baby boom retirement wave now underway -10,000 new retires per day each and every day until 2030 – will perform the coup de grace.  Retirees don’t go to malls in the first place, and won’t be able to afford it in any event. The statistics he presents on the lack of retirement savings among the overwhelming share of the population 50-64 is truly shocking.
Nor should bubblevision’s obsessive focus on the still positive results of a handful of high end chains like Michael Kors, Nordstrom, Tiffany, Saks, Ralph Lauren, etc. confuse the matter. The top dozen or so high end retail chains in America including the above and Whole Foods occupy hardly 50 million square feet or less than 1% of the total.
As the debt-burdened middle class continues to struggle with job insecurity, rising living costs, lack of savings and approaching retirements, shoppers will counting dropping from what will become even more dismal same-store “comps.” And as shoppers drop, so will the whole edifice of retail malinvestment and debt on which America’s 40 year consumption party was based.
By David Stockman. Check out his bestseller, The Great Deformation: The Corruption of Capitalism in America, and while at it, check out my 5-star review (in 2nd place). This article originally appeared on David Stockman’s Contra Corner.
Also by David Stockman: The monetary plumbers keep banging money-market rates to zero, thereby ignoring what the money market rate really is in a financialized, debt-ridden system: the price of hot money, the single most important price in all of capitalism. Read….The Hazardous Hunt For Carry – Why The EM Rebound Isn’t Real 


10-year Treasury Yield Sinks To Fresh 2014 Low, 7Y Treasury Yield Drops Below 2%, And Fewer And Fewer Stocks Are Making New Highs.


10-year Treasury Yield Sinks To Fresh 2014 Low
NEW YORK –  Treasury prices surged Wednesday, sending the benchmark 10-year Treasury note yield to its lowest of the year on a closing basis. The 10-year yield, which falls as prices rise, sank 5 basis points on the day at 2.470%….
Here’s the chart:
Screen Shot 2014 05 28 at 10.13.04 AM
Yahoo
7Y Treasury Yield Drops Below 2%
The plunge in yields continues and even unflappable stocks are starting to crack a little… 7Y Treasuriy yields just cracked below 2% for the first time since Nov 2013. What is perhaps most worrying for the exuberant equity market is the dramatic flattening in 2s30s today (2Y +2.5bps, 30Y -9bps on the week).  Wondering why bonds keep rallying… see below…
Yields are tumbling across the complex (except the short-end)
Leaving the 7Y back under 2%
And investors are euphoric…
Fewer And Fewer Stocks Are Making New Highs
German Unemployment Unexpectedly Jumps Its Most In 5 Years
GOLDMAN pres warns trading environment ‘abnormal’
Cramer: Magnificent bull nearing end, say charts
Mortgage Rates Fell, Purchase Applications Fell, Refinancings Fell
China’s millionaire machine has slowed, suggesting that the country’s economic weakness is reaching the top of the economy.
China’s millionaire population grew 3.6 percent last year, adding 100,000 millionaires and bringing its total millionaire count to 2.9 million, according a new report by the Chinese wealth website Hurun. The growth rate marks a sudden slowdown from the double-digit millionaire growth in China in recent years.
Headlines:

China vs. U.S.: Is a Trade War Inevitable?

IRANIAN BILLIONAIRE ‘SECRETLY EXECUTED’ OVER BIGGEST BANK FRAUD IN COUNTRY’S HISTORY

Scam was said to have cost Iranian banks nearly £1.5 bn


Mahafarid Amir-Khosravi, also known as Mansour Aria, was hanged at Tehran’s Evin prison on Saturday after being convicted of a scam that was said to have cost Iranian banks nearly £1.5 bn.

Alongside Khosravi, 39 defendants were convicted for fraud, with four others being sentenced to death.

According to Khosravi’s lawyers, the execution had taken place in secret and without their knowledge.

Gholam Ali Riahi, Khosravi's lawyer told Iranian news websitekhabaronline.ir that “he had not been informed of the execution,” and that Khosravi’s assets were at the “disposal of the prosecutor’s office.”

The crimes that led to Khosravi’s death related to a massive campaign of fraud that had started in 2007.

The fraud involved Khosravi forging documents to get credit from Iran’s biggest bank, Bank Saderat.

Khosravi used the credit to purchase state-owned assets including Iran’s major steel producer Khuzestan Steel Co.

Khosravi also used the money to buy 35 other companies, which included a mineral water producer, a meat importer and a football team.

The trial has raised questions about the level of corruption in the state-regulated economy of Iran.

Many believe that during the administration of President Mahmoud Ahmadinejad corruption was rife throughout those that controlled the country’s economy.

The government denied any involvement with the actions of Khosravi.

CCTV shows thousands of migrants storming border into Spanish enclave

Four pings no longer believed to be from MH370’s black box, says US official

Four pings no longer believed to be from MH370’s black box, says US official

Four acoustic transmissions that have been the focus of the search for missing Malaysia Airlines flight 370 are no longer believed to have come from the plane's black box, a US official said today.
The US Navy's deputy director of ocean engineering Michael Dean told CNN there was now broad agreement that they came from some other man-made source unrelated to the jet that disappeared on March 8 carrying 239 people.
Speaking to CNN, Dean said that if the pings had come from the recorders, searchers would have found them.
Dean added in the CNN report that other countries involved in the search for MH370 had come to the same conclusions.
"Our best theory at this point is that (the pings were) likely some sound produced by the ship... or within the electronics of the Towed Pinger Locator," the CNN report quoted Dean as saying.
"Always your fear any time you put electronic equipment in the water is that if any water gets in and grounds or shorts something out, that you could start producing sound."
Dean added that while it was not possible to absolutely exclude the theory that the pings had come from the flight's black boxes, there was no evidence now to suggest that they had.
The acknowledgement came as searchers concluded the first phase of their effort in which they scanned 239 square miles of the ocean floor without finding any trace of wreckage.
The acoustic transmissions played a key role in the search for MH370, the most extensive and expensive effort in aviation history. Authorities had earlier said that technology greatly increased the chances of success while search officials expressed "cautious optimism" in the pings when they were discovered last month.
However, experts had warned that crash damage or deep ocean pressure could alter the pinger frequency, a caution which stemmed from the pings' 33.3 kHz frequency – slightly lower than the design frequency of 37.5 kHz. They also raised concerns regarding the ping detection sites which were miles apart, noting that sounds can travel far, and even echo, in underwater environments.
In the CNN report, Dean said officials were also concerned because although pings had been detected twice on April 5, searchers had difficulty reacquiring the pings the next day.
Yesterday, British satellite company Inmarsat defended the accuracy of its data, saying that it had been checked by other parties as well.
Inmarsat vice-president of satellite operations Mark Dickinson had told CNN that many other parties who had done the same work with the same numbers had agreed on the data's accuracy.
"We have also compared the data here with data pertaining to other flights around the same time as well as the data from previous flights by the same aircraft," Dickinson added.
According to feedback received by CNN, families of passengers on board MH370 agree that the data should have been released sooner, but are not of one mind on the impact it has on current investigations or on the search for the missing aircraft.
CNN also reported that other families, especially those in Malaysia, said they do not care for the data and whether it is 100% accurate or not, wanting only some kind of debris to enable closure over the traumatic incident.
Flight MH370 was carrying 227 passengers and 12 crew when it vanished on March 8. Although authorities have not ruled out mechanical failure, they said that the loss of communication suggests the plane was deliberately diverted from its scheduled route from Kuala Lumpur to Beijing. – May 29, 2014.

Barisan’s event to showcase 150 DAP members switching sides ends in confusion

A Barisan Nasional (BN) function meant to unveil 150 DAP members who were apparently switching sides to join the coalition ended in confusion last night as no evidence was given to show the crossovers.
In his ceramah last night, Umno Information Chief and Deputy Finance Minister Datuk Ahmad Maslan claimed that the crowd gathered before him comprised DAP members who were jaded with the party and was eager to enter BN’s fold.
To complete the ceremony, three allegedly former DAP members stood before the audience and pulled on the signature blue BN T-shirts.
Ahmad then handed a DAP flag to one of the three "former DAP members". She was told to lay the flag down, and was then handed a BN flag to hold.
“We are very happy because we have friends who used to support DAP, now support BN tonight. Thank you for thinking about BN’s future, for the future of our children and grandchildren,” said Ahmad at the ceramah in Taman Desa Bakti, Teluk Intan.
Although Ahmad described it as a “historic moment”, the few members of the crowd told reporters later that they had always been BN supporters.
And one of three new “BN converts” who had made a show of donning the BN T-shirt before the crowd told reporters later that she had been “ordered” to attend the event, and that she was still a DAP member.
“I am very distressed by this. They forced me to come here, to bring my family and my friends. But when I came here, they took my photos. I don’t want this,” said Sahtin Subramaniam, a 46-year-old taxi driver, when approached by reporters.
“I am not a BN person. From before until now, I am a DAP person, my entire family supports DAP.”
She added that she had been promised “goodies” if she came to the event, but now she feared DAP and her friends would learn of her presence here and be disappointed.
Part of the audience at the Barisan Nasional ceramah last night. – The Malaysian Insider pic by Afif Abd Halim, May 28, 2014.But the media interview with Sahtin was cut short by one Arjami Ali, a committee member of pro-BN group Pertubuhan Kebangsaan Warisan Ketuanan Melayu Malaysia (Pewaris).
Arjami told reporters he was responsible for bringing Sahtin and others to the event, and that she had denied her support for BN because she was “confused.”
“She used to support DAP. But because you kept asking her, you twisted the questions, so she was confused. If she were still DAP, she wouldn’t have come here,” he said.
When asked how he had convinced her to allegedly leave DAP, Arjami said he had interviewed her about the problems she faced daily.
“I am good at that. It is like tackling a woman. If a woman followed me, it means she likes me. She wouldn’t have come here if she didn’t like it.”
After the function ended, the audience formed a small crowd outside a nearby house, waiting to collect a box of goodies each from individuals clad in the BN uniform.
Arjami scolded reporters who wanted to open a box offered by a recipient, but relented, revealing canned food inside. – May 28, 2014.

Charles Hugh Smith: Entrepreneur Skills A Must for Any Job

Jason Burack of Wall St for Main St interviewed economic blogger and author Charles Hugh Smith from the popular blog Of Two Mindshttp://www.oftwominds.com/blog.html . Charles’ blog was voted as the #7 best alternative financial blog websites by CNBC.
Charles also has a new book out about entrepreneurship, jobs and careers called, Get a Job, Build a Real Career and Defy a Bewildering Economy. which is a top selling jobs book on Amazon.
The book can be purchased here:http://www.amazon.com/gp/product/1497… 
During this 30+ minute interview, Jason asks Charles about how bad the real economy is and how people will have to be able to adapt to find a good job or career.
Charles talks about his book and some of the entrepreneurial skills people mus have in order to survive and thrive as an employee or to create their own job or company.
Charles talks about robotics, software programs, automation, outsourcing, technology and other things that are requiring Americans to adapt more rapidly in the jobs market than at any time in history.
This is a must listen interview if you are looking for a job, want to find a better job, looking to start a new career or are interested in becoming an entrepreneur or self employed and having your own business.
Please visit the Wall St for Main St website herehttp://www.wallstformainst.com/
Follow Jason Burack on Twitter @JasonEBurack
Follow Mo Dawoud on Twitter @m0dawoud
Follow John Manfreda on Twitter @JohnManfreda
Follow Wall St for Main St on Twitter @WallStforMainSt

Physical silver savers will be rewarded.


James Rickards to Newsmax TV: ‘Ugly’ Financial Crisis to Jolt US Within 5 Years Read Latest Breaking News from Newsmax.com

Report: Shadow Economy Thriving in Developing Countries

Editor's Note: The shadow economy is up to 80% of economic activity in developing countries a new report says. Entrepreneurs are concerned about "quality of political and economic institutions" as authorities seek to "formalize" them. Bringing them into the formal economy will somehow protect them against "corrupt government officials", the report below suggests.


Activist Post

There are large numbers of entrepreneurs in developing countries who aren't registering their businesses with official authorities, hampering economic growth, according to new research.

Shadow entrepreneurs are individuals who manage a business that sells legitimate goods and services but they do not register it. This means that they do not pay tax, operating in a shadow economy where business activities are performed outside the reach of government authorities. The shadow economy results in loss of tax revenue, unfair competition to registered businesses and also poor productivity – factors which hinder economic development. As these businesses are not registered it takes them beyond the reach of the law and makes shadow economy entrepreneurs vulnerable to corrupt government officials.

In a study of 68 countries, Professor Erkko Autio and Dr Kun Fu from Imperial College Business School estimated that business activities conducted by informal entrepreneurs can make up more than 80 per cent of the total economic activity in developing countries. Types of businesses include unlicensed taxicab services, roadside food stalls and small landscaping operations.

This is the first time that the number of entrepreneurs operating in the shadow economy has been estimated.

The researchers found that Indonesia has the highest rate of shadow economy entrepreneurs, with a ratio of over 130 shadow economy businesses to every business that is legally registered. After Indonesia the highest rates of shadow economy entrepreneurs are found in India, the Philippines, Pakistan, Egypt and Ghana.



In contrast, the UK exhibits the lowest rate of shadow entrepreneurship among the 68 countries surveyed, with a ratio of only one shadow economy entrepreneur to some 30 legally registered businesses.

The researchers also found that the quality of economic and political institutions has a substantial effect on entrepreneurs registering their businesses around the world.

Professor Erkko Autio, co-author of the report, at Imperial College Business School, said:

"Understanding shadow economy entrepreneurship is incredibly important for developing countries because it is a key factor affecting economic development. We found that government policies could play a big role in helping shadow economy entrepreneurs transition to the formal economy. This is important because shadow economy entrepreneurs are less likely to innovate, accumulate capital and invest in the economy, which hampers economic growth."

The researchers suggest that shadow entrepreneurs are highly sensitive to the quality of political and economic institutions. Where proper economic and political frameworks are in place, individuals are more likely to become 'formal' entrepreneurs and register their business, because doing so enables them to take advantage of laws and regulations that protect their company, such as trademarking legislation.

The researchers suggest if India improved the quality of its democratic institutions to match that of Malaysia, it could boost its rate of formal economy entrepreneurs by up to 50 per cent, while cutting the rate of entrepreneurs working in the shadow economy by up to a third. This means that the government could benefit from additional revenue such as taxes.

Source: Imperial College London. To create their league table, the researchers combined data from the Global Entrepreneurship Monitor (GEM) and the World Bank. Download a copy of the report: 
http://link.springer.com/article/10.1007/s10490-014-9381-0

Rob Kirby – I Think We’re Close To The Current System Breaking. . . . The Way America Is Printing Dollars, The Dollar Will Absolutely Go To Zero.


http://usawatchdog.com/u-s-gold-holdi… Macroeconomic analyst Rob Kirby has 15 years’ experience as an international derivatives broker. There are hundreds of trillions in derivatives spread around at the major global banks. There is no public market, no standards, and no guarantees. If someone miscalculates by a small amount, Kirby says the whole system could crash. Kirby explains, “You’ve got one bank in Germany that’s got a derivatives book that is 20 times the size of Germany’s GDP . . . . Germans have seen their currency go to zero. Germans know this can happen because it’s happened to them. Americans don’t think this can happen to them. Americans think they can print money until the cows come home and that they can control anything by printing more money. You can’t solve a problem of indebtedness by continuing to print money. This is fraud on the highest, highest order. This is not going to end well. What they are doing is bluffing with the future of humanity. They are bluffing with the future of mankind.”
Kirby goes on to predict, “Ultimately, we are going to get to a place where we will have no more choices. It will blow up. We are seeing cracks in the foundation of this fraud. . . . Gold and silver is your life insurance policy, and it isn’t going to come into its own until this current system breaks. I think we’re close to the current system breaking. . . . The way America is printing dollars, the dollar will absolutely go to zero.”
Join Greg Hunter of USAWatchdog.com as he goes One-on-One with Rob Kirby of KirbyAnalytics.com

Read more at http://investmentwatchblog.com/rob-kirby-i-think-were-close-to-the-current-system-breaking-the-way-america-is-printing-dollars-the-dollar-will-absolutely-go-to-zero/#hcyMwCjrqOprTxvj.99

Stock Market and Grocery Prices Both Rising For Same Reason - Peter Schiff


Quote Of The Day: Head Of Bank Of England Says Bankers Must Reassess "Sense Of Self"

Earlier today, the world's oligarchs held a conference titled "Inclusive Capitalism" (where common peasants were not allowed to get closer than 300 feet) where inclusive supposedly means "trickle down in an era of record cronyness", which among others was attended by Bill Clinton, Prince Charles and Madame Kill Bill herself.
Here is what some of the participants said via Reuters:
Christine Lagarde, the managing director of the International Monetary Fund, said ... that progress in completing banking reforms was being hampered by fierce industry lobbying.
You mean the industry which was bailed out by the same oligarchs holding court today (courtesy of taxpayer funds), and which even the Fed admits is still Too Big To Fail, and thus has no worries that any of its negative behavior would ever have negative consequences. That industry?
But the quotes of the day by far belonged to former Goldmanite and current Bank of England head Mark Carney. Here are some of his pearls of wisdom, via Reuters and Bloomberg:
"Just as any revolution eats its children, unchecked market fundamentalism can devour the social capital essential for the long-term dynamism of capitalism itself."
Well as long as he means social capital (not to be confused with government cash transfers in a world in which the welfare state has been bloated to epic proportions) because we know the real capital keeps evaporating: that "inevitable" capex rebound keeps getting pushed back year after year, while all the political capital, as Mario Draghi was so kind to lie to us, has been fully soaked up to keep Europe's artificial currency afloat.
Then there was this:
Carney said public trust had been damaged by the behaviour of banks both before and after the financial crisis. He cited allegations that the Libor interest rate benchmarks and prices on the foreign exchange market were tampered with. "An unstable dynamic of declining trust in the financial system and growing exclusivity of capitalism threatens."
Hold on: when Carney talks about examples of market rigging is he referring to the recent discovery that the "Bank Of England Encouraged Currency Manipulation By Banks"? Surely not: that would be too cute even for a former Goldmanite.
He goes on:
"In the Bank of England's view, changes to both the hard and soft infrastructure of markets will be required," he said.
True: unfair practices such as Virtu having one whole losing day in 4 years of frontrunning market orders should be permanently eradicated. Also the mere possibility that JPM may not report an entire year with zero trading losses, should be promptly struck from the collective mind: imagine how much more confident in markets the retail investors would be if they knew that neither HFT firms nor TBTF banks could ever lose money again!
Before we forget, here is another instance of "social capital" - perhaps Carney will elaborate just what he means:
"Unbridled faith in financial markets prior to the crisis and the recent demonstrations of corruption ... has eroded social capital,"
This is certain: anytime a banker almost, just barely avoids jail time for stealing billions courtesy of a corrupt and criminal legal system that panders to the banks and regulators whose only hope is to get a job with the banks they "supervise", something inside the social capital dies a little.
But the punchline is undoubtedly this, via Bloomberg:
Carney says capitalism must reassess bankers’ "sense of self."
Oh, so it was the impaired banker "sense of self" that was at fault for corrupting capitalism as we know it, or rather no longer can recognize it.... Well that explains everything. As for the cure: we have an idea. The central banks should just print up a few cool trillion more (you know, to boost the economy and lol) and assure that in 2014 bankers get a year of absolutely blockbuster bonuses. That will promptly fix all "sense of self" fears and lingering doubts, and with it, according to Carney, capitalism itself.
Q.E.D
* * *
And all of the above in Bank of England tweet form:
View image on Twitter

Stock Market Crash Analysis: Jim Rogers, Martin Armstrong, Patrick Byrne


Tune in to this week’s “InTheMoney Radio Show.” This is a powerful show, Gareth tells you exactly what to watch and what to trade. Listen close, then step up and get the live trades as Gareth provides to members. Our Research Center is the main place for any swing trader and investor looking to position their portfolio for multiple day/week moves in stocks and the markets. Take note of the track record of every call given to members over the past few years herehttp://www.inthemoneystocks.com/free-…. After you view the results, the only thing left to do is join the Pros in the Research Center, clickhttp://www.inthemoneystocks.com/investor for more information.

Jim Rogers: We Are Now Witnessing The Historic End Of The US Dollar As The World’s Reserve Currency As The Economic Giants Are Dumping It ‘En Masse’.

Sanction threats against Russia sent shock waves of panic across the world of investment. There’s still those who still believe in the prospects of the Russian economy, despite the political turmoil. So, what are these prospects? How are sanctions affecting the financial balance of power? And, finally, what does Moscow’s turn to Beijing mean for the future of the global economy? We ask these questions to a renowned investor and businessman — Jim Rogers.

Bill Gates: Don't tax my income, tax my consumption


FOOD INFLATION IS HERE


Here in this brief video are my small examples of food inflation. Pay close attention to the canned chicken. You are in fact paying for water.

U.S. city average Bacon, sliced, per lb. from 2004 to 2012:
2004 $3.157 
2014 $5.690 
A devastating bacterial disease called “early mortality syndrome” is crippling the shrimping industry all over Asia right now.  According toBloomberg, this has pushed the price of shrimp up 61 percent over the past 12 months…
In March, shrimp prices jumped 61 percent from a year earlier, according to the U.S. Bureau of Labor Statistics. The climb is mainly due to a bacterial disease known as early mortality syndrome. While the ailment has no effect on humans, it’s wreaking havoc on young shrimp farmed in Southeast Asia, shrinking supplies.
This disease has an extremely high mortality rate.  In fact, according to the article that I just quoted, it kills approximately nine out of every ten shrimp that it infects…
Cases of early mortality syndrome, which destroys the digestive systems of young shrimp, were first reported in China in 2009, said Donald Lightner, a professor of animal and comparative biomedical sciences at University of Arizona in Tucson.
The disease, which kills about 90 percent of the shrimp it infects, traveled from China to Vietnam to Malaysia and then to Thailand, he said. Cases also were reported in Mexico last year, Lightner said.
A different disease is driving up the price of pork in the United States.  It is known as the porcine epidemic diarrhea virus, and in less than a year it has spread to 30 states and has killed approximately 7 million pigs.
The price of bacon is already up 13.1 percent over the past year, but this is just the beginning.
It is being projected that U.S. pork production could be down by as much as 10 percent this year, and Americans could end up paying up to 20 percent more for pork by the end of 2014.http://theeconomiccollapseblog.com/archives/the-meat-crisis-is-here-price-of-shrimp-up-61-7-million-pigs-dead-beef-at-all-time-high 

GaryMule