Wednesday, December 10, 2014

New Image International

About New Image
Founded in 1984, New Image International is one of the pioneers of health products and direct selling in the Asia Pacific region.
Our Founding Chairman, Graeme Clegg, has pioneered the health-giving benefits of colostrum, the linchpin ingredient for many of our products, for more than 30 years. He is an internationally respected expert on its properties.
Based in New Zealand, New Image Group reaches customers through a rapidly growing group of independent Representatives in Australia, Hong Kong, Indonesia, Malaysia, New Zealand, the Philippines, Singapore, South Africa, Taiwan, India and Thailand.
These days, few fast growing companies last for more than five years and only a handful last for 29 years. New Image’s enduring success is based on four key ingredients: great products, effective systems, incredible people and an entrepreneurial spirit.
Mission Statement
New Image will provide an equal opportunity for people worldwide to unite and enhance their quality of life through sustainable free enterprise marketing of high quality products in accordance with our commitment to health, financial security and personal development.
Our goal is to enhance the health and well-being of people throughout the world, leveraging the power of colostrum as the essence for life.
Systems and People
A core team of industry leaders has developed the most advanced networking systems in Asia Pacific. Unlike other established companies, we use the latest processes from competence-based training to internet management systems.
With online communications, presentations and coaching workshops, New Image has the complete support programme for the new person. The Leadership Rewards Programme has the greatest potential of any in our region due to its innovative share option scheme.
“We believe there is an entrepreneurial spirit in everyone”, says founder Graeme Clegg. “All you have to do is release it. Our programme has helped countless people experience new success. Experience new confidence. Experience the joy of helping people discover positive health. We are going to astound you with our success.”
Guiding Principles and Values
Quality will never be compromised. A priority of our business is to maintain exceptional quality across all of our products.
Continuous improvement in all aspects of our business is our policy. A high standard of on-going training will be provided for both staff and Representatives.
Satisfied customers are more than important – they are the life force of this company.
All employees and Representatives are vital members of our team. Participation and mutual respect are valued.
Ethical and moral business practices will be pursued at all times. Traditions and culture will be respected in any country of operation.
The value of our company lies in its people. We are an equal opportunity company.
Become the most successful free enterprise marketing company in the world.
Ensure maximum benefits for the maximum number of people.
Provide environmentally sound products and manufacturing processes.
– No Health, No Future…”The healthy have many wishes; the sick only have one.”I have never forgotten this truism I heard many years ago and it is more applicable today than any other time in history. Our bodies are constantly under attack from our toxic stressful world. The challenge is how do we remain healthy? Personal tragedy brought home to me the reality that prevention is a thousand times more practical than the cure. The tragedy of losing my mother, father and younger brother to cancer brought home the grim reality that I was also possibly programmed to become a similar victim. I did not want to die as life had too much to offer so I was faced with two choices, 1. Leave my life to chance; or 2. Make a choice to do something about it.
New Image is 26 years of my doing something about it. I am in fact, living proof of excellent health and vitality. Since I started New Image, I have never had a day sick. Many people have observed my exuberant energy, my zest for life, my positive outlook and healthy wellbeing as I travel, speaking about our products (my passion). I am delighted to hear the amazing success stories from thousands of people as I travel around the Asia Pacific region.
We have pioneered many products and our greatest success has been with Colostrum. This product is nature’s answer to mankind’s greatest health concern – our weakened immune function. We are proud to be the first retailer, the largest retailer and greatest champion of nature’s ‘wonder product’. I hope you take this everyday.
I hope we can welcome you into our family of customers and support you in your quest for great health and vitality.

Graeme Clegg

This Time Is The Same: Like The Housing Bubble, The Fed Is Ignoring The Shale Bubble In Plain Sight

We are now far advanced into the third central bank generated bubble of the last two decades, but our monetary politburo has taken no notice whatsoever of its self-evident leading wave. Namely, the massive malinvestments and debt mania in the shale patch.
Call them monetary bourbons. It is no exaggeration to say that inhabitants of the Eccles Building deserve every single word of Talleyrand’s famous epithet: “They learned nothing and forgot nothing.”
To wit, during the last cycle they claimed to be fostering the Great Moderation and permanent full employment prosperity. It didn’t work. When the housing and credit bubble blew-up, it washed out all the phony gains from the Greenspan/Bernanke printing spree. By the time the liquidation was finished in early 2010, there were 2 million fewer payroll jobs than there had been at the turn of the century.

Never mind. The Fed simply doubled-down. Instead of expanding its balance sheet by 50%, as happened during the eight years between 2000 and 2008, it went into monetary warp drive, ballooning its made-from-thin-air liabilities by 5X in only six years. Yet even after Friday’s ballyhooed jobs report there were three million fewer full-time breadwinner jobs in November 2014 than there were in the early 2000s.
Breadwinner Economy - Click to enlarge
That’s right. Two cycles of lunatic monetary expansion and what they have to show for it is two short-lived bursts of part-time job creation that vanish when the underlying financial bubble bursts.
Part Time Economy - Click to enlarge
So, yes, our monetary central planners forget nothing. It doesn’t matter what the actual results have been. Like the original Bourbons, the  small posse of unelected academics and policy apparatchiks which control the nation’s all-powerful central bank most surely believe they have a divine right to run the printing presses as they see fit—even if it accomplishes nothing for the 99% of Americans who don’t have family offices or tickets to the hedge fund casino.
Still, you would think that the purported “labor economist” who is now chair person of the joint would be at least troubled by the chart below. Even liberals like Yellen usually do acknowledge that that the chief virtue of the state is that it purportedly generates  “public goods” that contribute to societal welfare—-not that it is a fount of productivity and new wealth generation. For that you need private enterprise and business driven efficiency.
Well, then. How do our monetary bourbons explain that the gain in labor hours utilized by the non-farm business sector has been zero since the third quarter of 1999?  That is, nada, nichts, nothing, zip for the last 15 years!

The Fed forgets nothing because its involved in ritual incantation—-that is to say, the execution of religious doctrine. That’s why its pompous devotion to the “incoming data” is such a farce. There is nothing empirical and factually rigorous about what it does; it just changes the doctrinal spin as the bubble expands and the economic data grind-out transient noise one month or quarter at a time.
Even now that the official unemployment rate has occupied the 5-6% zone for several months, the FOMC simultaneously brags about its success in rejuvenating the economy while keeping its foot on the accelerator of “extraordinary” monetary stimulus.
As to the “success” part of the incantation, surely any one who spends even a few hours with the BLS’ U-3 unemployment rate knows it is not worth the paper it is printed on owing to the huge dislocation of the labor force participation rate. That is, the denominator is cooked and the resulting ratio is phony.
And forget about the baby boom retirement excuse. The chart below shows the employment rate for the civilian population 16-54 years old. It has crashed during the last two decades of egregious money printing. Specifically, the 16-54 age population has grown by 37 million since 2000, but the number of non-farm employees in that same working age bracket has grown by just 4 million. Yes, the Fed’s hyper-stimulated economy has generated jobs for just 10% of the prime age workers who have been added to the labor force.
Only a choir of doctrinal chanters would call that “success”.
On the other hand, the policy most surely has been “extraordinary”. We are now in the 72nd straight month of ZIRP, and there is absolutely nothing like that in the economic history of the planet. And this freakish spell of ZIRP is not even remotely attributable to some unprecedented ailment of the private economy, such as “deflation”. Zero money market rates have been manufactured lock, stock and barrel in the Eccles building.
Yet zero cost roll-over money accomplishes nothing constructive because if growth and wealth could be generated by free money we should have had it for the last 100 years, not just seven. The people who ran this country prior to the current monetary regime were not so stupid as to have overlooked a genuine economic elixir; nor were they so fatuous as to think that by hitting the “print” lever over and over and over that the hard work of production, labor, enterprise and growth could actually be accomplished without human effort.
So, too, our monetary bourbons learn nothing. ZIRP, QE, wealth effects, stock market puts and all the rest of the Fed’s toolkit of financial market repression and manipulation have one principle effect: they generate unnatural, unsustainable and unconscionable financial bubbles.
Yet the Eccles Building once again sees no bubbles when they are again palpable throughout the financial system. Consider the forgotten lessons of last time around. Right up until the 11th hour, the Fed and all its spokesman and magicians denied the possibility of a housing bubble. Bernanke famously said that it was “contained” as late as March 2007. And contrary to the fibs of her apologists, Yellen was sitting right there cautioning against monetary sobriety even as the following chart relentlessly unfolded.
There you see a parabolic rise if there ever was one. In fact, housing prices rose for 111 consecutive months between 1994 and 2007. Average home prices more than doubled during that interval.
But that spectacular surge self-evidently had nothing to do with the economics of scarcity. Anyone half awake could have determined that lumber prices and building materials did not rise by even a small fraction of that 2X gain during the housing boom, nor did construction wages, real estate brokerage commissions or any other factor of production.
Nope. At bottom, the leading edge of the housing mania was the implicit price of land. That’s what always get bid up to irrational heights when the central bank fiddles with free market pricing of capital and debt.

Even as land prices were being driven to irrational heights you didn’t need to spend night and day in arcane data dumps to document it. All you had to do was look at the stock price of the homebuilders.
As I documented in The Great Deformation, the combined market cap of the big six national homebuilders including DH Horton, Lennar, Hovnanian, Pulte, Toll Brothers and KBH Homes soared from $6.5 billion in 2000 to $65 billion by the 2005-2006 peak. Yet you only needed peruse the financial statements and disclosures of any of these high-flyers and one thing was screamingly evident. They weren’t homebuilders at all; they were land banks that did not own a single hammer or saw or employ a single carpenter or electrician.
Stated differently, the homebuilders’ soaring profits were nothing more than speculative gain on their land banks—gains driven by the cheap mortgage mania that had been unleashed by Greenspan when he slashed the so-called policy rate from 6% to 1% in hardly 30 months of foot-to-the-floor monetary acceleration between 2001 and 2004.
Indeed, that cluelessness amounted to willful negligence. DH Horton was the monster of the homebuilder midway—–a giant bucket shop that never built a single home, but did accumulate land and sell finished turnkey units by the tens of thousands each period. Did it not therefore occur to the monetary politburo that DH Horton had possibly not really generated a 11X gain in sustainable economic profits in hardly 5 years?
DHI Chart
So now we come to the current screaming evidence of bubble finance—–the fact that upwards of $500 billion of junk bonds ($200B) and leveraged loans ($300 B) have surged into the US energy sector over the past decades—–and much of it into the shale oil and gas patch.
Folks, you don’t have to know whether the breakeven for wells drilled in the Eagleville Condy portion of the great Eagle Ford shale play is $80.28 per barrel, as one recent analysis documents, or $55 if you don’t count all the so-called “sunk costs” such as acreage leases and oilfield infrastructure. The point is, an honest free market would have never delivered up even $50 billion of leveraged capital—let alone $500 billion— at less than 400bps over risk-free treasuries to wildly speculative ventures like shale oil extraction.
The fact is, few North American shale oil fields make money below $55/barrel WTI on a full cycle basis (lease cost, taxes, overhead, transport, lifting cost etc.). As shown below, that actually amounts to up to $10 less on a netback to the wellhead basis—–the calculation that drives return on drillings costs.

In short, as the oil market price takes its next leg down into the $50s/bbl. bracket, much of the  fracking patch will become a losing proposition. Moreover, given the faltering state of the global economy and the huge overhang of excess supply, it is likely that the current crude oil crash will be more like 1986, which was long-lasting, than 2008-09, which was artificially resuscitated by the raging money printers at the world’s central banks.
So why is there a shale patch depression in store? Because there is literally a no more toxic combination than the high fixed costs of fracked oil wells, which produce 90% of their lifetime output in less than two years, and the massive range of short-run uncertainty that applies to the selling price of the world’s most important commodity.
Surely, it doesn’t need restating, but here is the price path for crude oil over the past 100 months. That is to say, it went from $40 per barrel to $150, back to $40, up to $115 and now back to barely $60 in what is an exceedingly short time horizon.

Obviously, what we have here is another massive deformation of capital markets and the related flow of economic activity. The so-called “shale miracle” was not made in Houston with some technology help from Silicon Valley. The technology of horizontal drilling and well fracking with chemicals has been around for decades. What changed were the economics, and those  were made in the Eccles Building with some help from Wall Street.
As to the latter, was it not made clear by Wall Street’s mortgage CDO meth labs last time that when the central bank engages in deep and sustained financial repression that it produces a stampede for “yield” which is not warranted by any sensible relationship between risk and return? It should not have been even possible to sell a shale junk bond or CLO that was based on assets with an effective two year life, a revenue stream subject to wild commodity price swings and one thing even more unaccountable. Namely, that the enterprise viability of virtually every shale junk issuer has always been dependent upon an endless rise in the junk bond issuance cycle.
Stated differently, oil and gas shale E&P operators are drastic capital consumption machines. Due to the lightening fast decline rates of shale wells, firms must access more and more capital just to run in place. If they don’t flush money down the well bore, they die along with all the “sunk” capital that was previously put in place.
In the case of shale oil, for example, it is estimated that were drilling to stop for just one month, production in the Eagle Ford, Bakken and one or two other major provinces would drop by 250,000 barrels per day. After four months, the drop would be 1 million bbl./day and after a one-year, nearly half the current four million barrels of shale oil production would disappear.
That’s why all of a sudden there is so much strum and drang about “breakeven” pricing. Obviously, new drilling is not going to go to zero under any imaginable price scenario, but for all practical purposes the shale revolution could shut down just as fast as did the housing boom in 2006-2007. In effect, the shale financing boom presumed that both the junk bond cycle and the oil price cycle had been eliminated.
Needless to say, they have not. So the impending “correction” may well be as swift and violent as was the housing bust.

Indeed, in the short-run the shale crash could be worse. The fantastic, debt-fueled drilling spree of the past 5-years is now sunk and will produce rising levels of production for a few quarters until rig activity is sharply curtailed and some of the better capitalized operators stop drilling in order to avoid lease expiration writeoffs.
So as the WTI market price is driven toward $50/ barrel, recall that the netback to the producer is significantly less. In the case of the biggest shale oil province, the Bakken, the netback to the well-head is upwards of $11 below WTI.  Accordingly, cash flow will plunge and that source of drilling funds will evaporate with it.
But the big down-leg is coming in the junk market. This time around, Wall Street has been even more reckless in its underwriting than it was with toxic securitized mortgages. Barely six months ago it sold $900 million of junk bonds for CCC rated Rice Energy.  The latter operates in the Marcellus gas shale trend but that makes the story even more preposterous.
These bonds were sold at barely 400 bp over the 10-years treasury, and the issue was 4X oversubscribed. That is, there was upwards of $4 billion of demand for the bottom of the barrel securities of a shale speculator that had generated the following results during its 15 quarters as a public filer with the SEC. To wit, it had produced $100 million of cumulative operating cash flow versus $1.2 billion of CapEx. In short, if the junk bond market dies, Rice Energy is a goner soon thereafter.
Indeed, the case of Forest Oil, one of the early pioneers in the giant Eagle Ford play shows what happens when new funding dries up. Owing to the dearth of capital, this once high flier has now done an HR Horton and then some—having lost 99% of its peak market cap.
FST Chart
FST data by YCharts
Here’s the thing, however. Rice Energy is not an outlier. It is a poster child for the entire junk shale Ponzi.  Take the storied leader of the pack—— Continental Resources (CLR). Its principal owner and flamboyant oil patch entrepreneur, Harold Hamm, did brilliantly assess the North Dakota opportunity once it became clear that the central banks of the world were not going to tolerate the $40 oil plunge after the financial crisis.
Yet absent the massive outbreak of junk debt financing, he would not have had the billions for his divorce settlement or the $15 billion his stock is still worth after the 40% crash of oil prices and 60% plunge of CLR stock since mid-year. The fact is, during the last 9 years, CLR has generated $8 billion of operating cash flow compared to $14 billion of CapEx—most of it poured into the Bakken.
The wonders of cheap debt. CLR had $140 million of debt  back in 2005 when the shale boom was in its infancy. It now has 43X more or about $6 billion, and the bleeding is just getting underway.
Needless to say, the issue is not whether Harold Hamm can hold on to his billions. Instead, the question is whether the bourbons in the Eccles Building can possibly hold on to their credibility for another go-round.
As the global boom cools, oil demand withers, the junk market craters, and the shale patch tumbles into depression, someone might actually note the chart below.
Its been another central bank parlor trick. The job count in the 45 non-shale states last Friday was 400,000 lower than it was at the end of 2007. That’s right, not one new job—even part-time or in the HES complex—- for the last seven years.
All the new jobs have been in the 5 shale states. That is, they were manufactured by the Fed’s tidal wave of cheap capital and the central bank fueled global recovery which created the illusion that $100 oil was here to stay.
But it isn’t and neither is the shale boom, the shale jobs or the shale investment spike, which counts for a good share of overall CapEx growth since the crisis.
Yes, indeed. The monetary politburo did it again.

Treasury Warns Congress (and Investors): This Financial Creature Could Sink the System…. Unsuspecting Retail Investors Will Get To Eat The Losses

Wolf Richter,
Office of Financial Research slams Leveraged Loans
In its 2014 Annual Report to Congress, the US Treasury’s Office of Financial Research, which serves the Financial Stability Oversight Council, analyzed for our Representatives the “potential threats” to the US financial house of cards. Among the biggest concerns was a financial creature that has boomed in recent years. The Fed, FDIC, and OCC have warned banks about it since March 2013. But they’re just too juicy: “leveraged loans.”
Leveraged loans are issued by junk-rated corporations already burdened by a large load of debt. Banks can retain these loans on their balance sheets or sell them. They can repackage them into synthetic securities called Collateralized Loan Obligations (CLOs) before they sell them. They have “Financial Crisis” stamped all over them.
So the 160-page report laments:
The leveraged lending market provides a test case of the current approach to cyclical excesses. The response to these issues has been led by bank regulators, who regulate the largest institutions that originate leveraged loans, often for sale to asset managers through various instruments. Despite stronger supervisory guidance and other actions, excesses in this market show little evidence of easing.
How did we get here?
Relentless QE along with interest-rate repression by the Fed and other central banks – “accommodative global monetary policy,” the report calls it – caused changes in “risk sentiment,” compressed volatility, and reduced risk premiums. To get a visible yield in an environment where central banks wiped out any visible yield, investors were “encouraged” to take on more and more risk, even for their most conservative holdings, thus moving “out of money market instruments and into riskier assets such as leveraged loans….”
During the “bout of volatility” in September and October, investors sold off these creatures, but it wasn’t nearly enough to dent the vast positions they’d accumulated. “On the contrary,” the report pointed out, “the fleeting nature of the episode ultimately had the effect of reinforcing demand for duration, credit, and liquidity risk, and led many investors to reestablish such positions.”
This came at the wrong time.
The credit cycle has four phases: repair (balance-sheet cleansing), recovery (restructuring), expansion (increasing leverage, weakening lending conditions, diminishing cash buffers), and finally the downturn (funding pressures, falling asset prices, increased defaults). Now the US is “somewhere between the expansion and downturn phases.”
Nonfinancial corporate balance-sheet leverage is still rising, underwriting standards continue to weaken, and an increasing share of corporate credit risk is being distributed through market-based financing vehicles that are exposed to redemption and refinancing risk.
Financial engineering has taken over.
Early on in the credit cycle, corporations borrowed money long-term to replace short-term debt and to fund capital expenditures. Now they use the borrowed money to “increase leverage such as through stock buybacks, dividend increases, mergers and acquisitions, and leveraged buyouts, rather than to support business growth.” And ultra-low interest rates and loosey-goosey lending standards have encouraged corporations to take “on more debt than they can service.”
So the ratio of debt to earnings before interest, taxes, depreciation, and amortization (EBITDA) for the most highly leveraged loans reached 7.7 in October, near the peak in 2007, at the cusp of the Financial Crisis. Large corporate loans with leverage ratios above the regulatory red-line of 6 times EBITDA soared from 15% of corporate bank loans, back when regulators started warning banks about them, to nearly 30% in 2014, exceeding the record set in 2007 before it all went down the tubes:
Why would that be a problem? Because…. “Even an average rate of default could lead to outsized losses once interest rates normalize.”
And the quality of the debt sucks.
Junk debt accounts for 24% of all corporate debt issued since 2008, up from 14% in prior cycles. Over the past year, junk debt “dominated new issuance volumes.” And ominously for the holders of this debt:  Two-thirds of these loans during the current credit cycle lack strict legal covenants to protect lenders, compared to one-third in previous cycles. Once the tsunami of defaults sets in during the downturn, these “covenant lite” loans will lead to lower recovery rates on defaulted debt, thus increasing the losses further.
This chart (2014 data through September, annualized) shows how volume of “highly leveraged loans” (those with a spread of 225 basis points above LIBOR), at nearly $600 billion this year, is about 50% higher than it was at the cusp of the Financial Crisis. And the dreaded covenant-lite loans, oh my:
Now enter CLOs.
The combined issuance of CLOs and leveraged loans has exceeded the peak levels of the last credit cycle, whose downturn phase turned into the Financial Crisis. This buildup in credit risk has frazzled bank regulators, and they have responded harshly, the OFR reported, um, “with guidance and exhortations.”
It may be too little, too late. As the credit cycle enters the downturn phase with the deterioration in corporate credit fundamentals and rising debt levels, “the buildup of past excesses will eventually lead to future defaults and losses.”
But we’re not there, yet.
Yields on leveraged loans and junk bonds, and spreads per unit of leverage, are still at historic lows, the OFR found (though some of it has very recently gone to heck,especially in the energy sector). And “investors are not being compensated for the incremental increase in corporate leverage.”
The increased credit, liquidity, and volatility risks – that “tend to rise simultaneously during periods of stress” – have led to these junk loans being wildly “mispriced.” When they’re repriced during the downturn, investors will lose their shirts.
And “product innovation” has soared, another “hallmark of late-stage credit cycles.” They led to “broader, cheaper access to credit such as exchange-traded, high-yield, and leveraged loan funds; total return swaps on leveraged loans; and synthetic collateralized debt obligations (CDOs).”
Banks, after originating these leveraged loans and repackaging them, increasingly sell them to nonbank lenders, such as institutional investors, pension funds, insurance companies, finance companies, mutual funds, ETF, etc. This process started long before the Financial Crisis – manifested by the collapse and occasional bailout of nonbanks, such as AIG. This chart (data through June 2014) shows this trend of risk being sloughed off to others:
The problem with nonbanks?
They’re not regulated by banking regulators. Even if the Fed, the FDIC, and the OCC crack down on banks with regards to leveraged loans, there is little they can do about nonbanks. And pushed to desperation by the Fed’s near-zero interest rates, nonbanks “engage in riskier deals than banks….”
Short-duration funds, which invest in leveraged loans, have shown the most significant growth. Assets under management have increased ten-fold over the last five years, driven by a search for yield and a hedge against an eventual rise in interest rates.
But banks can still be at risk when “a sudden stop in the leveraged lending market” – for example, when investors in ETFs and mutual funds get spooked – forces banks that originated these leveraged loans to hang on to them.
Yet a “significant amount of this risk continues to migrate to asset management products,” including mutual funds and ETFs that people have in their retirement funds. And investors in these products are largely on their own. When redemptions and fire sales start cascading thorough the system – the dreaded “structural vulnerabilities” – all heck could once again break loose. And that “adds urgency to the discussion” of how “a poorly underwritten leveraged loan that is pooled with other loans or is participated with other institutions may generate risks for the financial system.” Not to mention how it will savage the retirement portfolios of unsuspecting retail investors.
And some of this has already started happening in the energy sector. Revenues are plunging. Earnings will get hit. Liquidity is drying up. And stocks got eviscerated. Read…  Oil and Gas Bloodbath Spreads to Junk Bonds, Leveraged Loans. Defaults Next

Some oil and gas firms already in pretty bad shape. Oil price fall starts to weigh on banks.

View image on Twitter
Some oil and gas firms already in pretty bad shape 
I was offered a first year position at a big o&g firm in Texas last month. Received a call, followed by an email today that my offer was rescinded due to ‘external economic influences’. The problem is that big4 has already recruited for next year, so i really don’t know to do. Any advice would be much appreciated.
Fraser Thompson @fraserkthompson
price blues - Banks including Barclays and Wells Fargo facing heavy losses on $850m loan to 2 oil and gas firms 

Oil price fall starts to weigh on banks
Banks including Barclays and Wells Fargo are facing potentially heavy losses on an $850m loan made to two oil and gas companies, in a sign of how the dramatic slide in the price of oil is beginning to reverberate through the wider economy.
Details of the loan emerged as delegates of Opec, the oil producers’ cartel, gathered in Vienna to address the growing glut in the supply of oil.


Greece Post Mortem: Worst Day Since 1987 Crash, Banks Destroyed, Bond Yields At Post-Bailout Highs

As the sun sets in Athens, we thought a moment of reflection was worthwhile. Greek stocks are now down 13% - the biggest single-day drop since (drum roll please) the crash of 1987... led by total carnage in Greek banks (down 15-25% on the day). Greek bond yields exploded, 3YR +183bps to a new post-bailout high at 8.32% (and inverted to 10Y).

Worst day since the 1987 crash for Greek stocks...

As every smart money hedge fund traders best trade of the year - Greek Banks are destroyed...

leaving 3Y bond yields smashed higher...

Can 2014 get any worse for Tesco? £2bn wiped off value of beleaguered supermarket's share price after warning annual profits may be £550million worse than expected

  • Boss Dave Lewis says profits will not exceed £1.4bn - down from £1.94bn
  • Tesco shares plunged from £1.87 overnight to a new low of £1.58  
  • Serious Fraud Office still probing claims Tesco 'cooked' previous profits 
  • It is the supermarket's fourth profit warning in the past year
  • Sainsbury's, Morrisons and even M&S' shares fall after Tesco's bad news 
  • Tesco is in the biggest crisis of its 95-year history having haemorrhaged senior staff and seen its stock market value halve to £14billion
  • Last month a report said Tesco would have to close stores to survive 

Tesco had £2billion wiped from its market value in minutes today after it was plunged into a new deeper crisis because profits have slumped again.
Its share price fell off a cliff after the troubled supermarket announced its annual profits may be £550million lower than expected. 
Tesco's warning came weeks after it was revealed the Serious Fraud Office is investigating whether it inflated profits by £263million over several years.
Today chief executive Dave Lewis announced annual profits for the 2014/15 financial year will not exceed £1.4billion, when the consensus had been that they would be around £1.94billion. 
The company's shares then opened down 16 per cent this morning - an 11-year low - from £1.87 overnight to £1.58 at 8am - wiping nearly £2billion from its market value.
Shares have risen slightly since then, reaching £1.74 pence at 4.52pm – but this is still a decline of more than six per cent decline compared to yesterday.
With sales falling at their steepest level in four decades and its fourth profit warning in the past year, 2014 could not get much worse for Britain's biggest supermarket.  
In trouble: This chart shows the dramatic fall in Tesco's share price this morning after a surprise profits warning
In trouble: This chart shows the dramatic fall in Tesco's share price this morning after a surprise profits warning
Slide: This chart shows the relentless decline of Tesco's shares during an awful 2014 for the supermarket 
Slide: This chart shows the relentless decline of Tesco's shares during an awful 2014 for the supermarket 
Shares have risen slightly since then, reaching £1.74 pence at 4.52pm – but this is still a decline of more than six per cent decline compared to yesterday.
This chart show how shares plunged early this morning, but have then risen slightly during the day
The company suspended of eight of its most senior executives amid allegations Tesco artificially improved its results.
The supermarket originally suggested profits were overstated for the first six months of this year by £250million. However, it has now emerged the true figure was a higher £263million and the problems date back to 2012.

Greece’s stock market just suffered its worst collapse ever

Political jitters in Greece could delay ECB QE program

LONDON (MarketWatch) — Now this is Greek tragedy.
Greece’s Athex Composite GD, -2.73% tanked almost 13% Tuesday — the biggest drop for the index on record, according to FactSet. The renewed jitters came after the government, in a surprise move late Monday, said it would bring forward presidential elections to Dec. 17, potentially, setting the scene for snap elections in early 2015.
Here’s why that’s important: Far-left party Syriza currently is leading the early polls and it seems likely they would win a snap election. This is how to think about Syriza:
  • The party has been calling for an end to austerity in Greece
  • Has been campaigning for market-unfriendly measures
  • Is firmly against the international bailout program that helped the country avoid a default during the depths of its financial crisis.
How bad is Greece’s Tuesday collapse? It’s worse than the 9.7% drop the market saw Oct. 24, 2010, at the peak of Greek debt worries. The drop also eclipses the 10% fall Greek markets saw in 1989 during a bout of political turmoil.
“If there is uncertainty about Greece’s political commitment to the bailout program, it seems likely that the QE opposition within the ECB has some temporary tailwinds,” analysts at RBC Capital Markets said in a note. “If that is the case, the [ECB] January meeting (due on 22 January) could be a quite contentious one, and the ECB might choose to wait until after the elections in Greece to decide further measures.”
With Greece’s problems once again in the limelight, investors all across Europe. the Stoxx Europe 600 index SXXP, +0.33%  slumped 2.3%, while Germany’s DAX 30 index DAX, +0.63%  fell 2.2% and France’s CAC 40 index PX1, +0.20%  gave up 2.5%.
Greek government bond yields GR10YT, +0.00%  jumped 75 basis point to 7.90%, according to electronic trading platform Tradeweb.

Banks Urge Big U.S. Clients to Move Deposits, WSJ Reports

JPMorgan Chase & Co. (JPM) and Citigroup Inc. are among at least five banks urging big clients in the U.S. to park cash elsewhere as new rules make it onerous to hold certain deposits, the Wall Street Journal reported.
HSBC Holdings Plc (HSBA), Deutsche Bank AG and Bank of America Corp. expressed similar concerns in private talks with customers in past months, the newspaper said, citing unidentified people familiar with the conversations. In some cases, banks told clients -- including corporations, hedge funds, insurers and smaller lenders -- that fees may be added to accounts that have been free, it said.
The push was prompted by pending rules aimed at ensuring banks stockpile enough assets that can be easily converted to cash to cover a deposit flight in a crisis, the newspaper said. Because big, uninsured deposits are viewed as more susceptible to fast withdrawal, banks would be required to bolster related reserves rather than pursuing more profitable investments.
JPMorgan’s commercial bank recently told some clients it would start charging monthly fees on deposit accounts from which they can withdraw money at any time, the Journal wrote, citing an October memo it reviewed. The charges take effect Jan. 1 for U.S. accounts, and later for international accounts, the newspaper cited the memo as saying.
Spokesmen for the banks in Hong Kong either said they had no immediate response, declined to comment or didn’t respond to messages seeking comment.
Banks, struggling to balance rising costs for certain deposits, already have begun charging customers for holding large amounts of euros, passing on fees imposed by the European Central Bank. Bank of New York Mellon Corp., which holds money for institutional investors, began charging for euro deposits on Oct. 1, Chief Financial Officer Todd Gibbons said that month, joining peers in passing along so-called negative interest rates.
In the new push, banks are trying to work with big clients to find alternatives for some deposits, the Journal said.
To contact the reporter on this story: Alfred Liu in Hong Kong at
To contact the editors responsible for this story: Peter Eichenbaum at; Paul Panckhurst at David Scheer, Russell Ward

WAIT FOR IT: The Mother of all Bank Runs!

21st Century Wire says…

There comes a time when the following occurs: a large number of banks’ customers lose confidence in either the banks, the government or the larger financial system, and all want to withdraw their deposits – at the same time simultaneously.
The result is panic, followed by chaos.
It’s happened before, and will happen again…

Geoffrey Pike explains… 

“The head of the National Bank of Ukraine (NBU) is facing an investigation for abusing power and misusing her office. Governor Valeriya Gontareva has been the head of the Ukrainian central bank since June of this year. She is accused of manipulating the local currency, having executed major transactions on the foreign exchange market by buying and selling dollars using the Ukrainian currency. A Kiev-based court has directed prosecutors to file charges against Gontareva.”

“From an American point of view, perhaps it is refreshing to see a person in high power being held responsible for possible corruption. But it is hard to know the circumstances here, and we can’t rule out the fact that she is being brought down for political purposes.
Central banks exist for two main reasons: to act as a backstop for the big banks and to buy government debt.
If Gontareva is guilty of crimes in Ukraine, then we certainly have to believe Bernanke was even guiltier in 2008 and 2009 when he bailed out major financial institutions and car companies.
And if central bankers are going to get into trouble for currency manipulation, then what about the Fed increasing the monetary base by a multiple of five over the last six years?
What about manipulating interest rates and paying interest on bank reserves?”
Traditionally, central bankers have been crooks and thieves, robbing and looting on a grand scale. Central bankers tell you that they’ve thought of everything, but what Janet Yellen and Associates cannot tell you is: what good will gold do me in that situation, and what would you really do if there is a run on the banks?

Global Research

Do you remember seeing old pictures of the Great Depression which depicted “lines”?  There were two types, bread lines and also lines to the front doors of banks. While we don’t see any bread lines today, trust me, there are bread lines in every single state, and long ones at that. Nearly 50 million people in the U.S. survive on SNAP, EBT cards or whatever they are called in your state. Can you imagine the “confidence” it would instill if each day on your way to work you saw massive lines of people waiting for breakfast?  Or, when you came home from work you turn on your television only to see long lines again, this time for supper? 

I can see it now, some reporter out on the street giving us the “good” unemployment, inflation or GDP news with a line of people in the background waiting for food. My point?  False economic news would be harder to “sell” and even harder to “stomach” (pun intended). 
Back during the Great Depression there were also the other type of lines, these formed in front of banks.  Many banks either “ran out of money” or had poor investments which led to their demise.  We also had this type of activity in the U.S. in 2008-09… but again, we just didn’t see them.  There were “electronic runs” of all sorts which we either didn’t hear about or never saw… but they did happen.  This is why so many banks, brokers and mortgage companies were rolled up together and merged.  The failures had to be hidden as best they could from the public’s eye because fear would have bred more fear.  This cannot be allowed in a system built and standing alone on “confidence”.
I mention the above because another situation is now arising, another “line” is beginning to form.  The current line formation is unfortunately the scariest imaginable, we are facing the Mother of all Bank Runs! 

This past week Willem Middlekoop uncovered another central bank asking for their gold back, Belgium.  We already know Germany had publicly requested their gold back beginning in early 2013 and gotten very little so far.  Just a couple of weeks back, The Netherlands announced the repatriation of 122.5 tons of gold …after the fact.  When the announcement came, it said the transfer and transaction had already been done.  Several days afterwards, a leading candidate for France’s next election also brought up the possibility of French gold being repatriated… and now it’s Belgium!!!
Notice I used three exclamation points, I did so because of all the central banks to request their gold back Belgium in my opinion would be the very last to do so with one “caveat”.  The caveat being “unless something REALLY big has changed”, let me explain. First, Belgium is the “seat” of the European Union, this is where all European decisions are made and announced (with Germany’s approval of course).  The decision to repatriate gold from the “safe haven” of New York and to do it publicly raises eyebrows on its own, but this is Belgium, not “just some country” in Europe.  Brussels is where the EU itself is headquartered.   We are talking about a dealing between the #1 and #2 Western central banks in the world. Did the EU or ECB in Frankfurt give the OK to ask for repatriation?  Yes I understand, Belgium’s central bank is not the ECB but would they or any other central bank request repatriation without ECB approval?  The same could be asked of both Germany and The Netherlands, they must have had prior approval before asking for their gold back?
Looking at this a little further, I remind you of earlier in the year when it was discovered “Belgium” was holding some $400 billion worth of Treasury securities.  This was termed the “Belgian bulge” and not really explainable because Belgium as a country did not have the wherewithal to have purchased this amount.  Either this was done via proxies or with ECB help or some other manner, it has never been explained to my knowledge.  I mention this because of the important “tie” apparently between the U.S. and Belgium.  If “Belgium” trusted us so much to have purchased $400 billion worth of Treasuries, then why repatriate their gold?  Belgium has 227 tons of gold, we found out in 2011 that 86 tons of this amount were on lease, leaving approximately141 tons at the FRBNY.  This is only worth in current dollars somewhere close to $5 billion.  The “ratio” if you will is better than 80 to one, Treasuries to actual gold “held” but not leased (hopefully?).
Why does it even matter what the ratio is?  Let’s walk this through, because we are talking about the issue of “trust”.  The only reason one would repatriate gold is because they want it in hand.  If you believed your gold was safe and sound, protected and “actually there”, no one would ask for their gold back.  Belgium has displayed their confidence by holding $400 billion worth of U.S. Treasuries… but apparently not with the U.S. holding less than $5 billion worth of gold?  Why the dichotomy of trust?  Actually, I will use a better word, “bifurcation” of trust, and yes there is a pun within this one too.
Another piece of news out of the ECB (Belgium) this week was the classification of member’s gold reserves.
Koos Jansen brought this to our attention which on its own is very big news but has now been overshadowed by the repatriation news though most definitely connected.  The member states it seems are being told to differentiate between allocated and unallocated gold, and to also break down swap positions and receivables. Theoretically this should make gold holdings less opaque and more clear to view, but why?  Why change the reporting and why now during the repatriations …?
I of course do not have the answer but we can speculate something has and is definitely changing, and this “something” is HUGE!  I say huge because these events are a change to policy which has stood the test of 70 years time.  For the last 70 years, the world has stored their gold at the New York Fed and never asked for it back. Other than Germany withdrawing 1,000 tons from the Bank of England in 2001, Venezuela is the only country to ask for their gold back…until now.  The only way to describe what is beginning to happen is to call it a bank run, The Mother of all Bank Runs and an “old fashioned one” at that!
This will be very interesting to watch exactly because of the “old fashionedness” and the scramble for what we have been told and taught for so long to be a worthless barbarous relic, gold.  Current day bank runs as you know have been papered over time and again, just look at Fed, ECB, and BOJ balance sheets to understand this fact…

Bill Holter, Miles Franklin associate writer

Continue this article at Global Research
READ MORE FINANCIAL NEWS: 21st Century Wire Financial Files

Child Poverty In The U.S. Where Do We Rank?

Rothschild Bankers Lobby Congress To Force Taxpayers To Insure $TRILLIONS$ Of Fraudulent Bank Derivatives!!

Editor’s Note: As Michael Snyder notes, JP Morgan Chase, Goldman Sachs, Citibank, Bank of America, Morgan Stanley, and plenty of others have manipulated the market with these derivative bets, and have at least $40 trillion in derivatives exposure. If Congress passes FDIC protection for these controversial and complex financial instruments, it could dwarf existing debt held by the federal government and cost taxpayers an absolutely insurmountable sum, all while letting the bankers walk away free, and with their other winnings in hand.

Gates Rothschild NWO

Back in 2011, the Federal Reserve quietly stepped up to the plate to back Bank of America in attempting to park more than $75 trillion in European derivatives exposure in a division covered by FDIC (Federal Deposit Insurance Corporation) loss insurance – meant for ordinary consumers to promote general confidence in the banking system!
Bank of America is shifting derivatives in its Merrill investment banking unit to its depository arm, which has access to the Fed discount window and is protected by the FDIC.
This means that the investment bank’s European derivatives exposure is now backstopped by U.S. taxpayers. Bank of America didn’t get regulatory approval to do this, they just did it at the request of frightened counterparties. Now the Fed and the FDIC are fighting as to whether this was sound. The Fed wants to “give relief” to the bank holding company, which is under heavy pressure.
The FDIC objected, and the deal stalled, but the gesture has been attempted on other occasions as well, and the banks are now seeking to make this a general protection for derivatives at large. This is the ultimate in letting American taxpayers hold the bag, while the real criminals speed off in the proverbial get away vehicle – all with the Federal Reserve in the driver’s seat, mind you.
Wow! The mantra of private gains, public losses has never been more true; meanwhile, the American people are serious trouble if this passes through.


New Law Would Make Taxpayers Liable For TRILLIONS In Derivatives Losses
If the quadrillion dollar derivatives bubble implodes, who should be stuck with the bill? Well, if the “too big to fail” banks have their way it will be you and I. Right now, lobbyists for the big Wall Street banks are pushing really hard to include an extremely insidious provision in a bill that would keep the federal government funded past the upcoming December 11th deadline.
This provision would allow these big banks to trade derivatives through subsidiaries that are federally insured by the FDIC. What this would mean is that the big banks would be able to continue their incredibly reckless derivatives trading without having to worry about the downside.
If they win on their bets, the big banks would keep all of the profits. If they lose on their bets, the federal government would come in and bail them out using taxpayer money. In other words, it would essentially be a “heads I win, tails you lose” proposition.
Just imagine the following scenario. I go to Las Vegas and I place a million dollar bet on who will win the Super Bowl this year. If I am correct, I keep all of the winnings. If I lose, federal law requires you to bail me out and give me the million dollars that I just lost.
Does that sound fair?
Of course not! In fact, it is utter insanity. But through their influence in Congress, this is exactly what the big Wall Street banks are attempting to pull off. And according to the Huffington Post, there is a very good chance that this provision will be in the final bill that will soon be voted on…
According to multiple Democratic sources, banks are pushing hard to include the controversial provision in funding legislation that would keep the government operating after Dec. 11.
Top negotiators in the House are taking the derivatives provision seriously, and may include it in the final bill, the sources said.
Sadly, most Americans don’t understand how derivatives work and so there is very little public outrage.
But the truth is that people should be marching in the streets over this. If this provision becomes law, the American people could potentially be on the hook for absolutely massive losses…
The bank perks are not a traditional budget item. They would allow financial institutions to trade certain financial derivatives from subsidiaries that are insured by the Federal Deposit Insurance Corp. — potentially putting taxpayers on the hook for losses caused by the risky contracts.
This is not the first time these banks have tried to pull off such a coup. As Michael Krieger of Liberty Blitzkrieg has detailed, bank lobbyists tried to do a similar thing last year…
Five years after the Wall Street coup of 2008, it appears the U.S. House of Representatives is as bought and paid for as ever. We heard about the Citigroup crafted legislation currently being pushed through Congress back in May when Mother Jones reported on it. Fortunately, they included the following image in their article:
Unsurprisingly, the main backer of the bill is notorious Wall Street lackey Jim Himes (D-Conn.), a former Goldman Sachs employee who has discovered lobbyist payoffs can be just as lucrative as a career in financial services. The last time Mr. Himes made an appearance on these pages was in March 2013 in my piece: Congress Moves to DEREGULATE Wall Street.
Fortunately, it was stopped in the Senate at that time.
But that is the thing with bank lobbyists. They are like Terminators – they never, ever, ever give up.
And they now have more of a sense of urgency then ever, because we are moving into a period of time when the big banks may begin losing tremendous amounts of money on derivatives contracts.
For example, the rapidly plunging price of oil could potentially mean gigantic losses for the big banks. Many large shale oil producers locked in their profits for 2015 and 2016 through derivatives contracts when the price of oil was above $100 a barrel. As I write this, the price of oil is down to $65 a barrel, and many analysts expect it to go much lower.
So guess who is on the other end of many of those trades?
The Rothschild banks.
Their computer models never anticipated that the price of oil would fall by more than 40 dollars in less than six months. A loss of 40, 50 or even 60 dollars per barrel would be catastrophic.
No wonder they want legislation that will protect them.
And commodity derivatives are just part of the story. Over the past couple of decades, Wall Street has been transformed into the largest casino in the history of the world. At this point, the amounts of money that these “too big to fail” banks are potentially on the hook for are absolutely mind blowing.
As you read this, there are five Wall Street banks that each have more than 40 trillion dollars in exposure to derivatives. The following numbers come from the OCC’s most recent quarterly report (see Table 2)
JPMorgan Chase
Total Assets: $2,520,336,000,000 (about 2.5 trillion dollars)
Total Exposure To Derivatives: $68,326,075,000,000 (more than 68 trillion dollars)
Total Assets: $1,909,715,000,000 (slightly more than 1.9 trillion dollars)
Total Exposure To Derivatives: $61,753,462,000,000 (more than 61 trillion dollars)
Goldman Sachs
Total Assets: $860,008,000,000 (less than a trillion dollars)
Total Exposure To Derivatives: $57,695,156,000,000 (more than 57 trillion dollars)
Bank Of America
Total Assets: $2,172,001,000,000 (a bit more than 2.1 trillion dollars)
Total Exposure To Derivatives: $55,472,434,000,000 (more than 55 trillion dollars)
Morgan Stanley
Total Assets: $826,568,000,000 (less than a trillion dollars)
Total Exposure To Derivatives: $44,134,518,000,000 (more than 44 trillion dollars)
Those that follow my website regularly will note that the derivatives exposure for the top four banks has gone up significantly since I last wrote about this just a few months ago.
Do you want to be on the hook for all of that?
Keep in mind that the U.S. national debt is only about 18 trillion dollars at this point.
So why in the world would we want to guarantee losses that could potentially be far greater than our entire national debt?
Only a complete and utter fool would financially guarantee these incredibly reckless bets.
Please contact your representatives in Congress and tell them that you do not want to be on the hook for the derivatives losses of the big Wall Street banks.
When this derivatives bubble finally implodes and these big banks go down (and they inevitably will), we do not want them to take down the rest of us with them.
Icelandic Rothschild2


The elite of the world (exposed on video)

For decades, a shadowy and secret elite organization called the Bilderberg Group has plotted policy together that subjugates humanity under the cover of darkness.
Now expose them, this is real journalism you won’t see anywhere else.

WeAreChange proves Tony Blair lied to parliament about Bilderberg


MSNBC Lawrence O’Donnell too lazy to research Bilderberg

 Former Fed Chairman Alan Greenspan confronted on Bilderberg, Bohemian Grove

Clinton adviser Vernon Jordan on Bilderberg: “We don’t want any press”

FOX’s Lou Dobbs on Bilderberg, New World Order

CNN’s Paula Zahn completely ignorant of Bilderberg group

Lord Jacob Rothschild confronted

If you want to continue to hold these politicians accountable and make sure the elites continue to hear the voice of the people, donate @
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You’re Likely to Be a Lot Poorer Than You Were a Few Years Ago—And It’s All By Design

The typical American is even poorer than his or her equivalent in Greece. The median Australian is four times wealthier. The Canadians are twice as wealthy. The U.S. continues to lead the world in billionaires (571 in 2014, with China a distant second at 190). But after decades of financial deregulation and attacks on employee rights, Americans rank 26th in median wealth (defined as assets owned, minus debts owed for the person on the middle rung of the wealth ladder).
All by Design
During the Cold War, our working class was the envy of the world. We argued that our free-enterprise system, not communism, created the best conditions for a rising standard of living for all. Indeed, there was much to boast about. Real wages were increasing year after year. American workers were free to go on strike and did. Most importantly, the children of working people could climb the economic ladder—upward mobility was real.
Today, by almost every measure, none of this is true. Not only do we rank 26th in median wealth, we also are the most anti-employee country in the developed world. Actually, the two go together, because rising inequality results from our pro-Wall Street and anti-worker policies.
The Organization for Economic Cooperation and Development (OECD) ranks 43 nations by the degree of employee protection provided by government. The 21 indicators used include such items as laws and regulations governing unfair dismissals, notifications and protections during mass layoffs, the use and abuse of temporary workers, and the provision of severance based on seniority. Countries are ranked on a scale of 0 to 6 with 6 going to those who provide the most legal protections for employees and zero for those with the least. As the chart below reveals, we’re second to last, meaning that we have among the fewest regulations to protect employees—union, non-union, management, full-time and temporary workers alike.
Read more

Hard Times in a Boom Town: Pennsylvanians Describe Costs of Fracking

Sharon Kelly, DeSmogBlog
Waking Times
If you’re looking for the shale gas boom, northeastern Pennsylvania is the place to start.
The Marcellus is the largest and fastest growing shale gas play in the U.S. and more than half of its 50 most productive wells were drilled in Susquehanna County in the northeast. Susquehanna and neighboring Bradford County produced 41 percent of all Marcellus gasthis June.
While drilling is down in other shale gas plays across the US, with major oil companies selling off their stakes and CEO‘s expressing regret for buying in, the Marcellus has bucked some of the downward trends so far.
A recent report from the Post Carbon Institute, “Drilling Deeper: A Reality Check on U.S. Government Forecasts for a Lasting Tight Oil and Shale Gas Boom,” has grave warnings about the Energy Information Administration’s figures nationwide, concluding that two-fifths of the shale gas the agency expects to be produced between now and 2040 will likely never materialize. While many high-profile shale gas plays have already peaked in terms of gas production per well, the Marcellus appears to be an outlier in terms of productivity, researcher David Hughes concludes.
Enormous amounts of shale gas are being produced in Pennsylvania. In the first six months of this year, drillers here pumped 2 trillion cubic feet of gas. And much of this gas came from the Marcellus shale’s twin sweet spots, in the Northeast and Southwest corners of the state.
In the whirlwind of activity, some locals in here struck it rich – those who owned large tracts of land and negotiated their deals at exactly the right moment. Driving through the county, it seems like every back road has a red-and-white permit sign marking a shale gas well, a water impoundment, or other Marcellus-related infrastructure.
New drilling sites are a common sight in northeast Pennsylvania’s Marcellus shale region.  © 2014 Laura Evangelisto
Expectations ran high when the boom first began. In 2010, 60 Minutes introduced a new word to the national media – “shale-ionaires,” or landowners who made millions simply by leasing their land for drilling.
“Once a well is built and producing, royalty checks start popping up in the mailbox,” explained 60 Minutes anchor Leslye Stahl. “It can last years and add up to many more millions.”
But even in the most productive shale play in the country, these early hopes have often been dashed, with some landowners reporting that leasing has already wound up costing them money.
In Litchfield Township, Glenn Aikens, a member of the Bradford County Planning Commission, also has three shale gas wells on his land. Signing a lease brought a host of unexpected costs, Aikens says : $22,000 to set up an L.L.C. to make sure that his children could inherit the farm’s suddenly valuable acreage in spite of estate taxes, pre-drilling water testing for the farm’s seven wells (“He charged me $14,500 dollars, but I wouldn’t have had a leg to stand on had I not,” says Aikens. “If they ruin the water, what do I do with this farm?”), and perhaps most painfully, the permanent loss of a valuable tax credit for farmland, now that the leased land is considered commercial property instead. Land that was assessed at $500 an acre was now assessed at $2,500 – and taxes were due retroactively.
Litchfield Township’s Glenn Aikens was paid $0.10 in royalties by a division of Chesapeake Energy, after the company deducted costs from his royalty check.  © 2014 Laura Evangelisto
Aikens pulls a tattered photocopy of a ten cent check from his wallet, emblazoned with the logo of a division of Chesapeake Energy. It’s the royalty check for the gas produced on his 359 acre farm, after post-production expenses were deducted from the check. Under state law, property owners are supposed to be guaranteed a minimum of 12.5 percent of the value of the gas produced on their land, but a 2010 state Supreme Court ruling opened up a loophole. Gas companies started deducting a broad variety of costs – at times retroactively.
“I signed a contract and I’ll live by it, but I want my 12.5 percent,” said Aikens. “It’s been an ongoing battle with them and not getting paid.”
Even without post-production deductions, many landowners have found that oil wealth falls far short of the millions they first hoped. Property owners in the U.S.get an average of less than $500 a month from oil and gas wells that have been drilled on their property, David Sikes, a past president of the National Association of Royalty Owners, told the Wall Street Journal.
For Aikens, the calculations are unforgiving.
“It really wasn’t worth it,” Aikens says about his own lease.
The boom has brought other hidden costs, not only environmental but also economic for Northeastern Pennsylvania’s counties and their residents.
“Most people are still poor, most people are still struggling,” explained Vera Scroggins, an opponent of fracking from Susquehanna County, adding that even large landowners “complain to me privately, ‘people think we’re millionaires, but we’re not.”

© 2014 Laura Evangelisto
Driving down the streets of Montrose, PA (popualtion 1,500), Scroggins points out what’s changed (a new hotel, the warehouse for an oilfield services company) and what hasn’t – the empty store fronts, the “for rent” and “for sale” signs.