Saturday, February 16, 2013

Currency Wars Often Lead to Trade Wars … Which In Turn Can Devolve Into Hot Wars

d Currency Wars Often Lead to Trade Wars ... Which In Turn Can Devolve Into Hot Wars

Currency War → Trade War → Hot War?

According to numerous high-level insiders, the global currency war is accelerating:
And Japan’s escalation of the currency war has caused leaders in the Eurozone (more), Norway, Sweden, South Korea, Taiwan, Columbia, Mexico, Peru, Chile, Venezuela and many other regions to devalue or consider further devaluing their currencies. China may be joining as well.  (And James Rickard and Reggie Middleton think that Germany’s demand for its gold is part of the currency war.)
We’ve been in a global currency war for years.
As the Wall Street Journal asked in 2010:
Beggar-thy-neighbor currency devaluations proved ruinous for the global economy in the 1930s. Is the world setting off down the same slippery slope again?
Yes, we are.
Despite drivel from ignorant sources, currency wars don’t help the average person.
Quantitative easing – the main lever to depreciate currency – hurts the little guy and only helps the super-elite.
Former Secretary of Labor Robert Reich points out that a weak dollar makes everyone poorer … and any new jobs created by a a policy of devaluation are low-wage jobs.
Economist Mark Thoma noted in 2010:
While the positive effects a currency war produced in the 1930s [many disagree] are unlikely to reappear, there is a chance of large negative effects such as a simultaneous trade war or the breakdown of the international monetary system, so let’s hope a currency war can be avoided.
Philadelphia Federal Reserve Bank president Charles Plosser notes that currency wars would only hurt world trade and the economies that were involved.
The IMF noted in 2010 that currency wars “would represent a very serious risk to the global recovery”.
Even Paul Krugman is not that keen on currency wars.

Trade Wars

It is widely accepted that currency wars can lead to trade wars. As Time notes:
A competitive devaluation game can turn into a trade war, whereby losing countries start slapping tariffs on imports and exports to punish countries deemed to be “manipulating” their currencies. Trade wars, of course, make stuff more expensive for everyone, and that’s just about the last thing global consumers – increasingly squeezed by rising unemployment and inflation – need.
Nouriel Roubini agrees.
Indeed, there are signs that currency war induced trade wars are already starting.  And see this.

Hot Wars

Brazilian president-elect Rousseff said in 2010:
The last time there was a series of competitive devaluations … it ended in world war two.
Billionaire investor Jim Rogers says:
Trade wars always lead to wars.
Top trend forecaster Gerald Celente has said for years that currency wars turn into trade wars … which in turn lead to hot wars.
Jim Rickards agrees:
Currency wars lead to trade wars, which often lead to hot wars. In 2009, Rickards participated in the Pentagon’s first-ever “financial” war games. While expressing confidence in America’s ability to defeat any other nation-state in battle, Rickards says the U.S. could get dragged into “asymmetric warfare,” if currency wars lead to rising inflation and global economic uncertainty.
Indeed, trade wars have been leading to hot wars for thousands of years.  For example, the war between Rome and Carthage – leading to elephants in the mountains surrounding Rome – essentially started as a trade war.
Indeed, with top economic forecasters predicting war, the American policy of using the military to contain China’s growing economic influence, and the U.S. considering economic rivalry to be a basis for war, the global currency and trade wars are creating a tinderbox.

Dollar Sibor May Be Discontinued Amid Global Rate-Rigging Probe

Singapore’s central bank and a group of lenders are in talks to put an end to the city-state’s U.S. dollar-linked interbank lending rate as regulators worldwide probe allegations of rigged benchmark borrowing costs, a person with knowledge of the matter said.
Members of the Singapore Foreign Exchange Market Committee examined the proposal in a Jan. 22 meeting, during a discussion of the Monetary Authority of Singapore’s review of benchmark rates, said the person, who asked not to be identified as the discussions are confidential. The group may instead use the U.S. dollar London interbank offered rate, the person said.

The banks are reviewing the process for setting the Singapore interbank offered rates amid a probe into the manipulation of key interest rates spanning markets from the U.S. and U.K. to Hong Kong and Japan. Barclays Plc, UBS AG and Royal Bank of Scotland Group Plc have been penalized $2.6 billion for rigging the U.K.’s Libor, and the scandal is now set to engulf interdealer brokers such as ICAP Plc.
Singapore’s central bank will probably announce changes to the benchmark rates and the process for setting them by the end of June, the person said. The Monetary Authority of Singapore doesn’t comment on its internal operations, a spokesperson for the regulator said yesterday.

Homeowners’ Mortgages

Sibor, used to price debt ranging from commercial term- loans to homeowners’ mortgages, is calculated on behalf of the Association of Banks in Singapore. Each day, the 12 contributing banks are asked how much it would cost to borrow Singapore dollars from each other for different periods from one month to 12 months. The three highest and lowest quotes are excluded, and the six in the middle of the range are averaged and published at 11:30 a.m. in Singapore.
The process of setting the benchmark rates is still under review, Ong-Ang Ai Boon, a director at the Association of Banks in Singapore, said yesterday. She declined to comment further.
In July, the Monetary Authority of Singapore said it’s looking into how banks set key interest rates, mirroring reviews under way in financial centers from Sweden to South Korea.
The city-state’s regulator is working with the group of banks and the currency traders’ committee to review how Sibor can be strengthened, and has also directed the banks to independently review their internal submission processes, Lawrence Wong, a senior minister of state who sits on the monetary authority’s board, said in Singapore’s parliament on Sept. 10.

Currency Speculation

On Sept. 24, the central bank said it asked the banks to extend their review to include non-deliverable forwards, a derivative traders use to speculate on the movement of currencies that are subject to domestic foreign exchange restrictions. UBS, based in Zurich, and RBS suspended at least three traders in Singapore as part of probes into the manipulation of those rates, two people with knowledge of the matter said in October.
The U.S. dollar Sibor rate was set yesterday at 0.15667 percent for overnight loans, and at 0.295 percent for a three- month tenure, according to ABS data compiled by Bloomberg. That compares with rates of 0.155 percent for overnight loans and 0.2901 percent for three-month loans in U.S. dollars that banks in London say they pay, figures from the British Bankers’ Association show.
The Singapore Foreign Exchange Market Committee will meet again next month, the person said. The group, which aims to set industry standards and a code of conduct for currency traders, has 20 members including the Monetary Authority of Singapore and the nation’s sovereign wealth fund, as well as banks including JPMorgan Chase & Co., UBS and RBS, according to its website.

Libor Fines

Lenny Feder, group head of financial markets at London- based Standard Chartered Plc, who chairs the SFEMC, declined to answer any questions when contacted on his mobile phone yesterday. Standard Chartered hosted the meeting last month at its Singapore offices, according to the person.
RBS, Britain’s biggest publicly owned lender, was fined $612 million by regulators in the U.K. and the U.S. last week for rigging the London interbank offered rate and similar benchmarks. The Edinburgh-based lender said it would recoup the U.S. portion of the penalty by shrinking its bankers’ bonus pool and clawing back awards from previous years.
More than a dozen traders made hundreds of attempts to manipulate yen and Swiss franc Libor between mid-2006 and 2010 to benefit their trading positions, sometimes colluding with other firms, the U.S. Commodity Futures Trading Commission said.
The attempts to manipulate Libor -- which are at the heart of the biggest and longest-running scandal in banking history -- flourished for years, even after bank supervisors were made aware of the system’s flaws.
The British Bankers’ Association, the lobby group that oversees Libor, is cutting currencies and maturities included in the benchmark where there is insufficient trading data to estimate borrowing costs accurately. The BBA will stop quoting rates in Australian and New Zealand dollars as well as the Canadian dollar, Danish kroner and Swedish kronor rates by June. The group will stop publishing interim maturities, such as the two-week, four-month, and eight-month tenors for all currencies at the end of May.

Facebook Gets a Multibillion-Dollar Tax Break

Facebook Founder and Chief Executive Officer Mark Zuckerberg addresses the TechCrunch Conference
Photograph by C Flanigan/WireImage
Facebook Founder and Chief Executive Officer Mark Zuckerberg addresses the TechCrunch Conference

It hasn’t drawn much attention, but Facebook’s first annual earnings report contains an accounting gem: a multibillion-dollar tax deduction for the cost of executive stock options and share awards.
Even though Facebook (FB) reported $1.1 billion in pre-tax profits from U.S. operations in 2012, it will probably pay zero federal and state taxes—and even receive a federal tax refund of about $429 million—according to a Feb. 14 statement from Citizens for Tax Justice.
The tax-research and -lobbying organization says companies such as Facebook should treat stock options the same in their reports to shareholders as they do in their tax filings. Citizens for Tax Justice calls the tax footnotes in Facebook’s Jan. 30 financial statement “an amazing admission,” but there’s nothing illegal about the breaks the company is claiming. Companies like Facebook are allowed to treat the cost of non-cash compensation, such as stock options, as an expense that reduces profits, essentially the way they treat cash compensation such as salaries.
The difference is that Facebook—unlike, say, General Motors (GM)—relies heavily on stock options and restricted stock units as a form of compensation. It paid out a lot during its years as a private company that it must now recognize on its income statement and balance sheet.
You won’t find any $429 million tax refund in Facebook’s financial statements. Indeed, the company says it had a $559 million federal tax liability in 2012. But that liability isn’t an actual payment. In a footnote, the company also said that it had a $1.03 billion “excess tax benefit” last year related to “stock option exercises and other equity awards.” That benefit is what flips the federal tax liability into a refund. (A small portion is applied against state taxes.)
Facebook says that it anticipates reducing its tax liability in the future by an additional $2.17 billion by using further net operating loss carry-forwards that it has banked.
Facebook spokeswoman Ashley Zandy declined to discuss the tax break but pointed to the transcript of Facebook executives’ conference call with analysts. On the call, Chief Financial Officer David Ebersman cited the accumulated tax benefits and noted that the company ended the fiscal year with nearly $10 billion in cash and investments, “giving us great flexibility and risk protection.”

SEC sues over Heinz option trading before buyout

(Reuters) - U.S. securities regulators filed suit on Friday against unknown traders in the options of ketchup maker H.J. Heinz Co, alleging they traded on inside information before the company announced a deal to be acquired for $23 billion by Warren Buffett's Berkshire Hathaway Inc and Brazil's 3G Capital.
The suit, in federal court in Manhattan, cites "highly suspicious trading" in Heinz call options just prior to the February 14 announcement of the deal. The regulator has frequently in past filed suit against unnamed individuals where it has evidence of wrongdoing, but is still trying to uncover the identities of those involved.
That trading, the suit said, caused the price of the particular call option they bought to soar 1,700 percent and generated unrealized profits of more than $1.7 million.
The regulator claims the traders are either in, or trading through accounts in, Zurich, Switzerland. The account had no history of trading in Heinz over the last six or so months.
It has also obtained an emergency order to freeze assets in the Swiss account linked to the trading. In the suit, the SEC refers to the account as the "GS Account" and in a statement Goldman Sachs Group Inc said it was cooperating with the regulator's investigation.
"Irregular and highly suspicious options trading immediately in front of a merger or acquisition announcement is a serious red flag that traders may be improperly acting on confidential nonpublic information," Daniel Hawke, chief of the SEC's Division of Enforcement's Market Abuse Unit said in a statement.
Representatives of Heinz and Berkshire Hathaway were unavailable for immediate comment. A 3G representative declined to comment. The founder of 3G, Jorge Paulo Lemann, is from Brazil, but has made a home in Switzerland since the 1990s. He has not been implicated in any wrongdoing related to the deal.
After the deal was revealed on Thursday, options market experts called Wednesday's trading "suspicious and incredibly well-timed." [ID:nL1N0BEBMR]
The suit marks the second time in less than six months that the SEC has taken action over a 3G acquisition. In September 2012, the regulator got a court order to freeze the assets of a Wells Fargo & Co stockbroker who allegedly traded on inside information about 3G's 2010 acquisition of Burger King.
In that case, the SEC said the stockbroker got the information from a client who had invested in one of 3G's funds.
The suit also marks the second time in two years that controversy has erupted over a Berkshire acquisition target.
In March 2011, Berkshire struck a deal to buy chemical company Lubrizol for $9 billion. Less than three weeks later, Berkshire said Buffett lieutenant David Sokol was resigning and disclosed he had been buying Lubrizol shares while pushing Buffett to acquire the company. The SEC dropped a probe into Sokol's trading earlier this year.
The suit is Securities and Exchange Commission v. Certain Unknown Traders in the Securities of H.J. Heinz Co, U.S. District Court, Southern District of New York, No. 13-1080.
(Reporting by Jonathan Stempel and Bernard Vaughan.; Writing by Ben Berkowitz.; Editing by Leslie Adler, David Gregorio Tim Dobbyn and Andre Grenon)

It’s the Interest, Stupid! Why Bankers Rule the World

In the 2012 edition of Occupy Money released last week, Professor Margrit Kennedy writes that a stunning 35% to 40% of everything we buy goes to interest. This interest goes to bankers, financiers, and bondholders, who take a 35% to 40% cut of our GDP. That helps explain how wealth is systematically transferred from Main Street to Wall Street. The rich get progressively richer at the expense of the poor, not just because of “Wall Street greed” but because of the inexorable mathematics of our private banking system.
This hidden tribute to the banks will come as a surprise to most people, who think that if they pay their credit card bills on time and don’t take out loans, they aren’t paying interest. This, says Dr. Kennedy, is not true. Tradesmen, suppliers, wholesalers and retailers all along the chain of production rely on credit to pay their bills. They must pay for labor and materials before they have a product to sell and before the end buyer pays for the product 90 days later. Each supplier in the chain adds interest to its production costs, which are passed on to the ultimate consumer. Dr. Kennedy cites interest charges ranging from 12% for garbage collection, to 38% for drinking water to, 77% for rent in public housing in her native Germany.
Her figures are drawn from the research of economist Helmut Creutz, writing in German and interpreting Bundesbank publications.  They apply to the expenditures of German households for everyday goods and services in 2006; but similar figures are seen in financial sector profits in the United States, where they composed a whopping 40% of U.S. business profits in 2006.  That was five times the 7% made by the banking sector in 1980.  Bank assets, financial profits, interest, and debt have all been growing exponentially.

Exponential growth in financial sector profits has occurred at the expense of the non-financial sectors, where incomes have at best grown linearly.

By 2010, 1% of the population owned 42% of financial wealth, while 80% of the population owned only 5% percent of financial wealth.  Dr. Kennedy observes that the bottom 80% pay the hidden interest charges that the top 10% collect, making interest a strongly regressive tax that the poor pay to the rich.
Exponential growth is unsustainable. In nature, sustainable growth progresses in a logarithmic curve that grows increasingly more slowly until it levels off (the red line in the first chart above). Exponential growth does the reverse: it begins slowly and increases over time, until the curve shoots up vertically (the chart below). Exponential growth is seen in parasites, cancers . . . and compound interest. When the parasite runs out of its food source, the growth curve suddenly collapses.

People generally assume that if they pay their bills on time, they aren’t paying compound interest; but again, this isn’t true.  Compound interest is baked into the formula for most mortgages, which compose 80% of U.S. loans.  And if credit cards aren’t paid within the one-month grace period, interest charges are compounded daily.
Even if you pay within the grace period, you are paying 2% to 3% for the use of the card, since merchants pass their merchant fees on to the consumer.  Debit cards, which are the equivalent of writing checks, also involve fees.  Visa-MasterCard and the banks at both ends of these interchange transactions charge an average fee of 44 cents per transaction—though the cost to them is about four cents.
How to Recapture the Interest: Own the Bank
The implications of all this are stunning. If we had a financial system that returned the interest collected from the public directly to the public, 35% could be lopped off the price of everything we buy. That means we could buy three items for the current price of two, and that our paychecks could go 50% farther than they go today.
Direct reimbursement to the people is a hard system to work out, but there is a way we could collectively recover the interest paid to banks. We could do it by turning the banks into public utilities and their profits into public assets. Profits would return to the public, either reducing taxes or increasing the availability of public services and infrastructure.
By borrowing from their own publicly-owned banks, governments could eliminate their interest burden altogether.  This has been demonstrated elsewhere with stellar results, including in CanadaAustralia, and Argentina among other countries.
In 2011, the U.S. federal government paid $454 billion in interest on the federal debt—nearly one-third the total $1,100 billion paid in personal income taxes that year.  If the government had been borrowing directly from the Federal Reserve—which has the power to create credit on its books and now rebates its profits directly to the government—personal income taxes could have been cut by a third.
Borrowing from its own central bank interest-free might even allow a government to eliminate its national debt altogether.  In Money and Sustainability: The Missing Link(at page 126), Bernard Lietaer and Christian Asperger, et al., cite the example of France.  The Treasury borrowed interest-free from the nationalized Banque de France from 1946 to 1973.  The law then changed to forbid this practice, requiring the Treasury to borrow instead from the private sector.  The authors include a chart showing what would have happened if the French government had continued to borrow interest-free versus what did happen.  Rather than dropping from 21% to 8.6% of GDP, the debt shot up from 21% to 78% of GDP.
“No ‘spendthrift government’ can be blamed in this case,” write the authors. “Compound interest explains it all!”

More than Just a Federal Solution
It is not just federal governments that could eliminate their interest charges in this way. State and local governments could do it too.
Consider California.  At the end of 2010, it had general obligation and revenue bond debt of $158 billion.  Of this, $70 billion, or 44%, was owed for interest.  If the state had incurred that debt to its own bank—which then returned the profits to the state—California could be $70 billion richer today.  Instead of slashing services, selling off public assets, and laying off employees, it could be adding services and repairing its decaying infrastructure.
The only U.S. state to own its own depository bank today is North Dakota.  North Dakota is also the only state to have escaped the 2008 banking crisis, sporting a sizable budget surplus every year since then.  It has the lowest unemployment rate in the country, the lowest foreclosure rate, and the lowest default rate on credit card debt.
Globally, 40% of banks are publicly owned, and they are concentrated in countries that also escaped the 2008 banking crisis.  These are the BRIC countries—Brazil, Russia, India, and China—which are home to 40% of the global population.  The BRICs grew economically by 92% in the last decade, while Western economies were floundering.
Cities and counties could also set up their own banks; but in the U.S., this model has yet to be developed. In North Dakota, meanwhile, the Bank of North Dakota underwrites the bond issues of municipal governments, saving them from the vagaries of the “bond vigilantes” and speculators, as well as from the high fees of Wall Street underwriters and the risk of coming out on the wrong side of interest rate swaps required by the underwriters as “insurance.”
One of many cities crushed by this Wall Street “insurance” scheme is Philadelphia, which has lost $500 million on interest swaps alone.  (How the swaps work and their link to the LIBOR scandal was explained in an earlier article here.)  Last week, the Philadelphia City Council held hearings on what to do about these lost revenues.  In an October 30th article titled “Can Public Banks End Wall Street Hegemony?”, Willie Osterweil discussed a solution presented at the hearings in a fiery speech by Mike Krauss, a director of the Public Banking Institute.
Krauss’ solution was to do as Iceland did: just walk away. He proposed “a strategic default until the bank negotiates at better terms.” Osterweil called it “radical,” since the city would lose it favorable credit rating and might have trouble borrowing. But Krauss had a solution to that problem: the city could form its own bank and use it to generate credit for the city from public revenues, just as Wall Street banks generate credit from those revenues now.
A Radical Solution Whose Time Has Come
Public banking may be a radical solution, but it is also an obvious one. This is not rocket science. By developing a public banking system, governments can keep the interest and reinvest it locally. According to Kennedy and Creutz, that means public savings of 35% to 40%. Costs can be reduced across the board; taxes can be cut or services can be increased; and market stability can be created for governments, borrowers and consumers. Banking and credit can become public utilities, feeding the economy rather than feeding off it.

THE START OF 2008 ALL OVER AGAIN? Wal-Mart Says February Sales “Total Disaster”, Worst Monthly Start Since 2006, European Economic Data Disappointing, Two Billion Unemployed or Given Up Job Search Worldwide


Do you remember 2008?  …and what led up to it?  Do you especially remember all of the assurances made that “everything would be OK”?
It smells again like 2008 but this time much MUCH worse.  Consumer debt levels have barely subsided from those back in 2008.  Taxes are higher and now biting which is a definite factor suppressing retail sales.  Gasoline prices are higher and unless you own oil stocks this is surely no benefit.  Derivatives outstanding are higher than they were yet “banks say” they are less leveraged (how can this be?).
NOTHING has changed since 2008.  Many ratios, balance sheets and financial standings are far worse now than entering that year, a crisis now can no longer be jawboned away by “don’t worry, we are the government and won’t let anything bad happen”.  This is the classic reverse “Boy who cried wolf”.  Credibility of the puppet-masters has been stained and lost, nothing could be worse in today’s monetary system.  “Credibility”, trust, CONFIDENCE! was the only thing that held the system together during the dark days of 2008-09, and it’s waning fast.  “Confidence” is also the key factor of “value” behind your currency…no matter where you live or who your central bank is.

Wal-Mart Stock Drops After It Says February Sales “Total Disaster”, Worst Monthly Start Since 2006

Wal-Mart shares are plunging as the firm reports a ‘total disaster’ in its February sales. Bloomberg obtained internal emails that note:
“In case you haven’t seen a sales report these days, February MTD sales are a total disaster,” Jerry Murray, Wal-Mart’s vice president of finance and logistics, said in a Feb. 12 e-mail to other executives, referring to month-to-date sales. “The worst start to a month I have seen in my ~7 years with the company.”

One senior executive summed it up perfectly – “Well, we just had one of those weeks here at Walmart U.S. Where are all the customers? And where’s their money?” The company notes the end of the payroll tax cut by Obama and asks ”We need to stop the stupid.”

Start Your Day With The Usual Disappointing European Economic Data

Europe Woes Deepen as Economies Contract

Worldwide Crisis: Two Billion Unemployed or Given Up Job Search

Tax increases, catering to government employees, and inflation pose serious threats to the goal of growing the private sector.
In reality, private sector development should be at the forefront of the global economic policy agenda. Just look at the numbers for proof of this reality. Worldwide, there are two-billion working-age adults currently unemployed and no longer seeking jobs. Another 1.5 billion are only marginally employed.
Locations and sectors with strong potential for job growth must be honed in on so we can achieve a faster pace of sustainable job creation.

Investors Yanked Billions Out Of US Stocks This Week

January’s historic fund flows may finally be starting to reverse.
This week, flows into equity mutual funds and ETFs around the world continued – but not in the United States.
Funds invested in U.S. stocks suffered $3.65 billion in outflows this week. The table above, via Jefferies, details the flows.

People Are Getting Extremely Optimistic And Ignoring The No. 1 Threat To Stocks. New Payroll Tax Increase Is Crashing US Economy REAL-TIME! Wal-Mart: There’s No Reason To Be Optimistic, Customers Are Working Hard To Adapt To The ‘New Normal!

Why the Market’s Ignoring the No. 1 Threat to Stocks

Investors who fled in fear over potentially massive tax increases associated with the “fiscal cliff” have barely broken a sweat over corresponding spending cuts that are only two weeks away.
The so-called sequestration of $110 billion a year in discretionary spending will happen March 1 if Congress does not come to an agreement.
With little indication that Washington is anywhere near a compromise similar to the one that avoided the full brunt of the fiscal cliff, markets could be expected to be in full panic mode.

Sentiment surveys and fund flows remain strongly bullish, and Citigroup’s Panic/Euphoria model is near euphoria stage, according to Tobias Levkovich, Citi’s chief equity strategist.
“Given potentially bitter fiscal policy battles linked to required tax and spending reforms in March, we expect some volatility in the next couple of months,” Levkovich said in a report. “However, our outlook for 2013 remains attractive given signals from valuation, implied earnings growth and credit conditions to name a few factors.”

NYSE Margin Debt Is Creeping Toward All-Time Highs Right Along With The S&P 500

Should we be worried?
Here’s an interesting bit of correlation (and causation?) for you.  Have a look at the chart I formulated below showing NYSE Margin Debt and the S&P 500.  The two data sets show a correlation over 85%.
Now, this is really interesting in that it melds with our work on  Monetary Realism and monetary theory quite nicely.  Using Werner’s concept of disaggregation of credit we can clearly formulate how credit is being used at various times to benefit from improvement in the stock market.  If you’re not familiar with the concept of disaggregation of credit please see here.  But, in short, it is based on the understanding that our monetary system is almost entirely built around credit and how banks issue credit to perform various functions.  These functions can be both good and bad.

A Scary Reality About Wal-Mart’s Customers Might Be Coming To A Head

Wal-Mart shares are tanking after the company’s executives called February sales a “total disaster.”
“Have you ever had one of those weeks where your best-prepared plans weren’t good enough to accomplish everything you set out to do?” Wal-Mart exec Cameron Geiger wrote in one of the emails reported by Renee Dudley at Bloomberg.
“Well, we just had one of those weeks here at Walmart U.S. Where are all the customers? And where’s their money?” Geiger asked.
Wal-Mart is facing a scary reality: the ailing finances of its core customers, Brian Sozzi, chief equities analyst at NBG Productions, told us.
“Wal-Mart shoppers are the barometer of the U.S. consumer, and these emails reflect common sense about customers,” Sozzi told us. “The consumer isn’t mentally or physically ready to spend on discretionary inventory and there’s no reason to be optimistic.”

“They are middle-class Americans and those aspiring to join the middle class,” Duke said. “Our customers are working hard to adapt to the ‘new normal,’ but their confidence is still very fragile. They are shopping for Christmas now and they don’t need uncertainty over a tax increase.”

WAL-MART Internal Email: ‘February sales total disaster … worst start to month in my 7 years’…
Wal-Mart and discounters such as Family Dollar Stores Inc. are bracing for a rise in the payroll tax to take a bigger bite from the paychecks of shoppers already dealing with elevated unemployment. The world’s largest retailer’s struggles come after executives expected a strong start to February because of the Super Bowl, milder weather and paycheck cycles, according to the minutes of a Feb. 1 officers meeting Bloomberg obtained.
Murray’s comments about February sales follow disappointing results from January, a month that Cameron Geiger, senior vice president of Wal-Mart U.S. Replenishment, said he was relieved to see end, according to a separate internal e-mail obtained by Bloomberg News.

What Happens to a Financial System When Its Two Biggest Pillars Collapse?

…Thus, we find that Europe’s primary political market props (EU leaders including ECB head Mario Draghi) are coming unraveled at the precise time that EU banks are showing warning signs and the most important EU economies are heading sharply south.
2013 is going to be a very interesting year for Europe.
So if you have not already taken steps to prepare for systemic failure, you NEED to do so NOW. We’re literally at most a few months, and very likely just a few weeks from Europe’s banks imploding, potentially taking down the financial system with them. Think I’m joking? The Fed is pumping hundreds of BILLIONS of dollars into EU banks right now trying to stop this from happening….
Spanish Core Inflation Up Even as Recession Deepens

El-Erian On Stocks: “Prices Are Artificially High – It’s Time to Take Profits”

El-Erian puts himself in the second camp.
We think that prices are artificially high, that maintaining them here is going to be hard as central banks become less effective, and that it’s time to book some profits and to wait for some better entry points,” he explains.
He clarifies that this is not a “Lehman moment.” But “prices that have gotten way ahead of what policy can deliver,”

Click image for full clip:

Felix Zulauf – We Have Never Seen Anything Like This In History

KWN: Here is what Zulauf had to say: “I think the world economy is still having difficulties. Some leading indicators are picking up a little bit, and the world is getting very optimistic that we have passed the crisis, we have solved the problem, and sentiment is very optimistic. Actually it is as optimistic in the stock market as it was in 2007.
We have entered a very dangerous territory, and I think the world economy will not deliver what people expect. You just saw the numbers coming out about the eurozone GDP in the fourth quarter, it was quite a bit weaker than expected and still in negative territory….

Excellent interview with G. Edward Griffin the author of Creature from Jekyll Island regarding inflation & The FED ! video!

Greek Youth Unemployment Tops 60%

Optimism it seems is all that matters (or is all that is allowed) as we are battered by dismal data left, right, and center. Of course, a reflection on the markets tells any 'smart' person that it all must get better - or why would stocks or sovereigns, or EURUSD be where it is? However, the 6 out of 10 15-24 year olds in Greece (61.7% to be exact) would beg to differ with that view of the world (as their economy grinds to a halt) - and with Spain reaching new highs at 55.6% (as well as the Euro-zone over 24%), all the bureaucratic lip-service in the world won't stop the revolt that is coming we fear.

National Debt Headed To 200% Of GDP -- Even AFTER Fiscal Cliff Deal!

The Global Endgame: The Dollar’s Days As The Preeminent Currency Are Coming To An End And Escalating Currency Wars Are Throwing The World Into Chaos And Retaliation

Dick Bove: US Dollar Will Be ‘Overthrown’ as World’s Reserve Currency

There’s plenty of evidence supporting the belief that the dollar’s days as the preeminent currency are coming to an end, a development that would be catastrophic for the world’s largest economy.
“Generally speaking, it is not believed by the vast majority that the American dollar will be overthrown,” Dick Bove, vice president of equity research at Rafferty Capital Markets, said in a note obtained by CNBC. “But it will be, and this defrocking may occur in as short a period as five to 10 years.”
The greenback is declining as a percentage of the world’s currency supply. Compared with its peers, it has dropped to a 15-year low, as nations show a willingness to use other currencies to conduct business, according to the International Monetary Fund.

Currency War Fears Threaten Fragile Global Economic Recovery as G-20 Meets

The world economy faces a new threat. Instead of a banking collapse or too much debt, fears are growing that countries are using their currencies as an economic weapon.
History suggests that’s never a good thing.
If too many countries try to weaken their currencies for economic gain — sparking a so-called “currency war” — then the fragile global economic recovery could be derailed and the international financial system thrown into chaos.
Financial representatives from the world’s leading 20 industrial and developing nations are gathering in Moscow for a meeting this weekend that looks set to be dominated by these concerns and they will have their work cut out to douse the fires.
Why is everyone suddenly talking about currencies?
• During the financial crisis of the past few years, the value of currencies wasn’t a high priority — governments and central banks around the world co-operated to fix the global economy. But, five years down the line, a full recovery is still a long way off.
To encourage their consumers and businesses to keep spending, central banks in the U.S., Europe and beyond have made it a priority to keep interest rates extremely low. One way of doing this it to use their power to print money to buy up large quantities of bonds. Boosting the amount of currency in circulation also has a knock-on effect: it can drive down the value of that currency.

WSJ: Bernanke Abdicates World Leadership Role on Currencies

Central banks around the world are meddling with their currencies through massive easing, none more so than Federal Reserve Chairman Ben Bernanke, according to a Wall Street Journal editorial.
“The Fed is supposed to be the steward of the dollar, which is still the world’s reserve currency,” Journal editors write. “But since the crisis Mr. Bernanke has all but declared that the rest of the world can take care of itself.”
Central banks around the world have had to respond to the Fed’s easing program with easing of their own “to keep their currencies from rising too fast,” the editorial states. “Mr. Bernanke is the band leader in this round of monetary nationalism.

Meanwhile, editors of The New York Times argue against government manipulation of currencies in an editorial of their own.
“Such misguided thinking can lead only to chaos and retaliation,” The Times editorial reads. “If all countries were to competitively devalue their currencies, the result would be a downward spiral that would benefit no one, but could lead to high inflation.”

The “Cycle of Deflation.”: The Currency Wars Will Only Get Worse 

We’ve received numerous feedbacks from our weekly comments regarding the fact that we used the “Cycle of Deflation” (attached) numerous times over the past few years and warned about potential “competitive devaluations”, and “beggar-thy-neighbor” policies that are all symptoms of the deflation we expect to take place very soon.  Most of the feedback received gave us credit for bringing up these terms years ago, when they never heard of them before.  Now they are being used in the financial media every day.  Actually, we believe that we are in the “competitive devaluation” stage presently as country after country is printing money in order to lower rates and doing whatever possible to devalue their currency in order to export their goods and services.  Remember, deflation is a product of too much debt in the U.S. and we either default on the debt or pay it off.  When we get to the dashed line in the “Cycle of Deflation” chart, right after “protectionism and tariffs,” is when the deflation sets in and economic pain becomes unbearable. 

Central Banks Bought More Gold In February — Here Are The 10 Biggest Reserves

Guess where the U.S. ranks.
Total gold demand in dollar terms increased in 2012, but declined in tonnage.  This is according to the World Gold Council.

The world’s central banks were among the biggest customers, buying 534.6 metric tons of gold last year.
And the buying has continued into this year.
The World Gold Council reports that worldwide official gold holdings increased to 31,597 tons in February, up from 31,575.1 tons a month ago.

Currency Wars nearing a full Blown Breakout

The world can expect a full Blown breakout of the so-called Currency Wars soon enough. Japanese currency – the Yen & the nations monetary policy have become the focus of the global Currency tensions ahead of a meeting of G20 finance ministers and central bankers later this week in Moscow. The statements out of the G7 meet (Finance ministers and central bank governors of the US, Japan, UK, France, Germany, Italy and Canada) were aimed at cooling the Currency Wars tensions; it instead triggered fresh concerns on the same. It seems that a misinterpretation of a statement intended to discourage Currency Wars, undid the entire upside spike seen a day before. A joint statement by the world’s richest nations roiled the markets after an attempt to soothe global Currency tensions backfired today at the G7 summit. Currency markets roiled amid conflicting messages on how much of an economic threat is posed by the weakening yen….

An over-indebted, overcapacity economy cannot generate real expansion. It can only generate speculative asset bubbles that will implode, destroying the latest round of phantom collateral.
by Charles Hugh Smith, Of Two Minds:
I have endeavored to lay out the global endgame in four recent entries:
For those seeking a summary, here is the global endgame in fourteen points:
1. In the initial “boost phase” of credit expansion, credit-based capital ( i.e. debt-money) pours into expanding production and increasing productivity
2. As credit continues to expand, competitors can easily borrow the capital needed to push into every profitable sector.
The net result: an over-indebted, overcapacity economy cannot generate real expansion. It can only generate speculative asset bubbles that will implode, destroying the latest round of phantom collateral.

Central Banks Buy The Most Gold Since 1964

The Bernank has been busy.
"Central banks' move from net sellers of gold, to net buyers that we have seen in recent years, has continued apace.  The official central bank purchases across the world are now at their highest level for almost half a century."
Central Banks Last Year Bought The Most Gold Since 1964
FRANKFURT (MarketWatch) -- The world's central banks last year bought 534.6 tons of gold in 2012, the most since 1964, as global gold demand hit a record value level, the World Gold Council said Thursday in a quarterly report.  Purchases by central banks for the full year rose 17% compared with 2011, while fourth-quarter purchases of 145 tons marked a 29% rise from the same period a year earlier.
"Central banks' move from net sellers of gold to net buyers that we have seen in recent years has continued apace," with official sector purchases across the world now at their highest level for almost half a century, said Marcus Grubb, managing director for investment at the World Gold Council.  In value terms, total gold demand in 2012 was $236.4 billion, an all-time high, the council said.
Read the full press release from the World Gold Council...
World Gold Council 2012 Report:

Gold demand hits record value level.
$236 billion, and change.
Report was released yesterday.  Director Marcus Grubb discusses the findings for Q4 and fulll year 2012.  In value terms, global gold demand in 2012 was $236.4 billionn -- an all-time high.  Gold demand in value terms for the final quarter of the year was 6% higher year-on-year at $66.2 billion, marking the highest ever Q4 total.
Read the full press release from the World Gold Council...

Related stories:
Revealed: Why Gordon Brown sold Britain's gold at less than $300 per ounce
One globally significant US bank in particular is understood to have been heavily short on two tonnes of gold, enough to call into question its solvency if redemption occurred at the prevailing price.
Goldman Sachs, which is not understood to have been significantly short on gold itself, is rumoured to have approached the Treasury to explain the situation through its then head of commodities Gavyn Davies, later chairman of the BBC and married to Sue Nye who ran Brown’s private office.
Faced with the prospect of a global collapse in the banking system, the Chancellor took the decision to bail out the banks by dumping Britain’s gold, forcing the price down and allowing the banks to buy back gold at a profit, thus meeting their borrowing obligations.

Russia Bought More Gold Than China - When Prices Were Much Lower
Not only has Vladimir Putin made Russia the world’s largest oil producer, he’s also made it the biggest gold buyer.  His central bank has added 570 metric tons of the metal in the past decade, a quarter more than runner-up China, according to IMF data compiled by Bloomberg.  The added gold is also almost triple the weight of the Statue of Liberty.
"The more gold a country has, the more sovereignty it will have if there’s a cataclysm with the dollar, the euro, the pound or any other reserve currency," Evgeny Fedorov, a lawmaker for Putin’s United Russia party.

PAINT IT BLACK: FBI Gives 'Redacted Middle Finger' On Tracking Citizens

Must watch.
FBI goes silent on warrantless tracking of U.S. citizens, responds to transparency request with blacked-out page.
Americans are being kept in the dark about how and why they are being followed by the nation's security agency.  A civil liberties group in the U.S asked the FBI to spell out what techniques it's using when it tracks citizens - but as Gayane Chichakyan explains, the reply raised more questions than answers.
Warrant?  We don't need no stinkin' warrant...

COMEDY GOLD: Mark To Market With Alan Grayson

'Let's change the length of inches so I'm shorter!'
Brilliant stuff from Grayson.  We had never seen this clip until this morning.  Fair value, mark to market, FAS 157 nonsense exposed.  Robert Herz of FASB admits to widespread insolvency in the banking sector, and tells a classic story.
The witnesses for this hearing were:
Mr. James Kroeker, Acting Chief Accountant, SEC
Mr. Robert Herz, Chairman, Financial Accounting Standards Board
Mr. Kevin Bailey, Office of the Comptroller of the Currency

High taxes force more Americans to renounce their citizenship

US Passport
US Passport
Angry about the latest tax hikes? Each year, thousands of Americans pack their suitcases, rip up their US passports and move permanently overseas to prevent Uncle Sam from taking their money.
In the first three quarters of 2012, more than 1,100 Americans renounced their citizenship and made their homes elsewhere, according to the Federal Register. Available data does not yet include those who left in the fourth quarter, but it is on track to surpass the 1,781 Americans who relinquished their passports in 2011. And the number of Americans who ditched the US in 2011 was seven times higher than those who left in 2008.
With 6 million US citizens living abroad and continuing to pay US taxes, expatriates increasingly abandon their citizenship for the sake of saving cash. The US is the only industrialized country that requires its overseas citizens to pay income taxes – even if their income is generated abroad.
And for wealthy expatriates, the financial consequences of remaining a US citizen are most severe. Individuals earning more than $400,000 a year and married couples earning more than $450,000 a year will be paying an income tax rate of 39.6 percent – which is up from last year’s rate of 35 percent.
Those who earn more than $1 million annually will pay Uncle Sam about $170,341 more this fiscal year, according to the Tax Policy Center. Those who fear losing their savings frequently move to countries that do not tax their incomes.
One third of all billionaires that moved from the US to another country chose to go to ‘tax havens’ such as Switzerland, Bahamas, and Singapore, according to a 2012 study by the Research Institute of Industrial Economics.
While those who forego their citizenship will lose protection from the US government and could face difficulty in visiting the US, expatriates increasingly consider it worth it – including high-profile celebrities like 73-year-old American-born singerTina Turnerand Facebook co-founder Eduardo Saverin.
Turner, who is worth an estimated $200 million, in January became a Swiss citizen and ditched her US citizenship. Saverin, whose net worth is an estimated $2.2 billion, holds Brazilian citizenship and lives in Singapore. Bloomberg estimates that the Facebook co-founder saved at least $67 million in federal income taxes by cutting his ties to the US.
But while the rich and famous make headlines for escaping the IRS’ grip on their finances,allAmerican expatriates are subject to US taxes and are required by law to file estimated taxes and income, estate and gift tax returns. Some lawmakers are even trying to subject Americans to taxes even after giving up their citizenship. Sens. Charles Schumer and Bob Casey last yearsuggestedthat Congress vote for a law that would force former US citizens to pay taxes for years after renouncing their citizenship – as well as ban them from ever returning to the US.
But in the short-term, ditching the US comes with its own financial penalties: Americans renouncing citizenship are required to pay an often-hefty exit fee. Those whose net worth is more than $2 million or whose annual income tax average is more than $145,000 are required to pay a 15 percent tax on capital gains above $641,000 and taxes on other assets including retirement accounts at the income rate of 39.6 percent.
As the only country to tax its citizens abroad, the US is pushing thousands of its citizens away.
“If you don’t mind where you live and the tax becomes excessive, then leaving might be a good choice,” Nigel Green, CEO of deVere Group, told Yahoo! Finance. “Countries have less of a hold on people. Governments have to raise more taxes, but they can’t go too far.”

600 children living in Washington, DC homeless shelter

Washington, DC, offers one of the starkest portraits of the social crisis in America. At the District’s former General Hospital, a shelter for homeless families houses 372 adults and some 600 children in tiny living quarters. Families sleep with their scant belongings in areas barely bigger than office cubicles.
The city’s homeless crisis has exploded since the onset of the recession. Lack of work and unaffordable rent have pushed the number of families living in the streets up by 74 percent in the past five years. Last year alone, the number of homeless families rose 18 percent.
Advocates estimate that as many as 1,014 families in the city are now homeless, a group that includes at least 1,600 children.
Applicants for rent vouchers face years-long waiting lists and a safety net system that is terminally underfunded, understaffed, and overloaded. “It’s like paperwork on top of paperwork—they have to prove they don’t have a safe place to stay,” Washington Legal Clinic for the Homeless attorney Marta Beresin told the Washington Post in an article published February 11.
At the same time that homeless services are overwhelmed, the city has a budget surplus of $417 million. Democratic mayor Vincent Gray recently announced a $100 million budget for affordable housing, most slated for 10,000 senior and low-income housing units. Even with the funding, however, an analysis by the DC Fiscal Policy Institute found the apartments may be inadequately subsidized to help the poorest residents, especially those who are homeless and jobless.
While poverty deepens in many neighborhoods of the nation’s capital, D.C. has some of the highest rent rates in the country, a state of affairs that is widening along with the income gap. Driving the high housing costs is a tiny segment of the population, many working in government or military services, who have seen their wealth soar. One in seven D.C. residents fall in the top 5 percent of the income distribution, earning more than $191,500 per year. A construction boom catering to this layer has produced penthouses and luxury townhomes costing millions of dollars. Neighborhoods across the city have seen their cost of living soar as a result.
The Washington Post notes that overcrowding in the D.C. General shelter is due in part to a decision by the city to cut back on subsidies to temporarily house homeless families in motels along New York Avenue. This year, about 50 families are being put up in motel rooms, compared to some 200 families last winter. The city spent $3 million on the accommodations last year because of a law mandating that residents must be sheltered in motels when the city’s emergency housing facilities are full and the temperature is below freezing.
That arrangement produced crises for numerous families. Homeless mothers living in the motels were warned by shelter officials that they could be investigated by the child welfare agency for endangerment. Fearing that their children would be taken away from them because of the precarious living arrangements, many mothers left the homeless system altogether. This put families into situations potentially more dangerous, including living out on the streets and moving back in with abusive spouses or relatives.
At the General Hospital shelter, families face the misery of a refugee camp. The Post describes parents struggling to bathe their children in cold showers and feeding them poor-quality microwaveable food. Residents are not allowed to cook or bring food that is not microwaveable. The shelter provides only breakfast and dinner; its $300,000 lunch budget was cut last year.
“Outside a few activity rooms, there is no real place to play,” the Post notes. “For a few weeks last month, the heat went out in some rooms, and there weren’t enough cribs for all the babies.” Legal aids have pointed to the danger posed by the hard hospital floors for infants not confined to a crib, noting that failure to provide safe bedding is a violation of the city’s code. One mother who brought a crib too large to fit in her allotted space was told to “go buy one,” according to the Washington Legal Clinic for the Homeless.
“It’s like rock bottom for me,” said a 21-year-old mother of a 4-year-old. “I’m tired of seeing four walls. It’s like I’m in prison or something.” A 37-year-old mother of five described sharing a room with all of her children. “It’s stressful, it’s really stressful. Some days I literally sit in the room and my kids are asleep and I’m sitting and just watching them, feeling…I just feel displaced. My kids feel displaced.” The children do their homework lying on their beds. “There’s no tables, no desks, no nothing…. I just think about getting out of here.”
For fun, the children run through the empty halls of the hospital, which was closed in 2001. Volunteers with a homeless youth advocacy group visit a couple of times a week to provide activities. There is no playgound.
The Washington Legal Clinic for the Homeless reports that since January 7, D.C. General has been running at its full capacity of 271 family units. The impact of the shelter being full has meant that “Families sleeping in places like parks and cars with children when the temperature is just barely above freezing will have no access to shelter.” Once it is spring, families presently staying in the shelter will be turned out, meaning that “D.C. children will once again go more than half a year without any emergency shelter safety net, leaving them in dangerous settings.”
Many families are split up or rejected apparently because their needs are too great for the shelter to meet. “A woman who was more than eight months pregnant was turned away…and told to return when she delivered the baby,” the Legal Clinic reported. “In multiple cases, the father of the children, the fiancé of the mother or an over-18-year-old child was not allowed to be placed with the family in the shelter.”
The Legal Clinic reported that the General Hospital has had heat outages in many common areas and rooms since Christmas. “One client, who had an infant daughter, reported that she had been requesting a space heater from staff for three weeks to no avail,” the advocacy organization stated. She was not moved to a room with heat until the organization confronted city’s housing department about the problem.
Families have also reported that the building is “infested with mice, bedbugs, and water bugs. Some families also reported being bitten by spiders.”
This humanitarian catastrophe has been met by city officials with indifference and denial. Mayor Gray, questioned by Washington Post reporter Courtland Milloy about the Legal Clinic findings, declared, “I’m over at that shelter all the time, and I don’t think anybody can credibly say that we aren’t doing things to help the homeless.”
“I haven’t seen any bedbugs,” Gray said. “I’m always interacting with those young people over there and, frankly, I’ve never seen any evidence of what that advocacy group is talking about.”

'Household names' among four payday lenders that face being shutdown as watchdog receives complaint

Four payday lenders, including two 'household names', face being shut down after Citizens Advice sent a complaint about the firms to the Office of Fair Trading.
The charity refused to name the lenders but said that it believes they have been ‘causing significant distress’ to customers.
Under new powers from 19 February, the OFT can immediately suspend the consumer credit licence of companies to protect consumers - if it believes businesses are using practices that deceitful, oppressive or unfair.
Crackdown: Citizens Advice has called on the OFT to use new powers to suspend the credit license of four payday lender - two of which are 'household names'.
Crackdown: Citizens Advice has called on the OFT to use new powers to suspend the credit license of four payday lender - two of which are 'household names'.
At present companies can continue to trade as normal while being investigated - a process which can take years to complete.
The charity said that it has handed over a 'dossier of evidence' to the OFT including problems with:
  • firms pushing inflated fees and charges on customers;
  • continuing to take money when debts have been paid off;
  • obstructing customers from making repayments online or over the phone then charging late fees; 
  • harassment by repeated telephone calls, text messages and emails to repay debts;
  • chasing people for debts on loans when the individual didn’t apply for a loan in the first place;
  • aggressive and abusive staff.
Gillian Guy, Citizen’s Advice’s chief executive, urged the OFT to take immediate action and suspend the credit licences of the companies involved.
She said: ‘These firms pose a real risk to people looking to get a short term loan to help tide them over.
‘Our evidence shows these lenders are behaving as a law unto themselves.  Excessive fees and charges are escalating debts and people are worried sick as companies bombard them with texts, emails and phone calls often overstating their debt collection powers.’

The CAB would not name the companies it has referred to the OFT, saying only that two of them were 'household names'.
Wonga is known to be the largest payday lender. The company would not say if it was one of those companies named.  A spokesman said: 'This is only something the CAB or OFT could answer as the correspondence is between them.’
The charity has also reported three debt collection companies to the OFT asking for their licences to be suspended.
A spokesman from the OFT said: ‘The OFT will now be considering this letter but it is not appropriate to discuss its detail any further at present.
‘We would like to highlight that the new power to suspend can only be used in the most serious cases of immediate harm, but we won't hesitate to use it where cases fit that bill. In addition we expect to report within the next few weeks on our on-going review into the payday sector.’
In November the OFT wrote to 240 payday lenders to warn them of on-going bad practices in the sector as part of its review. It is expected to report its findings in less than two weeks’ time. 

So far today 2/15/13 12:20 PM est,3 years worth of mining of Gold has traded (dumped) on the market. Silver 1/2 years of mining (Charts of Silver and Gold today)

So far as of 12:20 PM est 387,250,000 ounces of Silver have traded as a whole.   There are approximately 760 million ounces of silver mined every year (year 2011 - 761 million ounces mined).   
Here is the information and amounts traded to what months in the Silver futures market so far today 2/15/13.  You can see the volume next to what futures month of the contracts (5000 ounces each) have traded dumped.
The chart below is for March 2013 contracts only as of 12:20 Pm est.   The amount of contracts just for next month is:  261,160,000 ounces dumped for the month.  
Here is gold's future trades for so far today:

Each of the volume contracts shown for the future months is 1000 ounces of gold.

All together they show 238102 contracts traded dumped so far, that equates to 238,102,000 million ounces of Gold traded.

There are approximately 2471 tonnes mined of gold a year which equals to 79,442,650 ounces of gold.

That means 3 years worth of gold dumped so far.

Chart for Gold April 2013 future contracts.

They decided to do a major smash today.  Considering there is a major shortage of Silver happening and countries are asking for their Gold back, the big shorts seem to be dumping their contracts.