Saturday, March 30, 2013

ANIMAL HOUSE: How To Defend A Banker

The Bankster Defense.
Don't blame us, blame the system and society as a whole.  Reminiscent of Bank of America CEO Bryan Moynihan preaching to Charlie Rose the other night that his bank does God's work, "helping everyone who needs help."
Friday humor from one of the best of all time.

This is really good:

Comedian Bill Burr On Obama, Guns And The NDAA

Stock Markets Flashing RED Signal, Things Are Deteriorating At An Alarming Rate!

Two numbers even the biggest stock market bulls should be concerned about now

From Kimble Charting Solutions:

Earlier this month I shared that cash levels/negative net worth in brokerage accounts were nearing the lowest levels in history. (see post here)   The last three times levels were this low the market fell in price.
My mentor Sir John Templeton said the four most dangerous words in investing are…”It’s different this time!”
The chart below reflects something “IS DIFFERENT THIS TIME!”

The inset in the above chart reflects that Negative Net worth and margin debt are reaching levels not seen many times in history.  The last couple of times this combo took place the stock market retreated a little bit in 2000 and 2008.
Is anything different this time around? One thing that is different this time around is…if take two extreme emotional market price points, (1987 high and the 2002 lows) and draw a support/resistance line into the future, it happens to come into play where the S&P 500 is RIGHT NOW!
Is the “Averaged PE ratio” any different this time?

The above chart from Doug Short/Bruce Carman  looks at that averaged PE ratio since 1877. As you can see, if this was the only tool you could use… does the market look like a screaming bargain right now?

One trading chart even long-term investors should keep an eye on

From All Star Charts:
One of my most important charts has to be the relative performance chart for consumer staples. I don’t care if you’re a technician or not, this is a big one.
The psychology behind the price action is very simple: Money has to be put to work, one way or another.
Whether that money goes into tech, financials, discretionaries, or chooses to be more defensive into staples is another thing.
If the economy is slowing and things are “bad”, we’re still going to drink soda, smoke cigarettes, brush our teeth and wash our dishes right? That’s not going to change.
So when institutions need to allocate money and prefer to be “defensive”, for whatever reason, the flow into staples picks up relative to other areas of the market (Coca-Cola, Philip Morris, Colgate-Palmolive, etc.).
Here is a daily line chart of S&P Consumer Staples Fund versus the S&P 500 to show the relative performance I’m talking about. I think it’s pretty clear that since the 2008 market crash, when institutions were dumping money into staples on a relative basis, price has been coiling to the point where it’s decision time very soon…

Final Q4 GDP Misses As Personal Consumption Slides Once More – Full Breakdown

Moments ago, as we prepare to put Q1 2013 to a close with a bout of window dressing that will send the S&P to all time highs, we got the final Q4 2012 GDP revision: a number largely meaningless, although it does put closure to the economy in 2012. And as with all economic numbers in the past year, it was not pretty, coming in at 0.37%, below estimates of a 0.5% print, although modestly better than the second Q4 revision when it was 0.14%. The full breakdown by various components is shown below, with the most notable, Personal Consumption Expenditures, showing a gradual and consistent decline over the past three months as it was revised relentlessly lower, dropping from 1.52% in the first revision, to 1.47% in the second, to 1.28% in the final. Offsetting this was a jump in Fixed Investment which rose to 1.69%, the highest since Q3 2011. Supposedly this implies that capital spending is soaring, when in reality companies continue to curb CapEx plans, instead focusing on short term shareholder gains such as buybacks and dividends, which is to be expected in the absence of any actual end-demand.

BIG MISS: Chicago PMI Falls To 52.4, Production Lowest Since September 2009

The March Chicago PMI survey is out.

The headline index fell to 52.4 from 56.8 last month.
Economists were expecting a much slighter moderation to 56.5.
The production sub-component plummeted to 51.8 from 60.2, marking its lowest reading since September 2009.
The new orders sub-component also fell sharply – to 53.0 from 60.2 – the largest monthly drop since May 2011.

MORGAN STANLEY: The Euro Risks Sliding To $ 1
Things Are Speeding Up: Portugal Budget Deficit Widened, Will Need A Second Bail Out! BE CAREFUL OF EURO; BE SHORT RATHER THAN LONG, EL-ERIAN SAYS PIMCO
More EU Bad Economic Data: German Unemployment Worse Than Expected! Portugal’s Budget Deficit Widened; 5.15% SPAIN 10YR! Italian GDP Forecast Revised Lower And Political Deadlock Worsening!
CANADA Sees An Potential Systemic Crisis In 2013; JIM GRANT: Cyprus Fired A Warning Shot Across The Globe; MARC FABER: Not Even Gold Will Be Able To Save You From What Is Coming

TrimTabs’ Biderman: ‘April Could Get Pretty Wild’ for Stocks

According to Biderman, the immediate stock market direction will be down — he believes many portfolio manager will be taking profits this week from a profitable first quarter that ends March 31.
But then stocks will go up again for the first week of April as the aforementioned new quarter and new month buyers emerge, only to be followed by fresh downward momentum again that should continue into the federal tax deadline, he predicted.
“My best guess is that billions of dollars of stock will be sold between now and April 15 to pay taxes,” Biderman said “And when the market has been as strong as this one, up 20 percent since the start of 2012, lots of taxpayers are waiting until the last moment to sell.”
Biderman’s market-timing scenario follows a familiar script – stocks should go back up after April 15, as “billions of tax-oriented investments are deployed by the end of the month.”


Food stamps and the database state…

The latest proposal for ‘food stamps’ has aroused a good deal of anger. It’s a policy that is divisive, depressing and hideous in many ways – Suzanne Moore’s article in the Guardian is one of the many excellent pieces written about it. She hits at the heart of the problem: ‘Repeat after me: austerity removes autonomy’.
That’s particularly true in this case, and in more ways than even Suzanne Moore brings in. This new programme has even more possibilities to remove autonomy than previous attempts at controlling what ‘the poor’ can do with their money – because it takes food stamps into the digital age…
The idea, as I understand it, is that people will be issued with food ‘cards’, rather than old fashioned food stamps. The precise details of these cards have yet to emerge, and quite how ‘smart’ they will be has yet to be seen, but the direction is clear. The cards will only work in certain shops, and only allow the purchase of certain goods. At the moment they’re talking about stopping ‘the poor’ from buying such evil goods as tobacco and alcohol, but as Suzanne Moore points out, equivalent schemes in the US have blocked the purchase of fizzy drinks. In a digital world, the control over what can or cannot be purchased can be exact and ever-changing. It allows complete control – we can determine an ‘acceptable’ list of things that people can and cannot buy.
All well and good, so people might think. Let’s make sure people only eat fresh fruit and vegetables – improve the nation’s health, instil better eating habits, force people to learn to cook. All for the better! There are, however, one or two flaws in this plan.
Firstly, it seems almost certain that the plan will be effectively subcontracted out to private companies – and limited to specific shops. In Birmingham it has already been said that these cards will only work in ASDA. Doubtless there will be tendering process, and the different supermarkets will be vying for the opportunity to stake their claims. Once they do, which products will they be directing people to buy? The most nutritious ones? The cheapest ones? The most practical ones? Or the ones that will make them the most money?
Secondly, these cards present a built-in opportunity for profiling. Just as existing supermarket loyalty cards are used primarily to profile the people who use them, monitoring shopping habits in order (amongst other things) to find ways to convince people to spend more money, these kind of food cards can be used to profile the people who use them. This may not be any different from existing supermarket loyalty cards – but at least people have a choice as to which supermarket they use, and whether they want to be profiled. This kind of a system is effectively selling the profiles of people directly to the supermarkets, without any choice at all. Now of course privacy isn’t as important as food – but is it really right that we say that poor people aren’t allowed privacy?
Thirdly, a database will be built up of those who have the cards – and it will be a database that is crying out to be used. If those selling ‘pay-day loans’ with interest rates in the thousands get access to those databases they’ve got a beautiful set of potential targets to exploit – almost certainly complete with addresses included, just in case the people need a little ‘visit’ to chivvy them along in terms of payment.
There are further implications of this kind of thing – logical extensions to the idea. Once the system is introduced, it’s almost bound to be abused. If you have a ‘food card’ but need cash – for example to pay off a loan – then if someone else says ‘I’ll buy your card for cash, but at a 40% discount’, many, many people may accept that offer. The chances of a black market growing are huge, and the implications even worse. It would make the poor poorer (by whatever discount they’re forced to accept for their cards) for starters, but there’s more. If the authorities see this kind of abuse to the system happening, they’ll try to do something about it – for example, by requiring biometrics for verification. Fingerprints are even a possibility…
…which may seem far fetched, but school canteens around the country are already using fingerprint verification to allow children access to school meals. The technology is there – and those who make it and sell it will be lobbying the government to let them have contracts to do this.
That, again, makes the situation worse – making the databases even more invasive, even more open to abuse, and so the cycle begins again.
Of course this is only a side issue compared to the main issues of divisiveness, demonisation and sheer vindictive dehumanisation that are the inevitable consequences of this kind of scheme. I’m sure, however, that these possibilities won’t have escaped the eagle eyes of those working with these kinds of schemes. It may sound like a conspiracy theory – and indeed, to an extent it is – but it isn’t nearly as far fetched as might be imagined. As well as removing autonomy, austerity provides opportunities for those unscrupulous enough to use them – and sadly, as the last few years have made far too clear, there are plenty of people and companies like that.

This Is What It Feels Like To Have Your Life Savings Confiscated By The Global Elite

By Michael
This Is What It Feels Like To Have Your Life Savings Confiscated By The Global Elite - Photo by Hannibal Poenaru
What would you do if you woke up one day and discovered that the banksters had “legally” stolen about 80 percent of your life savings?  Most people seem to assume that most of the depositors that are getting ripped off in Cyprus are “Russian oligarchs” or “wealthy European tycoons”, but the truth is that they are only just part of the story.  As you will see below, there are small businesses and aging retirees that have been absolutely devastated by the wealth confiscation that has taken place in Cyprus.  Many businesses can no longer meet their payrolls or pay their bills because their funds have been frozen, and many retirees have seen retirement plans that they have been working toward for decades absolutely destroyed in a matter of days.  Sometimes it can be hard to identify with events that are happening on the other side of the globe, but I want you to try to put yourself into their shoes for a few minutes.  How would you feel if something like this happened to you?
For example, just consider the case of one 65-year-old retiree that has had his life savings totally wiped out by the “wealth tax” in Cyprus.  His very sad story was recently featured by the Sydney Morning Herald
”Very bad, very, very bad,” says 65-year-old John Demetriou, rubbing tears from his lined face with thick fingers. ”I lost all my money.”
John now lives in the picturesque fishing village of Liopetri on Cyprus’ south coast. But for 35 years he lived at Bondi Junction and worked days, nights and weekends in Sydney markets selling jewellery and imitation jewellery.
He had left Cyprus in the early 1970s at the height of its war with Turkey, taking his wife and young children to safety in Australia. He built a life from nothing and, gradually, a substantial nest egg. He retired to Cyprus in 2007 with about $1 million, his life savings.
He planned to spend it on his grandchildren – some of whom live in Cyprus – putting them through university and setting them up. There would be medical bills; he has a heart condition. The interest was paying for a comfortable retirement, and trips back to Australia. He also toyed with the idea of buying a boat.
He wanted to leave any big purchases a few years, to be sure this was where he would spend his retirement. There was no hurry. But now it is all gone.
”If I made the decision to stay, I was going to build a house,” John says. ”Unfortunately I didn’t make the decision yet.
”I went to sleep Friday as a rich man. I woke up a poor man.”
You can read the rest of the article right here.
How would you feel if you suddenly lost almost everything that you have been working for your entire life?
And many small and mid-size businesses have been ruined by the bank account confiscation that has taken place in Cyprus.
The following is a bank account statement that was originally posted on a Bitcoin forum that has gone absolutely viral all over the Internet.  One medium size IT business has lost a staggering amount of money because of the “bail-in” that is happening in Cyprus…
Cyprus Bank Account Confiscation
The following is what the poster of this screenshot had to say about what this is going to do to his business…
Over 700k of expropriated money will be used to repay country’s debt. Probably we will get back about 20% of this amount in 6-7 years.
I’m not Russian oligarch, but just European medium size IT business. Thousands of other companies around Cyprus have the same situation.
The business is definitely ruined, all Cypriot workers to be fired.
We are moving to small Caribbean country where authorities have more respect to people’s assets. Also we are thinking about using Bitcoin to pay wages and for payments between our partners.
Special thanks to:
- Jeroen Dijsselbloem
- Angela Merkel
- Manuel Barroso
- the rest of officials of “European Comission”
With each passing day, things just continue to get worse for those with deposits of over 100,000 euros in Cyprus.  A few hours ago, a Reuters story entitled “Big depositors in Cyprus to lose far more than feared” declared that the initial estimates of the losses by big depositors in Cyprus were much too low.
And of course the truth is that those that have had their deposits frozen will be very fortunate to ever see any of that money ever again.
But just a few weeks ago, the Central Bank of Cyprus was swearing that nothing like this could ever possibly happen.  Just check out the following memo from the Central Bank of Cyprus dated “11 February 2013″ that was recently posted on Zero Hedge
Central Bank of Cyprus Memo
Sadly, the truth is that the politicians will lie to you all the way up until the very day that they confiscate your money.
You can believe our “leaders” when they swear that nothing like this will ever happen in the United States, in Canada or in other European nations if you want.
But I don’t believe them.
In fact, as an outstanding article by Ellen Brown recently detailed, the concept of a “bail-in” for “systemically important financial institutions” has been in the works for a long time…
Confiscating the customer deposits in Cyprus banks, it seems, was not a one-off, desperate idea of a few Eurozone “troika” officials scrambling to salvage their balance sheets. A joint paper by the US Federal Deposit Insurance Corporation and the Bank of England dated December 10, 2012, shows that these plans have been long in the making; that they originated with the G20 Financial Stability Board in Basel, Switzerland (discussed earlier here); and that the result will be to deliver clear title to the banks of depositor funds.
If you do not believe that what just happened in Cyprus could happen in the United States, you need to read the rest of her article.  The following is an extended excerpt from that article
Although few depositors realize it, legally the bank owns the depositor’s funds as soon as they are put in the bank. Our money becomes the bank’s, and we become unsecured creditors holding IOUs or promises to pay. (See here and here.) But until now the bank has been obligated to pay the money back on demand in the form of cash. Under the FDIC-BOE plan, our IOUs will be converted into “bank equity.”  The bank will get the money and we will get stock in the bank. With any luck we may be able to sell the stock to someone else, but when and at what price? Most people keep a deposit account so they can have ready cash to pay the bills.
The 15-page FDIC-BOE document is called “Resolving Globally Active, Systemically Important, Financial Institutions.”  It begins by explaining that the 2008 banking crisis has made it clear that some other way besides taxpayer bailouts is needed to maintain “financial stability.” Evidently anticipating that the next financial collapse will be on a grander scale than either the taxpayers or Congress is willing to underwrite, the authors state:
An efficient path for returning the sound operations of the G-SIFI to the private sector would be provided by exchanging or converting a sufficient amount of the unsecured debt from the original creditors of the failed company [meaning the depositors] into equity [or stock]. In the U.S., the new equity would become capital in one or more newly formed operating entities. In the U.K., the same approach could be used, or the equity could be used to recapitalize the failing financial company itself—thus, the highest layer of surviving bailed-in creditors would become the owners of the resolved firm. In either country, the new equity holders would take on the corresponding risk of being shareholders in a financial institution.
No exception is indicated for “insured deposits” in the U.S., meaning those under $250,000, the deposits we thought were protected by FDIC insurance. This can hardly be an oversight, since it is the FDIC that is issuing the directive. The FDIC is an insurance company funded by premiums paid by private banks.  The directive is called a “resolution process,” defined elsewhere as a plan that “would be triggered in the event of the failure of an insurer . . . .” The only  mention of “insured deposits” is in connection with existing UK legislation, which the FDIC-BOE directive goes on to say is inadequate, implying that it needs to be modified or overridden.
You can find the rest of her excellent article right here.  I would encourage everyone to especially pay attention to what she has to say about derivatives.
Sadly, what is happening in Cyprus right now is just the continuation of a trend.  In recent years, governments all over the world have turned to the confiscation of private wealth in order to solve their financial problems.  The following examples are from a recent article posted on Deviant Investor
October 2008 – Argentina’s leftist government, facing a gigantic revenue shortfall, proposes to nationalize all private pensions so as to meet national debt payments and avoid its second default in the decade.
November 2010 – Headline – Hungary Gives Its Citizens an Ultimatum: Move Your Private Pension Fund Assets to the State or Permanently Lose Your Pension – This is an effective nationalization of all pensions.
November 2010 – Ireland elects to appropriate ten billion euros from its National Pension Reserve Fund to help fund an eighty-five billion euro rescue package for its besieged banks. Ireland also moves to consider a regulatory move that compels some private Irish pension funds to hold more Irish government debt, thereby providing the state with a captive investor base but hugely raising the risk for savers.
December 2010 – France agrees to transfer twenty billion euros worth of assets belonging to its Fonds de Reserve pour les Retraites (FRR), the funded portion of its retirement system, to help pay off recurring social benefits costs. No pensioners are consulted.
April 2012 – Argentina announces that its Economy Ministry has taken an emergency loan from the national pension fund in the amount of $4.3 billion. No pensioners were consulted.
June 2012 – Treasury Secretary Timothy Geithner unilaterally appropriates $45 billion from US federal pension funds to help tide over US deficits for the remainder of fiscal year 2011.
January 2013 – Treasury Secretary Geithner again announces that the government has begun borrowing from the federal employees pension fund to keep operating without passing the approaching “fiscal cliff” debt limit. The move effectively creates $156 billion in borrowing authority from federal pension funds.
March 2013 – Open Bank Resolution finance minister, Bill English, is proposing a Cyprus style solution for potential New Zealand bank failures. The reserve bank is in the final stages of establishing a rescue scheme which will put all bank depositors on the hook for bailing out their banks. Depositors will overnight have their savings shaved by the amount needed to keep distressed banks afloat.
Can you see the pattern?
As I wrote about the other day, no bank account, no pension fund, no retirement account and no stock portfolio will be able to be considered 100% safe ever again.
And once the global derivatives casino melts down, there are going to be a lot of major banks that are going to need to be “bailed in”.
When that day arrives, they are going to try to come after your money.
So don’t leave your entire life savings sitting in a single bank – especially not one of the banks that has a tremendous amount of exposure toderivatives.
Hopefully we can get more people to wake up and realize what is happening.  We are moving into a time of great financial instability, and what worked in the past is not going to work in the future.
Be smart and get prepared while you still can.
Time is running out.

Benefit cuts: Monday will be the day that defines this government

Those on low incomes, after all the vicious talk dismissing them as cheats and idlers, will be hit by an avalanche of cuts
Jobcentre Plus in Doncaster
'The Guardian has revealed how jobcentre staff are under orders to find any sanction to knock people off benefits.' Photograph: Christopher Thomond for the Guardian
Not many know what is about to happen on Monday: neither those about to be knocked down nor those sailing too high above them to notice. But historians will see it as the day that defines the Cameron government. An avalanche of benefit cuts will hit the same households over and over, with no official assessment of how far this £18bn reduction will send those who are already poor into beggary.
In his 2009 Hugo Young lecture, David Cameron spoke with apparent passion of the damage done by inequality: "We all know, in our hearts, that as long as there is deep poverty living systematically side by side with great riches, we all remain the poorer for it." The wise saw the wolf beneath the sheepskin: sure enough, once in power, the language he and his ministers used to blame the poor for their plight was cruder and fiercer than in Thatcher's day. You need to go back to Edwardian times to find ministers and commentators so viciously dismissing all on low incomes as cheats, idlers and drunks.
On BBC news, Iain Duncan Smith, confronted with irrefutable cases of hardship, said: "It's about trying to get as many people as possible out of the welfare trap and into lives they can control themselves." As the economist JK Galbraith observed: "The modern conservative is engaged in one of man's oldest exercises in moral philosophy: that is, the search for a superior moral justification for selfishness."
So far, public opinion seems alarmingly content with these cuts – but before we despair of human kindness, many can plead ignorance. The government relies on destitution staying silent and unseen, isolated in families with no collective voice. Dear Guardian reader, you know what's happening because we report on the social security calamity almost daily, as you would expect.
Readers of the Mirror have been briefed this week, and the Independent covered the bedroom tax on its front page. But look back through this week's Times, Telegraph, Mail and Sun to see how their readers are told nothing. They know a lot about immigrants. Sun readers were told the welfare bill is soaring out of control. They read a freak story of a woman refusing to take well-paid jobs to keep her children's free university places.
Times readers learned at length of Tanni Grey-Thompson's ordeal of hauling herself up 12 floors when her lift broke down, but only a very short story on her admirable campaign against cuts leaving disabled people £4,600 poorer. Telegraph readers were told "benefit claimants should be forced to seek extra work", with a battery of stories against unfair budget treatment of stay-at-home mums suffering a "traditional families penalty". The Bishop of Exeter pleaded their cause for tax relief, although surely he should be raising hell about the cuts?
People may read these papers to be protected from inconvenient facts about growing inequality and the catastrophic falling behind of the poor. The Brookings Institution reports that ever-worsening inequality will be "permanent" from now on. Most people would be alarmed at a never-ending widening of the gulf, if they knew. Most people want to believe the equal opportunities myth, but are easily comforted when told the poor are bad and the well-off deserving, so social justice prevails in this best of all possible worlds.
Here's an interesting brief story in the Telegraph: a report that young children moving home three or more times suffer serious behaviour problems. Unfortunately, the Telegraph made no mention of the many families about to be uprooted and sent far from relatives, jobs and schools, into temporary accommodation and B&Bs, then moved on each time their rents rise. With virtually no takers for Cameron's parenting class vouchers, it's the government that needs lessons in child development.
No amount of IDS newspeak can turn the bedroom tax into a "spare bedroom subsidy". Frank Field calls for social landlords to knock down walls or brick up rooms so people can keep their homes: it's all a fraud, since IDS knows that 660,000 tenants with a spare room can never be found smaller properties, they will pay the extra or fall into debt and arrears until they are evicted. From Monday, most of the poorest get a new bill of an average £138 for council tax. Landlords expect mayhem when tenants are paid rent directly every month: pilots show many fall into debt.
Now add in these: disability living allowance starts converting into personal independence payment with a target to remove 500,000 people in new Atos medical tests. The Guardian has revealed how jobcentre staff are under orders to find any sanction to knock people off benefits. New obstacles are strewn in their path: people must apply for their benefits online from computers they don't possess; many of these claimants are semi-literate. When in dire straits, there will be no more crisis loans, only a card for buying food, with not a penny for bus fares. Trussell Trust food banks expect a great surge of the hungry, so they ask everyone to donate the price of an Easter egg.
Here is the final wicked twist: legal aid has been removed for advice on benefits, housing, divorce, debt, education and employment. On Monday the budget of Citizens Advice for such cases falls from £22m to £3m. The few emergency cases still covered – families facing instant eviction – can only use a phone service, not face-to-face legal help. Law centres will close. There will be no help on school exclusions, landlord or employer harassment, or failure to pay wages.
Every new benefit system starts out with a high error rate: everyone knows the complex universal credit will leave millions with incorrect or no payments – and now, nowhere to go for help. Courts and tribunals expect chaos as people try to make their own cases without any help. Try to imagine the plight of people in debt because of the non-arrival of payments, with no credit on their phones to call and inquire, no crisis loan to buy phone credit, no internet access – and now no advice service either.
I refuse to believe most people would not be shocked if they knew, if they saw and if they understood. Even some of the 30% who always vote Tory might be appalled if they weren't so well deceived by their ministers, MPs and newspapers, who lie knowingly and deliberately. People should know that historians will record the earthquake of social destruction that happened in their name, while they read of nothing but "scroungers" and the "soaring benefit bill".

Senior SAC Trader Arrested, Given Perp Walk

Hopefully the $155 million purchase of Picasso's "Le Reve" by Steve Cohen coupled with his splurge on a $60 million East Hamptons pad comes with a 30 full day money back guarantee, because very soon he may have more practical and immediate uses for the money. If the SAC head was hoping that the recent $602 million settlement his firm had reached with the SEC was enough to put all his troubles behind him, he may want to think twice.
First, yesterday, New York District Judge Victor Marrero pulled a "Judge Rakoff", when he balked at the SEC’s use of the “neither admit nor deny” provision (the same argument used by Rakoff when he rejected an SEC settlement with Citigroup in 2011). Marrero also asked what would happen if Martoma, who has pleaded not guilty to related criminal charges, is convicted. “How would it look if in the settlement before it, the parties were allowed to say ‘We did nothing wrong?’” Marrero asked. “The ground is shaking, let’s admit that,” said Marrero. “This court is in the same position that Judge Rakoff was some months ago." But in the end we are sure that Marrero, just like Rakoff, will fold to pressure, and money.
However, where things got interesting is that moments ago the Feds arrested long-time SAC suspect and PM Michael Steinberg, giving him a perp walk out of his Park Avenue apartment. This was the highest profile arrest so of any SAC employee and means that while the SEC may be trying to close the book on Cohen, the Feds are only now getting started.
From the WSJ:
Michael Steinberg, 40 years old, was led out of his building on New York's Park Avenue in handcuffs around 6 a.m. Mr. Steinberg has worked at Stamford, Conn.-based SAC since 1997 and at its Sigma Capital Management unit in New York since 2003, dealing closely with SAC's billionaire founder Steven A. Cohen. Details of the charges are expected to become public later Friday.

"Michael Steinberg did absolutely nothing wrong," his lawyer, Barry H. Berke, said in a statement Friday. "His trading decisions were based on detailed analysis" and information "he understood had been properly obtained through the types of channels that institutional investors rely upon on a daily basis."

Mr. Berke said Mr. Steinberg had been "caught in the crossfire of aggressive investigations of others [and] there is no basis for even the slightest blemish on his spotless reputation."

The development underscores that the government continues to aggressively pursue SAC and its employees just two weeks after the hedge-fund firm agreed to pay a record $616 million civil penalty to settle two insider-trading lawsuits brought by the Securities and Exchange Commission. SAC didn't admit or deny wrongdoing in either settlement.

SAC put Mr. Steinberg on leave last September. Around that time, Jon Horvath, a former analyst working under Mr. Steinberg, pleaded guilty to obtaining inside-information about Dell Inc. and other stocks and trading on the tips with his boss. Mr. Horvath is one of the ex-employees cooperating with authorities.

SAC has declined to specify the reason it put Mr. Steinberg on leave.

Mr. Steinberg's arrest also highlights how federal authorities are attempting to reach into the highest ranks of the $15 billion hedge fund. Since late 2009, six former SAC employees have been convicted of or pleaded guilty to insider-trading charges; four are cooperating with authorities.
The purpose for the demonstrative Good Friday arrest is quite clear: to send a message to old blue eyes himself:
The government could seek to use Mr. Steinberg as a potential witness against Mr. Cohen if Mr. Steinberg ever were to cooperate, according to the people familiar with the probe and with the hedge-fund firm. During his 16 years at SAC, he built trust with Mr. Cohen as an arbiter of analysts, able to assess their sometimes contradictory views and reliably advise Mr. Cohen on investment decisions, say people close to the firm's operations.
We wish the best of luck to the Feds whose sentencing guidelines (if it ever comes to that) better have a greater adverse NPV than the untold amount of hush money waiting for Steinberg on the other side, when he comes out of minimum security prison in 5 to 7.

US Savings Rate Near Record Low, Per Capita Disposable Income Almost Back To December 2006 Level

source link ZHedge
There was some good news for headline scanning algos this morning, when both personal incomes and spending came in modestly higher than expected, with incomes rising 1.1% compared to an estimated 0.8% increase, while spending was up 0.7%, also higher than the 0.6% expected. But while the superficial headline grab did indicate a modestly better climate for both spending and incomes, it was a look under the cover once again that revealed the full extent of the pain that US consumers continue to find themselves in, over 5 years since the start of the second great depression.
First, the bulk of the bounce in spending was driven by a surge in Non-Durable Goods, which rose by $48.5 billion in one month, and amounting to 61% of the total increase in personal outlays in February. This was the biggest monthly jump since the onset of the financial crisis: hardly inspiring much confidence for those companies which are wondering whether to ramp up capital expenditures and spending, especially since spending on Durable Goods declined by $400 million in February.

Second, while incomes did rebound after the plunge in January, the modest increase represented a rise in the personal savings rate to just 2.6% – the second lowest monthly savings print since 2007, excluding only the abysmal January 2.2% print. In other words, there is hardly much if any new room for additional spending with the savings rate nearly at record lows, and with US consumer continuing to reduce their outstanding revolving credit, the Q1 retail sales miracle will hardly be repeated in future months as US consumers seek to rebuild some cash buffer.

For those claiming there is something called a “recovery” underway, perhaps they can point out just where on this chart of Real Disposable Income per capita one can find said recovery. Because we are confused: with the average Real Disposable Income of $32,663 per person, or lower than where it was in December 2006 ($32,729), one may be excused for scratching their head.

Is Steven A. Cohen Buying Off the U.S. Government?

Most scandals involving the cozy relationship between Wall Street and its regulators play out behind closed doors. Others happen in plain view, and this is one of the latter. In a Manhattan courtroom Thursday, a federal judge held a hearing on whether to approve a legal settlement in which Steven A. Cohen, one of the richest and most publicity-shy men in the country, appears to be buying off the U.S. government, which for years has been investigating wrongdoing in and around his hedge fund, SAC Capital Advisers.
Unless the judge, Victor Marrero, rejects the settlement between the Securities and Exchange Commission and SAC, which was announced a couple of weeks ago, Cohen will be free to go about his business, which has long been clouded by suspicions of insider trading, once he writes a check of six hundred and sixteen million dollars to the Securities and Exchange Commission. There will be no further sanctions and no admission of wrongdoing. And in fact, Cohen already appears to be celebrating. According to a report in the Times, he has just purchased a Picasso painting, “Le Rêve,” for a hundred and fifty-five million dollars, and an ocean-front mansion in East Hampton, for sixty million dollars.
To his credit, Judge Marrero has, at least for now, refused to go along with this travesty. Reserving judgement on the case, he asked why the settlement didn’t include an admission of wrongdoing on the part of SAC and Cohen. “There is something counterintuitive and incongruous about settling for six hundred million dollars if it truly did nothing wrong,” the judge said. (A lawyer for SAC told the judge that the firm paid the fine because it didn’t want litigation hanging over its head for years.)
When the S.E.C. announced the agreement on March 15th, it played up the size of the settlement, most of which related to allegations of insider trading in the stocks of two big drug companies. “These settlements call for the imposition of historic penalties,” said George S. Canellos, the acting enforcement director of the S.E.C. But one man’s “historic penalty” is another’s drop in the ocean. The fund itself is paying the fine, but it is owned by and essentially synonymous with Cohen, its founder, who is worth $9.5 billion, according to the Bloomberg Billionaires Index. The settlement was arguably the trade of his life. For 6.5 per cent of his fortune—the equivalent of four Picasso paintings—he has gone a long way toward removing a threat that could have destroyed his firm and possibly seen him facing charges.
Exactly how Cohen pulled off this feat is something of a mystery. The details of the dealings between his lawyers and the government haven’t been revealed, and most likely won’t be. What we do know is this: until the settlement with the S.E.C. was announced, things were looking increasingly grim for Cohen and his firm, which is based in Greenwich, Connecticut.
During the past several years, investigators from the S.E.C. and the U.S. Attorney’s office in Manhattan have been carrying on a wide-ranging investigation of SAC, which manages about fifteen billion dollars in assets. As a result of this probe, no fewer than nine current or former employees of SAC have been tied to insider dealing while working at the firm, and four of them have pleaded guilty. The investigation started out with lowly former employees. Over time, though, it moved closer and closer to Cohen, the firm’s founder, until, finally, it enveloped him.
Last November, Preet Bharara, the U.S. Attorney for the Southern District of New York, held a press conference to announce the indictment of Matthew Martoma, a former SAC trader, for what Bharara said was “the most lucrative insider-trading scheme ever charged.” According to the complaint, the 2008 trades at the center of the case involved Cohen directly. After receiving at tip-off from an inside informant about a drug trial that had turned out badly, Martoma spoke for twenty minutes with Cohen—identified as “Portfolio Manager A”—and then started unloading shares that SAC owned in the two drug companies involved, Elan and Wyeth, the complaint said. Once the results of the drug trial became public, the stock prices of the drug companies fell sharply. The government said that Martoma’s trades netted SAC as much as two hundred and seventy-six million dollars.
The lack of any admission of wrongdoing on SAC’s part would be astounding if such omissions hadn’t become depressingly common in recent settlements between the government and Wall Street firms. In the aftermath of the financial crisis, Judge Jed S. Rakoff, one of Marrero’s colleagues on the district court, initially rejected S.E.C. settlements with Bank of America and Citigroup over their misconduct. But the government, for whatever reason, persists in allowing Wall Street firms to resolve big cases without admitting the obvious: the reason they are paying large fines is that they did something wrong.
It’s a farce, and it’s not getting any funnier. The SAC settlement marks the first time, to my knowledge, that the S.E.C. has accorded such deference to a hedge fund, and it also raises the question of whether the Justice Department is now ducking bringing criminal charges against Cohen himself. Some folks who know how the system works from the inside think that that’s what it looks like. “I read the Martoma complaint,” Bradley Simon, a prominent white-collar criminal defense attorney and former federal prosecutor, told me. “It seems like there’s evidence there for them to charge Cohen, but they don’t want to do it.”
In his press conference announcing the settlement, the S.E.C.’s Canellos said the deal didn’t mean that the Justice Department couldn’t bring criminal charges against more SAC employees in the future. Legally, that’s true. But the S.E.C. and the Justice Department usually coöperate on settlements of this sort. According to a report in the Times, prosecutors are currently deciding whether to indict Michael Steinberg, a portfolio manager at SAC. [UPDATE: Steinberg was arrested on Friday morning.] But the larger question is what happens to Cohen, who was widely presumed to be the government’s ultimate target.
In cases of this nature, the defendant’s lawyers usually deal with the possibility of criminal charges first, because that is the biggest danger. It’s only when the criminal issue has been resolved that they go ahead and try to resolve any civil charges. “If Cohen thought they were going to bring a criminal case against him, I don’t think he would be writing checks to the S.E.C.,” Simon said. “It looks to me like he has had some indication that the criminal investigation is going nowhere. He thinks they are not going after him with criminal charges. And the question is: Why not?”
Why not indeed? Perhaps Cohen didn’t do anything wrong. Back in November, after Martoma was charged, Jonathan Gasthalter, a spokesman for SAC at the P.R. firm Sard Verbinnen, said, “Mr. Cohen and SAC are confident that they have acted appropriately and will continue to coöperate with the government’s inquiry.” After the settlement with the S.E.C. was announced, Gasthalter said: “This settlement is a substantial step toward resolving all outstanding regulatory matters and allows the firm to move forward with confidence. We are committed to continuing to maintain a first-rate compliance effort woven into the fabric of the firm. Steve Cohen has not been charged with any wrongdoing and has done nothing wrong.” When I spoke to Gasthalter on Thursday, he declined to comment on the court hearing about the settlement or on speculation that the government had ruled out bringing charges against Cohen.
A second possibility is that, despite the Martoma complaint, there simply isn’t sufficient evidence to convict Cohen, and the prosecutors have reluctantly accepted this fact. Insider-trading cases are tricky. We don’t know what Cohen said to Martoma during their conversation, or whether Martoma would be willing to testify against him. In the insider-trading cases of Raj Rajaratnam, who ran the Galleon hedge fund, and Rajat Gupta, the former head of McKinsey, the government relied heavily on wiretap evidence. According to the Wall Street Journal, the government obtained a warrant to tap Cohen’s home phone in 2008, but it isn’t known what, if anything, these intercepts yielded.
A third possibility is that this is another instance in which the Justice Department doesn’t have the gumption to indict a senior Wall Street figure backed by a battalion of high-priced lawyers. To borrow Joe Nocera’s phrase, this may be just one more case of “too big to jail.” Mitigating against this explanation is the fact that Bharara has already demonstrated a willingness to put senior figures in the dock. Rajaratnam, who is serving eleven years in jail, and Gupta, who is serving two years, can both testify to that.
Without knowing the exact details of a case, it is always dangerous to reach judgements about a prosecutor’s decisions. But that doesn’t let the government off the hook. Even if Cohen didn’t actively encourage his employees to trade on inside information, he runs a firm where quite a few of them did, or so it seems. Under the law, senior managers of financial firms are responsible for introducing and enforcing internal policies designed to prevent law breaking. If they don’t do it properly, they can be held liable for wrongdoing even if they weren’t personally involved. By failing to obtain an admission of wrongdoing from SAC, and by leaving Cohen at the head of the firm, the S.E.C. and the Justice Department have made a mockery of this doctrine of corporate responsibility. In that sense, at least, they indeed allowed Cohen to buy off the U.S. government.
Photograph by Ronda Churchill/Bloomberg/Getty

V’s Cyber Attack Alert: You are not facing a financial haircut but financial decapitation

Steve Quayle Alerts
Ten months ago a massive powerful bank hack hit over 206 banks worldwide simultaneously siphoning billions from customer accounts. It went under-reported and unnoticed by main stream media. Six months ago NatWest/RBS online banking and ATM went offline. Millions had trouble accessing their funds.
A few months later online banking and ATMs from some of the biggest names in banking in the US started to receive DNS error messages and were knocked offline completely or were limping along,causing millions a hassle and head ache to get their funds.  
Two weeks ago Chase had an “issue” with their online banking computers as well as their mainframe servers were hit by some “problems” that caused thousands of their customers bank accounts to read $0.00 as their balance. Millions of others had issues accessing funds and ATM’S from the house of Morgan.
Last week the entire banking network of South Korea went down for hours, millions of customers were not able to access their funds, use ATMs or even check their balance.
This week the entire Internet teetered on the brink of collapse as SpamHaus was hit by over 300 billion bits of information per second. That is what we are led to believe and that this attack was led by a rival company Cyberbunker. Whether this story is true or not, it does highlight the sensitivity of the internet.
The overpowering pattern and factor here is that wherever you look in the world there are issues with the internet, networks and servers and it all centers around banking.
For some time I have emphatically stated that there will be a bank hack or cyber attack as the global economy is pushed to the brink of collapse. From top level sources I can confirm to you what you are seeing is an emerging pattern of various beta-tests using Stuxnet like algorithms to affect the banking networks the world over.
I can tell you though that the primary target is the US. Look you can not have a bank hack a few months ago that siphoned over $2 billion and hitting over 200 banks by some mere hacking group. In order pull something off like this I stated in a prior alert that this is something that can only be done by an Intelligence Agency working in close collusion with a Central Bank. After all you need to understand that various money and wire networks through which currency flows. Who but a Central Bank can give you the access and the backdoor for this to occur?
How can so many bank and ATM networks like NYCE, PULSE, PLUS, INTERAC, CIRRUS, BACNET, NOVUS all be affected? This is truly something of a very sophisticated nature. Something that is very large in scope and very ominous in action. Folks it is without a shadow of a doubt that these are all beta-tests.
I have said it before this will be a financial false flag. The frequency of banking network failures has gotten to be very acute to the point that I am convinced that we are edging closer to the one major event that will set everything in motion. The take down of the economy is close at hand and the major cyber attack will be on it’s way. These emerging patterns are a clear picture of an malevolent power play that will be done to bring the system crashing to it’s knees.
Things have gotten to the point of ‘Critical Mass’!. Maybe that is why some of the top economist are right now panicking like never before. Get your cash out, keep what you need to pay the bills. Otherwise what you will be getting is not a 40% haircut, It will be a financial decapitation.
Be Prepared

"Get Your Money Out of the Banks" Jim Rogers on CNBC 3/28/13 'Looting' of Bank Accounts Has Rogers Worried


Investor Jim Rogers is concerned about the safety of his money in bank accounts around the world now that Cyprus is "looting" money from big depositors to help fund the country's bailout.

Video of Jim Rogers on CNBC this morning 3/28/13:  
"Run for the hills and hurry to get your money out"  IMF condoning stealing of people's money.  

Posted March 28, 2013

Poverty survey paints bleak picture of life in UK

Thousands of families in Britain are living on the breadline. Picture: Getty Thousands of families in Britain are living on the breadline. Picture: Getty
AUSTERITY is hitting families hard across Britain and Scotland according to a survey which suggests thousands of people are finding it hard to pay for basics like heating, clothing and food.
The Poverty and Social Exclusion report, the biggest survey of deprivation across the UK, found that a third of adults now suffer from some form of financial insecurity, with more than a quarter admitting they can neither save £20 a month nor put money away for a pension.
Just under one in ten households say they are unable to heat the living areas of their homes, up from just 3 per cent in the 1990s. People now say they consider around 33 per cent of Britons to be suffering from a lifestyle of “multiple deprivation”.
Households are suffering marginally less badly in Scotland compared to the UK as a whole, however.
More than 14,000 people across the UK, and 2,700 in Scotland, took part in the survey, which was conducted by a number of universities.
Nick Bailey, of Glasgow University, said: “These findings paint a very bleak picture of life for large numbers of people living in low-income households in Scotland today. There is little comfort in the fact that levels of deprivation appear to be even worse in the rest of the UK. The absolute numbers in Scotland are still shocking.”
The findings come with political focus centred on the impact of welfare cuts due to kick in next week when the new financial year begins.
The results show that, compared to previous surveys in 1983, 1990 and 1999, the situation facing poor households today is worse than before.
On housing, 9 per cent of UK families cannot afford enough bedrooms for every child aged ten or over of a different sex to have their own room, up from 3 per cent in 1999. One in six children lives in a home which is either damp or not adequately heated.
On food, one in 20 people in Scotland say they cannot afford an adequate diet. On clothing, 7 per cent of adults said they could not afford basic items of clothing, such as a warm coat or two pairs of shoes.
Professor Glen Bramley, of Heriot-Watt University, said: “The situation is already serious but it is set to get worse. The decline in living standards and the high level of financial insecurity pose an enormous challenge for both the Scottish and Westminster governments.”

Bitcoin Mythology: Red-herrings and Bullshit

In this DTOM article I intend to examine the nature and purpose of bitcoin with reference to monetary metals, government fiat, binary codes, intrinsic value and PONZI schemes.
My conclusions will be drawn from a biased perspective – mine.  All opinions/views are biased and I hope you have learnt to describe yours as I believe the writing here describes mine.  Let’s commence with an examination of the monetary metal. 
Gold, Silver, Copper
If you believe it was through accident, fate, or manipulation that the market places throughout the world and throughout known history have preferred physical monetary metal in the form of gold, silver, and copper then you are quite delusional.
Through much trial-and-error with numerous mediums-of-exchange such as seeds, paper, tally sticks and other forms of currency, it was discovered by practically every culture in existence that a functional market place required something that was long-lasting, easily recognised, and easy to transport around.   Over time, and throughout the world, an enormous amount of gold, silver, and copper has been forged into coins and bars to facilitate trade between individuals, groups, and eventually nation states.  This isn’t an accident that occurred through chance, it happened for the simple reason that gold, silver, and copper in physical form have been the best medium-of-exchange since time immemorial.
Platinum and palladium have rarely been used since they were discovered relatively late, and because, more importantly, they are difficult to distinguish from silver.  I state above that the market place naturally craves a currency that’s ‘easily recognisable’ and as a thought experiment please place a gold coin next to a silver one next to a bronze/copper one.  They are easily distinguishable from each other and have provided many market places with a functional currency for items ranging from luxury items such as grand palaces to basic purchases such bag of potatoes.  If there’s an item for sale, one of the monetary metals can easily provide the medium-of-exchange.
To deny gold, silver, and copper are the ‘Kings of currency’ is to state that all our history books are incorrect – which may have an element of truth to it J – but not in this context.
The mistakes in the past have been to ‘fix’ the value of gold, silver, and copper in relation to each other, and in a nominal format.  Hopefully we won’t do that again and instead utilize the monetary metals on two basic principles: Purity and weight.
Binary code and perception of fiat
We’re starting to hear more-and-more about Bitcoin as time goes on and the contemporary monetary system shows increasingly obvious signs of weakness and vulnerability to collapse.
Those that encourage you to utilize the new cyber-currency called bitcoin may be well-intentioned, and indeed many bitcoin advocates are also monetary metal enthusiasts.  Although there is a strong suspicion for some regarding bitcoin, I’m philosophical towards it, although I must stress that I have no interest in it myself.
However, as many have stated prior to my rantings here, bitcoin is merely binary code and has no intrinsic value whatsoever.  Furthermore, it would appear to have pseudo-PONZI scheme qualities in which the early adopters are rewarded and the later-joining participants gaining less as time unfolds.  Bitcoin has apparently increased in price by 2000% in two years; does anyone reading this believe this trend will continue?
In the early days of my awakening to the current monetary systems in play I frequently asked people around me the simple question, “How much of £sterling is in physical notes and coins?”  I received a variety of responses with some believing that 50% is in physical form with the remaining being stored on a computer database – i.e. in binary code.  I used to examine their eyes as the individual elaborated upon the simple fact that a mere three-per-cent of £sterling is physical with the vast majority simply being a virtual currency…….”A bit like a computer game” one person responded.  “Yes, indeed” I replied.
Myth One:  The public accepts digital currency is a good thing
I would imagine if a large percentage of the population realised their wealth was in the format of intangible fiat currency, there would be a global bank-run in a matter of days.  Although our contemporary currency system has functioned like this for some time, it has worked without the general population being aware of the facts.  I would also assume most folk believe their currency is stored 100% in paper at the bank, an assumption about to be proved fatal for many throughout the euro zone area.
The criminal elite have a wet dream regarding a ‘cashless’ society and are continuously attempting to implement one without success to date.  This is because the vast majority of people have a psyche in the concrete and not in the abstract.  Bitcoin, being an intrinsically-worthless and abstract currency will not be adopted by the general population, and I personally believe that the majority of folk currently paying attention to its progress are doing so for one purpose alone – greed and the chance of making a profit.
Myth Two:  Bitcoin is a store-of-Value
People often use the shipwreck example to explain the notion that gold and silver are a store-of-value.  In essence, it’s simple:  A ship sinks in the year 1713 with one-hundred gold sovereigns and two-hundred silver florins on board.  In 2013 the ship is discovered by a team of deep-sea divers who bring the stash up to the surface.  Has the gold and silver ‘stored’ value?  The answer is of course, yes, and not only that they will probably have a ‘premium’ over their intrinsic melt value due to numismatic qualities.  What would happen to your ‘bitcoin wallet’ three-hundred years from now, or even 6000 years from now?  Yes, there are coins from 6000 years ago made of electrum in museums that have a basic melt value.  Bitcoin also requires a computer and electricity to function, which sounds, to me ate least, like a massive assumption of conditions.  Without a computer and electricity bitcoins revert to their intrinsic value of worthlessness.
Myth three:  Silver has no intrinsic value
This myth of nonsense has been thrown-around by those that really should know better, and I’m extremely suspicious as this myth is used in correlation with the promotion of bitcoin.  Let us review the exact words again to put this myth to bed once-and-for-all.
Intrinsic:  belonging to a thing by its very nature: the intrinsic value of a gold ring.
Value:  relative worth, merit, or importance
Those that are perpetrating the myth that silver has no intrinsic value are attempting to get you to reason that all value is perceived…..a flip on the saying, “beauty is in the eye of the beholder” into, “value is in the mind the beholder”.  This is partly true, and, after all, most bullshit has an element of truth to it otherwise it wouldn’t work.
Most DTOM readers will be aware of the wealth cycle principle and ratio investing, and will not be surprised nor enlightened with the concept that there is an element of the human psyche involved when examining value.  However, I refer you to the definition above which specifically states ‘relative worth, merit, or importance’.  Relativity is independent of the human psyche.  For example, there is relativity in the gravitational pull of planetary bodies; a phenomenom that existed before humans, and I dare suggest such relativity will exist long after our species meets the same fate as the many species before us.
Silver has intrinsic value/importance regardless of whether the human mind knows of its existence, just like oxygen has intrinsic importance prior to human kind discovering the properties of the air around us.  To suggest otherwise is either intellectually thick-as-pig-shit, or, as I chiefly suspect, the mind or minds of those with an agenda to promote ‘value’ in an intrinsically worthless entity such as bitcoin.  Those that fall into the latter category should be fully ashamed of themselves, shunned by the other awakened folk, and have their nonsense challenged for all to see.
Myth Four:  Bitcoin is anonymous
Trace Mayer recently appeared on a BBC Newsnight interview to pump the credentials of bitcoin to the British public.  Accompanied by Mr Knowles,  a shill from the Rothschild-controlled Economist, Trace and the shill debated for a few moments.  You can review the interview for yourself by clicking here.
Trace was reasonably honest and stated he uses bitcoin as a medium-of-exchange to circumvent the banking sector, and conceded that it is indeed a speculation/investment to make a move into bitcoin.
After the interview Trace addressed some of the topics discussed, and one of the arguments the Economist’s shill made was that bitcoin could be used for money-laundering, i.e. he was stating the myth that bitcoin is anonymous.  In response, Trace wrote:
Additionally, all transactions are permanently stored in the blockchain which anyone can review. This leaves a tremendous amount of digital footprints that a competent forensic accountant can follow.”
“Consequently, I think Mr. Knowles is attributing to Bitcoin’s censorship-resistant nature a property which it does not have. Just because a payment cannot be stopped does not mean it cannot be traced.”
So there you have it from one of the most knowledgeable people on the bitcoin operations system.  Clearly, although there are no capital controls obvious to TPTB stopping a transaction in bitcoin occurring, they could if they so wished find out what coins are being used for what, where, and by which computer ISPN.
Myth Five:  Bitcoin is immune to the powers of the Banking Cartel
I’m not going to comment too much on this particular myth but would like to stress:  Are you fucking kiddin’ me?
Are you seriously trying to tell me that TPTB in the western world, the same self-professed elite that had the ability to pay programmers to design STUXNET can not, if they so wished, pay the best computer experts to completely sabotage the existence of bitcoin?
Like I stated:  Are you fucking kiddin’ me?
Physical monetary metals have served the market place for millennia in various regions around the globe.  This is due to a process of trial-and-error with a variety of currencies with the outcome being the metals gold, silver, and copper becoming the ‘Kings of monetary history’.
Unlike bitcoin, gold silver and copper have intrinsic value outside of the human consciousness and although the human psyche does have a ‘value in the mind of the beholder’ effect on the monetary metals their value is not solely derived from such contemplation.  Bitcoin, on the other hand, is digital binary code with zero intrinsic value similar to digital government fiat currency.
The majority of humankind operate in the concrete rather than the abstract, and that is an explanation as to why TPTB have so far failed to implement their wet dream of a cashless society and computer-only currency transactions.  Bitcoin will meet the same reception from the general population……especially as the anger stage moves up a gear due to events in the euro area.
People will want to hold tangible wealth.
There are a few myths surrounding bitcoin and it is wise for anyone considering its usage to consider why they are interested in acquiring some:
Is it for profit?  How much longer will it rise?
Is it for an international medium-of-exchange?  The world is returning to localism, is it not?
Is it for confidentiality?  Trace Mayer states quite clearly there is a paper trail – or in this case a ‘binary code trail’.
But hey, it’s up to you if you want to speculate on whatever and whenever.  As I stated at the start of this article we are all biased and my bias motivated me to write this piece.  The thing that pissed me off was the utter bullshit being peddled about that “silver has no intrinsic value.”  If you genuinely believe that then you’re an intellectually pygmy not worthy of debating my 7-month-old son J
As always, keep safe and good luck.  Keep stacking that physical monetary metal – especially silver – and keep your wits about you as more-and-more shills and red-herrings will be released/unleashed as we go deeper into the collapse.

New York minimum wage hike to $9 could be paid by taxpayers

New York's legislature approved a budget that hikes the state’s minimum wage to $9 per hour. But taxpayers, not businesses, could actually be the responsible party for paying those extra wage costs, if a closed-door tax credit agreement among politicos made the final budget cut.
The new wage minimum will be phased in over three years, United Press International reports. The current level of $7.25 will hike to $8 by the end of 2013; to $8.75 by the end of 2014; and to $9 by the end of 2015, UPI says.
The minimum wage increase reflects a win for Democrats, who have fought hard against Republicans and business interests who see the mandate as a wall to economic growth. But the big loser may actually be the taxpayer, The Associated Press reports. Original budget language for the “minimum wage reimbursement credit” actually says employers will receive compensation for their higher wage costs — by way of taxpayers, AP says.
Once the minimum wage rises by $1.75- to its full $9-per-hour mandate, employers will only be paying 40 cents of that difference, AP reports. The remaining $1.35 will be paid by taxpayers, in the form of a reimbursement credit that goes back to employers.
“It’s a big subsidy for the corporate low-wage economy,” said Mark Dunlea of the Hunger Action Network advocacy group, in the AP report.
AP reports the tax credit deal was forged during closed-door meetings with Gov. Andrew Cuomo and legislative leaders, and was subsequently buried within the budget bill.
UPI did not clarify whether that tax credit was contained within the budget that passed the legislature earlier this week.

2013 Canadian Federal Budget contains a bail-in feature for collapsed Canadian Banks

Jeff Fitchett
Activist Post

The bail-out/bail-in that Cyprus has been subjected to has disturbed me quite a bit. Up until this point, collapsing countries have spared individual citizens' bank accounts (personal savings).  As you likely know, bank account holders with over 100k euros will lose between 30-40% of their cash in Cypriot bank accounts.

I have mentioned consistently for the last 4-5 years that the most vulnerable countries will be hit first and slowly the rot will make its way to "more stable" developed countries such as Canada.  I did a little digging and noticed on page 155 of the 2013 Canadian Federal budget that the Government of Canada has put in a section on this very topic.  

Specifically, "The Government proposes to implement a bail-in regime for systemical important banks. This regime will be designed to ensure that in the unlikely event that a systemical important bank depletes its capital, the bank can be recapitalized and returned to viability through the very rapid conversion of certain bank liabilities into the regulatory capital. This will reduce risks for taxpayers. The Government will consult stakeholders on how best to implement a bail-in regime in Canada. Implementation timelines will allow for a smooth transition for affected institutions, investors and other market participants." Here's the link and click on page 155:

A bail-in means that investors in a bank's stock, a bank's bonds or deposit holders pay for the collapsed institution. Just so you understand what I'm saying; the government mentioned: "the bank can be recapitalized and returned to viability through the very rapid conversion of certain bank liabilities into the regulatory capital". If you go to Scotiabank's 2012 annual report and pull up page 21: 

Under the liabilities section of Scotiabank's balance sheet you will notice that Personal deposits fall under the banks liabilities. Scotiabank has $135.4 billion in personal deposits.

Pay attention to the amount of cash you have sitting in your bank account.  Banks in Cyprus were closed for almost two weeks. Do you have enough cash at home to last you two weeks to cover things like gas, food, etc? If not, you might want to rethink your personal situation.  Pass this on to people you care about.

China and Brazil won’t speak ‘American’ anymore

The days when the dollar was important seem to be long gone.
Every couple of months, bilateral relations between new global powerhouses seem to confirm what has been long announced: The U.S. dollar is no longer seen as the world’s reserve currency.
This week it was the time for China and Brazil to ditch the once mighty U.S. dollar as the base for their commercial relations. The rising Asian country and the former Portuguese enclave in Latin America will now use their own currencies to trade.
Both countries have signed an agreement to use their own currencies when buying and selling from and to each other. The deal will be valid for the next three years and will amount to what is now worth some 60 billion Brazilian reals. This agreement is the first between the two nations, but not new when it comes to getting rid of a debilitated, less valuable dollar. In the past few months, China and Russia, China and India and other so-called emerging powers closed similar deals.
The kind of agreement to trade in local currencies is supposed to set a new standard in the international dynamics that for many years supported the prevalence of the U.S. dollar as everything all other currencies wanted to be. “Our interest is not to establish new relations with China, but to expand relations to be used in the case of turbulence in financial markets,” said Brazilian Central Bank Governor Alexandre Tombini said.
Mr. Tombini has got it just right. Carefully crafted turbulence in the Western economic landscape mandates new ways to assess risk and more importantly, to prepare for and mitigate unknowns. While the Euro zone and the American economy slowly but surely walk towards financial Armageddon, countries that were once completely dependent on the American and European way of doing business are now looking elsewhere to guarantee their survival. The recent Chinese-Brazilian expansion in their commercial relations is another example of how developing countries are assuring their lifeline in the post-dollar future.
What China and Brazil have in mind with the latest agreement is to buffer their commercial ties should another financial bomb explode somewhere in the world. Many academics and experts agree that solid ties between China and Brazil are very important for the political alliance know as the BRICS. What these two countries along with Russia, South Africa and Indian intend to do, is to limit the impact of economic instability by allying themselves with nations that have equal goals and conditions.
Commercial ties and exchange between China and Brazil grew exponentially in the last few years. It went from about 14 billion to more than 150 billion Brazilian Real between 2003 and 2012. The effects of this commercial partnership has gone so far as to turn China into Brazil’s main trading partner. This fact has further isolated Brazil from the negative effects of a dollar collapse, or an American economic downfall which many experts agree, has been looming for a long time.
The question many people are asking is whether Brazil is closing a deal with the devil or simply changing one devil for another. The only way to know is to observe near future events. Perhaps, the coming of the new Development Bank that the BRICS have agreed to create will further commercial ties among partners and help solidify agreements such as the one signed by the two countries.
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Preparing for Inflationary Times

Jeff Clark
Casey Research

"All this money printing, massive debt, and reckless deficit spending – and we have 2% inflation? I'm beginning to believe that either the deflationists are right, or the Fed's interventions are working." – Anonymous Casey Research reader

The CPI, in our view, does not accurately measure inflation, which accounts for some of the discrepancy our reader is pointing out. However, the proper definition of inflation is "an increase in the quantity of money," which we've had in spades. We've not experienced the concomitant increase in prices, which is what we're addressing in this article.

It's logical to assume that when you create more of something, you dilute the value of what's already in existence. That's exactly what has happened to the US dollar since the 2008 financial crisis hit. Economics 101 says this should lead to higher inflation – yet official Consumer Price Index (CPI) levels remain benign.

It's this unexpected development that led a reader to pen the above quote. Is the inflation argument dead? If so, does that mean gold's big run is over? It's a timely question since the current sell-off in gold is largely attributed to low inflation expectations.

This is the first installment in our in-depth series of examining the next big catalysts for the gold price. This month we're looking at inflation. While a low CPI may be puzzling in the midst of massive, global currency abuse, there are three realities about inflation that convince us it's not only coming, but will catch an unsuspecting citizenry off guard.

Let's take a look at why we're convinced inflation will be one of the next big catalysts for the gold price…

Reality #1: History shows that high levels of debt and deficit spending eventually lead to inflation.

This statement makes sense on the face of it, but seminal research has been done that confirms it. A country simply cannot escape high inflation when carrying oversized debt levels and/or running massive deficits. Sooner or later, these sins catch up to you, regardless of what the current thinking may be.

Debt. The first of these historical studies is detailed in the book, This Time Is Different by Carmen Reinhart and Kenneth Rogoff, who've extensively researched the impact of high debt on inflation and gross domestic product (GDP).

Based on a comprehensive study of global incidences, Reinhart and Rogoff gave the following conclusion:
  • Debt levels over 90% of GDP are linked to significantly elevated levels of inflation.
When specifically studying US history, they again observed that:
  • Debt levels over 90% of GDP are linked to significantly elevated inflation.
When US debt levels met or exceeded 90% of GDP, inflation rose to around 6% – roughly triple current levels – vs. the 0.5% to 2.5% range when the ratio was below 90%.
However, with regard to timing, they state:
  • There is no apparent pattern of simultaneous rising inflation and debt.
In other words, inflation is a clear and definite result of high debt levels, but it's not a day-to-day link. This likely explains the current lag between high debt and a low CPI reading.

So are we nearing that 90% mark? Bud Conrad, chief economist of Casey Research, estimates we're currently at approximately 110%. Further, he projected from his research in December that…
  • Using my assumptions, gross debt to GDP crosses 120% in 2014. That is well past the danger point of 90% that Reinhart and Rogoff cite. What's scary is that my assumptions are not even close to a worst-case scenario, so the situation could be much worse.
Bud does not expect to see much more deflation. One reason is because…
  • In essence, much of the deflationary pressures have been cleared out. Going forward, there should be fewer outright losses from bad loans, and thus less deflationary pressure. For that reason (and many others), I expect higher inflation sooner rather than later.
Deficit Spending. Peter Bernholz is widely considered the leading expert on the link between deficit spending and hyperinflation. He conclusively states from his research that…
  • Hyperinflation is caused by government budget deficits.
The US budget deficit totaled $5.1 trillion during Obama's first term in office. The longer deficits last and the bigger they are, the closer a country moves toward very high inflation levels.

The Congressional Budget Office (CBO) recently reported, however, that the 2013 deficit will drop to $845 billion. Good news, right? Not exactly, because the reduction is largely a result of higher taxes. The CBO was therefore forced to admit…
  • The fiscal tightening from higher taxes and lower spending will slow economic growth to an anemic 1.4 percent by the end of 2013, causing the unemployment rate to edge back higher.
It turns into a vicious cycle, because if unemployment grows, money printing will continue and even increase. The CBO further admitted…
  • Deficits are projected to increase later in the coming decade, however, because of the pressures of an aging population, rising health care costs, an expansion of federal subsidies for health insurance, and growing interest payments on federal debt.
If deficits grow – or even just remain elevated – we inch closer and closer to the hyperinflation Bernholz warns about. Breaking this cycle will be very difficult, if not impossible... at least not without serious consequences.

These studies present clear and direct evidence that spending more than is brought in and continually adding to the national credit card leads to higher inflation. Sooner or later, this type of reckless behavior catches up to an economy. The sobering reality is that avoiding moderate to high levels of inflation in our current fiscal state would be an historical first.

Unfortunately, that's not the only inflationary fear we have to contend with.

Reality #2: History shows that inflation can occur suddenly and grow rapidly.

Not only is higher inflation a near certainty, history tells us that once it grabs hold, it can quickly spiral out of control. Given our crumbling fiscal state, we must consider the possibility that price inflation could kick in abruptly and rise rapidly.

Amity Shlaes, a senior fellow of economic history at the Council on Foreign Relations and a best-selling author, provides some examples from the past century of US inflation that was at first subdued but then abruptly rocketed to alarming levels. Look how quickly inflation rose in just two years from "benign" levels.

According to Shlaes, US inflation was 1% in 1915 (based on an earlier version of the CPI-U). Within just two years, it soared to 17%. As she states, it happened because the Treasury "spent like crazy on the war, creating money to pay for it…"

In 1945, the official inflation rate was 2%; it accelerated to 14% in 24 months. Inflation registered 3.2% in 1972 and hit 11% by 1974.

It's clear that the arrival of inflation can be sudden, and that prices can quickly spiral out of control. Given the profligate amount of money being printed by many countries around the globe, we could easily become victim to rapidly rising inflation. If we matched the increases in the chart, our CPI would register 11%, 15%, and 19% respectively, by February 2014.

Regardless of the timing, though, this is a clear warning from history: expecting the CPI to remain low indefinitely is a dangerous assumption.

Reality #3: Most developed-world governments need inflation.

It is a fact that high inflation reduces the real cost of servicing debt. Our debt levels have grown so high that the only politically acceptable way to deal with them is to inflate the currency. Politicians and central bankers have no incentive to stop, and thus will continue until disastrous price inflation emerges. Just because it hasn't occurred yet doesn't mean it won't.

Other political solutions simply aren't realistic. There is no amount of politically acceptable increase in tax revenue or austerity measures that can meet existing and future obligations. Printing money is the only viable solution. Once you internalize this, an understanding of the most likely consequences becomes clear.

Even if deflation in select asset classes persists or we get another deflationary event like 2008, we can rely on central bankers to concoct more rescue schemes financed with freshly created money. Perhaps just as likely is that the economy does improve and all the money that's been held back enters the system and sparks inflation.


Based on these realities, we can draw some well-grounded conclusions about the coming rise in inflation.
  1. The onset of higher inflation isn't certain, but the outcome is. These realities make clear that higher inflation is virtually ensured at some point. It's thus imperative we prepare for it.
  1. What we use for money will experience a significant – perhaps catastrophic – loss of purchasing power. As shown, this is not speculation, but a process of cause and effect observed repeatedly throughout history. As a result, you will likely use some of your gold and silver to protect your standard of living – that is, after all, one of its purposes. The point here is to make sure you own enough ounces to offset a significant decline in purchasing power.
  1. When inflation begins rising, precious metals will respond and move to higher levels. We don't know if this is the next catalyst for gold, but we're confident it will be a major driver of future prices.
  1. Keep in mind that gold tends to moves in anticipation of inflation – think of it as inflation insurance. By the time inflation is "high," the big moves in gold and silver will have most likely already occurred.
Stay vigilant, my friends, because higher inflation is coming – and as a result, so are higher gold and silver prices.