Thursday, August 15, 2013

Why millions in US avoid food stamps

Republicans say too many Americans receive food stamps, and that too many of them obtain benefits fraudulently when they could just get jobs instead.
The Supplemental Nutrition Assistance Program’s enrollment has risen from 26 million in 2005 to 47 million today, pushing its annual cost to nearly $80 billion — but costs would be much higher if everyone eligible for benefits actually received them. In fact, contrary to the idea that America’s poor people are collectively gorging themselves on food stamps, they’re actually leaving food on the table.
Roughly a quarter of Americans eligible for federal nutrition assistance don’t sign up for it, according to the most recent data. The U.S. Department of Agriculture, which administers the program, says that in fiscal 2010 nearly 51 million Americans were poor enough to qualify but only 38 million received benefits.
So why don’t the rest enroll?
“Some people don’t know [they're eligible], for others it’s difficult to navigate the process, for others it’s the stigma,” Ellen Vollinger, legal director of the Food Research and Action Center, said in an interview.
The program’s participation rate has risen steadily since taking a dip after Congress reformed welfare in 1996, according to research by the anti-hunger advocacy group. The rate varies, however, for different demographic groups. Older Americans are generally much less inclined to sign up for SNAP, with less than 40 percent of eligible seniors participating in 2010, according to the USDA.
“One of the misconceptions we hear commonly from the elderly is that they feel they don’t want to take away from someone else,” Vollinger said. Of course, one person’s participation in the program doesn’t reduce the benefits available to others.
Another reason older Americans might not bother is that monthly retirement income from the Social Security Administration results in lower nutrition assistance benefits, since monthly benefit amounts are based on a person’s income and expenses. FRAC’s research shows people are less likely to participate in the program if their benefits are lower.
Adam Roach, 52, is unable to work because of chronic fatigue and mental disabilities, including bipolar, anxiety, and obsessive-compulsive disorders. He gets by on $843 in Social Security Disability Insurance and a rent subsidy that helps him afford a one-bedroom efficiency in Falls Church, a Washington suburb. A few years ago Roach also received $33 per month in food stamp benefits, a little more than twice Virginia’s minimum monthly benefit of $16.
The meager amount of assistance, combined with the shame of seeking help and the hassle of filling out forms, led Roach to give up when it came time to re-certify his poverty with the state, something Virginia SNAP recipients have to do every six months.
“They would ask everything. They wanted all the personal information you could give them about yourself,” Roach said. “I hated it.”
Roach felt frustrated by the Virginia Department of Social Services’ 18-page application form, which asks people seeking benefits a wide range of questions about their income, assets, family situation and expenses — standard information required from nutrition assistance applicants in any state. He particularly disliked a question about whether he owned a burial plot.
“I thought it was very unpleasant,” he said. “A very morbid question.”
(A version of the form on the DSS website indicates the question is only for people seeking “Medicaid, Auxiliary Grants, or Refugee Medical Assistance,” but the query is on the same page as other questions about resources for SNAP applicants.)
The Virginia Department of Social Services has seen its food stamp caseload nearly double from more than 232,000 in July 2007, before the onset of the Great Recession, to nearly 459,000 today. A spokesman said the agency has not received a corresponding increase in funding to process the claims. Roach said he thinks it’s inevitable that the caseworkers’ stress trickles down.
“They’re so overworked and so underpaid and so underappreciated it gets taken right out on the client,” Roach said. “It rolls downhill. That’s exactly what happens in this system.”
Republicans in Congress are seeking food stamp reforms that would save the federal government money by subjecting applicants to more stringent asset tests. Another proposal is require more of the 4 million able-bodied childless adults receiving SNAP to work or engage in “work activities” for at least 20 hours a week to receive benefits. A GOP measure the House of Representatives voted on in June would have given states incentives to deny benefits to working-age childless adults with disabilities — people like Roach.
“I’m 100 percent dependent on the government so when the Republicans start shaking their fists it scares the hell out of me,” Roach said. “Just because I’m unable to work I can’t support myself.”
But Republicans have said they’ll jettison the latter idea when the House votes on food stamps again in the coming months. The forthcoming legislation would cut SNAP by $40 billion over 10 years, or roughly 5 percent of the program’s near-$800 billion cost in that time.
If Republicans do get their way, which is unlikely, it wouldn’t matter to the millions of other people who are eligible for food stamps but don’t receive them. Not that these people have an easy time living without the benefits. Roach, for instance, said he’s always out of money by the end of the month. His checking account is currently $44 in the negative after he bought a ham & cheese sub for a friend, triggering an overdraft charge.
“I had treated a friend to lunch at Subway,” he said. “Something I rarely get to do is treat someone else to a meal.”

…read more
Republished from: Press TV

The Fed’s Confession: We Can Avoid A Crash At The End Of QE If Everybody Believes That Everybody Believes In A Mirage….

Wolf Richter
What an army of rabble-rousers, economists (those banished from the mainstream media), and bloggers, including your humble servant, have been hammering on for years, a study by the San Francisco Fed now finally confessed: Quantitative Easing didn’t do a heck of a lot of good for the real economy.
Whatever it did for Wall Street, and however it shifted wealth to the upper echelon of society, and however it destroyed what little remained of the free markets, and whatever distortions, misallocations, and bubbles it created, QE had “at best,” – emphasis mine – “moderate effects on economic growth,” the study said.
It estimated that the effects of QE on GDP growth were “smaller and more uncertain than a conventional policy move of temporarily reducing the federal funds rate by 0.25 percentage point.” So almost nothing, despite the Fed’s nearly $3-trillion money-printing and bond-buying binge.
The crux of the Fed’s confession: if anything has impact, it isn’t the actual money, but words. “Our analysis suggests that communication” – emphasis mine – “about when the Fed will begin to raise the federal funds rate from its near-zero level will be more important than signals about the precise timing of the end of QE3.”
But why is the Fed suddenly admitting that QE hasn’t accomplished much, now, with impeccable timing, just as it is preparing to take away the spiked punchbowl.
If the Fed lets its asset purchases peter out in mid-2014 – which seems increasingly likely – it will impact the markets in two ways: the flood of printed money, $85 billion a month, will no longer wash over the worldwide financial markets, and that’s a lot of moolah, enough to buy a few good-sized companies here and there on a monthly basis. It will be sorely missed.
The other area of impact? Back in early 2009, the Fed went all out to create the impression that printing a few trillions and forcing interest rates to near zero would re-inflate asset values. And the power structure jumped on that bandwagon, from President Obama and Warren Buffett on down, and it became the established belief propagated ceaselessly in the financial media, through financial advisors, on radio shows across the country….
Gradually, more and more people – hedge funds, insurance companies, TBTF banks, Buffet himself, his empire, and other direct beneficiaries of this newly printed money – believed that asset prices would rise, and they bought. And asset prices therefore went up. Other people saw this and began to believe the same, and soon “everybody” – not everybody but enough money – believed that assets would go up, and when they looked around to find confirmation, they saw that everybody believed the same thing, that in fact, everybody believed that everybody believed that asset prices would rise. And the party around the punch bowl was on.
It’s called “confidence.” So they poured more money into the markets around the world, regardless of risks and reality, and asset prices jumped because everybody believed that everybody believed that they would. Trillions were being printed in different corners of the Planet to fund the spree. And each wave inflated another asset class, or another local market.

But the system kept tripping. Each time, the expiration date of QE approached, doubts arose that everybody still believed that everybody believed that markets would rise, and so markets swooned. It took a new generation of QE to prop them up. And each time, the bubbles got bigger and more perilous.
Earlier this year, with bubbles too big to ignore, the Fed began to worry that they might take down the financial system again, which even the Fed didn’t want to do. Highly leveragedmortgage REITs were going haywire. Private equity funds were plowing tens of billions into vacant single-family homes to rent them out, though half remain vacant. Risks in even the worst junk bonds became practically invisible, and these time bombs are now sitting on the shelves of financial institutions and bond funds ready to blow up … without compensating their hapless owners for that risk. And people are once more creating toxic securities of the type that brought on the financial crisis – only worse [my take... Wall Street Engineers Newest Frankenstein’s Monster For Housing].
That’s when the “taper talk” commenced. Fed governors began spreading doubts about what Wall Street has been wallowing in, QE Infinity. Then dates appeared on the calendar. So people started to look around to see if everybody still believed that everybody believed that all assets would continue to go up, and suddenly they saw some doubters and even agnostics. It caused a rout in the bond market.
But the Fed is still printing just as prodigiously as before, and it promised to keep interest rates near zero practically forever. For a little while, simply not everybody believed any longer that everybody still believed in the mirage. A harbinger of things to come once the reality of the missing moolah hits: when everybody believes that everybody believes that asset values would head south. Envision a dizzying crash.
No way José. Instead, the Fed would reconstruct the belief system. So it shifted its manipulation machine into reverse. While it had preached for years that QE was re-inflating asset values and liberally took credit for the “wealth effect,” it now says that QE had nothing to do with it, that asset values ballooned on their own or whatever, and that investors shouldn’t fear the end of QE because QE never mattered in the first place.
Economists are already being quoted in the media confirming precisely that, and radio talk shows discuss it, and the hope is that everybody will soon believe that everybody believes that the party can go on without the punch bowl; that in fact, it had been there all along just for decoration. And so the party might go on a little longer, until someone discovers the missing moolah – or the economic realities hidden under these assets.
“You don’t seem to think Abenomics is working,” a reader wrote, followed by tough questions and a comparison to Kyle Bass, who has been betting on a full-blown Japan crisis. It got me thinking (which is trouble). I’m attached to Japan. What started in 1996 has turned into a complex relationship. But now that Abenomics is the religion of salvation, I’m even more worried. Read…. Why I’m Deeply Worried About Japan – And Why Betting On The Collapse Of JGBs Is A Horrible Idea.

Ron Paul: Our Peaceful Revolution Will Make Bankers, Crony Capitalists and War Profiteers Suffer!

Ron Paul:Our Peaceful Revolution Will Make Bankers, Crony Capitalists and War Profiteers Suffer! Part 1

Ron Paul:Our Peaceful Revolution Will Make Bankers, Crony Capitalists and War Profiteers Suffer! Part 2

Congress starts investigating Bitcoin

Sen. Tom Carper (D-Del.) (Charles Dharapak / AP)
Sen. Tom Carper (D-Del.) (Charles Dharapak/AP)
Bitcoin, the once-obscure virtual currency, is getting attention from the most mainstream of all institutions: Congress. The chairman of the Senate Committee on Homeland Security, Thomas Carper (D-Del.) and his Republican counterpart Tom Coburn (R-Okla.) have announced plans to begin probing the virtual currency and the regulatory regime that governs it.
The new inquiry was announced in a Monday letter to Homeland Security Secretary Janet Napolitano. “Virtual currencies appear to be an important emerging area,” the senators wrote, arguing that the subject “demands a holistic and whole-government approach   to understand and provide a sensible regulatory framework.” Similar letters were also sent to the Department of Justice, the Federal Reserve, Department of Treasury, the Securities and Exchanges Commission, the Office of Management and Budget, and the Commodities Futures Trading Commission.
To that end, the Homeland Security Committee is asking the Obama administration to provide details about all of its current “policies, procedures, guidance or advisories” related to virtual currencies and information about “plans or strategies regarding virtual currencies.”
Congress isn’t the only government institution taking a closer look at the cryptocurrency. Also yesterday, the New York Department of Financial Services announced that it was initiating its own probe of the subject. It subpoenaed 22 companies with a significant role in the Bitcoin economy with an eye to determining whether and how those firms were subject to New York financial regulations.
As more and more regulators become interested in Bitcoin, it could become increasingly difficult for firms to enter the Bitcoin marketplace. Indeed, Congress could play an important rule by establishing a uniform set of federal rules that preempt conflicting state laws and give Bitcoin startups greater certainty about what rules they must follow.

Bash Brothers: How Globalization and Technology Teamed Up to Crush Middle-Class Workers

Source The Atlantic

Profits have never been higher. Wages have never been lower.
Okay, that sounds like an awfully oversimplified analysis of the frustrating recovery. And it is sort of simplified. It's also sort of true.

Go back to 1960, and corporate profits have never been higher while salary income has never been lower, as a share of GDP. Take a look here (graph via Floyd Norris):

Screen Shot 2013-08-12 at 8.50.15 AM.png
Screen Shot 2013-08-12 at 8.50.02 AM.png
This isn't a new trend, but something really did change in the last generation. Here's a graph of the growth in corporate profits, labor income, and GDP since 1970. As you can see, corporate profits took off in the 1990s, returned to earth after the tech bubble burst and then, in the 2000s, started jumping around like a bouncy ball dropped from a helicopter. Meanwhile, labor income fell further and further behind overall growth.

Screen Shot 2013-03-04 at 12.35.48 PM.png

Sky-high corporate profit and stagnant wages aren't juxtaposing stories. They're the same story. And the main characters of that story are the familiar twin forces of globalization and technology, both of which have accelerated since the early 1990s.

In a sentence: Globalization (in particular, increased trade with China) has opened the doors to more consumers and more cheap workers while labor-saving technology has created more efficient ways to serve those consumers. As a result, the businesses are bigger, but the workers' share is getting smaller. Fifty years ago, the four most valuable U.S. companies employed an average of 430,000 people with an average market cap of $180 billion. These days, the largest U.S. companies have about 2X the market cap of their 1964 counterparts with one-fourth of the employees. That's what doing more with less looks like.

In macro explanations of the economy, globalizationandtechnology are often served up together in one big mixture, likeanother G&T you might know. But they don't have a monolithic effect. These are two distinct forces with distinct implications for distinct cities, according to new research by David Autor, David Dorn, and Gordon Hanson.
You have to define something to measure it, so they isolated hundreds of "commuting zones" (sort of like metro areas) and used the growth of Chinese imports as a proxy of globalization. Technological change they took as the decline in a city area's routine-intensive jobs -- e.g.: bookkeeping -- which are easily replaced by computers.

Here's the bumper sticker version of their conclusion: Globalization increases unemployment; technology increases inequality.

Globalization: The authors found that metros with more exposure to Chinese trade -- mostly concentrated in the swoosh of states extending from Indiana down to the Gulf of Mexico and up through North Carolina -- saw significant job losses, both in manufacturing and overall. For every $1,000 increase in imports per worker, the share of people with jobs declined by 0.7 percentage points -- and more for non-college grads. As manufacturing jobs declined, demand for local services would decline, and thus job losses could extend into areas like retail and hotels.

Technology: The computerization of certain tasks hasn't reduced employment, the authors find. But it has reduced the availability of decent-paying, routine-heavy jobs. Middle-class jobs, like clerks and sales people and administration support, have disappeared as computers gradually learned to perform their routines more efficiently. But as those jobs disappeared, cities saw an increase in both high-skill work and lower-paid service sector work, leading to little overall change in employment.

Back to the top two graphs. With globalization replacing American workers with Chinese labor and computers replacing middle-class workers with software programs, labor costs have fallen for companies while demand has grown all over the world. The result has been higher profits, not just for the finance companies who make up a growing share of domestic corporate earnings, but also for manufacturing companies and other multinational firms. It's a sad, inescapable truth that many international companies are thriving, not despite the incredible shrinking American worker, but because of him.

US Government Threatens California City Trying to Save Homeowners From Foreclosure

foreclosure8 13In a move that is hard to fathom considering how many banks too big to fail are being fined for subprime mortgage fraud, the nation's top house financing regulator, the Federal Housing Finance Agency, is threatening that if the City of Richmond, California, uses eminent domain to save homes for families, mortgages will be cut off for the city.

According to the Los Angeles Times:

The salvo from the Federal Housing Finance Agency came Thursday, on the heels of a lawsuit directed by major Wall Street firms and U.S.-sponsored mortgage giants Fannie Mae and Freddie Mac against the Bay Area city of Richmond.
Richmond is the first to push forward with the plan, also being debated in cities across the state and nation. Richmond wants to require lenders and investors to sell underwater mortgages at a deep discount. The city would then refinance borrowers into more-affordable mortgages.

The federal housing agency, which regulates Fannie and Freddie, on Thursday made clear it doesn't intend to let this happen. The agency said it would instruct Fannie and Freddie to "limit, restrict or cease business activities" in any jurisdiction using eminent domain to seize mortgages.
BuzzFlash at Truthout wrote a three-part series on the grassroots and innovative efforts of Richmond, an econonmically-challenged city in the Bay Area, to maintain a strong community amidst predatory lending and environmental assaults (by Chevron).  One of their strategies is to seize foreclosed (or near foreclosed) homes -- meeting certain criteria -- through the use of eminent domain.  As BuzzFlash at Truthout reported, Richmond would then resell them to the residents at current market value through a third party lender.
But yet again the Obama administration is siding with the big bank and secondary lenders -- the very ones that they are fining (while avoiding criminal cases against them) for everything from nationwide deceptive mortgage practices (in poorer communities), robo-signed foreclosures that are often in error, cash bonuses from banks for deceptive practices, and on and on.  It's a thieves den list of mortgage abuse, particularly targeting communities of color.  

Yet, the power of eminent domain and taxpayer subsidies that is used commonly to build sports stadiums and even expensive housing developments for multi-millionaires (and billionaires) -- as Dave Zirin recently recounted in Truthout -- is the focus of ire and legal threats by the Obama administration when it comes to saving homes for people who want to live in them and build their communities.

But Richmond is not backing down, says the LA Times:

Even with prices rebounding in Richmond, many residents still struggle with outsized mortgage payments, said Richmond Mayor Gayle McLoughlin.

"The fact these threats are being put out there are very, very disturbing — but we are not afraid to go to court," McLoughlin said. "We are looking forward to it, because we think fully that our legal reasoning will win."

Cornell Law professor Robert C. Hockett, who advised Mortgage Resolution Partners on the proposal, said that the federal housing finance agency was acting outside of its authority by issuing its threats.

"How many times must it be repeated that principal write-downs on deeply underwater mortgage loans increase the value of the loans — even while keeping homeowners in their homes and communities intact?" Hockett said. "This is not only illegal, it is disgusting."
The history of using eminent domain to build sports stadiums (and other structures that benefit the private sector, not to mention the increased value of the land) goes back a long way.  In the '50s, Pittsburgh displaced some 8000 residents to construct the original Civic Arena, now replaced by the Consol Energy Center.

In fact, the Consol Energy Center, new home of the Pittsburgh Penguins, brings up another point. These stadiums (and again eminent domain is used to acquire private property from the poor and middle class for other purposes that benefit the private market) become branded entities with names not of teams or municipalities or people who have contributed to the common good.  The sporting venue goes from neighborhood to stadium to commercially-branded product, and often with large taxpayer support (as in Detroit) for private gain, with little proof that they help in revitalizing a city in almost anyway.  

Perhaps -- sarcastically -- the suggestion for Richmond is to have foreclosed homeowners, many of them victims of predatory lending, sell the naming rights to their houses to the banks too big to fail.  Maybe the Federal Housing Finance Agency would agree to a community of homes named Bank of America or Fannie Mae or JP Morgan Chase.

Who needs the names of families who are enriched by their homes when you can brand a house with a corporation's name, particularly the one that defrauded the homeowners in the first place?  That's justice in the Obama administration when it comes to minorities and home ownership; that's the free market of unjust and illegal practices at work.

Minorities used to be redlined out of mortgage access; now the Federal Housing Finance Agency is threatening, in essence, to revive the practice in Richmond.

Or as Pat Garofalo of US News and World Report wrote about the governor of Michigan's "emergency manager" declaring Detroit bankrupt, while Governor Snyder was giving a few hundred million in taxpayer subsidies to build a new Detroit Red Wings stadium, "Let them eat pucks."

(Photo: bogleharmond)

Dreamliner: Airline Detects Wiring Faults

An ANA's Boeing Co's 787 Dreamliner plane receives restoration work at Okayama airport in Okayama, Japan
ANA operates 20 Boeing 787 Dreamliners

The Japanese airline ANA says it has found an electrical wiring problem in fire extinguishers for engines of three Dreamliner jets.
The problem - the latest in a series of setbacks for Boeing's 787 - was first discovered during pre-flight maintenance of a jet at Tokyo airport, an ANA spokeswoman said.
The airline said it was investigating whether the faulty wiring would have caused the extinguisher to malfunction in case of an engine fire.
After ANA reported the fault, rival Japan Airlines turned back a 787 jet en route to Helsinki to check the fire extinguisher wiring.
JAL said it was now conducting checks on all 10 of its 787s.
Damage to the Ethiopia Airlines Dreamliner.
A fire on a 787 in July forced Heathrow to ground flights temporarily
The 787, Boeing's most advanced aircraft which was designed with fuel efficiency in mind, has suffered a spate of problems since its first flight in December 2009.
In the latest incident, fire broke out on an Ethiopian Airlines 787 at London's Heathrow airport on July 12, triggering the inspection of the planes' beacons, used to locate the aircraft in the event of a crash.
Concerns over the so-called emergency locator transmitters are separate to the main electrical power supply battery faults which led to the grounding of 787 aircraft worldwide earlier this year after batteries overheated on two Japanese jets in quick succession in January.
The action led to delivery delays which caused Thomson Airways to scrap plans to use the ultra-green aircraft in May and June.
The carrier finally began Dreamliner services earlier this month.
British Airways has taken delivery of the first of its 24 Dreamliners, while Virgin Atlantic is due to receive the first of its 16 Dreamliners in September next year.

Robert Kiyosaki: I Don’t Trust the Financial System, But I Do Trust Gold!… - Financial expert Robert Kiyosaki points out, “The rich are getting richer than ever before, but the middle class is shrinking . . . . Both Obama and Romney promised to save them, and when politicians promise to save your butt, you know your butt is gone.” Kiyosaki, author of the mega best seller, “Rich Dad/Poor Dad,” goes on to say, “If you trust Obama or the Republicans or the Democrats, then you don’t need to buy gold. But I don’t trust them. I don’t trust Bernanke. I don’t trust the financial system, but I do trust gold. So, it’s not in God I trust, it’s in gold I trust.” Join Greg Hunter of as he goes One-on-One with Robert Kiyosaki of

New Signs One Of America’s Biggest Unions Is In Trouble – Union Crisis? – America Live

AFL-CIO Goes On Recruiting Tear!
New Signs One Of America’s Biggest Unions Is In Trouble – Union Crisis? – America Live

Peter Schiff: Taxes, Inflation Will Cause More US Emigration

Peter Schiff: Taxes, Inflation Will Cause More US Emigration

Eat the Rich- An Animated Fairy Tale from the California Federation of T...

What austerity? Sir Mervyn King leaves Bank of England with THREE leaving parties, a £597 silver napkin ring and a huge £10,000 portrait of himself

  • Governor retires with presents and parties costing nearly £25,000
  • Gifts included portrait, napkin ring and £2,505 bust of German politician

The Bank of England spent nearly £25,000 on leaving gifts and parties to mark the retirement of former governor Mervyn King.
Lord King finished his ten-year stewardship of the Bank last month, handing over to Canadian Mark Carney.
He was showered with gifts worth £13,000 and treated to farewell events costing more than £10,000.
Gift: Sir Mervyn King was given a copy of this portrait by Diana Blakeney as part of his farewell from the Bank of England
Gift: Sir Mervyn King was given a copy of this portrait by Diana Blakeney as part of his farewell from the Bank of England

The most expensive gift was a £10,000 bespoke copy of his portrait, a traditional leaving present for governors, by artist Diana Blakeney. The original will hang at the Bank, alongside portraits of the men who have held the position since the first governor in 1694.
He was also presented with a £597 silver napkin ring, a replica of those used in the directors’ dining room and another traditional parting gift. Lord King also took home a more personal gift, a bust of German literary giant and politician Johann von Goethe, worth £2,505.
The Bank also laid on three events – an evening reception costing £4,672 and two dinners costing £3,450 and £3,800. Included in the events cost was £1,501 for flowers and invitations. It took the final bill to £24,922 – just below the national average wage of £26,000. The total, revealed in a Freedom of Information request, was paid by the Bank of England.
Fond farewell: Sir Mervyn King left the Bank of England with a portrait of himself, a silver napkin ring and a bust of German politician Johann von Goethe
Fond farewell: Sir Mervyn King left the Bank of England with a portrait of himself, a silver napkin ring and a bust of German politician Johann von Goethe
Largesse: Critics said the revelations reveal the apparent culture of extravagance at the Bank, which has preached the virtues of austerity
Largesse: Critics said the revelations reveal the apparent culture of extravagance at the Bank, which has preached the virtues of austerity
Successor: Canadian Mark Carney took over as governor in July
Successor: Canadian Mark Carney took over as governor in July
Lord King, 65, who earned a £300,000 salary, will enjoy a pension from the Bank believed to be worth more than £200,000 a year.
The Bank, which is owned by the Treasury, is not directly funded by taxpayers, instead raising cash from a variety of sources including the financial sector.
The main source is known as the ‘cash ratio deposit’, under which lenders deposit cash interest-free.
The Bank then ploughs this into investments that pay interest, and keeps the difference for itself.
But the Government’s 39 per cent stake in Lloyds and 81 per cent in Royal Bank of Scotland mean the governor’s gifts were technically funded in part by the State.
Matthew Sinclair of the TaxPayers’ Alliance said: ‘These extravagant leaving gifts are in stark contrast to the situation faced by millions struggling with the cost of living thanks to stubborn levels of inflation overseen by Mervyn King.
‘Taxpayers and savers continue to pay for Bank of England policy so they will find it particularly egregious they are also paying so much for the governor’s goodbyes.’
Lord King’s predecessor Eddie George, who died in 2009, was given some furniture when he left, although a spokesman could not remember what it was.

The Market Is Getting Dragged Lower By The Critical Mass of Hindeburg Omens, Weaker Yen, Mortgage Activity

6th Hindenburg Omen In 8 Days Sends Stocks Slumping
As we noted last night, the current cluster of Hindenburg Omens is the most concentrated on record and today just made it worse. Critically, the Hindenburg Omen’s underlying construction is indicative of a market in deep confusion with momentum, advancers, decliners, new highs, and new lows all in divergence. For the 6th day in the last 8, the market has flashed another warning that all is not well in this ‘most levered ever’ equity market.
The equity market internals suggest great confusion…

Is it any wonder?

Charts: Bloomberg
Mortgage Activity Plunges 50% To April 2011 Levels
For the 12th week of the last 14, mortgage applications in the US fell this week. Despite the ongoing (though quietening) exclamation that the housing ‘recovery’ will continue, it is hard for even the most ardent ‘believer’ to still think that a rise in interest rates will have no effect on housing when mortgage actvity has collapsed by ove 50% in the last 3 months. At the lowest level since April 2011, back well below the lowest levels of the 2000s boom with home purchase and refis plunging, we suspect a few ‘investors’ will be rethining their theses (or finding another pillar to base their ‘buys’ on).
Mortgage Apps are down 50% in 3 months…
Yen plunging now

Homebuilders and Real Estate falling into an “Economic sink hole?”

Home builders and Real Estate (IYR) gave an early signal to some up coming economic and broad stock market weakness back in 2006 & 2007.
Of late Home builders and IYR are sinking in price, breaking lower below support of large bearish patterns.
Is the message coming from them something important or just noise?
Stocks as overvalued now as at 2007 high
Commentary: Valuation model with good record flashing “sell”
The Stocks Market Is Still All About Yields And The Japanese Yen

This morning, the S&P 500 Index e-mini futures (ES-U3) are trading lower by 3.00 points to 1687.75 per contract. It seems that the major stock market indexes are just spinning wheels in the mud and really going nowhere. The two most important charts that any trader can follow are the 10-year bond yield chart, and the USD/JPY chart. Higher yields are problematic for the real estate stocks, housing stocks, mortgage REITS, and Utility stocks. When the USD/JPY chart declines it will hurt the highly leveraged institutions that are playing that carry trade, so this will usually hurt stock prices. As for everything else in the market, it is simply just noise. Some equities that are important to follow include the iShares Barclays 20+ Yr Treasury Bond (ETF) (NYSEARCA:TLT), iShares Barclays 7-10 Year Treasury Bond Fund (NYSEARCA:IEF), and the CurrencyShares Japanese Yen Trust (NYSEARCA:FXY).

The £170bn secret raid on your savings: How keeping rates at a record low is a government ploy to pay off its debts

A stealth raid by the Bank of England has stripped savers of more than £170billion, a Money Mail investigation can reveal.
By slashing the base rate to a record low of 0.5 per cent and allowing the cost of living to soar for more than four years, the Bank has whittled away the value of cash sitting in High Street accounts through a ‘secret tax’.
And it is not just savers who have effectively had their money pinched. Anyone who has a fixed monthly income, such as pensioners, or has had a tiny pay rise, has also lost out.
Losing out: How £10,000 in an average easy-access savings account fell in value since 2009
Losing out: How £10,000 in an average easy-access savings account fell in value since 2009
Someone who earned £20,000 four years ago is now £804 worse off. A retired person living off a personal pension of £550 a month has lost £1,236 a year. A saver who has kept £10,000 in the best easy-access account has seen the value plunge by £1,243.
The money pickpocketed from savings and wages through this cunning attack is being used to pay off the nation’s debtors, including our own Government. This grab is about to get worse, too.
Last week, the Bank of England’s issued forward guidance - the first time it has ever taken such a radical step - and indicated that interest rates could remain low until 2016. The new governor, Mark Carney, has formally linked the base rate to unemployment rather than inflation.
As such, rates are unlikely to move until Britain’s jobless total is less than 7 per cent of the working population. This also allows the Bank to keep rises in the cost of living unchecked unless they climb above 2.5 per cent for the long term.
At current levels, savers would be stripped of £35billion a year. If the cost of living soars further it could slash billions more from the incomes of the prudent and hard-working.
Dr Ros Altmann, a former Downing Street pensions adviser, says: ‘What we are seeing is a massive redistribution of assets from savers to borrowers.
‘Every time the cost of living outstrips pay rises or interest on High Street accounts, money disappears out of the pockets of people who have been prudent into the pockets of those who have big debts to pay.’


Inflation: 25 years ago, you could have bought two Mars bars for 45p, but today you can buy one
Inflation: 25 years ago, you could have bought two Mars bars for 45p, but today you can buy one
The raid on your savings and wages happens because the pound in your pocket is being eroded by inflation. Inflation is the measure of how prices in the economy have risen. It shows how much food, drink, clothes and things we do often (such as going to the cinema) rise or fall in price.
For example, 25 years ago, you could have bought two Mars bars for 45p, but today you can buy one. This is inflation at work. There are two official measures - the retail prices index (RPI) and the consumer prices index (CPI) - and they are calculated every month by the Office for National Statistics.
The index the Government and the Bank of England use is the CPI. Currently, the annual CPI is 2.8 per cent. This essentially means that £10 of goods last year now costs £10.28. It’s vital that your savings interest or pay rises match this rate, or you will lose money.
For example, imagine you had £10,000 in a savings account earning a rate of 1.5 per cent. By the end of the year, the balance after interest was added would be £10,150. But if inflation is 3 per cent, the cost of the things you spend your money on would have gone up far quicker than the interest you earned.
You’d need £10,300 to buy the same things that £10,000 bought you 12 months earlier.
As a result, despite the interest you earned, you’d be worse off. It’s a sneaky - and complicated - trick. And because the actual pounds and pence in your account will not have gone down, it’s easy to be lured into a false sense of security. But anyone who has noticed how everything seems to be getting more expensive is likely to have been a victim.
Jason Riddle, from campaign group Save Our Savers, says: ‘There are plenty of people doing without things they used to buy because they have got too expensive and that is all because of inflation.
‘It makes ordinary people poorer, but is a huge benefit to anyone who has a debt.’ It has been the Bank of England’s job to control inflation - it has a target of 2 per cent - and it does this by moving interest rates up and down.
But since the credit crunch, getting to grips with inflation has not been a priority - so it has been above target for 43 months now. And inflation has also been higher than interest rates for 58 months. Before this, the last time interest rates didn’t beat rises in the cost of living was in December 1980.


Research for Money Mail by Save Our Savers shows how savers have been stripped of cash for the past four years. In 2009, the Bank of England cut its base rate to a historic low of 0.5 per cent. As a result, banks and building societies started to reduce the interest they paid on hundreds of accounts.
The average rate for the year was 1.95 per cent. But inflation for 2009 was 2.9 per cent. As a result, the loss from savers accounts was £28billion. The cost of living then climbed steadily and peaked at 4.2 per cent for 2011, stripping £42billion more from savers.
The rate of increase has fallen back slightly since then and yesterday the Bank declared it had slowed slightly again to 2.8 per cent. However, interest on savings accounts is still plunging.
The falls have been compounded by the introduction of the Government’s Funding For Lending scheme, which has given the banks a cheap source of cash. They no longer need to pay interest to attract savers’ money and so have been cutting rates.
There is currently £1.2trillion sitting in High Street accounts and it’s earning an average interest of 1.66 per cent. With banks and building societies now slashing the payouts on closed deals and reducing what they pay on best buys, this average is likely to plunge further. In total, since 2009 the inflation raid has cost savers £170 billion.


Workers are also losing out: Every year since 2009 pay has been rising more slowly than inflation
Workers are also losing out: Every year since 2009 pay has been rising more slowly than inflation
But it’s not just those with cash in High Street accounts that are losing out. Workers are being stripped of income because salary rises have lagged behind increases in the cost of living. For example, in 2009 the average pay rise across the UK was just 1.8 per cent - but workers will have seen their cost of living rise by 3.2 per cent.
Although someone who was paid £20,000 got a pay rise of £360 from their boss, they would need to earn £20,640 to buy the same things that they bought a year earlier.
Every year since then, pay has been rising more slowly than inflation. It’s meant that while someone who once earned £20,000 is now being paid £21,858, they would actually need to earn £22,662 to have exactly the same amount of purchasing power as they had four years earlier.
The effect is even more deadly for the retired with fixed pension payouts from an annuity. Their income does not rise every year - in our example, they get £550 paid into their bank account every month for life.
But according to our research, they would now need to be receiving an income of £653 a month to buy the same things as they did four years earlier. They are effectively £1,236 a year worse off.


So if you're losing money, where does it go? Again, it’s extremely complicated, but essentially it pays for a reduction in the debts of anyone who owes money. That inflation has been allowed to carry on above target is not an accident, rather it is a deliberate tactic by policymakers because the country owes so much money.
The Government has debts of £1.2trillion and households owe £1.4trillion. But, just as with money in savings accounts, every penny of this is worth less when the country has inflation. If the cost of living rises by 2.9 per cent, all this debt loses is a bit of its value.
Essentially, £34.8billion of national debt and £40.6billion of personal debt is wiped out. You only need to look at the housing market to see how this works. A mortgage of £39,000 would have bought the average home 20 years ago.
Today you would have to borrow £127,500 to buy the same property. Suddenly the debt of £39,000 seems tiny, even though it would have bought you exactly the same thing. Of course, all money borrowed is growing at a rate of interest - but even so, a substantial proportion will still be wiped out because of inflation. And it’s savers’ cash that is being used to fund this gap.
Renowned economists have also noted the sneaky way in which governments use inflation as a form of secret taxation. Milton Friedman, for example, observed that ‘inflation is the one form of taxation that can be imposed without legislation’.
And John Maynard Keynes said: ‘By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens.’


At current levels, you can’t beat inflation - at least not without taking some risks. No High Street savings account currently pays more than inflation. The only surefire way was to take out an index-linked savings certificate with National Savings & Investments - but these have not been on general sale since September 2011 and are unlikely to return any time soon.
You can invest - that way your savings may grow and you can draw a monthly income. But whenever you put your money in the stock market, or in bonds, there is the risk that your capital may get wiped out.
It is possible to take a pension income that increases with inflation, but these can be very bad value for money.
When will rates rise? The benchmark chart from the inflation report shows how money markets expect rates to rise
When will rates rise? The benchmark chart from the inflation report shows how money markets expect rates to rise.

Peter Schiff: Taxes, Inflation Will Cause More US Emigration

Platinum and Palladium See Rising Investment Demand While Production Plummets

by GoldCore
Today’s AM fix was USD 1,323.25, EUR 999.06 and GBP 855.53 per ounce.
Yesterday’s AM fix was USD 1,334.00, EUR 1,002.41 and GBP 862.31 per ounce.
Gold fell $14.30 or 1% yesterday, closing at $1,321.70/oz. Silver rose $0.11 or 0.52%, closing at $21.45. Platinum edged up 0.2% to $1,495.24/oz, while palladium gained $0.25 to $736.25/oz.
Gold has crept higher in all currencies today and is particularly strong in Swiss francs which has come under pressure after the a report showed the Eurozone pulled out of recession last quarter. While German and French gross domestic product exceeded analysts forecasts, it is premature to become over excited about a recovery in the Eurozone which remains in a very precarious state.
Gold’s fall yesterday was attributed to unfounded fears that the U.S. Fed may begin tapering next month.  Atlanta Fed President Dennis Lockhart said that bond purchases may be reduced next month even though  inflation is below their target.  Profit taking was a more likely reason for yesterday’s small fall.

South African Platinum and Palladium Production – (Bloomberg Industries)

The Federal Reserve has been suggesting for months, indeed years, that they would return to more normal monetary policies by reducing bond buying programmes and gradually increasing interest rates. ‘Talk is cheap’ and it is always best to watch what central banks do rather than what they say.
Near zero interest rates and bond buying are set to continue for the foreseeable future. Precious metals will only be threatened if there is a sustained period of rising interest rates which lead to positive real interest rates. This is not going to happen anytime soon as it would lead to an economic recession and possibly a severe depression.
Platinum and palladium prices are likely to gain in the coming months as South African supply fall again due to widespread labour disputes and strike action, problems with the national electricity infrastructure and surging energy costs.

Bloomberg Chart of the Day

These significant challenges have created numerous disruptions to the mining industry in South Africa and greatly reduced domestic precious metal production in 2012 and this has continued in 2013.
Geological constraints and declining ore grades may also be leading to reduced production.
South Africa supplies almost 60% of the world’s platinum (including secondary supply) and 30% of the world’s palladium (including secondary supply).
According to Johnson Matthey, platinum production fell almost 16% in 2012 while palladium production declined 10% last year alone.
With prices well below their recent highs, looming production cuts will leave markets tight supporting prices and likely leading to higher prices.
A record deficit in platinum supplies is set to push prices higher and demand is boosted by the new exchange traded fund (ETF).
Platinum assets in exchange-traded products are set to exceed palladium holdings for the first time as investors bet on mining disruptions in South Africa, the world’s largest producer, according to TD Securities Inc.
The Bloomberg Chart of the Day (see above) shows holdings in platinum ETPs climbed 50% this year to 68.59 metric tons while palladium ETPs are up 19% to 69.4 tons.
Palladium assets have exceeded platinum since at least 2007, according to data compiled by Bloomberg.

Platinum, used in automobile catalytic converters, jewellery and increasingly as an investment and store of value, will have a record shortage of 844,000 ounces this year, as mining output in South Africa falls according to HSBC.
Assets in NewPlat, a South African ETP started on April 26, now account for about a quarter of all platinum in the products, data compiled by Bloomberg show.
South African investors realise that the physical deficit in platinum will lead to higher prices and are positioning accordingly.

Platinum in USD, 10 Year – (GoldCore)

Platinum will rise 13% to average $1,700/oz in the fourth quarter while palladium climbs 12% to $825/oz, according to TD Securities forecasts.
HSBC’s Jim Steel recently said that the “possibility exists for further disruptions to production in South Africa. Additionally, the long-term challenges of low platinum prices make a sizable amount of current production uneconomical. This leads us to believe that higher prices are necessary to sustain production longer term.”

Platinum in USD, 15 Year – (GoldCore)

GoldCore believe that the supply demand fundamentals are very strong and should lead to new record nominal prices above $2,300/oz for platinum and $1,125/oz for palladium in the coming years.
The fundamentals of both PGM metals look increasingly strong and both precious metals are attractive for those looking to further diversify the precious metals component of their investment and savings portfolio.
Owning physical platinum and palladium bullion in allocated accounts rather than an ETF  is important. With physical bullion in your possession or in allocated accounts there is zero default risk.
While there is no guarantee of return on capital , there is a guarantee of return of capital as bullion cannot be ‘bailed-in’ or become worthless as many stocks and bonds have done throughout history.
Despite the very strong fundamentals, buyers should not over allocate to these precious metals and a 5% allocation to each precious metal is prudent.


Tensions remain high between the United States and Russia after Moscow approved the asylum request made by NSA leaker Edward Snowden. But even as US President Barack Obama drops plans to meet with Russia’s Vladimir Putin, the countries’ foreign reps met this week to discuss relations. Gayane Chichakyan recaps this week’s meeting between US Secretary of State John Kerry and Russian Foreign Minister Sergey Lavrov, where the two statesmen weighed in on the “collisions” caused by disagreements among superpowers.

Bitcoin Comes Under Full Scale Attack by Regulators

Activist Post

Digital cryptocurrencies, like Bitcoin, still have a long way to go before mainstream use, but they seem to pose a huge threat to the existing financial paradigm as evidence by the recent frantic reaction by regulators.

To be clear, cryptocurrencies are threatening because no central entity can fully control them, and they also represent a nearly free and anonymous payment application.  It's an algorithm that has the potential to make central banks, commercial banks, private banks, and the tax collectors obsolete.

In other words, cryptocoins may be epoch changing for society.  In the same way the Internet killed publishing or how VoIP killed long distance telephone carriers, cryptocoins may in fact kill debt-based money and brick-and-mortar banking.

As Bucky Fuller said "You never change things by fighting the existing reality.To change something, build a new model that makes the existing model obsolete."

The banking cartel along with the government are scrambling to protect their territory and regulate Bitcoin so it doesn't have an unfair market advantage (and to protect the public from fraudsters of course).

The industry leaders in the Bitcoin digital currency community just got subpoenaed yesterday by financial regulators in New York.  New York's Department of Financial Services declared that Bitcoin is "a virtual Wild West for narcotraffickers and other criminals."

"We believe that – for a number of reasons – putting in place appropriate regulatory safeguards for virtual currencies will be beneficial to the long-term strength of the virtual currency industry," said NY Financial Services superintendent Benjamin Lawsky in a statement.

The formal reasons for the subpoenas were described:
First, safety and soundness requirements help build greater confidence among customers that the funds that they entrust to virtual currency companies will not get stuck in a digital black hole. Indeed, some consumers have expressed concerns about how quickly their virtual currency transactions are processed. Taking steps to ensure that these transactions – particularly redemptions – are processed promptly is vital to earning the faith and confidence of customers. 
Second, serving as a money changer of choice for terrorists, drug smugglers, illegal weapons dealers, money launderers, and human traffickers could expose the virtual currency industry to extraordinarily serious criminal penalties. Taking steps to root out illegal activity is both a legal and business imperative for virtual currency firms. 
Finally, both virtual currency companies – and the currencies themselves – have received significant interest from investors and venture capital firms. Similar to any other industry, greater transparency and accountability is critical to promoting sustained, longterm investment.
This statement seems conflicted because everyone already knows the big banks are the "money changers of choice for terrorists, drug smugglers, illegal weapons dealers, money launderers, and human traffickers" -- despite futile efforts to regulate them.

Secondly, Bitcoin became an over $1.2 billion currency without the "protection" of the regulators. Now that there is money to be made with Bitcoin, here come the vultures.

The subpoenas came shortly after a federal judge ruled that Bitcoin is a currency in a Ponzi-scheme case involving Bitcoin. "It is clear that Bitcoin can be used as money,” writes Judge Mazzant in the ruling. "It can be used to purchase goods or services, and as Shavers stated, used to pay for individual living expenses."

What's more, Congress just announced it's opening an investigation of Bitcoin today.

Politico reports:
A Senate committee is pressing federal regulators and law enforcement officials to explain how they plan to oversee Bitcoin and other virtual currencies as the issue gains increasing attention from government officials concerned about the role these new markets will play in the future. 
The Senate Homeland Security and Government Affairs Committee on Monday sent letters to several agencies requesting that they disclose their virtual currency policies, how they developed them, how agencies are coordinating and finally what they plan to do going forward.
"The more folks that we talked to related to this issue, it became very clear to us that this is not a sort of technology that’s going away,” a committee aide told Politico. "This isn’t something that’s a flash in the pan. It’s something that’s going to be with us."

Meanwhile, Bitcoin entrepreneurs are attempting to set up their own digital currency regulatory body called DATA - the Digital Asset Transfer Authority.

The committee for DATA will "work proactively with regulators and policymakers to adapt their requirements to our technologies and business models," the group said in an announcement late last month.

"We must develop and implement common risk management and compliance standards that address the public policy concerns associated with our businesses. And our firms must build risk management and compliance programs that meet those standards," it added.

Many of the entrepreneurs in this working group have also received subpoenas to appear in New York in front of regulators.

List of companies subpoenaed by the New York State Department of Financial Services:
Coinbase Inc.
eCoin Cashier
Payward, Inc.
TrustCash Holdings Inc.
Butterfly Labs
Andreesen Horowitz
Bitcoin Opportunity Fund
Boost VC Bitcoin Fund
Founders Fund
Google Ventures
Lightspeed Venture Partners
Tribeca Venture Partners
Tropos Funds
Union Square Ventures
Winklevoss Capital Management
To make matters worse, authorities are already seizing bank accounts of Bitcoin exchanges and vendors prior to any formal regulations.  They are even holding up cryptocurrency mining equipment at customs.

What do you think will happen to Bitcoin if it gets regulated like other currencies? Will the transfer fees explode? If Bitcoin gets over regulated, will a different cryptocurrency replace it as the "private" option?