Tuesday, December 3, 2013

Chart Of The Day: The Fed Now Owns One Third Of The Entire US Bond Market

The most important chart that nobody at the Fed seems to pay any attention to, and certainly none of the economists who urge the Fed to accelerate its monetization of Treasury paper, is shown below: it shows the Fed's total holdings of the entire bond market expressed in 10 Year equivalents (because as a reminder to the Krugmans and Bullards of the world a 3 Year is not the same as a 30 Year). As we, and the TBAC, have been pounding the table over the past year (here, here and here as a sample), the amount of securities that the Fed can absorb without crushing the liquidity in the "deepest" bond market in the world is rapidly declining, and specifically now that the Fed has refused to taper, it is absorbing over 0.3% of all Ten Year Equivalents, also known as "High Quality Collateral", from the private sector every week. The total number as per the most recent weekly update is now a whopping 33.18%, up from 32.85% the week before. Or, said otherwise, the Fed now owns a third of the entire US bond market.

At this pace, assuming Janet Yellen keeps delaying the taper again and again over fears of how "tighter" financial conditions would get, even as gross US bond issuance declines in line with the decline in deficit funding needs, the Fed will own just shy of half the entire bond market on December 31, 2014... and all of it some time in 2018.
Source: Stone McCarthy

Single-Payer Healthcare for Vermont on Track for 2017

avermont12 2Amidst the difficulties of rolling out the private insurance company model of the Affordable Healthcare Act (ACA), it has almost gone unnoticed by the national corporate media that one state is going ahead with plans for a single-payer non-profit system to be implemented by 2017.
Back in 2011, the Vermont legislature passed and Governor Peter Shumlin (D) signed the single-payer goal into law, which has its signifying slogan: "Everybody in, nobody out."
This "Medicare for all" precedent was made possible by the latitude allowed in the ACA for states to create their own health insurance models.
Currently, Vermont is implementing the ACA as work is being done to figure out the best way of financing it by combining federal funds with new state taxes.  The governor has brought on a young financial whiz kid, Michael Costa, to work on a politically passable form of funding single-payer by its implementation date. (The additional state cost is generally expected to be between $1.5 and 2 billion dollars, which is misleading because it doesn't account for the likely eventual cost savings of the program.)
The website OccupyDemocrats.com praises the Vermont plans:
A single-payer system would all but eliminate anybody dying unnecessarily due to lack of access to healthcare.  Our Declaration of Independence states, “We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness.”  How can somebody have life and happiness, without their health? 
Despite the glaring hypocrisy of rich, white males who owned slaves stating all men are created equal, we have come a long way from 1776.  Yet when it comes to the very basic need, we are left to the whim of a business.  Single-payer is inevitable, and the ACA is a giant step in that direction.  We must hold our officials to a higher standard which will get us there faster.  45,000 people [dying a year in the United States because of lack of health insurance] is absolutely unacceptable.  Vermont saw the writing on the wall. 
Will the rest of us?
As the website notes, Vermont was the first state to legally back marriage equality through legislation* -- and that right is slowly but steadily being passed by many states.
The Green Mountain State hopefully is taking the lead on Medicare for all.  It's an important start that should not go unnoticed as the ACA goes through its shakeout period.
* VERMONT - In 2009, Vermont became the first state to legalize gay marriage by legislative means. Vermont in 2000 had become the first state to allow civil unions for gay couples. After the state legislature passed the measure, Governor Jim Douglas vetoed it. Legislators then voted to override his veto." -- Reuters
UPDATE: In an e-mail to BuzzFlash at Truthout, Dr. Margaret Flowers, a nationally known advocate for single-payer health coverage -- and a writer with Kevin Zeese often appearing on Truthout -- argued that although Vermont is aiming for universal coverage, it cannot achieve a pure single-payer status. That is because national government insurance such as Medicare, Medicaid, and Veterans care, along with the potential continuation of private insurance companies, would mean that the full cost savings of a pure single-payer federal system won't likely be achieved. 
(Photo: DonkeyHotey)

Will Chinese Investors Save DETROIT?

My commentary on the influx of Chinese investors buying up real estate in Detroit. Will they help the city make a comeback or force the current people out?
China Moves to U.S. Projects
Chinese investors betting on Detroit comeback, buy up real estate

Currency War Feared After EU Cuts Rate – Central Bankers Worried About Deflation in Europe, The U.K., The U.S. And All Over The World

Central banks and debt

“Central banks have to avoid deflation at all costs and that’s really what they’re worried about. They’re worried about it in Europe, the U.K., the U.S. and all over the world.  This would really make the sovereign debt crisis far worse that what we saw in 2010 and 2011,” said Rickards, who is author of Currency Wars: The Making of the Next Global Crisis.
At the G20 meeting two months ago, members pledged to “refrain from competitive devaluation.”
But the euro’s fall has left many countries worried about their exports.
The Czech central bank began selling its own currency last week, forcing the koruna down by 4.4 per cent against the euro.
Peru’s central bank cut borrowing costs on Nov. 4 for the first time in four years, citing slow export growth.
New Zealand’s central bank has delayed expected rate hikes and Australia’s Reserve Bank chairman says its currency is overvalued and it may be forced to cut rates.
The Bank of Japan cut rates six months ago, but is still struggling to meet its inflation targets. Rickards believes the yen may sink as low as 110 to the US dollar.
Rickards said cutting rates is the wrong way to boost export growth and stimulate economies.
Back off on stimulus, Rickards says

Wow – The Holiday Shopping Season Is Off To A Horrible Start

According to the National Retail Federation, Americans spent an average of 4 percent less over the four day Thanksgiving weekend than they did last year.  Overall, that means that approximately $1.7 billion less was spent at U.S. retailers compared to last year.  It had already been projected that this holiday shopping season would be the worst for retailers since 2009, but if these numbers are any indication it may be even worse than expected.  So why is this happening?  Well, basically the American consumer is tapped out.  The unemployment crisis in this country is actually getting worse, poverty is absolutely exploding and the middle class is being systematically eviscerated.  In other words, you can’t get blood out of a stone.  Many retailers are offering extreme discounts in a desperate attempt to lure more shoppers, but the money simply isn’t there.
According to Yahoo News, the decline in shopping over the four day Thanksgiving weekend was the first decline that we have seen since the last recession…
Shoppers, on average, were expected to spend $407.02 during the four days, down 3.9 percent from last year. That would be the first decline since the 2009 holiday shopping season when the economy was just coming out of the recession.
The survey underscores the challenges stores have faced since the recession began in late 2007. Retailers had to offer deeper discounts to get people to shop during the downturn, but Americans still expect those “70 percent off” signs now during the recovery.
And according to the New York Times, Americans spent a total of 1.7 billion dollars less than they did last year…
Over the course of the weekend, consumers spent about $1.7 billion less on holiday shopping than they did the year before, according to the National Retail Federation, a retail trade organization.
“There are some economic challenges that many Americans still face,” said Matthew Shay, the chief executive of the retail federation. “So in general terms, many are intending to be a little bit more conservative with their budgets.”
But this downturn for retailers did not just begin this past weekend.  There have been signs of trouble for quite a while now.
For example, posted below is a photo that one of my readers sent to me.  This is a photo of the Beverly Center Mall in Beverly Hills, California that was taken in the middle of the day on Tuesday, November 19th.  She said that there “wasn’t a soul in that mall and the employees were all standing, staring into space with nothing to do”…
Beverley Center Mall in Beverly Hills
So where are all of the shoppers?
Why aren’t people out buying stuff?
Sadly, this is just the continuation of a trend that has been developing for more than a decade.  The truth is that Americans are simply not spending money as rapidly as they used to.
Posted below is a chart that shows that the velocity of M2 in the United States is at an all-time low.  In other words, the rate at which money circulates through our economy is frighteningly low and it continues to drop…
Velocity Of Money
As you can see from the chart above, this decline in the velocity of money has been going on since the late 1990s.  This is a sign of a very unhealthy economy.
Most Americans know that the U.S. economy is very heavily dependent on consumer spending.  But consumers have to make money first in order to spend it.  And right now we have a major employment crisis in this country.
At this point, the labor force participation rate in the United States is at a 35 year low, and an all-time record 102 million working age Americans do not have a job.
Meanwhile, the quality of our jobs continues to decline as well.  According to the U.S. Census Bureau, median household income in the United States has fallen for five years in a row, and right now the middle class is taking home a smaller share of the overall income pie than has ever been recorded before.
So should it really be such a surprise that consumers are totally tapped out?
The money simply is not there.
After accounting for inflation, 40 percent of all U.S. workers are currently making less than what a full-time minimum wage worker made back in 1968.
A recent CNN article profiled one of these workers.  Carman Iverson is a 28-year-old mother of four that makes minimum wage at McDonald’s.  If it was not for government assistance, her and her four children would not be able to survive…
Iverson said she started working in 2012 at $7.25 an hour, and makes $7.35 an hour now after Missouri adjusted the minimum wage. She makes between $400 and $600 a month. Her rent is $650 a month.
When asked how she could pay her rent on those wages, she said she had a landlord who works with her. “I’m kind of on my last little leg, because I’ve been late on rent. I’m actually behind three months in rent.
“Sometimes I can pay it, sometimes I can’t. I get paid twice a month, and both checks go to rent and the rest of it goes to utilities to the point where I don’t have any money left to buy anything for my kids — to buy them clothes, shoes or anything they need.”
She said she manages to feed her four children on $543 worth of food stamps a month.
But instead of fixing things, Barack Obama continues to pursue policies that will kill millions more good jobs.  It is absolutely amazing that there are any Americans that still support this guy.  For a long list of statistics that show how badly the economy has tanked since Obama entered the White House, please see this article.
You know that things are bad when increasing the number of Americans on food stamps by 15 million is regarded as an “economic accomplishment”.  In fact, a message recently posted on the official White House website says that “SNAP is boosting the economy right now” and that high food stamp enrollment is creating lots of jobs…
“SNAP’s effect extends beyond the food on a family’s table–to the grocery stores, truck drivers, warehouses, processing plants and farmers that helped get it there.”
So why don’t we just enroll all Americans in every welfare program?
Wouldn’t that produce an extreme economic boom?
And actually under Obama we are already well on our way.  According to the U.S. Census Bureau, 49.2 percent of all Americans are currently receiving benefits from at least one government program, and the federal government has spent an astounding 3.7 trillion dollars on welfare programs over the past five years.
Yes, there will always be poor people that cannot help themselves that will need our assistance.
But most Americans are capable of working if they could just find jobs.
Unfortunately, our jobs are being killed off and wages are going down.  The middle class is being systematically destroyed and U.S. consumer spending is drying up.
The horrible start to this holiday shopping season is just the beginning.
Things are going to get much worse than this.
The official blog can be found here.

Distributed by RINF Alternative News

DoD seeks plan to shut all U.S. commissaries

Defense officials have reportedly asked the Defense Commissary Agency to develop a plan to close all U.S. commissaries.
Defense officials have reportedly asked the Defense Commissary Agency to develop a plan to close all U.S. commissaries. (Staff Sgt. John D. Strong II / Air Force)

Defense officials have reportedly asked the Defense Commissary Agency to develop a plan to close all U.S. commissaries — about three-fourths of its stores, according to a resale community source familiar with details of a meeting with representatives of the Joint Staff and Pentagon comptroller’s office.
The source, who spoke on condition of anonymity, said the meeting was held within the last few weeks and was part of preparations for the fiscal 2015 DoD budget request that is due out on February.
That DeCA has been asked to prepare such a draft plan does not mean commissaries would close anytime soon. Even if such a plan was included in the defense budget request for fiscal 2015 — almost a year away — it would have to be approved by Congress, where many lawmakers would oppose it.
The Military Coalition, comprised of more than 30 military and veterans advocacy groups sharing a common agenda, also would fiercely oppose such a plan.
Still, the fact that defense officials want DeCA to draft a plan for how it potentially would carry out such a move is another sign of the heavy budget pressures weighing on the Pentagon as a result of sequestration.
The Defense Department had no direct comment on the commissary initiative. But Pentagon spokeswoman Joy Crabaugh said Defense Secretary Chuck Hagel “has made it clear on numerous occasions that all cost-cutting efforts need to be on the table” in order for DoD to meet the sequestration caps mandated under the 2011 Budget Control Act.”
“At this time, no final decisions have been made on the ... fiscal 2015 budget submission. Therefore, it would be inappropriate to discuss any specific budget decisions,” Crabaugh said.
DeCA has 178 commissaries in the U.S., including Alaska and Hawaii. Almost 70 stores operate overseas. Operating costs for the overseas stores account for 35 percent of DeCA’s budget and 16 percent of total worldwide sales.
Commissary officials negotiate lower prices for products based on volume. Closing all or most U.S. commissaries would lead to higher prices and a degraded benefit in remaining stores, Tom Gordy, Armed Forces Marketing Council president, said in written testimony to a panel of the House Armed Services Committee on Nov. 20.
The council represents over 330 manufacturers of products sold in commissaries, exchanges and other military venues.
The proposal to close U.S. stores was not discussed at the hearing, but in his written testimony Gordy said closing U.S. stores “would eliminate the benefit for millions of families, breaking a commitment that has been made to every service member.”
That such a proposal would come from within DoD is “very concerning,” said Steve Rossetti, director of government affairs for the American Logistics Association.
Commissaries are “one of the most valued benefits,” he said. “For what this costs the department, they get a huge return,” not only in terms of the benefit itself but in other factors such as jobs for military spouses. About 30 percent of DeCA employees are spouses.
DeCA receives nearly $1.4 billion in annual taxpayer subsidies. It has reduced its annual funding requirement by $700 million over the last 20 years, said DeCA Director Joseph Jeu.
Jeu said DeCA is constantly looking for ways to save money, but added that the agency has no more “low-hanging fruit” to cut.
But Rep. Joe Heck, R-Nev., an Army reservist, said other proposals under consideration include raising the commissary surcharge to 10 percent from the current 5 percent; raising prices by 2 percent to 3 percent to pay for shipping products to overseas stores; and creating an “enhanced” commissary that would sell other products at higher markups.
Any such changes would have a “great impact” on troops and families, Jeu told lawmakers.
Heck said that if such steps are necessary to maintain the benefit, DoD officials must consider them. “I encourage you to take that kind of perspective,” he told Jeu.■

Detroit Bankruptcy: Unions Participate in Bankers’ Conspiracy Against the Working Class

Joseph Kishore
Last week, the Michigan branch of the main US union for state and local government employees filed a joint motion in federal bankruptcy court to push for the sell-off of artwork at the Detroit Institute of Arts (DIA). In precise legal language, the document exposes the unions as full participants in the bankers’ conspiracy against the rights of the working class.
The motion (available here) was drafted by American Federation of State, County and Municipal Employees (AFSCME) Council 25, an AFL-CIO affiliate, in collaboration with Financial Guaranty Insurance Company, a major bond insurance firm. The FGIC and AFSCME Council 25 were joined in the motion by a number of other banks and financial institutions.
In the name of the city’s creditors, the motion urges Judge Steven Rhodes to establish a body, composed of an equal number of representatives from the unions and the bondholders and bond insurers, to oversee the “monetization” of the DIA’s artwork. Rhodes is due to rule tomorrow on whether the city, under the direction of Emergency Manager Kevyn Orr, can proceed with bankruptcy.
The motion begins by endorsing the bankruptcy process and the actions of Orr, a Wall Street bankruptcy lawyer who was installed as financial tsar to restructure Detroit in the interests of the banks. The “creditors,” the motion states, “understand and support the City’s goals—assuming the City files an appropriate plan of adjustment.” It expresses concern, however, that Orr’s proposals (which include slashing pensions and health care for city workers) could “engender lengthy and contentious litigation due to a failure to provide for monetization of [Detroit's] non-essential assets, including the Art, potentially one of the City’s most valuable assets.”
Far from opposing the bankruptcy, the union and its fellow creditors declare they want to “ensure that the City’s efforts to file and confirm an appropriate plan quickly are not wasted.”
The motion goes on to assert that since the artistic masterpieces at the DIA, worth “billions of dollars,” are “not connected with the delivery of any core services,” they should be “monetized.” AFSCME and its Wall Street allies warn against an “inappropriately low assessment” of the art’s value.
The word “maximize” (in relation to the potential cash payout) appears 19 times in the 18 pages of the main part of the filing. In this connection, the motion notes that federal bankruptcy law requires that the plan submitted by the city be “in the best interests of the creditors,” that it afford “all creditors the potential for the greatest economic return for Debtor’s assets,” and that it “provide more of a return than the liquidation value if the city’s assets could be liquidated.”
This is the language of financial vultures and thieves. That the assets in question belong to the people, that the DIA itself is the cultural soul of the city, that its contents are central to the education of the younger generation—this is of no consequence. The idea that art and culture are both a right and anecessity for working people is totally alien to the union and its fellow “creditors.”
With this legal action, AFSCME defines itself as a business enterprise. Its allies are the banks, bondholders, bond insurers and real estate speculators such as Quicken Loans chief Dan Gilbert, not the working class. The sole concern of AFSCME, which speaks here for the United Auto Workers, the Teamsters and the rest of the unions, is to obtain the biggest possible cut of the spoils from the bankers’ conspiracy to impoverish Detroit workers, sell off public assets such as the DIA art, and slash social services.
There is not a word in the document about the needs of AFSCME members or Detroit workers in general. That is, quite simply, of no concern to the union. AFSCME would like to minimize the devaluation of the assets of city pension funds by cashing in on masterpieces at the DIA not because it wants to maintain the benefits of retired city workers, but because the six-figure salaries of its executives are tied to their control of pension fund assets.
No organization that has any connection to the working class or the traditions of working class struggle could make such statements. By joining this disgusting motion, AFSCME is giving expression to the transformation of the unions as a whole.
The use of the term “union” can itself be deceiving, insofar as it evokes images of workers united in the defense of their interests or recalls previous traditions of class struggle. The unions have long since repudiated these traditions.
Nowhere is the transformation of these organizations clearer than in Detroit. Southeastern Michigan, from Detroit up to Flint, was at the heart of the industrial union movement of the 1930s, including the great battles that led to the formation of the United Auto Workers. The expansion of the DIA was connected to this process, reflected in the auto industry murals of Diego Rivera that frame the museum’s central court.
This history is anathema to the present-day unions. The basis for the transformation of these organizations into pro-corporate syndicates was laid many decades ago, in the political alliance forged with the Democratic Party, the anticommunist purges of the 1940s and 1950s, and the subordination of the working class to capitalism and the nation-state.
Beginning in the 1970s, the unions—in Detroit, throughout the country and internationally—responded to the crisis of capitalism by further integrating themselves into the corporate establishment and the state. The UAW facilitated the destruction of hundreds of thousands of auto jobs in the Detroit area. Over the past four years, it has worked with the Obama administration to lower wages for young workers to levels, in real terms, below those that prevailed in the 1920s.
The backward and corrupt officials who run these organizations have a deeply ingrained hostility to culture and anything else that encourages workers to think and develop a broader consciousness of themselves and their relationship to society. Such an understanding is a powerful engine of social struggle. For the unions, no less then the financial aristocracy, the DIA is not only a source of potential wealth, but a positive evil.
While the working class of Detroit is looking for a way to defend its pensions and health care, to save the DIA and preserve and expand its rights, all sides in the bankruptcy proceedings—including Orr and Michigan Governor Rick Snyder, the Democrats and the Republicans, the bondholders and the unions—support the looting of the city to benefit the banks and bondholders. To the extent that there are differences, it is over the division of the spoils.
We reject the claim that workers’ access to art must be sacrificed and that there are no resources to preserve both the DIA and the pensions of working people. Such claims are made at a time when the Federal Reserve is printing $85 billion a month to subsidize Wall Street, when the stock markets are soaring to record heights, and the richest 400 individuals in the US have increased their collective wealth to over $2 trillion.
We reject the subordination of the rights of the working class—including the right to culture—to the wealth of the financial aristocracy and the capitalist profit system. For that reason, we oppose the anti-working class organizations such as AFSCME and the UAW and fight for the building of new, independent and democratic organizations of working class struggle.
The social constituency for defending culture and all the achievements of mankind is the working class. However, to fight for its interests, the working class requires both independent political organization and a conscious understanding of the social and political forces operating against it. It is on this basis that the SEP is organizing a Workers Inquiry into the Attack on the DIA and the Bankruptcy of Detroit. We urge all workers and youth in the Detroit area to make plans to attend today by visiting detroitinquiry.org.
With permission
World Socialist Web Site

Distributed by RINF Alternative News

China to US: ‘Take Your 60,000 Tons of GMO-Contaminated Corn and Shove It’ - See more at: http://www.thedailysheeple.com/china-to-us-take-your-60000-tons-of-gmo-corn-and-shove-it_122013#sthash.uHNDTPl9.dpuf

China recently rejected 60,000 tons of corn being imported into the country from the United States when it was found to be contaminated with Syngenta’s MIR162, an insect-resistant strain of transgenic corn.
It seems MIR162 is not authorized in China, and the batch was returned according to regulations regarding genetically modified imports into the country.
This strain of Bacillus thuringiensis (or Bt) corn is only approved for food and/or feed in 11 countries throughout the world; the first country it was approved for human consumption in was the U.S., back in 2008.
So basically China — a country that had one of the worst food contamination scandals in history when tainted baby formula killed 6 infants and hospitalized 54,000…where one in three toys produced is filled with toxic heavy metals like lead that can cause brain damage…a nation with appalling levels of air pollution, bad to the point that the country has officially asked its foreign embassies to stop publishing data on it because it doesn’t want the world to know just how atrocious it is…a nation where mass animal die-offs in the tens of thousands are the norm…a country where the third longest river in the world actually turned blood red likely due to toxic run off…a country widely known for abusive working conditions in its factories and listed among the worst in the world for human trafficking/modern slavery… a country with government forced abortions daily due to a barbarous one-child policy, the kind where a mother is given an injection to kill her baby at seven months pregnant because she can’t come up with the $6,000 fine for violating said policy, who is then made to wait next to her baby’s lifeless body in her jail cell where she delivered him stillborn…China, home of the Tiananmen Square Massacre
China has not approved this corn to be served up to its population and actually rejected and returned the entire 60,000-ton batch.
Eat up, America.
Delivered by The Daily Sheeple

Record crowds over weekend, but spending declined

Retailers' Dilemma: A record number of shoppers turn out, but they spent less for the 1st time

Record crowds over weekend, but spending declined
View gallery

NEW YORK (AP) -- Retailers got Americans into stores during the start to the holiday shopping season. Now, they'll need to figure out how to get them to actually shop.
Target, Macy's and other retailers offered holiday discounts in early November and opened stores on Thanksgiving Day. It was an effort to attract shoppers before Black Friday, the day after Thanksgiving that traditionally kicks off the holiday shopping season.
Those tactics drew bigger crowds during the four-day Thanksgiving weekend, but failed to motivate Americans to spend.
"The economy spoke loud and clear over the past few days," said Brian Sozzi, CEO and chief equities strategist at Belus Capital Advisors. "We are going to see an increase in markdowns."
A record 141 million people were expected to shop in stores and online over the four-day period that ended on Sunday, up from last year's 137 million, according to the results of a survey of nearly 4,500 shoppers conducted for The National Retail Federation.
But total spending was expected to fall for the first time ever since the trade group began tracking it in 2006, according to the survey that was released on Sunday afternoon. Over the four days, spending fell an estimated 2.9 percent to $57.4 billion.
Shoppers, on average, were expected to spend $407.02 during the four days, down 3.9 percent from last year. That would be the first decline since the 2009 holiday shopping season when the economy was just coming out of the recession.
The survey underscores the challenges stores have faced since the recession began in late 2007. Retailers had to offer deeper discounts to get people to shop during the downturn, but Americans still expect those "70 percent off" signs now during the recovery.
And stores may have only exacerbated that expectation this year. By offering bargains earlier in the season, it seems they've created a vicious cycle in which they'll need to constantly offer bigger sales. Shoppers who took advantage of "holiday" deals before Thanksgiving may have deal fatigue and are cautious about buying anything else unless it's heavily discounted.
Matthew Shay, president and CEO of The National Retail Federation, said that the survey results only represent one weekend in what is typically the biggest shopping period of the year. The combined months of November and December can account for up to 40 percent of retailers' revenue.
Overall, Shay said the trade group still expects sales for the combined two months to increase 3.9 percent to $602.1 billion. That's higher than the 3.5 percent pace in the previous year.
But to achieve that growth, retailers will likely have to offer big sales events. In a stronger economy, people who shopped early would continue to do so throughout the season. But analysts say that's not likely to be the case in this still tough economic climate.
"It's pretty clear that in the current environment, customers expect promotions," Shay said. "Absent promotions, they're not really spending."
Take Tuesday Trasvina, 37, who said she's been bombarded with holiday discounts since early November. Trasvina, a marketing coordinator, plans to spend $500 on holiday gifts, about a quarter of what she spent last year.
"They've been stretching out this Black Friday thing so long," said Trasvina, who was shopping with her husband on Friday at a Target store in Portland, Ore. "I just think the over-commercialization of the holiday has gotten to us."
At least a dozen major retailers — most of them for the first time — opened on Thanksgiving instead of on Black Friday, which is typically the biggest shopping day of the year. Wal-Mart, Toys R Us and other retailers said on Friday that Thanksgiving crowds were strong.
But the early start appeared to pull sales forward. Black Friday sales fell 13.2 percent from the previous year to $9.74 billion, according to Chicago-based technology firm ShopperTrak. But combined spending over Thanksgiving and Black Friday rose 2.3 percent to $12.3 billion compared with a year ago.
A Kmart store in New York City that opened at 6 a.m. on Thanksgiving and stayed open for 41 hour straight was packed on the holiday. Clothing was marked down 30 percent to 50 percent.
Adriana Tavaraz, 51, headed there at about 4 p.m. and spent $105 on ornaments, Santa hats and other holiday decor. She saved about 50 percent.
But it's not likely Tavaraz will be back in stores too many more times this season. Money is tight this year because of rising costs for food and rent, and Tavaraz already spent much of her $200 holiday budget.
"Nowadays, you have to think about what you spend," she said. "You have to think about tomorrow."
Sara Sell in Portland, Ore., contributed to this report.


MUST LISTEN: On the Cusp of HISTORIC COMEX EVENTS — Turd Ferguson & Silver Doc Roundtable

DON’T MISS THIS ONE: “We are on the cusp of something historic happening on the Comex,” says TF Metals Report’s Turd Ferguson.

In this roundtable discussion which also includes the Doc from Silver Doctors, we examine the strange recent purchase of gold contracts with a $3,000 strike price in 2015. We cover the PROVEN Gold and Silver manipulation with the London fix, we chat about the new gold-backed crypto-currency known as e-gold, and we finish with the gripping story of the very real drain of PHYSICAL from the Comex.
According to Turd, ‘We know that for the first time anyone can remember, the US banks are net long Comex gold futures, US banks meaning JP Morgan. And net long to the point of having CORNERED the paper gold market in New York because the position is so large. I’m talking the extent of 20% of open interest. And now we’re heading into the December delivery period…”

The Coordinated Effort To Suppress The Gold Price

by Gold Silver Worlds
In this two part interview, financial journalist Lars Schall looks at some specific topcis from Dimitri Speck’s book “The Gold Cartel.” The book appeared in November of this year in English and is available at MacMillan andAmazon. “The Gold Cartel is a brisk, articulate and convincing read. Even so, it remains extremely sound. A miracle!” – Professor Heinz Christian Hafke, former German Bundesbank Director.
The major topic of the book is about the suppression of the gold price. Based on the research of Dimitri Speck, three distinct phases are visible.
Phase 1 ranges from 1993 to 1996. Central banks have kept the gold price below $400 by leasing gold from central banks to bullion banks. The result is that gold reached the market, having the same effect as gold selling in the market.
Phase 2 started in 1996 and lasted till 2001. In that period, the interest was mainly for bullion banks to benefit from falling gold prices
Phase 3 started in May 2001 and goes on till today. One of the drivers was Greenspan who decided that he could not keep the gold price at that low level, but, simultaneously, the gold price rise should be controlled. That is also what happened since then by central banks through COMEX price manipulation and “price shocks” mainly during the London PM fixing.
The following chart shows the reduced amount of lending of gold since 2001, an important driver of the gold price since 2001.
gold market lending 2001 2013 price


There are two motives to manipulate the gold price, according to Dimitri Speck. The first one is to reduce inflation expectations. In 1993, during an FOMC meeting, Alan Greenspan revealed his thoughts by saying that “gold is a thermometer,” an indicator of danger of inflation. A rise in the price of gold would change the psychology of market participants. At that specific time (1993), an increase of interest rates would hurt the economy so a suppressed gold price was a psychological measure to lower inflation expectations.
The other motive is to lower long term yields of bonds by stimulating the demand for bonds. The rationale is that if gold does not rise, bonds would be favoured.
Other motives include a desire for a strong dollar, apart from an interest of central banks and the banking industry to keep the faith in their services.

The close of the “gold window”

1971 is mostly associated with the end of Bretton Woods, or the end of the gold standard and the start of pure credit money. Dimitri Speck notes that the gold standard only existed within the central banking system; normal citizens could not convert their dollars in gold.
In reality, however, the gold window closed already in 1967. The US was running deficits in the 60ies (because of wars). At the same time, several exporting countries (including Japan and Germany) had the choice to get paid in dollars or in gold. In 1967, the German Bundesbank confirmed by means of was later called the “blessing letter” that they would continue to accept dollars instead of gold. That was not only a blessing to the US, but also to the credit money system. The letter stated that if every central bank would apply their choice, the world could run endless deficits.

Gold’s outlook

The reason why the long term outlook for gold is positive is based on our financial system. The stability of the system is at risk. Debt has exploded in the last decades. Gold is the direct competitor of debt. Savers are already losing money in real terms. That is the reason why gold should rise long term. Gold owners will stabilize the purchasing power of its owner in real terms.
Gold has a double face. Apart from the protection against negative real rates, it also offers protection against bank or government defaults. There is no credit money risk associated with gold in case a bank or government would go bankrupt; by contrast, gold offers protection. With the debt crisis raging across the world, this lack of government and banking counterparty risk should not be underestimated.
In terms of the “end game,” Dimitri Speck says that the debt decrease is by default deflationary. He sees three possible scenarios playing out:
  1. Although not very likely, there is a chance that governments will aim for asset price deflation for some years possible, comparable to what has happened in Japan in the last two decades. That is unlikely because of several reasons, both political and fiscal.
  2. Another potential scenario, also unlikely, is one of high taxes, negative real rates, financial repression, like in Britain after World War II. The freedom of people would be considerably deprived, which makes it unlikely from a political point of view.
  3. The most likely scenario is one comparable to the current Japan: suppress deflation, stimulate slight inflation while avoiding strong inflation. In this scenario, Dimitri Speck believes that the velocity of money will increase, savers will gradually step out of the banking system, and inflation will occur both in asset and consumer prices. Gold is the best hedge in such a scenario.

Dimitri Speck is a quantitative asset manager, trading system developer and gold market analyst from Munich, Germany. He specializes in pattern recognition of charts. As part of this activity he came across an anomaly in the gold price, and he was ultimately able to demonstrate systematic interventions in the gold market since August 1993. Speck is also a consultant to the US-based Gold Anti-Trust Action Committee, GATA.
Speck is responsible for the Stay-C commodity fund that won the Hedge Fund Journal’s award as best European commodity fund. His two investment funds, a stock fund and a commodity fund, have considerably outperformed the market since its inception. Moreover, he is the founder and editor of the website “Seasonal Charts”, where accurate daily seasonal charts are illustrated. He is a well-known expert on precious metals investment analysis, and he has been interviewed for a number of investment letters and websites and has spoken at industry events on the topic.

Read more at http://investmentwatchblog.com/the-coordinated-effort-to-suppress-the-gold-price/#bv9H2tt4qoK7HTvM.99

U.S. 10yr RISING FAST AGAIN!!! 2.810%, Treasury Delays 3-month, 6-month Bill Auctions Due To Technical Glitch

U.S. 10 Year Treasury Note  - 2.810%
Treasury delays 3-month, 6-month bill auctions
WASHINGTON (MarketWatch) – The weekly 3-montha and 6-month Treasury bill auctions set for later Monday have been delayed until Tuesday, the Treasury Department announced. In a brief statement, the Bureau of Public Debt said the auctions were rescheduled due to an error that occurred during a test of the department’s auction system. The settlement data and all other aspects of both of these auctions remain unchanged, the statement said.
Auction System Failure Forces US Treasury To Postpone 3, 6-Month Bill Auctions
While nobody is impressed by breaking equity and options markets anymore, since this has become a virtually daily ocurrence and the habituation level is high, bond markets, and especially the US government’s “guaranteed” bond issuance machinery, are a different matter altogether. Which is why any time something out of the ordinary happens, people pay attention. Such as what happened moments ago when the US Treasury announced that it would delay the closing of the 3 and 6 month Bill auctions, originally scheduled to close today, to tomorrow.
The reason: “an error that occurred during a test of Treasury’s auction system.”
This is curious, as it implies there was a test of the system running concurrent with the actual bond auction. One wonders if instead of the stated reason, there simply wasn’t yet another “glitch” with TAAPS, which as we reported in September, had an error due to an order by none other than Goldman Sachs, being stuck in the quere, for reasons unknown resulting in yet another abnormal 3 and 6 month Bill auction.
The cracks in the dam keep growing…
From Brian Rogers
There Will Never Be A Failed US Treasury Auction… Until There Is

How Wall Street Has Turned Housing Into a Dangerous Get-Rich-Quick Scheme — Again

Laura Gottesdiener
You can hardly turn on the television or open a newspaper without hearing about the nation’s impressive, much celebrated housing recovery. Home prices are rising! New construction has started! The crisis is over! Yet beneath the fanfare, a whole new get-rich-quick scheme is brewing.
Over the last year and a half, Wall Street hedge funds and private equity firms have quietly amassed an unprecedented rental empire, snapping up Queen Anne Victorians in Atlanta, brick-faced bungalows in Chicago, Spanish revivals in Phoenix. In total, these deep-pocketed investors have bought more than 200,000 cheap, mostly foreclosed houses in cities hardest hit by the economic meltdown.
Wall Street’s foreclosure crisis, which began in late 2007 and forced more than 10 million people from their homes, has created a paradoxical problem. Millions of evicted Americans need a safe place to live, even as millions of vacant, bank-owned houses are blighting neighborhoods and spurring a rise in crime. Lucky for us, Wall Street has devised a solution: It’s going to rent these foreclosed houses back to us. In the process, it’s devised a new form of securitization that could cause this whole plan to blow up — again.
Since the buying frenzy began, no company has picked up more houses than the Blackstone Group, the largest private equity firm in the world. Using a subsidiary company, Invitation Homes, Blackstone has grabbed houses at foreclosure auctions, through local brokers, and in bulk purchases directly from banks the same way a regular person might stock up on toilet paper from Costco.
In one move, it bought 1,400 houses in Atlanta in a single day. As of November, Blackstone had spent $7.5 billion to buy 40,000 mostly foreclosed houses across the country. That’s a spending rate of $100 million a week since October 2012. It recently announced plans to take the business international, beginning in foreclosure-ravaged Spain.
Few outside the finance industry have heard of Blackstone. Yet today, it’s the largest owner of single-family rental homes in the nation — and of a whole lot of other things, too. It owns part or all of the Hilton Hotel chain, Southern Cross Healthcare, Houghton Mifflin publishing house, the Weather Channel, Sea World, the arts and crafts chain Michael’s, Orangina, and dozens of other companies.
Blackstone manages more than $210 billion in assets, according to its 2012 Securities and Exchange Commission annual filing. It’s also a public company with a list of institutional owners that reads like a who’s who of companies recently implicated in lawsuits over the mortgage crisis, including Morgan Stanley, Citigroup, Deutsche Bank, UBS, Bank of America, Goldman Sachs, and of course JP Morgan Chase, which just settled a lawsuit with the Department of Justice over its risky and often illegal mortgage practices, agreeing to pay an unprecedented $13 billion fine.
In other words, if Blackstone makes money by capitalizing on the housing crisis, all these other Wall Street banks — generally regarded as the main culprits in creating the conditions that led to the foreclosure crisis in the first place — make money too.

An All-Cash Goliath
In neighborhoods across the country, many residents didn’t have to know what Blackstone was to realize that things were going seriously wrong.
Last year, Mark Alston, a real estate broker in Los Angeles, began noticing something strange happening. Home prices were rising. And they were rising fast — up 20% between October 2012 and the same month this year. In a normal market, rising home prices would mean increased demand from homebuyers. But here was the unnerving thing: the homeownership rate was dropping, the first sign for Alston that the market was somehow out of whack.
The second sign was the buyers themselves.
Click here to see a larger version
About 5% of Blackstone’s properties, approximately 2,000 houses, are located in the Charlotte metro area. Of those, just under 1,000 (pictured above) are in Mecklenberg County, the city’s center. (Map by Anthony Giancatarino, research by Symone New.)
“I went two years without selling to a black family, and that wasn’t for lack of trying,” says Alston, whose business is concentrated in inner-city neighborhoods where the majority of residents are African American and Hispanic. Instead, all his buyers — every last one of them — were besuited businessmen. And weirder yet, they were all paying in cash.
Between 2005 and 2009, the mortgage crisis, fueled by racially discriminatorylending practices, destroyed 53% of African American wealth and 66% of Hispanic wealth, figures that stagger the imagination. As a result, it’s safe to say that few blacks or Hispanics today are buying homes outright, in cash. Blackstone, on the other hand, doesn’t have a problem fronting the money, given its $3.6 billion credit line arranged by Deutsche Bank. This money has allowed it to outbid families who have to secure traditional financing. It’s also paved the way for the company to purchase a lot of homes very quickly, shocking local markets and driving prices up in a way that pushes even more families out of the game.
“You can’t compete with a company that’s betting on speculative future value when they’re playing with cash,” says Alston. “It’s almost like they planned this.”
In hindsight, it’s clear that the Great Recession fueled a terrific wealth and asset transfer away from ordinary Americans and to financial institutions. During that crisis, Americans lost trillions of dollars of household wealth when housing prices crashed, while banks seized about five million homes. But what’s just beginning to emerge is how, as in the recession years, the recovery itself continues to drive the process of transferring wealth and power from the bottom to the top.
From 2009-2012, the top 1% of Americans captured 95% of income gains. Now, as the housing market rebounds, billions of dollars in recovered housing wealth are flowing straight to Wall Street instead of to families and communities. Since spring 2012, just at the time when Blackstone began buying foreclosed homes in bulk, an estimated $88 billion of housing wealth accumulation has gone straight to banks or institutional investors as a result of their residential property holdings, according to an analysis by TomDispatch. And it’s a number that’s likely to just keep growing.
“Institutional investors are siphoning the wealth and the ability for wealth accumulation out of underserved communities,” says Henry Wade, founder of the Arizona Association of Real Estate Brokers.
But buying homes cheap and then waiting for them to appreciate in value isn’t the only way Blackstone is making money on this deal. It wants your rental payment, too.
Securitizing Rentals
Wall Street’s rental empire is entirely new. The single-family rental industry used to be the bailiwick of small-time mom-and-pop operations. But what makes this moment unprecedented is the financial alchemy that Blackstone added. In November, after many months of hype, Blackstone released history’s first rated bond backed by securitized rental payments. And once investors tripped over themselves in a rush to get it, Blackstone’s competitors announced that they, too, would develop similar securities as soon as possible.
Depending on whom you ask, the idea of bundling rental payments and selling them off to investors is either a natural evolution of the finance industry or a fire-breathing chimera.
“This is a new frontier,” comments Ted Weinstein, a consultant in the real-estate-owned homes industry for 30 years. “It’s something I never really would have dreamt of.”
However, to anyone who went through the 2008 mortgage-backed-security crisis, this new territory will sound strangely familiar.
“It’s just like a residential mortgage-backed security,” said one hedge-fund investor whose company does business with Blackstone. When asked why the public should expect these securities to be safe, given the fact that risky mortgage-backed securities caused the 2008 collapse, he responded, “Trust me.”

For Blackstone, at least, the logic is simple. The company wants money upfront to purchase more cheap, foreclosed homes before prices rise. So it’s joined forces with JP Morgan, Credit Suisse, and Deutsche Bank to bundle the rental payments of 3,207 single-family houses and sell this bond to investors with mortgages on the underlying houses offered as collateral. This is, of course, just a test case for what could become a whole new industry of rental-backed securities.
Many major Wall Street banks are involved in the deal, according to a copy of the private pitch documents Blackstone sent to potential investors on October 31st, which was reviewed by TomDispatch. Deutsche Bank, JP Morgan, and Credit Suisse are helping market the bond. Wells Fargo is the certificate administrator. Midland Loan Services, a subsidiary of PNC Bank, is the loan servicer. (By the way, Deutsche Bank, JP Morgan Chase, Wells Fargo, and PNC Bank are all members of another clique: the list of banks foreclosing on the most families in 2013.)
According to interviews with economists, industry insiders, and housing activists, people are more or less holding their collective breath, hoping that what looks like a duck, swims like a duck, and quacks like a duck won’t crash the economy the same way the last flock of ducks did.
“You kind of just hope they know what they’re doing,” says Dean Baker, an economist with the Center for Economic and Policy Research. “That they have provisions for turnover and vacancies. But have they done that? Have they taken the appropriate care? I certainly wouldn’t count on it.” The cash flow analysis in the documents sent to investors assumes that 95% of these homes will be rented at all times, at an average monthly rent of $1,312. It’s an occupancy rate that real estate professionals describe as ambitious.
There’s one significant way, however, in which this kind of security differs from its mortgage-backed counterpart. When banks repossess mortgaged homes as collateral, there is at least the assumption (often incorrect due to botched or falsified paperwork from the banks) that the homeowner has, indeed, defaulted on her mortgage. In this case, however, if a single home-rental bond blows up, thousands of families could be evicted, whether or not they ever missed a single rental payment.
“We could well end up in that situation where you get a lot of people getting evicted… not because the tenants have fallen behind but because the landlordshave fallen behind,” says Baker.
Bugs in Blackstone’s Housing Dreams
Whether these new securities are safe may boil down to the simple question of whether Blackstone proves to be a good property manager. Decent management practices will ensure high occupancy rates, predictable turnover, and increased investor confidence. Bad management will create complaints, investigations, and vacancies, all of which will increase the likelihood that Blackstone won’t have the cash flow to pay investors back.
If you ask CaDonna Porter, a tenant in one of Blackstone’s Invitation Homes properties in a suburb outside Atlanta, property management is exactly the skill that Blackstone lacks. “If I could shorten my lease — I signed a two-year lease — I definitely would,” says Porter.
The cockroaches and fat water bugs were the first problem in the Invitation Homes rental that she and her children moved into in September. Porter repeatedly filed online maintenance requests that were canceled without anyone coming to investigate the infestation. She called the company’s repairs hotline. No one answered.
The second problem arrived in an email with the subject line marked “URGENT.” Invitation Homes had failed to withdraw part of Porter’s November payment from her bank account, prompting the company to demand that she deliver the remaining payment in person, via certified funds, by five p.m. the following day or incur “the additional legal fee of $200 and dispossessory,” according to email correspondences reviewed by TomDispatch.
Porter took off from work to deliver the money order in person, only to receive an email saying that the payment had been rejected because it didn’t include the $200 late fee and an additional $75 insufficient funds fee. What followed were a maddening string of emails that recall the fraught and often fraudulent interactions between homeowners and mortgage-servicing companies. Invitation Homes repeatedly threatened to file for eviction unless Porter paid various penalty fees. She repeatedly asked the company to simply accept her month’s payment and leave her alone.
“I felt really harassed. I felt it was very unjust,” says Porter. She ultimately wrote that she would seek legal counsel, which caused Invitation Homes to immediately agree to accept the payment as “a one-time courtesy.”
Porter is still frustrated by the experience — and by the continued presence of the cockroaches. (“I put in another request today about the bugs, which will probably be canceled again.”)
A recent Huffington Post investigation and dozens of online reviews written by Invitation Homes tenants echo Porter’s frustrations. Many said maintenance requests went unanswered, while others complained that their spiffed-up houses actually had underlying structural issues.
There’s also at least one documented case of Blackstone moving into murkier legal territory. This fall, the Orlando, Florida, branch of Invitation Homes appeared to mail forged eviction notices to a homeowner named Francisco Molina, according to the Orlando Sentinel. Delivered in letter-sized manila envelopes, the fake notices claimed that an eviction had been filed against Molina in court, although the city confirmed otherwise. The kicker is that Invitation Homes didn’t even have the right to evict Molina, legally or otherwise. Blackstone’s purchase of the house had been reversed months earlier, but the company had lost track of that information.
The Great Recession of 2016?
These anecdotal stories about Invitation Homes being quick to evict tenants may prove to be the trend rather than the exception, given Blackstone’s underlying business model. Securitizing rental payments creates an intense pressure on the company to ensure that the monthly checks keep flowing. For renters, that may mean you either pay on the first of the month every month, or you’re out.
Although Blackstone has issued only one rental-payment security so far, it already seems to be putting this strict protocol into place. In Charlotte, North Carolina, for example, the company has filed eviction proceedings against a full 10% of its renters, according to a report by the Charlotte Observer.
Click here to see a larger version

About 9% of Blackstone’s properties, approximately 3,600 houses, are located in the Phoenix metro area. Most are in low- to middle-income neighborhoods. (Map by Anthony Giancatarino, research by Jose Taveras.)
Forty thousand homes add up to only a small percentage of the total national housing stock. Yet in the cities Blackstone has targeted most aggressively, the concentration of its properties is staggering. In Phoenix, Arizona, some neighborhoods have at least one, if not two or three, Blackstone-owned homes on just about every block.
This inundation has some concerned that the private equity giant, perhaps in conjunction with other institutional investors, will exercise undue influence over regional markets, pushing up rental prices because of a lack of competition. The biggest concern among many ordinary Americans, however, should be that, not too many years from now, this whole rental empire and its hot new class of securities might fail, sending the economy into an all-too-familiar tailspin.
“You’re allowing Wall Street to control a significant sector of single-family housing,” said Michael Donley, a resident of Chicago who has been investigating Blackstone’s rapidly expanding presence in his neighborhood. “But is it sustainable?” he wondered. “It could all collapse in 2016, and you’ll be worse off than in 2008.”
Laura Gottesdiener is a journalist and the author of A Dream Foreclosed: Black America and the Fight for a Place to Call Home, published in August by Zuccotti Park Press. She is an editor for Waging Nonviolence and has written for Rolling Stone, Ms., Playboy, the Huffington Post, and other publications. She lived and worked in the People’s Kitchen during the occupation of Zuccotti Park. This is her second TomDispatch piece.
[Note: Special thanks to Symone New and Jose Taveras for conducting the difficult research to locate Blackstone-owned properties. Special thanks also to Anthony Giancatarino for turning this data into beautiful maps.]
With permission

Distributed by RINF Alternative News

IMF frowns at Iceland debt write-off plan

A plan to ease mortgage debts of every household in Iceland through a write-off has been criticised by the International Monetary Fund (IMF). An announcement on Saturday by the new government that it would follow through on its promise to ‘erase’ 150 billion krona in debt has been met with scepticism by international financial institutions.
Progressive Party Prime Minister, Sigmundur Davíð Gunnlaugsson, promised the relief during his April election campaign and now intends to implement a plan that would save each household the equivalent of 24,000 euro on their mortgage repayments. However, he gave no details on how the government intends to finance the plan.
He initially suggested foreign creditors, many who have assets frozen in Iceland following the 2009 financial crash, would have to bear some of the of write-off costs. The program would take four years.
In a swift statement following the news, the IMF said Iceland has: ‘little fiscal space for additional household debt relief’. The Organisation for Economic Co-operation and Development (OECD) put out a more measured solution, calling for relief for low-income households only.
Since taking office, the Progressive Party has made several controversial moves in a bold attempt to free Iceland from the strict fiscal disciplines imposed following the credit crunch, and EU and international creditors have been watching nervously.
Recently Standard & Poor’s financial services company slashed the outlook for Iceland’s long-term credit rating to negative from stable on anticipation of the news and hinted that it could be lowered further.
Borrowing costs skyrocketed in the wake of the financial crisis, and mortgage debt has gotten out of hand following the collapse of the krona, leaving many Iceland families mired in insurmountable debt.
“Currently, household debt is equivalent to 108 percent of GDP, which is high by international comparison,” the government said. “The action will boost household disposable income and encourage savings, with relief beginning in mid-2014,” it added.

'You have 24 hours': Devastating tape reveals how RBS accused of bullying warned struggling chain of chemists it could call in the administrators

A disturbing recording of a phone call made by officials at Royal Bank of Scotland to a firm struggling to survive appears to back up claims that the taxpayer-owned bank bullied small businesses.
RBS is being investigated by the City regulator and the Serious Fraud Office over claims by Government adviser Lawrence Tomlinson that it pushed struggling firms into its ‘restructuring’ division so it could charge higher fees and interest, and take control of assets.
The Mail on Sunday has a recording of a phone call between RBS’s business recover unit – the Global Restructuring Group – and TriHealth, a chain of pharmacies that claims the bank tried to pull its ‘life support’.
Investigation: TriHealth accuses RBS of becoming increasingly aggressive and believes it is determined to push the business into administration
Investigation: TriHealth accuses RBS of becoming increasingly aggressive and believes it is determined to push the business into administration
TriHealth, which operates in St Helens, Lancashire, bought two insurance policies from RBS meant to protect firms against interest rate movements on loans.
But these so-called ‘swaps’ ended up costing it £1.2million and business suffered. The swaps scandal is set to cost banks up to £20billion in mis-sold policies.

A review, overseen by the Financial Conduct Authority, ruled that TriHealth had been mis-sold swaps. However, TriHealth was not compensated.
The FCA lets banks put in place alternative products rather than pay compensation if it can argue it puts the firm back in the position it would have been in had it not been mis-sold the product.
In the recording of the conference call, a member of the bank recovery team tells TriHealth directors Mark Addison, Sally Woodward and Leo Risley: ‘Following an internal decision we are no longer bound by the review.’ He goes on to say that the bank will take control if it has to.
‘You’ve gone through the review process, come out the other side and been told there is no redress. The review has nothing to do with how you’re going to get through the next few weeks.
‘If you can’t give us comfort on this, we will have to consider the options open to us and one of those is the recourse to our security, which may mean the business goes into a process. You have a 24-hour deadline to respond to us or we will have to consider the options, including administration.’
While TriHealth says the bank initially seemed prepared to work with the firm, it accuses RBS of becoming increasingly aggressive and believes it is determined to push the business into administration.
Addison said: ‘RBS has demanded we give our consent to its appointed auditors, PwC, Grant Thornton or Ernst & Young, coming in to review the firm but won’t allow us to appoint independent auditors. These companies are on the RBS panel.
‘RBS said if we did not consent to this then it would remove funding and instigate insolvency proceedings. We feel RBS has groomed us, assaulted us, then kept us barely alive on a drip. It now wants to pull life support.’
A spokeswoman for RBS said: ‘It would be inappropriate to comment on the specifics of this case as it is subject to ongoing litigation.’
But the bank welcomed the FCA inquiry into Tomlinson’s allegations and said: ‘As of now, no evidence has been produced that backs the claims of systematic fraud made this week. We need to get to the facts as quickly as possible. That’s why we fully support the FCA’s work and will carry on with our own investigation.’
A spokesman for Bullybanks, which lobbies for 1,600 firms mis-sold swaps, said: ‘At least 15 per cent of members are now in administration and others are headed that way. This is a reflection of the banks’ behaviour, in particular RBS’s.’
Alison Loveday, a partner at Manchester law firm Berg, is handling claims for 160 firms believed to have been mis-sold swaps, of which more than a quarter are RBS customers. Since the allegations against RBS broke, Loveday says she has been inundated by calls from firms recounting similar experiences.
‘In the cases we’ve seen the firms were not in financial difficulties but were pushed into it by the actions of RBS and GRG,’ she said.
RBS has hired Clifford Chance to look into the allegations, though critics point to its close links with RBS. The law firm advised the bank on the fallout from the Libor scandal.
Meanwhile it was revealed that RBS’s chief risk officer David Stephen joined after leaving Australia’s ANZ Bank in 2010 following an internal review which found risks at ANZ were not properly understood or managed.

Bank’s harshest critic had his own run-in

Live fast: Ginetta is owned by Lawrence Tomlinson
Live fast: Ginetta is owned by Lawrence Tomlinson
Lawrence Tomlinson, the multi-millionaire behind the report that damned taxpayer-owned Royal Bank of Scotland, is used to controversy.
As the Department for Business’s ‘entrepreneur in residence’, he argues that RBS engineered the collapse of firms to levy high fees and buy pricey property at a discount. But this is just the latest in a series of attacks he has aimed at the banks and RBS in particular.
This time Tomlinson came in for criticism himself after he failed to disclose his own issues with RBS.
His LNT Group, which owns the Ginetta racing car brand, banks with RBS and as part of a fractious refinancing this year he had to put in £30million more of his own cash.
Tomlinson’s own tax affairs have also came under scrutiny, after his care home firm TriCare carried out a sale-and-leaseback deal in 2003 to reduce its tax bill that turned sour.
Tomlinson is said to be worth up to £400 million. He says if the RBS saga goes wrong for him he could just ‘go and sit on a beach in Antigua’. But he has also said he has pursued RBS, arguing it is in everyone’s interest to sort the banks out.

Party On Wall Street! Larry Summers Wants to Charge People for Saving

At the IMF Research Conference on November 8, 2013, former Treasury Secretary Larry Summers presented a plan to expand the con game. Summers says that it is not enough merely to give the banks interest free money. More should be done for the banks. Instead of being paid interest on their bank deposits, people should be penalized for keeping their money in banks instead of spending it. – PaulCraigRoberts.org
Dominant Social Theme: It is perfectly reasonable to want to remove money from people's bank accounts for the greater good of a prosperous society.
Free-Market Analysis: This excerpt of an editorial by Paul Craig Roberts shows clearly that our analysis of the long-running public-banking/alternative money promotion was probably correct.
From our humble perspective, these monetary cons were created as monetary promotions to provide additional capital when necessary for whatever devious strategies were necessary.
The Wall Street Party we've forecast continues to build.
  • The JOBS Act is forcing new product into the IPO market.
  • QE continues in the US, Britain and Europe.
  • Janet Yellen and Mark Carney are not about to try to taper in any serious way.
  • The fracking meme continues to be pursued, giving people at least the illusion of more gas and oil to stimulate another industrial boom.
And now, to ensue that money flows copiously, top bankers are obviously considering negative interest rates. Larry Summers didn't make up that comment. If he mentioned it, it's because it's the subject of discussion.
How do you increase consumer spending, thus contributing to the Wall Street Party about which we've regularly written? Try to increase the velocity of money any way you can. It's a distinctly dubious solution, but that won't stop the top elites from trying.
We've covered this dominant social theme in detail in the past. We've fought against the authoritarian crackpottery coming from the so-called alternative media regarding "usury," national banking and of course mutual and social credit schemes:
Margrit Kennedy and the 'Blue Economy'
Strange Bedfellows: More Authoritarian Linkages to Paper Money
Paper Money and the UN Perfect Together? More Currency and Credit Exchanges Supported by the UN
Are 'Green' Reciprocal Exchange and Credit Systems Part of a Larger Elite Promotion?
The authoritarian mind has a great attraction to state enforced monetary remedies. Of course, it is true that some faux-proponents of anti-usury alternative currencies try to claim that they can be implemented privately. But even a cursory look at the banking solutions they pro-offer easily reveals they are not what they seem.
Additionally, the proponents of these deeply anti-freedom economic remedies have only one focus when it comes to aggressiveness: They seek to attack free markets and laissez-fair economics.
Their agenda seems fairly clear: They propose authoritarian economic solutions and attack freedom.
Larry Summers' proposal is a good example.
Basically, Summers and the rest are working to ensure that the state remains in control of money. That's what the top bankers want, after all. They can always control government. They don't care whether their banks are "private," or public. They don't care whether banks are supposedly owned by "the people." That's something the hoi polloi can argue about.
They want to claim victory over unemployment. They want to prove that their adjustment of economic circumstances is necessary and appropriate. They'll try anything to stay "ahead of the curve."
We were suspicious of bitcoin for similar reasons. Its ascension seems almost predictably ... manipulated like an adult fairy tale. Isn't it worth close to US$1,000 now?
There was – and remains – an anti-precious metals angle to bitcoin support. And we were never sold on the dramatic backstory of how the founder of bitcoin dropped its recipe on the Internet and then mysteriously vanished.
Ben Bernanke has basically endorsed the bitcoin concept. Did the powers-that-be first introduce and then popularize bitcoin in order to get ahead of the inevitable expansion of electronic currency? Stranger things have happened ...
In the case of reverse-interest money, the promotion seems far longer than bitcoin's few years. It goes back to Silvio Gesell and the modern history of alternative currencies goes back to Greenbacks and proponents of state and federal "public banking" in the 1800s.
And now this long-running propaganda has been updated. Larry Summers and presumably a bevy of other monopoly central bankers are on board, essentially endorsing the crackpottery of Gesell.
It was Gesell who came up with the idea back in the 1930s that government ought to penalize savers by removing a certain part of their wealth every month or so.
This was such an offensive idea that even Gesell's contemporary, Major Douglas – himself the author of numerous economically illiterate theories – called Gesell's ideas an offensive and serious tax.
But now it is back, and perhaps about to be pressed into service on behalf of yet another elite meme: The Wall Street Party.