Tuesday, March 18, 2014

Time for world to sanction US government: Analyst

A view of the White House
A view of the White House
A political analyst has called on the global community to bring US rulers to justice and impose sanctions against the Machiavellian regime in Washington over its hegemonic policies.
In a Monday article on the Press TV website, Paul Craig Roberts pointed to Washington’s incessant destruction of countries across the world through its military and economic warfare coupled with propaganda tactics.
“When will the world sanction the criminal enterprise that pretends to be a government of the United States?
“When will the War Crimes Tribunal and the International Criminal Court issue arrest warrants for [US President Barack] Obama and his entire criminal regime as well as the criminal regimes of Bush and Clinton? When will the assets of the US government and its criminal members be seized?” he asked.
The analyst slammed the US government as “the worst criminal enterprise in the history of the world,” which constantly manipulates democratic slogans to extend its pernicious influence across the world.
Roberts censured Washington and its allies for their refusal to accept the Sunday referendum in the Republic of Crimea in which nearly 95.7 percent of the Crimeans voted to join Russia.
“Democracy is not acceptable to Washington, or to the two-bit punk American puppets who rule for Washington in Germany, UK, and France, when democracy does not serve Washington’s agenda of hegemony over the entire world,” Roberts pointed out.
Following the referendum, the Supreme Council of Crimea declared independence from Ukraine on Monday and formally applied to join Russia.
The United States and the European Union have rejected the Crimea vote as “illegal” and threatened Russia with sanctions over its stance on Ukraine. Russia says such measures are counterproductive.

Why Can't Cell Phone Data be Used To Find Missing Malaysia Airlines Flight 370?

UBS Investigated For Gold Manipulation Suggesting Gold Inquiry Goes Beyond London Fix

The last time the FT penned an article on the topic of gold manipulation, titled "Gold price rigging fears put investors on alert" it was promptly taken down without much (any) of an explanation. Luckily, we recorded the article for posterity here. Earlier today, another article on the topic appears to have slipped through the cracks of the distinguished editors of the financial journal that enjoys the ad spend of the status quo, when it reported that "Gold pricing scrutiny widens", hardly an update that will take the world by storm, however it is notable that "even" the FT, where for years goldbugs claiming gold manipulation had been ridiculed, is finally start to admit the glaringly obvious.
In this case, the FT looks at one of the most habitual and recidivist manipulators of practically every asset class that the market has ever known, Swiss bank UBS, better known as the rat that is allegedly perfectly happy to expose all other manipulators in exchange for immunity, and focuses on the Friday’s admission by UBS in its 2013 annual report: "that a review of its foreign exchange operations has been widened to include its precious metals business. In the report, the Swiss bank said: "Following an initial media report in June 2013 of widespread irregularities in the foreign exchange markets, UBS immediately commenced an internal review of its foreign exchange business, which includes our precious metals business.
And while it was recently revealed that there has been unprecedented collusion and rigging of gold at the time of the London fix, the latest revelations confirms that the inquiry is going beyond merely what the venerable five member banks of the London Gold Market Fixing Ltd, on the premises of N M Rothschild & Sons: after all UBS is not part of this particular criminal syndicate, which at last check included Barclays, Deustche (soon to be replaced by Standard Bank which is merely a front for China's ICBC), Bank of Nova Scotia, HSBC and SocGen.
More from the FT:
“A number of authorities also are reportedly investigating potential manipulation of precious metal prices. UBS has taken and will take appropriate action with respect to certain personnel as a result of its ongoing review.”

UBS has been in front of its peers in revealing important details about various regulatory probes – most notably the rigging of Libor and other interbank lending rates.

Until Friday the bank had not mentioned its precious metals business was included in its review of trading practices. There was, for example, no mention of the metals business alongside fourth-quarter results a month ago.
But before anyone gets too excited, let's recall that the last time the CFTC did an "in depth" investigation of manipulation in precious metals, it found... nothing (however, according to Bart Chilton that was only due to the zero or negative budget allotted to the impotent regulator, until recently headed by a Goldmanite). Perhaps this time will be different, and suddenly it may be in someone's interest to finally see gold trade up to its fair value, whatever that may be, although certainly higher than the current prevailing beaten down prices, which have seen China buy up unprecedented amounts of physical gold courtesy of manipulated paper supply and demand. Especially supply. 
Better yet: we look forward to learning all about it by the staunch defender of fair and efficient gold markets, the FT. Which is why, just in case, we have saved this article too. You never know when the FT will pull down this article or that, simply for breaching the taboo topic of gold price manipulation, something the Bank of England we are confident, will be very interested in as well.

Fed Nominee Stanley Fischer’s Cayman Islands Problem

By Pam Martens: March 17, 2014
Senator Elizabeth Warren Questioning Fed Nominee Stanley Fischer on March 13, 2014
Stanley Fischer did not get a proper vetting at his Senate Banking confirmation hearing last Thursday to serve as Vice Chairman of the Federal Reserve Board of Governors. Of the 22-member Senate Banking Committee, only five Senators, outside of the Chair and Ranking Member, showed up to question Fischer. Questions should have focused on Fischer’s ties to Citigroup, the serially corrupt mega bank which collapsed into the arms of taxpayers in 2008, requiring a bailout of $45 billion in equity infusions, $300 billion in asset guarantees to stop a run on the bank, and over $2 trillion in below market rate loans from the Federal Reserve to prop it up.
Of the five regular Committee members questioning Fischer, all Democrats, only one, Senator Elizabeth Warren, brought up his ties to Citigroup and the bank’s insidious relationship with government and regulators. We’ll get to that in a moment. First, these are the issues on which the public has been denied adequate information and which the Senate Banking Committee has failed miserably to question.
In a December 20, 2001 employment agreement filed with the Securities and Exchange Commission on behalf of Citigroup by Sanford (Sandy) Weill, Chairman and CEO, and Robert Rubin, former U.S. Treasury Secretary turned Citigroup Board Member, a new Vice Chairman, Stanley Fischer, would join the bank on February 1, 2002 with a lavish compensation package for a man who had never worked in commercial banking.
In addition to medical and other executive perks, Fischer’s employment agreement promised:
$41,666 in monthly compensation;
A $500,000 “sign-on incentive compensation award”;
A guaranteed bonus of $2 million for 2002, payable in cash and restricted Citigroup stock;
A stock option grant of 75,000 shares of Citigroup common stock, subject to Board approval;
And, finally, the bank would place $100,000 in the super-secretive Citigroup Employee Fund of Funds I, LP which lists an address in the Cayman Islands. In addition to fronting the investment for Fischer, the “contribution will be enhanced with company-provided two to one leverage.”
By 2004, Fischer was sitting on 188,748 employee stock options according to his SEC filing that year. According to an SEC filing Fischer made on January 20, 2005, he held a total of 84,791 shares of Citigroup stock, worth approximately $4.08 million at that time. Wall Street On Parade was unable to determine just how much Fischer made in profits on the sale of his stock option awards but it is clear he liquidated or exchanged them because they do not show on his 2005 filing.
Fischer’s employment agreement also contained the same type of caveat that was revealed in the Senate confirmation hearing of Jack Lew, a former Citigroup Chief Operating Officer now serving as U.S. Treasury Secretary. If either Lew or Fischer left Citigroup for a high level position in the U.S. government or a regulatory body, the restricted money Citigroup had put away for them would be theirs to keep.
In Lew’s case, Citigroup, the insolvent ward of the taxpayer, paid Lew $940,000 as a bonus from those taxpayer funds because he joined the U.S. State Department as Deputy Secretary of State under Hillary Clinton, making a few more government hops before landing in his current post as U.S. Treasury Secretary.
Fischer’s employment agreement with Citigroup added a new element: he could also join an “international” governmental body and keep his incentive awards. The agreement read:
“After two years of continuous employment with the Company, in the event that you terminate your employment for purposes of accepting a high level position with a U.S. or international governmental or regulatory body, then your outstanding stock options and restricted stock awards shall vest upon your termination of employment.”
Fischer left Citigroup and immediately became the head of the Bank of Israel, serving in that post until June of last year. But despite the Bank of Israel having a supervisory role over banks operating in the country through its Banking Supervision Department and Citigroup boasting that it has the largest presence of any foreign bank in Israel, Fischer did not exit his Citigroup Employee Fund of Funds I LP in the Cayman Islands.
Stanley Fischer, Former Vice Chairman of Citigroup, Nominated to Serve as Vice Chairman of the Federal Reserve Board of Governors
According to his current financial disclosures to the Senate, Fischer kept that investment after leaving Citigroup and currently holds between $100,000 to $250,000 in the Fund. (That amount may not include other distributions that have been paid out over the years.) Fischer says he’ll exit the Fund if he’s confirmed to sit on the Fed Board of Governors.
The Citigroup Employee Fund of Funds I LP is so secretive that on December 31, 2001, the SEC filed a request on behalf of Citigroup in the Federal Register requesting to exempt it and other key employee limited partnership funds at Citigroup from certain provisions of securities laws. The SEC said it was going to approve the exemptions unless someone convinced it to hold a hearing. We could find no information on the SEC’s web site to suggest that the exemptions were not approved or that a hearing was held.
Among the many exemptions requested, Citigroup wanted “to act as custodian for a Partnership without a written contract.” Citigroup asked further for an “exemption from the rule 17f–1(b)(4) requirement that an independent accountant periodically verify the assets held by the custodian.” It also wanted an exemption to be able to keep the partnership’s investments “in the locked files of the General Partner” and to exempt members of the partnership from having to file reports of ownership interests with the SEC.
According to Bloomberg News, Fischer now has a net worth between $14.6 million to $56.3 million, according to his financial disclosure report with the Office of Government Ethics. That’s more than a $40 million spread and a preposterous method of presenting financial disclosures to the public.
On its web site, Citigroup boasts that it has “the largest presence of any foreign financial institution in Israel and offers corporate and investment banking services to leading Israeli corporations and institutions, and global corporations operating in Israel. Citi also offers private banking services to high-net-worth individuals living in Israel.”
Despite it being the U.S. taxpayer that bailed out Citigroup after it played a pivotal role in the economic collapse of 2008, Citigroup’s loyalty to creating jobs to help rebuild the struggling U.S. economy are bizarrely divided. According to its web site, in September 2011, while Fischer served as the head of the Bank of Israel, it established a Technology Innovation Lab in Israel with the aim of capitalizing on “Israel’s vast technological talent to lead the financial industry into the future of technology…The Lab is working on developing an array of state-of-the-art financial and banking applications…Citi has opened a Financial Data Intelligence Lab that will combine expertise in big-data-analytics and domain knowledge within the financial markets.”
While Senator Elizabeth Warren did not get into the nitty-gritty details outlined above, she did frame the core conflicts between Citigroup and the perpetual stream of money men it continues to install in high government positions. That not one other member of the Senate Banking Committee had the guts to go near this subject is further proof of the intractable corruption that plagues Washington.
Senator Warren said:
“Now, I’m concerned that the mega banks not only have the capacity to tilt the financial system, but that they also have the capacity to tilt the political system. You know, we’ve learned that as big banks get bigger and bigger their lobbying power and influence in Washington also tend to grow. That means big banks can often delay, water down or even kill important regulations. So, size can have ripple effects everywhere and for that reason I think it’s a mistake to talk about size without considering how it affects the ability of government to enforce meaningful regulation. A century ago when Teddy Roosevelt and others worked to break up the giant trusts, this was a big concern – not just the economic impact of size but the political impact that came with size as well. So, Dr. Fischer, you have a great deal of experience as an observer and as a participant in the financial system, is this a point that you’ve thought about and do you think it’s possible for large Wall Street banks to amass too much political power?”
Fischer gave a muted response that he wasn’t convinced that banking supermarkets actually achieve any economies of scale. Warren continued:
“Many big banks are well represented in Washington but the connection between Citigroup and Democratic administrations really sticks out. Three of the last four Democratic Treasury Secretaries have Citigroup ties; the fourth was offered but turned down the CEO position at Citigroup. Former Directors of the National Economic Council and the Office of Management and Budget at the White House and our current U.S. Trade Representative also have Citigroup ties. You once served as President of Citigroup International and are now in line to be number two at the Federal Reserve…”
Fischer said he thought his Citigroup experience would help him at the Fed. Warren plowed ahead:
“I also think it’s dangerous if our government falls under the grip of a tight knit group connected to one institution. Former colleagues get access through calls and meetings; economic policy can be dominated by group think; other qualified and innovative people can be crowded out of top government positions.”
Senator Chuck Schumer Lavishes Praise on Stanley Fischer During Confirmation Hearing on March 13, 2014
Senator Chuck Schumer of New York was next in line to “question” Fischer. Instead of questioning, Schumer read the equivalent of a Man of the Year Award salute to Fischer calling him “brilliant” and lavishing praise on his credentials. It should be noted that Schumer did the same for Jack Lew, former Chief Operating Officer of Citigroup, during Lew’s confirmation hearing. Schumer has also previously led various drumbeats for looser Wall Street regulations.
As Schumer read his sugary tribute to Fischer, he punctuated his talk with frequent dagger stares in the direction of Senator Warren. By exposing the money men sent from Citigroup, Senator Warren had also, wittingly or unwittingly, pointed the finger at Schumer — their biggest cheerleader in confirmation hearings.

Why Income Inequality Is Going to Get Catastrophically Worse

Inequality is endemic to the core structure of an America that operates more as a plutocracy than a democracy.

There’s been a lot of discussion about the historically high levels of income and wealth inequality lately — mostly from people on the shorter end of that stick — with good reason: There’s no end in sight.
In his new book, “Capital in the Twenty-First Century,” economist Thomas Piketty argues that worsening inequality is inevitable in a mature capitalist system, based on his analysis of 200 years of data. But inequality isn’t just an evolving condition like a crippling allergy that comes and goes, or just grows, enumerated by horrifying statistics. Nor is it just the result of a capitalist-utopian idea of free markets in which everyone gets a fair shot armed with equal information (which simply don’t exist in the real world, where markets are routinely gamed by the biggest players). Inequality is endemic to the core structure of an America that operates more as a plutocracy than a democracy. It is an inherent result of the consolidation of a substantial amount of both financial power and political influence in the hands of a few families.
In my upcoming book, “All the Presidents’ Bankers,” I trace the lineage of the banking and political families and their associates who have had the most combined influence on American policy. Inequality of income or wealth is a byproduct of the predisposition and genealogy of this coterie of America’s power elite. True, being born into wealth means having a greater chance of accumulating more of it — but take it a step further. Expanding on the adage of “it takes money to make money,” we get a much better idea of why inequality is so rampant: Because aside from income and wealth issues, it takes power to keep power.
By nature of the construct and self-reinforcing behavior of a small circle of American families and their enterprises — particularly over the past century since financial capitalism replaced productive capitalism as the means to expand power, wealth and influence — a comparative handful of families and their connections run Wall Street and Washington collectively. They run America as two sides of one political-financial coin, not as divided factions but as co-influencers of policy through public and private office.
There have been times during the past century when the specific individuals commanding this joint effort paid credence to the public interest, or were imbued with more humility. During those times, levels of inequality happened to decrease. At other times, the power elite solely promoted private gain, as from WWI through the crash of 1929, and since the 1970s, particularly since the 2008 crisis. At those times,  inequality happened to grow. This is not to imply that the moods of the elite were the sole arbiters of the direction of inequality, but that whatever the direction of these levels, general economic health is more dependent on the actions of this long-term, tightknit and concentrated few than on the ideal of a democracy. In this environment of such power inequality, economic inequality is unavoidable — and unsolvable.
Today, the focus of this power structure is so skewed that any notion of “public good” is mere campaign fodder for presidents or presidential hopefuls, and nonexistent for the banking elite. That’s why inequality for the rest of the population has leapt back up to 1928 levels and will continue to rise from there. That’s why Jeb Bush or Hillary Clinton or both may run for president, while JPMorgan Chase, J.P. Morgan’s legacy, remains the most powerful bank in the world, as it was designed to be more than a century ago.
In the Economic Policy Institute’s February 2014 report “The Increasingly Unequal States of America,” authors Estelle Sommeiller and Mark Price chronicle income inequality on a state-by-state basis from 1917 to 2011. Starting in 1979 until 2011, as the average income of the bottom 99 percent of U.S. taxpayers rose by 18.9 percent, the average income of the top 1 percent rose by 10 times more, or 200.5 percent. Conversely, between 1928 and 1979, the share of income held by the top 1 percent fell in every state but one.
More recently, their results show that between 2009 and 2011, not only did income inequality grow in all 50 states, but all income growth went to the top 1 percent in 26 states. New York and Connecticut led the pack in terms of income inequality by virtue of their disproportionate share of financial industry millionaires and billionaires, whose fortunes were in turn bolstered by federal and Fed policies that championed the banks that had first access to cheap money and a place to dump their toxic assets. In these states, the average income gap in 2011 had the top 1 percent making 40 times more than the bottom 99 percent. (The gap in California was 26.8 times, confirming that on average Wall Street money trumps tech and entertainment money. The smallest average gap was in Hawaii at 12.1 times.)
Not only are current income inequality levels near the 1928 peak, but the systemic risk posed by this inequality is worse now. There is no counterbalance to the banking elite who possess no imbedded public spirit underlying their political influence and command more instruments of leverage capital than ever before. There’s no strong labor force, no large swaths of the population demanding reform by any means necessary, no revolution. Instead, we have an overhang of debt, stagnant wages and inferior jobs, all exacerbating income inequality.
Risk inequality means that those who have less to begin with have more to lose in adverse circumstances, whereas those with more have less to lose. This extra inequality dynamic is as dangerous to individuals as it is to the greater economy. It is particularly damaging in the wake of the epic Wall Street bailouts and ongoing zero-interest rate monetary policy and quantitative easing of the Federal Reserve policy, which helps the same banks whose family legacies worked with the Washington leaders who were their friends to create the Fed to back their bets and preserve their wealth a century ago.
Inequality has been given nothing but pithy lip service by the political-financial elite, elected or selected, or those aspiring to more of it. Last fall, Hillary Clinton was paid $400,000 to tell two Goldman Sachs gatherings that the financial crisis was a shared responsibility, implying that Wall Street had been unfairly demonized in its wake.
The Economic Policy Institute report authors conclude, “In the next decade, something must give. Either Americans must accept that the American dream of widespread mobility is dead or new policies must emerge that will restore broadly shared prosperity.” But the cards have already been dealt — and the verdict is in. Not only will the American dream remain dead, but also income and wealth and risk inequality will escalate by virtue of the government-supported consolidation of banking family and firm power.
Nomi Prins is a journalist and senior fellow at Demos. She is the author, most recently, of “It Takes a Pillage” and “Black Tuesday.”

Malaysian airplane investigators look at suicide as possible motive

The co-pilot of the missing Malaysia Airlines MH370 jetliner spoke the last words heard from the cockpit, the airline's chief executive said yesterday, as investigators consider suicide by the captain or first officer as one possible explanation for the disappearance.
No trace of flight MH370 has been found since it vanished on March 8 with 239 people on board. Investigators are increasingly convinced it was diverted perhaps thousands of miles off course by someone with deep knowledge of the Boeing 777-200ER and commercial navigation.
A search unprecedented in its scale is now under way for the plane, covering an area stretching from the shores of the Caspian Sea in the north to deep in the southern Indian Ocean.
Airline chief executive Ahmad Jauhari Yahya also told a news conference that it was unclear exactly when one of the plane's automatic tracking systems had been disabled, appearing to contradict the weekend comments of government ministers.
Suspicions of hijacking or sabotage had hardened further when officials said on Sunday that the last radio message from the plane – an informal "all right, good night" – was spoken after the tracking system, known as "ACARS", was shut down.
"Initial investigations indicate it was the co-pilot who basically spoke the last time it was recorded on tape," Jauhari said yesterday, when asked who it was believed had spoken those words.
That was a sign-off to air traffic controllers at 1.19 am, as the Beijing-bound plane left Malaysian airspace.
The last transmission from the ACARS system – a maintenance computer that relays data on the plane's status – had been received at 1.07 am, as the plane crossed Malaysia's northeast coast and headed out over the Gulf of Thailand.
"We don't know when the ACARS was switched off after that," Jauhari said. "It was supposed to transmit 30 minutes from there, but that transmission did not come through."
The plane vanished from civilian air traffic control screens off Malaysia's east coast less than an hour after taking off from Kuala Lumpur. Malaysian authorities believe that someone on board shut off its communications systems as the plane flew across the Gulf of Thailand.
Malaysian police are trawling through the backgrounds of the pilots, flight and ground staff for any clues to a possible motive in what they say is now being treated as a criminal investigation.
Asked if pilot or co-pilot suicide was a line of inquiry, Malaysian acting transport minister Datuk Seri Hishammuddin Hussein said: "We are looking at it." But it was only one of the possibilities under investigation, he added.
Intensive efforts by various governments to investigate the backgrounds of everyone on the airplane had not, as of yesterday, turned up any information linking anyone to militant groups or anyone with a known political or criminal motive to crash or hijack the aircraft, US and European security sources said.
One source familiar with US inquiries into the disappearance said the pilots were being studied because of the technical knowledge needed to disable the ACARS system.
Many experts and officials say while the jet's transponder can be switched off by flicking a switch in the cockpit, turning off ACARS may have required someone to open a trap door outside the cockpit, climb down into the plane's belly and pull a fuse or circuit breaker.
Whoever did so, had to have sophisticated knowledge of the systems on a 777, according to pilots and two current and former US officials close to the investigation.
Malaysian police special branch officers searched the homes of the captain, 53-year-old Zaharie Ahmad Shah, and first officer, 27-year-old Fariq Abdul Hamid, in middle-class suburbs of Kuala Lumpur close to the international airport on Saturday.
Among the items taken for examination was a flight simulator Zaharie had built in his home.
A senior police official familiar with the investigation said the flight simulator programmes were closely examined, adding they appeared to be normal ones that allow users to practise flying and landing in different conditions.
A second senior police official with knowledge of the investigation said they had found no evidence of a link between the pilot and any militant group.
Some US officials have expressed frustration at Malaysia's handling of the investigation. As of yesterday morning the Malaysian government still had not invited the FBI to send a team to Kuala Lumpur, two US security officials said.
The FBI, which has extensive experience in investigating airplane crashes, and other US law enforcement agencies have indicated they are eager to send teams to Kuala Lumpur, but will not do so unless formally invited.
Police and a multinational investigation team may never know for sure what happened in the cockpit unless they find the plane, and that in itself is a daunting challenge.
Satellite data suggests it could be anywhere in either of two vast corridors that arc through much of Asia: one stretching north from Laos to the Caspian, the other south from west of the Indonesian island of Sumatra into the southern Indian Ocean west of Australia.
Aviation officials in Pakistan, India, and Central Asian countries Kazakhstan and Kyrgyzstan – as well as Taliban militants in Pakistan and Afghanistan – said they knew nothing about the whereabouts of the plane.
China, which has been vocal in its impatience with Malaysian efforts to find the plane, called on its smaller neighbour to immediately expand and clarify the scope of the search. About two-thirds of the passengers aboard MH370 were Chinese.
Australian Prime Minister Tony Abbott said he had spoken to Malaysian counterpart Najib Razak by telephone, and had offered more surveillance resources in addition to the two P-3C Orion aircraft his country has already committed.
Hishammuddin said diplomatic notes had been sent to all countries along the northern and southern search corridors, requesting radar and satellite information as well as land, sea and air search operations.
The Malaysian navy and air force were also searching the southern corridor, he said, and US P-8A Poseidon surveillance aircraft were being sent to Perth, in Western Australia, to help scour the ocean.
Electronic signals between the plane and satellites continued to be exchanged for nearly six hours after MH370 flew out of range of Malaysian military radar off the northwest coast, following a commercial aviation route across the Andaman Sea towards India.
The plane had enough fuel to fly for about 30 minutes after that last satellite communication, Ahmad Jauhari said.
Twenty-six countries are involved in the search, stretching across much of Asia.
A source familiar with official US assessments of satellite data being used to try to find the plane said it was believed most likely it turned south sometime after the last sighting by Malaysian military radar, and may have run out of fuel over the Indian Ocean.
The Malaysian government-controlled New Straits Times yesterday quoted sources close to the investigation as saying data collected was pointing instead towards the northern corridor. – Reuters, March 18, 2014.

Britain's five richest families worth more than poorest 20%

Oxfam report reveals scale of inequality in UK as charity appeals to chancellor over tax

Who are the five richest families?

British Finance Minister George Osborne
Oxfam has urged George Osborne to use Wednesday’s budget to make a fresh assault on tax avoidance. Photograph: Carl Court/AFP/Getty Images
The scale of Britain's growing inequality is revealed by a report from a leading charity showing that the country's five richest families now own more wealth than the poorest 20% of the population.
Oxfam urged the chancellor George Osborne to use Wednesday's budget to make a fresh assault on tax avoidance and introduce a living wage in a report highlighting how a handful of the super-rich, headed by the Duke of Westminster, have more money and financial assets than 12.6 million Britons put together.
The development charity, which has opened UK programmes to tackle poverty, said the government should explore the possibility of a wealth tax after revealing how income gains and the benefits of rising asset prices had disproportionately helped those at the top.
Although Labour is seeking to make living standards central to the political debate in the run-up to next year's general election, Osborne is determined not to abandon the deficit-reduction strategy that has been in place since 2010. But he is likely to announce a fresh crackdown on tax avoidance and measures aimed at overseas owners of high-value London property in order to pay for modest tax cuts for working families.
The early stages of the UK's most severe post-war recession saw a fall in inequality as the least well-off were shielded by tax credits and benefits. But the trend has been reversed in recent years as a result of falling real wages, the rising cost of food and fuel, and by the exclusion of most poor families from home and share ownership.
In a report, a Tale of Two Britains, Oxfam said the poorest 20% in the UK had wealth totalling £28.1bn – an average of £2,230 each. The latest rich list from Forbes magazine showed that the five top UK entries – the family of the Duke of Westminster, David and Simon Reuben, the Hinduja brothers, the Cadogan family, and Sports Direct retail boss Mike Ashley – between them had property, savings and other assets worth £28.2bn.
The most affluent family in Britain, headed by Major General Gerald Grosvenor, owns 77 hectares (190 acres) of prime real estate in Belgravia, London, and has been a beneficiary of the foreign money flooding in to the capital's soaring property market in recent years. Oxfam said Grosvenor and his family had more wealth (£7.9bn) than the poorest 10% of the UK population (£7.8bn).
Oxfam's director of campaigns and policy, Ben Phillips, said: "Britain is becoming a deeply divided nation, with a wealthy elite who are seeing their incomes spiral up, while millions of families are struggling to make ends meet.
"It's deeply worrying that these extreme levels of wealth inequality exist in Britain today, where just a handful of people have more money than millions struggling to survive on the breadline."
The UK study follows an Oxfam report earlier this year which found that the wealth of 85 global billionaires is equivalent to that of half the world's population – or 3.5 billion people. The pope and Barack Obama have made tackling inequality a top priority for 2014, while the International Monetary Fund has warned that the growing divide between the haves and have-nots is leading to slower global growth.
Oxfam said the wealth gap in the UK was becoming more entrenched as a result of the ability of the better off to capture the lion's share of the proceeds of growth. Since the mid-1990s, the incomes of the top 0.1% have grown by £461 a week or £24,000 a year. By contrast, the bottom 90% have seen a real terms increase of only £2.82 a week or £147 a year.
The charity said the trends in income had been made even more adverse by increases in the cost of living over the past decade. "Since 2003 the majority of the British public (95%) have seen a 12% real terms drop in their disposable income after housing costs, while the richest 5% of the population have seen their disposable income increase."
Osborne will this week announce details of the government's new cap on the welfare budget and has indicated that he wants up to £12bn a year cut from the benefits bill in order to limit the impact of future rounds of austerity on Whitehall departments.
Oxfam said that for the first time more working households were in poverty than non-working ones, and predicted that the number of children living below the poverty line could increase by 800,000 by 2020. It said cuts to social security and public services were meshing with falling real incomes and a rising cost of living to create a "deeply damaging situation" in which millions were struggling to get by.
The charity said that starting with this week's budget, the government should balance its books by raising revenues from those that could afford it – "by clamping down on companies and individuals who avoid paying their fair share of tax and starting to explore greater taxation of extreme wealth".
The IMF recently released research showing that the ever-greater concentration of wealth and income hindered growth and said redistribution would not just reduce inequality but would be economically beneficial.
"On average, across countries and over time, the things that governments have typically done to redistribute do not seem to have led to bad growth outcomes, unless they were extreme", the IMF said in a research paper. "And the resulting narrowing of inequality helped support faster and more durable growth, apart from ethical, political or broader social considerations."
Phillips said: "Increasing inequality is a sign of economic failure rather than success. It's far from inevitable – a result of political choices that can be reversed. It's time for our leaders to stand up and be counted on this issue."

Landed gentry to self-made millionaires

• Back to the top
Duke of Westminster (Wealth: £7.9bn)
Gerald Grosvenor and his family owe the bulk of their wealth to owning 77 hectares (190 acres) of Mayfair and Belgravia, adjacent to Buckingham Palace and prime London real estate.
As the value of land rockets in the capital so too does the personal wealth of Grosvenor, formally the sixth Duke of Westminster and one of seven god parents to the new royal baby, Prince George.
The family also own 39,000 hectares in Scotland and 13,000 hectares in Spain, while their privately owned Grosvenor Estate property group has $20bn (£12bn) worth of assets under management including the Liverpool One shopping mall, according to leading US business magazine Forbes.
Reuben brothers (£6.9bn)
Simon and David Reuben made their early money out of metals. Born in India but brought up in London, they started in local scrap metal but branched out into trading tin and aluminium.
Their biggest break was to move into Russia just after the break-up of the Soviet Union, buying up half the country's aluminium production facilities and befriending Oleg Deripaska, the oligarch associate of Nat Rothschild and Peter Mandelson.
The Reuben brothers are still involved in mining and metals but control a widely diversified business empire that includes property, 850 British pubs, and luxury yacht-maker Kristal Waters. They are also donors to the Conservative party.
Hinduja brothers (£6bn)
Srichand and Gopichand Hinduja co-chair the Hinduja Group, a multinational conglomerate with a presence in 37 countries and businesses ranging from trucks and lubricants to banking and healthcare.
They began their careers working in their father's textile and trading businesses in Mumbai and Tehran, Iran but soon branched out by buying truck maker, Ashok Leyland from British Leyland and Gulf Oil from Chevron in the 1980s, while establishing banks in Switzerland and India in the 1990s.
The family's London home is a mansion on Carlton House Terrace, overlooking St James Park and just along from Buckingham Palace, which is potentially worth £300m. They have links with the Labour party.
Cadogan family (£4bn)
The wealth of the Cadogans family is built on 90 acres36 hectares of property and land in Chelsea and Knightsbridge, west London.
Eton-educated Charles is the eighth Earl of Cadogan and ran the family business, Cadogan Estates, until 2012 when he handed it over to his son Edward, Viscount Chelsea.
Charles, who is a first cousin to the Aga Khan, started in the Coldstream Guards before going into the City.
He was briefly chairman of Chelsea Football Club in the early 1980s and his family motto is: "He who envies is the lesser man."
Mike Ashley (£3.3bn)
Ashley owns Newcastle United football club and became a billionaire through his Sports Direct discount clothing chain which he started after leaving school.
He was the sole owner of the fast growing business, which snapped up brands such as Dunlop, Slazenger, Karrimor and Lonsdale, until it floated on the stock market in 2007. He now owns 62%.
Ashley is a regular visitor to London's swankiest casinos but is famously publicity-averse.

Gold’s Protection Against Counterparty Risk Is Coming Alive

History repeats itself. Although it does not repeat exactly in the same way, it rhymes. Consider this, exactly one year ago, on March 16th, Cyprus reached the newswires globally with the announcement of its bank bail-ins.
One year later, the geopolitical escalation between Ukraine and Russia is front stage. Just moments ago, the long awaited referendum in Crimea resulted in an overwhelming 95% of votes to join Russia, according to Reuters. The Western world, even before the closing of the referendum, has officially stated that it denies the results.
Think about this. Crimea has 2 million inhabitants, a GDP of $4.3 billion, an average monthly salary of $290, a budget deficit $1 billion. Its GDP is 0,02% of the US GDP. Yet, the US government, along with “its friends and allies”, feels the need to intervene in Putin’s backyard. Why?
Motives of the West become much more clear when looking below the surface, in this case literally. It appears that Crimea has a capacity of 7 million tons of oil production per year. Moreover, ExxonMobil and Royal Dutch Shell have closed a deal (although currently on hold) worth $1 billion. As far as Ukraine is concerned, it is a central hub of energy supply to the West, in particular gas.
Now there is nothing new to this. All geopolitical tensions of the last decades were centered around oil, gas or other commodities. Think of Iraq two decades ago, Syria very recently, and a dozens of other examples in between. However, there are important reasons why “this time could really be different.”
Next to the tensions in Russia, there are signs that the Chinese credit bubble, the biggest credit bubble in history, is cracking. Chinese bank assets expressed in US Dollars currently exceed 25 trillion, while US bank assets are close to 14 trillion USD. Chinese credit doubled since 2009. The most concerning news, however, is under the hood. Zerohedge cited Bank of America, when they discovered that one of the large trusts (CITIC) “tried to auction the collateral but failed to do so because the developer has sold the collateral and also mortgaged it to a few other lenders.”
The fundamental issue here is that an economic crisis, which seems developing, could be very different this time. The effect could really be dramatic. The reason why “this time is different” is directly related to the worsening debt crisis, which is inherently linked to the currency wars. The US is playing a key role here. Why? During all previous escalations, the US, with its global dominance, was in a better economic shape than it is today. And so was the rest of the world. Think about these global facts and figures:
  • Global debt in the financial system is at historic highs. It recently surpassed $100 trillion, as reported by Bloomberg based on BIS data.
  • US government debt alone has surged to $12 trillion up from $4.5 trillion at the end of 2007.
  • The interest rates on government debt, especially in the US with a zero interest rate policy, is at 5,000 year lows.
  • Global derivatives have a notional value of around $700 trillion (latest official BIS data from mid 2013), the highest point historically.
What this means in plain simple terms is that the financial system is extremely leveraged, highly sensible to an external shock. All major economies and, hence, the whole world, is inherently vulnerable. Unfortunately, the first signs of cracks are there, as evidenced by several facts in the last two weeks.
First, Friday’s reported data about US Treasuries from foreigners held by the Fed, has shown a drop of $104.5 billion. Zerohedge notes: “This was the biggest drop of Treasurys held by the Fed on record, i.e., foreigners were really busy selling. This brings the total Treasury holdings in custody at the Fed to levels not seen since December 2012, a period during which the Fed alone has monetized well over $1 trillion in US paper.” The following chart says it all.
Treasurys custody foreign accounts 14 March 2014 money currency
Why is this important? US Treasuries are the backbone of the world monetary system, at least as long as the US dollar is the world reserve currency. Think about this: China held $1.269 trillion of US Treasuries and Japan $1.183 trillion at the end of December, while Russia held $138.6 billion. After the US sent out warnings to Russia, China openly chose the side of Russia. Below the surface, however, “someone” sent a very strong signal to the US, and, by doing so, to the world, by withdrawing record amounts of US Treasuries. This is economic warfare at a level not seen to date, because of the current extremes in the monetary system.
Second, in the context of international currencies, Russia is likely to engage with China more actively in bilateral trade with the ultimate goal to transact in their own currencies, bypassing the US Dollar. It is not unthinkable that they will use gold.
As Ambrose Evans noted this week, the latest financial ructions go beyond Russia, they reek of stress in the international system. “Countries are intervening all over the place to defend their currencies, which means they are tightening. Their central banks built up huge war chests of reserves for a rainy day, and now it is raining,” said the currency chief at HSBC.
One of the biggest concerns for the US in particular would arise when Russia, backed by China, will start trading oil for gold, as we wrote in “Russia Touches U.S. Achilles Heel: Petrogold instead of Petrodollar.” Similar attempts of other countries in the past were not very effective. Think of Iraq or Turkey recently. But with major countries like Russia or China front stage, this has the potential to truly disrupt the US Dollar, and, hence, the world monetary system.
Note that the US Dollar has been a safe haven currency in the last years and even decades. Political tensions and wars have resulted in a flight to the dollar. Not so this time. In fact, since the tensions in Ukraine started a couple of weeks ago, the US Dollar index has turned down.
Now what is the key take-away of all this? In our view, the current situation highlights three fundamental trends in the big picture.
First, central bank control is an illusion. As hard as central banks are trying to achieve some specific goals, think of zero interest rates, inflation or GDP growth, it is ultimately the market that will determine what will happen. Look at the recent evolutions as described above. Even the most powerful countries on this planet cannot control market forces. Their power looks convincing in “normal market circumstances,” but the truth is they are powerless in times of stress in the market.
In that context, we think it is appropriate to quote John Williams, researcher at Shadowstats.com, when he recentlyexplained what would happen if there was a massive dollar dumping globally. “It would be disastrous for our markets. All those excess dollars coming in, with bonds being sold, interest rates would spike. The stock market would sell off and we would see inflation. To prevent that and try and keep things stable, the Fed would tend to buy up those Treasuries. It would intervene wherever it could to stabilize the circumstance.”
Second, paper assets are in a secular decline. It really does not matter that US and some European equities are at trading at all-time highs. They are doomed to fail till the bear cycle is over. Why? Because the inherent weakness of our financial system, with the US Dollar vulnerability at its heart, built on fiat.
The fact that Russia’s stock market is being hit recently seems not to be of the highest importance for Putin. We agree with Zerohedge when they wrote that “for Putin it is orders of magnitude more important to have the price of commodities, primarily crude and gas, high than seeing the illusion of paper wealth, aka stocks, hitting all time highs.”
It really is no coincidence that most countries, including Russia, China, and the likes, have been adding to their gold reserves for several years. This brings up the third long term trend: gold is in a secular uptrend. Yes, the gold price sold off in 2013. No, the price of gold is not the only aspect that matters. What is far more important is the protection one gets from physical gold.
Gold’s protection serves individuals as well as countries. The “Golden Rule” will continue to be relevant to countries: he who holds the gold rules. Quoting Michael Noonan: “The transition of physical gold from West to East is disrupting the elites domination of the entire financial world. The East has been saying “Enough is enough.” In our view, that is reflected in Eastern physical gold accumulation.
To individuals, what matters is that physical gold is immune to counterparty risk. And this, ladies and gentlemen, we believe is the key take-away from the ongoing economic and financial turmoil. All those dollars, Treasuries, stocks, derivatives, e.a., running a risk to become the object of the new economic warfare, in the context of extreme leverage and excess liquidity, has one and only one antidote: unencumbered ownership of physical gold and silver.
Precious metals in physical form, outside the banking system, are the antidote against what is happening in the world today. Protect yourself, there is still some time to do it (before it is too late). Here is one excellent way to protect your savings with physical gold and silver outside the banking system.

David Morgan: Silver Forming the Most Bullish Cup & Handle Possible!

Silver expert David Morgan joins SD Metals & Markets for an explosive show:
1. David breaks down this week’s trading in gold & silver: David states that silver is forming the most bullish cup & handle formation possible, and joins The Doc’s sentiments that you do NOT want to be short gold or silver this weekend ahead of the Crimea referendum
2. David provides his medium and long term outlook for the metals, including when the next avalanche of momentum buying to the upside will come, and predicts when the final blow-off top to the long term secular gold and silver bull markets will materialize
3. The Fed’s custodial treasury bond holdings plunge by $105 billion in the past week, as Russia likely pulled their t-bond holdings from the Fed to prevent an asset freeze in response to the annexation of Crimea (Putin is 1-stop ahead yet again)
4. We break down the build-up for war, and what to expect this weekend as the dominoes begin to fall in Ukraine. Are we on the brink of a military confrontation between two nuclear superpowers?
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DISCLAIMER: The financial and political opinions expressed in this interview are those of the guest and not necessarily of “Finance and Liberty” or its staff. Opinions expressed in this video do not constitute personalized investment advice and should not be relied on for making investment decisions.

You don't see taxis being hijacked, says Anwar

Anwar Ibrahim has claimed that the majority of taxi drivers in Malaysia are supporters of Pakatan Rakyat but noted that they do not hijack the vehicles.
"I think 90 percent of taxi drivers are our supporters. But I don't see all the taxis being hijacked to Kajang," he told reporters at the Parliament lobby today.
The opposition leader referred to Kajang as there is a by-election slated for the state constituency on March 23, which Pakatan is touting as a referendum against injustice in relation to Anwar's conviction.
Describing the pilot of the missing aircraft as a "good family man", Anwar also admitted that Zaharie was related to his daughter-in-law and that he had met the captain during several PKR functions.
"He is someone who has passion for justice," Anwar said.
He called on the media not to "cast aspersions" on Zaharie before investigations are concluded.
The PKR de facto leader was responding to speculations that Zaharie could have hijacked the plane in protest over the Sodomy II conviction against Anwar on March 7, hours before the plane bound for Beijing took off from KLIA.
Anwar also said that the handling of the MH370 crisis by the government is "disappointing".
"There's no doubt about this, so much has been said on this that I need not elaborate further," he added.
He also slammed Prime Minister Najib Abdul Razak for not having the "courage to field questions when facing the media", referring to the latter's press conference last Saturday announcing the change in search areas for MH370.

EU foreign ministers levy sanctions after Crimean referendum

The EU and US have announced sanctions against individuals involved in the current crisis engulfing Ukraine and Russia. EU foreign ministers meeting in Brussels said they wanted to send a strong signal to Moscow.
EU foreign ministers announced early Monday afternoon that the 28-member bloc would levy asset freezes and travel bans against 21 officials from Ukraine and Russia. Further measures were expected in a few days. The move came in response to those individuals' roles in the political crisis between Russia and Ukraine, which resulted in the secession of Crimea.
"It is a day on which clear messages need to happen," German Foreign Minister Frank-Walter Steinmeier said following the three-hour meeting in Brussels. According to him, Russia's Black Sea Fleet commander Alexander Vitko was on the EU ban list, alongside several members of Russia's parliament.
A statement from the White House followed soon after confirming that US President Barack Obama had ordered sanctions against at least seven other individuals linked to the crisis, including ousted Ukrainian President Viktor Yanukovych.
'Strongest possible signal'
Ahead of the meeting in Brussels, EU foreign ministers said they needed to act swiftly against Russia, as it had refused thus far to answer to the Western leaders' calls for a de-escalation in tensions with Ukraine.
"We are trying to send the strongest possible signals to Russia, a signal trying to ensure that they understand the seriousness of the situation," EU foreign policy chief Catherine Ashton told reporters. "I call upon Russia yet again to meet with the Ukrainian leaders and to start dialogue with them and to try to move to de-esclation as quickly as possible."

Eu sanctions against Russia

The Czech Republic's foreign minister, Lubomir Zaoralek, told reporters that they were focusing on 20 "political individuals" to levy sanctions against by the end of Monday.
"This is to be the first set and I would not rule out that this list can be widened at the next meeting of the Council," Zaoralek said, referring to the EU Council's next scheduled meeting on Thursday.
While many foreign ministers, including those from France and Britain, clearly stated that they wanted tough action against Russia, others emphasized the need to keep the lines of communication with Moscow open.
Dutch Foreign Minister Frans Timmersmans admitted that bans would "become inevitable" because of Russia's support for the referendum in Crimea, which Western leaders had condemned as illegal and illegitimate.
However, he added: "I would do anything possible to avoid sanctions because I believe everybody will suffer if we get into sanctions."
"The only [people] who can prevent this are the Russians," the Dutch foreign minister added.
Germany's top diplomat, Frank-Walter Steinmeier, expressed a similar view ahead of the meeting on Monday. In an interview with the daily newspaper Bild, he said the EU would "give a clear and definitive answer to the referendum, which violated international law," but that "every effort [should be] aimed at avoiding a further escalation [of the crisis]."
Crimea applies for annexation
On Monday morning, Crimea's lawmakers officially requested annexation by Moscow and declared that all remaining Ukrainian institutions were Crimean property.
"The Republic of Crimea appeals to the United Nations and to all countries of the world to recognize it as an independent state," a document approved by Crimea's regional assembly said.

Crimea votes to join Russia

"The activities of state institutions of Ukraine on the territory of Crimea are finished and their powers, their property and their budgets are transferred to the state organs of the Republic of Crimea," it said.
Russia was scheduled to review the request on Tuesday, with President Vladimir Putin addresing a joint session of the Russian parliament, according to Russian media reports.
On Sunday, 96.8 of ballots cast in the Crimean referendum voted yes to declaring independence from Ukraine and joining the Russian Federation. The voter turnout was estimated at 83 percent, a high figure considering that many opponents of the motion had pledged to boycott the ballot.
Ukraine approves mobilization of reservists
Meanwhile, Ukraine's parliament approved a presidential decree to partially mobilize a military reserve unit within the next two months, according to news agency Reuters.
The plan, which would involve some 40,000 reservists, was aimed at preventing "a repeat of the Crimean scenario in Ukraine's southeastern regions," the Ukrainain secretary of the National Security and Defense Council, Andriy Parubiy, said on Monday.
It also requested technical assistance from NATO, according to the Associated Press on Monday. The report added that NATO said it would strengthen its cooperation with the eastern European country, however it did not provide further detail about what that might include.
Russia's actions in the Ukrainian crisis have deeply worried foreign leaders, who fear that the rising tensions in eastern Europe could foreshadow further Russian aggression.
Following the ouster of Ukrainian President Viktor Yanukovych in February, Russian President Vladimir Putin deployed troops to the Crimean peninsula, where they have gradually taken over Ukrainian military bases. While the Russian leader admitted to providing political support to ethnic Russians in Ukraine who felt threatened by the pro-EU interim government in Kyiv, Putin has denied sending troops to the region. He has also repeatedly stated that Moscow does not recognize the legitimacy of the interim government in Ukraine.
kms/tj (AP, AFP, Reuters, dpa)


Audios and videos on the topic

  • Date 17.03.2014

Is Russia Cashing In On Its US Treasury Holdings?

Could Russia be cashing out on its U.S. Treasury holdings? Concerns over rising political tensions between the Russia and the West over the Ukrainian crisis have helped boost gold prices to their highest level in six months, as investors rush for cover into the traditional safe-haven asset. 
U.S. Treasury securities held in for foreign official and international accounts slid $105 billion in the week ending March 12, according to a Wall Street Journal report. The decline was the largest retreat on record. As of December 31, both official and private Russian holdings totaled $138.6 billion of Treasury debt, the report said.

Some market watchers wonder if Russia is moving funds out of U.S. Treasury bond holdings into other accounts that it would be able to access in case economic sanctions are imposed over the current Ukrainian crisis. Moving a billion dollars is serious business, and this situation remains on edge. All eyes will be focused on the Crimean referendum on Sunday as citizens there vote on potential secession from the Ukraine in order to join Russia.
What does this show about gold? Gold is still reacting in its traditional safe-haven manner. Investor flows are returning to the gold market. Bullish sentiment is climbing. The yellow metal has posted a stunning and some would say surprising rally move since the start of 2014. There are many potential factors supporting the up move, including a spate of weaker-than-expected data in the U.S. throughout the first quarter, weakness in the U.S. dollar index and most recently safe-haven buying from the Ukrainian crisis.
But, trend following traders often don't bother looking at the fundamentals. And, for now as the old market adage goes: "the trend is your friend." Gold is trading above its 200-day moving average, now at $1,304 basis the Comex April gold futures contract, which is a bullish signal to the trend following crowd.
Meanwhile, the U.S. dollar index has been trending lower in recent weeks as the bull market in the dollar has yet to materialize.
While tensions are heating up on the international stage, gold is reacting in its traditional and long-revered safe haven status. The near and medium term trends are bullish for gold, April futures have taken out a key resistance point at the October 2013 ($1,361) highs in recent days
and the bulls are focusing on a retest of the August 2013 high at $1,430.20.
Last year's gold declines are in the rear view mirror and gold bulls are back in charge.
Kira Brecht is managing editor at TraderPlanet.

im Sinclair: Gold to $2k, New Highs in Silver “A Given” As Putin Preparing Nuclear Economic Bomb!

World renowned gold expert Jim Sinclair is issuing a warning of a massive downside risk to U.S. sanctions against Russia.  Sinclair says watch the “struggling dollar” and Russia accepting any currency for oil and natural gas.  Sinclair explains, “It’s struggling . . . because it smells the real teeth of retaliation for sanctions being in the simple acceptance of any currency whatsoever for payment for gas to Europe.  Believe me, they will settle in other currencies. . . . It makes energy cheaper.  Why in the world would anyone want to pay in dollars if they can pay in their own currency?  Russia could retaliate in a way that would have phenomenal impact on the U.S. dollar. . . . Russia has the upper hand.  They have it in their ability to turn the U.S. economy upside down and into collapse.  There is no question whatsoever.  Putin doesn’t need a nuclear bomb. He has a nuclear economic bomb that he can set off at any time.” 
What would the price of gold be this year?  Sinclair predicts, Gold has $2,000 an ounce in its sites in 2014.  On silver, Sinclair says, “Silver is gold on steroids.  When gold takes off, silver goes up faster. . . . So, the idea you are going to get an old high on silver or better is a given.
Legendary gold trader Jim Sinclair’s MUST WATCH interview with Greg Hunter is below: