Tuesday, April 1, 2014

Bank of Hawaii is Closing The Accounts of Iranian Citizens

Bank of Hawaii is closing the accounts of Iranian nationals living in the state, a move that is angering Iranian activists and civil rights supporters.
A national Iranian organization sent a letter to the bank last week protesting the action.
“Bank of Hawaii has made a business decision to close all accounts belonging to customers with Iran citizenship,” according to a letter from the bank sent to 17 Iranian nationals in December.
The bank cites U.S. sanctions against Iran, issued from the U.S. Department of the Treasury Office of Foreign Assets Control (OFAC), the agency responsible for regulating the economic sanctions between the U.S. and Iran.
“U.S. depository institutions, including foreign branches, are prohibited from servicing accounts of the Government of Iran, including banks owned or controlled by the Government of Iran ... or persons in Iran,” one of the sanctions states.
The Bank of Hawaii letter noted that while the bank was aware the addresses associated with the account holders are located in the U.S., the bank is “not able to prevent the operation of your account if, or when, you are in Iran.”
Taking Action
Hamid Pourjalali, a professor at the University of Hawaii at Manoa’s Schidler College of Business, knows of several people who have received the letter; he believes it’s “outrageous” for the bank to take such action.
“This is an extreme case, because even in the letter they say it’s not based on transactions,” Pourjalali said. “The accounts are closing based on citizenship.”
The closures are mainly affecting students who are here on visas and others who live here with green cards. Pourjalali knows of at least one person who, once he proved his U.S. citizenship, was able to save the account.
In a statement to Civil Beat, Stafford Kiguchi, spokesman for the Bank of Hawaii, apologized for the inconvenience to customers. "In response to the customer feedback we received, we are working on a technology solution that may allow the reopening of these accounts, should our customers wish to do so," he said.
Kiguchi noted that there are many Iranian citizens legally in the U.S. and that there are exceptions to the rules for some situations. "However, if the person returns to Iran and leaves the account open, the financial institution is required to immediately restrict access to the account."
Under Iran’s citizenship laws, anyone born there is automatically a citizen, as are the children born outside of Iran to fathers who are Iranian nationals, which includes many Iranian-Americans.
Some fear this could lead to U.S. citizens having their bank accounts closed as well.
Erich Ferrari is an attorney in Washington, D.C., who specializes in issues related to U.S. trade sanctions. He says he has never seen a case like this and believes the bank went “way overboard.”
“What’s problematic here is that Iranians can have dual nationality regardless of if they have a connection there or not,” or ever go to the country, he said.
An Iranian advocacy group is taking on the bank. Jamal Abdi is the policy director at the National Iranian American Council (NIAC), a grassroots organization that addresses issues facing the Iranian community.
"We strongly urge for Bank of Hawaii to reverse this discriminatory action and to ensure its policies do not violate constitutional and legal protections for U.S. persons," he said in a Feb. 24 letter on behalf of NIAC.
Similar situations have happened before, “but nothing like this,” Abdi told Civl Beat. “Nothing where the bank has stated that they are cutting off customers solely because of their citizenship.”
Last year, more than 20 Iranian students at the University of Minnesota had their accounts terminated by TCF bank, triggered by the bank's investigations into transactions it believed may have violated the federal sanctions.
The bank denied it was targeting international students. Students filed a complaint with the Minnesota Department of Human Rights and the bank is now under an investigation to determine if there was discrimination.
In 2012, TD Bank in Canada closed the accounts of Iranians due to the federal sanctions, although many who got their accounts closed were shocked and said they hadn’t tried to send any money to Iran.
Caught Between Service and Compliance
The timing of the account closures comes after the U.S. and other world powers agreed to a six-month accord with Iran that began in January, temporarily freezing Iran’s nuclear program and in return easing some of the economic sanctions, allowing for negotiations over a long-term deal on Iran’s nuclear program.
Data from the 2010 census showed there were 370 individuals living in Hawaii that identified as Iranian alone or in combination.
According to the NIAC, many Iranian students studying in the U.S. have had difficulty paying for their tuition and living expenses because of the sanctions that make it difficult to access or transfer funds that are held in Iran.
Ferrari noted that banks operate under strict liability and have been known to refuse to service accounts to people they believe have a connection to Iran. Iran citizens have a higher risk profile, and raise red flags to banks, he said.
Kiguchi said that it is difficult for the Bank of Hawaii to monitor when someone returns to Iran. "We must be able to restrict their use of our internet, telephone and mobile services, or even their ability to write a check to access their accounts while in Iran, or we are in violation of the law. We are caught here between trying to serve our customer and being in compliance with U.S. regulations," he said.
Abdi says he realizes the banks “are put in a tough place” with regard to the sanctions.
“I don’t think that the Bank of Hawaii is intentionally discriminatory against Iranians,” he said. “I understand that they’re doing this because of the sanctions. The sanctions are broad. The issue here, though, is that complying with them doesn’t give them a blank check to use racial profiling.”
Abdi says the bank's reasoning, that it can’t control what Iran citizens will do with the account if or when the person returns to Iran, doesn’t hold up.
“Iranian Americans travel to Iran, other Americans travel to Iran, plenty of people travel to Iran. I’m not clear why they’re using Iranian citizenship as their criteria here,” Abdi said. “That’s not justifiable for cutting off a bank account.”
Kiguchi says the bank is hoping to reach a resolution to accommodate its Iranian customers within the next two weeks.

Exclusive: U.S. Taxpayers To Spend $400,000 For A Camel Sculpture In Pakistan

A camel staring at the eye of a needle would decorate a new American embassy — in a country where the average income yearly is $1,250.

“Camel Contemplating Needle” by John Baldessari on display at the HALL Wines winery in Napa Valley, Calif. An identical sculpture is planned for the U.S. Embassy in Pakistan. Photograph by Michael Bowles courtesy of Hall Wines / Via hallwines.com
The State Department is planning to spend $400,000 in taxpayer funds to buy a sculpture for the new American embassy being built in Islamabad, Pakistan, according to contracting records.
The work, by noted American artist John Baldessari, depicts a life-size white camel made of fiberglass staring in puzzlement at the eye of an oversize shiny needle — a not-so-subtle play on the New Testament phrase about the difficulty the wealthy have in entering the kingdom of heaven.
Officials explained the decision to purchase the piece of art, titled “Camel Contemplating Needle,” in a four-page document justifying a “sole source” procurement. “This artist’s product is uniquely qualified,” the document explains. “Public art which will be presented in the new embassy should reflect the values of a predominantly Islamist country,” it says. (Like the Bible, the Qur’an uses the metaphor of a camel passing through the eye of a needle.)
To emphasize Baldassari’s fame, the contracting officials pulled a section from Wikipedia. “John Anthony Baldessari (born June 17, 1931) is an American conceptual artist known for his work featuring found photography and appropriated images.”
In a statement, State Department press spokeswoman Christine Foushee said the proposed purchase comes from the department’s “Office of Art in Embassies.” In new construction projects, she said, a small part of the total funds, about 0.5%, is spent on art purchases.
Steven Beyer of Beyer Projects, the art dealer for the project, said the government reached out. “They approached us,” he said in a phone interview. “We were, of course, quite surprised.”
The $400,000 price tag “is actually a very a reduced price for this sculpture,” he said. “There is an art market that makes these prices, and this is one of the most prominent American artists.”
Another copy of “Camel Contemplating a Needle” is on display at Hall Wines in Napa Valley, Calif., and Beyer said that copy sold for far more then the State Department would pay.
He points out that while some Americans may find it frivolous for the government to pay for art, others will find it important. “It depends on what part of the public you are in,” he said. “If you go to the museum and enjoy art and are moved by it, things cost what they cost.”
To put the sculpture’s price tag into a local perspective, the average yearly income in impoverished Pakistan is about $1,250 per year, according to the Agency for International Development.

Contracting document for camel sculpture:

Contracting document for camel sculpture:
Click to view the full PDF.

More than 40% of Italians want to quit euro

A new poll has found that more than 40 percent of Italians would like the country to leave the European single currency.
As Europeans prepare to go to the polls in the EU elections in May, the study, conducted by Ixè institute for the Italian broadcaster Rai3, found that 43 percent of Italians would like to return to the Italian lira, the news agency Ansa reported.
The survey, which polled 1,000 people, found that the majority of those in favour (70 percent) were voters of Beppe Grillo’s Five Star Movement and 56 percent supported Silvio Berlusconi’s Forza Italia.
Meanwhile, just 28 percent of voters of the centre-left Democratic Party wanted out of the euro.
Though another study conducted earlier this year found that Italians’ trust in the EU was on the rise, it found that a large part of the electorate wanted to “re-discuss” the single currency. The study was carried out by SWG and commissioned by the Northern League.
Still, many Italians have long blamed the European Union for its woes, lamenting the euro for its stagnant economy and fall in living standards.
The Five Star Movement has called for a referendum on the currency while Forza Italia and the Northern League are also opposed to it.
The Local (news@thelocal.it)

DOOM! The US Is Like A Ship With No Lifeboats (Full Of Suicidal Bankers)

A great article from Zero Hedge.
Authored by Hugo Salinas Price via The Burning Platform blog,
The last dollar devaluation took place under President Roosevelt in 1934, when from being worth 1/20.67th of an ounce of gold in 1933, the dollar was devalued to 1/35th of an ounce of gold.
The last opportunity for devaluing the dollar took place in August 1971, when the dollar was still pegged at 1/35th of an ounce of gold. Nixon took the advice of Milton Friedman and made the worst mistake in history; Nixon did not devalue the dollar as he should have done, but simply took the US off the gold standard, such as it was, and thence forth the US refused to redeem dollars held by Central Banks around the world at any price.
Since August 15, 1971, the dollar can no longer be devalued.
I have copied approximately 15% of the full article.
Link to the full article:
Now, here is the part that should freak everyone out, at least those of us who are sane and love life…
When serious problems for the dollar surface – as they surely will – and the US has little or no gold to fall back on, the US with its back to the wall may become a very dangerous entity in the world. Would it be possible for those running the US to loose their heads and decide for a suicidal nuclear war in response to a desperate economic situation? Does the destruction of the whole world matter to men about to take their own lives? Do suicidal bankers worry about the fate of the world? 
Do suicidal bankers worry about the fate and well being of the world??
All wars are bankers wars.
I am guessing that a suicidal person does not care about anyone.
Nikola Tesla

The Odds Are Never In Our Favor

By Michael Snyder
Flash Boys
How would you feel if you went to the store to buy something, and someone rushed ahead of you and purchased it first and then sold it to you at a higher price?  Well, in the financial world this happens millions upon millions of times.  In fact, this practice has become so popular that it has spawned an entire industry known as “high frequency trading”.  At this point, high frequency trading makes up about half of all trading volume on Wall Street, and it is costing the rest of us billions of dollars a year.  And the funny thing is that this is all perfectly legal.  High frequency trading firms are exploiting a glitch in the system, and by allowing this to go on, the authorities have essentially given them a license to steal from the rest of us.  Sadly, this is just another example that shows that the odds are never in our favor.  The “little guy” never seems to be able to win, and those at the top of the food chain like it that way.
Making money in the stock market is supposed to be about making wise investment decisions.  It isn’t supposed to be about finding a glitch in a video game and exploiting it.  But that is essentially what these high frequency traders have done.  They have spent an extraordinary amount of time and energy figuring out ways to make pennies (or sometimes just fractions of a penny) on the trades that the rest of us make.
Fortunately, this practice was exposed in front of the entire world by 60 Minutes the other night.  Steve Kroft interviewed a former trader named Michael Lewis that just released a new book entitled “Flash Boys” that is all about the evils of high frequency trading.  The following is an excerpt from that interview…
Steve Kroft: And this is all being done by computers?
Michael Lewis: All being done by computers. It’s too fast to be done by humans. Humans have been completely removed from the marketplace.
“Fast” is the operative word. Machines with secret programs are now trading stocks in tiny fractions of a second, way too fast to be seen or recorded on a stock ticker or computer screen. Faster than the market itself. High-frequency traders, big Wall Street firms and stock exchanges have spent billions to gain an advantage of a millisecond for themselves and their customers, just to get a peek at stock market prices and orders a flash before everyone else, along with the opportunity to act on it.
Michael Lewis: The insiders are able to move faster than you. They’re able to see your order and play it against other orders in ways that you don’t understand. They’re able to front run your order.
Steve Kroft: What do you mean front run?
Michael Lewis: Means they’re able to identify your desire to, to buy shares in Microsoft and buy ‘em in front of you and sell ‘em back to you at a higher price. It all happens in infinitesimally small periods of time. There’s speed advantage that the faster traders have is milliseconds, some of it is fractions of milliseconds. But it”s enough for them to identify what you’re gonna do and do it before you do it at your expense.
Steve Kroft: So it drives the price up.
Michael Lewis: So it drives the price up, and in turn you pay a higher price.
You can watch the entire interview right here.  Unlike most mainstream media news reports, this one is actually worth your time.  I have watched the entire thing, and I highly recommend it.
Of course there have been many that have been screaming about high frequency trading for many years.  Zero Hedge is just one example.  This practice has gone on year after year and the federal government has looked the other way.
These high frequency trading firms do not add anything to society.  AsBarry Ritholtz noted recently, one of these firms has an average holding period for stocks of just 11 seconds, and at one point it stated that it had “not had a losing day of trading in four years“…
The only surprising thing about Lewis’s assertion was that anyone could be even remotely surprised by it.
The math on trading is simple: It is a zero-sum game. One trader’s gain is another trader’s loss. Only in the case of HFT, the losers are the investors — by way of their pension funds, retirement accounts and institutional funds. The HFT’s take — the “skim” — comes out of these large institution’s trade executions.
The technology behind HFT may be complex, but the math is that simple. Once the Securities and Exchange Commission allowed stock exchanges to share with traders all of the unexecuted incoming orders, it was hard not to make money by skimming a few cents or fractions of a cent from each trade. Several years ago, the founder of Tradebot, one of the biggest high-frequency firms, had said that the firm had “not had alosing day of trading in four years.” The firm’s average holding period for stocks is 11 seconds.
How in the world does that kind of behavior add any value to society?
They are just skimming money that should be going to others.  Billions of dollars is essentially being stolen from pension funds and retirement accounts, and it is time that people started getting outraged about this.
Unfortunately, even if this practice is outlawed, the truth is that the odds will still never be in our favor.
There are millions of Americans that dream of getting ahead, but they never seem to be able to get there.  They work incredibly hard, but the more they earn, the more the government taxes them.  If somehow you do manage to scrape together a little bit of money to invest in the financial markets, any profits that you make will be endlessly eroded by fees, commissions and even more taxes.
And it is important to remember that in the financial world, the “little guy” is regarded as easy prey by the hungry wolves that are all too eager to find a way to transfer your money into their own pockets.  If you don’t know what you are doing, it is all too easy to get absolutely slaughtered.
On Wall Street, there are winners and there are losers.
Most of the time, “the little guys” end up losing.
But at least they could try to have a system that at least has the appearance of fairness.  As long as high frequency trading exists, that will never be the case.

Is There Any Gold Left For Central Banks To Buy?

Jeff Nielson: Here is a conundrum for readers to unravel. Throughout 2011, 2012, and early into 2013; central banks in Eastern and Emerging Market nations went on the largest (official) gold-buying binge in history. This occurred as the currencies of these nations were relatively stable, and thus “inflation” pressures were relatively muted.
Now flash-forward to early 2014. We have what the mainstream propaganda machine is calling “the crises in Emerging Market currencies” (versus all the currencies of the corrupt, Western bloc). Let’s put aside the fact that the “collapse” of these currencies is just another mega-crime from the One Bank – committed while its banker-felons are currently being investigated for serial currency-manipulation.
Forgetting about the cause of this “collapse”, the effect of this plunge in the value of these nations’ currencies is a spike in the rate of inflation. In other words; whatever was the precise motivation for these central banks to begin their gold-buying binge, those motivations would be stronger today. Yet despite a stronger motive, their gold-buying has practically screeched to a halt.

The analogy here is a simple one. As summer begins (and people get thirsty), lemonade sales increase significantly. Yet just as a heat-wave arrives (and people are presumably even thirstier), lemonade sales suddenly collapse. There are only two plausible reasons which immediately assert themselves in this hypothetical scenario. Either the lemonade customers have no more funds to purchase lemonade, or the lemonade-makers have no more lemonade to sell.
Relating this conundrum back to the real world, if there is one thing which we know for certain it is that all of these central banks have plenty of paper to use to exchange for gold, indeed, virtually infinite amounts. Absent a gold standard; the only thing restraining these governments in the creation of these paper currencies is their own (lack of) discipline.
With “competitive devaluation” still the policy-of-suicide for all these governments; this translates into no discipline at all. It’s pedal-to-the-metal with all this paper-printing, meaning that all these governments have mountains of ‘money’ to devote to their gold-buying. Clearly then, our primary suspicion must be that there is little – if any – gold left for these central banks to vacuum-up.
Before pursuing this thinking further; let me deal with a few permutations of this scenario which may have occurred to astute readers. Obviously the collapse of all these currencies means that the price of gold (denominated in these same currencies) has spiked. Thus one possibility would be that these gold-buyers are simply waiting for more-reasonable prices.
There are two reasons to reject such reasoning. First of all, as previously noted; these governments have essentially infinite amounts of paper to exchange for limited/finite quantities of gold. Playing-out such a scenario; as the price of gold begins to fall, instead of waiting for “the bottom”, queue-jumpers would leap into the market to get their gold before supplies are exhausted.

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U.S. Government Gives Out $164 Billion in "No Bid Contracts" in One Year

Source: All Gov.

Although all federal contracts are supposed to be put out to bid, more than a third of them are non-competitive, that is there is only one vendor bidding on the chance to sell U.S. taxpayers goods and services.
The General Accounting Office (GAO) said that in fiscal 2013, the federal government agreed to $459 billion in contracts to purchase goods and services. Of that total, about $164 billion, or 35.7%, was in noncompetitive contracts.
There are several justifications the government can give for entering into a noncompetitive contract. One is that there is only one vendor qualified to provide the goods or service the government requires. But another is that there is an “unusual and compelling urgency” that requires the government to award the contract without competitive bidding. In these cases, there must be a risk of financial or other injury to the government caused by a delay in the competitive bidding process.
The GAO studied the urgency exception used in the years 2010 through 2012 by three federal entities: the Department of Defense, theDepartment of State and the U.S. Agency for International Development (USAID). Three percent of Defense’s noncompetitive contracts, amounting to $12.5 billion, fell under the urgency exception. The State Department had 12.5%t of its noncompetitive deals, worth $582 million attributed to urgency and USAID had only 1%, or about $20 million, under that category.
The most common use of the urgency provision in the Defense Department, according to an analysis by the Project on Government Oversight (POGO), were for combat operational needs in Iraq and Afghanistan and avoiding unanticipated gaps in program support.
The State Department and USAID used the urgency exception primarily to purchase services, such as security in State’s case and road construction for USAID, while the Defense Department relied on the exception about equally for goods and services.
The GAO report made several recommendations. It urged more guidance by the contracting agencies to its personnel in the use of correct procedures in using the urgency exception and to provide more oversight of the process. The report also recommended that the Office of Management and Budget provide guidance on the correct procedures to use when the duration of a contract awarded under the urgency exception exceeds one year.
-Steve Straehley

Jim Rickards: Currency War Between The US/West And China/Russia Is In Process, The END of This System is NEAR

In this MUST WATCH video, Jim Rickards discusses ‘currency war games’ and how the in progress currency war between the US/West and China/Russia is likely to be played out. Not surprisingly, GOLD plays a pivotal role in the currency war games.
The end of the current fiat monetary system is coming, and a GOLD BACKED CURRENCY will replace the fiat petro-dollar.

Check out my articles for more!

Full video can be found at:
this is getting close folks…
Gatekeeper Rickards WARNS: The END of This System is NEAR

NOTE: The downloadable PODCAST mp3 version of this interview will be available at SGT Report (dot) com within an hour after this interview posts on You Tube.Gatekeeper and establishment insider Jim Rickards is making the rounds promoting his new book ‘The Death of Money’ and while Rickards is openly admitting that the world’s financial system will soon collapse, in a recent interview with Kitco Rickards PROVED that he is a Gatekeeper for the establishment. I ask the Doc from Silver Doctors what he makes of Rickards and what it means when a Gatekeeper tells us that worldwide financial Armageddon is near. We also discuss ‘The Big Lie’ and Ukrainian gold, the fact that Russia has a nuclear economic weapon, the Federal Reserve owns gold CERTIFICATES, not gold – and the bankruptcy of Tulving. This is a jam PACKED 30-minutes, thanks for joining us.
For REAL News & Information:

SD Metals & Markets: Authorized Purchasers Rebel Against US Mint Halt Gold Eagle Purchases

Professor William Black-Epic Epidemic of Fraud

http://usawatchdog.com/zero-prosecuti… Fraud expert and former regulator Professor William Black says, “Even today, we are well into 2014, and the Department of Justice record is intact. There have been zero prosecutions of the elite officers who led the epic epidemic of fraud. It was the most destructive in world history, zero of them even unsuccessfully prosecuted, much less prosecuted.”What is the result of massive rampant unprosecuted fraud? Professor Black says, “If you don’t have any accountability, you not only make certain that there is going to be a next blow-up, but it will be worse. . . . We have effectively removed the criminal laws for a particular elite class of frauds.”
Join Greg Hunter of USAWatchdog.com as he goes One-on-One with Professor William Black of UMKC.

Dr Marc Faber: Entering Terminal Phase Of Fed Bubbles

by GoldCore
Today’s AM fix was USD 1,294.00, EUR 939.86 and GBP 777.78 per ounce.
Friday’s AM fix was USD 1,295.75, EUR 944.15 and GBP 779.68 per ounce.
Webinar: Dr Marc Faber On Gold, Silver and Asset Allocation In An Uncertain WorldThis Friday, April 4th at 0900 GMT, Dr Faber will give insights into his strategies for protecting and growing wealth in 2014 and beyond.
Register today and don’t miss this opportunity to hear one of the world’s most respected investment experts.
Gold climbed $0.20 or 0.02% Friday to $1,292.70/oz. Silver rose $0.04 or 0.2% to $19.79/oz.   Gold and silver were both down for the week at 3.02% and 2.46% respectively.
Palladium in U.S. Dollars, 30 Years (Thomson Reuters)
Gold is trading close to a 6 week low today and looks set to have its first monthly decline this year. The weakness is being attributed to hopes of a U.S. economic recovery and the recent abatement in geopolitical tension between Russia and the West.
Gold bullion is down 3% in March and is almost $100/oz below a six month high reached in March. It has fallen $100 in 10 trading sessions. The U.S. non farm payrolls figure Friday will give another glimpse as to the health of the struggling U.S. economy.
Palladium is nearly 1% higher today to $782.50/oz on Russian and South African supply concerns.

Platinum in U.S. Dollars, 30 Years (Thomson Reuters)
Among other precious metals, platinum rose nearly 1% today as labour strikes continued in top producer South Africa.
Dr Marc Faber: “The Old World Is Over”In the gilded ballroom of Hyatt’s Savoy Hotel in Melbourne Australia, Dr Mark Faber was the first speaker at the Port Phillip Publishing, World War D conference. Faber delivered an important message, saying that “The old world order is over”.
Dr Marc Faber is a respected economist and investment guru who predicted the Wall Street Crash in 1987, the Nasdaq crash, the property bubble and the Eurozone and global debt crisis. He is the editor and publisher of the Gloom, Boom & Doom Report and the author of many books including the best selling ‘Tomorrow’s Gold: Asia’s Age of Discovery’.
Faber advised investors to buy gold in 2001 and he is still extremely bullish on gold and silver. He believes that gold will rise in the coming  years due to currency debasement.
Money Morning Australia  reported on Faber’s address to the conference. “The U.S. reached a peak in prosperity and influence in the world in the 1950s or 1960s,” warned Faber. But since the 1970s the superpower has been locked into a cycle of bubbles, busts and growing debt.
“There are some people who claim to be economists who will tell you debts do not matter,” Faber said but he told the packed ballroom that the real story is very different.

Dr Marc Faber
Faber explained the flaw is at the heart of ultra loose monetary policies such as QE. “When you drop dollar bills into the economy…it won’t lift all prices and assets equally at the same time,” he said. In the 1960s and 1970s, extra money flowing through the economy inflated wages; in the early 2000s, money printing inflated tech stocks.
Thus, money printing creates more bubbles. Some assets go up, they overshoot, collapse and cause significant damage. This necessitates, in the view of the U.S. Federal Reserve, more money printing. It is a vicious cycle we’ve seen since the 1970s: every time there is an economic problem, the Fed prints money and creates more distortions and bubbles.
Bernanke’s tenure saw this trend continue, and when it came to assessing the former Fed chairman, Faber didn’t mince his words.
“He’s been a disaster,” Faber warned. Faber pointed out that not only did Bernanke not notice the subprime disaster, he actually denied it existed and even helped create it. “Under his tenure at the Federal Reserve and under his intellectual influence when working for Mr Greenspan, they created the gigantic housing bubble,” Faber said.
At the heart of this expansion in debt, and cycle of bubbles and busts is the reliance of the U.S. economy on consumption. For the last century, policy makers have encouraged consumption on all levels of society including government, and discouraged savings.
But according to Faber, consumption doesn’t create a strong economy. “Wealth doesn’t come from consumerism, it comes from capital spending,” he said.
And the problem for the U.S. economy is that while debt has continued to rise, capital investment hasn’t. In fact, it’s been falling sharply for a long time.
“If we have growing debts, there’s a difference in quality of those debts,” he said. Japan, South Korea and Taiwan used their debts to invest in factories, plants…investments that generate wealth. According to Faber however, the U.S. has just acquired debt to fuel consumption. “Where’s the future income?” he asked.
“We live in a new word. We live in a world where the balance of power has shifted to emerging countries,” said Faber.
One of the most important emerging economies is China. While China’s growth story is well known, Faber gave the audience an important geopolitical sub story.
China’s massive growth triggered massive commodity export booms in emerging economies. China’s real success was exporting the products it produced back to emerging economies. This has created a significant shift in the global economy. Today, exports from China to emerging countries are higher than exports to the U.S. or Europe.
“This is the new world, where the old world is largely bypassed,” said Faber.  While most of the media debates whether the U.S. will grow, Faber argues it will have little impact on the world, as China has a greater influence now than the U.S.
Faber is no bull on China however, and warned he would be very careful about investing there. Faber sees conditions at the present time as much worse than many people realise. There are also geopolitical concerns that are often left unexamined.
On geopolitics, Faber warned that the Middle East is a tinderbox and will go up in flames.
“The Middle East, in my opinion, will go up in flames at some point, that will be an unpleasant event,” predicted Faber in his typically apocalyptic but still understated way.
Punctuated by his usual dry wit, flashes of humour and dire warnings, it was a sober message and Money Morning Australia report that the attentive audience lapped Faber up.
Webinar: Dr Marc Faber On Gold, Silver and Asset Allocation In An Uncertain WorldIn this webinar, Dr Marc Faber will examine opportunities for investors in the uncertain world of today. This Friday only (April 4th), Dr Faber will give insights into his strategies for protecting and growing wealth in 2014 and beyond.
Register today and don’t miss this opportunity to hear one of the world’s most respected investment experts.
In this webinar, some of the topics covered with Dr Faber include:
Asian Century? – Western collapse or stagnation?
Events in Ukraine – Allocations to precious metals?
How to own precious metals?
Dollar cost average or lump sum?
Take profits/ rebalance or buy and hold for long term?
When to sell?
Favoured asset allocation?
Other investment and business opportunities?
Please join us for Dr Faber’s webinar this Friday, April 4th, 2014, at 0900 GMT.

Failure to find Malaysia Airlines flight MH370 sparks Chinese consideration to survey the world


Paul Lawrance
Activist Post

The Chinese government is considering vastly expanding its network of surveillance and observation satellites that would build their network's stature to the size, or even larger, than the one operated by the United States.

China cited the frustrating, so far failed, search for Malaysia Airlines flight MH370 as a reason to expand its global scope of surveillance which has gained support from Beijing lawmakers.

“If we had a global monitoring network today, we wouldn’t be searching in the dark. We would have a much greater chance to find the plane and trace it to its final position,” Professor Chi Tianhe, a researcher at the Chinese Academy of Sciences’ Institute of Remote Sensing and Digital Earth told The South China Morning Post.

“The plan is being drafted to expand our regional monitoring capability to global coverage.”

If the plan gets the go-ahead from lawmakers its expected to launch in as few as two years.

The Chinese government's current satellite surveillance capabilities are a state secret, though it is thought that most carry out surveillance over China and closely surrounding regions.

There are more than 1,000 satellites in orbit above the earth, most used for communication. According to statistics from the US-based Union of Concerned Scientists, 50 are earth-observation, remote-sensing and military-surveillance satellites.

This is a prime example of government never letting a “crisis go to waste”. (You might remember Rahm Emanuel famously saying.)

In a world where privacy is quickly vanishing in the name of fighting terrorism, the Chinese government is now bringing humanity closer to the total surveillance state that many are beginning to fear.
Paul Lawrance writes for Eyes Open Report, where this first appeared.

Russia Raises Some Salaries and Pensions for Crimeans

Prime Minister Dmitri A. Medvedev of Russia, right, visited a children's hospital on Monday in Simferopol, the Crimean capital. Credit RIA Novosti/Reuters

MOSCOW — Moving quickly to envelop Crimea in the Russian bureaucracy and economy, the Kremlin said Monday that it had nearly doubled pensions paid to retirees on the peninsula, raising them to the average levels paid in Russia.
President Vladimir V. Putin signed a decree raising pensions and another increasing salaries for public sector workers like teachers and doctors, according to a statement posted on the Kremlin’s website. Officials also announced a number of new investment plans and tax breaks for Crimea, which Russia seized from Ukraine two weeks ago after a rushed vote in the Crimean Legislature. The Crimeans even realigned the clock, moving theirs ahead two hours, to be identical with Moscow’s time zone.
To reinforce the message from Moscow, Russia’s prime minister, Dmitri A. Medvedev, traveled to the region’s capital to hold a meeting with members of the cabinet and local officials.
In what American officials interpreted as an encouraging sign on Monday that Russia would not invade other regions of Ukraine, the German government released a statement saying Mr. Putin told Chancellor Angela Merkel in a telephone call that he had ordered a partial withdrawal of Russian troops massed on Ukraine’s eastern border, a source of great tension with Western governments in recent weeks.

Russia’s Medvedev Visits Crimea

Prime Minister Dmitri A. Medvedev of Russia spoke in Crimea where he held a meeting with members of his Cabinet and local officials.
The German statement characterized the troop movement as described by Mr. Putin as “the partial withdrawal of Russian troops ordered from the eastern border of Ukraine.”
There was no direct confirmation from Russian officials. The Kremlin’s statement describing the same telephone conversation made no mention of any troop withdrawals. It said only that the leaders “discussed various aspects of the situation in Ukraine, including the possibility for international involvement in restoring stability” and that the pair had also talked about constitutional overhaul in Ukraine and another troubled region of Eastern Europe, the separatist Transnistria region of Moldova.
The Ministry of Defense posted a statement online saying one mechanized battalion, a unit that would typically consist of about 500 men, had completed exercises in the Rostov region, which borders Ukraine, and was returning to base elsewhere in Russia.
The troops had simply completed their exercises, the statement said, without clarifying whether this relatively modest troop movement signaled any broader pullback from the Ukrainian border.
American officials, who estimate the Russians have deployed 40,000 to 50,000 troops near the Ukrainian border, reacted positively to the apparent pullback, whatever its size.
“If reports that Russia is removing some troops from the border region are accurate, it would be a welcome preliminary step,” said Jen Psaki, a State Department spokeswoman. “We would urge Russia to accelerate this process. We also continue to urge Russia to engage in a dialogue with the government in Kiev to de-escalate the situation, while respecting the sovereignty and territorial integrity of Ukraine.”
Mr. Medvedev’s visit was also a show of defiance to the West, coming just hours after Secretary of State John Kerry and Russia’s foreign minister, Sergey V. Lavrov, failed to agree on a diplomatic solution to the Crimean crisis at late night talks in Paris. Mr. Kerry called the annexation “illegal and illegitimate.”
Mr. Medvedev said Crimea would become a special economic zone with tax breaks for businesses that invest in the region.
Russia’s retirement benefits are not high by the standards of developed countries but are higher than those in Ukraine, a condition that has proved one appeal of the annexation for residents of the peninsula, which includes many Soviet military veterans.
The average monthly pension in Russia in 2013 was about 10,000 rubles, according to the RIA state news agency, or $285 at the current exchange rate. In comparison, the average pension in Ukraine in December was $160. Raising retirement benefits on the peninsula is sure to prove popular, though its cost compared with the size of Russia’s budget is only modest. About a third of Crimea’s two million people are retirees; Russia, excluding the newly annexed region, has a population of 143 million. At a recent cabinet meeting, Mr. Medvedev said increasing pensions to Russian levels would cost about $1 billion this year.
Michael R. Gordon contributed reporting from Jerusalem.

Is the U.S. stock market rigged?

U.S. unfunded liabilities really more than $200 trillion

By John Seiler
debt, obama, Christo Komarnitski, cagle, Nov. 11, 2013In the past I’ve written here about the U.S. federal budget not being $17 trillion in the red, but more than $200 trillion (with a “t”). The calculations come not from some right-wing activist, but from Prof. Laurence Kotlikoff, a professor of economics at Boston University and a research associate at the National Bureau of Economic Research.
This is important for California because something around half of the state budget — the total amount — comes from the federal government. When the feds begin cutting back spending sharply, as inevitably they will, then California will see sharp cuts in Medicaid/Medical, AFDC, SNAP/food stamps (more than the recent cuts), education/No Child Left Behind/Race to the Top, etc.
Kotlikoff recently was interviewed by Financial Sense Newshour. And Bob Wenzel provides a transcript of some of it:

James Rickards - Dollar Going to Collapse 80% or 90% or More

House GOP investigators say regulators twice declined to probe faulty GM vehicles

Congressional investigators said Sunday that federal regulators had declined on two separate occasions to open formal probes into complaints about an ignition switch defect in certain General Motors cars.
The finding was announced in a memo prepared by staffers on the House Energy and Commerce Committee as part of a continuing investigation into events surrounding GM's eventual recall of 2.6 million small cars due to the defect, which has been linked to 13 deaths in traffic accidents. The investigators also determined that GM rejected a proposed fix for the problem in 2005 due to both the length of time needed for repair and the costs involved.
In response to the panel, the National Highway Traffic Safety Administration released a statement Sunday saying it had "reviewed data from a number of sources in 2007, but the data we had available at the time did not warrant a formal investigation."
The cars were recalled by GM due to a flaw which causes ignition switches to move from the "run" to the "accessory" or "off" position, which causes the car to stall and disables the air bags and power steering. The recall includes the Chevrolet Cobalt, Chevrolet HHR, Pontiac G5, Pontiac Solstice, Saturn Ion and Saturn Sky from the 2003-2011 model years.
Investigations by the House panel, a Senate committee, regulators and federal prosecutors are continuing. GM CEO Mary Barra and NHTSA Administrator David Friedman are scheduled to appear Tuesday before a House Energy and Commerce subcommittee. A separate Senate hearing is scheduled for Wednesday.
According to the memo, in September 2007, the then-head of NHTSA's defect assessments division emailed other officials in the Office of Defects Investigation recommending a probe into why front air bags weren't deploying in crashes involving 2003-2006 Chevrolet Cobalts and Saturn Ions.
"Notwithstanding GM's indications that they see no specific problem pattern, DAD perceives a pattern of nondeployments in these vehicles that does not exist in their peers," the email, which is cited by House investigators, said.
But on Nov. 15, 2007, NHTSA officials concluded there was no discernible trend, and it decided not to pursue the matter, the House memo states.
In 2010, NHTSA officials again considered data on whether the Cobalt had a problem with malfunctioning air bags but again decided there was no trend, the memo states.
Congress is also investigating why GM didn't recall the cars sooner, because it first found problems with the ignition switches in 2001. The House memo provides new details about GM's consideration — but ultimate rejection — of potential solutions.
According to the memo, GM engineers met in February 2005 to consider making changes to the ignition switch after reports it was moving out of position and causing cars to stall. But an engineer said the switch was "very fragile" and advised against changes. In March 2005, the engineering manager of the Cobalt closed the case, saying an ignition switch fix would take too long and cost too much, and that "none of the solutions represents an acceptable business case."
In May 2005, the company's brand quality division requested a new investigation into ignitions turning off while driving, and a new review suggests changing the design of the key so it wouldn't drag down the ignition. That proposal was initially approved but later cancelled.
In a statement released Sunday, GM said it deeply regrets the events that led to the recall.
"We are fully cooperating with NHTSA and the Congress and we welcome the opportunity to help both have a full understanding of the facts," the company said.
The Associated Press contributed to this report.

Race against time to find MH370 black box

Authorities were racing against the clock Tuesday to find the "black box" of missing Flight MH370 before its signal goes silent, as Malaysia admitted it got the last words from the cockpit of the doomed plane wrong.
Australian vessel Ocean Shield, fitted with a US-supplied black box detector known as a "towed pinger locator" left Perth Monday but is expected to take up to three days to reach the search zone in the remote southern Indian Ocean.
A black box signal usually lasts only about 30 days and fears are mounting that time will run out, after the Malaysian Airlines plane carrying 239 people veered off course and vanished on March 8.
Australian Defence Minister David Johnston admitted there was only a slim chance it would be found as debris needs to be positively identified first to nail down a crash site.
"We've got about a week (left), but it depends on the temperature of the water and water depth and pressure as to how long the battery power will last," he told national radio.
Authorities are scouring a massive expanse of ocean for clues and even if the zone is narrowed down, Ocean Shield must tow the equipment at just five kilometres per hour (3.1 mph) for the pinger to be able to pick up a signal.
Despite a far-reaching multinational search of the vast and desolate seas nothing has yet been identified, with repeated sightings of objects turning out to be fishing gear or flotsam.
If floating MH370 debris is eventually found, authorities plan to analyse recent weather patterns and ocean currents to determine where the plane went down.
Malaysia believes the flight, en route from Kuala Lumpur to Beijing, was deliberately diverted by someone on board and that satellite data indicates it crashed in the Indian Ocean.
- Last words spoken -
Ten planes and nine ships resumed the hunt Tuesday, hours after Malaysia's civil aviation department said the last words spoken by one of the pilots were "Good night Malaysian three seven zero".
The phrasing was different to the more casual "All right, good night" originally reported.
Malayasia's handling of the crisis has been widely criticised, with Chinese relatives of those on board the missing plane particularly scathing, accusing it of incompetence and even a cover-up.
"We would like to confirm that the last conversation in the transcript between the air traffic controller and the cockpit is at 0119 (Malaysian time) and is 'Good night Malaysian three seven zero'," the aviation department said in a statement.
"The authorities are still doing forensic investigation to determine whether those last words from the cockpit were by the pilot or the co-pilot."
Malaysia Airlines chief executive Ahmad Jauhari Yahya had said on March 17 that the last words from the cockpit were believed to have been spoken by the co-pilot.
Shortly after the final message communications were cut and the Boeing 777, carrying mostly Chinese nationals, vanished from civilian radar.
- 'We are not hiding anything' -
The move came after testy exchanges on Monday between foreign journalists and Malaysian Transport and Defence Minister Hishammuddin Hussein, who insisted: "We are not hiding anything, we are just following the procedure that has been set."
Malaysia insists it is being transparent, but has yet to release any details of its investigation into what happened, which has included probing the backgrounds of everyone on the flight, including its crew.
In the early days of their daily press briefings after the plane went missing, Malaysian officials made a series of contradictory statements that added to the confusion.
Notably, there have been about-turns regarding the crucial sequence of events in the plane's cockpit before it veered off course, and Malaysia's armed forces have been criticised for failing to intercept the diverted plane when it appeared on military radar.
While Malaysia remains officially in charge, Australia has assumed increasing responsibility for the search, appointing retired air chief marshal Angus Houston to head a new coordination centre in Perth.
Malaysian Prime Minister Najib Razak is expected in Perth on Wednesday to tour the air base being used a staging post.

Judge: Probation for du Pont heir in daughter rape because ‘he would not fare well’ in prison

A Superior Court judge who sentenced an heir to the du Pont fortune to probation for raping his 3-year-old daughter wrote in her order that he “will not fare well” in prison and suggested that he needed treatment instead of time behind bars, according to Delaware Online.

Court records show that in Judge Jan Jurden’s sentencing order for Robert H. Richards IV she considered unique circumstances when deciding his punishment for fourth-degree rape. Her observation that prison life would adversely affect Richards confused several criminal justice authorities in Delaware, who said that her view that treatment was a better idea than prison is typically used when sentencing drug addicts, not child rapists.

Jurden gave Richards, who had no previous criminal record, an eight-year prison term, but suspended all the prison time for probation.

“Defendant will not fare well in Level 5 [prison] setting,” she wrote in her order.

“It’s an extremely rare circumstance that prison serves the inmate well,” said Delaware Public Defender Brendan J. O’Neill, whose office represents defendants who normally cannot afford a lawyer. “Prison is to punish, to segregate the offender from society, and the notion that prison serves people well hasn’t proven to be true in most circumstances.”

O’Neill explained that he has previously argued that case if a defendant was too ill or frail for prison, but he had never seen a judge cite it as a “reason not to send someone to jail.”

Read more:


High-Speed Traders Rip Investors Off, Michael Lewis Says

New York Stock Exchange
A trader is reflected in a monitor as he works on the floor of the New York Stock Exchange (NYSE) in New York. Photographer: Jin Lee/Bloomberg
The U.S. stock market is rigged when high-frequency traders with advanced computers make tens of billions of dollars by jumping in front of investors, according to author Michael Lewis, who spent the past year researching the topic for his new book “Flash Boys.”
While speed traders’ strategies, developed over the past decade with help from exchanges, are legal, “it’s just nuts” that they’re allowed, Lewis said during an interview televised yesterday on CBS Corp.’s “60 Minutes.” The tactics are too complicated for individual investors to understand, he said.
“The United States stock market, the most iconic market in global capitalism, is rigged,” Lewis, whose books “Liar’s Poker” and “The Big Short” highlighted Wall Street excesses, said during the interview. The new book comes out today. “It’s crazy that it’s legal for some people to get advance news on prices and what investors are doing,” he said.
Everyone who owns equities is victimized by the practices, in which the fastest traders figure out which stocks investors plan to buy, purchase them first and then sell them back at a higher price, said Lewis, a columnist for Bloomberg View. To show how lucrative the tactics are, Lewis said a technology firm spent $300 million to build a line that would shave three milliseconds off the time it takes to communicate between New Jersey and Chicago, then leased it out to securities companies for $10 million each.

Industry Obsession

The author’s comments follow New York Attorney General Eric Schneiderman’s decision to investigate privileges marketed to professional traders that allow them to place their computers within feet of exchanges and buy access to faster data streams. Officials at the U.S. Securities and Exchange Commission and Commodity Futures Trading Commission have also said market rules may need to be examined.
Lewis is adding his voice to a debate that has obsessed the securities industry for almost a decade while only periodically surfacing in public via events such as the May 2010 flash crash, in which the Dow Jones Industrial Average posted an almost 1,000 point loss. Previous books by the one-time Salomon Brothers Inc. trader have focused attention on everything from mortgage derivatives to baseball statistics and contributed to the outcry over the events leading to the 2008 financial crisis.
His latest target, high-frequency trading, comprises a diverse set of software-driven strategies that have spread from U.S. equity markets to most developed countries as computer power grew and regulators tried to break the grip of centralized exchanges. While the tactics vary, they usually employ super-fast computers to post and cancel orders at rates measured in thousandths or even millionths of a second to capture price discrepancies on more than 50 public and private venues that make up the American equities market.

Dominating Volume

High-frequency traders account for about half of share volume in the U.S., a statistic that shows their pervasiveness and hints at the obstacles faced by proposals to rein them in. Exchanges rely on HFTs for profits as well as liquidity, with electronic market makers all but eliminating the old system of human floor traders who oversaw the buying and selling of equities. While critics such as Lewis see a Wall Street plot, proponents say the new system is faster and cheaper.
In the U.S., the biggest high-speed traders include Virtu Financial Inc. (VIRT:US), which filed in March to sell shares to the public. Bats Global Markets Inc., the Lenexa, Kansas-based equity exchange that merged with Direct Edge Holdings LLC this year, was founded by a high-frequency trader.

Book’s Hero

“We believe Lewis’s book can have a big impact on complex market-structure issues that have been simmering for years,” Joe Saluzzi, co-head of equity trading at Themis Trading LLC and a frequent critic of the status quo in markets, said before the “60 Minutes” interview was broadcast. “Hopefully this type of publicity will finally force regulators to take action on issues that they’ve been sitting on for way too long.”
One of the heroes of Lewis’s book is Brad Katsuyama, who left Royal Bank of Canada in 2012 to form a new market, IEX Group Inc., along with other former traders from the Toronto-based bank. David Einhorn’s Greenlight Capital Inc. hedge fund invested in the platform, which started trading in October and was established to minimize the influence of predatory strategies, Goldman Sachs Group (GS:US) Inc. has endorsed IEX and is the venue’s biggest broker.

Less Than 17% of Teenagers in Los Angeles County Have A Job :

Teenage unemployment in the USA is just plain bad. There is no other way to put it. But some cities have fared even worse than others. Based on a report from the Brookings Institution which pooled data from 2010-2011, employment rates for teenagers ranged from an unexemplary high of just over 43% in Ogden, Utah to a low of 16.9% in Los Angeles, California.

Stock market rigged, says Michael Lewis in new book

The U.S. stock market is rigged in favor of high-frequency traders, stock exchanges and large Wall Street banks who have found a way to use computer-based speed trading to gain a decisive edge over everyone else, from the smallest retail investors to the biggest hedge funds, says Michael Lewis in a new blockbuster book, "Flash Boys."
The insiders' methods are legal but cost the rest of the market's players tens of billions of dollars a year, according to Lewis, who speaks to Steve Kroft in his first interview about the book. Kroft's report will be broadcast on 60 Minutes, Sunday, March 30 at 7 p.m. ET/PT.
High-frequency traders have found ways to use their speed to gain an advantage that few understand, says Lewis. "They're able to identify your desire to buy shares in Microsoft and buy them in front of you and sell them back to you at a higher price," says Lewis. "The speed advantage that the faster traders have is milliseconds...fractions of milliseconds."


Professor William Black - Epic Epidemic of Fraud