Thursday, May 15, 2014

Corruption in Malaysia: No running away

My friend Ariff says he is not surprised with the latest findings of the Malaysian chapter of Transparency International – that political parties are the most corrupt among institutions in the country.
He believes the trend started in the late eighties, with money politics in party elections.
“You know how much power you can have as a division leader or a state leader of a political party if your party is in power? I have a few friends and acquaintances in such positions and I know the benefits that come from it – such as contracts and shares in companies.”
According to the TI-M findings, political parties have overtaken the police as the institution perceived to be the most corrupt in Malaysia.
Reports said TI-M president Datuk Akhbar Satar admitted that the result was unique to Malaysia and that political parties in other countries were not perceived to be ‎as corrupt as here.
"Yes, we don't see this happening in other countries. We are seeing this for the first time," he was quoted as saying after releasing the results of the first-ever Malaysian Corruption Barometer (MCB) 2014 yesterday.
He was also quoted as saying: "It is sad when political parties – being the driving force of democracy – are perceived to be the most corrupt institution."
Yes indeed.
A total of 2,032 respondents throughout Malaysia were interviewed face-to-face for the MCB.
Forty-five per cent of them perceive political parties as the most corrupt while 42 per cent see the police as most corrupt.
Thirty-one per cent of respondents see public officials and civil servants as being corrupt and 23 per cent see parliament and legislature as being corrupt.
The survey also found that 45 per cent of the respondents had been asked to pay bribes in the past. Most of the money was paid to speed things up, according to the respondents.
According to the MCB, the number of people willing to report corruption fell from 79 per last year to 51 per cent this year. Why? Forty-six per cent of those unwilling to report corruption said they were afraid of reprisals.
Akhbar was quoted as saying: "People are afraid that action might be taken against them for reporting the incident. They are not sure if the Whistleblower Act can actually work."
What this shows is that people don’t trust the authorities. Such a situation is not conducive to the eradication of corruption.
The MCB shows 38 per cent of Malaysians think the efforts of the government at fighting corruption are ineffective.
Certainly, more work needs to be done by the government. There has to be strong political will. Most Malaysians feel this will is lacking.
Ariff thinks the whole government system has been infected and that too many people would be affected if a serious effort was made to eradicate corruption.
But all is not bad. According to the MCB, the perception of corruption has improved compared with the findings of the 2013 Global Corruption Barometer.
The latest findings show that 30 per cent of Malaysians say the level of corruption had increased in the past two years whereas in the 2013 findings, the figure stood at 39 per cent.
Last year, 58 per cent of respondents said corruption was a serious problem in the public sector. Now it is 50 per cent.
Prime Minister Datuk Seri Najib Razak has been saying he is working to eradicate corruption. It was one of the election promises of the Barisan Nasional.
It was to create greater awareness of the evil of corruption that  Najib himself participated in a three-kilometre Anti-Corruption Run in Kuala Lumpur last month. It was aimed at showing the people’s commitment towards a corruption-free nation. About 3,000 people participated.
It is good to have such campaigns to create greater awareness of the evils of corruption. But, what is really needed is action.
One is through educating people on values and morals. This, so far, does not seem to have worked.
Another is through putting the fear into people that anyone who offers or receives bribes, or who asks for a cut in projects – no matter who he or she is – will be hauled up by an impartial, independent agency. This, too, does not appear to be working.
We can have all the anti-corruption runs we want, but we will not be able to outrun corruption, or whittle it down to insignificance, if the government does not win back the trust of the people by proving it is really committed, and that those who provide information will be protected.

Riots in Vietnam leave 1 Chinese dead, 90 injured

HANOI, Vietnam (AP) — A 1,000-strong mob stormed a Taiwanese steel mill in Vietnam overnight, killing a Chinese worker and injuring 90 others, Taiwan's ambassador said Thursday, the first deadly incident in a wave of unruly anti-China protests prompted by Beijing's deployment of an oil rig in disputed seas.
The unrest is emerging as a major challenge for Vietnam's authoritarian and secretive leadership, and is hurting the country's reputation as a safe investment destination. It risks inflaming an already tense and dangerous standoff between patrol ships from both countries in the South China Sea close to the rig, which Hanoi is demanding Beijing withdraw.
Companies from Taiwan, many of which employ significant numbers of Chinese nationals, are bearing the brunt of the protests and violence, the most serious in years to hit the tightly controlled nation of 90 million people.
Taiwan's China Airlines has added two charter flights to its usual service to Ho Chi Minh city, making for a total of just over 1,000 seats for Taiwanese looking to leave Vietnam amid the unrest, according to Taiwan's Central News Agency.
The riot took place at a mill in Ha Tinh province in central Vietnam, about 350 kilometers (220 miles) south of Hanoi. It followed an anti-China protest by workers at the complex, operated by the conglomerate Formosa Plastics Group, one of the biggest foreign investors in Vietnam, according to Ambassador Huang Chih-peng and police.
Huang, who spoke to a member of the management team at the mill Thursday morning, said rioters lit fires at several buildings and hunted down the Chinese workers, but did not target the Taiwanese management. He said the head of the provincial government and its security chief were at the mill during the riot but did not "order tough enough action."
He said he was told one Chinese citizen was killed in the riots, while another died of natural causes during the unrest. He said around 90 others were injured. State-controlled online newspaper VnExpress quoted a top police official as saying that one Chinese person was killed, and that police and military troops had restored order.
A doctor at the Ha Tinh General Hospital said about 50 people, most of them Chinese nationals, were admitted to the hospital Wednesday night and early Thursday morning. He didn't give his name because he was not authorized to speak to the media.
Anti-Chinese sentiment is never far from the surface in Vietnam, but it has surged since Beijing deployed an oil rig into disputed waters about 240 kilometers (150 miles) off the Vietnamese coast on May 1. The government protested the move as a violation of the country's sovereignty and sent a flotilla of boats to the area, which continue to bump and collide with Chinese ones guarding the rig, raising the risk of conflict.
On Tuesday and Wednesday, mobs burned and looted scores of foreign-owned factories in southern Vietnam near Ho Chi Minh City, believing they were Chinese-run, but many were actually Taiwanese or South Korean. Authorities said they had detained more than 400 people.
Ambassador Huang said that the mill in Ha Tinh is Vietnam's largest foreign-invested project and that when completed it will be the largest integrated steel mill in Southeast Asia. It employs 1,000 Chinese nationals, he said. Vietnamese Prime Minster Nguyen Tan Dung attended the groundbreaking ceremony for the complex in 2012.
Low wages, especially compared to next-door China, and a reputation for safety, have been driving investment in Vietnam over the last years. But that was now at risk, said Minister of Planning and Investment Bui Quang Vinh.
He said 400 factories had been damaged since the unrest began this week, and that worker protests had broken out in 22 of the country's 63 provinces. "The investment image that we have been building over the past 20 years is turning very ugly," he told the parliament, according to an account in the state-run Labor newspaper.
Willy Lin, who heads a Hong Kong trade group representing knitwear manufacturers and exporters, said investors were hoping it was "one-off incident."
"If this madness continues and spreads out in the next couple of days to other parts of Vietnam, definitely it will have a very damaging effect on exporters, because they might not be able to commit to their delivery day," he said.
Hong Kong-based contract clothing maker Lever Style, which started outsourcing production to Vietnamese factories three years ago, has sent some Chinese quality assurance and technical support staff working at those factories back to China as a safety precaution, said CEO Stanley Szeto.
"You always have these little hiccups, no matter where you go," Szeto said. "Other than our staff, we're not really affected."
Associated Press writer Kelvin Chan in Hong Kong contributed to this report.

World's oldest sperm found in Australia

Details of the world's oldest and best-preserved sperm, dating back 17 million years

The world's oldest and best-preserved sperm, dating back 17 million years, has been unearthed in Australia, scientists said Wednesday.
The sperm from an ancient species of tiny shrimp was discovered at the Riversleigh World Heritage Fossil Site, an area in the far north of the state of Queensland where many extraordinary prehistoric Australian animals have previously been found.
They include giant, toothed platypuses and flesh-eating kangaroos.
Mike Archer, from the University of New South Wales School of Biological, Earth and Environmental Sciences, who has been excavating at Riversleigh for 35 years, said the sperm was an exciting find.
"These are the oldest fossilised sperm ever found in the geological record," he said.
The sperm are thought to have been longer than the male's entire body, but were tightly coiled up inside the sexual organs of the fossilised freshwater crustaceans, known as ostracods.
"We have become used to delightfully unexpected surprises in what turns up there," he added of Riversleigh.
"But the discovery of fossil sperm, complete with sperm nuclei, was totally unexpected. It now makes us wonder what other types of extraordinary preservation await discovery in these deposits."
A research team led by Archer collected the fossils in 1988 and sent them to John Neil, a specialist ostracod researcher at La Trobe University in Melbourne, who realised they contained fossilised soft tissues.
He drew this to the attention of several European specialists, including Renate Matzke-Karasz from the Ludwig Maximilian University in Munich and Paul Tafforeau from the European Synchrotron Radiation Facility in Grenoble, France.
A microscopic study revealed the fossils contained the preserved internal organs of the ostracods, including their sexual organs.
Within these were the almost perfectly preserved giant sperm cells, and within them, the nuclei that once contained the animals' chromosomes and DNA.
The researchers, whose findings are published in the journal Proceedings of the Royal Society B, estimate the sperm are about 1.3 millimetres long, slightly longer than the shrimp.
Archer said that about 17 million years ago the site where the fossils were found was a cave in the middle of a vast, biologically diverse rainforest.
"Tiny ostracods thrived in a pool of water in the cave that was continually enriched by the droppings of thousands of bats," he said.
His UNSW colleague Suzanne Hand, a specialist in extinct bats and their ecological role in Riversleigh’s ancient environments, said the steady rain of droppings would have led to high levels of phosphorous in the water.
This could have aided mineralisation of the soft tissues.
"This amazing discovery at Riversleigh is echoed by a few examples of soft-tissue preservation in fossil bat-rich deposits in France," she said.
"So the key to eternal preservation of soft tissues may indeed be some magic ingredient in bat droppings."

Crocodile eats boy in Papua New Guinea

A total of 75 crocodile attacks, of which 65 were fatal, have been recorded in Papua New Guinea since 1958, according to the CrocBITE database

The limbs of an 11-year-old boy have been found inside a huge crocodile and his head discovered nearby after he was attacked in Papua New Guinea, a report said Wednesday.
The four-metre (13-foot) croc grabbed the boy, Melas Mero, as he was fishing with his parents on Thursday at the Siloura River in Gulf Province in the south of the Pacific nation, police commander Lincoln Gerari told PNG's National newspaper.
"The crocodile swept the boy with its tail and then attacked the defenceless child," Gerari said.
The provincial commander said police found two hands, two legs and a hipbone inside the crocodile after they tracked it down and killed it. The head was found later and taken to a morgue.
The attack is the second to take place in PNG this year, according to a global database managed by researchers at Australia's Charles Darwin University.
The CrocBITE database said a man, whose age was not given, was killed on January 1 by a saltwater crocodile at Rawa Bay in North Bougainville.
A total of 75 crocodile attacks, of which 65 were fatal, have been recorded in PNG by the database since 1958.

Malaysia Airlines flight grounded after aircraft belly hit by ground vehicle – Bernama

Malaysia Airlines (MAS) has retimed its MH740/741 flights after the aircraft's belly was hit by an airside vehicle (ground vehicles used for maintenance, refuelling, etc.) at the Kuala Lumpur International Airport (KLIA) today.
The B737-800 aircraft was scheduled to depart to Yangon (flight MH740) at 10.05am but due to the incident, passengers were transferred to a different aircraft which took off at 10.45am,  MAS said in a statement in Putrajaya today.
The return flight (MH741) has been retimed to depart Yangon at 12.30pm, it said.
The airline said the driver of the vehicle which belongs to a vendor had been immediately reprimanded.
MAS operations director Captain Izham Ismail said their engineers were on site to assess the damage.
"The preliminary assessment showed no immediate risk to the structure of the aircraft. However the grounding of the aircraft was necessary to conduct a thorough check," he said.
Izham reiterated that the safety of its passengers remained paramount to MAS.
Malaysia Airlines in the statement apologised to all passengers of MH740/741 today for the disruption to their travel plans. – Bernama, May 15, 2014.

Marc Faber’s Contrarian Play: Cash Is The Most Underappreciated Asset

by Gold Silver Worlds
Admittedly, Faber his call to hold cash is contrarian, and not the type of tip you would expect from a gold bull. Still, thinking about it, he has a valid point. His belief is not to hold cash for the long term. His point is that stocks and bonds are overvalued and not attractive as long term investment. As the markets are likely to be shaken up thoroughly in the coming months, it is wise to hold cash in order to jump on the opportunities that will pass by.
Faber on his contrarian play, via CNBC:
I don’t see any asset that is terribly attractive. The most underappreciated asset is cash. Nobody likes cash. In the next 10 years, you will earn precisely 0 percent. In fact, you will lose money because Ms. Yellen is a money printer like all the others, and she will make sure that the dollar will depreciate in real terms. But for the next 6 months, cash will be most attractive. I don’t want to be in cash, but in the coming 6 months a lot of opportunities will come along.
Faber on (the absence of) inflation:
Inflation is an increase in the quantity of money and credit. The symptoms occur in a variety of forms. You can print money in the US, but it could happen that it does not boost economic activity in the US but only in China or in Vietnam or Indian and so forth. It can boost wages in India, it can boost real estate prices in London, and so forth, because we have a global economy. Stating there is no inflation is an error.
He continues:
In case things turn out bad again, the central bankers have one thing left: money. When they start throwing out money, it will lead to price increases. Nobody can deny that anywhere in the world energy prices are substantially higher than they were ten years ago. Nobody can deny that food prices are up. Nobody in the US can deny that insurance premiums are up. So, to throw money at the system, at some point will lead to some more visible (!) pressure on consumer prices. Stocks has basically done nothing since the beginning of the year. But long term bonds are up 12% this year. Now, during the next downturn, I believe stocks and bonds will go down at the same time.
Faber also explains that we are 30% more levered than during the financial crisis. Total credit, including government debt, corporate debt and consumer debt, is higher than in 2008/2009.
It is really a smart view if you think about.

The Solution to the Declining Middle Class: Destroy Fixed Costs and Debt

by Charles Hugh-Smith
The solution to the erosion of the middle class lifestyle is to destroy debt and other fixed costs and eliminate self-sabotaging discretionary consumption.
Last week I covered the structural dynamics causing the decline of the middle class.In general, the costs of untradable services (healthcare, higher education, government) and the rot of financialization have increased while wages have stagnated. The Federal Reserve’s “solution” was to make everyone who owned a house a speculator who could only keep even with rising costs by riding the asset bubbles higher and then extracting the “free money” generated by these bubbles before they popped.
Let’s take two representative households to understand the decline of the middle class and the solution. Let’s say both households earn $81,000 annually, virtually all from wages and salaries. This puts the family at around the 70% mark of U.S. households, just within the top 30%. (For context, the 2011 median household income was $50,054.)
This income is solidly middle class: not low enough to qualify for much in the way of government subsidies but not high enough to avoid prioritizing and trade-offs.
Household A has a big mortgage on a house they bought near the top of the market with a minimal down payment, student loans, two auto loans and credit card balances. After making the loan payments and paying for utilities, transportation, groceries, employees’ share of healthcare costs, eating out, mobile phone/broadband/TV service plans, there is little money left to save for emergencies, travel, college for the kids, home maintenance, etc.
How do we describe this family: middle class or debt-serfs? Actually, they’re both:measured by what they superficially own (home, two vehicles, communication and entertainment devices, college degrees, etc.), this household is solidly middle class. But measured by how much income is spent servicing debt, how much is left to accumulate or invest, the family’s net worth (their assets’ market value minus debt) and generational wealththis household is mired in debt-serfdom: their debts will never be paid off.
The mortgage will never be paid off, and by the time the parents’ student loan debt is reduced, the next generation’s student loans are piling up. The auto loans may eventually be paid off, but it will look cheaper to buy a new vehicle with a modest monthly payment than to pay costly auto maintenance with scarce cash.
Debt anchors this household’s fealty to the state and financial sector as securely as any medieval peasant household’s bond to the noble’s manor house. This is the basis of my characterization of the U.S. economy as a neofeudal arrangement based on debt.
Household B shares the family home that is owned free and clear (mortgage has been paid off) with other family members, owns debt-free vehicles and maintains the cars themselves, rarely eats out, has no student loans (either paid cash for college, used scholarships and grants or paid their loans off), buys cheap catastrophic medical insurance and invests money in staying healthy/preventative care, i.e. eating and preparing real food and enjoying regular fitness, lives close to work, invests some of the ample family savings in enrichment (lessons for the kids, etc.), occasional frugal travel and income-producing assets and retains the rest for emergencies such as vehicle breakdown, medical emergency, etc.
If this scenario seems “impossible,” recall that 1/3 of all homes (roughly 26 million houses) in the U.S. are owned free and clear, i.e. there is no mortgage.
How do we describe this family: middle class or wealthy? Actually, they’re both: this household has a solidly middle class income, but because they’ve eradicated fixed costs (most importantly, debt, costly “gold-plated” healthcare insurance, etc.) and discretionary luxuries such as eating out, costly entertainment plans, etc., but measured by their values, behaviors and net income saved and invested, this household is upper-middle class or wealthy, having achieved a level of prosperity that eludes free-spending households with double their annual income.
The solution to the erosion of the middle class lifestyle is to destroy debt and other fixed costs and eliminate self-sabotaging discretionary consumption that cripples the household’s ability to accumulate capital that generates income. There is nothing magical about the values and behaviors that enable this; it boils down to choosing to leave the permanent adolescence of debt-based consumerism behind and move up to a more prosperous, productive way of living: doing more with less.
I am indebted to Paul C. for this graphic depiction of how instant-gratification consumption that appears “cheap” is actually horrendously expensive when the consequential costs and alternatives are considered:
This is but one example of many in which the lower-cost alternative is the better choice, not just in value but in opportunity costs. We assess the opportunity costs of every purchase or loan by asking one simple question: what else could we have done with this money?
It’s a question that is scale-invariant, that is, it works as well for a nation as it does for an individual, and every organization between these two ends of the economic spectrum.
In the case of the debt-serf “middle class” household, the answer to the question, “what else could we have done with our money?” is slowly build productive assets and prosperity that is within your own control.

Are Entrepreneurs in Decline?

Interview: Bail-ins May Cause Bank Runs and Capital Controls In Western World – Russia, China Opt Out

by GoldCore
Today’s AM fix was USD 1,300.25, EUR 948.33 and GBP 775.20 per ounce.
Yesterday’s AM fix was USD 1,292.75, EUR 939.91 and GBP 766.67 per ounce.
Gold fell $3.40 or 0.26% yesterday to $1,293.30/oz. Silver slipped $0.02 or 0.1% to $19.53/oz.
The historic 120-year old daily silver fixing process will cease as of 14th August this year, the London Silver Market Fixing Limited company announced today. The company that administers the daily silver fix currently consists of three member banks, Deutsche Bank, HSBC and Scotia Bank.
Silver in US Dollars – Weekly, 10 Years (Thomson Reuters)
An informational letter released this morning by the company and signed by Simon Weeks of Scotia Bank, current chairman of the silver fixing, attempts to address a number of concerns that users of the silver fixing data may now have.
In answer to the question of what happens after 14th August for those market participants who have contracts and terms and conditions referencing the Silver Fix, the Chairman states that “The Company is not in a position to comment on such matters, but market participants can speak to their contractual counterparties.”
The reason for the ending of the fix is due to increased regulatory scrutiny of the gold and silver market due to allegations of price rigging and manipulation. Many analysts believe that market manipulation has contributed to sharp sell offs and price weakness in recent months.
Platinum and palladium added to sharp gains made overnight on worries that increasing labour tensions in major producer South Africa and tensions with Russia could hurt supply. Gold edged up and broke above $1,300/oz on escalating violence in Ukraine and heightened geopolitical tensions.
Mark O’Byrne with Max Keiser on Russia Today
Ukrainian troops were attacked and seven were killed by pro-Russian separatists yesterday, in the heaviest loss of life for government forces in a single clash since Kiev sent soldiers to put down the revolution in the country’s east.
East-West relations are being poisoned by the day and this should support gold prices.
Russia retaliated against U.S. sanctions by hitting strategic aerospace projects, including refusing to extend the life of the International Space Station, a showcase of post-Cold War cooperation.
After four deaths over the weekend, South Africa upped security in the platinum belt to protect miners who have decided to ditch a 16-week strike that has halted 40% of normal global output.
Hundreds of stick-wielding miners barricaded roads and torched roadside vegetable stalls near Lonmin’s South African platinum mine on Tuesday, in an attempt to block fellow strikers from breaking rank and going back to work.
Platinum edged up 0.4% to $1,452.00 an ounce after jumping about 1% in the previous session to its highest in a month. Palladium also rose 0.4% after rising 1.1% overnight to a one-week high.
Platinum stockpiles having been reduced and this should lead to higher platinum prices.
South Africa is the top producer of platinum and second biggest producer of palladium after Russia.
Keiser: Mark, you have a new report on bail-ins - From Bail-Outs to Bail-Ins: Risks and Ramifications … Ok so the era of bondholder bailouts is ending and that of depositor bail-ins is coming. Tell us about your report.
O’Byrne: The risk of bail-ins has been coming in a very stealthy manner and under-the-radar way. Most people aren’t actually aware of it. It is very much on the radar now and is coming from the very top and the Bank of International Settlements, through the various central banks, and the legislation is there.
Only last week, the European Union and Dutch Finance Minister, Dijsselbloem, the Chairman of the Eurogroup Finance Ministers, confirmed that in the EU, they are ready to go in 2015 … The concern is, the legislation is there but if something happens and you have a ‘Black Swan’ event, you have a Lehman Brothers type of event, the legislation could be expedited and you could see them happen sooner rather than later.
That’s just the EU, it is also coming in the UK through the Bank of England, they have legislation in conjunction with the FDIC and so the bail-ins are coming in the UK, in the U.S. and indeed throughout most of the western world. Most G20 nations have signed up for bail-ins - not all of them but most of them.
So it is a real risk and it has happened in Cyprus. And in Cyprus when it happened, the authorities said it was a once-off, because of all of the hot Russian money that is in Cyprus, and this will not happen anywhere else…but meanwhile they are planning for that scenario in most of our countries and people need to be aware of that and they need to prepare.
Although they said that Cyprus was a one-off, most G20 countries are all legislating and preparing for a similar scenario in their home countries.
Keiser: Yes. Just this past weekend, David Cameron, UK Prime Minister, here in the UK was making some interesting comments, can you talk about that a little bit?
O’Byrne: Yes. It was just yesterday, actually. Cameron was talking on Sky News and in the recent UK Budget, again it was quietly put in there, almost in the p.p.s, down the bottom in the small print, they basically brought in new powers whereby HM Revenue can actually go in and raid people’s bank accounts, on the basis that they may not have paid taxes but the authorities do not have to prove it. So it is simply the word of the Revenue versus the individual and they don’t have to have any proof whatsoever.
There are various people in the UK Parliament, opposition MPs, have begun asking questions about this and indeed people in the financial services industry in the UK, including the Chartered Accountants body, they are asking questions about this and saying ‘hang on a second’, this goes against basic principles of law.
It creates a new power that is quite a dangerous power for a government to have. We have seen throughout history that when governments have such powers they tend to use them.
It was interesting that Cameron justified it in the context of…he said that if we do not do this then we will have to increase taxes. He is basically trying to scare people by saying let us have these powers…these extraordinary, extraordinary powers and if you do not give us these powers, we will increase your taxes so it was almost an implied threat and again it is another threat to people’s deposits and savings and it shows how risky and vulnerable the banking system is .
People need to be aware of that and not have all of their savings in these banks.
Keiser: Right, well, of course governments have a history of political prosecution using these techniques. We have seen this in the U.S. and around the world. When the government doesn’t like what people are saying, whether it is Julian Assange or others. And now they have the sanctions and blockage against Russia and Iran, they use the financial and the banking system for political ends.
Clearly, the UK now has the ability to do that. And the idea that a government can just come in and steal money and confiscate money is a recurring theme. We have seen it, as you point out, in Cyprus and elsewhere. So your point is that laws around the world and for the G20 nations have now been changed over the last year or two so that bankrupt or kleptocrat governments can start stealing money out of people’s accounts directly.
It was seen in the USA with Jamie Dimon and JP Morgan and Jon Corzine in the MF Global case when the bankers took clients’ money. Many bankers are committing suicide because they are ashamed of their industry. So this is giving the bankers more power. Governments are still giving the bankers more power to be more psychotic in their behaviour. I would anticipate that the banker suicide rate would skyrocket so there is a silver lining to this.
Keiser: … Who actually had their deposits taken in Cyprus and what is a bail-in, Mark?
O’Byrne: Basically, in Cyprus it was people with deposits over €100,000 who were bailed in. People think, well, bail-ins only affect rich people and it was actually justified on that basis and the authorities said that this is just…initially, they said this would only hit the ‘hot’ Russian money and then there was the realisation that Russian money was only a tiny minority of the deposits that were confiscated.
People don’t understand and think it was just the rich who were affected. It is not. Your average-sized, small or medium-sized enterprise business (SMEs) could easily have €100,000 to €300,000 on deposit and that is what they use to pay the salaries of their employees.
This is the key thing that people are not understanding and the ramifications of this…It is justified as almost a socialist measure whereby we are redistributing wealth from the very wealthy 1% (or the 0.1%) to the middle classes who are suffering from austerity. Nothing could be further from the truth. They are actually penalising and going after the savings of the middle classes and again protecting the interests of the 1% (or the 0.1%) and they are basically protecting the interests of large banks at the expense of small banks and smaller institutions and of the SMEs.
The other ramifications of bail-ins are that there are capital controls. So even in Cyprus today they still have not relaxed capital controls. So with bail-ins come capital controls and again it speaks to the need to have your savings outside of the banking system, to own gold and silver, physical coins and bars and own them in the safest way possible either in your possession or in vaults, outside the banking system, in allocated gold accounts, in safer jurisdictions around the world.
Keiser: Let’s give some historical context here. The banking system collapsed because of massive fraud. Recall 2004 the U.S. Fed gave their blessing to QE and near zero percent interest rates and a way to ‘stimulate’ the economy as a way to get things going again. Six years later and we’re in a huge asset bubble but the underlying economic numbers are still atrocious, but they cannot lower rates anymore, so they have two options. Option A – negative interest rates where they store people’s money at bank or option B, they just steal it out of their accounts through the bail-in process that you are describing.
So is this a way to soften people up to the idea of accepting negative interest rates? In other words, the governments will say, “Either you let us charge you negative interest rates, that is to say, you have got to pay us to keep your money in the bank at 2 or 3% per year, or we are just going to take it outright and we have the legal basis to do that and if you do not let us do that – you are a terrorist.”
Isn’t that what they are setting everyone up for Mark?
O’Byrne: Well, it is an interesting angle. It is a way that they could justify that. In effect, we have negative real interest rates right now – when you take into account the real rate of inflation. The official measures of inflation appear very compromised to many of us who have looked at them.
If you look at the actual deposit rate that you’re getting from the bank, it is below the real rate of inflation. And then on top of it you have taxes levied on that as well.
It is just absolutely incredible and it is bizarre as they claim that they are putting these measures in place as they are trying to protect the banks and avoid what they call the “doom loop” which is a connection between the sovereign and the banks but by doing what they are doing, they are actually making the banks more vulnerable. They are more likely to cause bank runs.
It would make a cynical person wonder what is the real agenda here? Is it to strengthen the Wall Street banks instead of the small banks?
And the negative interest rate scenario is just incredible, people will soon take their money out of their deposit accounts, like the runs on banks we’ve seen in recent years.
Keiser: Mark, what we’re saying is that if somebody calls their bank and says, “I need to move my money out because now you’re charging me a negative interest rate”, they’re gonna say, “to hell with you, we’re gonna penalise…you’re a terrorist for supporting Bitcoin”. They’ve already used the language to equate Bitcoin with terrorism. “So we’re just gonna take money out of your account.” So, first of all, any money in a bank, any of the big four banks in the UK or in the U.S. or in Europe — only keep money in those banks that you are willing to lose. Lesson number two, if you want to maintain your wealth going forward — by wealth I mean economic sovereignty against the pernicious plutocratic kleptocrat nightmare — it’s got to be held outside a bank, in a vault, in gold, in silver or in Bitcoin or another like-minded cryptocurrency.
Mark, we’ve got about a minute left. Different countries are of course approaching this bail-in scenario differently. Can you give us a little idea of which country is and how far along they are and which is the worst and which is becoming the worst. We have about a minute left. Go ahead.
O’Byrne: I wouldn’t say the worst, I mean, in terms of the scenario, the scenario is the same everywhere. In terms of being more advanced with legislation and that, the European Union seems to be more advanced. But it is in, as I said, the Bank of England and the FDIC legislation. And they are, I suppose…the driving force is, as I said, from the Bank of England and the Bank of International Settlements. So that’s coming down into the Bank of England and the ECB, and indeed the Federal Reserve. But it is very much…because it is the Bank of International Settlements, it’s more obviously the western central banks. The Chinese, the Russians have been slow to, I suppose, they are non-committal and there is no…
Keiser: Let me jump in there for a second. You just mentioned the Chinese, the Russians, the Iranians…oh, wait a minute, that’s the Shanghai Cooperation Organization, oh, wait a minute, that’s where the NATO, the USA, the EU are going to war with them in Ukraine! Gee, I wonder if there’s any connection? That those are the only independent central banks in the world and the US is bombing them and, you know, Victoria Nuland is claiming that they’re, you know, “terrorists”. Gee, I wonder if there’s a connection, Mark? I wonder. Anyway, that’s all the time we have. Mark, thanks again for being on the Keiser Report.
Protecting Your Savings In the Coming Bail-in Era is the guide we compiled to protect people from bail-ins.
The video of the interview can be watched here.

Cities All Over America Are Becoming Extremely Cruel To The Homeless

By Michael Snyder
Homeless - Photo by psyberartist
Have you ever given food to a homeless person?  Well, if you do it again in the future it might be a criminal act depending on where you live.  Right now, there are dozens of major U.S. cities that have already passed laws against feeding the homeless.  As you will read about below, in some areas of the country you can actually be fined hundreds of dollars for just trying to give food to a hungry person.  I know that sounds absolutely insane, but this is what America is turning into.  Communities all over the country are attempting to “clean up the streets” by making it virtually illegal to either be homeless or to help those that are homeless.  Instead of spending more money on programs to assist the homeless, local governments are bulldozing tent cities and giving homeless people one way bus tickets out of town.  We are treating some of the most vulnerable members of our society like human garbage, and it is a national disgrace.
What does it say about our country when we can’t even give a warm sandwich to a desperately hungry person that is sleeping on the streets?  A retired couple down in Florida named Debbie and Chico Jimenez wanted to do something positive for their community during their retirement years, so they started feeding the homeless in Daytona Beach.  But recently the police decided to crack down on their feeding program and slapped everyone involved with a $373 fine
For the past year, the Jimenezes have set up shop every Wednesday on Manatee Island in Daytona Beach, Fla., where they feed hot dogs, chicken, pasta salad and other BBQ staples to about 100 homeless people, WFTV reported. Handing out meals is just one aspect of the ministry the two founded, Spreading the Word Without Saying a Word, to help people living in poverty.
But on Wednesday, the Jimenezes said that without warning, they and four other volunteers were accosted by police, fined and told that they could be thrown in jail if they continue their program, according to NBC News.
Each of the six was fined $373 and were given 10 days to either pay up or go to court.
“We’re going to court,” Debbie Jimenez, 52, a former auto parts store manager, told NBC News. “The police don’t like it. But how can we turn our backs on the hungry? We can’t.”
Don’t the police down in Daytona Beach have something better to do with their time?
Sadly, more than 50 major cities have passed laws against feeding the homeless at this point.  It appears that “cleaning up the streets” has become a big point of emphasis all over the nation.
And what the city of Camden, New Jersey just did is even worse than what happened in Daytona Beach.
Camden just bulldozed an entire tent city and dumped all of the belongings of the homeless people living there into the trash…
Hazmat teams showed up at the camps in the early morning to search for syringes. A drug-sniffing dog followed a police officer around the area. And bulldozers tossed trash and discarded belongings into dumpsters before razing the premises.
Over the past few weeks, flyers had warned people in the tent cities that this was going to happen. Yet it still seemed surreal to many of them that their communities were about to be demolished for good.
But for most of the people that were living in that tent city, there is no place else for them to go.  The homeless shelters in the area are at max capacity, and so many of them will end up sleeping in the streets without any shelter at all
Aaron Howe, the “mayor” of a tent city that had 12 tents the night before eviction day, said he had called every shelter in town and not a single place had room for him and his girlfriend.
“There’s no available spots, and the city is saying if we pitch a tent somewhere else they’re gonna rip it down,” he said. “It’s not gonna look good when there’s a bunch of homeless on the streets.”
Camden has got to be one of the most mismanaged communities in the entire country.  Why is Camden spending time and money bulldozing homeless communities when it has so many other problems?  For much more on the nightmare that Camden has become, please see my previous article entitled “Camden, New Jersey: One Of Hundreds Of U.S. Cities That Are Turning Into Rotting, Decaying Hellholes“.
Other big cities that are a little bit more “progressive” are attempting to get rid of their homeless populations by giving them one way tickets out of town.  Some of the major cities that are doing this include San Diego and San Francisco
When her Greyhound bus pulled into town 6 months ago, Maria Castillo got off with two bags and dream.
“Start over, start a new life,” said the 42-year-old.
Castillo had been homeless in San Diego when a social worker offered her a one-way bus ticket to Portland.
“They said come here because all the opportunities in Portland, Oregon,” she said.
But Castillo said life isn’t much better in her new town. She’s still homeless. A Unit 8 investigation found several cities from San Diego to San Francisco are providing one-way bus tickets to the homeless.
As shocking as everything that you just read is, what one lawmaker out in Hawaii is doing tops it all.  In a previous article, I described how a state representative named Tom Brower has actually been using a sledgehammer to destroy shopping carts used by homeless people.  Just check out the following short excerpt from an RT article that was published a few months ago…
In the past two weeks residents in Hawaii noticed what appeared to be a crazed individual carrying a sledgehammer through the streets of Honolulu, a state lawmaker looking to rid the city of homeless people by targeting their belongings.
State Representative Tom Brower (D) is currently dedicated to dealing out his own personal brand of “justice” by seeking out homeless people and destroying their possessions. Brower estimates that he has used the sledgehammer to smash at least 30 shopping carts, rendering them useless by bashing in the front wheels.
I got tired of telling people I’m trying to pass laws. I want to do something practical that will really clean up the streets,” he told Hawaii News Now. “I find abandoned junk, specifically shopping carts, and I remove them.”
Is this how our society is going to treat those that are down on their luck from now on?
Where is the love?
Where is the compassion?
Why can’t we seem to be able to take care of these people?
The federal government sure seems to have plenty of money to waste on other things.  For example, it is being reported that workers at an Obamacare processing facility in Missouri are being paid to do nothing but stare at their computers
Employees at an ObamaCare processing center in Missouri with a contract worth $1.2 billion are reportedly getting paid to do nothing but sit at their computers.
“Their goals are set to process two applications per month and some people are not even able to do that,” a whistleblower told KMOV-TV, referring to employees hired to process paper applications for ObamaCare enrollees.
The facility in Wentzville is operated by Serco, a company owned by a British firm that was awarded $1.2 billion in part to hire 1,500 workers to handle paper applications for coverage under the law, according to The Washington Post.
The whistleblower employee told the station that weeks can pass without data entry workers receiving even a single application to process. Employees reportedly spend their days staring at their computers, according to a KMOX-TV report.
So we have millions upon millions of dollars to waste on that, but we can’t take care of our homeless population?
And without a doubt, the need to help the homeless is greater than it ever has been before.  Right now, there are 1.2 million public school students in America that are homeless.  That number is an all-time record, and it has grown by 72 percent since the start of the last recession.
In addition, there are 49 million Americans that are dealing with food insecurity.  Even in the midst of this so-called “economic recovery“, poverty is absolutely exploding.
And it is going to get a whole lot worse.  This is only just the beginning.
What is going to be needed in the years ahead is a tremendous amount of love and compassion.
But instead, it appears that hearts are becoming colder in America with each passing day.
So what do you think the solution is?  Please share your thoughts by posting a comment below…

HFT, Regulation, and Computing in Finance

The Beginning Of The End Of Precious Metals Manipulation: The London Silver Fix Is Officially Dead

14 May 2014, Following a crackdown on precious metal manipulation by various European regulators (mostly Germany's BaFin, recall "Precious Metals Manipulation Worse Than Libor Scandal, German Regulator Says"), which led to the shocking outcome that Deutsche Bank would pull out of the London gold and silver fixing committees, the London Silver Market Fixing company ended up with a most curious outcome: it would have just two members: HSBC and Bank of Nova Scotia. And, as an even more shocking result, overnight the London Silver Fix announced that after August 14, 2014 it will no longer exist - the first of many victories for all those who have fought for fair and unmanipulated precious metal markets.
From the press release:
The London Silver Market Fixing Limited (the 'Company') announces that it will cease to administer the London Silver Fixing with effect from close of business on 14 August 2014. (Zero Hedge)

The Great Deceiver — The Federal Reserve. The US Dollar’s Fragile Reserve Currency Status

1.2 billion come from?
There is only one source.  The money came from the US Federal Reserve, and the purchase was laundered through Belgium in order to hide the fact that actual Federal Reserve bond purchases during November 2013 through January 2014 were $112 billion per month.
In other words, during those 3 months there was a sharp rise in bond purchases by the Fed. The Fed’s actual bond purchases for those three months are $27 billion per month above the original $85 billion monthly purchase and $47 billion above the official $65 billion monthly purchase at that time. (In March 2014, official QE was tapered to $55 billion per month and to $45 billion for May.)
Why did the Federal Reserve have to purchase so many bonds above the announced amounts and why did the Fed have to launder and hide the purchase?
Some country or countries, unknown at this time, for reasons we do not know dumped $104 billion in Treasuries in one week.
Another curious aspect of the sale and purchase laundered through Belgium is that the sale was not executed and cleared via the Fed’s own National Book-Entry System (NBES), which was designed to facilitate the sale and ownership transfer of securities for Fed custodial customers. Instead, The foreign owner(s) of the Treasuries removed them from the Federal Reserve’s custodial holdings and sold them through the Euroclear securities clearing system, which is based in Brussels, Belgium.
We do not know why or who. We know that there was a withdrawal, a sale, a drop in the Federal Reserve’s “Securities held in Custody for Foreign Official and International Accounts,” an inexplicable rise in Belgium’s holdings, and then the bonds reappear in the Federal Reserve’s custodial accounts.
What are the reasons for this deception by the Federal Reserve?
The Fed realized that its policy of Quantitative Easing initiated in order to support the balance sheets of “banks too big to fail” and to lower the Treasury’s borrowing cost was putting pressure on the US dollar’s value. Tapering was a way of reassuring holders of dollars and dollar-denominated financial instruments that the Fed was going to reduce and eventually end the printing of new dollars with which to support financial markets.The image of foreign governments bailing out of Treasuries could unsettle the markets that the Fed was attempting to sooth by tapering.
A hundred billion dollar sale of US Treasuries is a big sale.  If the seller was a big holder of Treasuries, the sale could signal the bond market that a big holder might be selling Treasuries in large chunks. The Fed would want to keep the fact and identity of such a seller secret in order to avoid a stampede out of Treasuries. Such a stampede would raise interest rates, collapse US financial markets, and raise the cost of financing the US debt. To avoid the rise in interest rates, the Fed would have to accept the risk to the dollar of purchasing all the bonds.  This would be a no-win situation for the Fed, because a large increase in QE would unsettle the market for US dollars.
Washington’s power ultimately rests on the dollar as world reserve currency.  This privilege, attained at Bretton Woods following World War 2, allows the US to pay its bills by issuing debt. The world currency role also gives the US the power to cut countries out of the international payments system and to impose sanctions.
As impelled as the Fed is to protect the large banks that sit on the board of directors of the NY Fed, the Fed has to protect the dollar. That the Fed believed that it could not buy the bonds outright but needed to disguise its purchase by laundering it through Belgium suggests that the Fed is concerned that the world is losing confidence in the dollar.
If the world loses confidence in the dollar, the cost of living in the US would rise sharply as the dollar drops in value. Economic hardship and poverty would worsen. Political instability would rise.
If the dollar lost substantial value, the dollar would lose its reserve currency status. Washington would not be able to issue new debt or new dollars in order to pay its bills.
Its wars and hundreds of overseas military bases could not be financed.
The withdrawal from unsustainable empire would begin.  The rest of the world would see this as the silver lining in the collapse of the international monetary system brought on by the hubris and arrogance of Washington.

Gov’t Warns Roads Ready To Crumble

(Susan Jones)  "This may be the most dire moment the American transportation system has faced in decades," Transportation Secretary Anthony Foxx told reporters at the White House on Monday.
"Unless Congress acts, up to 700,000 Americans will lose their jobs over the next year," he said. Road work, bridge-building and transit maintenance projects "may be delayed or shut down completely," slowing trade and causing businesses not to hire.
"And by the way, your morning commute will be longer because the roads you're driving on will crumble, and no one will show up to fix it," Foxx said.
The dire scenario results partly from the insolvency of the Highway Trust Fund, a problem that's been years in the making.
The trust fund -- which depends on gasoline taxes -- is projected to run out of money by August, partly because people are driving more fuel-efficient cars, which means less tax money coming in.
To solve the nation's "infrastructure deficit," Foxx said the nation needs to spend $3.6 trillion by the end of the decade.
"So what we need right now is to rally around a set of ideas that increase annual investment," he said. (In Washington, "investment" means spending.)
Foxx was plugging the Obama administration's "Grow America Act," a four-year, $302-billion funding bill that would refill the Highway Trust Fund and "substantially increase annual funding" for transit projects.
The administration is recommending "pro-growth business tax reform" to raise $150 billion. Asked if the new taxes would fall mainly on transportation businesses, Foxx said, "it actually could be broader than that."
He talked about "taking some of the untaxed earnings that are overseas and plowing some of that into infrastructure." The bill also includes a provision that would allow state governors to apply to the federal government for the right to place tolls on interstate highways.
Foxx urged Congress to take the legislation "seriously."
"America is hungry and starving for more infrastructure investment, and we have a responsibility to articulate that as an agency because America is growing, whether we're investing or not.
We're going to have a hundred-million more people in this country by 2050, FOxx said -- plus 14 billion additional tons of freight moving within the U.S. "And that long commute that folks had this morning is going to get longer if we don't start doing something right now."

Report highlights child labor on US tobacco farms


Report: Food Prices Skyrocket: “We’re Going to Have a Major Problem Coming Into the Fall”

that will be made is that this is “transitory.”  Unfortunately the intermediate (~1-3 months forward) and crude (~3-6 month forward) numbers tell a very different story.
The intermdiate trend in foods is bad news; that is a monthly change.  Energy has been the counterbalance the last two months on an intermediate term, and has kept things in check, and “less foods and energy” has been reasonably-behaved — right up until this year.  Now it’s looking less-so.  But the alarm bells are not there, they’re in the forward trend on the crude side.
Here’s the problem — we’re several percent ahead of last year’s rate at this time of the year.  Spring into early summer tends to have a PPI increase in crude goods.  But if that spread continues we’re going to have a major problem coming into the fall as this works through the system, and given unit labor costs and productivity numbers (both going the wrong way too) there is no ability to absorb it.
Now let me point out that we’re not quite where you have to ring the “oh crap” bell yet.  There’s another month or two before that happens — but by June, if the trend we’re seeing here hasn’t broken this will get into the forward economic analysis mindspace of most of the people who look at this stuff.
I don’t like the trend at all.
Charts and full analysis
Within the next couple of months we’re going to have a very good idea of where this is all headed. If prices don’t turn down, then by Fall we’re going to have a big problem:
There is no ability in the economy to absorb such price increases as productivity and unit labor cost figures have shown.  Instead, what this will produce is recession – deep recession.
Look out below.
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