Thursday, March 3, 2016

Yahoo spent $1 billion to buy Tumblr, but now it's hinting it may write off nearly the entire deal

david karpRob Kim/Getty Images for TumblTumblr founder David Karp.
In 2013, Yahoo spent $990 million to buy the microblogging site Tumblr — $1.1 billion if you include the $113 million in liabilities.
Last month, Yahoo wrote off $230 million of its value. And now it's hinting that there's a chance it could write off the entire goodwill value it paid to acquire Tumblr.
According to its annual 10-K filing on Monday, Yahoo wrote (emphasis added):
Given the partial impairment recorded in the Tumblr reporting unit in 2015, it is reasonably possible that changes in judgments, assumptions and estimates the Company made in assessing the fair value of goodwill could cause the Company to consider some portion or all of the remaining goodwill of the Tumblr reporting unit to become impaired.
At the time of the acquisition, Yahoo said the goodwill portion of the deal was roughly $750 million. Goodwill is the amount paid for the company beyond what is valued on the balance sheet, including things that are hard to measure, like the company's reputation or ideas that could bring future growth.
In other words, Yahoo spent $750 million more than the actual value of the assets owned by Tumblr to buy the company. But now it's saying that all of the $750 million could possibly go down the drain.
The company said that the impairment was a result of many things, including smaller market share, slower revenue growth and cash flow. Yahoo said during its most recent earnings call that Tumblr failed to reach its 2015 revenue target of $100 million.
One reason for the sales shortfall has to do with Yahoo's decision to combine Tumblr's sales team with the rest of the company. As Business Insider previously reported, the integration didn't go too well and Yahoo is now unwinding the two sales teams.
But that doesn't mean Tumblr is doomed. Its revenue is still growing and Yahoo named it as one of the three major products for the company moving forward. Plus, since the deal is already paid for, write-offs don't have much impact on the company's actual cash balance, meaning it will change only the book value of the assets owned by Yahoo.
But the fact that Yahoo could possibly write off the entire goodwill portion of the deal is a striking admission of failure for the biggest deal on CEO Marissa Mayer's watch.

NOW WATCH: Here's Everything Yahoo CEO Marissa Mayer Just Said About Alibaba

Euro depression is 'deliberate' EU choice, says former Bank of England chief

Mervyn King says results of Europe's policy failures have been "appalling" and "deliberate" 
Lord King says results of Europe's policy failures have been 'appalling' and 'deliberate'
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Europe's deep economic malaise is the result of "deliberate" policy choices made by EU elites, according to the former governor of the Bank of England.
Lord Mervyn King continued his scathing assault on Europe's economic and monetary union, having predicted the beleaguered currency zone will need to be dismantled to free its weakest members from unremitting austerity and record levels of unemployment.
Speaking at the launch of his new book, Lord King said he could never have envisaged an economic collapse of the depths of the 1930s returning to Europe's shores in the modern age.
But the fate of Greece since 2009 - which has suffered a contraction eclipsing the US depression in the inter-war years - was an "appalling" example of economic policy failure, he told an audience at the London School of Economics.
The depths of Greece's depression
The depths of Greece's depression Credit: RBS economics/RBS

"In the euro area, the countries in the periphery have nothing at all to offset austerity. They are simply being asked to cut total spending without any form of demand to compensate. I think that is a serious problem.
"I never imagined that we would ever again in an industrialised country have a depression deeper than the United States experienced in the 1930s and that's what's happened in Greece.
"It is appalling and it has happened almost as a deliberate act of policy which makes it even worse".
Lord King - who spent a decade fighting the worst financial crisis in history at the Bank of England - has said the weakest eurozone members face little choice but to return to their national currencies as "the only way to plot a route back to economic growth and full employment".
Mervyn King, former Bank of England chief, 2003-2013
Lord King, former Bank of England chief, 2003-2013
"The long-term benefits outweigh the short-term costs," he writes in The End of Alchemy. 
The former Bank governor has said popular disillusion with EU economic policies are likely to lead to disintegration of the single currency rather than a move towards "completing" monetary union.
Two of the eurozone's debtor nations - Ireland and Spain - are currently locked in electoral stalemate after their pro-bail-out governments failed to win the backing of voters.
But the European Commission has defended itself against claims that punishing austerity measures have made incumbent European regimes unelectable, arguing that Brussels' economic policy represents a "virtuous triangle" of austerity, structural reforms and investment.
Outside of the eurozone, Lord King warned against undue pessimism about the longer-term prospects for the world economy, dismissing the "secular stagnation" thesis made popular in recent years by the likes of US treasury secretary Larry Summers.
He said it was a "serious mistake" to believe that productivity - which has flatlined across the developed world since the crisis - would never revive as technological development has been exhausted.
Instead, current waves of new research and innovation meant the 21st century was the "golden age of scientific discovery".
"I see absolutely no reason to suppose that because we had a banking crisis and a recession that [ideas, innovation and entrepreneurship] have permanently disappeared. They haven't and are waiting to spring back.
"The thinking that all these ideas will not come through to have practical ways of improving our living standards, seem extraordinarily pessimistic and something for which there is no basis in fact at all over the last 250 years of economic growth."
Lord King's book lays out a critique of the endemic imbalances which have plagued the global economy in recent decades. Failure to tackle the disparities between high savings and high spending rates in different parts of the world could see policymakers sleepwalk into another crisis, he has warned.
Meanwhile, central bank policies to boost levels of demand and encourage spending were necessary but not sufficient answers to the world's growth malaise,  only "buying time" for policymakers.
"We have to use that time to shift economies from their present disequilibrium to a new equilibrium where there is a proper balance between spending and saving, exports and consumption," he said.
"Only then can we achieve rapid growth, and stable inflation. That is the prize. I think we can do it."

What Savers Do Under NIRP - The "Perversely Negative" Impact Of Going Negative

Authored by Mark Cliffe, originally posted at,
As doubts grow about the effectiveness of quantitative easing, monetary policymakers are leaning towards cutting interest rates further into negative territory as their preferred mode of easing. But this begs crucial and untested questions of whether banks will be willing to pass on the cost to their retail depositors, and of how depositors might react if they did so. This column notes a recently published survey in which a large majority of respondents said that they would withdraw their savings, and yet few would spend more. Although it could be argued that savers might react less negatively when confronted with the reality of negative rates, their powerful aversion to the prospect raises troubling questions about the potential effectiveness of this policy tool.
In their struggle to keep up the momentum of economic growth, central banks are turning to negative interest rate policy (NIRP) as their weapon of choice. Amid doubts about the impact of further large-scale asset purchases, the Bank of Japan (BOJ) has recently followed the ECB and other European counterparts in imposing negative rates on the reserves that banks hold with them. Meanwhile, weak economic data has even prompted talk of the Federal Reserve potentially having to reverse course and join the NIRP club.
But there are doubts about NIRP too. In particular, if banks resist passing on negative rates for fear of triggering a deposit flight, they will fail to incentivise savers to spend. NIRP could still work via boosting asset prices or driving down the exchange rate, but, as the BOJ has discovered, this is a confidence trick that is liable to succumb to the vagaries of financial market sentiment.
So are the banks right to fear the zero lower bound (ZLB)? The obvious problem is that we have no experience to go on, since no bank has been brave enough to breach it in a significant way. The banks are clearly concerned that cutting savings rates below zero would lead to a customer backlash and significant withdrawals of deposits. But with loan rates often contractually linked to money market rates, shielding savers from lower rates comes at the cost of bank profitability, capital generation, and willingness to lend. This, in turn, blunts the intended stimulus that the central banks are trying to deliver by lowering rates.
So the response of retail customers to negative interest rates remains largely untested. In an attempt to fill this gap, ING commissioned IPSOS to survey around 13,000 consumers across Europe and – for comparison purposes – in the US and Australia to ask them how they have responded to low interest rates and how they might react to negative interest rates (ING 2016).
Such surveys have an obvious drawback: there is inevitably a gap between what people say and what they do – inertia often kicks in. Nevertheless, the results are remarkable. They indicate that zero is a major psychological barrier for savers. No less than 77% said that they would take their money out of their savings accounts if rates went negative. But only 12% would spend more, with most suggesting that they would either switch into riskier investments or hoard cash ‘in a safe place’.

Survey highlights

1) Response so far to low savings rates
In order to provide a context for the consumer reaction to the possibility that savings deposit rates might go negative, the survey began by asking respondents about how they have responded so far to low interest rates.
Figure 1. Nearly a third of savers have changed their behaviour due to low rates

Source: ING International Survey (IIS)
It asked whether the low rates had prompted a change in their behaviour and, if so, how. Across the 15 countries surveyed, 31% of respondents said that they had changed their savings behaviour (see Figure 1). The figures were higher in Eastern Europe, the UK (37%) and Turkey (47%), where rates have traditionally been higher or more volatile.
As to how savers had changed their behaviour in the light of low interest rates, the most popular answer, accounting for 40%, was that they were saving the same amount, but had switched to longer-term forms of saving (see Figure 2). Across countries, the highest proportion of respondents to have made this switch was in the UK, with 49%, and the lowest was in Austria, with 28%.
Figure 2. How have you changed the way you save?

Source: ING International Survey
The next most popular response, at 38%, was from those who have been saving less – the response most desired by the central banks. That said, ‘saving less’ does not necessarily translate fully into ‘spending more’, particularly for those households relying on interest income.
Meanwhile, the survey showed that a significant minority – namely 17% – of those who have changed their behaviour have actually increased their saving in response to lower rates. This may reflect the fact that the lower income resulting from lower rates may be making life harder for those who have target income or long-term savings goals, forcing them to save more to compensate.
Interestingly, US savers came out top on this account, with 26% of ‘changers’ having increased their savings, as many as those who had cut their savings. Lacklustre income growth may be partly to blame here. By contrast, only 5% of the Dutch had increased their savings.
2) Response to a possible move to negative savings rates
The survey then asked how they might react if rates went negative. Although there is room to doubt if all respondents might actually react as they say if this became a reality, the strength of feeling revealed by the survey is striking. Only 23% of the total sample said that they would do nothing in response (see Figure 3). This compares with 69% of the sample who said that they have not changed the way that they save in response to low interest rates so far. The survey suggests that crossing the zero bound is a major psychological shock to consumers.
The negative reaction to the possibility of negative interest rates is an interesting application of the behavioural economics concept of ‘loss regret’. Feelings evoked by seeing interest rates cut from, say, zero to -0.5% are stronger than those from 1% to 0.5%. The difference is that the former is perceived as an outright loss, while the latter merely as a smaller gain.
There are also political and cultural dimension. Many will see negative rates as an unfair ‘tax’ on small savers, particularly in cultures that celebrate saving as a virtue. In this respect, a significant minority of 11% would save more (Figure 3)
Figure 3. Nearly 80% of savers would respond to negative interest rates

Notes: Weighted by country, age, gender and region, significance tested on 95% level. As respondents were allowed to choose more than one answer, the country total may exceed 100%.
Source: ING International Survey

Figure 4 shows only those who plan to move at least some of their money out of savings accounts (some 78% of the respondents). Some 10% would spend more, almost exactly matching the proportion of those who intend to save more. The remainder are almost evenly split between those who would switch into alternative assets or simply put their savings ‘in a safe place’.
In other words, around 40% who would respond to negative rates (or 33% of the total sample) said that they would hoard cash. In the Netherlands, France and Belgium, this proportion rises to more than 50%.
Figure 4. Switching into investments and hoarding cash are the most popular options

Note: As respondents were allowed to choose more than one answer, the country total may exceed 100%
Source: ING International Survey


This survey makes sobering reading for both banks and central banks. For the banks, the results suggest that they might be right to be reluctant to cut rates below zero. Only 23% of savers would not react, and a smaller proportion still would save more. Four-fifths would move at least some of their money out of their savings accounts. Some of this might find its way into other bank products, but more than a third say that they would take some of their money out and hoard it.
The strength of the responses perhaps reflects the immediate shock of being confronted with the unprecedented possibility of incurring a charge to keep savings in bank accounts. Provided rates went only mildly negative, say no more than -0.5%, or the cuts were perceived as temporary, then the reaction might, in practice, be milder than the survey suggests.
Banks would be faced with an uncomfortable choice between not cutting retail rates below zero, and so seeing their profit margins squeezed, and doing so and risking a substantial deposit outflow.1 They might perhaps mitigate a profit squeeze by raising fees, or increasing the cost of mortgages, as some banks in Switzerland have done. However, these would undoubtedly also meet with customer resistance and official consternation.
Moreover, even if the banks dare to pass on negative rates to retail savers, the stimulus to spending would be far less than the rate cuts so far. Indeed, in the total sample, marginally more (11% versus 10%) of respondents said that they would save more, not less, in the event of negative rates.
Figure 5. Reaction to negative rates also depends on income

Source: ING International Survey
One important caveat to this is suggested by the disaggregated results of the survey. These show that richer, older, and more educated respondents would be more inclined to spend than other respondents in the event of negative rates (Figure 5). Since these groups tend to have higher savings levels, more spending by them would more than likely offset lesser spending by the poorer, younger, and less educated groups, giving a greater stimulus to spending.
Nevertheless, the results strongly suggest that the cuts in interest rates below zero are likely to give a smaller boost to consumer spending than cuts in rates above it. Moreover, they also highlight the unpredictability of pursuing NIRP. With the credit channel weak or blocked, central banks have been relying largely on rising asset values and weaker exchange rates to provide the needed stimulus. But the BOJ’s recent adoption of NIRP has had the opposite effect. Evidently, the initial market reaction has been to see it as an act of desperation. The risk is that this negative sentiment will infect the real economy, serving to depress spending. If so, the danger is that NIRP will have an impact on economic growth that is not merely non-linear, but perversely negative

Warning Bank Stocks in Serious Trouble

DJFIN-Y 1-1-2016

Barclays shares in the UK have fallen 9% after it announced further restructuring, a dividend cut, and an 8% decline in statutory pre-tax profit. As part of the restructure, Barclays is looking to sell off its 62.3% holding in its African business. They followed the trend of commodities and now they are following that same trend by exiting. Banks are notorious for buying the high and selling the low. Historically, they have been one of the worst investors in the arena.
You can see that even the Dow Jones Financial Index never made new highs above 2007. We see this index in serious trouble. A close below last year’s low technically will signal this is heading lower into the abyss ahead.

IBM brings down large axe on staff in the US

After rumors of upcoming layoffs, Big Blue kicks off round of 'mass' cuts

IBM axed a wedge of workers today across the US as part of an "aggressive" shakeup of its business.
Big Blue was due to lay off some staff at its Global Technology Services (GTS) wing in America back in January. That headcount chop was postponed, with the cuts being pushed back to this week and with more than GTS workers affected.
Many of those losing their jobs are being offered a maximum of one month of severance pay – much less than the amount offered in previous rounds of cuts. This squeeze on payouts was introduced in January. They'll also get 90 days to clear their desks and find new work.
"IBM is aggressively transforming its business to lead in a new era of cognitive and cloud computing," a Big Blue spokesman told The Register this afternoon.
"This includes remixing skills to meet client requirements. To this end, IBM hired more than 70,000 professionals in 2015, many in these key skills areas, and currently has more than 25,000 open positions."
About those numbers: IBM employed about 380,000 people worldwide at the end of 2015; about 70,000 people left the biz that year and, through hiring and acquisitions, it added 70,000 to its ranks.
Lee Conrad, an ex-IBMer and national coordinator of the Alliance@IBM union, confirmed the layoffs on Wednesday: "IBM is having a resource action aka job cuts today. Reports are coming from around the country," he told us.
Conrad said jobs are being shed at IBM's Cloud Managed Services; Application Management Services; Global Services Parts Operations; Technical Support Services; and GTS.
"Workers are also reporting their work is being moved offshore to Hungary and Brazil," he added. Some staffers have complained that they've been training their replacements in India for a while now and thus knew the writing was on the wall. Some are upset that they have lost their jobs while their H-1B visa-holding colleagues are allowed to stay.
"I am a GTS Strategic Outsourcing casualty of the mass firing today," one employee told Conrad's Watching IBM Facebook page.
"My manager told me it was big and widespread, and I'd be hearing from a lot of people that will also be notified today. My official end date is May 31, 2016 – 90 days – and the severance package is one month.
"I was encouraged to look for jobs inside IBM and was told that they are 'plentiful' and 'open'. Even if I were to believe that, I'm not sure why I would stay, looking over my shoulder every month or so waiting for the IBM axe-wielders to come for me again. I'm looking forward to moving on and leaving this nightmare behind me. I wish everyone good luck, whether you are staying or going. I'm not sure which group is going to need it more."
At the end of last month, Big Blue warned 1,352 GTS workers in the UK that they are at risk of redundancy with 185 roles definitely on the chopping block.
Quite a few of those losing their jobs today were longtime IBMers, judging from what we've heard.
This time last year, IBM CEO Ginni Rometty said she was going to focus her company on "strategic imperatives," including cloud, data analytics, mobility, social networking, and security. ®
Ping us an email, please, if you are affected by today's cuts.

Moody’s Warns of 30% Rise in Commodity Based Company Bankruptcies in 2016

The commodity industry is bracing for a high year of bankruptcy and default filings that will impact mining and metals along with oil and gas. Moody’s has also warned of global speculative-grade corporate defaults that will increase by more than 30% in 2016, reaching the highest level since 2009. Those interested in mining shares should pay close attention to what they are buying. Until gold crosses that key resistance, we still have only a typical three-month reaction. A rally must extend beyond March to be impressive.

Plunging Manufacturing Numbers Mean That It Is Time To Hit The Panic Button For The Global Economy

Michael Snyder
(RINF) – We haven’t seen numbers like these since the last global recession.  I recently wrote about how global trade is imploding all over the planet, and the same thing is true when it comes to manufacturing.  We just learned that manufacturing in China has now been contracting for seven months in a row, and as you will see below, U.S. manufacturing is facing “its toughest period since the global financial crisis”.  Yes, global stocks have bounced back a bit after experiencing dramatic declines during January and the first part of February, and this is something that investors are very happy about.  But that does not mean that the crisis is over.  All bear markets have their ups and downs, and this one will not be any different.  Meanwhile, the cold, hard economic numbers that keep coming in are absolutely screaming that a new global recession is here.
Just consider what is happening in China.  Manufacturing activity continues to implode, and factories are shedding jobs at the fastest pace since the last financial crisis
Chinese manufacturing suffered a seventh straight month of contraction in February.
China’s official Purchasing Managers’ Index (PMI) stood at 49.0 in February, down from the previous month’s reading of 49.4 and below the 50-point mark that separates growth from contraction on a monthly basis.
A private survey also showed China’s factories shed jobs at the fastest rate in seven years in February, raising doubts about the government’s ability to reduce industry overcapacity this year without triggering a sharp jump in unemployment.
For years, the expansion of the Chinese economy has helped fuel global economic growth.  But now things have shifted dramatically.
At this point, things are already so bad that the Chinese government is admitting that millions of workers are going to lose their jobs at state-controlled industries in China…
China’s premier told visiting U.S. Treasury Secretary Jacob Lew on Monday his government is pressing ahead with painful reforms to shrink bloated coal and steel industries that are a drag on its slowing economy and ruled out devaluing its currency as a short-cut to boosting exports.
Premier Li Keqiang’s comments to Lew on Monday were in line with a joint declaration by financial officials from the Group of 20 biggest rich and developing economies who met over the weekend in Shanghai. They pledged to avoid devaluations to boost sagging trade and urged governments to speed up reforms to boost slowing global growth.
Across all state-controlled industries, as many as six million workers could be out of a job, with almost two million in the coal industry alone.
But it isn’t just China.  Right now manufacturing activity is slowing down literally all over the planet, and this is exactly what we would expect to see if a new global recession had begun.  The following chart and analysis come from Zero Hedge
As the below table shows, 28 regions have reported so far. Seven saw improvements in their manufacturing sectors in February, twenty recorded a weakening, and India was unchanged. This means that over 70% of the world saw manufacturing sentiment deteriorate in February compared to January.
In terms of actual expansion, there were 21 countries in positive territory and 7 in negative. In particular, Greece moved from neutral to contraction territory, while Taiwan dropped below breakeven from expansion.
Unfortunately, most Americans don’t really pay much attention to what is going on in the rest of the world.  For most of us, what really matters is what is happening inside the good ole USA.
And of course the news is not good.  There were more signs of trouble for U.S. manufacturing in the February numbers, and this continues a trend that stretches back well into last year.  The following is what Chris Williamson, the chief economist at Markit, had to say about these numbers
“The February data add to signs of distress in the US manufacturing economy. Production and order book growth continues to worsen, led by falling exports. Jobs are being added at a slower pace and output prices are dropping at a rate not seen since mid-2012.
“The deterioration in the manufacturing sector’s performance since mid-2014 has broadly tracked the dollar’s rise, which makes US goods more expensive in overseas markets and leads US consumers to favour cheaper imported goods.
“With other headwinds including the downturn in the oil sector, heightened uncertainty due to financial market volatility, global growth worries and growing concerns about the presidential election, it’s no surprise that the manufacturing sector is facing its toughest period since the global financial crisis.
Over the past couple of decades, the U.S. economy has lost tens of thousands of manufacturing facilities.  We desperately need a manufacturing renaissance – not another manufacturing decline.
As good paying manufacturing jobs have been shipped overseas, they have been replaced by low paying service jobs.  As a result, the middle class is shrinking and the ranks of the poor are exploding.
It is hard to believe, but today more than 45 million Americans are on food stamps, and a significant percentage of those individuals actually have jobs.  They are called “the working poor”, and it is becoming a major crisis in this nation.
And no matter what Obama may say, unemployment remains a major problem in the United States as well.  At this point, unemployment rates in 36 states are higher than they were just before the last recession hit in 2008.
Of course a lot of people are going to look at this article and will point to the stock market gains of the past couple of weeks as evidence that “things are getting better”.  It is this kind of clueless approach that is keeping the American people from coming together on solutions to our problems.
The truth is that the United States has been experiencing economic decline for decades.  Our economic infrastructure has been gutted, the middle class is steadily deteriorating, and we have amassed the biggest pile of debt in the history of the world.
Anyone that believes that things are “just fine” is in a massive state of denial.  Consuming far more wealth than we produce is not a formula for a sustainable economy, and it is just a matter of time before we find this out the hard way.

Godfrey Bloom MEP: Bankers need to be jailed; the whole system is a scam


Is the Fix In? DNC Chair has sold out US citizens to the financial sector of loan sharking!

Is this the Emperor with no clothes?
Is the Fix In? DNC Chair has sold out to the financial sector of loan sharking!
File:Slavebeating.jpg - Wikimedia Commons
File:Slavebeating.jpg - Wikimedia Commons
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DNC Chair Debbie Wasserman Shultz Joins GOP Attack on Elizabeth Warren's Agency
Could this power drunk move be the stumbling of the facade, a look behind the curtain as Hillary campaigns to continue the Obama Presidency? Really? How does attacking Elizabeth Warren's work that she has fought so hard to protect the struggling of our citizens on the ropes from the vultures of greed?
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This is the DNC's representation of American citizens? Is not the Black community most adversely affected by these sharks in enslaving citizens into bondage? Have they no shame?
If Bernie's campaign and Elizabeth Warren does not call them out on this we will know that the fix is in. I am a Bernie supporter and he has not disappointed me even when the chorus was blaring no chance in hell. 

George King has been involved in civil rights and started protesting government as a US Marine protesting the Vietnam War in 1967. He has owned and operated as a small business owner of Coffee Houses and later Sporting Goods. He was employed (more...)

The Coming Economic Collapse & The Insanity of Bail-In Regimes – With Mark O’Byrne

Published on Feb 17, 2016
Mark O’Byrne, co-founder of the hugely successful Irish bullion broker GoldCore recently spoke to WAM’s Josh Sigurdson and John Sneisen about the value of silver & gold as well as the many problems with central banks and the printing of worthless IOU note currency.
During the 40 minute interview, Mark spoke on the coming global economic collapse and why we’re so at risk of plunging into complete economic chaos.
Mark believes there may be a recession or even a depression. There’s a lot of variance between the predictions of experts throughout the world as it’s hard to say exactly how it will happen, but it’s clear it will happen nonetheless.
From economic crash, Mark also spoke of the complete insanity of bail-in regimes which are being placed in the small print of legislation across the planet. We’ve seen bail-ins in Greece and there’s new legislation in Canada that advocates for a bail-in.
Bail-ins will affect people where it hurts the most, the wallet. With banks needing to pay off debts, they will simply take people’s cash out of their bank account as a subsidy. Basically, it’s highway robbery.
People need to understand that the money they keep in banks is not actually theirs and that banks have the unfortunate and absurd right to just take the money and leave people’s lives in ruins. However, it’s part of the contract so it’s up to the individual to be aware and take notice.
We will continue to talk about these crucially important issues as the crash elapses and becomes more important to individuals who will soon be unable to avoid the subject.
We thank Mark O’Byrne for talking with us. We appreciate his passion for this incredibly important issue.

Ruble-yuan currency swap mechanism to be implemented after testing — Russia’s Central Bank

The swapline agreed between the central banks of the two countries in October 2014 to ease export payments, totals 815 bln rubles ($11 bln) and 150 bln yuan ($22.8 bln)

MOSCOW, March 2. /TASS/. The ruble-yuan currency swap mechanism may be implemented after successful testing, Russia’s Central Bank reported Wednesday.
"The currency swap mechanism aimed at enhancing partnership between central banks of the two states, has been successfully tested on several transactions starting from October 2015 to allocate financing within a limited range of Russian and Chinese contract partners. Pilot deals enabled the Bank of Russia and the People's Bank of China to ensure availability of using swaps if needed in the future," the report said.
The swapline agreed between the central banks of the two countries in October 2014 to ease export payments, totals 815 bln rubles ($11 bln) and 150 bln yuan ($22.8 bln).
"The national currency swap agreement is aimed at triggering trade and investment cooperation between the Russian Federation and the People’s Republic of China and evidences rising financial cooperation level between the Bank of Russia and the People’s Bank of China," the Russian regulator said.

London Bubble Trouble – Visas Issued to Wealthy Foreigners Plunge 84%

Screen Shot 2015-12-14 at 11.09.07 AM
It appears the music may have finally stopped for one of the world’s largest luxury real estate bubbles: London.
It’s well known that foreign oligarchs love London real estate as a means to launder funds, typically “earned” by soaking their host countries dry via corruption and fraud. This has caused absurd and irrational spikes in high-end residential real estate in the English capital, as well as a flood of new construction.
With emerging markets now completely collapsing, the seemingly endless flood of foreign money is drying up, and with it, London real estate.
So has the London real estate bubble popped? Probably.
– From the September 9, 2015 article: Luxury London Home Sales Plunge 26% – Has this Mega Real Estate Bubble Finally Burst?
London’s luxury property bubble seems to have popped sometime during the second half of last year, something I’ve written about repeatedly over the past several months.
One of the primary drivers behind the weakness in this “asset class” is a sharp reduction in the numbers of foreign criminals laundering money via London real estate. Just in case you still harbored any doubts about high-end London property being little more than bank accounts for shady foreign oligarchs, we learn the following from Bloomberg:

The number of wealthy investors granted visas to live in the U.K. fell 84 percent last year after the government doubled the minimum investment required for the permit to 2 million pounds ($2.8 million) in November 2014. New checks that mean applicants have to go through anti-money laundering due diligence checks may also be restricting demand, according to Transparency International U.K., a non-profit organization that monitors corruption. The decline in the number of people being granted the visas may be bad news for developers. There are plans to construct more than 25,000 luxury properties in the city over the next decade, according to data compiled by consulting firm Arcadis.
It’s pretty simple. Take away the criminal money and London luxury real estate has no where to go but down. For example, check out the following excerpts from a different Bloomberg article titled, Luxury Home Prices in Central London Fall Most Since June 2009:
Home prices in the best areas of central London fell by the most since June 2009 in the six months through February as turmoil in financial markets and higher taxes deterred buyers.
The decline in the 15 districts defined as the capital’s prime areas was 0.6 percent, according to London-based broker Knight Frank LLP. In Knightsbridge, home to the Harrods department store, values dropped by 7 percent in the 12 months through February, while there was a 3.3 percent fall in South Kensington and a 2 percent drop in Chelsea.
Vendors lowered asking prices on 39 percent of homes in central London since they were first offered for sale, according to data compiled by researcher Lonres in January. 
It’s not going to be pretty.
For prior articles on the topic, see:
Tens of Thousands of Properties to Be “Dumped” on London Real Estate Market by 2017
Luxury London Real Estate Prices Plunge 11.5% Year-Over-Year
Luxury London Home Sales Plunge 26% – Has this Mega Real Estate Bubble Finally Burst?
The Luxury Housing Bubble Pops – Overseas Investors Struggle to Sell Overpriced Mansions
UK Think Tank Proposes Law to Restrict Foreign Oligarch Real Estate Speculation
In Liberty,
Michael Krieger

Can Americans Handle Four More Years Of This?

Some folks were peddling fiction... for everyone else, there's this reality!

No child (or student, or poor person, or grandchild, or debtholder, or healthy person, or retiree, or African American, or family, or homeowner, or renter) left behind untouched...
Now that is a legacy.

Sports Authority to File For Bankruptcy Protection

Will Close One-Third of Its Stores Anyway Under Bankruptcy Plan
Sports Authority
Sports Authority has stores in Piscataway, East Brunswick, and Iselin, N.J., plus in other Garden State towns. Wikipedia
EAST BRUNSWICK, NJ–Beleaguered Sports Authority Inc. (SA) will file for bankruptcy protection immediately or could find itself out of business completely in coming weeks if it fails to find a buyer for its business, according to reports.
But the company plans to close about 150 of the 450 stores it operates nationwide anyway, as part of a bankruptcy plan, reports Bloomberg, citing sources with knowledge of the matter.
Dicks Sporting Goods Inc. and Modell’s Sporting Goods could also purchase the company.
SA has agreed to borrow $595 million in bankruptcy financing from Bank of America Corp., Wells Fargo & Co., and J.P. Morgan Chase & Co. according to a Wall Street Journal report, which cites sources familiar with the matter.
Some of the sources told the Journal that SA would be required to shutter and clear out dozens of its stores after filing for chapter 11 protection, and then close all its remaining stores, by the end of next month, unless it was then able to find a buyer to invest in the business.
But SA may be bluffing the bankruptcy: “To be sure, companies and their creditors often use the threat of bankruptcy to cut last-minute deals,” reads the Journal report.
The Journal notes that if a buyer wants a “package of Sports Authority’s best stores,” a portion of the business would continue running, adding that bankruptcy is very challenging for retailers.
“Under pressure from creditors, vendors, landlords and other stakeholders, money-losing store chains often go out of business while trying to reorganize in bankruptcy,” according to the journal which cites data from consultancy AlixPartners LLP, that just over half of retail bankruptcies since 2005 have ended up in liquidation.
Substantial debt, cut throat competition in the retail environment, and a consumer shift toward more spending on experiences and services, rather than trips to malls continues to challenge traditional retail, as more people begin shopping online.
To that end, many retailers are investing heavily in technology to improve the in-store shopping experience for consumers.
Progressive retailers are also educating their workforce to engage with customers more effectively, use devices to stay abreast of inventory levels, and track items in stores and distribution centers so as not to stock-out of items and loose sales.
Other supply chain challenges are also being solved through technology such as Radio-frequency identification (RFID) chips, which use radio waves to read information stored on price tags and packages, and also help give consumer information on TV screens in some stores.
“We recognize consumers are doing things differently than they have in the past,” said National Retail Federation President and Chief Executive Officer, Matthew Shay recently, after the trade group announced growth of only 3.1% for this year.
But the federation says online sales will grow as much as 9% this year.
Chains such as Macy’s Inc., Wal-Mart Inc., and Sears Holdings Corporation have begun closing dozens of stores this year and will shutter many more.
In the past decade Dicks, which operates 600 trade-mark name stores, has become larger than SA.
SA’s e-commerce business, which SA does not operate on its own, but has given that task to eBay, GSI Commerce, now called eBay Enterprise, has reportedly not gone well in terms of SA ability to build vendor relationships.

Payday Loan Sharks Have Good Friend in Government: Democratic Party Chair

(Deirdre Fulton)  Sketchy payday loan sharks, whose short-term, high-interest loans trap millions of Americans in a cycle of debt, have a new ally on Capitol Hill—Democratic National Committee chair Debbie Wasserman Schultz, who is reportedly pushing a bill that would “gut” forthcoming industry regulations.
According to a memo seen by the Huffington Post, Rep. Wasserman Schultz (D-Fla.) is co-sponsoring legislation (pdf) to delay new rules from the Consumer Financial Protection Bureau (CFPB), meant to crack down on abusive payday lending that profits off deceptive terms, automatic “rollovers,” staggering fees, and interest rates averaging over 300 percent annual percentage rate (APR).
The so-called “Consumer Protection and Choice Act” would delay those rules for two years and “permanently block them in any state that enacts the sort of ineffectual, industry-crafted regulatory sham that Florida adopted in 2001,” ThinkProgress reports.
In December, 265 civil rights, labor, and consumer advocacy groups signed onto a letter opposing the legislation, which they decried as “an attempt to codify industry-backed practices that do little to protect consumers.”
In backing the bill, the HuffPo notes, Wasserman Shultz is aligning herself with the Republican Party, which has “assailed the agency from every conceivable angle—going after its budget, attempting to tie its hands with new layers of red tape, fomenting conspiracy theories about rogue regulators illegally shutting down businesses and launching direct attacks on payday loan rules themselves.”
She is also going against public opinion. A poll conducted last year for Americans for Financial Reform and the Center for Responsible Lending,showed that nearly two in three voters have a negative view of payday lenders. The same survey showed that respondents viewed payday lenders as predators rather than resources by a margin of more than 3:1.
The move also puts Wasserman Schultz—who has come under fire for the DNC’s perceived pro-Hillary Clinton bias—at odds with U.S. Sen. Elizabeth Warren (D-Mass.), who conceived of and established the CFPB and who hasdenounced payday lending schemes for targeting the poor.
As Eric Levitz of New York Magazine‘s Daily Intelligencer said Tuesday—his tongue firmly in his cheek: “With such brave legislators leading the Democratic Party, it’s difficult to understand how Bernie Sanders can get so mad at the ‘Establishment’.”