From Simon Black of Sovereign Man
US Government Asset Seizures On The Rise
The Wall Street Journal published a disturbing article earlier this week entitled “Federal Asset Seizures Rise, Netting Innocent With Guilty.”
You can already imagine the crux of the article.
In the United States, there are hundreds of regulations which authorize dozens federal agencies to confiscate private property– homes, cars, bank accounts, gold, company shares, and even personal effects.
Ironically, most Americans still think that they live in a country where you’re innocent until proven guilty. Nothing could be further from the truth, and it’s just another clear example of how the US Constitution has become a worthless piece of toilet paper for the federal government.
The Fifth Amendment states that “No person shall be… deprived of life, liberty, or property, without due process of law.” Tell that James Lieto, a New York businessman who was relieved of $392,000 when the armored car company used by his check-cashing firm was taken down by the FBI.
Lieto was innocent and not implicated in any wrongdoing, but the FBI took his money regardless as it just happened to be in the wrong place at the wrong time.
Last October, another businessman named Raul Stio was suspected of wrongdoing by the Treasury Department. The government seized over $150,000 from his account, yet in the 10-months that followed, Stio has still not been charged with a crime.
According to Justice Department statistics, the total value of confiscated property exceeded $2.5 billion in 2010, more than double from five years ago. The average take per case? $166,000… and the vast majority of cases were non-criminal.
It’s truly staggering to think about how much can be taken away from you in the blink of an eye, all without any judicial oversight or right to a hearing.
The reason could be anything. Maybe you violated some arcane, meaningless regulation among the hundreds of thousands of pages of US Code (ignorance of the law is NOT an excuse!). Maybe you were at the wrong place at the wrong time. Or maybe they had no real reason at all other than mere suspicion.
One minute you have money, the next you’re completely locked out of your wealth and livelihood. They force YOU to prove to them that you aren’t guilty, but they take away any means you had to defend yourself.
Look, this is the new reality in America. The entire country has become a nation of criminals– there isn’t a single man, woman, or child alive who is not in violation of some obscure regulation or cannot be ‘suspected’ of wrongdoing.
This is really just a form of cannibalism– a government feeding on its own citizens in order to keep the party going just a little bit longer. They’ll raise taxes, seize assets, take over pension funds, erode freedoms, start wars and send people to die– whatever it takes to maintain the status quo.
I’ve long advocated for an internationalization strategy: diversifying various assets and interests overseas so that no one single government has total control over your livelihood.
Store your gold in Switzerland. Open a bank account in Hong Kong. Register your company in the BVI. Establish a ‘backup’ residency in Chile. Expand your business in Brazil. Get a better job in Singapore. Obtain a second passport in Malta. Open a brokerage account in the Cayman Islands.
Friday, August 26, 2011
Marc Faber: "Everyone In The World Is A Keynesian, The Best Thing The Fed Could Do Is To Collectively Resign"
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Some of you may have already seen this clip elsewhere. Faber from about 2 weeks ago, which we post today in anticipation of Bernanke's speech at Jackson Hole on Friday.
Cenk On Kathryn Wylde, Eric Schneiderman And Obama's Love For Wall Street
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Video - The Young Turks on the Foreclosure Fraud Deal - Aug. 22, 2011
Peter Schiff: "Treasuries Are NOT A Safe Haven, No Ceiling For Gold Prices"
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Video - Peter Schiff - Aug. 20, 2011
- "Treasuries are not a safe haven."
Bernanke Jackson Hole speech could rattle markets
By Steven C. Johnson
NEW YORK (Reuters) - Whether the Federal Reserve likes it or not, its unprecedented monetary polices over the last few years have conditioned the financial markets to expect a helping hand when the going gets tough.
That's why all eyes will be on Ben Bernanke, the central bank's chairman, when he speaks Friday at the Fed's annual symposium in Jackson Hole, Wyoming.
With the stock market mired in a month-long slump and both the U.S. and euro zone economies in danger of sliding into recession, investors are bracing for a possible repeat of last year's performance, when Bernanke hinted the Fed would act if conditions deteriorated.
Two months later, the central bank began pumping $600 billion into the financial system through direct purchases of Treasury debt, a second round of stimulus that markets dubbed "QE2."
While the jury's still out on how effective these purchases have been, few are ready to rule out QE3 entirely.
Following is a look at what the Fed could do.
KEEPING OPTIONS OPEN
Wyoming may conjure up images of the American Wild West, but markets aren't expecting Bernanke to ride into the mountain resort with guns blazing -- at least not yet.
While the economy has taken a turn for the worse -- growth ground to a halt in the second quarter and nearly flat-lined in the first -- there's a sense that the Fed will want to wait a bit longer to assess the impact of its past stimulus.
Other Fed policymakers have sought to downplay expectations of an imminent QE3 announcement. St. Louis Fed President James Bullard was quoted in Japan's Nikkei newspaper saying that while the Fed could buy more bonds if the economy weakened, the time was not right for such a move.
"Going into Bernanke's speech at Jackson Hole, people are positioned for a significant shift in policy. (But) we think financial market conditions have to deteriorate even further for more QE3," said Simon Derrick, head of currency research at Bank of New York Mellon.
Nonetheless, traders are still expecting Bernanke to signal in some shape or form that he hasn't run out of bullets and could start shooting again if need be.
"Based on our conversations with clients, we believe investors would be very surprised if the speech did not include a discussion of asset purchases," strategists at Goldman Sachs wrote in a note to clients.
They said this could involve the Fed reinvesting proceeds from maturing assets into 10- and 30-year Treasuries to hold long-term interest rates low.
"I think we'll see (QE3) because America needs growth, but I don't think we'll necessarily get it on Friday," said Neil Dwane, chief investment officer for Europe at RCM.
Current market moves reflect this. While still down about 15 percent from late July, the S&P 500 rallied smartly Tuesday and the dollar has struggled against major currencies.
More stock market gains could be in store if Bernanke gives a strong hint of future action. After Bernanke's speech last August, the S&P 500 began a rally that took it up nearly 25 percent by May 2011.
LAUNCHING QE3 NOW
Pulling the trigger now would have the element of surprise going for it and might spark the most aggressive market moves.
There's been some talk in bond market circles that the 10-year yield's dip below 2 percent reflected a pricing in of QE3, though those moves probably had more to do with recent dismal jobs, manufacturing and growth data.
Still, there are impediments to launching QE3.
For one thing, Bernanke already caught investors off guard earlier this month and slowed a market rout when the Fed pledged to keep interest rates near zero until at least 2013.
Steven Bell, director of GLC Ltd, a global macro hedge fund in London with $1 billion in assets, also noted that higher inflation may make the Fed cautious. "We have core inflation going up," he said. "It may be low but it's still going up."
Political opposition is also on the rise. Texas Governor Rick Perry, a candidate for president, even said he would consider it "treasonous" if Bernanke "prints more money between now and the election" in 2012.
That populist anger stems partly from the fact that Fed policies have done little to increase hiring or spark a housing market recovery.
"The history is $600 billion (in bond purchases) hasn't really made any difference to the U.S. economy," Dwane said. "It's still where it was when he was talking about it last August: nearly in recession."
If QE3 fails to boost growth or stokes inflation, markets may wish the Fed had done nothing.
"Investors are becoming more cynical," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. "Central bankers and governments seem to playing the role of the Dutch boy trying to plug holes in the dike."
MUM'S THE WORD
A humdrum speech that neither announces plans for QE3 or even hints at the Fed's willingness to act is probably the most unlikely scenario, as far as markets are concerned.
If Bernanke did go that way, it could signal that the hawks were gaining the upper hand. Three Fed policymakers voted against extending the zero interest rate pledge to 2013 and have argued that the Fed cannot do much more to boost growth.
Fred Dickson, market strategist at D.A. Davidson & Co, noted that policy remains very loose even without QE3. In addition to holding rates near zero, the Fed has said it will reinvest the proceeds of maturing assets on its "extraordinarily large" $2.8 trillion balance sheet.
"So they have a stealth QE3 policy in place already," he said.
No mention of future easing would likely hurt stocks but should spark a short-term dollar rally. Treasuries would likely fall as expectations of more Fed support faded.
(Additional reporting by Jeremy Gaunt and Simon Jessop in London and Gertrude Chavez-Dreyfuss in New York; Editing by Dan Grebler)
NEW YORK (Reuters) - Whether the Federal Reserve likes it or not, its unprecedented monetary polices over the last few years have conditioned the financial markets to expect a helping hand when the going gets tough.
That's why all eyes will be on Ben Bernanke, the central bank's chairman, when he speaks Friday at the Fed's annual symposium in Jackson Hole, Wyoming.
With the stock market mired in a month-long slump and both the U.S. and euro zone economies in danger of sliding into recession, investors are bracing for a possible repeat of last year's performance, when Bernanke hinted the Fed would act if conditions deteriorated.
Two months later, the central bank began pumping $600 billion into the financial system through direct purchases of Treasury debt, a second round of stimulus that markets dubbed "QE2."
While the jury's still out on how effective these purchases have been, few are ready to rule out QE3 entirely.
Following is a look at what the Fed could do.
KEEPING OPTIONS OPEN
Wyoming may conjure up images of the American Wild West, but markets aren't expecting Bernanke to ride into the mountain resort with guns blazing -- at least not yet.
While the economy has taken a turn for the worse -- growth ground to a halt in the second quarter and nearly flat-lined in the first -- there's a sense that the Fed will want to wait a bit longer to assess the impact of its past stimulus.
Other Fed policymakers have sought to downplay expectations of an imminent QE3 announcement. St. Louis Fed President James Bullard was quoted in Japan's Nikkei newspaper saying that while the Fed could buy more bonds if the economy weakened, the time was not right for such a move.
"Going into Bernanke's speech at Jackson Hole, people are positioned for a significant shift in policy. (But) we think financial market conditions have to deteriorate even further for more QE3," said Simon Derrick, head of currency research at Bank of New York Mellon.
Nonetheless, traders are still expecting Bernanke to signal in some shape or form that he hasn't run out of bullets and could start shooting again if need be.
"Based on our conversations with clients, we believe investors would be very surprised if the speech did not include a discussion of asset purchases," strategists at Goldman Sachs wrote in a note to clients.
They said this could involve the Fed reinvesting proceeds from maturing assets into 10- and 30-year Treasuries to hold long-term interest rates low.
"I think we'll see (QE3) because America needs growth, but I don't think we'll necessarily get it on Friday," said Neil Dwane, chief investment officer for Europe at RCM.
Current market moves reflect this. While still down about 15 percent from late July, the S&P 500 rallied smartly Tuesday and the dollar has struggled against major currencies.
More stock market gains could be in store if Bernanke gives a strong hint of future action. After Bernanke's speech last August, the S&P 500 began a rally that took it up nearly 25 percent by May 2011.
LAUNCHING QE3 NOW
Pulling the trigger now would have the element of surprise going for it and might spark the most aggressive market moves.
There's been some talk in bond market circles that the 10-year yield's dip below 2 percent reflected a pricing in of QE3, though those moves probably had more to do with recent dismal jobs, manufacturing and growth data.
Still, there are impediments to launching QE3.
For one thing, Bernanke already caught investors off guard earlier this month and slowed a market rout when the Fed pledged to keep interest rates near zero until at least 2013.
Steven Bell, director of GLC Ltd, a global macro hedge fund in London with $1 billion in assets, also noted that higher inflation may make the Fed cautious. "We have core inflation going up," he said. "It may be low but it's still going up."
Political opposition is also on the rise. Texas Governor Rick Perry, a candidate for president, even said he would consider it "treasonous" if Bernanke "prints more money between now and the election" in 2012.
That populist anger stems partly from the fact that Fed policies have done little to increase hiring or spark a housing market recovery.
"The history is $600 billion (in bond purchases) hasn't really made any difference to the U.S. economy," Dwane said. "It's still where it was when he was talking about it last August: nearly in recession."
If QE3 fails to boost growth or stokes inflation, markets may wish the Fed had done nothing.
"Investors are becoming more cynical," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago. "Central bankers and governments seem to playing the role of the Dutch boy trying to plug holes in the dike."
MUM'S THE WORD
A humdrum speech that neither announces plans for QE3 or even hints at the Fed's willingness to act is probably the most unlikely scenario, as far as markets are concerned.
If Bernanke did go that way, it could signal that the hawks were gaining the upper hand. Three Fed policymakers voted against extending the zero interest rate pledge to 2013 and have argued that the Fed cannot do much more to boost growth.
Fred Dickson, market strategist at D.A. Davidson & Co, noted that policy remains very loose even without QE3. In addition to holding rates near zero, the Fed has said it will reinvest the proceeds of maturing assets on its "extraordinarily large" $2.8 trillion balance sheet.
"So they have a stealth QE3 policy in place already," he said.
No mention of future easing would likely hurt stocks but should spark a short-term dollar rally. Treasuries would likely fall as expectations of more Fed support faded.
(Additional reporting by Jeremy Gaunt and Simon Jessop in London and Gertrude Chavez-Dreyfuss in New York; Editing by Dan Grebler)
JP Morgan May Take Over Bank Of America
There is a rumor circulated on Wall St. that JP Morgan (NYSE: JPM) will takeover Bank of America (NYSE: BAC) within the week. The government will support the deal with a $100 billion investment in preferred shares issued by the combined entity. Alternatively, the government may guarantee the value of a large pool of Bank of America assets. The word is that Treasury Secretary Geithner has discussed the transaction with JP Morgan CEO Jamie Dimon.The "merger" would completely destroy the value of BAC's common shares.
The government feels that the deal may be necessary as Bank of America struggles unsuccessfully to close several transactions to bolster its balance sheet. The Wall Street Journal reported that the financial firm will need to raise $200 billion which would be another possible event that would wipe out common shareholders.
Bank of America's fortunes have been hurt by events in just the last few days. A New York State judge agreed to allow institutional investors to intervene in an $8.5 billion settlement between the bank and groups that lost money on mortgage-backed securities. China Construction Bank Corp said Bank of American will continue to hold 50% of its share in the foreign financial firm. Many investors hoped Bank of America would sell its entire stake to raise money. Several analysts believe that the costs of owning mortgage firm Countrywide Credit have grown unexpectedly large.
Under federal law, JP Morgan and Bank of America could not combine because together they would have too large a share of several financial markets in the US. Treasury would apparently work with other government agencies to have those rules suspended and then the new combined bank would sell assets to get back into compliance later.
The government's preference for a deal with JP Morgan rather than a federal takeover may be because it does not want to set the precedent of Washington owning one of the world's largest banks "paid for" with taxpayer money.
Note: Credit default swap insurance on the bank's unsecured debt jumped 64 basis points to 435 basis points, meaning it would cost $435,000 per year for five years to insure $10 million in bonds, according to Markit (via Reuters)
Douglas A. McIntyre
This blog is reprinted by permission from 24/7 Wall St, © 2007 24/7 Wall St., LLC All rights reserved.
Mortgage purchase applications at 15-year low: MBA
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, fell 2.4 percent in the week ended August 19.
The seasonally adjusted gauge of loan requests for home purchases tumbled 5.7 percent to its lowest level since December 1996, the MBA said. Refinance demand also sagged as interest rates rose, with the refinance index slipping 1.7 percent.
"Another week of volatile markets and rampant uncertainty regarding the economy kept prospective homebuyers on the sidelines, with purchase applications falling to a 15-year low," Mike Fratantoni, MBA's vice president of research and economics, said in a statement.
"This decline impacted borrowers across the board, with purchase applications for jumbo loans falling by more than 15 percent and purchase applications for the government housing programs falling by 8.2 percent."
The refinance share of mortgage activity increased to 79.8 percent of total applications from 78.8 percent the week before.
The seasonally adjusted gauge of loan requests for home purchases tumbled 5.7 percent to its lowest level since December 1996, the MBA said. Refinance demand also sagged as interest rates rose, with the refinance index slipping 1.7 percent.
"Another week of volatile markets and rampant uncertainty regarding the economy kept prospective homebuyers on the sidelines, with purchase applications falling to a 15-year low," Mike Fratantoni, MBA's vice president of research and economics, said in a statement.
"This decline impacted borrowers across the board, with purchase applications for jumbo loans falling by more than 15 percent and purchase applications for the government housing programs falling by 8.2 percent."
The refinance share of mortgage activity increased to 79.8 percent of total applications from 78.8 percent the week before.
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