• Pivotfarm
    04/20/2014 - 17:08
    As the audience went from laughter to applause, Vladimir Putin responded to the question that he had just read out on a televised debate in Russia. What was the question?

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The 5 Faces Of Income Inequality

Whatever your position is on income inequality or the “great wealth divide,” there is little argument that it currently exists. The question is whether something should be done about it. Raising taxes on “the rich,” forced redistribution, increases in social welfare, etc. all have potentially negative economic consequences which affects everyone. There is clearly no easy solution. However, for the upcoming mid-term elections this debate will be waged to swing votes in favor of those who want to remain in political office on both sides of the aisle. This is ironic considering that the majority of those individuals are currently in the top wealth brackets in the U.S. Maybe we should just start there?



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Anti-HFT Trading Platform Comes To "Rigged" FX Markets

The surge in volume on the anti-HFT equity trading platform IEX - of Flash Boys and TV-fight-night fame - makes it very easy to see how the buy-side (which the US retail investor is one small part of) clearly prefers an un-rigged place to find willing sellers (or buyers). Relatively light regulation and high volumes make the $5.3 trillion-a-day foreign-exchange market a prime target for high-frequency traders. More than 35% of spot currency volume in October was by speed traders, up from 9% five years earlier, but just as in equity markets, there are speculators and there are natural buyers and sellers in FX markets (looking to hedge payments and receipts from real business for example). As Bloomberg reports, a currency-dealing platform known as ParFX, established in 2011, offers a transparent marketplace and subjects orders to random pauses of about 20 to 80 milliseconds, and "is the industry’s effort to heal itself."



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It's Time To Retire Gross Domestic Product As A Measure of Prosperity

Distilling an economy's success in delivering "prosperity" to a single number has outlived its purpose. Political authorities knew exactly what was happening: they realized that their own credibility could be boosted by a rigged GDP number. Thus we have the central government of China issuing blatantly bogus claims of 7+% annual GDP, as anything less will severely erode their claim of managerial brilliance. In our own propaganda-dependent state, GDP is almost always positive, much like corporate earnings always beat expectations by a penny. But we should be paying attention to an even deeper critique of GDP: that prosperity no longer depends of the "growth" of consumption, financialization, etc. but on the Degrowth of narcissistic consumerism and more efficient use of resources and capital.



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US, And Global, Military Spending Summed Up In One Chart

While we previously noted the relative stability (but absolute surge) in US military spending over the past few decades, the scale of what the world's peace-keeping, red-line enforcing, hypocrisy-packed nation spends in context to the rest of the world...



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Everything We Are Told About Deflation Is A Lie

The conventional view of deflation is that if it sets in, “the banking industry, the financial markets, and much of the rest of the economy will be wiped out in a bottomless deflationary spiral.” But, such a spiral would not prove fatal to the lives and welfare of the general population. Rather, it would destroy “essentially those companies and industries that live a parasitical existence at the expense of the rest of the economy, and which owe their existence to our present money system.” Let us be more explicit. Severe deflation threatens at an existential level bankrupt banks and the bankrupt governments that perpetuate their existence. Deflation is a mortal enemy to the heavily indebted state and its embedded parasites, but it is a friend to the saver and to anyone with a positive net worth.



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How Americans Die

America is growing older. And as society comes to grips with the realization that the average age of America will hit new record highs with every passing day for the indefinite future, a new, and far less pleasant topic is sure to gain prominence. Namely: how Americans Die.



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"Timestamp Fraud": A Rigged Market Explained In One Simple Animation

The topic of High-Frequency-Trading quickly dissolves into a smorgasbord of mnemonics and 'inside-baseball' technical terms - just complicated enough to lose everyone that matters or should care about its implications. Despite the fair-and-balanced defense from the mainstream media business channels (sponsored by the belief in the status quo fair markets that 'America the free' is known for), the fact is that HFT does front-run (perfectly legal under the umbrella protection of Reg NMS) order flow, but there may be one more wrinkle - one which would cement the Michael Lewis (accurate) allegation that the market is rigged.



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David Stockman On 'The QE Follies': Bernanke's Swell Gift To The Big Four Banks

The Fed’s 5-year campaign to drive the 30-year mortgage rate from 6.5% to 3.3% has accomplished nothing except to touch off another of those pointless “refi” booms which enable homeowners to swap an existing mortgage for a new one carrying a significantly lower interest rate and monthly service cost. Such debt churning exercises have been sponsored repeatedly by the Fed since the S&L debacle of the late 1980s. The overwhelming evidence, however, is that America’s shop-till-they-drop consumers have finally dropped. But while peak debt means that the Fed’s entire 5-year money printing spree was destined to fail, it nevertheless has produced massive impacts - all of them bad or stupid. One of the most crucial is that it generated an artificial refi windfall to the Big Banks which now dominate the home mortgage business. And the profit windfall was a doozy. Now that financial results for Q1 2014 have been posted, the impact on Big Four financial results can actually be quantified. The four charts below on mortgage originations per quarter during the course of the Fed’s balance sheet expansion binge are the smoking gun.



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Massive "Meteor-Like" Explosion Lights Up North Russian Night Sky

A little over a year ago, in February 2013, a meteor traveling at 19 miles per second above Chelyabinsk in the Russian Urals exploded in the morning sky, recorded by countless dashcams, with the resulting shock wave shattering windows hundreds of miles away. Fast forward to this night, when residents of Russia's northern Murmansk region witnessed the fall of a celestial body similar to the famous Chelyabinsk meteorite on Saturday night. It flashed at 02:10 am local time and was clearly seen in the sky. However, no sound of explosions was heard.



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What Happened To The Middle Class? The Infographic

Restaurants like Olive Garden and Red Lobster are struggling, while high end dining is flourishing. At GE, demand for high-end dishwashers is racing ahead of sales growth for mass-market models. The increased wealth of highly skilled workers, the insane wealth of those with capital, and the outsourcing of lower skilled jobs have left us all asking, “what happened to the middle class?

 



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These Are America's Most And Least "Taxing" States (And Everything Inbetween)

One of the most consistent debates emanating out of Washington in the past 6 years has been that dealing with income tax. Whether high, low, "fair" or "unfair", said discussions, however, focus solely on tax paid at the Federal level, and largely ignore that "other" key tax: state. Which is surprising, considering some states such as California demand a total contribution amounting to a third of the highest marginal Federal tax bracket, which could make some wonder if those bracing sea breezes are really worth it. But what about the other states? Here is the full breakdown of the states with the top income tax rates, those with the lowest, and all the states inbetween.



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Are The Swiss Going Crazy? $25 Minimum Wage Referendum In May

Most of our readers probably know what we think of minimum wages, but let us briefly recapitulate: there is neither a sensible economic, nor a sensible ethical argument supporting the idea. So when we saw that the Swiss will vote in a national referendum May 18 on whether to create a minimum wage of 22 francs ($25) per hour, or 4,000 francs a month, we were stunned... If Swiss voters agree to introducing a new minimum wage law, they would end up doing incalculable damage to Switzerland's entrepreneurial culture. At the moment, Switzerland is still one of the freest economies in the world. It has been extremely successful so far and its achievements would clearly be put at risk. Hopefully Switzerland's voters won't be swayed by union's arguments.



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Democrats Told "Don't Mention 'Economic Recovery' - It's A Political Loser"

Democratic strategists have made a blunt declaration in an election-year memo, according to AP, "Don't talk about the economic recovery. It's a political loser." Stan Greenberg, James Carville and others wrote that in head-to-head polling tests the mere mention of the word "recovery" is trumped by a Republican assertion that the Obama administration has had six years to get the economy moving and its policies haven't worked. But, but, but... stocks are at all-time highs?



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The Real 'Reset' Button

It's too late now...



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Hyper-Sensitive Illinois Mayor Orders Police Raid Over Parody Twitter Account

There is now a systemic two-tier justice system operating in these United States, and the result will unquestionably be tyranny if the trend continues unabated. The latest example of a lowly citizen being subject to a disproportionate use of the law, is Jon Daniel of Peoria, Illinois. Jon was behind a parody Twitter account that mocked Peoria mayor Jim Ardis, and his biggest mistake was not making it clear that it was a parody. As a result, Twitter had already suspended the account weeks ago. Problem solved, right? Wrong. The tough guy mayor was so offended that a plebe would dare criticize his royal highness that he ordered a police raid on the home of Jon Daniel and his roommates.



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