en Why Is the American Dream Dead In The South? <p><a href=""><em>Authored by Matthew O'Brien, originally posted at The Atlantic</em></a>,</p> <p><strong>The top 1 percent aren't killing the American Dream. Something else is—if you live in the wrong place.</strong></p> <p>Here's what we know. <strong>The rich <em>are</em> getting richer, but according to a <a href="">blockbuster new study</a>&nbsp;that hasn't made it harder for the poor to become rich.</strong> The good news is that people at the bottom are just as likely to move up the income ladder today as they were 50 years ago. But the bad news is that people at the bottom are just as likely to move up the income ladder today as they were 50 years ago.</p> <p><strong>We like to tell ourselves that America is <em>the</em> land of opportunity, but the reality doesn't match the rhetoric—and hasn't for awhile. </strong>We actually have less social mobility than countries <a href="">like Denmark</a>. And that's more of a problem the more inequality there is. Think about it like this: Moving up matters more when there's a bigger gap between the rich and poor. So even though mobility hasn't gotten worse lately, it has worse consequences today because inequality is worse.</p> <p>But it's a little deceiving to talk about "our" mobility rate. <strong>There isn't one or two or even three Americas. There are hundreds. </strong>The research team of Raj Chetty, Nathaniel Herndon, Patrick Kline, and Emmanuel Saez looked at each "commuting zone" (CZ) within the U.S., and found that the American Dream is still alive in some parts of the country. Kids born into the bottom 20 percent of households, for example, have a 12.9 percent chance of reaching the top 20 percent if they live in San Jose. That's about as high as it is in the highest mobility countries. But kids born in Charlotte only have a 4.4 percent chance of moving from the bottom to the top 20 percent. That's worse than any developed country we have numbers for.</p> <p>You can see what my colleague <a href="">Derek Thompson</a> calls the <strong>geography of the American Dream in the map below</strong>. It shows where kids have the best and worst chances of moving up from the bottom to the top quintile—and that the South looks more like a banana republic. (<em>Note: darker colors mean there is less mobility, and lighter colors mean that there's more</em>).</p> <p><a href=""><img src="" width="600" height="413" /></a></p> <p><strong>So what makes northern California different from North Carolina? Well, we don't know for sure, but we do know what <em>doesn't</em>. </strong>The researchers found that local tax and spending decisions explain some, but not too much, of this regional mobility gap. Neither does local school quality, at least judged by class size.&nbsp;<span style="font-size: 16px;">Local area colleges and tuition were also non-factors. And so were local labor markets, including their share of manufacturing jobs and those facing cheap, foreign competition.&nbsp;</span><span>But here's what we know does matter. Just how much isn't clear.</span></p> <p><span><span style="text-decoration: underline;"><strong>1. Race</strong>.</span> The researchers found that <strong>the larger the black population, the lower the upward mobility. </strong>But this isn't actually a black-white issue. It's a rich-poor one. Low-income whites who live in areas with more black people also have a harder time moving up the income ladder. In other words, it's something about the <em>places</em> that black people live that hurts mobility.</span></p> <p><span style="text-decoration: underline;"><strong>2. Segregation</strong>.</span> Something like the poor being isolated—isolated from good jobs and good schools. See, the more black people a place has, the more divided it tends to be along racial and economic lines. The more divided it is, the more sprawl there is. And the more sprawl there is, the less higher-income people are willing to invest in things like public transit.&nbsp;</p> <p><strong>That leaves the poor in the ghetto, with no way out for their American Dreams. They're stuck with bad schools, bad jobs, and bad commutes if they do manage to find better work. </strong>So it should be no surprise that the researchers found that racial segregation, income segregation, and sprawl are all strongly negatively correlated with upward mobility. But what might surprise is that it doesn't matter whether the rich cut themselves off from everybody else. What matters is whether the middle class cut <em>themselves</em> off from the poor.</p> <p><span style="text-decoration: underline;"><strong>3. Social Capital</strong>.</span> Living around the middle class doesn't just bring better jobs and schools (which help, but probably aren't enough). It brings better institutions too. Things like religious groups, civic groups, and any other kind of group that keeps people from bowling alone. All of these are strongly correlated with more mobility—which is why Utah, with its vast Mormon safety net and services, is one of the best places to be born poor.</p> <p><span style="text-decoration: underline;"><strong>4. Inequality</strong></span><span><span style="text-decoration: underline;">.</span> The 1 percent are different from you and me—they have so much more money that they live in a different world. It's a world of <a href=";_r=0">$40,000 a year preschool</a>, "<a href=";">nanny consultants</a>," and an endless supply of <a href="">private tutors</a>. It keeps the children of the super-rich from falling too far, but it doesn't keep the poor from rising (at least into the top quintile). There just wasn't any correlation between the rise and rise of the 1 percent and upward mobility. In other words, it doesn't hurt your chances of making it into the top 80 to 99 percent if the super-rich get even richer.</span></p> <p><span><strong>But inequality does matter <em>within the bottom 99 percent</em>.</strong> The bigger the gap between the poor and the merely rich (as opposed to the super-rich), the less mobility there is. It makes intuitive sense: it's easier to jump from the bottom near the top if you don't have to jump as far. The top 1 percent are just so high now that it doesn't matter how much higher they go; almost nobody can reach them.</span></p> <p><span style="text-decoration: underline;"><strong>5. Family Structure</strong></span><span><span style="text-decoration: underline;">.</span> Forget race, forget jobs, forget schools, forget churches, forget neighborhoods, and forget the top 1—or maybe 10—percent.<strong> Nothing matters more for moving up than who raises you.</strong> Or, in econospeak, nothing correlates with upward mobility more than the number of single parents, divorcees, and married couples. The cliché is true: Kids do best in stable, two-parent homes.</span></p> <p><span><strong>It's not clear what, if any, policy lessons we should take from this truism. </strong>As my colleague <a href="">Jordan Weissmann</a> points out, we don't really have any idea how to promote marriage. We can try telling people how great it is to get hitched. We can even get rid of the <a href="">marriage penalties</a> some low-income couples face. But these won't, and haven't, been making more people exchange till-death-do-us-parts. And should we even want to? <a href="">Steve Waldman</a> points out that poor women know better than upper-middle-class people yelling at them to get married whether they should or not. They know whether their boyfriend would make a good husband, a good father, a good teacher. And they know that marriage is important. That they're not getting married tells us something.&nbsp;</span><span>Sometimes no match is better than a bad match.</span></p> <p style="text-align: center;">***</p> <p><strong>Flat mobility is the defining Rorschach test of our time.</strong> Conservatives look at it, and say, <em>see, we shouldn't worry about the top 1 percent, because they're not making the American Dream any harder to achieve</em>. But liberals look at it, and say <em>see, we should care about inequality, because it </em>can<em> make the American Dream harder to achieve—and it raises the stakes if you don't.&nbsp;</em>But both want to increase upward mobility. It's not enough to keep it where it was 50 years ago. We need to actually become the land of opportunity.&nbsp;</p> <p><strong>The American Dream is alive in Denmark and Finland and Sweden. And in San Jose and Salt Lake City and Pittsburgh. But it's dead in Atlanta and Raleigh and Charlotte.</strong> And in Indianapolis and Detroit and Jacksonville. Fixing that isn't just about redistribution. It's about building denser cities, so the poor aren't so segregated. About good schools that you don't have to live in the right (and expensive) neighborhood to attend.&nbsp;<span>And about ending a destructive drug war that imprisons and blights the job prospects of far too many non-violent offenders</span><span>—further shrinking the pool of "marriageable" men.</span></p> <p><em><span style="text-decoration: underline;"><strong>Because the American Dream is dead in too much of America.</strong></span></em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="516" height="359" alt="" src="" /> </div> </div> </div> Detroit Finland Reality Fri, 03 Jul 2015 02:25:00 +0000 Tyler Durden 509208 at Chinese Government "Losing Control": Stocks Are Collapsing, Hitting New Bear Market Lows <p>As one local reporter put it, despite being told not to say anything negative, <strong><em>"the government appeared to have lost its ability to manage the market." </em></strong>Chinese stocks are down 4-5% at the open, pressing new cycle lows with Shenzhen and CHINEXT now down 25% from last week. </p> <p><a href="">As The South China Morning Post reports</a>, many investors said the government was at least partly to blame for the collapse because it encouraged them to go into the market - <strong>for months, state-owned media have issued daily commentaries to encourage people to load up on shares.</strong></p> <p>And now the payback: even more utter carnage:</p> <p><a href=""><img src="" width="600" height="315" /></a></p> <p>&nbsp;</p> <p>The longer-term perspective:</p> <p><a href=""><img src="" style="width: 600px; height: 311px;" /></a></p> <p>Leading to the local version of "brokers with hands on their faces":</p> <p><img src="" style="width: 600px; height: 401px;" /></p> <p><a href=""><em>As The South China Morning Post explains</em></a>, <strong>a series of lifelines from Beijing failed to stop the slide in the mainland's stock market on Thursday, with the key Shanghai Composite Index closing below the critical 4,000 mark for the first time in almost three months.</strong></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Analysts warned that the nation's leadership would pay dearly if it failed to stabilise the market and prevent millions of small investors from losing their life savings.</p> <p>&nbsp;</p> <p><strong>"The government's response to the fall confirms that it will use all the resources at its disposal to influence the market when things do not go the way it wants and potentially puts its legitimacy at risk," said Steve Tsang, chair of the School of Contemporary Chinese Studies at the University of Nottingham.</strong></p> <p>&nbsp;</p> <p>The China Securities Regulatory Commission said last night that the stock market had recorded a significant drop, and the commission would launch an investigation into suspected market manipulation. Those suspected of committing an offence would be handed over to public security agencies.</p> <p>&nbsp;</p> <p>...</p> <p>&nbsp;</p> <p>Since falling off a seven-year peak of 5,166.35 on June 12, the Shanghai index has lost about a quarter of its value, with the mainland equity markets heading into bear territory after fears of a tightening of margin lending induced a sharp correction.</p> <p>&nbsp;</p> <p>Turnover in Shanghai dropped to 732 billion yuan (HK$926 billion) on Thursday, down from 1.015 trillion yuan on Wednesday. More than 1,400 mainland stocks finished down, with large state-owned banks and oil majors the big exceptions. Shanghai-traded PetroChina rose 8.8 per cent to 11.68 yuan, while Sinopec gained 6 per cent to 7.18 yuan.</p> <p>&nbsp;</p> <p><strong>All four big state-owned banks posted major gains as investors looked for safe havens.</strong></p> <p>&nbsp;</p> <p>"The deleveraging process in the stock markets and the over-the-counter platforms trading shares and futures is ongoing, leading to a big price movement regardless of Beijing's proactive monetary policies," said Ben Kwong Man-bun, the head of research at brokerage KGI Asia.</p> <p>&nbsp;</p> <p>Those proactive policies included a fourth round of interest-rate cuts last weekend and the reduction in reserve requirements for some banks.</p> <p>&nbsp;</p> <p>Many investors said the government was at least partly to blame for the collapse because it encouraged them to go into the market. For months, state-owned media have issued daily commentaries to encourage people to load up on shares.</p> <p>&nbsp;</p> <p><strong>Tsang said the government appeared to have lost its ability to manage the market.</strong></p> <p>&nbsp;</p> <p>"Will the government be able to change market sentiment if its initial interventions prove ineffective? Time will tell," he said.</p> <p>&nbsp;</p> <p>The central bank said it would pursue a prudent monetary policy and keep the economy growing at a "healthy" rate.</p> </blockquote> <p>And considering the HSBC Service PMI just plunged from 53.5 to 51.8, the lowest print of the year, that may be complicated especially if the government is truly helpless to halt the crashing stock market,</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="512" height="342" alt="" src="" /> </div> </div> </div> Bear Market China Equity Markets Market Manipulation Market Sentiment Monetary Policy Shenzhen Yuan Fri, 03 Jul 2015 02:02:54 +0000 Tyler Durden 509212 at China Completes Airstrip On Reef, Builds Military Facility On Second Island <p>China has reportedly completed an airstrip on Fiery Cross Reef, one of the islands Beijing has constructed in the South China Sea. </p> <p>Back in April, <a href="">satellite images</a> which appeared to show that construction had commenced on the runway set off alarm bells in the US and among Washington’s regional allies in the South Pacific.&nbsp;</p> <p>Since then, China’s land reclamation efforts in the disputed waters around the Spratlys have sparked an international furor and touched off a war of words between Washington and Beijing, with the Pentagon assuring China that the US Navy will continue to operate as before in the region and the PLA claiming it will enforce a no-fly zone over the islands “if threatened.”&nbsp;</p> <p>Although China recently claimed to have largely finished the dredging effort, construction atop the islands is moving forward and as Reuters reports, the airstrip on Fiery Cross, first spotted some three months ago, looks to be complete. Here’s <a href="">more</a>:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong><em>China has almost finished building a 3,000-meter-long (10,000-foot) airstrip on one of its artificial islands in the disputed Spratly archipelago of the South China Sea, new satellite photographs of the area show.</em></strong></p> <p>&nbsp;</p> <p><em>A U.S. military commander had told Reuters in May that the airstrip on Fiery Cross Reef could be operational by year-end, although the June 28 images suggest that could now be sooner.</em></p> <p>&nbsp;</p> <p><em><strong>The airstrip will be long enough to accommodate most Chinese military aircraft,</strong> security experts have said, giving Beijing greater reach into the heart of maritime Southeast Asia.</em></p> <p>&nbsp;</p> <p><em>The latest photographs were taken by satellite imagery firm DigitalGlobe and published by the Asia Maritime Transparency Initiative (AMTI) at the Center for Strategic and International Studies in Washington. (</em></p> <p>&nbsp;</p> <p><strong><em>AMTI said the airstrip was being paved and marked, while an apron and taxiway had been added adjacent to the runway.</em></strong></p> <p>&nbsp;</p> <p><em>Two helipads, up to 10 satellite communications antennas and one possible radar tower were visible on Fiery Cross Reef, it said. <strong>The images also showed a Chinese naval vessel moored in a port.</strong></em></p> </blockquote> <p><span style="font-size: 1em; line-height: 1.3em;">Here's the latest image and commentary on Fiery Cross <a href="">from AMTI</a>...</span></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>As of June 28, 2015, China is expanding the construction of its island facilities on Fiery Cross Reef. <strong>The construction of a 3,000 meter airstrip is nearly complete. China continues to pave and mark the airstrip and an apron and taxiway have been added adjacent to the runway. </strong>Prior photos showed that a small lake existed in the middle of the island; this has since been filled in. Personnel are now visible walking around the island.A sensor array has also been constructed and additional support facilities are being built. <strong>Meanwhile, a naval vessel is moored in the port. </strong>The size of the island is estimated at 2,740,000 square meters. The island has a partially-developed port with nine temporary loading piers. The harbor area is approximately 630,000 square meters. Two helipads, up to 10 satellite communications antennas, and one possible radar tower are also visible. Also visible are two lighthouses and one cement plant.</em></p> <p>&nbsp;</p> <p><em><a href=""><img src="" width="600" height="364" /></a><br /></em></p> <p>&nbsp;</p> </blockquote> <p>...and here's more on Johnson South Reef</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>South Johnson Reef was one of the first facilities to finish principal land reclamation. Since the seawalls have gone up, China has added a small port with limited berth space and two loading stations. The harbor area is approximately 3,000 square meters with an entrance 125 meters wide. There are two helipads on the reef and up to three satellite communications antennas. <strong>A large multi-level military facility is in the center of the reef with two possible radar towers under construction.</strong> Up to six security and surveillance towers are being built with four possible weapons towers also under construction. Agricultural facilities, a lighthouse, and a possible solar farm with 44 panels, in addition to two wind turbines, have been sighted.</em></p> <p>&nbsp;</p> <p><em><a href=""><img src="" width="600" height="442" /></a><br /></em></p> </blockquote> <p><span style="font-size: 1em; line-height: 1.3em;">As for the Chinese foreign ministry's contention that Beijing's construction efforts are nearly complete, that remains to be seen and indeed, Reuters notes that construction is continuing on two nearby islets. Their names: "Subi" and "<strong>Mischief</strong>".</span></p> <p><span style="font-size: 1em; line-height: 1.3em;"><img src="" width="549" height="349" /></span></p> <p><em><span style="font-size: 1em; line-height: 1.3em;">(Photo taken from Philippine military plane appears to show mischief at Mischief)</span></em></p> Archipelago China Reuters Transparency Fri, 03 Jul 2015 01:50:00 +0000 Tyler Durden 509204 at Government Trolls Are Using "Psychology-Based Influence Techniques" On YouTube, Facebook And Twitter <p><a href=""><em>Submitted by Michael Snyder via The End of The American Dream blog</em></a>,</p> <p>Have you ever come across someone on the Internet that you suspected was a paid government troll?&nbsp; Well, there is a very good chance that you were not imagining things.&nbsp;<strong> Thanks to Edward Snowden, we now have solid proof that paid government trolls are using &ldquo;psychology-based influence techniques&rdquo; on social media websites such as YouTube, Facebook and Twitter.&nbsp;</strong> Documents leaked by Snowden also reveal that government agents have been conducting denial-of-service attacks, flooding social media websites with thinly veiled propaganda and have been purposely attempting to warp public discourse online.&nbsp; If we do not stand up and object to this kind of Orwellian behavior, it is only going to get worse and worse.</p> <p>In the UK, the Joint Threat Research Intelligence Group (JTRIG) is a specialized unit within the Government Communications Headquarters (GCHQ).&nbsp; If it wasn&rsquo;t for Edward Snowden, we probably still would never have heard of them.&nbsp; This particular specialized unit is engaged in some very &ldquo;questionable&rdquo; online activities.&nbsp; The following is an excerpt from a recent piece&nbsp;<a href="" target="_blank" title="by Glenn Greenwald and Andrew Fishman">by Glenn Greenwald and Andrew Fishman</a>&hellip;</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Though its existence was secret until last year, JTRIG quickly developed a distinctive profile in the public understanding, after documents from NSA whistleblower Edward Snowden <a href="" target="_blank" title="revealed">revealed</a> that <strong>the unit had engaged in &ldquo;dirty tricks&rdquo; like deploying sexual &ldquo;honey traps&rdquo; designed to discredit targets, launching denial-of-service attacks to shut down Internet chat rooms, pushing veiled propaganda onto social networks and generally <a href="" target="_blank" title="warping discourse">warping discourse</a> online</strong>.</p> </blockquote> <p>We are told that JTRIG only uses these techniques to go after the &ldquo;bad guys&rdquo;.</p> <p>But precisely who are the &ldquo;bad guys&rdquo;?</p> <p>It turns out that their definition of who the &ldquo;bad guys&rdquo; are is quite broad.&nbsp; Here is more from <a href="" target="_blank" title="Glenn Greenwald and Andrew Fishman">Glenn Greenwald and Andrew Fishman</a>&hellip;</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>JTRIG&rsquo;s domestic and law enforcement operations are made clear. The report states that the controversial unit &ldquo;currently collaborates with other agencies&rdquo; including the Metropolitan police, Security Service (MI5), Serious Organised Crime Agency (SOCA), Border Agency, Revenue and Customs (HMRC), and National Public Order and Intelligence Unit (NPOIU). The document highlights that key JTRIG objectives include &ldquo;<strong>providing intelligence for judicial outcomes</strong>&rdquo;; monitoring &ldquo;<strong>domestic extremist groups</strong> such as the English Defence League <strong>by conducting online HUMINT</strong>&rdquo;; &ldquo;<strong>denying, deterring or dissuading</strong>&rdquo; criminals and &ldquo;<strong>hacktivists</strong>&rdquo;; and &ldquo;deterring, disrupting or degrading online consumerism of stolen data or child porn.&rdquo;</p> </blockquote> <p>Particularly disturbing to me is the phrase &ldquo;domestic extremist groups&rdquo;.&nbsp; What does someone have to say or do to be considered an &ldquo;extremist&rdquo;?&nbsp; For example, the English Defence League is a non-violent street protest movement in the UK that is strongly against the spread of radical Islam and sharia law in the UK.&nbsp; So if they are &ldquo;extremists&rdquo;, how many millions upon millions of ordinary citizens in the United States would fit that definition?</p> <p>When conducting operations against &ldquo;extremists&rdquo;, psychology-based influence techniques are among the tools that JTRIG uses to combat them online.&nbsp; The following comes from one of the documents that was posted by Greenwald and Fishman&hellip;</p> <p><a href="" target="_blank"><img alt="Psychology-Based Influence Techniques" class="aligncenter size-large wp-image-5362" height="249" src="" width="460" /></a></p> <p>In other words, these government trolls try to mess with people&rsquo;s minds.</p> <p>And here is another document that was posted by Greenwald and Fishman that talks about how JTRIG uses YouTube, Facebook and Twitter to accomplish their goals&hellip;</p> <p><a href="" target="_blank"><img alt="Government Trolls" class="aligncenter size-large wp-image-5363" height="482" src="" width="460" /></a></p> <p>It is very disturbing to think that some of the people that we may be interacting with on YouTube, Facebook and Twitter are actually paid government agents that are purposely trying to feed us propaganda and misinformation.</p> <p>And of course this kind of thing does not just happen in the United Kingdom.&nbsp; In Canada, it has been publicly admitted that the government uses paid trolls to warp Internet discourse.&nbsp; The following comes from <a href="" target="_blank" title="Natural News">Natural News</a>&hellip;</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>You&rsquo;ve probably run into them before</strong> &mdash; those seemingly random antagonizers who always end up diverting the conversation in an online chat room or article comment section away from the issue at hand, and towards a much different agenda. Hot-button issues like illegal immigration, the two-party political system, the &ldquo;war on terror&rdquo; and even alternative medicine are among the most common targets of such attackers, known as internet &ldquo;trolls&rdquo; or &ldquo;shills,&rdquo; who in many cases are nothing more than <strong>paid lackeys hired by the federal government</strong> and other international organizations <strong>to sway and ultimately control public opinion</strong>.</p> <p>&nbsp;</p> <p>Several years ago, Canada&rsquo;s <em>CTV News</em> aired a short segment about how its own government <strong>had been exposed</strong> for hiring secret agents to monitor social media and track online conversations, as well as the activities of certain dissenting individuals. This report, which in obvious whitewashing language referred to such activities as the government simply &ldquo;<strong>weighing in and correcting</strong>&rdquo; allegedly false information posted online, basically admitted that the Canadian government had assumed the role of <strong>secret online police</strong>.</p> </blockquote> <p>You can actually watch a video news report about what is happening up in Canada <a href=";" target="_blank" title="right here">right here</a>.</p> <p>Needless to say, the U.S. government is also engaged in this kind of activity as well.&nbsp; For instance, the U.S. government has actually been caught&nbsp;<a href="" target="_blank" title="manipulating discourse on Reddit">manipulating discourse on Reddit</a> and <a href="" target="_blank" title="editing Wikipedia">editing Wikipedia</a>.&nbsp; When it comes to spying, there is nobody that is off limits for our spooks.&nbsp; It just came out recently that we <a href="" target="_blank" title="even spied on three French presidents">even spied on three French presidents</a>, and they are supposed to be our &ldquo;friends&rdquo;.</p> <p>And just like the UK, the U.S. government has a very broad definition of &ldquo;extremists&rdquo;.&nbsp; This has especially been true since Barack Obama has been in the White House.&nbsp; If you doubt this, please see my previous article entitled &ldquo;<a href="" target="_blank" title="72 Types Of Americans That Are Considered ‘Potential Terrorists’ In Official Government Documents">72 Types Of Americans That Are Considered &lsquo;Potential Terrorists&rsquo; In Official Government Documents</a>&ldquo;.</p> <p><strong>All of this is very disturbing.&nbsp; </strong><em>Why can&rsquo;t they just leave us alone and let us talk to one another?&nbsp; Why do they have to spy on everything that we do and purposely try to manipulate public discourse?&nbsp; Why do they have to be such control freaks?</em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="346" height="300" alt="" src="" /> </div> </div> </div> Barack Obama SPY Twitter Twitter United Kingdom White House Fri, 03 Jul 2015 01:15:00 +0000 Tyler Durden 509207 at Shale Drillers About To Be "Zero Hedged" As Loss Protection Expires <p>In many ways, the US shale industry is emblematic of why failing to normalize monetary policy after seven years of largesse can be extremely dangerous. </p> <p>As discussed at length in these pages and then subsequently everywhere else, access to cheap cash via capital markets allows otherwise insolvent producers to keep drilling even as prices collapse, creating what are <a href="">effectively zombie companies</a> (to use Matt King’s words) on the way to delaying the Schumpeterian endgame and embedding an enormous amount of risk in HY credit by flooding the market with supply just as demand from investors (who are delirious from hunger after being starved of yield by the Fed) peaks and secondary market liquidity continues to dry up.&nbsp;</p> <p>This dynamic has served to create a supply glut in a number of industries and has suppressed commodity prices in a self-feeding deflationary loop. </p> <p>Thanks to <a href="">SEC rules</a> on how drillers are required to value their reserves, producers are effectively forced to overstate the value of their O&amp;G businesses by nearly two-thirds, which can lead unsophisticated investors who don’t bother to read the 10K fine print to believe that the businesses are healthier than they actually are. </p> <p>Furthermore, the <a href="">next round of revolver raids</a> for the industry isn’t due until October, meaning investors may also believe the industry has easier access to liquidity than it actually does. As a reminder:</p> <p><a href=""><img src="" width="520" height="162" /></a></p> <p>As if all of the above weren’t enough, there’s yet another reason why the shale default cascade has thus far been forestalled, giving many the impression that perhaps a “crude” awakening (pardon the terrible pun) has been averted: hedges. </p> <p>Here’s <a href="">Bloomberg with more</a> on why some US shale drillers may soon be <em>zero hedged</em> (ahem):</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>The insurance protecting shale drillers against plummeting prices has become so crucial that for one company, SandRidge Energy Inc., payments from the hedges accounted for a stunning 64 percent of first-quarter revenue.</em></p> <p>&nbsp;</p> <p><strong><em>Now the safety net is going away.</em></strong></p> <p>&nbsp;</p> <p><em>The insurance that producers bought before the collapse in oil -- much of which guaranteed minimum prices of $90 a barrel or more -- is expiring. As they do, investors are left to wonder how these companies will make up the $3.7 billion the hedges earned them in the first quarter after crude sunk below $60 from a peak of $107 in mid-2014.</em></p> <p>&nbsp;</p> <p><em>“A year ago, you could hedge at $85 to $90, and now it’s in the low $60s,” said Chris Lang, a senior vice president with Asset Risk Management, a hedging adviser for more than 100 exploration and production companies. “Next year it’s really going to come to a head.”</em></p> <p>&nbsp;</p> <p><strong><em>The hedges staved off an acute shortage of cash for shale companies and helped keep lenders from cutting credit lines, many of which are up for renewal in October. With drillers burdened by interest payments on $235 billion of debt, $89 billion of it high-yield, a U.S. regulator has warned banks to beware of the “emerging risk” of lending to energy companies.</em></strong></p> <p>&nbsp;</p> <p><em><span style="text-decoration: underline;"><strong>Payments from hedges accounted for at least 15 percent of first-quarter revenue at 30 of the 62 oil and gas companies in the Bloomberg Intelligence North America Exploration and Production Index.</strong></span> Revenue, already down 37 percent in the last year, will fall further as drillers cash out contracts that paid $90 a barrel even when oil fell below $44.</em></p> <p>&nbsp;</p> <p><em>For SandRidge and other drillers, the hedges, required by some lenders, gave them enough time to cut spending. Costs in shale fields have fallen by 20 to 30 percent and productivity has increased as producers moved rigs to the most prolific regions. Producers were able to raise about $44 billion in equity and debt in the first quarter, according to UBS AG.</em></p> <p>&nbsp;</p> <p><em><strong>“That postponed the day of reckoning,” </strong>said Carl Tricoli, co-founder of private-equity firm Denham Capital Management.</em></p> <p>&nbsp;</p> <p><em>At Goodrich Petroleum Corp., <strong>hedges accounted for 35 percent of revenue in the first three months of 2015.</strong> Most of its insurance runs out at the end of the year, company records show.</em></p> </blockquote> <p>In short, the last line of defense against terminal cash burn for the beleagured US shale complex is about to fall and when it does, it's going to take bank credit lines down with it. </p> <p>This means October is the expiration date for heavily indebted US drillers and perhaps for HY credit as well, because once the defaults begin in earnest and HY spreads start to blow out, the BTFD-ing retail crowd will head for the exits, triggering a very non-diversifiable, unidirectional flow for bond fund managers who will then be forced to hold their noses and dive into the ever-thinner secondary corporate credit market. </p> <p>It is precisely at that point when everyone's worst nightmares about shrinking dealer inventories and illiquid credit markets will suddenly be realized.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="465" height="261" alt="" src="" /> </div> </div> </div> Bond Capital Markets Crude default Monetary Policy Risk Management Fri, 03 Jul 2015 00:40:00 +0000 Tyler Durden 509203 at Trading Stocks - It's Easier Than Farmwork... And Porn <p><a href="">While the Chinese recently found out that making money from trading is, in fact, not "easier than farmwork,"</a> it appears in America, trading stocks is back en vogue... <strong><em>Meet 2014 Playmate of the Year, Kennedy Summers, who has given it all up to become a day trader...</em></strong></p> <p>&nbsp;</p> <p><iframe src="" width="560" height="315" frameborder="0"></iframe></p> <p><em>Brings to mind the terms "all in" and "tight stops"...</em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="336" height="309" alt="" src="" /> </div> </div> </div> Fri, 03 Jul 2015 00:33:05 +0000 Tyler Durden 509197 at JPMorgan Banker: "We Can't Make Money Anymore..." <p><a href=""><em>Submitted by Simon Black via Sovereign Man blog</em></a>,</p> <p>Yesterday over coffee, a friend of mine leaked the news that JP Morgan&rsquo;s private banking division here in Singapore is going to start charging negative interest rates.</p> <p>I almost fell out of my chair.</p> <p>He&rsquo;s a successful hedge fund manager and one of their best customers. So when he received the notice, he rang up his private banker and demanded to know why.</p> <p><strong>Between ridiculously low interest rates (banks are closing loans here for 0.9% or lower) and the increasing costs of compliance, &ldquo;we can&rsquo;t make money anymore&hellip;&rdquo; was the response.</strong></p> <p>It certainly paints a clear picture of how screwed up the entire financial system is.</p> <p><strong>Compliance is a major component in this. </strong>Bankers around the world are buried up to their eyeballs in paperwork and regulations now.</p> <p><u><strong>They can&rsquo;t make a move or approve a single transaction without first doing anti-money laundering, terrorist financing, and tax evasion due diligence.</strong></u></p> <p>Imagine it like this: your banker rings you up tomorrow and says,</p> <p>&ldquo;The government of China requires us to have all of our depositors fill out this paperwork. So I need you to send this form back to me ASAP&hellip;&rdquo;</p> <p>You&rsquo;d probably think it was a joke.</p> <p>Or at a minimum think, &ldquo;Wait, what? I&rsquo;m not Chinese. You&rsquo;re not a Chinese bank. Who cares about some stupid Chinese regulation?&rdquo;</p> <p>And you&rsquo;d be right.</p> <p><strong>Except that&rsquo;s precisely what the United States is doing right now.</strong></p> <p><u><strong>All over the world, bankers are contacting their customers and forcing them to fill out paperwork to comply with idiotic US government regulations. Even when there&rsquo;s no connection to the US.</strong></u></p> <p>Here in Singapore, the bankers are completely miserable about it.</p> <p>They&rsquo;re so angry for having to call customers and say, &ldquo;Yes I know you&rsquo;re in India, and I know we&rsquo;re in Singapore, and I know you&rsquo;ve been a customer for 10 years. But you still have to fill out this US government form or else we&rsquo;ll close your account.&rdquo;</p> <p><u><strong>It&rsquo;s ridiculous&ndash; all of this because the US government is bankrupt.</strong></u></p> <p>A few years ago they passed the Foreign Account Tax Compliance Act (FATCA)&ndash; a major part of their crusade to stamp out tax evasion and bring in more tax revenue.</p> <p>FATCA is now in full force. Banks all over the world have been forced to enter into information sharing agreements with the IRS, meaning that they have to report on all of their customers and force them to fill out meaningless forms.</p> <p><strong>Needless to say, this costs a lot of money.</strong></p> <p>If you own a business, you can just imagine how frustrating and expensive it would be to have your employees toil away on senseless paperwork instead of&hellip; you know, doing real business.</p> <p>The US government tells us that all of these disclosure programs have brought in about $6.5 billion in tax revenue.</p> <p><strong>Yet the costs of compliance are estimated to cost at least $8 billion, with some estimates over 10x higher.</strong></p> <p>Now that&rsquo;s a neat trick. Uncle Sam gets the money and passes off the costs to everyone else.</p> <p>And those who don&rsquo;t comply with America&rsquo;s rules are destroyed.</p> <p>The most blatant example of this was last year, when a French bank was fined $9 billion for doing business with countries that Uncle Sam didn&rsquo;t like.</p> <p>Bear in mind, this was a French bank, not an American bank.</p> <p>They violated no French laws. Yet they had to pay the US government $9 billion for doing business with places like Cuba.</p> <p>(Ironically, Cuba is now BFFs with the United States, but it&rsquo;s not like the bank is going to get a refund.)</p> <p><strong>More recently, the US government destroyed an Andorran bank that was accused of weak anti-money laundering controls.</strong></p> <p>And a few years ago they took down the oldest private bank in Switzerland.</p> <p>Every bank in the world has seen these incidents, and they&rsquo;re scared. They could be next.</p> <p>And that&rsquo;s why you can&rsquo;t get a single financial transaction done anymore without first submitting a mountain of paperwork to prove that you&rsquo;re not a terrorist. Or financing terrorists. Or laundering money. Or doing business with the Axis of Evil.</p> <p><u><strong>Even outside of banking it has become utterly ridiculous.</strong></u></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>A friend of mine here runs one of the largest bullion depositories in Singapore; he wanted to buy some raw gold and have it made into bars, so he contacted a refiner.</p> <p>&nbsp;</p> <p>The refiner said, &ldquo;Sure no problem. I just need you to send us some compliance documentation before we get started.&rdquo;</p> <p>&nbsp;</p> <p>Then he sent a list of no fewer than 22 items that he needed to submit&ndash; copies of licenses, passports, certificates, etc.</p> <p>&nbsp;</p> <p><strong>22 items. Just to have a refiner make some gold bars. Ridiculous.</strong></p> </blockquote> <p>So obviously they&rsquo;re not going to waste their time. Which means there&rsquo;s some business that could have been done, but won&rsquo;t, simply because of the compliance costs.</p> <p><strong>The US government has really screwed the world on this. Paperwork is the priority. Not business.</strong></p> <p><u><strong>And all because America is bankrupt.</strong></u></p> <p>This trip to Singapore has been very eye-opening for me as I&rsquo;m just now starting to understand how much people within the financial system despise the US government.</p> <p><strong>They feel like they&rsquo;re being forced at gunpoint to be volunteer spies and tax collectors, simply because US politicians have been financially irresponsible.</strong></p> <p>And to me, it&rsquo;s the biggest sign yet that America&rsquo;s financial dominance is coming to an end. They&rsquo;ve essentially engineered it themselves by alienating the whole world.</p> <p><strong>The transition isn&rsquo;t going to be smooth. And it won&rsquo;t happen overnight. But there will come a time, and likely soon, when the United States gets displaced.</strong></p> <p>And the rest of the world can hardly wait.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="193" height="163" alt="" src="" /> </div> </div> </div> China ETC India Switzerland Tax Revenue Fri, 03 Jul 2015 00:20:00 +0000 Tyler Durden 509198 at 17 Year Federal Judge Savages 'War On Drugs': "This Is A War I Saw Destroy Lives... Makes No Sense" <p><a href=""><em>Submitted by Mike Krieger via Liberty Blitzkrieg blog</em></a>,</p> <p><strong>The “war on drugs” is one of the most irrational, idiotic and destructive&nbsp;public policy failures in American history, and that’s saying a lot.</strong> I’ve covered this topic many times <a href="">at Liberty Blitzkrieg</a>, but nothing spells it out like the repentant words of a former federal judge, who admittedly ruined countless lives for no reason.</p> <p>From <a href="">the <em>Atlantic</em></a>:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>ASPEN, Colo.—Former Federal Judge Nancy Gertner was appointed to the federal bench by Bill Clinton in 1994. She presided over trials for 17 years. And Sunday, she stood before a crowd at The Aspen Ideas Festival to denounce most punishments that she imposed.</em></p> <p>&nbsp;</p> <p><em><strong>Among 500 sanctions that she handed down, “80 percent I believe were unfair and disproportionate,”</strong> she said. “I left the bench in 2011 to join the Harvard faculty to write about those stories––to write about how it came to pass that I was obliged to sentence people to terms that, frankly, made no sense under any philosophy.”</em></p> <p>&nbsp;</p> <p><em>She went on to savage the War on Drugs at greater length.&nbsp;“This is a war that I&nbsp;saw&nbsp;destroy lives,” she said. “It eliminated a generation of African American men, covered our racism in ostensibly neutral guidelines and mandatory minimums… and created an intergenerational problem––although I wasn’t on the bench long enough to see this, we know that the sons and daughters of the people we sentenced are in trouble, and are in trouble with the criminal justice system.”</em></p> <p>&nbsp;</p> <p>She added that the War on Drugs eliminated the political participation of its casualties. “We were not leveling cities as we did in WWII with bombs, but with prosecution, prison, and punishment,” she said, explaining that her life’s work is now focused on trying to reconstruct the lives that she undermined––as a general matter, by advocating for reform, and as a specific project: she is trying to go through the list of all the people she sentenced to see who deserves executive clemency.</p> </blockquote> <p>Enough is enough. Let’s end this stupidity once and for all.</p> <p>*&nbsp; *&nbsp; *</p> <p><a href=""><img src="" width="600" height="448" /></a></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="901" height="673" alt="" src="" /> </div> </div> </div> Fri, 03 Jul 2015 00:05:00 +0000 Tyler Durden 509206 at Greek Banks To Run Out Of Physical Cash "In A Matter Of Days" <p>Over the past several weeks we’ve documented the acute cash crunch that’s crippled the Greek banking sector and ultimately brought the country to its knees.&nbsp;</p> <p>Since March, Greek banks have subsisted on a slow liquidity drip administered by the ECB through the Bank of Greece. Once Syriza swept to power on an anti-austerity platform in January, it quickly became clear to Mario Draghi that accepting collateral backed by the full faith and credit of the new Greek government in exchange for cash loans wasn’t a safe bet and so, the ECB shifted the burden to the Bank of Greece, making it more expensive for the Greek banking sector to obtain emergency funding.&nbsp;</p> <p>As the crisis unfolded and Athens’ negotiations with creditors became increasingly contentious, Greek banks began to bleed cash. Eventually it became clear that the banks were relying entirely on the Eurosystem to meet outflows.</p> <p> Meanwhile, banknotes in circulation surged, as <strong>cash usage jumped 44%</strong>, prompting Barclays to note that “the amount of banknotes in excess of the quota for Greece represents a liability of the BoG to the Eurosystem.” Essentially, we said, Greece was quietly printing billions of euros. </p> <p>Now, with the ECB holding steady on the ELA cap and the banking system still hemorrhaging deposits despite the imposition of capital controls, <strong>Greek banks are running out of cash — literally.</strong> </p> <p>WSJ <a href="">has more</a>:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>How long the remaining cash lasts and how unsettled Greeks become will be big factors in Sunday’s referendum on creditors’ demands for more austerity in exchange for more bailout funds. The tighter the squeeze, the more Greeks might vote “yes” to reconcile with creditors, analysts say.</em></p> <p>&nbsp;</p> <p><strong><em>As of Wednesday, Greece’s banking system had about €1 billion in cash left, according to a person familiar with the situation. Even with the €60-a-day limit on ATM withdrawals from Greek’s closed banks, “it’s a matter of a few days” until the money runs out, this person said.</em></strong></p> <p>&nbsp;</p> <p><em>By Wednesday, many ATMs in central Athens had constant lines of people waiting to withdraw their daily limit. The crunch has suffused the economy. Merchants report lower spending. <strong>Wholesalers can’t pay for supplies. Importers’ foreign counterparts won’t trade.</strong></em></p> <p>&nbsp;</p> <p><em>Greece’s cash crunch hit small merchants first. They are less able to get credit from their suppliers, especially those dealing in perishable products that are continually imported. Christos Georgiopoulos owns a gourmet supermarket in Plaka, a picturesque Athens neighborhood frequented by tourists. He sells Champagne and Russian crab legs.</em></p> <p>&nbsp;</p> <p><em>Nobody is buying. “I haven’t had a single customer in two days,” he said Wednesday. He is shutting down his shop and says he doesn’t know when he will reopen. He gave some crab legs to his workers and is taking some home. “I haven’t paid my staff and don’t know if and when I will,” he added.</em></p> <p>&nbsp;</p> <p><em>Cash is king. “Now you have almost every cardholder going to the ATM every day,” said Stefanos Kotronakis of payment-processing provider ACI Worldwide in Athens, which operates systems that drive ATMs. “Cash has a higher value now.”</em></p> <p>&nbsp;</p> <p><em>Ellie Tzortzi, a partner at a Vienna-based digital-design and market research firm, is flying to Athens this weekend to pay her employees here in cash. <strong>“The last time I traveled with a wad of cash to pay someone’s salary was 10 years ago in Kosovo,” she said.</strong></em></p> </blockquote> <p>And AFP has <a href="">more color</a> on the crisis facing Greek businesses:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>Greece's dive into financial uncertainty is forcing struggling businesses to take unusual steps to survive, including hoarding euros in cash.</em></p> <p>&nbsp;</p> <p><em>The government's announcement it was closing banks this week to stem a panicked rush to withdraw money, left many ordinary Greeks high and dry.</em></p> <p>&nbsp;</p> <p><em>"I put aside as much cash as possible" in advance, said an Athens baker Taso Paraskevopoulos, who had expected the controls to be imposed as the country staggered towards a default on a debt repayment to the International Monetary Fund.</em></p> <p>&nbsp;</p> <p><em>"I sometimes need hundreds of euros a day to pay suppliers and expenses, I can't allow myself to be caught short," he said, making it quite clear he blames the radical left ruling party SYRIZA for the crisis.</em></p> <p>&nbsp;</p> <p><em>The capital controls forbid money transfers abroad, except by express permission from the Finance Ministry.</em></p> <p>&nbsp;</p> <p><em><strong>Businesses which import their raw materials have been the hardest hit,</strong> says Vassilis Korkidis, head of the National Confederation of Hellenic Commerce (ESEE).</em></p> <p>&nbsp;</p> <p><em><strong>As unease spreads, getting ones hands on cash has become a sort of national sport, </strong>with businesses from restaurants to car mechanics telling customers paying by card is no longer an option.</em></p> <p>&nbsp;</p> <p><em>And what if the crisis drags on? asked Sotiris Papantonopoulos, head of online insurance broker Insurancemarket, which employs 70 people.</em></p> <p>&nbsp;</p> <p><em>Launched in 2011 despite the financial crisis, the company was in expansion and had intended to take on other 60 people in the coming months, "but now everything is on hold," said Papantonopoulos, visibly upset after having to ask some of his employees not to come to work this week.</em></p> <p>&nbsp;</p> <p><strong><em>"If the measures remain in place for two months, well close, it's over."</em></strong></p> </blockquote> <p>So there you have it. The unthinkable — which we have of course been warning about for months — is unfolding before Europe's very eyes.&nbsp;</p> <p>The crisis has officially moved beyond the negotiating table and has now manifested itself in a shortage of physical banknotes and the inability of Greek businesses to stock the shelves, leaving all of those who accused the tin foil hat crowd of fearmongering to look on in horror as the ATMs go dark, imports grind to a halt, and Greece rapidly descends into the Third World. </p> <p>This is no longer speculation, it is a stark reality, and as&nbsp;Constantine Michalos, the president of the Athens Chamber of Commerce and Industry told WSJ, <strong>"in one week, two weeks, three weeks, it will be finished.”</strong></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="513" height="302" alt="" src="" /> </div> </div> </div> Barclays Creditors default Greece International Monetary Fund Reality Thu, 02 Jul 2015 23:30:00 +0000 Tyler Durden 509199 at Church Elder Defrauds Investors With "Holy Spirit" Day Trading System <p><a href="">Submitted by Daniel Drew via,</a></p> <p><img alt="Holy Spirit" border="1" src="" style="width: 200px; height: 215px;" title="Holy Spirit" /></p> <p><strong>While it remains unclear if the Holy Spirit was behind these trades, one thing is for sure: When Charles Erickson&#39;s investors opened their recent statements, they said, &quot;Holy Shit!&quot;</strong></p> <p>As reported by <a href="" target="_blank">Ponzi Tracker</a>, Charles Erickson of Uxbridge, Massachusetts was looking for a way to supplement his retirement income. Despite having no day trading experience, Erickson jumped head first into the E-Mini Russell 2000 futures contract. In testimony provided to the Massachusetts Securities Division, he said,</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>It&#39;s going to sound a little strange to you, but ... <strong><span style="text-decoration: underline;">I believe the Holy Spirit showed me this system</span></strong>.</p></blockquote> <p><strong>Apparently, the machinations of the Holy Spirit are proprietary</strong>. When asked for further disclosure, he said, &quot;I don&#39;t want to give my system away.&quot; However, he certainly had no reservations about letting his investors give their money away. He promised them monthly returns of 4%. It seems like a small number, but annually, that&#39;s about 50%. <strong>The 25 &quot;investors&quot; were convinced, and they gave him $3.5 million</strong>.</p> <p>The plan started unraveling in 2013 when Erickson sustained significant trading losses. He eventually halted payments in September 2014, and in December, he told investors he had &quot;<strong>zero capital and almost zero assets</strong>.&quot; Erickson later disclosed that the &quot;system&quot; did not generate returns every month and that he would use reserves to pay other investors during those situations, which is the definition of a Ponzi scheme.</p> <p>Optimistic investors should consider this as a bump in the road. Eventually, we will see a &quot;<strong>Holy Spirit ETF</strong>&quot; that will work out the kinks in Erickson&#39;s system, and we&#39;ll all be on the road to riches.</p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="186" height="116" alt="" src="" /> </div> </div> </div> Russell 2000 Testimony Thu, 02 Jul 2015 23:00:00 +0000 Tyler Durden 509200 at