en French Government Promises To Deal With Unions "Extremely Firmly" As Fuel Shortages Intensify <p>French police used <strong>water cannons and tear gas to break up a picket</strong> that was blocking access to a large oil refinery in the southern port area of Marseille, as Prime Minister Manuel Valls <a href="">told the unions</a> that <em><strong>&quot;enough is enough.&quot; </strong></em>Valls went on to say that if labor unions continue to picket and disrupt fuel supplies, that they would be dealt with &quot;<span style="text-decoration: underline;">extremely firmly.</span>&quot;</p> <p><a href=""><img height="388" src="" width="600" /></a></p> <p>&nbsp;</p> <p>Valls has changed his tone on the matter, as the <strong>unions have exhibited that they can in fact disrupt fuel supplies around the country</strong>. Unions have been striking and blocking fuel supplies from being delivered ever since the government <a href="">bypassed parliament and enacted unpopular labor reforms </a>earlier this month. Rationing at many of the roughly 12,000 gas stations nationwide has already begun <strong>as the pickets have started to create significant fuel shortages in the country</strong>.</p> <p><a href=""><img height="390" src="" width="600" /></a></p> <p>&nbsp;</p> <p>The government has said that there are enough emergency fuel reserves if necessary, but has taken a firm approach to breaking up the pickets a<strong>s now all 8 French refineries have gone on strike</strong>, and Exxon&#39;s Gravenchon refinery reports being down 50%, <span style="text-decoration: underline;">as it states that the plant isn&#39;t halted but no petroleum is being delivered</span>.</p> <p>CGT union boss Philippe Martinez said that the strikes will continue until the labor law is withdrawn, and that the government was &quot;playing a dangerous game&quot; by refusing to back down on the reforms.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>&quot;We&#39;ll see this through to the finish, to withdrawl of the labor law. This government which has turned its back on its promises and we are <strong>now seeing the consequences.</strong>&quot;</em></p> </blockquote> <p><strong>40 busloads of riot police took part in breaking up the strike outside of the Fos-sur-Mer refineries, which CGT union member Emmanuel Lepine called &quot;unprecedented violence.&quot;,</strong> also noting that the plan to disrupt fuel supplies is working &quot;output is going to fall by at least 50 percent.&quot;</p> <p>As if the disruption in fuel supplies wasn&#39;t enough, the CGT has also called weekly strikes on the SNCF state railways and an open-ended strike on the Paris underground and suburban commuter train networks from June 2, a week befor ethe Euro 2016 soccer tournament opens.</p> <p>Bloomberg has more:</p> <ul> <li><strong>*Prime Minister pledges further state intervention after Fos, near Marseille, unblocked by force</strong></li> <li><strong>*CGT: ALL 8 FRENCH REFINERIES ARE ON STRIKE</strong></li> <li><strong>*Exxon&rsquo;s Gravenchon in Normandy down by &gt;50%</strong></li> <li><strong>*Plant&rsquo;s units not halted but it&rsquo;s not delivering petroleum</strong></li> </ul> <p>Alas, contrary to what Prime Minister Valls would like everyone to believe,<em><strong> it appears that he does not have the situation &quot;<a href="">fully under control.</a>&quot;</strong></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="635" height="413" alt="" src="" /> </div> </div> </div> Exxon Tue, 24 May 2016 16:17:00 +0000 Tyler Durden 561690 at Herbalife First Soars Then Dumps After FTC Settlement Report Is Denied <p><strong>Update: According to CNBC, there will be no imminent settlement report, which just confirms that as we warned in the original post, the NY Post continues to be mostly a source of disinformation and hedge funds peddling their own positions.</strong></p> <p><img src="" width="600" height="443" /></p> <p>The market may be surging again, but that will hardly comfort Bill Ackman who later today is expected to report later today that his hedge <a href="">fund remains roughly 20% YTD</a>, or perhaps even worse following news from the NY Post, that his most hated stock ever, Herbalife, has reached "an agreement in principle with the Federal Trade Commission to settle a years-long probe into whether it was a pyramid scheme", as a result of which the stock is soaring.</p> <p>This follows the company's announcement earlier this month that it was close to a settlement with the FTC. </p> <p>As a reminder, the FTC's probe into whether or not HLF is a pyramid scheme is also the basis for Ackman's massive roughly $1 billion short in the name. If the FTC says no, then Ackman may have no choice but to cover.</p> <p>This is what the <a href="">Post reported</a>:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>An announcement of a deal could come as soon as Tuesday, sources said, although the agreement is not final and could still fall apart. Terms of the settlement — including what could be a sizeable financial penalty — could not be learned. </p> <p>&nbsp;</p> <p>“I do not believe the FTC is requiring a substantial change in the business model,” a source close to the matter said. Herbalife has, though, agreed to pay a hefty fine, the source said. </p> <p>&nbsp;</p> <p>The Los Angeles-based company has been operating under a cloud since Dec. 20, 2012, when hedge fund billionaire Bill Ackman announced a $1 billion bet that Herbalife was a fraud and that its shares would go to zero after regulators found it was a pyramid scheme. </p> <p>&nbsp;</p> <p>The company has strongly denied the accusations. </p> <p>&nbsp;</p> <p>The FTC subsequently opened a probe into the matter as did some state attorneys general.</p> </blockquote> <p>The stock is already trading as if Ackman will have no choice but to cover, and was up 8% on the report (which however we would urge readers to take with 2 grains of salt, coming from a publication with a known axe to grind either for or against Bill Ackman in the past).</p> <p><a href=""><img src="" width="600" height="443" /></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="1399" height="1033" alt="" src="" /> </div> </div> </div> Tue, 24 May 2016 15:57:10 +0000 Tyler Durden 561689 at ObamaCare Isn't Working - These Five Charts Show Why <p><a href=""><em>Submitted by Melissa Quinn via,</em></a></p> <p><span style="font-weight: 400;">Six years ago, President Barack Obama signed the Patient Protection and Affordable Care Act into law. Since then, <strong><em>Americans have seen their premiums increase, a dozen nonprofit insurers have closed their doors and the number of people on the Medicaid rolls has expanded.</em></strong></span></p> <p>Americans nationwide have both praised and cursed the law since the federal and state-run exchanges launched in October 2013.</p> <p>Many credit the president with giving them access to coverage&mdash;the result of Obamacare&rsquo;s provision prohibiting insurers from denying coverage based on pre-existing conditions. Others, meanwhile, have reported high premiums and deductibles, with the cost of their coverage increasing annually.</p> <p><strong>And for some, the cost of premiums has increased enough to leave them choosing between paying for insurance or paying the fine and going without.</strong></p> <p>Here are five graphs charting Obamacare&rsquo;s six-year history.</p> <h2><u><strong>1) The Cost of</strong></u></h2> <p><span style="font-weight: 400;">Obamacare&rsquo;s implementation in October 2013 came with the launch of, the federal health insurance exchange. </span></p> <p><span style="font-weight: 400;">Just six people successfully </span><a href=""><span style="font-weight: 400;">signed up</span></a><span style="font-weight: 400;"> for health insurance on on Oct. 1, 2013, because of massive glitches and failures with the site. In the months that followed the disastrous launch, the Republican-led House of Representatives held numerous hearings to determine why the Obama administration decided to launch the website.</span></p> <p><span style="font-weight: 400;">The Department of Health and Human Services fired CGI Federal, which was originally tasked with building, after the website&rsquo;s launch and signed a new contract with Accenture to rebuild the exchange.</span></p> <p><span style="font-weight: 400;">Though the Obama administration hasn&rsquo;t formally said how much cost the taxpayers, Department of Health and Human Services Secretary Sylvia Mathews Burwell </span><a href=""><span style="font-weight: 400;">said</span></a><span style="font-weight: 400;"> last May that the website cost $834 million. Similarly, a </span><a href=""><span style="font-weight: 400;">report</span></a><span style="font-weight: 400;"> from the Department of Health and Human Services Inspector General put the cost of the exchange at $800 million.</span></p> <p><span style="font-weight: 400;">An </span><a href=""><span style="font-weight: 400;">analysis</span></a><span style="font-weight: 400;"> by Bloomberg Government, though, put the total cost at $2.1 billion. Bloomberg Government took into account budgetary costs for the Internal Revenue Service and other government agencies, as well as contracts reworked to pay for the website.</span></p> <p><a class="disabled" href="" rel="attachment wp-att-255515"><img alt="Graphic: Kelsey Lucas/Visualsey" class="size-full wp-image-255515" src="" style="width: 600px; height: 831px;" /></a></p> <p>&nbsp;</p> <h2><u><strong>2) Obamacare&rsquo;s 2014 Enrollment Numbers</strong></u></h2> <p><span style="font-weight: 400;">According to the Obama administration, 9.25 million consumers enrolled in coverage in 2014 on the federal and state-run exchanges. An analysis of enrollment figures </span><a href=""><span style="font-weight: 400;">conducted</span></a><span style="font-weight: 400;"> by Ed Haislmaier, a senior research fellow in health policy studies at The Heritage Foundation, and </span><span style="font-weight: 400;">Drew Gonshorowski</span><span style="font-weight: 400;">, a senior policy analyst at The Heritage Foundation, found that the majority of those enrollees qualified for Medicaid under Obamacare&rsquo;s loosened eligibility requirements.</span></p> <p><a class="disabled" href="" rel="attachment wp-att-255512"><img alt="Graphic: Kelsey Lucas/Visualsey" class="size-full wp-image-255512" src="" style="width: 601px; height: 483px;" /></a></p> <p>&nbsp;</p> <h2><u><strong>3) Obamacare&rsquo;s Failed Co-Ops</strong></u></h2> <p><span style="font-weight: 400;">The Affordable Care Act allowed for the creation of consumer-operated and oriented plans, or co-ops, that were </span><a href=""><span style="font-weight: 400;">intended</span></a><span style="font-weight: 400;"> to inject competition into areas where consumers had few choices. The Centers for Medicare and Medicaid Services awarded $2.4 billion in start-up and solvency loans to the 23 co-ops that were eventually created.</span></p> <p><span style="font-weight: 400;">Now, 12 of the 23 co-ops that opened their doors in 2013 have </span><a href=""><span style="font-weight: 400;">shuttered</span></a><span style="font-weight: 400;">, and Republicans in Congress are questioning whether the taxpayers will see the $1.2 billion loaned to those failed insurers repaid.</span></p> <p><a class="disabled" href="" rel="attachment wp-att-255509"><img alt="Graphic: Kelsey Lucas/Visualsey" class="size-full wp-image-255509" src="" style="width: 600px; height: 1592px;" /></a></p> <p>&nbsp;</p> <h2><u><strong>4) Obamacare&rsquo;s 2015 Enrollment Numbers</strong></u></h2> <p><span style="font-weight: 400;">Earlier this month, the Centers for Medicare and Medicaid Services </span><a href=""><span style="font-weight: 400;">announced</span></a><span style="font-weight: 400;"> that nearly 8.8 million Americans had &ldquo;effectuated&rdquo; coverage at the end of 2015, meaning they were paying their health insurance premiums.</span></p> <p><span style="font-weight: 400;">The agency praised this number as a sign of Obamacare&rsquo;s success in expanding access to coverage.</span></p> <p><span style="font-weight: 400;">However, health policy experts noted that there was a significant drop in the number of consumers who selected plans at the start of 2015&mdash;11.69 million&mdash;when compared to those who continued paying their premiums through the end of the year&mdash;8.78 million.</span></p> <p><a class="disabled" href="" rel="attachment wp-att-255506"><img alt="Graphic: Kelsey Lucas/Visualsey" class="size-full wp-image-255506" src="" style="width: 601px; height: 494px;" /></a></p> <p>&nbsp;</p> <h2><u><strong>5) Insurer Participation in Each State Declined</strong></u></h2> <p><span style="font-weight: 400;">Though Obama credited the Affordable Care Act with expanding access to health insurance and increasing competition among insurers, insurer participation in each state and the District of Columbia found that participation in the exchanges </span><a href=""><span style="font-weight: 400;">declined</span></a><span style="font-weight: 400;"> from 2015 to 2016.</span></p> <p><span style="font-weight: 400;">When compared to 2015, 22 states and the District of Columbia have fewer insurers offering coverage on the exchanges in 2016. Just 10 states have more insurers offering coverage on Obamacare&rsquo;s exchange. </span></p> <p>Among the states that saw insurer participation decline from 2015 to 2016, the number of choices consumers have on the state-run or federal exchanges varies.</p> <p>In Alaska, for example, just one insurance company is selling insurance to consumers in the state for 2016.</p> <p>In Colorado, though, consumers can choose from eight different insurers selling coverage on the exchange this year. Both states saw fewer insurance companies selling coverage from 2015 to 2016.</p> <p><span style="font-weight: 400;">Find out how many insurers are selling coverage in your state </span><span style="font-weight: 400;"><a href="">here</a>.</span></p> <p><a class="disabled" href="" rel="attachment wp-att-255621"><img alt="Graphic: Kelsey Lucas/Visualsey" class="size-full wp-image-255621" src="" style="width: 600px; height: 772px;" /></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="333" height="219" alt="" src="" /> </div> </div> </div> Barack Obama Insurance Companies Medicare Obama Administration Obamacare Tue, 24 May 2016 15:51:25 +0000 Tyler Durden 561688 at On the Freddie Gray Case and Baltimore’s Path to Poverty <p>In what has turned into a never-ending saga, we learned yesterday of the acquittal of one of the Baltimore police officers charged in the arrest of Freddie Gray. As <em><a href=";action=click&amp;contentCollection=us&amp;region=rank&amp;module=package&amp;version=highlights&amp;contentPlacement=1&amp;pgtype=sectionfront">The New York Times</a></em> reported: “Officer Edward M. Nero’s acquittal on four charges for his role in the opening moments of Mr. Gray’s arrest was a second blow to the prosecution’s sweeping case, announced as Baltimore was still seething after the unrest following Mr. Gray’s death in April 2015.”</p> <p>Among other things, the Freddie Gray case points to the path Baltimore has taken – a path to poverty. My colleague, Prof. Stephen J.K. Walters, and I wrote about this in the <em><a href="">Investor’s Business Daily</a></em> on April 22, 2016: “One Year After: Freddie Gray and ‘Structural Statism’”</p> <p>Here is some of what we wrote about how the path of structural statism has contributed to Baltimore’s poverty and associated problems.</p> <p>“When Freddie Gray was born in 1989, Baltimore hosted 787,000 residents and 445,000 jobs. By the time his fatal injuries in police custody provoked riots last April, the city’s population had fallen by one fifth, to 623,000, and its job base had shrunk by one quarter, to 334,000.</p> <p>Little wonder that throughout his life, Mr. Gray had never been legally employed. Nevertheless, friends and family considered him “a good provider,” according to The Baltimore Sun.</p> <p>This was because he worked in the drug trade, which filled his city’s economic vacuum. An average day on the corner can yield take-home pay ten times that available in the low-skill warehousing or service jobs sometimes available to high-school dropouts like Gray.</p> <p>The catch, of course, is that such rewards carry two great risks. The lesser of these is regular involvement with the justice system. Gray was arrested 18 times and served three years behind bars in his tragically brief life.</p> <p>Far more dangerous is how competition works in illegal markets. When selling contraband, one does not pursue market share by advertising high quality or low prices. Sales are increased by acquiring territory from rivals, often violently.</p> <p>For Baltimore’s drug cartels, the post-riot disequilibrium provided an opportunity for market expansion. Inevitably, each strategic assassination produced reprisals and collateral damage.</p> <p>As a result, 2015 saw the highest homicide rate in Baltimore’s history, at 55 per 100,000 residents — over 13 times New York’s rate. This horrific suffering was concentrated in the African-American community: 93% of victims were black, of which 95% were male and 65% aged 18 to 34.</p> <p>In Freddie Gray’s demographic, then, the homicide rate was 450 per 100,000 — higher than the peak U.S. combat death rates recorded in the wars in Iraq and Afghanistan.</p> <p>The prevailing narrative is that all this is a by-product of structural racism and exemplifies a society “built on plunder” (according to the celebrated black radical Ta-Nehisi Coates). This is a myth.</p> <p>It is not that racism doesn’t exist but rather that it is relatively constant. When explaining variations in economic and social outcomes, constants have little power.</p> <p>It’s the application of destructive public policies that explain why neighborhoods like Gray’s Sandtown-Winchester are deprived. If one had to put a label on this malignant force, it might be structural statism: an addiction to market-unfriendly governmental approaches to every problem.”</p> <p><img src="" width="1000" height="563" /></p> <div class="field field-type-filefield field-field-image-blog"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_blog" width="1000" height="563" alt="" src="" /> </div> </div> </div> Afghanistan Iraq Market Share New York Times Tue, 24 May 2016 15:48:58 +0000 Steve H. Hanke 561687 at Morgan Stanley Notices The Strange Thing Taking Place Off The Singapore Coast <p>Last Friday we first <a href="">reported on two surprising developments</a>: one was a record accumulation of crude tankers on anchor or steaming just off the coast of Singapore in the Straits of Malacca, awaiting higher oil prices to offload their precious cargo; the second was that as a result of previously profitable contango trades now flattening and making storage no longer profitable, <strong>oil shippers are now forced to ask for bank loans to fund offshore storage costs. </strong></p> <p>Over the weekend Morgan Stanley's analyst Adam Longson also noticed our report, and released a report focusing on the problem of floating storage which continues to grow, especially in Asia, and how he thinks it will impact the price of oil.</p> <p><em>This is what he said, most of which is a recap of what we said on Friday.</em></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>Floating storage continues to grow despite outages and poor economics. </strong>According to Reuters reports, at least 40 supertankers laden with crude are anchored offshore Singapore as floating storage. In fact, according to Reuters, the volume stored offshore Singapore is up 10% WoW despite outages, to 47.7 mmb. The increase in floating oil comes despite disruptions in the Atlantic Basin and an out-of-the-money floating storage arb, suggesting markets are not as healthy as sentiment suggests. It also highlights the speculative nature of much of the oil bounce this year (recent disruptions aside).</p> <p>&nbsp;</p> <p><a href=""><img src="" width="600" height="464" /></a></p> <p>&nbsp;</p> <p>&nbsp;</p> <p><strong>Southeast Asia is getting worse, with offshore volumes reaching the highest level in at least 5 years. </strong>According to Poten &amp; Partners, “the volumes of oil stored at sea in South East Asia - predominantly Singapore and Malaysia - appear to have increased significantly”. Remember that the Straits of Malacca, carry 15+ mmb/d of ~56 mmb/d of world oil maritime trade – or ~27% of all seaborne oil - primarily from the Persian Gulf.</p> <p>&nbsp;</p> <p><a href=""><img src="" width="600" height="422" /></a></p> <p>&nbsp;</p> <p>&nbsp;</p> <p><strong>Falling global refinery maintenance may help seasonally, but we don’t expect much relief. </strong>Many local refineries have already made purchases for peak summer runs. Bloomberg also calculated 74 VLCCs already bound for China, the highest in 3 weeks, and Chinese imports are elevated in all other data sources. Yet, the offshore glut persists.</p> <p>&nbsp;</p> <p><strong>Unprofitable storage arbs hide a growing debt-fueled offshore trade as traders search for places to store oil. </strong>We estimate the Brent 1M floating storage arb is -$0.48/bbl while 12M is -$6.11/bbl, implying no incentive to store oil on ships. Yet, banks are seeing a sharp uptick in interest to finance storage charters. <span style="text-decoration: underline;"><strong>This storage is not happening for profit. Rather, the market is looking for places to store oil. To profit, traders need to hope for oil prices to rise enough to pay for the new debt incurred for this storage.</strong></span></p> <p>&nbsp;</p> <p><strong>Similar situations are being repeated in the Gulf of Mexico and North Sea, but to a lesser degree</strong>. Local supply disruptions and seasonality have reportedly allowed some of that crude to be drawn down, but unsold cargoes and congestion remain.</p> <p>&nbsp;</p> <p><strong>Product markets are unhealthy too</strong>. The situation in Asian gasoline is no better, with gasoline tankers floating offshore in Asia, and the contango is more notable. Gasoline stocks remain stubbornly high in available weekly data, esp in Singapore where they built counter seasonally. Total product stocks in Japan and ARA also built counter seasonally.</p> </blockquote> <p>Finally, some additional facts: according to shipbroker Gibson, <strong>nearly 9% of the global supertanker fleet is currently on storage duty: this is an increase of 40% since December </strong>despite a contango which no longer supports profitable offshore storage. As JBC notes, "the uptick in storage appears to be more of a global trend reflecting operational and logistical issues than traditional storage plays." It then notes the following:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>After 10 consecutive quarters of implied global oil stockbuilds, we see the uptick in floating storage as an indication capacity at the more convenient onshore locations is largely full. If this assumption is correct, then we should see volumes in floating storage decrease in the coming weeks given the expected Q3 stockdraw. </p> </blockquote> <p>When it comes to onshore storage, JBC is right: as we pointed out last week using Genscape data, "<a href="">Inventories At Cushing Are Close To Maximum Operating Capacity</a>", but it is not just Cushing - it is virtually every other land-based storage too. As for JBC's conclusion: "this situation (growing floating storage and flattening market structure) should not be sustainable, potentially providing a key reason why prices have failed to break above $50 so far." </p> <p>They also warn that if the situation does not improve, it will become a drag on front-end prices. The only question is when. </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="889" height="625" alt="" src="" /> </div> </div> </div> China Contango Crude Japan Mexico Morgan Stanley Reuters Tue, 24 May 2016 15:31:58 +0000 Tyler Durden 561683 at European Close Triggers Precious Metals Plunge <p>Because nothing says &#39;fiduciary&#39; duty like waiting until Europe closes to dump $850 million notional of gold...</p> <p>To the tick 1130ET - when European stocks close - gold started to be dumped...</p> <p><a href=""><img height="395" src="" width="600" /></a></p> <p>&nbsp;</p> <p>And Silver...</p> <p><a href=""><img height="395" src="" width="600" /></a></p> <p>&nbsp;</p> <p>As The USD was suddenly bid...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 297px;" /></a></p> <p>&nbsp;</p> <p><em>Charts: Bloomberg</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="1685" height="1110" alt="" src="" /> </div> </div> </div> Precious Metals Tue, 24 May 2016 15:30:54 +0000 Tyler Durden 561684 at The War On Cash Is A War On Your Freedom To Opt Out <p><a href=""><em>Submitted by Charles Hugh-Smith of OfTwoMinds blog,</em></a></p> <p><em>Cash is a proxy for the freedom to maintain some privacy in an era of Big Brother repression, surveillance and the suppression of dissent.</em></p> <p><strong>I&#39;ve covered the <em>war on cash</em> i.e. the proposed elimination of cash, a number of times,</strong> for example, <a href="" target="resource"> The War On Cash: Officially Sanctioned Theft</a> (June 13, 2015)</p> <p><strong>Our first question should be: just how big a share of our financial universe is cash?</strong> The answer is: vanishingly small. Look at this chart of total credit in the U.S. economy--$63 trillion--and <a href="" target="resource">total cash: $1.45 trillion</a>. Cash is the thin red line at the bottom of the chart--it barely registers.</p> <p><img align="middle" border="0" src="" /></p> <p>Meanwhile, total household/non-profit-sector financial assets total <a href="" target="resource"> $70.3 trillion</a> (net $55.8 trillion minus liabilities of $14.5 trillion).</p> <p>Total money (currency in circulation and demand deposits) is over $10 trillion.</p> <p><strong>If cash is such a small share of money and assets, why are governments so keen to ban cash?</strong></p> <p><strong>The official answer is to limit money-laundering by drug traffickers and criminals.</strong> But laundering money through official banking channels is not that difficult, so cash is not necessary for laundering.</p> <p><strong>Another official reason is tax evasion.</strong> But tax evasion is now so easy, once again cash is not required: <a href="" target="resource">The World&rsquo;s Favorite New Tax Haven Is the United States</a>: <em>Moving money out of the usual offshore secrecy havens and into the U.S. is a brisk new business.</em></p> <p><a href="" target="resource">THE BIGGEST TAX HAVEN OF THEM ALL? THE U.S., FATCA AND THE CRS</a> <em> &ldquo;By resisting new global disclosure standards, the U.S. is creating a hot new market, becoming the go-to place to stash foreign wealth. Everyone from London lawyers to Swiss trust companies is getting in on the act, helping the world&rsquo;s rich move accounts from places like the Bahamas and the British Virgin Islands to Nevada, Wyoming, and South Dakota.&rdquo; </em></p> <p><em>The irony of the situation has not been lost on at least one foreign observer &ndash; a Swiss lawyer quoted in the Bloomberg report: </em></p> <p><em>&ldquo;How ironic&mdash;no, how perverse&mdash;that the USA, which has been so sanctimonious in its condemnation of Swiss banks, has become the banking secrecy jurisdiction du jour. That &lsquo;giant sucking sound&rsquo; you hear? It is the sound of money rushing to the USA.&rdquo; </em></p> <p><strong>So if large-scale money-laundering and tax evasion no longer require cash, why are governments so anxious to ban cash?</strong> The simple answer is to eliminate small-time tax evasion by making every transaction visible to authorities.</p> <p><strong>This raises the obvious question: how much extra tax revenue would be raised</strong> by eliminating cash purchases at swap meets, garage sales, farmer&#39;s markets, etc.? Let&#39;s face it--the revenues gained would be modest, as many of the people using cash don&#39;t earn enough to pay much income tax anyway.</p> <p>As for drug-related transactions--does anyone seriously think a buyer of street heroin is going to log the sale electronically via a debit card? Or that the dealer would digitally transact the purchase as &quot;heroin, sold by ABC Dealers, Inc.&quot;?</p> <p>(Legalizing drugs and treating addictions as a medical issue would eliminate the illegal drug trade in one fell swoop. Look at Portugal&#39;s positive experience as a real-world guide.)</p> <p><strong>The real goal behind calls to eliminate cash is to limit our freedom to <em>opt out</em></strong>: to drop out of the entire must-get-a-paycheck-and-pay-payroll-taxes lifestyle that supports the status quo.</p> <p><strong>As I have often noted, a very common response to the decay of the Roman Empire was to opt-out / drop out:</strong> in effect, stop working for the Man, stop paying taxes and stop borrowing money.</p> <p>As taxes rose to crushing levels, productive people fled to monasteries or the relative protection of large estates (whose wealthy owners naturally evaded taxes), or simply went off the grid.</p> <p><strong>This is known as <a href="" target="resource">Voting With Your Feet</a></strong> (August 14, 2015).</p> <p>There are many ways to opt out, and most involve reducing expenses, living low to the ground and developing multiple income streams. Cash is integral to this lifestyle, and not just for purposes of tax evasion: <strong>cash is a proxy for the freedom to maintain some privacy in an era of Big Brother repression, surveillance and the suppression of dissent.</strong></p> <p>For the record, I am a proponent of <em>rendering under Caesar that which is Caesar&#39;s</em>, i.e. paying all taxes owed to the various levels of government. Evading tax is personally beneficial, but it simply increases the burdens on those who are unable to skim/scam their way out of taxes.</p> <p><strong>Ultimately, the war on cash is all about increasing control by eliminating privacy and the freedom to abandon the debt-serf rat-race.</strong> I should have the right to conduct my business with cash and pay my taxes digitally. Cash is necessary to maintain some modicum of privacy in an age of all-pervasive financial repression, surveillance and the suppression of dissent.</p> <p><strong>I recently discussed the war on cash with Adam and Daniel of <a href="" target="resource">the Wake Up Podcast</a>:</strong> <a href="" target="resource">The War on Cash with Charles Hugh Smith</a> (YouTube)</p> <p><iframe allowfullscreen="" frameborder="0" height="360" src="" width="480"></iframe></p> <p>Readers of my book <a href=";camp=1789&amp;creative=9325&amp;creativeASIN=B0178MQI1M&amp;linkCode=as2&amp;tag=charleshughsm-20&amp;linkId=CGXPIKGVST4OBTXU" rel="nofollow" target="resource">A Radically Beneficial World</a> will not be surprised to find that I see crypto-currencies as playing an increasingly important alternative role in a world of state-sponsored financial repression.</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="253" height="158" alt="" src="" /> </div> </div> </div> ETC Portugal Roman Empire Swiss Banks Tax Revenue Tue, 24 May 2016 15:20:54 +0000 Tyler Durden 561676 at Marc Faber's "Worst Fear" Is Hillary Clinton Becoming President <p><a href=""><em>Via,</em></a></p> <p>Publisher of the Gloom Boom &amp; Doom Report&nbsp; Marc Faber spoke with FOX Business Network&rsquo;s (FBN) Neil Cavuto about the <strong>realistic possibility of the market collapsing before November </strong>saying &ldquo;Most people haven&rsquo;t really made any money over the last 12 months or even two years because the market is down over the last 12 months.&rdquo; He continued saying <em><strong>&ldquo;the economy is stuck,&rdquo;</strong></em> and <strong><em>&ldquo;That&rsquo;s why you have people like Trump and Bernie Sanders having such an appeal. Otherwise if the economy was very strong, they wouldn&rsquo;t essentially be contenders for the presidential election.&rdquo;</em></strong></p> <p>&nbsp;</p> <p><script type="text/javascript" src=""></script></p><p><noscript>Watch the latest video at <a href=""></a></noscript></p> <p>&nbsp;</p> <p>On the impact the economy has had on the presidential election:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;<strong>Most people haven&rsquo;t really made any money over the last 12 months or even two years because the market is down over last 12 months. The typical stock is down significantly. </strong>So they&rsquo;ve actually diminished their activity in stocks. The economy is stuck. Manufacturing is no longer growing, and the service sector and employment is growing, but not with great paying jobs. And so <strong>the typical family is actually not doing well. And that&rsquo;s why you have people like Trump and Bernie Sanders having such an appeal. Otherwise if the economy was very strong, they wouldn&rsquo;t essentially be contenders for the presidential election</strong>.&rdquo;</p> </blockquote> <p>On the Fed announcing that there was a likelihood they would increase rates in June:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;I think from the Fed&rsquo;s perspective this was actually a smart move. Because then they could watch the market reaction. As the market didn&rsquo;t sell off meaningfully, the Fed may move. <strong>I don&rsquo;t think they will move, because within a month&rsquo;s time even they &ndash; who seem to be the one-eyed leading the blind &ndash; I think they grossly overestimate the strength of the U.S. economy.</strong>&rdquo;</p> </blockquote> <p>On the risk of building a bigger bubble:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;<strong>We have already a gigantic bubble. That should be clear. If they increase rates, we will see what happens. </strong>My suspicion is that markets can also go down without rate increase. In Japan there haven&rsquo;t been any rate increases for ages and rates came down, the markets came down. Liquidity can tighten, even with ultra-low interest rates as Milton Friedman observed.&rdquo;</p> </blockquote> <p>On Hillary Clinton becoming president:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&quot;<strong>The worst fear I have is that Mrs. Hillary Clinton will become president. That is my worst fear. I would vote for anyone in the world, including you [Neil Cavuto] and Trump before I would choose Hillary Clinton. </strong>She&rsquo;s dishonest, she&rsquo;s a liar and she has deceived people and is a very questionable character. And this has been all documented. <strong>I think the markets would sell off 100% if Hillary Clinton becomes president of the U.S. </strong>I don&rsquo;t think that Mr. Trump is the most desirable future president of the U.S., but none of the other candidates were. Actually, I like Bernie Sanders.&rdquo;</p> </blockquote> <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="229" height="134" alt="" src="" /> </div> </div> </div> Bernie Sanders Fox Business Japan Marc Faber Milton Friedman None Tue, 24 May 2016 15:12:15 +0000 Tyler Durden 561681 at Despite Rising Market, "Smart Money" Sells For Record 17th Consecutive Week <p>Another week, and another quiet exodus by the "smart money" clients of Bank of America (hedge funds, institutionals and private money), who collective sold $218 million in stocks, the <strong>17th consecutive week of selling </strong>completely oblivious of a market that "wants to go higher" according to Bob Pisani, and as BofA notes, "<strong>continuing the longest uninterrupted selling streak in our data history (since '08)."</strong></p> <p><a href=""><img src="" width="600" height="320" /></a></p> <p>&nbsp;</p> <p>Here is the full breakdown:</p> <p><a href=""><img src="" width="600" height="631" /></a></p> <p>The rolling four-week average trends by client type:</p> <ul> <li>Hedge funds have been net sellers on a 4-week average basis since early Feb.</li> <li>Institutional clients have been net sellers on a 4-week average basis since early Feb.</li> <li>Private clients have been net sellers of US stocks on a 4-week average basis since early January.</li> <li><strong>The four-week average trend for buybacks by corporate clients suggests a bigger seasonal slowdown in buybacks than what we have seen the last few years at this time</strong></li> </ul> <p><a href=""><img src="" width="600" height="653" /></a></p> <p>The silver lining is that selling, just like at the end of February and then again at the end of March, appears to be slowing down again.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Sales have now been slowing for the last four weeks, with last week’s net sales of $218mn notably the smallest since late February (see chart below). Institutional and private clients continued to sell US stocks for the 13th and 15th consecutive weeks, respectively, though net sales by institutional clients were the smallest since mid-February. Hedge fund clients were net buyers, after selling stocks the previous four weeks. Net sales were entirely in mid-caps last week, as small caps saw net buying for the second week, and large caps saw net buying for the first time since January.</p> </blockquote> <p><a href=""><img src="" width="600" height="237" /></a></p> <p>On net, however, there was selling, which is confusing because as stock rose in the past week, BofA also reported that "buybacks by corporate clients decelerated last week, and quarter-to-date are tracking below levels we saw both last year and the year before. Year-to-date, buybacks are cumulatively tracking slightly above last year’s levels but below 2014’s record levels."</p> <p><a href=""><img src="" width="600" height="733" /></a></p> <p>Finally, here is the breakdown by sector:</p> <ul> <li><strong>Net buying</strong>: Telecom since late April</li> <li><strong>Net selling: </strong>Tech since late Jan.; Staples since early Feb.; Industrials since mid-Feb.; Materials and Health Care since mid-March; Consumer Discretionary since late March, Utilities since early April, ETFs since late April.</li> <li><strong>Notable changes in trends: </strong>Energy saw a reversal back to net selling after a brief period of net buying; Financials saw a reversal to net buying after net selling since late Feb.</li> </ul> <p><a href=""><img src="" width="600" height="608" /></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="1013" height="540" alt="" src="" /> </div> </div> </div> Bank of America Bank of America Bob Pisani Smart Money Tue, 24 May 2016 14:47:12 +0000 Tyler Durden 561680 at Because... Fun-Durr-Mentals <p>USDJPY 110.00 hit... now what?</p> <p>&nbsp;</p> <p><img src="" width="600" height="316" /></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="963" height="507" alt="" src="" /> </div> </div> </div> Tue, 24 May 2016 14:43:10 +0000 Tyler Durden 561679 at