en Supply And Demand In The Gold And Silver Futures Markets <p><a href=""><em>Authored by Paul Craig Roberts and Dave Kranzler</em></a>,</p> <p>This&nbsp;article establishes that the price of gold and silver in the futures markets in which cash is the predominant means of settlement is <strong>inconsistent with the conditions of supply and demand in the actual physical or current market</strong> where physical bullion is bought and sold as opposed to transactions in uncovered paper claims to bullion in the futures markets. The supply of bullion in the futures markets is increased by printing uncovered contracts representing claims to gold. <strong>This artificial, indeed fraudulent, increase in the supply of paper bullion contracts drives down the price in the futures market despite high demand for bullion in the physical market and constrained supply</strong>. <u><strong>We will demonstrate with economic analysis and empirical evidence that the bear market in bullion is an artificial creation.</strong></u></p> <p><strong>The law of supply and demand is the basis of economics.</strong> Yet the price of gold and silver in the Comex futures market, where paper contracts representing 100 troy ounces of gold or 5,000 ounces of silver are traded, is inconsistent with the actual supply and demand conditions in the physical market for bullion. For four years the price of bullion has been falling in the futures market despite rising demand for possession of the physical metal and supply constraints.</p> <p><u><strong>We begin with a review of basics. </strong></u>The vertical axis measures price. The horizontal axis measures quantity. Demand curves slope down to the right, the quantity demanded increasing as price falls. Supply curves slope upward to the right, the quantity supplied rising with price. The intersection of supply with demand determines price. (Graph 1)</p> <p><img alt="Supply and Demand Graph 1" class="aligncenter size-full wp-image-33843" height="340" src="" width="379" /></p> <p>A change in <em>quantity demanded</em> or in the <em>quantity supplied</em> refers to a movement along a given curve. A change in demand or a change in supply refers to a shift in the curves. For example, an increase in demand (a shift to the right of the demand curve) causes a movement along the supply curve (an increase in the quantity supplied).</p> <p>Changes in income and changes in tastes or preferences toward an item can cause the demand curve to shift. For example, if people expect that their fiat currency is going to lose value, the demand for gold and silver would increase (a shift to the right).</p> <p>Changes in technology and resources can cause the supply curve to shift. New gold discoveries and improvements in gold mining technology would cause the supply curve to shift to the right. Exhaustion of existing mines would cause a reduction in supply (a shift to the left).</p> <p><u><strong>What can cause the price of gold to fall?</strong></u> Two things: <strong>The demand for gold can fall</strong>, that is, the demand curve could shift to the left, intersecting the supply curve at a lower price. The fall in demand results in a reduction in the quantity supplied. A fall in demand means that people want less gold at every price. (Graph 2)</p> <p><img alt="Supply and Demand Graph 2" class="aligncenter size-full wp-image-33844" height="341" src="" width="368" /></p> <p><strong>Alternatively, supply could increase,</strong> that is, the supply curve could shift to the right, intersecting the demand curve at a lower price. The increase in supply results in an increase in the quantity demanded. An increase in supply means that more gold is available at every price. (Graph 3)</p> <p><img alt="Supply and Demand Graph 3" class="aligncenter size-full wp-image-33845" height="332" src="" width="381" /></p> <p><u><strong>To summarize: a decline in the price of gold can be caused by a decline in the demand for gold or by an increase in the supply of gold.</strong></u></p> <p>A decline in demand or an increase in supply is not what we are observing in the gold and silver physical markets. The price of bullion in the futures market has been falling as demand for physical bullion increases and supply experiences constraints. <em><strong>What we are seeing in the physical market indicates a rising price. Yet in the futures market in which almost all contracts are settled in cash and not with bullion deliveries, the price is falling.</strong></em></p> <p>For example, on July 7, 2015, the U.S. Mint said that due to a &ldquo;significant&rdquo; increase in demand, it had sold out of Silver Eagles (one ounce silver coin) and was suspending sales until some time in August. The premiums on the coins (the price of the coin above the price of the silver) rose, but the spot price of silver fell 7 percent to its lowest level of the year (as of July 7).</p> <p><strong>This is the second time in 9 months that the U.S. Mint could not keep up with market demand and had to suspend sales.</strong> During the first 5 months of 2015, the U.S. Mint had to ration sales of Silver Eagles. According to Reuters, since 2013 the U.S. Mint has had to ration silver coin sales for 18 months. In 2013 the Royal Canadian Mint announced the rationing of its Silver Maple Leaf coins: &ldquo;We are carefully managing supply in the face of very high demand. . . . Coming off strong sales volumes in December 2012, demand to date remains very strong for our Silver Maple Leaf and Gold Maple Leaf bullion coins.&rdquo; During this entire period when mints could not keep up with demand for coins, the price of silver consistently fell on the Comex futures market. On July 24, 2015 the price of gold in the futures market fell to its lowest level in 5 years despite an increase in the demand for gold in the physical market. On that day U.S. Mint sales of Gold Eagles (one ounce gold coin) were the highest in more than two years, yet the price of gold fell in the futures market.</p> <p><strong>How can this be explained?</strong> The financial press says that the drop in precious metals prices unleashed a surge in global demand for coins. This explanation is nonsensical to an economist. Price is not a determinant of demand but of quantity demanded. A lower price does not shift the demand curve. Moreover, if demand increases, price goes up, not down.</p> <p>Perhaps what the financial press means is that the lower price resulted in an increase in the quantity demanded. If so, what caused the lower price? In economic analysis, the answer would have to be an increase in supply, either new supplies from new discoveries and new mines or mining technology advances that lower the cost of producing bullion.</p> <p>There are no reports of any such supply increasing developments. To the contrary, the lower prices of bullion have been causing reductions in mining output as falling prices make existing operations unprofitable.</p> <p><strong>There are abundant other signs of high demand for bullion, yet the prices continue their four-year decline on the Comex.</strong> Even as massive uncovered shorts (sales of gold contracts that are not covered by physical bullion) on the bullion futures market are driving down price, strong demand for physical bullion has been depleting the holdings of GLD, the largest exchange traded gold fund. Since February 27, 2015, the authorized bullion banks (principally JPMorganChase, HSBC, and Scotia) have removed 10 percent of GLD&rsquo;s gold holdings. Similarly, strong demand in China and India has resulted in a 19% increase of purchases from the Shanghai Gold Exchange, a physical bullion market, during the first quarter of 2015. Through the week ending July 10, 2015, purchases from the Shanghai Gold Exchange alone are occurring at an annualized rate approximately equal to the annual supply of global mining output.</p> <p>India&rsquo;s silver imports for the first four months of 2015 are 30% higher than 2014. In the first quarter of 2015 Canadian Silver Maple Leaf sales increased 8.5% compared to sales for the same period of 2014. Sales of Gold Eagles in June, 2015, were more than triple the sales for May. During the first 10 days of July, Gold Eagles sales were 2.5 times greater than during the first 10 days of June.</p> <p><u><em><strong>Clearly the demand for physical metal is very high, and the ability to meet this demand is constrained. Yet, the prices of bullion in the futures market have consistently fallen during this entire period. The only possible explanation is manipulation.</strong></em></u></p> <p><strong>Precious metal prices are determined in the futures market, where paper contracts representing bullion are settled in cash, not in markets where the actual metals are bought and sold. </strong>As the Comex is predominantly a cash settlement market, there is little risk in uncovered contracts (an uncovered contract is a promise to deliver gold that the seller of the contract does not possess). This means that <u><strong>it is easy to increase the supply of gold in the futures market where price is established simply by printing uncovered (naked) contracts</strong></u>. Selling naked shorts is a way to artificially increase the supply of bullion in the futures market where price is determined. The supply of paper contracts representing gold increases, but not the supply of physical bullion.</p> <p><a href="">As we have documented on a number of occasions,</a> the <strong>prices of bullion are being systematically driven down by the sudden appearance and sale during thinly traded times of day and night of uncovered future contracts representing massive amounts of bullion</strong>. In the space of a few minutes or less massive amounts of gold and silver shorts are dumped into the Comex market, dramatically increasing the supply of paper claims to bullion. <strong>If purchasers of these shorts stood for delivery, the Comex would fail. </strong>Comex bullion futures are used for speculation and by hedge funds to manage the risk/return characteristics of metrics like the Sharpe Ratio. The hedge funds are concerned with indexing the price of gold and silver and not with the rate of return performance of their bullion contracts.</p> <p><strong>A rational speculator faced with strong demand for bullion and constrained supply would not short the market.</strong> Moreover, no rational actor who wished to unwind a large gold position would dump the entirety of his position on the market all at once. What then explains the massive naked shorts that are hurled into the market during thinly traded times?</p> <p><strong><em>The bullion banks are the primary market-makers in bullion futures. They are also clearing members of the Comex, which gives them access to data such as the positions of the hedge funds and the prices at which stop-loss orders are triggered. They time their sales of uncovered shorts to trigger stop-loss sales and then cover their short sales by purchasing contracts at the price that they have forced down, pocketing the profits from the manipulation</em></strong></p> <p><u><strong>The manipulation is obvious. The question is why do the authorities tolerate it?</strong></u></p> <p><strong>Perhaps the answer is that a free gold market serves both to protect against the loss of a fiat currency&rsquo;s purchasing power from exchange rate decline and inflation and as a warning that destabilizing systemic events are on the horizon. </strong>The current round of on-going massive short sales compressed into a few minutes during thinly traded periods began after gold hit $1,900 per ounce in response to the build-up of troubled debt and the Federal Reserve&rsquo;s policy of Quantitative Easing.<strong> Washington&rsquo;s power is heavily dependent on the role of the dollar as world reserve currency.</strong> The rising dollar price of gold indicated rising discomfort with the dollar. Whereas the dollar&rsquo;s exchange value is carefully managed with help from the Japanese and European central banks, the supply of such help is not unlimited. <strong>If gold kept moving up, exchange rate weakness was likely to show up in the dollar, thus forcing the Fed off its policy of using QE to rescue the &ldquo;banks too big to fail.&rdquo;</strong></p> <p><strong>The bullion banks&rsquo; attack on gold is being augmented with a spate of stories in the financial media denying any usefulness of gold. </strong>On July 17 the Wall Street Journal declared that honesty about gold requires recognition that gold is nothing but a pet rock. Other commentators declare gold to be in a bear market despite the strong demand for physical metal and supply constraints, and some influential party is determined that gold not be regarded as money.</p> <p><strong>Why a sudden spate of claims that gold is not money? </strong>Gold is considered a part of the United States&rsquo; official monetary reserves, which is also the case for central banks and the IMF. The IMF accepts gold as repayment for credit extended. The US Treasury&rsquo;s Office of the Comptroller of the Currency classifies gold as a currency, as can be seen in the OCC&rsquo;s latest quarterly report on bank derivatives activities in which the OCC places gold futures in the foreign exchange derivatives classification.</p> <p><strong><em>The manipulation of the gold price by injecting large quantities of freshly printed uncovered contracts into the Comex market is an empirical fact. The sudden debunking of gold in the financial press is circumstantial evidence that a full-scale attack on gold&rsquo;s function as a systemic warning signal is underway.</em></strong></p> <p><u><strong>It is unlikely that regulatory authorities are unaware of the fraudulent manipulation of bullion prices. The fact that nothing is done about it is an indication of the lawlessness that prevails in US financial markets.</strong></u></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="203" height="100" alt="" src="" /> </div> </div> </div> 8.5% Bear Market Central Banks China Comptroller of the Currency Fail Federal Reserve Futures market India Office of the Comptroller of the Currency Precious Metals Purchasing Power Quantitative Easing Reserve Currency Reuters Too Big To Fail Wall Street Journal Wed, 29 Jul 2015 03:15:00 +0000 Tyler Durden 510622 at The End Draws Near For Syria's Assad As Putin's Patience "Wears Thin" <p>Early last month in, "<a href="">The Noose Around Syria’s Assad Tightens</a>" we outlined the latest developments in the country’s prolonged civil war. Here’s what we said then:&nbsp;</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>The US-led alliance realizes very well that as long as Assad has to fight three fronts: i.e., the Nusra Front in the northwestern province of Idlib and ever closer proximity to Syria's main infrastructure hub of Latakia, ISIS in the central part of the nation where militants recently took over the historic town of Palmyra, and the official "rebel" force in close proximity to Damascus, Assad's army will either eventually be obliterated or, more likely, mutiny and overthrow the president, putting the Ukraine scenario in play.</em></p> </blockquote> <p>In short, the US and its Middle Eastern allies are simply playing the waiting game; watching for the opportune time to charge in and "liberate" Syria from whatever army manages to take Damascus first, at which point a puppet government will be promptly installed.&nbsp;</p> <p>And make no mistake, the new, U.S.-backed regime will present itself as fiercely anti-militant and will be trotted out as Washington’s newest "partner" in the global war on terror. Of course behind the scenes the situation will likely resemble <a href="">what happened</a> in Yemen (Obama’s "model of success") where, according to one account, Abdullah Saleh and his lieutenants not only turned a blind eye to AQAP operations, but in fact played a direct role in facilitating al-Qaeda attacks even as the government accepted anti-terrorism financing from the US government.&nbsp;</p> <p>Of course no one in Washington will care to know the details, as long as the new regime in Syria is receptive to things like piping Qatari natural gas to Europe via a long-stalled pipeline, a project which will do wonders for breaking Gazprom’s energy stranglehold and robbing Vladimir Putin of quite a bit of leverage in what is becoming an increasingly tense standoff with the EU over Ukraine.</p> <p>On Sunday, Assad gave a speech in which he attempted to address concerns about the recent setbacks his army has suffered at the hands of the various groups fighting for control of the country. Here’s more from the LA Times’ Special correspondent Nabih Bulos <a href="">reporting from Beirut</a>:&nbsp;</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong><em>Syrian President Bashar Assad delivered a sober assessment of the state of his forces on Sunday, acknowledging a manpower shortage and conceding troop withdrawals from some areas, but asserting that the military was not facing collapse.</em></strong></p> <p>&nbsp;</p> <p><em>"Are we giving up areas?" Assad asked as he posed a series of questions about the government's strategy. "Why do we lose other areas? ... And where is the army in some of the areas?"</em></p> <p>&nbsp;</p> <p><em>The Syrian president endeavored to provide answers. But it was an open question whether his responses would reassure loyalists worried that the government could be losing its hold on the embattled country.</em></p> <p>&nbsp;</p> <p><strong><em>The president also thanked his allies — notably Iran — while taking the West to task for supporting “terrorists," the Syrian government's standard term for the armed opposition fighting to wrest control of the country.</em></strong></p> <p>&nbsp;</p> <p><em>The core areas under government control include the capital, Damascus, and the strategic corridor north to the cities of Homs and Hama and west to the Mediterranean coast, a pro-government stronghold.</em></p> <p>&nbsp;</p> <p><em>Syrian authorities have been actively seeking to increase military recruitment in recent months, a sign of the shortage of fighters across a sprawling battlefield that stretches from the country’s northern fringes to its southern tip, and from its western borders to its eastern frontier.</em></p> <p>&nbsp;</p> <p><em>In Damascus and other cities, prominent recruiting billboards depict stern-looking young men and women in full military gear exhorting others to enlist.</em></p> <p>&nbsp;</p> <p><em>"Our army means all of us," declares one billboard.</em></p> <p>&nbsp;</p> <p><em>Other signs posted prominently depict soldiers providing vital security for children and families.</em></p> <p>&nbsp;</p> <p><em>Another billboard takes a more confrontational approach, asking a man who is watching a computer screen: "Sitting there and looking? What are you waiting for?"</em></p> <p>&nbsp;</p> <p><strong><em>The presidential speech comes as the thinly stretched Syrian army has suffered a string of setbacks in the last few months, squeezing government forces into defensive positions in Syria’s northwest and in the south.</em></strong></p> <p>&nbsp;</p> <p><strong><em>Assad blamed the retreats on a lack of manpower, asserting that steps would need to be taken "to raise the [capacity] of the armed forces... primarily through calling the reserves in addition to recruits and volunteers."</em></strong></p> <p>&nbsp;</p> <p><em>One such step, Assad said, was the granting of an amnesty on Saturday to soldiers who had defected, so long as they had not joined armed opposition groups. The amnesty was also extended to draft dodgers, many of whom have left Syria to escape military service.</em></p> <p>&nbsp;</p> <p><em>Despite conceding setbacks, Assad maintained a confident tone, insisting that Army recruitment numbers had increased in the last few months and that "there is no collapse... and we will be steadfast and will achieve the missions."</em></p> <p>&nbsp;</p> <p><em>"Defeat ... does not exist in the dictionaries of the Syrian Arab army," he insisted.</em></p> </blockquote> <p>Maybe not yet, but that could change quickly, especially if Assad were to lose the support of his most important ally, Vladimir Putin. </p> <p>As we noted last month, the key outstanding question is this: what is the maximum pain level for Russia, which has the greatest vested interest in preserving the Assad regime? </p> <p>We could have an answer to that very soon, as slumping commodities prices, falling demand from China (which was <a href="">recently cited</a> as the reason for "indefinite" delays to the Altai pipeline joint venture which would have delivered 30 bcm/y of Siberian gas to China), and economic sanctions from the West are squeezing Moscow and may ultimately prompt Putin to "consider the acceptability of other candidates" for the Syrian Presidency. Here’s <a href="">WSJ with more</a>:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>And with Russia’s economy battered by a plunge in oil prices and Western sanctions, the government may be considering both the strategic and economic benefits of changing its stance on Mr. Assad.</em></p> <p>&nbsp;</p> <p><em>But Fyodor Lukyanov, chairman of a Kremlin foreign-policy advisory council, said Russian policy makers are likely considering possible alternatives to the Syrian president.</em></p> <p>&nbsp;</p> <p><em>"They are looking at the acceptability of other candidates at this point," he said, adding that he had not heard any names.</em></p> <p>&nbsp;</p> <p><strong><em>If Moscow does provide an opening to broker a negotiated exit for Mr. Assad, it would be a dramatic turn in the conflict.</em></strong></p> <p>&nbsp;</p> <p><em>Mr. Assad’s other major international backer, Iran, shows no signs of wavering in its crucial military and financial support for the Syrian regime. But the long-sought nuclear deal between Iran and six world powers reached earlier this month has also opened up the possibility of broader political cooperation between Tehran and the West on other regional issues such as the war in Syria.</em></p> <p>&nbsp;</p> <p><em>Hadi al-Bahra, a senior member of the Turkey-based opposition umbrella group the Syrian National Coalition, said his alliance discussed Mr. Assad’s political fate with Russian officials for the first time in a meeting last month led by Russia’s Deputy Foreign Minister Mikhail Bogdanov. Ahmed Ramadan, another senior coalition member, also attended that meeting in the Turkish capital Ankara.</em></p> <p>&nbsp;</p> <p><strong><em>“We have been speaking with the Russians from the very beginning and we have not heard one word of criticism of Assad," Mr. Ramadan said. "But now, the Russians are discussing the alternatives with us."</em></strong></p> <p>&nbsp;</p> <p><em>In addition to the Syrian opposition, Mr. Assad’s regional adversaries such as Saudi Arabia and Turkey have argued his ouster is essential to resolve the Syrian conflict and halt the spread of Islamic State militants.</em></p> <p>&nbsp;</p> <p><em>The Obama administration recently has pursued Russian cooperation on its goal of ousting the Assad regime based on intelligence assessments that the Syrian president is weakening. President Barack Obama spoke with Russian President Vladimir Putin on June 25 and July 15 on an array of issues including Syria.</em></p> <p>&nbsp;</p> <p><em>An exchange in a meeting last month between Mr. Putin and Syrian Foreign MinisterWalid al-Moallem suggested Moscow’s patience with Damascus might be running thin.</em></p> <p>&nbsp;</p> <p><strong><em>According to an official Russian transcript carried on the Kremlin’s website, Mr. Putin pointed out the regime’s recent military setbacks and suggested Mr. Assad join forces with regional rivals Saudi Arabia and Turkey. Mr. Moallem said the idea was farfetched.</em></strong></p> <p>&nbsp;</p> <p><em>Russia has financial and political incentives to change course on backing Mr. Assad. The country has been politically isolated by Western sanctions. Lower oil prices and sanctions have taken a toll on the economy.</em></p> </blockquote> <p>So, as the Assad regime weakens in the face of dwindling manpower and is forced to resort to a military recrutiment drive complete with billboards designed to shame men into taking up arms against the various armies competing to conquer Damascus, Russia has not only seen the writing on the wall, but may be prepared to finally cut Assad loose. As for what happens next, see <a href="">here</a>.&nbsp;</p> <p>* &nbsp;* &nbsp;*</p> <p><em>Full Assad speech from Sunday</em></p> <p><iframe src="" width="560" height="315" frameborder="0"></iframe></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="496" height="338" alt="" src="" /> </div> </div> </div> Barack Obama China Iran Natural Gas Obama Administration Saudi Arabia Turkey Ukraine Vladimir Putin Wed, 29 Jul 2015 02:30:21 +0000 Tyler Durden 510632 at Drivers, Beware: The Costly, Deadly Dangers Of Traffic Stops In The American Police State <p><a href=""><em>Submitted by John Whitehead via The Rutherford Institute</em></a>,</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;The Fourth Amendment was designed to stand between us and arbitrary governmental authority. For all practical purposes, that shield has been shattered, leaving our liberty and personal integrity subject to <a href="">the whim of every cop on the beat, trooper on the highway and jail official</a>. The framers would be appalled.&rdquo;&mdash;Herman Schwartz,&nbsp;<em>The Nation</em></p> </blockquote> <p><strong>Trying to predict the outcome of any encounter with the police is a bit like playing Russian roulette: most of the time you will emerge relatively unscathed, although decidedly poorer and less secure about your rights, but there&rsquo;s always the chance that an encounter will turn deadly.</strong></p> <p><em><strong>The odds weren&rsquo;t in Walter L. Scott&rsquo;s favor.</strong></em> Reportedly <a href="">pulled over for a broken taillight</a>, Scott&mdash;unarmed&mdash;ran away from the police officer, who pursued and shot him from behind, first with a Taser, then with a gun. Scott was struck five times, &ldquo;<a href="">three times in the back, once in the upper buttocks and once in the ear &mdash; with at least one bullet entering his heart</a>.&rdquo;</p> <p><em><strong>Samuel Dubose, also unarmed,</strong></em> was <a href="">pulled over for a missing front license plate</a>. He was reportedly shot in the head after a brief struggle in which his car began rolling forward.</p> <p><em><strong>Levar Jones was <a href="">stopped for a seatbelt offense</a>,</strong></em> just as he was getting out of his car to enter a convenience store. Directed to show his license, Jones leaned into his car to get his wallet, only to be shot four times by the &ldquo;fearful&rdquo; officer. Jones was also unarmed.</p> <p><em><strong>Bobby Canipe was <a href="">pulled over for having an expired registration</a>. </strong></em>When the 70-year-old reached into the back of his truck for his walking cane, the officer fired several shots at him, hitting him once in the abdomen.</p> <p><em><strong>Dontrell Stevens was <a href="">stopped &ldquo;for not bicycling properly.&rdquo;</a></strong></em> The officer pursuing him &ldquo;thought the way Stephens rode his bike was suspicious. He thought the way Stephens got off his bike was suspicious.&rdquo; Four seconds later, sheriff&rsquo;s deputy Adams Lin shot Stephens four times as he pulled out a black object from his waistband. The object was his cell phone. Stephens was unarmed.</p> <p><u><strong>If there is any lesson to be learned from these &ldquo;routine&rdquo; traffic stops, it is that drivers should beware.</strong></u></p> <p>At a time when police can do no wrong&mdash;at least in the eyes of the courts, police unions and politicians dependent on their votes&mdash;and a &ldquo;fear&rdquo; for officer safety is used to justify all manner of police misconduct, <strong>&ldquo;we the people&rdquo; are at a severe disadvantage.</strong></p> <p>According to the Justice Department, the <strong><a href=";tid=702">most common reason for a citizen to come into contact with the police</a> is being a driver in a traffic stop.</strong> On average, <a href="">one in 10 Americans gets pulled over by police</a>. Black drivers are 31 percent more likely to be pulled over than white drivers, or about 23 percent more likely than Hispanic drivers. As the <em>Washington Post</em> concludes, &ldquo;&lsquo;Driving while black&rsquo; is, indeed, a <a href="">measurable phenomenon</a>.&rdquo;</p> <p><strong>As <a href="">Sandra Bland</a> learned the hard way, the reason for a traffic stop no longer matters. </strong>Bland, who was pulled over for allegedly failing to use her turn signal, was arrested after refusing to comply with the police officer&rsquo;s order to extinguish her cigarette and exit her vehicle. The encounter escalated, with the officer threatening to &ldquo;light&rdquo; Bland up with his taser. Three days later, Bland was found dead in her jail cell.</p> <p>&ldquo;<a href="">You&rsquo;re doing all of this for a failure to signal?</a>&rdquo; Bland asked as she got out of her car, after having been yelled at and threatened repeatedly. Had she only known, drivers have been pulled over for far less. Indeed, police officers have been given free range to pull anyone over for a variety of reasons.</p> <p>This approach to traffic stops (what I would call &ldquo;blank check policing,&rdquo; in which the police get to call all of the shots) has resulted in drivers being stopped for windows that are too heavily tinted, for driving too fast, driving too slow, failing to maintain speed, following too closely, improper lane changes, distracted driving, screeching a car&rsquo;s tires, and leaving a parked car door open for too long.</p> <p><strong><em>Motorists can also be stopped by police for driving near a bar or on a road that has large amounts of drunk driving, driving a certain make of car (<a href="">Mercedes, Grand Prix and Hummers are among the most ticketed vehicles</a>), having anything dangling from the rearview mirror (air fresheners, handicap parking permits, troll transponders or rosaries), and displaying pro-police bumper stickers.</em></strong></p> <p>Incredibly, a federal appeals court actually ruled unanimously in 2014 that <a href="">acne scars and driving with a stiff upright posture are reasonable grounds for being pulled over</a>. More recently, the Fifth Circuit Court of Appeals ruled that <a href="">driving a vehicle that has a couple air fresheners, rosaries and pro-police bumper stickers at 2 MPH over the speed limit is suspicious</a>, meriting a traffic stop.</p> <p>Unfortunately for drivers, not only have traffic stops become potentially deadly encounters, they have also turned into a profitable form of highway robbery for the police departments involved.</p> <p>As <em>The Washington Post</em> reports, <strong>&ldquo;<a href="">traffic stops for minor infractions such as speeding or equipment violations are increasingly used as a pretext for officers to seize cash from drivers</a>.&rdquo;</strong> Relying on federal and state asset forfeiture laws, police set up &ldquo;stings&rdquo; on public roads that enable them to stop drivers for a variety of so-called &ldquo;suspicious&rdquo; behavior, search their vehicles and seize anything of value that <em>could </em>be suspected of being connected to criminal activity. Since 2001, <a href="">police have seized $2.5 billion from people who were not charged with a crime</a> and without a warrant being issued.</p> <p><em><strong>&ldquo;In case after case,&rdquo; <a href="">notes</a> The Washington Post, &ldquo;highway interdictors appeared to follow a similar script. Police set up what amounted to rolling checkpoints on busy highways and pulled over motorists for minor violations, such as following too closely or improper signaling. They quickly issued warnings or tickets. They studied drivers for signs of nervousness, including pulsing carotid arteries, clenched jaws and perspiration. They also looked for supposed &lsquo;indicators&rsquo; of criminal activity, which can include such things as trash on the floor of a vehicle, abundant energy drinks or air fresheners hanging from rearview mirrors.&rdquo;</strong></em></p> <p>If you&rsquo;re starting to feel somewhat overwhelmed, intimidated and fearful for your life and your property, you should be. Never before have &ldquo;we the people&rdquo; been so seemingly defenseless in the face of police misconduct, lacking advocates in the courts and in the legislatures.</p> <p><u><strong>So how do you survive a police encounter with your life and wallet intact?</strong></u></p> <p>The courts have already given police the green light to pull anyone over for a variety of reasons. In an 8-1 ruling in <a href=""><em>Heien v. North Carolina</em></a>, the U.S. Supreme Court affirmed that police officers can pull someone over based on a &ldquo;reasonable&rdquo; but mistaken belief about the law.</p> <p>Of course, what&rsquo;s reasonable to agents of the police state may be completely unreasonable to the populace. Nevertheless, the moment those lights start flashing and that siren goes off, we&rsquo;re all in the same boat: we must pull over.</p> <p><strong>However, it&rsquo;s what happens after you&rsquo;ve been pulled over that&rsquo;s critical. Survival is the key.</strong></p> <p><strong><em>Technically</em>, you have the right to remain silent </strong>(beyond the basic requirement to identify yourself and show your registration). You have the right to refuse to have your vehicle searched. You have the right to film your interaction with police. You have the right to ask to leave. You also have the right to resist an unlawful order such as a police officer directing you to extinguish your cigarette, <a href="">put away your phone or stop recording them</a>.</p> <p>However, as Bland learned the hard way, there is a price for asserting one&rsquo;s rights. &ldquo;Faced with an authority figure unwilling to de-escalate the situation, Bland refused to be bullied or intimidated,&rdquo; <a href="">writes <em>Boston Globe </em>contributor Renee Graham</a>. &ldquo;She understood her rights, but for African-Americans in encounters with police, the appalling price for asserting even the most basic rights can be their lives.&rdquo;</p> <p><strong>So if you don&rsquo;t want to get probed, poked, pinched, tasered, tackled, searched, seized, stripped, manhandled, arrested, shot, or killed, don&rsquo;t say, do or even suggest anything that even hints of noncompliance when it comes to interactions with police.</strong></p> <p>One police officer advised that if you feel as if you&rsquo;re being treated unfairly, comply anyhow and contest it in court later. Similarly, black parents, advising their kids on how to deal with police, tell them to just obey the officer&rsquo;s orders. &ldquo;The goal,&rdquo; as one parent <a href="">pointed</a> out, &ldquo;is to stay alive.&rdquo;</p> <p><strong>It seems that &ldquo;comply or die&rdquo; has become the new maxim for the American police state.</strong></p> <p>Then again, not even compliance is a guarantee of safety anymore. &ldquo;<a href="">Police are specialists in violence</a>,&rdquo; warns Kristian Williams, who has written extensively on the phenomenon of police militarization and brutality. &ldquo;They are armed, trained, and authorized to use force. With varying degrees of subtlety, this colors their every action. Like the possibility of arrest, the threat of violence is implicit in every police encounter. Violence, as well as the law, is what they represent.&rdquo;</p> <p>In other words, in the American police state, &ldquo;we the people&rdquo; are at the mercy of law enforcement officers who have almost absolute discretion to decide who is a threat, what constitutes resistance, and how harshly they can deal with the citizens they were appointed to &ldquo;serve and protect.&rdquo;</p> <p>As I point out in my book <a href=""><em>Battlefield America: The War on the American People</em></a>,<strong> this mindset that any challenge to police authority is a threat that needs to be &ldquo;neutralized&rdquo; is a dangerous one that is part of a greater nationwide trend that sets the police beyond the reach of the Fourth Amendment</strong>. Moreover, when police officers are allowed to operate under the assumption that their word is law and that there is no room for any form of disagreement or even question, that serves to chill the First Amendment&rsquo;s assurances of free speech, free assembly and the right to petition the government for a redress of grievances.</p> <p>Frankly, it doesn&rsquo;t matter whether it&rsquo;s a casual &ldquo;show your ID&rdquo; request on a boardwalk, a stop-and-frisk search on a city street, or a traffic stop for speeding or just to check your insurance. If you feel like you can&rsquo;t walk away from a police encounter of your own volition&mdash;and more often than not you can&rsquo;t, especially when you&rsquo;re being confronted by someone armed to the hilt with all manner of militarized weaponry and gear&mdash;then for all intents and purposes, you&rsquo;re under arrest from the moment a cop stops you.</p> <p>Sad, isn&rsquo;t it, how quickly we have gone from a nation of laws&mdash;where the least among us had just as much right to be treated with dignity and respect as the next person (in principle, at least)&mdash;to a nation of law enforcers (revenue collectors with weapons) who treat us all like suspects and criminals?</p> <p><u><em><strong>Clearly, the language of freedom is no longer the common tongue spoken by the citizenry and their government. With the government having shifted into a language of force, &ldquo;we the people&rdquo; have been reduced to suspects in a surveillance state, criminals in a police state, and enemy combatants in a military empire.</strong></em></u></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="221" height="183" alt="" src="" /> </div> </div> </div> First Amendment Wed, 29 Jul 2015 02:05:00 +0000 Tyler Durden 510635 at Chinese Stocks Rise After Government Injects $100bn Into Sovereign (Rescue) Fund; Sell-off 'Blame' Shifts To Hong Kong <p>Despite the reassurances from western media and talking heads that China is unimportant (both its stock market and economy), <strong>Asian economies continue to show signs of contagion from China&#39;s slowdown</strong> as Thai exports weaken and Hong Kong trade tumbles. But it is the blame game that is top of mind tonight as Chinese regulators switch attention to Hong Kong brokers in their &quot;investigation into malicious sellers.&quot; As SCMP&#39;s George Chen notes, <strong>first they blame a &quot;foreign force,&quot; and now they blame Hong Kong, always careful not to blame themselves</strong>. After 3 down days, <strong>Chinese stocks look are opening slightly higher</strong> as there is little follow-through from yesterday&#39;s PPT rescue or today&#39;s panic-buying in US markets especilaly in light of an additional $100bn injection into the sovereign (rescue) fund.</p> <p>Just throw another 100bn at it...</p> <blockquote class="twitter-tweet" lang="en"><p dir="ltr" lang="en">BREAKING: Chinese Gov injects US$100B to sovereign fund&#39;s direct investment subsidiary to buy assets abroad - Caixin <a href=""></a></p> <p>&mdash; George Chen (@george_chen) <a href="">July 29, 2015</a></p></blockquote> <script async src="//" charset="utf-8"></script><p>&nbsp;</p> <p>As a reminder, China closed on the weaker side overnight...</p> <p><a href=""><img src="" style="width: 600px; height: 316px;" /></a></p> <p>But it appears the PPT save overnight and extension through the US session is not helping China at the open...</p> <ul> <li><strong>*CHINA&#39;S CSI 300 STOCK-INDEX FUTURES LITTLE CHANGED AT 3,683</strong></li> </ul> <p><a href=""><img height="315" src="" width="600" /></a></p> <p>&nbsp;</p> <p><strong>Update: Buying pressure arrived shortly after the open ..</strong></p> <ul> <li><strong>*CHINA&#39;S CSI 300 INDEX SET TO OPEN UP 0.8% TO 3,839.96</strong></li> <li><strong>*CHINA SHANGHAI COMPOSITE SET TO OPEN UP 0.7% TO 3,689.82</strong></li> </ul> <p><a href=""><strong><img alt="" src="" style="width: 600px; height: 315px;" /></strong></a></p> <p><strong>Not exactly the follow-through they would have hoped for... </strong></p> <p><strong>But here is the chart everyone is looking at...</strong></p> <p><a href=""><strong><img alt="" src="" style="width: 600px; height: 315px;" /></strong></a></p> <p>*&nbsp; *&nbsp; *</p> <p>As SCMP&#39;s George Chen explains, blame continues to project outward...</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 912px;" /></a></p> <p>Though as we saw yesterday,. any strength is being used by locals to sell (not short) into government strength as one farmer exclaimed - fighting back tears, <strong><em>&quot;I have have ruined my entire family... I will nevere touch stocks again.&quot;</em></strong></p> <p>*&nbsp; *&nbsp; *</p> <p>Furthermore, while Western media continues to stress how unimportant Chinese stocks (and the Chinese economy now apparently) is to US stocks and the US economy... it is, <a href="">as Gavekal Capital explains,</a> crucially important and<strong> more evidence&nbsp; is building of a slowing Chinese economy permeating the rest of Asia...</strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Today&rsquo;s edition of our diary of weak Asian economic stats focuses on the recently&nbsp;released trade and industrial production numbers out of Thailand and the trade numbers from Hong Kong. The Thai economy is feeling the pain of the Chinese slowdown acutely even in the most high level economic statistics.</p> <p>&nbsp;</p> <p><a href=""><img alt="picture 2" class="alignnone size-full wp-image-8119" height="339" src="" width="600" /></a></p> <p>&nbsp;</p> <p><a href=""><img alt="picture 1" class="alignnone size-full wp-image-8120" height="339" src="" width="600" /></a></p> <p>&nbsp;</p> <p>Meanwhile the Hong Kong trade figures, which we view more as a proxy for Chinese trade given its intermediary port position connecting China with the rest of the world...</p> <p>&nbsp;</p> <p><a href=""><img alt="picture 3" class="alignnone size-full wp-image-8118" height="339" src="" width="600" /></a></p> <p>&nbsp;</p> <p><strong>...p</strong><span style="text-decoration: underline;"><strong>aint the picture of the weakest trade by volume since 2013.</strong></span></p> </blockquote> <p>*&nbsp; *&nbsp; *</p> <p>But apart from that - everything is awesome judging by US equities.</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="957" height="503" alt="" src="" /> </div> </div> </div> China Hong Kong Twitter Twitter Wed, 29 Jul 2015 01:19:29 +0000 Tyler Durden 510638 at Ron Paul Slams Gen. Wesley Clark: Is He Kidding, Internment Camps? <p><a href=""><em>Submitted by Ron Paul via The Ron Paul Institue for Peace &amp; Prosperity,</em></a></p> <p><strong>Last week, Retired General Wesley Clark, who was NATO commander during the US bombing of Serbia, proposed that &ldquo;disloyal Americans&rdquo; be sent to internment camps for the &ldquo;duration of the conflict.&rdquo; </strong>Discussing the recent military base shootings in Chattanooga, TN, in which five US service members were killed, Clark recalled the internment of American citizens during World War II who were merely suspected of having Nazi sympathies. He said:<strong><em> &ldquo;back then we didn&rsquo;t say &lsquo;that was freedom of speech,&rsquo; we put him in a camp.&rdquo;</em></strong></p> <p>He called for the government to <strong>identify people most likely to be radicalized so we can &ldquo;cut this off at the beginning.&rdquo; That sounds like &ldquo;pre-crime&rdquo;!</strong></p> <p>Gen. Clark ran for president in 2004 and it&rsquo;s <strong>probably a good thing he didn&rsquo;t win considering what seems to be his disregard for the Constitution</strong>. Unfortunately in the current presidential race Donald Trump even one-upped Clark, stating recently that NSA whistleblower Edward Snowden is a traitor and should be treated like one, implying that the government should kill him.</p> <p>These statements and others like them most likely reflect the <strong>frustration felt in Washington over a 15 year war on terror where there has been no victory and where we actually seem worse off than when we started</strong>. The real problem is they will argue and bicker over changing tactics but their interventionist strategy remains the same.</p> <p>Retired Army Gen. Mike Flynn, who was head of the Defense Intelligence Agency during the US wars in Afghanistan and Iraq, told al-Jazeera this week that US drones create more terrorists than they kill. He said: <strong><em>&ldquo;The more weapons we give, the more bombs we drop, that just &hellip; fuels the conflict.&rdquo;</em></strong></p> <p><strong>Still Washington pursues the same strategy while expecting different results.</strong></p> <p>It is probably almost inevitable that the warhawks will turn their anger inward, toward Americans who are sick of the endless and costly wars. The US loss of the Vietnam war is still blamed by many on the protesters at home rather than on the foolishness of the war based on a lie in the first place.</p> <p><strong>Let&rsquo;s hope these threats from Clark and Trump are not a trial balloon leading to a clampdown on our liberties. </strong>There are a few reasons we should be concerned. Last week the US House passed a bill that would allow the Secretary of State to unilaterally cancel an American citizen&rsquo;s passport if he determines that person has &ldquo;aided&rdquo; or &ldquo;abetted&rdquo; a terrorist organization. And as of this writing, the Senate is debating a highway funding bill that would allow the Secretary of State to cancel the passport of any American who owes too much money to the IRS.</p> <p>Canceling a passport means removing the right to travel, which is a kind of virtual internment camp. The person would find his movements restricted, either being prevented from leaving or entering the United States. Neither of these measures involves any due process or possibility of appeal, and the government&rsquo;s evidence supporting the action can be kept secret.</p> <p><u><strong>We should demand an end to these foolish wars that even the experts admit are making matters worse.</strong></u> Of course we need a strong defense, but we should not provoke the hatred of others through drones, bombs, or pushing regime change overseas. And we must protect our civil liberties here at home from government elites who increasingly view us as the enemy.</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="200" height="189" alt="" src="" /> </div> </div> </div> Afghanistan Donald Trump Iraq Ron Paul Wed, 29 Jul 2015 01:15:00 +0000 Tyler Durden 510633 at Trump Is "The Best Thing To Happen To Politics In A Long Time," Mark Cuban Says <p>Make no mistake, Donald Trump has made an enormous splash in the early days of the race for the GOP Presidential nomination. </p> <p>Need proof? You could check out the polls...</p> <p><a href=""><img src="" width="529" height="466" /></a></p> <p>..or just have a look at the cover of the latest New Yorker...</p> <p><a href=""><img src="" width="468" height="634" /></a></p> <p>...or simply tune in to the nightly news where you’re sure to hear the latest sound bite from the incorrigible billionaire, whose main advantage may be that he is simply "<a href="">gaffe proof</a>", which would explain why a series of statements which would have likely amounted to political suicide for anyone else, have only served to boost his popularity.</p> <p>In any event, it appears as though Trump can now count on the support of a fellow billionaire because as <a href="">The Hill reports</a>, <strong>Mark Cuban now says "The Donald" is "the best thing to happen to politics in a long time." </strong>Here's more from Cuban:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>Up until Trump announced his candidacy the conventional wisdom was that you had to be a professional politician in order to run. You had to have a background that was politically scrubbed. In other words, smart people who didn't live perfect lives could never run. Smart people who didn't want their families put under the media spotlight wouldn't run.<strong> The Donald is changing all of that. He has changed the game and for that he deserves a lot of credit.&nbsp;</strong></em></p> </blockquote> <p>And here's Trump's response:</p> <blockquote class="twitter-tweet" lang="en"><p dir="ltr" lang="en">Thank you <a href="">@mcuban</a> for your nice words. I am rapidly becoming a <a href="">@dallasmavs</a> fan!<br /> <a href=""></a></p> <p>— Donald J. Trump (@realDonaldTrump) <a href="">July 28, 2015</a></p></blockquote> <p> And just to prove that this is truly a man for whom the traditional rules of politics absolutely do not apply, we'll close with the following two tweets:</p> <blockquote class="twitter-tweet" lang="en"><p dir="ltr" lang="en">A nation WITHOUT BORDERS is not a nation at all. We must have a wall. The rule of law matters. Jeb just doesn’t get it.</p> <p>— Donald J. Trump (@realDonaldTrump) <a href="">July 28, 2015</a></p></blockquote> <script src="//"></script><script src="//"></script><blockquote class="twitter-tweet" lang="en"><p dir="ltr" lang="en">.<a href="">@realDonaldTrump</a> leads w/ Hispanics. Huckabee &amp; Christie - who supported in-state tuition 4 illegals -scrape bottom. <a href=""></a></p> <p>— Ann Coulter (@AnnCoulter) <a href="">July 28, 2015</a></p></blockquote> <script src="//"></script> Donald Trump Nomination Wed, 29 Jul 2015 00:45:21 +0000 Tyler Durden 510636 at The True Minimum Wage Is $0 Per Hour <p><a href=""><em>Submitted by Jeffrey Snider via Alhambra Investment Partners</em></a>,</p> <p>The minimum wage is not what is commonly referred, as is being proven again as parts of the US experiment directly with this boundary. In New York, fast food workers have been given a $15 per hour minimum wage which is <strong><u>being celebrated by the same fast food workers who will bear the brunt of the experimentation</u></strong>. Some of them will be happy with the results, but there will be clear losers &ndash;<strong> the full wrath of redistribution is usually unseen which is why it persists.</strong></p> <p>Twitter had been having fun on the other side of the country with a similar minimum wage diktat, as the University of California system mandates also a $15 per hour rate. <strong>Professors, who overwhelmingly lean in a favorable direction, are being shown this mathematical reductionism up close.</strong> One physics professor who in one tweet reiterated his support took the next to realize the logic of it.</p> <p>&nbsp;</p> <blockquote class="twitter-tweet" lang="en"><p dir="ltr" lang="en">Napolitano raises University of California minimum hourly wage to $15. It&#39;s a good thing but I cannot pay $15 to my undergrad researchers!</p> <p>&mdash; Asantha Cooray (@acooray) <a href="">July 22, 2015</a></p></blockquote> <script async src="//" charset="utf-8"></script><blockquote class="twitter-tweet" lang="en"><p dir="ltr" lang="en">I now pay six undergrads/year starting at $9-$10/hour with raises maxing out around $13 as seniors. At $15 it&#39;ll be 3-4 students.</p> <p>&mdash; Asantha Cooray (@acooray) <a href="">July 22, 2015</a></p></blockquote> <script async src="//" charset="utf-8"></script><p>&nbsp;</p> <p>He currently pays $9-$10 per hour for six undergrad assistants now, but in order to conform to the new &ldquo;minimum wage&rdquo; command he will only be able to afford four, maybe three. In other words, the true minimum wage is <span style="text-decoration: underline;"><strong>$0 per hour</strong></span>.</p> <p><strong>To think it is any different for a fastfood restaurant is naïve</strong>. Business owners paying their workers more by arbitrary government setting will not bring in offsetting revenue (a very close microcosm of all that belies &ldquo;aggregate demand&rdquo;). The cost of the law will be felt by fewer hours being worked, leading to rationing of the business operations (checkouts and those cooking in the back, meaning longer wait times and worse service) and, where possible, rising prices. None of this is surprising or especially insightful.</p> <p><strong>And yet in 2015, six years into recovery, there is still a huge and heavy undercurrent of discontent that breaks out into this kind of nonsensical &ldquo;solution.&rdquo; </strong>There has been a resurgent trend toward Marxism already (dating back to Occupy Wall Street that survived in sentiment beyond that pitiful outbreak) that flares up here and there with the next great Marx replica (Picketty being the last, global vestige). In a real recovery, none of this counterproductive meandering would stand a chance. If the labor market were growing as it should, in sharp contrast to how it has been presented over the past year, minimum wage laws would be the furthest from the mainstream.</p> <p><strong>The same goes with the sudden outbreak of robot envy/fear.</strong> In the case of fastfood workers, they may find themselves actually staring into that reality as beyond the short-term automated technology may be more cost-effective, and productive, than unskilled at $15. But by and large, in the overall economy, this raging tinge of disgruntlement about technology and jobs is of the same deficient impulse. In a truly functioning economy robots are quite welcome. Instead, what we have now, and have had for a decade and a half or more, gives way <a href="" target="_blank">to this</a>:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>The bleakest news involves manufacturing and service jobs. He reports that Foxconn, the primary maker of Apple products, plans to deploy up to 1 million robots in its factories. A chief Nike executive, meanwhile, thinks the solution to rising wages in Indonesia is &ldquo;engineering the labor out of the product.&rdquo; This would not only be more affordable, it might also silence criticism about horrendous working conditions in international factories that make beloved American products. Self-checkout aisles at the grocery store, Redbox movie rental kiosks, and touchscreen ordering at restaurants are all examples of the same trend.</p> <p>&nbsp;</p> <p>For those who claim that these changes simply move jobs from one sector of the economy to another, Ford points to statistics. Blockbuster once employed roughly 60,000 employees nationally. Redbox, in the entire Chicago area, has a staff of seven. A comparison between Google and General Motors is another instructive example. After adjusting for inflation, General Motors earned a profit of around $11 billion in 1979, when it employed 840,000 workers. Google, in 2012, earned almost $14 billion and employed fewer than 38,000 people. He offers many other examples suggesting that not every job lost in one area is gained in another.</p> </blockquote> <p><strong>The relevant comparison is not GM to Google but rather GM to first Japan and then China, with all of Google, Silicon Valley and the like added to Wall Street and its legions of mathematicians, accountants, lawyers and offshoot day traders and house flippers (along with the burger flippers, bartenders and hospitality workers &ldquo;serving&rdquo; asset inflation) to pick up the &ldquo;slack.&rdquo; </strong>Monetary redistribution is entirely the problem, not shipping off low wage jobs overseas (and getting lower price products in return) and having the government artificially price the entirety of the bottom rungs.</p> <p>Innovation is the spur to all of it, so long as it doesn&rsquo;t become entangled in exactly these kinds of socialist misdirections. In other words, the fear of robots is somewhat justified right now but only because innovation has run aground in the decades since financialism re-charted the overall economic course. The last time machines were &ldquo;taking jobs&rdquo; in such huge numbers it worked out very well not just for Americans but the rest of the world. There was once <em>background</em>&nbsp;fear of tractors as farming industrialized and reconstituted the entire workforce.</p> <p>In 1820, out of the estimated 2.88 million American workers, 2.07 million (72%) were farm workers. By 1880, non-farm workers outnumbered those in agriculture; in 1910, the number of farm workers in the US peaked in absolute numbers, amounting to then just less than a third of all labor; today, very few are employed in agriculture. Innovation through industrialization absorbed labor into new and once &ldquo;impossible&rdquo; endeavors, industry and products that were prior scarcely believed realistic and certainly beyond the reach of all but the richest. True economic growth, labor specialization as its core, should be welcomed even though it is highly messy and dynamic. The general upheaval is, over time, unquestionably received in higher living standards for everyone.</p> <p>The fear today should not be ATM&rsquo;s removing tellers from bank branches, just as there are no more elevator operators working in moving cages amongst the nation&rsquo;s taller buildings. The anxiety now is instead really about the serious lack of innovation that suddenly appeared right around the time hard money, and thus financial restraint, was banished so that various control elements could endeavor upon their <a href="" target="_blank">utopian ideals&nbsp;of redistribution</a>.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>In other words, across now more than a century of monetary recalculations, the object remains the same &ndash; to become what Marx called that &ldquo;third party&rdquo;, to be the wielder of a mathematical code that will break the conventions of the past and lead to a more or even most perfect economic existence. The problem, universally, is that value is not just some convention to be deciphered, it is essential and immutable. Monetarists have believed that money was that object, pliable and a perfect substitute across ages, but money is just the expression of a much deeper ethos, a physical stand-in for the dimension of value. Political socialism is to transform individuals into a cohesive singular entity; monetary socialism is to do the same, centered always on redefining value. We live today not with free market capitalism, or even a functioning eurodollar standard anymore, but what looks very much like the inevitable end of the third age of socialist monetary experimentation. Value, beaten, battered and bastardized, so far survives.</p> </blockquote> <p><strong><u>Each of these ages of socialist economic direction has pressed further and further into the economic foundation.</u></strong> Where once an entire system of economy was redistributed by market forces into global modernism, we now live in communal fear of every form of job being &ldquo;taken&rdquo; toward even the slightest difference (what would have been slight hyperbole just a few years ago isn&rsquo;t so much now). Perhaps the greatest rebuttal of these socialist ages is that now workers cling to mostly stasis of every kind (fastfood jobs are now as careers?), as job and labor opportunities are almost ancient concepts applied only to past remembrances of what it all used to be like (especially among the millennials; how must the economy look to all those stuck in school, endeavoring as college-educated baristas and living at home with mom and dad until after 30). <strong>There is no economic confidence because there <em>has been no reason for it</em>; the more that this is planned out by these kinds of intrusions into economic inner-workings the farther away from the utopian agenda (but not the totalitarian offshoot) we &ldquo;progress.&rdquo;</strong></p> <p><a href=""><img alt="Three AGES" class="aligncenter size-full wp-image-30818" src="" style="width: 601px; height: 154px;" /></a></p> <p><strong>The economy <a href="" target="_blank">has shrunk</a> and with it the means to be hopeful about what should be natural &ndash; opportunity.</strong> Robots are not the problem, per se, and the minimum wage will <em>always</em> be zero; it is this &ldquo;secular stagnation&rdquo; of serial asset bubbles that have robbed the economy of its organic and natural vitality and spreadable vigor. <strong>Fix the obvious incongruity, monetarism most especially, of redistribution by government directive and economic growth will engulf and subsume what is really unnatural economic angst expressed in all these various and quickening counterproductive &ldquo;solutions.&rdquo;</strong></p> <p><a href=""><img alt="ABOOK July 2015 Payrolls FT Participation" class="aligncenter size-full wp-image-31234" src="" style="width: 601px; height: 355px;" /></a></p> <p>Some disquiet about the uneven progress of market beneficence has always been present, but what is unique about especially the past six to eight years is its pervasiveness and persistence. In other words, there will always be some that fear dynamism because, again, the widespread benefits aren&rsquo;t readily apparent right away; but when so many are convinced in the opposite something is very, very wrong. <strong>The first step is to stop making the economy shrink and let opportunity, <em>real opportunity</em> not linked to asset market gambling and the <a href="" target="_blank">fake recovery efforts</a>, again take hold.</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="584" height="328" alt="" src="" /> </div> </div> </div> Apple China EuroDollar Ford Gambling General Motors Google Japan None Reality recovery Twitter Twitter University of California Wed, 29 Jul 2015 00:15:00 +0000 Tyler Durden 510623 at Caught On Tape: The Moment Diver Discovers $1 Million In Gold From 300-Year-Old Spanish Shipwreck <p>Following the latest mass media assault on gold, capped with such trollbait pearls as "<a href="">Gold is doomed</a>" or the classic "<a href="">Let’s Be Honest About Gold: It’s a Pet Rock</a>" by the inimitable Jason Zweig (imitable perhaps only by the September 2011 version of Jason Zweig when, days after gold hit its all time high just shy of $2000, he famously said "<a href="">Is Gold Cheap? Who Knows? But Gold-Mining Stocks Are</a>"... since then <strong><em>gold-mining stocks are down 80%</em></strong>) we were more shocked that someone would actually bother to look for the worthless pet rocks (of which China allegedly just bought 600 tons) than actually finding them during a random dive in the sea. </p> <p>Which is precisely what happened.</p> <p>For several weeks the Schmitt family had a million-dollar secret on their hands. Last month, it recovered $1 million worth of sunken Spanish coins and jewels off the Florida coast. </p> <p>The Schmitts are subcontractors to 1715 Fleet-Queens Jewels LLC which since 2010 has the salvaging rights to a fleet of Spanish ships, aka the "<em>1715 Fleet</em>", that wrecked off the Florida coast some 300 years ago. While $50 million has been pulled in from the fleet’s resting place so far, this is so far the biggest single haul.</p> <p>"One of the most amazing recoveries in 1715 Fleet History. Congratulations to the entire Schmitt family and the crew of the Aarrr Booty," said <a href="">1715 Fleet on its Facebook page Monday</a>.</p> <p>Some more details from the <a href="">Fleet Society's website</a>: "Gold and silver in great quantity was homeward bound to Philip V when a hurricane destroyed his fleet along Florida’s coast. Some recovery in the aftermath still left much to be recovered beginning in the 1960’s and ongoing to this day."</p> <p>“The treasure was actually found a month ago,” said Brent Brisben of 1715 Fleet-Queens Jewels LLC. Keeping the news under wraps was “particularly hard for the family that found it. They’ve been beside themselves.”</p> <p>The timing of 1715 Fleet’s announcement coincides with the 300th anniversary of the Spanish treasure fleet’s shipwrecks off the coast of Florida.</p> <p>Among the precious items recovered:</p> <ul> <li>51 gold coins</li> <li>40 feet of ornate gold chain</li> <li>A single coin called a Royal made for the king of Spain, Phillip V. Only a few are known to exist, and the coin — nicknamed “Tricentennial Royal” — is dated 1715. Brisben said the extremely rare silver-dollar-sized coin is worth “probably around half a million dollars itself.”</li> </ul> <p>Queens Jewels owner Brent Brisben <a href="">told the Daily News this discovery</a> is of the biggest single hauls taken from the ship.</p> <p>Or, as the WSJ would call it, a whole bunch of pet rocks.</p> <p>Brisben gives 20% of everything found to the state of Florida and then splits the remaining treasure equally with the contractor that finds it. Brisben said he and his family will keep everything they have and save it for a special collection for the public.</p> <p>It's believed there is still $400 million worth of treasure located below, he said.</p> <p>As the WSJ's sister publication, <a href="">MarketWatch </a>adds, "the discovery comes almost 300 years to the day that the fleet wrecked. As for the history, the ships were sent to America to fetch gold and silver and under pressure to get back quickly, as the Spanish crown needed to replenish its coffers to finance wars. Sailing from Havana, Cuba on July 24, 1715, the ships crashed during a hurricane a week later near present-day Vero Beach, Fla. The Spaniards returned a few times, salvaging a great chunk of that treasure."</p> <p>Three hundreds years later wars are financed by long strings of 1s and 0s, backed by the full faith of a government whose total unfunded obligations amount to <a href="">over 5x the total amount of goods and services </a>produced by said government.</p> <p>Back to the discovery, whose key components are shown below.</p> <p><img src="" width="635" height="357" /></p> <p><em>Fifty-one gold coins and 40 feet of gold chains were found from a Spanish ship of the 1715 Fleet</em></p> <p><img src="" width="635" height="319" /></p> <p><em>The total value of the haul is more than $1 million.</em></p> <p><img src="" width="635" height="365" /></p> <p><em>About $50 million worth of treasure has been discovered since the 1960s.</em></p> <p>* * * </p> <p>But the biggest drama was the actual moment when Schmitt discovered the gold, captured conveniently in the video below.</p> <p><object id="flashObj" width="640" height="390" data="" type="application/x-shockwave-flash"><param name="data" value="" /><param name="bgcolor" value="#FFFFFF" /><param name="flashVars" value="videoId=4379066669001&amp;playerID=2862111174001&amp;playerKey=AQ~~,AAAAB_wnNRk~,WN9MweAQd_tph1IXNFcwfQg_Iu_Aq-oV&amp;domain=embed&amp;dynamicStreaming=true" /><param name="base" value="" /><param name="seamlesstabbing" value="false" /><param name="allowFullScreen" value="true" /><param name="swLiveConnect" value="true" /><param name="allowScriptAccess" value="always" /><param name="src" value="" /><param name="name" value="flashObj" /><param name="flashvars" value="videoId=4379066669001&amp;playerID=2862111174001&amp;playerKey=AQ~~,AAAAB_wnNRk~,WN9MweAQd_tph1IXNFcwfQg_Iu_Aq-oV&amp;domain=embed&amp;dynamicStreaming=true" /><param name="allowfullscreen" value="true" /></object></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="515" height="393" alt="" src="" /> </div> </div> </div> China Florida recovery Tue, 28 Jul 2015 23:51:48 +0000 Tyler Durden 510637 at Today's Anti-Capitalists Ignore The Fundamental Problems Of Socialism <p><a href=""><em>Submitted by Jonathan Newman via The Mises Institute</em></a>,</p> <div class="body-content embedded-media"> <p><strong>Anti-market and pro-socialist rhetoric is surging in <a href="" target="_blank">headlines</a> (see also <a href="" target="_blank">here</a>, <a href="" target="_blank">here</a>, and <a href="" target="_blank">here</a>) and popping up more and more on <a href="" target="_blank">social media feeds</a>. Much of the time, these opponents of markets can&rsquo;t tell the difference between <a href="">state-sponsored organizations like the International Monetary Fund</a> and actual markets.</strong> But, that doesn&rsquo;t matter because the articles and memes are often populist and vaguely worded &mdash; intentionally framed in such a way to easily deflect uninformed attacks and honest descriptions of what they are actually saying. In the end, they can all be boiled down to one message: socialism works and is better than capitalism.</p> <p><strong>While most of it comes from the Left, the Right is not innocent,</strong> since the Right appears to be primarily concerned with promoting its own version of populism, which apparently does not involve a defense of markets. &ldquo;Build bigger walls at the border,&rdquo; for example, is not a sufficient response to &ldquo;All profits are evil!&rdquo;</p> <p>Instead of stooping to this level or simply resorting to &ldquo;<a href="">Read Mises</a>!&rdquo; (a more fitting response), <strong>we must show, yet again, that socialism &mdash; even under well-meaning political leaders &mdash; is impossible and leads to disastrous consequences.</strong></p> <h4><span style="text-decoration: underline;">The Necessity of Profits, Prices, and Entrepreneurs</span></h4> <p>Socialism is the collective ownership (i.e., a state monopoly) of the means of production. It calls for the abolition of private ownership of factors of production. Wages and profits are two parts of the same pie, and socialism says the profit slice should be zero.</p> <p>The inherent theoretical problems of socialism all emanate from its definition, and not the particulars of its application. However, the supporters of socialism define &ldquo;collective,&rdquo; as no exchange of the factors of production. And without exchange, there can be no prices, and without prices there is no way to measure the costs of production.</p> <p>In an unhampered market economy, the prices of the factors of production are determined by their aid in producing things that consumers want. They tend to earn their marginal product, and because every laborer has some comparative advantage, there is a slice of pie for everybody.</p> <p>If technological changes make certain factors more productive, or if education and training makes a laborer more productive, their prices or wages may be bid up to their new, higher marginal product. An entrepreneur would not like to hire or buy any factor at a price that exceeds its marginal product because the entrepreneur would then incur losses.</p> <p>Entrepreneurial losses are more important than many realize. They aren&rsquo;t just hits to the entrepreneur&rsquo;s bottom line. Losses show that on the market, the resources used to produce something were more highly valued than what they were producing. Losses show that wealth has been destroyed.</p> <p>Profits give the opposite signal. They represent economic growth and wealth creation. A profitable line of production is one in which the stuff that goes into producing some consumer good costs less than what consumers are willing to pay for the consumer good.</p> <p>As such, profits and losses are more than just important incentives, or cover in a conspiratorial capitalist class system; they are the only way to know that wealth is being created instead of destroyed in any line of production.</p> <p>Under socialism, there is a single owner that does not bid factors away from some lines of production and toward others. Nobody is able to say, with any shred of certainty, that a particular tool or machine or factory could be used to produce something else in a more effective way. Nobody knows what to produce or how much to produce. It&rsquo;s economic chaos.</p> <h4><span style="text-decoration: underline;">Without Markets, We Can&rsquo;t Know What or How to Produce</span></h4> <p>Profits and losses guide and correct entrepreneurs in the process of producing things they expect consumers will demand. Without this information, including the costs of production specifically, entrepreneurs cannot engage in economic calculation, the estimation of the difference between future revenues and the costs of production necessary to gain those future revenues.</p> <p>Laborers are put to work in areas where they don&rsquo;t have a comparative advantage. Farmers are sent to factories, and tailors are sent to the mines. Workers are in the wrong lines of production and have the wrong tools. Every morning, the economy looks like <a href="">Robert Murphy&rsquo;s capital rearranging gnomes</a> just ransacked it.</p> <p>The Polish film <a href="" target="_blank"><em>Brunet Will Call</em></a> lampooned situations like this throughout the movie, with consumer and capital goods in the most unlikely places. A butcher pulls an automobile&rsquo;s clutch cable out of his freezer, and gives it to the main character, who pays for it with information on the whereabouts of a double buggy for someone&rsquo;s newborn twins (at the flower shop, obviously).</p> <p>So the failure of socialism is not conditional on the culture, time, or place of the victims. Socialism is flawed at its core: the &ldquo;collective&rdquo; ownership of the means of production. As such, there is no way to enact a functioning, growth-inducing version of socialism anywhere. In practice, however, the theoretical problems of socialism give way to civil unrest, which is met with state force and results in a death toll higher than any official war ever fought.</p> <p>Without profit motives to produce, quotas must be put in place. With quotas, even in the cases where workers don&rsquo;t lie about their production, chaos still reigns. For example, if a nail production quota is based on the number of nails, workers produce a lot of tiny, unusable nails. A nail quota based on weight would encourage workers to produce massive, but still unusable nails &mdash; a situation lampooned by <a href="">this cartoon</a> in <a href="" target="_blank"><em>Krokodil </em></a>during the 1960s.</p> <p>Endless queues stretched across the USSR, filled with people looking for shoes even though shoe production in the USSR exceeded that of the US. The problem was all the shoes were too small, because shoe production was measured by number, with no regard for the sizes or designs consumers demand.</p> <h4><span style="text-decoration: underline;">The Wake of Socialism</span></h4> <p>Some cases are funny; others are not. About seven million people died of starvation in the USSR just in 1932&ndash;33 (middle-of-the-road estimate based on manipulated data). The authors of <a href="" target="_blank"><em>The Black Book of Communism</em></a> (1999) estimate the deaths of close to 100 million people are attributable to communist and socialist regimes. That&rsquo;s more than 200 times the number of US deaths in WWII (and a case could be made that their deaths are attributable to socialism, too).</p> <p>Even today, in Cuba, the average wage is about $20 a month. In North Korea civilians are routinely rounded up by the dozens for public execution for the crime of watching South Korean TV smuggled into the country.</p> <p>When people are hungry and unhappy, the state cannot survive if the people know others are better off. The state uses propaganda, misinformation, and censorship to make an already captive citizenry even more confused and submissive.</p> <p><em><span style="text-decoration: underline;"><strong>So count me surprised to hear fresh calls for socialism in 2015 &mdash; if the strong economic calculation argument and astronomical death toll haven&rsquo;t turned the Left off of socialism, I don&rsquo;t know what will. The idea is both bankrupt and deadly in both theory and practice.</strong></span></em></p> </div> <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="234" height="172" alt="" src="" /> </div> </div> </div> headlines International Monetary Fund Mises Institute North Korea Tue, 28 Jul 2015 23:15:00 +0000 Tyler Durden 510630 at The Rise Of The Yuan Continues: LME To Accept Renminbi As Collateral <p>As far-fetched as the notion may be to those who are wedded - by choice, by misguided beliefs, or by virtue of being completely beholden to the perpetuation of the status quo - to idea that the dollar will forever retain its status as the world’s reserve currency, the yuan is set to play a critical role in global finance, investment, and trade going forward.&nbsp;</p> <p>We’ve long argued that the BRICS bank, the AIIB, and to an even greater extent, the Silk Road Fund, will help to usher in a new era of yuan hegemony in international investment and trade. A number of recent developments support this, including Beijing’s push for the renminbi to play an outsized role in loans doled out through the AIIB, the <a href="">denomination of loans</a> from the BRICS bank in yuan, and China’s aggressive investment in Pakistan and Brazil via the Silk Road initiative (<a href="">here</a> and <a href="">here</a>).</p> <p>As for financial markets, China recently confirmed the <a href="">impending launch</a> of a yuan denominated gold fix which conveniently dovetailed with the <a href="">LBMA’s acceptance</a> of the first Chinese banks to participate in the twice-daily auction that determines London gold prices. </p> <p>Now, in the latest sign of yuan proliferation and penetration, <strong>the renminbi will be accepted as collateral by the LME along with the dollar, the euro, the pound, and the yen.</strong> </p> <p>Here’s <a href="">WSJ with more</a>:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>China’s domestic stock market may be in turmoil but the country’s currency, known as the yuan or renminbi, is making a seemingly relentless push deeper into the global financial system.</em></p> <p>&nbsp;</p> <p><strong><em>The latest step: the London Metal Exchange, the world’s largest venue for trading metals where $15 trillion of metals was traded last year, is set to accept yuan as collateral for banks and brokers that trade on its platform. </em></strong></p> <p>&nbsp;</p> <p><em>The Chinese currency joins the U.S. dollar, the euro, the British pound and Japan’s yen, which are all currently permissible as collateral on the LME’s platform.</em></p> <p>&nbsp;</p> <p><em>"In the commodities area, it makes absolute sense to start providing renminbi-denominated services," said Trevor Spanner, chief executive of the LME’s clearing house business. “The renminbi is on its way to becoming one of the world’s most widely used currencies” he said.</em></p> <p>&nbsp;</p> <p><em>While largely a technical change, the LME move marks another milestone for China’s currency.</em></p> <p>&nbsp;</p> <p><strong><em>The yuan is now the fifth most used currency for international payments, ranking number seven a year ago, according to data from the Society for Worldwide Interbank Financial Telecommunication, a provider of payments services.</em></strong></p> <p>&nbsp;</p> <p><em>A Bank of England survey on Monday showed that trading in yuan rose 25% in London in the six months to April this year, even as trading volumes in other currencies fell by 8% on average over the same period.</em></p> </blockquote> <p>The takeaway: irrespective of any damage China’s recent interventions into its domestic equity markets may have on the country’s SDR push, and regardless of whether the PBoC cash injection into CSF spooks the market and serves to accelerate short-term capital outflows, the internationalization of the yuan isn’t likely to be meaningfully derailed. </p> <p>We’ll leave you with the following quote from Dan Marcus, CEO of London-based currency trading platform ParFX who <a href="">spoke to WSJ</a>:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>"The rise of China’s currency on global markets is arguably the most significant development in currency trading since the introduction of the euro in 1999."</em></p> <p>&nbsp;</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="566" height="309" alt="" src="" /> </div> </div> </div> Bank of England Brazil BRICs British Pound China Equity Markets Renminbi Reserve Currency Yen Yuan Tue, 28 Jul 2015 22:45:21 +0000 Tyler Durden 510634 at