en How This Debt-Addicted World Could Go The Way Of The Mayans <p><a href=""><em>Authored Op-Ed by Satyajit Das, originally posted at MarketWatch</em></a>,</p> <p>Paying a high price for too many elites and their &lsquo;frivolous cravings&rsquo;.</p> <p><figure class="hero-figure has-caption"><br /> <div class="hero-image-wrap"><img class="article-image ZH" src="" style="height: 338px; width: 601px;" /></div> <div class="hero-image-wrap"><cite>Getty Images</cite></div> <p><figcaption></figcaption></p></figure><br /> <div class="left-rail" id="article-left-rail">&nbsp;</div> </p><p><strong>Nowadays many countries&rsquo; social and political structure relies on debt-driven consumption and increasing levels of entitlements.</strong></p> <p><u><strong>Blame the policy makers.</strong></u> To drive economic growth, boost living standards, and manage growing inequality, policy makers have used debt and monetary tools to create economic activity. This has resulted in excessive borrowing and imbalances in global trade and capital.</p> <p>Governments played a part, too, allowing the buildup of social entitlements to win or maintain office. Private companies also encouraged the growth of employee benefits to avoid immediate pressure on wages as well as boost current earnings and share prices.</p> <p><strong>But such expensive commitments were rarely fully funded.</strong></p> <p>Rather than deal with the fundamental issues, policy makers substituted public spending, financed by government debt or central banks, to boost demand. Strong growth and higher inflation, they hoped or believed, would correct the problems.</p> <p>The current state of affairs echoes Archaeologist Arthur Demarest&rsquo;s observation about the Mayan civilization:<strong><em> &ldquo;Society had evolved too many elites, all demanding exotic baubles&hellip;all needed quetzal feathers, jade, obsidian, fine chert, and animal furs. Nobility is expensive, non-productive and parasitic, siphoning away too much of society&rsquo;s energy to satisfy its frivolous cravings.&rdquo;</em></strong></p> <p><strong>Seven years into this crisis, the level of debt in major economies has increased.</strong> Global imbalances have decreased, but primarily as a result of slower economic growth. Countries such as China and Germany are reluctant to inflate their domestic economies, moving away from their export-driven model. Major borrowers, such as the U.S., refuse to reduce spending and bring their public finances into order. Enthusiasm for fundamental financial reform has dissipated, driven by concern that lower credit growth will decrease economic growth.</p> <p><strong><a class="icon none" href="">Policy makers refused to acknowledge that available fiscal and monetary policy tools cannot address the underlying problems. </a></strong>They repeatedly use complex jargon, obscure mathematics and tired ideologies to disguise their failures and limitations. Perhaps, as the writer G. K. Chesterton suggested: &ldquo;It isn&rsquo;t that they can&rsquo;t see the solution. It is that they can&rsquo;t see the problem.&rdquo;</p> <p><u><strong>The policies, now centered around debt monetization entailing zero interest-rates and quantitative easing (QE), have potentially destructive side effect</strong></u>s:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><u><em><strong>Punishing frugality and thrift, and rewarding borrowing, profligacy, excess, and waste.</strong></em></u></p> </blockquote> <p>The resultant loss of purchasing power effectively represents a tax on holders of money and sovereign debt. It redistributes real resources from savers to borrowers and the issuer of the currency, resulting in diminution of wealth over time.</p> <p>Debt monetization also creates moral hazards. Low rates and easy availability of credit reduces market discipline. Borrowers face less pressure to cut back on their debts. Low borrowing costs allow unproductive investment to be maintained. It reduces incentives for governments to bring public finances under control.</p> <p><strong>Ultimately, the policies being used to manage the debt crisis punish frugality and thrift, and reward borrowing, profligacy, excess, and waste.</strong></p> <p>The policies might have been defensible if successful. But evidence to date suggests that policy makers are unlikely to succeed. The Bank for International Settlements and other central bankers now stress the limits to monetary policy in boosting economic growth without addressing the underlying issues.</p> <p>Ordinary people fear the consequences on their lives from the Great Unraveling. The political and social response is likely to be volatile. It was the fear and disaffection of middle-class citizens who had lost their savings in the Great Depression that gave rise to fascism.</p> <p><strong>Governments have shown little willingness to inform the electorate about the magnitude of the economic problems, the lack of solutions, and cost of possible corrective actions.</strong> Politicians have taken regard of historian Simon Schama&rsquo;s comment that no one ever won an election by telling voters it had come to the end of its &ldquo;providential allotment of inexhaustible plenty.&rdquo; In a moment of unusual candor, Prime Minister of Luxembourg and Head of the Euro-Group Jean-Claude Junker stated: &ldquo;We all know what to do, we just don&rsquo;t know how to get re-elected after we have done it.&rdquo;</p> <p><strong>Precious political and economic capital has been wasted with inadequate policies that have side effects and decrease chances of a recovery.</strong> <em>For policy makers everywhere, to paraphrase Alexander Solzhenitsyn, the &ldquo;permanent lie [has become] the only safe form of existence.&rdquo;</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="467" height="348" alt="" src="" /> </div> </div> </div> Borrowing Costs Central Banks China Germany Great Depression Monetary Policy Monetization Purchasing Power Quantitative Easing recovery Sovereign Debt Tue, 28 Apr 2015 02:10:42 +0000 Tyler Durden 505588 at Charting American Oligarchy: How The 0.01% Contributes 42% Of All Campaign Cash <p><a href=""><em>Submitted by Mike Krieger via Liberty Blitzkrieg blog</em></a>,</p> <div class="post-content"> <p><img alt="Screen Shot 2015-04-27 at 11.22.37 AM" class="alignnone wp-image-23510" height="230" src="" width="329" /></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong><em>This is an economic fight, but this is also a political fight. The biggest financial institutions aren&rsquo;t just big &ndash; they wield enormous political power. Last December, Citibank lobbyists wrote an amendment to Dodd-Frank and persuaded their friends in Washington to attach it to a bill that had to pass or the government would have been shut down. And when there was pushback over the amendment, the CEO of JPMorgan, Jamie Dimon, personally got on the phone with Members of Congress to secure their votes. How many individuals who are looking for a mortgage or a credit card could make that call? How many small banks could have their lobbyists write an amendment and threaten to shut down the US government if they didn&rsquo;t get it? None. Keep in mind that the big banks aren&rsquo;t trying to make the market more competitive; they just want rules that create more advantages for themselves. The system is rigged and those who rigged it want to keep it that way.</em></strong></p> <p>&nbsp;</p> <p>&ndash; From Senator Elizabeth Warren&rsquo;s excellent speech:&nbsp;<a href="">&ldquo;The Unfinished Business of Financial Reform&rdquo;</a></p> </blockquote> <p>This is probably one of the most important posts I&rsquo;ll write all year. The reason is because&nbsp;in order to displace&nbsp;the current paradigm, the public needs to deeply and intellectually understand exactly where the real cancer&nbsp;resides.</p> <p>I never liked the saying: &ldquo;We are the 99%.&rdquo; While admittedly catchy and effective&nbsp;as a slogan, I think it is ultimately divisive and counterproductive. The reason I say this is because the statement itself alienates much needed allies for no good reason.</p> <p>In a country with a population of 320 million, the 1% represents 3.2 million people, which is a pretty big number. While the 1% certainly have far superior material lives compared to the 99%, that doesn&rsquo;t mean a particularly large percentage of them are thieves, cronies or oligarchs. In fact, it behooves people interested in transitioning to another paradigm to court as many of them as possible to&nbsp;the cause. It is very useful to have well meaning people with resources and connections on your side. To blithely assume there aren&rsquo;t plenty of potential allies from a pool of 3.2 million is committing strategic suicide. Indeed, John Hancock came from one of the wealthiest families in the American colonies in the run up to the Revolution, yet he isn&rsquo;t remembered by history for&nbsp;his family&rsquo;s tremendous wealth, but for his signature:</p> <p><img alt="Screen Shot 2015-04-27 at 10.45.54 AM" class="alignnone wp-image-23500" height="547" src="" width="459" /></p> <p>&nbsp;</p> <p>The moment you proudly espouse, &ldquo;I am the 99%,&rdquo; you are being tribal and open yourself up to irrational thought. You are essentially saying 3.2 million of your countrymen and women are in some way the enemy&nbsp;merely because of their income. You are lumping a lot of&nbsp;very decent &mdash; albeit wealthy &mdash; people inappropriately into the oligarch bucket. While many of them are indeed oligarch wannabes or their well paid henchmen, many of them are not. You create a barrier between yourselves and them. This works to make many of the 1%&nbsp;reflexively align with each other&nbsp;when they should be aligning with you. It&rsquo;s a pretty stupid strategy to alienate millions of people you&nbsp;know nothing about.</p> <p>The root of the problem is the&nbsp;oligarchy, run by, well, oligarchs. Here is how I defined the term&nbsp;in the post:&nbsp;<strong><a href="">Inside the Mind of an Oligarch &ndash; Sheldon Adelson Proclaims &ldquo;I Don&rsquo;t Like Journalism.&rdquo;</a></strong></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong><em>In a nutshell, while many oligarchs are extremely wealthy (or have access to extreme wealth), not all people with extreme wealth are oligarchs. The term oligarch is reserved for those with extreme wealth who also want to control the political process, policy levers and most other aspects of the lives of the citizenry in a top-down tyrannical and undemocratic manner. They think they know best about pretty much everything, and believe unelected technocrats who&nbsp;share their worldview should be empowered so that they can unilaterally make&nbsp;all of society&rsquo;s important decisions. The unwashed masses (plebs) in their minds are unnecessary distractions who must&nbsp;to be told what to do. Useless eaters who need to be brainwashed into worshipping the oligarch mindset, or turned into apathetic automatons incapable or unwilling to engage in critical thought. Either outcome is equally acceptable and equally encouraged.</em></strong></p> </blockquote> <p>So oligarchs are the problem, but there aren&rsquo;t 3.2 million of them. In case you missed it the first time around, I discussed this in the post,&nbsp;<strong><a href="">Where Does the Real Problem Reside? Two Charts Showing the 0.01% vs. the 1%</a>. </strong>In that piece, I highlighted the following chart, which showed how the 1% has more or less been treading water while the wealth of the 0.01% has exploded in recent years:</p> <p><img alt="Screen Shot 2015-04-27 at 10.56.53 AM" class="alignnone wp-image-23504" src="" style="width: 600px; height: 547px;" /></p> <p>While that chart is disturbing in its own right, over the weekend, I came across another one&nbsp;that simply&nbsp;blew me away. It was from Palo Alto based political data compiling company&nbsp;<a href="">CrowdPac</a>, and it showed the percentage of political contributions emanating from the 0.01% of income earners. Here is what it showed:</p> <p><a href=""><img alt="Screen Shot 2015-04-27 at 11.01.38 AM" class="alignnone size-large wp-image-23506" src="" style="width: 601px; height: 287px;" /></a></p> <p>You&rsquo;ll notice a couple of trends from the chart above, but one that is crystal clear is that although the trend has been higher for decades, it hit escape velocity since the bailouts (and the Citizens United decision). These two things resulted in an&nbsp;increased&nbsp;concentration of wealth and power in the hands of the oligarchy (the bailouts), and provided an avenue for this wealth and power to be wielded (Citizens United). The bailouts did very little&nbsp;to help the American economy, but served as&nbsp;a mind-boggling windfall for the plutocracy.</p> <p>There are roughly&nbsp;250 million adults in America, so 0.01% of that is about 25,000 people. I would argue even this number is too high. In fact, I want to find out information about what percentage of political contributions come from the 0.001%. That number will probably get us much closer to the root of the problem. It is far more possible&nbsp;and efficient to closely monitor 2,500 people as opposed to 25,000. After all, 25,000 people don&rsquo;t regularly call Congress and get the specific legislation they want passed. 25,000 people don&rsquo;t have a direct line to the Federal Reserve, <strong>but people like Jamie Dimon do, and it is these people we must watch like hawks.</strong> If we can zero in on the 2,500 wealthiest people, we can also efficiently pick out the worst offenders, as opposed to just demonizing people based on wealth, even within the 0.001%. You can&rsquo;t easily&nbsp;separate the good from the bad&nbsp;with a sample of 25,000 people, but you can with 2,500 (and that smaller group has much more pull anyway).</p> <p>Far fewer people are calling the shots in America than you could ever imagine, and we must zero in with laser like precision on them, as opposed to alienating 3.2 million people. A more accurate&nbsp;slogan would be: <strong>&ldquo;We are not the Oligarchy.&rdquo;&nbsp;</strong></p> <p>*&nbsp; *&nbsp; *</p> <p><em>For related articles, see:</em></p> <p><em><a href="" rel="bookmark" title="Permanent Link to Portrait of the American Oligarchy – The Very Troubling Income and Wealth Trends Since 1989">Portrait of the American Oligarchy &ndash; The Very Troubling Income and Wealth Trends Since 1989</a></em></p> <p><em><a href="" rel="bookmark" title="Permanent Link to When Asked if the U.S. is a Capitalist Democracy or Oligarchy, Janet Yellen Can’t Answer…">When Asked if the U.S. is a Capitalist Democracy or Oligarchy, Janet Yellen Can&rsquo;t Answer&hellip;</a></em></p> <p><em><a href="" rel="bookmark" title="Permanent Link to New Report from Princeton and Northwestern Proves It: The U.S. is an Oligarchy">New Report from Princeton and Northwestern Proves It: The U.S. is an Oligarchy</a></em></p> </div> <p>&nbsp;</p> Citibank Elizabeth Warren Federal Reserve Jamie Dimon Janet Yellen John Hancock None Sheldon Adelson Tue, 28 Apr 2015 01:55:35 +0000 Tyler Durden 505597 at Who Is Really Choosing America's Next President? <p><a href=""><em>Submitted by Robert Faturechi and Jonathan Stray via ProPublica,</em></a></p> <p><span style="text-decoration: underline;"><strong>Rapid Rise in Super PACs Dominated by Single Donors</strong></span></p> <p>Super PACS that get nearly all of their money from one donor quadrupled their share of overall fund-raising in 2014.</p> <p><a href=""><img height="395" src="" width="600" /></a></p> <p>&nbsp;</p> <p>The wealthiest Americans can fly on their own jets, live in gated compounds and watch movies in their own theaters.</p> <p>More of them also are walling off their political contributions from other big and small players.</p> <p><strong>A growing number of political committees known as super PACs have become instruments of single donors, according to a ProPublica analysis of federal records.</strong> During the 2014 election cycle, $113 million &ndash; 16 percent of money raised by all super PACs &ndash; went to committees dominated by one donor. That was quadruple their 2012 share.</p> <p><strong>The rise of single-donor groups is a new example of how changes in campaign finance law are giving outsized influence to a handful of funders.</strong></p> <p><u><strong>The trend may continue into 2016.</strong></u> Last week, National Review <a href="">reported</a> that Texas Senator Ted Cruz&rsquo;s bid for the Republican presidential nomination would be boosted not by one anointed super PAC but four, each controlled by a <a href="">single donor</a> or donor family.</p> <p>The Supreme Court&rsquo;s 2010 Citizens United ruling helped usher in the era of super PACs. Unlike traditional political action committees, the independent groups can accept donations of any dollar size as long as they don&rsquo;t coordinate with the campaign of any candidate. Previously, much of the focus in big-money fundraising was on &ldquo;bundlers&rdquo; -- volunteers who tap friends and associates for maximum individual contributions of $5,400 to a candidate, then deliver big lump sums directly to the campaigns. Former president George W. Bush awarded his most prolific bundlers special titles such as &ldquo;Ranger&rdquo; and &ldquo;Pioneer.&rdquo;</p> <p>While bundling intensified the impact of wealthy donors on campaigns, the dollar limits and the need to join with others diluted the influence of any one person. With a super PAC, a donor can single-handedly push a narrower agenda. Last year, National Journal profiled <a href="">one such donor</a> &ndash; a California vineyard owner who helped start the trend by launching his own super PAC and becoming a power player in a Senate race across the country.</p> <p>Beyond the single-donor groups, big donations are dominant across all kinds of super PACs, according to the analysis. Six-figure contributions from individuals or organizations accounted for almost 50 percent of all super PAC money raised during the last two cycles.</p> <p><strong><em>&ldquo;We are anointing an aristocracy that&rsquo;s getting a stronger and stronger grip on democracy,&rdquo;</em></strong> said Miles Rapoport, president of Common Cause, an advocacy group that seeks to reduce the influence of money on politics.</p> <p>ProPublica&rsquo;s analysis identified 59 super PACs that received at least 80 percent of their funding from one individual during the 2014 cycle. They raised a total of $113 million, compared with the $33 million raised by the 34 such groups that existed in 2012.</p> <p><strong>Donors who launch their own PACs are seeking more control over how their money is spent.</strong> And many have complained about the commissions that <a href="">fundraising consultants</a> take off the top of their donations to outside groups. But the move carries risks if the patron is new to the arena.</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 738px;" /></a></p> <p>&nbsp;</p> <p><strong>In one cautionary tale, </strong>a reclusive 89-year-old Texas oilman with no political experience launched Vote2ReduceDebt, one of the nation&rsquo;s highest-spending conservative super PACs. A <a href="">ProPublica investigation found</a> that much of the donor&rsquo;s millions went to entities run by the group&rsquo;s consultants or their close associates. <strong>The super PAC imploded as principals traded allegations including self-dealing, faked campaign events and a plot to siphon the PAC&rsquo;s money to a reality TV show.</strong></p> <p>Bill Burton, a former Obama administration official who helped found Priorities USA, the juggernaut super PAC affiliated with the president&rsquo;s reelection campaign, said he expects donors to face more problems if they continue to go it alone.</p> <p><strong>&ldquo;One of two things is going to happen,&rdquo; he said. &ldquo;We will either see widespread flaunting of coordination rules or we will see some pretty spectacular failures to the tune of millions of dollars.&rdquo;</strong></p> <p>The single-donor super PACs identified by ProPublica span the political spectrum. Among the top conservative donors were Richard Uihlein, a packaging supplies businessman, and casino magnate Sheldon Adelson. Former New York City mayor Michael Bloomberg spent heavily on both sides but leaned Democrat. Hedge fund titan Tom Steyer dominated on the left.</p> <p>In 2012 the largest single-donor super PAC was former TD Ameritrade CEO Joe Ricketts&rsquo; Ending Spending Action Fund, which raised over $14 million, 89 percent of which came from Ricketts. It was the ninth-largest super PAC by spending. In 2014 Steyer&rsquo;s Nextgen Climate Action was the largest super PAC, raising almost $78 million, 85 percent from Steyer. (Steyer&rsquo;s wife, Kat Taylor, is a member of ProPublica&rsquo;s board of directors, and the couple has donated to ProPublica.)</p> <p>In addition to the super PACs dominated by a single individual, dozens more received the great majority of their funding from one corporation, labor group or advocacy organization. In 2014, those PACs represented 8.6 percent of super-PAC fundraising.</p> <p>PACs dominated by one donor could run afoul of disclosure laws, according to Larry Noble, the former top lawyer for the Federal Election Commission. Under the rules, political ads must include disclosures about who funded them. Noble said election law would require groups funded by one person to list that donor&rsquo;s name, not just the name of the PAC &ndash; though he couldn&rsquo;t recall the FEC addressing such a case.</p> <p>Naming the super PAC instead of the donor in the ad, Noble said, also allows the groups to delay disclosing where their money comes from until the next FEC filing date &ndash; potentially weeks after the ad runs.</p> <p><strong><em>&ldquo;It defeats the purpose of the law to allow someone to hide behind a super PAC if they are the only funder,&rdquo;</em></strong> Noble said.</p> <p><strong><em>&ldquo;They want to make it more authoritative, like there&rsquo;s more support. It looks better to say the ad is from Americans for Good Government than from John Smith&hellip; That just makes a mockery of the law.&rdquo;</em></strong></p> New York City Nomination Obama Administration Reality Sheldon Adelson Tue, 28 Apr 2015 01:50:50 +0000 Tyler Durden 505573 at Q2 GDP 'Excuse' Emerges: Up To 16,000 West Coast Port Truckers Go On Strike <p>The collapse of Q1 GDP has been placed squarely on the shoulders of weather (too hot, too cold, and definitely not just right) and the dockworkers strike which shut 29 seaports. As Q1 GDP plunged, so Q2 was lifted hockey-stick-like to keep the growth dream alive but so far in Q2, data has not shown the bounce expected... so <strong>we are going to need a bigger excuse</strong>. </p> <p><a href=""><img src="" width="500" height="262" /></a></p> <p>&nbsp;</p> <p>We have found one!</p> <p><a href=""><img src="" width="499" height="344" /></a></p> <p> <a href="">As NBC Los Angeles reports</a>, <strong>truck drivers who haul goods from the nation's busiest port complex in Los Angeles and Long Beach went on strike Monday</strong> in the latest action as part of a long-running labor dispute <em>(it wasn't immediately clear how many of the 16,000 truckers would walk off the job)</em>.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><script src=";videoID=y9zTD5HyK93P&amp;;sec=news&amp;subsec=local&amp;width=600&amp;height=360" type="text/javascript"></script></p> <p>&nbsp;</p> <p><strong>About 200 of the estimated 500 drivers associated with the four companies were on the picket lines Monday, and the job action will expand to cargo terminals later in the day,</strong> a Teamsters union representative said during a morning conference call announcing the strike. Some secondary&nbsp; picketing will target specific trucks as they arrive at other locations.</p> <p>&nbsp;</p> <p><strong>The strike involving drayage firms, which specialize in short-haul tansport, is not expected to shut down all port business.</strong> All port terminals remained opened Monday morning.</p> <p>&nbsp;</p> <p>...</p> <p>&nbsp;</p> <p><strong>About 16,000 drivers work at the ports, most of them independent contractors for trucking companies.</strong> The truckers say they face shrinking wages and want to become employees of the trucking companies, which they say would mean better wages and workplace protections.</p> <p>&nbsp;</p> <p><strong>The drivers have been subjected to "persistent wage theft,"</strong> said Teamsters spokeswoman Barb Maynard. Striking truckers argue they are improperly classified as independent contractors.</p> <p>&nbsp;</p> <p>It was <strong>too soon to say what, if any, effect a work stoppage would have on business, </strong>said ports representatives.</p> <p>&nbsp;</p> <p>...</p> <p>&nbsp;</p> <p><strong>Trucking companies have argued that driver pay is good and picketing at the ports did not represent the majority of drivers.</strong> They object especially to the timing of the unrest as the port is still recovering from a dockworkers strike.</p> <p>&nbsp;</p> <p><strong>"I believe now is a horrible time to introduce any slow-downs to the supply chain,"</strong> Weston LaBar, executive director of the Harbor Trucking Association, said in a statement late last week.<em> "If they want to be a part of the real solution perhaps they should suspend these efforts until we get closer to a normal flow of cargo in the San Pedro Bay. <strong>We don't want to put any more jobs in our region in jeopardy."</strong></em></p> </blockquote> <p>*&nbsp; *&nbsp; *</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="537" height="332" alt="" src="" /> </div> </div> </div> NBC Tue, 28 Apr 2015 01:20:43 +0000 Tyler Durden 505595 at The Limits Of Propaganda <p><a href=""><em>Submitted by Dmitry Orlov via Club Orlov blog</em></a>,</p> <p><a href="">As Paul Craig Roberts has recently reported,</a> the US government is in the process of launching an all-out war on truth. <strong>Those who express views contrary to the party line out of Washington will be labeled a threat.</strong> Eventually they may find themselves carted to one of the concentration camps which Halliburton<em> (Dick Cheney&#39;s old company) </em>has constructed for $385 million. But that may take a while.</p> <p>In the meantime, we can expect lots of other, less dramatic developments. Indeed, some of these are already happening. <strong>Here they are, listed in order of severity</strong>.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>1. Self-censorship.</strong> Those who have previously tried to get the truth out no matter out become more reticent and prone to equivocation when reporting on &ldquo;hot&rdquo; issues.</p> <p>&nbsp;</p> <p><strong>2. Topic-avoidance. </strong>They start avoiding certain &ldquo;hot&rdquo; issues that they feel are most likely to get them into trouble.</p> <p>&nbsp;</p> <p><strong>3. Response to harassment.</strong> A few incidents of mild official harassment cause certain blogs to start watering down their content, or pulling down content in response to harassment.</p> <p>&nbsp;</p> <p><strong>4. Blacklisting.</strong> The officials start censoring content on a case-by-case basis, blocking or shutting down certain internet sites that they consider seditious.</p> <p>&nbsp;</p> <p><strong>5. Blocking communications.</strong> The officials start dealing with the &ldquo;hard cases&rdquo; of uncooperative individuals who remain, shutting down their communications by disabling their cell phones, shutting down internet access, and by imposing travel restrictions so that the &ldquo;hard cases&rdquo; are forced to remain in places where they can be watched.</p> <p>&nbsp;</p> <p><strong>6. Detention.</strong> Those found to be truly uncooperative, who try to circumvent the restrictions, are rounded up and shipped off to the above-mentioned camps.</p> </blockquote> <p>This may seem like a dire prognosis, but actually I just want to present a <strong>relatively complete list of public measures for your consideration.</strong> Yes, there will be a few &ldquo;hard cases&rdquo; who will insist on getting right in the face of Washington officialdom in futile hopes of somehow affecting the political process or winning over a few of their compatriots. But<strong> at some point such individuals become indistinguishable from people with mental problems</strong>. <strong><u><em>That is because if you live in the US, actually know how the political system there operates, and still think that the US is a democracy, then you DO have a mental problem. You can&#39;t have it both ways: either you buy into the official propaganda, or you don&#39;t.</em></u></strong></p> <p><strong>Also, it bears pointing out that the vast majority of people in the US are quite happy listening to Washington&#39;s propaganda,</strong> be it from Fox or NPR, don&#39;t consider it propaganda, and have been conditioned to consider anyone who attempts to tell them the truth to be tin hat-wearing conspiracy theorist nut case. And that means that tin hat-wearing conspiracy theorist nut cases have a role to play. They are important to have, in the same way that a village idiot is important to have, so that children can learn what idiocy looks and sounds like. So, why bother sending them to a concentration camp?</p> <p><strong>And so it seems likely that the village idiots... ahem, truth-tellers will remain free-range for the time being, unless they really lose it and start tilting at windmills. </strong>But then that becomes a bona fide mental health issue.</p> <p><strong>Unless, of course, full-on war hysteria breaks out.</strong> In that case, while the external goons are busy pretending to be &ldquo;not winning, not losing&rdquo; but somehow &ldquo;keeping America safe&rdquo; in yet another wretched part of the world, the internal goons have to be kept busy. Rounding up undesirables would give them something to do.</p> <p><strong>That&#39;s the state of affairs in the United States and its subservient territories: Canada, Europe, Australia and New Zealand and a few others. </strong>But Washington&#39;s propaganda isn&#39;t working at all well in the rest of the world, be it Russia or China or Latin America. In all of these places, Washington&#39;s message control has more or less failed. This is why the people in Washington are in a bit of a panic, and labeling internal dissidents as a &ldquo;threat&rdquo; is just them flailing in search of an answer. <strong>They can&#39;t stop lying, and they can&#39;t even pretend to rule the world if everyone knows that they are lying, so their only option is to try to squelch every voice except their own</strong>. They may succeed at this within the US (some would say they already have) but as far as the rest of the world&mdash;good luck!</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="189" height="167" alt="" src="" /> </div> </div> </div> Australia China New Zealand Tue, 28 Apr 2015 00:45:37 +0000 Tyler Durden 505594 at Meet IBR, The Student Loan Bubble's Dirty Secret <p>A little over a week ago we asked: “<a href="">Is The Student Debt Bubble About To Witness Its 2007 Moment?</a>” We were prompted by Moody’s decision to place 14 student loan-backed ABS tranches on review for downgrade as the ratings agency cited the very real possibility that the tranches wouldn’t fully pay down by their maturity date. In other words, some $3 billion in student loan-backed paper is now at risk of default. As a reminder, here’s an excerpt from the rationale:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>Voluntary prepayment rates in FFELP loan pools remain historically low as a result of sluggish economic growth and high unemployment rates among recent graduates… Deferment and forbearance levels remain high throughout the life of the collateral pools, although they recently declined slightly from peak levels in 2009-11... <strong>The growing popularity of IBR, which extends the life of the loans to up to 25 years from the standard 10-year term of non-consolidation loans, and the extended repayment option (for borrowers with balances of more than $30,000) is further lengthening the weighted-average life of the student loan collateral pools. In some pools, loans in IBR and extended repayment represented 10%-12% of the balance of loans in repayment.</strong></em></p> </blockquote> <p>As a reminder, “IBR” stands for Income Based Repayment and, as the name suggests, simply means that payments on federal student loans are calculated based on how much the borrower earns. Here’s how Fedloan Servicing (a Department of Education approved servicer), <a href="">describes</a> the program:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>Under this plan, your <strong>monthly payments are based on your adjusted gross income</strong> and family size. If you're married and file a joint federal income tax return, your spouse's adjusted gross income, and eligible student loan debt, if applicable, is also taken into consideration.</em></p> </blockquote> <p>And here is how the organization describes a typical IBR-eligible borrower:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>I have little or no income and mounds of student loan debt, so I'm stressed about my monthly payments.</em></p> </blockquote> <p>Now consider the following information about monthly payments:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>They are based on your adjusted gross income (individually or with your spouse, as applicable), your family size, and your state of residence.</em></p> <p>&nbsp;</p> <p><em>They may be less than the interest that accrues each month.</em></p> <p>&nbsp;</p> <p><strong><em>They may be as low as $0.00.</em></strong></p> </blockquote> <p>Note that last point — “may be as low as zero.” In other words, depending on your financial situation, you may not have to make monthly payments at all.</p> <p>After 300 “qualifying monthly payments” — so after 25 years of payments — any remaining balance is forgiven and legally discharged. <strong>The interesting thing about this is that if the calculated payment is zero, it still counts as a “qualifying monthly payment.” That is, if, based on the borrower’s financial situation, he/she is not required to make an actual cash payment for a period, that period still counts towards the 300 “payments” needed to have the balance of the debt discharged, meaning that in the end, borrowers could end up paying substantially less than principal (taxpayers eat the balance) and are effectively allowed to remain in a perpetual state of default while avoiding actual payment default along the way.&nbsp;</strong></p> <p>This of course led us to wonder just what percentage of the government’s student loan portfolio was comprised of borrowers who are now in IBR. Here’s BofAML:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em><span style="font-size: 1em; line-height: 1.3em;">With respect to Income Based Repayment (IBR) and extended repayment programs, the Department of Education’s most recent data shows that <strong>the percent of FDLP borrowers in repayment opting for IBR or PAYE increased from 10% on June 30, 2013 to 13% on December 31, 2014, and the related balances increased from 14% to 24%.&nbsp;</strong></span></em></p> </blockquote> <p>So in terms of dollar value, <strong>nearly a quarter of FDLP loans are on an IBR or PAYE (which is a similar scheme and stands for “Pay As You Earn”) program</strong> while 13% of all borrowers have opted into some manner of income-based payment plan.&nbsp;</p> <p>We, along with the St. Louis Fed, have argued that stripping out loans in forbearance or deferment from the delinquency calculations <a href="">paints a clearer picture</a> of where things actually stand because while you can argue about how those loans should be classified, what you&nbsp;<em>cannot do</em> is count those loans in the denominator but not in the numerator when calculating delinquency rates because if you do, you're effecitvely ensuring that you will understate the true percentage of borrowers who are behind. As we’ve seen, the delinquency rate for borrowers <strong>in repayment</strong> is somewhere around 30%.&nbsp;</p> <p><strong>That said, if those who are enrolled in an IBR or PAYE program but whose financial circumstances are such that their calculated payments are zero are counted as both "in repayment"&nbsp;<em>and</em> as "current" (which seems likely), then even the 30% figure is likely a woeful misrepresentation of the actual delinquency rate, because those borrowers are being counted towards the total number of loans in repayment (the denominator) but not towards the total number of delinquencies (the numerator).</strong>&nbsp;Put differently: it seems rather strange to count someone as “current” just because their income-adjusted payment happens to be zero.</p> <p>In short, borrowers making no payments by virtue of their financial situation are really no dfferent than borrowers in forbearance or deferment so why count them as though they are? <strong>They should also be stripped out of the "in repayment" delinquency equation and if they aren't (i.e. if you want to count them as being "in repayment"), then you also have to count them as being delinquent, because they are.</strong> &nbsp;</p> <p><span style="font-size: 1em; line-height: 1.3em;">* &nbsp;* &nbsp;*</span></p> <p>We'll close with a few charts from BofAML which show that for the 2009 cohort, things are looking particularly grim:</p> <p><a href=""><img src="" width="600" height="292" /></a></p> <p><a href=""><img src="" width="600" height="312" /></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="566" height="282" alt="" src="" /> </div> </div> </div> default ratings St Louis Fed St. Louis Fed Student Loans Unemployment Tue, 28 Apr 2015 00:10:00 +0000 Tyler Durden 505598 at Ron Paul Exposes The Real War On The Middle Class <p><a href=""><em>Submitted by Ron Paul via The Ron Paul Institute for Peace &amp; Prosperity</em></a>,</p> <p>One of the great ironies of American politics is that <strong>most politicians who talk about helping the middle class support policies that, by expanding the welfare-warfare state, are harmful to middle-class Americans</strong>. Eliminating the welfare-warfare state would benefit middle-class Americans by freeing them from exorbitant federal taxes, including the Federal Reserve&rsquo;s inflation tax.</p> <p>Politicians serious about helping middle-class Americans should allow individuals to <strong>opt out of Social Security and Medicare by not having to pay payroll taxes if they agree to never accept federal retirement or health care benefits</strong>. Individuals are quite capable of meeting their own unique retirement and health care needs if the government stops forcing them into one-size-fits-all plans.</p> <p>Middle-class families with college-age children would benefit if government got out of the student loan business. <strong>Government involvement in higher education is the main reason tuition is skyrocketing and so many Americans are graduating with huge student loan debts. </strong>College graduates entering the job market would certainly benefit if Congress stopped imposing destructive regulations and taxes on the economy.</p> <p>Politicians who support an interventionist foreign policy are obviously not concerned with the harm inflicted on the middle-class populations of countries targeted for regime change. These politicians also disregard the harm US foreign policy inflicts on Americans.&nbsp; <strong>Middle- and working-class Americans, and their families, who join the military certainly suffer when they are maimed or killed fighting in unjust and unconstitutional wars.</strong> Our interventionist foreign policy also contributes to the high tax burden imposed on middle-class Americans.</p> <p>Middle-class Americans also suffer from intrusions on their liberty and privacy, such as not being able to board an airplane unless they submit to invasive and humiliating searches.<strong> Even children and the physically disabled are not safe from the Transposition Security Administration.</strong> These assaults are justified by the threat of terrorism, a direct result of our interventionist foreign policy that fosters hatred and resentment of Americans.</p> <p><strong>Some &ldquo;military Keynesians&rdquo; claim that middle-class workers benefit from jobs in the military-industrial complex.</strong> Military Keynesians seem to think that the resources spent on militarism would disappear if the Pentagon&rsquo;s budget were cut. The truth is, if we reduced spending on militarism, those currently employed by the military-industrial complex would be able to find new jobs producing goods desired by consumers. Even those currently employed as lobbyists for the military-industrial complex may be able to find useful work.&nbsp;</p> <p><strong><u>Few things would benefit the middle class more than ending the Federal Reserve.&nbsp;</u></strong> The Federal Reserve&rsquo;s inflationary policies erode middle-class families&rsquo; standards of living while benefiting the financial and political elites. Middle-class Americans may gain some temporary benefits from Federal Reserve created booms, but they also suffer from the inevitable busts.</p> <p>As I write this, the dollar still reigns as the world&rsquo;s reserve currency. However, <strong>there are signs that other economies are moving away from using the dollar as the reserve currency, and this trend will accelerate as the Federal Reserve continues to pump more fiat currency into the economy and as resentment toward our foreign policy grows.&nbsp; </strong>Eventually, international investors will lose confidence in the US economy, the dollar will lose its reserve currency status, and the dollar bubble will burst.</p> <p><em><u><strong>These events will cause a major economic downturn that may even be worse than the Great Depression. </strong></u></em>The main victims of this crisis will be average Americans. The only way to avoid this calamity is for the <u><strong>American people to force Congress to free them from the burdens of the warfare state, the welfare state, taxation, and fiat currency.</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="339" height="240" alt="" src="" /> </div> </div> </div> Federal Reserve Great Depression Medicare Reserve Currency Ron Paul Mon, 27 Apr 2015 23:35:39 +0000 Tyler Durden 505592 at Guessing Game: China's "Real" GDP Growth Could Be As Low As 3.8% <p>In “<a href="">Ignore This Measure Of Global Liquidity At Your Own Risk</a>” we pointed out that according to the very data points which Premier Li Keqiang himself prefers to examine for an indication of where the economy stands (electricity consumption, rail freight volume, and credit growth), China’s GDP growth is likely running far below the reported 7% figure. Here’s the visual:</p> <p><a href=""><img src="" width="537" height="302" /></a></p> <p>&nbsp;</p> <p>Since then, the country has turned in a rather abysmal spate of data including a 15% <a href="">decline in exports</a>, the lowest Y/Y industrial production growth since 2008, astonishingly low rail freight volumes, and, at the aggregate level, the <a href="">worst GDP growth</a> in six years. </p> <p><a href=""><img src="" style="width: 600px; height: 341px;" /></a></p> <p><a href=""><img src="" width="600" height="410" /></a></p> <p>&nbsp;</p> <p>Of course the reality of the situation is likely far worse as <a href="">demand for steel</a> (and by extension, iron ore) collapses on the back of Beijing’s attempt to transition the country towards a more service-based economy. </p> <p><a href=""><img src="" width="600" height="403" /></a></p> <p>Meanwhile, the “war on pollution” could hit industrial production hard going forward causing still more pain even as government options to fight the downturn are limited by a reluctance to devalue the yuan which, thanks to a strong dollar and unprecedented stimulus in Japan and Europe, has seen double-digit REER appreciation over the past year.&nbsp;</p> <p><a href=""><img src="" width="526" height="244" /></a></p> <p>&nbsp;</p> <p>What does all of this mean? Well, a lot of things including that Chinese QE may be inevitable (if it’s not <a href="">already here</a>), but from a GDP perspective it means that no one really knows what the real figures are, as a sharply decelerating economy makes the official numbers even more opaque than they were in the first place. Here’s WSJ with more:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em>When China released its tabulation of first-quarter growth earlier this month, the 7% figure—the worst in six years—stirred fears of a deepening slowdown.</em></p> <p>&nbsp;</p> <p><em>It also raised fresh doubt about the trustworthiness of China’s own statistics.</em></p> <p><em>Efforts to discern China’s actual growth rate have kept economists pinned to their calculators for years, and for good reason.</em></p> <p>&nbsp;</p> <p><strong><em>For one, the figures are suspiciously smooth, with none of the sharp gyrations seen in the U.S. or other economies. The methodology often appears inconsistent or contradictory. Also, no one knows how China accounts for inflation when tabulating its gross domestic product…</em></strong></p> <p>&nbsp;</p> <p><em>Then there are the many ways China’s GDP figures appear to clash with other data points considered more difficult to manipulate. <strong>Economists point to the discrepancy between headline GDP growth and industrial production, often seen as a proxy for growth, which grew by 5.6% year to year in March—its lowest level since late 2008.</strong></em></p> <p>&nbsp;</p> <p><em><strong>How the agency obtains GDP figures is “anybody’s guess,”</strong> said Hong Kong University of Science and Technology economics professor Carsten Holz, author of a paper on the quality of China’s GDP statistics, citing what he calls an <strong>“atrocious lack of transparency.”</strong></em></p> <p>&nbsp;</p> <p><em>Suspicion centers on two major issues: How willful is the fudging, and does China have a second set of books so leaders know what’s “really” going on?</em></p> </blockquote> <p>By just how much are the numbers overstated? As indicated, no one really knows, but here are some guesses as to what the “real” data might look like:</p> <p><a href=""><img src="" width="600" height="250" /></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="849" height="354" alt="" src="" /> </div> </div> </div> China Hong Kong Japan None Reality Transparency Yuan Mon, 27 Apr 2015 23:00:53 +0000 Tyler Durden 505596 at Austrian Economists Understand Why There Is A Commodity Glut <p>In response to <a href="">The Wall Street Journal&#39;s article on confused policymakers dealing with a glut of capital</a>, <a href="">Mises Canada&#39; Patrick Barron briefly summarizes their errors...</a></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>The worldwide commodity glut is not a surprise to Austrian school economists.</strong></p> <p>&nbsp;</p> <p>It is a wonderful example of the adverse consequences of monetary repression to drive the interest rate below the natural rate.</p> <p>&nbsp;</p> <p>Longer term projects, such as expansion of mineral extraction, appear to become profitable. But such is not the case for the simple reason that printing money does not represent an increase in real, saved resources.</p> <p>&nbsp;</p> <p><strong>Eventually it will be clear that capital has been wasted, what Austrian school economists call &ldquo;malinvested&rdquo;.</strong></p> <p>&nbsp;</p> <p><strong><a href=""><img height="316" src="" width="600" /></a></strong></p> <p>&nbsp;</p> <p><span style="text-decoration: underline;"><strong>No amount of further monetary repression can cure this problem</strong></span>, although I am certain that the Keynesian school economists in charge of central banks and governments all over the world will give it a good try. <strong><span style="text-decoration: underline;">Akin to bleeding the patient until he recovers, we may not survive this Keynesian medicine</span></strong>.</p> </blockquote> <p>*&nbsp; *&nbsp; *</p> <p>Simply out - Austrian economists understand full well why there is a commodity glut but what they don&#39;t understand won&#39;t stop them...</p> <p>*&nbsp; *&nbsp; *</p> <p><a href="">As we concluded previously,</a> in the end, <strong>central banks will continue to keep conditions loose, seemingly oblivious (or perhaps willfully ignorant) to the fact that low rates and booming equity markets are contributing to the supply glut without effectuating a concomitant increase in demand.</strong> Meanwhile, producers &mdash; such as heavily indebted US shale companies &mdash; are forced to keep producing in order to keep what little revenue is still coming in flowing, a dynamic which is exacerbated when companies take on debt (and thus more interest expense) to stay alive:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><em>Even if governments have the capacity for more fiscal stimulus, few have the political will to unleash it. That has left central banks to step into the void. The Federal Reserve and Bank of England have both expanded their balance sheets to nearly 25% of annual gross domestic product from around 6% in 2008. The European Central Bank&rsquo;s has climbed to 23% from 14% and the Bank of Japan to nearly 66% from 22%...</em></p> <p>&nbsp;</p> <p><strong><em>Producers have their own share of the blame. In a lower commodity price environment, producers typically are reluctant to cut production in an effort to maintain their market shares.</em></strong></p> <p>&nbsp;</p> <p><strong><em>In some cases, producers even increase their output to make up for the revenue losses due to lower prices, exacerbating the problem of oversupply.</em></strong></p> </blockquote> <p>Here is the vicious cycle visualized:</p> <p><a href=""><img height="326" src="" width="600" /></a></p> <p>* &nbsp;* &nbsp;*</p> <p>For those wondering how this will play out, consider that sooner or later, in order to avoid liquidation and stave off severe disinflationary pressures, someone will have to call in &quot;Helicopter Janet&quot; and once the cash paradropping begins well, we&#39;ll see you in the Weimar Republic.</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="960" height="505" alt="" src="" /> </div> </div> </div> Bank of England Bank of Japan Central Banks Equity Markets European Central Bank Federal Reserve Gross Domestic Product Japan Wall Street Journal Mon, 27 Apr 2015 22:25:44 +0000 Tyler Durden 505591 at Legalizing Marijuana & The Increasing Pace Of Social Change In America <p><span style="text-decoration: underline;"><em><strong>This is how fast America changes its mind...</strong></em></span></p> <p><strong>Eleven years after Massachusetts became the first state to allow same-sex couples to marry, the Supreme Court on April 28 will hear arguments about whether to extend that right nationwide.</strong> The case comes amid a wave of gay marriage legalization: 28 states since 2013, and 36 overall.</p> <p>But, <a href="">as Bloomberg explains,</a> such widespread acceptance in a short amount of time isn&#39;t a phenomenon unique to gay marriage. <span style="text-decoration: underline;"><strong>Social change in the U.S. appears to follow a pattern</strong></span>: <em>A few pioneer states get out front before the others, and then a key event&mdash;often a court decision or a grassroots campaign reaching maturity&mdash;triggers a rush of state activity that ultimately leads to a change in federal law.</em></p> <p>Bloomberg looked at six big issues - <strong><em>interracial marriage, prohibition, women&rsquo;s suffrage, abortion, same-sex marriage, and recreational marijuana</em></strong> - to show how this has happened in the past, and may again in the very near future.</p> <p><em>click image for large legible version</em></p> <p><a href=""><img height="282" src="" width="600" /></a></p> <p>&nbsp;</p> <p>So with that in mind, how long until Recreational Marijuana is adopted nationwide...</p> <p><a href=""><img height="298" src="" width="600" /></a></p> <p>&nbsp;</p> <p>If the pattern holds, the marijuana legalization movement may take far less time than other issues to gain widespread acceptance.</p> <p><a href=""><img alt="" src="" style="width: 600px; height: 273px;" /></a></p> <p>&nbsp;</p> <p><strong>Though the pattern of social change may have remained largely the same over the years, change is happening faster now.</strong></p> <p><em>Source: Bloomberg</em></p> Same-Sex Marriage Mon, 27 Apr 2015 21:50:48 +0000 Tyler Durden 505590 at