en And The Most Complained-About Nation In The World Trade Organization Is... <p><strong>Protectionist sentiment is running high in the US, </strong>with both presidential candidates citing the need to shield workers from the alleged harmful effects of foreign trade. So it is perhaps ironic that <em><strong>the nation that has the most complaints against it for violating trade agreements is...</strong></em></p> <p><span style="text-decoration: underline;"><strong>USA USA USA...</strong></span></p> <p><a href=""><img height="556" src="" width="600" /></a></p> <p><em>Chart: Goldman Sachs</em></p> <p>So USA has almost 4 times more complaints against it for violating agreements that Chynaa.. Protectionist That!</p> <p>As Goldman&#39;s Marina Grushin notes,<strong> public opinion seems to stand behind this view, as Pew surveys have found that roughly half of Americans believe trade destroys jobs and lowers wages, compared to only about 20% who think the opposite</strong>. Perhaps more surprising, a review of research on trade, jobs, and wage inequality over the last 25 years shows that economists are also increasingly emphasizing the costs that trade can impose on US workers.</p> <h3><u>Early days: Think tech, not trade</u></h3> <p><strong>Economic theory predicts that, in aggregate, trade benefits all parties</strong>; by importing goods that a trading partner can produce more efficiently, countries increase their consumption and welfare. But economists have also long recognized that trade leads the prices of labor to converge across borders. <strong><em>For developed countries, that pressures less-skilled workers, who find themselves effectively competing with cheaper foreign labor, and who face challenges in transitioning to more competitive parts of the economy.</em></strong></p> <p>As trade flourished in the 1970s and 1980s, its effects on labor markets attracted increasing attention. Between 1970 and 1990, goods trade rose from 8% to 15% of US GDP, while the share of manufacturing workers in US employment declined from 25% to 16%. Wage inequality increased, with the &ldquo;premium&rdquo; for a college vs. a high school graduate growing from around 45% to 60%. Economists agreed that blue-collar workers were being squeezed; the question was how much of it was due to trade.</p> <p><strong>For most researchers, the answer at the time was very little. </strong>Skill-biased technological change (e.g., the automation of routine tasks) and related productivity gains were generally deemed more important. Robert Lawrence and Matthew Slaughter (1993), for example, concluded from shifts in traded goods prices that trade contributed little to rising wage inequality. Paul Krugman (1994, 1995) similarly assigned trade a &ldquo;quantitatively minor&rdquo; role, and estimated that trade with less developed countries accounted for only around 10% of the increase in US wage disparity over the prior 20 years. Effects on employment were also deemed modest. By the estimates of Jeffrey Sachs and Howard Shatz (1994), trade with developing economies between 1978 and 1990 reduced US demand for lower-skilled manufacturing jobs by just 6.2%.</p> <p><strong>Some researchers did find more substantial effects. </strong>Translating the US trade deficit into an effective increase in the supply of less-skilled labor, George Borjas, Richard Freeman, and Lawrence Katz (1992) showed that trade accounted for up to 25% of the widening US wage gap between 1980 and 1985. And Adrian Wood (1994), contending that most studies understated the labor displaced by imports, concluded that trade reduced unskilled manufacturing employment in developed economies by 21.5%, more than three times the Sachs/Shatz estimate. Still, these views were in the minority; among more than 30 studies on wage inequality reviewed by William Cline (1997), most found that the adverse impacts of trade were minimal to modest. In short, the research acknowledged some losses from foreign trade, but emphasized overall gains.</p> <h3><u>The new view: A bigger role for trade</u></h3> <p>Between 1990 and 2010, developing economies&rsquo; share of world trade roughly doubled, to 38%, driven in large part by EM Asia and China&rsquo;s 2001 entry into the WTO. In the US, the college wage premium approached 80%, while the trade deficit widened well beyond prior extremes. These shifts prompted economists to revisit the conclusions of the 1990s with new data. <strong>Krugman wrote in 2008 that it was &ldquo;no longer safe&rdquo; to argue that trade&rsquo;s impact on inequality in developed economies was insignificant.</strong></p> <p>Indeed, the work that followed often pointed to greater costs from trade. In an update of Krugman&rsquo;s 1995 model, Josh Bivens (2013) estimated that trade with less developed countries accounted for one-third of the rise in US wage inequality between 1979 and 2011&mdash;and more than 90% of it after 1995. In another example, Michael Elsby, Bart Hobijn, and Aysegul Sahin (2013) found that import exposure could account for 85% of the 3.9pp decline in US workers&rsquo; share of national income over the prior 25 years.</p> <p><strong>Recent research has also highlighted the spillovers from pressure on US manufacturing. </strong>In one such study, Avraham Ebenstein and colleagues (2014) found that trade was pushing workers out of generally higher-paying manufacturing jobs and into lower-paying positions in other parts of the economy. Using census data on individual workers across industries, the authors estimated that people who switched occupations due to trade or offshoring saw their real wages fall 12-17% between 1984 and 2002.</p> <p><strong>China has played an important part in these developments, having increased its share of US imports to 21% in 2015 from only 6% in 1995.</strong> MIT&rsquo;s David Autor and other researchers (2013, 2016) mapped the exposure of 700+ US labor markets to this surge based on initial industry composition, and concluded that workers in more-exposed regions faced lower lifetime earnings, particularly if they were already at the lower end of the pay scale. By Autor&rsquo;s estimates, Chinese imports cost the US up to 2.4mn jobs between 1999 and 2011, of which nearly 1mn were in manufacturing. Others have found evidence of US jobs effectively &ldquo;moving&rdquo; abroad: Ebenstein et al (2012) noted that US job losses have corresponded with Chinese gains in the same sectors. That these shifts occurred even for routine tasks suggests, in their view, that US workers are being displaced by trade rather than technology.</p> <h3><u>When the facts change, I change my mind</u></h3> <p>The recent research has not invalidated earlier findings; indeed, the trade landscape has changed considerably since the &ldquo;first wave&rdquo; of analysis. More importantly, economists remain proponents of free trade (and, to be sure, some maintain that trade is not an important driver of wage inequality). However, the tone around trade appears to be shifting toward a greater acknowledgment of concentrated losses rather than an affirmation of overall gains. In the words of Harvard University&rsquo;s Dani Rodrik, <em><strong>&ldquo;The populist rhetoric on trade may be excessive, but few deny any longer that the underlying grievances are real.&rdquo;</strong></em></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="202" height="119" alt="" src="" /> </div> </div> </div> China goldman sachs Goldman Sachs Krugman Paul Krugman Trade Deficit World Trade Sat, 01 Oct 2016 15:35:00 +0000 Tyler Durden 573692 at Is a Joke? Quartz Bemoans ‘Coarseness’ Aimed at Clinton and Yellen <div id="article_main" class="article_text" style="box-sizing: border-box; font-size: 16px; line-height: 24px; padding-bottom: 8px; color: #303030; font-family: Georgia, &quot;Times New Roman&quot;, Times, serif;"> <blockquote style="box-sizing: border-box; padding: 10px 20px; margin: 0px 0px 20px; font-size: 17.5px; border-left: 5px solid #eeeeee;"> <p style="box-sizing: border-box; font-size: 16px; line-height: 24px; padding-bottom: 8px;"><em>Via <strong><a href="">The Daily Bell</a></strong></em></p> <p style="box-sizing: border-box; font-size: 16px; line-height: 24px; padding-bottom: 8px;">Janet Yellen’s terrible week signals more about the state of US politics than the US economy … Was Janet Yellen mansplained to by members of Congress who grilled the Federal Reserve chair this week in her semi-annual testimony to the House Financial Services Committee? -Quartz</p> </blockquote> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; line-height: 24px; padding-bottom: 8px;">In this short article, Quartz bemoans how “tough” the treatment was for both Janet Yellen and Hillary this past week.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; line-height: 24px; padding-bottom: 8px;">Yellen appeared before Congress during her semi-annual testimony before the House Financial Services Committee. She came in for harsh questioning regarding Fed political bias and also her inability to reduce risks associated with too-big-too-fail banks.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; line-height: 24px; padding-bottom: 8px;">As for Ms. Clinton, she was attacked by Trump during the first debate via “90 minutes of veiled microaggressions.”</p> <blockquote style="box-sizing: border-box; padding: 10px 20px; margin: 0px 0px 20px; font-size: 17.5px; border-left: 5px solid #eeeeee;"><p style="box-sizing: border-box; font-size: 16px; line-height: 24px; padding-bottom: 8px;">… The interruptions, the remarks about her “temperament,” the questioning of her “stamina,” the criticism of her preparedness—another intelligent woman of great achievement was reprimanded by men of lesser knowledge ....</p> </blockquote> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; line-height: 24px; padding-bottom: 8px;">The article called the approaches of Congress and Trump “coarse” and “sophomoric.”</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; line-height: 24px; padding-bottom: 8px;">The only hope is that&nbsp; the “next generation” of American voters will treat officials with the “civility they deserve” regardless of gender and party affiliations.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; line-height: 24px; padding-bottom: 8px;">From our view, the Quartz article is misidentifying victims. The real victims are millions of people at home and abroad.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; line-height: 24px; padding-bottom: 8px;">US citizens are out of work and surviving on food stamps and worse. The economy offers little hope and the “solutions” voiced by Yellen and&nbsp;Clinton and others only promise more of the same: increased economic dysfunction and expanding poverty.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; line-height: 24px; padding-bottom: 8px;">Meanwhile, the US is continually injuring and slaughtering people abroad, including whole families celebrating weddings and women and children lying injured in hospitals that are destroyed around them.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; line-height: 24px; padding-bottom: 8px;">Both&nbsp;Yellen and Clinton have been directly enmeshed in support of a federal government that has been pursuing economic destruction at home and serial warfare abroad. There is plenty of evidence on the 'Net that the US and its allies helped found ISIS and even Al Qaeda.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; line-height: 24px; padding-bottom: 8px;">The US’s recent wars&nbsp;have destroyed whole countries. In Iraq, depleted uranium caused&nbsp;doctors to warn women not to get pregnant.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; line-height: 24px; padding-bottom: 8px;">Given the ruination of cultures and countries around the world, &nbsp;it seems somewhat ironic that Quartz writers are concerned about “roughness” aimed at Yellen and Clinton via the political process.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; line-height: 24px; padding-bottom: 8px;">Once we were informed that female participation in public life would change things for the better. But Yellen has been an active promoter of the Fed behemoth that has virtually bankrupted the entire US, and probably the world as well.&nbsp;Meanwhile, Clinton is far more warlike than her opponent, Donald Trump. She seems&nbsp;intent on going to war with Iran for instance, if she is elected. And she seems to be welcoming war with Russia, also.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; line-height: 24px; padding-bottom: 8px;"><span style="box-sizing: border-box; font-weight: bold;">Conclusion:&nbsp;</span>When one examines the power these two women have exercised already, it becomes clear that their actions have been destructive. Quartz should be more concerned with this destructiveness&nbsp;than “coarseness” aimed&nbsp;in their direction.</p> <p style="box-sizing: border-box; margin-top: 0px; margin-bottom: 10px; line-height: 24px; padding-bottom: 8px;"><a href=""><em>,&nbsp;<span style="font-family: franklin-gothic-urw; font-size: 24px;">See Also: <strong>Suburban Technology Should Die a Deserved Death</strong></span></em></a></p> <div><em><span style="font-family: franklin-gothic-urw; font-size: 24px;"><br /></span></em></div> </div> Donald Trump Federal Reserve House Financial Services Committee Iran Iraq Janet Yellen Testimony Uranium Sat, 01 Oct 2016 15:30:15 +0000 TDB 573691 at New Gallup Poll Shows 57% Of Americans Want A Major 3rd Party <p><a href=""><em>Submitted by Mike Krieger via Liberty Blitzkrieg blog,</em></a></p> <p><strong>There’s good news and bad news in&nbsp;the latest Gallup poll on Americans’ desire for a major 3rd Party</strong>.</p> <p><a href=""><img src="" width="499" height="299" /></a></p> <p>The good news is that at 57%, this is the highest demand we’ve seen<br /> during any recent Presidential election year. <strong>The bad news is that we’ve<br /> seen levels this high before. </strong>Additionally, this desire for a 3rd Party<br /> doesn’t actually translate into massive third party support when it<br /> comes time to actually voting.</p> <p><a href=";utm_medium=email&amp;utm_content=morelink&amp;utm_campaign=syndication"><em>Gallup</em></a> reports:</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><em><strong>PRINCETON, N.J. — A majority of Americans,<br /> 57%, continue to say that a third major U.S. political party is needed,<br /> while 37% disagree, saying the two parties are doing an adequate job of<br /> representing the American people.</strong> These views are similar to<br /> what Gallup has measured in each of the last three years. However, they<br /> represent a departure from public opinion in 2008 and 2012 — the last<br /> two presidential election years — when Americans were evenly divided on<br /> the need for a third party.</em></p> <p>&nbsp;</p> <p><em>These results are based on Gallup’s annual Governance poll. The poll was conducted Sept. 7-11, at a time when Americans’&nbsp;<a href="" target="_blank">views of the Republican and Democratic parties</a>&nbsp;are near historical lows, and when Americans hold&nbsp;<a href="" target="_blank">highly negative opinions</a>&nbsp;of<br /> both major-party presidential nominees. In 2008 and 2012, Americans’<br /> favorable ratings of the parties were slightly more positive than today,<br /> but their favorable ratings of the presidential candidates were far<br /> better.</em></p> <p>&nbsp;</p> <p><strong><em>In those years, third-party presidential candidates<br /> received less than 2% of the popular vote for president. This year,<br /> third-party candidates are getting about 10% of the vote combined in<br /> presidential preference polls. Should that level of support hold between<br /> now and Election Day, it would be the strongest performance for<br /> third-party candidates since the 1992 and 1996 campaigns, when Ross<br /> Perot ran for president.</em></strong></p> <p>&nbsp;</p> <p><em>As might be expected, independents have consistently been most<br /> likely among the major political groups to believe a third party is<br /> needed. Currently, 73% of independents, 51% of Republicans and 43% of<br /> Democrats favor the formation of a third party. Republicans’ preference<br /> for a third party today ranks among the highest Gallup has found for a<br /> partisan group, along with a 52% reading among Republicans in 2013 and<br /> 50% for Democrats in 2006.</em></p> <p>&nbsp;</p> <p><em><strong>Americans’ usual preference for a third major political<br /> party had subsided in the last two presidential election years, but that<br /> pattern did not repeat itself this year.</strong> In 2008 and 2012,<br /> Americans’ general contentment with the major-party nominees may have<br /> led them to believe the parties were doing an adequate job of<br /> representing their views, and thus there was little appetite for a third<br /> party. This was the case in 2012, even as the well-funded “Americans<br /> Elect” movement aimed at providing the infrastructure for a credible<br /> third-party candidate could not field a viable candidate.</em></p> <p>&nbsp;</p> <p><em>The political environment is different this year, with Hillary Clinton’s&nbsp;<a href="" target="_blank">favorable ratings</a>&nbsp;struggling<br /> to break 40%, while Trump’s have been stuck even lower at around 33%.<br /> Four years ago, Gary Johnson and Jill Stein combined for just over 1% of<br /> the national popular vote as the Libertarian and Green Party<br /> presidential nominees, respectively. This year, with those two<br /> third-party candidates nominated again, their support in pre-election<br /> polls among likely voters is nearly 10%.</em></p> <p>&nbsp;</p> <p><em><strong>With 57% of Americans favoring a third major political<br /> party, but only about one in 10 voters currently saying they will vote<br /> for a third-party candidate, Americans’ appetite for a third party may<br /> not be as great as they say it is.</strong> The gap between preference<br /> for a third party and support for third-party candidates in this year’s<br /> election may also reflect the structural challenges third parties face,<br /> Americans’&nbsp;<a href="" target="_blank">unfamiliarity with the third-party candidates</a>&nbsp;and possibly Americans’ reluctance to cast their vote for a candidate with little chance of winning.</em></p> </blockquote> <p>Here’s the chart of the trend over time. Still no breakout.</p> <p><img src="" alt="screen-shot-2016-09-30-at-11-39-26-am" width="501" height="289" class="alignnone wp-image-38095" /></p> <p>For related articles, see:</p> <p><em><a href="" title="Permanent Link to Jill Stein of the Green Party – Clinton Helped Create Trump" rel="bookmark">Jill Stein of the Green Party – Clinton Helped Create Trump</a></em></p> <p><em><a href="" title="Permanent Link to Libertarian Candidate Gary Johnson Polls Ahead of Hillary Clinton Amongst Independents" rel="bookmark">Libertarian Candidate Gary Johnson Polls Ahead of Hillary Clinton Amongst Independents</a></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="499" height="299" alt="" src="" /> </div> </div> </div> Gallup ratings Sat, 01 Oct 2016 15:03:59 +0000 Tyler Durden 573689 at Deutsche Bank Charged By Italy For Market Manipulation, Creating False Accounts <p>For Deutsche Bank, when it rains, it pours, even when everyone tries to come to its rescue.&nbsp;</p> <p>One day after its stock soared from all time lows, following what so far appears to have been a fabricated report sourced by AFP which relied on Twitter as a source that the DOJ would reduce its RMBS settlement ask with Deutsche Bank from $14 billion to below $6 billion (and which neither the DOJ nor Deutsche Bank have confirmed for obvious reason), moments ago <a href="">Bloomberg reported</a> that six current and former managers of Deutsche Bank, including Michele Faissola, Michele Foresti and Ivor Dunbar, were charged in Milan for colluding to falsify the accounts of Italy’s third-biggest bank, Monte Paschi (which itself is so insolvent it is currently scrambling to finalize a private sector bailout) and manipulate the market. Two former executives at Nomura Holdings Inc. and five at Banca Monte dei Paschi di Siena were also charged.</p> <p>The news comes in a time of heated relations between Italy and Germany, when the former has been pushing to get German "permission" for a state bailout of its insolvent banks only to be met by stiff resistance by the latter as Merkel and Schauble have demanded a bail-in of private investors instead, even as - ironically - it has been Deutsche Bank's woeful financial state that has been in the Wall Street spotlight this past week.</p> <p>In what appears to be another case of "Wells Fargo-esque" scapegoating of junior employees to keep senior execs off the hook, just <a href="">weeks after Milan prosecutors shelved a probe </a>against Monte Paschi's former chairman and CEO for alleged market manipulation and false accounting as it "risked undermining investor sentiment", a <strong>judge approved a request by Milan prosecutors to try the bankers on charges involving two separate derivative transactions arranged with Nomura and Deutsche Bank</strong>, said a lawyer involved in the case who was in the courtroom Saturday as the decision was announced Bloomberg reports.</p> <p>Just as importantly, the <strong>firms are also named as defendants in the indictment</strong>, as the Italian law provides for a direct liability of legal entities for certain crimes committed by their representatives. Which means even more legal charges, fines and settlements are looking likely in DB's future.</p> <p>A trial is scheduled for Dec. 15.</p> <p>As Bloomberg adds, Monte Paschi’s former executives Giuseppe Mussari, Antonio Vigni and Gianluca Baldassarri, and Nomura’s former bankers Sadeq Sayeed and Raffaele Ricci also will face trial for allegedly obstructing regulators after the investigation revealed that the 2009 deal, dubbed Alexandria, was designed to disguise losses from a previous investment.</p> <p>The basis for the legal action are two deals conducted by Deutsche Bank and Nomura which took place at the height of the financial crisis, meant to mask Monte Paschi's financial woes. Prosecutors have been reconstructing how Monte Paschi’s former managers misrepresented the lender’s finances in the years through the two deals signed with Deutsche Bank in 2008 and Nomura in 2009.&nbsp; The investigation revealed <strong>Monte Paschi arranged the transactions to hide billions in losses that led to false accounting between 2008 and 2012, </strong>according to a prosecutors’ statement released Jan. 14, when they completed the investigation.</p> <p>The fraud first came to light in January 2013, when Bloomberg News reported that Monte Paschi used the transaction with Deutsche Bank, dubbed Santorini, to mask losses from an earlier derivative contract. The world’s oldest bank restated its accounts and has since been forced to tap investors to replenish capital amid a slump in its shares. It’s now attempting to convince investors to buy billions of bad loans before a fresh stock sale.</p> <p><em>Zero Hedge previously posted an in depth look of the incestuous relationship between Deutsche Bank and Monte Paschi represented by the"Santorini" deal, which we repost below for those unfamiliar with the nuances of the deal which will likely see renewed media interest in the coming days.</em></p> <p>* * *</p> <p><a href=""><strong>The Deutsche Bank, Monte Paschi Cover-Up: Tier 1 Capital and an Equity Swap</strong></a></p> <div class="content"> <p>At Deutsche Bank, the job title “risk manager” might be more appropriately characterized as “campaign manager.” That is, Deutsche Bank is no more concerned with the active mitigation of risk than the unscrupulous politician is with actively avoiding extra marital affairs. Like campaign mangers then, risk managers at Deutsche Bank must accept the fact that occasionally (or perhaps quite often) messes will be made and spin campaigns will need to be devised and deployed in order to keep public opinion from turning sour and in order to keep the few regulators who aren’t on the payroll from stirring up any trouble. In short, risk management at the firm seems to be more reactive than proactive and the combination of pliable mathematical models, questionable ethical standards, and a clueless public makes it possible for the firm’s quant spin doctors to disappear vast amounts of risk from the books without anyone getting wise.</p> <p>Apparently however, even the mainstream media has gotten wise to the act. Recently, CNBC’s <a href="">John Carney</a> and DealBreaker’s <a href="">Matt Levine</a> observed that Deutsche Bank was able to report a higher Tier 1 capital ratio in its most recent quarter not by reducing the loans on its books or by increasing its earnings, but by changing the way it calculates its risk weighted assets. In other words, it manipulated its mathematical models to achieve more favorable results.</p> <p>It is ironic that these commentators should be the ones calling out Deutsche Bank for crimes against mathematics. After all, a little over a month ago, these same two journalists (and many of their peers) trivialized the whistleblower claim filed against Deutsche Bank by a Mr. Eric Ben-Artzi, a PhD mathematician from the most prestigious school of applied mathematics in the country, NYU’s Courant Institute.</p> <p>In any case, on January 17, <a href="">Bloomberg reported</a> that “Deutsche Bank designed a derivative for Banca Monte dei Paschi di Siena SpA at the height of the financial crisis that obscured losses at the world’s oldest lender before it sought a taxpayer bailout.” The Bloomberg story set-off a wave of investigations which ultimately revealed that the world’s oldest bank made a series of bad derivatives bets that will ultimately cost it three quarters of a billion euros. The Bank of Italy has since approved a 3.9 billion euro taxpayer-sponsored bailout. The story has taken several decisive (albeit hilarious) turns for worst over the past two weeks and the whole thing now reads like a lost chapter of The Da Vinci Code, complete with treacherous characters, scandalous deal-making, and a <a href="">secret contract</a> locked away “in a concealed safe in a 14th century Tuscan palace.”</p> <p>As intriguing as all of that is, it is the Deutsche Bank connection which is of particular interest. The firm’s role in helping Monet Paschi conceal losses speaks to the depravity of Deutsche’s corporate culture and to the firm’s willingness to share its expertise in the art of obfuscation with its clients. Here is Bloomberg’s description of what happened:</p> <p style="padding-left: 30px;"><em>Monte Paschi was facing a 367 million-euro loss on a… Deutsche Bank derivative linked to its stake in Intesa Sanpaolo SpA (ISP), Italy’s second-biggest bank, according to two documents drafted by executives at the German lender in November and December 2008…</em><br /><em>Monte Paschi, which originally took the stake in one of Intesa’s predecessor companies more than a decade earlier, had entered into a swap with the German bank in 2002 to raise cash from the holding to bolster capital while retaining exposure to Intesa’s stock-price moves, the documents show. </em></p> <p style="padding-left: 30px;"><em>Intesa shares fell more than 50 percent in the 11 months through November 2008, and the decline would have forced Monte Paschi to post a fair-value loss on the swap at the end of the quarter, threatening the bank’s capital and earnings, the derivatives specialists who examined the documents said. </em></p> <p style="padding-left: 30px;"><em>“Monte Paschi was facing a loss on its equity position and may have needed to find a way around it,” Satyajit Das, a former Citigroup Inc. (C) banker and author of half a dozen books on risk management and derivatives, said after reviewing the files. </em></p> <p>This is the first part of what would eventually become a multi-legged trade that spanned the better part of a decade. Although the mainstream media has done a decent job of describing the mechanics of the transaction, I wanted to know the details, so I contacted Bloomberg to see if they would be interested in sharing the 70 some odd pages of documents on which they based their original story. Not surprisingly, they informed me that they are not currently able to share the evidence. While they promised that I would be the first to know if the situation changed, I thought I might take a stab at explaining, in detail, what exactly went on between Deutsche and Monte Paschi in lieu of Bloomberg’s top-secret document stash.</p> <p>I cannot, of course, be sure that this is entirely accurate without access to primary sources, but this should serve as a decent outline for those interested in learning how the largest bank in the world conspired with the oldest bank in the world to effectively hide hundreds of millions in losses from shareholders.</p> <p>For our purposes, the story begins on page 310 of Monte Paschi’s 2002 <a href="">annual report</a>. Under “Acquisitions, Incorporations, and Sales,” the following passage appears:</p> <p style="padding-left: 30px;"><em>Sale to Deutsche Bank AG London Branch of a 4.99-percent holding in San Paolo-IMI S.p.A. Along with this sale, the Bank invested EUR 329 million to purchase a 49-percent interest in the newly incorporated Santorini Investment Ltd. Partnership, a Scottish company that is 51- percent owned by Deutsche Bank AG. The aggregate price of the sale was EUR 785.4 million; <strong>the difference (EUR 425.3 million) between the sale price and the carrying value (EUR 1,210.7 million) was charged to the revaluation reserve set up in accordance with Law 342/2000. The residual amount was allocated to shareholders' equity through a bonus share capital increase</strong> authorized by a resolution of the extraordinary shareholders' meeting of 30 November 2002. (emphasis mine)</em></p> <p>This is the genesis of the Deutsche Bank deal and while it may sound convoluted, the bank’s motives seem relatively clear in retrospect. First, consider the effect the transaction above had on Monte Paschi’s statement of shareholders’ equity:</p> <p><img src="" width="784" height="180" /></p> <p>First, the bank had to account for the 425 million-euro difference between the carrying value of its stake in San Paolo bank and the amount Deutsche Bank paid for those shares. This was effectively a loss, and as it turned out, Monte Paschi had held what it called an “extraordinary meeting” on November 30 of 2002 to get shareholder approval to use its entire 715 million-euro revaluation reserve (green arrow above) for an increase in the par value of the ordinary and savings shares and to absorb the loss on the sale of the San Paolo stake to Deutsche Bank (this is outlined on page 383 of the 2002 annual report).</p> <p><em>Because revaluation reserves didn’t generally count towards Tier 1 capital, the bank was able to absorb the loss on the sale without affecting the area it was really concerned about: core capital. As an added benefit, Monte Paschi was able to use the remainder of the revaluation reserve (the 209 million left over after it absorbed the loss on the sale of the shares) to raise the par value of its own shares, resulting in an increase in its share capital (yellow arrow above). This of course, led to a concurrent increase in the bank’s Tier 1 capital ratio. Effectively then, Monte Paschi turned a 425 million euro loss on the sale of an equity stake into a .2% increase in its Tier 1 capital ratio (there were other components which contributed to the increase, but the point stands).</em>&nbsp; This is likely what Bloomberg was referring to when it said Monte Paschi was seeking “to bolster capital” by using its equity stake in San Paolo.</p> <p>As noted above, Monte Paschi and Deutsche set up “Santorini Investment Ltd” after the completion of the equity sale. This is where the “equity swap” referenced by Bloomberg comes into play. From what I can tell, this was some derivation of a “total return equity swap.” Here, the deal began with the sale of the San Paolo stake to Deutsche Bank. “Santorini Investment Ltd” (the ”partnership” Deutsche and Monte Paschi set up after the sale) was essentially a special purpose vehicle (SPV) through which the swap was effectuated.</p> <p>Santorini was majority owned (51%) by Deutsche Bank – Monte Paschi controlled 49%. A portion of the cash from the original sale of the San Paolo stake to Deutsche was effectively used to finance Monte Paschi’s stake in Santorini. Through the SPV, Monte Paschi was able to retain exposure to the share price fluctuations of its San Paolo stake. Typically in such a deal, there is either a floating rate or a fixed rate of interest paid over the life of the swap to the entity to which the shares were sold (in this case Deutsche) based on the notional amount of the shares traded (so 785 million euros here). When the swap matures, the original seller of the shares (Monte Paschi here) will receive the difference between the price of the shares when the swap was originated and the price of the shares at maturity.</p> <p>Obviously, if the shares rise over time the original seller makes a profit on the swap (minus any interest payments made along the way). Of course the stock could go up or down over the life of the transaction so there is a very real possibility that the original seller of the shares will have to make a payment at maturity in addition to the interest payments made along the way. Note also that if the stock drops over the course of the deal, the original seller may be forced to post collateral to the buyer of the shares. Through Santorini then, Monte Paschi appears to have entered into a total return equity swap with Deutsche Bank referencing the 4.99% stake in San Paolo. Monte Paschi paid Deutsche interest on the deal and was on the hook for margin calls in the event the value of San Paolo’s shares dropped. The following graphic is a simplified diagram of the swap based on an unrelated total return swap diagram originally posted on Sober Look:</p> <p><img src="" width="520" height="240" /></p> <p><em>It is important to remember that one of the pitfalls of entering into such an agreement is that the seller of the shares may initially have to recognize a capital loss on the sale.&nbsp; By using its revaluation reserve, Monte Paschi was able not only to effectively avoid this for the purposes of core capital, but was in fact able to boost its Tier 1 capital ratio while retaining exposure to the share price movements of the sold San Paolo stake through the swap deal with Deutsche. </em></p> <p>The original term of the deal was 3 years but according to Monte Paschi’s 2004 annual <a href="">report</a>, the swap was extended to 2009:</p> <p style="padding-left: 30px;"><em>“…with reference to the investments held in Santorini Investment Limited Partnership, the capital loss, due to the compliance with several accounting principle, is not deemed to be permanent in view of the assets underlying the financial contracts, which anyway increased in value in the last period; moreover, the contract was renewed for further 4 years (new expiry: 31 May 2009) while keeping the advance redemption right.”</em></p> <p>On January 1 2007, San Paolo <a href="">merged with</a> Banka Intesa hence the following passage from the Bloomberg piece:</p> <p style="padding-left: 30px;"><em>“Monte Paschi,… originally took the stake in one of Intesa’s predecessor companies… [and] entered into a swap with the [Deutsche] in 2002 to raise cash from [that]…while retaining exposure to Intesa’s stock-price moves.” </em></p> <p>It appears then, that Monte Paschi effectively gained exposure to Intesa’s stock by default. Whatever the case, the collapse in the price of Intesa’s shares in 2008 resulted in a 367 million euro impairment to Monte Paschi’s Santorini investment. Desperate, the bank asked Deutsche Bank what could be done. Ultimately, it was determined that Deutsche and Monte Paschi would restructure Santorini and devise a replacement swap that would allow Monte Paschi to hide the losses on its original position.</p> <p>The replacement swap will be the topic of a follow up piece. For now, consider that Deutsche Bank and Monte Paschi were able, via a stock purchase and a subsequent equity swap, to boost Monte Paschi’s 2002 Tier 1 capital (even though the stock purchase resulted in a nearly half billion euro capital loss for Monte Paschi), while ensuring that Monte Paschi retained exposure to the underlying shares. At the time, it undoubtedly seemed like a good idea – perhaps even a win-win situation. Of course, the near collapse of the worldwide financial system in 2008 would turn the deal into a nightmare for Monte Paschi, but as the Italian bank learned, when Deutsche Bank’s risk management department is involved, “losses” are just an illusion.</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="1024" height="576" alt="" src="" /> </div> </div> </div> Bloomberg News Carrying Value Citigroup default Deutsche Bank fixed Germany Investor Sentiment Italy Market Manipulation Monte Paschi Nomura Risk Management Twitter Twitter Sat, 01 Oct 2016 14:08:07 +0000 Tyler Durden 573688 at Clinton Campaign Mocks Trump Porn Cameo After His Sex Tape Tweet <p>In the latest bizarre twist in what has become the most surreal US presidential campaign, Donald Trump had an early start on Friday, when around 3am, the republican nominee tweeted about porn footage that reportedly exists of former Miss Universe Alicia Machado with whom he is engaged in a perplexing media spat (more on that later), drawing fire from Democrat Hillary Clinton. </p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">Did Crooked Hillary help disgusting (check out sex tape and past) Alicia M become a U.S. citizen so she could use her in the debate?</p> <p>— Donald J. Trump (@realDonaldTrump) <a href="">September 30, 2016</a></p></blockquote> <script src="//"></script><p>Then, by the end of the day, Trump was facing reports that he himself had appeared briefly in a pornographic video in 2000. </p> <p>Posted originally on <a href="">BuzzFeed's website</a>, in the 13-second clip Trump is seen on a street in New York fully clothed surrounded by young women as he uncorks a bottle of champagne and pours it over the bunny-ear Playboy logo printed on the side of limousine. </p> <blockquote class="twitter-tweet"><p dir="ltr" lang="en">Donald Trump appeared in a 2000 Playboy softcore porn <a href=""></a> <a href=""></a></p> <p>— BuzzFeed (@BuzzFeed) <a href="">September 30, 2016</a></p></blockquote> <script src="//"></script><p>"There’s been a lot of talk about sex tapes today," Clinton spokesman Nick Merrill said. "<strong>And in a strange turn of events only one adult film has emerged today and its star is Donald Trump."</strong></p> <p>It is unclear if Trump knew at the time he was being filmed for a porn video, <a href="">Bloomberg writes</a>. As even <a href="">BuzzFeed admits Trump</a>'s role in the sex video is virtually non-existent, and centers around him breaking a bottle of champagne on a Playboy-branded limo while several of the playmates are visiting New York City. "Other scenes from the film feature fully nude women posing in sexual positions, dancing naked, touching themselves while naked, touching each other sensually, rubbing honey on themselves, taking a bath, and dressing in costumes."</p> <p>In the latest orchestrated media scandal meant to deflect public attention from Hillary and keep the news cycle focused on Trump, during Monday's debate Hillary cited Machado in Monday’s debate, saying Trump called the Venezuelan “Miss Piggy” after she gained weight. “She has become a U.S. citizen and you can bet she’s going to vote,” Clinton said of the 1996 pageant winner. Having once again taken the bait, since then Trump has defended the way he treated Machado and has sought to discredit her.</p> <p>"Did Crooked Hillary help disgusting (check out sex tape and past) Alicia M become a U.S. citizen so she could use her in the debate?" Trump said on Twitter early Friday morning.</p> <p>Trump cited the "sex tape" as evidence of the model's "disgusting" personality after Machado publicly criticized the GOP nominee for his comments regarding her weight. </p> <p>As BBG adds, the Republican Party includes a statement in its official party platform about porn: "Its harmful effects, especially on children, has become a public health crisis that is destroying the lives of millions. We encourage states to continue to fight this public menace and pledge our commitment to children’s safety and well-being."</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="625" height="463" alt="" src="" /> </div> </div> </div> Donald Trump Merrill New York City Twitter Twitter Sat, 01 Oct 2016 12:37:11 +0000 Tyler Durden 573687 at Meet The Young Virginia Democrat That Registered 19 Dead People To Vote In Virginia <p>Just yesterday we wrote about an FBI investigation into potential voter fraud in the critical swing state of Virginia after it was revealed that 19 dead people had recently been re-registered to vote (see "<a href="">FBI Investigating More Dead People Voting In The Key Swing State Of Virginia</a>").&nbsp; While the <a href="">Washington Post</a> caught wind of the investigation, it was not known who was behind the operation...until now. &nbsp;</p> <p>Meet, <strong>Andrew Spieles</strong>, a student at James Madison University, and apparently <strong>"Lead Organizer" for <a href="">HarrisonburgVOTES</a>.</strong>&nbsp; According to the <a href="">Daily News-Record</a>, <strong>Spieles confessed to re-registering 19 deceased Virginians to vote in the 2016 election cycle</strong>.&nbsp; </p> <p><strong>While this should come as a surprise to precisely <span style="text-decoration: underline;">0</span> people, Spieles just happens to be <span style="text-decoration: underline;">Democrat</span> </strong>who, accorded to a deleted FaceBook post, apparently recently ran for Caucus Chair of the Virginia Young Democrats.&nbsp; </p> <p>It's too bad really, sounds like Spieles had all the right <strong>"special talents" required to be very successful politician</strong>...he just forgot the most important first rule: <strong>"Don't get caught." &nbsp;</strong></p> <p><img src="" alt="Harrisonburg Votes" width="300" height="433" /></p> <p>&nbsp;</p> <p>The 19 applications of deceased citizens were submitted by Spieles through an organization called <strong><a href="">HarrisonburgVOTES</a></strong>. According to the organization's "<a href="">About Us</a>" page, <strong>HarrisonburgVOTES is a <span style="text-decoration: underline;">"non-partisan"</span> voter registration organization in Harrisonburg, VA and the surrounding areas</strong>.</p> <p>As the <a href="">HarrisonburgVOTES</a> webpage points out, the sole goal of the organization is to raise the number of registered voters in Harrisonburg to 25,000...<strong>though it's unclear what percentage of that goal was intended to be filled by dead voters</strong>.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>The sole goal of HarrisonburgVOTES is to increase the number of registered voters in Harrisonburg</strong> and the surrounding areas to increase and encourage civic engagement.</p> <p>&nbsp;</p> <p>Harrisonburg has the lowest percentage of voting age population (VAP) registered to vote among Virginia localities. Very roughly, about 17,000 people are registered to vote and about 18,000 are voting age and not registered.&nbsp; <strong>The goal of HarrisonburgVOTES will be to overcome these issues and raise the number of registered voters to 25,000.</strong></p> </blockquote> <p>HarrisonburgVOTES was founded by<strong> Joseph Fitzgerald who, "shockingly", is also a prominent democrat in Harrisonburg</strong>. &nbsp; Fitzgerald is currently Chairman of the Sixth Congressional District Democratic Committee in Virginia and the former Mayor of Harrisonburg.&nbsp; </p> <p><a href=""><img src="" alt="Harrisonburg Votes" width="600" height="364" /></a></p> <p>&nbsp;</p> <p>Fitzgerald told reporters, of course, that his organization had no knowledge of Spieles’s actions and fired him immediately after his confession.&nbsp;&nbsp;&nbsp; </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>“He’s smart, and he understands the [political] process,”</strong> Fitzgerald told the Daily News-Record of Spieles. <strong>“Who the hell knows what his motivations were?”</strong></p> </blockquote> <p>While we agree it's difficult to be 100% sure about anyone's motivations, <strong>we would be willing to put money on it having something to do with registering a bunch of dead people and then having them all vote for Hillary in November</strong>....just a hunch.</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="342" height="246" alt="" src="" /> </div> </div> </div> FBI Sat, 01 Oct 2016 03:55:00 +0000 Tyler Durden 573683 at In Hacked Fundraiser Recording, Hillary Mocks Bernie Supporters "Living In Their Parents’ Basement" <p>The reason why the Trump campaign has been so eager to find transcripts and recordings of the private speeches Hillary Clinton has delivered during her extensive, lucrative speaking career, is because it is there that she reveals that rare glimpse into what she truly thinks, or at least what $250,000 per hour will get her to believe. One such example is a recently hacked recording of Hillary Clinton, where in a private conversation with campaign donors in February, Clinton distanced herself from progressive goals like “free college, free healthcare” and described her place on the political spectrum as spanning from the center-left to the center-right.</p> <p>The newly disclosed comments first <a href="">noticed by the Intercept</a>, came in audio from hacked emails revealed this week by the <a href="">Washington Free Beacon</a>. Clinton was speaking at a Virginia fundraiser hosted by Beatrice Welters, the <a href="">former U.S. ambassador to Trinidad and Tobago</a>, and her husband <a href="">Anthony Welters</a>, the executive chairman of an investment consulting firm founded by former Clinton aid Cheryl Mills.</p> <p>The hacked audio provides another peek into the ideological chameleon that Hillary is on a day to day basis. As the Intercept notes, "Clinton has been inconsistent in the past about espousing political labels. She has at times touted herself as stalwart liberal. For instance, <a href="">she said last July</a>: “I take a backseat to no one when you look at my record in standing up and fighting for progressive values.” But a few months later, she <a href="">told a group in Ohio</a>: “You know, I get accused of being kind of moderate and center. I plead guilty.”</p> <p>In one segment of the leaked audio, Hillary focused on her opponent at the time, Bernie Sanders, was pointed to successful programs in Scandinavia which provide universal daycare, family leave, and government sponsored healthcare and college education, as policies that he would seek to adopt. "Progressive" Hillary mocked the compared idea of "free college, free healthcare" to the "extreme" ideas promulgated by the right, which include "populism, nationalism and xenophobia."</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>It is important to recognize what’s going on in this election. Everybody who’s ever been in an election that I’m aware of is quite bewildered because there is a strain of, on the one hand, <strong>the kind of populist, nationalist, xenophobic, discriminatory kind of approach that we hear too much of from the Republican candidates.</strong> And on the other side, there’s just a <strong>deep desire to believe that we can have free college, free healthcare, that what we’ve done hasn’t gone far enough</strong>, and that we just need to, you know,&nbsp; go as far as, you know, Scandinavia, whatever that means, and half the people don’t know what that means, but it’s something that they deeply feel. So as a friend of mine said the other day,<strong> I am occupying from the center-left to the center-right. </strong>And I don’t have much company there. Because it is difficult when you’re running to be president, and you understand how hard the job is —&nbsp; I don’t want to overpromise. I don’t want to tell people things that I know we cannot do. </p> </blockquote> <p>Recording below::</p> <p><iframe src=";auto_play=false&amp;hide_related=false&amp;show_comments=true&amp;show_user=true&amp;show_reposts=false&amp;visual=true" width="500" height="100" frameborder="no" scrolling="no"></iframe></p> <p>&nbsp;</p> <p>Clinton then went on to explain why she felt so many Democratic voters, many of whom "live in their parents' basement" were gravitating to Sanders. Ironically, for a presidential candidate that touts the economic recovery the US is going through, she admits these "children of the Great Recession" don't see much of a future...</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Some are new to politics completely. They’re children of the Great Recession. <strong>And they are living in their parents’ basement</strong>. They feel they got their education and the jobs that are available to them are not at all what they envisioned for themselves. And they don’t see much of a future. </p> </blockquote> <p>... and with an entire generation unexpectedly finding itself in a dead-end economy, it provides a perfect incubator for what according to Hillary is an army of Bernie supporters: "if you’re feeling like you’re consigned to, you know, being a barista... <strong>then the idea that maybe, just maybe, you could be part of a political revolution is pretty appealing."</strong></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>I met with a group of young black millennials today and you know one of the young women said, “<strong>You know, none of us feel that we have the job that we should have gotten out of college. And we don’t believe the job market is going to give us much of a chance.</strong>” So that is a mindset that is really affecting their politics. And so if you’re feeling like you’re consigned to, you know, being a barista, or you know, some other job that doesn’t pay a lot, and doesn’t have some other ladder of opportunity attached to it, <strong>then the idea that maybe, just maybe, you could be part of a political revolution is pretty appealing</strong>.&nbsp;</p> </blockquote> <p>One wonders whose fault it is that millions of young people are stuck in dead end jobs, living in their parents basement, while both Obama and Hillary make TV appearances touting the strength of the economic recovery.</p> <p>But the punchline was what Hillary, who has been scrambling to secure the much-needed Millennial vote in recent weeks, truly thought about about the millions of young people whose vote she is trying to win: a diatribe of mockery, in which she describes the concept of a political revolution as a "false promise" which has attracted all these disillusioned and disheartened young people "living in their parents' basement." Does Hillary have anything to offer them? No, but she desperately needs their vote, even if behind the scenes at generously paid private functions, she mocks them in front of all those present. </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>We should all be really understanding of that and should try to do the best we can not to be, you know, a wet blanket on idealism. We want people to be idealistic. We want them to set big goals... <strong>But those of us who understand this, who've worked in it know that it's a false promise. But I don't think you tell idealistic people, particularly young people that they've bought into a false promise</strong>. </p> </blockquote> <p>Especially when you are trying to secure their votes? </p> <p>Then again, considering the eagerness with which Bernie Sanders has endorsed Wall Street's favorite candidate, it is quite clear that the real "false promise" here was Sanders' "revolution" all along.&nbsp; We wonder if in light of this hack, if Bernie Sanders would care to make some statement why he is endosing the candidate who behind closed doors, openly mocks everything that his supporters believe in. </p> <p> <iframe src=";auto_play=false&amp;hide_related=false&amp;show_comments=true&amp;show_user=true&amp;show_reposts=false&amp;visual=true" width="500" height="100" frameborder="no" scrolling="no"></iframe></p> <p>Clinton has been accused numerous times in the past of patronizing young Sanders supporters. On <a href="">Meet The Press </a>in April, Clinton said she said “I feel sorry sometimes for the young people” who believe Sanders’s claims about her <a href="">taking money </a>from the fossil fuel industry.</p> <p>During her remarks, she reiterated her belief that politics is the art of the possible, dismissing the more aspirational approach of Sanders and his supporters. “I want to be very clear about the progress I think we can make,” she said. There was no discussion of her view that the ideology of millions of progressive, young people is a false promise. </p> <p>And while America's young voters will be given an opportunity to respond to Hillary in just over 5 weeks time, one wonders what, in a world where Donald Trump's every word is brutally attacked by the pro-Clinton media. would emerge if even a handful of Hillary's Wall Street speech transcripts were the finally emerge. </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="1308" height="678" alt="" src="" /> </div> </div> </div> Bernie Sanders Meet The Press Nationalism None Ohio Recession recovery Sat, 01 Oct 2016 02:53:10 +0000 Tyler Durden 573686 at Hunter S. Thompson's Prescient 1972 Warning <p><a href=""><em>Submitted by Mike Krieger via Liberty Blitzkrieg blog,</em></a></p> <p>While on the campaign trail in 1972, Hunter S. Thompson issued a dire warning that is more true today than it ever has been.</p> <p><em><strong>He warned us about what would happen to the country if we continued along the destructive path he noticed nearly 45 years ago. He observed&nbsp;that if Americans continued to accept &ldquo;lesser of two evilism&rdquo; the only thing we&rsquo;d end up with would be increased evil.</strong></em></p> <p>He was right.</p> <p>Here&rsquo;s the quote:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong><em>That&rsquo;s the real issue this time,&rdquo; he said. &ldquo;Beating Nixon.&nbsp; It&rsquo;s hard to even guess how much damage those bastards will do if they get in for another four years.&rdquo;</em></strong></p> <p>&nbsp;</p> <p><strong><em>The argument was familiar, I had even made it myself, here and there, but I was beginning to sense something very depressing about it.&nbsp; How many more of these goddamn elections are we going to have to write off as lame, but &ldquo;regrettably necessary&rdquo; holding actions?&nbsp; And how many more of these stinking double-downer sideshows will we have to go through before we can get ourselves straight enough to put together some kind of national election that will give me and the at least 20 million people I tend to agree with a chance to vote&nbsp;for&nbsp;something, instead of always being faced with that old familiar choice between the lesser of two evils?</em></strong></p> <p>&nbsp;</p> <p><strong><em>Now with another one of these big bogus showdowns looming down on us, I can already pick up the stench of another bummer.&nbsp; I understand, along with a lot of other people, that the big thing this year is Beating Nixon.&nbsp; But that was also the big thing, as I recall, twelve years ago in 1960 &ndash; and as far as I can tell, we&rsquo;ve gone from bad to worse to rotten since then, and the outlook is for more of the same.</em></strong></p> <p>&nbsp;</p> <p><strong><em>&mdash;Hunter S. Thompson,&nbsp;Fear and Loathing: On the Campaign Trail &rsquo;72</em></strong></p> </blockquote> <p><em>This above quote came to my attention courtesy of an article published at Counterpunch titled:&nbsp;<a href="" rel="bookmark">Stop Trump! Stop Clinton!! Stop the Madness (and Let Me Get Off)!</a></em></p> <p>Wish you were still with us.</p> <p><img alt="screen-shot-2016-09-29-at-10-20-41-am" class="alignnone wp-image-38055" height="593" src="" width="493" /></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="439" height="227" alt="" src="" /> </div> </div> </div> Sat, 01 Oct 2016 02:40:13 +0000 Tyler Durden 573646 at After the Debate, the Deluge? (Now With A Trigger Warning) <p><a href=""><em>Submitted by David Galland via,</em></a></p> <p><strong><em>Trigger Warning:</em></strong><em> The following article includes an abundance of insults and harsh words directed at individuals of both of the male and female sex as well as politically incorrect statements including digs at cross-dressers and people worried about the weather. If you feel &ldquo;triggered&rdquo; by any of the statements, please see a psychiatrist.</em></p> <p><strong><em>**** &nbsp;**** &nbsp;*****</em></strong></p> <p>Dear Debate-Watchers,</p> <p><strong><em>&ldquo;I guess he is a buffoon after all. Too bad.&rdquo;</em></strong></p> <p>Those words were written by a dear friend and, until the lights went out on the first presidential debate, the most ardent of Trump supporters.</p> <p>For the debate, a group of us had gathered at the Social Club at <a href="" target="_blank">La Estancia de Cafayate</a> here in the Argentine outback.</p> <p>Most of our group were expats who, yearning to be free, have voted with our feet. Therefore, not indicative of broader US demographics.</p> <p><img src="" style="width: 250px; height: 254px;" /></p> <p><strong>It&rsquo;s safe to say the audience was hopeful that Trump would wipe the proverbial floor with Mrs. Clinton. Within a few minutes, however, it became apparent it was not The Donald holding the mop handle.</strong></p> <p>If proof was ever needed that Hillary is a skilled politician, the debate provided it. She speaks in complete sentences, adroitly dodges sticky questions, and wields the rhetorical knife like a Colombian <em>sicario</em>.</p> <p><strong>Of course, Hillary had help. It often seemed as if the moderator had sat in on Hillary&rsquo;s debate preparation, studiously taking notes as her team made helpful suggestions on questions he could use to blindside Trump or topics to be quickly passed over should they arise. Topics such as war-starting and email-server emptying.</strong></p> <p>But the moderator&rsquo;s lack of impartiality ultimately didn&rsquo;t matter, because, to the great detriment of the American Dream, The Donald could hardly string together a single coherent thought. Trump huffed and puffed&mdash;and oddly, sniffed&mdash;but in the end couldn&rsquo;t have blown out a paper match.</p> <p>When he did make an understandable point, as often as not, I disagreed. For instance, it seems like he&rsquo;s advocating imposing a fresh round of trade tariffs, something that history has proven time and again to be a bucket of cold water over the free flow of goods and services. And he appears to favor using US military muscle to &ldquo;take the oil&rdquo; of Middle Eastern countries.</p> <p><em><strong>So, here we are.</strong></em></p> <p><em><strong>And by &ldquo;here,&rdquo; I mean on the verge of electing the ultimate statist and an unindicted conspirator in too many shady deals to list here.</strong></em></p> <p>&nbsp;</p> <h3><u>The Real Problem</u></h3> <p>As mentioned last week, this month&rsquo;s edition of <a href=";utm_medium=tpp&amp;utm_campaign=gg003&amp;utm_content=tpp092316" target="_blank"><strong>Compelling Investments <em>Quantified</em></strong></a><em>, </em>released yesterday, leads off with a fairly deep dive into the regulatory morass gunking up the workings of the US and global economies.</p> <p><strong>To give you the smallest sense of the situation, the graphic below shows the stunning increase in regulation under Obama.</strong></p> <p>As you can see, the biggest new burden foisted on the economy is an aggressive ramping up of the <em>Environmental Protection Agency</em>, Grand Inquisitors of the Holy Church of Weather Worriers.</p> <p><img src="" style="width: 550px; height: 654px;" /></p> <p><strong>While I have long held the attitude that <em>anyone </em>wanting to be a politician is possessed of serious character flaws, I confess to caring about Trump winning the debate and, more to the point, prevailing in the November election.</strong></p> <p>My reasons were not that he is a man of stellar character with a firm grasp on the issues, but rather because it is clear from his many public actions that he is not a politician in the conventional sense.</p> <p><img src="" style="width: 250px; height: 387px;" /></p> <p>Therefore, the Pollyannaish side of me hoped that, upon taking office, he would stop providing water and nutrients to the growing bureaucracy that is literally destroying the US economy, as well as the very idea of America.</p> <p>And by the latter, I mean a corner of the Earth where private property rights are respected and where everyone has a decent shot at attaining whatever it is they deem to be success.</p> <p>You know, the America where rugged individuals are considered archetypical.</p> <p><strong><em>Instead, the American entrepreneur is forced to struggle through a minefield of politically correct landmines and hundreds of thousands of pages of laws and regulations.</em></strong></p> <p><strong><em>Should he or she succeed financially, the government celebrates such success with progressively punitive taxes.</em></strong></p> <p><strong>As a symbol of the New American, I would nominate campus Safe Spaces, such as the one promoted on the sign shown here, from the hallway at Hofstra University where the presidential debate was held.</strong></p> <p>I will now briefly pause, dear readers, to let out a string of loud and very politically incorrect expletives.</p> <p>That out of the way, and falling in line with what it means to be an American in this day and age, I must confess to feeling &ldquo;triggered&rdquo; by the implications of Trump&rsquo;s debate pratfall.</p> <h3><u>After the Debate, the Deluge?</u></h3> <p><strong>During the debate, Mrs. Clinton made it clear that&mdash;rather than reversing the tide of regulation and taxation, prerequisites to getting the US economy off the blocks&mdash;she is going to double down.</strong></p> <p>Starting by ensuring that those individuals whose energetic pursuit of success has resulted in them <strong>earning above-average incomes are forced by the state to &ldquo;pay their fair share.&rdquo;</strong></p> <p><strong>We all know how unfair that statement is, given that the top 1% of income earners already pay about half of all income taxes, while the bottom 80% pay just 20% of the total. And a very large percentage of that total pay no taxes at all.</strong></p> <p>Mrs. Clinton is aware of these facts, but fairness and facts have no role to play in Progressive America. The <em>only </em>thing that counts is how the narrative plays with the rubes.</p> <p><strong>Will she be worse than Obama in terms of regulations and implementing punitive taxes? Based on her history and stump speeches, the Magic 8 ball points to &ldquo;YES.&rdquo;</strong></p> <p>The following quote is from a Clinton-fawning article in the <em>Huffington Post</em>, entitled, &ldquo;<a href="" target="_blank"><strong>The Future of America Is Being Written in This Tiny Office</strong></a>.&rdquo;</p> <p style="margin-left: .5in;">&ldquo;...Clinton&rsquo;s plans are as unambiguously progressive as any from a Democratic nominee in modern history&mdash;and almost nobody seems to have noticed.&rdquo;</p> <p>Among those plans are free college for the 50% or so of Americans who are already not paying any taxes; subsidies so no one has to pay more than 10% of their income on child care; guaranteed paid family leave; new layers of special treatment for non-whites and non-heterosexuals; new regulations to help unions regain their bargaining power and even, in her own words, to &ldquo;rewrite the rules&rdquo; on capitalism.</p> <p>And so, at the very point in time when the US <em>desperately </em>needs to cut away the bureaucratic Kudzu holding back capitalism, the country is falling into the hands of a socialist sociopath who views the state as a hammer to be unhesitantly used to beat society flat.</p> <p><u><strong>In addition to higher taxes for those on the wrong side of the income divide, and more handouts for those on the right side, I think we can correctly anticipate some other consequences of Zer election as La Presidenta, many of which will have implications for investment markets:</strong></u></p> <ul> <li><strong>Bank bashing</strong>. Mrs. Clinton has promised, when elected, to burden the banks with even more regulations. Coming on top of the massive Dodd-Frank bill, the flow of bank funds, which in a healthy economy provides upwards of 90% of total money supply (M4), will continue to remain frozen.</li> <li><strong>Dastardly deeds done to dirty energy.</strong> Oil, gas, nuclear, and in particular coal&mdash;are going to come under even greater pressure. Fracking is going to get fracked.</li> <li><strong>Obamacare is dead, long live Hillarycare. </strong>Make no mistake, Hillary and her brain trust will set about &ldquo;fixing&rdquo; Obamacare by adding yet more bureaucracy. Universal healthcare was her pet project back in the day. She is plenty peeved Obama pulled off his version of it and so will go to great lengths to make it her own again.</li> <li><strong>Political correctness on steroids. </strong>The morning after she is sworn in, Hillary will get to work pandering to the miscellany of special interest groups to win a second term. With George Soros on her arm and supported at every turn by the not-so-invisible hand of Silicon Valley, she&rsquo;ll find ways to assure Black Lives Matter in every way they think they should matter. Ditto, the Hispanic populations and every other non-white male demographic, especially Bernie&rsquo;s Millennials, who will be a far bigger factor in the next election than they are in this one.</li> <li><strong>An economic circus, but not of the funny sort</strong>. The US economy&mdash;and most of the world&rsquo;s largest economies&mdash;have suffered extensively at the hands of government bureaucrats who, through ignorance or deliberate malfeasance, have burdened it with regulations to the point of breaking. <p>However, given that Clinton will have grand plans to make her tenure historically significant for something more than possessing a womb, you can expect a tidal wave of new regulation designed to create a more perfect world.</p> <p>As the new wave of regulations will threaten to kill the already gagging golden goose, the Clinton administration will need to get very creative to keep the deficits from running amok.</p> <p>I can&rsquo;t even begin to guess how, but literally anything that can be imagined is on the table. Wage and price controls, higher estate taxes, big penalties for companies with assets overseas (unless, of course, her hubby is on the board), confiscating foreign-held assets&hellip; really, anything is fair game.</p></li> <li><strong>Prosperity on hold. </strong>Most importantly, instead of turning back toward the light, a Clinton victory ensures that the current economic stagnation and the attendant societal tensions will only worsen. Rig for a long dark night and for the deluge that is all but certain.</li> </ul> <p>While the blame for the precarious situation the US finds itself in could justly be placed at the feet of any number of players, and extends well back in history, at the risk of angering some dear readers, in terms of the here and now, I choose to throw a razzberry in the direction of Donald Trump.</p> <p><strong>That&rsquo;s because he arrogantly failed to properly prepare for the debate. </strong>As a consequence, he walked into one sucker punch after another and, when smacked, had no snappy retorts prepared to steer the debate back to themes less flattering to his opponent.</p> <p>By failing to prepare, he let down the millions of people who had allowed themselves to become reengaged in the political process and who dared hope the cultural Marxism overrunning the nation could be slowed.</p> <p><em><strong>Of course, there is another possible explanation for Trump&rsquo;s performance. Maybe he did prepare rigorously for the debate&mdash;and according to his campaign co-chair, he did&mdash;in which case, could his dismal performance be a sign that, per my friend&rsquo;s assessment, he actually is a buffoon? Or, as they say in Texas, he&rsquo;s all hat and no cows.</strong></em></p> <p>Regardless, his dismal showing has fully exposed the tender belly of what was left of the American dream, granting a big opening for the progressives to move in for the kill.</p> <h3><u>Game Over?</u></h3> <p><em><strong>Given the debate disaster, is it game over for Trump and, by extension, America?</strong></em></p> <p>It&rsquo;s impossible to say. On the one hand, demoralized as Trump&rsquo;s supporters may be, the idea of President Hillary is probably enough to get them off their couches come election day.</p> <p><strong>In fact, much to my surprise, following the debate, Trump&rsquo;s fundraising efforts soared.</strong> And while I have heard from many Trump supporters who share my assessment of his debate performance, every one of them appears to remain committed to their candidate come election day.</p> <p>However, <strong>as far as independents go, I think his performance may have poisoned that well for good.</strong></p> <p>At the end of the day, it will all come down to turnout. Whereas prior to the debate, Hillary couldn&rsquo;t get any respect, <strong><em>I don&rsquo;t think anyone who watched could deny that she appeared more presidential.</em></strong></p> <p><u><em><strong>Condescending? Arrogant? Slippery? Absolutely.</strong></em></u></p> <p><u><em><strong>But at least she was coherent.</strong></em></u></p> <p>I cannot tell you how it pains me to write these words, because I tend toward optimism in my life. Despite having removed our family from ground zero, I had hoped the driving force behind Trump&rsquo;s near miraculous candidacy&mdash;an up-swelling of popular anger at the poor condition the bureaucrats have left the country in&mdash;heralded a step back toward the path of sanity for the United States.</p> <p><strong>Maybe Trump just had a really bad day and will do well enough in what&rsquo;s left of the campaign season to prevail.</strong> And maybe, if elected, he&rsquo;ll surround himself with smart people and then wander off to the nearest golf course like his predecessor.</p> <p>At this point, <strong>given the choice between the anti-capitalist crook and the big unknown that is Donald Trump, I would still have to pull the lever for Trump and hope for the best.</strong></p> <p><u><strong>However, after the dismal debate, the future has just gotten a lot more unpredictable.</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="194" height="110" alt="" src="" /> </div> </div> </div> Demographics Donald Trump George Soros Golden Goose Money Supply Obamacare Sat, 01 Oct 2016 02:30:00 +0000 Tyler Durden 573685 at Project Mayhem - Man Calmly Enters Apple Store And Crushes Every iPhone In Sight With A Ball Bearing <p>It is unclear what caused this Frenchman to walk into an Apple store and <strong>crush every single iPhone in site with a metal ball bearing</strong> but that is exactly what he decided to do.&nbsp; Perhaps he was one of the unfortunate victims of a <a href="">spoof video</a> that apparently succeeding a convincing people to drill a headphone jack in their new iPhone 7?</p> <blockquote class="twitter-video"><p dir="ltr" lang="en">Man walks into Apple Store in France and smashes every <a href="">#iPhone</a> in sight "crazy way to go about an exchange?" <a href=""></a></p> <p>— Shiny Apples UK (@Shiny_Apples) <a href="">September 30, 2016</a></p></blockquote> <script src="//"></script><p>&nbsp;</p> <p>Luckily for the iPhone smasher, this event occurred in France where security guards quickly surrendered the store and allowed the man to simply walk out and go on his merry way.</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="931" height="485" alt="" src="" /> </div> </div> </div> Apple France Twitter Twitter Sat, 01 Oct 2016 02:18:11 +0000 Tyler Durden 573649 at