http://www.zerohedge.com/fullrss2.xml/%2A%7CARCHIVE%7C%2A/588691 en Remembering A Still Falling Hero: Small Business http://www.zerohedge.com/news/2017-05-29/remembering-still-falling-hero-small-business <p><a href="https://markstcyr.com/2017/05/28/remembering-a-still-falling-hero-small-business/"><em>Authored by Mark St.Cyr,</em></a></p> <p>On this holiday weekend known here in the U.S. as Memorial Day, <strong>I would like to make a slight turn in the narrative that many give little to no attention too,</strong> yet, is one of the most important underlying principles or fundamentals which helped shape, lift, mold, sustain, and create one of the world&rsquo;s greatest economic powerhouses bar none.</p> <p>That &ldquo;turn&rdquo; is in remembering: <strong><em>The liberty to create, and own, one&rsquo;s own business.</em></strong></p> <p>As true as holding the principles of liberty close to one&rsquo;s heart is near-and-dear to every American. What gets forgotten all too easily is what enabled many of those immigrants that fled here during its rocky beginnings, and still continues today, to shape and mold a better life for themselves and their families. That other foundational principle is this:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>The ability to create, and pursue, a business idea that could, or would, allow them to acquire economic liberty based on their own self-expression made manifest via perseverance, and sometimes a little luck. And with that &ndash; create a foundation which could either be passed on, or sold, by their heirs, giving them possibly one further step-up, or ahead, onto firmer ground to take another. And maybe another, and another, and so forth.</strong></p> </blockquote> <p>Only through the pursuit of business was the true circumvention of any stigmatized political or economic class, ethnicity, and more so truly held in one&rsquo;s own hands. Self-actualization, the pursuit of economic riches, the ability to ingratiated oneself by their own means to not only claim to be part of the American experiment, but to actually be American regardless of where one began, either from abroad or born within &ndash; was not inconsequential.</p> <p><strong><em>Being an American businessman, regardless of ethnicity, political class, economic class, religious persuasion, gender, or anything else, in many ways was the embodiment for something to be cherished and honored by the owner.</em></strong></p> <p>Being the sole-owner of one&rsquo;s own economic future was either unattainable, or unavailable anywhere else.</p> <p><strong>It embodied everything the American principle was created for and rose upon.</strong> Without it &ndash; we would have just been another ruled monarchy; socialist; communist; caste; (fill-in-the-blank) or combination of all system under a different name with better topography. It&rsquo;s the only thing that separates the U.S. from all others that came before and since.</p> <p><em>(Note:&nbsp;The gender neutral term &ldquo;business-person&rdquo; just doesn&rsquo;t flow and only emboldens the gender-sensitivity-police and I&rsquo;m personally sick-and-tired of them. Women with true business fortitude understand there&rsquo;s no derogatory slight in the term &ldquo;businessman.&rdquo; Period. For those wanting more on my thoughts about women in business see my article <a href="http://wp.me/piYrt-3bK">&ldquo;The Bull On Bossy&rdquo;</a> for more insight.)</em></p> <p>The term, as well as structure, that has allowed the U.S. to grow as to become such an economic powerhouse is called: Free Market Capitalism (FMC.) And its foundational starting point is the sole-person who decides to either create their own product, or work with (and yes even for) others who are in need of their talent. Then, decide where, and on what agreed upon price commerce takes place. (Examples of such are Family Dr&rsquo;s., accountants, bakers, tattoo artists, waiters, waitresses, plumbers, electricians, salespeople, and far too many more to list. And yes, even bankers.)</p> <p>Again, at its foundational point is the solitary person who decides to take matters and consequences under their own purview and either rise, or fall, on their own business prowess upon the battlefield known as business or commerce.</p> <p><u><strong>What is taking shape today, and what&rsquo;s worse &ndash; growing &ndash; is anything but.</strong></u></p> <p>What most have no understanding of,&nbsp;let alone idea, that&rsquo;s taking place today is the circumvention of Free Market Capitalism, and in its place, the insertion of its hybrid, ever-morphing, evil twin. e.g, Cronyism, aka Crony Capitalism (CC.)</p> <p>I could go on for days explaining why this insertion of CC into the FMC model is not only egregious, but dangerous. However, all one has to do is look at the current economic landscape with an eye for truth &ndash; and its perversions and consequences can be seen everywhere.</p> <p><strong>It&rsquo;s like a visible, metastasized cancer encroaching upon economic liberty. </strong>i.e., Forget about the &ldquo;golden egg&rdquo; its wrapping its hands firmly around the goose&rsquo;s neck in broad daylight. And never mind those not bothering to look. What&rsquo;s worse &ndash; is those who can&rsquo;t turn their eyes away seem to think there&rsquo;s anything wrong with this picture! e.g., Ivory Towered academics, main stream business/financial outlets,&nbsp;<em>et al</em>.</p> <p>A few years ago I penned the following article, <a href="http://www.zerohedge.com/news/2015-10-04/its-entrepreneur-saves-economy-%E2%80%93-not-fed">&ldquo;It&rsquo;s The Entrepreneur That Saves An Economy &ndash; Not The Fed&rdquo;</a> and in it I made the following point. To wit:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;The problem that&rsquo;s taking place right now within the economy is exactly what you get when you take a free market economy and try to impose a command and control blanket over it: you smother it.</p> <p>&nbsp;</p> <p>The Ivory Tower academics have no real understanding of what &ldquo;free&rdquo; actually entails when it&rsquo;s expressed through the economy as a whole. The ability to build a better mouse trap, or, solve a previously unsolvable riddle all while charging a price two parties can both bear, profit by, and have satisfaction in the transaction does not, nor ever will take place within a command and control base. Ever.</p> <p>&nbsp;</p> <p>Free markets allow for competition to find equilibrium as to provide and deliver a service or good someone will pay a fair price for. And yes, even for such an item such as a stock price.</p> <p>&nbsp;</p> <p>Command and control fosters either the &ldquo;State&rdquo; to be the only provider, or, a fostered crony capitalism styled arrangement which is nothing more than another iteration of some communist system in prettier buildings wearing better suits. Harsh? Yes. Off point? Hardly. And that&rsquo;s the problem.</p> <p>&nbsp;</p> <p>The great capital formation experiment and enterprise known as Wall Street and its Exchanges, once the envy of the world, has now been transformed into nothing more than a rigged casino where Fed fueled &ldquo;hot money&rdquo; front runs orders in ways so egregious to the principal of fair play; walking into &ldquo;a den of thieves&rdquo; would be considered a step up.&rdquo;</p> </blockquote> <p>Here&rsquo;s a bit more from that article directed squarely at the Fed. (or central banks in general) and its interventionist policies. At the time my accusations were excoriated as derisive, uneducated, (fill-in-the-blank.) However, with that said I&rsquo;ll let you be the judge as to just whom seems to be &ldquo;uneducated&rdquo; when it comes to economic theory and practices. Again, to wit:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;Business people know and understand this intuitively. Ivory Tower academics, intellectuals, and economists are not only clueless, it&rsquo;s their wanton indignation of these facts that move their policies beyond destructive right into outright dangerous territory for any free market based economy.</p> <p>&nbsp;</p> <p>The only one&rsquo;s that can benefit from such a business environment are those that gorge and reward themselves via the availability current Fed. policy fosters. And the name for it is: crony capitalism.</p> <p>&nbsp;</p> <p>Whether the Fed. wants to admit or not, that&rsquo;s what their current policy and communication fosters and bolsters which is the antithesis of what the Fed. itself states as its primary objective; for there is no wage growth, no true job creation, no sustainable capital formations, and not stable markets.</p> <p>&nbsp;</p> <p>The Fed. is killing the economy &ndash; not helping it. And as de facto proof I point to their own measurements of achievement. The markets, the labor participation rate, small business formation, wage growth, and on, and on. It&rsquo;s all pathetic.</p> <p>&nbsp;</p> <p>The Fed&rsquo;s QE program has adulterated valuations so much it will be a wonder if we ever get back to a more normalized set of business values let alone their valuations and away from this calamity.</p> <p>&nbsp;</p> <p>There are entrepreneurs along with CEO&rsquo;s of companies who are quite literally chomping at the bit to try new or improved innovations &ndash; yet don&rsquo;t dare for either their competitors are being kept alive via cheap money afforded them under current ZIRP policy, or worse, don&rsquo;t dare hire or spend for who knows if the Fed. will raise out of the blue or announce some new program that runs anathema to basic sound monetary policies.</p> <p>&nbsp;</p> <p>You don&rsquo;t invest in cap-ex or hiring for the long-term if you don&rsquo;t know what the rules might be tomorrow never-mind next year. Period.&rdquo;</p> </blockquote> <p><strong>If you gauge the current economy via the abomination now known as &ldquo;markets&rdquo; (which the Fed. clearly does) this &ldquo;success&rdquo; is all but missing its own &ldquo;Mission Accomplished&rdquo; banner. </strong>However, if you measure the economy via its true measurements of health like jobs, small business creation, cap-ex, and more? You go from banner to tombstone. Yet &ndash; the epitaph reads the same as &ldquo;banner.&rdquo; It only depends on perspective as to what the words mean. Think about it.</p> <p>To make my point even further on just how far economic &ldquo;thinking&rdquo; has gone off the rails. I was reminded of it by none other than Mark Zuckerberg of Facebook&trade; via his latest speech or commencement address.</p> <p><strong>Nowhere in my recent memory has the idea of small business, along with what it means for the economic health (e.g. Free market Capitalism) been so avoided, so adulterated, so perverted in its messaging and delivery than what I witnessed when viewing&nbsp;<a href="http://news.harvard.edu/gazette/story/2017/05/mark-zuckerbergs-speech-as-written-for-harvards-class-of-2017/">Mark Zuckerberg&rsquo;s address to this year&rsquo;s graduating class at Harvard University</a>.</strong></p> <p>In my opinion: It was the epitome of everything going wrong in business today. I also viewed it as one of the most tone-deaf, quasi-political speeches ever given at a commencement speech via someone who should be the embodiment of this time in history&rsquo;s most celebrated and espousing Free Market Capitalism entrepreneurs.</p> <p><strong>It was so dreadful, and full of what I view as socialistic laced mumbo-jumbo, I couldn&rsquo;t listen to much more than a few minutes. Again, via my interpretations; it was agonizingly void of anything resembling free market business principles.</strong></p> <p>Only a speech delivered by Hilary Clinton compared for substance and delivery. And that&rsquo;s being kind.</p> <p><strong>This so-called &ldquo;address&rdquo; was anything but &ldquo;uplifting&rdquo; for those who are supposedly about to enter the work force </strong>and help create the next wave of dynamism for economic growth for the U.S. and subsequently the global business environment.</p> <p>No, instead, after listening about such themes as &ldquo;guaranteed universal basic income&rdquo;, &ldquo;we are the world&rdquo;, &ldquo;save the planet&rdquo;, and more; it would make perfect sense after receiving their diplomas they simply returned home to their parents basements and waited for the world to offer them a corner office, 7 figure starting salary, trophy-spouse, 2.2 children (gender to be determined) and world peace. Just make sure you&rsquo;re logged into FB as you wait. Because that&rsquo;s how Mark gets paid, even if you don&rsquo;t.</p> <p>It seemed when listening that in a Zuckerberg vision of the world: Don&rsquo;t pull on your own bootstraps. Wait! Sooner or later they&rsquo;ll be able to offer you Utopia. And you&rsquo;ll thank him for it. Just remember to <del>vote</del> &ldquo;Like&rdquo; to show your support behind him if, or when, he decides to run for office. Because for what that speech lacked in spoken words of business ideals, it was laced with more unspoken terms of the political which could not be ignored even when trying. i.e., I couldn&rsquo;t help but think at any moment I would hear something to the effect of: &ldquo;And be on the lookout for Zuckerberg for (fill in the blank) in 20??&rdquo;</p> <p><strong>Compare Mark&rsquo;s recent with the one delivered in 2005 by the late <a href="http://news.stanford.edu/2005/06/14/jobs-061505/">Steve Jobs at Stanford University</a>. The two could not be more striking in both tone, as well as delivery. The difference is utterly remarkable and is clearly visible:</strong></p> <p>One is a businessman explaining via his own words and experiences how one may go about changing the world for the better via FMC principles and ideas eschewing anything to do with the political. The other? The antithesis of the former, delivering a speech more in-tune as if it were written by Mrs. Clinton&rsquo;s former speech writers.</p> <p>Don&rsquo;t take my word for it, view both of them yourself and come to your own conclusions. The differences couldn&rsquo;t be more striking.</p> <p><strong>The only way forward for this nation (e.g., U.S.) is for the rebirth of quest and zeal for small business America. </strong>It is what built this nation, continues to support it (although it is being waged war upon by crony capitalist benefactors and devotees daily) and is the only way to reassert and preserve the foundations of the Free Market Capital system.</p> <p>What we are experiencing today is an adulterated, ever-growing, Frankenstein perversion of those once pristine principles that is growing ever-the-more unstable with each passing day and is showing signs that it&rsquo;s about to break loose of its creators (The Federal Reserve) control at any time.</p> <p>The current &ldquo;market&rdquo; is nothing more than a bull looking for a china shop. Ironically, it may be China that subsequently puts the &ldquo;bull&rdquo; into a place which no one &ldquo;thinks&rdquo;, let alone, believes.</p> <p>For those of the newly minted &ldquo;graduate class&rdquo; let me offer you an example of just how cronyism works and is prevalent at the very core of what many of you use and treat almost as sacrosanct for entrepreneurialism&nbsp;in today&rsquo;s business and &ldquo;market&rdquo; climate. e.g., Social media, and the companies that fuel it.</p> <p>If you are one of the few that believed (or still does) Snapchat&trade; was possibly the next Facebook and invested in its stock, only to see your profits or initial investment go &ldquo;poof&rdquo; much like its core product? And yet &ndash; have watched simultaneously as FB shares rise and think there must be some &ldquo;business&rdquo; reason as to why this happens or &ldquo;business acumen&rdquo; you don&rsquo;t fully yet comprehend? Hint: Welcome to central bank manipulation for picking winners and losers 101.</p> <p>As I&rsquo;ve stated too many times to count over the years: This is why&nbsp;having (or picking) a company with a stock price which has a central bankers &ldquo;bullseye&rdquo; on it is the only thing that matters. And guess what &ndash; Facebook does and Snapchat doesn&rsquo;t. Want proof. Fair point. To wit:</p> <p><em><strong>&ldquo;<a href="http://www.zerohedge.com/news/2017-02-09/swiss-national-banks-us-stock-portfolio-hits-record-634-billion">Swiss National Bank&rsquo;s U.S. Stock Holdings Hit A Record $63.4 Billion&rdquo;</a></strong></em></p> <p>The real issue here as I&rsquo;ve reiterated time, and time again, is this:</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong><em>When your investment loses value &ndash; you lose money and net worth. When a central banks &ldquo;investment&rdquo; loses value &ndash; they just print more, and buy more, allowing the pretense of &ldquo;health&rdquo; to perpetuate inducing even more to buy alongside them furthering&nbsp;the charade of a &ldquo;market&rdquo; based price or demand. Rinse, repeat.</em></strong></p> </blockquote> <p>Hint: <strong>Facebook is on that &ldquo;Bullseye&rdquo; list. </strong>Along with a few other notables. Snapchat? See latest stock price for clues. And that&rsquo;s just the SNB. You still have the Fed&rsquo;s proxies, ECB, BoJ, PBoC and their proxies buying who knows what else.</p> <p>Is it any wonder why small businesses are having such a hard time competing with these new-found business behemoths of today? For others, its having to compete with companies which are clearly &ldquo;over.&rdquo; e.g., See Sears&trade; for clues and why it has been able to stay open via cheap capital facilitated via Fed. policies unavailable to small businesses.</p> <p><strong>So with that all said: Long live small business!</strong> It may be badly banged up, battered, and bruised. But it&rsquo;s far from dead just yet. We only need to remember its importance too all of us. Our nations health, and very survival depends on it. It&rsquo;s a too often overlooked part of our fundamental liberties. Brave men and women of all stripes have, do, and hopefully will, continue to fight for its preservation along with our other sacred liberties.</p> <p><strong>To all of them: past, present, and future &ndash; you have my sincere gratitude. Both military, as well as business people.</strong></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="268" height="140" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170529_dead.jpg?1496090439" /> </div> </div> </div> http://www.zerohedge.com/news/2017-05-29/remembering-still-falling-hero-small-business#comments Capital Formation Capitalism Capitalist mode of production Central Banks China Crony capitalism Cronyism Economic ideologies Economic liberalism Economy European Central Bank fed Federal Reserve Free market Harvard University None Political terminology Politics Production economics Sears Socialism Stanford University Steve Jobs Structure Swiss National Bank Swiss National Bank US Federal Reserve Mon, 29 May 2017 23:00:00 +0000 Tyler Durden 596922 at http://www.zerohedge.com James Mattis: War With North Korea Would Be "Catastrophic" http://www.zerohedge.com/news/2017-05-29/james-mattis-war-north-korea-would-be-catastrophic <p>Defense Secretary James Mattis <a href="http://www.cbsnews.com/news/war-with-north-korea-would-be-catastrophic-mattis-says/">appeared on &ldquo;Face the Nation&rdquo; with John Dickerson</a> on Sunday and repeated his warning that an armed conflict with North Korea would be &ldquo;catastrophic&rdquo; for US allies in the region, and <strong>that it &quot;would be probably the worst kind of fighting&quot; because of the North&#39;s proximity to the South Korean capital, Seoul. </strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user245717/imageroot/2017/05/18/mattis.JPG"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user245717/imageroot/2017/05/18/mattis_0_0.JPG" style="width: 500px; height: 256px;" /></a></p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&nbsp;</p> <p>&ldquo;A conflict in North Korea, John,<strong> would be probably the worst kind of fighting in most people&#39;s lifetimes. </strong>Why do I say this? The <strong>North Korean regime has hundreds of artillery cannons and rocket launchers within range of one of the most densely populated cities on earth, which is the capital of South Korea.&quot;</strong></p> </blockquote> <p>Mattis told a Pentagon news conference earlier this month that a war with the north <a href="http://www.zerohedge.com/news/2017-05-19/mattis-north-korea-military-solution-would-be-tragic-unbelievable-scale">would be &ldquo;tragic on an unbelievable scale,&quot;</a> suggesting that the Trump administration would seek to exhaust all alternatives before resorting to military action.&nbsp;</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;We are working with the international community to deal with this issue. <strong>This regime is a threat to the region, to Japan, to South Korea. And in the event of war, they would bring danger to China and to Russia as well. But the bottom line is it would be a catastrophic war if this turns into a combat if we&#39;re not able to resolve this situation through diplomatic means.&rdquo;</strong></p> </blockquote> <p><strong>Mattis affirms that the North is a threat to the US,</strong> but he stops short of drawing a line in the sand when he tells Dickerson he&rsquo;d prefer not to answer a question about what the North could do, if anything, to provoke a response from the US. The president, Mattis said, needs &ldquo;political maneuver room on the issue.&rdquo;</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;It is a direct threat to the United States. They have been very clear in their rhetoric we don&#39;t have to wait until they have an intercont- intercontinental ballistic missile with a nuclear weapon on it to say that now it&#39;s manifested completely.&rdquo;</p> <p>&quot;Yeah, I&#39;d prefer not to answer that question, John. <strong>The president needs political maneuver room on this issue. We-- we do not draw red lines unless we intend to carry them out. We&#39;ve made very clear that we&#39;re willing to work with China and we believe China has tried to be helpful in this regard.&rdquo;</strong></p> </blockquote> <p><strong>North Korea <a href="http://www.zerohedge.com/news/2017-05-26/pentagon-will-try-shoot-down-test-icbm-next-tuesday">launched another missile into the Sea of Japan Sunday evening,</a> a few hours after Mattis appeared on the show, </strong>and shortly after <a href="http://www.zerohedge.com/news/2017-05-26/pentagon-will-try-shoot-down-test-icbm-next-tuesday">the Pentagon said it is preparing to test its capability to shoot down an intercontinental-range missile next week.</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="455" height="221" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170529_mattis.jpg?1496095179" /> </div> </div> </div> http://www.zerohedge.com/news/2017-05-29/james-mattis-war-north-korea-would-be-catastrophic#comments China James Mattis Japan Military Military personnel North Korea Pentagon Politics Trump Administration War Mon, 29 May 2017 22:30:00 +0000 Tyler Durden 596894 at http://www.zerohedge.com Paris Mayor Condemns Black Feminist Festival Which Bans White People http://www.zerohedge.com/news/2017-05-29/paris-mayor-condemns-black-feminist-festival-which-bans-white-people <p>Paris Mayor Anne Hidalgo on Sunday condemned a vivid example of reverse racism, when she called for a black feminist festival in the French capital to be banned, saying it was "prohibited to white people." The first edition of the Nyansapo Festival, due to run from July 28 to 30 at a cultural center in Paris, bills itself as "<strong>an event rooted in blackfeminism, activism, and on (a) European scale</strong>."</p> <p><a href="http://www.france24.com/en/20170528-paris-black-feminist-festival-prohibited-whites-sparks-outrage">According to AFP</a>, four-fifths of the festival area will be set aside as a "non-mixed" space "for black women," according to its website in French. Another space will be a "non-mixed" area "for black people" regardless of gender, while a final space would be "open to all" although as the French media explains, the English version of the site does uses the word "reserved" instead of "non-mixed."</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/05/12/afrofemfest-paris-2017.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/05/12/afrofemfest-paris-2017_0.jpg" width="400" height="566" /></a></p> <p>The announcement prompted an angry response from Hidalgo, a socialist, who said on Twitter that <strong>she "firmly condemned" the organisation "of this event, 'prohibited to white people</strong>'."</p> <p><strong>"I am asking for this festival to be banned," Hidalgo said, adding she also reserved the right "to prosecute the organisers for discrimination." </strong></p> <p>She wasn't the only one: French antiracist and antisemitism organisations strongly condemned the festival. SOS Racisme described the event as "a mistake, even an abomination, because it wallows in ethnic separation, whereas anti-racism is a movement which seeks to go beyond race." LICRA, the International League against Racism and Antisemitism, <strong>said "Rosa Parks would be turning in her grave," </strong>a reference to the American civil rights icon.</p> <p>Attention to the festival was first brought up by Wallerand de Saint-Just, the regional head of Marine Le Pen's National Front party, who challenged Hidalgo on Friday to explain how the city was putting on an event "promoting a concept that is blatantly racist and anti-republican."</p> <p>As for the response by the organizers of the clearly racist event, it was just as one would expect: instead of taking responsibility they blamed "fake news" and the "far right":</p> <blockquote><p>The cultural centre La Generale, where the event was to be hosted, and the collective Mwasi, which organised the event, <strong>said Sunday they were the "target of a disinformation campaign and of 'fake news' orchestrated by the foulest far right." </strong></p> <p>&nbsp;</p> <p>"We are saddened to see certain antiracist associations letting themselves be manipulated like this," according to a statement posted on the Generale website.</p> </blockquote> <p>Because when all else fails, and one has no arguments, what does one do? Blame "fake news" and/or the "alt-right", which at least in this case means those who point out the facts.</p> <p>The Nuansapo is not the first prominent French reverse-racist event: a "decolonisation summer camp" in the northeastern French city of Reims elicited similar outrage last year, as it billed itself as a "training seminar on antiracism" reserved for victims of "institutional racism" or "racialised" minorities -- excluding by default white people.</p> <p>AFP adds that police prefect Michel Delpuech said in a statement that police had not been advised about the event by Sunday evening. But, Delpuech added, the police "would ensure the rigorous compliance of the laws, values, and principles of the republic".</p> <p>In a subsequent update reported by <a href="https://www.bloomberg.com/news/articles/2017-05-29/paris-mayor-condemns-black-festival-says-it-bars-whites">Bloomberg</a>, Hidalgo said her "firm" discussion with organizers had yielded a satisfactory clarification: the parts of the festival held on property would be open to everyone and "non-mixed workshops will be held elsewhere, in a strictly private setting." Although even this prompted confusion: MWASI, the Afro-feminist collective sponsoring the three-day event, <strong>responded to the mayor's latest comments by saying it hadn't changed the festival program "an inch.</strong>"</p> <p>Meanwhile, last week several women attempting to stage a "burkini party" were detained in Cannes after a ban against the full-body beachwear favored by some Muslim women was upheld in a fresh decree.</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="389" height="251" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/nyansapo%20france.jpg?1496095545" /> </div> </div> </div> http://www.zerohedge.com/news/2017-05-29/paris-mayor-condemns-black-feminist-festival-which-bans-white-people#comments Antisemitism Burkini default Discrimination Identity politics Institutional racism International League against Racism and Anti-Semitism International League against Racism and Antisemitism Marine Le Pen's National Front party Race and society Racism Social Issues Structure Twitter Twitter Mon, 29 May 2017 22:08:21 +0000 Tyler Durden 596932 at http://www.zerohedge.com Millions Of Americans Just Got An Artificial Boost To Their Credit Score http://www.zerohedge.com/news/2017-05-29/millions-americans-just-got-artificial-boost-their-credit-score <p>Back in August 2014, <a href="http://www.zerohedge.com/news/2014-08-08/housing-recovery-fizzles-new-scheme-emerges-boost-fico-scores-changing-definition">we first reported </a>that in what appeared a suspicious attempt to boost the pool of eligible, credit-worthy mortgage and auto recipients, Fair Isaac, the company behind the crucial FICO score that determines every consumer's credit rating, <strong>"will stop including in its FICO credit-score calculations any record of a consumer failing to pay a bill if the bill has been paid or settled with a collection agency.</strong> The San Jose, Calif., company also will give less weight to unpaid medical bills that are with a collection agency." In doing so, the company would "make it easier for tens of millions of Americans to get loans." </p> <p>Then, back in March of this year, in the latest push to artificially boost FICO scores, the <a href="https://www.wsj.com/articles/credit-reports-to-exclude-certain-negative-information-boosting-fico-scores-1489338002?mod=e2tw">WSJ reported </a>that <strong>"many tax liens and civil judgments soon will be removed from people’s credit reports, the latest in a series of moves to omit negative information from these financial scorecards. The development could help boost credit scores for millions of consumers, but could pose risks for lenders</strong>" as FICO scores remain the only widely accepted method of quantifying any individual American's credit risk, and determine how much consumers can borrow for a new house or car as well as determine their credit-card spending limit</p> <p>Stated simply, the definition of the all important FICO score, the most important number at the base of every mortgage application, was set for a series of "adjustments" which would push it higher for millions of Americans.</p> <p><strong>&nbsp;<a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/08/FICO%20range.png"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2014/08/FICO%20range_0.png" width="600" height="162" /></a></strong></p> <p>&nbsp;</p> <p>The outcome of these changes was clear for the 12 million people impacted: it "<strong>will make many people who have these types of credit-report blemishes look more creditworthy.</strong>"</p> <p>Now, as the <a href="https://www.wsj.com/articles/credit-scores-hit-record-high-as-recession-wounds-heal-1496055600?mg=id-wsj">Wall Street Journal</a> points out today, efforts to rig the FICO scoring process seems to be bearing some fruit.&nbsp; <strong>The average credit score nationwide hit 700 in April, according to new data from Fair Isaac Corp., which is the highest since at least 2005.</strong></p> <p>Meanwhile, the share of consumers deemed to be riskiest, with a score below 600, hit a new low of roughly 40 million, or 20% of U.S. adults who have FICO scores, according to Fair Isaac. That is down from 20.5% in October and a peak of 25.5% in 2010.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/05/29/2017.05.29%20-%20FICO%201.JPG"><img src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/05/29/2017.05.29%20-%20FICO%201_0.JPG" alt="FICO" width="600" height="423" /></a></p> <p>&nbsp;</p> <p>Of course, to be fair, we are also reaching that critical 7-year point where the previous wave of mortgage foreclosures start to magically disappear from the FICO scores of millions of Americans.&nbsp; </p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Mortgage foreclosures stay on credit reports for up to seven years dating back to the missed payment that resulted in the foreclosure. Foreclosure starts, the first stage in the process, peaked in 2009 at 2.1 million, according to Attom Data Solutions. They totaled nearly 1.8 million in 2010 and remained above one million during each of the next two years.</p> <p>&nbsp;</p> <p><strong>Personal bankruptcies are more complicated and can stay on credit reports for seven to 10 years.</strong></p> <p>&nbsp;</p> <p>Consumers who filed in 2007 for Chapter 7 protection—the most common type of bankruptcy, in which certain debts are discharged and creditors can get paid back from sales of consumers’ assets—are now starting to see those events fall off their reports. <strong>Some 500,000 Chapter 7 bankruptcy cases were filed in 2007, a figure that swelled to nearly 1.1 million in 2010, according to the Administrative Office of the U.S. Courts.</strong></p> <p>&nbsp;</p> <p>Chapter<br /> 13 bankruptcies, in which consumers enter a payment plan with creditors, usually stay on reports for at least seven years. Those filings reached a recent peak of nearly 435,000 in 2010 and are set to start falling off reports this year.</p> </blockquote> <p><a href="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/05/29/2017.05.29%20-%20FICO%202.JPG"><img src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/2017/05/29/2017.05.29%20-%20FICO%202_0.JPG" alt="FICO" width="600" height="423" /></a></p> <p>&nbsp;</p> <p>All of which, as the WSJ points out, will help to <strong>"boost originations of large-dollar loans for cars and homes."&nbsp; </strong>Which is precisely what the average, massively-overlevered American household needs...more debt.</p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p>Fresh starts for credit reports are likely to help boost originations of large-dollar loans for cars and homes. Consumers have a greater chance of getting approved for financing if they apply for loans after negative events fall off their reports, in particular from large banks that have stuck to strict underwriting criteria, says Morgan Whitacre, who oversees consumer-loan underwriting at Bank of America Corp.</p> <p>&nbsp;</p> <p>Credit-card lending, already on the rise, could increase further as a result of fresh starts. <strong>Consumers who have one type of bankruptcy filing removed from their credit report experience a roughly $1,500 increase in spending limits and rack up $800 more in credit-card debt within three years, according to the Federal Reserve Bank of New York.</strong></p> </blockquote> <p>So maybe that auto lending bubble has a little room left to run afterall...</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="727" height="460" alt="" src="http://www.zerohedge.com/sites/default/files/images/user230519/imageroot/FICO.JPG?1496072682" /> </div> </div> </div> http://www.zerohedge.com/news/2017-05-29/millions-americans-just-got-artificial-boost-their-credit-score#comments Administrative office of the U.S. Courts Bank of America Bank of America Bank of New York Business Credit Credit card Credit history Credit score Credit score in the United States Creditors Economy Federal Reserve Federal Reserve Bank Federal Reserve Bank of New York Federal Reserve Bank of New York FICO Finance Foreclosure Foreclosures Money Mortgage loan Personal finance Wall Street Journal Mon, 29 May 2017 21:29:30 +0000 Tyler Durden 596895 at http://www.zerohedge.com Sperry: How Team Obama Tried To Hack The Election http://www.zerohedge.com/news/2017-05-29/sperry-how-team-obama-tried-hack-election <p><a href="http://nypost.com/2017/05/26/how-team-obama-tried-to-hack-the-election/"><em>Authored by Paul Sperry, op-ed via NYPost.com,</em></a></p> <p><strong>New revelations have surfaced that the Obama administration abused intelligence during the election by launching a massive domestic spy campaign that included snooping on Trump officials.</strong></p> <p><u><strong>The irony is mind-boggling:</strong></u> <em>Targeting political opposition is long a technique of police states like Russia, which Team Obama has loudly condemned for allegedly using its own intelligence agencies to hack into our election.</em></p> <p>The revelations, as well as testimony this week from former Obama intel officials, show the extent to which <strong>the Obama administration politicized and weaponized intelligence against Americans.</strong></p> <p><a href="http://circa.com/politics/barack-obamas-team-secretly-disclosed-years-of-illegal-nsa-searches-spying-on-americans">Thanks to Circa News</a>, we now know the National Security Agency under President Barack Obama routinely violated privacy protections while snooping through foreign intercepts involving US citizens &mdash; and failed to disclose the breaches, prompting the Foreign Intelligence Surveillance Court a month before the election to rebuke administration officials.</p> <p>The story concerns what&rsquo;s known as &ldquo;upstream&rdquo; data collection under Section 702 of the Foreign Intelligence Surveillance Act, under which the NSA looks at the content of electronic communication. Upstream refers to intel scooped up about third parties: Person A sends Person B an email mentioning Person C. Though Person C isn&rsquo;t a party to the email, his information will be scooped up and potentially used by the NSA.</p> <p>Further, the number of NSA data searches about Americans mushroomed after Obama loosened rules for protecting such identities from government officials and thus the reporters they talk to.</p> <p>The FISA court called it a &ldquo;very serious Fourth Amendment issue&rdquo; that NSA analysts &mdash; in violation of a 2011 rule change prohibiting officials from searching Americans&rsquo; information without a warrant &mdash; &ldquo;had been conducting such queries in violation of that prohibition, with much greater frequency than had been previously disclosed to the Court.&rdquo;</p> <p><strong>A number of those searches were made from the White House, and included private citizens working for the Trump campaign, some of whose identities were leaked to the media. The revelations earned a stern rebuke from the ACLU and from civil liberties champion Sen. Rand Paul.</strong></p> <p>We also learned this week that Obama intelligence officials really had no good reason attaching a summary of a dossier on Trump to a highly classified Russia briefing they gave to Obama just weeks before Trump took office.</p> <p><a href="http://nypost.com/2017/05/23/ex-cia-chief-warned-of-russian-contact-with-trump-campaign-officials/">Under congressional questioning Tuesday</a>, Obama&rsquo;s CIA chief John Brennan said the dossier did not &ldquo;in any way&rdquo; factor into the agency&rsquo;s assessment that Russia interfered in the election. Why not? Because as Obama intel czar James Clapper earlier testified, &ldquo;We could not corroborate the sourcing.&rdquo;</p> <p><u><strong>But that didn&rsquo;t stop Brennan in January from attaching its contents to the official report for the president.</strong></u> He also included the unverified allegations in the briefing he gave Hill Democrats.</p> <p><strong>In so doing, Brennan virtually guaranteed that it would be leaked, which it promptly was.</strong></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/28/20170529_obama.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/28/20170529_obama.jpg" style="width: 568px; height: 330px;" /></a></p> <p><u><em><strong>In short, Brennan politicized raw intelligence. In fact, he politicized the entire CIA.</strong></em></u></p> <p>Langley vets say Brennan was the most politicized director in the agency&rsquo;s history. Former CIA field operations officer Gene Coyle said <strong><em>Brennan was &ldquo;known as the greatest sycophant in the history of the CIA, and a supporter of Hillary Clinton before the election. I find it hard to put any real credence in anything that the man says.&rdquo;</em></strong></p> <p>Coyle noted that Brennan broke with his predecessors who stayed out of elections. Several weeks before the vote, he made it very clear he was pulling for Hillary. His deputy Mike Morell even came out and publicly endorsed her in the New York Times, claiming Trump was an &ldquo;unwitting agent&rdquo; of Moscow.</p> <p>Brennan isn&rsquo;t just a Democrat. He&rsquo;s a radical leftist who in 1980 &mdash; during the height of the Cold War &mdash; voted for a Communist Party candidate for president.</p> <p><strong>When Brennan rants about the dangers of strongman Vladimir Putin targeting our elections and subverting our democratic process, does he not catch at least a glimpse of his own reflection?</strong></p> <p>What he and the rest of the Obama gang did has inflicted more damage on the integrity of our electoral process than anything the Russians have done.</p> <p>&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="568" height="330" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170529_obama.jpg?1496089608" /> </div> </div> </div> http://www.zerohedge.com/news/2017-05-29/sperry-how-team-obama-tried-hack-election#comments American Presbyterians B+ Barack Obama Barack Obama Central Intelligence Agency Central Intelligence Agency Communist Party Donald Trump FISA court Foreign Intelligence Surveillance Court James Clapper Mass surveillance national security National Security Agency National Security Agency New York Times Obama Administration Obama administration Politics Politics Presidency of Barack Obama Russian interference in the 2016 United States elections SPY Testimony United States United States Foreign Intelligence Surveillance Court Vladimir Putin White House White House Mon, 29 May 2017 21:20:00 +0000 Tyler Durden 596915 at http://www.zerohedge.com Who's Really To Blame For America's Accelerating Home Prices? http://www.zerohedge.com/news/2017-05-29/whos-really-blame-americas-accelerating-home-prices <p><a href="https://mishtalk.com/2017/05/27/investigating-trends-in-median-home-prices/"><em>Authored by Mike Shedlock via MishTalk.com,</em></a></p> <p>Fed Chairs Ben Bernanke and Janet Yellen <strong>re-blew the Alan Greenspan initiated housing bubble</strong>.</p> <p>However, the trend towards higher and higher home prices<strong> started well before that dynamic trio made a mess of everything</strong>.</p> <p>The following picture shows the true origin of escalating home prices.</p> <h3><u><strong>Median Home Prices 1963-Present</strong></u></h3> <p><a href="https://mishgea.files.wordpress.com/2017/05/median-home-prices-1963-present.png"><img class="alignnone size-large wp-image-46016" src="https://mishgea.files.wordpress.com/2017/05/median-home-prices-1963-present.png?w=529&amp;h=183" style="width: 601px; height: 208px;" /></a></p> <p>To be fair, homes have gotten larger, with more features, better windows, etc.</p> <p>However, it is safe to say the explosion in credit that started when Nixon closed the gold window, ending convertibility of dollars for gold accounts, coupled with inane policies of the last three Fed Chairs accounts for nearly all of the price acceleration.</p> <h3><u><strong>Real Homes of Genius</strong></u></h3> <p>Dr. Housing Bubble provides an excellent example in <a href="http://www.doctorhousingbubble.com/real-homes-of-genius-los-angeles-trash-can-photography-gentrification/" rel="noopener noreferrer" target="_blank">Real Homes of Genius</a>, including pictures of tiny homes listed for close to $500,000 in the Los Angeles area.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>Today we salute you Los Angeles with our Real Homes of Genius Award. When half a million dollars isn&rsquo;t worth moving a trash bin:</p> <p>&nbsp;</p> <p><a href="https://mishgea.files.wordpress.com/2017/04/real-homes-of-genius-11.png"><img class="alignnone size-full wp-image-45442" src="https://mishgea.files.wordpress.com/2017/04/real-homes-of-genius-11.png?w=529" style="height: 448px; width: 601px;" /></a></p> <p>&nbsp;</p> <p>3525 Portola Ave, Los Angeles, CA 90032<br />2 beds 1 bath 572 sqft<br />This place is tiny. 572 square feet.</p> <p>&nbsp;</p> <p>I actually like the trash can being left in the picture overfilled with crap to show you a better perspective on how small this place is. The ad is written in beautiful prose that really makes your heart jump with joy:</p> <p>&nbsp;</p> <p>&ldquo;Why Rent when You Can Buy! This House Features 2 Bedrooms and 1 bathroom with lots of potential especially for a <em>First Time Home Buyer</em>. Great Location close to Downtown Los Angeles, centrally located near Schools, Parks and Shopping. This house has been nicely upgraded.&rdquo;</p> <p>&nbsp;</p> <p>So let us take a Google Street View here:</p> <p>&nbsp;</p> <p><a href="https://mishgea.files.wordpress.com/2017/04/real-homes-of-genius-2.png"><img class="alignnone size-large wp-image-45439" src="https://mishgea.files.wordpress.com/2017/04/real-homes-of-genius-2.png?w=529&amp;h=225" style="width: 600px; height: 255px;" /></a></p> <p>&nbsp;</p> <p>More trash cans! One trash can looks like it is crossing the road or gearing up to strike a pose for another realtor&rsquo;s ad. Now some might say &ldquo;hey, this is a working class neighborhood!&rdquo; And to that I would say, of course it is! That is why it is so mind numbing to see this tiny place listed at $470,000.</p> </blockquote> <h3><u><strong>Explaining Balance of Trade</strong></u></h3> <p><a href="https://mishgea.files.wordpress.com/2017/02/trade-imbalance1.png"><img alt="trade-imbalance" class="alignnone size-large wp-image-43959" src="https://mishgea.files.wordpress.com/2017/02/trade-imbalance1.png?w=529&amp;h=181" style="width: 599px; height: 205px;" /></a></p> <h3><u><strong>Total Credit Market Debt Owed</strong></u></h3> <p><a href="https://mishgea.files.wordpress.com/2017/02/tcmdo-2017-02-043.png"><img alt="tcmdo-2017-02-04" class="alignnone size-large wp-image-43967" src="https://mishgea.files.wordpress.com/2017/02/tcmdo-2017-02-043.png?w=529&amp;h=181" style="width: 599px; height: 205px;" /></a></p> <h3><u><strong>&ldquo;Our Currency but Your Problem&rdquo;</strong></u></h3> <p><strong>Starting in 1971, credit soared out of sight to the benefit of the banks, CEOs, the already wealthy, and the politically connected.</strong></p> <p>The source of global trading imbalances, soaring debt, escalating median home prices,&nbsp;declining real wages, and the massive rise of the 1% at the expense of the bottom 90% is Nixon closing the gold window.</p> <p>At that time, Nixon&rsquo;s Treasury Secretary <a href="https://en.wikipedia.org/wiki/John_Connally" rel="noopener noreferrer" target="_blank">John Connally</a> famously told a group of European finance ministers worried about the export of American inflation that the&nbsp; <em>&ldquo;dollar</em> <em>is our currency, but your problem</em>.&rdquo;</p> <p><em><u><strong>Balance of trade issues, soaring debt, declining real wages, and the demise of the US middle class are now our problem.</strong></u></em></p> <p><em>The Fed, ECB, Larry Summers, Paul Krugman, Donald Trump, and economists in general cannot figure out the real&nbsp;problem.</em></p> <p><em>Bernanke&nbsp;proposes a &ldquo;savings glut&rdquo;, and Larry Summers proposes &ldquo;secular stagnation&rdquo;.</em></p> <p><em>My challenge to the <a href="https://mishtalk.com/2017/01/12/secular-stagnation-challenge/" rel="noopener noreferrer" target="_blank">Secular Stagnation Theory of Summers</a> has gone unanswered.</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="529" height="183" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170528_mish.png?1496086391" /> </div> </div> </div> http://www.zerohedge.com/news/2017-05-29/whos-really-blame-americas-accelerating-home-prices#comments Alan Greenspan Alan Greenspan Ben Bernanke Ben Bernanke Ben Bernanke CRAP Donald Trump Economic stagnation Economics Economy ETC European Central Bank Financial economics Google Housing Bubble Inflation Janet Yellen Krugman Larry Summers Macroeconomics Paul Krugman US Federal Reserve Mon, 29 May 2017 20:59:40 +0000 Tyler Durden 596914 at http://www.zerohedge.com Tiger Woods Arrested For DUI http://www.zerohedge.com/news/2017-05-29/tiger-woods-arrested-dui <div> <div id=":204.co"> <p id=":209.ma"><span dir="ltr" id=":209.co"><strong>Everyone has their own of celebrating the memory of the fallen.</strong> For Tiger Woods it involves getting hammered and driving drunk inside one of Florida&#39;s most upscale communities</span>...</p> <p><iframe allowfullscreen="" frameborder="0" height="315" src="http://assets.scrippsdigital.com/cms/videoIframe.html?&amp;host=www.wptv.com&amp;title=Golfer%20Tiger%20Woods%20arrested%20on%20DUI%20charges%20in%20Jupiter&amp;vid=592c3d8c8dd15d3706a94a0b&amp;purl=/news/region-n-palm-beach-county/jupiter/golfer-tiger-woods-arrested-on-dui-charges-in-jupiter&amp;story=1&amp;ex=1&amp;s=wptv" width="560"></iframe></p> <p>Eight years after crashing his car <em>(with a golf club through the back window)</em>, Golfer Tiger Woods has been <strong>arrested on charges of driving under the influence early Monday morning in Jupiter, Florida</strong> (near his residence).</p> <p><a href="http://www.wptv.com/news/region-n-palm-beach-county/jupiter/golfer-tiger-woods-arrested-on-dui-charges-in-jupiter"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/28/20170529_tiger.jpg" style="width: 601px; height: 436px;" /></a></p> <p><a href="http://www.wptv.com/news/region-n-palm-beach-county/jupiter/golfer-tiger-woods-arrested-on-dui-charges-in-jupiter"><em>As WPTV reports,</em></a> Woods, a Jupiter Island resident, was <strong>taken into custody at 3 a.m. on Military Trail South of Indian Creek Parkway</strong>. Palm Beach County Jail records indicate Woods was<strong> released from custody at 10:50 a.m.</strong> As his mugshot below shows, he has looked better...</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/28/20170529_mug.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/28/20170529_mug.jpg" style="width: 368px; height: 458px;" /></a></p> </div> </div> <p>It appears it&#39;s time for Woods to swap one driver for another...</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="368" height="245" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170529_mug1.jpg?1496072637" /> </div> </div> </div> http://www.zerohedge.com/news/2017-05-29/tiger-woods-arrested-dui#comments Drive Florida Geography of Florida Golf Jupiter Jupiter Island Jupiter, Florida Palm Beach County, Florida Tiger Woods Woods WPTV-TV Mon, 29 May 2017 20:45:06 +0000 Tyler Durden 596886 at http://www.zerohedge.com Economists Puzzled By Unexpected Plunge In Saudi Foreign Reserves http://www.zerohedge.com/news/2017-05-29/economists-puzzled-unexpected-plunge-saudi-foreign-reserves <p>The stabilization of oil prices in the $50-60/bbl range was meant to have one particular, material impact on Saudi finances: it was expected to stem the accelerating bleeding of Saudi Arabian reserves. However, according to the latest data from Saudi Arabia’s central bank, aka the Saudi Arabian Monetary Authority, that has not happened and net foreign assets inexplicably tumbled below $500 billion in April for the first time since 2011 even after accounting for the $9 billion raised from the Kingdom's first international sale of Islamic bonds. </p> <p>As the chart below shows, according to SAMA, Saudi net foreign assets fell by $8.5 billion from the previous month to $493 billion the lowest in six years, bringing the decline this year to $36 billion. Over the past three years, Saudi foreign reserves have dropped by a third from a peak of more than $730 billion in 2014 after the plunge in oil prices, <em>prompting the IMF to warn that the kingdom may run out of financial assets needed to support spending within five years, <a href="https://www.bloomberg.com/news/articles/2017-05-28/saudi-net-foreign-assets-dip-below-500-billion-in-april"></a></em><a href="https://www.bloomberg.com/news/articles/2017-05-28/saudi-net-foreign-assets-dip-below-500-billion-in-april">according to Bloomberg<em>. </em></a></p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/05/12/20170529_saudi.jpg"><img src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/2017/05/12/20170529_saudi_0.jpg" width="500" height="264" /></a></p> <p>Analysts were puzzled by the ongoing sharp decling in Saudi reserves, especially since Saudi authorities recently embarked on a very public and "unprecedented" plan to overhaul the economy and repair public finances. </p> <p>Quoted by Bloomberg, Mohamed Abu Basha, a Cairo-based economist at EFG-Hermes said that he "<strong>didn’t really see any major driver for such a huge drop, especially when accounting for the sukuk sale</strong>." He added that even if the proceeds from the sale weren’t included, “the reserve decline remains huge."</p> <p>Adding to the confusion, the pace of the decline in reserves this year "<strong>has puzzled economists who see little evidence of increased government spending, fueling speculation it’s triggered by capital flight and the costs of the kingdom’s war in Yemen.</strong>" Of course, the recent purchase of $110 billion in US weapons will be an even greater drain on Saudi finances, and begs the question whether the Saudis can even afford it. </p> <p>Ironically, the reserve decline has continued even after the introduction of sharp austerity measures, designed to reduce the budget deficit, which have weighed on the economy and brought non-oil growth to a halt last year. According to Bloomberg data, loans, advances and overdrafts to the private sector declined 0.6 percent in April compared with the same month a year earlier, central bank data show. Furthermore,&nbsp; GDP growth in the world’s biggest oil exporter will likely drop to just barely above contraction, and is expected to grow by just 0.6% this year from 1.1% in 2016. </p> <p>Meanwhile, local authorities disagree with the consensus and say growth will exceed 1%, in part because of a plan to launch a four-year, 200 billion-riyal ($53 billion) stimulus package targeting the private sector. Additionally, Finance Minister Mohammed Al-Jadaan said in April that the government didn’t withdraw from its central bank reserves during the first quarter. He said the decline could be attributed to local contractors paying overseas vendors after the government settled its arrears.</p> <p>Adding to the variables, last year Saudi Arabia revealed it is carrying out the biggest economic shakeup in the kingdom’s history to reduce its reliance on oil revenue. The measures include reducing subsidies and selling government stakes in several companies, including Saudi Arabian Oil Co., or Aramco, which has been the other main driver behind Saudi insistence on keeping oil prices higher even if it means losing market share to US shale producers, a stark change from its strategy at the end of 2014 when it hoped to put low-cost producers out of business. In an attempt to boost its funds, the kingdom also allowed qualified institutional investors from outside Gulf Arab states to trade Saudi stocks directly from June 2015, and introduced additional changes this year to attract more funds.</p> <p>Taking the other side of the argument, speaking to Bloomberg, BofA's Hootan Yazhari said that the continued drawdown was something "he had been expecting" even though he expects continue lacklustre growth and predicts that 2017 will be a very difficult year for Saudi banks.</p> <p><iframe src="https://www.bloomberg.com/api/embed/iframe?id=35bc7204-cc5d-4c98-8291-2a3fb40b4053" width="500" height="281" frameborder="0"></iframe></p> <p>Whatever the reason, one thing is becoming clear: if Saudi Arabia is unable to stem the reserve bleeding with oil in the critical $50-60 zone, any further declines in oil would have dire consequences on Saudi government finances. In fact, according to a presentation by Sushant Gupta of Wood Mackenzie, despite the extension of the OPEC oil production cut, the market will be unable to absorb growth in shale production and returning volumes from OPEC producers after cuts until the second half of 2018. Specifically, the oil consultancy warns that due to seasonal weakness in Q1 for global oil demand, the market will soften just as cuts are set to expire in March 2018. </p> <p><em>Additionally, below we present some further critical perspectives from a reader on what the continued decline in Saudi reserves means:</em></p> <blockquote><div class="quote_start"> <div></div> </div> <div class="quote_end"> <div></div> </div> <p><strong>Saudi Arabia is in big turmoil</strong>. <strong>One third of GCC is now quasi- junk rated (Oman and Bahrain both are now BB rated) which is effectively a junk rating.</strong> </p> <p>&nbsp;</p> <p>Oman is already siding with Iran due to business (new ferries, 2 new China Dragon malls, all trade going via Oman instead of Dubai ports, more flights and opening of the first bank in the world from Oman, inside Iran, are just a few signals aside from all Iranian conferences being held in Oman and the first trip of President of Iran to Oman). </p> <p>&nbsp;</p> <p>Now Qatar wants to side with Iran which is having massive repercussions (cancelling of OSN Saudi subscriptions by Qatari’s, blocking Al Jazeera TV in Saudi and UAE, war of words by UAE and Saudi Ministers but most importantly the call between Iran President and Qatari Emir yesterday etc). </p> <p>&nbsp;</p> <p><strong>One third of GCC is now actively siding with Iran. </strong>To say there is a crisis in the GCC is an understatement! This is bound to escalate. </p> <p>&nbsp;</p> <p>This is occurring at a time when reserves are plunging at a rapid speed, despite issuing bonds in mega sizes of tens of billions per annum! </p> <p>&nbsp;</p> <p>Saudi has lost one third of it’s reserves in less than 3 years! </p> <p>&nbsp;</p> <p><strong>If Saudi lost 11% of their reserves in 2014, 11% reserves in 2015 and 11% in 2016, can you guess how much reserves will Saudi lose in 2017? </strong>Total Saudi reserves are now at USD 493bn which will drop another 11% to USD 438bn or lower maybe closer to USD 400bn by the end of 2017! </p> <p>&nbsp;</p> <p>All remaining assets are typically in hard assets like long term investments, oil and other assets overseas, real estate (towers around the world), all of which are not at all easy to sell. As I have predicted that GCC currency peg should break. My target of 2018 remains.&nbsp; <strong>It may begin with Oman and Bahrain buckling under pressure first. </strong>If they depeg or depreciate, then others must follow because all business will only go those 2 countries otherwise due to being “cheaper”. </p> <p>&nbsp;</p> <p>The rationale being the oil plunge in June 2014. First 2 years, GCC could use it’s reserves. Next 2 years until until end of 2017 they can keep borrowing by issuing the bonds. <strong>The pressure escalates dramatically when they start getting downgraded due to excessive borrowings (as has happened both to Oman and Bahrain as well as Saudi but they are not yet junk, just Single A rated). </strong></p> <p>&nbsp;</p> <p>Sovereign fund assets in global equities have dropped 18% between 2014 and 2016. Expect decline to rise to 31% and drop from their peak sovereign fund assets in 2014 at USD 3,256 billion and should be down to USD 2,200 billion by end of 2017! </p> <p>&nbsp;</p> <p>VAT is coming in 2018 to GCC along with corporate taxes. Do not be surprised if Oman or Bahrain CANCEL VAT. If they do so, they will get more business that will compensate for lost revenues but will be the end of GCC union as well. </p> <p>&nbsp;</p> <p>Saudi and UAE are already dealing with China actively and Saudi King made a historic visit to China 2 months ago. Most likely a timeline has been set when China will be able to pay Saudi and UAE in Chinese Yuan instead of US dollars (which China pays to Nigeria, Iran, Russia, Venezuela etc already for buying oil from them).&nbsp; </p> <p>&nbsp;</p> <p>That event will bring USD to it’s knees and also be the end of the US petrodollar system and the end of GCC peg or at least a massive depreciation. </p> <p>&nbsp;</p> <p><strong>Trump has done a massive coup by taking hundreds of billions dollars away from Saudi and possibly also from UAE soon to provide them with “security”. This will cause a further massive dip in their reserves over the next 1 year. </strong></p> <p>&nbsp;</p> <p>So expect monetary, fiscal and real turbulence in the months ahead. And yeah, more taxes or fees or fines too!</p> </blockquote> <p>Finally, there is the possibility that as sov-wealth funds seek to liquidate to boost liquidity, a repeat of the inverse petrodollar episode observed in 2015 emerges once again:</p> <ul> <li><a href=" http://www.marketwatch.com/story/sovereign-wealth-funds-could-pull-another-404-billion-out-of-stock-market-2016-02-22"><strong>Sovereign-wealth funds could pull another $404 billion out of stock market</strong></a></li> <li><a href="http://www.reuters.com/article/us-global-swf-flows-idUSKCN18E14U"><strong>Sovereign funds pull $18.4 billion from global markets in first quarter 2017</strong></a></li> <li><a href="http://www.bondsloans.com/news/article/1354/low-oil-price-is-testing-gcc-commitment-to-cu"><strong>Low Oil Price is Testing GCC Commitment to Currency Pegs</strong></a></li> </ul> <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="962" height="508" alt="" src="http://www.zerohedge.com/sites/default/files/images/user5/imageroot/20170529_saudi.jpg?1496090331" /> </div> </div> </div> http://www.zerohedge.com/news/2017-05-29/economists-puzzled-unexpected-plunge-saudi-foreign-reserves#comments 8.5% Arabian Peninsula Asia Budget Deficit Business China Currency Peg Dubai Dubai Economic history of Saudi Arabia Economy of Saudi Arabia Energy in Saudi Arabia ETC Foreign relations of Saudi Arabia Geography of Asia Institutional Investors International Monetary Fund Iran Market Share Member states of OPEC Member states of the Arab League Member states of the Organisation of Islamic Cooperation Member states of the United Nations OPEC OPEC Organization of Petroleum-Exporting Countries Peak oil Petroleum industry in Saudi Arabia Qatar Real estate Saudi Arabia Saudi Arabia Saudi Arabian Monetary Authority Saudi Arabia’s central bank Saudi Aramco Saudi government Sukuk Sukuk United Arab Emirates Yuan Mon, 29 May 2017 20:39:37 +0000 Tyler Durden 596921 at http://www.zerohedge.com Ignore OPEC, It's China That Dictates Oil Prices http://www.zerohedge.com/news/2017-05-29/ignore-opec-its-china-dictates-oil-prices <p><a href="http://oilprice.com/Energy/Crude-Oil/Not-OPEC-China-Dictates-The-Oil-Prices.html"><em>Authored by Nick Cunningham via OilPrice.com,</em></a></p> <p><strong>The OPEC deal will lead to an ongoing tightening of the crude oil market, putting a floor beneath crude prices in the $50s per barrel in the second half of 2017, according to Helima Croft of RBC Capital Markets.</strong> She <a href="http://www.cnbc.com/2017/05/25/oil-prices-should-grind-higher-into-the-60s-later-this-year-rbcs-croft-says.html">said</a> that prices should ultimately &ldquo;grind higher into the $60s&rdquo; by the fourth quarter, with an average price for WTI expected at $61. Political and economic pressure surrounding Saudi Aramco&rsquo;s IPO and Russian elections &ndash; both of which are slated for 2018 &ndash; will ensure that OPEC and non-OPEC does &ldquo;whatever it takes&rdquo; to keep oil prices stable and on the rise.</p> <p>But there are a lot of factors outside of OPEC&rsquo;s control. <strong>High up on that list is the role of China, a country that has received little attention in the oil world as of late amid all the furor over the OPEC vs. U.S. shale debate.</strong> But China could make or break the oil market this year and next, depending on what happens with its economy. &quot;<em>If you wanted to know where the downside risk is, it is not in OPEC&#39;s decision or in U.S. driving demand or in global inventories rebalancing. I think China is the big source of concern,&quot;</em> Prestige Economics President Jason Schenker told <a href="http://www.cnbc.com/2017/05/24/up.html">CNBC</a>.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/28/20170529_chinaoil.jpg"><img height="311" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/28/20170529_chinaoil_0.jpg" width="600" /></a></p> <p>Moody&rsquo;s Investors Service <a href="http://www.cnbc.com/2017/05/23/moodys-downgrades-china-rating-to-a1-from-aa3-with-stable-outlook.html">downgraded</a> China&rsquo;s credit rating on May 24 to A1 from Aa3, <strong>explaining that the Chinese government might try to juice the economy with higher spending levels, which will lead to ballooning debt. </strong>The decision from Moody&rsquo;s is ominous as it is the first credit downgrade for China in nearly three decades. Moody&rsquo;s expects economic growth to continue to slow in China, putting a heavier burden on government stimulus when debt has already started to become a concern.</p> <p><strong><em>&quot;It&#39;s really the size of the leverage, the trends in leverage as well as the debt servicing capacities of the institutions that have that debt. When growth slows, then that points toward slower revenue growth, probably slower profitability and somewhat weaker debt servicing capacity,</em>&quot;</strong> Marie Diron, senior vice president for Moody&#39;s sovereign rating group, said on CNBC&#39;s &ldquo;Street Signs.&rdquo;</p> <p>Credit downgrades themselves can add costs as debt finance becomes more expensive.<em> <strong>&quot;Downgrade(s) by rating agencies could potentially erode the financial soundness of China, creating the risk of a negative feedback loop,&quot;</strong></em><strong> </strong>ANZ wrote in a research note.</p> <p>A softer Chinese economy has enormous implications for the oil market. China is the largest crude oil importer in the world and it is expected to account for one of the largest sources of demand growth this year &ndash; the IEA expects Chinese oil demand to expand by 400,000 barrels per day to 12.3 million barrels per day (mb/d). With worldwide demand growth estimated at 1.3 mb/d this year, China will essentially account for nearly one-third of the global increase. If it falters, demand scenarios go out the window. <em>&quot;Without China, the oil market cannot survive,&quot;</em> Fereidun Fesharaki, founder of FGE, told CNBC.</p> <p><strong>At the same time, if China surprises with a stronger economic performance going forward, it could also boost momentum to a tightening oil market. </strong>Not only is China expected to post strong demand figures &ndash; assuming its economy doesn&rsquo;t slow too much &ndash; but its domestic production is falling. That means it will need to import more crude to make up for the shortfall. China&rsquo;s state-owned oil companies preside over expensive, aging and depleting oil fields. The collapse of oil prices three years ago put them in a bind, forcing them to cut back on investment and even shutter older fields that are no longer worth the trouble. China&rsquo;s oil production fell by 300,000 bpd in 2016 and the IEA sees output dipping by an additional 185,000 bpd this year.</p> <p><strong>The end result will likely be much steeper imports from China &ndash; a bullish trend for oil. </strong>A rather aggressive forecast comes from FGE&rsquo;s Fesharaki, which expects imports to rise by 900,000 bpd this year compared to 2016.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/28/20170529_chinaoil1.jpg"><img alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/28/20170529_chinaoil1_0.jpg" style="width: 600px; height: 316px;" /></a></p> <p>There is a great deal of uncertainty surrounding these figures, <strong>but they highlight the fact that China really will make or break the oil price rally this year.</strong></p> <div class="field field-type-filefield field-field-image-teaser"> <div class="field-items"> <div class="field-item odd"> <img class="imagefield imagefield-field_image_teaser" width="1084" height="561" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170529_chinaoil.jpg?1496077809" /> </div> </div> </div> http://www.zerohedge.com/news/2017-05-29/ignore-opec-its-china-dictates-oil-prices#comments Business Capital Markets China Chinese government Crude Crude Oil Economy Economy of China Energy crisis Government Stimulus Investors Service OPEC OPEC Organization of Petroleum-Exporting Countries Peak oil Petroleum Petroleum industry Petroleum politics Price of oil Pricing Rating Agencies RBC Capital Markets Mon, 29 May 2017 20:01:02 +0000 Tyler Durden 596898 at http://www.zerohedge.com John McCain Warns The World: "Democracy-Destroying" Russia Is Bigger Threat Than "Terrible ISIS" http://www.zerohedge.com/news/2017-05-29/john-mccain-warns-world-democracy-destroying-russia-bigger-threat-terrible-isis <p>While visiting Australia, outspoken warmonger Sen. John McCain told ABC TV that <strong>Russia is a bigger security threat than Islamic State,</strong> based on its willingness to challenge the democratic foundations of the U.S. by interfering in elections.</p> <p>The visit to Australia by the chairman of the Senate Armed Services Committee was <strong>part of an Asia tour to outline a blueprint for the U.S. to invest nearly $8 billion bulking up its military presence in the region</strong> by upgrading infrastructure, conducting additional exercises and deploying more forces and ships. Mr. McCain&rsquo;s visit also was<strong> aimed at reassuring allies about U.S. willingness to remain engaged in Asia</strong>, both as a check against China&rsquo;s increasing assertiveness in the South China Sea and on North Korea&rsquo;s nuclear program.</p> <p><a href="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/28/20170529_mccain.jpg"><img height="369" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2017/05/28/20170529_mccain_0.jpg" width="600" /></a></p> <p><a href="https://www.wsj.com/articles/mccain-says-russia-is-bigger-threat-than-islamic-state-1496048800"><em>As The Wall Street Journal reports</em></a>, McCain, who was in Australia to discuss Asia-Pacific security issues, said Russian President Vladimir Putin was the &ldquo;premier&rdquo; challenge to American security.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p><strong>&ldquo;I think ISIS can do terrible things </strong>and I worry a lot about what is happening with the Muslim faith,&rdquo; he told Australian ABC state television Monday.</p> <p>&nbsp;</p> <p>&ldquo;<strong>But it&rsquo;s the Russians who tried to destroy the very fundamental of democracy,</strong> and that is to change the outcome of an American election.&rdquo;</p> </blockquote> <p><strong>It seems the arch-neocon just cannot get his story straight </strong>as McCain recently&nbsp;<a href="https://www.wsj.com/articles/sen-mccain-softens-watergate-statement-on-trump-administration-turmoil-1495392594">walked back comments&nbsp;</a>that the controversy surrounding investigations into potential collusion between associates of President Donald Trump and the Russian government had reached &ldquo;Watergate size and scale,&rdquo; saying <strong>he had seen no evidence Russia had succeeded in swaying the U.S. presidential-election process</strong>.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;But they tried and they are still trying,&rdquo; he said on Monday.</p> </blockquote> <p>So just to clarify, Russians are worse than lawless terrorists killing hundreds of people (including 8 year old girls) in the name of their god, paid for by Qatari and Saudi funds? Far be it from us to judge - but perhaps Mr. McCain needs a perspective transplant, and stop saying utterly ridiculous things.</p> <p><strong>However, McCain was not done with his fearmongery. </strong>After North Korea fired another short-range ballistic missile off its east coast on Monday, Mr. McCain said <strong>unless something could be done to restrain Pyongyang&rsquo;s ambitions, the crisis could escalate along the lines of the Cuban Missile Crisis in 1962,</strong> when the U.S. and the Soviet Union came close to nuclear conflict.</p> <blockquote><div class="quote_start"><div></div></div><div class="quote_end"><div></div></div><p>&ldquo;What&rsquo;s the best and easiest way [to deal with the situation]? Obviously the Chinese, because the Chinese control basically the North Korean economy,&rdquo; Mr. McCain said.</p> <p>&nbsp;</p> <p><strong>&ldquo;We have to explain to the Chinese how this is a vital issue. We need their help and cooperation.&rdquo;</strong></p> </blockquote> <p>We are sure somehow North Korea is also Russia&#39;s fault?</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="788" height="485" alt="" src="http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/20170529_mccain.jpg?1496064134" /> </div> </div> </div> http://www.zerohedge.com/news/2017-05-29/john-mccain-warns-world-democracy-destroying-russia-bigger-threat-terrible-isis#comments ABC Australia China Cuban Missile Crisis Donald Trump International Republican Institute John McCain John McCain McCain Military brats North Korea Political positions of John McCain Politics Recipients of the Legion of Merit Senate career of John McCain, 2001–2014 USS John S. McCain Vladimir Putin Wall Street Journal Mon, 29 May 2017 19:31:20 +0000 Tyler Durden 596875 at http://www.zerohedge.com