Tuesday, July 17, 2012

Who Exploits You More: Capitalists or Cronies?

By : One common claim is that capitalism exploits the masses for the benefit of the few. Many people who think capitalism exploits workers advocate increasing government power over the economy. Professor Matt Zwolinski suggests, however, that government power may be more exploitative than free-market capitalism.

'West invented Al-Qaeda, monster turned on master' George Galloway

Laura Smith discusses Britain's domestic and foreign policy with a controversial UK MP George Galloway who sheds light on agendas debated behind closed doors. Source

How Bernanke will cause the next crash before 2014

By Paul B. Farrell: “Massive wealth destruction coming,” warns Hong Kong economist Marc Faber, one of many “Dr. Dooms” we’ve featured over the years. Faber warned in a recent interview on CNBC:  
The Super-Rich “may lose up to 50 percent of their total wealth.”
Marc Faber
How? “Somewhere down the line we will have a massive wealth destruction. That usually happens either through very high inflation or through social unrest or through war or credit-market collapse.” And as if to punctuate his message, in Barron’s recent “Midyear Roundup,” Faber was asked, “Will things get worse before they get better?”
Answer: “Yes, possibly much worse,” adding “most markets peaked in May 2011.” He expects “further weakness in the second half of the year. Corporate profits will disappoint … stock markets are oversold. The U.S. government-bond market is overbought. The U.S. dollar is overbought, and gold is oversold near term.” Worse, he’s “very negative about the outlook longer term.”
In spite of his doom and gloom about America and the world economy, when pressed Faber did recommend some China REITs. And waffled a bit on America: “It is safest to buy U.S. Treasurys because the U.S. can print money” and “pay the interest. But you are earning only 1.6%, and the cost of living is increasing by about 5% a year around the world. You are getting a negative real return.”
Not very promising in today’s uncertain world, where the American elections are unlikely to solve the economy’s core jobs problem, no matter who wins in November.
So when comes the change? “Down the line.” “The breaking point could be three, four, five years away. The world is heading toward a major crisis.”
OK, he hedges his bet on timing. But he’s very clear on how and why: The collapse will be “caused by Federal Reserve Chairman Ben Bernanke and the Federal Reserve’s continuous printing of new money.”

Hugh Hendry: “Bad things are going to happen and I still think the closest analogy is the 1930s.”

There are various reasons why not only we at Zero Hedge are big fans of Hugh Hendry. One of them of course is his uncanny ability to not only tell the truth, but to bash his competitors faces into it (as Joseph Stiglitz so vividly recalls), even if it means running squarely against the consensus. The other reason are self-aware statements such as this one via the FT today: "What I found was that when I speak in person, and especially when it’s television and timing is so acute, it gives the impression that I am cavalier and, if you will, full of myself,” says Mr Hendry, speaking by phone from his office in Bayswater, central London." Hendry was obviously discussing his self-imposed media blackout which unlike other prominent financiers is not being used for book sales promotion purposes but appears quite genuine. It also means he won't get to collect $200/appearance fees as a guest contributor on CNBC but we digress. "The danger when people look at that from a distance is that they try to align that with the guy that they’ve just given $50m or $75m to and it’s not the same person." iI is sad that none of the other talking muppet heads and "daily pundits" who appear on financial comedy TV to merely blow smoke up assorted holes and talk their books, don't share Hendry's revelations a little more often.
Still, what Hendry says and thinks influences many. So here is where he stands right now

Cotton Candy Fraud - Max Keiser with Chris Cook

Max Keiser and co-host, Stacy Herbert, discuss how market participants are never more than a few milliseconds away from the next act of fraud and how a teaspoon of collateral leads to economic martial law. They also discuss German economists proposing that the wealthy be forced to buy bonds while in Spain the government and EU force bank losses on cooks and pensioners. In the second half of the show, oil analyst, Chris Cook, about how, despite sanctions, oil will always find a home; the Enron technique of pre-pay now being used by Enron's former counterparties; and how stability is the death for the oil market middlemen. Source

It is now official: The Eurozone’s monetary transmission system is broken - Yanis Varoufakis

'This is what a monetary union on the verge of collapse looks like.'

Under normal conditions, the interest rates that you and I must pay on a home loan, a car loan, our credit card, a business loan are pegged onto two crucial rates. One is the rate that banks charge one another in order to borrow from each other. The other is the Central Bank’s overnight rate. Alas, neither of these interest rates matter during this Crisis. While such ‘official’ rates are tending to zero (as Central Banks try to squeeze the costs of borrowing to nothing), the interest rates people and firms pay are much, much higher and track indices of fear and subjective estimates of the Eurozone’s disintegration.

Following the Crash of 2008, banks stopped lending to each other, fearful that they will never get their money back (as most banks became, in effect, insolvent). Thus, the interest rate at which they lend to one another simply ceased being a meaningful price (just like the prices of CDOs, following Lehman’s collapse, lost their meaning as no one bought or sold those pieces of paper). The truly scandalous aspect of the Libor scandal of recent weeks is that banks continued to use (and ‘fix’) an estimate of the interest rate at which they lent to each other (for the purposes of fixing all other interest rates; e.g. mortgage and credit card rates) when they did not lend to each other any more…
The demise of Libor and other measures of inter-bank lending interest rates left us with the official interest rate of Central Banks, like the European Central Bank. Recently, in an acknowledgment of past errors and of the strength of the European austerity-induced recession, the ECB lowered its key interest rate to 0.75% – the lowest level since the euro’s inception. At the same time, the ECB did something else that is extraordinary by its own standards: it reduced to zero the interest rate it paid private banks for depositing money with the ECB. 
Under normal conditions, such an aggressive interest rate reduction would drag downward all interest rates: with private banks being able to borrow at a pitiful 0.75% from the ECB to lend on to the private sector, and having no incentive whatsoever to park their idle capital with the ECB, one might have hoped (as the ECB’s President, Mr Mario Draghi, clearly did) that banks would be more willing to lend and at a lower interest rate. However, such hopes would have been baseless. Indeed, the interest rates p[aid by households and companies remained high, the banks’ funding costs even increased, and the normal ‘monetary transmission mechanism’ (i.e. the system that converts lower official Central Bank interest rates into an increase in the supply of money) proved to be broken and beyond repair. The question is: Why?

Occupy Bohemian Grove: Secret 1% getaway revealed

In the US, Occupy protesters have descended on a quiet California redwood retreat - where some of the world's elite gather every year. Demonstrators say the two weeks, officially portrayed as a time of rest and relaxation, is really a chance to discuss plans for the world's future. RT's Abby Martin at Bohemian Grove to see what triggers those rumours and growing protests. Source

Criminal Inquiry Shifts To JPMorgan's Mispricing Of Hundreds Of Billions In CDS: Is Dimon The Next Diamond?

Tyler Durden's pictureOn the last day of May, when we first learned via Bloomberg that there was even the scantest likelihood that JPM may have been massaging its CDS marks within the (London-based of course) CIO organization - the backbone of hundreds of billions in notional exposure, and thus a huge counterfeited benefit to trader bonuses and corporate earnings - we wrote, "The Second Act Of The JPM CIO Fiasco Has Arrived - Mismarking Hundreds Of Billions In Credit Default Swaps" in which we explained precisely how this activity would and did take place, precisely why other traders caught doing the same are on the verge of being thrown in jail, precisely why everyone else does it, and precisely why the biggest CDS self-reporting and client/banker owned-organization (this is where images of Libor should appear), MarkIt, may well be implicated in everything - very much in the same way that the BBA is the heart of Lie-borgate. Because unlike all other allegations of impropriety, most of which rely on Level 2 and Level 3 assets whose valuations are in the eye of the oh so very sophisticated beholder (in this case JPM) who has complex DCFs and speaks confidently when explaining marks to naive, stupid outsiders (in other words baffles with bullshit), when it comes to one of the last places where Mark to Market is still applicable and used: the OTC CDS market, and where daily P&L records are kept, it will take any regulator, enforcer, or criminal investigator precisely 1 minute to find out if there was fraud, or gambling, going on here.

68-year-old car buyer mistaken for terrorist due to credit report

By Madison Ruppert:
Sandra Cortez got a lot more than she bargained for when she went to buy a new car and within an hour was threatened with calls to the FBI by the staff at the Denver dealership she went to.
Cortez’s ludicrous encounter is far from the first and will almost certainly not be the last case of someone being confused with a terrorist or international criminal simply due to a similar or shared name and then being treated as such.
In this instance, Cortez was unlucky enough to happen to share her name with someone on a government list including fine company like suspected terrorists, international drug traffickers and even people associated with weapons of mass destruction.
The 68-year-old grandmother and accountant clearly is none of those things, but it didn’t stop her from being forced to struggle over the mistake from 2005 to 2010.

Anti-Drone Terminator Countermesasures with Mike Adams

Today across America, we're witnessing an explosion in the planned deployment of spy drones, military drones and surveillance drones, both for law enforcement use and military use. The FAA has granted permission for tens of thousands of drones to be flown in the skies of America, and companies like Raytheon are working on tiny munitions (missiles) that can be carried by single-shot drones. What follows is my personal analysis of near-future drone capabilities and countermeasures, extrapolated from information found in public articles as well as my personal knowledge of military and law enforcement tactics and mission profiles.

Drones are now being weaponized in America.

Paul C. Roberts on "the REAL LIBOR scandal" and "Bond Market Armageddon!"

Today we survey the Wall Street hijinks. From potential big bank criminal wrongdoing in the Libor scandal reported by the Justice Department, to regulators answering for the money laundering probe at HSBC, to a former Citigroup banker accused of misleading clients in a CDO deal. Does this continue because of the lack of senior executive level convictions for financial crimes? We hear from Charles Ferguson, director of Inside Job and author of Predator Nation who wrote about that on the Huffington Post today. After all of the work he's done, he tells us the price he's paid personally for shining the light Wall Street's underbelly.
And returning to the issue of LIBOR, and the scandal there, the current picture painted is one that shows banks benefiting from borrowing at low rates through interest rate manipulation. But our guest, former assistant Treasury secretary, Paul Craig Roberts, argues that this is too simplistic and that it functions as a diversion from the deeper, darker scandal.

Together we can strangle innovation and plunge civilization into the Dark Ages!