STOCK MARKET WATCH -- Monday, 17 August 2015

[Tansy_Gold]

[font size=3]STOCK MARKET WATCH, Monday, 17 August 2015[font color=black][/font]

SMW for 14 August 2015

AT THE CLOSING BELL ON 14 August 2015
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Dow Jones 17,477.40 +69.15 (0.40%)
S&P 500 2,091.54 +8.15 (0.39%)
Nasdaq 5,048.23 +14.68 (0.29%)


[font color=red]10 Year 2.20% +0.01 (0.46%)
[font color=black]30 Year 2.84% 0.00 (0.00%) [font color=black]


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[font color=black][font size=2]Handy Links - Essential Reading:[/font][/font]
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Matt Taibi: Secret and Lies of the Bailout


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[font color=red]Partial List of Financial Sector Officials Convicted since 1/20/09 [/font][font color=red]
2/2/12 David Higgs and Salmaan Siddiqui, Credit Suisse, plead guilty to conspiracy involving valuation of MBS
3/6/12 Allen Stanford, former Caribbean billionaire and general schmuck, convicted on 13 of 14 counts in $2.2B Ponzi scheme, faces 20+ years in prison
6/4/12 Matthew Kluger, lawyer, sentenced to 12 years in prison, along with co-conspirator stock trader Garrett Bauer (9 years) and co-conspirator Kenneth Robinson (not yet sentenced) for 17 year insider trading scheme.
6/14/12 Allen Stanford sentenced to 110 years without parole.
6/15/12 Rajat Gupta, former Goldman Sachs director, found guilty of insider trading. Could face a decade in prison when sentenced later this year.
6/22/12 Timothy S. Durham, 49, former CEO of Fair Financial Company, convicted of one count conspiracy to commit wire and securities fraud, 10 counts of wire fraud, and one count of securities fraud.
6/22/12 James F. Cochran, 56, former chairman of the board of Fair, convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud, and six counts of wire fraud.
6/22/12 Rick D. Snow, 48, former CFO of Fair, convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud, and three counts of wire fraud.
7/13/12 Russell Wassendorf Sr., CEO of collapsed brokerage firm Peregrine Financial Group Inc. arrested and charged with lying to regulators after admitting to authorities he embezzled "millions of dollars" and forged bank statements for "nearly twenty years."
8/22/12 Doug Whitman, Whitman Capital LLC hedge fund founder, convicted of insider trading following a trial in which he spent more than two days on the stand telling jurors he was innocent
10/26/12 UPDATE: Former Goldman Sachs director Rajat Gupta sentenced to two years in federal prison. He will, of course, appeal. . .
11/20/12 Hedge fund manager Matthew Martoma charged with insider trading at SAC Capital Advisors, and prosecutors are looking at Martoma's boss, Steven Cohen, for possible involvement.
02/14/13 Gilbert Lopez, former chief accounting officer of Stanford Financial Group, and former controller Mark Kuhrt sentenced to 20 yrs in prison for their roles in Allen Sanford's $7.2 billion Ponzi scheme.
03/29/13 Michael Sternberg, portfolio mgr at SAC Capital, arrested in NYC, charged with conspiracy and securities fraud. Pled not guilty and freed on $3m bail.
04/04/13 Matthew Marshall Taylor,fmr Goldman Sachs trader arrested, charged by CFTC w/defrauding his employer on $8BN futures bet "by intentionally concealing the true huge size, as well as the risk and potential profits or losses associated."
04/04/13 Matthew Taylor admits guilt, makes plea bargain. Sentencing set for 26 June; faces up to 20 years in prison but will likely only see 3-4 years. Says, "I am truly sorry."
04/11/13 Ex-KPMG LLP partner Scott London charged by federal prosecutors w/passing inside tips to a friend in exchange for cash, jewelry, and concert tickets; expected to plead guilty in May.
08/01/13 Fabrice Tourré convicted on six counts of security fraud, including "aiding and abetting" his former employer, Goldman Sachs
08/14/13 Javier Martin-Artajo and Julien Grout charged with wire fraud, falsifying records, and conspiracy in connection with JP Morgan's "London Whale" trade.
08/19/13 Phillip A. Falcone, manager of hedge fund Harbinger Capital Partners, agrees to admit to "wrongdoing" in market manipulation. Will banned from securities industry for 5 years and pay $18MM in disgorgement and fines.
09/16/13 Javier Martin-Artajo and Julien Grout officially indicted on charges associated with "London Whale" trade.
02/06/14 Matthew Martoma convicted of insider trading while at hedge fund SAC (Stephen A. Cohen) Capital Advisors. Expected sentence 7-10 years.
03/24/14 Annette Bongiorno, Bernard Madoff's secretary; Daniel Bonventre, director of operations for investments; JoAnn Crupi, an account manager; and Jerome O'Hara and George Perez, both computer programmers convicted of conspiracy to defraud clients, securities fraud, and falsifying the books and records.
05/19/14 Credit Suisse, which has an investment bank branch in NYC, agrees to plead guilty and pay appx. $2.6 billion penalties for helping wealthy Americans hide wealth and avoid taxes.
09/08/14 Matthew Martoma, convicted SAC trader, sentenced to 9 years in prison plus forfeiture of $9.3 million, including home and bank accounts
08/03/15 Former City (London) trader Tom Hayes found guilty of rigging global Libor interest rates. Each fo eight counts carries up to 10 yr. sentence.







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[font size=3][font color=red]This thread contains opinions and observations. Individuals may post their experiences, inferences and opinions on this thread. However, it should not be construed as advice. It is unethical (and probably illegal) for financial recommendations to be given here.[/font][/font][/font color=red][font color=black]

[Demeter]

1. I fear sarcasm and irony are lost arts--despite Jon Stewart's best efforts

Good toon.

[Demeter]

2. The Future of Work: Why Wages Aren't Keeping Up

BECAUSE THEY DON'T HAVE TO, HOW DIFFICULT IS THAT? THE UNIONS ARE BROKEN AND SO IS THE SOCIAL CONTRACT

http://www.psmag.com/business-economics/the-future-of-work-why-wages-arent-keeping-up


The latest entry in a special project in which business and labor leaders, social scientists, technology visionaries, activists, and journalists weigh in on the most consequential changes in the workplace...One of the more puzzling and damaging features of the American labor market in the last few decades has been the failure of real (i.e. inflation-adjusted) wages and benefits to keep up with the increase in productivity. In the years after the Second World War, real wages generally rose at the same rate as output per hour worked. This rough balance was made explicit in what came to be called the Treaty of Detroit: the agreement between the United Auto Workers and General Motors (followed by Ford and Chrysler) that the average annual rate of wage increase would be the percentage increase in productivity plus the percentage increase in consumer prices. This norm spread beyond the auto industry. It had the arithmetic consequence that the share of total value added in industry going to labor would stay roughly constant, with the rest going to the capital side.

This balance no longer holds. To illustrate, in the past 10 years productivity has increased 12.3 percent in the non-farm business sector of our economy while real compensation of labor has increased by only 5.1 percent. One has to wonder why this happened and whether it is likely to continue. I want to suggest one possible cause for the lag of wages behind productivity. It is not the only one, for sure. But it is particularly interesting, and it interacts with another rather unhappy trend in the labor market to suggest that the trend against wages is likely to continue. (During the past year and a half, real compensation has outrun productivity, but it is much too soon to guess whether this reversal merely reflects dismal productivity performance and other short-run factors or something more durable.)

The custom is to think of value added in a corporation (or in the economy as a whole) as just the sum of the return to labor and the return to capital. But that is not quite right. There is a third component which I will call “monopoly rent” or, better still, just “rent.” It is not a return earned by capital or labor, but rather a return to the special position of the firm. It may come from traditional monopoly power, being the only producer of something, but there are other ways in which firms are at least partly protected from competition. Anything that hampers competition, sometimes even regulation itself, is a source of rent. We carelessly think of it as “belonging” to the capital side of the ledger, but that is arbitrary. The division of rent among the stakeholders of a firm is something to be bargained over, formally or informally.

This is a tricky matter because there is no direct measurement of rent in this sense. You will not find a line called “monopoly rent” in any firm’s income statement or in the national accounts. It has to be estimated indirectly, if at all. There have been attempts to do this, by one ingenious method or another. The results are not quite “all over the place” but they differ. It is enough if the rent component lies between, say, 10 and 30 percent of GDP, where most of the estimates fall. This is what has to be divided between the claimants—labor and capital and perhaps others. It is essential to understand that what we measure as wages and profits both contain an element of rent.

The purpose of the Treaty of Detroit was to freeze that allocation. What happens to it now is not so much a matter of economic law. It depends on bargaining power, business attitudes and practices, social norms and public opinion....

BREAK THE CONTRACT, BREAK THE UNIONS, BREAK THE CITY....STORY OF MY NATIVE LAND

[Punx]

11. "One has to wonder why this happened and whether it is likely to continue."

SERIOUSLY!?

There has been a 40 year and ongoing project by those in power to weaken the hand of labor and suppress wages.

In ways that are discussed here everyday. And you get this "handwringing" crap from a MIT professor. Willfully ignorant I guess.


BREAK THE SOCIAL CONTRACT INDEED.

[Demeter]

12. MIT professors are "special"

And Massachusetts lost the union battle when all the mills left, back at the end of the Civil War...that was Reconstruction! Not within living memory, in other words.

[Punx]

15. Didn't know about the Mills

MIT, one of the most Ivory of "Ivory Towers. After reading that, I'm glad I got my economics education elsewhere, in a saner era.


Btw, one of my uncles is a architecture grad from many-many years ago. He did some of the design work for the MBTA long ago.

[Demeter]

3. The crippling problem restaurant-goers haven’t noticed but chefs are freaking out about

http://www.washingtonpost.com/news/wonkblog/wp/2015/08/12/the-crippling-problem-people-who-eat-at-restaurants-havent-noticed-but-chefs-are-freaking-out-about/?postshare=8301439495952929

Behind the swinging doors of restaurant kitchens around the country, things are getting a bit more chaotic. It’s not the sort of thing diners would not have noticed, because it’s happening behind the scenes, out of view. Orders are still coming in, and plates are still coming out. But there’s a growing problem that chefs and restaurateurs are talking about more these days.

Good cooks are getting harder to come by. Not the head kitchen honchos, depicted in Food Network reality shows, who fine-tune menus and orchestrate the dinner rush, but the men and women who are fresh out of culinary school and eager. The shortage of able kitchen hands is affecting chefs in Chicago, where restaurateurs said they are receiving far fewer applications than in past years. “It’s gotten to the point where if good cooks come along, we’ll hire them even if we don’t have a position. Because we will have a position,” Paul Kahan, a local chef, told the Chicago Tribune last week.

It’s also an issue in New York, where skilled cooks are an increasingly rare commodity. “If I had a position open in the kitchen, I might have 12 résumés, call in three or four to [try out] in the kitchen, and make a decision,” Alfred Portale, the chef and owner of Michelin-starred Manhattan restaurant Gotham Bar and Grill, told Fortune recently. “Now it’s the other way around; there’s one cook and 12 restaurants.” And it extends to restaurants out West. Seattle is coping with the same dilemma. San Francisco, too.

The glitz and glamour of rising through the ranks in the restaurant industry isn’t what it used to be. Long hours, low pay and a series of other cultural and economic factors have made lower-tier restaurant work a much less desirable path than it once was, leaving many kitchens chronically understaffed. One of the clearest obstacles to hiring a good cook, let alone someone willing to work the kitchen these days, is that living in this country’s biggest cities is increasingly unaffordable. In New York, for instance, where a cook can expect to make between $10 and $12 per hour, and the median rent runs upward of $1,200 a month, living in the city is a near impossibility. As a result, people end up living far from the restaurants where they work. Add to that how late dinner shifts can end, causing people to arrive home well into the night.

Top it all off with the fact that culinary school graduates are often working through significant amounts of debt, and the burden can be insurmountable...

AND NOBODY CAN AFFORD TO GO OUT FOR FINE DINING, ANYWAY....SEE TREATY OF DETROIT, BROKEN--PREVIOUS POST

[Demeter]

4. US Military Uses IMF and World Bank to Launder 85% of Its Black Budget Jake Anderson

http://theantimedia.org/us-military-uses-imf-and-world-bank-to-launder-85-of-its-black-budget/

Though transparency was a cause he championed when campaigning for the presidency, President Obama has largely avoided making certain defense costs known to the public. However, when it comes to military appropriations for government spy agencies, we know from Freedom of Information Act requests that the so-called “black budget” is an increasingly massive expenditure subsidized by American taxpayers. The CIA and and NSA alone garnered $52.6 billion in funding in 2013 while the Department of Defense black ops budget for secret military projects exceeds this number. It is estimated to be $58.7 billion for the fiscal year 2015.

What is the black budget? Officially, it is the military’s appropriations for “spy satellites, stealth bombers, next-missile-spotting radars, next-gen drones, and ultra-powerful eavesdropping gear.”

However, of greater interest to some may be the clandestine nature and full scope of the black budget, which, according to analyst Catherine Austin Fitts, goes far beyond classified appropriations. Based on her research, some of which can be found in her piece “What’s Up With the Black Budget?,” Fitts concludes that the during the last decade, global financial elites have configured an elaborate system that makes most of the military budget unauditable. This is because the real black budget includes money acquired by intelligence groups via narcotics trafficking, predatory lending, and various kinds of other financial fraud. The result of this vast, geopolitically-sanctioned money laundering scheme is that Housing and Urban Development and other agencies are used for drug trafficking and securities fraud. According to Fitts, the scheme allows for at least 85 percent of the U.S. federal budget to remain unaudited.

Fitts has been researching this issue since 2001, when she began to believe that a financial coup d’etat was underway. Specifically, she suspected that the banks, corporations, and investors acting in each global region were part of a “global heist,” whereby capital was being sucked out of each country. She was right.

As Fitts asserts,

“[She] served as Assistant Secretary of Housing at the US Department of Housing and Urban Development (HUD) in the United States where I oversaw billions of government investment in US communities…..I later found out that the government contractor leading the War on Drugs strategy for U.S. aid to Peru, Colombia and Bolivia was the same contractor in charge of knowledge management for HUD enforcement. This Washington-Wall Street game was a global game. The peasant women of Latin America were up against the same financial pirates and business model as the people in South Central Los Angeles, West Philadelphia, Baltimore and the South Bronx.”

This is part of an even larger financial scheme. It is fairly well-established by now that international financial institutions like the World Trade Organization, the World Bank, and the International Monetary Fund operate primarily as instruments of corporate power and nation-controlling infrastructure investment mechanisms. For example, the primary purpose of the World Bank is to bully developing countries into borrowing money for infrastructure investments that will fleece trillions of dollars while permanently indebting these “debtor” nations to West. But how exactly does the World Bank go about doing this?

John Perkins wrote about this paradigm in his book, Confessions of an Economic Hitman. During the 1970s, Perkins worked for the international engineering consulting firm, Chas T. Main, as an “economic hitman.” He says the operations of the World Bank are nothing less than “pure economic colonization on behalf of powerful corporations and banks that use the United States government as their tool.”

In his book, Perkins discusses Joseph Stiglitz, the Chief Economist for the World Bank from 1997-2000, at length. Stiglitz described the four-step plan for bamboozling developing countries into becoming debtor nations:

Step One, according to Stiglitz, is to convince a nation to privatize its state industries. Step Two utilizes “capital market liberalization,” which refers to the sudden influx of speculative investment money that depletes national reserves and property values while triggering a large interest bump by the IMF. Step Three, Stiglitz says, is “Market-Based Pricing,” which means raising the prices on food, water and cooking gas. This leads to “Step Three and a Half: The IMF Riot.” Examples of this can be seen in Indonesia, Bolivia, Ecuador and many other countries where the IMF’s actions have caused financial turmoil and social strife.

Step 4, of course, is “free trade,” where all barriers to the exploitation of local produce are eliminated.

There is a connection between the U.S. black budget and the trillion dollar international investment fraud scheme. Our government and the banking cartels and corporatocracy running it have configured a complex screen to block our ability to audit their budget and the funds they use for various black op projects. However, they can not block our ability to uncover their actions and raise awareness.

his article (US Military Uses IMF and World Bank to Launder 85% of Its Black Budget) is free and open source. You have permission to republish this article under a Creative Commons license with attribution to Jake Anderson and theAntiMedia.org. Anti-Media Radio airs weeknights at 11pm Eastern/8pm Pacific. If you spot a typo, email [e-mail].

Jake Anderson joined Anti-Media as an independent journalist in April of 2015. His topics of interest include social justice, science, corporatocracy, and dystopianT science fiction. He currently resides in Escondido, California. Learn more about Anderson here!
http://theantimedia.org/team/jake/

CONSPIRACY FACT FOR A MONDAY MORNING...WHAT COULD BE BETTER TO SET THE TONE OF THE WEEK?

[mother earth]

13. Conspiracy & fact, the meaning of which are in direct opposition, if it is factual, it IS.

Given we have back up by Joseph Stiglitz is beyond confirmation, lol.

Excellent read, as always.



"Conspiracy" no more....

[Demeter]

5. The Kansas Experiment By CHRIS SUELLENTROP

My uncle Gene is a state legislator in Topeka. This year, he and his fellow Republicans tried to do something pretty drastic with the state budget. And I got to watch the whole thing...

http://www.nytimes.com/2015/08/09/magazine/the-kansas-experiment.html

...But when you think of Gene Suellentrop — and you do think of him, even if you don’t know it yet — you just might regard him as a blight on the Republic. He is a partisan political warrior, which is a social type whose popularity probably ranks somewhere just above that of journalists, even for those who share his deeply conservative fiscal politics. And if you’re a liberal, coastal, cosmopolitan sort, at best you probably see him as a deluded if well-intentioned peddler of what the New York Times Op-Ed columnist Paul Krugman has called ‘‘right-wing derp, of doctrines that just get repeated (and indeed strengthen their political hold) no matter how wrong they prove.’’ Maybe you think my uncle Gene is an ideologue. Or maybe that’s another word for idealist.

Gene is 63 now, and his worm-dancing days are well behind him. He has served in the Kansas Legislature for the past six years, the last four as an ally of Gov. Sam Brownback, who is best known for his crusading social conservatism, including an unwavering opposition to abortion rights and same-sex marriage. Yet as governor, Brownback’s fiscal politics may be more remarkable.

In keeping with the state motto — ad astra per aspera, or ‘‘to the stars through difficulties’’ — Kansas politics have always been touched with a spirit of the avant-garde and the unorthodox, from popular sovereignty to prohibition and beyond. Today, thanks in large part to Brownback, the state is a petri dish for movement conservatism, a window into how the national Republican Party might govern if the opposition vanished. The 125 legislators of the House of Representatives include 97 Republicans; the Senate has an even greater percentage of Republicans, with only 8 Democrats among the 40 senators. With Brownback as governor, Kansas is in the midst of a self-described economic ‘‘experiment,’’ a project that, whatever you think of its merits, is one of the boldest and most ambitious agendas undertaken by any politician in America. Brownback calls it the ‘‘march to zero,’’ an attempt to wean his state’s government off the revenues of income taxes and to transition to a government that is financed entirely by what he calls consumption taxes — that is, sales taxes and, to a lesser extent, property taxes.

This fervor for budget-cutting is hardly unique to Kansas. At the federal level, the opposition party in the White House has kept the Republican majority in Congress from making much headway. But there are 23 states in the Union controlled entirely by Republicans, from statehouse to governor’s mansion — 24, if you count Nebraska’s technically nonpartisan, unicameral legislature — compared with just six (and Washington, D.C.) on the Democratic side. In these Republican states, the combination of the Great Recession with the anti-Obama elections of 2010 and 2014 has allowed legislators to make deeper cuts to the size and scope of government than has been possible in Washington for decades. In 2012, according to a report by the Pew Charitable Trusts, state governments spent $9 billion less than they did the previous year — the first such decline in 50 years. Many of these cuts have fallen on education. In Pennsylvania, for example, Gov. Tom Corbett cut funding for the state’s public universities by 20 percent, a compromise from his original proposal of 50 percent. Last month in Wisconsin, Gov. Scott Walker, backed by Republican majorities in the state House and Senate, cut $250 million from the University of Wisconsin system.

As many tax-cutting states have found later on, the party’s deep-seated opposition to tax increases of any kind can make balancing the budget a high-wire act...

A HIGH WIRE TRAVERSED BY THE GOP CLOWN TROOPS....MORE AT LINK THAN YOU CAN STAND TO READ ABOUT WHAT IS THE MATTER WITH KANSAS

[Demeter]

6. Is There Anything Progressive About Hillary’s Economic Plan? by Dean Baker

http://www.counterpunch.org/2015/08/14/is-there-anything-progressive-about-hillarys-economic-plan/

The long period of income stagnation facing middle class and working class families has created a substantial demand for progressive economic policies. In response, former Secretary of State Hillary Clinton has repeatedly indicated that middle class living standards would play a central role in her campaign for the Democratic presidential nomination.

Last week, in a major speech she laid out an argument for more long-term investment and urging companies to focus on developing the skills of their workers. The major item that Secretary Clinton put forward in a previous talk was tax incentives for workplace training and profit sharing. While these are admirable goals, it is not clear whether the specific proposals she put forward are likely to push the economy in this direction.

In her most recent talk she proposed graduating the capital gains tax rate. Under this proposal people would have to hold stock and other assets for a longer period of time to get the full benefit of the capital gains tax rate. Currently taxpayers only need to hold stock for a year to pay the 20 percent top capital gains tax rate, rather than the 40 percent income tax rate for high earners. Clinton is proposing that they would have to hold stock for four years before getting the 20 percent rate.

Taking these in turn, we have a long history of creating tax breaks to promote various types of corporate or individual behavior. Few work as planned. In fact, one of the few areas in which there tends to be bipartisan agreement in Washington is that there are far too many tax breaks in the tax code already. Nearly all proposals for both corporate and individual tax reform start from the premise that it would be desirable to have a simpler tax code with lower tax rates. So Clinton’s proposal would be a clear step in the opposite direction.

Since there is no specific proposal at this point it is difficult to know what potential problems it poses...

BUT HILLARY AND BILL HAVE A RECORD! MORE AT LINK

[bread_and_roses]

14. did you guys know the Robin Hood Tax is now a bad thing?

That's according to Hillary supporters around here who want to make out that a miniscule transaction tax will crush workers' pensions.

I really can't take it. I have to avert my eyes from the front page and just come here if I'm going to come by at all.

[Demeter]

7. EU aims to lure Greek deposits back to banks with bail-in shield

PUT YOUR EUROS IN OUR BANKS--AND WE PROMISE NOT TO CONFISCATE THEM!

SUCH A DEAL! DO THEY THINK WE ARE IDIOTS?

http://www.ekathimerini.com/200585/article/ekathimerini/business/eu-aims-to-lure-greek-deposits-back-to-banks-with-bail-in-shield

Euro-area finance ministers shielded Greek bank depositors from any losses resulting from the restructuring of the nation’s financial system, as part of Friday’s deal on an 86 billion-euro ($96 billion) bailout.

Senior bank bondholders will be in the crosshairs if Greek lenders tap into any of the financial stability funds set aside in the new bailout. Euro-area finance ministers agreed to a deal that would next week place 10 billion euros in Greece’s bank recapitalization fund, with another 15 billion euros available if needed.

“Bail-in of depositors will be explicitly excluded” from European Union rules to make private investors share the cost of fixing troubled banks, Eurogroup President and Dutch Finance Minister Jeroen Dijsselbloem told reporters after the six-hour meeting in Brussels.

By shielding all depositors, the euro area will protect small and medium-sized enterprises who have more than 100,000 euros in their accounts and aren’t covered by government deposit insurance, Dijsselbloem said. This prevents “a blow to the Greek economy” that ministers wanted to avoid, he said. Instead, the focus will turn to bond investors.

“When so much money must be invested in banks, in the first place, banks must take part of the risks,” Dijsselbloem said....

MORE LIES AT LINK

[Demeter]

8. Riskiest End of the Junk Bond Market Just Blew Up by Wolf Richter

http://wolfstreet.com/2015/08/15/riskiest-end-of-junk-bond-market-just-blew-up-ccc-rated-yields-spike/

You wouldn’t know by looking at the US Treasury market, which remained relatively sanguine this week, with only a little panic buying on Tuesday. So 10-year Treasuries ended the week near where they’d started it. But at the other end of the spectrum, the riskiest portion of the junk bond market just blew up spectacularly.

There were a lot of culprits to catch the blame. At the top of the list was the devaluation of the Chinese yuan. It caught the corporate bond markets by surprise, though it shouldn’t have, injected all kinds of stress into them, and drove up bond spreads, with investors demanding a higher yields for riskier bonds. It hit the riskiest segment of the junk bond market with a sledge hammer.

Given the precarious state of the current credit bubble and the pandemic nervousness about it, bond investors were rattled by the moves of the People’s Bank of China. In prior crises, such as the 1997 Asian financial crisis and the 2008-2009 Global Financial Crisis, the PBOC had maintained a fixed exchange rate with the dollar. It didn’t devalue, as other countries were doing, to get out of the crisis. The yuan was seen as stabilizing the markets. Now the yuan is seen as destabilizing the markets.

It didn’t help that the Fed’s cacophony has been pointing at a September rate hike. It would be the first ever in the careers of millennials working on Wall Street. It would bring to an end the 30-year bull market in bonds. Even most middle-aged money managers have not yet experienced the alternative, other than a few short-lived dips and panics. On a visceral level, they simply can’t believe rates can ever rise over the long term. To them, rates can only go down....

MORE

[Demeter]

9. Is Financial Success a Product of Inherited Genes? By Abdul Alasaad

http://ineteconomics.org/ideas-papers/blog/is-financial-success-a-product-of-our-genes

Comparing outcomes for biological and adopted children sheds light on the intergenerational transmission of wealth.

How much does a family’s wealth determine a child’s financial prospects? Is Ivanka Trump a success because she inherited smarts and drive from her father, Donald Trump, or did her father’s success give her a leg up?

Of course, no one completely denies the impact of affluent upbringing on a child’s educational and financial prospects. But the far more important question is: by how much does an affluent upbringing influence a child financial and educational prospects?

In his infamous essay, Defending the One Percent, Gerg Mankiw links the correlation between people’s earnings with those of their parents to genetic factors. “parents and children share genes” Mankiw noticed ” a fact that would lead to intergenerational persistence in income even in a world of equal opportunities. Smart parents are more likely to have smart children, and their greater intelligence will be reflected, on average, in higher incomes”

Figure 1b shows the relationship between parents’ and children’s ranking within the wealth distribution, prior to any inheritance. The data indicate that, even before inheritance, the higher the ranking of parents in the wealth distribution, the higher the ranking of their biological children. The strength of this positive relationship, measured by the coefficient, is .35.



Figure 1b: Within-Cohort Wealth Rank Relationship between Parents and Own-birth Children Parents in the top and bottom 5% of the within-cohort wealth distribution are dropped
Black, Devereuz, Laundborg and Majlesi

Is Mankiw right to link this strong relationship to genetic factors? Well, to distinguish the role of nature versus nature in the intergenerational transmission of wealth, four economists, in an NBER working paper, compared the wealth of adoptive children to the wealth of their adoptive and biological parents.

The relationship between the wealth ranking of adoptive children and with those of their adoptive parents is strikingly positive and almost as strong as the relationship between parents and their biological children with a coefficient of .27.


Figure 2b: Within-Cohort Wealth Rank Relationship between Parents and Children and Their Adoptive Parents
Black, Devereuz, Laundborg and Majlesi

More conclusively, the relationship between the wealth ranking of adopted children and with the ranking of their biological parents is much weaker with a coefficient of .11. In other words, a child’s wealth is more strongly correlated with the wealth of their adoptive parents than to the wealth of their biological parents. Nurture, when it comes to wealth, is far more important than nature.

But overall, who had a higher net wealth at the age of 44 prior to any inheritance? Biological children or adopted ones? If Mankiw is right to assume that inherited genes determines earnings, then biological children must have accumulated relatively more money than adopted ones.

It turns out that the biological children had in fact accumulated more net worth; but by a very small, and almost irrelevant, margin. On average, biological children held 5% more in net wealth than adopted ones.

Intergenerational Relationships



Dependent Variable: Child Rank in Within-Cohort Wealth Distribution Notes: All specifications include cohort dummies for parents and children. Parental wealth is measured in 1999 and child wealth is measured in 2006. All parents are alive in 1999 and at least one of the (adoptive) parents of (adopted) biological children is alive in 2006. Parental wealth is calculated as combined wealth of the mother and father divided by two. *** p<0.01, ** p<0.05, * p<0.1. Standard errors clustered by adoptive family.
Black, Devereuz, Laundborg and Majlesi

****
Summary Statistics

Notes: * Monetary values are reported in Swedish Krona on December 31, 2000. At the time, the exchange rate was 1 USD = 9.42 SEK. Parental wealth is calculated as combined wealth of the mother and father divided by two. Black, Devereuz, Laundborg and Majlesi

Mankiw seems to get it wrong when it comes to intergenerational transmission of wealth, and he is not alone. Wealth, like most things in life, has more to do with environmental factors than genetic ones. There are lots of reasons why Ivanka Trump is rich like her father; an inherited gene is certainly not one of them.

References

Mankiw, N. Gregory. “Defending the One Percent.” Journal of Economic Perspectives 27 (2013): 21-34. Accessed August 6, 2015.

Sandra Black, Paul Devereux, Petter Lundborg, and Kaveh Majlesi. ” Poor Little Rich Kids? The Determinants of the Intergenerational Transmission of Wealth.” No. 21409 (2015). National Bureau of Economic Research. Web. 6 Aug. 2015.

[Demeter]

10. 6 AM and it never got below 70F last night

There's a cold front coming...I hope it gets here soon! Have a bearable day, everyone!

[Demeter]

16. It's officially Tuesday now--continuing on here

[Demeter]

17. Citizens Bank Shortchanged Depositors NYT EDITORIAL

http://www.nytimes.com/2015/08/17/opinion/citizens-bank-shortchanged-depositors.html?_r=0

When depositing checks at the bank, there is always a chance for error. The bank’s scanner might misread the checks or the deposit slip. Or the total on a deposit slip might not match the actual deposit. But you usually rest assured that the bank will correct the mistake and notify you of the difference. Not at Citizens Bank. For years, it turns out, Citizens often kept the difference, up to $50.

Last week, the Consumer Financial Protection Bureau and other federal bank regulators ordered Citizens, which operates in New York and 10 other states, to refund at least $14 million to customers and pay $20.5 million in penalties for unfair and deceptive banking.

The regulators, tipped off by a whistle-blower, found that from 2008 until September 2012 Citizens did not investigate and correct deposit discrepancies under $50 that were flagged by its review system; it changed the cutoff to $25 through November 2013. Throughout that time, the bank’s account disclosures assured customers that all deposits were subject to verification, strongly implying that the bank would ensure the accuracy of deposits.

The action against Citizens is the first by the consumer bureau for deception in handling deposits. Regulators would not say whether other banks were being investigated for similar violations or whether Citizens could be criminally liable; the regulators do not have authority in criminal cases. They were clear, however, that Citizens had no excuse. They noted that by not correcting the discrepancies, Citizens would have cheated itself when a mistake was in the customer’s favor. But that does not nullify the harm to customers who were shortchanged.

Regulators also noted that Citizens, which has assets over $100 billion, may have wrongly viewed the small discrepancies as not worth the time to review and fix. But a rounding error to a bank is real money to a customer. Besides, no amount of money is trivial for banks. They are in the business of vacuuming up pennies, by the trillions, in transactions large and small.

In the last decade, through the financial bust and bailout, banks have earned the public’s mistrust. The Citizens breach is not as calamitous as others, but is appalling precisely because it is so basic. It is a reminder that no corner of banking should go unpoliced and that bank regulators like the Consumer Financial Protection Bureau are a necessary defense against a system prone to abuses.

ONE HAS TO WONDER WHAT IT TAKES TO GET ARRESTED IN THIS COUNTRY, WHEN ONE IS A BANKSTER

[Demeter]

18. Republicans Against Retirement PAUL KRUGMAN

http://www.nytimes.com/2015/08/17/opinion/republicans-against-retirement.html

Something strange is happening in the Republican primary — something strange, that is, besides the Trump phenomenon. For some reason, just about all the leading candidates other than The Donald have taken a deeply unpopular position, a known political loser, on a major domestic policy issue. And it’s interesting to ask why. The issue in question is the future of Social Security, which turned 80 last week. The retirement program is, of course, both extremely popular and a long-term target of conservatives, who want to kill it precisely because its popularity helps legitimize government action in general. As the right-wing activist Stephen Moore (now chief economist of the Heritage Foundation) once declared, Social Security is “the soft underbelly of the welfare state”; “jab your spear through that” and you can undermine the whole thing. But that was a decade ago, during former President George W. Bush’s attempt to privatize the program — and what Mr. Bush learned was that the underbelly wasn’t that soft after all. Despite the political momentum coming from the G.O.P.’s victory in the 2004 election, despite support from much of the media establishment, the assault on Social Security quickly crashed and burned. Voters, it turns out, like Social Security as it is, and don’t want it cut. It’s remarkable, then, that most of the Republicans who would be president seem to be lining up for another round of punishment. In particular, they’ve been declaring that the retirement age — which has already been pushed up from 65 to 66, and is scheduled to rise to 67 — should go up even further. Thus, Jeb Bush says that the retirement age should be pushed back to “68 or 70”. Scott Walker has echoed that position. Marco Rubio wants both to raise the retirement age and to cut benefits for higher-income seniors. Rand Paul wants to raise the retirement age to 70 and means-test benefits. Ted Cruz wants to revive the Bush privatization plan.

For the record, these proposals would be really bad public policy — a harsh blow to Americans in the bottom half of the income distribution, who depend on Social Security, often have jobs that involve manual labor, and have not, in fact, seen a big rise in life expectancy. Meanwhile, the decline of private pensions has left working Americans more reliant on Social Security than ever. And no, Social Security does not face a financial crisis; its long-term funding shortfall could easily be closed with modest increases in revenue.

Still, nobody should be surprised at the spectacle of politicians enthusiastically endorsing destructive policies. What’s puzzling about the renewed Republican assault on Social Security is that it looks like bad politics as well as bad policy. Americans love Social Security, so why aren’t the candidates at least pretending to share that sentiment? The answer, I’d suggest, is that it’s all about the big money. Wealthy individuals have long played a disproportionate role in politics, but we’ve never seen anything like what’s happening now: domination of campaign finance, especially on the Republican side, by a tiny group of immensely wealthy donors. Indeed, more than half the funds raised by Republican candidates through June came from just 130 families.

And while most Americans love Social Security, the wealthy don’t. Two years ago a pioneering study of the policy preferences of the very wealthy found many contrasts with the views of the general public; as you might expect, the rich are politically different from you and me. But nowhere are they as different as they are on the matter of Social Security. By a very wide margin, ordinary Americans want to see Social Security expanded. But by an even wider margin, Americans in the top 1 percent want to see it cut. And guess whose preferences are prevailing among Republican candidates.

You often see political analyses pointing out, rightly, that voting in actual primaries is preceded by an “invisible primary” in which candidates compete for the support of crucial elites. But who are these elites? In the past, it might have been members of the political establishment and other opinion leaders. But what the new attack on Social Security tells us is that the rules have changed. Nowadays, at least on the Republican side, the invisible primary has been reduced to a stark competition for the affections and, of course, the money of a few dozen plutocrats. What this means, in turn, is that the eventual Republican nominee — assuming that it’s not Mr. Trump —will be committed not just to a renewed attack on Social Security but to a broader plutocratic agenda. Whatever the rhetoric, the GOP is on track to nominate someone who has won over the big money by promising government by the 1 percent, for the 1 percent.

[Demeter]

19. IRS data theft: 5 things you need to know By Priya Anand

The IRS data breach is worse than originally expected

http://www.marketwatch.com/story/irs-data-theft-5-things-you-need-to-know-2015-05-27

Criminals who manipulated the Internal Revenue Service’s website in May to steal taxpayer information may have swiped information on as many as 390,000 accounts in a breach nearly double the size the agency originally suspected.

The IRS said in May that identity thieves used data stolen elsewhere, such as Social Security numbers, birth dates and street addresses, in attempts to clear verification questions and access past tax transcripts for more than 225,000 households. On Monday, the agency said a deeper analysis found an additional 220,000 successful attempts and 170,000 failed tries to access information. That makes for a total of about 615,000 hack attempts.

The IRS will mail letters to 390,000 taxpayers whose information was accessed or could be at risk “in the next few days,” according to an agency statement. It shut down the “get transcript” feature hackers exploited in May, and says it is “continues to work on strengthening the system.”

For years, the IRS has been struggling to keep tax refunds out of the hands of crooks, especially as online tax filing became common. It gave criminals who filed fraudulent refunds an estimated $5.8 billion in 2013, according to the U.S. Government Accountability Office. Earlier this month, the IRS set up a new cybercrime unit to fend off hackers. And after inadvertently giving out millions of dollars to prisoners who sent in fake filings while behind bars , the agency in 2013 began sharing more information with federal and state prisons to better match records.

1. The IRS will send you a letter if your records were at risk.
2. The IRS will offer you free credit monitoring, but that is in no way a catch-all
3. The IRS already knew it needed to do a better job at securing taxpayer data.
4. Personal identity-verification questions are a poor security practice.
5. Your information isn’t much safer with the government.

MORE DETAIL AT LINK, AND SUGGESTED ACTIONS

[Demeter]

20. Banks braced for billions in civil claims over forex rate rigging

http://www.cnbc.com/2015/08/18/d-for-billions-in-civil-claims-over-forex-rate-rigging.html

Global banks are facing billions of pounds-worth of civil claims in London and Asia over the rigging of currency markets, following a landmark legal settlement in New York.

Barclays, Goldman Sachs, HSBC and Royal Bank of Scotland were among nine banks revealed last Friday to have agreed a $2bn settlement with thousands of investors affected by rate-rigging in a New York court case.

Lawyers warned the victory opens the floodgates for an even greater number of claims in London, the largest foreign exchange trading hub in the world, in a sign that the currency manipulation scandal is far from over.

Banks could be hit as early as the autumn with claims in London's High Court from corporates, fund managers and local authorities, according to lawyers working on the cases. ,,,

[Demeter]

21. Dallas Fed Names Harvard Professor Robert Kaplan as Next President GOLDMAN SACHS ALUMNUS

http://www.bloomberg.com/news/articles/2015-08-17/dallas-fed-names-harvard-professor-kaplan-as-next-president

The Federal Reserve Bank of Dallas named Robert Steven Kaplan, a former Goldman Sachs Group Inc. executive who left to teach at Harvard in 2006, as its new president.

Kaplan, 58, will take his post Sept. 8, the Dallas Fed said Monday in a press release. He will succeed Richard Fisher, who was president from April 2005 to March 2015. Helen Holcomb, the Dallas Fed’s first vice president, has served as interim head since Fisher retired.

The new president, who won’t vote on policy until 2017, will join the Fed at a pivotal time, just eight days before the meeting at which most economists expect the central bank to begin raise interest rates. Officials are weighing when and how quickly to tighten policy after leaving rates near zero since 2008.

Kaplan is a professor of management practice and a senior associate dean at Harvard Business School. Before joining Harvard, he spent 22 years at Goldman Sachs and was vice chairman in charge of investment banking when he departed....MORE

HE'S ALSO FROM KANSAS, TALK ABOUT A GUY WHO HAS NO REDEEMING FEATURES!

[Demeter]

22. Fish Farming Becomes Bigger Business Than the Open Sea

http://www.bloomberg.com/news/articles/2015-08-17/hungry-fish-farms-lure-cargill-as-seafood-demand-grows

For the first time, the world is eating more fish from farms than from the open sea, spurring billions of dollars of takeovers as one of the largest food companies seeks to capitalize on rising demand.

The latest buyer to enter the fray is Cargill Inc., the world’s biggest grain trader and a meat supplier, which said Monday it agreed to acquire Norwegian salmon-feed business EWOS Holding AS for $1.5 billion.

Fish consumption is growing at a faster pace than beef, pork and poultry, driven by an expanding, increasingly prosperous global population that recognizes the health benefits of eating seafood. Demand is forecast by United Nations to outstrip supply in coming years. Wild fish aren’t going to fill the gap, and that leaves farming in lakes and coastal waters -- also known as aquaculture -- to make up the shortfall.

“We can expect that large companies active in commodities, animal proteins and life sciences will be considering this industry and how they can play a role in the growth of what some call the Blue Revolution, the growth of marine farming of food and feed,” Gorjan Nikolik, a Rabobank International seafood-industry analyst, said by phone from Utrecht, the Netherlands.

MORE

[Demeter]

23. Ringgit in Soros-Like Selloff Reviving Memories of 1998 Crisis

http://www.bloomberg.com/news/articles/2015-08-16/soros-like-attack-on-malaysian-ringgit-revives-memories-of-98

The currency slid 3.8 percent against the dollar last week as central bank Governor Zeti Akhtar Aziz said Thursday foreign-exchange reserves will need to be rebuilt after they fell below $100 billion for the first time since 2010. She ruled out introducing a currency peg or capital controls, the solutions Malaysia turned to 17 years ago when faced with a tumbling exchange rate. Mahathir blamed foreign investors for the demise of the ringgit and labeled Soros a “moron” for his part in it.

“The fallout is reviving memories of hedge-fund attacks in the 1997/98 crisis,” Chua Hak Bin, an economist at Bank of America Merrill Lynch in Singapore, said Friday in an interview. “We don’t think capital controls are likely, but cannot rule out the risk given the rapid depletion of foreign reserves.”

Malaysia’s currency leads losses in Asia for the past year with a 23 percent drop, battered by a political scandal, the yuan’s devaluation, slumping oil prices and the prospect of higher U.S. interest rates. That compares with a 30 percent slide in the 12 months before Mahathir imposed capital controls in September 1998 and some investors say the risk of a repeat is fueling an exodus of money from Malaysia.

The ringgit has retreated in each of the past eight weeks and slid 0.6 percent on Monday to close at 4.1030 per dollar in Kuala Lumpur. It earlier fell to a 17-year low of 4.1340. Bank Negara Malaysia declined on Friday to comment on the move and on whether it was intervening in the market.
‘Draconian’ Responses

Malaysia has a “history of draconian policy responses” and that may be spurring the flow of funds from the country as the currency weakens, said Alan Richardson, a Hong Kong-based money manager at Samsung Asset Management Ltd., which oversees about $112 billion.

Global funds held 32 percent of Malaysian sovereign bonds in July, compared with 17 percent for Thailand, according to the latest available central bank data...

[Demeter]

24. A Biotech Company Escalates the War Against Its Own Founder

http://www.bloomberg.com/news/articles/2015-08-17/a-biotech-company-escalates-the-war-against-its-own-founder

In stepping up a bizarre legal battle with its own founder, the biotech company Retrophin has made a most unusual allegation: that it was created in 2011 and taken public shortly thereafter merely to provide shares for the founder and former chief executive, Martin Shkreli, to hand out to aggrieved investors in an insolvent hedge fund.

Shkreli, 32, first gained public notice as a short-selling trader whose hedge fund MSMB Capital speculated on small biotech stocks to fall. He surprised many investors by then turning around and placing the ultimate long bet—forming a biotech of his own to develop drugs for rare diseases. Controversy followed Shkreli in his new role as Retrophin's chief executive, and the board of directors accused him of misusing assets, an accusation he denied.

Shkreli left Retrophin in September 2014; investor lawsuits and a subpoena from the U.S. Justice Department followed. In February, Retrophin said that based on its own independent investigation, it determined that Shkreli had improperly used company cash and stock to settle a series of threatened lawsuits by investors in MSMB Capital. The lawsuit Retrophin filed today in federal court in New York elaborates on those allegations and seeks more than $65 million in damages, as well as unspecified disgorgement of compensation paid to Shkreli.

Perhaps the most intriguing part of the suit is the allegation that after a single disastrous February 2011 trade with Merrill Lynch effectively wiped out MSMB Capital, Shkreli formed Retrophin "to create an asset that he might be able to use to placate his MSMB Capital investors." The suit goes on to accuse Shkreli of doing exactly that—getting the company aloft and then doling out its cash and shares to fend off complaints from angry hedge fund investors.

MORE

THIS HAS GOT TO BE THE BIGGEST INNOVATION IN FINANCIAL TECHNOLOGY YET

[Demeter]

25. Flash Crash Trader Sarao Released as He Fights Extradition

http://www.bloomberg.com/news/articles/2015-08-14/flash-crash-trader-to-be-released-during-u-s-extradition-fight

The trader charged over his role in the 2010 U.S. flash crash was released after four months in a London prison as a judge changed the terms of his bail while he fights extradition.

Navinder Singh Sarao won his release by disclosing the existence of roughly 25 million pounds ($39 million) worth of assets invested in Switzerland that will be secured by the U.S. Sarao will have to pay 2.5 million pounds from the Swiss assets to the court once the money becomes available.

Sarao has been in jail since he was arrested in April at his house in London’s Hounslow neighborhood, and charged by U.S. prosecutors with fraud and market manipulation. Authorities said he was responsible for one in five sell orders during the frenzy on May 6, 2010, when investors saw almost $1 trillion erased from U.S. stocks in minutes.

Sarao left Westminster Magistrates’ Court in the rain, wearing a dark jacket with a hood pulled over his head, with his lawyer and didn’t speak with the press, Reuters reported.

His bail was originally set at 5 million pounds based on funds in his trading account before they were frozen. Two previous attempts to have the security waived were unsuccessful because the U.S. alleged he had made $40 million profits, most of which were unaccounted for.

The disclosure of the 25 million pounds in Switzerland satisfied the U.S. authorities, who didn’t oppose the renewed bail application....

'Flash crash' trader released on bail

http://www.theguardian.com/business/2015/aug/14/flash-crash-trader-navinder-singh-sarao-granted-bail


The British financial trader accused of contributing to a multibillion-dollar stock market crash has been released from prison after being granted bail while he fights extradition to the US. Navinder Singh Sarao, 36, who faces 22 counts of fraud and commodity manipulation in the US, was set bail of £50,000 at Westminster magistrates court. He has been held at Wandsworth prison in London, after being denied bail following his arrest in April and losing an appeal in May. On Friday, district judge Quentin Purdy said Sarao could be released provided he remains within the bounds of the M25. Sarao, who before his arrest lived with his parents in a modest semi-detached house in Hounslow, west London, is also barred from using the internet for any trading.

During the hearing it emerged that Sarao has funds of more than £30m, including £25.5m held in Switzerland, as well as £5m in a US account controlled by his lawyers. Sarao’s lawyers are trying to transfer the Swiss funds into the US account, to provide surety to US authorities. However, the Swiss authorities will not release the majority of funds until 2017, apart from £5m that will be transferred to the escrow account in October.

The court also heard that Sarao had been diagnosed as having “severe Asperger syndrome” by an expert from Cambridge University.

Sarao, who appeared in court wearing a yellow T-shirt, over a black long-sleeved top, denies the charges against him. The British trader is accused of manipulating US financial markets and contributing to the flash crash of 6 May 2010, when the Dow Jones industrial average plunged 1,000 points in five minutes, losing 9% of its value and causing panic on Wall Street. The market soon recovered and ended the day 3% lower. The US Department of Justice alleges that Sarao earned $40m (£26m) by “spoofing” financial markets, which involved using software to place fake trades to move prices up or down.

James Lewis QC, representing Sarao, argued that his client needed to be released from jail to present evidence to a financial expert on his trading activities, as part of his defence against extradition.

[Demeter]

26. Microsoft can now remotely disable pirated games, if you’re running them on Windows 10

http://tech.firstpost.com/news-analysis/microsoft-can-now-remotely-disable-pirated-games-if-youre-running-them-on-windows-10-277956.html


OR ANY OTHER THING YOU HAVE ON YOUR MACHINE, IF THEY WANT TO....WHO NEEDS THE NSA, WHEN YOU HAVE MS?

[Demeter]

27. Governments do not need the savings of the rich, nor their taxes! (SAYS WHO? THE RICH)

http://bilbo.economicoutlook.net/blog/?p=31604

WELL, THEN, THEY DON'T NEED THE POOR'S SAVINGS OR TAXES, EITHER!



In Chapter 24 of The General Theory of Employment, Interest and Money, Concluding Notes on the Social Philosophy towards which the General Theory might Lead, John Maynard Keynes confronted the issue of the “arbitrary and inequitable distribution of wealth and incomes” in capitalist economies. The argument he advances in that Chapter of his 1936 book contains guidelines for the progressive left that some just cannot seem to grasp. In short, governments (as our agents) do not need the savings of the rich to ensure that society prospers. There was another interesting contribution in 1946 from the American statistician and economist – Beardsley Ruml – who wrote that “Taxes for Revenue are Obsolete”. The progressive left would be advised to study his work and stop building political policy platforms on the claim that governments needs to make the rich pay their fair share of taxes so that adequate public services and infrastructure can be provided. The incomes and taxes paid by the rich are largely irrelevant to the capacity of a national, currency-issuing government to provide first-class public services and infrastructure. It is time to re-frame the debate and the way in which progressive political forces state their policy aspirations. This bears on the current interesting struggle in Britain for the leadership of their Labour Party.

In Chapter 24 of the General Theory, Keynes considers that the:

… outstanding faults of the economic society in which we live are its failure to provide for full employment and its arbitrary and inequitable distribution of wealth and incomes.

He said his work (the General Theory) had obvious relevance for the first fault – “failure to provide for full employment” – because it demonstrated categorically that mass unemployment was the result of a deficiency of total spending in the economy and that governments could easily use their fiscal capacities (spending and taxation) to redress that ill.

This observation destroyed the existing ‘macroeconomics’ of the day which had maintained that unemployment was due to excessive real wages and that wage cuts would restore full employment.

In the early years of the Great Depression, the ‘Treasury View’ (wage cutting) was tried and failed dramatically. Keynes’ insights, which built on what Marx had already understood and explained in detail many decades earlier, were demonstrated to be valid as governments introduced major fiscal stimulus and job creation programs to combat the growing mass unemployment in the 1930s.

The onset of the Second World War and the rise in fiscal deficits as governments sought to prosecute their respective War efforts ended the Great Depression and set the scene in the subsequent peace time for several decades of full employment managed by appropriate fiscal policy use.

That era ended when the neo-liberals stormed back into the policy dominance....

[Demeter]

28. More Argentine discovery shenanigans THE VULTURE SINGER

http://www.creditslips.org/creditslips/2015/08/more-argentine-discovery-shenanigans.html



Much has been going on, although little has actually happened, in the litigation against Argentina. For instance, the court has allowed the plaintiffs to file an amended complaint seeking an injunction blocking payments on the recently-issued BONAR 2024s (USD-denominated, Argentine law bonds). That may prove important, for it's a step toward blocking Argentina from issuing any foreign currency debt, anywhere within the great orange blob known as "places-that-are-not-New-York." But no injunction yet; Argentina has not yet filed an answer to the complaint.

Plaintiffs have also continued efforts to find executable Argentine assets. I'm interested in the role that sovereign immunity plays in the debt markets, and a development yesterday captured my attention. Readers may recall that, in a 2014 case involving Argentina, the U.S. Supreme Court considered the extent to which a creditor holding a money judgment can use U.S. discovery rules to force disclosure of a sovereign's assets around the globe. The Court ruled against Argentina, thereby opening the door to potentially expansive discovery into the nature and location of the sovereign's assets worldwide. After losing in the Supreme Court, Argentina persisted in refusing to turn over much of the discovery requested by plaintiffs. Yesterday, the district judge sanctioned Argentina by ordering that "any property of the Republic of Argentina in the United States except diplomatic or military property is deemed to be used for commercial activity." (No paper order is available on the court's docket yet.)

U.S. law permits creditors of a foreign state to seize only assets that are "used for a commercial activity" in the country. The district court's order deems all Argentine assets (other than military or diplomatic assets) to satisfy this criterion. In one sense, this is a complete end-run around the statute. By restricting enforcement to commercial assets, the law minimizes the ability of private creditors to create diplomatic headaches for the U.S. government. On the other hand, the sanctions order is analogous to a so-called adverse inference, where the court treats certain facts as established because the sovereign's discovery misconduct has made the facts impossible to prove. There is some authority for adverse inferences as a sanction for a sovereign's litigation misconduct. Right or wrong, however, the result of yesterday's order is an even wider embargo on Argentina's ability to conduct transactions in the U.S.

[Demeter]

29. A Point of View: Why Greece and the eurozone aren't playing games

THEY AREN'T? COULD HAVE FOOLED ME--LOOKED LIKE BDSM GAMES, TO BOOT!

http://www.bbc.com/news/magazine-33863913

Game theory can't explain the Greek crisis - the entire euro project is now in the hands of fate, writes philosopher John Gray.

After much drama, a third bailout has been announced for Greece and approved by the Greek parliament. The details have yet to be settled, but whatever deal finally emerges Greece's government will be compelled to impose more spending cuts and tax rises at a time when unemployment is already higher than it was in America during the Great Depression. The result will be to lock Greece into permanent poverty, while the burden of debt will never be paid off.

Greece has been forced to submit to another round of destructive and self-defeating austerity policies in order to save the euro. But the euro is weaker than it was before the deal, and many are beginning to consider what for respectable opinion has until now been a forbidden thought: the euro project may have been a colossal error. Instead of leaving it stronger, the deal that has been imposed has strengthened the suspicion that the single currency is irreparably flawed.

It seems a strange outcome for a deal reached among reasonable men and women. But was the deal a result of rational bargaining? If you listened to the media on the negotiations in Brussels, you'd be inclined to think so. There has been constant talk of stratagems and counter-stratagems, bluffs and double bluffs. The Greek drama has been interpreted as a high-stakes poker game, with each of the players trying to maximise their chance of winning.

It's an interpretation that's been all the more popular as a result of the fact that one of the players, Greece's former finance minister Yanis Varoufakis, has written an academic textbook on game theory. A familiar line of commentary has it that the Syriza government destroyed any credibility it may have had among European elites by reckless shifts in strategy. If only the Greeks had played their hand more shrewdly, a better deal could have been reached and the crisis could have been resolved. The eurozone could then become more integrated and more stable.

I think it's an unrealistic analysis. Unworkable and unreformable, the euro can only produce recurrent and worsening crises. But this can go on for only so long. The euro will break down through a process of political contagion, as resurgent nationalism and radical parties of opposition become stronger throughout Europe. The driving force of the currency's disintegration will be a mood of popular anger. Attempting to maintain the euro at any cost can only result in mounting desperation, which will seek expression in violence if no practicable policies are on offer to ameliorate the situation.

MORE

[DemReadingDU]

30. Michael Snyder: 23 Nations Around The World Where Stock Market Crashes Are Already Happening

8/17/15 Michael Snyder: 23 Nations Around The World Where Stock Market Crashes Are Already Happening

You can stop waiting for a global financial crisis to happen. The truth is that one is happening right now. All over the world, stock markets are already crashing. Most of these stock market crashes are occurring in nations that are known as “emerging markets”. In recent years, developing countries in Asia, South America and Africa loaded up on lots of cheap loans that were denominated in U.S. dollars. But now that the U.S. dollar has been surging, those borrowers are finding that it takes much more of their own local currencies to service those loans. At the same time, prices are crashing for many of the commodities that those countries export. The exact same kind of double whammy caused the Latin American debt crisis of the 1980s and the Asian financial crisis of the 1990s.

As you read this article, almost every single stock market in the world is down significantly from a record high that was set either earlier this year or late in 2014. But even though stocks have been sliding in the western world, they haven’t completely collapsed just yet.

In much of the developing world, it is a very different story. Emerging market currencies are crashing hard, recessions are starting, and equity prices are getting absolutely hammered.

Posted below is a list that I put together of 23 nations around the world where stock market crashes are already happening.

1. Malaysia

2. Brazil

3. Egypt

4. China

5. Indonesia

6. South Korea

7. Turkey

8. Chile

9. Colombia

10. Peru

11. Bulgaria

12. Greece

13. Poland

14. Serbia

15. Slovenia

16. Ukraine

17. Ghana

18. Kenya

19. Morocco

20. Nigeria

21. Singapore

22. Taiwan

23. Thailand

http://theeconomiccollapseblog.com/archives/23-nations-around-the-world-where-stock-market-crashes-are-already-happening

[DemReadingDU]

31. more from Michael Snyder

continued from above link...

A global financial crisis has already begun.
So those that were claiming that one would not happen in 2015 are already wrong.

Over the coming months we will find out how bad it will ultimately be.

Sometimes I get criticized for talking about these things. There are a few people out there that don’t like all of the “doom and gloom” that I discuss on my website. Apparently it is a bad thing to talk about the things that really matter and we should all just be “keeping up with the Kardashians” instead.

I consider myself just to be another watchman on the wall. From our spots on the wall, watchmen such as myself all over the nation are sounding the alarm about what we clearly see coming.

If we saw what was coming and we did not warn the people, their blood would be on our hands. But if we do warn the people, then we have done our duty.

Every day I just do the best that I can with what I have been given. And there are many others just like me that are doing exactly the same thing.

Those that do not like the warning message are going to feel really stupid when things start falling apart all around them and they finally realize how wrong they truly were.

http://theeconomiccollapseblog.com/archives/23-nations-around-the-world-where-stock-market-crashes-are-already-happening

[Demeter]

34. And you are one of the watchmen--thanks DRDU

[DemReadingDU]

32. 8/18/15 Shanghai stock index plunges more than 6 percent

8/18/15 Shanghai stock index plunges more than 6 percent
The Shanghai Composite Index fell 6.2 percent to 3,748.16. It was its largest fall since an 8.5 percent dive on July 27, which was its biggest slide in eight years.
more...
http://finance.yahoo.com/news/shanghai-index-plunges-more-6-percent-074046860.html


8/17/15 From Karl Denninger
So you think China's market blowup is isolated eh? That's what we heard about the Nasdaq blowup in 2000 too.

Remember that back in 2000 the tech market blew up in the early part of the year. It took quite a while before that filtered into the broader market and detonated the S&P 500.

Likewise, in early 2007 the Asian market took a huge hit, and then in mid 2007 we had the two hedge funds and Bear Stearns in early 2008. It took a few months before the impact filtered through to the broader market.

The same is likely to happen this time. It is not likely that China's market blowup will instantly transmit itself to the United States, Japan and Europe -- but it is extremely likely that it will eventually do so.

You have been given plenty of warning and thus have no excuse if you get caught in what is very likely coming some time in the next 6 to 12 months.
https://market-ticker.org/cgi-ticker/akcs-www?post=230513

[DemReadingDU]

33. Michael Snyder: 8 Financial Experts That Are Warning That A Great Financial Crisis Is Imminent

8/4/15 8 Financial Experts That Are Warning That A Great Financial Crisis Is Imminent

Will there be a financial collapse in the United States before the end of 2015? An increasing number of respected financial experts are now warning that we are right on the verge of another great economic crisis. Of course that doesn’t mean that it will happen. Experts have been wrong before. But without a doubt, red flags are popping up all over the place and things are lining up in textbook fashion for a new financial crisis. As I write this article, U.S. stocks have declined four days in a row, the Dow is down more than 750 points from the peak of the market in May, and one out of every five U.S. stocks is already in a bear market. I fully expect the next several months to be extremely chaotic, and I am far from alone. The following are 8 financial experts that are warning that a great financial crisis is imminent…

#1 During one recent interview, Doug Casey stated that we are heading for “a catastrophe of historic proportions”…

#2 Bill Fleckenstein is warning that U.S. markets could be headed for calamity in the coming months…

#3 Richard Russell believes that the bear market that is coming “will tear apart the current economic system”…

#4 Larry Edelson is “100% confident” that a global financial crisis will be triggered “within the next few months”…

#5 John Hussman is warning that market conditions such as we are observing right now have only happened at a few key moments throughout our history…

#6 During a recent appearance on CNBC, Marc Faber suggested that U.S. stocks could soon plummet by up to 40 percent…

#7 In a previous article, I noted that Henry Blodget of Business Insider is suggesting that U.S. stocks could soon drop by up to 50 percent…

#8 Egon von Greyerz is even more bearish. He recently told King World News that we are heading for “the most historic wealth destruction ever”…


And of course they are not the only ones with a bad feeling about what is ahead. A recent WSJ/NBC News survey found that 65 percent of all Americans believe that the country is currently on the wrong track.

more...
http://theeconomiccollapseblog.com/archives/8-financial-experts-that-are-warning-that-a-great-financial-crisis-is-imminent