Economics

Economics
Max and Stacy give you all the financial news you need as the Global Insurrection Against Banker Occupation gathers pace. Occupy Wall Street, Crash JP Morgan, Buy Silver and DEFINITELY visit MaxKeiser.com!
Updated: 9 hours 42 min ago

[KR1064] Keiser Report: America-China Financial Wars

29-Apr-2017

We discuss the ‘total fool’ speculator who bombed the Borussia Dortmund team bus in order to profit from shares falling. We also discuss global debt exploding to 325 percent of global gross GDP. In the second half, Max interviews Alasdair Macleod of Macleod Finance. They discuss America’s financial war strategy and whether or not it has already failed in this war against China.

The French, Coming Apart Just Like the Americans . . . and the Brits

29-Apr-2017

Fascinating read looking at the rising similarities between France and the US as we see the rise of ‘the creative class’ and the decline (literally via increased mortality) of the former working class.

The French, Coming Apart

The laid-off, the less educated, the mistrained—all must rebuild their lives in what Guilluy calls (in the title of his second book) La France périphérique. This is the key term in Guilluy’s sociological vocabulary, and much misunderstood in France, so it is worth clarifying: it is neither a synonym for the boondocks nor a measure of distance from the city center. (Most of France’s small cities, in fact, are in la France périphérique.) Rather, the term measures distance from the functioning parts of the global economy. France’s best-performing urban nodes have arguably never been richer or better-stocked with cultural and retail amenities. But too few such places exist to carry a national economy. When France’s was a national economy, its median workers were well compensated and well protected from illness, age, and other vicissitudes. In a knowledge economy, these workers have largely been exiled from the places where the economy still functions. They have been replaced by immigrants.

In the US, the media (and 90% of journalists for online publishers live in a county that Hillary won) have reacted almost violently to the Rustbelt Americans who voted for Trump – calling them racist, fascist, bigots, etc. Worth reading the full piece to get more insight into what’s happening.

And this:

The old bourgeoisie hasn’t been supplanted; it has been supplemented by a second bourgeoisie that occupies the previously non-bourgeois housing stock. For every old-economy banker in an inherited high-ceilinged Second Empire apartment off the Champs-Élysées, there is a new-economy television anchor or high-tech patent attorney living in some exorbitantly remodeled mews house in the Marais. A New Yorker might see these two bourgeoisies as analogous to residents of the Upper East and Upper West Sides. They have arrived through different routes, and they might once have held different political opinions, but they don’t now. Guilluy notes that the conservative presidential candidate Alain Juppé, mayor of Bordeaux, and Gérard Collomb, the Socialist running Lyon, pursue identical policies. As Paris has become not just the richest city in France but the richest city in the history of France, its residents have come to describe their politics as “on the left”—a judgment that tomorrow’s historians might dispute. Most often, Parisians mean what Guilluy calls la gauche hashtag, or what we might call the “glass-ceiling Left,” preoccupied with redistribution among, not from, elites: we may have done nothing for the poor, but we did appoint the first disabled lesbian parking commissioner.

It’s an interesting take and complements our understanding of this notion of ‘fake news,’ which ‘la gauche hashtag’ have hysterically embraced as the antidote to their own failure to understand or even see those living outside ‘the functioning parts of the global economy.’ Now that the likes of Google and Facebook are responding to these hysterics by beginning to ‘block’ the voices of those outside the functioning parts of the global economy from any chance of being heard, it seems that the ballot box is the next to go? Surely ‘fake votes’ will be the next rallying cry from ‘la gauche hashtag?’

VIDEO: All the Plenary’s Men

29-Apr-2017

“The King can do no wrong.”

—William Blackstone, Commentaries on the Laws of England

“When the president does it, that means that it is not illegal.”

—Ex-President Richard Nixon, interview with David Frost

The question at bar is why the U.S. Department of Justice has failed to prosecute any too-big-to-fail banks or—more importantly—their bankers, even for admitted crimes.

It’s a crucial question, because after eight straight years of unremitting prosecutorial failure, it looks very much as if a select group of top banks can, in fact, do no wrong. If that’s the case, then our constitutional republic isn’t merely in trouble. It’s dead.

A person or group of people who satisfy Blackstone’s criterion for ultimate sovereign power—the power to commit crimes with impunity—can’t exist in a nation where the law reigns supreme. And yet here we are a decade after the financial crisis began in earnest, and not one TBTF bank executive has gone to jail.

Legally, the TBTF banks are indistinguishable from the King, since the power to commit crimes with impunity swallows all other sovereign powers; such a power isn’t even supposed to exist in the U.S., and yet it does.

Moreover, since there can’t be two kings in a kingdom, the entire U.S. government, from the president on down, is just one of the King’s men under this formulation of power. The real job of the U.S. government, then, isn’t to represent the will of the people at all, it’s to do the King’s bidding. A nation that isn’t governed by law is governed by instead by a king—it’s one or the other—and the president’s inferiority to such an above-the-law sovereign was confirmed over 40 years ago with Nixon’s ouster. The president, unlike the King, answers to the law (despite Nixon’s opinion).

Now, you may say that while the TBTF banks might arguably have the de facto power of the King, that’s a far cry from wielding such power formally (i.e., having de jure criminal immunity).

The reply to that objection is set forth in this film, “All the Plenary’s Men,” which is a sequel to “The Veneer of Justice in a Kingdom of Crime.”

Another objection, raised by the DOJ itself, is that it HAS prosecuted TBTF bankers, citing cases like that of Raj Rajaratnam. These cases, however, in fact reveal the DOJ acting on behalf of the criminal global banking cartel.

On that score, the DOJ’s abysmal track record is by now so extensive and so thorough that it’s possible to spot legal patterns in the DOJ’s protracted miscarriage of justice, and, as you’re about to see, those patterns are very deeply disturbing indeed. What’s been going on cuts right past a garden variety constitutional crisis like Watergate straight to a crisis of sovereignty.

The backdrop for all of this is HSBC’s exoneration in December of 2012 for laundering money for drug dealers and terrorists, about which the House Financial Services Committee issued a report in July of 2016. Whether it was due to the political circus in town at the time, or to the Republican authorship of that report (albeit without dissent), it didn’t get nearly the scrutiny it deserved.

You see, prosecutors working on the HSBC case were actually going to indict the bank, but they got overruled, and HSBC and its team of criminals skated. The story of how exactly that reversal came about reveals, if not the King himself, then certainly many of the King’s top men.

Make the coffee extra strong before viewing. Lots of ground gets covered, quickly.

And don’t mothball those pitchforks and torches just yet.

Are We (Collectively) Depressed?

28-Apr-2017

Psychoanalysis teaches that one cause of depression is repressed anger.

The rising tide of collective anger is visible in many places: road rage, violent street clashes between groups seething for a fight, the destruction of friendships for holding the “incorrect” ideological views, and so on. I Think We Can Safely Say The American Culture War Has Been Taken As Far As It Can Go.

A coarsening of the entire social order is increasingly visible: The Age of Rudeness.

This raises a larger question: are we as a society becoming depressed as we repress our righteous anger and our sense of powerlessness as economic and social inequality rises?

Depression is a complex phenomenon, but it typically includes a loss of hope and vitality, absence of goals, the reinforcement of negative internal dialogs, and anhedonia, the loss of the joy of living (joie de vivre).

Depressive thoughts (and the emotions they generate) tend to be self-reinforcing, and this is why it’s so difficult to break out of depression once in its grip.

One part of the healing process is to expose the sources of anger that we are repressing. As psychiatrist Karen Horney explained in her 1950 masterwork, Neurosis and Human Growth: The Struggle Towards Self-Realization, anger at ourselves sometimes arises from our failure to live up to the many “shoulds” we’ve internalized, and the idealized track we’ve laid out for ourselves and our lives.

The recent article, The American Dream Is Killing Us does a good job of explaining how our failure to obtain the expected rewards of “doing all the right things”(getting a college degree, working hard, etc.) breeds resentment and despair.

Since we did the “right things,” the system “should” deliver the financial rewards and security we expected. This systemic failure to deliver the promised rewards is eroding social mobility and the social contract while generating frustration, anger, etc.

We are increasingly angry at the system, but we reserve some anger for ourselves, because the mass-media trumpets how well the economy is doing and how some people are doing extremely well. Naturally, we wonder, why them and not us? The failure is thus internalized.

One response to this sense that the system no longer works as advertised is to seek the relative comfort of echo chambers–places we can go to hear confirmation that this systemic stagnation is the opposing political party’s fault.

We don’t just self-sort ourselves into political “tribes” online–we congregate in increasingly segregated communities and states: The Simple Reason Why A Second American Civil War May Be Inevitable.

Americans are moving to communities that align more with their politics. Liberals are moving to liberal areas, and conservatives are moving to conservative communities. It’s been going on for decades. When Jimmy Carter was elected in 1976, 26.8% of Americans lived in landslide counties; that is counties where the president won or lost by 20% of the vote.

By 2004, 48.3% of the population lived in these counties. This trend continues to worsen. As Americans move to their preferred geographic bubbles, they face less exposure to opposing viewpoints, and their own opinions become more extreme. This trend is at the heart of why politics have become so polarizing in America.

We’re self-sorting at every level. Because of this, Americans are only going to grow more extreme in their beliefs, and see people on the other side of the political spectrum as more alien.”

Part of the American Exceptionalism we hear so much about is a can-do optimism: set your mind to it and everything is possible.

The failure to prosper as anticipated is generating a range of negative emotions that are “un-American”: complaining that you didn’t get a high-paying secure job despite having a college degree (or advanced degree) sounds like sour-grapes: the message is you didn’t work hard enough, you didn’t get the right diploma, etc.

It can’t be the system that’s failed, right? I discuss this in my book Why Our Status Quo Failed and Is Beyond Reform: the top 10% who are benefiting mightily dominate politics and the media, and their assumption is: the system is working great for me, so it must be working for everyone. That’s the implicit narrative parroted by status quo mouthpieces.

The inability to express our despair and anger generates depression. Some people will redouble their efforts, others will seek to lay the blame on “the other” (some external group) and others will give up. What few people will do is look at the sources of systemic injustice.

Perhaps we need a national dialog about declining expectations, rising inequality and the failure of the status quo that avoids the blame-game and the internalization trap (i.e. it’s your own fault you’re not well-off).

We need ways to express our resentment, anger, despair, etc. that are directed at the source, the complex system we inhabit, not “the other.” We need to encourage honesty above optimism. Once we can speak honestly, there is a foundation for optimism.


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Regulation fears may impede silver manipulation

28-Apr-2017

Fear of regulation may impede bank’s from manipulating London’s silver benchmark

  • New regulations in 2018 have spooked bullion banks and silver fix operators
  • Lack of liquidity in silver fix auction has lead to high volatility in the market
  • Silver benchmark has strayed from spot price multiple times since 2016
  • No new silver benchmark operator lined up to take over in the Autumn
  • No smoke without fire as actions point to silver price manipulation
  • Silver remains suppressed and at a low price for investors stocking up

Gold fixing in London at NM Rothschild and Sons began in September 1919

Simple economics tells us that markets and prices are driven by demand and supply. Unfortunately, this isn’t always the case in the silver market. However, the threat of new regulations may be putting a stop to some bullion banks from fiddling the London silver benchmark.

Silver price manipulation is always a thorny issue and one that has been taken on by academics, lawsuits, by veteran silver analyst Ted Butler and by the Gold Anti-Trust Action Committee (GATA). As we have reported previously, allegations of silver price manipulation are far past the point of rumours, in the last couple of years bullion banks have been called to account for their behaviour. Deutsche bank even agreed to settle out of court and pay $38m, in response to a class-action lawsuit.

But it seems the rising attention (and cost) of manipulation by silver bullion banks is not the only thing that is putting a stop to a behaviour that has been evident for over a decade. Reuters reported yesterday that fear of being accused by regulators of market manipulation has resulted in participating banks being reluctant to add liquidity during the daily auction.

Banks finally fear regulation

The low volume of orders and lack of liquidity has resulted in the benchmark price failing on multiple occasions to provide a fair and accurate snapshot of what is known as the ‘spot price’. The spot price is calculated based on a much wider and faster market. Huge divergences from this spot price have resulted in unexpected gains and losses, according to Thomson Reuters data, since at least January 2016.

Traditionally, the seven banks involved in the auction ensure the benchmark stays close to the spot price by adding liquidity and buying or selling silver during the auction. However, lawsuits regarding gold and silver manipulation as well as investigations into other markets such as Libor appear to have put the banks off from their usual antics for fear of drawing the attention of regulators.

Sources told Reuters that the ‘Banks are now unwilling to intervene beyond putting in orders beforehand, fearing this might be construed as price manipulation by regulators.’

Read Full Story Here…

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Are We Really that Divided?

28-Apr-2017

If there is any statement about politics in America that qualifies as as a truism accepted by virtually everyone, left, right or independent, it’s that America is a deeply divided nation. But is this really true?

Like everyone else, I too accepted that the line between Hillary supporters and detractors, and Trump supporters and detractors, was about as “either/or” as real life gets.

But are we really that divided? A fascinating 55-minute lecture by historian Michael Kulikowski entitled The Accidental Suicide of the Roman Empire has made me question this consensus certitude.

Maybe the real driver of this division is divisive language–more specifically, language that is designed to drive a wedge between us. In other words, maybe the divisions are an intentional consequence of the language we’re using.

Kulikowski makes a number of nuanced arguments in his talk, but his primary point is that the late-stage Roman Empire collapsed partly as an unintended consequence of rhetorical binaries, polarizing rhetoric that lumped an extremely diverse Imperial populace into false binaries: Roman or Barbarian, Christian or heretic, and so on.

The actual lived reality was completely different from these artificial either-or binary classifications. As Kulikowski explains (and anyone who has read a modern history of late-stage Rome will know this from other accounts), many “Roman generals” were “Barbarian” by birth, and the boundary between “Roman citizen” and “Barbarian” was porous on purpose.

Rome had prospered by ensuring the boundary was porous (not counting slaves, of course). An impoverished young man from the hinterlands could join the Roman military and achieve a stable income and Roman citizenship. (Women could advance through marrying into a Roman-citizen family–even one that was “Barbarian” until recently.)

By Imperial decree in the 3rd Century A.D., any free person inside the boundaries of Imperial Rome was declared a Roman citizen. So numerous people of a variety of ethnicities may have been born outside the boundaries (i.e. Barbarian) became as “Roman” as any native born Roman in terms of their obligations to pay taxes and rights to judicial review.

This social/economic upward mobility was a key “secret sauce” of Rome’s enduring success.

So why the sudden fatal attraction to completely false polarizing binaries?Kulikowski makes the case that deploying these rhetorical devices–polarizing binariesserved the political purposes of warring elites within the Imperial aristocracy.

For example, one sure-fire way to undermine a political challenger was to label him as a “Barbarian.” Even though he might have served in the Roman army from his youth, his political opponent could transform him into a “bad guy” by virtue of his being born a non-Roman. Sound familiar? (Hint: try “deplorable”.)

There is a self-destructive, self-reinforcing dynamic in this polarizing rhetoric:though it served the political interests of individual members of the elite, it did so at the cost of the entire polity, which was poisoned by these false binaries that then developed into dominant narratives.

Hence Kulikowski’s startling conclusion: Rome didn’t “die of natural causes”–it accidentally committed suicide once its political elites embracing polarizing binaries as political weapons. These weapons seemed targeted to their users, but the rhetorical narratives spread like a deadly virus through the empire, helping to trigger collapse of the Imperial core.

Bloomberg-BusinessWeek published a major multiple-part story in September of 2016 prior to the election entitled One Nation Divisible: The American Electorate.

The story repeats the truism of America being a divided nation, but my take-away was not the either-or binaries accepted by the mainstream and alternative media alike– my take-away was a newfound appreciation for the incredible diversity in America, not just ethnically, but geographically, demographically, and in every other measure of complex diversity.

How could a nation of such astounding diversity be artificially cleaved into polarizing binaries? The short answer is that it cannot: the polarizing binaries are artificial rhetorical devices, completely out of touch with the nuanced, complex reality of a diverse populace with widely diverse opinions on a wide spectrum of political topics.

My conclusion is that we should be alert to the great distance between these politically useful but systemically poisonous polarizing binaries and the complex and dynamic realities of the American populace.

We would also benefit from recognizing the artificiality and self-serving nature of these polarizing binaries, and be alert to the false and destructive narratives and teleologies they generate.

For more on narratives and teleologies, please read my recent essay The Deep State’s Dominant Narratives and Authority Are Crumbling.

We’ve already witnessed the toxic weeds of polarizing binaries spreading across the political landscape, choking out real-world narratives: diverse populations are being demonized as “deplorables,” “racists,” “evil,” and so on. So many of our choices are false choices based on polarizing binaries. For example– how many voters would have championed an alternative to Hillary or Trump? If given a choice, would 60% of the voters have chosen someone other than the two party candidates? (Hint: Bernie Sanders is the most popular politico in America, according to recent polls.)

Identity politics is another rhetorical device designed to consolidate diverse populaces into politically useful (to the elites jockeying for power) binary blocks: you’re either “for us” (and good) or “against everything good” (bad, evil, racist, etc.)

If we don’t challenge these poisonous polarizing binaries, they may well trigger the accidental suicide of our polity. THe saying is the demographics is destiny; the same can be said of the language we use to divide or unite people of good faith who are sick of the parasitic, predatory elites that are plundering the nation.


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Check out both of my new books, Inequality and the Collapse of Privilege ($3.95 Kindle, $8.95 print) and Why Our Status Quo Failed and Is Beyond Reform ($3.95 Kindle, $8.95 print, $5.95 audiobook) For more, please visit the OTM essentials website.

U.S. and UK Both Drop in Latest ‘World Press Freedom Index’ Rankings

27-Apr-2017

Reporters without Borders just published its annual World Press Freedom Index rankings, and the results for both the U.S. and UK are not impressive. Both countries declined two spots from last year, with the UK at 41, and the greatest and most free nation on earth, America, down to 43.

Read the rest here.

[KR1063] Keiser Report: Fed Balancing Sheet

27-Apr-2017

We discuss the Fed’s balance sheet and whether or . . . NOT . . . it’s ready to save us all from the next recession. Max continues his interview with Dan Collins of TheChinaMoneyReport.com about China’s booming tech sector. They also discuss the increasing tensions on the Korean Peninsula, and the fierce trade war going on between China and Korea.

Trump 100, Margin Debt Stock Bubble and Gold

27-Apr-2017
– Stocks and the dollar look vulnerable due to Trump’s policies, America’s civil war politics and economic vulnerability
– Stock bubble on margin debt – ‘Powerful time bomb’
– “There is no alternative” to stock bubble? Gold?
– Bank Of America sets a date for the market’s “Great Fall”
– Even uber bull Cramer compares 2000 dotcom bubble bust to today
– Gold to stay elevated on safe haven demand – Economist
– Gold’s tempered climb makes gains more ‘sustainable’

Trump’s first 100 days in office have been a whirlwind but so far the ‘Trump Trade’ of being long stocks has worked for investors and speculators. Will markets continue to be so forgiving of the many foreign and domestic policy failures including the failure to repeal ‘Obamacare’?

It is possible but we think it unlikely as many stock and bond markets, particularly U.S. markets, are now priced for close to perfection – in a far from perfect, massively indebted, volatile financial world.

So far during his Presidency, markets have remained high on the cocaine of massive monetary stimulus and still near o%, ultra low interest rates and record margin debt.

There remain hopes of a further “Trump bump” from aggressive fiscal easing and deregulation and this and increasing “irrational exuberance” has seen the S&P 500 move back towards record territory, driven by increasingly bubble like technology stocks and a Nasdaq at all time record highs above 6,000.

Read full story here….

Avoid Digital & ETF Gold – Key Gold Storage Must Haves

 

Iraq War Architect, Paul Wolfowitz, is Becoming Optimistic on Trump

26-Apr-2017

I spent the last 50 minutes listening to an interview of neocon Iraq war architect Paul Wolfowitz, a truly unfortunate experience which felt like a tomahawk missile attack against my cerebrum. Regrettably, we still live in a world where you have to listen to the musings of such war criminals, as they continue to have considerable influence in certain circles of American power, and quite possibly within the Trump administration itself…

Read the rest here.

Where There’s Smoke…There’s central bank manipulation

26-Apr-2017

Central banks around the world have colluded, if not conspired, to elevate and prop up financial asset prices. Here we’ll present the data and evidence that they’ve not only done so, but gone too far.

Here are three questions most alert investors are asking:

  • Question #1: When will financial assets ever ‘correct’ and fall in price?
  • Question #2: How much does overt propping by the central banks have to do with today’s elevated prices?
  • Question #3: How much does covert propping by central banks play a role in these inflated markets?

These are important questions to consider because if central banks have been too involved and gotten themselves mixed up in trying to ‘wag the dog’ by using elevated financial asset prices as a means to drive economic expansion — then the risk is a big implosion in financial asset prices if their efforts fail.

Click here to read the full article

Gold Imports Into China via Hong Kong Double

26-Apr-2017
Gold bullion imports into China via main conduit Hong Kong more than doubled month-on-month in March, data showed on Tuesday as reported by Reuters.

China’s net-gold imports via Hong Kong more than doubled in March to 111.6 tonnes. Chart not updated as official data not publicly available yet. Source: Goldchartsrus.com 

Net-gold imports by the world’s top gold consumer through the port of Hong Kong rose to 111.647 tonnes in March from 47.931 tonnes in February, according to data emailed to Reuters by the Hong Kong Census and Statistics Department.

China’s net-gold imports rose to its best since May 2016. Total gold imports rose to 116.68 tonnes in March from 49.026 tonnes in February.

Both total and net imports in March rose for a second straight month.

Gold has risen over 10 percent so far this year, driven by geopolitical worries.

Read full story here…

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Internet of Coins: One hybrid asset to rule them all?

26-Apr-2017

Their goal to let every cryptocurrency autonomously become part of a massive swarm of decentralized global financial interaction. They will be represented by hybrid tokens and the programming code for this would be open source.

Read More

Housing’s Echo Bubble Now Exceeds the 2006-07 Bubble Peak

25-Apr-2017

A funny thing often occurs after a mania-fueled asset bubble pops: an echo-bubble inflates a few years later, as monetary authorities and all the institutions that depend on rising asset valuations go all-in to reflate the crushed asset class.

Take a quick look at the Case-Shiller Home Price Index charts for San Francisco, Seattle and Portland, OR. Each now exceeds its previous Housing Bubble #1 peak:

Is an asset bubble merely in the eye of the beholder? This is what the multitudes of monetary authorities (central banks, realty industry analysts, etc.) are claiming: there’s no bubble here, just a “normal market” in action.

This self-serving justification–a bubble isn’t a bubble because we need soaring asset prices–ignores the tell-tale characteristics of bubbles. Even a cursory glance at these charts reveals various characteristics of bubbles: a steep, sustained lift-off, a defined peak, a sharp decline that retraces much or all of the bubble’s rise, and a symmetrical duration of the time needed to inflate and deflate the bubble extremes.

It seems housing bubbles take about 5 to 6 years to reach their bubble peaks, and about half that time to retrace much or all of the gains.

Bubbles have a habit of overshooting on the downside when they finally burst. The Federal Reserve acted quickly in 2009-10 to re-inflate the housing bubble by lowering interest rates to near-zero and buying over $1 trillion of mortgage-backed securities.

When bubbles are followed by echo-bubbles, the bursting of the second bubble tends to signal the end of the speculative cycle in that asset class. There is no fundamental reason why housing could not round-trip to levels below the 2011 post-bubble #1 trough.

Consider the fundamentals of China’s remarkable housing bubble. The consensus view is: sure, China’s housing prices could fall modestly, but since Chinese households buy homes with cash or large down payments, this decline won’t trigger a banking crisis like America’s housing bubble did in 2008.

The problem isn’t a banking crisis; it’s a loss of household wealth, the reversal of the wealth effect and the decimation of local government budgets and the construction sector.

China is uniquely dependent on housing and real estate development. This makes it uniquely vulnerable to any slowdown in construction and sales of new housing.

About 15% of China’s GDP is housing-related. This is extraordinarily high. In the 2003-08 housing bubble, housing’s share of U.S. GDP barely cracked 5%.

Of even greater concern, local governments in China depend on land development sales for roughly 2/3 of their revenues. (These are not fee simple sales of land, but the sale of leasehold rights, as all land in China is owned by the state.)

There is no substitute source of revenue waiting in the wings should land sales and housing development grind to a halt. Local governments will lose a majority of their operating revenues, and there is no other source they can tap to replace this lost revenue.

Since China authorized private ownership of housing in the late 1990s, homeowners in China have only experienced rising prices and thus rising household wealth. The end of that “rising tide raises all ships” gravy train will dramatically alter China’s household wealth and local government income.

If you need some evidence that the echo-bubble in housing is global, take a look at this chart of Sweden’s housing bubble. Oops, did I say bubble? I meant “normal market in action.”

Who is prepared for the inevitable bursting of the echo bubble in housing?Certainly not those who cling to the fantasy that there is no bubble in housing.

NOTE: James Collins, please email me re: your generous contribution via Dwolla.

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Meet Emmanuel Macron – The Consummate Banker Puppet, Bizarre Elitist Creation

25-Apr-2017

The last thing I ever wanted to do was write about France’s likely next president, Emmanuel Macron, but here we are. This post was inspired by a very telling Financial Times article sent to me by a reader, but we’ll get to that in a bit.

Most Americans paying attention to global affairs have some conception of his opponent, nationalist firebrand Marine Le Pen, but Macron is likely to be very much a black box. I hope today’s post changes that.

Any knowledge you may have on Macron probably comes from mainstream news outlets, which have been uniformly gushing about the socialist-centrist Rothschild protege…

Read the rest here.

[KR1062] Keiser Report: Silicon Valley Destruction

25-Apr-2017

We discuss the fact that Silicon Valley is being destroyed and $400 juicers are the evidence. Max interviews Dan Collins of TheChinaMoneyReport.com about China’s tech sector coming up with all the innovations while drawing in all the investment. While Silicon Valley wastes capital on complex juicers, China attracts 50% of global fintech investment and its digital payments market is 50 times larger than America’s.

New Florida bill targets Bitcoin Money Laundering: A progressive step or a regressive measure?

25-Apr-2017

Florida lawmakers are considering a new legislation that aims to stop virtual currency dealers who indulge in money laundering activities. The bill, sponsored by Miami-Dade Representative Jose Diaz, has already passed through the state’s House Appropriations Committee.

 

Will this prove out to be detrimental to Bitcoin’s image?

Read More

LePen Euro Panic Over – “For Now”

25-Apr-2017
LePen Euro Frexit Panic Over – “For Now”

by John Stepek, Editor of Money Week

OK, drama’s over.

The French election has turned out pretty much exactly as expected.

For all that some of the papers are leading with “French revolution” headlines, the reality is that a face-off between the right-wing Marine Le Pen of the Front National and independent/socialist candidate Emmanuel Macron of En Marche! has been on the cards for months now.

So what happens now? And what does it mean for your money?

Looks as though Macron will win the French presidency

Emmanuel Macron, the French Tony Blair, won about 24% of the votes in yesterday’s first round of the French presidential election. Marine Le Pen, the French Nigel Farage, won around 22%.

They go through to the final round on 7 May. The rest of the candidates are out of the race.

Who will win?

Read full story here…

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Who Will Live in the Suburbs if Millennials Favor Cities?

24-Apr-2017

Longtime readers know I follow the work of urbanist Richard Florida, whose recent book was the topic of Are Cities the Incubators of Decentralized Solutions?(March 14, 2017).

Florida’s thesis–that urban zones are the primary incubators of technological and economic growth–is well-supported by data that shows that the large urban regions (NYC, L.A., S.F. Bay Area, Seattle, Minneapolis,etc.) generate the majority of GDP and wage gains.

Cities have always attracted capital, talent and people rich and poor alike.Indeed, “city” is the root of our word “civilization.” So in this sense, Florida is simply confirming the central role cities have played for millennia.

More recently, Florida has addressed the rising wealth/income inequality that is making desirable urban areas unaffordable to all but the top 10% or even 5% wage earners. This is a critical concern, because vitality is a function of diversity: a city of wealthy elites paying low wages to masses of service workers is not an economic powerhouse.

What happens as buying a home in a desirable city becomes out of reach of all but the most highly paid tranche of workers?

The larger question is: what happens to home ownership as housing prices continue higher while the next generation’s wages remain significantly lower than previous generations’ incomes?

Millennials are typically earning less than Baby Boomers and Gen-X did in their 20s and 30s, and if this continues–and history suggests it will–then how many Millennials will be able to buy a pricey house?

One consequence of stagnating wages and rising home valuations is a “nation of homeowners” morphs into a “nation of renters.”

The other big question is: if Millennials aren’t earning enough to buy pricey homes, who is going to buy the tens of millions of houses Baby Boomers will be selling as they downsize/move to assisted living? As for inheriting Mom and Dad’s house–that’s not likely if Mom or Dad need the cash to fund their retirement/assisted living.

This question is especially relevant to suburban homes, especially those far from employment centers. Though data on this trend is sketchy, it seems Millennials strongly favor city living over exurban/suburban living.

Anecdotally, I can’t think of a single individual in their 20s or 30s that I know personally who has bought a house in a distant suburb. Everyone in this age group has bought a house in an urban zone. Not a highrise condo in the city center, but a house in a ring city near public transport.

Though data on this is hard to find (if it exists at all), Millennials seem more willing to make the sacrifices necessary to live in the urban core, either by renting rather than buying a cheaper suburban home, or by purchasing a modest bungalow on a small lot rather than an expansive suburban home on a big lot.

(This could change if Millennials start having lots of children, but to date small bungalows in urban regions appear big enough for families with two children.)

In a turn-around from the postwar era, which saw a mass exodus of the middle class from city centers to suburbia, the upper middle class is moving back to urban centers and the lower-income populace–once the urban poor–are being pushed out to the suburbs. We can now speak of the suburban poor.

To some degree, the suburbs have become victims of their own success. Long commutes in heavy traffic are the inevitable result of the vast expansion of suburban subdivisions, shopping malls and business parks. These killer commutes detract from the desirability of suburbs, especially to auto-agnostics of the Millennial generation, who exhibit low enthusiasm for auto ownership.

Rather than symbolizing freedom, auto ownership is viewed as a burdensome necessity at best.

If we overlay these trends (assuming they continue into the future), we discern the possibility that marginal suburban housing could crash in price and morph into suburban ghettos of isolated low-income residents.

The Pareto Distribution may play a role in this transformation. Should 20% of the suburban housing stock fall into disrepair, that could trigger the collapse of valuation in the remaining 80%.

Not all suburbs are equal. Those with diverse job growth may well act as magnets much like small cities. Those with few jobs and long commutes are less desirable and have smaller tax bases to support services.

The asymmetry between modest/stagnant Millennial wages and the soaring cost of housing cannot be bridged. If these trends continue, only the top tranche of highly paid young workers will be able to afford housing in desirable areas. Given a choice between affordable ownership in a small city or in a distant suburb, Millennials may well choose the affordable small city rather than the distant exurb or low-services suburb.

Note that most incomes have gone nowhere since about 1998. Even the top 5% has made modest gains in real (inflation-adjusted) income.

Meanwhile, home prices are back in bubble territory. “Hot” urban areas such as Seattle, Portland, the San Francisco Bay Area, Los Angeles, Brooklyn NYC, etc. have logged double-digit gains in recent years.

So who’s going to pay bubble-valuation prices for the millions of suburban homes Baby Boomers will be off-loading in the coming decade as they retire/ downsize? We know one part of the answer: it won’t be Millennials, as they don’t have the income or savings to afford homes at these prices.

These trends promise to remake the financial geography of cities (large and small) and suburbia–and in the process, radically shift the financial assets of households, renters and owners alike.

NOTE: James Collins, please email me re: your generous contribution via Dwolla.

This essay was drawn from Musings Report 15. The weekly Musings Reports are emailed exclusively to major contributors/ subscribers /patrons ($5/month or $50/year).

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Gold Sovereigns – ‘Treasure’ Trove Found In UK – Don’t Be The Piano Owner

24-Apr-2017

Gold Sovereigns – ‘Life Changing’ ‘Treasure’ Trove Found In UK

The gold sovereigns – semi-numismatic gold coins made up of both gold sovereigns and half gold sovereigns dating from the reigns of Victoria, Edward VII and George V – were discovered inside an old piano after it was donated to a school last year.

A gold sovereign from that period is currently valued at between £200-250, with a half sovereign worth between £100-200. A pouch contains just a sampling of the 913 coins composing the hoard.  Image © Trustees of the British Museum via Coin World

The largest ‘hoard’ of gold sovereigns found in the UK ever has been declared ‘treasure’.

A piano tuner who discovered £500,000 (€590,000 or $640,000) worth of semi numismatic gold coins, gold sovereigns (0.2354 troy ounce) and half gold sovereigns (0.1167 troy ounces) inside the piano will get to keep half the cash – but the couple who owned the piano for 33 years won’t get a penny.

The piano’s new owners, Bishop’s Castle Community College, Shropshire which is near Birmingham, will split the £500,000 with the piano tuner Martin Backhouse.

The gold sovereigns are expected to be claimed by the British Museum, but the cash will be split between the school and Mr Backhouse, a inquest has ruled.

Meg and Graham Hemmings, who owned the piano for 33 years before donating it when they downsized, won’t get any of the money.

John Ellery, Shropshire’s Coroner, used an inquest to seek the original owners of the gold sovereigns, but despite more than 40 people claiming the gold sovereigns, none could prove they belonged to them.

The coroner said the gold sovereign hoard qualifies as ‘treasure’ because:

(1) It is substantially made of gold or silver
(2) It was deliberately concealed by the owner with a view to later recovery
(3) The owner, or his or her present heirs or successors, remain unknown

The story clearly shows the value of gold coins and the financial benefit and financial security they can bring to their owners – providing they are owned in the safest way possible.

Read full story here…

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