[The following post by TDV Chief Editor, Jeff Berwick]
It was announced last week that Burger King had bought a famous Canadian restaurant franchise known as Tim Horton's to reduce the amount of taxes they "owe" to the US government. An upcry arose!
As usual the mainstream media and the people who watch it have the story totally wrong. Burger King is not giving US taxpayers a "raw deal" by looking to move abroad so as to save on profits which are not repatriated. Instead, the iconic fast food burger chain is doing the moral thing by moving its tax-base outside the war-mongering, highly socialist US federal government's reach.
The mainstream media will never give you this side of the story. This obvious trend towards expatriation terrifies the talking heads. You have to come to alternative media sources like The Dollar Vigilante (TDV) Blog and others to get the truth. As Howard Kurtz writes at Fox News,
I feel confident in saying that most Americans are disgusted by the perfectly legal practice of US companies avoiding taxes by incorporating in another country.
If this is the case, it is because Americans love bombing other countries. They lust for blood. I can think of no other logical explanation Americans would want the machine in Washington to continue being fed. Burger King is not the first company to make the moral decision to leave the US tax farm. Many American companies are going abroad - as many as 70. These so-called "inversions". Even the most American of investors stand behind the inversion. Iconic American billionaire, Warren Buffet, coughed up $3 billion so the hamburger chain could buy the Canadian donut outfit Tim Hortons. Buffett did this just one month after Obama denounced ‘inversion’ tactics as an ‘unpatriotic tax loophole’, ordering regulatory changes to undermine them.
The debate has been totally laughable. It is truly shocking how clueless Americans are about why these companies (and citizens) are leaving the US in droves. The US is not competitive! For a country that claims to have been built on capitalism, it sure does not understand free markets.
US tax policy has made the US uncompetitive globally. The nation has the highest effective corporate income tax rate in the developed world.
And the US taxes earnings of foreign subsidiaries of US companies once that money comes back to the US. US corporations instead have chosen to keep more than $1.9 trillion earnings offshore abroad. The moral thing to do.
The past couple years alone have seen dozens of well-known US companies move abroad. Many have at least considered it. All this just to lower their corporate income tax. All the politicos in Washington would need to do is lower the US corporate income tax, but they are Marxist and Keynesian idiots. In the US, the wealthy are now seen as the cash-cows for the poor thanks to the nanny state's government welfare. Medtronic, Liberty Global, Sara Lee, and Omnicom Group—the largest US advertising firm—have all moved abroad. Pfizer looked into moving abroad in order to cut its tax bills by $1 billion each year. Walgreens also mulled doing the same.
Walgreens was looking at Switzerland. Its tax rate would decrease to 20% down from 31%. The move would save around $4 billion over the next five years. Quoting an international tax lawyer, The New York Times stated, “it takes one company with enough public recognition to start [a] domino effect.”
Walgreens backed off due to the public scrutiny. By moving, though, Walgreens would have gained a big advantage over its competitors who will all be paying the effective US corporate tax rate. I still think they will do it. They've tested the waters. And now Burger King has made the move.
I almost coughed up my tacos when I read that Republocrat Senator Chuck Grassley from Iowa said,“These expatriations aren’t illegal. But they’re sure immoral.”
What a joke! Immoral! Sorry, Chuck, but immoral is bombing nearly every country on the planet or at least intervening to the tune of millions dead and forcing people at gunpoint to pay for it.
These companies don't want to keep giving parasite psychopaths in Washington DC more money. It's immoral to keep funding Washington, DC. These companies are doing the moral thing by paying taxes in less war-prone nations. Inversion is a matter of life-and-death for people all over the planet, including in America. While people abroad depend on the inversion of American companies to slow the tide of American-led war, Americans depend on US companies not inverting so that they don't starve when their food stamps run out.
I am not so much championing Burger King as much as I am championing the notion of an inversion. Personally, I think Burger King produces nutritiously void foods and promote an unhealthy and early-to-the-grave America (albeit admitting I have eaten it after a long night out and it has been delicious and appreciated at that moment). As far as I know, the only thing I support in their business model is the company's long history of aggressive tax-reduction strategies, which is something we champion here at TDV as well as its ancilliary businesses TDV Passports, TDV Offshore, TDV Wealth Management and others.
The firm has long been trying to bring down taxable profits in the US and maximizing profits reported in low tax jurisdictions. "I would be surprised if in five years' time, their tax rate does not come down reasonably dramatically," said Professor Stephen Shay, from Harvard Law School, who has testified to Congress on corporate taxation. Great for Burger King, in this regard.
By operating a tax-efficient overseas regime, with income coming through Switzerland, Burger King's effective tax rate has been 15% on foreign income in the past three years. Clearly Burger King wants to lower that rate. What does Burger King have up its sleeves? As an American company Burger King cannot cut its current American tax bill by routing franchise fees from its US franchisees via Switzerland. If they bought Tim Hortons this would not apply to the Canadian company.
At this point, for a company clever on taxes like Burger King, despite its status as an American icon, Obama's vision for a 28% corporate tax rate won't be low enough.
And this is all besides the fact that THERE IS NO CORPORATE TAX. Corporate tax is always passed on to the consumer... it is a tax on consumers. Yet, look at all the tax slaves in the US rising up angrily that a company is trying to find a way for them to be extorted for less money.
It's a thankless job helping people by always doing the moral thing (in this case avoiding taxes at all costs). But all of us at TDV thank Burger King for their service.Jeff Berwick
September 2, 2014
En route to South America
As the world’s top central bankers gathered at their annual jamboree recently, the governor of Bank of Canada, Stephen Poloz, undoubtedly received envious comments from his fellow money magicians for Canada’s perceived status as a global financial safe haven.
This newly found perception was perhaps best exemplified during a Bloomberg interview, when the CEO of RBC Wealth Management – the biggest financial institution in Canada said that “Canada is what Switzerland was 20 years ago, and the banks in Canada are what Swiss banks were 20 years ago.”
This is the new flavor of Kool-Aid. Canada is seen as the new banking safe haven and an “island of safety and stability” because of its perceived sound fiscal position, commodity wealth and solid economic performance.
Now, anytime I see central bankers slapping each other on the back, I’m going to be skeptical. But here at Sovereign Man, our conclusions are all data driven… so we dove into the numbers.
First, the Big Daddy himself—Canada’s central bank.
Any strong, healthy banking system requires a central bank with a pristine balance sheet… specifically, substantial net equity as a percentage of assets.
So how strong is the balance sheet for Banque du Canada? Not very.
As it turns out, Banque du Canada is actually the most pitifully capitalized central bank in the western world. They’re in such bad shape they actually make the Fed look healthy.
Hong Kong’s Monetary Authority Exchange Fund is a good example of a strong balance sheet; their latest figures as of 30 June show a whopping capital reserve equal to nearly 22% of total assets.
This is a massive margin of safety for the central bank.
The US Federal Reserve, on the other hand, shows a capital reserve of just 1.27%. And Canada? A tiny 0.47%… as in less than one half of one percent.
This isn’t safety and stability. It’s a rounding error.
Moreover, Canada also has ZERO reserve requirements for its banks; this means that Canadian banks are not obliged to hold any of their customers’ deposits.
So yes, it’s legally permissible for a Canadian bank to loan out 100% of its customers’ funds.
Not to worry, though. The Canadian Deposit Insurance Corporation (CDIC) is standing by to insure bank deposits up to $100,000.
But when you look at it closely, there isn’t much there for depositors at all. There’s roughly $646 billion of eligible deposits in the Canadian banking system. Yet the CDIC only has $2.8 billion in cash available to insure it all… a ratio of just 0.43%.
Even more troubling is that Canada has legislated an actual Cyprus-style confiscation of deposits in the event that Canadian banks deplete their capital.
Buried deep into the government’s Economic Action Plan 2013 is a provision that would implement a “bail-in” regime for “systemically important banks”.
This would legally allow the banks to tap into customer deposits if the banks get into trouble… something I don’t find particularly safe.
Last, the Canada myth really starts to become apparent when you look at the country’s gold reserves.
At the beginning of this century Canada held 46.19 tonnes of gold. Now they hold only 2.99 tonnes. That’s a whopping 93.5% decline in gold reserves in just over a decade!
In other words, Canada’s monetary leadership has made a conscious decision to reject real assets in favor of paper assets that can be conjured out of thin air.
They’ve managed to run their central bank into borderline insolvency.
It’s important to look at facts and not rely on sentiment.
To anyone who rationally looks at the data, the obvious conclusion is that Canada is certainly NOT the safe-haven it’s been built up to be.
Jeff Interviews Tres Knippa, topics include: over-regulation crippling the markets, US real estate bubble, govt debt interest in Japan 50% of GDP, bonds following the Yen's devaluation, big opportunity to short this debt, short exposure to the Yen, AIG &n Goldman Sachs, US to follow Japan, long gold the safest bet.Click here or on thumbnail
Incredibly, Sperandeo was interviewed in Barrons in September of 1987, where, with astonishing accuracy, he predicted that the stock market would crash. The market crash took place one month later and it just added to his legendary reputation. Below are the warnings issued by Sperandeo.
Submitted by Mike Krieger via Liberty Blitzkrieg blog,
Liberty Blitzkrieg was early in reporting on the trend of financial firms entering the U.S. residential real estate market with “all-cash” bids for tens of thousands of homes with the intention of turning former homeowners into permanent sources of rental income. The first of many pieces I published on the topic was in January 2013, titled: America Meet Your New Slumlord: Wall Street.
Now that the financial oligarchs have had their way with the U.S. property market, to the point that average citizens can’t even afford to own a home (Zillow recently showed that 1 in 3 homes are unaffordable), it appears they have turned their sights overseas. What better market for bailed-out bankers to feast on than Spain, with its 50%+ youth unemployment rate and a continued depressed real estate market.
We learn from Bloomberg that:
Marcelino Calvo Sanchez and his wife, Maria Luisa, had never heard of Goldman Sachs Group Inc. until last year, when the global investment bank bought the four-building housing estate where they live in Vallecas, on the southern outskirts of Madrid. Marcelino, a 71-year-old retired truck driver, isn’t impressed by his new landlord.
Goldman Sachs picked up the 289-unit complex in August 2013 as part of its purchase of 3,000 low-income apartments from the regional government of Madrid for 201 million euros ($269 million). With the sale, some subsidies for tenants disappeared, and, according to Sanchez, a small problem with squatters has become a larger one.
That’s exactly right, Bloomberg Markets will report in its October issue. Though the housing estate looks like one of the last places in the world smart-money Goldman Sachs bankers would bet on — glass doors are shattered, broken mailboxes hang open, and graffiti mars the courtyard walls — this is where Goldman has touched down in the Spanish real estate market. Blackstone Group LP, the world’s largest alternative-asset manager, bought a similar low-income-housing portfolio from the city of Madrid in July 2013 for 125 million euros.
These bets on Spain marked a turning point in investor sentiment. The country, for five long years a toxic no-go zone for foreign investors, is now at the top of the list for private-equity firms, hedge funds and sovereign wealth funds hunting for cheap assets in Europe.
“Spain now is a tale of two cities,” says Ismael Clemente, chairman and chief executive officer of Merlin Properties SA, which raised 1.25 billion euros in June in the largest initial public offering in Spain in three years.
I sometimes wonder when I hear people characterize the economy as a “tale of two cities,” if they even appreciate the fact that the book itself was written about the violent overthrow that was the French Revolution, itself sparked by extreme inequality and poverty.
Clemente, 44, is sitting in the art deco lobby of Madrid’s five-star Villa Magna hotel, which these days is crawling with investors and bankers chasing juicy deals. A 14-year veteran of Deutsche Bank AG, Clemente says the opportunities are enormous as Spain emerges from the depths of recession and banks continue to unload real estate assets.
Merlin’s IPO capped a dizzying six months of Spanish real estate deals. In January, the New York–based private-equity firm Apollo Global Management LLC bought the real estate unit of Banco Santander SA, Spain’s biggest bank by assets, for 664 million euros. In March, the Madrid-based REIT Hispania Activos Inmobiliarios SA raised 500 million euros from investors, including George Soros’s Quantum Strategic Partners LP and John Paulson’s Paulson & Co. In June, Texas-based private-equity firm Lone Star Funds and JPMorgan Chase & Co.bought a 4.4 billion euro portfolio of Spanish and Portuguese commercial property loans from Commerzbank AG of Frankfurt.
In the U.S., Auten was a managing director at Waypoint Real Estate Group, an Oakland, California-based investment firm that buys up foreclosed homes across the U.S. Auten says a lot of investors are looking at Spain, a country of 46 million, as if it’s a carbon copy of the U.S. market, where investors such as Blackstone and Waypoint have scooped up hundreds of millions of dollars’ worth of homes and rented them out.
I gave these serfs an offer they couldn’t refuse:
While it is unclear if August's exuberant buy-it-all strategy will hold for September, the following chart from BofA should raise a few eyebrows. In August, practically all the gains for bonds (yield compression) occurred in the overnight session (from 8pmET to 6amET)...
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Normal trading? Well it's better than no trades at all like in Japanese govvies...
When it comes to keeping track of China's economy, one can listen, and ignore, the official goalseeked and made-up-on-the-fly data released by the government, or one can simply observe the price dynamics of the all-important Chinese commodities sector (because with fixed investment accounting for well over 50% of GDP, the marginal price of the commodities that are used in capital investment tell us all we need to know about the true state of the Chinese economy). It is here where we find that contrary to the recent performance of the Shanghai Composite, which has been trading exclusively on the coattails of the most recent unofficial QE by the PBOC, commodity prices in China are actually crashing across the board, which in turn suggest that the real GDP is most likely anywhere between 20% and 60%, if not more, below the "official" 7.5% GDP print.
Here are the charts, alongside some commentary from Bank of America:
Last week, Qinhuangdao (QHD) 5,500k thermal coal price was at RMB480/t, unchanged from the week prior. QHD coal inventory decreased to 5.6mt, down 0.5% wow.
In August, growth of daily coal consumption at 6 major IPPs dropped by 22.5% yoy, down from the -16.3% yoy in July.
Rebar price was RMB3,058/t, down 1.1% wow. Rebar inventory in 34 major cities was at 5.47mt, down 1.9% wow. Concerns about the property market and relatively high steel production are still weighing on steel prices.
Iron ore price was US$88.0/t, down 1.9% wow. Iron inventory at Chinese ports was 112mt, up 1.4% wow. Iron ore prices have been under immense pressure since the beginning of the year and are likely under continuous pressure from the weak housing market.
National average cement price was RMB347.5/t, down 0.9% wow.
That said, for the inflation watchers, there is some good news: pigs are flying! "Last week, national average pork prices increased by 2.3% from the previous week to RMB23.3/kg. Meanwhile, the hog-to-corn price ratio edged up to 5.57 compared to a breakeven point of 6 for pig farmers."
Actually did we say, "good news"... in a contracting economy, the last thing China can afford is surging food prices from the most prevalent protein. Keep a close eye on this as should pork prices approach or take out 2011 highs just RMB5 higher from here, the events from the Arab Spring will be due for a quick and violent comeback.
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Finally, for the data purists, here are the three most "representative" charts: electricity, rail and autos.
— SITE Intel Group (@siteintelgroup) September 2, 2014
BREAKING: Video purports to show beheading of U.S. reporter Steven Sotloff (center, black helmet) by ISIS. (Getty) pic.twitter.com/BkPhiPHST5
— The Denver Post (@denverpost) September 2, 2014
- *WHITE HOUSE CAN'T CONFIRM REPORTS OF SOTLOFF BEHEADING
- VIDEO WARNS GOVERNMENTS TO BACK OFF "THIS EVIL ALLIANCE OF AMERICA AGAINST THE ISLAMIC STATE"-SITE
British #ISIS fighter warns Obama "as your missiles continue to strike our people, our knife will continue to strike necks of your people"
— Jon Williams (@WilliamsJon) September 2, 2014
In "Second Message to America", #ISIS 'executioner' says "Obama I'm back". Sotloff asks "why paying price of your interference with my life"
— Jon Williams (@WilliamsJon) September 2, 2014
The clip can be found here... (warning very graphic)
Submitted by Simon Black via Sovereign Man blog,
Imagine this scene:
“Everyone in the country was in shock. People’s net worth had devalued more than 53% overnight.”
“The value in savings accounts dropped in half and neither merchants nor consumers knew how to react because they had never been through something like it before…”
This is how an American business executive described living through Mexico’s devaluation of the peso exactly 38 years ago on September 1, 1976.
Looking back, it was so obvious.
Mexico had a mounting debt, destructive policies, and a woefully unsustainable fixed exchange rate with the US dollar. All the writing was on the wall.
But most people ignored the warning signs and kept their money in pesos.
Mexican President Luis Echevarria even went out on the radio to reassure people that the currency was safe.
Finally, under intense fiscal pressure, the government reached its breaking point. And on August 31, 1976, they made the decision to devalue the peso.
People woke up the next morning on September 1st to a 50%+ decline.
Coincidentally today is also the 75th anniversary of the Nazi invasion of Poland, the event that ultimately dragged the world into war.
Germany had already invaded Austria and Czechoslovakia in the months before.
By May 1939 Hitler had stated very plainly, “the decision remains to attack Poland at the first opportunity.”
Even a week before the invasion, Hitler told his military commanders, “I have prepared . . . my ‘Death’s Head’ formations with orders to kill without pity or mercy all men, women, and children of Polish descent or language.”
Germany had 60 divisions massed on the Polish border ready to invade.
Yet people in Poland were told to keep calm, remain in place, and have confidence in their leaders.
Finally, on August 30, the Polish government ordered a partial mobilization to meet the German threat.
Needless to say, it was too little, too late. Germany invaded only hours later.
This is a familiar story that repeats across history. Despite obvious warning signs, people almost universally allow themselves to ignore reality.
It’s human nature to want to believe that everything is going to be OK. And when our political leaders whisper soothing words of hope and optimism, we take the bait.
Looking back, it was plain as day that Mexico was going to devalue the peso. Everything about the economy and currency was totally unsustainable. Deep down people knew it.
Similarly, it was plain as day that Hitler was going to decimate Poland. And people knew it.
Yet millions allowed their confidence to be misplaced in leaders who assured them that everything was OK.
Are we so different today?
The raw numbers tell us that most banks in Europe are insolvent. Bank in the US are dangerously illiquid.
Most western governments are bankrupt. Pension and social security funds are insolvent.
Financial markets are at precarious valuations. And the dollar is beginning to unravel as the dominant reserve currency.
These are data-driven assertions. And my guess is, deep down, your instincts are also telling you that something is seriously wrong with the system.
Yet we’re all told to keep calm by our leaders. There’s nothing to see here, nothing to worry about.
Looking back, it’s all going to seem so obvious. If a major, global currency crisis hits within the next 12-months, people will think, “duh, how did I not see that coming?”
Unfortunately by then it will be too late.
It takes only a little foresight and planning to insulate yourself from an event that can have disastrous consequences.
If you knew the Mexican peso was at an unsustainable level, why would anyone continue to hold pesos?
Similarly, if all the objective data suggests that the dollar is in store for an epic decline… and that the entire world is on a path to shift away from the dollar, why in the world would any rational person base his entire life savings in dollars?
It takes little effort to actually do something about it. Hold stronger currencies overseas. Own real assets. Move your retirement account abroad where your bankrupt government can’t steal it.
These are common sense steps, just like putting on a seatbelt when you get into a car.
The time to act is now. Why play Russian roulette when the odds are clearly in favor of the house?
Don’t try to time it. Nobody has a crystal ball. It’s irrelevant whether the trend unfolds over weeks, months, or years. It’s pretty clear where this is all headed.
Call for Papers:
2014 International Conference of Prices & Markets
November 7-8, 2014
Reflective of the growing international participation at the Toronto Austrian Scholars Conference, the event has been rebranded as the International Conference of Prices & Markets in concert with the Mises Canada published Journal of Prices & Markets. The 3rd iteration of the conference will be held on November 8th, with an opening reception the evening before, and the event continuing throughout the weekend.
The International Conference of Prices & Markets is designed to combine the opportunities of a professional meeting, with the added attraction of hearing and presenting new and innovative research, engaging in vigorous debate, and interacting with like-minded scholars who share research interests.
Past speakers include Austrian economists Dr. David Howden, Dr. Joseph Salerno, Douglas French, Kel Kelly and Dr. George Bragues. Investment guru Nick Barisheff gave a keynote address in 2013. The International Conference of Prices & Markets will be held November 7-8, 2014 at the Bahen Centre, University of Toronto, St. George Campus Toronto, Ontario, Canada.
ICPM seeks papers that seek to improve the understanding of the role of markets in the economy. Submissions should seek to shed light on contemporary issues while being grounded in a praxeological reasoning. Papers are welcome from a variety of fields such as politics, sociology, and psychology, where ever they can bring relevance to economic and financial questions.
Scholars interested in presenting papers, serving as chairs/discussants, or proposing entire panels should submit proposals by October 1st, 2014. With all submissions, please include the following information for each participant, including non-attending co-authors:
2. Affiliation (title and institution)
3. E-mail address
4. Telephone number
5. Title of paper(s)
6. Abstract(s) of no more than 100-200 words
Please ensure that all attachments are either Adobe Acrobat (.pdf) or Word (.doc or .docx) format.
Select papers from the conference will be published as Papers and Proceedings of the conference in the Journal of Prices & Markets, the flagship journal of the Ludwig von Mises Institute of Canada.
Please send your submissions by email only to David Howden at email@example.com (with “ICPM2014” in the subject line of the e-mail).
As we discussed yesterday, Vladimir Putin's apparent 'threat' to EU's Barroso that "If I want to, I can take Kiev in two weeks," prompted both anger and response as NATO reacted by stating a new "spearhead" force of 3-5,000 troops would be flown in to combat any (further) Russian aggression. However, Russia is not happy that the EC President leaked the conversation with Putin's aide Ushakov stating that recounting the private conversation was "inappropriate," "undiplomatic," and "unworthy of a serious political player." More troublingly, the cold-war-tension-like escalation from NATO has prompted Russia to revise its military doctrine to account for “changing military dangers and military threats.”
Vladimir Putin has boasted to European leaders that his forces could sweep into Kiev in two weeks if he wanted.
The Russian president reportedly made the threat to the European Commission president during talks on the Ukraine crisis.
Mr Putin told Jose Manuel Barroso: “If I want to, I can take Kiev in two weeks,” Italy’s La Repubblica newspaper reported, implying this could be the result if the EU stepped up sanctions against Russia.
His comments, relayed by Mr Barroso to colleagues at last weekend’s EU summit, emerged as Nato announced it would build a new “spearhead” rapid reaction force of up to 4,000 troops that can be flown into eastern Europe in 48 hours to respond to possible Russian aggression.
Which prompted 2 responses from Russia..
First, a diplomatic talking to...
Yuri V. Ushakov, an aide to Mr. Putin, said Mr. Barroso’s recounting of a private conversation was “inappropriate.”
“Whether these words were said or not, in my viewpoint, this quote given is taken out of context and it had absolutely different sense,” Mr. Ushakov said.
Disclosing details of conversation is undiplomatic, “unworthy of a serious political player”
And second, as The NY Times reports, a military one...
With NATO leaders expected to endorse a rapid-reaction force of 4,000 troops for Eastern Europe this week, a senior Russian military official said on Tuesday that Moscow would revise its military doctrine to account for “changing military dangers and military threats.”
In an interview with the Russian state news agency RIA Novosti, the official, Mikhail Popov, deputy secretary of Russia’s military Security Council, called the expansion of NATO “one of the leading military dangers for the Russian Federation.”
Mr. Popov said Russia expected that leaders of NATO would seek to strengthen the alliance’s long-term military presence in Eastern Europe by establishing new military bases in the region and by deploying tanks in Estonia, a member of NATO that borders Russia.
“We believe that the defining factor in our relationship with NATO remains the unacceptability for Russia of plans to move military infrastructures of the alliance to our borders, including by means of expanding the bloc,” Mr. Popov said.
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Furthermore, Russia appears set to release the Putin-Barroso conversation...
Russia ready to release audio recording of conversation between President Vladimir Putin and European Commission President Jose Barroso, Interfax cites Russian ambassador to European Union as saying.
Unless EU objects, Russia will distribute recording of phone talk to establish truth within 2 days, Vladimir Chizov says in letter to Barroso, Interfax reports
One can only wonder what Barroso said...
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(Photo: U.S. Air Force)
The U.S. Army is preparing to fight political dissidents who challenge the power of the state as “megacities” become the battleground of the future, according to a new report in the Army Times.
The article details how the Army’s Capabilities Integration Center (ARCIC) worked with US Army Special Operations Command, the chief of staff’s Strategic Studies Group and the UK’s Ministry of Defence earlier this year to wargame the future of armed combat, which will revolve around the neutralization of groups “who can influence the lives of the population while undermining the authority of the state,” a chillingly vague description which could easily be applied to political dissidents.
The plan foresees an unprecedented realignment of U.S. military strategy focused around putting “boots on the ground” in megacities to deal with “politically dispossessed” populations while relying on “more lethal and more autonomous” methods.
“It is inevitable that at some point the United States Army will be asked to operate in a megacity and currently the Army is ill-prepared to do so,” asserted a report by Army Chief of Staff Gen. Ray Odierno’s Strategic Studies Group, while Lt. Gen. H.R. McMaster warned that the Army will increasingly have to expand its presence to battle an enemy which operates in “other contested spaces like organized crime and politics.”
The report also notes how the Army will utilize directed energy weapons which “would allow U.S. to have direct-fire capabilities with significant logistics reduction, and to counter enemy long-range missile capability.”
The article also cites a recent report by the Australian Army which identifies the fact that “these cities represent the battlefields of the future.”
Confirmation that the U.S. Army is preparing to fight disaffected groups and individuals who attempt to ‘undermine the authority of the state’, which could apply to a whole host of perfectly legal political activities, is particularly concerning given the recent militarized police response to unrest in Ferguson, Missouri.
A 2012 study by the National Consortium for the Study of Terrorism and Responses to Terrorism at the University of Maryland which was funded by the Department of Homeland Security lists Americans who are “reverent of individual liberty” and “suspicious of centralized federal authority” alongside violent terrorist groups.
Will citizens who ‘undermine the authority of the state’ by espousing these beliefs also be a future target for the U.S. Army under this new doctrine?
Earlier this year we also highlighted how the U.S. Army built a 300 acre ‘fake city’ in Virginia complete with a sports stadium, bank, school, and an underground subway in order to train for unspecified future combat scenarios. The city included a Christian chapel and subway signs in English, suggesting it was intended to double as a domestic town in addition to an overseas location.
The Army Times report is also disconcerting in light of a recently uncovered U.S. Army training document which detailed preparations for “full scale riots” within the United States during which troops may be forced to engage in a “lethal response” to deal with crowds of demonstrators.
As with previous examples, the manual made it clear that such operations were being planned not just for foreign occupations but for inside the “continental United States (CONUS)” in the event of “unruly and violent crowds” where it is “necessary to quell riots and restore public order.”
The document also describes the deployment of a “lethal response” directed against “unarmed civilians,” including “sniper response” and “small arms direct fire,” while making reference to domestic political upheavals such as the 1999 demonstrations against the WTO in Seattle.
While the U.S. border remains wide open amidst reports of ISIS insurgents planning attacks, the fact that the security apparatus of the United States is more concerned with taking on political dissidents inside megacities is likely to prompt fresh outrage.
"Good news" it would appear in the exuberant ISM and construction data, has morphed into bad news now that Europe has closed and US equities are tumbling. Despite the best efforts of VIX and JPY, the S&P 500 cash index just broke below the crucial 2,000 level.
S&P breaks back below 2000...
and JPY carry is not helping...
Neither is VIX...
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It has been a bad year for Malaysian Airlines: following the disappearance of MH-370 (which to our knowledge still hasn't been found), and the crash of MH-17 (which to our knowledge still hasn't had its Kiev ATC recordings released) the country's national carrier reported it would be delisted, and nationalized, with a follow up report last week that some 6,000 workers would be laid off to enjoy the recovery "confirmed" by the market's all time highs on their own. The year not only got worse, but outright bizarre, macabre and morbid following a marketing ploy revealed last week in which would-be passengers were given a chance to win a ticket if only they shared their... bucket list?
According to the Malay Mail, reported by Time, Malaysia Airlines launched a competition in Australia and New Zealand four days ago, according to media reports, in which it said it was giving away free economy-class tickets and free iPads. The competition name was, to say the least, bizarre: My Ultimate Bucket List. Contestants had to explain “What and where would you like to tick off on your bucket list?”
Where this goes from here hardly needs an explanation but here goes:
The Merriam-Webster definition of bucket list is “a list of things that one has not done before but wants to do before dying.” The association is horrific, given that 537 people lost their lives flying on the airline this year.
The contest appears to have since been withdrawn, with the original competition link now leading to a 404 error page. A PDF of the competition terms and conditions could be found here at time of publication, but besides that there no longer appear to be details of the competition on the MAS site.
The launch of the competition was picked up in the Australian travel-industry press and even name-checked in British tabloid the Daily Mail. But perhaps MAS has since realized that asking prospective passengers to think up a bucket list before accepting a free ticket on one of its planes might be construed as macabre.
This is not the first such tragedy related gaffe out of the Pacific Rim: "in 2003, the Hong Kong Tourism Board ran an ad promising would-be visitors that “Hong Kong will take your breath away.” At the time, SARS — severe acute respiratory syndrome — had killed about 100 people, mostly in Hong Kong and China. But the ad ran in British and European print magazines — and there was no time to change the slogan before the presses started to roll."
That said, in a world in which fading celebrities need a massive "cloud" hacking to rekindle their idle glory, it would not be at all surprising if as this marketing gimmick goes viral, that traffic yearning for a flight on board the Malaysian airline will soar, and not just thanks to jihadist suicide bombers.
The weekend's headlines reeled from the collapse in global manufacturing PMIs and with them the last best hope for the world's economies to reach escape velocity all on their own. However, there was one nation that did not plunge... there was one country whose growth (based on the soft survey data) is at 10-month highs. Perhaps this is the chart that President 'we need moar sanctions and costs' Obama does not want Angela 'umm, wait a minute' Merkel to see...
Since sanctions began the plunge in Euro-Area PMIs has been commensurate with the rise in Russia's (oh and according to survey-data, US is as good as it has ever been)...
* * *
Seems pretty clear who is paying the price and suffering the costs of Western sanctions...
When does Europe draw its own red line around Obama's sanctions?
The CDC's worst nightmare is coming true. Despite reassurances from the government that it was 'contained', the Ebola outbreak in Nigeria is accelerating fast. Health Minister Chukwu said that 17 had now been infected and 271 were under surveillance (including most horrifyingly, 72 in Lagos). In addition, Congo is seeing cases increase rapidly, with WHO reporting 53 cases of Ebola (31 dead) and warning, perhaps ominously, that there is no link with the West Africa strain. Liberian President Ellen Johnson Sirleaf said the situation in her country "remains grave," adding "People now don't see this as a Liberia or West Africa crisis. It could easily become a global crisis." Furthermore, Doctors-without-Borders warns, "the world is losing the battle to contain the Ebola epidemic."
— WHO (@WHO) August 29, 2014
- *WORLD LEADERS ARE FAILING TO ADDRESS EBOLA EPIDEMIC, MSF SAYS
- *INTERNATIONAL RESPONSE TO EBOLA 'LETHALLY INADEQUATE', MSF SAYS
- *MSF: WORLD IS LOSING BATTLE TO CONTAIN EBOLA EPIDEMIC
- *MSF: NATIONS WITH DISASTER RESPONSE CAPACITY MUST ASSIST
Six months into the worst Ebola epidemic in history, the world is losing the battle to contain it. Leaders are failing to come to grips with this transnational threat.
In West Africa, cases and deaths continue to surge. Riots are breaking out. Isolation centers are overwhelmed. Health workers on the front lines are becoming infected and are dying in shocking numbers. Others have fled in fear, leaving people without care for even the most common illnesses. Entire health systems have crumbled.
Ebola treatment centers are reduced to places where people go to die alone, where little more than palliative care is offered. It is impossible to keep up with the sheer number of infected people pouring into facilities. In Sierra Leone, infectious bodies are rotting in the streets.
Rather than building new Ebola care centers in Liberia, we are forced to build crematoria.
Last week, the World Health Organisation (WHO) projected as many as 20,000 people infected over three months in Liberia, Sierra Leone, and Guinea.
We are in uncharted waters. Transmission rates are at unprecedented levels, and the virus is spreading quickly through Liberia’s capital, Monrovia.
We have been losing for the past six months. We must win over the next three.
Nigeria is bad and getting worse fast.. (via Reuters)
Nigeria has a third confirmed case of Ebola in the oil hub of Port Harcourt, bringing the country's total confirmed infections to 17, with 271 people under surveillance, the health minister said on Monday.
Patrick Sawyer, the first case, came from Liberia, and then collapsed at Lagos airport on July 20.
The shift to Port Harcourt shows how easily containment efforts can be undermined. Nigeria's government acted quickly at the end of July, setting up an isolation ward and monitoring contacts closely. But one of Sawyer's contacts in Lagos avoided quarantine and traveled east to Port Harcourt.
Health Minister Onyebuchi Chukwu said in a press conference that 72 people in Lagos, a city of 21 million people, were still under surveillance. Another 199 people were under surveillance in Port Harcourt.
Congo is accelerating... (via WHO)
- *WHO SAYS IDENTIFIED 53 CASES CONSISTENT W/EBOLA IN DRC, 31 DEAD
- *NO LINK BETWEEN WEST AFRICA, CONGO EBOLA OUTBREAKS, WHO SAYS
"There are now 31 deaths," Eugene Kambambi, the WHO's head of communication in DR Congo, told AFP, citing Congolese authorities and stressing that the epidemic "remains contained" in an area around 800 kilometres north of the capital Kinshasa.
Kabamba added that there were "53 confirmed, suspected or likely cases" of Ebola, while 185 people were under medical watch because they had admitted to contact with patients or were believed to have had dealings with people stricken by the highly contagious disease.
The government announced on August 25 that the DRC was facing its seventh Ebola outbreak since the disease was first identified in the former Zaire in 1976.
The health minister has ruled out any link with a serious Ebola epidemic sweeping parts of west Africa, at a cost of more than 1,500 lives, on the grounds that there had been no contact between those distant nations and Boende. The WHO has taken the same position.
And Liberia is a disaster... (via CNN)
Liberian President Ellen Johnson Sirleaf said Monday that the situation over the massive Ebola outbreak in her country "remains grave."
"Our health delivery system is under stress. The international community couldn't respond quickly," Johnson Sirleaf told CNN's Nima Elbagir in an interview.
She warned a bigger response is needed to prevent that.
"People now don't see this as a Liberia or West Africa crisis. It could easily become a global crisis."
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Submitted by Charles Hugh-Smith of OfTwoMinds blog,
The hollowing out of corporate strengths to enable short-term profiteering by the handful at the top leads to systemic fragility.
Anonymous comments on message boards must be taken with a grain of salt, but this comment succinctly captures the underbelly of Corporate America: massive insider selling, borrowing billions to buy back their own stocks to push valuations to the moon so shares granted as compensation can be sold for a fortune, and dodgy accounting strategies that boost headline profits and hide the gutting of investments in long-term growth.Here's the comment: "I’m occupying a vantage point that allows me to see what is going on inside the top Fortune 50 companies. I have never seen such rot before. Of the 50, at least 30 have debt at 120% of cash. Most have cut capex, R&D and maintenance by 80%. Most have been borrowing money to do stock buy-backs, while simultaneously selling off business units and doing layoffs. Of the 50, at least 20 have 100% insider selling. For some, you would have to go back decades to find a point where all of the acting board of directors are selling. In essence, they are paying the mortgage with their credit cards. Without bookkeeping games, there are no solid earnings. There will be no earnings growth. “Executive compensation based on stock performance” is killing corporate America. A black swan is not needed to make it fall, a gentle breeze will do just fine."
(source message thread) So let's try contesting these points.
Where is the data showing insiders buying hand over fist at these valuations?
Insider selling has been raising red flags since March 2014: In-the-know insiders are dumping stocks
Where is the data proving Corporate America isn't borrowing billions of dollars and using the nearly-free money to buy back shares? Buying back shares reduces the float (stocks available for purchase by the public), reducing supply and creating demand which pushes prices higher.
Stocks’ Biggest Gains Are an Inside Job: Companies spent $598.1 billion on stock buybacks last year, according to Birinyi Associates in Westport, Conn. That was the second highest annual total in history, behind only 2007, Birinyi calculated. The pace picked up in the first quarter of 2014, when companies spent $188 billion, the highest quarterly amount since 2007.
Where is the data showing Corporate America has added jobs?
Who actually creates jobs: Start-ups, small businesses or big corporations? During the 1990s, American multinational companies added 2.7 million jobs in foreign countries and 4.4 million in the United States. But over the following decade, those firms continued adding positions overseas (another 2.4 million) while cutting 2.9 million jobs in the United States.
As for dodgy accounting: when the dodgy accounting has been institutionalized, it's no longer viewed as dodgy. Which brings us to the money shot of the comment: “Executive compensation based on stock performance” is killing corporate America.
When executives and others at the top of the corporate pyramid have such an enormous incentive (stock options worth tens of millions of dollars) if they can push the stock price higher with buy-backs paid with borrowed money and accounting gimmicks that inflate headline earnings, then why wouldn't they do precisely that?
The profits are as bogus as the stock prices: both are relentlessly gamed to make sure fortunes can be reaped in a few years by those at the top.
As the comment noted, this hollowing out of corporate strengths to enable short-term profiteering by the handful at the top leads to systemic fragility. No shock is needed to bring down these fragile corporate structures: existing debt and the slightest tremor of global recession will be enough to topple the rickety facade.
The Central Bank policies of the last five years have damaged the capital markets to the point that the single most important item is no longer developments in the real world, but how Central banks will respond to said developments.
Let us take a moment to digest that. Before 2008, for the most part, when something happened in the world, an investor would think about how that issue would affect the markets.
Today, that same investor will try to analyze how the Central Banks will react to that issue, not the impact of the issue itself. This is why, for various periods between 2008 and today, the markets would rally on terrible economic data and other economic negatives: traders believed that because the data was bad the Fed would be more inclined to engage in more easing.
After all, why do we invest? We invest because we want to make money. And when it comes to investing, we prefer easy money: gains that have a high probability of success. And thanks to Central Banks cutting interest rates over 500 times and printing over $10 trillion in money since 2008, what’s the easiest way to make money by investing today?
Front-run Central Banks policies.
Consider Europe. In 2012, ECB President Mario Draghi promised to do “whatever it takes” to keep the Euro in one piece. Since that time, nothing has really improved in Europe’s economy.
France is approaching a triple dip recession. Germany may re-enter recession before the year’s end. Spain remains an economic basket-case. Portugal just suffered another major bank failure. And on and on.
And yet, bond yields on European Sovereign debt have fallen to multi-century lows. Germany’s 10 year is now at 1%... an ALL TIME low. The reason for this? Investors, convinced that the ECB will buy sovereign bonds or, at a minimum, drive bond yields lower, have poured into European bonds.
As a result, European bonds are now stretched to levels that far exceed a bubble. Remember, the entire sovereign debt crisis in Europe was based on the fact that most European countries are insolvent. When you include unfunded liabilities, most European countries are running Debt to GDP ratios north of 400%.
The basic premise of investing is that you should be compensated for your risk exposure. The riskier an investment, the higher your expected returns should be.
However, thanks to Central Bank meddling, today this is no longer the case. In Europe, where lending money to sovereign nations is in fact a high risk proposition, you are given almost nothing in the way of yields.
This will not end well. In fact, the ending will likely be catastrophic as the fast money herd panics and tries to move out of the various assets it only bought based on the assumption that it could unload its position on someone willing to pay a higher price (likely a Central Bank) down the road.
We don’t know when this will happen, but it WILL happen. And unlike stocks, when bond bubbles implode things tend to get VERY serious VERY quickly.
This concludes this article. If you’re looking for the means of protecting your portfolio from the coming collapse, you can pick up a FREE investment report titled Protect Your Portfolio at http://phoenixcapitalmarketing.com/special-reports.html.
This report outlines a number of strategies you can implement to prepare yourself and your loved ones from the coming market carnage.
Phoenix Capital Research
It appears JPY weakness (or generalized USD strength) is mirroring the demise of precious metals (and oil) this morning. Gold's 1.7% drop is the biggest in 6 weeks and drops the yellow metal to near 3-month lows. Treasury yields are up 5-8bps at the long-end. Troublingly, for the carry bulls, equity futures are not playing along with the JPY weakness.
Gold and JPY inseparable...
S&P fuitures bumped back up to VWAP but are not following through with JPY carry...