Dems Try To Tear into Ben Carson, So He Takes Them to School with His ‘Common-Sense’ Solution

May 22, 2019

News broke in April that the Department of Housing and Urban Development planned to crack down on illegal immigrants who’ve gamed the system to take advantage of taxpayer-funded federal housing aid. That new policy would include the potential eviction of ineligible non-citizens from government-subsidized housing with an eye toward ensuring that American citizens in need…

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Stock Market Cheerleading: Why Do We Celebrate The Super-Rich Getting Richer?

13 November 2019

Stock Market Cheerleading: Why Do We Celebrate The Super-Rich Getting Richer?

Authored by Charles Hugh Smith via OfTwoMinds blog,

It's not too difficult to predict a political rebellion against the machinery of soaring wealth and income inequality.

The one constant across the media-political spectrum is an unblinking focus on the stock market as a barometer of the national economy: every major media outlet from the New York Times to Fox News prominently displays stock market action, and TV news anchors' expressions reflect the media's emotional promotion of the market as the end all to be all: if stocks rose, the anchors are smiling and chirpy, and if the market fell then their expressions are downcast and dour.

This cheerleading of the stock market is based on an implicit assumption that the rising stock market raises all boats: a rising market is assumed to reflect an expansion of sales and profits that trickle down to the masses in higher wages, more jobs and rising 401K retirement accounts.

The reality is starkly different: the vast majority of the gains generated by a rising stock market flow to the top 10% households who own 93% of all financial assets, and the gains within the top 10% are highly concentrated in the top .01% of financiers, super-wealthy families and corporate managers who have reaped the vast majority of the past decade of stock market gains.

The 1% grabbed 82% of all wealth created in 2017 (and 2018 and 2019...)

America's Richest 1% Now Own As Much Wealth As The Middle And Lower Classes Combined

As my friend Adam T. recently observed: when we cheer the rising stock market, we're celebrating the super-rich getting even richer. Why are we celebrating an unprecedented widening of wealth inequality that erodes democracy (because the super-wealthy buy political influence) and the social contract (as the vast majority of wealth and power flow to the top .01%)?

Soaring wealth inequality is extremely destabilizing politically, socially and economically: much of the social unrest breaking out around the world can be traced to the political, social and financial disenfranchisement of the masses by super-wealthy elites.

Economically, soaring inequality concentrates and capital and power in the hands of the few, creating fertile ground for cartels and monopolies which raise costs without generating better services or more jobs. This dynamic is easily visible in the U.S.:

The U.S. Only Pretends to Have Free Markets: From plane tickets to cellphone bills, monopoly power costs American consumers billions of dollars a year.

Politically, the 90% who are losing ground seek political redress, generating tension in a political system dominated by the super-wealthy. Since the political machinery is controlled by the elite, the bottom 90%'s efforts to gain political redress will fail: Medicare for All (to take one example of many) is just an expansion of rapacious sickcare cartels that further concentrate wealth and power in the hands of the few at the expense of the many.

(Recall that 40% of Medicare spending is billing fraud, worthless or harmful meds and procedures and paper-pushing. All Medicare for All will accomplish is sickcare CEOs skimming $80 million a year in stock options will skim $160 million.)

In cheering advances in the stock market that benefit the financial and political elite, we're cheering the destabilization of our economy and society. Is that really something worth cheering?

At some point, people will awaken to the fact that the soaring stock market is the primary engine of soaring inequality, the erosion of democracy and the destabilization of the social order.

It's not too difficult to predict a political rebellion against the machinery of soaring wealth and income inequality, which will eventually lead to a severe reduction in the power of the Federal Reserve and its greed-driven dependent, Wall Street.

It's not just wealth that's concentrated in the hands of the top .01%--virtually all the income gains of the past decade of "recovery" have flowed to the top .01%: and the super-wealthy's response? Let them eat brioche, a response so disconnected from reality that it would be humorous were it not a reflection of a completely corrupt and rotten status quo.

* * *

My recent books:

Will You Be Richer or Poorer? Profit, Power and A.I. in a Traumatized World (Kindle $6.95, print $11.95) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($6.95 (Kindle), $12 (print), $13.08 ( audiobook): Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).

* * *

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

Tyler Durden Wed, 11/13/2019 - 11:30 Tags Business Finance

Rand Paul Drops The 'C'-Word: Names Whistleblower, Demands Testimony

13 November 2019

Rand Paul Drops The 'C'-Word: Names Whistleblower, Demands Testimony

A week ago, Senator Rand Paul said that he might release the whistleblower's name.

Over the weekend, Senator Paul said the whistleblower's name should be released.

And today, Senator Paul has named the whistleblower publicly...Eric Ciamerella

During a Wednesday interview on Washington, D.C.-based WMAL, Paul named Ciaramella himself and said he should be brought in testify to clarify whether he is indeed the whistleblower.

“I think Eric Ciaramella needs to be pulled in for testimony, and then I think it will be ultimately determined at that point,” said Paul.

“But I think he is a person of interest in the sense that he was at the Ukraine desk when Joe Biden was there when Hunter Biden was working for the Ukrainian oligarch. So simply for that alone, I think he’s a material witness who needs to be brought in.”

“I think the whistleblower needs to come in because he needs to be asked about, did he know about the conflict of interest?” said Paul.

“He was there during the time of Joe Biden and Hunter Biden working for $50,000 a month for a Ukrainian oligarch, so he needs to be asked about that.”

As The Washington Examiner reports, Paul also said he wants answers about Ciaramella’s ties to the Democratic Party and Rep. Adam Schiff, whose staff knew about the whistleblower’s report before it was filed.

Now the name is out there in the public (as if it wasn't earlier), will Mark Zuckerberg allow it to be mentioned on his platform?

All of which is worth noting since Rep. Schiff told Congress this morning that "I do not know the identity of the whistleblower." - Seemingly a total lie, given what we know about their pre-hearing meetings...

Rep. @Jim_Jordan rips @RepAdamSchiff for coordinating with the whistleblower. Schiff claims he "does not know the identity of the whistleblower." pic.twitter.com/HdDQGmHwv8

— Daily Caller (@DailyCaller) November 13, 2019

Adam Schiff is not going to be happy...

Tyler Durden Wed, 11/13/2019 - 11:11 Tags Business Finance Politics

The Fed Is Losing Control Over Rates Again, This Time In The Other Direction

13 November 2019

The Fed Is Losing Control Over Rates Again, This Time In The Other Direction

Starting in late March, something unexpected happened: as the Effective Fed Funds rate drifted higher, it broke above the implicit upper bound on the interest rate corridor defined by the Interest on Excess Reserves. It was not meant to do this.

This loss of control over the effective Fed Funds rate prompted many to speculate that reserves (i.e. liquidity) in the system was too low, and sure enough, it all culminated with the end of the Fed's tightening cycle which was followed by 3 rate cuts in the past 4 months, but more importantly, resulted in the repo crisis in late September (which we had previewed in August) and which served as the catalyst for Powell to launch "NOT QE" in October, whereby the Fed is now injecting $60 billion per month in liquidity via monetization of T-Bills, a process that has promptly sent the Fed's balance sheet back over $4 trillion, an increase of $280 billion in 7 weeks.

Yet while the Fed's emergency response to the repo crisis helped restore a "normal" level of liquidity to the system, another unexpected consequence has emerged: the Fed is now losing control of rates again, only this time in the opposite direction!

As Bloomberg points out this morning, as a result of its recent interference with market liquidity levels, the Fed's key effective fed funds rate - aka the "main interest rate" that the Fed controls - is getting close to the edge of the range the Fed is targeting.

As shown in the chart below, after the Effective Fed Funds rate kept drifting ever high during the period of reserve scarcity, we now find ourselves on the other side of the boat, and as a result of the Fed's actions such as repo operations and T-bill purchases, the effective fed funds rates has been pushed to 1.55%, just shy of the Fed's lower bound target of 1.50% (the upper is at 1.75%). And, as Bloomberg points out, "some are worried it could dip below."

As Bloomberg's Alexandra Harris politely puts it, "when that rate strays, it tends to signal that the Fed doesn’t have strong control over its main tool for implementing monetary policy, a worrisome prospect for central bankers. It happened in mid-September as fed funds briefly jumped 5 basis points above the upper bound, prompting hundreds of billions of dollars of Fed intervention to get things back under control."

Said otherwise, the Fed's actions have resulted in a dramatic lurch in the US financial system, from too little liquidity to too much. It also explains the dramatic surge in the S&P500, which has increased every week for the past five, the same period that saw the Fed's balance sheet grow week!

And with stocks surging, for now nobody is asking questions, although it is only a matter of time before someone notices that we have shifted from one extreme to another: “It’s all just about Fed credibility and maintaining control over fed funds,” BMO rates strategist Jon Hill said. “That’s absolute.”

Well, if it is about credibility, the Fed has none: as noted above, starting in March, the Fed lost control over the Effective Fed Funds rate, only at the bound of the target range. As we discussed before, to keep the effective fed funds the range, the Fed was forced on four occasions to adjusted another key rate, the Fed's interest on excess reserves rate, or how much the Fed pays banks for parking reserves with it.

Lowering IOER acted as an anchor that pulled fed funds back down, to an extent. The first three times IOER was tweaked, the central bank took action when fed funds got within 5 basis points of the top of the range. The fourth occasion was in the midst of September’s market turmoil, when it actually breached.

Fast forward just two months later when we have observed a dramatic U-turn as the fed funds is now just 5 basis points from the bottom of the central bank’s range. And while it’s dead in line with the current IOER rate of 1.55%, there are suggestions that it may be weighing too much. In fact, as Bloomberg notes, some strategists are wondering whether it is time for the Fed to adjust the IOER again, this time in the opposite direction closer to the midpoint - currently 1.625% - between the upper and lower limit.

"The symmetry is pretty compelling that they might do this,” said BMO’s Hill. “Five basis points seems to be when they decided.”

However, what is most likely is that the Fed will do nothing: while Powell was instantly spooked when there was too little liquidity, there is no indication the Fed will move if there is too much (as there is now courtesy of nearly $300 billion in liquidity injections in the past two months).

There is another reason why the Fed may prefer an excessive liquidity situation: we are approaching year end, when many worry that rates could soar higher, as they did at the end of 2018.

Knowing that, policy makers might find some extra room between fed funds and the upper boundary useful.

"A lot of the same frictions that happened in September are still there,” said NatWest strategist Blake Gwinn. “The Fed’s actions clip the tail end of a spike, but there’s still frictions in getting cash to where it needs to go."

He sees 70% odds of a year-end jump in fed funds. “There’s no downward spikes” in that rate, “so I’m not really worried about it dropping below” the low end of the Fed’s target range, he added.

According to Jefferies money-market economist, Thomas Simons, a breach of the lower bound by fed funds will be ignored and the Fed "may never need to worry about the fed funds rate breaching the bottom of the range". Two months of liquidity injections suggests there is little risk that the central bank is providing too much liquidity that will push fed funds below the lower bound.

Too much liquidity "is a problem the Fed would love to have," Simons wrote. Of course, he is correct: in fact the only downside to "too much liquidity" is that the world's biggest asset bubble is just getting bigger just as the president of the US demands (when it bursts it's all over of course, but that will be some other Fed chair's problem).

In other words, Powell has nothing to lose and little to gain by standing in the way of risk prices levitating ever higher on the latest massive liquidity injection by the Fed meant to stabilize money markets and restore the Fed's "credibility", but really meant to push the S&P500 to all time highs just before the 2020 election to make sure that Trump is elected.

Tyler Durden Wed, 11/13/2019 - 11:05 Tags Business Finance

Watch Live: Powell Tells Congress There Will Be No More Rate Cuts

13 November 2019

Watch Live: Powell Tells Congress There Will Be No More Rate Cuts

Judging by his prepared remarks, which we posted here, along with a preview of what to expect from Wednesday's testimony, Fed Chairman Jerome Powell is gearing up to tell the market something it doesn't want to hear: That the central bank is done cutting interest rates, and that Powell expects the economy to continue to strengthen regardless.

That's a bold statement, coming one day after President Trump praised European-style negative interest rates to tepid applause during a speech before the Economic Club of New York, and pushed the central bank to keep on cutting.

Expect some angry Trump tweets after - or perhaps even during - Powell's testimony before the Joint Economic Committee is set to begin at 11 am ET.

Watch live below:

[youtube https://www.youtube.com/watch?v=a058oEbZFxU]

Tyler Durden Wed, 11/13/2019 - 10:55 Tags Business Finance

After Evo, The Lithium Question Looms Large In Bolivia

13 November 2019

After Evo, The Lithium Question Looms Large In Bolivia

Authored by Vijay Prashad via Counterpunch.org,

Bolivia’s President Evo Morales was overthrown in a military coup on November 10. He is now in Mexico. Before he left office, Morales had been involved in a long project to bring economic and social democracy to his long-exploited country. It is important to recall that Bolivia has suffered a series of coups, often conducted by the military and the oligarchy on behalf of transnational mining companies. Initially, these were tin firms, but tin is no longer the main target in Bolivia. The main target is its massive deposits of lithium, crucial for the electric car.

Over the past 13 years, Morales has tried to build a different relationship between his country and its resources. He has not wanted the resources to benefit the transnational mining firms, but rather to benefit his own population. Part of that promise was met as Bolivia’s poverty rate has declined, and as Bolivia’s population was able to improve its social indicators. Nationalization of resources combined with the use of its income to fund social development has played a role. The attitude of the Morales government toward the transnational firms produced a harsh response from them, many of them taking Bolivia to court.

Over the course of the past few years, Bolivia has struggled to raise investment to develop the lithium reserves in a way that brings the wealth back into the country for its people. Morales’ Vice President Álvaro García Linera had said that lithium is the “fuel that will feed the world.” Bolivia was unable to make deals with Western transnational firms; it decided to partner with Chinese firms. This made the Morales government vulnerable. It had walked into the new Cold War between the West and China. The coup against Morales cannot be understood without a glance at this clash.

Clash With the Transnational Firms

When Evo Morales and the Movement for Socialism took power in 2006, the government immediately sought to undo decades of theft by transnational mining firms. Morales’ government seized several of the mining operations of the most powerful firms, such as Glencore, Jindal Steel & Power, Anglo-Argentine Pan American Energy, and South American Silver (now TriMetals Mining). It sent a message that business as usual was not going to continue.

Nonetheless, these large firms continued their operations—based on older contracts—in some areas of the country. For example, the Canadian transnational firm South American Silver had created a company in 2003—before Morales came to power—to mine the Malku Khota for silver and indium (a rare earth metal used in flat-screen televisions). South American Silver then began to extend its reach into its concessions. The land that it claimed was inhabited by indigenous Bolivians, who argued that the company was destroying its sacred spaces as well as promoting an atmosphere of violence.

On August 1, 2012, the Morales government—by Supreme Decree no. 1308—annulled the contract with South American Silver (TriMetals Mining), which then sought international arbitration and compensation. Canada’s government of Justin Trudeau—as part of a broader pushon behalf of Canadian mining companies in South America—put an immense amount of pressure on Bolivia. In August 2019, TriMetals struck a deal with the Bolivian government for $25.8 million, about a tenth of what it had earlier demanded as compensation.

Jindal Steel, an Indian transnational corporation, had an old contract to mine iron ore from Bolivia’s El Mutún, a contract that was put on hold by the Morales government in 2007. In July 2012, Jindal Steel terminated the contract and sought international arbitration and compensation for its investment. In 2014, it won $22.5 million from Bolivia in a ruling from Paris-based International Chamber of Commerce. For another case against Bolivia, Jindal Steel demanded $100 million in compensation.

The Morales government seized three facilities from the Swiss-based transnational mining firm Glencore; these included a tin and zinc mine as well as two smelters. The mine’s expropriation took place after Glencore’s subsidiary clashed violently with miners.

Most aggressively, Pan American sued the Bolivian government for $1.5 billion for the expropriation of the Anglo-Argentinian company’s stake in natural gas producer Chaco by the state. Bolivia settled for $357 million in 2014.

The scale of these payouts is enormous. It was estimated in 2014 that the public and private payments made for nationalization of these key sectors amounted to at least $1.9 billion (Bolivia’s GDP was at that time $28 billion).

In 2014, even the Financial Times agreed that Morales’ strategy was not entirely inappropriate. “Proof of the success of Morales’s economic model is that since coming to power he has tripled the size of the economy while ramping up record foreign reserves.”

Lithium

Bolivia’s key reserves are in lithium, which is essential for the electric car. Bolivia claims to have 70 percent of the world’s lithium reserves, mostly in the Salar de Uyuni salt flats. The complexity of the mining and processing has meant that Bolivia has not been able to develop the lithium industry on its own. It requires capital, and it requires expertise.

Source: Bloomberg

The salt flat is about 12,000 feet (3,600 meters) above sea level, and it receives high rainfall. This makes it difficult to use sun-based evaporation. Such simpler solutions are available to Chile’s Atacama Desert and in Argentina’s Hombre Muerto. More technical solutions are needed for Bolivia, which means that more investment is needed.

The nationalization policy of the Morales government and the geographical complexity of Salar de Uyuni chased away several transnational mining firms. Eramet (France), FMC (United States) and Posco (South Korea) could not make deals with Bolivia, so they now operate in Argentina.

Morales made it clear that any development of the lithium had to be done with Bolivia’s Comibol—its national mining company—and Yacimientos de Litio Bolivianos (YLB)—its national lithium company—as equal partners.

Last year, Germany’s ACI Systems agreed to a deal with Bolivia. After protests from residents in the Salar de Uyuni region, Morales canceled that deal on November 4, 2019.

Chinese firms—such as TBEA Group and China Machinery Engineering—made a deal with YLB. It was being said that China’s Tianqi Lithium Group, which operates in Argentina, was going to make a deal with YLB. Both Chinese investment and the Bolivian lithium company were experimenting with new ways to both mine the lithium and to share the profits of the lithium. The idea that there might be a new social compact for the lithium was unacceptable to the main transnational mining companies.

Tesla (United States) and Pure Energy Minerals (Canada) both showed great interest in having a direct stake in Bolivian lithium. But they could not make a deal that would take into consideration the parameters set by the Morales government. Morales himself was a direct impediment to the takeover of the lithium fields by the non-Chinese transnational firms. He had to go.

After the coup, Tesla’s stock rose astronomically.

Tyler Durden Wed, 11/13/2019 - 10:40

Furious farmer films flood water coursing through broken grass bank onto his farmland

13 November 2019

Henry Ward posted a video to Twitter which showed the water coursing through a broken grass bank at his farm in Lincoln.

Moment bikers put would-be pickpocket in a headlock

13 November 2019

Steven Norman, 43, was spotted trying to swipe the wallet from a pensioner selling poppies in Stafford town centre before he was restrained by bikers, who held him into police arrived.

Britain is major flood alert today with 115 areas at risk

13 November 2019

Boris Johnson was given a rough ride by locals in Fishlake as desperate families across the country brace for more downpours.

Evocative pictures show Victorian youths rescued from the streets before being sent to Canada

13 November 2019

The Ragged School movement would help rough sleepers emigrate to Canada to start a new life, and took their photo for posterity. The men aged between 12 to 28 were mostly sent to Toronto.

Penniless rubbish collector finds lump of yellow wax which could be whale vomit worth £80,000

13 November 2019

Somsak Boonrith (pictured), 45, stumbled on the yellow chunk of what he hopes is ambergris, while sifting through rubbish on Tarutao island is Satun, southern Thailand on Sunday.