German Low Wages & Personal Assets
German citizens have not actually benefited from the Euro in personal ways. Among the 17 countries of the Eurozone, Germany is far behind countries such as Italy, France or Spain insofar as net assets are concerned. Additionally, one in four Germans suffer from a low wage.
The Coming Budget Fights in September
Congress goes on vacation for a month and upon return the fight will be the budget and debt ceiling. Obama is already trying to blame the Republicans for undermining his proposals for the Middle Class. But this is really a joke. If you just look at Detroit, about 50% of all tax revenue is going to pensions. If a town has 10 police and 5 retire, they hire 5 more and then they are paying for 15.
Only a sublime idiot cannot see that this entire system is getting ready for a massive implosion between 2016 and 2020. Moody’s has now downgraded Philadelphia’s School System. There is no system that is fundamentally safe. These structures have never been designed with long-term solutions. They have all been predicated upon the assumption that tax revenue will always be available without any regard for the practical consequences. It now takes two incomes to support what use to require just one in the 1960s. This entire structure is collapsing. Forget about the hyperinflation. The state and local level has no power to create money – only more taxes.
We will see a wild September and an important turning point. Both the US budget battle and the German elections are lining up for a very interest month on the horizon.
Congress goes on vacation for a month and upon return the fight will be the budget and debt ceiling. Obama is already trying to blame the Republicans for undermining his proposals for the Middle Class. But this is really a joke. If you just look at Detroit, about 50% of all tax revenue is going to pensions. If a town has 10 police and 5 retire, they hire 5 more and then they are paying for 15.
Only a sublime idiot cannot see that this entire system is getting ready for a massive implosion between 2016 and 2020. Moody’s has now downgraded Philadelphia’s School System. There is no system that is fundamentally safe. These structures have never been designed with long-term solutions. They have all been predicated upon the assumption that tax revenue will always be available without any regard for the practical consequences. It now takes two incomes to support what use to require just one in the 1960s. This entire structure is collapsing. Forget about the hyperinflation. The state and local level has no power to create money – only more taxes.
We will see a wild September and an important turning point. Both the US budget battle and the German elections are lining up for a very interest month on the horizon.
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Halliburton Pleads Guilty in BP Disaster
Dick Cheny’s Halliburton has agreed to plead guilty to destroying evidence in the BP oil disaster. They have accepted one count of destruction of evidence and paying an unspecified fine. The company moved overseas previously when they were the target of other questionable activity.
Dick Cheny’s Halliburton has agreed to plead guilty to destroying evidence in the BP oil disaster. They have accepted one count of destruction of evidence and paying an unspecified fine. The company moved overseas previously when they were the target of other questionable activity.
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SAC Capital Criminally Charged Insider Trading
In a 41-page indictment that includes four counts of securities fraud and one count of wire fraud, prosecutors in NYC have charged Steven Cohen’s SAC Capital of Singapore and its units with permitting a “systematic” insider trading scheme to unfold between 1999 and 2010. The government claims that the insider trading generated hundreds of millions of dollars in profits for the firm. The case attributes criminal acts of several employees to the company itself by alleging that the fund “enabled and promoted” the illicit behavior.
Preet Bharara, the US Attorney for New York City, said “When so many people from a single hedge fund have engaged in insider trading, it is not a coincidence.”
The interesting aspect is that insider trading has been extremely common among the institutions in NYC. The SAC prosecution was brought clearly because it is a Singapore firm yet this could lead to a lot more than the US Attorney Office has in mind. It is curious that they would criminally charge the fund in general for if you follow the bread crumbs you will end up square on Wall Street. This is one prosecution that should be watched carefully.
In a 41-page indictment that includes four counts of securities fraud and one count of wire fraud, prosecutors in NYC have charged Steven Cohen’s SAC Capital of Singapore and its units with permitting a “systematic” insider trading scheme to unfold between 1999 and 2010. The government claims that the insider trading generated hundreds of millions of dollars in profits for the firm. The case attributes criminal acts of several employees to the company itself by alleging that the fund “enabled and promoted” the illicit behavior.
Preet Bharara, the US Attorney for New York City, said “When so many people from a single hedge fund have engaged in insider trading, it is not a coincidence.”
The interesting aspect is that insider trading has been extremely common among the institutions in NYC. The SAC prosecution was brought clearly because it is a Singapore firm yet this could lead to a lot more than the US Attorney Office has in mind. It is curious that they would criminally charge the fund in general for if you follow the bread crumbs you will end up square on Wall Street. This is one prosecution that should be watched carefully.
The Week of 7/22
The Dow has been inching higher but has been unable to reach the major resistance area that we have outlined at the 16000 level. Many markets have reached a temporary high this week and the next two weeks will now become interesting. The fact that the Dow has backed off to some extent and has been unable to blast through to a good isolated spike high, remains encouraging for the long-term.
The Dow will be the primary focus that the Fed will pay attention to. As I have stated many times before, the only time Congress gets upset is not over housing prices or the collapse in real estate or even bonds, but the stock market that impacts their personal portfolios. Congress has been exempt even from insider trading. So it is the stock market that they focus on. The Fed will raise inter rates when the Dow starts to breakout after September and they will misunderstand the rally attributing this to investment rather than a shift in capital flows to preserve capital.
Outright investment flows have been in trouble and things like MF Global and then the LIBOR scandal only further reduce net capital investment. Liquidity is still off by about 50%. The rise in global enforcement and the hunt for Americans around the world has caused a massive contraction in investment. This by itself will contribute to the collapse in capital formation on an international scale that is historically unprecedented. Much of this collapse in liquidity has taken place because of the 2011 law dictating that any foreign entity that fails to inform the US government what an American is doing outside the USA will justify their assets being confiscated because of a presumption that the American is not paying their tax.
Then there is the surveillance of everything and everybody that is beyond description and is destroying the free investment of capital. Governments are not only scanning every piece of mail, but they are tracking everyone as they drive through massive license plate scanning, email collections. internet surveillance, banking records, and recording telephone conversations. They have wiped-out technological advancements like Skype turning that into a video recording device for the NSA. Of course we cannot forget the ability to peek into your house through new TVs, know whatever non-Microsoft software you install in a computer using Windows 8, the intent to install GPS chips in upcoming computers to help you in case someone steals your computer, and we should not leave out the chip in cars that record historically how fast you ever drove storing that in a black box. All of this is paranoia that justifies keeping track of everything and everybody is all about civil unrest in combination with the thirst for taxation – not terrorism.
All of this is having a deflationary impact as liquidity, volume, and eventually corporate profits decline. The months ahead are going to be difficult at best. This is not your everyday event that we are going to see unfold. Keep in mind that theMAJORITY must always be WRONG in order to see the major trend developments.