“The Obama administration’s efforts to rein in Wall Street face opposition from members of the president’s own party. Since 2011, after Dodd-Frank became law, Democrats have raised over $330 million from the financial industry, and their party’s presumptive incoming Senate leader, New York’s Chuck Schumer, is considered a close ally of the financial sector. As the year-end legislative wrangling intensifies, here are the other Democrats who have been Wall Street’s key allies in fighting the Obama administration. They have all raised big money from the financial industry.” Continue reading

“While the current rationale for encryption back doors is to fight terrorism, they wouldn’t be used just for that purpose. For proof, just look at the history of the PATRIOT Act. This law gives the US government unprecedented civil forfeiture authority over the US ‘correspondent accounts’ of any bank in the world. If an alleged terrorist or other criminal deposits money at the bank overseas, the PATRIOT Act allows the government to seize an equivalent sum of money in the correspondent account in the US. Proponents justified the law as a necessary escalation in the ‘War on Terror.’ But the very first time the government used its new civil forfeiture authority, it had nothing to do with terrorism.” Continue reading

“Investors who refused to take the speculative bait may have been the first casualties of the Fed’s policies. But now, it is investors who remain fully invested in obscenely overvalued equities and junk credit that have become the unwitting dupes in this game. If the Fed cannot force people to abandon saving behavior with zero interest rates, some members of the FOMC have openly talked about driving interest rates to negative rates to ‘stimulate’ spending. This is not economics, it is megalomaniacal sociopathy. Centuries of economic history warn that this speculative episode, too, will end in a collapse.” Continue reading

“The creation of the Federal Reserve System in 1913 was the re-establishment of the oligarchs’ lender of last resort. That meant that the federal debt would become the foundation of the entire economy: debt purchased by the central bank to balloon the monetary base. To pay off the debt would create mass deflation and depression. The oligarchs now have immunity. Congress will not order an independent audit of the FED. The model is the Bank of England. It has been the chief insurance agency of the Anglo-American oligarchy ever since 1694. The ‘Glorious Revolution’ of 1688/89 was in fact the symbolic triumph of the oligarchs over the king.” Continue reading

“As the market now diligently calculates the suddenly surging odds of a December rate hike, here’s Yellen with a preview of what will happen once the rate hike cycle is aborted, just as it was aborted in Japan in August of 2000 when the BOJ also decided to send a signal how much stronger the economy is by hiking 25 bps, only to cut 7 months later and to proceed to monetize not only all net Japanese debt issuance a decade later, but to hold half of all equity ETFs. The good news: YELLEN SAYS SHE DOESN’T SEE NEED FOR NEGATIVE RATES NOW; YELLEN SAYS FED SEES ECONOMY ON STEADY PATH OF IMPROVEMENT; Because when have the Fed’s forecasts before ever been wrong.” Continue reading

“China’s devaluation couldn’t come at a worse time for Argentina. About a quarter of the country’s $33.7 billion of foreign reserves are now denominated in yuan, which suffered its biggest loss since 1994 on Tuesday. The move is eroding the cash Argentina uses to pay its debt and comes as the nation is effectively shut out of overseas bond markets and struggling to defend its slumping peso at home. The country’s yuan holdings have ballooned since it signed an $11 billion currency-swap agreement with the People’s Bank of China in July. In the unregulated market Argentines use to sidestep the government’s currency controls, the peso has sunk 12 percent in the past two months.” Continue reading

“Now, the PBoC will look to supercharge efforts to re-engineer a stock market bubble via leverage by pushing brokerages to issue ABS backed by margin loans. If brokerages simply offload the margin loan risk to investors and use the proceeds to fund still more margin lending which can also be turned into still more ABS, and so on, then the effect will be to pile leverage on top of leverage. What happens in the event the underlying stocks become completely illiquid (i.e. Beijing decides to suspend trading on three quarters of the market again)? The punchline: the senior tranche (which accounts for CNY475 million of the total CNY500 million deal) is rated AAA.” Continue reading

“China’s 2 percent devaluation of the yuan on Tuesday pushed the U.S. dollar higher and hit Wall Street and other global equity markets as it raised fears of a new round of currency wars and fed worries about slowing Chinese economic growth. U.S. stock indices dropped more than 1 percent and stocks also fell in Asia and Europe as investors contemplated the implications of a move designed to support China’s slowing economy and exports. Companies that sell to China were hit hard, with heavy equipment maker Caterpillar losing 3.13 percent and Germany’s Volkswagen dropping 4 percent. Energy and materials shares also tumbled on China demand concerns.” Continue reading

“Alan Greenspan, who served as Fed chairman between 1987 and 2006, told Bloomberg: ‘I think we have a pending bond market bubble. If we merely substitute the structure of equity prices, and we have the price of bonds, and instead of expected equity return we have expected interest rate return, that price earnings ratio is in an extraordinary unstable position.’ Mr Greenspan, who has been criticised for fuelling the US housing bubble by keeping rates down in the early 2000s and failing to keep a closer eye on banks, said behavioural economics was playing a central role in investor decision making. Mr Greenspan also said oil prices had further to fall.” Continue reading

“The hedge fund report, authored by a trio of former International Monetary Fund economists, noted that Puerto Rico’s education spending had risen 39 percent in a decade during which school enrollment actually fell by a quarter. Surely, there must have been some unnecessary fat in the system to cut. It’s easy to understand why this might seem outrageous. Firing teachers in the middle of what’s essentially a nine-year depression seems like a good way to further exacerbate Puerto Rican unemployment, possibly while sacrificing some childrens’ educations.” Continue reading

“Vermont’s first digital currency ATM has been ordered closed by state regulators who say the company operating the cash machine is violating state law. The move by the Department of Financial Regulation has disappointed the tech enthusiasts who used the new currency service. PYC CEO Emilio Pagan-Yourno admits the company doesn’t have any Vermont-specific licenses. But he says his company is licensed federally through the Financial Crimes Enforcement Network (FinCEN). The letters from the department warn Blu-Bin and PYC that they may be in violation of the law. But they also seem to show a lack of clarity about what, exactly, the two companies are even doing.” Continue reading

“An Australian government inquiry will recommend treating digital currencies as money, simplifying tax for people who trade with them while forcing bitcoin exchanges to monitor customers for potential money laundering and terrorism financing activities. The Senate committee recommendations underscore governments’ growing acceptance of the role of so-called ‘cryptocurrencies’ around the world. If implemented, the changes would align Australia with the United Kingdom and Spain by having people pay sales tax just once if they buy something with bitcoin, while leaving other nations like Sweden to fret over its true legal status. The changes would also match Australia with Canada and Singapore.” Continue reading