The Freedom Watch

Australian inquiry says digital currencies are real money

"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 →

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The Fed Joins the War on Drugs

"The Federal Reserve is now in the business of enforcing the US government’s drug laws, even if that means making a mockery of both state governments’ right to set their own drug policies and the Fed’s own governing statutes. The Fed’s involvement in drug prohibition became official last month, when the Federal Reserve Bank of Kansas City informed Denver’s Fourth Corner Credit Union — a non-profit cooperative formed by Colorado’s state-licensed cannabis manufacturers — of its decision to deny its application for a master account. The Fourth Corner Credit Union isn’t taking this sitting down. On the contrary: it is suing the Federal Reserve Bank of Kansas City." Continue reading →

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U.S. Homeownership Rate Falls to 20-Year Low

"The U.S. homeownership fell to its lowest level in 20 years at the end of 2014—levels last seen when national leaders embarked on a broad push to expand homeownership in the mid-1990s. Over the past year, President Barack Obama and other administration officials have voiced alarm that lending has gone from one extreme during the bubble—too loose —to the other—too tight—in the aftermath of the bust. Officials have walked a fine line in attempting to bar a return of the reckless products and practices that allowed the bubble to inflate 10 years ago while loosening some standards elsewhere to provide broader access to homeowners without perfect credit or big down payments." Continue reading →

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“Green Banks” Will Drown in the Red

"A state solvency report released by the Mercatus Center has each of these five states ranked in the bottom third of the country, with their solvency described as either 'low' or 'poor.' This all raises the question of whether these governments are able to find sound investment opportunities in the first place. Recently, though, there have been calls to extend the struggling green banking system to the federal level. Mark Muro and Reed Hundt at the Brookings Institute assert that demand for green banking institutions and the types of companies they finance is so strong that the existing state-based green banks cannot muster enough capital to meet demand." Continue reading →

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Obama renewing call to reauthorize Export-Import Bank

"President Barack Obama is ramping up pressure on Congress to reauthorize the Export-Import Bank. The obscure federal agency's charter expired last month after lawmakers refused to reauthorize it. The bank underwrites loans to foreign companies purchasing American products, but conservatives call it corporate welfare. Obama on Wednesday plans to meet at the White House with owners of small- and medium-size businesses that have benefited from the bank. Senate Majority Leader Mitch McConnell of Kentucky has floated the possibility of attaching the bank's reauthorization to a six-year highway and transit bill." Continue reading →

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The Ex-Im Bank Is Dead (For Now)

"After 81 years of funneling taxpayer dollars to favored companies, projects, and geopolitical outcomes under the guise of advancing some vague conception of the 'U.S. economic interest,' the Export-Import Bank of the United States will end its financing operations at midnight tonight. Proponents of the Bank have been regrouping and strategizing to move legislation to reauthorize the Bank at the soonest possible chance. In fact the White House is hosting a conference call for the purpose of advancing that outcome. The battle may be over but the war continues." Continue reading →

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Here’s a risk to stocks you’ve likely overlooked

"Michael Milken, the creator of junk bonds, once remarked: 'Liquidity is an illusion.....It’s always there when you don’t need it, and rarely there when you do'. The problems with liquidity underscore the distorting effects of central bank intervention in financial markets. Official policies in the aftermath of the financial crisis have forced excessive risk taking in search of returns. Yet regulatory changes have contributed to a reduction in trading liquidity. Over time, investors can become increasingly exposed to ever more risky financial assets that in a crisis would be difficult to trade — triggering a major collapse in prices." Continue reading →

Continue ReadingHere’s a risk to stocks you’ve likely overlooked

Aussie, Kiwi And Loonie Under Commodity Currency Attack

"Recent actions and rhetoric from Commonwealth Prime Ministers, and their respective policy makers, have put their commodity sensitive currencies under pressure. In Australasia, the kiwi ($0.6592) and Aussie dollar ($0.7370) both linger within striking distance of their six-year lows. In North America, the loonie has fared no better, straddling its own six-year low, while under attack from last week’s Bank of Canada (BoC) rate cut to +0.5%. For now, dealers and investors are willing to trade as if they do not expect any short-term market reprieve for any of these commodity and interest sensitive currencies." Continue reading →

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Bank of Canada Admits Recession, The Solution: More Bubbles

"What made the Canadian recession easy to spot was the Canadian yield curve inverted out to three years following a surprise rate cut by the Bank of Canada on January 21. It remains to be seen if the US follows. The US contracted in the first quarter, but the second quarter rebound was a bit stronger than I expected. I awarded Canada the 'Blue Ribbon' for the first yield curve inversion of any major country following the great financial crisis. I smell an 'Operation Twist' type move by the Canadian central bank to rectify this horrific 'recession-signaling' condition. If so, the sweet spot for banks and hedge funds to front-run the trade appears to be 5Y or 7Y notes. Some banks may already be in on it." Continue reading →

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Fed rate-hike speculation lifts U.S. dollar to three-month high

"The dollar reached its highest in nearly three months against a basket of currencies on Monday on a rise in U.S. bond yields as traders built bets the Federal Reserve would raise interest rates later this year. A plummet in gold prices to five-year lows under $1,100 an ounce also increased the appeal of the greenback, the world's reserve currency. Last week, U.S. Fed Chair Janet Yellen testified before Congress, reiterating U.S. interest rates will go up later this year if the economy continues to expand. St. Louis Fed chief James Bullard told Fox Business network on Monday there was a higher than 50 percent chance the U.S. central bank will raise rates in September." Continue reading →

Continue ReadingFed rate-hike speculation lifts U.S. dollar to three-month high