Saturday, November 22, 2014

Today's links

Today's quote:   "The biggest problem with any central bank trading in the financial markets is it completely destroys the integrity of the market.  Market is an allocation of a finite resource i.e. money.  Money is an infinite resource for central banks and thus destroys the entire function of efficient market valuation. (price distortion)  As we see in the markets today.  Everything is rigged." BIHM

"The most significant thing about these exposés is that they have no repercussions. Detailed and damning evidence is presented showing that the likes of JPMorgan, Goldman, Morgan Stanley, Bank of America, Citigroup, etc.—and their top executives—lied, cheated, broke laws and, in general, profited handsomely from the economic and social disasters produced by their actions. But no bank or top banker is prosecuted, let alone jailed. No measures are taken to rein in the banks. The sporadic exposés assume the character of harmless rituals. The banks are and remain above the law." WSWS

1--Can-Kicking hits 7-year high, oc housing
2,759,000 loans still delinquent

2---Existing home sales decline 5% in West despite low rates, oc housing

Here is another way to visualize the problem:
Purchase Index and US Population

3--Biderman Discusses Major Disconnect Between Stock Market and Economy on CNBC -
excellent short video

4---No retirement for you, Burning Platform

5---Mexican military threatens intervention amidst mass protests over disappeared normalistas, wsws

All the major parties have also backed Peña Nieto’s “Pact for Mexico,” aimed at introducing free market “reforms” and restructuring the economy to benefit the ruling class and foreign capital.
As the Mexican ruling class prepares to suppress social opposition domestically, it can count on the full support of its counterparts in the United States.
In a February 2014 press conference with President Peña Nieto held in Toluca, Mexico, US President Barack Obama touted “our shared commitment to democratic values and human rights” and praised the “enormous sacrifices” made by the Mexican security forces in the fight against drug cartels.

While the US has remained largely silent about the normalistas, US State Department spokesperson Jen Psaki addressed the Ayotzinapa massacre earlier this month, urging “all parties to remain calm throughout the process,” as though peaceful demonstrators and those responsible for the murder of the normalistas stood on equal ground. Noting that the US government is “concerned about the tensions on the ground,” Psaki added the US was “engaged, also, closely with officials there.” This, no doubt, includes top officials in the Mexican military.

Meanwhile, the United States military and intelligence agencies continue to deepen their already close ties with their Mexican counterparts, under the cover of the “war on drugs.” A report yesterday in the Wall Street Journal noted that officials from the Department of Justice were donning the uniforms of the Mexican Marines and taking part in armed raids in Mexican territory. The US has supplied the Mexican state with some $2 billion in arms aid under the pretext of fighting crime.
Representatives of international finance capital have also responded with concern over the demonstrations.

6---Top incomes soared as tax rates fell, David Cay Johnston

Several dozen Americans, disclosure documents show, earn annual incomes of $1 billion or more. But they do not show up in the top 400 reports because Congress does not require them to report their full incomes or pay taxes immediately. For cash to live on these people typically borrow against their assets, paying interest rates of 2 percent or less.
In contrast to these unlimited and open-ended deferrals, Congress requires that taxes be withheld from most workers before they get paid

7--What Record Stock Buybacks Say About Economic Growth, zero hedge

8--Trust in Mass Media Returns to All-Time Low, Gallup

9--Wall Street banks and commodities fraud, wsws

The document focuses on the role of three of the largest banks—Goldman Sachs, Morgan Stanley and JPMorgan Chase—in the physical control of commodities, including energy resources and metals. “The current level of bank involvement with critical raw materials, power generation and the food supply appears to be unprecedented in US history,” the report states.

After the deregulation of the commodities markets in the late 1990s—part of a broader banking deregulation under the Clinton administration—trading in commodity-related assets increased enormously. A vast array of derivatives were developed to allow for speculation on commodities, with the market in these assets increasingly divorced from its initial purpose of enabling producers and buyers to hedge against shifts in commodity prices. Markets such as the Commodity Mercantile Exchange in Chicago are now dominated by speculators, who control as much as 70 percent of all assets.

A great deal of money is made buying and selling financial instruments tied to the prices of such basic necessities as oil and wheat. The growth in the direct control of physical goods by banks has allowed them not only to influence the prices consumers pay, but also to leverage their control of commodities to manipulate the prices of the financial instruments on which they gamble. The consequences can be deadly. Speculation in food prices, for example, is a major factor in price swings that can throw millions of people into poverty and hunger all over the world.
Some figures from the report give a sense of what is involved. At one point, the investment bank Morgan Stanley “controlled over 55 million barrels of oil storage capacity, 100 oil tankers, and 6,000 miles of pipeline.”...

The most significant thing about these exposés is that they have no repercussions. Detailed and damning evidence is presented showing that the likes of JPMorgan, Goldman, Morgan Stanley, Bank of America, Citigroup, etc.—and their top executives—lied, cheated, broke laws and, in general, profited handsomely from the economic and social disasters produced by their actions. But no bank or top banker is prosecuted, let alone jailed. No measures are taken to rein in the banks. The sporadic exposés assume the character of harmless rituals. The banks are and remain above the law....

Just last week, JPMorgan, Citigroup, Bank of America, UBS, Royal Bank of Scotland and HSBC agreed to a collective fine of $4 billion for their role in manipulating foreign exchange rates. This followed similar settlements over the banks’ manipulation of the most important interest rate in the world, the London Interbank Offer Rate (Libor).
Previous deals were reached to settle charges of money-laundering for drug cartels, deceit and fraud in the sale of mortgage-backed securities, concealment of losses from derivatives trading, complicity in the Bernard Madoff Ponzi scheme, fraud in the foreclosure of homes, and other crimes.

After the Permanent Subcommittee’s release of a 640-page document in 2011 on the 2008 financial collapse, the committee’s chairman, Senator Carl Levin, declared that the investigation had found “a financial snake pit rife with greed, conflicts of interests and wrongdoing.” The longest chapter of the report was a detailed, fact-filled review of Goldman Sach’s unloading of toxic sub-prime loans in 2007 and 2008 to counterparties who were not informed that Goldman was betting against the very securities it was hailing as sound investments...

Nevertheless, the Obama administration announced in 2012 that it was ending its investigation of Goldman Sachs for manipulating the sub-prime mortgage market and would file no charges against the bank.
The Subcommittee’s second major report on banking fraud, published in 2013, focused on fraud and deception by JPMorgan Chase over $6.2 billion in losses from speculative trades in financial derivatives (the so-called “London whale” trades). Despite documentary evidence that the bank’s top management, including Chairman and CEO Jamie Dimon, deliberately concealed information from investors about the loss, no one was prosecuted or held accountable

10---High Yield Is Flashing A "Sell Signal", Says Barclays, zero hedge

in 2007, as hints of the financial crisis were unveiled, spreads in the high yield market increased sharply. Meanwhile, the equity market climbed to a new record high. Had equity investors heeded the warning being sent from high yield, significant losses may have been avoided... and currently high yield sell signals suggest equity investors should position defensively!
Click image for massive legible version

Why should 'equity' investors care? The last few years' gains in stocks have been thanks massively to record amounts of buybacks (juicing EPS and also providing a non-economic bid to the market no matter what happens). This financial engineering - for even the worst of the worst credit -  has been enabled by massive inflows into high-yield and leveraged loan funds, lowering funding costs and allowing CFOs to destroy/releverage their firms all in the goal of raising the share price.
Simply put - equity prices cannot rally for long without the support of high-yield credit markets - never have, never will

11---Mexico’s disappeared students, wsws

The horrific episode has exposed how, under the cover of a so-called “war on drugs,” state institutions and security forces have been taken over by and integrated with the drug cartels. The process is described by Mexicans with terms like narcopolitica and narcoestado, in which all of the bourgeois parties, from the right to the so-called "left," are implicated.

The massacre has also underscored the rising inequality and savage violence that have gone hand in hand with Mexico’s free market “reforms.” This process has steadily deepened over the past three decades, culminating in the “Pact for Mexico” introduced by the current PRI (Institutional Revolutionary Party) president, Enrique Peña Nieto, with the backing of all the other major parties...

The normalistas, Mexico’s idealistic future teachers, were among the most militant opponents of this kind of capitalist “reform.” It is hardly a coincidence that they were targeted for unspeakable violence.
The massacre in Iguala is not an isolated incident. Since the so-called drug war was launched in 2006 under Peña Nieto’s predecessor, President Felipe Calderón, an estimated 130,000 Mexicans have lost their lives, while, according to the government’s own figures, 22,322 “disappeared” remain missing.
Just last June, in the town Tlatlaya, Mexican troops summarily executed 21 unarmed civilians, including a 15-year-old girl, a massacre that the government unsuccessfully attempted to cover up.

These methods are clearly not just a matter of a war on drugs, but grow inevitably out of a society characterized by unsustainable levels of inequality. Mexico is the most unequal of the 34 member countries of the Organization for Economic Cooperation and Development (OECD), with the richest 10 percent of the population having an average income almost 30 times as high as the bottom 10 percent. While Mexico is home to the world’s second richest man, Carlos Slim, and at least 15 other billionaires, approximately half of its population lives in poverty. The country’s minimum wage has not been increased since 1976, losing 77 percent of its purchasing power in the meantime

Notably silent on the Iguala massacre is the Obama administration in Washington. US imperialism has major interests in Mexico, which is the United States’ third-largest trading partner. Mexico provides US corporations with a huge army of cheap labor employed in the maquiladora assembly plants, auto production and other industries directed to the US market. US finance and oil corporations are eagerly awaiting the privatization of the Mexican oil industry and the profit opportunities this will open up.
Washington is also deeply implicated in the bloody repression in Mexico, supplying some $2 billion in arms aid to the country under the so-called Merida Initiative, while training security forces and sending US “advisors” across the border. It is entirely possible that the cops involved in the Iguala massacre were trained and armed by the US, and by no means excluded that the aid found its way into the hands of the United Warriors gang as well.
In the weeks since the massacre, the only official statements from Washington have been to warn American tourists to stay away from protests over the disappeared normalistas. This silence is a clear expression of direct complicity in the violent suppression of the struggles of the Mexican working class.

12---Nebojsa Malic:  I think the objective was to create the conflict, to create the chaos, RT

Personally I think the objective was to create the conflict, to create the chaos, to create disorder, suffering and misery, so that the US government and the EU could bow in as liberators or knights in shining arms rescuing people, except there hasn’t been any rescue as they are neither capable of it, nor do they actually intend to perform it. If I was in charge of US foreign policy, I would chalk it up as a massive failure, if the objectives were, as officially stated, to create order and stability. But I’m not in charge and the objectives are not what they were officially stated. ....

so long as Kiev believes that it has unconditional support of the West to do whatever it wants, including what it rightly classified as war crimes, they will continue being aggressive and belligerent, refusing any sort of compromise or dialogue. They believe their rights are absolute, they believe they can do whatever they want and they will continue behaving accordingly. This is not a prescription for peace; this is a prescription for further conflict.

13---US, Canada & Ukraine vote against Russia’s anti-Nazism resolution at UN, RT

UN General Assembly’s Third Committee passed a Russia-proposed resolution condemning attempts to glorify Nazism ideology and denial of German Nazi war crimes. The US, Canada and Ukraine were the only countries to vote against it...

“The fact that the US, Canada and Ukraine voted against, while delegations from EU member states abstained in the vote on this draft resolution, which was supported by an overwhelming majority of the UN member states, is extremely regrettable,” the Russian Foreign Ministry said in a statement.
“Ukraine’s position is particularly dispiriting and alarming. One can hardly understand how a country, the people of which suffered their full share of the horrors of Nazism and contributed significantly to our common victory against it, can vote against a resolution condemning its glorification,” the ministry said

14---Lavrov: "We're not anti-American", RT

“The EU is our largest partner," Lavrov said. "Nobody is going to shoot himself in the foot and reject cooperation with Europe, but everyone understands that it won’t be business as usual anymore.
“But we don’t need the kind of business we had. [That] was like ‘Russia must do this and must do that,' and we want to cooperate as equals,” he added.

He added that while some take Russia’s opposition to America’s global influence as anti-Americanism, this is not the case.
“It’s not about anti-Americanism or forming some sort of anti-American coalition. It’s about the natural desire of an increasing number of nations to ensure their vital interests and doing it in a way they see right, not the way they are being told by a foreign party,” he said.

15--Crackdown? RT

Russian President Vladimir Putin has said that forces willing to reshape the world often used extremism as a tool in so-called “color revolutions” and urged law enforcement to use international experience to fight such tendencies in Russia.
In the modern world extremism is used as a geopolitical tool for redistribution of spheres of interest. We can see the tragic consequences of the wave of the so-called color revolutions, the shock experienced by people in the countries that had went through the irresponsible experiments of hidden, or sometimes brute and direct interference with their lives,” Putin told the Security Council on Thursday.
This is a lesson and a warning for us,” Putin said. “We will do everything to never let this take place in Russia.”

16--Russia and Saudi Arabia against ‘politicized’ oil prices – Lavrov, RT

Venezuelan Foreign Minister Rafael Ramirez says it is pretty clear there are attempts to damage Russia, Iran, and other oil producing countries by manipulating oil prices.
“It is a particular geopolitical position of some powerful political players in the world. But the common interest of all oil producing countries is to have a fair price. We believe its $100 per barrel,” Ramirez said in Caracas Friday.

Tumbling oil prices have hit the Russian currency hard; in November the ruble lost nearly 45 percent of its value before recovering slightly. On Friday at 15:30MSK the ruble improved to 45.52 against the dollar, and 56.59 against the euro.
On November 7, the ruble hit its record low of 60 rubles to the euro, and grazed just above 48 against the dollar. Soon after the Central Bank announced it was abolishing automatic currency interventions, to protect the ruble from heavy speculation

17---China Backs Russia on Ukraine, the diplomat

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