Originally posted http://www.tothetick.com/hyperinflation-10-worst-cases

I have a neat little app on my smartphone that I like to look at when I’m feeling bored. It won’t change anything in my life, but it makes me think as I see the numbers clocking up, and then suddenly stopping for a few seconds. It’s the app that tells me the how much the National Debt of each country stands at in real-time. As I sit down at my computer screen the USA National Debt amounts to $17 041 241 xxx xxx. Forgive the x’s…they’re not kisses…I tried to get the last six digits, but, there’s no point, they’re moving too fast! Speedie Gonzalez has got into that app! It works out to $54 087 per person. That’s the same value as 3 408 248 816 XXX Big Mac Meals.

Inflation is hot property today, hyperinflation is even hotter! We think we are modern, contemporary, smart and ready to deal with anything. We’ve got that seen-it-all-before, been-there-done-it attitude. But, we are not a patch on what some countries have been through in the worst cases of hyperinflation in history. Here’s the top 10 list of worst cases in history. We’ll start with the worst first…let’s think positive!

1. Hungary 1946

Inflation at its peak reached a staggering figure of 13.6 quadrillion % per month! That’s 13, 600, 000, 000, 000, 000%. The largest denomination bill was a 100 Quintillion note. Prices ended up doubling every 15 hours at the time.

2. Zimbabwe 2008

Prices doubled here every 24.7 hours in November 2008 and inflation reached levels of 79 billion-odd %. They eventually stopped using the official currency and switched to the South African Rand or the $US. A loaf of bread ended up costing $35 million. This is the most recent case. It was Mugabe’s land-redistribution program that caused this.

3. Yugoslavia 1994

In just the one month of January 1994 inflation rose by 313 million %. Prices doubled every 34 hours (which is nothing compared to Hungary). The currency ended up getting revalued 5 times in all between 1993 and 1995, all to no avail. The cause? A recession triggered by overseas borrowing and an on-going political struggle in the 1980s and the following decade.

4. Germany 1923

Adolf Hitler rose to power as a consequence of hyperinflationary pressure (at least one of the reasons). Prices doubled every 3.7 days and inflation stood at 29, 500%. Germany was crippled with the reparation payments after the Treaty of Versailles and the end of World War I.

5. Greece 1944

Prices started rising by 13, 800% in October 1944 and they doubled every 4.3 days. The trouble was the debt incurred by World War II.

6. Poland 1921

Prices rose in 1921 by 251 times in comparison with those of 1914. They doubled every 19.5 days. The Zloty was introduced as the new currency in 1924 in an attempt to start afresh. Inflation stood at 988, 233% in 1924.

7. Mexico 1982

Mexico had a rate of inflation of 10, 000% in 1982 (due mainly to too much social expenditure).

8. Brazil 1994

Inflation was 2, 075.8% at its worst in 1994. The Real was adopted in 1994 and it managed to calm inflation down.

9. Argentina 1981

The highest denomination bill was the one million pesos note. The Peso was revalued three times.

10. Taiwan 1949

This was a knock-on effect from China and the Chinese Civil War. The New Taiwan Dollar was issued in June 1949. The monthly rate of inflation stood at 399%

Inflation can be creeping (mild or moderate inflation) or galloping. We can talk of Hyperinflation and stagflation (inflation and recession). Deflation is not better. We have so many names for it.

Hyperinflation means prices doubling in such a short space of time that we can’t keep up with it all. Hyperinflation comes about at times of trouble, war, conflict, upheaval, change on unprecedented levels. It comes about because we still haven’t learnt how to control it. History repeats itself, we hear people say. Thankfully, it doesn’t repeat itself too often. Fingers crossed.

But, in the time it took for me to write this, the US National Debt is now worth $17 041 308 85xx xxx, that means 3 408 261 915 xxx Big Mac Meals!

The post Hyperinflation – 10 Worst Cases appeared first on MORTGAGE FRAUD EXAMINERS.

It seems that the recent rise in interest rates, instead of the typical (pre-depression) behavioral tendency to make people nervous and rush to lock in low rates, has once again stalled any hope of an organic housing recovery occurring. While the reams of hard data show that the housing recovery remains a fast-money investment-driven enigma (here, here, and here) – as opposed to real confidence-driven house-buying; we are still told day after day that housing is the backbone of the economy (despite construction jobs languishing and affordability plunging again). The fact of the matter is that the last 2 weeks have seen mortgage applications plunge at their fastest rate for this time of year (a typically busy time) since the financial crisis began. But that doesn’t matter because housing must be recovering because the homebuilder ETF is up 2% today…

January and February we saw the rate rises (blue line dropping) spark a renewed (more behaviorally normal) interest in locking in low rates and buying… but since then the relationshio has invferted once again as the Bernanke put on bonds has now found its way into the real world. The last 2 weeks have seen rates rise and mortgage apps plunge…

at the fastest rate for this time of year since the crisis began…

What could possibly go wrong?

Charts: Bloomberg

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Wolf Richter   www.testosteronepit.com   www.amazon.com/author/wolfrichter

The issue of inflation is complex everywhere. Official rates are disputed. People can’t reconcile them with what they see at the store. There are different formulas and data sets, resulting in different rates, and everyone picks and chooses what suits their needs. But nowhere is the issue as “complex,” infested with lies, and shrouded in obscurity as in Argentina.

The debacle took on hilarious overtones when a Greek reporter, in her soft, harmless-looking manner, began to crucify Economy Minister Hernan Lorenzino during an interview at his office: “I have a very simple question for you, which seems very complicated these days: how much is Argentine inflation at this moment?” His response was an epic journey into obfuscation that got him entangled in such verbal spaghetti that the video, when it was released in April, went viral instantly. “We never speak about inflation, not even with the Argentine media,” an unseen aide explained after the minister had skedaddled.

But his jab at official inflation was on target. The interview took place late last year. By April, inflation, as reported by the Instituto Nacional de Estadista, was 10.5%, down from 10.6% in March, and from 11.1% in January, its recent peak, nicely heading once again in the right direction, after having been below 10% for much of 2012. But it’s a joke – though not nearly as hilarious as Lorenzino’s verbal spaghetti.

In early 2007, the staff at the statistical agency were booted out and replaced with political appointees who would toe the line on inflation and other inconvenient statistics. Since then, official inflation has been decided by edict.

Private economists, brushing off these figures with a nervous smile, kick around 25% as the current annual inflation rate. Mid-May the government nodded. With elections coming up in October, President Cristina Fernández de Kirchner has to hand some goodies to her base to buy their votes. So during the impeccably timed wage negotiations, she personally met with leaders of six unions representing 2 million workers, and struck the same kind of deal she’d made with the Railway and Bus Drivers’ unions, a deal that might get close to preserving purchasing power: wages would be increased by 24%! The closest to an official and somewhat realistic CPI that Argentina has.

To pour some oil on the fire, Torcuato Di Tella University (UTDT) – a non-profit private university in Buenos Aires – publishes the Inflation Expectation Survey. It measures what the public expects inflation to be over the next 12 months. For much of 2006, when the surveys began, median inflation expectation was 10%. The just-released index for April came in at 30%; and average inflation expectation rose from 34.2% to 34.9%.

UTDT concedes that the public has a tendency to overestimate changes in consumer prices. Nevertheless, it’s another ray of light in an obscure environment where the government has done its darnedest to replace any visibility with lies. Yet ordinary people, managers, and investors alike need to make decisions daily based on their understanding of inflation. And they’re making those decisions – just not the way the government wants them to.

The impact on the peso has been, let’s say, noticeable. In 1999, when I first traipsed around Argentina, the peso was interchangeable with the dollar one-to-one. ATMs would distribute both, depending on the button you pushed. Quite impressive. But Argentina seemed expensive, compared to other Latin American countries. And the economy was bogging down. Something was amiss.

The peso mirage ended in 2001, when people cleared out their bank accounts, converted pesos to dollars, and sent them overseas. To stop this torrent, the government froze all bank accounts; only small amounts of cash could be withdrawn. The people didn’t accept this quietly, which led to the declaration of a state of emergency, and more riots. In January 2002, the government lifted the dollar-peso parity, and set an exchange rate of 1.4 pesos to the dollar. People with money still frozen at the bank had been robbed.

And it never stopped. In early May on the black market, the peso fell through yet another floor: for the first time ever, it took over 10 pesos to buy a dollar. People have been scrambling to convert every peso they didn’t need at the moment into dollar bills. The official exchange rate is 5.25 pesos to the dollar. But it too is a lie, for most people. In one of those ironies that follow reckless deceitful governance, the government is running out of dollars and few people can buy them at the official rate – though the country is awash in dollar bills.

Since I write so much about financial fiascos, debacles, and nightmares, I’ve been asked about ways to protect assets in this environment. Thankfully, I don’t give financial advice. Even if I did, I wouldn’t have all the answers. But I just finished reading an excellent book on precisely that topic, so I decided to review it. Read…. Diplomatic Immunity For Your Assets In Interesting Times!

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And yet another post-mortem opinion, this time from the man who meets every month or so with Goldman’s the NYFed’s Bill Dudley at the Pound and Pence in FiDi: that of Goldman’s Jan Hatzius.

The most notable statement made by Bernanke during the Q&A session was that the FOMC could potentially cut the pace of QE purchases “in the next few meetings,” although this was predicated on a continued improvement in the outlook for the economy and confidence in the sustainability of that improvement. He also stated that the purchase pace will depend on incoming data and that the FOMC could either raise or lower the pace of purchases in the future. Our view continues to be that the December meeting and subsequent press conference is the most likely time that the Committee would announce QE tapering, although September is a possibility if the economy picks up more than we expect in coming months.

 

2. On the strategy for winding down the Fed’s portfolio, Bernanke noted that the Fed could exit without selling securities (in contrast to the June 2011 exit principles which prescribed asset sales), consistent with the recent trend in Fed communication on this topic.

 

3. Bernanke’s prepared remarks were very much in line with recent communications from the Fed leadership. He acknowledged the gradual improvement in the labor market, but stressed that the labor market remains weak and allocated a considerable amount of time to discussing fiscal drag. Bernanke reiterated an argument which he has made in the past, that raising interest rates prematurely could choke off the recovery, ultimately resulting in a longer period of low interest rates.

But… but… Hilsenrath just said attempting to predict the tapering, pardon, the slow down of $80 billion in monthly flow is futile and meaningless!? (incidentally we think it will be September: just after the Bernanke-free Jackson Hole meeting and right around the time the US debt ceiling is hiked again, following much theatrical kicking and screaming from all sides).

Or is this just another “distract with BS” script, while the oligarchy continues to quietly convert paper assets that have never been more expensive into oh so very cheap real ones?

The post Goldman: “Our View Is That Tapering Is Announced At The December FOMC Meeting” appeared first on MORTGAGE FRAUD EXAMINERS.

The last time the WSJ’ Jon Hilsenrath was relevant was two weeks ago (in a flashback to those days before QEternity when infinite QE was not assured and Jon’s input was actually relevant), when following an article of his, and due to his “proximity” with the New York Fed, many assumed that the Tapering suggested by Hilsenrath was being telegraphed by Bernanke to the market. Turns out it was nothing but yet another baffle with bullshit headfake by a central planning regime that is now merely engaged in observing market responses to indirect stimuli: if reduce monthly flow by $20 billion then X (-1%); if cut QE off entirely then Y (-50%?), and so on. Moments ago the same Hilsenrath just released another piece, which effectively refuted everything his previous piece suggested, and in fact made his position as Fed mouthpiece absolutely irrelevant, courtesy of the following disclosure: “this time, when the Fed shuts off bond buying, it won’t be… predictable.” He goes so far as to say that the term “tapering” is no longer even applicable! Funny that, considering on May 11, none other than Hilsenrath said: “Federal Reserve officials have mapped out a strategy for winding down an unprecedented $85 billion-a-month bond-buying program meant to spur the economy.”

The irony here is that Hilsenrath is correct, but for another far simpler reason: the Fed simply can not shut down bond buying, at least not voluntarily, without crashing bond the stock market, and the perception that the economy is doing well (it isn’t), just because the S&P hits new all time highs day after day.

The Fed will of course “shut down” bond buying when like in the summer of 2008 simple inflation is raging in commodities, and when a bank has to be sacrificed to induce a deflationary vortex. However, for now thanks to the epic planning in keeping the Brent vigilantes largely in check (now that the Bond vigilatnes are long dead), and since the market has a few more thousand points higher to go before everyone has no choice but to acknowledge how ridiculous the asset bubble has become, there is, to paraphrase Tim Geithner, “no risk.”

From the WSJ:

When the Fed ended a buying program in 2011, it shut it off all at once. When it shut off another bond buying program in 2009 and 2010, it did it in predetermined, predictable and “tapered” steps. When the Fed raised short-term interest rates from 2003 to 2006, it raised them in gradual and very predictable steps.

 

This time, when the Fed shuts off bond buying, it won’t be abrupt and it won’t be predictable. The term “tapering” — which implies a predictable gradual process — probably doesn’t describe the plan very well any more, and you’re unlikely to hear Fed officials describing it like that. Instead, the Fed will take a step and then see what happens. Officials also want to avoid the market blowup that happened in 1994, when it took one step and the market assumed that meant a succession of additional steps.

 

“A step to reduce the flow of purchases would not be an automatic, mechanistic process to end the program,” Mr. Bernanke said. In other words, if the Fed takes a step to reduce the program and the economy falters, it could sit still for a while or even dial purchases back up.

 

The Fed effectively wants the markets to experience the same uncertainty it experiences about policy and the economy when officials walk into a meeting, and it wants to condition the market to avoid jumping to conclusions about what it will do next. As officials keep saying, it will depend on the economy.

Perhaps the biggest insult here to sentient creatures everywhere, is that people have now become merely lab rats in the greatest behavioral conditioning experiment of all time, not only as regards to buying stocks on both bad and good news, or any utterance out of Bernanke’s mouth, but an experiment designed to force everyone to simply stop thinking logically – the logic being that since every central bank is engaged full bore in reflating everything, than the economy left on its own is simply horrendous – and BTFD.

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The diaspora experience has long been “America’s Story.” As Russell Shorto’s book, The Island at the Center of the World, details, seventeenth-century Manhattan was a microcosm of the much larger American diaspora to follow: Among the island’s then-400 inhabitants, 18 different languages were spoken. Centuries later, this description not only fits New York, but also the U.S. as a whole. Today, almost one quarter of Americans are first- or second-generation diasporans.

My grandparents came from Eastern and Central Europe. Getting here wasn’t easy and neither was life when they first arrived. But America welcomed them. Inspired by the welcome my grandparents had received, on May 14, I felt particularly honored to welcome the 500 participants of the 2013 Global Diaspora Forum hosted by the State Department’s Global Partnership Initiative and USAID. My remarks emphasized the importance of America continuing to give an enthusiastic welcome to people from foreign lands wanting to come here to make a better life for themselves and their families and, in so doing, help make a more prosperous and dynamic America. Diversity, I emphasized, enriches our country and the experience of living here.

Members of diaspora communities also are grassroots ambassadors, often returning to their countries of origin or heritage to speak about America’s values. They bring language and cultural familiarity. They also understand business opportunities in those countries. For such communities, supporting diplomacy and development in those countries is intrinsic and personal, not simply a matter of traditional policy or diplomacy. Supporting higher living standards, economic growth, and political stability there is about helping their friends and families.

Remittances are one basic connection, and provide an important lifeline for millions of households around the globe. According to the Hudson Institute, in 2010, remittances from the U.S. to other countries totaled $95.8 billion. Diaspora communities also provide critical business linkages to global markets for countries that may be struggling to capture the benefits of globalization.

In the United States, immigrant-owned companies generate an estimated $67 billion in business each year. Strikingly, immigrants are 30 percent more likely to form new businesses than U.S.-born citizens. Nowhere is the role of diasporans more prominent than in Silicon Valley — the innovation capital of the world: 52 percent of all start-ups there have been founded by immigrants. These companies generated $52 billion in revenue and employed 450,000 workers in 2005. Immigration, across many decades and generations, has created jobs for millions of people in the U.S.

Diasporans here have also created job opportunities in other lands. In fact, diaspora “Marketplaces” — which encourage diaspora entrepreneurs to invest and start businesses in their countries of heritage — target economic growth through job creation in those countries. It is a major initiative spearheaded by the International diaspora Engagement Alliance (IdEA), a multi-stakeholder platform launched jointly by the State Department and USAID. Under the auspices of IdEA, we have successfully completed three Marketplace competitions targeting African diaspora and Caribbean diasporas. The Latin America IdEA Marketplace was just launched over the weekend and is accepting applications from diasporan entrepreneurs.

IdEA also provides a platform for diaspora-led philanthropy and volunteerism. Last year, IdEA launched two major partnerships to promote giving through an alliance with Global Giving, which has created an online marketplace for development projects in communities around the world. Creating opportunities for mentors in the United States to share their experiences and expertise is another way U.S.-based diasporans can give back.

And last year at the State Department’s Global Diaspora Forum, a new initiative was launched: Networks of Diasporas for Engineers and Scientists, or NODES — a partnership between State Department, the American Association for the Advancement of Science, and the National Academy of Sciences. NODES connects diaspora scientists across boundaries. In the past year, it convened scientists and diaspora groups from over 30 countries.

The State Department has worked especially hard to strengthen the links between American diaspora communities and Middle East countries in transition. There are, for example, nearly 200,000 Egyptians living in the U.S. The potential of these diaspora communities is vast. It goes far beyond serving as a source for remittance flows. They offer critical sources of investment capital and business skills that Middle East countries in transition need in order to place themselves on a sustainable path to development. We also have a multitude of excellent scientific exchanges between the Iranian diaspora here and colleagues in Iran. Deepening and expanding diaspora networks can do much to make America a more responsive and effective world leader. We can develop stronger bonds with other nations.

When I walk down the streets in my other home city — New York City — I am always proud to see so many people from different countries, cultures, and ethnicities living and working together. It also makes me proud when I see the contributions that waves of immigrants have made in the U.S.

For America to remain the world’s beacon, as well as its most dynamic economy and society, we need to keep our doors open and be a land of opportunity for all. We need to invite, welcome, and honor those from around the world who want to come here for a new life. They enrich America, are deeply committed to its success, and make us a more innovative and energetic country.

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You can really capture the emerging power being wielded by women using their human capital networks in the world of business and power in Pamela Ryckman’s just released book: Stiletto Network: Inside the Women’s Power Circles That Are Changing the Face of Business. It is coming “on the heels” (pun intended) of two other powerful books that came out just this spring, Lean In by Sheryl Sandberg and The Athena Doctrine by John Gerzema and Michael D’Antonio. All of them are capturing the changing world of women, business and power from different perspectives. But if you want to know how this is being done, Stiletto Network is the one that can inform you.

Pamela started out on the road to her research to fill a personal need. She has written for The New York Times, The Financial Times, Fortune, CNNMoney, The Observer and many more. But when she took a break to raise her children, she found upon her return that she had lost her footing.

Then she attended a women’s conference in California and an amazing pattern started to unfold. She met woman after woman who introduced her to others and Pamela started to realize the landscape was shifting. Not only were women not balking at helping each other achieve their goals, they were promoting their friends, business associates and colleagues. The women were active, confident, collaborative and intuitively knew who Pamela needed to know next. The electronic rolodexes came out and one connection after another was made. This is the power of women using their human capital network to effect change. This is the heart of the Stiletto Network, friendly, open, selfless and stylish women opened up with their stories.

What has resulted is a beautiful mosaic of how women are changing the rules of business to suit themselves and their life styles. At last, we are learning to earn power and use power for ourselves and others.

The power of the human capital network emerges in the story of Shauna Mei, who started her career at Goldman Sachs and left after only a couple years to join a Goldman client and start a research firm in luxury goods. That led to her becoming the COO for a client company and having her AHA moment, which is when she left that company to start her own online luxury lifestyle company, AHAlife. That is when she returned to her Goldman contact Janet Hanson, Founder of 85 Broads, the global professional women’s network. She discussed her plans for AHAlife and her need for capital. One discussion led to another until Shauna wound up raising her angel capital primarily from the group of 85 Broads members. The human capital network effect was definitely in place.

Stories like Shauna’s fill the book. Uber connectors, Kim Moses, Heidi Roizen, Maggie Wilderotter, Heidi Messer, Ann Winblad, Gerry Leybourne, Alexa Von Tobel and dozens and dozens more provide the blue print for how these Stiletto Networks are formed, operate and provide real value to their members.

Time after time, you learn that the characteristics women hold and cherish are becoming more the norm for business today. Attributes such as collaboration diversity, judgment, intuition, partnership, listening, inclusiveness, flexibility, selflessness and loyalty mean a lot.

Interestingly, these are the attributes that are documented in the extensive global research done by John Gerzema and Michael D’Antonio in The Athena Doctrine. They tested the gender associations of 125 attributes among 64,000 men and women and came up with some pretty conclusive results. The business world is decisively moving towards leadership in the attributes most commonly described as feminine.

One might expect that the attributes more characteristic of men would be going out of fashion, but neither The Athena Doctrine nor Stiletto Network take that position. Male attributes of decisiveness, authority, power, ambition, aggressiveness and the like have their place too. It’s the combination of both gender attributes that will be required for leadership as we move forward.

What author Ryckman is attempting to do is to give women a road map of how they can form their own “Stiletto Networks” and help others as well as themselves succeed in business and indeed in life. That roadmap relies in part on being able to harness the power of our human capital networks.

I find the stories told in her book reflect what I see changing every day in the world of entrepreneurs, where I spend a good portion of my time working with women entrepreneurs who are participating in the Springboard Enterprises network to raise capital. What they learn on their way to raising capital is that it is that the human capital, the human network, is what leads you to success. That’s the story of the Stiletto Network, told in the rich stories of the women brave enough to tell them.

The post Kay Koplovitz: Stiletto Network: The Emerging Power of Women’s Human Capital appeared first on MORTGAGE FRAUD EXAMINERS.

Sparked by the police shooting of a machete-wielding 69 year-old man, traditionally calm-and-collected Sweden is suffering amid its third night of riots. It seems underlying tensions from high youth unemployment and rising nationalism against the nation’s large immigrant population have been catalyzed by this seemingly unrelated event. As the Daily Mail notes, immigrant ghettos have been created where unemployment is high and there are few opportunities for residents with left-leaning commenters adding that the riots represented a ‘gigantic failure’ of government policies, which had underpinned the rise of ghettos in the suburbs – “We have failed to give many of the people in the suburbs a hope for the future.” An anti-immigrant party, the Sweden Democrats, has risen to third in polls ahead of a general election due next year, reflecting unease about immigrants among many voters. What is driving this tension? After decades of practicing the ‘Swedish model’ of generous welfare benefits, the country has been reducing the role of the state since the 1990s, spurring the fastest growth in inequality of any advanced OECD economy. Given Sweden’s 24.7% youth unemployment, we wonder just what will happen to the 60% of unemployed youths in Greece and Spain when school lets out this summer?

Brief clip below provides more color…

This can’t end well!

Via The Daily Mail:

The disorder has intensified despite a call for calm from Prime Minister Fredrik Reinfeldt.

 

Last night, rioters attacked the police station in the Jakosberg area in the northwest of the city and set fire to 30 cars.

 

…

 

Groups of youths also smashed shop windows and burned down a 19th Century cultural centre.

 

Gangs of up to 60 set fire to a school and a nursery and hurled rocks at police and firefighters.

 

…

 

While average living standards are still among the highest in Europe, governments have failed to substantially reduce long-term youth unemployment and poverty, which have affected immigrant communities worst.

 

Some 15 per cent of the population is foreign-born, the highest proportion in the Nordic region.

 

…

 

Among 44 industrialized countries, Sweden ranked fourth in the absolute number of asylum seekers, and second relative to its population, according to U.N. figures.

 

…

Via Al Jazeera:

Around 200 people hurled rocks at police and set cars ablaze in a Stockholm suburb…

 

…

 

Around 80 percent of the roughly 11,000 residents of the suburbs are first- or second-generation immigrants.

 

…

 

Many local residents see the shooting as an example of police brutality, and the violence has stirred debate in Sweden.

 

…

 

Horniak claimed he witnessed police firing warning shots in the air and calling a woman a “monkey.”

 

“I got upset yesterday because I saw police attack innocent people, they beat a woman with a baton,” he said.

 

Horniak’s claims of racist remarks were backed up by the organisation Megafonen, which represents citizens in Stockholm’s suburbs.

 

…

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It has become more obvious than ever that the way we as a nation of these United States of America manage our economic system is skewed heavily in favor of the very wealthy, often referred to, since the onset of the Occupy Movement, as “the 1 percent.” While I don’t think that’s fully accurate, but probably closer to 5 percent, the imbalance is staggering and out of sorts with any sense of workable economic equity or balance.

The control of the few, not only over the economy but over government, in this country, has probably never been this extreme. A case could be made that the industrialists and robber barons of old exerted massive influence over government historically, but it would probably be too much to say “control.”

Now, however, a different case I believe could be made. With the lobbyists in Washington, D.C. significantly out-populating all of Congress, with the money with which they are awash, and then with organizations such as ALEC (American Legislative Exchange Council) which is composed of a good many of the Fortune 500 companies as members, composes and submits legislation for our legislators at all levels of government, from City to State to Federal.

After the debacle in September 2008, sometimes referred to as “a financial 9/11″, it became obvious even to mainstream America how the banking system virtually controlled several branches of government, from the Treasury Department, the Oval Office and the Justice Department: to this day, even after so much evidence has surfaced, even after the documentary film Inside Job won the Academy Award for “Best Documentary” of the year, after 60 Minutes and Steve Croft did several segments exposing the fraud in the banking and mortgage industries repeatedly, not one Wall Street prosecution from that crash occurred. Robo-signing of foreclosure documents, evictions occurring because people got ‘caught’ in the banking foreclosure net, has led to millions of people removed from their homes since 2008.

In brief, the banking industry was found to have been breaking the law so rampantly that to de-construct it apparently proved to be too massive a job for the Justice Department which seemingly decided to give them a “Pass” with the motto: “… too big to fail and too big to prosecute.” Remember that over 17 million children go to bed hungry in our wealthy nation, a number vastly increased from the 9/08 banking debacle.

It shouldn’t be a surprise to anyone that “casino capitalism” is one of the very worst and lowest expressions of the human spirit. In human civilization, we have achieved some of the most extraordinary acts of love, art and heroism for millennia.

Let’s get to the bottom of this: what parent would feel proud to know that the son or daughter they raised with love and a good sense of values would be pleased to learn that their child grew up valuing money over human life, or digits on a spreadsheet more than a family having a roof over their head? Casino capitalism, in effect, a collective gambling addiction, exemplifies nothing of anything that anyone could really feel proud of.

On the other hand, capitalism practiced with an attitude of compassion, can be a powerful system of empowerment and establishing a society based on higher human values such as peace, patience, respect, empathy and cooperation. It could lead to establishing a harmony between inner and outer eco-systems and our economy could reflect this congruence.

Wise and prudent, renewable use of resources leading to sustainability could be the theme instead of endless exploitation of resources which more often than not, leads to the uprooting of indigenous people who often live in areas where these resources are found, from Africa and the Amazon to America. A refreshed relationship based on respect with our own “Spaceship Earth” as Buckminster Fuller called it, could be the revival that keeps our species — and others — alive and sustained.

How would a businessperson’s life be substantially changed if, instead of making a profit of 200 percent, he or she made half or a quarter of that? Instead of “making a killing” that is killing us, be it on the stock market, in commodities or in real estate, we deliberately and consciously relaxed “maximum profit” to “medium” or “moderate” profit, I suggest that the biggest difference shows up, not in lifestyle choices, not in not being able to pay the mortgage, but in giving space for others to do same.

It would result primarily in different numbers in the black on a spreadsheet on some accountant’s desk. It would result in a quarterly dividend share, instead of being $2.50 per share but $1.50 per share, but a lot more people able to breathe at the end of the month. We’d also be reducing our carbon footprint and our impact on global warming and climate change.

In place of a landlord collecting the top of what they believe the market will bear, they charged 25-50 percent less than that but are still able to do reasonably well, I’m suggesting that if we all did this in our respective roles in society, we would ease the stress and tension across the board and everyone’s lives could be more fluid. Underlying principle: more is not better and not infrequently; it’s burdensome.

Along with the example of the landlord, taxes would have to be commensurately lowered, which would be simpler than imagined because new technology in the green and energy-efficiency-renewable energy sector reduces the cost of delivering electricity, heat, A/C and clean water to the resident.

In short, we’re talking about greening our economy, our lifestyle, lightening our collective commitment to money-as-God and embracing a larger, higher value system which can govern all aspects of our lives.

Buildings are being built more energy-efficient as well so the overall operating cost of government, if we’re willing to give up the addictions to waste, war, self-destructive patterns in exchange for an overall wellness model across the board, we could move from the Wild West to a life of greater simplicity (as exemplified in the age-old Voluntary Simplicity Movement re-stoked and formulated by Duane Elgin through his book published in 1981), happiness (as measured in Bhutan on a national scale) and well-being, something we should be measuring in the West with our vast abundance of wealth and resources.

Being materially wealthy but spiritually impoverished does not lead to a happy or fulfilling life as we have seen over and over, but changing the wealth-building paradigm from “the extreme to the middle”, while not an answer in itself — it must be coupled with a very different connection to the nature of life itself — could offer a healthy start. Stress, as we know, is a big killer: What about helping a lot more people reduce it and relax?

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Perhaps the best answer to the question posed to Bernanke moments ago whether US unemployment is structural or cyclical comes courtesy of Microsoft, which announced earlier that it was set to hire “several thousand” workers. Sadly, the catch is that the hires will be in China.

From BusinessWeek:

Microsoft the largest software maker, will hire several thousand workers in China to support new cloud computing services and smartphones using its Windows operating system, Chief Executive Officer Steve Ballmer said.

 

The workforce (MSFT) expansion, from a current base of 4,000 staff, will take place during the next year, Ballmer said today at a press conference in Shanghai that was streamed live on the Internet. He didn’t provide a specific number for new workers.

 

China has become the fastest growing market (MSFT) for the company’s smartphone operating system, Ballmer said. The Redmond, Washington-based company will start a public preview of its Windows Azure service in the country next month, making Microsoft the first multinational to offer public cloud computing in the nation.

 

“I visited China last about one year ago in May and it is remarkable to me how much has changed,” Ballmer, 57, said. “At Microsoft this is an incredibly exciting time.”

For future Chinese employees of Microsoft it is a quite exciting time too. For those Americans who will not be hired by Microsoft as a result of this decision, it is not nearly as exciting. But at least those unhired workers can take solace that their E*trade daytrading P&L is green for the day.

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In February, I wrote What Drives the Price of Gold and Silver?

If there is a credible rumor that the Fed is planning to further extend its “Quantitative Easing”, how would you expect the monetary metals to react? Typically, the gold price would rise and the silver price would rise even more. The question is why.

Traders read the headlines and they know how the price “should” react to such news, and they begin buying. For a while, the prophecy fulfills itself. But then what happens next? It may take an hour or a month, but sooner or later some of the new buyers begin to sell.

Most people accept the Quantity Theory of Money. In brief, if the money supply rises then prices will rise (though often there is a caveat that not all prices will rise uniformly).

Today, Fed Chairman Bernanke said that the ongoing increases in the quantity of dollars will continue. The silver market reacted as it “should”: more money = higher silver prices. Look at this annotated chart.

In about 15 minutes, the silver price rose 2.2%. I call this the “Quantity Theory of Money Gap”. In about 15 minutes more, the price fell back to where it had been.

Within 30 minutes, all those who had bought based on this idea were, if not proven wrong, at least given losses by the market.

The price of the dollar as measured in gold or silver is collapsing and the rate of collapse will accelerate. This will be reflected in much higher prices of gold and silver when quoted in dollars. But it is not due to the quantity of money, and certainly not due to talk of the quantity of money.

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Today, the National Association of Realtors (NAR) released their Existing Home Sales Report for April showing an increase in sales with total home sales rising 0.6% since March and climbing 9.7% above the level seen in April 2012.

Single family home sales also improved climbing 1.2% from March rising 9.0% above the level seen in April 2012 while the median selling price increased a notable 11% above the level seen a year earlier.

Inventory of single family homes increased from March to 1.92 million units but still remained 11.9% below the level seen in April 2012 which, along with the sales pace, resulted in a monthly supply of 5.3 months.

The following charts (click for full-screen dynamic version) shows national existing single family home sales, median home prices, inventory and months of supply since 2005.

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Today’s AM fix was USD 1,385.25, EUR 1,071.43 and GBP 917.75 per ounce.  
Yesterday’s AM fix was USD 1,378.75, EUR 1,070.21 and GBP 908.39 per ounce. 

Gold fell $6.50 or 0.47% yesterday to $1,377.80/oz and silver finished down 0.56%. Click here to download our free guide to gold.

The fundamentals of the platinum and palladium markets are beginning to receive market attention and not before time. The positive supply demand dynamics are leading to increased investment demand as seen in the ETF data and Chinese demand rising again due to both industrial and jewellery demand.


Source: Bloomberg, China Customs General Administration – (UBS)

Net platinum imports into China jumped to 8.9 metric tonnes last month, marking the strongest inflow in about a year according to UBS. 

This reflected a 14% increase from March, and year-on-year growth of 29%. The trade data coincides with strong platinum volumes on the Shanghai Gold Exchange (SGE), which coincidentally also totalled 8.9 tonnes for the whole month of April, the strongest turnover since September 2011. The fall in prices towards $1,400/oz prompted a pick-up in physical buying. 

Jewellery demand was cited by UBS as the main source of the physical buying.  

While gold is still the more popular precious metal in China, platinum jewellery has also enjoyed an improvement in demand. Johnson Matthey estimates a 14% increase in net global platinum jewellery offtake last year, with China accounting for a large portion of the increase. The expansion in the number of retail outlets across second and third tier cities in China has contributed to the growth in platinum jewellery demand. 

Although platinum’s discount to gold in 2012 did not necessarily translate into relatively cheaper platinum jewellery at a retail level, better margins would have encouraged sellers to exert more effort in promoting platinum. The surge in China’s platinum imports and increased SGE activity in April is a reflection of the physical demand response to the price drop, similar to that seen in gold.

Avg Known ETF Platinum Holdings – (Bloomberg)

Investment demand is likely to have received a boost from the announcement in March that Russia and South Africa, which together control about 80% of the world’s reserves of platinum group metals, plan to create a trading bloc similar to OPEC to control the flow of exports of the precious metals.

Source: Various ETFs – (UBS)

The increase in the holdings in of the platinum and palladium ETFs has been significant but the holdings remain very small compared to the far more successful gold and silver ETFs.

Platinum Group Metals (PGM) are seeing broad base global demand. Besides investment demand, they are widely used to make catalytic converters that filter car exhausts, in jewellery where increasing demand has been seen in Asia, and in many military applications. 

The majority of the world’s platinum reserves are found in just one country, South Africa which is home to 75% of global platinum production and 95% of known reserves. Neighboring Zimbabwe also sits on large reserves. 

Resource nationalism as has been seen in Zimbabwe, Russia and Latin American countries in recent years is a real risk. This seems likely to lead to serious supply issues in the coming years which mean that the fundamentals of the PGM remain very attractive. 

Both are trading well below their record nominal highs and way below their inflation adjusted highs.

Platinum in USD/oz, Monthly, 1983-2013 – (Bloomberg)

We believe that due to the very favourable supply demand dynamics in the platinum market, it should rise well above the inflation adjusted record high from 1980 at $2,700/oz in the coming years from $1,468/oz today.

Palladium could see similar returns and should rise above both its nominal high and inflation adjusted high in the coming years.

The Platinum Group Metals are more volatile than gold and therefore merit a lesser allocation of one’s wealth but platinum and palladium coins and bars in allocated accounts remain a prudent diversification for anyone wishing to preserve and grow wealth in the coming years.

Palladium in USD/oz, Monthly, 1983-2013 – (Bloomberg)

Many studies have shown that, precious metals are one of the few asset classes with a positive correlation coefficient with inflation. According to Ibbotson Associates, precious metals are the most positively correlated asset class to inflation. From a strategic point of view, Ibbotson determined that portfolios with a 7-15% allocation to gold, silver, platinum and palladium bullion could reduce risks and improve returns. 

The bullish supply demand fundamentals of the platinum and palladium markets is something we have long highlighted. Both metals remain attractive and important diversifications which can protect investors and store of wealth buyers from inflation and currency devaluation. 

They also have the potential for sizeable capital gains given the unstable outlook for supply from primary producer countries, Russia and especially South Africa.

Real diversification means including allocations to gold, silver, platinum and palladium bullion in your portfolio.

NEWS
Gold Is Still Relevant as Insurance Policy - Bloomberg

Gold gains on U.S. stimulus hopes; Bernanke eyed - Reuters

Platinum Buying Quickens as Gold Allure Diminishes - Bloomberg

Opening of Chinese-Aussie gold mine shows solid partnership between Canberra, Beijing - Xinhaunet

COMMENTARY 
Platinum and Palladium: A Fundamental Shift – Casey Research

Video: Platinum and Palladium Shine as Gold Tumbles - Bloomberg

Jim Willie: Coming to a Climax with Gold at $7,000/oz – You Tube

Texas Pension Fund: “Gold is a hedge, and it still fills that role” – Wall Street Journal

Butler: Blockbuster in Gold - SilverSeek

For breaking news and commentary on financial markets and gold, follow us onTwitter.

For our FREE guide to Investing in Gold

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Relationships are complicated and messy. It’s a fact. That couple shuffling through the park holding hands after 50 years of marriage either are just having a good day or they’ve learned to push all the complicated stuff away and focus on what the true value of their relationship is.

It’s no different on Wall Street. Stereotypically depicted as super-ego, predominantly type-A males and “hard-wired” species, it’s tough to let go of all the complicated stuff that’s in their DNA and just hold their hands – and to teach them to do the same.

This, to me, is the crux of the problem the U.S. Securities and Exchange Commission(SEC), FINRA and other regulatory agencies are grappling with. They’re facing the daunting task of trying to regulate some of the finest minds in the world. They are still in that phase of the relationship where they think they can change the behavior and turn somebody into something they’re not – make them compliant using outdated standards.

Compliance is among the most revered – and feared – words, missions and initiatives in the Wall Street community. It is one of the most respected, and sometimes disrespected, parts of the investing world. It is also one of the most influential communities of Wall Street, and as such it is a major stakeholder in the future in the current relationship spat over digital media versus compliance rules.
Can compliance become Facebook friends with marketing? Why can’t we all get along?

I was in Toronto recently speaking at the CFA Institute’s Toronto Wealth Management Conference. The CFA charterholder is widely considered the “gold standard” in the financial planning world. At this conference, I not only found the speakers excellent but also the level of engagement among attendees off the charts. There were probably 65 in attendance. It was during one of the sessions that I heard the sound bite that summed up the entire “relationship” problem.

Margaret Franklin, former chairman of the Board for the Global CFA Institute and co-coordinator of the event, made a statement that I immediately noted. Marg is a widely known and respected member of the global wealth management community, President of Toronto-based Marret Private Wealth. She summed it up by stating that we (meaning advisors and compliance folks) needed to return back to the elements over which we are united. Said Marg: “…we must not lose sight of the regulatory spirit which simply puts the client’s interests clearly in the forefront.”

And there’s the problem. Financial services regulatory bodies continue to treat the investment and advisory world as if they’re in the “change” part of the relationship. Maybe they’ve got them to put down the toilet seat and clear away the dishes, but they’re still nagging about candle-lit dinners, walks in the park and shopping sprees at Saks.

Except it’s not 1955 anymore, or 1933. It’s 2013. The SEC and others keep tinkering and modify laws that are irrelevant and old. They keep trying to modify the relationship.
The modes and methods of communications have changed so dramatically that it’s time for new laws to be re-imagined and re-written, focusing not on what needs to be changed but on what works – and how and why it works in the technology-driven world we live in today. It still means protecting the client’s interests. But it also means waking up to the fact that maybe the other party needs to lift the toilet seat when they’re done too.

As Marg so eloquently said, we cannot lose sight of the reason for compliance and the “spirit” in which it exists. But we need to recognize that we need a new way to maintain the regulatory spirit and discard those ideas that are no longer relevant in a world of Facebook, Twitter, LinkedIn, blogging, social media, posts, ‘likes’, endorsements, comments and opinions, all of which appear in real-time.
Here is the original law on which today’s client communications is based. This includes social media platforms as well. It is the “truth in securities” law, i.e. the Securities Act of 1933. I copied from the SEC site, its two basic objectives:

…require that investors receive financial and other significant information concerning securities being offered for public sale; and prohibit deceit, misrepresentations, and other fraud in the sale of securities.

I don’t think there is a dissenter among us who would or could take issue with these goals. On the other hand, in an effort to “protect” we have also drifted from the spirit on which this is based. One of the ways clients’ interests can be well served is through the dissemination of good information and educational initiatives. Social communities seek to provide affinities and forums for collaboration and engagement. Financial services regulators have an opportunity to become Facebook friends by returning to the spirit of the law.

It doesn’t have to be that social media and financial services regulators are “natural enemies.” It just means accepting the relationship for what it is, doing away overthinking the complicated stuff and getting to that place where the long-married couple walking in the park are at: focused on the true value of the relationship.

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MOAR Orderly… oops… Bernanke: “Fed could reduce bond purchases in the next few meetings if data supports it” and perhaps most disturbing is that reality is finally seeping into the corner offices of the Marriner Eccles building when Bernanke says that concerns about “frothiness” and “bubbles” has increased? Was it the sub-5% yield in high yield that tipped them off?

The post Euphoria Cracks As Ben Drops Hint Of Tapering After All appeared first on MORTGAGE FRAUD EXAMINERS.

We are constantly measuring the success of women by their salaries and their occupancy of c-suites compared to men. But is that all there is for women? For any of us? While this data is easily obtained, there may be a far more important and accurate measure of an individual’s and our country’s success that we don’t even attempt to quantify, and that is well-being. well-being is often described as, “The state of being content, happy, healthy and prosperous.”

Dan Buettner’s work looking at the characteristics of the happiest cities in the world places very little emphasis on status or income. In fact, one of the happiest cities in the world is in the Netherlands, where a lawyer makes the same salary as a garbage man. Since there isn’t an emphasis on status or motivation simply for salary, people pursue what they are truly passionate about, producing a much more innovative workforce. Buettner’s work also shows the primary driver of work related happiness is the quality of relationships at work. Having a best friend at work is a much stronger correlate of work happiness than income. In addition to great relationships, people have balance. On average, people in the Netherlands work 37 hours a week and take full advantage of their six weeks of vacation.

Happy people have more than money and titles, they have their health and well-being. The Dalai Lama, when asked what surprised him most about humanity, answered “Man. Because he sacrifices his health in order to make money. Then he sacrifices money to recuperate his health. And then he is so anxious about the future that he does not enjoy the present the result being that he does not live in the present or the future; he lives as if he is never going to die, and then dies having never really lived.”

Statistics show that the people who live the longest have a strong social connection, place their families and loved ones first, and have a clear personal purpose. Unfortunately, this is exactly the opposite for most of us as we climb the “career ladder” and attempt to gain income and status.

I remember when I was first starting medical school, I was certain I wanted to be a brain surgeon. If you had asked me why, I would have told you simply because it’s the hardest and most competitive field to get into. After having a chance to actually spend time in an operating room, I had to face the fact that I didn’t actually enjoy operating; I liked the idea of being a brain surgeon to say I could do it.

I found myself facing a similar dilemma in the last few years as I focused my work in cardiology on the preventive side. Preventive cardiology allowed me the opportunity to focus on an area that I was more passionate about, providing me more job satisfaction and also more flexibility that led to more personal and family well-being. However, I consciously chose to leave a more traditional cardiology path that would have meant a higher financial trajectory and more clinical prestige.

I consider myself very fortunate to have had these choices and the ability to act on them. However everyone has a different set of circumstances, and many individuals can’t afford to make changes that could lead to better health, more happiness, more purpose, or higher job satisfaction and an improvement in overall well-being. But that doesn’t mean we shouldn’t include well-being as a measure of our national and individual success — perhaps it is the reason we should.

It is not enough to say employers need to create more job flexibility or to talk about tips for work life balance. We value the things we measure. If we start measuring and paying attention to well- being, we are far more likely to start acting seriously to improve it — as a nation and as institutions and employers — creating a climate that is more hospitable and more practical for individuals to take action and make choices not currently available to improve their own well being, whether they are women or men.

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Central Banking’s Split Personality Can’t Go On

Central bankers have spent the past five years expanding their balance sheets to unprecedented degrees. Now they have modest (at best) growth, but an enormous monetary base. Some want to do more but others are worried about how hard it will be to normalize policy. Nowhere is this split more apparent than in the Bank of England, although there are signs of the same at the Federal Reserve and even the Bank of Japan. Once again the BOE’s Monetary Policy Committee voted 6-3 against providing more quantitative easing to the economy, with outgoing governor Mervyn King on the losing side.

http://www.financialjuice.com/News/109287/Central-Bankings-Split-Personality-Cant-Go-On.aspx

Canada’s Bond-Dumping Frenzy Escalates as Pensions Unload

Canada’s biggest pension-fund manager will “significantly” cut its C$64 billion ($62.3 billion) allocation to bonds as the fixed-income market’s foothold among its most loyal base of investors grows less certain.

http://www.financialjuice.com/News/109279/Canadas-Bond-Dumping-Frenzy-Es…

EUR/USD Most Vulnerable Pair Ahead of Bernanke, FOMC Minutes

Most currencies have fallen against the dollar towards the testimony of Ben Bernanke in Washington and the release of the recent FOMC meeting minutes. Some had good reasons to fall and some didn’t have specific ones.

http://www.financialjuice.com/News/109278/EURUSD-Most-Vulnerable-Pair-Ah…

Schaeuble: EU must accelerate fighting youth unemployment

Cutting unemployment decisive for EU legitimacy German bilateral programs compliment EU efforts Schaeuble is speaking in Berlin.

http://www.financialjuice.com/News/109277/Schaeuble-EU-must-accelerate-f…

Lehman Brothers Holding raises $1.88 bln selling broker claims

Lehman Brothers Holding Inc, the former investment bank that is working to repay creditors, said on Wednesday it had raised $1.88 billion by selling claims it held against its former brokerage.

http://www.financialjuice.com/News/109266/Lehman-Brothers-Holding-raises…

Bernanke expected to stay the course on Fed policy

NEW YORK (Reuters) – Federal Reserve Chairman Ben Bernanke is not expected to hint at a pending policy change when he testifies before the U.S. Congress on Wednesday despite some speculation among investors that the central bank could soon reduce its massive bond buying program

http://www.financialjuice.com/News/109264/Bernanke-expected-to-stay-the-…

Credit rating firms sow doubt on euro zone bond rally

Credit rating firms say they could further downgrade the ratings of highly indebted euro zone countries, putting their bonds at risk of being pitched out of global indexes and reversing a fall in their borrowing costs.

http://www.financialjuice.com/News/109237/Credit-rating-firms-sow-doubt-…

US Existing Home Sales 4.97 within expectations.

The annual level of US existing homes sales was expected to rise to 4.99 million. This is a rise of 0.6%. EUR/USD extends its gains after the publication and breaks above

http://www.financialjuice.com/News/109301/US-Existing-Home-Sales-497-wit…

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By CHRISTOPHER S. RUGABER AP Economics Writer May 22, 2013 9:22AM

The National Association of Realtors said Wednesday that sales of previously occupied U.S. homes rose to its highest levels in 3 1/2 years. File Photo | AP

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WASHINGTON (AP) — Sales of previously occupied U.S. homes ticked up last month to the highest level in three and a half years, helped by a jump in the number of houses for sale.

The National Association of Realtors said Wednesday that sales rose to a seasonally adjusted annual rate of 4.97 million, up from 4.94 million in March.

Home sales have risen 9.7 percent in the past 12 months. Still, sales have changed little since November. The supply of available homes remains tight and many would-be buyers aren’t able to get loans.

The number of homes for sale jumped to 2.16 million, up nearly 12 percent from the previous month. But inventory is still almost 14 percent lower than a year earlier.

Many Americans remain hesitant to put their homes on the market. The Realtors group notes sales typically pick up in spring.

Still, many of the sales are going to private investors, who are buying up lower-price homes and then renting them out.

First-time buyers, who help drive healthy markets, made up only 30 percent of sales in March. That’s well below the 40 percent typical in a healthy market and down from nearly 33 percent in March 2012. Those buyers purchase from existing homeowners, who then are able to move on to larger houses.

Since the housing bubble burst more than six years ago, banks have imposed tighter credit conditions and required larger down payments. Those changes have left many would-be buyers unable to qualify for the super-low mortgage rates.

One reason economists expected the increase is a measure of signed contracts to buy homes rose in March to the highest level in three years. There is usually a one- to two-month between a signed contract and a completed sale.

Contract signings have increased 4.3 percent so far in 2013, according to economists at UBS, while sales of previously owned homes have barely increased. That also points to rising sales.

The housing recovery helped Home Depot Inc. post a big gain in first-quarter net income, the company said Tuesday. Its quarterly profits rose 18 percent. The company also raised its full-year revenue and earnings forecasts.

Rising demand and limited supply have encouraged builders to boost construction. Applications for building permits rose in April to the highest level in nearly five years. And U.S. builders started work on more new homes and apartments in April compared with the same month a year earlier

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