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Friday 08.01.2014

Elliott's Paul Singer On Gold, Inflation, And The Global Monetary Delusion
Central bankers think they are the masters of the universe because the world is looking to them (and only them) to deliver continuous stability and prosperity. There is no reason to suppose that they understand the modern financial system and economy to any greater extent than they did in 2007 (that is to say, not at all). Nevertheless, they plow ahead, expressing total confidence that what they are saying and doing is wise and not dangerous drivel. These master chefs have but one vat next to them on the policy table, and it is labeled “QE.” They seem to think that all they need to do is dip into this vat, ladle on some QE, and asset prices will rise, the economy can be supported, jobs can be created and growth can be achieved. With no side effects, no indigestion, and no other factor would make them put the vat away and demand other ingredients. The new Chairwoman of the Fed, moreover, has made clear that as far as she is concerned, ZIRP is perfectly fine despite the stock market...

Hedge fund offers support for RadioShack’s store closing plan
Hedge fund BlueCrest Capital Management is coming to the defense of Fort Worth-based RadioShack, offering to help provide financing to repay lenders that have blocked the struggling retailer’s store-closing plans, according to a letter obtained by Bloomberg News. BlueCrest, run by billionaire Michael Platt, said in the letter that the fund is a RadioShack shareholder and unsecured debtholder. The hedge fund supports the company’s attempt to shutter stores, which would help stem its cash burn, according to the letter.The offer shows that some RadioShack creditors and shareholders are increasingly frustrated by other lenders that have blocked of Chief Executive Officer Joe Magnacca’s plan to close as many as 1,100 stores as a lifeline to the struggling electronics retailer. Lenders blocked the plan earlir this year, forcing RadioShack to limit closings to as many as 200 this year.

Adidas Plunges After Reducing Forecast on Russia, Golf
Adidas AG shares fell by a record after the world’s second-largest sporting-goods maker slashed its full-year profit forecast, bursting euphoria around the German company less than a month after its national team’s victory in the World Cup. Adidas said profit this year will miss its forecast by at least 180 million euros ($241 million). The shoemaker and apparel maker scrapped a long-standing growth target for next year, citing a slump in demand for golf supplies in North America combined with turmoil in Russia. The shares tumbled as much as 16 percent in Frankfurt trading, the biggest intraday drop since the company’s 1995 initial public offering. “You could argue they’ve been a victim of their own success,” said John Guy, an analyst at Berenberg Bank in London who recommends buying the shares. “Russia is one of their most profitable regions,” and now a dispute with Ukraine and economic sanctions against Russia are weighing on the outlook.

US Dollar Rejected - Prepare Your Family | Jim Willie

Companies handling troubled mortgages appear to skirt new US rules to prevent abuses
Companies overseeing millions of mortgage loans appear to be skirting new federal regulations and legal settlements intended to stop them profiteering at the expense of troubled homeowners. They are selling or have sold nearly nonexistent insurance agencies — in some cases with no offices, no websites and only a single registered agent — in multi-million dollar deals, as new rules prohibit them from collecting commissions on insurance they force homeowners to buy. The deals illustrate how regulators are still wrestling with messy banking practices more than six years after the housing market's collapse. They also mean that newly sold insurance agencies have an incentive to compel struggling homeowners to buy costly policies, to justify the high sales prices commanded when the insurance agencies were sold. The deals involve "force-placed insurance," a type of backup property insurance meant to protect mortgage investors' stake in uninsured properties.

Jobs are the secret to getting millennials to move out of the basement
The guessing game continues as to what it will take to pry millennials out of their parents’ basements. This time Goldman Sachs has weighed in with an analysis of the forces influencing this generation — the largest and most diverse in history — to stay put in the family home rather than form new households. It’s well-accepted that the tight job market pushed young adults to move in with their parents during the recession, or discouraged them from leaving in the first place. But some have suggested that perhaps this generation also has lost its taste for buying. Enter Goldman Sachs, which is predicting that the 18 to 34 year olds will leave the nest when the labor market fully recovers. Goldman compared the share of young adults living with their parents in two states: California (where the unemployment rate jumped from less than 5 percent in 2006 to more than 12 percent in 2010) and North Dakota (where the rate peaked at 4.2 percent in 2009 and stayed under 3 percent in the past year.)

An Insufferable Beer Crisis Hits California
I need to disclose upfront that I’m biased: I’m a beer lover. And I live in beer-paradise, the crazy state of California. Kicking back with a brewski from a local craft brewer, of which we have over 450, can make even the Fed’s capers less aggravating. But soon that beer-induced smile on my face may dry up. California’s enduring drought that has turned into a water crisis is hitting beer production. Turns out, to get one gallon of beer, breweries use about four to seven gallons of water in their processes, including rinsing of equipment, etc. And there isn’t enough water, or not enough of the right kind of water. California’s craft brewing industry is big. In 2012, according to the most recent data available from the California Craft Brewers Association, the industry contributed $4.7 billion to the economy and employed 44,000 people who earned $1.7 billion in wages.

Jobs return, but long-term unemployed still left behind

Obama Administration Spent Thousands On Strippers, Boxing Tickets In Failed Sting On Border Patrol Agent
he Obama administration abandoned a corruption case against an Arizona border patrol agent after his attorney accused federal agents of entrapping his client, and spending federal dollars on strippers, plane tickets, and tickets to a Manny Pacquiao fight as part of their investigation. A federal judge dismissed money-laundering and corruption charges against Customs and Border Protection agent Lauro Tobias Tuesday in response to dismissal motions from both the Department of Justice and Tobias’ attorney, which were filed within hours of each other July 25. Tobias, a 10-year veteran of the CBP who also served in the Air Force for two decades, was arrested in March 2013 after he took a trip from Phoenix to Las Vegas for a drug deal — 6 kilograms of cocaine were exchanged with unnamed persons for $100,000. Tobias was paid $4,000 for working as security during the deal, based on court documents. Tobias has maintained he did not know the trip was for a drug deal, and that he was assured the exchange was legal.

CDC chief: Ebola ‘could arrive in the U.S.’
The Ebola crisis in West Africa is “definitely not under control,” according to a top Centers for Disease Control official who concedes it’s possible the deadly, incurable virus could come to U.S. shores. Stephan Monroe, deputy director of the National Center for Emerging and Zoonotic Infectious Diseases at the CDC, told CBS News the worst Ebola outbreak in history – with 1,323 cases recorded in Guinea, Liberia, Sierra Leone and Nigeria and 729 deaths – is “rapidly evolving.” “Theoretically, the virus could arrive in the United States,” he said. He said the CDC, consequently, has issued a nationwide health alert to health-care providers in the U.S., with instructions to isolate anyone suspected of being infected. The CDC instructs that “if someone presents with symptoms that are compatible with Ebola virus, to ask them about recent travel history, and if they do have a travel history and potential exposure, that they put those people into isolation and request specimens for diagnostic testing.”

Senators spent $1 million on charter flights last year
Last summer, Sen. Mark Warner, D-Va., embarked on what his office trumpeted as a four-day, 1,000-mile trip across his state, with press releases noting he "woke up early to hit the road," making stops at a minor league ballpark, a craft brewery and a Roanoke rail yard, among others. But for several hundred of those miles, Warner was not hitting the road — he was flying a chartered plane at a cost to taxpayers of $8,500. Warner was one of two dozen U.S. senators who flew taxpayer-funded charter airplanes to, from or around their home state last year at a total cost of just under $1 million, according to a USA TODAY analysis of Senate spending records compiled by the nonpartisan Sunlight Foundation. Senators pay for their official duties from taxpayer-funded accounts set aside for them to cover costs of staff, travel, office supplies and the like. The rules allow them to use these accounts to pay for charter aircraft for official travel...

Former Employees Allege Widespread Illegality at Taxpayer-Backed Solar Company
A solar company backed by billions in stimulus funds routinely violated U.S. immigration law, workplace safety codes, and environmental regulations, replaced American workers with foreigners, and may be on the verge of bankruptcy, former employees tell the Washington Free Beacon. The employees describe a pervasive culture of illegality and irresponsibility at the highest levels of the politically connected Spanish solar firm Abengoa. Despite receiving $2.6 billion in taxpayer backing through President Barack Obama’s stimulus package, they say, the company brazenly flouts U.S. laws that could slow production or hurt its bottom line. The stimulus was designed to put Americans back to work after the financial and economic catastrophes of 2008, but the employees say taxpayer funds are being used to employ foreign expats, even for menial jobs that could easily be filled by American workers.

How I was able to board a plane and fly to New York using my Costco card as ID
Ever lost your drivers license? It’s the worst. I lost mine while flying to Dallas for work earlier this week. Was I be able to rent a car? Nope. Check into the hotel? Yeah, they were okay giving me a room after showing them multiple credit cards in my name. But what about getting back home to NYC? How would I get through TSA without any government ID? Would Glenn finally get his wish for me to move to Dallas because I can’t fly home? It turns out, no — and that’s the downright scary part. After being in Dallas for a few days, I headed to Dallas-Fort Worth International Airport on the day of departure (Thursday). I wanted to try an experiment: Could I get on to the plane without showing any form of official ID? Just in case, I had a friend in New York expedite my passport to me in Dallas. I tucked it in my carry-on should the TSA agent not let me board. But I wanted to see if it could be done without any form of official documentation.

Top Gold Refinery Loses 2.7 Tons of Gold
On July 25, South Africa’s Rand Refinery – the biggest processing facility for gold in Africa and one of the largest worldwide – announced it will receive a shareholder loan to make up for “lost” 87,000 ounces (2.7 tons) of physical gold in its inventory. The press release describes what amounts to a $112 million loss at current gold prices. Rand Refinery typically processes around 380 tons of gold annually. Since its founding in 1920, it has refined approximately 50,000 tons of the yellow metal – nearly one-third of the world’s total gold mined worldwide. It’s also the largest integrated single-site precious metals refining and smelting facility on the globe. According to Rand’s July 25 statement, the refinery could not draft its 2013 annual report due to an error in its recently adopted “enterprise resource planning” software. “Following the adoption of the ERP system in April last year, Rand Refinery experienced implementation difficulties....

Why Taco Bell Likes to Call Its Workers 'Champions'
Michael Jordan is a champion. Derek Jeter is a champion. Brandi Chastain is a champion. But Taco Bell's cashiers? According to a spokesperson, Taco Bell calls the people who prepare their food “food champions” and the people who tend the registers “service champions.” Taco Bell isn’t alone in putting a positive spin on their job titles. Disney refers to its employees as “cast members,” and some are even “imagineers.” Apple has its “geniuses.” (In a similar vein, Subway has taken to calling its customers "fans.") Why do companies insist on these strained nicknames? Adam Grant, a professor of management and psychology at the University of Pennsylvania’s Wharton School of Business, says that these optimistic labels certainly can backfire, but that they do have the potential to make workers happier. “If employees identify strongly with the titles,” he says, “they may actually find them meaningful.”

TD Bank's 'thanking' ATM goes viral

Obama pivots to economic legacy
President Obama is tying his legacy to a growing economy, seizing on the administration’s successes in boosting the nation during financial woes. Bolstered by a string of positive economic reports, the administration hopes it can increase Democrats’ chances of holding the Senate this fall by highlighting Obama’s stewardship of the economy. More broadly, the White House hopes to ride the wave of an economic recovery to improve Obama’s approval numbers over the final two years of his presidency, setting up a possible Democratic successor at the White House. “It’s the best possible legacy item,” said one former senior administration official. “The elections in 2008 and 2012 were all about the economy and if the nation could bounce back after such terrible times. And look, it shows that, not only did we bounce back, but things are going to an even better place, one where a potential predecessor could build a foundation.”

Why Bretton Woods Failed
TODAY is a period when we are building the foundation for the monetary systems of the future – what former Fed chief Paul Volcker recently called "the need to develop an international monetary system worthy of our time," writes Nathan Lewis at New World Economics. This "foundation" consists mainly of ideas – the ideas that are later implemented in real-world systems. Without the ideas, you can't make the system. It's as simple as that. I think there is a lot of trauma remaining today regarding the last "system" we had, the Bretton Woods arrangement of 1944-1971. This was a prosperous time worldwide - the best era, I would say, of the last century since 1914. Not the sort of thing that anyone would want to come to an end. So, you can see why its accidental and premature death was a bit traumatic. I think we need to review this today, and get over it. Bretton Woods blew up, in the midst of peace and prosperity...

Target Names New CEO in Bid to Lure Back Customers
Target appointed former PepsiCo executive Brian Cornell as CEO and chairman as it tries to regain customer confidence following a devastating data breach that hurt the retailer's earnings and reputation. Cornell, 55, will be responsible for accelerating Target's performance and developing its e-commerce business, the No. 3 U.S. retailer said Thursday. His top priorities when he takes over Aug. 12 will also include improving traffic and sales at Target's U.S. and Canada stores, spokesperson Dustee Jenkins told Reuters. Target removed Gregg Steinhafel, CEO since 2008, in May after a data breach during the key holiday season led to the theft of at least 40 million payment card numbers and 70 million other pieces of customer data. Steinhafel's exit also followed Target's botched multibillion dollar expansion into Canada. Cornell resigned earlier this week as head of PepsiCo's Americas Foods, the largest of its four divisions, after leading the business for more than two years.

Long-Term Unemployed Likely to Return to Job Market, Study Finds
The long-running debate about the causes of America’s high rate of long-term unemployment is far from settled. A new working paper from the National Bureau of Economic Research wades into the discussion and its findings fall squarely on the side of those who see the labor market’s woes as a product of a weak business cycle. The other so-called structural explanation is that a mix of demographic shifts and the deep recession could have done permanent damage to the labor force, meaning no amount of policy support, fiscal or monetary, could lift employment growth back to its historical trend. Some Federal Reserve officials, including Richmond Fed President Jeffrey Lacker, have favored such explanations. The NBER paper’s authors, led by Kory Kroft of the University of Toronto, aren’t buying that argument. “Compositional shifts in demographics, occupation, industry, region and the reason for unemployment jointly account for very little of the observed increase in long-term unemployment,” they write.

Keiser Report: America's Kleptocro-Oligarchy

The Coming Slump
Governments and central banks have made little or no progress in recovering from the Lehman crisis six years ago. The problem is not helped by dependence on statistics which are downright misleading. This is particularly true of real GDP, comprised of nominal GDP deflated by an estimate of price inflation. First, we must discuss the inflation adjustment. The idea that there is such a thing as a valid measure of price inflation is only true in an econometrician’s imagination. An index which might be theoretically valid at a single point in time is only subsequently valid in the wholly artificial construction of an unchanging, or “evenly rotating economy”: in other words an economy where everyone who is employed remains in the same employment producing at the same rate, retains the same proportion of cash liquidity, and buys exactly the same things in the same quantities. Furthermore business inventory quantities must also be static. All human choice must be excluded for this condition.

Feds Say Big Banks Are Still Too Big to Fail
Six years after the financial crisis, the largest US banks are likely still too-big-to-fail, according to a study released Thursday afternoon by the Government Accountability Office (GAO). That means that these massive financial institutions are still so important to the wider financial system that they can expect the government to bail them out again if they are close to collapse. Even though the GAO study found that this advantage banks enjoy dropped off significantly in 2013, "this is a continuing issue," Sen. David Vitter (R-La.), who has introduced legislation aimed at ending bank bailouts, told Bloomberg Thursday. "Too-big-to-fail is not dead and gone at all. It exists." During the financial crisis, the government forked out $700 billion to bail out the nation's biggest banks. The 2010 Dodd-Frank financial reform act imposed new requirements on Wall Street designed to prevent this from happening again.

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