[Most Recent Quotes from www.kitco.com]

"Economics with Attitude"

NEWS to Disturb the Comfortable...

We don't tell you what to think,

but we give you something to think about.

Thursday 03.05.2015

ECB To Embark On Final Leg Of QE
The European Central Bank on Thursday is set to detail its historic $1.1 trillion quantitative easing plan announced in January and present its latest batch of growth and inflation forecasts for the euro area, after what is likely to be an otherwise uneventful rate-setting session now that the drama over Greece has come to a halt. Following the Governing Council session in the Cypriot capital Nicosia, ECB President Mario Draghi will announce the details of the 'expanded asset purchase programme' under which the central bank will buy EUR 60 billion assets, including euro area government debt, a month. The move, which met strong opposition from Germany, is set to run from this March till at least September 2016 or a sustained adjustment in the path of inflation which is consistent with" the ECB's aim of achieving inflation rates below, but close to, 2 percent over the medium term. Further, the ECB statement is likely to be scanned thoroughly for the details of the crucial arrangement...

U.S. Companies Stash $2.1 Trillion Overseas
Eight of the biggest U.S. technology companies added a combined $69 billion to their stockpiled offshore profits over the past year, even as some corporations in other industries felt pressure to bring cash back home. Microsoft Corp., Apple Inc., Google Inc., and five other tech firms now account for more than a fifth of the $2.10 trillion in profits that U.S. companies are holding overseas, according to a Bloomberg News review of the securities filings of 304 corporations. The total amount held outside the U.S. by the companies was up 8 percent from the previous year, though 58 companies reported smaller stockpiles. The money pileup, reflecting companies’ incentives to park profits in low-tax countries, has drawn the attention of President Barack Obama and U.S. lawmakers, who see a chance to tap the funds for spending programs and to revamp the tax code. That effort is stalled in Washington, and there are few signs that tech companies will bring the profits back to the U.S. until...

Divided US Supreme Court again weighs fate of 'Obamacare'
A sharply divided US Supreme Court weighed the future of "Obamacare" for a second time in three years Wednesday after a new challenge to the contentious healthcare reform. The law, President Barack Obama's crowning domestic achievement, seeks to make health insurance available to a broad cross-section of Americans, for whom health care is often too expensive or otherwise inaccessible. In June 2012, the first time the Supreme Court considered a challenge to Obamacare, its conservative Chief Justice John Roberts helped save the measure by voting alongside the four more progressive justices. The president's Republican foes have tried various tactics to repeal the law, but their latest challenge in the US high court focuses on the wording of a statute of the law that governs federal tax subsidies for people who sign up for Obamacare coverage. The narrow question before the court is whether some seven million people who signed up for Obamacare via the government's website are actually entitled...

New Fed transcripts show central bank fighting crisis
The Federal Reserve on Wednesday released transcripts of its board meetings during the depths of the financial crisis in 2009, revealing an urgency about the weakness of the economy and major financial institutions that overcame misgivings about the unprecedented steps it was taking. In a January 16 conference call and a Jan. 27 meeting, Janet Yellen, then a regional Fed president and now chairman, brushed aside concerns about whether the central bank’s extraordinary steps would ignite inflation or treat certain sectors of the economy unequally.“The main communication problem we now face is that most of us anticipate a period that may be quite extended in which inflation will be below the mandate-consistent rate, even with monetary policy pulling out all the stops,” Yellen said.In a debate about whether the Fed should publicly set an inflation target, Yellen said “we do need to communicate very clearly that such a decline in inflation is both unwelcome and undesirable and that we will do everything...

Gold To Move Higher Against USD, Fed Rate Hike Won't Impact U.S. Economy

$5m gold heist may have been inside job, police in North Carolina suggest
A search warrant suggests that investigators suspected a multimillion-dollar gold heist from an armoured truck was an inside job, though a sheriff said on Wednesday that the two guards are not currently considered suspects. The warrant was written in a hurry before the two guards, who spoke little English, could be thoroughly interviewed in Spanish, the Wilson County sheriff, Calvin Woodard, said on Wednesday during a news conference. The search warrant, which seeks permission to search the cellphone of the truck’s passenger, details the account of the two men in the armoured truck. The driver pulled over on the side of Interstate 95 on Sunday when his passenger smelled gas and began to feel sick. Then, three men pulled up in a white minivan, armed with handguns, and bound both the driver and passenger. Both men were ordered to go into nearby woods. The three men then opened the trailer and took out five buckets holding 275lb in gold bars, valued at about $4.8m.

Euro zone rebuffs Spanish talk of new Greek bailout
Germany and the European Commission slapped down talk of a third financial rescue for Greece as premature, after Spain once again suggested on Wednesday that a new aid package for Athens was almost inevitable. Athens, which says it does not need a new aid program, averted a new crisis on Wednesday by successfully raising over 1 billion euros in short-term debt as planned but its long-term funding outlook appears increasingly uncertain. The country has secured a four-month extension to its bailout program until the end of June but remains shut out of debt markets and its new leftwing government has angered euro zone partners with its sharp anti-bailout rhetoric. For the second time this week, Spanish Economy Minister Luis de Guindos said Athens was unlikely to be able to return to capital markets by June, and that a package of between 30 and 50 billion euros ($33-56 billion) would be needed. "If Greece does not recover market access by June ... we will have to establish some other type of agreement...

Here’s why gas really costs Americans $6.25 a gallon
It’s almost April 15, and you may be worrying about how much taxes will hurt this year. But a new study published today suggests there’s a whole world of economic losses in the air around us that few of us know anything about. The study, published in the journal Climatic Change, is the first to pull together a proper accounting of the hidden costs of greenhouse gas emissions. It shows the true (and much higher) cost that we pay in dollars at the pump and light switch—or in human lives at the emergency room. Drew Shindell, a professor at Duke University, has attempted to play CPA to our industrialized emitting world. He has tabulated what he calls “climate damages” for a whole range of greenhouse gases like CO2, aerosols, and methane—and more persistent ones like nitrous oxides. If these damages are added in like the gas tax, a gallon of regular in the United States would really cost $6.25. The price of diesel would be a whopping $7.72 a gallon.

Get Ready for Another Real Estate Bubble
Real estate prices increased again in January, with several states reaching new historic highs, leading experts to wonder whether another real estate bubble might be brewing. Nationwide, home prices rose by 5.7 percent in January compared to a year ago, according to data released Tuesday by CoreLogic. CoreLogic also cited four states (Colorado, Texas, Wyoming and New York) where home prices have reached new historical record highs. Colorado was the state with the highest home price appreciation in January with a 9.1 percent increase, while Texas and Wyoming were shortly behind with 8.3 percent increases. New York homes rose by 5.6 percent. “In part, these trends reflect the strength of regional economies,” Frank Nothaft, chief economist at CoreLogic, said in a press release. “Colorado and Texas have had stronger job creation and have seen 8 to 9 percent price gains over the past 12 months.” Core Logic wasn’t immediately available for comments. A quick price gain doesn’t mean the market is overvalued...

Americans Increasingly Favor Ground Troops To Fight ISIS

Most Say Government Policies Since Recession Have Done Little to Help Middle Class, Poor
The public makes sharp distinctions about which groups have benefited – and which have not – from the economic policies the government has put in place since the start of the recession. Majorities say that large banks, large corporations and the wealthy have been helped a great deal or a fair amount by government policies. By contrast, 72% say that, in general, the government’s policies since the recession have done little or nothing to help middle class people, and nearly as many say they have provided little or no help for small businesses (68%) and the poor (65%). These opinions have changed little in recent years, and differ only modestly across demographic and income categories. There are significant partisan differences in these views, though majorities of Democrats, Republicans and independents say that government policies following the start of the recession have done little or nothing for the poor and the middle class. The latest national survey by the Pew Research Center, conducted Feb. 18-22...

Wal-Mart, Starbucks, Aetna’s pay hikes: Why now?
More companies are worried about the fact that workers’ wages have been stagnant for decades. The recent spate of pay raises could be a response to such concerns. Last week, it was TJX, the parent of T.J. Maxx and Marshalls. The previous week: Wal-Mart Before that, it was Aetna, Starbucks, and Gap. One by one, corporate America suddenly seems inclined to lift its workers’ wages. The question is, why? Perhaps because Wal-Mart is the nation’s largest employer, with 1.3 million people on its U.S. payroll, its move has been the most heavily scrutinized, with observers trying to unearth the company’s true motive, the way Kremlinologists used to parse a decree from the Soviet Politburo. Wal-Mart itself has stressed that the pay increase—which will raise its workers’ minimum wage from as little as $7.25 an hour to $9 in April and $10 next year—is just one part of an overall package that includes enhanced training and improved scheduling. The intention, says Doug McMillon, is to “reignite the sense of ownership”.

The Chinese have put out billboard ads announcing the renminbi as the new world currency
When I arrived to Bangkok the other day, coming down the motorway from the airport I saw a huge billboard—and it floored me. The billboard was from the Bank of China. It said: “RMB: New Choice; The World Currency” Given that the Bank of China is more than 70% owned by the government of the People’s Republic of China, I find this very significant. It means that China is literally advertising its currency overseas, and it’s making sure that everyone landing at one of the world’s busiest airports sees it. They know that the future belongs to them and they’re flaunting it. And it’s true. The renminbi’s importance in global trade and as a reserve currency is increasing exponentially, with renminbi trading hubs popping up all over the world, from Singapore to London to Luxembourg to Frankfurt to Toronto. Multinational companies such as McDonald’s are now issuing bonds in renminbi, and even sovereign governments are issuing debt denominated in renminbi, including the UK.

White House Official: Nuclear Deal Is Best Way to Avoid War With Iran
Deputy National Security Adviser Ben Rhodes, one of the President Obama’s closest aides, appeared on the Charlie Rose Show last night (Goldblog was guest-hosting), in order to address Israeli Prime Minister Benjamin Netanyahu’s criticisms of Obama's Iran approach. The transcript of our conversation is below, but there are a couple of things worth noting. When I asked Rhodes why Obama believes that a nuclear agreement may encourage Iran—a well-known regional bully—to behave in a more responsible manner, he more or less rejected the notion that this is Obama’s belief, saying, “The purpose of the agreement is not to bet on the notion that Iran will moderate. The purpose of the agreement is to prevent Iran from getting a nuclear weapon throughout the duration of the agreement.” This brings us, conveniently, to a second controversial topic: the sunset clause, the provision of this still-theoretical deal that would see it fade away in 10 or 15 years. The White House has been adamant that the sunset provision...

Less Refining in the Northeast Adds to the Supply Glut

US clears officer in Ferguson case, criticizes police force
A former Ferguson, Missouri, police officer will not face federal civil rights charges in the fatal shooting of unarmed black teen Michael Brown, the Justice Department said Wednesday. The feds found there was no evidence to disprove Darren Wilson’s testimony that he feared for his safety during the Aug. 9 killing — and that there also was no reliable evidence that the 18-year-old had his hands up when he was shot. Meanwhile, the Justice Department released a scathing report that slams the city and its police force for racial bias. The report says blacks in Ferguson are disproportionately subject to excessive police force, groundless traffic stops and citations for petty infractions. Wilson, who has said Brown hit him in the face and reached for his gun during an altercation, also was cleared by a Missouri grand jury in November and later resigned from the police force. The city now must figure out how to fix the racial biases that the feds say are firmly rooted in the police department, court and jail.

Government-Wide Improper Payments Totaled $124.7 Billion
The federal government issued $124.7 billion in improper payments in fiscal year 2014, representing a 17.9 percent increase, according to the Government Accountability Office (GAO). Medicare reported the highest number of improper payments with $59.914 billion, followed by the Earned Income Tax Credit (EITC) at $17.7 billion, which has an error rate of 27.2 percent. “Efforts to reduce improper payments could result in significant cost savings,” the GAO said in a report released Wednesday. “For the first time in recent years, the government-wide improper payment estimate significantly increased—to $124.7 billion in fiscal year 2014, up from $105.8 billion in fiscal year 2013.” “This increase of almost $19 billion was primarily due to estimates for Medicare, Medicaid, and the Earned Income Tax Credit, which account for over 76 percent of the government-wide estimate,” they said. Medicaid also had a high rate of improper payments, which are defined as payments that “should not have been made...

Rare glimpse into how Nasdaq polices markets
Tucked into a nondescript corporate office park in suburban Rockville, Maryland, is an unusual high-security operation: the Nasdaq's Market Watch facility, where teams of analysts are on duty 24 hours a day, monitoring global trading for hints of manipulation, high frequency violations or insider trading. Although Nasdaq has its market site headquartered in New York's Times Square, the exchange's surveillance effort is based outside of Washington, D.C., for better access to the nation's financial regulators at the SEC and FINRA, as well as for the local tech and legal workforce. Nasdaq has never allowed a reporter into the facility, but granted CNBC rare all-day access to see how its analysts police the markets in real time. "Our goal here is to find bad behavior, but it's also to deter bad behavior," said Ed Knight, Nasdaq's executive vice president and general counsel. "People need to know that we have the best people and in my view the best technology."

DOJ: We Legalized 100,000 Illegals by Executive Action Before Injunction
President Obama's expanded executive amnesty started earlier than the administration said it would - and before a court blocked it. "Out of an abundance of caution," the Obama Justice Department on Tuesday informed a federal court in Texas that it started issuing three-year work permits to thousands of illegal aliens right after President Obama announced his executive amnesty on November 20 -- and before a federal court issued a preliminary injuction blocking the expanded amnesty on Feb. 16. The injunction barred the Obama administration from implementing "any and all aspects or phases" of Obama's expanded DACA (deferred action for childhood arrivals) program. That program allows certain illegal aliens to live and work in the U.S. for three years instead of two. But the injunction did not apply to Obama's original 2012 DACA program, so when those people renewed their enrollment, they got the new three-year work permits. Between November 24, 2014 -- four days after Obama announced his expanded amnesty...

What's the Biggest Economic Surprise?

Citigroup Forgot To Compensate 23,000 Consumers For Abusive Foreclosure Practices, Sending Checks Now
Several years ago, Citigroup reached a deal with federal regulators that required the company to provide compensation for nearly 380,000 people affected by foreclosure abuse. Only the lender didn’t exactly follow through, failing to send checks to 23,000 consumers. Bloomberg reports that Citigroup is preparing to right that wrong by sending the overlooked consumers checks totaling $20 million. The compensation – which ranges from a few hundred dollars to as much as $125,000 per consumer – was a key requirement of the company’s settlement with the Federal Reserve and the Office of the Comptroller of the Currency to resolve the lender’s widespread foreclosure abuses. In all, the consumers still awaiting monetary relief make up just 6% of those who were originally owed money by Citigroup. Back in 2012, Citigroup – along with 14 other banks – agreed to the settlement in order to resolve allegations that they mishandled loan papers, robo-signed legal documents, and improperly initiated foreclosures...

Russia’s Underleveraged Economy vs. America’s Overleveraged Economy
Over the last 9 years, total outstanding US mortgage debt has increased by 6.68% to $13.36 trillion. It remains down 9.8% from its 2Q 2008 pre-financial crisis peak of $14.809 trillion, but has bounced 1% from its 1Q 2013 post-financial crisis low of $13.226 trillion. Over the last 9 years, total outstanding Russia mortgage debt has increased by 2,803% to RUB3.65 trillion. It briefly dipped 9% from a 1Q 2009 peak of RUB1.287 trillion as a result of the global financial crisis, but quickly bottomed in 1Q 2010 (three years ahead of the U.S.). It has since increased 211.7% from its 1Q 2010 post-financial crisis low of RUB1.171 trillion. US mortgage debt is currently equal to 75.43% of US GDP, down from 91.75% of GDP at the beginning of 2006. Despite Russia’s outstanding mortgage debt growing by 2,803% over the last 9 years, current outstanding Russia mortgage debt is equal to only 5.13% of Russia’s GDP, up from 0.55% of GDP at the beginning of 2006.

In one month, gas prices in California have surged about $1 a gallon
California gas prices have shot up about $1 a gallon in the last month as oil refineries have been idled by a labor strike and an explosion. That's made gasoline much more expensive here than anywhere else in the nation — an average of $3.44 for a gallon of regular as of 7 a.m. Wednesday, according to price-tracker GasBuddy.com. Hawaii is the only other state with an average price above $3 a gallon. Most of the increase came last week, including when the local price surged 14.3 cents Friday from Thursday. For the week that ended Monday, West Coast gas prices jumped a record 37.2 cents a gallon, according to the U.S. Energy Information Administration. California's increase nearly tripled the nationwide average over the past month. Drivers in Los Angeles are paying an average of $3.54 a gallon to fuel up, more than any of the other 443 metropolitan areas tracked by GasBuddy. Part of the jump is driven by factors that always make California gas more expensive, such environmental controls...

For ethics in banking, rules aren't enough
Fed chief Janet Yellen worries about 'shortcomings' in values among bank workers, and the effects on the financial system. How can banks change from 'mere compliance' to 'good compliance'? With all her focus on economic data, Federal Reserve Chair Janet Yellen rarely speaks of a difficult soft topic for a government regulator: ethics in corporate culture. Yet in a speech Tuesday she suggested that employees of large financial firms have “pervasive shortcomings” in values. She decried recent brazen behavior in some banks and a need for stronger governance. “It is unfortunate that I need to underscore this, but we expect the firms we oversee to follow the law and to operate in an ethical manner,” Ms. Yellen said. Since the 2008-09 crisis, banks have certainly improved in levels of capital and liquidity as well as governance, Yellen said. But “compliance breakdowns” in recent years show “room for improvement.” Despite tougher federal rules and supervision imposed on firms since the Great Recession...

NEWS to Disturb the Comfortable...

We don't tell you what to think,

but we give you something to think about.