Friday, January 30, 2015

Here Comes the Oil Drilling Crash: U.S.Rig Count at Lowest Point in More Than 5 Years

It's getting ugly in the oil patch.

The total number of rigs drilling for oil in the U.S. came in at 1,223 for the week ending Jan. 30, compared with 1,317 in the prior week and 1,422 a year ago. Including 320 other rigs mostly drilling for natural gas there are a total of 1,543 working rigs in the U.S., down 90 week-over-week, and down 242 year-over-year, according to from Baker Hughes North American Rotary Rig Count.

The number of rigs drilling for oil fell by 199 year-over-year and by 94 week-over-week. The natural gas rig count declined by 3 to 319 week-over-week and by 39 year-over-year.

The two states losing the most rigs were Texas (down 58) and Oklahoma (down 10). North Dakota and Wyoming each lost 4 and Ohio lost 3. California and Pennsylvania were the only states to add to rig counts during the week, and each added just 1.

The state of North Dakota’s legislative council said on Thursday that it had lowered its forecast for oil and gas tax revenues from a total of $8.3 billion to $4.3 billion for the two-year budget cycle beginning in June of this year.


(via 24/7 Wall Street)

Revolving Door' Between Fed and Banksters Spins Faster and Faster

What the New Greek Finance Minister Said Today to the EU and Banksters

Bloomberg reports:
Finance Minister Yanis Varoufakis said Greece won’t seek an extension of its bailout agreement, setting the government on course to enter March without a financial backstop for the first time in five years.
Greece won’t engage with officials from the troika of official creditors who have been policing the conditions of its rescue since 2010. It’s five-day-old government wants a new deal with the European Union that allows for more spending, Varoufakis said at a joint press conference with Eurogroup Chief Jeroen Dijsselbloem in Athens, Friday.
“We don’t plan to cooperate with that committee,” Varoufakis said. “The Greek state has a future, but what we won’t accept has a future is the self-perpetuating crisis of deflation and unsustainable debt.”
The standoff could see Greek banks effectively excluded from European Central Bank liquidity operations and the government with no source of funding, having rejected EU aid while still shut out of international markets.
‘Not Bluffing’
“These people are not bluffing,” Theodore Pelagidis, a senior fellow at the Brookings Institution, said by phone. “There is no way that Greece will make it through February. The situation will be get worse every day, and at the forefront of the drama will be the country’s banks.”
 Joe Weisenthal says this pic says it all and is Varoufakis' position  :

Bank of Russia Cuts Interest Rates

Russia's central bank headquarters in Moscow.
In its statement, the central bank said its emergency rate rise on Dec. 16—a 6.5 percentage point increase that came as the ruble was in free fall—had worked as expected, allowing it to now reduce its key rate to 15% from 17%.

The central bank said that while inflation—now running at 13.1%—is likely to continue to rise in the coming months, the deepening slowdown in the economy will bring down price growth later in the year. However, inflation won’t fall below 10% until January 2016, the bank said.

In emailed comments, the central bank’s chairwoman, Elvira Nabiullina, sought to justify the unexpected rate decision by saying December’s move was an emergency measure that had already helped address panic in the currency markets. A rate cut now “gives an opportunity to kickstart lending,” she said.

It is not clear what is actually behind the move, whether lending activity completely dried up at the higher rate or whether the central bank has cuts rates simply because of an overall slowdown in economic activity.


Disability Trust Fund Will Run Out of Money By the End of 2016

The first major entitlement program is about to run out of money.

In the past quarter-century the share of working-age Americans on disability has doubled, to 5%. Some 11m Americans—9m workers plus their dependents—now receive benefits, nearly as many as work in manufacturing. The result is that DI now pays out far more in benefits than it receives in payroll taxes. Its trust fund will run dry by the end of 2016, reports Economist magazine.

When danger-point has been reached in previous years, money has been shifted to DI from payroll tax or the Social Security trust fund (which is meant to cover public pensions); but a rule passed this month by the House of Representatives says this cannot be done any more without reform.

Economist notes:
The programme owes its dire state, in part, to the same demographic forces undermining Social Security and Medicare. Baby-boomers who haven’t yet retired are now at the age when they are most likely to become disabled. Their numbers have been swollen by the entry of more women to the workforce. And a gradually rising retirement age means beneficiaries collect disability payments longer before they switch to a pension.
But demography explains only a bit more than half the rise in the rolls since 1980, according to the Congressional Budget Office and Federal Reserve Bank of San Francisco. The rest is because workers of any age or sex are now much more likely to qualify.
However, in 1984 the eligibility criteria were changed. It is now easier to qualify with hard-to-verify ailments, such as mental illness and back pain. Meanwhile, wage stagnation among the low-skilled makes disability benefits—which come with automatic annual increases and health insurance—more appealing, especially during recessions. One study found that ten years after starting on disability benefits, less than 4% of recipients had returned to work.
Grab some popcorn and watch your wallet. The only solution to the crisis is to either cut DI benefits or raise payroll taxes.


Say No to 'Audit the Fed'

By Robert Wenzel

I have never been a big fan of "Audit the Fed." In May 2009, I wrote:

I Smell A Trap

Ron Paul's House bill calling for an audit of the Fed is getting support from the strangest places.

Lew Rockwell today links to a column by Dean Baker who now supports an audit of the Fed.

The problem with Baker's column is that he doesn't quote Ron Paul. He doesn't even mention that Paul introduced the bill. He does, however, mention Elizabeth Warren, who heads a congressional oversight panel, dealing with bailout money.

I've discussed Warren before, her oversight committee went so out of bounds that two members of the five member panel dissented. She is a big time Obama operative. You don't want columnists using Warren as a signal flag to support Paul's bill.


This what Baker would like to see come from an audit:

The proposal for a GAO audit of the Fed is a first step towards reasserting democratic control over this institution...In a democracy, it is difficult to justify a situation in which the most important economic policy making body is, by design, more answerable to the banking industry than democratically elected officials.
I hope Congressman Paul knows what he is doing, to me it sounds like this may evolve into a power play over who controls Fed money rather than an investigation into whether the Fed should be printing money in the first place. If Democrats start signing on to the bill in heavier numbers, it may be a sign that an audit may come, but it will end with a restructured Fed controlled by left wing radicals, who believe money is for handing out and who have no fear of inflation.

In August 2009, I wrote:
One of the group's supporting Ron Paul's legislation to audit the Federal Reserve is the National People's Action Network (NAPAN). Their top target right now is the Fed. Their executive director, George Goehl, recently told me in a private conversation, when I asked him what he thought of Paul's bill to audit the Fed, without hesitating he said, "I think it's great."

Don't take his anti-Federal Reserve stance as an anti-big government stance, though. He is a big supporter of government nationalized healthcare, intervention to stop mortgage foreclosures and government heavy handed control interest rates. He is protesting the Fed because he wants more representation "by the people" at the Fed...[Ron] Paul better be very careful on his audit the Fed legislation as it is very vulnerable to being hijacked by the radical left. This needs to be shifted to an End the Fed program real fast.

I am certainly am no fan of the Fed (SEE: The Fed Flunks: My Speech at the New York Federal Reserve Bank), but I think to believe that the focus should be, as I wrote in 2009, on ending the Fed rather than who is controlling the Fed.

If it comes between the banksters continuing to control the Fed or Congress, there may actually be something to be said for letting control stay in the hands of the banksters. They most assuredly will use the Fed to line their own pockets, but there is no advantage for them to see  hyperinflation hit the economy. Remember, when inflation started to get somewhat out of control in the late 1970s-early 1980s, it was the banksters who brought Paul Volcker in at the Fed to slow the money printing and battle the price inflation.

It is not at all clear that the same thing would have occurred if Congress would have been in control, of the Fed at that time. There are a lot of very clueless and dangerous members of Congress, who have no idea how the economy works and would never call for a slow down in money printing. Whether these fools are in the majority in Congress, I have no idea.  But the thought that these nut jobs could control the money supply is very scary, and that's exactly where an audit the Fed bill would go.

I have talked this over with a serious bankster, who knows many of the members of Congress a lot better than I ever will, and the idea that such a group would control Fed policy scares him. I have to agree.

Thus, I have to oppose Rand Paul's re-launch of the Audit the Fed bill. I can't see any good coming from it.

I am not in favor of the special privileges that banksters get, but I am much more scared of the Elizabeth Warrens in Congress running Fed policy.

The focus should be on educating the public about the evils of the Fed and why it should be shutdown, rather than wasting time focusing on what criminal group should be running that great economic manipulating money manipulating machine called The Fed.

Robert Wenzel is Editor & Publisher at and at Target Liberty. He is also author of The Fed Flunks: My Speech at the New York Federal Reserve Bank. Follow him on twitter:@wenzeleconomics

35 Is The Most Common Age Top Founders Start

Writes Anna Vital of Funders and Founders:
When you graduate college, with expectations from parents on your shoulders, seeing teenage CEOs in the news can make you feel like a late bloomer. Even at 25. Since today we expect to live longer than today's average life span of 78 years, at 25 you can reasonably think you are through a quarter of your life...

Looking at the biographies of top 100 founders on the Forbes List shows that 35 is the most common age to start one of the top companies in the world.
But there is hope for you even at 61, Vital continues:
 Should Charles Flint have felt himself a loser when he organized IBM out of a time-card punching technology firm at the ripe age of 61? Those time card punchers turned out to be early prototypes of computers.

Perhaps you have not heard much about Flint, but the device you are looking at right now is possible in part because of what Flint started at 61. He even lived another 24 years, working and enjoying the fruits of his late-in-life success. A later bloomer? Perhaps. Too late for him at 61? Never too late.

THE INSIDE SCOOP Yellen Meets Privately With Senate Democrats

Janet Yellen mat at a private luncheon on Thursday with Senate Democrats and according to a WSJ report told them that “things are going well” for the economy.

Sen. Joe Manchin told reporters after emerging from the luncheon Thursday afternoon that “She feels the economy is strong, a lot is good,” he said.

This is pretty much what I wrote in the EPJ Daily Alert yesterday about the Fed view. There is no indication that the Fed, like some forecasters are suggesting, will launch into another QE round anytime soon. I wrote:
There were no surprises in the FOMC policy statement released yesterday. All indications are that the Fed will start to raise rates sometime near the start of the second half of this year...

That said, I do want to point to the first paragraph of the statement, which provides a very good snapshot as to how the Fed does view the current economic situation:

Information received since the Federal Open Market Committee met in December suggests that economic activity has been expanding at a solid pace.  Labor market conditions have improved further, with strong job gains and a lower unemployment rate.  On balance, a range of labor market indicators suggests that underutilization of labor resources continues to diminish.  Household spending is rising moderately; recent declines in energy prices have boosted household purchasing power.  Business fixed investment is advancing, while the recovery in the housing sector remains slow.  Inflation has declined further below the Committee’s longer-run objective, largely reflecting declines in energy prices.  Market-based measures of inflation compensation have declined substantially in recent months; survey-based measures of longer-term inflation expectations have remained stable.

In other words, the Fed thinks that the economy is improving nicely.There is really no sense at all that they are going to launch a new round of quantitative easing anytime in the near future. I do a lot of radio interviews and one of the top questions I am asked is about such a new round of QE. It is not going to happen. The Fed is very comfortable with the current trends in the economy. 

Obama's "Middle Class Economics" Exposed

WSJ writes:
President Obama is disguising his latest tax increase as “middle-class economics,” no doubt because it sounds better than calling it income redistribution. So it’s instructive that this false political front has already been exposed by no less than the President’s political allies at the Tax Policy Center.

This week the liberal think tank analyzed the tax proposals in Mr. Obama’s State of the Union with one of those familiar distributional tables that attempts to estimate the after-tax results across the U.S. income scale. Surprise, surprise, the middle 20% of earners—people making between $49,000 and $84,000—would see their taxes rise by $7 on average in 2016.

In selling his proposals in Kansas the other day, Mr. Obama said that middle-class economics is about “lowering the taxes for working families by thousands of dollars, putting money back into their pockets so that they can have a little bit of cushion in their lives.” Paying $7 more isn’t much of a cushion.
The same goes for the second and fourth income quintiles. According to the think tank, the taxes of those groups would rise by 0.1% on average. The tax changes of note would come at the bottom and top of the income scale, with a 0.7% average rise in tax liability for the top 20% of earners, and a 1.2% boost in after-tax benefits (largely from tax credits) for the bottom 20%. Mr. Obama’s middle-class economics, in short, applies to everyone but the middle class

Thursday, January 29, 2015

Peter Schiff Stiff-Arms The Winklevoss Twins

By Chris Rossini

This Industry Is Still Completely Ridiculous (Results of Fed money printing madness Edition)

 By Jon Evans

Things are getting pretty strange out there. Roughly a year ago I wrote a post entitled “This Industry Is Completely Ridiculous.” Since then, as you probably already know, our world has gotten even more surreal. If anything the ridiculousness is accelerating. It’s like the tech industry is subject to a Moore’s Law of weird.
Consider: within the last month, Burning Man announced it was accepting Bitcoin donations, while Xapo declared it was (in some unspecified way) securing its Bitcoin wallets on satellites. Add those together, and what do you get? That’s right: we now live in a world where you can donate virtual cryptocurrency to an ephemeral city, from space.
Back in foggy San Francisco, where security guards protect custom GIF projectors outside the BART tunnels that house the homeless, because that’s how America works, I humbly coined a new law:

…and it was a busy year for it.

...But that list was way premature. Did you know there’s an app out there that lets you simulate giving Anna from Frozen a C-section? I am not making this up. Did you know there’s an app with an ‘Incest Prevention Alarm,’ to help keep you from sleeping with a cousin? Again, not making this up. Did you know there are two emoji-only social networks? No wonder SF has a new game show: “App Or Crap?

The Bay Area’s tech boom is now reverberating through the rest of the world, too. People out there are literally raising millions of dollars for “startups about nothing.”

Read the rest here.

You Should Watch the Super Bowl, You’re Paying for It

By Jared Meyer

Before the Super Bowl this Sunday, one winner is already determined—local New England Patriots fans. NFL owners are professionals at extracting taxpayer money from local fans to fund generous subsidies for their lavish stadiums, and the NFL is tax-exempt. But Patriots owner Robert Kraft took a different, more taxpayer-friendly, approach and arranged 100 percent private funding for the construction and maintenance of Gillette Stadium, located outside Boston. In contrast, the public’s share of financing for the Seattle Seahawks’ CenturyLink Field was 64 percent ($300 million). In this competition, the Patriots won by an even larger margin than they did against the Indianapolis Colts.

Local Seahawks fans are not just paying for CenturyLink Field—they are still paying for the team’s last home field as well. The Seattle Kingdome was occupied for just 24 years before the city agreed to build the Seahawks a new stadium. Even though the Kingdome was demolished in 2000, taxpayers were still responsible for nearly $180 million to cover its outstanding debts. The last of the debt will finally be paid off this year.

As Harvard professor Judith Grant Long shows in her 2012 book Public-Private Partnerships for Major League Sports Facilities, taxpayer costs for new stadiums have been increasing drastically. Public funding for stadiums completed in the 2000s was 70 percent higher than for those completed in the 1990s.

Most public stadium cost figures are underestimated since...

Read the rest here.

Federal Reserve Money Printing, Crazed Rent Laws and Construction Restrictions Have Done This to San Francisco Rents:

San Francisco’s median rent was $3,500 a month in the fourth quarter of 2014, according to leasing site, the highest in the nation.

The area known as The Dogpatch has the most expensive median rent in San Francisco, according to Lovely, at $4,300 a month.


Medical Errors in America Kill More People than AIDS or Drug Overdoses.

Sarah Kliff wirtes:
Medical errors kill more people than car crashes or new disease outbreaks. They kill more people annually than breast cancer, AIDS, plane crashes, or drug overdoses. Depending which estimate you use, medical errors are either the 3rd or 9th leading cause of death in the United States. Those left dead as a result of their medical care could fill an average-sized Major League Baseball stadium — sometimes twice over.

Medical errors tend to fall into two buckets. There are the mistakes that happen when doctors set a wrong plan: when they prescribe the wrong medication, for example, thinking it was the right treatment. Then there are the errors that occur when doctors set the right plan but don't follow it — when messy handwriting means a patient gets the wrong drug dosage, for example, or when a surgeon operates on the wrong body part (yes, this actually happens).

"Something like 2 to 3 percent of people who go into the hospital are going to have some pretty severe harm as a result," says Don Berwick, the Obama administration's former Medicare administrator. "Australian studies show that the rate might be as high as 12 percent. The harder you look, and the more you study the issue, the more errors you find."...

In the Utah and Colorado study, researchers found that 2.9 percent of patients experienced a medical error during a hospital trip. In New York, it was 3.7 percent. The New York study also found that, of those who experienced a medical error, 13.7 percent died because of it. In other words: of 1,000 patients who enter a hospital, about 30 or 40 would experience a mistake in their care. About four would end up dead as a result...

Some errors in medicine are stunningly bad. One study, published in the journal Surgery, found that surgeons operated on the wrong part of the body 2,413 times between 1990 and 2010. They left foreign objects behind in the body (typically sponges) 4,857 times. In 27 cases, they operated on the wrong patient altogether.

These errors are terrible, and easy to recognize. But they aren't what cause the most harm in American health care. It's the less stunning, more quotidian mistakes that are the biggest killers.

Read the full article, here.

Bill Gates Takes On Bitcoin

Bill Gates says there are two reasons Bitcoin won't help the poor, reports CoinBuzz:
His first reason was that the value of bitcoin is too volatile compared to most people’s local currencies. The large downswings in the cryptocurrency’s value make it likely a person to lose money. For example, the bitcoin price has fallen by -9.37% in the last 24 hours, and -56.82% in the last 6 months. This volatility prevents it from being used as a store of value.
The second reason Gates cited was that transactions made with bitcoin cannot be reversed. Payments that are made with bitcoin can only be returned by the person or company they were sent to. Small mistakes could end up being very costly, especially for those living in poverty. Gates also added that “anonymity doesn’t work”, because there is no personal information linked to a bitcoin address that can be used to contact its owner.
So what is the man sitting on top of the biggest pile of cash in the world going to do about it? Why he is using mobile payment systems, instead of Bitcoin, when he tosses out some of his cash:

Gates said, “Overall financial transactions will get cheaper using the work [the Gates Foundation does] and Bitcoin related approaches.”

He said that the Gates Foundation is “far closer” to bringing mobile banking than bitcoin to developing countries.

The Gates Foundation mobile banking to be effective because it costs nearly nothing to process digital transactions. Also, a large percentage of adults in developing countries already have access to a mobile phone.

M-Pesa, an SMS money transfer service launched in Kenya in 2007, has been so successful that there are more accounts than the number of adults in the country. Bangladeshi mobile money provider bKash currently processes over 60 million transactions worth a total of over $1 billion monthly.

The Gates Foundation predicts that in 15 years, 2 billion people will have access to a bank account for the first time using their phones.

New Greek Finance Minister Name Drops Mises and Hayek

Economist Yanis Varoufakis, who is the new Greek finance minister, was interviewed on Wednesday by Phillip Adams of Austrailia's Late Night Live.

During the interview, he said that among other economists he has been "influenced by libertarians," and then mentioned Ludwig von Mises and  Friedrich Hayek.

He went on to say that he is a "libertarian communist. or a libertarian Marxist." He then said he knew that is a contradiction.

During the interview he also called Keynes and Marx great men.


Tales From the Silicon Valley Corridor

I had a chat the other evening with an executive at a fairly new firm, whose growth is exploding in the current boom environment. I am talking about super growth.

The firm just received hundreds of millions of dollars in a new round of funding.

Here is the thing: Although this firm does a great job in providing the service it does. They are extremely vulnerable to the boom-bust cycle.

I said to the exec, "You do realize that you are making long term 10 and 20 year commitments with suppliers to get your product, but that your clients are at the most committing to you for only six months, some even less?  Eighty percent of your clients are going to disappear in the next down phase of the business cycle  are you prepared for that?"

The exec responded, "Yeah, we know. We are trying to prepare the best we can." He shrugged and told me about 2 more locations that they are opening.


Bob English Responds to the Suggestion That He May Be A Russian Spy

The Daily Beast hints in a story that Bob English, occasional EPJ and ZeroHedge contributor, and former RT producer, was involved, while in his duties at RT, as a spy for the Russian government. This is his response:

For the record, I, Bob English, am not a spy for the Russian government (or any other).

Monday, Federal prosecutors levied criminal charges against Evgeny Buryakov, one of three Russians alleged to have engaged in espionage against the US.  Several media outlets reported the story, but Shane Harris and M.L. Nestel at The Daily Beast jumped through hoops in a vain attempt to link me and my former employer, RTTV America, to the conspiracy. 

The Daily Beast wrote (emphasis mine):

[T]he trio seemed to have been in contact with higher ups back in Russia. At one point, they were contacted by their chain of command for a last-minute assignment by a “Russian state-owned news organization” to prepare questions for one of their journalists to submit to New York Stock Exchange personnel during an interview.

The alleged spies were given only 15 minutes to come up with questions that could cull valuable information about the intricacies of financial trades. In a sloppy break with their standard operational security, Sporyshev called Buryakov and asked him for advice. Buryakov managed to float two self-serving questions, including whether the NYSE is going to be “limiting the use of trading robots.”

The criminal complaint doesn’t name the news organization. But the state-owned channel RT hosts a number [two, to be exact] of business news programs, several of which reported on the New York Stock Exchange around the time of the conversation recorded in the complaint, in May 2013One month after the phone call between Buryakov and Sporyshev, for example, Prime Interest host Bob English interviewed trader Ben Willis from the floor of the New York Stock Exchange, and the two talked about high frequency trading and robot traders. In the interview, English asks, “Do you think there is still a role for humans to capture back what was lost a few years ago with electronic trading?” While the interview shouldn’t be tied to Buryakov, the line of questioning isn’t so far off from the ones suggested to Sporyshev in May.

A spokesperson for RT told BuzzFeed that it was not the outfit in question.

If the Daily Beast relies upon a quote from BuzzFeed regarding RT’s complicity, that’s fine.  But, upon introducing additional information and indirectly fingering me personally, they owed a journalistic duty to contact me or RT directly.  Unfortunately, the writers did not do this.  Despite the weasel phrase, “While the interview shouldn’t be tied to Buryakov, the line of questioning isn’t so far off…,” The Daily Beast saw fit to connect two dots, the nexus of which is pure fiction.

Innuendo is the tribute yellow journalism pays to actual journalism.

Feel free to watch the interview (beginning 14:40 here) and judge for yourself whether any trading secrets or state secrets were revealed.  Even layman readers would understand this was a relatively light interview that was more a human interest story regarding market action and brokers, as opposed to a hard hitting investigative story.

For the record:

* My interview with Ben Willis on the floor of the NYSE was booked on June 11, 2013.

* The Q&A interaction between the alleged Russian spies took place during the month of May.

* I formulated all questions to NYSE’s Mr. Willis the same day of the interview and received exactly zero input on the questions from any other person or source.

* Inasmuch as I have been programming trading algorithms (not HFT) since 2005, this was a natural line of questioning, given my background.

The next time Shane Harris and M.L. Nestel decide to indirectly tie me to a Russian spy ring under the flimsiest of pretenses, feel free to reach out to me: