Sunday, May 31, 2015

Never Been to Walmart?

Pam Silva emails in response to my comment that I have never been in a Walmart:
Have you ever heard Dolly Parton sing "Coat of many Colors"?
Growing up I was surrounded by kids wearing ill fitting hand me downs, filled with shame.
Now all kids in this country get new clothes thanks to Walmart.
Walmart changed rural areas forever, allowing people to find and buy THOUSANDS of items the little Mom and Pops couldn't/didn't carry.
Walmart changed the world and you can't be bothered to go see it for yourself?

I responded:
Hi Pam,

Actually, I don't think I could name a Dolly Parton song. And, "Coat of many Colors," I don't believe I have ever heard it.

What's great about free markets is that different businesses can provide products to entirely different markets. I understand that Walmart provides products to many at great prices and that is why they have been successful.

I for one am very grateful that free markets have caused the New York Knicks to emerge as entertainment--and even more so NBA League Pass, which allows me to watch every game, I am geographically---but I am guessing that you have probably never been to a Knicks game. Free markets are about incredible choices and that is what makes them great.

Best Regards,

Bob Wenzel

Robert Wenzel
Editor & Publisher
San Francisco, CA

‘San Andreas’ Movie Destroying S.F. is Great Fun, Bad Science

By David Perlman

The latest Big Disaster movie is wiping out San Francisco this week as a monster earthquake and tsunami swallows the city and drowns the Golden Gate Bridge — all in less than two hours on the silver screen.

To the real experts on quakes and their effects — the geologists and emergency specialists who watched it at a Friday night showing sponsored by the city’s Office of Emergency Services — the film is a hoot, and crammed with more ersatz seismic science than Hollywood has ever before conjured up.

But the experts loved it and laughed as the movie’s star, chief firefighter Dwayne Johnson (the Rock), wrestles with his official helicopter, steals a pickup truck, flies a fixed-wing plane and finally uses a million-dollar speedboat to outrun a tsunami’s smashing crest and find safety beyond Mile Rock.

“But he’s headed the wrong way,” geophysicist Ross Stein of the U.S. Geological Survey said with a laugh. “He shouldn’t try to beat a tsunami — he should turn the boat around and head inland into the nearest slough. It’s calmer there.”

Too big for fault

And a really big tsunami is impossible in California, Stein said, because the San Andreas is what geologists call a strike-slip fault and it would inevitably rupture sideways in a real earthquake; it couldn’t do more than make ripples, except perhaps in a harbor, Stein said.

Read the rest here.

Elon Musk's Growing Empire is Fueled by $4.9 Billion in Government Subsidies

It turns out Must is a crony capitalist on steroids.

The Los Angeles Times with the expose:
Los Angeles entrepreneur Elon Musk has built a multibillion-dollar fortune running companies that make electric cars, sell solar panels and launch rockets into space.

And he's built those companies with the help of billions in government subsidies.

Tesla Motors Inc., SolarCity Corp. and Space Exploration Technologies Corp., known as SpaceX, together have benefited from an estimated $4.9 billion in government support, according to data compiled by The Times. The figure underscores a common theme running through his emerging empire: a public-private financing model underpinning long-shot start-ups.

"He definitely goes where there is government money," said Dan Dolev, an analyst at Jefferies Equity Research...

The figure compiled by The Times comprises a variety of government incentives, including grants, tax breaks, factory construction, discounted loans and environmental credits that Tesla can sell. It also includes tax credits and rebates to buyers of solar panels and electric cars...

New York state is spending $750 million to build a solar panel factory in Buffalo for SolarCity. The San Mateo, Calif.-based company will lease the plant for $1 a year...

The federal government also provides grants or tax credits to cover 30% of the cost of solar installations. SolarCity reported receiving $497.5 million in direct grants from the Treasury Department.

The 10 Most Popular Business Establishments in America

To determine the nation’s most popular stores, 24/7 Wall St. reviewed data from Placed, which calculated the percentage of American shoppers who visited various stores in March 2015. 24/7 Wall St. also reviewed fiscal 2014 U.S. sales and store count data that came from recent company financial documents, as well as advertising expenditure figures from AdAge in 2012 and 2013.
These are the most popular stores in America.
1. Wal-Mart
Percent of Americans visiting in March: 51.91%
Number of U.S. stores: 4,516
2. McDonald’s
Percent of Americans visiting in March: 48.4%
Number of U.S. stores: 14,350

The Average Price of a Home in Menlo Park, CA Reached $2.35m in the First Quarter

It's fueled by Janet Yellen money printing and a new Facebook office complex in the city.

FT considers the Facebook angle:
In March, thousands of Facebook employees began moving into the tech firm’s gleaming new office in Menlo Park, a small city of about 33,000 people, approximately 30 miles south of San Francisco. Designed by Frank Gehry, the cavernous 434,000 sq ft complex, with raw-steel beams and 22ft-high ceilings, sits just across from the company’s main headquarters and is already being hailed as an architectural gem. Yet the building symbolises much more than the social networking company’s fondness for modern architecture.
 Since moving its headquarters to Menlo Park four years ago, Facebook has led a building boom that has added thousands of high-paying jobs to the city, while helping to push residential real estate values to record levels. The company says about half of its 10,000-strong global workforce now work out of Menlo Park...
The average price of a home in Menlo Park reached $2.35m in the first quarter of this year, a rise of 19 per cent from the same period in 2014 and 52 per cent higher from 2013, according to the San Mateo County Association of Realtors with data from MLSListings. Average home prices have nearly doubled — up 96.4 per cent — since 2011, the year Facebook moved its headquarters from nearby Palo Alto...Menlo Park’s property rise comes amid another economic boom across the wider Silicon Valley area.
 The job growth rate in the area grew 4.1 per cent in 2014, the highest since 2000, adding almost 58,000 jobs, according to think-tank Joint Venture Silicon Valley. The average annual income reached $116,033, compared with $61,489 in the US as a whole, the study shows. 
“All the strong economic data are creating one of the most frenzied real estate markets since the dotcom boom,” says Penelope Huang, an estate agent at Re/Max Distinctive Properties who has been a broker in the area for 26 years. “We’re seeing the same kinds of bidding wars and sharply rising prices that we saw over a decade ago.”

Jocular Truth Telling by the President of the Federal Reserve Bank of San Francisco

By Bob English

The President of the San Francisco Fed, John Williams, toured Yahoo Financial headquarters in Midtown Manhattan on Monday, May 11, 2015.  Afterwards there was a brief Q&A, in which he proved quite candid.  

Someone asked Williams what warning signs might precede the next financial crisis.  He responded to the effect, "Have you read my research papers regarding the Great Moderation [prior to the financial panic of 2008]?...I'm the last person who should be answering that question."  Laughter ensued.  

The "Great Moderation" moniker turned out to be as ominous and inaccurate as Irving Fisher's 1929 assessment of the stock market as having reached a "permanently high plateau."

As a reminder, Williams serves as a current voting member of the FOMC throughout 2015.  Not only will he vote on one of the most important interest rate policy hikes in Fed history, his own predictions regarding future GDP, employment and price inflation are embedded in the central tendency statistics released by the Fed after each FOMC meeting.  Literally, the entire bond market is influenced by the predictions of Williams and his Fed cohorts.

Yes, the Fed will raise interest rates soon.  Yes, the consciences of the voting members of the FOMC will be temporarily allayed by the results of their own manipulated boom.  And yes, they will ultimately miss the telltale signs of the [beguiling-to-them] inevitable bust phase.

At least Williams got a few laughs from his self-depreciation.  Would that other mainstream economists be as honest in their assessments of central banker omniscience.  Except that they have.  See Bernanke's 2014 farewell speech, or the 2009 missive from a leading establishment economist lackey (hint: it's Paul Krugman).

Time to start taking the Fed at its word: these guys have no clue of what's going on in the "economy."  Prepare accordingly.

The Top 25 Cities to Find a Great Job In

Via and  determined by weighting three factors equally: how easy it is to get a job (hiring opportunity), how affordable it is to live there (cost of living), and how satisfied employees are working there (job satisfaction).

  1. Raleigh, NC – Glassdoor Job Score: 4.1
  • Number of Job Openings: 24,146
  • Population: 1,242,974
  • Median Base Salary: $50,950
  • Median Home Value: $198,400
  • Job Satisfaction Rating: 3.3
  1. Kansas City, MO – Glassdoor Job Score: 3.9
  • Number of Job Openings: 28,786
  • Population: 2,071,133
  • Median Base Salary: $46,000
  • Median Home Value: $138,500
  • Job Satisfaction Rating: 3.2

The California Government at Work: Porn Actors Will Have to Wear GOGGLES

Porn stars may soon be forced to wear goggles along with condoms as part of a stricter set of rules for adult film sets in California, reports the Los Angeles Daily News.

According to a proposed set of regulations, published by the California state Occupational Safety and Health Standards Board, goggles could soon be introduced as a way of preventing the spread of STDs.

 RW note: What implementation of this regulation will do is drive the industry out of California to a "No googles while having sex" state.

(ht Travis Holte)

The Robert Wenzel Show: Dr. Mark Hendrickson Exposes the Problems With Piketty

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**Thanks to John Daubert, Head of Editing and Mastering.**

Saturday, May 30, 2015

Denny Hastert and the Fed's War on Cash

By Jeff Deist

Governments, at least modern western governments, have always hated cash. Cash is private, and cash transactions are hard to tax. As Joe Salerno explains, the US fedgov's relentless War on Cash has been ongoing.
Now one of the primary weapons in that War, the misnamed Bank Secrecy Act of 1970, has targeted a prominent retired politician.
When I worked for Ron Paul in the early 2000s, Illinois Congressman and Speaker of the House Denny Hastert was known as an amiable guy. He was not seen as a political hitman like Newt Gingrich, and thus House Republicans installed him as the kinder, gentler face of the GOP caucus. Behind the scenes, however, he was widely considered a puppet of Majority Leader Tom DeLay and the Bush White House.
Rumors about skeletons in Hastert's closet did circulate among congressional staffers. But it always seemed unlikely that he had a long history of extramarital affairs, simply because of the Bob Livingston debacle. Livingston was tapped to succeed Gingrich as Speaker, until revelations of (Livingston's) marital indiscretions opened the door for Hastert. Surely House GOP leaders would not be so stupid as to nominate another philanderer (gay or straight) for Speaker? But who knows.
Now Hastert has been charged with two noncrimes: allegedly "structuring" over $1 million in cash withdrawals from several banks (i.e. taking out less than $10,000 repeatedly); and allegedly lying to FBI agents about what he had done with the money. 
First and foremost, withdrawing one's own cash from a bank is none of fedgov's business. But of course the feds hate privacy almost as much as they hate not taxing every human transaction. So the Bank Secrecy Act of 1970, sold to the public as a tool to fight money laundering and drug trafficking (for the children!), was born. And along with it came the odious requirement for financial institutions to report any cash withdrawals over $10,000. 
Keep in mind that the original $10,000 reporting rule has never been adjusted for inflation. In 1970, $10,000 could buy a new car, appliances, expensive jewelry, etc. Just keeping pace with official BLS CPI would require raising the reporting amount to nearly $61,000 today! So even if one accepts the premises of the Bank Secrecy Act, individuals should be allowed to withdraw, carry, and conduct business with $60,000 in cash without any suspicion.
Also note that the "structuring" prohibition was added by one of the many amendments to the original Act. Cash withdrawals of $10,000 or more from a bank must be reported, but withdrawals of less than $10,000 may also need to be reported... And the person making this Junior G-Man decision may be a 20 year old bank teller!
While the original Act mandated reporting by financial institutions, subsequent legislation has significantly expanded the types of businesses that must comply. Insurance companies, casinos, car dealers, jewelry dealers, coin shops, and pawn shops have all been deputized into federal service-- and they're all terrified of the penalties for noncompliance. 
As for the charge of lying to FBI agents, are we to take their word for it? Hastert made a terrible and stupid mistake by talking to said agents, but he was not under oath. And the "False Statements Act" is nothing more than a shameful tool for federal agents seeking to elicit dubious confessions from hapless suspects.
Look for the War on Cash to intensify.

The above originally appeared at

True Cost as Compared to What?

Don Boudreaux writes to the Los Angeles Times:
Fashion critic Booth Moore is clearly moved by Andrew Morgan’s new documentary, “The True Cost,” which highlights the terrible work conditions and pay in third-world factories that manufacture the inexpensive clothing now enjoyed by denizens of rich countries (“’The True Cost’ documentary tallies global effect of cheap clothes,” May 28).  Yet not once in her review of “The True Cost” does Ms. Moore ask the key question that is asked by those scholars who, above all others, think most deeply and consistently about true costs: economists.  That question is “As compared to what?”
Compared to work conditions and pay today in rich countries such as the U.S. and Sweden, work conditions and pay today in developing countries are indeed awful.  But despite being the one comparison that apparently is central to the film, this comparison is inappropriate and misleading.  Instead, the relevant comparison is of third-world workers’ current pay and work conditions with these workers’ realistic alternatives.  The fact that so many third-world workers willingly endure the harsh conditions and low pay that now prevail in third-world garment factories is powerful evidence that these workers’ alternatives are even worse.  Therefore, if Mr. Morgan and other activists succeed in their efforts to reduce the rich-world’s demand for clothing produced in the third world, many third-world factory workers will personally suffer the true cost of rich-world-activists’ economically ignorant concern for them – namely, being obliged to toil at jobs that pay even less and in conditions that are even dirtier and more dangerous.
Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA  22030

The above originally appeared at Cafe Hayek.

NIGHTMARE: Massive Obamacare Price Hikes Coming

This report is coming from mainstream Politico:
The cost of Obamacare could rise for millions of Americans next year, with one insurer proposing a 50 percent hike in premiums, fueling the controversy about just how “affordable” the Affordable Care Act really is.
The eye-popping 50 percent hike by New Mexico insurer Blue Cross Blue Shield is an outlier, and state officials may not allow it to go through. But health insurance experts are predicting that premiums will rise more significantly in 2016 than in the first two years of Obamacare exchange coverage. In 2015, for example, premiums increased by an average of 5.4 percent, according to PwC’s Health Research Institute...

“Insurers seem to be reporting higher trend, which means they are seeing bigger increases in health care costs,” said Larry Levitt, senior vice president for special initiatives at the Kaiser Family Foundation. “But really what’s going on here is they now have data showing what the risk pool looks like. Initially in 2014 they were completely guessing about who was going to enroll and how much health care they were going to use.”
Many plans haven’t yet made public their proposed rates; Monday is the deadline for publishing and providing an explanation for rate hikes of at least 10 percent. None announced so far is as dramatic as the New Mexico plan, although a few others are also quite sharp. The Blues in Maryland and Tennessee, both with the largest market share on the exchanges in their states, are seeking increases of more than 30 percent. In Oregon, Moda Health Plan — which attracted more than 40 percent of exchange customers in 2015, despite competing against a dozen other health plans — is seeking average rate increases of 25 percent.

And it could get worse:
Hovering over the rate-setting season is the specter of the King v. Burwell lawsuit currently before the Supreme Court. A ruling is expected in late June, and defeat for the White House would mean subsidies would be eliminated in at least 34 states that use the federal health insurance exchange. That would throw the insurance markets into chaos.
Because of the King uncertainty, at least a half dozen states, including Texas, are allowing insurers to submit two sets of rates depending on which way the court rules. But for the most part the proposed 2016 rates don’t account for the possibility that subsidies might disappear for millions of low-income Americans.
“How do you price for the apocalypse?” asks John Gorman, a consultant who works with insurers.
Government involvement in healthcare needs to stop now. Anything government gets involved in from housing to education ends up with soaring prices.


7 Scientifically Proven Ways to Capture Someone’s Attention

RW note: Those who are familiar with my theory of "give by half" will recognize that it dovetails nicely with the ideas below of Mystery: Leave things incomplete, and Disruption: Break expectations. And I do have complex views somewhat in line with the idea of Reward: Create desire.

By Richard Feloni
Whether it’s pitching your startup to an investor or trying to impress your boss, you likely spend much of your life vying for someone’s attention.
The good news is that there is plenty of research on how the human brain perceives information and directs its focus.

When Walter Williams Smashed Charlie Rangel on Minimum Wage and Unemployment

The Growing and Dangerous War on Cash

McDonald's & The Minimum Wage

Friday, May 29, 2015

How Does the Current Economic Recovery Compare with Others?

The red line represents the current Fed manipulated recovery.


If You Want to Blackmail Someone or Payoff a Blackmailer. Use a Lawyer

Via Travis Holte who points to this:

This, btw, is a corollary to my rule that if you ever want to bribe a government official (for good reason) or do anything the government might later charge you for doing, stick a lawyer in the middle so that he can draw up the necessary legalese or advise you on how to  structure the transaction so that you are protected.


American Express President Dies Suddenly On Flight From Japan To New York

For the record.

Ed Gilligan, the president of American Express, has died.

He was 55 years old.

Gilligan died after becoming ill on a flight from Japan to New York, according to CBS New York

Gilligan was named the company’s president two years ago and joined American Express in 1980 while still a student at New York University, according to the Wall Street Journal.

He was widely considered a possible successor to CEO Ken Chenault, WSJ reported.

Chenault made the announcement via a letter to Amex employees Friday.


(ht Travis Holte)

Here's What 9,000 Years of Breeding Has Done to Corn, Peaches, and Other Crops

By Brad Plumer

Fruits and vegetables have changed a lot since the onset of agriculture 10,000 years ago, as generation after generation of farmers artificially bred crops to select for more desirable traits like size and taste.

But that change can be hard to visualize. So James Kennedy, a chemistry teacher in Australia, created some terrific infographics to show just how drastic the evolution has been. This one, for instance, shows how corn has changed in the last 9,000 years — from a wild grass in the early Americas known as teosinte to the plump ears of corn we know today:

Read the rest here.

Long live human altered food and GMO! Some are good, some are bad but to be against all changes is nuts-RW

BREAKING Silk Road Creator Ross Ulbricht Sentenced

U.S. District Judge Katherine Forrest has sentenced Silk Road creator Ross Ulbricht to LIFE.

More details will be posted here.

There is No Price Inflation Acceleration Threat (Oil Edition)

Oil surged today by 4.5%.

US oil settled today in New York up $2.62, or 4.5%, at $60.30 a barrel.

Crude oil has been climbing (again) since late March:

In Review: 'Taking a Stand' by Rand Paul

I review the new Rand Paul book and its disappointing beltarian economic bent, here.

Feldstein Warns About Developing Price Inflation

My favorite Keynesian economist, the former President and Chief Executive Officer of the National Bureau of Economic Research, former chairman of the Council of Economic Advisers and current Harvard professor, Martin Feldstein, correctly warns:
The Federal Reserve’s unconventional monetary policy during the past five years–the combination of massive purchases of long-term bonds and its promise to keep short-term rates very low for a very long time–caused a sharp rise in the stock market and in the prices of owner-occupied homes. Together these raised household net worth by some $10 trillion in 2013. This large increase in wealth caused households to raise their spending and businesses to invest in new capacity. That increase in spending raised employment by enough to drive the unemployment rate down to just 5.4%. But the very easy monetary policy has also left us with dangerously low interest rates and overvalued assets.

With the overall unemployment rate down to 5.4% and the rate among college graduates at only 2.7%, there is little or no slack left in labor markets. As a result, labor costs are now rising at a faster rate. Compensation per hour in the nonfarm business sector rose at a 3.1% rate in the first quarter of this year, up from 2.5% in 2014 and 1.1% in 2013.

Rising labor costs usually lead to a higher rate of price inflation. This time inflation has temporarily been kept in check by the decline over the past year in the prices of gasoline and other forms of energy and by the rising dollar’s impact on the cost of imported goods. But those offsetting forces are shifting into reverse. With oil prices recently up from their lows and the dollar no longer rising, inflation will be heading higher in the year ahead.
And he sounds Ron Paul-like on the debt situation:
 For the longer term, the economy faces a serious issue of preventing the projected explosion of the national debt. The ratio of the national debt to GDP has doubled in the past decade, from roughly 35% to about 75%. It is projected to start rising again in the near future, heading to 100% of GDP and higher unless legislative action is taken.
I am not a big fan of his big government solution: cut tax breaks, but he sees what is coming.


Uber Unveils Design Concept For Its New, 420,000 Square-Foot Headquarters In SF

Images detailing the design of Uber’s giant new San Francisco corporate headquarters have emerged, showing what the new, two-building corporate campus should look like when it opens up in a few years. The plan is for the new buildings to have more than 420,000 square feet of new office and retail space..

Uber announced a joint venture with Alexandria Real Estate Equities to develop its new headquarters last September, and released a request for qualification for the project on Wednesday.

As part of that bid, Uber released key details around the project, which will include the construction of two buildings on a couple of lots in San Francisco’s Mission Bay neighborhood. The new corporate campus will include one 10-story building and another six-story building, which are designed to be linked by glass walkways between them.

Uber hopes to officially break ground by the end of the year, and is targeting a late 2017 or early 2018 opening for the new buildings.

“Uber was born in San Francisco, and this city has very special meaning for our company. We are excited to expand our presence here and invest in the Mission Bay neighborhood. As part of the standard RFQ process, we have released renderings and a model of the buildings.

Uber would be successful and a survivor, even without the current Fed induced boom, but you have to wonder if the funds would be around for a new building project like this without Janet printing.

It's all about secular trends vs. cyclical trends.


(via Tech Crunch)

IMF Prez: Greek Exit From Euro is ‘A Potential

The head of the International Monetary Fund has acknowledged that Greece could leave the euro, reports FT.

"It’s a potential,” Christine Lagarde told the German newspaper Frankfurter Allgemeine Zeitung, adding that it would be “no stroll” but also that it would definitely not mean the end of the euro.

This would be a great thing if Greece actually had officials who knew how to properly manage a currency. They could screw bankster payments and get on with allowing growth in their economy by sound monetary policy and by removing oppressive regulations.

But sadly, none of the officials in Greece appear to have any grounding in basic, sound economics.

If they re-launch the drachma, Venezuela is going to have monetary madness competition.


2009 Was the Hardest Year to Enter the Workforce

This is not surprising see it was the end of the epicenter of the bust phase of the Fed created bom-bust business cycle.

Thursday, May 28, 2015

The Goldman Sach's Crony Revolving Door Spins Once Again

Andrew J. "Buddy" Donohue will return to the Securities and Exchange Commission as the chief of staff for SEC Chair Mary Jo White.

Donohue is currently a managing director at Goldman Sachs Group Inc.

This is not Donohue's spin through the crony revolving door.

He previously served as director of the SEC's Investment Management Division from May 2006 through November 2010.

He has also worked at Morgan Lewis & Bockius LLP, as well as Merrill Lynch Investment Managers and OppenheimerFunds Inc, the investment fund subsidiary of Massachusetts Mutual Life Insurance Company.

In a statement, White said Donohue will be deeply involved in helping the SEC write rules to protect Goldman Sachs create a uniform fiduciary standard for retail brokers and investment advisers.

To bring full circle to the revolving door cronyism, Donohue was also a member of the board of The Mutual Fund Directors Forum.


Ron Paul Warns CNBC Viewers about the Economy

Ron Paul's appearance in Porter Stansberry commercials has already driven the mainstream crazy. But that was only when ads linking to the Ron Paul videos were appearing online.

Now, Stansberry is running 30 second commercials of Dr. Paul warnings on CNBC. Which first of all indicates that there are a lot of people paying attention to RP, otherwise Stansberry wouldn't be running the commercials there.

Further, these clips are great. They are just Dr. Paul warning of the developing crises in the economy. Everyone who watches CNBC will know DR. Paul's view on what is ahead.

When the inevitable spike in price inflation, the dollar collapse and the downturn in the business cycle occur, everyone will know Dr. Paul saw it in advance.


The 'Misery Index' Professor says Venezuela's Inflation Rate is Over 500%

Steve Hanke writes:
Venezuela’s bolivar is collapsing...I estimate Venezuela’s current annual implied inflation rate to be 510%. This is the highest rate in the world. It’s well above the second-highest rate: Syria’s, which stands at 84%.

Why is Janet Yellen Skipping Jackson Hole?

Mr. Establishment Apologist, gold-hater, Ron Insana hints it may have something to do with the current separate  DOJ and House investigations into a leak from the Fed (that possibly came from Yellen).

Insana writes at CNBC:
The annual economic symposium there, sponsored by the Kansas City Fed, has become a virtual staging ground for new policy declarations from the likes of Alan Greenspan, Ben Bernanke and global central bankers who want to drive home policy points in late August, just before everyone returns from their summer vacation. But something funny is happening on the way to Jackson Hole this year. Fed Chair, Janet Yellen, has decided not to participate, the first Fed chair to skip the trip in modern memory...

[T]here has been some talk that Congress is concerned about whether Ms. Yellen was the source of that Fed leak to the Fed forecasting firm, Medley Global Advisors, founded by the late Richard Medley. He was among those with links to Washington whose Fed forecasts could move markets.

Ms. Yellen admitted to having met with representatives of the firm in June of 2012, though she has denied revealing any sensitive information to them. Other Fed staffers also met with reps from Medley, who a couple months later, released a near perfect prediction of information the Fed would make known a mere day later.

The Department of Justice, and the Fed's internal investigating arm, is also investigating the matter, according to Ms. Yellen, herself.
While I think Ms. Yellen, more likely than not, simply does not want to pre-empt any move the Fed might make in September, it's also possible that she would prefer to keep her head down for a while and announce policy changes through official channels, rather than hint at coming events.
Insana's mention that "there is some talk" that Congress is concerned whether Yellen was the source of the leak is the first direct mention that Yellen may have been the leaker.

This hint from an insider like Insana should not be taken lightly. It continues to look like powers that be may be putting Yellen in play to oust her, which, of course, would mean that the former head of Israel's central bank, current vice-chairman Stanley Fischer, would become acting Fed chair.


The State of the Housing Market (And the business cycle)

This is not what the down phase of the business cycle looks like. What some Austrian school leaning economists fail to recognize is  that the Fed creates a boom AND bust cycle. We are in the "Boom' phase, that is the phase where money is pushed in distorted fashion into the capital goods sector, which includes the stock market and real estate.


Why the Minimum Wage Hike in Los Angeles Could be More Damaging than Hikes in Other Cities

We have already seen how damaging the minimum wage has been in cities like San Francisco and Oakland, with some marginal books stores and restaurants closing.

Given the large population in Los Angeles working at the current minimum wage, the impaat could be much more significant.

Monica Potts has the details:
This week, the Los Angeles City Council voted to increase its minimum wage to $15 an hour, from the current $9, by 2020, joining the ranks of other liberal cities like Seattle and San Francisco who are acting despite federal inaction on the issue. But L.A. is the largest city to have raised the minimum wage so far, and the increase is much higher than the proposed federal hike to a little more than $10 from the current $7.25. Not only that, but as much as 50 percent of L.A.’s workforce may be affected, which is many more people than in any city that has raised its minimum wage so high to date.

Russia’s Central Bank Increasing Gold Reserves

A lesson to learn from Vladimir Putin: When the Empire monetary threatens confiscation, it is time to move into gold.  -RW

CMI Gold and Silver reports:

Russia is increasing its gold holdings because gold is a reserve asset that is free from legal and political risks, a senior Russian central banker said on Tuesday.

The comments by Dmitry Tulin, who manages monetary policy at the central bank, reflect Russian fears that the country’s overseas assets could be frozen as part of a possible toughening of Western sanctions over the Ukraine crisis.

“As you know we are increasing our gold holdings, although this comes with market risks,” Tulin told lawmakers in the lower house of parliament.

“The price of it (gold) swings, but on the other hand it is a 100 percent guarantee from legal and political risks.”

According to central bank data, Russia’s gold reserves rose to 40.1 million troy ounces as of May 1 compared with 39.8 million ounces a month earlier.

(HT Felix Bronstein)

Wednesday, May 27, 2015

These 19 Passports Will Be a Lot More Valuable on July 1st

It seems strange that a complete accident of birth has such a massive impact on someone’s life.
We don’t get to control where we’re born. It’s a fluke really. Yet as soon as we come into this world a particular nationality is thrust upon us like a birthmark that stays with us for life.

Our nationality dictates so many things throughout our life.

It might mean that we’re required to serve in the military-- to go fight and die in some foreign land at the behest of an insensitive, out of touch politician.

It might mean that we’re required to pay an ever increasing portion of our income to finance government largess that we don’t agree with at all.

It can also substantially restrict the places we can go and travel in this world.

A Response to Joshua Sperber’s Libertarian Mythologies

By Luis R. Rivera III

Last night I came upon a recent article attacking libertarianism. I read it and took it upon myself to defend what the author was attacking: libertarianism. Libertarian Mythologies can be viewed in its entirety here:
I begin my paper by dividing up Joshua Sperber’s claims. He makes two claims one normative and one economic. Mr. Sperber’s normative claim is that physical aggression whether it’s global hegemony, imperialism, colonialism, vandalism, coercive purging or war is morally wrong. His economic claims are that capitalism or markets hurt the overall economy. I agree with his normative claim and strongly disagree with his economic view. I address Sperber’s conflation of the state and private sector individual which is the normative part of his argument. This section is followed by Sperber’s views on economics. Both of these sections are buttressed with excerpts from his paper as well as the corresponding rebuttals.

Anthony Bourdain Invested in This Website After the Founder Sent Him a Drunken Email

I am going to rule that this is an indication that Bourdain is an interesting character, rather than this is another example of Fed money printing gone mad.

Bloomberg reports:
Among the many ways for a business to raise capital these days, sending a drunken e-mail to Anthony Bourdain probably isn’t the most fruitful strategy. But it worked for Roads & Kingdoms, a burgeoning Web magazine offering an eclectic mix of food, politics, and travel fare.
“It was like a midnight Hail Mary, but Tony responded right away,” said Matt Goulding, one of two veteran journalists behind the media platform. This morning, Roads & Kingdoms announced that Bourdain has invested an undisclosed sum and joined the startup as a partner and editor-at-large. It's Bourdain's first personal stake in a company, a purchase that expands to digital media a personal brand largely built on TV and books.
In short, the "many glasses" of sake that fueled Goulding's midnight missive paid off.
It wasn't an entirely cold query. Goulding had met Bourdain in 2011 when they were both covering a snail feast in Spain's Catalonia region. At the time, Goulding, known for his book series Eat This, Not That, and then Time magazine editor Nathan Thornburgh were about to launch Roads & Kingdoms. The idea was to enlist hundreds of professional journalists to occasionally pen an essay, shoot a series of photos, or crib a piece of narrative nonfiction from their overflowing Evernote apps and scribbled bar receipts.
Today, Roads & Kingdoms has a staff of 10 people in Brooklyn, N.Y., editing and publishing works from some 500 contributors worldwide. This week, the site featured a first-person account of subsisting solely on Chinese military rations, a deep dive into Kashmir’s heroin trade, and a celebration of drinking pastis in southern France.


A Bankster Think Tank "To Help Educate the World"

JPMorgan Chase & Co has launched the JPMorgan Chase Institute, a think tank.

International Business Times reports:
The institute aims to use real-time big-data analytics for the benefit of policymakers, businesses and the wider public. JPMorgan CEO Jamie Dimon has said the think tank is out to “educate the world.”

As its inaugural report’s conclusions show, perhaps unsurprisingly, the greater good might just be served through Chase’s own banking products...

The institute isn't your typical corporate stab at social responsibility. It has access to a uniquely vast trove of customer data: Chase’s checking and savings accounts. Moored to the largest American bank by assets, the think tank says it can put "the broad spectrum of data within the firm to use for the public good.”

In its first report the institute writes:
 To draw conclusions about household liquidity and income and consumption volatility, we adapted the firm’s internal data on nearly 30 million U.S. account holders into a secure groundbreaking data asset.
The president of the Institute,  Diana Farrell, is a revolving door crony. She was the Global Head of the McKinsey Center for Government and then  an operative in the White House as Deputy Director of the National Economic Council and Deputy Assistant to the President on Economic Policy from 2009-2011. She also coordinated "stakeholder engagement" around the passage of the Dodd-Frank Act and operated as a member of the President’s Auto Recovery Task Force.

Most fascinating is the Institute's Chief of Staff, Director of Operations, Rachel Pacheco.

Pacheco's past consulting and research includes government reforms in Kazakhstan with Tony Blair Associates, climate financing in Indonesia. This looks like the CIA control in the Institute.


Oh Boy, I Have Heard This Before

Yeah right, Ben, real normal:

Developer Building $500 Million Home

San Francisco's Median Rent Climbs to $4,225!!!

A Picasso Sells for $179 Million

Money Supply growth (M2NSA) since the Great Recession:

Here is the last time Bernanke thought things were normal.


Back to the Drawing Board: Self Parking Car Runs Over Reporters

Reports indicate that  the two men hit “were bruised but are ok”. According to “sources the driver forgot to turn on ‘City-Safe’ mode”.

Lower Minimum Wage To $0

By Katie Kieffer

If you love In-N-Out burgers and care about the workers who flip your burgers, then you should support a minimum wage of $0.
Deep down, I know you’re tired of seeing actors jump up and down for TV cameras while waving professional signs that read: “McGreedy! McStingy! McPoverty!” or “McShame. McDonald’s. Raise That Wage.
You weren’t born yesterday. You doubt that these protestors come up with these slogans on their own or fashion them into makeshift signs with their own cardboard, sticks and markers. You suspect they were given signs and paid to wave them. Indeed, in recent protests, 84% of McDonald's "protesters" were not real McDonald's employees but paid and trained professional rioters.
Professional rioters pout and shout in public for a one-time cash payment—not a cause. Since rioters are not entrepreneurs, they do not empathize with the challenges of competing in the restaurant business where profit margins hover at 4%. Nor do they understand the feat of turning a profit while relying on a staff of over-paid and inexperienced high school students.

RW note: Kieffer speaks truth here, Especially in Washington D.C. you see these protestors all the time. They take these protesting gigs becasue they can't get jobs at current high minimum wages. So they take cash from union organizers at below minimum wage rates to protest in favor of higher minimum wages that will keep them out of above ground jobs!

Tuesday, May 26, 2015

A Clue the Fed is Going to Raise Rates in September?

Reports WSJ.
[Fed chair Janet]. Yellen “does not plan to attend the Federal Reserve Bank of Kansas City’s Jackson Hole Economic Policy Symposium in August,” a Fed spokesperson said Tuesday. “However, she looks forward to participating in the symposium from time to time in future years as part of a public speaking schedule that includes a wide variety of venues and events.”
Is this an indication the Fed plans to raise rates in September and she doesn't want to have public exposure before the event?

The 2015 Jackson Hole central banker get together is scheduled for Aug. 27-29, just three weeks before the Fed’s Sept. 16-17 policy meeting. This year’s symposium topic: “Inflation Dynamics and Monetary Policy.”


Piketty AND Egalitarianism Destroyed

Earlier today, I interviewed Professor Mark Hendrickson about his book, Problems with Piketty: The Flaws and Fallacies in Capital in the Twenty-First Century, for the upcoming May 31 Robert Wenzel Show.

I consider Hendrickson's book must reading for anyone interested in economics or public policy. The brief (99 pages) analysis of Thomas Piketty's million plus best seller, Capital in the Twenty-First Century, is devastating in its take down of Piketty's views and, especially, of the idea that within capitalism there is "an inequality problem." 

The book is extremely well written, fast reading and thorough. You won't have to trudge through Piketty's  685 page monstrosity after you read Hendrickson, he covers it all and covers all Piketty's errors.

This book is a great weapon against socialist thinking, leftist thinking in general and interventionist government, buy a copy for yourself and copies for all your lefty friends.


Home Prices Index for Metro Cities Up 5% in March

The Fed manipulated boom is on. The S&P/Case-Shiller's 20-City Composite gained 5 percent year-over-year in March, matching February's pace of appreciation.Home prices in San Francisco and Denver led the gains, increasing by 10.3 percent and 10 percent, respectively. :

Because of the Minimum Wage Hike I Am Moving My Two Companies Out of Los Angeles

The following appeared in the New York Times in a response to Los Angeles Lifts Its Minimum Wage to $15 Per Hour” (front page, May 20)

To the Editor:

I will be moving my two companies out of Los Angeles when the lease is due to renew. I’ve been here since 1966, grew up in L.A., but I cannot make it anymore. When the city compels me to pay employees $15 per hour, it comes out of my pocket. Last year, my employees made more than I, the owner, did. I am still trying to pay off the line of credit that got me through the recession.

I am not a charity. I can’t raise my product prices because of pricing pressure. I can’t reduce my expenses; in fact, salaries are my greatest expense, and $15 per hour increases my expenses and reduces my profit.

Just when small-business owners were clawing out of the recession’s devastation, the L.A. City Council hits us with this. We are the ones who hire people, expand the economy, market our products or services, risk capital for research and development, and buy inventory.

As a result of this decision, L.A. will have a mass exodus of employers from the city, leaving increased unemployment, less tax revenue and increased city debt in its wake.


Woodland Hills, Calif.

(ht Mark Perry)

More Details on the Uptown Station, Oakland Stop Work Order

It appears that the bureaucratic harassment at Upton Station in Oakland was limited to a parking spot, although the stop work order was posted on the building.

As a follow up to my post, And They Wonder Why Progress Never Seems to Get Off the Ground in Oakland, Cinch PR & Branding Group emails:
Hi Robert,

My firm works with Uptown Station and we wanted to reach out to you regarding the story posted on Friday

One of the contractors working on the building had been issued a short-term permit to use a metered parking spot at the building site. That permit expired on 5/20/15 and the stop work order was issued at the parking spot only as a result. The permit was renewed the next day. Work never ceased at the building. 

We would appreciate a clarification to your story. 

Please let me know if you have any questions.


Tegan Kopilenko
Cinch PR & Branding Group
632 Commercial Street
Second Floor
San Francisco, CA  94111


Has Peter Schiff Changed His View on a Fed Interest Rate Hike?

Peter Schiff may have changed his view slightly on a possible Fed rate hike. His lates comment on rates is a bit to nuanced to know four sure. But, whereas, recently he has written that there will be no rate hike and that QE4 is coming, he writes in an essay today:
 I do not believe the Fed has any actual intention of delivering the rate increases that it may expect will damage our already weak economy.
I have no problem with Peter's take here, if by this he means that rate hikes will occur that do not reverse the current up phase of the business cycle. Indeed, as I have stated here in EPJ a number of times. I believe the Fed will raise rates on a "one and watch" basis.

That is, there will not be a series of regularly stepped increases such as the increases made under Alan Greenspan by the Fed:

However, I do not believe that it will be a "one and done" rate hike. The Fed will raise the rate once and watch the markets and economy before hiking again, but they will hike again. Indeed, as I discuss in the EPJ Daily Alert, I expect such a dramatic acceleration in price inflation that the Fed will be caught in a tiger by the tail situation in battling the inflation and that over a two to three year period short-term rates could easily climb to 10% or more---with the Fed still not bringing the inflation under control!

In other words, my view on what the Fed will do with interest rates over the next 2 to 3 years is significantly different than those who think no rate hike is coming or that it will only be a very minuscule rate hike.

The first rate hike will be in the range of 25 basis points, but it will only be one of many over the next 2 to 3 years. As I discuss in the ALERT, this will have significant implications for investments and business operations.

As for Peter's exact view, he is booked for The Robert Wenzel Show in a couple of weeks. so I will get his specific take then. (The show will air at EPJ on June 12).