Mitch McConnell Leads Alison Lundergan Grimes for First Time in Poll

Senate Minority Leader Mitch McConnell leads Democrat Alison Lundergan Grimes in the Bluegrass Poll for the first time, reports MarketWatch and National Journal has several important takeaways for the closely watched race. Among them: that McConnell is gaining ground, even though his lead is just two points. He trailed Grimes by four points in February and one point in May. Further, Grimes is winning women voters by just a single percentage point. To win in November she likely needs to win more women. The poll is sponsored by four media organizations in Kentucky.

US Imposes Additional Sanctions on Russia; Russia Has Spent More Than $30 Billion in an Attempt to Prop Up the Ruble

As part of the escalating tension between the US and Russia, over Ukraine, the US Treasury Department imposed sanctions that prohibit U.S. persons from providing new financing to three major Russian financial institutions, limiting their access to U.S. capital markets.  Treasury today has also designated one Russian state-owned defense technology firm pursuant to Executive Order (E.O.) 13661.  These measures coincide with actions taken to suspend U.S. export credit and development finance to Russia.

Specifically, Treasury today imposed measures prohibiting U.S. persons and persons within the United States from transacting in, providing financing for, or otherwise dealing in new debt of longer than 90 days maturity or new equity for Bank of Moscow, Russian Agricultural Bank, and VTB Bank OAO, their property, or their interests in property.  As a practical matter, this step will severely limit these banks’ access to medium- and long-term U.S. dollar financing.

The Treasury today has also designated and blocked the assets of United Shipbuilding Corporation, pursuant to E.O. 13661, for operating in the arms or related materiel sector in Russia.

United Shipbuilding Corporation, which was established pursuant to a March 21, 2007 Russian presidential order, is a Russian state-owned company that manufactures, among other things, ordnance and accessories, and is engaged in shipbuilding, repair, and maintenance. United Shipbuilding Corporation designs and constructs ships for the Russian Navy and is the largest shipbuilding company in Russia. This addition expands upon the list of eight defense technology firms designated on July 16.

As a result of today’s action under E.O. 13661, any assets of the entity designated that are within U.S. jurisdiction must be frozen. In addition, transactions by U.S. persons or within the United States involving the entity designated today under E.O. 13661 are generally prohibited.

During a White House conference call today that I participated in, a senior Administration official, as evidence of the impact of US sanctions on Russia, pointed out that the Russian ruble has declined by 8% since the start of the year, despite the Russian central bank aggressively intervening to stem the decline. According to the official, Russia has spent more than $30 billion in an attempt to prop up the ruble.

-RW

Make a 3D BobbleHead of Yourself!

Amazon has launched a new 3D printing store that allows users to customize and build earrings, bobblehead toys and other items from third-party sellers using a new personalization option on its website, reports NyPo.

Most of the more than 200 items available on the company’s new 3D printed products store can be customized using a new feature that allows users to rotate and change the item they are viewing, including a 3D bobblehead of yourself.




The store is here.

The bobblehead maker is here.

C’mon Alan! Bubbles Are Caused By Central Bankers, Not “Human Nature”

By David Stockman

Alan Greenspan just cannot give up the ghost. During his baleful 18-year reign, the Fed was turned into a serial bubble machine—and thereby became a clear and present danger to honest free market capitalism and an enemy of the 99% who do not benefit from the Wall Street casino and the vast inflation of financial assets which it has enabled.  His legacy is a toxically financialized economy that has extracted huge windfall rents from main street, and left it burdened with overwhelming debts and sharply reduced capacity for gains in real living standards and breadwinner jobs.

Yet after all this time Greenspan still insists on

INSIDE STORY: My Awkward Call With the Late Alan ‘Ace’ Greenberg

By John Crudele

Ace Greenberg liked to play cards. Bridge was his favorite game, but he was known to keep a deck of cards on his desk to distract himself from the rigors of Wall Street trading.

But in 1987, or it could have been 1988, Ace and I played a different game — cat and mouse.

Back at the time I was writing a financial column called “The Bottom Line” for New York Magazine.

Corporate takeovers were big then, and I was breaking news about companies going after other companies and corporate raiders making a nuisance of themselves.

Alan “Ace” Greenberg, who died Friday from cancer at the age of 86, was running Bear Stearns at the time. He was a legend on Wall Street and in bridge circles.

And mostly because of Greenberg, Bear had become a favorite of corporate raiders who would buy a big stake in companies through that brokerage firm and then — using that leverage of those purchases — got the target’s management to do whatever the raiders wanted.

The raiders were making lots of money. Bear Stearns was doing a lot of business. And I was filling up a bunch of columns. So it was all good — for a while.

I started to notice there were leaks when many of these raiders had accumulated stock. The rule was that buyers would have to file with the Securities and Exchange Commission whenever they purchased 5 percent or more of a company’s shares.

But word was leaking out whenever someone got to, say, 4.9 percent or 4.5 percent. In other words, someone wanted the world to know that the company was under attack, but he didn’t want to get the SEC involved.

This bothered me, but not for the reason you might think.

Read the rest here.

Freedom is Neither “Left” nor “Right”

Richard Ebeling emails:

The usual political distinction between the political “left” and the political “right” in America is a false dichotomy because many American liberals and conservatives are actually merely variations on the same collectivist theme.

Their difference relate only to the form, type and purpose for which they wish to use the government to advance their ideological purposes and special interest groups that keep them in power.

The friend of freedom sees the true and essential political distinction to be between those who value and defend individual rights, private property and the free market, and those who desire to control the lives and actions of other through political force...

I have a new article that appears on the news and commentary website of “EpicTimes.”

http://www.epictimes.com/2014/07/freedom-is-neither-left-nor-right/

Reckless Monetary Policy Resulted in the US Ditching the Gold Standard and the Truth About Bretton Woods

Benn Steil, author of The Battle of Bretton Woods: John Maynard Keynes, Harry Dexter White, and the Making of a New World Order, writes at WSJ:

This month marks the 70th anniversary of the historic United Nations Monetary and Financial Conference in Bretton Woods, N.H., today known simply as Bretton Woods. The conference, attended by 44 allied nations in the wake of the D-Day landings at Normandy, established the International Monetary Fund, the World Bank and a global fixed exchange-rate system based on the U.S. dollar and gold. The latter lasted until 1971, when President Nixon ended the last remnants of the dollar's gold convertibility.

The name of the remote New Hampshire town has become virtually synonymous with enlightened, cooperative globalization. After all, the quarter-century post-World War II "Bretton Woods era" was marked by robust economic recovery and the formalization of a multilateral trading system.

It is thus no surprise that in the wake of the 2008 global financial crisis world leaders were calling for "a new Bretton Woods" to restore economic order.

But was Bretton Woods actually the cause of the postwar economic revival? The simple answer is no...

 [T]he monetary system established at Bretton Woods cannot be said to have started until 1961, 15 years after the IMF was inaugurated, when the first nine European countries formally adopted the convertibility commitments required by IMF Article VIII. By then the system was already under strain as European nations converted excess dollars to gold, depleting the U.S. gold reserves underpinning the dollar's supposedly indelible gold-backing...

The designer of the Bretton Woods monetary system, U.S. Treasury official Harry Dexter White, had told Congress that there was "no likelihood" that "the United States will, at any time, be faced with the difficulty of buying and selling gold at a fixed price freely." But the U.S. rejected any obligation to manage its monetary policy such that it would always have enough gold to back the dollars it issued. And so in the end it didn't.

BREAKING: Ukraine Firing Ballistic Missiles

CNN is reporting that, in a major escalation, Ukraine is using ballistic missiles against rebel separatist forces.

It appears that the missiles are  tactical ballistic missile, designed for short-range battlefield use.

Wikipedia reports:

Tactical ballistic missiles fill the gap between conventional rocket artillery and longer-range theatre ballistic missiles. Tactical missiles can carry heavy payloads deep behind enemy lines in comparison to rockets or tube artillery, while having better mobility and less expense than the more strategic theatre missiles. Additionally, due to their mobility, tactical missiles are better suited to responding to developments on the battlefield.

For many nations, tactical missiles represent the upper limit of their land-based military equipment. They can provide a powerful weapon for a very economical price, and in some cases are sought to help level the field against opponents who are clearly superior in other areas of military technology.

It is very likely that Russia will provide more advanced weapons to separatists in response to this escalation.

Silicon Valley Obama-Pelosi "Feast in Time of Plague" Invitation

Posters went up Monday night all over Hollywood as President Obama visits the area for a $32,000 per plate fundraiser at the home of Shonda Rhimes, producer of the hit TV show Scandal.

The posters feature a modified version of the Scandal logo, which now reads “Scandals” and a quote from Rhimes's infamous commencement speech at Dartmouth where she urged graduates, “Don’t be an asshole,” reports The Week.

There are other posters:

The Chart That Will Scare You Out of Your Wits

ZeroHedge is running the chart below. It shows that after rising by 18.2% in April, the San Francisco housing market in May posted only a 15.4% Y/Y price increase: the lowest since 2012.

As long term EPJ readers know, I am not one to offer up casual correlations, and project out extrapolations from the correlations. There are no constants in the world of human action. Relying simply on correlations can be very dangerous. It has brought down many traders and firms, including Long Term Capital Management and those who held subprime adjustable rate mortgages.  However, I always look to see if there is a paraxeological way to explain a correlation. The bubbles pictured in the above chart all coincide with significant slowdowns in money supply growth. Austrian business cycle theory explains the praxeological reason why slowdowns in money supply growth generally lead to economic crashes. The money supply is starting to slow again. This probably explains the dip in San Francisco housing prices.

Money supply growth has become very erratic in recent months, but if the current slowdown continues,we are likely headed for another economic crash. In the EPJ Daily Alert, I am watching money supply growth very closely. Indeed, based on the method I use to calculate money growth, I have set a target slowdown rate for money growth that might be hit this week. If money growth comes in below the target, I will be advising in the Alert for  aggressive traders to start shorting the US stock market. (I have already advised investors to start liquidating long positions, except in one sector.)

Bottom line: We are in a very delicate time with regard to the stock market, real estate and economy, money supply growth must be watched very closely. We are very close to heading off a financial cliff once again. I am not sounding a full alarm warning just yet, but I am very close.

-RW

It's Nice to Have Good Relations with Top NYC Gvt. Officials: NYC Construction Contractor Buys Billy Joel's House for $19.9 Million

Tom Iovino, whose Judlau Inc. contracting firm has over $1 billion worth of contracts with the MTA, just bought Billy Joel's East Hampton house for $19.9 million, reports NyPo.

NyPo's Richard Johnson adds:

Iovino [also] bought a $9.6 million apartment on Fifth Avenue at 93rd Street in 2006 shortly after his firm was contracted to build the East Side Access tunnels for a new LIRR station in Grand Central. 

Judlau is also revamping the 63rd Street subway station.

“He’s a really nice guy, and plays at Sebonack Golf Club,” one source told me.

Krugman: Listen to the Gentiles

 In a new post, Paul Krugman spills the beans on the crony nature of establishment economics:

[M]odern academic economics is very much an interlocking set of old-boy networks; to some extent this has become even more true since the decline of the journals, with most discourse taking place via working papers long before formal publication. I used to refer to the international trade circuit as the floating crap game — the same 30 or 40 people meeting in conferences all over the world, reading and citing each others’ work; it’s the same in each sub-field. And to some extent it’s inevitable: there’s so much stuff out there, and you have to filter somehow, so you mainly read stuff by people you know and people they tell you are worth reading.

But it’s also true that this is a tendency one ought to lean against. One of my principles for research has always been “Listen to the Gentiles“.

His  “Listen to the Gentiles“ link then takes us to an MIT paper in which he wrote while teaching at MIT:

RULES FOR RESEARCH

In the course of describing my formative moment in 1978, I have already implicitly given my four basic rules for research. Let me now state them explicitly, then explain. Here are the rules:

1. Listen to the Gentiles..

What I mean by this rule is "Pay attention to what intelligent people are saying, even if they do not have your customs or speak your analytical language."

It's too bad he hasn't taken his own advice to learn better the theories of Austrian school economics, of which, if one is charitable, one can say, at best, that Krugman has a limited Swiss-cheese understanding of.

On another note, in the same MIT paper, I found this introspective comment by Krugie fascinating:

There are a lot of things about my life and personality that I regret -- if things have gone astonishingly well for me professionally, they have been by no means as easy or happy elsewhere. But in this essay I only want to talk about professional regrets...[An]  important regret is that while the MIT course evaluations rate me as a pretty good lecturer, I have not yet succeeded in generating a string of really fine students, the kind who reflect glory on their teacher. I can make excuses for this failing -- students often prefer advisers who are more methodical and less intuitive, and I all too often scare students off by demanding that they use less math and more economics. It's also true that I probably seem busy and distracted, and perhaps I am just not imposing enough in person to be inspiring (if I were only a few inches taller ...). Whatever the reasons, I wish I could do better, and intend to try.

-RW

More George Soros Tentacles Revealed...

This time in the country of his birth.

Politics.hu reports:

Amid the heavy international coverage of the Hungarian government’s campaign against foreign-funded NGOs comes a surprising development: János Lázár, the head of the Prime Minister’s Office and the most high-critic of such organizations was himself linked to a[n].... NGO financed by left-wing financier George Soros...

Hungarian Prime Minister Viktor Orbán was also a recipient of Soros’s largess while studying in the United Kingdom for several months in 1989.

A "Dear John" Letter From Jackie O.

Ben Dreyfuss at Mother Jones writes:

In 1947, years before she met John F. Kennedy, Jacqueline Lee Bouvier sent her high school boyfriend what is maybe my favorite Dear John letter of all time.

"I’ve always thought of being in love as being willing to do anything for the other person—starve to buy them bread and not mind living in Siberia with them—and I’ve always thought that every minute away from them would be hell—so looking at it that [way] I guess I’m not in love with you."

It's Getting Serious: Social Security's Disability Insurance Trust Fund is Only Two Years Away From Running Out of Money

By Robert Wenzel

The  Social Security and Medicare Boards of Trustees have issued their annual financial review of the programs. It isn't pretty.

Taken in combination, if you believe government accounting, Social Security's retirement and disability programs[OASDI] have dedicated resources sufficient to cover benefits for the next 19 years, until 2033.

However, even under tortured accounting, the projected depletion date for the separate Social Security's Disability Insurance (DI) Trust Fund is only two years away, in late 2016. Dedicated DI revenues are projected to cover only about 80 percent of scheduled benefit payments. "Legislation will be needed to address this financial imbalance," says the Treasury.

The Medicare Hospital Insurance Trust Fund (HI) will have sufficient funds to cover its obligations until 2030 based on the tortured accounting.

That said, remove the phony accounting and the real situation is

The Very Creepy, Kissinger Connected, Theranos

I have already commented on the very curious firm Theranos and its very curious board that includes Henry Kissinger and a bunch of politicos and military men on the board of directors. (SEE: What is Henry Kissinger and Gang Up To Now?)

The  cover story is that Theranos is a firm that offers comprehensive laboratory tests from samples as small as a few drops of blood at very low prices. It will thus disrupt the diagnostic sector and make complex tests available to the poor throughout the world. But as one observer put it, Kissinger may be many things, but a humanitarian is not one of them. In my initial commentary,I speculated that, perhaps, the tests were going to be a way for Kissinger and team to loot some international health related organizations:

A blood diagnostic company this may be, but with this crowd involved something else is probably up. Perhaps, Kissinger gave it away when he mentioned the tests will "bring this advance to developing nations." Could this mean it is a scam to siphon UN and WHO money for the test? If that is the extent of the scam, my guess is the US citizenry will get off fairly lightly, with just a few dollars from each taxpayer ending up in the pockets of Kissinger, Schultz, Bechtel et al. But with this group they seem to enjoy rubbing in an extra layer of evil. Theranos needs to be monitored closely.

I am glad I added the cautionary note with my speculation. I just came across this in a  2013 WSJ profile of Theranos CEO Elizabeth Holmes

Ms. Holmes declines to discuss Theranos’s future plans, though one may speculate. There could be military applications in the battlefield, especially given the numerous framed American flags across the Theranos office and the presence on its corporate board of retired Gens. Jim Mattis and Gary Roughead, former Defense Secretary Bill Perry and former Secretary of State George Shultz.

Framed American flags across the Theranos office? Very creepy.

And the same profile includes this news from former Secretary of State and Treasury, and current Bechtel Corporation capo, George Shultz (Riley P. Bechtel-Chairman of the Board and a Director of Bechtel also sits on the board of Theranos)

 In a conversation about a year ago, Secretary Shultz said Ms. Holmes could be "the next Steve Jobs or Bill Gates. "

When I put it to him again on my recent visit, he smiles slyly. "This is not the last thing she's going to invent or create."

-RW

UPDATE:

Major Theranos Scandal Brewing; Henry Kissinger Involvement

Obama Tells Linda Ronstadt He Had Crush on Her

The prez passed out propaganda medals Monday at the White House.

Among the recipients was Linda Rondstat.

The president hung a National Medal of Arts around her neck and revealed, "I had a little crush on her back in the day."

She's looking different from when I remember her.

Rumor has it she hummed this while leaving WH.

-RW