Russia Readies Back-Up System For Potential "Split With International Banking System"

Authored by Mac Slavo via SHTFplan.com,

The grand order of things could be undergoing some major overhauls.

To put it more bluntly, a war to reset the global financial order is about to be unleashed.

Preparations inside Russia are being made in case the ultimate banking sanctions are placed on them, cutting off commerce inside the all-encompassing Worldwide Interbank Financial Telecomm SWIFT system – which runs credit, debt, and banking card transactions across a real time global network.

As it would be doled out by the banking elites, the price for misbehavior at the Kremlin could be ostracization from this global commerce vehicle.

But that isn’t the end of the story… Putin is readying his people to divorce from the international banking system altogether, and start over with a nationalistic platform, backed by thousands of tons of gold, and growing alliances with Europe, China and the BRICS nations, the Middle East and several emerging powers.

A major attempt to bring Russia under heel could result in the greatest schism the global system of finance has ever seen. Then what?

via Russia Insider:

Russia has successfully developed and implemented an alternative should it be excluded from international banking systems, according to a recent report.

As far as western sanctions go, by far Russia’s largest vulnerability is in its banking sector, which for better or for worse is tied to the hip with international banking.

If Russia wishes to maintain the status quo, there’s not much that can be done about this dependency. But shortly after sanctions were announced in 2014, Moscow set out to prepare for the worst-case scenario: being cut off from the Worldwide Interbank Financial Telecommunication (SWIFT) system.

In layman’s terms, SWIFT allows for fast and (allegedly) secure international financial transfers. In fifty years when you are able to use your Bank of America debit card on the Moon (for a low fee of 2,000 moon rubles), it will be because of SWIFT or a system similar to it.

There are two issues surrounding SWIFT “cut-off” for Russia: 1. Is it likely to happen? and 2. Is Russia prepared for it?

…cutting Russia from SWIFT would be a disaster.

According to Nowotny:

Such a move “we would see as very problematic because it could perhaps undermine confidence in this system,” the governor of Austria’s central bank told reporters… Of course, this hasn’t stopped Europe and Washington from threatening to pull the SWIFT plug.

While it isn’t clear if this is going to happen, threats have been made since the beginning of the issues with Crimea and Ukraine.

And as a result, Putin has overseen the creation of a survival plan from which it could grow stronger. As RT reports:

“There were threats that we can be disconnected from SWIFT. We have finished working on our own payment system, and if something happens, all operations in SWIFT format will work inside the country. We have created an alternative,” Nabiullina said at a meeting with President Vladimir Putin on Wednesday.

She also added that 90 percent of ATMs in Russia are ready to accept the Mir payment system, a domestic version of Visa and MasterCard.

Izvestia daily reported that as of January 2016, 330 Russian banks had been connected to the SWIFT alternative, the system for transfer of financial messages (SPFS).

[…]

The central bank’s website says the system was established “as an alternative channel for interbank cooperation with the aim of ensuring the guaranteed and uninterrupted provision of services for the transmission of electronic messages on financial transactions.”

Will there be economic wars, or outright World War III? Nobody knows for sure, but things could get very tense very quickly. Already, loose allegations are flying at an unprecedented rate. Somebody wants to egg this thing on.

Russia under Putin has seen a significant challenge to a world order that has, for some time, been ultimately controlled by the central banking elite.

The Rothschild presence in Russia has been challenged; Soros-front NGOs have been kicked out, and it seems that only all out war will ever settle these power plays for the dominance or death of the U.S. petrodollar, which is ultimately controlled by the same few hands that steer and control the central banks of nearly all the world’s nations. Only by stealth and monotony have these activities remained in the shadows.

Indeed, the only countries left on the map which have not yielded to yoke of the central bank are the countries that are most at threat of being drawn into war:

–Syria

– Iran

– North Korea

– Cuba

With that list so close to complete, a reversal could be a real blow to global order, and to maintaining orderly deposits.

If Russia moves to drop their central bank, or if they are locked out of the global SWIFT system, it will mean a thudding silence, an unprecedented reversal in the concentration of power.

Russia has prepared to create its own SWIFT-style system as a back up system, that while it is not yet up and running, could one day rival the primary system, and which could provide a meaningful alternative for dissenters and tax evaders alike.

But be aware that behind the scenes, even with this massive and explosive changes in the works, those who control the finances are well aware of the shifts that are taking place, and are in position to reassert their leverage over humanity through new systems, and new centers of power.

Curiously, it cannot be denied that Russia has been a player in the international framework that has been erected. They have been equal partners in covert research and experimentation, and for all the animosity with the U.S., it has also played a willing dance partner for much of what has been going on during the past century.

Vladimir Putin has delicately and masterfully navigated these boundaries, yet he too is woven into the larger fabric. Like George H.W. Bush and the CIA, Putin is a product of the KGB, and remains permanently tied to it.

A monetary power this total does not lose power overnight – and they are not above jumping ship. Only a truly decentralized, private currencies based on mutually beneficial terms for individuals and communities could dissipate that power, and that will not come as easily.

Is the tide turning?

Banks Slash Loan Books While Equities Hover Near All-Time Highs; Someone Is Massively Wrong

Over this past weekend we noted that the Fed"s latest weekly commercial bank loan data revealed some rather shocking deterioration in year-over-year loan growth.  As shown in the chart below, after growing 4.6% one week ago, total loans and leases grew only 4.2% in the week ended March 8: the lowest growth rate since May 2014. However, it was once again the Commercial and Industrial loans creation - or lack thereof - which was more problematic, because after growing 4.0% on a year over year basis as of March 1, and 5.7% one month ago as of February 8, the growth rate has since tumbled to just 2.9%, a 1.1% decline in the growth rate over the past week.

As shown in the chart below, on a cumulative 4-week basis the slowdown in C&I loan creation tumbled by 2.8% as of the latest period: this was the biggest monthly slowdown going back to the financial crisis.

That said, many equity analysts have dismissed the sudden collapse in new business loans as the fortunate side effect of a long-term positive trend whereby corporates are tapping the fixed-rate bond market to take advantage of current low rates and extend out bank debt while reducing exposure to rising floating rates. 

And while that"s a very convenient explanation, particularly for equity bulls, it would seem to ignore the fact that C&I lending standards seemed to tighten at the precise moment that loan volumes started to drop...i.e., it wasn"t a loan demand problem from borrowers but rather a loan supply problem from the banks that caused the collapse in issuance growth.  From Bloomberg:

But it"s not just business loan volumes that are drying up as banks are pulling back in consumer segments as well.  Auto loan growth, for example, was hovering around 8-9% for the first 3 quarters of 2016 but have collapsed over the past 6 months.

So are auto borrowers also tapping the high-yield market to buy their new Camaro"s?  Or, is it possible that banks are starting to take notice of the accelerating delinquency rates that we"ve been pointing out for a while now?

Perhaps banks also noticed that upticks in YoY changes in auto delinquency rates have historically been a fairly decent indicator that all is not well with the economy. 

Meanwhile, credit card charges offs are spiking to "great recession" levels as well.  Unfortunately, there"s no easy way to blame this metric on the high-yield market.

Could it be that banks are actually starting to act prudently with their capital and react to the deteriorating data that equity markets seem all too happy to dismiss?

Goldman: Investors Will Soon Capitulate

After the inflation in P/E multiples has sent the S&P500 to to a level above the 90% percentile of all historical valuations, Goldman has called a time out, and says that there will be no more multiple expansion. As a result only one thing will push stock prices higher "as equity valuations compress as interest rates rise" - higher profits.

In his latest note, Goldman"s equity strategist David Kostin says that his tactical view remains that S&P 500 has peaked at 2400 and (unlike BofA"s recent flipflop which now expects the S&P to keep rising to 2,450 after earlier predicting a 2,300 year end target) will fade to 2300 by year-end. In fact, looking dead ahead, Goldman comes about as close as it has in recent months warning of an imminent market drop: "investors will soon capitulate on their expectation of upside to 2017 EPS forecasts as they face the reality that the accretive impact from tax reform will not occur until 2018. In fact, revisions to consensus EPS forecasts during the past few months have been negative for both 2017 and 2018."

But don"t worry: like other recent sellside notes, any imminent corrections (or crashes) will be a "buy the dip" opportunity, and thus Goldman keeps its year-end 2019 S&P 500 target at 2500, a 6% rise from the current index level and implies a forward P/E multiple contraction of 5% to 18x.

Below are some further observations on the current state of the market from Kostin.

Thursday marked the 8th anniversary of the current bull market, making it the second-longest on record. On March 9, 2009, the S&P 500 index traded at 677 and it now stands at 2365, reflecting a price gain of 250% or 17% annualized (19% annualized with dividends). Happy Birthday indeed!

But the current bull market is really a tale of two sub-cycles (Exhibit 1).

During the first phase (March 2009 to April 2011), the market rallied on the back of a rebound in earnings from the depths of the Global Financial Crisis. Higher profits accounted for 66% of the index’s 102% gain while P/E multiple expansion explained just 17% of the rally (faster expected EPS growth contributed the remainder; see Exhibit 2).

In 2011, the US only narrowly averted defaulting on the national debt. As Congress dithered over the debt ceiling, the S&P 500 plunged by 19%, just missing the 20% threshold typically used to define a bear market. Hence, some investors debate over whether the current bull market started from the low in 2009 or after the debt ceiling debacle in 2011. Since the market low of 1099 in 2011, the S&P 500 has climbed by 115%.

This second phase of the bull market has lasted more than five years and has been driven mostly by an increase in valuation rather than the level of profits. The adjusted P/E multiple climbed to 18x from 10x, explaining 71% of the rise in the index. Higher earnings accounted for just 28% of the rise.

After the inflation in P/E multiple, the S&P 500 now trades at the 90th percentile of historical valuation relative to the past 40 years. Current consensus forward P/E of 18.1x is the highest level since 1976 outside of the Tech bubble. The median stock trades at the 99th percentile vs. history.

The drivers of a bull market matter for investors. Some rallies are powered by earnings while others rely on valuation. Since 2011, real GDP expanded at an average annual pace of 2%, Fed funds hovered at extraordinarily low levels, and the valuation of stocks surged. However, looking forward, growth in an economy with limited slack will lead to rising inflation, higher interest rates, and a lower P/E multiple.

We are on the cusp of the Fed accelerating its pace of tightening. The Current Activity Indicator (CAI) from our US Economics team stands at 4.4% following the strongest ADP report in three years, above-consensus payroll gains of 235K, and an unemployment rate of 4.7%. Our wage tracker has accelerated to 2.8%. Next week we expect the FOMC will tighten the funds rate by 25 bp (to 0.75%-1.0%) and futures imply an additional two hikes during the remaining nine months of 2017 to roughly 1.4%. The 10-year US Treasury yield equals 2.6% and is marching towards our 3% year-end target.

 Continued US economic expansion will lift operating EPS by 13% to $127 by 2019 (adjusted EPS of $134). Our 2500 year-end 2019 target for the S&P 500 represents a 6% rise from the current index level and implies an adjusted forward P/E contraction of 5% to 18x from 19x, consistent with our forecast of higher interest rates. Simply put, only higher profits will support higher stock prices because equity valuations will almost certainly be lower.

Our tactical view remains that S&P 500 has peaked at 2400 and will fade to 2300 by year-end. S&P 500 has rallied by 11% since the election amidst optimism that corporate tax reform will increase S&P 500 earnings. However, investors will soon capitulate on their expectation of upside to 2017 EPS forecasts as they face the reality that the accretive impact from tax reform will not occur until 2018. In fact, revisions to consensus EPS forecasts during the past few months have been negative for both 2017 and 2018. There are only two drivers of stock performance when multiples stop expanding: (1) Earnings growth, and/or (2) expected earnings revisions.

March Missile Madness: Odds Of A North Korean WMD Attack In Next Month Tops 60%

Authored by Marie DuMond via Beyond Parallel,

A Predata-Beyond Parallel prediction indicates there is a 43% chance of North Korean WMD activity taking place in the next 14 days. In the next 30 days, there is a 62% chance for North Korean WMD activity. Beyond Parallel defines WMD activity as nuclear tests and ballistic missile launches.

As seen below, Predata’s North Korea WMD overview signal captured a notable spike in conversations beginning on March 4, just two days prior to North Korea’s March 6 missile launches, and the signal has remained elevated since. Further, the signal’s 30-day exponential moving average started trending up on March 4, reaching its highest point in the previous 90 days on March 6. These signals indicate there are more March missile tests to come from North Korea.

(click image for interactive version)

The underlying signal for this prediction started spiking on February 28, also capturing a notable spike in conversations prior to the March 6 launches, and remaining elevated since. Indeed, the 30-day exponential average for the North Korea WMD missile test signal has been edging up since February 18.

These signal predictions are in line with, and corroborated by, other Beyond Parallel empirical studies of North Korean behavior and events on the Korean peninsula. March 1 kicked off the annual spring joint U.S.-Republic of Korea (ROK) military exercises to which North Korea often issues strong statements and sometimes conducts provocations. Beyond Parallel studies have found that the U.S.-ROK exercises themselves do not provoke North Korea. Rather, it is the state of U.S.-North Korea relations in the 4-8 week window prior to the joint exercise period that serves as the best indicator of North Korean behavior during these annual exercises. When U.S.-North Korea relations during this window are coded as negative then the exercise period will see a high level of provocations. And this year’s bilateral relations between the United States and North Korea have certainly been negative.

North Korea’s missile program has been rapidly developing with a fast pace of missile testing on a wide variety of missile types in recent years. To explore North Korea’s ballistic missiles in further detail, visit the CSIS Missile Defense Project.

These predictions are made possible through a Predata-CSIS Beyond Parallel collaboration seeking to bring open source intelligence tools and big data analytics to issues related to the Korean peninsula. The signals are drawn from open sources across the internet which provide a rich source of information for insights and context to current events and ongoing trends. Predata’s analytics are paired with Beyond Parallel databases of historical events to analyze current trends and make predictions about future events.

Washington Post Employee Arrested On Charges Of Impersonating ICE Agent - Weapons And Tactical Gear Recovered At Home

Washington Post employee Itai Ozderman, 35, was arrested after his Gaithersburg, MD home was raided by Montgomery County Police on February 22nd at around 6 a.m, according to court documents. Ozderman is charged with impersonating an ICE officer on several occasions throughout Falls Church, VA.

When the warrant was served on Feb. 22 at Ozderman"s home in the 100 block of Elmira Lane, court documents say 10 weapons, including handguns, assault rifles, and a shotgun, were recovered.

Sources tell ABC7"s Kevin Lewis that Ozderman impersonated an ICE officer throughout Falls Church, Va. on more than one occasion. According to sources, Ozderman would "patrol" while wearing a bullet proof vest with an ICE placard and a Baltimore County police badge. -WJLA

Ozderman, an I.T. engineer at the Washington Post, is currently out on bond. No word on whether this alleged #FakeAgent is still employed with one of the original MSM outlets responsible for the term #FakeNews permeating the public lexicon.

Washington Post employee arrested on charges of impersonating ICE agent. Weapons, tactical gear, badge recovered. ????https://t.co/hKBiUClP1A pic.twitter.com/bv0JMkuBJF

— ZeroPointNow (@ZeroPointNow) March 7, 2017

 

Content originally generated at iBankCoin.com * Follow on Twitter @ZeroPointNow

Selling Of French Bonds Accelerates As Le Pen Extends Lead, Macron Tumbles In Latest Poll

Another day, another headache for owners of French bonds. In the latest French presidential poll, conducted by Elabe for TV broadcaster BFMTV, Marine Le Pen extended her lead by another 2-3 points, while support for her primary centrist challenger Emmanuel Macron, tumbled by 5 points in the last week.

The poll, released today, showed that Le Pen"s lead rose by either 1.5 points to 27% or by 2 points to 28%, depending whether centrist candidate Francois Bayrou would take part in the election...

... or withdraw.

The most surprising result, however, is the plunge in Macron"s odds, who lost five points in the first round voting intentions compared to the same poll conducted two weeks ago. Macron, who is the former French economy minister and who is running on a pro-EU platform, fell to third place behind right-wing candidate Francois Fillon, whom he eclipsed earlier in the month after a major embezzlement scandal erupted in which Fillon was accused of using public funds to pay for his family"s wages. Fillon gained 3 points in both variations of the poll.

But more concerning for her opponents, was the notable gains Le Pen made in the second round, where while still trailing behind both Fillon and Macron, she has seen a 4 points gain in the past week, shrinking the difference between Macron in the runoff round to 59-41. Until several weeks ago, she was firmly in the 20% range.

Meanwhile, as we have observed virtually every single day in the past three weeks, the better Le Pen does the polls, the higher French yields rise, and the greater the spread to German bunds....

... over fears that a Le Pen victory would be the last nail in the coffin for the Eurozone. Le Pen"s FN party has warned it would take France out of the Eurozone, return to the French franc, and would redenominate billions in French debt, a step which leading economists and rating agencies last week declared would to "massive sovereign default" and global financial chaos.

Russia's Lavrov To Tillerson: "We Do Not Interfere In The Domestic Matters Of Other Countries"

Secretary of State Rex Tillerson met his Russian counterparty, Foreign Minister Sergey Lavrov, at a G20 summit in Germany in the pair’s first meeting since Tillerson became secretary of state, and comes as a possible Russia-US rapprochement is in the spotlight. Moscow and Washington have much to discuss, Lavrov told Tillerson at their first meeting in Bonn, Germany, on Thursday.

"Mostly, it includes issues addressed by the two presidents during their phone conversation. I think that we could identify parameters of our future cooperation on each of those topics," he stated.

More importantly, Lavrov once again focused on current developments in Washington in which Trump administration links to Russia are under the spotlight, and said that these are US domestic affairs, in which Moscow has no interest in meddling.

"You should know we do not interfere in the domestic matters of other countries," Lavrov told reporters when asked if "turbulence" in the American capital has ramifications for US-Russia relations.

Lavrov meets with US Secretary of State Tillerson in Germany https://t.co/HGtXiPsfkP pic.twitter.com/4LtaUVy2S0

— RT (@RT_com) February 16, 2017

He spoke days after U.S. President Donald Trump asked for the resignation of his key national security adviser Michael Flynn amid questions about his conversations with Russian officials. He added the two countries had "plenty of issues" to discuss."

Earlier comments from the Russian Foreign Ministry suggested that Syria and sensitive bilateral issues would be discussed at the meeting, RT reported.

The US State Department told reporters the upcoming conversation with Lavrov “obviously will be a very important one,” adding that Tillerson is likely to use the occasion to seek “ways for pragmatic and constructive cooperation in areas where our interests overlap.” Areas of mutual interest might include “counter-ISIS [Islamic State] and counterterrorism” efforts, State Department officials said at a special briefing.

The officials also said that Tillerson would not soften Washington"s stance on Ukraine, a crisis which remains largely unresolved. The secretary of state would “push for full implementation of the parties’, including Russia’s, commitments under the Minsk agreement for the Donbass.”

Ukraine and the issue of economic sanctions look like becoming a stumbling block for future dialogue between Moscow and Washington. President Donald Trump has claimed that Crimea – a region that was reunited with mainland Russia following a 2014 referendum – was “taken” by Moscow, prompting a measured but swift response from the Russian Foreign Ministry.

“Crimea is part of the Russian Federation,” Zakharova told reporters on Wednesday.

It will be the first time Lavrov has met the newly-appointed Tillerson. It comes as US-Russia relations are under particular scrutiny following the election of President Trump, who has repeatedly pledged to mend ties with Moscow.

Top U.S. Secret Service Agent Rages: "I Wouldn't Take A Bullet For Trump"

Submitted by Mac Slavo via SHTFPlan.com,

(Pictured: Secret Service Denver District Chief Kerry O’Grady)

As the last line of defense for the leader of the world, America’s Secret Service agents are tasked with risking their lives and even standing in the way of a bullet should it be headed towards the President.

But after a tumultuous election year some in the agency are not prepared to do their sworn duty.

In a series of recent Facebook posts Kerry O’Grady, reportedly one of the nation’s top Secret Service agents, said she would not be willing to take a bullet for the President.

Kerry O’Grady, the special agent in charge of the Secret Service’s Denver district, oversees coordination with Washington-based advance teams for all presidential candidate and presidential trips to the area, including all upcoming or future trips by the president, vice president or Trump administration officials.

Despite her senior security role, she has made her disdain for Trump and his incoming administration clear to her Facebook followers, who included current and former Secret Service agents and other people who were employees at the time of the posts.

Via: The Washington Examiner

The posts, written during the heat of the campaign in late 2016, show that O’Grady was a Clinton supporter and likely assumed Hillary would be elected to the Presidency. Such a move may have done wonders for her career had Clinton become her boss.

In her initial post O’Grady raged about how she is “horrified and dismayed” by Trump and his supporters moving “our civil rights into a period of bigotry, misogyny and racism that this country has not tolerated for decades.”

She quickly followed up with another post, in which she claimed she’d rather go to jail than to take a bullet for President Trump:

…this world has changed and I have changed. And I would take jail time over a bullet or an endorsement for what I believe to be disaster to this country and the strong and amazing women and minorities who reside here.

The full Facebook post was captured by The Washington Examiner and was subsequently deleted when the news organization reported it this Tuesday:

While her actions are certainly being applauded, albeit behind closed doors, by mainstream media pundits who have previously joked about the assassination of President Trump, The Washington Examiner notes that while America’s First Amendment protects our free speech, Secret Service employees agree to enhanced restrictions when joining the agency, including the following two rules:

• May not post a comment to a blog or a social media site that advocates for or against a partisan political party, candidate for partisan political office, or partisan political group.


• May not use any email account or social media to distribute, send or forward content that advocates for or against a partisan political party, candidate for partisan political office, or partisan political group.

Though O’Grady now claims that she would uphold her duty and protect the President, the cat is out of the bag and it is clear that neither the President or his family would be safe in her presence.

The Secret Service said on Tuesday that they are “aware of the postings and the agency is taking quick and appropriate action.”

We suspect Ms. O’Grady’s career with the Secret Service will be coming to an end in short order:

Explaining Dysfunctional Illinois in One Word, One Idea, One Person

Submitted by Mike Shedlock via MishTalk.com,

One Word: Corruption

One Idea: Public Unions

One Person: House Speaker Mike Madigan
 

On Saturday, union servitude came to an end in Kentucky: State Kills Prevailing Wages, Passes Right-to-Work

No such chance exists in Illinois despite the fact that corruption, prevailing wages, pension disasters, public unions, and the dire fiscal straits of Illinois all go hand in hand.

Illinois is under the hard control of House Speaker Mike Madigan who is the Legislative Branch Dictator. Nothing gets passed without his approval.

Madigan’s Power

• Dole out committee chair positions and the stipends that come with them.


• Control who votes in committees.


• Dictate when a bill will be called for a vote.


• Control what bills make it to a vote.

Under House rules in Illinois, these committee chairs are appointed by and serve at the pleasure of the speaker. This means the speaker may remove and replace committee chairs for any reason at any time. Additionally, the speaker can create new special committees, and thus dole out even more chair positions.

The speaker’s influence doesn’t end there. Each of these committee leadership positions comes with a generous $10,000 yearly stipend. These stipends help push Illinois lawmakers’ salaries to the fifth-highest in the nation.

Total average compensation for lawmakers is now nearly $100,000 for what is essentially part-time work. Those stipends help boost the pensionable salaries of lawmakers who participate in the state pension plan, making the positions much more attractive than one might guess at first glance.

Speaker Corruption

Illinois legislators benefit from their own corruption and Mike Madigan intends to keep it that way. His tax firm is one of the biggest beneficiaries of his power.

The state could benefit from pension reform, workers’ compensation reform, property tax reform, school reform, bankruptcy reform, prevailing wage reform, and right to work reform.

None of them have a chance because Madigan will not let a single bill out of committee.

Those who cross Madigan find themselves ousted from committee perks at a cost of $10,000 per.

Illinois corruption is so bad that that it’s no wonder Illinois loses 1 resident every 4.6 minutes, and could fall behind Pennsylvania in population.

Shrinking Illinois

About to Become Number Five

Plea for Help

Madigan’s only answer is higher taxes. But higher taxes and union corruption are the driving force behind citizens leaving the state.

Higher taxes, union work rules, and unfriendly corporate rules, especially workers’ compensation, are the driving force behind the Illinois business exodus.

Meanwhile, cities are squeezed by prevailing wage laws and the lack of right-to-work laws that drive up expenses for every public project.

There is some hope at the national level thanks to the incoming Trump administration. To get things off on the right foot, the new U.S. legislature needs to do three things to help states like Illinois right themselves.

Three National Level Priorities

1. National right-to-work legislation that supersedes state legislation


2. Scrap Davis-Bacon and all prevailing wage laws


3. Bankruptcy legislation that allows municipalities to file when they want to, not when dictators like Madigan allow them.

In regards to point number 3, bankruptcy law is currently a mixed bag. Municipal bankruptcies are governed by Federal law, not state law. However, the existing law lets states decide whether to opt in. Illinois did not.

The Chicago Public school system is bankrupt in all but name. There are also more than a handful of Illinois cities that desperately need to get out from pension promises that absolutely cannot be met.

The only rational solution is bankruptcy, not higher taxes. The later will drive more businesses and citizens away.

Right-to-Work States

It’s not just for Illinois that needs help. The National Right To Work Map looks like this (Kentucky not penned in yet).

Illinois and other states hamstrung by public unions, pension woes, and high costs three things at the national level: right-to-work laws, bankruptcy reform, and prevailing wage elimination.

The Illinois Chamber of Commerce and the Chamber of Commerce of each Illinois city need to make their representatives aware of what needs to be done.

It would also behoove the Illinois chambers’ of commerce to reach out to plighted cities in other states so their respective chambers preach the same message to their legislative representatives.

Citi: "There Is Something Strange Going On... Something Doesn't Smell Right"

With the Dow Jones rising excruciatingly close, or within 0.37 points of 20,000 on Friday only to let down the market cheerleaders in the last minute, it would appear that there is nothing one can throw at a market which is determined to keep rising no matter what happens in the world.  So leave it to our favorite skeptic, Citi"s Matt King to throw a fly in the ointment by asking how is it possible that "nothing sticks to markets."

He proposes one possible reason: perhaps analysts were overly pessimistic going into the election and year end, which is possible considering the "most synchronized DM upturn in years"...

... an upturn, which however, has been largely predicated by the reflexivity of soaring stock markets, which in turn have spiked not on actual news, but frontrunning the "everyone"s-a-winner-under-Trump" trade...

... which however may never actually materialize in practice, and which could very well also lead to a recession as the surging dollar leads to a global GDP slump while paralyzing financial conditions (see recent record FX volatility in China).

As King then notes, earnings bullishness gets you only so far, and as the chart below shows, the recent surge in global stock prices is not a function of earnings, but expanding P/E multiples relative to Trasuries, which then prompts him to ask why, now that yields are surging, "shouldn"t we be discounting using higher bond yields."

This is turn prompts King to propose one of his trademark rhetorical questions: "There Is something strange going on" adding that "something doesn"t smell right" in a world in which uncertainty is soaring yet spreads are collapsing, as SocGen first pointed out last month in its "most frightening credit chart", even as leverage also keeps rising.

What is the "key ingredient" in the mix that makes sense out of this market chaos? Simple: according to King, central bank buying of anything that is not nailed down is the "missing link."

Furthermore, despite all talk of a shift from monetary to fiscal stimulus, "central banks aren"t done yet", not by a long shot:

Which in turn has - so far - allowed markets to ignore the reality that the credit bubble is getting bigger by the day as debt and interest coverage continue to rise while EBITDA still shrinks, resulting in late cycle fundamentals and valuations.

And yet, there is always a tipping point: according to King, such a point would arrive once real yields spike higher "not matched by a pick-up in growth."

His final rhetorical question: how long until this tipping point happens? The answer: 50 basis points.

Now if only a 50 basis point spike in real yields would also put an end to all the other "strange things" taking place in a world which is burning every day, yet where the Dow Jones is partying like it"s 19,999.

Steven Mnuchin Donated To One Democrat In 2016 – The Woman Who Declined To Prosecute His Bank

Submitted by Mike Krieger via Liberty Blitzkrieg blog,

Wednesday’s post, Donald Trump Has an Enormous and Very Dangerous Wall Street Blind Spot, highlighted the fact that the bank run by Trump’s Treasury Secretary nominee, Steven Mnuchin, was given a pass by California attorney general Kamala Harris, despite the discovery of over a thousand legal violations. Kamala Harris has since been (s)elected to the U.S. Senate.

Let’s recap some of what we learned:

In the memo, the leaders of the state attorney general’s Consumer Law Section said they had “uncovered evidence suggestive of widespread misconduct” in a yearlong investigation. In a detailed 22-page request, they identified over a thousand legal violations in the small subsection of OneWest loans they were able to examine, and they recommended that Attorney General Kamala Harris file a civil enforcement action against the Pasadena-based bank. They even wrote up a sample legal complaint, seeking injunctive relief and millions of dollars in penalties.

But Harris’s office, without any explanation, declined to prosecute the case.

Sen. Ron Wyden, the top Democrat on the Senate Finance Committee, warned: “Given Mr. Mnuchin’s history of profiting off the victims of predatory lending, I look forward to asking him how his Treasury Department would work for Americans who are still waiting for the economic recovery to show up in their communities.”

The consistent violations of California foreclosure processes outlined in the memo would indicate that Mnuchin’s bank didn’t merely act callously, but did so with blatant disregard for the law.

According to the memo, OneWest also obstructed the investigation by ordering third parties to refuse to comply with state subpoenas.

The memo also raises questions about then-California Attorney General Kamala Harris, who was sworn in as a U.S. senator on Tuesday, and who will soon have to vote on Mnuchin’s appointment.

Why did her office close the case, deciding not to “conduct a full investigation of a national bank’s misconduct and provide a public accounting of what happened,” as her own investigators had urged?

In the days since this story broke, there’s been a lot of well deserved scrutiny pointed in the direction of Ms. Harris, yet she’s failed to provide a satisfactory answer as to why her office failed to prosecute. Which got me thinking about another paragraph from the above article:

Harris’s prodigious fundraising also raises questions about how attentive she is to the needs of campaign contributors. Prior to signing on with Trump, Mnuchin donated to members of both parties. He gave $2,000 to Harris’ Senate campaign in February 2016. Among the investors in OneWest Bank was major Democratic donor George Soros, who maxed out to Harris’ campaign in 2015.

Did he really “donate to members of both parties.” Technically, yes, but it appears Kamala Harris was the only Democrat he donated to in 2016. Which raises all sorts of obvious questions. As the Sacramento Bee noted last month in its article, Kamala Harris Won Over Many Californians, Steve Mnuchin Included:

Donald Trump, promising to drain the swamp, picked former Goldman Sachs executive and Hollywood financier Steven Mnuchin to be his Treasury secretary, fitting because Mnuchin helped fatten Trump’s campaign treasury as his campaign finance chairman. Mnuchin donated $592,600 to Republicans in 2016, including $430,000 to Trump, Federal Election Commission records show. A onetime Hillary Clinton donor, Mnuchin gave one donation this year to a Democrat, $2,000 to help elect Attorney General Kamala Harris to the U.S. Senate.

Well isn’t that interesting. Mnuchin gives one donation to a Democrat, and it just so happens to be the woman who inexplicably protected his bank from prosecution. Click here to see his 2016 donations.

While $2,000 is a small amount of money, the entire thing stinks. Kamala Harris should resign from her Senate seat immediately unless she can provide a reasonable explanation of why she let OneWest off the hook. Likewise, Steven Mnuchin should be replaced by Trump as Treasury Secretary nominee. Both are swamp creatures, and we should demand better than these two.

The 80 Billion Euros a Month Stimulus - Only Thing Holding Up Markets (Video)

By EconMatters

We discuss the final catalyst for the global asset market crash in this video, it starts and ends with Mario Draghi and the ECB, take away this 80 Billion Euros from hitting developed financial markets each month, and the entire system collapses, the quintessential Ponzi Scheme if ever there was one. The FTSE is overvalued by a substantial margin, and is a long-term short!

Central Bankers have been more irresponsible than any malfeasances that occurred in the Financial Crisis of 2007, they have set the stage with unsound, extreme monetary policies that barely helped the real economy, and succeeded in inflating the biggest bubble in Financial Markets History, that is going to cause The Biggest Global Recession in Modern History. The amount of Capital getting destroyed from such ridiculous levels is going to make the financial crisis look like a speed bump in comparison when this Ponzi Scheme Can Kicking Extreme Monetary Policy Experiment Implodes! 

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Nearly 3,000 US Communities Have Lead Levels Higher Than Flint

Submitted by Nadia Prupis via TheAntiMedia.org,

A Reuters investigation this week uncovered nearly 3,000 different communities across the U.S. with lead levels higher than those found in Flint, Michigan, which has been the center of an ongoing water contamination crisis since 2014.

click image for link to interactive map...

The investigation found that many of the hot-spots are receiving little attention or funding. Local healthcare advocates said they hope the reporting will spur action from influential community leaders.

All of the communities Reuters investigated had lead levels at least two times higher than Flint’s; more than 1,000 were four times higher. In most cases, the local data covered a 5- to 10-year period through 2015, the analysis states.

Areas affected by lead poisoning populate the map from Texas to Pennsylvania, reported Reuters‘ M.B. Pell and Joshua Schneyer. The available data charts 21 states that are home to about 61 percent of the U.S. population.

Despite the massive drop in lead poisoning rates since the 1970s—when heavy metals were phased out of paint and gasoline—many communities throughout the country are still at risk.

“The national mean doesn’t mean anything for a kid who lives in a place where the risks are much higher,” said Dr. Helen Egger, chair of Child and Adolescent Psychiatry at NYU Langone Medical Center’s Child Study Center.

Like Flint, many of the communities are mired in “legacy lead,” Reuters reported—old industrial waste, crumbling paint, or corrosive pipes. But few have received help or attention.

Contamination in children can cause cognitive difficulties, which in turn can lead to low school performance, few job opportunities, and trouble with the law. That cycle was examined last year when 25-year-old Baltimore resident Freddie Gray died after his spine was severed in police custody. Amid protests against brutality and racism, many noted that Gray experienced lead poisoning as a child while living in an area with persistently high exposure levels.

But the problem is nationwide and affects a vast spectrum of communities, Reuters writes. Milwaukee, Wisconsin still has “135,000 prewar dwellings with lead paint, and 70,000 with lead water service lines,” and $50 million has already been spent to protect the city’s children. Many families do not have the funds to make the repairs themselves, and laws requiring owners to remove lead from their properties are not consistent state by state.

“Reporters visited several of the trouble spots: a neighborhood with many rundown homes in South Bend, Indiana; a rural mining town in Missouri’s Lead Belt; the economically depressed North Side of Milwaukee,” Pell and Schneyer write. “In each location, it was easy to find people whose lives have been impacted by lead exposure. While poverty remains a potent predictor of lead poisoning, the victims span the American spectrum—poor and rich, rural and urban, black and white.”

In St. Joseph, Missouri, one of the most contaminated neighborhoods included in the study, even a local pediatrician’s children had lead poisoning.

Earlier this month, the U.S. Senate approved a $170 million aid package to repair Flint’s corrosive pipes and fund recovery efforts. But that is 10 times the budget the U.S. Centers for Disease Control and Prevention (CDC) allotted for lead poisoning assistance this year, Reuters notes.

“I hope this data spurs questions from the public to community leaders who can make changes,” epidemiologist Robert Walker, co-chair of the CDC’s Lead Content Work Group, told Reuters. “I would think that it would turn some heads.”