Equity 1 Group
Pushing back the frontiers of economic ignorance and restoring sound financial foundations, one family at a time.

Aug
27

Years ago, an elderly, frail Japanese martial arts master once boasted a 200-0 record against his opponents.

He claimed to have a unique power that allowed him to inflict serious injury on people without actually laying a finger on them.

Was it Chi? Magic? None of the above. It was a total scam. But that didn’t matter.

You see, the legend of the master’s powers turned out to be far more powerful than reality.

His core following of students believed in the master so much that they would fling themselves across the dojo whenever he raised his pinky finger.

And anyone who saw the display would become transfixed by the perception of the master’s extraordinary abilities. It was an incredible case of mass delusion.

Everyone believed it, including the master himself. He was so confident in his skills that he put up a $5,000 challenge that he could beat any fighter in the world.

A mixed martial arts champion accepted the wager, and the result wasn’t pretty.

As you can see in the video, the master is quickly knocked to the ground with a broken nose and a pool of blood. Observers scramble to find a doctor to come to his aid.

You can almost hear the sound of reality quickly taking hold from the gasps of his students. No one could bring themselves to believe that the master had been so quickly beaten. Read the rest of this entry »

Aug
27

Six months since Larry Summers first suggested “it;’s time to kill the $100 bill,” and three months after The ECB actually killed the €500 Note, another Harvard ‘scholar’ is reinvigorating the war on cash.

Amid claims that paper money fuels corruption, terrorism, tax evasion, and illegal immigration, Ken Rogoff (ironically of “It’s Different This Time” infamy) says the US should get rid of the $100 bill (and $50s and $20s) proposing, in his words, “a ‘less-cash’ society, not a cashless one, at least for the foreseeable future.”

According to the esteemed ivory tower academic, paper currency lies at the heart of some of today’s most intractable public-finance and monetary problems. As Rogoff explains in The Wall Street Journal, getting rid of most of it – that is, moving to a society where cash is used less frequently and mainly for small transactions – could be a big help.

Rogoff’s begins by stating factoids as facts…

There is little debate among law-enforcement agencies that paper currency, especially large notes such as the U.S. $100 bill, facilitates crime: racketeering, extortion, money laundering, drug and human trafficking, the corruption of public officials, not to mention terrorism. There are substitutes for cash—cryptocurrencies, uncut diamonds, gold coins, prepaid cards—but for many kinds of criminal transactions, cash is still king. It delivers absolute anonymity, portability, liquidity and near-universal acceptance. It is no accident that whenever there is a big-time drug bust, the authorities typically find wads of cash.

Read the rest of this entry »

Aug
27

Another canary in the coal mine has just dropped to the bottom of its cage.

A few weeks back, I wrote about evidence that the bubble-ized new car business – “sales” inflated by the same kinds of financial flim-flam that gave us the housing bubble just about ten years ago – is on the verge of popping.

And may have already popped.

Now comes another indicator.

Sales of Chevy’s Camaro muscle car and its two rivals, the Ford Mustang and the Dodge Challenger, have stalled.

Suddenly, too.

As if they just ran out of gas – all three of them – all at once.

This after several years of double digit increases.

Now, the reverse is happening.

Camaro is down an ominous 15.4 percent for the year to date (January to July) despite the current model benefitting from an update that few, if any people could find fault with. The car looks virtually the same as the previous version – which was hugely popular – but is now several hundred pounds lighter and so it’s both quicker and more fuel efficient than it was before. That kind of thing usually increases sales of a muscle car.

It hasn’t.

Same thing over at Ford and Dodge. Both of their muscle cars have been improved recently and neither has lost any of the attributes that made them successful… until now.

So what’s up?

Read the rest of this entry »

Aug
27

In one of the best summations of 2014, and the West in general, English filmmaker Adam Curtis asks some very basic questions of the British economy– questions that really apply to the entire Western World [including the United States].

How is it, for example, that UK Chancellor of the Exchequer George Osborne can tell his nation that the economy is growing… but at the same time wages are going down?
How is it possible that the deficit is going down… but the deficit is also going up?
Why is the British government cutting spending by billions of pounds, but the central bank is pumping billions of pounds back in to the economy?
How is it that those billions of pounds being pumped into the economy are only making their way into the hands of the wealthiest people?
And how is it possible that no one seems to know? That no major mainstream media outlet is covering the story of the greatest transfer of wealth in history?
One can ask these same questions for nearly every western nation that has engaged in Quantitative Easing… most notably the United States.
The answer is pretty clear. As Curtis shows in just five simple minutes, this is the modern day version of Orwell’s world— it’s power through propaganda and confusion. See for yourself:
Aug
27

The relationship between those who are constantly watched and tracked, and those who watch and track them, is the relationship between masters and slaves.

Yesterday, Bloomberg published a lengthy expose on a company called Persistent Surveillance Systems, which has been secretly surveilling the people of Baltimore on behalf of the police since January.

Pritchett had no idea that as he spoke, a small Cessna airplane equipped with a sophisticated array of cameras was circling Baltimore at roughly the same altitude as the massing clouds. The plane’s wide-angle cameras captured an area of roughly 30 square miles and continuously transmitted real-time images to analysts on the ground. The footage from the plane was instantly archived and stored on massive hard drives, allowing analysts to review it weeks later if necessary.

Since the beginning of the year, the Baltimore Police Department had been using the plane to investigate all sorts of crimes, from property thefts to shootings. The Cessna sometimes flew above the city for as many as 10 hours a day, and the public had no idea it was there.

Are we citizens, or are we subjects? I think the answer is obvious.

A company called Persistent Surveillance Systems, based in Dayton, Ohio, provided the service to the police, and the funding came from a private donor. No public disclosure of the program had ever been made.

Outside the courthouse, several of the protesters began marching around the building, chanting for justice. The plane continued to circle overhead, unseen…

A half block from the city’s central police station, in a spare office suite above a parking garage, Ross McNutt, the founder of Persistent Surveillance Systems, monitored the city’s reaction to the Goodson verdict by staring at a bank of computer monitors. “It’s pretty quiet out there,” he said. The riots that convulsed the city after Gray was killed wouldn’t be repeated. “A few protesters on the corner, and not much else. The police want us to keep flying, but the clouds are getting in the way.”

McNutt is an Air Force Academy graduate, physicist, and MIT-trained astronautical engineer who in 2004 founded the Air Force’s Center for Rapid Product Development. The Pentagon asked him if he could develop something to figure out who was planting the roadside bombs that were killing and maiming American soldiers in Iraq. In 2006 he gave the military Angel Fire, a wide-area, live-feed surveillance system that could cast an unblinking eye on an entire city.

So war technology coming home to roost without any public debate whatsoever. Don’t say you weren’t warned. Recall:

Read the rest of this entry »

Aug
27

I like to say policy objectives are invisible ink and policy results are the colored glasses that expose them.

You see, policy makers always tell us how they design and implement policies targeted at middle class America.  However, time after time after time, the only segment of society that fails to realize any benefit from any policy is middle class America.  Yet for some mind boggling reason we continue to allow these policy makers to carry on with this skullduggery.  

The chart really tells you everything you need to know about economic policy objectives for the past three decades.

The above chart depicts Wall Street real profits (black line), non-financial corporate real profits (red line) and real median weekly wages and salaries (blue line) all indexed back to 1982 (this is an important period where antitrust policies broke down under the Reagan admin).

What we find is that while median wages and salaries have increased by a paltry 9% over the past 35 years, corporate income is up 250% and Wall Street income is up almost 800%.   And so over the decades this story line about policies targeting the middle class is absolutely, in every way, a total and complete fabrication.  This chart doesn’t happen by accident nor could it be the result of honest mistakes.

The above results expose the hidden agenda perpetrated by Congress and the Fed.  

The American middle class is a patsy in a system designed to do exactly what it has done.  

International trade agreements and excessive money printing do help Wall Street and Corporate America but do not help the middle class.  This is made absolutely clear in the above chart.  And if you are one of those typically shallow regurgitators of the theories you’ve been told, well tell it to the facts above.

Aug
25

Warren Buffett claims that gold is worthless because it doesn’t produce anything. Fair point, but what if the other sectors of the economy also stop producing?

KB Banner 5G MC Repsol

“If you think of gold, the only way gold loses is if normal business and private sector cycles come back. If that is the case, gold goes back 100 dollars per ounce. The other outcomes, deflation, stagflation, hyperinflation are good for gold,” said Viktor Shvets, global strategist for investment bank Macquarie Group. So gold wins in three out of four scenarios, but none of the three are particularly appealing. 

He believes aggressive action by the world’s central banks after the financial crisis has covered up a lack of private sector productivity.

Also, the movements of central banks and governments have replaced private sector investment signals such as earnings and employment data. So everything comes down to confidence in central banks.

“If people become more confident, gold will ease back. But when the chickens come home to roost, gold will come back,” he said. Gold futures have rallied 26 percent this year after the Federal Reserve shook confidence in its ability to manage the economy by raising interest rates last December. Junior gold mining stocks, the companies most sensitive to gold price increases rallied 155 percent this year.

The lack of success of conventional monetary policies in spurring economic activity has prompted some Fed officials to call for more unconventional methods in case the economy turns south again.

Read the rest of this entry »

Aug
25

Image result for blockchain bank images

That was fast.

Yesterday I told you how a consortium of 15 Japanese banks had just signed up to implement new financial technology to clear and settle international financial transactions.

This is a huge step.

Right now, most international financial transactions must pass through the US banking system’s network of correspondent accounts.

This gives the US government an incredible amount of power… power they haven’t been shy about using over the last several years.

2014 was one of the first major watershed moments when the Obama administration fined French bank BNP Paribas $9 billion for doing business with countries that the US doesn’t like – namely Cuba and Iran.

It didn’t matter that this French bank wasn’t violating any French laws.

Nor did it matter that only months later the President of the United States inked a sweetheart nuclear deal with Iran and flew down to Cuba to attend a baseball game with his new BFFs.

BNP had to pay up. A French bank paid $9 billion because they violated US law.

And if they didn’t pay, the US government threatened to kick them out of the US banking system.

$9 billion hurt. But being kicked out of the US banking system would have been totally crippling.

Big international banks in particular cannot function if they don’t have access to the US banking system.

As long as the US dollar remains the world’s dominant reserve currency, major banks must able to clear and settle US dollar transactions if they expect to remain in business.

This means having access to the US banking system… the gatekeeper of the US dollar.

Read the rest of this entry »

Aug
25

Image result for subprime auto delinquency image

There was a troubling development at the end of July, when as we noted at the time, the largest US subprime auto lender delayed its Q2 earnings released due to “Accounting matters”, an event which promptly raised red flags not only over the fate of the company (whose stock plunged as a result), but the entire US subprime auto space.

This is what SC said as justification for its 10-Q filing delay:

Santander Consumer USA Holdings Inc. (NYSE: SC) (“SC” or the “Company”) announced today that it will delay the release of its Q2 2016 financial results, previously scheduled for Wednesday, July 27, 2016, because the Company’s financial statements for the quarter have not yet been completed.

The Company is in discussions with its current and previous independent accountants regarding certain accounting matters, primarily related to the Company’s discount accretion and credit loss allowance methodologies. The resolution of these matters may impact prior period financial statements and the timing of the filing of the Company’s quarterly report on Form 10-Q for the quarter ended June 30, 2016 (the “Form 10-Q”).

The Company is working diligently to file the Form 10-Q and schedule its earnings call as soon as practicable.

One month later, the accountant discussions continue, as yesterday the company provided the following terse update

Santander Consumer USA Holdings Inc. (NYSE: SC) (“SC” or the “Company”), is delaying the filing of its Quarterly Report on Form 10-Q for the quarter ended June 30, 2016 (the “Form 10-Q”) beyond the August 15, 2016 extended filing date.

Read the rest of this entry »

Aug
25

Wealthy Have Nearly Healed From Recession; the Poor Haven’t

The Great Recession and the subsequent recovery from it have deepened the wedge between the very wealthy and everyone else in America, plunging the poor deeper into debt and wiping out two-fifths of the wealth held by families in the heart of the middle class. The wealthiest Americans, meanwhile, appear close to regaining all their losses over the same period, according to an analysis released last week by the Congressional Budget Office. – Washington Post

This analysis helps prove a point we’ve been making for years: Fed stimulation provided by too-low interest rates does NOT stimulate industry only finance and speculation.

The Congressional Report doesn’t seem to mention central banking, so in this article we will rectify the omission. The entire justification for central banking is that it helps policymakers produce prosperity. But it doesn’t.

We don’t need a government analysis to confirm this but it’s useful to have because it illustrates once more the truth of what’s occurring in terms of economic manipulation. The entire apparatus of monetary leadership, and its influence on the marketplace itself, does not deliver what it is supposed to.

The idea is that the Fed provides additional liquidity as necessary. But this is a form of price-fixing. In a  normal economy where the government itself was not involved in “adjusting¨ the value and volume of currency, the value would be provided by the market itself.

This is the way it has traditionally worked throughout history. The last century has been one enormous experiment. But the consequences are obvious.

Read the rest of this entry »

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