STOCK MARKET WATCH -- Wednesday, 8 April 2015

[Tansy_Gold]

[font size=3]STOCK MARKET WATCH, Wednesday, 8 April 2015[font color=black][/font]

SMW for 7 April 2015

AT THE CLOSING BELL ON 7 April 2015
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Dow Jones 17,875.42 -5.43 (-0.03%)
S&P 500 2,076.33 -4.29 (-0.21%)
Nasdaq 4,910.23 -7.08 (-0.14%)


[font color=green]10 Year 1.89% -0.02 (-1.05%)
30 Year 2.52% -0.03 (-1.18%) [font color=black]


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[font color=red]Partial List of Financial Sector Officials Convicted since 1/20/09 [/font][font color=red]
2/2/12 David Higgs and Salmaan Siddiqui, Credit Suisse, plead guilty to conspiracy involving valuation of MBS
3/6/12 Allen Stanford, former Caribbean billionaire and general schmuck, convicted on 13 of 14 counts in $2.2B Ponzi scheme, faces 20+ years in prison
6/4/12 Matthew Kluger, lawyer, sentenced to 12 years in prison, along with co-conspirator stock trader Garrett Bauer (9 years) and co-conspirator Kenneth Robinson (not yet sentenced) for 17 year insider trading scheme.
6/14/12 Allen Stanford sentenced to 110 years without parole.
6/15/12 Rajat Gupta, former Goldman Sachs director, found guilty of insider trading. Could face a decade in prison when sentenced later this year.
6/22/12 Timothy S. Durham, 49, former CEO of Fair Financial Company, convicted of one count conspiracy to commit wire and securities fraud, 10 counts of wire fraud, and one count of securities fraud.
6/22/12 James F. Cochran, 56, former chairman of the board of Fair, convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud, and six counts of wire fraud.
6/22/12 Rick D. Snow, 48, former CFO of Fair, convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud, and three counts of wire fraud.
7/13/12 Russell Wassendorf Sr., CEO of collapsed brokerage firm Peregrine Financial Group Inc. arrested and charged with lying to regulators after admitting to authorities he embezzled "millions of dollars" and forged bank statements for "nearly twenty years."
8/22/12 Doug Whitman, Whitman Capital LLC hedge fund founder, convicted of insider trading following a trial in which he spent more than two days on the stand telling jurors he was innocent
10/26/12 UPDATE: Former Goldman Sachs director Rajat Gupta sentenced to two years in federal prison. He will, of course, appeal. . .
11/20/12 Hedge fund manager Matthew Martoma charged with insider trading at SAC Capital Advisors, and prosecutors are looking at Martoma's boss, Steven Cohen, for possible involvement.
02/14/13 Gilbert Lopez, former chief accounting officer of Stanford Financial Group, and former controller Mark Kuhrt sentenced to 20 yrs in prison for their roles in Allen Sanford's $7.2 billion Ponzi scheme.
03/29/13 Michael Sternberg, portfolio mgr at SAC Capital, arrested in NYC, charged with conspiracy and securities fraud. Pled not guilty and freed on $3m bail.
04/04/13 Matthew Marshall Taylor,fmr Goldman Sachs trader arrested, charged by CFTC w/defrauding his employer on $8BN futures bet "by intentionally concealing the true huge size, as well as the risk and potential profits or losses associated."
04/04/13 Matthew Taylor admits guilt, makes plea bargain. Sentencing set for 26 June; faces up to 20 years in prison but will likely only see 3-4 years. Says, "I am truly sorry."
04/11/13 Ex-KPMG LLP partner Scott London charged by federal prosecutors w/passing inside tips to a friend in exchange for cash, jewelry, and concert tickets; expected to plead guilty in May.
08/01/13 Fabrice Tourré convicted on six counts of security fraud, including "aiding and abetting" his former employer, Goldman Sachs
08/14/13 Javier Martin-Artajo and Julien Grout charged with wire fraud, falsifying records, and conspiracy in connection with JP Morgan's "London Whale" trade.
08/19/13 Phillip A. Falcone, manager of hedge fund Harbinger Capital Partners, agrees to admit to "wrongdoing" in market manipulation. Will banned from securities industry for 5 years and pay $18MM in disgorgement and fines.
09/16/13 Javier Martin-Artajo and Julien Grout officially indicted on charges associated with "London Whale" trade.
02/06/14 Matthew Martoma convicted of insider trading while at hedge fund SAC (Stephen A. Cohen) Capital Advisors. Expected sentence 7-10 years.
03/24/14 Annette Bongiorno, Bernard Madoff's secretary; Daniel Bonventre, director of operations for investments; JoAnn Crupi, an account manager; and Jerome O'Hara and George Perez, both computer programmers convicted of conspiracy to defraud clients, securities fraud, and falsifying the books and records.
05/19/14 Credit Suisse, which has an investment bank branch in NYC, agrees to plead guilty and pay appx. $2.6 billion penalties for helping wealthy Americans hide wealth and avoid taxes.
09/08/14 Matthew Martoma, convicted SAC trader, sentenced to 9 years in prison plus forfeiture of $9.3 million, including home and bank accounts







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[font size=3][font color=red]This thread contains opinions and observations. Individuals may post their experiences, inferences and opinions on this thread. However, it should not be construed as advice. It is unethical (and probably illegal) for financial recommendations to be given here.[/font][/font][/font color=red][font color=black]

[Tansy_Gold]

1. I don't like the racial categorization . . .

"Mad Stupid-as-Fuck Moron" would have been better.

[Demeter]

2. The Wells Fargo employee who emailed the CEO asking for a $10K raise for his colleagues has quit

http://finance.yahoo.com/news/wells-fargo-employee-emailed-ceo-182754261.html

The Wells Fargo employee who emailed the bank's CEO last year asking for a raise for himself and his colleagues has left his job.

"After 7 years last Friday was my last day with Wells Fargo," Tyrel Oates wrote on Facebook attaching a copy of the letter he sent to John Stumpf, the CEO of Wells Fargo.

His decision to leave appears to be a personal one.

He continued: "Unfortunately, school has gotten to the point where a more flexible schedule is needed. I had planned to send a follow up to the email from back in October, but out of respect for the changes in the communication policies and no possible workaround, I was unable to send it to the company. I have; however, sent it to the Board of Directors as well as Mr. Stumpf."

Oates, 31, worked for seven years at a Wells Fargo location in Portland, Oregon.

Back in October, Oates sent a letter highlighting income inequality and asking the CEO for a $10,000 raise for himself and his colleagues (a raise of about $4.71 per hour) to "show the rest of the United States, if not the world that, yes big corporations can have a heart other than philanthropic endeavors." Healso CC'd thousands of other Wells Fargo employees on the email...

I JUST POST 'EM, FOLKS. MORE INCOMPREHENSIBILITY AT LINK

[Demeter]

3. Halliburton plans sale of three drilling businesses

http://www.marketwatch.com/story/halliburton-plans-sale-of-three-drilling-businesses-2015-04-07-1710384?siteid=YAHOOB

Halliburton Co., which is seeking regulatory approval for its roughly $35 billion purchase of Baker Hughes Inc., plans to sell three drilling business.

The three businesses are drill bits, directional drilling and its LWD/MWD businesses, which are logging while drilling and measurement while drilling. The divisions will be marketed separately, the oilfield-service company said Tuesday.

Halliburton expects to complete the sale of the businesses in the same time frame as the closing of the Baker Hughes deal late in the second half of 2015.

In February, the companies said they received an expected second request for additional information from antitrust regulators.

I'LL BET THEY DID

[Demeter]

4. Even at 14-year high, job openings data also contain worrying signs

http://www.marketwatch.com/story/even-at-14-year-high-job-openings-data-contain-worrying-signs-2015-04-07?siteid=YAHOOB



Data showing job openings rising to a 14-year high nonetheless contain some unsettling aspects. One key figure, the quits rate, fell to 1.9% in February from 2% in January, the Labor Department reported Tuesday. The quits rate is the percentage of workers quitting as a share of total employment. It’s good when this number rises, as it signals willingness to hunt (or get) a new job. Though it’s risen from a low of 1.3% five years ago, the quits rate is still lagging behind levels from before the Great Recession.

Another key figure, the hiring rate, stayed at 3.5%. That’s also below prerecession levels, and worse, down from highs at the end of 2014. Federal Reserve Chairwoman Janet Yellen has said that she plays close attention to both the quits and the hiring rate in evaluating the dynamics of the jobs market.

Last week, the Labor Department reported that 126,000 jobs were added in March, the worst showing in 15 months. On the positive side, job openings rose to a 14-year high of 5.13 million in February from 4.97 million in January. That could signal that companies have been wanting to hire but haven’t found the right, or willing, candidates.

“None of this means you should become overly pessimistic about the labor market outlook — we currently anticipate that employment gains will probably bounce back from March’s disappointing pace,” said Guy Berger of RBS Securities. “But if you’re trying to make yourself feel better about March, this February JOLTS report won’t do it.”


AND IF YOU ARE REALLY HAVING PROBLEMS, INDULGE IN YOUR RECREATIONAL DRUG OF CHOICE

[Demeter]

5. Wall Street ends down, dollar gains offset deal news optimism

http://www.reuters.com/article/2015/04/07/us-markets-stocks-idUSKBN0MY0ZP20150407?feedType=RSS&feedName=businessNews

U.S. stocks ended slightly lower on Tuesday, reversing course late in the session as strength in the dollar offset optimism about deal news. The S&P utilities sector, which helped lead gains on Monday, was the biggest drag on the S&P 500, closing down 1.1 percent.

The dollar recovered from recent losses, reaching session highs in afternoon trading. That shifted investor focus again to worries about its impact on U.S. earnings.

"If the (dollar) move is gradual it shouldn't impact stocks too much, as companies will have a chance to hedge against the impact, but a sharp rise will have an impact," said Tony Roth, chief investment officer at Wilmington Trust in Wilmington, Delaware.

Stocks were in positive territory for most of the session, lifted by deal news that suggested companies still see value in the market...

YEAH, LIKE ANOTHER 50 TO 100 PTS ON THE DJIA. TOO BAD NOBODY COULD SUSTAIN THOSE PRICES

[Demeter]

6. Colorado Senator says pot tax is in trouble

http://www.cnbc.com/id/102567730

A year after legalizing recreational marijuana, Colorado has raked in some $60 million in tax dollars. However, thanks to an anti-spending provision in the state's constitution, it may have to refund the money to the drug's consumers, growers and the public.

Now the state's lawmakers are making a push to ask residents for permission to keep the money.

One of those lawmakers, state Sen. Pat Steadman, a Democrat, said he wants to make sure the money is spent for "the things the voters wanted marijuana tax spent on," such as school construction.

"I'm working on a ballot measure that would get voter approval to not make the refund, to allow the state to keep it," Steadman said. "We've got a whole package of things we would like to do with this money and it would be a shame to have to refund it."

MAYBE IF MICHIGAN LEGALIZED AND TAXED POT....THEY WOULDN'T HAVE ANY TROUBLE SPENDING IT, I ASSURE YOU!

[Demeter]

7. The TSA Made $675,000 Off Spare Change Left At Airport Security Checkpoints Last Year

http://www.huffingtonpost.com/2015/04/07/tsa-collected-675000-in-spare-change-2014_n_7019894.html?utm_hp_ref=business&ir=Business

Next time you pass through airport security, double-check your pockets. It's just common cents.

On Monday, the Transportation Security Administration released its 2014 fiscal year report, which disclosed the government agency collected almost $675,000 in loose change left behind by travelers in 2014 -- and it gets to keep every penny.

"TSA makes every effort to reunite passengers with items left at the checkpoint, however there are instances where loose change or other items are left behind and unclaimed," TSA press secretary Ross Feinstein said in a statement Tuesday. "Unclaimed money, typically consisting of loose coins passengers remove from their pockets, is documented and turned into the TSA financial office."

Last year's haul of $674,841.06 is only the latest in a steady increase of yearly collections: In 2008, the TSA collected a "mere" $383,413.79....

IS IT THE FIRST OF APRIL, AGAIN?

[Demeter]

8. WOMAN'S LAMENT

[DemReadingDU]

21. Ha!

[Demeter]

9. Russia Ready to Discuss Gas Discount, New Loan With Greece

http://sputniknews.com/business/20150407/1020554205.html

The Russian government is willing to hold talks with Greece on the possible allocation of new loans and a discount on the price of gas, the Kommersant newspaper reports.

"We are ready to discuss the issue of providing Greece with a discount on gas: under the contract, its price is tied to the price of oil, which has dropped significantly in recent months. We are also ready to discuss the possibility of issuing new credit to Greece," an anonymous government source told the Russian daily on Tuesday.

According to the source, Russian authorities are interested in acquiring certain assets in Greece and that would be the condition for the allocation of additional loans, should the issue be discussed.

Read more: http://sputniknews.com/business/20150407/1020554205.html#ixzz3WgR3cZ2y

[Demeter]

10. Passenger car sales in Ukraine plunges almost 80% in March

http://en.interfax.com.ua/news/economic/258632.html

The new passenger car market in Ukraine in March reached only 2,259 cars, which is 79.2% down on March 2014 and 23% down on February 2015, the Ukrautoprom association has reported. The association said that the number of new vehicles sold in March (2,579) was the lowest figure starting from 2001.

• According to a posting on the association's website, the leader of the new passenger car market in March was Toyota, boosting sales by 3.5% on February 2015, to 175, which allowed the brand to climb from the sixth position. In March 2014, Toyota was third with car sales exceeding the March 2015 sales by six times.
  
  
• Renault (the leader of February) was second with 173 cars sold, which is 28% down on February 2015. "A year ago Renault was eighth with 2.4 times more sales," Ukrautoprom said.
  
  
• Volkswagen was third with 151 cars (in February it was fifth) with 14% decline in sales on February 2015 and 70.6% down on March 2015.
  
  
• Skoda was fourth with 140 cars sold (a rise of 64% on February 2015 and 71% down on March 2014). In February 2015 Skoda was only 13th and in March 2014 – sixth.
  
  
• KIA is fifth with 118 cars sold with 6% rise in sales compared to February 2015 and 65% fall on March 2014 (11th).
  
  A total of 270 commercial vehicles were sold on the new commercial vehicle market in March, a decline of 37% on February 2015 and almost 62% decline on March 2014.
  
  
• Volkswagen is the leader in the segment with around 19% share of all primary registrations.
  
  Some 50 new buses were sold in March, which is twice more than in February 2015, but 54% down on March 2014.
  
  
• RUTA buses occupied 36% of the Ukrainian new bus market in March.

[Demeter]

11. Rob Parenteau: Draghi’s Doom Loop(s) – More Than Just the Euthanasia of the Rentiers

http://www.nakedcapitalism.com/2015/04/rob-parenteau-draghis-doom-loops-just-euthanasia-rentiers.html

By Rob Parenteau, CFA, sole proprietor of MacroStrategy Edge and a research associate of The Levy Economics Institute

The recently adopted quantitative easing (QE) approach by the ECB, in concert with the negative deposit policy rate (NDPR) introduced last summer, has set off a number of nested disequilibrium dynamics that may unwittingly introduce a material increase in systemic risk for the eurozone, and perhaps beyond....Lord Keynes anticipated what he termed a “euthanasia of the rentiers”, as he expected active monetary policy would be successful in reducing long-term interest rates, and the share of the population living off of bond coupons would eventually just wither away. By way of contrast, if the following assessment is correct, Draghi may have signed a mutually assisted suicide pact with finanzkapital in the eurozone.

The logistics of implementing QE (including questions about whether there are enough bonds for the ECB to purchase, as well as the related market “liquidity” concerns), or whether or not QE represents what Lord Turner refers to as “open monetary financing”, are not the real problem, or at least not the most compelling ones. Rather, the implementation of QE with a large and increasing share of the bond market displaying negative yields to maturity (NYTM) presents a number of serious challenges to financial stability in the eurozone. To cut to the chase, the ECB’s QE and NDRP measures may be setting investors up for a discontinuous price event, much like what was experienced in the equity market meltdown back in October 1987. Even if a disruptive yield spike is avoided, or even contained and reversed by ECB heroics, pursuing QE under NYTM market conditions may lead to a significant dampening down of bank and insurance company profitability. In the extreme, the solvency of key eurozone financial institutions could once again come under question. This could further complicate the ECB’s chances of achieving their 2% inflation goal, as it may dampen the bank lending channel as a key transmission mechanism for unconventional monetary policy. The entire set up, in other words, begins to take on many of the characteristics of Andrew Haldane’s Doom Loops. In this case, however, the ECB may unintentionally be setting off nested Doom Loops that will feed on each other, and thereby magnify systemic risks quicker than investors and policy makers might otherwise imagine possible. Below is a concise sketch of the main elements of the Doom Loop dynamics the ECB may have set in motion.

1. NYTM bonds still pay positive coupons, but the price of the bond has been bid so far above the par or face value that over the full life of the bond, the holder of the bond will face a certain loss when the bond matures. NYTM bonds are therefore never likely to be willingly held to maturity by private investors, as they guarantee a loss. No client of institutional investors is likely to ever have a nominal loss as their target return on their assets – especially on assets meant to be managed to cover future nominal liabilities that tend to grow over time, like corporate pension fund liabilities.

2. NYTM bonds are therefore held solely for prospective capital gains, via sale of the bond before the maturity of the bond. This requires the holder of NYTM bonds to believe they will be facing a virtually certain Greater Fool (GF) in the fixed income market. This GF must possess ample if not nearly infinite buying power, as well as the motivation to constantly bid up prices of NYTM bonds, or else the existing holder of the NTYM bond faces the risk of not finding a buyer at a higher price, which means they will face a certain nominal loss from having to hold the NYTM bond to maturity.

3. Central banks (CB) with fiat or sovereign currencies (that is, money not exchangeable on demand into a fixed number of other currencies or commodities) fit the description of this GF perfectly, as their balance sheet expansion is virtually unrestricted. In the case of the ECB, their purchasing of bonds in GF mode is limited only by the inflation ceiling constraint of 2%. With price deflation spreading across the eurozone, the ECB is clearly highly motivated to play the necessary GF role, and very unconstrained in doing so.

4. Buyers of NTYM bonds have to believe CBs will execute QE sufficiently to produce falling yields and rising bond prices. The GF must be committed to delivering risk-adjusted returns that are compelling enough to private investors to take the risk of holding NYTM bonds. Unless the GF can credibly and continually create the expectation of higher prices and hence capital gains to holders of NYTM bonds, private investors will want to dump their entire holdings of NYTM bonds if the GF appears to be backing away from the designated role.

5. Since the CB is the GF, and since existing holders and new buyers of NTYM bonds require the GF to continually be prepared to bid NYTM bond prices higher, any indication the CB will terminate, or taper, or even pause on its originally indicated path of QE purchases introduces a significant risk. The stock demand for NYTM bonds, not just the flow demand of private investors, then shifts against NYTM bonds en masse. There is a likely revulsion of investors, a la Charles Kindleberger, with NYTM holdings, since the market set up with NYTM bonds is not unlike the game of Musical Chairs.

6. The minute the CB is even vaguely suspected of pausing in its purchase program (the equivalent of reaching for the needle on the record in the Musical Chair analogy), there will be a simultaneous desire to dump NYTM bonds, which could also have repercussions for the creditors and owners of financial institutions trying to dump NTYM bonds. To the extent that the “smart money” (aka wise guys in hedge fund land) recognize there is a distinct first mover advantage in the game of Musical Chairs, the mere hint the CB is preparing to pause may be sufficient to set off a stampede of private investors out of NYTM bonds.

7. When portfolio preferences adjust against holding NTYM bonds in this sharp and simultaneous fashion, bond pricing may go discontinuous (huge gaps in prices, or even no bid), as the stock supply offered up in the market will tend to overwhelm the natural flow demand for NYTM bonds. When pricing goes discontinuous, quantitative driven models (as well as “algos”) tend to blow up, since they presume continuous pricing at all times. Measures of volatility will also tend to surge, which means risk budgets will get gobbled up quickly. As risk budgets get eaten up, forced sales of risky assets tend to spread across institutional investors. In the extreme, investor sell large blocks of financial assets that are still liquid, even if they are unrelated to the original asset class under distress, as a hedge against the holdings they wish to sell, but are facing no bid market conditions.

8. In this fashion, feedback loops with adverse consequences can be set into motion, with attempts to sell NYTM bonds leading to more attempts to sell the same; leading to more discontinuous pricing, and so on, as we witnessed in 1987 with the portfolio insurance mechanism in the US equity market. It is not unlikely, as in 1987, that forced or panic selling could spread to more liquid assets in the bond market, or even to more liquid assets in the equity and other markets

9. In theory, this vicious cycle/Doom Loop process would supposedly end when yields are once again high enough to represent a good risk/return proposition to private investors. Yet there are likely to be large capital losses in the portfolios of holders of NTYM who could not find buyers once the music stops and the GF/CB steps back. Their risk budgets will also be very restrictive at that point. So-called value buyers may be few and far between under these circumstances. After all, it is harder for private investors to reach for yield when they are facing a risk budget that has been exceeded, and sitting on large unrealized capital losses).

10. There are several reasons why the GF, in this case the ECB may elect to pause or taper early. The financial media is beginning to recognize some of the reasons for the game of Musical Chairs to end earlier than September 2016, which marks the currently planned termination of the PSPP. These include:

a) Supply constraints may complicate the ECB buying program in future months – after all, the ECB has been massively front run by investors flocking to government subsidized and virtually government guaranteed capital gains, and the supply of high quality bonds may not be large enough given ECB portfolio risk constraints;

b) Eurozone macroeconomic data may continue to surprise on upside, and inflation may revive sooner once oil and other commodity prices find a bottom (note that Draghi has already declared victory in turning eurozone economy around, just by announcing QE);

c) Bank net interest margins and insurance company profitability may be sufficiently eroded by negative deposit rates (which are acting as a tax on excess reserves held by banks at the ECB), by flattened yield curves (which are reducing their various carry trades), and by an ever increasing share of the bond market exhibiting NYTM (which means they effectively are off limits to purchase by the banks and insurance companies), that major financial institutions begin to push back, such that political opposition could build within ECB (probably through German financial institutions getting the Bundesbank to lead the charge) to curtail or even reverse QE early.

To conclude, what we appear to have in play here is a game of Musical Chairs, but it may prove to be a game with remarkably high stakes. Once the music stops – or even the hint of the music stopping filters out across institutional investors – everyone will race for a chair (i.e. try to sell NTYM bonds). The absence of a GF at that point in time means there will be no buyer, at least not until yields spike sufficiently to warrant taking on the perceived risk, which will probably be quite high under those circumstances, as longer maturity bonds at low nominal yields have high durations – that is, bond prices react a lot to small changes in nominal yields.

The Draghi Doom Loops traced above are probably features of the ECB’s current QE and NDRP policy that either have not been recognized by investors, or have not been thought through by ECB, or both.... It would be a great irony if Draghi’s QE and NDRP initiatives have forged a mutual assisted suicide pact with finanzkapital in the eurozone.


A CASE OF HANDING A LOADED, HAIR-TRIGGER ASSAULT WEAPON TO A TWO-YEAR-OLD....

THIS IS TERRIFYING...DOOMSDAY SCI-FI MEETS LIBERTARIAN-NEOCON ECONOMICS

[Demeter]

12. The Commentary (see link) is even more frightening...

including this note from the Author:

I did consider titling this piece: Draghi, the new pilot at Germanwings, but I felt that was in rather poor taste, even if it did seem to capture the essence of the situation much better than recycling one of Keynes’ bon mot phrases…

[Demeter]

28. ECB reaches first-month spending goal for quantitative easing

http://www.dw.de/ecb-reaches-first-month-spending-goal-for-quantitative-easing/a-18366256



The European Central Bank has reached its first monthly target of buying up billions in government and private sector bonds. The "quantitative easing" program is meant to stimulate the economy and ward off deflation... In the first stage of a trillion-euro effort which is currently set to continue until at least September next year, the European Central Bank (ECB) said it had met its monthly goal of buying some 60 billion euros ($65 billion) worth of government and corporate debt with freshly-minted money.

Since launching its trillion-euro economic stimulus program on March 9, the chief monetary authority for the 19 countries which use the euro currency said it had bought 52.52 billion euros in bonds issued by EU governments or euro-area institutions up until April 3, and purchased additional private sector bonds to reach its 60-billion-euro goal. The initiative, called Quantitative Easing or QE, involves pumping euros into the economy - effectively freshly-printed money - in an effort to combat deflation and boost growth in the economy. The ECB asserts that its program should make credit easier to access, thereby increasing possibilities for growth, innovation and job creation.

"With the first month of its expanded asset purchase program complete, the ECB can look back at a success," Berenberg bank economist Christian Schulz told news agency AFP. "This strong implementation, especially given that the ECB only started the sovereign purchases on March 9, should dispel fears that the ECB will not find enough sellers for its purchases."

Long road ahead

The ECB plans to continue the program to the tune of about 60 billion euros a month, each month until at least September 2016, making the stimulus package's total value about 1.1 trillion euros ($1.2 trillion). The ECB's goal is to achieve about 2 percent consumer price inflation - currently it stands at about negative 0.1 percent.

The effects of the program, which was announced in January, were already being seen in the form of a drop in borrowing costs for eurozone governments, a weaker euro and more positive economic confidence indicators. Major European stock indexes have reported a strong first quarter for 2015, especially Germany's DAX. Risks of the program, however, include the formation of asset price bubbles and the possibility of complacency among governments with regards to making progress on structural reforms needed to underpin lasting economic growth.

Similar quantitative easing programs have in the past also been used by the central banks of Britain, Japan and the United States.

[Demeter]

13. The Financial Impact of Longevity Risk – 2012 AARP

http://www.aarp.org/livable-communities/learn/demographics/info-12-2012/financial-impact-of-longevity.html

As the U.S. grows older, more financial resources will be expended to meet the needs of an aging population base. Just how much will be expended depends on reliable forecasting. Forecasting must be accurate in order to adequately prepare for changes in both expenditures and revenue. This report by the International Monetary Fund (IMF) indicates that most projections do not factor in “longevity risk,” meaning that because people will live longer, governments will pay longer (and therefore more), impacting revenue available for everyone.

In particular, not factoring in longevity risks impacts state pension plans, which could require more money than currently planned. Longevity risk could also impact funding requirements by states for Medicare/Medicaid resources. Longevity risk is no small financial risk. For example, “if individuals live three years longer than expected – in line with underestimations in the past – the already large costs of aging could increase by another 50 percent” (page 1). As state and local governments prepare for an older demographic, this report suggests new thinking for some of those calculations.
Key Points

The report offers three approaches to addressing longevity risk. These include: 1) an honest assessment by governments of longevity risk on existing financial projections; 2) the even distribution of risk by individuals, governments and businesses; and 3) transferring longevity risk to capital markets....


UNLESS I AM MISSING THE POINT, THE GREATEST RISK IS THAT PROFIT WILL DISAPPEAR FROM THE SYSTEM ENTIRELY. WE ALL WILL HAVE ENOUGH....AND ANYONE WHO WANTS MORE IS A PSYCHOPATH.

[Demeter]

14. Spain Joins Negative Yield Club

http://blogs.wsj.com/moneybeat/2015/04/07/spain-joins-negative-yield-club/

Spain has joined the sub-zero debt club, just.

The Spanish Treasury on Tuesday issued short-term debt yielding a shade under 0%. The €725 million ($796 million) in six-month Spanish debt delivers an average yield to investors of -0.002%. Buyers were still keen, placing bids worth five times that amount, according to the Treasury.

Another slug of 12-month T-bills, also issued Tuesday, yields just 0.006%.

This is quite a turnaround for Spain. The country was at the heart of the eurozone debt crisis at its darkest hour. In June 2012, it sold similar short-term debt yielding 3.237%.

Recently, the electoral success of anti-austerity party Syriza in the Greek elections has stirred concerns of a repeat in Spain. But that’s not translating into debt nerves. The driver for negative yield here is, unsurprisingly, the European Central Bank and its heavy-hitting bond-buying scheme. Even though T-bills are too short-term for the ECB to buy them (the shortest maturity is two years), the wave of debt buying has lifted all boats.

Spain’s sub-zero issue is its first to come out of the blocks in negative territory, but of course the phenomenon is not new. All German bonds up to seven years in maturity now have negative yields in the secondary market.

Germany, France, the Netherlands, Belgium, Ireland and Austria already have all their short-term debt trading with yields under 0% in the post-issuance market.

[Demeter]

15. Cloud Live Says Will Miss Payment in 2nd China Onshore Default

YOU CAN'T TAKE THE GOOD OF CAPITALISM WITHOUT ALSO TAKING THE BAD...

http://www.bloomberg.com/news/articles/2015-04-06/china-gets-2nd-onshore-default-as-cloud-live-date-missed

China’s corporate bond market may experience its second default after Internet company Cloud Live Technology Group Co. said it will miss payments, and Premier Li Keqiang said the nation will tolerate individual cases of financial risk.

The big data provider, which shifted into that industry in July after corruption probes hurt its former restaurant business, will fail to meet an April 7 deadline to pay investors who had exercised an option to sell back notes, the company said in statements to the Shenzhen stock exchange on Monday. Failure to pay would constitute the second default on an onshore yuan debenture.

President Xi Jinping’s anti-graft probe and the slowest economic growth since 1990 are stoking concern defaults may spread, a year after Chaori Solar Energy Science & Technology Co. became the first company to default on onshore bonds. The China Securities Regulatory Commission had said last month that Cloud Live should urge its biggest shareholder and former chief to return from overseas to solve the repayment problem.

Cloud Live issued the bonds in question in 2012 with a 6.78 percent coupon. The yield on the securities jumped over 20 percent as of April 1 from 9.7 percent on Dec. 31, exchange data show. Investors had an option to sell them back to the company April 5, with the effective payment deadline being April 7, the first business day after holidays April 5-6...

[Demeter]

16. Venture-backed U.S. IPOs hit lowest levels in two years

PROOF THAT YOU CAN'T MILK A DEAD COW

http://www.reuters.com/article/2015/04/06/us-venture-ipos-idUSKBN0MX0ZQ20150406

U.S. initial public offerings by venture-backed companies fell to a two-year low in the first quarter of 2015, according to data from the National Venture Capital Association and Thomson Reuters.

About 17 venture-backed companies raised $1.43 billion in the three months ended March, compared with 37 that raised $3.40 billion in the same period a year earlier, according to the report.

The last time the number fell below 20 was in the first quarter of 2013, when eight venture-backed companies raised $716.9 million....The average amount raised was $84.3 million, down from $92 million in the first quarter of 2014.

Among venture-backed mergers and acquisitions, only 16 of the 86 during the quarter reported deal size. The average deal size was $128.1 million, compared with $245.8 million a year earlier.

[Demeter]

22. Two private equity consortia in talks to buy Informatica

http://www.reuters.com/article/2015/04/06/us-informatica-m-a-idUSKBN0MX14O20150406'

Enterprise software company Informatica Corp (INFA.O) has received offers from two private equity consortia and is negotiating a sale that could value it at between $5 billion and $6 billion, according to people familiar with the matter.

A deal would be this year's largest leveraged buyout. Private equity firms have been reluctant to take big companies private for fear of overpaying, and the negotiations with Informatica may not lead to a deal, the people cautioned....

[Demeter]

17. Iran Oil Return May Be Slow Amid Jostling for Foreign Investors

http://www.bloomberg.com/news/articles/2015-04-06/iran-oil-return-may-be-slow-amid-jostling-for-foreign-investors

Iran’s full return to world oil markets will be hindered by strong competition for foreign investment dollars from rival producers including Iraq, Mexico and Brazil, among others.

In a world of surplus supply, prices hovering around $50 a barrel and deep cuts to capital expenditures by oil companies, Iran will be challenged to find investors should it finalize a nuclear agreement that leads to a lifting of sanctions.

Other jurisdictions have already seen super-major oil companies walk away from reserves because returns were deemed inadequate. Exxon Mobil Corp. has rejected renewing a concession in Abu Dhabi because that country didn’t offer enough returns, and BP Plc has told Mexico it needs better terms to attract foreign investments as it reopens fields...

[Demeter]

18. Japan looks for growth from Islamic finance boom

http://www.japantoday.com/category/business/view/japan-looks-for-growth-and-influence-from-islamic-finance-boom

Japan is the latest global financial hub to start making inroads into Islamic finance, a move that could help strengthen regional economic ties and give its lenders an edge in winning business in markets whose growth prospects far outpace their home turf.

Tokyo has long been a major provider of financial assistance for developing countries and its banks are active across Asia and the Middle East, but until now Islamic finance has played a minor role.

That could soon change amid a regulatory effort to facilitate development of the sector, and could even help Japan counter any loss of regional influence ahead of the launch of the China-led Asian Infrastructure Investment Bank.

Islamic finance, which follow religious principles such as bans on interest and monetary speculation, has boomed in the last few years on the back of strong economic growth in its core markets, the Gulf and southeast Asia. The sector has grabbed the attention of global financial centers - Britain, Hong Kong and Luxembourg have all issued debut sovereign Islamic bonds over the past year - and the industry’s worldwide assets are now estimated at more than $2trillion...

WHY NOT? EVERYONE ELSE HAS BEEN DRAINED OF EVERYTHING

[Demeter]

19. N.Y. stock brokers must face SEC insider trading case

http://www.reuters.com/article/2015/04/06/usa-insidertrading-ibm-idUSL2N0X31WP20150406

Two New York stock brokers who escaped criminal insider trading charges after a recent appellate ruling limited authorities' abilities to pursue such cases must still face civil charges by U.S. securities regulators, a federal judge ruled Monday.

U.S. District Judge Jed Rakoff in Manhattan rejected a bid by former Euro Pacific Capital Inc traders Daryl Payton and Benjamin Durant to dismiss U.S. Securities and Exchange Commission charges that they engaged in illegal trading ahead of an IBM Corp deal.

The ruling clears the way for a Sept. 21. trial. Gregory Morvillo, Durant's lawyer, said it will also require the SEC meet a new, tougher standard at trial for what constitutes insider trading in light of the December appellate ruling.

While Rakoff endorsed applying the ruling to the case, the judge suggested Congress should going forward formally define insider trading, an area that has been largely left to the courts...

LETTING THE CRIMINALS DEFINE THE CRIME?

[Demeter]

20. Russian Inflation Surges to 13-Year High as Ruble Crisis Stings

A CLEAR CASE OF EXPORTING INFLATION...BUT WHY DO THIS, IF THE WEST IS SUFFERING FROM A "LACK" OF INFLATION?

http://www.themoscowtimes.com/business/article/russian-inflation-surges-to-13-year-high-as-ruble-crisis-stings/518699.html

Russian price inflation rose to 16.9 percent in March, its highest level since 2002, as the country adapts to a sharply weakened ruble and the impact of politically motivated food import bans. But despite the new high in the year-on-year rate, price growth is slowing, data published by the Rosstat state statistics service on Monday showed. Prices rose 1.2 percent in March, following increases of 2.2 percent in February, 3.9 percent in January and 2.6 percent in December, Rosstat said.

Inflation surged after Moscow imposed bans on imports of food from the United States, the European Union and a number of other countries in August in response to sanctions over Russia's actions in Ukraine. A near 40 percent fall in the value of the ruble against the U.S. dollar since last summer has also raised the cost of imports.

Food prices are rising faster than average inflation. The cost of food rose 1.6 percent in March and 23 percent year-on-year, according to Rosstat. As spiraling inflation outstripped wage growth, real average incomes fell almost 10 percent in February compared to the same month in 2014.

March's 16.9 percent annualized inflation rate compares with 11.4 at the end of last year and around 6 percent at the start of 2014. The current inflation rate exceeds the high of around 15 percent reached during the 2009 economic crisis and is higher than at any point since 2002....


RUSSIA IS ADJUSTING TO DE-GLOBALIZATION. THIS ONE-TIME ADJUSTMENT WILL LEAD TO GREATER AUTARKY, AND RUSSIA, WHICH HAS GREAT UNTAPPED NATURAL RESOURCES AND AN EDUCATED POPULATION, WILL THRIVE (UNLESS SOME FOOL DECLARES A SHOOTING WAR).

IT IS THE WESTERN WORLD WHICH IS LOOKING DOWN THE BARREL OF THE GUN IT IS HOLDING TO ITS OWN CITIZENRY'S HEADS.

[Demeter]

23. Regulation crucial for success of P2P online lending CHINA

http://www.chinadaily.com.cn/business/tech/2015-04/08/content_20023207.htm

As one of the world's largest online financial markets, China is currently going through a quiet crisis: Many Internet-based money lenders are sinking, along with the funds they owe to their creditors. The crisis may last into the middle of the year and incur a total loss of 100 billion yuan ($16 billion) to the creditors, mostly individuals with small savings, according to Guan Jianzhong, president of the Chinese ratings agency Dagong Global.

Internet-based instant lending and borrowing between strangers is called peer-to-peer lending. And the websites enabling such transactions are called P2P platforms. Online financial services, although growing in leaps and bounds, are still in their infancy in China, and as a result "there are still few laws and regulations applicable to the industry", Guan said.

At the end of 2014, Dagong reported that more than 80 percent of China's P2P platforms were considered high-risk. The company's latest warning, issued on March 21, said that of the 1,587 P2P platforms it was monitoring, 393 were blacklisted, while another 668 were given risk warnings...

[Demeter]

30. Pessimistic Views of China’s Economy are Unconvincing

http://www.nakedcapitalism.com/2015/04/pessimistic-views-chinas-economy-unconvincing.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

By Jim O’Neill, Visiting Research Fellow at Bruegel, and previously Chairman of Goldman Sachs Asset Management (GSAM). Originally published at Breugel.

In late 2001, I first used the phrase BRIC to discuss the likely rise of Brazil, Russia, India and China as growing shares of the world economy and outlined a number of scenarios in which it seemed pretty inevitable that their share would rise sharply by the end of that decade. In 2003, along with some Goldman Sachs colleagues, we first projected what the world might look like by 2050 if the BRIC and other large emerging economies reached their potential, a world that would be dramatically different than the one prevailing at the time.

It was these two papers that led to the beginning of the focus on the phrase BRIC and indeed, my own central role in the story that since unfolded. What is especially noteworthy over the subsequent 13 and ½ years is just how dominant China has become within the BRIC group in terms of economic size, as well of course, it’s increasing importance to the world economy. At the end of 2014, China’s economy surpassed $10 trillion in current US$ and according to the World Bank, in purchasing power parity terms (PPP), actually was larger than the US. At $10 trillion, China is around one and a half times the size of the other three BRIC countries put together. It is also bigger than the combined size of France, Germany and Italy. It is about twice the size of Japan (in the 2003 Paper, we thought it might take China until 2015 to reach the size of Japan, never mind twice). Its economic size has nearly risen tenfold since I first mentioned the word “BRIC” and since the 2008 global credit crisis, China has doubled its own size.

In terms of size and growth, perhaps it is especially important to point out that not only did China grow at lot more than expected in the last decade, which was also true for the other three BRIC countries, but so far, in this decade, it is the only one that has–so far–surpassed my expectations. The other three, Brazil and Russia in particular, India less so, have disappointed my expectations notably. Back in 2010, I assumed China would grow by 7.5 percent over the decade 2011–2020. After four years, it has averaged 8.0 percent...

MORE

[Demeter]

24. TPP as Important as Another Aircraft Carrier: US Defense Secretary

PULL THE OTHER LEG, SO I DON'T LIMP...

SO, TPP IS A MILITARY PROGRAM? WAR BY ANY OTHER MEANS? IS THIS THE LATEST GAMBIT--A CONTINUATION OF THE TERRA, TERRA TERRA!

http://thediplomat.com/2015/04/tpp-as-important-as-another-aircraft-carrier-us-defense-secretary/

On April 6, US Secretary of Defense Ash Carter delivered a speech at the McCain Institute at Arizona State University on ‘the next phase’ of the US rebalance to the Asia-Pacific.

The speech began with a customary nod to the Asia-Pacific’s growing importance, a brief assessment of America’s strengths in the region, and an overview of the rebalance.

Carter then went on say what ‘the next phase’ of the US rebalance might entail on the defense side, focusing on four components: investments; capabilities; posture; and partnerships and alliances. He touched on investments in a new long-range stealth bomber and a new, long-range anti-ship cruise missile; the fielding of key US capabilities like advanced fighters and missile-defense equipped ships; adapting America’s bases, personnel and platforms to be more distributed, resilient and sustainable; and reinforcing existing alliances, emerging partnerships, and links between them, including trilateral cooperation with Japan and Australia.

But after this deep dive into defense issues, Carter also spent some time in his speech to highlight the importance of concluding the Trans-Pacific Partnership (TPP). He stressed its importance in boosting US exports, strengthening key US relationships in the Asia-Pacific, signaling America’s commitment to the region more broadly, and promoting U.S. values. He even likened the TPP to be as important to him as another aircraft carrier.

“In fact, you may not expect to hear this from a Secretary of Defense, but in terms of our rebalance in the broadest sense, passing TPP is as important to me as another aircraft carrier,” Carter said.

“It would deepen our alliances and partnerships abroad and underscore our lasting commitment to the Asia-Pacific,” he continued. “And it would help us promote a global order that reflects both our interests and our values”.

He also said that time was running out as countries in the region are already pursuing alternatives and the United States risks being on the sidelines...

IT SURE IS HARD TO EXERT EMPIRE WHEN THE ECONOMICS OF YOUR VASSALS IS WALKING AWAY FROM YOU...AND TPP MAY BE THE ONLY WAY TO ENSURE THAT THE US MILITARY STAYS "GAINFULLY" EMPLOYED.

IT REDEFINES CHUTZPAH: THE MAN WHO KILLED HIS PARENTS BEGGING THE COURT FOR MERCY BECAUSE HE IS AN ORPHAN....

[Demeter]

25. FedEx to buy TNT for $4.8 billion to take on rivals in Europe

http://www.reuters.com/article/2015/04/07/us-tnt-express-m-a-fedex-idUSKBN0MY06G20150407

FedEx Corp (FDX.N) is to buy Dutch package delivery firm TNT Express (TNTE.AS) for an agreed 4.4 billion euros ($4.8 billion), stepping up the challenge to rivals United Parcel Service (UPS.N) and Deutsche Post (DPWGn.DE) in Europe.

European regulators blocked a 2013 takeover of TNT by UPS due to concerns it would stifle competition, but analysts and executives said on Tuesday FedEx, with its strong air fleet, would complement TNT's sizeable European road network.

"Europe, despite the fact that there has been low growth, is still an enormous market both for import and export," FedEx Corp. (FDX.N) Chief Executive Fred Smith told analysts.

TNT gives FedEx access to pan-European service and the domestic UK and French markets, areas where it is not yet a big player, Smith said, while TNT customers will get access to FedEx's global distribution platform....

INTERESTING, UPS BAD, FEDEX GOOD? THAT WILL LEARN UPS TO ABUSE WORKERS! OF COURSE, FEDEX DOES THE SAME...

[Demeter]

26. Royal Dutch Shell to buy BG Group in £47bn deal

http://www.bbc.com/news/business-32213341

Royal Dutch Shell says it has agreed to buy oil and gas exploration firm BG Group in a deal that values the business at £47bn.

The two firms say they have reached agreement on a cash and shares offer which gives investors a 50% premium on BG Group's share price on 7 April.

The deal could be one of the biggest of 2015 and could produce a company with a value of more than £200bn ($296bn).


CONSOLIDATION PROCEEDS AS SCHEDULED

[Demeter]

27. Japan eyes maximum $1.5B contribution to AIIB

http://asia.nikkei.com/Politics-Economy/International-Relations/Japan-eyes-maximum-1.5B-contribution-to-AIIB

Japan will continue to push for transparency at the Asian Infrastructure Investment Bank and would chip in as much as $1.5 billion if it decides to take part in the Chinese-led initiative, according to a policy outlined by the government.

The Japanese position is spelled out in a report, compiled by the finance and foreign affairs ministries, that was submitted to Prime Minister Shinzo Abe at the end of March. Japan will make a final decision on its participation by the end of June. Japan will work with the U.S. to demand that China ensure transparent operations at the bank and fair screening of projects, according to the report. Japan will also cooperate with other Group of Seven economies and Australia, the document says.

The concern is that a lack of transparency at the AIIB would make it harder for Japan to wield influence commensurate with its financial contribution. The ministries will continue gathering information for the time being....China had asked other countries to sign by the end of March a memorandum of understanding to express their intention of joining. Such G-7 countries as the U.K. and France have decided to participate. But Japan put off the decision out of consideration for the U.S., which is cautious about taking part.

The AIIB is expected to attract capital totaling $100 billion. China hopes to sign at the end of June an agreement with other countries on the sizes of their stakes, aiming to begin operations at the bank by year-end.

IF AIIB IS SMART, THEY WON'T LET THIS US RUNNING DOG LACKEY IN. TRANSPARENCY, MY FOOT! IT'S AN ATTEMPT TO SUBVERT AND CONTROL, AND THE ONLY THING THAT'S TRANSPARENT IS THE TREACHERY.

[Demeter]

29. Dubious FX Broker CWM FX Claims Sports Celebrity Scalps, but Princess Anne Remains Unmolested

http://www.nakedcapitalism.com/2015/04/dubious-fx-broker-cwm-fx-claims-sports-celebrity-scalps-princess-anne-remains-unmolested.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

…early this month, police raided the financial group’s premises and arrested 13 people on suspicion of fraud by false representation and money laundering.

For weeks, the police and Financial Conduct Authority would not even confirm it was CWM which was involved. This left it to social media to speculate what might be going on, causing much consternation among its clients.

At the time of the arrests, the Standard called for more information to be made public, either by the police or the Financial Conduct Authority, which assisted in the inquiry.

Now, at last, some of the secrecy is lifting. The police today confirmed it was CWM, and issued a statement calling for anyone who’s invested in its managed funds offering 5% interest per month to contact them.

Quite generous, 5% a month.

Readers should of course decode the drily British “Quite generous” as “A screamingly obvious scam”. Sustained returns like that are impossible, and only promised in scamland. It appears this “managed fund” was only ever offered over the phone: there’s nothing in the web site archives about it.

The lengthy news blackout is not completely unprecedented when there’s a boiler room raid, but still interesting. For more than three weeks after the raid, the identity of the raided firm was a mystery, and the raidee denied everything:

CWM FX – a foreign exchange trading platform with a website that lists the Heron Tower in its contact details – wrote on its official Twitter account: “CWM FX is operating as normal. Merely an AML [anti-money laundering] enquiry & had no correspondence to us.” The tweet was deleted later in the day.

MOSTLY GOSSIP, BUT IT SHOWS THE UNDERSIDE OF BEAUTIFUL LONDON...

[Demeter]

31. Minimum Wage: Could Democrats Please Give Consideration to Idea of Ceasing to Betray WorkingClass

http://www.nakedcapitalism.com/2015/04/minimum-wage-democrats-please-give-consideration-idea-ceasing-betray-working-people.html

Let’s begin by noting that the current minimum wage is miserably inadequate and a flat insult to working people. The MIT Living Wage Calculator project(1) has this to say:

While the minimum wage sets an earnings threshold under which our society is not willing to let families slip, it fails to approximate the basic expenses of families in 2013 [or today]. Consequently, many working adults must seek public assistance and/or hold multiple jobs in order to afford to feed, cloth, house, and provide medical care for themselves and their families.

An analysis of the living wage using updated data from 2013 and compiling geographically specific expenditure data for food, childcare, health care, housing, transportation, and other basic necessities, finds that:

The minimum wage does not provide a living wage for most American families. A typical family of four (two working adults, two children) needs to work more than 3 full-time minimum-wage jobs (a 68-hour work week per working adult) to earn a living wage. Across all family sizes, the living wage exceeds the poverty threshold, often used to identify need. This means that families earning between the poverty threshold ($23,283 for two working adults, two children) and the median living wage ($51,224 for two working adults, two children per year before taxes), may fall short of the income and assistance they require to meet their basic needs.

Three jobs, 68 hours… It’s hard work — and extremely time-consuming! — to be part of the working poor. Is raising the minimum wage popular? Yes, it is. Rasmussen (a Republican-leaning polling firm) finds that 54% of American Adults favor an increase in the minimum wage, and 32% are opposed. That may be why increasing the minimum wage did so well in the 2014 election:

Voters in four red states approved ballot initiatives to raise their state minimum wages on Tuesday, sending another message to Washington that Americans support a higher wage floor.

In fact, the margins were, in some cases, greater than those of the Rasmussen poll (22%); Alaska’s initiative won by 38%, Arkansas’ by 31%, and Nebraska’s by 20%. So 2014 was a debacle for Democratic candidates, but not for the sort of policy that, given their brand identity, one would expect Democrats to be backing. Perhaps the Democrats should give consideration to not sucking on policy if they want to win?

But by what amount should the minimum wage be raised?

There are several ways of looking at this question, depending on the sort of social contract you consider wage labor to be.

$21.72. If by productivity, $21.72. Here the social contract is that if workers become more efficient, then their wages should increase in proportion to the efficiency gains. Oldthink, I know! But if that’s your theory, $21.72 is the result. CEPR:

Between the end of World War II and 1968, the minimum wage tracked average productivity growth fairly closely. S ince 1968, however, productivity growth has far outpaced the minimum wage. If the minimum wage had continued to move with average productivity after 1968, it would have reached $21.72 per hour in 2012–a rate well above the average production worker wage. If minimum-wage workers received only half of the productivity gains over the period, the federal minimum would be $15.34. Even if the minimum wage only grew at one-fourth the rate of productivity, in 2012 it would be set at $12.25.

$15.00. If by cost of reproducing labor power, $15.00. Here the social contract is that workers sell their labor power for what it costs to reproduce it(2) (which is what “a living wage” is shorthand for). As it turns out, that’s $15.00 an hour. Americans for Tax Fairness:

(We have) analyzed the effect of Walmart’s new wage policy and found that even after the planned pay hikes are fully implemented, large taxpayer subsidies will still be required to make up for the company’s low wages.

Here’s how the numbers break down. An employee working 34 hours a week (Walmart’s definition of “full-time”) for $9 an hour would take home about $16,000 a year. If that worker was single, she would qualify for three out of five public programs. With children, the employee would qualify for all eight of the public programs—and the same is true at the $10 an hour rate.

The reality is Walmart would need to raise its base pay to at least $15 an hour to properly compensate its workers and relieve America’s taxpayers from picking up part of its payroll tab (which amount to $6.2 billion a year in public subsidies that support its employees: food stamps, Medicaid, child care support and five other taxpayer-funded programs).

It’s a remarkable exhibition of state capture that Walmart has actually gotten the taxpayers to “top up” the wage packet they offer.

$10.10. If you’re a Democrat, $10.10. Finally, one might take the view that the social contract is a pure power relation(3): Workers are paid what they have the power to take, period; “the strong do what they can and the weak suffer what they must,” as Thucydides said. Here — after agitation began for $15 — Democrats determined that the appropriate level of suffering for workers is to be denied a share in productivity gains, and to continue combining their wage packet with government subsidies to make a living wage.

Obama is throwing his support behind congressional Democrats’ proposal to raise the minimum wage to $10.10 and peg it to inflation, more than a dollar higher than the $9 proposal he made in his State of the Union address in February.

“The President has long supported raising the minimum wage so hardworking Americans can have a decent wage for a day’s works to support their families and make ends meet, and he supports the Harkin/Miller bill that accomplishes this important goal,” the White House official said in an email.

Given that $10.10 does not, as we have just seen, make ends meet, the White House email statement is grotesquely, breathtakingly cynical, even for Obama. (And whenever you hear “hardworking Americans,” keep a sharp eye out of for the con.) In any case, the real tell here is the number itself: Why 10.10? I’ve never been able to find a justification for it. Euphony? Why not be generous, and round up to the nearest quarter, for 10.25? Regardless, $10.10 is the number, and in one of his famous Executive Orders, Obama put that in place for some workers:

On February 12, 2014, President Obama signed Executive Order 13658, “Establishing a Minimum Wage for Contractors,” to raise the minimum wage to $10.10 for all workers on Federal construction and service contracts. The President took this executive action because raising wages will improve the quality and efficiency of services provided to the government. Boosting wages lowers turnover, increases morale, and will lead to higher productivity overall on Federal contracts.

However, as we have seen, $10.10 is not a living wage. And you will notice that none of the justifications in the Order have anything to do with workers at all.

What happens to leftists who try to raise the minimum wage “too much”? The Democrats try to punish them, or discredit them and compromise away their proposals Naturellement. Two examples, first Seattle, Washington:

Mayor Ed Murray is expected to release his plan to raise Seattle’s minimum wage as soon as today. No matter what happens in the $15 wage debate, Seattle City Councilmember Kshama Sawant has already won.

If the Seattle City Council passes a $15 wage in the coming months (as appears likely), Sawant will appropriately get credit for coming out of nowhere to commandeer the city’s political agenda.

$15.00! Sawant got the workers “too much!” So what do the Democrats do? Run a candidate against Sawant, of course! Black Agenda Report:

Kshama Sawant helped lead a multi-year effort to raise the minimum wage in Seattle. The CEO of Seattle’s Urban League, [Panm Banks,] a longtime political insider with great fundraising connections wants to run for local office. Apparently there are no neoliberal pension-cutting Democrats for her to go after in Seattle, and no neolithic Republicans worth dethroning either.

The number one and only target of Banks’ campaign for office will be the socialist, because she knows things. Pam Banks knows that while you can never have too many Republicans or Democrats in office, even one socialist is way too many. CEO Banks knows that while you can never have too many corporate funded politicians, even one elected official that doesn’t take the corporate cash makes everybody else feel nervous and look bad. … Banks knows that any run against a socialist incumbent will be well funded by forces who already call the League, and her, their good friend. They just might not be friends of the people of Seattle.

Second example, Portland, Maine, where the Greens started an initiative for $15.00. Then this happened:

Under Portland mayor [Brennan’s] proposal, the minimum wage would initially increase from the current $7.50 to $9.50 an hour, with additional increases scheduled over the next few years.

Again, $15.00! Those darn Greens are trying to get the workers “too much!” Green state chair Asher Platts met with Brennan (sorry, Faceborg):

I saw the mayor of Portland today, he seemed really upset at the #‎15now campaign for overshadowing his more moderate min wage proposal.

What was odd, was when I explained to him that we supported any work to raise the wage, and that our campaign does him a favor by making his proposal look more moderate, and explained how with negotiations you always ask for more than you expect and compromise your way back, he said, “maybe that’s how you negotiate Asher, but that’s not how I negotiate.”

Which I was confused about, because… the definition of negotiation….

I guess he’s right though, that’s not how Democrats like him negotiate– they start conceding everything to their opponent and work their way backwards from there.

“That’s not how I negotiate.” Indeed! MORE


Notes

1. Interestingly, Ikea pegged its wage to the results of that calculator.
   
   
2. In other words, labor power is a commodity like any other, and in this case is sold at cost.
   
   
3. Here are Bob and Ray on the Thucydidean theory of labor relations. Caution: The humor is Sahara dry.
   
   
4. Amusingly, our crazypants Republican governor picked up on this.
   
   
5. The classic expression of this existential question for the left comes from Susie Madrak (and WaPo):
   
   “We’re the girl you’ll take under the bleachers but you won’t be seen with in the light of day,” the blogger, Susan Madrak pointedly told Axelrod on the call, which was organzied for liberal bloggers and progressive media.
   
   Needless to say, she was not invited back. Now, as of this moment, the Democrats are emitting left-like noises, but I think that’s because “they have no place to go”; in the 2014 debacle, most of Steve Israel’s Blue Dogs got nuked, as voters decided they might as well vote for a real Repblican instead of a fake one.
   
   
6. I did some Googling and found what I believe to be the original expression of Frum’s Law. Curiously, it seems to be a retweet (“RT”) from Glenn Greenwald (“@ggreenwald”) but I can’t find anything from Greenwald at all. So Frum’s Law it is.
   
   
7. A good proxy for the size of the left is 14% of the electorate: Those who think ObamaCare doesn’t go far enough, and presumably want single payer or even a national health service. Last I checked, that’s about the size of the (feared) Tea Party.
   
8. Unless it’s channelled, controlled, and neutralized by the Democratic nomenklatura, of course.

[Demeter]

32. It's cold and rainy

Good for the pansies I planted....only half a flat to go! Stay warm and dry, everybody!