STOCK MARKET WATCH -- Tuesday, 11 August 2015

[Tansy_Gold]

[font size=3]STOCK MARKET WATCH, Tuesday, 11 August 2015[font color=black][/font]

SMW for 10 August 2015

AT THE CLOSING BELL ON 10 August 2015
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Dow Jones 17,615.17 +241.79 (1.39%)
S&P 500 2,104.18 +26.61 (1.28%)
Nasdaq 5,101.80 +58.25 (1.16%)


[font color=red]10 Year 2.23% +0.03 (1.36%)
30 Year 2.90% +0.03 (1.05%) [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
08/03/15 Former City (London) trader Tom Hayes found guilty of rigging global Libor interest rates. Each fo eight counts carries up to 10 yr. sentence.







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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]

[Demeter]

1. Looks like the Fed was saving up all last week for yesterday's QE goosing of the markets

I don't know who they think they are fooling, pumping hot air into a leaking balloon.

Friends, my family is on deathwatch....BIL has at best a week. It's sudden, shocking, and my poor sister....please understand that I may be a little erratic. Deaths come in threes, and this is the third and last, I hope. It's too much to bear to think about.

[magical thyme]

20. aw Demeter, so sorry...

take care, please.

[DemReadingDU]

23. Thoughts and prayers for your family

[Demeter]

24. Thank you all

[Demeter]

2. As phone companies ditch copper, they nix the ability to call during blackouts

http://www.csmonitor.com/Technology/2015/0807/As-phone-companies-ditch-copper-they-nix-the-ability-to-call-during-blackouts

Some telecoms embrace fiber and wireless phone lines, which are faster but do not supply electricity on their own, as copper lines do. The Federal Communications Commission (FCC) on Thursday put several new rules in place to regulate telecom companies looking to move away from the old copper wires that have carried voices across town and around the world for more than a century.

But, until this week’s decisions, if you wanted to know what was going on with your carrier’s network decisions, you’d need to go online to the FCC’s website and try to find your answers. Now, your phone company has to tell you, directly.

Though there has never been an impediment to phone companies wishing to ditch the copper in favor of faster fiber, there has been no regulation requiring information be given directly to customers. Now, companies need to give you three months notice and guarantee the same quality and functionality as before the switch. And, if companies do want to change what services they provide, there is a process with more defined rules in place for such requests. Phone companies have been making the move to fiber optic cable for a while now, says Mark Wigfield from the FCC’s Media Relations Office. Some companies have even been considering entirely wireless networks, even for that phone you still plug into the port in your kitchen wall. Mr. Wigfield says that there are many benefits to this move, not the least of which is the ability to receive high-speed Internet service over the same lines on which you make a phone call. But, the move away from copper may be cause for some concern.

The biggest benefit to those old copper wires is that they carry their own electricity. So, when the power goes out, you can still make a call as long as your phone unit itself is still in operation. This is not so with fiber.

“The Commission took this fact very seriously, especially as it related to 911 calling,” says Wigfield. “That means that the new rules include a mandate that requires phone companies to make direct-to-consumer offers of power backups.” Wigfield says that these backups would be at the consumer’s expense, but at least they would know exactly what they needed and where to get it.

WHEN I UPDATED THE INTERNET SERVICE, I SWITCHED TO FIBER...AND GOT THE BATTERY BACKUP FOR FREE...BUT I HAD TO INSIST UP ON IT. I SURE HOPES IT WORKS...HAVEN'T HAD TO FIND OUT, YET.

I'VE ALSO HAD TO REBOOT THE NEW SYSTEM ONCE, SINCE IT GOT CONFUSED AND WOULDN'T DIAL OUT.

IT'S A BRAVE NEW WORLD.

[DemReadingDU]

5. Ohio - Loss of landlines cause for concern

A big concern!


8/10/15 Loss of landlines cause for concern
Under a new law, traditional copper-wire landline telephone service could soon be removed by the telephone company.

The likely changes in home phone service could affect hundreds of thousands of Ohioans. The most recent National Health Statistics Report found in 2013 that 15.8 percent of Ohio households mostly rely on landline service.

Telephone companies in Ohio have pushed for years for permission to stop supporting the legacy landline service and switch to internet-based phones. After several attempts at passage of a standalone bill to make it happen, the move was included in the new state budget bill and signed into law by Gov. John Kasich June 30.

It calls for the Ohio Public Utilities Commission to convene a collaborative of consumer and industry representatives to review alternatives to wireline service. Those alternatives include cell service and phone service over the internet.

The timetable for the switch remains undetermined, according to Holly Karg, PUCO spokesperson. The agency has 90 days from the effective date of the budget bill — Sept. 28 — to develop the collaborative effort.

“We are currently studying the law and laying the groundwork for that process,” said Karg. “The No. 1 concern is that everyone has access to 9-1-1.”

more...
http://www.springfieldnewssun.com/news/news/local/loss-of-landlines-cause-for-concern/nnGtJ/

[Demeter]

3. Rule-Breaking: Jan-Werner Müller writes about the problems of the Eurozone

http://www.lrb.co.uk/v37/n16/jan-werner-muller/rule-breaking?utm_source=newsletter&utm_medium=email&utm_campaign=3716&utm_content=usca_nonsubs&hq_e=el&hq_m=3877287&hq_l=9&hq_v=e477429728

Never before have the struggles among national elites been as visible to the public as they were in the early weeks of this summer, when Greece almost left – or was made to leave – the Eurozone. Never before has an assertion of national popular will, as expressed in the Greek referendum of 5 July, been flouted so thoroughly and so quickly by the enforcers of European economic orthodoxy. (There was an interval of two and a half years between the French and Dutch ‘No’ to the EU treaty in the spring of 2005 and the adoption of the Lisbon Treaty, which retained most of the constitution the French and Dutch had rejected, in December 2007.) Never before have the flaws of the Eurozone been so clearly exposed. We can expect more Greek drama before too long: the real struggle over the Eurozone – and the EU more broadly – is just beginning. If nothing else, Alexis Tsipras has demonstrated to the world that the Eurozone does not operate according to a system of rules but on the basis of ad hoc deals between national governments. The continuation of such a system risks a resurgence of the nationalism that the creation of the EU was meant to extinguish.

That the drama unfolded now, and with such flamboyant characters, could be seen as an accident. If Antonis Samaras hadn’t miscalculated at the beginning of the year and called an early election, Yanis Varoufakis would still be giving TED talks about Europeans not being morally worthy of a true federation. Samaras’s risky move wasn’t entirely out of character. Although most will remember him as the man who, after the Greek elections of 2012, became the EU’s ‘responsible adult’, dutifully administering the troika’s ‘programme’, it was Samaras who, as foreign minister in the 1990s, whipped up nationalist passions over the new Macedonian Question. Greece agreed not to obstruct Macedonia’s application to join Nato and the EU provided the country didn’t call itself Macedonia – there is a Greek region called Macedonia. (There are Greeks who claim the Eurocrisis has been staged solely to settle this question against Greek interests.)

Contrary to the way it has been characterised, in the German press in particular, Syriza’s programme was not ‘populist’ in the sense of making demagogic promises and pursuing irresponsible policies. Economists outside Greece have long argued that only growth-oriented spending would get the country back on its feet. Yet from the beginning, Tsipras combined rather modest economic demands with a high-risk political strategy – a strategy that could be described as populist – to side with the long-suffering Greeks against their enemies, internal and external. The decision to enter a coalition with the nationalist Independent Greeks (Anel) sent the strongest possible signal that Syriza’s opposition to austerity was real; To Potami (‘The River’), the new left-liberal party founded by a popular talkshow host, was seen as too accepting of troika orthodoxy. Anel is led by Christian reactionaries, racists and homophobes with a penchant for conspiracy theories (one favourite is that helicopters have sprayed the country with sedatives to make Greeks comply with austerity). The alliance alienated a good deal of European left-liberal opinion, whose anti-totalitarianism has become an anti-populism based on the fear that les extrêmes – Syriza and Anel – se touchent. Tsipras gave the defence ministry to the leader of Anel, Panos Kammenos, which made defence cuts even more difficult in a country that has the largest military budget relative to GDP in the EU (even at his very last Eurogroup meeting, Varoufakis is said to have refused a €200 million cut to the army).

Tsipras tried to build a pan-European coalition during early February, but the chances of isolating Germany were always low. Hollande couldn’t afford to go against Merkel openly (Tsipras accused her of having ‘false Protestant principles’). Renzi was more interested in trying to sell the idea that Italy had turned the corner because of him alone; he has been implementing troika-friendly structural reforms without having to be asked, and – most significant – Italy is Greece’s third largest creditor, and wants its euros back. Mariano Rajoy, the conservative Spanish prime minister, was especially determined that the Greek government should fail: he faces an election in December, and success for Syriza would have decided it in favour of Podemos, the party created virtually out of nothing two years ago by young political science professors from Madrid.

It’s no surprise that governments whose fortunes are riding on the philosophy of ‘no pain, no gain’ should emphasise that their democratic mandates are just as strong as Syriza’s. Merkel insisted that whatever concessions were made to Tsipras should under no circumstances constitute an incentive for Syriza-style offensives across Europe; in that sense, there was from the beginning a strategic imperative to make Syriza fail. This political constellation – not matters of style – explains why the EU’s creditors and Syriza made no headway in negotiations in the spring. But style mattered too. Never mind Varoufakis’s turned-up collar or his making a point of flying economy with his rucksack to Eurogroup meetings. As the British political scientist Chris Bickerton has observed, Varoufakis violated the etiquette of the Eurogroup – the assembled finance ministers of the Eurozone – in a deeper sense. Its members, an informal collective without any status in EU law, see themselves as focused on solving a common problem. Varoufakis annoyed everyone, not only by lecturing his fellow finance ministers on economics, but also by politicising the meetings. He seemed never quite to decide whether he was a responsible actor or an academic analyst. No other finance minister has ever used Twitter, as he did, to comment on events as if he weren’t really involved in them; no other finance minister has been constantly reachable at their private email address or granted interviews to all and sundry; no other finance minister has recorded Eurozone negotiations on a smartphone – all of this, on a charitable reading, was not self-promotion but an attempt to put pressure on the Eurogroup by influencing a European public which, alas, at this stage in its linguistic and cultural fragmentation, simply doesn’t exist. Varoufakis’s style was a break with the EU’s usual method of hammering out agreements behind closed doors, often on the understanding that, having made their compromises, the participants would go home the next day and complain to their electorates that Brussels had coerced them. Some found Varoufakis a refreshing change; others, veterans of European integration like the German finance minister, Wolfgang Schäuble, saw him as a vandal in the engine-room of the EU, where the expectation is that dirty deals can be made comfortably and in secret.

Time was not on the Greeks’ side. Tax revenues began to collapse in February, and the extent of capital flight was unprecedented – by the end, according to some estimates, a billion euros a day. Modest economic growth turned into recession: losses to the Greek economy have amounted to as much as €63 billion over the spring and summer. The referendum was a high-risk move prompted by political desperation. Syriza and Anel’s ‘No’ campaign made much of echoes of 20th-century history, such as Metaxas’s refusal of Mussolini’s request in 1940 that the Italian army be allowed to march through Greece (celebrated every October on ‘Oxi Day’). There were posters of Schäuble as a ‘neo-Nazi war criminal’, and Varoufakis accused the creditors of being ‘terrorists’.

What followed was one of the strangest weeks in recent European history. The ‘No’ vote was a great symbolic victory, but it also left a vacuum, since nobody had defined in advance what would follow from that outcome. Creditor countries reiterated that debt restructuring couldn’t simply be the result of a unilateral democratic decision by the debtors (‘Our family has voted democratically,’ a German comedian tweeted. ‘The mortgage will not be repaid. A triumph of popular will!’). It was clear at least that Varoufakis couldn’t walk back into a Eurogroup meeting to negotiate with those he had called ‘terrorists’. It was clear too that Greece couldn’t survive in the Eurozone without a deal and that Tsipras had no coherent exit plan that he could use as leverage. With the banks closed and Greece already the first EU country to have missed a payment to the IMF, Tsipras couldn’t keep the negotiations going for long.

Was the result, at the end of an unprecedented 17-hour summit, a ‘coup’, as it was immediately called on social media? Considered dispassionately (or, if you prefer, in terms of game theory), Schäuble was right to make Grexit part of the negotiations. Since the UK started to entertain the possibility of leaving the EU, talk of reversing European integration has hardly been taboo. Merkel appeared to have opened herself up to blackmail by telling the German parliament in 2011 that ‘if the euro fails, Europe fails’ – a rare occasion on which she took a clear position. Anybody with the power to make the euro fail – intentionally or not – was now in a position to make her chancellorship fail. In theory, Merkel had used the past five years to make the Eurozone failsafe, or safe, at least, from Greece: a firewall had been put in place to protect countries like Spain and Portugal and, most important, Italy in the event that another country defaulted. But the risks were still enormous, and Tsipras had every incentive to make Greece as much of a ‘systemic risk’ as possible. At the same time, Merkel had to combat resistance among her own Christian Democrats and her Northern European allies, Finland in particular, to the idea that Athens should be shown mercy one more time (as if the creditors weren’t making a profit from the whole scheme). Threatening Grexit helped quieten her critics; and increased her approval ratings in Germany (Schäuble’s are even better).

Perverse as it might seem, having Grexit on the table was good for Tsipras too. An overwhelming majority of Greeks want to stay in the Eurozone. The prime minister was forced to return to Athens with a worse deal than the one his electorate had rejected in the referendum; if he had been unable to claim that he had averted Grexit, his support at home would have collapsed. As it is, he can still live off the great Greek self-assertion of the referendum, and gain the support of almost all the parties at home – though not of his own party’s left wing. Tsipras crafted a powerful public image: he had fought to the last for ‘dignity’ and ‘democracy’ in Europe as a whole, and Podemos should now continue the struggle....

MORE ANALYSIS AT LINK

[Demeter]

4. NOTE: REFERS TO US STATE BANKRUPTCIES IN 1840'S

State Bankruptcies in the 1840s occurred in Arkansas, Illinois, Indiana, Louisiana, Maryland, Michigan, Mississippi, Pennsylvania, and the territory of Florida. The end of an inflationary period from 1834–1839 and the Panic of 1837 led to a tightening of credit lending from the Bank of England.

By 1841, nineteen of the twenty-six U.S. states and two of the three territories had issued bonds and incurred state debt. Of these, the aforementioned states and territory were forced to default on payments and enter bankruptcy.

The states were borrowing to fund transportation investments as well as raising capital to start new banks.

Northern states, such as Pennsylvania and Maryland, incurred debt through the building of canals to connect the Midwest to ports on the Atlantic Ocean.

Midwest states, including Ohio, Indiana, Illinois, and Michigan, built railroads and canals throughout the region, while Southern States raised capital to fund new banks to improve a weakened banking system.

The majority of state debt was owed to parties outside the U.S., primarily Europe. State debts were largely paid off in full by the late 1840s, although no direct sanctions were enacted to force repayment. The state bankruptcies led to The Bankruptcy Act of 1841, which was later repealed in 1843.

https://en.wikipedia.org/wiki/State_bankruptcies_in_the_1840s

SO, WE'VE BEEN HERE BEFORE....I BET PUERTO RICO IS ECSTATIC....

[Demeter]

6. When States Default: 2011, Meet 1841 By Dennis K. Berman

http://www.wsj.com/articles/SB10001424052748704835504576060193029215716

NOTHING HAS IMPROVED SINCE 2011 TO MAKE THIS ARTICLE ANY LESS TRUE

Land values soared. States splurged on new programs. Then it all went bust, bringing down banks and state governments with them. This wasn't America in 2011, it was America in 1841, when a now-forgotten depression pushed eight states and a desolate territory called Florida into the unthinkable: They defaulted on debts.

This was an incredible step, even then. Fledgling U.S. states like Indiana and Illinois were still building credibility on global debt markets. They rightly feared "a prejudice so deep and wide" that they could never sell bonds in Europe again, said one banker. Their paranoia would be familiar to the shell-shocked California and Illinois of 2011. Each is beset by budget problems so great that some have begun debating default or bankruptcy. These worriers may draw comfort from the state crises that raged and retreated long ago. Most of the states eventually paid off their debts, and changed their laws to safeguard their finances, helping make U.S. states some of the world's best credits.

Congress, meanwhile, helped set a precedent that still holds: In 1843, it rejected an elaborate plan for a bailout, with one critic later observing it would "cause recklessness and extravagance" among the states. Surely, someone will dust off those ideas in 2011.

Yet for all their similarities, there was an ominous difference from now: Leaders and citizens of the 1840s were more willing to accept new taxes to pay for the infrastructure and to defend, in the earnest words of the time, their "moral duty" of meeting debts. In Indiana and Ohio, property taxes went up eightfold in the early 1840s. New York, Pennsylvania, Maryland, and Massachusetts all installed state property taxes, the first in 40 years for Pennsylvania.

"People didn't want to raise taxes but they did," says John J. Wallis, a University of Maryland economic historian. He traces our current states crises back to those defaults in 1841, after which legislators amended constitutions to clamp down on new borrowing. Over time, these rules have been perverted by politicians, meaning that "constitutional rules have made it harder to raise taxes than to raise expenditures," he says.

There were differences between today and 19th century. Then, expensive state programs weren't for government pensions or Medicaid. They were for roads and canals. And in today's slow-growth economy, raising taxes won't solve all of the states' fiscal woes. Any real solution will require wholesale cuts in government programs and spending, too.

When the defaults began in January 1841, investors dumped state bonds, pushing yields above 12% in early 1841, and to nearly 30% by 1842. The consequences of those defaults would last for decades: Among historians, the rule of thumb is that U.S. states would pay interest rates one percentage point higher than Canadian issuers the rest of the 19th century. To this day, Mississippi hasn't paid back some of those bonds, even after a 100-year English bid to collect.

The defaults weren't crippling. U.S. states went back into the public markets in the railroad boom of the 1850s, most of them armed with stronger safeguards for creditors and new constitutions.

Could states default today without causing another 1841? Randall Kroszner, a former Fed governor and University of Chicago professor, calls it as a long shot. "Only if there were a clear legal framework, and a clear way in which people would be treated, and not interminable delays through the courts," he says. "States should be very averse to defaulting."

For Mr. Wallis, the lessons of the 1840s are bracingly clear. Taxpayers and politicians have lost the connection between borrowing and costs. So taxpayers must be willing to approve tax rises as a direct part of new borrowing plans.

"There is nothing wrong with raising taxes to support government services that voters want and are willing to pay for," he says. But government needs to be set up "so that both voters and legislatures are forced to make decisions about taxing, spending, and borrowing simultaneously."

YEAH, LIKE THEY WILL GIVE VOTERS THE RIGHT TO DECIDE EXPENDITURES....WE SHOULD LIVE THAT LONG!

[Demeter]

7. Want to Know How the Banks Got Greece to Surrender? Explaining Bank Power 101

Last edited Tue Aug 11, 2015, 04:12 PM - Edit history (1)

http://www.alternet.org/economy/want-know-how-banks-got-greece-surrender-explaining-bank-power-101?akid=13352.227380.8aGiKD&rd=1&src=newsletter1040341&t=15

The European Central Bank threatened to turn off the liquidity that all banks need for their day-to-day accounting balances. In the modern global banking system, all banks need a credit line with the central bank in order to be part of the payments system. Choking off that credit line was a form of blackmail the Greek government couldn’t refuse.

Former Greek finance minister Yanis Varoufakis is now being charged with treason for exploring the possibility of an alternative payment system in the event of a Greek exit from the euro. The irony of it all was underscored by Raúl Ilargi Meijer, who opined in a July 27th blog:

The fact that these things were taken into consideration doesn’t mean Syriza was planning a coup . . . . If you want a coup, look instead at the Troika having wrestled control over Greek domestic finances. That’s a coup if you ever saw one.

Let’s have an independent commission look into how on earth it is possible that a cabal of unelected movers and shakers gets full control over the entire financial structure of a democratically elected eurozone member government. By all means, let’s see the legal arguments for this.

So how was that coup pulled off? The answer seems to be through extortion. The European Central Bank threatened to turn off the liquidity that all banks – even solvent ones – need to maintain their day-to-day accounting balances. That threat was made good in the run-up to the Greek referendum, when the ECB did turn off the liquidity tap and Greek banks had to close their doors. Businesses were left without supplies and pensioners without food. How was that apparently criminal act justified? Here is the rather tortured reasoning of ECB President Mario Draghi at a press conference on July 16:

There is an article in the Maastricht Treaty that says that basically the ECB has the responsibility to promote the smooth functioning of the payment system. But this has to do with . . . the distribution of notes, coins. So not with the provision of liquidity, which actually is regulated by a different provision, in Article 18.1 in the ECB Statute: “In order to achieve the objectives of the ESCB European System of Central Banks, the ECB and the national central banks may conduct credit operations with credit institutions and other market participants, with lending based on adequate collateral.” This is the Treaty provision. But our operations were not monetary policy operations, but ELA Emergency Liquidity Assistance operations, and so they are regulated by a separate agreement, which makes explicit reference to the necessity to have sufficient collateral. So, all in all, liquidity provision has never been unconditional and unlimited.

In a July 23rd post on Naked Capitalism, Nathan Tankus calls this “a truly shocking statement.” Why? Because all banks rely on their central banks to settle payments with other banks. “If the smooth functioning of the payments system is defined as the ability of depository institutions to clear payments,” says Tankus, “the central bank must ensure that settlement balances are available at some price.”

How the Payments System Works

The role of the central bank in the payments system is explained by the Bank for International Settlements like this:

One of the principal functions of central banks is to be the guardian of public confidence in money, and this confidence depends crucially on the ability of economic agents to transmit money and financial instruments smoothly and securely through payment and settlement systems. . . . Central banks provide a safe settlement asset and in most cases they operate systems which allow for the transfer of that settlement asset.

Internationally before 1971, this “settlement asset” was gold. Later, it became electronic “settlement balances” or “reserves” maintained at the central bank. Today, when money travels by check from Bank A to Bank B, the central bank settles the transfer simply by adjusting the banks’ respective reserve balances, subtracting from one and adding to the other. Checks continue to fly back and forth all day. If a bank’s reserve account comes up short at the end of the day, the central bank treats it as an automatic overdraft in the bank’s reserve account, effectively lending the bank the money in the form of electronic “liquidity” until the overdraft can be cleared. The bank can cure the deficit by attracting new deposits or by borrowing from another bank with excess reserves; and if the whole system is short of reserves, the central bank creates more to maintain the liquidity of the system.

The most dramatic exercise of this liquidity function was seen after the banking crisis of 2008, when credit was frozen and banks had largely stopped lending to each other. The US Federal Reserve then stepped in and advanced over $16 trillion to financial institutions through the TAF (Term Asset Facility), the TALF (Term Asset-backed Securities Loan Facility), and similar facilities, at near-zero interest. Toxic unmarketable assets were converted into “good collateral” so the banks could remain solvent and keep their doors open.

Liquidity as a Tool of Coercion

That is how the Fed sees its role, but the ECB evidently has other ideas about this liquidity tool. Whether a country’s banks are allowed to “access monetary policy operations” is seen by the ECB not as mandatory but as discretionary with the central bank. And as a condition of that access, if a country’s bonds are “below investment grade,” the country must be under an IMF program — meaning it must subject itself to forced austerity measures. According to ECB Vice President Constâncio at the same press conference:

When a country has a rating which is below the investment grade which is the minimum, then to access monetary policy operations, it has to have a waiver. And the waiver is granted if there are two conditions. The first condition is that the country must be under a programme with the EU and IMF; and second, we have to assess that there is credible compliance with such a programme.

Liquidity is provided only on “adequate collateral” — usually government bonds. But whether the bonds are “adequate” is not determined by their market price. Rather, political concessions are demanded. The government must sell off public assets, slash public services, lay off public workers, and subject its fiscal policies to oversight by unelected bureaucrats who can dictate every line item in the national budget.

Tankus observes:

Europe now has a system where liquidity and insolvency problems can occur and can be deliberately generated (at least in part) by the central bank. Then the Troika can force that country into an “IMF program” if it wants to continue having a functioning banking system. Alternatively, the central bank can choose to simply “suspend convertibility” to the unit of account (i.e. cut off the supply of Euros) and force the write down of deposits (haircuts and bail-ins) until the banks are solvent again.

Pushed to the Cliff by the Financial Mafia

Were liquidity and insolvency problems intentionally generated in Greece’s case, as Tankus suggests? Let’s review.

First there was the derivatives scheme sold to Greece by Goldman Sachs in 2001, which nearly doubled the nation’s debt by 2005.

Then there was the bank-induced credit crisis of 2008, when the ECB coerced Greece to bail out its insolvent private banks, throwing the country itself into bankruptcy.

This was followed in late 2009 by the intentional overstatement of Greece’s debt by a Eurostat agent who was later tried criminally for it, triggering the first bailout and accompanying austerity measures.

The Greek prime minister was later replaced with an unelected technocrat, former governor of the Bank of Greece and later vice president of the ECB, who refused a debt restructuring and instead oversaw a second massive bailout and further austerity measures. An estimated 90% of the bailout money went right back into the coffers of the banks.

In December 2014, Goldman Sachs warned the Greek Parliament that central bank liquidity could be cut off if the Syriza Party were elected. When it was elected in January, the ECB made good on the threat, cutting bank liquidity to a trickle.

When Prime Minister Tsipras called a public referendum in July at which the voters rejected the brutal austerity being imposed on them, the ECB shuttered the banks.

The Greek government was thus broken Mafia-style at the knees, until it was forced to abandon its national sovereignty and watch its public treasures sold off piece by piece. Suspicious minds might infer that this was a calculated plot designed from the beginning to throw Greece’s prized assets onto the auction block, a hostile takeover and asset stripping for the benefit of those well-heeled entities in a position to purchase them, including the very banks, hedge funds and speculators instrumental in driving up Greek debt and destroying the economy.

No Sovereignty Without Control Over Currency and Credit

In the taped conference call for which Yanis Varoufakis is currently facing treason charges, he exposed the trap that eurozone countries are now in. It seems there is virtually no legal way to break free of the euro and the domination of the troika. The government has no access to the critical data files of its own banks, which are controlled by the ECB.

Varoufakis said this should alarm every EU government. As Canadian Prime Minister William Lyon Mackenzie King warned in 1935:

Once a nation parts with the control of its currency and credit, it matters not who makes the nation’s laws. Usury, once in control, will wreck any nation.

For a nation to regain control of its currency and credit, it needs a central bank with a mandate to serve the interests of the nation. Banking should be a public utility, serving the economy and the people.

Ellen Brown is an attorney, chairman of the Public Banking Institute, and author of 12 books. In her latest book, The Public Bank Solution, she explores successful public banking models historically and globally. She is currently running for California State Treasurer on a state bank platform.

AND THAT, LADIES AND GENTS, IS WHY EUROPE IN NO LONGER A GOOD PLACE OF EXILE, IF YOU ARE PISSED AT THE USA.

[Ghost Dog]

22. Usury, once in control, will wreck any nation.

.

[Demeter]

9. Europe’s Deepest Debt BY Roger Cohen

http://www.nytimes.com/2015/08/11/opinion/roger-cohen-europes-deepest-debt.html

From time to time I am reminded of all that Europe lost. It can happen in the most unlikely places, like in San Diego for example...I was sitting the other day with a friend named Bonnie Richins. She told me that, as children, she and her sister were not allowed to wear striped clothes. They reminded her father, Kurt Lorig, of the pajama-like attire the Nazis forced him to wear in Auschwitz. Kurt was born a German Jew. Unlike most of his family, he survived the Holocaust, became an American, settled in California and built a business in outdoor furniture. He always drove an American car. In the 1950s he would sometimes amuse himself by trying to force German-made Volkswagen Beetles off the road — or almost....Like many survivors, Kurt did not speak of what had happened in Europe. What had happened was unspeakable. Auschwitz left no words. It overwhelmed the lexicon of the hitherto.

About 36.5 million Europeans died between 1939 and 1945 from war-related causes, over half of them civilians, some six million of them Jews targeted for extermination by the Third Reich and its accomplices from Vichy to Vilnius. As the late Tony Judt observed in “Postwar,” his magisterial history of Europe since 1945, “No other conflict in recorded history killed so many people in so short a time.”

This was the culmination of the 31-year European suicide that began in 1914. Europe lay in ruins. Millions of stunned refugees wandered among the charred vestiges of what had once been called European civilization. Borders were redrawn, whole populations moved like pawns on some diabolical chessboard, Germany cut in two and, at Yalta, Europe east of the Elbe ceded to Stalin’s totalitarian empire. Europe had lost not only Kurt. It had lost almost everything. It had lost half itself. It had lost much of the mingling of which it was composed. In Germany at the end of the war, 21,450 of the country’s 600,000 Jews remained. This, for a long time, Europe chose not to recall in any detail. It had also lost its memory....


Germany’s debt to Europe can never be repaid. It is the real and deepest one.

AND GERMANY TODAY IS COMPOUNDING THAT DEBT BY ITS WEAPON OF CHOICE: THE EURO.

THAT IS WHY EUROPE MAY NEVER BE A GOOD PLACE TO LIVE, AGAIN.

[Punx]

19. Interesting

We had a Holocaust survivor visit and talk at my high school many many years ago. One of the many things I remember is that she couldn’t bear to own a German automobile.

My wife’s stepmother is a German Jew. Her family got out to England just before WWII started. An impressive (lucky?) feat given how hard other countries made it for Jews to emigrate, the US right at the forefront in this. There was rampant anti-Semitism in the US in the 1930’s including many in positions of power in places like the State Department.

If anyone hasn’t done so already, I recommend reading “In the Garden of Beasts” by Eric Larson about Ambassador William Dodd and his family in Germany in the 30’s.

[magical thyme]

21. we had Holocaust survivors as neighbors in my early-mid teens

They kept very much to themselves, so I never met them or knew much about them.

The one thing I do know is that when my parents started going away for weekends and leaving me locked out in the street, they called my parents once to let them know they had seen "somebody" breaking into the house through a window and had called the police, so they might want to look around to see if anything was missing.

I was the one breaking into the house, as had become my habit with the new routine. No police had driven by that I was aware of that evening -- we lived on a very quiet street so there's a fair chance I would have seen them.

I can't imagine it would have been easy for them to call the police. So I have long since wondered whether they really did, or whether they realized it was me breaking in and they'd just called my parents to let them know that somebody was aware of what they were doing.

I guess I'll always wonder...but it is the incident that caused my father to decide to give me a key.

[Demeter]

25. Nice parents you had there

They didn't deserve you...

[Demeter]

15. Greece bailout agreed 'in principle': European Commission

http://www.cnbc.com/2015/08/10/greece-lenders-agree-primary-budget-target.html

Greece and its lenders have agreed on the technical details of a third bailout, a spokesperson for the European Commission confirmed Tuesday, but a political agreement still needs to be secured. Speaking at the Commission's midday press briefing, Annika Breidthardt, spokesperson for Economic and Financial Affairs, told reporters that technical talks had been concluded late last night. While a bailout was "agreed in principle on a technical level…the Commission won't comment on other details until political agreement is reached," she said. "Nothing is agreed until everything is agreed. We've had an agreement in principle," she said, although she remained tight-lipped about the details still to be ironed-out. The president of the Commission, Jean-Claude Juncker, was talking to teams on the ground in Greece, she said, and would talk to German Chancellor Angela Merkel and French President Francois Hollande.

Greece and its lenders have agreed the terms of a new bailout, a Greek Finance Ministry official told CNBC. The official, who asked to remain anonymous, told CNBC that an agreement had been reached and there were some "minor details" left to be discussed. "The negotiations were completed this morning, there are some minor details left but it's nothing special. These details do not affect the completion of the deal," the official said on Tuesday.

Also on Tuesday, Greek government spokesperson, Theodoras Mihopoulos, tweeted: "Negotiations have been completed. There are some details left."

Craig Erlam, senior market analyst at currency trading company OANDA, said the news was a positive step, although he remained cautious.

"Of course, we've heard this all before so shouldn't get carried away until we've had official confirmation but it all sounds very promising," he said in a research note.

"It's very unusual for talks between Greece and its creditors to go so smoothly, which may straight away raise skepticism among some investors. If true, then Greek ministers could pass the bailout throughout parliament on Thursday leaving finance ministers to give it their backing on Friday, comfortably before the 20 August deadline when Greece must pay 3.2 billion euros to the European Central Bank."

[Demeter]

8. 10 Ways to Make The U.S. Economy Work for Everyone, By Bernie Sanders

http://www.alternet.org/election-2016/10-ways-make-us-economy-work-everyone-bernie-sanders?akid=13360.227380.ot5fxQ&rd=1&src=newsletter1040491&t=3

A forthcoming book compiles Bernie's words and solutions.

(This article is excerpted from The Essential Bernie Sanders and His Vision for America by Jonathan Tasini (Chelsea Green Publishing, September 2015) and is published here with permission of the publisher. The book will be available nationwide on September 8th, which is Sanders’ birthday. For more information: http://www.chelseagreen.com/the-essential-bernie-sanders .)

...Here are 10 examples of how we can raise revenue and reduce spending in a fair way.

1. Stop corporations from using offshore tax havens to avoid U.S. taxes. Each and every year, the United States loses an estimated $100 billion in tax revenues due to offshore tax abuses by the wealthy and large corporations. The situation has become so absurd that one five-story office building in the Cayman Islands is now the “home” to more than 18,000 corporations.

The wealthy and large corporations should not be allowed to avoid paying taxes by setting up tax shelters in Panama, the Cayman Islands, Bermuda, the Bahamas or other tax haven countries. The first bill that I introduced in the Senate (the Corporate Tax Dodging Prevention Act) would raise more than $580 billion over the next decade by eliminating the most egregious corporate offshore tax haven abuses.

2. Establish a Robin Hood tax on Wall Street speculators. Both the economic crisis and the deficit crisis are a direct result of the greed and recklessness on Wall Street. Creating a speculation fee of just 0.03 percent on the sale of credit default swaps, derivatives, options, futures, and large amounts of stock would reduce gambling on Wall Street, encourage the financial sector to invest in the job-creating productive economy, and reduce the deficit by $352 billion over 10 years, according to the Joint Committee on Taxation.

3. End tax breaks and subsidies for big oil, gas and coal companies. If we ended tax breaks and subsidies for big oil, gas, and coal companies, we could reduce the deficit by more than $113 billion over the next ten years. The five largest oil companies in the United States have made over $1 trillion in profits over the past decade. ExxonMobil is now the most profitable corporation in the world. Large, profitable fossil fuel companies do not need a tax break.

4. Establish a Progressive Estate Tax. If we established a progressive estate tax on inherited wealth of more than $3.5 million, we could raise more than $300 billion over 10 years. introduced the Responsible Estate Tax Act that would reduce the deficit in a fair way while ensuring that 99.7 percent of Americans would never pay a penny in estate taxes.

5. Tax capital gains and dividends the same as work. Taxing capital gains and dividends the same way that we tax work would raise more than $500 billion over the next decade. Warren Buffett has often said that he pays a lower effective tax rate than his secretary. The reason for this is that the wealthy obtain most of their income from capital gains and dividends, which is taxed at a much lower rate than work. Right now, the top marginal income tax for working is 39.6%, but the top tax rate on corporate dividends and capital gains is only 23.9%.

6. Repeal all of the 2001 and 2003 Bush tax breaks for the top two percent. In January, Congress finally repealed the Bush tax breaks for the top one percent—households making more than $450,000 a year. But the Bush tax breaks have been continued for the top two percent—households with incomes between $250,000 and $450,000 a year. Repealing the Bush tax breaks for all of the top two percent would reduce the deficit by about $400 billion over the next decade. After President Clinton increased taxes on the top two percent, the economy added over 22 million jobs. After President Bush reduced taxes for the rich, the economy lost over 600,000 private sector jobs.

7. Eliminate the cap on taxable income that goes into the Social Security Trust Fund. If we are serious about making sure that Social Security can pay all of the benefits owed to every eligible American for the next 50 to 75 years, we don’t do that by cutting benefits, we do that by scrapping the cap on taxable income so that a millionaire and a billionaire pay the same percentage of their income into Social Security as someone making $40,000 or $50,000 a year. Right now, someone who earns $113,700 a year pays the same amount of money in Social Security taxes as a billionaire. This makes no sense. Applying the Social Security payroll tax on income above $250,000 would ensure that Social Security remains solvent for the next 50 years. This plan would only impact the wealthiest 1.3 percent of wage earners; 98.7 percent of wage earners in the United States would not see their taxes go up by one dime.

8. Establish a currency manipulation fee on China and other countries. As almost everyone knows, China is manipulating its currency, giving it an unfair trade advantage over the United States and destroying decent paying manufacturing jobs in the process. If we imposed a currency manipulation fee on China and other currency manipulators, the Economic Policy Institute has estimated that we could raise $500 billion over 10 years and create 1 million jobs in the process.

9. Reduce unnecessary and wasteful spending at the Pentagon, which now consumes over half of our discretionary budget. Much of the huge spending at the Pentagon is devoted to spending money on Cold War weapons programs to fight a Soviet Union that no longer exists. Lawrence Korb, an Assistant Secretary of Defense under Ronald Reagan, has estimated that we could achieve significant savings of around $100 billion a year at the Pentagon while still ensuring that the United States has the strongest and most powerful military in the world.

10. Require Medicare to negotiate for lower prescription drug prices with the pharmaceutical industry. Requiring Medicare to negotiate drug prices, similarly to what the VA currently does, would save more than $240 billion over 10 years.

MORE

[DemReadingDU]

17. all good things!

But unless the banksters are prosecuted, they're not going to happen

[DemReadingDU]

18. John Whitehead: Don’t Be Fooled by the Political Game

8/10/15 Don’t Be Fooled by the Political Game: The Illusion of Freedom in America By John W. Whitehead

“The shaping of the will of Congress and the choosing of the American president has become a privilege reserved to the country’s equestrian classes, a.k.a. the 20% of the population that holds 93% of the wealth, the happy few who run the corporations and the banks, own and operate the news and entertainment media, compose the laws and govern the universities, control the philanthropic foundations, the policy institutes, the casinos, and the sports arenas.”—Journalist Lewis Lapham

Being a citizen in the American corporate state is much like playing against a stacked deck: you’re always going to lose.

The game is rigged, and “we the people” keep getting dealt the same losing hand. Even so, most stay in the game, against all odds, trusting that their luck will change.

The problem, of course, is that luck will not save us. As I make clear in my book, Battlefield America: The War on the American People, the people dealing the cards—the politicians, the corporations, the judges, the prosecutors, the police, the bureaucrats, the military, the media, etc.—have only one prevailing concern, and that is to maintain their power and control over the citizenry, while milking us of our money and possessions.

It really doesn’t matter what you call them—Republicans, Democrats, the 1%, the elite, the controllers, the masterminds, the shadow government, the police state, the surveillance state, the military industrial complex—so long as you understand that while they are dealing the cards, the deck will always be stacked in their favor.

Incredibly, no matter how many times we see this played out, Americans continue to naively buy into the idea that politics matter, as if there really were a difference between the Republicans and Democrats (there’s not).

As if Barack Obama proved to be any different from George W. Bush (he has not). As if Hillary Clinton’s values are any different from Donald Trump’s (with both of them, money talks). As if when we elect a president, we’re getting someone who truly represents “we the people” rather than the corporate state (in fact, in the oligarchy that is the American police state, an elite group of wealthy donors is calling the shots).

Politics is a game, a joke, a hustle, a con, a distraction, a spectacle, a sport, and for many devout Americans, a religion.

In other words, it’s a sophisticated ruse aimed at keeping us divided and fighting over two parties whose priorities are exactly the same. It’s no secret that both parties support endless war, engage in out-of-control spending, ignore the citizenry’s basic rights, have no respect for the rule of law, are bought and paid for by Big Business, care most about their own power, and have a long record of expanding government and shrinking liberty.

more...
http://www.rutherford.org/publications_resources/john_whiteheads_commentary/dont_be_fooled_by_the_political_game_the_illusion_of_freedom_in_america

[Demeter]

10. Universe slowly dying as old stars fade faster than new ones are born

SOME NEWS TO PUT IT ALL IN PERSPECTIVE....MAKES ONE FEEL ALMOST CHEERFUL, SOESN'T IT?

http://www.theguardian.com/science/2015/aug/10/universe-slowly-dying-gama-old-stars-fade-faster-than-new-ones-born



Analysis of starlight from more than 220,000 distant galaxies shows that the cosmos has lost half of its brightness in the past two billion years ... Without applause or encore, the lights are going out across the universe, as old stars die faster than new ones are born to replace them.

Astronomers described the slow death of the cosmos in fresh detail on Monday after training some of the world’s most powerful telescopes on a vast region of space. They analysed starlight from more than 220,000 distant galaxies and found that the universe has lost about half of its twinkle over the past two billion years. It will lose far more in the next two billion.

“The universe is curling up on the sofa and becoming a couch potato,” said Joe Liske, an astronomer at the European Southern Observatory in Garching, Germany, who took part in the study.

Universal dimming is driven by a slump in the rate of new star formation, which peaked about eight billion years ago. Stars shine by fusing hydrogen into helium, but as they consume their cosmic fuel supply, the birth rate of new stars falls dramatically. ...

EVEN THE UNIVERSE IS DISGUSTED BY EVENTS!

[Demeter]

11. It's on! Silicon Valley going after Wall Street

http://finance.yahoo.com/news/silicon-valley-going-wall-street-171001127.html

Silicon Valley is taking on Wall Street right where it lives: in financial services that big banks either have ditched or haven't latched onto yet.

Tech-focused venture capital firms poured some $12.2 billion into financial services start-ups in 2014, more than triple the amount in 2013, according to numbers from Accenture and CB Insights that Wall Street brokerage Convergex cited in a note Monday.

The "fintech" interest is broad based, from mobile payments to peer-to-peer lending to cryptocurrencies and a handful of areas in between. At the root of the interest is an effort to capture the way millennials want to do banking in the future.

Surveys repeatedly have shown that this cohort, generally identified as those who came to young adulthood around the turn of the century, is avidly looking for alternatives to traditional banking. One in 3 would switch banking in the next 90 days, according to a survey from Viacom's Scratch. Earlier this year, SNL Financial reported that 1 in 4 millennials changed banks solely because of an institution that offered a better app. ...

MORE

MILLENNIALS HAVE MONEY?

[Demeter]

12. California Is Proving That Health Reform Works NYT EDITORIAL

http://www.nytimes.com/2015/08/10/opinion/california-is-proving-that-health-reform-works.html

Californians got a double dose of good health care news late last month. The number of Californians who have trouble finding a doctor or paying their medical bills has sharply declined since the Affordable Care Act took effect. And premiums charged by private insurers have risen only modestly, contrary to warnings that insurers were likely to get double-digit premium increases.

In its latest survey tracking the experiences of California’s previously uninsured residents, the Kaiser Family Foundation reported that two-thirds of the uninsured had gained coverage through various programs, including the state’s Medicaid plan, employer-sponsored insurance and private policies bought on the new insurance exchange established by the state under the Affordable Care Act. Those who remain uninsured in California rank health care costs as their top financial challenge, with 85 percent saying health insurance is difficult to afford, more than housing, gas or utilities. Among the recently insured, health care ranked fourth on their list of economic concerns, behind housing, utilities, and gas.

Meanwhile, Covered California, the state agency that runs the insurance exchange, announced that the average premium would rise only 4 percent next year, slightly less than the 4.2 percent increase for the current year. California officials attributed the low rates to having a large number of enrollees (more than 1.3 million) in relatively good health, defying predictions that only the old and the sick would sign up. The state also benefited from a law giving the exchange power to decide which insurers can sell policies, which gives it leverage to demand lower rates. Since all insurers are required to provide a standard array of benefits and cost-sharing for various levels of coverage, consumers can focus on the two other issues of greatest concern: the price of the plan and whether it includes their preferred doctors. Covered California said that premiums will vary significantly from one area to another (the average premium for an insurance plan in Southern California will be $296 a month; in Northern California, premiums will average $384 a month). Limited competition among doctors and hospitals as a result of consolidation is pushing premiums up in some areas; in parts of Northern California,the average rate increase next year will be 12.8 percent, largely because of those forces.

California is one of the few states that actively negotiates prices with insurers. But under the act, any state can demand that insurers justify big rate increases, a tactic that may cause some to trim back. Consumers need to pressure state insurance commissioners to get as tough as they can.

[Demeter]

13. CHINA DEVALUES ITS YUAN, ALL HELL BREAKS LOOSE

China devalues yuan by 2% to boost flagging economy

http://www.theguardian.com/business/2015/aug/11/china-devalues-yuan-by-2-to-boost-flagging-economy

China has devalued its currency to boost flagging exports in a move that risks deepening the global currency war.

After recent data showing falling exports and a stalling manufacturing sector, the central bank said on Tuesday that it was allowing the yuan to weaken by nearly 2% in the hope of making China’s exports cheaper and pushing down borrowing costs.

In what it called a “one-off depreciation”, the People’s Bank of China said the centre of the yuan’s trading band was reset 1.9% lower at 6.2298 per US dollar, its weakest point against the US dollar for almost three years. The midpoint will now be based on the previous day’s closing price rather than being controlled centrally.

The impact of the decision was felt across regional markets as investors fretted about a prolonged fall in demand from the world’s second biggest economy.

The US dollar gained against a basket of currencies, moving up 0.2% to 97.506.

But the Australian dollar, often used as a liquid proxy for the Chinese currency, slid more than 1% to as low as US73.07c....

Gold prices reverse losses, spurred by China’s yuan devaluation

http://www.marketwatch.com/story/gold-prices-reverse-losses-spurred-by-chinas-yuan-devaluation-2015-08-11?siteid=YAHOOB

Oil prices fall after China devalues yuan

http://finance.yahoo.com/news/oil-prices-fall-china-devalues-031621280.html

Oil prices fell on Tuesday after China devalued its currency in its latest effort to prop up economic growth, making dollar-priced commodities more expensive and weighing on the oil demand outlook for the world's top energy consumer.

A slowdown in China's economy, which is still expected to grow by around 7 percent annually, has been a key driver for the sharp drop in oil prices over the past year along with rising global supplies...

[Demeter]

14. Keep the Internet Free of Borders NYT EDITORIAL

http://www.nytimes.com/2015/08/10/opinion/keep-the-internet-free-of-borders.html

One of the great things about the Internet is that it does not have national borders. When a company in Tokyo sends a digital file to a company in New York, the data does not have to clear customs. But the outcome of a federal appeals court case could hinder that free flow of information.

The case involves digital files containing information on dental aligners, used to straighten teeth, sent over the Internet by a company in Pakistan to a business in Texas. Last year, the United States International Trade Commission, a relatively obscure federal agency, ruled that the Texas company, ClearCorrect, could not import those files because they violated patents owned by Align Technology. ClearCorrect has appealed the decision to the United States Court of Appeals for the Federal Circuit in Washington D.C., which is scheduled to hear the case on Tuesday.

The I.T.C. has long had the power to forbid companies from importing physical goods like electronics, books and mechanical equipment that violate the patents, copyrights and trademarks of American businesses. It does so by ordering customs officials to seize items at the border or by issuing cease and desist orders to importers. The commission’s order to ClearCorrect was the first time it had sought to bar the transfer of digital information. If the appeals court upholds this decision, it could set a precedent that would allow businesses to seek to block all kinds of data transmissions.

Of course, businesses should be able to protect their patents and copyrights. But there are far better ways to do so. In this case, for example, Align could sue ClearCorrect and seek damages for patent infringement. Or the company could ask a judge to order ClearCorrect to stop selling products made using the information contained in the files.

It is not even clear that the commission has the authority to restrict international data transfers. Congress has given it authority to block the import of “articles,” which for decades has been understood to mean physical goods. In last year’s ruling, a five-member majority of the commission ruled that the word “article” includes data. Groups like the Motion Picture Association of America and the Recording Industry Association of America are supporting the commission’s view. They argue that, as trade increasingly becomes digital, the definition of “article” should include data. The Internet Association, which represents companies like Facebook, Google and Twitter, is asking the court to reverse the decision.

At some point, Congress may have to step in. Because it defines the limits of the commission’s authority, Congress should decide whether the changing nature of international trade requires the government to apply the same rules to data that it does to physical goods. History suggests that it might not be sympathetic to the commission’s position. In response to opposition from Internet users, Wikipedia, Google and others, Congress did not approve proposals that would have allowed movie studios and record labels to block foreign websites that were alleged to have violated copyrights.

The appeals court should strike down the commission’s ruling, which is bound to hamper the exchange of ideas and information on the Internet.

[Demeter]

16. Citigroup in $13.5 million settlement over defunct CSO hedge fund

http://www.reuters.com/article/2015/08/10/us-citigroup-prosiebensat-1-settlement-idUSKCN0QF2A920150810?feedType=RSS&feedName=businessNews

Citigroup Inc (C.N) agreed to pay $13.5 million to settle a lawsuit accusing the bank of deceiving investors into remaining in its Corporate Special Opportunities hedge fund, only to suffer big losses when the fund was liquidated in November 2008, court papers filed on Monday show

The lawsuit accused Citigroup and its Citigroup Alternative Investments affiliate of misleading investors in a Dec. 14, 2007 letter about the status of the fund's leveraged, 558 million euro ($756 million at the time) original investment in a syndicated loan arranged for ProSiebenSat1 SE (PSMGn.DE), a large German broadcaster.

Investors said Citigroup falsely told them in the letter that the quality of the fund's portfolio was "fundamentally sound," but was forced six weeks later to suspend redemptions. They claimed to lose the bulk of their investments when the fund was liquidated, despite Citigroup's efforts to prop it up.

The preliminary settlement was filed in Manhattan federal court and requires court approval. Citigroup denied wrongdoing in agreeing to settle. A spokeswoman, Danielle Romero-Apsilos, said the New York-based bank is pleased to resolve the matter.

The lawsuit, led by David Beach and Christopher Kelly, was brought on behalf of a proposed class that suffered an estimated $39.2 million of CSO fund losses attributable to ProSiebenSat1.

Legal fees for the plaintiffs' lawyers would not exceed $4.5 million, court papers show.