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Spain to Abolish Rent Controls; 20,000 Small Businesses May Close; Good Thing or Not? / Mike “Mish” Shedlock / December 19, 2014

Abolition of rent controls in Spain this month have prompted some landlords to increase fees by tens of thousands of euros. The Guardian claims Spanish rent changes ‘could close 20,000 small businesses’.

Is this a good thing? Ponder that question for a moment, but also consider a few snips from the article.

Up to 20,000 small Spanish businesses could be forced to close when rent controls are abolished at the end of this month, according to the self-employed workers union. Many of the closures will be emblematic shops that shape the urban landscape in cities such as Madrid, Granada and Barcelona.

The Camisería Hernando has been in business since 1857 and has occupied the same shop on Madrid’s Gran Vía for 50 years but is closing after the rent shot up from €3,000 to €30,000 a month.

Barcelona has already lost a toy shop and a secondhand bookstore that have been a feature of the old part of the city for more than a century. Both premises have been occupied by retail clothing chains. Other gems such as the modernista Monge stamp shop and the Quiles grocery are also under threat as the city succumbs to an influx of chain stores.

Local government officials have refused to intervene to preserve the city’s heritage but local artists and intellectuals are taking the case of Monge to court. While some landlords have been prepared to negotiate affordable rent hikes, many shops are in buildings owned by banks and funds that simply notify the shopkeepers of the impending rise.


Get REAL – Gold Heading From West to East

MaxKeiserTV, Published on Dec 19, 2014

The Housing Bubble Explained in One Little Gem of an Excerpt… / by Thad Beversdorf via First Rebuttal blog on 12/19/2014 18:55

For some reason I feel like this is a good time to review what we can expect when our government and its agencies attempt to create wealth out of thin air.  We can see the absurdity and hubris of our policymakers who believe they can circumvent economic laws in the following excerpt from the “The National Homeownership Strategy: Partners in the American Dream”.  This is a document that was put together by HUD and some other private and public stakeholders at the request of President Clinton way back in 1995.  Isn’t it amazing how poor policies that seem so right at the time, to some, end up kicking us in the ass for decades.  And as much as the government has gotten comfortable with the storyline suggesting banks are responsible for the entire mortgage bubble mess of the mid 2000′s, it was, in fact, all started by government agenda.  Have a look at this little gem which I am suggesting is the document that led us to the economic devastation from which we are yet to crawl out.  

For many potential homebuyers, the lack of cash available to accumulate the required downpayment and closing costs is the major impediment to purchasing a home. Other households do not have sufficient available income to to make the monthly payments on mortgages financed at market interest rates for standard loan terms. Financing strategies, fueled by the creativity and resources of the private and public sectors, should address both of these financial barriers to homeownership.


Japan Considering Exit Tax to Leave the Country / by Martin Armstrong / 

The trend on a global basis is getting really scary. Our forecasts have been computer generated and are by no means my PERSON opinion of what I would like to see. This is getting to be really horrible as government simply go after more and more money without any consideration what happens when you have extorted everyone and there is nothing left?  Japan is now moving to become the latest country to consider taxing wealthy individuals who move abroad to take advantage of lower rates or to simply guard their freedom.

Governments look upon the people as the great unwashed. We were born to serve their special interests and have no rights even to exist. What we earn and produce belongs to government and we should be grateful that they allow us to play with some toys. Now the Japanese ruling party lawmakers are proposing an “exit tax” under which people with over ¥100 million ($857,000) in financial assets would have to pay a tax on any unrealized capital gains on those assets if they moved out of Japan.

We are economic slaves – nothing more.


A2A with John Butler of Amphora Capital / By Turd Ferguson / December 18, 2014

Earlier today, we held our final A2A webinar of the year and we couldn’t have had a better and more timely guest than John Butler, author of the great book, “The Golden Revolution”.

In this tremendous, 45-minute presentation, John addresses a multitude of subjects, including:

  • The possibility of a gold-backed Russian government bond, which would provide stability for the rouble
  • What China might be planing to do with their gold reserves and the upcoming IMF meeting next autumn
  • The meaning of today’s announcement by the SNB to begin charging negative interest to depositors
  • The growing list of gold repatriation requests from around the globe

Many other subjects are covered as well so please be sure to listen to the entire recording. When you’re done, check out John’s latest Amphora Report entitled “AS THE ‘SANCTIONS WAR’ HEATS UP, WILL PUTIN PLAY HIS ‘GOLD CARD’?”( You should then join John’s mailing list so that you’re notified whenever he publishes something new.

Lastly, if you haven’t yet read “The Golden Revolution”, I strongly suggest you order it today by clicking the link below. It is as powerful and relevant today as it was when it was published in 2012. You won’t be disappointed.




Why The US Is About To Be Flooded With Record Oil Production Due To Plunging Oil Prices / by Tyler Durden on 12/19/2014 15:44

One would think that plunging oil prices and the resulting mothballing (or bankruptcy) of the highest-cost domestic producers would lead to a collapse in US oil production. And sure enough, if looking simply at headline data like the Baker Hughes count of active rigs in the US, then US oil production grinding to a halt would be all but assured. However, what will actually happen, even as the highest-cost producers and those with the weakest balance sheets are taken to their local bankruptcy court, is that asBloomberg reports, the US is – paradoxically – set to pump a 42-year high amount of oil in 2015 as drillers ignore the recent decline in price, pointing them in the opposite direction.

Here is the surprise for all those thinking Saudi Arabia will declare a quick win when half of the US shale is bankrupt and supply plunges: U.S. energy producers plan to pump more crude in 2015 as declining equipment costs and enhanced drilling techniques more than offset the collapse in oil markets, said Troy Eckard, whose Eckard Global LLC owns stakes in more than 260 North Dakota shale wells. That and the scramble to put competitors out of work, before competitors do just that to you.

On one hand oil companies are, logically, shutting down expensive production. However, in borrowing a page from the playbook of the iron ore producers who also are caught in an AMZNian race to the bottom, and are producing more raw materials than ever in hope of putting their competitors out of business as fast as possible, what they are also doing is shifting their focus to their most-prolific, lowest-cost fields, which means extracting more oil with fewer drilling rigs, said Goldman Sachs Group Inc. Global giant Exxon Mobil Corp. the largest U.S. energy company, will increase oil production next year by the biggest margin since 2010. So far, the Organization of Petroleum Exporting Countries’ month-old bet that American drillers would be crushed by cratering prices has been a bust.

In short, what the US energy industry will do at the national level, is precisely what OPEC did as an international cartel: battle plunging prices, and demand, with surge, if not record, production:


The worst investment of the century—paying 0.07% interest / December 19, 2014

Edith had been saving up wherever she could. She only prepared meat once a week for the family and she’d spent many extra hours mending the children’s clothing so they wouldn’t have to buy any new things this year.

So when she and her husband had finally saved up enough to purchase a £100 war bond, she was filled with immense pride.

Everywhere around her the posters had advertised, “unlike the soldier, the investor runs no risk”.

Not only was she proud to know that she was doing her part to help Great Britain win the Great War, but also that she was making a safe investment in her children’s future.

Little did she know that she was actually investing in her children’s future financial enslavement.

Initially Edith was promised that the bond would be paid out after 20 years, and in the meantime she would earn 5% interest each year.

However, those terms were quickly changed.

Just 10 years in, the British government said that times were tight and refinanced the loans, bringing down interest payments to 4%.

Another 5 years later, they pushed their rates down yet again to 3.5%. And this time they took off the 20-year deadline, offering that instead of paying back the principal that they would just keep paying out interest indefinitely.

Nearly 100 years later, over £2 billion of WWI debt remains, with the British government continuing to pay out 3.5% annually.


Torture, Schmorture? / Pater Tenebrarum / December 20, 2014

In recent days, unknown Senate staffers have attempted to edit the Wikipedia page on the CIA torture report at least two times, trying to edit out the term “torture” so as to replace it with the Orwellian euphemism du jour, “enhanced interrogation”. If a normal interrogation is good, an enhanced one must be even better, right?

The Pew Research Centre has recently lobbed the following questions at American tax cows with surprising results (at least, they were surprising to us):

If you call it an “interrogation method” instead of calling it what it actually is, this is the result you get.

Mish has some more details and color on this particular survey. Certainly the framing of the questions has a strong influence on the replies one gets in such surveys. This has prompted many to try to explain this poll result away, and to some extent their arguments have merit.

However, we actually don’t want to make excuses for the intellectual laziness and moral turpitude of those who are fine with torture. Anyone supporting torture is both woefully uninformed and needs to urgently re-examine his moral compass. It is quite stunning how many people of this sort are apparently running around.


When Shale Hedges Fail: The Downside Of Three-Ways / by Tyler Durden on 12/19/2014 18:20

“[Shale Oil]Producers are inherently bullish,” warns one energy-hedging firm, and that truth belies the weakness in the apparent hedging programs many over-optimistic energy firms are facing now. We hear day after day that, in the short-term, low prices can be handled “because they’re hedged,” but producers were so exuberant about the direction of oil prices they didn’t do simple linear hedges (swaps or futures) to manage price movements, but instead, as Bloomberg reports, used the so-called “three-way collar.” Simply put instead of a floor and a ceiling for prices, there is a 3rd (bullish) leg of low-strike sold puts that subsidized the cost of the hedge… unless the price of oil goes below that strike, in which case the hedge fails and, as a lot of producers are finding, they are now losing money.


More Sony Hack/North Korea Psyop Fun: Team America World Police Screenings Canceled / Melissa Melton / December 19th, 2014

Hey government and mainstream, lapdog establishment media: I thought we were supposed to be afraid of ISIS… Now it’s North Korea?

What a ridiculous reality we live in.

Right now the mainstream media is flooding the news cycle with story after story trying to rile people up about how the FBI has officially blamed North Korea for the Sony hack which led to the company canceling its scheduled release of the upcoming Seth Rogan movie “The Interview,” ostensibly to avoid terror attacks at theaters.

Yesterday The New York Times ran a story titled, “U.S. Weighs Response to Sony Cyberattack, With North Korea Confrontation Possible.” Voice of America, one of our government’s more openly official propaganda arms, ran with the headline, “US: Sony Cyberattack is ‘Serious’ National Security Matter.” I saw the headline on VOA and went, “Uh-huh. Suuuuuuure it is.”

The Telegraph is even saying China helped.

And it’s official: the mainstream media sound like a bunch of children stomping around flailing their arms, “Look over here, look over here!! Pay attention to me, dammit!” for a story that most people aren’t even sure they should waste eyeball juice on.

At the same time, alternative media outlets are rightfully calling this whole thing what it very likely is: a U.S. intelligence operation, and a huge (and frankly ridiculous) distraction.

Two family members have individually asked me now what I personally think of the Sony/North Korea story. My first response when I saw the headlines prior to the ridiculousfest blowing up the last few days was a yawn and a stretch. My response today, however, when they asked was more along the lines of *insert mind-melting scream here* akin to the sound of a rabid ninja camel fist-fighting a giant zombie anteater on crack with lightning bolts for eyes.

So people are actually buying this crap? Really?!


Facebook’s Days Are Numbered / by Karl Denninger / December 19, 2014

Who remembers Myspace?

A report today by Frank N. Magid Associates Inc. found that the portion of 13- to 17-year-old social-media users in the U.S. on Facebook slipped to 88 percent this year from 94 percent in 2013 and 95 percent in 2012. In the same period, Twitter Inc. and messaging applications rose in popularity in that age group, the study showed.

That’s a fairly material drop, and it portends bad things.

Here’s the thing — what tends to happen with “social media” is that they appear to “plateau” in terms of daily active users but engagement falls — and this is an easy metric to game for the company (thus they have every reason to do so.)

But the fade-to-black is in fact happening — and is happening here too.  When you get into the single digits on “safe” or “trustworthy”, well….. and Facebook has.

The happy face on people like Cramer who’s spouting on CNBS this morning…. well, just remember his stellar record in the early part of 2000.

You have to look forward, and the reality of Facebook is that the lack of trust (earned by Zukerburglar, and justly so) will eventually blow up in his face.

It is simply a matter of time.


“Something Changed” – Comparing E-Mini Liquidity In 2009, 2012 And Today / by Tyler Durden on 12/19/2014 17:10

Here is a snapshot of the liquidity in E-Mini on this day in 2009:

Here it is again in 2012:


Asian Metals Market Update / By Chintan Karnani, Insignia Consultants / 19 December 2014 

Indian demand for gold and silver will start to rise from the middle of January. Chinese jewelers and Chinese physical dealers will be hoarding gold and silver for the Chinese New Year in early February. We prefer a buy on sharp dips strategy for gold and silver from now till the end of January. Be patient and have very high margin money if you are trading in futures. One can start buying far dated gold and silver call options (September 2015 till June 2016) as premiums are very low. I also like buying far dated crude oil call options. To me at this price level, all metals and energies are an excellent opportunity to buy far dated call options.

Yearend profit taking in gold and silver and crude oil can result in a very big rise anytime. The reaction of gold and silver after the FOMC has been excellent. However gold and silver need to trade over $1160 and $15.40 for the rest of the year to be in a bullish zone.

As far as the currency markets are concerned, the European central bank is expected to announce more quantitative easing in January. The Bank of Japan already wants a weaker Yen against the US dollar. The Euro-US dollar can fall to 1.1975 and 1.1375 in case ECB announces more QE. The euro/usd fall to 1.1375 (if any) will create more downward price pressure in gold and silver. The European central bank meeting in January could be a big threat to gold and silver bulls. The rest of the factors (apart from currency markets) are more gold and silver positive than negative.


Will This Take Markets To The Brink & Bring Consumers To Their Knees? / December 19, 2014

With crude oil surging nearly $4 a barrel, today one of the top economists in the world sent King World News a powerful piece which predicts the global markets will be taken to the brink and consumers brought to their knees.  Below is the fantastic piece from Michael Pento.

By Michael Pento of Pento Portfolio Strategies

December 19 (King World News) – Will This Take Markets To The Brink & Bring Consumers To Their Knees?

Analysts on every financial news network are screaming about how the lower oil and gas prices will spur on the U.S. consumer and lead to a stronger economy.  It is true that total retail sales rose 0.7 percent in November, beating analysts’ expectations of 0.4 percent.  And the Thomson-Reuters University of Michigan survey of consumers saw its December 2014 “preliminary index of consumer sentiment” soaring to 93.8 — well above last month’s 88.8 reading. Yet, despite this, global markets are throwing off many deflationary signals that should not be ignored.     


Former BIS Chief Economist: “The System Is Dangerously Unanchored; It Is Every Man For Himself” / From Mark Dittli and Alexander Trentin of Finanz und Wirtschaft on 12/19/2014 17:45

“The monetary system is dangerously unanchored”

William R. White, the former chief economist of the Bank for International Settlements, is worried about extreme monetary policies worldwide. The Swiss National Bank, by introducing negative interest rates, is trying to cope with these currents.   

In its quest to stop an appreciation of the Franc, the Swiss National Bank (SNB) introduced negative interest rates on Thursday. According to William White, former chief economist of the Bank for International Settlements in Basel, the SNB acts in an international monetary «non-system», where every country only looks out for itself. In his opinion there could be a counterintuitive effect of negative interest rates: To cover their losses, banks could increase the costs of loans.

Mr White, the Swiss National Bank has introduced negative interest rates. What do you think of this measure?

It is one more step along the same path that the SNB has followed for years. There has been an increase of inflows of capital into the Swiss Franc, because of all kinds of trouble around the world. Furthermore, I suspect the SNB expects more trouble along the road, which is the possibility when the European Central Bank introduces a strategy of quantitative easing some time next year. The SNB tries to convince the banks not to channel more capital into the Franc, and to get banks who have long-term positions in Swiss Francs to start reversing them. This is directed to lower the value of the Swiss Franc or at least to take the pressure off the currency.


5 Things To Ponder: Variegated Contemplations / Lance Roberts / 18 December 2014

“Twas the week before Christmas, when all through markets

Not a trader was stirring, because they already left for the Hamptons.

Which left  the “inmates running the asylum” with very little care

As everyone hoped a ‘Santa Claus Rally’ would soon be there.”

Yes, it is that magical week leading up to Christmas and the subsequent low volume push into the new year. For individuals, it is “magic time” as hopes are high that “Santa Claus” will come to WallStreet.

Of course, as mutual funds window dress portfolios for the end of year reporting, it tends to elevate the most popular stocks in the markets. However, investors should also be wary of the rotation of the calendar as those same managers then sell positions for tax purposes in the New Year.

This weekend’s reading list is a smattering of articles that cover a wide range of topics from investing to oil. As always, I try to provide opposing points of view to give readers a complete picture of the topic. As a portfolio manager, it is important to remember that our fundamental beliefs can lead us into making poor investment decisions. Therefore, it is crucial for long-term investment success that we eliminate the emotional biases that affect our decision-making processes.

With that said, here are the things I will be reading this weekend…


Russia expanded gold reserves for 8th month amid ruble rout / By Anna Andrianova and Laura Clarke, Bloomberg News / Friday, December 19, 2014

Russia, the world’s fifth-biggest gold holder, added to its hoard for an eighth month even after having to use its international reserves on defending the ruble.

The gold stockpile rose to 38.2 million ounces as of Dec. 1 from 37.6 million ounces a month earlier, the central bank said today on its website. Its value in dollar terms fell by $85 million. Total reserves shrank by $9.7 billion in November to $418.9 billion, the lowest level since 2009.

“Physical volumes are increasing but their dollar value is not changing that much because the gold price has fallen,” Vladimir Tikhomirov, chief economist at BCS Financial Group in Moscow, said before the release. “Many central banks are buying gold since the price for gold has fallen.” …

“I cannot imagine that Russia has sold gold or would sell gold, unless its foreign-exchange reserve are depleted,” Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt, said by phone. “Gold is the final bullet, because gold is a store of value and outside of the dollar system and not subject to sanctions.”

… For the remainder of the report:…


Last Minute Fizzle Fails To Dent Best 3-Day Stock Surge In 3 Years / by Tyler Durden on 12/19/2014 17:35

For old time’s sake…

What a week!!

  • WTI’s best day in over a year
  • S&P 500 2nd best week in 2 years
  • Dow’s best 3-day run in 3 years
  • USD at 8 year highs

The Dow rips over 800 points off its lows in 3 days, S&P over 100 near record highs.. before a weak close…


Gold Daily and Silver Weekly Charts / 19 DECEMBER 2014

Gold and silver marked time today.

Next week will be short and quiet, unless *something happens.*

The economic calendar has a few things on it. It is included below.

Russia added 600,000 ounces of bullion to its gold reserves in November.

The major preoccupation of the mainstream media this holiday season is the ability of Americans to watch an asinine movie, in incredibly poor taste, about the government sanctioned murder of the actual head of state of another sovereign nation, just for laughs.

Well, it provides a distraction from reality. And besides, we called no hackbacks.


Gold & Silver Market Morning / Julian D.W. Phillips for the Gold & Silver Forecasters / 19 December 2014

Gold Today –New York closed at $1,198.10 up $9.20 where Asia and London held it up to the Fix. The euro was 10 points weaker at $1.2286.  In London gold rose strongly and the gold Fixing was set at $1,197.50 down $13.75 and in the euro, at €975.79 down €6.244 while the euro was 0.5 cents weaker at $1.2272. Ahead of New York’s opening gold was trading in London at $1,96.72 and in the euro at €975.14.

Silver Today – The silver price rose to $15.91 up 14 cents, in New York. Ahead of New York’s opening it was trading at $15.90.

Gold (very short-term) The gold price will consolidate, in New York, today.

Silver (very short-term) The silver price will consolidate, in New York today.

Price Drivers

Currency strains are not limited to the Ruble, down brutally to half the value it was earlier this year. The Ruble may fall further as Putin has told the central bank publicly that it should not use reserves to defend the Ruble exchange rate. The Fed did remove ‘considerable time’ from its statement indicating that two more meetings must be held before the raising of interest rates in the States.