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Monday 09.01.2014

Israel cuts spending to offset $2.52bn war costs
Israel has been presented with a hefty bill for 50 days of war in Gaza, as the Prime Minister, Benjamin Netanyahu, moved to slash government spending by 2 percent this year to offset the $2.52bn (£1.51bn) cost of the conflict. With only the Israeli military and domestic intelligence agency Shin Bet exempt from the sharp spending reductions, the area to be hit hardest emerged as the Israeli education system, with critics — including members of Netanyahu’s cabinet — predicting that the poorest Israelis will feel the brunt of the cuts. Among those protesting was the welfare minister, Meir Cohen, who insisted there was no more fat in his budget to trim. “From whom will we take? From those who have nothing to put in their children’s sandwiches for school?” he complained. Amid estimates by some economic observers that the war may have cost Israel a decline of 0.5 percent in its growth in GDP, Netanyahu defended the stringent across-the-board cuts before a cabinet meeting, insisting: “Security comes first.”

Why Buffett's son bought Rosa Parks' papers
Howard Buffett, the youngest son of the billionaire investor, said he was thinking of his mother when he paid $4.5 million for a trove of historic belongings left by civil rights activist Rosa Parks. "I knew that my mom would think that it was something that should get done," Buffett told CNNMoney. Buffett's mother, Susan, died in 2004 after 52 years of marriage to Warren Buffett, the CEO of Berkshire Hathaway (BRKA). Howard Buffett's charitable foundation closed a deal to purchase the Parks material on August 19. The items have been in storage, caught up in a years-long legal fight and then put up for auction. The cache includes Parks' Presidential Medal of Freedom and Congressional Gold Medal, as well as letters, photos and other artifacts. Parks, who died in 2005, became a civil rights icon when she refused to give up her seat on a bus to a white man in Montgomery, Alabama, in 1955. Her arrest triggered a 381-day boycott organized by the Rev. Martin Luther King Jr.

Russians Get Creative With Ukraine Protests Despite Danger
Under relentless pressure from heavy-handed officials, Russians protesting their country’s policies in Ukraine are getting creative. At a recent Moscow fashion show, a young girl stepped down the catwalk dressed in Ukraine's national colors of yellow and sky blue before stopping and holding a gun to her head. The video of the performance went viral, causing a stir in Russian social media. Any morning commute on the Moscow Metro reveals a smattering of accessories in blue and yellow -- a subtle but striking statement. On Aug. 20 the Russian capital awoke to televised images of one of the iconic “seven sisters” Stalin-era skyscrapers flying the Ukrainian flag, its showpiece golden star painted yellow and blue. Four young Russians were detained by the authorities even as journalists rushed to the scene. Two days later, a daredevil going by the pseudonym “Mustang Wanted” posted a selfie on top of the skyscraper, and released a statement on his Facebook page claiming responsibility for the stunt.

China refuses to give Hong Kong right to choose leaders; protesters vow vengeance
China’s parliament decided Sunday against letting Hong Kong voters nominate candidates for the 2017 election, despite growing agitation for democratic reform. The move is likely to spark long-promised protests in Hong Kong’s business district, as activists began planning and mobilizing within hours of the announcement. The decision by China’s National People’s Congress essentially allows Communist leaders to weed out any candidates not loyal to Beijing. “It’s not unexpected, but it is still infuriating,” said legislator Emily Lau, chairwoman of the Democratic Party. “This is not what Beijing promised. They’ve lied to the people of Hong Kong. And it’s clear we are dealing with an authoritarian regime.” Defending China’s ruling, Li Fei, deputy secretary general of the Standing Committee of the National People’s Congress, said allowing public nominations in the election for Hong Kong’s leader would be too “chaotic.”

20 Miners Rescued From Collapsed Nicaragua Gold Mine

Malaysia Airlines to cut 6,000 staff
Malaysia Airlines is to cut 6,000 staff as part of recovery plan after being hit by two disasters this year. The reduction in staff numbers represents around 30% of its workforce of 20,000. The airline will become completely state owned, and a new chief executive will eventually be put in place. Investigators continue to hunt for flight MH370, the Kuala Lumpur to Beijing flight which went missing in March. The MH17 air crash in eastern Ukraine is also under investigation. The plane was shot down on 17 July, with the loss of all 298 people on board. The recovery plan will cost about 6 billion Malaysian ringgit $1.9bn. Khazanah Nasional, the state investment company that owns a 69% stake in the troubled firm, will take 100% ownership. "The combination of measures announced today will enable our national airline to be revived," said Khazanah's managing director Azman Mokhtar. "Success is by no means guaranteed...

$100 Million Later, The Ice Bucket Challenge May Not Lower Your Taxes After All
Despite media saturation and knock-offs, you have to hand it to the amazing success of the ALS Ice Bucket Challenge. The ALS Association announced that donations topped $100 million in one month, a 3,500% increase from a year ago. More than three million people have donated, but it’s tapering. Average donations peaked at over $100 on August 21. They were down to less than $30 this week, says one report. If someone challenges you to dump a bucket of ice water over your head and you don’t, you contribute $100 to the ALS Association. But most of the challenge is about promoting awareness of the disease, so many people dump as well as donate. The contribution gimmick got many celebrities involved and got people excited and invigorated beyond the frigid dunking. So is all this tax deductible? Donating the money should be, but it is subject to myriad hurdles. Services aren’t deductible, so even celebrities can’t deduct the value they’ve added by the videos that have gone viral.

(What’s Left of) Our Economy: A Fact-Free Case Against Austerity by Krugman
I wish I knew how to say “cherry pick” in French. Then I could write a snappier headline for this post about Paul Krugman’s recent efforts to show the devastating effects of Eurozone austerity policies. Per the longstanding arguments of the New York Times columnist and Nobel Prize-winning economist, tight monetary and especially fiscal policies in post-financial crisis Europe have unnecessarily weakened recovery for reasons having nothing to do with sound economics and everything to do with conservative ideology run wild. In recent months, he has contended, these deeply and tragically misguided policies needlessly threaten to plunge the Eurozone into yet another recession. His supposedly dispositive evidence? The economic performance of France. According to Krugman, a close examination of the country’s record completely debunks the conventional wisdom that its economy has long been a big government-ruined disaster area desperately in need of major belt-tightening and much more...

The Fall Is Golden For Bullion Bulls
September is the hottest month of the year for gold prices, rising on average 3% over the past 20 years. As the yellow metal tests hovers off 2-month-lows, Bloomberg notes that "Indian jewelers and dealers will be stocking up in the coming weeks," ahead of the festival period, which runs from late August to October (andis followed by the wedding season) when bullion is bought for part of the bridal trousseau or in jewelry form as gifts from relatives. As GoldCore's Mark O'Byrne notes, "a lot of traders are aware of this trend towards seasonal strength... They tend to buy and that creates momentum." The pattern of trading in precious metals changed for the better this week. After London's bank holiday on Monday, for the first time in a long time the market opened in London's pre-market with higher prices. This indicated Asian or Middle-Eastern physical demand was returning to the market. Predictably, prices drifted lower during London hours as paper trading took over, and the gains were more or less...

Keiser Report: Fast Food Tax Evasion

Detroit's Bankruptcy Case Goes to Court
It took decades of mismanagement, malfeasance and meltdowns in its bread-and-butter manufacturing sector for Detroit to hit fiscal rock bottom. The path to exit bankruptcy could take less than a year and a half. After some delays, the confirmation trial for the largest municipal bankruptcy in U.S. history is scheduled to start Tuesday. Massive debt, thousands of creditors and complex union and pension issues had many experts thinking Detroit's bankruptcy would take years to resolve, considering two California cities — Stockton and San Bernardino — filed a year before Detroit did and still haven't settled on plans. Detroit expects to cut $12 billion in unsecured debt to about $5 billion, which is "more manageable," according to Bill Nowling, a spokesman for emergency manager Kevyn Orr. "None of it will get wiped out until the plan is confirmed and the judge issues an effective date," Nowling told The Associated Press. "And it happens really fast after that."

Ebola Virus Spreads Into African Cities
The Ebola virus which has spread in five countries continues to migrate through towns and into West African cities. According to reports done by the World Health Organization, in West Africa alone Ebola has killed over 1,552 people. The deaths range from Liberia, to Nigeria, to Sierra Leone, and all the way to Guinea. The latter, has plagued close to 650 people, and taken the lives of 430 others. Even though government officials and on-site doctors have spent several months trying to contain the malicious outbreak, those infected continue to increase. Reports show that over 40 percent of Ebola cases have been in the last 23 days. In Sierra Leone, the dreaded “hemorrhagic fever” arrived in Ola During Hospital in Freetown. Its carrier was a 4-year-old boy. The diagnosis of the child became apparent only a few days after he was checked in. The hospital, which is Freetown’s sole pediatric center, was forced to shut down. The boy did not survive.

Ron Paul - Obama Has No Middle East Strategy? Good!
Last week President Obama admitted that his administration has not worked out a strategy on how to deal with the emergence of the Islamic State in Iraq and Syria (ISIS) as a dominant force in the Middle East. However, as ISIS continues its march through Syria and Iraq, many in the US administration believe it is, in the words of Defense Secretary Chuck Hagel, a threat “beyond anything we have ever seen.” Predictably, the neocons attacked the president’s speech. They believe the solution to any problem is more bombs and troops on the ground, so they cannot understand the president’s hesitation. Chairman of the House Armed Services Committee Buck McKeon made it clear that fighting ISIS is going to cost a lot more money and will bring US forces back to Iraq for the third time. The post-Iraq, post-Afghanistan peace dividend disintegrates. Mr. McKeon said last week: ISIS is an urgent threat and a minimalist approach, that depends solely on FY15 funding or pinprick strikes that leave fragile forces in Iraq...

We've Got A Busy 4-Day Week Ahead Of Us — Here's Your Complete Preview
Last week was really something. The stock market hit new record highs, with the S&P 500 finally closing above 2,000 for the first time ever. And we also learned GDP growth surged 4.2% in Q2 thanks to big upward revisions in business spending. The U.S. will be closed on Monday for Labor Day. However, we have a stacked line-up of top-shelf economic reports coming our way. Here's your Monday Scouting Report: Top Stories-Europe: In recent weeks, we've heard nothing but bad news out of the eurozone economy. Growth has stalled and inflation is approaching zero. All of this puts increasing amounts of pressure for the European Central Bank to act when it meets on Thursday. Indeed, ECB President Mario Draghi recently said, "We stand ready to adjust our policy stance further." However, the consensus is for the ECB to make no change in its policy, which includes a main refinancing rate of 0.15%, a marginal lending facility rate of 0.4%, and a deposit facility rate of -0.1%....

Footage Shows Militia at US Compound in Libya

Labor Day Turns Attention Back to Minimum-Wage Debate
The White House and union leaders are using Labor Day reinvigorate efforts to raise the minimum wage. Legislation to increase the federal pay floor from $7.25 an hour stalled in Congress this spring, but Democrats hope the issue will resonate with voters in November, especially in states with closely contested Senate races. “Raising the minimum wage would be one of the best ways to give a boost to working families,” President Barack Obama said Saturday in his weekly radio address. He pointed to stronger job creation gains this year but noted many workers are in low-paying jobs. Raising the federal minimum wage “would help around 28 million Americans from all walks of life pay the bills, provide for their kids, and spend that money at local businesses,” he said. “And that grows the economy for everyone.” Congress has not heeded the president’s call. A bill that would have lifted the minimum wage to $10.10 an hour failed to pass the Senate earlier this year.

Landlord Reportedly Orders 86-Year-Old Tenant To Remove American Flag From Rental Property
Julia Lease recently came home to a surprising notice on her door. According to 10-TV, the 86-year-old woman was reportedly ordered by her landlord to remove her American flag from the front of the Estates at Eden of Whitehall rental property where she has resided for the past 36 years. During a recent interview with the news station, she recounted the incident explaining the Notice of Lease Violation she received on Wednesday, August 20. She stated that the specified violation was marked as “Other.” The brief description of her alleged violation said, “”Please remove flag from your front porch. Thank you!” No further explanation was given in reference to the order. Lease revealed that she’d hung the flag nearly a month prior to receiving the notice. However, she still doesn’t understand what the problem is. “This is the flag that’s making this complex look bad,” Lease said in reference to the flag. “It’s detracting from the beauty of everything else....

Is Medical Marijuana the Answer to Lowering Healthcare Costs?
Comparatively speaking the United States has the highest healthcare costs of all 34 countries in the Organisation of Economic Co-operation and Development. But, relative to the past five decades, healthcare inflation is practically at its low. According to data from the Commerce Department, healthcare costs for July 2013 rose just 1% over July 2012. To add some context to these figures, the year-over-year increase between the mid-1970s and the mid-1990s ranged between 4% to as high as 12%. However, one treatment area where costs aren't declining for consumers and insurers is opioid prescriptions. Opioids are commonly prescribed to patients who are dealing with chronic pain issues. Because the condition is ongoing, there's a propensity for patients to be on these medications for long periods of time. Furthermore, many opioid-based medications, such as Oxycontin and Vicodin, can be quite addictive which can lead to abuse of the medication.

Eurozone Currency Dispute Intensifies: France Wants More ECB Action to Correct Overvalued Euro, Germany Doesn't
The currency and fiscal battleground front lines in Europe remains the same. France wants QE, fiscal stimulus, and more leeway on meeting fiscal deficit targets. Germany doesn't. And the fighting has strengthened. The idea that ECB can produce nirvana by devaluing the euro is ridiculous. Yet, that's the battle cry of the day. Bloomberg reports France Asks for More Action From ECB to Correct Overvalued Euro. French Prime Minister Manuel Valls called for more action from the European Central Bank to lower the value of the euro, amid concerns the 18-nation region might be headed toward deflation. “The monetary policy has started to change,” Valls said today in a speech made at the Socialist Party’s summer school in La Rochelle, France. While he called the ECB’s package of measures taken in June a “strong signal,” he also said that “one will have to go even further.” Valls’s comments come after ECB President Mario Draghi, who’ll meet French President Francois Hollande in Paris, signaled that declining...

Putin Wants 'Statehood' Talks In Eastern Ukraine

China official PMI falls to 51.1 in August
The pace of activity in China's vast manufacturing sector slowed in August, government data released Monday showed. The official purchasing managers' index (PMI) came in at 51.1 in August, a tad below expectations for a reading of 51.2 and down from a 27-month high of 51.7 in July. It remains above the 50-mark which separates expansion from contraction. The final reading of HSBC's flash manufacturing PMI for August is due later Monday. The flash reading came in at a three-month low of 50.3. There was little reaction in Asian stock markets outside of Australia. Sydney shares widened their gains to 0.5 percent, hitting a more than one-week high, while the Australian dollar barely moved. The figures follow a slew of disappointing economic data – from manufacturing to credit growth – over the past month despite a burst of government stimulus measures to support the economy. Last week, the Bank of America Merrill Lynch said the Chinese government has launched a "fresh round of mini-stimulus"...

Desperately Dry California Tries to Curb Private Drilling for Water
The small prefab office of Arthur & Orum, a well-drilling outfit hidden in the almond trees and grapevines south of Fresno, has become a magnet for scores of California farmers in desperate need of water to sustain their crops. Looking at binders of dozens of orders for yet-to-be-drilled wells, Steve Arthur, a manager, said, “We’ve got more stacked up than we’ll do before the end of the year.” California’s vicious, prolonged drought, which has radically curtailed most natural surface water supplies, is making farmers look deeper and deeper underground to slake their thirst. This means the drought is a short-term bonanza for firms like Arthur & Orum, which expects to gross as much as $3 million this year. But in a drought as long and severe as the current one, over-reliance on groundwater means that land sinks, old wells go dry, and saltwater invades coastal aquifers. Aquifers are natural savings accounts, a place to go when the streams run dry.

Gold imports on the rise
Gold prices have been range-bound in recent weeks but traders have turned optimistic, as the festive season has begun. This is already getting reflected in imports. Inching up of premiums for physical delivery of gold suggest demand is returning. A fortnight earlier, the premiums were marginal and, on some occasions, there was a discount to the landed cost of imports. In the past few days, premiums of $10-12 an ounce are quoted. Import figures have been rising. In the past three months, 214 tonnes are estimated to have entered India. Gold import was 64 tonnes in August 2012; it had fallen to 10 tonnes in August 2013 due to stringent and ambiguous import norms. However, in August this year, 70 tonnes are estimated to have been imported. It was 47 tonnes in July due to June's carry-forward stock; June import was an estimated 97 tonnes. Bachhraj Bamalva, director, All India Gems and Jewellery Trade Federation, said: "Consumer demand is expected to pick up in the next one or two weeks.

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