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Charter set to announce Time Warner Cable acquisition
Charter may announce a three-way proposal to buy Time Warner Cable and a smaller cable provider, Bright House, as early as Tuesday, a person close to the talks confirmed on Monday. Charter is the third largest cable provider in the country, and Time Warner Cable is second. Earlier Monday, Bloomberg reported that Charter intends to pay $195 a share for Time Warner Cable. Before the holiday weekend, Time Warner Cable stock closed at an all-time high of $171.18, amid speculation that a bid by Charter (CHTR) was imminent. A Charter-Time Warner Cable- Bright House merger will have to pass muster with the same government regulators who stymied the attempt by Comcast to buy Time Warner Cable. Comcast, the No. 1 cable TV provider in the United States, withdrew its offer on April 24, more than a year after setting out to buy Time Warner Cable. Charter -- whose largest shareholder is a company controlled by cable pioneer John Malone -- is in some ways the company that triggered the wave of consolidation moves.

Shocker: 40% of Workers Now Have 'Contingent' Jobs, Says U.S. Government
Tucked away in the pages of a new report by the U.S. General Accounting Office is a startling statistic: 40.4 percent of the U.S. workforce is now made up of contingent workers—that is, people who don’t have what we traditionally consider secure jobs. There is currently a lot of debate about how contingent workers should be defined. To arrive at the 40.4 percent, which the workforce reached in 2010, the report counts the following types of workers as having the alternative work arrangements considered contingent: Agency temps: (1.3%) On-call workers (people called to work when needed): (3.5%) Contract company workers (3.0%) Independent contractors who provide a product or service and find their own customers (12.9%) Self-employed workers such as shop and restaurant owners, etc. (3.3%) Standard part-time workers (16.2%). In contrast, in 2005, 30.6% of workers were contingent. The biggest growth has been among people with part time jobs. They made up just 11.9% of the labor force in 2005.

Austria is joining the ‘bring our gold home’ movement
After increasing pressure from the Austrian people on the government and the central bank to increase the ratio of the gold effectively held in the Austrian Central Bank in Vienna, the central bank has finally made the decision to effectively do so. Less than 20% of Austria’s (relatively) sizeable gold reserves were held in its own vaults with the remainder being stored in Switzerland and London. Austria will now remove 63% of the gold from London and transport it to both Switzerland and Austria. This will be an interesting test case to see how long it will take the Bank of England to ship the 140 tonnes of gold (4.5 million ounces) to Vienna, and we dare to bet this will either take much longer than anticipated, or we’ll suddenly see another gold withdrawal from the Federal Reserve which will very likely be the magical 125-150 tonnes number. That’s an interesting move, as Vienna originally said it stored the gold in London because it would make their lives much easier to trade the gold...

What’s next for U.S. surveillance rules?

Is The 505 Trillion Dollar Interest Rate Derivatives Bubble In Imminent Jeopardy?
All over the planet, large banks are massively overexposed to derivatives contracts. Interest rate derivatives account for the biggest chunk of these derivatives contracts. According to the Bank for International Settlements, the notional value of all interest rate derivatives contracts outstanding around the globe is a staggering 505 trillion dollars. Considering the fact that the U.S. national debt is only 18 trillion dollars, that is an amount of money that is almost incomprehensible. When this derivatives bubble finally bursts, there won’t be enough money in the entire world to bail everyone out. The key to making sure that all of these interest rate bets do not start going bad is for interest rates to remain stable. That is why what is going on in Greece right now is so important. The Greek government has announced that it will default on a loan payment that it owes to the IMF on June 5th. If that default does indeed happen, Greek bond yields will soar into the stratosphere as panicked...

Regulation should be main tool against bubbles: Fed's Mester
Central bankers should be aware of the potentially destabilizing effects of super-easy policy on financial systems, a top U.S. Federal Reserve official said on Monday, even if monetary policy should not be used as a main tool to prevent bubbles. "I would opt to use the macroprudential tools as the first line of defense, since they can be more targeted to the markets and institutions where the risks are emerging," Cleveland Fed President Loretta Mester said in remarks prepared for delivery to the annual conference in of the Financial Intermediation Research Society, a group she helped found, meeting in Reykjavik, Iceland. "However, I do think that when we are making policy decisions, we should be cognizant of the linkages between our nonconventional monetary policy of an extended period of essentially zero interest rates and financial stability." The concern that the Fed's near-zero rates, in place since December 2008, could be creating new bubbles and an eventual crisis has motivated...

Oil prices hit struggling oil companies
According to a new report from Moody's Investors Service, the oil and gas industry could see the rate of bankruptcies rise over the next year. Low oil prices are endangering an increasing number of exploration and production companies. According to a new report from Moody's Investors Service, the oil and gas industry could see the rate of defaults rise over the next year. The companies in danger of going belly up, not surprisingly, are the ones that already have low credit ratings. Moody's finds that the default rate for oil drillers with a credit rating of B2 or lower could jump from 2.7% to 7.4% by March 2016. Moreover, distressed oil companies make up a rising share of overall firms with a poor credit rating – roughly 14.8% of the companies with a B3 credit rating or worse covered by Moody's are in oil and gas. That is up sharply from the 8% share that oil firms accounted for in 2014. The credit ratings agency also said that even if oil prices rise to $70 or $75 per barrel...

‘Kiss your pension fund goodbye’? Economist warns government could seize 401(k)s
The United States government could start seizing 401(k) plans, says one economist who believes a recent Supreme Court ruling sets the stage for Washington to initiate any such plans. Economist Martin Armstrong published a blog post Monday that took a look at the recent Tibble v. Edison case. The court concluded that employers have an obligation to protect their workers’ 401(k) plans from mutual funds that provide deplorable returns. Armstrong thinks this could give the federal government the arsenal to begin seizing private funds and take companies to court if mutual funds perform poorly. This comes as the Obama administration has attempted to battle Wall Street brokers who peddle certain retirement investments that may prove to be a conflict of interest. Here is what Armstrong, who reportedly predicted the ’87 crash and 1990s Russian economic collapse, wrote in his article: “This comes just in time for then the next step is government to seize private funds and prosecute employers who choose badly...

Should America be the World's Policeman?

The world is drowning in debt, warns Goldman Sachs
The world is sinking under too much debt and an ageing global population means countries' debt piles are in danger of growing out of control, the European chief executive of Goldman Sachs Asset Management has warned. Andrew Wilson, head of Europe, Middle East and Africa (EMEA), said growing debt piles around the world posed one of the biggest threats to the global economy. "There is too much debt and this represents a risk to economies. Consequently, there is a clear need to generate growth to work that debt off but, as demographics change, new ways of thinking at a policy level are required to do this," he said. "The demographics in most major economies – including the US, in Europe and Japan - are a major issue – and present us with the question of how we are going to pay down the huge debt burden. With life expectancy increasing rapidly, we no longer have the young, working populations required to sustain a debt-driven economic model in the same way as we've managed to do in the past."

BlackBerry to cut more jobs globally as it continues battle to streamline
Ever determined to rejuvenate its once mighty mobile business following several years of rapid decline, BlackBerry said over the weekend it’s decided to cut more jobs at its locations around the world. It’s not clear how many positions are set to go, though it’s understood the move will affect its hardware, software and applications departments. “As the company moves into its next stage of the turnaround, our intention is to reallocate resources in ways that will best enable us to capitalize on growth opportunities while driving toward sustainable profitability across all facets of our business,” the Canadian company told the AFP news agency. Back in 2011, BlackBerry employed some 17,000 people globally, but a plummeting market share – the result of company blunders and tough competition from Android and Apple’s smartphones – forced it to make massive cuts in the intervening years, leaving it with a workforce that currently stands at around 7,000.

Senate Passage of "Fast-Track" Could Slide U.S. Further Downhill
Senate passage of Trade Promotion Authority just before the Memorial Day weekend is an example of the legal saying that, while two wrongs don’t make a right, they do make a precedent. Should the House, where anti-TPA sentiment is stronger than in the Senate, approve the measure, it will, of course, not be the first time Congress has abdicated its legislative powers to a president in order to expedite a trade agreement. Proponents argue that the authority has been granted to a long succession of U.S. presidents, beginning with Franklin Delano Roosevelt. But Republicans, who vastly outnumber the Democrats as supporters of TPA, used to oppose the usurpations of authority by the imperial Roosevelt and his power-hungry successors. Besides, the American dominance of world markets was far stronger after the United States came out of the great Depression and was arguably the only real winner of World War II. With Germany, Japan, and even most of the nations on the winning side devastated by the war...

Is Tax Credit Better Than Raising Minimum Wage?
On television last week arguing against an increase in the minimum wage, I found myself making the case that it was a blunt instrument. So it is — and so, I should have mentioned, is the alternative policy that I suggested and that has been attracting a lot of attention lately. An increase in the minimum wage would force higher pay for affluent teenagers working summer jobs and for senior citizens with savings and Social Security checks who are working part-time to keep busy and earn a little extra money. Better, I suggested, to raise the earned-income tax credit, which would boost the income of the working poor in a targeted way, without the job-killing effect of a minimum wage or the benefits to non-poor workers. A few days later, one of the richest businessmen in the world, Warren Buffett, published an Op-Ed in The Wall Street Journal making a similar argument. Under the headline, “Better than Raising the Minimum Wage,” Mr. Buffett wrote, “The better answer is a major and carefully crafted...

David Stockman: It's A Coup d'etat, The Central Banks Have Taken Over

Why America's Debt Bomb Won't Explode... Yet
In Schrodinger’s famous thought experiment, a cat is placed in a sealed box with a mechanism rigged to possibly release cyanide in an hour, depending on the rate of atomic decay. It is a quirk of quantum mechanics that, until the contents of the box are observed, the cat can be considered to be both alive and dead—simultaneously. The thought experiment is well suited to pondering the U.S. federal government’s current debt situation. Currently, there is an unprecedented amount of debt in the proverbial “box,” and the outcome is difficult to observe until after the fact. And this is part of the problem. Much like Schrodinger’s cyanide, the level of U.S. debt could be safely contained or mortally high, it depends on when, if, and by how much interest rates rise in the future. We neither know the timing or the extent interest rates will rise in the future—not to mention the level of debt that will need to be refinanced. This means that the debt situation is in a sort of limbo.

ECB error spurs questions about policy disclosures
A European Central Bank snafu last week that meant one of its officials gave market-moving information to a private audience including major hedge funds hours before it was made public is raising broader concerns about European policy makers' behind-closed-doors meetings. The central bank blamed a "procedural error" for last Monday's incident, in which ECB executive board member Benoît Coeuré gave fresh details of the central bank's bond-buying stimulus plan that weren't published until the next morning. But investors and governance experts say the widespread practice of speaking at private events could hand an advantage to some investors. "There is a growing issue," said Philip Lawlor, a partner at London-based Smith & Williamson Investment, which has about GBP15.5 billion of funds under management. "If you get people in a room and if you disclose something that could be perceived to be market-moving to a reasonably select group, then you've got to be exceptionally careful."

Former Fed chief Ben Bernanke says Chinese policymakers face currency challenge
China needs to create deep and liquid markets to avoid currency risks as it makes the yuan a convertible currency, former US Federal Reserve Chairman Ben Bernanke said in Shanghai. "China needs to avoid currency mismatch as it opens its capital account," Bernanke said at a speech at the Shanghai Forum on Monday. "For a currency to be internationally traded, what you need most is liquid markets. A deep market means people can get their money out." China is in the final stages of opening up its capital account, giving global investors greater access to its stock and bond markets while making it easier for citizens to invest offshore. A freer flow of funds is needed for policy makers to achieve their goal of getting the yuan recognised as a reserve currency when the International Monetary Fund conducts a review in October. The latest iniative was announced on Friday, when Chinese regulators and their Hong Kong counterparts said that cross- border sales of funds can begin on July 1...

Washington under pressure over ISIL strategy

Ron Paul Rages: Janet Yellen is Right, She Can’t Predict The Future
This week I found myself in rare agreement with Janet Yellen when she admitted that her economic predictions are likely to be wrong. Sadly, Yellen did not follow up her admission by handing in her resignation and joining efforts to end the Fed. An honest examination of the Federal Reserve’s record over the past seven years clearly shows that the American people would be better off without it. Following the bursting of the Federal Reserve-created housing bubble, the Fed embarked on an unprecedented program of bailouts and money creation via quantitative easing (QE) 1, 2, 3, etc. Not only has QE failed to revive the economy, it has further damaged the average American’s standard of living while benefiting the financial elites. None other than Donald Trump has called QE “a great deal for guys like me.” The failure of quantitative easing to improve the economy has left the Fed reluctant to raise interest rates. Yet the Fed does not want to appear oblivious to the dangers posed by keeping rates...

Global Trade Dives Most since the Financial Crisis
How great was the global economy in the first quarter? We know the US economy was crummy. The revised GDP estimate will likely sink into red mire. Hence the heated proposals these days, including at the Fed, to apply “a second round of seasonal adjustment” that would “correct” the first-quarter GDP estimate, no matter how bad, into positive territory. An elegant way of covering up an unsightly sore. So was it just a crummy quarter in the US, or was it a global thing, in which case we might have to apply a “second round of” whatever to adjust the global downturn out of the picture? Because here is the thing: in the first quarter, one of the crucial measures of the global economy – global trade – slumped the most since the Financial Crisis. But ironically, it wasn’t because of the USA. The CPB Netherlands Bureau for Economic Policy Analysis, a division of the Ministry of Economic Affairs, just released its latest Merchandise World Trade Monitor, which covers global import volumes as well as global...

Tuesday 05.26.2015

NEWS to Disturb the Comfortable...

We don't tell you what to think,

but we give you something to think about.