Europe to Remove 500-Euro Bill, the ‘Bin Laden’ Bank Note Criminals Love
A suitcase stuffed full of cash may soon be worth a lot less. In a move aimed at hampering cash transactions by terrorists, drug dealers and money launderers, the European Central Bank on Wednesday announced an end to the 500-euro bank note, worth roughly $575.
When it comes to moving money nefariously, the €500 note has been especially handy. It is a large denomination in a widely circulated and easily convertible currency. In the United States, the largest denomination is $100, after the Federal Reserve discontinued the $500, $1,000, $5,000 and $10,000 bills in 1969. Switzerland has a 1,000-franc note, worth about $1,050, but its supply is limited.
The €500 note is also more compact and convenient for evading the gaze of authorities. The equivalent of $1 million, in that high euro note, weighs about five pounds and fits in a small bag, according to a Harvard University study this year.
After the European Central Bank phases out the €500 note by the end of 2018, the next highest denomination will be €200. That same $1 million would weigh roughly two and half times as much. And using $100 bills is just downright bulky. That would clock in at roughly 22 pounds and require an entire briefcase to carry.
Stanley Druckenmiller Gives Crisis Warning At Sohn Conference, Gundlach Says Trump Wins Presidency
The hedge fund world is coming off its worst year since the financial crisis, as investors pull tens of billions of dollars from the asset class because funds are struggling to outperform rising and volatile markets. But the stars of the industry once again are convening in Lincoln Center for the 21st Annual Sohn Investment Conference to offer up new trades, and their current read on financial markets.
The Sohn lineup includes billionaires Stanley Druckenmiller, Jeffrey Gundlach, Larry Robbins and David Einhorn, activists like Starboard’s Jeffrey Smith, and short sellers Carson Block and Jim Chanos.
Two years ago, attendee PointState Capital’s Zachary Schreiber recommended investors short oil, arguing that the shale drilling boom would lead to oversupplied markets, much like a previous glut in natural gas. Schreiber, a former portfolio manager for Druckenmiller’s Duquense Management, reportedly made limited partners $1 billion on the trade as oil fell from over $100 a barrel to the $60s within a year, and now sits at around $40.
Last year, the conference’s most notable investment came from Pershing Square’s Bill Ackman, who presented a bullish view on so-called platform stocks like Jarden JAH -0.03%, Danaher DHR -1.00%, 3G Capital backed Budweiser and his large investment in Valeant Pharmaceuticals VRX -2.68%. The presentation, titled 45x after the return Jarden achieved under Martin Franklin, famously compared Valeant’s ability to buy and integrate pharma companies to Berkshire Hathaway BRK.B +%. Since then, Valeant has tumbled, punishing Ackman’s performance, and creating a spat between he and Charlie Munger, a critic of Valeant’s business model.
The men America has left behind
They don't have college degrees. They have few job prospects. They feel left behind. Nearly one-quarter of white men with only a high school diploma aren't working. Many of these men, age 25 to 64, aren't just unemployed ... they aren't even looking for a job, according to federal data.
Their college-educated peers, however, have fared much better. Only about one in 10 isn't working. The plight of these blue collar workers is now in the national spotlight. The 2016 presidential election has awakened their political power and reshaped the course of the campaign.
Their anger -- which has brought millions to the polls, particularly on the Republican side -- has prompted the candidates to focus heavily on manufacturing, trade and other issues of importance to this slice of America. Four years ago, the GOP nominee Mitt Romney dismissed the 47% of Americans who don't pay taxes. Now, frontrunner Donald Trump proclaims that he loves "the poorly educated."
CNNMoney went in search of these men who feel forgotten by both Washington and the economy. It brought us to Scioto County, a stretch of Appalachia in southern Ohio just across the river from Kentucky, where only 53.8% of men age 16 to 64 are employed. While Ohio Governor John Kasich won the state, Trump was heavily favored in these parts. It's tough to make a living in Scioto County these days. Gone are all but one of the shoe manufacturing factories that used to employ thousands. Shuttered are most of the steel mills that supported middle class families. Shrunken are the railroad maintenance yards that once carried coal from Kentucky and paid well.
Michael Pento-Market Losing Faith in Value of the Dollar
Bill Gross: 'Helicopter Money' Is Coming
Get your butterfly nets ready. The next big monetary and fiscal policy move should include an airdrop of “money from helicopters” to stimulate the U.S. economy and avoid an extended recession, says Bill Gross, a portfolio manager at Janus Capital Group Inc.
Gross may not be entirely serious about “helicopter money,” but in his latest Investment Outlook note published Wednesday, he said the Federal Reserve and U.S. Treasury should engage in another round of quantitative easing (QE), printing trillions of dollars to buy government bonds and thereby boost the economy.
“Drop the money from helicopters,” wrote Gross, manager of the $1.3 billion Janus Global Unconstrained Bond fund. “There is a rude end to flying helicopters, but the alternative is an immediate visit to austerity rehab and an extended recession. I suspect politicians and central bankers will choose to fly, instead of die.”
“Helicopter money” is an idea made popular by the American economist Milton Friedman in 1969, when he suggested that dropping money out of helicopters for citizens to pick up was a sure way to restart the economy and effectively fight deflation. Gross noted that the Federal Reserve, the European Central Bank, Bank of Japan, and the Bank of England have effectively bought bonds from their governments for six years and allowed them to spend money to support their sagging economies.
Peter Schiff: How Trump Can Make America Great Again
Donald Trump’s critics have heaped scorn on his calls for protective tariffs to deal with America’s widening trade imbalance and the resulting loss of higher–paying blue color jobs. Some have accused him of trying to turn back the clock in pursuit of a cheap populist ploy and have said that he simply refuses to acknowledge that America is now an information and service economy for which large trade deficits are the new normal. But voters are sensing that The Donald is right to sound alarm bells, and that something radical needs to be done to revive manufacturing to make America great again. But his tariff solution is hardly the best medicine. To be honest, given the even worse solutions that are being offered by the left, Trump’s instincts may be preferable.
Ironically, in the late 19th and early 20th Centuries, the elimination of tariffs was a populist issue. A little more than a century later, the polls have reversed completely. Prior to the introduction of the income tax in 1913, tariffs were the Federal Government’s principal source of revenue. During the long and contentious campaign to enact the 16th Amendment (which allowed the government to tax incomes for the first time since the emergency Civil War-era 3% to 10% income tax), proponents argued that the passage of a “soak the rich” income tax would allow the government to repeal the tariffs and thereby transfer the tax burden from the working class, who paid the tariffs through higher prices on imports, to the ultra-wealthy, who were the sole target of the income tax as it was originally conceived, packaged and sold.
(The tax originally imposed rates from 1% to 7%, and only applied to fewer than 1% of Americans. The 99% supported its enactment solely because they believed they were getting something for nothing, in this case, government services paid for by the rich. In fact, in 1895, when the Supreme Court bravely declared the government’s first attempt to replace tariffs with an income tax unconstitutional, the justices were personally vilified as defenders of the rich.)
But once the Federal Government got its foot in the door, it rapidly raised the tax rates and expanded the base of taxpayers, ultimately subjecting the middle class to rates far higher than anything originally contemplated for the Rockefellers, Carnegies, or Vanderbilts. If this does not provide a sterling example to the legions of Democrats “Feeling the Bern” of how class warfare can backfire on the class waging the war, I don’t know what does. Ironically, no single tax has done more harm to the middle class than the income tax.
90% Of American Households Have Lower Real Net Worth Today Than In 1970s
Today we will focus on a recent study from the Levy Economics Institute which found that 90% of Americans were worse off financially in 2015 than at any time since the early 1970s. Furthermore, for the vast majority of Americans, the nation’s economy is in a prolonged period of stagnation, worse even than that of Japan.
So are we really worse off today than Japan? This latest study concludes that the answer isYES, when it comes to real income – that is, income adjusted for inflation. According to their findings, 90% of Americans earn roughly the same real income today as the average American earned back in the early 1970s. It’s an eye-opening look at how the vast majority of Americans are struggling to make ends meet.
Before we get to that discussion, let’s take a look at last Thursday’s disappointing report on 1Q Gross Domestic Product. We will round-out today’s E-Letter with some interesting polling data from Rasmussen, which suggests that up to 24% of American voters may not vote for Donald Trump or Hillary Clinton and may just stay home on Election Day if they are the nominees. Wow!
Last Thursday’s initial 1Q GDP report came in below expectations and deserves some additional analysis. The US economy expanded in the 1Q at the slowest pace in two years as American consumers reined-in spending and companies tightened their belts in response to weak global financial conditions and the plunge in oil prices.
Barclays offers 0% deposit mortgage for home buyers IN UK
There is some good news for Britons interested in buying property. Barclays has reinstated the no-deposit mortgage. It has become the first high street bank to introduce this since the 2008 financial crisis.
The move is the latest indicator of banks opting for riskier lending and is in contrast to the majority of banks who currently insist on a deposit of 5 to 10% of the property value before offering a mortgage. The move by Barclays means that it will not take any deposits and will instead grant loans equal to 100% of the property value under mortgage loans.
The new product will be provided by Barclays under its "family springboard" mortgage, which previously required an interested buyer to pay a 5% deposit, have a guardian — usually the home buyer's parents — and deposit cash equal to 10% of the purchase price into a savings account linked to the mortgage. However, now while the deposit has been scrapped, Barclays says the mortgage still requires the backing of a family member or a guardian.
The bank said the guardian should keep the same 10% amount for three years in the linked savings account, called the "helpful start" account. It would, however, return the amount with interest provided borrowers are making their mortgage repayments on time.
U.S. rentals on the rise: A good sign for the economy?
Quit Living So Long!
The mainstream media has your number. You make too much money, you don’t pay enough in taxes, and you get too many tax deductions. Now there’s a new charge to add to the list – you live too long.
We all know that Social Security favors low-income workers. As the graph illustrates, for those at the low end of the average wage scale, Social Security replaces a little more than 50% of their income. As career-average wages go up, the replacement rate goes down. The numbers slide all the way to the top of the earnings scale, where those earning the maximum amount taxed for Social Security have about 26% of their income replaced by the social safety net.
So the people at the top get half of the replacement rate of those at the bottom. On the face of it this seems unfair. If 12.4% of one person’s income, the combined amount of FICA tax paid by employees and their employers, is enough to provide the worker with 53% of his career-average wages in retirement, why is this not the same for everyone?
Eventually, this conversation will lead to “fairness” based on absolute dollars, but that doesn’t hold up. Taxes are based on a rising percentage of earnings, even though no one gets more police protection, road construction, or national security simply because they pay more in taxes. Of course none of that matters.
Congrats, class of 2016: You're the most indebted yet
Graduating from college should be a time of celebration, but some seniors may be feeling slightly wary about joining the workforce given what's ahead of them: years of paying off their student loans.
Members of the class of 2016 who borrowed to finance their degrees will leave college with a record level of debt: $37,173 per student on average, according to calculations from student loan expert Mark Kantrowitz. That represents a 6 percent increase from last year, when students left school with an average of $35,051. The calculation is a projection based on federal student-loan data and other factors.
There's some good news, however: Starting salaries are on the rise again. The figure for new grads with undergraduate degrees was $43,000 last year, or 7.5 percent higher than in 2014, according to the Federal Reserve Bank of New York. That may provide some reassurance to students and their parents about whether taking on so much debt will pay off. "So long as your total student loan debt at graduation is less than your annual starting salary, you'll be able to repay your student loans in 10 years or less," Kantrowitz said. "But some students vary from these averages, enrolling in more expensive colleges and pursuing careers that are less financially rewarding. But this is more a matter of choice than necessity.
The key is to keep your debt in sync with your income." In other words, taking on debt of $100,000 to pursue a career that only pays $25,000 annually may not be a wise financial choice. And while the economy has improved since the Great Recession ended, it's still not back to precrisis levels. The class of 2016 will enter a job market that continues to suffer from higher levels of unemployment for young Americans and relatively stagnant wage trends, according to a study from left-leaning Economic Policy Institute last month. The percentage of recent grads who are "idled" -- meaning neither employed nor in school -- is about 10 percent now, up from 8.4 percent in 2007.
War, Debt, Default And Socialism – Just Another Day In America
I’ve accepted that there are evil forces in this world that will do what they can to destroy you and your family in order to build globalism. From the Brussels bombings to the Panama Papers to the ongoing Syrian massacres and turmoil in the Middle East and the refugee crises, it is all planned out. People have a hard time with that insight. It’s very difficult to live with the idea that the top controllers of Western society are actively trying to kill you or at least destroy the society you live in.
I’m not surprised for instance that troops continue to build up in the Middle East and now there are reports that China will send its military to help Syria. We’ve predicted this escalation in previous articles. And we fully expect a situation that spirals into a kind of World War III. Of course war is not the only kind of chaos psychopathic elites want to inflict. Economic jolts continue to rock the West and particularly the US. Just yesterday, US stocks plunged to a three-week low . Stock analysts had suggested that energy stocks along with commodity-oriented stocks would firm as the economy improved. The idea is that the US is fighting its way out of a recession. But it’s not a recession. It’s a depression. And it’s lasted since 2008.
Europe and China both sold off again, and that’s no surprise given that Europe too, at least its southern flank, is gripped by depression and China’s economic collapse can no longer be staved off by easy money. Given Janet Yellen’s rhetoric about the coming “recovery” one might expect that the US would at least be fighting its way out of the worst of its budgetary woes. Instead, since the so-called budget deal – which was nothing more than a Republican surrender – the US has added another staggering $1 trillion in debt.
The deal signed by President Obama rearranged the debt ceiling until March 15, 2017. One might think that legislators would use that time to make adjustments but the only adjustment has been upwards. On Oct. 30, 2015, the total federal debt was $18,152,981,685,747.52. As of April 28, 2016, it was $19,186,207,744,589.55 – an increase of $1,033,226,058,842.03.
Mexico Is 'Offended' and 'Worried' by Trump, Former President Says
Outspoken Fed Official Frets About Following Japan’s Path
James Bullard, president of the Federal Reserve Bank of St. Louis, doesn’t know when the American economy will fall into another recession. But he says it’s increasingly likely that it will happen before the Fed has a chance to return its benchmark interest rate to a historically normal level.
Indeed, Mr. Bullard has fretted for years that the United States and other major economies may be stuck with low interest rates for some time to come. In an interview last week, Mr. Bullard said he wants to raise rates. He really does. It just seems as if the necessary conditions keep slipping away.
After pushing to raise rates at the beginning of the year, he voted against a rate increase in April and he said he’s still thinking about June. “If you talk to people in Tokyo, they say, ‘Well, we’ve been through this and tried all these things and you guys are just following us,’ ” he said in the interview. “I hope that’s not exactly true.”
Mr. Bullard also talked about his distaste for the Fed’s “dot plot” and why he’s not afraid of a little Brexit. And I asked Mr. Bullard, the most talkative of the Fed’s current crop of officials, whether he talks too much...
Fight For $15 Group Actually Wants Minimum Wage To Go Much Higher
The leader of a group fighting to raise the minimum wage to $15 an hour revealed she actually wants an increase that goes much higher, according to a video released Wednesday.
The Restaurant Opportunities Centers United (ROC) has done a lot to advocate for the $15 minimum wage. It is one of many union-funded groups that has pushed for the policy both locally and nationally. ROC Founder Saru Jayaraman told a small group April 28 in North Carolina that $15 is not enough, and advocates should be looking to go much higher.
“If you are taking into account child care and transportation and everything that people need to live,” Jayaraman said in the video, which was provided to The Daily Caller News Foundation. “You are talking much higher $17, $21. So $15 is not a livable wage and I don’t think anyone, I hope no one is claiming that it is. I wouldn’t think that it is even here in North Carolina.”
Jayaraman added that she determined the higher increase from a wage calculator on the Massachusetts Institute of Technology website. The video was first uncovered by the conservative opposition research group America Rising Squared, which has been highly critical of how advocates push for the $15 minimum wage. ROC has organized protests and dispatched local affiliates to advocate for the $15 minimum wage. It claims to be an industry support group but is highly funded by the AFL-CIO. Labor unions have utilized front-groups to make policy pushes look like grassroots movement. The Fight for $15, for instance, is highly funded by the Service Employees International Union.
Epic bust in oil leads to 3rd qtr of shrinking US earnings
Is Greece just weeks away from another debt crisis?
Gruelling negotiations between Greece and its creditors last year pushed its economy and financial system into meltdown. Two national votes and a finance minister later, an agreement was finally reached and the country started passing reforms and getting some much-needed bailout cash.
It was all going fairly smoothly. So far Greece has received €21.4bn (£17bn) from the original €86bn bailout deal, €5.4bn of which has been used to shore up the country’s struggling banking system.
For each slice of cash, Greece must pass reforms through its parliament to satisfy its creditors — the European Commission, European Central Bank, and the International Monetary Fund. But now the bailout has stalled. For the next slice of cash to be given to Greece, it must pass its so-called 'first review'. Its creditors must be satisfied Greece’s economy and public finances are on the right track. But two of its creditors, the IMF and the EC, disagree over Greece’s progress.
The agreement signed last summer requires Greece to achieve a government budget surplus of 3.5pc in 2018. Brussels expects a further 3pc of gross domestic product (GDP) worth of savings will be needed to achieve the surplus. It reckons Greece is on track with finance minister Euclid Tsakalotos expecting to save 1pc from pension reforms, 1pc from personal income tax reform, 0.75pc from public sector wage cuts and 0.25pc from VAT changes.
Productivity in U.S. Decreases for a Second Straight Quarter
U.S. worker productivity decreased for a second straight quarter and employer costs for labor climbed by the most in more than a year. The measure of employee output per hour fell at a 1 percent annualized rate from January through March after a 1.7 percent decline in the fourth quarter. The median estimate of in a Bloomberg survey was for a 1.3 percent retreat. Labor costs jumped 4.1 percent, more than forecast.
Employers have steadily beefed up headcounts to meet demand even as growth softened the past two quarters. At the same time, they’ve been hesitant to ramp up investments in efficiency-boosting equipment, meaning productivity will likely continue to languish.
“Productivity is pretty weak, there’s no question about that,” said David Sloan, a senior economist at 4cast Inc. in New York. Still, the report “does give a hint that wage pressures are starting to build because of the strong labor market, so that is of significance.” Estimates for productivity in the Bloomberg survey ranged from no change to a 2.4 percent decline. The reading for the prior three months was originally reported as a 2.2 percent decline.
The productivity data showed expenses per worker picked up in the first quarter from a 2.7 percent rate in the final three months of 2015. These so-called unit labor costs, which are adjusted for efficiency gains, were forecast to climb 3.3 percent, according to the Bloomberg survey median. Adjusted for inflation, hourly earnings increased at a 3.4 percent rate in the first quarter, the most in a year, after rising at a 0.1 percent pace the previous period.
U.S. Government Pays $48 Million to Resettle First American “Climate Change Refugees”
Each morning at 3:30, when Joann Bourg leaves the mildewed and rusted house that her parents built on her grandfather’s property, she worries that the bridge connecting this spit of waterlogged land to Louisiana’s terra firma will again be flooded and she will miss another day’s work.
Ms. Bourg, a custodian at a sporting goods store on the mainland, lives with her two sisters, 82-year-old mother, son and niece on land where her ancestors, members of the Native American tribes of southeastern Louisiana, have lived for generations. That earth is now dying, drowning in salt and sinking into the sea, and she is ready to leave. With a first-of-its-kind “climate resilience” grant to resettle the island’s native residents, Washington is ready to help.
“Yes, this is our grandpa’s land,” Ms. Bourg said. “But it’s going under one way or another.” In January, the Department of Housing and Urban Development announced grants totaling $1 billion in 13 states to help communities adapt to climate change, by building stronger levees, dams and drainage systems. One of those grants, $48 million for Isle de Jean Charles, is something new: the first allocation of federal tax dollars to move an entire community struggling with the impacts of climate change. The divisions the effort has exposed and the logistical and moral dilemmas it has presented point up in microcosm the massive problems the world could face in the coming decades as it confronts a new category of displaced people who have become known as climate refugees.
“We’re going to lose all our heritage, all our culture,” lamented Chief Albert Naquin of the Biloxi-Chitimacha-Choctaw, the tribe to which most Isle de Jean Charles residents belong. “It’s all going to be history.” Around the globe, governments are confronting the reality that as human-caused climate change warms the planet, rising sea levels, stronger storms, increased flooding, harsher droughts and dwindling freshwater supplies could drive the world’s most vulnerable people from their homes. Between 50 million and 200 million people — mainly subsistence farmers and fishermen — could be displaced by 2050 because of climate change, according to estimates by the United Nations University Institute for Environment and Human Security and the International Organization for Migration.
Credit Suisse is cutting trading jobs right now
Credit Suisse is cutting jobs in London, according to people familiar with the matter. The bank is putting about 130 people at risk of redundancy in the global markets business in the UK capital, according to the people.
The cuts started Tuesday and are continuing into Wednesday. Of the 130, about 80 are in fixed income, with the other 50 in equities, the people said. After reporting weak results, Credit Suisse previously announced that it would accelerate cuts to the investment bank.
The bank said late Tuesday that it had sold some of its distressed-credit portfolio to TSSP for about $1.27 billion. The bank said Bob Franz, head of US credit trading, and Ken Hoffman, head of distressed research and trading, would leave to form a new asset management to assist in servicing the assets.
The bank will report results on Tuesday, giving an update on its distressed-credit exposure then. That business has been a thorn in the side of new CEO Tidjane Thiam, who said traders had racked up positions without telling anyone.