Category Archives: Economy and Meltdown

The Bubble’s Revenge: China’s Stock Market Is Littered With ‘Pledged-Share Land-Mines’ Buried During 2015 Mania

Via Investing In Chinese Stocks blog,

Back during the 2015 stock market bubble, many investors and companies pledged their shares for loans. Standards were low at the time. In addition to taking insanely overvalued shares as collateral, banks also loaned money against shares that the owner didn’t have the right to sell. Here’s a post I wrote nearly 3 years ago, back in July 2015, detailing what I thought was the craziest example: Is This Peak Insanity? Blanket Company With P/E of 6000 Pledges 30% of Shares As Collateral

A blanket company had a P/E of 5800 at the peak. Shares have plunged, but the P/E is still above 3000. Shares fell more than 60% from their peak. This week, they were limit down on Monday, halted for three days, and limit up on Friday.

Just in case you think the P/E ratio may be distorting things, the price-to-sales ratio is above 70. Debt-to-assets is 23 times. Price-to-book 159 times.

By itself, this is crazy enough to show how the bull market was an indiscriminate liquidity driven momentum trader market. But this is not the end of the story.

Reuters: China’s companies at risk of stock-backed loan recalls

Chinese companies that borrowed money using shares as collateral may have to put up more assets or repay their debts, carrying the ripples from the stock market plunge into the wider economy.

A near 30 percent collapse in share prices has started to endanger some businesses using such financing, and the country’s banking regulator said on Thursday it would let financial institutions renegotiate lending terms in these circumstances.

Bank and other loans backed by listed shares officially increased around 260 percent in May to 58.4 billion yuan ($9.4 billion) from a year earlier, representing about 4.8 percent of total social financing for the period.

“There is no doubt all the companies are facing a financing dilemma,” said Zhang Jihong, board secretary at Hubei Landing Holding Co Ltd, a textile company that suspended its shares from trading on Tuesday – roughly half of all shares on mainland bourses are now suspended – after its stock fell 61 percent.

Hubei Landing has 29.9 percent of its shares pledged as collateral for a loan from a trust company.

The stock trading under the symbol of Hubei Landing is now called Gosun Holding after acquiring Gosun Technology in August 2015. Shares are at a new post-2015 low.

More importantly, the “financing dilemma” is back for many companies. Already, more than 10 companies have run into trouble this month. That may be far from the worst of it as 98 percent of A-shares companies have pledged shares. Some major shareholders have pledged 100 percent of their holdings, while other companies have more than 70 percent of outstanding shares pledged. 
 

In fact, judging from recent years, this landmine of equity pledges was buried in the bull market in 2015. At that time, the stocks in the entire market soared. Many shareholders who did not have the necessary conditions for reducing shareholdings used the stock pledge to finance and increase leverage. This became a direct incentive for the rapid development of the A share stock pledge business at that time.

From the perspective of the pledged ratio, among the 3,453 A-share companies that have pledged their stocks at present, there are 1,250 listed companies with more than 20% of the pledged shares, accounting for 36.2%, and 129 listed companies with more than 50% of the pledged shares. Among them, 51 listed companies pledged more than 60%, and 10 companies pledged more than 70%. Among them, the proportion of pledged stocks of Tibetan Song is 78%, ranking first.

The top ten companies by pledged shares as a total of outstanding:

Earlier this week Zhongnan Red Cultural Group saw its shares halted. 

Nasdaq: China Stocks-Factors to watch on Wednesday

Zhongnan Red Cultural’s share trade to halt as shares pledged by controlling shareholder triggered margin call

Nanfeng Ventilator (300004) is in the midst of a stock pledge crisis and it’s largest shareholder, and chairman, is missing.

East Money: 股权质押危机之一:南风股份股权质押爆仓 实控人失联留下官司一堆

On June 12, Nanfeng Co., Ltd. (referred to as “Nanfeng Shares”, 300004.SZ) issued the “Announcement on the Progress of the Missing Chairman-related Issues.” He said that on May 3, he was informed of the company’s actual controller and chairman. Yang Zishan lost contact and has not yet obtained contact with him. Loss of association, restructuring failed, the company’s multiple accounts were frozen, and the chairman’s pledged stock was taken. Namfung’s shares have yet to come out of the shadows of the dark May.

… According to the announcement, as of the announcement date, it was initially understood that Yang Zishan’s personal borrowings excluding stock pledges amounted to approximately 360 million yuan (without involving the company), and there may be a debt amount of approximately 380 million yuan in the name of the fraudulent company as a borrower or guarantor (not yet Verified) and other personal debts not involving the company (exact amount is unknown).

The company stated that the verification company confirmed that the relevant borrowings or guarantees were not corporate actions and none of the company’s board of directors or the shareholders’ meeting decided or approved the company. The company was unaware of this, and the related loan money did not enter the company. The company did not grant any related matters. The accreditation clearly stated that it would not assume related responsibilities and had reported the case to the public security agency.

…At present, Yang Zishan holds 12.37% of the company’s shares, accumulative pledged shares accounted for 99.12% of its total shareholding, accounting for 12.26% of the company’s total share capital. If Yang Zishan’s shares are closed or judicially auctioned, there will be no change in the actual control of the company. A person in charge of the company told the China Times reporter that the actual controller of Nanfeng shares was lost, which may be related to the debt crisis. Problems in funding led to an increase in the gap.

The article puts some value on pledged shares:

As of June 12, 129 listed companies had pledged more than 50% of the total share capital. According to statistical data, the stock pledges of the controlling shareholders of 404 listed companies have hit a closing line with a market value of RMB 328.9 billion. There are 86 listed companies with a market value of more than 1 billion yuan pledged by controlling shareholders, and 9 companies with more than 5 billion yuan. Industry insiders told the China Times reporter that the stocks held by the major shareholders and actual controllers of listed companies all have limited time for sale, and they cannot realize real-time liquidity. The equity pledge model has become a fast financing channel. In the field of listed companies, it is not surprising that major shareholders or actual controllers complete cash financing through equity pledge. The problem is that the risk is relatively large. The amount of financing with certain discounted proportions is financed through the market value of the pledged equity. If the stock price fluctuates, there may be a series of risks such as the inability to repay the principal due to pledge of equity.

Shares are experiencing “flash crashes” as a result of this “land mine” risk.

East Money: 6月以来逾10家A股公司股权质押“炸雷” 你的股票有强平风险没?

[More than 10 A-share companies with pledged shares have “hit mines” since June. Have you had a strong risk in your stock? Since the beginning of this year, the share prices of some listed companies of A shares have seen multiple rounds of “flash crashes.” If it is said that the “first flash crash” in the previous quarter is closely related to the “deleveraging” of institutional trust products, then in the “second quarter of the flash crash” that is coming, a high proportion of equity pledges will increasingly become a new “Gate of Life” for stocks. (Securities Times)

No stocks and no deposits: 98% of A-share companies pledged

  Judging from the characteristics of the recent market, whether it is the stock price drop triggering the risk of equity pledge closing (such as the South China Culture), it still triggers a real closeout behavior (such as Huayi Jiaxin), the stock price “flash collapse second quarter” and equity The relationship between pledges is particularly close.

Here’s the charts of Zhongnan Red and Spearhead Integrated Marketing (Huayi). The former has halted trading.

Pledging shares is a way to obtain cheap financing, what could go wrong?

The equity pledge has the advantages of low cost, high efficiency, flexible business, and wide source of funds, which has become an important reason for the high enthusiasm for equity pledges in recent years. At the same time, investment bankers also told reporters that the prevalence of equity pledges, in addition to the relevant shareholders of the assets of the bank’s assets, but also with the background of bank tightening, some projects can not achieve loans, loans have reached limits and other closely related. This makes the relevant shareholders more willing to finance through equity pledges.

In fact, judging from recent years, this landmine of equity pledges was buried in the bull market in 2015. At that time, the stocks in the entire market soared. Many shareholders who did not have the necessary conditions for reduction used the stock pledge to finance and increase leverage. This became a direct incentive for the rapid development of the A share stock pledge business at that time.

Under the huge scale of equity pledges, if the company’s value grows steadily and the secondary market performs smoothly, it will be calm. However, with the increase of external interference factors and the resulting price below the A-share market valuation center, equity pledges have become a major explosion. Since June of this year, more than 10 A-share companies have already announced the existence of pledges. The risk of equity liquidation involves the market value of nearly 10 billion yuan.

Naturally, there’s possible fraud involved. One investment banker lays out a 3-step process that started with manipulating share prices higher:

“Three steps”

“Equity pledges have been an important way of capital operation.” The aforementioned investment bankers explained that, for example, some of the fixed-income participants replaced the previous bridge loans used for the increase in the number of shares, and some of the companies The method of equity pledge achieves the change of major shareholders, in order to bypass the threshold of “can’t backdoor”.

However, under the equity pledge and the expected collapse of share prices, a “three-step” model is emerging in the market.

“From a certain point of view, the major shareholder of the equity pledge is a group of smart capital players. Sometimes, they first blow the market value to achieve the maximum financing, but then the stock price will often appear due to the return value of the stock price It fell, and the institutions of the pledges became anxious at this time.”

Here’s one example: 361 shareholders of one company pledged all their shares, equivalent to nearly 50 percent of outstanding shares:

Statistically, many stockholders’ stock pledges are conducted at relatively high stock prices. This is not only related to the overall downward trend of the market itself, but also related to the choice of shareholders for the pledge of specific time nodes.

Three hundred and sixty-one controlling shareholders, Tianjin Qixin Zhicheng Technology, pledged 3.297 billion shares in one breath in March, which accounted for 100% of their shares, and also accounted for 48.74% of the company’s total share capital. At the time of its pledge, it was precisely when the stock price of three hundred sixty-six had the strongest performance. The company recently issued an announcement that the pledge was not a new issue, but a pledge of 460 shares in the equity of the controlling shareholder at the time of the privatization of US stocks.

Tianjin Qixin is a private company that has a stake in Qihoo. It says the shares are related to the delisting of Qihoo from the U.S. market.

Step two in this process is halting shares after they collapsed in price:

Secondly, after the equity pledge, under the influence of the big market, the stock price of the relevant company has become the norm. Most of the major shareholders have adopted a suspension to protect the interests. However, this approach is a double-edged sword, although it can suppress the stock price decline in the short term, it will also Bring the loss of stock liquidity. And in the context of stricter regulation of suspension, it cannot be used frequently.

According to the aforementioned investment bank sources, in fact, after the major shareholders pledged their money, some of them are not afraid of falling stock prices. They are most afraid of the stock price falling but they are their pledges. “From this point of view, it is equivalent to the major shareholders transferring the risk to the pledgee. Therefore, the institutional equity pledge business including some brokerage companies has begun to shrink.”

In accordance with the conventional practice, since the pledges reach the warning line, it is generally required to make up the position within 2 days, and to add additional pledged stocks or direct cash compensation. If it breaks below the open line, it will notify the emergency plan the next day: either, the priority shareholder redeems, the redemption amount = principal + unpaid interest; or, if there is no money to redeem, it will be equal.

According to the preliminary review of the announcement, in the past month, the equity pledges of more than 20 listed companies have been liquidated, and the number has quadrupled compared with April.

Finally, after stock prices fell due to equity pledges, if major shareholders cannot protect stock prices through repurchase or other means, there is no way to cover short positions and there is no way to repay loans. When financial institutions sell off, they will have an impact on the secondary market. As a result, stocks with a high ratio of pledges have seen their shares collapse.

Here’s a list of companies whose controlling shareholders have pledged 100 percent of their shares:

Some companies are avoiding collapse by pledging more collateral. Others, such as Nanfeng discussed above, have shifted risk to the lender thanks to the court freezing the assets. 

Take Ruikang as an example, the company received a letter from the company’s controlling shareholder, Hangzhou Ruikang Sports Culture Co., Ltd. on June 12th. Due to the continuous decline in the stock price of the company in recent days, some of the shares of Ruikang Sports Pledge have already exceeded the liquidation line. . As a result, Ruikang Sports and its controlling shareholder Shenzhen Shenliyuan Investment Group Co., Ltd. began to actively negotiate with the pledgee to sign a supplementary agreement and added 20 sets of commercial houses and 5 sets of residential buildings totaling 5770.07m2 as collateral.

Taking Southwind as an example, the shares of Yangzishan, one of the company’s actual controllers, had already touched the liquidation line as early as the end of May. However, since all of its shares have been frozen by the judiciary, the shares pledged by Yang Zishan will not be forced. Warehouse transfer. This also means that the relevant risks have been accumulated here at the pledgee.

Final advice for investors:

The pledge rate of equity is below 30%, which is generally safer. Conversely, more than 70% of them belong to high-risk varieties, because once the warning line is touched, they may face the dilemma of no assets available for compensation. At the same time, for cases where the proportion of equity pledged exceeds 50%, it should always pay close attention to the changes in the stock prices of related companies and the latest equity pledge information.

So much for default risk from China’s deleveraging effort being contained.

Edwards: “The Fed Should Lose Its Independence” For Steering The US To Its Next Crisis

Perhaps it’s because of his long-held view that bond yields will remain anchored – and might even enter (or reenter) negative territory in the near future – as the global economy slumps into another uncomfortable slowdown – but the financial press has been paying quite a bit of attention to Societe General global strategist Albert Edward. Barron’s back in April published a must-read interview with Edwards, in which he touched on his infamous “Ice Age” thesis, as well as the looming global recession. And this week, the Financial Times is back with its own piece on Edwards that’s pegged to the fact that Edwards’ former nemesis, Malaysian Prime Minister Mahathir Mohamad, has returned to power.

Edwards

Albert Edwards

Edwards – who was then employed as a strategist at Kleinwort Benson Securities – made a name for himself back in the 1990s when he was writing (correctly, as it turned out) about some of the issues that led to the 1997 Asian financial crisis. The strategist, who moved to French bank Societe Generale just over 10 years ago, has over the last two decades earned a reputation as perhaps the best-known permabear on Wall Street.

The year was 1995 and, for market strategist Albert Edwards, a nasty piece of feedback had just arrived from the Far East. A one-page fax to Mr Edwards from a client of his then employer, Kleinwort Benson Securities, tore into a piece of his analysis which had suggested that economies round the Pacific Rim might be over-heating.

The client was having none of it: “Your understanding of this part of the world ranks on a par with Noddy and Big Ears’s comprehension of sub-atomic physics,” the client wrote.

And so was born in the strategist’s mind the idea of “Noddynomics” – an insult that Mr Edwards was soon to hurl in the direction of the then Malaysian prime minister, Mahathir Mohamad, in one of his regular strategy notes. Kleinwort Benson was not very popular in the region for some time.

Edwards readily admits that investors who followed his predictions to the letter would’ve lost money doing so (particularly since the dawn of QE), Edwards is refusing to give up on his long-term bearish view. Back in February, Edwards joined the ranks of US bond bears, with the caveat that his view was an explicitly short-term thesis (“I repeat my forecast that US 10y yields will fall below zero”).

Despite his on-paper record, Edwards has proved himself to be one of the Street’s more enduring strategists for his commitment to his contrarian ideas.

Mr Edwards’ durability has been evident in another form: in June each year winners are announced for the annual Extel Survey of analyst research. And every year, for the past 15 on the trot, this particular strategist has come top of the Global Strategy category. It is an extraordinary record, not least because, by his own words, Mr Edwards’ predictions have proved somewhat wrong for some time now.

Mr Edwards himself puts this down, at least partly, to the fact that he is ready to make fun of himself. “The Weekly note is short. It’s entertaining. And you’ve got to remember there’s so much bullish stuff out there,” he says. “Across the market people feel comfortable when everyone’s being bullish. So there’s room for a maverick. There’s room for the long view.”

And while the recovery wasn’t kind to devoted believers in Edwards’ “Ice Age” thesis (since the start of the year, equities have largely remained near their all-time highs, even during periods of intense market turbulence), at least one of his predictions has been proven correct:

In the years since, following the dotcom crash and then the financial crisis a decade ago, one side of the thesis has proved correct, with sovereign yields moving into negative territory across developed markets. But the secular derating of equities predicted by Mr Edwards has manifestly failed to happen.

But as stocks failed to rally during the Q1 earnings season and the correlation between climbing yields and a rising dollar reemerged, strategists at Morgan Stanley and elsewhere have reaffirmed their own long-term bullish views on volatility.

So while Morgan Stanley’s quants view near-term volatility pricing as roughly fair from a dynamic hedging perspective, “if buying options to benefit from price movement they are a little rich – hence the view to overwrite or play the upside via call spreads.”

Longer-term, however, the bank remains bullish on volatility given the nearing turn of the cycle – but for directional users of options it is better to wait until there is a catalyst for a crack in earnings, which will drive a true break of the range.

As Edwards explains, QE might work in the short term, but ultimately, it fails to solve the underlying problem. Credit bubbles like the one that triggered the financial crisis remain intact until the Fed and its fellow central banks – fearing that the economies they supervise would be left vulnerable should another collapse occur – decide to hike interest rates until they unleash another catastrophic “credit event”.

In a summary of one of Edwards’ more recent strategy notes, we reminded readers how Fed tightening cycles have preceded nearly every financial crash of the twentieth century.

Creditbubble

But as Edwards and ideological compatriots see things, that’s hardly the Fed’s only shortcoming. The rapid expansion in home valuations and wealth inequality has created a generation of people who feel economically left behind setting up lawmakers to capitalize on the growing antipathy toward central bankers when the next crash hits.

“QE might look good for a few years, but it makes the problem worse. With a normal cycle, with interest rates going up quickly, these companies would have gone out of business quicker.”

So when the next credit bubble bursts, when the next crisis arrives, politicians will be looking for someone to blame.

“Last time they were able to blame it on the bankers, people like Fred Goodwin. But the commercial banks won’t he holding all the toxic waste next time. Instead, the politicians will be looking to the central bankers. They will lose the confidence.”

According to a BIS report released late last year, roughly 10% of companies in emerging and developed economies have only survived because central banks have suppressed real interest rates. These “zombie” firms will be the first to be culled by the next recession because, quite simply, they are unable to survive without the flow of cheap financing that has kept them afloat over the past decade.

Zombie

This trend, combined with the disturbing jump in small-business credit-card charge-off rates…

Charge

…Has prompted Edwards to declare that the second-longest US economic expansion in history is nearing a spectacular end. To put a spin on a popular defense of central bank intervention, while this isn’t the first time Edwards has made such a declaration, This Time It’s Different.

Earlier this month, Edwards shared a message with the Federal Reserve that he learned during a recent vacation – a two-week long commune with nature in Lake Tahoe and Yosemite.

It was significant that we didn’t see any bears at either venue despite doing a 7.30am, 13 mile valley floor hike! I’m sure the absence of fellow bears was a significant countertrend sign. I learned something else on my trip worth sharing. We took the Yosemite Tram tour of the valley floor and the ranger gave a very interesting talk about fire.  Until 1970 Yosemite Parks was extinguishing regular small-scale fires to prevent property damage. The resultant rise in dense small tree growth meant that although fires were less frequent, they quickly got out of control. Since 1970 they have allowed more fires to burn, resulting in less damage.

So, when the next recession finally arrives, will central banks be able to salvage their already damaged credibility? Or will this next crash lead to a fundamental shift in the view that central banks can and should be independent?

“The Fed could well lose its independence. So, too, could the Bank of England. And in my view they should.”

What Could Go Wrong? US Army To Deploy Autonomous Killer Robots On Battlefield By 2028

Authored by Jay Syrmopoulos via ActivistPost.com,

United States Army Secretary Mark Esper recently revealed that the military has a strategic vision of utilizing autonomous and semi-autonomous unmanned vehicles on the battlefield by 2028.

“I think robotics has the potential of fundamentally changing the character of warfare. And I think whoever gets there first will have a unique advantage on the modern battlefield,” Esper said during a Brookings Institution event.

“My ambition is by 2028, to begin fielding autonomous and certainly semi-autonomous vehicles that can fight on the battlefield,” he added. “Fight, sustain us, provide those things we need and we’ll continue to evolve from there.”

In a preview of the U.S. Army’s strategic vision, released on June 6, Esper said the integration of these forces would become a critical strategic component, quoting from the document:

The Army of 2028 will be able to deploy, fight, and win decisively against any adversary, anytime, and anywhere … through the employment of modern manned and unmanned ground combat systems aircraft, sustainment systems and weapons.

When Esper was reportedly asked about concerns regarding autonomous robots being a threat to humanity, he replied in jest, “Well, we’re not doing a T-3000 yet,” referencing the Terminator movie series about self-aware AI threatening the existence of humanity.

Of course, while he jokes about the threat of autonomous killer robots, polymath inventor Elon Musk clearly takes the potential of such a threat much more seriously, as evidenced by his comments at the South by Southwest (SXSW) conference and festival on March 11, in which he said that “AI is far more dangerous than nukes.”

“I’m very close to the cutting edge in AI and it scares the hell out of me,” Musk told the SXSW crowd. “Narrow AI is not a species-level risk. It will result in dislocation… lost jobs… better weaponry and that sort of thing. It is not a fundamental, species-level risk, but digital super-intelligence is.”

I think the danger of AI is much bigger than the danger of nuclear warheads by a lot. Nobody would suggest we allow the world to just build nuclear warheads if they want, that would be insane. And mark my words: AI is far more dangerous than nukes,” Musk added.

As The Free Thought Project reported last month, the Pentagon reportedly plans to spend more than $1 billion over the next few years developing advanced robots for military applications that are expected to complement soldiers on the battlefield, and potentially even replace some of them.

While the development of this tech by the Army sounds like a movement toward better weaponry, and not a digital super-intelligence, as discussed by Musk—the creation of fully autonomous unmanned weapons systems clearly has implications given the potential future development of some type of “digital super-intelligence.”

Esper attempted to allay fears by noting that the Army’s unmanned vehicle program would be akin to the Air Force’s use of Predator drones, and clarified that the idea would be to protect soldiers by removing them from direct combat. In turn, he said, this would enhance tactical ability and mobility, thus paving the way for cheaper tanks due to not having a crew inside in need of protection.

However, due to the complexity of the modern battlefield, a human element would remain part of the process.

“In my vision, at least, there will be a soldier in the loop. There needs to be. The battlefield is too complex as is,” Esper said.

The nuance in Esper’s statement seemingly leaves lots of ambiguity when he says, “In my vision, at least…” which by default likely implies other competing visions that almost certainly include the use of autonomous systems that don’t have a “solider in the loop.”

During his SXSW commentary, Musk noted that rapid advancements in artificial intelligence are far outpacing regulation of the burgeoning technology, thus creating a dangerous paradigm. He explained that while he is usually against governmental regulation and oversight, the potentially catastrophic implications for humanity create a need for regulation.

“I’m not normally an advocate of regulation and oversight,” Musk said. “There needs to be a public body that has insight and oversight to confirm that everyone is developing AI safely.”

While some experts in the field have attempted to dismiss the threat posed to humanity by the development of AI, Musk said these “experts” are victims of their own delusions of intellectual superiority over machines, calling their thought process “fundamentally flawed.”

“The biggest issue I have with AI experts… is that they think they’re smarter than they are. This tends to plague smart people,” Musk said. “They’re defining themselves by their intelligence… and they don’t like the idea that a machine could be smarter than them, so they discount the idea. And that’s fundamentally flawed.”

The billionaire inventor pointed to Google’s AlphaGo, an AI-powered software that can play the ancient Chinese board game Go as evidence of exponential learning capacity of machines. Although it was reputedly the world’s most demanding strategy game, in early 2017, the AlphaGo AI clinched a decisive victory over the top Go player in the world.

While current semi-autonomous systems keep humans marginally in the loop, the advent of fully autonomous systems that operate without any human input creates serious ethical implications in terms of the morality of using killer robots to slaughter human combatants on the battlefield.

Although Esper’s stated preference for keeping soldiers in the loop is noble, the larger U.S. war machine will undoubtedly find some type of efficiency in eliminating the human component altogether to make killing on the battlefield even more “efficient.”

We are clearly on an extremely slippery slope when it comes to killer robots and A.I.  Intellectual giants like Elon Musk and Stephen Hawking have continually attempted to sound the civilizational alarm regarding the extreme dangers inherent to AI.

As an article in the Guardian on Monday pointed out, killer robots are only a threat if we are stupid enough to create them. Now, the only question is: Will anyone heed all these warnings?

“I Wouldn’t Let You Suck My D*ck”: NY Shrink Claims Trump “Unfit For Office” After Alleged Encounter

A New York psychologist who claims to have “met Trump personally” in the early 90’s at a fashion event, Suzanne Lachmann, says that Donald Trump interrupted her while she was trying to introduce herself – asking her why he would want to talk to her with all the hot models around, and that he “wouldn’t let you suck my dick.”  

Lachmann told The Post she spotted the famous developer standing alone at a Missoni fashion event — filled with models — on the heels of his 1992 divorce from first-wife Ivana.

She approached The Donald to introduce herself as “a neighbor,” and tell him she enjoyed his recent interview on the Howard Stern show.

“He interrupted me and said, ‘Why would I want to talk to you? Look at all the beautiful women in here. I wouldn’t let you s–k my d–k.’”

Stunned, she said, she walked away without a response. –NY Post

Earlier in the month, Lachmann – a New York Fire Department consultant whose Twitter account is littered with anti-Trump tweets and retweets, wrote “As a mental health expert – clinical psychologist – based in #nyc consultant for #FDNY who helps determine who must be taken off line due to mental duress, have met trump personally and had direct interaction w him I say w certainty that he is #UnfitForOffice #UnfitToBePresident”

As a mental health expert – clinical psychologist – based in #nyc consultant for #FDNY who helps determine who must be taken off line due to mental duress, have met trump personally and had direct interaction w him I say w certainty that he is #UnfitForOffice #UnfitToBePresident

— Suzanne Lachmann (@DrSuzanneL) June 6, 2018

In February, Lachmann ranted over Twitter about Trump supporters, saying they are “psychiatrically unstable, mentally impaired, cognitively limited, utterly misanthropic, white supremacists to the extreme,” who “can’t distinguish what an abusive sick nut job he is.”

They don’t have an answer. They’rpsychiatrically unstable, mentally impaired, cognitively limited, utterly misanthropic, white supremacists to the extreme, and/or so severely traumatized by events in their own lives that they cannot distinguish what an abusive, sick nutjob he is

— Suzanne Lachmann (@DrSuzanneL) February 12, 2018

Lachmann, 50, described the encounter in the March 2017 edition of Psychology Today:

I was volunteering that evening and later approached him in order to introduce myself, and he said, “Why would I want to talk to you? I wouldn’t even let you suck my d*ck. Look at all the beautiful women here. Don’t waste my time.” –Psychology Today

The Post suggested that Lachmann’s comments over Twitter may have violated the FDNY’s social media policy which states: “Employees who identify themselves as FDNY employees, or hold positions with the FDNY that are known to the general public … should make a clear disclaimer that the statements and views expressed … do not reflect the views of the FDNY.” 

Lachmann, however, insisted the policy doesn’t apply to her because “I’m a consultant, not an employee.” 

FDNY spokesman Frank Gribbon, however, said “It’s inappropriate to cite her work with FDNY in social posts that express political views.

Sad! 

Is The Federal Reserve ‘Public Enemy Number One’?

Authored by Peter Schmidt via SchiffGold.com,

When currency was backed by gold, a central bank’s main function was to maintain the value of the issued currency in terms of gold.  For example, if a central bank created too much money against the gold reserves in the banking system, an increasing number of people would begin to exchange their currency for gold.  To combat this, a central bank would be forced to raise interest rates and decrease the money supply.  The higher interest rates would incentivize people to exchange gold for larger savings on deposit that earn interest.  Banking reserves – gold – would return to the banking system and the economy would return to balance.  The prime reason for insisting on defining currency in terms of a precious metal was to provide a self-correcting braking mechanism to the creation of money.  As expressed by the great Wilhelm Röpke:

If in the production of goods the most important pedal is the accelerator, in the production of money it is the brake.  To insure that this brake works automatically and independently of the whims of government and the pressure of parties and groups seeking “easy money” has been one of the main functions of the gold standard.  That the liberal should prefer the automatic brake of gold to the whims of government in its role of trustee of a managed currency is understandable.”

The US dollar was backed by gold as recently as 1971.  Any central bank in the world could present the Federal Reserve $35 and receive 1-ounce of gold in exchange.  However, on August 15, 1971 – blaming it on the “gnomes of Zurich” – President Nixon “temporarily” broke the dollar’s last link with gold.  Nixon closed the “gold window” and reneged on the promise to exchange an ounce of gold for $35.  Since then, the system of credit in the US has been under the Fed’s complete control.

Unsurprisingly, without the natural braking action provided by gold, the value of the dollar has collapsed and the ensuing 45 years are the most crisis-ridden period in American economic history.

The case against today’s Fed can be made in a number of ways.  A method – which enjoys the advantage of hoisting Ben Bernanke on his own mathematical petard – is to use economic statistics from two eras – 1967 and 2015.  One of the reasons Ben Bernanke is such a big fan of baseball is his fondness of statistics.  In baseball, like few other sports, players from one era can be compared to players from other eras because the game has changed so little.  Because of his fondness for baseball statistics and their constancy over time, Bernanke should be sympathetic to the data presented here – even if it exposes the enormous damage he and the Fed have visited on hundreds of millions of hard-working Americans.

The chart below speaks volumes about the disastrous impact of Fed policies since 1971.  The chart also reveals how the credit inflation the Fed has created, actually masks the disastrous impact of the Fed’s policies.  Specifically, the Fed-induced inflation makes it difficult for the average worker to realize that even though their salaries have soared in dollar terms, these salaries now purchase much less than they used to.

The chart lists prices for several common items as well as average incomes and home prices for the years 1967 and 2015.   In addition to defining prices and incomes in dollars, prices and incomes are also defined in their equivalent amounts measured in ounces of gold.  The equivalent “ounces of gold” are simply determined by taking the price in dollars and dividing it by the prevailing price of gold for the time period under review.

As a result of the collapsing value of the dollar – it is worth less than 3% of its 1971 equivalent in gold terms – it is not completely straightforward to compare economic performance in 1967 with the performance today.  When prices and incomes are measured in dollars they appear to be soaring – annual incomes have risen from $7,181 per year to $52,000.  However, when these same incomes are measured in ounces of gold, they appear to be collapsing – falling from 648.6-ounces per year to just 269.5.

What is really going on?

Because money – whether it manifests itself as paper currency issued by a central bank or a constitutionally prescribed amount of precious metal – is merely a store of wealth and a means of exchange, the Fed’s incompetence is best demonstrated by comparing what the average person can purchase with his salary today versus 1967.  The last column in the chart measures how much more unaffordable everyday items have become to the average worker, and does so without using dollars or gold.  Instead, this column computes the cost of an item on the basis of the median worker’s income for both 2015 and 1967.  A ratio of these two costs is then taken with the 2015 cost in the numerator.

For example, let’s examine home prices.  In 2015, a house cost the average worker 5.7-times their average annual income (296,400/52,000).  In contrast, in 1967 the median house cost the average worker just 3.06-times their average annual income (22,700/7,181).  Measured against the average worker’s income, today’s house costs 1.8-times more than the 1967 equivalent house (5.7/3.06)!  With the exception of a gallon of milk, every item in the chart has become more expensive to the average worker since 1967.

In conclusion and as shown here, when prices of goods are measured in terms of incomes, we can clearly see that today’s incomes purchase much less than they used to.  The clearly demonstrated fact that the average worker – the backbone of any economy – has been falling behind for decades on end shows the problems with the US economy are deep, systemic and long-running.  As evidenced here, these problems clearly have their origin in the Fed’s monetary mismanagement and the failure of the dollar to maintain even a fraction of its value over time.