June 5, 2014
- A year after the first Snowden reveal, the only privacy remedy you have
- Snowden’s “missing document”? Sensitive and potentially lucrative info
- “A major offensive in the global currency wars”: Amoss unpacks the ECB’s big move
- All the cool countries are doing it… and now so are American companies
- The company where fewer bribes mean lower dividends… artificial sweeteners, continued…Chinese precious metals scams… and more!
“I think there are more reasonable ways to catch illusory terrorists than ubiquitously collecting the data of Americans and not targeting specific people,” says 16-year-old Andrew Demeter of Concord, Ohio.
Mr. Demeter — the one in the glasses — became a YouTube star this week after he posed an impertinent question about NSA surveillance to House Minority Leader Nancy Pelosi. Not that we have any problem with posing impertinent questions to politicians, heh…
Young Andrew’s timing was impeccable, coming in the run-up to the first anniversary of the first Edward Snowden disclosures. It was a year ago today we learned the NSA was vacuuming up the phone call records of every Verizon customer in the United States. “We’re back to the general warrants that launched the American Revolution,” we noted in real time.
To mark the anniversary, several websites like Reddit, Imgur and BoingBoing have declared today the day to “reset the Net.”
“Rather than telling users to write to their electoral representatives,” reports the Guardian, “this protest will push more direct action, encouraging visitors to install privacy and encryption tools.”
[Something our Laissez Faire Club has been urging the last nine months, we hasten to add…]
Says Reddit general manager Erik Martin, “We can take back control of our personal and private data one website, one device, one Internet user at a time.”
Indeed, that’s the only way it can work… because Congress sure as hell won’t stand up for you.
A few people are well-intentioned. The Snowden disclosures outraged Rep. Jim Sensenbrenner (R-Wis.). He said the USA Patriot Act was never intended to be used the way the NSA uses it. Sensenbrenner introduced the Patriot Act in the House in 2001, so he ought to know.
To correct the NSA’s abuses, he recently introduced the USA Freedom Act. Alas, after weeks of sleazy parliamentary maneuvers, the bill has been watered down to the point that blogger Marcy Wheeler labeled it the “Freedumb” Act… and, after still more revisions, the “Freedumber” Act.
Indeed, by the time the final bill is drafted, matters could be even worse than they are now. For instance, while “bulk collection” of phone records is prohibited, the Freedumber Act says the collection of all phone records from, say, a single area code, doesn’t qualify as “bulk collection.”
“Unless the [privacy] community finds some way to defeat USA Freedumber,” Wheeler writes, “the intelligence community will soon be toasting themselves that they used the cover of Edward Snowden’s disclosures to expand surveillance.”
[Ed. note: For weeks now, we’ve been told the biggest bombshell from the Snowden documents is yet to come. This one is supposed to name names — politicians, CEOs and the like.
We have a military source who’s offered up a few potential clues… and we’re ready to reveal those clues right now. They will change the way you look at the government — and your financial future. But the information is, well, sensitive. So we’re asking you to do something we’ve asked only once before — to initial a confidentiality agreement in advance.
You’ll find it at this link. All you have to do is agree to the terms and enter your initials. The form doesn’t obligate you to do a thing. All you’re agreeing to do is not share the information you’ll see with anybody. As soon as you agree to the terms, you’ll be taken to a Web page where we’ll share the research. Simply initial the agreement right here to get started.]
“The euro is now the first major currency to experiment with a negative interest rate policy,” says our macro strategist Dan Amoss.
The European Central Bank led by Mario Draghi opened a new chapter in the post-2008 playbook for monetary policy this morning. “The guardian of the euro’s virtue unleashed a barrage of measures to cheapen it,” says Dan.
And he adds the ECB’s measures will be difficult to halt, much less reverse…
- Cutting its overnight bank deposit rate to negative 0.1%
- Cutting its main lending rate to 0.15%
- It plans to offer targeted long-term refinancing operations, or “TLTROs.” These loans to banks will require banks to lend more to the so-called real economy. “Investors might be surprised,” Dan quips, “to hear of this mythical European economy that lies outside the influence of government spending and banking.”
Quantitative easing? That’s still in the works, “once a politically acceptable debt instrument is identified for purchase,” Dan suggests.
“Can we please dispense with the narrative that the global economy has achieved ‘escape velocity’ from central bank stimulus programs? By slashing its growth outlook, the ECB just threw cold water on the perception that Europe is recovering.”
“The bottom line is that the ECB has launched a major offensive in the global currency wars,” Dan goes on.
“Other central banks will respond with counteroffensives. None of these radical measures will bring about sustainable economic recovery. Instead, they will exacerbate existing economic problems by lowering the cost of debt for bloated, inefficient governments.
“Central banks will be terrified to stop what they’re doing, let alone reverse it, for fear of handicapping their local economies with a strong currency.”
Dan’s final takeaway: “The case for avoiding most stocks and owning precious metals just got stronger.”
Market reaction to the ECB’s much-awaited announcement? Muted.
The euro is all but unchanged at $1.361. The dollar index, of which the euro comprises more than 50%, is likewise nearly flat at 80.6.
European stock markets rallied, but not to extremes. The Euro STOXX 50 closed up about 1%, and so did France’s CAC 40. Germany’s DAX crested 10,000 for the first time but then retreated, posting only a 0.2% gain on the day.
Stateside, the major stock indexes are in the green — goosed less by the eurozone news than by hedge fund manager David Tepper.
A month ago, Tepper moved markets down by saying, “Don’t be too freaking long.” Today he said the concerns he had at that time are now “alleviated.”
Only after Tepper opened his yap did the Dow and the S&P move decisively into record territory, the Dow cresting 16,800.
Gold has huffed and puffed its way back above $1,250, to $1,254. Crude is off slightly, to $102.46.
The slow-drip demise of the dollar as the world’s reserve currency has reached American shores.
For years, we’ve chronicled the deals China has struck with its trade partners to do business using each other’s currencies. China and Russia, China and Brazil, China and Australia, even China and its old/new enemy Japan — they all have currency swaps and other arrangements in place to bypass the dollar.
Now it’s… China and major U.S. corporations, according to new figures from the international payments system SWIFT. “The value of renminbi payments between the U.S. and the rest of the world rose by 327% in April this year from the same month a year ago,” says the Financial Times, “as more U.S. corporations switched to using the Chinese currency to pay for imports from China.”
Paying in renminbi can trim the costs of imports, the salmon-colored rag explains. And it’s made easier by new renminbi-denominated vehicles in the financial markets.
HSBC estimates 18% of China’s trade worldwide is now settled in renminbi — a percentage set to double by the end of next year.
Sometimes the most hilarious items we run across demand to be repeated verbatim. Witness this story from the BBC.
“Operating profits at the French spirits group Remy Cointreau have fallen 40% following a crackdown on corruption in China,” the Beeb reports with its customary stiff upper lip.
Remy is not the first spirits maker to report slower sales because China’s economy is slowing down; Diageo, the maker of everything from Smirnoff to Guinness, did so in January.
But Remy is definitely the first to attribute lower demand to fewer bribes. Who knew the commissars and kleptocrats had such a thirst for $3,400 bottles of Louis XIII cognac?
The crackdown is having such a severe impact Remy is cutting its dividend 9.3%. Cognac makes up 80% of Remy’s operating profit, and half of that comes from China, wouldn’t you know…
“I find a major discrepancy,” a reader writes on an ongoing topic, “in your justification of the amount of artificial sweeteners a typical American consumes: The total of 585 grams and 375 grams is 960 grams, which equals 64 tablespoons.
“You are assuming this total to be all aspartame! I am sure the foods contain other ingredients as well and perhaps only a small percentage would be aspartame. Am I missing something?”
The 5: No. To be clear, that’s 64 tablespoons of foods containing artificial sweeteners.
Which is an awful lot, no?
“I stay away from artificial sweeteners as much as I can,” another reader chimes in, “and use a product called Stevia, which is a naturally occurring sweetener.
“If I go out to eat, I take a couple of packets of Stevia with me for any unsweetened drinks such as ice tea or coffee. I even use it on my cereal at breakfast.”
“All things in moderation,” reads the subject line of an email from one of our regulars.
“If only ‘fat assed’ America could grasp that concept (which, I believe, may have come from the Bible?)!
“The human body (at least this was what my first cousin and best friend in grade school told me the year he finished his last year of med school in 1966) is as close to perfect specimen — biologically — as walks upon this Earth. He said that was one of the first things they taught them in medical school. It is basically self-healing from outside harm as long as it is PROPERLY nourished and receives decent level of exercise.
“Now that Big Pharma has taken complete control of our medical system (including the education of today’s doctors), that may have all changed, but I believed him at the time (I’m now 75).
“He died, wheelchair-bound, several years ago of ALS or one of the progressive/debilitating killers, but until he did, he helped many people in his small Kansas town where he was a GP understand what he meant and take better care of their health. We need many more like him, but I fear that med schools don’t teach that way anymore, and thus the ‘take a pill’ attitude that our modern culture of medicine espouses will continue down the current path.”
The 5: Thanks to everyone for weighing in, if you’ll excuse the pun. If you’ve been busy this week and missed what inspired all the discussion, you can take a look at this.
“So Warren Buffett says we should pay more in taxes,” a reader writes after we briefly invoked the Oracle this week.
“I would say to him, ‘Warren, if you feel that way, liquidate half your holdings, or about $30 billion, pay taxes to the U.S. government and donate the $30 billion to hospitals, soup kitchens and food pantries throughout the USA!'”
“I’ll bet doughnuts to dollars he would never do that, because he is just another Democrat and just good at spending other people’s money!”
“You mention precious metals in most of your reports,” writes our final correspondent, “yet I have never seen any information on all the fake gold and silver products produced in China and sent all over the world.
“Whether it is American or Canadian silver or gold products, you can buy them on Alibaba. They are guaranteed to pass the test, same measurements and weights as the real product. The U.S. Mint is aware of these products, but is the public? Millions of the unsuspecting public have bought these fake coins and will never even know it until they try to sell. Even then, many dealers are also unaware of this situation and are not knowledgeable enough to know the difference.”
The 5: Even if you buy on eBay, you’re generally assured of getting the real thing — but at a significant markup.
This is why we like the Hard Assets Alliance so much. The markups are reasonable. The website interface is refreshingly simple. You can take delivery, or they can arrange storage in another country. Check it out at this link. And do be aware that we may be compensated once you fund your account, but Agora Financial wouldn’t have become a charter member of the Hard Assets Alliance unless we knew they’d do right by you.
Best regards,
Dave Gonigam
The 5 Min. Forecast
P.S. Hard Assets Alliance also has an IRA option for U.S. customers — complete with overseas storage in Zurich. You can find those details here.