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Nick Hodge – Peak Oil: It's Baaaack – PRN.fm – PRN.fm

Nick Hodge – Peak Oil: It’s Baaaack – PRN.fm – PRN.fm.

Nick Hodge – Peak Oil: It’s Baaaack

Posted on: March 19th, 2014

Over the past few months, I’ve been sharing my concerns about shale oil.

Namely, that it’s more comparable to a Ponzi scheme than any sort of boom.

I’ve articulated the reasons for my thesis, including fast decline rates, the amount of new rigs and wells needed, and a cost of production that’s been higher than the price of sale for some time now.

I’ve also shared recent evidence that this theory is proving correct, from horrid earnings reports — citing the reasons I just mentioned — for oil majors across the board to the fact that mainstream media outlets are starting to put the dots together, running stories like:

“Big Oil Companies Struggle to Justify Soaring Project Costs” —Wall Street Journal

“Dream of U.S. Oil Independence Slams Against Shale Costs” — Bloomberg

“Why America’s Shale Boom Could End Sooner Than You Think” —Forbes

“What Happens When The Shale Boom Ends?” — Christian Science Monitor

After my last article on the subject, I got an email from a sophisticated investor-friend of mine worth hundreds of millions of dollars — some even say a billion. His subject line was: “Awesome Article on Shale.” Here’s what he had to say:

Read More

Nick Hodge – Peak Oil: It’s Baaaack – PRN.fm – PRN.fm

Nick Hodge – Peak Oil: It’s Baaaack – PRN.fm – PRN.fm.

Nick Hodge – Peak Oil: It’s Baaaack

Posted on: March 19th, 2014

Over the past few months, I’ve been sharing my concerns about shale oil.

Namely, that it’s more comparable to a Ponzi scheme than any sort of boom.

I’ve articulated the reasons for my thesis, including fast decline rates, the amount of new rigs and wells needed, and a cost of production that’s been higher than the price of sale for some time now.

I’ve also shared recent evidence that this theory is proving correct, from horrid earnings reports — citing the reasons I just mentioned — for oil majors across the board to the fact that mainstream media outlets are starting to put the dots together, running stories like:

“Big Oil Companies Struggle to Justify Soaring Project Costs” —Wall Street Journal

“Dream of U.S. Oil Independence Slams Against Shale Costs” — Bloomberg

“Why America’s Shale Boom Could End Sooner Than You Think” —Forbes

“What Happens When The Shale Boom Ends?” — Christian Science Monitor

After my last article on the subject, I got an email from a sophisticated investor-friend of mine worth hundreds of millions of dollars — some even say a billion. His subject line was: “Awesome Article on Shale.” Here’s what he had to say:

Read More

Bruce Berkowitz’s Bogus Bombast | David Stockman's Contra Corner

Bruce Berkowitz’s Bogus Bombast | David Stockman’s Contra Corner.

by  • March 5, 2014

Source: WSJ

Click to enlarge

The Fed’s serial bubble machine has not only bestowed massive speculative windfalls on the 1%, but it has also fostered a noxious culture of plunder and entitlement in the gambling casinos of Wall Street. After each thundering sell-off during the bust phase, crony capitalist gamblers have been gifted with ill-gotten windfalls during the Fed’s subsequent maniacal money printing spree.

Worse still, this trash-to-riches syndrome has unfolded so consistently since the late 1980s that there now exists a marauding gang of permanent vulture-speculators who impudently claim entitlement to any and all action by the state that might be needed to quickly reflate their gleanings from the bottom. The passel of hedge funds led by Elliot Capital which blackmailed the Obama White House into paying billions for the worthless debt of Delphi during the GM bailout is only one especially odious example.

In this context comes Bruce Berkowitz “scolding” and firing “salvos” at Washington from the front page of the Wall Street Journal. As it has happened, the usually craven denizens of the beltway have so far managed to ignore his petulant demands for a multi-billion payday on the worthless Fannie and Freddie preferred stock that his fund scooped up after the housing bust. Recall, these were the securities issued in 2008 at $25 per share to shore up the tottering housing finance agencies just before Hank Paulson’s bazooka sputtered.

Not inappropriately, when the Republican White House nationalized Freddie and Fannie in September 2008 these preferred shares plunged to 25 cents—-their true value all along. The fact is, the so-called GSEs do not “earn” profits; they merely book bloated accounting margins that reflect nothing more profound than the fact that Freddie and Fannie drastically underpay for renting Uncle Sam’s balance sheet. As finally became official when the U.S. Treasury threw them a $180 billion lifeline, the GSEs are now—and have always been—a branch office of the U.S. Treasury Department.

The only reason Freddie and Fannie are not prosecuted for filing fraudulent accounting statements, therefore, is the beltway fiction that they are “off-budget”. This convenient scam was first invented by Lyndon Johnson to magically shrink his “guns and butter” fiscal deficits, but it has since metastasized into a giant business fairy tale—namely, that behind the imposing brick façade of Fannie Mae there is a real company generating value-added services that are the source of its reported profits and current multi-billion pink sheet valuation. In fact, there is nothing behind those walls except a stamping machine that embosses the signature of the American taxpayer on every billion dollar package of securitized mortgages it guarantees and on all the bonds it issues to fund a giant portfolio of mortgages and securities from which it strips the interest.

If we wanted to have honest socialist mortgage finance, a handful of GS-14s could run Freddie and Fannie out of the U.S. Treasury building. Civil servants could emboss the taxpayers’ guarantee on every family’s home mortgage just as proficiently as the make-believe business executives who populate the GSEs today; and in the process we could dispense with the sheer waste involved in applying GAAP accounting to the operations of a mere government bureau.

In an alternative political universe not corrupted by crony capitalist mythology about the elixir of homeownership, of course, there would be no need for a Treasury Bureau of Home Mortgage Finance. The decision to own own or rent would be made by 115 million American households based on their best lights, not the inducements and favors of the state. Markets would clear the interest price of mortgage debt and set credit terms and maturities consistent with the risks involved. Undoubtedly, rates would be a few hundred basis points higher and 30-year fixed rates mortgages quite rare. And like in the seemingly prosperous precincts of Germany, the home-ownership rate might be 55% or any other number not selected by pandering politicians of the type who pinned the 70% disaster on the wall during the Clinton-Bush era.

At the end of the day, having 40 million renter-households and 25 million mortgage-free owner-households provide (in their capacity as taxpayers) trillions of subsidized credit to upwards of 50 million mortgage-encumbered households is absurd. Yet it could be dismissed as just another expression of the capricious and random shuffling of income among American citizens that is the tradecraft of the Washington puzzle palace.

Unfortunately, the reality is not so anodyne. In order to hide this random redistribution mischief, the Treasury Bureau of Home Mortgage Finance has been gussied-up to form the simulacrum of a profit-making enterprise—otherwise known as a GSE. In that posture, the GSEs have been repeatedly plundered by insiders like Franklin Rains, the 90 million dollar man who drove Fannie off the cliff; and by fast money stock speculators who managed to drive the combined market cap of Freddie and Fannie to the lunatic level of $140 billion during their hay-day at the turn of the century; and by the Wall Street dealers and so-called fund managers who inventory trillions of GSE debt securities in order to scalp profits from the economically pointless spread between regular treasury bonds and the GSE variant of the same thing.

All of these hundreds of billions were pocketed by adept cronies and speculators in the various debt, equity and preferred securities of the GSEs during the decades culminating in the 2008 financial crisis. Given the trauma of those events, Secretary Paulson’s desperate and ill-disguised nationalization of Freddie and Fannie should have put an end to the plunder.

But it hasn’t because there is no end to the zero cost-of-goods carry trades by which speculators scoop-up and fund financial assets—busted and not—during the Fed’s money printing marathons. Likewise, there is no end to crony capitalist marauders like Berkowitz, who have the temerity to demand make-wholes from the state, and K-Street hirelings—lawyers, accountants and consultants— who are skilled at the manufacture of specious public policy rationalizations for outright thievery.

So now comes the patented crony capitalist rush. The worthless Freddie and Fannie preferreds have lately erupted from $0.25 per share to $12, meaning that some speculators have already garnered a paper return of 48X. And why did this revival miracle transpire? Quite simply because Berkowitz’s Fairholme Capital and his posse of punters—-John Paulson, Perry Capital and Pershing Square, among others—have taken turns bidding up the paper.

Meanwhile, their deplorable plan to do the American people a favor and swap these bogus securities for those of a new tax-payer underwritten, mortgage guarantee stamping machine, has but one objective—that is, to put a statutory floor under the current $12 per share price and enable them to dicker with Capitol Hill staffs for an ultimate take-out at par($25) under the guise of “privatization”. The larceny intended here is not modest: the payday for Berkowitz and his hedge fund posse would amount to $35 billion on toxic paper which was purchased for rounding errors.

To be sure, Berkowitz and his sharpies blather that Freddie and Fannie have now returned $200 billion to the US Treasury, thereby repaying the original $180 billion drawdown, with some change to spare. But what hay wagon do they think even the clueless officialdom of Washington rides upon? Roughly $50 billion of that was for writing-up a “tax asset” that had earlier been written-down, owing to the fact that absent nationalization the GSEs had no prospect of booking even accounting income in the future. And the remaining $150 billion represents dividends paid to the Treasury since 2009 based on using Uncle Sam’s credit card to issue the bonds and guarantees which fund the assets from which these so-called GSE dividends are scalped.

In other words, the Berkowitz Gang wants to be paid a king’s ransom for ownership shares in what amounts to a bureau of the US Treasury. And yet these con men pound the table demanding to “wake up the (GSE) boards” so that they will execute their “fiduciary responsibility”. Indeed, so shameless are Wall Street’s princes of plunder that Berkowitz told a skeptical CNBC questioner last fall “we’ve helped before with AIG”, and that he now merely seeks a “win-win” to “help with jobs, help with the economy, help with the dream of homeownership”!

That gibberish is the measure of the crony capitalist deformation that has infested the nation’s financial markets and system of political governance. The obvious thing for Washington to do is close the doors at Fannie and Freddie and allow their $5 trillion portfolio to run-off in the manner of any liquidation. And if it must subsidize home mortgage credit, just bring back the metal filing cabinets in the Treasury Building where the so-called “secondary mortgage market” was birthed in 1938. Yet what it dare not do is succumb to the bogus bombast of the punters and sharpies who troll the financial wreckage inexorably created by the Fed’s serial bubble machine.

If it does, the people will find their pitchforks and torches—–one of these days.

Bruce Berkowitz’s Bogus Bombast | David Stockman’s Contra Corner

Bruce Berkowitz’s Bogus Bombast | David Stockman’s Contra Corner.

by  • March 5, 2014

Source: WSJ

Click to enlarge

The Fed’s serial bubble machine has not only bestowed massive speculative windfalls on the 1%, but it has also fostered a noxious culture of plunder and entitlement in the gambling casinos of Wall Street. After each thundering sell-off during the bust phase, crony capitalist gamblers have been gifted with ill-gotten windfalls during the Fed’s subsequent maniacal money printing spree.

Worse still, this trash-to-riches syndrome has unfolded so consistently since the late 1980s that there now exists a marauding gang of permanent vulture-speculators who impudently claim entitlement to any and all action by the state that might be needed to quickly reflate their gleanings from the bottom. The passel of hedge funds led by Elliot Capital which blackmailed the Obama White House into paying billions for the worthless debt of Delphi during the GM bailout is only one especially odious example.

In this context comes Bruce Berkowitz “scolding” and firing “salvos” at Washington from the front page of the Wall Street Journal. As it has happened, the usually craven denizens of the beltway have so far managed to ignore his petulant demands for a multi-billion payday on the worthless Fannie and Freddie preferred stock that his fund scooped up after the housing bust. Recall, these were the securities issued in 2008 at $25 per share to shore up the tottering housing finance agencies just before Hank Paulson’s bazooka sputtered.

Not inappropriately, when the Republican White House nationalized Freddie and Fannie in September 2008 these preferred shares plunged to 25 cents—-their true value all along. The fact is, the so-called GSEs do not “earn” profits; they merely book bloated accounting margins that reflect nothing more profound than the fact that Freddie and Fannie drastically underpay for renting Uncle Sam’s balance sheet. As finally became official when the U.S. Treasury threw them a $180 billion lifeline, the GSEs are now—and have always been—a branch office of the U.S. Treasury Department.

The only reason Freddie and Fannie are not prosecuted for filing fraudulent accounting statements, therefore, is the beltway fiction that they are “off-budget”. This convenient scam was first invented by Lyndon Johnson to magically shrink his “guns and butter” fiscal deficits, but it has since metastasized into a giant business fairy tale—namely, that behind the imposing brick façade of Fannie Mae there is a real company generating value-added services that are the source of its reported profits and current multi-billion pink sheet valuation. In fact, there is nothing behind those walls except a stamping machine that embosses the signature of the American taxpayer on every billion dollar package of securitized mortgages it guarantees and on all the bonds it issues to fund a giant portfolio of mortgages and securities from which it strips the interest.

If we wanted to have honest socialist mortgage finance, a handful of GS-14s could run Freddie and Fannie out of the U.S. Treasury building. Civil servants could emboss the taxpayers’ guarantee on every family’s home mortgage just as proficiently as the make-believe business executives who populate the GSEs today; and in the process we could dispense with the sheer waste involved in applying GAAP accounting to the operations of a mere government bureau.

In an alternative political universe not corrupted by crony capitalist mythology about the elixir of homeownership, of course, there would be no need for a Treasury Bureau of Home Mortgage Finance. The decision to own own or rent would be made by 115 million American households based on their best lights, not the inducements and favors of the state. Markets would clear the interest price of mortgage debt and set credit terms and maturities consistent with the risks involved. Undoubtedly, rates would be a few hundred basis points higher and 30-year fixed rates mortgages quite rare. And like in the seemingly prosperous precincts of Germany, the home-ownership rate might be 55% or any other number not selected by pandering politicians of the type who pinned the 70% disaster on the wall during the Clinton-Bush era.

At the end of the day, having 40 million renter-households and 25 million mortgage-free owner-households provide (in their capacity as taxpayers) trillions of subsidized credit to upwards of 50 million mortgage-encumbered households is absurd. Yet it could be dismissed as just another expression of the capricious and random shuffling of income among American citizens that is the tradecraft of the Washington puzzle palace.

Unfortunately, the reality is not so anodyne. In order to hide this random redistribution mischief, the Treasury Bureau of Home Mortgage Finance has been gussied-up to form the simulacrum of a profit-making enterprise—otherwise known as a GSE. In that posture, the GSEs have been repeatedly plundered by insiders like Franklin Rains, the 90 million dollar man who drove Fannie off the cliff; and by fast money stock speculators who managed to drive the combined market cap of Freddie and Fannie to the lunatic level of $140 billion during their hay-day at the turn of the century; and by the Wall Street dealers and so-called fund managers who inventory trillions of GSE debt securities in order to scalp profits from the economically pointless spread between regular treasury bonds and the GSE variant of the same thing.

All of these hundreds of billions were pocketed by adept cronies and speculators in the various debt, equity and preferred securities of the GSEs during the decades culminating in the 2008 financial crisis. Given the trauma of those events, Secretary Paulson’s desperate and ill-disguised nationalization of Freddie and Fannie should have put an end to the plunder.

But it hasn’t because there is no end to the zero cost-of-goods carry trades by which speculators scoop-up and fund financial assets—busted and not—during the Fed’s money printing marathons. Likewise, there is no end to crony capitalist marauders like Berkowitz, who have the temerity to demand make-wholes from the state, and K-Street hirelings—lawyers, accountants and consultants— who are skilled at the manufacture of specious public policy rationalizations for outright thievery.

So now comes the patented crony capitalist rush. The worthless Freddie and Fannie preferreds have lately erupted from $0.25 per share to $12, meaning that some speculators have already garnered a paper return of 48X. And why did this revival miracle transpire? Quite simply because Berkowitz’s Fairholme Capital and his posse of punters—-John Paulson, Perry Capital and Pershing Square, among others—have taken turns bidding up the paper.

Meanwhile, their deplorable plan to do the American people a favor and swap these bogus securities for those of a new tax-payer underwritten, mortgage guarantee stamping machine, has but one objective—that is, to put a statutory floor under the current $12 per share price and enable them to dicker with Capitol Hill staffs for an ultimate take-out at par($25) under the guise of “privatization”. The larceny intended here is not modest: the payday for Berkowitz and his hedge fund posse would amount to $35 billion on toxic paper which was purchased for rounding errors.

To be sure, Berkowitz and his sharpies blather that Freddie and Fannie have now returned $200 billion to the US Treasury, thereby repaying the original $180 billion drawdown, with some change to spare. But what hay wagon do they think even the clueless officialdom of Washington rides upon? Roughly $50 billion of that was for writing-up a “tax asset” that had earlier been written-down, owing to the fact that absent nationalization the GSEs had no prospect of booking even accounting income in the future. And the remaining $150 billion represents dividends paid to the Treasury since 2009 based on using Uncle Sam’s credit card to issue the bonds and guarantees which fund the assets from which these so-called GSE dividends are scalped.

In other words, the Berkowitz Gang wants to be paid a king’s ransom for ownership shares in what amounts to a bureau of the US Treasury. And yet these con men pound the table demanding to “wake up the (GSE) boards” so that they will execute their “fiduciary responsibility”. Indeed, so shameless are Wall Street’s princes of plunder that Berkowitz told a skeptical CNBC questioner last fall “we’ve helped before with AIG”, and that he now merely seeks a “win-win” to “help with jobs, help with the economy, help with the dream of homeownership”!

That gibberish is the measure of the crony capitalist deformation that has infested the nation’s financial markets and system of political governance. The obvious thing for Washington to do is close the doors at Fannie and Freddie and allow their $5 trillion portfolio to run-off in the manner of any liquidation. And if it must subsidize home mortgage credit, just bring back the metal filing cabinets in the Treasury Building where the so-called “secondary mortgage market” was birthed in 1938. Yet what it dare not do is succumb to the bogus bombast of the punters and sharpies who troll the financial wreckage inexorably created by the Fed’s serial bubble machine.

If it does, the people will find their pitchforks and torches—–one of these days.

Dismantling of US Bill of Rights Proceeds Apace … |

Dismantling of US Bill of Rights Proceeds Apace … |.

February 28, 2014 | Author 

Another Amendment Bites the Dust

Back in October, the WSJ reported on an interesting case about to be heard by  the Supreme Court. Apparently prosecutors are more and more often rigging trials by means of civil forfeiture. By simply confiscating the assets of the accused, the accused can no longer pay for a defense lawyer of their choice. This makes life for the prosecution a lot easier, but it appears to be in conflict with the 6th amendment, at least in spirit. The amendment states:

“In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury of the State and district wherein the crime shall have been committed, which district shall have been previously ascertained by law, and to be informed of the nature and cause of the accusation; to be confronted with the witnesses against him; to have compulsory process for obtaining witnesses in his favor, and to have the Assistance of Counsel for his defence.

(emphasis added)

One could of course argue that a court-appointed lawyer is after all counsel as well (in fact, the prosecution did so argue in the case discussed below), but the countless innocents found vegetating on death row after DNA analysis became available could probably tell you a thing or two about the quality issues occasionally associated with that option.

The WSJ wrote at the time:

“On Oct. 16, the Supreme Court will hear oral arguments on a claim brought by husband and wife Brian and Kerri Kaley. The Kaleys are asking the high court to answer a serious and hotly contested question in the federal criminal justice system: Does the Constitution allow federal prosecutors to seize or freeze a defendant’s assets before the prosecution has shown at a pretrial hearing that those assets were illegally obtained?

Such asset freezes often prevent a defendant from hiring the trial counsel of his choice to mount a vigorous defense, thus increasing the likelihood of the government extracting a guilty plea or verdict. Because asset forfeiture almost automatically follows conviction, a pretrial freeze ultimately enables the Justice Department to grab the frozen assets for use by executive-branch law enforcement agencies. It is a neat, vicious circle.

What crimes are the Kaleys charged with? Kerri Kaley was a sales representative for a subsidiary of Johnson & Johnson. Beginning in 2005, the feds in Florida investigated her, her husband Brian, and other sales reps for reselling medical devices given to them by hospitals. The hospitals had previously bought and stocked the devices but no longer needed or wanted the overstock since the company was offering new products. Knowing that the J&J subsidiary had already been paid for the now-obsolete products and was focused instead on selling new models, the sales reps resold the old devices and kept the proceeds.

The feds had various theories for why this “gray market” activity was a crime, even though prosecutors could not agree on who owned the overstocked devices and, by extension, who were the supposed victims of the Kaleys’ alleged thefts. The J&J subsidiary never claimed to be a victim.

The Kaleys were confident that they would prevail at trial if they could retain their preferred lawyers. A third defendant did go to trial with her counsel of choice and was acquitted. But the Justice Department made it impossible for the Kaleys to pay their chosen lawyers for trial.

The government insisted that as long as the Kaleys’ assets—including bank accounts and their home—could be traced to the sale of the medical devices, all of those assets could be frozen. The Kaleys were not allowed to go a step further and show that their activities were in no way criminal, since this would be determined by a trial.But the Kaleys insisted that if the government wanted to freeze their funds, the court had to hold a pretrial hearing on the question of the legality of how the funds were earned.

The Kaleys complained that the asset freeze effectively deprived them of their Sixth Amendment right to the counsel of their choice—the couple couldn’t afford to hire the defense that they wanted. Prosecutors and the trial judge responded that the Kaleys could proceed with a public defender. This wouldn’t have been an encouraging prospect for them, for while public counsel is often quite skilled, such legal aid wouldn’t meet the requirements the Kaleys believed they needed for this complex defense. Choice of counsel in a free society, one would think, lies with the defendant, not with the prosecutor or the judge.”

(emphasis added)

“Choice of counsel in a free society, one would think, lies with the defendant, not with the prosecutor or the judge” – Yes, one would certainly think so, alas…

Supreme Court Hands Government a Big Club

As criminal defense lawyer Scott Greenfield reports, the “Day the 6th Amendment Died” has arrived. He sounds slightly surprised, but he shouldn’t be. After all, the 4th amendment and habeas corpus have become victims of the GWOT and the ‘national security’ octopus with nary a peep from anyone. A great many protections once enjoyed by individuals have become, shall we say, bona peritura.

Asset forfeiture on pure suspicion is especially pernicious given the fact that nowadays everyone is basically a criminal, as a result of the vast overproduction of laws, and rules/regulations that have the force of laws. Since ignorance cannot protect one from the law, every citizen would in theory have to spend several lifetimes studying the whole shebang to make 100% certain he won’t commit at least three crimes before 9 AM. Of course this situation is not a coincidence. The fact that there are now so many laws that it has become nigh impossible not to break some of them now and then without even knowing it has become a major weapon against the citizenry in the hands of the State (only TBTF banks are completely safe, even if they e.g. launder 100ds of millions in drug money – since they are ‘systemically relevant’, they cannot be prosecuted or punished. And this after it was decided that corporations are ‘persons’. Evidently not all ‘persons’ are similarly likely to get the book thrown at them).

As the case of the Kaleys shows, such asset forfeitures can be employed on what appear to be rather flimsy grounds. Judging from the WSJ article, the government seems to be attempting to transform an apparently victimless crime – as no-one asserts that they believe their property rights were violated by the accused (how can there be theft without victims? It boggles the mind) –  into a major theft and criminal conspiracy case ex nihilo. This is all the more astonishing as one of the co-accused has already been acquitted in a separate trial. So clearly, the prosecution is seeking to gain an advantage by means of the asset forfeiture in a complicated case it might otherwise very easily lose.

Here are a few excerpts from Mr. Greenfield’s article:

“Having followed Kerri Kaley’s struggle to enable herself and her husband to fight charges of dubious merit since the circuit, an old question arose: Would the law that grew like a fungus in the bad, old drug days of forfeiture law that gave rise to such discreditable decisions as Monsanto, be perpetuated now that they were being applied to people who society didn’t inherently despise?

The Supreme Court answered the question in Kaley v. United States, a split decision by Justice Elena Kagan: Hell, yes!

[…]

The manner in which the Court structured its issue, and hence its response, foretold the outcome. Rather than approach the case as a 6th Amendment deprivation of the ability to obtain counsel to defend themselves from a spurious indictment, the majority seized upon it as a math problem.

Indictment = Probable Cause

Forfeiture = Probable Cause

Indictment = Forfeiture

Ham sandwich, anyone?  In considering the Court’s adherence to beloved legal fictions, one of which is that a grand jury indictment conclusively proves the existence of probable cause to believe that a crime occurred and the defendants committed the crime, the majority reduced the issue before it to an absurdity. What about the presumption of innocence?  What about the right to counsel of choice? What about the constraints of forfeiture to the proceeds of crime?

Meh.  It’s as if someone mumbled during their post argument conference, “you know, if we cut her a break, it’s going to look like we no longer have faith in grand jury indictments. Since everybody already knows they’re argle-bargle, that won’t end well. It looks like we have no choice here.”

There was always the other side of the equation, that pre-trial restraint of allegedly forfeitable assets is unconstitutional because it impairs a fundamental 6th Amendment right to counsel, but they blew that one in Monsanto when they were busy hating on drug dealers.  Yes, that crap invariably comes back to haunt us.”

(emphasis added)

Goodbye, presumption of innocence and due process. Which incidentally is precisely what Justice Roberts mentioned in his dissenting opinion:

“The issues presented here implicate some of the most fundamental precepts underlying the American criminal justice system. A person accused by the United States of committing a crime is presumed innocent until proven guilty beyond a reasonable doubt. But he faces a foe of powerful might and vast resources, intent on seeing him behind bars. That individual has the right to choose the advocate he believes will most ably defend his liberty at trial.”

(emphasis added)

Inspector Clouseau to Justice Roberts:

Not anymeure!

 

What is the price of a piano compared to the terrible crime that has been committed here?

 

Dismantling of US Bill of Rights Proceeds Apace … |

Dismantling of US Bill of Rights Proceeds Apace … |.

February 28, 2014 | Author 

Another Amendment Bites the Dust

Back in October, the WSJ reported on an interesting case about to be heard by  the Supreme Court. Apparently prosecutors are more and more often rigging trials by means of civil forfeiture. By simply confiscating the assets of the accused, the accused can no longer pay for a defense lawyer of their choice. This makes life for the prosecution a lot easier, but it appears to be in conflict with the 6th amendment, at least in spirit. The amendment states:

“In all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury of the State and district wherein the crime shall have been committed, which district shall have been previously ascertained by law, and to be informed of the nature and cause of the accusation; to be confronted with the witnesses against him; to have compulsory process for obtaining witnesses in his favor, and to have the Assistance of Counsel for his defence.

(emphasis added)

One could of course argue that a court-appointed lawyer is after all counsel as well (in fact, the prosecution did so argue in the case discussed below), but the countless innocents found vegetating on death row after DNA analysis became available could probably tell you a thing or two about the quality issues occasionally associated with that option.

The WSJ wrote at the time:

“On Oct. 16, the Supreme Court will hear oral arguments on a claim brought by husband and wife Brian and Kerri Kaley. The Kaleys are asking the high court to answer a serious and hotly contested question in the federal criminal justice system: Does the Constitution allow federal prosecutors to seize or freeze a defendant’s assets before the prosecution has shown at a pretrial hearing that those assets were illegally obtained?

Such asset freezes often prevent a defendant from hiring the trial counsel of his choice to mount a vigorous defense, thus increasing the likelihood of the government extracting a guilty plea or verdict. Because asset forfeiture almost automatically follows conviction, a pretrial freeze ultimately enables the Justice Department to grab the frozen assets for use by executive-branch law enforcement agencies. It is a neat, vicious circle.

What crimes are the Kaleys charged with? Kerri Kaley was a sales representative for a subsidiary of Johnson & Johnson. Beginning in 2005, the feds in Florida investigated her, her husband Brian, and other sales reps for reselling medical devices given to them by hospitals. The hospitals had previously bought and stocked the devices but no longer needed or wanted the overstock since the company was offering new products. Knowing that the J&J subsidiary had already been paid for the now-obsolete products and was focused instead on selling new models, the sales reps resold the old devices and kept the proceeds.

The feds had various theories for why this “gray market” activity was a crime, even though prosecutors could not agree on who owned the overstocked devices and, by extension, who were the supposed victims of the Kaleys’ alleged thefts. The J&J subsidiary never claimed to be a victim.

The Kaleys were confident that they would prevail at trial if they could retain their preferred lawyers. A third defendant did go to trial with her counsel of choice and was acquitted. But the Justice Department made it impossible for the Kaleys to pay their chosen lawyers for trial.

The government insisted that as long as the Kaleys’ assets—including bank accounts and their home—could be traced to the sale of the medical devices, all of those assets could be frozen. The Kaleys were not allowed to go a step further and show that their activities were in no way criminal, since this would be determined by a trial.But the Kaleys insisted that if the government wanted to freeze their funds, the court had to hold a pretrial hearing on the question of the legality of how the funds were earned.

The Kaleys complained that the asset freeze effectively deprived them of their Sixth Amendment right to the counsel of their choice—the couple couldn’t afford to hire the defense that they wanted. Prosecutors and the trial judge responded that the Kaleys could proceed with a public defender. This wouldn’t have been an encouraging prospect for them, for while public counsel is often quite skilled, such legal aid wouldn’t meet the requirements the Kaleys believed they needed for this complex defense. Choice of counsel in a free society, one would think, lies with the defendant, not with the prosecutor or the judge.”

(emphasis added)

“Choice of counsel in a free society, one would think, lies with the defendant, not with the prosecutor or the judge” – Yes, one would certainly think so, alas…

Supreme Court Hands Government a Big Club

As criminal defense lawyer Scott Greenfield reports, the “Day the 6th Amendment Died” has arrived. He sounds slightly surprised, but he shouldn’t be. After all, the 4th amendment and habeas corpus have become victims of the GWOT and the ‘national security’ octopus with nary a peep from anyone. A great many protections once enjoyed by individuals have become, shall we say, bona peritura.

Asset forfeiture on pure suspicion is especially pernicious given the fact that nowadays everyone is basically a criminal, as a result of the vast overproduction of laws, and rules/regulations that have the force of laws. Since ignorance cannot protect one from the law, every citizen would in theory have to spend several lifetimes studying the whole shebang to make 100% certain he won’t commit at least three crimes before 9 AM. Of course this situation is not a coincidence. The fact that there are now so many laws that it has become nigh impossible not to break some of them now and then without even knowing it has become a major weapon against the citizenry in the hands of the State (only TBTF banks are completely safe, even if they e.g. launder 100ds of millions in drug money – since they are ‘systemically relevant’, they cannot be prosecuted or punished. And this after it was decided that corporations are ‘persons’. Evidently not all ‘persons’ are similarly likely to get the book thrown at them).

As the case of the Kaleys shows, such asset forfeitures can be employed on what appear to be rather flimsy grounds. Judging from the WSJ article, the government seems to be attempting to transform an apparently victimless crime – as no-one asserts that they believe their property rights were violated by the accused (how can there be theft without victims? It boggles the mind) –  into a major theft and criminal conspiracy case ex nihilo. This is all the more astonishing as one of the co-accused has already been acquitted in a separate trial. So clearly, the prosecution is seeking to gain an advantage by means of the asset forfeiture in a complicated case it might otherwise very easily lose.

Here are a few excerpts from Mr. Greenfield’s article:

“Having followed Kerri Kaley’s struggle to enable herself and her husband to fight charges of dubious merit since the circuit, an old question arose: Would the law that grew like a fungus in the bad, old drug days of forfeiture law that gave rise to such discreditable decisions as Monsanto, be perpetuated now that they were being applied to people who society didn’t inherently despise?

The Supreme Court answered the question in Kaley v. United States, a split decision by Justice Elena Kagan: Hell, yes!

[…]

The manner in which the Court structured its issue, and hence its response, foretold the outcome. Rather than approach the case as a 6th Amendment deprivation of the ability to obtain counsel to defend themselves from a spurious indictment, the majority seized upon it as a math problem.

Indictment = Probable Cause

Forfeiture = Probable Cause

Indictment = Forfeiture

Ham sandwich, anyone?  In considering the Court’s adherence to beloved legal fictions, one of which is that a grand jury indictment conclusively proves the existence of probable cause to believe that a crime occurred and the defendants committed the crime, the majority reduced the issue before it to an absurdity. What about the presumption of innocence?  What about the right to counsel of choice? What about the constraints of forfeiture to the proceeds of crime?

Meh.  It’s as if someone mumbled during their post argument conference, “you know, if we cut her a break, it’s going to look like we no longer have faith in grand jury indictments. Since everybody already knows they’re argle-bargle, that won’t end well. It looks like we have no choice here.”

There was always the other side of the equation, that pre-trial restraint of allegedly forfeitable assets is unconstitutional because it impairs a fundamental 6th Amendment right to counsel, but they blew that one in Monsanto when they were busy hating on drug dealers.  Yes, that crap invariably comes back to haunt us.”

(emphasis added)

Goodbye, presumption of innocence and due process. Which incidentally is precisely what Justice Roberts mentioned in his dissenting opinion:

“The issues presented here implicate some of the most fundamental precepts underlying the American criminal justice system. A person accused by the United States of committing a crime is presumed innocent until proven guilty beyond a reasonable doubt. But he faces a foe of powerful might and vast resources, intent on seeing him behind bars. That individual has the right to choose the advocate he believes will most ably defend his liberty at trial.”

(emphasis added)

Inspector Clouseau to Justice Roberts:

Not anymeure!

 

What is the price of a piano compared to the terrible crime that has been committed here?

 

Bankruptcy In The USSA: Detroit Bondholders About To Be GM’ed In Favor Of Pensioners | Zero Hedge

Bankruptcy In The USSA: Detroit Bondholders About To Be GM’ed In Favor Of Pensioners | Zero Hedge.

First, the Obama administration showed during the course of the GM and Chrysler bankruptcy proceedings, that when it comes to Most Preferred Voter classes, some unsecured creditors – namely labor unions, and the millions of votes they bring – are more equal than other unsecured creditors – namely bondholders, and the zero votes they bring. Five years later we are about to get a stark reminder that under the superpriority rule of a community organizer for whom “fairness” trumps contract law any day, it is now Detroit’s turn to make a mockery of the recovery waterfall. As it turns out, bankrupt Detroit is proposing to favor pension funds at roughly double the rate of bondholders to resolve an estimated $18 billion in long-term obligations, according to a draft of a debt-cutting plan reviewed by The Wall Street Journal.

The breakdown to unsecured stakeholders would be as follows: 40% recovery for pension funds, 20% for unsecured bondholders – all this to the same pari class of unsecured creditors. Because just like in Europe when cashing out on CDS in insolvent nations is prohibited as it would suggest that the entire Eurozone experiment is one epic farce, regardless of how much “political capital” Goldman Sachs has invested in it, so in the US municipal creditors are realizing that in the worst case scenario, they will be layered first and foremost by all those whose votes are critical in keeping this crony administration in power.

According to the WSJ the plan calls for recovery to be divided among the unsecureds amounting to $4.2 billion, more than the originally planned $2 billion to settle claims which included about $11 billion in unsecured debt, including $6 billion in health and other benefits for retirees; $3.5 billion for retiree pensions; and about $530 million in general-obligation bonds.

There is a possibility that final “math” in the Plan of Reorg is changed before the final draft.

It was unclear from the plan reviewed by the Journal whether the city is using all of the same estimates for the money owed to unsecured creditors in its draft plan. A person familiar with the draft plan said the recovery rate for the pension funds could end lower than the balance sheet shows.

 

Details of the plan sent to creditors on Wednesday have been kept under wraps as the city and its debtholders continue to talk in closed-door mediation. The city sent its working draft to creditors in the hopes that the plan with a richer payout might spur some of them to settle with the city individually or, in the least, offer their own suggestions toward modifying the overall proposal, according to another person familiar with the matter.

 

The formal plan is expected to be filed in federal court in Detroit within two weeks, officials said. Creditors will vote on the plan, but the final decision rests with the court.

Still, the probability is that Kevyn Orr has finally gotten cold feet on playing hard ball with the unions. “The proposed plan provides the road map for all parties to resolve all outstanding issues and facilitate the city’s efforts to achieve long-term financial health,” Detroit Emergency Manager Kevyn Orr said in a statement Wednesday. Mr. Orr’s spokesman declined Thursday to comment on the plan’s details. Several creditors, who were opposed to the city’s early plans to offer creditors, including bondholders and pension funds, less than 20 cents on the dollars owed to them, also declined to comment.”

One can only imagine the amount of “Steve Rattnering” that must have gone on behind the scenes, and how much more is still set to happen, for such a skewed plan to pass the bankruptcy judge over creditor objections. Which it will once the president makes a phone call.

Then again, with contract law abrogated as was made very clear with this administration’s first steps into the “Fairness Doctrine” back in 2009 and the bankruptcy of GM and Chrysler, nothing can, or should, surprise one any more.

Peter Schiff Destroys The “Deflation Is An Ogre” Myth | Zero Hedge

Peter Schiff Destroys The “Deflation Is An Ogre” Myth | Zero Hedge.

Submitted by Peter Schiff via Euro Pacific Capital,

Dedicated readers of The Wall Street Journal have recently been offered many dire warnings about a clear and present danger that is stalking the global economy. They are not referring to a possible looming stock or real estate bubble (which you can find more on in my latest newsletter). Nor are they talking about other usual suspects such as global warming, peak oil, the Arab Spring, sovereign defaults, the breakup of the euro, Miley Cyrus, a nuclear Iran, or Obamacare. Instead they are warning about the horror that could result from falling prices, otherwise known as deflation. Get the kids into the basement Mom… they just marked down Cheerios!

In order to justify our current monetary and fiscal policies, in which governments refuse to reign in runaway deficits while central banks furiously expand the money supply, economists must convince us that inflation, which results in rising prices, is vital for economic growth.

Simultaneously they make the case that falling prices are bad. This is a difficult proposition to make because most people have long suspected that inflation is a sign of economic distress and that high prices qualify as a problem not a solution. But the absurdity of the position has not stopped our top economists, and their acolytes in the media, from making the case.

A January 5th article in The Wall Street Journal described the economic situation in Europe by saying “Anxieties are rising in the euro zone that deflation-the phenomenon of persistent falling prices across the economy that blighted the lives of millions in the 1930s-may be starting to take root as it did in Japan in the mid-1990s.” Really, blighted the lives of millions? When was the last time you were “blighted” by a store’s mark down? If you own a business, are you “blighted” when your suppliers drop their prices? Read more about Europe’s economy in my latest newsletter.

The Journal is advancing a classic “wet sidewalks cause rain” argument, confusing and inverting cause and effect. It suggests that falling prices caused the Great Depression and in turn the widespread consumer suffering that went along with it. But this puts the cart way in front of the horse.  The Great Depression was triggered by the bursting of a speculative bubble (resulted from too much easy money in the latter half of the 1920s). The resulting economic contraction, prolonged unnecessarily by the anti-market policies of Hoover and Roosevelt, was part of a necessary re-balancing.A bad economy encourages people to reduce current consumption and save for the future. The resulting drop in demand brings down prices.

But lower prices function as a counterweight to a contracting economy by cushioning the blow of the downturn. I would argue that those who lived through the Great Depression were grateful that they were able to buy more with what little money they had. Imagine how much worse it would have been if they had to contend with rising consumer prices as well. Consumers always want to buy, but sometimes they forego or defer purchases because they can’t afford a desired good or service. Higher prices will only compound the problem. It may surprise many Nobel Prize-winning economists, but discounts often motivate consumers to buy – -try the experiment yourself the next time you walk past the sale rack.

Economists will argue that expectations for future prices are a much bigger motivation than current prices themselves. But those economists concerned with deflation expect there to be, at most, a one or two percent decrease in prices. Can consumers be expected not to buy something today because they expect it to be one percent cheaper in a year? Bear in mind that something that a consumer can buy and use today is more valuable to the purchaser than the same item that is not bought until next year. The costs of going without a desired purchase are overlooked by those warning about the danger of deflation

In another article two days later, the Journal hit readers with the same message: “Annual euro-zone inflation weakened further below the European Central Bank’s target in December, rekindling fears that too little inflation or outright consumer-price declines may threaten the currency area’s fragile economy.” In this case, the paper adds “too little inflation” to the list of woes that needs to be avoided. Apparently, if prices don’t rise briskly enough, the wheels of an economy stop turning

Neither article mentions some very important historical context. For the first 120 years of the existence of the United States (before the establishment of the Federal Reserve), general prices trended downward. According to the Department of Commerce’s Statistical Abstract of the United States, the “General Price Index” declined by 19% from 1801 to 1900. This stands in contrast to the 2,280% increase of the CPI between 1913 and 2013

While the 19th century had plenty of well-documented ups and downs, people tend to forget that the country experienced tremendous economic growth during that time. Living standards for the average American at the end of the century were leaps and bounds higher than they were at the beginning. The 19th Century turned a formerly inconsequential agricultural nation into the richest, most productive, and economically dynamic nation on Earth. Immigrants could not come here fast enough. But all this happened against a backdrop of consistently falling prices.

Thomas Edison once said that his goal was to make electricity so cheap that only the rich would burn candles. He was fortunate to have no Nobel economists on his marketing team.They certainly would have advised him to raise prices to increase sales. But Edison’s strategy of driving sales volume through lower prices is clearly visible today in industries all over the world. By lowering prices, companies not only grow their customer base, but they tend to increase profits as well. Most visibly, consumer electronics has seen chronic deflation for years without crimping demand or hurting profits. According to the Wall Street Journal, this should be impossible.

The truth is the media is merely helping the government to spread propaganda. It is highly indebted governments that need inflation, not consumers. But before government can lead a self-serving crusade to create inflation, they must first convince the public that higher prices is a goal worth pursuing. Since inflation also helps sustain asset bubbles and prop up banks, in this instance The Wall Street Journal and the Government seem to be perfectly aligned.

» Household Gun Ownership Surges In 40 Year Trend Reversal Alex Jones’ Infowars: There’s a war on for your mind!

» Household Gun Ownership Surges In 40 Year Trend Reversal Alex Jones’ Infowars: There’s a war on for your mind!.

 

Steve Watson
Infowars.com
January 10, 2014

The number of households owning guns in 2013 has surged to 39 percent, a five point increase on 2012 figures, and signaling that a general decline in gun ownership may be reversing.

A survey by The Economist and YouGov found that almost 4 in every 10 US households now have guns. A slim majority of 56 percent say they do not keep guns at home.

The poll found that 30 percent of households with guns identify as Democrat, while 49 percent say they are Republican.

Gun sales hit new records in 2013

Gun control proponents have routinely argued that a large increase in gun sales in recent years is not a reliable indicator of increasing gun ownership popularity, because the same individuals may be buying multiple firearms. These latest figures, however, are more difficult to dispute.

Indeed, the aggressive push for increased gun control by the government in the last year, seems to have been the driving force for actually increasing gun ownership among American households.

According to the General Social Survey, the leading societal trends data source in the US, household gun ownership has been in decline for four decades. In the 1970s gun ownership was at 50 percent, falling slightly to 49 percent in the 1980s, 43 percent in the 1990s, and down to 35 percent in the last decade. In 2012, the figure was at 34 percent, meaning that the general trend has been halted and reversed.

The real trend of gun ownership has not gone unnoticed by investors, with stocks in gun companies soaring. According to The Wall Street Journal’s Market Watch, “those who bought [stock in] Smith & Wesson in the aftermath of [the heinous crime at Sandy Hook Elementary] have made profits of more than 60 percent.”

Those who bought Sturm, Ruger & Co. stock have made profits of “nearly 80 percent.” These investments beat “the overall stock market by more than two-to-one.” the report notes, concluding that “Gun control is dead as an issue.”

The latest Economist and YouGov poll also found that more Americans believe it very unlikely (31%), or somewhat unlikely (27%) that new gun control measures will pass, than those who believe it very likely (10%) or somewhat likely (24%).

When asked whether gun control laws should be made more strict, 48 percent said yes, while a total of 49 percent said there should be no change or that gun laws should be made less strict.

Gun proponents and pro Second Amendment rights groups believe that crime statistics often cited by the government have been spun to suit the Obama administration’s crack down on gun ownership.

As Alex explains in the following clips, more accurate figures can be garnered from the FBI’s analysis, which concludes that increased gun control directly correlates with more gun related crime, as more individuals are left unarmed and defenseless.

—————————————————————-

Steve Watson is the London based writer and editor for Alex Jones’ Infowars.com, andPrisonplanet.com. He has a Masters Degree in International Relations from the School of Politics at The University of Nottingham, and a Bachelor Of Arts Degree in Literature and Creative Writing from Nottingham Trent University.

 

 

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