Market Meltdown Warning: Institutional Investors Are Offloading Stocks to Retail Buyers (That’s Us)

As the Dow Jones appoaches 13,000 and continues to break through multi-year highs, reports over the last several months suggest that the smart money, including major trading houses and hedge funds, is heading for the exits. The latest report comes to us from none other than government bailout darling Goldman Sachs:

Earlier today we got our first clue that the smart money has stopped “distribution” and is now offloading to retail after we saw the first equity fund inflow, however tiny, in months, and only the second one out of 37 outflows since April, as reported by ICI. The second and far more important one comes from today’s Goldman sales roundup, which confirmed that following today’s latest borderline ridiculous meltup, retail investors looking for the sucker at the poker table, wouldn’t be able to find one. Here’s why. Quote Goldman: “As has been the recent trend, our cash flow remains better to sell, both from long-only and hedge funds.” And there you have it: smart money (well, relatively so) has “recently” been using every melt up chance it gets to dump the bags with the E*Trade baby. Third and final proof: “ETF flow however skewed toward better buying.” At this point retail investors may want to ask themselves: what do they know that the others, who are actively selling to them, don’t.
Source: Zero Hedge

In late November 2011, it was reported that a silent run on the banks in Europe had already begun:

As is generally the case in the financial community, the big investors which include large sovereign wealth funds and behemoth financial institutions, are one upping the public by getting out while the gettin’ is good. While mainstream media makes it seem like we are moving in a positive direction with respect to Europe, one thing should be clear: it’s a sham. This the same thing we were being told two years ago, a year ago, a month ago, a week ago. Nothing could be further from the truth.
…
Business Inside reports that a run on Europe has begun, and large institutional players are liquidating their exposure to European bonds and other assets:
Until recently, the concern about Europe has been mostly theoretical–a potential train-wreck that would occur if/when the world’s lenders decided that the continent’s problems extended beyond the basket case known as Greece and cut lending to Europe’s “core.”
Well, that concern is no longer theoretical.
It’s happening.
The world’s lenders are increasingly deciding that it’s better to be safe than sorry, and they’re pulling their money out of Europe.
Source: The Daily Sheeple

Best Places in the World to Retire

By the staff of International Living

If you had $20,000 a month to retire on — you could live lavishly pretty much anywhere on the planet. But we’re interested in the places where you can live that lifestyle on one-tenth the budget... Places where you can have a maid clean for you...hire a gardener... wake up to a view...have great health care, eat well, enjoy the finer things in life — for less than $2,000 a month. You may be surprised how many there are... Months ago, our far-flung editors and in-country advisers began collecting all the data and details that inform our annual Retirement Index. To compile it, we evaluate and rank countries around the world according to eight crucial categories: real estate, special retirement benefits, cost of living, ease of integration, entertainment and amenities, health care, retirement infrastructure and climate. This is a qualitative assessment, based on real-world data gathered on the ground. For each category in our Index, we looked closely at what matters most to you when you’re considering an overseas retirement spot — everything from the price of bread to how easy it is to make friends or stay in touch with family. We considered a vast range of data points, from the average humidity to the cost of a taxi. And with costs in mind, we examined prices for real estate, rentals, and utilities like water, electricity, and cable TV. We looked at costs for groceries, eating out, even specific medical procedures. We took into account what kind of discounts retirees can get on travel, taxes and entertainment. And we considered whether there were direct flights back home...how many and how long they are, too. And we asked: What is the Internet like? Do you need a car? Can you catch a movie in English? Are the people friendly? Does it rain? In effect, we asked all the questions you should ask when you’re considering a retirement overseas. This year’s Top 19 foreign locations are listed below: Numbers and rankings don’t tell the whole story, of course. When it comes to relocating overseas, there is no such thing as “one size fits all.” So the staff and global correspondents of International Living also recorded a wide range of boots-on-the-ground testimonials from folks who have retired to these various foreign locales. Take Daphne Newman, who lives in Caribbean Honduras. She’s spending just $1,400 a month to live yards from a white-sand beach on the island of Roatan. Only a three-hour flight from the US, English- speaking Roatan with its world-class reef just offshore, is an easy place to make friends and fit in. It lands mid-table in this year’s Index. Jack Griffin and his wife Margaret have opted, by contrast, for city life in Nicaragua. When the stock market crashed and the value of their home in the States plummeted by 30%, they began to worry about how to fund their retirement. The final straw came with a 37% hike in their annual health-insurance premium. At age 60, they felt they deserved the retirement they had worked for all their lives, so they found a new home in Managua, the country’s capital. Today their international medical insurance costs them 62% less than their policy did back home (yet their local hospital is internationally accredited and the doctors speak English). Retired now without money worries, they spend their days exploring, horseback riding, going to the beach or gym, and doing yoga. They have a full-time maid and a gardener and, says Jack, “We do it all for less than half the cost of a moderate lifestyle back home in Atlanta, Georgia.” Chuck and Jamie Bilbe, ready to retire in Florida, found themselves in a situation similar to the Griffins’. “We were concerned that our retirement savings wouldn’t see us through, so we began looking overseas for a place where our ever-shrinking nest egg might last longer,” says Chuck. Now they live in Corozal, Belize, their cost of living is much lower than it was in the States, but that’s not the greatest appeal. What they say they like most is the Old-World lifestyle. “Like Florida in the 1950’s,” they say. “We’re eating better, sleeping better and enjoying social activity much more now than we did before.” It’s not just destinations south of the States that appeal. Pam Griner Leavy and her husband Jim are just two of the more than 100,000 American expats living in France. They’re retired in Paris on a reasonable $3,149 a month. “There are so many things for free here, or reasonably priced...big-city life is good,” says Pam. In Asia you can live comfortably for less than $1,000 a month on a powder-sand beach in Thailand. Up the budget just a bit and you can afford First-World comforts and conveniences in colonial Penang Island, Malaysia. Keith Hockton and his wife Lisa live there, where they rent a sea-view apartment for $1,000 a month — it comes with a shared pool and gym — and they eat out five nights a week, keep a small sailboat, enjoy cycling through the botanic gardens. Their total budget is $1,719 a month. In Brazil, expats with $2,150 a month can live a block from the country’s best beaches in Fortaleza. In Boquete, Panama, Karl and Liz Parker need just $2,000 a month to fund their life in a place that provides lavish highland views in a near-perfect climate. Panama’s retiree-benefit program provides them discounts on nearly everything, too, which helps keep their costs down. In Cuenca, Ecuador, Douglas Willis, his wife and two children live on just $1,000 a month. In Costa Rica’s Central Valley, Sharon and Lee Harris bought a townhouse in Heredia for $75,000, and pay only $40 a month for healthcare coverage as members of the Caja, the country’s excellent national healthcare system. Wherever the locale they’ve chosen — beach, city, highland, valley — these expats all have one thing in common: They’re living the lives they’ve always wanted for much less than they ever dreamt they could. This 2012 Retirement Index covers all the bases, revealing a wealth of choices when it comes to comfortable retirement living abroad. Choices you don’t have to be wealthy to take advantage of. Regards, The International Living Team for The Daily Reckoning

Bill Bonner on "Christians" and politics......

** “Hey Bill,” writes a Dear Reader, “How can you say America is going to Hell? We’re the most Christian country in the world.”

The trouble with Christians is that from time to time they render unto Caesar far more than he deserves...and lose sight of their own faith. Hardly had the martyrdoms stopped under Emperor Constantine than early Christians began pointing the figure, calling one another heretics...and then murdering each other. 

Christian crusaders sacked the Christian city of Constantinople on their way to the Holy Land ...where they did even worse mischief. In the 15th century, Lutherans under Charles V gave Rome a worse sack than the barbarians had a thousand years before. They raped nuns, murdered priests, and stole whatever they could carry off. 

And now, once again, Christian mobs are calling for blood. Jon Utley, who we met Tuesday night, explains why America’s evangelical Christians are an ungodly bunch. Logically, they should support Ron Paul. He opposes abortion, gay marriage and promiscuity. He’s never been divorced. Two of his brothers are ministers. And he’s a Baptist. What more could they want?

What they want, Utley explains, is to live by the sword:

Why...are evangelical leaders now opting for Santorum, and before him Gingrich? The one big area of disagreement with Ron Paul is war; foreign wars and the domestic one against drugs. For this they oppose him. Santorum supports unending war in Afghanistan, backing Israel without limit and a new war against Iran.

Earlier there was a major far leftist candidate who supported all the issues that evangelicals oppose, and was a vocal proponent for expanding Israeli settlements on the West Bank and promoting the war on Iraq. He was overjoyed when open homosexuality became allowed in the military, he supports abortion, gay marriage and the leftist agenda for big, intrusive government; power to labor unions as well as expanded, unconstitutional police powers within the US. Evangelicals adore him and went all out to support him 2006, when he lost his primary race and ran as an independent for the Senate. He is Senator Joseph Lieberman of Connecticut.

All this shows how evangelical leaders put support for wars ahead of their social values. Their support includes every new law giving Washington ever greater police powers over American citizens, such as the Patriot Act, Military Commissions Act and the recent National Defense Authorization Act which tear asunder much of the Bill of Rights. Most also supported torture of prisoners of war (with the notable exception of Chuck Colson of Prison Fellowship). All this comes with their “social values.”

They loved George Bush. They were major supporters of the two wars against Iraq and the occupation of Afghanistan. Fear and ignorance of the outside world joins together with a belief that God uniquely favors America. Mostly poorer Southerners they also have strong affinity for the American military and its industrial complex. In addition, author Chris Hedges has written about how they are joined by many Northern blue collar families hurting from new technology, globalization, and poor schools in seeing government as out to undermine their communities and social values. Their solace is to hope for Armageddon.

Evangelicals like to quote a biblical text that God favors those who favor the Jews. However, for them they mean only Jews who make wars and contribute to chaos in the Middle East. Jewish peacemakers are cursed in their view. No tears were shed for Yitzak Rabin who negotiated peace with the Arabs until Israeli fanatics killed him. Indeed Pat Robertson said that Rabin was killed because he was trying to thwart God’s plans.

Herein lies their antipathy to Ron Paul, who in all other respects is a family values conservative. Indeed, most of them are Baptists who used to look upon Catholics with suspicion. Today they would prefer Senator Santorum or Newt Gingrich, both Catholics, to Ron Paul, who is Baptist. Santorum is no libertarian believer in limited government (he would use government to enforce his social values) and urges absolute support for Israel and the military industrial complex. These evangelicals don’t want peace because it would mean postponing Armageddon. That’s why their leaders oppose Ron Paul.

Jon Basil Utley is Associate Publisher of The American Conservative.

Regards,

Bill Bonner
for The Daily Reckoning

Tax Laws, Corruption and Other Reasons to Expatriate

Reporting from Buenos Aires, Argentina...


Quote of the day "Only to say that, as a general rule, people find themselves treated much better as guests in one country than slaves in another."


ere’s a meaningless abstraction for you, Fellow Reckoner. You ready? 

US GDP grew at an annualized rate of 1.7% for 2011.

Now, what does that sentence actually tell us? What does it reveal about life or the quality of it; about the long arc of history and where we are along it; about the Heavens above us, the Hells below and our place in the present somewhere in between? What useful piece of information does this arrangement of letters and numbers divulge that has this morning’s news wires so abuzz with excitement? 

What, if anything, does it really say? 

Nothing. Well, nothing important anyway. It simply tells us that a measurement with no meaningful connection to reality has, in an attempt to quantify the size of something that does not exist, moved in a direction that does not matter. 

Frank Shostak, an adjunct scholar at the Mises Institute, sums the GDP fraud up nicely:

“The GDP framework gives the impression that it is not the activities of individuals that produce goods and services, but something else outside these activities called the ‘economy.’ However, at no stage does the so-called ‘economy’ have a life of its own independent of individuals. The so-called economy is a metaphor — it doesn’t exist.”

But let us imagine for a moment that there was such thing as an economyindependent of the individuals who comprise it. The GDP metric still provides, at best, a shoddy way to measure “it.” There is no accounting, for example, for the immense time, effort and natural resources that go into building a good/providing a service that nobody actually wants. Consider the infamous Cash for Clunkers disaster that goosed 2009’s GDP reading...or the payroll numbers of Census employees that pumped up 2010’s read.

According to the first example, the more goods that get destroyed prematurely...the higher GDP goes up! Likewise, in the second example, the more people are employed to perform meaningless tasks...the higher GDP does soar! Following this twisted logic, why not simply bulldoze every house in America and put the population to work rebuilding them from scratch?

Sure, nobody would have a roof...but everybody would have a job fixing one! Plus, GDP would be sky-high. Welcome to your workers’ paradise, comrade! 

But we’ve been down this rabbit hole before. And it’s Friday. The sun is shining here in Argentina’s capital city and the pretty people have already taken to the plazas for their afternoon cafés and cervezas. We’re not in the mood for tussling with statist newspeak jargon, for disentangling the government’s web of misleading euphemisms and dysphemisms, for straightening out crooked statistics and setting right wrongheaded theories. 

We’re in the mood for some good news today...something to welcome the weekend along a bit. Thankfully, this world is rich with uplifting stories. Ah, why here’s a piece of news that brought a smile to our dial earlier in the week: 

According to National Taxpayer Advocate Nina E. Olson, approximately 4,000 people gave up their [US] citizenship from fiscal year 2005 to FY 2010. Numbers were up sharply since the Great Correction began in 2008, “from 146 in FY 2008 to 1,534 in FY 2010” said the article we read. The rate quickened further last year, with 1,024 Americans ditching their citizenship during the first two quarters of FY 2011 alone. 

To be sure, the number of Americans “making the chicken run” is, in absolute terms, still very small. But the trend is still young...and, in our opinion, likely to continue to gather pace as the empire crumbles. Not that we have anything against one or the other government in particular. They’re all comprised of thugs and phonies. Only to say that, as a general rule, people find themselves treated much better as guests in one country than slaves in another. Besides, freedom takes small victories when and where she can find them these days. 

The study cites the “confusing complexity” of the US tax code and “bait and switch” tactics used by the IRS to lure in victims behind on “payments” as the primary two reasons for the uptick in permanent expatriation. 

As to the first reason, we harbor no doubts. Last year’s US tax code weighed in at 71,684 pages in length. According to the website, Political Calculations, that’s up from roughly 500 pages too many (read: 500 in total) in 1940. We have no idea if those numbers are correct...but they seem sufficiently absurd to be at least approaching the truth. Which causes us to wonder, as it did a Fellow Reckoner earlier in the week... If something that takes the equivalent of 55 War and Peaces to explain does not satisfy the qualifications of void for vagueness, we’re not sure what does.

“As a business owner who has survived 2 IRS audits,” writes our tortured reader, “I can personally attest that no one person alive on this earth understands the entirety of the IRS code; no lawyer, tax advisor, IRS agent or justice of the court. Literally thousands of terms and conditions in the code are so convoluted and confusing to the point that 5 accountants (or agents, or judges) considering the same point in question come to 5 differing conclusions proves my point.

“After both of my audits I received a nominal refund from Uncle Sam, and wrote a larger check to my CPA. The US tax code is completely corrupt, and certainly should be ruled ‘Void for Vagueness’.”

Nor do we doubt, for a moment, the second reason cited for the increase in citizenship renunciations. Apparently, reads the article, the naughty boys and girls at the IRS have been “telling Americans they can resolve their unpaid taxes under...‘older voluntary disclosure programs with the promise of reduced penalties, only to find themselves subjected to steeper penalties.’”

Well, what did you expect, Fellow Reckoner? It’s called honor among thieves, not honorable thieves. These are people who would turn in their own grandmothers if they found a dotless “i” or a crossless “t” on the ol’ dear’s tax return. You have to beamong them if you don’t want your own pockets picked. 

But then, what kind of horrible fate is that...where one becomes the very evil they despise in order to protect themselves from it? 

Hmmm...we don’t know. Try writing your congressman. He surely will.


Joel Bowman
Daily Reckoning