A Horror-Show Called “Fed-Gate” May Be Coming To Your Bond Fund Soon | David Stockman's Contra Corner:
"The Financial Times is not exactly a rumor mill—-so its recent headline amounts to a thunderbolt:
“Fed Looks At Exit Fees On Bond Funds”
And so the shoes begin to fall.
Owing to the Fed’s brutal financial repression since December 2008 (i.e. zero yield on short-term funds), there has been massive scramble for yield that has driven trillions into corporate and high yield bond funds.
What this means is that liquid funds which would have normally been parked in bank deposits or money market funds have been artificially displaced.
That is, they have been chased by the dictates of the monetary politburo into far more illiquid and risky investment vehicles owing to zero yields in their preferred financial venues.
But now it is dawning on at least some of the more market savvy occupants of the Eccles Building that they have created a monumental financial log-jam waiting to happen.
In their jargon, the migration of trillions into bond funds since the financial crisis has resulted in a sweeping “maturity transformation”.
As former governor Jeremy Stein succinctly put it,
“It may be the essence of shadow banking is … giving people a liquid claim on illiquid assets.”
What Stein means is that the traditional money markets existed for a reason—even if returns were inferior to what could be obtained in longer duration fixed income securities or investments with equity-like features such as junk bonds.
Corporations and individuals who invested in money market instruments, including bank CDs, were
willing to absorb the yield penalty in return for the assurance of absolute daily liquidity that the funds in question required.
But zero return is not a market driven liquidity penalty; it is an arbitrary prohibition imposed on the market by the monetary politburo.
So now we have a giant anomaly.
Trillions of daily liquidity demanding investments are potentially stuck in bond funds which could not provide it during a crisis.
In effect, any attempt by bond funds managers to meet a surge of redemptions calls would make the crisis surrounding the Reserve Prime Fund’s “breaking the buck” in September 2008 seem like a Sunday School picnic."
Exclusive: USAF General Running for Congress Calls for ‘Aggressive Leadership’ After Tea Party Surge:
(Detroit, MI) -- A Detroit man is dead and a woman is recovering after both are shot in an attempted carjacking.
These special certificates are known today as 14(c) permits, and thousands of employers have one. Some studies claim that more than 300,000 Americans work for subminimum wage under the auspices of such permits.
"The civil rights leader also said that Pelosi has no problem when gays and lesbians insult her faith, instead choosing to speak out when Catholic leaders embrace church teaching.
"A senior adviser to the Department of Homeland Security claimed on Friday that the takeover of Iraqi cities by a deadly terrorist group is evidence that the return of a Muslim “Caliphate” is “inevitable.”
"The following is an overview of each of the Islamist figures who have found their place — in some way, shape or form — at the Obama administration’s table."
VIDEO: Marine Arrested and Institutionalized for Facebook Posts Critical of the Government: "Brandon Raub, a decorated Marine who was forcefully admitted to a mental health institution for posting Facebook posts that were at-odds with the Obama Administration’s political agenda, is now suing the federal government for the apparent civil rights violation."
"First lady Michelle Obama on Monday blasted back at critics of her school lunch program, arguing parents should ensure their children eat healthy meals.
"The IRS said it could not recover an untold number of emails to and from Lois Lerner, the former head of the IRS tax-exempt organizations unit, because of a hard drive crash. That time period — from January 2009 to April 2011 – included a critical time in the IRS’ extra scrutinizing of Tea Party and other conservative groups."
And so the shoes begin to fall.
Unless the law is changed before the projects get under way, $35 million of the nearly $469 million voters approved for construction this month will be spent to cover the costs of the prevailing wage, according to the Associated Builders and Contractors of Michigan, a statewide trade association representing the commercial and industrial construction industries.
As a result, economists are now forecasting the economy contracted at an annual rate of 1.5% to 2.4% in the first three months of the year, even weaker than the 1% contraction already reported by the Commerce Department. 
"Border Patrol agents along the southwest border have been directed not to speak with journalists after the public became aware that more than 47,000 undocumented children have illegally entered into the country over the past eight months. Most of the undocumented children crossed through the Rio Grande Valley sector and many times, they traveled alone."
"Fresh off the Michigan Legislature approving a $195 million bailout for Detroit, some elected state officials and the governor are looking to favor the city again, but this time with the statutory revenue sharing.
Then they "surgically knocked out 17 giant transformers" by shooting at them with sniper rifles for 19 minutes, the Journal reported.
"Imagine if Congress passed and the president signed a law making it a crime to utter “false, scandalous and malicious” statements “against the government.” Do you think that would violate your right to free speech?
PHILADELPHIA — Teachers in Pittsburgh are absent way too often, finds a new report.
Public pension funds are now so massively short of money to pay future claims, depending on how their liabilities are valued, the deficit ranges from $1 trillion to $3 trillion. 
