Glenn Greenwald: ‘There has been a complete breakdown in partisan or ideological divisions over how people reacted to this story’

On Tuesday’s episode of
The Independents
, civil-liberties journalist Glenn Greenwald came on for a
two-part interview to discuss his
new book

No Place to Hide
: Edward Snowden, the NSA, and the
U.S. Surveillance State
. In the first part, he talks about the
harrowing first few weeks of trying to process one of the most
significant government leaks in U.S. history:

In Part II, Greenwald talks about Snowden’s background and
motivations for leaking, and about the new cross-ideological
coalition of Americans who have joined in opposition to the
surveillance state:

Reason on Greenwald here, and
Snowden here. Past
Independents segments can be viewed at this
link
.

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China Slams US “Hypocrisy”, Tells Obama To Stop “Inspiring Militancy”

Tensions between China and the U.S. continue to grow. On Wednesday, Beijing called U.S. Secretary remark about “provocative behavior” of China in the South China Sea “inspiring militancy,” and insisted that the U.S. “stop encouraging the provocation” of the Philippines and Vietnam. As China Daily reports, China has expressed the view that the U.S. must abandon the “hypocrisy” and stop publicly support Vietnam and the Philippines in territorial disputes with China.

As RIA reports, Tensions between China and the U.S. continues to grow, experts say. On Wednesday, Beijing called U.S. Secretary remark about “provocative behavior” of China in the South China Sea “inspiring militancy,” writes China Daily .

Chinese Foreign Minister Wang Yi said in a telephone conversation with John Kerry that China insists that the U.S. “stop encourage provocation” of the Philippines and Vietnam.

 

According to analysts, so China has expressed the view that the U.S. must abandon the “hypocrisy” and stop publicly support Vietnam and the Philippines in territorial disputes with China.

 

Earlier it was reported that the Philippine government to seize the Chinese fishing boat and 11 crew members on charges of catching endangered sea turtles in the territory disputed waters of the South China Sea. Shortly before that, Vietnam demanded that China stop drilling for oil in the South China Sea.

 

Tensions between China, Vietnam and the Philippines began to increase after last week, President Barack Obama signed a new military agreement with the Philippines, which aims to persuade Asian allies of American support in case of conflict with Beijing.

 

According to experts, the reason why the conflict risks becoming much more serious than just a territorial dispute is because Philippines quickly became embroiled in the geopolitical rivalry between the U.S. and China, while the two powers are fighting for strategic dominance in the western Pacific Ocean, says Al Jazeera article “Strategic Dilemma of the Philippines, between the eagle and the dragon.”

 

Professor at the Chinese Institute of International Relations Dan Dzhankun believes that the U.S. is fully engaged in the problems encountered in the Asia-Pacific region because of its relationship with China. However, Washington’s aggressive behavior in the territory of South-East Asia is unlikely to stabilize the situation. “The Obama administration is moving away from a century of U.S. diplomatic tradition in maintaining the balance between the other two countries,” – said the expert, noting that “sabotage relations between the south-eastern countries may have important implications for the situation in the region and even the world. And fatal mistakes in strategy, which adheres Obama can not be ignored.”

Seems like the potential for “costs” are growing…




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Emails Reveal Federal Agency Ignored Conservative Media Inquiries

A series of emails
disclosed this week indicate that officials at the Center for
Disease Control and Prevention (CDC) don’t particularly like
conservative reporters and in at least one case told a scientist to
lie in order to avoid answering questions.

The Daily Caller
discovered
this after being subject to one of the federal
agency’s “freeze-outs.” The right-wing website was skeptical of a
CDC study that purported to show obesity rates in 2- to 5-year-olds
dropping by 43 percent, and of subsequent claims that First Lady
Michelle Obama’s Let’s Move! campaign played a role in the
decline.

Having emails and phone calls go unanswered, the Caller
made a Freedom of Information request:

“Karen gets very worked up whenever conservative outlets want to
do interviews,” wrote Jeffrey Lancashire, a spokesman for the
National Center of Health Statistics, a part of the CDC, in an
email to Cynthia Ogden, the lead scientist on the study.

Lancashire was referring to Karen Hunter, a senior press officer
at the federal agency.

“But that has caused us trouble in the past,” Lancashire
continued, “because it raises unnecessary flags as to why we’re
doing some interviews but not others.”…

“Tell him you can’t do an interview because you’re on leave and
unavailable due to a family activity/event (or just say you’re on
leave),” Lancashire wrote Ogden.

Ogden did not take Lancashire’s advice. She did not respond at
all to the interview request.

However, the CDC did respond to requests from other media
outlets, prompting the Caller to conclude that Ogden
wasn’t actually on leave. 

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Subprime 2.0: 125% LTV Loans Are Coming Back

Yesterday we mocked China for being desperate enough to push its tumbling housing market (which directly and indirectly accounts for some 80% of Chinese GDP per SocGen estimates) no matter the cost, that at least 20 developers were offering the kinds of mortgages that resulted in the first credit bubble crack up boom and collapse, namely “Zero money down.”

Little did we know that the US, never one to lag in the financial innovation department had once again one-upped China, by bringing back from the dead the company that according to Housing Wire was “once a poster child for pre-crash subprime lending” – Ditech Mortgage Corp. 

Don’t remember ditech? Then you certainly were not in the housing market during the peak bubble years last time around: ditech, which hasn’t been in the news in nearly five years, will also be developing co-branded and joint-ventures with financial institutions that want to offer mortgages. Supposedly, ditech is one of the better-known brands thanks to its heavy consumer advertising in the first half of the 2000s – remember the “Lost another loan to ditech!” ads?

But best of all, ditech was known as a leader in subprime. The bulk of the mortgages were interest-only, low-documentation subprimes, and ditech was a pioneer in offering 125% loans allowing the borrower to borrow more than the sale price.

So just how does Ditech plan on making its grand (re)entrance? With a bang, of course: “Ditech Mortgage Corp. is launching a new three-pronged approach to staking out territory with direct consumer lending, retail lending and correspondent lending with their 600-plus institutional partners. (In all nonformal references, the company goes with a lower-case spelling.)

This new ditech was formed from the assets from the GMACRescap estate, purchased by Walter Investment Management Corp. (WAC)/Greentree Originations in November 2012, and sources tell HousingWire that the new ownership is going all in on taking advantage of the ditech brand and the clean slate afforded by resurrecting the company from the near-dead.

 

This puts ditech in the unique position of having a clean slate on their customer operation and experience side, while at the same time working with the benefits of an established brand.

 

According to Cook, ditech conducted extensive research around what consumers most want in a home-lending partner.

 

“The fact that the ditech brand was so recognizable and highly regarded convinced us that this was the name under which we wanted to do business,” Cook said.

 

ditech’s first focus will be on partnering with financial institutions that want to provide mortgage and refinance loans to their customers.

… and only then will it resume offering 125% LTVs again, assuming of course, that by then the second, and final (because this time the central banks themselves are all in), uber liquidity bubble hasn’t popped of course.




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The Department of Agriculture Launches Proposal to Purchase Submachine Guns

The following solicitation from the U.S. Department of Agriculture almost defies belief. We’ve seen this type of bizarre behavior before, but it has mostly originated from the American Gestapo, aka the Department of Homeland Security (DHS). I highlighted this trend early last year in my post: Department of Homeland Security to Purchase 7,000 “Assault Weapons”.

Here’s a screenshot of the solicitation from the Department of Agriculture (click on the image to get to the source page):

Screen Shot 2014-05-15 at 11.05.18 AM

What is so important to understand about the current war/civil unrest cycle that the world has now entered into is that it will affect different regions and nations differently. It appears tensions in the Ukraine/Russia region and the Asia/Pacific may rather quickly erupt into a war amongst nation-states. This could ultimately lead to a world war. For the United States region, I predict more of a rebellion and civil unrest scenario that consists of the status quo versus the people. I also think its obvious the status quo knows this, which is why they are stealing everything in sight and setting up a total surveillance state. Things are going to get dicey, but the status quo is in the wrong and they will need to be tossed aside peacefully.

The solicitation can be found here.

In Liberty,
Michael Krieger.

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The Department of Agriculture Launches Proposal to Purchase Submachine Guns originally appeared on A Lightning War for Liberty on May 15, 2014.

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Total Recall: GM Pulls 3 Million More Cars Due To Problems With Brakes, Lights, Wipers And Steering

When “new” GM emerged from bankruptcy, in addition to losing billions of taxpayer funds so the government can buy a few hundred thousand labor union votes, the narrative sold to the public is that the company is a new, and vastly improved version of the legacy monster that went bankrupt in 2009, and instead of worrying about its balance sheet, the company would have the freedom to innovate and impress new customers. However, following the recent spate of scandals rocking the “new” GM, the only thing that the bankruptcy appears to have done is pushed its litigation liabilities into the pool of prepetition unsecured claims. As for the quality, well, not so much, which explains why recalls are now becoming a daily event such as the most recent one which as we learn today involves a whopping 3 million cars and trucks worldwide to fix five different safety problems that have triggered hundreds of complaints and some injuries, but no deaths.

Among the extensive components that have resulted in this most recent fiasco for the new CEO are brakes, lights, wipers and the steering wheel.

USA Today reports:

Most of the vehicles — 2.7 million — are in the U.S. They include a handful of GM’s redesigned pickups and SUVs, which have a potential steering problem.

 

It’s serious enough that GM sent those owners overnight-delivery letters Wednesday, telling them to have their trucks hauled — not driven — to dealers for inspection and repair, if needed.

 

Also included in the new recall: 140,067 new Chevrolet Malibus for brake issues, reported here Wednesday.

The good news: this announcement will allow GM to addback another $200 million in “one-time”charges to its EPS in the process almost certainly beating whatever its Q2 earnings estimate is.

The models impacted in the latest recall:

  • 2,440,591 U.S.-market, previous-generation passenger cars for a taillamp malfunction that also can disable the cruise control, traction control, electronic stability control and panic braking assist feature. Another 194,314 are in Canada and 68,819 were exported.
  • 477 full-size, 2014-model, U.S.-market pickup trucks and 2015 Chevrolet Tahoe SUVs for a tie-rod defect that can lead to a crash. Another 33 are in Canada and 10 have been exported.
  • 111,889 previous-generation Chevrolet Corvettes in the U.S., for loss of low-beam head lamps. Another 3,054 are in Canada and 5,677 more were exported. In addition, 103,158 newer Corvettes that might have the same problem get the fix in what GM calls a customer satisfaction program.
  • 19,225 Cadillac CTS 2013-2014 models for windshield wiper failures. Another 732 are in Canada, 94 in Mexico and 1,512 were exported.
  • 140,067 Chevrolet Malibus from the 2014 model year for hydraulic brake booster malfunctions. Canada has another 732 and Mexico has 1,163.

And here is where GM has been skimping on production and quality control costs:

The taillight problem that is the biggest group in the recall involves 2004-2012 Chevrolet Malibu, 2004-2007 Chevrolet Malibu Maxx, 2005-2010 Pontiac G6 and 2007-2010 Saturn Aura models. GM says their brake-lamp wiring harness has to be modified.

 

GM says corrosion causes the brake-light fault, which also can disable the cruise control, traction control, electronic stability control and panic braking assist feature.

 

The automaker says it knows of several hundred complaints, 13 crashes and two injuries, but no fatalities as a result of the condition. The company issued a technical service bulletin concerning the problem in 2008, and recalled a small group of 2005 model-year cars in January 2009.

 

The Corvette recall is because the low-beam headlights can quit working. Models from 2008-2013 with the same flaw will be covered under what GM calls a customer satisfaction program.

 

GM knows of several hundred complaints as result of the condition but no crashes, injuries or fatalities.

 

The Cadillac CTS has a potential fault that can cause the windshield wiper system to quit working after a jump start when the wipers have been left on but are restricted, such as by ice and snow. Dealers will replace the wiper module free of charge. GM is unaware of any crashes or injuries due to the condition.

This most recent recall GM brings the total number of recalls for 2014 alone to 24 and includes 12,8 million vehicles worldwide, 11,2 million of those in the U.S. (remember: recall charges are “one-time” and should certainly be added back to non-GAAP EPS).

That said, we increasingly fail to see any notable differences between the old and new GM. All that’s left now is for GM to release an anniversary edition of the Aztec and the anti-metamorphosis will be complete.




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School Hands 13-Year-Old Over to Cops for a Doodle of a Man Hanging, Lawsuit Alleges

gonna go the way of dodgeball?Another child victim of zero tolerance
policies by schools around the country. The law of
contagion
led to a freak out over a 13-year-old boy’s doodle at
a school in Beaverton, Oregon. Via
Courthouse News Service
:

[Robert] Keller, suing for himself and his son, B.R.K.,
claims that on May 2, 2013, his 13-year-old son “was interviewed at
his school, Raleigh Hills, K-8, by officers of the Beaverton Police
Department regarding an alleged threat of harm based on a doodle
[showing a person being hanged ] that was drawn during class.
B.R.K. was removed from his classroom and placed in the principal’s
office of Raleigh Hills K-8 to be questioned about offenses that he
was alleged to have committed…”

The doodling incident occurred on April 30. Keller says his son
was suspended pending a “risk assessment” and that despite telling
the school they were not allowed to interview his son without a
parent present, a school psychologist and police interviewed the
boy. Keller is seeking $100,000 for violations of his son’s Fourth
and 14th Amendment rights.

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How Malinvestment Poisons The Entire Economy

Submitted by Charles Hugh-Smith of OfTwoMinds blog,

Our Fed-fueled lottery-ticket economy will unravel with a vengeance in the years ahead.

Malinvestment–the systemic consequence of the Federal Reserve's policies of near-zero interest rates and abundant credit–doesn't just inflate destruction asset bubbles: it poisons productive assets and the entire economy.
 
Malinvestments arise when credit is cheap and abundant, as it costs speculators very little to borrow money for gambles, and they can in essence buy lottery tickets in the asset bubble of the day without having any skin in the game, i.e. without having to put any of their own money at risk.
 
The classic example in the previous housing bubble were speculators who bought houses with no-down, no-document low-interest "liar loans": with no money down and a modest interest-only mortgage payments, speculators could buy a lottery ticket in the housing mania for almost nothing, and maintain their gamble for a very modest monthly sum. Given the potential for an enormous gain should the gambler find a greater fool to buy the house in a few months, this was an entirely rational and indeed attractive bet.
 
Today's asset bubbles in stocks, junk bonds, housing, art, bat guano futures, etc. are being driven by the Federal Reserve, which has replaced the nuisance of no-document liar loans with unlimited liquidity for bankers, financiers and insiders.The super-wealthy and corporate cronies can borrow as much nearly free money as they want from the Fed, without even bothering with qualifying for the credit.
 
When credit-money is nearly free and abundant, it becomes rational to buy lottery tickets in every asset class that is soaring in a Fed-fueled frenzy of "don't fight the Fed" euphoria.
 
Longtime correspondent Joe H. explains how such perverse incentives to malinvest millions of dollars in asset-bubble lottery tickets poisons not just the market's ability to discover price but the entire economy:
 
Something that often gets overlooked in the abstract discussions of malinvestment are the potentially productive assets that get captured in the malinvestment.
 
There are 80 acres directly east of me that were subdivided into 12 lots. That happened about 6 year ago at the peak of the housing boom. Three of the lots sold. One additional lot was in process when the bottom fell out and never went to closing.
 
My neighbor to the south and west raises cattle. He has more head of cattle than he has land to feed them.
 
He approached the speculators and asked if he could fence and graze the unsold 60 acres of land until it sold.
 
They told him to pound sand. If he wanted the property he could spend the $10,000 an acre: the full asking price.
 
A full grown calf (1200 lbs) might go for $2000 at auction….but that is still not enough to support that kind of price. Further, there is no guarantee those prices will continue into the future. My neighbor said, "No thank-you."
 
The owners of the property can afford to play hardball because it costs them so little to service the debt. There is little incentive for them to activate the frozen resources in productive ways. Consequently resources that could be growing beef (or potatoes or corn or green onions) are being withheld from production.
 
And beef averages $5.30 a pound.
 
How much labor is tied up in similar locked-up ventures?
 
How much concrete, and copper, and petroleum derived products are trapped?
 
Locked up and not producing, not being reallocated to a higher value process…. because it costs virtually nothing to hold on to last week's lottery ticket in the hope that the holder will be able to redeem it in some future drawing.
 
Thank you, Joe, for explaining how malinvestment poisons productive investments and the entire economy. Issuing lottery tickets to the asset bubble du jour is the Fed's core policy, and the unintended consequences of the Fed-fueled lottery-ticket economy will come home to roost with a vengeance in the years ahead.




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“Global Bubble … Ends Very Badly” Warns ‘Death Of Money’ Rickards

DAILY PRICE
Today’s AM fix was USD 1,303.75, EUR 953.73and GBP 777.85 per ounce.           

Yesterday’s AM fix was USD 1,300.25, EUR 948.33 and GBP 775.20 per ounce.


Gold rose $12.80 or 0.99% yesterday to $1,306.10/oz. Silver climbed $0.24 or 1.23% to $19.77/oz.



Francine Lacqua on Bloomberg Television’s “The Pulse”

Gold consolidated above the key $1,300/oz level as technical buying supported gold and tensions in Ukraine and geopolitical risk remained to the forefront of traders minds.

Spot gold in Singapore traded 0.3% lower to $1,301.60/oz prior to gold popping higher and eking out gains in London trading. Silver for immediate delivery fell marginally to $19.739 an ounce in London.

Platinum lost 0.2% to $1,478 an ounce, after reaching $1,486 yesterday, the highest since March 7. Palladium slipped 0.4% to $824.75 an ounce. It climbed to $829.25 yesterday, the highest in 2 and a half years, since August 2011, due to supply risk.

Palladium has surged 15% this year on concern supply may be disrupted from South Africa and Russia, the largest producers. As palladium has gone, we expect platinum, gold and silver to follow given their strong fundamentals.


Gold in U.S. Dollars – Daily, 2014 Year To Date (Thomson Reuters)

Russia, which has been threatened with more sanctions by western nations, is the largest supplier of palladium, with South Africa the next biggest. The African country is the top producer of platinum.

Workers at the biggest platinum mines in South Africa have been on strike since January 23. Lonmin Plc will keep its platinum mines open for a second day in an effort to break the strike. Many workers were prevented from reporting for duty yesterday.


Russian Foreign Minister Sergei Lavrov said Ukraine is sliding into a civil war increaing the risk of conflict between Russia and the West. Ukrainian leaders and their international allies blamed Russia for the violence and say Russia is behind the unrest in Ukraine’s easternmost regions. Russia says that the U.S. is supporting Ukrainian nationalist militants.


This morning, futures trading volume was 10% below the average for the past 100 days for this time of day, data compiled by Bloomberg showed. Smart money continues to accumulate on dips.


Hyperinflation Risk and “Global Bubble” … “Ends Very Badly” – Rickards

James Rickards, author of best selling book, ‘Currency Wars’ and now ‘The Death of Money: The Coming Collapse of the International Monetary System’ has done another interesting interview, He joined Guy Johnson and Francine Lacqua on Bloomberg Television’s “The Pulse.”


Topics covered included the risk of the global bubble bursting, his admiration of the ECB’s Draghi, how Europe is moving in the right direction, the coming of a true Eurobond, how the “day of reckoning” is coming for China and the U.S. and the risk of financial warfare, deflation, hyperinflation and market collapse.


Interviewer (Francine Lacqua): Jim, you also have this new book out, right, saying “The Death of Money” and this basically argues that if a number of things come together, we could have financial warfare, deflation, hyperinflation, market collapse. And yet the markets are merrily going along.

Are we in a fictitious world?

Jim Rickards: I actually had breakfast with some of the leading private equity investors and CEOs this morning and, you know, privately they’ll say, look, the bank  covenants are gone, cost of funds is very close to zero, they’ve got more leverage than they’ve ever had, the U.S. inner stock exchange has greater leverage than they’ve ever had, so it looks good but this is a bubble being supported by zero interest rates, high leverage.


We all know what happens, they will collapse sooner than later.

You know, stocks could actually be higher by the end of the year, based on, I expect, the Federal pause, the taper around the middle of the year. But in the long…this is a bubble. The problem is bubbles, they last longer than we think, but when they pop, it ends very badly. This is all being floated by zero interest rates and leverage.

Find out why Singapore is now one of the safest places in the world to store gold in our latest gold guide – The Essential Guide To Storing Gold In Singapore


Interviewer (Guy Johnson):
You buy bubbles. That’s what Soros and everybody else says; initially, when you see a bubble, you buy it. So, give us your sense of the duration of this bubble. Yellen sounds very dovish still at the moment.


Jim Rickards: I agree completely, she is dovish; I think she’ll be more dovish. As I say, I expect a pause in the taper later this year. But, look, this could run on well into 2015 but the problem is the scale of it.

In 2008, all we heard about was “too big to fail”; well, guess what, the five biggest banks in the U.S. today are bigger than they were in 2008. They have a larger percentage of the banking industry assets, their derivatives books are significantly bigger, you know, so the problem is that the whole thing is bigger, which means that…risk is an exponential function of scale; when you triple the system, you don’t triple the risk, you increase it by a factor of ten or more and this is what we’re up against, this is what we’re facing.

Could start anywhere, could start in China.


Interviewer (Francine Lacqua):  And we haven’t even touched on China, the house of cards?

Jim Rickards: Yes, and I have a whole chapter in the book, “The Death of Money”, just on China. You know, the wealth management products are a Ponzi and that’s not from me, the Chairman of the Bank of China said they’re a Ponzi, so you’ve seen the Chinese banking officials saying the same thing.


The problem is the money’s going into real estate so if you’re a state-owned enterprise, and you produce steel or glass or any of the cement or any of the components for construction and you just wanna roll steel and build buildings…

I’ve been out there, I expect you have too, I’ve seen the ghost cities, I’ve seen them as far as the eye can see — completely empty.

And people say, “Well, they’ll fill up in the years ahead.” No, they won’t. I mean, that migration from the countryside to the cities is largely over, number one. Number two, it doesn’t take into account obsolescence. You can’t mothball a building; you have to occupy it and maintain it.

So, this is wasted investment. If you adjust the Chinese GDP for the amount that’s wasted, it would already be lower …

The full interview can be watched here





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