Kerry Summary: “There Will Be Costs”

Kerry speaks. The punchline:

  • KERRY SAYS RUSSIA NOT PREPARED TO TAKE STEPS BEFORE REFERENDUM
  • KERRY SAYS U.S. AND INTERNATIONAL COMMUNITY WILL NOT RECOGNIZE OUTCOME OF CRIMEA REFERENDUM

And of course, the hollow threats – the costs are back.

  • KERRY SAYS THERE WILL BE COSTS IF RUSSIA DOES NOT CHANGE COURSE
  • KERRY SAYS IF RUSSIA DOES ESTABLISH FACTS ON THE GROUND THAT THREATEN UKRAINIAN PEOPLE ‘THAT WILL BEG AN EVEN GREATER COST’

Everything else was superfluous:

  • KERRY SAYS TALKS WERE `CANDID, DIRECT’
  • KERRY SAYS HE, LAVROV DISCUSSED FREEZE ON MILITARY DEPLOYMENTS… and?

But before you accuse him of slacking, Kerry put in a solid workday into it:

  • KERRY SAYS HE HAD 6 HOURS OF TALKS WITH LAVROV, and
  • KERRY SAYS HE AND LAVROV TO STAY IN TOUCH IN NEXT FEW DAYS

In summary: Kerry came, spoke with Lavrov, and all he had to show for it was some $50k in taxpayer funds spent for the first class ticket to London.


    



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“World’s Greatest Hedge Fund In History” Generated $91 Billion Profit In 2013

While investors enjoy collecting and reading the monthly and year end letters by distinguished hedge fund managers, the only one that really matters is the annual report by the world’s “greatest hedge fund in history” (not our words, those of Warren Buffet). It is here where we find that in 2013, the Fed generated a record $90.5 billion in Interest Income, surpassing the previous all time high of $88 billion set in 2011.

 

However, despite the record surge in profits, this year the Fed’s remittances to the Treasury fell materially from 2012 (due to the absence of one-time gains), and were virtually unchanged for the past 4 years, at just shy of $80 billion.

 

But what is most disturbing is that the Fed is getting increasingly less bang for the buck courtesy of its own ZIRP policy. This is best manifest in the declining Return on Assets: recall that in 2013 the Fed’s total assets rose by over $1 trillion from $2.9 trillion to $4.0 trillion as of December 2013, a 38% increase. And yet the profit boost was a fraction of this increase. Sure enough, ROA tumbled, and continues to drop: at 2.2% down from 2.8% in 2012, the Fed’s “efficiency” is now the lowest since QE began in 2008, when ROA was just 1.9%.

 

If there was one place where everything was normal, it is in the Fed’s salaries and benefits line. At $3.2 billion it just hit a new all time high, and posted an increase of 4.6% from 2012, a number which incidentally is far more indicative of the real cost of living increases which the Fed is happy to provide for its own employees if nobody else among the 99%.


    



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Where The Russian Troops Are – The Full “Pre-Takeover” Infographic

As we reported yesterday, Crimea is last week’s story. Now it is all about east Ukraine. In that vein, moments ago John Kerry’s latest stand up comedy routine hit the tape which contained, besides the usual laugh lines, this particular pearl:

  • KERRY SAYS RUSSIA DOESN’T YET HAVE FORCES FOR UKRAINE TAKEOVER

Is that so? We provide this map showing the latest distribution of Russian military forces on the Ukraine borders so that readers can make up their own mind.

 

And here is another map compiled by Dmitry Tymchuk, a former Ukrainian military officer, who has established an organization, the Center of Military and Political Research on Kiev, to effectively collect and gather data about military-related facts.

Kerry concluded:

  • KERRY SAYS `CONTINGENCIES’ IF RUSSIA MOVED INTO EAST UKRAINE

We’ll know just what those are by Sunday night. The only question: will Referendum Sunday be the new Lehman Sunday…

h/t @BSpringnote


    



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Russia-US “Remain At Odds” Over Ukraine; Sanctions “Counterproductive”, And The Tanks Are Coming…

With Interfax reporting that Belarus has begun full-scale military drills in a "readiness check", images from Russia and Ukraine suggest the worst-case scenario – that Russia is making preparations to invade Ukraine, not just Crimea but perhaps as far west as Kharkiv, or even beyond – is more possible. Talks have broken down:

  • *LAVROV SAYS RUSSIA, U.S. REMAIN AT ODDS ON UKRAINE: INTERFAX
  • *LAVROV SAYS RUSSIA TO RESPECT `WILL' OF CRIMEAN PEOPLE

Russia now has a massive force of tanks, troops, artillery, aircraft, and naval forces in position to potentially invade mainland Ukraine from Crimea in the south, but also from positions east and north of Ukraine.

Lavrov adds:

  • *LAVROV SAYS RUSSIA TO RESPECT CHOICE MADE AT CRIMEAN REFERENDUM
  • *LAVROV SAYS KERRY `DIDN'T THREATEN RUSSIA WITH ANYTHING'
  • *LAVROV SAYS WESTERN SANCTIONS WOULD BE COUNTERPRODUCTIVE

And subtley poitning out the hypocrisy:

  • RUSSIA'S LAVROV SAYS IF KOSOVO WAS A SPECIAL CASE THEN CRIMEA SHOULD BE A SPECIAL CASE TOO

Then Lavrov said this:

  • RUSSIA HAS HAD AND CAN HAVE NO PLANS TO INVADE SOUTHEAST OF UKRAINE – LAVROV

Which seems to run counter to the following images pouring in from across Russia of even more firepower on the move.

 

And images suggest more to come…

 

 


    



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Massive Fraud Has Been Unveiled At The EPA (Again)

Submitted by Mike Krieger of Liberty Blitzkrieg blog,

While I doubt anyone reading this will be shocked by major fraud at the Environmental Protection Agency (EPA), the potential extent of the fraud is huge, and we still have no idea how big it is.

A report released by the EPA’s Inspector General found that over 90% of sampled transactions were for “prohibited, improper, or erroneous purchases.” Worst of all, the sample size was extremely small at only 80 transactions out of 67,000 transactions during the sample period. Considering EPA cardholders spent $29 million in taxpayer dollars in 2012 with a potential 90% fraud rate, you do the math.

Oh, but the story gets even better (or worse, depending on your perspective). Examples of egregious fraud at the EPA have been well documented in the past, in fact as recently as in 2008. Absolutely nothing was done about it.

More from Americans for Tax Reform:

A report released by the Environmental Protection Agency’s Inspector General has found that EPA employees have improperly used federal charge cards to purchase everything from gym memberships to gift cards. The report indicated that over 90 percent of the sampled transactions were for prohibited, improper, or erroneous purchases, all paid for by American taxpayers. Ironically, Senate Democrats Monday night carried on an all-night filibuster in the hopes of generating even more power and funding for the EPA.

 

The report outlined nine specific internal control oversight issues, ranging from the approval of prohibited transactions by EPA officials to the outright failure to maintain transaction records.

 

Some specific instances of EPA employee misconduct were so egregious they are worth mentioning. In three instances, cardholders purchased gym memberships totaling $2,867. Two of those purchases were not even for EPA employees but for family members.

 

The report also found that the purchase of gift cards by EPA cardholders was also a problem in seven transactions. For example, in one transaction 20 American Express gift cards were purchased totaling $1,588. Additionally, the report highlighted an instance where EPA employees blatantly violated records keeping requirements in that:

Two transactions totaling $26,152 could not be located despite instructions to maintain supporting documentation. The EPA’s policy requires the retention of documentation for 3 years on a fiscal year basis. Cardholders were not attentive to this basic requirement. In two cases, the cardholders left their positions and no arrangements were made to retain the records. In another transaction the cardholder stated that records were not kept because of privacy concerns. This lack of documentation increases the risk that purchases could be fraudulent, improper or abusive.

It must also be pointed out that the report focused on only 80 transactions out of 67,000, ninety-two percent of which turned out to be prohibited or improper.For FY 2012, the EPA had “1,370 active cardholders that transacted more than $29 million in purchases.” The EPA also had “309 convenience check writers who wrote more than 1,000 checks totaling more than $500,000.” It is very likely the 80 transactions sampled are just the tip of an iceberg characterized by improper and wasteful spending of federal funds.

 

The ultimate irony is that a similar report conducted in 2008 found the exact same internal control weaknesses as those found in the most recent report conducted by the Inspector General. Due to an obvious inability of EPA officials to correct these internal control weaknesses, there is no guarantee that any of the prohibited and improper conduct by EPA employees will change.

 

Full article here.

 


    



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Crimea Prime Minister Says May Formally Join Russia Next Week

Crimea’s Prime Minister Sergie Aksenov has been very vocal this morning with comments on nationalizing the region’s banks, but the following few comments are sparking concerns:

  • *AKSENOV SAYS CRIMEA ISN’T TAKING ORDERS FROM RUSSIA
  • *AKSENOV SAYS DOESN’T ENVISAGE UKRAINIAN CIVIL WAR
  • *CRIMEA MAY FORMALLY JOIN RUSSIA NEXT WK, INTEGRATE IN 1 YR: PM

We will see what Obama, Merkel, and Ukraine’s leadership has to say about that… Turchynov, for one, has warned to be “ready for a full-scale invasion at any moment.”

 

Via Interfax,

The Crimean authorities do not consider the possibility of proclaiming independence “under the Abkhaz scenario” and think that the process of joining Russia will take up to a year, Crimean Prime Minister Sergei Aksyonov said at a briefing in Simferopol on Friday.

 

“I suppose that the transition period will last up to one year, when we will able to use all the processes and privileges in Russia comprehensively,” Aksyonov said.

 

When asked whether “the Abkhaz variant” was possible, Aksyonov said no. “No, we will not have independence. We currently think, I personally think, that Crimea should join Russia as a Russian region,” he said.

 

At the same time, when asked how quickly Crimea will be able to join Russia after the referendum is held, Aksyonov said: “In terms of passing a legislative act, I think this will be virtually next week and in regard comprehensive joining, transition period will last up to a year at most.”

Is that crossing a red line? It certainly seems from Turchynov’s words that it is…

Ukraine must be ready for a full-scale Russian invasion “at any moment,” the country’s acting president warned Thursday, as officials announced the emergency call-up of a 60,000-strong national guard force.

 

Oleksander Turchynov said Moscow was “ready” to go much further than the annexation of the Black Sea territory of Crimea, which is expected to vote to secede from Ukraine in a referendum on Sunday.

 

Only clear international pressure could halt slow the momentum of the Kremlin, he said. “All of civilized humanity supports our country,” said Mr. Turchynov. “I am sure that this united effort in the international arena, bringing together all democratic countries, can still allow us to halt this aggression.”

 

Ukraine won’t give up ‘a single centimetre’ of Crimea to Russia, Prime Minister Arseniy Yatsenyuk says


    



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Consumer Confidence Fades; Misses By Most In 15 Months

It would appear that pending wars in Europe, freezing snow storms (and droughts) in the US, and Asian credit concerns have finaly taken their toll on US consumer confidence. At 79.9 relative to an expectation of 82.2 this is the biggest miss since Dec 2012 and lowest since Nov 2013.Current conditions rose modestly but the economic outlook fell by its most in 5 months. UMich confidence remains notably below the July 2013 peak levels (which correspond quite coincidentally to the same 4 year 4 month cycle we have seen in the prior 2 cycles) despite stocks have made higher highs since then as the decoupling remains in place.

Confidence fades and is well off July 2013 peak levels…

 

As we have noted previously – this move in confidence is key…

But, it's all about confidence… investors will not be willing to pay increasing multiples unless they are confident that the future streams of earnings are sustainable and forecastable… And simply put, the current levels of Consumer Sentiment need to almost double for the US equity market tp approach historical multiple valuation levels…

 

 

 

and the cycle appears to be shifting…

Via Citi,

Is consumer confidence set to turn?

Consumer Confidence is once again following a dynamic where we see it move higher for 4 years and 4 months before beginning to collapse

  • Moves higher from 1996-2000 with a smaller dip halfway through in October 1998
  • Moves higher from 2003-2007 with a smaller dip hallway through in October 2005
  • Moves higher and so far tops out in June 2013. Also sees a small dip halfway through in October 2011.


    



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