Tag: finance

Submitted by James E Miller of the Ludwig von Mises Institute of Canada,

From the desk of Cass Sunstein

Former Administrator of the White House Office of Information and Regulatory Affairs

Former appointment to NSA Advisory Panel

March 3, 2014

Hello there citizen! I hope you are enjoying your day. I also hope you are enjoying your freedom from oppression that our kind, benevolent government provides. As a former lead bureaucrat in the Obama Administration, let me assure you, Washington is working around the clock to protect you and add fulfillment to your life.

You see, without the American government, roaming bands of thieves would run rampant in our country. There would be terror in the streets. Old ladies would have their purses snatched while out for their Sunday walks. Babies would never have candy since criminals would be forever stealing it. Your right to privacy within your home would be contested by armed thugs. And your eyes and ears would be continually bombarded with propaganda by greedy corporations.

Society is always hanging by a thread. That’s why the government is here to make sure it stays secure. Yes, it’s a good thing Washington protects you. Within the state, enforcers hold a monopoly on legal force to keep you safe. If it weren’t for their tireless efforts to protect law and order, society would wither away. You should, of course, be grateful that your liberty is secure thanks to Uncle Sam.

I recently had the pleasure of returning to public life to help establish new guidelines for the unjustly scrutinized National Security Agency. Ever since the traitorous rat Edward Snowden leaked documents alleging government wrongdoing, it seems that Americans have lost faith in their government. They seem to think the government collects vast swaths of private information without court-issued warrants. They also wrongly believe they have constitutional protection for their personal belongings. This is not good. That’s why I was brought aboard to help reform the NSA and shore up support for our great overseers…I mean public servants.

Unfortunately, our recommended changes to the NSA’s policy of data collection were largely ignored by President Obama. No matter though, what Washington decides is best is always for the best. Don’t like it? When you teach at Harvard Law School, you can start criticizing how our government works. Until then, go on with your quiet, desperate lives.

Forgive me if I come off as rude. Sometimes tough love is needed to ensure our great nation remains safe and protected. We work hard to keep our society free. And yet, all we get in return is suspicion and distrust. Some of you people don’t know how to be grateful.

Lately, the efforts by the NSA have once again begun to raise eyebrows in some rather unsavory corners. It’s remarkable. Again, the government only exists to protect and serve citizens like you. Why there is any question of our moral scruples, I cannot begin to comprehend.

For your protection, I must warn you that there are dangerous conspiracies out there. A few individuals are spreading theories about government spying that shouldn’t be believed. Those who circulate such nonsense are only perpetuating evil and sinister lies. They shouldn’t be believed. In due time, they will be stopped. Their alleged “truth-seeking” is nothing but treasonous libel.

One of these rumors is that the government has actually infiltrated the World Wide Web with a number of decoys and fake identities to quell dissent. This is a ridiculous assertion. For one thing, the government respects the free sharing of ideas the internet fosters. It would never do anything to inhibit free speech rights or slander anyone who voices a false opinion. In our great American Republic, the right to free expression is absolute. It will never be trampled upon for the purposes of aggrandizing those of us attached to the state.

Sure, I once co-authored a paper urging our government to infiltrate and discredit political dissent groups. Is that a crime? It was a harmless recommendation. What’s dangerous are theories that undermine our government’s efforts to stop terrorists. I only offered our guardians in Washington a way to respond, which would consist of “cognitive infiltration of extremist groups.” No big deal there. On the 1st Amendment, I also once argued the free flow of ideas may be better served with a government that regulates speech so as to ensure a better democracy. I truly do believe that our “constitutional guarantee of free speech” is not “adequately serving democratic goals.” Here again, I was only making recommendations so as to ensure a more perfect, more just, and more free country.

Now, there apparently is documented evidence proving the government dispatched a number of gadflies to silence political dissenters. Well, that just can’t be. The government is always a source of truth and goodness. None of the million or so bureaucrats who man our glorious state apparatus have a devious bone in their body.

The source of these rumors is the new media outlet founded by that unpatriotic scoundrel Glenn Greenwald. He claims to have unadulterated proof that government agents clandestinely work to dispel dissent by spreading lies online. Remember: this is the same Greenwald who fled his own country to live in Brazil. That means he can’t be trusted.

And let me assure you, if there is any truth to these revelations, then you are still in good hands. Our government only targets those who pose as threats to the nation’s health. Innocent, hard-working citizens have nothing to worry about. Certainly, there may be mistakes from time to time. But rest assured, any injustice inflicted by our good-natured officials is corrected as soon as possible.

There’s also another crazed assertion going around that our friends in the British government are capturing images of civilians in possibly compromising positions. The NSA supposedly assisted in this effort. Let me just say that all sounds like nonsense. Only in the make-believe world of George Orwell would such a thing to take place.

A foreign news outlet is trumpeting these claims. It claims to have proof of this gross violation of privacy. Now a few United States Senators are looking into the issue. Their efforts might score political points back home, but I can assure you, citizen, there is no violation of basic rights going on.

All of this breaking news is really a shame. It was the efforts of bureaucrats such as myself that we really had you ignorant of your own government’s activities. It was for your own good of course! Keeping you safe means knowing everything going on within our national borders. It also means monitoring the national “conversation” and making sure no unapproved comments are brought to light. The Zeitgeist is very important. If our government is to survive so as to protect the nation, then we must maintain legitimacy in the eyes of the serfs….I mean taxpayers.

For decades, Washington had a strict policy of labeling folks who challenge the efficacy of the government paranoid freaks who shouldn’t be given any attention. The news media followed its lead. As did the academics within prestigious universities including yours truly. For a good while, the state’s influence pervaded all corners of the country. But since the advent of the internet, and the terribly, unguided pool of information it houses, you and your fellow citizens are now subject to unverified truth. It used to be that you needed the permission of bureaucrats like me to know what’s real and what’s not. Now you can figure it out yourself, and that’s not good.

I will confess something to you citizen: there is a grain of truth to the notion that government attempts to influence your personal behavior. Sometimes, government officials try to discredit voices that challenge their authority. Other times they attempt to influence your spending habits to control the economy. And many times regulators flood the school system with pro-state propaganda to influence the next generation. In my book Nudge: Improving Decisions About Health, Wealth, and Happiness, I outline a plan for government to coerce you into making certain decisions. I only presume to know what you want, because I do. That’s why I travel in the upper branches of government.

This isn’t anything new. In the 1950s, the CIA instituted a program known as “Operation Mockingbird” in an attempt to influence the mainstream news. Journalists were recruited to spread the message of honor and nobility within the ranks of our government. Anybody who questioned our message was immediately marginalized. We couldn’t let the American people know they were being played for pawns. It’s all for national security, you see.

You must understand that this is all done for your own good. For your safety and posterity, it’s sometimes better for you to be left in the dark. There are smarter, more capable people taking care of you. Don’t like it? You can spend some time in luxurious prison system where guns, drugs, and other paraphernalia are within your grasp. You should be so lucky as to experience that kind of vacation!

I’ll leave you with one final reminder: the government is always watching. Uncle Sam does it for your own benefit. You’re not allowed to disagree. Just think of me and my bureaucratic colleagues as wise paternal figures. Sit down. Shut up. And keep paying your taxes.

Your friend,

Cass Sunstein

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The pool of potential capitulators is practically peopleless…

 

 

h/t @Not_Jim_Cramer

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Submitted by Guy Haselmann of Scotiabank

The Herd Mentality – The Left Tail Will Follow the Right Tail

Last Friday in NY, I attended a fabulous Monetary Policy Forum sponsored by the Initiative on Global Markets, a thought-leadership-medium set-up within the University of Chicago Booth School of Business. This annual event is increasingly being viewed as ‘Jackson Hole East’. Eight current members of the FOMC were in attendance including Stanley Fischer (not yet confirmed). Former Treasury Secretary Robert Rubin gave the keynote lunch address.

Each year the conference begins with a highly-topical report co-authored by a few economists and academics, and which serves as the basis for initial discussion. This year’s paper was entitled “Market Tantrums and Monetary Policy” (on website). The paper was successful at proving that there is the potential for financial instability even with subdued leverage in the banking system.

The authors drew five conclusions:

1) the absence of leverage in the banking system is not a sufficient reason for Monetary Policy to disregard concerns for financial stability

2) the usual macroprudential toolkit does not address instability driven by non-leveraged or non-bank investors;

3) forward guidance (like ZIRP – my words) can encourage risk taking that can lead to risk reversals;

4) financial instability need not be associated with insolvency of financial institutions; and

5) Tradeoffs for monetary policy are more difficult than portrayed.

The tradeoff is not the contemporaneous one between more versus less policy stimulus today, but is better understood as an intertemporal tradeoff between more stimulus today at the expense of more challenging and disruptive policy exit in the future.

The paper did not comment on how policy makers fundamentally assess and mollify the tradeoff between attempts at stimulating real economic activity and financial stability. I was surprised that Fed officials so openly admitted their policies cause moral hazard problems and power the ‘search for yield’. One interesting point is that Fed officials seem to tacitly admit that supervisory tools alone may be insufficient to protect markets against excessive risk-taking and that monetary tools may be required.

The word “tantrums” referenced in the title was the paper’s attempt to explain adverse market reactions, e.g., last year’s reaction from ‘taper-talk’. The authors stated that risk premiums can jump quickly, simply because non-bank market participants (read: mutual funds) are motivated by their peer performance rank. The authors had 3 subsequent conclusions:

1) the relative peerperformance race causes momentum in return;

2) return chasing can reverse sharply; and

3) changes in the stance of monetary policy can trigger heavy fund inflows and outflows.

These conclusions partially explain (empirically) the herd mentality and momentum in recent years behind tight credit spreads and elevated equity prices. Investors are so fearful of missing the upside and underperforming peers that they frantically scramble to remain ahead of them (i.e., seek risk). However, the conference and paper suggests that there is a threshold point during the Fed’s attempt to normalize policy where the tide reverses and investors join in a selloff in a race to avoid being left behind. This is why I’ve been calling it the greater fool theory.

The most surprising part of the conference was Rubin’s keynote speech. Most thought he said little, but I found the topic of his speech a bit startling. Rather than speak about Washington’s messy politics or such, he basically gave a speech that criticized and questioned Fed policy.

He began by saying that forecast models don’t work; particularly with the complexities of today’s modern world. He said that it was unwise to depend too much on  models and that nothing can replace experience and intuition. He said, there is never perfect information and uncertainties always exist, so decisions must be made through judgment about the probabilities of potential outcomes. He suggested that anecdotal information was as helpful as quantitative analysis. As a case in point, he mentioned a recent dinner with 10 senior corporate executives who all unanimously said that business investment and growth were sluggish.

Rubin said the Eurozone is more vulnerable than most think, especially given EM exposures. He suggested there is great tail risk that is not properly reflected in market prices. He said tail risk always exists, but it can’t be ignored. He said the best way to deal with it today given high probabilities and low risk premiums is to reduce exposures.

The last part of his speech continued to criticize the Fed in his friendly and humble way, often saying that “you know more about this than me, but….”. He thought the risks to QE3 far outweigh the benefits. He blasted Fed policy for elevating moral hazard and encouraging excessive risk taking. He commented on the unpredictable market reaction from, and difficulties in, unwinding the balance sheet and trying to normalize policy. He said the ultimate effects cannot be ascertained by models (rub it in). He blasted forward guidance as having no validity saying that it is impossible to know what is going to happen in 6 months.

Cracks in the foundation are evident. Buy Volatility.

“Two roads diverged in a wood, and I – I took the one less traveled by, and that has made all the difference” – Robert Frost

via Zero Hedge http://ift.tt/1hN9702 Tyler Durden

Presented with little comment, suffice to add former Washington DC RT correspondent Liz Wahl’s comments that “personally she cannot be part of a network funded by the Russian government that whitewashes the action of Putin…”  At least RT was correct when it said yesterday that “Contrary to the popular opinion, RT doesn’t beat its journalists into submission, and they are free to express their own opinions, not just in private but on the air.”  One wonders if Ms. Wahl’s next stop will be MSNBC, FOX or CNN, where the truly unbiased coverage can be found.

Today’s drama takes to a entirely new level the statement voiced by another RT presenter who also denounced as “wrong” Russia’s military intervention in Ukraine.

“I can’t stress enough how strongly I am against any state intervention in a sovereign nation’s affairs,” Abby Martin declared in her news programme.

 

RT said it respected Ms Martin’s views, and that she would not be reprimanded.

 

Ms Martin made her remarks at the end of her Breaking the Set show, broadcast from a studio in Washington.

 

“Just because I work here doesn’t mean I don’t have editorial independence,” she said, adding: “What Russia did was wrong.”

 

The outspoken presenter admitted that she did not possess in-depth knowledge of Ukraine’s history or “cultural dynamics”, but insisted that military intervention was not the answer.

 

“I will not sit here and apologise for, or defend, military aggression,” she said.

RT responded as follows:

In response to the journalist’s on-air statement, the Russian TV channel said: “Contrary to the popular opinion, RT doesn’t beat its journalists into submission, and they are free to express their own opinions, not just in private but on the air.”

 

The broadcaster added that it would send Ms Martin to Crimea to “give her an opportunity to make up her own mind from the epicentre of the story”.

So far Ms. Martin has not taken up RT’s offer to provide unbiased reporting from the “epicenter” of the story.

And now back to the US mainstream media’s expansive coverage of the story of the day that it may well have been Kiev’s own current government ordering the murder of its own civilians in an apparent provocation to escalate the regime change. Wait what?

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There are days when it seems that the Nobel Peace Prize should just go home and put their feet up, ask the home-help to make them a cuppa and to bath them and then they can be put to bed and tucked in. The Nobel Peace Prize Committee has done some daft things in the past, like giving the European Union the 2012 prize when in actual fact it should never have had it since it cannot be given in to an entity or a group, but only to one individual and anyhow: since when did the EU actually stop (it starts, doesn’t it?) wars? Europe has based its peace on waging wars and maintains peace through simple sheer military force and nothing else in the past decades since World War II. Now, we discover that Vladimir Putin has been nominated for the Nobel Peace Prize. Admittedly, it was before they actually knew he was officially going (had gone?) into Ukraine, guns ablazing in true Yanky fashion to ‘blast the brains out of the baskets’.

Candidates

There have never been so many candidates for the Nobel Peace Prize. Either that means they are having a hard time choosing who should be the winner of the SEK 8 million ($1.24 million) prize money or they are spoilt for choice in a peaceful world. There are 278 candidates and to boot there are 47 organizations for the 2014 prize. Having said that, they decided to meet on Tuesday this week to confirm the candidates. Do they read the newspapers, watch television even or do they know what is happening on their very doorstep? Did they see that Putin has been in Ukraine officially since the start of this week gung-hoing it? Putin did actually enter the Crimean region on February 22nd 2014 straight after President Viktor Yanukovich was ousted from power like a bad smell. Forgive me for saying, but the West and the East are currently hotting up and having a war of words for the moment on whether or not Putin can actually do something or not. Although, the Russian leader was actually very right when he said that it wasn’t the West that should be giving lessons to anybody about invasion and least of all the USA (the last bit was thought so loud you could hear it).

The Nobel Prize Committee stated that the reason they met on Tuesday was as follows: “Part of the purpose of the committee’s first meeting is to take into account recent events, and committee members try to anticipate what could be the potential developments in political hotspots”. Obviously the Siberian wind has been blowing over that hotspot for them to miss it. It’s not so much that Putin might have been nominated as a candidate as the reason why we allow the deceit, the imposture, the farcical waste of time at the Oslo Committee to continue dictating who they believe to be the best example of peace. The final list selected on Tuesday was narrowed down to between 25 and 40 candidates.

USA

Anyhow, the National Security Agency also got nominated. Wow! They really did accept that? Still, we could say that they gave President Barack Obama the Nobel Peace Prize too back in 2009. At the time he stated that he was ‘surprised’. We can confirm that we were too. Did a man really deserve to get given a prize, apparently for having done nothing, in the hope that it would encourage him to act peacefully? I’ll do almost anything if yougive me the prize first. So would most people. Would you want the National Security Agencygetting the Nobel Peace Prize? What for? Pray do tell!

Europe

The Nobel Peace Prize has been handed out since 1901. There are sad times when it is done for political reasons (are there any other sorts of times?). There are times when it is downright ridiculous, such as the 2012 prize for the European Union. We all know that most of the wars in the world have either been started for geopolitical, commercial, exploitation or colonization reasons by either the five permanent members of theSecurity Council of the United Nations or by the leading countries in the European Union. Europe never maintained peace in the world. It has participated in every single war and conflict that has ever taken place since the wonderful founding of the machinery that was meant to maintain peace.

The Committee

The five members of the Nobel Prize Committee are appointed by the Norwegian Parliament, the Storting. It’s impossible for it not to be political. But, at least make us think that it is! One of those members is the Secretary General of the Council of Europe. Another is a Public Affairs Advisor. The third is a lawyer and President of the Norwegian Bar Association. The fourth is the Senior Political Advisor to the Progress Party’s Parliamentary Group. The Last is a University Professor.

So, we have a whole array of what is absolutely impartial. Politics, Law, Public Advisory Sector and Academia. We certainly have every chance of gaining in impartiality.

Can you name a war in the world that hasn’t be started by one of the countries in the western world or that was actively participated in by them? So, the Nobel Peace Prize Committee could be just about as daft as they have always been and actually give Putin what they want. What’s more worrying is that Putin, wasn’t exactly Mr. Peace before he went into Ukraine!

But, maybe they should change the name. It’s not a Nobel Prize, but a NOVEL one. Very novel indeed.

Originally posted: Putin’s Peace Prize

 

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Submitted by James H Kunstler via Peak Prosperity,

 

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"The market is an artificial fabrication," Universa's Mark Spitznagel warns in this brief but revealing interview, adding that "to think this can persist is simply naive." Talking to Maria B on FOX, Spitznagel thinks the market could be cut in half if the Fed stepped away now and points out the fallacy of a belief in any persistent tapering as the Fed will step right back if the market goes down. The gap between the market's "alternate reality" and actual reality is something that simply cannot persist and explains now is the time to be out, to prepare for when the market reprices (as opposed to suggesting people short the market) which is exactly what traders are not doing – as it would be irrational to think longer-term, "if they don't make their next week, month, quarter; they won't be around."

"Asset markets now are totally an illusion… they are pricing in an alternative reality that is so different what is going on"

 

"The reason for this is the Fed – the modern day Victor Frankenstein – who have created this thing that otherwise wouldn't live"

 

"We are led to believe there is this vigor out there, whereas in reality, if the Fed pulled out, the market would be cut in half"

 

"Japan is a crazy science experiment… it's a scary scary place [to invest]"

This brief clip covers a lot of ground but is well worth the price of admission as Spitznagel explains why the Fed is making the short-termist perspective of everyone from traders to corporate managers far greater…

 

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In what is becoming an epic embarrassment, the WSJ reports that the Obama administration announced today that consumers can keep insurance plans that don't comply with the federal health law for another two years, pushing a potential firestorm over cancellations and broken promises that "you can keep your health plan". As The Hill adds, the unprecedented move will protect vulnerable Democrats in the midterm elections by staving off a wave of cancellation notices and for some consumers, rather stunningly, Obamacare will not be in place for all Americans when President Obama leaves office. Sickeningly, the administration explicitly gave cover to 13 vulnerable Democratic lawmakers by saying the extension was developed in “close consultation” with those members.

 

Yet another extension (Via WSJ),

The Obama administration announced Wednesday that consumers can keep insurance plans that don't comply with the federal health law for another two years, pushing a potential firestorm over cancellations until after midterm elections.

 

Previously, some consumers could keep insurance plans that didn't comply with the 2010 Affordable Care Act until roughly the end of this year, as long as their state regulators and insurance company allowed it. Now, consumers will have up to an additional two years to do so, putting their plans in place until roughly 2016.

But the farce gets worse (Via The Hill),

The policy also means that one of the key features of the Affordable Care Act — minimum healthcare benefit requirements — will not be in place for all Americans when President Obama leaves office.

The administration's spin…

Senior administration officials insisted that the change will not substantially alter the Affordable Care Act and emphasized that their focus was on flexibility for individuals.

But the reality is politics as usual…

President Obama and many Democratic lawmakers made promises that consumers could keep their current coverage under the healthcare law, and Republicans were eager to use those statements as leverage in their effort to retake the Senate.

 

The administration explicitly gave cover to 13 vulnerable Democratic lawmakers such as Sen. Mary Landrieu (D-La.) and Rep. Ron Barber (D-Ariz.) by saying the extension was developed in “close consultation” with those members.

Meaning that you can keep your health plan (well beyond the Tea Party's original demands that were so rancorously disavowed last year by the Democrats)…

The policy prolongs the administration's “keep your plan” fix from last fall and applies to the individual and small-group insurance markets, potentially affecting 12.5 million people, officials said.

 

The timetable will allow consumers to renew old health plans for the last time on Oct. 1, 2016, meaning some plans will continue into 2017 under the next president.

 

Administration officials denied that the 2016 campaign season will see its own wave of cancellation notices, predicting that most people will have migrated into the new marketplaces by then.

Welcome to HillaryCare…

Source: Cagle

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Submitted by Simon Black of Sovereign Man blog,

“Putin: Unconstitutional coup is taking place in Ukraine. The U.S halted military cooperation and trade negotiations with Russia”

That’s the headline from a Beijing newspaper– and no surprise that it leans slightly to the Russian side.

The article goes on:

“Russian president Putin said on 4th March that unconstitutional coup is taking place in Ukraine and Russia will only use the army to Ukraine under “the most extreme situation”. This was the first time that Putin declared this publicly since the escalation of the situation in Ukraine.”

 

“U.S. Secretary of State John Kerry threatened on March 2nd that the U.S and allied countries will take a series of actions including visa ban, capital controls, economic and trade sanctions, etc.”

 

“The White House issued this in a joint statement signed by the Group of Seven member countries and accused Russia of violation of the territorial integrity of Ukraine. The White House also declared temporarily not to participate in the preparation for the G8 summit scheduled for June in Sochi, Russia.”

– and of course :

“Chinese Permanent Representative to the United Nations Liu Jieyi called for dialogue of all sides to resolve differences and maintain regional peace and stability. The united nations security council held an emergency meeting on the Ukrainian situation. Liu Jieyi said in the meeting that China is deeply concerned about Ukrainian situation and condemn the extreme violence in Ukraine.”

Meanwhile, Russian newspaper Itar Tass had this headline (loose translation):

“Putin: Those [foreign nations] who are talking about imposing sanctions on the Russian Federation should first consider the impact of those sanctions”

The article goes on:

“President Putin told reporters that the damage to all countries involved is mutual:

 

“We can cause damage to each other– mutual damage. And this needs to be thought about. . . We believe our actions are fully justified. And any threats to Russia are counterproductive and harmful.”

 

Mr. Putin added that Russia is still preparing for upcoming G8 meeting.

 

“If [the other countries] do not want to come, they don’t have to,” he told reporters .

 

The Russian President also expressed the opinion that the U.S. has historically created its own geopolitical goals, and then dragging along the rest of the world underneath them:

 

“Our partners, especially in the U.S.– they always clearly formulate their geopolitical interests and pursue them very aggressively. Guided by the well-known phrase, “you are either with us or against us,” they drag the rest of the world along, underneath them. And whoever doesn’t go along is beaten and usually killed,” the President told reporters.

 

He emphasized that Russia’s actions come from legitimate grounds.

So on one hand, the Chinese are essentially making the West out to be the belligerents, the Russians to be defending their interests, and the Chinese as the strong diplomats who are pushing for peace.

And on the other hand, the Russian papers are highlighting the utter hypocrisy of US foreign policy– it’s OK for America to invade whatever country it likes, but not for Russia to defend its own interests.

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