Pope Opens Vatican Bank Kimono

In a desperate attempt to distance itself from the widening corruption scandal linking the Vatican’s bank accounts to fund (and allegedly bribe) a 2007 acquisition by Monte dei Paschi of Antonventa, the Pope has taken an unprecedented step in open the Vatican’s finances to public view.

As Reuters reports, Pope Francis on Monday revolutionized the Vatican’s scandal-plagued finances by appointing an auditor-general stating that the Church must see its possessions and financial assets in the “light of its mission to evangelize, with particular concern for the most needy.

The auditor-general will have wide oversight powers “to conduct audits of any agency of the Holy See and Vatican City State at any time,” a statement said. Francis decreed that the changes have “immediate, full and stable effect,” abrogating any existing rules not compatible with them.

 

Via Reuters,

Pope Francis on Monday revolutionised the Vatican’s scandal-plagued finances, inviting outside experts into a world often seen as murky and secretive and saying the church must use its wealth to help the poor.

 

 

The auditor-general will have wide oversight powers “to conduct audits of any agency of the Holy See and Vatican City State at any time,” a statement said.

 

 

A Vatican statement said the changes “will enable more formal involvement of senior and experienced experts in financial administration, planning and reporting and will ensure better use of resources, improving the support available for various programmes, particularly our works with the poor and marginalised”.

 

 

Francis decreed that the changes have “immediate, full and stable effect,” abrogating any existing rules not compatible with them.

 

 

The role and structure of the separate Vatican bank, formally known as the Institute for Works of Religion (IOR), will not change for the time being, a spokesman said.

 

There was no mention of the IOR in Monday’s statements. Francis has not ruled out closing the bank, which primarily handles funds for religious orders and Vatican employees.

 

Both the IOR and APSA have been at the centre of scandals. Italian magistrates are investigating the IOR on allegations of money laundering. The Vatican dismisses the charges.


    



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Reddit Censors Big Story About Government Manipulation and Disruption of the Internet

The moderators at the giant r/news reddit (with over 2 million readers) repeatedly killed the Greenwald/Snowden story on government manipulation and disruption of the Internet … widely acknowledged to be one of the most important stories ever leaked by Snowden.

Similarly, the moderators at the even bigger r/worldnews reddit (over 5 million readers) repeatedly deleted the story, so that each new post had to start over at zero.

For example, here are a number of posts deleted from r/news (click any image for much larger/clearer version):

Related posts from other sites – like 21stCenturyWire – were deleted as well:

And here are a number of the posts deleted by the moderators of r/worldnews:

Write-ups of the same story from other sites – like Zero Hedge – were also deleted:

Two Redditors provide further information on the censorship of this story:

This isn’t the first time Reddit moderators have been caught censoring:

Source links: Here, here, here, here, here and here.


    



via Zero Hedge http://ift.tt/1hQzNzJ George Washington

How To Identify Economic Zombies

Via Monty Pelerin’s World,

Economics is not a difficult subject, unless you try to learn it from an economist. As described by John Kenneth Galbraith, who posed as an economist but was far better as a critic:

Economics is a subject profoundly conducive to cliche, resonant with boredom. On few topics is an American audience so practiced in turning off its ears and minds. And none can say that the response is ill advised.

Common sense is all that is required to be a good economist. Unfortunately, in order to get your union card, you must pretend to have none. Belief in fairy tales like more spending and “free lunches” is also necessary.

But that is of little import in regard to the title – How to identify economic zombies.
 
What Is A Zombie?

Webster defines zombie as

…a will-less and speechless human in the West Indies capable only of automatic movement who is held to have died and been supernaturally reanimated

An economic zombie can speak and is not dead in any physical sense. His defining feature is a focus almost solely on the present. He assumes tomorrow will be just like today. If his current behavior has not created trouble or hardship thus far, then it won’t tomorrow or on into the future. Linearity describes his thinking and world. The future will be just like today.

A Simple Test For Economic Zombie Determination

The test to determine whether you or your friends are zombies is simple. Answer the following question: How would you live if debt/credit were outlawed? The economic zombie has difficulty comprehending the question, no less answering it. If you or your friends do, then you are well on your way toward full zombie-hood, if in fact you are not already there.

The question is relevant because it identifies those too ignorant to comprehend the fact that you cannot consume more than your income will support, at least not forever.

Income for a period determines the amount you can spend that period, or it would in the absence of debt or savings. Borrowing this period enables spending to exceed income this period. But borrowing is nothing but advancing consumption that otherwise would occur in a later period. Whatever is borrowed raises consumption this period but reduces it next period when some of the income earned then cannot be spent because it must be used to service the prior debt. Total consumption for both periods is lower than it would have been without the borrowing. That is due to the paying the carrying cost of debt, interest.

If you cannot understand this concept or you believe that you can nullify it by borrowing again next period, you qualify as an economic zombie. If you answered that you could not live if debt/credit were outlawed, you are an economic zombie, and perhaps also an economic idiot. Osavi Osar-Emokpae colorfully described debt:

And don’t tell me debt is not a big deal. Debt will cut off your legs and laugh at you as you grovel in the dirt begging for mercy. If you don’t need it, don’t get it. If you can’t afford it, don’t get it. If you’re already in debt, get out quickly. If you think you’ll never get out, you’re right, you won’t.

If you are using your credit cards as loans (i.e., you are not paying in full the balance each month) then you are zombie-qualified.

Economic zombies are not born. They are made. They choose their lifestyle. Behind every economic zombie is someone who believes he should live better than his abilities allow. That may work for a time. Then the Osar-Emokpae quote takes over.

The reality is that negative borrowing, saving, should be occurring every year. Man has a finite lifespan and a finite earning career. The latter is shorter than the former. Part of life is to be responsible enough to prepare for the future when income stops. Borrowing is a sign of immaturity and ignorance. Occasionally borrowing is necessary to meet an unforeseen emergency. If it is routine, then you are an economic zombie!


    



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How Credit Suisse Helped Thousands Of Americans Avoid Paying Taxes

Just when the latest wave of litigation against banks seemed to be calming down with one after another fraudclosure-related settlement (which have cost JPM alone some $30 billion in the past four years), here comes the Senate Permanent Subcommittee chaired by Carl “Shitty Deal” Levin, and blows up the peace of Zurich’s nighttime air with a bombshell of a 175-page report which put Switzerland’s second largest bank, Credit Suisse, front and center in a brand news tax evasion scandal… not that there is anything inherently wrong with that: the last thing the US government needs is to be enabled to be even bigger, plus any money the Treasury needs, the Fed will simply print on its behalf. However, it is considered illegal, at least in polite company. And so among the accusations listed in the report, seen by FT, is that “Credit Suisse made false claims in US visa applications, conducted business with clients in secret elevators and shredded documents to help more than 22,000 American customers avoid US taxes, according to a scathing report by a US congressional committee.

It continues: “Credit Suisse handed account statements to one client tucked inside a Sports Illustrated magazine as part of their “cloak and dagger tactics”, according to Senator Carl Levin, chairman of the US Senate Permanent Subcommittee on Investigations which drafted the report. The bank also helped clients create offshore shell entities to avoid taxes and aided them in structuring transactions so they fell below the $10,000 amount that would alert the government, according to the report, released on Tuesday.” In other words all in a day’s business for any self-respecting tax avoider. Which according to the report would be some 22,000 self-respecting tax avoiders.

Credit Suisse created an office at Zurich airport where more than 10,000 US accounts were held, known by the code name SIO85. Bankers made 150 trips to the US from 2002 to 2008 to aid in the tax evasion efforts. At its peak, the assets of the more than 22,000 customers totaled as much as $12bn.

That tax avoidance was (note: past tense – the days of Swiss bank secrecy are now long gone) one of the Swiss banking industry’s largest sources of incomes and jobs is not a surprise, however the magnitude of just the Credit Suisse involvement is quite stuning: In total, about 1,800 bankers were involved in helping clients avoid taxes, leading Senator John McCain, the top Republican on the subcommittee, to call the practices “systematic.” And since John McCain can’t really be bothered with much more than playing online poker these days, one wonders: just who stands to benefit from the complete unraveling of the Swiss banking sector, which without its secrecy shroud provides absolutely nothing of attraction: certainly 0% deposit rates can be found everywhere these days.

Amusingly, one entity that has fallen under the magnifying glass is the US department of justice, best known in recent years of having replaced its name to department of injustice, for arming Mexican drug gangs, for aiding and abetting the IRS with hunt of conservative groups, and for not prosecuting those it deems Too Big To Prosecute.

Mr McCain also criticised the US justice department for not holding high-level individuals accountable, adding that this seemed to be the common practice of the agency.

 

Mr Levin, a Democrat, accused the justice department of failing to “pierce the cocoon of bank secrecy” and not using all available legal tools to aggressively pursue the case. He said the DoJ obtained the names of only 238 clients out of more than 22,000.

 

“The battle against tax havens using secrecy laws to facilitate US tax evasion has bogged down, causing a huge loss to our Treasury,” Mr Levin said. “The Credit Suisse case study shows how a Swiss bank aided and abetted US tax evasion, not only from behind a veil of secrecy in Switzerland, but also on US soil by sending Swiss bankers here to open hidden accounts.”

So just how big will the next latest and greatest wristslap be? And just how intense will the tongue lashing be of Credit Suisse’s current batch of executives? Find out tomorrow at 9:30 am when the Senate Subcommittee on Investigations holds a hearing title “Offshore Tax Evasion: The Effort to Collect Unpaid Taxes on Billions in Hidden Offshore Accounts” and where everyone who is anyone at Credit Suisse will be present:

    BRADY W. DOUGAN
    Chief Executive Officer
    Credit Suisse Group AG, Credit Suisse AG
    New York, NY

    ROMEO CERUTTI
    General Counsel
    Credit Suisse Group AG, Credit Suisse AG
    Zürich, Switzerland

    HANS-ULRICH MEISTER
    Co Head, Private Banking and Wealth Management, Chief Executive Officer – Region Switzerland
    Credit Suisse Group AG, Credit Suisse AG
    Zürich, Switzerland

    ROBERT S. SHAFIR
    Co Head, Private Banking and Wealth Management, Chief Executive Officer – Region Americas
    Credit Suisse Group AG, Credit Suisse AG
    New York, NY

Of course, as everyone in finance has long since known, the real center of offshore bank account money laundering moved away from the Alpine nation some 5 years ago and is now located in Singapore. One can’t wait to see just how eager the US will be to pick on someone more its own size – say China – when it is done with this latest particular witch hunt, which incidentally global regulations helped enable and which tax authorities closed their eyes on for decades, or at least until the music was playing. It would appear the time to pay the piper has finally come.


    



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Heartbreaking Video Released of Woman Watching Cops Kill Her Husband in Oklahoma

As I
blogged earlier this month
, Luis Rodriguez was killed by cops
in an Oklahoma movie theater parking lot after running after his
wife after she got in a physical fight with their
daughter. 

Cops claim Rodriguez became “combative” and five of them set
upon him; by the time the interaction was over he was dead.

As I blogged, they initially took the video his wife took of the
incident. Now
the video is available
at Photography is not a Crime.
It’s what commenters call a “nutpunch,” a real heartbreaker, as she
realizes the man she calls “papa” tenderly is dead–a fact the cops
lie to her about.

She even gives pretty apt on the scene critique of their
technique, why it took five professionals to commit this crime.
“Why you came to all this?….Look how you treating him….Can
someone tell me why you come to this?…Five men! Training!”

Most interesting/terrible moments: a sort of Monty Pythonesque
“he’s just pining for the fjords” moment when a cop half-heartedly
says to the already completely motionless Rodriguez “calm down sir”
(one suspects he was aware of the camera) and the cops telling the
woman who just witnessed this that she should “not get herself in
trouble.” She saw what getting herself in trouble with cops leads
to.

Remember: watching that video at the link will upset you.

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Will We Never Learn? 1840’s Gold Rush Edition

1840’s Gold Rush or 2014 Dot-Com 2.0?

Despite the amazingly high cost of living and the extraordinary opportunities for frittering away money, everyone in early San Francisco was supremely confident that he would soon be able to return home with an incalculable amount of [wealth].

 

Everything was conceived on a vast scale, and there was always plenty of cash available for any scheme that might be proposed, no matter how impossible or bizarre it seemed. No one hesitated to borrow money…

 

-The Barbary Coast (describing the gold rush)

 

 

Source: @signejb

 


    



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Feds Don’t Want Kids to Even See How Awesome Junk Food Is

Avert your eyes, citizen!In another example of your
federal rulers thinking our poor habits are due to not knowing any
better and being manipulated by the agricultural industrial complex
and not, say, our own decisions, the feds are forcing public
schools not just to drop what it deems to be unhealthy food, but to
drop any advertising that appears at schools for unhealthy food.
Even pictures of food have to have the federal government’s stamp
of approval. From the
Associated Press
:

Promotion of sugary drinks and junk foods around campuses during
the school day would be phased out under the Agriculture Department
rules, which are intended to ensure that marketing is brought in
line with health standards that already apply to food served by
public schools.

That means a scoreboard at a high school football or basketball
game eventually wouldn’t be allowed to advertise Coca-Cola, for
example, though it could advertise Diet Coke or Dasani water, also
owned by Coca-Cola Co. Same with the front of a vending machine.
Cups, posters and menu boards that promote foods that don’t meet
federal standards would also be phased out.

Ninety-three percent of such marketing in schools is related to
beverages. And many soda companies already have started to
transition their sales and advertising in schools from sugary sodas
and sports drinks to other products they produce. Companies are
spending $149 million a year on marketing to kids in schools,
according to the Agriculture Department.

There are
questions
as to whether diet sodas are actually healthier than
sodas with sugar in them, but they have the government stamp of
approval, so it’s fine. It’s the stamp that makes it safe.

I dare some kid out there to make a book cover out of candy bar
wrappers. You know you want to.

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HealthCare.gov’s Cloud Computer System Cost Five Times as Much as Expected

The cloud computing contract for the federal
government’s Obamacare exchange came in a lot higher than
originally planned,
reports NextGov
:

The government’s contract with Terremark, Verizon’s cloud
division, had
already quadrupled
 from $11 million when it was first
awarded in 2011 to $46 million at the time of HealthCare.gov’s
disastrous launch in October 2013. That included a $9 million
adjustment just
days before launch
 when testing revealed the cloud could
only support 10,000 concurrent HealthCare.gov users rather than the
expected 50,000.

CMS ordered an additional $15.2 worth of cloud services from
Terramark between the launch date, when most users were unable to
access key portions of the site, and Nov. 30, when officials
declared the site was performing at an acceptable level, according
to a justification
for other than full and open competition document
 posted
on Thursday.

That contract adjustment paid for added cloud storage plus
firewall upgrades, additional software and various other
services.

Once again, it suggests that the federal government didn’t know
what they were getting into when the exchanges launched last
October. Asked about the increased cost, a federal health official
tells NextGov that “if the additional services were not added
urgently, the exchanges would not function as designed and citizens
would continue to have issues using the marketplace.” In other
words, the original plan had been for a system that wouldn’t
work. 

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Parking Fines Are Unconstitutionally Excessive, Violate Due Process, Claims Class Action Suit

Jennifer Abel
writes in Consumer Affairs
about an interesting
approach to fighting parking tickets: a class-action federal suit
complaining that the end result consistutes an unconstitutionally
“excessive” fine.

Details:

Lead plaintiff Jesus Pimentel ran up a $63 expired parking meter
fine, which is bad enough, but the city gave him only two weeks to
pay before doubling the fine. Then there was a $28 “delinquent” fee
and a $21 “collection” fee. Add it all up and Pimentel was out
$175, which he thinks is so excessive it’s
downright unconstitutional, Courthouse
News Service
 reported. 

Besides the money, Pimentel was miffed when the DMV threatened
to withhold his car’s registration if he didn’t pay up, the city
threatened to boot and impound his car while also holding out the
possibility of civil litigation, damage to his credit rating and
garnishing of his state tax refund. This, says Pimentel, violated
the Due Process clause…..

Pimentel’s fines come to 336 percent of the daily median
income for a Latino Angeleno.

I wrote last month on how the
pettiest end of state enforcement of laws
regarding
things like vehicular and body movement can quickly escalate to
life-ruining problems.

[Hat tip: Jeff Patterson]

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Howard Davies On The Banks That Ate The Economy

Authored by Howard Davies, originally posted at Project Syndicate,

Bank of England Governor Mark Carney surprised his audience at a conference late last year by speculating that banking assets in London could grow to more than nine times Britain’s GDP by 2050. His forecast represented a simple extrapolation of two trends: continued financial deepening worldwide (that is, faster growth of financial assets than of the real economy), and London’s maintenance of its share of the global financial business.

These may be reasonable assumptions, but the estimate was deeply unsettling to many. Hosting a huge financial center, with outsize domestic banks, can be costly to taxpayers. In Iceland and Ireland, banks outgrew their governments’ ability to support them when needed. The result was disastrous.

Quite apart from the potential bailout costs, some argue that financial hypertrophy harms the real economy by syphoning off talent and resources that could better be deployed elsewhere. But Carney argues that, on the contrary, the rest of the British economy benefits from having a global financial center in its midst. “Being at the heart of the global financial system,” he said, “broadens the investment opportunities for the institutions that look after British savings, and reinforces the ability of UK manufacturing and creative industries to compete globally.”

That is certainly the assumption on which the London market has been built and the line that successive governments have peddled. But it is coming under fire.

Andy Haldane, one of the lieutenants Carney inherited at the BoE, has questioned the financial sector’s economic contribution, pointing to “its ability to both invigorate and incapacitate large parts of the non-financial economy.” He argues (in a speech revealingly entitled “The Contribution of the Financial Sector: Miracle or Mirage?”) that the financial sector’s reported contribution to GDP has been significantly overrated.

Two recent papers raise further doubts. In “The Growth of Modern Finance,” Robin Greenwood and David Scharfstein of Harvard Business School show that the share of finance in US GDP almost doubled between 1980 and 2006, just before the onset of the financial crisis, from 4.9% to 8.3%. The two main factors driving that increase were the expansion of credit and the rapid rise in resources devoted to asset management (associated, not coincidentally, with the exponential growth in financial-sector incomes).

Greenwood and Scharfstein argue that increased financialization was a mixed blessing. There may have been more savings opportunities for households and more diverse funding sources for firms, but the added value of asset-management activity was illusory. Much of it involved costly churning of portfolios, while increased leverage implied fragility for the financial system as a whole and imposed severe social costs as over-exposed households subsequently went bankrupt.

Stephen G. Cecchetti and Enisse Kharroubi of the Bank for International Settlements – the central banks’ central bank – go further. They argue that rapid financial-sector growth reduces productivity growth in other sectors. Using a sample of 20 developed countries, they find a negative correlation between the financial sector’s share of GDP and the health of the real economy.

The reasons for this relationship are not easy to establish definitively, and the authors’ conclusions are controversial. But it is clear that financial firms compete with others for resources, and especially for skilled labor. Physicists or engineers with doctorates can choose to develop complex mathematical models of market movements for investment banks or hedge funds, where they are known colloquially as “rocket scientists.” Or they could use their talents to design, say, real rockets.

Cecchetti and Kharroubi find evidence that it is indeed research-intensive firms that suffer most when finance is booming. These companies find it harder to recruit skilled graduates when financial firms can pay higher salaries. And we are not just talking about the so-called “quants.” In the years before the 2008 financial crisis, more than a third of Harvard MBAs, and a similar proportion of graduates of the London School of Economics, went to work for financial firms. (Some might cynically say that keeping MBAs and economists out of real businesses is a blessing, but I doubt that that is really true.)

The authors find another intriguing effect, too. Periods of rapid growth in lending are often associated with construction booms, partly because real-estate assets are relatively easy to post as collateral for loans. But the rate of productivity growth in construction is low, and the value of many credit-fueled projects subsequently turns out to be low or negative.

So, should Britons look forward with enthusiasm to the future sketched by Carney? Aspiring derivatives traders certainly will be more confident of their career prospects. And other parts of the economy that provide services to the financial sector – Porsche dealers and strip clubs, for example – will be similarly encouraged.

But if finance continues to take a disproportionate number of the best and the brightest, there could be little British manufacturing left by 2050, and even fewer hi-tech firms than today. Anyone concerned about economic imbalances, and about excessive reliance on a volatile financial sector, will certainly hope that this aspect of the BoE’s “forward guidance” proves as unreliable as its forecasts of unemployment have been.


    



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