The World's Most Crowded Trade

By: Chris Tell at: http://ift.tt/146186R

With over $900 billion invested into bond funds by mom-and-pop investors since the global financial crisis, the great law of unintended consequence is gearing up to rear its ugly head. Once again, money will be taken from those least able to afford it.

Take a look at the graph below, which shows the spread between junk grade bonds and US treasuries (the 10 year). You’ll note how the spread  isn’t really a “spread” anymore because it has been squeezed to almost zero by delusional, yield-hungry fools. A premium of some 2.5% above the US 10 year treasury is nothing short of insane.

Junk bonds

This is indicative of how crowded the bond market really is. Thank you central bankers for your service to mankind.

“Relative value” is increasingly what investors seek, in the process of leaving common sense on the breakfast table. As our monetary overlords punish savers, those savers turn to other “relative” yield investments to obtain interest rates over and above that which is offered in the completely pathetic government debt markets.

Naturally this has led them into junk bonds. Ask your neighbour if he knows what a junk bond is and he’ll likely stare blankly at you. Ask him where he’s investing and he’ll quite possibly tell you “high yield bond funds”. Safety is important you know. Bonds are safe. Much safer than equities. Really?

Consider that debt rated below Baa3 by Moody’s and lower than BBB by S&P has declined to 5.96%. To put this into perspective, the average yield over the last decade for these bonds is 8.91%. A return to the mean is sure gonna hurt.

Now let us play devil’s advocate for a minute. What if central bankers follow through with their threats to reign in stimulus? I know, I know they’ve painted themselves into a corner but let’s play the game, shall we. Should they follow through there would be an exodus out of bond funds, causing credit markets to freeze up.

The real question to ask ourselves is this. What if the market decides to begin acting ahead of, or despite the actions of central bankers. In most instances of dramatic crisis market forces drive values and price moves not central bankers, who typically rush in to “save” the situation after the fact.

Now imagine the effect on junk bonds which are less liquid than say treasuries, should the market begin to react to severe miss-pricing of risk, or indeed QE takes a walk over the horizon and does not return. As interest rates tick higher it’s not hard to imagine some of these bonds going no bid for long enough to cause a few heart failures. In a crisis some of these overleveraged companies sitting in fund managers portfolios will not be able to refinance their debt and for bond holders it may well be a 100% wipe-out. There is a reason it’s called junk.

There are a number of ways to position for sanity to return. Directly shorting via futures, buying puts on junk grade bonds or even junk bond ETFs. Instead of pinpointing one or two, feel free to look at any of these, which is a list of junk bond funds.

Asymmetric trading opportunities like the one just discussed are the brainchild of Brad Thomas, not me. The trades he and I discuss and write about herein are indicative of the sort of positions he takes in his fund, which is currently closed to new investment. Please drop your email in the box here and we’ll notify you when it is taking investment and you’ll be provided with additional information.

We share these ideas with you so that hopefully investors who are long might at least consider the setup and act in accordance with that knowledge. Even if Brad is wrong, the return or compensation for taking on such risk is just mind-blowing. Caveat emptor.

– Chris

 

“The past is always triple-A. We can all remember what the past was. But if we try to make the future triple-A, we have no future. The future is always single-B.” – Michael Milken




via Zero Hedge http://ift.tt/1uF5rpR Capitalist Exploits

The World’s Most Crowded Trade

By: Chris Tell at: http://ift.tt/146186R

With over $900 billion invested into bond funds by mom-and-pop investors since the global financial crisis, the great law of unintended consequence is gearing up to rear its ugly head. Once again, money will be taken from those least able to afford it.

Take a look at the graph below, which shows the spread between junk grade bonds and US treasuries (the 10 year). You’ll note how the spread  isn’t really a “spread” anymore because it has been squeezed to almost zero by delusional, yield-hungry fools. A premium of some 2.5% above the US 10 year treasury is nothing short of insane.

Junk bonds

This is indicative of how crowded the bond market really is. Thank you central bankers for your service to mankind.

“Relative value” is increasingly what investors seek, in the process of leaving common sense on the breakfast table. As our monetary overlords punish savers, those savers turn to other “relative” yield investments to obtain interest rates over and above that which is offered in the completely pathetic government debt markets.

Naturally this has led them into junk bonds. Ask your neighbour if he knows what a junk bond is and he’ll likely stare blankly at you. Ask him where he’s investing and he’ll quite possibly tell you “high yield bond funds”. Safety is important you know. Bonds are safe. Much safer than equities. Really?

Consider that debt rated below Baa3 by Moody’s and lower than BBB by S&P has declined to 5.96%. To put this into perspective, the average yield over the last decade for these bonds is 8.91%. A return to the mean is sure gonna hurt.

Now let us play devil’s advocate for a minute. What if central bankers follow through with their threats to reign in stimulus? I know, I know they’ve painted themselves into a corner but let’s play the game, shall we. Should they follow through there would be an exodus out of bond funds, causing credit markets to freeze up.

The real question to ask ourselves is this. What if the market decides to begin acting ahead of, or despite the actions of central bankers. In most instances of dramatic crisis market forces drive values and price moves not central bankers, who typically rush in to “save” the situation after the fact.

Now imagine the effect on junk bonds which are less liquid than say treasuries, should the market begin to react to severe miss-pricing of risk, or indeed QE takes a walk over the horizon and does not return. As interest rates tick higher it’s not hard to imagine some of these bonds going no bid for long enough to cause a few heart failures. In a crisis some of these overleveraged companies sitting in fund managers portfolios will not be able to refinance their debt and for bond holders it may well be a 100% wipe-out. There is a reason it’s called junk.

There are a number of ways to position for sanity to return. Directly shorting via futures, buying puts on junk grade bonds or even junk bond ETFs. Instead of pinpointing one or two, feel free to look at any of these, which is a list of junk bond funds.

Asymmetric trading opportunities like the one just discussed are the brainchild of Brad Thomas, not me. The trades he and I discuss and write about herein are indicative of the sort of positions he takes in his fund, which is currently closed to new investment. Please drop your email in the box here and we’ll notify you when it is taking investment and you’ll be provided with additional information.

We share these ideas with you so that hopefully investors who are long might at least consider the setup and act in accordance with that knowledge. Even if Brad is wrong, the return or compensation for taking on such risk is just mind-blowing. Caveat emptor.

– Chris

 

“The past is always triple-A. We can all remember what the past was. But if we try to make the future triple-A, we have no future. The future is always single-B.” – Michael Milken




via Zero Hedge http://ift.tt/1uF5rpR Capitalist Exploits

On Dominoes, WMDs And Putin's "Aggression": Imperial Washington Is Intoxicated By Another Big Lie

Submitted by David Stockman via Contra Corner blog,

Imperial Washington is truly running amuck in its insensible confrontation with Vladimir Putin. The pending round of new sanctions is a counter-productive joke. Apparently, more of Vlad’s posse will be put on double probation, thereby reducing demand for Harry Macklowe’s swell new $60 million apartment units on Park Avenue. Likewise, American exporters of high tech oilfield equipment will be shot in the foot with an embargo; and debt-saturated Russian state companies will be denied the opportunity to bury themselves even deeper in dollar debt by borrowing on the New York bond market. Some real wet noodles, these!

But it is the larger narrative that is so blatantly offensive—that is, the notion that a sovereign state is being wantonly violated by an aggressive neighbor arming “terrorists” inside its borders. Obama’s deputy national security advisor, Tony Blanken, stated that specious meme in stark form yesterday:

“Russia bears responsibility for everything that’s going on in Eastern Ukraine” and “has the ability to actually de-escalate this crisis,” Blinken said.

Puleese! The Kiev government is a dysfunctional, bankrupt usurper that is deploying western taxpayer money to wage a vicious war on several million Russian-speaking citizens in the Donbas—-the traditional center of greater Russia’s coal, steel and industrial infrastructure. It is geographically part of present day Ukraine by historical happenstance. For better or worse, it was Stalin who financed its forced draft industrialization during the 1930s; populated it with Russian speakers to insure political reliability; and expelled the Nazi occupiers at immeasurable cost in blood and treasure during WWII. Indeed, the Donbas and Russia have been Saimese twins economically and politically not merely for decades, but centuries.

On the other hand, Kiev’s marauding army and militias would come to an instant halt without access to the $35 billion of promised aid from the IMF, EU and US treasury. Obama just needs to say “stop”. That’s it. The civil war would quickly end, permitting the US, Russia and the warring parties of the Ukraine to hold a peace conference and work out the details of a separation agreement.

After all, what is so sacrosanct about preserving the territorial integrity of the Ukraine? Ever since the middle ages, it has consisted of a set of meandering borders in search of a nation that never existed owing to endemic ethnic, tribal and religious differences. Its modern boundaries are merely the fruit of 20th century wars and  the expediencies of a totalitarian state during the decades of its rise, rule and disintegration.

There was until recently a neighboring “state” of equally artificial lineage called Czechoslovakia. It was carved out of the German and Austrian empires by the vengeful victors at Versailles, urged on by scheming Czech nationalists who coveted the resources of the Slovaks. But notwithstanding revolutions, the Stalinist oppression, the Cold War, the Prague Spring and all the rest of the 20th century mayhem—-the machinations at Versailles didn’t birth a state that was viable or sustainable. Accordingly, separation has been had, and the parties are better off for it—as are its neighbors and the larger world.

And on the topic of partition there is the ghost of Yugoslavia–another state that emerged in whole cloth  from the madness of Versailles. Yes, it has been partitioned now into half a dozen smaller states—-Slovenia, Macedonia, Serbia, Montenegro, Croatia, Kosovo and Bosnia. But the operative point is that the partitioner was none other than Washington and its European groupies who had no regard for those happenstance 20th century-made borders when it suited their purpose.

So the sanctimonious yelping from Washington about the sacred territorial integrity of the Ukraine is ahistorical tommyrot. In fact, however, it is a thin fig leaf for a far more insidious purpose. Namely, the self-aggrandizement of the Warfare State machinery that was left stranded in Imperial Washington without purpose or justification when the Cold War ended two decades ago.

So the Warfare State machinery—including its spy network, state department, aid agencies and NGO supplicants— invented enemies and missions to justify their continued existence and their massive dissipation of fiscal resources. Those are upwards of $1 trillion annually if you count everything including veterans and homeland security.

Thus, after arming the mujahedeen in Afghanistan against the Soviets in the 1980s, their Taliban successors were deemed our enemy after the cold war ended—even though they never poised a scintilla of threat to the citizens of Lincoln NE or Worcester MA.  So too with our 1980′s ally Saddam Hussein, and also with Khadafy, Assad and the warring tribal potentates and cutthroats of Yemen, Somalia and Waziristan, to name just a few.

But it is in eastern Europe that the Warfare State machinery has most egregiously made an enemy and mission out of whole cloth. As the Cold War was drawing to a close in the late 1980s, then Secretary of State James Baker made a sensible deal with Gorbachev. In return for Soviet acquiesce in the reunification of Germany, the US would insure that NATO did not expand by a “single inch”.

Since then, of course, there has been a senseless bipartisan betrayal and stampede in the opposite direction. Starting under Clinton and extending through Bush and Obama, NATO has been expanded from 16 nations at the end of the Cold War to 28 countries today.

Yet the very recitation of its new members underscores the historical farce that this needless expansion amounted to. For better or worse, the formation of NATO in the late 1940′s involved what were perceived to be vital national security interests against a Stalinist policy that by the lights of the hawks and militarists of the day amounted to a violation of his Yalta obligations. Accordingly, NATO constituted an alliance of real nations—England, France, Italy and West Germany—-that could make a meaningful contribution to collective security against the perceived Soviet threat of the times.

But Albania, Bulgaria, Latvia, Slovakia and Slovenia?  And that is not to forget Moldova, Georgia, Macedonia and the Ukraine—all of which are still coveted for membership by the NATO apparatchiks. What could these micro-states possibly contribute to American security? That’s especially the case since the Warsaw pact had been dissolved; the Soviet Empire has erased from the pages of history; and the Russian successor was left with an Italian sized GDP encumbered with the destructive legacy of a state-dominated economy that had been appropriated by a passel of thieves, opportunists and oligarchs.

In short, today’s Ukrainian crisis is the outcome of the mindless 20-year drive of the Warfare State to push an obsolete NATO to the very doorstep of Russia, and into the messy remnants of the Soviet disintegration. Stated differently, Putin has been in power for 15 years, yet during 13 of those years there was n
o hue and cry from Washington, London and Brussels that he was an incipient Hitler bent on sweeping conquest. Even the so-called invasion of Georgia in 2008 was a tempest in a teapot provoked by local pro-Russian separatists who did not want to be ruled by a de facto American interloper in Tbilisi.

In any event, it was the $5 billion that Washington spent during the last decade meddling in Ukrainian politics, and finally inciting and financing the February overthrow of the country’s constitutionally elected government that precipitated the current civil war. It brought to power a new gang of crooks and thugs who could not govern for a day without tapping the Washington/Western financial lifeline. Indeed, the civil war now raging, the brutal military attacks on civilian populations and the hundreds of thousands of refugees now streaming out of the eastern regions are the result of a crisis made in Washington, not the Kremlin.

So the rebels— who properly fear for their lives and property were the nationalists and neo-fascists who run the Kiev government to prevail—are not “terrorists” by any stretch of the imagination. That is just insipid Washington propaganda.  Instead, they are the Russian speaking remnant of the Soviet empire who fear an ethnic cleansing and who noted well the fate of their kinsmen in the hands of Ukrainian thugs during the fire at Odessa.

Once again, the American Warfare State has confected a false narrative to justify policies and missions that have nothing to do with the safety and security of the citizens of Lincoln NE and Wooster MA. About 55-years ago such a false narrative arose in the form of the “domino theory” that lead to the carnage of Vietnam. Ten years ago it cropped up in the form of the WMD story that led to the disastrous invasion and occupation of Iraq.  Today, it is the preposterous story of Ukrainian territorial integrity, terrorists in the East and a latter-day Hitler in the Kremlin.

Unfortunately, false narratives are what the Warfare State does.




via Zero Hedge http://ift.tt/1uF5r9f Tyler Durden

On Dominoes, WMDs And Putin’s “Aggression”: Imperial Washington Is Intoxicated By Another Big Lie

Submitted by David Stockman via Contra Corner blog,

Imperial Washington is truly running amuck in its insensible confrontation with Vladimir Putin. The pending round of new sanctions is a counter-productive joke. Apparently, more of Vlad’s posse will be put on double probation, thereby reducing demand for Harry Macklowe’s swell new $60 million apartment units on Park Avenue. Likewise, American exporters of high tech oilfield equipment will be shot in the foot with an embargo; and debt-saturated Russian state companies will be denied the opportunity to bury themselves even deeper in dollar debt by borrowing on the New York bond market. Some real wet noodles, these!

But it is the larger narrative that is so blatantly offensive—that is, the notion that a sovereign state is being wantonly violated by an aggressive neighbor arming “terrorists” inside its borders. Obama’s deputy national security advisor, Tony Blanken, stated that specious meme in stark form yesterday:

“Russia bears responsibility for everything that’s going on in Eastern Ukraine” and “has the ability to actually de-escalate this crisis,” Blinken said.

Puleese! The Kiev government is a dysfunctional, bankrupt usurper that is deploying western taxpayer money to wage a vicious war on several million Russian-speaking citizens in the Donbas—-the traditional center of greater Russia’s coal, steel and industrial infrastructure. It is geographically part of present day Ukraine by historical happenstance. For better or worse, it was Stalin who financed its forced draft industrialization during the 1930s; populated it with Russian speakers to insure political reliability; and expelled the Nazi occupiers at immeasurable cost in blood and treasure during WWII. Indeed, the Donbas and Russia have been Saimese twins economically and politically not merely for decades, but centuries.

On the other hand, Kiev’s marauding army and militias would come to an instant halt without access to the $35 billion of promised aid from the IMF, EU and US treasury. Obama just needs to say “stop”. That’s it. The civil war would quickly end, permitting the US, Russia and the warring parties of the Ukraine to hold a peace conference and work out the details of a separation agreement.

After all, what is so sacrosanct about preserving the territorial integrity of the Ukraine? Ever since the middle ages, it has consisted of a set of meandering borders in search of a nation that never existed owing to endemic ethnic, tribal and religious differences. Its modern boundaries are merely the fruit of 20th century wars and  the expediencies of a totalitarian state during the decades of its rise, rule and disintegration.

There was until recently a neighboring “state” of equally artificial lineage called Czechoslovakia. It was carved out of the German and Austrian empires by the vengeful victors at Versailles, urged on by scheming Czech nationalists who coveted the resources of the Slovaks. But notwithstanding revolutions, the Stalinist oppression, the Cold War, the Prague Spring and all the rest of the 20th century mayhem—-the machinations at Versailles didn’t birth a state that was viable or sustainable. Accordingly, separation has been had, and the parties are better off for it—as are its neighbors and the larger world.

And on the topic of partition there is the ghost of Yugoslavia–another state that emerged in whole cloth  from the madness of Versailles. Yes, it has been partitioned now into half a dozen smaller states—-Slovenia, Macedonia, Serbia, Montenegro, Croatia, Kosovo and Bosnia. But the operative point is that the partitioner was none other than Washington and its European groupies who had no regard for those happenstance 20th century-made borders when it suited their purpose.

So the sanctimonious yelping from Washington about the sacred territorial integrity of the Ukraine is ahistorical tommyrot. In fact, however, it is a thin fig leaf for a far more insidious purpose. Namely, the self-aggrandizement of the Warfare State machinery that was left stranded in Imperial Washington without purpose or justification when the Cold War ended two decades ago.

So the Warfare State machinery—including its spy network, state department, aid agencies and NGO supplicants— invented enemies and missions to justify their continued existence and their massive dissipation of fiscal resources. Those are upwards of $1 trillion annually if you count everything including veterans and homeland security.

Thus, after arming the mujahedeen in Afghanistan against the Soviets in the 1980s, their Taliban successors were deemed our enemy after the cold war ended—even though they never poised a scintilla of threat to the citizens of Lincoln NE or Worcester MA.  So too with our 1980′s ally Saddam Hussein, and also with Khadafy, Assad and the warring tribal potentates and cutthroats of Yemen, Somalia and Waziristan, to name just a few.

But it is in eastern Europe that the Warfare State machinery has most egregiously made an enemy and mission out of whole cloth. As the Cold War was drawing to a close in the late 1980s, then Secretary of State James Baker made a sensible deal with Gorbachev. In return for Soviet acquiesce in the reunification of Germany, the US would insure that NATO did not expand by a “single inch”.

Since then, of course, there has been a senseless bipartisan betrayal and stampede in the opposite direction. Starting under Clinton and extending through Bush and Obama, NATO has been expanded from 16 nations at the end of the Cold War to 28 countries today.

Yet the very recitation of its new members underscores the historical farce that this needless expansion amounted to. For better or worse, the formation of NATO in the late 1940′s involved what were perceived to be vital national security interests against a Stalinist policy that by the lights of the hawks and militarists of the day amounted to a violation of his Yalta obligations. Accordingly, NATO constituted an alliance of real nations—England, France, Italy and West Germany—-that could make a meaningful contribution to collective security against the perceived Soviet threat of the times.

But Albania, Bulgaria, Latvia, Slovakia and Slovenia?  And that is not to forget Moldova, Georgia, Macedonia and the Ukraine—all of which are still coveted for membership by the NATO apparatchiks. What could these micro-states possibly contribute to American security? That’s especially the case since the Warsaw pact had been dissolved; the Soviet Empire has erased from the pages of history; and the Russian successor was left with an Italian sized GDP encumbered with the destructive legacy of a state-dominated economy that had been appropriated by a passel of thieves, opportunists and oligarchs.

In short, today’s Ukrainian crisis is the outcome of the mindless 20-year drive of the Warfare State to push an obsolete NATO to the very doorstep of Russia, and into the messy remnants of the Soviet disintegration. Stated differently, Putin has been in power for 15 years, yet during 13 of those years there was no hue and cry from Washington, London and Brussels that he was an incipient Hitler bent on sweeping conquest. Even the so-called invasion of Georgia in 2008 was a tempest in a teapot provoked by local pro-Russian separatists who did not want to be ruled by a de facto American interloper in Tbilisi.

In any event, it was the $5 billion that Washington spent during the last decade meddling in Ukrainian politics, and finally inciting and financing the February overthrow of the country’s constitutionally elected government that precipitated the current civil war. It brought to power a new gang of crooks and thugs who could not govern for a day without tapping the Washington/Western financial lifeline. Indeed, the civil war now raging, the brutal military attacks on civilian populations and the hundreds of thousands of refugees now streaming out of the eastern regions are the result of a crisis made in Washington, not the Kremlin.

So the rebels— who properly fear for their lives and property were the nationalists and neo-fascists who run the Kiev government to prevail—are not “terrorists” by any stretch of the imagination. That is just insipid Washington propaganda.  Instead, they are the Russian speaking remnant of the Soviet empire who fear an ethnic cleansing and who noted well the fate of their kinsmen in the hands of Ukrainian thugs during the fire at Odessa.

Once again, the American Warfare State has confected a false narrative to justify policies and missions that have nothing to do with the safety and security of the citizens of Lincoln NE and Wooster MA. About 55-years ago such a false narrative arose in the form of the “domino theory” that lead to the carnage of Vietnam. Ten years ago it cropped up in the form of the WMD story that led to the disastrous invasion and occupation of Iraq.  Today, it is the preposterous story of Ukrainian territorial integrity, terrorists in the East and a latter-day Hitler in the Kremlin.

Unfortunately, false narratives are what the Warfare State does.




via Zero Hedge http://ift.tt/1uF5r9f Tyler Durden

"Shocked" White House Slams "Fabrication" After Israel TV Leaks Damning Transcript Of Obama-Netanyahu Phone Call

While everyone’s attention is glued on Russia and whether Obama can successfully launch World War III, things are going from bad to worse when it also comes to US relations with Israel. Recall that here things were already on the verge of disaster after for some reason, Kerry was unleashed to “arrange” a ceasefire with Israel, when in reality the SecState somehow managed to infuriate every single feuding faction (there are lot of them), Israel included, after Haaretz wrote that “Kerry ruined everything.”

So what happened next? Something rather stunning according to the US State Department, and which according to BBC reporter Paul Danahar, constitutes “a severe violation of a private discussions” – Israel’s Channel 1 decided to publish a Hebrew transcript of a portion of Prime Minister Benjamin Netanyahu and US President Barack Obama’s telephone conversation which took place on Sunday, in which Obama was insistent that Israel unilaterally halt all military activities in the Gaza Strip. As is quite clear by now, Israel rejected, and the bloodshed continued.

The transcript, as shown by the Times of Israel was as follows:

The following is an English translation of the Hebrew account of the talk given in the report:

Barack Obama: I demand that Israel agrees to an immediate, unilateral ceasefire and halt all offensive activities, in particular airstrikes.

Benjamin Netanyahu: And what will Israel receive in exchange for a ceasefire?

BO: I believe that Hamas will cease its rocket fire — silence will be met with silence.

BN: Hamas broke all five previous ceasefires. It’s a terrorist organization dedicated to the destruction of Israel.

BO: I repeat and expect Israel to stop all its military activities unilaterally. The pictures of destruction in Gaza distance the world from Israel’s position.

BN: Kerry’s proposal was completely unrealistic and gives Hamas military and diplomatic advantages.

BO: Within a week of the end of Israel’s military activities, Qatar and Turkey will begin negotiations with Hamas based on the 2012 understandings, including Israel’s commitment to removing the siege and restrictions on Gaza.

BN: Qatar and Turkey are the biggest supporters of Hamas. It’s impossible to rely on them to be fair mediators.

BO: I trust Qatar and Turkey. Israel is not in the position that it can choose its mediators.

BN: I protest because Hamas can continue to launch rockets and use tunnels for terror attacks –

BO: (interrupting Netanyahu) The ball’s in Israel’s court, and it must end all its military activities.

One can quickly see why the US would quickly disavow any credibility of this report: after all it wouldn’t look very good for the leader of the free world if the leader of another state, one which on top of it all is reliant on the former for continued military and economic support, flat out rejected what amounted to a demand from the US. As expected the denial was prompt with the US administration calling the quotations “fabrications”, “shocking”, and “disappointing

It took mere minutes for the National Security Council to deny the transcript was even remotely accurate:

Sure enough, it wouldn’t look good if only the US denied so Netanyahu had to step in, which he did:

The Prime Minister’s Office says in a statement that the Channel 1 report is false, using precisely the same words as the White House.

 

“We have seen these reports, and neither the reports nor the alleged transcript bear any resemblance to reality. It’s shocking and disappointing that someone would sink to misrepresenting a private conversation between the President and the Prime Minister in fabrications to the Israeli press,” the PMO says.

Despite the denials, Israel’s Channel 1 refused to retract the leaked statement. Worse, it revealed the source of the leak as a “senior American official.”

Despite rejections by American and Israeli officials, Channel 1?s Or Nahari insists that the transcript leaked to him by a “senior American official” is authentic, but acknowledges that the quotes he published were merely an excerpt from a long conversation.

All of which leads to three quite disturbing, for Obama, possibilities:

  1. With Russia clearly ignoring US “superpower” status and openly defying not only the US, but Europe, and hence NATO, Obama now has another foreign relations disaster on his hands, where a former close ally of the US is now openly refusing to bow down to US demands.
  2. There is a leak in the highest echelons of US power, one which appears focused on exposing the administration in a position of weakness
  3. The media tactics of fabrication and lies, so prevalent in the US vs Russia proxy war through the Ukraine, have now seeped over into US-Israel relations.

Whichever one of these is the truth, it simply means that the old Pax Americana world, in which the word of the US president was final, is no more, and first Russia (and thus the BRICs), and now such staunch allies as Israel, are clearly defying the former.  Or perhaps one should add former superpower?

As for John Kerry, just stick a fork in him already as per the following clip.




via Zero Hedge http://ift.tt/1qj8c9S Tyler Durden

“Shocked” White House Slams “Fabrication” After Israel TV Leaks Damning Transcript Of Obama-Netanyahu Phone Call

While everyone’s attention is glued on Russia and whether Obama can successfully launch World War III, things are going from bad to worse when it also comes to US relations with Israel. Recall that here things were already on the verge of disaster after for some reason, Kerry was unleashed to “arrange” a ceasefire with Israel, when in reality the SecState somehow managed to infuriate every single feuding faction (there are lot of them), Israel included, after Haaretz wrote that “Kerry ruined everything.”

So what happened next? Something rather stunning according to the US State Department, and which according to BBC reporter Paul Danahar, constitutes “a severe violation of a private discussions” – Israel’s Channel 1 decided to publish a Hebrew transcript of a portion of Prime Minister Benjamin Netanyahu and US President Barack Obama’s telephone conversation which took place on Sunday, in which Obama was insistent that Israel unilaterally halt all military activities in the Gaza Strip. As is quite clear by now, Israel rejected, and the bloodshed continued.

The transcript, as shown by the Times of Israel was as follows:

The following is an English translation of the Hebrew account of the talk given in the report:

Barack Obama: I demand that Israel agrees to an immediate, unilateral ceasefire and halt all offensive activities, in particular airstrikes.

Benjamin Netanyahu: And what will Israel receive in exchange for a ceasefire?

BO: I believe that Hamas will cease its rocket fire — silence will be met with silence.

BN: Hamas broke all five previous ceasefires. It’s a terrorist organization dedicated to the destruction of Israel.

BO: I repeat and expect Israel to stop all its military activities unilaterally. The pictures of destruction in Gaza distance the world from Israel’s position.

BN: Kerry’s proposal was completely unrealistic and gives Hamas military and diplomatic advantages.

BO: Within a week of the end of Israel’s military activities, Qatar and Turkey will begin negotiations with Hamas based on the 2012 understandings, including Israel’s commitment to removing the siege and restrictions on Gaza.

BN: Qatar and Turkey are the biggest supporters of Hamas. It’s impossible to rely on them to be fair mediators.

BO: I trust Qatar and Turkey. Israel is not in the position that it can choose its mediators.

BN: I protest because Hamas can continue to launch rockets and use tunnels for terror attacks –

BO: (interrupting Netanyahu) The ball’s in Israel’s court, and it must end all its military activities.

One can quickly see why the US would quickly disavow any credibility of this report: after all it wouldn’t look very good for the leader of the free world if the leader of another state, one which on top of it all is reliant on the former for continued military and economic support, flat out rejected what amounted to a demand from the US. As expected the denial was prompt with the US administration calling the quotations “fabrications”, “shocking”, and “disappointing

It took mere minutes for the National Security Council to deny the transcript was even remotely accurate:

Sure enough, it wouldn’t look good if only the US denied so Netanyahu had to step in, which he did:

The Prime Minister’s Office says in a statement that the Channel 1 report is false, using precisely the same words as the White House.

 

“We have seen these reports, and neither the reports nor the alleged transcript bear any resemblance to reality. It’s shocking and disappointing that someone would sink to misrepresenting a private conversation between the President and the Prime Minister in fabrications to the Israeli press,” the PMO says.

Despite the denials, Israel’s Channel 1 refused to retract the leaked statement. Worse, it revealed the source of the leak as a “senior American official.”

Despite rejections by American and Israeli officials, Channel 1?s Or Nahari insists that the transcript leaked to him by a “senior American official” is authentic, but acknowledges that the quotes he published were merely an excerpt from a long conversation.

All of which leads to three quite disturbing, for Obama, possibilities:

  1. With Russia clearly ignoring US “superpower” status and openly defying not only the US, but Europe, and hence NATO, Obama now has another foreign relations disaster on his hands, where a former close ally of the US is now openly refusing to bow down to US demands.
  2. There is a leak in the highest echelons of US power, one which appears focused on exposing the administration in a position of weakness
  3. The media tactics of fabrication and lies, so prevalent in the US vs Russia proxy war through the Ukraine, have now seeped over into US-Israel relations.

Whichever one of these is the truth, it simply means that the old Pax Americana world, in which the word of the US president was final, is no more, and first Russia (and thus the BRICs), and now such staunch allies as Israel, are clearly defying the former.  Or perhaps one should add former superpower?

As for John Kerry, just stick a fork in him already as per the following clip.




via Zero Hedge http://ift.tt/1qj8c9S Tyler Durden

Judge Who Imposed a 57-Year Mandatory Minimum Sentence Gets It Reduced to 20

Francois Holloway is less sympathetic than
the prisoners typically featured in stories about the injustices
wrought by mandatory minimum sentences. He is not a nonviolent drug
offender; he is a convicted carjacker. Still, he has already served
two decades for his crimes, and he probably would have died behind
bars had it not been for the efforts of the federal judge who
sentenced him.

Holloway, who was convicted in 1996, got 57 years, more than
twice as long as the average sentence for murder that year in the
district where he was tried. “Sentencing data suggest that Holloway
would have fared much better if he had committed first degree
murder instead of robbing three cars,”
observes
U.S. District Judge John Gleeson, who presided over
Holloway’s trial at the federal courthouse in Brooklyn.

The sentence was dictated mainly by a federal law
aimed at criminals who use guns—the same law that sent
Weldon Angelos
, a nonviolent pot dealer, to prison for 55 years
and that would have sent
Chris Williams
, a Montana medical marijuana grower, to prison
for 80 years if prosecutors had not relented after his trial.
Holloway was not actually armed during the three carjackings in
which he participated, but one of his accomplices was, and that was
enough for sentencing purposes. He got five years for the first gun
use and 20 years each for the two others, plus 12 for the three
carjackings, all to be served consecutively. By contrast, the
longest sentence received by his accomplices, all of whom pleaded
guilty, was six years. Holloway himself was offered a plea deal
that included a recommended sentence of about 11 years. In effect,
he got an extra 46 years for exercising his constitutional right to
a trial.

Holloway “filed one motion after another trying to get his
sentence and his case re-evaluated,” The New York Times

reports
, and last year Gleeson “began his own campaign on Mr.
Holloway’s behalf,” citing “his clean disciplinary record and his
participation in prison programs as evidence of his rehabilitation
and his prospect of a normal post-prison life.” In response to
Gleeson’s repeated recommendations, Loretta Lynch, the U.S. for the
Eastern District of New York, recently agreed to vacate two of the
gun charges against Holloway, clearing the way for him to be freed
next year (after he serves some time in state prison for a drug
offense). Otherwise his release date, allowing for “good time”
credit, would have been 2045.

In a May 14
memorandum
urging Lynch to reduce the number of gun charges
against Holloway, Gleeson said the case illustrates “prosecutors’
use of ultraharsh mandatory minimum provisions to annihilate a
defendant who dares to go to trial.” As I
noted
in a column last December, the power to invoke such
provisions helps explain why 97 percent of federal defendants
plead
guilty

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China Meat Scandal Spreads: McDonald's Japan Slashes Guidance

We warned last week that the scandal over Chinese meat supplier OSI was spreading (and Asians were increasingly shunning western fast-food restaurants) and now, as The FT reports, McDonald’s Japan has pulled its full-year profit guidance on the back of falling sales. It had previously forecast sales of $2.45bn for the year to December but warned it could not commit to new targets as it was too soon to estimate the scandal’s full impact.

 

 

As The FT reports, OSI processes the meat of 300m chickens a year in China, as well as other meats, vegetables and pre-assembled food such as sandwiches or wraps.

This is a problem for McDonalds as some of its 3,200 restaurants were forced to scratch chicken nuggets off the menu

 

Fast-food chains have scrambled to redirect the supply chain after the Shanghai plant closed, and the loss of supply from all of OSI’s China plants could prove a challenge for McDonald’s, which relies on a smaller but tighter network of suppliers than does its chief rival, KFC.

 

 

“Supplies of some products to some China restaurants have been cut. We are trying hard to allocate supply from other sources and resume supply as soon as possible,” the fast-food chain said.

 

 

McDonald’s Japan, which is 50 per cent owned by the US fast food group and operates in its second biggest market by number of outlets, said that its “sales and profit expectations have been reduced” after its China-based supplier was found to be relabelling expired meat and breaching other food safety practices.

 

It had previously forecast sales of Y250bn ($2.45bn) for the year to December and net income of Y6bn, adding that it could not commit to new targets as it was too soon to estimate the scandal’s full impact.

*  *  *

At least it's a better excuse than the weather… but McDonalds is enough trouble as it is with Russia bans on some items and sales sliding




via Zero Hedge http://ift.tt/1qiY551 Tyler Durden

China Meat Scandal Spreads: McDonald’s Japan Slashes Guidance

We warned last week that the scandal over Chinese meat supplier OSI was spreading (and Asians were increasingly shunning western fast-food restaurants) and now, as The FT reports, McDonald’s Japan has pulled its full-year profit guidance on the back of falling sales. It had previously forecast sales of $2.45bn for the year to December but warned it could not commit to new targets as it was too soon to estimate the scandal’s full impact.

 

 

As The FT reports, OSI processes the meat of 300m chickens a year in China, as well as other meats, vegetables and pre-assembled food such as sandwiches or wraps.

This is a problem for McDonalds as some of its 3,200 restaurants were forced to scratch chicken nuggets off the menu

 

Fast-food chains have scrambled to redirect the supply chain after the Shanghai plant closed, and the loss of supply from all of OSI’s China plants could prove a challenge for McDonald’s, which relies on a smaller but tighter network of suppliers than does its chief rival, KFC.

 

 

“Supplies of some products to some China restaurants have been cut. We are trying hard to allocate supply from other sources and resume supply as soon as possible,” the fast-food chain said.

 

 

McDonald’s Japan, which is 50 per cent owned by the US fast food group and operates in its second biggest market by number of outlets, said that its “sales and profit expectations have been reduced” after its China-based supplier was found to be relabelling expired meat and breaching other food safety practices.

 

It had previously forecast sales of Y250bn ($2.45bn) for the year to December and net income of Y6bn, adding that it could not commit to new targets as it was too soon to estimate the scandal’s full impact.

*  *  *

At least it's a better excuse than the weather… but McDonalds is enough trouble as it is with Russia bans on some items and sales sliding




via Zero Hedge http://ift.tt/1qiY551 Tyler Durden

"End Torture," Ron Paul Demands "Shut Down The CIA!"

Submitted by Ron Paul via The Ron Paul Institute,

Remember back in April, 2007, when then-CIA director George Tenet appeared on 60 Minutes, angrily telling the program host, “we don’t torture people”? Remember a few months later, in October, President George W. Bush saying, “this government does not torture people”? We knew then it was not true because we had already seen the photos of Iraqis tortured at Abu Ghraib prison four years earlier.
 
Still the US administration denied that torture was torture, preferring to call it “enhanced interrogation” and claiming that it had disrupted so many terrorist plots. Of course, we later found out that the CIA had not only lied about the torture of large numbers of people after 9/11, but it had vastly exaggerated any valuable information that came from such practices.

However secret rendition of prisoners to other places was ongoing.

The US not only tortured people in its own custody, however. Last week the European Court of Human Rights found that the US government transferred individuals to secret detention centers in Poland (and likely elsewhere) where they were tortured away from public scrutiny. The government of Poland was ordered to pay hundreds of thousands of dollars in damages to two victims for doing nothing to stop their torture on Polish soil.
 
How tragic that Poland, where the Nazis constructed the Auschwitz concentration camp in which so many innocents were tortured and murdered, would acquiesce to hosting secret torture facilities. The idea that such brutality would be permitted on Polish soil just 70 years after the Nazi occupation should remind us of how dangerous and disingenuous governments continue to be.
 
This is the first time the European court has connected any EU country to US torture practices. The Obama administration refuses to admit that such facilities existed and instead claims that any such “enhanced interrogation” programs were shut down by 2009. We can only hope this is true, but we should be wary of government promises. After all, they promised us all along that they were not using torture, and we might have never known had photographs and other information not been leaked to the press.
 
There are more reasons to be wary of this administration’s claims about rejecting torture and upholding human rights. The president has openly justified killing American citizens without charge or trial and he has done so on at least three occasions. There is not much of a gap between torture and extrajudicial murder when it comes to human rights abuses.
 
Meanwhile, former CIA director George Tenet and other senior current and former CIA officials are said to be frantically attempting to prepare a response to a planned release of an unclassified version of a 6,500 page Senate Intelligence Committee study on the torture practices of that agency. The CIA was already caught tapping into the computers of Senate investigators last year, looking to see what information might be contained in the report. Those who have seen the report have commented that it details far more brutal CIA practices than have been revealed to this point.
 
Revelations of US secret torture sites overseas and a new Senate investigation revealing widespread horrific CIA torture practices should finally lead to the abolishment of this agency. Far from keeping us safer, CIA covert actions across the globe have led to destruction of countries and societies and unprecedented resentment toward the United States. For our own safety, end the CIA!




via Zero Hedge http://ift.tt/1lTab1E Tyler Durden