Month: January 2017

A manhunt was underway for a gunman who opened fire on people at a packed nightclub on the shores of Istanbul’s Bosphorus waterway on New Year’s morning, killing at least 39 people, including 15 foreigners, then fled the scene.

The suspect escaped the scene by changing clothes at the club after the attack, according to reports on Turkish media. There have also been rumors that there was a second attacker, but officials are now just talking about one terrorist.

While Turkish authorities are starting to uncover evidence about a gun attack on an Istanbul nightclub which killed 39 people on Sunday but there is no clarity yet on who was responsible, Turkish Prime Minister Binali Yildirim said. “Some details have started emerging, but the authorities are working towards a concrete result,” Yildirim told reporters, when asked about who might have been behind the attack.

“Police and security officials will share information as it becomes available during the investigation,” he said.

While no group has yet claimed responsibility for the attack, Metin Gurcan, an Istanbul-based security analyst, told BBC “signs point to the Islamic State.”

Security camera footage obtained by AP from Haberturk newspaper, shows the male assailant dressed in black and carrying a backpack as he shoots down a police officer outside the Reina nightclub. Footage taken by a different camera shows him inside the venue wearing different clothes and a Santa Claus hat.

“A manhunt for the terrorist is underway. Police have launched operations. We hope the attacker will be captured soon,” said Interior Minister Suleyman Soylu adding that 15 or 16 of those killed at Reina were foreigners but only 21 bodies had so far been identified.  He told reporters 69 people were in hospital, four of them in critical condition.

Nationals of Saudi Arabia, Morocco, Lebanon, Libya, Israel and Belgium were among those killed, officials said. France said three of its citizens were wounded.

The attacker, armed with a long-barreled weapon, killed a policeman and a civilian outside Istanbul’s popular Reina club at around 1:15 a.m. before entering and firing on people partying inside, Istanbul governor Vasip Sahin said.

“Unfortunately (he) rained bullets in a very cruel and merciless way on innocent people who were there to celebrate New Year’s and have fun,” Sahin told reporters.

A Turkish coast guard boat patrols in front of the Reina nightclub by the Bosphorus

As Reuters notes, the attack shook NATO member Turkey as it tries to recover from a failed July coup and a series of deadly bombings in cities including Istanbul and the capital Ankara, some blamed on Islamic State and others claimed by Kurdish militants. What makes the deadly terrorist attack even worse is that across Europe security services had been on alert for new year celebrations following the mid-December attack on a Christmas market in Berlin that killed 12 people. Only days ago, an online message from a pro-Islamic State group called for attacks by “lone wolves” on “celebrations, gatherings and clubs”.

The Turkish Hurriyet newspaper cited witnesses as saying the attackers shouted in Arabic as they opened fire at Reina. “We were having fun. All of a sudden people started to run. My husband said don’t be afraid, and he jumped on me. People ran over me. My husband was hit in three places,” one club-goer, Sinem Uyanik, told the newspaper. “I managed to push through and get out, it was terrible,” she said, describing seeing people soaked in blood.

Police secure the area near the Istanbul nightclub on January 1, 2017.

President Recep Tayyip Erdogan vehemently condemned “the terror attack in Istanbul’s Ortakoy neighborhood in the first hours of 2017” and offered condolences for those who lost their lives, including “foreign guests.” He dubbed the New Year’s shooting spree “dirty games,” vowing Turkey will fight to the end against all forms of terrorist attacks. 

“As a nation, we will fight to the end against not just the armed attacks of terror groups, but also against their economic, political and social attacks,” President Tayyip Erdogan said in a written statement. “They are trying to create chaos, demoralize our people, and destabilize our country … We will retain our cool-headedness as a nation, standing more closely together, and we will never give ground to such dirty games,” he said.

Erdogan linked the attack to the situation in the region. Turkey neighbors Syria, where Ankara is conducting a military operation called Euphrates Shield, which is said to be targeting Islamic State and YPG forces.

The news received a strong international response, as world leaders, including those of Poland, Iran and Greece, condemned the attack.

Russian President Vladimir Putin sent his Turkish counterpart a a telegram of condolences, saying “it is hard to imagine a more cynical crime than killing innocent people during New Year celebrations” adding that “terrorists don’t share moral values. Our common duty is to combat terrorists’ aggression.”

U.S. President Barack Obama, on vacation in Hawaii, expressed condolences and directed his team to offer help to the Turkish authorities, the White House said.

Despite repeated warnings of a possible terrorist attack at a night club, an even bigger tragedy was avoided thanks to the prompt police response: dozens of ambulances and police vehicles were immediately dispatched to the club in Ortakoy, a neighborhood on the city’s European side nestled under one of three bridges crossing the Bosphorus and home to nightclubs, restaurants and art galleries, once news of the shooting around 1:15am local time emerged.

“I didn’t see who was shooting but heard the gun shots and people fled. Police moved in quickly,” Sefa Boydas, a Turkish soccer player, wrote on Twitter. “My girlfriend was wearing high heels. I lifted her and carried her out on my back,” he said.

Hurriyet quoted Reina’s owner, Mehmet Kocarslan, as saying security measures had been taken over the past 10 days after U.S. intelligence reports suggested a possible attack.

“US intelligence warned about such an attack about one week or 10 days ago – and measures were taken, including [on] the sea front. And look what has happened,” Kocarslan told Hurriyet.

As many as 600 people were thought to have been inside the club at the time of the attack. The Hurriyet newspaper cited witnesses as saying the attacker shouted in Arabic at Reina. “We were having fun. All of a sudden people started to run. My husband said don’t be afraid, and he jumped on me. People ran over me. My husband was hit in three places,” one club-goer, Sinem Uyanik, told the newspaper.

“I managed to push through and get out, it was terrible,” she said, describing seeing people soaked in blood.

Meanwhile, the Turkish response to the tragedy was familiar: a full media clamp down. The prime minister’s office issued a media blackout on the events and asked media to refrain from broadcasting and publishing anything that may cause “fear in the public, panic and disorder and which may serve the aims of terrorist organizations.”

Security measures had been heightened in major Turkish cities, with police barring traffic leading up to key squares in Istanbul and the capital Ankara. In Istanbul, 17,000 police officers were put on duty, some disguised as Santa Claus and others as street vendors, Turkey’s Anadolu news agency reported.

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Authored by Eric Zuesse via Strategic-Culture.org,

I’m a former lifelong Democrat, stating here a clear and incontestable fact: Barack Obama is a failed President.

It’s true not just because of the sad realities such as that «Top Ex-White House Economist Admits 94 % Of All New Jobs Under Obama Were Part-Time» — or, as the economists Alan Krueger and Lawrence Katz wrote in the original of that study: «94 percent of the net employment growth in the U.S. economy from 2005 to 2015 appears to have occurred in alternative work arrangements». («Alternative work arrangements» referred there to Americans who were involuntarily working only part-time jobs — they simply couldn’t find full-time, though that’s what they wanted.) In other words: Obama’s failure isn’t just because of America’s increasingly sales-clerk, and burger-flipping, workforce.

And Obama’s failure is also not just because «Poverty Rose In 96 % Of U.S. House Districts, During Obama’s Presidency». (However, that reality turned out to be decisive in Hillary Clinton’s loss to Donald Trump on November 8^th, as Nate Cohn pointed out in The New York Times on December 23rd, headlining, «How the Obama Coalition Crumbled, Leaving an Opening for Trump». Hillary was running on Obama’s poor record.)

Obama’s failure is also because of other important reasons. Among them is the uncounted thousands of people who were killed in, and the uncounted millions of people who became refugees from, the places where Obama (or else his installed regimes) bombed and caused the residents to either die or flee. George W. Bush’s destructions of Iraq and even Afghanistan were now being followed by the destructions of Libya by Obama and Sarkozy, and of Syria by Obama and Saud and Thani and Erdogan, who armed the tens of thousands of jihadists and sent them into Syria to overthrow and replace Assad — and Bush’s destructions were followed also by Obama’s keeping in power the barbaric junta-regime that replaced the democratically elected Honduran Presiden Manuel Zelaya on 28 June 2009 shortly after Obama entered the White House (and this junta-regime, in turn, caused Honduras’s murder-rate to soar 50% to become the world’s highest, which then caused hundreds of thousands of Hondurans to flee and become undocumented U.S. immigrants, against which Donald Trump campaigned).

The Obama regime has thus created far more misery outside America, than inside it. Failures such as those didn’t cost Hillary Clinton many (if any) votes (because most voters didn’t even know about these foreign-affairs matters), but those failures were actually even bigger than Obama’s failures in purely domestic U.S. policy matters (which voters do know about). Trump campaigned against ‘illegal immigrants’, but he never even called attention to those people’s fleeing the hells that the U.S. regime had created in not only Honduras but earlier in Guatemala and El Salvador — coups and U.S.-trained death squads.

In noting Obama’s failures, I’m not a Republican; I’m no one who is condemning Obama for his allegedly being a ‘Marxist' ‘Muslim’, or some other imaginary distraction from the reality (a reality which is too Republican for Republicans to be able to criticize — so, they’ve insteadignored that reality, and cited fake ‘reasons’ against him, including ‘death panels’ and other fabrications, which Republicans then forgot about after their fraudulent allegations against him became clear, to all but insane people, as being just Republican lies). 

Obama is a failure not because he wasn’t sufficiently conservative or ‘Christian' (as Republicans had constantly accused him of having been), but instead because he wasn’t sufficiently progressive (nowhere close to being a progressive) — and, in many ways, he was actually far more conservative than any of his duplicitous campaign-rhetoric had pretended him to be. He’s an extraordinarily gifted liar — he was phenomenally successful at that.

And I am not blaming Obama for congressional Republicans’ having been more obsessed with making him be a failed President, than they were interested in making America be a successful nation. Republicans lie at least as much as he does, just not nearly as skillfully. (They especially can’t feign compassion as skillfully as he.) This article thus does not blame him for what the overt Republicans were doing to cripple the little good he had actually tried to achieve — such as closing Guantanamo. It’s only about Obama’s failure.

Obama’s failure was all his own — it’s not because of the good things that Republicans had blocked him from doing; it is instead because of the horrible things (such as his failed TPP, TTIP and TISA trade-treaties, and his successful 2011 killing of Gaddafi, and 2014 coup in Ukraine) that were central to his actual agenda — a conservative, even reactionary, agenda, which favored the interests of the hundreds of billionaires who control U.S.-based international corporations, above the interests of the 300+ million American people, whom the U.S. President is supposed to be serving.

I voted for Barack Obama both times, because both of his opponents («Bomb bomb bomb Iran» McCain in 2008, and «#1 geopolitical foe» Romney in 2012) were clearly determined to focus America’s enormous military expenditures away from exterminating the jihadists and their Saudi funders, toward instead conquering Iran (McCain) and Russia (Romney), and also because Republicans — throughout at least the period extending from 1910 to 2010 — consistently had, in fact, produced a record of far less success with the U.S. economy, than did Democrats, and especially because neither McCain nor Romney had repudiated the very worst President in U.S. history (at least prior to Obama) and his atrocious record of lies and needless bloodshed and invasions: George W. Bush — Bush’s Party instead reaffirmed that monstrous President.

And, consequently, I never expected Barack Obama to turn out to have been, quite possibly, even a worse President than Bush. Nobody expected that — except Republicans, for whom Bush wasn’t bad enough to satisfy them (and certainly not bad enough for them to apologize for — so, they did not apologize for him).

Here, then, is Obama’s astounding record of failure:

«From a Democracy to a Plutocracy»

«Understanding President Obama’s Strategy to Force Cutting Social Security, Medicare, and Medicaid»

«Obama Finally Lays His Cards on the Table»

«Barack Obama Is Now Completing His Long-Held Plan to Subvert the Democratic Party»

«Obama: ‘I Don’t Care About the Public’s Welfare’».

As that last one documented, the Obama ‘Justice’ Department scored an all-time low number both of financial institution fraud prosecutions, and of white-collar-crime prosecutions. Obama came into power immediately after an economic crash that was loaded especially with financial-institution frauds. He protected the banksters. So, financial-executive-fraud prosecutions didn’t soar, like they should have; instead they plunged. Like Obama told the Wall Street bigs, near the start of his regime, on 27 March 2009, in private, inside the White House: «My administration is the only thing between you and the pitchforks. … I’m not out there to go after you. I’m protecting you… I’m going to shield you». And that’s what he did. And, on 20 September 2016, Dave Johnson of the Campaign for America’s Future, headlined «Banks Used Low Wages, Job Insecurity To Force Employees To Commit Fraud», so there was no way that the employees could keep their jobs except to do the crimes that they were being virtually forced by their bosses to do.

The criminality was actually at the very top — where Obama had promised «I’m protecting you». So, the TARP’s Inspector General urged, on 26 October 2016 (since the President was refusing to prosecute those people), «that Congress remove the insulation around Wall Street CEOs and other high-level officials by requiring the CEO, CFO and certain other senior executives to sign an annual certification that they have conducted due diligence within their organization and can certify that that there is no criminal conduct or civil fraud in their organization». The Special Inspector General of TARP, Christy Goldsmith Romero, was proposing this, as being the way to make prosecutions, of these top-level fraud-executives, so easy that the Obama Administration’s claims — that there was no top-level fraud that could be prosecuted — would be an even more blatant, absurdly false, lie, than it had been.

If this country were Ukraine, or even Russia, then Americans (trained by decades of a CIA-controlled ‘free press’) would say «Oh, of course those countries are corrupt, but America isn’t like that». But, at least under Barack Obama, ‘we’ were that. This was America — and ‘our’ President was protecting the elite fraudsters, instead of prosecuting them.

Nonetheless, anyone who would say that the American people are not better off now than they were at the end of Bush’s disastrous Presidency would be either misinformed or lying, because there’s lots of data showing that, finally, eight years after Bush, Americans are better off than they were at the end of Bush’s miserable eight years (even though not yet better off than Americans were prior to Bush’s 2007-2008 crash). And the Administration published on December 15^th its record of ‘successes’ «The 2017 Economic Report of the President» which was real but not adjusted for the fact that Obama came into office at the pit of the economic crash, which means that such ‘successes’ are almost inevitable, hardly a credit to Obama. But yet, the reality stands, that the Obama economic recovery was the weakest in the entire post-World-War-II period. Plus, the federal debt doubled on his watch, even while, as that Economic Report mentioned only in passing: «The United States has seen a faster increase in inequality in recent decades than any of the major advanced economies, and despite the historic progress made over the last eight years, the level of U.S. inequality remains high». Normally, after an economic crash, economic inequality reduces; but under Obama it remained at or near its pre-crash high. 

It was an economic record (and an invasion and coup record) of which any Republican President could justifiably have been proud (since conservatives favor inequality, a caste system) — but no Democrat could (except fake ones — such as Obama and the Clintons).

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Submitted by Michael Shedlock via MishTalk.com,

In the wake of the near collapse of the Dallas police and fire pension fund, a Dallas News editorial says Former Police, Fire Pension Managers Should Face Criminal Investigation.

Mayor Mike Rawlings is right to ask for a state criminal investigation into shady practices by the Dallas Police and Fire Pension System’s prior management.

 

The fund is on the verge of a potentially catastrophic collapse that could leave public safety workers, taxpayers and the City of Dallas on the hook for billions of dollars. And the reason stems from abuses under the former administrator Richard Tettamant, who was ousted in 2014.

 

The fund’s former managers bet heavily on risky investments such as luxury homes in Hawaii, a resort and vineyard in California and Dallas’ Museum Tower itself, and promised its hardworking police and fire employees unrealistic returns while enjoying lavish perks.

 

Those returns didn’t materialize, saddling the retirement fund’s new managers with $2 billion to $5 billion in unfunded liabilities. Frightened police officers and firefighters began a run on the fund, pulling more than $500 million out of it in recent weeks at a pace that would have drained the fund’s cash to dangerous levels.

 

The city of Dallas contends it is not legally responsible for the actions of the pension fund’s former managers, in part, because the city doesn’t control the fund, which was set up decades ago by the Texas Legislature. But the city is on the hook nonetheless; a failure of the fund would betray promises made to current and retired public safety workers and would make it much more difficult for the city to recruit new police officers and firefighters.

 

Too many people are at risk and those who put them there need to be called to account for their actions.

Criminal Witch Hunt

I am not here to defend the investment schemes of the fund managers. And I certainly take exception to alleged lavish perks. But this case is going nowhere.

If one wants to place blame, then blame rests squarely on the shoulders of the legislature that authorized the plan and established the absurd pension assumptions.

Perks did not cause the pension plan to be ridiculously underfunded. Rather, ridiculous plan assumptions steered the managers into risky assets.

In hindsight, it’s easy to say the fund should have thrown it all at Google, Apple, etc. Care to make the same case going forward?

Taxpayers on the Hook?

Taxpayers should not be on the hook for this mess. The promises were bound to fail from the get go.

The fault for this mess is squarely in the hands of politicians, not those running the fund.

Nearly every public pension plan in the nation is severely underfunded. There is nothing special about Dallas.

However, politicians will never point the finger at themselves. So the witch hunt is on.

Related Articles

1. Dallas Police Retiring in Droves, Taking Lump Sum Pensions, Fearing the Money Isn’t There (And It Isn’t)
2. Dallas Pension Showdown: Mayor Seeks to “Target Those Who Got Rich From System”
3. Not Just Dallas: Fort Worth Employees’ Pension Plan in Deep Trouble

The only realistic solution to this mess is massive haircuts on pension assumptions, one of two ways: Voluntary or in bankruptcy court.

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Readers of the Washington Post received some alarming news yesterday when the paper published a story alleging that those pesky “Russian hackers” were up to their no good tricks again and had managed to “penetrate the U.S. electricity grid through a utility in Vermont.”  The full headline read as follows:

The opening paragraph of WaPo’s story directly linked the “hack” of the Vermont utility to the same “Russian hacking operation dubbed Grizzly Steppe” that the Obama administration has blamed for the DNC and John Podesta email hacks.  Vermont’s Governor, Peter Shumlin, told WaPo that “Americans should be both alarmed and outraged” by these actions perpetrated by “one of the world’s leading thugs, Vladimir Putin,” before seemingly calling for further retaliatory actions from the Obama administration.

Vermonters and all Americans should be both alarmed and outraged that one of the world’s leading thugs, Vladimir Putin, has been attempting to hack our electric grid, which we rely upon to support our quality-of-life, economy, health, and safety. This episode should highlight the urgent need for our federal government to vigorously pursue and put an end to this sort of Russian meddling.

Moreover, Vermont Senator Patrick Leahy took the rhetoric to a whole new level by asserting a diabolical Russian plot to shut down the U.S. electrical grid in the middle of winter…a move that would most certainly kill off half the state’s population in an instant.

Of course, it didn’t take long for the New York Times and ABC to latch on to the story since it fits their “2016 election hacking” narrative so perfectly.

Our Russian “friend” Putin attacked the U.S. power grid. https://t.co/iAneRgbuhF

— Brent Staples (@BrentNYT) December 31, 2016

NEW: “One of the world’s leading thugs, [Putin] has been attempting to hack our electric grid,” says VT Gov. Shumlin https://t.co/YgdtT4JrlX http://pic.twitter.com/AU0ZQjT3aO

— ABC News (@ABC) December 31, 2016

 

Alas, there was just one minor problem, namely that the entire article was completely fabricated.  Apparently the esteemed “journalists” of the Washington Post didn’t even bother to contact the Burlington Electric Department to confirm their bogus story…and why should they…it fit the “Russian hacking” narrative so perfectly therefore it must be true, right?

Well, apparently not.  The quick spread of WaPo’s “fake news” story forced the Burlington Electric Department to issue a clarifying statement assuring worried residents that, indeed, their electricity grid had not been hacked, but rather a single “laptop not connected” to the grid had been found to have a malware virus.

Which forced the embarrassed Washington Post to quickly tone down their provocative headline…

…and supplement their original article with the following “Editor’s Note” admitting the entire premise of their original story was nothing more than “fake news.”

Editor’s Note: An earlier version of this story incorrectly said that Russian hackers had penetrated the U.S. electric grid. Authorities say there is no indication of that so far. The computer at Burlington Electric that was hacked was not attached to the grid.

Which drew quick reactions from twitter…

1) Not an infiltration of the power grid.
2) “Russian” malware can be purchased online by anyone.
3) See 1 & 2. https://t.co/bVIG8zQBsk

— Dell Cameron (@dellcam) December 31, 2016

Pretty amazing how badly the Post appears to have mangled this one. You didn’t call the Vermont utility regulator before publishing?

— Eric Geller (@ericgeller) December 31, 2016

 

…and Glenn Greenwald of The Intercept, who blasted WaPo for their “irresponsible and sensationalist tabloid behavior.”

THIS MATTERS not only because one of the nation’s major newspaper once again published a wildly misleading, fear-mongering story about Russia. It matters even more because it reflects the deeply irrational and ever-spiraling fever that is being cultivated in U.S. political discourse and culture about the threat posed by Moscow.

 

The Post has many excellent reporters and smart editors. They have produced many great stories this year. But this kind of blatantly irresponsible and sensationalist tabloid behavior – which tracks what they did when promoting that grotesque PropOrNot blacklist of U.S. news outlets accused of being Kremlin tools – is a by-product of the Anything Goes mentality that now shapes mainstream discussion of Russia, Putin and the Grave Threat to All Things Decent in America that they pose.

Ironically, a few weeks ago we noted that The Washington Post was all too happy to promote an anonymous website that described Zerohedge as “‘dark gray’ propaganda, systematically deceiving its civilian audiences for foreign political gain” (see “Washington Post Names Drudge, Zero Hedge, & Ron Paul As Anti-Clinton ‘Sophisticated Russian Propaganda Tools’“), all while presenting exactly zero evidence to support their preposterous claim.  Perhaps it’s time for WaPo to dedicate a bit more of its time to self-reflection.

via http://ift.tt/2iR6r6t Tyler Durden

Live Feed from Istanbul courtesy of RT:

* * *

Turkey greeted the New Year in a tragic fashion with at least 35 people were killed and 40 wounded around 1:15 am local time, after gunmen dressed as Santas opened fire on New Year’s revelers at a nightclub in Istanbul on Sunday morning, Istanbul Governor Vasip Sahin told reporters.

Turkey’s probably most famous night club Reina attacked by 2 who were dressed as Santas and opening fire randomly, local media reports

— Fercan Yalinkilic (@FercanY) December 31, 2016

Ambulances line up in front of the Reina nightclub in Istanbul, where a gun
attack took place during a New Year party.

The attacker shot a police officer and a civilian as he entered the popular Reina club in the Ortakoy district of Istanbul before opening fire inside the building, Sahin said, in what he described as a terrorist attack.

#BREAKING Istanbul Governor says at least 35 people killed, 40 wounded in attack at Reina night club #Turkey http://pic.twitter.com/irZD4Djtj1

— CNN Türk ENG (@CNNTURK_ENG) January 1, 2017

Attackers w kaleshnikovs reportedly still inside famous #Reina club.
Seen several dead & injured people footage & photos. #IstanbulAttacked. http://pic.twitter.com/3lNYNNeixS

— ilhan tanir (@WashingtonPoint) December 31, 2016

Sahin told local media that the assailants first killed the police officer, who was standing at the door of the club, and then went on a rampage inside, killing innocent civilians. A policeman and a civilian are reported to be among the two known casualties at the nightclub. There were two attackers involved, according to NTV, but conflicting reports also described a lone gunman.

The gunmen were dressed in Santa Claus outfits, wielding assault rifles, Turkish media said

??te ilk götüntüler. 40 civar? yaral? oldu?u belirtiliyor. http://pic.twitter.com/FExbV7e7Qy

— Murat ?ahin (@SunucuSpiker) December 31, 2016

The gunmen were dressed in Santa Claus outfits, wielding assault rifles, Turkish media said.

breaking An armed attack on a local club, Reina, in #Istanbul. Many casualties reported. At least 2 dead and over 50 ambulances on scene http://pic.twitter.com/GF1vhcCoW7

— Jewish Breaking News (@JBN) December 31, 2016

According to RT, one of the gunmen has reportedly hidden inside the club, while the whereabouts of the second one were not immediately clear. The number of casualties may rise, as local press estimates that between 700 and 800 people could have been in the club at the time of the attack, Mynet Haber reports.

Emergency crews have been evacuating injured people from the building as the police search for suspects. After the attackers stormed into the building, some club-goers jumped into the sea in panic, Turkish media cited eyewitnesses as saying.

A search and rescue operation for those who jumped in the water is being carried out by maritime police.

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Variously marketed as "all-weather", "all-season", or "bulletproof", the so-called "risk-parity" strategies of some of the world's largest hedge funds have been anything but 'stable' since the election as the combination of leverage and bond losses have crushed the gains from an exuberant equity market.

Promise people something for nothing and you are going to attract a lot of attention. Stumble in the process and the critics will be quick to pounce.

As The Wall Street Journal reports, the weeks since the election have been rough for one of the most polarizing investment strategies out there: risk parity.

The strategy – which simply put, involves using diversification – and sometimes borrowed money (leverage) – to find an (historically-optimized) balance between risk and return.

Bridgewater’s variant of this strategy, for example, has historically used borrowed money to invest about $1.50 for each dollar in assets, often putting the leverage in historically less-volatile bonds. The goal is stocklike returns with less volatility.

Problems occur when histroical relationships between asset-classes break down… just as they did during this year (when the historical norm of inversely correlated bond and stock prices reversed completely)…

The post-election rally in stocks and selloff in bonds hit these portfolios, embolding critics of the approach…

Bonds have been in a bull market for 35 years, so adding leverage would have produced strong returns for a modest increase in volatility, says Ben Inker of fund management firm GMO. He also argues that “volatility and risk are not the same.”

As WSJ concludes, the strategy has sharply underperformed both stocks and a traditional 60% stock 40% bond index fund offered by Vanguard since 1993.

Without the benefit of leverage, lower volatility equals lower returns. Even with it, though, there are occasional bumps in the road. For investors whose moods are as fickle as the weather, risk parity may involve more risk than reward.

via http://ift.tt/2ipN0m6 Tyler Durden

Submitted by Economic Prism's MN Gordon via Acting-Man.com,

Conjuring Up Visions

Today’s a day for considering new hopes, new dreams, and new hallucinations.  The New Year is here, after all.  Now is the time to turn over a new leaf and start afresh. Naturally, 2017 will be the year you get exactly what’s coming to you. Both good and bad.  But what else will happen?

 

Image of a recently discarded vision…

 

 

Here we begin by closing our eyes and slowing our breath.  We let our mind role back into the gray matter of our brain.  We wait patiently for new neurological connections to open up.  Then, ever so subtly, visions of the year ahead come into focus.

Will stocks go up or down?  What about gold and Treasury bonds?  Will the economy expand or contract?  Are we fated for World War III?  Who will win the Super Bowl? These are the questions – and more – we intend to answer.

Obviously, conjuring up visions is more art than science.  But so is Fed monetary policy. Nonetheless, before we get to it we must first lean upon ancient Chinese Philosopher Lao Tzu for a full disclaimer:

“Those who have knowledge, don’t predict.  Those who predict, don’t have knowledge.”

Hence, what follows comes from a place of zero knowledge.  We know nothing.  Still we sharpen our pencils and face our limitations.  What follows, for fun and for free, are several simple conjectures for the year ahead…

 

Global Recession

To start, the animal spirits and optimism that greeted Donald Trump’s election victory will flame out not long after inauguration day.  Without a major economic crisis, it will be near impossible to get substantial – $2 trillion deficit – spending approved by Congress.  Moreover, even if massive fiscal stimulus is approved it won’t make much of a lick to the economy for four quarters or more – if ever.

One lesson of the 2009 American Recovery and Reinvestment Act is that throwing money at infrastructure projects is more complex than commonly appreciated.  Shovel ready projects don’t exist.  In particular, shovel ready infrastructure projects that could generate significant growth in high paying jobs are hard to come by with just the inking of a stimulus bill.

 

The surplus shovels from the last batch of shovel-ready infrastructure projects are still in the process of being dumped…

 

No doubt, this lesson was quickly forgotten when the sky stopped falling just after the darkest days of the Great Recession.  So, too, it’ll be quickly remembered.  Soon enough, the realization that stimulus spending won’t provide an immediate lift to the economy will spread across Wall Street and the post-election stock market rally will reverse.

Similarly, the Fed’s efforts to ‘normalize’ interest rates will be tabled.  The economy simply can’t afford higher rates.  This isn’t Trump’s fault, of course.  He’s been handed a badly damaged economy.

Quite frankly, there’s really no way to fix it.  Decades of economic degradation are irreversible.  Adding new debt based stimulus will only further the overall divergence between debt and GDP.

Specifically, the debt will grow larger while GDP slouches forward.  On top of that, larger deficits will eventually ignite a level of consumer price inflation that hasn’t dramatically flared up since the early 1980s.  A scenario of slow growth and rising consumer price inflation will emerge at some point.

But first something else must come to pass.  By mid-year it will become all too apparent that the global economy, including the United States, Europe, China, and Japan, are in a full blown recession.

The Fed will quickly return to zero interest rate policy.  Ten Year Treasury yields will again slip below 2 percent as investors blindly plow their capital back into the ‘safest investment in the world’ at precisely the most dangerous time.

The S&P 500, presently near its all-time high, will rapidly descend to 1,200.  And, only then, when fear has reached its extreme, will Congress be ready to go along with Trump’s massive fiscal spending program.

 

The interesting Wile E. Coyote moment of blissful weightlessness shortly after passing the all time high…

 

Other Visions for 2017

That’s when things will go really haywire.  By then the effects of infrastructure stimulus will be considered too slow to save the economy from itself.  Calls for a direct economic jolt will be made by Larry Summers as he lobbies to replace Janet Yellen as Fed Head.

Direct monetization of the debt in the form of ‘tax rebate checks’ will be mailed out to every working age citizen whether they have a taxable income or not.  Alas, any temporary boost to the economy these efforts encourage will be overwhelmed by rising price inflation… and higher interest rates.

The strong dollar trend will also reverse in earnest by the second quarter.  About this time gold will once again glitter.  Consequently, the first three months of the year will be a fantastic time to accumulate and add to your physical gold hoard.  By mid-April gold will be back above $1,350 per ounce.

Indeed, the coming year will be one of great distress.  As the global economy slips and slides into recession, world politicians will look to distract blame from their own bungles.  They’ll seize any diversion afforded to them to channel the discontents of their masses.  They’ll blunder outward in search of a new mission and greater purpose for their young and idle.

Global factions are on a collision course for war.  We wish this weren’t so.  But, unfortunately, ongoing territorial disputes between China, Malaysia, Philippines, Taiwan, and Vietnam over the Spratly Islands in the South China Sea will continue to escalate.

Likewise, ancient territorial disagreements between Japan and China over the Senkaku-Diaoyu Islands in the East China Sea will deepen.  These disputes, and a burgeoning arms race, could provide the perfect diversion for China and Japan as their debt fueled economies unravel.

On a high note, we start the New Year hopeful that a lasting ceasefire has been reached in the proxy Syria war – in spite of the failings of the United Nations and the Obama administration.  In addition, there are numerous other reasons for optimism as we enter 2017.

For example, right now, in cities across the globe, brilliant minds at the fringe of scientific propriety are but one experiment away from the big energy breakthrough humanity’s been waiting more than 45-years for.  Unfettered by academic zealotry, this new scientific discovery will not come from a leading research or government institution.

Like all great discoveries in our time, it will come from a small team of eccentrics operating out of a garage on a shoestring budget. What we mean is, in the words of the late Gordon MacKenzie:

“Orville Wright did not have a pilot’s license.”

 

What is this? Flying without a license?  Obviously, the pre-world war age must have been pure chaos… not enough regulations, as Ben Bernanke would say!

 

Lastly, the Dallas Cowboys will win the Super Bowl.

 

The best part of the Dallas Cowboys. In late 2015 the team became the most valuable sports team in the world, surpassing Real Madrid – with its estimated net worth reaching $4 bn.

Happy New Year!

via http://ift.tt/2iRLvjF Tyler Durden