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In the latest scandal set to rock Germany, Spiegel reports that a German intelligence officer has been arrested over a suspected Islamist plot to bomb the agency’s headquarters in Cologne, raising fears that the spy agency itself has been infiltrated. The 51-year-old official had made a “partial confession” to the plot, Spiegel reports.

Germany’s domestic security agency

The suspect attempted to pass on “sensitive information about the BfV (Germany’s domestic security agency), which could lead to a threat to the office”, an official told the newspaper. The spy agency first became aware of the man’s activities about four weeks ago according to Der Spiegel.

A spokesman for the Bundesverfassungsschutz (BfV) declined to provide details on the man’s position at the agency or say when he joined. He also declined to comment on a report in Die Welt newspaper that the 51-year-old had planned to explode a bomb at the agency’s central office in Cologne.

“The man is accused of making Islamist remarks online under a false name, and offering internal information during chats,” the spokeswoman told AFP. The suspect has, since April, been engaged in gathering intelligence on the Islamist scene in Germany, according to Der Spiegel.

The alleged mole also offered to share sensitive data about the BfV which could have endangered the agency’s work, the spokesman said

The spokesman said the suspect had not previously attracted attention, adding: “The man behaved inconspicuously during his employment process, training and in his area of responsibility.”

Online chats were apparently found between the suspect and other Islamists in which he attempted to recruit them to the intelligence agency to mount an attack on “non-believers”.

The man’s family reportedly knew nothing of his conversion to Islam and subsequent radicalization.

German police have arrested several suspected Islamic State sympathisers in recent weeks, including a 20-year-old Syrian refugee who had tried to cross into Denmark with potential bomb-making materials. Two weeks ago, German police launched its biggest crackdown in Islamists in the nation with dawn raids in 60 different cities on about 190 mosques, flats and offices believed to have links to the Islamist missionary network ‘The True Religion.”

The BfV estimates there are about 40,000 Islamists in Germany, including 9,200 ultra-conservative Islamists known as Salafists, Hans-Georg Maassen, who leads the agency, told Reuters in an interview earlier this month. “We remain a target of Islamic terrorism and we have to assume that Islamic State or other terrorist organisations will carry out an attack in Germany if they can,” he said at the time.

ISIS claimed two attacks in late July – on a train near Wuerzburg and on a music festival in Ansbach – in which asylum-seekers wounded 20 people in total. In addition, security forces had to respond to an attack in a shopping centre in the city of Munich in which nine people were killed by an 18-year-old German-Iranian who had been in psychiatric treatment and was obsessed with mass killings.

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In just a couple of months, the largest pension fund in the United States, the California Public Employees’ Retirement System (CalPERS), will have to decide whether they’ll rely on sound financial judgement and math to set their rate of return expectations going forward or whether they’ll cave to political pressure to maintain artificially high return hurdles that they’ll never meet but help to maintain their ponzi scheme a little longer.  The decision faced by CALPERS is whether their long-term assumed rate of return on assets should be lowered from the current 7.5% down to a more reasonable 6%. 

As pointed out by Pensions & Investments, the decision has far-reaching consequences.  First, a lower rate of return will equate to higher contribution levels for municipalities throughout California, many of which are on the verge of bankruptcy already.  Second, given that CALPERS is the largest pension fund in the United States, a move to lower return hurdles could set a precedent that would have to be followed by other funds around the country in even worse shape (yes, we’re looking at you Illinois).

The stakes are high as the CalPERS board debates whether to significantly decrease the nation’s largest public pension fund’s assumed rate of return, a move that could hamstring the budgets of contributing municipalities as well as prompt other public funds across the country to follow suit.

 

But if the retirement system doesn’t act, pushing to achieve an unrealistically high return could threaten the viability of the $299.5 billion fund itself, its top investment officer and consultants say.

 

“Being aggressive, having a reasonable amount of volatility and (being) wrong could lead to an unrecoverable loss,” Andrew Junkin, president of Wilshire Consulting, the system’s general investment consultant, told the board at a November meeting. CalPERS’ current portfolio is pegged to a 7.5% return and a 13% volatility rate.

 

The chief investment officer of the California Public Employees’ Retirement System and its investment consultants now say that assumed annualized rate of return is unlikely to be achieved over the next decade, given updated capital market assumptions that show a slow-growing economy and continued low interest rates.

 

Still, cities, towns and school districts that are part of the Sacramento-based system say they can’t afford increased contributions they would be forced to pay to provide pension benefits if the return rate is lowered.

Of course, the math would seem to imply that a lower return assumption is warranted given low global interest rates and equity markets that are drastically overvalued by almost any historical measure.  Moreover, for 3 out of the past 5 calendar years, CALPERS has missed their 7.5% return threshold and their 10-year cumulative returns are 6.2%, a far cry from their 7.5% projection.

Only a year earlier, CalPERS investment staff and consultants had agreed that CalPERS was on the right track with its 7.5% figure. So confident were they that they urged the board to approve a risk mitigation plan that did lower the rate of return, but over a 20-year period, and only when returns were in excess of the 7.5% assumption.

 

Two years of subpar results — a 0.6% return for the fiscal year ended June 30 and a 2.4% return in fiscal 2015 — reduced views of what CalPERS can earn over the next decade. Mr. Junkin said at the November meeting that Wilshire was predicting an annual return of 6.21% for the next decade, down from its estimates of 7.1% a year earlier.

 

Indeed, Mr. Junkin and Mr. Eliopoulos said the system’s very survival could be at stake if board members don’t lower the rate of return. “Being conservative leads to higher contributions, but you still have a sustainable benefit to CalPERS members,” Mr. Junkin said.

Of course, mathematical realities have to be weighed against the risk of disrupting the ponzi scheme and forcing several California cities to the brink of bankruptcy.

But a CalPERS return reduction would just move the burden to other government units. Groups representing municipal governments in California warn that some cities could be forced to make layoffs and major cuts in city services as well as face the risk of bankruptcy if they have to absorb the decline through higher contributions to CalPERS.

 

“This is big for us,” Dane Hutchings, a lobbyist with the League of California Cities, said in an interview. “We’ve got cities out there with half their general fund obligated to pension liabilities. How do you run a city with half a budget?”

 

CalPERS documents show that some governmental units could see their contributions more than double if the rate of return was lowered to 6%. Mr. Hutchings said bankruptcies might occur if cities had a major hike without it being phased in over a period of years. CalPERS’ annual report in September on funding levels and risks also warned of potential bankruptcies by governmental units if the rate of return was decreased.

And, just to confirm the ponzi, P&I points out that for the 2015 fiscal year, CALPERS paid out roughly $5BN more in benefits than they received in contributions.

Compounding the problem is that CalPERS is 68% funded and cash-flow negative, meaning each year CalPERS is paying out more in benefits than it receives in contributions, Mr. Junkin said. CalPERS statistics show that the retirement system received $14 billion in contributions in the fiscal year ended June 30 but paid out $19 billion in benefits. To fill that $5 billion gap, the system was forced to sell investments.

 

CalPERS has an unfunded liability of $111 billion and critics have said unrealistic investment assumptions and inadequate contributions from employers and employees have led to the large gap.

We’ve seen this battle between math/logic and politicians played out numerous times in states all across the country.  Somehow we suspect that “math/logic” will continue to lose…better to bury your head in the sand for a couple of more years and pretend there is no problem.

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Submitted by Derrick Broze via TheAntiMedia.org,

The Federal Bureau of Investigations is facing a new lawsuit from EPIC (Electronic Privacy Information Center) regarding the agency’s latest biometric identification system. The FBI’s Next Generation Identification (NGI) system is made up of fingerprints, iris scans, faceprints, and other facial recognition data. EPIC is suing regarding the FBI’s plan to include tattoos and scars in the database.

According to EPIC:

“With NGI, the FBI will expand the number of uploaded photographs and provide investigators with ‘automated facial recognition search capability.’ The FBI intends to do this by eliminating restrictions on the number of submitted photographs (including photographs that are not accompanied by tenprint fingerprints) and allowing the submission of non-facial photographs (e.g. scars or tattoos).”

 

“The FBI also widely disseminates this NGI data. According to the FBI’s latest NGI fact sheet, 24,510 local, state, tribal, federal and international partners submitted queries to NGI in September 2016.”

EPIC is asking a judge to force the FBI to release records about its plan to share the biometric data with the U.S. Department of Defense. EPIC filed a Freedom of Information Act request last year, but the FBI has so far refused to release the 35 pages of responsive records. EPIC and privacy advocates are concerned about the potential for cases of mistaken identity and abuse of the collected data. EPIC also argues “the FBI stated that ‘[i]ncreased collection and retention of personally identifiable information presents a correspondingly increased risk that the FBI will then be maintaining more information that might potentially be subject to loss or unauthorized use.”

Although very little is actually known about the database, the Electronic Frontier Foundation (EFF) and EPIC have been able to uncover that the FBI would like to track every individual as they move from one location to another. In 2013, EPIC obtained a document that showed “NGI shall return an incorrect candidate a maximum of 20% of the time.”

In 2011, EFF observed the growing biometrics trend:

“Once the collection of biometrics becomes standardized, it becomes much easier to locate and track someone across all aspects of their life. EFF believes that perfect tracking is inimical to a free society. A society in which everyone’s actions are tracked is not, in principle, free. It may be a livable society, but would not be our society.”

In 2014, EFF received documents from the FBI related to the NGI system. Based on the records, EFF estimated the facial recognition component of NGI would include as many as 52 million face images by 2015. Indeed, the danger of abuse from facial recognition programs is on the rise. Activist Post recently highlighted a new report from Georgetown Law University’s Center for Privacy and Technology that details how law enforcement is using facial recognition software without the knowledge or consent of the people. The report, “The Perpetual Line-Up: Unregulated Police Face Recognition in America,” examines several cases of misuse or abuse of facial recognition technology.

Facial recognition software is not the only type of surveillance tool the FBI has an interest in. The Bureau is reportedly set to sign a contract with Dataminr that will provide the feds with an upgrade to social media monitoring software. According to the Federal Business Opportunities’ official government page, the contract will provide the FBI with around 200 licenses for Dataminr’s Advanced Alerting Tool. This upgrade “will permit the FBI to search the complete Twitter firehose, in near real-time, using customizable filters.”

The FBI claims to want the social media tool for detecting and catching terrorists, but it doesn’t take a huge leap of the imagination to see how this could be applied to U.S. citizens. The pursuit of facial recognition software and social media monitoring tools is just the latest step in the expanding war on privacy, which is itself a part of the eternal war on freedom. Whether privacy will exist as a concept in the near future depends on the steps the American people choose to take in the present moment.

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We previously reported on Druckenmiller’s sudden and dramatic U-turn in outlook following the Donald Trump presidential victory, when on November 10, the legendary Duquesne manager said that he is now “as hopeful as I’ve been in a long time”, and to validate his belief, he said that “I sold all my gold on the night of the election” because “all the reasons I owned it for the last couple of years seem to be ending”, first and foremost his expectations that inflation is now set to spike, forcing money out of safe assets – like gold and Treasuries – and into the US Dollar.

Druckenmiller became an overnight bull on hopes the Trump administration would unleash a fiscal stimulus-based  period of growth for the economy, with a a “large bet on economic growth.” He also told CNBC that “I’m short bonds, Bunds, Italian bonds, U.S. bonds” a reflection of his expectation of higher deficits and stronger growth.

Fast forward to today, when Stan Druckenmiller spoke at the Robin Hood Investors Conference in Brooklyn, repeated he is bullish on the American economy following the U.S. election, and anticipates a much stronger dollar and higher bond yields. Druckenmiller joined Jeff Gundlach in predicting that US 10Y yields may rise to 6% over the next year or two, while the euro could weaken far below parity and drop to 82 cents against the dollar. He’s also short the yen, European, Japanese bonds and also gilts.

Speaking at the conference, Druckenmiller said that he had been short the market heading into the election, expecting a Clinton victory and was prepared to short more had the market rallied “based on the quagmire of no options left after the eight year-old experiment of low rates.” However, he immediately went long on the Trump win on expectations of lower taxes and deregulation. Druck also said that Trump – of whom he is not a fan but is a fan of
Paul Ryan with whom Mike Pence is close – is expected to cut individual
and corporate taxes.

In short: the entire thesis changed overnight upon Trump’s victory, which also led to Drucknemiller’s liquidation of his gold holdings.

Druckenmiller quoted Larry Lindsey, who expects US GDP to rise as much as 6% by 2019, and expects the yield on the 10Y to correlate with that. He noted that the fair value of the 10Y Treasury is around 3%.

At this point he echoed the warning made just last night by Goldman Sachs, according to which a 10Y above 2.75% would put pressure on stocks, and said that if the 10Y rose to 3%, the S&P could see a 10% correction, but warned that the market could correct well prior to that in anticipation.

He then went on to bash Japan, whose debt-to-GDP he defined as “crazy”, slammed the BOJ’s monetary policy (accusing it of tightening on deflation and easing on strength). He also was far less sanguine about the fate of the Euro zone, and predicted that within 10 years the EU would break up.

Druckenmiller also noted that he is optimistic that the “rigged volatility” period of the last several years has finally ended, a transition which would be beneficial for hedge funds and concluded by casually telling the audiences that his returns in 2016 were in the low teens.

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Did the SEC just grow some teeth? For those who follow our quarterly reporting on the farce that is Tesla's earnings, the non-GAAP malarkey will be no surprise whatsoever – especially given the last quarter's "methodology changes." But it seems, as WSJ reports, that the company had come under fire from the SEC for using prohibited accounting metrics and sharing that information with investors.

As we noted ahead of the last earnings call, the electric-car maker is phasing out most of the non-GAAP adjustments it’s traditionally made, including ones for resale value guarantees or vehicles leased through banking partners.

Starting today, when the company discusses third-quarter adjusted non-GAAP earnings per share, it plans to exclude only stock-based compensation. The SEC in recent months has raised concern that public companies may be straying too far too often from Generally Accepted Accounting Principles. Though Tesla has telegraphed its plan for weeks, many analysts are only now revising forecast models and some are sitting out the guessing game entirely this time. That means it may be challenging to draw firm conclusions about whether Tesla missed or beat Wall Street expectations – giving added importance to what Chief Executive Officer Elon Musk says on a follow-up conference call about cash or production plans.

But now, as The Wall Street Journal reports, we have the details from The SEC…

The SEC said Tesla in its August earnings release used “individually tailored” measurements when the electric-vehicle maker added back certain costs to revenue calculated under generally accepted accounting principles. While the SEC allows the use of some non-GAAP metrics, certain figures that adjust revenue are prohibited as detailed in the regulator’s guidelines from May 17.

 

Tesla on Oct. 2 said in a press release it would drop non-GAAP revenue and other custom metrics flagged by the SEC from future earnings filings. The move came after the company in August said it was reviewing the SEC’s new accounting guidelines and taking steps to modify its non-GAAP information.

 

The SEC used the word “tailored” to describe revenue adjustments that are specifically prohibited in its May update on regulatory guidelines.

 

“Whenever the SEC uses that specific term it’s a clear indication that this specific adjustment should not be used, it’s very strong language,” said Olga Usvyatsky, vice president of research and CPA at Audit Analytics.

 

Tesla was also chastised for its slow response to new guidance on the use of non-GAAP figures.

 

The regulator criticized Tesla for failing to make a “substantive” case for providing non-GAAP figures to investors.

 

The SEC in this case is uncharacteristically specific about wanting to see Tesla’s revised disclosures in advance, Ms. Usvyatsky said. “The language is strong, it’s not ‘please, in future filings,’” Ms. Usvyatsky said.

All of which explains the sudden "methodology adjustments" in the last quarter…

And here's what those adjustments looked like…

But remember, even these numbers are questionabe as Tesla stopped paying its suppliers…

Musk and Mirrors indeed…

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

Did the SEC just grow some teeth? For those who follow our quarterly reporting on the farce that is Tesla's earnings, the non-GAAP malarkey will be no surprise whatsoever – especially given the last quarter's "methodology changes." But it seems, as WSJ reports, that the company had come under fire from the SEC for using prohibited accounting metrics and sharing that information with investors.

As we noted ahead of the last earnings call, the electric-car maker is phasing out most of the non-GAAP adjustments it’s traditionally made, including ones for resale value guarantees or vehicles leased through banking partners.

Starting today, when the company discusses third-quarter adjusted non-GAAP earnings per share, it plans to exclude only stock-based compensation. The SEC in recent months has raised concern that public companies may be straying too far too often from Generally Accepted Accounting Principles. Though Tesla has telegraphed its plan for weeks, many analysts are only now revising forecast models and some are sitting out the guessing game entirely this time. That means it may be challenging to draw firm conclusions about whether Tesla missed or beat Wall Street expectations – giving added importance to what Chief Executive Officer Elon Musk says on a follow-up conference call about cash or production plans.

But now, as The Wall Street Journal reports, we have the details from The SEC…

The SEC said Tesla in its August earnings release used “individually tailored” measurements when the electric-vehicle maker added back certain costs to revenue calculated under generally accepted accounting principles. While the SEC allows the use of some non-GAAP metrics, certain figures that adjust revenue are prohibited as detailed in the regulator’s guidelines from May 17.

 

Tesla on Oct. 2 said in a press release it would drop non-GAAP revenue and other custom metrics flagged by the SEC from future earnings filings. The move came after the company in August said it was reviewing the SEC’s new accounting guidelines and taking steps to modify its non-GAAP information.

 

The SEC used the word “tailored” to describe revenue adjustments that are specifically prohibited in its May update on regulatory guidelines.

 

“Whenever the SEC uses that specific term it’s a clear indication that this specific adjustment should not be used, it’s very strong language,” said Olga Usvyatsky, vice president of research and CPA at Audit Analytics.

 

Tesla was also chastised for its slow response to new guidance on the use of non-GAAP figures.

 

The regulator criticized Tesla for failing to make a “substantive” case for providing non-GAAP figures to investors.

 

The SEC in this case is uncharacteristically specific about wanting to see Tesla’s revised disclosures in advance, Ms. Usvyatsky said. “The language is strong, it’s not ‘please, in future filings,’” Ms. Usvyatsky said.

All of which explains the sudden "methodology adjustments" in the last quarter…

And here's what those adjustments looked like…

But remember, even these numbers are questionabe as Tesla stopped paying its suppliers…

Musk and Mirrors indeed…

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