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Submitted by Mike Krieger of Liberty Blitzkrieg blog,

Want to hear the worst idea in the history of horrible ideas? How about we take the industry responsible for destroying the U.S. economy and wrecking the lives of tens of millions of people, and then allow it to create a “government-industry cyber war council.”

It appears that trillions in taxpayer bailouts simply wasn’t enough for Wall Street. Noting that it can seemingly get whatever it wants whenever it wants, the industry is now positioning itself to overtly control U.S. “cyber” policy. What could go wrong?

The man behind the push appears to be ex-NSA chief Keith Alexander, who as I reported on last month, is now: Pimping Advice to Wall Street Banks for $1 Million a Month. As I mentioned in that post, one of Mr. Alexander’s most high profile clients is Wall Street’s largest lobbying group the Securities Industry and Financial Markets Association (SIFMA). Unsurprisingly, SIFMA is behind the latest push to formally merge Wall Street with the government intelligence apparatus. Mr. Alexander isn’t wasting any time.

Bloomberg reports that:

Wall Street’s biggest trade group has proposed a government-industry cyber war council to stave off terrorist attacks that could trigger financial panic by temporarily wiping out account balances, according to an internal document.

 

The proposal by the Securities Industry and Financial Markets Association, known as Sifma, calls for a committee of executives and deputy-level representatives from at least eight U.S. agencies including the Treasury Department, the National Security Agency and the Department of Homeland Security, all led by a senior White House official.

 

More centralization. This is the exact opposite of what we want or need. The establishment is very worried about the trend toward decentralization, and making its move on many fronts.

 

The trade association also reveals in the document that Sifma has retained former NSA director Keith Alexander to “facilitate” the joint effort with the government. Alexander, in turn, has brought in Michael Chertoff, the former U.S. Secretary of Homeland Security, and his firm, Chertoff Group.

Ah, Michael Chertoff again. One of the most shameless government cronies out there. His relentless desire to profit from the “war on terror” is one of the main reasons we have installed those useless naked body scanners at airports across the country. Recall I covered this in my post, License Plate Readers Stir Controversy in California as the NYPD Prepares to Use Drones, in which I noted:

Alexander had been pitching Sifma and other bank trade associations to purchase his services through his new consulting firm, IronNet Cybersecurity Inc., for as much as $1 million per month, according to two people briefed on the talks.

 

He has made much the same argument to Sifma as the association is now making to the government about the emergence of new kinds of software assaults. For several months beginning in fall 2012, major U.S. bank websites were hit by what is known as distributed denial-of-service attacks, in which hackers flood systems with information to shut them down.

 

The government-industry group would develop plans for “much quicker, near real-time” dissemination of information from agencies to the private sector and ways to “actively defend the industry” if preparations for a cyber attack are discovered in advance. Sifma is also seeking “pre-discussed and mutually understood protocols” for the industry to request government help during and after an attack.

Merging of private business and government. Fascism.

Representative Alan Grayson, a Florida Democrat, said today he was concerned that industry members in such a joint group could improperly get involved in pre-emptive strikes against a person or state planning an assault on the U.S.

 

Or they could get involved in strikes against U.S. citizens they find undesirable or problematic.

 

“This could in effect make the banks part of what would begin to look like a war council,” Grayson said in an e-mail. “Congress needs to keep an eye on what something like this could mean.”

 

The Senate Intelligence Committee plans today to take up a bipartisan bill — sponsored by Senators Dianne Feinstein, a California Democrat, and Saxby Chambliss, a Georgia Republican – – aimed at improving private-sector cyber-defenses. The bill includes rules that would insulate banks from liability arising from sharing information for cybersecurity, addressing a point financial institutions have raised in the past.

Naturally, Dianne Feinstein, one of Congress’ most dangerous and authoritarian members is behind this travesty.

As I said in the beginning, this is one of the worst ideas of all-time. Two of the most powerful, out of control and corrupt segments of American society, Wall Street and the intelligence community, want to formally merge in order to better protect their power structure in a “public-private partnership.” As I noted on twitter the other day:

I've realized that whenever you hear the term "public-private partnership" run for the hills. You are being screwed in every way imaginable.

— Michael Krieger (@LibertyBlitz) June 30, 2014

Although these partnerships are always a concern, this particular partnership is as dangerous as you get.

Full article here.

via Zero Hedge http://ift.tt/1mxg4Fh Tyler Durden

The age old question: what is the difference between a good trader and a bad trader… aside from the P&L at the end of the day of course.

While luck has always been a major component of the equation, figuring out just what makes one trader successful, while another blows all his funds on a trade gone horribly bad has always been the holy grail of behavioral finance. Because if one can isolate what makes a good trader “ticks, that something can then be bottled, packaged and resold at a massive markup (and thus, another good trade) in the process making everyone the functional equivalent of Warren Buffett.

Or so the myth goes. Alas, the distinction between the world’s only two types of traders has been a very vague one.

Until now.

According to a new study by researchers at Caltech and Virginia Tech that looked at the brain activity and behavior of people trading in experimental markets where price bubbles formed, an early warning signal tips off smart traders when to get out even as the “dumb” ones keep ploughing in and chasing the momentum wave. In such markets, where price far outpaces actual value, it appears that wise traders receive an early warning signal from their brains—a warning that makes them feel uncomfortable and urges them to sell, sell, sell.

“Seeing what’s going on in people’s brains when they are trading suggests that Buffett was right on target,” says Colin Camerer, the Robert Kirby Professor of Behavioral Economics at Caltech.   He is referring, of course, to Warren Buffett’s suggestion that investors should try to “be fearful when others are greedy and be greedy only when others are fearful.”

That is because in their experimental markets, Camerer and his colleagues found two distinct types of activity in the brains of participants—one that made a small fraction of participants nervous and prompted them to sell their experimental shares even as prices were on the rise, and another that was much more common and made traders behave in a greedy way, buying aggressively during the bubble and even after the peak. The lucky few who received the early warning signal got out of the market early, ultimately causing the bubble to burst, and earned the most money. The others displayed what former Federal Reserve chairman Alan Greenspan called “irrational exuberance” and lost their proverbial shirts.

The Experiment

The researchers set up a simple experimental market in which they were able to control the fundamental, or actual, value of a traded risky asset. In each of 16 sessions, about 20 participants were told how an on-screen trading market worked and were given 100 units of experimental currency and six shares of the risky asset. Then, over the course of 50 trading periods, the traders indicated by pressing keyboard buttons whether they wanted to buy, sell, or hold shares at various prices. 

Given the way the experiment was set up, the fundamental price of the risky asset was 14 currency units. Yet in many sessions, the traded price rose well above that—sometimes three to five times as high—creating bubble markets that eventually crashed.

During the experiment, two or three additional subjects per session also participated in the market while having their brains scanned by a functional magnetic resonance imaging (fMRI) machine. In fMRI, blood flow is monitored and used as a proxy for brain activation. If a brain region shows a relatively high level of blood oxygenation during a task, that region is thought to be particularly active.

At the end of the experiment, the researchers first sought to understand the behavioral data—the choices the participants made and the resulting market activity—before analyzing the fMRI scans.

“The first thing we saw was that even in an environment where you don’t have squawking heads and all kinds of other information being fed to people, you can get bubbles just through pricing dynamics that occur naturally,” says Camerer. This finding is at odds with what some economists have held—that bubbles are rare or are caused by misinformation or hype.

Next, the researchers divided the participants into three categories based on their earnings during their 50 trading periods—low, medium, and high earners. They found that the low earners tended to be momentum buyers who started buying as prices went up and then kept buying even as prices tanked. The middle-of-the-road folks didn’t take many risks at all and, as a result, neither made nor lost the most money. And the traders who earned the most bought early and sold when prices were on the rise.

“The high-earning traders are the most interesting people to us,” Camerer says. “Emotionally, they have to do something really hard: sell into a rising market. We thought that something must be going on in their brains that gives them an early warning signal.”

Perhaps this explains why the Fed’s job is so difficult: after all it has to pander to momentum-chasing idiots, the same group of people who always blows up in the end. Ironically, this is perhaps the best reason why the Fed’s centrally-planned attempt to intervene in markets and hand off the baton of price discovery to the momo group is doomed to failure.

Irrational Exuberance

To reveal what was actually occurring in the brains of the subjects—and the nature of that warning signal—Camerer and his colleagues analyzed the fMRI scans. Using this data, the researchers first looked for an area of the brain that was unusually active when the results screen came up that told participants their outcome for the last trading period. It turned out that a region called the nucleus accumbens (NAcc) lit up at that time in all participants, showing more activity when shares were bought or sold. The NAcc is associated with reward processing—it lights up when people are given expected rewards such as money or juice or a smile, for example. So it was not particularly surprising to see that the NAcc was activated when traders found out how their gambles paid off.

What was surprising, though, was that low earners were very sensitive to activity in the NAcc: when they experienced the most activity in the NAcc, they bought a lot of the risky asset. “That is a correlation we can call irrational exuberance,” Camerer says. “Exuberance is the brain signal, and the irrational part is buying so many shares. The people who make the most money have low sensitivity to the same brain signal. Even though they’re having the same mental reaction, they’re not translating it into buying as aggressively.”

Returning to the question of the high earners and their early warning signal, the researchers hypothesized that a part of the brain called the insular cortex, or insula, might be serving as that bellwether. The insula was a good candidate because previous studies had linked it to financial uncertainty and risk aversion. It is also known to reflect negative emotions associated with bodily sensations such as being shocked or smelling something disgusting, or even with feelings of social discomfort like those that come with being treated unfairly or being excluded.

Looking at the brain data of the high earners, the researchers found that insula activity did indeed increase shortly before the traders switched from buying to selling. And again, Camerer notes, “The prices were still going up at that time, so they couldn’t be making pessimistic predictions just based on the recent price trend. We think this is a real warning signal.”

Meanwhile, in the low earners, insula activity actually decreased, perhaps allowing their irrational exuberance to continue unchecked. 

Read Montague, director of the Human Neuroimaging Laboratory at the Virginia Tech Carilion Research Institute and one of the paper’s senior authors, emphasizes the importance of group dynamics, or group thinking, in the study. “Individual human brains are indeed powerful alone, but in groups we know they can build bridges, spacecraft, microscopes, and even economic systems,” he says. “This is one of the next frontiers in neuroscience—understanding the social mind.”

Conclusion

Clearly more work needs to be done, but what emerges is that momentum based strategies, those that by definition perpetuate bubbles, are the the most rewarding in the short run and the most disastrous in the long run. Ironically, in the artificial “BTFD” market created by the Federal Reserve, the only strategy that still works (aside from going long the most shorted names) is riding the momentum wave (whether it is facilitated by the Fed’s balance sheet or not). The problem is that momentum be definition sows the seeds of its own destruction. Perhaps this also explains why some of the most prestigious and acclaimed investors of more than one generation, those who “sold” as the market went higher, higher, higher and is now at post-bubble valuation levels, have abandoned the market entirely, leaving it to the momos and the Fed to keep perpetuating the lie that this time the bubble won’t burst.

And maybe the Caltech study should have been rerun in the Fed’s bizarro world: a place where only momentum strategies are rewarded – at least for now – while those who in theory would be “high earners” are mocked and ridiculed by the momo brigade whose only skillset is just to push the green button.

Who knows, maybe the lunatics have indeed taken over the asylum and this time indeed will be different.

And to think: the Fed has only engaged in QE for “ony” 5 out of its illustrious 100 year history. Consider the “wealth effect” Bernanke, Yellen and company left on the table by not launching QE back in 1913. Surely everyone would be a trillionaire by now and the world would be overflowing in “wealth”…

Source: “Irrational exuberance and neural warning signals during endogenous experimental market bubbles”

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

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

The World Cup is on. I sat and watched a game on the weekend with my son. “Dad, that guy completely faked that fall. Couldn’t the ref see that?”

My son who watches precious little television noticed immediately how many of the players were pretending to be hurt at the first available opportunity. Granted, he’s been exposed to Rugby, where the idea that a grown man tapped gently collapses to the floor in pretend agony would be grounds for immediate suspension of all and any social engagements in the entire country for life.

PR has become such a part of the game of football that it’s amounted to a bunch of grown men spending an inordinate amount of time pretending to be hurt in order to gain some favour. Soon they’ll be recruiting from Hollywood instead of football clubs.

In the same manner as the hollywood inspired footballers, the venture capital world is currently paying inordinate amounts of money for software companies which are making a lot of noise. It’s a spectacular time to be a noisy, preferably good looking entrepreneur with some solid “social connections” under your belt.

I’m AWESOME do you hear!

When I look at a private equity deal I like to think of the problem the company is solving, and in solving that particular problem how they intend to make money. I was recently pitched a deal and when questioning the founder on what problem was being solved and how the company would generate revenues he flat out said to me “No, we’re going for eyeballs first. We’ll figure out how to monetize it later”. Awesome… no thanks.

Wanna raise a bunch of stupid VC money? Start a tech related company, preferably build some sort of App, line up your current set of buzzwords. Social, optimization, scalable, engagement, viral and this one… thought leader. WTF is that? Most of the guys screaming to the world that they’re thought leaders have neither led nor do they think. Do all the above and you’re about ready to change the world… or if you get funded at least change your own world. A few million never hurt.

It is one hell of a show. Buy a ticket and watch it unfold.

Rdio just bought Tastemakerx for an “undisclosed” sum of money. This follows a frenetic pace of acquisitions in the tech space. Facebook’s purchase of WhatsApp, like bestiality, was questionable. All reasonable valuation methods have been kicked into touch. They no longer apply.

As the CEO of one of our portfolio companies recently expressed to me:

Tastemakerx is the Kim Kardashian of startups… no talent, no intellect, no abilities or product just a great salesman, in the press, and nice to look at.

He makes a valid point and he should know as his company has incredible technology, a great team, experienced operators (former Viacom and Craigslist) but they aren’t in everyone’s face.?? Their metrics are stellar by literally every measure but they’ve not be out trying to win the popularity contest.

I discussed some of this with my partner in crime Mark and he sent back the following:

Google gobbling Songza and the slew of acquisitions this week prove it’s just a popularity contest. PR and marketing. It’s why Dave McClure is successful. He doesn’t have a monopoly on good companies, he’s just makes more noise than everyone else and is more obnoxious. Any PR is good PR.?? I’m not sure startups should be worrying about their technology any longer.

 

Just spend the money on marketing and flying around to industry parties. It seems to be the way to get the money and get acquired. ??It reminds me of the “infamous pop artist, Damian Hirst. The guy was a stockbroker and saw how much his dumb, rich friends were paying for really bad art. So, he decides he can do that! He goes and creates a bunch of talent-less crap and sells it for hundreds of thousands… now millions. ??Ah, but this ain’t a bubble! LOL.

A personal story

In the late 90s I was working for a large investment bank. In order to protect the innocent we’ll use a fictitious name and call it MP Jordan. We were, you may recall, smack dab in the middle of the dot com boom. I vividly remember one particular instance where two kids in their early 20s came in to pitch a deal. They wanted us to underwrite and take them public.

Their “company” amounted to a website that would advertise and sell auto-parts to online consumers such as the local grease monkey down the road. Their “value” lay in the website and payment processing facilities. Though I found it ludicrous, they actually placed a huge amount of emphasis on their “signed contracts” with distributors. What these guys had done was to obtain contracts from the suppliers of multiple auto parts saying “yeah we’ll flog our stuff on your site”, and why wouldn’t they? They then got contracts from a half dozen London couriers to say “yeah we’ll deliver the goods from A-B”, and why wouldn’t they? That this was considered to have any value was just nuts but those were heady days.

Here was a company which had never sold as much as a spark plug, had zero customers, and therefore zero revenue and best of all was looking for an IPO. We never did the deal. Were we smart?

Not really. An equally large investment bank, which we’ll call Remmil Cynch to protect the innocent, led the IPO and these two kids walked away with more money than a Middle Eastern prince gets for his monthly allowance, which is a lot!

The bankers made a lot of money and the founders made a lot of money. Investors, on the other hand, got hosed… eventually as the company disappeared. In truth, the company didn’t need to disappear as it wasn’t really there in the first place. We called them vapourware companies. No assets, no collateral and no revenues.

That story and many like it have been told many times before but clearly they need repeating. The information is readily accessible. Heck, I just lifted the below directly from Wikipedia to show you how easy it is to educate oneself about this. Yet, here we are with investors making the same mistakes again.

• Boo.com – spent $188 million in just six months in an attempt to create a global online fashion store that went bankrupt in May 2000.
• Broadcast.com – Acquired by Yahoo! for $5.9 billion in stock, making Mark Cuban a multi-billionaire. The site is now defunct and redirects to Yahoo!’s home page.
• e.Digital Corporation (EDIG) – Long-term, unprofitable OTCBB-traded company founded in 1988 previously named Norris Communications. Changed its name to e.Digital in January 1999 when stock was at $0.06 level. The stock rose rapidly in 1999 and went from closing price of $2.91 on December 31, 1999, to intraday high of $24.50 on January 24, 2000. It quickly retraced and has traded between $0.07 and $0.165 in 2010. As of 2013, the stock continues to trade low, ranging between $0.12 and $0.19 a share.
• Freeinternet.com – Filed for bankruptcy in October 2000, soon after canceling its initial public offering. At the time Freeinternet.com was the fifth-largest ISP in the United States, with 3.2 million users. Famous for its mascot Baby Bob, the company lost $19 million in 1999 on revenues of less than $1 million.
• GeoCities – Purchased by Yahoo! for $3.57 billion in January 1999. Yahoo! closed GeoCities on October 26, 2009.
• theGlobe.com – Social networking service, that went live in April 1995 and made headlines by going public on November 1998 and posting the largest first day gain of any IPO in history up to that date. The CEO became in 1999 a visible symbol of the excesses of dot-com millionaires.
• GovWorks.com – Doomed dot-com featured in the documentary film Startup.com.
• inktomi – Valuation of $25 billion in March 2000.
• InfoSpace – In March 2000 this stock reached a price $1,305 per share, but by April 2001 the price had crashed down to $22 a share.
• Kozmo.com – offered one-hour local delivery of a number of retail items, from March 1998 to April 2001.
• Lastminute.com – IPO in the UK coincided with the bursting of the bubble.
• The Learning Company, bought by Mattel in 1999 for $3.5 billion, sold for $27.3 million in 2000.
• Lycos – Purchased by Spanish telecommunications provider Telefónica for $12.5 billion in 2000 to expand its Terra Networks online platform. It was sold in 2004 to Seoul, South Korea-based Daum Communications Corporation for $95.4 million in cash, less than 2% of Terra’s initial multi-billion dollar investment.
• MicroStrategy – Shares lost more than half their value on March 20, 2000, following their announcement of re-stated financials for the previous two years. A BusinessWeek editorial said at the time, “The company’s misfortune is a wake-up call to all dot-com investors. The message: It’s time, at last, to pay attention to the numbers”.
• Open.com – Was a big software security producer, reseller, and distributor, declared in bankruptcy in 2001.
• Pets.com – Former dot-com enterprise that sold pet supplies to retail customers before entering bankruptcy in 2000.
• Pixelon – Web streaming party that hosted a $16 million launch party in 1999 hosting celebrities such as The Who and the Dixie Chicks. Failed less than a year later when it became apparent that its technologies were fraudulent or misrepresented.
• Startups.com – “Ultimate dot-com startup” that went out of business in 2002.
• Think Tools AG – One of the most extreme symptoms of the bubble in Europe: market valuation of CHF 2.5 billion in March 2000, no prospects of having a substantial product (investor deception), followed by a collapse.
• Tiscali – Important Italian telecommunications company whose share price grew from €46 (IPO in November 1999) to €1,197 in four months. They fell to €40 afterwards in less than two months and have continued plummeting to well under 0.2 euros.
• VA Linux – A provider of built-to-order Intel systems based on Linux and other open source projects. They set the record for largest first-day IPO price gain; after the price was set at $30/share, it ended the first day of trading at $239.25/share, a 698% gain (9 December 1999). After that, its stock declined consistently. After several business transitions it became Geeknet. It provides the backdrop of the documentary Revolution OS.
• Webvan, Online grocer that operated on a “credit and delivery” system; the original company went bankrupt in 2001. It was later resurrected by Amazon.com.
• WorldCom, a long-distance telephone and internet-services provider that became notorious for using fraudulent accounting practices to increase their stock price. The company filed for bankruptcy in 2002 and former CEO Bernard Ebbers was convicted of fraud and conspiracy.
• Xcelera.com – Swedish investor in start-up technology firms that was one of the “greatest one-year rise of any exchange-listed stock in the history of Wall Street”.

OK so that was then and this is now. We’re smarter now right?

I present to you: Snapchat

Here we have some kid, Evan Spiegel to be exact, who got offered $3 billion by Facebook for a company with no revenues, no idea HOW or indeed IF it will ever make any revenue, and he turned the offer down. He was then offered $4 billion from Google and turned that down. My advice to this young extremely fortunate kid would be take the money and run. Is Snapchat even going to be around in another 10 years time?

Now I realise that I’ve never been offered a billion dollars for anything except in Zimbabwe but that’s another story, so maybe Mr Spiegel proves me wrong and gets $20 billion for his creation, which, as far as I can tell, changes the lives of 16 year old teenage girls all over shopping malls across the United States but only for about 30 seconds, which is about the attention span of app happy youth. Or maybe, just maybe, investors start looking at the gadgets and string of Apps on their smart phones, and they begin comparing them to things like… oh let me see, food, infrastructure, healthcare, logistics, natural resources such as zinc, copper, coconuts, or that barbarous relic gold, and they begin to wonder to themselves… just maybe the next software iteration that tweaks a text message isn’t actually worth billions of dollars and maybe, just maybe it’s actually worthless.

I propose that venture capital firms are spending money in entirely the wrong places. Fully 37% of all VC funding is currently going into software deals. It has recently surpassed the figure achieved in the early 2000s. Remember when we had the last tech bubble.

In much of the developed world we’re getting smarter phones and worse infrastructure. I’m shocked at how transportation and energy infrastructure is over 50 years old in most instances, and falling apart. But don’t worry. You can always take a Snapchat of the potholes in your neighborhood and tweet it to your mates before updating your Facebook status.

– Chris

 

“My friends are people who like building cool stuff. We always have this joke about people who want to just start companies without making something valuable. There’s a lot of that in Silicon Valley.” – Mark Zuckerberg

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

Submitted by James E. Miller of Mises Canada,

In politics, words can be dangerous weapons. The terms we use can either accurately or inaccurately reflect what the government is up to. George Orwell understood this better than anyone, and his essay “Politics and the English Language” is a great denouncement of the abuse of words at the hands of the political class. Though he was writing at the end of World War II, Orwell’s criticism still rings true today. In the age of around-the-clock news and easily digestible sound bites, political speech and writing have largely become “the defense of the indefensible.”

The ongoing debate in the United States over the merits of the Export-Import Bank – a government institution that makes loans to governments and private companies abroad to boost domestic exports – exemplifies this tug-of-war between language. The D.C. lobbying cabal and its puppets in Congress are staunchly defending the institution as a job-creator and economic necessity. A handful of free market organizations are attacking the bank for being a deliberate form of crony capitalism. For years, the intrepid Tim Carney of the Washington Examiner has led the fight to dismantle the Ex-Im Bank, calling out the unfair advantage given to companies like Boeing through government-backed underwriting. His efforts finally appear to be gaining steam. Newly elected House Majority Leader Kevin McCarthy has indicated his support for allowing the charter of the Bank to expire come the end of September. All the lower chamber of Congress has to do is sit on their laurels and the relic of the New Deal era will finally begin to unravel.

Of course, special interests in Washington aren’t going down without a fight. A well-financed lobbying effort is pulling levers behind the scenes to make sure the Bank remains functional. The goal is to convince the American people that the Ex-Im Bank promotes the national interest. Using buzz phrases like “investment at home” and “creating jobs,” the strategy is to obfuscate their true agenda: preserving the trough from which they feed.

So here’s my radical suggestion to help counter to the pro-crony forces: be upfront about the true sinister nature of organizations like the Ex-Im Bank. Let’s call a spade a spade, and finally describe the Ex-Im Bank what it truly is: fascism. Such a word comes off as a boogey man term used to rile up emotions. But in the battle of ideas, sophistry always comes up short. Just as the shortest distance between two points is a straight line, precise words are better than vague words when it comes to making a point.

Fascism was best defined by Italian historian Gaetano Salvemini as an economic system where “profit is private and individual” and “loss is public and social.”  What’s a better merger of government and business than a bank that makes loans to finance the purchase of private-made goods, all of which is backed by taxpayers?

The use of the word “fascism” is guaranteed to turn some people off. The economic system is seen as authoritarian and tyrannical. But calling things as they are penetrates the bubble of specious reasoning. It forces the hand of regime defenders; either they must defend the corrupt system they favor or back off.

Some more astute commentators may claim the tactic is too coarse for the mission. Politics, they say, should be a gentleman’s game where rational discourse is paramount. I completely agree; hence I advocate using fascism to describe exactly what the Ex-Bank is: a government entity used to shore up the balance sheets of for-profit companies.

There is nothing unfair about using proper definitions. What lack fairness are the dishonest arguments being made in favor of the Bank. Robert Samuelson of the Washington Post argues that the Ex-Im Bank “turned a profit in 2013 and paid $1.1 billion to the Treasury.” Not only that, but the Bank “helped support 205,000 jobs” last year, and should thus be allowed to survive given the weak economy.

These kind of arguments are typical of mainstream press reporters. Every government agency is somehow turning a profit. And all government personnel are desperately needed so as to not rock the economy into a recession. Lines of argument such as this take economics to be a straightforward science devoid of nuanced meaning. If something creates a job, then it’s good. If a profit is recorded, that’s also a sign of success. But economic prosperity is never that easy. If the world worked that way, then communism would be an unparalleled success instead of a disaster.

Just the same, the Ex-Im Bank appears to be a sound institution due to fraudulent accounting. According to the Congressional Budget Office, when the Bank is subject to fair-value accounting rules, it actually lost $2 billion over the past decade. In other words, if it were a private institution, the Bank would go the way of Pontiac cars or Circuit City.

If the Ex-Im Bank is a money-loser, then it doesn’t matter how many jobs it creates. The labor and resources that make the Bank functional are being wasted. Proponents of the institution are therefore arguing that taxpayers throw their money away so that Boeing and other big manufacturers get a subsidy. Basically, they are making the case for fascism in the American economy. Is it so much to ask that they be up front about it?

The notion that fascism is somehow foreign to the U.S. is disproven by the very founding of the Ex-Im Bank. As the Franklin Roosevelt administration struggled to get the economy out of the Great Depression, they forthrightly acknowledged they borrowed policy from Mussolini and the fascists. Presidential adviser Rexford Tugwell noted in his private diary that the Italian dictator had done “many of the things which seem to me necessary.” One report from the National Recovery Administration – a bureaucracy created by the National Recovery Act- declared the “Fascist Principles are very similar to those we have been evolving here in America.” Roosevelt himself called Mussolini “admirable” in a letter to an American envoy. In another letter, the president told the addressee “I don’t mind telling you in confidence that I am keeping in fairly close touch with the admirable Italian gentleman.”

If the father of the U.S. welfare state was brave enough to admire fascism in its day, why aren’t the endorsers of a strong, centralized government today? The answer is that “fascism” is now a catch-all word for bigoted conservativism – not a genuine economic system. As Orwell wrote following the last World War, the word “Fascism has now no meaning except in so far as it signifies ‘something not desirable.’” If that’s the working definition today, I see no reason to not use it. The economic merits of the Ex-Im Bank are in serious question. Arguments for its closure would be best helped with some more forceful language.

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

“There is a colossal bubble in all asset prices and eventually it will burst,” is the subtle recurring message from The Gloom, Boom, & Doom Report’s Marc Faber, warnings that “maybe has begun to burst already.” While Faber admits he has called for such a correction previously, he notes that the difference now is that “valuations are so much higher; and contrary to what the mainstream economists believe, I don’t believe the global economy is strengthening; in fact I believe it is weakening.” Furthermore, while “you never know what will trigger for a bull market or bear market is until after the fact,” Faber offers 3 factors (aside from the Fed) that could trigger a 30% crash or more… beginning with “a) In The White House we have a very poor President – which will lead to political issues domestically in the US,” which are not priced in.

 

 

Annotated Transcript:

“There is a colossal bubble in all asset prices and eventually it will burst.. and maybe has begun to burst already”

 

“We are not going to have a ‘correction’; but we are going to have a bear market”

 

“You never know what will trigger a bull market or what will trigger a bear market – you only know it after the fact”

 

“When markets peak out, nobody can believe that it could go down and we have an environment where everybody puts their faith in central banks printing money – and therefore asset prices cannot go down“

 

“I look for 30% – if you can’t buy something with the expectation that it could drop 30% then don’t even get out of your bed in the morning because we have within markets now a lot of volatility” – no matter how obscured it is by the VIX.

 

While Faber admits he has called for such a correction previously, he notes that the difference now is that “valuations are so much higher; and contrary to what the mainstream economists believe, I don’t believe the global economy is strengthening; in fact I believe it is weakening.”

 

Analysts are all bullish for the next quarter’s earnings but as Faber says “I have never met an analysts who predicted a downturn in earnings“

 

The fact is simply, he notes “earnings have been boosted by stock buybacks not by revenue growth and earnings are grossly inflated due to artificially low interest rates… don’t rely on analysts expectations as of today.”

 

Faber thinks there are other factors that could drive prices down aside from a Fed that raises rates sooner rather than later (which he doesn’t expect)

 

a) In The White House we have a very poor President – which will lead to political issues domestically in the US (which are not priced in);

 

b) we have numerous geopolitical issues to consider (that are not priced in); and

 

c) We could have potentially a much higher oil price (which is not priced in)

*  *  *

The rest of the clip offer sup a Gartman vs Schiff debate over the merits of gold… worth the price of admission (and a desparate attempt by Gartman to explain how he was so wrong about Corn)

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

Submitted by $hane Obata and TRIGGER$

GUNS: The Good, The Bad, And The Ugly

Gun ownership and gun control are very controversial topics. If more people own guns then will there be more violence and more crime? If everyone is allowed to own guns then will there be negative consequences? Both of these questions are debateable and each of them has its proponents and opponents.

In this article we’ll take a look at some interesting gun statistics from an objective viewpoint. The point is not to argue for or against gun ownership and or gun control. With that said, let’s look at the good, the bad, and the ugly gun statistics.

The Good

Gun ownership in America – as a percentage of households – has been in a shallow decline since 1960. In 1960 almost 50% of households had a gun. In 2010 that percentage was down to around 40%.

Furthermore, the rates of firearm homicide deaths and non-fatal firearm crimes have also been falling steadily. From 1981 to 2010 those rates fell 45 and 75%, respectively.

Lastly, the incidence of intentional homicides per 100,000 people is lower in the US than it is in many other countries.

h/t @wu_tang_finance

In sum, the rates of gun ownership and firearm homicides deaths and non-fatal firearm crimes have been in decline for a while. Furthermore, the intentional homicide rate in the US is relatively low.

The Bad

The homicide rate in the US is higher than it is in most other developed nations.

h/t @gunsenseUSA

Moreover, gun ownership per 100 people is higher in the US than it is anywhere else in the world.

h/t @wu_tang_finance

Unfortunately, mass shooting casualties continue to be a problem for the US.

Homicide and gun ownership rates are down in the US, but relative to other countries, they’re still high.

In addition, annual mass shooting casualties are on the rise.

The Ugly

Spending on guns and ammo has risen with the gini ratio – a statistical measure of income inequality.

source: http://ift.tt/K7p8ck

it’s also interesting to note that violent crimes are often committed by the same perpetrators.

If the US wants to reduce the incidence of violent crime then it should shift its focus away from incarceration / punishment…

…to treatment, rehabilitation, and prevention.

There’s no two ways about it – guns are dangerous.

That said, it’s not a question of “how many guns are out there?” – it’s a question of who’s holding them.

We live in a reactionist society. Often times, we don’t deal with important issues until we have to. If we can take a more proactive stance and concentrate on preventing gun crimes, on reducing the number of repeat offenders, and on the rehabilitation and reintegration of criminals into society then it’s likely that the rate of firearm homicides and the financial burden associated with incarceration would fall.

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

"America is a marvelous idea, a unique idea, fantastic idea. I’m extremely pro-American. But America has ceased to exist,” says Doug Casey in this fascinating interview with Reason TV’s Nick Gillespie. Casey warns of the political, social, and economic challenges the US must conquer as well as lessons we can learn from failed states.

 

 

Read more here

A severe economic and/or political crisis can sneak up on you before you know it. Learn from the three harrowing stories of international crisis survivors – and the insightful comments of experts like Doug – how to recognize a crisis in the making. You may need those skills soon because it can, and will, happen here… Watch Meltdown America, a 30-minute free documentary that predicts the economic and political unraveling of the US.

via Zero Hedge http://ift.tt/VHkRua Tyler Durden