Author: admin

“…There’s only one thing left to do now, gentlemen… Let’s find a way to blame Bush.”

 

 

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/Ivvdtq98udo/story01.htm Tyler Durden

The Obama administration, which has a spotless track record in taking credit for everything that goes right (all of which is thanks to Bernanke’s flooding the world with record liquidity as when the No Free Lunch bill comes due, it will be some other president’s clean up), has an even more impeccable history of deflecting responsibility for all that goes wrong.

Most recently, it was the horrific rollout of Obamacare which as we observed earlier in the week, was all “someone else’s fault” but certainly not the government’s. Now, as the Snowden whistleblowing scandal has found its third (or fourth) wind courtesy of a furious international response following revelations that Obama was listening in to Merkel and at least 34 other world leaders’, it is time for perhaps the most stunning revelation of all: you see, Obama is shocked, shocked to learn that cell phone spying – of virtually everyone on the planet – is going on in here.

From the WSJ:

The White House cut off some monitoring programs after learning of them, including the one tracking Ms. Merkel and some other world leaders, a senior U.S. official said. Other programs have been slated for termination but haven’t been phased out completely yet, officials said. 

 

The account suggests President Barack Obama went nearly five years without knowing his own spies were bugging the phones of world leaders. Officials said the NSA has so many eavesdropping operations under way that it wouldn’t have been practical to brief him on all of them.

 

They added that the president was briefed on and approved of broader intelligence-collection “priorities,” but that those below him make decisions about specific intelligence targets.

 

The senior U.S. official said that the current practice has been for these types of surveillance decisions to be made at the agency level. “These decisions are made at NSA,” the official said. “The president doesn’t sign off on this stuff.” That protocol now is under review, the official added.

 

NSA spokeswoman Vanee Vines said NSA based its operations on priorities set across the U.S. government. “The agency’s activities stem from the National Intelligence Priorities Framework, which guides prioritization for the operation, planning and programming of U.S. intelligence analysis and collection,” she said.

 

The administration didn’t end all operations involving world leaders following this summer’s revelations because some of the programs are producing intelligence of use to the U.S.

Time to throw the low-cost alternative:  where besides every single bank in the past 5 years have we seen this model? But more importantly, as so many were predicting, five years of zero knowledge means… it was all Bush’s fault again!

Which after seeing the following snapshots from 2006, makes some sense.

It makes just as perfect sense that supposedly mid-level janitors decide which leaders of the free and not so free world they will decide to eavesdrop on without even informally informing the president.

It makes even greater sense that a government which is desperately strapped for money, can spend billions on wiretaps in Spain, where El Mundo reports, the NSA monitored 60.5 million Spanish phone calls between December 2012 and January 2013.

Because when in doubt, spend taxpayer money when not even the president has any idea why the entire world is suddenly quite angry with him and America. And then panic when the government shutdown results in the furlough of thousands of spies otherwise busy eavesdropping on Frau Merkel.

But going back to the original point: with just under 3 years to go in his term, an economy that is foundering and which not all the moneyprinting in history can offset the inevitable, a budget deficit that depsite recent dips is still the largest until 2008, does Obama actually have any idea what the US Government is spending money on, or is his daily teleprompted address the only thing that Obama actually has a hand in.

As for the punchline: remember when Obama said he would have disclosed all the Snowden revelations anyway? That is now in the running for funniest phrase of the year.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/4W417Q9EdWA/story01.htm Tyler Durden

The Obama administration, which has a spotless track record in taking credit for everything that goes right (all of which is thanks to Bernanke’s flooding the world with record liquidity as when the No Free Lunch bill comes due, it will be some other president’s clean up), has an even more impeccable history of deflecting responsibility for all that goes wrong.

Most recently, it was the horrific rollout of Obamacare which as we observed earlier in the week, was all “someone else’s fault” but certainly not the government’s. Now, as the Snowden whistleblowing scandal has found its third (or fourth) wind courtesy of a furious international response following revelations that Obama was listening in to Merkel and at least 34 other world leaders’, it is time for perhaps the most stunning revelation of all: you see, Obama is shocked, shocked to learn that cell phone spying – of virtually everyone on the planet – is going on in here.

From the WSJ:

The White House cut off some monitoring programs after learning of them, including the one tracking Ms. Merkel and some other world leaders, a senior U.S. official said. Other programs have been slated for termination but haven’t been phased out completely yet, officials said. 

 

The account suggests President Barack Obama went nearly five years without knowing his own spies were bugging the phones of world leaders. Officials said the NSA has so many eavesdropping operations under way that it wouldn’t have been practical to brief him on all of them.

 

They added that the president was briefed on and approved of broader intelligence-collection “priorities,” but that those below him make decisions about specific intelligence targets.

 

The senior U.S. official said that the current practice has been for these types of surveillance decisions to be made at the agency level. “These decisions are made at NSA,” the official said. “The president doesn’t sign off on this stuff.” That protocol now is under review, the official added.

 

NSA spokeswoman Vanee Vines said NSA based its operations on priorities set across the U.S. government. “The agency’s activities stem from the National Intelligence Priorities Framework, which guides prioritization for the operation, planning and programming of U.S. intelligence analysis and collection,” she said.

 

The administration didn’t end all operations involving world leaders following this summer’s revelations because some of the programs are producing intelligence of use to the U.S.

Time to throw the low-cost alternative:  where besides every single bank in the past 5 years have we seen this model? But more importantly, as so many were predicting, five years of zero knowledge means… it was all Bush’s fault again!

Which after seeing the following snapshots from 2006, makes some sense.

It makes just as perfect sense that supposedly mid-level janitors decide which leaders of the free and not so free world they will decide to eavesdrop on without even informally informing the president.

It makes even greater sense that a government which is desperately strapped for money, can spend billions on wiretaps in Spain, where El Mundo reports, the NSA monitored 60.5 million Spanish phone calls between December 2012 and January 2013.

Because when in doubt, spend taxpayer money when not even the president has any idea why the entire world is suddenly quite angry with him and America. And then panic when the government shutdown results in the furlough of thousands of spies otherwise busy eavesdropping on Frau Merkel.

But going back to the original point: with just under 3 years to go in his term, an economy that is foundering and which not all the moneyprinting in history can offset the inevitable, a budget deficit that depsite recent dips is still the largest until 2008, does Obama actually have any idea what the US Government is spending money on, or is his daily teleprompted address the only thing that Obama actually has a hand in.

As for the punchline: remember when Obama said he would have disclosed all the Snowden revelations anyway? That is now in the running for funniest phrase of the year.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/4W417Q9EdWA/story01.htm Tyler Durden

Submitted by Steen Jakobsen, CIO Saxo Bank (via Trading Floor.com),

I’ve been starting my speeches for some time now by saying: “I am the most optimistic I have been in almost thirty years in the market—if only because things can’t get any worse.”

Is that true, and more importantly, how do we get a fundamental change away from this extend-and-pretend which prevails not only in Europe but also the world?

History tells us that we only get real changes as a result of war, famine, social riots or collapsing stock markets. None of these is an issue for most of the world—at least not yet—but on the other hand we have never had less growth, worse demographics, or higher unemployment since WWII. This is a true paradox that somehow needs to be resolved, and quickly if we are to avoid wasting an entire generation of European youth.

---

^{The West's central banks' policies are akin to Soviet-style central planning. Photo: Eugene Ivanov}

---

Policymakers try to pretend we have achieved significant progress and stability as the result of their actions, but from a fundamental point of view that’s a mere illusion. Italian banks today own more government debt than before the banking crisis, leaving them systematically more exposed to their own government, not less. The spread on government bonds between Germany and Club Med is down below historic averages, but the price has been a total suspension of the “price discovery” of money.

The price discovery of money is the cruel capitalistic part of any system. An economics  textbook would call it the modus operandi by which capital is allocated where it can find the highest marginal utility. In practice, this should mean that the market dictates the price of money beyond one year—while at durations of less than one year, the central banks determine the price of money. The beauty of the system is that money is allocated in an auction where the highest bidder for “money” or “credit” gets filled on the price he or she deems to match his expected price of money.

Contrast the market-driven model with the present “success story” of relatively low sovereign spreads in Europe, which are driven by the European Central Bank president Mario Draghi’s promise to do "whatever it takes" to keep the euro out of trouble. He has threatened to activate the European Financial Stability Facility and the European Stability Mechamism plus the full arsenal of policy tools to ensure stability.

By doing so, he has effectively suspended price discovery for sovereign debt and for money, as the ECB and local central banks will provide infinite liquidity to local banks and hence indirectly to their government in any market conditions. This one-sided offer from the ECB and the market means there is no power to discipline the government with higher rates or to allocate credit more generally. We have simply disconnected the market and the price of money.

This comes after Draghi’s longer-term refinancing operation, a cheap funding for banks with little or no collateral, or the closest thing to quantitative easing you can have without calling it quantitative easing.

This is a problem because corporations that need to finance long-term projects, like building a power station over six to eight years, need a price for the credit they require throughout the building period. Right now they have an almost flat yield curve from zero to 30 years, which would be fine if it were realistic. But the problem is that one day in the “distant future” when the market normalises, interest rates should revert to their normal price, which is roughly inflation plus a risk premium.

In the case of an industrial company, an appropriate loan rate calculation could be something like: inflation plus Libor plus a risk spread, which might work out to about seven percent. Compare this with the rates available for highly creditworthy companies. Recently, Nestle  was able to issue a four-year corporate bond at 0.75 percent—the lowest ever. Yes, it’s nice for Nestle but remember the situation is created by the central banks presence in the market, not just due to the financial strength of Nestle.

A move from less than one percent to seven percent would administer an ugly shock to companies.  We have created a negative vicious circle in which not only investors, but also companies are depending on low interest rates forever. They have priced their future earnings and costs on government support prices rather than on realistic market prices.

The worst thing about the situation, however, is that the reason a blue chip company like Nestle can borrow at less than one percent in the capital market is the lack of alternatives for banks and investors. Less creditworthy small and medium enterprises (SMEs) which make up as much as 80 percent of many countries’ economies are not allowed to borrow. They are deemed too risky to lend to at the current “market rates” even though they hold the key to improving the employment and productivity picture.

They are willing to work cheaper, longer, harder and with higher risk tolerance in order to survive. So the remaining 20 percent of the economy occupied by large and publicly listed companies and banks gets 95 percent of all credit and 99 percent of all political capital. In other words, blue chips receive artificially low interest rates only because the SMEs don’t get any credit. Herein lies my continued belief in the my traditional opening statement: things must get better soon because they can hardly get any worse.

We have never been in a more dysfunctional state at the corporate, political and individual level in history. It’s time to realise that the reason capitalism won the war against communism in the 1980s was its strong market based economy—itself based on price discovery. Now the policymakers in their “wisdom” are copying everything a planned economy entails: central planning and control, no price discovery, one supplier of credit, money and the corollary effect of suppressing SMEs and even individuals.

Finally, history offers a compelling lesson: the last time the Federal Reserve engaged in a sizeable quantitative easing was in the 1940s. The low growth and falling inflation only reversed when the Federal Reserve stopped intervening due to a severe recession brought on by the policy mistakes of keeping QE in place too long.

In 2014, a bout of near or real recession in Germany and the US could kick start the price discovery mechanism again, which will help us to start healing the deep wounds left by years of policymakers compounding their errors with round after round of extend-and-pretend. Getting to the bottom is good in one sense: the only way is up.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/1IGfps1Fawg/story01.htm Tyler Durden

Submitted by Steen Jakobsen, CIO Saxo Bank (via Trading Floor.com),

I’ve been starting my speeches for some time now by saying: “I am the most optimistic I have been in almost thirty years in the market—if only because things can’t get any worse.”

Is that true, and more importantly, how do we get a fundamental change away from this extend-and-pretend which prevails not only in Europe but also the world?

History tells us that we only get real changes as a result of war, famine, social riots or collapsing stock markets. None of these is an issue for most of the world—at least not yet—but on the other hand we have never had less growth, worse demographics, or higher unemployment since WWII. This is a true paradox that somehow needs to be resolved, and quickly if we are to avoid wasting an entire generation of European youth.

---

^{The West's central banks' policies are akin to Soviet-style central planning. Photo: Eugene Ivanov}

---

Policymakers try to pretend we have achieved significant progress and stability as the result of their actions, but from a fundamental point of view that’s a mere illusion. Italian banks today own more government debt than before the banking crisis, leaving them systematically more exposed to their own government, not less. The spread on government bonds between Germany and Club Med is down below historic averages, but the price has been a total suspension of the “price discovery” of money.

The price discovery of money is the cruel capitalistic part of any system. An economics  textbook would call it the modus operandi by which capital is allocated where it can find the highest marginal utility. In practice, this should mean that the market dictates the price of money beyond one year—while at durations of less than one year, the central banks determine the price of money. The beauty of the system is that money is allocated in an auction where the highest bidder for “money” or “credit” gets filled on the price he or she deems to match his expected price of money.

Contrast the market-driven model with the present “success story” of relatively low sovereign spreads in Europe, which are driven by the European Central Bank president Mario Draghi’s promise to do "whatever it takes" to keep the euro out of trouble. He has threatened to activate the European Financial Stability Facility and the European Stability Mechamism plus the full arsenal of policy tools to ensure stability.

By doing so, he has effectively suspended price discovery for sovereign debt and for money, as the ECB and local central banks will provide infinite liquidity to local banks and hence indirectly to their government in any market conditions. This one-sided offer from the ECB and the market means there is no power to discipline the government with higher rates or to allocate credit more generally. We have simply disconnected the market and the price of money.

This comes after Draghi’s longer-term refinancing operation, a cheap funding for banks with little or no collateral, or the closest thing to quantitative easing you can have without calling it quantitative easing.

This is a problem because corporations that need to finance long-term projects, like building a power station over six to eight years, need a price for the credit they require throughout the building period. Right now they have an almost flat yield curve from zero to 30 years, which would be fine if it were realistic. But the problem is that one day in the “distant future” when the market normalises, interest rates should revert to their normal price, which is roughly inflation plus a risk premium.

In the case of an industrial company, an appropriate loan rate calculation could be something like: inflation plus Libor plus a risk spread, which might work out to about seven percent. Compare this with the rates available for highly creditworthy companies. Recently, Nestle  was able to issue a four-year corporate bond at 0.75 percent—the lowest ever. Yes, it’s nice for Nestle but remember the situation is created by the central banks presence in the market, not just due to the financial strength of Nestle.

A move from less than one percent to seven percent would administer an ugly shock to companies.  We have created a negative vicious circle in which not only investors, but also companies are depending on low interest rates forever. They have priced their future earnings and costs on government support prices rather than on realistic market prices.

The worst thing about the situation, however, is that the reason a blue chip company like Nestle can borrow at less than one percent in the capital market is the lack of alternatives for banks and investors. Less creditworthy small and medium enterprises (SMEs) which make up as much as 80 percent of many countries’ economies are not allowed to borrow. They are deemed too risky to lend to at the current “market rates” even though they hold the key to improving the employment and productivity picture.

They are willing to work cheaper, longer, harder and with higher risk tolerance in order to survive. So the remaining 20 percent of the economy occupied by large and publicly listed companies and banks gets 95 percent of all credit and 99 percent of all political capital. In other words, blue chips receive artificially low interest rates only because the SMEs don’t get any credit. Herein lies my continued belief in the my traditional opening statement: things must get better soon because they can hardly get any worse.

We have never been in a more dysfunctional state at the corporate, political and individual level in history. It’s time to realise that the reason capitalism won the war against communism in the 1980s was its strong market based economy—itself based on price discovery. Now the policymakers in their “wisdom” are copying everything a planned economy entails: central planning and control, no price discovery, one supplier of credit, money and the corollary effect of suppressing SMEs and even individuals.

Finally, history offers a compelling lesson: the last time the Federal Reserve engaged in a sizeable quantitative easing was in the 1940s. The low growth and falling inflation only reversed when the Federal Reserve stopped intervening due to a severe recession brought on by the policy mistakes of keeping QE in place too long.

In 2014, a bout of near or real recession in Germany and the US could kick start the price discovery mechanism again, which will help us to start healing the deep wounds left by years of policymakers compounding their errors with round after round of extend-and-pretend. Getting to the bottom is good in one sense: the only way is up.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/1IGfps1Fawg/story01.htm Tyler Durden

Losing track of all the loose ends as the NSA handed out Obamaphones to virtually every world leader? Here is the latest summary via BBG and other outlets:

• NSA boss Keith Alexander personally informed Obama in 2010 about secret operations targeting German chancellor and president didn’t demand to stop it, Bild am Sonntag reported, citing unidentified U.S. intelligence sources: Bild
• US denies Obama knew of Merkel spying: AFP
• Merkel to seek ‘no spy deal’ within EU as well as with US: Reuters
• Spying didn’t just involve Merkel’s phone from her party, the tamper-proof phone she got in summer also hacked: Bild
• Merkel Violated Rules With Use of Party Mobile Phone, Welt Says
• NSA spied on Merkel’s text messages, mobile phone calls: Bild
• NSA specialists didn’t tap Merkel’s specially secured landline
• Social Democrats demand parliamentary investigation to look into matter, SPD’s Thomas Oppermann tells Bild
• Interior Minister Hans-Peter Friedrich says tapping phones is crime and needs to be prosecuted, says trust has evaporated: Bild

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/Mvy99G8wH9M/story01.htm Tyler Durden