House Approves a Weakened Surveillance Reform Bill After Co-Sponsors Turn Against It

Today the House of Representatives approved a
watered-down version of the surveillance reform bill known as the
USA FREEDOM Act by a vote of 303 to 121. Revisions to the bill
demanded by the Obama administration were so troubling that several
prominent supporters, including Reps. Justin Amash (R-Mich.) and
Zoe Lofgren (D-Calif.), ended up opposing
it
. Here is how Amash, an original co-sponsor of the bill,
explained
his vote against it in a message on Facebook:

This morning’s bill maintains and codifies a large-scale,
unconstitutional domestic spying program. It claims to end “bulk
collection” of Americans’ data only in a very technical sense: The
bill prohibits the government from, for example, ordering a
telephone company to turn over all its call records every day.

But the bill was so weakened in behind-the-scenes negotiations
over the last week that the government still can order—without
probable cause—a telephone company to turn over all call records
for “area code 616” or for “phone calls made east of the
Mississippi.” The bill green-lights the government’s massive data
collection activities that sweep up Americans’ records in violation
of the Fourth Amendment.

As I
noted
yesterday, the current version of the bill redefines the
“specific selection term” that is supposed to limit government
demands for phone records and other personal data held by third
parties. The version
unanimously approved
by two House committees earlier this month
defined “specific selection term” as “a term used to uniquely
describe a person, entity or account.” The bill passed by the House
instead defines “specific selection term” as “a discrete term”
that “limit[s] the scope of the information.” Critics like Amash
plausibly worry that anything short of universal collection might
satisfy this requirement, meaning that the records of many innocent
people could still be sucked up by the National Security Agency on
the slightest pretext. One small consolation is that we may have
some indication if that is happening, since the bill requires that
decisions by the Foreign Intelligence Surveillance Court construing
that crucial phrase be published at least in summary form.

Rep. James Sensenbrenner (R-Wis.), who introduced the USA
FREEDOM Act to correct what he believed to be a gross
misinterpretation of the government’s authority to collect
information under Section 215 of the PATRIOT Act (which he also
wrote), said the weakened version of his bill was still an
improvement. “Let me be clear,” he
told
his fellow legislators. “I wish this bill did more. To my
colleagues who lament the changes, I agree with you. The
negotiations for this bill were intense, we had to make
compromises, but this bill still does deserve support.”

The ACLU’s Laura Murphy took a similar view. “While far from
perfect,” she said,
“this bill is an unambiguous statement of congressional intent to
rein in the out-of-control NSA. While we share the concerns of
many—including members of both parties who rightly believe the bill
does not go far enough—without it we would be left with no reform
at all, or worse, a House Intelligence Committee bill that would
have cemented bulk collection of Americans’ communications into
law. We will fight to secure additional improvements in the
Senate.”

While the bill may be clear statement of congressional intent,
the mechanism for implementing that intent is highly ambiguous,
which is what the administration wanted. The people who argued that
all phone records are “relevant” to a terrorism investigation will
have no compunction about arguing that slightly reducing the size
of their dragnet makes it comply with the statutory language they
wrote.

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Hookers And Blow: How Changing The Definition Of GDP Officially Jumped The Shark

A year ago it was the US which first “boosted” America’s GDP by $500 billion – literally out of thin air – when it arbitrarily decided to add to the components that make up GDP adding “intangibles” into the calculation (in the process cutting over 5% from the US Debt/GDP ratio). Then Spain joined the fray. Then Greece. Then the UK. Then Nigeria, which showed those deveoped Keynesian basket cases how it is really done, when it doubled the size of its GDP overnight when it decided to change the base year of its GDP calculations. Now it is Italy’s turn, and like everything else Italy does, this latest “revision” of the definition of GDP easily wins in the style points category. As Bloomberg reports, “Italy will include prostitution and illegal drug sales in the gross domestic product calculation this year.” Yup: blow and hookers. And that, ladies and gents, how it’s done.

Alas for Keynesian economists everywhere, since this “adjustment” largely shows that what one includes in GDP is now absolutely meaningless and for lack of a better word, a joke, it also means that the core concept of economic growth measurement has now officially jumped the shark.

But at least one will get a laugh out of the Italian GDP line items for hookers and blow. Bloomberg has the full story:

Drugs, prostitution and smuggling will be part of GDP as of 2014 and prior-year figures will be adjusted to reflect the change in methodology, the Istat national statistics office said today. The revision was made to comply with European Union rules, it said.

 

Renzi, 39, is committed to narrowing Italy’s deficit to 2.6 percent of GDP this year, a task that’s easier if output is boosted by portions of the underground economy that previously went uncounted. Four recessions in the last 13 years left Italy’s GDP at 1.56 trillion euros ($2.13 trillion) last year, 2 percent lower than in 2001 after adjusting for inflation.

The punchline:

“Even if the impact is hard to quantify, it’s obvious it will have a positive impact on GDP,” said Giuseppe Di Taranto, economist and professor of financial history at Rome’s Luiss University. “Therefore Renzi will have a greater margin this year to spend” without breaching the deficit limit, he said.

And that’s what it is all about: literally making up a higher GDP number thus allowing the government to spend even more money it doesn’t have on ridiculous political schemes, kickbacks, and corruption and then when the people start to riot, blaming it all on “austerity.”




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From Rags to Riches in One Generation

By: Miha Zupan at http://ift.tt/146186R

My first experience with South Korea (or Korea) goes back to my university era when I, more by coincidence than anything else, ended up in a student exchange program there. It was during that time that I got my first insight into the country’s economic development, which could probably be best described with the phrase “from zero to hero”.

 Today Korea is one of the most economically and technologically advanced nations on the planet, but it wasn’t always like that.

Merely fifty years ago it was one of the poorest places on Earth. The country was poorer in fact than most of Africa and South America, and, ironically, poorer than its neighbor North Korea.

With the help of a stronger industrial base established during the pre-war Japanese colonial era, and excessive aid from the other communist countries, particularly from the Soviet Union, North Korea managed to quickly get back on its feet after the formal end of the Korean War in 1953. South Korea, on the other side, was suffering from political instability and high inflation. Interestingly enough, South Korea surpassed the economy of its northern neighbor only during the 1970s.

Things in the South started to turn around in 1961, when military general Park Cheung-hee (father of the current Korean president Park Geun-hye) took power and began the industrialization of the country through five-year economic plans.

BusanBusan, home to one of the largest ports in the world

In the fifty years since, South Korea has turned from one of the most impoverished to one of the world’s richest nations per capita. This remarkable economic transformation, also dubbed as “the miracle on the Han River”, after the Han River that flows through the Korean capital Seoul, was led by the chaebol, Korea’s family-owned conglomerates.

Chaebol such as Samsung, LG, Kia or Hyundai are synonyms for electronic gadgets or cars for many outside of Korea. But as I learned when squeezing toothpaste out of a LG branded tub, there’s much more to chaebol than that. In Korea, many of these chaebol supply pretty much everything, from toilet paper to medical care.

LG Toothpaste

A concept partially related to chaebol is something called jeonse. Wikipedia describes jeonse as:

“A real estate term unique to South Korea that refers to the way apartments are leased. Instead of paying monthly rent, a renter will make a lump-sum deposit on a rental space, at anywhere from 50% to 100% of the market value. At the end of the contract, usually two or three years, the landlord returns the amount in its entirety to the renter.”

To better understand the important role jeonse plays in the South Korean economy, let’s look at the Korean era of industrialization. Rapid economic transformation drew farmers from rural areas to seek higher paying jobs in the cities. With that the need for additional housing to be built occurred. However, local banks were mainly focused on financing chaebol and access to credit for smaller entrepreneurs was often limited.

Jeonse, a system with roots going back to the period of ancient Korea, turned to be a convenient solution to both problems. It is a hybrid of a rental system and informal lending scheme. Imagine pledging your empty apartment as collateral for an interest free loan to finance expansion of your business. On the other side, it induces people to pool savings, which would over time be used for purchasing their own home.

The system proved to be particularly resilient during the Asian financial crisis in 1997 when it offered an attractive alternative to fragile and heavily indebted banks. To reduce the hefty debt burden Koreans were queuing up to donate their gold to the state. Ultimately this campaign became so popular that the officials feared that this would drive down the global prices of gold. From what I’ve experienced so far this gesture paints a pretty accurate image of Korean patriotic spirit.

Jeonse, however, is not a bulletproof system. It only works well in the environment of high interest rates and rising real estate prices. In the wake of the Asian crisis, first cracks began to show in the system. Interest rates came down to historically low levels and landlords started to raise the deposits to match their return on investment.

After the collapse of Lehman Brothers, Korean property prices started to lose steam. Since then even more people have turned to renting instead of buying an apartment that is declining in value. This pushed jeonse prices even higher. As of last year a tenant would on average have to put down a $290,000 deposit to rent an apartment in Seoul.

Korean Condos

High deposits and low return have incentivized many tenants and landlords, respectively, to start turning to a monthly rental system that is more familiar to the Western world and dubbed wolse in Korea.

Also akin to the Western world as well as Korea is the high level of debt. Korea today has one of the highest consumer debt levels in the world, largely accumulated in the last two decades. It is considered to be one of the biggest threats hanging over the Korean economy.

In the last few decades, Koreans have proved that they are capable of achieving a lot. They have a proven track record of economic successes, which I hope will not be broken when dealing with debt.

As I am sitting at the airport to leave the country, perhaps, ???, a Korean word for encouragement is the best way to wrap it up.

– Miha

 

“When I was growing up in South Korea in the ’70s and early ’80s, the country was too poor to buy original records. Everything was bootlegged.” – Ha-Joon Chang




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Bundesbank Warns European Investors: “We See Risks, Despite Calm Markets”

A day after the Federal Reserve warned that “low level of expected volatility implied by some financial market prices might also signal an increase in risk appetite” and this complacency; the Bundesbank has decided to try and jawbone back investors’ exuberance across Europe. As Die Welt reports, while stocks and bonds are near record highs across Europe – thanks to the ECB’s Mario Draghi’s promises, Bundesbank board member Andreas Dombret warned “we see risks – despite the fact that markets are calm,” and perhaps incredibly suggested investors “flatten all risks now to avoid the herd behavior.”

 

Via Die Welt (via Google Translate),

The Bundesbank is the spoilsport. While stocks and bonds of the euro-zone haussieren and politics everywhere knocks on the shoulder just before the European elections, how great the euro crisis has been mastered, the highest German monetary authorities appear suddenly as a stern warning voice. They warn of speculative excesses in the markets, drag the new risks to financial stability by itself.

 

“We see risks – despite the fact that the markets are calm,” Bundesbank board member Andreas Dombret said the financial agency Bloomberg. In many European countries, the real estate prices are very high. An exuberance is also reflected in the ratings of corporate bonds, he said. “The small fluctuations in the markets entice the market players to weigh in safety.”

 

“We must not again flatten all risks now. Transported the herd behavior”, Dombret said, referring to the market developments. The word of the 54-year-old certainly has weight. So Dombret care at the Bundesbank been responsible for financial stability.

 

And the Bundesbank board is not the only high-ranking central bankers, who warns against a false sense of security for investors. On Tuesday already U.S. central bankers Richard Fisher had raised the alarm. “I am disturbed by the fact that there is no volatility in the markets. This is not a healthy development.” Fisher’s concern is not unfounded. The last time that the financial markets moved in as quiet lanes, was in 2007, shortly before the outbreak of the financial crisis.

 

 

monetary authorities seem to be trying to counteract with verbal interventions. Financial stability plays an increasingly important role in the monetary policy. Thus, the financial crisis has shown in 2008 that bursting speculative bubbles entire economies can tear into the abyss.

Remember though – don’t fight the Fed (unless they say to sell)




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The US Government Explained In One Chart

Presented with little comment – the oligarchic pilfering and squandering network…

 

 

As Bill Bonner explains, via Acting Man blog, Government’s primary concern is not to protect its citizens or their economy. Instead, it aims to transfer more power, status, and wealth to the elite who control it (the oligarchs).

And to do that, it must keep the masses (the poligarchs) sedated. As Charles Hugh Smith, chief writer at OfTwoMinds.com, explains:

The State has two core mandates: enforce quasi-monopolies and cartels for private capital, and satisfy enough of the citizenry’s demands for more benefits to maintain social stability. If the State fails to maintain monopolistic cartels, profit margins plummet and capital is unable to maintain its spending on investment and labor. Simply put, the economy tanks as profits, investment and growth all stagnate. If the State fails to satisfy enough of the citizenry’s demands, it risks social instability.”

The feds will be the borrowers of last resort. But the money won’t be invested in a brighter future. It will be pilfered and squandered.

And then what?




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Zenon Evans Says School Sucks! ‘Maker Culture’ Is Literally Making Learning Better

Perched in a watchtower above a live-sized
game of Mouse Trap, MythBusters host Adam
Savage announced, “When you make something … you’re telling
a story about your desires. … You’re using your tools to improve
yourself and the world around you.” He was directing the point to
the younger attendees in his crowd of hundreds at Maker Faire in
San Mateo, California, this past weekend. Their stories and desires
are varied, but there was a consistent theme among many makers:
They want to make life and learning more liberated, more fun, and a
bit more rugged. Why do they want this? Because, as millennials
know all too well from zero tolerance policies and restrictive
“free speech zones,” school sucks. Zenon Evans says that the class
of 2014 could learn something from the eclectic maker movement
about visceral, hands-on opportunities to succeed (or fail),
because they can teach an individual more about herself and her
abilities than any standardized test or mandatory general education
course ever could. 

View this article.

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NSA Sort-of-Reform Bill Passes House, VA Horrors Just ‘Tip of the Iceberg,’ New Coup in Thailand: P.M. Links

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This Is Why Hewlett Packard Just Announced Another 16,000 Job Cuts

The biggest scandal in today’s release of Hewlett Packard Q2 earnings was not that it hit 30 minutes prematurely, catching algos unaware and unable to BTFD when the stock tumbled on what was a revenue miss and 1% decline from last year, nor that the company guided below estimate, pushing its stock some 3% lower in the last minutes of trading.

The biggest scandal was this disclosure in the second quarter results press release: “As HP continues to reengineer the workforce to be more competitive and meet its objectives, the previously estimated number of eliminated positions will increase by between 11,000 to 16,000. This is in addition to the 34,000 layoffs already noted previously, meaning HP will fire a total of 50,000 in the near future.

Want to know why HPQ is forced to fire so many well-paying jobs it once again makes a mockery of anyone who claims there is some economic recovery going on?

The chart below, which compares the company’s quarterly CapEx, declining (so no, not increasing as some clueless sellside analyst hacks claim) by 16% from last quarter and down 4.5% from a year ago to $840 million and thus leading to less growth opportunities for the company and resulting in tens of thousands of pink slips, and the soaring amount of stock buybacks, which rose by nearly 50% in Q2 from Q1 to $831 million and by 27,600% (!) from a year ago, the most since 2011, should provide all the answers.

So dear soon to be laid off Hewlett Packard employees, if you want to direct your anger somewhere, please direct it at the company’s “activist” shareholders who have forced management to invest not in growth for the future, and thus you, but to reward its shareholders immediately, right now with what otherwise would have been your future salary.




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VIX Hits 14-Month Low As Stocks Rally On Lowest Volume Of The Year

Another day, another melt-up on the lowest volume of the year and VIX collapse. The Dow and the Nasdaq almost made it back to unchanged for the year; The Dow almost made it back to unchanged for May; but as the S&P surged towards its record highs once again, "most shorted" stocks led the way with a massive squeeze (almost 4% in the last 2 days). VIX broke back below 12 once again trading at its lowest in 14 months. Equity markets decoupled notably once again from bonds. Treasury yields rose once again at the long-end (30Y +8bps on the week, 5Y -1bps) but the steepening trend stalled today. The USD rose today (+0.2% on the week) led JPY weakness. USDJPY was in charge of stocks with a correlation over 90% once again. Commodities all closed higher with WTI testing $104 again. HP's 'early' release of earnings appeared to take the shine off things into the close as VIX gapped higher back above 12 to close…

 

This is the lowest NYSE volume in at least a decade – even for this holiday time of year…

 

Spot the down-day in the volume chart…

 

"Most Shorted" stocks have surged almost 4% in the last few days – almost tripling the broad market as hedge funds have yet another bad week…

 

Squeeze-a vu…all over again…

 

As the Momo stocks have exploded higher since last Thursday's lows…

 

Which is what supported the Russell and Nasdaq in their epic ramp of the last few days…

 

A close-up of today…

 

VIX was run even lower – to its lowest intraday since March 2013… (still room to go for the 9.39 all-time intraday lows on 12/15/06)

 

But look at the illiquidity in VIX… and a very ugly close once the HP reesults hit…

 

USDJPY was in charge of stocks…

 

Once again – stocks decoupled from bonds… that hasn't worked out so well recently for stocks…

 

Commodities rose on the day – despite a higher USD

 

 

 

Charts: Bloomberg

Bonus Chart: The spread between Q1 GDP and Q2 GDP expectations is now over 4percentage points as Q2 jumped this week to +3.5% consensus…

 

Bonus Bonus Chart: Looks like the Fed's transmission mechanism to housing has finally broken…




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