Senate Report: Attack on US Consulate in Benghazi Could Have Been Prevented

A Senate
Intelligence Committee report on the September 2012 assault on the
U.S. consulate in Benghazi blames the State Department and American
intelligence agencies for not preventing the attack, which resulted
in the deaths of four Americans.

From
The Washington Post
:

A long-delayed Senate intelligence committee
report released on Wednesday spreads blame among the State
Department and intelligence agencies for not preventing an attack
at an outpost in Libya that killed four Americans,
including U.S. Ambassador J. Christopher Stevens.

The bipartisan report lays out more than a dozen findings
regarding the Sept. 11, 2012 assault on the diplomatic compound in
the Libyan city of Benghazi. It says the State Department failed to
increase security at the compound despite warnings, and faults
intelligence agencies for not sharing information about the
existence of a secret CIA outpost at the site.

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Hang On Tight: ‘Merger Monday,’ Which Died in 2008, Is BAAACK

Wolf Richter   http://ift.tt/NCxwUy   http://ift.tt/Wz5XCn

“Merger Monday” was an exciting weekly feature of life during the 2007 bubble. It was the day when mega deals were announced, when all the craziness of leveraged buyouts invaded CNBC’s morning shows with great hoopla, and stocks would surge, and surging stocks would beget more buyouts and more hoopla, and fees and profits were extracted out of thin air, and everyone was in heaven.

After it all collapsed, I thought we’d never see “Merger Monday” again, the phrase, the concept. But now, the unthinkable happened, the impossible, the zombie phrase has walked back into the scene, when it reappeared on the front page of MarketWatch. It was like in the olden days of 2007: the big numbers were there, the exuberance was there, the craziness, the media hoopla, the head-shaking.

There was the acquisition by Japan’s booze conglomerate Suntory of US booze conglomerate Beam for $83.50 per share, a 25% premium from Friday’s closing price. Their combined booze sales would amount to $4.3 billion. The $16 billion deal, including debt, would be funded mostly with debt.

Among the brands Suntory will pick up is Maker’s Mark, which got into a huge tussle a year ago when it told its customers that it would water down its bourbon. “Fact is, demand for our bourbon is exceeding our ability to make it, which means we’re running very low on supply,” explained COO Rob Samuels at the time. They’d add water to the remaining batch, and lower alcohol content from 45% to 42%, so that there’d be enough for everybody. The uproar was immediate, including by yours truly…. Self-Medicating With Watered-Down Bourbon: An Insidious Inflation

Next was Charter Communications, backed by media mogul John Malone. It offered to buy Time Warner Cable, the second-largest cable company behind Comcast, for $132.50 per share, $83 in cash and $49.50 in Charter stock. Rumors had been flying for months. It’s tough out there for cable companies. TWC lost 825,000 cable TV subscribers in 2013, after having already lost 530,000 in 2012. And 2014 doesn’t look exactly bright. So banding together might help, the theory goes. The $61 billion deal would have been the largest unsolicited takeover since the final days of the bubble in 2008. But it was just a “low-ball offer,” as TWC CEO Rob Marcus called it. An even bigger deal may now be in the cards.

And Google announced that it would acquire thermostat and smoke-alarm maker Nest for $3.2 billion, a routine amount these days for a startup that was founded a couple of years ago, has about 300 employees, and is not even making a dent in an industry dominated by giants Honeywell and Johnson Controls.

But Google would get a foothold in the latest hot thing, connected devices, the “Internet of things.” It already knows everything you do on line and stores that information forever. It knows everything you do in your various Google accounts. It reads your emails, data mines them, and stores the results for later use. It knows where you’re going if you use an Android device, and it knows where you’re thinking of going if you use Google maps. Soon it will drive you there in a self-driving vehicle of your choice (or drive you to an advertiser’s store instead).

It knows what the outside of your place looks like, but the one thing it hasn’t seen yet is the inside of your place. Hence Nest. Google is entering your home with a sensor system that will soon be a lot more than just a thermostat – why not motion detectors, cameras, microphones, and the like – to perfect the efficiency and security of your home. Any data the system picks up will be forwarded to, or pilfered by, the NSA and others, and will be used by advertisers who want to get to know you better, because serving ads is what Google is all about.

But don’t worry. They have a privacy policy which “clearly limits the use of customer information to providing and improving Nest’s products and services,” Nest explained in perfect corporate speak. Google simply wants to be in every part of your life, connect all your devices, understand your thinking, your preferences, your emotions, your snacking habits. And this acquisition was one more step in that direction [here is my personal experience…. How Much Is My Private Data Worth? (Google Just Offered Me $$)]

But Monday didn’t end on this uplifting note. There was more excitement fermenting beneath the surface. It was all about “leveraged loans.” They’d hit an all-time high in 2013 of $1.14 trillion, and market participants are exuberant about 2014, according to Thomson Reuters’s Quarterly Lender Survey. Alas, in its minutes of the December meeting, the Fed had named leveraged loans and their deteriorating underwriting standards as one of the four threats to “financial stability.”  They’re issued to highly leveraged companies with dubious prospects and junk credit ratings. And many of them are going to blow up once the mania fizzles out.

But not yet. Everyone is counting on rock-bottom interest rates to persist, and on desperate investors who’re chasing yield when there is none in reasonable places, and so they take on risks, any risks, and they hold their noses and swallow covenant-lite junk debt that gives them few rights once there is a problem. In 2013, $311 billion in covenant-lite loans were issued, more than triple the prior all-time high. And everyone is hoping that this year will set another record. After us the deluge.

Did a company have problems servicing its debt or did it threaten to default? A replacement leveraged loan would be offered with better terms. Extend and pretend…. Last year, about 70% of the leveraged loans were issued to reprice and refinance existing debt.

But for 2014, that may be hard to beat. So enthusiasm is building in another direction: mergers and acquisitions. “It’s nice to see that M&A is starting to pick up, and that should provide a new source of fresh capital needs from borrowers,” said Leland Hart, a Managing Director at BlackRock. And everyone is already dreaming of a series of glorious Merger Mondays.

So the mini-downdraft in the stock market so far this year, including Monday’s selloff, hasn’t dampened anyone’s enthusiasm. The Fed seems ready to taper QE out of existence and is sprinkling the market with verbiage to that effect, and eventually this will have an impact, but at this point, it is still just talk, and everyone is hoping that this bubble can be maintained for a while longer.

Prices for housing have jumped and rents have jumped too, yet the 38.7 million renters, 34% of all households, watched with dismay as their real wages declined. They’ve got a problem with the “wealth effect” that Bernanke held up as pretext for printing money. Read…. The Magic “Wealth Effect” On Our Hapless Renters


    



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ECB Eases European Bank Stress Test By 25%, Lowers Capital Ratio Requirement From 8% to 6%

First the Volcker Rule was defanged when last night the requirement to offload TruPS CDOs was eliminated, and now here comes Europe where the ECB just lowered the capital requirement for its “stringent” bank stress test (the one where Bankia and Dexia won’t pass with flying colors we assume) by 25%. From the wires:

  • ECB SAID TO FAVOR 6% CAPITAL REQUIREMENT IN BANK STRESS TEST
  • ECB SAYS DECISION ON CAPITAL REQUIREMENT NOT YET FORMALLY MADE
  • MAJORITY OF POLICYMAKERS AND TECHNICALS OFFICIALS HAVE REACHED CONSENSUS ON THE BENCHMARK

The final number may in fact be even lower:

  • SMALL NUMBER OF COUNTRIES WANT AN EASIER BENCHMARK AND MAY PRESS FOR COMPROMISE LOWER THAN 6%

Why is this notable? Recall from three short months ago:

The European Central Bank said it will use stricter rules when stress testing banks’ balance sheets next year than it will to study their assets, as it seeks to prove its credentials as the region’s financial supervisor.

 

While the ECB confirmed that it will require lenders to have a capital ratio of 8 percent, what qualifies as capital will change over the course of the three-part assessment, the central bank said in an e-mailed statement. The capital definition applicable on Jan. 1, 2014 will be used for the asset-quality review and the definition in force “at the end of the horizon” of the stress test will be used in that evaluation, it said.

 

Ignazio Angeloni, who is head of the ECB’s financial stability directorate, said today in Frankfurt that officials haven’t yet decided on a timeframe or on details for the stress test. The European Union is gradually phasing in global capital standards known as Basel III, a process which is due to be completed by 2019.

 

“We’ve got a feasible but safe capital cushion of 8 percent,” Angeloni told reporters. “We want the exercise to encompass all the main sources of risk.”

Apparently you don’t, but who cares as long as the myth of strong European bank balance sheets is perpetuated. And should the capital requirement be lowered even more, expect politicians and central bankers to bang the drums even louder on just how stable the European financial system is.


    



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

Vid: The Brothel King – Dennis Hof on Prostitution, Wild West Libertarianism, and "Pimpin' for Paul"

“Nevada’s the last of the live and let live states,” says Dennis
Hof, the self-described “Brothel King” and owner and proprieter of
Nevada’s Moonlite Bunny Ranch, made famous as the setting for the
HBO documentary series, Cathouse
(2005-2008). “I don’t care if you smoke weed. Don’t bother me
because I have a safe full of guns and work in the sex
business.”

Reason TV’s Zach Weissmueller sat down with Hof in his brothel
for a wide-ranging interview about sex, prostitution, black
markets, politics, and more.

Hof acquired the Moonlite Bunny Ranch in 1992 and systematically
pushed it into the public eye through a blend of showmanship,
attention-seeking, and media outreach he calls the “PT Barnum/Andy
Kaufman” school of marketing and publicity. In fact, he claims that
Andy Kaufman gave him the initial idea to buy the Bunny Ranch when
they partied there together in the late ’70s. 

 ”In about ’78, Kaufman said, ‘Dennis, let’s buy this place
and make it our den,'” says Hof (1:30).

Since then, Hof has gone on to acquire six more brothels, giving
him a huge share of a national market that only includes 17 total
brothels. This is because Nevada is the only state in the U.S. that
has legalized prostitution, and only in counties with populations
of less than 400,000. This, of course, rules out Clark County,
where Las Vegas is located.

“It’s illegal in Las Vegas, and look what you’ve got,” says Hof.
“You’ve got 2,000 girls a month being arrested. Lots of guys being
arrested, lives being ruined… Las Vegas is the sexual cesspool of
America.” (24:20)

He also points to the
remarkably high rate of HIV infection among prosititutes in Las
Vegas
. By contrast, he says, under the state’s regime of
mandatory STD testing, there has never been a
documented case of HIV
among licensed workers in Nevada’s
brothels.

Watch the whole interview above to hear Hof talk more about what
it’s like to run some of the country’s only legal brothels, as well
as stories about his run-ins with Sen. Harry Reid (7:10), his advice for
Anthony Weiner and Elliot Spitzer (17:45), and why he
started the group “Pimpin’ for [Ron] Paul” (18:17).

Click the link below for downloadable versions of this
video.

Produced by Zach Weissmueller. Shot by Sharif Matar and Will
Neff. Approximately 27 minutes.

Subscribe to Reason TV’s
YouTube channel
to receive automatic notification when new
material goes live.

View this article.

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Vid: The Brothel King – Dennis Hof on Prostitution, Wild West Libertarianism, and “Pimpin’ for Paul”

“Nevada’s the last of the live and let live states,” says Dennis
Hof, the self-described “Brothel King” and owner and proprieter of
Nevada’s Moonlite Bunny Ranch, made famous as the setting for the
HBO documentary series, Cathouse
(2005-2008). “I don’t care if you smoke weed. Don’t bother me
because I have a safe full of guns and work in the sex
business.”

Reason TV’s Zach Weissmueller sat down with Hof in his brothel
for a wide-ranging interview about sex, prostitution, black
markets, politics, and more.

Hof acquired the Moonlite Bunny Ranch in 1992 and systematically
pushed it into the public eye through a blend of showmanship,
attention-seeking, and media outreach he calls the “PT Barnum/Andy
Kaufman” school of marketing and publicity. In fact, he claims that
Andy Kaufman gave him the initial idea to buy the Bunny Ranch when
they partied there together in the late ’70s. 

 ”In about ’78, Kaufman said, ‘Dennis, let’s buy this place
and make it our den,'” says Hof (1:30).

Since then, Hof has gone on to acquire six more brothels, giving
him a huge share of a national market that only includes 17 total
brothels. This is because Nevada is the only state in the U.S. that
has legalized prostitution, and only in counties with populations
of less than 400,000. This, of course, rules out Clark County,
where Las Vegas is located.

“It’s illegal in Las Vegas, and look what you’ve got,” says Hof.
“You’ve got 2,000 girls a month being arrested. Lots of guys being
arrested, lives being ruined… Las Vegas is the sexual cesspool of
America.” (24:20)

He also points to the
remarkably high rate of HIV infection among prosititutes in Las
Vegas
. By contrast, he says, under the state’s regime of
mandatory STD testing, there has never been a
documented case of HIV
among licensed workers in Nevada’s
brothels.

Watch the whole interview above to hear Hof talk more about what
it’s like to run some of the country’s only legal brothels, as well
as stories about his run-ins with Sen. Harry Reid (7:10), his advice for
Anthony Weiner and Elliot Spitzer (17:45), and why he
started the group “Pimpin’ for [Ron] Paul” (18:17).

Click the link below for downloadable versions of this
video.

Produced by Zach Weissmueller. Shot by Sharif Matar and Will
Neff. Approximately 27 minutes.

Subscribe to Reason TV’s
YouTube channel
to receive automatic notification when new
material goes live.

View this article.

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The Sheer Idiocy Of The Markets In One Chart… Is Back

When Google bought Nest (for its smart, intrusive thermostat technology that gives the NSA a front-row seat into the heating requirements of Americans), little did it know that it was purchasing an OTC penny stock with the ticker NEST and a market cap of a few hundred thousand. Or maybe, Google knew very well what it paid $3 billion for, and it was the increasingly prevalent idiots that make up the stock market that were confused. Either way, just like TWTRQ was TWTR for a few short days, so NEST (not to be confused with the GOOG acquisition target if even that is precisely what happened) is now the second coming of the unmitigated idiocy that defines the “market”

 

Meet Nestor (ticker symbol NEST) – a small company from Rhode Island that makes traffic systems – different to Nest – the thermostat-maker that Google just bought for $3.2 billion. NEST was up 4900% at its peak yesterday on massive volume.

 

One just has to laugh and yes, Jordan Belfort would be proud.


    



via Zero Hedge http://ift.tt/1gL3WeY Tyler Durden

How Warren Buffett Became a Billionaire

One of Warren Buffett’s greatest investment ideas concerned “economic moats.”

 

What he meant by this was to invest in companies with significant competitive advantage that stops competitors from breaking into their market share. These competitive advantages served as “moats” around these businesses, much as a moat of water would protect a castle from intruders in medieval times.

 

To consider how “moat” investing works in the real world, let’s consider McDonalds (MCD).

 

For starters, MCD has a moat. MCD was launched in 1940. Burger King was launched in 1953. Wendy’s was launched in 1969.

 

Despite these competitors moving into its space, MCD has thrived, growing to become the largest hamburger based business in the world: its 2012 revenues were $27 billion compared to Burger King’s $1.9 billion and Wendy’s $2.5 billion.

 

Today, MCD has over 34,000 restaurants based in 199 countries employing 1.8 million people. Obviously the company is able to defend its market share from competitors. That’s an economic moat.

 

Between this and the company’s focus on producing returns to shareholders, those who invested in MCD and held for the long-term have dramatically outperformed the market and built literal fortunes.

 

Indeed, had you in McDonalds in 1986, you would have outperformed the S&P 500 by a simply enormous margin (see Figure 1 below). Not only that but you would have crushed every asset manager on planet earth with very few exceptions.

 

Regarding returns to shareholders, MCD has paid dividends every year for 37 years and has increased its dividend at least once per year.

 

Dividends per share have increased from $0.11 in 1986 to $2.87 in 2012. Those who invested in MCD shares in 1986 are receiving a yield of nearly 30% per year on their initial investment today just from dividends alone.

 

MCD is so focused on producing returns for shareholders that the company has bought back 23% of its shares outstanding in the last ten years. So even investors who bought in 2000 have experienced a synthetic yield of roughly 5% per year.

 

However, the most dramatic returns produced by “moat” investing are evident through the power of compounding as illustrated by MCD’s Dividend Re-Investment Plan or DRIP (a plan through which cash dividend payouts were  automatically used to buy more MCD shares).

 

If you had invested in MCD’s DRIP program in 1988, you would have turned $1,000 into over $23,000 by the end of 2012. This is not by adding to your positions, this is the result of one single $1000 purchase of MCD stock.

 

This example of “moat” investing is precisely the kind of wealth generating investment that has made Warren Buffett a billionaire.

 

For a FREE Special Report outlining how to set up your portfolio from this, swing by: http://ift.tt/170oFLH

 

Best Regards

Phoenix Capital Research 

 

 

 


    



via Zero Hedge http://ift.tt/1gL3T33 Phoenix Capital Research

Catholic Diocese Of Stockton Files Bankruptcy; Priest Sexual-Abuse Scandal Blamed

Between lack of cash flows, insurmountable liabilities, an untenable pension funding, even insider fraud, we thought we had seen all the various reasons for filing for Chapter 11 bankruptcy protection. And then along came the Catholic Diocese of Stockton which announced that it would join its host city and seek bankruptcy protection “in the wake of the church’s sexual-abuse scandal.” As WSJ reported, Bishop Stephen E. Blaire said in a news release Monday that the diocese would seek bankruptcy protection Wednesday, explaining that reorganization was the only option for dealing with mounting legal costs related to abuse by priests. The bishop said the diocese has spent $14 million in legal settlements and judgments over the past 20 years dealing with abuse allegations, and doesn’t have funds available to settle pending lawsuits or address future allegations. The punchline: “Very simply, we are in this situation because of those priests in our diocese who perpetrated grave, evil acts of child sexual abuse.

In the Stockton diocesan bankruptcy, the parties will likely agree on a figure that the diocese would pay, in addition to potentially pulling in funds from insurers. However, the diocese says it holds “relatively little property and assets.” Other holdings, including schools, parishes and several parcels of land, are incorporated separately.

And so the Stockton Catholics became the 10th US Diocese after Milwaukee; San Diego; Spokane, Wash.; Davenport, Iowa; Portland, Ore.; Tucson, Ariz.; Fairbanks, Alaska; Wilmington, Del.; and Gallup, N.M. to file bankruptcy.  In addition, the Christian Brothers Institute, which operates Catholic schools and orphanages, also filed because of sexual abuse liabilities.

The Chapter 11 filing would halt pending litigation against the diocese and likely would ultimately allow it to discharge liabilities stemming from sexual-abuse allegations by setting up a trust to compensate victims. The diocese said it hopes to arrive at a resolution with victims and insurers through the process.

 

Joelle Casteix, western regional director of the Survivors Network of those Abused by Priests, called the bankruptcy “problematic on a lot of different levels,” noting that it would let the diocese avoid future civil cases.

However, while the local catholics’ financial woes may be put on temporary hold, their civil troubles are only starting:

Separately, a grand jury Monday indicted a former priest with the diocese, Michael Eugene Kelly, and a warrant for his arrest has been issued. Calaveras County authorities are seeking Mr. Kelly’s extradition from Ireland to face charges of three counts of lewd and lascivious conduct on a child, and one count of oral copulation with a child. Mr. Kelly faces 14 years in prison if convicted.

Not surprisingly, the Catholic church which itself is embroiled in numerous financial scandals recently, was unable to come to the Diocese’s rescue even though it has already paid out an estimated $2.2 billion to cover settlements, therapy for victims, support for offenders, attorney fees and other costs, according to a report by the U.S. Conference of Catholic Bishops.

And with this filing, we are fairly confident we have seen every possible bankruptcy filing reason.


    



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