This Pretty Much Sums Up The Sad State Of The US Constitution

Submitted by Simon Black of Sovereign Man blog,

My research team recently passed along a piece of legislation they were looking at called the “ENFORCE the Law Act of 2014.”

It immediately piqued my interest… because anytime you see all CAPS in government documents, it signifies some absurd acronym. And the ‘ENFORCE the Law Act’ did not disappoint.

ENFORCE stands for “Executive Needs to Faithfully Observe and Respect Congressional Enactments”.

And the stated objective of the legislation is “to protect the separation of powers in the Constitution of the United States by ensuring that the President takes care that the laws be faithfully executed. . .”

The bill goes on with specific language to authorize Congress bringing civil legal action against the President of the United States, or any cabinet secretary, for implementing some rule or executive order that does not conform with Article II of the Constitution.

This pretty much sums up the sad state of affairs in the Land of the Free.

When Congress has to pass a new law just to get the President of the United States to, you know, follow the Constitution that he swore to ‘support and defend’, you can be certain that the system has become broken beyond all repair.

This isn’t a commentary on the current POTUS; the disturbing trend of rapidly expanding executive abuse has been increasing for years.

It has nothing to do with Mr. Obama, or Mr. Bush before him, or future Presidents that will continue to expand their offices.

It’s the system itself that is fundamentally flawed. The model is simply no longer valid. Having an election and voting in a new commander-in-chief won’t fix the problem. All you’re doing is changing the players. It’s time to change the game.


    



via Zero Hedge http://ift.tt/1gua3Gq Tyler Durden

The Fed is Fighting the Wrong Battle Again… And Creating Yet Another Crisis

A critical element for investors to consider is that the Fed is not forward thinking when it comes to monetary policy. Indeed, if we reflect on the last 15 years, we see that the Fed has been well behind the curve on everything.

 

First and foremost, recall that Alan Greenspan was concerned about deflation after the Tech Crash (this, in part is why he hired Ben Bernanke, who was considered an expert on the Great Depression).

 

Bernanke and Greenspan, both fearing deflation (Bernanke’s first speech at the Fed was titled "Deflation: Making Sure It Doesn't Happen Here"), created one of the most extraordinary bouts of IN-flation the US has ever seen.

 

From 1999 to 2008, oil rose from $10 per barrel to over $140 per barrel. Does deflation look like it was the issue here?

 

 

Over the same time period, housing prices staged their biggest bubble in US history, rising over three standard deviations away from their historic relationship to incomes.

 

Here are food prices during the period in which Greenspan and then Bernanke saw deflation as the biggest threat to the US economy:

 

 

The message here is clear, the Greenspan/ Bernanke Fed was so far behind the economic curve, that it created one of the biggest inflationary bubbles in history in its quest to avoid deflation.

 

Indeed, by the time deflation did hit (in the epic crash of 2007-2008), the Fed was caught totally off guard. During this period, Bernanke repeatedly stating that the subprime bust was contained and that the overall spillage into the economy would be minimal.

 

Deflation reigned from late 2007 to early 2009 with the Fed effectively powerless to stop it. Then asset prices bottomed in the first half of 2009. From this point onward, generally speaking, prices have risen.

 

The Fed, however, continued to battle deflation in the post-2009 era, unveiling one extraordinary monetary policy after another. They’ve done this at a period in which stocks and oil have skyrocketed:

 

 

Home prices bottomed in 2011 and have since turned up as well (in some areas, prices now exceed their bubble peaks):

 

 

Which brings us to today. Inflation is once again rearing its head in the financial system with the cost of living rising swiftly in early 2014.

 

Rents, home prices, food prices, energy prices, you name it, they’re all rising.

 

And the Fed is once again behind the curve. Indeed, Janet Yellen and Bill Evans, two prominent members what is now the Yellen Fed (Bernanke stepped down in January), have both recently stated that inflation is too low. They’ve also emphasized that rates need to remain at or near ZERO for at least a year or two more.

 

Investors should take note of this. The Fed claims to be proactive, but its track record shows it to be way behind the curve with monetary policy for at least two decades. Barring some major development, there is little reason to believe the Yellen Fed will somehow be different (Yellen herself is a huge proponent of QE and the Fed’s other extraordinary monetary measures).

 

Which means… by the time the Fed moves to quash inflation, the latter will be a much, much bigger problem than it is today.

 

For a FREE Special Report on how to protect your portfolio from inflation, swing by

http://ift.tt/RQfggo

 

Best Regards

Phoenix Capital Research

 

 

 


    



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Missing Malaysian Flight Mystery Deepens: Pilot Investigated, Foul Play Suspected

It has been over a week since Malaysia Airlines Flight MH370 disappeared without a trace, and the world is nowhere closer to finding either where the airplane and its 239 passengers and crew are to be found, nor what actually happened. Instead, what initially was speculation about a midair disintegration, and subsequently suggested a potential case of airplane terrorism gone wrong, has now transformed into a theory that the pilot and/or crew may have been engaged in “foul play”, especially since it appears that based on tracking data, that the plane flew for nearly seven hours after someone “skilled” purposefully shut down its communications and tracking beacon: possibly indicative of a stealthy midair hijacking. However, the same satellite data gave no precise location, and the plane’s altered course could have taken it anywhere from central Asia to the southern Indian Ocean.

More importantly, and what is missing so far, is that if indeed this was a hijacking, then where is the list of demands? Or was this merely repossession of something already onboard the plane, i.e. theft, ostesnisbly of something in the cargo hold, or the kidnapping or repossession of one or more passengers on board the plane? Also, if indeed the plane is safely somewhere else, as per the pilot’s wishes, then how and why are the 200+ passengers, most of whom likely have portable communication devices, keeping quiet?

On the topic of the plane’s possible location considering the latest satellite tracking data, the Malaysian officials on Saturday released this map showing two corridors that the plane might be located on.

WaPo reports:

Malaysian Prime Minister Najib Razak said Saturday that, based on newly analyzed satellite data, the plane could have made last made contact anywhere along one of two corridors: one stretching from northern Thailand toward the Kazakhstan-Turkmenistan border, the other, more southern one stretching from Indonesia to the remote Indian Ocean.

 

Although U.S. officials previously said they believed the plane could have remained in the air for several extra hours, Najib said Saturday that the flight was still communicating with satellites until 8:11 a.m. — 7 ½ hours after takeoff, and more than 90 minutes after it was due in Beijing. There was no further communication with the plane after that time, Najib said. If the plane was still in the air, it would have been nearing its fuel limit.

 

The U.S. official said the search area is somewhere along the arc or circumference of a circle with a diameter of thousands of miles.

 

The new leads about the plane’s path, though ambiguous, have drastically changed a search operation involving more than a dozen nations. Malaysia on Saturday said that efforts would be terminated in the Gulf of Thailand and the South China Sea, the spot where the plane first disappeared from civilian radar.

 

Malaysian authorities are now likely to look for help from other countries in Southeast and South Asia, seeking mysterious or unidentified readings that their radar systems might have picked up.

The largely clueless Malaysian police, with few leads to puruse, have rapidly shifted their suspicion on the team of pilot and co-pilot. Reuters reports that minutes after Malaysian leader Najib Razak outlined investigators’ latest findings about flight MH370 at a news conference, police began searching the house of the aircraft’s 53-year-old captain for any evidence that he could have been involved in foul play.

Investigative sources told Reuters on Friday they believed the plane was following a commonly used navigational route when it was last spotted early on Saturday, northwest of Malaysia.

 

Their suspicion has hardened that it was flown off-course by the pilot or co-pilot, or someone else with detailed knowledge of how to fly and navigate a large commercial aircraft. No details have emerged of any passengers or crew with militant links or psychological problems that could explain a motive for sabotaging the flight.

 

The experienced captain, Zaharie Ahmad Shah, was a flying enthusiast who spent his off days tinkering with a flight simulator of the plane that he had set up at home, current and former co-workers said. Malaysia Airlines officials did not believe he would have sabotaged the flight.

 

The 27-year-old co-pilot Fariq Abdul Hamid was religious and serious about his career, family and friends said, countering news reports suggesting he was a cockpit Romeo who was reckless on the job.

A photo of the flight simulator set up in the pilot’s house is shown below:

 

AFP provides some additional perspective on the pilot:

An Australian television report broadcast an interview with a young South African woman who said Fariq and another pilot colleague invited them into the cockpit of a flight he co-piloted from Phuket, Thailand to Kuala Lumpur in 2011. Since 9/11, passengers have been prohibited from entering cockpits during a flight. Malaysia Airlines has said it was “shocked” by the report, but that it could not verify the claims.

 

The son of a high-ranking official in the public works department of a Malaysian state, Fariq joined Malaysia Airlines when he was 20.

 

He is a mild-mannered “good boy” who regularly visited his neighbourhood mosque outside Kuala Lumpur, said the mosque’s imam, or spiritual leader.

 

The far more seasoned Zaharie joined MAS in 1981 and had logged 18,365 hours of flying time.

 

Malaysian media reports quoted colleagues calling Zaharie a “superb pilot”, who also served as an examiner, authorised by the Malaysian Civil Aviation Department, to conduct simulator tests for pilots.

 

The whole passenger manifest is likely to be re-examined.

So if the pilots were not involved, could it have been a hijacking by someone among the passengers (with or without the complict participation of the pilors)? Here suspicion will once again fall on two passengers who boarded with stolen EU passports. Interpol had identified the two men as Iranians: Seyed Mohammed Reza Delavar, who used a stolen Italian passport, and Pouria Nourmohammadi, who used an Austrian one. Both passports had been stolen in Thailand. Interpol chief Ronald Noble said last Tuesday that the men were thought to be illegal immigrants who had travelled from Doha to Kuala Lumpur in a round-about bid to reach Europe.

Interpol’s information suggested the pair were “probably not terrorists”, Noble said at the time.

Adam Dolnik, a professor of terrorism studies at the University of Wollongong in Australia, said he still doubted that organised terrorism was behind the Malaysian plane mystery.

 

While a group like Al-Qaeda “would love to bring down an airliner”, a Malaysia Airlines plane made little sense as a target and the stolen passports had an “amateurish” element, Dolnik said. “Terrorists don’t do (hijackings), because the chances of success have gone down,” he said, citing the challenge of bringing weapons onto a plane and subduing other passengers.

 

There has been no indication yet of any possible terrorist involvement. But some academics suggest the theory requires further consideration. “Investigations should focus on criminal and terrorist motives,” said Rohan Gunaratna, a terrorism expert at Singapore’s Nanyang Technological University.

 

“It is likely that the aircraft was hijacked by a team knowledgeable about airport and aircraft security. It is likely they are supported by a competent team from the ground.”

Which is why instead of merely looking at the passenger manifest, perhaps it is time to look at the cargo manifest as well. Was there anything on board the plane, one serving the all-important Beijing route, that may have made the stealthy theft of the plane a sufficiently attractive risk/return proposition to the pilots?

Purely hypothetically, a 777 has a cargo hold that, in addition to passengers and baggage, can hold somewhere between 20 and 25 tons. 25 tons of gold, on a less than public Malaysia-China “official import-bypassing” route, would have a value of a little over $1 billion, four times more than the value of a new Boeing 777. So perhaps instead of robbing the cargo from the plane, some more enterprising thought would be to get the pilots in on the play, and steal the entire plane, mid-flight.

Of course, all of the above is purely hypothetical, and we are confident once the plane is uncovered safe and sound (or not as the case may be) and with all the cargo accounted for, that yet another crazy conspiracy theory can be disproved.

And still, we wonder, would Malaysia Airlines be so kind as the disclose just what “other” cargo may have been on board the mysterious flight. Inquiring minds are dying to know.

Finally, for all those pressed for time, just watch the following clip summarizing all the recent theories and views on flight MH370’s whereabouts:


    



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

What Happens After Sunday’s Crimea Referendum Vote?

Given this morning's UN vote declaring the Crimea referendum invalid (and Russia's obvious veto – along with China's abstention), and on the heels of Lavrov's words Friday that Russia would decide how to respond to the Crimean vote after the referendum had been held, it is thought-provoking to consider Putin's options given the vote's outcome is a near-certainty voting in favor of accession to the Russian Federation (especially in light of this morning's images across Crimea). Europe's Council on Foreign Relations notes "not knowing Vladimir Putin’s strategy makes it hard for Europe and the West to come up with meaningful and workable responses. In a way, we are all speculating and trying to get a glimpse into Putin’s soul. The five points below attempt to reinforce or refute some aspects of the conventional wisdom that has emerged from all this speculation."

 

Via CEFR,

1. Has Putin always wanted to invade Crimea?  

Russian diplomats (who probably hate their jobs these days) have made elaborate attempts to demonstrate that no international law has been broken in Crimea. But the breach is blatant and the pretext used to justify invasion is thinner than thin – and Moscow knows it.  

It is true that some hawkish groups in Moscow probably could not care less about international law. They would approve of any means to reunify Slavic lands. However, the bulk of the establishment has in fact always maintained a different position. For example, the Russian foreign ministry has traditionally adhered to a rigidly legalistic view of world affairs: in effect, post-1945 international law, with its strict emphasis on state sovereignty, non-interference in the internal affairs of other countries, and the inviolability of borders. Newer and softer concepts, such as the responsibility to protect, are alien to them. 

Putin himself has always passionately belonged to that legalistic camp, as evidenced by his positions on Libya, on Syria, and on multiple other issues. Therefore, deciding to invade Crimea cannot have been easy for him. He must consider that something extremely important is at stake. The corollary is that in defending his conception of what is at stake, he may well be ready to go further than many of us assume. 

2. Is Putin out of touch with reality?

Angela Merkel’s statement that Putin is out of touch with reality, which was leaked to the New York Times, gave rise to a considerable amount of conjecture and comment. Some people concluded that Putin has gone mad. In fact, while he may be living in his own version of reality, it looks like Putin’s world has actually been around for a long time.  

Putin seems to sincerely believe that dangerous extremist groups have taken power in Kiev. He may genuinely not realise that the events in Kiev represented a classic popular revolution. As pointed out by Fiona Hill, it is possible that the whole concept of popular revolutions is alien to Putin. In the late 1980s and early 1990s, when Russia was having its own revolution, Putin was not there – he was serving the KGB in Dresden. He did not personally witness the fact that a massive number of people were involved in the overthrow of the Soviet Union. His being abroad for these pivotal events, as well as his KGB schooling and worldview, may have made it easy for him to see the collapse of the Soviet Union as the result of a conspiracy by a few combined with betrayal by others. 

Similarly, Putin may see current events in Ukraine as a conspiracy by the West, which was definitely his view of the Orange revolution of 2004. Or he may see the situation as the result of recklessness: actions along the same lines as Western involvement in Libya and Syria. As Putin sees it, in both places the West has supported marginal and extremist groups against legitimate leaders, in a naïve hope that democracy will somehow take root in the ruins of the old regimes. It may well be that he saw the West applying the same logic to Ukraine and decided that he could not allow anything of the kind to happen in Ukraine. 

Added to this, he likely feels a sense of betrayal over the West’s (as he sees it) geopolitical incursion into Ukraine, and over the West’s failure (as he sees it) to support Viktor Yanukovych after the agreement of February 21. All this comes together to form the reality in which Putin lives. 

This means that what we are seeing as Putin’s revisionism may still be inspired largely by his conservatism. Also, much of his reality is indeed based on false premises. But understanding this does not make it easier to set the record straight and make Putin see sense – as multiple Western interlocutors have by now discovered. 

3. Does Putin want to use Crimea as leverage over Ukraine? 

Some analysts assume that Russia will stop short of incorporating Crimea, but will instead keep it in a Transnistria-style legal limbo in order to use it as leverage over Kiev. It seems likely that obtaining leverage over all of Ukraine, as opposed to just Crimea, is Moscow’s real goal. But it is hard to predict exactly what Moscow will see as sufficient and reliable leverage. 

The government that came to power in Kiev in late February is weak. Contrary to Moscow’s claims, it is not illegitimate – it is as legitimate as it can be under the circumstances. However, it still does not represent the whole of society in the ways that a government should. In theory, it would have been easy for Moscow to gain leverage over the new government by using a mixture of legitimate and more shady means. But Moscow did not even make the attempt. 

By now, it is unclear just how much the “Transnistrianisation” of Crimea would add to Moscow’s leverage. Kiev is now considerably less amenable to making a deal with Moscow than it would have been less than a month ago. Many in the nationalist camp may be secretly relieved to see Crimea go, taking with it its two million Russian voters and Russian base. 

As recently as a week or so ago, Russia could probably have counted on the West to put pressure on Kiev. The West is terrified by what Moscow is doing and it does not know how to respond. So, many would have been relieved if, instead of annexing Crimea, Russia stopped at “Transnistrianisation”. The West would have been ready to put pressure on Kiev to accept Moscow’s conditions – thereby, of course, contributing to prolonged bad governance in Ukraine and, consequently, to more trouble down the road. But Moscow did not try to use the West either – and now it could be too late for that as well. The build-up of Russian troops at Ukraine’s borders has probably made the West more determined to counter Russia and less likely to go for unholy compromises. And, likewise, the massing of troops could indicate that Moscow is not interested in making use of Western pressure. The sort of control over Kiev that the Kremlin has in mind may be of a much harder sort than mere co-option and coercion.    

4. Is Putin acting only in response to domestic pressures?

Some analysts claim that the whole Crimea affair was begun in order to impress the domestic public, who have increasingly fallen out of love with Putin. Others, even those who do not share that interpretation, claim that Putin cannot back down because of domestic pressures. It is true that the invasion has boosted Putin’s ratings. And the domestic media-propaganda machine has created a powerful momentum for annexation, which has the support of many in Russian society. But it is still hard to believe that any of this constitutes serious limitations of action for Putin, especially given that he does not have to face the ballot box any time soon.   

Russian society has no capacity for an informed and critical discussion about foreign policy. The state-controlled media is masterful in justifying the regime’s actions, whatever they may be. Portraying a climb-down as a victory would be easy. (This kind of method is described well in an old Soviet joke about a 100-metre race between Ronald Reagan and Leonid Brezhnev: after Reagan’s win, the Soviet news agency reported that “in yesterday’s race between the heads of state the General Secretary of the Communist Party of the USSR achieved a precious second place. The president of the Imperialist United States finished second-last.”)

In short, for the moment at least, Putin is in no way hostage to his domestic constituency. But that does not mean that he will want to de-escalate or back down.  

5. Will sanctions stop Putin?

Different people see different logic behind Western sanctions on Russia. Some hope that sanctions, or the threat of them, will force Moscow to back down. Others hope that sanctions will alienate Russian elites from Putin and leave him with little domestic support. Others simply believe that people who were instrumental in acting against sovereignty and territorial integrity deserve to be punished. And some look at the situation from a long-term perspective and think that sanctions should be applied to erode the economic foundations of an increasingly aggressive regime. 

Much of this reasoning seems accurate and justified. But even so, the calculation that sanctions will make Putin reverse course does not ring true. Ever since the domestic protests of 2011-2012, Putin has lost trust in the members of his elite who keep their money in the West and so are vulnerable to Western pressures. Losing their support, therefore, does not really matter to him. They have no leverage over him. In any case, “repatriating money” has been an unofficial policy for quite a while.  

Sanctions, as well as Putin’s growing alienation from Russian elites, may well have effects in the medium term. But they will not stop Putin on Sunday or in the days ahead. Even so, this does not mean that sanctions are futile or unnecessary – especially because it seems more and more likely that we are now facing a longer-term battle between Russia and the West. 


    



via Zero Hedge http://ift.tt/1o83GuA Tyler Durden

Japan Launches “Yakuza-Like” TacticsTo Name (And Shame) Firms Not Raising Wages

With the Japanese stock market fading fast and macro-economic data showing anything but the kinds of inspiring recovery that Abenomics promised, the leaders in Japan have turned to a new inflation-inspiring meme – that the economy will be fixed when companies start raising their wages. Day after day the mantra is repeated in the hopes that repetition will make it come true and every company that raises wages (by an average of 4 Big Macs per month) is heralded as heroic.

But, as The Japan Times reports, the government (in all its newly socialist bravado) has threatened to take the unprecedented step of shaming big "uncooperative" companies that do not raise wages during the annual spring labor talks. Forget minimum wage adjustments, this is pay-by-mandate Maduro-style; we just wonder how Abe will cope when a nation used to 'full' employment sees joblessness surge.

 

So far Abe's demand are not being met…

Case in point, last night the Japan labor ministry reported that monthly wages excluding overtime and bonus payments fell 0.2 percent in December from a year earlier to 241,525 yen on average per worker, a series of declines which has now stretched to 19 consecutive months.

 

 

The broken record "common knowledge" meme Japan is trying to force feed (just a few headlines from Japan in the last week):

  • *ABE: WILL WORK SO SMALL, MEDIUM COMPANIES ALSO RAISE WAGES
  • *AICHI: HOPE FOR WAGES RISES IN NON-REGULAR LABOR
  • *AICHI: RISING WAGES IN JAPAN GOOD SIGN OF VIRTUOUS CYCLE
  • *JR CENTRAL TO RAISE WAGES BY 1,500 YEN, YOMIURI SAYS ($12!!! per month)
  • *AMARI: FEEL WAGES ARE RISING UNLIKE THEY HAVE IN RECENT YEARS
  • *LAWSON TO RASE WAGES FOR 1ST TIME SINCE 2002, NIKKEI SAYS

 

And so, as The Japan Times reports, forget currency devaluation (that didn't create the energetic J-Curve everyone expected) and the fall in the stock market is removing that confidence-inspiring pillar – so now Abe and his apparently socialist cronies are mandating wage rises…

The government threatened Thursday to take the unprecedented step of shaming big companies that do not raise wages during the annual spring labor talks, despite calls by the nation’s inflation-stoking prime minister to boost pay.

 

The surprising threat to disclose companies’ names comes days after Akira Amari, state minister in charge of economic and fiscal policy, raised the stakes in the sensitive pay negotiations with an apparent threat to take action against “uncooperative” firms.

 

 

The government “will react in some way” against firms that are “uncooperative with our policy of creating a virtuous economic cycle,” Amari told reporters on Tuesday, referring to the “Abenomics” strategy of Prime Minister Shinzo Abe.

 

Tabloid Nikkan Gendai compared Amari’s comments to the aggressive tactics used by the notorious yakuza.

The question, of course, is if you force firms to raise wages (when their raw material costs are already surging thanks to a devlauing JPY) just what do you think will happen to the workforce? For Japan, that is used to jobs-for-life and full-employment, a sudden rise in unemployment levels (though the employed would be paid more) would be catastrophic from a social strat perspective.

 


    



via Zero Hedge http://ift.tt/1m7qTi5 Tyler Durden

Here’s What The Richest Man In The World Thinks About Snowden And NSA Surveillance

Submitted by Mike Krieger of Liberty Blitzkrieg blog,

So Bill Gates recently gave an interview to Rolling Stone magazine. The vast majority of the interview focused on his philanthropic efforts, with a particular focus on poverty and climate change. However, several questions were brought up on illegal NSA surveillance in general, and Edward Snowden in particular.

His answers reveal one of the biggest problems facing America today, which is the fact that the billionaire class as a whole does not question or rock the boat whatsoever. They criticize only when it is convenient or easy to do so, never putting themselves at risk for the sake of civil liberties and the Constitution.

In mosts cases, this is due to the fact that they themselves are the characters pulling the strings of the political class in Washington D.C. So when it comes down to it, their policies ultimately become our policies.

It is also important to note that Microsoft was a particularly eager participant in NSA spying from the very beginning. For example, according to the following PRISM slide provided by Edward Snowden, we see that Gates’ company was the first to become involved. In fact, they were participating a full six months before Yahoo!, while Apple didn’t join until a year after Steve Jobs died.

 

What a tangled web we have weaved. Now from Rolling Stone:

Question: When people think about the cloud, it’s not only the accessibility of information and their documents that comes to mind, but also their privacy – or lack of it.

 

Gates: Should there be cameras everywhere in outdoor streets? My personal view is having cameras in inner cities is a very good thing. In the case of London, petty crime has gone down. They catch terrorists because of it. And if something really bad happens, most of the time you can figure out who did it. There’s a general view there that it’s not used to invade privacy in some way. Yet in an American city, in order to take advantage of that in the same way, you have to trust what this information is going to be used for.

Do they really catch terrorists because of it in London? Because in the U.S., the NSA chief already admitted that the entire spy program has stopped essentially zero terrorist attacks. It certainly didn’t stop the Boston bombings. So what are we giving up our privacy for exactly?

Question: Thanks to Edward Snowden, who has leaked tens of thousands of NSA documents, we are. Do you consider him a hero or a traitor?

 

Gates: I think he broke the law, so I certainly wouldn’t characterize him as a hero. If he wanted to raise the issues and stay in the country and engage in civil disobedience or something of that kind, or if he had been careful in terms of what he had released, then it would fit more of the model of “OK, I’m really trying to improve things.” You won’t find much admiration from me.

Sorry Billy boy, but we have had many whistleblowers in the past who went through the system and they ended up in jail or their lives were ruined. For example, the only person imprisoned for torture in the USA is the guy who exposed the torture program, John Kiriakou.

Question: Even so, do you think it’s better now that we know what we know about government surveillance?

 

Gates: The government has such ability to do these things. There has to be a debate. But the specific techniques they use become unavailable if they’re discussed in detail. So the debate needs to be about the general notion of under what circumstances should they be allowed to do things.

First of all, without the Snowden revelations, there would be no “debate.” As it stands, the intelligence complex and Obama don’t seem to have much interest in changing a single thing anyway.

Before Snowden proved us right, those who accurately claimed the NSA was doing all of these things were labeled paranoid conspiracy theorists. Moreover, how can anyone seriously defend these “techniques” in light of the recent revelations that show activities so egregious that security experts think they threaten the infrastructure of the entire internet?

Gates goes on to ponder…

Should surveillance be usable for petty crimes like jaywalking or minor drug possession? Or is there a higher threshold for certain information?Those aren’t easy questions.

How are those not easy questions? They are exceedingly easy questions for a civilized society. The answer is no. Unless you want to toss even more citizens in jail for non-violent offenses, because having 25% of the world’s prison population and only 5% of its population is not inhumane enough.

More from Gates…

The U.S. government in general is one of the better governments in the world. It’s the best in many, many respects. Lack of corruption, for instance, and a reasonable justice system.

Seriously, what country is Gates living in? I suppose when you are the richest man in the world it’s pretty easy to live in a bubble. He is so obsessed with the problems of the outside world and the fact that they are more corrupt than we are, that he is completely blind to the very dangerous trends happening in America.

What a joke.

The entire interview can be read here.


    



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Russia Vetoes, China Abstains From UN Security Council Resolution On Ukraine

In a rather concerning (though not entirely surprising) turn of events, the United Nations (which may well need to be renamed after this) is making headlines:

  • *RUSSIA REJECTS U.S. DRAFT RESOLUTION ON UKRAINE, CHURKING SAYS
  • *U.S. DRAFT DOES NOT DIRECTLY BLAME RUSSIA FOR CRISIS IN UKRAINE
  • *RUSSIA VETOES UN SECURITY COUNCIL RESOLUTION ON UKRAINE CRISIS
  • *CHINA ABSTAINS ON UN RESOLUTION ON UKRAINE

And then the US comes over the top:

  • *POWER SAYS UN VOTE SHOWS RUSSIA ‘ISOLATED, ALONE, WRONG’

Well “isolated and alone” with China?


    



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Ukraine Says It Has Repelled A Russian Army Attempt To Enter Region Adjacent To Crimea

With a day left until the critical, if widely expected, results from the Crimean referendum are revealed, it is worth recalling the main footnote in last night’s State Department travel alert for Russia: “all U.S. citizens located in or considering travel to the border region, specifically the regions bordering Ukraine in Bryansk, Kursk, Belgorod, Voronezh, and Rostov Oblasts and Krasnodar Krai, should be aware of the potential for escalation of tensions, military clashes (either accidental or intentional).” See, for the purpose of a military provocation, “accidental” will do. It is therefore not surprising to see that moments ago all major news wires blasted the following headline, quoting the Ukraine ministry of defense:

  • UKRAINIAN MILITARY REPELS ATTEMPT BY RUSSIAN FORCES TO ENTER REGION ADJACENT TO CRIMEA-UKRAINE’S DEFENCE MINISTRY

The incursion allegedly took place in the Ukraine region of Kherson, neighboring the Crimea.

Here is the full google translated statement from the Ministry website:

Another provocation on the part of members of the Armed Forces of the Russian Federation has failed.

 

Today, 15 March 2014, forces of the Armed Forces of Ukraine halted the penetration of the Armed Forces of the Russian Federation on the territory of Kherson Oblast from the “Arabatka.” Response was made immediately.

So the official line is that the Ukraine repelled a Russian “military force” in a region inside east Ukraine and out of Crimea the day after Russia’s foreign minister Lavrov said Russia has no plans to Invade Ukraine? Call us cynical, but something tells us if Russians wanted to “penetrate” east Ukraine, the would have done so without “being repelled.”

Either way, here is Reuters’ take:

Ukraine’s military scrambled aircraft and paratroops on Saturday to repel an attempt by Russian forces to enter a long spit of land belonging to a region adjacent to Crimea, Ukraine’s defence ministry said.

 

“Units of Ukraine’s armed forces today…repelled an attempt by servicemen of the armed forces of the Russian Federation to enter the territory of Kherson region on Arbatskaya Strelka,” a ministry statement said. “This was repelled immediately.”

 

It said the Ukrainian military used aircraft, ground forces and its aeromobile battalion in the operation. The territory in question is a long spit of land running parallel to the east of Ukraine’s Crimea peninsula, now controlled by Russian forces.

But just so Russia isn’t accused of being inert, moments ago it too re-escalate the war of words and provocations, either accidental or intentional, and stated that:

  • RUSSIA’S FOREIGN MINISTRY SAYS REQUESTS FOR DEFENCE OF PEACEFUL CITIZENS IN UKRAINE WILL BE CONSIDERED

Specifically, the Russian Foreign Ministry says in website statement that it will examine Ukrainians’ requests. Armed radicals are heading to eastern Ukrainian cities of Donetsk, Lugansk. Radicals provoked 2 deaths at pro-Russian rally in Kharkiv. The full statement is below:

On March 14 in Kharkov Ukraininan elements including the “Right Sector” arranged provocation against peaceful demonstrators who came to express their attitude to the so-called new government. As a result, the militants opened fire, killing two people, some were injured.

 

Of disturbing information that from Kharkov Donetsk and Lugansk left column with armed mercenaries “right sector” , whose leaders have announced the opening of the “Eastern Front” , and on one of the garment factories in Russia urgently sew uniforms.

 

At the risk of making the Verkhovna Rada of legitimizing the “right sector ” and other radicals by converting them into system power structures like the National Guard

paid attention Secretary of State John Kerry Russian Foreign Minister Sergey Lavrov during their meeting in London on 14 March . of While Lavrov urged John Kerry to use Washington’s influence on Kiev to curb rampant ultra- nationalists.

 

Russia To receive many calls asking to protect civilians. These applications will be considered.

Meanwhile in Crimea, the Russian flag is already flying above the Crimean Supreme Council:

And finally, just in case things weren’t exciting enough, the US appears to finally be flexing its muscles too.

  • U.S. WARSHIP TRUXTUN TO CARRY OUT FURTHER EXERCISES WITH ALLIES IN BLACK SEA-COMMANDER

From Reuters:

The USS Truxtun, a U.S. guided-missile destroyer, will carry out more exercises with allied ships in the Black Sea, its commander said on Saturday, in a further sign of the international response to Russia’s actions in Ukraine. Commander Andrew Biehn was briefing reporters aboard the 300-crew destroyer as it lay docked in a Bulgarian port.

 

The USS Truxtun last week took part in drills with Romanian and Bulgarian ships a few hundred miles from Russian forces that entered Ukraine’s Russian-majority of Crimea after mass protests toppled the country’s pro-Moscow president.

If all this has happened while it is still light in Ukraine and before the Crimean referendum, we can’t wait until darkness falls on Sunday night.


    



via Zero Hedge http://ift.tt/1fzeJ9l Tyler Durden

China Widens Dollar Trading Band From 1% To 2%, Yuan Volatility Set To Spike

In the aftermath in the recent surge in China’s renminbi volatility which saw it plunge at the fastest pace in years, many, us included, suggested that the immediate next step in China’s “fight with speculators” (not to mention the second biggest trade deficit in history), was for the PBOC to promptly widen the Yuan trading band, something it hasn’t done since April 2012, with the stated objective of further liberalizing its monetary system and bringing the currency that much closer to being freely traded and market-set. Overnight it did just that, when it announced it would widen the Yuan’s trading band against the dollar from 1% to 2%.

The PBOC’s overnight release:

The healthy development of China’s current foreign exchange market, trading body independent pricing and risk management capabilities continue to increase. To meet the requirements of market development, increase the intensity of market-determined exchange rate, and establish a market-based, managed floating exchange rate system, the People’s Bank of China decided to expand the foreign exchange market, the floating range of the RMB against the U.S. dollar, is now on the relevant matters are announced as follows:

 

Since March 17, 2014, inter-bank spot foreign exchange market trading price of the RMB against the U.S. dollar floating rate of expansion from 1% to 2%, or a daily inter-bank spot foreign exchange market trading price of the RMB against the U.S. dollar foreign exchange transactions in China can be Center announced the same day the central parity of RMB against the U.S. dollar and down 2% in the amplitude fluctuations. Designated foreign exchange banks to provide customers with the highest cash offer price of $ day of the minimum cash purchase price difference does not exceed the magnitude of the day the central parity rate expanded from 2% to 3%, other provisions remain in compliance, “the People’s Bank of China on the interbank foreign exchange market Trading foreign exchange designated banks listed on the exchange rate and the exchange rate management issues related to notice “(Yin Fa [2010] No. 325) execution.

 

People’s Bank of China will continue to improve the RMB exchange rate formation mechanism of the market, further develop the role of the market in the RMB exchange rate formation mechanism, strengthen two-way floating RMB exchange rate flexibility, to maintain the RMB exchange rate basically stable at an adaptive and equilibrium level.

Amusingly, we may have the first attempt at forward guidance by yet another central bank: that of China. As the WSJ explains: “There is no basis for big appreciation of the renminbi,” the PBOC said, noting that China’s trade surplus now represents only 2.1% of its gross domestic product. At the same time, “there is no basis for big depreciation of renminbi,” the central bank added, saying that risks in China’s financial system are “under control” and the country’s big foreign-exchange reserves can serve as a big buffer against any external shocks.

Alas, in China merely soothing words hardly ever do the job which is why “while pledging to give the market a bigger role in setting the yuan’s exchange rate, the PBOC said it would still implement “necessary adjustments” to prevent big, abnormal fluctuations in the yuan’s exchange rate.”

The macro thinking behind China’s move was foretold well in advance, but for those who missed it, the WSJ does a good recap:

the change, which followed Beijing’s landmark move in 2012 to double the yuan’s trading bandwidth, is seen as an important step toward establishing a market-based exchange-rate system, whereby the yuan would move up and down just like any other major currency.

 

The exchange-rate reform is part of China’s plan to overhaul its creaky financial sector, elevate the country’s status in the international monetary system and someday challenge the U.S. dollar as the de facto global currency.

 

A freer yuan can also help China deflect foreign complaints about its currency policies. The U.S. and other advanced economies have pressed Beijing for years to relax its hold on the yuan and allow it to appreciate at a faster pace. The hope is to boost consumer demand in China as consumers in Western countries such as the U.S. and Europe pull back amid still-fragile economies.

 

The move to widen the yuan’s trading range comes as China’s juggernaut economic machine is slowing down, leading to questions of whether leaders would continue to press ahead on fundamental economic change, or pull back to help struggling companies.

For some even the doubling in the rate band is not enough:

Widening the band would give a greater indication of how the market values the yuan. A prominent Chinese economist, Yu Yongding, for instance, advocates that the daily band be widened to 7.5% in either direction, which would essentially let the market fully determine the rate.

But perhaps the biggest message from today’s announcement is that China is preparing to focus far more on its internal affairs rather than dealing with daily FX manipulation, as well as the micromanagement of China’s reserves, which recently may or may not have been sod off in the form of US Treasurys.

Meanwhile, loosening its hold on the yuan can also help the PBOC focus more on domestic monetary policy while reducing the need for currency intervention by the central bank.

 

That is because when the yuan’s floating range gets bigger, the yuan won’t touch the upper or lower limit of the band as frequently as it did in the past, thereby making it less necessary for the PBOC to meddle in the currency market in a bid to rein in or prop up the yuan’s value.

 

As a result, with the expanded trading band, the PBOC is expected to issue fewer yuan for the purpose of exchange-rate intervention, and that could leave the central bank with more room to manage the domestic monetary policy.

 

“The PBOC will still resort to intervention, but a wider trading band means that it may not need to intervene as readily as it did in the past,” said Christy Tan, a currency specialist at Bank of America Merrill Lynch.

One thing is certain: as the world digests the latest out of the country that creates credit at a pace that is five times greater than the US, the volatility in the CNY will soar, at jthe worst possible time. Because as we explained before, all global specs, especially those out of Hong Kong need, is for the USDCNY to surge above 6.20 for the margin calls to start coming in fast and furious.

* * *

Finally, here are some kneejerk reactions by Wall Street analysts, via Bloomberg.

UBS

 

  • The action, coupled with more two- way volatility, could help discourage “hot money” inflows and encourage companies and banks to be more vigilant about exchange-rate risks, Wang Tao, chief China economist at UBS AG in Hong Kong, says in an e-mail.
  • Action doesn’t have direct implications for direction of CNY against USD
  • UBS still sees exchange rate “broadly unchanged, with increased two-way volatility”
  • Action isn’t surprising because central bank has said for a qhile that it would widen band soon: Wang

Morgan Stanley

  • “We do not think the PBOC took this move to accelerate the CNY depreciation for mercantile interests to stabilize growth,” Morgan Stanley economist Helen Qiao says in e-mailed comment.
  • Wider yuan band will help deter “carry trade speculators” as volatility increases
  • Action is “largely in line with our expectation, as a major step in China’s FX reform” and is part of government’s “continued reform efforts”
  • Recent CNY depreciation created precondition for band widening

Commonwealth Bank of Australia

  • With PBOC dollar purchases being key driver in recent yuan weakness, it will be challenging for yuan to trade at both sides of the doubled trading band in a symmetric fashion, Andy Ji, FX strategist at Commonwealth Bank of Australia, says in email interview.
  • Yuan is unlikely to depreciate substantially without PBOC intervention, given the status of current account surplus and without broad dollar strength
  • Yuan may weaken in 1H then strengthen in 2H, similar to the patterns in past two years

BEA

  • PBOC is likely to guide a weaker yuan through its daily reference rate to ensure there won’t be renewed one-way appreciation bets after doubling the trading band, Bank of East Asia FX analyst Kenix Lai says in phone interview today.
  • Yuan band widening announcement shouldn’t be too surprising to market given the PBOC has already signaled such a move in Feb.
  • Yuan should still be able to deliver mild appreciation in 2014 as China continues to push for yuan internationalization

Bank of America

  • Weaker yuan fixings in past month or so has changed one-way appreciation bias, Albert Leung, BofAML local market strategist for Asia, says in email interview.
  • PBOC wants to widen band when market view is more balanced
  • Not very surprising in terms of band-widening timing
  • Another band widening this year is unlikely
  • Knee-jerk market reaction should be higher volatility, with higher NDF, DF implied rates
  • Long-dated NDFs could weaken further, though not necessarily the daily official fixings
  • Any follow-through after the knee-jerk and whether yuan will weaken further will highly depend on PBOC daily fixing and how macro data and corporate credit situation

ANZ

  • With the band widening and, more importantly, recent spate of weak China data, the bias is for near-term yuan weakness and potentially higher volatility, ANZ FX strategist Irene Cheung says in email interview today.
  • Yuan band widening didn’t come as a surprise
  • Band widening doesn’t necessarily relate to recent PBOC Governor Zhou Xiaochuan’s statement on interest rate liberalization
  • Another widening won’t come so soon given the last move was 2 yrs ago in 2012


    



via Zero Hedge http://ift.tt/1hm5qw4 Tyler Durden