Tag: finance

There was a time in America when retail brawls only broke out around Thanksgiving dinner time (and increasingly earlier with every passing year). It appears that’s no longer the case as the recent release of the Air Jordan 11s reveals. USA Today reports that following the release of Jordan 11 Retro Gamma Blue sneakers on Saturday, “the nation just about fell apart.” One week ago, a crowd tore down a mall door just to get an advance ticket to buy the $185 Jordans. With the shoes now officially on sale, the world appears to be ending.

And it goes on: In Dallas, police reported to a fight in line Friday night. At 6 a.m. Saturday, customers tried to cut in line, causing a commotion that required police intervention, according to MyFoxDFW.

In the Bronx, two people brawled outside of a Foot Locker.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/UnrVcPZfD8o/story01.htm Tyler Durden

That yet another major retailer was hacked, as happened last week when Target announced that as many as 40 million credit and debit cards used from November 27 until December 15 at its stores  (one wonders why it took the retailer three weeks to realize/announce what was happening) had been “compromised”, is no surprise. What was a big surprise is the action one major financial company took in response to the mega hack. The company in question was JPMorgan, and what it did was to tell customers whose debit cards had been used at Target stores during the period in question, that it was limiting use of their cards to cash withdrawals of $100 and purchases to $300 per day.

However, what is perhaps most surprising is the sheer number of cards with spending caps: The new limit effects roughly 2 million accounts, or roughly 10% of Chase debit card accounts, according to a bank spokeswoman.

So with millions of Americans blocked from bulk purchases just in time for Christmas, will the Census department be forced to “seasonally adjust” December retail sales data substantially higher to “pro forma” what spending would have been net of computer hacks?

“We are taking additional measures to protect Chase accounts from the Target breach, and our branches and call centers are there to help these customers,” a Chase spokesperson said.

Reuters adds that the bank said in the letter that it plans to reissue affected debit cards over the coming weeks and in the meantime said employees at its 5,600 branches would help those who need more cash. Many branches will stay open late “if needed,” the letter said.

From the WSJ:

Target is working with the Secret Service as well as a forensics unit at Verizon Communications to investigate the breach, which lasted from Nov. 27 until Dec. 15. The company is working to set up a year of fraud protection monitoring for customers affected, Target spokeswoman Molly Snyder said on Saturday.

 

Typically, banks are responsible for financial losses tied to fraudulent transactions, though in some significant cases that responsibility may be passed on to the merchant. After a similar data breach at discount retailer in 2007, that company agreed to pay $65 million to Visa Inc. and MasterCard Inc. to resolve potential claims by banks that lost money.

 

On Saturday, Target said it is continuing to help customers obtain credit reports and change pin numbers on their cards to guard against potential fraud.

 

The security breach raises concerns that Target might lose sales during the final days of the important year-end holiday shopping season. Target offered customers at its U.S. stores a 10% discount this weekend, a move aimed at drawing customers back to its outlets.

Well, it may not be Cyprus where the capital controls and spending caps resulting from the March near-death experience of its financial system will remain forever a long time; instead what it is is a partial form of capital controls resulting from a “security breach”, whereby the bank whose obligation is to prevent fraud retroactively, instead imposes blanket proactive spending limits on all. Luckily, such trial computer hacks (and the Syrian Electronic Army has yet to be blamed) will never take place across the entire financial system, usually just in time when there is a wholesale demand of deposits, if only by that part of the population that stil has cash held at zero interest deposit accounts.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/0NMqsfmV41Y/story01.htm Tyler Durden

There was no background radioactive cesium before above-ground nuclear testing and nuclear accidents started.

Wikipedia provides some details on the distribution of cesium-137 due to human activities:

Small amounts of caesium-134 and caesium-137 were released into the environment during nearly all nuclear weapon tests and some nuclear accidents, most notably the Chernobyl disaster.

 

***

 

Caesium-137 is unique in that it is totally anthropogenic. Unlike most other radioisotopes, caesium-137 is not produced from its non-radioactive isotope, but from uranium. It did not occur in nature before nuclear weapons testing began. By observing the characteristic gamma rays emitted by this isotope, it is possible to determine whether the contents of a given sealed container were made before or after the advent of atomic bomb explosions. This procedure has been used by researchers to check the authenticity of certain rare wines, most notably the purported “Jefferson bottles”.

As the EPA notes:

Cesium-133 is the only naturally occurring isotope and is non-radioactive; all other isotopes, including cesium-137, are produced by human activity.

What people call “background” radiation is really the amount of radiation deposited into the environment within the last 100 years from nuclear tests and nuclear accidents (and naturally-occurring substances, such as radon).

2,053 nuclear tests occurred between 1945 and 1998:

 

Above-ground nuclear tests – which caused numerous cancers to the “downwinders” – were covered up by the American, French and other governments for decades. See this, this, this, this, this and this.

But the amount of radiation pumped out by Fukushima dwarfs the amount released by the nuclear tests.

As nuclear engineer and former nuclear executive Arnie Gundersen notes, the wave of radioactive cesium from Fukushima which is going to hit the West Coast of North America will be 10 times greater than from the nuclear tests (starting at 55:00).

This graphic from Woods Hole in Massachusetts – one of the world’s top ocean science institutions – shows how much more cesium was dumped into the sea off Japan from Fukushima as compared to nuclear testing and Chernobyl:

(And Fukushima radiation has arrived on the West Coast years earlier than predicted.)

The Canadian government has confirmed in October that Fukushima radiation will exceed “levels higher than maximum fallout” from the nuclear tests.

The party line from the Japanese, Canadian and American governments are that these are safe levels of radiation.   Given that those countries have tried to ban investigative journalism and have tried to cover up the scope of the Fukushima disaster, people may want to investigate for ourselves.

For example, Gundersen notes that the U.S. government flew helicopters with special radiation testing equipment 90 days after the Fukushima meltdown happened.  The government said it was just doing a routine “background radiation” check, but that it was really measuring the amount of “hot particles” in the Seattle area (starting at 27:00). Hot particles are inhaled and become very dangerous “internal emitters”. The government then covered up the results on the basis of “national security”.

As the Washington Department of Health noted at the time:

A helicopter flying over some urban areas of King and Pierce counties will gather radiological readings July 11-28, 2011. [Seattle is in King County.] The U.S. Department of Energy’s Remote Sensing Laboratory Aerial Measurement System will collect baseline levels of radioactive materials.

 

**

 

Some of the data may be withheld for national security purposes.

Similarly, the Department of Homeland Security and National Nuclear Security Administration sent low-flying helicopters over the San Francisco Bay Area in 2012 to test for radiation. But they have not released the results.

Indeed, residents of Seattle breathed in 5 hot particles each day in April of 2011 … a full 50% of what Tokyo residents were breathing at the time:

 

(the video is from June 2011.)

After all, the reactors at Fukushima literally exploded … and ejected cladding from the reactors and fuel particles. And see this.

Gundersen says that geiger counters don’t measure hot particles. Unless the government or nuclear scientists measure and share their data, we are in the dark as to what’s really going on.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/zlCa6AZT6fo/story01.htm George Washington

Back in December 2012, we wrote that it was only a matter of time before Japan’s criminal lying about the radioactive exposure in the aftermath of the Fukushima catastrophe caught up with it, as well as with countless numbers of people who would soon succumb to radiation induced cancers and other diseases. What we found surprising back then, before the full scale of the Fukushima catastrophe become clear and before even Tepco admitted that the situation is completely out of control, is that those holding Japan accountable were not its own citizens but eight US sailors who have then filed a suit against semi-nationalized energy operator TEPCO – the company which repeatedly ignored internal warnings about the ability of the Fukushima NPP to withstand an earthquake/tsunami –  seeking $110 million in damages.

Kyodo reported:

“Eight U.S. sailors have filed a damages suit against Tokyo Electric Power Co., claiming they were exposed to radiation and face health threats as the utility did not provide appropriate information about the Fukushima nuclear disaster while they engaged in rescue operations on board an aircraft carrier, U.S. media reported.

 

The plaintiffs who filed the suit at the U.S. federal court in San Diego — seeking a total of $110 million, or 9.4 billion yen, in damages — were aboard the aircraft carrier USS Ronald Reagan when it was involved in “Operation Tomodachi,” a disaster relief effort shortly after a big earthquake and tsunami triggered the worst nuclear accident in decades, the reports said.”

What is sad is that while everyone in the alternative media was repeatedly warning about the radiation exposure being misrepresented by both TEPCO and various Japanese ministries, it was the mainstream media that was constantly complicit in disseminating official and unofficial lies that there is nothing to fear.

One year after our report, the lies are not only catching up (and overtaking), but are ruining and dooming innocent lives. As Fox reports, dozens of US soldiers who participated in the Fukushima cleanup effort, are succumbing to numerous radiation-related illnesses, including cancer, and their only error was believing the official media lies.

From Fox:

When the USS Ronald Reagan responded to the tsunami that struck Japan in March 2011, Navy sailors including Quartermaster Maurice Enis gladly pitched in with rescue efforts. 

 

But months later, while still serving aboard the aircraft carrier, he began to notice strange lumps all over his body. Testing revealed he’d been poisoned with radiation, and his illness would get worse. And his fiance and fellow Reagan quartermaster, Jamie Plym, who also spent several months helping near the Fukushima nuclear power plant, also began to develop frightening symptoms, including chronic bronchitis and hemorrhaging.

 

They and 49 other U.S. Navy members who served aboard the Reagan and sister ship the USS Essex now trace illnesses including thyroid and testicular cancers, leukemia and brain tumors to the time spent aboard the massive ship, whose desalination system pulled in seawater that was used for drinking, cooking and bathing. In a lawsuit filed against Tokyo Electric Power Company (TEPCO), the plaintiffs claim the power company delayed telling the U.S. Navy the tsunami had caused a nuclear meltdown, sending huge amounts of contaminated water into the sea and, ultimately, into the ship’s water system.

 

“At our level, we weren’t told anything,” Plym told FoxNews.com. “We were told everything was OK.” Now, Plym, Enis and dozens of others wonder if their service to their country and to Japan has left them doomed.

 

“I get so angry,” Plym said. “They said as long as the plume was avoided we would be fine. But we knew then that something was going to happen. Common sense tells you that the wind would blow it everywhere. You don’t need to be a nuclear scientist to figure that out.”

Why the anger though: after all everyone lied, starting with those in control, and certainly the media that supports the status quo (one must think of all those advertising dollars) constantly and repeatedly that it is simply preposterous to assume that a benevolent regime which only cares about the wealth effect (of both the US and Japan) would engage in such a vast conspiracy as to hide from the world just how destructive the fallour from Fukushima truly was (even as the fringe blogosphere was warning precisely about this day in, and day out).

But while the lies are easily explainable, what is more surprising is that the soldiers are blaming just Tepco instead of everyone in their chain of command for putting them in the line of gamma radiation fire.

San Francisco Attorney Charles Bonner,who is representing allegedly cancer-stricken sailors, initially filed a federal suit in the Southern District of California more than a year ago on behalf of a dozen sailors. The lawsuit was initially dismissed, when the court ruled that any ruling would hinge on interpreting communication between the Japanese and U.S. governments, which could violate the separation of powers. But Bonner is amending the suit to add new allegations that would fall under the court’s jurisdiction. And the number of plaintives has more than quadrupled as more service members come forward with radiation-related illnesses, he said.

“They went in to help with rescue efforts,” said Bonner, who plans to refile the suit on Jan. 6. “They did not go in prepared to deal with radiation containment.”

The plaintiffs don’t blame the U.S. Navy, which they believe acted in good faith, Bonner said. It was the plant’s operators who sat on the meltdown information during the crucial hours following the March 11, 2011 disaster, he said.

“TEPCO pursued a policy which caused rescuers, including the plaintiffs, to rush into an unsafe area which was too close to the [Fukushima nuclear power plant] that had been damaged,” Bonner charged in an April filing now being updated to add more plaintiffs. “Relying upon the misrepresentation regarding health and safety made by TEPCO, upon information and belief, the U.S. Navy was lulled into a false sense of security.

“The officers and crew of the U.S.S. Reagan (CVN-76) and other vessels believed that it was safe to operate within the waters adjacent to the FNPP, without doing the kinds of research and testing that would have verified the problems known to the defendant TEPCO at the time.”

Nathan Piekutoski, 22, who served aboard the USS Essex, which was in the same deployment as the Reagan, said sailors had no choice but to trust what they were told.

“They did say it was safe at the time,” Piekutoski said. “We had to take their word for it.”

Piekutowski says he suffered from leukemia and, while he is currently in remission, Doctors have told him that he may need a bone marro
w transplant.

“Within a few months I started getting all these weird symptoms,” he recalled of the months following the disaster response. “Night sweats. Not sleeping. I started losing a lot of weight.

“It’s one of those things,” he added. “You’re angry that it happens but we had to go. It was our duty. I joined the military to help people in need.”

A spokesperson for the Department of Defense declined to comment on the pending lawsuit, but told FoxNews.com the Pentagon has been monitoring and collecting data on radiation exposure in the region.

Needless to say, the criminals at Tepco have nothing to say:

TEPCO officials did not respond to requests for comment. But a recent admission before members of the Japanese press on Dec. 12 during a meeting at the Tokyo Press Club, former Prime Minister Naoto Jan said the first meltdown occurred five hours after the tsunami, not the next day as reported at the time. 

 

Bonner alleges that the statement means that the Japanese government knew radiation was being leaked and did not inform the U.S. Navy.

 

“They knew there was an active meltdown and they deliberately hid it from the public as well as the Navy,” Bonner said. “Those sailors went in there totally unaware and they were contaminated as a result.”

 

Plym says she is prepared to have her symptoms question in court, should the case go to trial. But with so many U.S. sailors coming forward, she believes justice will prevail.

 

“People will say that out lawsuit is fake and that we are doing this for money, but it’s really about getting the correct information out there,” Plym said.

And now back to a mythical reality in which insolvent governments tell the “truth” about the true, and very deplorable, state of affairs just behind the peeing facade. In the meantime, to all the sailors whose only crime was believing their criminal, corrupt superiors: our condolences.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/61UlcntxaRc/story01.htm Tyler Durden

Perhaps it is because the prevalent theme of the past five years has been the ascent of central planning in the name of the Bernanke wealth effect, headed by Saint Ben himself, that has forced Americans to reassess, and moderate, their belief in “conventional” topics such as god, miracles and heaven. According to a new Harris Poll while a strong majority (74%) of U.S. adults do believe in God, this belief is in decline when compared to previous years as just over four in five (82%) expressed a belief in God in 2005, 2007 and 2009.

Also, while majorities also believe in miracles (72%, down from 79% in 2005), heaven (68%, down from 75%), that Jesus is God or the Son of God (68%, down from 72%), the resurrection of Jesus Christ (65%, down from 70%), the survival of the soul after death (64%, down from 69%), the devil, hell (both at 58%, down from 62%) and the Virgin birth (57%, down from 60%), these are all down from previous Harris Polls. Belief in Darwin’s theory of evolution, however, while well below levels recorded for belief in God, miracles and heaven, is up in comparison to 2005 findings (47%, up from 42%).

There is good news: the ascent of the mandarin of Marriner Eccles to the pinnacle of Keynesian socio-economic “religion” has also to increased the number of people who believe in Darwin’s theory of evolution…. to just under half of all Americans. While well below levels recorded for belief in God, miracles and heaven, is up in comparison to 2005 findings (47%, up from 42%). The bad news is that nearly the same amount of Americans who believe in evolution also believe in ghosts: according to the Harris poll 42% of Americans believe in ghosts, 36% each believe in creationism and UFOs, 29% believe in astrology, 26% believe in witches and 24% believe in reincarnation – that they were once another person.

In summary, this is what Americans believe in:

 

The list above broken down by generation and political affiliation:

 

How certain are Americans in the existence of god:

 

What is the gender of god:

 

The Bible, the Torah, or the Koran: which book captures the word of god.

 

Finally, how religious do Americans see themselves as:

 

Some additional color from Harris:

Generational & political divides

Echo Boomers are less likely than their counterparts in all older generations to express belief in God (64% Echo Boomers, 75% Gen Xers, 81% Baby Boomers, 83% Matures), miracles (65%, 74%, 76% and 78%, respectively), that Jesus is God or the Son of God (58%, 67%, 74% and 75%, respectively) and angels (59%, 71%, 73% and 68%, respectively.

On the other end of the generational spectrum, Matures are far less likely than any other generation to express belief in ghosts (44% Echo Boomers, 46% Gen Xers, 46% Baby Boomers, 24% Matures), witches (27%, 29%, 28% and 18%, respectively) and reincarnation (27%, 25%, 23% and 13%, respectively).

Turning to the political spectrum, Democrats and Independents show similar levels of belief in most of the tested concepts, with Republicans consistently more likely than either group to express belief in those concepts aligned with the Judeo-Christian belief system; Republicans are less likely than either group to express belief in Darwin’s theory of evolution (36% Republicans, 52% Democrats, 51% Independents).

Absolute certainty that there is a God down vs. 10 years ago

In a separate line of questioning, focused on Americans’ degree of certainty that there is or is not a God, two-thirds of Americans (68%) indicate being either absolutely or somewhat certain that there is a God, while 54% specify being absolutely certain; these figures represent drops of 11 and 12 percentage points, respectively, from 2003 testing, where combined certainty was at 79% and absolute certainty was at 66%.

Meanwhile, combined belief that there is no God (16%) and uncertainty as to whether or not there is a God (also 16%) are both up from 2003 findings (when these levels were 9% and 12%, respectively).

Outside of specific religious samples, the groups most likely to be absolutely certain there is a God include blacks (70%), Republicans (65%), Matures (62%) and Baby Boomers (60%), Southerners (61%) and Midwesterners (58%), and those with a high school education or less (60%).

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/ZlygqDEiSz4/story01.htm Tyler Durden

Perhaps it is because the prevalent theme of the past five years has been the ascent of central planning in the name of the Bernanke wealth effect, headed by Saint Ben himself, that has forced Americans to reassess, and moderate, their belief in “conventional” topics such as god, miracles and heaven. According to a new Harris Poll while a strong majority (74%) of U.S. adults do believe in God, this belief is in decline when compared to previous years as just over four in five (82%) expressed a belief in God in 2005, 2007 and 2009.

Also, while majorities also believe in miracles (72%, down from 79% in 2005), heaven (68%, down from 75%), that Jesus is God or the Son of God (68%, down from 72%), the resurrection of Jesus Christ (65%, down from 70%), the survival of the soul after death (64%, down from 69%), the devil, hell (both at 58%, down from 62%) and the Virgin birth (57%, down from 60%), these are all down from previous Harris Polls. Belief in Darwin’s theory of evolution, however, while well below levels recorded for belief in God, miracles and heaven, is up in comparison to 2005 findings (47%, up from 42%).

There is good news: the ascent of the mandarin of Marriner Eccles to the pinnacle of Keynesian socio-economic “religion” has also to increased the number of people who believe in Darwin’s theory of evolution…. to just under half of all Americans. While well below levels recorded for belief in God, miracles and heaven, is up in comparison to 2005 findings (47%, up from 42%). The bad news is that nearly the same amount of Americans who believe in evolution also believe in ghosts: according to the Harris poll 42% of Americans believe in ghosts, 36% each believe in creationism and UFOs, 29% believe in astrology, 26% believe in witches and 24% believe in reincarnation – that they were once another person.

In summary, this is what Americans believe in:

 

The list above broken down by generation and political affiliation:

 

How certain are Americans in the existence of god:

 

What is the gender of god:

 

The Bible, the Torah, or the Koran: which book captures the word of god.

 

Finally, how religious do Americans see themselves as:

 

Some additional color from Harris:

Generational & political divides

Echo Boomers are less likely than their counterparts in all older generations to express belief in God (64% Echo Boomers, 75% Gen Xers, 81% Baby Boomers, 83% Matures), miracles (65%, 74%, 76% and 78%, respectively), that Jesus is God or the Son of God (58%, 67%, 74% and 75%, respectively) and angels (59%, 71%, 73% and 68%, respectively.

On the other end of the generational spectrum, Matures are far less likely than any other generation to express belief in ghosts (44% Echo Boomers, 46% Gen Xers, 46% Baby Boomers, 24% Matures), witches (27%, 29%, 28% and 18%, respectively) and reincarnation (27%, 25%, 23% and 13%, respectively).

Turning to the political spectrum, Democrats and Independents show similar levels of belief in most of the tested concepts, with Republicans consistently more likely than either group to express belief in those concepts aligned with the Judeo-Christian belief system; Republicans are less likely than either group to express belief in Darwin’s theory of evolution (36% Republicans, 52% Democrats, 51% Independents).

Absolute certainty that there is a God down vs. 10 years ago

In a separate line of questioning, focused on Americans’ degree of certainty that there is or is not a God, two-thirds of Americans (68%) indicate being either absolutely or somewhat certain that there is a God, while 54% specify being absolutely certain; these figures represent drops of 11 and 12 percentage points, respectively, from 2003 testing, where combined certainty was at 79% and absolute certainty was at 66%.

Meanwhile, combined belief that there is no God (16%) and uncertainty as to whether or not there is a God (also 16%) are both up from 2003 findings (when these levels were 9% and 12%, respectively).

Outside of specific religious samples, the groups most likely to be absolutely certain there is a God include blacks (70%), Republicans (65%), Matures (62%) and Baby Boomers (60%), Southerners (61%) and Midwesterners (58%), and those with a high school education or less (60%).

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/ZlygqDEiSz4/story01.htm Tyler Durden

Submitted by Frank Hollenbeck via the Ludwig von Mises Institute,

As an economist, it is getting more difficult to understand the logic underlying current monetary policy in the U.S. There are two main channels by which economists think monetary policy can influence growth and employment. The first is to lower interest rates to spur investment and consumption spending. The second is to induce inflation so real wages drop, spurring output and employment.

Since 2008, the central bank has reduced interest rates to almost zero with little to show for it. You can bring a horse to water in a trough, pond, or lake, but you cannot make him drink. Most of the added liquidity has found its way into excess reserves. Banks are not lending because they have few creditworthy customers who want to borrow. The household sector is still deleveraging and has less appetite for more debt, and the business sector is careful about making future investments in a financial and economic environment on unstable footing. Businesses are keenly aware of the malinvestments never cleaned up after the last bubble and of the price distortions of current monetary policy. Why would businesses stick their necks out if they suspect a painful adjustment is around the corner?

Since the first channel has failed, only the second channel remains. Economists are generally in agreement, however, that there is no long-run trade-off between inflation and unemployment. The Keynesians and monetarists believe that there may be a short-run trade-off. If people have adaptive expectations, (based on the recent past) then monetary policy that creates inflation will reduce unemployment by lowering a worker’s real wages. Of course, once a worker realizes he has been fooled, he will demand an increase in nominal wages to bring his real wages back up to previous levels. The gain in employment is only temporary. If, instead, people base their expectations rationally and are not fooled, the neo-classical position, there is no short- or long-run trade-offs between inflation and unemployment.

In a capitalist economy, relative prices play a crucial role in sending information to producers about what society wants. When one price goes up and another goes down, these are signals that tell producers to make more of the first good and less of the second. It is a complex system of signals with price changes reflecting the urgency of the needs within the reality of the law of scarcity. The most important aspect of a price system is the information it conveys to guide production.

Inflation causes an “information extraction” problem. When all prices are going up by different degrees, it is very difficult for an entrepreneur to distinguish between a relative and an absolute price change. Is a rising price a reflection of greater demand or inflationary pressure? That is, does it reflect a society’s changing needs or simply reflects a changed measuring stick (i.e., the value of money)? The same information extraction problem holds true with the prices of resources and labor. We have different labor markets with a wage gradient established along the production process. The printing of money interferes with this wage gradient and the information it conveys about the right proportion of capital and consumption goods to produce. Overall employment may initially improve but the gain is not worth the cost from the adjustment that must occur once the printing stops.

Looking at historical evidence, inflation leads to higher, not lower, unemployment. This should not be surprising. Inflation is like a wrench thrown into the workings of a capitalist system.

If economists agree that there is no long-term trade-off between inflation and unemployment, and the current Fed strategy to lower interest rates has failed miserably to boost growth, then we must ask, why is the Fed, even after this week’s taper, in effect printing $75 billion a month? It’s likely the goal is to induce inflation for a short-term gain in employment. Things are no better if the Fed’s strategy is to raise asset prices to induce an imaginary wealth effect. Yet multiple bubbles may pop before any wealth effect takes place. The Fed should not be playing the economy as a stake in a poker game.

Through multiple bubbles, Alan Greenspan’s monetary policy was responsible for massive human suffering worldwide. Yet Greenspan is living high on the hog with a comfy government pension, spending his spare time penning op-ed articles and dispensing his expert advice on the lecture circuit. He informs us that he was only human and that no one saw the bubble coming. This is less than ingenuous. If you play with fire, and you burn down the forest, it is criminal to say “I did not realize that playing with matches was dangerous.” The sad situation is that we recently replaced him with even bigger arsonists!

One can be certain that interest rates will shoot up once inflation picks up. Since most of the U.S. debt is short term, it is going to be very difficult to inflate prices to reduce the real value of the debt. How will the U.S. government react if it has to refinance at interest rates of 12 percent or more, like in 1981? Yellen is no Volker; will she be able to tame the inflation beast as Volcker did? The independent German central bank was powerless to stop the German government from using the printing presses during 1921-23.

Napoleon and Hitler, both responsible for millions of deaths, rode to power on a wave of discontent that followed periods of excessive monetary printing. Why are we taking such risks?

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/UNem8kMN3FE/story01.htm Tyler Durden

Over the past several months, Bitcoins have soared in popularity, acceptance and price. Naturally, it was only a matter of time before Bitcoin crime followed. As reported here previously, earlier this month, the largest heist in the history of Bitcoin was pulled off when the illegal drug bazaar Sheep Marketplace was plundered, either by hackers or insiders, and about $100 million worth of the currency was stolen from customers.

That was only the most recent heist however: the reality is that Bitcoin theft has been around for years. In June of 2011, a user named Allinvain was the victim of what is arguably the first recorded major Bitcoin theft. As The Verge reports, “Allinvain awoke to find that a hacker had stolen about half a million dollars’ worth of bitcoins. “I feel like killing myself now,” he wrote at the time.”

Outright robbery is not the only crime plaguing the new digital currency, as more sophisticated thefts have emerged including ponzi schemes:

The supposedly high-return investment fund Bitcoin Savings & Trust turned out to be a pyramid scheme, its owner charged with ripping off investors for $4.5 million in bitcoins. MyBitcoin, a “wallet” service that stored bitcoins like a bank account, disappeared with about $1 million worth of users’ bitcoins. Several of the most trusted and well-known Bitcoin companies, including the Mt. Gox and the now-defunct Bitcoinica exchanges, have also suffered high-profile thefts.

 

Victims of credit card theft can cancel a card or reverse fraudulent transactions, but Bitcoin is attractive to thieves because its transactions are irreversible. “Bitcoin is like cash,” says Nicolas Christin, an assistant research professor at Carnegie Mellon University who has done extensive analysis of Bitcoin. “The only way to get it back is by tracking you down and basically beating you up with a lead pipe.”

So it appears that despite the advent of the digital, hard physical objects – like lead pipes – still rule supreme.

But going back to Bitcoin is, where the vast majority still aren’t exactly clear what the fiat currency alternative actually is, it’s difficult to understand exactly how digital theft works. What are you stealing, exactly? And once you’ve got it, what do you do with it?

 

The Verge provides the explanation on how to steal Bitcoins in three easy steps:

 

1. Copying the keys

There is no such thing as a Bitcoin. The virtual currency is nothing more than a public ledger system, called the blockchain, that keeps track of an ever-expanding list of addresses, and how many units of bitcoin are at those addresses.

If you own Bitcoin, what you actually own is the private cryptographic key to unlock a specific address. The private key looks like a long string of numbers and letters. You may choose to store your key, or keys if you have multiple addresses, in a number of places including a paper printout, a metal coin, a hard drive, an online service, or a tattoo on your body.

All methods can be protected with various levels of security, but all methods are vulnerable to theft since the robbery simply depends on gaining access to the string. “I recommend creating physical paper wallets using an Arch Linux boot which has never been online,” says Marak Squires, an early Bitcoin adopter who is developing a secure Bitcoin bank. “Unfortunately, this is not an option for most people. For the average user there are no good options right now to securely store cryptocurrencies.”

The most lucrative attacks are carried out on online services that store the private keys for a large number of users, as Sheep Marketplace did. It seems these attacks are often carried out by insiders who don’t have to do much hacking at all. Just copy the database of private keys and you can gain control of the bitcoins at all those addresses. You, the thief, can now spend those bitcoins whenever you want, as long as the owner doesn’t move them first.

2. Getting away with it

While Bitcoin has some features that make it great for thieves, it also has some features that make it not so great. The fact that the blockchain is public means that anyone can see to which address the coins were transferred next. After the Sheep Marketplace heist, some users tracked the thief as he or she moved the stolen coins from address to address.

This tracking technique isn’t very helpful for the time being, since the thief’s identity is still unknown. However, Bitcoin forensics is getting better and better as programmers figure out new ways to extract information from the blockchain. A thief may leave traces that are undetectable now but could be uncovered in the future, inspiring a retroactive investigation.

That’s why this step, money laundering, is so important. Laundering Bitcoin is done with “mixers,” also called “tumblers,” which randomly crisscross your bitcoins with other users’ bitcoins so that you get a clean address that the blockchain cannot connect with any of the addresses from which the coins were stolen.

Most of the time it works basically like this: you transfer your stolen bitcoins to a new address owned by the Bitcoin tumbler. That address is still “dirty” because there is a clear path from the victim’s address, so the tumbler leaves the coins there. The tumbler makes a note to transfer the same amount of bitcoins from other users to a new “clean” address owned by you. But it doesn’t make the transfer right away. Anyone watching would probably notice if the same exact amount of bitcoins — say, 96.1 — were moved into a new address, so the tumbler has you withdraw your coins over time in smaller amounts. When you request 10 bitcoins, the tumbler will transfer 10 bitcoins to your clean address. Extra-careful tumblers may also split these payouts further, especially if it is a noticeably large number of bitcoins.

Over time, the tumbler will sip bitcoins from the “dirty” addresses in order to replenish the pool. By the time your dirty address gets tapped, you’re long gone. The tumbler is only accessible through the anonymizing Tor network, making it difficult for law enforcement to trace traffic to it or discover the people behind it.

Of course, that also means you have to trust the tumbler. “Caution: Mixing services may themselves be operating with anonymity. As such, if the mixing output fails to be delivered or access to funds is denied there is no recourse. Use at your own discretion,” reads the Bitcoin wiki.

Another option is to launder the money the way the mob might: spend it at Satoshi Dice or another Bitcoin casino.

3. Get rich

Now you’ve got clean bitcoins — hopefully a lot of them! — and you’ve got your eye on a villa in the south of France. Unfortunately, the landlord doesn’t accept Bitcoin. Like most merchants in the world, she wants a government-sanctioned currency, preferably the euro.

So now you’ve got to convert your bitcoins to euros. But you’ve got a lot of bitcoins. If you’re the owner of Sheep Marketplace, you’ve got $100 millions’ worth. The Bitcoin economy is still tiny and relatively illiquid — there aren’t many buyers who could cash you out for that much Bitcoin all in one sale, and a transaction of that size would surely raise alarms. It a
lso becomes much harder to conceal your identity when you exchange Bitcoin for other currencies. Most exchanges require some type of identifying information, and at the very least you need an account into which the euros can be deposited.

It’s time to get creative. There are several ways you can unload a lot of Bitcoin while maintaining your anonymity. Find a rich buyer who is willing to take the bitcoins without verifying your identity in exchange for a discount on the price, for example. However, the best way to protect yourself is to remain patient. Unload your bitcoins in a series of transactions over weeks, ideally months or even years, in order to avoid arousing suspicion from those watching the blockchain as well as real-life authorities that might wonder how you suddenly came into millions of dollars.

Now, enjoy life in France.

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Thanks to Bob “I don’t get out of bed unless it’s over 20” Pisani’s daily diatribes about VIX (the so-called ‘fear’ index), we are supposed to rest assured that all is well in the ever-decreasing horizon world of equity markets. However, while VIX measures the expectations of ‘normal’ day to day moves in stocks, it does not offer any insight into market participants’ perspectives on tail risks (or ‘the big one’). CBOE’s SKEW index does just that, based on the pricing differences between normal and fat-tail risk pricing in the options market, it provides a measure of the market’s belief in extreme events… and for only the 4th time in history, it’s flashing a big red warning signal of volatility ahead.

The last 3 times this happened… markets went a little crazy…

 

In 24 years of history, SKEW has been above 140 only 4 times (including the current)… the last 3 times were…

• 06/21/1990 – S&L Crisis (Stocks dropped 18% in next 3 months and the US entered recession)
• 10/16/1998 – Russian Default and LTCM (Stocks soared 22% in the next 3 months and the dot-com bubble was born)
• 03/16/2006 – Housing Bubble peak (Stock dropped 6% in next 3 months and the ‘great recession’ started within a year)

And now?

• 12/20/2013… Taper…

 

Chart: Bloomberg

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Submitted by Adam Taggart via Peak Prosperity,

Every year, David Collum writes a detailed "Year in Review" synopsis full of keen perspective and plenty of wit. This year's is no exception. The 89-page tour-de-force is a must-read this holiday season for perspective on where we have been and where we are going. From Krugman to the abuse of civil liberties, from gold to muni bankruptices, and from Student debt bubble to Cyprus and beyond, Collum covers it all.

…

Why would anybody give a damn what an organic chemist thinks about investing, economics, and politics? I’m baffled. As a half-hearted defense, in over 34 years of investing with a decidedly lopsided portfolio, I have had only two years in which my total wealth decreased in nominal dollars. My 14-year return since 01/01/00 is 9% compounded with no leverage and no glass eye. (We all made money in the 90’s so I don’t even go there.)

Each review begins with a highly personalized account of my efforts to get through another year of investing, which is followed by an overview of 34 years of investing. I thought maybe I would drop the former, but I couldn’t because one of my two losing years was this year. Come again? You lost money this year? Yep, I’m the guy—an urban legend in the flesh. You cannot teach this kind of prowess. It was a very expensive year to be in the Church of Austrian Economics and Hard Assets. Thus, I must continue with the personal overview as a form of a trip to the confessional. The investing section may be instructive for those interested in my approach and for gold bulls on suicide watch. The bulk of the review, however, describes thoughts and observations—the year’s events told as a narrative. The links are copious, albeit not comprehensive. Some are flagged as highly recommended.

I try to avoid themes covered amply in my previous reviews. I won’t pick on the Roth IRA anymore (although I was right), and I’ve left resource depletion alone (it’s still a problem). Nonetheless, some gifts just keep on giving. Debt permeates all levels of society, demanding comment every year. Precious metals are a personal favorite. This year seems to be more about politics and less about economics. Sections entitled Baptists, Bankers, the Federal Reserve, and Bootleggers describe the players involved in the biggest battle since Frodo melted down the ring for beer money. Society is juiced on easy money, leaving some of us breathless. I finish with a book list that shaped my thinking.

Every year I have declared with an increasingly shrill voice now inaudible even to dogs that civil liberties must be protected at all costs and that we all should avoid using “conspiracy” as a pejorative term. Oh…my…God! Just as smartphones have put to rest the existence of Yeti, aliens, and the Loch Ness Monster, 2013 put to rest any claim that conspiracies do not exist. If you denounce conspiracy theories and conspiracy theorists to me, I will remind you of the quote from a 20th century philosopher:

“Everybody has a plan until they get punched in the face.”

~ Mike Tyson

The full review is below:

 

The contents are as follows:

    Background
    Investing
    The Bear Case
    The Economy
    Broken Markets
    Gold
    Debt and Retirement
    Municipal Debt
    Student Debt
    Bonds and Sovereign Debt
    Housing the Mortgage Markets
    Europe
    Cyprus
    Rest of the World
    Confiscation
    The Fourth Estate
    CNBC–Rise Above
    Bankers and Finance
    Federal Reserve
    Bootleggers
    Paul Krugman
    Baptists
    Government Gone Wild
    Mr. Obama Goes to Washington
    Civil Liberties Part 1
    Civil Liberties Part 2: Edward Snowden versus the NSA
    Books
    Acknowledgements
    Links

 

2013yearinreview-30

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