Frontrunning: March 25

  • Putin Threatened With More Sanctions as Russia Out of G-8 (BBG)
  • China Faces ‘Mini Crisis’ on Debt Defaults, Ex-PBOC Adviser Says (BBG)
  • Don’t laugh too hard: Obama to propose ending NSA bulk collection of phone records (Reuters)
  • Japan GPIF asset review not aimed at supporting domestic stocks (Reuters)
  • Chinese families clash with police, slam Malaysia over lost plane (Reuters)
  • Russian Capital Flight Surges in First Quarter, Fueled by Ukraine Crisis (WSJ)
  • SEC Is Probing Dealings by Banks and Companies in Loan Securities (WSJ)
  • Democrats ditch Nate Silver after data whiz predicts dismal midterm outcome (DN)
  • China’s Urbanization Loses Momentum as Growth Slows (BBG)
  • German Confidence Falls for First Time in Five Months (BBG)
  • Loneliness of Kiev Bond Trader Shows Market Was Wiped Out (BBG)
  • Japan Firms Continue to Hoard Cash (WSJ)
  • China Internet Funds Called Vampires Draw Calls for Rules  (BBG)
  • UK satellite operator used 19th century physics to trace missing plane (Reuters)
  • Grand Central: A Stein on the Fed’s Easy Policy Path  (WSJ)

 

Overnight Media Digest

WSJ

* The heads of state of the world’s largest advanced economies moved Monday to isolate Russia, severing a key link between Moscow and the Western world after nearly two decades. The leaders of the Group of Seven, or G-7, nations effectively disbanded the larger G-8 by excluding Russia until it changes course in Ukraine. (http://ift.tt/1fWuAPB)

* Seventeen days after a Malaysian jetliner disappeared, authorities for the first time said they believed they knew what happened to the plane and the 239 people aboard: It crashed in the southern Indian Ocean, one of the world’s most remote and turbulent seas. (http://ift.tt/1eHTiXE)

* The Securities and Exchange Commission is investigating whether a Wall Street boom in complicated bond deals is creating new avenues for fraud, according to people close to the probes. (http://ift.tt/1eHTgiw)

* Bernard L. Madoff has maintained for years that his decades long Ponzi scheme was a one-man show. On Monday, a jury concluded instead that it was a team effort. Jurors found five former employees of Madoff guilty of aiding and hiding the fraud in a trial that painted the money manager’s Manhattan offices as a hive of illegal activity, where employees cooked up lies and manufactured fake documents to keep afloat a scam that ultimately cost investors $17 billion. (http://ift.tt/1eHTgiD)

* Box Inc on Monday revealed plans to raise up to $250 million in an initial public offering as the unprofitable startup tries to ward off intensifying competition in the online storage market. (http://ift.tt/1eHTiXI)

* Walt Disney Co on Monday named ABC News President Ben Sherwood as the next head of its television-entertainment networks, marking a rapid climb for a news producer who just four years ago was out of the media business entirely. (http://ift.tt/1eHTiXK)

* General Motors Co engineering managers knew about ignition-switch problems on the 2005 Cobalt that could disable power steering, power brakes and air bags, but launched the car because they believed the vehicles could be safely coasted off the road after a stall, according to court documents. (http://ift.tt/1eHTiXM)

 

FT

Russia’s government is braced for capital outflows to jump to $70 billion in the first three months of the year as investors seek to soften the blow from international sanctions after President Vladimir Putin’s Ukrainian land grab.

Five of investment manager Bernard Madoff’s former aides have been found guilty of helping him carry out and cover up multibillion-dollar investment fraud for years.

The European Commission shelved plans to relax cross-border rules that could leave schemes with a multibillion pound funding gap, dashing the Scottish government’s hopes that EU pension reforms would smooth a transition to independence, sources said.

Data storage company Box said it hoped to raise about $250 million in an initial public offering after posting a wider net loss than last year despite doubling its revenue.

Rating agency Moody’s cautioned that changes to the rules on buying an annuity in Britain had “credit negative implications” for the country’s life insurers, dealing them a further blow following George Osborne’s pensions overhaul

 

NYT

* The Obama administration is preparing to unveil a legislative proposal to end the National Security Agency’s once-secret bulk phone records program – a systematic collection of data about Americans’ calling habits. If approved by Congress, phone companies would not be required to retain bulk data for any longer than they normally would. The N.S.A. could obtain specific records only with permission from a judge, using a new kind of court order.(http://ift.tt/NMWzu3)

* At a meeting on May 15, 2009, engineers at General Motors Co learned that data in the black boxes of Chevrolet Cobalts confirmed a potentially fatal defect that existed in hundreds of thousands of cars. But in the months and years that followed, as a trove of internal documents and studies mounted, GM told the families of accident victims and other customers that it did not have enough evidence of any defect in their cars, interviews, letters and legal documents show. (http://ift.tt/1nW727g)

* A federal jury on Monday found five associates of the convicted swindler Bernard Madoff guilty of 31 counts of aiding one of the largest Ponzi schemes in history. (http://ift.tt/NMWzub)

* The Walt Disney Co acted quickly to put a new top executive in place at its ABC Television Group, naming Ben Sherwood on Monday to succeed Anne Sweeney, who announced her resignation two weeks ago. (http://ift.tt/NMWzud)

* Herbalife Ltd said on Monday it agreed to give its biggest shareholder Carl Icahn three additional seats on the board. Icahn, one of the company’s most outspoken supporters, who already had a 16.8 percent stake in the company and two board seats, requested the additional representation last week. (http://ift.tt/NMWzuh)

* Online storage service company Box Inc expects to raise about $250 million in its initial public offering. Box was valued at $2 billion in a recent round of private funding, but would most likely be worth several times that after the IPO. Many more cloud businesses, for both business and consumers, are expected to follow this year. (http://ift.tt/NMWCpQ)

* Google Inc on Monday announced a partnership with the Luxottica Group, the largest eyeglass company in the world, to design, manufacture and distribute frames for Google Glass, the Internet-connected eyewear.(http://ift.tt/1nW6Zsi)

 

Canada

THE GLOBE AND MAIL

* Ontario’s Liberal government is planning a budget crafted to be hard for the New Democratic Party to defeat, including left-friendly measures such as better welfare benefits. Despite Premier Kathleen Wynne’s bullish posturing in recent weeks, government sources say the Liberals are wary of a spring vote – particularly after two by-election losses last month – and will design a budget New Democrats can support in order to prevent one. (http://ift.tt/1fdSyqc)

* The Alberta Progressive Conservative party leadership vote to replace Alison Redford will take place on Sept. 6, with a potential run off vote scheduled for Sept. 20. The PC party, which has formed the government in Alberta continuously for more than four decades, made the announcement about the leadership contest after a long board meeting on Monday. (http://ift.tt/1gltxOa)

Reports in the business section:

* Canadian companies operating in Russia are pleading with Ottawa to ensure they aren’t hurt by sanctions as the federal government puts global security ahead of commercial interests in the region. On Monday Prime Minister Stephen Harper said commercial interests are now secondary in the consideration of responses to the Russian moves. (http://ift.tt/1gltuSu)

NATIONAL POST

* Prime Minister Stephen Harper and his fellow G7 leaders have indefinitely suspended Russia from the Group of Eight until President Vladimir Putin “changes course.” The G7 “condemned” Russia’s annexation of Crimea in a brief document called “The Hague Statement” that was more strongly worded than had been expected. It described the referendum held in Crimea eight days ago that resulted in a 96.7 percent support for union with Russia as “illegal.” (http://ift.tt/1fdSw1B)

* Prime Minister Stephen Harper has endorsed controversial Calgary Conservative MP Rob Anders, who faces a serious challenge from a well-known former Alberta provincial minister as he seeks his party’s nomination for the 2015 election. (http://ift.tt/1fdSwhS)

FINANCIAL POST

* British Columbia’s Liberal government has followed through with its promise to table back-to-work legislation for unionized truckers on strike at Port Metro Vancouver, with heavy penalties for not complying. The legislation includes penalties of up to $400 per day for workers and $10,000 per day for the union or employer for contravening the legislation. (http://ift.tt/1fdSyGv)

* The clock is still ticking on BlackBerry Ltd’s attempted turnaround, but it is clear Chief Executive John Chen has managed to buy some time for the embattled technology company. Chen has moved quickly to jumpstart BlackBerry’s transition from primarily a seller of smartphones to a specialized provider of enterprise grade software and services. (http://ift.tt/1glty4D)

 

China

SOUTH CHINA MORNING POST

— Occupy Central activists may block roads in Hong Kong’s financial district this summer if authorities make decisions that rule out any hope for “genuine” universal suffrage. Campaign organiser Chan Kin-man said supporters became impatient since protests against a cross-strait trade pact began in Taiwan. (http://ift.tt/1gU9MIB)

— Bets on yuan appreciation have long been deemed the key reason for accumulation of yuan deposits in offshore banking systems, but Hong Kong regulators say growth in yuan deposits in the city had instead been driven by the interest rate difference between yuan and Hong Kong dollar. (http://ift.tt/1gU9MID)

— Sinopharm, China’s largest drug distributor, plans to boost retail sales to more than 10 billion yuan ($1.62 billion) in 2016, said president Li Zhiming. Last year, the state-owned firm’s drug retail sales rose 17.5 percent to 4.83 billion yuan. (http://ift.tt/1gU9Ms8)

THE STANDARD

— The Housing Authority will put up 85 Home Ownership Scheme flats in Tai O on Lantau Island for sale in June, all costing below HK$1 million ($128,900) each. The prices are based on a 30 percent discount to market value and reflect the remote location of the flats. (http://ift.tt/1gwgcDJ)

— Chongqing Bank plans to boost micro loans to comprise 40 percent of its total business by 2015 from 33 percent now. (http://ift.tt/1gwgfz7)

HONG KONG ECONOMIC JOURNAL

— Tongda Group Holdings Ltd is seen to sell 420 million new shares at up to HK$1.19 apiece in a share placement, raising up to HK$500 million ($64.45 million), according to a term sheet.

HONG KONG ECONOMIC TIMES

— Yanzhou Coal Mining Co Ltd had trimmed its work force by 5,400 in 2013 in a move to reduce cost and the firm is set to cut up to another 5,000 this year, according to senior management.

 

Britain

The Telegraph

RBS ‘IN TALKS’ TO SELL CITIZENS TO JAPANESE BANK

One of Japan’s largest banks has approached Royal Bank of Scotland to buy its U.S. retail business ahead of its stock market flotation this year. (http://ift.tt/1h3IhAU)

ENERGY COMPETITION PROBE ‘WILL INCREASE RISK OF BLACKOUTS’

The risk of blackouts will be increased by a two-year probe into the energy market that will deter companies from building new power plants, a leading analyst has warned. (http://ift.tt/1h3Iggc)

MONITISE TO RAISE 110 MLN STG IN SHARE PLACING

Monitise, the online payments provider, announced plans to raise more than 110 million pounds ($181.4 million) on London’s junior AIM market to fund a shift to subscription-based services that is expected to slow its growth. (http://ift.tt/1h3IhAW)

GATWICK MISSES OUT ON DIRECT ROUTE TO JAKARTA

An Indonesian airline which was due to launch a direct service from Gatwick to Jakarta in May will now operate the service via Amsterdam to pick up passengers, it has emerged. (http://ift.tt/1h3Iggh)

The Guardian

LLOYDS’ TOP MANAGEMENT BONUSES POTENTIALLY WORTH MORE THAN 27 MLN STG

Bailed out Lloyds Banking Group has handed its top management team – including Chief Executive Antonio Horta-Osorio – bonuses potentially worth more than 27 million pounds. (http://ift.tt/1h3Iggn)

ASDA TO AXE AROUND 200 JOBS

Asda is to cut around 200 jobs as it forges a new five-year plan to tackle increasing competition from rival supermarkets and discounters. (http://ift.tt/1h3Iggp)

The Times

CO-OP’S STAKE IN BANK SLIPS AFTER 400 MILLION POUND CALL

The Co-operative Group’s grip on its troubled banking division appeared to weaken further last night after a stack of mis-selling costs forced the lender into a surprise 400 million pound emergency cash call. (http://ift.tt/1h3IhRm)

SCOTLAND ‘WOULD FACE HIGHER TAXES OR IMMIGRATION TO FUND PENSIONS’

An independent Scotland would have to raise taxes or attract hundreds of thousands of immigrants to pay the state pension currently offered within the UK, a new study has found. (http://ift.tt/1h3Iggr)

PHONES4U TRIES TO GATECRASH CARPHONE MERGER WITH DIXONS

Merger talks between Dixons Retail and Carphone Warehouse have hit a potential hurdle after the owners of Phones4u approached the retailer about an alternative deal. (http://ift.tt/1h3IhRx)

LLOYDS ACCUSED OF USING LOOPHOLE TO CUT PPI BILL

A fresh payment protection insurance scandal is set to engulf Lloyds Banking Group amid accusations that it used a loophole to cut compensation awards to customers. (http://ift.tt/1ivKJQy)

ALL THAT GLISTERS COULD NOW TURN TO DUST FOR ALBEMARLE

Troubled pawnbroker Albemarle & Bond, which has been seeking a buyer for the business for months while its lenders kept the company afloat, is set to collapse after its banks called time on the turnaround of the business. (http://ift.tt/1ivKK6M)

The Independent

FURY AS FCA IS ACCUSED OF WIMPING OUT OF TOUGH NEW REGULATIONS ON PAYDAY LOANS

Members of Parliament and consumer groups have criticised the London’s financial watchdog, the Financial Conduct Authority, for lacking teeth ahead of its taking over responsibility for payday lenders next month. (http://ift.tt/1ivKK6O)

 

 

Fly On The Wall 7:00 AM Market Snapshot

ECONOMIC REPORTS

Domestic economic reports scheduled today include:
S&P Case-Shiller 20-city home price index for January at 9:00–consensus up 0.6% for month
Consumer confidence for March at 10:00–consensus 78.4
New home sales for February at 10:00–consensus down 4.9% to 445K rate

ANALYST RESEARCH

Upgrades

Domtar (UFS) upgraded to Buy from Neutral at Goldman
Eni SpA (E) upgraded to Outperform from Market Perform at Raymond James
Exa Corp. (EXA) upgraded to Outperform from Neutral at RW Baird
Farmers Capital upgraded to Outperform from Market Perform at Keefe Bruyette
PACCAR (PCAR) upgraded to Buy from Neutral at Goldman
Palo Alto (PANW) upgraded to Outperform from Market Perform at FBR Capital
Rackspace (RAX) upgraded to Overweight from Equal Weight at Morgan Stanley
ReneSola (SOL) upgraded to Buy from Neutral at Roth Capital
Sinopharm Group (SHTDF) upgraded to Outperform from Neutral at Credit Suisse

Downgrades

Alpha Natural (ANR) downgraded to Hold from Buy at Jefferies
Arch Coal (ACI) downgraded to Hold from Buy at Jefferies
BioMarin (BMRN) downgraded to Neutral from Buy at Goldman
CST Brands (CST) downgraded to Neutral from Overweight at JPMorgan
KBR (KBR) downgraded to Neutral from Buy at Goldman
MSCI (MSCI) downgraded to Neutral from Buy at UBS
Navistar (NAV) downgraded to Neutral from Buy at UBS
PulteGroup (PHM) downgraded to Underweight from Equalweight at Barclays
Timken (TKR) downgraded to Hold from Buy at KeyBanc

Initiations

Alliance Fiber Optic (AFOP) initiated with a Buy at Needham
Convergys (CVG) initiated with a Buy at SunTrust
Fifth Street Senior (FSFR) initiated with a Buy at UBS
FireEye (FEYE) initiated with an In-Line at Imperial Capital
NPS Pharmaceuticals (NPSP) initiated with a Buy at Goldman
Sapient (SAPE) initiated with a Buy at SunTrust
Spirit Airlines (SAVE) initiated with a Buy at SunTrust
Varonis (VRNS) initiated with a Buy at Jefferies
Varonis (VRNS) initiated with a Buy at Needham
Varonis (VRNS) initiated with an Equalweight at Barclays
Varonis (VRNS) initiated with an Outperform at RBC Capital

COMPANY NEWS

Disney (DIS) announced a deal to acquire Maker Studios for $500M. The deal also includes up to an additional $450M in performance-based payouts for Maker
Online file sharing and content management service Box (BOX) filed with the SEC for an IPO
RealD (RLD) announced an agreement with Wanda Cinema to install 780 additional 3D screens in China
Sonic (SONC) said it expects FY14 SSS to grow by low-single digits and earnings for the year to grow 14%-15%
Orthofix (OFIX) implemented an internal audit program and announced the filing of restated financial results
Safeway (SWY) declared special stock dividend to spin-off Blackhawk (HAWK)

EARNINGS

Companies that beat consensus earnings expectations last night and today include:
McCormick (MKC), HD Supply (HDS), Sonic (SONC)

Companies that matched consensus earnings expectations include:
CTI Industries (CTIB), Exa Corp. (EXA)

NEWSPAPERS/WEBSITES

SEC launching investigation into complex bond deals (BCS, C, DB, GS, MS, UBS, RBS), WSJ reports
Yahoo (YHOO) shareholders eyeing a big Alibaba payday, FT reports
Luxottica (LUX), Google (GOOG) collaborating on new versions of Google Glass, WSJ says
HP (HPQ) may not release news on first 3D printer until October, GigaOM says
Sanofi (SNY) joins bidders for Merck’s (MRK) consumer health unit, Bloomberg reports 
U.K. PS4 (SNE) sales up 106% since launch of ‘InFamous’ game, MCV says
RBS (RBS), Sumitomo (SMFG) hold talks on RBS Citizens, WSJ says
Mitsubishi UFJ Financial Group (MTU) has considered bid for RBS’s (RBS) Citizens, Reuters reports
General Motors (GM) engineers knew about ignition problems, WSJ reports

SYNDICATE

Actinium Pharmaceuticals (ATNM) files $200M mixed securities shelf
Arlington Asset Investment (AI) files to sell 2.75M common shares
Box, Inc. (BOX) files registration with SEC for IPO
CommScope (COMM) files to sell 17.5M shares of common stock for holders
Crestwood Midstream (CMLP) files to sell $300M in common units
CyrusOne (CONE) files $600M mixed securities shelf
CyrusOne (CONE) files to sell 44.48M shares of common stock for holders
Farmland Partners (FPI) files 4.67M share IPO
MoneyGram (MGI) files to sell 8M shares of common stock
MoneyGram (MGI) files to sell 8M shares of common stock for holders
PRO-DEX (PDEX) announces commencement of rights offering
PennyMac (PFSI) files to sell 5.55M shares of common stock for holder
SciQuest (SQI) files to sell 3M shares of common stock
Veeva (VEEV) files to sell 12M shares of common stock in an amended S-1 filing
Western Asset Mortgage (WMC) files $400M mixed securities shelf


    



via Zero Hedge http://ift.tt/1jBct5o Tyler Durden

The Quote from the Chair of the Senate Intelligence Committee that Proves that the Intelligence Agencies Are Completely Rogue

In 2007, reporter Charles Davis asked then-Chairman of the Senate Intelligence committee – Jay Rockefeller – about clandestine U.S. operations against a foreign government.

Here’s the exchange (listen to the minute plus recording or just listen to the 20-second money quote):

DAVIS: Reports quote administration officials as saying this is going on and it’s being done in a way to avoid oversight of the Intelligence Committee. Is there any way—

ROCKEFELLER: They’ll go to any lengths to do that, as we’ve seen in the last two days [during hearings on FISA].

DAVIS: Is there anything you could do in your position as Chairman of the Intelligence Committee to find answers about this, if it is in fact going on?

ROCKEFELLER: Don’t you understand the way Intelligence works? Do you think that because I’m Chairman of the Intelligence Committee that I just say I want it, and they give it to me? They control it. All of it. ALL of it. ALL THE TIME. I only get –  and my committee only gets –  what they WANT to give me.

This is shocking … but not new.

The NSA was created in secret … and Congress wasn’t even notified.

During the Vietnam war, the NSA spied on two prominent politicians: Senators Frank Church and Howard Baker.  Church was the chairman of the committee investigating wrongdoing by the NSA and other intelligence agencies.

Reuters notes:

This power struggle burst into public view during the Church Committee hearings of the  mid-1970s. The Senate hearings stunned the nation with revelations about CIA assassination plots and illegal activities. The result was the creation of congressional committees designed to give the lawmakers greater control over intelligence.

 

In the aftermath of the horrific September 11 attacks, however, President George W. Bush, aided and abetted by his powerful vice president, Dick Cheney, essentially gave the CIA [and all other intelligence agencies] a free pass to fight the  ”war on terrorism.”

 

***

 

The battle erupted on the Senate floor on Tuesday when Senator Diane Feinstein (D-Calif.), the intelligence panel’s chairwoman and normally a staunch CIA defender, denounced it for allegedly spying on committee investigators and violating the constitutional separation of powers.

 

***

 

The Senate investigators in that basement had discovered an internal CIA study that appeared to agree with many of the Senate report’s critical findings. Senator Mark Udall (D-Colo.) said the internal study “conflicts” with [CIA head] Brennan’s rebuttal. CIA officials suspected that the Senate investigators had obtained unauthorized access to the internal study, and yanked the documents from the  basement computers. Feinstein said Tuesday that the CIA had not only searched the committee’s computers but had referred the matter  to the Justice Department as a criminal case.

The White House has also withheld 9,400 documents from the Senate’s CIA torture investigation.

The Washington Times reported in 2006 that – when high-level NSA whistleblower Russell Tice offered to testify to Congress about this illegal spying – he was informed by the NSA that the Senate and House intelligence committees were not cleared to hear such information:

Renee Seymour, director of NSA special access programs stated in a Jan. 9 letter to Russ Tice that he should not testify about secret electronic intelligence programs because members and staff of the House and Senate intelligence committees do not have the proper security clearances for the secret intelligence.

(And see this.)

Former high-level NSA executive Bill Binney points out how absurd that statement is:

Russ Tice … was prepared to testify to Congress to this, too, and so NSA sent him a letter saying, we agree that you have a right to go to Congress to testify, but we have to advise you that the intelligence committees that you want to testify to are not cleared for the programs you want to speak about. Now, that fundamentally is an open admission … by NSA that they are violating the intelligence acts of 1947 and 1978, which require NSA and all other intelligence agencies to notify Congress of all the programs that they’re running so they can have effective oversight, which they’ve never had anyway.

It was widely reported in 2009 the CIA had hidden a major program from Congress.

To this day, Congress members get more information about NSA spying from reading the newspaper than they get in classified NSA briefings.

Congressman Justin Amash said that the NSA would only divulge information in classified briefings if Congress guessed at the right questions:

Amash said that intelligence officials are often evasive during classified briefings and reveal little new information unless directly pressed.

 

“You don’t have any idea what kind of things are going on,” Amash said. “So you have to start just spitting off random questions. Does the government have a moon base? Does the government have a talking bear? Does the government have a cyborg army? If you don’t know what kind of things the government might have, you just have to guess and it becomes a totally ridiculous game of twenty questions.

A senior staffer for the Chair of the Senate Intelligence Committee – one of the biggest apologists for NSA spying- confirms Amash’s statement:

Sen. Dianne Feinstein (D-Calif.), chairman of the Senate Intelligence Committee, said in August that the committee has less information about, and conducts less oversight of, intelligence-gathering that relies solely on presidential authority. She said she planned to ask for more briefings on those programs.

 

“In general, the committee is far less aware of operations conducted under 12333,” said a senior committee staff member, referring to Executive Order 12333, which defines the basic powers and responsibilities of the intelligence agencies. “I believe the NSA would answer questions if we asked them, and if we knew to ask them, but it would not routinely report these things, and in general they would not fall within the focus of the committee.”

In other words, the intelligence agencies are rogue.

Congress Not Informed that the Constitution Was More Or Less Suspended

But perhaps the most dramatic example of the Executive branch wholly stonewalling Congress occurred when Dick Cheney implemented “Continuity of Government” plans on 9/11.  This created a “shadow government” which largely sidelined Congress and suspended the Constitution.  But Congress wasn’t even informed.

As CBS pointed out, virtually none of the Congressional leadership knew that Continuity of Government (“COG” for short) had been implemented or was still in existence as of March 2002:

Key congressional leaders say they didn’t know President Bush had established a “shadow government,” moving dozens of senior civilian managers to secret underground locations outside Washington to ensure that the federal government could survive a devastating terrorist attack on the nation’s capital, The Washington Post says in its Saturday editions.

 

Senate Majority Leader Thomas A. Daschle (D-S.D.) told the Post he had not been informed by the White House about the role, location or even the existence of the shadow government that the administration began to deploy the morning of the Sept. 11 hijackings.

 

An aide to House Minority Leader Richard A. Gephardt (D-Mo.) said he was also unaware of the administration’s move.

 

Among Congress’s GOP leadership, aides to House Speaker J. Dennis Hastert (Ill.), second in line to succeed the president if he became incapacitated, and to Senate Minority Leader Trent Lott (Miss.) said they were not sure whether they knew.

Aides to Sen. Robert C. Byrd (D-W. Va.) said he had not been told. As Senate president pro tempore, he is in line to become president after the House speaker.

CNN reported:

Senate Majority Leader Tom Daschle, D-South Dakota, said Friday he can’t say much about the plan.

 

“We have not been informed at all about the role of the shadow government or its whereabouts or what particular responsibilities they have and when they would kick in, but we look forward to work with the administration to get additional information on that.”

Indeed, the White House has specifically refused to share information about Continuity of Government plans with the Homeland Security Committee of the U.S. Congress, even though that Committee has proper security clearance to hear the full details of all COG plans.

Specifically, in the summer 2007, Congressman Peter DeFazio, on the Homeland Security Committee (and so with proper security access to be briefed on COG issues), inquired about continuity of government plans, and was refused access. Indeed, DeFazio told Congress that the entire Homeland Security Committee of the U.S. Congress has been denied access to the plans by the White House.

 

(Or here is the transcript).

The Homeland Security Committee has full clearance to view all information about COG plans.

DeFazio concluded: “Maybe the people who think there’s a conspiracy out there are right”.

University of California Berkeley Professor Emeritus Peter Dale Scott points out that – whether or not COG plans are still in effect – the refusal of the executive branch to disclose their details to Congress means that the Constitutional system of checks and balances has already been gravely injured:

If members of the Homeland Security Committee cannot enforce their right to read secret plans of the Executive Branch, then the systems of checks and balances established by the U.S. Constitution would seem to be failing.

 

To put it another way, if the White House is successful in frustrating DeFazio, then Continuity of Government planning has arguably already superseded the Constitution as a higher authority.

Postscript: Whistleblowers allege that the intelligence agencies are blackmailing Congress.

In any event, the courts don’t have any oversight over the intelligence agencies either:

  • When these judges raised concerns about NSA spying, the Justice Department completely ignored them

 


    



via Zero Hedge http://ift.tt/1gwcWYL George Washington

Guest Post: Does The World Need China’s Leadership?

Submitted by Dingding Chen of The Diplomat,

For more than two decades China has abided by former leader Deng Xiaoping’s “keep a low profile” strategy in foreign affairs. But things are changing — China is ready to take on a leadership role in international affairs, and the world will benefit from it.

In a recent speech on the country’s regional diplomacy, China’s President Xi Jinping emphasized “being more active,” “adjusting to new times,” providing “more leadership,” and “contributing to the world.” The Minister of Foreign Affairs, Wang Yi, also said recently that China is ready to take on more international responsibilities, ranging from foreign aid, peacekeeping, nuclear non-proliferation, and regional security mechanisms.

This is already happening in several areas. China’s Premier Li Keqiang recently spoke of building a new security framework in East Asia, and the country’s senior leaders are making efforts to manage nuclear dilemmas in Iran and North Korea. The country is working with other BRICS countries to establish their own development bank that could rival the World Bank and the IMF. China has also shaped the development of the responsibility to protect norm in international security and human rights, and continues to reform it along with other developing countries.

As these developments have gradually changed the face of international relations, the U.S. has been hampered by problems ranging from its fiscal deficit and domestic political stagnation to international withdrawal, sending a discouraging signal to the world. Gone are the days when the U.S. could singlehandedly provide a stable order for the international community. Now more than ever, the U.S. needs help from other countries to provide global leadership. But Europe has been plagued by its own debt crisis and Japan is struggling to come back from two decades of economic stagnation. China, on the other hand, has recovered quickly from the 2008 global financial crisis and now is the second largest economy in the world.

Not all scholars would agree that China is ready for a leadership role, and several misconceptions should be addressed.

First, leadership is not hegemony. Chinese leadership in global affairs will not mean regional or global domination. China should not impose its own will on other states, and it will not do so. It knows the perils of this approach very well from its own painful experiences since 1840 at the hands of the West and Japan. Moreover, China has sided with the developing countries over many issues for a long time. Indeed, part of China’s identity is still as a developing country, and this ensures that China will continue to restrain itself from bullying other developing or smaller countries.

 

Second, China cannot lead in all issue areas. Its power and resources are still limited and will remain so for a long time. Yet the country can start taking on more leadership in areas such as poverty reduction, environmental protection, community building in East Asia, foreign aid to developing countries, and international human rights protection.

 

Third, some worry that China’s pursuit of leadership will generate conflict. This would only happen if the U.S. chose to contain or undermine China’s efforts. More Chinese leadership will lead to more regional and global public goods, a more stable order in Asia, and a more confident and secure China. That, in turn, will help to keep rising domestic nationalism at bay.

 

Fourth, some within China worry that taking on too much international responsibilities will weaken China’s own social and economic development. This worry is unwarranted. With power comes greater responsibility. China’s power has increased significantly over the last decades and China has been the biggest beneficiary of globalization and economic openness; now is the right time for China to make some contributions to the international community.

To play an effective leadership role in global affairs, China must also adopt meaningful economic, political, and social reforms at home. Just like the U.S., China’s global leadership must come from internal accomplishments. This means that the Chinese government should rebuild its domestic legitimacy through redefining state-society relations and shifting emphasis from GDP growth to morality. The good news is that the current Chinese leadership, led by President Xi Jinping, is keenly aware of this problem and is determined to tackle legitimacy issues through more major reforms.

All this talk about China’s leadership might make some countries uneasy. But they need not worry. The international community must acknowledge that today’s fast-rising China has earned the right to play an important role in shaping a new international order. A more stable and prosperous world will need China to be more active and assertive in global affairs.


    



via Zero Hedge http://ift.tt/1h3HmAo Tyler Durden

Who Is And Isn’t Saving For Retirement

In the land of the free and the home of the entitled, the sad (but true) nature of income inequality’s inexorable rise in the past few years has a somewhat more startling impact on the future. With work being punished for the marginal employee and the wealth effect concentrated in the hands of the great and good, the following two charts show clearly the sad fact that those who need to save for the future the most don’t (and likely can’t) and those with all the income save the most (and thus ‘spend’ the least). As we noted previously, the rich have the assets and the poor have the debt (and debt is not wealth).

 

As MarketWatch’s Matthew Heimer notes, a recent study shows that 36% of Americans had saved $1,000 or less for retirement.

The following charts show just how intensely the problem of scanty retirement savings is concentrated among lower earners.

 

Among households that earn less than $25,000 a year, around 75% have less than $1,000 saved, and almost 95% have less than $25,000.

 

Once you get to the middle income range, the outlook brightens a little: About half of all households earning between $50,000 and $75,000 have at least $25,000 put away, and around 20% of that group have saved at least $100,000.

 

Among six-figure earners, as you’d expect, the retirement balances look healthier still: More than 40% have saved at least $250,000, and 10% have saved at least $1 million.

 

 

Of course, just because you’re earning well doesn’t mean you’re saving much; about 12% of this high income group has saved less than $25,000 for retirement. 

 

 

So there it is – those that need to save can’t (or won’t) and those that don’t need to save do… so why again is Fed policy aimed at pumping up the assets of the wealthy (who are relative over-savers and under-consumers) in an economy reliant on the marginal consumer to bring home the bacon for everyone?

 

As we noted previously,

 

Why is it important? Simple – contrary to the Fed’s flawed DSGE models, it is the poor who
are more likely to consume. And logically with their purchasing power
being funneled to the rich with every additional billion in monthly debt
monetization, they purchase less and less. As the slow but steady contraction in the economy over the past five years has proven beyond a reasonable doubt.

But hey: at least Hamptons’ houses have never been more expensive and the Russell 2000 keeps on hitting daily all time highs. Thank you “wealth effect.”

 

Source: Marketwatch


    



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

Eric Holder & DoJ Spent Millions Of Taxpayer Dollars On Unreported Personal Travel

Submitted by Mike Krieger of Liberty Blitzkrieg blog,

As the Attorney General of these United States, Eric Holder is the top legal advisor for the entire nation. As such, he has been in a position to help punish financial criminals and the mega-banks for the crimes they committed in the run-up to the financial crisis, and the egregious looting thereafter.

Despite his unique role, Eric Holder has spent the past five years taking absolutely zero action on any matter of national significance. In fact, his major claim to fame appears to be that he has solidified the creation of a group of untouchable criminals known as the “Too Big to Jail” class.

So what does Eric Holder do in his spare time, you know, when he isn’t coddling financial oligarchs and running firearms into Mexico? Apparently, according to a recent study from the non-partisan Government Accountability Office, he likes to hop on government planes for personal trips at taxpayer expense. Serfs up suckers!

From The Washington Post:

The agency that tracks federal travel did not report hundreds of personal and other “non mission” trips aboard government planes for senior Justice Department officials including Attorney General Eric Holder and former FBI Director Robert Mueller, according to a watchdog report.

 

Congress’s nonpartisan Government Accountability Office determined that the 395 flights cost taxpayers $7.8 million. But the General Services Administration, which oversees trips aboard federal jets, did not require documentation because of a GSA reporting exemption that covers intelligence agencies, even in cases of unclassified personal travel.

 

The findings, released Thursday, came out nearly 19 months after Republican lawmakers began questioning Holder’s use of an FBI jet for travel unrelated to Justice Department work. Sen. Charles Grassley (R-Iowa), the ranking member of the Senate Judiciary Committee, asked the GAO to look into the matter.

 

For security reasons, attorneys general are required to use non-commercial flights when they fly, and they have access to Defense Department jets. However, they must reimburse the government for personal trips.

Oh right, good luck with that. I’m more likely to have dinner with the Easter Bunny tonight.

Full article here.

In the spirit of this article, I suggest watching this classic Eric Holder video clip that I highlighted last year. Enjoy:


    



via Zero Hedge http://ift.tt/1hiAw6z Tyler Durden

30 Survey Results That Sound False But Are Actually True

Submitted by Michael Snyder of The Economic Collapse blog,

You will be shocked at what some Americans actually believe. 

For example, close to 90 percent of us believe that we are eating a healthy diet, and yet more than third of the population is officially obese.  65 percent of all Americans say that they are dissatisfied with the government, and yet nearly a third of us would be willing to submit to a "TSA body cavity search" in order to get on an airplane. 

As you will see below, Americans are angrier and more frustrated with government and with their lives than ever before, but we also exhibit almost unbelievable levels of sloth and apathy.  Some of the numbers below are quite funny, and others are absolutely stunning.  But they all say something about who we have become as a nation. 

The following are 30 survey results that sound false but that are actually true…

#1 According to a recent Rasmussen Reports survey, 52 percent of Americans "do not think the economy is fair to those willing to work hard".

#2 70 percent of all Americans do not "feel engaged or inspired at their jobs".

#3 According to another recent Rasmussen Reports survey, 59 percent of Americans believe that "less government involvement in the economy" would help reduce the size of the income gap in this country.  (And those 59 percent are actually correct.)

#4 20 percent of all government workers and 26 percent of all Obama supporters consider the Tea Party to be "the biggest terror threat" that America is facing.

#5 Approximately 30 percent of all American workers have $1,000 or less saved up for retirement.

#6 A worldwide survey conducted by the Worldwide Independent Network and Gallup found that 24 percent of people around the world consider the United States to be the biggest threat to peace.  Pakistan was in second place with just 8 percent.

#7 60 percent of Americans report feeling "angry or irritable".  Two years ago that number was at 50 percent.

#8 36 percent of Americans admit that they have yelled at a customer service agent during the past year.

#9 29 percent of Americans believe that "cloud computing" involves an actual cloud.

#10 A survey of employers that currently pay minimum wage to at least some of their employees found that 38 percent of them would start laying off employees if the minimum wage was raised.

#11 One survey found that 56 percent of Americans believe that it is okay for the government to track "the telephone records of millions of Americans" in order to keep us safe.

#12 When George W. Bush was president, 61 percent of Democrats considered NSA surveillance to be "unacceptable", but now that Obama is in the White House, only 34 percent of them consider it to be "unacceptable".

#13 67 percent of Americans support the use of unmanned drones in "homeland security missions" inside the United States.

#14 One survey found that 51 percent of all Americans agree with this statement: "it is necessary to give up some civil liberties in order to make the country safe from terrorism."

#15 Close to one-third of all Americans would be willing to submit to a "TSA body cavity search" in order to fly.

#16 65 percent of Americans are dissatisfied "with the U.S. system of government and its effectiveness".  That is the highest level of dissatisfaction that Gallup has ever recorded.

#17 Only 8 percent of Americans believe that Congress is doing a "good" or "excellent" job.

#18 70 percent of Americans do not have confidence that the federal government will "make progress on the important problems and issues facing the country in 2014".

#19 According to a survey conducted by the National Geographic Society, only 37 percent of all Americans in the 18 to 24-year-old age range can find the nation of Iraq on a map.

#20 Close to 25 percent of all Americans do not know that the United States declared independence from Great Britain.

#21 Right now, 29 percent of all Americans under the age of 35 are living with their parents.

#22 According to one survey, 24 percent of all U.S. teens that have a sexually-transmitted disease say that they still have unprotected sex.

#23 Approximately one out of every five teenage girls in the United States actually wants to be a teenage mother.

#24 The percentage of Americans that "believe there are signs that aliens have visited Earth" is actually higher than the percentage of Americans that believe that Jesus Christ is the Son of God.

#25 According to one recent survey, only 35 percent of all Americans say that they are better off financially than they were a year ago.

#26 It is hard to believe, but 56 percent of all Americans are considered to have "subprime credit" at this point.

#27 89.7 percent of all Americans believe that they are eating a healthy diet.  Meanwhile, approximately 36 percent of all Americans are obese.

#28 44 percent of all Americans do not have a first-aid kit in their homes.

#29 48 percent of all Americans do not have any emergency supplies stored up at all.

#30 53 percent of all Americans do not even have a 3 day supply of nonperishable food and water in their homes.  What will they do when a major crisis or emergency strikes?  Do they actually believe that the government will swoop in to save them if something happens?


    



via Zero Hedge http://ift.tt/OPqu66 Tyler Durden

What Happens To America’s Long-Term Unemployed (Spoiler Alert: Nothing Good)

The number of people unemployed for 27 weeks or longer in the US rose by 203,000 in February to 3.8 million. As we noted previously, this is the desperate shadow hanging over the so-called recovery. What is more problematic is the stunning findings of a new study that only 11% of the long-term unemployed in any given month found full-time work a year later.

 

 

Via The LA Times,

…three Princeton economists found that only 11% of the long-term unemployed in any given month found full-time work a year later.

 

 

The economists tested the hypothesis of whether a low supply of jobs or discrimination by employers contributed to long-term unemployment.

 

The answer? Probably both.

 

 

"The demand-side and supply-side effects of long-term unemployment can be viewed as complementary and reinforcing of each other as opposed to competing explanations,"

 

 

The paper found that those who have been out of work for months come from all industries, but are primarily concentrated in sales, service and blue-collar jobs. The share of the long-term unemployed from sales and service jobs was 36%, and from blue-collar jobs 28%.

 

Even in states with booming economies, such as North Dakota, the long-term unemployed find landing a full-time job elusive.

 

 

The economists found that in 2012:

  • More than 30% of those out of work for extended periods are 50 or older, compared with 20% of the short-term unemployed.
  • 55% of the long-term unemployed are men.
  • 44% of the long-term unemployed have never been married and nearly 20% are either widowed, separated or divorced.
  • Blacks represent 22% of the long-term unemployed, a rate higher than their share of the population.
  • More than half of the long-term unemployed are white.

The paper concludes that "a concerted effort will be needed to raise the employment prospects of the long-term unemployed." Otherwise, these job seekers will continue to drop out of the workforce and hold the economy back, the economists said.

This is a major problem since, as we noted previously, echoing Irving Fisher, it appears we have reached a permanently high plateau in the duration of unemployment in America…

 

 

h/t @Not_Jim_Cramer

 

So, 1 in 9 of the long-term unemployed (over 27 weeks) find a job again… and the mean duration of unemployment is 37 weeks! Hope and Change that!


    



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

IceCap: “Which Bubble Is Created Next?”

From the latest monthly letter by IceCap Asset Management

Selected excerpts from: Connecting the Dots

Rock star status is achieved by the very few. To be eligible, one must simply be held in a very high regard. It’s difficult to achieve, but once you’ve earned this distinguished level of recognition, in the eyes of many you can never do wrong. Until of course you do.

In universities, students no longer aspire to become hedge fund managers, or investment bankers – that is so 2000s. Today, the really sharp knives all want to become a central banker. Posters of Warren Buffett and Ray Dalio have been replaced with the Mona Lisa-like grins of Mark Carney, Ben Bernanke and Janet Yellen.

It is true that these masters’ of the universe control the levers that affect our global economy, but is the praise, the respect, and the power justified? Sadly, no.

Reading down IceCap’s memory lane, you’ll recall our November 2012 “Salma Hayek” publication which described how world leaders had two choices in the way to manage the global economy.

The first option was based upon economic theory by Friedrich Hayek who claimed that the economy couldn’t be and shouldn’t be managed on an acute basis. Mr. Hayek believed that governments should simply ensure there was enough money available. That was about it.

If only our leaders had listened.

Instead, the financial world we enjoy today chose the second option which was built entirely on the mislead belief of John Maynard Keynes, that man could in fact control or better still eliminate the business cycle by changing interest rates, changing tax rates, and spending more money than you own.

In theory, this approach works beautifully. Then it meets reality. From our perspective, reality arrives when there are no more interest rates to cut, no more taxes to cut, and no more money to spend.

Chart 1 shows the success enjoyed by the US central bank’s interest rate policy over the years. In 1997, the Asian crisis followed by the Russian crisis followed by the collapse of a gigantic hedge fund, allowed the American central bank to plant the seeds for the next crisis which turned out to be the tech bubble.

At the time, both financial pundits and the big banks with their balanced funds proclaimed that the world had indeed entered a different financial and economic era – yes, this time it was different.

Of course 4,000 Dow Jones Industrial and NASDAQ points later, the sheep started to lazily admit that perhaps this new post-Y2K economy wasn’t all that it was cracked up to be.

Not to worry, once again the American central bank mounted their ponies and rode the global economy straight into several years of ultra-low interest rates. The hope (there’s that word again) was that really cheap money would encourage people, companies and governments to borrow and spend again.

And borrow and spend they did – right smack into the biggest housing bubble in economic history. Day traders became passé, and the newest game in town was flippin’ houses. Rich people flipped mansions, plumbers and teachers flipped suburban homes and even Vegas strippers got in on the act and flipped condos among other things. By the time it was over, the entire world was flipped upside down – courtesy of the US Federal Reserve and their interest rate machine.

And this brings us to the next global crisis, which we assure you is on its way. After all, Chart 1 proves it is crystal clear that every time the US Federal Reserve acts to “save us” from one crisis, it directly sows the seeds for an even bigger crisis in the future.

The thing to understand about the US Federal Reserve is that although it makes decisions to acutely affect the American economy, it also directly affects the economies of other countries around the world. First of all, many countries do not have their own currency and instead rely upon the US Dollar. Others have their own currency, yet have it directly tied to the US Dollar and therefore the interest rate policies that come with it.

Since 2009, the 0% short-term interest rate policy, money printing, bailouts, implicit and explicit guarantees effectively been exported to the entire US Dollar world.

To put it another way, we estimate that only about 40% of America’s economic stimulus has actually stayed in America – the remainder has flowed elsewhere. But what has made this policy especially ineffective, is that the stimulus has been indirectly thrown at the economy in the form of lower interest rates and higher stock markets. In other words – these extraordinary stimulus plans are not March 2014 Connecting the Dot reaching the real economy and the average person on the street.

Now the curious thing about our world’s financial leaders is that they all read from the exact same playbook. It may come in different names, shapes and sizes but at the end of the day the Bank of England, the European Central Bank and the Bank of Japan all hum and whistle to the same tune as the US Federal Reserve.

This means all of the world’s biggest economies and biggest borrowers have 0% interest rates, money printing and explicit and implicit guarantees for various countries and companies who need to borrow money.

This point is important to understand and this is how you connect the dots to the next crisis on the horizon.

These extreme interest rates, money printing and debt guarantees have created the illusion that everything looks marvelous. On the surface, stock markets are rising, and bankrupt countries look beautiful when borrowing in the bond market.

Yet, when you strip away the wonderful headline news, you can see that no country is decreasing the money they owe. Worse still, new jobs and wages are not increasing enough to maintain an accelerating economy. This is an economic death sentence – debt totals continue to rise, not decline.

What this means is that the weakest of the weak countries are gradually reaching the point where either they won’t be able to borrow additional money, or implicit guarantees from a larger country will no longer be available.

* * *

Full letter below (pdf)


    



via Zero Hedge http://ift.tt/1gvCxB9 Tyler Durden

The Fourteen Year Recession

Submitted by Jim Quinn via The Burning Platform blog,

“When a government is dependent upon bankers for money, they and not the leaders of the government control the situation, since the hand that gives is above the hand that takes. Money has no motherland; financiers are without patriotism and without decency; their sole object is gain.”Napoleon Bonaparte

 

 Click to View

“A great industrial nation is controlled by its system of credit. Our system of credit is privately concentrated. The growth of the nation, therefore, and all our activities are in the hands of a few men … [W]e have come to be one of the worst ruled, one of the most completely controlled and dominated, governments in the civilized world—no longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and the duress of small groups of dominant men.”Woodrow Wilson

When you ponder the implications of allowing a small group of powerful wealthy unaccountable men to control the currency of a nation over the last one hundred years, you understand why our public education system sucks. You understand why the government created Common Core curriculum teaches children that 3 x 4 = 13, as long as you feel good about your answer. George Carlin was right. The owners of this country (bankers, billionaires, corporate titans, politicians) want more for themselves and less for everyone else. They want an educational system that creates ignorant, obedient, vacuous, obese dullards who question nothing, consume mass quantities of corporate processed fast food, gaze at iGadgets, are easily susceptible to media propaganda and compliant to government regulations and directives. They don’t want highly educated, critical thinking, civil minded, well informed, questioning citizens understanding how badly they have been screwed over the last century. I’m sorry to say, your owners are winning in a landslide.

The government controlled public education system has flourished beyond all expectations of your owners. We’ve become a nation of techno-narcissistic, math challenged, reality TV distracted, welfare entitled, materialistic, gluttonous, indebted consumers of Chinese slave labor produced crap. There are more Americans who know the name of Kanye West and Kim Kardashian’s bastard child (North West) than know the name of our Secretary of State (Ketchup Kerry). Americans can generate a text or tweet with blinding speed but couldn’t give you change from a dollar bill if their life depended upon it. They are whizzes at buying crap on Amazon or Ebay with a credit card, but have never balanced their checkbook or figured out the concept of deferred gratification and saving for the future. While the ignorant masses are worked into a frenzy by the media propaganda machine over gay marriage, diversity, abortion, climate change, and never ending wars on poverty, drugs and terror, our owners use their complete capture of the financial, regulatory, political, judicial and economic systems to pillage the remaining national wealth they haven’t already extracted.

The financial illiteracy of the uneducated lower classes and the willful ignorance of the supposedly highly educated classes has never been more evident than when examining the concept of Federal Reserve created currency debasement – also known as inflation. The insidious central banker created monetary inflation is the cause of all the ills in our warped, deformed, rigged financialized economic system. The outright manipulation and falsity of government reported economic data is designed to obscure the truth and keep the populace unaware of the deception being executed by the owners of this country. They have utilized deceit, falsification, propaganda and outright lies to mislead the public about the true picture of the disastrous financial condition in this country. Since most people are already trapped in the mental state of normalcy bias, it is easy for those in control to reinforce that normalcy bias by manipulating economic data to appear normal and using their media mouthpieces to perpetuate the false storyline of recovery and a return to normalcy.

This is how feckless politicians and government apparatchiks are able to add $2.8 billion per day to the national debt; a central bank owned by Too Big To Trust Wall Street banks has been able to create $3.3 trillion out of thin air and pump it into the veins of its owners; and government controlled agencies report a declining unemployment rate, no inflation and a growing economy, without creating an iota of dissent or skepticism from the public. Americans want to be lied to because it allows them to continue living lives of delusion, where spending more than you make, consuming rather than saving, and believing stock market speculation and home price appreciation will make them rich are viable life strategies. Even though 90% of the population owns virtually no stocks, they are convinced record stock market highs are somehow beneficial to their lives. They actually believe Bernanke/Yellen when they bloviate about the dangers of deflation. Who would want to pay less for gasoline, food, rent, or tuition?

Unless you are beholden to the oligarchs, that sense of stress, discomfort, feeling that all in not well, and disturbing everyday visual observations is part of the cognitive dissonance engulfing the nation. Anyone who opens their eyes and honestly assesses their own financial condition, along with the obvious deterioration of our suburban sprawl retail paradise infrastructure, is confronted with information that is inconsistent with what they hear from their bought off politician leaders, highly compensated Ivy League trained economists, and millionaire talking heads in the corporate legacy media. Most people resolve this inconsistency by ignoring the facts, rejecting the obvious and refusing to use their common sense. To acknowledge the truth would require confronting your own part in this Ponzi debt charade disguised as an economic system. It is easier to believe a big lie than think critically and face up to decades of irrational behavior and reckless conduct.

What’s In Your GDP                          

“The Gross Domestic Product (GDP) is one of the broader measures of economic activity and is the most widely followed business indicator reported by the U.S. government. Upward growth biases built into GDP modeling since the early 1980s, however, have rendered this important series nearly worthless as an indicator of economic activity.  The popularly followed number in each release is the seasonally adjusted, annualized quarterly growth rate of real (inflation-adjusted) GDP, where the current-dollar number is deflated by the BEA’s estimates of appropriate price changes. It is important to keep in mind that the lower the inflation rate used in the deflation process, the higher will be the resulting inflation-adjusted GDP growth.”John Williams – Shadowstats

GDP is the economic statistic bankers, politicians and media pundits use to convince the masses the economy is growing and their lives are improving. Therefore, it is the statistic most likely to be manipulated, twisted and engineered in order to portray the storyline required by the oligarchs. Two consecutive quarters of negative GDP growth usually marks a recession. Those in power do not like to report recessions, so data “massaging” has been required over the last few decades to generate the required result. Prior to 1991 the government reported the broader GNP, which includes the GDP plus the balance of international flows of interest and dividend payments. Once we became a debtor nation, with massive interest payments to foreigners, reporting GNP became inconvenient. It is not reported because it is approximately $900 billion lower than GDP. The creativity of our keepers knows no bounds. In July of 2013 the government decided they had found a more “accurate” method for measuring GDP and simply retroactively increased GDP by $500 billion out of thin air. It’s amazing how every “more accurate” accounting adjustment improves the reported data. The economic growth didn’t change, but GDP was boosted by 3%. These adjustments pale in comparison to the decades long under-reporting of inflation baked into the GDP calculation.

As John Williams pointed out, GDP is adjusted for inflation. The higher inflation factored into the calculation, the lower reported GDP. The deflator used by the BEA in their GDP calculation is even lower than the already bastardized CPI. According to the BEA, there has only been 32% inflation since the year 2000. They have only found 1.4% inflation in the last year and only 7.1% in the last five years. You’d have to be a zombie from the Walking Dead or an Ivy League economist to believe those lies. Anyone living in the real world knows their cost of living has risen at a far greater rate. According to the government, and unquestioningly reported by the compliant co-conspirators in the the corporate media, GDP has grown from $10 trillion in 2000 to $17 trillion today. Even using the ridiculously low inflation BEA adjustment yields an increase from $12.4 trillion to only $15.9 trillion in real terms. That pitiful 28% growth over the last fourteen years is dramatically overstated, as revealed in the graph below. Using a true rate of inflation exposes the grand fraud being committed by those in power. The country has been in a never ending recession since 2000.   

Your normalcy bias is telling you this is impossible. Your government tells you we have only experienced a recession from the third quarter of 2008 through the third quarter of 2009. So despite experiencing two stock market crashes, the greatest housing crash in history, and a worldwide financial system implosion the authorities insist  we’ve had a growing economy 93% of the time over the last fourteen years. That mental anguish you are feeling is the cognitive dissonance of wanting to believe your government, but knowing they are lying. It is a known fact the government, in conspiracy with Greenspan, Congress and academia, have systematically reduced the reported CPI based upon hedonistic quality adjustments, geometric weighting alterations, substitution modifications, and the creation of incomprehensible owner’s equivalent rent calculations. Since the 1700s consumer inflation had been estimated by measuring price changes in a fixed-weight basket of goods, effectively measuring the cost of maintaining a constant standard of living. This began to change in the early 1980s with the Greenspan Commission to “save” Social Security and came to a head with the Boskin Commission in 1995.

Simply stated, the Greenspan/Boskin Commissions’ task was to reduce future Social Security payments to senior citizens by deceitfully reducing CPI and allowing politicians the easy way out. Politicians would lose votes if they ever had to directly address the unsustainability of Social Security. Therefore, they allowed academics to work their magic by understating the CPI and stealing $700 billion from retirees in the ten years ending in 2006. With 10,000 baby boomers per day turning 65 for the next eighteen years, understating CPI will rob them of trillions in payments. This is a cowardly dishonest method of extending the life of Social Security.

If CPI was calculated exactly as it was computed prior to 1983, it would have averaged between 5% and 10% over the last fourteen years. Even computing it based on the 1990 calculation prior to the Boskin Commission adjustments, would have produced annual inflation of 4% to 7%. A glance at an inflation chart from 1872 through today reveals the complete and utter failure of the Federal Reserve in achieving their stated mandate of price stability. They have managed to reduce the purchasing power of your dollar by 95% over the last 100 years. You may also notice the net deflation from 1872 until 1913, when the American economy was growing rapidly. It is almost as if the Federal Reserve’s true mandate has been to create inflation, finance wars, perpetuate the proliferation of debt, artificially create booms and busts, enrich their Wall Street owners, and impoverish the masses. Happy Birthday Federal Reserve!!!

 Click to View

When you connect the dots you realize the under-reporting of inflation benefits the corporate fascist surveillance state. If the government was reporting the true rate of inflation, mega-corporations would be forced to pay their workers higher wages, reducing profits, reducing corporate bonuses, and sticking a pin in their stock prices. The toady economists at the Federal Reserve would be unable to sustain their ludicrous ZIRP and absurd QEfinity stock market levitation policies. Reporting a true rate of inflation would force long-term interest rates higher. These higher rates, along with higher COLA increases to government entitlements, would blow a hole in the deficit and force our spineless politicians to address our unsustainable economic system. There would be no stock market or debt bubble. If the clueless dupes watching CNBC bimbos and shills on a daily basis were told the economy has been in fourteen year downturn, they might just wake up and demand accountability from their leaders and an overhaul of this corrupt system.          

Mother Should I Trust the Government?

We know the BEA has deflated GDP by only 32% since 2000. We know the BLS reports the CPI has only risen by 37% since 2000. Should I trust the government or trust the facts and my own eyes? The data is available to see if the government figures pass the smell test. If you are reading this, you can remember your life in 2000. Americans know what it cost for food, energy, shelter, healthcare, transportation and entertainment in 2000, but they unquestioningly accept the falsified inflation figures produced by the propaganda machine known as our government. The chart below is a fairly comprehensive list of items most people might need to live in this world. A critical thinking individual might wonder how the government can proclaim inflation of 32% to 37% over the last fourteen years, when the true cost of living has grown by 50% to 100% for most daily living expenses. The huge increases in property taxes, sales taxes, government fees, tolls and income taxes aren’t even factored in the chart. It seems gold has smelled out the currency debasement and the lies of our leaders. This explains the concerted effort by the powers that be to suppress the price of gold by any means necessary.   

Living Expense

Jan-00

Mar-14

% Increase

Gallon of gas

$1.27

$3.51

176.4%

Barrel of oil

$24.11

$100.00

314.8%

Fuel oil per gallon

$1.19

$4.07

242.0%

Electricity per Kwh

$0.084

$0.134

59.5%

Gas per therm

$0.712

$1.078

51.4%

Dozen eggs

$0.97

$2.00

106.2%

Coffee per lb

$3.40

$5.20

52.9%

Ground Beef per lb.

$1.90

$3.73

96.3%

Postage stamp

$0.33

$0.49

48.5%

Movie ticket

$5.25

$10.25

95.2%

New car

$20,300.00

$31,500.00

55.2%

Annual healthcare spending per capita

$4,550.00

$9,300.00

104.4%

Average private college tuition

$22,000.00

$37,000.00

68.2%

Avg home price (Case Shiller)

$161,000.00

$242,000.00

50.3%

Avg monthly rent (Case Shiller)

$635.00

$890.00

40.2%

Ounce of gold

$279.00

$1,334.00

378.1%

Mother, you should not trust the government. There is no doubt they have systematically under-reported inflation based on any impartial assessment of the facts. The reality that we remain stuck in a fourteen year recession is borne out by the continued decline in vehicle miles driven (at 1995 levels) due to declining commercial activity, the millions of shuttered small businesses, and the proliferation of Space Available signs in strip malls and office parks across the land. The fact there are only 8 million more people employed today than were employed in 2000, despite the working age population growing by 35 million, might be a clue that we remain in recession. If that isn’t enough proof for you, than maybe a glimpse at real median household income, retail sales and housing will put the final nail in the coffin of your cognitive dissonance.

The government and their media mouthpieces expect the ignorant masses to believe they have advanced their standard of living, with median household income growing from $40,800 to $52,500 since 2000. But, even using the badly flawed CPI to adjust these figures into real terms reveals real median household income to be 7.3% below the level of 2000. Using a true inflation figure would cause a CNBC talking head to have an epileptic seizure.        

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The picture is even bleaker when broken down into the age of households, with younger households suffering devastating real declines in household income since 2000. I guess all those retail clerk, cashier, waitress, waiter, food prep, and housekeeper jobs created over the last few years aren’t cutting the mustard. Maybe that explains the 30 million increase (175% increase) in food stamp recipients since 2000, encompassing 19% of all households in the U.S. Luckily the banking oligarchs were able to convince the pliable masses to increase their credit card, auto and student loan debt from $1.5 trillion to $3.1 trillion over the fourteen year descent into delusion.

When you get your head around this unprecedented decline in household income over the last fourteen years, along with the 50% to 100% rise in costs to live in the real world, as opposed to the theoretical world of the Federal Reserve and BLS, you will understand the long term decline in retail sales reflected in the following chart. When you adjust monthly retail sales for gasoline (an additional tax), inflation (understated), and population growth, you understand why retailers are closing thousands of stores and hurdling towards inevitable bankruptcy. Retail sales are 6.9% below the June 2005 peak and 4% below levels reached in 2000. And this is with millions of retail square feet added over this time frame. We know the dramatic surge from the 2009 lows was not prompted by an increase in household income. So how did the 11% proliferation of spending happen?

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The up swell in retail spending began to accelerate in late 2010. Considering credit card debt outstanding is at exactly where it was in October 2010, it seems consumers playing with their own money turned off the spigot of speculation. It has been non-revolving debt that has skyrocketed from $1.63 trillion in February 2010 to $2.26 trillion today. This unprecedented 39% rise in four years has been engineered by the government, using your tax dollars and the tax dollars of unborn generations. The Federal government has complete control of the student loan market and with their 85% ownership of Ally Financial, the largest auto financing company, a dominant position in the auto loan market. The peddling of $400 billion of subprime student loan debt and $200 billion of subprime auto loan debt has created the illusion of a retail recovery. The student loan debt has been utilized by University of Phoenix MBA wannabes  to buy iGadgets, the latest PS3 version of Grand Theft Auto and the latest glazed donut breakfast sandwich on the market. It’s nothing but another debt financed bubble that will end in tears for the American taxpayer, as hundreds of billions will be written off.

The fake retail recovery pales in comparison to the wolves of Wall Street produced housing recovery sham. They deserve an Academy Award for best fantasy production. The Federal Reserve fed Wall Street hedge fund purchase of millions of foreclosed shanties across the nation has produced media proclaimed home price increases of 10% to 30% in cities across the country. Withholding foreclosures from the market and creating artificial demand with free money provided by the Federal Reserve has temporarily added $4 trillion of housing net worth and reduced the number of underwater mortgages on the books of the Too Big To Trust Wall Street banks. The percentage of investor purchases and cash purchases is at all-time highs, while the percentage of first time buyers is at all-time lows. Anyone with an ounce of common sense can look at the long-term chart of mortgage applications and realize we are still in a recession. Applications are 35% below levels at the depths of the 2008/2009 recession. Applications are 65% below levels at the housing market peak in 2005. They are even 35% below 2000 levels. There is no real housing recovery, despite the propaganda peddled by the NAR, CNBC, and Wall Street. It’s a fraud.   

It is the pinnacle of arrogance and hubris that a few Ivy League educated economists sitting in the Marriner Eccles Building in the swamps of Washington D.C., who have never worked a day in their lives at a real job, think they can create wealth and pull the levers of money creation to control the American and global financial systems. All they have done is perfect the art of bubble finance in order to enrich their owners at the expense of the rest of us. Their policies have induced unwarranted hope and speculation on a grand scale. Greenspan and Bernanke have provoked multiple bouts of extreme speculation in stocks and housing over the last 15 years, with the subsequent inevitable collapses. Fed encouraged gambling does not create wealth it just redistributes it from the peasants to the aristocracy. The Fed has again produced an epic bubble in stock and bond valuations which will result in another collapse. Normalcy bias keeps the majority from seeing the cliff straight ahead. Federal Reserve monetary policies have distorted financial markets, created extreme imbalances, encouraged excessive risk taking, and ruined the lives of working class people. Take a long hard look at the chart below and answer one question. Was QE designed to benefit Main Street or Wall Street?  

The average American has experienced a fourteen year recession caused by the monetary policies of the Federal Reserve. Our leaders could have learned the lesson of two Fed induced collapses in the space of eight years and voluntarily abandoned the policies of reckless credit expansion, instead embracing policies encouraging saving, capital investment and balanced budgets. They have chosen the same cure as the disease, which will lead to crisis, catastrophe and collapse.  

“There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as the result of voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved.” – Ludwig von Mises


    



via Zero Hedge http://ift.tt/1jors77 Tyler Durden

Poland Is Quietly Mobilizing Its Army Reservists

It seems the words of Polish Prime Minister Donald Tusk warning that “the world stands on the brink of conflict, the consequences of which are not foreseen… Not everyone in Europe is aware of this situation,” are a little more real than some (US equity buyers) might suspect. As The Week’s Crispin Black reports, at least 7,000 Polish workers in Europe have received call-up papers as army reservists in the last few weeks. Polish authorities dismiss it as “routine” but the men note this has never happened before.

 

As The Week’s Crispin Black goes on to note,

At least 7,000 reservists have been recalled to the colours for immediate exercises lasting between 10 and 30 days.

 

They’re told by the Polish authorities that the call-ups are “routine”: but the men say they haven’t been asked before and they’re well aware of the growing alarm in Warsaw at President Putin’s aggression.

 

Three weeks ago, their Prime Minister, Donald Tusk, called a press conference to warn that “the world stands on the brink of conflict, the consequences of which are not foreseen… Not everyone in Europe is aware of this situation.”

 

My own view is that Putin was initially more concerned with righting a specific historical wrong in Crimea than starting a new Cold War.  This is still probably the case despite the dawning truth that the EU/Nato Emperor really has no clothes at all. 

 

But in the worst case scenario of a truly revanchist Russia, Poland certainly has the borders from hell.  Starting from the top, it abuts Kaliningrad (the Russian exclave on the Baltic carved at the end of the war from East Prussia), Lithuania, Belarus and Ukraine.

 

None of these borders relies on any natural barriers like rivers or mountain ranges – they are just lines on a map drawn by Stalin in the full flush of victory.  No wonder the Poles are feeling vulnerable.

Read more here


    



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