President Obama Wants a Back Door on Your Phone. But Not on His.

In yesterday’s South by Southwest keynote address, President Obama took a firm stand against strong encryption. Standing before an audience of over two thousand technology enthusiasts, Obama explained why the government needs back door access to all personal communication devices.

If it was technologically possible to make an impenetrable device where there’s no door at all, then how do we apprehend the child pornographer? How do we disrupt a terrorist plot? How do we even do a simple thing like tax enforcement? If government can’t get in, then everyone’s walking around with a Swiss bank account in their pocket. There has to be some concession to get into that information somewhere.

Obama didn’t specifically discuss Apple’s case with the FBI, though the inference is clear. The president is not content with unlocking the individual phones of suspected criminals. He’s asking for specific security protections to be permanently removed from all electronic devices. Because terrorists, child pornographers, and tax dodgers exist, no private citizen should have the right to secure communications.

Photo by Pete Souza, The White House

Buried inside the President’s appeals to fear is a principle that’s widely understood by security professionals: A back door for the government is, in practice, indistinguishable from a security flaw that makes communication devices vulnerable for everyone.

As Alex Abdo of the ACLU put it, “If the FBI can force Apple to hack into its customers’ devices, then so too can every repressive regime in the rest of the world.”

The sentiment was echoed by Edward Snowden, who has called Apple legal battles with the FBI, “the most important tech case in a decade.” In a recent interview with Reason TV. Snowden characterized the issue in stark terms. “It’s a binary choice: Either all of us have security or none of us have security.” 

Watch Snowden’s extended comments on Apple vs. the FBI below, starting at the 0:53 minute mark.

In the coming months, Obama’s hypothetical concerns may become a lot less speculative. Apple is widely believed to be making an impenetrable iPhone, possibly for sale within the coming year, which could render recent legal wrangling moot. 

Paradoxically, Obama also used his keynote address to encourage citizens to use technology to reclaim American democracy. “We systematically make it harder for our citizens to vote,” he said. “It is much easier to order pizza or a trip than it is for you to exercise the single most important task in democracy.”

In theory, voting online is long overdue. But at the very least, a digital election would seem to require the very kind of secure, encrypted communication that the president wants to abolish.

Bonus irony: President Obama still uses a Blackberry because he’s not allowed to use the latest technology… for security reasons.

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JPMorgan: “The ECB Could Purchase Equities Next”

On Thursday, after the ECB’s stunning announcement that it would for the first time start monetizing corporate debt, we joked – or so we thought – that “within 6-9 months we expect to add a chart showing Europe’s junk bond market which will be next on the monetization menu, followed shortly after by equities and kitchen sinks.

As it turns out, this wasn’t a joke, and overnight JPM’s Nikolaos Panigirtzoglou explained what to “expect” next from the ECB:

To the extent this week’s ECB decision marks a shift towards private sector asset purchases, the ammunition the ECB has expands hugely.

 

Assuming the ECB will be willing to navigate eventually into other private sector asset classes, the asset universe for QE purchases could expand to include uncovered bank bonds, bank loans and equities.

Will the ECB buy equities outright? Of course: after all the reason for all the “helicopter money” and cash ban talk is because central banks are now utterly desperate and have their backs against the wall. They will try anything, including what until just years ago was considered absolutely insanity: buying stocks outright.

Incidentally, at just the same time as the above “joke”, we said something else which we thought was sarcasm: that corporations would take advantage of the ECB-guaranteed IG bid to issue debt and, having nothing else to do with the proceeds, use the funds to buyback their own stock, a rerun of what has been happening in the US for the past 4 years.

This too was not a “joke”, and here is JPM again explaining that we were spot on:

The ECB’s corporate bond program will result to lower financing costs and more limited financial distress over time. This coupled with elevated Equity Risk Premia will increase the incentive for European companies to buy back their own shares. We thus see a higher chance that share buyback activity will improve in Europe from its current dormant phase.

Finally, we predicted that the most acute impact of the ECB’s corporate QE action would be to impair an already painfully illiquid corporate bond market: “ECB purchases of company securities could serve to limit liquidity in a market where investors say it’s become harder to trade after banks cut their bond holdings to preserve capital in response to tougher rules.

And, lo and behold, JPM just confirmed this as well, estimating that the ECB can purchase at most €3.5 -€6 BN in bonds per month before it damages the market, and that in general “ECB corporate bond purchase program will be more difficult and more fragmented from an implementation perspective, than either the government bond or the covered bond purchase program“:

Another implication of the ECB corporate bond purchase program is related to the liquidity of the European corporate bond market. Under what conditions will prospective ECB purchases be damaging for the liquidity of the European corporate bond market? How does this liquidity compare to the liquidity of other segments of fixed income markets such as government bonds, covered bonds and asset backed securities where the ECB has been purchasing bonds for a year now?

* * *

The capacity of the ECB to purchase corporate bonds is also a function of the how the primary market responds to ECB buying. The primary market issuance is running at a rather slow pace of around €12bn a month currently. So again assuming ECB primary market purchases of 5%-10% of issuance, would add another €1bn per month of potential ECB buying. This capacity would naturally expand if the ECB program manages to bolster issuance going forward, e.g. if it manages to induce corporates to buy back their own equity.

 

Without an expansion of primary market capacity, the above analysis suggests that a feasible purchase pace by the ECB in order to avoid damaging the liquidity and the functioning of the European corporate bond market too much is between €3.5bn to €6bn per month.

 

Finally, another consideration for the ECB should be trade sizes and market depth. The Trax report provides data on average trade sizes across fixed income sectors, which can serve as proxy for market depth. The average trade size for IG Corporates has been €850k during 2015. This is a lot lower than that of Government bonds, at €7m, or covered bonds at €2m. This means that the ECB corporate bond purchase program will be more difficult and more fragmented from an implementation perspective, than either the government bond or the covered bond purchase program.

Said otherwise, in order not to break the already illiquid IG bond market, the ECB’s intervention will hardly make a marginal price impact aside from the implicit backstop of these securities.

Finally, here is the final “joke” we made: “The only thing the ECB will never monetize, however, is gold – perhaps because it is the only asset class that does not need central bank support?”

In retrospect, this too is not a joke, and we find it very disturbing that we now live in a world in which the only asset class that has no explicit central bank support, is a “pet rock.”


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Slut-Shaming ‘Johns’ Shouldn’t Be Sanctioned by Police

As social media and “call out culture” elevate public shaming to a national pastime, many a hot take has been written on how this corrupts our political discourse. But barely acknowledged is the official use of online shaming by law enforcement. So it’s great to see Suzy Khimm at The New Republic tackle this topic in depth as it relates to prostitution. 

Despite the tenet of “innocent until proven guilty” in American jurisprudence, police routinely release the names and mugshots of suspected criminals before they’ve been convicted. For some serious offenses, this might make sense, especially when public dispersal of the info could help in an investigation. But most people would probably agree that it’s unfair to broadcast it everytime someone gets picked up for a petty offense. 

When it comes to prostitution, however, all decorum—and due process—tends to go out the window. Police will release pics of both sex workers and their clients to the media, who are all too willing to publish the photos. Outlets especially love to highlight whenever any of the “johns” works in some profession—professor, doctor, scientist—deemed too respectable for such shenanigans. 

“A slew of … cities have embraced john-shaming as a way to combat prostitution,” writes Khimm. “Some have published the names and photos of accused johns upon arrest on designated web sites and social media, or in press conferences.” (Some johns’ mugshots have even been plastered on billboards.)

“Shame isn’t just the side effect of catching and prosecuting criminals in an open society with an active press corps,” notes Khimm, but an active end-goal of government agents. 

Tapping into the new power of the internet, along with our very old obsession with transgressive sex, these officials hope to wield the fear of public judgment in the name of the public good, arguing that prostitution is linked to far more serious crimes than we ever thought. But by taking punishment out of the hands of law enforcement and placing it in the hands of the public, whose emotions and reactions lie beyond their control, shaming campaigns can also be messy and unpredictable. And the resulting stigma can last indefinitely. … Or as Yale law professor James Whitman told me, shaming “allows the general public to do the dirty work.”

Of course the debate over government shaming goes way back, with arguments over its sanction as old as our republic. But the Internet changes the nature of public shaming substantially. No longer will an offender only earn the gaze and opprobrium of his community members; now his or her name will long be associated with the offense for anyone anywhere who has Internet access. “The internet has vastly expanded the potential audience for public ridicule and turned the enforcement of social norms into a collective pastime, while Google’s enduring memory can allow that infamy to continue without end,” writes Khimm. 

One man Khimm spoke with, a scientist whose arrest on solicitation charges in Nassau County, New York, made major media headlines, was let go from one job and denied a promotion at another after word got out. He considered fighting the charges, but feared that would only get his name in the press more. But another of the johns arrested at the same time, pizzeria owner Louis DiMaria, is suing the county and several police officers, alleging false arrest, defamation, and a violation of his due process rights.

DiMaria was arrested in a sting after going with his friend to a hotel where—without his knowledge, DiMaria claims—the friend had arranged to hook-up with someone whom he thought was a sex worker but was actually a cop. Prosecutors eventually dropped the charges against DiMaria, but not before his name and picture were released to the media, he was let go from this position as a high-school wrestling coach, and his wife left him. 

Read Khimm’s whole piece here for more about the havoc such ploys have wreaked and how police and prosecutors justify them (hint: it involves everyone’s favorite moral panic du jour…). 

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Norway’s Interest Rate Conundrum

Submitted by Alexander Grover

Current Situation

The ECB recently stimulated more than expected, cutting rates by five basis points and expanding  quantitative easing. It is already expected that Norges Bank (The Norwegian Central Bank) will cut rates next week, seeing accelerating inflation as temporary. They have a 2.5% inflation target mandate “over time,” giving them lee-way. They see demand falling off while the local economy, driven by exports, recovering. Therefore, they feel that they can cut rates. My previous articles challenged the assumptions that the oil sector will recover, showing that new technology reduces long term prices below offshore break-even points, and exports can make up the difference, illustrating that key sectors, like fishing, can be replicated in Canada, Maine, Russia and Japan.

We are experiencing 1970’s style stagflation, coming from the supply side, not demand. Prices are going up because Norges Bank continues to destroy the Norwegian Krone, turning it into the Nordic Peso. This is where they are “hiding” the damage to save rest of the economy. For example, housing prices will rise in NOK but fall in USD or gold (universal commodity) terms. It’s a shell game, leading to long term decline or even worse, an unexpected period of elevated inflation, requiring a rapid rise in interest rates.  Housing remains at risk in this situation (Norway does not have 30 year fixed loans, most people float monthly). 

I am in no position to stop them from making trips to Thailand, fruit from Spain and iPhones from California more expensive, but at least I can share my knowledge with others.

The dashboard, above, lines up key figures, showing how low rates drive inflation, gradually eroding public wealth. It is important to notice that inflation is much higher than interest paid at the bank, punishing responsible behavior. A person’s savings diminishes over time in terms of purchasing power. In layman’s terms, prices of what you need go up faster than what the bank interest compensates, losing money over time. This is done to encourage (coerce) spending and investment.

This is great if you have rapidly rising productivity and economic growth but could be a trap if you borrowed money on depreciating assets.

Central Banks, around the world, share a common mandate: maintain price stability. Price stability maintains the public’s trust in the monetary and banking system. Norges Bank is no different.

Norges Bank’s 2014-2016 Strategy Document Review

On the Central Bank’s website, there is an interesting document.  Oystein Olsen outlines the path from late 2013 to 2016, highlighting (in quotes with my response after):

  • “Norges Bank’s communication will feature transparency, predictability and accountability” 

Norges Bank, like all western central banks, makes it easy to get information.

  • “Norges Bank will help set the standard internationally”

If the standard is to devalue currency as fast as possible while destroying economic growth, they are excelling.

  • “Norges Bank will make prudent and responsible use of its resources”

Buying London real estate, regardless of risks and elevated asset prices, is not responsible investing. London, is highly dependent on the finance sector. If BREXIT doesn’t come this year, it will happen eventually since European Federalization is not sustainable.

  • “We will update our understanding of how the economy and monetary policy function”

Since 2013, cutting rates does not promote economic growth. It just makes life more uncertain as more people come to realize interest rates below the rate of inflation is not sustainable. Japan and the ECB demonstrated that stimulus and negative rates do not help either. It just makes people more nervous.

  • “Norges Bank will analyze and counteract imbalances in the financial system”

It appears the coming “reactionary” force in the future to cope with an “unexpected” surge in inflation will be devastating, pushing up monthly payment obligations while killing growth.

  • “Norges Bank will continue to be well prepared for financial crises”

They have yet to allocate make a gold allocation, safeguarding the fund against unforeseen events.

  • “Norges Bank will promote an efficient money market”

Devaluing currency and driving inflation will drive people to barter instead of using the banking system.

  • “Norges Bank will promote a robust and efficient payment system”

Norway is the easiest place, in the world, to make payments. Vipps is the future of payments. However, people need to trust that Central Banks will maintain price stability, especially with electronic based currency.

  • “The fund’s distinguishing characteristics will be used to obtain the highest possible return”

NBIM continues to edge the benchmarks. However, we hope that when benchmarks make negative returns that NBIM is not celebrating by being less negative. They need to aim for always positive returns. Past performance does not always predict future returns, especially in the asset management business.

  • “The fund will spread its risk across markets and asset classes”

Their allocation remains rather traditional: stocks, bonds and real estate. Perhaps they should consider domestic investments that enable future economic growth and make housing affordable. If Norway followed my advice earlier this year, allocating to gold, they would have propelled the NAV even higher:

  • “A respected, transparent and responsible investment manager”

Although the fund continues to do a good job, beating benchmarks, the risks in the global economy continue to mount. I am very skeptical that those working at Norges Bank and in Parliament are intellectually and emotionally equipped to handle a sudden currency crisis. I don’t see them using it as an opportunity to re-invent the system but instead just pull and push traditional levers, interest rate policy and money supply, until they break, exacerbating the problem. What is different this time than in 2007/8 is the oil. It is no longer a scarce resource but an abundant commodity, made so by technological innovation. This happened before with aluminum and salt.

Globally, we are seeing a bias towards rate cuts and stimulus, seen by many as measures of desperation. Even some in Fed are calling for NIRP (negative interest rate policy) and more stimulus. If Norges Bank aims for respect, they, instead acting like the rest, should make bold moves, based on universal truths. Admit that there is a problem with asset bubbles, engineering a soft landing, rebalancing the economy. This will allow it to move forward in a sustainable manner, which is in line with Nordic tradition and culture.

* * *

Potential Outcomes:

Based on the ECB’s recent actions, firing the monetary bazooka, and considering the risks to the Norwegian economy, primarily the housing market, these are the following outcomes: 

Cut Rates: Most Likely

All indications point to a cut on March 17th, 2016. This is the quickest way to stimulate the economy, lowering people’s loan payments, giving them more to spend. Hence this is an inflationary move. This move also devalues the currency, boosting exports and gold prices. We have already seen this hold true since 2013. The effect was so strong that gold even went up in NOK terms while moving down in dollar terms. Mostly, this move helps support housing, in NOK terms, postponing the crash.

However, the “wealth effect” could be dampened if they decide to save, buy used goods or imports. People generally save money when they cannot see a positive future outlook. Although the mainstream propaganda states that 2017 will be a good year. It doesn’t seem like people are believing it, indicated by the GDP growth figures. I am curious what happens when the severance package and NAV (Norwegian unemployment insurance) money wears off.

Leaving Rates Unchanged: Likely

They may leave rates unchanged, having a change of heart about the effects of accelerating inflation and falling NOK. However, the vectors will remain intact. Although inflation is rising, GDP growth is slowing, stalling the economy.  This move would change perception, strengthening the NOK, moderating supply side inflation. However, Norwegian government and industry would have to make some bold moves to cover the losses from the oil sector.

Raise Rates: Highly Unlikely

This action, along with a “controlled crash” plan (discussed in one of my earlier stories), dealing with the inevitable recession, would be the most responsible move. The Norwegian government, in effect, would admit that there is a problem with misallocation of assets, done by encouraging deficit spending. Rebalancing the housing market would not only kill the worry associated with having high debts on unsustainably low interest but also stimulate other parts of the economy with the freed up cash, leading to new innovation and businesses. 

Stimulus: Possible

This will happen, in effect, by the government drawing from the oil fund to fill budget gaps. The Norwegian government already stated that they will increase public spending, boosting the economy. This will create inflation which will have to, eventually, be counteracted with rate hike, making housing at current price/income ratios a very risky proposition.  They may increase money supply to mitigate the currency strengthening, associated with spending the sovereign wealth fund. NBIM’s investments are mostly denominated in USD and EUR, requiring them to buy back NOK for domestic spending. This has the “undesired” effect of currency strengthening, dampening exports. Expecting the unexpected is the norm.

Conclusion

People, in order to spend, want a predictable future, not a volatile one associated with low rates and stimulus. We can expect more cocaine and heroin from all Central Banks in the near term. There is nothing we can do except buy gold (gold is an investment in inflation), invest in dividend paying export related stocks and keep cash on hand, taking advantage of arbitrage opportunities, presented by those who are over-extended. They, like all other central banks, will punish responsible behavior, savers and investors, and reward irresponsible behavior, gamblers and speculators. 


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“Gloom” Returns To China’s Economy: Industrial Production, Retail Sales Miss Lowest Estimates

After an unprecedented surge in Chinese attempts to stimulate the economy in late 2015, mostly on the fiscal side, coupled with recent monetary easing by the PBOC which cut the banks’ reserve ratio recently and unleashed a tsunami of new loan creation in January, many expected that this unprecedented credit impulse would translate into at least a modest rebound for the economy, prompting a stable pick up in spending for the economy which many are touting is now consumer-spending driven as opposed to export and production.

However, that did not happen: according to data released overnight by the National Bureau of Statistics, Chinese factories and retailers not only missed expectations, but slowed down materially from the December prints, as anemic demand and excess capacity continued to bear down on the world’s second-largest economy.

Specifically, Jan-Feb factory output grew just 5.4% in January and February from a year earlier, data released by the National Bureau of Statistics (NBS) showed, slowing from a 5.9% rise in December to the weakest since November 2008; the print matched the lowest Wall Street estimate.

Meanwhile, retail sales rose 10.2% over the two-month period from a year ago, below the lowest Wall Street estimate of 10.5%, and far below the December’s 11.1% increase, pushing the trend growth in this series to lows not seen since early 2015.

“Overall, the picture is still quite gloomy,” said Commerzbank AG economist Zhou Hao. “Normally, because of Chinese New Year, there’s a big drop and a big jump. This year there’s only a big drop.”

The retail data was particularly disappointing because as the WSJ writes “while industries have been battered by the economic slowdown, retail sales have been relatively buoyant, so the downtick surprised some economists, especially since it occurred around the Lunar New Year holiday when consumption is usually strong.”

And to think record, if fake, box office numbers were supposed to carry China’s economy in the aftermath of the absolutely disastrous trade data released earlier in the month.

To be sure, the commentary immediately explained that the weak data will mean even more stimulus, even though it was just last week when the Congress laid out all the measures that China will adopt to assure “GDP growth” of 6.5%-7.0%.

Here’s Reuters: “China’s activity data remained weak in the first two months of 2016, with factory output growth hitting the weakest since the global financial crisis, keeping pressure on policymakers to do more to avert a sharper showdown in the world’s second-largest economy.

Unlike the recent collapse in Chinese exports and imports, the overnight data could not be “explained away” due to calendar effects as it combines the January and February timeframe: China’s government combines some economic data for January and February to minimize distortions tied to the Lunar New Year holiday, which falls during those two months. It was in early February this year.

It wasn’t all bad news: one area that did pick up was investment in factories, buildings and other fixed assets, which increased a faster-than-expected at 10.2?% year-over-year in January and February, compared with a 10% increase for all of 2015. However, economists said that boost came largely from government spending on infrastructure and from investment in parts of the overbuilt property market.

In other words, China is adding even more excess capacity to an economy already drowning in excess capacity.

Ultimately, the problem for China remains: weak demand at home and abroad is weighing on industries and many factories continue to churn out unneeded goods. “A recovery is still eluding China’s industrial sector,” Mizuho Securities Asia Ltd. said in a recent report, before the release of the data Saturday.

Worse, for all the talk about a massive stimulus, China’s economy continues to deteriorate: as quoted by the WSJ, Chen Zhenxing, sales manager with Zhejiang Lanxi Shanye Machinery Co., which produces hand carts and other logistics equipment in the eastern city of Jinhua, said his company faces ongoing problems raising capital and boosting prices: “competition is cutthroat,” he said. “Too many companies make products that are pretty much the same, so the focus turns to lowering prices.”

Ultimately many will have to go out of business, leading to millions in layoffs, and forcing the Beijing politburo to face its greatest nightmare.

The problem with China’s economy  is that the local population, having tired of the stock market bubble, has now shifted its attention back to reflating the housing bubble, where as we reported recently there has been an unprecedented 50% surge in some Tier 1 cities such as Shenzen. As such the economy is focused not on creating new goods and services, but merely facilitating financialization and extracting rents.

This is why China’s leaders have now put all their eggs in the housing market basket:  Zhang Yiping, an economist with China Merchants Securities, said property investment and domestic consumption could be China’s major growth drivers this year given sluggish global demand and Beijing’s plans to cut industrial overcapacity.

Commerzbank’s Mr. Zhou and other economists expressed concern that investment is flowing into a few real-estate markets that show signs of overheating, rather than into new ventures. “Monetary policy is relaxed, but it’s reluctant to go to the real economy, only to property assets,” he said.

The slower pace of retail sales in January and February may reflect the turbulent financial markets and weak corporate profits last year, which dampened wage hikes and bonuses, economists said.

Even accounting for data volatility around the Lunar New Year holiday, China’s economy is off to a slow start this year following economic growth in 2015 of 6.9%, the slowest pace in 25 years. A host of stimulus measures late last year and into 2016—most recently a 0.5 percentage point cut in bank reserves late last month, have yet to reverse the slide in momentum.

The biggest problem, one which we have warned about since 2010, is that China remains mired under an unprecedented debt load, one which makes any forecast for 6.5% growth on the back of credit which is growing at double this pace, laughable.


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The FDA’s Foul Crackdown on Manure: New at Reason

Last week, the FDA announced it would investigate the use of manure and other biological matter. Manure is animal poop. Rich in nutrients, it’s been used by farmers as fertilizer for thousands of years. But the agency is skeptical of the safety of the practice. Yet as Baylen Linnekin observes, the FDA’s expertise in this area is (charitably) virtually nonexistent.

View this article.

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Democracy, Be Damned – The “Sea Island” Conspiracy Reveals The Deep State

Submitted by Patrick Buchanan via Buchanan.org,

Over the long weekend before the Mississippi and Michigan primaries, the sky above Sea Island was black with corporate jets.

Apple’s Tim Cook, Google’s Larry Page and Eric Schmidt, Napster’s Sean Parker, Tesla Motors’ Elon Musk, and other members of the super-rich were jetting in to the exclusive Georgia resort, ostensibly to participate in the annual World Forum of the American Enterprise Institute.

Among the advertised topics of discussion: “Millennials: How Much Do They Matter and What Do They Want?”

That was the cover story.

As revealed by the Huffington Post, Sea Island last weekend was host to a secret conclave at the Cloisters where oligarchs colluded with Beltway elites to reverse the democratic decisions of millions of voters and abort the candidacy of Donald Trump.

Among the journalists at Sea Island were Rich Lowry of National Review, which just devoted an entire issue to the topic: “Against Trump,” and Arthur Sulzberger, publisher of the Trumphobic New York Times.

Bush guru Karl Rove of FOX News was on hand, as were Speaker Paul Ryan, Majority Leader Mitch McConnell and Sen. Lindsey Graham, dispatched by Trump in New Hampshire and a berserker on the subject of the Donald.

So, too, was William Kristol, editor of the rabidly anti-Trump Weekly Standard, who reported back to comrades: “The key task now, to … paraphrase Karl Marx, is less to understand Trump than to stop him.”

Kristol earlier tweeted that the Sea Island conclave is “off the record, so please do consider my tweets from there off the record.”

Redeeming itself for relegating Trump to its entertainment pages, the Huffington Post did the nation a service in lifting the rug on “something rotten in the state.”

What we see at Sea Island is that, despite all their babble about bringing the blessings of “democracy” to the world’s benighted, AEI, Neocon Central, believes less in democracy than in perpetual control of the American nation by the ruling Beltway elites.

If an outsider like Trump imperils that control, democracy be damned. The elites will come together to bring him down, because, behind party ties, they are soul brothers in the pursuit of power.

Something else was revealed by the Huffington Post — a deeply embedded corruption that permeates this capital city.

The American Enterprise Institute for Public Policy Research is a 501(c)(3) under IRS rules, an organization exempt from U.S. taxation.

Million-dollar corporate contributions to AEI are tax-deductible.

This special privilege, this freedom from taxation, is accorded to organizations established for purposes such as “religious, educational, charitable, scientific, literary … or the prevention of cruelty to children or animals.”

What the co-conspirators of Sea Island were up at the Cloisters was about as religious as what the Bolsheviks at that girls school known as the Smolny Institute were up to in Petrograd in 1917.

From what has been reported, it would not be extreme to say this was a conspiracy of oligarchs, War Party neocons, and face-card Republicans to reverse the results of the primaries and impose upon the party, against its expressed will, a nominee responsive to the elites’ agenda.

And this taxpayer-subsidized “Dump Trump” camarilla raises even larger issues.

Now America is not Russia or Egypt or China.

But all those countries are now moving purposefully to expose U.S. ties to nongovernmental organizations set up and operating in their capital cities.

Many of those NGOs have had funds funneled to them from U.S. agencies such as the National Endowment for Democracy, which has backed “color-coded revolutions” credited with dumping over regimes in Serbia, Ukraine and Georgia.

In the early 1950s, in Iran and Guatemala, the CIA of the Dulles brothers did this work.

Whatever ones thinks of Vladimir Putin, can anyone blame him for not wanting U.S. agencies backing NGOs in Moscow, whose unstated goal is to see him and his regime overthrown?

And whatever one thinks of NED and its subsidiaries, it is time Americans took a hard look at the tax-exempt foundations, think tanks and public policy institutes operating in our capital city.

How many are like AEI, scheming to predetermine the outcome of presidential elections while enjoying tax exemptions and posturing as benign assemblages of disinterested scholars and seekers of truth?

How many of these tax-exempt think tanks are fronts and propaganda organs of transnational corporations that are sustained with tax-deductible dollars, until their “resident scholars” can move into government offices and do the work for which they have been paid handsomely in advance?

How many of these think tanks take foreign money to advance the interests of foreign regimes in America’s capital?

We talk about the “deep state” in Turkey and Egypt, the unseen regimes that exist beneath the public regime and rule the nation no matter the president or prime minister.

What about the “deep state” that rules us, of which we caught a glimpse at Sea Island?

A diligent legislature of a democratic republic would have long since dragged America’s deep state out into the sunlight.


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What The Average Zhou Thinks Of China’s Housing Bubble: “Only After War Breaks Out, We’ll Be Able To Afford It”

Chinese home prices are soaring. In fact, according to the latest data, the bubble among China's top, or "Tier 1" cities has never been bigger entirely at the expense of all other cities.

 

 

And while this appears at first glance a positive, for central-planners and leveraged speculators, we wondered what the man on the street of Beijing thought of it.

Policies by Chinese authorities to stimulate the country’s housing market have contributed to sky-high prices in some big cities such as Beijing, Shanghai and Shenzhen – with developers and real estate agents adding to the craze. What do Beijing residents make of the current market? Do they fear that a property bubble might be on the horizon?

The Wall Street Journal hit the streets to find out, and discovered the average Zhou is not happy…

Hu Xiaolin, 56, retired worker from Beijing

Do you currently own a house? If not, do you plan to buy one in the future?

No, I don't own a house. I don't plan to buy one; I can't afford it. My parents had a house, but my brother and sister live in it now. I just saw the news today about a "school district house:" an 11-square-meter bungalow was sold at 460,000 yuan ($71,000) per square meter. In total it's 5 million yuan ($770,000). It's just a game for the rich!

Why do you think real estate prices are so high? Do you expect them to decline or keep rising?

A few years ago the high prices were due to real demand. Gradually there was speculation, and now even regular people know that real estate is more valuable than stocks; the value just keeps rising. A house originally worth 4-500,000 yuan ($62-$77,000) might now be worth 2-3 million yuan ($300-$460,000). You can survey how many houses have owners living in them by counting the lights at night. Why so many empty houses? They belong to the real estate speculators, the hoarders and the corrupt officials.

Have you ever used a housing agent in Beijing? What was your experience like?

Yes. They're unreliable. Most talk rubbish, especially those working for small agencies. They always go back on their word and the staff are low quality; all they think about is selling houses and drawing a commission.

With “destocking” one of this year’s economic targets, what kind of change do you hope to see? What is the role of the housing market in China’s economy, in your opinion?

I hope the bubble can be eliminated more or less. What worries me is that if there are no purchasing requirements for outsiders and the rich flood into Beijing, the pressure will be overwhelming. The home-purchase policy isn't implemented strictly. Beijing isn't a livable city at all.

Liu Na, 32, garment trader from Shandong

"Chinese people want a house after they get money. It’s a fixed asset and can be passed to their descendants. But I have no plan or fantasy to buy one. The price makes it off-limits. It’s also a food chain: Only the richest and most capable people can live here."

Anna Zhuo, 33, ad industry worker from Heilongjiang

"I hope the prices can be stabilized. The government can release regulations on housing replacement, sparing the ownership transfer fees. The housing market is a pillar (of the economy). If it's ruined, our economy will be, too. It’s also a visible bubble. Everybody knows it will burst, but they still touch it."

Martin Lee, 34, business manager from Beijing

"Housing is the most direct way to exploit people. The prices will rise steadily and fall dramatically after they've reached a certain point."

 

"It's a means for the privileged and interest groups to make a profit. 1,000 years ago, the ancient poet Du Fu said, "Where can I get a big broad shelter a thousand, ten thousand spans wide, a huge roof that all the world's poor people can share with smiling faces?" Now, nothing has changed. The housing market is part of the bubble economy. In 5 years or so, after a war has broken out, then the middle class will be able to afford a home."

*  *  *

And finally, there is Shi Ji, 24, housing agent from Jilin

"The Chinese housing market started in the 1990s and is still in an initial stage. It’s a backbone of the economy. The Beijing real estate industry pays tens of billions of yuan in taxes annually. Many say they can’t afford to buy a house, which is not exactly right. Most consumers are seeking to upgrade their homes. If you can’t buy a big house, buy a small one. If you can’t buy in Beijing, buy in second-tier…"

So buy, buy, buy!

 


via Zero Hedge http://ift.tt/21ntSTM Tyler Durden

FBI Morale “Very Good” As ‘Immune’ Hillary IT-Staffer Reportedly A “Devastating Witness”

Despite the arrogance of Hillary's campaign claiming to be "pleased" that the Justice Department granted immunity to an IT specialist who worked on Hillary's private email server, Fox News reports Bryan Pagliano has told the FBI key details, about how and what devices she used, citing an intelligence source who called him a "devastating witness." Having been warned that she should be "terrified" since "they would not be immunizing him and thereby inducing him to spill his guts unless they wanted to indict someone," Pagliano has reportedly provided information allowing investigators to knit together the emails with other evidence, including images of Clinton on the road as secretary of state.

FOX News reports that the intelligence source said Pagliano told the FBI who had access to the former secretary of state’s system – as well as when – and what devices were used, amounting to a roadmap for investigators.

"Bryan Pagliano is a devastating witness and, as the webmaster, knows exactly who had access to [Clinton's] computer and devices at specific times. His importance to this case cannot be over-emphasized," the intelligence source said.

 

The cross-referencing of evidence could help investigators pinpoint potential gaps in the email record. "Don't forget all those photos with her using various devices and it is easy to track the whereabouts of her phone," the source said. "It is still boils down to a paper case. Did you email at this time from your home or elsewhere using this device? And here is a picture of you and your aides holding the devices." 

At a Democratic debate Wednesday evening, Clinton brushed off the question when asked by the moderator whether she would withdraw from the presidential race if faced with criminal charges.

Univision’s Jorge Ramos asked, "If you get indicted, will you drop out?" Clinton responded, "My goodness. That is not going to happen. I'm not even answering that question."

She then added her now standard explanation that nothing she sent or received was marked classified at the time. While technically correct, the distinction appears misleading. The January 2009 classified information non-disclosure agreement signed by Clinton says she understood that classified information could be marked and unmarked, as well as verbal communications. Classification is based on content, not markings.

The intelligence source said the FBI is "extremely focused" on the 22 “top secret” emails deemed too damaging to national security to publicly release under any circumstances, with agents reviewing those sent by Clinton as well her subordinates including former chief of staff Cheryl Mills.

"Mrs. Clinton sending them in this instance would show her intent much more than would receiving [them],” the source said. "Hillary Clinton was at a minimum grossly negligent in her handling of NDI [National Defense Information] materials merely by her insisting that she utilize a private server versus a [U.S. government] server. Remember, NDI does not have to be classified."

 

According to the Congressional Research Service, NDI is broadly defined to include “information that they have reason to know could be used to harm the national security.”

 

It was emphasized to Fox News that Clinton’s deliberate “creation” and “control” of the private server used for her official government business is the subject of intense scrutiny. Pagliano knows key details as to how the private server was installed and maintained in her home.

 

The 22 “top secret” emails are not public, but in a Jan. 14 unclassified letter, first reported by Fox News,  Intelligence Community Inspector General I. Charles McCullough III notified Congress of the findings of a recent comprehensive review by intelligence agencies identifying "several dozen" additional classified emails — including specific intelligence known as "special access programs" (SAP).

 

That indicates a level of classification beyond even "top secret," the label previously given to other emails found on her server, and brings even more scrutiny to the presidential candidate's handling of the government's closely held secrets.

The intelligence source described the morale of agents as "very good and nobody is moping around which is the first sign a big case is going south."

*  *  *

Keep on running…


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Obama to SXSW: Government Has Failed You But You Should Trust It Anyway

Barack Obama at SXSW 2016South by Southwest Interactive (SXSWi), the big annual technology, media, and entrepreneurship conference held in Austin every March, got an unusually high-profile guest speaker this year: Barack Obama. In his opening-day keynote address, the president all but apologized to young people for how outmoded their federal government is—while also imploring them to give it credit for all the “great things” it does for us “every day.”

Obama began by admitting something not often heard from Washington, D.C., establishment figures like a sitting commander in chief: “Our government’s not working, our politics aren’t working as well as they should,” he said. When the interviewer prodded him with a question about how Washington, in contrast to the tech sector, is “big and bloated and slow and risk averse,” Obama didn’t disagree, and in fact offered the audience a note of humor and self-awareness.

“Let me give you an example of the big and the bloated and the frustrating,” he said. “You may recall that I passed this law called the Affordable Care Act to give people access to health insurance—and then the website didn’t work. And this was a little embarrassing for me because, you know, I was the cool early adopter president, and my entire campaign had been premised on having really cool technology.”

It was a concession even a libertarian could almost be proud of. Unfortunately, the sentiment didn’t last long. Within moments, Obama was explaining that “what happened as a consequence of healthcare.gov breaking down” was that “we realized we could build a SWAT team, a world-class technology office, inside government. We did that with the U.S. Digital Service.”

See, what President Obama wants you to know is that you only think Washington is frustratingly inefficient. Evincing exasperation at critics (including libertarians, whom he specifically name checked), he said that “when government does great things we take it for granted.” His pivotal example: the National Oceanic and Atmospheric Administration.

“Government is delivering every day,” he declared. “I could find the fiercest libertarian in the room…but they’re checking the weather on their phone, and lo and behold, there’s a government satellite out there that’s facilitating that.”

It was a reminder of the difference between people like Obama and people like me: He sees government’s many glaring failures and concludes that it’s imperative they be fixed, because there are no other means by which society can solve the “big, important problems” that we face. Whereas I see government’s many glaring failures and conclude it’s imperative we find other ways to solve society’s big important problems, since government has shown itself repeatedly to be so godawful bad at it.

But for people like the president, fixing government remains a straightforward proposition: All you have to do is to install a good, smart, competent manager and then get out of his way. As Obama quipped this afternoon: “I’ve said I could change the politics of America faster than anything if I could just take control of all the DMVs.”

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