Tag: news

It was only a summer ago when it was revealed, courtesy of Edward Snowden, that the NSA had been listening in to the cell phone call of German chancellor Angela Merkel. This resulted in a prompt summoning of the US ambassador to Germany for a stern talking down and… nothing else. Fast forward to this summer when over the weekend another spying incident was revealed, this time involving what according to Germany is a double agent spying for the US (it is not quite clear why the US would need even more spying when it already has virtually every form of German communications bugged and intercepted).

According to Reuters, an employee of Germany’s BND foreign intelligence agency has been arrested on suspicion of spying for the United States, two lawmakers with knowledge of the affair told Reuters on Friday.

The German Federal Prosecutor’s office said in a statement that a 31-year-old man had been arrested on suspicion of being a foreign spy, but it gave no further details. Investigations were continuing, it said.

The case risks further straining ties with Washington, which were damaged by revelations last year of mass surveillance of German citizens by the U.S. National Security Agency, including the monitoring of Chancellor Angela Merkel’s mobile phone.

 

The man, who is German, has admitted passing to an American contact details about a special German parliamentary committee set up to investigate the spying revelations made by former U.S. intelligence contractor Edward Snowden, the politicians said.

 

Both lawmakers are members of the nine-person parliamentary control committee, whose meetings are confidential, and which is in charge of monitoring the work of German intelligence agencies.

 

The parliamentary committee investigating the NSA affair also holds some confidential meetings. The German Foreign Ministry said in a statement that it had invited the U.S. ambassador to come for talks regarding the matter, and asked him to help deliver a swift explanation.

 

“This was a man who had no direct contact with the investigative committee … He was not a top agent,” said one of the members of parliament, who spoke on condition of anonymity. The suspect had offered his services to the United States voluntarily, the source said.

 

Merkel’s spokesman Steffen Seibert said: “We don’t take the matter of spying for foreign intelligence agencies lightly.”

 

When asked whether Merkel had discussed the issue with President Barack Obama during a phone conversation on Thursday night, he merely said they had talked about foreign affairs. The U.S. embassy in Berlin, the State Department in Washington and the White House all declined to comment.

Ironically, Germany’s Sueddeutsche Zeitung newspaper and the broadcasters WDR and NDR first reported that the alleged spy was first detained on suspicion of contacting Russian intelligence agents. He then admitted he had worked with Americans. Well, there goes that scapegoat.

Bild newspaper said in an advance copy of an article to be published on Saturday that the man had worked for two years as a double agent and had stolen 218 confidential documents.  He sold the documents, three of which related to the work of the committee in the Bundestag, for 25,000 euros ($34,100), Bild said, citing security sources.

Supposedly the buyer was the US, which probably explains the following update:

• GERMANY ASKED U.S. AMBASSADOR FOR EXPLANATION: FOREIGN MINISTRY

Truly an “unprecedented” escalation, just like last summer. Because how on earth will the US continue spying on one of its closest allies if the ambassador is asked to explain himself. Sarcasm aside, one does wonder: just what dirt does the US have on Merkel to keep the chancellor meekly quiet in her corner?

This is precisely what one of our German readers was wondering earlier, when framing the situation. His observations are as follows:

This NSA spying is really becoming completely ridiculous.

 

Gauck über US-Spionage: “Jetzt reicht’s auch einmal” (translated: Gauck on U.S. espionage: “That’s about enough “)

 

Why Merkel is sooo silent – me thinks the NSA is blackmailing her (and likely most other gov. leaders too) because of her past in the DDR.

 

Consequences of all this will lead to exactly this outcome:

 

The public will refuse to buy things made by US corporations – MS, Apple, Google, Verizon, Amazon, Ebay, …. etc etc etc etc.

 

We avoid already Chinese products because of their use of poisons and the low quality in general.

 

We will avoid American products too because America is the worst liar of all states in our generation and we have enough of their spying and stealing (of other countries gold) and pointing with fingers and meddling in foreign affairs (which is also unprecedented) – when they have the most biggest shit on themselves.

 

I have never been anti-American – really and I have a lot of and most of my friends over their (thanks to internet) – but this and the last administration (or in fact a few criminals behind it) has done soooo much damage to the american poeple, to the image of America all over the globe, so that it is no wonder that finally the whole world will think about them as the biggest shitplace on this planet.

 

I’m 58 and have seen a lot in my life – but I think Gauck is spot on: “Jetzt reicht’s auch einmal”.

 

And I think many Europeans think alike.

 

This will NOT end well for America. Unfortunately the American people will likely have to pay a very high and very painful price for haven given up their Constitutuional rights in exchange for coke, burgers, tv, porn and games.

Well, dear German friend, when it comes to such key decisions as constitutional rights vs coke, burgers, tv, porn and games, all we can say is “priorities.”

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

Submitted by David Stockman of Contra Corner blog,

David Stockman, Director of the Office of Management and Budget under Reagan, former Congressman, and author of the bestseller The Great Deformation: The Corruption of Capitalism in America, discusses his book, the gold standard, bailouts, and the problems the American economy faces today.

Mises Institute: In the book, you oppose Bernanke’s view of the Great Depression, which you point out relies heavily on the views of Milton Friedman.

David Stockman: Bernanke has cultivated this idea that he is a brilliant scholar of The Great Depression, but that’s not true at all. What Bernanke did was basically copy Milton Friedman’s misguided and very damaging theory that the Federal Reserve didn’t expand its balance sheet fast enough by massive open market purchases of government debt during the Great Depression. Bernanke therefore claimed that monetary stringency deepened and lengthened the depression, but in fact interest rates plummeted during the crucial 1930-1933 period: credit contracted due to genuine and widespread insolvencies in the agricultural districts and industrial boom towns, causing bank deposits to shrink as a passive consequence. So Bernanke had cause and effect upside down – a historical error that he replicated with reckless abandon in response to the bursting of the housing and credit bubble in 2008.

Friedman’s error about the great depression led him, albeit inadvertently, into the deep waters of statism. He claimed to be the tribune of free markets, but in urging Nixon to scrap the Bretton Woods gold standard he inaugurated the present era of fiat central banking. He held that the central banking branch of the state could improve upon the performance of the free market by targeting the correct level of M1 (money supply) and thereby ensure optimum performance of aggregate demand, real GDP, and inflation. That’s Keynesianism through the monetary control dials, and has led to outright monetary central planning under Greenspan, Bernanke, and most of the other central banks of the world today.

MI: You blame many of our current woes on the movement away from monetary and fiscal discipline started decades ago. Yet, why did it take so long for the U.S. economy to get into the deep trouble we’re in today? Have things gotten worse in recent years?

DS: Although central banking does cause moral hazards and lends itself to abuses, there have been periods in which monetary and fiscal discipline have been employed. Fed Chairman William McChesney Martin, for example, really did take the punch bowl away when the party got started because he took monetary discipline seriously. Fiscal discipline under Eisenhower and the gold standard behind Bretton Woods helped put off the day of reckoning for quite a long time. But fiscal discipline went out the window with Lyndon Johnson and Richard Nixon, and the elimination of the weak gold standard behind Bretton Woods certainly didn’t help. The deficit spending of the Reagan years made things even worse.

The Greenspan and Bernanke years then opened the door the massive abuse of the system we see today. Greenspan took the Federal Reserve, which for years had been run by far more cautious and conservative men, and turned it into a machine for fine-tuning every aspect of the economy. Bernanke has continued this, and taken it even further.

MI: Among many conservatives and Republicans, it is often claimed that the Reagan years were a victory for free markets and that the 1990s vindicated this strategy. Is this the case?

DS: In the early days of the Reagan years I thought, with many others, that the Reagan Revolution would in fact lead to smaller government. I turned out to be wrong, and politics overwhelmed any commitment Reagan had to making government smaller. The reality was huge growth in the deficit, more government spending, and the laying of the groundwork for the huge debt-based problems we have today.

During the Reagan years and since, the GOP has made peace with tinkering with the economy through the central bank, and joined the Democrats in wanting to gin up so-called aggregate demand and stimulate growth. Dick Cheney declared that deficits don’t matter, and the Republicans abandoned any serious commitment to taking a true hands-off approach to the economy.

In spite of this, the perception remains that the Reagan years were a period of laissez-faire, and this in turn has led to the myth that the fiscal indiscipline of the 1980s led to the boom of the nineties. In reality, the 1990s were a period of monetary profligacy, with a big expansion in the money supply under Greenspan, and a real acceleration in the Fed’s drive to manipulate economic growth and employment from the Fed. This in turn led to the dot-com bubble which burst in 2000-2001.

MI: We’ve been told that deregulation of the financial sector caused the 2008 crisis, and that a lack of regulation allows the “One Percent” to prosper while the “99 Percent” suffers.

DS: Fundamentally, the financial crisis was a product of the Fed’s repeated blowing up of bubbles, and not of deregulation. Moreover, any suffering inflicted on the 99 Percent by our system doesn’t come from the free market, it comes from the crony capitalism that is now our economic system. The Blackberry Panic of September 2008, in which Washington policy makers led by former Goldman Sachs CEO Hank Paulson, panicked as they saw Wall Street stock prices plummet on their mobile devices, had very little to do with the Main Street economy in the United States. The panic and bailouts that followed were really about protecting the bonuses and incomes of very wealthy and politically well-connected managers at banks and other heavily leveraged businesses that were eventually deemed too big to fail. What followed was a massive transfer of wealth from the taxpayers and middle-class savers, in the form of bailouts and zero interest rates on bank deposits imposed by the Fed, to the so-called One Percent.

As I show in my book, none of this was necessary to save the larger economy, since the losses that would have taken place as a result of the collapse would have been largely limited to Wall Street. What the bailouts did was preserve the wealth of wealthy and powerful Wall Street players. Meanwhile, we’ve seen no real economic recovery in the rest of the economy.

This transfer of wealth continues, by the way, in the form of relentlessly low interest rates, and an ongoing war by the Fed on safe and stable investment tools such as savings accounts and low-risk bonds. Indeed, this is a deliberate policy to get people away from these safer investments, and to get them investing in more volatile and higher yield investments. The idea is that the Fed can somehow force bigger returns on these riskier investments, and this will lead to a wealth effect. People will then think they’re richer, and we can then spend ourselves into a recovery. This is a terrible doctrine, but that’s what rules Washington right now. It actively works against middle-class people who want to work and save and invest their money responsibly and conservatively.

MI: It seems that the Fed today tries to manage everything from growth to employment to the mortgage rate. Has this always been the case?

DS: The Greenspan-Bernanke-Yellen Fed has become a tool for central planning and manipulation of the economy, but it hasn’t always been that way. One way to reverse this dangerous and unstable deformation of policy would be to return to the vision of Carter Glass, and employ the Fed as a “banker’s bank.” In such a situation, the Fed takes its cues from the market. The market sets prices (i.e., interest rates on money and debt), and the Fed only provides additional liquidity, in exchange for sound collateral, at a penalty rate, when the banks needed liquidity.

The system we have now is one in which the Fed decides, through a Politburo of planners sitting in Washington, how much liquidity is necessary, what the interest rate should be, what the unemployment rate should be, and what economic growth should be.

There is no honest pricing left at all anywhere in the world because central banks everywhere manipulate and rig the price of all financial assets. We can’t even analyze the economy in the traditional sense anymore because so much of it depends not on market forces, but on the whims of people at the Fed.

MI: Is there any way to fix things before a major crisis comes?

DS: You’re not going to have legislation to change the mandate of the Fed, and I don’t see how you’ll get new people on the Fed who think differently from the current group. Even if you get rid of Bernanke, then you just get Janet Yellen. I just don’t see the political will right now to make any great reforms or cut spending significantly.

I think the political realities of the situation make the most likely scenario one in which there will be some kind of real financial collapse and disorder that will require a total reconstruction of the system. It’s impossible to say how that will be done, and this may be the chance to go back to a gold standard or to a very sharply circumscribed remit for central banks.

via Zero Hedge http://ift.tt/1vO5Y4e Tyler Durden

Investors learned last week that the US created 1.38 mln net new jobs in H1, the most for a six-month period since 2006. They learned that US vehicle sales in June also reached an 8-year high. For its part, the ECB emphasized that the TLTRO facility could inject around 1 trillion euros into the banking system for loans to businesses and households. It also announced that the rules of engagement will allow banks that already work closely together to tap the TLTRO facility collectively.

 

In Japan, the Tankan was mixed as sentiment among large businesses deteriorated a little more than expected, but capex plans increased. Separately, data showed that overall household consumption collapsed in May, warning that the impact of sales tax increase, coupled with base wages and return on savings not keeping pace with inflation, may have compress demand longer than Japanese officials may appreciate.

 

These developments were not game changers. The dollar remains within the two yen range (JPY101-JPY103) that has largely confined the price action since early April. It recovered into the middle of that range with the help a 10 bp net increase in US Treasury yields. At 207 bp, the US premium is at its 200-day moving average. The dollar managed to resurface above its 200-day moving average against the yen (~JPY101.80) and finish the week above it.

 

The euro has been confined to a two cent range ($1.35-$1.37) for the past six weeks. The decline from near $1.40 appears to have be participants anticipating the June rate cuts. The euro was actually stronger against the dollar before the ECB’s July meeting than it was at the June meeting.

 

If last week’s developments were not able to break the dollar out of its ranges, the events in the week ahead are unlikely to either. The May industrial production reports from the largest euro area countries will likely confirm the general impression that investors already have. Germany has lost some momentum. Spain is performing well. France and Italy are struggling.

 

The main release from Japan will be its May current account figures. There are two key components. The trade balance and the investment income balance. The former is in deficit, despite (or because) the significant decline in the yen. The latter is in surplus and sufficiently so that it should overcome the trade deficit and put the external account into surplus.

 

US data cycle is also at a low ebb in week ahead. The JOLTS data on the labor market may receive more attention by economists given that Fed Chair Yellen has referred to it. However, it is not a market mover. It follows on the heels of a national survey and is unlikely to dissuade investors and policy makers that the Fed is drawing nearer its mandates.

 

The FOMC minutes rarely provide market moving material either. Note that the minutes often give air to a wider range of opinion that the Fed’s statement following the meetings, as non-voters also participate in the meeting. Yellen’s willingness to play down the recent upticks in inflation and play down risks to financial stability are not necessarily universally shared. As QE3+ will be wound down in a few more months, discussions of the Fed’s toolkit to manage policy, such as reverse repos, are bound to increase, and there is plenty of scope for difference of opinion.

 

The heuristic point we make is worth repeating in this context.  Yellen and Dudley (and we expect Vice Chairman Fischer to join them) generate the important policy signals. It is not that the others do not have important things to say, far from it. However, when trying to discern the signal from the noise, Yellen and Dudley (and Fischer) can be counted on for the signal.

 

The consumer credit report is unlikely to move the markets either, but it nevertheless offers important insight. Most of the household consumption that has taken place during this cycle has not been financed with revolving credit (that is credit cards). The bulk of the credit that has been extended is for auto and student loans. However, in April, revolving credit rose by $8.8 bln, which is most in seven years. To put this in perspective, consider that even including it, the 12-month average growth in revolving credit is a little less than $1.7 bln. The May report will lend credibility to this turn or show it as a fluke. We are more inclined to expect the former, which is to say that the de-leveraging of the American household may have very well run its course.

 

The Bank of England meets, but for investors, this is a non-event. It is too early to look for a rate hike. The minutes will not be published until July 23. Although some members see conditions that may soon justify a rate hike, no one seems prepared to pull the trigger now. Expect a unanimous decision to keep rates on hold.

 

Separately the UK reports industrial production figures for May. Recall that the May manufacturing PMI edged lower to 57.0 from 57.3. Barring a significant surprise, it should be consistent with the preponderant of evidence indicating the UK economy continues to expand at a robust pace (just shy of 1.0% quarter-over-quarter pace)

 

The combination of the growth differentials, strength of sterling and some structural factors has contributed to the UK’s large external deficit. The visible (goods) trade balance is expected to be near the six month average of GBP8.8 bln. The overall trade deficit (including services) is expected to have narrowed sharply to GBP1.6 bln (six-month average is GBP1.66 bln deficit) from a GBP2.54 bln deficit. 

 

It is a big week for Chinese data, but the general sense that with the aid of targeted government support, the economy has stabilized is unlikely to change. The inflation China is experiencing is concentrated in foodstuffs. Goods and service price inflation is running below 2.0%, and producer prices are still falling (albeit at a slower pace). Official efforts to rein in the shadow banking activity likely means that yuan bank loans should account for a larger share of aggregate social financing.

 

Arguably the most interesting data will relate to reserve growth and trade. In Q1, reserves jumped $126.8 bln on a Q1 trade surplus of $23.1 bln. Reserve growth then outstripped the trade surplus by a factor of 5. This is a prima facie case that the reserve growth was more a function of sterilizing the capital inflows than recycling the trade surplus.

 

Assuming a $37 bln trade surplus in June, as the consensus forecasts, that would bring the trade surplus to about $91 bln in Q2. Export growth may have accelerated (consensus is for around 10% increase after 7% in May). Imports fell 1.6% in May and are expected to have risen by around 5.5% in June. Reserves are expected to have risen by about $30 bln. Such results would be consistent with capital outflows from China in Q2.

 

The IMF’s models suggest the yuan is near fair value. The US Treasury recognizes the large reserve growth as evidence that it is not. Treasury officials have it made it clear. It would rather China buy US goods than buy Treasuries. The next round of Strategic and Economic Dialogue talks will be held on July 9-10 in Beijing and Secretaries of State, and Treasury (Kerry and Lew) will lead the US delegation. A Deputy Secretary of Defense will also meet his counterpart.

 

In light of the economic and political context, some yuan appreciation would not be surprising, within, of course, a limited framework. In fact, the dollar’s peak against the yuan was two months ago (April 30, almost CNY6.27). It finished last week near CNY6.2050. The dollar could ease into the CNY6.15-CNY6.18 range.

 

The Swedish krona and Norwegian krone are the weakest of the major currencies against the dollar last week. The krona’s 1.6% decline brings its losses for the year to almost 6%. It is the weakest of the majors. The 50 bp cut by the Riksbank last week was more aggressive than the market expected. Moreover, that the Governor and First Deputy were outvoted (4-2) creates some uncertainty. At the same time the large move renders the coming data, including CPI, less important. The krona can continue to under-perform.

 

Norwegian krone lost 1.0% to essentially double the year-to-date loss. The losses were mostly in sympathy with its neighbor, but there has been a more dovish shift in the central bank’s stance. The krone weakness buys the central bank time for inflation to fall, it which case it can cut rates, or for the economy to pick up. It should outperform the krona.

via Zero Hedge http://ift.tt/1pSnRS0 Marc To Market

Investors learned last week that the US created 1.38 mln net new jobs in H1, the most for a six-month period since 2006. They learned that US vehicle sales in June also reached an 8-year high. For its part, the ECB emphasized that the TLTRO facility could inject around 1 trillion euros into the banking system for loans to businesses and households. It also announced that the rules of engagement will allow banks that already work closely together to tap the TLTRO facility collectively.

 

In Japan, the Tankan was mixed as sentiment among large businesses deteriorated a little more than expected, but capex plans increased. Separately, data showed that overall household consumption collapsed in May, warning that the impact of sales tax increase, coupled with base wages and return on savings not keeping pace with inflation, may have compress demand longer than Japanese officials may appreciate.

 

These developments were not game changers. The dollar remains within the two yen range (JPY101-JPY103) that has largely confined the price action since early April. It recovered into the middle of that range with the help a 10 bp net increase in US Treasury yields. At 207 bp, the US premium is at its 200-day moving average. The dollar managed to resurface above its 200-day moving average against the yen (~JPY101.80) and finish the week above it.

 

The euro has been confined to a two cent range ($1.35-$1.37) for the past six weeks. The decline from near $1.40 appears to have be participants anticipating the June rate cuts. The euro was actually stronger against the dollar before the ECB’s July meeting than it was at the June meeting.

 

If last week’s developments were not able to break the dollar out of its ranges, the events in the week ahead are unlikely to either. The May industrial production reports from the largest euro area countries will likely confirm the general impression that investors already have. Germany has lost some momentum. Spain is performing well. France and Italy are struggling.

 

The main release from Japan will be its May current account figures. There are two key components. The trade balance and the investment income balance. The former is in deficit, despite (or because) the significant decline in the yen. The latter is in surplus and sufficiently so that it should overcome the trade deficit and put the external account into surplus.

 

US data cycle is also at a low ebb in week ahead. The JOLTS data on the labor market may receive more attention by economists given that Fed Chair Yellen has referred to it. However, it is not a market mover. It follows on the heels of a national survey and is unlikely to dissuade investors and policy makers that the Fed is drawing nearer its mandates.

 

The FOMC minutes rarely provide market moving material either. Note that the minutes often give air to a wider range of opinion that the Fed’s statement following the meetings, as non-voters also participate in the meeting. Yellen’s willingness to play down the recent upticks in inflation and play down risks to financial stability are not necessarily universally shared. As QE3+ will be wound down in a few more months, discussions of the Fed’s toolkit to manage policy, such as reverse repos, are bound to increase, and there is plenty of scope for difference of opinion.

 

The heuristic point we make is worth repeating in this context.  Yellen and Dudley (and we expect Vice Chairman Fischer to join them) generate the important policy signals. It is not that the others do not have important things to say, far from it. However, when trying to discern the signal from the noise, Yellen and Dudley (and Fischer) can be counted on for the signal.

 

The consumer credit report is unlikely to move the markets either, but it nevertheless offers important insight. Most of the household consumption that has taken place during this cycle has not been financed with revolving credit (that is credit cards). The bulk of the credit that has been extended is for auto and student loans. However, in April, revolving credit rose by $8.8 bln, which is most in seven years. To put this in perspective, consider that even including it, the 12-month average growth in revolving credit is a little less than $1.7 bln. The May report will lend credibility to this turn or show it as a fluke. We are more inclined to expect the former, which is to say that the de-leveraging of the American household may have very well run its course.

 

The Bank of England meets, but for investors, this is a non-event. It is too early to look for a rate hike. The minutes will not be published until July 23. Although some members see conditions that may soon justify a rate hike, no one seems prepared to pull the trigger now. Expect a unanimous decision to keep rates on hold.

 

Separately the UK reports industrial production figures for May. Recall that the May manufacturing PMI edged lower to 57.0 from 57.3. Barring a significant surprise, it should be consistent with the preponderant of evidence indicating the UK economy continues to expand at a robust pace (just shy of 1.0% quarter-over-quarter pace)

 

The combination of the growth differentials, strength of sterling and some structural factors has contributed to the UK’s large external deficit. The visible (goods) trade balance is expected to be near the six month average of GBP8.8 bln. The overall trade deficit (including services) is expected to have narrowed sharply to GBP1.6 bln (six-month average is GBP1.66 bln deficit) from a GBP2.54 bln deficit. 

 

It is a big week for Chinese data, but the general sense that with the aid of targeted government support, the economy has stabilized is unlikely to change. The inflation China is experiencing is concentrated in foodstuffs. Goods and service price inflation is running below 2.0%, and producer prices are still falling (albeit at a slower pace). Official efforts to rein in the shadow banking activity likely means that yuan bank loans should account for a larger share of aggregate social financing.

 

Arguably the most interesting data will relate to reserve growth and trade. In Q1, reserves jumped $126.8 bln on a Q1 trade surplus of $23.1 bln. Reserve growth then outstripped the trade surplus by a factor of 5. This is a prima facie case that the reserve growth was more a function of sterilizing the capital inflows than recycling the trade surplus.

 

Assuming a $37 bln trade surplus in June, as the consensus forecasts, that would bring the trade surplus to about $91 bln in Q2. Export growth may have accelerated (consensus is for around 10% increase after 7% in May). Imports fell 1.6% in May and are expected to have risen by around 5.5% in June. Reserves are expected to have risen by about $30 bln. Such results would be consistent with capital outflows from China in Q2.

 

The IMF’s models suggest the yuan is near fair value. The US Treasury recognizes the large reserve growth as evidence that it is not. Treasury officials have it made it clear. It would rather China buy US goods than buy Treasuries. The next round of Strategic and Economic Dialogue talks will be held on July 9-10 in Beijing and Secretaries of State, and Treasury (Kerry and Lew) will lead the US delegation. A Deputy Secretary of Defense will also meet his counterpart.

 

In light of the economic and political context, some yuan appreciation would not be surprising, within, of course, a limited framework. In fact, the dollar’s peak against the yuan was two months ago (April 30, almost CNY6.27). It finished last week near CNY6.2050. The dollar could ease into the CNY6.15-CNY6.18 range.

 

The Swedish krona and Norwegian krone are the weakest of the major currencies against the dollar last week. The krona’s 1.6% decline brings its losses for the year to almost 6%. It is the weakest of the majors. The 50 bp cut by the Riksbank last week was more aggressive than the market expected. Moreover, that the Governor and First Deputy were outvoted (4-2) creates some uncertainty. At the same time the large move renders the coming data, including CPI, less important. The krona can continue to under-perform.

 

Norwegian krone lost 1.0% to essentially double the year-to-date loss. The losses were mostly in sympathy with its neighbor, but there has been a more dovish shift in the central bank’s stance. The krone weakness buys the central bank time for inflation to fall, it which case it can cut rates, or for the economy to pick up. It should outperform the krona.

via Zero Hedge http://ift.tt/1pSnRRO Marc To Market

A few days ago, we asked a simple rhetorical question: “Are you targeted by the NSA?”

The answer, sadly for those reading this, is very likely yes, as it was revealed that as part of the NSA’s XKeyscore program “a computer network exploitation system, as described in an NSA presentation, devoted to gathering nearly everything a user does on the internet” all it takes for a user to be flagged by America’s superspooks is to go to a website the NSA finds less than “patriotic” and that user becomes a fixture for the NSA’s tracking algos.

So assuming one is being tracked by the NSA – or as it is also known for politically correct reasons “intercepted” – as a “person of interest” or worse, just what kind of data does the NSA collect? The latest report by the WaPo titled “In NSA-intercepted data, those not targeted far outnumber the foreigners who are” sheds much needed light on just how extensive the NSA’s data collection effort is.

According to WaPo, the files on intercepted Americans “have a startlingly intimate, even voyeuristic quality. They tell stories of love and heartbreak, illicit sexual liaisons, mental-health crises, political and religious conversions, financial anxieties and disappointed hopes. The daily lives of more than 10,000 account holders who were not targeted are catalogued and recorded nevertheless.”

The Post reviewed roughly 160,000 intercepted e-mail and instant-message conversations, some of them hundreds of pages long, and 7,900 documents taken from more than 11,000 online accounts.

Remember when the NSA said they only target foreigners, and only those who are of particular actionable interest? They lied.

Nine of 10 account holders found in a large cache of intercepted conversations, which former NSA contractor Edward Snowden provided in full to The Post, were not the intended surveillance targets but were caught in a net the agency had cast for somebody else.

 

Many of them were Americans. Nearly half of the surveillance files, a strikingly high proportion, contained names, e-mail addresses or other details that the NSA marked as belonging to U.S. citizens or residents. NSA analysts masked, or “minimized,” more than 65,000 such references to protect Americans’ privacy, but The Post found nearly 900 additional e-mail addresses, unmasked in the files, that could be strongly linked to U.S. citizens or U.S.residents.

Going back to “your” file:

Taken together, the files offer an unprecedented vantage point on the changes wrought by Section 702 of the FISA amendments, which enabled the NSA to make freer use of methods that for 30 years had required probable cause and a warrant from a judge. One program, code-named PRISM, extracts content stored in user accounts at Yahoo, Microsoft, Facebook, Google and five other leading Internet companies. Another, known inside the NSA as Upstream, intercepts data on the move as it crosses the U.S. junctions of global voice and data networks.

It gets worse, because that bed-wetting habit you kicked in the 2nd grade? The NSA knows all about it.

Among the latter are medical records sent from one family member to another, résumés from job hunters and academic transcripts of schoolchildren. In one photo, a young girl in religious dress beams at a camera outside a mosque.

 

Scores of pictures show infants and toddlers in bathtubs, on swings, sprawled on their backs and kissed by their mothers. In some photos, men show off their physiques. In others, women model lingerie, leaning suggestively into a webcam or striking risque poses in shorts and bikini tops.

How many Americans may be tracked by the NSA at any one time? Turns out ther answer is lots:

The Obama administration declines to discuss the scale of incidental collection. The NSA, backed by Director of National Intelligence James R. Clapper Jr., has asserted that it is unable to make any estimate, even in classified form, of the number of Americans swept in. It is not obvious why the NSA could not offer at least a partial count, given that its analysts routinely pick out “U.S. persons” and mask their identities, in most cases, before distributing intelligence reports.

 

If Snowden’s sample is representative, the population under scrutiny in the PRISM and Upstream programs is far larger than the government has suggested. In a June 26 “transparency report,” the Office of the Director of National Intelligence disclosed that 89,138 people were targets of last year’s collection under FISA Section 702. At the 9-to-1 ratio of incidental collection in Snowden’s sample, the office’s figure would correspond to nearly 900,000 accounts, targeted or not, under surveillance.

And tangentially, for those who are urging the NSA to release Lois Lerner’s emails, all it would take are a few keystrokes:

“If I had wanted to pull a copy of a judge’s or a senator’s e-mail, all I had to do was enter that selector into XKEYSCORE,” one of the NSA’s main query systems, [Edward Snowden] said.

What the file would likely reveal is all the dirt the US intelligence apparatus had on said (Supreme Court) judge or senator, or IRS employee. After all, what better way to keep the system of “checks and balances” in check than to have dirt on all the key places of leverage.

The WaPo has released a sterilized example of what a “target package” looks like for any given individual.

All of the above would be stunning… if it wasn’t for a culture in which FaceBook has made the exhibitionist stripping of one’s privacy and disclosure of every last piece of “intimate” personal information a daily chore. It is in this world, sadly, where the most recent confirmation of just how expansive Big Brother is will merely be granted with a yawn by the vast majority of the population.

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

It should come as no surprise that when Gallup recently conducted a poll asking residents to rank if their state is the “worst possible to live in” a whopping 25% of its residents, by far the most of any states, responded Illinois. Which were the other “worst possible” states? The table below ranks them all.

 

How about the opposite: the best US states to live in? Here is the full list in descending order.

And some commentary from Gallup:

Residents of Western and Midwestern states are generally more positive about their states as places to live. With the exception of the New England states of New Hampshire and Vermont, all of the top 10 rated states are west of the Mississippi River. In addition to Montana and Alaska, Utah (70%), Wyoming (69%), and Colorado (65%) are among the 10 states that residents are most likely to say their state is among the best places to reside. Most of these states have relatively low populations, including Wyoming, Vermont, North Dakota, and Alaska — the four states with the smallest populations in the nation. Texas, the second most populated state, is the major exception to this population relationship. Although it is difficult to discern what the causal relationship is between terrain and climate and positive attitudes, many of the top 10 states are mountainous with cold winters. In fact, the two states most highly rated by their residents — Montana and Alaska — are among not only the nation’s coldest states but also both border Canada.

With the exception of New Mexico, all of the bottom 10 states are either east of the Mississippi River or border it (Louisiana and Missouri). New Jersey (28%), Maryland (29%), and Connecticut (31%) join Rhode Island among the bottom 10.

The results are based on a special 50-state Gallup poll conducted June-December 2013, including interviews with at least 600 residents in every state. For the first time, Gallup measured whether residents view their states as “the best possible state to live in,” “one of the best possible states to live in,” “as good a state as any to live in,” or “the worst possible state to live in.”

Few Americans say their states are the single best or worst places to live. Rather, the large majority of respondents say their states were either “one of the best” or “as good a state as any” place to live.

One in Four Illinois Residents Say Their State Is the Worst Place to Live

Illinois has the unfortunate distinction of being the state with the highest percentage of residents who say it is the worst possible place to live. One in four Illinois residents (25%) say the state is the worst place to live, followed by 17% each in Rhode Island and Connecticut.

Throughout its history, Illinois has been rocked by high-profile scandals, investigations, and resignations from Chicago to Springfield and elsewhere throughout the state. Such scandals may explain why Illinois residents have the least trust in their state government across all 50 states. Additionally, they are among the most resentful about the amount they pay in state taxes. These factors may contribute to an overall low morale for the state’s residents.

Texans Most Likely to View the Lone Star State as the Very Best

Although Texas trails Montana and Alaska in terms of its residents rating it as the best or one of the best places to live, it edges out Alaska (27%) and Hawaii (25%) in the percentage of residents who rate it as the single best place to live.

Texans’ pride for their state as the single best place to live is not surprising when viewed in the context of other measures. According to Gallup Daily tracking for 2013, Texans rank high on standard of living and trust in their state government, and they are less negative than others are about the state taxes they pay. The same is true for Alaska and, to a lesser extent, Hawaii, which had relatively average scores for trust in state government and state taxes, but ranked high for standard of living. The three also have distinct histories, geographies, natural resources, and environmental features that may contribute to residents’ personal enjoyment and pride in their locale.

Bottom Line

Residents with the most pride in their state as a place to live generally boast a greater standard of living, higher trust in state government, and less resentment toward the amount they pay in state taxes. However, the factors that residents use to determine whether their state is a great place to live are not always obvious. West Virginia, for example, falls far behind all other states on a variety of metrics, including economic confidence, well-being, standard of living, and stress levels. Still, over a third of West Virginians feel their state is among the best places to live, giving it a ranking near the middle of the pack.

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

There was a time when reports issued by short selling-focused research shops such as Muddy Waters would usually result in disparagement lawsuits by the targeted company (typically a  reverse-merged Chinese fraudcap), seeking to shut said short-sellers and restore confidence in the company (when the best way to restore said confidence would have been for the company to simply buy back its shares at severely depressed values).

However, the reputation of such bearish-biased research boutiques will only be boosted following the latest fiasco involving Spanish small-cap tech company Let’s Gowex (GOW), a Madrid-based provider of Wi-Fi connections and support services for mobile-phone carriers, which a week ago was the subject of a research report by Gotham City Research (whose work has deservedly appeared in the past on Zero Hedge) and its Twitter frontliner, @LongShortTrader.

In the report, Gotham predicted that “Gowex shares are worth €0.00 per share.” It added that over 90% of Gowex’s reported revenues do not exist noting that “we estimate GOW’s actual revenues to be <€10 million.”

Its conclusion: “the shares will be suspended, just as Pescanova’s shares were suspended.” Needless to say at the time Gowex vehemently denied the report saying all its allegations were false.

Gotham was right: after the stock crashed by nearly 50% in the days after the release of the report, on July 3 Gowex SA was suspended from trading, and overnight, the CEO admitted his company is a fraud.

As Bloomberg reports, Let’s Gowex will file for insolvency and said its chief executive officer resigned after admitting he presented false accounts for at least the past four years.

The board of the Madrid-based provider of Wi-Fi connections accepted CEO and founder Jenaro Garcia’s resignation after he took full responsibility for fake accounts, the company said in a regulatory statement today. Gowex shares have dropped 60 percent since July 1, when short-seller Gotham City Research LLC said the start-up was worthless, claiming the company inflated revenue.

Aside from humiliation for an entire sell-side following which ignored the clear warnings signs and pushed the stock to a market cap of some $2 billion before the Gotham report, this is also a hit to the Spanish stock market.

Gowex’s fast growth, with a market value that more than doubled between going public in 2010 and the release of Gotham’s report, was a rare success story in a country that has failed to foster successful technology start-ups with global reach. The company was also one of the best performers in Madrid’s small-cap MAB stock index, an alternative funding source for small companies in line with a government drive to promote financing options for businesses.

It isn’t going to be performing that well now that it is worth precisely the €0.00 Gotham predicted. Perhaps what is most shocking is how quickly the company folded and admitted it had been cooking the books – it is almost as if it didn’t even bother preserving some value while selling shares to idiot BTFDers.

That said, we are confident that the CEO will surely avoid prison time for defrauding investors and cooking the books for 5 years. After all he apologized: “I made a voluntary confession in court,” Garcia said on Twitter today – voluntary, that is, only after the jig was up. “I want to collaborate with justice. I will face the consequences.” The posting followed an earlier message in which he said he was apologizing “to everybody. I am truly sorry.”

Below is the full statement released by the company early this morning:

 The Board of Directors of the Company announces that on July 5 2014, at 16’00, at the Company’s offices, Mr. Jenaro García Martin, Chief Executive Officer and President of the Board, has declared in the presence of different Board Members that the financial accounts of the Company for the last four years, at least, do not show a full and fair view of the Company’s situation, taking responsibility for this falsity.

 

The Board, as stated in the minutes of the meeting, signed by the Board Members attending the session (Mrs. Solsona Piera, Martínez Marugán and García (attending the meeting both on his own behalf and representing the Board Member Ms. Maté),has revoked all powers and delegations granted to the Chief Executive Officer and has accepted his resignation.

 

The Board, anticipating that the Company might not be in a position to face its ongoing debts when they become due, has agreed to file for a declaration of voluntary insolvency, without prejudice of other measure that it may adopt for the best protection of the Company’s interests, regarding which it will immediately inform the market as soon as it might  adopt them.

 

The Board resolutions shall be notarized by exhibition of the minutes, as it has not been possible to certify their contents, since the Board has accepted the resignation of Mr. Garcia Martin and  has not appointed a new President.

 

We remain at your disposal for any clarification deemed appropriate.

This latest loss of confidence in a rigged market will likely mean that all other companies trading on Spain’s MAB stock index are about to be monkeyhammered:

It looks like an isolated case in the Spanish context, but I do think it is significant in the context of MAB — it’s a market that’s relatively new and has had some failures and the vigilance of the information about the companies has not always been adequate,” Jose Ramon Pin, a professor at the Barcelona-based IESE business school, said in a phone interview.

 

The MAB is a “market basically for SMEs and sort of company that quotes there tends to have more aggressive strategies,” he said.

 

Gowex is one of 23 stocks listed on the Madrid’s MAB index, which includes companies from toy retailer Imaginarium SA (IMG) to carbon fiber manufacturer Carbures Europe SA (CAR), whose stock is up 114 percent this year. Zinkia Entertainment SA (ZNK), which produces a cartoon television series, sought creditor protection last year.

Every bubble eventually bursts. As for Gotham and @longshorttrader congratulations on not only being contrarian and doing another tremendous piece of research, but, more importantly, being right. Curious what other names Gotham Street hates? Here is a sampling: Ebix Inc. (EBIX), The Tile Shop Holdings Inc. (TTS), Blucora Inc (BCOR), and Quindell Plc. (QPP)

Gotham’s full research report is below.

via Zero Hedge http://ift.tt/1vNDg3b Tyler Durden