Tag: news

A week ago we wrote how Pennsylvania is financing various state infrastructure projects by selling residency to Chinese “investors” for $500K each. As it turns out, the practice of pimping passports for Chinese capex is hardly new or just isolated to Pennsylvania and is, in fact, massively widespread throughout America’s insolvent states whose tax collections are far below budget and which are in desperate need of fresh funds to embezzle invest in random boondoggles.

Case in point, New York, where the Biggest real-estate project in a generation, the Hudson Yards, is now officially financed by 1200 Chinese families in search of visas allowing them to live (and park their stolen cash) in the US.

According to the WSJ, “Developer Related Cos. says it has raised roughly $600 million from the families to build the foundation for three skyscrapers at the West Side project, a 17-million-square-foot colossus of office, retail and residential space set to open over the next decade.

To finance the concrete-steel platform, Related tapped a little-known and at times controversial federal visa program known as EB-5, which offers green cards to foreign families who invest at least $500,000 in U.S. projects that create at least 10 jobs per investor.

 

The amount brought in so far, which privately held Related hasn’t previously disclosed, is a record for the cash-for-visa program.

 

Related’s success shows how the once-obscure federal program has grown in popularity among developers and foreign investors since the recession.

The great news is that, through another loophole in the immigration code, those oligarchs who stole a lot, if not more, and are now terrified to live in their native countries, can purchase a “get out of jail” card from Uncle Sam for a lofty price.

The bad news is that America, that paragon of moral virtue place where torture and droning are now a fixture of daily life, has given up all claims to the moral high ground as it will provide the vilest of offshore criminals with an unconditional amnesty if only they promise to build one or two high-rise buildings in some bloated, if insolvent, megapolis, assuring at least a few more union votes in the next election.

Not surprisingly, the companies most eager to take advantage of the EB-5 program are US homebuilders, desperate to find any demand, but certainly demand for expensive projects. All the better, if the proceeds ultimately trickle down to the bottom line.

In San Francisco, home builder Lennar Corp. has raised about $200 million through the program for San Francisco projects that include more than 12,000 housing units on a former naval shipyard. Developer Forest City Ratner Cos. has taken in more than $475 million for the real-estate project connected to Brooklyn’s Barclays Center. In lower Manhattan, World Trade Center developer Larry Silverstein is trying to raise about $250 million for a 937-foot Four Seasons hotel and condominium going up.

In all, 10,928 foreign investors applied to invest through the program in the fiscal year ended Sept. 30, up from 6,346 a year earlier and 486 in 2006, according to U.S. Citizenship and Immigration Services, the program’s administrator. Most projects have been real-estate developments.

To be sure, the EB-5 program is nothing new: Congress created it in 1990 to spur job creation through foreign investment. It was used infrequently for years. However, it was not until 2009 when administrators clarified a rule to allow temporary construction jobs to be counted toward the 10-job-per-investor requirement, sparking more activity.

And while the immediate trade off for the $500K investment is a temporary visa, if the project is found to have produced the pledged 10 jobs per investor, the investors and their immediate families become eligible for green cards. Also known as asylum. Also known as a new superclass of uber-wealthy individuals who stole so much in their native country, they can no longer safely live there and instead come to the US to inflate the prices of comparable housing. Not that most Americans can afford to compete for a duplex apartment at 15 CPW that is, but it sure builds resentment among the New York hedge fund class, who not only can’t outperform the market for 6 years in a row, but now have to look up to their new Chinese overlords. Or at least landlords.

The growing popularity has made for lengthy processing times for investors and developers. But Related successfully urged the federal government to declare the development a project of such national importance that it deserved expedited approval.

 

Raising the money through traditional means would have been difficult because of the yearslong gap between when the platform over the 13-acre train yard is started and when the buildings are completed and income starts rolling in, said Related Chief Executive Jeff Blau.

 

“It was a very critical part of the puzzle,” said Mr. Blau, who expects to rake in hundreds of millions of dollars more from Chinese and other foreign investors as the project progresses.

Also not surprising, Chinese nationals are the biggest source of EB-5 funds, making up more than 85% of visas approved in the 12 months ended in September. Many are investing for their children rather than for themselves, said Kenneth Li, a Houston real-estate broker who has offered advice to Chinese investing in EB-5 projects. But really, they are investing for themselves: as the current Chinese politburo has shown, the allegiances of the president can turn on a dime, and today’s oligarch may well be tomorrow’s inmate. So it is best to have a cozy little 12,000 triplex in midtown Manhattan handy just in case the People’s Liberation Army comes knocking one day.

Another tangent: the EB-5 program caps the number of visas allowed per year at 10,000; within that total, the number from individual countries is also capped, however as noted above, China is by and far the biggest (ab)user of the “cash for citizenship” swap. What is unclear is just how many Chinese billionaires will end up US citizens in the coming years before every single Chinese oligarch who wants to buy a US passport is provided one.

Then again, one may wonder: is it really bad news? “Developers are embracing the program largely because it provides low-cost capital. Money borrowed through the EB-5 program carries much lower interest rates, sometimes half of what companies typically pay, executives said. That is because investors are primarily seeking green cards, not a profit, and generally are willing to accept low returns, EB-5 advisers said.”

And since we live in a time and place where capital misallocation is the only game in town, and where central banks will blow a few trillion without batting an eyelid on the most idiotic uses of funds (mostly on making trillionaires out of billionaires), is it really that bad if a few Chinese criminals-cum-billionaires are allowed to park their wealth, and ass, in the US? Following Obama’s recent 5 million strong amnesty of illegal immigrants, it’s not as if US immigration policy makes much sense anyway.

via Zero Hedge http://ift.tt/1vRT6hy Tyler Durden

For the first time in almost 3 years, the ‘market’ is fighting the PBOC in the FX markets. The last month has seen USDCNY rise almost 9 handles to as high as 6.21 (the weakest CNY in 5 months). At the same time, the PBOC’s official ‘fix’ of CNY has been strengthened to below 6.12 (the strongest CNY in 9-months) diverging by the most in six months from the market. “The market is staying cautious and even bearish on the China macro outlook,” notes Morgan Stanley, but as HSBC explains, “China doesn’t want to join the currency wars [and wants to stall any speculation on trend] and that explains the fix movement.” Simply put, markets doubt the PBOC and believe it will eventually be dragged into the currency war or just fundamentally deteriorate enough to warrant capital flight.

 

The lower pane shows the divergence between the CNY weakness in the market rate and strength in the Fix…

 

As WSJ reports,

A battle in China’s currency markets has emerged in recent days with traders pushing the yuan weaker while the central bank has been attempting to guide the tightly-controlled foreign-exchange rate stronger.

 

That tension was on show Wednesday when the yuan opened 1.1% weaker from where the central bank fixed the morning reference rate, the biggest drop since June.

 

The slide of the currency accelerated in December after the central bank cut interest rates in November, leaving it 2% weaker for the year so far and on track for its first annual loss since 2009.

 

Investors have been focusing on an almost daily deluge of weak data out of China with reports this week showing inflation softened to a five-year low in November while the country’s exports fell well below expectations in the same period. A broadly stronger dollar on the back of a recovering U.S. economy has also hurt sentiment on the yuan.

 

The volatility picked up this week after Beijing curbed risky lending in the bond markets, sparking heavy declines in the stock and bond markets Tuesday and a record two-day tumble in the yuan.

 

But China’s central bank has been fighting the market, setting the yuan’s reference exchange rate, or “fix,” stronger against the dollar. The currency’s daily trading is limited to a 2% band above or below this “central parity” rate.

 

Analysts say Beijing is eager to prevent one-way speculation on the currency and squeeze out those betting on the currency to decline further.

 

“China doesn’t want to join the currency wars and that explains the fix movement,” said Ju Wang, a currency strategist at HSBC in Hong Kong, referring to some country’s efforts to push their currencies lower to stay competitive against one another. “But markets see it as China will eventually be dragged into the currency war or just fundamentally, growth and exports will weaken so much that will trigger the markets demand for the U.S. dollar.”

 

With a broadly stronger U.S. dollar since July this year and diverging monetary policies between the U.S. Federal Reserve and the central banks of Japan and Europe, currencies across the board have suffered significant losses, especially the Japanese yen, creating competitive challenges for many economies.

 

Analysts also point to China’s balance of payments data that in recent quarters has shown falling trade financing and short-term loans as possible evidence of outflows of speculative money, also pressuring the currency weaker.

 

Plus, as the difference in interest rates between the U.S. and China narrows and the returns on a higher-yielding currency fall, the yuan is expected to adjust to a weaker level.

 

“The market is staying cautious and even bearish on the China macro outlook,” analysts from Morgan Stanley wrote in a note. The currency market “is the most liquid market to express such a concern.”

 

To add to the pressure, the Bank of International Settlements in a report released Sunday noted China had become the largest emerging market borrower, with outstanding cross-border claims on China totaling $1.1 trillion at the end of June this year.

 

“Concern at growing debt levels in China are only compounded by the BIS data. Combine that with fears over the slowing of activity and investor caution toward Chinese assets and the [yuan] has its validation,” Patrick Bennett, currency strategist at CIBC World Markets wrote in note.

*  *  *

We suspect this will end badly as the pBOC changes some rules ad hoc and squeezes the trend chasers…

via Zero Hedge http://ift.tt/1Aic93w Tyler Durden

While on the one hand, Iceland's decision to inch towards lifting its capital controls is a positive step, it appears what they give with one hand they are taking with another. Just as we predicted three years ago, the muddle-through has failed and there are only hard choices left and sure enough BCG's envisioned 'wealth tax' appears to be rearing its ugly head once more. As Morgunbladid reports, Iceland plans to impose an exit tax as part of removing capital controls, anticipating all bank assets will be subject to the levy, regardless of whether assets are held in local (ISK) or foreign exchange.

 

As Bloomberg reports,

Iceland’s plan to impose an exit tax as part of removing capital controls anticipates all bank assets will be subject to levy, regardless of whether assets are held in ISK or FX, Morgunbladid reports without saying how it obtained the information.

 

Part of program may also include forcing foreign holders of ISK assets to swap ISK at discount to a 30-yr FX bond; bond to carry interest rate less than 3%: Morgunbladid

 

NOTE: Iceland task force on capital controls’ removal met yesterday with representatives of Kaupthing Bank hf, Glitnir Bank hf and LBI hf. The country may proceed with lifting controls early next year, according to task force member Lee C. Buchheit

As we concluded previously,

…between household, corporate and government debt, the developed world has $20 trillion in debt over and above the  sustainable threshold by the definition of "stable" debt to GDP of 180%.

 

The facts according to which all attempts to eliminate the excess debt have failed, and for now even the Fed's relentless pursuit of inflating our way out this insurmountable debt load have been for nothing.

 

The facts which state that the only way to resolve the massive debt load is through a global coordinated debt restructuring (which would, among other things, push all global banks into bankruptcy) which, when all is said and done, will have to be funded by the world's financial asset holders: the middle-and upper-class, which, if BCS is right, have a ~30% one-time tax on all their assets to look forward to as the great mean reversion finally arrives and the world is set back on a viable path.

*  *  *

Slowly but surely it is being enacted…

via Zero Hedge http://ift.tt/1uolu6h Tyler Durden

By: Chris at http://ift.tt/12YmHT5

I cracked a rib a week ago. Don’t ask. Every time I breathe deeply, turn my body or laugh I am reminded that a tiny portion of my body, namely my damned rib, is involved in the process.

It got me to thinking how much our present crop of bureaucrats are like my busted rib. Everywhere you turn they’re there to inflict pain and remind you that life can indeed be painful.

After the ’08 crisis the government and regulators swooped in and decided it was time to have a crackdown. The government is always having a crackdown on something, terrorists in sandals, oven mitts and marigolds, or some other absurdity. Never, ever do they accomplish what they profess. They’d be better off cracking down on talking dogs, or cloudy days.

After ’08 the regulators pretended to go after the banks, and we pretended to believe them. That’s how it works. Behind the scenes however the little guy trying to deposit a few thousand bucks into a bank now has to jump through hoops that defy common sense, and now foreign banks simply won’t take US citizens. Why would they?

Investors participating in private deals have to jump through hoops and entrepreneurs raising capital have to be super careful about who they talk to – lest they not be accredited.

Over the last few months our private group, Seraph, led the Series A on a private company based in the US. Because the deal was a US deal we used a Delaware LLC structure as an SPV. 130 pages later, tens of thousands of dollars in costs and investors could participate. What on earth the Patriot Act, which took up about 30 pages on its own, has to do with my investing my own money into a private company, I have no idea. We’ve done deals from Mongolia to Iraq, to New Zealand and many more so we have some metrics to compare.

In New Zealand, where there is zero capital gains tax or dividend tax, we can set up and run an SPV with a 3 page document where all shareholders are registered and 100% transparent online and it can be done for less than a nice dinner in New York.

KYC has never been a problem but increasingly is becoming a problem for US citizens. The onus is no longer just on US citizens to report but now on anybody that said citizens land up transacting with. Thanks FATCA!

Compliance has become so onerous that brokers and custodians are refusing to take stock in private placements. The compliance costs are simply too high for them to make it worth their time.

What happens when brokers won’t register the stock? Investors find it too time consuming and painful, and when that happens they simply don’t invest capital, and when that happens pray tell how small and medium sized business which has always been the lifeblood of every healthy economy fund growth?

Governments hold a near monopoly in absurdity but what I wanted to discuss today is what they’re doing in the hedge fund world and how the regulatory overreach will be ensuring monopolies are created as smaller funds are eliminated.

The reason I discuss this topic is because I’ve spent the last few months doing extensive due diligence on different corporate structures and the compliance issues associated with them. It’s been a truly enlightening experience and I’d like to share some of my findings with you today.

It started with a conversation I had with a gentleman running a multi-billion dollar hedge fund. He explained to me in detail why his firm is scrapping the hedge fund model and moving to a simpler less onerous business model – a private limited holding company which will be domiciled in Hong Kong.

This was followed by dozens of conversations with fund managers, service firms, lawyers, accountants – all from multiple jurisdictions. What I learned was that the majority of hedge fund managers were either ignorant of a good many of the obligations they had and were therefore operating “illegally” especially with respect to capital raising activities.

Another group knew of various regulations but in their own words told me that if they had to abide by them they’d go out of business. The cost of compliance would mean them closing their doors. The only way for these guys to survive is to get substantial assets under management (AUM) in order for the 2% of fees charged to be able to cover all the additional expense.

Another good friend who runs a fund here in SE Asia commented to me that if he was going to do it all again there is absolutely NO WAY he would setup as a hedge fund: “I can’t keep up with all the laws and requirements, its impossible to remain compliant if you’re a small shop.”

It also matters less and less where the hedgies domicile. A Cayman fund, for example, cannot openly solicit European investors unless it pays a fee and becomes registered to do so in the European Union. Ditto the US.

To give you a sampling of some of this lunacy. New IRS laws designate a hedge fund a PFIC or “Private Investment Company” should the fund have not transacted for a period of time, which is worded in such a fashion that this period of time is discretionary upon the IRS.

The implications are severe due to the way the IRS treats PFIC’s. To provide some colour let us for a moment consider we’re running a hedge fund and let us further consider that the market looks particularly frothy and we want to go to cash and sit it out for a few months. Bam! Capture!

Inactivity will automatically designate us a PFIC. No forms need to be filled in, no minutes of any meeting documented, nada. We’re now in a new regime. Brilliant. Furthermore we can’t get from PFIC status back. Nope, we’ll have to liquidate our entire asset base, paying the full, much higher tax rate designated to PFIC’s and then go set up a new fund because – hey, that was so much fun.

Hedge fund managers with their mind in neutral are in for a nasty shock as the clamp down on funds not operating based on existing regulations and requirements heats up. As Western governments head into 2015 with un-payable and increasingly unserviceable debt levels they’ll be looking for every last penny they can find. To understand how bad those debt levels are, I strongly suggest downloading our free debt report here. It’ll blow your mind.

Internally we ran some numbers on successfully running a hedge fund and honestly I can’t say it makes much sense to do so for under $50 million dollars which is really the absolute bare minimum to make it work economically. Below that all your compliance and regulatory costs will be costing you a disproportionate amount of AUM. It’s simple enough math. I actually don’t think it makes much sense unless you can hit $250M and then if you can why would you bother?

Sure a fund structure can be more attractive to investors due to a perception, rightly or wrongly of greater transparency but the cost of accessing that capital is rising sharply. For the successful funds out there they are typically turning away capital so why on earth would they bother having all the pain? I don’t invest in funds but if I did I would be questioning a fund manager who can simply by changing his corporate structure immediately boost returns to shareholders.

Let’s take a look at some numbers.

We can see that smaller funds spend far more on compliance as a percentage of AUM than their larger competitors, and further that North American fund managers are spending 4X more than their Asian counterparts and 2X more than their European friends.

In a report published by KPMG an extensive survey was done and it was found that 52% of European fund managers said they had considered moving their fund domicile and management company to other jurisdictions as a result of regulatory changes. Furthermore 50% of fund managers with assets of $5 billion and up said they had considered exiting markets or lines of business as a result of regulatory pressure.

What is happening is that there is going to be a coming wave of hedge funds which will be incorporating as companies. Limited liability companies, partnerships, anything but the heavily regulated hedge funds.

Regulatory and compliance requirements have exploded since the GFC resulting in costs associated rising sharply. This has had the effect of barriers being created for smaller operators and in order for hedge funds to survive assets under management (AUM) have to be substantially larger to offset the increased costs.

This is a trend whereby we will be seeing less hedge funds entering the market and at the same time the large funds will likely merge and buy up smaller funds in order to produce better economies of scale due to these rising costs as margins are compressed. At the same time, as one very smart hedge fund manager who is in the $1B plus range said to me: “Why bother, just use a holding company.”

Someone is going to make a bunch of money servicing hedge funds who will be restructuring their entities as the compliance hammer comes down…

– Chris

 

“The only thing that saves us from the bureaucracy is its inefficiency.” – Eugene McCarthy

via Zero Hedge http://ift.tt/1wizCkG Capitalist Exploits

Submitted by John Whitehead via The Rutherford Institute,

“The truth is that the State is a conspiracy designed not only to exploit, but above all to corrupt its citizens.”—Leo Tolstoy

My 7-year-old granddaughter has suddenly developed a keen interest in card games: Go Fish, Crazy Eights, Old Maid, Blackjack, and War. We’ve fallen into a set pattern now: every time we play, she deals the cards, and I pretend not to see her stacking the deck in her favor. And of course, I always lose.

I don’t mind losing to my granddaughter at Old Maid, knowing full well the game is rigged. For now, it’s fun and games, and she’s winning. Where the rub comes in is in knowing that someday she’ll be old enough to realize that being a citizen in the American police state is much like playing against a stacked deck: you’re always going to lose.

The game is rigged, and “we the people” keep getting dealt the same losing hand. Even so, we stay in the game, against all odds, trusting that our luck will change.

The problem, of course, is that luck will not save us. The people dealing the cards—the politicians, the corporations, the judges, the prosecutors, the police, the bureaucrats, the military, the media, etc.—have only one prevailing concern, and that is to maintain their power and control over the country and us.

It really doesn’t matter what you call them—the 1%, the elite, the controllers, the masterminds, the shadow government, the police state, the surveillance state, the military industrial complex—so long as you understand that while they are dealing the cards, the deck will always be stacked in their favor.

Incredibly, no matter how many times we see this played out, Americans continue to naively buy into the idea that it’s our politics that divide us as a nation. As if there were really a difference between the Democrats and Republicans. As if the policies of George W. Bush were any different from those of Barack Obama. As if we weren’t a nation of sheep being fattened for the kill by a ravenous government of wolves.

We’re in trouble, folks, and changing the dealer won’t save us: it’s time to get out of the game.

We have relinquished control of our government to overlords who care nothing for our rights, our dignity or our humanity, and now we’re saddled with an authoritarian regime that is deaf to our cries, dumb to our troubles, blind to our needs, and accountable to no one.

Even revelations of wrongdoing amount to little in the way of changes for the better.

For instance, after six years of investigation, 6,000 written pages and $40 million to write a report that will not be released to the public in its entirety, the U.S. Senate has finally concluded that the CIA lied about its torture tactics, failed to acquire any life-saving intelligence, and was more brutal and extensive than previously admitted. This is no revelation. It’s a costly sleight of hand intended to distract us from the fact that nothing has changed. We’re still a military empire waging endless wars against shadowy enemies, all the while fattening the wallets of the defense contractors for whom war is money.

 

Same goes for the government’s surveillance programs. More than a year after Edward Snowden’s revelations dominated news headlines, the government’s domestic surveillance programs are just as invasive as ever. In fact, while the nation was distracted by the hubbub over the long-awaited release of the Senate’s CIA torture, the Foreign Intelligence Surveillance Court quietly reauthorized the National Security Agency’s surveillance of phone records. This was in response to the Obama administration’s request to keep the program alive.

 

Police misconduct and brutality have been dominating the news headlines for months now, but don’t expect any change for the better. In fact, with Obama’s blessing, police departments continue to make themselves battle ready with weapons and gear created for the military. Police shootings of unarmed citizens continue with alarming regularity. And grand juries, little more than puppets controlled by state prosecutors, continue to legitimize the police state by absolving police of any wrongdoing.

 

These grand juries embody everything that’s wrong with America today. In an age of secret meetings, secret surveillance, secret laws, secret tribunals and secret courts, the grand jury—which meets secretly, hears secret testimony, and is exposed to only what a prosecutor deems appropriate—has become yet another bureaucratic appendage to a government utterly lacking in transparency, accountability and adherence to the rule of law.

It’s a sorry lesson in how a well-intentioned law or program can be perverted, corrupted and used to advance illegitimate purposes. The war on terror, the war on drugs, asset forfeiture schemes, road safety schemes, school zero tolerance policies, eminent domain, private prisons: all of these programs started out as legitimate responses to pressing concerns. However, once you add money and power into the mix, even the most benevolent plans can be put to malevolent purposes.

In this way, the war on terror has become a convenient ruse to justify surveillance of all Americans, to create a suspect society, to expand the military empire, and to allow the president to expand the powers of the Executive Branch to imperial heights.

 

Under cover of the war on drugs, the nation’s police forces have been transformed into extensions of the military, with SWAT team raids carried out on unsuspecting homeowners for the slightest charge, and police officers given carte blanche authority to shoot first and ask questions later.

 

Asset forfeiture schemes, engineered as a way to strip organized crime syndicates of their ill-gotten wealth, have, in the hands of law enforcement agencies, become corrupt systems aimed at fleecing the citizenry while padding the pockets of the police.

 

Eminent domain, intended by the founders as a means to build roads and hospitals for the benefit of the general public, has become a handy loophole by which local governments can evict homeowners to make way for costly developments and shopping centers.

 

Private prisons, touted as an economically savvy solution to cash-strapped states with overcrowded prisons have turned into profit- and quota-driven detention centers that jail Americans guilty of little more than living off the grid, growing vegetable gardens in the front yards, or holding Bible studies in their back yards.

 

Traffic safety schemes such as automated red light and speed cameras, ostensibly aimed at making the nation’s roads safer, have been shown to be thinly disguised road taxes, levying hefty fines on drivers, most of whom would never have been pulled over, let alone ticketed, by an actual police officer.

 

School zero tolerance policies, a response to a handful of school shootings, have become exercises in folly, turning the schools into quasi-prisons, complete with armed police, metal detectors and lockdowns. The horror stories abound of 4- and 6-year-olds being handcuffed, shackled and dragged, kicking and screaming, to police headquarters for daring to act like children while at school.

 

As for grand juries, which were intended to serve as a check on the powers of the police and prosecutors, they have gone from being the citizen’s shield against injustice to a weapon in the hands of government agents. A far cry from a people’s court, today’s grand jury system is so blatantly rigged in favor of the government as to be laughable. Unless, that is, you happen to be one of the growing numbers of Americans betrayed and/or victimized by their own government, in which case, you’ll find nothing amusing about the way in which grand juries are used to terrorize the populace all the while covering up police misconduct.

Unfortunately, as I make clear in my book A Government of Wolves: The Emerging American Police State, we’re long past the point of simple fixes. The system has grown too large, too corrupt, and too unaccountable. If there’s to be any hope for tomorrow, it has to start at the local level, where Americans still have a chance to make their voices heard. Stop buying into the schemes of the elite, stop being distracted by their sleight-of-hands, stop being manipulated into believing that an election will change anything, and stop playing a rigged game where you’ll always be the loser.

It’s time to change the rules of the game. For that matter, it’s time to change the game.

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

Those Who Can’t Be Nailed

CBS NEWS–After a review of the Senate Intelligence Committee’s full report, the Justice Department is not expected to initiate any criminal charges against any CIA officers who participated in or authorized the Retention, Detention and Interrogation (RDI) program.

This means the Justice Department is standing by its earlier decision not to pursue criminal charges.

Its investigators also reviewed the Committee’s full report and did not find any new information that they had not previously considered in reaching their determination.

The admissible evidence, the Justice Department concluded would not be sufficient to obtain and sustain convictions beyond a reasonable doubt.

He Who Can: If You Can’t Nail Him For What You Don’t Like, Nail Him For Something Else 

HUFFINGTON POST–The Justice Department is unlikely to prosecute anyone connected to the brutal torture techniques outlined in a Senate report released on Tuesday, but the one man already sitting in jail in connection with the CIA’s interrogation program tried to draw public attention to it.

In an interview with ABC News in 2007, former CIA agent John Kiriakou was one of the first to acknowledge the existence of the CIA’s torture program. Federal authorities brought criminal charges against him in 2008 for revealing the name of a covert agent to a reporter.

Kiriakou pleaded guilty to those charges in 2012 and is currently serving a 30-month federal prison sentence.

“I believe I was prosecuted not for what I did but for who I am: a CIA officer who said torture was wrong and ineffective and went against the grain,” Kiriakou said last year.

Justice Served

BLOOMBERG VIEW–In short, then, the [DOJ’s Torture Memos] worked: The Department of Justice gave the CIA a free pass to torture without being punished. The legal analysis may have been wrong or morally monstrous, and the CIA appears to have lied to the Department of Justice. But even discounting the political factors that make it unlikely a president would prosecute the CIA, the legal ground for proceeding would be very rocky.

Serious crimes were committed. They’re going to go unpunished.

WB7

Is this farcical outcome surprising to anyone?

Can we expect this outcome to deter acts of government sanctioned torture in the future? 

Well, I suppose we can now hold our breath waiting for those morally solvent Europeans, Poland for example, to carry the ball of justice…

 

 

.

 

.

via Zero Hedge http://ift.tt/1DdwSv8 williambanzai7

Underneath the Propaganda, the Economy Is In BAD SHAPE …

We noted in 2013 that the British economy is worse than during the Great Depression.

The Washington Post's Wonkblog pointed out in August that Europe is stuck in a "Greater Depression" … worse than the Great Depression.

Well-known economist Brad DeLong agrees. As does Paul Krugman.

Historian, economist and demographer Neil Howe provided the following charts via Forbes last month, showing how dire the situation is in Europe:

The chart for the U.S. doesn't look as bad …

But as Howe notes:

These figures don’t mean that the Depression was definitely worse. Though it was deeper, it … likely will be shorter than the Great Reces­sion in the United States. The recovery in the ‘30s occurred much faster than it has in recent years.

 

***

 

What’s more, from 1933 on, U.S. GDP grew at a blistering average rate of over 8% per year for the next eight years. And that includes one recession year: 1938. By 1941, 12 years after the Great Depression began, U.S. GDP was 41% higher than its pre-downturn figure. This is almost certainly a much higher level, relative to 1929, than the United States will see by 2019, relative to 2007.

Indeed, Pulitzer prize-winning economic reporter David Cay Johnston showed last year that Americans bounced back faster after the Great Depression than the "Great Recession".

As we pointed out in 2012, the much-hyped "recovery" may be a myth:

What Do Economic Indicators Say?

We've repeatedly pointed out that there are many indicators which show that the last 5 years have been worse than the Great Depression of the 1930s, including:

• The housing slump

• The bank charge off rate

• The collapse in world trade

• The withdrawal of short-term credit

• The level of inequality between rich and poor (too much inequality destroys economies)

• The interconnectedness of financial systems and economies worldwide (interconnectedness leads to financial instability)

• Runaway spending and greed

Mark McHugh reports:

Velocity of money is the frequency with which a unit of money is spent on new goods and services. It is a far better indicator of economic activity than GDP, consumer prices, the stock market, or sales of men’s underwear (which Greenspan was fond of ogling). In a healthy economy, the same dollar is collected as payment and subsequently spent many times over. In a depression, the velocity of money goes catatonic. Velocity of money is calculated by simply dividing GDP by a given money supply. This VoM chart using monetary base should end any discussion of what ”this” is and whether or not anybody should be using the word “recovery” with a straight face:

In just four short years, our “enlightened” policy-makers have slowed money velocity to depths never seen in the Great Depression.

 

[It's gotten much worse since then.]

(As we've previously explained, the Fed has intentionally squashed money multipliers and money velocity as a way to battle inflation. And see this)

 

Indeed, the number of Americans relying on government assistance to obtain basic food may be higher now that during the Great Depression. The only reason we don't see "soup lines" like we did in the 30s is because of the massive food stamp program.

 

And while apologists for government and bank policy point to unemployment as being better than during the 1930s, even that claim is debatable.

What Do Economists Say?

Indeed, many economists agree that this could be worse than the Great Depression, including:

• Fed Chairman Ben Bernanke

• Former Fed Chairman Alan Greenspan (and see this and this)

• Former Fed Chairman Paul Volcker

• Economics scholar and former Federal Reserve Governor Frederic Mishkin

• The head of the Bank of England Mervyn King (and see this)

• Nobel prize winning economist Joseph Stiglitz

• Nobel prize winning economist Paul Krugman

• Former Goldman Sachs chairman John Whitehead

• Economics professors Barry Eichengreen and and Kevin H. O’Rourke (updated here)

• Investment advisor, risk expert and “Black Swan” author Nassim Nicholas Taleb

• Well-known PhD economist Marc Faber

• Morgan Stanley’s UK equity strategist Graham Secker

• Former chief credit officer at Fannie Mae Edward J. Pinto

• Billionaire investor George Soros

• Senior British minister Ed Balls

Bad Policy Has Us Stuck

We are stuck in a depression because the government has done all of the wrong things, and has failed to address the core problems.

 

For example:

• An economics professor says we’ll have “a never-ending depression unless we repudiate the debt, which never should have been extended in the first place”

• Fraud was one of the main causes of the Depression, but nothing has been done to rein in fraud today. Indeed, the only action the government is taking is to help cover up fraud

• All leading independent economists have said that the economy cannot recover until the big, insolvent banks are broken up, but the government has just helped them to get bigger

• Excessive leverage helped cause the Great Depression and the current crisis, but the government has encouraged more leverage

• The Federal Reserve caused the Great Depression and the current crisis, and has done nothing but help the fatcats at the expense of the little guy. And yet the government has given the Fed more power than ever.

• Government policies send manufacturing jobs and dollars abroad

• The government is doing everything else wrong. See this and this

Quantitative easing won't help … it will only make things worse.

 

This isn’t an issue of left versus right … it’s corruption and bad policies which help the super-elite but are causing a depression for the vast majority of the American people.

 

The government and the banks are doing all of the wrong things. See this and this.

And Europe is doing all of the wrong things, as well:

If a patient is bleeding out, doctors have to suture the wounds before they decide whether to give more blood or to taper off the amount of transfusions.

 

But Europe has never treated the wounds …  As we noted in 2011, failing to prosecute financial fraud – on either side of the Atlantic – is extending the economic crisis.

 

In 2012, we pointed out that European (and American) governments were encouraging bank manipulation and fraud to cover up insolvency … trying to put lipstick on a pig.

Indeed:

• Fraud was one of the main causes of the Great Depression, but nothing has   been done to rein in fraud today.  Iceland is the only European country that did it right

• Quantitative easing hurts the economy. Even the Bank of England and the creators of QE admit that it is “pushing on a string“.  But the UK did tons of QE instead of actually fixing the economy

• An economics professor says we’ll have “a never-ending depression unless we repudiate the debt, which never should have been extended in the first place”

• Europe’s sanctions against Russia are backfiring, wounding Europe’s already-struggling economy more than Russia’s

• Authoritarian actions by the government interfere with the free market, and thus harm prosperity.   Personal freedom and liberty – and freedom from the arbitrary exercise of government power – are strongly correlated with a healthy economy.  A strong rule of law is the main determinant of GDP growth. Trust is essential for a healthy economy.   But the EU has usurped the sovereign power of European countries … and many commentators believe that Europeans are losing freedom, liberty and the rule of law

Heck of a job, guys …

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

In July 2008, crude oil prices peaked and began to fall quickly. After 2 months they had dropped 30%, but being the smartest extrapolators in the room, producers piled on the rig count driving it higher and higher until around 5 months after oil prices peaked… the rig count completely collapsed. Today, it has now been almost 6 months since oil peaked and began its accelerating free-fall and rig counts have just started to drop (still 2% above the June peak oil levels)…  

 

There is always a lag… and with permits down 40%, let’s just see if it’s different this time…

 

Of course, it’s different this time… it’s way worse! All these rigs are backed by massive debt loads at drastically lower costs of funding than is possible now… but we should ignore that, right?

 

Charts: Bloomberg

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