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01 Oct 16:55

Lew Warns D(ebt-Ceiling)-Day Is Oct 17 (Full Letter)

by Tyler Durden

In a new letter to Congress, the political rhetoric is on the rise as Treasury Secretary Lew warns:


Adding that results could be catastrophic if the US government is unable to pay its bills, he warned that any attempt to priotize payments would "Default by another name."



20 Sep 01:21

About Last Week's "Busted" Treasury Auction

by Tyler Durden

When people think failed or busted Treasury bond auction, they usually imagine something out of Brazil or Russia where the government was selling obligations and nobody showed up. Of course, in the US, courtesy of the Primary Dealer system and more importantly, of a multi-trillion shadow banking system, where bonds are cash equivalent following rehypothecation and pledging for cash-equivalents with virtually no haircut, there is no risk of an auction failing in the conventional sense, at least not until Bernanke finally manages to irrevocably erode the Dollar's reserve currency status. However, that does not mean that auction's can't "fail" in a purely technical sense. Which is exactly what happened during last week's sale of 3 month Bills, when due to a "glitch" in the system not only was a key Primary Dealer locked out of the auction, forcing the US Treasury to arbitrarily reassign allotment in the parallel 6 month auction, but leading to a wild intraday mispricing in the already collateral-scarce, short term maturity market.

The dealer in question is Wall Street's biggest pure-play hedge fund (excluding JPM's CIO office, and the Federal Reserve of course) Goldman Sachs, whose order at the September 9 3-Month bill auction did not come through, making it seem that there was far less demand for the paper, and resulting in a brief spike in the yield of 3 Month bills, which priced at a 0.02% yield, or about 50% higher than the 0.013% yield for the complex before the auction.

The Treasury, meanwhile, scrambling to remedy the situation, had no choice but to boost allocation to Goldman in the concurrent 6 Month Bill auction. As WSJ reports, "The Treasury made the decision to give Goldman more six-month T-bills than it had bid for in the two-minute span between the auction ending and the results being disseminated to the market. In making this decision, the Treasury chose to break one of its own rules for its debt auctions. The Treasury limits the amount of debt any one buyer can obtain in an auction to 35 %.... [as a result] the six-month bill auction appeared to have more demand and the bills sold at a lower rate than expected, at 0.035%. That is a tumble from comparable bills yielding 0.048% before the auction. Six-month bill yields fell to as low as 0.02% after the results were released. "

Sadly, the Treasury has no problem with allowing the Fed to monetize up to 70% of any one CUSIP, albeit it happens in the secondary market from the same Primary Dealers who buy paper outright. So it is not technically "monetization."

This is the announcement that the Treasury posted on the day after the auction:

During yesterday's auctions of 3- and 6-month Treasury bills, the Bureau of the Public Debt (BPD) discovered a technical issue within the TAAPS system, a web-based portal for bidders to participate in Treasury auctions, which resulted in one bidder being unable to access the 3-month auction. Our manual attempts to address the issue ultimately resulted in the bidder being awarded a larger sum of 6-month bills than originally intended, in excess of the '35 percent rule' for competitive bidders in Treasury auctions. In this instance, we have determined that it is in the best interest of market participants to waive the 35 percent limitation and for yesterday's auctions to stand. Today's scheduled auctions occurred without issue and BPD continues to test its systems to maintain the smooth functioning of Treasury auctions.

The WSJ correctly observes that the, "incident rattled the short-term debt market at a time when investors in U.S. government debt are adjusting their portfolios amid concern about the path of interest rates."

Luckily this time it was just a Bill auction, which is not as closely scrutinized by the broader public, although the vast majority of money-markets, banks and corporations are very active participants in the cash-equivalent space. However, what if the TAAPS system encountered a "Taps" moment, and shut off not just Goldman but the majority of Primary Dealers (we hope the Syrian Electronic Army isn't getting any ideas here), in a much more important benchmark security, say the 10 Year? How would the already jittery market react if instead of pricing just around the When Issued, the 10 Year were to price some 50% higher for some unknown reason?

One can only imagine the cross asset cataclysm that would ensue as the panic gripped the kneejerky, HFT-dominated bond markets, who, unclear what had just happened, decided to follow suit and dump it all...

29 Aug 22:47

Fast-Food Workers Of The World, Unite: The McStrike Epidemic Spreads, Coming To A City Near You

by Tyler Durden

A month ago we reported that US fast food workers in several US cities, namely New York City, Chicago, St. Louis, Detroit, Milwaukee, Kansas City, Mo., and Flint, Mich., walked out Monday in a one-day strike demanding a doubling of their pay. Not unexpectedly, even though the president himself has been a strong proponent of rising the minimum wage, the corporations balked and the strikers achieved nothing and just in case there is some confusion, there is a lot of minimum skills, minimum wage applicants (not to mention robots) out there which translates into two words for the strikers: no leverage. However, these concepts may be foreign to a fast-food labor force that probably just wants a day out in the nice weather and to take a break from hard work for a change.

Some more on what would be keeping up Marx at night if he were alive today, from Bloomberg:

Protests that began in New York last year are spreading to cities including Boston, Chicago, Denver, San Diego and Indianapolis, according to the Service Employees International Union, which is advising the strikers. The non-union workers are demanding the right to organize and wages of $15 an hour, more than double the federal minimum of $7.25. They now make $9 an hour on average, according to the Bureau of Labor Statistics.


By simultaneously targeting the largest chains, including Yum! Brand Inc.’s Taco Bell and KFC, Subway and Burger King Worldwide Inc., organizers want to force a sector-wide response.  “What the workers are trying to do is hold the corporations accountable,” said Mary Kay Henry, SEIU president.

Well, have they considered quitting and finding a higher paying job? No? Oh...

Of course, instead of focusing on what really drives labor dynamics, slack, the workers' appeal is to what has made the Obama administration so very memorable : the "fairness" doctrine.

If the minimum wage were raised to $10.50, fast-food restaurants would see about 2.7 percent higher costs, according to a letter signed by economists in July in support of raising the federal minimum wage. The eateries could absorb those cost increases by raising menu prices and by allowing low-wage workers to get more of the business’s revenue, it said

Somewhat ironically, or perhaps not at all, it seems that even when striking, these minimum paid workers can barely find the motivation to go out and strike.

Previous strikes haven’t had much impact, and turnout was thin. What’s more, under agreements with the restaurant chains, the franchisees who own and operate most fast-food stores in the U.S. typically are responsible for hiring and wages. While they can raise prices to offset higher costs, they’re already under pressure to pay rent and royalties to the restaurant chains at a time when consumers remain reluctant to eat out.

And of course, the "humanitarian" angle:

While winning the right to organize and make $15 an hour is “hard to visualize in this day and age,” the campaign is “raising public awareness, and at the very least it’s putting raising the minimum wage higher on the agenda,” said Nelson Lichtenstein, director of the Center for the Study of Work, Labor, and Democracy at University of California at Santa Barbara. “It’s important for social movements to set a new standard.”

Surely Americans everywhere will sympathize. At least until they learn that their 99 cent meal has become the 105 cent meal. Then it gets interesting: i.e., whom does a population of obese, fast-food addicted Americans blame when their processed, genetically-engineered pink mcnugget slim, suddenly goes up in price.

Then there is the whole economic "recovery" part:

Nicholas Williams, a 28-year-old McDonald’s worker in Indianapolis, has been looking for a second job because the $7.35 an hour he earns isn’t enough to buy food, pay bills and afford the daily $4 bus pass to get to and from his job.


"They don’t treat us with respect and they don’t treat us fairly,” he said. “I’m not going to work on Thursday.

Well, it is a free country (and the NSA certainly is free to eavesdrop on every phone conversation). And keep in mind: it is the part-time jobs that are "improving" in the US!

There are no good jobs hiring -- out here, it’s only fast food,” he
said in an interview yesterday. Williams, who’s cooked fries and grilled
burgers at the restaurant for about 17 months, is planning to strike.

But, but... The recovery? Obama and Bernanke promised...

Finally, and going back to the key topic here: leverage, and the lack thereof, we go back to an article we posted back in April 2011. It is just as relevant today, if not more so, as it was over two years ago.

McDonalds Hires 62,000, Turns Away Over 938,000 Applicants For Minimum Wage, Part-Time Jobs

This is what the US economy has been reduced to: McDonalds reports that as part of its employment event to hire 50,000 minimum wage, part-time (mostly) workers, subsequently raised to 62,000 it received a whopping 1 million applications, or a Tim Geithner jealousy inducing 6.2% hit rate (h/t X. Kurt. OSis). Alas, the US economy is now so pathetic that the bulk of the population will settle for anything. Literally anything. And the saddest part: over 938,000 applicants were turned away. Here's hoping to Burger King needs a few million janitors in the immediate future too. And yes, aside from reality, things in America are really recovering quite nicely.

From Bloomberg:

McDonald’s and its franchisees hired 62,000 people in the U.S. after receiving more than one million applications, the Oak Brook, Illinois-based company said today in an e-mailed statement. Previously, it said it planned to hire 50,000.

The April 19 national hiring day was the company’s first, said Danya Proud, a McDonald’s spokeswoman. She declined to disclose how many of the jobs were full- versus part-time. McDonald’s employed 400,000 workers worldwide at company-owned stores at the end of 2010, according to a company filing.


Earlier this month, McDonald’s said sales at stores open at least 13 months climbed 2.9 percent in the U.S. after it attracted more diners with items such as beverages and the Chipotle BBQ Bacon Angus burger. The fast-food chain has about 14,000 stores in the U.S. and more than 18,000 abroad. About 80 percent of all McDonald’s stores are franchised.

Of course, all of the above excludes the millions of unemployed stock trading algos and robots which have nothing to do with stock volumes about to hit zero. They would be more than happy to flip paddies for $0.00/hour.

20 Jul 14:52

1. Move To Daytona Beach; 2. Flip That House; 3. 82% Profit

by Tyler Durden

There is an old joke:

  1. Collect Underpants
  2. ?
  3. Profit

Here is the "new normal" version:

  1. Move to Daytona Beach
  2. "Flip That House"
  3. 82% Profit

Gratuitous photo of the Bluth Model Home:

With sign after sign of Ben Bernanke's second housing bubble hitting everyone squarely in the face, and yet with pundit after pundit rushing to deny that there is in fact a housing bubble, all one can do is smile.

Some, however, such as those who have been following our amusing deja vu parody series titled "Housing Bubble 2.0 Edition: "25 Markets Where Flipping Homes Is Most Profitable" will know that the bubble can be all too lucrative if mostly to those hedge funds who are eligible for the subsidized REO-To-Rent program, and can subsequently flip the hot potatoes properties among each other giving the impression of a recovery.

As it turns out the grotesque days of the first housing bubble are now being flatly trounced by the surreal second coming of the housing bubble, where courtesy of RealtyTrac we find that the old gross maximum profit potential of 63% realized in Orlando, FL house flipping, has two short months been eclipsed by flipping a house in Daytona Beach, generating a mindblowing 82% "flip that house" return!

In brief: in the first half of 2013 there were 136,184 single family home flips — where a home is purchased and
subsequently sold again within six months — in the first half of 2013,
up 19 percent from a year ago and up 74 percent from the first half of
. Real estate investors made an average gross profit of $18,391 on single
family home flips in the first half of the year, a 9 percent gross
return on the initial purchase price.
That was up 246 percent from an
average gross return of $5,321 in the first half of 2012
and an average
loss of -$13,206 in the first half of 2011.

A 9% return in under 6 months, so roughly 20% annualized, from flipping houses: nope, no bubble here at all.

RealtyTrac's other stunning findings, which also

Real estate investors who flipped homes in the first half of the year purchased those homes at a discount of 5 percent below estimated market value on average, and sold them at a premium of 1 percent above estimated market value on average.


“The Reno-Sparks area was one of the first to see an increase in distressed sales and like many of our sister markets we are one of the first out.  The 32 percent decline in flipped homes in the last year  is likely due to the decrease in distressed sales and it’s actually a positive sign of the housing recovery we are experiencing,” said Craig King, COO at Chase International brokerage serving the Reno and Lake Tahoe markets. “While there will always be a market for sharp home flippers our marketplace numbers indicate that home flipping here is back to a place best left to the professionals.”


Many investors who buy homes to flip have holding restrictions placed on them, so they rent the property with the idea that after a certain period of time they’ll put it on the market and sell it,” said Sheldon Detrick, CEO of Prudential Detrick/Alliance Realty in Oklahoma City and Tulsa. “There is a pronounced reluctance from these investors to sell now because rental rates are skyrocketing, especially in Oklahoma City due to the tornado, and we are experiencing a 10 percent appreciation on home values. Many investors who may have intended to flip properties are not putting them back on the market because they can rent the property for a profit while it continues to appreciate.”

But even the flipping fun is tapering:

“While flipping continues to be profitable in most markets, particularly those where the home price recovery is still nascent and a recent rebound in foreclosure activity allows investors to find distressed inventory at a discount, home flipping is tapering off in markets where fewer of those distressed bargains are available,” said Daren Blomquist, vice president at RealtyTrac. “Out of the 100 markets we analyzed for the report, 32 had declining flipping numbers, including perennial flipping hot spots like Las Vegas, Phoenix, Southern California and Atlanta. Still flipping was on the rise in more than two-thirds of the markets, including New York, Washington, D.C., Chicago and several Florida metros.”


“While flipping of homes continues to be of great interest to many people in the general public as they see this as an easy way to make a fast profit, the opportunity to buy and flip homes in Southern California is diminishing each month, as the price to purchase fixer-uppers continues to increase rapidly,” said Rich Cosner, CEO at Prudential California Realty covering Orange, Riverside and San Bernardino counties in Southern California.  “The allure of a quick profit from flipping can entice many first-time home buyers but the gross profit does not take into account the costs of repairs, upgrades, cleanup and the money spent while owning the property.  In some areas home prices have increased so much that there is little or no profit available to flip it.”

Finally to learn if house flipping offers a get rich quick scheme in your state, the next table is for you:

19 Jul 16:45

Startup Aims to Help Media License Amateur News Photos for $20 Apiece

by Conor Risch

Had this idea two years ago, but never got around to implementing it. This is the price of laziness!

An image sourced by CrowdMedia from a Twitter user who was on the tarmac at SFO during the Asiana Airlines crash was used in a gallery on Huffington Post.

© Huffington Post. An image sourced by CrowdMedia from Twitter user @mcc_maryland, whose plane was on the tarmac at SFO during the Asiana Airlines crash, was used in a gallery on Huffington Post.

A six-week-old company that connects media organizations to amateur photographers who have taken newsworthy photographs is creating some buzz, and could add yet another wrinkle to the market for news photography—one professional photographers and their photo agencies may not like.

CrowdMedia, the Montreal-based startup, uses a combination of an algorithm and a manual process to analyze more than 100 million images shared everyday via Twitter. The company identifies the .03% of these images that they consider valuable and newsworthy, reaches out to the creators via Twitter, and asks them to click a link if they would like to make their image available to media organizations. Once the creator of the photo creates an account, images are uploaded to the CrowdMedia platform, where media companies can find and purchase them for roughly $20 apiece, regardless of the usage.

Roldan says, “News outlets want [photos shared on social media] but it’s really cumbersome.” CrowdMedia promises to streamline the process, connecting editors directly to social media users.

CrowdMedia launched in June, shortly after the Chicago Sun-Times layed off its photo staff.

To read the full interview with CrowdMedia’s Roldan and learn more about the company’s pricing and functionality, see our full story, now on PDNOnline.

Related: Chicago Sun-Times Eliminates Photo Staff

11 Jul 22:48

The Market Ticker - Real And Practical Ways To Avoid The Snoops

by genesis

You may have read my previous post entitled "Tired of Snoopfest?" in which I outlined how to set up an extremely secure IPSEC/IKEv2 VPN that can encrypt data between device(s) of your choice and your home or office network.

What's shown up recently, however, are some really bad and maybe even dangerously bad pieces of advice on evading the snooping that goes on out there.

This article is intended to disabuse those notions.  I'm going to use the following assumptions and note that I rely on them -- if they're wrong, then so are my conclusions!

  • Modern cryptographic algorithms themselves are extremely secure.  It is very unlikely that the NSA, for example, can break AES-256 in any sort of reasonable amount of time.  Remember that we're not the only nation with high-powered computers or mathematical geniuses -- so anything that can be broken with those, can be broken by other than the US.  And our military and other government agencies do need and use encryption
  • It is easier to attack your key, most of the time, than to attack your algorithm.  That is, a crappy password is easily broken.  A good password (1) does not contain dictionary words, (2) does contain upper and lower case letters, numbers and symbols, and (3) is used to seed a high-quality key generation algorithm.  The last is hard to verify.  The other two are under your control.  Therefore, worry about #1 and #2.

  • Open-source software beats closed source in the general sense.  The reason for this is that smart people can look at it and if someone tries to play games with it to insert a "back door" it can be detected.  With closed-source or worse, closed-service you're trusting everyone involved to have not stabbed you in the back.  As has been recently revealed this is a bad bet.

  • If I can't break your key generator or algorithm the easiest way to break your encryption is to coerce (bribe, blackmail, threaten to or actually pull off fingernails, etc) someone into giving me what I need to break it.  This is usually overlooked but shouldn't be.  Push comes to shove, if I want your password I will get out the vice-grips, drill or hammer.  It's faster and cheaper than trying to break AES-256 by far.   However, and this is critical, this is not only applied to you.  More on that in a minute.

  • You cannot trust any commercial entity or indeed anyone other than yourself to protect your data.   Period.

  • If you have to compromise absolute levels of trust then minimizing the number of such incursions grossly minimizes risk.  In fact the odds of compromise go up exponentially with the number of points of exposure.   Thus "one" is not half as bad as two, it's 1/4 as bad -- or less. 

Ok, so let's start demolishing fools.

First, "SSL" certificates and everything based on them are only as secure as the certificate authorities.  What this means is that all commercially-issued certificates cannot be trusted.  You must assume that every public CA has given their private key to the NSA, either voluntarily or not-so-voluntarily.

This means that if you're going to be using public-key cryptography of any sort, whether to authenticate or encrypt VPN traffic, to secure email, or to secure access over the Internet you must either be the CA or the CA that signs your certificate must be some entity you trust entirely.

No, Verisign does not count.  I have no knowledge that their keys have been compromised but I am forced to assume that all of them have been, no matter who the CA is!

So you must generate your own certificate authority, publish the public key and make damn sure the private key is secured and not compromised.  

The reason for this is that if I can interject myself in the middle of the conversation (as the NSA has to be assumed to be able to do) and I have compromised the CA I can replace your key with another one that allows me to decrypt the transmission and your browser or other tool will not detect it.  I can then use the original certificate to send on the communication undetected.  Since a web server doesn't know who's talking to it and thus doesn't verify a machine certificate for the client and even if it did your key would probably be signed by a "public" CA there is no way for the server to detect the tampering.

Note that you can detect a server being attacked in this fashion if you connected to it before it was tampered with and if you saved its key fingerprint.  That's a lot of "ifs", but if you did then you can detect that the fingerprint has changed.  The problem is that there are perfectly-valid reasons for the fingerprint to change (the key expires and is replaced, the company changes its address, etc.) -- but it at least can raise an alarm.  Unfortunately browsers in general don't flag this (nor should they) because the model presumes that CAs are trustworthy.

In short you cannot use any key that requires verification against a public CA because it can be spoofed by someone interjecting themselves in the middle if the CA has been compromised. Since we now have bald assertions that companies that have claimed to be secure have in fact cooperated with warrantless interception you can't trust any of them.

This leaves you in a pretty rough spot.  Specifically:

  • Any web or other online service that relies on SSL using a certificate "vouched for" by a public CA has to be considered suspect.   It doesn't matter if the entity itself is trustworthy. This includes virtually all online services except for ones controlled by people you trust and who have given you their own CA key that validates their certificate.  In practice this means that using "https" (the nice "lock" symbol) is probably safe to use for shopping if you're worried about a criminal stealing your credit card number.  If your concern is that the government has a complete and true record of everything you did on the site you must assume the security value of https against a publicly-verified certificate is zero.

  • S/Mime email cannot be considered secure if you got your keys, directly or indirectly, from a public CA.  If you run your own CA then it is as secure as is the CA (you.)  But this makes interoperability somewhat of a pain as verifying certificates forces correspondents to install your CA public key.

  • PGP Email is probably secure.  Because PGP does not rely on a key being vouched for by a central authority, there is nobody's arm to twist.  PGP Email is thus probably more secure than S/Mime using a public CA, and likely about equally secure as S/Mime with a private and trusted CA.  PGP has a reasonably-robust and solid infrastructure for distributing public keys, but you have to submit yours.  For email use you thus probably want to strongly prefer PGP over S/Mime.

  • For files on your local PC, network or cellular device encryption of the device should be strongly encouraged.  It can be a pain in the ass to use, however.  I have no knowledge of the security afforded by things like Bitlocker, and given recent revelations I wouldn't trust it.  Truecrypt, on the other hand, is open source and therefore probably secure.  Other open source solutions (E.g. GELI on FreeBSD, etc) are probably secure provided your key is good.  Note that if your machine is "seized" while "in use" and powered up there exists the potential to extract the key.  It's not easy to do but if you're a high-enough value target they very well may come prepared to do exactly that.  Just remember that if you're that high of a value target that the use of vice-grips and hammers is easier than cryogenics and other special equipment.

  • For remote access to files or resources only a strong VPN should ever be used.  This means OpenVPN or IPSEC/IKEv2 with machine certificate verification for the server with the CA being private, yours, and you having hand-loaded the CA public key on the remote device.  If you're using PPTP/LT2P or similar forget it.  If you're not going to use a machine certificate verified against your own private CA then you're probably safer using a password with no machine verification at all!

  • Remember that the security only goes as far as the encryption does.  If you're in a "free" Hotspot Internet cafe and have your phone out browsing, everything you do over the web is visible to anyone sitting in the same cafe (or within a few hundred feet of it.)   If you VPN to your office network via IPSEC (secure) and then browse the Internet all you've done is force the bad guy to spy on your office connection instead of at the cafe.

  • If you have a wireless router in your home or office and are not using WPA2/AES with a strong password, you're screwed.  WEP in particular is trivially breakable, usually within minutes.  WPA2/AES is theoretically breakable but it requires a long time and a lot of connecting clients that are valid in order to glean enough pattern data to try to attack it, and even then it may fail.  Machine certificates are even better but a serious pain in the ass to administer (since you have to load them on the client machines) but are something to consider.

  • You cannot trust so-called "anonymous" networks such as TOR.  There is no way to know if a given node is "clean" or compromised.  There are a fairly-small number of high-bandwidth nodes in the TOR network, which means that the task of actually intercepting your traffic in terms of statistical probability is not all that difficult.  I have to assume that TOR is thus "secure" against a random website operator knowing I'm browsing their site but that if the government wants to track me using it, they not only can but probably already are.

  • There is no such thing as a "chat", "video chat" or "phone" (voice) network that can be considered secure except for true peer-to-peer where you know the certifying authority is secure.  This, for all practical purposes, means that no online chat or "phone" application no matter which one it is, can be considered secure in today's world.  Sorry.

  • All cloud services, no matter what they are and who runs them, other than your own personal cloud on your own hardware, must be considered compromised.  There is no other reasonable posture to take at the present time.  This means that nothing you care about ever goes on any cloud service from anyone unless the file is first encrypted with strong encryption.  This explicitly includes all "cloud" storage services and all cloud computing resources.  If you are a business using "cloud computing" for your operations given these revelations and facts you are a fool.  Again, if you think the United States is the only nation doing what has been disclosed you're stupid beyond words and deserve to have the Chinese steal everything on your so-called "secure" cloud service and use it. 

Any compromise you make on the above is a bet not just on the government of today not wanting to do evil things to you but on all instances of the government from this day forward until you are dead.  

Understand this well -- the government is building a data center right now capable of storing everything they can grab that you do or any data you allow to leak out of your hands forever and they both are now and intend on a forward basis to do exactly that.

That data, once collected, will never be deleted.  Your only defense against this is to not allow them to acquire the data in the first place, and that means the data has to be encrypted to the best of your ability at all times. 

This won't stop them from showing up with a warrant and seizing your computers.  But it will stop them from taking and indefinitely storing your data without you knowing about it and without said warrant.

If you think this is nothing to worry about consider how many Jewish people had any clue that Hitler was going to come and start gassing them in the 1920s.  That was less than 20 years before it happened!

Whatever you do today will be in that database 20 years from now.  

Are you willing to count on the government not being evil from today until the day you die? 

THAT is the bet you're making.

11 Jul 19:42

House Proposes To Wind-Down GSEs Within 5 Years

by Tyler Durden

There will be an increasing cry of 'not fair' from the Perry Capital's of the world as Jeb Hensarling unveils a dramatic plan to overhaul the GSEs (and broad housing finance in general).  The chairman of the House financial services committee wants Fannie and Freddie to be wound-down within 5 years - removing the explicit government guarantees and demanding that:


and not:


Higher down-payments for FHA loans, limited to first-time-homebuyers only, and reducing the conforming loan-limits are all likely to drive the hedge funds to more litigation and complaint that this will end the housing recovery and their dividend stream. Hensarling wants to create a securitization platform 'utility-like' entity with the government serving only as a catastrophic reinsurer.

11 Jul 15:28

Woman Assaulted and Robbed in Annandale (7/9) (no replies)

by The Neighborhood Watch!
Woman Assaulted and Robbed in Annandale

Fairfax County Police Department
Public Information Office
4100 Chain Bridge Road, Fairfax, Va. 22030
703-246-2253. TTY 703-204-2264. Fax 703-246-4253
News Release:13/190/0252/LHC(7)
July 10, 2013

Woman Assaulted and Robbed in Annandale

West Springfield Police District – Officers responded to a report of a 73-year-old woman who was assaulted and robbed in the 7900 block of Heritage Drive in Annandale.

The woman was walking from a bus stop at around 8 p.m. on Tuesday, July 9 when she was approached by a group of young men. One of the individuals reportedly came up from behind her and grabbed her purse. He then threatened and struck her several times. The suspects then fled.

The victim was transported to the hospital and was treated for non-life threatening injuries.

Suspects were described as two Hispanic and two black young men.

Anyone with information is asked to call Crime Solvers by phone at 1-866-411-TIPS/8477, e-mail at or text “TIP187” plus your message to CRIMES/274637 or call Fairfax County Police at 703-691-2131.


To request this information in an alternate format, call the Public Information Office at 703.246.2253. TTY 703-204-2264
03 Jul 14:39

Precedent: If One President Can Unilaterally Rewrite the Law of ObamaCare and Choose to Not Enforce It, Why Can Another President Not Do the Same, But Refuse to Enforce Any of It?

by Ace
Heard Obama Admin may delay #Obamacare employer mandate for 1 year. How about we delay it all forever? #FullRepeal— Senator Ted Cruz (@SenTedCruz) July 2, 2013 Is there a special provision in the Constitution that specially empowers liberal presidents...
19 Jun 16:17

Refreshed Surface RT To Come With Qualcomm Processor & LTE

by Suril Amin
A new report by Bloomberg claims that a new version of the SurfaceRT will be own its way soon sporting Qualcomm’s Snapdragon 800 processors instead of the existing Nvidia Tegra 3 chipset.  Nvidia may still be a supplier for some SurfaceRT tablets, but it is unclear at this time.  The Snapdragon 800 processor does include integrated LTE connectivity, so this may potentially be the first Surface tablet from Microsoft with 3G/4G mobile broadband.  Microsoft does have a great relationship with Qualcomm considering they are the exclusive supplier of processors for Windows Phone and a move to SurfaceRT on the same chips sounds highly plausible. Microsoft has recently been offering the SurfaceRT at discounted prices at their own TechEd conference for $99 with Touch Cover included.  It also recently announced a program where educational institutions can purchase the SurfaceRT for $199, significantly cheaper than buying iPads. The refreshed SurfaceRT may be ready for holiday 2013 in line with Windows 8.1.  An 8-inch Surface tablet is expected to be announced at the BUILD...
18 Jun 10:56

WARNING: The IRS is using high-tech snoops to collect personal information on taxpayers' digital activities (no replies)

by Nose for News

A government that assumes it has first dibs on your income is no better than a petty tyrant.

The Internal Revenue Service is collecting a lot more than taxes this year - it's also acquiring a huge volume of personal information on taxpayers' digital activities, from eBay auctions to Facebook posts and, for the first time ever, credit card and e-payment transaction records, as it expands its search for tax cheats to places it's never gone before.

. . . .

"It's well-known in the tax community, but not many people outside of it are aware of this big expansion of data and computer use," says Edward Zelinsky, a tax law expert and professor at Benjamin N. Cardozo School of Law and Yale Law School. "I am sure people will be concerned about the use of personal information on databases in government, and those concerns are well-taken. It's appropriate to watch it carefully. There should be safeguards." He adds that taxpayers should know that whatever people do and say electronically can and will be used against them in IRS enforcement.

. . . .

"Private industry would be envious if they knew what our models are," boasted Dean Silverman, the agency's high-tech top gun who heads a group recruited from the private sector to update the IRS, in a comment reported in trade publications. The IRS did not respond to a request for an interview.
18 Jun 10:48

YO, KARL ROVE: The 1986 Amnesty Bill Turned California Into the Closest Thing America Has to a Third World Country

by directorblue
Another phenomenal guest post culled from a comment at City Journal.

"What pragmatic assessment leads to thinking that the Simpson-Mazzoli 1986 amnesty program did anything bad? Anything at all?"

Let's see how many bad things came from that 1986 Amnesty. California is America's number one immigration state and the state most impacted by the IRCA (the 1986 Reagan Amnesty).

1. California once had the best public schools in America. Now they compete with Mississippi for the bottom. Sometimes they "win".

2. California once had the most affordable and best middle-class housing in America. Now it ranks at the bottom.

3. California once paid the highest real wages to workers of any state in the union. Now wages (adjusted for the local cost of living) are rock bottom.

4. California once had income inequality somewhat below the national average. Now it's far above the national average.

5. California once offered mobility to its people. Gridlock is now the norm.

6. California was once a place where Americans from every state could go looking for a better life. Now its a chamber of horrors that even illegal aliens flee.

The Los Angeles Times published a great story about how Amnesty and mass immigration wrecked the once great state of California.

U.S. immigrants' stories often are about reinvention and newfound prosperity, about leaving behind poverty and limitations... But that is not Magdaleno's story.

Both Magdaleno and Anzaldo are illegal immigrants, settled for years in an immigrant enclave. Magdaleno has the same number of children as her parents, who were peasant farmers in Mexico. Like her parents, she is living in poverty and struggling to provide for her family.

"It's not sweet," said her 36-year-old sister, Alejandra. "It's very sad. The life for girls back there in Mexico is the same as the one Angela has now. They marry and have children, and that's their lives."

Neither Magdaleno nor her husband speaks English, though she has been in the United States 22 years and he 28. Even her teenage daughters speak mostly Spanish; their English vocabulary is limited."

"As Angela was having children, her siblings were undergoing a transformation of a different kind. They were slowly leaving Los Angeles.

Her sister Alejandra was the first to leave. In Los Angeles, she and her husband were barely able to make ends meet. As in Mexico, "there was little work and it's poorly paid," she said.

Eight years ago, she and her family moved to Kentucky, where a friend said there was more work and were fewer Mexican immigrants bidding down the wages for unskilled jobs.

In Kentucky, Alejandra picked tobacco. The work was hard and she didn't know the language. But soon, life improved. Over the years, she invited her siblings to join her. One sister married a man who managed a Golden Corral, a chain of all-you-can-eat buffets. Soon several Magdaleno siblings were working in Golden Corrals. Their husbands found work installing windows and as farm-labor contractors. They went to night school to learn English because few people in Lexington speak Spanish.

Today, the Magdalenos in Lexington earn more than they did in Los Angeles, in a city where the cost of living is lower. Kentucky is now their promised land, and they talk about California the way they used to talk about Mexico.

"What we weren't able to do in many years in California," Alejandra said, "we've done quickly here.

"We're in a state where there's nothing but Americans. The police control the streets. It's clean, no gangs. California now resembles Mexico -- everyone thinks like in Mexico. California's broken."

If illegal aliens can recognize that mass immigration has "broken" California, it should be possible for you to make the same intellectual leap.

Hat tip: BadBlue News.

17 Jun 19:17

Greek Prime Minister Folds, Will Restart Public Broadcaster

by Tyler Durden

Greece took year after year after year of Troika punishment stoically, if with the occasional tear gas-puncutated celebration of 60%+ youth unemployment. But when it came to taking away the free, public TV... Well, as we predicted:

You may take away the Greek pensions, but you will never take away their TV

— zerohedge (@zerohedge) June 12, 2013

So it would be:

Greek Prime Minister Samaras offers to allow the immediate restart of ERT broadcasting: government source #breaking

— Reuters World (@ReutersWorld) June 17, 2013

Moral of the story? Despotic, technocratic unelected commissions can take away a people's pensions, but when one takes away the same people's ability to watch Kim Kardashian, prepare to reap the whirlwind.

Also, know your priorities.

16 Jun 19:51

Aetna Pulls Out Of California Individual Insurance Market In Response To Obamacare

by Tyler Durden

If Obamacare's stated goal was to broaden the health insurance market, give more options to consumers, and generally lower the cost of health insurance, courtesy of the IRS' flawless execution of yet another unprecedented government expansion, it may be in for a tough time. Because while on paper every statist plan of centrally-planned ambitions looks good, in reality things usually don't work out quite as expected. Case in point the news that Aetna will stop selling health insurance to individual consumers in California at the end of 2013, in advance of Obamacare's complete transformation of the insurance market: a transformation which just incidentally may see most private health insurance firms follow in Aetna's steps and the emergence of a single-payer system along the lines of the British National Health Service. A government-mandated and funded system which, needless to say, crushes private enterprise, and ends up costing far more for all involved than an efficient market based on individual wants, needs and capabilities constantly in flux.

But that's ok - there is an administration which is smarter than the entire market, and a Federal Reserve which will monetize any deficit funding, and the only trade off is making the already ridiculous US federal debt ridiculouser.

For more irony we go to the WSJ which informs us that that "pullout is likely to draw attention as California has become a focus of national debate over the law's impact. Supporters, including President Barack Obama, who highlighted the state in a recent speech, argue that it has shown the success of the health overhaul in encouraging competition and pushing down prices."

If in some parallel socialist universe, the exit of competitors ends up boosting competition, than yes, we agree. In this one, however, things are a little... different.

For now, Aetna is just the start. A relatively small start:

Aetna said it currently has about 49,000 individual policyholders in California. In 2011, when it had substantially bigger membership, it was the fourth-biggest player in the state's consumer market, with about 5.2% of the plans sold that year, according to a report from Citigroup Inc.


Aetna isn't one of the 13 insurers participating in the state's new consumer insurance marketplace set to launch this fall under the federal law. Like several other major national carriers, it has said it would join only a limited number of these exchanges. A carrier can still offer consumer plans without being in the exchange.


Aetna said it will continue selling health insurance in California to employers and Medicare beneficiaries, as well as dental and life-insurance products. The insurer said it is "fully committed to serving the needs of our 1.5 million members in the state." A company spokeswoman declined to comment about the reasons for Aetna's individual-business withdrawal.

As long as those members aren't on individual insurance: those members will have to find a different provider of insurance.

People who currently have Aetna individual health coverage will have to find plans with other carriers by year-end. That might be easier because of the federal health law's requirements that insurers no longer decline coverage or set premiums based on people's health history, but still, "it's going to be confusing" for Aetna policyholders, said Ken Fasola, chief executive of HealthMarkets Inc., parent of insurance agency Insphere Insurance Solutions. His firm plans to send written notice to affected clients, then follow up with calls and, if wanted, visits.

Aetna is just the first to crunch the numbers and realize that one indeed has to pass a law first to find out how much money will be lost - by private companies - as a result.

The health law is expected to expand the individual insurance business, but the new coverage rules will also mean major changes. Also, in the new exchanges, consumers are expected to focus closely on costs, particularly monthly premiums. Insurers may find it tough to compete if they don't have scale in a particular market, partly because they can't match the prices that competitors win from health-care providers.

As for the "model" assumptions behind Obamacare, it is likely too late to clarify that one does not get strong competition in an artificial marketplace in which the service providers are dropping out one by one.

The Obama administration has highlighted its expectation that the new health-insurance marketplaces will generally boast strong competition, with around 90% of consumers buying their own plans living in states where there would be products from at least five insurers.


But in at least some places, the offerings will be limited. In Washington state, for instance, nine insurers bid to sell plans in the individual market but only one carrier, Kaiser Permanente, bid to sell a small-business plan through the exchange in some counties, forcing Washington officials to cancel plans to run a full small-business exchange for the first year.

So instead of "strong competition" the end results was a government-enforced... monopoly. And guess who has all the pricing power in a monopoly.

Oh well, such is life under "central-planning" - the end result is always complete disaster, but at least the intentions to promote "fairness" were quite noble.

13 Jun 10:26

Guest Post: Why Things Will Get Worse - Much Worse

by Tyler Durden

Originally posted at Monty Pelerin's World blog,

It is easy to be upset about what is happening all around. The economy is being destroyed, deliberately, by insane economic policies. Incentives to work are being eliminated by punishing work. At the same time rewards are increasing for not working. Not surprisingly we get less of what we penalize (work) and more of what we subsidize (non-work).

As an economist I get sick over what I see happening to what was once a great engine of productivity, capital creation and improvements in standards of living.

After two centuries of progress that amazed the world, the conditions necessary for growth and productivity are steadily being removed. Their presence allowed the miracle of America. Their absence guarantees the decline. Carried to extreme, the US could become a second or third-world nation within a few decades. Virtually all changes in the last five to ten years point in this direction and these changes are accelerating.

As pained as the economic retrogression is, the loss of freedom is even more disturbing. It was free markets and free men that made America the dominant economic power and the beacon of freedom. Without freedom, no economic policy can succeed. Yet, just as economic policies seem designed to destroy rather than create, so too does the role of government as steadily destroys freedom with its expanded oppression and power. The absence of freedom is tyranny. The absence of freedom is also poverty.

Economic decline is difficult to convey, although data are useful.

The decline of liberty, however, is not easily quantifiable and even more difficult to communicate. An email from Simon Black, expresses his concern regarding Leviathan government and its increasing oppression. It provides as good a qualitative measure of what is occurring to freedom in this country:

By now it should be clear to anyone paying attention that most of Western civilization is on a dangerous slide into tyranny.


They’re confiscating funds directly from people’s bank accounts. They’re seizing reporters’ personal records and phone logs. They’re digitally spying on everyone’s emails.


They’ve authorized military detention and drone assassination of their own citizens.


They’re using tax offices to harass political opposition groups.


They tell us what we are allowed to eat and drink, what foods we are allowed to put in our own body.


Think about it. These are Soviet tactics, plain and simple.


What’s more, they don’t even care. They think we’re all idiots who are too stupid to even notice what they’re doing.


In fact, just a few days ago, Barack Obama staunchly defended his policies, saying “you can complain about Big Brother. . . but when you actually look at the details, then I think we’ve struck the right balance.” This is textbook sociopathic behavior: destructive, antisocial conduct and a complete lack of conscience.


Unfortunately this is just the beginning.


Imagine what it will look like in a few more years: trillions of dollars of more debt… more printed currency. More police state tactics. More invasions of privacy. More ridiculous regulations.

Unless government oppression is beaten back, there is no hope for the future. For those who focus on the foolish economic policies, they miss the root cause of all of our problems — oversized, overactive, interventionist, overcontrolling and oppressive government. Unless government can be reduced in size and power dramatically and then put back into its Constitutional box, nothing will improve in the economy. Ultimately the economy will collapse and freedom will be lost.

History shows no examples reversing these kinds of trends. Civilizations die as a result and then they rebuild from the ashes. But history never knew the flowering of such a vibrant civilization before our break from King George. It seems as though a similar miracle is required today.

I fear the majority of the American people are too dumbed down to understand what is happening to them and their country. They appear too content collecting whatever benefits the government buys them off with. These benefits will cease when the economy can no longer be pillaged. By then, it will likely be too late.

America will continue to exist and it will eventually be free and prosperous again. But there will be a long period, call it the modern-day  Dark Ages, before freedom and prosperity return. A century or so seems a reasonable guess. Evil will eventually be overcome, but not before generations suffer as a result of our allowing and enabling the growth in government power.

12 Jun 01:15

Supreme Court Standoff Next? ACLU Sues Obama Over Constitutionality Of NSA Surveillance

by Tyler Durden

If the constitutional scholar was hoping he would quietly avoid a major showdown over the constitutionality of the biggest spying scandal since Nixon (whether legal or not remains to be determined) and which would likely have led to an early POTUS retirement if current president was republican, the ACLU just slammed the door shut on the possibility. Moments ago, the American Civil Liberties Union filed a lawsuit against the Obama administration over its "dragnet" collection of logs of domestic phone calls, contending that the once-secret program is illegal and asking a judge to both stop it and order the records purged. And, as the NYT reports, "the lawsuit, filed in New York, could set up an eventual Supreme Court test." Only once that happens it will be too bad that InTrade is no longer available, to take the other side of a trade that believes the SCOTUS will for once do the right thing and preserve the constitution when everyone knows the decision to formally enact a Big Brother state will pass along political party lines and America will officially become the country that for 5 decades, at least superficially, it was waging "cold war" against.

From NYT: 

The program began as part of the Bush administration’s post-9/11 programs of surveillance without warrants, and, it is now known, it has continued since 2006 with the blessing of a national security court, which has ruled in still-secret legal opinions that such bulk surveillance was authorized by a section of the Patriot Act that allows the F.B.I. to obtain “business records” if they are relevant to a counterterrorism investigation.


Congress never openly voted to authorize the N.S.A. to collect logs of hundreds of millions of domestic phone calls, but the administration notes that some lawmakers were briefed on the program. Some members of Congress have backed it as a useful counterterrorism tool, while others have denounced it.


“The administration claims authority to sift through details of our private lives because the Patriot Act says that it can,” Representative Jim Sensenbrenner, Republican of Wisconsin, wrote in a letter to Attorney General Eric H. Holder Jr. on Sunday. “I disagree. I authored the Patriot Act, and this is an abuse of that law.”


Over the weekend, in hope of preventing a backlash, James R. Clapper, the director of national intelligence, also disclosed details about privacy protections built into the program. Among them, officials may access the database only if they can meet a legal justification — “reasonable suspicion, based on specific facts, that the particular basis for the query is associated with a foreign terrorist organization.” To deter abuse, queries are audited under the oversight of judges on a national security court.


Timothy Edgar, who recently left the government after serving as a privacy and civil liberties official on intelligence matters in both the Bush and Obama administrations and who worked on building safeguards into the phone log program, said the notion underlying the limits was that people’s privacy is not invaded by having their records collected and stored in government computers, but only when a human extracts and examines them.


“When you have important reasons why that collection needs to take place on a scale that is much larger than case-by-case or individual obtaining of records, then one of the ways you try to deal with the privacy issue is you think carefully about having a set of safeguards that basically say ‘O.K., yes, this has major privacy implications, but what can we do on the back end to address those?'” he said.


Still, even with such restrictions, privacy advocates say the mere existence of the database will inevitably erode the sense of living in a free society: from now on, whenever Americans pick up a phone, before dialing they now face the consideration of whether they want the record of that call to go into the government’s permanent files.

Living in a what society?

Supporters of the program privately say the database’s existence is about more than convenience and speed. They say it can also help in searching for networks of terrorists who may be taking steps to shield their communications with one another, for instance by using different phone lines; if calls are going to and from a different number at the same address or cellphone towers as the number that is known to be suspicious, for example, having the comprehensive database may be helpful in a way that subpoenas for specific numbers cannot match.


It remains unclear, however, whether there have been any real-world instances in which a terrorist network that tried to evade detection was identified in that way, and so the existence of the database prevented an attack that otherwise would have occurred, or whether that advantage is to date only theoretical. A 1979 ruling over a small-scale collection of calling “metadata,” Smith v. Maryland, held that such records were not protected by the Fourth Amendment since people have revealed such information to phone companies and so have no reasonable expectation of privacy. However, in a 2012 case involving GPS trackers placed by the police on cars, the Supreme Court suggested that the automated collection of people’s public movements may raise Fourth Amendment privacy issues in a way that nonbulk surveillance does not.


A 1979 ruling over a small-scale collection of calling “metadata,” Smith v. Maryland, held that such records were not protected by the Fourth Amendment since people have revealed such information to phone companies and so have no reasonable expectation of privacy. However, in a 2012 case involving GPS trackers placed by the police on cars, the Supreme Court suggested that the automated collection of people’s public movements may raise Fourth Amendment privacy issues in a way that nonbulk surveillance does not.

Can we just cut to the chase and take this straight to a Supreme Court showdown so that just like in the case of Obamacare, it can be voted through along political party lines, and the final schism of an already broken society, where one half no longer demands any right can be put in the books.

10 Jun 22:58

The New Normal America: A Country Where Eating And Drinking Is The New Manufacturing

by Tyler Durden

For a long time we have been seeking a chart that captures the pure essence of America's transition into its "new normal" mutant clone, in which record high stock markets coexist with record high foodstamp usage; in which record public debt amounts coexist with record low interest rates; in which the Fed is responsible for 20% of the US GDP but which is forgiven if it means the second coming of a housing bubble giving people the false hope of another "flip that house" get rich scheme. We believe we have found it.

On the chart below we show the number of US manufacturing workers over the past decade (currently at levels first seen in 1941) on one axis; and the number of bar and restaurant employees - currently at an all time high - on the other. For those asking, in the past year the US has added 366,700 "food service and drinking places" employees and a whopping... 41,000 manufacturing workers.

And that, in a nutshell is the new America: a nation in which more than ever eat out, in which almost nobody actually produces anything.

Source: BLS

10 Jun 16:13

How The Fed, Courtesy Of Foreign Banks, "Grew" The US Economy By $146 Billion In The First Quarter

by Tyler Durden

By now it should come as no surprise to anyone that in a Keynesian world in which the aggregate increase in credit levels is the only necessary and sufficient driver for "growth", as admitted repeatedly by Europe which has blamed its longest ever recession on "(f)austerity" and the inability to issue debt like a drunken-sailor, that the only thing that matters is how much credit money (i.e., liabilities) are created in the banking sector, either organically by creating loans, or through the Fed's low-power "reserve" money creation.

If there is any confusion, we present Exhibit A: the chart (now updated for Q1 data courtesy of the latest Flow of Funds report) that strips away all the conventional GDP = C+I+G+(X-M) abracadabra and cuts to the chase - US GDP has tracked the change in traditional bank liabilities for the past 50 years on an almost dollar for dollar basis.

Here is the most recent math:

  • Q1 increase in nominal GDP: $146 billion
  • Q1 increase in nominal bank liabilities: $212 billion (Flow of Funds sections L.110, L.111, L.112)

Which is why it is so critical for the US 'economy' to keep growing the debt: without credit (money) creation, there is no growth. Such is the reality in a Keynesian, monetarist world.

The logical next question is: just what are these bank liabilities that grew in Q1, and let the US economy "improve" at a 2.4% annualized pace in the first quarter. And, just as importantly, what are the assets?

We move on to Exhibit B - Bank Assets. Looking at the two largest components of the traditional banking sector (not shadow banking), specifically US-chartered depository institutions and Foreign banking offices in the US, we can see that of the total $165.1 billion increase in bank assets, more than all of it, or $300.3 billion was due to Fed Reserve growth! The reason why this was greater than the total is simply because conventional banking credit creation is still clogged up and traditional assets, chief among which was Credit Market Instruments or loans, in US banks declined in Q1.

To summarize so far: the bulk of bank asset creation has been thank to just one entity: the Fed.

Presenting Exhibit C - Bank Liabilities, or the component which as shown in the chart above tracks the GDP with an uncanny correlation. Here is which liabilities were the most to benefit from the Fed's largese.

Virtually all of the bank sector liability increase, or some $126.6 billion, was as a result of interbank liability creation by foreign banks operating in the US as a "net due to related foreign offices."

Which brings us back to another chart we like to show: the amount of Fed reserves parked with foreign banks.

Presenting Exhibit D - total Fed reserve creation and the cash held by domestic and foreign banks, as reported by the Fed's weekly H.8 statement:

And Exhibit E - the direct correlation between cash holdings of domestic branches of foreign banks and the reserves created by the Fed. As the chart makes all too clear, all the Fed's new reserves are going almost on a dollar for dollar basis to foreign banks!

By this logic it should also come as no surprise that total cash parked at Foreign banks operating in the US just rose to an all time record of $1.12 trillion, or more than all the cash held by domestic US banks, which was $100 billion less or $1.02 trillion. This was confirmed by the non-seasonally adjusted number as well, which too rose to a record high of $1.13 trillion up tom $1.1 trillion. Here is Exhibit F: total cash held by foreign banks in the US. (btw, NSA stands for Not Seasonally Adjusted, not this chart was created by the NSA)

So the next time someone asks you how it is that the US economy grew by 2.4% in Q1, explain as follows:

  1. Fed creates some $300 billion in reserves in Q1 courtesy of QE4
  2.  Virtually all reserves are parked as cash at foreign banks operating in the US.
  3.  ???
  4. Profit, aka GDP growth of $146 billion

And that concludes our New Normal economics lesson for the day.

Of course, the logical next question is "does this mean that $2.6 trillion, or 17%, of US "GDP growth" in the past four years is nothing but reserves created by the Fed and funneled through into the stock market economy?"

The answer, of course, is yes but we will leave it to readers to contemplate what it means that the Fed is now responsible for nearly one fifth of total US economic "output."

Source: Z.1, H.8

06 Jun 18:42

webOS to receive mandatory system update to maintain access to cloud services

by Michael Gorman

It's not exactly the best birthday present ever, but today HP announced that webOS devices running version 2.1 and up will receive an automatic update to the App Catalog. The new code is needed to replace security certificate set to expire on July 23 that grants access to webOS cloud services. For the select few running older versions of webOS, fear not, for updating your devices merely requires manual navigation to the App Catalog, then grab and install the "HP App Catalog Update" application. Got it? Good.

Filed under: Cellphones, Tablets, Software, Mobile, HP


06 Jun 11:31

What If It Isn't Islamism Per Se That's Behind the Swedish Riots?

by Ace
Hear this guy out. Immigrants who have recently arrived lack country-specific human capital. This includes language skills, labor-market experience, and cultural knowledge. In the United States, recent immigrants typically earn less than natives do, but they experience faster wage growth...
04 Jun 19:41

This Is What The IRS Spends Your Money On

by Tyler Durden

Our gold-plated government.

Moments ago, the Treasury inspector general for tax administration, the same source as the crushing report exposing the IRS persecution of conservative groups, released a report highlighting the spending and "questionable expensing" by IRS staff who blew through $49 million across 225 conferences between 2010 and 2012. The source of the money was largely unused cash meant to hire more enforcement agents. Instead it was spent on things like the previously mentioned Star Trek parody, ad hoc drawn paintings of Abraham Lincoln and "motivational speakers" whose primary requirement is to be flown in first class.

Before getting into the details of just how the IRS spent the tax money it itself collected, here is the summary of the report:

In April 2012, the Treasury Inspector General for Tax Administration received an allegation about an August 2010 Internal Revenue Service (IRS) conference held in Anaheim, California, (hereafter referred to as the Anaheim conference or the conference) that may have involved excessive spending. The Small Business/Self-Employed (SB/SE) Division held the conference, entitled "Leading into the Future," for its entire management staff. According to information provided by the IRS, this conference was provided to 2,609 employees at an estimated cost of approximately $4.1 million.

Where did the money come from:

According to SB/SE Division management, the SB/SE Division was allocated $132.7 million in the IRS's FY 2010 budget to hire 1,315 full-time employees.

Or roughly $100,000 per agent: one can see why the IRS is incentivized to collect as much as possible. After all, any leftover cash will be promptly spent on "conventions."

So what exactly was the cash used for?

First, here is the breakdown of all IRS conferences in the period 2010-2012. 225 conferences in 3 years (over 70 per year), costing $48.6 million, averaging $216,141 each. Morale at the IRS must truly have been abysmal if it needs this much "group-building" activity and entertainment.

Narrowing it down to the infamous Anaheim conference:

Drilling down some more, here is how much just the guest speakers were paid at the same conference:

The motivational level must have been at all time highs. But it gets better:

For the conference, SB/SE Division management contracted with 15 outside speakers for presentations at a total cost of $135,350.... One keynote speaker was contracted to perform two keynote speeches that lasted approximately one hour each, and the speaker was paid $17,000. According to the contract signed by the IRS, this speaker was "uniquely qualified to deliver this presentation because of the combination of his artistic abilities and his presentation skills. In each presentation, he will create a unique painting that reinforces his message of unlearning the rules, breaking the boundaries, and freeing the thought process to find creative solutions to challenges."

The speaker was Eric Wahl: "artist, author, performer." More importantly, he is an artist:

The speaker created six paintings at these two keynote sessions (three at each session). These paintings consisted of the following portraits: Albert Einstein (one); Michael Jordan (one); Abraham Lincoln (one); U2 singer Bono (one); and the Statute of Liberty (two).


At each session, one attendee was selected by the speaker and presented with one of the paintings. SB/SE Division management indicated that three paintings were donated to the Combined Federal Campaign as auction items (these paintings were sold for $75, $130, and $380). SB/SE Division management stated that the final painting prepared during these presentations was lost. Figure 2 shows an example of a painting prepared during the conference.



The second keynote speaker was paid $27,500 (including travel expenses) for two speeches lasting approximately one hour each. According to the contract signed by the IRS, this speaker was uniquely qualified because the presentation was based on a book published by the speaker, and the speaker "will share how seemingly random combinations of ideas can drive radical innovations. His concept of Intersectional Ideas illustrates how ideas from different fields can be combined to generate new solutions to existing challenges. According to the contract, this speaker's fee of $27,500 included a $2,500 flat fee for travel, which the contracting officer authorized to accommodate first-class travel. "

The speaker in question is this Frans Johannson. According to this twitter profile, he is "the author of The Medici Effect and The Click Moment, dragon slayer, innovation thought leader, speaker and CEO of The Medici Group."

This, ladies and gentlemen, is what is known as the public sector trickle-down effect, which keeps motivational speakers (and artists) among the 1%.


Next we get to the infamous Star Trek Video...

As previously stated, the IRS reported that it expended $50,187 on "videos" for the conference, but was unable to provide any details supporting this cost. We determined that SB/SE Division management showed several videos at the conference, including a Star Trek parody and another video entitled "SB/SE Shuffle."


The conference theme was "Leading into the Future," with a Star Trek parody video shown at the beginning of the conference. This video consisted of a scripted presentation featuring SB/SE Division executives portraying Star Trek characters in a tax-themed parody.


SB/SE Division management stated that the purpose of the video was to open the conference by highlighting "current issues facing the IRS and SB/SE [Division] in the leadership arena and set the stage for the many topics being covered at the conference." According to SB/SE Division management, the SB/SE Division Commissioner verbally approved the creation of the video.


Although SB/SE Division management did not track a specific cost associated with producing the Star Trek video, we determined the following:

  • The Star Trek video was approximately 5 minutes and 40 seconds long and featured SB/SE Division executives in Star Trek costumes on a mock set of the Starship Enterprise. Per the SB/SE Division, employees purchased the costumes using personal funds.
  • The IRS constructed a mock set at its television studio located in New Carrollton, Maryland, at a cost of $2,400. However, SB/SE Division  management  does not have any documentation supporting this amount.
  • IRS personnel located at its New Carrollton television studio worked on the video production. The average grade for these IRS employees was a General  Schedule-14.
  • The SB/SE Division estimated that it takes 11 hours of staff work to produce one minute of finished video. Based on the length of the Star Trek  video,  we estimate it took approximately 62 staff hours to produce the final video. At a minimum hourly rate of 50.00 for a General Schedule-14 employee, this converts to approximately $3,100 in staff time.
  • No documentation was maintained to track any costs associated with the development of the other production costs, such as the script development, makeup, lighting, and videotaping.

... Then on to lodgings:

As part of the Letters of Intent with the hotels, the IRS received a certain number of free rooms per night as well as suite upgrades that were used by IRS personnel. Federal employees traveling for work are paid for their lodging costs plus a fixed amount for meals (per diem). As part of the agreement, the hotels charged the IRS the Federal Government rate of $135 per night for all rooms (including suites) provided.


Specifically, the Letters of Intent indicate that 93 suite upgrades were provided by the Hilton, 33 by the Marriott, and six by the Sheraton each night of the conference. This represents 4.7 percent of the 2,830 rooms that the hotels agreed to reserve in the Letters of Intent.


Although the per diem rate of $135 was charged by the hotels, we determined the rack rates13 for the upgraded rooms provided ranged from $299 per night to $1,500 per night, depending on the room and the hotel. For example, the Commissioner, SB/SE Division, stayed five nights in a Presidential Suite at the Marriott. This room is described as having a private bedroom, living area, conference table, wet bar, and billiard table. We spoke with a Marriott representative who stated that this suite currently retails for $3,500 per night."

The IRS per diem...

Federal employees traveling for work are paid a fixed amount for meals (per diem). In Calendar Year 2010, the meal and incidental expenses allowance for Anaheim, California, was $71 per day. According to the Federal Travel Regulations, employees are not required to reduce their per diem reimbursement for complimentary meals provided by a hotel or motel.

And so on. Much more in the full report below.

02 Jun 17:18

Chicago Sun-Times Eliminates Photo Staff

by David Walker

A disappointing trend, but not unexpected as Americans permanently adjust to animated media.

The Chicago Sun-Times has laid off its entire photography staff, and will instead rely on reporters and freelancers for pictures, according to a Chicago Tribune report. The lay-offs affect about 20 full-time staff.

In announcing the layoffs, the Sun-Times issued a statement saying its “business is changing rapidly and our audiences are consistently seeking more video content with their news. We …are focused on bolstering our reporting capabilities with video and other multimedia elements….[A]s a result, we have had to restructure the way we manage multimedia, including photography, across the network.”

The Chicago Newspaper Guild says it will take actions against the cuts, according to Crain’s Chicago Business. “We will be looking into all of our options, legal and non-legal,” guild executive director Craig Rosenbaum told Crain’s.

Over the past decade, newspapers around the country have drastically reduced staff, including photographers. Few papers rely entirely on freelancers for their photography, however.

28 May 00:16

Oracle Exadata Database Machine: Proving 160 Xeon E7 Cores Are As “Slow” As 128 Xeon E5 Cores?

by kevinclosson

Reading Data Sheets
If you are in a position of influence affecting technology adoption in your enterprise you likely spend a lot of time reading data sheets from vendors.  This is just a quick blog entry about something I simply haven’t taken the time to cover even though the topic at hand has always be a “problem.” Well, at least since the release of the Oracle Exadata Database Machine X2-8.

read more

27 May 20:20

Ben Bernanke's Latest Casualty: The Pension Plan

by Tyler Durden

With every passing day, the destructive consequences of Ben Bernanke's ruinous monetary policy on the broader economy become more and more apparent.

Nowhere is this more evident than the observation of a record high stock market - benefiting just a tiny portion of the population - correlating directly with the record number of Americans on food stamps - the wealth effect "trickle down", or lack thereof, for everyone else (not to mention an economic growth rate four years after the "end of the recession" that is the worst recovery in recorded history).

Less hyperbolically, this can be seen empirically in the anti-correlation between the US economy and corporate profits. Through his "central" scheming, Bernanke has turned the discounting paradigm on its face, leading to a world in which the market no longer "discounts" or anticipates any information or fundamentals, but merely cares about how big the next latest and greatest liquidity hit will be, and in which there is an inverse correlation between profitability and general economic well-being.

And so on, and so on: which is to be expected from a world gone upside down as a result of the biggest doomed economic experiment ever conducted on a global scale to preserve a system which can only survive following debt liquidation, and yet one which we are told day in and day out needs just a little bit more debt... to fix a problem resulting from record debt.

For the the latest "unintended casualty" of Bernanke and his ZIRP policy, we look at corporate pension funds, which as WaPo reports, are finally starting to crack under the weight of pervasive central planning, brought to the brink by none other than the Chairman's "good intentions."

On the surface this makes no sense: after all pension funds invest in assets - the same assets that Bernanke's policy of serial cheap credit funded bubble creation are supposed to inflate. And they do. The only problem is that pension funds also have offsetting matching liabilities: or the amount of money a company has to inject in order to cover future retiree obligations. And in a period of low discount rates brought by a record low interest rate environment, these liabilities painfully and relentlessly increase when discounting future cash needs.

Quote WaPo:

Assets held by pension plans of the firms that make up the Standard & Poor’s 500-stock index increased by $113.4 billion in 2012, according to a report by Wilshire Associates, a consulting firm. But largely because of low rates, company liabilities increased even more: by $173.6 billion. That left the median corporation’s pension plan 76.9 percent funded, with just over $3 of assets for every $4 of liabilities.


Low interest rates hurt firms that provide pensions in two ways: They are required to set aside more money to pay for future pensions even as the liabilities appearing on their balance sheets grow larger.

And therein lies the rub: because while the NPV of future benefits in a bubbly environment results in higher asset values, it is the plunging rate used in the DCF that is dooming companies to a slow, painful cash bleeding death as they scramble to prefunded already underfunded (and ever more so) liabilities.

Visually, this is as follows:

In brief: the longer ZIRP drags on, the uglier the monetary reality that private (for now) workers will have to face when they finally choose to retire.

“Low interest rates are certainly a significant issue for employers,” said Judy A. Miller, director of retirement policy for the American Society of Pension Professionals and Actuaries. “The lower the interest rates, the higher the value of the benefits you have to provide and the higher the required contributions.”

Fear not though: in a world in which the recovery is so strong, Mark-to-Market accounting for banks still has to come back four years after it was killed at the altar of central planning, corporations are the next to realize that out of sight means out of mind, and what better way to ignore the pension issue than to just move it "off the books."

[F]irms are moving pension liabilities off their books. Last year, Verizon Communications transferred $7.5 billion in pension obligations — about a quarter of its total — to Prudential Insurance, to limit its liabilities and bolster its financial profile. The move came after General Motors paid Prudential to assume $25 billion of its pension risks.

Congress is in on it too now:

Congress moved last year to provide relief from the pension damage being caused by low rates by allowing firms to temporarily use a 25-year interest rate average when calculating how much money they had to funnel into funds.


“It phases out over the next five or six years,” said Joshua D. Rauh, a Stanford University professor who studies pension plans.


But the relief does not change how pension liabilities appear on a firm’s balance sheet. In addition, firms could find that under the new law, their pension-related liabilities could quickly rise after 2013 unless interest rates return to more normal levels. This has dampened the appeal of the change for many companies.

Nothing like legislating 'magic' accounting into law, allowing companies to reap the benefit of low interest rates and soaring asset values, while pricing in the future benefits of inflation that will magically come (but not impair the asset values of course) and sweep all their underfunded liability concerns away.

Of course, since everyone is in on the scheme - most certainly the workers who stands to receive less and less the longer the lies are perpetuated - it has no chance of working. Instead, what companies are doing is simply cutting off the "welfare" illusion tentacle at the core, and finally starting to freeze pension funds.

That has left many firms to conclude that it is best to freeze their pension plans, cutting off contributions for current workers and making new employees ineligible for the benefit.


At ILM, which sells commercial insurance to building-supply manufacturers and retailers, the pension plan had been a source of pride in a benevolent company culture developed over 117 years.


“Personally, I think a pension is a tremendous benefit,” said Don W. Blackwell, ILM’s chief financial officer and treasurer. “This is a very valuable benefit to our employees. We did not want to take it away.”


But with the pension plan causing the firm to report a $8 million liability at the end of last year and with no end in sight for low interest rates, “we waved the white flag,” Blackwell said. “It was a waiting game and we blinked. We had no idea that interest rates would remain this low.”

There is still the hope and the illusion that as companies switch from traditional pensions to that most direct bubble beneficiary, the 401(k), that everyone will live happily ever after? Well no: here is the side by side comparison:

Once it froze its pension plan, ILM started to contribute 3 percent of each worker’s salary to a 401(k) plan. It’s something, but nowhere near enough to provide the same level of retirement security that the company’s pension did.


Blackwell said an employee with a $40,000 annual salary who received a 3 percent raise each year, set aside 7 percent of his pay for retirement and received a 3 percent company contribution would wind up with roughly a third less money in his retirement fund after 25 years than he would have with the pension plan.

In the private sector, surprisingly, some still prefer realism over lies:

Still, ILM employees are taking the pension fund’s demise in stride. “To be honest, I am surprised that the plan was not frozen a while back,” said Traci Barber, 42, a service center manager who has been with ILM nearly 13 years. “I was surprised when I took this job that it even offered a pension plan.”


Knotts, the firm’s vice president for human resources, said that many employees do not seem to understand the security that a pension’s guaranteed monthly payments offer in retirement. “When people get hired here,” she said, “they are not thinking about that. All of the questions are about salary and paid time off.”


She was among the executives who fretted over cutting the pension plan, deciding to back the decision even though she knew it is bad for employees. Keeping it, she said, would be even worse for the company.


David J. Riese, who retired as vice president of claims in 1997 after 16 years at ILM, said he values the security provided by his company pension. Current employees, he added, will not have it as good.

At least someone dares to admit defeat in the face of ubiquitous central planning. And as always, the private sector is the first to realize that in the New Normal, all workers will be worse off.

The question we have is how long until the same logic and methodology, which is absolutely universal, is transferred from the private to the public sector, and how long until the tens of millions of state and federal servants, most of whom do their tedious and menial tasks with a matched enthusiasm, only so they can reap the benefits of a luxurious lifetime pension upon early retirement, still based on a discounting math from the Old Normal?

Because the start of the unwind of the welfare myth, if only in the private sector for now, should be making those enforcing a collapsing statist regime, made worse by Ben Bernanke's endless tinkering in what was formerly a free market, should be making the guardians of the status quo very, very nervous... and certainly has the disciples of the Bismarckian welfare state delusion on their toes, because they can see very well what is coming down the road.

27 May 15:56

With The Unwind Approaching, Here Are $18.6 Billion SAC Capital's Largest Stock Positions

by Tyler Durden

Nearly three years ago, following the publishing of "Is The SEC's Insider Trading Case Implicating FrontPoint A Sting Operation Aimed At S.A.C. Capital?" which exposed the key aspects of SAC's insider trading strategy, and which linked SAC, and the hedge fund world in general, to expert networks three weeks before virtually anyone outside of the 2 and 20 (or 3 and 50 as the case may be) world had heard of them and before they became a household euphemism for insider trading, we expected the full rabid fury of the world's best paid legal team to fall upon us. It didn't, which meant only one thing: we were correct, or they had bigger fish (to avoid harpooning) on their mind. Turns out it was both.

In the months and years following our publication, what we speculated has become fact, and as Vanity Fair's Bryan Burroughs reports, some 71 people have now been convicted or admitted guilt in the case of the government vs Stevie Cohen.

 But the final blow against the formerly infallible hedge fund that redefined the concept of "information arbitrage", and whose track record was almost as successful as that of Bernie Madoff, came from Blackstone, which as Reuters reported moments ago, has decided to pull all its money from SAC, which is the official end of SAC as an outside investment asset management operation. Because once the fund of funds operator, and the largest outside investor in SAC, votes no confidence in Cohen, it's game over, and at best SAC may remain as a family and employee-funded office, assuming of course the DOJ doesn't actually decide to demand restitution for years and decades of insider trading.

Actually, one outside investor may remain: the always amusing Anthony Scaramucci, head of the PR company, which has an occasional FOF operation, SkyBridge Capital. From NYT:

A group of Mr. Cohen’s investors continue to stand by him and hope that he stays in business. For Anthony Scaramucci, chief executive of the hedge fund firm SkyBridge Capital and a friend of Mr. Cohen’s, sticking with SAC has as much to do with friendship and loyalty as it does its superior performance.


“A lot of guys, when bombs are going off, you figure out very quickly who your friends are in the trenches,” Mr. Scaramucci said. “Most friends run from bullets, but your best friends run toward them. I have enormous amount of respect for the guy, and I think he’s misunderstood.”

He may be forced to change his tune once Cohen unwinds all outside capital. In the meantime, Blackstone is done. From Reuters:

Billionaire hedge fund manager Steven A. Cohen is losing the financial support of Blackstone Group Inc, the largest outside investor in his embattled SAC Capital Advisors, which is yanking much of its client money, according to a letter reviewed by Reuters.


A pension consultant, in a May 21 letter to clients, said Blackstone has notified Cohen that it intends to "fully redeem" a significant portion of the roughly $550 million the investment firm has invested with the $15 billion hedge fund. The letter from pension consulting firm Russell Investments said Blackstone submitted its redemption notice to SAC Capital sometime before May 15 because of ongoing concerns about the insider trading investigation that continues to engulf Cohen's fund.


Blackstone's investment with SAC Capital is through several investment funds known as hedge fund of funds and also through separately managed accounts it maintains for clients. The decision to redeem from SAC Capital impacts only client money invested in its hedge fund of funds, according to the letter. It's not clear how much of the $550 million is in those hedge fund of funds and it is not clear what Blackstone is advising clients who have money in separately managed accounts that is invested with SAC Capital.


Russell did say in the address to its pension clients that Blackstone "expects to receive 100 percent of investors' capital by year-end." Russell, which manages $173 billion in assets and oversees a number of index funds, also provides advice to pensions and institutional investors on where to invest their dollars in hedge funds.

Regardless, Blackstone's decision is a black stamp of death for SAC:

The decision by Blackstone, which has invested with SAC Capital for at least a decade, is a big blow to the 56-year-old fund manager, who is widely regarded as one of the most successful traders of his generation. Blackstone - which manages about $46 billion in hedge fund investments for public pensions, foundations, corporations and wealthy individuals - is seen as something of a bellwether for other investors in the $2.2 trillion hedge fund industry because of its stature.


Blackstone's hedge fund of funds invests client money with more than four dozen hedge funds, including SAC Capital, Pershing Square Capital Management, Elliott Management and DE Shaw & Co, according to people familiar with the private equity firm's asset management business.


The decision by Blackstone to redeem comes after the private equity and investment firm has stuck with Cohen throughout the course of the long-running investigation that has so far resulted in nine one-time employees of the firm being charged or implicated in insider trading schemes

The decision is now up to Cohen whether to keep operating in a reduced capacity ex-outside capital, or shut down altogether to remove any spotlight from his hedge fund which suddenly and "inexplicably" is dramatically underperforming the broader market. Should he choose the latter, the implications for market liquidity, already negligible at best, would be dire.

In which case the most important question is if and when the market will begin front-running the liquidation of Cohen's positions, of which there are some $18.6 billion in total, the top 30 of which are listed below:

Finally, anyone who still is unfamiliar with the epic story of Moby Steve and its inevitable denouement, the Vanity Fair's "The Hunt for Steve Cohen" is the best place to start.

23 May 23:53

Is America’s Economy Being Sovietized?

by Tyler Durden

Submitted by Brandon Smith of Alt-Market blog,

The foundation of the Soviet model of trade and investment was centralization under the guise of "universal public ownership". The entire goal of communism in general was not to give more social and political power to the people, but to extinguish alternative options and focus power into the hands of a select few. The process used to reach this end result can vary, but the goal always remains the same. In most cases, such centralization begins with economic hegemony, and it is in our fiscal structure that we have the means to see the future. Sovietization in our financial life will inevitably lead to sovietization in our political life.

Does the U.S. economy’s path resemble the Soviet template exactly? No. And I’m sure the very suggestion will make the average unaware free market evangelical froth at the mouth. However, as I plan to show, the parallels in our fundamentals are disturbing; the reality is that true free markets in America died a long time ago.

The Tyranny Of Planned Economy

The characteristics of a free market society defy the use of centralized planning. Adam Smith’s original concept of free market trade stood as an antithesis to what was then referred to as “mercantilism,” a select few “joint stock companies” (corporations) monopolizing production while using government ties to destroy any new competition. Unfortunately, there are to this day economists and politicians who believe that corporate centralization is a “natural” function of a free market. In reality, corporate monopolies are an unnatural creation of collusion between governments and big-money interests designed to suffocate any entrepreneurship outside of their sphere of influence. Over time, as we now see in the United States today, government power and corporate power begin to hybridize, until one can barely be distinguished from the other.

The bottom line is that you cannot have planned structures, monopolized production or controlled capital flow within an economy and still claim it to be a “free market. There are no exceptions to this rule.

The Soviet system was the ultimate in centralization. Every aspect of financial life was dictated by the communist government, from industrial input and output to investment to food production and rationing to wages and retail prices. Some people might argue that this structure is a far cry from what we now have in the United States, but let’s look at the fundamentals.

Controlled Money Creation

One of the primary tenets of The Communist Manifesto was the creation of a central bank meant to keep tight controls over currency issuance. The existence of a central bank immediately disrupts any chance of a true free market. Central banking without competition allows an oligarchy, whether corporate or political or a meshing of the two, to manipulate interest rates as well as adjust prices through inflation. Lending standards (which the central bank determines arbitrarily) built on fractional reserve banking opens the door to murky debt instruments and toxic financial products that are further used to either fabricate a “high” standard of living (as we saw in the U.S. in the 90s and early 2000s) or execute a bubble implosion causing a lower standard of living (as the U.S. is experiencing today).

Since the establishment of the Federal Reserve through subversive collusion between banking interests and corrupt politicians in 1913, America has not had a free market system. From that point forward, every boom and bust, every interest rate disaster, every inflationary increase in prices has been scientifically engineered.

Dominance Of Industry

Soviet controls on industrial output are legendary. Every part of the resource allocation process became subject to bureaucracy, and this led to stunted manufacturing growth as well as a culture of misrepresented economic data. In the United States, the establishment has taken a slightly different approach but with the same end result.

Heavy taxation on business ventures within the U.S. against entrepreneurs not lucky enough to run in elitists circles has erased incentives for manufacturing experiments within our borders. In the meantime, members of the corporate glee club receive government subsidization while they simultaneously outsource industrial projects to Third World nations. Controlled industry within communist Russia was meant to force the population to depend upon the government for every means of survival. In the United States, dependency on government has been replaced by interdependency on the globalized model in general. Necessities are now compartmentalized, and only select international businesses with cooperation from government have the ability to bring all the pieces together to keep our domestic economy running smoothly. Our society has been so distanced from self-sufficiency that many people now consider the globalist dynamic indispensable.

The next step in this degradation of free market industry is the introduction of "public works projects" by the federal government, which gives the illusion that job creation through centralization is possible.  This is the same strategy used in the Soviet Union and to this day, socialists still argue that the communist design for industrial expansion was "effective".  In truth, the soviet public works plan with all its trains and transits and bridges and buildings was an absolute failure, as the collapse of the country made clear.  Tax funded infrastructure is no replacement for free market invention, and at bottom, no public works enterprise can be undertaken without the government first stealing capital from one area in order to fund another.  Governments can never and will never create wealth or jobs.  They can only present the semblance of economic progress while siphoning wealth away from private citizens.

Bureaucracy And Food Production

U.S. Environmental Protection Agency and U.S. Food and Drug Administration regulations, based on dubious junk science and often instituted on high without congressional oversight, further erode business possibilities, especially for young companies as well as private agriculture, while giving free reign to elitist entities like Monsanto, an organization the government actually PROTECTS through specialized legislation making it nearly immune to civil litigation.

While farms in the United States are not exactly “controlled” by the Federal government in the Soviet sense, many of them are subsidized through welfare on the condition that they grow only particular kinds of crops, raise particular animals or grow nothing at all. This subsidization is an indirect form of price control, creating engineered scarcity or abundance. At the same time, agricultural empires like Monsanto make private farm ownership increasingly difficult by using their government protection to harass and squeeze out independent food producers.

This destabilization of private resource management by common citizens has culminated in the passage of President Barack Obama’s executive order National Defense Resource Preparedness, which allows under a “national emergency” (which the President can declare for any reason) the confiscation of any and all private resources, including farms and businesses, to be redistributed by the government to ensure security conditions. This is the Stalinist model, pure and simple.

Centralized Control Of Investment

We now know that since at least 2008, the U.S. stock market, often presented by the mainstream as a paragon of free market prowess, has actually been propped up and inflated by Federal Reserve fiat. Both former Fed Chairman Alan Greenspan and current branch head Richard Fisher have openly admitted in separate news interviews that the central bank spends considerable energy in “artificially sustaining” equity markets. This has been done, I suspect, with full knowledge of the U.S. Treasury and the Obama Administration.

The Soviet model for investment was to remove all uncertainties from their domestic markets, often in the name of preventing manipulation by “speculators.” The speculator rationale was generally a distraction away from the attempt to dictate the natural forces of supply and demand. The idea was that if the government could dismiss legitimate demand or lack of demand or hide excess supply or lack of supply, the perception of a balanced economy could be conjured for the population. This led to strict redirection of capital to areas where manipulation was needed to artificially pump up (or deflate) a particular part of the economy. The government became the sole investor of the Soviet system and, thus, the sole determinant of the success or failure of any particular market.

This is EXACTLY what is going on in America today, in what mainstream economists now call "the new normal". Federal Reserve fiat is being printed and dumped into every financial mechanism that supposedly maintains our country’s fiscal health, including stocks, Treasuries and municipals, while trade volume remains low and private investment disappears. The Federal government now owes its very existence to the continued support of central bank dollars, and the Dow Jones does as well. If this is not the Soviet ideal, then I don’t know what is.

Labor Oppression, Dismal Living Standards And Government Dependency

Poverty levels within the United States are at record highs. Nearly 50 million Americans are now dependent on government-subsidized food stamps for their survival. Nearly 100 million Americans receive welfare (or Social Security) in one form or another from the establishment. That is almost one-third of our entire population that relies on the system for at least a part of their sustainment. If Obamacare is fully realized, millions more Americans will also be conditioned to become dependent on government-designated healthcare providers. The point is not to pass judgment on those people who get money or services from the government, only to make clear our progression away from freedom and into centralized servitude.

For a Soviet structure to thrive, poverty among common citizens has to be institutionalized. Dependency requires a constant state of desperation. In America, this has been accomplished through a combination of inflated prices and reduced wages in conjunction with the destruction of labor options.

At the height of the communist machine in Russia, employment was ample; but the kind of employment one could apply for was dependent on bureaucratic red tape and availability based on a worker’s record. Only the academic “elite” within the government-run cesspools of Soviet universities and military schools had their choice of employment; even then, they were often pressured into particular specialized fields, depending on the kind of labor the state needed done at that particular time.

In the United States anyone can certainly aspire to do whatever job he hopes to do. But again, options have been removed economically; and the same academic elitism pervasive in Soviet Union labor markets exists in America today. In a recent installment of his weekly radio show, New York Mayor Michael Bloomberg said it was better for “so-so” high school students to pursue a career in plumbing rather than go to college.

Though I rarely agree with Bloomberg on anything, my initial reaction was surprise at his willingness to steer American youth away from university indoctrination centers. However, upon further examination, it became clear that Bloomberg was not trying to save the next generation time and money. Instead, he is promoting a shift in the labor dynamic of the U.S. economy toward a Soviet-style foundation. Bloomberg knows well that the U.S. labor market will never return to its former glory, partly because he is a supporter of the globalist policies that ruined our economy in the first place. Instead of suggesting ways to reverse the trend of progressive poverty and the lack of high-end jobs that engender ingenuity and invention, elitists like Bloomberg are saying “forget your dreams and get used to being a drone.”

In a 70% service and retail economy, where job availability is increasingly degraded and independent business is discouraged, Americans will have two choices:  Excel in the world of federally funded and propagandized education and sell your soul just for a chance at obtaining a professional career in a field of influence, or, settle for the leftovers.  Modern socialists often sing the praises of the soviet educational model for raising the literacy rates of once agricultural and isolated people to 98%, but what they fail to mention is that this literacy was only encouraged in order to create a more efficient servant class that was easier to propagandize.  The U.S. is moving into a similar paradigm.  For some people, being a plumber is a fine thing; but it should not be the only thing. In a true free market, a smart man can make his own way, even if he does not conform to the ideologies of the educational racket. In a Sovietized market, a smart man is prohibited from accomplishing anything unless he conforms to the ideologies of the educational racket.

Some people may respond that the centralization conspiracy within the American economy is an obvious thing today, and that there is little need to expose it any further.  I would point out that centralization is not the only issue here; the guidebook by which that centralization is being implemented is also important.  This has all been done before on the other side of the world only decades ago, and the end result was a horrifying cascade of social enslavement and mechanically inclined death.

In the end, the Soviet economy was so utterly fraudulent that the final breakdown of the system came as a complete surprise to many in political and economic fields of the era.  This is what happens when governments control all source data for financial statistics; transparency dies and collapse creeps in. Centralization is an absolute affront to the natural laws of supply and demand and an oppressive hindrance to the innovation that humanity thrives on. Such systems require constant theft from the populace in the form of reduced employment, reduced wages, reduced resources, increased taxes, increased price controls and a highly ignorant citizenry in order to function even for a short time. Sadly, the United States is well on its way in all of these areas, emulating a poisonous fiscal system and lending itself to a global economic tyranny in which all of us work much harder, for much less, and all for a government that seeks to use our very labor against us.

23 May 10:28

BBC's experimental Perceptive Radio intelligently adjusts what's playing

by Melissa Grey

DNP BBC shows off the Perceptive Radio,

At today's Thinking Digital conference, the BBC exhibited the first gadget designed through its Perceptive Media Project: the Perceptive Radio, created by Ian Forrester of the corporation's Future Media division. When the BBC announced the project last summer, the response included some head scratching, mostly due to a lack of clarity about what perceptive media entails. The BBC's R&D department defines perceptive media as distinct from personalized or pervasive media in that it intelligently adapts to specific audiences and surroundings. The Perceptive Radio accomplishes this through the use of light, sound and proximity sensors that adjust what the radio plays according to environmental factors like time, location and the listener's distance from the device. At the moment, the list of tricks ready to demo on the Perceptive Radio is short, but the BBC plans to open-source the design soon, allowing tinkerers to fiddle with it to their hearts' content.

Filed under: Portable Audio/Video, Science


Via: The Next Web

23 May 10:26

Microsoft takes on Apple in its latest Windows 8 ad

by Michael Archambault

Microsoft has been busy pushing out commercials that show their latest operating system can do more than just play games. The latest ad from Redmond doesn’t just put on a suit and tie to strut its work capabilities, it makes fun of Apple’s iPad in the process.

The commercial opens with a side by side of ASUS’s VivoTab and the world famous fruit tablet. Microsoft’s minimalist approach is very reminiscent of Apple’s commercials and makes it clear that this is a parody right down to the musical chopstick routine.

Our favorite virtual assistant, Siri, narrates the entire show, commenting on everything that she can’t do that Windows 8 tablets can. Live tiles, side by side applications, and PowerPoint slides are all touched upon.

Microsoft also doesn't forget to mention that an ASUS VivoTab 64 GB at $449 is much cheaper than Apple's iPad 64 GB at $699.

What do you think about Microsoft’s Windows 8 commercials going head to head with Apple’s iPad?

Source: WindowsVideos, Thanks, Dustin, for the tip!


21 May 23:08

Thanks To QE Bernanke Has Injected Foreign Banks With Over $1 Trillion In Cash For First Time Ever

by Tyler Durden

Two years ago, Zero Hedge first made the observation that the bulk of Fed reserves (also known simply as "cash created out of thin air" because money is first and foremost fungible no matter what textbook theoreticians may claim, and the only cash allocation preference is the capital allocation IRR analysis) had been parked not with US banks, but with foreign banks with US-based operations. We followed that with more analyses, showing explicitly how the Fed was providing a constant cash injection to foreign banks courtesy of the rate on overnight reserves which is the amount Fed pays to banks that hold reserves with it, as the bulk of reserves continued to end up with foreign banks - a situation set to become a huge political storm some time in 2014-2015 when the IOER has to rise and the Fed is "found" to have injected tens of billions of "interest" not into US banks but in foreign banks operating in the US, and which then can upstream the "profits" to insolvent offshore domiciled holding companies.

So it was our expectation that while if not slowing down its rate of money-creation (i.e., reserve-production) - something that won't happen for a long time as it would crash the stock market - the Fed's reserves would at least revert to being accumulated at US-based banks. No such luck. In fact as the latest H.8 report demonstrates, as of the most recently weekly data, the Fed's policies have led to foreign banks operating in the US holding an all time high amount of reserves, surpassing $1 trillion for the first time, or $1,033 billion to be precise.

This means that, as we expected several months ago, the only recipient of ongoing Fed money printing are not US banks, but foreign banks operating in the US. For those confused about the big picture, here is a chart showing the breakdown of cash held by big and small US banks as well as foreign banks, superimposed to total reserves created by the Fed since the start of the Great Financial Crisis. The correlation is 100%.

And just to prove that ALL the unsterilized cash from both QE2 and QEternity has essentially gone to support offshore banks, here is the conclusive chart showing the change in Fed reserves and cash held by foreign banks:

Finally, tying it all together, here is chart showing cash at US banks vs cash at foreign banks operating in the US. At $1.03 trillion in foreign cash, the Fed's policies have once again led to more cash being held by foreign banks than all cash held by domestic banks.

We are confident that we speak for all when we say: "Thank you Ben - insolvent foreign banks appreciate your ongoing QE2 and QEternity-funded generosity"

21 May 22:49

IRS' Lois Lerner To Plead The Fifth Before House Oversight Committee

by Tyler Durden

For an affair that numerous media outlets will have you believe has been spun out of all proportion, and that it really is the conservatives fault that the IRS was targeting them, it is somewhat ironic that the IRS official who opened up the entire Pandora's box with her targeted apology two weeks ago, and who learned in 2011 about the improper targeting of political groups yet lied under oath to Congress to the contrary, has decided to plead the Fifth and will invoke her right not to testify on Wednesday for fear of self-incrimination, according to her lawyer. But this would mean that... she may have something to hide? And that would be rather problematic for the media's spin cycle, although we are confident it will take just a few minutes of deep though in the proper channels, before this all too overt admission of guilt is somehow spun as the IRS being the unwitting targets of an aggressive McCarthyesque campaign seeking to discredit the government's impartial tax collector whose only noble purpose is to enable the government to get even bigger.

From the LA Times:

Lois Lerner, the head of the exempt organizations division of the IRS, won’t answer questions about what she knew about the improper screening — or why she didn’t disclose it to Congress, according to a letter from her defense lawyer, William W. Taylor III. Lerner was scheduled to appear before the House Oversight Committee on Wednesday.


“She has not committed any crime or made any misrepresentation but under the circumstances she has no choice but to take this course,” said a letter by Taylor to committee Chairman Darrell Issa (R-Vista). The letter, sent Monday, was obtained Tuesday by the Los Angeles Times.

Perhaps she could clarify what circumstances those are: maybe the same ones that forced her to bow out of the Western New England Law School commencement speech?

Taylor, a criminal defense attorney from the Washington firm Zuckerman Spaeder, said that the Department of Justice has launched a criminal investigation, and that the House committee has asked Lerner to explain why she provided “false or misleading information” to the committee four times last year.


Since Lerner won’t answer questions, Taylor asked that she be excused from appearing, saying that would “have no purpose other than to embarrass or burden her.” There was no immediate word whether the committee will grant her request.

Wait, criminal investigation? Does this mean that the administration will offer yet another deferred-prosecution deal whose terms will involve harsh mandatory lifetime pensions and onerous full benefits upon retirement?  Surely not even a corrupt, co-opted, drenched in scandals administration is that inhumane.

And on that note, we leave you with...