- President Killary
Authored by Paul Craig Roberts,
This is an English translation of an article that I wrote for the German magazine, Compact. I was encouraged by the high level of intelligent discourse that Compact brings to its readers. If only the US had more people capable of reaching beyond entertainment to comprehending the forces that affect them, there might be some hope for America.
Compact brings hope to Germany. The German people are beginning to understand that their country is not sovereign but a vassal of Washington and that their chancellor serves Washington’s hegemony and American financial interests, and not the German people.
Would The World Survive President Hillary?
Hillary Clinton is proving to be the “teflon candidate.” In her campaign for the Democratic presidential nomination, she has escaped damage from major scandals, any one of which would destroy a politician. Hillary has accepted massive bribes in the form of speaking fees from financial organizations and corporations. She is under investigation for misuse of classified data, an offense for which a number of whistleblowers are in prison. Hillary has survived the bombing of Libya, her creation of a failed Libyan state that is today a major source of terrorist jihadists, and the Benghazi controversy. She has survived charges that as Secretary of State she arranged favors for foreign interests in exchange for donations to the Clintons’ foundation. And, of course, there is a long list of previous scandals: Whitewater, Travelgate, Filegate. Diana Johnstone’s book, Queen of Chaos, describes Hillary Clinton as “the top salesperson for the ruling oligarchy.”
Hillary Clinton is a bought-and-paid-for representative of the big banks, the military-security complex, and the Israel Lobby. She will represent these interests, not those of the American people or America’s European allies.
The Clintons’ purchase by interest groups is public knowledge. For example, CNN reports that between February 2001 and May 2015 Bill and Hillary Clinton were paid $153 million in speaking fees for 729 speeches, an average price of $210,000.
As it became evident that Hillary Clinton would emerge as the likely Democratic presidential candidate, she was paid more. Deutsche Bank paid her $485,000 for one speech, and Goldman Sachs paid her $675,000 for three speeches. Bank of American Morgan Stanley, UBS, and Fidelity Investments each paid $225,000.
Despite Hillary’s blatent willingness to be bribed in public, her opponent, Bernie Sanders, has not succeeded in making an issue of Hillary’s shamelessness. Both of the main establishment newspapers, the Washington Post and the New York Times have come to Hillary’s defense.
Hillary is a war-monger. She pushed the Obama regime into the destruction of a stable and largely cooperative government in Libya where the “Arab Spring” was a CIA-backed group of jihadists who were used to dislodge China from its oil investments in eastern Libya. She urged her husband to bomb Yugoslavia. She pushed for “regime change” in Syria. She oversaw the coup that overthrew the democratically elected president of Honduras. She brought neoconservative Victoria Nuland, who arranged the coup that overthrew the democratically elected president of Ukraine, into the State Department. Hillary has called President Vladimir Putin of Russia the “new Hitler.” Hillary as president guarantees war and more war.
In the United States government has been privatized. Office holders use their positions in order to make themselves wealthy, not in order to serve the public interest. Bill and Hillary Clinton epitomize the use of public office in behalf of the office holder’s interest. For the Clintons government means using public office to be rewarded for doing favors for private interests. The Wall Street Journal reported that “at least 60 companies that lobbied the State Department during her [Hillary Clinton’s] tenure as Secretary of State donated a total of more than $26 million to the Clinton Foundation.”
According to washingtonsblog.com, “All told, the Clinton Foundation and its affiliates have collected donations and pledges from all souces of more than $1.6 billion, accoring to their tax returns.”
According to rootsactionteam.com, multi-million dollar donars to the Clinton Foundation include Saudi Arabia, Ukrainian oligarch Victor Pinchuk, Kuwait, ExxonMobil, Friends of Saudi Arabia, James Murdoch, Qatar, Boeing, Dow, Goldman Sachs, Walmart, and the United Arab Emirates.
According to the International Business Times, “Under Hillary Clinton, the State Department approved $165 billion worth of commercial arms sales to 20 nations whose governments had given millions to the Clinton Foundation.”
Hillary Clinton has escaped unharmed from so many crimes and scandals that she would likely be the most reckless president in American history. With the arms race renewed, with Russia declared “an existential threat to the United States,” and with Hillary’s declaration of President Putin as the new Hitler, Hillary’s arrogant self-confidence is likely to result in over-reach that ends in conflict between NATO and Russia. Considering the extraordinary destructive force of nuclear weapons, Hillary as president could mean the end of life on earth.
- The Best (And Worst) States To Avoid Income Taxes
As Tax Day (April 18th) looms, we are once again reminded of how deeply the government reaches into our pockets. However, as Bloomberg details, there is one way to reduce your income tax burden – Switch states. Federal tax rates are the same no matter where you live, but state income taxes are all over the place.
Some have progressive tax systems, where top earners pay a higher marginal rate on their taxable income than those who make less.
Eight states have a flat tax, applying the same percentage levy across all incomes.
Three states actually have regressive income taxes, where the mega-wealthy pay a lower percentage of their taxable income than those in the middle.
And nine states have no income tax at all.
See how your state stacks up.
This chart lets you compare the effective state tax rates of a household earning the U.S. median of $36,841 in adjusted gross income with a household earning $1,860,848, just enough to enter the top 0.1%.
Finally, as we noted previously, if you hate taxes, you are far from alone. According to NBC News, here are some of the things that Americans would rather do than pay taxes…
Six percent would rather sell a kidney, eight percent would rather name their first-born “Taxes,” and 11 percent would rather spend three years cleaning the bathrooms at noro-torious Chipotle.
Of course our system was never intended to be like this anyway. Our founders hated taxes, and they fought a very bitter war to escape the yoke of oppressive taxation. During his very first inaugural address, Thomas Jefferson clearly expressed what he thought about taxes…
“A wise and frugal government… shall restrain men from injuring one another, shall leave them otherwise free to regulate their own pursuits of industry and improvement, and shall not take from the mouth of labor the bread it has earned. This is the sum of good government.”
Why couldn’t we have listened to him?
- Shoe Company Accuses Obama Of Bribing It To Join TPP Trade Deal
Another Obama corporatocracy conspiracy theory becomes fact as The Boston Globe reports shoemaker 'New Balance' is renewing its opposition to the far-reaching Pacific Rim trade deal, saying the Obama administration reneged on a promise to give the sneaker maker a fair shot at military business if it stopped bad-mouthing the agreement. "We swallowed the poison pill that is TPP so we could have a chance to bid on these contracts," rages a New Balance spokesman, "[but] the chances of the Department of Defense buying shoes that are made in the USA are slim to none while Obama is president."
Since the so-called free-trade-agreement known as Trans-Pacific-Partnership was signed last October, details of the actual 'agreement' have been few and far between and critics around the world have also lambasted the deal for being negotiated in secret and being biased towards corporations, criticisms that are likely to be amplified when the national legislatures seek to ratify the TPP in the months to come. This will likely now be even more pronounced as companies com forward to highlight the bribery and manipulation involved… As The Boston Globe details,
After several years of resistance to the Trans-Pacific Partnership, a pact aimed at making it easier to conduct trade among the United States and 11 other countries, the Boston company had gone quiet last year. New Balance officials say one big reason is that they were told the Department of Defense would give them serious consideration for a contract to outfit recruits with athletic shoes.
But no order has been placed, and New Balance officials say the Pentagon is intentionally delaying any purchase.
New Balance is reviving its fight against the trade deal, which would, in part, gradually phase out tariffs on shoes made in Vietnam. A loss of those tariffs, the company says, would make imports cheaper and jeopardize its factory jobs in New England.
“We swallowed the poison pill that is TPP so we could have a chance to bid on these contracts,” said Matt LeBretton, New Balance’s vice president of public affairs.
“We were assured this would be a top-down approach at the Department of Defense if we agreed to either support or remain neutral on TPP. [But] the chances of the Department of Defense buying shoes that are made in the USA are slim to none while Obama is president.”
The details of the 'deal' highlight the kind of back-door dealings and cozy non-free-market, non-free-trade quid pro quo-ism that is always brushed off as conspiracist claptrap but is in fact absolutely true…
The company employs about 1,400 people at its five New England factories — one in Brighton, one in Lawrence, and three in Maine.
Company officials say they are looking to add workers to those plants, and they see a major military contract, with potentially as many as 200,000 shoe orders a year, as a way to help reach that goal.
Nearly every piece of gear that military recruits wear is made in the United States, per a 1940s-era law known as the Berry Amendment. But for many years, athletic shoes were exempt, largely because of a lack of sufficient domestic options.
Hoping to change that, New Balance and other companies worked toward making an all-American shoe. New Balance even purchased an expensive machine to make midsoles, a key component that was nearly always made overseas.
In 2014, the Pentagon relented. With competition among US manufacturers, officials said they were ready to consider domestically made shoes.
LeBretton said a representative for the Obama administration then asked New Balance to accept a compromise version of the trade deal, partly in exchange for a pledge of help getting the Department the Defense to expedite the purchase of US-made shoes.
But that help never arrived, LeBretton said. The agency still hasn’t ordered any US-made sneakers.
Executives at New Balance recognize that they risk alienating a big potential customer by challenging the US government over the trade agreement. But LeBretton said it’s worth the gamble.
“We make a lot fewer shoes in the US than we do overseas, but the point is we’re trying to make more here, not less,” LeBretton said. “When agreements like this go into place, what that says to us is that our president and our trade negotiators, they don’t want us to make more products here.”
As we concluded previously, and merely confirmed by New Balance's brave and outspoken stance against the Obama administration's media gag, packaged as a gift to the American people that will renew industry and make us more competitive, the Trans-Pacific Partnership is a Trojan horse. It’s a coup by multinational corporations who want global subservience to their agenda. Buyer beware. Citizens beware.
- Following Double-Fed Emergency Meetings, China Devalues Yuan By Most In 3 Months
After weeks of "stability," and following two emergency Fed meetings in 3 days (and an unexpected ease by MAS), The PBOC decided today was the right time to drastically slash the Yuan fix by 300 pips. This is the largest devaluation of the Chinese currency since January 7th (and second largest since August's world-market-turmoiling devaluation). Offshore Yuan had been tumbling all day (shrugging off the supposedly better trade data as FX traders saw through the colossal spike in imports from HK as indicative of capital outflows), and is falling further following PBOC's cut.
As Bloomberg's Tom Orlik notes, China's March imports from Hong Kong soared an implausible 116% YoY! As it is clearly disguising capital flows…
Trade mis-invoicing as a way to hide capital flows remains a factor. In the past, over-invoicing for exports was used as a way to hide capital inflows.
The latest data show the reverse phenomenon, with over-invoicing of imports as a way of hiding capital outflows.
And Offshore Yuan – after an initial modest rally on the trade data – plunged all day…
Which seemingly prompted PBOC to slash its Yuan Fix…by the most in 3 months…
As it appears it is time for the USD to take its punishment (as JPY and EUR has in the last few weeks of divergence between Yuan basket and USDCNY)…
All of this chaos amid the biggest short-squeeze in US stocks in 6 months makes us wonder if something serious is not breaking behind the scenes and every effort is being made to put lipstick on this pig.
- Billion Dollar Baby Bye Bye: Regulators Seek To Ban Theranos Founder Elizabeth Holmes
It seems billion dollar baby of Silcon Valley, Elizabeth Holmes, is facing yet another unicorn-slaying moment as the fairy-take ending for Stanford drop-out looks increasingly distant after WSJ reports regulators are seeking ban the so-called "billionaire" from the blood-tsting business for two years after U.S. health inspectors have found serious deficiencies at Theranos Inc.’s laboratory in Northern California.
As The Wall Street Journal, which has broke and has been on this story from day one, reports,
In a letter dated March 18, the Centers for Medicare and Medicaid Services said it plans to revoke the California lab’s federal license and prohibit its owners, including Ms. Holmes and Theranos’s president, Sunny Balwani, from owning or running any other lab for at least two years. That would include the company’s only other lab, located in Arizona.
The two labs generate most of Theranos’s revenue and are at the core of its strategy to revolutionize the blood-testing industry with new technology, user-friendliness and quick results.
The letter hasn’t been released to the public, but a copy was reviewed by The Wall Street Journal.
Holmes has 10 days to try to clear her name: "under federal law, Theranos had 10 days to give CMS evidence of why the sanctions shouldn’t be imposed. The company has responded, and CMS is reviewing the response, according to a person familiar with the matter. If the company doesn’t respond to the satisfaction of the regulators, CMS said in the letter that it will proceed to impose the sanctions."
And if sanctions are imposed, it's pretty much game over.
If the sanctions are imposed, some would take effect within eight days. Others would take longer, including revoking the California lab’s license, which could occur in 60 days.
Theranos could appeal to an administrative law judge and then a departmental appeals board, which could delay the effective date of some of the sanctions. If Theranos were to appeal, the lab would keep its license pending the outcome of the appeals process. The proposed ban on Ms. Holmes and Mr. Balwani would take effect at the same time as the lab’s license revocation and would be subject to the same appeals process.
The appeals process could take months, and such appeals have rarely succeeded in the past. A list of appeals decisions on the agency’s website shows that the agency didn’t lose a single such case from 2001 to the end of 2010.
None of this should be a huge surprise, after Aswath Damodaran chastened just a few months ago, looking back at the build up and the let down on the Theranos story, the recurring question that comes up is how the smart people that funded, promoted and wrote about this company never stopped and looked beyond the claim of “30 tests from one drop of blood” that seemed to be the mantra for the company. While we may never know the answer to the question, Aswath Damodaran offers three possible reasons that should operate as red flags on future young company narratives…
1. The Runaway Story: If Aaron Sorkin were writing a movie about a young start up, it would be almost impossible for him to come up with one as gripping as the Theranos story: a nineteen-year old woman (that already makes it different from the typical start up founder), drops out of Stanford (the new Harvard) and disrupts a business that makes us go through a health ritual that we all dislike. Who amongst us has not sat for hours at a lab for a blood test, subjected ourselves to multiple syringe shots as the technician draw large vials of blood, waited for days to get the test back and then blanched at the bill for $1,500 for the tests? To add to its allure, the story had a missionary component to it, of a product that would change health care around the world by bringing cheap and speedy blood testing to the vast multitudes that cannot afford the status quo.
The mix of exuberance, passion and missionary zeal that animated the company comes through in this interview that Ms. Holmes gave Wired magazine before the dam broke a few weeks ago. As you read the interview, you can perhaps see why there was so little questioning and skepticism along the way. With a story this good and a heroine this likeable, would you want to be the Grinch raising mundane questions about whether the product actually works?
2. The Black Turtleneck: I must confess that the one aspect of this story that has always bothered me (and I am probably being petty) is the black turtleneck that has become Ms. Holmes’s uniform. She has boasted of having dozens of black turtlenecks in her closet and while there is mention that her original model for the outfit was Sharon Stone, and that Ms. Holmes does this because it saves her time, she has never tamped down the predictable comparisons that people made to Steve Jobs.
If a central ingredient of a credible narrative is authenticity, and I think it is, trying to dress like someone else (Steve Jobs, Warren Buffett or the Dalai Lama) undercuts that quality.
3. Governance matters (even at private businesses): I have always been surprised by the absence of attention paid to corporate governance at young, start ups and private businesses, but I have attributed that to two factors. One is that these businesses are often run by their founders, who have their wealth (both financial and human capital) vested in these businesses, and are therefore as less likely to act like “managers” do in publicly traded companies where there is separation of ownership and management. The other is that the venture capitalists who invest in these firms often have a much more direct role to play in how they are run, and thus should be able to protect themselves. Theranos illustrates the limitations of these built in governance mechanisms, with a board of directors in August 2015 had twelve members:
I apologize if I am hurting anyone’s feelings, but my first reaction as I was reading through the list was “Really? He is still alive?”, followed by the suspicion that Theranos was in the process of developing a biological weapon of some sort. This is a board that may have made sense (twenty years ago) for a defense contractor, but not for a company whose primary task is working through the FDA approval process and getting customers in the health care business. (Theranos does some work for the US Military, though like almost everything else about the company, the work is so secret that no one seems to know what it involves.)The only two outside members that may have had the remotest link to the health care business were Bill Frist, a doctor and lead stockholder in Hospital Corporation of America, and William Foege, worthy for honor because of his role in eradicating small pox. My cynical reaction is that if you were Ms. Holmes and wanted to create a board of directors that had little idea what you were doing as a business and had no interest in asking, you could not have done much better than this group of septuagenarians. - Singapore Unexpectedly Eases Monetary Policy After "Economy Grinds To A Halt"
After a brief hiatus during which central banks refrained from stimulating their economies by the only way they know how, i.e., devaluing their currency through monetary policy, moments ago Singapore broke ranks when its central bank, the Monetary Authority of Singapore, unexpectedly eased monetary policy and drew a line against further appreciation when it announced that it would move to zero-percent appreciation in its currency.
The MAS also said that width of policy band and the level at which it is centered will be unchanged while adding that the Singapore economy is projected to expand at a more modest pace in 2016 than envisaged in the October policy review,” the central bank said. “Core inflation should also pick up more gradually over the course of 2016 than previously anticipated.”
The decision came as a surprise to economists, as 12 of the 18 polled said they expected no change from the central bank. It also surprised the SGD which proceeded to slide against the dollar following the announcement.
As a reminder, the Singapore central bank eased monetary policy twice last year by reducing the slope of band, while retaining “modest and gradual appreciation” of currency against basket.
Why did the MAS feel compelled to ease further? According to Bloomberg, the reason is that the trade-dependent city-state’s economic growth ground to a halt last quarter.
Growth was stagnant on an annualized basis compared with the fourth quarter, the trade ministry said in a separate report. That was in line with the median forecast of 12 economists surveyed by Bloomberg. The city state’s services sector contracted for the first time since the first quarter of 2015.
“As Asia’s financial hub, Singapore is feeling the effects of the global downturn and China’s weakening economy. “More businesses were shut than opened in December and February, while bank loans have dropped every month since October, the longest period of declines since 2000.”
As Bloomberg adds, Citigroup Inc. economist Kit Wei Zheng said in a report last month that the decline in net new businesses for the first time since 2009 signals a possible recession. In the past two decades, the only time that business closures exceeded openings was during contractionary periods in 2009, 2001 and 1995 to 1997, he said.
More economic weakness was revealed when the services industry contracted an annualized 3.8 percent in the first quarter from the previous three months, when it grew 7.7 percent. Manufacturing and construction rebounded strongly in the quarter, expanding 18.2 percent and 10.2 percent respectively
“The key factors we see here are an absence of a significant pickup in the external front,” Weiwen Ng, an economist with Australia & New Zealand Banking Group Ltd., said by phone from Singapore before the data was released. “The rest of the year will be a function of how the global outlook evolves.”
So now that Singapore has confirmed what the IMF warned about this week, namely that in a time of soaring global debt growth remains elusive and the only way to rent it, is to “beggar thy neighrbor” with monetary devaluation, just which other more prominent central bank will be the next to ease monetary policy because, you know, “global conditions”?
- The Fed Just Held An Emergency Meeting To Discuss Capital Markets
As we reported on Friday morning, in a surprise announcement the Fed revealed under its “Government in the Sunshine” protocol that it would hold a closed meeting under expedited procedures in which it would review the “advance and discount rates to be charged by Federal Reserve Banks.” The last time such a meeting took place was less than a month before the Fed hiked rates for the first time in years.
What took place during the meeting will remain a mystery, however what made it particularly interesting is that just hours later it was followed by another impromptu closed-door session, this time between president Obama and Janet Yellen.
What information was exchanged during the follow up meeting is also a secret, although the White House was kind enough to release the following statement:
“The President and Chair Yellen met this afternoon in the Oval Office as part of an ongoing dialogue on the state of the economy. They discussed both the near and long-term growth outlook, the state of the labor market, inequality, and potential risks to the economy, both in the United States and globally. They also discussed the significant progress that has been made through the continued implementation of Wall Street Reform to strengthen our financial system and protect consumers.”
We also will never know if there is any coincidence between these two meeting and the fact that just after they took place, the S&P went from red on the year to fresh 2016 highs in under two days.
We do know, however, that it is a very busy week for unexpected, emergency meeting for the Fed, because according to the Fed’s board meeting website, today at 3pm the Fed held yet another previously unscheduled “meeting under expedited procedures”, only instead of discussing rates this time, the Fed talked about institutions, infrastructure and financial markets.
Don’t expect the Fed to disclose what was said during this meeting either, although keep an eye on stocks: they may be the only tell one needs.
- State Of Fear – Corruption In High Places
Submitted by Pater Tenebrarum via Acting-Man.com,
Mr. X and his Mysterious Benefactors
As the Australian Broadcasting Corporation (ABC) reports, a money-laundering alarm was triggered at AmBank in Malaysia, a bank part-owned by one of Australia’s “big four” banks, ANZ. What had triggered the alarm? Money had poured into the personal account of one of the bank’s customers, a certain Mr. X, in truly staggering amounts.
A recent photograph of Mr. X.
Hundreds of millions of dollars were paid into the account of Mr. X by a Saudi prince described as “mysterious”, and two British Virgin Island companies characterized as “shadowy”.
Overall, more than $1.05 billion landed in Mr. X’s private account in a little over two years. This was bound to raise eyebrows, considering Mr. X’s official salary only amounts to approx. $100,000 per year. Not a bad salary to be sure, but even if he were to save half of it every year, it would take him 210,000 years to save up $1.05 billion, not just two.
Then the head of a government-owned Malaysian company put millions of ringgit into Mr. X’s credit card accounts, which had been a tad overdrawn (by slightly over $ 1m.), due to Mr. X’s wife splurging a bit on jewelry in 2014.
A nice little pile of ringgit suddenly found its way into Mr. X’s credit card accounts, taking care of a slight overdraft.
Apparently Mr. X was not shy about spending some of his new-found wealth either. Apart from his wife’s predilection for expensive jewelry and other luxury items, he himself occasionally displayed a yen for fancy cars and reportedly also favored swanky accommodation. Friends and partners of Mr. X also enjoyed a windfall.
Thy “mysterious Saudi Prince” who wired sums ranging from $25 million to $50 million in one fell swoop into Mr. X’s account was one “Prince Faisal bin Turki bin Bandar Al-Saud”. These deposits were accompanied by letters penned by yet another Saudi prince, “HRH Prince Saud Abdulaziz Al-Saud”, pledging quite generous “gifts” to Mr. X. One promise of $375 m. was accompanied by the following reassuring words:
“This is merely a token gesture on my part but it is my way of contributing to the development of Islam to the world. You shall have absolute discretion to determine how the Gift shall be utilized. This letter is issued as a gesture of good faith and for clarification, I do not expect to receive any personal benefit whether directly or indirectly as a result of the Gift. The Gift should not in any event be construed as an act of corruption since this is against the practice of Islam and I personally do not encourage such practices in any manner whatsoever.”
The gift-bearing mystery prince from the desert kingdom.
The title “HRH” (“his royal highness”) implies that the man is either a son or a grandson of King Abdulaziz Ibn Saud, the first king of modern Saudi Arabia. Given that Ibn Saud had 22 wives, 45 sons and approximately 1,000 grandchildren, all of whom are “Al-Sauds”, with a great many “Abdulazizes” among them, this could really be anyone. It was nice of him though to provide Mr. X with this get-out-of-jail card (“there’s absolutely no corruption involved, honestly!”).
Obviously, with such convincing assurances accompanying the big deposits, there was little reason to suspect Mr. X of any wrongdoing. Malaysia’s central bank governor assured ABC though that there is still an “ongoing investigation”, even after the (new) prosecutor-general shut down a corruption probe of Mr. X in January (his predecessor planned to lay criminal charges against Mr. X and was removed from office a few days before he could do so).
The Virgin Island companies, “Blackstone Asia Real Estate Partners” and “Tanore Finance” were no slouches either, with the latter wiring $680 million into the account of Mr. X in a single month. We imagine that any normal tax serf would have been visited by nosy government minions for a little quality inquisition time shortly after receiving the first of this series of large deposits – exonerating letters from mystery princes notwithstanding.
Mr. X – the codename that has actually been assigned to him at AmBank – has evidently been spared such indignities. The reason is that he is otherwise known as Najib Razak and has been Malaysia’s prime minister since 2009.
Najib Razak, a.k.a. Mr. X, who not surprisingly, is another finger-wagger. Last year he had the brilliant idea to order Malaysia’s Communications and Multimedia Commission to “step up enforcement to check dissemination of slander on social media”.
State of Fear
The revelations about the prime ministers account are connected to the so-called 1MBD scandal involving Malaysia’s sovereign wealth fund. The fund has been an utter disaster, “mislaying” some $4 billion in total – and its advisory board is chaired by none other than Najib Razak.
Two things have piqued our interest: for one thing, we were beginning to wonder about the fact that Najib Razak actually remains in office and has so far successfully deflected all attempts to unseat him over the scandal, including massive public protests (however, the air is clearly getting thinner now).
Secondly, ABC has recently sent a team of investigators to Malaysia, who were briefly arrested after attempting to ask the prime minister a few questions. For a while it looked like they may actually face jail time, but that was probably considered one step too far and they were let go after two weeks. They were in Kuala Lumpur while filming a documentary on the still burgeoning scandal.
The documentary – “State of Fear: Murder and Money in Malaysia” – is truly fascinating. As the blurb at ABC’s web site says:
“It’s a story of intrigue, corruption and multiple murders, stretching from the streets of Malaysia’s capital Kuala Lumpur, to Switzerland, France and the US as well as Hong Kong and Singapore, all the way to Australia’s doorstep.”
Here is the video… it’s really quite an incredible story: State of Fear – Murder and Money in Malaysia
- Inside The Most Important Building For U.S. Capital Markets, Where Trillions Trade Each Day
Ask people which is the most important structure that keeps the US capital markets humming day after day, and most will likely erroneously say the New York Stock Exchange, which however over the past decade has transformed from its historic role into nothing more than a TV studio for financial cable networks. Some might be closer to the truth and say that the most important building is the true New York Stock Exchange located in Mahwah, New Jersey however that also is not true as the NYSE now accounts for just a small fraction of total traded volume.
No, the real answer of what the most important building if for US capital markets, and not just stocks, but all assets classes, as under its roof on a daily basis electronic trades representing many trillions of dollars’ worth of equities, derivatives, currencies, and fixed-income take place, is the Equinix NY4 data center, located at 755 Secaucus Road, in Secaucus, NJ 07094.
This, as Bloomberg puts it in its fascinating profile of this particular structure, “is where Wall Street actually transacts.”
Behold what the new trading floor looks like: This view from a catwalk shows some of the miles of fiber-optic cable that connect to machines below.
Photo: Bloomberg
The first thing that any entrant in this giant, semi-refrigerated warehouse containing millions of servers will notice is that there are virtually no humans to be seen anywhere. Yes: the Equinix’s NY4 data center hosts 49 exchanges (among the customers that pay to use this Secaucus location) and it is all just servers and fiberoptic interconnections either between them, or to the outside world.
This is how Bloomberg introduces this new nerve centre of virtually every capital markets in the US: “six miles northwest of the New York Stock Exchange as the microwave flies, across the Hudson River and within earshot of Interstate 95, is a building with no name. Only three numbers mark its address, and, like much of its surroundings, it’s nondescript, encircled by windblown trash and lonely semitrailers waiting to be hauled away somewhere. It’s a part of New Jersey that’s, well, ugly.”
That’s not a coincidence: the building wants to attract as little attention to itself as possible because it happens to be the most critical node in the U.S. financial system. “The 49 different exchanges that lease space at this data center sent a record 9.6 million messages per second through its fiber-optic cables in February. Every day, electronic trades representing trillions of dollars’ worth of equities, derivatives, currencies, and fixed-income assets pass under this roof. This is NY4.”
NY4 is just one of the core assets, or “crown jewels” of Equinix, the $22.7 billion company that’s quietly grown into the world’s largest owner of interconnected data centers, which really is a fancy name for warehouses.
The full public technical specs of this vast building are below:
However, Equinix pitches its centers as more than just storage space for servers.
As Bloomberg reports, its clients pay in part because of who else is there. NY4 Clients includes the Chicago Board Options Exchange, Direct Edge, ICAP, Nasdaq, the NYSE, and Bloomberg LP, the parent company of Bloomberg News.
Servers in cages at NY4. Photo: Bloomberg
It’s not just legacy Wall Street firms, or their more recent collocated High Frequency Trading spawn that call Secaucus their home. IEX Group, the firm that starred in Michael Lewis’s 2014 book Flash Boys, stashes a key piece of its hardware in one of Equinix’s New Jersey data centers: a coil of fiber-optic cable that slows orders down by a fraction of a second. And those firms are just from the handful of financial industry customers Equinix discloses. It connects more than 6,300 businesses to their customers, and most of those firms don’t want it known that they lease one of NY4’s metal cages, which are identified only by numbers, not names.
It’s not just Wall Street. Equinix’s nonfinancial clients, meanwhile, include some of the Internet’s biggest names: Amazon.com, AT&T, China Mobile, Comcast, Facebook, Hulu, LinkedIn, Microsoft, Netflix, Pandora, and Verizon.
It is the immediate proximity of these non-financial that makes the building all the more desirable for financial companies which are located at the very place where the servers of companies whose assets they trade billions of times per day, are actually located.
As Bloomberg adds, much of the Internet is literally run through the nondescript buildings Equinix has scattered around the world. “They’re a crucial component of how the cloud works,” says Colby Synesael, an analyst at Cowen & Co. who covers Equinix. “It’s where the Internet lives.”
As it turns out, the internet is very heavily protected. The security at NY4 is unprecedented: to get from the parking lot to a spot where you could touch one of the servers you’d have to go through five checkpoints. One of them is a so-called man trap with two automatic steel doors that never open at the same time. Your palm print is required twice in addition to your PIN code. A wall of video monitors captures every nook and cranny of the 338,000-square-foot building.
Those lucky enough to enter will notice that once in, the space is enveloped by a rush of white noise from the thousands of computer fans whirring away to keep the servers cool. To help maintain the temperature, the ceiling is 45 feet high, roughly four stories up. It’s barely visible—not just because of its height, but also thanks to all of the suspended trays of cables and cooling ducts running overhead. All this goes toward one statistic: Equinix says in its annual filing that it kept its facilities up and running 99.9999 percent of the time in 2015.
The 12 air-handling units in NY4 move cold air via overhead ducts.
However, in the off chance that primary power is somehow interrupted, NY4 is protected: the company prides itself on its backups. According to Bloomberg, the structure’s uninterrupted power supply room has 5,600 batteries on standby to provide eight minutes of electricity while the generators rev to life. Should the air conditioning fail and risk the servers overheating, there are three 150,000-gallon tanks filled with water chilled to 45F. Running that cold water through pipes would give NY4 staff 20 minutes to get the AC fixed.
Finally, there are the generators: 18 of them, “each the size of a locomotive engine and able to crank out 2.5 megawatts of power” Equinix keeps 180,000 gallons of diesel fuel on-site to run them. In terms of footprint, NY4 is roughly the same size as a Manhattan block. If you want to look out the window, too bad. There isn’t one.
Standby power comes from 18 generators that can crank out 2.5?megawatts each. Photo: Bloomberg
Then there is the matter of the Feng Shui.
As Bloomberg, whose reporters recently visited the facility, reports “there’s a slick appearance to it all, from the red-lit foyer to the metal all around and the blue lights that shine from above. This last feature comes in handy at night for security purposes, but it’s also got an aesthetic touch to it. “When everything is dark and you only have these blue lights, it looks really cool,” says Michael Poleshuk, senior director of operations for Equinix in the northeast region, as he leads a tour.”
And this is the brilliance of Equinix: while exchanges, dark pools, ATS bicker and compete who gets what traffic, and cloud providers scramble to reach clients, one company has managed to roll up the most mission-critical providers of life in the US as we know it – it would not be an exageration to say that a double digit percentage of US GDP is made possible thanks to this one warehouse.
But there are many more.
Another reason the location is important to Wall Street is because NY4 is only one part of Equinix’s Secaucus, N.J., campus. This is how the company pitches its services on its website:
- Connections to 125+ network service providers
- Facilities compliant with SSAE16 SOC-1 Type II, an auditing standard for service provider locations (NY1, NY2, NY4, and NY7 only)
- Ability to interconnect directly to 750+ companies colocated with Equinix in New York
- Customer population comprised of many financial services firms, media companies and large enterprises
- 7 buildings with 484,000+ square feet of colocation space
The company has spent the last 20 years growing and consolidating the industry into its own spider web of interconnected data centers from Frankfurt to Tokyo to London to Rio de Janeiro to Sydney. This is the company that controls a significant part of modern finance: the sites where you plug in the actual computers that fuel today’s hyperfast and hyperconnected electronic trading.
“I call them the 800-pound gorilla of the data services market,” says Inder Singh, an analyst at SunTrust Robinson Humphrey. “I see these guys as a key bridge between customers and suppliers.”
More importantly, Equinix is effectively a monopoly. As such it does not need to compete with customers. Singh says. “It is the Switzerland of data center players,” he says. That has a downside, though. “Equinix definitely leaves some money on the table. But they would probably be losing some of their coveted customers.”
Then there are the subservice providers, because Equinix provides only “dark fiber”; it doesn’t move data itself.
That’s created opportunities for other companies. A startup called Lucera is one of them. The company operates something like a telecom within the data center by using software to interconnect the banks, exchanges, and investment firms that have servers at NY4.
“If Goldman Sachs wants to connect to 100 people, they just run one cable to us,” says Jacob Loveless, Lucera’s co-founder and chief executive officer. In turn, that one cable from a firm can then connect the client to any of the other 52 data centers around the world where Lucera operates.
Loveless’ idea was to provide a seamless interconnection between traders by moving Wall Street into the cloud. He realized there were too many trades out in the world that were great ideas but impractical: Implementing them would take six months and $500,000 because of the connections that needed to be made to another bank or investor or exchange that might be halfway around the world. Additionally, it would take a bank about three months to create a new connection to another bank if it did it on its own, Loveless says. Lucera’s fastest time to connect two of its users is eight seconds. That’s because the company is software-based and relies on hard-wired connections already created by Equinix. Lucera’s mean connection time is only two hours, Loveless says. In short, everything is digital, everything is hotswappable, and everything is modular.
How did Loveless get his idea? He spent 10 years at Cantor Fitzgerald, where he was the firm’s head of high-frequency trading.
* * *
What happens at NY4 today is vastly different from Wall Street 30 years ago, or 20 years ago, or even 10 years ago.
At the dawn of electronic trading in the 1980s, major banks such as Goldman Sachs or Bank of America had to lay wire and cable to create their own networks to connect to customers. If you laid one bank network atop the other, they would have all been basically the same, Loveless explains, which is another way of saying it was hugely inefficient. Then in 2000, a company called Radianz set out to create a global network that promised access to the major financial institutions through a single connection and it worked. British Telecom bought Radianz in 2005 for about $130 million. Lucera, which got its start in 2013, is now a sort of second-generation Radianz as it offers to handle the complicated interconnections within a data center like NY4 for its clients.
In effect, even the act of collocation has been outsourced to “cloud” vendors: “If I’m a customer and I want to connect to 270 companies, I can either run 540 connections out of my own cage or they can run a pair to us and we’ll run the rest,” says Michael Badrov, global head of operations for Lucera.
* * *
When one re-emerges from this massive “cloudy” server farm, and stands on the roof of NY4, the skyscrapers of Manhattan could just be seen to the east. To the west, planes lined up to land at Newark airport.
And everywhere there are microwave antennas that are pointed toward Chicago, Newark, and north of the city to either Mahwah and the NYSE, or to a transducer station where the signal can get hooked into the fiber-optic cable that ends in London. That’s where Equinix’s LD4 center is located.
This global network of densely packed data centers is now the reason you can trade a stock on your smartphone in a way that was unimaginable 10 years ago. The six or seven intermediaries needed—AT&T, your brokerage, the NYSE, and so forth—are all housed under Equinix’s enormous roof.
And this is what the nerve center of the real US capital markets looks like.
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