Aug 21

Today’s News August 21, 2015

  • China's "Judgment Day" Arrives – Malicious Sellers Slam Stocks Below Communist Floor

    Chinese media are describing tonight’s market action as “Judgment Day” for China, as SCMP’s George Chen explains, the crusade of ‘malicious short sellers’ against the Communist central planners and their ‘funds’ is in full swing. The “manage-the-economy-by-technical-analysis” strategy appears to have failed as Shanghai Composite has broken notably below its 200-day moving average – which six times before has been defended aggressively. Chinese Stocks are back at 7-week lows, just off the crash lows in July.

    • *CHINA’S SHANGHAI COMPOSITE FALLS 3% TO 3,552.82 AT BREAK
    • *CHINA’S CSI 300 INDEX FALLS 3.1% TO 3,646.45 AT BREAK

    The big showdown – can the 200DMA be defended… or more crucially, the July lows!!

     

     

     

     

    Charts: Bloomberg

  • US Equity Futures Nosedive After China PMI Plunge

    It appears bad news in China is "bad news" for everyone. With Chinese authorities already in full liquidity spigot-mode, the fact that China PMI for August collapsed to its lowest since March 2009 strongly suggests that – unlike every talking-head's proclamation – a crashing stock market does (whether reflexively or not) impact the real economy. US equity futures legged significantly lower on the news – S&P 500 to 7-month lows, eyeing the stunning 2,000 level; and Japanese stocks also legged lower.

     

    Weakest China Manufacturing PMI since March 2009…

     

    and the breakdown is ugly..

    The 'confidence-inspiring' Caixin/Markit economists proclaim…

    The Caixin Flash China General Manufacturing PMI for August has fallen further from July’s two-year low, indicating that the economy is still in the process of bottoming out. But overall, the likelihood of a systemic risk remains under control and the structure of the economy is still improving. There is still pressure on the front of maintaining growth rates, and to realize the goal set for this year the government needs to fine tune fiscal and monetary policies to ensure macroeconomic stability and speed up the structural reform. This will lead the market to confidence and renew the vigour of the economy.”

    Thouigh we are unsure where there enthusiasm that a bottom is forming comes from.

     

    And the result…

    \

     

    Charts: Bloomberg

  • Paul Craig Roberts: "Insouciance Rules The West"

    Submitted by Paul Craig Roberts,

    Europe is being overrun by refugees from Washington’s, and Israel’s, hegemonic policies in the Middle East and North Africa that are resulting in the slaughter of massive numbers of civilians. The inflows are so heavy that European governments are squabbling among themselves about who is to take the refugees. Hungary is considering constructing a fence, like the US and Israel, to keep out the undesirables. Everywhere in the Western media there are reports deploring the influx of migrants; yet nowhere is there any reference to the cause of the problem.

    The European governments and their insouciant populations are themselves responsible for their immigrant problems. For 14 years Europe has supported Washington’s aggressive militarism that has murdered and dislocated millions of peoples who never lifted a finger against Washington. The destruction of entire countries such as Iraq, Libya, and Afghanistan, and now Syria and Yemen, and the continuing US slaughter of Pakistani civilians with the full complicity of the corrupt and traitorous Pakistani government, produced a refugee problem that the moronic Europeans brought upon themselves.

    Europe deserves the problem, but it is not enough punishment for their crimes against humanity in support of Washington’s world hegemony.

    In the Western world insouciance rules governments as well as peoples, and most likely also everywhere else in the world. It remains to be seen whether Russia and China have any clearer grasp of the reality that confronts them.

    Lt. Gen. Michael Flynn, Director of the US Defense Intelligence Agency until his retirement in August 2014, has confirmed that the Obama regime disregarded his advice and made a willful decision to support the jihadists who now comprise ISIS. ( https://medium.com/insurge-intelligence/officials-islamic-state-arose-from-us-support-for-al-qaeda-in-iraq-a37c9a60be4 ) Here we have an American government so insouciant, and with nothing but tunnel vision, empowering the various elements that comprise Washington’s excuse for the “war on terror” and the destruction of several countries. Just as the idiot Europeans produce their own refugee problems, the idiot Americans produce their own terrorist problems. It is mindless. And there is no end to it.

    Consider the insanity of the Obama regime’s policy toward the Soviet Union. Kissinger and Brzezinski, two of the left-wing’s most hated bogymen, are astonished at the total unawareness of Washington and the EU of the consequences of their aggression and false accusations toward Russia. Kissinger says that America’s foreign policy is in the hands of “ahistorical people,” who do not comprehend that “we should not engage in international conflicts if, at the beginning, we cannot describe an end.” Kissinger criticizes Washington and the EU for their misconception that the West could act in Ukraine in ways inconsistent with Russian interests and receive a pass from the Russian government.

    As for the Idiotic claim that Putin is responsible for the Ukrainian tragedy, Kissinger says:

    “It is not conceivable that Putin spends sixty billion euros on turning a summer resort into a winter Olympic village in order to start a military crisis the week after a concluding Olympic ceremony that depicted Russia as a part of Western civilization.” ( http://sputniknews.com/world/20150819/1025918194/us-russia-policy-history-kissinger.html )

    Don’t expect the low-grade morons who comprise the Western media to notice anything as obvious as the meaning Kissinger’s observation.

    Brzezinski has joined Kissinger in stating unequivocally that “Russia must be reassured that Ukraine will never become a NATO member.” ( http://sputniknews.com/politics/20150630/1024022244.html )

    Kissinger is correct that Americans and their leaders are ahistorical. The US operates on the basis of a priori theories that justify American preconceptions and desires. This is a prescription for war, disaster, and the demise of humanity.

    Even American commentators whom one would consider to be intelligent are ahistorical. Writing on OpEdNews (8-18-15) William Bike says that Ronald Reagan advocated the destruction of the Soviet Union. Reagan did no such thing. Reagan was respectful of the Soviet leadership and worked with Gorbachev to end the Cold War. Reagan never spoke about winning the Cold War, only about bringing it to an end. The Soviet Union collapsed as a consequence of Gorbachev being arrested by hardline communists, opposed to Gorbachev’s policies, who launched a coup. The coup failed, but it took down the Soviet government. Reagan had nothing to do with it and was no longer in office.

    Some ahistorical Americans cannot tell the difference between the war criminals Clinton, Bush, Cheney, and Obama, and Jimmy Carter, who spent his life doing, and trying to do, good deeds. No sooner do we hear that the 90-year old former president has cancer than Matt Peppe regals us on CounterPunch about “Jimmy Carter’s Blood-Drenched Legacy” (8-18-15). Peppe describes Carter as just another hypocrite who professed human rights but had a “penchant for bloodshed.” What Peppe means is that Carter did not stop bloodshed initiated by foreigners abroad. In other words Carter failed as a global policeman. Peppe’s criticism of Carter, of course, is the stale and false neoconservative criticism of Carter.

    Peppe, like so many others, shows an astonishing ignorance of the constraints existing policies institutionalized in government exercise over presidents. In American politics, interest groups are more powerful than the elected politicians. Look around you. The federal agencies created to oversea the wellbeing of the national forests, public lands, air and water are staffed with the executives of the very polluting and clear-cutting industries that the agencies are supposed to be regulating. Read CounterPunch editor Jeffrey St. Clair’s book, Born Under A Bad Sky, to understand that those who are supposed to be regulated are in fact doing the regulating, and in their interests. The public interest is nowhere in the picture.

    Look away from the environment to economic policy. The same financial executives who caused the ongoing financial crisis resulting in enormous ongoing public subsidies to the private banking system, now into the eight year, are the ones who run the US Treasury and Federal Reserve.

    Without a strong movement behind him, from whose ranks a president can staff an administration committed to major changes, the president is in effect a captive of the private interests who finance political campaigns. Reagan is the only president of our time who had even a semblance of a movement behind him, and the “Reaganites” in his administration were counterbalanced by the Bush Establishment Republicans.

    During the 1930s, President Franklin D. Roosevelt had a movement behind him consisting of New Dealers. Consequently, Roosevelt was able to achieve a number of overdue reforms such as Social Security.

    Nevertheless, Roosevelt did not see himself as being in charge. In The Age of Acquiescence (2015), Steve Fraser quotes President Roosevelt telling Treasury Secretary Henry Morgenthau at the end of 1934 that “the people I have called the ‘money changers in the Temple’ are still in absolute control. It will take many years and possibly several revolutions to eliminate them.”

    Eight decades later as Nomi Prins has made clear in All The Presidents’ Bankers (2014), the money changers are still in control. Nothing less than fire and the sword can dislodge them.

    Yet, and it will forever be the case, America has commentators who really believe that a president can change things but refuses to do so because he prefers the way that they are.

    Unless there is a major disaster, such as the Great Depression, or a lessor challenge, such as stagflation for which solutions were scarce, a president without a movement is outgunned by powerful private interest groups, and sometimes even if he has a movement.

    Private interests were empowered by the Republican Supreme Court’s decision that the purchase of the US government by corporate money is the constitutionally protected exercise of free speech.

    To be completely clear, the US Supreme Court has ruled that organized interest groups have the right to control the US government.

    Under this Supreme Court ruling, how can the United States pretend to be a democracy?

    How can Washington justify its genocidal murders as “bringing democracy” to the decimated?

    Unless the world wakes up and realizes that total evil has the reins in the West, humanity has no future.

  • What Will It Take For The Fed To Panic And Bail Out The Market Once Again: BofA Explains

    One of the main reasons a month ago we started carefully following the commodity trading giants, the Glencores, Mercurias and Trafiguras of the world…

    … is because nobody else was.

    Perhaps due to their commodity-trading operations, these companies were expected to be immune from the mark-to-market vagaries of the commodity collapse on their balance sheet, and as such presented far less interest to market participants than pure-play miners whose stocks have gotten crushed since the commodity collapse and subsequent relapse.

    And then, yesterday, Glencore “happened” and everyone was so shocked by the company’s abysmal results, which as we explained may servce as “The Next Leg Of The Commodity Carnage: Attention Shifts To Traders – Glencore Crashes, Noble Default Risk Soars.” This took place a day after we penned “Noble Group’s Kurtosis Awakening Moment For The Commodity Markets” in which we profiled the ongoing slow-motion trainwreck of Asia’s largest commodity trader.

    Of course, Glencore’s problems should not have been reason for surprise: after all it was a bet on a surge in Glencore’s default risk that prompted us to write “Is This The Cheapest (And Most Levered) Way To Play The Chinese Credit-Commodity Crunch?” in March of 2014 as a levered and relatively safe way to trade crashing copper prices (since then, Glencore CDS have doubled).

    And so others started to notice.

    So with Wall Street’s attention suddenly focused, with the usual delay, almost exclusively on the commodity hybrids, it was none other than Bank of America which earlier today reserved a very special place for a possible collapse of these companies. In fact, the “credit event” (read “failure”) of a company like Glencore is precisely what BofA’s Michael Hartnett said “may be necessary to cause policy-makers to panic.“

    Bank of America starts with a chart that ZH readers are all too familiar with: a comparison of the CDS of Noble and Glencore which as duly noted many times already, have recently spiked:

    And here is why Bank of America decided to suddenly focus on a small subset of the commodity sector, one which we have been fascinated with for over a month: to BofA the collapse of either of these two companies is the necessary and/or sufficient condition for the Fed to exit its recent trance, and reenter and bailout the market.

    That’s right: Bank of America is begging for another Fed-assisted market bailout, which gladly hints would be accelerated should Glencore experience a premature “credit event.” To wit:

    Short-term, markets seem intent on forcing either the Fed to pass in September, or the Chinese to launch a more comprehensive and credible policy package to boost growth expectations. Alternatively, a credit event in commodities (note CDS is widening sharply for resources companies – front page chart) may be necessary to cause policy-makers to panic. Markets stop panicking when central banks start panicking. We think that is increasingly likely in September, thus arguing that risk-takers should soon look to add risk, particularly on any further weakness.

    We thank Bank of America for making it quite clear what the catalyst for QE4 will be (and why we should double down on the Glencore long CDS trade), but we are confused: how is the Fed expected to “panic” in September when that is when BofA’s crack economists predict the Fed will hike rates. If anything, a rate hike is supposed to calm the market and give confidence that the Fed is on top of the situation, even if as has been clearly the case, the US economy, not to mention the global one, are both going into reverse.

    And while that is a major loose end to any trading thesis BofA may want to present, it does hedge by saying that all bets on a market bailout are off if the Fed and other central banks have now “lost their potency”, i.e., if the market’s faith in money printing has ended.

    Finally, we believe the inexorable rise in volatility as QE programs wane leads to the ultimate risk. In our view, all investment strategies have been tied in recent years to the power of central banks. There are few bond vigilantes willing to punish profligate governments, fewer currency speculators willing to defy central bank intervention, and investors have become adept at front-running policy-makers and/or expecting central banks will “blink” at signs of market volatility. We believe a loss of central bank potency is an unambiguous risk-off.

    Indeed, we too believe that if not even central banks can boost this market, then the time to get the hell out of Dodge is at hand. And while exiting, make sure to have a lot of gold, silver and lead. Because if the days of Keynesian voodoo and fiat are almost over, then absolutely nobody has any idea what lies ahead.

  • America (In 9 Words)

    Presented with no comment…

     

     

    Source: Jim Quinn’s Burning Platform blog

  • Gold Surges Amid Asian Sea Of Red, China Strengthens Yuan By Most In 4 Months

    Hong Kong's Hang Seng index is now down over 21% from the highs, having fallen over 9% in the last week, and Taiwan's TAIEX is down over 20% from April highs, joining Chinese stocks, both joining Chinese stocks in official bear markets. Japanese markets are down over 6% in the last few days (which Amari simply brushes off, blaming the global selloff stemming from China), a JGB trading volumes slump to a record low. Tensions in Korea are not helping. With all eyes on China's flash PMI (though why we are not sure since PBOC is already full liquidity-tard with CNY350bn this week alone), The PBOC fixed Yuan at 6.3864, up from yesterday's biggest strengthening in 3 months to 6.3915 (the biggest 2 day strengthening since April), and margin debt fell for the 3rd day. Gold is surging in the Asia session, near $1160.

    The 3 Bears…

    • *HONG KONG'S HANG SENG INDEX FALLS 1.8% IN PREMARKET

     

    China remains ugly…

    • *SHANGHAI MARGIN DEBT DECLINES FOR THIRD DAY (Good News!)
    • *CHINA'S CSI 300 STOCK-INDEX FUTURES FALL 0.6% TO 3,580.2
    • *CHINA'S CSI 300 INDEX SET TO OPEN DOWN 1.3% TO 3,714.29
    • *CHINA SHANGHAI COMPOSITE SET TO OPEN DOWN 1.5% TO 3,609.96

     

    As The Yuan fix is strengthened notably..biggest 2 days strengthening in over 4 months…

    • *CHINA SETS YUAN REFERENCE RATE AT 6.3864 AGAINST U.S. DOLLAR

     

    The question is will China's PPT rescue them from the 200DMA…

     

    Japan is rapidly getting uglier…

    • *JAPAN'S TOPIX INDEX EXTENDS LOSS TO 2.3%

     

    But don't worry about Japanese stocks…

    • *AMARI: JAPAN STOCKS REFLECT GLOBAL SELLOFF STARTING IN CHINA
    • *ASO: HAVE TO CAREFULLY WATCH CHINA CURRENCY SYSTEM

    But perhaps this will wake some Japanese up…

    Japanese government bond trading has slumped to a record low and the Bank of Japan’s own analysis shows a market still in stress across a range of indicators.

     

    Trading volume sank to 15.6 trillion yen ($126 billion) in July, based on BOJ calculations using figures from the Japan Securities Dealers Association on Thursday. That’s down 73 percent from as high as 57.4 trillion yen in April 2012, a year before BOJ Governor Haruhiko Kuroda began unprecedented debt purchases.

    As we noted earlier, Korean tensions are rising…

    • *S.KOREA, U.S. FORCES UPGRADE JOINT SURVEILLANCE WATCHCON:YONHAP
    • *N. KOREA’S KIM JONG UN ORDERS ARMY INTO STATE OF WAR: XINHUA
    • *N. KOREA SEEN MOVING ARTILLERIES CLOSER TO BORDER: YONHAP NEWS

    But there is some Green…. in Gold…

    *  *  *

    Charts: Bloomberg

  • No, Credit Growth In China Is Not "Surging"…

    Back in May, the BEA officially jumped the shark when, to delighted cheers from the San Francisco Fed and Steve Liesman, it announced that going forward, US GDP data would be double seasonally adjusted. 

    Somewhere deep in the bowels of China’s National Statistics Bureau someone was probably chuckling under their breath at how long it took US statisticians to realize that the beauty of being in government is that you can make the numbers say whatever you want them to say.

    Indeed, for China (whose GDP growth is at best exaggerated due to an understated deflator and at worst is completely made up) going full-shark-jumping-retard means doing something so completely ridiculous that it hides in plain sight.

    Something like loaning yourself a trillion yuan to prop up the stock market and then counting that trillion yuan loan towards credit growth. 

    Well as we reported not once, but twice (here and here), that’s exactly what China did in July when it reported that new RMB loans for the month nearly doubled expectations, coming in at CNY1.48 trillion and somehow, even though it was one of the worst kept secrets in the financial universe, some people actually believed the numbers. Case in point:

    Yes, “surging credit growth”, only 60% of which is completely made up. 

    Here’s a look a look at the breakdown for anyone who missed it earlier this month:

    So what should be abundantly clear there is that loans to the real economy (i.e. loans China did not make to itself in the form of equity plunge protection funding) fell a staggering 55%. In case it isn’t clear enough from the above how embarrassingly anomalous the “loans to non-banking financial institutions” figure is, allow us to break it down (again):

    And because we somehow get the feeling that quite a few people might be missing the point on just how significant this was from a big picture point of view, here’s a look at the data, with helpful arrows that demonstrate the effect of China’s decision to include these loans:

    Behold, the power of counting a trillion yuan in stock market manipulation money towards credit growth.

  • "Mystery" Cyanide Foam Covers Streets In China As "Massive Fish Die-Off" Observed After Tianjin Explosion

    Update: The latest images from the massive fish die-off…

    On Wednesday evening we noted that China, in what looks like an attempt to discourage investigative reports into Communist Party culpability for the explosion at Tianjin which killed more than a hundred people and injured more than 700 last week, revealed the previously unnamed majority shareholders of Tianjin International Ruihai Logistics. 

    The two men – a Mr. Yu and a Mr. Dong – have Party ties and admitted to using their political connections to skirt restrictions on the storage and handling of hazardous chemicals like sodium cyanide. 

    That admission isn’t likely to satisfy the Chinese public, which is looking for the head (figuratively speaking we hope) of someone higher up in the party, as scapegoating a few locals with tenuous Party ties doesn’t seem to constitute the type of wholesale, rigorous investigation that would indicate Beijing is serious about getting to the bottom of how 700 tonnes of toxic chemicals ended up being stored at a facility that was only licensed to warehouse a fraction of that total.

    In any event, the “cyanide thunderstorms” we warned were rolling into the area have now blanketed Tianjin in a “mysterious” white foam. The images are below.

    Source

    And as The South China Morning Post reports, some claimed the rain had burned their skin and lips, which would be consistent with a text message purported to have emanated from the American Embassy (which immediately denied its authenticity) advising workers to “avoid ALL contact” between their skin and any rain:

    Some residents and journalists near the blast site in Tianjin experienced skin burns as rain hit the Binhai New Area on Tuesday.

     

    Amid fears the rain could spark toxic reactions with chemicals at the site – in particular with hundreds of tonnes of sodium cyanide – an official urged the public to “stay far away”.

     

    As the rain progressed, an unusual white foam emerged on roads near the blast site. A journalist for Caixin reported feeling burns on the lips and arms after being exposed to the rain.

    As for the official explanation for why the streets in Tianjin are now running white with what might very well be an extremely toxic, cyanide-laced foam, Tianjin’s environmental monitoring center says it’s “a normal phenomenon when rain falls, and similar things have occurred before.” 

    And in case that wasn’t enough of a punchline for you, here’s a look at what happened after no chemicals were detected in the seawater around the blast site:

  • How Google Could Rig The 2016 Election

    Authored by Robert Epstein (@DrREpstein – senior research psychologist at the American Institute for Behavioral Research and Technology), originally posted at Politico.com,

    America’s next president could be eased into office not just by TV ads or speeches, but by Google’s secret decisions, and no one—except for me and perhaps a few other obscure researchers—would know how this was accomplished.

    Research I have been directing in recent years suggests that Google, Inc., has amassed far more power to control elections—indeed, to control a wide variety of opinions and beliefs—than any company in history has ever had. Google’s search algorithm can easily shift the voting preferences of undecided voters by 20 percent or more—up to 80 percent in some demographic groups—with virtually no one knowing they are being manipulated, according to experiments I conducted recently with Ronald E. Robertson.

    Given that many elections are won by small margins, this gives Google the power, right now, to flip upwards of 25 percent of the national elections worldwide. In the United States, half of our presidential elections have been won by margins under 7.6 percent, and the 2012 election was won by a margin of only 3.9 percent—well within Google’s control.

    There are at least three very real scenarios whereby Google—perhaps even without its leaders’ knowledge—could shape or even decide the election next year. Whether or not Google executives see it this way, the employees who constantly adjust the search giant’s algorithms are manipulating people every minute of every day. The adjustments they make increasingly influence our thinking—including, it turns out, our voting preferences.

    What we call in our research the Search Engine Manipulation Effect (SEME) turns out to be one of the largest behavioral effects ever discovered. Our comprehensive new study, just published in the Proceedings of the National Academy of Sciences (PNAS), includes the results of five experiments we conducted with more than 4,500 participants in two countries. Because SEME is virtually invisible as a form of social influence, because the effect is so large and because there are currently no specific regulations anywhere in the world that would prevent Google from using and abusing this technique, we believe SEME is a serious threat to the democratic system of government.

    According to Google Trends, at this writing Donald Trump is currently trouncing all other candidates in search activity in 47 of 50 states. Could this activity push him higher in search rankings, and could higher rankings in turn bring him more support? Most definitely—depending, that is, on how Google employees choose to adjust numeric weightings in the search algorithm. Google acknowledges adjusting the algorithm 600 times a year, but the process is secret, so what effect Mr. Trump’s success will have on how he shows up in Google searches is presumably out of his hands.

    ***

    Our new research leaves little doubt about whether Google has the ability to control voters. In laboratory and online experiments conducted in the United States, we were able to boost the proportion of people who favored any candidate by between 37 and 63 percent after just one search session. The impact of viewing biased rankings repeatedly over a period of weeks or months would undoubtedly be larger.

    In our basic experiment, participants were randomly assigned to one of three groups in which search rankings favored either Candidate A, Candidate B or neither candidate. Participants were given brief descriptions of each candidate and then asked how much they liked and trusted each candidate and whom they would vote for. Then they were allowed up to 15 minutes to conduct online research on the candidates using a Google-like search engine we created called Kadoodle.

    Each group had access to the same 30 search results—all real search results linking to real web pages from a past election. Only the ordering of the results differed in the three groups. People could click freely on any result or shift between any of five different results pages, just as one can on Google’s search engine.

    When our participants were done searching, we asked them those questions again, and, voilà: On all measures, opinions shifted in the direction of the candidate who was favored in the rankings. Trust, liking and voting preferences all shifted predictably.

    More alarmingly, we also demonstrated this shift with real voters during an actual electoral campaign—in an experiment conducted with more than 2,000 eligible, undecided voters throughout India during the 2014 Lok Sabha election there—the largest democratic election in history, with more than 800 million eligible voters and 480 million votes ultimately cast. Even here, with real voters who were highly familiar with the candidates and who were being bombarded with campaign rhetoric every day, we showed that search rankings could boost the proportion of people favoring any candidate by more than 20 percent—more than 60 percent in some demographic groups.

    Given how powerful this effect is, it’s possible that Google decided the winner of the Indian election.  Google’s own daily data on election-related search activity (subsequently removed from the Internet, but not before my colleagues and I downloaded the pages) showed that Narendra Modi, the ultimate winner, outscored his rivals in search activity by more than 25 percent for sixty-one consecutive days before the final votes were cast. That high volume of search activity could easily have been generated by higher search rankings for Modi.

    Google’s official comment on SEME research is always the same: “Providing relevant answers has been the cornerstone of Google’s approach to search from the very beginning. It would undermine the people’s trust in our results and company if we were to change course.”

    Could any comment be more meaningless? How does providing “relevant answers” to election-related questions rule out the possibility of favoring one candidate over another in search rankings? Google’s statement seems far short of a blanket denial that it ever puts its finger on the scales.

    There are three credible scenarios under which Google could easily be flipping elections worldwide as you read this:

    First, there is the Western Union Scenario

    Google’s executives decide which candidate is best for us—and for the company, of course—and they fiddle with search rankings accordingly. There is precedent in the United States for this kind of backroom king-making. Rutherford B. Hayes, the 19th president of the United States, was put into office in part because of strong support by Western Union. In the late 1800s, Western Union had a monopoly on communications in America, and just before the election of 1876, the company did its best to assure that only positive news stories about Hayes appeared in newspapers nationwide. It also shared all the telegrams sent by his opponent’s campaign staff with Hayes’s staff. Perhaps the most effective way to wield political influence in today’s high-tech world is to donate money to a candidate and then to use technology to make sure he or she wins. The technology guarantees the win, and the donation guarantees allegiance, which Google has certainly tapped in recent years with the Obama administration.

     

    Given Google’s strong ties to Democrats, there is reason to suspect that if Google or its employees intervene to favor their candidates, it will be to adjust the search algorithm to favor Hillary Clinton. In 2012, Google and its top executives donated more than $800,000 to Obama but only $37,000 to Romney. At least six top tech officials in the Obama administration, including Megan Smith, the country’s chief technology officer, are former Google employees. According to a recent report by the Wall Street Journal, since Obama took office, Google representatives have visited the White House ten times as frequently as representatives from comparable companies—once a week, on average.

     

    Hillary Clinton clearly has Google’s support and is well aware of Google’s value in elections. In April of this year, she hired a top Google executive, Stephanie Hannon, to serve as her chief technology officer. I don’t have any reason to suspect Hannon would use her old connections to aid her candidate, but the fact that she—or any other individual with sufficient clout at Google—has the power to decide elections threatens to undermine the legitimacy of our electoral system, particularly in close elections.

     

    This is, in any case, the most implausible scenario. What company would risk the public outrage and corporate punishment that would follow from being caught manipulating an election?

    Second, there is the Marius Milner Scenario

    A rogue employee at Google who has sufficient password authority or hacking skills makes a few tweaks in the rankings (perhaps after receiving a text message from some old friend who now works on a campaign), and the deed is done. In 2010, when Google got caught sweeping up personal information from unprotected Wi-Fi networks in more than 30 countries using its Street View vehicles, the entire operation was blamed on one Google employee: software engineer Marius Milner. So they fired him, right? Nope. He’s still there, and on LinkedIn he currently identifies his profession as “hacker.” If, somehow, you have gotten the impression that at least a few of Google’s 37,000 employees are every bit as smart as Milner and possess a certain mischievousness—well, you are probably right, which is why the rogue employee scenario isn’t as far-fetched as it might seem.

    And third—and this is the scariest possibility—there is the Algorithm Scenario

    Under this scenario, all of Google’s employees are innocent little lambs, but the software is evil. Google’s search algorithm is pushing one candidate to the top of rankings because of what the company coyly dismisses as “organic” search activity by users; it’s harmless, you see, because it’s all natural. Under this scenario, a computer program is picking our elected officials.

     

    To put this another way, our research suggests that no matter how innocent or disinterested Google’s employees may be, Google’s search algorithm, propelled by user activity, has been determining the outcomes of close elections worldwide for years, with increasing impact every year because of increasing Internet penetration.

    SEME is powerful precisely because Google is so good at what it does; its search results are generally superb. Having learned that fact over time, we have come to trust those results to a high degree. We have also learned that higher rankings mean better material, which is why 50 percent of our clicks go to the first two items, with more than 90 percent of all clicks going to that precious first search page. Unfortunately, when it comes to elections, that extreme trust we have developed makes us vulnerable to manipulation.

    In the final days of a campaign, fortunes are spent on media blitzes directed at a handful of counties where swing voters will determine the winners in the all-important swing states. What a waste of resources! The right person at Google could influence those key voters more than any stump speech could; there is no cheaper, more efficient or subtler way to turn swing voters than SEME. SEME also has one eerie advantage over billboards: when people are unaware of a source of influence, they believe they weren’t being influenced at all; they believe they made up their own minds.

    Republicans, take note: A manipulation on Hillary Clinton’s behalf would be particularly easy for Google to carry out, because of all the demographic groups we have looked at so far, no group has been more vulnerable to SEME—in other words, so blindly trusting of search rankings—than moderate Republicans. In a national experiment we conducted in the United States, we were able to shift a whopping 80 percent of moderate Republicans in any direction we chose just by varying search rankings.

    There are many ways to influence voters—more ways than ever these days, thanks to cable television, mobile devices and the Internet. Why be so afraid of Google’s search engine? If rankings are so influential, won’t all the candidates be using the latest SEO techniques to make sure they rank high?

    SEO is competitive, as are billboards and TV commercials. No problem there. The problem is that for all practical purposes, there is just one search engine. More than 75 percent of online search in the United States is conducted on Google, and in most other countries that proportion is 90 percent. That means that if Google’s CEO, a rogue employee or even just the search algorithm itself favors one candidate, there is no way to counteract that influence. It would be as if Fox News were the only television channel in the country. As Internet penetration grows and more people get their information about candidates online, SEME will become an increasingly powerful form of influence, which means that the programmers and executives who control search engines will also become more powerful.

    Worse still, our research shows that even when people do notice they are seeing biased search rankings, their voting preferences still shift in the desired directions—even more than the preferences of people who are oblivious to the bias. In our national study in the United States, 36 percent of people who were unaware of the rankings bias shifted toward the candidate we chose for them, but 45 percent of those who were aware of the bias also shifted. It’s as if the bias was serving as a form of social proof; the search engine clearly prefers one candidate, so that candidate must be the best. (Search results are supposed to be biased, after all; they’re supposed to show us what’s best, second best, and so on.)

    Biased rankings are hard for individuals to detect, but what about regulators or election watchdogs? Unfortunately, SEME is easy to hide. The best way to wield this type of influence is to do what Google is becoming better at doing every day: send out customized search results. If search results favoring one candidate were sent only to vulnerable individuals, regulators and watchdogs would be especially hard pressed to find them.

    For the record, by the way, our experiments meet the gold standards of research in the behavioral sciences: They are randomized (which means people are randomly assigned to different groups), controlled (which means they include groups in which interventions are either present or absent), counterbalanced (which means critical details, such as names, are presented to half the participants in one order and to half in the opposite order) and double-blind (which means that neither the subjects nor anyone who interacts with them has any idea what the hypotheses are or what groups people are assigned to). Our subject pools are diverse, matched as closely as possible to characteristics of a country’s electorate. Finally, our recent report in PNAS included four replications; in other words, we showed repeatedly—under different conditions and with different groups—that SEME is real.

    Our newest research on SEME, conducted with nearly 4,000 people just before the national elections in the UK this past spring, is looking at ways we might be able to protect people from the manipulation. We found the monster; now we’re trying to figure out how to kill it. What we have learned so far is that the only way to protect people from biased search rankings is to break the trust Google has worked so hard to build. When we deliberately mix rankings up, or when we display various kinds of alerts that identify bias, we can suppress SEME to some extent.

    It’s hard to imagine Google ever degrading its product and undermining its credibility in such ways, however. To protect the free and fair election, that might leave only one option, as unpalatable as it might seem: government regulation.

  • July Was Warmest Month On Record NOAA Reports, Lists All "Signifiicant Climate Anomalies And Events"

    While some, perhaps not California farmers, will disagree with NOAA’s assessment of the world’s atmospheric conditions, earlier today the National Oceanic and Atmospheric Administration declared that July was the warmest month ever recorded for the globe and was also the record warmest for global oceans, putting a full stop to a year that has been characterized by numerous perplexing atmospheric outliers around the globe but perhaps none other more so than NOAA’s earlier assessment that the winter of 2015 was also the warmest on record despite the much discussed US winter, where for the second year in a row the economic slowdown was blamed on a colder than usual winter. Go figure: perhaps here too we need double seasonal adjustments.

    Among some of the highlights noted by NOAA:

    • The combined average temperature over global land and ocean surfaces for July 2015 was the highest for July in the 136-year period of record, at 0.81°C (1.46°F) above the 20th century average of 15.8°C (60.4°F), surpassing the previous record set in 1998 by 0.08°C (0.14°F). As July is climatologically the warmest month of the year globally, this monthly global temperature of 16.61°C (61.86°F) was also the highest among all 1627 months in the record that began in January 1880. The July temperature is currently increasing at an average rate of 0.65°C (1.17°F) per century.
    • The July globally-averaged land surface temperature was 1.73°F (0.96°C) above the 20th century average. This was the sixth highest for July in the 1880–2015 record.
    • The July globally-averaged sea surface temperature was 1.35°F (0.75°C) above the 20th century average. This was the highest temperature for any month in the 1880–2015 record, surpassing the previous record set in July 2014 by 0.13°F (0.07°C). The global value was driven by record warmth across large expanses of the Pacific and Indian Oceans.

     

    NOAA goes on to note some of the headline-grabbing “significant climate anomalies and events” including the Arctic and Antarctic Sea Ice Extent, Typhoon Nangka, the abnormally hot summer in western and central Europe coupled with the cooler than average weather in North Europe, the “widespread snow” in eastern Australia, the second warmest July in Africa, the fifth warmest July on record for South America, and the strange distribution of atmospheric conditions in the US, where the record California drought was contrasted with the cool Central states.

     

    Some other highlights from the report:

    • The average Arctic sea ice extent for July was 350,000 square miles (9.5 percent) below the 1981–2010 average. This was the eighth smallest July extent since records began in 1979 and largest since 2009, according to analysis by the National Snow and Ice Data Center using data from NOAA and NASA.
    • Antarctic sea ice during July was 240,000 square miles (3.8 percent) above the 1981–2010 average. This was the fourth largest July Antarctic sea ice extent on record and 140,000 square miles smaller than the record-large July extent of 2014.
    • Austria  recorded its hottest July since national records began in 1767. The average temperature was 3.0°C (5.0°F) higher than the 1981–2010 average, beating the previous record of +2.7°C (+4.9°F) set just a few years earlier in 2006. Two major heatwaves, with temperatures reaching 38°C (100°F), contributed to this heat record. At some stations in major cities, including Innsbruck University, Linz, and Klagenfurt, it was not only the hottest July, but the hottest month ever recorded in the 249-year period of record. On July 7th, the daily temperature reached 38.2°C (100.8°F) in Innsbruck, its highest temperature in recorded history.
    • The heat waves extended to France, where the country had its third warmest July in its 116-year period of record. Overall, the temperature was 2.1°C (3.8°F) higher than the 1981–2010 average, with localized departures of more than 4°C (7°F) in the Massif Central to the North East and the Alps, according to MeteoFrance .
    • The Netherlands also experienced abnormally hot July temperatures at the beginning of the month. Under an intense heat wave that gripped much of western and central Europe, the southeastern town of Maastricht observed a temperature of 38.2°C (100.8°F) on July 2nd the highest temperature on record for that town and one of the highest for the country. The highest temperature ever recorded was 38.6°C (101.5°F) in Warnsveld in 1944. The heat did not last however. The temperature was below 0°C (32°F) at a station in Twente in the eastern part of the country on July 9th and 10th, the first time the temperature dropped below freezing in July since 1984.
    • Record-breaking heat was observed in parts of the southern United Kingdom at the beginning of July, including the highest temperature recorded in the country since August 2003. However, the heat did not last as westerly Atlantic air flowed in, bringing cooler-than-average temperatures for much of the remainder of the month. So, despite the early record heat, overall, the average July temperature for the UK was 0.7°C (1.1°F) lower than the 1981–2010 average.
    • Despite a heatwave over part of Sweden at the beginning of the month, temperatures remained cool for the reminder of July across much of the country. While temperatures across southeastern Sweden were slightly above average, other areas, particularly in the far north, were not. Pajala observed its coolest July since 1965 and Gaddede its coolest since 1951, although SMHI notes that the station has been relocated a few times over the years.
    • Norway experienced cooler-than-average temperatures for the third consecutive month. The average July temperature was 0.7°C (1.1°F) lower than the 1961–1990 average. Temperatures were as much as 3°C (5°F) below average at some stations in Finnmark.
    • A high pressure dome over the Middle East brought what may be one of the most extreme heat indices ever recorded in the world on July 31st. According to media reports, in the city of Bandar Mahshahr, the air temperature of 46°C (115°F) combined with a dew point of 32°C (90°F) for a heat index on 74°C (165°F). The highest known heat index of 81°C (178°F) occurred in Dhahran, Saudi Arabia on July 8th, 2003.

    Putting this in context, in the 180 or so State of the Climate summaries since 2000, the NOAA has documented what it defines to be 13 of the 15 warmest years on record. Which means that the US government is hoping the population is not habituated to seeing such reports by now, especially not ahead of the politically important Paris climate conference this December, when a “comprehensive climate plan” is expected to be proposed. A plan which, just like the entire carbon credit fiasco, is certain to enrich some – such as Goldman Sachs – and do little for everyone else, because it is far better for financial elites and the political oligarchy to keep the world always one step away from a state of permanent crisis.

  • What Obama Gets Wrong On Foreign Policy

    Last year, in what was surely one of the more unfortunately timed declarations in recent foreign policy history, President Obama described Yemen as a counter terrorism success story. 

    The first thing that sticks out about that statement is that, as we documented in June, it’s at least possible that Abdullah Saleh and his lieutenants not only turned a blind eye to AQAP operations in the country, but in fact played a direct role in facilitating al-Qaeda attacks even as the government accepted anti-terrorism financing from the US government, but the truly ridiculous thing about claiming that Yemen should be viewed as a “success” is that here we are less than a year later and the country is the exact opposite. That is, it’s a failed state, and if it weren’t for the Saudi boots which, no matter what Riyadh says, are most assuredly on the ground in Yemen, the country would be controlled by Iran-backed Houthi rebels wielding some $500 million in arms that the US “lost” after President Abd Rabbuh Mansur Hadi was forced to flee to the Saudi capital. 

    Of course that isn’t the only example of foreign policy debacles that have unfolded on the current administration’s watch. There’s Ukraine, for instance, where deposing a Russia-backed leader led, in short order, to civil war and may soon culminate in a coup by fascist militants. Then there’s Syria, where efforts to support “freedom fighters” in their battle against the Assad regime ended up creating a marauding band of blag flag-waving jihadists, bent on establishing a medieval caliphate. Finally there’s the deteriorating relationship with China, which culminated in a tense war of words after Beijing essentially threatened to shoot down a US spy plane over the Spratlys.

    Against that backdrop we bring you the following excerpts from “What Obama Gets Wrong” as originally published in Foreign Affairs’ September/October issue:

    Gideon Rose’s intriguing essay on President Barack Obama’s foreign policy raises a vexing question: When does the statute of limitations on blaming President George W. Bush for the record of the current administration finally expire?

     

    Rose devotes much of his article to rehearsing a litany of the Bush administration’s sins in an effort to persuade readers that Obama inherited a uniquely bad set of cards when he came to the White House—a “mess,” as the president liked to say—and must therefore be judged accordingly. But this is doubtful as a matter of history and past its sell-by date as a form of apology.

     

    Every president inherits a mixed bag when he comes to office, and Obama’s was hardly the worst.

     

    Obama’s supporters also need to acknowledge that they cannot celebrate the president’s supposed successes at one point and then disavow responsibility later when those successes turn to dust. If Obama can take credit for putting the core of al Qaeda “on the path to defeat” and bringing the war on terror effectively to an end—as he did at the National Defense University in May 2013, to much liberal applause—then it becomes difficult for him to evade responsibility for the resurgence of jihadism in the two years since then. If the administration can celebrate the success of its Iraq policy in 2012 (“What is beyond debate,” said Antony Blinken, one of Obama’s senior foreign policy advisers, “is that Iraq today is less violent, more democratic and more prosperous, and the United States more deeply engaged there, than at any time in recent history”), then maybe Bush can be exempted from blame for Iraq’s travails in 2014.

     


     

    Every president should be judged on a few fundamentals—his ability to deliver what he promised, weaken the country’s foes and strengthen its friends, elaborate a concept of the American interest that is persuasive and true, and pass on a world heading in the right direction. Obama rates well on none of these.

     

    [Stability was supposed] to be restored in such places as Cairo, Istanbul, and Damascus. Israeli settlement expansion [was supposed to have] ended, and peace with the Palestinians would be forged. Much of this was to be achieved, so it seemed, through the sheer moral force of Obama’s personality and the compelling logic of his ideas. Yet none of it occurred. Obama became the president who, to use one of Rose’s baseball metaphors, called his shot only to strike out.

     

    As for U.S. enemies, the core of al Qaeda might be weaker today than it was when Obama took office, but the groups he once cavalierly dismissed as jihad’s “JV team” are vastly more potent, successful, and aggressive. The Russian economy may have been badly hit by the fall in global oil prices, but Ukraine is bracing for the next phase in a Russian offensive that Obama has opposed with only token measures. The deal with Iran exchanges billions of dollars in tangible economic relief for Tehran—some of which will be used to fund anti-American proxies in Lebanon, Yemen, Iraq, the Gaza Strip, and Afghanistan—in return for the paper promise of a temporary lull in Iran’s nuclear program.

     

    The truth is that Obama’s idea of U.S. foreign policy is that there should be less of it, that the United States generally ought not to meddle in the internal affairs of other states and certainly not do so without a UN warrant, and that Washington should focus on what it does at home more than on what it does abroad.

     

    Now, however, the consequences of that foreign policy are becoming more obvious. 

     

    Full article here

  • North Korea Declares State Of War After Argument Over Loudspeaker Spirals Out Of Control

    Kim Jong-un has declared a state of war following an escalation of hostilities across the DMZ. Here’s Xinhua:

    The top leader of the Democratic People’s Republic of Korea (DPRK) Kim Jong Un has ordered the country’s frontline combined forces to enter state of war from 5pm (0830 GMT) Friday. the official KCNA news agency reported Friday, the official KCNA news agency reported early Friday.

     

    Kim made the order at an emergency enlarged meeting of the central military commission of the ruling Workers’ Party of Korea, said the report.

     

    He ordered the forces to be well armed to cope with any possible operations at any time. Kim also gave the order that the frontline area enter quasi state of war from 5 pm Friday.

     

    During the emergency meeting, political and military countermeasures aimed to smash the enemy’s war provocations were discussed while the military’s combat plan of the frontline command was approved, according to the KCNA.

    How did it come to this you ask? Below is the amusing backstory…

    North Korea’s Kim Jong-un – the world’s sabre rattler par excellence – doesn’t like to stray too far from the spotlight when it comes to global conflict, which is why we weren’t terribly surprised when, a few days ago, the pariah state threatened to invade the US mainland and use “weapons unknown to the world.”

    Of course a lot of what goes on inside the country is “unknown to the world”, much as the world is largely “unknown” to North Koreans and that’s just fine with Kim, whose regime depends on a combination of propaganda and censorship to keep the populace transfixed in a perpetual state of hypnotic hero worship. Of course the West and its allies – and now even China – have a tendency to dismiss Kim’s threats as the ravings of a delusional child, which is why occasionally, Pyongyang will actually fire a missile into the ocean or execute a member of the military top brass with an anti-aircraft gun just to remind everyone that the regime isn’t totally bluffing. 

    Given Pyongyang’s propensity for lobbing bombastic threats that, were they to emanate from virtually any other government on the planet would be met with a sharp rebuke, it’s something of a miracle that sour relations between Kim and US ally South Korea haven’t already produced an armed conflict, and as Bloomberg reports, the “maiming” of two South Korean soldiers along the DMZ and subsequent “blaring of propaganda through loudspeakers” by the South culminated in the exchange of artillery fire on Thursday, marking the worst escalation between the two countries in five years. Here’s more:

    North and South Korea exchanged fire across the demilitarized zone between the two countries in one of the worst incidents since 2010, sparking fears that hostilities will worsen.

     

    The incident started when North Korea fired a rocket at a South Korean border area, prompting Seoul’s forces to reply with an artillery barrage. It was unclear whether there were any casualties.

     

    Tensions have flared in recent weeks across the so-called DMZ that bisects the Korean peninsula. Two South Korean soldiers were maimed on Aug. 4 by land mines that the Seoul government says were recently laid by North Korea. Pyongyang denied any role in the blasts.

     

    Relations deteriorated further when South Korea started blaring propaganda at the North through loudspeakers along the DMZ. After today’s exchange, North Korea threatened to “start a military action” unless South Korea stops all propaganda broadcasts and withdraws the loudspeakers within 48 hours.

     

    “The ball is in North Korea’s court now,” Koh Yu Hwan, professor of North Korea studies at Dongguk University in Seoul, said by phone. “If North Korea decides to fire back, that means the conflict will broaden, something probably neither Korea wants.”

     

    Today’s exchange was among the most serious since North Korea shelled a front-line island in the south in 2010, killing two marines and two civilians. Last year, their ships exchanged warning fire near a disputed Yellow Sea boundary.

     

    South Korea’s military remains on heightened alert after today’s incident and is closely monitoring the situation, the Defense Ministry said in an e-mailed statement. The exchange began when North Korea fired a single rocket across the border, the ministry said. South Korean troops fired “dozens of shells” back, the statement said.

    And while the above would suggest that North Korea was largely responsible for the escalation by firing “a rocket” at South Korean positions, it looks like it’s also possible that the North was shooting at a loudspeaker after its soldiers tired of an endless stream of broadcasted rheotric. Here’s CNN:

    South Korea also has accused the North of planting mines, an allegation that Pyongyang denies.

     

    Seoul vowed a “harsh” response to the landmines and resumed blaring propaganda messages over the border from huge loudspeakers.

     

    The move infuriated North Korea, which called the broadcasting “a direct action of declaring a war.” Over the weekend, it threatened to blow up the South Korean speakers and also warned of “indiscriminate strikes.”

     

    And a U.S. official told CNN’s Barbara Starr that the U.S. believes that North Korea fired a shot at a South Korean loudspeaker, and South Korea responded with 36 artillery shells.

    So an eye for an eye, we suppose. You shoot at our loudspeakers, and we’ll resort to heavy artillery fire. Here’s a look at one of the loudspeakers South Korea installed along the border in the wake of the land mine incident: 

    We shall see, in the days and weeks ahead, if a pot-shot at a speaker system will go down in history as the event that triggered another war in the Korean Peninsula, but in the meantime, we would caution observers that determining whose account offers a more accurate description of when exactly things started to go wrong will be more difficult than usual this time around because thanks to Kim’s move to establish his own time zone earlier this week, the two countries are half an hour apart.

  • Looking Back On The Presidency Of Donald Trump – A Dispatch From The Future

    Authored by Jon Lovett, originally posted at The Atlantic,

    “It was the terrific leader of India, Gandhi, who said, ‘First they ignore you, then they laugh at you, then they attack you, and then you win.’ Well we won, didn’t we?”

    That’s how President Donald John Trump began his inaugural address, that clear morning in January of 2017. The fact that Gandhi never said these words was among the very least of our problems. Besides, the line drew rapturous applause from the crowd. According to a joint statement released by the White House and Nielsen, the Trump Inaugural drew the largest television audience in human history. As President Trump himself pointed out in his second press availability that afternoon, the numbers would only go up, once you factored in DVR.

    It’s amazing isn’t? How adaptable we are as human beings? It was only a year earlier that Trump was a punch line. Obviously, everyone knew, he could never actually get anywhere once the votes were cast. American democracy was too robust to let that happen. He was too dangerous to win, and to win would be too dangerous. It couldn’t happen because it couldn’t happen.

    And then, just like that, it did.

    There’s no need to rehash how it all went down. He won the nomination, and then he won the general election. It wasn’t more complicated than that. Some have compared the tenor of the news on election night to the coverage of a tragedy or disaster. But that’s not exactly right. It wasn’t like a meteor strike. It was more like finding out a meteor is heading our way. The anchors were dazed and somber. There was a real effort on the part of journalists to assuage viewers. Twitter was a shit show, but Twitter is always a shit show. Many immediately expressed their regret for voting Trump. Some had just wanted to register a protest, not realizing that they would be swinging the election to an insecure, undisciplined narcissist unfit for public office.

    The next morning, President Obama declared a bank holiday, to the chagrin of President-Elect Trump, who blamed the fear mongering of Washington elites for the massive sell off roiling global markets. No one seemed more surprised by the returns than the Donald himself who—at the one moment in his life when it was truly needed—couldn’t muster the bravura for which he was famous. Being elected president made him seem tiny, and of course it did.

    Those were the darkest moments. Yet, in the dull terror of those first days, there were the stirrings of redemption. You could see it in the pride that journalists—even cynical, sneering political reporters—took in covering this historic and surprising transition. You could see it on display in the meetings that President Obama and White House staff held almost around-the-clock with congressional leaders and aides of both parties. But most of all, you could see it everywhere. Everyone was talking about the news. Everyone was watching and reading the news. There was a sense, in those weeks between Election Day and Inauguration Day, that Americans were all in this together, preparing, girding, for what we didn’t know. And maybe it’s crazy, but we grew closer to each other, kinder, as we all participated in this event as one country. Some still scoff at this, and as time passes, it’s harder and harder to prove. But I think it’s true. I think we are different now.

    Maybe Trump was a mirror, and we hated him because we hated what we saw in our reflection.

    By the time President Trump raised his right hand and swore to preserve, protect, and defend the Constitution, the Constitution itself had been enlisted. In what Trump supporters called the “Christmas Coup” and what everyone else called a historic act of national preservation, President Obama signed into law a bill passed with overwhelming bipartisan support (with the exception of a few House Republicans and Ted Cruz, who abstained) which reasserted congressional primacy over the republic and stripped away the presidential prerogatives that had accrued over the previous century. In a talk at the Heritage Foundation, Chief Justice John Roberts, speaking only hypothetically of course, suggested such a law would survive judicial review. The liberals on the high court offered similar hints. The only source of debate was which parts of the law ought to be permanent and which should sunset after four years. You can imagine how that went.

    Anyway, there’s no need to belabor the details of how the next four years unfolded: the budget crisis, President Trump’s impeachment, Vice President Cruz’s inauguration, the second budget crisis. It’s all pretty straightforward. It was a painful and frightening time, to be sure. And while it didn’t bring about the collapse of society, it did hurt us. Our economy suffered, as did our standing in the world. (Relations with Mexico remain tense.) One bright spot: We elected a man who loves to name things after himself, but all we named after him is the “Trump Recession.” He’ll be remembered for that forever. The irony was almost worth the price.

    And maybe it was a price the American people had to pay. Maybe Trump was a mirror, and we hated him because we hated what we saw in our reflection. We were coasting and knew it. A generation of elites prized shamelessness and ambition over virtue. Our newness and pride as a nation didn’t protect us from decadence, but it did allow us to ignore it, glued to our grievances and our phones as our culture and politics grew ever more brittle and shallow and crass.

    In the end, Trump is what America had earned. Trump is what America deserved. Trump was our reckoning. And while his rise to power was born of our failings, it also forced us to find our strength. It’s amazing how adaptable we are as human beings, isn’t it? Trump saved us.

    Now it’s all up to President Fieri.

    *  *  *

    Don't laugh yet…

     

  • It's A Divorce Lawyer Orgy: "Ashley Madison Hack Is The Best Thing To Happen Since Moses"

    Husbands and wives across the world are waking up to their partners' extramarital affairs after, as AP calls it, a catastrophic leak at adultery website Ashley Madison spewed electronic evidence of infidelity across the Internet. Online forums were buzzing Thursday with users claiming to have found evidence that their significant others were on the site. But it's not all doom and gloom… as Reuters notes many professions stand to benefit from the unfolding saga, from lawyers to therapists to cyber security firms. Prominent divorce lawyer Raoul Felder said the release is the best thing to happen to his profession since the seventh Commandment forbade adultery in the Bible, "I've never had anything like this before."

    As AP explains,

    Ashley Madison marketed itself as the premier venue for cheating spouses before data stolen by hackers started spreading across the Internet earlier this week. The prospect of finding the name of a loved one or an acquaintance amid the site's more than 35 million registered members has drawn strong interest worldwide.

     

    Websites devoted to checking emails against the leaked data appeared to be experiencing heavy traffic. Forums such as Reddit — the user-powered news and discussion site — carried stories of anguished husbands and wives confronting their partners after finding their data among the massive dump of information.

     

    When the hosts of a morning show in Sydney, Australia, asked listeners to phone in if they wanted their spouse's details run through the database, a woman called saying she was suspicious because her husband had been acting strangely since the news of the leak broke. The hosts plugged his details into a website and said they found a match.

     

    "Are you serious? Are you freaking kidding me?" the woman asked, her voice shaking. "These websites are disgusting." She then hung up.

     

    Family law experts are divided on the likely offline impact of the leak, but Los Angeles-based divorce lawyer Steve Mindel predicted an uptick in business for him and his colleagues.

    And, as Reuters reports, that is a silver lining of sorts…

    The hacker attack has been a big blow to Toronto-based assignation website firm Avid Life Media, which owns Ashley Madison and has indefinitely postponed the adultery site's IPO plans. But many professions stand to benefit from the unfolding saga, from lawyers to therapists to cyber security firms.

     

    Prominent divorce lawyer Raoul Felder said the release is the best thing to happen to his profession since the seventh Commandment forbade adultery in the Bible. "I've never had anything like this before," he said.

     

    The public embarrassment and emotional toll is likely to be enormous on unsuspecting people whose extra-marital affairs may have been exposed on the web or even whose emails were used without their knowledge to sign up for the site.

     

    "These poor people will be dealing with it in such a public way. It will be absolutely devastating," said Michele Weiner Davis, marriage therapist in Colorado and author of Divorce Busting.

    But there are other problems,

    The data release could have severe consequences for U.S. service members if found to be real. Several tech websites reported that more than 15,000 email addresses were government and military ones.

     

    Adultery, under certain criteria including the misuse of government time and resources, is a crime in the U.S. armed forces and can lead to dishonorable discharge or imprisonment.

     

    "Fall on your sword if you want to save your relationship," said Dr B. Janet Hibbs, a psychologist and couples therapist in Philadelphia. "Be prepared for them to ask a lot of questions, to not be defensive, to be compassionate."

    *  *  *

    So hey, those cheating spouses are now helping the economy grow…

  • This Fraud Of A Company Is Trying To Sell Stock, But Who Cares: Here Are Semi-Naked Women In Bikinis

    Here’s a business idea:

    1. Hire a bunch of hot women
    2. Tell them to pretend to punch each other on camera while wearing just a string bikini
    3. Go public (kind of) and hope to sell $20 million worth of stock which you paid a few hundred bucks for before making even one dollar in revenue
    4. Profit

    That’s exactly what Las Vegas-based Lingerie Fighting Championships (LFC), formerly known as Spaking Events, Xodetec Group,  Xodetec LED and Cala Energy Cor,p which has a very appropriate OTC Pink trading symbol: BOTY, decided to do according to its just filed amended S-1 statement.

    Only it is not exactly a public offering: the company’s stock which rarely if ever trades on the pink sheets, is selling 3.9 million shares of selling shareholder stock for total proceeds of just under $20 million, as part of a reverse acquisition (no, not a reverse merger, a reverse acquisition) of its predecessor shell company with LFC.

    The offering is part of a broader transaction involving a reverse acquisition using a shell company, the trademark of “unshady” deals:

    On March 31, 2015, we acquired Lingerie Fighting Championships, Inc. (“LFC”) in a transaction which is accounted for as a reverse acquisition.  As a result of the reverse acquisition, we ceased to be a shell company and our business became the business of LFC, and our historical financial statements became the financial statements of LFC, to the extent that such financial statements relate to periods prior to the completion of the reverse acquisition transaction.  In connection with the reverse acquisition, we changed our fiscal year to the calendar year.  Since LFC was formed in July 2014, we do not show results of operations or cash flows for any periods prior to LFC’s organization in July 2014.  On April 1, 2015, LFC was merged into us, and our corporate name was changed to Lingerie Fighting Championships Inc.

    Boring stuff: the company’s description is more exciting:

    We are a development-stage media company, which is in the process of developing and implementing a program of original entertainment which we plan to make available predominantly through live entertainment events, as well as through digital home video, broadcast television networks, video-on-demand and digital media channels.  Our business is focused on developing mixed martial arts fighting techniques, known as MMA, together with fictional character persona portrayed by beautiful women in attractive costumes based on their respective fictional characters for the purpose of providing entertainment.

     

    On August 8, 2015, we presented our first program, Lingerie Fighting Championships 20:  A Midsummer Night’s Dream, at the Hard Rock Hotel and Casino in Las Vegas, Nevada.  The program featured eight matches with 16 fighters.  The fighters are beautiful women in attractive costumes.  Each of the fighters has a specific and unique persona and appearance.  Our event was live and carried on pay per view cable in United States and Canada. We expect that the program or a one-hour edited version will be available through video on demand in a number of countries, including the United States, Canada, Mexico, most of South America, the United Kingdom, Italy, India, Australia and New Zealand.  Our source of revenue from this program includes a percentage of the fees received by the media distribution companies who carries our program, as well as from ticket sales and products related to the program.  We may also receive additional revenue from sales of products through our website and from sale of the program through video on demand and other post-event media distribution.  We are commencing discussions with respect to our second program, which we hope to schedule for October 2015.

     

    We promote our events in a manner to create interest in each of the fighters and in the success of each fighter against the others, in the manner similar to a MMA league.  We believe that our female fighters and their characters will enable us to develop and maintain an audience willing to attend our events or watch our events either live or through video on demand, and well as buying merchandise related to the events. Some of the fighters have followings independent of their participation in our events and perform in their character in other media or venues.

    The punchlines above, in addition to “beautiful women in attractive costumes” is that this is a “development-stage media company”, and sure enough, a quick look at the financials reveals just that: zero revenue…

     

    … but a whole lot of outstanding shares, shares which the selling shareholders are now rushing to liquidate:

     

    Why are they rushing to dump their holdings. That actually is a very interesting question.

    We find this riveting description in the related transactions section:

    On December 31, 2014, Mr. Butler, Mr. Chan and one non-affiliated person each made a $12,000 loan to us (then known as Cala Energy Corp.) and received a 10% senior promissory note in the principal amount of $12,000.  The notes were due December 31, 2015 or earlier in the event that we completed a private placement of our stock.  The notes were paid from the proceeds of a $200,000 private placement of our common stock on March 31, 2015, contemporaneously with the completion of the reverse acquisition with LFC.  Mr. Chan was not a related party at December 31, 2014, and is deemed to have become a related party solely as a result of his acquisition of more than 5% of our common stock on March 31, 2015 pursuant to the Share Exchange Agreement relating to the reverse acquisition transaction.

     

    In February 2015, Mr. Butler and Mr. Chan each made a loan to LFC in the amount of $1,925.  The notes had a September 30, 2015 maturity date, and were converted into 1,925,000 shares of common stock pursuant to the share exchange agreement relating to the reverse acquisition.  At the time of the issuance of the shares upon conversion of the promissory notes, neither Mr. Butler nor Mr. Chan held any equity interest in our securities.  Two non-affiliated individuals, Giselle Dufourcq and Natilia Lopera, who are selling shareholder, each made a $700 loan to LFC and received 700,000 shares of common stock pursuant to the Share Exchange Agreement.  Neither Mr. Butler nor Mr. Chan had any stock or other equity interest in our equity securities other than the convertible notes prior to the completion of the reverse acquisition.

     

    In addition, during 2014, Mr. Butler made a $100 advance to us, and Mr. Donnelly made a $115 advance to LFC prior to the reverse acquisition.  These advances are included in loans payable at March 15, 2015.

     

    Through December 31, 2014, Mr. Butler had accrued compensation of $270,000, which represented compensation through August 31, 2014 from us, then known as Cala Energy Corp.  In February 2015, Mr. Butler forgave $270,000 of accrued compensation which was treated as a contribution to our capital.  The forgiveness of compensation was effective prior to the reverse acquisition transaction.

     

    Pursuant to the share exchange agreement relating to the reverse acquisition with LFC, on March 31, 2015, Mr. Donnelly exchanged his common stock in LFC for 9,350,000 shares of common stock, representing 47.3% of our outstanding common stock after giving effect to the shares of common stock issued in connection with the reverse acquisition transaction and the related private placement.  Prior to the issuance of these shares, Mr. Donnelly had no equity or other interest in us.  He became our chief executive officer and a director as a result of the reverse acquisition transaction.

    So a couple of people lent out the company a few hundred dollars (literally) for which they got millions of shares in stock, and now they are looking to sell these shares at a price of up to $5/share? Something tells us they won’t succeed not just because the “company” has no chance of ever generating any actual material revenue, let alone a profit, but because even a cursory glance at the “relationships” section reveals this is nothing but a fraud.

    Still, in a world where CYNK, a company without assets, operations or frankly anything except for an office in a stripmall and one employee can soar to billions in market cap on zero volume and then crash just as fast to zero, all of that is largely boring especially to the SEC and the Feds who certainly should be looking under the cover of Lingerie Fighting Championships very closely but they won’t, so let’s cut to the chase.

    Here is the company’s one and only “product” – “beautiful women in attractive costumes.“

     

    Chloe “Ladykillah” Cameron

     

    Feather “The Hammer” Hadden

     

    Suzanne “Hawaiian Punch” Nakata

     

    Shelly “Aphrodite” DaSilva

     

    Lauren “The Animal” Erickson

     

    Jenny Valentine

     

    Holly “The Lotus” Mei

     

     

    Some more deep research into the nature of the company’s future revenue stream:

     

    And remember: if anyone gives you dirty looks for scouring through a post of semi-naked women at work, just say it’s due diligence for an equity offering, which incidentally is what all the bankers who were caught on Ashley Madison should be telling their spouses and girlfriends.

  • Aug 21 – Greek PM Tsipras Resigns, Calls Snap Elections

    EMOTION MOVING MARKETS NOW: 11/100 EXTREME FEAR

    PREVIOUS CLOSE: 11/100 EXTREME FEAR

    ONE WEEK AGO: 9/100 EXTREME FEAR

    ONE MONTH AGO: 25/100 EXTREME FEAR

    ONE YEAR AGO: 37/100 FEAR

    Put and Call Options: EXTREME FEAR During the last five trading days, volume in put options has lagged volume in call options by 25.60% as investors make bullish bets in their portfolios. However, this is still among the highest levels of put buying seen during the last two years, indicating extreme fear on the part of investors.
    Market Volatility: EXTREME FEAR The CBOE Volatility Index (VIX) is at 19.14, 34.83% above its 50-day moving average and indicates that investors are concerned about the near-term values of their portfolios.

    Stock Price Strength: EXTREME FEAR The number of stocks hitting 52-week lows is slightly greater than the number hitting highs and is at the lower end of its range, indicating extreme fear.

    PIVOT POINTS

    EURUSD | GBPUSD | USDJPY | USDCAD | AUDUSD | EURJPY | EURCHF | EURGBP| GBPJPY | NZDUSD | USDCHF | EURAUD | AUDJPY 

    S&P 500 (ES) | NASDAQ 100 (NQ) | DOW 30 (YM) | RUSSELL 2000 (TF) | Euro (6E) |Pound (6B)

    EUROSTOXX 50 (FESX) | DAX 30 (FDAX) | BOBL (FGBM) | SCHATZ (FGBS) | BUND (FGBL)

    CRUDE OIL (CL) | GOLD (GC)

     

    MEME OF THE DAY – IT’S THE JERKS

     

    UNUSUAL ACTIVITY

    IDTI Vol weakness SEP 19 PUT ACTIVITY @$1.25 on offer 4500+ Contracts

    SLB SEP 80 PUT ACTIVITY @$1.31 on offer 4000+ Contracts

    PYPL SEP WEEKLY4 PUTS on the BID @$1.35 3700 Contracts

    SPLS DEC 15 CALLS on the OFFER @$.90-.95 6000 Contracts

    SEMI – CEO Purchased $300k+ total

    AVHI Director Purchase 1,920 @$ 13.9989 Purchase 1,280 @$13.99

    More Unusual Activity…

     

    HEADLINES

     

    Greek PM Tsipras resigns, calls snap elections

    US Philly Fed Business Index (Aug): 8.3 (est 6.5; prev 5.7)

    US Existing Home Sales (MoM) (Jul): 2.0%% (est -1.20%; prev rev 3.0%)

    US Leading Index (MoM) (Jul): -0.2% (est 0.20%; prev 0.60%)

    US Initial Jobless Claims Aug-15: 277K (est 271K; rev prev 273K)

    US Continuing Claims Aug-08: 2254K (est 2265K; rev prev 2278K)

    US EIA Natural Gas Storage Change (Aug): 53 (est 59; prev 65)

    US Commercial Paper Outstanding (SA) (19 Aug): -$1.8bn

    CA Wholesale Trade Sales (MoM) Jun: 1.30% (est 0.90%; rev prev -0.90%)

    ECB Nowotny: No signals for early QE end, dismisses idea of FX wars

    Bank Of Spain bends ECB rules to favour own banks –HB

    SNB’s Jordan: SNB prepared to intervene in CHF if necessary

    M&A: Visa In $21bn Bid To Merge US, European Units

    M&A: Valeant pays $1bn for women’s libido drug

    Fitch: China’s capital injections support policy banks, economy

     

    GOVERNMENTS/CENTRAL BANKS

    US Commercial Paper Outstanding (SA) (19 Aug): -$1.8bn

    Allianz’s El-Erian: Fed missed earlier chance to hike rates –Rtrs

    Liberty St Econ: The Evolution of Workups in UST Securities Market

    ECB’s Nowotny: There is no signal for early end to QE –FXStreet

    ECB’s Nowotny dismisses ‘currency wars’ talk –Rtrs

    ECB: E155m Borrowed Using Overnight Loan Facility, E157bn Deposited –Livesquawk

    ECB: EZ Excess Liquidity Fell To E471.705bn From E472.92bn

    Bank Of Spain bends ECB rules to favour own banks –Handelsblatt

    SNB’s Jordan: SNB prepared to intervene in CHF if necessary –FoerxLive

    France’s Hollande: Tax cuts will come with higher growth next year –Rtrs

    GREECE

    Greek PM Tsipras to resign, calls nsap elections –Tele

    ECB confirms Greece payment received –Livesquawk

    EC signs 3yr ESM stability support programme for Greece –EC

    Greece Authorizes $3.6B Payment on ECB-Held Bonds –BBG

    GEOPOLITICS

    North And South Korea ‘Trade Artillery Fire’ –Rtrs

    UK to reopen Tehran embassy –Sky

    FIXED INCOME

    UST to auction $26bn 2s, $35bn 5s, $29bn 7sm $13bn 2y FRN –Livesquawk

    Bankrate: US Mortgage Rates Rise, Boosted By Improved Housing Market –Bankrate

    Apple releases Kangaroo guidance –IFR

    FX

    USD: Dollar slips as Fed rate hike hopes recede –Rtrs

    EUR: Euro rises to 7-week peak against dollar –FT

    CHF: SNB’s Jordan: SNB prepared to intervene in CHF if necessary –FoerxLive

    CHF: Swiss EconMin: CHF Should Move Towards 1.22 Vs Euro, Hopes Will Weaken Towards 1.10

    CNY: IMF decision rattles China’s yuan –WSJ

    CNY: ECB Nowotny: Yuan Drop Sign of Slowing Growth, Not FX War

    EMFX: EM currency turmoil escalates –FT

    ENERGY/COMMODITIES

    CRUDE: WTI futures settle 0.8% higher at $41.14 per barrel –Livesquawk

    CRUDE: Brent futures settle down 1.2% at $46.62 per barrel –Livesquawk

    CRUDE: US EIA Natural Gas Storage Change (Aug): 53 (est 59; prev 65)

    CRUDE: Rigzone: Some offshore rigs being bid at break even rates –BBG

    CRUDE: Mexico hedges 2016 oil exports at $49 a barrel –FT

    WEATHER: Hurricane Danny named as first major storm of Atlantic season –Guardian

    METALS: Gold breaks above $1150; highest since July 15 –CNBC

    EQUITIES

    M&A: Visa In $21bn Bid To Merge US, European Units –Sky

    M&A: Valeant pays $1bn for women’s libido drug –FT

    M&A: Zurich Insurance drafts Evercore in RSA pursuit –FT

    M&A: United Tech in talks to buy Nortek –WSJ

    TRADING: FTSE 100 falls into correction territory –FT

    TECH: Twitter falls below IPO price –BI

    TECH: Gartner: Worldwide Smartphone Sales Recorded Slowest Growth Rate Since 2013

    BANKS: FDIC sues Citigroup, 2 other banks over soured mortgages –Rtrs

    UTILITIES: RWE To Replace Head Of British Unit –Rtrs

    MEDIA: Netflix slumps amid broad media selloff –MW

    EARNINGS: Sears reports first quarterly profit since 2012, sales still tumble -Rtrs

    REGULATION: US senators urge recall of all autos with Takata airbags –BI

    COMMODS: Moody’s downgrades ConocoPhillips’ unsecured ratings to A2, stable outlook

    EMERGING MARKETS

    Fitch: China’s Capital Injections Boost Support For Policy Banks, Economy

     

    El-Erian: Seeing a classical overshoot, starting in emerging markets –CNBC

  • Hillary Clinton Admits Classified Information Was Stored On Home Server

    “What, with a cloth or something?,” Democratic frontrunner (for now anyway) Hillary Clinton said earlier this week, in a sarcastic and fairly condescending reply to a reporter who pressed her on whether she had attempted to wipe her private e-mail server clean before turning it over to the FBI. 

    That was the second time in a week that Clinton has attempted to deflect questions about the server with a dark mix of humor and disdain, and it’s backfired both times.

    When Clinton first handed over the server along with a thumb drive, an attorney for the Colorado-based company that managed Clinton’s private e-mail said the server the FBI got “is blank and does not contain any useful data.” That only exacerbated GOP lawmakers’ aggravation and may well have cost Clinton in the polls, as the socialist Bernie Sanders surged ahead in New Hampshire. 

    Subsequently, reports surfaced that an audit of the e-mails the former First Lady turned over to the State Department revealed that at least two e-mails may have contained top secret information about the CIA’s drone program.

    With the controversy unlikely to dissipate any time soon, and with many analysts claiming that the issue could well imperil her run for The White House, Clinton has now admitted that in fact, her private server did contain classified e-mails. Here’s the story from WSJ:

    Hillary Clinton’s campaign said Wednesday that emails on the private server she used when she was secretary of state contained material that is now classified, the clearest explanation thus far of an issue that has roiled her bid for the presidency.

     

    At the same time, the campaign sought to play down the disclosure by saying the material had been retroactively classified out of an abundance of caution by U.S. intelligence agencies.

     

    “She was at worst a passive recipient of unwitting information that subsequently became deemed as classified,” said Brian Fallon, a spokesman for Mrs. Clinton’s campaign.

     


     

    Mrs. Clinton has been criticized for using a private email server when she was in office. Since 2013, the server was maintained by a small Denver company and stored at a secure data center in New Jersey until it was turned over to the FBI last week. Her use of the server has prompted an FBI counterintelligence investigation.

     

    Republicans portrayed the Clinton campaign’s disclosure as a tacit admission that her previous statements about the partisan direction of the investigation were in error. Earlier this year, Mrs. Clinton said “there is no classified material,” before shifting her emphasis to say she didn’t receive any materials marked as classified.

     

    “Secretary Clinton has repeatedly made false claims about her email records, and her charge that these investigations are partisan have been widely ridiculed. If she and her campaign are having a change of heart, she should personally admit the truth and retract her false statements,” said Kevin Smith, a spokesman for House Speaker John Boehner.

    While it’s certainly disconcerting that the nation’s one-time top diplomat was sending and receiving sensitive information over an unsecure private e-mail server, the issue for Clinton – because it would probably be naive to think that anyone besides voters will actually hold her accountable – is that her handling of the ordeal has served to reinforce the perception that she’s too arrogant and untrustworthy to be given the reins to the country.

    That is, the public was already wary of electing yet another member of America’s political aristocracy (or oligarchy, if you will) and the fact that Clinton apparently expects Americans to believe that she had no idea the information she was receiving on her home server might one day be deemed classified (even though she’s been privy to such information in various capacities for decades) seems to underscore her arrogance and highlight her propsensity to, as Jean Claude-Juncker famously put it, lie when “things become serious.”

  • FBI Had 12-Page File On George Carlin Because He Made Jokes About Government

    Submitted by John Vibes via TheAntiMedia.org,

    Comedian George Carlin is known as one of the most controversial and outspoken entertainers of his time, and as far as the government is concerned, he could have possibly been a terrorist.

    Carlin was not a violent or criminal person in any way, but he said things during his routines that struck at the root of the problems in our society. He went into great detail about corruption in government and business.

    During the 1978 Supreme Court case, FCC v Pacifica Foundation, the government cited Carlin’s work as an example of profanity. They used his “Seven Dirty Words” segment to show the type of language that was being used in records and broadcasts. However, the government’s interest in his work did not stop there.

    Just after his 1969 appearance on the Jackie Gleason show, Carlin caught the attention of the FBI because he made jokes about then-FBI chief J. Edgar Hoover. According to the government, Carlin had “referred to the Bureau and the Director in a satirical vein.”

    They added that his act was “considered to be in very poor taste” and “it was obvious that he was using the prestige of the Bureau and Mr. Hoover to enhance his performance.”

    carlin1 (1)

    After Carlin’s appearance on the show, the staff of Jackie Gleason received a number of anonymous letters — allegedly from fans but possibly from the FBI — condemning Carlin for speaking about the government in the critical way that he did. It has been proven that the FBI has indeed sent threatening letters to public figures in the past, pretending to be concerned colleagues or a member of the public, including to Dr. Martin Luther King Jr.

    carlin4

    A letter claiming to be from a viewer of the Jackie Gleason show, criticizing Carlin’s statements.

    Anyone that speaks out against the injustices of the world, whether they are a dangerous terrorist or a harmless comedian, will receive unwanted attention from government.

    Below is a video showing Carlin’s deep political analysis in action:

    Read the 12 pages of FBI documents on Carlin here.

  • Wall Street To Form New Tech Company To "Clean Up" Dirty Data

    Back in June, when commenting on a lawsuit brought by a group of pension and retirement funds which amusingly accused Wall Street and its progeny Markit of conspiring to monopolize the CDS market to the detriment of potential new entrants that we’re sure had only the best intentions (like Citadel), we said the following: 

    While the entire world is now, with the benefit of hindsight, able to see how a setup that allowed rate traders to communicate with benchmark submitters might have been a recipe for disaster, what should be even more obvious is that allowing a firm controlled by Wall Street’s largest banks to effectively monopolize the market for the derivatives that not only played a rather large role in the financial crisis but also serve as the go-to instrument for hedging tail risk is likely also a bad idea and could very well lead to manipulation and all sorts of other nefarious things like, for instance, attempts to create and preserve a lucrative monopoly by adopting anti-competitive practices. 

    We were of course referring to Markit, the Wall Street-backed provider for CDS data, and as WSJ reports, it now appears that Wall Street will conspire to form another reference data entity in which everyone will have a stake. The project is called “SPReD” and it will be implemented by SmartStream Technologies ltd. Here are the (convoluted) details:

    The initiative is currently dubbed “SPReD”, which stands for Securities Product Reference Data, and is likely to be launched as a new entity in the next six to 12 months, the people said. Each founding bank is investing “seven figures” for the entity, the people said.

     

    The company will work specifically with reference data on financial instruments, including identifiers like names, codes and symbols that each institution already buys. It will start with listed derivatives and equity data, with fixed income-related data added later.

     

    The project would consolidate efforts to clean and store the vast amount of data, centralizing a function that many banks have previously done individually, with some housing data in a variety of units within their organization.

     

    Banks typically use market data from vendors and glean it from public sources, run it through their systems and “scrub” the data to get so-called “golden copies” that are consistent and ready for use across the business, one of these people said. That consistent data can help save on transaction costs across the organization.

     

    The new entity will create tailored data feeds for each client using existing sources of data that firms receive from a variety of vendors. Each bank or client will continue to negotiate those data vendor relationships themselves.

     

    Earlier this year J.P. Morgan created a central system within the bank that pulled streams of reference data from all of its providers into one hub, a person familiar with the process said. The new entity will take over scrubbing reference data for the bank, ultimately feeding it back into J.P. Morgan’s system, as part of its cost savings initiative.

     

    Using consistent data allows the banks to form accurate pricing for trades and can be essential for risk and compliance reviews that could arise.

    While it’s not entirely clear from the above exactly what all will be included in the data sets that comprise SPReD – and we’ll probably never know until someone gets caught manipulating something – this seems to be an attempt to standardize data across markets in a way that allows the banks to control the tracking.

    What that will mean going forward is anyone’s guess but as is clear from the last line excerpted above, standardizing this data will supposedly help banks “form accurate pricing for trades”, and we all know what can happen when Wall Street gets together to “standardize” a reference point on which trades are based. 

Digest powered by RSS Digest