Today’s News December 22, 2015

• Janet Yellen Fights the Tide of Falling Interest

  by Keith Weiner

   

  On Wednesday Dec 16, Federal Reserve Chair Janet Yellen announced that the Fed was raising the federal funds rate by 25 basis points.

  Let’s get one thing out of the way. This is not a move towards free markets. Whether the Fed sets interest lower, or whether it sets interest higher, we still have central planning. We still have price fixing of interest rates.

  Interest rates may be set too low. However, forcing interest up is no cure. We need to eliminate central planning, and move to a free market in interest. This is impossible in our present monetary regime.

  Anyway, given the system as it is, the Fed is going to have to take back this interest rate hike. Here is Exhibit A of our case: a graph of the 10-year US Treasury bond yield.

  
  Source: Yahoo Finance

  At least the US dollar still has interest. Switzerland, and several countries in the European Union, don’t. Their currencies are drowning under the zero line. For example, the Swiss government 10-year bond takes 0.16% per year from lenders. That’s right, if you fork over your francs to buy that bond, you get back less at the end. Germany is little better, with their five-year bond charging investors 0.1%.

  The global trend for over three decades has been falling interest. The yield on the 10 year Treasury even fell after the Fed’s announcement. Yellen thinks to fight this megatrend, but that’s absurd. Let’s look at why.

  The process that sets the interest rate is complex. I have written many words on its terminal decline. However, there are two simple reasons why the trend remains downward.

  One, banks today have a business model called maturity transformation. They borrow short term to lend long term.

  To understand this, consider the simple example of buying a house. Only, you don’t get a normal mortgage. You get a balloon loan due tomorrow morning. Every day, you have to borrow anew. This would be crazy for an individual homeowner to attempt.

  However, it’s what banks do. They risk an increase in their cost of funding. That would be a problem, because the interest they receive on their bonds is fixed.

  The problem isn’t just reduced cash flows. When the cost of funding goes up, some bondholders are obliged to sell bonds. That causes a drop in the price of bonds, and all bondholders take capital losses. With reduced capital, banks have to cut back on lending. Funding to business is reduced, and there can be a recession.

  Two, falling interest has driven down the yields of stocks and real estate. This has been a process of borrowing ever more, of going deeper into debt. What else should we expect people to do, with ever cheaper cost to borrow? They borrow, to increase their leverage, to own more assets. At least, there are more assets in dollar terms. But remember, prices are rising in this process, so there aren’t necessarily more assets in reality.

  Picture both assets and liabilities rising together. It is a ratchet, that cannot go backwards. Any significant interest hike causes the prices of all assets to drop. That turns many balance sheets upside down. For some, liabilities exceed assets. Their bankruptcies lead to liquidations, which causes further asset declines. Assets must be sold, but no one can get funding to buy them, and everyone’s balance sheet is under stress.

  Janet Yellen will want to avoid this catastrophe. She won’t want to be remembered as the Fed Chair who caused a repeat of 2008. She will find that it’s easier to take another hit of financial heroin. Interest rates will go down.

   

  This article is from Keith Weiner’s weekly column, called The Gold Standard, at the Swiss National Bank and Swiss Franc Blog SNBCHF.com.

  

  

  

  

• USS ISIS STRaTeGY…

  

  

  

  

  

• The New World Disorder – How Empires Die

  Submitted Jeff Thomas via InternationalMan.com,

  The state-owned Bank of China has been ordered by an American court to hand over customer information to the US. The bank has refused to comply, as to do so would violate China’s privacy law. The US court has subsequently ordered the Bank of China to pay a fine of $50,000 per day.

  Any guess as to how this is likely to turn out?

  China is a sovereign nation, halfway around the globe from the US, yet the US seems to feel that it’s somehow entitled to set the rules for China (as well as the other nations in the world). When China sees fit to develop islands in the South China Sea that it has laid claim to for centuries, it begins to hear threatening noises from the US military. A candidate for US president declares that he would buzz the islands with Air Force One, the Presidential jet, saying, "They'll know we mean business."

  All over the world, those who live outside the US are increasingly observing that the US has become so drunk with power that they’re threatening both friend and foe with fines, trade restrictions, monetary sanctions, warfare, and invasions.

  And in so-observing, those of us who have studied the history of empires note that history is once again repeating itself. Time and time again, great empires build themselves up through industriousness and sound economic management only to subsequently decline into debt, complacency, and an entitlement mind-set.

  Over the millennia, empires as disparate as Persia, Rome, Spain, and Great Britain rose to dominate the world. Of course, we know how those empires turned out and, by extension, we might hazard an educated guess as to how the present American Empire will end.

  In the final throes of empire-decline, we invariably observe the more sociopathic trends of a failing power, such as we’re seeing today from the US.

  First and foremost, any empire declines as a result of economic mismanagement. Decline from within (pandering to the populace with “bread and circuses”) and without (endless conquest and/or maintenance of dominance over far-flung geography) drain even the wealthiest government. Even eighteenth-century Spain, with all its billions in stolen New World gold, could not pay its ever-increasing bills and warfare-driven debt.

  Typically, the empire of the day enjoys the world’s greatest fighting force/armada/weapons build-up yet, when the money runs out, the war machine simply stops. Soldiers think more about their empty bellies than how much ammunition they have left. Generals continue to issue orders, but they cease to be followed after the supply lines begin to dry up.

  And the leaders of a collapsing empire invariably make a fatal mistake: they assume that all the goodwill the empire gained when it was on its rise is permanent – that it will continue, even if the empire behaves like the world’s foremost bully.

  This is never the outcome. Invariably, as the decline nears its end, allies, without ever saying so, begin to withdraw their support. We see this today, as European leaders (America’s most essential allies) realise that the empire is becoming an arrogant liability and they begin cutting deals with the other side, as European leaders are now doing with Russia and others.

  For a century or more, there’s been much talk amongst highly placed government and industry leaders of a New World Order, and there can be no doubt that this has been a long-term objective for Western leaders. They see themselves as being at the head of this order, with the rest of the powers coming along for the ride and the non-powers being forced to comply.

  The US, with its ever-expanding draconian legislation, clearly intends to bring this Orwellian ideal to fruition in the relatively near future as they speed up the process of dominance over all. With some countries, such as the traditional allies, it’s intended to be implemented through coercion and a promise of inclusiveness. For those who the US does not hold close, but needs as trading partners, this is intended to be achieved through fines, trade restrictions, and sanctions (if possible) and force (if necessary). The lesser countries will be overcome through bullying or, if necessary, invasion.

  But, again, empires decline principally through loss of economic power. And the US is attempting the greatest world-control in history at the same time as the money is running out.

  Many people (conspiracy theory advocates and otherwise) acknowledge that an effort exists to create a New World Order, with the US at its head and the EU as its little brother and co-conspirator. Many of these theorists believe that Russia and China only pretend to oppose the order but secretly only seek to have a place at the table.

  I think not.

  Political leaders, more often than not, tend to have sociopathic tendencies. Above all their other goals, the desire to be omnipotent reigns supreme. Most leaders will do extraordinarily stupid things to maintain or expand their own personal power. Countless leaders have destroyed their own country rather than relinquish power over it.

  To think that leaders of other great powers, such as China and Russia, will willingly comply just to get to break bread with the US in the same room is a faulty assumption.

  Of course, as we’re observing, the US is now obsessively demonstrating its perceived power over all, bulling its allies, invading one small nation after another, and threatening its trading partners. They fail, as do all sociopaths, to even consider that it can all come crashing down and, for that reason, are failing to see the warning signs as they occur.

  Of course, it’s important to remember that those leaders of other nations, who are holding the cards, will not wish to utterly destroy the US. They will not seek a Treaty of Versailles. They will hope to re-invent America as a consumer, but without its fangs.

  To whatever level the US falls in the coming years, their leaders won’t see it coming. They’ll understand that there’ll be pushback from trading partners, but they’ll believe it can be overcome with a combination of cajoling and force. What they will thoroughly fail to see coming is that when the knives are drawn by the other major nations, America’s allies, too, will have had enough. They’ll see a better future with those nations that are still behaving in a reasonable fashion than to continue to side with the fearful US Goliath.

  As Doug Casey has stated, “Countries fall from grace with amazing speed.” Quite so. Just as the Roman senators that had previously supported Caesar joined in with those that openly opposed him and took part in his assassination, so America’s formerly staunch allies will join in when the other major powers make their move. There’s been an unstated deterioration in the loyalty of US allies in recent years and, when they turn, I believe they will do so decisively. The Caesar that was bowed to only yesterday will find himself alone in his fate tomorrow when the knives are drawn against him.

  So, what do we take away from this? An interesting little history lesson? Well, hopefully more. Hopefully, we’ll recognise that, as threatening as the US Goliath is at present, there will, at some point in the coming years, be dramatic and rather sudden change. When this occurs, our lives, liberty, and wealth will not be unaffected.

  In my opinion, we shall see a “New World Disorder” – a dramatic decline in US hegemony, coupled with a scramble by other nations to fill the void. Those who fare best within it will be those who made the necessary preparations ahead of time.

  *  *  *

  Unfortunately, there’s little any individual can practically do to change the trajectory of this trend in motion. The best you can and should do is to stay informed so that you can protect yourself in the best way possible, and even profit from the situation.

  We think everyone should own some physical gold. Gold is the ultimate form of wealth insurance. It’s preserved wealth through every kind of crisis imaginable. It will preserve wealth during the next crisis, too.

  But, if you want to be truly “crisis-proof”, there is more to do…

  Most people have no idea what really happens when a currency collapses, let alone how to prepare…

  How will you protect your savings in the event of a currency crisis? This just-released video will show you exactly how. Click here to watch it now.

  

  

  

  

  

• Caught On Tape: U.S. Senator Issues Dire Warning On Unchecked Executive Power

  Submitted by Mike Krieger via Liberty Blitzkrieg blog,

  The deliberations of the Constitutional Convention of 1787 were held in strict secrecy. Consequently, anxious citizens gathered outside Independence Hall when the proceedings ended in order to learn what had been produced behind closed doors. The answer was provided immediately. A Mrs. Powel of Philadelphia asked Benjamin Franklin, “Well, Doctor, what have we got, a republic or a monarchy?”

   

  With no hesitation whatsoever, Franklin responded, “A republic, if you can keep it.”

  I actually can’t believe I’m writing this, but the following speech from freshman U.S. Senator Ben Sasse (R, Neb) is so thoughtful and inspiring, it should be required viewing for all American citizens.

  To hear a U.S. Senator sound more like a statesman than a corrupt hack politician for sale to the highest bidder, is such a breath of fresh air I almost can’t believe it’s real. Rather than talking down to voters, he challenges them to become more enlightened, nonpartisan-thinkers with a sense of history. He challenges all of us to shake ourselves from an ignorant, fear-based stupor and reclaim the true genius and beauty at the heart of the American experiment.

  Take the time to watch this. The entire thing, and then share it with everyone you know.

  "The problem of a weak Congress and executive growth should be bad news to all of us and, more importantly, to every constituent who cast their votes for us under the impression that Congress made decisions – not suggestions. I think the weakness of the Congress is not just undesirable, but is actually a dangerous thing for America."

  Thank you Ben Sasse, for proving that there remains a remnant of wise, honorable, decent people in U.S. government.

   

  Finally, while we’re on the topic of executive overreach, here’s what Obama has planned for gun control in the new year…

  From Roll Call:

  Senior congressional aides and sources in the gun-control community expect the White House to use its executive powers to tighten federal gun laws shortly after President Barack Obama returns from a Hawaiian vacation in early January.

   

  White House Press Secretary Josh Earnest said Thursday he anticipates a legal review to continue through the holidays.

   

  Since the deadly shooting in San Bernardino, Calif., White House officials have been, as Earnest has put it, “scrubbing through the law” to determine whether and how Obama can use his constitutional authorities to make it harder for terrorists and other potential mass shooters to legally obtain firearms.

   

  On both sides of the Capitol, sources involved in the guns debate say, as one senior House GOP leadership aide put it, “something is brewing on guns.”

   

  The hot-button issue returned to the front burner of American politics following the lethal Islamic State-inspired California shooting.

  Since, however, Republican lawmakers have blocked Democratic measures on stiffening gun laws; and Democrats have kept a mental health bill the GOP has tied to mass shootings from passing, saying they would rather close loopholes in gun laws first.

   

  A recent CNN/ORC poll suggests the American public is siding with GOP arguments. The survey found a majority (52 percent) of those polled oppose tighter gun laws. And a Washington Post/ABC News poll found 53 percent are against the assault weapons ban the White House has endorsed.

   

  “So part of our solution is to consider the range of authorities that are vested in the executive branch to try to advance some of those common-sense policies,” Earnest said. “And we certainly do want to make sure that any sort of steps that the president would take have a strong legal basis in the law.”

  So there you have it. A majority of Americans do not want tighter gun laws. Nevertheless, King Obama thinks he know best, and will simply do as he pleases.

  This is not what freedom looks like.

  

  

  

  

  

• China "Suspends" Another Unofficial PMI Data Release To Make "Major Adjustment"

  For the second time in two months, an economic data series that indicate drastically weak performance in China has been "suspended." Having seen Markit/Caixin's flash gauge of China's manufacturing discontinued in October (having plunged notably divergently from the government's official data), Bloomberg reports that the publishers of the alternative China Minxin PMI will stop updating the series to make a "major adjustment."

   

  Guess which time series was just "suspended"…

  

   

  As Bloomberg details,

  Release of the unofficial purchasing managers index jointly compiled by China Minsheng Banking Corp. and the China Academy of New Supply-side Economics will be suspended starting this month, the Beijing-based academy said in an e-mailed statement Monday, about six hours before the latest monthly data were scheduled for release.

   

  Minxin’s suspension is the second in recent months as policy makers in the world’s second-largest economy struggle to arrest a deceleration in growth. Another early estimate of China’s manufacturing sector, a flash gauge of a purchasing managers index compiled by Markit Economics and sponsored by Caixin Media, was discontinued Oct. 1.

  Minxin’s PMI readings are based on a monthly survey covering more than 4,000 companies, about 70 percent of which are smaller enterprises. The private gauges have shown a more volatile picture than the official PMIs in the past year.

  The manufacturing PMI declined to 42.4 in November from 43.3 in October, while the non-manufacturing reading fell to 42.9 from 44.2, according the the latest release. The factory gauge fell to a record low of 41.9 in August. China’s official PMI from the National Bureau of Statistics fell to a three-year low of 49.6 in November.

  For September, the now-discontinued flash Markit/Caixin PMI fell to a six-year low, while the official PMI reading showed a modest improvement.

  *  *  *

  Because nothing inspires confidence like removing transparency of just the worst data series. We assume the "major adjustment" needed is akin to America's "double-seasonal adjustment" because how could it be possible that official figures remain so 'healthy' when every private survey (pre-discontinuation) has shown utter collapse…?

  

  

  

  

  

• Presenting The Stunning Difference In How Blacks And Whites Are Killed By Guns

  If one were asked to name the top five issues on America’s collective mind as we head into 2016, gun violence would almost certainly make the list. 

  A string of incidents that culminated in the massacre in San Bernardino earlier this month has put gun control back in the limelight as the nation debates the best way to prevent mass shootings. 

  Some suggest gun violence should be a designated as a public health issue. “Supporters, including doctors and medical associations, say that designating gun violence – which they define to include homicides, suicides and injuries – as a public health issue will save lives,” US News & World Report wrote over the summer. “Doctors already counsel patients about a range of safety issues, including avoiding lead paint, wearing seatbelts, getting vaccinated and dealing with the dangers of backyard pools. If the designation were to change, they could more often ask patients about whether they keep a gun in the home and, if so, how it is secured.”

  That rather surreal sounding idea is in many ways reflective of how frustrated America has become with the issue. The right to keep and bear arms is not only enshrined in the Constitution, it’s also part of the country’s consciousness and identity – even most gun control advocates would likely be loath to see citizens’ gun rights curtailed wholesale. Even so, the perception that gun violence is on the rise and the nation is powerless to stop it has led some to question whether it may be time to consider taking a more drastic approach when it comes to limiting access to firearms. 

  What gets lost in the debate is the fact that when it comes to gun violence, mass shootings really aren’t the problem. That is, as horrific as they are and as often as they seem to be occurring, “less than 2 percent of more than 33,000 gun deaths in [America] are due to mass shootings,” Trace wrote, earlier this month. 

  “The gun control debate often plays out in monolithic fashion in this country,” WaPo writes, adding that “the traditional understanding is that there’s one overarching problem — gun violence — that can be addressed by a more or less uniform set of solutions: better background checks, improved technology, etc.” 

  However, “one shortcoming of this approach is that it elides over the sometimes drastic differences in how different populations experience gun violence and gun ownership in their lives.” WaPo goes on to present the following rather stunning chart from The Brookings Institute. As you can see, there’s a marked difference between how African Americans and whites are killed by firearms. More specifically, “among whites, 77 percent of gun deaths are suicides. But among black Americans, 82 percent of gun deaths are homicides.”

  

  Consider that, then consider the following chart which depicts parents’ perceptions of the risks their children face. We present it below and leave the issue for readers to discuss:

  

  

  

  

  

  

• Liberty Imperiled – Welcome To Cop-Land

  Submitted by Matthew Harwood via TomDispatch.com,

  If you’ve been listening to various police agencies and their supporters, then you know what the future holds: anarchy is coming — and it’s all the fault of activists.

  In May, a Wall Street Journal op-ed warned of a “new nationwide crime wave” thanks to “intense agitation against American police departments” over the previous year. New Jersey Governor Chris Christie went further. Talking recently with the host of CBS’s Face the Nation, the Republican presidential hopeful asserted that the Black Lives Matter movement wasn’t about reform but something far more sinister. “They’ve been chanting in the streets for the murder of police officers,” he insisted. Even the nation’s top cop, FBI Director James Comey, weighed in at the University of Chicago Law School, speaking of “a chill wind that has blown through American law enforcement over the last year.”

  According to these figures and others like them, lawlessness has been sweeping the nation as the so-called Ferguson effect spreads. Criminals have been emboldened as police officers are forced to think twice about doing their jobs for fear of the infamy of starring in the next viral video. The police have supposedly become the targets of assassins intoxicated by “anti-cop rhetoric,” just as departments are being stripped of the kind of high-powered equipment they need to protect officers and communities.  Even their funding streams have, it’s claimed, come under attack as anti-cop bias has infected Washington, D.C.  Senator Ted Cruz caught the spirit of that critique by convening a Senate subcommittee hearing to which he gave the title, “The War on Police: How the Federal Government Undermines State and Local Law Enforcement.” According to him, the federal government, including the president and attorney general, has been vilifying the police, who are now being treated as if they, not the criminals, were the enemy.

  Beyond the storm of commentary and criticism, however, quite a different reality presents itself. In the simplest terms, there is no war on the police. Violent attacks against police officers remain at historic lows, even though approximately 1,000 people have been killed by the police this year nationwide. In just the past few weeks, videos have been released of problematic fatal police shootings in San Francisco and Chicago.

  While it’s too soon to tell whether there has been an uptick in violent crime in the post-Ferguson period, no evidence connects any possible increase to the phenomenon of police violence being exposed to the nation. What is taking place and what the police and their supporters are largely reacting to is a modest push for sensible law enforcement reforms from groups as diverse as Campaign Zero, Koch Industries, the Cato Institute, The Leadership Conference, and the ACLU (my employer). Unfortunately, as the rhetoric ratchets up, many police agencies and organizations are increasingly resistant to any reforms, forgetting whom they serve and ignoring constitutional limits on what they can do.

  Indeed, a closer look at law enforcement arguments against commonsense reforms like independently investigating police violence, demilitarizing police forces, or ending “for-profit policing” reveals a striking disregard for concerns of just about any sort when it comes to brutality and abuse. What this “debate” has revealed, in fact, is a mainstream policing mindset ready to manufacture fear without evidence and promote the belief that American civil rights and liberties are actually an impediment to public safety. In the end, such law enforcement arguments subvert the very idea that the police are there to serve the community and should be under civilian control.

  And that, when you come right down to it, is the logic of the police state.

  Due Process Plus

  It’s no mystery why so few police officers are investigated and prosecuted for using excessive force and violating someone’s rights. “Local prosecutors rely on local police departments to gather the evidence and testimony they need to successfully prosecute criminals,” according to Campaign Zero . “This makes it hard for them to investigate and prosecute the same police officers in cases of police violence.”

  Since 2005, according to an analysis by the Washington Post and Bowling Green State University, only 54 officers have been prosecuted nationwide, despite the thousands of fatal shootings by police. As Philip M. Stinson, a criminologist at Bowling Green, puts it, “To charge an officer in a fatal shooting, it takes something so egregious, so over the top that it cannot be explained in any rational way. It also has to be a case that prosecutors are willing to hang their reputation on.”

  For many in law enforcement, however, none of this should concern any of us. When New York Governor Andrew Cuomo signed an executive order appointing a special prosecutor to investigate police killings, for instance, Patrick Lynch, president of the Patrolmen’s Benevolent Association, insisted: “Given the many levels of oversight that already exist, both internally in the NYPD [New York Police Department] and externally in many forms, the appointment of a special prosecutor is unnecessary.” Even before Cuomo’s decision, the chairman of New York’s District Attorneys Association called plans to appoint a special prosecutor for police killings “deeply insulting.”

  Such pushback against the very idea of independently investigating police actions has, post-Ferguson, become everyday fare, and some law enforcement leaders have staked out a position significantly beyond that.  The police, they clearly believe, should get special treatment.

  “By virtue of our dangerous vocation, we should expect to receive the benefit of the doubt in controversial incidents,” wrote Ed Mullins, the president of New York City’s Sergeants Benevolent Association, in the organization’s magazine, Frontline. As if to drive home the point, its cover depicts Baltimore State Attorney Marilyn Mosby under the ominous headline “The Wolf That Lurks.” In May, Mosby had announced indictments of six officers in the case of Freddie Gray, who died in Baltimore police custody the previous month. The message being sent to a prosecutor willing to indict cops was hardly subtle: you’re a traitor.

  Mullins put forward a legal standard for officers accused of wrongdoing that he would never support for the average citizen — and in a situation in which cops already get what former federal prosecutor Laurie Levenson calls “a super presumption of innocence."  In addition, police unions in many states have aggressively pushed for their own bills of rights, which make it nearly impossible for police officers to be fired, much less charged with crimes when they violate an individual’s civil rights and liberties.

  In 14 states, versions of a Law Enforcement Officers’ Bill of Rights (LEOBR) have already been passed, while in 11 others they are under consideration.  These provide an “extra layer of due process” in cases of alleged police misconduct, according to Samuel Walker, an expert on police accountability. In many of the states without a LEOBR, the Marshall Project has discovered, police unions have directly negotiated the same rights and privileges with state governments.

  LEOBRs are, in fact, amazingly un-American documents in the protections they afford officers accused of misconduct during internal investigations, rights that those officers are never required to extend to their suspects. Though the specific language of these laws varies from state to state, notes Mike Riggs in Reason, they are remarkably similar in their special considerations for the police.

  “Unlike a member of the public, the officer gets a ‘cooling off’ period before he has to respond to any questions. Unlike a member of the public, the officer under investigation is privy to the names of his complainants and their testimony against him before he is ever interrogated. Unlike a member of the public, the officer under investigation is to be interrogated ‘at a reasonable hour,’ with a union member present. Unlike a member of the public, the officer can only be questioned by one person during his interrogation. Unlike a member of the public, the officer can be interrogated only ‘for reasonable periods,’ which ‘shall be timed to allow for such personal necessities and rest periods as are reasonably necessary.’ Unlike a member of the public, the officer under investigation cannot be ‘threatened with disciplinary action’ at any point during his interrogation. If he is threatened with punishment, whatever he says following the threat cannot be used against him.”

  The Marshall Project refers to these laws as the “Blue Shield” and “the original Bill of Rights with an upgrade.’’ Police associations, naturally, don’t agree. "All this does is provide a very basic level of constitutional protections for our officers, so that they can make statements that will stand up later in court," says Vince Canales, the president of Maryland's Fraternal Order of Police.

  Put another way, there are two kinds of due process in America — one for cops and another for the rest of us. This is the reason why the Black Lives Matter movement and other civil rights and civil liberties organizations regularly call on states to create a special prosecutor’s office to launch independent investigations when police seriously injure or kill someone.

  The Demilitarized Blues

  Since Americans first took in those images from Ferguson of police units outfitted like soldiers, riding in military vehicles, and pointing assault rifles at protesters, the militarization of the police and the way the Pentagon has been supplying them with equipment directly off this country’s distant battlefields have been top concerns for police reformers. In May, the Obama administration suggested modest changes to the Pentagon’s 1033 program, which, since 1990, has been redistributing weaponry and equipment to police departments nationwide — urban, suburban, and rural — in the name of fighting the war on drugs and protecting Americans from terrorism.  

  Even the idea that the police shouldn’t sport the look of an occupying army in local communities has, however, been met with fierce resistance. Read, for example, the online petition started by the National Sheriffs' Association and you could be excused for thinking that the Obama administration was aggressively moving to stop the flow of military-grade equipment to local and state police agencies. (It isn’t.)  The message that tops the petition is as simple as it is misleading: “Don’t strip law enforcement of the gear they need to keep us safe.”

  The Obama administration has done no such thing. In May, the president announced that he was prohibiting certain military-grade equipment from being transferred to state and local law enforcement. “Some equipment made for the battlefield is not appropriate for local police departments,” he said. The list included tracked armored vehicles (essentially tanks), bayonets, grenade launchers, camouflage uniforms, and guns and ammo of .50 caliber or higher. In reality, what use could a local police department have for bayonets, grenade launchers, or the kinds of bullets that resemble small missiles, pierce armor, and can blow people’s limbs off?

  Yet the sheriffs' association has no problem complaining that “the White House announced the government would no longer provide equipment like helicopters and MRAPs [mine-resistant ambush-protected vehicles] to local law enforcement.” And it’s not even true. Police departments can still obtain both helicopters and MRAPs if they establish community policing practices, institute training protocols, and get community approval before the equipment transfer occurs. 

  “Helicopters rescue runaways and natural disaster victims,” the sheriff’s association adds gravely, “and MRAPs are used to respond to shooters who barricade themselves in neighborhoods and are one of the few vehicles able to navigate hurricane, snowstorm, and tornado-strewn areas to save survivors.”

  As with our wars abroad, think mission creep at home. A program started to wage the war on drugs, and strengthened after 9/11, is now being justified on the grounds that certain equipment is useful during disasters or emergencies. In reality, the police have clearly become hooked on a militarized look. Many departments are ever more attached to their weapons of war and evidently don’t mind the appearance of being an occupying force in their communities, which leaves groups like the sheriffs' association fighting fiercely for a militarized future.

  Legal Plunder

   In July, the American Civil Liberties Union and the ACLU of Arizona sued law enforcement in Pinal County, Arizona, on behalf of Rhonda Cox. Two years before, her son had stolen some truck accessories and, without her knowledge, fitted them on her truck. When the county sheriff’s department arrested him, it also seized the truck.

  Arriving on the scene of her son’s arrest, Cox asked a deputy about getting her truck back. No way, he told her. After she protested, explaining that she had nothing to do with her son’s alleged crimes, he responded “too bad.” Under Arizona law, the truck could indeed be taken into custody and kept or sold off by the sheriff’s department even though she was never charged with a crime. It was guilty even if she wasn’t.

  Welcome to America’s civil asset forfeiture laws, another product of law enforcement’s failed war on drugs, updated for the twenty-first century. Originally designed to deprive suspected real-life Scarfaces of the spoils of their illicit trade — houses, cars, boats — it now regularly deprives people unconnected to the war on drugs of their property without due process of law and in violation of the Fifth and Fourteenth Amendments. Not surprisingly, corruption follows.

  Federal and state law enforcement can now often keep property seized or sell it and retain a portion of the revenue generated. Some of this, in turn, can be repurposed and distributed as bonuses in police and other law enforcement departments.  The only way the dispossessed stand a chance of getting such “forfeited” property back is if they are willing to take on the government in a process where the deck is stacked against them.

  In such cases, for instance, property owners have no right to an attorney to defend them, which means that they must either pony up additional cash for a lawyer or contest the seizure themselves in court.  “It is an upside-down world where,” says the libertarian Institute for Justice, “the government holds all the cards and has the financial incentive to play them to the hilt.”

  In this century, civil asset forfeiture has mutated into what’s now called “for-profit policing” in which police departments and state and federal law enforcement agencies indiscriminately seize the property of citizens who aren’t drug kingpins. Sometimes, for instance, distinctly ordinary citizens suspected of driving drunk or soliciting prostitutes get their cars confiscated. Sometimes they simply get cash taken from them on suspicion of low-level drug dealing.

  Like most criminal justice issues, race matters in civil asset forfeiture. This summer, the ACLU of Pennsylvania issued a report, Guilty Property, documenting how the Philadelphia Police Department and district attorney’s office abused state civil asset forfeiture by taking at least $1 million from innocent people within the city limits. Approximately 70% of the time, those people were black, even though the city’s population is almost evenly divided between whites and African-Americans.  

  Currently, only one state, New Mexico, has done away with civil asset forfeiture entirely, while also severely restricting state and local law enforcement from profiting off similar national laws when they work with the feds. (The police in Albuquerque are, however, actively defying the new law, demonstrating yet again the way in which police departments believe the rules don’t apply to them.) That no other state has done so is hardly surprising. Police departments have become so reliant on civil asset forfeiture to pad their budgets and acquire “little goodies” that reforming, much less repealing, such laws are a tough sell.

  As with militarization, when police defend such policies, you sense their urgent desire to maintain what many of them now clearly think of as police rights. In August, for instance, Pinal County Sheriff Paul Babeu sent a fundraising email to his supporters using the imagined peril of the ACLU lawsuit as clickbait. In justifying civil forfeiture, he failed to mention that a huge portion of the money goes to enrich his own department, but praised the program in this fashion:

  "[O]ver the past seven years, the Pinal County Sheriff’s Office has donated $1.2 million of seized criminal money to support youth programs like the Boys & Girls Clubs, Boy Scouts, YMCA, high school graduation night lock-in events, youth sports as well as veterans groups, local food banks, victims assistance programs, and Home of Home in Casa Grande."

  Under this logic, police officers can steal from people who haven’t even been charged with a crime as long as they share the wealth with community organizations — though, in fact, neither in Pinal County or elsewhere is that where most of the confiscated loot appears to go. Think of this as the development of a culture of thievery masquerading as Robin Hood in blue.

  Contempt for Civilian Control 

  Post-Ferguson developments in policing are essentially a struggle over whether the police deserve special treatment and exceptions from the rules the rest of us must follow. For too long, they have avoided accountability for brutal misconduct, while in this century arming themselves for war on America’s streets and misusing laws to profit off the public trust, largely in secret. The events of the past two years have offered graphic evidence that police culture is dysfunctional and in need of a democratic reformation.

  There are, of course, still examples of law enforcement leaders who see the police as part of American society, not exempt from it. But even then, the reformers face stiff resistance from the law enforcement communities they lead. In Minneapolis, for instance, Police Chief Janeé Harteau attempted to have state investigators look into incidents when her officers seriously hurt or killed someone in the line of duty. Police union opposition killed her plan. In Philadelphia, Police Commissioner Charles Ramsey ordered his department to publicly release the names of officers involved in shootings within 72 hours of any incident. The city’s police union promptly challenged his policy, while the Pennsylvania House of Representatives passed a bill in November to stop the release of the names of officers who fire their weapon or use force when on the job unless criminal charges are filed. Not surprisingly, three powerful police unions in the state supported the legislation. 

  In the present atmosphere, many in the law enforcement community see the Harteaus and Ramseys of their profession as figures who don’t speak for them, and groups or individuals wanting even the most modest of police reforms as so many police haters. As former New York Police Department Commissioner Howard Safir told Fox News in May, “Similar to athletes on the playing field, sometimes it's difficult to tune out the boos from the no-talents sipping their drinks, sitting comfortably in their seats. It's demoralizing to read about the misguided anti-cop gibberish spewing from those who take their freedoms for granted.”

  The disdain in such imagery, increasingly common in the world of policing, is striking. It smacks of a police-state, bunker mentality that sees democratic values and just about any limits on the power of law enforcement as threats. In other words, the Safirs want the public — particularly in communities of color and poor neighborhoods — to shut up and do as it’s told when a police officer says so. If the cops give the orders, compliance — so this line of thinking goes — isn’t optional, no matter how egregious the misconduct or how sensible the reforms. Obey or else.

  The post-Ferguson public clamor demanding better policing continues to get louder, and yet too many police departments have this to say in response: Welcome to Cop Land. We make the rules around here.

  

  

  

  

  

• 272 Islamic State Terrorists Are Hiding In Europe, 150 More Are On Their Way, Dagbladet Reports

  It has been over a month since the November 13 Paris terrorist suicide bombings and mass shootings and the subsequent warzone-like shutdown of Brussels, and Europe was just starting to emerge from its terrorized shell.

  However, for a continent which wants to “use global issues as excuses to extend its power”, issues such as terrorism in the words of the infamous 2008 AIG presentation, which serve as an “excuse for greater control over police and judicial issues; increase extent of surveillance” a return to normalcy is unacceptable.

  And since fear of the unknown must constant by stoked in order to justify any government intervention in personal privacy and public affairs, Norwegian newspaper Dagbladet reported that two waves of Islamic State terrorists are said to have been trained for terror attacks in Europe – either for suicide bombings, or for Paris-style handgun attacks.

  According to the paper, the first wave is said to already have travelled to Europe. The cell was trained for attacks in Europe and  originally consisted of 300 fighters. 28 of the 300 have lost their lives in Syria – in bombings, firefights, or from other causes. Dagbladet is told that the remaining 272 fighters have travelled to Europe. The sleeper cell is said to be instructed to lay low. Dagbladet is aware that other sources have another estimate of the number of IS terrorists in Europe. This estimate is below 100.

  The second wave is still with the terror group in Syria – after having received training in a militant camp between Sinjar and Mosul in Iraq. The inbound cell consists of 150 fighters who are still in Syria. They are said to have had training in a militant camp between Sinjar and Mosul in Iraq. 112 of the 150 have completed their training. Approximately two weeks ago several of the 112 travelled from the militant camp, to the IS controlled city of Deir el Zour in Syria. Dagbladet is told the fighters travelled to Syria using a total of 11 cars.

  It is unclear if the cars were Ford F250 trucks or purchased from Texas car auctions by Turkish middlemen.

  From Deir el Zour they travelled on to Raqqa – IS’ most important city in Syria, and the «capital» of the terrorist group?s so-called «caliphate», and the neighbouring city of Tabaqah. A German IS fighter is said to be a leader in this group.

  

  Dagbladet’s source claims that IS fighters trained for
  terror attacks in Europe
  have used this building in the IS «capital» in
  Syria. Picture: Private / Dagbladet

  Dagbladet has obtained the information from a source with deep insight into IS in Syria. The source has previously given information which proved to be correct.

  According to Dagbladet’s source, the first wave of fighters was trained in Raqqa. There they were trained to perform two different types of terror attacks, Dagbladet is told.

  • One group is said to be trained to become martyrs through suicide attacks. Dagbladet?s source describes these fighters as being «completely brainwashed».
  • The second group is said to be trained to plan attacks using handguns and suicide belts.

  Both methods were used during the Paris attacks on November 13.

  The Norwegian Police Security Service (PST) confirmed to Dagbladet that they are familiar with the information.

  “PST is aware that similar information exists. I do not want to go into more detail about the information PST possesses, regarding the information that Dagbladet has obtained” Trond Hugubakken, head of communications at PST, says.

  “Intelligence is, and will always be, uncertain. Intelligence work is for a big part about making uncertain information more certain. The stream of terror related information is vast. Some of this information is correct, lots of it is incorrect. I do not want to go into more detail about the information PST possesses, regarding the information that Dagbladet has obtained: Hugubakken added.

  “The amount of information usually increases considerably related to, and in the aftermath of, terror attacks. This was also the case with the terror attacks in Paris in November. PST is continuously working to verify and analyse the information we receive, in order to supply the Norwegian authorities with the best possible foundation on which to decide how to relate to the threat situation we are facing all the time.”

  And now that Europeans are again solidly worked up with angst and concerns that there is a massive ISIS sleeper cell among them, somewhere, and the it is best to leave all this surveillance stuff to the government (a government which will soon request every last trace of essential Liberty in order to provide a little temporary Safety, Ben Franklin’s warning to the contrary nowithstanding), it is time to ease back just a little:

  Dagbladet has no concrete information about possible attacks on Norwegian soil.

  Surely, if that changes, the Dagbladet “source” will promptly advise.

  

  

  

  

  

• Feudalism: Then & Now

  The complicated financial landscape today has made everyone “slaves to the central bank” while ordinary people have found themselves stuck in debt, and spending all they have just to get by.

   

  

   

  As SHTFPlan.com’s Mac Slavo concludes,

  The few who are able to save at all have lost value by saving during extended periods of ZIRP and have instead been sidelined as hedge funds and Wall Street bankers have used virtually free money to buy up assets – like houses – which force the middle class types to rent rather than buy. 

   

  It is truly a vicious cycle, and it will leave humanity at the bottom again, reversing all the gains of the 1776 revolution – as we are all serfs now.

  

  

  

  

  

• Live Feed Of First SpaceX Rocket Launch Since June Falcon 9 Explosion

  On June 28, everything was normal for about 2 minutes and 18 seconds when Elon Musk’s SpaceX launched its latest unmanned Falcon 9 rocket tasked with delivering cargo to the International Space Station. One second later the rocket exploded.

  Nasa’s unmanned @SpaceX rocket explodes at start of #ISScargo supply mission pic.twitter.com/ZmJ6cNJE2Q

  — BBC Breaking News (@BBCBreaking) June 28, 2015

  Since then there was an orbital hiatus at Elon Musk’s rocket company until tonight, when in a few minutes, a new SpaceX’s Falcon 9 rocket is set to deliver 11 satellites to low-Earth orbit for ORBCOMM, a Machine-to-Machine communication and Internet of Things solutions.

  The ORBCOMM launch is targeted for an evening launch from Space Launch Complex 40 at Cape Canaveral Air Force Station. If all goes as planned, the 11 satellites will be deployed approximately 20 minutes after liftoff, completing a 17-satellite, low Earth orbit constellation for ORBCOMM.

  Perhaps just as importantly, this mission also marks SpaceX’s return-to-flight as well as its first attempt to land a first stage on land. The landing of the first stage is a secondary test objective.

   

  Update:

  The Falcon 9 first stage landing is confirmed. Second stage continuing nominally. pic.twitter.com/RX2QKSl0z7

  — SpaceX (@SpaceX) December 22, 2015

  

  

  

  

  

• Germans Scramble To Buy Weapons Amid Nationwide Spike In Migrant-Driven Crime

  Submitted by Soeren Kern via The Gatestone Institute,

  • The scramble to acquire weapons comes amid an indisputable nationwide spike in migrant-driven crime, including rapes of German women and girls on a shocking scale, as well as physical assaults, stabbings, home invasions, robberies and burglaries — in cities and towns throughout the country.

  • German authorities, however, are going to great lengths to argue that the German citizenry's sudden interest in self-defense has nothing whatsoever to do with mass migration into the country, despite ample evidence to the contrary.

  • The spike in violent crimes committed by migrants has been corroborated by a leaked confidential police report, which reveals that a record-breaking 38,000 asylum seekers were accused of committing crimes in the country in 2014. Analysts believe this figure — which works out to more than 100 crimes a day — is only a fragment: many crimes are not reported.

  • "Anyone who asks for the reasons for the surge in weapons purchases encounters silence." — Süddeutsche Zeitung

  Germans, facing an influx of more than one million asylum seekers from Africa, Asia and the Middle East, are rushing to arm themselves.

  All across Germany, a country with some of the most stringent gun-control laws in Europe, demand is skyrocketing for non-lethal self-defense weapons, including pepper sprays, gas pistols, flare guns, electroshock weapons and animal repellants. Germans are also applying for weapons permits in record numbers.

  The scramble to acquire weapons comes amid a migrant-driven surge in violent crimes — including rapes, robberies and aggravated assaults — in cities and towns throughout the country.

  German authorities, however, are going to great lengths to argue that the German citizenry's sudden interest in self-defense has nothing whatsoever to do with mass migration into the country, despite ample evidence to the contrary.

  In recent weeks, German newspapers have published dozens of stories with headlines such as: "Germany is Afraid — And Grabs for the Weapon," "Germans are Arming Themselves: The Demand for Weapons Explodes," "More and More People are Buying a Weapon," "Security: Hands Up!" "The Need for Security Increases," "Boom in Weapons Stores," and "Bavarians are Arming Themselves— Afraid of Refugees?"

  The German daily newspaper Die Welt recently produced a video report about Germany's surge in sales of self-defense weapons, which was titled "The Weapons Business is Profiting from the Refugee Crisis." (Image source: Die Welt video screenshot)

  Since Germany's migration crisis exploded in August 2015, nationwide sales of pepper spray have jumped by 600%, according to the German newsmagazine, Focus. Supplies of the product are now completely sold out in many parts of the country and additional stocks will not become available until 2016. "Manufacturers and distributors say the huge influx of foreigners in recent weeks has apparently frightened many people," Focus reports.

  According to KH Security, a German manufacturer of self-defense products, demand is up by a factor of five, and sales in September 2015 — the month when the implications of German Chancellor Angela Merkel's open-door migration policy began to dawn on many Germans — were the highest since the company was founded 25 years ago. The company says there is an increased demand not only for self-defense weapons, but also for home alarm systems.

  Another manufacturer of self-defense products, the Frankfurt-based company DEF-TEC Defense Technology, has reported a 600% increase in sales this fall. According to CEO Kai Prase:

  "Things took off beginning in September. Since then, our dealers have been totally overrun. We have never experienced anything like this in the 21 years of our corporate history. Fear: This is not rational. The important term is: 'refugee crisis.'"

  The same story is being repeated across Germany. According to the public broadcaster, Mitteldeutscher Rundfunk, citizens in Saxony can regularly be seen queuing up in large numbers waiting for gun shops to open.

  A store owner in the Saxon town of Pirna said he is now selling up to 200 cans of pepper spray each day, compared to five cans a week before the migrant crisis began. He said he is seeing many new customers who are not the typical clientele, including women of all ages and men who are buying weapons for their wives.

  Günter Fritz, the owner of a gun shop in Ebersbach, another town in Saxony, told RTL News, "Since September, all over Germany, also at my shop, sales of self-defense products have exploded." He added that his clients come from all walks of life, ranging "from the professor to the retired lady. All are afraid."

  Andreas Reinhardt, a gun shop owner in the northern German town of Eutin, said he now sells four to five self-defense weapons each day, compared to around two per month before the recent influx of asylum seekers. "The current social upheaval is clearly driving the current rush to self-defense," he said. "I never thought that fear would spread so quickly," he added.

  Eric Thiel, the owner of a gun shop in Flensburg, a city on the Baltic Sea coast, said that pepper spray is no longer available: "Everything is sold out. New supplies will not arrive until March. Everything that has to do with self-defense is booming enormously."

  Wolfgang Mayer, the owner of a gun shop in Nördlingen, a town in Bavaria, said he has an explanation for the surge in gun licenses: "I think with the influx of refugees, the rise in break-ins and the many tricksters, the people are demanding greater protection."

  Mayer added that there is a growing sense within German society that the state cannot adequately protect its citizens and therefore they have to better protect themselves. "Since the summer, sales of pepper spray have increased by 50%," Mayer said, adding that buyers are mainly women, of all ages — from the student in the city up to the widowed grandmother.

  Pepper spray and other types of non-lethal self-defense weapons are legal in Germany, but a permit is required to carry and use some categories of them. Officials in all of Germany's 16 federal states are reporting a spike in applications for such permits, known as the small weapons license (kleinen Waffenschein).

  In the northern German state of Schleswig-Holstein, nearly 10,000 people now hold a small weapons license, an "all-time record level," according to the regional interior ministry. Retailers in the state are also reporting an "unprecedented surge" in sales of self-defense weapons, with supplies of pepper spray sold out until the spring of 2016.

   

  In Saxony, retailers are reporting an unprecedented boom in sales of pepper spray, tear gas, gas pistols and even cross bows. Some stores are now selling more self-defense weapons in one day than they did in an entire month before the migrant crisis began.

   

  Saxon officials are also reporting a jump in the number of people applying for the full-fledged firearms license (großen Waffenschein). The rush to arms can be attributed to a "subjective decline in the people's sense of security," Saxon Interior Minister Markus Ulbig said.

   

  In Berlin, the number of people holding a small weapons license increased by 30% during the first ten months of 2015 compared to the same period in 2014, while the number of those holding the full-fledged firearms license jumped by some 50%, according to local police.

   

  In Bavaria, more than 45,000 people now hold a small weapons license, 3,000 more than in 2014. This represents a "significant increase," according to the regional interior ministry. As in other parts of Germany, Bavarian retailers are also reporting a boom in sales of self-defense weapons, including gas pistols, flare guns and pepper spray.

   

  In Stuttgart, the capital city of Baden-Württemberg, local gun shops are reporting a four-fold increase in sales of self-defense weapons since August. One shop owner said she now sells more weapons in one week than she normally sells in one month. She added that she has never seen such high demand.

   

  In Heilbronn, another city in Baden-Württemberg, local officials report that sales of pepper spray have doubled in 2015. According to one shopkeeper, the demand for pepper spray began surging in August, when many mothers started purchasing the product for their school-aged daughters. "Our clients are extremely afraid," the shopkeeper said. "We are seeing this everywhere."

   

  In Gera, a city in Thuringia, local media reported that at one store, the entire inventory of 120 cans of pepper spray was sold out within three hours. The store, which subsequently sold out of another batch of 144 cans, is now on a waiting list to obtain more because of supplier shortfalls.

  A woman in Gera who bought pepper spray for her 16-year-old daughter said:

  "I think it is fundamentally proper for me to protect my daughter. She is at that age where she is out alone in the evening. If she says she needs this for protection, I think this is not unjustified. Of course, due to the current situation that we now have in Germany. We just do not know who is here. There are quite a lot of people who are not registered."

  The same trend toward self-defense is being repeated in the German states of Brandenburg, Mecklenburg-Vorpommern, Saxony-Anhalt and North Rhine-Westphalia, where spiraling levels of violent crime perpetrated by migrants is turning some neighborhoods into no-go zones.

  Apologists for mass migration are accusing German citizens of overreacting. Some point to recent studies — commissioned by pro-migration groups — which claim, implausibly, that the number of crimes committed by migrants is decreasing, not increasing.

  Others deny that the rush to self-defense has anything to do with migrants at all. They blame a variety of different factors, including the early darkness associated with the end of daylight savings time, the jihadist attacks in Paris (which occurred in November, three months after sales of self-defense weapons began to spike), and the need for protection from wild wolves in parts of northern Germany.

  The Süddeutsche Zeitung described the deception this way:

  "Anyone who asks for the reasons for the surge in weapons purchases encounters silence. Officially, the regulatory agencies say that anyone who applies for the small weapons license does not need to provide a justification and therefore the government offices have no explanation. 'But it is true that sometimes we clearly get the message that they are afraid because of the refugees,' says one, on condition that his name and office will not be mentioned in the newspaper. 'People have already told me: I want to protect my family.' We have reported this to the Ministry…

   

  "The retailers also say nothing officially about the reasons for the increase in sales. Call a small gun shop. Many refugees arrived at the end of August, and since September the numbers are up, can there not be a connection? 'If you do not use my name: Sure, what else?' Says the man on the phone. The people who come to the store are afraid. They believe that among the refugees there are 'black sheep.' Some customers openly admit it."

  Empirical evidence shows an indisputable nationwide spike in migrant-driven crime, including rapes of German women and girls on a shocking scale, as well as sexual and physical assaults, stabbings, home invasions, robberies, burglaries and drug trafficking.

  The spike in violent crimes committed by migrants has been corroborated by a confidential police report leaked to a German newspaper. The document reveals that a record-breaking 38,000 asylum seekers were accused of committing crimes in the country in 2014. Analysts believe this figure — which works out to more than 100 crimes a day — is only a fragment: many crimes are not reported.

  Not surprisingly, a new poll shows that 55% of Germans are pessimistic about the future, up from 31% in 2014 and 28% in 2013. The poll shows that 42% of those between the ages of 14 and 34 believe their future will be bleak; this is more than double the number of those (19%) who felt this way in 2013. At the same time, 64% of those aged 55 and above are fearful about the future.

  The poll also shows that four-fifths (79%) of the German population believe the economy will deteriorate in 2016 due to the financial burdens created by the migration crisis, and 70% believe that member states of the European Union will drift further apart in the coming year. The most predictable finding of all: 87% of Germans believe their politicians will experience a decline in public support during 2016.

  

  

  

  

  

• 2015 – The Year In Money

  Huge mega-mergers. Anemic hedge fund returns. Billion-dollar venture capital deals. Bloomberg breaks down 2015's record highs and lows.

   

  The Stock Market…

  

  

   

  The Bond Market…

  

  

   

  Deals…

  

  

  

  

  

  

   

  Venture Capital…

  

  

   

  Jobs…

  

  

   

  Ups & Downs…

  

  

  

  

   

  Read more here at Bloomberg.com

  

  

  

  

• Dramatic Amateur Video Captures Moment Deadly Chinese Landslide Buries 33 Buildings

  In a year marked by numerous dramatic (and often deadly) infrastructure failures in China’s industrial sector, culminating with several deadly explosions at its port towns, the latest tragedy to strike took place yesterday in China’s southern town of Shenzhen where at least 91 people were missing after a giant mound of mud and construction waste spewed out of an overfull dump site in a southern China boomtown and buried 33 buildings in the country’s latest industrial disaster.

  As Reuters reports, the site should have been closed down in February, but according to local workers, mud and waste had continued to be dumped there, a news portal run by the city government in Shenzhen said. The latest incident takes place over a year after a government-run newspaper warned Shenzhen would run out of space to dump the waste left behind from a building frenzy.

  The mudslide at the business park had covered an area of more than 380,000 square meters (94 acres) and was 10 metres (11 yards) deep in parts, Shenzhen Vice Mayor Liu Qingsheng told reporters, according to Xinhua. Almost 3,000 rescuers were at the scene, Xinhua said, with sniffer dogs and drones. Rescuers were focusing on several areas where sensors had detected signs of life, it added.

  

  Fourteen factories, 13 low-rise buildings and three dormitories were among the buildings flattened. Xinhua said 14 people had been rescued and more than 900 people had been evacuated from the site by Sunday evening. State television said the 91 missing included 59 men and 32 women.

  A nearby section of China’s major West-East natural gas pipeline exploded, state television added, though it was not clear if this had any impact on the landslide. Xinhua said the pipeline was owned by PetroChina, China’s top oil and gas producer, that the 400-meter-long ruptured pipe “has been emptied” and a temporary pipe will be built.

  Premier Li Keqiang ordered an official investigation into Sunday’s landslide in Shenzhen, just across the border from Hong Kong. The mudslide smashed into multi-storey buildings at the Hengtaiyu industrial park in the city’s northwestern Guangming New District, toppling them within seconds in collisions that sent rivers of earth skyward. Villager Peng Jinxin said the mud came like “huge waves”, as residents ran out of the way.

  “At one point the running mud was only ten meters away from me,” Peng told the official Xinhua news agency.

  The frequency of industrial accidents in China has raised questions about safety standards following three decades of breakneck growth in the world’s second-largest economy. Just four months ago, more than 160 people were killed in huge chemical blasts in the northern port city of Tianjin.

  State television showed scenes of devastation in Shenzhen, with crumpled buildings sticking up from heaps of brown mud which stretched out across the industrial park.

  Besides new buildings, a network of subway lines is being built in Shenzhen, and mounds of earth are being excavated and dumped at waste sites. “Shenzhen has 12 waste sites and they can only hold out until next year,” the official Shenzhen Evening Post, published by the city government, said in October, 2014.

  Once a quiet fishing village, Shenzhen was chosen by Beijing three decades ago to help pioneer landmark economic reforms, and it has boomed ever since.

  The Ministry of Land Resources said the accumulation of a large amount of waste meant that mud was stacked too steep, “causing instability and collapse, resulting in the collapse of buildings”.

  * * *

  And in this age of ubiquitous cell phone use, there was an immediate amateur video recording capturing the landslide as it happened:

  

  

  

  

  

• The Fed Never Solved The Mystery Of The "Missing Inflation", And Now It Has A Big Problem

  Back in June, this website first “solved” the “mystery” behind America’s missing inflation, when we showed that a record number of US renters are unable to afford housing, suggesting that record amounts of “disposable income” were being diverted for use as a shelter “tax” instead of being spent on true discretionary goods and services, leading (together with the Obamacare tax) to the broad and distressing decline in not only traditional retail sales and moribund consumer spending, and the “secular” economic slowdown observed over the past several years.

  We followed this in September with another expose titled  “The Mystery Of The “Missing Inflation” Solved, And Why The US Housing Crisis Is About To Get Much Worse” explaining why the Fed is about to make a historic mistake and unleash an even more acute housing crisis if it hikes into an economy where the only core inflationary “impulse” if that from rent inflation, at a time when median real household incomes have tumbled to levels last seen in 1989.

  

  As we explained in July, one major problem is that the Fed’s measures of inflation are wrong, if not with malicious intent, then purely due to definitional purposes. But a bigger problem for the the Fed’s measures of how the overall economy is doing (and/or overheating) is that the Fed telling the vast majority of Americans that inflation is negligible, leads to riotous laughter.

  The reason for this is a simple, if dramatic, one: the U.S. transformation from a homeownership society, to one of renters.

  

   

  In fact, the only age group that has seen an increase in homeownership in the “New Normal” are those aged 65 and over!

  

  Showcasing the plight of renters was the “State of the Nation’s Housing” report from the Center for Housing Studies, according to which for American renters 2013 marked another year with a record-high number of cost burdened households – those paying more than 30 percent of income for housing. In the United States, 20.7 million renter households (49.0 percent) were cost burdened in 2013.

  As more Americans are forced into a limited number of rental units, prices have exploded at a far greater pace than what is officially reported in the shelter or core CPI metric, for all – but especially for those in the lower income buckets: as seen in the lower right chart, the rental “cost burden” of households making under $30,000 is the higest ever, at well over 70%. 

  

  It gets worse: a whopping 11.2 million, or more than a quarter of all renter households, had “severe cost burdens, paying more than half of income for housing.” The median US renter household earned $32,700 in 2013 and spent $900 per month on housing costs. Renter housing costs are gross rents, which include contract rents and utilities.

  But the punchline is that, as noted above, all this was taking place in the years following 2000, when gains in typical monthly rental costs exceeded the overall inflation rate, while median income among renters fell further and further behind. As a result, the share of renter households facing severe cost burdens grew dramatically, reaching a new record high of 28 percent in 2011, and if adding in those with moderate burdens, just under half of all renters were cost burdened in 2013. These rates are substantially higher than a decade ago and roughly twice what they were in 1960.

  

   

  As we explained three months ago, the implications for not just the US economy, but for US demographics and society as a result of this “stagflationary” rental environment are profound. They are also the reason why the biggest US generation by number of participants – the Millennials, at 82 million strong – and the one generation that was supposed to be the dynamo that pushes the US out of its post-crisis funk is, simply said, crushed.

  Millennials are also expected to continue experiencing rent burdens as they age. Having entered the labor market during and following the Great Recession, those in the millennial generation have received lower wages and experienced higher rates of unemployment and underemployment than their older counterparts at this point in their lives. As a result, millennials have less wealth accumulated, have delayed forming new households, and are less likely to become owners at the age that older generations had previously. In combination, we are likely to see additional household formation by millennials over the next decade and expect a relatively higher share to remain renters during that period.

  In fact, far from confirming the “bullish thesis” that Millennials will eventually move out of their parents basement and buy (or rent) their own housing while starting new households, just the opposite was found to be taking place:

  In 2015, 15.1 percent of  25 to 34 year olds were living with their parents, a fourth straight annual increase, according to an analysis of new Census Bureau data by the Population Reference Bureau in Washington. The proportion is the highest since at least 1960, according to demographer Mark Mather, associate vice president with PRB. “The phenomenon of young adults, facing their own financial challenges, forced to squeeze in the homes of their parents. And new data show the trend is getting worse, not better.”

  

  As Bloomberg redundantly added, “It takes young people longer these days to find jobs with decent wages. Young adults need to spend more time getting the necessary education and skills before they can become self-sufficient. The recession likely exacerbated this trend.”

  Perhaps the best visual summary of the “mystery of the missing inflation” was the following interactive map showing that in virtually all major seaboard metro areas, including the major cities in California, New York, and Florida, the number of households with a cost burden is 50% or higher.

   

  

   

  This is how we concluded in September:

  All of this could have been avoided if only the Fed has observed the “missing” and soaring rental inflation that was right in front of its nose all the time, and which it did everything in its power to ignore just so the 1% can keep their ZIRP and QE, and become even wealthier on the back of the middle class and the 80 million of 25-34 year old Americans who have found out the hard way that not only is the American Dream of owning a home officially dead, it has been replaced with the American nightmare of completely unffordable renting.

  So why do we bring up this very critical topic today? One reason: as Deutsche Bank’s Dominic Konstam wrote out over the weekend, not only is it still “all about the rental inflation”, but it is this “mystery” of missing inflation, which we exposed not once but twice over the past 6 months, that has so stumped and confused the Fed, it is now piling policy mistake upon policy mistake.

  As a reminder, in the last CPI print before the Fed’s rate hike announcement, even as headline inflation barely rose from the year ago period pushed lower by the ongoing collapse in energy prices, it was core inflation that printed at 2.0% and give the Fed the green light it had been so eagerly anticipating, to hike.

  Only there is one problem.

  Here is what Konstam said about the prospects for US benign inflation, why the German bank “remains strongly opposed to a view that inflation will shock to the upside”, and how rental inflation is at the core of everything.

  From a theoretical perspective we have a bigger problem with a bearish inflation outlook in that core inflation ex housing remains extremely weak on both a PCE and CPI basis. OER/rental inflation is therefore the main “culprit” for the Fed in achieving its inflation “target”.

  Define irony: the one thing that is crushing millions of Americans and more than a quarter of all US renting households – those who can barely afford to rent even as their real median incomes continue to slide – is what the Fed interpreted as a green light to hike!

  Konstam continues:

  The trouble is that rents are running high not because house prices are booming and/or construction is sawing but because structurally new entrants to the housing market are renters not owners. This is reflected in the very low first time homebuyer rate, less than 30 percent.

  Now, prepare to be amazed: remember how we said above core inflation rose 2.0% in November from a year ago. Well, if you strip out housing, core inflation was just barely above 1%. Worse, on a Core PCE basis, if one excludes housing inflation, one gets the lowest inflationary print since the financial crisis!

  

  And here is absolute punchline which if one ignores everything we have said above, is a must read:

  Rent is however a “tax”. In this instance it is not something that represents real growth or discretionary consumption. If OER was soaring on the back of house prices and housing construction that allowed for wealth extraction, i.e. prior to the crisis, the outlook would be very different. As we have highlighted before, the stagflation concept in housing is a negative for structural demand and therefore pricing power.

  If only every economist would read these 68 short words, there would be no confusion why there is no economic recovery, why retail sales are foundering, why wage growth is non-existent, and why corporate CEOs are the most bearish they have been since 2012. In short: everyone would know why not only the Fed failed with its ZIRP policies, but why it is compounding this failure with another failure by hiking rates.

  So what does all of this mean? Well, the US economy is now one where “taxes” define growth.

  • On the one hand, there is the Supreme Court mandated “tax” that is Obamacare, which quarter after quarter is the biggest source of GDP growth as it forces US consumers to spend billions on (soaring) health insurance, in the process giving the impression of healthy Personal Consumption Expenditures and a growing US economy.  Don’t feel like paying this tax? Sorry – it’s the law.
  • On the other hand, there is the “tax” that is rent: a tax which has soared in recent years, vastly outpacing median incomes (which have been declining) as landlords can hike asking rents to whatever levels they choose: after all owning a new home has become virtually impossible for what little is left of the US middle class. Don’t feel like paying this tax? Fine, just prepare to live under a bridge or in a tent.

  Combined, these two taxes are draining hundreds of billions in disposable income from American households, and leading to the secular stagnation that so many supposedly intelligent economists are observing every day unfold before their very eyes, and yet which so very few can explain even though the reasoning is so simple a 10 year old without a formal economic education can understand that when one pays the bulk of one’s disposable income on the two core essentials, housing and health – whose prices keep soaring with every passing day – there is virtually no money left for everything else.

  No wonder then that the Fed will not grasp any of this before it is far too late.

  And the biggest irony: for the Fed these two largest economic “taxes” which force “spending” and which push up “inflation” are precisely the catalysts that served as the basis for the Fed’s decision to hike rates in a desperate attempt to give the impression that the US economy is recovering, when in reality the Fed has been looking at the economy’s fundamental deterioration in the face, and reached the absolutely wrong conclusion, convincing itself it now has the “green light” to proceed with a rate hike!

  

  

  

  

  

• Why Capitalists Are Repeatedly "Fooled" By Business Cycles

  Submitted by Frank Shostak via The Mises Institute,

  According to the Austrian business cycle theory (ABCT) the artificial lowering of interest rates by the central bank leads to a misallocation of resources because businesses undertake various capital projects that — prior to the lowering of interest rates —weren’t considered as viable. This misallocation of resources is commonly described as an economic boom.

  As a rule, businessmen discover their error once the central bank — which was instrumental in the artificial lowering of interest rates — reverses its stance, which in turn brings to a halt capital expansion and an ensuing economic bust.

  From the ABCT one can infer that the artificial lowering of interest rates sets a trap for businessmen by luring them into unsustainable business activities that are only exposed once the central bank tightens its interest rate stance.

  Critics of the ABCT maintain that there is no reason why businessmen should fall prey again and again to an artificial lowering of interest rates.

  Businessmen are likely to learn from experience, the critics argue, and not fall into the trap produced by an artificial lowering of interest rates.

  Correct expectations will undo or neutralize the whole process of the boom-bust cycle that is set in motion by the artificial lowering of interest rates.

  Hence, it is held, the ABCT is not a serious contender in the explanation of modern business cycle phenomena. According to a prominent critic of the ABCT, Gordon Tullock,

  One would think that business people might be misled in the first couple of runs of the Rothbard cycle and not anticipate that the low interest rate will later be raised. That they would continue to be unable to figure this out, however, seems unlikely. Normally, Rothbard and other Austrians argue that entrepreneurs are well informed and make correct judgments. At the very least, one would assume that a well-informed businessperson interested in important matters concerned with the business would read Mises and Rothbard and, hence, anticipate the government action.

  Even Mises himself had conceded that it is possible that some time in the future businessmen will stop responding to loose monetary policy thereby preventing the setting in motion of the boom-bust cycle. In his reply to Lachmann (Economica, August 1943) Mises wrote,

  It may be that businessmen will in the future react to credit expansion in another manner than they did in the past. It may be that they will avoid using for an expansion of their operations the easy money available, because they will keep in mind the inevitable end of the boom. Some signs forebode such a change. But it is too early to make a positive statement.

  Do Expectations Matter?

  According to the critics then, if businessmen were to anticipate that the artificial lowering of interest rates is likely to be followed some time in the future by a tighter interest rate stance, their conduct in response to this anticipation will neutralize the occurrence of the boom-bust cycle phenomenon. But is it true that businessmen are likely to act on correct expectations as critics are suggesting?

  Furthermore, the key to business cycles is not just businessmen’s conduct but also the conduct of consumers in response to the artificial lowering of interest rates — after all, businessmen adjust their activities in accordance with expected consumer demand. So on this ground one could generalize and suggest that correct expectations by people in an economy should prevent the boom-bust cycle phenomenon. But would it?

  For instance, if an individual John, as a result of a loose central bank stance, could lower his interest rate payment on his mortgage why would he refuse to do that even if he knows that a lower interest rate leads to boom-bust cycles?

  As an individual the only concern John has is his own well being. By paying less interest on his existent debt John’s means have now expanded. He can now afford various ends that previously he couldn’t undertake.

  As a result of the central bank’s easy stance the demand for John’s goods and services and other mortgage holders has risen. (Again it must be realized that all this couldn’t have taken place without the support from the central bank, which accommodates the lower interest rate stance.)

  Now, the job of a businessman is to cater to consumers’ future requirements. So whenever he observes a lowering in interest rates he knows that this most likely will provide a boost to the demand for various goods and services in the months ahead.

  Hence if he wants to make a profit he would have to make the necessary arrangements to meet the future demand.

  For instance, if a builder refuses to act on the likely increase in the demand for houses because he believes that this is on account of the loose monetary policy of the central bank and cannot be sustainable, then he will be out of business very quickly.

  To be in the building business means that he must be in tune with the demand for housing. Likewise any other businessman in a given field will have to respond to the likely changes in demand in the area of his involvement if he wants to stay in business.

  A businessman has only two options — either to be in a particular business or not to be there at all. Once he has decided to be in a given business this means that the businessman is likely to cater for changes in the demand for goods and services in this particular business irrespective of the underlying causes behind changes in demand.

  Failing to do so will put him out of business very quickly. Now, regardless of expectations once the central bank tightens its stance most businessmen will “get caught.” A tighter stance will undermine demand for goods and services and this will put pressure on various business activities that sprang up while the interest rate stance was loose. An economic bust emerges.

  We can conclude that correct expectations cannot prevent boom-bust cycles once the central bank has eased its interest rate stance. The only way to stop the menace of boom-bust cycles is for the central bank to stop the tampering with financial markets. As a rule however, central banks respond to the bust by again loosening their stance and thereby starting the new boom-bust cycle phase.

  

  

  

  

  

• Traders Panic-Buy Stocks Into The Close Despite Crude And Credit Crumble

  Artist's impression of Fed credibility…

   

  Since The Fed unleashed its rate-hike, things for the confidence-inspiring awesomeness have not gone well…

  

   

  Trannies were worst post-Fed, Small Caps best but they are all red…

  

   

  Stocks and bonds decoupled early in the overnight European session, then recoupled when Europe closed then stocks just went full retard into the close…

  

   

  Here's your day summarized… come on!!!

  

   

  As the machines lifted stocks to the opening ramp highs…

  

   

  But credit just laughed…

  

  As the algos ran the stops to the pre-opex dump… (that was a 140 point rip in The Dow in the last 30 minutes… on absolutely no news whatsoever)

  

   

  FANGs were dumped and then pumped into the close but remain red post-Fed…

  

   

  Stocks continue to leak lower towards credit's inevitable endgame…

  

   

  Meanwhile Waddell & Reed's canary in the coalmine is flashing red… Is WDR the marginal liquidator-at-any-price?

  

  h/t@BeardedMiguel

   

  And The TED Spread is soaring…

  

   

  The USDollar was sold from early in the US session to the end of the EU session, then flatlined…

  

   

  Treasury bonds were well bid in the early session (notably 5Y, 7Y, and 10Y bonds are unchanged on the year now in yield terms)

  

   

  The weaker dollar broadly speaking helped commodities with silver and gold doing well..

  

   

  But crude's January contract expiration seemed to keep volatility under control (despite the surge into NYMEX close across the complex)

  

   

  Charts: Bloomberg

  Bonus Chart: "Fed Says"

  

  

  

  

  

• Whistleblower Exposes Exactly How The Government Spies On Your Cell Phone

  Submitted by Derrick Broze via TheAntiMedia.org,

  The release of a secret U.S. government catalog of cell phone surveillance devices has revealed the names and abilities of dozens of surveillance tools previously unknown to the public. The catalog shines a light on well-known devices like the Stingray and DRT box, as well as new names like Cellbrite, Yellowstone, Blackfin, Maximus, Stargrazer, and Cyberhawk.

  

   

  The Intercept reports:

  “Within the catalogue, the NSA is listed as the vendor of one device, while another was developed for use by the CIA, and another was developed for a special forces requirement. Nearly a third of the entries focus on equipment that seems to have never been described in public before.”

   

  Anti Media has reported extensively on the Stingray, the brand name of a popular cell-site simulator manufactured by the Harris Corporation. The Electronic Frontier Foundation describes Stingrays as “a brand name of an IMSI (International Mobile Subscriber Identity) Catcher targeted and sold to law enforcement. A Stingray works by masquerading as a cell phone tower – to which your mobile phone sends signals to every 7 to 15 seconds whether you are on a call or not – and tricks your phone into connecting to it.”

  As a result, whoever is in possession of the Stingray can figure out who, when, and to where you are calling, the precise location of every device within the range, and with some devices, even capture the content of your conversations.

  Both the Harris Corp. and the Federal Bureau of Investigations (FBI) require police to sign non-disclosure agreements (NDA) related to the use of the devices. Through these NDAs local police departments have become subordinate to Harris, and even in court cases in front of a judge, are not allowed to speak on the details of their arrangements. Due to this secrecy, very little has been known about how exactly the Stingrays work.

  The bit of publicly available information was disclosed through open records requests and lawsuits filed by journalists and researchers. This new catalog provides even more detail about how the devices operate.

  We already knew that Stingrays drain the battery of a targeted device, as well as raise signal strength. We also knew that as long as your phone is on, it could be targeted. Some newer details include the fact that the Stingray I and II will not work if the user is “engaged in a call.” Also, the device can gather data from phones within a 200 meter radius. And the next generation Hailstorm device is even capable of cracking encryption on the newer 4G LTE networks.

  A number of the devices in the catalog are Digital Receiver Technology (DRT) boxes, also known as dirt boxes, which can be installed in planes for aerial surveillance. DRT was recently purchased by Boeing. We first learned of dirt boxes in late 2014, when the Wall Street Journal revealed a cell phone monitoring program operated by the U.S. Marshals Service, using Cessna planes mounted with Stingrays. AntiMedia has also reported on surveillance planes equipped with thermal imaging technology.

  Other devices include:

  • Cellbrite: “a portable, handheld, field proven forensic system for the quick extraction and analysis of 95% cell phones, smart phones and PDA devices,” capable of extracting “information such as phone book, pictures, video, text messages, and call logs.”
  • Kingfish: a Stingray-like device that is “portable enough to be carried around in a backpack.”
  • Stargrazer: “an Army system developed to deny, degrade and/or disrupt a targeted adversary’s command and control (C2) system,” which “can jam a handset and capture its metadata at the same time it pinpoints your target’s location. But watch out — the Stargazer may jam all the other phones in the area too — including your own.”
  • Cyberhawk: which is capable of gathering “phonebook, names, SMS, media files, text, deleted SMS, calendar items and notes” from 79 cell phones.

  Jennifer Lynch, a senior staff attorney at the Electronic Frontier Foundation, told the Intercept that the use of these tools is part of the militarization of the police in the U.S.: “We’ve seen a trend in the years since 9/11 to bring sophisticated surveillance technologies that were originally designed for military use — like Stingrays or drones or biometrics — back home to the United States.”

  The Office of the Director of National Intelligence, the FBI, NSA, and U.S. military declined to leave a comment with the Intercept regarding the catalog. Marc Raimondi, a Justice Department spokesperson, told the Intercept that the Department “uses technology in a manner that is consistent with the requirements and protections of the Constitution, including the Fourth Amendment, and applicable statutory authorities.”

  The Intercept notes that Raimondi worked for Harris Corp. for six years prior to working for the DOJ.

  Secrecy surrounding the use of these devices has been a contentious topic of debate for several years. Truth In Media recently reported that four members of the House Oversight Committee sent letters to 24 federal agencies including the Department of State and the Securities and Exchange Commission, demanding answers regarding policies for using the controversial surveillance technology.

  House Oversight Committee Chairman Jason Chaf­fetz, ranking member Elijah Cummings, and Reps. Will Hurd (R-Texas) and Robin Kelly (D-Ill.), as members of the committee’s IT subcommittee, issued requests for information related to the potential use of stingrays.

  Chaf­fetz also recently introduced the Stingray Privacy Act, which would expand newly established warrant requirements for the Department of Justice and Department of Homeland Security to all federal, state, and local agencies that use the cell-site simulators.

  In September, the DHS joined the DOJ by announcing warrant requirements for the use of Stingray equipment, but those rule changes have come under fire for possible loopholes which may allow the continued use of surveillance equipment without a warrant.

  “Because cell-site simulators can collect so much information from innocent people, a simple warrant for their use is not enough,” Jennifer Lynch told the Intercept. “Police officers should be required to limit their use of the device to a short and defined period of time. Officers also need to be clear in the probable cause affidavit supporting the warrant about the device’s capabilities.”

  At this point, it’s painfully obvious that America is the home of the Police-Surveillance State. Awakened hearts and minds everywhere should continue to educate themselves and their communities about the dangers of these tools. We should also support initiatives to create technology that can defend against the prying eyes and ears of Big Brother. Privacy is a dying notion in a nation of fools determined to be safe rather than liberated. If you give a damn, now is the time to stand up and be heard.

  

  

  

  

  

• Monday Humor? America's "Most Polluted" Nuclear Weapons Site To Become National Park

  On Sunday, we brought you “Huge Fukushima Cover-Up Exposed, Government Scientists In Meltdown,” in which we highlighted a piece from Sean Adl-Tabatabai who asks whether government-funded researchers are intentionally downplaying rising levels of radiation in the Pacific Ocean stemming from the 2011 meltdown in Japan.  

  “In March 2011, Japan’s Fukushima Daiichi nuclear power plant suffered multiple meltdowns following a massive earthquake and tsunami. The exploding reactors sprayed massive amounts of radioactive material into the air, most of which settled into the Pacific Ocean,” Adl-Tabatabai writes, adding that “a study presented at the conference of the American Geophysical Union in San Francisco on Dec. 14, shows that radiation levels from Alaska to California have increased since samples were last taken.”

  But while Adl-Tabatabai worries that perhaps Americans are getting a sugar-coated version of story thanks to the fact that the Woods Hole Oceanographic Institution has received millions in government funding, he may be overestimating the public’s interest in the dangers of being exposed to nuclear waste because as AP reports, “thousands of people are expected next year to tour the Hanford Nuclear Reservation, home of the world’s first full-sized nuclear reactor, near Richland, about 200 miles east of Seattle in south-central Washington.” Here’s more: 

  The nation’s most polluted nuclear weapons production site is now its newest national park.

   

  [Visitors] won’t be allowed anywhere near the nation’s largest collection of toxic radioactive waste.

   

  The Manhattan Project National Historic Park, signed into existence in November, also includes sites at Oak Ridge, Tennessee, and Los Alamos, New Mexico. The Manhattan Project is the name for the U.S. effort to build an atomic bomb during World War II.

   

  At Hanford, the main attractions will be B Reactor – the world’s first full-sized reactor – along with the ghost towns of Hanford and White Bluffs, which were evacuated by the government to make room for the Manhattan Project.

   

  The B Reactor was built in about one year and produced plutonium for the Trinity test blast in New Mexico and for the atomic bomb dropped on Nagasaki, Japan, that led to the surrender of the Japanese.

   

  Starting in 1943, more than 50,000 people from across the United States arrived at the top-secret Hanford site to perform work whose purpose few knew, French said.

   

  The 300 residents of Richland were evicted and that town became a bedroom community for the adjacent Hanford site, skyrocketing in population. Workers labored around the clock to build reactors and processing plants to make plutonium, a key ingredient in nuclear weapons.

   

  The park will tell the story of those workers, plus the scientists who performed groundbreaking research and the residents who were displaced, said Chip Jenkins of the National Park Service, which is jointly developing the park with the Energy Department.

  And a bit more color from the government’s Hanford webpage:

  Post World War II tensions between the U.S. and Russia brought about the “Cold War” and drove continued atomic weapons production and Hanford’s plutonium production mission.  Additional reactors were constructed next to the Columbia River as the two nations began to develop and stockpile nuclear weapons.  In 1959, construction began on the last Hanford reactor, dubbed “N.” N Reactor was a dual-purpose facility which produced plutonium for atomic weapons as well as steam for generating electricity. It was the only dual-purpose reactor in the United States and was so advanced that President John F. Kennedy came to Hanford in September of 1963 for its dedication.  Starting in the mid 60’s through 1971, the older reactors were shut down leaving only N Reactor operating on the Site.  N Reactor continued its mission of producing plutonium and electricity until 1987.  Since that time Hanford’s mission has been to clean up the site after decades of weapons production activities.

  Here are a few images from the site:

  

  

  

  

  

  

  

  *  *  *

  For anyone planning a family trip to the country’s most polluted nuclear site, you can rest assured that “everything is clean and perfectly safe,” Colleen French, the U.S. Department of Energy’s program manager for the Hanford park says.

  “Any radioactive materials are miles away.”

  

  

  

  

  

• Chasing Unicorns – 5 Investing Myths That Will Hurt You

  Submitted by Lance Roberts via RealInvestmentAdvice.com,

  In the summer of 1885 William R. Travers, prominent NYC businessman and builder of Saratoga Race Track, was vacationing in Newport, Rhode Island. He pointed out a long line of beautiful yachts tied up in the harbor. When he was informed that they all belonged to Wall Street brokers he simply asked,

  “Where are their clients’ yachts?”.

  When it comes to investing, there is nothing more dangerous to an individual’s future outcomes than falling prey to the many myths perpetrated on them by Wall Street. The investment business is, after all, just that – a business.

  What Wall Street has learned, as the days of commission-based trading have been relegated to computerized trading, is that fee based management is a very profitable annuitized business model. The only trick is keeping individuals fully invested at all times so fees can be collected. This need has generated some of the biggest “myths” in the investment world to keep investors piling money into mutual funds, hedge funds and advisory accounts. Here are 5-myths worth thinking about.

  1) Stay Invested – The Market Always Returns 10%

  You have heard this one plenty. “Over the long-term” the stock market has generated a 10% annualized total return. So, just plunk your money down and you will be wealthy.

  

  The statement is not entirely false. Since 1900, stock market appreciation plus dividends has provided investors with an AVERAGE return of 10% per year. Historically, 4%, or 40% of the total return, came from dividends alone. The other 60% came from capital appreciation that averaged 6% and equated to the long-term growth rate of the economy.

  However, there are several fallacies with the notion that the markets long-term will compound 10% annually.

  1) The market does not return 10% every year. There are many years where market returns have been sharply higher and significantly lower.

  2) The analysis does not include the real world effects of inflation, taxes, fees, and other expenses that subtract from total returns over the long-term.

  3) You don’t have 144 years to invest and save.

  The chart below shows what happens to a $1000 investment from 1871 to present including the effects of inflation, taxes, and fees. (Assumptions: I have used a 15% tax rate on years the portfolio advanced in value, CPI as the benchmark for inflation and a 1% annual expense ratio. In reality, all of these assumptions are quite likely on the low side.)

  

  As you can see, there is a dramatic difference in outcomes over the long-term.

  From 1871 to present the total nominal return was 9.07% versus just 6.86% on a “real” basis. While the percentages may not seem like much, over such a long period the ending value of the original $1000 investment was lower by an astounding $260 million dollars.

  Importantly, as stated previously, and as I will discuss more in a moment, the return that investors receive from the financial markets is more dependent on the “WHEN” you begin investing.

  2) I Can Beat/Outperform The Stock Market

  No, you can’t and the data proves it.

  Dalbar recently released their 21st annual Quantitative Analysis Of Investor Behavior study which continues to show just how poorly investors perform relative to market benchmarks over time and the reasons for that under performance.

  It is important to note that it is impossible for an investor to consistently “beat” an index over long periods of time due to the impact of taxes, trading costs, and fees. Furthermore, there are internal dynamics of an index that affect long term performance which do not apply to an actual portfolio such as share repurchases, substitution, and replacement effects.

  However, even the issues shown above do not fully account for the underperformance of investors over time. The key findings of the study show that:

  • In 2014, the average equity mutual fund investor underperformed the S&P 500 by a wide margin of 8.19%.The broader market return was more than double the average equity mutual fund investor’s return. (13.69% vs. 5.50%).
  • In 2014, the average fixed income mutual fund investor underperformed the Barclays Aggregate Bond Index by a margin of 4.81%. The broader bond market returned over five times that of the average fixed income mutual fund investor. (5.97% vs. 1.16%).
  • Retention rates are
    • slightly higher than the previous year for equity funds and
    • increased by almost 6-months for fixed income funds after dropping by almost a year in 2013.
  • In 2014, the 20-year annualized S&P return was 9.85% while the 20-year annualized return for the average equity mutual fund investor was only 5.19%, a gap of 4.66%.
  • In 8 out of 12 months, investors guessed right about the market direction the following month. Despite “guessing right” 67% of the time in 2014, the average mutual fund investor was not able to come close to beating the market based on the actual volume of buying and selling at the right times.

  

  Most importantly, despite what Wall Street and advisors want you to believe, 50% of the shortfall was directly attributable to psychology – both theirs and yours. The other 50% came down to lack of capital to invest.

  So, the next time you hear the mainstream media chastise investors for not beating some random benchmark index, just realize they didn’t either. 

  3) Your Financial Plan Says You Will Be Just Fine

  One the biggest mistakes that investors make are in the planning assumptions for their retirement. As I discussed previously:

  “There is a massive difference between compounded returns and real returns as shown. The assumption is that an investment is made in 1965 at the age of 20. In 2000, the individual is now 55 and just 10 years from retirement. The S&P index is actual through 2014 and then projected through age 100 using historical volatility and market cycles as a precedent for future returns.”

  

  “While the historical AVERAGE return is 7% for both series, the shortfall between ‘compounded’  returns and ‘actual’  returns is significant. That deficit is compounded further when you begin to add in the impact of fees, taxes and inflation over the given time frame.

  The single biggest mistake made in financial planning is NOT to include variable rates of return in your planning process.”

  So, look at your financial plan projections. If they are a smooth curve upwards, you are going to be very disappointed.  

  4) If You’re Not In, You’re Missing Out

  It is often stated that you should remain invested in the markets at all times because there has NEVER been a 10-year period that has produced negative returns for investors. That is simply not true.

  

  Okay, but over 20-years investors have never lost money, right? Not really.

  

  There are two important points to take away from the data. First, is that there are several periods throughout history where market returns were not only low, but negative. Secondly, the periods of low returns follow periods of excessive market valuations. 

  In other words, it is vital to understand the “WHEN” you begin investing that affects your eventual outcome.

  The chart below compares Shiller’s 10-year CAPE to 20-year actual forward returns from the S&P 500.

  From current levels history suggests returns to investors over the next 20-years will likely be lower than higher. We can also prove this mathematically as well as shown.

  Capital gains from markets are primarily a function of market capitalization, nominal economic growth plus the dividend yield. Using John Hussman’s formula we can mathematically calculate returns over the next 10-year period as follows:

  (1+nominal GDP growth)*(normal market cap to GDP ratio / actual market cap to GDP ratio)^(1/10)-1

  Therefore, IF we assume that GDP could maintain 4% annualized growth in the future, with no recessions, AND IF current market cap/GDP stays flat at 1.25, AND IF the current dividend yield of roughly 2% remains, we get forward returns of:

  (1.04)*(.8/1.25)^(1/10)-1+.02 = 1.5%

  Regardless, there are a “whole lotta ifs” in that assumption. More importantly, if we assume that inflation remains stagnant at 2%, as the Fed hopes, this would mean a real rate of return of -0.5%. This is certainly not what investors are hoping for.

  5) You Can’t Time The Market – Just Buy And Hold

  There are no great investors of our time that “buy and hold” investments. Even the great Warren Buffett occasionally sells investments. Real investors buy when they see value, and sell when value no longer exists. 

  While there are many sophisticated methods of handling risk within a portfolio, even using a basic method of price analysis, such as a moving average crossover, can be a valuable tool over the long term holding periods. Will such a method ALWAYS be right? Absolutely not. However, will such a method keep you from losing large amounts of capital? Absolutely.

  The chart below shows a simple moving average crossover study. The actual moving averages used are not relevant, but what is clear is that using a basic form of price movement analysis can provide a useful identification of periods when portfolio risk should be REDUCED. 

  Importantly, I did not say risk should be eliminated; just reduced.

  

  Again, I am not implying, suggesting or stating that such signals mean going 100% to cash. What I am suggesting is that when “sell signals” are given that is the time when individuals should perform some basic portfolio risk management such as:

  • Trim back winning positions to original portfolio weights: Investment Rule: Let Winners Run
  • Sell positions that simply are not working (if the position was not working in a rising market, it likely won’t in a declining market.) Investment Rule: Cut Losers Short
  • Hold the cash raised from these activities until the next buying opportunity occurs. Investment Rule: Buy Low

  The reason that portfolio risk management is so crucial is that it is not “missing the 10-best days” that is important; it is “missing the 10-worst days.” The chart below shows the comparison of $100,000 invested in the S&P 500 Index (log scale base 2) and the return when adjusted for missing the 10 best and worst days.

  

  Clearly, avoiding major drawdowns in the market is key to long-term investment success. If I am not spending the bulk of my time making up previous losses in my portfolio, I spend more time growing my invested dollars towards my long term goals.

  Chasing A Unicorn

  There are many half-truths perpetrated on individuals by Wall Street to sell product, gain assets, etc. However, if individuals took a moment to think about it, the illogic of many of these arguments are readily apparent.

  Chasing an arbitrary index that is 100% invested in the equity market requires you to take on far more risk that you realize. Two massive bear markets over the last decade have left many individuals further away from retirement than they ever imagined. Furthermore, all investors lost something far more valuable than money – the TIME needed to achieve their goal.

  To win the long-term investing game, your portfolio should be built around the things that matter most to you.

  • Capital preservation
  • A rate of return sufficient to keep pace with the rate of inflation.
  • Expectations based on realistic objectives.  (The market does not compound at 8%, 6% or 4% every year, losses matter)
  • Higher rates of return require an exponential increase in the underlying risk profile. This tends to not work out well.
  • You can replace lost capital – but you can’t replace lost time. Time is a precious commodity that you cannot afford to waste.
  • Portfolios are time-frame specific. If you have a 5-years to retirement but build a portfolio with a 20-year time horizon (taking on more risk) the results will likely be disastrous.

  The index is a mythical creature, like the Unicorn, and chasing it has historically led to disappointment. Investing is not a competition, and there are horrid consequences for treating it as such.

  So, the next time a financial professional encourages you to just “buy and hold” for the long-term, maybe you should question just whose “yacht” are you buying?

  

  

  

  

  

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