Weekend Economists Stop the Presses! November 14-16, 2014

[Demeter]

The newspaper industry was known as the 4th Estate, because

The Fourth Estate (or fourth power) is a societal or political force or institution whose influence is not consistently or officially recognized. "Fourth Estate" most commonly refers to the news media; especially print journalism or "the press". Thomas Carlyle attributed the origin of the term to Edmund Burke, who used it in a parliamentary debate in 1787 on the opening up of press reporting of the House of Commons of Great Britain. Earlier writers have applied the term to lawyers, to the British queens consort (acting as a free agent, independent of the king), and to the proletariat. The term makes implicit reference to the earlier division of the three Estates of the Realm...

In current use the term is applied to the press, with the earliest use in this sense described by Thomas Carlyle in his book On Heroes and Hero Worship: "Burke said there were Three Estates in Parliament; but, in the Reporters' Gallery yonder, there sat a Fourth Estate more important far than they all."

In Burke's 1787 coining he would have been making reference to the traditional three estates of Parliament: The Lords Spiritual, the Lords Temporal and the Commons. If, indeed, Burke did make the statement Carlyle attributes to him, the remark may have been in the back of Carlyle's mind when he wrote in his French Revolution (1837) that "A Fourth Estate, of Able Editors, springs up; increases and multiplies, irrepressible, incalculable." In this context, the other three estates are those of the French States-General: the church, the nobility and the townsmen. Carlyle, however, may have mistaken his attribution: Thomas Macknight, writing in 1858, observes that Burke was merely a teller at the "illustrious nativity of the Fourth Estate". If Burke is excluded, other candidates for coining the term are Henry Brougham speaking in Parliament in 1823 or 1824 and Thomas Macaulay in an essay of 1828 reviewing Hallam's Constitutional History: "The gallery in which the reporters sit has become a fourth estate of the realm." By 1835, when William Hazlitt (another editor of Michel de Montaigne—see below) applied the term to an individual journalist, William Cobbett, the phrase was well established...In United States English, the phrase "fourth estate" is contrasted with the "fourth branch of government", a term that originated because no direct equivalents to the estates of the realm exist in the United States. The "fourth estate" is used to emphasize the independence of the press, while the "fourth branch" suggests that the press is not independent of the government.

The networked Fourth Estate

Yochai Benkler, author of the 2006 book The Wealth of Networks, described the "Networked Fourth Estate" in a May 2011 paper published in the Harvard Civil Liberties Review. He explains the growth of non-traditional journalistic media on the Internet and how it affects the traditional press using Wikileaks as an example. When Benkler was asked to testify in the United States vs. PFC Bradley E. Manning trial, in his statement to the morning July 10, 2013 session of the trial he described the Networked Fourth Estate as the set of practices, organizing models, and technologies that are associated with the free press and provide a public check on the branches of government. It differs from the traditional press and the traditional fourth estate in that it has a diverse set of actors instead of a small number of major presses. These actors include small for-profit media organizations, non-profit media organizations, academic centers, and distributed networks of individuals participating in the media process with the larger traditional organizations...wikipedia: Fourth Estate

The news industry has had more than its share of colorful, powerful figures, and today I'd like to review the career of William Randolph Hearst, a 1%er if there ever was one, whose influence dominated a century of US policy, domestic and foreign, in his own right and that of his descendant: Patty Hearst.

William Randolph Hearst ( April 29, 1863 – August 14, 1951) was an American newspaper publisher who built the nation's largest newspaper chain and whose methods profoundly influenced American journalism. Hearst entered the publishing business in 1887 after taking control of The San Francisco Examiner from his father. Moving to New York City, he acquired The New York Journal and engaged in a bitter circulation war with Joseph Pulitzer's New York World that led to the creation of yellow journalism—sensationalized stories of dubious veracity. Acquiring more newspapers, Hearst created a chain that numbered nearly 30 papers in major American cities at its peak. He later expanded to magazines, creating the largest newspaper and magazine business in the world.

He was twice elected as a Democrat to the U.S. House of Representatives, and ran unsuccessfully for Mayor of New York City in 1905 and 1909, for Governor of New York in 1906, and for Lieutenant Governor of New York in 1910. Nonetheless, through his newspapers and magazines, he exercised enormous political influence, and was famously blamed for pushing public opinion with his yellow journalism type of reporting leading the United States into a war with Spain in 1898.

His life story was the main inspiration for the development of the lead character in Orson Welles's film Citizen Kane. His mansion, Hearst Castle, on a hill overlooking the Pacific Ocean near San Simeon, California, halfway between Los Angeles and San Francisco, was donated by the Hearst Corporation to the state of California in 1957, and is now a State Historical Monument and a National Historic Landmark, open for public tours. Hearst formally named the estate La Cuesta Encantada ("The Enchanted Slope&quot , but he usually just called it "the ranch."

William Randolph Hearst

Castle Photo Slideshow

http://hearstcastle.org/

[Demeter]

1. "Citizen Kane"

Ancestry and early life

William R. Hearst was born in San Francisco to millionaire mining engineer, goldmine owner and U.S. senator (1886–91) George Hearst and his wife Phoebe Apperson Hearst.

His paternal great-grandfather was John Hearst, of Scots-Irish origin, who emigrated to America with his wife and six children in 1766 and settled in South Carolina. Their immigration to South Carolina was spurred in part by the colonial government's policy that encouraged the immigration of Irish Protestants. The names "John Hearse" and "John Hearse Jr." appear on the council records of October 26, 1766, being credited with meriting 400 and 100 acres (1.62 and 0.40 km2) of land on the Long Canes (in what became Abbeville District), based upon 100 acres (0.40 km2) to heads of household and 50 acres (200,000 m2) for each dependent of a Protestant immigrant. The "Hearse" spelling of the family name never was used afterward by the family members themselves, or any family of any size. A separate theory purports that one branch of a "Hurst" family of Virginia (originally from Plymouth Colony) moved to South Carolina at about the same time and changed the spelling of its surname of over a century to that of the emigrant Hearsts. Hearst's mother, née Phoebe Elizabeth Apperson, was of Irish ancestry; her family came from Galway. She was the first woman regent of University of California, Berkeley, funded many anthropological expeditions and founded the Phoebe A. Hearst Museum of Anthropology.

Following preparation at St. Paul's School in Concord, New Hampshire, Hearst enrolled in the Harvard College class of 1885. While there he was a member of Delta Kappa Epsilon, the A.D. Club (a Harvard Final club), the Hasty Pudding Theatricals, and of the Harvard Lampoon before being expelled for antics ranging from sponsoring massive beer parties in Harvard Square to sending pudding pots used as chamber pots to his professors (their images were depicted within the bowls).

Publishing business

Searching for an occupation, in 1887 Hearst took over management of a newspaper, the San Francisco Examiner, which his father received in 1880 as repayment for a gambling debt. Giving his paper a grand motto, "Monarch of the Dailies," he acquired the best equipment and the most talented writers of the time, including Ambrose Bierce, Mark Twain, Jack London, and political cartoonist Homer Davenport. A self-proclaimed populist, Hearst went on to publish stories of municipal and financial corruption, often attacking companies in which his own family held an interest. Within a few years, his paper dominated the San Francisco market.

New York Morning Journal

Early in his career at the San Francisco Examiner, Hearst envisioned running a large newspaper chain, and "always knew that his dream of a nation-spanning, multi-paper news operation was impossible without a triumph in New York." In 1895, with the financial support of his mother, he bought the failing New York Morning Journal, hiring writers like Stephen Crane and Julian Hawthorne and entering into a head-to-head circulation war with Joseph Pulitzer, owner and publisher of the New York World, from whom he "stole" Richard F. Outcault, the inventor of color comics, and all of Pulitzer's Sunday staff as well. Another prominent hire was James J. Montague, who came from the Portland Oregonian and started his well-known "More Truth Than Poetry" column at the Hearst-owned New York Evening Journal.

When Hearst purchased the "penny paper," so called because its copies sold for only a penny apiece, the Journal was competing with New York's 16 other major dailies, with a strong focus on Democratic Party politics. Hearst imported his best managers from the San Francisco Examiner and "quickly established himself as the most attractive employer" among New York newspapers. He was generous, paid more than his competitors, gave credit to his writers with page-one bylines, and was unfailingly polite, unassuming, "impeccably calm," and indulgent of "prima donnas, eccentrics, bohemians, drunks, or reprobates so long as they had useful talents."

Hearst's activist approach to journalism can be summarized by the motto, "While others Talk, the Journal Acts."

[snot]

2. Hope this is not too tangential:

Control of the media is important not just because it brings the power to control what facts people are aware of, but also because it affords a powerful p.r. machine.

"Assange's insight into the cost of tightened secrecy to organizational I.Q. sheds new light on why Edward Bernays' invention was such a boon to the the powerful – because 'public relations' helps them manipulate populations through their basic instincts and emotions, rather than through secrecy. To the extent p.r. is successful, it tends to help corrupt regimes maintain control without having to compromise their own systems' computational power."

More at http://www.c-cyte.com/Ten_Things_You_Need_to_Know.html .

[Demeter]

4. Fits right in to where I hope this is going

Thanks!

[Demeter]

3. I look at pictures of Hearst's Castle and ask

Who did this man think he was? Nero?

What would possess anyone born in this country to build such a useless monstrosity? It's so profoundly unAmerican as to be an insult to the land that bred him and the people who suffered and died so he might live to commit such waste. It's more than ostentatious; it's tasteless, more the outward expression of a diseased mind and rotten soul than anything else.

And derivative, not artistic. I'm minded of that German Prince Ludwig II of Bavaria and his Neuschwanstein Castle "a private refuge in the familiar landscape far from the capital Munich, so that he could live out his idea of the Middle Ages", for those parts that aren't Nero-ic.

[Demeter]

5. NO BANK FAILURES THIS WEEKEND

whew!

[kickysnana]

6. None here either. Balanced the books, I am a dain-gramaged bookkeeper these days

I use an auto program that links to accounts and I figured by now I would either be way off one way or the other.

When I got done it said I had $11 difference so I had supper and remembered that I had closed a little savings account I no longer used a couple months ago. Sure enough it had come back in as income rather than transfer. Voila balanced.

Guess I can still take care of myself for a while longer.

[MattSh]

7. Get thee to the Greatest Page!

There! My first good deed of the day.

[MattSh]

8. Wolf Richter: Italy’s Crazy New Economy from Hell | naked capitalism

Yves here. Italy provides an intriguing example of how austerity inflicts damage on businesses. Here, one of the ways that the government is making its fiscal deficit look better is by paying companies that provide services to it slowly, or not at all.

By Wolf Richter, a San Francisco based executive, entrepreneur, start up specialist, and author, with extensive international work experience. Originally published at Wolf Street.

Italy is a country of entrepreneurs and of vibrant small enterprises. Or was. Now these businesses are dying.

Of its 5.3 million companies (as of December 31, 2013), 3.3 million are small, often family-owned outfits, according to Rome-based credit information provider Cerved Group. And another 900,000 are sole proprietorships, or 17% of all companies, a larger percentage than anywhere else in the EU, ahead of France (12%), Spain (10%), and Germany (10%). The remaining 1 million companies are corporations of all sizes.

And life in Italy has been exceedingly tough for small outfits.

Consumer spending has dropped sharply since the onset of the crisis. Industrial production continued its downward spiral in September and is down 0.5% for the first nine months of 2014 over the same period a year ago. Unemployment is 12.6%, and rising. Youth unemployment is at a catastrophic 43%, up from an already terrible 26% in 2010.

It doesn’t help that the government refuses, and I mean refuses – due to “technical” problems, as a minister explained – to pay its long overdue bills to these already strung-out businesses. It’s a shell game to lower Italy’s overall indebtedness and thus pacify the financial markets and Italy’s masters in Brussels [Italy “Would Love To” But Can’t Pay Its Bills This Year].

So this shouldn’t come as a surprise, given that the largest customer in the country, the government, refuses to pay its bills to the members of the private sector which then can’t pay their own bills: in September, non-performing loans held by Italian banks jumped 19.7% from a year ago, according to the Bank of Italy. At the same time, loans to the private sector dropped 2.3%.

Complete story at - http://www.nakedcapitalism.com/2014/11/wolf-richter-italys-crazy-new-economy-from-hell.html

But hey! As long as Brussels is happy, what else matters?

[MattSh]

9. Turkish Hackers Crack Electric Utility; Delete $670 Billion Of Pending Bills | Zero Hedge

RedHack - a Turkish hacker collective - has hacked the website of the Turkey Electricity Transmission Company, and, as TechWorm reports, claim to have deleted the pending bills of Turkish citizens amounting to Turkish Lira 1.5 trillion (a stunning $668.5 billion). The collective, which has many hacktivism projects against Turkey's internet censorship laws, posted a video of how they deleted the debt of millions of Turks.

As TechWorm reports,

RedHack the Turkey’s number one hacker collective today hacked into the website of the Turkey Electricity Transmission Company website.

They then did something which will cheer a lot of Turkish citizens who owe large amounts to the Electricity department.

They have claimed that they have deleted the pending bill of Turkish citizens amounting to Turkish Lira 1.5 trillion.

Complete story at - http://www.zerohedge.com/news/2014-11-14/turkish-hackers-crack-electric-utility-delete-670-billion-pending-bills

Something tells me that's not a permanent solution, but it's good to know that some people are throwing things against the wall and seeing what sticks.

[Demeter]

10. I am only surprised it hasn't happened earlier

Perhaps it has, but the information has been suppressed. I'd love to know if Anonymous ever tried it, but the govt. would have put them all in Gitmo or worse.

[Demeter]

11. Snowden: "I Did What I Did Because I Believe It Is the Right Thing to Do"

http://www.alternet.org/world/snowden-i-did-what-i-did-because-i-believe-it-right-thing-do?akid=12461.227380._7gtXT&rd=1&src=newsletter1026893&t=11&paging=off¤t_page=1#bookmark

...We are a representative democracy. But how did we get there? We got there through direct action. And that’s enshrined in our Constitution and in our values. We have the right of revolution. Revolution does not always have to be weapons and warfare; it’s also about revolutionary ideas. It’s about the principles that we hold to be representative of the kind of world we want to live in. A given order may at any given time fail to represent those values, even work against those values. I think that’s the dynamic we’re seeing today. We have these traditional political parties that are less and less responsive to the needs of ordinary people, so people are in search of their own values. If the government or the parties won’t address our needs, we will. It’s about direct action, even civil disobedience. But then the state says: “Well, in order for it to be legitimate civil disobedience, you have to follow these rules.” They put us in “free-speech zones”; they say you can only do it at this time, and in this way, and you can’t interrupt the functioning of the government. They limit the impact that civil disobedience can achieve. We have to remember that civil disobedience must be disobedience if it’s to be effective. If we simply follow the rules that a state imposes upon us when that state is acting contrary to the public interest, we’re not actually improving anything. We’re not changing anything....

REFERRING TO WATERGATE AND ITS AFTERMATH...

...This is a generational thing that we must all do continuously. We only have the rights that we protect. It doesn’t matter what we say or think we have. It’s not enough to believe in something; it matters what we actually defend. So when we think in the context of the last decade’s infringements upon personal liberty and the last year’s revelations, it’s not about surveillance. It’s about liberty. When people say, “I have nothing to hide,” what they’re saying is, “My rights don’t matter.” Because you don’t need to justify your rights as a citizen—that inverts the model of responsibility. The government must justify its intrusion into your rights. If you stop defending your rights by saying, “I don’t need them in this context” or “I can’t understand this,” they are no longer rights. You have ceded the concept of your own rights. You’ve converted them into something you get as a revocable privilege from the government, something that can be abrogated at its convenience. And that has diminished the measure of liberty within a society...

AN UNCANNY YOUNG MAN--I LOOK FORWARD TO HIS FUTURE DOINGS

[MattSh]

12. ClubOrlov: Twilight of the Oligarchs

Last week I published a brave prediction:

I see the political elites and their oligarch puppet-masters becoming endangered species in the United States before too long as the populace, including their own bodyguards, turns against them.

As usual, I made no attempt to specify what I mean by “before too long” because making predictions as to timing is a fool's game. And, as usual, I got a flurry of emails expressing a wide range of rationalizations but all adding up to the same sentiment: “not any time soon.”

Some people thought that the populace, consisting as it does of zombified overfed clowns addicted to Facebook and internet porn is unlikely to stage the revolution. Others thought that the oligarchy will manage to manipulate financial markets, destroy one country after another in order to drain all remaining wealth out of the world and consume it, and by so doing manage to placate the populace with bread and circuses, well into the future. The bodyguards are unlikely to rebel, some said, because they are so well paid.

Getting back to basics, it is a fairly obvious and increasingly well-recognized fact that the American empire, the empire of military bases, the Federal Reserve, the IMF and the World Bank, is on its way out. And it is a well-known fact about empires that when they fail those who held positions of power and privilege within them are quickly recycled into punching bags and pincushions. Oddly, nobody mentioned any of the mechanisms by which this transformation tends to take place, so I thought I'd mention them briefly.

First, when empires start falling apart, this is manifested in a few ways. One is loss of control over the periphery, as a shrinking pool of resources is used to shore up the center. Another is loss of control over the use of violence, as a wide variety of violent entrepreneurs enter the scene and the center is forced to play them against each other and make deals with them. And as the unraveling progresses, the violent entrepreneurs develop agendas of their own, which, inevitably, involve having the cooperation flow the other way: instead of cooperating with those formerly in charge, they demand that those formerly in charge start cooperating with them. And it is here that the scene turns bloody.

Complete story at - http://cluborlov.blogspot.co.uk/2014/11/twilight-of-oligarchs.html

[Demeter]

13. Not soon enough, for the good of the nation, I'd say

If such a disconnection of the Oligarchy were to happen before it all dissolved into chaos, that would be a better thing for the People.

[xchrom]

14. Restaurant Stocks Have Been Doing Great

http://www.businessinsider.com/r-wall-street-week-ahead-restaurants-uptick-offers-hope-for-consumer-discretionaries-2014-11

NEW YORK (Reuters) - An improving U.S. economy has failed to galvanize the consumer discretionary sector so far this year, but a recent rally in restaurant stocks as the holidays approach could herald happier days ahead for other retailers.

The S&P 500 consumer discretionary sector index is up about 3 percent for the year, with only the S&P energy index performing worse.

One recent ray of sunshine, however, has been the performance of restaurant stocks. The Dow Jones U.S. Restaurants & Bars Index index has risen about 4 percent since the beginning of September. The S&P 500 consumer discretionary sector index is up less than 1 percent for the period.

Usually restaurant stocks correlate well with other retailers, but at the moment consumers are showing a preference for dining out over buying apparel, said Oscar Sloterbeck, senior managing director at Evercore ISI.



Read more: http://www.businessinsider.com/r-wall-street-week-ahead-restaurants-uptick-offers-hope-for-consumer-discretionaries-2014-11#ixzz3J8jTt7g6

[xchrom]

15. G-20 SUMMIT OPENS IN AUSTRALIA; GROWTH TOPS AGENDA

http://hosted.ap.org/dynamic/stories/A/AS_G_20?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2014-11-15-05-49-54

BRISBANE, Australia (AP) -- Australia's prime minister vowed that world leaders would deliver on an initiative to add $2 trillion to global GDP, promising freer trade and more investment in infrastructure as heads of the 20 largest economies began cementing plans to drag sagging growth out of the doldrums.

Prime Minister Tony Abbott, who has repeatedly promised this year's Group of 20 gathering in the Australian city of Brisbane would be more than a talkfest, said the growth plans would add millions of jobs and boost global GDP by "more than 2 percent" above expected levels over the next five years.

"That is millions of jobs and trillions of dollars in extra production," Abbott said as he officially opened the two-day G-20 conference. "Yes, we want freer trade and we will deliver it. Yes, we need more infrastructure and we will build it."

"This is our message to the world: that governments can deliver, that governments can agree that the world can be better, that there can be higher jobs, higher growth and more jobs," he added.

[Demeter]

16. Why the Dems' Post-Election Recipe of Getting Even Cozier with the Banks Will Lead to More Disaster

http://www.alternet.org/why-dems-post-election-recipe-getting-even-cozier-banks-will-lead-more-disaster?akid=12458.227380.tOK1XC&rd=1&src=newsletter1026751&t=18&paging=off&current_page=1#bookmark




After the Democrats' drubbing in the 2014 midterm elections, there have been fervent debates about whether the Party should embrace an economic populism to tap pocketbook frustrations -- or move further to the center in the hopes of capturing more independents.

One thing the Democrats did throughout Obama's nearly six years was move closer to Wall Street -- from the economic team Obama appointed, to the administration's premature embrace of deficit reduction promoted by financial moguls, to a bailout plan that shored up the biggest banks rather than breaking them up.

It was this coziness with big finance that allowed the far-right Tea Party movement to paint Wall Street and Washington with the same brush -- and to capture much of the populist rage on display against Democrats in the 2010 midterms and once again on November 4.

So the last thing Democrats need going forward is an even closer affinity with Wall Street, right? Well, the Democrats may soon get even cozier....

DEFINITION OF INSANITY AND GREED APPLY HERE...

[MattSh]

22. If I didn't know better, I'd think...

that the Democrats just pulled off the move awesome election strategy ever. Things are falling apart at the seams and are likely to accelerate. Strategy? Let the other side win. Things will fall apart under their watch and you'll have the most incredible win possible in 2016. Of course you'd have to admit that you just didn't give a shit about what would happen to people in the next two years, because the win in 2016 is what matters; accomplishing something useful is just too much work.

Of course, I know better. There was no strategy, no plan, no organization. And it showed. And who knows if either of the current political parties will be relevant by 2016.

One can hope, right?

[Demeter]

23. The Question Is: What should we hope for?

I'm hoping that the Grim Reaper gets off its ass and takes out some of the political deadwood and fungus that has plagued us for decades: Reid, Pelosi, Scalia, Thomas, Roberts, and the list goes on....and then, there are those not so decrepitly long-lived, but equally toxic...

I guess I had great hopes for ebola in high places.

[Hotler]

35. "I guess I had great hopes for ebola in high places."

Me too.

[xchrom]

17. GROUPS CALL FOR G-20 TO UNMASK SHELL COMPANIES

http://hosted.ap.org/dynamic/stories/A/AS_G_20_BRIEFING_SHELL_COMPANIES?SITE=AP&SECTION=HOME&TEMPLATE=DEFAULT&CTIME=2014-11-15-05-10-57

BRISBANE, Australia (AP) -- Anti-corruption advocates want G-20 countries to stem the flow of illicit money across borders by introducing public registers that reveal the people who ultimately own, control, or benefit from a business but use shell companies to hide their identities and avoid tax.

One group, Transparency International, fears that China is the biggest obstacle to achieving meaningful agreement on the subject of unmasking "beneficial owners," - those who hide behind shell companies.

Establishing principles of transparency and clarity has long been on the G-20 agenda and has been a focus of its Anti-Corruption Working Group. Mandating national registers is a step too far for some countries, but endorsing a set of principles that promote transparency may be in reach at the G-20's summit this weekend in Brisbane.

Transparency International, two Nobel Laureates, Archbishop Desmond Tutu and Tawakkol Karman, plus 22 leaders of civil society representing every continent published an open letter to G-20 leaders this week calling on them to take concrete actions to stop corruption and make the global system more transparent.

[Demeter]

18. G20: Obama to pledge up to $3bn to help poor countries on climate change

WITH WHAT MONEY, MR. PRESIDENT?

http://www.theguardian.com/environment/2014/nov/14/barack-obama-to-pledge-at-least-25bn-to-help-poor-countries-fight-climate-change?CMP=ema_565


CERTAINLY NOT GRASSROOTS MONEY....

[Demeter]

19. Barclays may face massive new penalty over currency rigging

http://www.theguardian.com/business/2014/nov/13/barclays-penalty-currency-rigging-banks?CMP=ema_565

THREAT AND BLUSTER

[Demeter]

20. Here are 3 ways Russian banks are vulnerable to a crisis: Shades of the 1998 Russian debt crisis?

WISHFUL THINKING IS THE RULE THESE DAYS IN THE WEST

https://secure.marketwatch.com/story/here-are-3-ways-russian-banks-are-vulnerable-to-a-crisis-2014-11-13?siteid=YAHOOB

The rapid depreciation of the ruble brings back shades of another, albeit more dramatic, decline in Russia’s currency. In 1998, that currency strain caused the Russian economy to collapse, igniting a chain of events that eventually resulted in Russia defaulting on its debt payments, which in turn led to the notorious demise of Long Term Capital Management...Approximately 16 years ago, the Central Bank of Russia was forced to spend its foreign exchange reserves to prop up the worthless ruble, which caused what was effectively a run on the central bank. At the time, the bank was forced to spend billions to maintain an unsustainable artificial exchange rate with the dollar.

A similar collapse doesn’t seem imminent: Russian banks are better capitalized, Russian state’s balance sheet has strengthened, and the central bank has options to help support the currency should it slide to dangerous levels. However, those points haven’t prevented currency watchers from pointing out that Russia still could be vulnerable to currency-induced strife, if the ruble continues its stead descent.

A research note from Capital Economics, released on Tuesday, outlined three ways the Russian financial system could be vulnerable to a falling ruble:

Russian banks have far more dollar-denominated debts than they have dollar-denominated assets. So a weakening ruble will inflate the value of their debts vs. their assets, making it more difficult for them to afford their debt service.

Companies and individuals who took out loans from Russian banks denominated in foreign currency will find it more difficult to pay the bank back as the relative cost of their debt service grows as the ruble declines. This could cause the number of debts in arrears to spike, adding pressure to Russian banks’ balance sheets.

Russians, concerned that the ruble’s falling value could wipe out their savings, could withdraw their rubles from the banking system en masse and convert them to dollars, leading to a good ol’ fashioned run on the banks.

The falling ruble has come into the spotlight as hit a fresh record low against the dollar Nov. 7, when it barely traded above the 2 cent mark. Falling oil prices and the weight of international sanctions have been rippling through the Russian economy.

And mounting tensions in the Ukraine, with Russia at the center, in spite of political sanctions, make the ruble look exceedingly shaky.

[MattSh]

24. A relic to the rescue!

No, not John McCain. Gold!

Putin stockpiles gold as Russia prepares for economic war - Telegraph

Russia has taken advantage of lower gold prices to pack the vaults of its central bank with bullion as it prepares for the possibility of a long, drawn-out economic war with the West.

The latest research from the World Gold Council reveals that the Kremlin snapped up 55 tonnes of the precious metal - far more than any other nation - in the three months to the end of September as prices began to weaken.

Vladimir Putin's government is understood to be hoarding vast quantities of gold, having tripled stocks to around 1,150 tonnes in the last decade. These reserves could provide the Kremlin with vital firepower to try and offset the sharp declines in the rouble.

Russia's currency has come under intense pressure since US and European sanctions and falling oil prices started to hurt the economy. Revenues from the sale of oil and gas account for about 45pc of the Russian government's budget receipts.

The biggest buyers of gold after Russia are other countries from the Commonwealth of Independent States, led by Kazakhstan and Azerbaijan.

Complete story at - http://www.telegraph.co.uk/finance/commodities/11226240/Putin-stockpiles-gold-as-Russia-prepares-for-economic-war.html

[MattSh]

29. And speaking of vulnerable...

this might sink the whole EU into recession and trigger a massive flood of refugees. Add in a war, and all bets are off...

And notice it all happens after the election. Coincidence? I think not!

Ukraine's hryvnia slides to a new low of UAH16.05 to the dollar | Business New Europe

How LOW can it go?

Ukraine's hryvnia slid to a new historical low of UAH16.05 to the dollar at the close of November 12 on the interbank market. This marks a 50% devaluation on the UAH8 to the dollar exchange rate propped up by former president Viktor Yanukovych from 2010 through to his ousting in February 2014 - at the expense of the nation's hard currency reserves.

On November the National Bank of Ukraine reacted by deciding to raise the discount rate from 12.5% to 14.0%, partly to prop up the forex market. According to Valeriya Gontareva, head of National Bank of Ukraine (NBU), the central bank intends to fully switch to flexible exchange rate policy and inflation targeting.

Today's crossing of the psychological UAH16 to the dollar mark will not be the end of the descent, top NBU officials warned. "A balanced hryvnia exchange rate will come into being when the currency stops devalution," (duh, you think so?) Serhiy Ponamerenko, the NBU's head of currency operations told newswires on November 13.

"Unfortunately, it is impossible to judge where the slide of the hrvynia might stop," says Dmitry Boyarchuk, executive director of thinktank CASE Ukraine. "If you look at the fundamentals, then there is no need for further weakening of the hryvnia. The problem is that the country has lost confidence in the leadership of the NBU, and in fact we see vicious circle of devaluation," Boyarchuk told Liga.net portal.

With the currency in free fall, and the security situation unstable, the price of Ukrainian debt also plummeted to new lows for the year.

The hryvnia started to slide immediately after the ousting of Yanukovych, and accelerated as Russia proceeded to annex Ukraine's Crimea peninsula and Russian-backed insurgents seized control of Ukraine's eastern Donbass region, provoking war. Now the hryvnia is the world's worst performing currency in 2014.

Complete story at - http://www.bne.eu/content/story/ukraines-hryvnia-slides-new-low-uah1605-dollar

[Demeter]

21. Islamic State Says It Plans to Issue Its Own Currency

http://www.nytimes.com/2014/11/15/world/middleeast/islamic-state-says-it-plans-to-issue-its-own-currency-.html

They have paraded their own flag, formed courts and ministries, issued passports and even license plates. Now, the leaders of the Islamic State, the violent jihadist group that has seized parts of Syria and Iraq, have created their own currency, part of a grandiose plan to restore the caliphate era that dominated the Middle East more than 1,300 years ago.

In an announcement on Thursday heralding a liberation from the “satanic usury-based global economic system,” the Islamic State said it would begin minting gold, silver and copper coins, in likenesses similar to the days of the seventh-century caliphs.

The coins will have standardized weights and values, the announcement said, and they will be the legal tender of the lands controlled by the group, also known as ISIS or ISIL.

Important details such as the exact timing of when the coins would begin to circulate, and how they would be minted, were not disclosed, and a question remained: Can the group really create a viable currency?

WHY NOT? IT'S NOT LIKE IT WAS ROCKET SCIENCE, AFTER ALL...

[rogerashton]

57. Well, it kind of is.

Notice that they promise a metallic coin currency. My guess is that the gold and silver coins (if they are issued) will disappear into hoards and the copper coins into recycling processes and whatever scrip has come from the governments in Damascus and Baghdad will continue to circulate, to the extent that anything does.

This is just another evidence of the remarkable -- call it what it is -- conservatism of DAISH (ISIS, ISIL, whatever.) Our conservatives also want to go back to the "gold standard," which was invented by David Ricardo in about 1815. But a metallic coin monetary system is the brilliant new idea of 700 BC or thereabouts.

[Demeter]

25. Banks Behaving Badly: Why Big Fines Won’t Stop Wall Street

http://wallstcheatsheet.com/business/banks-behaving-badly-why-big-fines-wont-stop-wall-street.html/?ref=YF

....

“Today’s record fines mark the gravity of the failings we found, and firms need to take responsibility for putting it right,” Britain’s Financial Conduct Authority CEO Martin Wheatley said. He added that banks need to take responsibility for their employees, and ensure that traders are following the rules. It’s expected that many traders will actually be fired as a result of the investigation, and that many firms will increase automated trading as well. There are also some regulatory changes that are expected to come out of the G20 summit planned for the near future. While Britain’s regulators handed down the biggest penalty, other regulators are expected to lay down their own fines. Reuters says American regulators are likely to issue a $1.48 billion fine, while Swiss authorities are asking for an additional $139 million....Given the recklessness and Wild West-like feeling of the world of big finance, this sort of behavior isn’t exactly surprising, and the billions in fines that are being handed down seem like simply another drop in the bucket. This most recent example of manipulating the market isn’t all that much different from many of the others, in that it is very hard to understand exactly what was going on, from a layman’s perspective. What is important to understand is that these banks have yet again abused their positions to make quick profits. Yes, generating revenues is technically what these institutions are supposed to do, but the issue is that they are doing so with little regard for the rules, and at the expense of everyone else.

This particular market that was being screwed with averages trading of more than $5.3 trillion every day. Compare that to the fine of $4.3 billion (and any additional penalties that trickle in), and the amount of money that these banks could have possibly made as a result of their bad behavior, and it’s probably not a bad deal for the banks. It does seem that finding out exactly how much was made would probably be an important part of the investigation, but as one Bloomberg article says, the U.K. regulators didn’t want to disclose that information. The FCA apparently felt that “that it is not practicable to quantify the financial benefit.” But that is the crux of the issue. Not specifically for this scandal, but for pretty much everything that goes down in the world of high finance and the big banks. These institutions only do things that provide them with a profit. If they were not making money, then they wouldn’t engage in certain actions. Since we’re continually seeing these banks and financial institutions engage in completely reckless, unethical and illegal behavior, that means that it’s profitable for them. With that in mind, it’s probably a fair assumption to think that whatever these banks did make off of manipulating the foreign currency market was a much higher sum than the penalties it’s actually paying for doing so...Think about it this way, if you could steal five cars, but the police only took one back, what’s the incentive to stop stealing cars? There is none.

Instead of real penalties that will actually discourage wrongdoing, banks get a slap on the wrist and some tough rhetoric, like that handed down by U.S. Commodity Futures Trading Commission (CFTC) Chairman Tim Massad, who says that the behavior displayed by the big banks in this most recent case is unacceptable. “Integrity of the market place is a paramount concern to the CFTC, and today’s enforcement action should be seen as a message to all market participants that wrongdoing and foul play in the financial markets is unacceptable and will not be tolerated,” he said in a statement. While that may have the banks feeling bad about themselves for a short time, they will likely get right back to business once the next news cycle hits. A Mother Jones article even recants how some government staff members are completely aware that this system of punishment is broken and useless, and that the banks and traders themselves should face criminal charges.

Remember, these are the same institutions and individuals who crashed the entire world’s economy only a handful of years ago, and only one person ended up going to prison because of it. With so much to gain and so little risk of actually facing real penalties, can you really blame those in the financial world for acting as they do?

[Demeter]

26. Bank Stock Roundup: FX Fines Take a Toll; Citi, JPMorgan, Wells Fargo in Focus

SO THE PPT JUST PUMPS IT BACK UP---PROBLEM SOLVED, DEFINITION OF INSANITY SUCCESSFULLY APPLIED.

https://finance.yahoo.com/news/bank-stock-roundup-fx-fines-182442150.html

Efforts by major banks to resolve litigation and probes pertaining to their business conduct remained the key trend over the last five trading days. As part of the widespread investigation by the U.S., British and Swiss regulators into alleged foreign exchange (:FX) market manipulation, five major global banks were fined $3.4 billion for their misdoings. This resulted in an overall pessimistic mood in the banking sector.

Nonetheless, banks continued with their restructuring activities with the primary aim to boost operational efficiency. Such efforts were able to offset negative investor sentiments related to FX fines to some extent.

Recap of the Week’s Most Important Developments:

1. In a major blow to the global financial institutions, the U.S., British and Swiss regulators fined Citigroup Inc. (C), JPMorgan Chase & Co. (JPM), The Royal Bank of Scotland Group plc, HSBC Holdings plc and UBS AG an aggregate amount of $3.4 billion for alleged FX market rigging. The U.S. Commodity Futures Trading Commission (:CFTC), the U.K. Financial Conduct Authority (:FCA) and the Swiss Financial Market Supervisory Authority (:FINMA) entered into settlements with these banks. (Read More: Another Blow to Global Banks: Fined Billions for FX Manipulation)

2. In tune with its efforts to focus more on private student lending business, Wells Fargo & Company (WFC) is set to sell $8.5 billion of its Federal Family Education Loan Program (:FFELP) loans to Navient Corporation. Notably, the companies did not reveal the terms of the transaction. The deal is expected to close via a series of transactions by the end of 2014. The transaction comprises entire loans originated under the FFELP, before the program ended in 2010. Wells Fargo stated that the sale of student loans is immaterial to its earnings. As of Sep 30, 2014, Wells Fargo EFS served 1.3 million customers with $11.9 billion of balance outstanding. On Navient’s part, the deal will undoubtedly enhance its business that started operating independently as a loan management, servicing and asset recovery company following the separation of Sallie Mae into two distinct publicly-traded entities in Apr 2014.

Separately, Wells Fargo also cancelled its proposed sale of mortgage servicing rights (:MSRs) to Ocwen Financial Corp. The deal was announced in Jan 2014. The cancellation followed, superintendent of New York’s Department of Financial Services ( FS), Benjamin Lawsky’s restriction on the proceedings of the cash-deal in Feb 2014. Driven by concerns over the mortgage servicer's ability to handle the increase in servicing volume, Lawsky halted the Ocwen deal indefinitely. Therefore, Ocwen put the deal on hold at regulator’s request and was cooperating to resolve his concerns regarding its ability to service portfolios.

3. Major banking bellwethers like Bank of America Corp. (BAC) and U.S. Bancorp (USB) settled a Securities Class Action lawsuit for $69 million. Investors accused both these banks of failing their responsibility as trustees for securities backed by Washington Mutual Inc. home mortgages from 2005 to 2007. Notably, the settlement awaits the federal judge’s approval in Manhattan before it becomes effective. (Read More: BofA and U.S. Bancorp Settle Lawsuit for $69M).

4. With an aim to expand its footprints in the Mid-Atlantic region, North Carolina-based BB&T Corp. (BBT) is set to acquire Susquehanna Bancshares, Inc. in Lititz, PA. The cash-cum-stock transaction is valued at $2.5 billion. BB&T will incur pre-tax integration and merger charges of $250 million. Nevertheless, upon closure of the acquisition (expected in the second half of 2015), the company will save nearly $160 million annually. Additionally, the company expects the deal to be accretive to its earnings in the first full year excluding one-time expenses. (Read More: BB&T to Buy Susquehanna for $2.5B: Will it be Accretive?)

5. In a bid to reduce expenses and improve efficiency, JPMorgan intends to slash another 3,000 jobs in its Consumer and Community Banking (:CCB) segment by the year end. At an industry conference in Boston, the bank disclosed its plan to cut 7,000 jobs in its mortgage-banking segment and 4,000 in other divisions of the CCB arm, including the merchant services, cards and auto units by end-2014. Notably, earlier in February, the company had announced the curtailment of 6,000 jobs in the mortgage banking unit and 2,000 in rest of the CCB unit. (Read More: JPMorgan to Cut Jobs in Consumer & Community Banking Unit)

MORE

[Demeter]

28. UBS looking to take back bonuses from forex traders

https://finance.yahoo.com/news/ubs-looking-back-bonuses-forex-001508494.html

...A UBS spokeswoman confirmed a Financial Times report, which said UBS and four other banks were preparing to take back millions of dollars in bonuses from traders.

Regulators on Wednesday fined six major banks a total of $4.3 billion (2.74 billion pounds) for failing to stop traders from trying to manipulate the foreign exchange market, following a year-long global investigation. ...MORE

[Demeter]

27. Why we need stock prices to fall 25%

https://secure.marketwatch.com/story/why-we-need-stock-prices-to-fall-25-2014-11-15?siteid=YAHOOB

Just where is this market's peak? In early October, as share prices wobbled, I had high hopes that U.S. stocks would plummet to attractive levels. Instead, shares have shot higher, adding to the rip-roaring bull market that has seen stocks triple since March 2009. The long rally has done wonders for my portfolio’s value. But it also means stocks are now more richly valued—and expected returns are lower. Unless you never again plan to add to your stock portfolio, you should have mixed feelings about the market’s heady gains.

Think about all the money you’ll invest in stocks in the years ahead, whether it’s with new savings, reinvested dividends or by shifting money from elsewhere in your portfolio. Wouldn’t you rather buy at 2009 prices than at today’s nosebleed valuations?

Indeed, I find it hard to get enthused about the prospects for U.S. stocks over the next 10 years. Consider the three components of the market’s return: the dividend yield, corporate-earnings growth and the value put on those earnings, as reflected in the market’s price/earnings ratio. We already know the dividend yield: It’s 2% for the S&P 500. But big question marks hang over the other two components of the market’s return...How fast will earnings grow? Over the 10 years through mid-2014, the per-share earnings of the S&P 500 companies grew 6.3% a year, far ahead of the 3.6% nominal (including inflation) growth in GDP. But there are three reasons to fear slower earnings growth over the next 10 years...

First, the recent gains have been driven by rising profit margins. After-tax corporate profits rose from 7.9% of GDP in mid-2004 to 10.6% in early 2014. Without that boost, the S&P 500’s earnings would have lagged behind GDP growth. Suppose profits remain at 10.6% of GDP, rather than reverting to 7.9%. Even in that scenario, investors likely wouldn’t be happy, because corporate profits would grow no faster than the economy.

That brings us to the second reason for worry: Economic growth may disappoint. Over the past 50 years, roughly half the economy’s 3% after-inflation growth has come from increases in the working population and half from productivity gains. But the labor force is now growing more slowly, as the entrance of new workers barely outpaces retiring baby boomers. The Bureau of Labor Statistics projects that the civilian labor force will expand 0.5% a year over the 10 years through 2022, versus 0.7% for 2002-12 and 1.2% for 1992-2002....On top of that, many American families simply can’t afford to spend freely, either because they’re unemployed or underemployed or they remain handcuffed by hefty amounts of debt. That, too, could crimp economic growth.

A third reason to worry: Over the past 10 years, companies have bought back as much stock as they’ve issued. That’s unusual—and it may not last. Historically, shareholders have seen their claim on the nation’s profits diluted by two percentage points a year, as new companies emerge and existing companies issue new shares.

What will happen to valuations?

Let’s be optimistic: Suppose after-tax corporate profits remain at 10.6% of GDP, both nominal GDP and overall corporate profits grow 5% annually over the next decade, and earnings per share also climb 5%, because companies continue to buy back stock at the same pace they issue shares. If all that comes to pass, stock prices would also climb 5% a year—if we don’t get any change in valuations. That’s a big “if.” Consider the cyclically adjusted price/earnings ratio, which looks at share prices compared with average inflation-adjusted earnings for the past 10 years. The average for this P/E was 19.6 over the past 50 years and 16.6 over the past 100 years. But since 1990, the average has been 25.3—which is pretty much where we are today. A bullish interpretation: Stocks have been richly valued for a long time, so perhaps we won’t see a big market decline and stocks can hang in there at current valuations. Where does that leave us? Add 5% annual share-price gains to the 2% dividend yield, and you’re looking at a 7% total return over the next decade, while inflation runs at maybe 2% or so. And that, I would argue, is a scenario where everything goes right.

My hope: We get a 25% decline in share prices. That would make the market more reasonably valued and provide a buffer against disappointment—and I’d have greater confidence that my next stock-market purchase would collect a decent long-run return.

[Demeter]

30. Michael Hudson: Putin’s Pivot to Asia

http://www.nakedcapitalism.com/2014/11/michael-hudson-putins-pivot-asia.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

[Demeter]

31. Bill Black and Marshall Auerback Discuss Why Economists and Regulators Don’t Use “Fraud”

http://www.nakedcapitalism.com/2014/11/bill-black-marshall-auerback-discuss-economists-regulators-dont-use-fraud.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

[Demeter]

32. Guess How Much Money Bill Gross Made Last Year?

http://www.bloombergview.com/articles/2014-11-14/guess-how-much-money-bill-gross-made-last-year

How much compensation the folks at Pacific Investment Management Co., better known as Pimco, haul in each year has always been a topic of fascination on Wall Street.

In 2012, news reports suggested that the firm's top 30 partners “pulled down an average $33 million a year in compensation in recent years.” A subsequent column by Felix Salmon guessed that the average investment professional at Pimco was making “roughly $7 million each” annually.

A Pimco spokesman denied Salmon's claim, responding that “The numbers cited in your blog post today are wildly inaccurate.”

Salmon's speculation was, indeed, wildly inaccurate -- to the downside. Actual bonuses at Pimco are higher, much higher, than probably any outsiders previously believed. Based on news reports, public records and new data obtained by Bloomberg View, it appears that Pimco had a 2013 bonus pool for its 60 managing directors of almost $1.5 billion.

So how much have Pimco's top executives earned? According to documents provided to Bloomberg View by someone with knowledge of Pimco's bonus policies, the numbers break down like this: Gross earned $290 million as his year-end bonus for 2013. Mohamed El-Erian, Pimco's former chief executive officer and one-time heir apparent to Gross, received $230 million (El-Erian is a fellow Bloomberg View contributor)....

MORE OBSCENITY AT LINK

[Demeter]

33. High marginal tax rates on the top 1%

http://www.voxeu.org/article/high-marginal-tax-rates-top-1

Recently, public and scientific attention has been drawn to the increasing share of labour earnings, income, and wealth accruing to the so-called ‘top 1%’. Robert B. Reich in his 2009 book Aftershock opines that: “Concentration of income and wealth at the top continues to be the crux of America’s economic predicament”. The book Capital in the Twenty-First Century by Thomas Piketty (2014) has renewed the scientific debate about the sources and consequences of the high and increasing concentration of wealth in the US and around the world.

But what is a proper public policy reaction to such a situation? Should the government address this inequality with its policy instruments at all, and if so, what are the consequences for the macroeconomy? The formidable literature on optimal taxation has provided important answers to the first question. Based on a static optimal tax analysis of labour income, Peter Diamond and Emmanuel Saez (2011) argue in favour of high marginal tax rates on the top 1% earners, aimed at maximising tax revenue from this group. Piketty (2014) advocates a wealth tax to reduce economy-wide wealth inequality.

Motivated by their analyses and recommendations, in our own research on optimal taxation at the top of the earnings distribution (Kindermann and Krueger 2014) we address the following substantial questions:

What are the consequences of high marginal tax rates on the top 1% for macroeconomic performance?

Is squeezing the maximum tax revenue out of the top 1% earners actually beneficial for society as a whole and if so, how large would the welfare gains be?

Would a higher marginal tax rate on top earners only reduce earnings inequality, or would it also have a significant impact on the distribution of wealth, rendering a wealth tax obsolete or at least less pressing?

Modelling high labour earnings: A combination of luck and effort


...When we search for the marginal tax rate on the top 1% earners that maximises tax revenue from this group, we find it to be very substantial. In fact, tax rates between 80% and 95% will do the job. The main reason for this is that earners in the top 1% income bracket react with only moderate changes in effort to changes in marginal tax rates. When one thinks about the structure of individual productivity over the life cycle outlined above, it is clear why this is the case. Even with high marginal tax rates, individuals at the very top of the labour productivity distribution can still generate a substantial amount of after-tax income, and they will do so to save and thereby insure against their uncertain and, in expectation, much lower future labour income.

LOTS OF IVORY TOWER RAMBLING AT LINK

[Demeter]

34. Taking a Sanity Break--Be back Soon!

After all, there's only so much reporting on the Real World I can take, without actually dealing with my own little real world.

Anybody got some music for the Weekend? How about Personal Favorites as the theme? I got nothing otherwise...

[MattSh]

36. Well this is probably semi-related...

[MattSh]

37. And then there's this one...

[Demeter]

38. Corporate Profit Margins vs. Wages in One Disturbing Chart NAKED CAPITALISM

http://www.nakedcapitalism.com/2014/11/corporate-profit-margins-vs-wages-in-one-disturbing-chart.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

Yves here. This brief post by Doug Short is even more important than it appears to be. We had an outburst of neoliberal orthodoxy in comments yesterday on a post that discussed how wealth of most households had fallen since 1987. Some readers assigned blame for stagnant average worker wages (which was a big contributor to the lack of growth in household wealth) to immigrants, particularly Mexicans and H1-B visa workers.

While immigration was no doubt an element, to give it the leading role is counterfactual. The argument made, explicitly, is “more workers leads to lower wages”. Ahem, there a a lot more variables than just the labor supply side. But even if you take a simple-minded point of view, women’s rising participation in the workforce, particularly given that women even now make 77% of what men make, would be a vastly bigger wage-rate depressor than Mexican workers. The number of working women rose by nearly 30 million between 1970 and 2010, considerably larger than any estimate of immigrant influx.*

The Doug Short chart below looks at corporate profit share versus labor share. This pinpoints the degree to which wage stagnation is the result of corporate managers and executives succeeding in cutting the pie to favor themselves (executive pay has become increasingly linked to stock prices, and relentless focus on short-term earnings, as well as stock buybacks, do wonders for earnings per share)...



MUCH MORE AT LINK--READ-WORTHY!

[DemReadingDU]

39. The Fugitive's Sister

The following 4-pdf pages story is about Linda Case, the sister of Rebecca Parrett. Parrett was employed with the National Century Financial Enterprises Inc. (NCFE), in Columbus, Ohio.


11/2/14 The Fugitive's Sister

Linda Case admits she did
one thing wrong; others say
she did two.
Either way, at age 66, the
petite grandmother who never
had so much as a speeding
ticket wound up in jail for her
connection to a $1.9 billion
federal fraud case in which it
appears she never received a
penny.

Her younger sister, Rebecca
(Becky) Parrett, benefited
handsomely from the criminal
bookkeeping at National Century
Financial Enterprises Inc.
(NCFE), a company she cofounded
and served as vicechairman
and treasurer.

NCFE provided
loans to hospitals and other
health care providers using
their accounts receivables
as collateral. Based in Columbus,
the company claimed
$200 million in annual revenue
that year and had offices
in Arizona, Florida and North
Carolina.

In 2008, Becky was convicted
of nine counts of fraud, but
she vanished before she could
be sentenced. While in hiding,
she secretly communicated
with her sister. That’s when
Linda entered a moral and legal
gray area.

much more...
http://thefugitivessister.com/wp-content/uploads/2014/11/Linda-Case-PJ1.pdf


29 photos
http://www.myajc.com/gallery/lifestyles/photos-linda-case-and-her-family/gCPFh/



Link backwards to previous articles about Columbus, Ohio saga of National Century Financial Enterprises...
http://www.democraticunderground.com/111632257#post29

[Demeter]

40. Mathew D. Rose: Luxembourg and Juncker as a Microcosm of the EU’s Political and Moral Bankruptcy

http://www.nakedcapitalism.com/2014/11/mathew-d-rose-luxembourg-juncker-microcosm-eus-political-moral-bankruptcy.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

Yves here. The EU has gone so far astray of its original aims that its corruption and resulting fissures seem beyond repair, yet as Mathew D. Rose discusses in depth, its leaders remain dangerously complacent.

The recent revelation that Luxembourg under its former prime minister, Jean-Claude Juncker, had introduced laws that enabled multinational companies to avoid billions of dollars in tax is simply a further nail in the coffin of the European Union. With his tax-dodging scheme Juncker, in the meantime newly appointed president of the European commission, transformed his economically floundering miniscule nation (population 500,000) into the per capita richest state in the world. This was not a case of subtly beggaring thy neighbour, but blatantly buggering the world. The talking heads of European politics, finance and business are at pains to explain there was nothing remotely illegal about what Juncker and Luxembourg have done and are still doing, and there is very little clamour from the political class or the media for Juncker’s resignation or removal from office. Even the excuse of last resort has been utilized: Juncker, who was for much of the time concerned also Finance Minister of Luxembourg, did not know about his nation’s tax deals. Juncker is not in the least repentant. This case is paradigmatic for the current demise of the EU, an institution that has lost its way morally and democratically.

The selection of Juncker as EU president was simply a further episode in a cascade of misguided decisions by Europe’s governments. Juncker has no credibility as a statesman, but is notorious as a backroom dealmaker, whose ideological lodestar is his own career. The only national leader who dared to publicly raise his voice against Juncker’s EU presidency was David Cameron. The British prime minister interpreted the results of the EU elections in May of this year correctly: European voters are fed up with an EU that is not working in their interests. Cameron knew perfectly well that Juncker was a liability for the EU and especially for the Tories, as the British anti EU party, UKIP, threatens a Tory victory in the upcoming general election in the spring. Apparently even Angela Merkel initially had grave doubts about Juncker. What he promised in return for her support, we shall eventually find out. Juncker claimed that he had been democratically elected to the EU presidency by the citizens of Europe in recent elections, despite a turnout of only 42.5 percent, whereby most voters had never heard of him, much less realized that their votes had anything to do with his appointment as EU president.

This was not the only recent incident that is eroding confidence and increasing controversy within the EU. At the end of October the British were perplexed to discover that they must contribute an additional 2.1 billion Euros ($2.7 billion) to the EU budget (of which 779 million Euros will be passed on to Germany as a rebate). This is the result of the United Kingdom’s economy performing better than expected in the past ten years. This was not only due to technical adjustments in the calculation of budget contributions. Germany has forced the Euro nations to adopt a disastrous regime of austerity following the Great Recession, resulting in stagnation and low inflation, while the UK financial policies have resulted in robust growth. This trend, which should continue for a number of years, means that the British, with their Anglo-Saxon pragmatic view of things, shall have to pay for what they see as Teutonic financial dogmatism and outright pig-headedness. EU officials are rather taken aback by British rancour, as these are the rules of the EU, which is based upon solidarity of the strong with the weak. These two incidents highlight the current crisis of the EU and Euro group. Both have lost credibility, politically and – probably even worse – morally. In southern European nations, as well as Ireland and now France, the EU’s and Euro group’s mishandling of the economic crisis, has given them both a character of a bandog of the German government.

A BRIEF HISTORY OF THE EUROZONE

The EU project was based upon a simple moral assumption: to end European nationalism that had led to two major wars, the second of which nearly destroyed the continent, by creating a sense of solidarity and equality among European nations. What began in 1951 with the prosaic European Coal and Steel Community from a very high moral ground wallows today in an undemocratic, intransparent morass. Although initially an economic organisation, the goal of the European Coal and Steel Community and the European Economic Community, the precursors of the EU, was to unify national interests within Europe through amicable regulation, thus obviating political confrontation and ensuring peace on the continent. The visions of Monet and Schumann were successful and the EU enjoyed decades of peace and prosperity. In its early years most Europeans saw the EU as something of an obscure bureaucratic affair and the politically ineffectual European Parliament – at least those that knew it existed – as an institution where superannuated or discredited politicians could continue to receive high salaries for little work, as well as skim a bit of cream from the top of the EU budget. To this day EU policy and laws are primarily dictated by the member governments. Not having legislative initiative, the EU parliament has a subsidiary role. The Treaty of Maastricht of 1993 was however a watershed for the EU. A reunited Germany and an Eastern Europe free to make new alliances woke dreams of grandeur – and an ever-present simmering anti-Americanism – in both Berlin and Paris. Many former communist countries were drawn to the EU expecting a free lunch with EU money. Not only did the EU begin to expand rapidly – too rapidly – but suddenly a federal policy was on the agenda, although the citizens within the European Community were at no time consulted. The introduction of the Euro in 1999 was seen as an inevitable step in this process. As we now know, the Euro was either poorly planned to benefit Europe or brilliantly designed to enable Germany to dictate financial policy to the other members of the Euro group. The European Central Bank can limit the autonomy of the national banks within the Euro group and determine national policy, even remove democratically elected heads of state. Yet the ECB proved in the recent sovereign debt crisis that it was not part of its remit to effectively help member nations in financial difficulties. That things were not progressing smoothly towards a federal EU became evident with the introduction of the Euro. In a referendum in 2000 the Danes voted against adopting the common currency. Three years later the Swedes followed suit. No other nations held a referendum – for obvious reasons. One must understand that the Scandinavian countries, with a much stronger democratic traditions than other European nations, are a bellwether for the political mood in Europe. This repudiation did not faze politicians trying to ram through European federalism. In 2005 they created an EU constitution. Following the Scandinavian referendums concerning the Euro some countries decided to hold a referendum concerning this historic step; but democracy has never been a friend of EU politicians. The planned constitution became untenable following its rejection by voters in France and the Netherlands, it being clear that voters in other nations that had scheduled referendums would follow suit. The project was terminated....Undaunted by the dearth or popular support for European federalism, the EU political class, driven by economic interests that found it simpler and cheaper to purchase the passage of laws in Brussels than in the capitals of the numerous member states of the EU, pressed ahead. In 2007, the failed constitution was repackaged as the Treaty of Lisbon, the adoption of which necessitated solely the authorisation of the EU member states, eliminating the need for referendums – that is except for Ireland, which was obliged to hold one under its 1936 constitution. The treaty was promptly rejected by the Irish voters in June 2008. Under the motto that the Irish should keep voting until they finally approved the treaty, it was endorsed in a second referendum four months later. In the meantime, the EU has expanded its power over the member states. Members of the Bundestag claim that around sixty percent of the legislation they deal with is simply the confirmation of laws emanating from Brussels. This has been a comfortable arrangement for politicians of many EU nations who pass laws in Brussels that would be considered unacceptable by their own voters, then placing the blame on the EU.

As the decision making processes of the EU are opaque, it is no wonder that Brussels, similar to Washington DC, has become the focal point of thousands of lobbyists in Europe. This has become painfully obvious as the EU carries on secret negotiations for a trade treaty with the US, the Transatlantic Trade and Investment Partnership (TTIP). A handful of politicians from the European Commission and cohorts of lobbyists and their lawyers control the negotiations. Leaked documents proved that TTIP was everything but beneficial for EU citizens, instead favouring international corporations and banks. This week, hundreds of citizens’ initiatives from throughout Europe filed suit at the European Court of Justice to force the European Commission to break off the current TTIP negotiations, as they violate the rights of EU citizens. A petition signed by almost a million EU citizens had been previously rejected by the Commission.

MORE...CURRENT EVENTS AND POSSIBLE TRENDS IN THE ZONE

[Demeter]

45. Tim Geithner reveals in the raw how Europe's leaders tried to commit financial suicide

http://www.telegraph.co.uk/finance/economics/11226828/Tim-Geithner-reveals-in-the-raw-how-Europes-leaders-tried-to-commit-financial-suicide.html

Taped transcripts of the former US Treasury Secretary expose a catalogue of errors that will haunt Europe for years, made worse by misplaced righteousness...NOT TO MENTION THE INEVITABLE GRAFT AND CORRUPTION--DEMETER

So now we know: Europe’s leaders did indeed attempt to smash Greece back into the Stone Age out of vindictive rage; conspired to withhold debt support for Italy unless the elected leader was forced out; and mismanaged the EMU crisis for three years with a level of stupidity that makes you want to weep. Timothy Geithner has revealed the details, unpleasant and alarming in equal measure. The former US Treasury Secretary hinted at some of these “short-comings” in his memoir, Stress Test: Reflections on Financial Crises. Peter Spiegel, from the Financial Times, has now obtained the raw transcripts, laced with expletives.

The verdict is brutal. “I completely underweighted the possibility they would flail around for three years. I thought it was just inconceivable to me they would let it get as bad as they ultimately did,” Mr Geithner said.

WHAT WE HAVE HERE, FOLKS, IS A FAILURE OF IMAGINATION--A LAMENTABLE LACK OF THE BASIC SOCIAL SKILLS AND OBSERVATION OF REALITY IN REAL TIME, PLUS TOTAL IGNORANCE OF HISTORY....

THIS ARTICLE GIVES REAL INSIGHT INTO WTF THOSE ASSHOLES IN THIS ADMINISTRATION IN DC WERE DOING AT THE TIME, WHAT THEY WERE THINKING, AND HOW THEY FAIL AS HUMANS, AS INTELLECTUALS, AS ECONOMISTS, AS EVERYTHING.

IT IS APPALLING.

AND GEITHNER, TRYING FOR CLEMENCY, SYMPATHY, AND ABSOLUTION MAKES ME WANT TO FIRE UP THE NUREMBURG TRIALS AGAIN.

[Demeter]

46. Took the Kid to the movies yesterday--Dumb and Dumber Part To

(There was nothing else but Big Hero 6, which we had seen last weekend--pretty good for an animated comic book/manga, and some stupid Xtian thing)

D&D2 was as horrible as Rotten Tomatoes said, but fortunately the Kid isn't sophisticated (corrupted) enough to comprehend most of the worst of what passed for humor.

It took me watching both Star Trek reboots when we got home to get the bad taste out of my mouth....

But, one thing I got from the experience was an understanding of WTF is and has been going on in Europe.

Dumb and Dumber sums it up, perfectly, including all the gross "body humor", anti-social behaviors, and undue deference to a "name" even when attached to the wrong body.

[Demeter]

47. Harvard, home of the Economic Hitmen--Go Team!

Fuck over some other economy--the Klingons, maybe. They will fix you!

[Demeter]

41. How Harvard lost Russia By David McClintick

http://www.institutionalinvestor.com/Article/1020662/How-Harvard-lost-Russia.html

The best and brightest of America's premier university came to Moscow in the 1990s to teach Russians how to be capitalists. This is the inside story of how their efforts led to scandal and disgrace.

Since being named president of Harvard University in 2001, former U.S. Treasury secretary Lawrence Summers has sparked a series of controversies that have grabbed headlines. Summers incurred the wrath of African-Americans when he belittled the work of controversial religion professor Cornel West (who left for Princeton University); last year he infuriated faculty and students alike when he seemed to disparage the innate scientific abilities of women at a Massachusetts economic conference, igniting a national uproar that nearly cost him his job; last fall brought the departure of Jack Meyer, the head of Harvard Management Co., which oversees the school's endowment but had inflamed some in the community because of the multimillion-dollar salaries it pays some of its managers...Then, in quiet contrast, there is the case of economics professor Andrei Shleifer, who in the mid-1990s led a Harvard advisory program in Russia that collapsed in disgrace. In August, after years of litigation, Harvard, Shleifer and others agreed to pay at least $31 million to settle a lawsuit brought by the U.S. government. Harvard had been charged with breach of contract, Shleifer and an associate, Jonathan Hay, with conspiracy to defraud the U.S. government. Shleifer remains a faculty member in good standing. Colleagues say that is because he is a close longtime friend and collaborator of Summers. In the following pages investigative journalist David McClintick, a Harvard alumnus, chronicles Shleifer's role in the university's Russia Project and how his friendship with Summers has protected him from the consequences of that debacle inside America's premier academic institution.

Off duty and in swimsuits, the mentor and his protégé strolled the beach at Truro. For years, with their families, they had summered together along this stretch of Massachusetts' famed Cape Cod. Close personally and professionally, the two friends confided in each other the most private matters of family and finance. The topic of the day was the former Soviet Union.

"You've got to be careful," the mentor, Lawrence Summers, warned his protégé, Andrei Shleifer. "There's a lot of corruption in Russia."

It was late August 1996, and Summers, 42, was deputy secretary of the U.S. Treasury. Shleifer, 35, was a rising star in the Harvard University economics department, just as Summers had been 15 years earlier when he had first taken Shleifer under his wing.

Summers' warning rose out of their pivotal roles in a revolution of global consequence -- the attempt to bring the Russian economy out from the ruins of communism into the promise of Western-style capitalism. Summers, as Treasury's second-in-command, was the architect of U.S. efforts to help Russia. Shleifer's involvement was more intimate. Traveling frequently to Moscow, he was directing key elements of the reform effort under the banner of the renowned Harvard Institute for International Development.

Working on contract for the U.S., HIID advised the Russian government on privatizing its economy and creating capital markets and the laws and institutions to regulate them. Shleifer did not report formally to Summers but rather to the State Department's Agency for International Development, or AID, the spearhead of the U.S.'s foreign aid program.

Personal affection as much as official concern prompted Summers' admonition. He had come to know that Shleifer and his wife, Nancy Zimmerman, a noted hedge fund manager, had been investing in Russia. Though he didn't know specifics, he understood just enough to worry that the couple might run afoul of myriad conflict-of-interest regulations that barred American advisers from investing in the countries they were assisting.

Summers did not restrict his warnings to Shleifer.

"There might be a scandal, and you could become embroiled," Summers told Zimmerman. "You should make sure you're clear with everybody. People might want to make Andrei a problem some day. The world's a shitty place."

Summers' warnings proved at once prophetic and ineffectual. Even as Shleifer and his wife strove to reassure their friend, they were maneuvering to make an investment in Russia's first authorized mutual fund company. Within eight months their private Russian dealings, together with those of close associates and relatives, would explode in scandal -- bringing dishonor to them, Harvard University and the U.S. government. The Department of Justice would deploy the Federal Bureau of Investigation and the U.S. Attorney's Office in Boston to launch a criminal investigation that would uncover evidence of fraud and money laundering, as well as the cavalier use of U.S. government funds to support everything from tennis lessons to vacation boondoggles for Harvard employees and their spouses, girlfriends and Russian pals. It would, in the end, be an extraordinary display of an overweening "best and brightest" arrogance toward the laws and rules that the Harvard people were supposed to live by.

Says one banker who was a frequent visitor to Russia in that era, "The Harvard crowd hurt themselves, they hurt Harvard, and they hurt the U.S. government."

Mostly, they hurt Russia and its hopes of establishing a lasting framework for a stable Western-style capitalism, as Summers himself acknowledged when he testified under oath in the U.S. lawsuit in Cambridge in 2002. "The project was of enormous value," said Summers, who by then had been installed as the president of Harvard. "Its cessation was damaging to Russian economic reform and to the U.S.-Russian relationship."

Reinventing Russia was never going to be easy, but Harvard botched a historic opportunity. The failure to reform Russia's legal system, one of the aid program's chief goals, left a vacuum that has yet to be filled and impedes the country's ability to confront economic and financial challenges today. Harvard vigorously defended its work in Russia, but in 2004, after protracted legal wranglings, a judge in federal district court in Boston ruled that the university had breached its contract with the U.S. government and that Shleifer and an associate were liable for conspiracy to defraud the U.S. Last August, nine years after Summers and his protégé took their stroll along that Truro beach, Harvard, Shleifer and associates agreed to pay the government $31 million-plus to settle the case. Shleifer and Zimmerman were forced to mortgage their house to secure their part of the settlement.

Russia's struggles today certainly don't result entirely from Harvard's misdeeds or Shleifer's misconduct. There is plenty of blame to share. It is difficult to overstate the challenge of transforming the economic and legal culture, not to mention the ancient pathologies, of a huge, enigmatic nation that once spanned one sixth of the earth's land surface, 150 ethnicities and 11 time zones. The Marshall Plan, by comparison, was simple.

Summers wasn't president of Harvard when Shleifer's mission to Moscow was coming apart. But as a Harvard economics professor in the 1980s, a World Bank and Treasury official in the 1990s and Harvard's president since 2001, Summers was positioned uniquely to influence Shleifer's career path, to shape U.S. aid to Russia and Shleifer's role in it and even to shield Shleifer after the scandal broke. Though Summers, as Harvard president, recused himself from the school's handling of this case, he made a point of taking aside Jeremy Knowles, then the dean of the faculty of arts and sciences, and asking him to protect Shleifer.

Months after Harvard was forced to pay the biggest settlement in its history, largely because of his misdeeds, Shleifer remains on the faculty. No public action has been taken against him, nor is there any sign as this magazine goes to press in late December that any is contemplated. Throughout the otherwise voluble university community, there has been an odd silence about the entire affair. Discussions mostly have taken place sotto voce in deans' offices or in local Cambridge haunts, such as the one where a well-connected Harvard personage expressed deep concern, telling II: "Larry's handling of the Shleifer matter raises very basic questions about the way he governs Harvard. This is fraught with significance. It couldn't be more fraught." The silence is now beginning to break, thanks to the leadership of academic worthies like former Harvard College dean Harry Lewis, who is finishing a book about the university to be published in the spring by Perseus Public Affairs. Lewis agreed to show II the manuscript, in which he asserts, "The relativism with which Harvard has dealt with the Shleifer case undermines Harvard's moral authority over its students."

Whether this new questioning will erupt into yet another crisis engulfing Summers and the university remains unclear. What is certain, though, is that the story of Harvard and its representatives' malfeasance, told in full for the first time over the following pages, shows how much damage can be done when the considerable power and resources of the U.S. government are placed in the wrong hands...

HISTORICAL RETELLING OF EVENTS FOLLOWS--FASCINATING READING ON THE ABUSE OF POWER--NAMES NAMES AND LISTS CRIMES

IF WE HAD A GLOBAL SYSTEM OF JUSTICE, HEADS WOULD BE HANGING

[Demeter]

42. The Mercenaries HACKERS

Ex-NSA hackers and their corporate clients are stretching legal boundaries and shaping the future of cyberwar.

http://www.slate.com/articles/technology/future_tense/2014/11/how_corporations_are_adopting_cyber_defense_and_around_legal_barriers_the.single.html

...In June 2013, Microsoft joined forces with some of the world’s biggest financial institutions, including Bank of America, American Express, JPMorgan Chase, Citigroup, Wells Fargo, Credit Suisse, HSBC, the Royal Bank of Canada, and PayPal, to disable a huge cluster of hijacked computers being used for online crime. Their target was a notorious outfit called Citadel, which had infected thousands of machines around the world and, without their owners’ knowledge, conscripted them into armies of “botnets,” or clusters of infected computers under the remote control of a hacker, which the criminals used to steal account credentials, and thus money, from millions of people. In a counterstrike that Microsoft code-named Operation b54, the company’s Digital Crimes Unit severed the lines of communication between Citadel’s more than 1,400 botnets and an estimated 5 million personal computers that Citadel had infected with malware. Microsoft also took over servers that Citadel was using to conduct its operations.

Microsoft hacked Citadel. That would have been illegal had the company not obtained a civil court order blessing the operation. Effectively now in control of Citadel’s victims—who had no idea that their machines had ever been infected—Microsoft could alert them to install patches to their vulnerable software. In effect, Microsoft had hacked the users in order to save them. (And to save itself, since the machines had been infected in the first place owing to flaws in Microsoft’s products, which are probably the most frequently exploited in the world.)

It was the first time that Microsoft had teamed up with the FBI. But it was the seventh time it had knocked down botnets since 2010. The company’s lawyers had used novel legal arguments, such as accusing criminals who had attacked Microsoft products of violating its trademark. This was a new legal frontier. Even Microsoft’s lawyers, who included a former U.S. attorney, acknowledged that they’d never considered using alleged violations of common law to obtain permission for a cyberattack. For Operation b54, Microsoft and the banks had spied on Citadel for six months before talking to the FBI. The sleuths from Microsoft’s counter-hacking group eventually went to two Internet hosting facilities, in Pennsylvania and New Jersey, where, accompanied by U.S. marshals, they gathered forensic evidence to attack Citadel’s network of botnets. The military would call that collecting targeting data. And in many respects, Operation b54 looked like a military cyberstrike. Technically speaking, it was not so different from the attack that U.S. cyber forces launched on the Obelisk network used by al-Qaida in Iraq.

Microsoft also worked with law enforcement agencies in 80 countries to strike at Citadel. The head of cybercrime investigations for Europol, the European Union’s law enforcement organization, declared that Operation b54 had succeeded in wiping out Citadel from nearly all its infected hosts. And a lawyer with Microsoft’s Digital Crimes Unit declared, “The bad guys will feel the punch in the gut.”

Microsoft has continued to attack botnets, and its success has encouraged government officials and company executives, who see partnerships between cops and corporate hackers as a viable way to fight cybercriminals. But coordinated counterstrikes like the one against Citadel take time to plan, and teams of lawyers to approve them. What happens when a company doesn’t want to wait six months to hack back, or would just as soon not have federal law enforcement officers looking over its shoulder?

[Demeter]

48. How Obama Endangered Us All With Stuxnet

http://www.thedailybeast.com/articles/2014/11/13/how-obama-endangered-us-all-with-stuxnet.html

The cybersabotage campaign on Iran’s nuclear facilities didn’t just damage centrifuges. It undermined digital security everywhere...A few months after President Obama took office in 2009, he announced that securing the nation's critical infrastructure -- its power generators, its dams, its airports, and its trading floors -- was a top priority for his administration. Intruders had already probed the electrical grid, and Obama made it clear the status quo around unsecured systems was unacceptable. A year later, however, a sophisticated digital weapon was discovered on computers in Iran that was designed to attack a uranium enrichment plant near the town of Natanz. The virus, dubbed Stuxnet, would eventually be identified by journalists and security experts as a U.S.-engineered attack. Stuxnet was unprecedented in that it was the first malicious code found in the wild that was built not to steal data, but to physically destroy equipment controlled by the computers it infected—in this case, the cylindrical centrifuges Iran uses to enrich uranium gas.

Much has been said about Stuxnet in the years since its discovery. But little of that talk has focused on how use of the digital weapon undermined Obama’s stated priority of protecting critical infrastructure, placed that vulnerable infrastructure in the crosshairs of retaliatory attacks, and illuminated our country’s often-contradictory policies on cyberwarfare and critical infrastructure security. Even less has been said about Stuxnet’s use of five so-called “zero-day” exploits to spread itself and the troubling security implications of the government's stockpile of zero-days -- malicious code designed to attack previously-unknown vulnerabilities in computer software...Because a zero-day vulnerability is unknown, there is no patch available yet to fix it and no signatures available to detect exploit code built to attack it. Hackers and cyber criminals uncover these vulnerabilities and develop zero-day exploits to gain entry to susceptible systems and slip a virus or Trojan horse onto them, like a burglar using a crowbar to pry open a window and slip into a house. But organizations like the NSA and the U.S. military also use them to hack into systems for surveillance purposes, and even for sabotage, such as the case with the centrifuges in Iran.

Generally when security researchers uncover zero-day vulnerabilities in software, they disclose them to the vendor to be fixed; to do otherwise would leave critical infrastructure systems and other computers open to attack from criminal hackers, corporate spies and foreign intelligence agencies. But when the NSA uncovers a zero-day vulnerability, it has traditionally kept the information secret in order to exploit the security hole in the systems of adversaries. In doing so, it leaves critical systems in the U.S—government computers and other systems that control the electric grid and the financial sector—vulnerable to attack. It's a government model that relies on keeping everyone vulnerable so that a targeted few can be hacked—the equivalent of withholding vaccination from an entire population so that a select few can be infected with a strategic biological virus. It's also a policy that pits the NSA’s offensive practices against the Department of Homeland Security's defensive ones, since it's the latter's job to help secure critical infrastructure. That’s more than just poor policy. It’s a combination that could someday lead to disaster.

None of this would be so troubling if the use of zero-days in Stuxnet were an isolated event. But the U.S. government has been collecting zero day vulnerabilities and exploits for about a decade, resulting in a flourishing market to meet this demand and a burgeoning arms race against other countries racing to stockpile their own zero day tools. The trade in zero days used to be confined to the underground hacker forums, but in the last ten years, it's gone commercial and become populated with small boutique firms whose sole business is zero-day bug hunting and large defense contractors and staffing agencies that employ teams of professional hackers to find security holes and create exploits for governments to attack them. Today, a zero-day exploit can sell for anywhere from $1,000 to $1 million. Thanks to the injection of government dollars, what was once a small and murky underground trade has ballooned into a vast, unregulated cyber weapons bazaar.

When I spoke with former NSA and CIA Director Michael Hayden for a book about Stuxnet, he defended the government's general use of zero-days, without acknowledging that the U.S. was behind Stuxnet, by citing the “Nobody But U.S.” rule the NSA uses for deciding when to withhold information and when to disclose it: The NSA only keeps a vulnerability secret if it judges that “Nobody But Us” could exploit it. “How unique is our knowledge of this,” he said, “or our ability to exploit this compared to others?”

At first glance, the argument seems reasonable. But ask anyone in the cybersecurity industry about the principle behind it, known as “security through obscurity”—relying on the safety of a system by assuming that nobody else knows about its vulnerability—and you’ll find it’s widely discredited. In the words of Obama’s former cybersecurity advisor Howard Schmidt: “It’s pretty naive to believe that with a newly discovered zero day, you are the only one in the world that's discovered it. Whether it’s another government, a researcher or someone else who sells exploits, you may have it by yourself for a few hours or for a few days, but you sure are not going to have it alone for long.”

MORE WANTING THE CAKE AND EATING IT, TOO

It’s time for lawmakers to get serious about the security of U.S. systems and decide whether our need to defend against digital assaults is greater than our need to attack others.

[Demeter]

50. DRTBOX and the DRT surveillance systems THE DIRT ON A DIRTY SECRET

http://electrospaces.blogspot.com/2013/11/drtbox-and-drt-surveillance-systems.html

[Demeter]

55. Google Is Quietly Becoming One of the Nation’s Most Powerful Political Forces While Expanding Its In

Google Becoming One of Nation’s Most Powerful Political Forces While Expanding Its Information-Collection Empire

https://www.citizen.org/google-political-spending-report

Google is so rapidly expanding both its information-collecting capabilities and its political clout that it could become too powerful to be held accountable, a new Public Citizen report finds.
“Mission Creep-y: Google Is Quietly Becoming One of the Nation’s Most Powerful Political Forces While Expanding Its Information-Collection Empire” looks at the ways Google is accruing power both in terms of the information it collects about the public and the sway it has over federal and state governments, as well as civil society.

The report documents the new technologies Google is developing and acquiring to collect new kinds of information, chronicles examples in which the company has acquired and shared information in questionable ways, and describes the company’s rapidly growing and in some ways non-transparent political activity.

The report is a look at one of the world’s most powerful and pervasive companies as it approaches new levels of dominance, a position that could make it hard to regulate if society ever decides its activities have become out of hand.

LINK TO REPORT, PETITION AT OP

[xchrom]

43. The US Military Says It's Losing Its Competitive Edge

http://www.businessinsider.com/r-us-military-readiness-for-war-competitive-edge-worsening-officials-2014-11

The U.S. military's ability to stay ahead of technology advances by other countries and respond to multiple crises around the world is already in jeopardy and will get worse unless mandatory budget cuts are reversed, top U.S. officials warned on Saturday.

Chief of Naval Operations Admiral Jonathan Greenert told Reuters the Navy would have to cut forces and reduce its ability to position ships around the world if lawmakers did not ease or reverse the cuts, which are due to resume in fiscal 2016.

"Electronic warfare, electronic attack, anti-submarine warfare - all of these higher end areas - will fall further behind because we’re just not investing in them," he said in an interview at a conference at the Reagan Presidential Library.

He said the Navy's ability to stay ahead of potential adversaries would "degrade significantly" unless the cuts ended.

Greenert and other U.S. officials are urging Congress to end the cuts known as "sequestration," citing growing strains amid increasing threats, including Russia's aggression in the Crimea region, and increasing Islamic State extremism in Iraq and Syria.



Read more: http://www.businessinsider.com/r-us-military-readiness-for-war-competitive-edge-worsening-officials-2014-11#ixzz3JEUlLXOL

[xchrom]

44. Europe's Economy Is Going Nowhere

http://www.businessinsider.com/r-spotlight-falls-on-europes-stuttering-economy-2014-11FRANKFURT (Reuters) - As large parts of Europe's economy grind almost to a halt, attention will focus this week on the latest assessments of business confidence in the euro zone and Germany, which has just narrowly avoided a recession.

While the United States economy has accelerated and China holds a slower but steady course, euro zone countries have remained sluggish, with overall growth in output slowing to a trickle.

"The euro zone is the best part of 20 percent of the global economy," James Knightley, an economist with ING, said. "The longer the stagnation goes on the more Japan-like it becomes."

The euro zone's problems have raised expectations that the European Central Bank is preparing to loosen its purse strings further to try to rekindle growth.

Against this backdrop, Germany's Centre for European Economic Research's (ZEW) monthly barometer of sentiment, due on Nov 18, will provide more insight into business confidence levels.



Read more: http://www.businessinsider.com/r-spotlight-falls-on-europes-stuttering-economy-2014-11#ixzz3JEVNXMDr

[Demeter]

49. See above EU articles posted

They earned their depression.

[Demeter]

51. Angola on the road of de-dollarization

WHILE OBAMA AND PNAC DICK AROUND IN THE MIDDLE EAST AND EASTERN EUROPE, CHINA AND RUSSIA EAT UP AFRICA....

http://failedevolution.blogspot.gr/2014/11/angola-on-road-of-de-dollarization.html

[Demeter]

52. IMF’s Post-Crisis Austerity Call Mistaken, Watchdog Says WHY DO THESE PEOPLE STILL HAVE JOBS?

http://www.bloomberg.com/news/2014-11-04/imf-s-post-crisis-austerity-call-mistaken-watchdog-says.html

[Demeter]

53. Mike "Mish" Shedlock PREDICTIONS IN CURRENCIES WARS

http://globaleconomicanalysis.blogspot.com/2014/11/next-phase-in-currency-wars-society.html

[Demeter]

54. Rahm Emanuel Accepted Campaign Contributions From Financial Firms Managing City Pension Money

http://www.ibtimes.com/chicago-mayor-rahm-emanuel-accepted-campaign-contributions-financial-firms-managing-1723396

Executives at investment firms that manage Chicago pension funds have since 2011 poured more than $600,000 in contributions into Mayor Rahm Emanuel's campaign operation and political action committees (PACs) that support him, according to documents reviewed by International Business Times. These contributions appear to flout federal rules banning companies that manage pension funds from financing the campaigns of officials with authority over pension systems, say legal experts.

The contributions also potentially conflict with an executive order Emanuel himself signed in 2011 prohibiting city contractors and subcontractors from making campaign donations to city officials.

A former chief of staff to President Obama, Emanuel, a Democrat, was elected Chicago mayor three years ago with a substantial boost from financial services executives. Since 2011, at least 31 executives at firms that harvest fees by managing city pension funds have contributed to his campaign and associated PACs. That list of donors includes Kelly Welsh, a Northern Trust executive who was recently appointed by President Obama to the top legal position in the U.S. Commerce Department...

THIS FISH HEAD WAS ROTTEN FROM DAY ONE

[Demeter]

56. Harry Reid Moves for Senate Vote on NSA Reform By Dustin Volz

The Senate majority leader is hoping to move the bulk data-collection bill before his party returns to the minority... Senate Majority Leader Harry Reid on Wednesday moved to advance a bill that would usher in sweeping reforms to the government's most controversial domestic-spying program, more than a year after Edward Snowden's leaks exposed it publicly. Reid filed for cloture on the measure late Wednesday, a surprising move intended to address the National Security Agency's mass-surveillance practices before Republicans take over the Senate next year. To advance further, the legislation would need 60 votes to end debate, and then a majority vote to pass it through the chamber.

The bill, the USA Freedom Act, would effectively end the government's bulk collection of metadata—the numbers and time stamps of phone calls but not their actual content. Phone companies such as Verizon would instead retain those records, which intelligence agencies could obtain only after being granted approval from the Foreign Intelligence Surveillance Court. The bill would also usher in a host of additional privacy and transparency measures, including a more precise definition of what can be considered a surveillance target.

The measure is sponsored by Senate Judiciary Chairman Patrick Leahy, and has earned cosponsors ranging from Republican Sen. Ted Cruz to liberal Sens. Edward Markey and Chuck Schumer. It also boasts support from a wide array of tech companies, privacy and civil-liberties groups, the White House, and senior members of the intelligence community. The bill is a reworked version of a similar bill that passed the House in May, though that version was accused by privacy advocates and the tech industry of being "watered down" during 11th-hour negotiations.

Leahy spent months working to build consensus around his bill, and he nearly achieved it before debuting the measure in late July. It still faces opposition from some defense hawks, including Senate Intelligence Chairwoman Dianne Feinstein. And two of the loudest critics of NSA spying, Sens. Ron Wyden and Mark Udall, have criticized the measure for not going far enough. The two Democrats said they wanted to strengthen the bill to require warrants for "backdoor" searches of Americans' Internet data that can be incidentally collected during foreign-surveillance hauls. NSA critics have been waiting the entire year to see Congress come to an agreement on how to curtail the government's mass-surveillance activities. In January, President Obama pledged in a major policy speech to reform the NSA, but said he could only do so when Congress sent him a bill that closely matched his recommended changes. Leahy has insisted for weeks that the Senate take up his bill early in the lame duck. "The American people are wondering whether Congress can get anything done," Leahy said Wednesday night, after Reid filed for cloture. "The answer is yes. Congress can and should take up and pass the bipartisan USA Freedom Act, without delay."

Reid's filing was not expected by many surveillance critics, who had thought the lame-duck session was too packed with other legislative agendas to leave any room for NSA reform. But growing uncertainty about where the issue ranked for Republicans may have forced Reid's hand. Further complicating negotiations is the June 2015 sunset of the post-9/11 Patriot Act, the law that grants the government much of its legal authority for domestic surveillance. It is widely expected that Congress would not reauthorize the Patriot Act in its current form.

"That sunset could very easily touch off an ugly intra-party battle among both Democrats and Republicans," said Harley Geiger, senior counsel at the Center for Democracy & Transparency, which supports NSA reform. "Everyone expected it to be ugly."

ONE SOMETIMES WONDERS WHAT IT WOULD TAKE TO GET HARRY REID TO ACTUALLY DO SOMETHING...THE ONLY TIME I EVER NOTICED HIM ACTING PROMPTLY AND WITH RESOLUTION AND PERSISTENCE WAS WHEN HIS CONTINUATION IN THE SENATE WAS THREATENED....

[Demeter]

58. Obama Administration Explores Ways To Collect Student Loan Payments Without Middlemen

BECAUSE WE WANT THE GOVERNMENT TO EXTRACT EVERY PENNY FROM THE PLEBEIAN POCKET...

GERMANY CAN PAY THEIR KIDS' WAY--AFTER ALL, THEY ARE GUTTING, RAPING, PILLAGING AND DESTROYING ALL OF EUROPE SO THEY HAVE LOTS OF CASH....


http://www.huffingtonpost.com/2014/11/13/student-loan-debt-collectors-pilot_n_6148330.html?utm_hp_ref=tw

The U.S. Treasury Department soon will take some student borrowers' accounts away from private debt collectors and give them to federal workers, an ambitious new pilot project that may result in the government cutting out the student loan middlemen who have gotten rich targeting distressed borrowers.

The federal employees will be charged with finding ways to help troubled borrowers make good on their delinquent debts, according to borrower advocates and Obama administration officials who have been briefed on the project. The project may start early next year.

Private debt collectors working for the Education Department have been paid billions of dollars over the last few years, while racking up complaints that they routinely violated the law and mistreated borrowers who had defaulted on federal student loans.

The Treasury Department project aims to change the process, which has become a nightmare for some borrowers....

UNDOING REAGANOMICS, A NICKEL AT A TIME...

[Demeter]

59. IT'S A NIGHTMARE--MUST READ IF YOU HAVE ANY TIE TO A STUDENT LOAN

[Demeter]

60. Silicon Valley Shakedown Jim Hightower

http://www.nationofchange.org/2014/11/13/silicon-valley-shakedown/

Electronics for Imaging has been exposed for paying $1.21 an hour to employees, who have been brought over to the U.S. from India. What a disgraceful company...The demigods of Silicon Valley like to present themselves as miracle workers, able to create electronic wonders (and wondrous profits) from nothing but their vaunted imaginations and entrepreneurial prowess. Well, yes. But there’s another part to that program: their routine exploitation of workers. From the disgraceful use of sweatshop labor abroad to wage theft at home, a key component of the Silicon Valley business plan is to squeeze money from their workers. Such is the price of “miracles.”

A particularly crass example of this profiteering came to light in October, when a multimillion-dollar, multinational digital printing outfit named Electronics for Imaging was nabbed for a jaw-dropping act of wage theft. EFI executives had flown in eight IT workers from Bangalore, India to Silicon Valley to help install the corporation’s computer system in its new headquarters.

Here comes the jaw-dropper: EFI tried to get away with paying those workers what they would’ve made in India — $1.21 an hour — rather than paying California’s $8-an-hour minimum wage or more. Furthermore, they worked up to 122 hours a week — that’s 17 hours a day — with no overtime. And get this: EFI even paid them in Indian rupees rather than U.S. dollars.

Thanks to an anonymous tip, the Labor Department has now convicted EFI of gross labor law violations, forcing the company to pay back the wages it stole. Yet CEO Guy Gecht — who raked in a $6-million paycheck as he ripped off these imported people — offered no apology. EFI said it “unintentionally overlooked” U.S. wage law, dismissing its monstrous wage theft as an “administrative error.” No way. It was a failure of moral character. But since EFI was fined only $3,500 after paying the back wages, Silicon Valley will surely see this wrist slap as an endorsement of its prevailing ethic of labor exploitation.

[Crewleader]

61. Today's Comic

[Demeter]

62. The Crapified Magic of the ObamaCare Marketplace By Lambert Strether of Corrente.

http://www.nakedcapitalism.com/2014/11/crapified-magic-obamacare-marketplace.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

I confess that this second ObamaCare enrollment period is even harder to write about than the first, because watching our famously free press normalizing — as “shopping” — what is clearly an insane system is so painful and degrading to watch. Perhaps the website debacle last year — an IT disaster for which nobody with executive authority has been held accountable, not even by our fiercely oppositional Republicans — has had the paradoxical effect of setting the baseline for ObamaCare’s success so low that even the most marginal improvements induce a mutual group hug in the usual cluster of reporters, apparatchiks, and political appointees. “At least the website works” is an awfully easy story to write.

Anyhow, the stories read like coverage of holiday shopping (“shoppers” having replaced “consumers”). There are crowds, and sometimes balloons, or cookies. Venues are brightly lit. Some shoppers are intent, others confused. Some buy at once, others take the brochures home. There are greeters, floorwalkers, assistants. Random individuals are quoted by name! The “experience” is great, except when it isn’t. Occasionally, there are problems, mostly technical. “Computers!” There are very few numbers, no context, and no analysis (Bloomberg, Reuters, WaPo, New York Times, Contra Costa Times, and many others.) It’s as if the entire press corps took Obama’s riff that buying health insurance should be like buying a flat-screen TV, and reverse engineered their stories out of it. Never mind that ObamaCare shoppers are highly unlikely to know what they’re actually buying.

To avoid becoming bogged down in all this dull normality, I’d like to focus on three things: (1) The numbers game; (2) information technology; and (3) traps for the unwary enrollee.

(1) A General Lack of Purpose and Direction

A story almost as easy to write as “the website is working this year” is the numbers game: “How many signups will there be?” (Never mind that since health insurance is not the same as health care, we aren’t sure from the signup numbers what the concrete material benefits to enrollees are; you write the story with the numbers you have.) And that’s a very safe story to write, since not only do we not know how many will enroll for the first time, we don’t know how many will re-enroll, either. (IT issues prevent us from having these numbers, even if the vagaries of human behavior were taken into account.) Politico has a puff piece on the “much more precise strategy” the administration is using this year, but International Business Times speaks of “malaise”:

The limited talk about the Affordable Care Act — only 44,000 mentions on Twitter at press time Saturday for “Obamacare” and less than 50 for “HealthCare.gov” — appears to fall in line with a general malaise about the law. While the number of uninsured Americans has fallen by about 10 million since last year, there as still 41 million people without coverage, and administration officials have said they are expecting a net gain of only 2 million people through HealthCare.gov during this open-enrollment period.

A net gain of two million? That’s not very much. You’d think — given the death rate — that signing up as many people as fast as possible would be Job One for the administration, but apparently not. In other words, the answer to “How many signups will there be?” is “Not nearly enough!” So what is the purpose of ObamaCare, since apparently delivering life-saving health care is not? ‘Tis a puzzlement!

(2) Mind-Bogglingly Horrible Information Technology

First, the back end is still broken. This really is mind-boggling. I’d rather write about the 2016 horse race than this, and since that makes me want to claw out my eyeballs, you know how bad this is. For review, from 2013:

NOTE [2] Frontend vs. backend from Stack Overflow:

Generally speaking, the “front end” is the user interface, and the “back end” is the code supporting that front end (responsible for database access, business logic etc). …

Frontend is what you do that the user can see. Like designing a user interface. Backend programming is the code that the user doesn’t ‘see’. This is what works with the data behind the scenes. For example fetching/inserting/deleting/updating a database. …

So, if the WordPress back end were broken the way the ObamaCare backend is broken, you would press Submit — work with me here, I know WordPress doesn’t work ideally for everyone at all times — and rather than the bits and bytes of your comment being stored in a database, and then processed electronically and displayed as a web page, they would be appear in the backend by fax, and little elves would combine your comment’s fax with other bits of paper, typing and scissoring and gluing very rapidly, and then display that as the web page. Yes, that would be expensive, cumbersome, slow, error-prone, and basically, not the way work like this is done. And your point? Anyhow, when Obama called in a tech dude SWAT team to fix the website in November 2013, he had them fix — for reasons nobody has ever explained — the user-facing, visible front end, but not the database-facing, invisible back-end, with the result that lots of ObamaCare’s data handling is, mind-bogglingly, still done by little elves. From the Philadelphia Inquirer:

“Everyone reports that there are still back-end issues,” says Joel Ario, a managing director at Manatt Health Care Solutions and a former Pennsylvania insurance commissioner. “That means there will be some cleaning up to do in terms of reconciling accounts and making sure payments are correct and the coverage dates are correct.”

That “cleaning up” is manual data entry. And not only are little elves working for the insurance companies, they are working for CMS, too:

Insurance industry sources say the Centers for Medicare and Medicaid Services (CMS) had sorted through about 80 percent to 85 percent of existing accounts to make sure its records match those of insurers.

“Sorted through” is another euphemism for manual data entry. Obama’s famously data-driven campaign apparatus seems to have been powered by computers, and not by little elves. Of course, campaigns are important, unlike signature domestic initiatives that involve significant financial decisions — not to mention life and death choices — for millions of Americans, out there shopping in the flyover states. What a shame they’re not visible from the Acela!

But just because the back-end is still hosed — four five years after ObamaCare was passed, mind you — doesn’t mean the front-end isn’t, in its own very special way, hosed too. One of the shiny new features rolled out in this year’s non-crashing model of the website is “window shopping,” which permits you to compare plans without first going through an insanely cumbersome registration process that hands all your personal data to the government. CMS Administrator Marilyn Taverner, who still has a job:

“Using this tool, consumers can compare plans, covered benefits, and physician and hospital networks before the Marketplace annual open enrollment period starts on November 15,” CMS Administrator Marilyn Tavenner said. “New features will give consumers a comprehensive picture of the plans in their area so they can choose the one that’s right for them.”

First, let’s set a baseline. Let’s look at… Oh, flat screen TVs at Best Buy. What you do is, you check boxes next to the TVs you want to compare, click the Compare button, and the site builds a comparison page that looks like this:

MIND-BOGGLING AWFULNESS ENSUES HERE


Conclusion

At this point, I will issue my ritual prophylactic disclaimer that of course some people are helped by ObamaCare; a program as big as ObamaCare is bound to do that. And for those who are compelled to comment on how great the plan they got is, I’m happy for you; I just think that every American deserves to be as happy and lucky as you.

It’s the crapification that gets me: We’ve got, on the very same continent as our own, a single payer system that covers everybody for a boatload less money — those wacky Canadians call it “Medicare” — and the best we can do in this exceptionally great country, this shining city on a hill, is normalize a program that still leaves 41 million uninsured, that has gross defects in its construction, and that is a full of traps for the unwary that will cost you bucks to some unholy number or needed treatment for a vital organ, whenever you look at it sideways or put your foot down in the wrong place. Because markets.

NOTE

“ObamaCare and Its Opportunity Costs”:

The key point to remember in all discussions of ObamaCare is that neither it, nor indeed the entire private health insurance “industry,” should exist. They are rent-seeking parasites, economic tapeworms. One does not improve a tapeworm; one removes it. .... Health care is, Obama avers, the right of every citizen. In Canada, everybody’s got the same access as everybody else. Under ObamaCare,there’s all these different “options” to sort through, all with different levels of risk, many of them junk, and others scams. Which country implements health care as a right better? (And don’t tell me “Because freedom!”) It’s like they’re trying to sell you a whole supermarket shelf full of different brands of air. “Would you like Platinum brand air? Gold brand?” “No, I just want air! I need to breathe!”

[bread_and_roses]

66. "Rent seeking parasites" - exactly

I am still furious with my own House of Labor and with the progressive allies with whom I work every day on other issues for buying into this monstrosity. We should all, right now, refuse to pay a single medical bill. Refuse the misbegotten unnatural hybrid from hell that is "Obamacare" and refuse to pay a single medical bill.

Except, sigh, we won't.

What cowards we are. Including me, I cast no stones that I am not throwing at myself as well. But at least I have the intellectual honesty not to pretend that a slimy heap of dung is a bowl of chocolate pudding.

[Demeter]

63. I have depressed myself early this thread

Going to go off and deal with something...anything....that can actually be dealt with.

Like finishing the mending marathon, or something.

See you on the SMW!

[Demeter]

64. Satirist Onion Inc. Said to Hire Adviser for Sale YES, THAT ONION, NO, NOT SATIRE

http://www.bloomberg.com/news/2014-11-14/satirist-onion-inc-said-to-hire-adviser-for-sale.html?hootPostID=a57d5e5550c76eb3e2555db1831168c8

Everything in this story is actually, honestly true.

Onion Inc., owner of the satirical news site the Onion and the entertainment site the A.V. Club, has hired a financial adviser for a possible sale, according to people with knowledge of the matter.

The company, which calls itself “America’s Finest News Source,” is working with the investment bank GCA Savvian, said the people, who asked not to be identified because the deliberations are private.

Steve Hannah, chief executive officer of Onion, confirmed the hiring of a financial adviser in a memo to his staff obtained by Bloomberg. He said the adviser has been handling inbound inquiries for both investment partners and potential buyers of Onion.

“We have had follow-up conversations with numerous parties in recent months,” Hannah wrote. “Our advisors will continue to have those conversations and, hopefully, they will lead to the right outcome.”

Onion can use its brand to capitalize on money flowing into Web media from traditional outlets. Funny or Die, the comedy website co-founded by Will Ferrell, recently hired Moelis & Co. to advise on strategic options. In May, Walt Disney Co. paid $500 million for Maker Studios, while Vice Media Inc. raised $500 million in September selling 10 percent stakes to Technology Crossover Ventures and A+E Networks.

MORE

[Demeter]

65. IS NOTHING SACRED?