Covert Operations
by ilene - August 31st, 2010 1:33 am
Covert Operations
The billionaire brothers who are waging a war against Obama.
Excerpts:
DiZerega, who has lost touch with Charles [Koch], eventually abandoned right-wing views, and became a political-science professor. He credits Charles with opening his mind to political philosophy, which set him on the path to academia; Charles is one of three people to whom he dedicated his first book. But diZerega believes that the Koch brothers have followed a wayward intellectual trajectory, transferring their father’s paranoia about Soviet Communism to a distrust of the U.S. government, and seeing its expansion, beginning with the New Deal, as a tyrannical threat to freedom. In an essay, posted on Beliefnet, diZerega writes, “As state socialism failed . . . the target for many within these organizations shifted to any kind of regulation at all. ‘Socialism’ kept being defined downwards.”
Members of the John Birch Society developed an interest in a school of Austrian economists who promoted free-market ideals. Charles and David Koch were particularly influenced by the work of Friedrich von Hayek, the author of “The Road to Serfdom” (1944), which argued that centralized government planning led, inexorably, to totalitarianism. Hayek’s belief in unfettered capitalism has proved inspirational to many conservatives, and to anti-Soviet dissidents; lately, Tea Party supporters have championed his work. In June, the talk-radio host Glenn Beck, who has supported the Tea Party rebellion, promoted “The Road to Serfdom” on his show; the paperback soon became a No. 1 best-seller on Amazon. (Beck appears to be a fan of the Kochs; in the midst of a recent on-air parody of Al Gore, Beck said, without explanation, “I want to thank Charles Koch for this information.” Beck declined to elaborate on the relationship.)
[...]
As their fortunes grew, Charles and David Koch became the primary underwriters of hard-line libertarian politics in America. Charles’s goal, as Doherty described it, was to tear the government “out at the root.” The brothers’ first major public step came in 1979, when Charles persuaded David, then thirty-nine, to run for public office. They had become supporters of the Libertarian Party, and were backing its Presidential candidate, Ed Clark, who was running against Ronald Reagan from the right. Frustrated by the legal limits on campaign donations, they contrived to place David on the ticket, in the Vice-Presidential slot; upon becoming a candidate, he could lavish…
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DiggSo You Think They’re Not Watching Your PC?
by Zero Hedge - August 31st, 2010 1:05 am
Courtesy of madhedgefundtrader
Hey! You there, staring at this monitor. This is your PC talking to you. No, not you over there standing in the background. I’m talking to the guy sitting in front of me poking at my keys. Ouch! That one hurt!
So you thought no one was watching, did you? Let me straighten you out. About a month ago you clicked on a certain website, and I installed myself as a cookie on your computer, which is an innocuous little text file that you can’t see. Since then, I have been tracking your every move, recording websites you clicked on, the pages you visited, and the stuff you ordered. I then used this handy little algorithm to build a profile of exactly who you are. I now know you better than your own mother. In fact, I know you better than you know yourself.
For example, I am aware that you make more than $250,000 a year, live in a posh zip code in San Francisco, belong to a fancy country club, and drive a Mercedes. You donate to Republican political causes, send your kids to a prestigious private school, and bill it all to an American Express Platinum Card. Did I leave anything out?
Because I know every detail of your life, down to your inside leg measurement, I am able to harness the power of this machine to more precisely service your every need. That includes directing advertising to you which you have a high probability of clicking on. The more you click on my ads, the higher prices I can realize for those ads. The ad campaigns you now see are unique to your own personal computer because they are tied to your IP address. My program, called “behavioral targeting” is the next “big thing” in online advertising. It’s all part of the brave new world.
I see you have been shopping for a new car. Check out the new Hyundai at http://www.hyundaiusa.com/ which offers the same quality as your existing ride, at half the price. Your clicks this morning suggest you’re taking your “significant other” out to dinner tonight. Might I suggest Gary Danko’s on Bay Street at http://www.garydanko.com/site/bio.html ? The rack of lamb is to die for there. Your visits to http://www.travelocity.com/ and http://www.expedia.com/ tell me you’re planning a vacation. I bet you didn’t know…
IMF Eliminates Borrowing Cap On Rescue Facility In Anticipation Of Europe Crisis 2.0; US Prepares To Print Fresh Trillions In "Rescue" Linen
by Zero Hedge - August 30th, 2010 11:28 pm
Courtesy of Tyler Durden
Back in April, when we discussed the inception of the IMF’s then brand new New Arrangement to Borrow (NAB) $500 billion credit facility, we asked rhetorically, “If the IMF believes that over half a trillion in short-term funding is needed imminently, is all hell about to break loose.” A month later the question was answered, as Greece lay smoldering in the ashes of insolvency, and the developed world was on the hook for almost a trillion bucks to make sure the tattered eurozone remained in one piece (leading to such grotesque abortions as Ireland, whose cost of debt is approaching 6%, funding Greek debt at 5%). Well, if that was the proverbial canary in the coalmine, today the entire flock just keeled over and died: today the IMF announced it “expanded and enhanced its lending tools to help contain the occurrence of financial crises.” As a result, the IMF has as of today extended the duration of its existing Flexible Credit Line (FCL) to two years, concurrently removing the borrowing cap on this facility, which previously stood at 1000 percent of a member’s IMF quota, in essence making the FCL a limitless credit facility, to be used to rescue whomever, at the sole discretion of the IMF’s overlords. Additionally, as the FCL has some make believe acceptance criteria (and with countries such as Poland, Columbia, and Mexico having had access to it, these must certainly be sky high), the IMF is introducing a brand new credit facility, the Precautionary Credit Line (PCL), which will be geared for members with “sound policies [which just happen to need an unlimited source of rescue funding] who nevertheless may not meet the FCL’s high qualification requirements.” In other words everyone. In yet other words, the IMF as of today, has a limitless facility to bail out anyone in the world, without a maximum bound in how much is lendable. One wonders who would be stupid enough to take advantage of the gullibility of IMF’s biggest backers (the US), to borrow an infinite amount of money for any reason whatsoever… And just what all this means for the imminent explosion of the amount of money in circulation…Not to mention the brand new Ben Bernanke smokescreen of having a new justification to print a few trillion dollars when Europe unexpectedly collapses yet again.
In discussing the imminent need for its…
IMF Eliminates Borrowing Cap On Rescue Facility In Anticipation Of Europe Crisis 2.0; US Prepares To Print Fresh Trillions In “Rescue” Linen
by ilene - August 30th, 2010 11:28 pm
IMF Eliminates Borrowing Cap On Rescue Facility In Anticipation Of Europe Crisis 2.0; US Prepares To Print Fresh Trillions In "Rescue" Linen
Courtesy of Tyler Durden
Back in April, when we discussed the inception of the IMF’s then brand new New Arrangement to Borrow (NAB) $500 billion credit facility, we asked rhetorically, "If the IMF believes that over half a trillion in short-term funding is needed imminently, is all hell about to break loose." A month later the question was answered, as Greece lay smoldering in the ashes of insolvency, and the developed world was on the hook for almost a trillion bucks to make sure the tattered eurozone remained in one piece (leading to such grotesque abortions as Ireland, whose cost of debt is approaching 6%, funding Greek debt at 5%).
Well, if that was the proverbial canary in the coalmine, today the entire flock just keeled over and died: today the IMF announced it "expanded and enhanced its lending tools to help contain the occurrence of financial crises." As a result, the IMF has as of today extended the duration of its existing Flexible Credit Line (FCL) to two years, concurrently removing the borrowing cap on this facility, which previously stood at 1000 percent of a member’s IMF quota, in essence making the FCL a limitless credit facility, to be used to rescue whomever, at the sole discretion of the IMF’s overlords. Additionally, as the FCL has some make believe acceptance criteria (and with countries such as Poland, Columbia, and Mexico having had access to it, these must certainly be sky high), the IMF is introducing a brand new credit facility, the Precautionary Credit Line (PCL), which will be geared for members with "sound policies [which just happen to need an unlimited source of rescue funding] who nevertheless may not meet the FCL’s high qualification requirements." In other words everyone. In yet other words, the IMF as of today, has a limitless facility to bail out anyone in the world, without a maximum bound in how much is lendable. One wonders who would be stupid enough to take advantage of the gullibility of IMF’s biggest backers (the US), to borrow an infinite amount of money for any reason whatsoever… And just what all this means for the imminent explosion of the amount of money in circulation…Not to mention the brand new Ben Bernanke smokescreen of…
If Lehman Had “No Idea,” Who Else is Clueless?
by Zero Hedge - August 30th, 2010 10:21 pm
Courtesy of Phoenix Capital Research
Here’s a zinger of a news story:
Barclays Plc had no idea how big Lehman Brothers Holdings Inc.’s futures-and-options trading business was when it considered taking over the defunct bank’s derivatives trades at exchanges in 2008, a Barclays executive said.
“Lehman’s books were in such a mess that I don’t think they knew where they were,” Elizabeth James, a director of Barclays’s futures business, testified today in U.S. Bankruptcy Court in Manhattan. James worked on Barclays’s purchase of Lehman’s brokerage during the 2008 financial crisis.
I’ve railed for months that the central issue surrounding the Financial Crisis (derivatives) was not only misunderstood but completely ignored by the mainstream financial media. Here we are, nearly two years after Lehman Brothers went bust, and they’re telling us that Lehman had “no idea” what its options and futures exposure was.
Let’s put this into perspective.
The notional value of the derivatives market at the time that Lehman went bust was somewhere between $600 trillion and $1 Quadrillion (1,000 trillions). It was a market of inter-linked paper contracts entangling virtually every financial institution (including some non-financials), country (Greece, Italy used derivatives to get into the European union), and county (Birmingham Alabama is one example) in the world. As a market it was at least 20 times larger than the world stock market and somewhere north of 10 time World GDP.
In other words, this was the giant white elephant in the living room.
And here’s Lehman brothers, one of Wall Streets’ finest, most respected financial institutions which had been in business for over 150 years announcing that it had “no idea” “if it had sold $2 billion more options than it had bought, or whether it owned $4 billion more than it had sold.”
In today’s world of trillion dollar bailouts, $2-4 billion doesn’t sound like much, so let’s give some perspective here… in its golden days, Lehman Brother’s market cap was roughly $47 billion. So you’re talking about bets equal to an amount between five and 10% of its market cap. Not exactly chump change.
And Lehman had no idea where it was or how much it really owed.
Mind you, we’re only addressing…
Our Ever Shrinking Pension Payouts?
by Zero Hedge - August 30th, 2010 9:39 pm
Courtesy of Leo Kolivakis
Becky Barrow of the London Mail reports, Our ever shrinking pension payouts: The millions facing lowest returns on investments since records began:
Millions approaching retirement could be devastated by the worst pension payouts since records began.
Despite saving the same amount of money into their pensions, they face the dire prospect of getting about half the income they would have received 15 years ago, research reveals today.
It comes on top of the collapse in final salary pension schemes, with millions locked out of the best type of retirement provision.
Experts said employees who want to retire are facing a nightmare which no previous generation has had to cope with. The plunge in pension payouts is because annuity rates have nose-dived. Annuities offer a guaranteed monthly income to those who have saved into a pension pot.
But over the last month several major investment firms, such as Aegon, Aviva and Legal & General, have started to cut their annuity rates.
Their rivals are almost certain to follow and experts predict that rates will fall even lower over the coming months. Around 50,000 people a year buy an annuity, with up to £20billion of their hard-earned cash ploughed into the investment products.
The decision about which annuity to buy, when to buy it and which company to buy it from is one of the biggest financial decisions a person ever has to make.
Because it dictates how much money a pensioner will get every month for the rest of his or her life, it can mean the difference between enjoying a comfortable retirement, and a retirement surviving at the most basic level.
Today’s research, from the financial information firm Moneyfacts, looked at the annuity which a £10,000 pension pot can buy.
In 1995, a 65-year-old man buying an annuity would have received an average annual payout of £1,111. Today, a man of the same age with the same pension pot would get just £606 a year, a drop of 5 per cent which shows how rapidly annuity rates have plummeted.
Just 12 months ago, the same fund would have bought a pension of £647 a year.
The average
…
Bank of America Now Proudly Exporting HFT Market Death And Destruction To Asia
by Zero Hedge - August 30th, 2010 9:37 pm
Courtesy of Tyler Durden
Feel like it is time to spread the market annihilation love courtesy of “any minute now” HFT-induced flash crashes? Have no fear, Bank of America is here. “High-frequency trading in the US and Europe has grabbed most attention in the market, but similar activities are quietly taking off in Asia as well.” Thusly begins a pamphlet by BofA/ML’s Carrie Cheung which explains the tremendous “advantages” that HFTs offer to any local market. Not mentioned is that these advantages include drastic market destabilization, and that the “attention” is of the “get that thing the hell out of here” variety. At least we get to learn some very useful facts about the proliferation of the little bloodsucking algos in the Pacific rim such as…
- “high-frequency trading firms today account for about 20-25% of the TSE turnover – ZH translation: the TSE will crash only one third lower when the Flash Crash hits it”
- “the market microstructure changes introduced at the same time (i.e. new tick sizes) cut the average spread of Nikkei 225 stocks by 25%, making it much cheaper to trade – ZH tranlsation: in HFT jargon, trade is a synonym for stuff cancelable quotes and/or churn”,
- “The new platform allows for higher-frequency trading, where algorithms are used to make thousands of trades in milliseconds, thereby allowing firms to profit from tiny spreads and market imbalances.” – ZH translation: we make frontrunning fast and easy, or your Other People’s Money back;
- “Furthermore, the introduction of co-location services by Japanese exchanges, together with third-party proximity services, further enhances the platform for high-frequency trading firms in Japan.” – ZH translation: Cisco stands to make at least one or two cents in incremental EPS by letting the biggest market manipulators frontrun and scalp at the speed of light; judging by its latest results, it needs it;
- “It is estimated that high-frequency trading activity will account for 30-40% of liquidity by the end of 2010.” – ZH translation: the crash after the next, will be about half the amplitude of the May 6 crash;
- The Kospi Index Option is the world’s most heavily traded derivative. It is highly correlated with the US markets, has a low transaction cost and hence is heavily traded by retail investors. These elements make it an attractive market for a lot of foreign investors including the highfrequency
…
Why Do Heavy Drinkers Outlive Nondrinkers?
by ilene - August 30th, 2010 9:19 pm
Why Do Heavy Drinkers Outlive Nondrinkers?
By John Cloud, courtesy of TIME
One of the most contentious issues in the vast literature about alcohol consumption has been the consistent finding that those who don’t drink actually tend to die sooner than those who do. The standard Alcoholics Anonymous explanation for this finding is that many of those who show up as abstainers in such research are actually former hard-core drunks who had already incurred health problems associated with drinking.
But a new paper in the journal Alcoholism: Clinical and Experimental Research suggests that — for reasons that aren’t entirely clear — abstaining from alcohol does actually tend to increase one’s risk of dying even when you exclude former drinkers. The most shocking part? Abstainers’ mortality rates are higher than those of heavy drinkers.
Moderate drinking, which is defined as one to three drinks per day, is associated with the lowest mortality rates in alcohol studies. Moderate alcohol use (especially when the beverage of choice is red wine) is thought to improve heart health, circulation and sociability, which can be important because people who are isolated don’t have as many family members and friends who can notice and help treat health problems.
But why would abstaining from alcohol lead to a shorter life? It’s true that those who abstain from alcohol tend to be from lower socioeconomic classes, since drinking can be expensive. And people of lower socioeconomic status have more life stressors — job and child-care worries that might not only keep them from the bottle but also cause stress-related illnesses over long periods. (They also don’t get the stress-reducing benefits of a drink or two after work.)
But even after controlling for nearly all imaginable variables — socioeconomic status, level of physical activity, number of close friends, quality of social support and so on — the researchers (a six-member team led by psychologist Charles Holahan of the University of Texas at Austin) found that over a 20-year period, mortality rates were highest for those who had never been drinkers, second-highest for heavy drinkers and lowest for moderate drinkers.
The sample of those who were studied included individuals between ages 55 and 65 who had had any kind of outpatient care in the previous three years. The 1,824 participants were followed for 20 years. One drawback of the sample: a disproportionate number, 63%, were men. Just over…
STOCKS ARE CHEAP, BUT THIS METRIC DOESN’T WORK?
by ilene - August 30th, 2010 8:58 pm
STOCKS ARE CHEAP, BUT THIS METRIC DOESN’T WORK?
Courtesy of The Pragmatic Capitalist
I’ll be frank – I have a special place in my heart for the PE ratio and it is the same place where all the things I hate are stored. This simple to understand metric has, in my opinion, resulted in more misguided Wall Street thinking than just about any metric in existence. A quick glance at the breakdown of the PE ratio shows serious flaws at work here. It is basically a moving price target (which is never correct unless you still believe in EMH) divided by the earnings estimates that are created by analysts who have literally no idea where future earnings will be. In other words, you might as well pick random numbers out of a hat and divide them and then go buy or sell
What disgusts me even more about this metric is its incessant use in selling buy and hold strategies. You can’t read a book on value investing or buy and hold without running into the PE ratio. “The market is cheap – stocks for the long-run!” You’ve probably seen this slogan on every mutual fund pamphlet you’ve ever read. Your stock broker no doubt thinks the market is “cheap” right now. The PE ratio has become the sales pitch of an entire generation of sales people who are just herding small investors into fee based products. “Did you know Warren Buffet is a value investor?” “Just buy cheap stocks and hang on. Your status on the list of the world’s richest is in the making!” Or so goes the old sales pitch.
So, I wasn’t surprised to open Yahoo Finance this morning to see the following headline arguing that stocks are cheap according to the PE ratio. But just two articles down is an article from the WSJ arguing that the PE ratio doesn’t work in this environment. You can’t make this stuff up. According to the article:
“Not only is the P/E
…
Daily Market Commentary: Semiconductors Pile On The Pressure
by Chart School - August 30th, 2010 8:41 pm
Daily Market Commentary: Semiconductors Pile On The Pressure
Courtesy of Fallond Stock Picks
Selling in the semiconductor index dominated the day as any hope for a bull trap (and therefore an opportunity to prevent similar breakdowns in the Nasdaq and Nasdaq 100) rapidly turned to smoke. The semiconductor index is going to need at least a 14 point gain (4%+) to give bulls any chance of making a stand. Even then, the 20-day and 50-day MA are available to add supply to the market. Note the sharp drop in relative strength to Nasdaq 100 once the 200-day MA broke. The tentative bullish technical development in the CCI is likely to disappear on another day of selling.
via StockCharts.com
The S&P looks set to test modest bullish channel support.
via StockCharts.com
The Russell 2000 is likely to see a test of key support around 590.5 tomorrow. The outlook for this test is negative given the action in the semiconductors.
via StockCharts.com
Same for the Nasdaq and 2,098.
via StockCharts.com
Tomorrow may see some early morning downside before channel support kicks in. However, this support may be short-lived. The subsequent rally may only last a couple of days before a more protracted decline kicks in.
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the Favorites backup site
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