national security

The only way to keep the status quo from imploding is to banish common-sense.

While hardly as dramatic as ongoing revelations of Big NSA Brother probing every aspect of Americans' lives, overnight the WSJ reported that in addition to the complete loss of privacy - which should now be taken for granted - the CIA has been added to the list of entities that scrutinize every online interaction, and is "building a vast database of international money transfers, including Western Union, that includes millions of Americans' financial and personal data, officials familiar with the program say." The program will be (and is) carried out under the same provision of the Patriot Act that enables the National Security Agency to collect nearly all American phone records. In other words, instead of being upfront that all the CIA, and administration, care about is tracking large flows of money that may have "evaded" taxation, and is traditionally used by expats to send modest amounts of money back to their host countries, what the CIA is instead focusing on is whether mom and pop are using Western Union to deposit $500 in Al-Qaeda's account in Afghanistan.

Ben Lawsky, the New York financial services superintendent, has made it clear: he wants to regulate BitCoin now by issuing BitLicenses for business that conduct transactions in Bitcoin, and to that end he will conduct a public hearing to discuss the "burgeoning world of digital money." Participants will discuss the feasibility of a license that would make the virtual currency market more like those for other forms of money. In other words: it will make Bitcoin just like the fiat currency it is trying to replace, at least in the eyes of the government. At which point the primary utility of Bitcoin - as an unregulated medium of exchange- itself disappears.

• Yellen to defend Fed's ultra-easy monetary policy (Reuters)
• Japan growth slows on global weakness (WSJ)
• Eurozone third-quarter growth falters (FT)
• Fed Debates Its Low-Rate Peg (Hilsenrath)
• Yellen: Economy Still Needs Fed Aid (WSJ)
• ‘Obamacare’ launch fiasco rouses sceptics (FT)
• DoubleLine's Gundlach says U.S. equities 'only game in town' (Reuters)
• Indian Inflation Exceeding Estimates Adds Rate-Rise Pressure (BBG)
• HUD Said to Fail in Bid to Sell $450 Million of Mortgages (BBG)
• Boeing machinists reject labor deal on 777X by 67 percent (Reuters)

Anyone who says that he or she is prepared to “do whatever it takes”, whether it’s Mario Draghi and Angela Merkel talking about support of the euro, Ben Bernanke talking about preventing deflation, George W. Bush talking about pursuit of terrorism, or Barack Obama talking about growing the economy … is making a preventive war argument just like Curtis LeMay. Not a preventive war against a particular nation, but a preventive war against some conceptual social ill. Of course, you can’t defeat a conceptual social ill like you can defeat a nation. You can’t accept the surrender of General Deflation. These social ills will always be with us in one form or another, which means that a preventive war in the modern context is a permanent and constant war. It may not seem like we are on a war footing when it comes to NSA eavesdropping or QE, because the trappings of war … mobilizations, set battles, etc. … may not be present. But the language associated with a war footing is definitely present, and this is what creates the social space that allows these policies to exist and thrive. I am struck almost every day by how the language of extremism and war pervades our domestic political and social institutions, on both the left and the right.

If Anything Goes Wrong,  the Whole World Could Be Affected For a Long Time

Many will answer "yes" to the five questions - and that has profound implications on what kind of country the US will become for the next generation...

In a mirror image of the NSA's wanton invasion of privacy - whether 'enabled' by privacy policy 'small print' or not - NYTimes Charlie Savage claims that the CIA pays the US' 2nd largest telecom company, AT&T, $10 million a year in exchange for voluntarily handing over troves of phone logs. This has been going on since at least 2010 and while the CIA is forbidden from "acquiring information concerning the domestic activities of US persons," AT&T has indeed been handing over information pertaining to American citizens.

• Twitter's IPO to Make Market Debut (WSJ); Twitter Raises $1.82 Billion, Pricier Value Than Facebook (BBG)
• Worried Senators Press Obama on Health Law (WSJ)
• Greenspan Says Yellen Was His Guide to Economics Research at Fed (BBG)
• European Central Bank seen holding rates despite inflation tumble (Reuters)
• Wall St. Bonuses Over All Are Predicted to Rise 5 to 10% (NYT)
• Cautious consumers seen curbing U.S. economic growth (Reuters)
• China Grants U.S. Investors Indirect Access to Its Stock Markets (WSJ)
• Higher Tax Rates Give Top U.S. Earners Year-End Headaches (BBG)
• Iran Loses Nuclear Leverage as World Ignores Export Drop (BBG)
• NYPD Commissioner Ray Kelly in the running for JPMorgan job (Post)

Chinese officials are worried. Not about inflation... not about growth... not even about pollution per se... but security. As the South China Morning Post reports, government officials are raising concerns about the function of its vast network of surveillance cameras because of the thick smog blocking visibility for some of them. In a truly central-planned world, there is nothing more dangerous that not being able to keep an eye on the population and officials fear that threat of terrorism could be heightened on smoggy days. Improving air quality in China has been often discussed but a new military team is looking for a solution (as security trumps health it would appear) - harsher punishments on polluters are needed to help improve air quality in China, a senior Chinese official said here on Tuesday.

• China premier warns against loose money policies (Reuters)
• Brussels forecasts tepid Eurozone growth (FT)
• SAC Case Began With Informant’s Tips on Cohen, Rajaratnam (BBG)
• Dirty Munich Home’s Nazi Loot Estimated at $1.35 Billion (BBG)
• Mortar hits Vatican embassy in Damascus, no casualties (Reuters)
• India Launches Mars Mission (WSJ)
• Lael Brainard to leave Treasury, heading to Fed (FT)
• U.S. Takes Aim at 'Forced' Insurance (WSJ)
• Wife of Jeff Bezos attacks book about Amazon (FT)
• Fall of Brazil’s Batista embarrasses President Dilma Rousseff (FT)
• The One Thing People Still Really Like About BlackBerry (BusinessWeek)

The US and the National Security Agency may well have just dug their own grave where the internet is concerned. 

The financial markets continue higher, and the excesses of the status quo continue expanding with little ill effect (so far). Why is it so difficult to predict the timing of crisis/collapse? The question is equally valid for both bears and bulls; how could all the boosters of housing be so wrong in 2008 when they asserted that "housing is not a bubble"? Here are ten possible factors in why it's so difficult to predict crisis/reset.

President Obama, the US federal government shutdown, the omnipotence of the National Security Agency and the anger of the world at just how much the USA flouts the laws that we thought we might have lived by. 

Google Executive Chairman Eric Schmidt is the latest to admit he is shocked, shocked, to learn there was spying going on in here. In an interview with the WSJ  "bristled" at the recent report that the U.S. government has spied on the company's data centers, describing such an act as "outrageous" and potentially illegal if proven. Then again, since the NSA's domestic espionage is effectively unchecked expect by a secret FISA court which approves virtually every spying request, the legality of the NSA's activity has little relevance but merely confirms what Snowden wrote in his "manifesto", in which he correctely noted that he has opened a long overdue debate over the meaning of civil liberties and lack thereof in the age of the authoritarian superspying big brother state.