national security

And so the final curtain falls on the myth of what was supposed to be, in its own words, the "most transparent administration" in history. As it turns out, the big Friday story of Bloomberg journalists snooping on clients was just amateur hour compared to what the AP was about to serve. In fact, the Watergate affair may soon appear like a walk in the park compared to the First Amendment shitstorm that is about to be unleashed following the just reported news that the US Department of Justice had "secretly obtained two months of telephone records of reporters and editors for The Associated Press in what the news cooperative's top executive called a "massive and unprecedented intrusion" into how news organizations gather the news." First amendment? Freedom of speech and press? Surely not when it comes to the Nobel-peace prize winning President and those who dare to expose his secret ways. And what's worst, is that the AP breach has all the makings of a spiteful hack driven by personal vengeance against one of America's premier news outlets.

The Obama administration has come out in support of the idea of exporting U.S. natural gas. This stance is counterproductive and shortsighted, and if followed, it will prove harmful to domestic manufacturing (i.e., value generation) and to future generations of Americans. While exporting natural gas would certainly prove to be an economic boon for a very select minority of companies and individuals, it makes no sense from an energy standpoint and undermines our national interests. All it will do is enrich a few while boosting prices for all domestic consumers and shortchanging the energy and environmental inheritance we pass along to our children. The time has come to give greater weighting to energy matters than to economic and political desires. To continue to be energetically wasteful at this time in history, when so much data is telling us that the effluent of our activities is measurably altering our support systems, is beyond embarrassing.  It's tragic.

What REALLY Happened?

With equity valuations no longer levitating but in a different, 4th dimension altogether, and credit spreads compressing dramatically (and unreasonably)... It is in situations like these, when the crash comes, that the proverbial run for liquidity forces central banks to coordinate liquidity injections. However, something tells me that this time, the trick won’t work. Over almost a century, we have witnessed the slow and progressive destruction of the best global mechanism available to cooperate in the creation and allocation of resources. This process began with the loss of the ability to address flow imbalances (i.e. savings, trade). After the World Wars, it became clear that we had also lost the ability to address stock imbalances, and by 1971 we ensured that any price flexibility left to reset the system in the face of an adjustment would be wiped out too. From this moment, adjustments can only make way through a growing series of global systemic risk events with increasingly relevant consequences. Swaps, as a tool, will no longer be able to face the upcoming challenges. When this fact finally sets in, governments will be forced to resort directly to basic asset confiscation.

The economy has changed in structural ways; preparing for the old economy is a sure path to disappointment. Millions of young people will be graduating from college over the next four years, and unfortunately, they will be entering an economy that has changed in structural ways for the worse. It's easy to blame politics or the Baby Boomers (that's like shooting fish in a barrel), but the dynamics are deeper than policy or one generation's foolish belief in endless good times and rising housing prices.

The Government – Which Has Taken Away Our Liberties and Destroyed Our Prosperity to Fight An Endless War On Terror – Has Been Arming, Funding and Otherwise Backing the Very Terrorists Who Are Carrying Out Most of the Attacks

On the surface, the Status Quo appears stable, if not quite healthy. This stability is illusory, however, for the Status Quo has a fatal disease: diminishing return. The basic idea of diminishing return is closely related to marginal utility and marginal return: the more capital, energy and labor committed to a project, the lower the return/yield/output. The input needed to keep the Status Quo stable must be taken from other potentially more productive investments. Taxes notch higher as the state scoops ever greater sums into its maw to fund its failing fiefdoms and diminishing-return cartels, and it borrows trillions of dollars to fill the gap between tax revenues and ever-rising input costs. All that borrowed money has a cost, too, of course--interest. The costs of maintaining a sclerotic, cartel-state Status Quo infected with incurable diminishing returns eventually exceed the carrying capacity of the real economy and the Status Quo collapses in a heap.

Terrorism Is a Real Threat … But the Threat to the U.S. from Muslim Terrorists Has Been Exaggerated

Think the revolving door for Morgan Stanley's diaspora of clutch interests goes only from the private sector outward, with the recent appointment of MS' darling Mary Jo White (who will promptly recuse herself in virtually all major cases involved her former clients at Debevoise for years to come) to head the SEC? Think again. Moments ago, Reuters reported that according to a memo sent internally today, Morgan Stanley has hired Michele Davis, "a public relations official and policy director who helped shape the Treasury Department's strategy during the financial crisis, to become global head of corporate affairs, according to a bank memo sent on Monday."

The controversial cybersecurity bill, known, ever so gently as, the Cyber Information Sharing and Protection Act (CISPA) - since it's for your own good - that passed the House last week looks set to be shelved in the Senate according to representatives. The bill would have allowed the federal government to share classified "cyber threat" information with companies, but it also provided provisions that would have allowed companies to share information about specific users with the government. Privacy advocates also worried, rightly so given previous experience, that the National Security Administration would have gotten involved. As US News reports, Sen. Jay Rockefeller, D-W.V., chairman of the committee, said the passage of CISPA was "important," but said the bill's "privacy protections are insufficient." One of CISPA's staunchest opponents, the ACLU, added, "CISPA is too controversial, it's too expansive, it's just not the same sort of program contemplated by the Senate last year." While this is a short-term victory for everyone who uses the web, the ACLU warns, "we need to be vigilant as the year moves on to make sure that whatever the next product is, it's not CISPA- lite."

No, We Shouldn't Kill Everyone from a Particular Religion

Cyberspace matters. We know this because governments and militaries around the world are scrambling to control the digital space even as they slash defense spending in other areas, rapidly building up cyber forces with which to defend their own virtual territories and attack those of their rivals. But we do not yet know how much cyberspace matters, at least in security terms. Is it merely warfare’s new periphery, the theatre for a 21st century Cold War that will be waged unseen, and with practically no real-world consequences? Or is it emerging as the most important battle-space of the information age, the critical domain in which future wars will be won and lost? China and the U.S. have both said that they would like to see a rules-based cyberspace, but they do not see eye to eye on how those rules should be established. A costly and potentially dangerous Cyber Cold War awaits if they cannot do better, and agree on some rules of engagement for their rapidly expanding online forces.

Fresh from his humiliating defeat in the Senate to promote his pacifist gun-control agenda yesterday, in the name of the "90%" of course (who apparently need to pick their senatorial representative just a little more effectively), the Nobel Peace Prize winner has decided that guns just may be the right answer when it comes to promoting peace, or least his agenda abroad. WaPo reports that  the Obama administration has ordered additional U.S. troops to Jordan for possible chemical weapons control, humanitarian response or “stability operations” in Syria. "The new troops, a headquarters element of the 1st Armored Division based at Fort Bliss, Tex., will not greatly increase the number of U.S. forces in Jordan. About 150 troops were sent last year to help train Jordanian military and Syrian opposition forces. Some of those troops will remain, and the new arrivals will increase the total to more than 200."

While We’re Waiting to Learn Who the Boston Terrorists Were … Let’s Review How Stupid Our Anti-Terrorism Policies Have Been

Back in 2012, amid "intense pressure from Obama" including an appeal for its passage in his 2012 State of the Union address, Congress passed the Stop Trading on Congressional Knowledge (STOCK) Act (with 96-3 theatrical votes in the Senate, and 417-2 even more theatrical votes in the House) - a bill prohibiting the use of non-public information for private profit, including insider trading by members of Congress and other government employees. It is unclear why until 2012 it was perfectly legal for congress to trade on inside information, something we pointed out in May 2011 when we wrote that a "A Hedge Fund Comprised Of Junior Congressional Democrats Should Outperform The Market By 9%" as it turned out flagrant insider trading abuse occurred mostly within the democrat ranks of the House (compared to a mere 2%+ outperformance by Congressional stock trading republicans). It turns out that any cynical skepticism regarding Congress' ability and willingness to police itself was well founded, as last night the House eliminated a "key requirement of the insider trading law for most federal employees, passing legislation exempting these workers, including congressional staff, from a rule scheduled to take effect next week that mandated online posting of financial transactions."