XIAM007

Making Unique Observations in a Very Cluttered World

Friday 31 January 2014

Summing Up Ben Bernanke's Reign In 4 Numbers -

Summing Up Ben Bernanke's Reign In 4 Numbers - 



First of all, a very Happy New Year to our many Chinese readers.

According to the ancient Zodiac, today we are shedding the coils of the year of the Snake in favor of the Horse.

Given this symbology, it is perhaps a very small irony that today is also the final day in office for Ben Bernanke, chairman of the US Federal Reserve. Let’s review the statistics:

1) When Mr. Bernanke took office in 2006, the Fed had $834.6 billion in assets, the vast majority of which were US Treasuries.

As of Wednesday, Mr. Bernanke’s Fed now counts $4.1 trillion in assets. And the balance sheet is stuffed full of mortgage debt ‘guaranteed’ by insolvent government agencies.

2) When Mr. Bernanke took office, the Fed’s capital ratio (net equity divided by total assets) was 3.22%.

This capital ratio is a hugely important number in banking that represents a sort of ‘margin of safety’. In a severe crisis situation, banks with a higher capital ratio are able to withstand major financial shocks.

Candidly, 3.22% is not high; this means that the Fed would effectively be rendered insolvent if its assets lost more than 3.22% of their value. So the Fed that Mr. Bernanke inherited was not exceptionally healthy.

But today, Mr. Bernanke leaves office with the balance sheet in far worse condition. The Fed’s capital ratio is just 1.34%. And it’s deteriorating rapidly.

Three years ago, the Fed’s capital ratio was 2.17%. A year ago it was 1.82%. Six months ago it was 1.54%. And now today just 1.34%. It doesn’t take a rocket scientist (or a PhD in economics) to see how quickly this is unraveling.

The Fed now has a razor thin margin of safety to guarantee a bloated balance sheet crammed full of questionable assets. This is not exactly the height of responsible stewardship.

Has it helped? I suppose that depends on whom you ask.

3) When Mr. Bernanke took office, the Dow Jones Industrial Average stood at 10,954, and the US government could borrow money for ten years at 4.57%.

Today the Dow is at 15,569, and the 10-year note is 2.65%.

So this has been a pretty good run for folks who have thrown money in the stock market or have heavily indebted themselves.

Yet over 50% of Americans don’t own a single share of stocks. And as of 2010, 10% of Americans own 81% of all stocks.

Then there’s the Federal government, which has been able to pass off trillions of dollars of debt to a willing central banker, as well as generate tax revenue from all the stock investors’ capital gains.

4) Most folks, however, have seen a different side of the Fed’s expansion. The FAO food price index, for example, has increased from 122 to 207, and the labor force participation rate declined to its lowest level in decades under Mr. Bernake’s tenure.

It’s fairly clear if you look at the data objectively that Mr. Bernanke’s policies have left the Fed (and consequently the global financial system) in far more precarious condition than when he started, yet disproportionately benefited the US government and small percentage of society at the expense of everyone else.

This is not to say that Mr. Bernanke is some evil mastermind bent on nefarious ends.

When I listened to him explain his decision-making process at a dinner in Washington a few months ago, it became clear that he is very well intentioned and honestly believes that his policies help.

Unfortunately the road to ruin is almost always paved with good intentions.

Read more - 
http://www.zerohedge.com/news/2014-01-31/summing-ben-bernankes-reign-4-numbers

Phone app sets up sex partners during plane rides... -

Phone app sets up sex partners during plane rides... - 



The New York Times might say landing strips are out of sexual style, but this new app promises to keep users scoring in the sky, on the airport runway and beyond.
“Wingman” purports to be “an app that connects you with attractive people on your flight, all before you touch down,” its website asserts.
Translation: as long as there’s WiFi, the app will help you find fellow hornballs and bang in the bathroom. We’re not so convinced the “attractive” part will come to fruition, but as our grandma says, there’s a lid for every pot.
Wingman’s collective of developers, known as Miscellaneous Mischief, told Betabeat the app’s interface “will be simple: individuals will be matched according to their flight number and airline.”
They’re working on an iOS version, but will also have a browser version ready, too. Users can indicate whether they’re flying for business, pleasure or both, and reveal their seat number and final destination if they so choose.
“The idea is to start interesting conversations in unique situations, and simply see what happens,” a spokesperson said.
The app’s beta version is launching in two to three months. In the meantime, the developers are collecting email addresses on Wingman’s website for beta testers. Enter yours to be among the privileged few who get to try the app before it launches, you lech, and get turned on quicker than the “fasten seatbelt” sign.
Or you could just use Tinder on your flight. Whatever works.

Read more - 
http://betabeat.com/2014/01/wingman-app-will-get-you-sex-on-a-plane/

Snowden Docs - Canadians used as Guinea Pigs for NSA Snooping -

Snowden Docs - Canadians used as Guinea Pigs for NSA Snooping - 



A top secret document retrieved by U.S. whistleblower Edward Snowden and obtained by CBC News shows that Canada's electronic spy agency used information from the free internet service at a major Canadian airport to track the wireless devices of thousands of ordinary airline passengers for days after they left the terminal.

After reviewing the document, one of Canada's foremost authorities on cyber-security says the clandestine operation by the Communications Security Establishment Canada (CSEC) was almost certainly illegal.

Read the doc: CSEC's airport Wi-Fi tracking (redacted PDF)
http://www.cbc.ca/news2/pdf/airports_redacted.pdf

Ronald Deibert told CBC News: "I can't see any circumstance in which this would not be unlawful, under current Canadian law, under our Charter, under CSEC's mandates."

The spy agency is supposed to be collecting primarily foreign intelligence by intercepting overseas phone and internet traffic, and is prohibited by law from targeting Canadians or anyone in Canada without a judicial warrant.

As CSEC chief John Forster recently stated: "I can tell you that we do not target Canadians at home or abroad in our foreign intelligence activities, nor do we target anyone in Canada.

"In fact, it's prohibited by law. Protecting the privacy of Canadians is our most important principle."

But security experts who have been apprised of the document point out the airline passengers in a Canadian airport were clearly in Canada.

CSEC said in a written statement to CBC News that it is "mandated to collect foreign signals intelligence to protect Canada and Canadians. And in order to fulfill that key foreign intelligence role for the country, CSEC is legally authorized to collect and analyze metadata."

Metadata reveals a trove of information including, for example, the location and telephone numbers of all calls a person makes and receives — but not the content of the call, which would legally be considered a private communication and cannot be intercepted without a warrant.

"No Canadian communications were (or are) targeted, collected or used," the agency says.

In the case of the airport tracking operation, the metadata apparently identified travelers' wireless devices, but not the content of calls made or emails sent from them.

Read more - 
http://www.cbc.ca/news/politics/csec-used-airport-wi-fi-to-track-canadian-travellers-edward-snowden-documents-1.2517881

Equity Funds Have Largest Weekly Outflow In Over Two Years -

Equity Funds Have Largest Weekly Outflow In Over Two Years - 



There is one major problem when the entire market is a rigged casino (by both the Fed and HFTs), favoring degenerate gamblers over traditional investors: at the first whiff of trouble everyone bails. Or as BofA politely puts it, "Typically flows follow returns and this week was no exception." In the past week, trouble whiffed, and the degenerate gamblers, loaded up to the gills with record margin debt hightailed it out of the casino, leading to the largest weekly equity fund outflow in over two years! Add some record leverage to the equity withdrawal, continued EM turbulence, ongoing Japanese deflation exports, oh and of course the ongoing Fed taper which has been solely responsible for all S&P gains since 666, and suddenly you have all the ingredients for a broad market crash.

More from BofA:

"... equity, high yield and EM bond funds all reported large outflows last week after the sharp selloff in risk assets driven by weakness in EM. At the same time munis – the asset class that benefits most from the rally in rates – had the first significant inflow (+$0.46bn) since May. The $12.02bn equity fund outflow was the largest weekly outflow in over two years. EM funds also saw a sizable $2.65bn outflow, driven by local currency funds – the largest since June. This outflow also reversed the slowdown in EM redemptions that we saw during the first three weeks of the year."




Read more - 
http://www.zerohedge.com/news/2014-01-31/equity-funds-have-largest-weekly-outflow-over-two-years

Genetically modified monkeys created with cut-and-paste DNA -

Genetically modified monkeys created with cut-and-paste DNA - 



Researchers have created genetically modified monkeys with a revolutionary new procedure that enables scientists to cut and paste DNA in living organisms.

The macaques are the first primates to have their genetic makeup altered with the powerful technology which many scientists believe will lead to a new era of genetic medicine.

The feat was applauded by some researchers who said it would help them to recreate devastating human diseases in monkeys, such as Alzheimer's and Parkinson's. The ability to alter DNA with such precision is already being investigated as a way to make people resistant to HIV.

But the breakthrough is controversial, with groups opposed to animal testing warning that it could drive a rise in the use of monkeys in research. One critic said that genetic engineering gave researchers "almost limitless power to create sick animals".

The work was carried out in a lab in China, where scientists said they had used a genome editing procedure, called Crispr/Cas9, to manipulate two genes in fertilised monkey eggs before transferring them to surrogate mothers.

Writing in the journal, Cell, the team from Nanjing Medical University reported the delivery of twin female long-tailed macaques, called Ningning and Mingming. Five surrogates miscarried and four more pregnancies are ongoing.

The Crispr procedure has been welcomed by geneticists in labs around the world because of its enormous potential. Unlike standard gene therapy, Crispr allows scientists to remove faulty genes from cells, or replace them with healthy ones. It can even correct single letter spelling mistakes in the DNA code.

The Chinese team, led by Jiahao Sha, said their work demonstrates how Crispr could be used to create monkeys that carry genetic faults that lead to diseases in humans. But the same could be done to small pieces of human organs grown in the lab, and used to test drugs, or to monitor the progress of serious diseases.

Nelson Freimer, director of the centre for neurobehavioural genetics at the University of California in Los Angeles, said that while researchers often use mice to study human diseases, brain disorders are particularly hard to recreate in the animals because their brains are so different.

"People have been looking for primate models for a whole list of diseases, but in the past it's been either completely unfeasible, or incredibly expensive. This is saying we can do this relatively inexpensively and quickly, and that is a major advance," said Freimer.

But Freimer added that the use of monkeys was likely to remain a last resort. "It's going to be really critical to define the problems for which this is used, just as you always do with animal research. You want to use all the alternatives before you propose animal research. This will be reserved for terrible diseases for which it offers hope that cannot be gotten any other way," he said.

Tipu Aziz, who has used primates in his work on Parkinson's disease at Oxford University, welcomed the new procedure. "If we can identify genes for neurological disorders in a clinical setting and transpose those into a monkey it would be of massive benefit. I don't know that it'll lead to a rise in the use of monkeys, but it will lead to more focused studies," he said.

Read more -
http://www.theguardian.com/science/2014/jan/30/genetically-modified-monkeys-cut-and-paste-dna-alzheimers-parkinsons