STOCK MARKET WATCH -- Monday, 23 December 2013

[Tansy_Gold]

[font size=3]STOCK MARKET WATCH, Monday, 23 December 2013[font color=black][/font]

SMW for 20 December 2013

AT THE CLOSING BELL ON 20 December 2013
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Dow Jones 16,221.14 +42.06 (0.26%)
S&P 500 1,818.32 +8.72 (0.48%)
Nasdaq 4,104.74 +46.61 (1.15%)


[font color=green]10 Year 2.88% -0.06 (-2.04%)
30 Year 3.82% -0.07 (-1.80%) [font color=black]


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[font size=2]Market Conditions During Trading Hours[/font]
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[font size=2]Euro, Yen, Loonie, Silver and Gold[center]

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[font color=black][font size=2]Handy Links - Market Data and News:[/font][/font]
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Economic Calendar
Marketwatch Data
Bloomberg Economic News
Yahoo Finance
Google Finance
Bank Tracker
Credit Union Tracker
Daily Job Cuts
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[font color=black][font size=2]Handy Links - Economic Blogs:[/font][/font]
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The Big Picture
Financial Sense
Calculated Risk
Naked Capitalism
Credit Writedowns
Brad DeLong
Bonddad
Atrios
goldmansachs666
The Stand-Up Economist
The Automatic Earth
Wall Street on Parade
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[font color=black][font size=2]Handy Links - Essential Reading:[/font][/font]
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Matt Taibi: Secret and Lies of the Bailout


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[font color=black][font size=2]Handy Links - Government Issues:[/font][/font]
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LegitGov
Open Government
Earmark Database
USA spending.gov
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[font color=black][font size=2]Handy Links - Videos:[/font][/font]
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Charlie Rose talks with Roubini
Charlie Rose talks with Krugman
William Black: This Economic Disaster
Bill Moyers with Kevin Drum and David Corn
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[font color=red]Partial List of Financial Sector Officials Convicted since 1/20/09 [/font][font color=red]
2/2/12 David Higgs and Salmaan Siddiqui, Credit Suisse, plead guilty to conspiracy involving valuation of MBS
3/6/12 Allen Stanford, former Caribbean billionaire and general schmuck, convicted on 13 of 14 counts in $2.2B Ponzi scheme, faces 20+ years in prison
6/4/12 Matthew Kluger, lawyer, sentenced to 12 years in prison, along with co-conspirator stock trader Garrett Bauer (9 years) and co-conspirator Kenneth Robinson (not yet sentenced) for 17 year insider trading scheme.
6/14/12 Allen Stanford sentenced to 110 years without parole.
6/15/12 Rajat Gupta, former Goldman Sachs director, found guilty of insider trading. Could face a decade in prison when sentenced later this year.
6/22/12 Timothy S. Durham, 49, former CEO of Fair Financial Company, convicted of one count conspiracy to commit wire and securities fraud, 10 counts of wire fraud, and one count of securities fraud.
6/22/12 James F. Cochran, 56, former chairman of the board of Fair, convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud, and six counts of wire fraud.
6/22/12 Rick D. Snow, 48, former CFO of Fair, convicted of one count of conspiracy to commit wire and securities fraud, one count of securities fraud, and three counts of wire fraud.
7/13/12 Russell Wassendorf Sr., CEO of collapsed brokerage firm Peregrine Financial Group Inc. arrested and charged with lying to regulators after admitting to authorities he embezzled "millions of dollars" and forged bank statements for "nearly twenty years."
8/22/12 Doug Whitman, Whitman Capital LLC hedge fund founder, convicted of insider trading following a trial in which he spent more than two days on the stand telling jurors he was innocent
10/26/12 UPDATE: Former Goldman Sachs director Rajat Gupta sentenced to two years in federal prison. He will, of course, appeal. . .
11/20/12 Hedge fund manager Matthew Martoma charged with insider trading at SAC Capital Advisors, and prosecutors are looking at Martoma's boss, Steven Cohen, for possible involvement.
02/14/13 Gilbert Lopez, former chief accounting officer of Stanford Financial Group, and former controller Mark Kuhrt sentenced to 20 yrs in prison for their roles in Allen Sanford's $7.2 billion Ponzi scheme.
03/29/13 Michael Sternberg, portfolio mgr at SAC Capital, arrested in NYC, charged with conspiracy and securities fraud. Pled not guilty and freed on $3m bail.
04/04/13 Matthew Marshall Taylor,fmr Goldman Sachs trader arrested, charged by CFTC w/defrauding his employer on $8BN futures bet "by intentionally concealing the true huge size, as well as the risk and potential profits or losses associated."
04/04/13 Matthew Taylor admits guilt, makes plea bargain. Sentencing set for 26 June; faces up to 20 years in prison but will likely only see 3-4 years. Says, "I am truly sorry."
04/11/13 Ex-KPMG LLP partner Scott London charged by federal prosecutors w/passing inside tips to a friend in exchange for cash, jewelry, and concert tickets; expected to plead guilty in May.
08/01/13 Fabrice Tourré convicted on six counts of security fraud, including "aiding and abetting" his former employer, Goldman Sachs
08/14/13 Javier Martin-Artajo and Julien Grout charged with wire fraud, falsifying records, and conspiracy in connection with JP Morgan's "London Whale" trade.
08/19/13 Phillip A. Falcone, manager of hedge fund Harbinger Capital Partners, agrees to admit to "wrongdoing" in market manipulation. Will banned from securities industry for 5 years and pay $18MM in disgorgement and fines.
09/16/13 Javier Martin-Artajo and Julien Grout officially indicted on charges associated with "London Whale" trade.








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[font size=3][font color=red]This thread contains opinions and observations. Individuals may post their experiences, inferences and opinions on this thread. However, it should not be construed as advice. It is unethical (and probably illegal) for financial recommendations to be given here.[/font][/font][/font color=red][font color=black]

[Demeter]

1. Who is the libertarian geek? Anyone in particular?

Looks like Bill Clinton.

[Warpy]

2. It could be just as easily him

but I think it's supposed to be Rand Paul.

However, plug in any economic conservative. They all fit.

[Tansy_Gold]

3. The cartoonist

is Joel Pett, of the Lexington (KY) Herald-Leader.

It's Rand Paul.

[Demeter]

4. Five Years After Lehman's: Did We Learn Anything? By L. Randall Wray - EconoMonitor

http://www.economonitor.com/lrwray/2013/09/18/five-years-after-lehmans-did-we-learn-anything/

..............

1. The crisis exposed the dangerous and lawless culture prevailing at the world’s biggest financial institutions. We now know, beyond any doubt, that it was fraud from bottom to top. For example, every single step in the mortgage backed securities business was fraudulent. The mortgage originations were fraudulent—with the originators lying to borrowers about the terms, and then crudely doctoring the paperwork to make the terms even worse after borrowers had signed. The property appraisers falsified the home values. The investment banks misrepresented the quality of the mortgages as they were securitized. The trustees lied to the buyers of the securities about possession of the proper paperwork. At the urging of the industry’s creation, MERS, the banks lost or destroyed the property records, making it impossible for anyone to know who owns what and who owns whom. The mortgage servicers “lost” payments and illegally foreclosed using documents forged by “robo-signers”, wrongly evicting even homeowners who owed no mortgage. Now those homes are being sold in huge blocks to hedge funds at cents on the dollar so that they can be rented back to the former owners now living on the streets. It is not too much to say that foreclosure and dispossession was the desired result of what President Bush had called the “ownership society”: move all wealth to the top 1%. I’ve just given one example—you will find a similar level of criminality in every line of business undertaken by the biggest banks, from manipulating bond markets to setting LIBOR rates, from manipulating commodities prices to front-running stocks and trading on insider information.

2. The crisis demonstrated that real reform can only be undertaken in the depths of a crisis. Once Wall Street had been rescued behind closed doors by the US Fed and Treasury (it took $29 trillion!), there was no hope of reform. The biggest institutions just got bigger. They are back to doing the same things they were doing in 2007. Even the very weak Dodd-Frank reforms will never be implemented—Wall Street put together armies to delay, water-down, and eventually prevent implementation of any changes that would constrain the financial practices that caused the crisis. Franklin Roosevelt did it the right way in the 1930s: declare a banking “holiday”, demand resignations from all top management, and refuse to allow banks to open until they had a plan that would lead to solvency. Almost all the New Deal financial sector reforms were enacted in the heat of the crisis. The important lesson that should have been learned: in the next crisis, we cannot let the Fed and Treasury meet behind closed doors to rescue the “vampire squids” that are destroying the economy. We must drive the stake through their hearts when they are weakest.

3. The crisis brought into public view the longer term trend toward “financialization” of the entire economy. The FIRE sector gets 40% of corporate profits and 20% of value added. That is, quite simply, crazy. Everything has become financialized—from college education (student loans are a trillion dollars) to homes, healthcare (Obamacare makes this worse), and even death (so-called death settlements and peasant insurance in which employers bet that workers will die early). Wall Street has financialized energy and even crops. It has turned worker’s pensions against them, by using their own retirement funds to bid up the price of gasoline at the pump and bread at the grocery store. Just wait until they use pension funds to drive up the price of water at the meter!

MORE

[Demeter]

5. Obama Exempts “If You Like It You Can Keep It” Cancelees from the Individual Mandate

http://www.nakedcapitalism.com/2013/12/obama-exempts-like-can-keep-cancelees-individual-mandate.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29



In a six-part series on “ObamaCare’s relentless creation of second-class citizens,” I showed how people seeking health care through ObamaCare’s exchanges get randomly varying access to care because of age, geography (state and county), income, employment status, banking status, internet access, existing insurance status, language, demographics, and by CMS marketing category (1, 2, 3, 4, 5, and 6. In addition, people “on the bubble” for income eligibility are incentivized to corrupt the system by gaming it.) These variations are in great contrast, both morally and economically, to single payer’s “everybody in, nobody out” model. None of these variations are in any way fair, or encourage equal access to health care, which Obama seemingly concedes is a right; they exist solely because of Obama’s determination to preserve the private insurance industry’s actuarial model, even though the private insurance industry is a wholly parasitical, rent extracting tapeworm on the body politic. All this would be true even the supposedly tech savvy Obama political operation had not turned healthcare.gov into the debacle it has been.

Be that as it may, the administration has now added yet another whimsical and arbitrary misfeature to Obama’s “signature domestic initiative.” David Lauter of the LA Times explains why some people who were going to Pain City are now going to Happyville!

Under the new policy, people who have received notices that their health plans are being canceled would qualify for hardship exemptions allowed by the law. Under those exemptions, they could buy low-cost catastrophic health plans or skip buying health coverage altogether.

It’s worth noting that the rule change was not motivated by public policy, but — and I know this will come as a surprise to you — purely by political considerations.

The new policy stems from one of the biggest political problems Obama has faced with the troubled rollout of the healthcare law — his promise that the people who liked their existing health plans could keep them. When several million people nationwide began receiving notices that their plans would be canceled because the plans fell short of the new law’s requirements, Obama suffered a sharp drop in public trust.

Democrats in Congress, especially senators facing tough reelection challenges next year, were bitterly upset at the predicament in which Obama’s words had placed them. They have pressured the administration to respond to angry constituents.

Why is this important? (Consumer Reports, disgracefully, simply uses the story as click bait for its eligibility calculator.) Because the key feature of ObamaCare is “the marketplace” (the exchanges) and the individual mandate that forces people to buy products from that market, in order to guarantee the health insurance industry customers for the foreseeable future. But this new hardship exemption blows a hole in the mandate. Reuters:

In the law, there are 14 categories of “hardships” that can be used to get an exemption from the mandate to buy insurance, such as a recent eviction or bankruptcy. But this is the first exemption prompted by the administration’s botched rollout of the law, and comes after months of insistence that there would be no delays in implementing the individual mandate.

No delays except for everybody and his brother who already got a delay, like employers, small businesses, health insurance companies, name it. Everybody but you. Until now! Again, needless to say, this delay is has no coherent basis whatever in ethics or policy. Even Ezra Klein is aghast:

A 45-year-old whose plan just got canceled can now purchase catastrophic coverage. A 45-year-old who didn’t have insurance at all can’t. Why don’t people who couldn’t afford a plan in the first place deserve the same kind of help as people whose plans were canceled?

Why, it’s almost like people who might cause Democrats electoral problems are a protected category, isn’t it? If lack of coverage for enough people like you makes Obama look bad, you’ve got a hardship. You’re a winner, and you get a ticket to Happyville! See how simple Federal rule-making can really be? Here’s how the exemption works, according to WaPo:

2. According to HHS, the exemption covers people who “experienced financial or domestic circumstances, including an unexpected natural or human-caused event, such that he or she had a significant, unexpected increase in essential expenses that prevented him or her from obtaining coverage under a qualified health plan.”

MORE

TO CALL IT POLITICAL HYPOCRISY IS TO BEG THE QUESTION. I THINK WE'VE DESCENDED RIGHT INTO MADNESS: LOOKING GLASS, CHESHIRE CAT MADNESS.

THIS IS WHAT HAPPENS WHEN A PRESIDENT HAS NO ETHICS, MORALS, OR SCRUPLES WHATSOEVER.

[Demeter]

24. I never thought I'd be an outlaw, but the Affordable Care Act might make me one By Diane Snyder

http://www.theguardian.com/commentisfree/2013/dec/20/affordable-care-act-healthcare-not-affordable


...Contrary to what you might think, I'm not some Obama-hating Tea Party supporter who resents government interference. I'm pretty far to the left politically, and as a freelancer without employer-sponsored healthcare, I really want Obamacare to work. I don't want to see it repealed, just improved, and if others like me don't sign up, perhaps this solidarity will make America's brave new healthcare world better for everyone – not the extension of the profit-making enterprise it remains. Leaving healthcare to the private sector, instead of expanding government-sponsored Medicare to those under 65, has not meant affordability.

But I hoped for the best when I registered through New York State's "marketplace" website (the name makes clear that this is business first, healthcare second). There you can compare plans from various insurers, and the most "affordable" one (from MetroPlus, without dental) was more than $350 a month – not affordable on my income. I was eligible for a subsidy, which reduced my monthly cost to under $200, but it was still nearly double the $100 I was hoping for. Much has been written about the premiums being too expensive for people in their 20s, but the price is also a financial burden for me at age 43. Still, had that been the entire cost, I would have signed up. But additionally, each doctor's visit would cost $30, and there was a $1,750 deductible. Quite a contrast to what I've paid the last several years. As a New York City resident, I've been eligible for a program called HHC Options, sponsored by the city's Health and Hospitals Corporation, which provides truly affordable care to low and moderate-income individuals. It's not insurance, and there's no monthly fee. You pay only when you see a doctor, and your copayment (between $15 to $60) is based on your income.

I felt guilty paying so little when I could afford a bit more, and hoped to contribute that when Obamacare kicked in – just not so much more. My healthcare expenses for last year (around $350) are about equal to the fine I'd pay if I don't get insurance by 31 March (and yes, the president just extended that deadline for some individuals, although now I have to figure out if I meet the requirements)....When I went back to reassess my options I discovered that you can change the income on which the premiums are determined. They're not based on my last income tax return or on my 2013 earnings. The amounts I entered are what I expect to make from my various employers in 2014. And because it's hard to predict, I just put in how much I made in 2013, assuming it would be about the same. But you can lower your premium by lowering your financial expectations for the new year. With more conservative earning estimates, I was able to get it down to $140 a month. Do I try to get it down to the $100 I could afford to pay? Has US healthcare become some inverted version of the game Angry Birds, where the lowest score wins and you can keep trying until you get three stars?

That sums up "universal healthcare" in America. Even with all the work that went into the Affordable Care Act, it remains a game of chance. Perhaps if enough Americans who can't handle the financial burden break the law and don't sign up, we can get it amended to something simpler and truly affordable, like the single-payer, free-choice system Ralph Nader, Bernie Sanders, and even Colin Powell support.

I never thought I'd be an outlaw, but I may become one next year.

[Demeter]

26. Latest ACA problem: New Medicaid enrollees may find their coverage is limited By Beth Fitzgerald

AND THE HITS JUST KEEP ON COMING...

http://www.njbiz.com/article/20131220/NJBIZ01/131229972/Latest-ACA-problem:-New-Medicaid-enrollees-may-find-their-coverage-is-limited-

Expanding eligibility for Medicaid was one of top features of The Affordable Care Act. But now even it is running into problem.

Those now eligible for Medicaid are concerned they won't find as wide a choice of physicians in the Medicaid program as they can find in the commercial health insurance market.

Insurance broker Eileen Shrem said one of her clients earns about $10,000 a year and is eligible for Medicaid. If that client decides instead to remain in the commercial market, her premium will be about $349 a month, and she won't get a subsidy to buy commercial coverage, since people who are eligible for Medicaid can't get a subsidy. Shrem's client, however, has health problems and she's not sure she can get what she needs through Medicaid.

"So what she is doing is calling her doctors to find out if they take Medicaid or not before she makes the decision," Shrem said.

Medicaid eligibility in 2014 rises to 138 percent of the federal poverty level. Between 138 percent and 400 percent of poverty, federal subsidies are available under the ACA to help people afford coverage in the commercial insurance market. But will it help?... a paper published earlier this year in Health Affairs found that more than half of New Jersey primary care doctors did not accept new Medicaid patients in 2011 and 2012, compared to about 33 percent nationwide...For 2013 and 2014, the ACA increased (Medicaid) payments for certain primary care services to the same level as Medicare, with the federal government picking up the tab. But Downs said the enhanced payments do not apply to specialists who treat Medicaid patients. In 2015, the additional federal payments end and the states will have to decide whether or not to continue them. Downs said before the enhanced payment took effect in 2013, Medicaid rates were about half of the Medicare rates. For example, if Medicare was paying about $80 for a general office visit, Medicaid was paying between $38 and $42.

&quot Medicaid) is not a solely primary care endeavor," he said. &quot The ACA) has expanded a program that is fundamentally flawed in the way it is designed and it has been underfunded for a decade."

[Demeter]

37. Colorado Takes Health Plans To People Shopping For Groceries

http://www.npr.org/blogs/health/2013/12/23/255264131/colorado-takes-health-plans-to-people-shopping-for-groceries?ft=1&f=1001

THE MARKETING OPPORTUNITY OF A CENTURY! IT REPLACES THE MORTGAGE MILLS...

[Demeter]

6. Irish banking world rocked as three financiers in court

http://www.independent.ie/irish-news/courts/irish-banking-world-rocked-as-three-financiers-in-court-29850636.html

A former chief executive of Irish Life & Permanent (IL&P) and two other former bankers will stand trial on charges of conspiring to mislead Anglo Irish Bank investors in the run-up to the banking crisis of September 2008. One of the three men charged is Denis Casey (54) from Raheny, Dublin, who becomes the first chief executive officer (CEO) who was in charge of an Irish financial institution during the crash to have charges brought against him.

The trials will be closely watched by investors who lost out as a result of their decision to hold on to Anglo Irish Bank shares and junior bonds in the period before the bank was nationalised. Investors will be seeking any evidence that could help them make legal claims to recoup losses.

The three former senior bank executives will stand trial accused of conspiring to mislead Anglo Irish Bank investors in relation to €7.2bn transactions...The prosecutions relate to financial transfers involving Irish Life Assurance, Irish Life and Permanent and Anglo Irish Bank, between March and September 2008 -- the period running up to the bank guarantee.

The case is not related to the trial of three former Anglo Irish Bank executives set to go ahead in January...

[Demeter]

7. Insight: How U.S. spying cost Boeing multibillion-dollar jet contract

http://www.reuters.com/article/2013/12/20/us-boeing-brazil-insight-idUSBRE9BJ10P20131220

...Brazil had been struggling for years to decide which company to choose for a $4 billion-plus fighter jet contract, one of the world's most sought-after defense deals and one that would help define the country's strategic alliances for decades to come. But Rousseff, the leftist president known for being sometimes gruff and even standoffish with foreign leaders, was thrilled after a 90-minute meeting in Brasilia on May 31 with U.S. Vice President Joe Biden. After Biden's reassurances that the United States would not block crucial transfers of technological know-how to Brazil if it bought the jets, she was closer than ever to selecting Chicago-based Boeing to supply its fighter, the F/A-18 Super Hornet.

"She's ready to sign on the dotted line," one of her senior aides told Reuters at the time. "This is going to happen soon."

And then along came Edward Snowden.

Documents leaked by the former National Security Agency contractor, released in the weeks after Biden's visit, ended up enraging Rousseff and completely changing her plans, several Brazilian officials told Reuters. On Wednesday, she surprised the defense and diplomatic worlds by tapping Sweden's Saab to supply the jets, a move aides said was made in part as a deliberate snub to the United States. The decision was one of the biggest and most expensive consequences yet of the NSA revelations, which have strained Washington's relations with countries around the world. Anger over espionage was not the only reason for Rousseff's decision. Saab's Gripen jet offered the best combination of price, transfers of technology to Brazilian companies and low maintenance costs compared with the other two finalists, Boeing and France's Dassault Aviation, Defense Minister Celso Amorim told reporters on Wednesday.

Still, the NSA revelations were clearly the determining factor for Rousseff, the Brazilian officials told Reuters, for reasons that were both political and deeply personal. A former guerrilla who had fought a U.S.-backed military dictatorship in the 1960s, Rousseff had spent the first two years of her presidency edging closer to Washington, fending off pressure from leftist elements of her Workers' Party and scheduling a rare state visit to the White House for last October. Snowden's documents, many of which were published by Brazil-based U.S. journalist Glenn Greenwald, revealed that Washington had spied on Rousseff's personal communications, those of state-run oil company Petrobras - which Rousseff once chaired - and countless Brazilian citizens.

Rousseff could not understand why Washington would spy on an ally with no history of international terrorism, aides said...The day after that report, a person who had been pushing for Boeing angrily questioned whether the intelligence obtained from Rousseff's communications justified possibly losing the deal. "Was that worth $4 billion?" the person asked rhetorically, speaking on condition of anonymity. Facing renewed pressure from her party's anti-Washington flank, Rousseff requested an apology from Obama, still hoping to salvage the trip. Instead, Obama said only that he would order a review of U.S. intelligence-gathering techniques.

AH, YES, OUR UNAPOLOGETIC PRESIDENT STANDS TALL, IN THE "W" TRADITION. $4 BILLION AND A LOST ALLY LATER....THE BIGGEST POSSIBLE ALLY IN SOUTH AMERICA, NOW FIRMLY IN THE CHAVEZ CAMP, NO DOUBT!

WAY TO GO, MR. PRESIDENT!

[Demeter]

8. N.S.A. Spied on Allies, Aid Groups and Businesses

http://www.nytimes.com/2013/12/21/world/nsa-dragnet-included-allies-aid-groups-and-business-elite.html?hp&_r=0


SEEMS THERE'S THE GENERAL DRAGNET, THEN THE "PISS OFF YOUR ALLIES" EFFORTS, GOD KNOWS WHAT THE NEXT REVELATION WILL INVOLVE....

PROBABLY DOMESTIC, POLITICAL ESPIONAGE. ON DEMOCRATS.

[Demeter]

9. Major computer security firm RSA took $10 mln from NSA to weaken encryption

http://rt.com/usa/rsa-nsa-deal-weaken-encryption-581/

The National Security Agency arranged a clandestine US$10 million contract with computer security power RSA that allowed the spy agency to embed encryption software it could use to infiltrate the company’s widely used products, Reuters reported.

Revelations provided by former NSA contractor Edward Snowden and first reported in September showed that the NSA created and perpetuated a corruptible formula that was ultimately a “back door” into encryption products.

Reuters later reported RSA became the lead distributor of the formula, installing it into a software tool known as BSAFE that is widely used to boost security in personal computers and other products....

SO, LIFE IMITATES ART IMITATES LIFE....SANDRA BULLOCK, YOU ARE WANTED ON "THE NET"

WHEN THAT FILM CAME OUT, A LOT OF GEEKS PANNED IT. I BET THEY FEEL FOOLISH, NOW.

[Demeter]

13. A spy world reshaped by Edward Snowden A MUST READ: TIES IT ALL TOGETHER

http://www.latimes.com/world/la-fg-nsa-snowden-20131222,0,7166210.story?track=rss&utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+latimes%2Fnews%2Fnationworld%2Fworld+%28L.A.+Times+-+World+News%29&utm_content=My+Yahoo


Leaks from the former NSA contractor have been so illuminating that experts say they mark a turning point in U.S. intelligence operations....After news reports that the National Security Agency had secretly monitored German Chancellor Angela Merkel's cellphone calls, America's top intelligence official was asked why congressional oversight committees were kept in the dark. Shouldn't Congress have been briefed, Rep. Adam B. Schiff (D-Burbank) asked James R. Clapper, the director of national intelligence, about a spying operation that would embarrass the U.S. government if exposed?

"Well, sir, there are many things we do in intelligence that, if revealed, would have the potential for all kinds of blowback," Clapper replied at a House Intelligence Committee hearing in October. "The conduct of intelligence is premised on the notion that we can do it secretly, and we don't count on it being revealed in the newspaper."

Not these days. Clapper and his colleagues now operate in a spy world reshaped by Edward Snowden, the former NSA contractor who claims responsibility for what officials deem the largest and most damaging compromise of classified information in U.S. history. Among the casualties is the assumption that some of the nation's most carefully guarded secrets will stay secret. NSA officials say Snowden downloaded and removed about 1.7 million documents from computer networks at an NSA listening post in Hawaii where he worked until June. The haul included about 2,000 specific requests for NSA surveillance that officials say make up a digital road map of spying successes and gaps in such high-profile targets as Iran, Russia, North Korea and China. The requests have not been made public. But other leaks from Snowden's cache have been so illuminating that experts say the disclosures will mark a turning point in U.S. spying, much as revelations of CIA assassinations and NSA domestic spying led to creation of the congressional oversight committees and new laws in the 1970s.

At least some change appears inevitable. In just the last week, events produced "a seismic shift in the movement for real surveillance reform," said Sen. Mark Udall (D-Colo.) a member of the Senate Intelligence Committee and a critic of NSA programs. In Washington, U.S. District Judge Richard J. Leon issued a sharp rebuke to the NSA on Monday when he ruled that a major program that Snowden exposed — the secret logging of virtually every American's telephone calls — was "almost Orwellian" in scope and probably violated the Constitution. Leon stayed his ruling pending an expected government appeal. Sen. Dianne Feinstein (D-Calif.), who chairs the Senate Intelligence Committee and has been a staunch Capitol Hill ally for the embattled agency, announced that she would welcome a Supreme Court review to determine whether the bulk collection is legal.


GEE, THAT'S BIG OF HER, TO DEIGN TO ALLOW THE SUPREME COURT TO DO ITS JOB...NOT THAT THE CORRUPTED COURT WILL, OF COURSE, BUT IT DOES SET A PRECEDENT...


THE ENTIRE ARTICLE, AND THE ATTITUDES RECORDED THEREIN, ARE SIMPLE BREATH-TAKING.

[Demeter]

20. Review Group Falsely Claims No NSA Backdoors in U.S. Software

http://www.moonofalabama.org/2013/12/review-group-falsly-claims-no-nsa-backdoors-in-us-software.html

In its 28th recommendation Obama's NSA Review Group, which included no technological experts, asserted (pdf via emptywheel):

Upon review, however, we are unaware of any vulnerability created by the US Government in generally available commercial software that puts users at risk of criminal hackers or foreign governments decrypting their data. Moreover, it appears that in the vast majority of generally used, commercially available encryption software, there is no vulnerability, or “backdoor,” that makes it possible for the US Government or anyone else to achieve unauthorized access.

Like other seemingly assuring assertions from the NSA and related entities this one turns out to be false:

As a key part of a campaign to embed encryption software that it could crack into widely used computer products, the U.S. National Security Agency arranged a secret $10 million contract with RSA, one of the most influential firms in the computer security industry, Reuters has learned.

Documents leaked by former NSA contractor Edward Snowden show that the NSA created and promulgated a flawed formula for generating random numbers to create a "back door" in encryption products, the New York Times reported in September. Reuters later reported that RSA became the most important distributor of that formula by rolling it into a software tool called Bsafe that is used to enhance security in personal computers and many other products.

Undisclosed until now was that RSA received $10 million in a deal that set the NSA formula as the preferred, or default, method for number generation in the BSafe software, according to two sources familiar with the contract.

RSA security products, widely used so far, are not secure. The NSA paid RSA to use a weak encryption which the NSA can easily break. If the NSA can break these others can too. They thereby have a backdoor into RSA software and whoever uses those insecure products should do away with them.

If the NSA Review Group was unaware of paid for NSA backdoors in commercial products how many of its other recommendations tackle the real problems?

Yeah. Thought so.

[Demeter]

21. The NSA review panel didn't answer the real question: was any of this legal?

http://www.theguardian.com/commentisfree/2013/dec/19/nsa-review-panel-report-legal-questions

President Obama's NSA review panel makes it clear that many of the things NSA has been doing are bad from a policy perspective. But the real question we should be asking is: are they legal? Early leaks about the review panel suggested it had found all the NSA's (and other agencies they imply, such as FBI) activities to be legal. That's based, in part, on this statement:

Significantly, and in stark contrast to the pre-Fisa era, the Review Group found no evidence of illegality or other abuse of authority for the purpose of targeting domestic political activity. This is of central importance, because one of the greatest dangers of government surveillance is the potential to use what is learned to undermine democratic governance. On the other hand, as discussed later in this report, there have been serious and persistent instances of noncompliance in the Intelligence Community's implementation of its authorities. Even if unintentional, these instances of noncompliance raise serious concerns about the Intelligence Community's capacity to manage its authorities in an effective and lawful manner.

But notice that statement did not say the panel had found everything to be legal. On the contrary, it applied that judgment only to illegality or abuse "for the purposes of targeting domestic political activity". That leaves open a whole slew of potential abuse, even illegal activities, targeting Americans for reasons outside of politics. That's what the report should have tackled, but it didn't. Instead, we have tame sounding "policy recommendations" as if this is all just a matter of political disagreement over the budget or farm bill.

A later statement on the phone dragnet is equally ambiguous:

We have not uncovered any official efforts to suppress dissent or any intent to intrude into people's private lives without legal justification.

Fine, but this leaves the possibility of unofficial efforts to suppress dissent or intruding into people's lives with dodgy legal justification. Perhaps one signal the report won't comment on legality is it is conspicuously silent about President George Bush's "presidential" wiretap program, which top Department of Justice officials refused to authorize as lawful in 2004, in its section on legal issues. Later in the report, it briefly notes that Bush's program operated outside Fisa. Funny, that's the same thing some of President Obama's programs currently do.

Beyond the emphasis on the "serious and persistent instances of noncompliance", there are other moments where the report points to issues of concern. For example, the report emphasizes that EO 12333 – the executive order used both to authorize Bush's illegal surveillance program and much of the dragnet currently – only governs "foreign intelligence activities not governed by Fisa". Yet the administration appears to have continued internet metadata collection more broadly under EO 12333. Furthermore, according to a Washington Post report, the NSA has taken data (that is governed by Section 702 of Fisa) from Google and Yahoo cables overseas. The report stresses the limits of EO 12333, but another way to read into that is that it suggests the executive branch continues to overstep its authority. Then there are places where the report airs questions about the legal interpretations the executive branch (and the Fisa court) adopted – noting that critics argue the phone dragnet rulings have done "violence" to the meaning of the word "relevant" – but then insisting that the review's "charge is not to resolve these questions, but to offer guidance from the perspective of sound public policy as we look to the future". Yet elsewhere, the report states the 2005-06 Patriot Act standard, "leaves too little authority in the FISC to define the appropriate parameters of section 215 orders".

For these reasons, some of the areas where the report remains silent are the most intriguing. One example: when the report discusses the kinds of things, in addition to phone metadata, the government can collect under Section 215, it lists some possibilities, including bank records, credit card records, medical records, travel records, internet search records, and email records. It claims, "the government has expressly disclaimed any interest in such mass collection of personal information under section 215". Yet we know the government has used section 215 to collect purchase records of explosives precursors. And we know the Fisa has imposed minimization procedures on more and more of the government's 215 orders in recent years – doing so for 176 orders last year – which is the hallmark of some kind of bulk program. The report may say the government doesn't collect these items, but it's collecting something – probably a lot of somethings – in bulk, and the report warns the president that such bulk collections "seem both unrealistic and unsound as a matter of public policy".

The same applies even more with the report's recommendation that "governments should abstain from penetrating the systems of financial institutions and changing the amounts held in accounts there". Huh? There have not yet been any allegations from the Snowden reporting that the NSA has done this (though it has hacked into financial data to collect it). And the recommendation is presented as a kind of best practices that all governments should adhere to, not something that would apply solely to the US. But it does raise questions about whether the review panel knows that such activities have been going on. (It's not at all clear this would be illegal; just unwise.) There are hints like this in a number of places the report, all presented as a discussion of policy. That, of course, permits the president to accept or reject these recommendations, as a matter of policy. But underneath it all, there's a warning that the dragnets and the president's EO 12333 activities may be wrong both on policy and on legal grounds.

[Demeter]

31. Conning the Record, Conning the Courts, Defrauding the People

http://www.emptywheel.net/2013/12/21/conning-the-record-conning-the-courts-defrauding-the-people/

... lest we grow too enamored of our still vaporous success, keep in mind Judge Leon’s decision, as right on the merits as it may be, and is, is still a rather adventurous and activist decision for a District level judge, and will almost certainly be pared back to some extent on appeal, even if some substantive parts of it are upheld. We shall see.

But the other cold water thrown came from Obama himself when he gave a slippery and disingenuous press conference Friday. Here is the New York Times this morning capturing spot on the worthless lip service Barack Obama gave surveillance reform yesterday:

By the time President Obama gave his news conference on Friday, there was really only one course to take on surveillance policy from an ethical, moral, constitutional and even political point of view. And that was to embrace the recommendations of his handpicked panel on government spying — and bills pending in Congress — to end the obvious excesses. He could have started by suspending the constitutionally questionable (and evidently pointless) collection of data on every phone call and email that Americans make.

He did not do any of that.
….
He kept returning to the idea that he might be willing to do more, but only to reassure the public “in light of the disclosures that have taken place.”

In other words, he never intended to make the changes that his panel, many lawmakers and others, including this page, have advocated to correct the flaws in the government’s surveillance policy had they not been revealed by Edward Snowden’s leaks.

And that is why any actions that Mr. Obama may announce next month would certainly not be adequate. Congress has to rewrite the relevant passage in the Patriot Act that George W. Bush and then Mr. Obama claimed — in secret — as the justification for the data vacuuming.

http://www.nytimes.com/2013/12/21/opinion/mr-obamas-disappointing-response.html?hp&rref=opinion

Precisely. The NYT comes out and calls the dog a dog. If you read between the lines of this Ken Dilanian report at the LA Times, you get the same preview of the nothingburger President Obama is cooking up over the holidays. As Ken more directly said in his tweet, “Obama poised to reject panel proposals on 702 and national security letters.” Yes, indeed, count on it.

Which brings us to that which begets the title of this post: I Con The Record has made a Saturday before Christmas news dump. And a rather significant one to boot. Apparently because they were too cowardly to even do it in a Friday news dump. Which is par for the course of the Obama Administration, James Clapper and the American Intel Shop. Their raison de’etre appears to be keep America uninformed, terrorized and supplicant to their power grabs. Only a big time operator like Big Bad Terror Voodoo Daddy Clapper can keep us chilluns safe!

So, the dump today is HERE in all its glory:

http://icontherecord.tumblr.com/post/70683717031/dni-announces-the-declassification-of-the

.......................................................



The record has been conned. Our federal courts have been conned. All as the Snowden disclosures have proven. And the American people have been defrauded by pompous terror mongers who value their own and institutional power over truth and honesty to those they serve. Clapper, Alexander and Obama have the temerity to call Ed Snowden a traitor? Please, look in the mirror boys.

Lastly, and again as Trevor Timm pointed out above, these are just the declarations for cases the EFF and others are still pursuing. What of the false secret declarations made in al-Haramain v. Obama, which the government long ago admitted were bogus? Why won’t the cons behind “I Con” release those declarations? What about the frauds perpetrated in Mohamed v. Jeppesen that have fraudulently ingrained states secrets cons into the government arsenal?

If the government wants to come clean, here is the opportunity. Frauds have been perpetrated on our courts, in our name. We should hear about that. Unless, of course, Obama and the “I Cons” are really nothing more than simple good old fashioned cons.

SO MUCH MORE AT LINK--THE GIFT THAT KEEPS ON GIVING

[Demeter]

35. Mr. Obama’s Disappointing Response NYT EDITORIAL

http://www.nytimes.com/2013/12/21/opinion/mr-obamas-disappointing-response.html?hp&rref=opinion



By the time President Obama gave his news conference on Friday, there was really only one course to take on surveillance policy from an ethical, moral, constitutional and even political point of view. And that was to embrace the recommendations of his handpicked panel on government spying — and bills pending in Congress — to end the obvious excesses. He could have started by suspending the constitutionally questionable (and evidently pointless) collection of data on every phone call and email that Americans make.

He did not do any of that.

.....................................

Mr. Obama, who six months ago said that he thought the data collection struck the “right balance” between security and civil liberties, said on Friday that the government had not abused its access to private information. He continued to defend the mostly secret, internal protocols that the government uses to prevent abuse. He kept returning to the idea that he might be willing to do more, but only to reassure the public “in light of the disclosures that have taken place.”

In other words, he never intended to make the changes that his panel, many lawmakers and others, including this page, have advocated to correct the flaws in the government’s surveillance policy had they not been revealed by Edward Snowden’s leaks. And that is why any actions that Mr. Obama may announce next month would certainly not be adequate. Congress has to rewrite the relevant passage in the Patriot Act that George W. Bush and then Mr. Obama claimed — in secret — as the justification for the data vacuuming.

MORE

[Demeter]

36. NSA review panel members to appear before Senate committee in January

http://www.theguardian.com/world/2013/dec/22/nsa-review-panel-senate-judiciary-hearing-january?CMP=ema_565

MAYBE CONGRESS WILL DO THEIR JOB?

...

The committee’s Democratic chairman, Patrick Leahy, announced on Sunday that a special session would be convened on 14 January to discuss the 46 recommendations made by the handpicked panel last week. The hearing, the judiciary committee’s first of the New Year, promises to put data surveillance at the top of the political agenda when Congress returns to work in 2014.

Leahy said in a statement: “The recommendations from the President’s Review Group make clear that it is time to recalibrate our government’s surveillance programs. Momentum is building for real reform.”

The announcement suggests that political steam is intensifying for some concrete measure of reform of NSA activities, with most debate focusing around the agency’s collection of billions of Americans’ phone records, which the Guardian disclosed in June. Last week the practice was denounced by a federal judge who branded it unconstitutional and “almost Orwellian” in scope....

[Demeter]

10. Why I want Bitcoin to die in a fire By Charlie Stross

http://www.antipope.org/charlie/blog-static/2013/12/why-i-want-bitcoin-to-die-in-a.html


Bitcoin just crashed 50% .... on news that the Chinese government has banned local exchanges from accepting deposits in Yuan. BtC was trading over $1000 yesterday; now it's down to $500 and still falling. Good. I want Bitcoin to die in a fire: this is a start, but it's not sufficient. Let me give you a round-up below the cut.

Like all currency systems, Bitcoin comes with an implicit political agenda attached. Decisions we take about how to manage money, taxation, and the economy have consequences: by its consequences you may judge a finance system. Our current global system is pretty crap, but I submit that Bitcoin is worst. For starters, BtC is inherently deflationary. There is an upper limit on the number of bitcoins that can ever be created ('mined', in the jargon: new bitcoins are created by carrying out mathematical operations which become progressively harder as the bitcoin space is explored—like calculating ever-larger prime numbers, they get further apart). This means the the cost of generating new Bitcoins rises over time, so that the value of Bitcoins rise relative to the available goods and services in the market. Less money chasing stuff; less cash for everybody to spend (as the supply of stuff out-grows the supply of money). Hint: Deflation and Inflation are two very different things; in particular, deflation is not the opposite of inflation (although you can't have both deflation and inflation simultaneously—you get one disease or the other).

Bitcoin is designed to be verifiable (forgery-resistant) but pretty much untraceable, and very easy to hide. Easier than a bunch of gold coins, anyway. And easier to ship to the opposite side of the planet at the push of a button. Libertarians love it because it pushes the same buttons as their gold fetish and it doesn't look like a "Fiat currency". You can visualize it as some kind of scarce precious data resource, sort of a digital equivalent of gold. Nation-states don't control the supply of it, so it promises to bypass central banks.

But there are a number of huge down-sides. Here's a link-farm to the high points:

Mining BtC has a carbon footprint from hell (as they get more computationally expensive to generate, electricity consumption soars). This essay has some questionable numbers, but the underlying principle is sound.

Bitcoin mining software is now being distributed as malware because using someone else's computer to mine BitCoins is easier than buying a farm of your own mining hardware.

Bitcoin violates Gresham's law: Stolen electricity will drive out honest mining. (So the greatest benefits accrue to the most ruthless criminals.)

Bitcoin's utter lack of regulation permits really hideous markets to emerge, in commodities like assassination (and drugs and child pornography).

It's also inherently damaging to the fabric of civil society. You think our wonderful investment bankers aren't paying their fair share of taxes? Bitcoin is pretty much designed for tax evasion. Moreover, The Gini coefficient of the Bitcoin economy is ghastly, and getting worse, to an extent that makes a sub-Saharan African kleptocracy look like a socialist utopia, and the "if this goes on" linear extrapolations imply that BtC will badly damage stable governance, not to mention redistributive taxation systems and social security/pension nets if its value continues to soar (as it seems designed to do due to its deflationary properties).

To editorialize briefly, BitCoin looks like it was designed as a weapon intended to damage central banking and money issuing banks, with a Libertarian political agenda in mind—to damage states ability to collect tax and monitor their citizens financial transactions. Which is fine if you're a Libertarian, but I tend to take the stance that Libertarianism is like Leninism: a fascinating, internally consistent political theory with some good underlying points that, regrettably, makes prescriptions about how to run human society that can only work if we replace real messy human beings with frictionless spherical humanoids of uniform density (because it relies on simplifying assumptions about human behaviour which are unfortunately wrong).

[Demeter]

11. Bitcoin, Magical Thinking, and Political Ideology Alex Payne

https://al3x.net/2013/12/18/bitcoin.html



Last week, investor Chris Dixon posed a provocative dichotomy when introducing his employer’s USD $25M investment in Bitcoin service Coinbase:

“The press tends to portray Bitcoin as either a speculative bubble or a scheme for supporting criminal activity. In Silicon Valley, by contrast, Bitcoin is generally viewed as a profound technological breakthrough.”

Now working at vogue venture capital firm Andreessen Horowitz, Dixon is in a fine position to speak for Silicon Valley. But to the extent that the Valley is a placeholder for the technology industry at large, I beg to differ. Bitcoin is “generally viewed” quite differently. Most charitably, Bitcoin is regarded as a flawed but nonetheless worthwhile experiment, one that has unfortunately attracted outsized attention and investment before correcting any number of glaring security issues. To those less kind, Bitcoin has become synonymous with everything wrong with Silicon Valley: a marriage of dubious technology and questionable economics wrapped up in a crypto-libertarian political agenda that smacks of nerds-do-it-better paternalism. With its influx of finance mercenaries, the Bitcoin community is a grim illustration of greed running roughshod over meaningful progress. Far from a “breakthrough”, Bitcoin is viewed by many technologists as an intellectual sinkhole. A person’s sincere interest in Bitcoin is evidence that they are disconnected from the financial problems most people face while lacking a fundamental understanding of the role and function of central banking. The only thing “profound” about Bitcoin is its community’s near-total obliviousness to reality.

Regulation and Other Minor Details

Bitcoin owes its present flexibility to a lack of regulation (or, more accurately, a lack of understanding around existing regulations and/or unwillingness to comply with them). If the broader Bitcoin experiment doesn’t implode, the currency will be regulated just as any other. In this best-case scenario for Bitcoin, what of the benefits Dixon claims? We’re told that Bitcoin “fixes serious problems with existing payment systems that depend on centralized services to verify the validity of transactions.” If by “fixes” you mean “ignores”, then yes: a Bitcoin transaction, like cash, comes with the certainty that a definite quantity of a store of value has changed hands, and little else. How this verifies any “validity” or cuts down on fraud I’m not sure; stolen Bitcoins are spent as easily as stolen cash, which is why theft of Bitcoins has been rampant....


Silicon Valley has a seemingly endless capacity to mistake social and political problems for technological ones, and Bitcoin is just the latest example of this selective blindness. The underbanked will not be lifted out of poverty by conducting their meager daily business in a cryptocurrency rather than a fiat currency, even if Bitcoin or its ilk manages to reduce marginal transaction costs (at scale and in full regulatory compliance, that is). But then, we should note that Dixon wasn’t talking about lifting anyone out of poverty, just “offering them low-cost financial services”. Also notable is that both Andreessen and Horowitz supported Mitt Romney’s failed presidential bid, giving us some insight into the likely level of concern for economic inequality around Dixon’s office.

In Bitcoin, the Valley sees another PayPal and the associated fat exit, but ideally without the annoying costs of policing fraud and handling chargebacks this time around. Bankers in New York and London see opportunities for cryptocurrency market-making. International investors see the potential for arbitrage and are taking advantage of cheap electricity, bringing the environmental destruction of real-world mining to the brave new world of digital money. In other words: Bitcoin represents more of the same short-sighted hypercapitalism that got us into this mess, minus the accountability. No wonder that many of the same culprits are diving eagerly into the mining pool.

[Demeter]

46. Banks Mostly Avoid Providing Bitcoin Services

http://online.wsj.com/news/articles/SB10001424052702304202204579252850121034702

Companies trying to cash in on the newfangled bitcoin craze are having trouble getting old-fashioned bank accounts.

Lenders are leery of dealing with virtual-currency companies because of concerns that the businesses could run afoul of anti-money-laundering laws or be involved in illegal activities, banking executives say. Regulators and central bankers around the world have raised similar concerns in recent months.

The problem has grown so acute that some owners of fledgling virtual-currency businesses are trying to elude bank scrutiny by avoiding the words "bitcoin" or "bit" in their names, according to entrepreneurs and investors who actively track the industry...


I AM TRYING TO IMAGINE WHAT THE BANKSTERS ARE THINKING...SINCE THEY AREN'T HANDLING BITCOIN, MERELY DEPOSITING GOOD OLD GREENBACKS...

MAYBE THEY'RE ANTICIPATING A DECLARATION OF ILLEGALITY?

[Demeter]

48. Into the Bitcoin Mines By NATHANIEL POPPER

http://dealbook.nytimes.com/2013/12/21/into-the-bitcoin-mines/



On the flat lava plain of Reykjanesbaer, Iceland, near the Arctic Circle, you can find the mines of Bitcoin. To get there, you pass through a fortified gate and enter a featureless yellow building. After checking in with a guard behind bulletproof glass, you face four more security checkpoints, including a so-called man trap that allows passage only after the door behind you has shut. This brings you to the center of the operation, a fluorescent-lit room with more than 100 whirring silver computers, each in a locked cabinet and each cooled by blasts of Arctic air shot up from vents in the floor. These computers are the laborers of the virtual mines where Bitcoins are unearthed. Instead of swinging pickaxes, these custom-built machines, which are running an open-source Bitcoin program, perform complex algorithms 24 hours a day. If they come up with the right answers before competitors around the world do, they win a block of 25 new Bitcoins from the virtual currency’s decentralized network.

The network is programmed to release 21 million coins eventually. A little more than half are already out in the world, but because the system will release Bitcoins at a progressively slower rate, the work of mining could take more than 100 years. The scarcity — along with a speculative mania that has grown up around digital money — has made each new Bitcoin worth as much as $1,100 in recent weeks. Bitcoins are invisible money, backed by no government, useful only as a speculative investment or online currency, but creating them commands a surprisingly hefty real-world infrastructure.

“What we have here are money-printing machines,” said Emmanuel Abiodun, 31, founder of the company that built the Iceland installation, shouting above the din of the computers. “We cannot risk that anyone will get to them.”

Mr. Abiodun is one of a number of entrepreneurs who have rushed, gold-fever style, into large-scale Bitcoin mining operations in just the last few months. All of these people are making enormous bets that Bitcoin will not collapse, as it has threatened to do several times. Just last week, moves by Chinese authorities caused the price of a Bitcoin to drop briefly below $500. If the system did crash, the new computers would be essentially useless because they are custom-built for Bitcoin mining.

Miners, though, are among the virtual-currency faithful, believing that Bitcoin will turn into a new, cheaper way of sending money around the world, leaving behind its current status as a largely speculative commodity...


IT SOUNDS LIKE DRUG-INDUCED MADNESS

[Demeter]

49. Big US online retailer to accept Bitcoin

http://www.ft.com/intl/cms/s/0/d5f2f096-6907-11e3-996a-00144feabdc0.html?siteedition=intl

Overstock plans to become the first big US online retailer to accept Bitcoin, as Patrick Byrne, the company’s libertarian chief executive, warms to the virtual currency as a refuge from government control.

Mr Byrne told the Financial Times that Overstock planned to start accepting Bitcoin next year – possibly by the end of the second quarter – a decision that he said was driven mainly by his own political philosophy...


I GUESS THE LESSONS FROM SEARS HAVEN'T BEEN INCORPORATED INTO BUSINESS CONSCIOUSNESSES, YET.

[Demeter]

12. Trust Me (I'm a kettle) By Charlie Stross

http://www.antipope.org/charlie/blog-static/2013/12/trust-me.html


The internet of things may be coming to us all faster and harder than we'd like.

Reports coming out of Russia suggest that some Chinese domestic appliances, notably kettles, come kitted out with malware—in the shape of small embedded computers that leech off the mains power to the device. The covert computational passenger hunts for unsecured wifi networks, connects to them, and joins a spam and malware pushing botnet. The theory is that a home computer user might eventually twig if their PC is a zombie, but who looks inside the base of their electric kettle, or the casing of their toaster? We tend to forget that the Raspberry Pi is as powerful as an early 90s UNIX server or a late 90s desktop; it costs £25, is the size of a credit card, and runs off a 5 watt USB power source. And there are cheaper, less competent small computers out there. Building them into kettles is a stroke of genius for a budding crime lord looking to build a covert botnet.

But that's not what I'm here to talk about...

EXPOSITION ON HOW TO HACK MOST ANY CONSUMER ELECTRONICS OUT THERE

The possibilities are endless: it's the dark side of the internet of things. If you'll excuse me now, I've got to go wallpaper my apartment in tinfoil ...

[Demeter]

14. ANOTHER TTP! The corporation invasion by Lori M Wallach

http://mondediplo.com/2013/12/02tafta


A new treaty being negotiated in secret between the US and the EU has been specifically engineered to give companies what they want — the dismantling of all social, consumer and environmental protection, and compensation for any infringement of their assumed rights.

Imagine what would happen if foreign companies could sue governments directly for cash compensation over earnings lost because of strict labour or environmental legislation. This may sound far-fetched, but it was a provision of the Multilateral Agreement on Investment (MAI), a projected treaty negotiated in secret between 1995 and 1997 by the then 29 member states of the OECD (Organisation for Economic Cooperation and Development) (1). News about it got out just in time, causing an unprecedented wave of protests and derailing negotiations.

Now the agenda is back. Since July the European Union and the United States have been negotiating the Transatlantic Trade and Investment Partnership (TTIP) or Transatlantic Free Trade Agreement (TAFTA), a modified version of the MAI under which existing legislation on both sides of the Atlantic will have to conform to the free trade norms established by and for large US and EU corporations, with failure to do so punishable by trade sanctions or the payment of millions of dollars in compensation to corporations.

Negotiations are expected to last another two years. The TTIP/TAFTA incorporates the most damaging elements of past agreements and expands on them. If it came into force, privileges enjoyed by foreign companies would become law and governments would have their hands tied for good. The agreement would be binding and permanent: even if public opinion or governments were to change, it could only be altered by consensus of all signatory nations. In Europe it would mirror the Trans-Pacific Partnership (TPP) due to be adopted by 12 Pacific Rim countries, which has been fiercely promoted by US business interests. Together, the TTIP/TAFTA and the TPP would form an economic empire capable of dictating conditions outside its own frontiers: any country seeking trade relations with the US or EU would be required to adopt the rules prevailing within the agreements as they stood.

The TTIP/TAFTA negotiations are taking place behind closed doors. The US delegations have more than 600 corporate trade advisers, who have unlimited access to the preparatory documents and to representatives of the US administration. Draft texts will not be released, and instructions have been given to keep the public and press in the dark until a final deal is signed. By then, it will be too late to change...

SUBTLE, REALLY SUBTLE

BUT IF THERE'S A GODDESS, TOO LATE!

[Demeter]

15. Investors’ Story Left Out of Wall St. ‘Wolf’ Movie By SUSAN ANTILLA

http://dealbook.nytimes.com/2013/12/19/investors-story-left-out-of-wall-st-wolf-movie/?src=dlbksb&_r=2


...The Martin Scorsese film about the Wolf — Jordan Belfort in real life, played by Leonardo DiCaprio — tells how Mr. Belfort swindled thousands of investors out of more than $100 million as head of a penny-stock boiler room in the 1990s.

The film, which is coming out on Christmas Day, is an “almost nonstop parade of sex, drugs, nudity and rock and roll,” according to the online magazine Deadline Hollywood.

Left untold is the story of the victims, disparaged as “garbage” by Mr. DiCaprio’s character in the movie....

DETAILS FOLLOW

[Demeter]

16. FOR THOSE WHO HAVEN'T "WRAPPED UP" THEIR CHRISTMAS GIVING, YET

[DemReadingDU]

41. The kitty wrap, lol!

[Tansy_Gold]

47. I should try that with Moby.

Not.

[Demeter]

50. It would only work on my cats if they were dead

Don't tempt me.

[Demeter]

17. The Most Memorable Words of 2013

http://online.wsj.com/news/articles/SB10001424052702304367204579268591272440548

A billionaire's worry: 'Every time I hear the stock market went up I know the guillotines are coming closer.'

The most arresting words heard this year? A billionaire of New York, in conversation: "I hate it when the market goes up. Every time I hear the stock market went up I know the guillotines are coming closer." This was interesting in part because the speaker has a lot of money in the market. But he meant it. He is self-made, broadly accomplished, a thinker on politics, and for a moment he was sharing the innards of his mind. His biggest concern is the great and growing distance between the economically successful and those who have not or cannot begin to climb. The division has become too extreme, too dramatic, and static. He fears it will eventually tear the country apart and give rise to policies that are bitter and punishing, not helpful and broadening.

This year I came to understand, at meetings and symposia, that this has become an ongoing preoccupation of the wealthy. They are not oblivious, they are concerned. And though they give away hundreds of millions of dollars to charities, schools and scholarships, they don't know what can be done to turn the overall economic picture around. Globalization isn't leaving, industrial manufacturing isn't coming back as it was, technology will continue to give jobs to the educated, and the ever-evolving mischief of men and markets won't change.

They are worried. They are right to be. They are trying to think it through, trying to find any realistic solutions, and words.



LEAVE IT TO PEGGY NOONAN TO SHOOT HERSELF IN THE FOOT WITH SUCH SYMPATHY FOR THE POOR, BENIGHTED ELITE...


SHE DOES A MASTERFUL JOB ON OBAMACARE, THOUGH. SEE LINK

[Demeter]

18. Whew! Just that little bit of posting left me exhausted

Have to pace my recovery....have a good Monday, week, Xmas, etc!

The temperature's been dropping; now down to 29F. Ice is a definite danger, esp. black ice.

[Demeter]

19. Detroit's Dan Gilbert: Henry Ford or Henry Potter?

WHAT A VULTURE! FIRST HE DEFRAUDS THE HOMEOWNERS INTO FORECLOSURE, NOW HE WANTS TO "REDEVELOP" BY RAZING AND REBUILDING...

http://truth-out.org/opinion/item/20604-detroits-dan-gilbert-henry-ford-or-henry-potter

THIS GUY ISN'T FORD OR POTTER...HE'S VOLDEMORT!

[xchrom]

22. Secret Handshakes Greet Frat Brothers on Wall Street

http://www.bloomberg.com/news/2013-12-23/secret-handshakes-greet-frat-brothers-on-wall-street.html

Conor Hails, head of the University of Pennsylvania’s Sigma Chi chapter, was in a Philadelphia hotel ballroom last month for a Barclays Plc (BARC) recruiting reception. A friend pointed out a banker from their fraternity. Hails, 20, approached with a secret handshake.

“We exchanged a grip, and he said, ‘Every Sigma Chi gets a business card,’” Hails recalled. “We’re trying to create Sigma Chi on Wall Street, a little fraternity on Wall Street.”

As students vie for 2014 internships in an industry where 22-year-olds can make more than $100,000 a year, interviews with three dozen fraternity members showed a network whose Wall Street alumni guide resumes to the tops of stacks, reveal interview questions with recommended answers, offer applicants secret mottoes and support chapters facing crackdowns.

That’s one reason men continue to dominate on Wall Street, where no woman has run a big bank. General Motors Co. (GM) announced Dec. 10 it would make Mary Barra the auto industry’s first female chief executive officer, the same day research firm Catalyst Inc. showed women holding about one in eight executive roles in U.S. finance.

[xchrom]

23. Swiss Banks Employ Army of Advisers for U.S. Amnesty Plan

http://www.bloomberg.com/news/2013-12-22/swiss-banks-employ-army-of-advisers-for-u-s-amnesty-plan.html

Switzerland’s 300 banks have enlisted an army of auditors, lawyers and in-house workers as they race to meet a Dec. 31 deadline on whether to seek U.S. amnesty for helping American clients evade taxes.

Banks in Switzerland, the largest cross-border financial center with $2.2 trillion of assets, are closely examining accounts before joining a disclosure program that’s the broadest assault in a five-year U.S. crackdown on offshore tax evasion.

“The hard work is getting to the right data and cutting through complex systems to get all the facts on the table,” said David Fidan, a partner in Deloitte LLP’s forensic services practice in Switzerland. “That’s very expensive and involves lawyers, forensic accountants and bank employees. It can take 20, 30 or 40 people over four or five months for bigger banks.”

Banks with “reason to believe” they violated tax laws can ask the Justice Department to forgo prosecution. In turn, banks must disclose how they helped Americans hide assets, hand over data on undeclared accounts and pay penalties. Those that don’t apply could face criminal probes like those against 14 banks, including Credit Suisse Group AG (CSGN) and HSBC Holdings Plc. (HSBA)

[xchrom]

25. European Stocks Climb on IMF Outlook; ARM Holdings Gains

http://www.bloomberg.com/news/2013-12-23/european-stock-index-futures-advance-swatch-might-move.html

European stocks advanced for a fourth day, the longest streak in two months, after the International Monetary Fund said it will raise its growth outlook for the U.S. economy. U.S. stock-index futures and Asian shares climbed.

ARM Holdings Plc, which designs chips for Apple Inc.’s iPhones, increased 2.5 percent as Apple struck a deal to sell the smartphone through China Mobile Ltd. Lanxess AG rose 3 percent after the chemical maker’s chief executive officer said the company will reach its full-year earnings forecast. Orell Fuessli Holding AG declined 4.1 percent after predicting “clearly negative” earnings for 2013.

The Stoxx Europe 600 Index climbed 0.3 percent to 321.99 at 12:01 p.m. in London. The gauge has rallied 15 percent this year and is heading for its biggest annual advance since 2009. Standard & Poor’s 500 Index futures and the MSCI Asia Pacific Index gained 0.4 percent today.

“The positive assessment the IMF gave with regard to U.S. growth corroborates the improving economic indicators we have been witnessing,” said Konstantin Giantiroglou, head of investment advisory at Neue Aargauer Bank in Brugg, Switzerland. “The sentiment going into Christmas and the New Year is good. We have an improving global economy and for the first time since the financial crisis we should see a synchronous recovery. We should see a continuation of the bull market in 2014.”

[xchrom]

27. Probes See U.K. Market Manipulation Reports Rise 43%

http://www.bloomberg.com/news/2013-12-23/probes-see-u-k-market-manipulation-reports-rise-43-.html

Reports of suspected market manipulation soared by 43 percent this year as the U.K. financial regulator investigated the rigging of multiple benchmark rates.

The Financial Conduct Authority received 117 reports of suspected “distortion and manipulation” of markets in the 12 months to August, compared with 82 in 2012, according to Bovill Ltd, a financial services consultant in London.

The FCA in 2013 has opened investigations into currency-rigging, issued a second wave of fines for manipulation of the London interbank offered rate, and levied its first fine against a high-frequency trader for manipulating commodities markets.

“Regulated businesses now know just how seriously regulators and politicians will treat market manipulation,” said Mark Spiers, Bovill’s head of wealth management. “They know that they can only expect leniency if they report pro-actively suspected cases of market manipulation that they come across.”

[xchrom]

28. Hedge Funds Cut Gold Bull Bets Amid Record Outflows: Commodities

http://www.bloomberg.com/news/2013-12-22/hedge-funds-cut-gold-bull-bets-amid-record-outflows-commodities.html

Hedge funds got less bullish on gold before prices dropped to the lowest level since 2010, leaving the metal poised for the worst annual loss in 32 years as investors dump bullion at a record pace.

Money managers reduced their net-long position by 2.8 percent to 32,524 futures and options in the week ended Dec. 17, U.S. Commodity Futures Trading Commission data show. Short holdings climbed 1.2 percent to 75,199, within 6 percent of the record reached in July. Net-bullish holdings across 18 U.S.- traded commodities rose 8.5 percent to a seven-week high, led by soybeans, natural gas and cotton.

Investors pulled $38.8 billion from gold funds this year, the most in data going back through 2000, according to EPFR Global, a research company. Futures settled at a three-year low on Dec. 19 in New York, a day after the Federal Reserve cut the pace of its monthly bond purchases. Prices plunged 37 percent since reaching a record in September 2011, U.S. equities climbed to an all-time high and the dollar is poised for its strongest annual performance since 2008.

“Gold was probably one of the easiest shorts of all time,” said Uri Landesman, the president of New York-based hedge fund Platinum Partners who helps manage about $1.3 billion of assets. “It has fallen out of favor because people felt its general security wasn’t needed in this market. People wanted to take on risk this year.”

[Demeter]

33. "People wanted to take on risk this year"

SOCIALIZE THE COSTS, PRIVATIZE THE PROFITS?

THIS IS WHERE I CAME IN...

[xchrom]

29. Vietnam GDP Rises 5.42% in 2013; Estimate 5.3% Gain

http://www.bloomberg.com/news/2013-12-23/vietnam-gdp-rises-5-42-in-2013-estimate-5-3-gain.html


Vietnam’s economic growth accelerated as exports climbed, even as banks struggled to meet the government’s lending target. Stocks rose.

Gross domestic product rose 6.04 percent in the fourth quarter from a year earlier, quickening from a 5.54 percent gain in the three months through September, according to data released by the General Statistics Office in Hanoi today. For the full year, the economy grew 5.42 percent, faster than a 5.25 percent pace in 2012, and the median estimate of 5.3 percent in a Bloomberg survey.

Manufacturers from Samsung Electronics Co. to Nokia Oyj have boosted Vietnam’s exports, which grew 15.4 percent this year from a year earlier. That has helped offset faltering bank lending, as the government takes steps to resolve bad debt and overhaul the financial system.

“The economy is steadily recovering,” said Fiachra MacCana, managing director of Ho Chi Minh City Securities Corp. “Exports are still the main driver, especially for Vietnam’s manufacturing industries, but there’s a little bit of domestic backup there. It’s a broad-based recovery.”

[xchrom]

30. Japan Unveils Record 2014 Budget Draft as Debt Burden Mounts

http://www.bloomberg.com/news/2013-12-21/japan-unveils-record-budget-even-as-abe-trims-new-bond-sales.html

Japan unveiled a record budget for the next fiscal year, as Prime Minister Shinzo Abe boosts spending on social security, defense and public works while trying to contain the growth of the world’s biggest debt burden.

Government ministers and the ruling coalition adopted the 95.88 trillion yen ($921 billion) budget proposal for the fiscal year starting April 1 at a meeting yesterday in Tokyo, Finance Minister Taro Aso told reporters. Japan will issue 41.25 trillion yen of new revenue bonds, Aso said, less than the 42.9 trillion yen earmarked in this year’s initial budget.

Abe aims to pull the country out of a 15-year deflationary malaise and cope with the rising welfare costs of its aging population, while containing public debt that’s more than twice the size of the economy. His government has pledged to halve the primary balance deficit by fiscal 2015 and achieve a surplus by fiscal 2020.

“The government needs to show that it’s moving in the right direction on fiscal discipline but this budget lacks punch,” said Yoshimasa Maruyama, chief economist at Itochu Corp. in Tokyo. “The government must cut spending to reach the planned target of a surplus in 2020.”

[xchrom]

32. Australia Sets Higher Capital Buffer for Four Biggest Banks

http://www.bloomberg.com/news/2013-12-22/australia-sets-higher-capital-buffer-for-four-biggest-lenders.html

Australia’s four largest banks will need to carry an extra 1 percent of core tier 1 capital from Jan. 1, 2016, due to their systemically important status, according to the country’s banking regulator.

Australia & New Zealand Banking Group Ltd. (ANZ), Commonwealth Bank of Australia (CBA), National Australia Bank Ltd. and Westpac Banking Corp. (WBC) need to have a greater capacity to absorb losses, the Australian Prudential Regulation Authority said in a statement today.

The nomination of domestic systemically important banks, or D-SIBs, is part of Basel III rules to deal with any threat to domestic and regional financial stability. APRA expects the lenders will have sufficient capital to meet the new rules by 2016 and said the 1 percent higher loss absorbency rate is at the lower end of rates applied elsewhere in the world.

“While we don’t expect equity raisings, we expect banks will again need to rely on dividend reinvestment plans to meet higher capital requirements,” Victor German, a Sydney-based analyst at Nomura Holdings Inc., said in an e-mail, referring to discounted stock offered by banks to encourage investors to accept shares in place of dividends.

[Demeter]

34. MICHAEL HUSDON EXPLAINS IT ALL

AND A SORRY STORY IT IS...FROM MARX TO DETROIT AND BEYOND.

HE DOESN'T TALK ABOUT THE NSA, THOUGH...

http://truth-out.org/news/item/20788-trade-advantage-replaced-by-rent-extraction


ANOTHER, SHORT VIDEO HISTORY OF ECONOMICS

http://www.maxkeiser.com/2013/11/worlds-best-economist-explains-all-in-8-12-minutes/

[Demeter]

38. A Locked Door, A Secret Meeting And The Birth Of The Fed

http://www.npr.org/blogs/money/2013/12/23/256326325/a-locked-door-a-secret-meeting-and-the-birth-of-the-fed?ft=1&f=1001



... Senator Nelson Aldrich, chairman of the Senate finance committee...knew there was something America could do so that it would no longer have to rely on one guy to end panics. The U.S. could create a central bank... Countries in Europe already had central banks. And, during panics, the central banks basically did what J.P. Morgan did in the U.S.: Act as lenders of last resort for healthy banks. When depositors were lined up out the door yelling for their money, banks that were basically sound could borrow from the central bank.

But just consider that name: central bank. Throughout American history, both of those words — "central" and "bank" — had been deeply unpopular. The thought of a bunch of rich bankers in New York controlling a powerful central bank did not inspire confidence. Still, Aldrich realized he needed bankers' help to draw up a plan for a central bank. So he came up with a plan to gather in secret. He told a handful of New York bankers to come on a given night, one by one, to a train station in New Jersey. There they would find a private rail car hitched to the back of a southbound train. To conceal their identities, Aldrich told the bankers to come dressed as duck hunters and to address each other only by first name.

The train headed south, and the bankers got off in Georgia. They spent the next week holed up in a private club at a place called Jekyll Island. (Apparently, the name didn't sound as sketchy then as it does today.) At Jekyll Island, Aldrich and the bankers came up with a plan. They knew many Americans thought a central bank could become too powerful, too influential in the economy. So they came up with a classic, American workaround: The decided the U.S. should create lots of little central banks, scattered all around the country. The plan they came up with still had a long way to go. It got shot down the first time in Congress. The plan for a central bank was debated, changed significantly, renamed. But the basic idea held up. And on December 23rd, 1913 President Woodrow Wilson signed the Federal Reserve Act into law.

Creating the Fed didn't solve the nation's economic problems. IMAGINE THAT, MARKETEERS! In fact, a few decades after the Fed was created, its policies made the Great Depression worse. And the Fed has changed significantly over the course of a century...

[Demeter]

39. THIS JUST IN: Obamacare raising health costs for most, poll finds

http://www.marketwatch.com/story/obamacare-raising-health-costs-for-most-poll-finds-2013-12-23?siteid=YAHOOB

...

The survey of more than 18,000 readers conducted on our website last week also found that of those who have enrolled in insurance plans or intend to, 55% said they expect their health insurance costs to increase. About 40% expect their costs to decrease and roughly 4% expect their expenses to stay the same.

...

[Tansy_Gold]

51. First....

[Tansy_Gold]

52. Followed by....

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40. BAE finalizes South Korean F-16 upgrade deal, eyes more prospects

http://uk.reuters.com/article/2013/12/23/uk-bae-korea-f16s-idUKBRE9BM0FI20131223


(Reuters) - Britain's BAE Systems Plc (BAES.L) said on Monday it will hire 300 workers at its Fort Worth, Texas, plant and other sites to upgrade over 130 South Korean F-16 fighter jets after finalizing a deal with the U.S. government it hopes to replicate in other places in Europe and Asia in coming years.

BAE in 2012 beat out the maker of the jets, Lockheed Martin Corp (LMT.N), for the upgrade work, which could be worth over $1 billion, according to South Korean media reports.

Historically the companies that make warplanes have also serviced them and carried out major upgrades, but tighter military budgets in the United States and Europe have spurred arms makers to look for business in new areas, such as upgrade work, since there are fewer major new acquisition programs.

Erin Moseley, president of BAE Systems' Support Solutions sector, told Reuters the deal marked a significant expansion of BAE's F-16 modernization business. She added the company was in talks with other countries in Europe and Asia about similar work.

[xchrom]

42. Italy PM Letta pledges reform pact in January

http://uk.reuters.com/article/2013/12/23/uk-italy-politics-idUKBRE9BM0G520131223

(Reuters) - Prime Minister Enrico Letta promised on Monday to include a swift reform of Italy's widely criticised electoral law and cuts to bureaucracy and taxes in a new coalition pact to be worked out in January.

Letta, who is 47, said that 2014 would be a year in which a new generation of leaders would be able to begin reforms to pull Italy out of two decades of stagnation.

"I have been part of this change and I feel the full weight of responsibility. This generation will have the opportunity of changing Italy and I am convinced it can do it."

He dismissed suggestions that his authority could be undermined by the election of Matteo Renzi as head of his centre-left Democratic Party (PD), saying the 38-year-old Renzi's arrival was part of an "unprecedented" generational change in Italian politics.

[Demeter]

43. For pity's sake! This isn't a Santa Claus Rally It's a Xmas Snowjob!

I hope the banksters lose it all, and before the primary season starts.

[Demeter]

44. Off Limits, but Blessed by the Fed By GRETCHEN MORGENSON

http://www.nytimes.com/2013/12/22/business/off-limits-but-blessed-by-the-fed.html?ref=business

The good news arrived in a confidential letter from the Federal Reserve Board in Washington. The nation’s biggest bank, JPMorgan Chase, had won the right to expand its reach in a lucrative business that has nothing to do with banking: electricity.

Areas like electricity are generally off limits to banks because of the risks involved. But with its June 2010 letter, the Fed let JPMorgan take an even bigger role selling electricity in California and the Midwest, saying the push would “reasonably be expected to produce benefits to the public that outweigh any potential adverse effects.”

Three months later, JPMorgan traders began a scheme to manipulate electricity prices, ultimately forcing consumers in those regions to pay more every time they flicked on a light switch or an air-conditioner, the Federal Energy Regulatory Commission subsequently contended.

The story of how the Fed cleared the way for JPMorgan — a decision that brought many millions in profits to the bank — illuminates how the Fed has allowed the bank into a variety of markets for basic goods. Since 1956, a federal law has limited banks’ involvement in physical commodities. But confidential documents, many obtained under the Freedom of Information Act, show that since 2005 the Fed has granted three special exemptions to JPMorgan Chase alone...

THAT TEARS IT...KILL THE FED.

[Demeter]

45. The opposite of what they do in America by David Atkins

http://digbysblog.blogspot.com/2013/12/the-opposite-of-what-they-do-in-america.html

[Demeter]

53. Obama Repeals ObamaCare WSJ Editorial board member Joe Rago MUST READ!

http://online.wsj.com/news/article_email/SB10001424052702304367204579270252042143502-lMyQjAxMTAzMDIwMTEyNDEyWj

Under pressure from Senate Democrats, the President partly suspends the individual mandate... It seems Nancy Pelosi was wrong when she said "we have to pass" ObamaCare to "find out what's in it." No one may ever know because the White House keeps treating the Affordable Care Act's text as a mere suggestion subject to day-to-day revision. Its latest political retrofit is the most brazen: President Obama is partly suspending the individual mandate...The White House argued at the Supreme Court that the insurance-purchase mandate was not only constitutional but essential to the law's success, while refusing Republican demands to delay or repeal it. But late on Thursday, with only four days to go before the December enrollment deadline, the Health and Human Services Department decreed that millions of Americans are suddenly exempt. Individuals whose health plans were canceled will now automatically qualify for a "hardship exemption" from the mandate. If they can't or don't sign up for a new plan, they don't have to pay the tax. They can also get a special category of ObamaCare insurance designed for people under age 30.
***

So merry Christmas. If ObamaCare's benefit and income redistribution requirements made your old, cheaper, better health plan illegal, you now have the option of going without coverage without the government taking your money as punishment. You can also claim the tautological consolation of an ObamaCare hardship exemption due to ObamaCare itself.

These exemptions were supposed to go only to the truly destitute such as the homeless, bankrupts or victims of domestic violence. But this week a group of six endangered Senate Democrats importuned HHS Secretary Kathleen Sebelius to "clarify" that the victims of ObamaCare also qualify...HHS and the Senators must have coordinated in advance because literally overnight HHS rushed out a bulletin noting that exemptions are available to those who "experienced financial or domestic circumstances, including an unexpected natural or human-caused event, such that he or she had a significant, unexpected increase in essential expenses that prevented him or her from obtaining coverage under a qualified health plan." A tornado destroys the neighborhood or ObamaCare blows up the individual insurance market, what's the difference?

The HHS ruling is that ObamaCare is precisely such a "significant, unexpected increase." In other words, it is an admission that rate shock is real and the mandates drive up costs well into hardship territory. HHS is agreeing with the Senators that exemptions should cover "an individual whose 2013 plan was canceled and considers their new premium unaffordable." In her reply letter, Mrs. Sebelius also observes that some people "are having difficulty finding an acceptable replacement." She means the new plans are overpriced...The under-30 ObamaCare category that is being opened to everyone is called "catastrophic" coverage. These plans are still more expensive than those sold on the former market but they're about 20% cheaper on average than normal exchange plans because fewer mandates apply and they're priced for a healthier, younger risk pool. Liberal Democrats hated making even this concession when they wrote the law, so people who pick catastrophic plans don't get subsidies. What an incredible political turnabout. Mr. Obama and HHS used to insist that the new plans are better and less expensive after subsidies than the old "substandard" insurance. Now they're conceding that at least some people should be free to choose less costly plans if they prefer—or no plan—and ObamaCare's all-you-can-eat benefits rules aren't necessary for quality health coverage after all.

But the White House is shredding ObamaCare's economics on its own terms. Premiums for catastrophic products are based on the assumption that enrollees would be under 30. A 55-year-old will now get a steep discount on care courtesy of the insurer's balance sheet, while other risk-tiers on the exchanges will have even fewer customers to make the actuarial math work. Pulling the thread of the individual mandate also means that the whole scheme could unravel. Waiving ObamaCare rules for some citizens and continuing to squeeze the individual economic liberties of others by forcing them to buy what the White House now concedes is an unaffordable product is untenable. Mr. Obama is inviting a blanket hardship amnesty for everyone, which is what Republicans should demand. The new political risk that the rules are liable to change at any moment will also be cycled into 2015 premiums. Expect another price spike late next summer. With ObamaCare looking like a loss-making book of business, a public declaration of penance by the insurance industry for helping to sell ObamaCare is long overdue. The only political explanation for relaxing enforcement of the individual mandate—even at the risk of destabilizing ObamaCare in the long term—is that the White House is panicked that the whole entitlement is endangered. The insurance terminations and rollout fiasco could leave more people uninsured in 2014 than in 2013. ObamaCare's unpopularity with the public could cost Democrats the Senate in 2014, and a GOP Congress in 2015 could compel the White House to reopen the law and make major changes. Republicans ought to prepare for that eventuality with insurance reforms beyond the "repeal" slogan, but they can also take some vindication in Thursday's reversal. Mr. Obama's actions are as damning about ObamaCare as anything Senator Ted Cruz has said, and they implicitly confirm that the law is quarter-baked and harmful. Mr. Obama is doing through executive fiat what Republicans shut down the government to get him to do.
***

The President declared at his Friday press conference that the exemptions "don't go to the core of the law," but in fact they belong to his larger pattern of suspending the law on his own administrative whim. Earlier this month he ordered insurers to backdate policies to compensate for the federal exchange meltdown, and before that HHS declared that it would not enforce for a year the mandates responsible for policy cancellations. Mr. Obama's team has also by fiat abandoned the small-business exchanges, delayed the employer mandate and scaled back income verification.

"The basic structure of that law is working, despite all the problems," Mr. Obama added. His make-it-up-as-he-goes improvisation will continue, because the law is failing.