Tags: Saudis

Government is Lying – New Study Shows No Increase in Use of Encryption by Jihadists Since Snowden Revelations

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Speaking less than three days after coordinated terrorist attacks in Paris killed 129 and injured hundreds more, Mr. Brennan complained about “a lot of hand-wringing over the government’s role in the effort to try to uncover these terrorists.”

What he calls “hand-wringing” was the sustained national outrage following the 2013 revelations by Edward Snowden, a former National Security Agency contractor, that the agency was using provisions of the Patriot Act to secretly collect information on millions of Americans’ phone records.

It is hard to believe anything Mr. Brennan says. Last year, he bluntly denied that the C.I.A. had illegally hacked into the computers of Senate staff members conducting an investigation into the agency’s detention and torture programs when, in fact, it did. In 2011, when he was President Obama’s top counterterrorism adviser, he claimed that American drone strikes had not killed any civilians, despite clear evidence that they had. And his boss, James Clapper Jr., the director of national intelligence, has admitted lying to the Senate on the N.S.A.’s bulk collection of data. Even putting this lack of credibility aside, it’s not clear what extra powers Mr. Brennan is seeking.

 From the New York Times editorial board article: Mass Surveillance Isn’t the Answer to Fighting Terrorism 

Let’s get a few things clear right off the bat.

U.S. intelligence agencies have been waiting for a terror attack to do two things. 1) Blame Edward Snowden. 2) Target Encryption.

This is why in the immediate aftermath of the Paris tragedy, we saw the following…

From the post, Meet the Institution Most Intent on Destroying American Freedom – (*Hint: It’s Not ISIS):

CIA Director John Brennan said Monday he suspects the Islamic State is currently working on more terrorist plots against the West following Friday’s attack in Paris that killed at least 129 people and injured hundreds more. He also criticized new privacy protections enacted after Edward Snowden’s disclosures about U.S. government surveillance practices.

In his remarks, Brennan said the attacks should serve as a “wake-up call” for those misrepresenting what intelligence services do to protect innocent civilians. He cited “a number of unauthorized disclosures, and a lot of handwringing over the government’s role in the effort to try to uncover these terrorists.”

Of course, it wasn’t just Brennan. As noted in yesterday’s post, U.S. Government Moves to Exploit Paris Terror Attacks to Ban Privacy:

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Brooklyn Man Interrupts SuperBowl Post Game Press Conference with “Investigate 9/11” Comment

I have always maintained I have no idea what exactly happened on 9/11, but that the official story is the biggest bunch of bullshit I have ever heard. As time passes more and more people are coming to the same conclusion, and more and more disturbing facts are coming forward. Personally, it appears all roads lead to the Saudis and I would also assume certain factions within the “power elite” were also involved behind the scenes.

This video clip is simply incredible.


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Zealotry of either kind — the puritan’s need to regiment others or the victim’s passion for blaming everyone except himself — tends to produce a depressing civic stupidity. Each trait has about it the immobility of addiction. Victims become addicted to being victims:  they derive identity, innocence and a kind of devious power from sheer, defaulting helplessness. On the other side, the candlesnuffers of behavioral and political correctness enact their paradox, accomplishing intolerance in the name of tolerance, regimentation in the name of betterment.
– Lance Morrow

It is unclear how disarming law-abiding citizens would better protect them from the dangers and threats posed by those who would flout the law. It is at just such times that the constitutional right to self-defense is most precious and must be protected from government overreach.
– Rick Scott

In my email of two weeks ago I wrote the following:

Barring a market catastrophe in the next two weeks I do not expect the Fed to act at the June meeting.  With rates where they are and stocks where they are there is little upside to action; however, this lack of action is precisely what will set the stage for the massive action that must come later.

Well the Fed meeting came and went, and in my opinion, they did less than zero.  The extension of operation TWIST is the biggest non-event, nonsense move in the history of the Federal Reserve.  In fact, it does more harm than good on several fronts and it would have been smarter to have done nothing at all.  Most significantly, the fact that they felt the need to “do something” should tell you something.  With stock prices near their highs and the 10 year treasury at 1.60%, or just shy of record low yields, what is the rationale for any action?  The answer to this question of course is that many of the world’s economies have been in recession for much of the year and as I have said for weeks, publicly and privately, I believe the U.S. joined the recession club at some point in May of this year.  I think The Bernank understands this but dares not say it.  Just like he rambled on about how “there was no housing bubble” and that the “subprime crisis was contained” back in 2007/08 as the world tipped into financial implosion, he employs the same strategy today.  The core strategy at the moment, as I mentioned previously, is “talk up the economy, talk down printing and pray.”  While this is all well and good, the biggest problem that the Bernank now faces is that the financial markets are such a distorted hologram that all asset prices are vulnerable to flash crash type moves.  No one believes in their positions (other than people that hold hard assets like precious metals outside of the banking system and will not sell until the system is reset), rather investors and traders are forced to be involved in positions as a function of their mandates.  Their decisions are no longer driven by economic or business prospects but rather by some view on what the Central Planners of the world will do next.  The markets seem calm but there is a storm brewing beneath them and the pressure will be released one way or the other.  We are now in the crucial six week period between Fed meetings.  The reason I think this is such an important time is because not only will investors come to grips with the reality on the ground (recession) but it is also earnings season.  As I pointed out during the last earnings period, stocks that had even a whiff of weakness in their numbers or outlook were decimated.  Even names that had good results did not break out.  This sent a clear signal that too much goodness is priced into many shares out there.  Today we see a similar sign with Bed, Bath and Beyond.  Another high flier returns to earth…

Bed, Bath and Beyond Chart       

The Saudi Stimulus
In my recent piece titled Saudis Pump All Out as the Global Economy Crumbles, I outlined how the Obama administration and the Saudi government clearly came to an arrangement.  Bascically, the U.S. and other OECD nations would not release SPR (strategic petroleum reserves) oil in exchange for the Saudis pumping all out.  Of course, when faced with an SPR release the choice for the Saudis was pretty simple.  At least this way if prices are headed lower they can sell the volume.  I believe that with the Bernank terrified to act given the populist backlash (and rightly so) agaisnt the Federal Reserve, this was the “stimulus” that the administration agreed upon.  It was a very crafty move.  This is because 99% of investors out there have no idea what is really happening in the oil market and all of the geopolitical forces involved in the recent manufactured crash.  As a result, your average investor, and more importantly, your average computer algo just sees oil collapsing and thinks this will be some boost to the economy.  The following chart sums up this brain-dead trade perfectly.

Oil vs. the SPX

Disneyland Lives!
No ladies and gentlemen, oil is not falling from the sky like manna from heaven.  No ladies and gentlemen, the Bakken shale is not a global oil supply game changer.  Yes, the Saudis are purposefully crashing the price.  Yes, demand is plunging as the world economy tips into recession.  So where does this leave us?  In a very, very bad position.  First of all, just like all of the other “stimulus” this is a band-aid kick the can down the road move.  Sure the Saudis can live with low oil prices for a while, but certainly not forever as their population is young, restless and needs consistent payoffs.  Second, all of the new sources of supply are expensive, such as oil shale, oil sands and deepwater.  Projects will be canceled en masse at these prices.  Then, when the Central Planners of the world finally give in with the Big Print oil will skyrocket higher as confetti money meets supply declines and any economic recovery gets stopped dead in its tracks once again.  Also, what about the fact that oil shale has been one of the highlights of the U.S. economy over the last few years.  You think it is just a coincidence that North Dakota has the lowest unemployment rate in the United States at 3%?  Of course not.  The oil boom has been the one bright spot in this disaster financial ghetto economy we’ve got, and at $80 oil that doesn’t work.  The oil shale workers can sadly now join the ranks of Obama’s food stamp nation.  Oh and I’m sure green energy will really be stimulated at these prices!  Great work guys.  You are killing an entire nation to maintain your petty little power structure.  But it won’t work because we are in the Forth Turning, and when it all blows up, trust me, we will never forget who’s responsible.

Peace and wisdom,

Saudis Pump All Out as the Global Economy Crumbles

It is a mindless philosophy that assumes that one’s private beliefs have nothing to do with public office. Does it make sense to entrust those who are  immoral in private with the power to determine the nation’s moral issues and, indeed, its destiny? …. The duplicitous soul of a leader can only make a nation more sophisticated in evil.
– Dr. Ravi Zacharias

 A reasonable action on the part of the majority is very rare, while the evidence of mob stupidity and brutality is overwhelming. The majority in power make laws for their own financial benefit, disregarding the interests of the minority, and when the weak minority, by adding to its numbers, becomes powerful, it, in turn, does the same thing; thus, by appealing to power to settle their conflicting interests, the conflict would go on forever.
– Charles T. Sprading

A little government and a little luck are necessary in life, but only a fool trusts either of them.
– P. J. O’Rourke

Saudis Pump All Out as the Global Economy Crumbles
In an election year where The Bernank is afraid to print more money despite his understanding that he must in order to keep the ponzi going (if only for a few more months), Obama has been given a gift by the Saudis in the form of purposefully flooding the world with oil.  Specifically, the Saudis are now pumping 9.9 million b/d, which is the highest level in at least the last 20 years (see chart below).  This increase in output has come at the exact same time that much of Europe has fallen into depression and as China and many of the BRICS have collapsed from higher than average growth rates to what I believe is barely positive real GDP growth (if we actually had reliable data).  This oversupply of crude has led to a severe correction.

I think the realization of the situation in Europe and the emerging markets accounted for the initial 10% or so drop in Brent crude from $125/b to $110/b.  The most recent 10% plunge to just below $100/b as of today can, in my opinion, be explained by the sudden understanding that the U.S. is not the Goliath the presstitutes in the mainstream media would have you believe.  Rather, as I mentioned in my email from last week, I believe that May represented the tipping point into contraction for the domestic economy.  A process that could unfold a lot faster than most anticipate.

Saudi Crude Oil Production 1982-Present

As you can see from the above chart, Saudi oil production is at its highs.  The fact that they continue to flood the market is no accident.  It is a favor to Barack Obama and the United States generally.  The idea was that if oil supply flooded the market and knocked down the most important commodity in the world, this would serve as a hidden “stimulus” in an election year.  It would represent something of a tax break to the American consumer and thus make things look better into November.  That was the plan.  Unfortunately for them, it is not working.

The reason it is not working is because we do not have a healthy global economy.  We have a giant house of cards built on debt and derivatives, which market forces desperately wants to blow away so that the system can reset.  The ponzi has gotten so gigantic at this point that a little extra Saudi oil isn’t going to do the trick.  As I have been saying for a while and made clear last week, when the forces of nature start to roll over again there will be no stopping the train wreck.  It will be so catastrophic and overwhelming that asset prices will do things pretty much no money manager out there is anticipating at this point.  While The Bernank and his minions can go out in public and lie about the state of the economy and claim they do not need more QE, the only thing they are doing is setting the stage for a seismic price readjustment in assets classes globally.  It is a readjustment they will not be able to accept, and the global Central Planner response will have to be so massive just to keep things together it will send gold to at least $2,500/oz.

The other thing I would point out is look at where Saudi production was in the summer of 2008.  It was at a high of 9.6 million b/d right before the entire global financial system melted down.  Is history repeating itself in crude?  If so, what is the downside?  My sense is the downside is much, much higher than in 2008.  Back then Brent crude got to just below $40/b.  There are many reasons for this, but I think one of them relates to the fact that there was a commodity bubble going into the decline at that time.  Not so in 2012.  Furthermore, the marginal cost of oil has only been moving higher and higher as conventional supplies have peaked and the world is relying more on higher cost shale, deepwater and oil sands.  My guess is that even if the global economy goes into a depression like state, I do not think oil will sustain itself much below $70/b.  In fact, my guess would be somewhere in the $60s/b will be the low and that will only happen if the Central Planners play things too cute and do not act until this fall.

The last point I want to make is that commodities are way ahead of stocks in the U.S., and the sell-off in equities we have seen so far may have quite a bit more to go.  The dominoes this time are falling in reverse to what happened in 2008.  Back then, it was the U.S. that cratered first and later commodities joined the show.  There were dreams of BRIC decoupling in the air.  This time Europe and the BRICS went first and there are new dreams of decoupling – this time centered upon the U.S. economy.  This dream, like the prior one, will turn out to be a nightmare.  Brent crude has already corrected by about 24% from the highs.  The Dow Jones Industrial Average is only down 8% from the highs.  24% would put it at about 10,000.  Decoupling didn’t exist in 2008 and it doesn’t exist now.  Plan accordingly.

Peace and wisdom,