The Big Picture

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• How Bad Was It? The Costs and Consequences of the 2007–09 Financial Crisis
• Privacy and Civil Liberties Oversight Board Says NSA Spying Is ILLEGAL AND UNNECESSARY
• 10 Thursday PM Reads
• If Company Market Caps = Countries’ Listed Firms
• The Bull Market Ends (or Is It Just a Correction?)
• 10 Thursday AM Reads
• Winnipeg: 45 Below 0°F

How Bad Was It? The Costs and Consequences of the 2007–09 Financial Crisis Posted: 24 Jan 2014 02:00 AM PST

Privacy and Civil Liberties Oversight Board Says NSA Spying Is ILLEGAL AND UNNECESSARY Posted: 23 Jan 2014 10:30 PM PST Privacy and Civil Liberties Oversight Board – Which Congress Made An Independent Agency in 2007, But Which Just Became Operational – Says NSA Spying Is ILLEGAL AND UNNECESSARY Major New Voice Slams NSA Spying Experts – including congress members say that the NSA's spying program is illegal. Officials in the legislative, judicial and executive branches of government all say that the mass surveillance on Americans is unnecessary: 3 Senators with top secret clearance "have reviewed this surveillance extensively and have seen no evidence that the bulk collection of Americans' phone records has provided any intelligence of value that could not have been gathered through less intrusive means" Another Senator with top secret clearance agrees, and so does the congress member who wrote the Patriot Act, and more than 100 congress members from both parties As does the official panel created by President Obama to review NSA spying, made up of top former White House officials and other government insiders, including the head of counter-terrorism under Clinton and Bush and former deputy CIA director Michael J. Morrell A non-profit, bipartisan policy group says that NSA mass surveillance has no impact on terrorism CNN terrrorism expert Peter Bergen says that mass surveillance is not needed to stop another 9/11 Former president Clinton (and apparently Carter, as well), agree that mass surveillance is unnecessary As do the chairs of the 9/11 Commission which was created by Congress and the White House As does the counter-terrorism czar under the Clinton and Bush administrations, Richard Clarke. And see this As does a federal judge (and see this) A major new voice has just weighed in to agree: the Privacy and Civil Liberties Oversight Board, which Congress made an independent agency in 2007, and which only recently became fully operational. As the New York Times reports: An independent federal privacy watchdog has concluded that the National Security Agency's program to collect bulk phone call records has provided only "minimal" benefits in counterterrorism efforts, is illegal and should be shut down. The findings are laid out in a 238-page report, scheduled for release by Thursday and obtained by The New York Times …. In its report, the board lays out what may be the most detailed critique of the government's once-secret legal theory behind the program: that a law known as Section 215 of the Patriot Act, which allows the F.B.I. to obtain business records deemed "relevant" to an investigation, can be legitimately interpreted as authorizing the N.S.A. to collect all calling records in the country. The program "lacks a viable legal foundation under Section 215, implicates constitutional concerns under the First and Fourth Amendments, raises serious threats to privacy and civil liberties as a policy matter, and has shown only limited value," the report said. "As a result, the board recommends that the government end the program." *** The report also … contains the first official acknowledgment that the Foreign Intelligence Surveillance Court produced no judicial opinion detailing its legal rationale for the program until last August, even though it had been issuing orders to phone companies for the records and to the N.S.A. for how it could handle them since May 2006. *** The privacy board was unanimous in recommending a series of immediate changes to the program. *** In 2006, the Bush administration persuaded the surveillance court to begin authorizing the program based on the Patriot Act under a theory the Obama administration would later embrace. But the privacy board's report criticized that, saying that the legal theory was a "subversion" of the law's intent, and that the program also violated the Electronic Communications Privacy Act. *** The report also scrutinizes in detail a handful of investigations in which the program was used, finding "no instance in which the program directly contributed to the discovery of a previously unknown terrorist plot or the disruption of a terrorist attack."

10 Thursday PM Reads Posted: 23 Jan 2014 02:30 PM PST My afternoon train reading: • Is This Bull Cyclical or Secular? (WSJ) • Security Check Firm Said to Have Defrauded U.S. (NY Times) too bad they didnt see A Wonderfully Simple Heuristic to Recognize Charlatans (Farnam Street) • Active is the New Passive (Reformed Broker) • Russian hackers' hands in cyber espionage against Western energy interests (Washington Post) see also Clean Tech Is Not Dead—In Fact, It’s Booming Like Never Before (Slate) • Why Bitcoin Matters (DealBook) • Ezra Klein and the early-mover disadvantage (Columbia Journalism Review) see also The Six Things That Make Stories Go Viral Will Amaze, and Maybe Infuriate, You (New Yorker) • 5 critical retirement investing mistakes to avoid (MarketWatch) • Obama Recovery Fails to Resonate as Americans Left Behind (Bloomberg) see also Pining for LBJ, We Got Christie (Bloomberg) • Independent board says NSA phone program should end (Washington Post) see also Watchdog Report Says N.S.A. Program Is Illegal and Should End (NY Times) • In U.S., 67% Dissatisfied With Income, Wealth Distribution (Gallup) see also Economic mobility hasn't changed in a half-century in America, economists declare (Washington Post) What are you reading?   Nest Becomes Google’s Latest Billion Dollar Acquisition Source: Statista

If Company Market Caps = Countries’ Listed Firms Posted: 23 Jan 2014 11:30 AM PST This map matches the value of an entire countries' listed firms (in total) versus the cap of a single company. Source: Economist

The Bull Market Ends (or Is It Just a Correction?) Posted: 23 Jan 2014 09:00 AM PST We awoke this morning to see futures deep in the red. Over the past two weeks, markets seem indecisive, unable to make much progress. Lots of days began with positive trades, only to roll over and fall into losses. Several days that began in the red closed negative, though usually off their worst levels. Last week's big ugly Monday is still fresh in many traders' minds. Might this be the start of the long-awaited, overdue correction? There certainly have been plenty of catalysts that could hasten a 10 percent drop or worse. Earnings season has begun rather inauspiciously. There have been several high profile disappointments — IBM, Best Buy, Intel and Citigroup come to mind. On the other side of the world, China is slowing, with January manufacturing Purchasing Managers’ Index falling to a 6-month low and breaking 50 (49.6). New orders, exports, employment and backlogs all showed declines. On top of that, HSBC reports that China continues to face a cash shortage within its financial system (why does that sound so familiar?). All this takes place against the backdrop of the U.S. Federal Reserve taper. The first step toward removing the bond-buying program was put into place last month, with the next step possibly coming as soon as the two-day Open Market Committee meeting next week. An unusually accommodative monetary policy is beginning to come to the natural end of its unnatural life. Indeed, the degree of stimulus has been so enormous that it might take three full years or even longer to fully unwind it. Congress has exhibited no interest in post-recession fiscal stimulus — unlike in prior recessions -– so perhaps the FOMC 's slow withdrawal is a mixed blessing.   Continues here

10 Thursday AM Reads Posted: 23 Jan 2014 06:30 AM PST Good morning. My morning train reading: • How Wall Street makes a good investment bad: High fees (USA Today) • Albert Edwards: My Pick For Fed Chair Would've Been Basketball Legend Magic Johnson (Business Insider), see also Albert Edwards and Dylan Grice (Advisor Perspectives) • Energy is gradually decoupling from economic growth (FT Alphaville) • The new GE: Google, everywhere (Economist) continue here

Winnipeg: 45 Below 0°F Posted: 23 Jan 2014 04:00 AM PST Exactly one year ago today, I thought it might be fun to speak at a CFA conference in Winnipeg. In January. In the least hospitable major city in North America that is not in Alaska. Read this: 27 Below 0°F; 45 Below 0°F Wind Chill See also: A bull-and-bear naturalist (Winnipeg Free Press) An investor’s worst enemy? Their brain (The Globe and Mail)

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