The Big Picture

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• The 2009 Recovery Act: Directly Created and Saved Jobs Were Primarily in Government
• The Hidden History of Mass Surveillance
• How Brain Electro-stim Improves Cognitive Functions
• A 100-Year Legacy of World War I
• A Matter of Time (and Distance)
• 10 Sunday Reads
• Kiron Sarkar’s Weekly Report 28th June 2014
• What Is the St. Louis Fed Financial Stress Index?

The 2009 Recovery Act: Directly Created and Saved Jobs Were Primarily in Government Posted: 30 Jun 2014 02:00 AM PDT

The Hidden History of Mass Surveillance Posted: 29 Jun 2014 10:30 PM PDT What Americans Need to Know About the History of Spying   Americans are told that we live in a "post-9/11 reality" that requires mass surveillance. But the NSA was already conducting mass surveillance prior to 9/11 … including surveillance on the 9/11 hijackers. And top security experts – including the highest-level government officials and the top university experts – say that mass surveillance actually increases terrorism and hurts security. And they say that our government failed to stop the Boston bombing because they were too busy spying on millions of innocent Americans instead of focusing on actual bad guys. So why is the government conducting mass surveillance on the American people? 5,000 Years of History Shows that Mass Spying Is Always Aimed at Crushing Dissent For thousands of years, tyrants have spied on their own people in order to crush dissent. Keith Laidler – a PhD anthropologist, Fellow of the Royal Geographical Society and a past member of the Scientific Exploration Society – explains: The rise of city states and empires … meant that each needed to know not only the disposition and morale of their enemy, but also the loyalty and general sentiment of their own population. The Encyclopedia of Espionage, Intelligence and Security notes: Espionage is one of the oldest, and most well documented, political and military arts. The rise of the great ancient civilizations, beginning 6,000 years ago in Mesopotamia, begat institutions and persons devoted to the security and preservation of their ruling regimes. *** Early Egyptian pharos [some 5,000 years ago] employed agents of espionage to ferret-out disloyal subject and to locate tribes that could be conquered and enslaved. *** The Roman Empire possessed a fondness for the practice of political espionage. Spies engaged in both foreign and domestic political operations, gauging the political climate of the Empire and surrounding lands by eavesdropping in the Forum or in public market spaces. Several ancient accounts, especially those of the A.D. first century, mention the presence of a secret police force, the frumentarii . By the third century, Roman authors noted the pervasiveness and excessive censorship of the secret police forces, likening them to an authoritative force or an occupational army. The BBC notes: In the Middle Ages, the Roman Catholic Church was more powerful than most governments – and it had a powerful surveillance network to match. French Bishop Bernard Gui was a noted author and one of the leading architects of the Inquisition in the late 13th and early 14th Centuries. For 15 years, he served as head inquisitor of Toulouse, where he convicted more than 900 individuals of heresy. A noted author and historian, Gui was best known for the Conduct of the Inquisition into Heretical Depravity, written in 1323-24, in which he outlined the means for identifying, interrogating and punishing heretics. The U.S. Supreme Court noted in Stanford v. Texas (1965): While the Fourth Amendment [of the U.S. Constitution] was most immediately the product of contemporary revulsion against a regime of writs of assistance, its roots go far deeper. Its adoption in the Constitution of this new Nation reflected the culmination in England a few years earlier of a struggle against oppression which had endured for centuries. The story of that struggle has been fully chronicled in the pages of this Court's reports, and it would be a needless exercise in pedantry to review again the detailed history of the use of general warrants as instruments of oppression from the time of the Tudors, through the Star Chamber, the Long Parliament, the Restoration, and beyond. What is significant to note is that this history is largely a history of conflict between the Crown and the press. It was in enforcing the laws licensing the publication of literature and, later, in prosecutions for seditious libel, that general warrants were systematically used in the sixteenth, seventeenth, and eighteenth centuries. In Tudor England, officers of the Crown were given roving commissions to search where they pleased in order to suppress and destroy the literature of dissent, both Catholic and Puritan. In later years, warrants were sometimes more specific in content, but they typically authorized of all persons connected of the premises of all persons connected with the publication of a particular libel, or the arrest and seizure of all the papers of a named person thought to be connected with a libel. By "libel", the court is referring to a critique of the British government which the King or his ministers didn't like … they would label such criticism "libel" and then seize all of the author's papers. The Supreme Court provided interesting historical details in the case of Marcus v. Search Warrant (1961): The use by government of the power of search and seizure as an adjunct to a system for the suppression of objectionable publications … was a principal instrument for the enforcement of the Tudor licensing system. The Stationers' Company was incorporated in 1557 to help implement that system, and was empowered "to make search whenever it shall please them in any place, shop, house, chamber, or building or any printer, binder or bookseller whatever within our kingdom of England or the dominions of the same of or for any books or things printed, or to be printed, and to seize, take hold, burn, or turn to the proper use of the aforesaid community, all and several those books and things which are or shall be printed contrary to the form of any statute, act, or proclamation, made or to be made. . . . An order of counsel confirmed and expanded the Company's power in 1566, and the Star Chamber reaffirmed it in 1586 by a decree "That it shall be lawful for the wardens of the said Company for the time being or any two of the said Company thereto deputed by the said wardens, to make search in all workhouses, shops, warehouses of printers, booksellers, bookbinders, or where they shall have reasonable cause of suspicion, and all books [etc.] . . . contrary to . . . these present ordinances to stay and take to her Majesty's use. . . . " Books thus seized were taken to Stationers' Hall where they were inspected by ecclesiastical officers, who decided whether they should be burnt. These powers were exercised under the Tudor censorship to suppress both Catholic and Puritan dissenting literature. Each succeeding regime during turbulent Seventeenth Century England used the search and seizure power to suppress publications. James I commissioned the ecclesiastical judges comprising the Court of High Commission "to enquire and search for . . . all heretical, schismatical and seditious books, libels, and writings, and all other books, pamphlets and portraitures offensive to the state or set forth without sufficient and lawful authority in that behalf, . . . and the same books [etc.] and their printing presses themselves likewise to seize and so to order and dispose of them . . . as they may not after serve or be employed for any such unlawful use. . . ." The Star Chamber decree of 1637, reenacting the requirement that all books be licensed, continued the broad powers of the Stationers' Company to enforce the licensing laws. During the political overturn of the 1640′s, Parliament on several occasions asserted the necessity of a broad search and seizure power to control printing. Thus, an order of 1648 gave power to the searchers "to search in any house or place where there is just cause of suspicion that Presses are kept and employed in the printing of Scandalous and lying Pamphlets, . . . [and] to seize such scandalous and lying pamphlets as they find upon search. . . ." The Restoration brought a new licensing act in 1662. Under its authority, "messengers of the press" operated under the secretaries of state, who issued executive warrants for the seizure of persons and papers. These warrants, while sometimes specific in content, often gave the most general discretionary authority. For example, a warrant to Roger L'Estrange, the Surveyor of the Press, empowered him to "seize all seditious books and libels and to apprehend the authors, contrivers, printers, publishers, and dispersers of them," and to "search any house, shop, printing room, chamber, warehouse, etc. for seditious, scandalous or unlicensed pictures, books, or papers, to bring away or deface the same, and the letter press, taking away all the copies. . . .]" *** Although increasingly attacked, the licensing system was continued in effect for a time even after the Revolution of 1688, and executive warrants continued to issue for the search for and seizure of offending books. The Stationers' Company was also ordered "to make often and diligent searches in all such places you or any of you shall know or have any probable reason to suspect, and to seize all unlicensed, scandalous books and pamphlets. . . ." And even when the device of prosecution for seditious libel replaced licensing as the principal governmental control of the press, it too was enforced with the aid of general warrants — authorizing either the arrest of all persons connected with the publication of a particular libel and the search of their premises or the seizure of all the papers of a named person alleged to be connected with the publication of a libel. And see this. General warrants were largely declared illegal in Britain in 1765. But the British continued to use general warrants in the American colonies. In fact, the Revolutionary War was largely launched to stop the use of general warrants in the colonies. King George gave various excuses of why general warrants were needed for the public good, of course … but such excuses were all hollow. The New York Review of Books notes that the American government did not start to conduct mass surveillance against the American people until long after the Revolutionary War ended … but once started, the purpose was to crush dissent: In the United States, political spying by the federal government began in the early part of the twentieth century, with the creation of the Bureau of Investigation in the Department of Justice on July 1, 1908. In more than one sense, the new agency was a descendant of the surveillance practices developed in France a century earlier, since it was initiated by US Attorney General Charles Joseph Bonaparte, a great nephew of Napoleon Bonaparte, who created it during a Congressional recess. Its establishment was denounced by Congressman Walter Smith of Iowa, who argued that "No general system of spying upon and espionage of the people, such as has prevailed in Russia, in France under the Empire, and at one time in Ireland, should be allowed to grow up." Nonetheless, the new Bureau became deeply engaged in political surveillance during World War I when federal authorities sought to gather information on those opposing American entry into the war and those opposing the draft. As a result of this surveillance, many hundreds of people were prosecuted under the 1917 Espionage Act and the 1918 Sedition Act for the peaceful expression of opinion about the war and the draft. But it was during the Vietnam War that political surveillance in the United States reached its peak. Under Presidents Lyndon Johnson and, to an even greater extent, Richard Nixon, there was a systematic effort by various agencies, including the United States Army, to gather information on those involved in anti-war protests. Millions of Americans took part in such protests and the federal government—as well as many state and local agencies—gathered enormous amounts of information on them. Here are just three of the numerous examples of political surveillance in that era: In the 1960s in Rochester, New York, the local police department launched Operation SAFE (Scout Awareness for Emergency). It involved twenty thousand boy scouts living in the vicinity of Rochester. They got identification cards marked with their thumb prints. On the cards were the telephone numbers of the local police and the FBI. The scouts participating in the program were given a list of suspicious activities that they were to report. In 1969, the FBI learned that one of the sponsors of an anti-war demonstration in Washington, DC, was a New York City-based organization, the Fifth Avenue Peace Parade Committee, that chartered buses to take protesters to the event. The FBI visited the bank where the organization maintained its account to get photocopies of the checks written to reserve places on the buses and, thereby, to identify participants in the demonstration. One of the other federal agencies given the information by the FBI was the Internal Revenue Service. *** The National Security Agency was involved in the domestic political surveillance of that era as well. Decades before the Internet, under the direction of President Nixon, the NSA made arrangements with the major communications firms of the time such as RCA Global and Western Union to obtain copies of telegrams. When the matter came before the courts, the Nixon Administration argued that the president had inherent authority to protect the country against subversion. In a unanimous decision in 1972, however, the US Supreme Court rejected the claim that the president had the authority to disregard the requirement of the Fourth Amendment for a judicial warrant. *** Much of the political surveillance of the 1960s and the 1970s and of the period going back to World War I consisted in efforts to identify organizations that were critical of government policies, or that were proponents of various causes the government didn't like, and to gather information on their adherents. It was not always clear how this information was used. As best it is possible to establish, the main use was to block some of those who were identified with certain causes from obtaining public employment or some kinds of private employment. Those who were victimized in this way rarely discovered the reason they had been excluded. Efforts to protect civil liberties during that era eventually led to the destruction of many of these records, sometimes after those whose activities were monitored were given an opportunity to examine them. In many cases, this prevented surveillance records from being used to harm those who were spied on. Yet great vigilance by organizations such as the ACLU and the Center for Constitutional Rights, which brought a large number of court cases challenging political surveillance, was required to safeguard rights. The collection of data concerning the activities of US citizens did not take place for benign purposes. *** Between 1956 and 1971, the FBI operated a program known as COINTELPRO, for Counter Intelligence Program. Its purpose was to interfere with the activities of the organizations and individuals who were its targets or, in the words of long-time FBI Director J. Edgar Hoover, to "expose, disrupt, misdirect, discredit or otherwise neutralize" them. The first target was the Communist Party of the United States, but subsequent targets ranged from the Reverend Martin Luther King, Jr. and his Southern Christian Leadership Conference to organizations espousing women's rights to right wing organizations such as the National States Rights Party. A well-known example of COINTELPRO was the FBI's planting in 1964 of false documents about William Albertson, a long-time Communist Party official, that persuaded the Communist Party that Albertson was an FBI informant. Amid major publicity, Albertson was expelled from the party, lost all his friends, and was fired from his job. Until his death in an automobile accident in 1972, he tried to prove that he was not a snitch, but the case was not resolved until 1989, when the FBI agreed to pay Albertson's widow $170,000 to settle her lawsuit against the government. COINTELPRO was eventually halted by J. Edgar Hoover after activists broke into a small FBI office in Media, Pennsylvania, in 1971, and released stolen documents about the program to the press. The lesson of COINTELPRO is that any government agency that is able to gather information through political surveillance will be tempted to use that information. After a time, the passive accumulation of data may seem insufficient and it may be used aggressively. This may take place long after the information is initially collected and may involve officials who had nothing to do with the original decision to engage in surveillance. The East German Stasi obviously used mass surveillance to crush dissent and keep it's officials in check (and falsely claimed that spying was necessary to protect people against vague threats.) In 1972, the CIA director relabeled "dissidents" as "terrorists" so he could continue spying on them. During the Vietnam war, the NSA spied on Senator Frank Church because of his criticism of the Vietnam War. The NSA also spied on Senator Howard Baker. Senator Church – the head of a congressional committee investigating Cointelpro – warned in 1975: [NSA's] capability at any time could be turned around on the American people, and no American would have any privacy left, such is the capability to monitor everything: telephone conversations, telegrams, it doesn't matter. There would be no place to hide. [If a dictator ever took over, the N.S.A.] could enable it to impose total tyranny, and there would be no way to fight back. This is, in fact, what's happened … Initially, American constitutional law experts say that the NSA is doing exactly the same thing to the American people today which King George did to the Colonists … using "general warrant" type spying. And it is clear that the government is using its massive spy programs in order to track those who question government policies. See this, this, this and this. Todd Gitlin – chair of the PhD program in communications at Columbia University, and a professor of journalism and sociology – notes: Under the Freedom of Information Act, the Partnership for Civil Justice Fund (PCJF) has unearthed documents showing that, in 2011 and 2012, the Department of Homeland Security (DHS) and other federal agencies were busy surveilling and worrying about a good number of Occupy groups — during the very time that they were missing actual warnings about actual terrorist actions. From its beginnings, the Occupy movement was of considerable interest to the DHS, the FBI, and other law enforcement and intelligence agencies, while true terrorists were slipping past the nets they cast in the wrong places. In the fall of 2011, the DHS specifically asked its regional affiliates to report on "Peaceful Activist Demonstrations, in addition to reporting on domestic terrorist acts and 'significant criminal activity.'" Aware that Occupy was overwhelmingly peaceful, the federally funded Boston Regional Intelligence Center (BRIC), one of 77 coordination centers known generically as "fusion centers," was busy monitoring Occupy Boston daily. As the investigative journalist Michael Isikoff recently reported, they were not only tracking Occupy-related Facebook pages and websites but "writing reports on the movement's potential impact on 'commercial and financial sector assets.'" It was in this period that the FBI received the second of two Russian police warnings about the extremist Islamist activities of Tamerlan Tsarnaev, the future Boston Marathon bomber. That city's police commissioner later testified that the federal authorities did not pass any information at all about the Tsarnaev brothers on to him, though there's no point in letting the Boston police off the hook either. The ACLU has uncovered documents showing that, during the same period, they were paying close attention to the internal workings of…Code Pink and Veterans for Peace. *** In Alaska, Alabama, Florida, Mississippi, Tennessee, and Wisconsin, intelligence was not only pooled among public law enforcement agencies, but shared with private corporations — and vice versa. Nationally, in 2011, the FBI and DHS were, in the words of Mara Verheyden-Hilliard, executive director of the Partnership for Civil Justice Fund, "treating protests against the corporate and banking structure of America as potential criminal and terrorist activity." Last December using FOIA, PCJF obtained 112 pages of documents (heavily redacted) revealing a good deal of evidence for what might otherwise seem like an outlandish charge: that federal authorities were, in Verheyden-Hilliard's words, "functioning as a de facto intelligence arm of Wall Street and Corporate America." Consider these examples from PCJF's summary of federal agencies working directly not only with local authorities but on behalf of the private sector: • "As early as August 19, 2011, the FBI in New York was meeting with the New York Stock Exchange to discuss the Occupy Wall Street protests that wouldn't start for another month. By September, prior to the start of the OWS, the FBI was notifying businesses that they might be the focus of an OWS protest." • "The FBI in Albany and the Syracuse Joint Terrorism Task Force disseminated information to… [22] campus police officials… A representative of the State University of New York at Oswego contacted the FBI for information on the OWS protests and reported to the FBI on the SUNY-Oswego Occupy encampment made up of students and professors." • An entity called the Domestic Security Alliance Council (DSAC), "a strategic partnership between the FBI, the Department of Homeland Security, and the private sector," sent around information regarding Occupy protests at West Coast ports [on Nov. 2, 2011] to "raise awareness concerning this type of criminal activity." The DSAC report contained "a 'handling notice' that the information is 'meant for use primarily within the corporate security community. Such messages shall not be released in either written or oral form to the media, the general public or other personnel…' Naval Criminal Investigative Services (NCIS) reported to DSAC on the relationship between OWS and organized labor." • DSAC gave tips to its corporate clients on "civil unrest," which it defined as running the gamut from "small, organized rallies to large-scale demonstrations and rioting." *** • The FBI in Anchorage, Jacksonville, Tampa, Richmond, Memphis, Milwaukee, and Birmingham also gathered information and briefed local officials on wholly peaceful Occupy activities. • In Jackson, Mississippi, FBI agents "attended a meeting with the Bank Security Group in Biloxi, MS with multiple private banks and the Biloxi Police Department, in which they discussed an announced protest for 'National Bad Bank Sit-In-Day' on December 7, 2011." Also in Jackson, "the Joint Terrorism Task Force issued a 'Counterterrorism Preparedness' alert" that, despite heavy redactions, notes the need to 'document…the Occupy Wall Street Movement.'" *** In 2010, the American Civil Liberties Union of Tennessee learned … that the Tennessee Fusion Center was "highlighting on its website map of 'Terrorism Events and Other Suspicious Activity' a recent ACLU-TN letter to school superintendents. The letter encourages schools to be supportive of all religious beliefs during the holiday season." *** Consider an "intelligence report" from the North Central Texas fusion center, which in a 2009 "Prevention Awareness Bulletin" described, in the ACLU's words, "a purported conspiracy between Muslim civil rights organizations, lobbying groups, the anti-war movement, a former U.S. Congresswoman, the U.S. Treasury Department, and hip hop bands to spread tolerance in the United States, which would 'provide an environment for terrorist organizations to flourish.'" *** And those Virginia and Texas fusion centers were hardly alone in expanding the definition of "terrorist" to fit just about anyone who might oppose government policies. According to a 2010 report in the Los Angeles Times, the Justice Department Inspector General found that "FBI agents improperly opened investigations into Greenpeace and several other domestic advocacy groups after the Sept. 11 terrorist attacks in 2001, and put the names of some of their members on terrorist watch lists based on evidence that turned out to be 'factually weak.'" The Inspector General called "troubling" what the Los Angeles Times described as "singling out some of the domestic groups for investigations that lasted up to five years, and were extended 'without adequate basis.' Subsequently, the FBI continued to maintain investigative files on groups like Greenpeace, the Catholic Worker, and the Thomas Merton Center in Pittsburgh, cases where (in the politely put words of the Inspector General's report) "there was little indication of any possible federal crimes… In some cases, the FBI classified some investigations relating to nonviolent civil disobedience under its 'acts of terrorism' classification." *** In Pittsburgh, on the day after Thanksgiving 2002 ("a slow work day" in the Justice Department Inspector General's estimation), a rookie FBI agent was outfitted with a camera, sent to an antiwar rally, and told to look for terrorism suspects. The "possibility that any useful information would result from this make-work assignment was remote," the report added drily. "The agent was unable to identify any terrorism subjects at the event, but he photographed a woman in order to have something to show his supervisor. He told us he had spoken to a woman leafletter at the rally who appeared to be of Middle Eastern descent, and that she was probably the person he photographed." The sequel was not quite so droll. The Inspector General found that FBI officials, including their chief lawyer in Pittsburgh, manufactured postdated "routing slips" and the rest of a phony paper trail to justify this surveillance retroactively. Moreover, at least one fusion center has involved military intelligence in civilian law enforcement. In 2009, a military operative from Fort Lewis, Washington, worked undercover collecting information on peace groups in the Northwest. In fact, he helped run the Port Militarization Resistance group's Listserv. Once uncovered, he told activists there were others doing similar work in the Army. How much the military spies on American citizens is unknown and, at the moment at least, unknowable. Do we hear an echo from the abyss of the counterintelligence programs of the 1960s and 1970s, when FBI memos — I have some in my own heavily redacted files obtained through an FOIA request — were routinely copied to military intelligence units? Then, too, military intelligence operatives spied on activists who violated no laws, were not suspected of violating laws, and had they violated laws, would not have been under military jurisdiction in any case. During those years, more than 1,500 Army intelligence agents in plain clothes were spying, undercover, on domestic political groups (according to Military Surveillance of Civilian Politics, 1967-70, an unpublished dissertation by former Army intelligence captain Christopher H. Pyle). They posed as students, sometimes growing long hair and beards for the purpose, or as reporters and camera crews. They recorded speeches and conversations on concealed tape recorders. The Army lied about their purposes, claiming they were interested solely in "civil disturbance planning." Mass surveillance is also being conducted to stop peaceful boycotts. Glenn Greenwald notes that the list of people targeted for mass surveillance by the American government have included: "Anyone who uses online tools to promote political ideals" Those who express "radical" ideas "Americans opposed to the Iraq war, including Quakers and student groups" "Non-violent protesters" "Political opponents" "Environmental activists, broad swaths of anti-government rightwing groups, anti-war activists, and associations organised around Palestinian rights "Martin Luther King, the civil rights movement, … environmentalists" "The National Association for the Advancement of Colored People, black nationalist movements, socialist and communist organizations, … and various rightwing groups" And the head of the NSA's digital communications surveillance program, a high-level NSA executive, the NSA whistleblower who was the source of the New York Times' groundbreaking expose on spying and Edward Snowden have all said that NSA spying is about crushing dissent  … not protecting us from terrorists. A Key Characteristic of Fascism Naomi Wolf notes that mass surveillance is one of the 10 key characteristics of fascism: In Mussolini's Italy, in Nazi Germany, in communist East Germany, in communist China – in every closed society – secret police spy on ordinary people and encourage neighbours to spy on neighbours. *** In closed societies, this surveillance is cast as being about "national security"; the true function is to keep citizens docile and inhibit their activism and dissent. The Constitution Society points out: The methods used to overthrow a constitutional order and establish a tyranny are well-known. *** Internal spying and surveillance is the beginning. A sign is false prosecutions of their leaders Glenn Greenwald writes: "Doing something wrong" in the eyes of [authoritarian]  institutions encompasses far more than illegal acts, violent behaviour and terrorist plots. It typically extends to meaningful dissent and any genuine challenge. It is the nature of authority to equate dissent with wrongdoing, or at least with a threat. Even the quintessential defender of the status quo for the powers-that-be – Cass Sunstein – notes that benevolent rulers don't need to spy on their own people like tyrants do: As a general rule, tyrants, far more than democratic rulers, need guns, ammunition, spies, and police officers. Their decrees will rarely be self-implementing. Terror is required.   End Note: For ease of reading, we deleted the footnotes from the two Supreme Court opinions.

How Brain Electro-stim Improves Cognitive Functions Posted: 29 Jun 2014 05:00 PM PDT From Radiolab: 9-Volt Nirvana

A 100-Year Legacy of World War I Posted: 29 Jun 2014 02:00 PM PDT Click for full coverage. Source: NY Times

A Matter of Time (and Distance) Posted: 29 Jun 2014 09:00 AM PDT @TBPInvictus here:   “Have you ever noticed that anybody driving slower than you is an idiot, and anyone going faster than you is a maniac?” – George Carlin A quick note on where I think technology might take us in the very near future. We’re well into the age of electronic toll collection systems (E-ZPass, etc.), the convenience of which is indisputable. These systems provide users with electronic tags – mounted on windshields and associated with specific vehicles – that register their passage through tolls and automatically deduct the appropriate amount from a prepaid account. The downside of this technological advance has been the virtual elimination of the job of “toll collector.” (I tried to scrounge up an employment series for “Collector, Toll,” but it seems BLS doesn’t drill down quite that deep, and “Cashier” is way too broad a category. I will update this post should I find the data.) One local bridge no longer has any toll collectors whatsoever. Payment is made either via E-ZPass or “Toll by Mail,” a process by which a photo of the vehicle’s license plate is snapped and a bill subsequently mailed to the registered owner. Traffic flows very smoothly and there are rarely delays. Back to the electronic toll collection system: The system registers your entry and exit points along with the time of entry and exit; these are always detailed on your monthly statement. So: You enter the thruway at Point A and exit at Point B. Let’s say it takes you one hour to travel the 85 miles from Point A to Point B. You see where this is going? The system is already in place to determine – very easily, in fact – whose average speed exceeded the lawful limit and by how much. A citation could subsequently be issued. The use of electronic toll collection systems as a tool for law enforcement – and deterrent – purposes is simply a matter of time and, well, distance. As with the now-ubiquitous red-light cameras, no points could be assessed on these violations, as it would be virtually impossible to determine who was behind the wheel. My guess is that no one would trade off the convenience of E-ZPass for the opportunity to speed with impunity and immediately lose all that “saved” time sitting in a queue waiting to pay the toll. The benefits here are twofold (in order of importance): Increased highway safety Increased revenue It’s obvious, of course, that this concept would, in one broad stroke, cover thousands of miles of highways, whereas a stationary trooper sitting roadside with a radar gun has much more limited efficacy. I am most definitely, most vehemently, against government surveillance and intrusion into our lives. I am, however, for increased highway safety and minimizing the senseless loss of life on our roadways. Secondarily, speeding costs our economy over $40 billion/year (2004 data). There will be some challenges if/when my vision becomes reality. But they will be beaten back and the state, as it usually does, will prevail. Very uncharacteristically, I’ll be okay with that in this case. Update: Seeing some comments about various ways in which the scheme I laid out can be defeated, and they’re valid. However, let’s not make the perfect the enemy of the good. Sure, there are always work-arounds, and no system is ever flawless. That said, I do think this will ultimately be deployed and will ultimately be effective in achieving its objective.

10 Sunday Reads Posted: 29 Jun 2014 06:00 AM PDT Pour a cup of coffee, butter that bagel, and cozy up with my Sunday morning reads: • For Stocks, Good News Beyond GDP (Barron’s)  see also Broad Market Gains Power Historic Rally (WSJ) • From Alpha to Beta: A Long/Short Story (Pension Partners) • Housel: Unfortunate Realities You Should Get Used To (Fool) • Time to Officially Stick a Fork in That 1929 Chart (Moneybeat) • Stiglitz: Inequality Is Not Inevitable  (NYT) see also Does Inherited Wealth Really Help the Economy?  A reply to Greg Mankiw. (Ed Dolan’s Econ Blog) • Germany's New Coal Plants Push Power Glut to 4-Year High (Bloomberg) • Toyota’s answer to Tesla is this $70,000 fuel-cell car (The Verge) • Boehner's attack on Obama's executive orders ignores presidential history (WonkBlog) see also Why John Boehner is really suing Barack Obama (The Fix) • Everything on the internet is blue (BoingBoing) • Lessons From the World Cup (Bloomberg View) What are you reading?   Has the developed world stopped waging trade wars? Source: WonkBlog

Kiron Sarkar’s Weekly Report 28th June 2014 Posted: 29 Jun 2014 04:00 AM PDT The Japanese PM announced details of his plans to stimulate economic growth. Whilst highlighting the key issues which need to be addressed, his proposals were sketchy, with a lack of concrete measures and unlikely to result in stronger growth anytime soon. Chinese June PMI was better than expected, reflecting mainly, I believe, the increase in spending by the government. However, with spending brought forward into H1, the question remains as to what happens in the 2nd half of the year. The government is hoping that the economy will pick up, though I suspect that it will have to increase its stimulus programme. In a reversal from previous comments, Mr Carney, the governor of the Bank of England (BOE), tried to dampen down the prospect of an early rise in interest rates, stating that there was still slack in the system, as wage increases were lower than expected. However, real wages are expected to increase and I suspect that UK interest rates will have to be raised sooner than the BoE would prefer, most likely in Q1 2015, though late this year is a possibility if the economic data remains strong. Sterling dipped following Mr Carney's comments, though I believe will remain firm in coming months, in particular against the Euro. There is a possibility that the EU will increase sanctions against Russia next week. Germany seems to be pressing to impose sanctions on Russia unless it implements a peace plan by Monday 30th June. Italy is opposed to additional sanctions. With the continued problems in Iraq, geopolitical risks are increasing. These risks are impacting Europe  more so than the US. US housing data continues to improve, following the slow, though weather affected, earlier months this year. Consumer confidence is also improving, as unemployment declines. I continue to believe that the US economy will recover strongly from the particularly weak Q1 GDP reading and that the US$ will strengthen, in particular against the Euro. In addition, I suspect that inflationary pressures are being underestimated and that the FED will have to raise rates earlier than currently anticipated by markets. Admittedly, consumer spending is not as robust as anticipated, though should pick up during the year. US bond yields closed lower on the week, with the 10 year at 2.53%. The much weaker revised Q1 GDP data, together with weaker than expected personal spending and increased geopolitical risks contributed to the decline in bond yields. US US Q1 GDP Q/Q was revised much lower to -2.9% on an annualised basis, down from the -1.0% previously reported (which itself was revised lower from the +0.1% initially reported) and well below the expected decline of -1.8%. It was the worst decline in 5 years and the largest downward revision since records began. Lower health care spending was a major reason for the downward revision, though weaker exports also contributed to the decline. Consumer purchases rose by an annualised rate of just +1.0%, much slower than the previous estimate of +3.1%. However, the economy is expected to rebound sharply in Q2 with growth of around +3.0%. Existing home sales rose by +4.9% in May to an annualised rate of 4.89 mn, better than the annualised rate of 4.65 mn in April and the forecast of 4.73 mn homes. Housing data is improving from a slow start this year. New home sales rose by a massive +18.6% in May M/M to an annualised rate of 504k, much higher than the 439k expected and April's revised rate of 425k. The M/M increase was the largest in 22 years and the number of homes sold was the highest since May 2008. The much higher than expected sales reduced inventories to just 4.5 months supply. The Case-Shiller April 20 city home price index increased by +10.8%, lower than the rise of +11.5% Y/Y expected and the +12.4% gain in March. This and other recent data suggests that property price increases are slowing. US May durable goods orders declined by -1.0%, worse than the unchanged level expected and the increase of +0.6% in April. However, orders ex defense and aircraft, a better reflection of business spending, increased by +0.7%, as opposed to a decline of -1.0% in April and better than the rise of +0.5% expected. Importantly, the report indicated that inventories are being rebuilt which will be positive for Q2 GDP. Consumer confidence rose to 85.2 in June, higher than May's revised 82.2 and the forecast of 83.5. It is the highest reading since January 2008. Both the current situation and future expectations components improved. Personal incomes rose by +0.4% in May, in line with expectations, whilst personal consumption expenditures (PCE) rose by just +0.2%, below the rise of +0.4% expected. The price index for PCE increased by +0.2%, the same as in April. Excluding food and energy, the FED's preferred measure for inflation, the core PCE index rose by +0.2% or +1.5% Y/Y. The US will allow the export of ultra-light crude oil for the 1st time in 40 years. 2 companies were granted export permits and shipments may start as early as August. Initial jobless claims came in at 312k, slightly below the previous weeks 314k. The 4 week moving average was 314.25k as opposed to 312.25k. Europe Eurozone (EZ) June manufacturing PMI came in at 51.9, below the 52.2 expected. Germany came in at 52.4, roughly in line with estimates of 52.5. However, the reading for France was particularly poor, coming in at 47.8 as opposed to 49.5 expected, which indicates that France remains in contraction territory. The regions services PMI came in at 52.8, lower than the 53.3 expected. Germany came in at 54.8, as opposed to the forecast of 55.7. France was also lower than expected, coming in at 48.2, as opposed to the forecast of 49.4, once again in contraction territory. The data implies that the EZ economy should grow by between +0.3% to +0.4% Q/Q in Q2. The particularly disappointing French data reconfirms the serious problems affecting the country and with no indication of a solution at present. The government’s forecast of GDP growth of +1.0% this year look particularly optimistic, as does its budget deficit estimate of 3.8% of GDP. Interestingly, the EZ PMI data suggests that disinflationary pressures are easing and that input prices are rising at the fastest rate since last November. German CPI increased to +1.0% Y/Y in June, up from +0.9% Y/Y in May. Mr Draghi has hinted that the ECB will keep interest rates at low levels until the end of 2016. He stated that banks will have access to unlimited liquidity until the end of 2016, which should be taken as a signal by markets. (Source Bloomberg). The German business confidence index (the IFO index), declined to 109.7 in June, its lowest level this year and down both from 110.4 in May and the forecast of 110.3.   The current conditions component was unchanged at 114.8, though the expectations component declined for a 2nd month to 104.8, down from 106.2 in May. The German economy is expected to slow appreciably this Q, though recover in Q3. The domestic economy, together with construction, remains strong. EZ consumer and business confidence declined to 102 in June, from a revised 102.6 in May and below the rise to 103 expected. Increased tensions in the Ukraine, combined with the strength of the Euro were cited as the main reasons for the decline. Mr Carney, the governor of the BoE, suggested that there was more spare labour capacity than thought previously, which has accounted for the lower than expected wage increases. However, he expected real wages to rise in coming months, as unemployment continues to decline. Mr Carney's comments suggest that the BoE is reluctant to raise interest rates too early. However, the BoE remains concerned about large property price increases, which they state was due to a lack of supply of housing. Sterling declined following his comments. In an attempt to curb home price increases, the Financial Policy Committee of the BoE has imposed certain curbs on mortgage lending, though the restrictions were not as great as was anticipated. As requested by Mr Putin, Russian lawmakers voted overwhelmingly to cancel the option to use force in the Ukraine to support pro Russian separatists. The Ukraine, Georgia and Moldova have signed partnership agreements with the EU, which bind the 3 countries more closely economically and politically to the EU. The agreement is certainly not one that Russia wanted and Mr Putin has warned of grave consequences. The EU has set Russia a deadline of 30th June to implement a peace plan in eastern Ukraine or face increased sanctions. Japan Prime Minister Abe unveiled his policies to stimulate economic growth, the so called 3rd arrow. Corporate taxes are to be cut to 30% over the next few years, though the reduction in revenue will be made up by broadening the tax base. He also stressed the importance of encouraging women to enter the workforce and to increase the number of foreign workers, as the Japanese population declines. He stated that changes would be made to employment rules, together with the agricultural and healthcare sectors. The government investment pension fund would also be reformed, with an increased portion of its funds invested into equities, rather than bonds. Whilst highlighting the key problems facing the Japanese economy, the proposals were light in terms of substance. CPI, excluding fresh food, rose by the fastest rate in 32 years, exclusively due to the sales tax increase in April. Core CPI was up +3.4% Y/Y in May, in line with estimates. May household expenditure declined by -8.0% Y/Y, as a result of the sales tax rise and higher inflation, whilst wages are not being increased to compensate for the higher prices. Wages, excluding overtime and bonuses, fell for the 23rd month in April. China The preliminary HSBC June Chinese PMI came is at 50.8, a 7 month high and above both the estimate of 49.7 and May's 49.4. It is the 1st time this year that the reading is above the 50 level, which indicates expansion rather than contraction. The new orders component, in particular in respect of domestic consumption, rose and the output component also came in higher. The employment component was weaker, though the rate of contraction slowed from May. The Central Bank has been easing monetary conditions and the government has both increased and brought forward capex spending, which clearly has helped the domestic economy. Kiron Sarkar 28th June 2014

What Is the St. Louis Fed Financial Stress Index? Posted: 29 Jun 2014 02:00 AM PDT For the week ending June 6, the St. Louis Fed Financial Stress Index (STLFSI) rose to -1.256 from -1.289. The latter is currently the lowest level on record for the index, which goes back to December 1993. The recent increase in the index was the first in the past five weeks, and the index has been below zero for more than two years (127 weeks). But what does all of this mean? In the aftermath of the financial crisis, arguments arose over how to monitor financial market developments, with measurement of "stress" in the market being a likely requirement of any regulator engaging in such monitoring. However, there are many ways to monitor financial stress. For example: An interest rate spread, such as the difference between yields on a "risky" asset (such as corporate bonds) and a "risk-free" asset (such as U.S. Treasuries), may be used to measure default risk. Whether financial institutions are able to secure funding to finance short-term liabilities may indicate liquidity risk. In an attempt to avoid focusing on a single indicator at the expense of others, economists and analysts created composite indexes of several of these indicators. In early 2010, the St. Louis Fed created the STLFSI, which uses 18 weekly data series to measure financial stress in the market. Weekly series are used to have a more "real-time" index to measure rapid changes in the market. However, the tradeoff of having a higher-frequency index is greater volatility and potentially more noise. The STLFSI is constructed from seven interest rate series, six yield spreads and five other indicators.1 Each of these variables captures some aspect of financial stress. Accordingly, as the level of financial stress in the economy changes, the data series are likely to move together. How should the index be interpreted? The average value of the index, which begins in late 1993, is designed to be zero. Thus, zero is viewed as representing normal financial market conditions. Values below zero suggest below-average financial market stress, while values above zero suggest above-average financial market stress. Each week, the St. Louis Fed provides a news release based on the STLFSI. The news release includes details for the following: The latest STLFSI reading The contribution of each indicator to the weekly change in the STLFSI The contribution of each indicator to the change in the index from one year ago Notes and References 1 See the STLFSI Key for a list of data series used in the index. For more details on the construction of the STLFSI, see the appendix to the January 2010 issue of the St. Louis Fed's National Economic Trends. Source: Federal Reserve of St. Louis

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