The Big Picture

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• IMF: An Overview of Macroprudential Policy Tools
• BdE: Sovereign Ratings and Their Asymmetric Response to Fundamentals
• How U.S. Torture Led to the Rise of ISIS
• Officer Involved Fatalities: 1999-2014
• Wall Street Economists = Consistently Wrong on 10-year Rate
• Performance fee baloney.

IMF: An Overview of Macroprudential Policy Tools Posted: 23 Dec 2014 02:00 AM PST

BdE: Sovereign Ratings and Their Asymmetric Response to Fundamentals Posted: 23 Dec 2014 02:00 AM PST

How U.S. Torture Led to the Rise of ISIS Posted: 22 Dec 2014 10:30 PM PST   Nice Job Creating Terrorists, You Morons … We've previously noted that many members of ISIS were members of Saddam Hussein's secular Baath Party who converted to radical Islam in American prisons. And we've documented that torture creates more terrorists.   Indeed, Salon notes: Among the most notable victims of torture was Sayeed Qutb, the founding father of modern political jihadism. His 1964 book, "Milestones," describes a journey towards radicalization that included rape and torture, sometimes with dogs, in an Egyptian prison. He left jail burning with the determination to wage transnational jihad to destroy these regimes and their backers, calling for war against all those who used these methods against Muslims *** "Milestones" remains one of the Arab world's most influential books. Indeed, it was the lodestar of Al Qaeda leaders like Ayman Al-Zawahiri (who was also tortured in Egyptian jails) and the late Osama Bin Laden. In other words, it was torture which drove the founder of modern jihad to terrorism in the first place. ISIS … Created By Torture The head of ISIS (al-Baghdadi) spent 4 years as a prisoner at the U.S. Bucca Camp in Iraq.  As the Washington Post reports: But the narrative solidifies in 2005, when [al-Baghdadi] was captured by American forces and spent the next four years a prisoner in the Bucca Camp in southern Iraq. It was from his time there that the first known picture of Baghdadi emerged. Kathy Kelly wrote in September: In January of 2004 I visited "Bucca Camp," a U.S.-run POW camp … located near the isolated port city of Umm Qasr,  in southern Iraq …. *** These men at Bucca had been marched naked in front of women soldiers.  They'd been told to say "I love George Bush" before they could receive their food rations.  They'd slept on the open ground in punishingly cold weather with no mat beneath them and only one blanket.   The guards had taunted them and they had had no way of telling their friends they were still alive. *** It's widely acknowledged that the 2003 invasion of Iraq radicalized Al-Baghdadi, with his humiliation at Camp Bucca further hardening him. Mother Jones noted in July: According to the Telegraph, members of his local mosque in Tobchi (a neighborhood in Baghdad) who knew him from around 1989 until 2004 (when he was between the ages of 18 and 33) considered Baghdadi a quiet, studious fellow and a talented soccer player. When the United States invaded Iraq in 2003, Baghdadi was earning a degree in Islamic studies in Baghdad. But within a couple years of the US invasion, Baghdadi was a prisoner in Camp Bucca, the US-run detainment facility in Umm Qasr, Iraq. And a US compound commander stationed at that prison—and other military officials—have in recent weeks wondered whether Baghdadi's stint there radicalized him and put him on the path to taking over ISIS in 2010 and guiding the movement to its recent military victories. *** The reason why he was apprehended is not publicly known; he could have been arrested on a specific charge or as part of a large sweep of insurgents or insurgent supporters. (A confidential Red Cross report leaked in May 2004 suggested than around 90 percent of detainees of Iraqi origin were arrested "by mistake.") Army Colonel Kenneth King, the commanding US officer at Camp Bucca in 2009, recently told the Daily Beast that he distinctly remembered a man resembling Baghdadi: "He was a bad dude, but he wasn't the worst of the worst." King noted he was "not surprised" that such a radical figure emerged from the facility. *** James Skylar Gerrond, a former US Air Force security forces officer and a compound commander at Camp Bucca in 2006 and 2007, says that he believes Baghdadi's stay at the prison contributed to his radicalization—or at least bolstered his extremism. After Baghdadi proclaimed the Islamic State a new nation and himself its leader, Gerrond tweeted, "Many of us at Camp Bucca were concerned that instead of just holding detainees, we had created a pressure cooker for extremism." Gerrond is now a civilian working for the Department of Defense. The Guardian reported in 2009 Critics of the facility say it had in effect become a terror training institute, run by resentful inmates under a strict interpretation of Islamic law."It is al-Qa'ida central down there," said Sheikh Ali Hatem Suleiman, a tribal leader from Anbar province. "What better way to teach everyone how to become fanatical than put them all together for scant reason, then deprive them?" Indeed, many of the top ISIS commanders – including Abu Ayman al-Iraqi and Abu Abdulrahman al-Bilawi – were high-level Iraqi officers under Saddam Hussein who were imprisoned at Camp Bucca by American forces. There was unquestionably widespread torture at Camp Bucca … Allen Keller M.D. – Assistant Professor of Medicine at the NYU School of Medicine, attending Physician in the Bellevue Hospital Primary Care Medical Clinic, and a recognized expert on torture – documents in the journal Perspectives in Biology and Medicine various forms of torture at Camp Bucca … including surgeries without anaesthetic, rape and various types of beatings (search for the word "Bucca"). The Red Cross and 60 Minutes reported that prisoners were shot at Camp Bucca. The Seattle Times reported in 2004: A U.S. resident who was held prisoner by the United States in another detention center in Iraq last year says prisoners there were also beaten and sexually humiliated. Hossam Shaltout said widespread mistreatment by soldiers in Camp Bucca detention center in southern Iraq was as inhumane as that depicted in recent photos from Abu Ghraib prison in Iraq. He described Camp Bucca as a "torture camp," where soldiers beat and humiliated prisoners. He said he saw soldiers tie groups of naked prisoners together. He said they hogtied his hands and legs and placed scorpions on his body. "American soldiers love scorpions," Shaltout said in an interview arranged by his U.S. lawyer. The Washington Post reported in 2004: On May 12, four soldiers from the 320th Military Police Battalion, based in Ashley, Pa., were charged with beating prisoners after transporting them to Camp Bucca. MPs from a different unit reported the incident, saying the legs of prisoners were held apart while soldiers kicked them in the groin. The rise of ISIS confirms what we've been saying for years … torture reduces our national security: A former FBI interrogator — who interrogated Al Qaeda suspects — says categorically that torture turns people into terrorists A 30-year veteran of CIA's operations directorate who rose to the most senior managerial ranks, says: Torture creates more terrorists and fosters more acts of terror than it could possibly neutralize. A former US Air Force interrogator said that torture just creates more terrorists A former U.S. interrogator and counterintelligence agent, and Afghanistan veteran said: Torture puts our troops in danger, torture makes our troops less safe, torture creates terrorists. It's used so widely as a propaganda tool now in Afghanistan. All too often, detainees have pamphlets on them, depicting what happened at Guantanamo. The Senate Armed Services Committee unanimously stated: "The administration's policies concerning [torture] and the resulting controversies … strengthened the hand of our enemies." Two professors of political science have demonstrated that torture increases, rather than decreases, terrorism General Petraeus said that torture hurts our national security The head of all U.S. intelligence said: "The bottom line is these techniques have hurt our image around the world," [Director of National Intelligence Dennis] Blair said in the statement. "The damage they have done to our interests far outweighed whatever benefit they gave us and they are not essential to our national security." A top counter-terrorism expert says torture increases the risk of terrorism (and see this) One of the top military interrogators said that torture by Americans of innocent Iraqis is the main reason that foreign fighters started fighting against Americans in Iraq in the first place (and see this). Former counter-terrorism czar Richard A. Clarke says that America's indefinite detention without trial and abuse of prisoners is a leading Al Qaeda recruiting tool

Officer Involved Fatalities: 1999-2014 Posted: 22 Dec 2014 04:30 PM PST Learn About Tableau Source: NY Daily News

Wall Street Economists = Consistently Wrong on 10-year Rate Posted: 22 Dec 2014 08:30 AM PST Torsten Sløk of Deutsche Bank Securities calls out Wall Street’s bad forecasts on the 10 year bonds:   As we leave 2014 behind, professional forecasters are once again predicting that long rates will go up next year. As the chart below shows, this has been a pattern for the past decade. The latest Fed Survey of Professional Forecasters predicts that ten-year rates in 2015 will go up to 3%, see the last dotted line in the chart. Subtracting the average 12-month forecast error of 60bps from that number suggests that another estimate of where ten-year rates will be by the end of 2015 is 2.4%.   Source: Deutsche Bank Securities

Performance fee baloney. Posted: 22 Dec 2014 04:00 AM PST The Banker’s Umbrella began in January of 2013, and as it turns out it seems to have become rather popular. The Banker’s Umbrella is loved by many and hated by a few. Not bad for one (former) banker and a laptop. ~~~ Performance fee baloney. You know that look teenage kids give their parents at least twice a day? You know the one I mean. The "Oh no mom, not again! I've heard it a million times" look. Yes that one. As a private banker I've been in countless situations when I've had to suppress that look when meeting a certain type of potential clients So what's that certain type of potential client, you ask? Well, it's when a prospective client asks you if you can offer them an investment advice that is based on a performance only fee. This question is always and without fail delivered with a smug smile, the type that says "Aha! Aren't I smart? I bet no one's been as smart as me to suggest this idea to you." Well the truth is that several people have suggested it (hence the teenager look of disproval). To be perfectly blunt it's a bit of a silly suggestion, because performance based fees can be harmful to the investor. People who believe the answer to better investment advisory returns is performance fees have no idea of the basic ethos of investing, which is the relationship between risk and reward. The greater the risk, the greater the possible reward, but also the greater the probability of defeat. It is a fallacy to believe that performance fees align the investor's and the adviser's interests. If you stop to consider this point for a moment, you will realize that this is basic human psychology. If you give someone a bundle of your money and tell them you're going to pay them a share based on how much profit they bring back, then that person will try to turn around as quick a buck as possible, and should the first deals head south, they'll keep doubling up and doubling up until they make a profit or go bust… with your money. When an adviser's salary is dependent on gaining the maximum amount of profit, in as short an amount of time as possible, with your money, then they will, 100% of the time, to use a term from poker, go all-in. In fact performance fees are an all-in all the time way of playing poker with your money. So what's the answer? Most importantly never, never, never believe a salesperson's spiel that performance fees are good for you, the investor. In fact there is only one fee structure for advice that is one that (unfortunately) remains relatively rare, that is a fee-only structure. A fee-only structure is fair for both sides: The investor and the adviser. The investor gets to carry the risk with his capital, as he should, and the adviser's recommendations are not skewed by a hard to resist, short-term greed incentive.

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