Category Archives: Economy and Meltdown

Guest Post: Meet Stingray Surveillance: The "Unconstitutional, All-You-Can-Eat Data Buffet"

Via Michael Krieger of Liberty Blitzkrieg blog,

It’s getting impossible to keep track of all the new spy tools being rolled out by the police state in the name of “fighting terrorism”, aka spying on innocent American citizens unconstitutionally.  I thought that I had my hands full the other day with ARGUS: The World’s Highest Resolution Video Surveillance Platform, but this “Stingray” system is already being deployed illegally in cities throughout the United States.  As the EFF states: “The Stingray is the digital equivalent of the pre-revolutionary British soldier.”  From the EFF:

The device, which acts as a fake cell phone tower, essentially allows the government to electronically search large areas for a particular cell phone’s signal—sucking down data on potentially thousands of innocent people along the way. At the same time, law enforcement has attempted use them while avoiding many of the traditional limitations set forth in the Constitution, like individualized warrants. This is why we called the tool “an unconstitutional, all-you-can-eat data buffet.”


Recently, LA Weekly reported the Los Angeles Police Department (LAPD) got a Department of Homeland Security (DHS) grant in 2006 to buy a stingray. The original grant request said it would be used for “regional terrorism investigations.” Instead LAPD has been using it for just about any investigation imaginable.


Of course, we’ve seen this pattern over and over and over. The government uses “terrorism” as a catalyst to gain some powerful new surveillance tool or ability, and then turns around and uses it on ordinary citizens, severely infringing on their civil liberties in the process.


Stingrays are particularly odious given they give police dangerous “general warrant” powers, which the founding fathers specifically drafted the Fourth Amendment to prevent. In pre-revolutionary America, British soldiers used “general warrants” as authority to go house-to-house in a particular neighborhood, looking for whatever they please, without specifying an individual or place to be searched.

The Stingray is the digital equivalent of the pre-revolutionary British soldier.


On March 28th, the judge overseeing the Rigmaiden case, which we wrote about previously, will hold a hearing on whether evidence obtained using a stringray should be suppressed.  It will be one of the first times a judge will rules on the constitutionality of these devices in federal court.

It will be interesting to see what happens in late March.  I will be watching.

Full article here.

Currency As the New WMD

Currency As the New WMD
Justin Burkhardt |

How do you hedge when shots are pips? The next world war will be computerized. The global economy is on the brink and battle lines are forming with one objective, restoring economic balance. Properly engineered devaluation measures would accomplish precisely that. This is a new age of currency wars. In the past countries would directly manipulate the value of their currency with trade wars and the like. But today’s currency war is a result of unconventional monetary policy by central banks, which indirectly impacts the value of a countries currency.
The G7 has been working hard to defuse investor concerns of a currency war, but recent comments have only stirred up confusion in the markets prompting an unintended response. On Tuesday the groups said  “fiscal and monetary policies must not be aimed at devaluating currencies” a statement that had been directed at Tokyo.
Shinzo Abe, Japan’s new prime minister, is being accused of manipulating the value of the Yen to gain an unfair competitive advantage in international markets. Shinzo has been working tirelessly to convey that his policies were not aimed at devaluing the country’s currency, but that they were targeted at deflation… and the devaluation of their currency was just an implication of that objective…. Really?
Japan may be in the spotlight today, but the truth is they are not the only country participating in this fight to the finish. Europe’s strides appear to be more subtle, but recent policies would indicated that they have a similar objective in mind… That thinking can be backed up by recent comments from Mario Draghi, head of the European Central Bank (ECB), who has stated on several occasions that the value of the Euro is too high and that a continuation of trend will negatively impact overall growth. And couldn’t we say the same thing about the United States with the Feds new “QE infinity” world? The list goes on…
The G20 is meeting in Moscow this week, so the question remains, how will they respond and what can they actually do when it’s the central banks that are indirectly impacting currency values?
Everyone is trying to devalue their currency, so we have to understand how to navigate through this tension because it will inevitably spark increased volatility in the markets.  Understanding how that volatility is going to play out is our job as currency traders…
Can your portfolio withstand what’s on the horizon, or are you still looking for the perfect hedge?


Stop looking join Forward Thinking for in-depth Insight into this market


Your currency analyst,

Justin Burkhardt

Japan Refuses To Exit Triple-Dip Recession As Q4 GDP Disappoints Expectations Of A Positive Print

Despite so much pent up hope that Japan would post a 0.4% annualized growth (and a 0.1% rise Q/Q) in its Q4 GDP, finally exiting that pesky triple dip recession it has been stuck in for the past five years, moments ago the Cabinet Office reported that contrary to optimistic expectations, in the 4th quarter the economy again contracted for the third straight quarter, this time by 0.4% annualized, and 0.1% on a Q/Q basis. This was driven by a whopping 14% SAAR implosion in exports, which should not come as a surprise to those who have been tracking the ongoing destruction of Japan’s trade balance (and current account surplus). “Japan’s economy may show some weakness for the time being. But it is likely to resume a moderate recovery thereafter due to the Bank of Japan’s monetary easing, the effect of an emergency economic package, as well as an expected moderate recovery in the global economy,” Economics Minister Akira Amari said in a statement. True: there is hope. And there is the reality that all the BOJ is doing is desperately trying to offset the loss of the Chinese export market, which courtesy of the ever escalating foreign relations snafu involving a few islands close to a massive gas field, remains as shut as ever. And as long as China refuses to assist Japan in its trade and current account deficit predicament, Amari can hope, and hope, and hope.

And the components:

How GETCO Went From HFT Trading Giant To Dwarf, And Raked Up Over $50 Million In T&E Expenses Along The Way

There was a time back in 2009 when GETCO was the absolute titan of the high frequency trading arena, printing money with the reckless abandon of a Federal Reserve on full tilt. It even got its own profile piece in the WSJ in the summer of 2009: “Meet Getco, High-Frequency Trade KingMeet Getco, High-Frequency Trade King.” However, the good days were not to last as shortly thereafter we got a flash crash, then we got three + years of Ben Bernanke’s (and every other bank’s) central planning and some $10 trillion in combined exogenous liquidity to prop up the market, both of which resulted in the complete loss of faith in a standalone stock market by the retail investor (and once the current unwind of the December rotation from stocks into savings accounts over capital gains tax fears ends, the outflows will resume especially as latest ICI data shows with the smallest inflow into domestic equities to date in 2013).

And since retail orders no longer would feed the frontrunning, sub-pennying, quote churning, flash crashing juggernaut that is HFT, that meant less revenue and profit for algo master GETCO.

How much less? A whopping 82% less in the nine months ended September 30, 2012 compared to a year prior, and 92% less when annualizing 2012 results compared to the firm’s heyday in 2008, the year in which it made a record $430 million in net income. Getco’s net income as of September 30, 2012: a tiny $25 million.

Which is why the status quo and the entire institutional infrastructure is so very desperate to get the retail investor out of hibernation and the “safety of bonds” and back in the corrupt casino known as the “stock market” dominated by the likes of Getco, Goldman, the G-7 (since the markets are now nothing more than a political vehicle to pass policy and promote a globalist agenda), and, of course, Ben Bernanke.

To see the desperation visually, here is a chart of private GETCO’s net income, which was revealed for the first time today as part of the S-4 filed in relation to the still very shady collapse and acquisition of former market making giant Knight Capital, which suicided itself in the span of 30 minutes after an errant algo literally destroyed the company.

GETCO Net Income – the fun days are over.

Getco Revenue – not only a spending problem; a revenue problem too.

Yet while as revenues drop, even GETCO has no choice but to build out its collocation infrastructure, putting up ever bigger, ever faster, ever frontrunning-er computers at exchanges, just so it can in turn be bigger and faster than every one else who is immitating its strategy of bringing nothing more to the table than the fastest algorithm that can and will intercept any inbound orders and scalp pennies per trade on millions and millions of trades.

Oh well, it was fun while it lasted – and now, like with AAPL, like with every other industry in which the frontrunner no longer provides anything unique or special, the margin war begins. May the one with the largest balance sheet and biggest accordion credit facility win.

And yes, it definitely was fun: one of the P&L line items broken down was the firm’s “travel and entertainment” expenses. At $52.8 million in the past six years (annualizing the 2012 number), travel was probably modest, but the entertainment sure was grand, especially for whoever the clients on the receiving ends of the various expensed lap dances entertainments were.