The Number of the Beast Is 1667
May 20, 2013
The Devil is in the details.
The Devil, of course, always claims to be "doing God’s work." Satan’s job, as it were, is to deceive, and if claiming to be "doing God’s work" deceives the credulous, then by golly, Satan will do so with the utmost sincerity.
If mixing in a bit of truth to a slurry of lies deceives the credulous, then Satan will happily mix up a batch of misdirection and deception with a dollop of truth.
The Devil is also a jokester, and so He loves dropping little hints about His influence, for example, stopping the meltdown of the S&P 500 in early 2009 right at 666, the Number of the Beast.
He also likes to toy with those sensing His presence, for example, pushing the S&P 500 (SPX) from 1,666–all too obvious!–to 1,667 in the waning seconds of trading on May 17, 2013. (The Devil is in the details.)
It turns out the Number of the Beast (traditionally 666, but 616 in some texts) refers to the Roman Emperor Nero. Though his reign mixed tyranny and extravagance in equal measure, his primary financial legacy was the devaluation of the Roman currency as a means of increasing Imperial spending.
Hmm… does that sound familiar?
He was also known for reducing the power of the Senate: "By 65 A.D., senators complained that they had no power left."
Who are the unelected rulers of monetary policy? The Federal Reserve, of course, and their bankster buddies like Jamie Dimon, who Bloomberg Businessweek just declared as "Wall Street’s indispensable man."
The only difference between 65 A.D. and 2013 A.D. is our senators are too clueless to even grasp they have no real power left.
The very fact that 1,667 is a single digit above Satan’s trademark number suggests that Satan has played a little joke on us, and that makes 1,667 the new Number of the Beast that holds Imperial power over finance and money and seeks to devalue the Empire’s currency to fund both tyranny and extravagance.
Statistics: Posted by yoda — Sun May 19, 2013 7:23 pm
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Living by the Numbers: Big Data Knows What Your Future Holds
By Martin U. Müller, Marcel Rosenbach and Thomas Schulz
Forget Big Brother. Companies and countries are discovering that algorithms programmed to scour vast quantities of data can be much more powerful. They can predict your next purchase, forecast car thefts and maybe even help cure cancer. But there is a down side.
On balmy spring evenings, Hamburg’s Köhlbrand Bridge offers an idyllic postcard view of the city’s harbor. The Elbe River shimmers in the reddish glow of sunset, forklifts, cranes and trucks seem to move in slow motion, and occasionally a container ship glides by. But from the standpoint of Sebastian Saxe, the area is primarily an equation with many variables. For the past four-and-a-half years, the 57-year-old mathematician has been working on his trickiest computing task yet at the behest of the company that manages the Hamburg port.
The port covers an area of 7,200 hectares (about 28 square miles). Roughly 200 trains a day traverse its 300-kilometer (186-mile) network of rails and its 130 bridges to transport goods that have arrived by ship. Saxe, as chief information officer of the Hamburg Port Authority (HPA), faces the enormous task of optimizing this logistical nightmare.
The amount of land is finite, and further expansion is not possible. Nevertheless, the Hamburg Senate has announced its goal of almost tripling container transshipment volumes in the city by 2025. This will only work if Saxe and his 60-member IT team manage to optimally exploit another resource: data. He certainly has plenty of it.
The port is already filled with sensors today. Trucks and freight trains are constantly transmitting their positions while incoming container ships report their location and speed. Sensors that constantly monitor port traffic are built into the Köhlbrand Bridge.
"Our goal is a totally interconnected, intelligent port, a Smart-port," says Saxe. He envisions a port in which, for example, a railroad drawbridge would no longer open at specific times, but rather just before a ship actually reaches it. This eliminates unnecessary delays for the railroad and at the terminal. Even the Köhlbrand Bridge would become "intelligent," in that it would report its current condition and predict future maintenance needs, all through the use of sensors. The frequency of scheduled maintenance dates was recently increased because significantly larger numbers of heavy trucks were crossing the bridge than had been planned for. This was of interest to Saxe and the HPA, but also to police and the customs agency, because some of the trucks were carrying illegal loads.
In the end, the complex harbor logistics will create a machine that controls itself. Saxe’s vision of the future is a sort of port exchange, allowing shipping companies to predict, down to the minute, how quickly their containers will be moved from the water to the road.
Many other companies worldwide are in the same position as the HPA. They are rediscovering a raw material that they, their facilities and their customers produce in excess every day: data.
The expression "Big Brother" has become dated. Experts would seem to have reached consensus on the term "Big Data" to describe the new favorite topic of discussion in boardrooms, at conventions like Berlin’s re:publica last week, and in a number of new books. Big Data promises both total control and the logical management of our future in all aspects of life. Authors like Oxford Professor Victor Mayer-Schönberger are calling it a "revolution." According to Mayer-Schönberger, Big Data, which is also the title of his current book on the subject, will change our working environment and even the way we think.
The most important factor is not the sheer volume of data, even though it is currently growing faster than ever. An estimated 2.8 zettabytes of data were created in 2012. One zettabyte is 1,000,000,000,000,000,000 kilobytes. Experts predict that the volume of new data could increase to 40 zettabytes by 2020. It would take about 250 million DVDs to store the amount of data being transmitted on the Internet in a single day. This volume doubles about once every two years.
New is the way companies, government agencies and scientists are now beginning to interpret and analyze their data resources. Because storage space costs almost nothing nowadays, computers, which are getting faster and faster, can link and correlate a wide variety of data around the clock. Algorithms are what create order from this chaos. They dig through, discovering previously unknown patterns and promptly revealing new relationships, insights and business models.
Though the term Big Data means very little to most people, the power of algorithms is already everywhere. Credit card companies can quickly recognize unusual usage patterns, and hence automatically warn cardholders when large sums are suddenly being charged to their cards in places where they have never been. Energy companies use weather data analyses to pinpoint the ideal locations for wind turbines down to the last meter. According to official figures, since the Swedish capital Stockholm began using algorithms to manage traffic, drive times through the city’s downtown area have been cut in half and emissions reduced by 10 percent. Online merchants have recently started using the analyses to optimize their selling strategies. The widespread phrase "Customers who bought this item also bought …" is only one example of the approach.
Turning Data into Dollars
Google and Facebook are pure, unadulterated Big Data. Their business models are based on collecting, analyzing and marketing information about their users, through advertising tailored as closely as possible to the individual. This gigantic database and the notion of what can be done with more than a billion individual profiles in the age of Big Data was worth at least $100 billion (€78 billion) to Facebook investors.
The prospect of turning their treasure troves of data into dollars is now fueling the fantasies of businesses in many industries, from supermarkets to the automobile industry, and from aviation to banks and insurance companies. According to figures published by industry association Bitkom, global sales related to Big Data applications amounted to €4.6 billion in 2012. That number is expected to increase to about €16 billion by 2016.
Countless Big Data applications are also being tested in medicine and science. Even the public sector, especially police departments and security agencies, not always the most progressive when it comes to IT, have recognized the potential benefits in their fields.
What captivates so many people is the promise of gazing into the future, thanks to the lightning speed at which massive amounts of data can be analyzed. In fact, algorithms allow for astonishingly precise predictions of human behavior, be it in front of supermarket shelves, in traffic or when it comes to credit-card payment patterns.
In 2010, Google predicted a wave of flu outbreaks on the basis of user searches. American data specialist Nate Silver predicted the outcome of the last US presidential election well in advance and more precisely than all demographers.
‘The End of Chance’
Some cities even predict the probability of crimes in certain neighborhoods. The method, known as "predictive policing," seems like something straight out of a Hollywood film, and in fact it is. In Steven Spielberg’s "Minority Report," perpetrators were arrested for crimes they hadn’t even committed yet.
Finding the presumed delinquents also doesn’t seem to present a problem. Scientists have figured out that, with the help of our mobile phone geolocation and address book data, they can predict with some certainty where we will be tomorrow or at a certain time a year from now.
The increasing accuracy of such forecasts have led American tech guru Chris Anderson to proclaim that we are arriving at the "end of theory." Austrian media executive Rudi Klausnitzer, who has just written a book on the subject called "Das Ende des Zufalls" ("The End of Chance"), has reached a similar conclusion.
It is a prospect that is not altogether appealing to some. But many already rely on the prognostic ability of soulless algorithms in the most intimate spheres of life. The extensive questionnaires used by online dating agencies are fed into algorithms designed to increase the probability of finding a compatible partner.
A gold rush of sorts is taking shape in companies, research laboratories and some government agencies. In many places, the mantra of data is extolled as the new "oil" or "gold" of the 21st century. Some people are already benefiting financially: statisticians, physicists and so-called data scientists or data miners, who advise companies on Big Data applications. As with the classic American gold rush in the 19th century, most of the money is being made by those who sell equipment, tools and expertise, Big Data specialists like Blue Yonder, a company with 85 employees.
Statistics: Posted by yoda — Sun May 19, 2013 4:39 pm
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The 14% wage rise for private-sector workers in 2012, reported by China’s National Bureau of Statistics on Friday, represented an acceleration from 12.3% in 2011.
With high labor costs eating into his bottom line, Mr. Madec uses frozen ingredients—and even complete main courses—for the dishes served at Les Templiers…. a steady increase in labor costs and food prices has fueled an unexpected phenomenon: Many restaurants can no longer afford to prepare meals from fresh ingredients in their own kitchens.
And what’s the lesson I learned from Julian Simon? As I wrote in Libertarianism: A Primer,
Over the long run, in real terms, the only price that consistently seems to rise is the price of human labor. Looking back a hundred years or so, we see that prices of goods–from wheat to oil to computers–have fallen, while the real wage rate has quintupled in 50 years. The only thing getting more scarce in economic terms, that is, relative to all other factors, is people.
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HKMEX TO CEASE TRADING, WILL CLOSE OUT & CASH SETTLE OPEN CONTRACTS MONDAY!
MAY 18, 2013 BY THE DOC 24 COMMENTS
When the Rothchild’s HKMEx was launched in 2011, much of the metals community assumed that the COMEX & LBMA, were they not to outright default, would fade into irrelevance with the advent of the new Asian metals exchange.
Two years to the day after the exchange’s launch however, in perhaps the most glaring evidence of physical gold & silver shortage to date, the HKMEx has announced it will voluntarily cease trading, and all open positions will be closed out and financially (cash) settled on Monday 5/20!
2013 Silver Eagles As Low As $3.79 Over Spot at SDBullion!
As Commodities Now reports, the HKMEx has voluntarily made the decision to cease trading and close out all open positions:
The Hong Kong Mercantile Exchange (HKMEx) announces today it has decided to voluntarily surrender the authorisation to provide automated trading services (“ATS”) granted by the Securities and Futures Commission (“the SFC”). With immediate effect, no new orders may be placed and all open positions will be financially settled at the settlement price determined by HKMEx and its designated clearinghouse.
The HKMEx’s Chairman claims that their priority is to protect members’ interests by closing their positions:
“The favourable conditions under which HKMEx was founded have not changed. Global commodity demand continues to shift towards Asia as the region undergoes sustained growth, presenting great opportunities that we will continue to exploit,” said Barry Cheung, Chairman of HKMEx. “Our priorities now are to protect members’ interests by ensuring effective closing of open positions while strengthening our shareholding base and developing new products that play to our distinctive strengths.”
In closing out the open positions, the Exchange has developed a plan in consultation with the SFC to ensure the process is orderly and that investors are well informed of the matter. The Exchange will disseminate settlement prices to its members the morning of next Monday, 20 May 2013.
In an interview with the South China Morning Post, Cheung claimed that defaulting on metals contracts has no impact on investors:
HKMEx chairman Barry Cheung Chun-yuen told the Sunday Morning Postthat the decision to surrender the trading licence and not reopen for business tomorrow would have no impact on investors and that client contracts would be honoured.
“There is no question of not getting your money back or anything like that. People absolutely do not have to worry about that and I don’t think they are.
“The only thing they will want to know is what settlement price will be used,” Cheung said.
HKMEx was working with LCH.Clearnet – the world’s largest clearing house for financial transaction settlements – to arrange settlement pricing on the exchange’s roughly 200 outstanding contracts, Cheung said.
The tiny number of outstanding contracts reflects the difficulty HKMEx has had in attracting trades to the platform that officially opened almost two years ago to the day on May 18, 2011.
We suspect that come Monday morning, more than one Chinese investor who believed he owned a gold position (and learns that in fact he held paper) will immediately attempt to source and take delivery of physical metal. As the Shanghai Gold Exchange appears to have stopped delivering gold as well, we suspect that the LBMA may be in for a bit of a physical run.
The first domino appears to have fallen in the ponzi fractional gold system.
Statistics: Posted by DIGGER DAN — Sun May 19, 2013 1:24 am
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Not bad. The economy must be just killing it! No? Well…Then why is the market ripping and roaring? You say they’re handing out free chips at the Fed window and the cards are stacked for the players? Oh excellent. That seems like a good way to run an economy. Pass me a martini.
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Trader Dan’s Market Views
Market Insights and News
“Woe to the land whose king is a child and whose leaders are already drunk in the morning. Happy the land whose king is a nobleman, and whose leaders work hard before they feast and drink, and then only to strengthen themselves for the tasks ahead”. (Eccl 10: 16-17)
"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat
In every stage of these Oppressions We have Petitioned for Redress in the most humble terms: Our repeated Petitions have been answered only by repeated injury. A Prince whose character is thus marked by every act which may define a Tyrant, is unfit to be the ruler of a free people. Source – The Declaration of Independence
Friday, May 17, 2013
Gold has come off of one horrific week in terms of price action. As noted on the price chart, the metal pushed into the region where it recently had its LOWEST CLOSE in some time. You might recall that after the spike down towards $1320, physical demand was unleashed in what can only be described as a torrent. That demand spooked bears and resulted in a wave of short covering that took price nearly $160 off that low. It was at that point that the big selling re-entered.
The resistance at $1485 – $1475 proved to be a bridge too far and down went the metal. It encountered some decent buying near $1440 but once that gave way, especially once $1420 collapsed, sell stops did the rest. Once it lost its "14" handle, many buyers stepped back, expecting that downside momentum would enable them to acquire the metal even cheaper.
I am now watching to see whether or not this market can hold support down at the shaded rectangle I have marked on the chart. Personally, I am welcoming this move back to that recent low because I want to see how it now responds. I do not like buying into markets with spike lows or selling spike tops mainly because the risk/reward can be too great based on the entry point and the exit point that tells you that the trade has soured. A test of a low, that holds is a much better entry point with lower risk. The flip side to this is that if $1320 fails to hold, it will confirm that bearish flag formation noted on the chart with a potential price projection down closer to $1100. Yikes!
It did not help matters any for gold to see in the most recent 13F reports to the SEC, that very large institutional investors have been jettisoning their shares of the gold ETF, GLD. Northern Trust dumped some 910.5 thousand shares alone in Q1 with BlackRock in second place dumping 428.5 thousand shares. If you take the largest institutional investors combined, their selling accounted for nearly 75% of the shares being dumped in GLD.
Paulson is holding firm but it would appear most are not. This is where the pressure keeps coming on the paper markets over here in the West. Institutions see no reason whatsoever to own the metal when they can better put that client money to work achieving historic gains in the US equity market bubble.
The current investing strategy is therefore very simple here in the West – SELL EVERYTHING GOLD and GOLD RELATED and buy equities; i.e. anything that is not a gold or silver mining equity.
With nearly every single passing day bringing us yet another new lifetime high in US stock markets, the pattern is clear – institutional money, and hedge fund money, are buying equities in what they now firmly believe is a NO LOSE SCENARIO. This sure bet is what the Fed and the Central Banks globally hoped to create and they have done just that.
As mentioned many times here – trying to fight the tape is a fool’s errand. Traders have to go with the money flow. Investors had better be damned careful is all that I can say. There is a vast difference between trading and investing. This is coming from a professional trader so please do not casually dismiss this.
The Fed has managed to annihilate the very concept of "RISK". If anything, the only risk that now exists is the RISK OF NOT BEING IN the STOCK MARKET and angering your clients who are sure to take their money elsewhere. Money has no loyalty – it goes to where it can gain the largest yield and all money managers understand this. If they wish to retain their client base, they must chase stocks, whether or not they want to. Again, this is just a reminder, they are not investing client money – they are trading it.
We are living through monetary history. Others coming behind us are going to pour over this period that we are privileged to be first hand participants in trying to come up with explanations for this speculative frenzy in equities that we are now experiencing. Mark it well and remember it; you can tell your kids and grandkids what it was like to watch an entire generation collectively lose their minds and throw caution out of the window. This is what ZERO YIELD environments produce.
Posted by Trader Dan at 12:22 PM
Statistics: Posted by DIGGER DAN — Sun May 19, 2013 7:07 am
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May 16, ’13
DISPATCHES FROM AMERICA
Where’s all the money gone?
By David Vine
Outside the United States, the Pentagon controls a collection of military bases unprecedented in history. With US troops gone from Iraq and the withdrawal from Afghanistan underway, it’s easy to forget that we probably still have about 1,000 military bases in other peoples’ lands. This giant collection of bases receives remarkably little media attention, costs a fortune, and even when cost cutting is the subject du jour, it still seems to get a free ride.
With so much money pouring into the Pentagon’s base world, the question is: Who’s benefiting?
Some of the money clearly pays for things like salaries, health care, and other benefits for around one million military and Defense Department personnel and their families overseas. But
after an extensive examination of government spending data and contracts, I estimate that the Pentagon has dispersed around US$385 billion to private companies for work done outside the US since late 2001, mainly in that baseworld. That’s nearly double the entire State Department budget over the same period, and because Pentagon and government accounting practices are so poor, the true total may be significantly higher.
Not surprisingly, when it comes to such contracts and given our recent wars, the top two countries into which taxpayer dollars flowed were Afghanistan and Iraq (around US$160 billion). Next comes Kuwait ($37.2 billion), where the military has had a significant presence since the first Gulf War of 1990-1991, followed by Germany ($27.8 billion), South Korea ($18.2 billion), Japan ($15.2 billion), and Britain ($14.7 billion).
While some of these costs are for weapons procurement, rather than for bases and troop support, the hundreds of thousands of contracts believed to be omitted from these tallies thanks to government accounting errors make the numbers a reasonable reflection of the everyday moneys flowing to private contractors for the world of bases the United States has maintained since World War II.
Beyond the sheer volume of dollars heading overseas, an analysis of Pentagon spending reveals a troubling pattern: the majority of benefits have gone to a relatively small group of private contractors. In total, almost a third of the $385 billion has flowed into the coffers of just 10 top contractors, including scandal-prone companies like KBR, the former subsidiary of Halliburton, and oil giant BP.
In addition, Pentagon spending on its baseworld has been marked by spiraling expenditures, the growing use of uncompetitive contracts and contracts lacking incentives to control costs, outright fraud, and the repeated awarding of non-competitive sweetheart contracts to companies with histories of fraud and abuse.
There’s been so much cost gouging that any attempt to catalog it across bases globally would be a mammoth effort. The $31-$60 billion in contracting fraud in the Afghanistan and Iraq wars alone, as calculated by the Commission on Wartime Contracting, which the United States Congress established to investigate waste and abuse, suggests the global total could be astronomical.
Since 2001, US taxpayers have effectively shipped hundreds of billions of dollars out of the country to build and maintain an enormous military presence abroad, while major Pentagon contractors and a select group of politicians, lobbyists, and other friends have benefited mightily.
Peeling potatoes, bringing home the bacon
While a handful of overseas bases, like Guantanamo Bay, date to the turn of the twentieth century, most have existed since the construction of thousands of bases during World War II. Although the number of installations and troops ebbed and flowed in the Cold War years and shrank by about 60% once it was over, a significant infrastructure of bases remains.
Scattered from Aruba and Belgium to the United Arab Emirates and Singapore, the Pentagon’s global landholdings are bigger than all of North Korea and represent by far the largest collection of foreign bases in history.
Once upon a time, however, the military, not contractors, built the barracks, cleaned the clothes, and peeled the potatoes at these bases. This started to change during the Vietnam War, when Brown & Root, better known to critics as "Burn & Loot" (later KBR), began building major military installations in South Vietnam as part of a contractor consortium.
The use of contractors accelerated following the Cold War’s end, part of a larger trend toward the privatization of formerly public services. By the first Gulf War, one in 100 deployed personnel was a contractor. Later in the 1990s, during US military operations in Somalia, Rwanda, Haiti, Saudi Arabia, Kuwait, Italy, and especially the Balkans, Brown & Root received more than $2 billion in base-support and logistics contracts for base construction and maintenance, food services, waste removal, water production, transportation services, and much more.
By the second Gulf War, contractors represented roughly one in two deployed personnel in Iraq, with the company now known as KBR employing more than 50,000 people, or enough to staff 100 army battalions. Burger Kings, Starbucks, and car dealerships, as well as air conditioning, steak, and ice cream became regular features of often city-sized bases. However, this wasn’t a phenomenon restricted to war zones. US bases worldwide look much the same, which helps explain the staggering taxpayer dollars they consume.
Calculating costs in a ‘dysfunctional’ system
The problem is, it’s remarkably difficult to figure out who’s been benefiting from all the taxpayer money. The government doesn’t bother to compile such information. This meant I had to pick through hundreds of thousands of contracts and research scores of companies in countries worldwide.
I began with publicly available government contract data and followed a methodology for tracking funds used by the Commission on Wartime Contracting. This allowed me to compile a list of every Pentagon contract with a "place of performance" – that is, the country where most of a contract’s work is performed – outside the United States since the start of the Afghan war (fiscal year 2002).
There were 1.7 million of them.
Scrolling through 1.7 million spreadsheet rows, one for each contract, offered a dizzying feel for the immensity of the Pentagon’s activities and the money spent globally. Generally, the companies winning the largest contracts have been doing one (or more) of four things: building bases, running bases, providing security for bases, and delivering fuel to bases. Among those 1.7 million contracts, there was one for $43 for sand in South Korea and another for a $1.7 million fitness center in Honduras. There was the $23,000 for sports drinks in Kuwait, $53 million in base support services in Afghanistan, and everything from $73 in pens to $301 million for US Army industrial supplies in Iraq.
Cheek by jowl, I found the most basic services, the most banal purchases, and the most ominous acquisitions, including concrete sidewalks, a traffic light system, diesel fuel, insect fogger, shower heads, black toner, a 59" desk, unskilled laborers, chaplain supplies, linen for "distinguished visitor" rooms, easy chairs, gym equipment, flamenco dancers, the rental of six sedans, phone cards, a 50-inch plasma screen, billiards cues, X-Box 360 games and accessories, Slushie machine parts, a hot dog roller, scallops, shrimp, strawberries, asparagus, and toaster pastries, as well as hazardous waste services, a burn pit, ammo and clips, bomb disposal services, blackout goggles for detainees, and confinement buildings.
The $385 billion total is at best a rough estimate; the real totals are surely higher. The Federal Procurement Data System that’s supposed to keep track of government contracts "often contains inaccurate data", according to the Government Accountability Office. Harvard University economist Linda Bilmes calls the system "dysfunctional". For example, hundreds of thousands of contracts have no "place of performance" listed at all. There are 116,527 contracts that list the place of performance as Switzerland, even though the vast majority are for delivering food to troops in Afghanistan and at bases worldwide.
The unreliable and opaque nature of the data becomes clearer when you consider that the top recipient of Pentagon contracts isn’t a company at all, but a category labeled "miscellaneous foreign contractors"; that is, almost 250,000 contracts totaling nearly $50 billion, or 12% of the total, have gone to recipients we can’t identify. As the Commission on Wartime Contracting explains, "miscellaneous foreign contractors" is a catch-all "often used for the purpose of obscuring the identification of the actual contractor[s]".
The reliability of the data only worsens when we consider the Pentagon’s inability to track its own money or pass an audit. Identifying the value of contracts given to specific companies is made more difficult by a general lack of corporate transparency, as well as complicated subcontracting arrangements, the use of foreign subsidiaries, and frequent corporate name changes.
Still, examining the top contractors is illuminating. Let’s start with the top three whose names we know:
1. KBR: Among the companies bringing home billions, the name Kellogg, Brown & Root dominates. It has almost five times the contracts of the next company on the list and is emblematic of broader problems in the contracting system.
KBR is the latest incarnation of Brown & Root, the company that started paving roads in Texas in 1919 and grew into the largest engineering and construction firm in the United States. In 1962, Halliburton, an international oil services company, bought Brown & Root. In 1995, Dick Cheney became Halliburton’s president and CEO after helping jump-start the Pentagon’s ever-greater reliance on private contractors when he was President George H W Bush’s secretary of defense.
Later, while Cheney was vice president, Halliburton and its KBR subsidiary (formed after acquiring Kellogg Industries) won by far the largest wartime contracts in Iraq and Afghanistan. It’s difficult to overstate KBR’s role in the two conflicts. Without its work, there might have been no wars. In a 2005 interview, Paul Cerjan, a former Halliburton vice president, explained that KBR was supporting more than 200,000 coalition forces in Iraq, providing "anything they need to conduct the war". That meant "base support services, which includes all the billeting, the feeding, water supplies, sewage – anything it would take to run a city". It also meant Army "logistics functions, which include transportation, movement of POL [petroleum, oil, and lubricants] supplies, gas… spare parts, ammunition".
Most of KBR’s contracts to support bases and troops overseas have come under the multi-billion dollar Logistics Civilian Augmentation Program (LOGCAP). In 2001, KBR won a one-year LOGCAP contract to provide an undefined quantity and an undefined value of "selected services in wartime". The company subsequently enjoyed nearly eight years of work without facing a competitor’s bid, thanks to a series of one-year contract extensions.
By July 2011, KBR had received more than $37 billion in LOGCAP funds. Its experience reflected the near tripling of Pentagon contracts issued without competitive bidding between 2001 and 2010. "It’s like a gigantic monopoly", a representative from Taxpayers for Common Sense said of LOGCAP.
The work KBR performed under LOGCAP also reflected the Pentagon’s frequent use of "cost-plus" contracts. These reimburse a company for its expenses and then add a fee that’s usually fixed contractually or determined by a performance evaluation board. The Congressional Research Service explained that because "increased costs mean increased fees to the contractor," there is "no incentive for the contractor to limit the government’s costs". As one Halliburton official told a congressional committee bluntly, the company’s unofficial mantra in Iraq became "Don’t worry about price. It’s ‘cost-plus.’"
Not surprisingly, in 2009, the Pentagon’s top auditor testified that KBR accounted for "the vast majority" of wartime fraud. The company has also faced accusations of overcharging for everything from delivering food and fuel and supplying housing for troops to providing base security services.
After years of bad publicity, in 2007, Halliburton spun KBR off as an independent company and moved its headquarters from Houston to Dubai. Despite KBR’s track record and a 2009 guilty plea for bribing Nigerian government officials to win gas contracts (for which its former CEO received prison time), the company has continued to receive massive government contracts. Its latest LOGCAP contract, awarded in 2008, could be worth up to $50 billion through 2018.
2. Supreme Group: Next on the list is the company that’s been described as the KBR for the Afghan War. Supreme Group has won more than $9 billion in contracts for transporting and serving meals to troops in Afghanistan and at other bases worldwide. Its growth perfectly symbolizes the soldiers-to-contractors shift in who peels the potatoes.
Supreme was founded in 1957 by an Army veteran who saw an opportunity to provide food for the hundreds of US bases in Germany. After expanding over several decades into the Middle East, Africa, and the Balkans, the company won multi-billion-dollar "sole source contracts" that gave it a virtual monopoly over wartime food services in Afghanistan.
Today, in a prime example of the revolving door between the Pentagon and its contractors, Supreme’s chief commercial officer is former Lieutenant General Robert Dail. From August 2006 to November 2008, Dail headed the Pentagon’s Defense Logistics Agency (DLA), which awards food contracts. In 2007, Dail presented Supreme with DLA’s "New Contractor of the Year Award". Four months after leaving the Pentagon, he became the president of Supreme Group USA.
Recently, Supreme has faced growing scrutiny over the way it has won competition-free contracts, with service fees as high as 75% of costs and reportedly for more than three-quarters of a billion dollars in over-billing. Last month, Supreme had the chutzpah to sue the Pentagon for awarding a new $10 billion Afghanistan food contract to a competitor that underbid Supreme’s offer by $1.4 billion.
3. Agility Logistics: Next on the list is Agility Logistics, a Kuwaiti company. It won multi-billion-dollar contracts to transport food to troops in Iraq. When the Pentagon decided against awarding similar contracts in Afghanistan to a single firm, Agility partnered with Supreme in exchange for a 3.5% fee on revenues. In 2009 and 2010, grand juries indicted Agility for massive contracting fraud, and the Pentagon suspended the company and 125 related companies from receiving new contracts. In 2012, a judge issued a default judgment against Agility in a whistleblower suit seeking more than $1 billion for overcharging the government.
And the rest …
Things don’t get much better farther down the list. Next come DynCorp International and Fluor Intercontinental, which along with KBR won the latest LOGCAP contracts. Awarding that contract to three companies rather than one was intended to increase competition. In practice, according to the Commission on Wartime Contracting, each corporation has enjoyed a "mini-monopoly" over logistics services in Afghanistan and other locations. DynCorp, which has also won large wartime private security contracts, has a history littered with charges of over-billing, shoddy construction, smuggling laborers onto bases, sexual harassment, and sex trafficking.
Although a Fluor employee pled guilty in 2012 to conspiring to steal and sell military equipment in Iraq, it’s the only defense firm in the world to receive an "A" on Transparency International’s anti-corruption index that rates companies’ efforts to fight corruption. On the other hand, number seven on the list, ITT (now Exelis), received a "C" (along with KBR and DynCorp).
The last three in the top 10 are BP (which tops the Project on Government Oversight’s federal contractor misconduct list) and the petroleum companies of Bahrain and the United Arab Emirates. After all, the US military runs on oil. It consumed five billion gallons in fiscal year 2011 alone, or more than all of Sweden. In total, 10 of the top 25 firms are oil companies, with contracts for delivering oil overseas totaling around $40 billion.
Spreading the love
Contractors are hardly alone in raking in the dollars from the Pentagon’s baseworld. Pentagon officials, military personnel, members of congress, and lobbyists, among others, have all benefited – financially, politically, and professionally – from the giant overseas presence. In particular, contractors have spread the love by making millions in campaign contributions to members of congress. According to the Center for Responsive Politics, military contractors and their employees gave more than $27 million in election donations in 2012 alone, and have donated almost $200 million since 1990.
Most of these have gone to members of the armed services and appropriations committees in the Senate and House of Representatives. These, of course, have primary authority over awarding military dollars. For the 2012 elections, for example, DynCorp International’s political action committee donated $10,000 to both the chair and ranking member of the House Armed Services Committee, and made additional donations to 33 other members of the House and Senate armed services committees and 16 members of the two appropriations committees.
Most contractors also pay lobbyists hundreds of thousands of dollars to sway military budgeteers and policymakers their way. KBR and Halliburton spent nearly $5.5 million on lobbying between 2002 and 2012, including $420,000 in 2008 when KBR won the latest LOGCAP contract and $620,000 the following year when it protested being barred from bidding on contracts in Kuwait. Supreme spent $660,000 on lobbying in 2012 alone. Agility spent $200,000 in 2011, after its second indictment on fraud charges, and Fluor racked up nearly $9.5 million in lobbying fees from 2002 to 2012.
Shrinking the baseworld
Today, there are some signs of baseworld shrinkage. The hundreds of bases built in Iraq are long gone, and many of the hundreds built in Afghanistan are now being shut down as US combat troops prepare to withdraw. The military is downsizing an old base in the Portuguese Azores and studying further base and troop reductions in Europe.
While many in congress are resisting an Obama administration request to reduce "excess capacity" among thousands of domestic bases through two new rounds of the Base Realignment and Closure process, at least some current and former members of congress are calling for a parallel effort to close bases abroad.
At the same time, however, the military is building (or exploring the possibility of building) new bases from Asia and Africa to the Persian Gulf and Latin America. Small drone bases are on the rise from Niger to Saudi Arabia. Even in Europe, the Pentagon is still building bases while closing others.
Much work remains to be done to figure out who’s been benefiting from the Pentagon’s baseworld. The billions in contracts that sustain our bases, however, are a good reminder that there are immediate savings available by reducing troop deployments and Cold War bases abroad. They are also a reminder of where we should look when we’re told there isn’t enough money for Head Start or hospitals or housing.
For decades, tens of billions of dollars in overseas spending have ended up in the coffers of a select few, with many billions leaking out of the US economy entirely. Stemming those leaks by cutting overseas spending and redirecting precious resources toward long-neglected non-military needs is an important way to help revive an economy that has long benefited the few rather than the many.
Statistics: Posted by yoda — Sun May 19, 2013 1:44 am
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Data all points to a slowing US economy despite a soaring stock market and rising consumer confidence
Posted on 19 May 2013
Is the US economic recovery all hot air? The latest economic data from the US economy all points to a slowing economy, not a growing recovery. That’s what you might expect after tax rises and public expenditure cuts. Just because everybody wants a recovery does not make it happen.
The Philadelphia Federal Reserve Bank’s factory activity report in the mid-Atlantic region fell to minus 5.2 in May, a decisive fall in business though not surprising really as new orders have been falling this year. The housing recovery is also not happening.
Housing starts slump
New US home starts plunged by 16.5 per cent to a 853,000-unit annual rate, according to the Commerce Department. Then again the latest data showed a hike in new claims for jobless benefits which grew at the fastest rate for six months. That might be an early sign that the recent better news on jobs is a flash in the pan.
Indeed, economists are now warning that the first quarter recovery in US GDP is failing and slipping back towards the lousy Q4 figure. This is the time-lagged impact of the New Year tax increases and the March cuts in public expenditure working through. It’s not rocket science.
How could anybody possibly expect anything else than a tough economy under such conditions? It beggars belief. But Wall Street has a well known ability to lose touch with reality for a while only to come thumping back to earth later on, costing everybody a huge amount of money and generating massive commissions for brokers.
Still not persuaded? Look at the 0.4 per cent fall in the Consumer Price Index, the biggest fall since December 2008 when the US was stuck deep in the global financial crisis. That might sound like an good thing. But deflation is a sign of a slowing economy, not a growing economy. Gas prices at the pumps are down by the most since the gobal economic crisis struck.
So when will US stock market investors wake up and realize that their country is going back into recession or at best sticking with economic stagnation? The economic data is starting to pile up and its widespread, comprehensive and conclusive.
Is there any reason on earth why this should be ignored? Apart of course from that heady optimism that afflicts the popular delusions of crowds?
The best selling opportunity in years? That is what some of the smartest investors are saying right now. What goes up will come down and the higher you go the harder you fall!
Statistics: Posted by yoda — Sun May 19, 2013 2:50 am
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Reason to believe the next global economic crisis will start in the East and not the West
Posted on 19 May 2013
Mirror, mirror on the wall where are the biggest bubbles of all? That is the question to ask when looking for where the next global economic crisis is most likely to erupt. It’s been five long years since the last crisis and we are about due for another. The long gap between the Asian financial crisis of the late 90s and the subprime debacle was a bit of an anomaly.
Sure the Fed appears to have saved the US from economic collapse and the death of the eurozone was greatly exaggerated. But what about the bubbles inflating in Asia today and the nationalistic governments unable to call on the moderate federalism of the US or even the eurozone to solve these problems?
Japan’s money printing
Japan is inflating its money supply three times faster than the Fed’s QE program. It is weakening the yen as intended and exporting deflation to its customers, making them less competitive. The sugar-rush effect is reflected in a booming Japanese stock market as profits from abroad will also now be higher in yen.
However, devaluation in a highly indebted economy is fraught with danger. Why hold a currency like the yen that pays almost zero interest rates if it collapsing in value? Besides the increased profits are coming to companies whose product lines are out-dated and at the cost of a ballooning money supply and inflation down the pike.
It’s also very bad news for Japan’s main trading partner China, though the response by nationalistic Chinese politicians has been to whip up public fervor over some disputed and uninhabited islands. That put a dent in Japanese car sales last year.
Of course, the situation is much worse on the Korean peninsula where the lunatics are running the assylum in the North. These guys have their triggers on nuclear weapons and can only stay in power by taking an increasingly aggressive stance.
Chinese banking crisis?
Then again the biggest threat to Asia could well turn out to be the Chinese banking system. Hedge fund manager Carson Block whose Muddy Waters Research has uncovered a series of huge financial scandals in China in recent years is now warning that the risks within China’s banking system are more severe than those in Western financial institutions before the crisis.
He told the Sunday Telegraph: ‘Our view is that China is a massive asset bubble. This puts resource-based emerging market economies and Australia, Canada and New Zealand at direct risk. A China unwind will have significant knock-on effects in other developed markets too, likely implicating liquidity and asset prices. The severity of the effects in the rest of the developed world of course partly depend on the timing of the unwind.’
Timing is the tough call, all the same. Hedge fund billionaire Jim Chanos has been shorting China for a couple of years. Still if you want to spot the next global financial crisis perhaps you should be looking East and not West.
Statistics: Posted by yoda — Sun May 19, 2013 12:27 am
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Google insider exposes ‘immoral’ tax scam
Simon Duke and Jon Ungoed-Thomas Published: 19 May 2013
Former Google executive Barney Jones has a cache of 100,000 emails and documents (
A FORMER Google executive has blown the whistle on a massive and “immoral” tax avoidance scheme that has “cheated” British taxpayers out of hundreds of millions of pounds over the past decade.
Barney Jones, 34, who worked for the internet search giant between 2002 and 2006, has lifted the lid on an elaborate structure which diverts British profits through Ireland to the Bermuda tax haven.
Although Google’s London sales staff would negotiate and sign contracts with British customers, and cash was paid into a UK bank account, deals were technically booked through its Dublin office to minimise its liabilities here. Jones, a devout Christian and father of four, is ready to hand over a cache of more than 100,000 emails and documents to HM Revenue & Customs (HMRC), detailing the “concocted scheme”.
Statistics: Posted by yoda — Sat May 18, 2013 6:44 pm
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