Morgan Stanley CEO: Some Facebook investors were ‘naive’

Hyperinflation dates – via @historysquared

Leon Panetta: A Crippling Cyber Attack Would Be ‘Act of War’

PANETTA: Well, there’s no question that if a cyber attack, you know, crippled our power grid in this country, took down our financial systems, took down our government systems, that that would constitute an act of war.

The opposite is obviously a different story


I sat down with Defense Secretary Leon Panetta for a “This Week” interview and we discussed the growing threat from China. Read our exchange on the cyber threat from China and check out our complete conversation in the web-only video below to find out how concerned Panetta is about the Asian power’s aggression in the South China Sea.

TAPPER: So, you are headed to Asia, and you will be meeting with your Chinese counterpart in Singapore.  You’ve said that we face the possibility of a  cyber attack. This is one of the things you talked about last time with me, about how this was a very big, serious issue of concern for you.  And you said it could be the equivalent of Pearl Harbor.

The Pentagon has acknowledged recently China is the biggest source of cyber attacks against this country, including stealing our military secrets.  Newt Gingrich spoke about this threat on the campaign trail often.  He said cyber attacks, cyber spying, are quote, “acts of war.” Do you agree?  Are they acts of war, and how would the United States respond?

PANETTA: Well, there’s no question that if a cyber attack, you know, crippled our power grid in this country, took down our financial systems, took down our government systems, that that would constitute an act of war.

But what we’re involved with here is the effort to make sure that never happens.  And in order to do that, we’ve got to engage. You know, I think it’s important for us to engage China in this effort.  That’s one of the issues I raised when the minister of defense came here from China.  How can we better engage on this issue, to share information and to ensure that those kinds of attacks never happen, because this is an area where the technology is developing quickly and where clearly it is becoming an adjunct in terms of any country that moves against another country militarily.

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Capital Flight Intensifies to Record Levels in Spain; Outflows Make Spanish Banks Increasingly Reliant on ELA Funding [Mish]


Here is a note regarding capital flight in Spain and Greece that I received via email.

Capital flight has intensified to record levels in Spain but interestingly leveled off in Greece. Capital flight from Greece is expected to resume when next reported given statements by the Greek president.

The original source of this information appears to be Credit Suisse AG.

 Spanish private Sector Deposit numbers dropping at a faster rate

The Spanish bond markets continue to be viewed with both suspicion and concern by would be investors, with the shocking size of the Bankia bailout send clear warning signs of what else might yet emerge from the Spanish banking sector. Investors were also unimpressed by what appears to have been a very poorly thought out strategy for recapitalising Bankia, with the ECB indicating that they were not consulted by the Spaniard’s before the bonds-for-repo strategy was announced. The Spanish government has lost further credibility because of its handling of this issue, and has since announced that it will indeed have to raise cash from the markets and use the proceeds to recapitalise Bankia.

The ECB published the latest aggregated balance sheet of the euro area MFI’s on Wednesday, which contained the usual array of interesting and relevant data. The Spanish numbers were obviously in focus given the markets current attention to the Iberian peninsula. The data showed that the run up in bank buying of Spanish Government bonds came to an end in April, with a net reduction of €3.3bn in holdings being recorded at month end.

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Is it possible to issue Eurobonds to maintain fiscal balance in the European Union? [randomthingsthatcometomyhead]

The title of this article is one of the current controversies within the European Union, which is an element of friction between those who believe they are necessary to contain the current crisis in European sovereign debt and those who maintain that the issuance of Eurobonds countries would fail to meet its deficit targets spending again so excessive and consequently would cause the dissolution of the EU itself and lead to non-compliant countries to an economic crisis and deep long-term consequences economic and social terms.
But from my point of view, both positions are wrong, it really needs to be discussed is not whether Eurobonds whether, or not, but the type of formula to be used to issue them.
Those who are against Eurobonds argues that the absence of a common fiscal policy, and a systematic failure by some countries of the deficit targets would make the Eurobond issue was a breach of stimulated deficit, making that those countries responsible for public accounts had to endure mismanagement and wasteful spending irresponsible countries.
This argument is false, since it would be pointless to issue Eurobonds solidarity among all members of the European Unio an amount to be determined individually by each country in terms of supposed needs. If done this way there would be no difference with what is happening right now. So we might call Eurobonds open bar meaningless.

How The Super Rich Avoid Taxes Even As They Demand That The Rest Of Us Pay More [theeconomiccollapseblog]


How The Super Rich Avoid Taxes Even As They Demand That The Rest Of Us Pay More

The way that we tax people in the United States is fundamentally broken and should be completely discarded.  The U.S. tax code is absolutely riddled with loopholes that allow the super rich to legally avoid taxes while many of the rest of us are being taxed into oblivion.  In our system of taxation, middle class families that work hard and try to play by the rules are deeply penalized while those that are willing to abuse the system make out like bandits.  There is something fundamentally wrong with a system that enables wealthy politicians such as Barack Obama and Mitt Romney to pay a smaller percentage of their incomes in taxes than millions of middle class families.  Mitt Romney hasmillions of dollars parked down in the Cayman Islands and in other tax havens.  He does this to avoid taxes.  Unfortunately, most Americans do not have the resources to funnel money through offshore tax havens.  Most Americans just automatically have their paychecks shredded by taxes and then try to live on whatever is left over.  Most Americans are just trying to survive financially from one month to the next.  But the super rich have options.  Thanks to technology, they can live almost anywhere they want and they can run their companies and manage their investments from anywhere in the world.  The truth is that the wealthier you are the easier it is to avoid taxes.  But even as the ultra-wealthy do their best to avoid taxes, many of them still feel free to demand that the rest of us be taxed more.

So what are some of the ways that the super rich avoid taxes?

Well, let’s start with those that are just “somewhat wealthy”.  Many millionaires still want or need to be U.S. citizens, so they are subject to the U.S. tax code.  Fortunately for them, their tax lawyers know of thousands of loopholes that have been designed to help the rich avoid taxes.

The following is from a recent article by Jen Talley….

Some of the richest people in the country pay the least, relatively speaking, in taxes. How is this possible? Answer: Through the clever manipulation of the U.S. tax code’s loopholes. And it works: as income rises, effective tax rates rise as well, but only up to a point. IRS data shows that the effective income tax rate flattens out at just over 24 percent for those making over a million dollars. As income exceeds $1.5 million, the rate begins to decline; those with incomes above $10 million pay an average income tax rate of around 19 percent. So, how do they do it?

You could write an entire series of books on the technical details of how this gets done.  Trust me, I studied tax law when I was in law school.

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Monthly Gold Charts for May 2012 []



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