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US spy agency gathers data on phone locations – Americas – Al Jazeera English

US spy agency gathers data on phone locations – Americas – Al Jazeera English.

The report in the Washington Post says the NSA inadvertently gathers US location records [Reuters]
It is being reported that the National Security Agency is gathering nearly five billion records a day on the whereabouts of mobile telephones around the world.

That is according to documents leaked by whistleblower Edward Snowden published by the Washington Post.

The newspaper says the NSA inadvertently gathers US location records, along with the billions of other records it collects by tapping into worldwide mobile network cables.

The programme is detailed in documents given to the Post by former NSA systems analyst Edward Snowden.

Such data means the NSA can track the movements of almost any mobile phone around the world, in addition to tracking who that cell user is calling.

The report said the NSA does not target Americans’ location data intentionally, but acquires a substantial amount of information on the whereabouts of domestic cellular telephones “incidentally.”

One manager told the newspaper the NSA obtained “vast volumes” of location data by tapping into the cables that connect mobile networks globally and that serve US mobile phone as well as foreign ones.

A spokesman for the Office of the Director of National Intelligence declined to comment on the report.

NSA officials have said no NSA programme gathers data on US mobile phones inside the US.

‘Guilt by association’

Senior Staff Attorney at the non profit advocacy Electronic Frontier Foundation Kurt Op-Sal told Al Jazeera that the programme was against civil liberties.

“It is being used to track people to find out associations between one person and another and to build guilt by association,” he said.

“If we want a future that has freedom we need to have privacy.

“The UN has recognised a freedom of association without having the government making assumptions based on those associations.This programme is designed to destroy that.”

Facing a public outcry and concern that programmes are targeting average Americans as well as international terrorism suspects, Republican and Democratic members of Congress are writing legislation to clamp down on the data collection and increase public access to information about it.

Advocates responded to the Post report by calling on Congress to take up legislation to reform NSA data-gathering programmes.

“How many revelations of NSA surveillance will it take for Congress to act? Today’s news is the latest startling blow to the right to privacy,” Zeke Johnson, director of Amnesty International USA’s Security and Human Rights, said in a statement.

 

This Is How The NSA Is Tracking You This Instant | Zero Hedge

This Is How The NSA Is Tracking You This Instant | Zero Hedge.

That little “entertaining” cell phone in your back pocket, which you are so addicted to thanks to all its apps, videos, messaging function and all other cool bells and whistles, that you can’t possibly live without? It is simply the definitive NSA tracking beacon used to find where you are at any given moment. The following infographic explains how the NSA does just that…

 

“For Sale. Baby Shoes. Never Worn.” | Collapse of Industrial Civilization

“For Sale. Baby Shoes. Never Worn.” | Collapse of Industrial Civilization.

“For Sale. Baby Shoes. Never Worn.”

02 Monday Dec 2013

Dystopian-Worlds-1

Despite mounting evidence of our grim reality, the world’s psychopathic leadership remains willfully deaf, dumb, and blind to the unfolding global ecocide and humanicide. A persistent sounding of the alarm by a tiny minority of the population only seems to have irritated and offended those in the elite class who are pressing the fossil-fueled industrial machine onward, full steam ahead. However, it’s not a cliff we are headed towards because surely the psychopaths would have hidden their parachutes underneath their business suits. There will be no Bottleneck for humans because we’re headed toward the black hole of extinction from which nobody gets out alive. Yes, they’ll be a few hangers-on for a brief period until there is only one lone straggler… and then darkness for the human species along with 99% of all other life. We’re doomed by a pathocracy:

…from Greek pathos, “feeling, pain, suffering”; and kratos, “rule”

A totalitarian form of government in which absolute political power is held by a psychopathic elite, and their effect on the people is such that the entire society is ruled and motivated by purely pathological values.

A pathocracy can take many forms and can insinuate itself covertly into any seemingly just system or ideology. As such it can masquerade under the guise of a democracy or theocracy as well as more openly oppressive regimes…

Kevin Moore, a frequent commenter on this site, has provided us with an excellent summation of current factors which clearly spell extinction for the “wise” ape. Certainly if a reasonable person in charge studies his list, they would want to turn this ill-fated ship around before it quite literally takes everyone down into a deep, watery grave. On the contrary, Kevin points out that they are “throwing the compass and fishing gear overboard” and “boring holes in the hull while distributing all the rations for immediate consumption.” I’m afraid those who have managed to work their way into political positions are forbidden from making any decisions jeopardizing business-as-usual; but as the memes go, there is no business on a dead planet nor is there a planet B. The least these politicians and corporate heads could do is be honest with their own children by telling them their future is not as important as the short-term profits to be had right now by ripping up the Earth’s last remaining resources and fouling the biosphere. If they cannot be truthful to their own offspring, how could we expect them to be forthright and unbiased with us?

At any rate and for posterity’s sake (however brief that may be), here is Kevin’s detailed and ‘hopium-free’ list:

Yesterday I sent out an email to a long list of people concerning the meeting I had with the local council’s climate change officer, during which I pointed out we are in the early stages of complete meltdown of planetary systems. And ‘nobody’ is at all bothered.

Here is what I sent as a summary of the meeting: .

I raised the following points with Colin Comber, New Plymouth District Council climate change officer, at our meeting on Friday, 29th November, 2013. On most points he had nothing to say.

1. The forcing factor for methane has been raised from 23 times CO2 to 34 times CO2. Even that multiplier understates the warming potential in the short term, and a figure of at least 100 times should be used for methane bursts.

2. Recent methane bursts in the East Siberian Sea have resulted in 2000ppb, which is equivalent to over 200ppm CO2 in the short-term, making the total global CO2 equivalence 600ppm (at least). The extraordinarily high concentration of greenhouse gases has resulted in rapid temperature increases in the Arctic (up around 1C since 2006, despite the huge amount of energy involved in melting ice.).

3. 2012 saw the lowest ever summer ice area.

4. The current Arctic ice area is hovering around two standard deviations below the historic average, but much of the ice is thin and new, making 2013 the lowest stable ice volume ever.

5. Atmospheric CO2 hit 400ppm earlier this year. It troughed at 393ppm (photosynthesis cycle) and is on its way up; it is anticipated to reach 403ppm April-May 2014.

6. The heat forcing of current atmospheric CO2 is equivalent to around 400,000 Hiroshima-sized bombs being exploded every day.

7. The present level of atmospheric CO2 is 40% above the pre-industrial level and corresponds to a sea level 23 meters above current; the reason we don’t have an immediate sea level rise is the thermal lag of warming deep oceans and converting ice into water. Such a level of CO2 has not been experienced any time in the evolution of humans over the past 2 million years. Indeed, for much of our recent history the CO2 level was around 180ppm and there were thick ice sheets as far south as central England.

8. The IEA has announced we are on track for a rise in average temperature of 3.5oC by 2035. Such a temperature rise puts temperatures beyond anything experienced in human history and most of the Earth into an uninhabitable zone. Interestingly, NZ governments quote the IEA as the best source of information when it comes to energy but completely ignore the IEA when it comes to unwelcome information about climate. The IEA is talking about a runaway greenhouse gas situation.

9. Acidification of the oceans [due to absorption of anthropogenic CO2 from the atmosphere] is proceeding at an unprecedented rate, leading to stress of organisms dependent on bicarbonate cycle for shell formation. Industrial activity is altering the chemical and biological composition of the oceans at a rate faster than that of the great Permian Extinction Event which wiped out 95% of life on Earth. Continuation on the current path of burning fossil fuels will render the oceans uninhabitable to most existing marine species, and then wipe out most terrestrial species.

10. I was personally shocked to see millions of jellyfish on a local beach recently. Although my observation has no scientific significance it is indicative of the ‘death of the oceans’ I have been reading about; we are transforming the oceans back to some primeval form, similar to that of 600 million years ago, wiping out the species (turtles, sunfish etc.) that feed on jellyfish and loading the oceans with toxins. I had previously noted the paucity of sea life in rock pools compared to 30 years ago (this is presumably not from over-collection, since the beach has been designated a maritime protection zone).

11. Whereas the previous five mass extinction events (other than the one that wiped out dinosaurs) were due to natural volcanic activity, the present mass extinction event is due to industrial activity and emissions from industrial activity.

12. An unknown amount of radiation is leaking from the crippled Fukushima reactors into the Pacific Ocean. People on the west coast of the US are now extremely concerned, particularly since mass deaths of sea life are now being frequently reported.

13. Australia recently reported the highest ever October temperatures (corresponding with the earliest severe wildfires).

14. Typhoon Haiyan was the biggest storm ever to make landfall and resulted in unprecedented damage. This was due to extraordinarily hot sea water associated with ocean warming. An excellent essay on Nature Bats Last highlighted the fact that prior to the Second World War people in the region lived without the ‘benefits’ of civilization, and when storms smashed things up they just picked up the pieces and rebuilt their huts, got water from lakes and rivers, and went back to fishing from small boats: now they are unable to do any of that because all the natural, sustainable systems have been ruined or covered with concrete and asphalt, and industrial civilization resulted in a population explosion that resulted in far more victims than there would have been if development had not occurred.

15. If we imagine the Earth totally covered with industrial civilization (no land available for food production) it is clearly not sustainable. 90% covered by civilization is not sustainable. Nor is 80%. Not even 50% is sustainable. The current level of civilization utilises about 43% of the primary production of the Earth and has resulted in a 0.85C rise in average temperature. That 0.85C rise is already having catastrophic effects (meltdown of the Arctic, super-storms etc.)

16. The fact that we already have meltdown (lowest Arctic ice, extraordinary storms, death of corals etc.) at 0.85C above the long-term average indicates that we are already in overshoot with respect to population and resource consumption. Despite the fact that we have reached the meltdown stage, governments persist with policies predicated on increased population and increased resource use, which is completely insane. NPDC [New Plymouth District Council] advocates the same kind of insanity on a daily basis.

17. The previously proposed ‘safe’ level of temperature rise of 2C is not safe at all, and was only ever an arbitrary number. But climate specialists now admit that warming cannot be restricted to 2C anyway, and that we are on track for a 4C or 6C rise in average temperature, i.e. a largely uninhabitable planet in a matter of decades, probably by 2060, which would be within the normal lifespan of children living today. If the International Energy Agency is correct, the Earth will be largely uninhabitable by 2040.

18. Nothing whatsoever is being done to curtail emissions. International negotiations are a farce predicated on ‘kicking the can down the road’ for as long as possible. NPDC policy, mirroring that around the world, is geared to increasing CO2 emissions, via increased population, increased use of concrete, increased dependence on internal combustion engines, etc. I quoted the incident I had witnessed of two petrol-powered vehicles being used to deposit and level gravel on a path in Pukekura Park when one person with a wheelbarrow could have done the job (and 50 years ago that was how the job was done); meanwhile, the mulching machine in operation in the park prior to our meeting would have consumed more energy in a few hours than the electric bikes the council promotes would save in a year.

19. Extraction of conventional oil peaked over 2005 to 2008, and the economic system is now being propped up by desperation measures centered around fracking, deep-sea drilling, extraction from tar sands, etc. as well as consuming ever greater amounts of energy, such activities increase the emissions associated with fossil fuel extraction, thereby exacerbating the climate catastrophe.

20. We cannot look to John Key* or Jonathan Young** or Andrew Little*** for leadership on environmental issues: they are simply opportunists acting as agents of global corporations and money-lenders; they implement policies favourable to global corporations and money-lenders which entail trashing the environment, generally as quickly as possible.

21. Currently, NPDC is fully committed to destroying the futures of the young people living in the district and elsewhere via resource depletion and environmental collapse, as indicated by the huge display in the council foyer which announces that NPDC spends 2c of every dollar collected promoting economic growth. (Economic growth equates to increased resource consumption and increased emissions.)

22. The present economy has no future because of energy depletion and because it is increasing the level of pollution, both locally and globally. Continuation on the present path of searching for and burning fossil fuels results in an uninhabitable planet within decades. Drastically reducing fuel consumption leading to total abandonment of fossil fuels is the only sane option. (It may be too late for that, but it is still the only sane option.)

23. This is not a matter of priorities. Surely there can be no priority higher than ensuring the next generation has a habitable planet to live on. The system ignores the most important priority of all, and therefore the system is INSANE.

24. Everyone within the system pretends nothing is wrong and that the system has a future even when a modicum of rational thought indicates it doesn’t (infinite growth on a finite planet is mathematically impossible.)

25. The composition of the new council give us no reason for optimism and many reasons for extreme pessimism.

26. The main reason the general populace of the district continues to ‘behave badly’ -purchase and use oversized vehicles, cover land with concrete and asphalt, consume at unsustainable levels etc.- is because they are encouraged to by NPDC. The only message they get from the council is that everything is rosy (when the reverse is the case and we are mightily close to collapse).

27. The overuse of internal combustion engines is causing severe health problems globally and within the district. Coupled with consumption of junk food, mechanized transport is causing obesity and other diseases. Consumerism is generating a freak society, and each week that passes the ‘freak show’ becomes more bizarre.

28. There is a culture of ‘spend, spend, spend’ amongst council officers, with utterly ridiculous projects being undertaken. Apart from being totally unnecessary, these concrete and steel projects put additional CO2 into the atmosphere and bring forward abrupt climate change and an uninhabitable planet, are financially crippling the district, and pushing those on low fixed incomes ‘off the cliff’.

29. I pointed out that I spoke with Gary Bedford, regional environment officer, prior to returning to NP in 2006, and raised the matters of Peak Oil and Abrupt Climate Change; he ‘did not want to know’ and has done nothing whatsoever to protect the district. Indeed, he is on record as making absurd statements such as: “Climate change will be good for Taranaki.” I wish to have a follow-up session with him.

30. I have been proven right on practically everything I said in 2006 and subsequently to variously composed councils since 2006. Council officers have been proven consistently wrong. But it makes no difference how often council officers are proven wrong, nothing in the system changes and the insanity continues.

31. NPDC has been provided with the most accurate data and analysis available over many years (particularly my submission to the draft plan 2013), and NPDC has ignored it all. Hence, everything that matters has gotten worse and will continue to get worse by the day.

32. As far as I can establish, Colin Comber is the only council officer in a position to challenge the nonsense churned out by the bulk of the administration, in so far as all the policies advocated by senior council officers result in increased emissions and an ever faster meltdown of the global and local environment. I pointed out to him that he has ‘sat on his hands’ since our first meeting (around 6 years ago) and everything has gotten worse as a consequence.

Notes:

*John Key: NZ Prime Minister.

**Jonathan Young: MP for the city

***Andrew Little: List Labour MP for the city (MMP system).

Andre Judd: recently elected (October 2013) mayor of the city.

What is particularly interesting for me is that Jonathan Young, Andrew Little and Andrew Judd all have copies of my most recent book ‘The Easy Way’ (which details most of what is discussed on CoIC and NBL etc.) and that I had several sessions with Andrew Little on the content of TEW, and numerous sessions with Andrew Judd prior to his election.

Old habits die hard, but if you’re a smoker and you’ve got stage 3 cancer staring you in the face, the only two options are to radically change your behavior or die with your bad habits. We’ve already destroyed the Earth’s air conditioner which has altered the Jet Streams, unlocked the methane monster, and set off various other positive feedback loops ushering in a new normal of extreme weather. As a result, humans no longer enjoy a stable climate within which to cultivate food and can no longer depend on feshwater supply from seasonal snow melt. Yes, it’s rather a bit too late, but why keep digging when the hole you are in is already way too deep?

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They’re Going to Dump the Fukushima Radiation Into the Ocean Washington’s Blog

They’re Going to Dump the Fukushima Radiation Into the Ocean Washington’s Blog.

Yup … They’re Going to Dump It

Tepco is planning on dumping all of the radioactive water stored at Fukushima into the ocean.

Others are pushing them to do this as well.

As EneNews reports:

Juan Carlos Lentijo, head of IAEA’s mission to Fukushima Daiichi, Dec. 4, 2013: “Controlled discharge is a regular practice in all the nuclear facilities in the world. And what we are trying to say here is to consider this as one of the options to contribute to a good balance of risks and to stabilize the facility for the long term.”

Shunichi Tanaka, chairman of Japan’s Nuclear Regulation Authority, Dec. 4, 2013: “You cannot keep storing the water forever. We have to make choice comparing all risks involved.”

Xinhua, Dec. 4, 2013: Lentijo said that TEPCO should weigh the possible damaging effects of discharging toxic water against the total risks involved in the overall decommissioning work process. […] Tanaka highlighted the fact that while highly radioactive water could be decontaminated in around seven years, the amount of water containing tritium will keep rising, topping 700,000 tons in two years. […] nuclear experts have repeatedly pointed out that [tritium] is still a significant radiation hazard when inhaled, ingested via food or water, or absorbed through the skin. […] fisherman, industries and fisheries bodies in the Fukushima area and beyond in Japan’s northeast, have collectively baulked at the idea of releasing toxic water into the sea […] TEPCO will be duty-bound to submit assessments of the safety and environmental impact […]

NHK, Dec. 4, 2013: IAEA team leader Juan Carlos Lentijo […] said it is necessary and indispensable to assess the impact the tritium discharge might have on human health and the environment, and to get government approval as well as consent from concerned people.

Japan Times, Dec. 4, 2013: “Of course . . . public acceptance for this purpose is necessary,” said Lentijo, adding strict monitoring of the impact of the discharge would also be essential.

AFP, Dec. 4, 2013: [L]ocal fishermen, neighbouring countries and environmental groups all oppose the idea.

See also: Gundersen: They want to dump all Fukushima’s radioactive water in Pacific — Tepco: It will be diluted, then released — Professor suggests pumping it out in deep ocean (VIDEOS)

In the real world, there is no safe level of radiation.

And there are alternatives.

Dr. Arjun Makhijani  – a recognized expert on nuclear power, who has testified  before Congress, served as an expert witness in Nuclear Regulatory Commission proceedings, and been interviewed by many of the largest news organizations – told PBS in March:

We actually sent a proposal to Japan two years ago, some colleagues of mine and I, saying you should park a supertanker or a large tanker offshore, and put the water in it, and send it off someplace else so that the water treatment and the water management is not such a huge, constant issue. But [the Japanese declined].

Unfortunately, Japan has devolved into a crony capitalist tyranny. Tepco – with no financial incentive to actually fix things – has been insanely irresponsible and has only been pretending to contain Fukushima. And see this.

So instead of doing something to contain the radiation, they’re going to dump it.

Postscript: In related news, the Japanese government has embarked on a massive program ofburning radioactive waste throughout Japan … instead of encapsulating it in glass or otherwise containing it.

Getting Ready for the Big One: February 2014 | ToTheTick™ToTheTick™

Getting Ready for the Big One: February 2014 | ToTheTick™ToTheTick™.

Getting ready for Christmas? What’s Santa got in his sack for you this year? Well, if there’s one thing you should be preparing for, then it can only be the big crash of February 2014. The signs have been there for months now and it’s definitely now on the books for February next year. Santa will be emptying his sack and it won’t be presents that will be falling from the sky as his sleigh goes whizzing past us.

Preordained Events

Stick the date in your diary, pop it on your iPad and synch it with your iPhone. Use them while you can, because they will be relics of the past most undoubtedly in the coming months. You won’t be needing anything in the future, once the financial world implodes and it is set to happen in February 2014.

If we were in 1929, this would be June 1929, just a few months before the crash happened back then. Yes, we can say whatever we like with numbers, but like cameras, there are some calculations that never seem to lie. Businesssweek’sTom DeMark, a financial analyst has put together indicators that are able to predict movements of the market with surprising accuracy. DeMark states that “the market’s going to have one more rally, then once we get above that high, I think it’s going to be treacherous. I think it’s all preordained right now”.

Some might be saying that we didn’t need a crystal ball and we had no need for mathematics either to show that. You just had to look at how the Federal Reserve has bounced the financial markets back into a false-sense of security without actually doing anything at all to change the economy. Where’s the employment, where’s the increase in industry? It’s in the past. The only thing that is there right now is the virtual prosperity of the financiers and the banks. The next US shutdown and arrival at the debt ceiling will be just in time too for the biggest crash in history and will probably be linked.

Cash in on the last rise of the financial markets before what has been set down long ago comes of age and ripens completely. After that, who knows! You’ll have to buy low and wait a long time before the markets move back up.

The chart that compares pre-1929 and today is uncannily identical. Take a look for yourself. Pooh-pooh it, refuse to see it, do whatever you wish, but the crash will be coming and it’s the banks that started it all. The government will finish it all. God bless America! Game over! Goodnight!

DeMark's Market Predictions

It’s something when you end up witnessing the downfall of your own country. Some have been predicting it for years now and have been shouted down. They will be consoled by ‘I-told-you-so’ vociferating. But, it’s doubtless if that will help them anymore than anyone else.

The number of companies that is pushing the stock markets higher is narrowing at an alarming rate and there are a handful today that are taking the markets higher. That handful will gradually reduce and collapse. The eggs that were put into one basket by Ben Bernanke will end up being splattered on Janet Yellen’s face as she takes over. She should get out now while she can! The few companies that are dragging the financial market up by the collar are distorting the perception of the rest of the companies there and so speculation is becoming greater and greater.

January will see the bull rush on the financial markets for the last time. Then things will fall dramatically. You’ve been warned.

Yet again, those that believe they know will turn their noses up and say it’s never going to happen. Granted, the markets are unpredictable. But, there is one thing we all have to agree on, they are buoyant on nothing right now. They are increasing without any reason to do so. That won’t last at all.

January is named after the ancient Roman mythological God Janus. He’s the god of beginnings and transitions, changes and endings or new beginnings. This year Janus, the gateway god, will be looking back into the past to 1929, stopping off on the way at the financial crisis of 2007/2008. But, he isn’t two-faced for nothing.

He’ll be looking into the future and pin-pointing February as the time you’ll need to take cover. Forget the financial crisis of yesteryear or yester-century. This one will be the biggest, the best, the most of everything you could imagine.

The Americans always did excel in verbose language and hyperbole. They always did excel at showing the world that they were the top of the roost and the best at whatever they did. As the last beats of Auld Lange Syne play out, ringing in your ears, the Americans will be surely remembered as those that started it all. Well done the Federal Reserve; well done the successive governments.

Above all, well done the banksters, the gangsters of the financial world. Let’s remember the old acquaintances… Shid ald akwentans bee firgot, an nivir brocht ti mynd?

 

Boom-era credit deals poised for comeback – FT.com

Boom-era credit deals poised for comeback – FT.com

 

Last month Citigroup placed an unusual job advertisement. The bank was seeking an analyst able to crunch the numbers on an obscure financial security: synthetic collateralised debt obligations.

Four weeks later, job applicants would find the position filled. Such has been the clamour among investors for the higher yields from higher-risk products that big banks including Citi, JPMorgan Chase and Morgan Stanley are turning again to the more esoteric parts of the financial markets. Hence the need to hire.

Synthetic CDOs are a type of structured credit product blamed by critics for exacerbating the global financial crisis. Wall Street manufactured billions of dollars of these securities at the peak of the credit boom. They have all but disappeared since.

The road to recovery, though, has been a bumpy one for synthetic products. The stigma of buying into such boom-era assets remains strong for investors, particularly when leverage – or borrowing – is used in an effort to enhance returns.

“Investors have learnt the use of leverage can create losses when they are not expected,” says Ashish Shah, head of global credit at AllianceBernstein. “Investors have to be conservative when applying leverage to less liquid assets.”

That has prompted some banks to tweak the structure of new synthetic deals. Citi has begun marketing an unusual $100m senior slice of a four-year synthetic CDO to investors.

Since their creation in the early 2000s, synthetic CDOs have allowed investors to make amplified, or leveraged, bets on portfolios of credit ranging from subprime mortgage bonds to corporate loans. The products buy derivatives known as credit default swaps and divide them into “tranches” with varying risk and seniority.

Finding investors to buy the most senior pieces of such deals has tended to be difficult because the top slices generate the lowest yields. So banks invented a so-called “leveraged super senior” tranche, which allowed investors to pay only a fraction of the senior tranche’s total value and, by doing so, juice their returns.

But leveraged super seniors caused massive losses during the crisis as declines in the market value of the products triggered contract clauses that required investors to stump up billions of dollars of collateral or walk away.

To assuage investors’ concerns about possible losses, Citi has changed the structure of its proposed senior synthetic CDO deal, which is tied to a pool of investment-grade corporate credits.

Instead of asking investors to put up more collateral as the market value of the underlying portfolio falls, investors will have to pay up only if actual losses on the portfolio exceed 15 per cent. “It’s very easy to call it a leveraged super senior but what it really is, is a vanilla super senior plus financing,” said an executive at a rival bank.

While synthetic CDOs with a “full capital structure” – including junior, “mezzanine” and senior tranches – have yet to return to the market, banks have been selling “bespoke” or “single-tranche” CDOs in recent years. Citi, in particular, has been offering customised single-tranche deals notable for attractive-looking yields.

Such unrated deals are typically tied to corporate credit, rather than mortgages. Average trades have two-year terms instead of the 10-year deals that were common before the crisis. The bank is believed to have sold as much as $1bn of these bespoke single-tranche CDOs so far this year.

“They [Citi] have been reasonably active in junior parts of the capital structure,” says one bank executive. Selling off the bank’s senior credit risk to new investors is “the best way for them to risk manage” overall credit exposure.

It is unclear whether Citi will be able to find buyers for its proposed deal, which it has been marketing to potential investors including big pension funds and endowments for a month in Europe and the US, according to people familiar with the transaction.

Some big institutional investors have criticised the product for yielding only 3.5 per cent – or about one percentage point more than regular investment-grade bonds. They reckon the deal should yield about 5 per cent.

Investors have learnt the use of leverage can create losses when they are not expected– Ashish Shah, AllianceBernstein

That could prove a stumbling block. A previous attempt to resuscitate a pre-crisis-like, “full capital structure” CDO by JPMorgan and Morgan Stanley failed after the two banks were unable to line up investors to take on the most senior part of the deal.

Still, people familiar with the deal say Citi could prepare the ground for a wider revival in demand for structured credit in the new year, once investors have a clearer view of interest rates and when the Federal Reserve starts to pare back its $85bn-a-month bond-buying programme.

Bankers are hopeful that, once the dust settles from the Fed “taper”, investors will feel more comfortable buying investment-grade credit at higher interest rates and, moreover, leveraging the returns against a low risk of high-quality companies going bust. Citi, for its part, believes a super senior revival will be the story of 2014.

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  1. ReportJP Stanley | December 4 11:14am | Permalink

    As a bank diluting away 90% of its shareholder value by its previous encounter with structured products, Citi is uniquely qualified to pioneer the area. I wonder if “Citigroup” will be pronounced with a sizzle soon enough.

  2. ReportSapien | December 4 10:52am | Permalink

    Sensationalism.

 

Iran threatens to trigger oil price war

Iran threatens to trigger oil price war.

Iran has threatened to trigger a price war in the global oil markets, warning Opec members that it will increase output even if crude prices tumble to $20 a barrel.

The oil production cartel, which is meeting in Vienna today, is set to keep its production target unchanged.

With Brent crude, the global benchmark, hitting a two-month high of more than $113 per barrel, oil ministers from the group which spans Venezuela to Saudi Arabia have said they want to keep targeting production of 30m b/d.

In spite of the apparent consensus, this week’s meeting has seen aggressive jockeying for internal position within the cartel.

Speaking to Iranian journalists in Farsi minutes before ministers went into a closed-door meeting, Bijan Zangeneh, Iran’s oil minister, said: “Under any circumstances we will reach 4m b/d even if the price of oil falls to $20 per barrel.”

“We will not give up our rights on this issue,” Mr Zangeneh added, suggesting Opec would be able to accommodate rising Iranian production to keep prices high.

Opec pumps around a third of the world’s crude oil supplies, and as the only source of spare production capacity plays a key role in setting prices.

Brent has averaged close to $110 per barrel this year, easily above the group’s unofficial target, as production disruptions in Nigeria and Libya have offset rapidly growing US shale oil output.

Buoyed by an interim agreement on its nuclear programme ten days ago, Iran said it would raise production from around 2.8m b/d today to 4m b/d next year.

Iran under Rouhani

'Iran after Rouhani' in depth

Iran’s president Hassan Rouhani is looking to pursue a foreign policy of moderation to revive deadlocked nuclear talks with the west after tough financial sanctions have brought the Islamic Republic’s economy to a standstill

Iraq, meanwhile, has also said it plans to increase production by 1m b/d next year to 4mb/d.

That would put pressure on prices, and push the cartel to respond by reining in production from other members, although both countries face significant challenges in meeting their ambitious targets: Iran faces months of tricky negotiations before sanctions could be lifted, and Iraq’s oil industry is labouring under security and infrastructure problems.

Saudi Arabia, the world’s largest oil exporter and de facto leader of the cartel, would face most pressure to cut back on production to accommodate Iran and Iraq, as the kingdom has been producing at near record levels of more than 10mb/d as production from other Opec members has faltered.

But Saudi officials have suggested Iranian and Iraqi production growth is unlikely to materialise quickly, and ahead of the meeting Ali al-Naimi, the Saudi oil minister, brushed off Iran’s aggressive stance on price:

“You are preoccupied by Iran and that is not a good preoccupation,” he said. “You know what is going to happen if the price goes to $20? You know how many countries would be out of producing, including shale oil, including Canadian sands oil, including subsalt oil. All of that will be gone.

Brent was trading down 42 cents at $112.20 a barrel by mid-morning in London.

 

EU Commission fines banks $2.3 billion for benchmark rigging | Reuters

EU Commission fines banks $2.3 billion for benchmark rigging | Reuters.

European Union Competition Commissioner Joaquin Almunia addresses a news conference at the EU Commission headquarters in Brussels December 4, 2013. REUTERS-Yves Herman
European Union Competition Commissioner Joaquin Almunia addresses a news conference at the EU Commission headquarters in Brussels December 4, 2013. REUTERS-Yves Herman

1 OF 2. European Union Competition Commissioner Joaquin Almunia addresses a news conference at the EU Commission headquarters in Brussels December 4, 2013.

CREDIT: REUTERS/YVES HERMAN

(Reuters) – EU antitrust regulators fined six financial institutions including Deutsche Bank, Royal Bank of Scotland and Citigroup a record total of 1.71 billion euros ($2.3 billion) on Wednesday for rigging financial benchmarks.

The move confirms what a source familiar with the matter had previously told Reuters.

The penalty is the biggest yet to be handed down to banks for rigging the benchmarks used to determine the cost of lending, one of the most brazen violations of conduct since the financial crisis. It is also the highest antitrust penalty ever imposed by the Commission, the EU’s competition regulator.

The other banks penalized are Societe Generale, JPMorgan and brokerage RP Martin.

Deutsche Bank received the biggest fine of 725.36 million euros.

The European Commission said it would continue to investigate Credit Agricole, HSBC, JPMorgan and brokerage ICAP for similar offences.

The benchmarks involved are the London interbank offered rate, or Libor, the Tokyo interbank offered rate and the euro area equivalents. They are used to price hundreds of trillions of dollars in assets ranging from mortgages to derivatives.

“What is shocking about the Libor and Euribor scandals is not only the manipulation of benchmarks, which is being tackled by financial regulators worldwide, but also the collusion between banks who are supposed to be competing with each other,” EU Competition Commissioner Joaquin Almunia said in a statement.

LIKELY SANCTIONS

RP Martin and ICAP could not be immediately reached for comment. Deutsche Bank said it has set aside enough money to cover most of the 725 million euro fine.

JPMorgan confirmed its 79.9 million euro penalty in the Libor case but said it would defend itself in the Euribor case. [ID:nWNBB037YI]. Societe Generale declined to comment.

Unlike the six banks which admitted liability in return for a 10 percent reduction in their fines, Credit Agricole has refused to settle and will likely face sanctions next year. HSBC has also contested the EU’s proposed penalty.

Both banks are expected to be formally charged on Wednesday.

A spokesman for HSBC said the bank would defend itself vigorously in the Euribor case, while Barclays confirmed its cooperation with the Commission which helped it stave off a 690 million euros sanction.

RBS said its 391 million euro penalty had been fully provisioned for.

Authorities around the world have so far handed down a total of $3.7 billion in fines to UBS, RBS, Barclays, Rabobank and ICAP for manipulating rates, while seven individuals face criminal charges.

UBS paid a record fine of $1.5 billion late last year to the U.S. Department of Justice and the UK’s Financial Services Authority for rate-rigging.

EU fines can reach up to 10 percent of a company’s global turnover.

UBS blew the whistle on the Libor and Tibor cases and will not be fined as a result. Barclays will escape a fine in the Euribor case because it alerted the Commission to the offence.

(Additional reporting by Matthias Blamont in Paris, Steve Slater and Kirstin Ridley in London, Ludwig Burger and Clare Hutchison in Frankfurt, Lionel Laurent in Paris; Writing by John O’Donnell; Editing by Luke Baker and David Holmes)

 

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