Truth Frequency Radio
Jan 20, 2015


British security agency GCHQ has stored thousands of emails from journalists working for the world’s biggest news organizations, according to a new batch of Edward Snowden leaks. Emails from the BBC, Guardian, New York Times, Washington Post and others were saved by GCHQ, allegedly as part of a ‘test exercise’ conducted by the agency.


Greece allowed Germany a haircut in 1953, after which Germany became the economic wonder.

Economic Historian: ‘Germany Was Biggest Debt Transgressor of 20th Century’

Think Greece’s current economic malaise is the worst ever experienced in Europe? Think again. Germany, economic historian Albrecht Ritschl argues in a SPIEGEL ONLINE interview, has been the worst debtor nation of the past century. He warns the country should take a more chaste approach in the euro crisis or it could face renewed demands for World War II reparations.


SPIEGEL ONLINE: The Germany of today is considered the embodiment of stability. How many times has Germany become insolvent in the past?

Ritschl: That depends on how you do the math. During the past century alone, though, at least three times. After the first default during the 1930s, the US gave Germany a “haircut” in 1953, reducing its debt problem to practically nothing. Germany has been in a very good position ever since, even as other Europeans were forced to endure the burdens of World War II and the consequences of the German occupation. Germany even had a period of non-payment in 1990.

SPIEGEL ONLINE: Really? A default?

Ritschl: Yes, then-Chancellor Helmut Kohl refused at the time to implement changes to the London Agreement on German External Debts of 1953. Under the terms of the agreement, in the event of a reunification, the issue of German reparations payments from World War II would be newly regulated. The only demand made was that a small remaining sum be paid, but we’re talking about minimal sums here. With the exception of compensation paid out to forced laborers, Germany did not pay any reparations after 1990 — and neither did it pay off the loans and occupation costs it pressed out of the countries it had occupied during World War II. Not to the Greeks, either.


Choked by Austerity: Child poverty, youth unemployment rise in Greece

In Greece the left-wing Syriza party is leading polls ahead of a snap parliamentary election. They pledge to end austerity measures and cut the country’s outstanding debt. While Child poverty, drug use and youth unemployment all rise in the country.

Greece’s snap elections on January 25th have sparked fears of a euro zone exit. Why the fuss?

EU launches a series of counterterrorism initiatives

Homeland Security News Wire

Using Europol, which has new authority to collect information on people who have never been convicted of a criminal offense, the EU is planning to create a more centralized intelligence sharing system which will allow security services to monitor and track suspects throughout the union. EU officials are also looking to improve information sharing with Arab countries.

Foreign ministers from the European Union’s (EU) twenty-eight member countries met in Brussels yesterday to discuss anti-terror initiatives following the terror attacks in Paris and the breakup of a jihadist cell in Belgium. The EU is expected to enter a new era of travel surveillance and anti-terror initiatives.

The British government has called for support of its plan to create new databases to monitor all air travel in and out and within Europe. British foreign secretary Philip Hammond said that ministers would review ways to block European Parliament opposition to the central databases of airline passengers records. “We will all be determined to do what is necessary to keep Europe safe from the terrorist threat. We will be talking about the challenge of extreme Islamism today and how we deal with it, with our counter-terrorist response,” he said. “We will be looking at some of the specific measures that can help to keep us safe, like passenger name records, within Europe. So that is important.”

The Telegraph reports that using Europol, which has new authority to collect information on people who have never been convicted of a criminal offense, the EU is planning to create a more centralized intelligence sharing system which will allow security services to monitor and track suspects throughout the union.

EU officials are also looking to improve information sharing with Arab countries. Hammond notes that the United States will join officials from EU and Arab countries later this week in London to discuss progress made in the fight against the Islamic State (ISIS). Cooperation with the Arab world is vital to combating Islamic extremism, EU officials repeated during the meeting. “The Muslim countries of the world are the ones that have suffered the greatest burden of terrorism. They will continue to be in the front line and we have to work closely with them to protect both those countries and the EU countries,” Hammond said.

The EU’s foreign minister Federica Mogherini welcomed Nabil el-Arabi, the secretary general of the Arab League, to yesterday’s talks. She stressed that the EU must first strengthen information sharing relationships with Muslim countries, then internally with EU member countries. “We need to share information more, we need to cooperate more. We will discuss with the secretary general how to increase the level of cooperation with our partners. We need an alliance, a dialogue.”

Mogherini also noted that EU governments would appeal an European court ruling that orders the Palestinian Islamist group Hamas be removed from the EU’s list of terrorist organizations. Pending the appeal, Hamas will remain on the list and its assets will remain frozen before a final judgment by the European Court of Justice.

“The EU is determined to stem the financing of terrorism,” she said.


EU Parliament considers reviving uniform air-passenger information legislation

Homeland Security News Wire

The European Parliament is considering reviving draft legislation which would force airline companies to give EU member governments a cohesive and uniform set of passenger information, following heightened security concerns in the wake of the 7 January Paris attacks. The legislation, first proposed in 2011, was rejected bu the EU Parliament in 2013.

The European Parliament is considering reviving draft legislation which would force airline companies to give EU member governments a cohesive and uniform set of passenger information, following heightened security concerns in the wake of the 7 January Paris attacks.

As Bloomberg News reports, the draft, originally rejected by the Parliament’s civil-liberties committee in April 2013, is now being steered by Tory Party member Timothy Kirkhope through the EU assembly. He has vowed to proposed stronger provisions on data protection in order to win over skeptical lawmakers who still question the constitutionality of the bill.

The measures, — originally proposed in 2011 before being rejected two years later, would require all EU and foreign flight carriers to provide authorities with data on passengers and their PNR, or “passenger name record” information, which includes seat number, reservation date, payment method, and travel itinerary.

“Europe’s patchwork use of PNR creates weak point that terrorists can exploit, said Kirkhope in a statement last Tuesday to the 28-nation Parliament in Strasbourg, France. “I want an agreement that safeguards lives and liberties by offering stronger data-protection rules while also making it much harder for a radicalized fighter to slip back into Europe undetected.”

The heightened security concerns come after it was reported that among the 7 January Jihadist attackers was one who may have received military training in Yemen and traveled between Syria and France days before the attacks. Some see the more cohesive EU-sanctioned PNR as a safer alternative to the sporadic use of it in place currently.

The proposed Europe-wide system would resemble the U.S. system put in place after the 9/11 terror attacks.

Manfred Weber, the German head of the Christian Democrats in the Parliament, told reporters on Tuesday that his party had endorsed the draft legislation and expressed hope that opponents of the legislation would reconsider their position.

Additionally, German chancellor Angela Merkel and British prime minister David Cameron have both urged the Parliament in recent days to unblock the bill.

EU president Donald Tusk also added his voice to those supporting the proposal, declaring on 13 January in Strasbourg that at stake was the need to “protect the security of those who elected to this chamber.”

“If we do not get a single European PNR,” he said, “We may end up with twenty-eight national ones. One European system is clearly better for security and freedom.”


Europeans try counter-radicalization hotlines to combat Islamists’ appeal

Homeland Security News Wire

Much attention has been given to Islamic State recruitment efforts targeting Europe’s Muslim population, and now a coalition of private and public sector groups are countering those recruitment efforts with preventative measures. Current counter-radicalization hotlines were launched after European governments effectively used them to de-radicalize neo-Nazis. Despite the success with skinheads, observers note that many hotlines for would-be Islamic terrorists do not seem to be effective, at least not yet.

Much attention has been given to Islamic State recruitment efforts targeting Europe’s Muslim population, and now a coalition of private and public sector groups are countering those recruitment efforts with preventative measures.

In the Netherlands, a group of volunteers operate the Dutch Radicalization Hotline. The telephone service offers parents and relatives of vulnerable youths support and insight to recognize when radicalization has begun to take hold in their communities.

To date, roughly 3,000 Western fighters have traveled to Syria to join a number of militant groups, mainly the Islamic State. About 700 of them are reportedly from France, but at least 500 militants are believed to be from Belgium and the Netherlands.

The Dutch hotline is different from many other counterterrorist hotlines in Europe because it is operated and funded without government support. The hotline is backed by the Moroccan Dutch community and focuses its resources on prevention, rather than self-reporting. The German government has operated its own anti-radicalization hotline since 2010, and last year, the Austrian and French government followed suit.

According to VICE News, current counter-radicalization hotlines were launched after European governments effectively used them to de-radicalize neo-Nazis. “They had a lot of people calling them,” Lorenzo Vidino, a specialist on European Islamic and political violence, tells VICE, “and a substantial number of those who called got out (of neo-Nazi communities).”

In terms of ideological (support),” Vidino explains, “it was (about) talking to former neo-Nazis themselves, who explain why the ideology’s flawed. It does help to talk to people who went through what you were going through yourself. In many cases, for the neo-Nazis, they help to provide relocation. It’s common to a lot of radicalization — a lot of it has to do with the environment you’re in. Maybe you want to get out, but if you live in a small (community), these are your friends, this is your social environment. It’s difficult to get out. You move to a new city. You make new friends.”

Vidino notes that despite the success with skinheads, many hotlines for would-be Islamic terrorists do not seem to be effective. The problem stems from a mistrust of unknown actors, specifically government institutions. Would-be callers fear that reaching out to anti-radicalization hotlines may identify them as at-risk individuals, subject to government surveillance.

Having government support doesn’t necessarily taint you and make you illegitimate in the eyes of the community,” Vidino stresses. “But not having the ties, you run fewer risks of being seen as the long arm of the secret services and so on.”

Denmark and parts of the United Kingdom have initiated comprehensive programs by which national and local government institutions fund community and religious efforts that address the social and economic roots of radicalization. Yet stories of radicalized Muslims in Europe and growing frustration within European Muslim communities have led many Europeans to believe those comprehensive efforts have failed.

It’s understandable (as a gut reaction),” Vidino says, “but we don’t have all the facts to make a judgment call on what works and what doesn’t.”

In the meantime, the Dutch hotlines, operated by community members with an intimate knowledge of the communities they serve and with no government affiliation, may be a breakthrough. “Unless they have (clearly) abysmal success rates, they provide a good complement to hard counter-terror measures,” Vidino says. “If the alternative is just not doing anything, I think (they’re) useful.”


Saxo Bank Warns “This Is The Endgame For Central Banks”

From Steen Jakobsen, CIO & Chief Economist, Saxo Bank, via,

  • Why oh why do we trust central banks?
  • Central bankers are politicians’ puppets
  • This is endgame for the central banks

The Swiss National Bank’s removal of the franc’s peg to the euro last week had far-reaching consequences because we were all taken by surprise. The fact that it would (and should) happen eventually was not lost on the market, but the SNB was as late as last week end talking tough and telling the market that the floor was an integral part of Swiss monetary policy – until it suddenly wasn’t any more.

I fully understand the rationale for the move (Jakobsen: SNB move is rationality itself) but like most of the market I’m extremely disappointed in the SNB’s communication and handling of the issue, but that’s the bigger lesson: Why is it most people trust or bother to listen to central banks?
Major central banks claim to be independent, but they are totally under the control of politicians. Many developed countries have tried to anchor an independent central bank to offset pressure from politicians and that’s all well and good in principle until the economy spins out of control – at zero-bound growth and rates central banks and politicians becomes one in a survival mode where rules are broken and bent to fit an agenda of buying more time.
Just looks to the Eurozone crisis over the past eight years – if not in the letter of law, then in spirit, every single criterion of the EU treaty has been violated by the need to “keep the show on the road”. No, the conclusion has to be that there are no independent central banks anywhere! There are some who pretend to be, but not a single one operates in true independence.

cb hands tied

 Let’s get real — central bankers aren’t autonomous. Pic: Jakob Ammentorp Lund
That’s the reality of the moment. I would not be surprised to find that the Swiss Government overruled the SNB last week and the interesting question for this week is of course if the German government will overrule the Bundesbank on quantitative easing to save face for the Eurozone? Probably….
The new dimension of central banking is the “communications policy” which is not only the poorest policy but also only really a front for “talking the market into believing our dream” without any further action.
Look at the Federal Reserve forward-looking guidance: They are constantly over-optimistic on growth and inflation. Constantly. The joke doing the rounds is that to get the proper GDP and inflation forecast you merely take the Fed’s own forecasts and deduct 100-150 bps from both growth and inflation targets and voila! You have best track record over time.
Studies shows that the business cycle was less volatile before the Federal Reserves was born. The birth of the Fed meant leverage (gearing) which of course has resulted in bigger and bigger collapses of the economy, but with a trend of major crashes increasing in frequency: 1987 stock crash, 1992 ERM crisis, 1993 Mexico “Tequila crisis”, 1998 Asian crisis and the Russian default, 2000 NASDAQ bubble, 2008 stock market crash, and now 2015 SNB, ECB QE, Russia and China and what’s the next crisis?
I don’t know, but clearly the world of finance and the flow of money is increasing its velocity meaning considerably more “volatility”. By the way, the only guarantee I issued at the end of 2014 looking into 2015 was:

main themes

 Where does this all bring me? The SNB’s action was really the culmination of bigger and bigger moves at the end of a low volatility paradigm. I have been trading currencies for more than 30 years, Thursday’s move was single biggest move I have experienced in one market. But let’s look at other remarkable moves this year:
Oil has dropped more than 50%

 Source: Bloomberg
Russian ruble falls off a USD cliff

 Source: Bloomberg
EURNOK had it biggest move in many, many years (15% in space of a few days)

  Source: Bloomberg
EURCHF move in comparison:

  Source: Bloomberg
Even overnight, the Shanghai index dropped more than 7% – the biggest move in years on margin calls:

 Source: Bloomberg
The lesson is clearly that the market has been trying to tell us for a long time that volatility was a function of an economic model of suspending the business cycle. When you suspend an economic system such as the world markets for an extended period you ultimately release more energy when the business cycle starts anew.
We started the year with Maximum Dislocation of the market in a model of planned economies. We have bond and credit spreads at historic lows, currencies at extremes, equities and real estate in bubble-like valuations, and a geopolitical risk which keeps rising as seen this year in Paris, last year in Ukraine and also the rise of ISIS.
The US dollar is putting pressure not only on US itself but also the world. A journalist asked me last week: Who benefits from a stronger US dollar?  I still owe him an answer because very few benefit. In fact the world has two growth engines: The US and emerging markets. Both are pretty much US dollar economies. Debt (US dollar funding) in EM has exploded to an extent that many including the World Bank now call a for risk of “Perfect Storm in EM”. Both US and EM became credit junkies over the QE-to-infinity era in the US. The law of unintended consequences.
Another unintended consequence was that energy was the trigger for the crisis in 2008 as rising energy prices took five trillion US dollars out of the economy – which became the catalyst for the Eurozone crisis and US banking bailout. Now eight year later the drop in energy has broad spillover effects as the wealth is transferred from sovereign wealth funds in resource countries to consumers. 
That’s good for Main Street and bad for Wall Street as the “bid” in the assets disappear as these sovereign buyers needs to draw down on their wealth instead of buying overseas assets. Similarly, will a direct impact from SNB not having a floor be less NASDAQ buying which famously SNB had in its portfolio?
Meanwhile the fact that volatility is rising, the fact that we see early signs of the business cycle being activated, is good for the real economy. It’s a sign of money flowing from the 20% QE induced overvalued listed companies to the 80% SMEs (the real economy) as increase in volatility will make expected return less in “paper money” and more attractive in tangible assets and good business.
The world should be concerned when volatility is too low, it’s a sign of the market not allocating money correctly. The one lesson everyone needs to learn is that for a market based economy to function you need to allocate capital to the highest marginal real return of capital. Not to the most politically connected.
When history of 2015 is written I have no doubt that the Paris terror act and SNB’s removal of the floor will stand out – both happened less than two weeks into 2015, although that is random, what is not random is that market volatility has been rising directly and indirectly through a misallocation of capital directed by the central bank system.


 Endgame for central banks – no more tools, no more options. Pic: iStock
Many central banks will envy the SNB for its move last week, as it at least tries to regain some control of its future, but the conclusion remains: central banks have as a group lost credibility and when the ECB starts QE this week the beginning of the end for central banks is completed. They are running out of time – that’s the real real bottom line: the SNB ran out of time, the ECB will runout of time this week, and the Fed, Bank of Japan and the Bank of England ran out of time in 2014.
What comes now is a new reality – the SNB move was a true paradigm shift – we can no longer look at central banks, the markets and extend-and-pretend in the same light as we did last Wednesday (the day before the SNB pounced).
The king is dead, long live the King.