Are You Targeted By The NSA? Submitted by Tyler Durden on 07/03/2014 16:01 -0400 Apple Erste ETC FBI Germany Google Newspaper PrISM The Onion lang: en_U in Share 3 Meet XKeyscore - "a computer network exploitation system", as described in an NSA presentation, devoted to gathering "nearly everything a user does on the internet." The German site Das Erste has exposed the shocking truth about the rules used by the NSA to decide who is a "target" for surveillance. While the NSA claims to only "target" a small fraction of internet users, the perhaps unsurprising truth is very different. As Boing Boing concludes , one expert suggested that the NSA's intention here was to separate the sheep from the goats -- to split the entire population of the Internet into "people who have the technical know-how to be private" and "people who don't" and then capture all the communications from the first group. As Das Erste describes it, The NSA program XKeyscore is a collection and analysis tool and "a computer network exploitation system", as described in an NSA presentation. It is one of the agency’s most ambitious programs devoted to gathering "nearly everything a user does on the internet." The source code contains several rules that enable agents using XKeyscore to surveil privacy-conscious internet users around the world. The rules published here are specifically directed at the infrastructure and the users of the Tor Network, the Tails operating system, and other privacy-related software. And Cory Doctorow of Boing Boing summarizes, In a shocking story on the German site Tagesschau ( Google translate ), Lena Kampf, Jacob Appelbaum and John Goetz report on the rules used by the NSA to decide who is a "target" for surveillance. Since the start of the Snowden story in 2013, the NSA has stressed that while it may intercept nearly every Internet user's communications, it only "targets" a small fraction of those, whose traffic patterns reveal some basis for suspicion. Targets of NSA surveillance don't have their data flushed from the NSA's databases on a rolling 48-hour or 30-day basis, but are instead retained indefinitely. The authors of the Tagesschau story have seen the "deep packet inspection" rules used to determine who is considered to be a legitimate target for deep surveillance, and the results are bizarre. According to the story, the NSA targets anyone who searches for online articles about Tails -- like this one that we published in April, or this article for teens that I wrote in May -- or Tor (The Onion Router, which we've been posted about since 2004 ). Anyone who is determined to be using Tor is also targeted for long-term surveillance and retention. Tor and Tails have been part of the mainstream discussion of online security, surveillance and privacy for years. It's nothing short of bizarre to place people under suspicion for searching for these terms. More importantly, this shows that the NSA uses "targeted surveillance" in a way that beggars common sense. It's a dead certainty that people who heard the NSA's reassurances about "targeting" its surveillance on people who were doing something suspicious didn't understand that the NSA meant people who'd looked up technical details about systems that are routinely discussed on the front page of every newspaper in the world. But it's not the first time the NSA has deployed specialized, highly counterintuitive wordsmithing to play games with the public, the law and its oversight. From James Clapper's insistence that he didn't lie to Congress about spying on Americans because he was only intercepting all their data, but not looking at it all; to the internal wordgames on evidence in the original Prism leak in which the NSA claimed to have "direct access" to servers from Google, Yahoo, Microsoft, Apple, etc, even though this "direct access" was a process by which the FBI would use secret warrants to request information from Internet giants without revealing that the data was destined for the NSA. I have known that this story was coming for some time now, having learned about its broad contours under embargo from a trusted source. Since then, I've discussed it in confidence with some of the technical experts who have worked on the full set of Snowden docs, and they were as shocked as I was. One expert suggested that the NSA's intention here was to separate the sheep from the goats -- to split the entire population of the Internet into "people who have the technical know-how to be private" and "people who don't" and then capture all the communications from the first group. Another expert said that s/he believed that this leak may come from a second source, not Edward Snowden, as s/he had not seen this in the original Snowden docs; and had seen other revelations that also appeared independent of the Snowden materials. If that's true, it's big news, as Snowden was the first person to ever leak docs from the NSA. The existence of a potential second source means that Snowden may have inspired some of his former colleagues to take a long, hard look at the agency's cavalier attitude to the law and decency. * * * And just this week it was all found perfectly legal... But it appears the US continues to make friends wherever it goes... The German attorney Thomas Stadler, who specializes in IT law, commented: " The fact that a German citizen is specifically traced by the NSA, in my opinion, justifies the reasonable suspicion of the NSA carrying out secret service activities in Germany. For this reason, the German Federal Public Prosecutor should look into this matter and initiate preliminary proceedings. " So now you know - you are all being watched... Average: 4.94737 Your rating: None Average: 4.9 ( 19 votes)
How Central Banks Cause Income Inequality Submitted by Tyler Durden on 02/01/2014 22:03 -0500 Apple Central Banks China European Central Bank Germany Great Depression Gross Domestic Product Janet Yellen LTRO Ludwig von Mises Mises Institute Monetization President Obama in Share 1 Submitted by Frank Hollenbeck via the Ludwig von Mises Institute , The gap between the rich and poor continues to grow. The wealthiest 1 percent held 8 percent of the economic pie in 1975 but now hold over 20 percent. This is a striking change from the 1950s and 1960s when their share of all incomes was slightly over 10 percent. A study by Emmanuel Saez found that between 2009 and 2012 the real incomes of the top 1 percent jumped 31.4 percent. The richest 10 percent now receive 50.5 percent of all incomes, the largest share since data was first recorded in 1917. The wealthiest are becoming disproportionally wealthier at an ever increasing rate. Most of the literature on income inequalities is written by professors from the sociology departments of universities. They have identified factors such as technology, the reduced role of labor unions, the decline in the real value of the minimum wage, and, everyone’s favorite scapegoat, the growing importance of China. Those factors may have played a role, but there are really two overriding factors that are the real cause of income differentials. One is desirable and justified while the other is the exact opposite. In a capitalist economy, prices and profit play a critical role in ensuring resources are allocated where they are most needed and used to produce goods and services that best meets society’s needs. When Apple took the risk of producing the iPad, many commentators expected it to flop. Its success brought profits while at the same time sent a signal to all other producers that society wanted more of this product. The profits were a reward for the risks taken. It is the profit motive that has given us a multitude of new products and an ever-increasing standard of living. Yet, profits and income inequalities go hand in hand. We cannot have one without the other, and if we try to eliminate one, we will eliminate, or significantly reduce, the other. Income inequalities are an integral outcome of the profit-and-loss characteristic of capitalism; they cannot be divorced. Prime Minister Margaret Thatcher understood this inseparability well. She once said it is better to have large income inequalities and have everyone near the top of the ladder, than have little income differences and have everyone closer to the bottom of the ladder. Yet, the middle class has been sinking toward poverty: that is not climbing the ladder. Over the period between 1979 and 2007, incomes for the middle 60 percent increased less than 40 percent while inflation was 186 percent. According to the Saez study, the remaining 99 percent saw their real incomes increase a mere .4 percent between 2009 and 2012. However, this does not come close to recovering the loss of 11.6 percent suffered between 2007 and 2009, the largest two-year decline since the Great Depression. When adjusted for inflation, low-wage workers are actually making less now than they did 50 years ago. This brings us to the second undesirable and unjustified source of income inequalities, i.e., the creation of money out of thin air, or legal counterfeiting, by central banks. It should be no surprise the growing gap in income inequalities has coincided with the adoption of fiat currencies worldwide. Every dollar the central bank creates benefits the early recipients of the money—the government and the banking sector — at the expense of the late recipients of the money, the wage earners, and the poor. Since the creation of a fiat currency system in 1971, the dollar has lost 82 percent of its value while the banking sector has gone from 4 percent of GDP to well over 10 percent today. The central bank does not create anything real; neither resources nor goods and services. When it creates money it causes the price of transactions to increase. The original quantity theory of money clearly related money to the price of anything money can buy, including assets. When the central bank creates money, traders, hedge funds and banks — being first in line — benefit from the increased variability and upward trend in asset prices. Also, future contracts and other derivative products on exchange rates or interest rates were unnecessary prior to 1971, since hedging activity was mostly unnecessary. The central bank is responsible for this added risk, variability, and surge in asset prices unjustified by fundamentals. The banking sector has been able to significantly increase its profits or claims on goods and services. However, more claims held by one sector, which essentially does not create anything of real value, means less claims on real goods and services for everyone else. This is why counterfeiting is illegal. Hence, the central bank has been playing a central role as a “reverse Robin Hood” by increasing the economic pie going to the rich and by slowly sinking the middle class toward poverty. Janet Yellen recently said “I am hopeful that … inflation will move back toward our longer-run goal of 2 percent, demonstrating her commitment to an institutionalized policy of theft and wealth redistribution.” The European central bank is no better. Its LTRO strategy was to give longer term loans to banks on dodgy collateral to buy government bonds which they promptly turned around and deposited with the central bank for more cheap loans for more government bonds. This has nothing to do with liquidity and everything to do with boosting bank profits . Yet, every euro the central bank creates is a tax on everyone that uses the euro. It is a tax on cash balances. It is taking from the working man to give to the rich European bankers. This is clearly a back door monetization of the debt with the banking sector acting as a middle man and taking a nice juicy cut . The same logic applies to the redistribution created by paying interest on reserves to U.S. banks. Concerned with income inequalities, President Obama and democrats have suggested even higher taxes on the rich and boosting the minimum wage . They are wrongly focusing on the results instead of the causes of income inequalities. If they succeed, they will be throwing the baby out with the bathwater. If they are serious about reducing income inequalities, they should focus on its main cause, the central bank. In 1923, Germany returned to its pre-war currency and the gold standard with essentially no gold. It did it by pledging never to print again. We should do the same. Average: 5 Your rating: None Average: 5 ( 4 votes)
Carl iCahn's Nightmare (Or The Credit Bubble In 4 Simple Charts) Submitted by Tyler Durden on 10/01/2013 20:56 -0400 Apple Barclays Bond Carl Icahn Reality Verizon Volatility in Share 2 This morning's media blitz by Carl iCahn - demanding that AAPL's Tim Cook, borrow money cheap, lever-up, and gift it all back to shareholders through buybacks - reminded us of our previous post on the record high levels of leverage in US corporations. To a point, firms can add debt as earnings and equity value increase - leaving leverage and credit risk somewhat constant. However, the last few years, in spite of Maria Bartiromo's constant drivel of cash on the balance sheets, companies have increased debt faster than EBITDA, leverage is at record levels, and credit markets appear to have peaked (as they did in 2007). U.S. equities have made new highs in the past 10 months while IG corporate credit has not rallied past 130bp (despite all the liquidity provision) ... The inverse relationship between equity prices and credit spreads has broken down - as additional debt has risen faster than EBITDA Leading to pre-crisis levels of leverage (and implicitly credit risk) - which should mean wider spreads but thanks to the liquidity (for now) is being held at merely record low "stable" levels... But we have seen this "credit cycle end, equities ramp" before - in 2007 - where leverage (both firm-wise (debt/EBITDA) and instrument-wise (CDOs)) provided the extra oomph to send stocks higher on the back of credit fueled extrapolation of earnings trends. (charts: Barclays) In the end we know this is unsustainable - the question is when (in 2007 it last 10 months or so...). We already see 30Y Apple bonds trading at 5% yields - admittedly low still but notably higher than when they issued previously. The Verizon deal recently now trades at around 5.7% yield and is considerably worse financially pro forma. Of course, just as in 2007, things change very quickly once collateral chains start to shrink. Perhaps this is why Carl iCahn said the Apple CFO/CEO shunned him - iCahn's worst nightmare is simply the inability to proxy-LBO each and every firm... Given these charts - which market do you think is in a bubble - equity or credit? Bear in mind that the Fed's Jeremy Stein has already made his case that the latter is a bubble for sure... and the fragility that reaching for yield creates... Full Stein paper here: Stein 20130926 A Of course, we discussed this previously and as a bonus here are a few extra charts as a bonus... ...pretty much every other credit metric is deteriorating... and the credit cycle is getting long in the tooth... We suspect we are in Stage 13 of the 14-Stage credit cycle from credit expansion to speculative bust... 1. "Boost Phase" of Credit Expansion 2. Overextended Credit Expansion and Over Capacity 3. Financialization and Collateral 4. Era of Financialization 5. Growing Malinvestment 6. Phantom Collateral from Asset Bubbles 7. Bubble Implosions 8. Impaired Debt and Policy Decisions 9. Stalled Consumption 10. Cheap Money Offered 11. Shrinking Loans and Bank Speculation 12. Search for Yield from Shrinking Pool of Productive Assets 13. Increasingly Speculative Investments with high Risk ---- YOU ARE HERE 14. Stagnation: Over-indebted, overcapacity with limited growth The key dynamics here are debt saturation and diminishing returns ... It seems to us that the corporate bond market (now absent the underpinning of a dominating retail technical flow) has reverted back to the macro background reality. ... the question is - what happens when the equity market 'admits' that perhaps things are not so rosy... Remember corporate credit risk reflects just as much on the underlying business volatility and cashflow outlook as the equity part of the capital structure. There are periods in the credit cycle when credit will underperform as management relevers (i.e. buybacks/dividends) but that always only lasts a brief time as credit begins to penalize those actions, making the re-levering non-economic, and an over-expectant equity market reverts back to a less-levered reality. 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Spy Agencies Are Doing WHAT? Submitted by George Washington on 09/23/2013 10:32 -0400 Apple FBI Global Economy Israel national security Obama Administration Obamacare President Obama SPY Steve Jobs SWIFT Wall Street Journal in Share 1 Revelations about the breathtaking scope of government spying are coming so fast that it's time for an updated roundup: The government is spying on essentially everything we do . It is not just "metadata" ... although that is enough to destroy your privacy The government has adopted a secret interpretation of the Patriot Act which allows it to pretend that " everything " is relevant ... so it spies on everyone . For example, the NSA "oversight" court believes the mere claim that terrorists use the phone system is enough to show that all phone records are relevant NSA whistleblowers say that the NSA collects all of our conversations word-for-word It's not just the NSA ... Many other agencies, like the FBI and IRS – concerned only with domestic issues - spy on Americans as well. The Drug Enforcement Administration has had direct access to ATT phone records for 25 years The information gained through spying is shared with federal, state and local agencies , and they are using that information to prosecute petty crimes such as drugs and taxes . The agencies are instructed to intentionally "launder" the information gained through spying, i.e. to pretend that they got the information in a more legitimate way ... and to hide that from defense attorneys and judges The Department of Health and Human Services will also have access to vast quantities of sensitive federal data on Americans as part of Obamacare (here's the underlying Government Accountability Office report ) The NSA not only shares our information with other American agencies, it also gives personal, sensitive unfiltered information on Americans to Israel and other foreign nations And it's not only governments. Private A id=_GPLITA_3 title="Click to Continue by Text-Enhance" href="http://www.washingtonsblog.com/2013/07/mass-spying-being-used-to-make-some-people-rich.html#" data-mce-href="http://www.washingtonsblog.com/2013/07/mass-spying-being-used-to-make-some-people-rich.html#"contractors can also view all of your data (and the government isn’t keeping track of which contractors see your data and which don’t ). And because background checks regarding some contractors are falsified, it is hard to know the types of people that might have your information. Indeed, private contractors are involved in spying on behalf of governments world-wide It's not just your computer and your phone. It is well-documented that the government may be spying on us through cars and buses, streetlights, at airports and on the street, via mobile scanners and drones, through our smart meters , and in many other ways Top counter-terror experts say that the government’s mass spying doesn't keep us safe Indeed, they say that mass spying actually hurts U.S. counter-terror efforts (more here and here ) They say we can, instead, keep everyone safe without violating the Constitution ... more cheaply and efficiently than the current system There is no real oversight by Congress , the courts , or the executive branch of government. And see this and this . Indeed, most Congress members had no idea what the NSA is doing . Even staunch defenders of the NSA - and congress members on the intelligence oversight committees - now say they've been kept in the dark A Federal judge who was on the secret spying court for 3 years says that it's a kangaroo court Even the current judges on the secret spying court now admit that they're out of the loop and powerless to exercise real oversight . When these judges raised concerns about NSA spying, the Justice Department completely ignored them A former U.S. president says that the spying program shows that we no longer have a functioning democracy The chairs of the 9/11 Commission say that NSA spying has gone way too far Top constitutional experts say that Obama and Bush are worse than Nixon ... and the Stasi East Germans While the government initially claimed that mass surveillance on Americans prevented more than 50 terror attacks, the NSA’s deputy director John Inglis walked that position back all the way to saying that – at the most – one (1) plot might have been disrupted by the bulk phone records collection alone. In other words, the NSA can't prove that stopped any terror attacks. The government greatly exaggerated an alleged recent terror plot for political purposes ( and promoted the fearmongering of serial liars ). The argument that recent terror warnings show that NSA spying is necessary is so weak that American counter-terrorism experts have slammed it as "crazy pants" You're much more likely to be killed by brain-eating amoeba , lightning or a toddler than by terrorism. Even President Obama admits that you're much less likely to be killed by terrorists than a car accident . So the government has resorted to lamer and lamer excuses to try to justify mass surveillance Experts say that the spying program is illegal , and is exactly the kind of thing which King George imposed on the American colonists ... which led to the Revolutionary War A Harvard law school professor - and director of theBerkman Center for Internet Society at Harvard University - says : "The NSA has mounted a systematic campaign against the foundations of American power: constitutional checks and balances, technological leadership, and market entrepreneurship . The NSA scandal is no longer about privacy, or a particular violation of constitutional or legislative obligations. The American body politic is suffering a severe case of auto-immune disease: our defense system is attacking other critical systems of our body ". The top counter-terrorism Czar under Clinton and Bush says that revealing NSA spying programs does not harm national security The feds are considering prosecuting the owner of a private email company - who shut down his business rather than turning over records to the NSA - for refusing to fork over the information and keep quiet. This is a little like trying to throw someone in jail because he's died and is no longer paying taxes Whistleblowers on illegal spying have no "legal" way to get the information out Spying started before 9/11 ... and various excuses have been used to spy on Americans over the years Governments and big corporations are doing everything they can to destroy anonymity Mass spying creates an easy mark for hackers . Indeed, the Pentagon now sees the collection of "big data" as a "national security threat" ... but the NSA is the biggest data collector on the planet, and thus provides a tempting mother lode of information for foreign hackers Mass surveillance by the NSA directly harms internet companies, Silicon Valley, California … and the entire U.S. economy . For example, Facebook lost 11 millions users as of April mainly due to privacy concerns (and that was before the Snowden revelations). And see these reports from Boingboing and the Guardian IT and security professionals are quite concerned about government spying Some people make a lot of money off of mass spying. But the government isn't using the spying program to stop the worst types of lawlessness The NSA spying program is unambiguously being used for industrial espionage , by spying on large foreign corporations , and the biggest financial payments systems such as VISA and Swift. Indeed, in a slide leaked by Edward Snowden, "economic" was one of the main justifications for spying The top U.S. spy's justifications for such financial spying is not very reassuring : "We collect this information for many important reasons: for one, it could provide the United States and our allies early warning of international financial crises which could negatively impact the global economy. It also could provide insight into other countries' economic policy or behavior which could affect global markets ." Top financial experts say that the NSA and other intelligence agencies are using the information to profit from this inside information The Wall Street Journal reported that the NSA spies on Americans’ credit card transactions . Many other agencies are doing the same . In fact, virtually all U.S. intelligence agencies – including the CIA and NSA – are going to spy on Americans’ finances . The A id=_GPLITA_5 title="Click to Continue by Text-Enhance" href="http://www.washingtonsblog.com/2013/07/mass-spying-being-used-to-make-some-people-rich.html#" data-mce-href="http://www.washingtonsblog.com/2013/07/mass-spying-being-used-to-make-some-people-rich.html#"IRS will also be spying on Americans’ shopping records, travel, social interactions, health records and files from other government investigators Polls show that the public doesn’t believe the NSA … and thinks that the government has gone way too far in the name of terrorism While leaker Edward Snowden is treated as a traitor by the fatcats and elites, he is considered a hero by the American public . Members of the Executive, Legislative and Judicial branches of government have all praised the debate on spying which Snowden's leaks started The heads of the intelligence services have repeatedly been caught lying about spying. And even liberal publications are starting to say that Obama has been intentionally lying about spying . The government claimed that most spying programs ended in 2011, when - in fact - they were expanded that year Obama says he'll rein in spying ... but his words and deeds indicate that he won't . Indeed, Obama appointed the fox to guard the chicken coop . No wonder only 11% of Americans trust Obama to actually do anything to rein in spying A huge majority of Americans wants the director of intelligence - Clapper - prosecuted for perjury . One of the chairs of the 9/11 Commission agrees While the Obama administration is spying on everyone in the country – it is at the same time the most secretive administration ever ( background ). That’s despite Obama saying he’s running the most transparent administration ever The NSA treats the American people with contempt . For example, Spiegel notes : "The authors of the draw a comparison with "1984," ... revealing the agency's current view of smartphones and their users. "Who knew in 1984 that this would be Big Brother …" the authors ask, in reference to a photo of Apple co-founder Steve Jobs. And commenting on photos of enthusiastic Apple customers and iPhone users, the NSA writes: "… and the zombies would be paying customers ? Worse, the intelligence agencies often view normal, true-blue Americans as potential terrorists (and see this ) A Congressman noted that - even if a mass surveillance program is started for good purposes - it will inevitably turn into a witch hunt There are indications that the spy agencies aren't just passively gathering information, but are actively using it in mischievous ways Surveillance can be used to frame you if someone in government happens to take a dislike to you Government spying has always focused on crushing dissent … not on keeping us safe An NSA whistleblower says that the NSA is spying on – and blackmailing – top government officials and military officers (and see this ) High-level US government officials have warned for 40 years that mass surveillance would lead to tyranny in America A top NSA whistleblower says that the only way to fix things is to fire all of the corrupt government officials who let it happen . As the polls above show, the American public is starting to wake up to that fact Average: 5 Your rating: None Average: 5 ( 34 votes)
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