The Open Dimension

Commentary on social issues; politics; religion and spirituality

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Location: Laguna Hills, California, United States

I am a semi-retired psychotherapist/psychiatric social worker and certified hypnotherapist. Originally a practicing attorney, I changed careers during the 1980's. My interests include history, constitutional law, Hindustani classical music, yoga, meditation and spirituality.

Saturday, October 05, 2013

October 4, 2013,OpEdNews

NSA and GCHQ Target Tor Network That Protects Anonymity of Web Users
By Glenn Greenwald

Tor -- which stands for The Onion Router -- is an open-source public project that bounces its users' internet traffic through several other computers, which it calls "relays" or "nodes," to keep it anonymous and avoid online censorship tools.
... Top-secret documents detail repeated efforts to crack Tor
... Tool funded by US government and relied on by dissidents and activists
... Core security of network remains intact but NSA has some success attacking users' computers

NSA laptop
One technique developed by the agency targeted the Firefox web browser used with Tor, giving the agency full control over targets' computers. Photograph: Felix Clay

*This article co-written by and
The National Security Agency has made repeated attempts to develop attacks against people using Tor, a popular tool designed to protect online anonymity, despite the fact the software is primarily funded and promoted by the US government itself.

Top-secret NSA documents, disclosed by whistleblower Edward Snowden, reveal that the agency's current successes against Tor rely on identifying users and then attacking vulnerable software on their computers. One technique developed by the agency targeted the Firefox web browser used with Tor, giving the agency full control over targets' computers, including access to files, all keystrokes and all online activity.

But the documents suggest that the fundamental security of the Tor service remains intact. One top-secret presentation, titled "Tor Stinks," states: "We will never be able to de-anonymize all Tor users all the time." It continues: "With manual analysis we can de-anonymize a very small fraction of Tor users," and says the agency has had "no success de-anonymizing a user in response" to a specific request.

Another top-secret presentation calls Tor "the king of high-secure, low-latency internet anonymity."
Tor -- which stands for The Onion Router -- is an open-source public project that bounces its users' internet traffic through several other computers, which it calls "relays" or "nodes," to keep it anonymous and avoid online censorship tools.

It is relied upon by journalists, activists and campaigners in the US and Europe as well as in China, Iran and Syria, to maintain the privacy of their communications and avoid reprisals from government. To this end, it receives around 60% of its funding from the US government, primarily the State Department and the Department of Defense -- which houses the NSA.

Despite Tor's importance to dissidents and human rights organizations, however, the NSA and its UK counterpart GCHQ have devoted considerable efforts to attacking the service, which law enforcement agencies say is also used by people engaged in terrorism, the trade of child abuse images, and online drug dealing.

Privacy and human rights groups have been concerned about the security of Tor following revelations in the Guardian, New York Times and ProPublica about widespread NSA efforts to undermine privacy and security software. A report by Brazilian newspaper Globo also contained hints that the agencies had capabilities against the network.

While it seems that the NSA has not compromised the core security of the Tor software or network, the documents detail proof-of-concept attacks, including several relying on the large-scale online surveillance systems maintained by the NSA and GCHQ through internet cable taps.
One such technique is based on trying to spot patterns in the signals entering and leaving the Tor network, to try to de-anonymise its users. The effort was based on a long-discussed theoretical weakness of the network: that if one agency controlled a large number of the "exits" from the Tor network, they could identify a large amount of the traffic passing through it.

The proof-of-concept attack demonstrated in the documents would rely on the NSA's cable-tapping operation, and the agency secretly operating computers, or "nodes," in the Tor system. However, one presentation stated that the success of this technique was "negligible" because the NSA has "access to very few nodes" and that it is "difficult to combine meaningfully with passive Sigint."

While the documents confirm the NSA does indeed operate and collect traffic from some nodes in the Tor network, they contain no detail as to how many, and there are no indications that the proposed de-anonymization technique was ever implemented.

Other efforts mounted by the agencies include attempting to direct traffic toward NSA-operated servers, or attacking other software used by Tor users. One presentation, titled "Tor: Overview of Existing Techniques," also refers to making efforts to "shape," or influence, the future development of Tor, in conjunction with GCHQ.

Another effort involves measuring the timings of messages going in and out of the network to try to identify users. A third attempts to degrade or disrupt the Tor service, forcing users to abandon the anonymity protection.

Such efforts to target or undermine Tor are likely to raise legal and policy concerns for the intelligence agencies.

Foremost among those concerns is whether the NSA has acted, deliberately or inadvertently, against internet users in the US when attacking Tor. One of the functions of the anonymity service is to hide the country of all of its users, meaning any attack could be hitting members of Tor's substantial US user base.

Several attacks result in implanting malicious code on the computers of Tor users who visit particular websites. The agencies say they are targeting terrorists or organized criminals visiting particular discussion boards, but these attacks could also hit journalists, researchers, or those who accidentally stumble upon a targeted site.

The efforts could also raise concerns in the State Department and other US government agencies that provide funding to increase Tor's security -- as part of the Obama administration's internet freedom agenda to help citizens of repressive regimes -- circumvent online restrictions.

Material published online for a discussion event held by the State Department, for example, described the importance of tools such as Tor.

"[T]he technologies of internet repression, monitoring and control continue to advance and spread as the tools that oppressive governments use to restrict internet access and to track citizen online activities grow more sophisticated. Sophisticated, secure, and scalable technologies are needed to continue to advance internet freedom."

The Broadcasting Board of Governors, a federal agency whose mission is to "inform, engage, and connect people around the world in support of freedom and democracy" through networks such as Voice of America, also supports Tor'
s development, and uses it to ensure its broadcasts reach people in countries such as Iran and China.

The governments of both these countries have attempted to curtail Tor's use: China has tried on multiple occasions to block Tor entirely, while one of the motives behind Iranian efforts to create a "national internet" entirely under government control was to prevent circumvention of those controls.

The NSA's own documents acknowledge the service's wide use in countries where the internet is routinely surveilled or censored. One presentation notes that among uses of Tor for "general privacy" and "non-attribution," it can be used for "circumvention of nation state internet policies" -- and is used by "dissidents" in "Iran, China, etc."

Yet GCHQ documents show a disparaging attitude towards Tor users. One presentation acknowledges Tor was "created by the US government" and is "now maintained by the Electronic Frontier Foundation (EFF)," a US freedom of expression group. In reality, Tor is maintained by an independent foundation, though has in the past received funding from the EFF.

The presentation continues by noting that "EFF will tell you there are many pseudo-legitimate uses for Tor," but says "we're interested as bad people use Tor." Another presentation remarks: "Very naughty people use Tor."

The technique developed by the NSA to attack Tor users through vulnerable software on their computers has the codename EgotisticalGiraffe, the documents show. It involves exploiting the Tor browser bundle, a collection of programs, designed to make it easy for people to install and use the software. Among these is a version of the Firefox web browser.

Please go to The Guardian to read the rest of this article.

October 5, 2013, OpEdNews

The "Hyper-meritocracy" -- an Oxymoron Led by Criminal Morons
By William K. Black, J.D., Ph.D.

We do not live in a "winner-take-all" Nation. We increasingly live in a "cheater-take-all" system. This column was prompted by William Galston's review of Tyler Cowen's new book Average is Over. Galston's column worries about the huge, permanent underclass that Cowen envisions will grow in the United States. I write to challenge Cowen's assumption that winners will prevail through a process of "hyper-meritocracy."

Reprinted from
This column was prompted by William Galston's review of Tyler Cowen's new book Average is Over. Galston's column worries about the huge, permanent underclass that Cowen envisions will grow in the United States. I write to challenge Cowen's assumption that winners will prevail through a process of "hyper-meritocracy." Cowen's embrace of Social Darwinism assumes that the winners have a selective advantage that arises from "merit" -- which Cowen conflates with the ability to create wealth. This is passing strange as we are still suffering from an orgy of wealth destruction led by the "winners." The people who grew wealthiest were often the people must responsible for the largest destruction of wealth in history. In this first column I show that it is the most anti-meritocratic system. We do not live in a "winner-take-all" Nation. We increasingly live in a "cheater-take-all" system.

What Cowen has missed is the famous (but nearly famous enough) warning sounded by George Akerlof and Paul Romer in 1993 in their classic article "Looting: The Economic Underworld of Bankruptcy for Profit."
"[M]any economists still [do] not understand that a combination of circumstances in the 1980s made it very easy to loot a [bank] with little risk of prosecution. Once this is clear, it becomes obvious that high-risk strategies that would pay off only in some states of the world were only for the timid. Why abuse the system to pursue a gamble that might pay off when you can exploit a sure thing with little risk of prosecution?" (Akerlof & Romer 1993: 4-5).
The result of these perverse incentives is the epidemics of accounting control fraud that drive our recurrent, intensifying financial crises. In the savings and loan debacle, for example:
"The typical large failure [grew] at an extremely rapid rate, achieving high concentrations of assets in risky ventures". [E]very accounting trick available was used". Evidence of fraud was invariably present as was the ability of the operators to "milk' the organization" (NCFIRRE 1993).
The large Enron-era frauds were all accounting control frauds.
Worse, when cheaters prosper market forces become perverse because of the "Gresham's" dynamic in which bad ethics drives good ethics out of the markets and professions. George Akerlof explained this in his most famous article on "Lemons" in 1970.
"[D]ishonest dealings tend to drive honest dealings out of the market. The cost of dishonesty, therefore, lies not only in the amount by which the purchaser is cheated; the cost also must include the loss incurred from driving legitimate business out of existence."
Akerlof was not the first expert to understand the dynamic.
"The Lilliputians look upon fraud as a greater crime than theft. For, they allege, care and vigilance, with a very common understanding, can protect a man's goods from thieves, but honesty hath no fence against superior cunning. . . where fraud is permitted or connived at, or hath no law to punish it, the honest dealer is always undone, and the knave gets the advantage" (Swift, J. Gulliver's Travels: 1726).
The mortgage fraud crisis occurred because the fraudulent CEOs whose banks created the twin epidemics of mortgage origination fraud deliberately generated a series of Gresham's dynamics that produced an unethical race to the bottom in the professions that aided and abetted the loan origination fraud. The earliest warnings of this were made by honest appraisers in 2000.
"From 2000 to 2007, a coalition of appraisal organizations " delivered to Washington officials a public petition; signed by 11,000 appraisers". [I]t charged that lenders were pressuring appraisers to place artificially high prices on properties [and] "blacklisting honest appraisers" and instead assigning business only to appraisers who would hit the desired price targets"( FCIC 2011: 18).
A national survey of appraisers conducted in early 2004 found that 75% of appraisers had been urged within the prior 12 months to inflate an appraisal. A 2007 survey found that the percentage of appraisers reporting that they had been urged to inflate an appraisal within the past 12 months had risen to 90% and honest appraisers were forced to pay a high price for refusing to give in to the coercion: 68% reported losing a client and 45% did not get paid for their work. Note that a Gresham's dynamic does not have to drive all the honest professionals out of the field to produce epidemic levels of fraud. Even if only a small percentage of the appraisers are suborned they can inflate all the appraisals required.
New York Attorney General (now, governor) Cuomo investigation of Washington Mutual (WaMu) found that it had blacklisted honest appraisers. Cuomo described WaMu as typical of nonprime lenders.
Similar Gresham's dynamics have been documented in many crises and professions.
"[A]busive operators of S&L[s] sought out compliant and cooperative accountants. The result was a sort of "Gresham's Law" in which the bad professionals forced out the good" (NCFIRRE 1993).
Modern executive compensation is also a superb device for enlisting the aid of hundreds or even thousands of employees and officers and suborning internal controls. It also reduces whistleblowing.
"Don't just say: "If you hit this revenue number, your bonus is going to be this.' It sets up an incentive that's overwhelming. You wave enough money in front of people, and good people will do bad things" Franklin Raines: CEO, Fannie Mae.
Raines' analysis was correct, which explains why the bonus system he put in place was so successful in turning Fannie Mae into one of the world's largest and most destructive accounting control frauds.
"By now every one of you must have 6.46 [earnings per share (EPS)] branded in your brains. You must be able to say it in your sleep, you must be able to recite it forwards and backwards, you must have a raging fire in your belly that burns away all doubts, you must live, breath and dream 6.46, you must be obsessed on 6.46". After all, thanks to Frank, we all have a lot of money riding on it". We must do this with a fiery determination, not on some days, not on most days but day in and day out, give it your best, not 50%, not 75%, not 100%, but 150%.
Remember, Frank has given us an opportunity to earn not just our salaries, benefits, raises, ESPP, but substantially over and above if we make 6.46. So it is our moral obligation to give well above our 100% and if we do this, we would have made tangible contributions to Frank's goals." (Mr. Rajappa, head of Fannie's internal audit, emphasis in original.)
The second epidemic of loan fraud by lenders created the epidemic of fraudulent "liar's" loans. The liar's loan epidemic interacted with the appraisal fraud epidemic to hyper-inflate the real estate bubble and created a financial catastrophe. The fraudulent leaders of nonprime lenders deliberately created a Gresham's dynamic among their loan officers and their loan brokers. Loan brokers did most of the dirty work (giving the lenders deniability) of inflating appraisals and putting the lies in liar's loans.
"More loan sales meant higher profits for everyone in the chain. Business boomed for Christopher Cruise, a Maryland-based corporate educator who trained loan officers for companies that were expanding mortgage originations. He crisscrossed the nation, coaching about 10,000 loan originators a year". (FCIC 2011: 7)
"His clients included many of the largest lenders--Countrywide, Ameriquest, and Ditech among them. Most of their new hires were young, with no mortgage experience, fresh out of school and with previous jobs "flipping burgers,' he told the FCIC. Given the right training, however, the best of them could "easily' earn millions." (FCIC 2011: 8 )
"He taught them the new playbook: "You had no incentive whatsoever to be concerned about the quality of the loan, whether it was suitable for the borrower or whether the loan performed.' He added, "I knew that the risk was being shunted off. I knew that we could be writing crap. But in the end it was like a game of musical chairs. Volume might go down but we were not going to be hurt'" (FCIC 2011: 8 ).
"I knew that we could be writing crap." Under the incentive structures deliberately created by the officers controlling the lenders the loan officers "had no incentive whatsoever to be concerned about the quality of the loan, whether it was suitable for the borrower or whether the loan performed." To ensure that their new loan officers understood and responded to the perverse incentives the fraudulent lenders hired people like Christopher Cruise to train them to understand and act in accordance with those incentives.
The general reader may be confused as to why the CEOs leading the fraudulent lenders were deliberately creating incentives to make enormous numbers of bad loans. The fraud "recipe" for an accounting control fraud optimizing fraudulent income by making (buying) bad loans has four ingredients.
  1. Grow extremely quickly by
  2. Making (buying) bad loans at premium yield
  3. While employing extreme leverage, and
  4. Providing grossly inadequate allowances for loan and lease losses (ALLL)
This is the recipe that produces what Akerlof and Romer aptly described as a "sure thing" and that hyper-inflated the bubble and drove the crisis. The recipe produces three sure things: the lender (purchaser) of "crap[py]" loans will immediately report record income, the controlling officers will promptly be made wealthy through modern executive compensation, and the firm will suffer severe losses.
It is simple to follow the recipe. No skill is required. The fact that the recipe can be employed simultaneously by the originator/seller and the buyer of the fraudulent loans explains why the secondary market followed the financial version of "don't ask; don't tell."
Even the former head of the professional association of mortgage brokers, while trying to minimize the success of the Gresham's dynamic, actually conceded its critical importance.
"Marc S. Savitt, a past president of the National Association of Mortgage Brokers, told the Commission that while most mortgage brokers looked out for borrowers' best interests and steered them away from risky loans, about 50,000 of the newcomers to the field nationwide were willing to do whatever it took to maximize the number of loans they made. He added that some loan origination firms, such as Ameriquest, were "absolutely' corrupt" (FCIC 2011: 14).
Ameriquest was not some random lender. It was the fraudulent lender that first developed liar's loans and it was for many years the largest originator and seller of fraudulent loans. Its CEO, Roland Arnall, was made wealthy by the fraud -- wealthy enough to make the large political contributions that got him appointed our Ambassador to the Netherlands after the fourth time Ameriquest was subject to government sanctions. It was Ameriquest that WaMu and Citicorp rushed to acquire even though Ameriquest was the most notorious lender in America.
Sadly, Savitt's estimate of fraudulent loan brokers was far too low. When entry is easy -- and becoming a mortgage broker was simple -- and the financial incentives to commit fraud are powerful the result is horrific.
"According to an investigative news report published in 2008, between 2000 and 2007, at least 10,500 people with criminal records entered the field in Florida, for example, including 4,065 who had previously been convicted of such crimes as fraud, bank robbery, racketeering, and extortion" (FCIC 2011: 14).
A loan broker could make $2,000 to $20,000 by getting a single bad loan approved. But he got nothing if the loan was not approved. The brokers knew that that if they put the borrower into a liar's loan the broker would receive a higher fee because such loans had a higher interest rate (which increased the broker's compensation). The brokers knew that the lender would not verify the borrower's reported income on a liar's loan. If the broker inflated the borrower's income the lender was far more likely to approve the loan. The broker, but not the borrower, knew how much to inflate the borrower's stated income.
"[Many originators invent] non-existent occupations or income sources, or simply inflat[e] income totals to support loan applications. Importantly, our investigations have found that most stated income fraud occurs at the suggestion and direction of the loan originator, not the consumer." Tom Miller, AG, Iowa, 2007 testimony to Fed.
It was the lenders and their agents that put the lies in "liar's" loans and that used coercion to inflate appraisals. No honest lender would create the perverse incentives sure to lead to fraudulent epidemics of liar's loans and inflated appraisals.
The constants present in each of our three modern financial crises (the S&L debacle, the Enron-era scandals, and the mortgage fraud crisis) were that the crises were driven by epidemics of accounting control fraud and that during the expansion phase of each crisis neo-classical economists praised the worst frauds as brilliant innovators who understood the importance of technological advances. The economists assured us that the massive compensation that the fraudulent CEOs awarded themselves was the just result of an emerging meritocracy. The reality was the opposite.
"Neither the public nor economists foresaw that [S&L deregulation was] bound to produce looting. Nor, unaware of the concept, could they have known how serious it would be. Thus the regulators in the field who understood what was happening from the beginning found lukewarm support, at best, for their cause. Now we know better. If we learn from experience, history need not repeat itself" (George Akerlof & Paul Romer.1993: 60).
Cowen does not discuss financial fraud, Akerlof and Romer's findings, or the Gresham's dynamic in his book even though they are central to his purported thesis. He simply assumes that the financial frauds were made wealthy because they were more "productive." They were the opposite of productive. Cowen has adopted, implicitly, the label that Christopher Cruise, the lead training official that the fraudulent lenders chose to train their loan officers, used.
"Most of their new hires were young, with no mortgage experience, fresh out of school and with previous jobs "flipping burgers,' he told the FCIC. Given the right training, however, the best of them could "easily' earn millions." (FCIC 2011: 8 )
Cruise and Cowen simply assume that whoever can "earn millions" represents the "best" of Americans. It can, but it can also represent the worst of us. Finance has become dominated by the worst of us, which is why we have recurrent, intensifying financial crises driven by their fraud epidemics. Cowen looks at the results of our hyper-anti-meritocracy system of finance, a gaudy whorehouse bedecked with red neon lights. Cowen concedes in his book (though it does lead to any analytical inquiry) that finance executives are currently the largest winners in gaining wealth despite causing the massive loss of societal wealth in the ongoing crisis. Without even discussing fraud or why the people who are the leading destroyers of wealth were the largest beneficiaries and experienced the greatest growth in wealth since 2009 Cowen describes finance as if it were a temple of meritocracy. Cowen has demonstrated that when Akerlof and Romer said of economists -- twenty years ago -- that "now we know better" about fraud and financial crises they were far too optimistic about their profession.

Submitters Website:

Submitters Bio:
William K Black , J.D., Ph.D. is Associate Professor of Law and Economics at the University of Missouri-Kansas City. Bill Black has testified before the Senate Agricultural Committee on the regulation of financial derivatives and House Governance Committee on the regulation of executive compensation. He was interviewed by Bill Moyers on PBS, which went viral. He gave an invited lecture at UCLA’s Hammer Institute which, when the video was posted on the web, drew so many “hits” that it crashed the UCLA server. He appeared extensively in Michael Moore’s most recent documentary: “Capitalism: A Love Story.” He was featured in the Obama campaign release discussing Senator McCain’s role in the “Keating Five.” (Bill took the notes of that meeting that led to the Senate Ethics investigation of the Keating Five. His testimony was highly critical of all five Senators’ actions.) He is a frequent guest on local, national, and international television and radio and is quoted as an expert by the national and international print media nearly every week. He was the subject of featured interviews in Newsweek, Barron’s, and Village Voice.

Thursday, October 03, 2013

Li Lightfoot

Quote Of The Day

                                 " I can't even recognize this
as the country I fought for anymore."
                                               ( A 90-year-old
                                         World-War Two Veteran )

Wednesday, October 02, 2013

By Leonardo Ulian

October 1, 2013, OpEdNews

Obamacare Is Another Private Sector Rip-Off Of Americans
By Paul Craig Roberts

The government has shut itself down, because it cannot deal with the budget deficit and mounting public debt caused by 12 years of wars, by financial deregulation that allows "banks too big to fail" to loot the taxpayers, and by the loss of jobs, GDP, and tax base that jobs offshoring forced by Wall Street caused.

The private sector allied with government is a second IRS

The government of the "world's only superpower," the "exceptional," the "indispensable" country, claims to know what is best for Syria, Iraq, Afghanistan, Libya, Yemen, Pakistan, Somalia, Mali, Russia, Venezuela, Bolivia, Ecuador, Brazil, China, indeed for the entire world. However, the "indispensable" country cannot even govern itself, much less the world over which the "superpower" desires hegemony. The government of the "world's only superpower" has shut itself down.
The government has shut itself down, because it cannot deal with the budget deficit and mounting public debt caused by 12 years of wars, by financial deregulation that allows "banks too big to fail" to loot the taxpayers, and by the loss of jobs, GDP, and tax base that jobs offshoring forced by Wall Street caused.

The Republicans are using the fight over the limit on new public debt to block Obamacare. The Republicans are right to oppose Obamacare, but they are opposing Obamacare largely for ideological reasons when there are very good sound reasons to oppose Obamacare.
Last February 3, I posted on this website a column, "Obamacare: A Deception," written by an expert on the subject.

When Republicans for ideological reasons blocked a single-payer health system like the rest of the developed world has and, indeed, even some developing countries have, the Obama regime, needing a victory, went to the insurance companies and told them to come up with a health care plan that the insurance lobby could get passed by Congress. Obamacare was written by the private insurance industry with the goal of raising its profits with 50 million mandated new customers
Obamacare works for the insurance companies, but not for the uninsured. The cost of using Obamacare is prohibitive for those who most need the health coverage. The cost of the premiums net of the government subsidy is large. It amounts to a substantial pay cut for people struggling to pay their bills. In addition to the premium cost, it is prohibitive for hard-pressed Americans to use the policies because of the deductibles and co-pays. For the very poor, who are thrown into Medicaid systems, any assets they might have, such as a home, are subject to confiscation to cover their Medicaid bills. The only people other than the insurance companies who benefit from Obamacare are the down and out who are devoid of all assets.

This might prove to be a growing percentage of Americans. On September 19 the New York Times on the front page of the business section reported what I have reported for years: that real median family incomes in the US are where they were a quarter of a century ago. In other words, in a quarter of a century there has been no income growth for the median American family.

In 2013, payroll employment is below where it was six years ago. During 2013 most of the new jobs, barely sufficient to stay even with population growth and insufficient to recover the job loss from the recession, have been part-time jobs that do not provide any discretionary income with which to drive a consumer economy.

Obamacare has resulted in the health insurance companies, who thought that they would be living in high profits from the mandated health coverage, being outsmarted by employers, who have reduced their full-time workers to part-time in order to avoid Omamacare's requirement to provide health coverage to those employees who work 30 hours a week or more.

Employers can get away with this, because jobs are hard to find. The lack of employment opportunities results in Americans with engineering degrees working as retail sales clerks and as shelf stockers in Walmart and Home Depot. Despite the abundance of unemployed and under-employed American technical and engineering workers, the large corporations lobby Congress for more H-1B visas to bring in lowly paid foreigners with the argument that there is a shortage of qualified Americans for technical work.

As I have pointed out so many times, if there were a shortage of engineering and technical workers, salaries would be rising, not falling.

For millions of employees, Obamacare means cut hours and less take home pay plus out-of-pocket expenses to purchase an Obamacare health policy. For most people covered by Obamacare, this is a lose-lose situation.

It is also a lose-loss situation for the vast majority of the young. Most young people, unless they have jobs that provide health coverage, do without it, because the chances of the young having heart attacks, cancer, and other serious health problems is low.

Obamacare, however, requires the healthy young to pay premiums for coverage or to pay a penalty to the IRS.

In my day this might not have been a problem. However, today there are few jobs for the young that pay enough to have an independent existence. The monthly payroll jobs reports do not show well-paying jobs. The Labor Department's projections of future jobs are not jobs that pay well. For the youth, it seems that the penalty is less than the premium, so youthful penalties paid out of waitress and bartender tips will subsidize the unusable Obamacare health policies for the poor adults who are not thrown into Medicare, which confiscates their assets, if any.

Obamacare benefits only two classes of people. It benefits employers who drop their employees working hours below the hours specified for Obamacare coverage, and it benefits the insurance companies or the IRS who collect the premiums and penalties.
Many of the people who pay the premiums won't be able to use the policies because of co-pays and deductions.

The very poor with no assets might receive health care if they reside in states that accept the Medicaid provisions of Obamacare.

In 21st century America, the few people who have experienced income gains are the executives and shareholders of firms who offshored their production for US markets, Wall Street which makes bets covered by the Federal Reserve, and the military-security complex which has been enriched by the neoconservatives' wars.

Every other American has lost.

Tuesday, October 01, 2013


Matt Taibbi on How Wall Street Hedge Funds Are Looting the Pension Funds of Public Workers, 9/26/2013
In his latest article for Rolling Stone, Matt Taibbi reports that Wall Street firms are now making millions in profits off of public pension funds nationwide. "Essentially it is a wealth transfer from teachers, cops and firemen to billionaire hedge funders," Taibbi says. "Pension funds are one of the last great, unguarded piles of money in this country and there are going to be all sort of operators that are trying to get their hands on that money."


JUAN GONZALEZ: We turn now to major new piece by Rolling Stone Contributing Editor Matt Taibbi called, "Looting the Pension Funds: Five years after the financial crisis, Wall Street is picking at the carcass of flat-broke city and state governments, blaming public workers and making millions to 'rescue' them.”

AMY GOODMAN: Matt Taibbi joins us here in our studio. Explain how the pension funds are being looted.

MATT TAIBBI: The primary focus of my piece, there were a couple of things. Number one, how did these funds come to be broke the first place? I think everyone realizes that states are in fiscal crises or having trouble paying out their obligations to workers. One of the reasons is that at least 14 states have not been making their annual required contributions to the pension fund for years and years and years. So essentially, they have been illegally borrowing from these pension funds, sometimes going back decades. Another focus of the piece was the solution that a lot of sort of Wall Street funded think tanks are coming up with now is to get higher returns by putting these funds into alternative investments like hedge funds. In a lot of cases what I’m finding is that the fees that states are paying for these new hedge funds and these new types of alternatives investments are actually roughly equal to the cuts that they are taking from workers. Like in the state of Rhode Island, for instance, they have frozen the cost of living adjustment and the frozen cola roughly equals the fees that they’re paying to hedge funds in that state. So essentially it is a wealth transfer from teachers, cops, and firemen to billionaire hedge-funders.

JUAN GONZALEZ: You know, decades ago, pension funds used to invest conservatively, basically in bonds, because they knew that this was retirement money of workers that they couldn’t risk. But increasingly then over the last 20 to 30 years, they have shifted more of their money into the stock markets, to the gambling of the stock market, so when the market went down then suddenly the investment returns of these pension funds went down and they were stuck then because they were projecting continued increases on those returns.

MATT TAIBBI: Sure, and among the problems here is that state and municipal pension funds are actually not covered ERISA which is the federal law governing pensions. So if there is no prudent man rule that requires a certain level of reasonability or prudence in investment, hedge funds probably would not have been a typical public or municipal investment a long time ago, but now they are being used in some cases 10%, 15 to 20% of these state funds are being put into these alternative investments. If you look on the prospectuses of a lot of these investments, they say right in the front, in huge letters, these are high risk investments, you may lose everything. It is exactly the opposite of what you want to put public money into.

AMY GOODMAN: Matt Taibbi, talk about John Arnold.

MATT TAIBBI: John Arnold is a former Enron energy commodities trader who became a billionaire, one of the world’s most successful commodity traders after the collapse of Enron and he is sort of the new Koch Brothers figure. He is on a crusade. He has created something called the Arnold Foundation which is funding pension reform efforts in multiple states all across the country from Montana to Kentucky to Florida to Rhode Island where I spend a lot of time. In Rhode Island Arnold donated a lot of money to a 501(c)4 organization called Engage Rhode Island which helped promote the pension reform policies of the sort of Wall Street friendly treasurer they have in that state. And this is sort of the new formula, you have in the Citizen’s United age you have some person, a hedge fund guy like John Arnold, who gives a whole bunch of money to some shadowing organization which advertises this crisis that we can’t afford to pay workers any more so we have to do things differently. We gotta make cuts and then we gotta put all the money in Wall Street managed funds. That is sort of his playbook.

JUAN GONZALEZ: I would like to ask you about Detroit, obviously he biggest bankruptcy we know of in recent modern times for a municipality, and you have the situation of the pension funds there under threat. big front page story in the New York Times today; but the average retiree from the Detroit government is receiving a pension of $19,000 a year. We’re not talking about golden parachutes here, yet these are the very pension funds that are now under attack.

MATT TAIBBI: Sure, there is a huge corruption case that just broke open this morning. What I would say about that, is what did Willie Sutton say about why he robbed banks? That’s where the money is. Look, pension funds are sort of the last great big unguarded piles of money in this country and there are going to be all sorts of operators who trying to get their hands on that money. During the crisis era, it was Wall Street banks who were essentially looting these funds by selling them toxic, fraudulent mortgage backed securities. In Detroit, it was the workers themselves who were taking the money. They’re giving themselves what they called 13th checks, taking advances of their own money. But across the country the more typical narrative is not some worker who is making $19,000 who is really making out in this kind of corruption. It is the hedge fund who is making $50 and $60 million in fees managing state funds. That is the much more typical narrative.

AMY GOODMAN: Matt, you had a piece earlier, 16 major firms may have received early data from Thompson Reuters.

MATT TAIBBI: Yeah. That story came out actually earlier this year. There was a whistleblower who worked at Thompson Reuters. There was a key economic indicator that Thompson Reuters is contracted with the University of Michigan to release. It affects the fed’s projections and some of the fed’s moves. If you have early access to that data you definitely have a trading advantage and it has subsequently come out that some firms, 16 of the biggest banks and hedge funds in the world, have been getting that data up to an hour early.

AMY GOODMAN: And that means?

MATT TAIBBI: That means that they are able to trade ahead of that information. I spoke with a market research firm who looked at the trading data and he said, look you are seeing these huge spikes in activity just before the data is officially released, which means that a whole bunch of people who had a lot of money were gambling on inside information and this is going on all over the place.

AMY GOODMAN: Matt Taibbi, we are going to have to leave it there. Contributing editor for Rolling Stone magazine. We will have a link to piece in Rolling Stone that hits the stands Friday. It’s called, "Looting the Pension Funds: Five years after the financial crisis, Wall Street is picking at the carcass of flat-broke city and state governments, blaming public workers and making millions to 'rescue' them.”

Monday, September 30, 2013

New Snowden Leak: NSA is Monitoring The Internet Histories of Millions of Americans

 September 30, 2013,                                                   

AFP Photo / Patrick Hertzog
AFP Photo / Patrick Hertzog
The National Security Agency is collecting information on the Internet habits of millions of innocent Americans never suspected of criminal involvement, new NSA documents leaked by former intelligence contractor Edward Snowden suggest.

Britain’s Guardian newspaper reported Monday that top-secret documents included in the trove of files supplied by the NSA contractor-turned-leaker Edward Snowden reveal that the US intelligence community obtains and keeps information on American citizens accumulated off the Internet without ever issuing a search warrant or opening an investigation into that person.

The information is obtained using a program codenamed Marina, the documents suggest, and is kept by the government for up to a full year without investigators ever having to explain why the subject is being surveilled.

Marina has the ability to look back on the last 365 days' worth of DNI metadata seen by the Sigint collection system, regardless whether or not it was tasked for collection,” the Guardian’s James Ball quotes from the documents.

According to a guide for intelligence analysts supplied by Mr. Snowden, “The Marina metadata application tracks a user's browser experience, gathers contact information/content and develops summaries of target.”

"This tool offers the ability to export the data in a variety of formats, as well as create various charts to assist in pattern-of-life development,” it continues.

Ball writes that the program collects “almost anything” a Web user does online, “from browsing history – such as map searches and websites visited – to account details, email activity, and even some account passwords.”

Only days earlier, separate disclosures attributed to Snowden revealed that the NSA was using a massive collection of metadata to create complex graphs of social connections for foreign intelligence purposes, although that program had pulled in intelligence about Americans as well.

After the New York Times broke news of that program, a NSA spokesperson said that “All data queries must include a foreign intelligence justification, period.” As Snowden documents continue to surface, however, it’s becoming clear that personal information pertaining to millions of US citizens is routinely raked in by the NSA and other agencies as the intelligence community collects as much data as possible.

In June, a top-secret document also attributed to Mr. Snowden revealed that the NSA was collecting the telephone metadata for millions of Americans from their telecom providers. The government has defended this practice by saying that the metadata — rough information that does not include the content of communications — is not protected by the US Constitution’s prohibition against unlawful search and seizure.

Metadata can be very revealing,” George Washington University law professor Orin S. Kerr told the Times this week. “Knowing things like the number someone just dialed or the location of the person’s cellphone is going to allow them to assemble a picture of what someone is up to. It’s the digital equivalent of tailing a suspect.”

According to the Guardian’s Ball, Internet metadata picked up by the NSA is routed to the Marina database, which is kept separate from the servers where telephony metadata is stored.
Only moments after the Guardian wrote of its latest leak on Monday, Jesselyn Radack of the Government Accountability Project read a statement before the European Parliament’s Committee on Civil Liberties, Justice and Home Affairs penned by none other than Snowden himself.

When I began my work, it was with the sole intention of making possible the debate we see occurring here in this body,” Snowden said.

Snowden, who has been granted temporary asylum in Russia after being charged with espionage in the US, said through Raddack that “The cost for one in my position of returning public knowledge to public hands has been persecution and exile.”
Meanwhile, at the White House Monday afternoon, NBC News correspondent Chuck Todd asked Obama press secretary Jay Carney to comment on the latest disclosures, but to no avail.

The NSA’s activities are directed against foreign intelligence targets in order to protect the nation and its interests,” said Carney, adding, “We do what other nations do, and that is collect foreign intelligence.”

When Todd responded, “This is about Americans; this is about Americans, that are not foreign,” Carney replied by refusing to acknowledge any specific intelligence tool and instead said that the agency’s foreign intelligence activities “are directed pursuant to procedures approved by the United States attorney general and secretary of defense.”

I understand that that’s what you have to say. And that’s a statement you have to say. But are you at all concerned?” asked Todd.