U.S. Senator Warns of ‘Financial Meltdown’ Risk
February 26th, 2010Via: Financial Times:
The US is heading for a debt-driven “financial meltdown” within five to seven years [?], according to Judd Gregg, the outgoing Republican senator for New Hampshire.
In a robust and at times testy video interview for the Financial Times’s View from DC series, Mr Gregg also complimented China for showing rising alarm about the US’s mounting levels of public debt.
“We have had China say that they are looking for other places to put their reserves and that is probably a smart decision on their part,” said Mr Gregg, who will not seek re-election in November. “So the warning signs are pretty clear and the path is unsustainable and, at this point, unless we take different actions, unavoidable.”
But the senator, who was the most high-profile Republican invited by Barack Obama, the president, to join his administration last year, an offer Mr Gregg accepted and then turned down, said he doubted that the two parties would get together to tackle it.
Weaponizing Mozart: How Britain Is Using Classical Music as a Form of Social Control
February 26th, 2010Via: Reason:
In recent years Britain has become the Willy Wonka of social control, churning out increasingly creepy, bizarre, and fantastic methods for policing the populace. But our weaponization of classical music—where Mozart, Beethoven, and other greats have been turned into tools of state repression—marks a new low.
We’re already the kings of CCTV. An estimated 20 per cent of the world’s CCTV cameras are in the UK, a remarkable achievement for an island that occupies only 0.2 per cent of the world’s inhabitable landmass.
A few years ago some local authorities introduced the Mosquito, a gadget that emits a noise that sounds like a faint buzz to people over the age of 20 but which is so high-pitched, so piercing, and so unbearable to the delicate ear drums of anyone under 20 that they cannot remain in earshot. It’s designed to drive away unruly youth from public spaces, yet is so brutally indiscriminate that it also drives away good kids, terrifies toddlers, and wakes sleeping babes.
Police in the West of England recently started using super-bright halogen lights to temporarily blind misbehaving youngsters. From helicopters, the cops beam the spotlights at youths drinking or loitering in parks, in the hope that they will become so bamboozled that (when they recover their eyesight) they will stagger home.
And recently police in Liverpool boasted about making Britain’s first-ever arrest by unmanned flying drone. Inspired, it seems, by Britain and America’s robot planes in Afghanistan, the Liverpool cops used a remote-control helicopter fitted with CCTV (of course) to catch a car thief.
Britain might not make steel anymore, or cars, or pop music worth listening to, but, boy, are we world-beaters when it comes to tyranny. And now classical music, which was once taught to young people as a way of elevating their minds and tingling their souls, is being mined for its potential as a deterrent against bad behavior.
In January it was revealed that West Park School, in Derby in the midlands of England, was “subjecting” (its words) badly behaved children to Mozart and others. In “special detentions,” the children are forced to endure two hours of classical music both as a relaxant (the headmaster claims it calms them down) and as a deterrent against future bad behavior (apparently the number of disruptive pupils has fallen by 60 per cent since the detentions were introduced.)
One news report says some of the children who have endured this Mozart authoritarianism now find classical music unbearable. As one critical commentator said, they will probably “go into adulthood associating great music—the most bewitchingly lovely sounds on Earth—with a punitive slap on the chops.” This is what passes for education in Britain today: teaching kids to think “Danger!” whenever they hear Mozart’s Requiem or some other piece of musical genius.
The classical music detentions at West Park School are only the latest experiment in using and abusing some of humanity’s greatest cultural achievements to reprimand youth.
Across the UK, local councils and other public institutions now play recorded classical music through speakers at bus-stops, in parking lots, outside department stores, and elsewhere. No, not because they think the public will appreciate these sweet sounds (they think we are uncultured grunts), but because they hope it will make naughty youngsters flee.
Tyne and Wear in the north of England was one of the first parts of the UK to weaponize classical music. In the early 2000s, the local railway company decided to do something about the “problem” of “youths hanging around” its train stations. The young people were “not getting up to criminal activities,” admitted Tyne and Wear Metro, but they were “swearing, smoking at stations and harassing passengers.” So the railway company unleashed “blasts of Mozart and Vivaldi.”
Apparently it was a roaring success. The youth fled. “They seem to loathe [the music],” said the proud railway guy. “It’s pretty uncool to be seen hanging around somewhere when Mozart is playing.” He said the most successful deterrent music included the Pastoral Symphony by Beethoven, Symphony No. 2 by Rachmaninov, and Piano Concerto No. 2 by Shostakovich. (That last one I can kind of understand.)
In Yorkshire in the north of England, the local council has started playing classical music through vandal-proof speakers at “troublesome bus-stops” between 7:30 PM and 11:30 PM. Shops in Worcester, Bristol, and North Wales have also taken to “firing out” bursts of classical music to ward of feckless youngsters.
Research Credit: EG
Ex-Madoff Operations Director Arrested by FBI
February 25th, 2010Via: CNBC:
A former executive for imprisoned swindler Bernard Madoff’s firm was arrested Thursday and charged with concealing the scope of its multibillion dollar fraud and using at least $750 million of investor money to support the company’s trading arm.
The executive, Daniel Bonventre, was described by investigators as the director of operations of the Madoff firm from at least 1978 until its collapse in December 2008 when Madoff was arrested.
Madoff, 71, pleaded guilty last March to running Wall Street’s biggest investment fraud of as much as $65 billion and he is serving a 150-year prison sentence.
Investigators and the trustee winding down Bernard L. Madoff Investment Securities LLC (BLMIS) have previously said the activity took place in the firm’s investment arm (IA), but the charges against Bonventre directly link the investment and proprietary trading operations.
U.S. prosecutors and the FBI said in a statement that Bonventre, 63, who started working for Madoff in 1968, had broad responsibility for the general ledger, financial statements, accounting records and supervising back office staff.
The statement said he supervised “the use and reconciliation of BLMIS bank accounts through which the market making, proprietary trading, and IA business operations were funded.” He also supervised “settlement and clearing of trades executed by the market making and proprietary trading operations.” Bonventre’s lawyer could not immediately be reached for comment.
Senate Extends Patriot Act
February 25th, 2010Via: AP:
Democrats have retreated from adding new privacy protections to the primary U.S counterterrorism law, stymied by Senate Republicans who argued the changes would weaken terror investigations.
The proposed protections were cast aside when Senate Democrats lacked the necessary 60-vote supermajority to pass them. Dashing the hopes of liberals, the Senate Wednesday night instead passed — by voice vote without debate — a one-year extension of key parts of the USA Patriot Act that would have expired on Sunday.
Thrown away were restrictions and greater scrutiny on the government’s authority to spy on Americans and seize their records.
The House was prepared to approve the extension Thursday, dropping even more extensive privacy protections approved by the House Judiciary Committee.
The Democratic retreat is a political victory for Republicans, who gained new ammunition for their election theme that they can better protect America. The outcome is a major disappointment for Democrats and their liberal allies, including the American Civil Liberties Union, who believe the Patriot Act fails to protect Americans’ privacy and gives the government too much authority to spy on Americans and seize their property.
Something Very Strange Is Happening With Treasuries
February 25th, 2010Related: In 2009, the Federal Reserve Bought 80% of U.S. Debt
Via: NASDAQ:
This means that the Treasury took up EVERY single cent of competitive bids coming from indirect buyers. Remember, indirect buyers are usually assumed to be foreign governments (even the Treasury website admits this).
If this was the case yesterday, then foreign governments barely bought much of anything in yesterday’s auction (only 19% of total debt issued). Moreover, it implies that Primary Dealers (those having to buy) had to gorge on the auction to make up for the fact that few if any foreign governments are interested in buying our debt anymore (including even short-term debt).
Or…
One could potentially argue that this indirect buying came from the Fed covertly buying under the guise of an indirect bidder (the Treasury recently changed the definition of what qualifies for an indirect bidder to make it more vague). It IS rather odd that every single cent of competitive bidding coming from indirect buyers was filled. It’s almost as if the indirect buyers knew precisely WHAT yield to accept… OR were simply trying to take up the slack in what was already a VERY weak auction.
I cannot tell you which of the above is true. Heck, neither of them could be and something completely different could be happening. But regardless, something very, VERY strange is going on in US debt auctions.
I wrote earlier this year that bonds, not stocks, would be the big story of 2010. We’re only into February and there are already some very unusual things happening on both the long (30 year) and the short (4 week) ends of the Treasury curve. And with the Fed’s Quantitative Easing Program scheduled to end in March, things are about to get a whole lot more interesting (barring of course an extension of the QE or QE 2.0).
Keep your eye on US Treasuries. Stocks, despite being so popular with investors are usually the LAST to get what’s coming down the pike. And investors just parked $30 billion for a month with Uncle Sam at virtually NO YIELD yesterday.
Put another way, someone(s) is/are willing to not make money just for the sake of insuring return OF capital (the US can always print money to return it) rather than any return ON capital.
Banks Bet Greece Defaults on Debt They Helped Hide
February 25th, 2010But first, a quick walk down memory lane: Banks Bundled Bad Debt, Bet Against It and Won:
In late October 2007, as the financial markets were starting to come unglued, a Goldman Sachs trader, Jonathan M. Egol, received very good news. At 37, he was named a managing director at the firm.
Mr. Egol, a Princeton graduate, had risen to prominence inside the bank by creating mortgage-related securities, named Abacus, that were at first intended to protect Goldman from investment losses if the housing market collapsed. As the market soured, Goldman created even more of these securities, enabling it to pocket huge profits.
Goldman’s own clients who bought them, however, were less fortunate.
Pension funds and insurance companies lost billions of dollars on securities that they believed were solid investments, according to former Goldman employees with direct knowledge of the deals who asked not to be identified because they have confidentiality agreements with the firm.
Goldman was not the only firm that peddled these complex securities — known as synthetic collateralized debt obligations, or C.D.O.’s — and then made financial bets against them, called selling short in Wall Street parlance. Others that created similar securities and then bet they would fail, according to Wall Street traders, include Deutsche Bank and Morgan Stanley, as well as smaller firms like Tricadia Inc., an investment company whose parent firm was overseen by Lewis A. Sachs, who this year became a special counselor to Treasury Secretary Timothy F. Geithner.
And now…
Via: New York Times:
Bets by some of the same banks that helped Greece shroud its mounting debts may actually now be pushing the nation closer to the brink of financial ruin.
Echoing the kind of trades that nearly toppled the American International Group, the increasingly popular insurance against the risk of a Greek default is making it harder for Athens to raise the money it needs to pay its bills, according to traders and money managers.
These contracts, known as credit-default swaps, effectively let banks and hedge funds wager on the financial equivalent of a four-alarm fire: a default by a company or, in the case of Greece, an entire country. If Greece reneges on its debts, traders who own these swaps stand to profit.
“It’s like buying fire insurance on your neighbor’s house — you create an incentive to burn down the house,” said Philip Gisdakis, head of credit strategy at UniCredit in Munich.
As Greece’s financial condition has worsened, undermining the euro, the role of Goldman Sachs and other major banks in masking the true extent of the country’s problems has drawn criticism from European leaders. But even before that issue became apparent, a little-known company backed by Goldman, JP Morgan Chase and about a dozen other banks had created an index that enabled market players to bet on whether Greece and other European nations would go bust.
Fed to Look Into Insurance Contracts on Greek Debt
February 25th, 2010Bernanke is going to get to the bottom of it???
Via: AP:
Federal Reserve Chairman Ben Bernanke told lawmakers Thursday that the central bank is looking into the use by Goldman Sachs and other Wall Street firms of a sophisticated investment instrument to make bets that Greece will default on its debt.
Bernanke said the Fed is looking into companies’ use of credit default swaps, a form of insurance against bond defaults. Bernanke made the comments at the start of a Senate Banking Committee hearing, where the Fed chief delivered his twice-a-year economic report to Congress.
“Obviously, using these instruments in a way that intentionally destabilizes a company or a country is counterproductive,” Bernanke said, adding that the Securities and Exchange Commission probably will be looking into this matter as well.
“We’ll certainly be evaluating what we can learn from the activities of the holding companies that we supervise here in the U.S,” Bernanke said.
The panel’s chairman, Sen. Christopher Dodd, D-Conn., said he is troubled that this practice could worsen Greece’s debt crisis.
“We have a situation in which major financial institutions are amplifying a public crisis for what would appear to be for private gain,” Dodd said.
Dodd wondered whether there ought to be limits on the use of credit default swaps to prevent “the intentional creation of runs against governments.”
Do Toxins Cause Autism?
February 25th, 2010Just take a breath of fresh air.
Via: New York Times:
Autism was first identified in 1943 in an obscure medical journal. Since then it has become a frighteningly common affliction, with the Centers for Disease Control reporting recently that autism disorders now affect almost 1 percent of children.
Over recent decades, other development disorders also appear to have proliferated, along with certain cancers in children and adults. Why? No one knows for certain. And despite their financial and human cost, they presumably won’t be discussed much at Thursday’s White House summit on health care.
Yet they constitute a huge national health burden, and suspicions are growing that one culprit may be chemicals in the environment. An article in a forthcoming issue of a peer-reviewed medical journal, Current Opinion in Pediatrics, just posted online, makes this explicit.
The article cites “historically important, proof-of-concept studies that specifically link autism to environmental exposures experienced prenatally.” It adds that the “likelihood is high” that many chemicals “have potential to cause injury to the developing brain and to produce neurodevelopmental disorders.”
The author is not a granola-munching crank but Dr. Philip J. Landrigan, professor of pediatrics at the Mount Sinai School of Medicine in New York and chairman of the school’s department of preventive medicine. While his article is full of cautionary language, Dr. Landrigan told me that he is increasingly confident that autism and other ailments are, in part, the result of the impact of environmental chemicals on the brain as it is being formed.
“The crux of this is brain development,” he said. “If babies are exposed in the womb or shortly after birth to chemicals that interfere with brain development, the consequences last a lifetime.”
Concern about toxins in the environment used to be a fringe view. But alarm has moved into the medical mainstream. Toxicologists, endocrinologists and oncologists seem to be the most concerned.
Research Credit: RR
Commercial Mortgage Default Rate in U.S. More Than Doubles
February 25th, 2010Via: Bloomberg:
The default rate for commercial property mortgages held by U.S. banks more than doubled in the fourth quarter and may reach a peak of 5.4 percent at the end of next year, according to Real Capital Analytics Inc.
The default rate for loans on office, retail, hotel and industrial properties surged to 3.8 percent from 1.6 percent a year earlier, the New York-based real estate research firm said yesterday in a report. The default rate for loans on apartment buildings climbed to 4.4 percent from 1.8 percent.
Cryptome Forced Down Over Microsoft Law Enforcement Surveillance Compliance Document
February 25th, 2010Update: Microsoft Withdraws DMCA Complaint Against Cryptome
Via: cryptome.org:
Subject: DN: www.cryptome.org; Registrar: Network Solutions; Host: Network Solutions – Demand for Immediate Take Down – Notice of Infringing Activity – MS Ref. 304277
Date: Thu, 25 Feb 2010 12:22:59 -0500
From: “DMCA”
To: “John Young”
We would like to notify you that Microsoft has contacted us regarding www.cryptome.org. Microsoft has withdrawn their DMCA complaint. As a result www.cryptome.org has been reactivated and this matter has been closed. Please allow time for the reactivation to propagate throughout the various servers around the world.
Linda L. Larsen, Designated Agent
Network Solutions, LLC
Telephone: 703.668.5615
Facsimile: 703.668.5959
Email: dmca[at]networksolutions.com
_________
Subject: DN: www.cryptome.org; Registrar: Network Solutions; Host: Network Solutions – Demand for Immediate Take Down – Notice of Infringing Activity – MS Ref. 304277
Date: Thu, 25 Feb 2010 13:09 -0500
To: “DMCA”
From: “John Young”
Dear Ms. Larsen,
You may know we are publishing our email exchanges to help readers understand the process. Could you describe means by which Microsoft withdrew their DMCA complaint?
Regards,
John Young
__________
Subject: RE: DN: www.cryptome.org; Registrar: Network Solutions; Host: Network Solutions – Demand for Immediate Take Down – Notice of Infringing Activity – MS Ref. 304277
Date: Thu, 25 Feb 2010 13:24:52 -0500
From: “DMCA”
To: “John Young”
We received an email from Microsoft’s counsel withdrawing the complaint. Accordingly, we restored access and notified you of our action.
If you have any questions, please feel free to call me.
Linda L. Larsen, Designated Agent
Network Solutions, LLC
Telephone: 703.668.5615
Facsimile: 703.668.5959
Email: dmca[at]networksolutions.com
__________
Subject: RE: DN: www.cryptome.org; Registrar: Network Solutions; Host: Network Solutions – Demand for Immediate Take Down – Notice of Infringing Activity – MS Ref. 304277
Date: Thu, 25 Feb 2010 13:42 -0500
To: “DMCA”
From: “John Young”
Could we get a copy of the Microsoft email? For the public record.
Thanks, John
__________
Subject: DN: www.cryptome.org; Registrar: Network Solutions; Host: Network Solutions – Demand for Immediate Take Down – Notice of Infringing Activity – MS Ref. 304277
Date: Thu, 25 Feb 2010 14:09:47 -0500
From: “DMCA”
To: “John Young”
Mr. Young,
Pursuant to your request, attached please find the email correspondence containing Microsoft’s withdrawal of its “takedown request”.
Respectfully,
Linda L. Larsen, Designated Agent
Network Solutions, LLC
Telephone: 703.668.5615
Facsimile: 703.668.5959
Email: dmca[at]networksolutions.com
__________
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Content-class: urn:content-classes:message
Subject: Re: Ticket Number 1-452132847
Date: Wed, 24 Feb 2010 22:46:56 -0500
Message-ID: <54F83DC1AC2D7443AA904FFD32E2DAA40877B437[at]cbiexm02sf.cov.com>
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Thread-Topic: Re: Ticket Number 1-452132847
Thread-Index: Acq06IFo420gHHQPThWg1v/l3yM7TAAAjYcAAABtzJAAABl6EAAAmcd6ADcZlUA=
From: “Cox, Evan”
To: “DMCA”
Cc: “internet4[at]microsoft-antipiracy.com”
Dear Ms. Larsen:
I am outside counsel to Microsoft Corporation. I am writing to confirm my telephone message left with your nighttime operator at 7:45 PST this evening to withdraw Microsoft’s takedown request with respect to the file available at http://cryptome.org/isp-spy/microsoft-spy.zip which is the subject of the correspondence below.
While Microsoft has a good faith belief that the distribution of the file that was made available at that address infringes Microsoft’s copyrights, it was not Microsoft’s intention that the takedown request result in the disablement of web acess to the entire cryptome.org website on which the file was made available.
Accordingly, on behalf of Microsoft, I am hereby withdrawing the takedown request and asking that Network Solutions restore internet access to http: cryptome.org as soon as possible.
I can be reached at 415-640-5145 if you wish to discuss this request.
Sincerely,
Evan Cox
Counsel to Microsoft Corporation
—End Update—
Update: Cryptome Operating as Subdomain on siteprotect.net
That didn’t take long. HAHA.
—End Update—
The Wired page includes the document.
Via: Wired:
Microsoft has managed to do what a roomful of secretive, three-letter government agencies have wanted to do for years: get the whistleblowing, government-document sharing site Cryptome shut down.
Microsoft dropped a DMCA notice alleging copyright infringement on Cryptome’s proprietor John Young on Tuesday after he posted a Microsoft surveillance compliance document that the company gives to law enforcement agents seeking information on Microsoft users. Young filed a counterclaim on Wednesday — arguing he had a fair use to publishing the document, a full day before the Thursday deadline set by his hosting provider, Network Solutions.
Regardless, Cryptome was shut down by Network Solutions and its domain name locked on Wednesday — shuttering a site that thumbed its nose at the government since 1996 — posting thousands of documents that the feds would prefer never saw the light of day.
Microsoft did not return a call for comment by press time.
The 22-page document (.pdf) contains no trade secrets, but will tell Microsoft users things they didn’t know. (You can read it directly on your own computer from the above link, or read it inline below.)
For instance, Xbox Live records every IP address you ever use to login and stores them for perpetuity. While that’s going to be creepy for some, there’s an upside if your house gets robbed, according to the document: “If your investigation involves a stolen Xbox console, if the console serial number or Xbox LIVE user gamertag is provided and the console has been connected to the Internet, IP connection records may be available.”
The Microsoft® Online Services Global Criminal Compliance Handbook (.pdf) also goes so far as to provide sample language for subpoenas and diagrams on how to understand server logs.
Other things you might not know and which Microsoft (sometimes oddly) doesn’t want you to know?
Microsoft retains only the last 10 login records for Windows Live ID. As for your instant messages, it tells police that it keeps no record of what anyone says over Microsoft Messenger – though it will turn over who is on your buddy list.
And if you like to use Microsoft’s social networking products — like its old-school Group mailing list or its Facebook-like Spaces product, be aware that it’s very social when it comes to law enforcement or court subpoenas.
As Microsoft tells potential subpoenaees, “when you are looking for information on a specific incident like a photo posting or message posting, please request all group content and logs. We cannot retrieve single incident data.” The same holds for Spaces — if you are interested in a single picture, just request the entire thing. Call it Subpoena 2.0.
The compliance handbook is just the latest in a series of leaks of similar documents from other companies. Yahoo, like Microsoft, reacted as if its secret sauce had somehow been spilled by letting curious users know the hows and whys of how the companies deal with lawful surveillance requests. Google, for all its crusading for internet freedom, refuses to say how often law enforcement comes searching for user data.
The one company who has had a stand-up policy for years is the Cox Communications’ ISP, which has had this information and their price list public for years.
But hypocrisy is the name of the game for giant internet companies like Yahoo, Microsoft and Google that want us to entrust large portions of our lives to Gmail, Yahoo Mail, Buzz, Xbox, Hotmail, Messenger, Google Groups. When it comes to the most basic information about how, why and how often our data is subpoenaed and collected without our knowledge, these online innovators resort to lawyers, abusive legal process and double-talk.
