The Fed as Giant Counterfeiter

February 2nd, 2010

Via: Ludwig von Mises Institute:

San Jose State economics professor Jeffrey Rogers Hummel tells all his students that the easiest way to understand the Federal Reserve is to think of it as a giant, legalized counterfeiter. I had always known that the Fed and other central banks were like counterfeiters, but I still thought that the actual mechanics of open-market operations and so forth actually provided some important distinctions.

In large part because of my frequent email exchanges with Hummel, I now realize that I was being naïve. Once you understand the details of modern central banking, you are able to step back and see that it truly is a way for the government to use the printing press to pay its bills. All of the complicated process of targeting interest rates through buying Treasuries simply hides this essential point — and perhaps deliberately so.


January Earnings

February 2nd, 2010

In January, earnings from all sources came to a total of $873.88, a miss of $126.12 from the minimum earnings goal of $1000.

This is the first miss of the earnings goal in years, and many months have far exceeded the goal. Missing the goal in January isn’t the end of the world, but it won’t happen too many times with the site remaining open, or, at least, open to the public.

I don’t want to waste the time of the handful of people who make Cryptogon possible, but for those of you who appreciate the site, but do nothing at all to support it, this page describes the financial situation. It’s up to you. You vote on the site’s availability with your financial support. I wish that reality could work differently for me, but that’s the situation. (I’m having some small but encouraging successes with some interesting hacks that I’ve been working on for a very long time. So, maybe this situation can change.)

In the event that some kind of subscription model has to be used, all of your previous contributions would apply toward any subscription fees. (Some of you would have paid up subscriptions for many decades. HA) I would have to think about which affiliate activity could be counted, since most of that isn’t attributable to individuals… Hopefully, we won’t need to go there.

With that out of the way * phew *, thank you to all of you who contributed to Cryptogon in January, and conducted business via Cryptogon’s affiliate links.


CIA Officers Working for Private Corporations

February 2nd, 2010

Related: They Made a Killing: The Use of Knowledge of Covert Operations in the Stock Market

Via: Politico:

In the midst of two wars and the fight against Al Qaeda, the CIA is offering operatives a chance to peddle their expertise to private companies on the side — a policy that gives financial firms and hedge funds access to the nation’s top-level intelligence talent, POLITICO has learned.

In one case, these active-duty officers moonlighted at a hedge-fund consulting firm that wanted to tap their expertise in “deception detection,” the highly specialized art of telling when executives may be lying based on clues in a conversation.

…

A government official familiar with the policy insists it doesn’t impede the CIA’s work on critical national security investigations. This official said CIA officers who want to participate in it must first submit a detailed explanation of the type of work involved and get permission from higher-ups within the agency.

“If any officer requests permission for outside employment, those requests are reviewed not just for legality, but for propriety,” CIA spokesman George Little told POLITICO.

There is much about the policy that is unclear, including how many officers have availed themselves of it, how long it has been in place and what types of outside employment have been allowed. The CIA declined to provide additional details.

…

But the close ties between active-duty and retired CIA officers at one consulting company show the degree to which CIA-style intelligence gathering techniques have been employed by hedge funds and financial institutions in the global economy.

The firm is called Business Intelligence Advisors, and it is based in Boston. BIA was founded and is staffed by a number of retired CIA officers, and it specializes in the arcane field of “deception detection.” BIA’s clients have included Goldman Sachs and the enormous hedge fund SAC Capital Advisors, according to spokesmen for both firms.

BIA has employed active-duty CIA officers in the past, although BIA president Cheryl Cook said that has “not been the case with BIA for some time.”

But the ties between BIA and the intelligence world run deep. The name itself was chosen as a play off CIA. And the presence of so many former CIA personnel on the payroll at BIA causes confusion as to whether the intelligence firm is actually an extension of the agency itself. As a result, BIA places a disclaimer in some of its corporate materials to clarify that it is not, in fact, controlled by Langley.

BIA’s clients can put the company on a retainer for as much as $400,000 to $800,000 a year. And in return, they receive access to a variety of services, from deception detection to other programs that feature the CIA intelligence techniques.


Britain: Significant Percentage of Teenagers Think Oats Grow on Trees, Bacon Comes from Sheep

February 2nd, 2010

Via: Telegraph:

Teenage schoolchildren think oats grow on trees and bacon comes from sheep, a survey showed today.

Many children and young adults also believe eggs were a key ingredient in bread, the researchers said.

The survey showed 26% of children thought bacon came from sheep, 29% thought oats grow on trees, while 17% of both children and adults under the age of 30 believed eggs were a core ingredient in bread.

Research Credit: V


Deficit Balloons Into National Security Threat

February 1st, 2010

Via: Wall Street Journal:

The federal budget deficit has long since graduated from nuisance to headache to pressing national concern. Now, however, it has become so large and persistent that it is time to start thinking of it as something else entirely: a national-security threat.

The budget plan released Monday by the Obama administration illustrates why this escalation is warranted. The numbers are mind-numbing: a $1.6 trillion deficit this year, $1.3 trillion next year, $8.5 trillion for the next 10 years combined—and that assumes Congress enacts President Barack Obama’s proposals to start bringing it down, and that the proposals work.

These numbers are often discussed as an economic and domestic problem. But it’s time to start thinking of the ramifications for America’s ability to continue playing its traditional global role.

The U.S. government this year will borrow one of every three dollars it spends, with many of those funds coming from foreign countries. That weakens America’s standing and its freedom to act; strengthens China and other world powers including cash-rich oil producers; puts long-term defense spending at risk; undermines the power of the American system as a model for developing countries; and reduces the aura of power that has been a great intangible asset for presidents for more than a century.

“We’ve reached a point now where there’s an intimate link between our solvency and our national security,” says Richard Haass, president of the Council on Foreign Relations and a senior national-security adviser in both the first and second Bush presidencies. “What’s so discouraging is that our domestic politics don’t seem to be up to the challenge. And the whole world is watching.”


Jim Cramer: Illuminati Not That Bad

February 1st, 2010

It’s the usual nonsense for the first couple of minutes, but then, “And you know what, the Bavarian Illuminati, the Trilateral Commission, Goldman Sachs and the Queen of England are not all bad.”


Genetically Modified Forest Planned for U.S. Southeast

February 1st, 2010

Via: Scientific American:

Genetic engineering is coming to the forests.

While the practice of splicing foreign DNA into food crops has become common in corn and soy, few companies or researchers have dared to apply genetic engineering to plants that provide an essential strut of the U.S. economy, trees.

But that will soon change. Two industry giants, International Paper Co. and MeadWestvaco Corp., are planning to transform plantation forests of the southeastern United States by replacing native pine with genetically engineered eucalyptus, a rapidly growing Australian tree that in its conventional strains now dominates the tropical timber industry.

The companies’ push into genetically modified trees, led by their joint biotech venture, ArborGen LLC, looks to overcome several hurdles for the first time. Most prominently, they are banking on a controversial gene splice that restricts trees’ ability to reproduce, meant to allay fears of bioengineered eucalyptus turning invasive and overtaking native forests.

If such a fertility control technology — which has come under fire in farming for fear seed firms will exploit it — is proven effective, it could open the door to many varieties of wild plants, including weedy grasses, to be genetically engineered for use in energy applications like biomass and next-generation biofuels without fear of invasiveness.


Airstrip Built at Zimbabwe Diamond Field

February 1st, 2010

Via: Telegraph:

A secret airstrip is being built in a diamond field illegally seized by the Zimbabwean army 14 months ago which would enable clandestine weapons shipments.

Diplomats and analysts believe that the mile-long runway is intended for arms shipments, probably from China, for which troops loyal to President Robert Mugabe would pay on the spot with gemstones from the Chiadzwa diamond mines.

Aerial pictures show construction work is well under way, with a newly built control tower apparently complete and the runway nearly ready for surfacing.

There are other airfields within a short distance of the mining area, and no obvious need for a runway long enough for transport planes to take off and land even closer to the mines. A Western diplomat said the existence of the runway, out of sight except from the air, was “extremely” worrying.

The images also show what appears to be a tented army camp in the diamond fields, which would be in violation of Zimbabwean court orders and of an undertaking to the Kimberley Process, which was set up to prevent “blood diamonds” from conflict zones entering the global gem trade.

According to human rights groups, hundreds of independent miners were killed when soldiers seized control of the Chiadzwa area in November 2008, since when others have been compelled to work for only a fraction of the value of the diamonds they unearth. Officers use the proceeds from their sale to enhance their meagre pay – a ploy encouraged by Mr Mugabe’s henchmen to help ensure the army’s continued loyalty.

But the construction of the runway suggests that the army has now widened its ambition and wants to use its access to the raw diamonds – whose production is worth an estimated £125 million a month – to obtain goods from abroad, in particular weapons.


Quadrennial Defense Review: Melee Mode, Cyberwar, More Killer Robots, Environmental Catastrophes

February 1st, 2010

Via: CNN:

The Pentagon will no longer shape the U.S. military to fight two major conventional wars at once, but rather prepare for numerous conflicts and not all in the same style, according to a draft of a new strategic outlook the Pentagon is announcing on Monday.

The new mantra for military planners will replace the almost 25-year-old combat planning style of fighting and winning two major conventional wars in two different locations in favor of a fighting force that is capable of protecting U.S. interests around the world from a range of threats, from terrorism to cyber attacks.

The change will be addressed in the 2010 Quadrennial Defense Review, a congressionally mandated document that looks at future threats and the military’s requirements to mitigate them.

“It is no longer appropriate to speak of major regional conflicts as the sole or even primary template for sizing, shaping or evaluating U.S. forces,” according to a draft first obtained by Inside Defense.

The review will come on the same day the Pentagon presents its 2011 budget.

According to Pentagon officials, Defense Secretary Robert Gates will be asking for $708 billion, including funding for the wars in Iraq and Afghanistan — $44 billion more the 2010 budget of $664 billion.

The last major review was released in 2006 and the Pentagon’s view of the world has changed dramatically in the four years since.


U.S. Surrounds Iran with “Missile Shield”

February 1st, 2010

Via: Guardian:

Tension between the US and Iran heightened dramatically today with the disclosure that Barack Obama is deploying a missile shield to protect American allies in the Gulf from attack by Tehran.

The US is dispatching Patriot defensive missiles to four countries – Qatar, United Arab Emirates, Bahrain and Kuwait – and keeping two ships in the Gulf capable of shooting down Iranian missiles. Washington is also helping Saudi Arabia develop a force to protect its oil installations.

American officials said the move is aimed at deterring an attack by Iran and reassuring Gulf states fearful that Tehran might react to sanctions by striking at US allies in the region. Washington is also seeking to discourage Israel from a strike against Iran by demonstrating that the US is prepared to contain any threat.

The deployment comes after Obama’s attempts to emphasise diplomacy over confrontation in dealing with Iran – a contrast to the Bush administration’s approach – have failed to persuade Tehran to open its nuclear installations to international controls. The White House is now trying to engineer agreement for sanctions focused on Iran’s Revolutionary Guard, believed to be in charge of the atomic programme.

Washington has not formally announced the deployment of the Patriots and other anti-missile systems, but by leaking it to American newspapers the administration is evidently seeking to alert Tehran to a hardening of its position.

The administration is deploying two Patriot batteries, capable of shooting down incoming missiles, in each of the four Gulf countries. Kuwait already has an older version of the missile, deployed after Iraq’s invasion. Saudi Arabia has long had the missiles, as has Israel.

An unnamed senior administration official told the New York Times: “Our first goal is to deter the Iranians. A second is to reassure the Arab states, so they don’t feel they have to go nuclear themselves. But there is certainly an element of calming the Israelis as well.”


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