...the most robust articulation of privacy rights in the modern age.
Data and Goliath, The hidden Battles to Collect Your Data and Control Your World, Bruce Schneier, 2015 Schneier is a world class expert in cryptography and internet security. He is one of the first people contacted by Glenn Greenwald and the Guardian to help analyze the Edward Snowden papers. Schneider credits Snowden with informing us of the extent of NSA surveillance today. Schneider's first book Applied Cryptography, was published in 1993. The US military and government had fought a twenty year battle to prevent use of strong encryption, except by the military, ending with a plan to allow encryption only if government back doors were placed in the technology. The market decreed that such technology was unsellable and Schneider thought by 1990 the battle to control encryption had been won. Snowden revealed that the government had simply gone underground, secretly inserting hardware and software into systems to give themselves the desired encryption back doors. The NSA maintains a small army of cyber hackers who look for vulnerabilities in existing systems. Once found, they may create software hacks to exploit the vulnerability, or they may simply stockpile the vulnerability for future use. Occasionally they may even tell the developers about the problem so the hole can be fixed but this is rare. One Snowden disclosure has the NSA intercepting Cisco communications equipment shipments to modify the hardware before forwarding the equipment to its destination. The Watergate break ins pale by comparison with a government acting completely out of control. Again, after Snowden, the market is speaking, and Schneier puts the three year estimated cost in lost US business because of the Snowden revelations at $180 Billion. So where are the major fixes by Congress and the administration to reign in the illegal and unconstitutional abuses? Nowhere. A part of the problem is that US corporations are equally guilty of illegally collecting and mining private data on its users. So a lot of pressure that corporations should be applying to the government to reign its surveillance in can backfire and constrain the corporation's own surveillance. This they strongly oppose. The corporations are as guilty of secrecy as the government so the actual data collected, the length of retention, where the data is kept, the uses made of the data (data mining), the sale of the data, etc. are all kept secret from the user. Without sanctions and enforcement user data will never be safe. Schneier is an optimist and believes that we can find solutions to this massively invasive surveillance but its hard to see even from this book. Schneier gives a few hints about protecting yourself from surveillance but admits that, other than encrypting your communications, little can be done. The internet and cell phones won't work unless location and meta data are clear (not encrypted) and Schneier goes to great length to show how meta data can reveal even more useful detail to government and corporate spies than the content of communications. Meta data can be automatically analyzed by computer and networks of communication easily constructed. Latanya Sweeney, a computer science professor, conducted a study in 1990 using census data, and found that zip code, birth date, and sex could be combined to uniquely identify 87% of the United States population. Meta data mining can be used by government to study protest groups and by business to exploit connections with highly targeted marketing and product placement. Neither government nor the corporations are likely to give this ability up without a major fight. Schneier mentions DuckDuckGo a search engine that does not track users. Tor is an anonymous web browser. Wicker offers encrypted messaging. Ello is a social network that does not track users. Snowden used encryption and secure messaging when communicating with Greenwald and Poitrus. Coming under particular scrutiny here are Google and Facebook, both because of their dominant market positions and because of their aggressive exploitation of user data to generate revenue. This reader was an early user of Google when they first were available on the web. The searches for obscure information needed for a software developer were vastly superior to other search engines like Yahoo so this reader has stuck with them. But as advertising hits have become more pervasive and since most of these hits don't actually retrieve pages, this reader is now in the market for an alternative search engine and is trying DuckDuckGo. One of Schneier's scariest observations is that we seem very adaptable, we get used to the obvious use of our private information by corporations for their own exploitation. We conclude quickly that that is just the way things are and we like the modern technology and the capabilities it gives us. We don't see the dangers of government and corporate surveillance. He gives some attention to the "creepy threshold", the point at which the user senses that the internet services seem to be drawing inferences about us that we never anticipated. Beyond this threshold, users are likely to object. Schneier points out that mass surveillance is not effective as a means of uncovering either crime or acts of terror. Traditional investigative police work would be far more effective but the governments seem determined to spend their resources on non productive mass surveillance. Fixing privacy protection is made more difficult by the global nature of the internet. The user's data can be stored and mined anywhere in the world. Each country has its own privacy rules and levels of enforcement. There could be engineered technical solutions created by the Internet governing bodies but deploying them would encounter enormous resistance from governments and corporations. Schneier calls for a new magna carta to reaffirm that the legitimacy of rulers (whether political or corporate) comes from the subjects. He points to the 2009 Madrid Privacy Declaration as
Guantanamo Diary, Mohamedou Ould SLahi, Edited by Larry Siems, 2015 An ant's eye view of the US rendition and torture program by a "high-value" (number one actually) detainee who still resides in GTMO. The only work of comparable depth and insight are the writings of Aleksandr Solzhenitsyn about the Soviet Gulags. How far the US has fallen. Most detainees were captured or handed over to the US for pitiful bounties in Afghanistan and Pakistan and tortured and even killed at Bagram Force Air Base in Afghanistan Many were then rendered to GTMO. Taxi to the Dark Side documents the torture death of an Afghan taxi driver at US hands. Slahi's story is quite different. As a young man, Slahi decided to join the Mujahdeen fight against the Soviet occupation of Afghanistan. He was trained at an al Qaeda camp and joined the fighting briefly in 1992. This was the time that the Mujahdeen were supported and trained by the US in their fight against the Soviet occupiers. Slahi returned to Germany where he was studying for an engineering degree. A cousin of Slahi is Mahfouz Ould al-Walid who was spiritual adviser to Osama bin Laden prior to the 9/11 attacks. Both Slahi and al-Walid severed their ties to al Qaeda. After completing his degree, Slahi worked for a small privately held German company. When Germany would no longer issue Slahi a visa, he moved to Canada for work. In Germany, Slahi attended the same Mosque as the 9/11 hijackers, and in Canada, he attended the same Mosque as the Millennium Bomber who planned to blow up LAX. One military officer briefly associated with the Slahi interrogation at GTMO called him a Forest Gump character, always present on the periphery of any significant terror activity. The US asked a Canadian intelligence officer to investigate and interview Slahi and he so frightened Slahi that Slahi decided it was time to return home to Mauritania in January 2000. He was detained in Senegal at US request and questioned about the Millennium Bomb plot. He was cleared but the US had him rendered to Mauritania for further questioning. Mauritania cleared him and he finally returned home Feb. 18, 2000. On Sept. 29, 2001 the US had Slahi detained and questioned for two weeks while the FBI questioned him further about the Millennium Bomb plot. He was released but asked to come in for further questions on Nov. 20, 2001. He drove his own car to the station from which the US rendered him to Amman Jordan. He has been in US custody since. Slahi grew up in Mauritania, a former French colony, so learned both Arabic and French at an early age. He has an ear for language and has traveled extensively. He can immediately identify the origin of any Arabic speaker which allowed him instantly to know he had been rendered to Jordan. Later at GTMO he was able to identify visiting torturers ("interrogators") as being from Egypt or from Jordan. While studying in Germany, he quickly picked up German and became fluent. A computer he was carrying home was the one he used in Germany and while working for the private German company. The FBI seized it and had its contents translated from German to English. The resulting "English" was then translated into Arabic for the Jordanian "interrogators". The resulting consecutive bad translations resulted in complete gibberish, nonsensical rubbish. Slahi found the incompetence amusing. He learned English at GMTO and constantly questioned willing guards about grammar and vocabulary. He says most guards used incorrect grammar and swore a lot, so learning correct English was a challenge. He persisted and started writing this diary in English in 2005. Slahi also is gifted with a remarkable memory. He memorized the entire Koran at an early age, and when his personal Koran was taken from him at GTMO, he kept his mind sharp be repeatedly reciting the entire Koran to himself line by line over and over again. This memory extends to events, voices, and faces and he would be able to recall in great detail his experiences and the people involved at each step of his detention and interrogation. If there ever were a war crimes investigation his remarkable memory would contain a wealth of information, an ant's view of the whole process. Slahi thinks he was rendered to Jordan because the US was squeamish about torture immediately after 9/11. They quickly got over the squeamishness and found plenty of US sadists to perform their own torture. Slahi was rendered next to Bagram in Afghanistan and from there was rendered to GTMO. In each case, his captors tried to conceal his location but he always knew immediately where he was because of accents and other clues. He at first welcomed being brought to the US because he assumed the US would have to follow the law and he would have legal rights. He quickly learned how wrong this assumption was. He was further shocked to learn that the US considered him high-value detainee number one. On the US use of Arabs for torturing detainees:
I felt ashamed that my people were being used for this horrible job by a government that claims to be the leader of the democratic free world, a government that preaches against dictatorship and "fights" for human rights and sends its children to die for that purpose: What a joke this government makes of its own people!Slahi's torture at GTMO in 2002-2003 was personally approved by Donald Rumsfeld. It is well known that torture does not produce reliable intelligence. But at some point, torture victims will do and say anything to get the pain to stop. This moment arrived for Slahi when his prays had failed him and he knew he would either lose his mind or his life or both if the torture continued. So he made up a confession. His interrogators were also under enormous pressure to produce something for their superiors and so a kind of bargain was struck. Slahi puts this bargain beautifully:
If you're ready to buy, I am selling.Slahi confesses that he came to Canada with a plan to blow up the CN Tower in Toronto. Slahi had never even heard of this tower. The Interrogators were delighted and his conditions immediately improved. Interrogators told Slahi he had given them 85% and they needed the remaining 15%. This involved an incident in Germany when a 9/11 hijacker asked Slahi how to travel from Germany to Chechnya and Slahi told him he would look like a Mujahdeen if he traveled through any former Soviet state so he should travel through Afghanistan where he would fit right in. Interrogators wanted Slahi to confess to being a central al Qaeda recruiter for the 9/11 plot and for the Millennium bomb plot. The dates made no sense and Slahi knew such a confession would unravel. Instead he accused another guy in a Florida jail of being a drug smuggler. Slahi while making these "confessions" simultaneously is telling the interrogators they are not true. The interrogators are confused and suggest Slahi take a polygraph test. Slahi's entire seven page description of this test is redacted. We gather the result were to convince the interrogators that he did not lie in the confession.
So you have interrogators who are prepared, schooled, trained, and pitted to meet their worst enemies. And you have detainees who typically were captured and turned over to US forces without any proper judicial process. After that, they experience heavy mistreatment and found themselves incarcerated in another hemisphere, in GTMO Bay, by a country that claims to safeguard human rights all over the world -- but a country that many Muslims suspect is conspiring to wipe the Islamic religion off the face of the earth.In 2005 Slahi wrote this diary and a petition for habeas corpus. In 2008 the US Supreme Court ruled that detainees have a right to challenge their detention through habeas corpus. In 2010 a judge granted Slahi's habeas corpus petition and ordered his release. The government appealed and the case is still pending. This book is heavily redacted throughout in one of the clearest possible examples of the misuse of classification sited in Lords of Secrecy that classification should never be used to cover up illegality, war crimes, or war criminals. There is no other reason than to protect the identity of war criminals and their crimes than the redactions in this book. It took the government all these years to clear the diary, first written in 2005 for publication. This is shameful and inexcusable.
Lords of Secrecy; The National Security Elite and America's Stealth Warfare, Scott Horton, 2015 Horton opens with a brief description of the bizarre events surrounding the Feinstein Senate Intelligence Committee's attempt to launch an in-depth study of the CIA role in interrogation and imprisonment. The CIA, under Leon Panetta reacted with a series of delaying and evasive maneuvers starting with insisting that the committee staffers travel to Langley and do their research on specially prepared by CIA stand alone computers. The CIA then accused the staffers of "stealing" classified material by removing them from the premises. The CIA and Panetta chose to treat their regulators as adversaries to be fought and opposed. Horton then proceeds with a short selected history of democracy. He says that too often Greek scholars have focused on Aristotle and Plato instead of looking at the remarkable effort of the Athenians to form a democratic government with public debate and consensus decision making. He says that it is precisely in the area of decisions regarding war and peace that debate and consensus building is most crucial. He credits Athens with effective governance using principles of public debate and consensus decision making. He moves on to Max Weber and Georg Simmel who focus on the role of secrecy in creating the conditions for authoritarian governance. He also spends time praising Danial Patrick Moynihan, a trained sociologist and politician who chaired the Commission on Protecting and Reducing Government Secrecy who produced a study in 1997 that concluded:
Secrecy is a form of Government Regulation
Secrecy Keeps Information Away from Decision Makers
Secrecy Thwarts Accountability
Secrecy Undermines Democracy
First, he says secrecy is needed to keep weapons research and medical research that could be weaponized secret.
Second, he says that signals intelligence such as breaking the German and Japanese codes in WWII must be kept secret so our enemies don't learn that their communications are being decoded and monitored.
Third, the identity of covert operatives and foreign informants must be kept secret.
First, Opinions of the Justice Departments Office of Legal Counsel, which are being used as "get out of jail" cards for administrative officials who can claim to be relying of the opinions as to the legality of their actions and decisions. The public and other branches of government must have full access to these opinions. Most will not stand up to public scrutiny.
- Second, Material already in the public domain should never be classified. This includes material that entered the public domain via whistle blowers or other leakers. Attempts to put the genie back into the bottle cannot have standing in courts.
Third, secrets should all have a known "shelf life" and it should not be possible for later administrations to change the time limits for disclosure.
Forth, basic scientific research should never be classified. This is a fundamental principal of science and assures maximum progress and disciple in the scientific process.
Fifth, classification should never be used to cover mistakes or incompetence or lying to Congress or the public.
Sixth, classification should never be used to cover illegal actions and their perpetrators. Like NSA mass surveillance of American citizens communications.
The cache of secrets, and particularly the vast and unwieldy store of intercepted communications, is growing into a modern Tower of Babel, already essentially unmanageable and overshadowing all the institutions of American democracy. Like the Tower of Babel or yore, it is a monument to the unseemly thirst for power of those who built it and to their indifference to the core values of their own society.
Unstoppable; The Emerging Left-Right Alliance to Dismantle the Corporate State, Ralph Nader, 2014 This book advocates an idea that single purpose coalitions of leaders from the left and from the right can attack the major problems facing the nation including actions to: 1. Require that the Department of Defense budget be audited annually, and disclose all government budgets. Security destroys accountability. 2. Establish rigorous procedures to evaluate the claims of businesses looking for a government handout, which would end most corporate welfare and bailouts. 3. Promote efficiency in government contracting and government spending. 4. Adjust the minimum wage to inflation. 5. Introduce specific forms of taxation reform as well and push to regain uncollected taxes. 6. Break up "Too Big to Fail" banks. 7. Expand contributions to charity, using them to increase jobs and drawing on available "dead money". 8. Allow taxpayers the standing to sue, especially immunized governments and corporations. 9. Further direct democracy - initiative, referendum, and recall, for starters. 10. Push community self reliance. 11. Clear away the obstacles to a competitive electoral process. 12. Defend and extend civil liberties. 13. Enhance civil skills and experience for students. 14. End unconstitutional wars and enforce Article 1, section 8, of the Constitution, which includes the exclusive congressional authority to declare war. 15. Revise trade agreements to protect US sovereignty, and resume full congressional deliberations, ending fast track. 16. Protect children from commercialism and its physical and mental exploitation and harm. 17. End corporate personhood. 18. Control more of the commons that we already own. 19. Get tough on corporate crime, providing penalties and enforcement budgets. 20. Ramp up investor power by strengthening investor-protection laws and by creating a penny brigade to pay an investor watchdog agency. 21. Oppose the patenting of life forms, including human genes. 22. End the ineffective war on drugs. 23. Push for environmentalism. 24. Reform health care. 25. Create convergent institutions. Nader's first example that change is possible is the coalition of conservatives and environmentalist that joined together in 1982 to defeat the Clinch River Breeder Reactor in Tennessee. Nader's other examples to demonstrate that such coalitions are possible and work mostly come from the 70's (Richard Nixon) EPA and OSHA. Nader also studied the 19th century populist movement of agrarians who opposed sharecropping and created cooperative to get leverage over agricultural suppliers and the railroads. He talks briefly about the trust busting efforts of Teddy Roosevelt and highlights conservatives who were instrumental in getting New Deal legislation during the great depression. Nader believes that modern conservatism has been highjacked by the neoconservatives and the corporatists. He shows that original conservative philosophy from Adam Smith, through von Mises, through Hayek, have been misunderstood and/or misinterpreted by modern conservatives. Nader's central argument is that the 25 issues all have wide popular support as well as support of powerful individuals from the liberal and conservative political leadership who could form single issue coalitions to attack an individual problem. He believes before this can start with the attention and organization required to overcome corporate and entrenched governmental interests, specially funded convergence organizations must be created. With this in mind, Nader has written an open letter to the 114 billionaires who signed the Gates-Buffet pledge to give away half their wealth to "good causes" during their lifetime. Nader thinks modest funding in the tens of millions could bootstrap this effort.
Pay Any Price; Greed, Power, and Endless War, James Risen, 2014 Risen gives an eloquent rational for writing this book:
In 2009, when the new Obama administration continued the government's legal campaign against me, I realized, in a very personal way, that the war on terror had become a bipartisan enterprise. America was now locked into an endless war and unintended consequences were spreading. And so my answer -- both to the government's long campaign against me and to this endless war -- is this new book, Pay Any Price. Pay Any Price is my answer to how best to challenge the government's draconian efforts to crack down on aggressive investigative reporting and suppress the truth in the name of endless war. My answer is to keep writing, because I believe that if journalists ever stop uncovering abuses of power, and ever stop publishing stories about those abuses, we will lose our democracy.Paul Bremer, Mastermind of Chaos The book itself seems to have been written or at least published backward with the vaguest and weirdest stuff put first. In 2003 and 2004 $20 Billion in $100 bills was air lifted by military transport to Iraq. Serial numbers were not recorded and there was virtually no supervision or safeguards. Most of the money simply disappeared. Risen reports of one shipment of $1.6 Billion sent to a branch of the Iraq Central Bank in northern Iraq and stacked on the floor of the bank - not in a vault. The money vanished. When $1.6 Billion was reported found in a bunker in Lebanon, the US government couldn't even be bothered to investigate under either W or Obama. Overall the US spent $63 Billion on the reconstruction of Iraq, most of it going to US contractors. Many is not most of the contracts were never completed and some were never even started. Risen then turns to fraudsters of the war on terror, featuring Dennis Montgomery who used phantom-ware to decode secret Al Quaeda messages hidden in Al Jazerra broadcasts. His reports caused the grounding of international flights and a serious discussion of shooting down commercial airliners. When he approached the French government, their experts quickly exposed the hoax. The US government, having been duped, buried the incident under a mountain of top secret documents. Flying Blues Brothers He features the Blue's brothers who bought an unmanned aircraft subsidiary, General Atomics, for $50 million and now have a privately held near monopoly on US war drones. He turns to to KBR the former subsidiary of Halliburton (Dick Cheney CEO), the military's largest contractor. KBR built substandard housing for US troops using indentured third world untrained labor and with poor or nonexistent supervision and inspections. The result were showers that electrocuted soldiers. One mother persisted in finding out how her son died and then sued KBR. She won on appeal and the case has been appealed by KBR to the supreme court. Risen calls this section Too Big to Fail but it is really Too Big to Jail as with the banks who can't even get prosecuted for massive drug money laundering activity. The shower electrocutions pail in comparison to the damage caused by KBR's practice of burning trash (several hundreds of tons per day) in open pits using jet fuel. KBR burned anything including computers, batteries, and other electronics. This has led to the discovery of "war lung injury" this war's equivalent of Agent Orange in Vietnam and Gulf War syndrome from exposure to uranium shells in the first Gulf war. Returning soldiers were found with titanium and unusual bio masses in their lungs as a result of exposure to the burning pits. The VA and DOD have gone to great lengths to cover up the problem and have failed to survey returning soldiers, provide diagnosis and care, or even to acknowledge a problem. One VA researcher Stephen Coughlin uncovered some suppressed studies and went to Congress with his findings. He was forced to resign under enormous pressure. One DOD official, Charles Smith, stood up to KBR when auditors pointed out a $1 Billion overcharge. He proposed opening bidding to other contractors. Smith was sidelined and soon retired. Risen talks about the prison torture and abuse scandals and the "few bad apples" campaign by the government to scapegoat low level guards. When one prosecution failed, the government abandoned its efforts at scapegoating but the whole prison guard experience ruined many lives. Risen focuses on the the role of psychologists and the APA who gave cover to the torture program. The APA used the old NAZI argument that if the activity was legal (according to W administration legal justifications) it must be ethical. The DOD and VA are the largest employers of psychologists and their careers and livelihoods depend on giving the government what it wants. The legal rational is based on the military use of the techniques in training, particularly the SERE navy training. Risen shows what nonsense the use of torture is by presenting the navy SERE's own PowerPoint presentation:
Why is torture the worst interrogation method? Produces unreliable information Negative world opinion Subject to war crimes trials Used as a tool for complianceBrennan Defends Torture Dec 12, 2014 Yesterday, CIA director Brennan once again asserted that actionable intelligence was gained from the use of torture and it shouldn't be banned outright. Utter nonsense as Diane Feinstein rebutted him point by point. Obama refuses to pursue war crimes prosecutions. Haskell Free Library and Opera House Canadian Border Line Risen turns to the cost of the endless war on ordinary American citizens. Most obvious are airports that today resemble high security prisons that visitors must transit if they want to fly. He features two small towns on the border, one in Vermont and one in Quebec that built an opera house spanning the border. The house, with its painted black line is the main tourist attraction of the towns. For generations residents have freely traveled back and forth across the border to shop and visit. Most residents didn't even own passports since few travel abroad. All this changed after 9/11 when abusive homeland security outsiders started arriving in town. They build a fence and closed off all roads but one which is heavily guarded. Residents now require expensive passports and must endure abusive officials as they cross. When the local pharmacist was arrested for walking two blocks to pick up a pizza in Canada public outrage forced the reassignment of the homeland security official in charge. The draconian treatment eased but the fence and closed streets remain and passports are now required. Diane Roark Risen turns to the story closest to him, NSA warrant less surveillance and gives the best account yet of all the insiders who attempted to blow the whistle on the illegal activity. The efforts cost each of them their jobs and the government has ruined many lives. Featured here is the little known story of Diane Roark, a staffer for the House Permanent Select Committee on Intelligence. Her personal battle with NSA Director Michael Hayden dates from 2000 prior to 9/11 and the war on terror. It starts when NSA's Bill Binney discovers that a part of the program he had worked on was being misused with the built in protections against spying on Americans removed. When his internal efforts to stop the activity failed, Binney reached out the Roark who immediately recognized the illegality of the collections. Roark quickly discovered her contacts inside the NSA and the house had been secretly informed of the program and none were objecting. When Roark contacted the Chief Judge of the FISA court Coleen Kollar Kotelly, Kotelly not only did not respond but she notified the Justice Department to inform them Roark was asking questions. Roark was forced to resign but this was not enough for Hayden who insisted on meeting Roark in person. Roark took notes and these are a summary: General Michael Hayden Repeatedly Lies to Congress
I (Roark) pushed hard and repeatedly about why he had dropped the protections (for American Citizens). He avoided answering until finally he said again that they didn't need them because they had the power.Wyden Silenced by Classified Disclosures Roark was stunned by this answer. The rest of the conversation was equally shocking. Hayden believed that seeking authorization would shed unwanted light on the program. That "It is now among us." I.E. the program is permanent and expanding. He told her he believed he would prevail if the program came before the supreme court and that he was considering leaking it to select Congress members to assure their silence. Among those silenced appears to be Oregon Senator Ron Wyden. Hayden was telling Roark all this to warn her to drop her efforts to oppose the program. Still, Roark took a chance and wrote a letter to Supreme Court Chief Justice William Rehnquist via hand delivery from Rehnquist's daughter. Rehnquist never responded. The FBI sent a phalanx of officers to Roark's Oregon home to seize all her files, computers, etc. Her lawyer advised her to ask for the affidavit in support of the search warrant and the FBI responded it was under seal and she couldn't see it. That same day the FBI raided the homes of three other NSA whistle blowers. A few months later they raided the home of NSA whistle blower Thomas Drake. This time the supporting affidavit was later discovered to indicate the FBI was looking for evidence that Drake was the source of the leaks to reporters James Risen and Eric Lichtblau. The NYT repeatedly killed the NSA story for two years from 2004 til 2006 when they published it just weeks before the release of Risen's book State of War. So much for the newspaper of record. Risen comments that he fully understands why Edward Snowden felt compelled to leave the country before blowing the whistle on the NSA given the devastating personal experience of all previous NSA whistle blowers. In 2005 Risen reported on a botched harebrained CIA plan to give nuclear weapons blueprints to Iran. The government is still after Risen to reveal his source for this story and Risen faces jail time if he refuses to cooperate. The only way to go to jail in this country today is to be poor or to be an investigative reporter. Pretty sad.
No Place to Hide; Edward Snowden, the NSA, and the U.S. Surveillance State, Glenn Greenwald, 2014 This book seems to be a collection of five articles. For this reader, Part One, Ten Days in Hong Kong, is the most interesting. On Dec 1 2012 (The first published article, featuring the FISA Verizon order appeared in the Guardian on June 5,2013, more than five months later.) Glenn Greenwald (GG) receives an email from "Cincinnatus" saying he has important documents to share but GG must first install PGP (Pretty Good Privacy) encryption on his computer. GG ignores the email. Three days later he receives another email from C asking him to confirm he received the first email. GG immediately says he got it and later that day he receives an email with detailed instructions for installing the encryption program. GG does nothing for seven weeks. He thinks encryption would be useful for his work so he emails C on Jan 28, 2013 saying he will get someone to help him install the encryption. GG still does nothing and C steps up his efforts, producing a ten minute video "PGP for Journalists" on how to install the program. GG does nothing. PGP Public Key Encryption On April 18, GG flew to New York to give some talks. On landing GG receives an email from Laura Poitras (LP) the documentary filmmaker saying she needs to meet him in person the next time he is in New York. GG had written an article detailing all the times Poitras was detained at US airports and her equipment seized. After the article the harassment at the airports stopped. GG arranged to meet LP at a restaurant in Yonkers. She changed tables several times at the restaurant and told GG to remove the batteries from his cellphone. She then showed GG a couple of emails she received asking LP to work with GG. GG thinks the sender is real but they do nothing and GG returns to Brazil. On May 11 GG receives an email from a technical expert he and LP had worked with in the past asking GG if he is ready to install the PGP encryption. He responded yes and was told to expect a Fedex package in Rio de Janeiro. The package was held in customs for a week enhancing the paranoia. The day after the package finally arrives, GG receives an email from LP saying they need urgently to talk but only via OTR chat. GG figures the source must have sent LP some documents. LP is far less a technophobe than GG so must have installed PGP. GG had used OTR in the past and now managed to install it and sign up for an account. LP tells GG they need to go to Hong Kong immediately to meet the source. GG thinks the source has to be guy in his late fifties with a thirty year career with the NSA living somewhere along the Washington beltway. Hong Kong makes no sense. The source was getting upset with LP and GG delays and was discussing involving the Washington Post. That finally got GG into gear. The source agreed to chat over OTR and GG assured him he was committed to the story but he still can't make sense of Hong Kong. LP had shared some PRISM material with the Washington Post and they responded with an army of lawyers and foot dragging, greatly worrying the source. GG asked to see some documents before he came to Hong Kong and the source patiently walked him keystroke at a time through the PGP installation process. GG was embarrassed by his lack of proficiency but the source assured him he had lots of free time then. Once installed, the source sent GG about 25 documents, the tip of the iceberg. The documents convinced GG that he needed to go to Hong Kong immediately and that He would need major institutional support to get this material out. GG had been working at the Guardian for only nine months but had little contact with their editorial staff. GG immediately Skyped Janine Gibson British editor in chief of the US edition in New York gushing about the material. Gibson told GG to get off Skype immediately. GG flew to New York and agreed to meet LP in New York. GG arrived in NY May 31. GG and LP book a non stop flight from New York to Hong Kong but then Gibson drops that the Guardian insists on involving long time Guardian journalist Ewen MacAskill who will fly with them to Hong Kong. LP is furious and GG doesn't know their minder MacAskill. LP was afraid a third person might freak the source but GG understood that the Guardian wanted a long time company man on the scene. LP relents but only if MacAskill stays away from the source until she and GG are ready to introduce him. Snowden Journalists MacAskill, Greenwald, and Poitras LP insists that GG buy a new air gapped (never connected to the Internet) laptop before they leave. As they drive to the airport LP gives GG a tutorial on secure computer systems and hands him a thumb drive (with the full collection of documents). For the 16 hours of the flight GG can't stop reading. He is amazed by the level of organization and pre thought put into the document archive. He immediately locates the FISA Verizon order that all domestic phone metadata records must be handed to the NSA. We now enter the realm so well captured in the 1997 Norwegian movie Insomnia where the crime detective sent north of the Arctic Circle to the land of midnight sun finds he can't sleep. GG doesn't sleep for the next 10 days. When he is about to collapse, he pops a pill and drops off for a couple hours and is then back at work. Part of this is because constant communication with New York Guardian staff is necessary but mostly that he is too excited after chasing the NSA story for years, proof of the whole horrible reality and scope of their surveillance activities has fallen in his lap. Snowden's Hideaway GG wants to meet the source immediately but LP thinks that would look suspicious so they wait til tomorrow. The source gives LP elaborate spy trade-craft instructions of how and where to meet. GG is expecting a hideaway but instead they go to a Kowloon five star hotel. They are instructed to find a meeting room with an alligator (not real) on the floor where at a precise time they are to wait for exactly 2 minutes. If the source doesn't appear they are to leave making sure they are not being tailed. Twenty minutes later they are to return to the alligator for exactly 2 more minutes. If the source does arrive they will recognize him carrying a Rubiks cube (GG laughs). GG is expecting an older very senior Washington bureaucrat and is shocked when a young kid (Snowden was 29 but looks younger in a tee shirt jeans and nerd glasses) shows up carrying a Rubiks cube. GG thinks this kid can't possibly have had access to all those top secret documents. But they are now committed so follow Snowden to his room. GG was once a practicing lawyer and treats the first meeting with Snowden as a legal deposition where the lawyer tries to trip up a witness forced to answer all questions. Snowden is calm, articulate, very organized and thoughtful and GG can't find any holes in his amazing story. GG can't contain his excitement. LP films the deposition. They plan the first release of articles and the time when Snowden wants to reveal himself as the whistle-blower. The first article will be the FISA Verizon order and the Guardian plans to tell the government ahead of publication as has become standard practice. Gibson calls the government the morning of planned publication and then total silence. At 3PM an army of White House, NSA and other officials call Gibson back. They want to meet in about a week to explain why the Guardian shouldn't run the story, Gibson says they have until she hangs up to convince the Guardian. The government tries bullying and threats. They don't work. Their reasons are totally lame and Gibson decides to publish. London and the lawyers agree. At 5:40 May 5, 2013 the story goes live. GG spends the rest of the day and night on the phone with interviews, then starts the next cycle for the PRISM story where nine internet providers are giving the NSA all their data. The same cycle between the Guardian and government repeats but this time someone in government give lap dog Washington Post a heads up and they rush to post the story they have been holding without publication. GG reads the Post story and realizes they haven't even asked the internet services for comment. The Guardian story which goes live 10 minutes after the Post's includes denials from all nine providers that they were cooperating with the government. GG figures the providers and NSA can fight out their denials in public. GG suddenly remembers Cincinnatus and sends an email to thank him for suggesting the PGP program. Snowden immediately emails back you are welcome. GG has never connected Cincinnatus to Snowden. Several more articles follow. Finally the time arrives to announce the identity of the leaker who the NSA has been unable to identify. LP wants to include a video of Snowden but can't use the disjointed GG deposition. LP writes down a list of 20 questions and asks MacAskil, who everyone has come to trust, to read the questions while she films. The result is the 12 minute video we have all seen introducing us to Edward Snowden for the first time. About the time of this release a Guardian lawyer is sent to Hong Kong who asks what is being done to protect Snowden once his identity is released. GG and LP and even Snowden seem to have given this little thought. As the last story began breaking an acquaintance of GG's, who lives in Hong Kong, called GG pointing out that everyone would now be looking for Snowden in Hong Kong and asking if they didn't need some qualified Hong Kong lawyers. He suggested two human rights specialists with good contacts in the Hong Kong government. The Guardian lawyer quickly vetted them via the Internet and decided they were good choices. GG agrees to meet and the friend tells him they are already in the Hotel lobby. When GG opens his door a swarm of reporters are waiting. They follow him into the elevator and GG finds still more reporters waiting in the lobby. He decides to give a short impromptu interview and within 15 minutes most reporter have left to file their stories. GG was finally able to locate his friend and the lawyers. They suggested the lawyers accompany Snowden to a UN mission and from there to a safe house. But how to get Snowden out of his five star Hotel? Snowden is now ahead of them with a prepared disguise and he makes his way safely to an exit where the lawyers are waiting. So that is how the biggest story of GG's life got told. Also featuring is GGs Brazilian partner David Miranda who comes across as a wise, intuitive advisor without whom GG would be even more indecisive. It is Miranda that first concludes the source is for real. He advises GG to pressure the Guardian so the story gets out there. Later, he becomes a story himself when LP and GG decide to use him to courier Snowden material from Berlin, where LP lives to Rio de Janiero where GG lives. It never occurs to either that Miranda is in danger as he transits the London airport. Miranda is stopped, his possessions seized and he is threatened and bullied for nine full hours under a British terror provision. Under pressure from the Guardian and Brazilian diplomats, Miranda was released to continue his journey after the full nine hours allowed under this dangerous law. Miranda arrived in Brazil a returning hero, but very frightened. Presumably the British government (or the US) has the thumb drive he was carrying but GG doesn't say. Snowden prepared thumb drives for both LP and GG with all documents. He also prepared a separate thumb drive for the Guardian containing the documents pertaining to the British GCHQ activities. British authorities later descended on Guardian London offices demanding all Snowden documents. The Guardian refused but agreed to let the GCHQ supervise and observe the destruction of all computers at the Guardian. Before this happened, the GCHQ materials were forwarded to the New York Times where they must be sitting in limbo. Snowden encrypted the documents and assured GG and LP that neither China nor Russia would have the capability to break the encryption. This reader assumes the US could break the encryption but only if they dedicated some super computers for several years to the effort. Even if the Miranda carried thumb drive is in either British or US hands, it is unlikely any attempt will be made to decrypt the material. It is likely that the NSA is still unaware of the full extent of the documents in the archive unless all are now located in the new Intercept archive. One of the big lessons learned by GG in this adventure is the absolute necessity for investigative journalists to use encrypted communications. Their work will be impossible in the future without these tools. GG further advises all activists and any lawyer engaged with litigation against the government to encrypt all their communications. He uses the example of David Petraeus to illustrate how easy it is to destroy a career if unencrypted emails fall into the wrong hands. Part two "Collect it All" highlights documents emphasizing the worldwide and universal scope of NSA ambitions. Part three makes a strong case for the harm that Surveillance causes in a democracy. His strongest point comes in his conclusion. The public sector operates in total darkness and secrecy and privacy while the private sector is subjected to total surveillance of their activities with no place to hide. Somehow our system has become completely inverted. Snowden had expected Obama to reign in the illegal abuses and held off his release until it was clear things were worse than before. Part Four is a discussion of the forth estate much of which (the corporate media) have become mere tools of the corporate state. GG was shocked that media personalities were at the forefront of attacks suggesting GG be prosecuted for his reporting. This is new. News organizations used to come immediately and strongly to the defense of journalists under Government attack. They no longer do this. The Obama administration has felt free to conduct open warfare against whistle blowers and their reporters who are trying to do investigative reporting as guaranteed in the Constitution. The Guardian's own lawyers suggested GG should avoid returning to the US and repeatedly failed to get assurances from the US government that GG would not be arrested and prosecuted should he return. David Gregory shocks Glenn Greenwald David Gregory Calls for Greenwald to be Arrested for Snowden Reporting Live on Meet the Press. Seymour Hersh (who broke the My Lai massacre and Abu Ghraib prison abuses stories) suggests that journalism would be greatly improved if about 900 corporate media types were to lose their jobs. LP has now released her new documentary Citizenfour in a theatrical release. It will doubtless receive Academy Award nominations.
This Changes Everything; Capitalism vs the Climate, Naomi Klein, 2014 Naomi Klein in Vancouver BC. Photo taken by Jeff Chant This was supposed to be a book to give hope to those that want to transition from greenhouse emitting fossil fuel consuming that will make the Earth uninhabitable to a world of renewable and sustainable energy. Klein starts by discussing the many studies that show, not only is such a transition possible, but that it can be accomplished with existing technologies and can happen very quickly, well within the time frames necessary to avoid catastrophic climate change. Great, lets get going. In fact Denmark and Germany have transformed large parts of their energy sources to wind and solar more quickly then predicted, so quickly that existing German coal burning power plants are exporting their power to other countries. Unfortunately, the reader starts to feel like cartoon character Charlie Brown. Every time he gets ready to kick the football, Luci (Klein) yanks the ball away and the reader falls flat on his back. Klein start with Genesis 1:18 written about 500 B.C.
God blessed them and said to them, "Be fruitful and increase in number; fill the earth and subdue it. Rule over the fish in the sea and the birds in the sky and over every living creature that moves on the ground.The entire Judea-Christian culture is based on the fundamental notion that the Earth and its resources were created especially for man and man is to rule over them and use them however he wishes without limit. Klein contrasts this to the typical indigenous native view that the Earth provides for all living things but man with his intelligence has a particular responsibility to care for the Earth and all living things in it. Guess which view dominates. She then gives us a brief history of industrialization which started its unstoppable acceleration with James Watt's invention of the steam engine in the 18th Century. Our burning of fossil fuels has been accelerating ever since. Most of the carbon in the atmosphere is the responsibility of the oldest large economies. Klein returns to one of her favorite topics; neoliberalism (see The Shock Doctrine)
Indeed, the three pillars of the neoliberal age - privatization of the public sphere, deregulation of the corporate sector, and the lowering of income and corporate taxes, paid for with cuts to public spending - are each incompatible with many of the actions we must take to bring our emissions to safe levels.We measure the success of our economies by the growth rate of the national GDP. A recent long term economic study by French economist Thomas Piketty shows that low GDP growth rates and low population growth has been the typical state of large economies from 1700 until 1914 (WWI) and he expects that in the 21st Century we will return to those stable states baring another major catastrophe like global climate change. But today's capitalism puts enormous pressure on executives to grow grow grow. No wonder they will go to extreme means and measures to achieve this unnatural growth. This form of unsustainable expansive capitalism must change or the Earth will be uninhabitable. The deregulating Clinton administration and his climate change alarmist VP Al Gore pioneered worldwide trade agreements starting with NAFTA and creating the WTO that have brought into existence a global economy based on industrial agriculture, the search for lowest labor costs, and massive increase in the need to transport the resulting products and food; in other words an explosive increase in fossil fuel consumption. These same trade agreements have been used effectively to block locally generated alternate energy projects. Clinton also introduced the cap and trade carbon system late in the Kyoto talks and Gore pushed the idea through. There is little evidence that cap and trade has done anything to reduce emissions but it has created a world wide derivatives market (think sub prime mortgages) where a company in India is paid a large sum to produce ozone destroying refrigerants banned in most countries. Figure that one out. Carbon credits and derivatives are an open invitation to game the system. Where is the environmental movement? Big green sold out to the energy companies who use them in PR campaigns to make them appear to support alternate energy sources - but we need a "transition period". Many of the biggest environmental groups receive most of their funding, some secretly, from big energy. The biggest, The Nature Conservatory, was given 2303 acres in southeast Texas by Mobil in 1995 to provide a preserve for the endangered Attwater prairie chicken. In 1999 the Conservatory put a gas well on the property. This was discovered and reported by the LA Times in 2002 forcing a promise not to drill again but the Conservatory put in an oil well in 2007. Big green - big carbon producer. By the way, the prairie chickens are all gone from the preserve. Guess they don't like oil drilling. The Sierra Club (setting a few personal scandals aside), Greenpeace, and 350.org are exceptions to the sellout. Attwater Prairie Chicken estimated 60 remain in the wild What do you do when your fortune and livelihood is dependent on producing a deadly product? Or you are a politician dependent on those producing that deadly product? You engage in magical thinking. Step 1 denial. The midterm election that swept Republicans into control of congress will assure that all environmental and energy committee positions will be filled with climate change deniers. Climate Denier James Inhofe new Senate Environment Chairman The alternative is that you are out of a job. Step 2 green billionaires will buy a solution. Richard Branson promised to use $3 Billion in profits from Virgin to develop alternate fuel sources. He also offered a $25 million prize for the inventor of a carbon sequestration system. Virgin flies more routes than ever, the $3 Billion never materialized and the prize has not been awarded. Brilliant PR campaign though. Gates, Pickens are others who have made some alternate energy noises, remain deeply invested in fossil fuel energy. Step 3 Bio engineer a solution (see Climate Engineering) This is the one where you put a sulphite shield in the stratosphere to simulate the cooling effects of a volcanic eruption. The effects on the climate worldwide are unknowable because you can't experiment to try it. What is really scary is that Klein admits that if she was desperate enough she might be willing to try it. Big energy needs to grow and to do so they need to resort to more extreme methods and to extract closer to those more able to fight them, for example attempts to frack natural gas in Ithaca, New York, home to Cornell University - Big mistake. Cornell is the originator of some of the best studies showing how dirty fracking is in the release of methane gas, pollution of water, and earthquakes. Coal mining in Montana with plans to ship the coal to China ran into the Indian - Cowboy collation with local ranchers joining with native tribes to prevent the hauling of coal over beautiful but dangerous Highway 12, prevented the building of a special rail line and, so far the building of a big port somewhere in the Northwest. Big energy better stay away from the Northwest. Lummi Totem Kwel Hoy (We Draw the Line) traveled 1300 km to the Montana coal site. Kwel Hoy has been planted near Vancouver looking out at the Pacific. Kwel Hoy at proposed coal port in Bellingham Kwel Hoy visits Seattle Klein is Canadian with a special interest and concern with the Alberta tar sands. She is on the board of directors of 350.org. Her big hopes here are that the pipelines needed to move the oil can be stopped (choke points like the Montana coal routes). Central to these efforts are native treaty rights and a series of recent court decisions upholding the native treaty rights. It seems, at least in Canada, that the native population never gave up their rights to much of Canada beyond the reservations but agreed to share the land. How to you share something that somebody else destroyed. The liabilities for the Canadian government are in the Trillions. But when natives asked the person responsible for Canada's AAA credit rating how this rating can be maintained in face of this liability, the individual responded basically you and what army are going to enforce those reparations? Can the native treaties be used to stop the tar sands pipelines or coal routes? We don't know. Alberta Tar Sands Klein talks about the growing divestment movement and hopes it is joined by an equally robust reinvestment in alternative energy sources. What is clear is that most of the stock value of energy companies relies on energy reserves and that extraction and use of those reserves will make the Earth uninhabitable. You can deny the science maybe but Mother Nature is non negotiable. There is now a group of divestment investors whose primary rationale is that values dependent on unusable reserves are not real and energy stock prices must crash at some point. Energy companies won't continue to be profitable and the window of opportunity is short to use energy profits for reinvestment in alternate energy. So lets review our situation. The dominant world culture believes that the Earth was created for us to exploit. Capitalism must grow or perish. Globalism requires exploitation of the cheapest resources wherever they are found, prevents regulation of trade, and greatly expands energy needs. Big agriculture requires massive chemical inputs and massive transport and is unsustainable. The climate gets more extreme and unpredictable and climate disasters are vastly more expensive now. Worldwide, politicians are largely neoliberal favoring austerity measures to further their agenda and dependent on corporations for their survival. Courts are largely manned by pro corporate judges. The handful of billionaires that own half the world's wealth are insensitive to other's suffering to the point of allowing entire nations to be drowned in the rising seas believing their wealth will protect them from anything. Klein says you can buy an apartment in NYC where you can live underwater like in a submarine if necessary. I wonder what you eat in your submarine. Most of the world's population won't be able to grow food or have access to clean water. Klein is clear that a broad based worldwide grass roots populist movement is the only thing that has a chance to change things. We know the alternative is possible. We just don't know how to force the changes needed to get there.
Put another way, only mass social movements can save us now. Because we know where the current system, left unchecked, is headed. We also know, I would add, how that system will deal with the reality of serial climate-related disasters: with profiteering and escalating barbarism to segregate the losers from the winners. To arrive at that dystopia, all we need to do is keep barreling down the road we are on. The only remaining variable is whether some countervailing power will emerge to block the road, and simultaneously clear some alternate pathways to destinations that are safer. If that happens, well, it changes everything.Hence the title of the book. Hope you feel better.
Capital in the Twenty-First Century, Thomas Piketty, 2014 An important new work based on many years of meticulous research and made possible by improvements in research materials and methods. French economist Piketty decries economic thought in the past from Malthus to Marx to Kuznets (and this reader adds Milton Friedman of the Chicago School) who first arrived at their theories and conclusions and then sought evidence to support their pre-conceived conclusions. He equally decries modern mathematical economics for trying to reduce a complex and human subject to a few sterile and usually unhelpful formulas. Honore' de Balzac Jane Austen Piketty was able to collect considerable data for the entire period from 1700 to the present. The most complete data are available for England and France for the entire period. The period from 1700-1914 was characterized by relative stability of the economies with national incomes growing at 0 to 1½% and with populations and inflation growing at about the same rate. Piketty's primary focus in this work is the inequalities in individual incomes and wealth. He uses the novels of Jane Austen in England and Honore' de Balzac in France to give a very specific sense of what it meant to be wealthy and how much income was necessary to live well. The novels are very specific giving numbers in Pounds and Francs so it was possible for readers up to 1914 to get an exact sense of the meaning of the character's income and wealth and their consequent place in society. Piketty's first conclusion is that the relative stability of the period 1700-1914 is the typical state of the world's economy barring major upsets such as occurred in the period form 1914-1945 and that we are heading into another period of similar stability in the twenty-first century, barring new major catastrophes. The reason that those living today who grew up after WWII and therefore lived through an unusual period of higher growth as the world economies recovered from the catastrophes of 1914-1945 have an expectation of growth that it has been their personal lifetime experience. The data indicates that long term the outlook is for low income growth, low population growth, and low inflation. Piketty's second conclusion is that individual wealth (capital) and its concentration grows over time because the return on capital exceeds the growth in output except in times of extreme catastrophes such as the period 1914-1945. Furthermore, wealthier individual's or institution's (like the Harvard $30+ billion endowment) return is higher than less wealthy individual's or institution's returns. This gives a long term trend toward an extreme concentration of wealth. Piketty believes that messy and human democratic processes are the only viable means for societies to determine the proper role of government in society. For Piketty, public education, public health care, and aging security are minimum required functions of government. Public transportation and other infrastructure are also essential. These minimum public requirements cannot be privatized. Piketty specifically does not mention military defense security. To pay for these public functions, the government must raise money and they have a choice of taxation or debt to do so. Government debt requires repayment and so ultimately taxes must be raised to pay for government functions. Debt increases the cost of government, transfers the cost to a later time, and further enriches those wealthy enough to loan to the government. For all these reasons, Piketty believes that government debt must be limited. Big economies are very wealthy and Piketty finds no reason to worry that excessive government debt will transfer ownership to foreign sovereign funds or to any small number of wealthy individuals but excessive government debt is still undesirable and should be avoided. Talking about the recent Greek experiences with the large scale sale of public assets to private owners to reduce government debt levels, Piketty says that wealthy Greeks simply preferred this solution to paying more taxes which they could easily have done with little long term impact on their personal fortunes. Even before 1914 the Europeans were experimenting with progressive taxes on individual incomes and with estate taxes on the inheritance of wealth. In the ensuing period 1914-1945 extreme tax rates up to 90 percent were levied on incomes and estates. These taxes along with extreme inflation (1913-1950 France averaged 13% and Germany averaged 17%) along with direct confiscation of assets caused a great decrease in wealth and income and a great decrease in income and wealth inequality. Piketty says that the French Revolution did not decrease income and wealth inequality in France as much as is commonly believed and wealth quickly consolidated again immediately following the first violence of the revolution. While revolutions, wars, and economic depression all reduce income and wealth inequality optimistic Piketty believes these goals should be achievable by less catastrophic means. The solution to reduced inequality is progressive income and inheritance wealth taxation and Piketty argues that far less extreme rates of progressive taxation can achieve the desired end of reducing inequality if moderate progressive taxation is maintained consistently over the long term. In 2010 taxes as a percentage of national income were 55% in Sweden, 50% in France, 40% in Britain, and 30% in the US. Up til 1910 wealthy countries taxes seldom exceeded 10%. In comparing Europe and the US today, Piketty finds the US by far the least economically (and socially) mobile society. Most great US Universities are private and their students almost all have wealthy parents. Education in the US is no longer a path to upward mobility. Even the public Universities in the US have skyrocketing costs putting them out of reach of all but the wealthiest families. Oddly, Piketty does not discuss students accumulating massive er-reputable debt to finance their own educations going into indentured servitude to banks or the US government. Most of the top jobs and highest incomes are then given to graduates of the elite universities. He talks about the philanthropic uses of great wealth such as that of the Gates Foundation, but he clearly would prefer the society as a whole make these philanthropic decisions rather than a single wealthy individual. These decisions are the proper role of democratic decision making. In 2010 the top 10% of the US working population got 58% of total income while in Europe the top 10% got 30%. In 2010 total wealth for the US top 10% was about 70% and for the top 1% was 35%. The top 10% of Europeans owned 90% of wealth in 1900 and that level dropped by 2010 to 60%. Piketty suspects that wealthy individuals and institutions hide one third or more of their actual income and capital. Judging by US Presidential candidate Romney, Piketty is probably underestimating the problem of hiding wealth from taxation. Historically, Piketty notes that foreign ownership of capital was highest in France and Britain during the colonial period and dropped to negligible levels after WWII. He also notes that the capitalization of labor in the US slave south was a significant feature in US wealth up to the civil war. Capitalizing 40% of the total population of the US south meant that US slave owners were far wealthier than their European counterparts of the period. He notes, wryly, that Thomas Jefferson owned 600 slaves about which he held conflicting emotions. Piketty is particularly sensitive to the lack of adequate data and record keeping which is essential to a fair and equitable tax system. Information on income and capital holdings must be made available automatically to the governments by banks and institutions and governments must freely share this information among themselves. Today there is a race to the bottom as countries compete with one another to offer lower tax rates on income and inheritance and some aggressively hide wealth held in their territories. Without a court order with proof of fraud or other illegality, Swiss banks will not release information on individual accounts held in Switzerland. Without the account information governments are hard pressed to bring evidence of illegality. There are many such places in the world. Too much of the world's individual and institutional wealth is hidden in secret shelters which creates problems for researchers and governments alike. Piketty thinks it makes more sense to base taxes on the location of the wealth and income rather than the residence of the individual. Piketty notes with envy that larger economies like the US and China have an easier time setting and enforcing tax policy than the smaller European countries. He talks at some length about the Euro-zone. A central bank for the Euro was created but with little thought to its actual role and function. Piketty holds little hope for the Euro-zone unless a corresponding legislative body with real authority can be established. Piketty finishes with a discussion of economists' treatment of the climate change crisis which is widely viewed as the next huge and looming economic catastrophe. Economists are arguing about the proper discount rate to apply to this catastrophe while the world's governments seem unable to come up with any meaningful plans of action. One of Piketty's big contributions to the discussion of wealth and income inequality is his insistence that you cannot just look at the top 10% or even the top 1% but you must continue down to the .1% the .01% etc because of the extreme concentrations of wealth. He notes that inherited wealth is still dominant but that with the recent extreme inequalities in income and high savings rates of top earners it is now possible to build sizable fortunes within one's lifetime. Piketty can find no rational economic justification for the extreme new top salaries but governments, unlike the war years when there were salary boards, does nothing to control runaway salary levels. Despite all the evidence to the contrary, Piketty is optimistic that an international democratic consensus can be achieved with increased wealth and income transparency and reporting and with sensible tax policies that can slowly control and correct for income and wealth inequality.
The Divide; American Injustice in the Age of the Wealth Gap, Matt Taibbi, 2014 A painful book full of well researched stories from both ends of the injustice spectrum; from wall street to welfare to stop and frisk to immigrant extortion and deportations. At the center of the failure to try or jail a single financial bankster is Attorney General Eric Holder, author during the Clinton administration of the infamous Collateral Consequences doctrine at the heart of the current "too big to jail" policy. This then is the bookend to the story of Timothy Geithner's refusal to break up Citibank or any other too big to fail institution. See She Bear at the FDIC. As with Geithner, Taibbi makes a strong case for cowardliness at the heart of each failure. This is in sharp contrast to the effective government action to deal with the savings and loan crisis of the 1980s where many executives were sent to jail and were banned for life from banking. See William Black's account. Collateral Consequences doctrine dictates that no prosecution should be undertaken where innocent bystanders like stockholders and corporate employees or global financial stability may be adversely effected. In effect, this vague, undefinable "doctrine" has prevented any and all government prosecutions from proceeding. Instead, the government has negotiated an endless stream of financial "settlements" where the corporations agreeing to the settlement admit to no wrong doing, no one gets fired, and no one has to face future litigation. At its highest in the case of JP Morgan the total settlements amounted to 12% of one year's profits. The target institutions have come to look at these "settlements" as a normal cost of doing business as usual. The underlying criminal behavior continues. The most notorious and disgusting cases were the The HongKong and Shanghai Bank HSBC settlement for mafia and drug cartel money laundering and the LIBOR interest fixing settlement involving many banks. If these cases do not involve criminal activity then what does. Oh, I see, it is criminal to stand on the sidewalk outside your own apartment. This is the type of contrast Taibbi is exposing. Less emphasized in this book but equally true, most of these bankster "settlements" have gone directly into government coffers. Those victimized by the fraud receive nothing or laughable amounts. The bank illegally repossessed and sold your house? Here's $200, now go away. How about the whistle blowers like the woman at JP Morgan Chase fired because she blew the whistle on robo-signing for credit card collections. All the government can seem to do after several years is to continue to "lose" her whistle blower's case file. She doesn't even know if she is on file. For lighter entertainment, Taibbi includes the case of several big time short sellers (see also the Big Short) who wrongly guess that a well run Canadian insurance company is about to go out of business and then hire some clowns to try to force them out of business with dirty tricks. When this fails, the insurance company sues the short sellers for damages but of course the Canadians lose the case. Then there is the interesting case of the Barclay Bank buying the husk of Lehman Brothers after the government (read Hank Paulson) refuse to bail them out forcing Lehmans into bankruptcy. Barclay masterminds a clever scheme to secretly reduce the $50 Billion asset purchase by $5 billion by tricking the judge with an amendment. When the Lehmans creditors discover the scheme and sue, the same judge that was fooled during bankruptcy hearings buys a weird McNamara like "Fog of War" defense, this time called the "Fog of Bankruptcy" that during hurried bankruptcy filings "shit happens". Too bad, no relief for the creditors. Want to invest in a growth industry? Try private jailers. Note that the sharp increased slope starts with Reagan but does not slow for Clinton.
Flash Boys, A Wall Street Revolt, Michael Lewis, 2014 This book is about the fast changing character of market exchanges, the big banks, and their collusion with high frequency traders that have made trading into a totally opaque dive into the shark tank. The book was rushed to market with incorrect words, syntax, and spelling problems, but it is still worth reading. Wall street has undergone a technological revolution into electronic trading led first by NASDAQ . A few years ago there were three stock exchanges plus the Chicago futures market where an individual stock could be listed on only one exchange. Now there are countless exchanges and stocks can be traded on any of them. After September 11, 2001 there was an exodus of the markets from Manhattan to the suburbs of New Jersey. In 2007 the SEC implemented Reg NMS which required brokers to find the best market price for investors. This new regulation was in response to a growing epidemic of front running in the markets, but its implementation actually increased the opportunity for front running because brokers were required to pass their orders to more exchanges leading to more opportunities to front run. Wikipedia defines and explains front running as follows:
Front running is the illegal practice of a stockbroker executing orders on a security for its own account while taking advantage of advance knowledge of pending orders from its customers. When orders previously submitted by its customers will predictably affect the price of the security, purchasing first for its own account gives the broker an unfair advantage, since it can expect to close out its position at a profit based on the new price level. The front running broker either buys for his own account (before filling customer buy orders that drive up the price), or sells (where the broker sells for its own account, before filling customer sell orders that drive down the price).As if things were not complicated enough many financial institutions have created something called dark (or black) pool as a total alternative to the mess with the public exchanges. Again Wikipedia defines a dark pool as:
In finance, a dark pool (also black pool) is a private forum for trading securities that is not openly available to the public. Liquidity on these markets is called dark pool liquidity.The bulk of dark pool trades represent large trades by financial institutions that are offered away from public exchanges like the New York Stock Exchange and the NASDAQ, so that such trades remain confidential and outside the purview of the general investing public. The fragmentation of financial trading venues and electronic trading has allowed dark pools to be created, and they are normally accessed through crossing networks or directly among market participants via private contractual arrangements. One of the main advantages for institutional investors in using dark pools is for buying or selling large blocks of securities without showing their hand to others and thus avoiding market impact as neither the size of the trade nor the identity are revealed until the trade is filled. However, it also means that some market participants are disadvantaged as they cannot see the trades before they are executed; prices are agreed upon by participants in the dark pools, so the market becomes no longer transparent.The main focus of this book is high frequency trading defined again in Wikipedia:
High-frequency trading (HFT) is a type of algorithmic trading, specifically the use of sophisticated technological tools and computer algorithms to rapidly trade securities. HFT uses proprietary trading strategies carried out by computers to move in and out of positions in seconds or fractions of a second. As of 2009, studies suggested HFT firms accounted for 60-73% of all US equity trading volume, with that number falling to approximately 50% in 2012. High-frequency traders move in and out of short-term positions aiming to capture sometimes just a fraction of a cent in profit on every trade. HFT firms do not employ significant leverage, accumulate positions or hold their portfolios overnight. HFT firms make up the low margins with incredible high volumes of tradings, frequently numbering in the millions. HFT may cause new types of serious risks and dangers to the financial system. Algorithmic and HFT were both found to have contributed to volatility in the May 6, 2010 Flash Crash, when high-frequency liquidity providers rapidly withdrew from the market.High Frequency traders trade with perfect information and their speed advantage assures that their trades incur no risk of loss. HDTs never lose money unless their algorithms or machines blow up. Katsayama with Lewis Personalizing this mess, Lewis focuses on Brad Katsuyama a young trader at the Royal Bank of Canada who, in 2006 noticed that whenever he placed an order, the price instantly changed. Welcome to the brave new world of trading. What Brad discovers is that HFT and other financial institutions act on his orders before the actual traders can do so. These leaches co locate their equipment with the exchanges and pay fortunes for fast communications links. To gather information they troll tiny orders for a wide variety of stocks and when these tiny orders get a nibble they determine by the stock involved and the trader that this may be a part of a large trade and they rush throughout the exchanges to beat the traders to the stocks being offered. Once owned the front runners can change the price and sell them back. Katsuyama eventually leaves RBC to start his own "honest" exchange, IEX. The trick is to ensure that his exchange IEX support only the few most common trading types and to guarantee that all connections to IEX are slow enough to prevent front running. If you trade exclusively on IEX, HFT and other financial institutions cannot front run your orders. IEX is new and its survival and success were unknown at publication time. Goldman Sachs placed its first large order on IEX on Dec 19, 2013 which IEX took as a very hopeful sign. Because stocks seldom trade exclusively on IEX, HFT and other financial institutions systematically troll IEX for information that they can exploit on other exchanges. Life goes on as usual. Sergey Aleynikov and his attorney Kevin Marino Lewis includes the side story of Sergey Aleynikov charged by Goldman Sachs with stealing proprietary software when he left the company. Sergey was acquitted on appeal but, for this reader, the interesting details concerned the use of open source software defined again by Wikipedia:
Open-source software (OSS) is computer software with its source code made available and licensed with a license in which the copyright holder provides the rights to study, change and distribute the software to anyone and for any purpose. Open-source software is very often developed in a public, collaborative manner. Open-source software is the most prominent example of open-source development and often compared to (technically defined) user-generated content or (legally defined) open-content movements.Open source software is often used by developers to shorten their development time and to produce better software. The trick is to find the right software on the internet that can be modified for the user's purposes. Sergey's stolen software was modified open source software that, according to the license of its use must remain open and the modifications made available to the public open source community. Goldman Sachs removed the license notice from the software so it was actually Goldman Sachs, not Sergey who illegally stole the software.