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By David Finnerty, a global macro commentator for Bloomberg

Flattening U.S. Yield Curve Story Ain’t Over Yet: Macro View

The rise of U.S. 10-yields above 3% may be the talk of the town this week, but that doesn’t mean yield-curve flattening is finished. U.S. economic data due Friday may bring it right back to center-stage.

Surging commodity prices helped drive the 10-year rate’s ascent, but there are also other supports for higher yields.

The U.S. deficit is forecast to balloon to $1 trillion by 2020, two years earlier than previously forecast, says the Congressional Budget Office. The prices paid component of the Institute of Supply Management advanced in March to its highest level since April 2011, wages are steadily rising, and let’s not forget U.S. inflation reached 2.4% in March, its strongest level in a year.

The catch is these same reasons are also helping to spur the 2- year yield higher, as markets factor in tighter Fed policy. There appears room for 2-year yields to edge higher, with four rate hikes this year left as a possibility after the Fed’s March meeting.

Whether 10-year yields can keep rising near-term is more debatable. A breach of the 3.05% January 2014 high remains elusive. There’s still scope for a decline in the short-term.

U.S. first quarter data due Friday is expected to show GDP growth fell to 2% from 2.9%, while measures for core personal consumption expenditure and employment costs gained.

Slowing growth amid rising cost pressures isn’t an optimum economic scenario. If that inspires an equity selloff, expect longer-term bonds to be the main beneficiary.

There’s also the real risk that rising longer-term yields alone will spur an equity selloff, driving money back into bonds; February being a case in point.

Trade war fears between U.S. and China appear to have been put on the back burner for the moment, but that doesn’t mean they’ve disappeared. Given China’s initial response to U.S. tariffs, it’s unlikely President Xi will easily cave in.

Trump said this week if the two sides can’t reach agreement the proposed U.S. tariffs on billions of dollars in Chinese goods will take effect as planned. Treasuries would feel some investor love if that happened.

So while the rise above 3% makes for captivating headlines, it doesn’t mean the bear flattening yield curve should be forgotten.

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The British pound tumbled, 10Y gilt yields slumped and odds of a May BOE rate hike vaporized after the UK reported the weakest GDP print since 2012.

This morning, the UK’s Office for National Statistics reported that Q1 GDP rose just 0.1% Q/Q, badly missing expectations of a 0.3% increase, and the lowest quarterly increase since Q4 2012. On an anual basis, the increase was just 1.2%, also missing expectations of a 1.4% rise.

While analysts had had expected a modest slow down in growth to drop from the 0.4% growth in Q4 2017, the slowdown was far bigger than expected as snow hit retail sales and disrupted building work, and raises further questions over whether the Bank of England will raise interest rates in May.

According to the FT, a sharp fall in construction output was responsible for most of the slowdown. “The sector contracted by 3.3 per cent compared to the previous quarter. Analysts had expected the industry to bear the brunt of the poor weather.”

Following the news, UK money markets slashed their bets in half for a rate hike in May to 27% from 56% on Thursday. They now see the first rate increase this year in December, from November earlier.

Immediately following the data, which put the likelihood of a widely priced-in May rate hike by the BOE in doubt, the pound was hammered on the news, tumbling by 150 pips or 0.9% to 1.3791. Cable was already under pressure as U.K. Prime Minister Theresa May’s struggle to keep control of a Cabinet divided over Brexit doesn’t go unnoticed amid broad dollar strength

10Y Gilt yields similarly tumbled on the news, dropping 5bps to 1.45%.

So all this was due to a heavy snowstorm, which nobody could possibly see… take place over a month ago?

Apparently yes: chancellor Philip Hammond blamed the “Beast from the East” snowstorms as a key cause for the pullback.  “Today’s data reflects some impact from the exceptional weather that we experienced last month, but our economy is strong and we have made significant progress,” he said in a statement. He was simply taking cues from Mario Draghi who yesterday blamed the European weakness on the timing of Easter and, of course, weather.

Refuting this ridiculous explanation, the ONS said that the impact of snow on output in the first quarter was estimated to be “relatively small” and “ the soft [growth] outcome reflects pockets of weakness more broadly across the economy.”

Rob Kent-Smith of the Office for National Statistics said:

Our initial estimate shows the UK economy growing at its slowest pace in more than five years, with weaker manufacturing growth, subdued consumer-facing industries and construction output falling significantly.

While the snow had some impact on the economy, particularly in construction and some areas of retail, its overall effect was limited with the bad weather actually boosting energy supply and online sales.

According to the market, the figures will prevent BOE head Mark Carney from raising rates in May. The governor of the central bank Mark Carney has already suggested that weak inflation data and a smaller increase in wage growth than expected has reduced the pressure on the BoE to increase interest rates.

As for the drop in the pound, it has been exacerbated by the relentless resurgence in the dollar in the past two weeks, leaving the UK currency at its weakest point in close to two months.

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Authored by Leonard Savin via Oriental Review,

Shortly before its attack on Syria, the US declassified its “Report on the Legal and Policy Frameworks Guiding the United States’ Use of Military Force and Related National Security Operations.” As its name implies, this paper concerns itself with US military operations abroad. The word “war” is never officially used, as you may notice, because the procedure for declaring war is a rather complicated process.

According to the report, “US. forces remain in Afghanistan for the purposes of stopping the reemergence of safe havens that enable terrorists to threaten the United States or its interests.” In regard to Iraq and Syria, the picture is much the same. US armed forces are deployed “to conduct operations against ISIS with indigenous ground forces.” Such evasive wording in regard to the second group suggests that this is a reference not only to terrorists, but also to Syrian government troops. This is confirmed a bit further into the document, where it states that “US Armed Forces participating in the Defeat-ISIS campaign in Syria have taken a limited number of strikes against Syrian government and pro-Syrian government forces.” As for the Kurdish divisions, only the Iraqi Peshmerga are mentioned, although in Syria the US has also provided military assistance to the Kurdish units of the SDF.

Only a relatively small contingent of American troops have been posted to Yemen, where they are conducting operations against the local branches of al-Qaeda. In addition to taking part in combat operations, the US provides logistical assistance from Saudi Arabia against Houthi rebels.

In Somalia, the US carries out both air strikes as well as ground operations, which includes cooperation with the African Union mission in Somalia. The US has designated al-Qaeda, ISIS, and al-Shabaab as its military targets.

Libya has mostly been on the receiving end of air strikes that are supposedly coordinated with the Libyan Government of National Accord.

The seventh country mentioned in the document does not often come up in any of the various news reports about the military hostilities. This is Niger, and the official reason for the presence of the US military there is to train, assist, and advise the local government in the fight against ISIS. Moreover it states that “United States and Nigerien partner forces responded with armed force in self-defense.”

General Wesley Clark

In 2007 General Wesley Clark claimed in a television interview that after the attack on New York in 2001, the US planned to conduct seven wars in the Middle East region over the course of five years. The Pentagon would start with Iraq and then move on to target Syria, Lebanon, Libya, Somalia, Sudan, and Iran.

The fact is that all of these countries, with the exception of Iran, have been the subject of direct or indirect aggression and political pressure from the US and its satellites. There are US military forces that remain stationed in some of them still to this day.

With regard to the legal framework, which is based on both local as well as international law, this document states that there has been no change that would apply to the presence and actions of the US armed forces there. Only in Yemen are certain restrictions in place. The section about the capture and detention of the citizens of various countries who are seized in conflict zones, as well as the sadly infamous Guantanamo prison, includes a similar statement. Despite the fact that this prison is actually even physically located on an illegally occupied part of Cuba at Guantanamo Bay, Washington continues to maintain that “detention operations at Guantanamo Bay are legal, safe, humane, and conducted consistent with U.S. and international law.” It reports that the detention operations at the prison will continue and new prisoners will be sent to Guantanamo.

Long War or Perpetual War?

To understand the US practice of warfare, one must turn to systematic studies that have been done on this subject, as this report is a logical continuation of the strategic research and development conducted by American academic and military institutions. In 2008, the RAND Corporation released a study, called “Unfolding the Future of the Long War: Motivations, Prospects, and Implications for the U.S. Army.” The document was drafted on the basis of the grimmest forecasts, i.e., the assumption that the US will be involved in conflicts against a unified Muslim world that will seek to supplant Western dominance until at least 2020, thus making it necessary to identify the ambiguities and actors in that war, as well as how it might unfold, and to come up with potential strategies to contend with that scenario.

The authors of the report suggest that methods such as capitalizing on the Sunni-Shiite conflict be used to sway US enemies in a future long war. For example, shoring up the region’s traditional Sunni regimes is suggested as a way to contain Iran and limit its influence in the Middle East and the Persian Gulf.

Another proposal is that the US might adapt its strategy to focus more on the long-term, relying less on forceful aggression in the Middle East. Under this option, the State Department, USAID, Peace Corps, Department of Agriculture, and Department of Justice could become the primary actors in this new American strategy.

It is revealing that the term “long war” was not simply added to the lengthy backlist of numerous other theoretical analyses, but has instead been transformed into a concept that is part of the common parlance of the current Washington establishment. This was confirmed by the relatively recent testimony presented by Seth Jones on April 27, 2017 before the House Foreign Affairs Committee, Subcommittee on Terrorism, Nonproliferation, and Trade, titled “Managing the Long War: U.S. Policy toward Afghanistan and the Region. ”

Given that Afghanistan is located in an important geopolitical region — between Iran and Pakistan and relatively close to the Central Asia states of the former USSR — this country is doomed to be the object of a long and perhaps even perpetual US war.

But apparently the Pentagon is gearing up to wage an unending war on three fronts — not only in Afghanistan, but also against China and Russia. At least that’s the claim of Professor Michael Klare, who calls this evolution of events “an invitation to disaster” and cautions officials in Washington to think hard before committing to any strategies that involve the use of force.

War is Business

On April 16, 2018 the news broke that some US senators were drafting a new war authorization bill. Its authors are Sens. Bob Corker, R-Tenn. and Tim Kaine, D-Va. and its co-sponsors include Sens. Chris Coons, D-Del.; Jeff Flake, R-Ariz.; Bill Nelson, D-Fla., and Todd Young, R-Ind. The bill would regulate the president’s power to press the US armed forces into service. But if one bothers to scrutinize even a bit all the work done by defense contractors and the political decisions related to combat operations, one can quickly see that there is a definite connection between the two. Therefore, any such restrictions can be not only political in nature, but also aimed at business interests. Both of the US missile strikes in Syria (April 2017 and April 2018) used Tomahawk missiles, which are manufactured by the American company Raytheon. In April 2017, when the US attacked a Syrian airbase (firing 59 Tomahawk cruise missiles), Raytheon surged 3% before paring its gain by half, but closed above its 50-day moving average and a 152.68 flat-base buy point. That put the stock back in buy range. Other Pentagon contractors, such as Lockheed Martin, Northrop Grumman, and Boeing, also edged higher. Interestingly, after April 11, 2018, Raytheon shares began to creep upward, rising from $219 per share to a ceiling of $228 by April 17. And this was despite the fact that most of the Tomahawks landed wide of their target.

The U.S. Senate

One would have thought that this would have put the Russian company Rosoboronexport in a better position, since it supplies weapons systems to Syria (and some of those systems prevented the Tomahawks from reaching their target), but not Raytheon, whose products were virtual duds. However, on April 16, Russian companies suffered a bad day on the stock market due to the latest US sanctions, with financial analysts claiming that Rosoboronexport, along with Rusal, took the biggest beating.And that was despite the fact that military products from Russia are in high demand on the global arms market.   In other words, some other kind of mechanism exists that makes it possible to manipulate the quotes for securities and the exchange rates. And sure enough, back in 2015 Business Insider reported that Donald Trump’s investment portfolio included stock holdings in Raytheon. At the time, a number of publications suggested that Trump’s financial interests benefited from the 2017 missile strike.  If someone has administrative leverage and the assistance of brokerage firms, a military campaign could be used for personal enrichment. And the whole shebang could be branded as a “defense of national interests” or “protection of democracy.”

The oil market also reacted to the attack on Syria. The price of crude oil jumped. Analysts explained this as a side effect of the potential danger that the conflict might escalate, thereby affecting the entire Middle East. And that could jeopardize the existing supplies. But those prices had changed before the US and Great Britain launched their missile attack. As early as April 11, Brent crude had risen to $71.96 a barrel, its highest point since December 2014. If one tracks the momentum of oil prices and the work of oil companies and traders on the global market, it’s easy to see who cashed in on this price hike.

Given that the US political system is based on “iron triangles” — the intersecting interests of corporations, government officials, and special-interest groups — it is unlikely that any truly sensible decision will be made in the US in regard to the use of armed force that would make it possible to resolve conflicts by means of diplomacy instead. The interests of the American military-industrial complex are clearly more compelling than those of the organizations that specialize in negotiations and consultations. War (or, to use the official rhetoric: “military operations abroad”) will be long, perpetual, and lucrative for the many actors involved.

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California’s Bay Area – that bastion of tech-inspired economic inequality – isn’t the only place where the homeless population is being hopelessly undercounted.

A recent study found that the number of homeless people living in the UK is almost 10 times as high as the official statistics reflect. The reason? The government hopelessly undercounts the number of families living in temporary accommodations like bed & breakfasts, according to the Independent.

Many of these people – at least 50,000 of them – have been “forgotten in statistics” that fail to reflect anything close to the true scale of the homelessness crisis in the UK.

The true scale of homelessness in the UK is almost 10 times worse than official figures suggest, according to a new report.

Homeless charity Justlife warns thousands of people are being “forgotten in statistics” after it estimated that at least 51,500 people were living in B&Bs in the year to April 2016 – compared with 5,870 official B&B placements recorded by the government.

It comes after a separate investigation found that 78 homeless people died last winter – an average of at least two a week. The report by the Bureau of Investigative Journalism revealed the fatalities included rough sleepers, people recognised as “statutory homeless” and people staying in temporary accommodation.

The organization that conducted the study, Justlife, used data gathered from Freedom of Information requests to various government agencies.

Christa Maciver, author of the report, said: “We can no longer ignore the tens of thousands of people stuck homeless, hidden and ignored in our cities. This report shows there is so much we don’t know and that we really need to be calculating homelessness more accurately.  

“Very few seem to care about the vulnerable people who end up in B&Bs, hostels and guesthouses. Once they are there they are forgotten and it’s almost like we forget they are people.”

“Their mental and physical health gets worse, and many can end up dead, but because they have a roof over their head – no matter how insecure – they are not counted within homelessness, when they should be. Only if we acknowledge the problem will we really be able to start finding solutions.”

The report appears to corroborate another study commissioned by commissioned by a different nonprofit which found that 100,000 households would be living in B&Bs by 2020. One young man interviewed by the Independent offered a chilling account of his experience living in cheap nightly accommodations. 

“I’m totally depressed living there. You can’t have anything nice. Things just go missing.”

“You see, there aren’t working locks on all the doors. In my room there are bare wires hanging out and I have no light. I also feel quite vulnerable because anyone can get in or is let in and it gets me down.”

Megan Lucero, director of Bureau Local, which surveyed dozens of homeless charities, trawled local press reports and pieced together figures to create a database of homeless deaths, said: “Local journalists and charities are often the only ones recording these deaths.”

In response to the study, a government minister said the UK government sets aside more than one billion pounds to help the homeless get “the support they need.”

But, as is the case in the US, the true homelessness crisis isn’t playing out in the country’s streets, where homeless people are difficult to ignore. It’s playing out in cheap motels and bed and breakfasts, where itinerant families are struggling with a constant sense of insecurity as they bounce from establishment to establishment, never scraping together quite enough money to pay rent and a deposit on a permanent place.

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For the first time since the end of the Korean War, 65 years ago, a North Korean leader has crossed over to the southern side, as Kim Jong-un and South Korean President Moon Jae-in met at their mutual border ahead of an historic summit.

The pair were expected to announce agreements later Friday on plans for formally resolving their 68-year conflict and defusing the dispute over Kim’s growing nuclear arsenal — although there’s broad skepticism that they could avoid the collapse of similar deals in the past. Kim joked that Moon would no longer be woken up by early morning weapons tests.

The meeting could pave the way for Mr Kim to meet US President Donald Trump later this year.

“I felt a flood of emotion as I walked the 200 meters here,” Kim told Moon as talks began.

“I came here with a mindset that we will fire a flare at the starting point of a new history for peace and prosperity. Let’s get everything off our minds out here and get good results.”

This is what Kim Jong-un told Moon Jae-in, as relayed by South Korea’s presidential spokesman Yoon Young-chan.

“Kim Jong-un said that he came here to put an end to the history of conflict, discuss and remove obstacles between us with the South Korean president. He said let’s meet more often and we should be determined not to go back to square one. Kim also said let’s live up to all the expectations and create a better world.”

“The two leaders had a sincere and frank dialogue over the denuclearisation and the establishment of permanent peace of the Korean peninsula and development of inter-Korea ties.“

#BREAKING: North Korean leader Kim Jong-un makes history with a brief walk into South Korea for an ice-breaking #KoreaSummit pic.twitter.com/hsa4IM7O2v

— Jeffs (@jeffs_araujo35) April 27, 2018

After they planted the tree, Mr Kim told Mr Moon:

“Just like a pine tree, I hope that we can always be green, even in winter time.”

“Yes, it will be like that,” Mr Moon replied.

“Eyes and ears from all over the world are focused on Panmunjom,” Moon said. “I feel the weight on our shoulders is heavy.”

As The BBC notes, the inter-Korean summit has basically taken everyone by surprise and proven many an expert prediction very wrong (and gravely disappointed many anti-Trump-ites).

From this…

To this…

In 3 months.

No Wall, No War, No hate
Today, We are all KOREANS #interkoreansummit #남북정상회담 #KoreaSummit pic.twitter.com/iziTIIEGmW

— JaeKwon Son 손재권 (@gjack) April 27, 2018

Here’s one of the pundits contemplating the “known and unknown unknowns” this is teaching us…

Along the way, I’ve gotten many things wrong. Known and unknown unknowns abound. The capacity to be surprised & questions one’s assumptions is a struggle, and the most important one. But blanket skepticism does not guarantee you are getting things right; & fatalism is a dead-end.

— John Delury (@JohnDelury) April 27, 2018

Previous attempts to negotiate aid-for-disarmament deals have failed.

But in January, the North embarked on direct talks with Seoul, attended the Winter Olympics in South Korea and in April the two leaders met for a historic inter-Korean summit.

Pyongyang also offered direct talks with the US – an offer Mr Trump accepted – and ordered a halt to nuclear and missile tests.

Talks between the two would be unprecedented, but the details, agenda and timing of the summit are yet to be confirmed.

Of course, as Bloomberg reports, any progress on dismantling the Kim’s weapons program would likely be slow and fraught, and involve visits by international inspectors. Prior efforts involving Kim’s late father when he was leader collapsed in acrimony, with North Korea blaming the U.S. for failure to adhere to the agreements.

“It’s off to a good start, but there must be a concrete commitment by Kim on denuclearization,” said Youngshik Bong, a researcher at Yonsei University’s Institute for North Korean Studies in Seoul. “Otherwise it will end up as a fancy show.”

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Authored by Rob Slane via TheBlogMire.com,

On April 14^th, shortly after the United Kingdom, United States and France bombed the sovereign country of Syria, on the basis of unproven allegations of the use of chemical weapons in Douma on 7^th April, the British Prime Minister, Theresa May made the following comment in her official statement:

“Together we have hit a specific and limited set of targets. They were a chemical weapons storage and production facility, a key chemical weapons research centre and a military bunker involved in chemical weapons attacks. Hitting these targets with the force that we have deployed will significantly degrade the Syrian Regime’s ability to research, develop and deploy chemical weapons” [my emphasis].

It seemed to me when I heard these words – and the passage of time has not altered this impression – that Mrs May was admitting to one of two actions, either of which ought to see her removed from office.

If we take her statement at face value, then it appears that she authorised a cruise missile strike on a number of depots that she believed contained chemical weapons, thus risking the dispersion of toxic chemicals into the atmosphere. It hardly needs to be spelled out what this could have led to, especially as some of these sites were close to residential areas.

On the other hand, if she authorised the bombing of these facilities knowing full well that they did not contain chemical weapons, then her public statement made after the bombing was false.

There really are no other options. Either she believed that these facilities contained chemical weapons, in which case her authorisation of the bombing of them was a deeply reckless and irresponsible act, which could have had horrendous consequences for the people near those locations. Or she knew that they did not in fact contain chemical weapons, in which case her statement was deliberately misleading.

According to the Russian Ministry of Defence, the Organisation for the Prohibition of Chemical Weapons (OPCW) has been investigating one of the bombed sites, Barzah, and has so far found no evidence of chemical weapons.

But let’s say that you don’t take their word for this. Fine, but you are then faced with two problems:

Firstly, the OPCW, in a report published on 23rd March, just three weeks before the US, UK and French strikes on Syria, stated that their inspectors had found no evidence of chemical weapons at the Barzah site when they last inspected it back in late November:

“In accordance with paragraph 11 of Council decision EC-83/DEC.5, the second round of inspections at the Barzah and Jamrayah facilities of the SSRC was concluded on 22 November 2017. The results of the inspections were reported as an addendum (EC-87/DG.15/Add.1, dated 28 February 2018) to the report entitled “Status of Implementation of Executive Council Decision EC-83/DEC.5 (dated 11 November 2016)” (EC-87/DG.15, dated 23 February 2018). The analysis of samples taken during the inspections did not indicate the presence of scheduled chemicals in the samples, and the inspection team did not observe any activities inconsistent with obligations under the Convention [Chemical Weapons Convention] during the second round of inspections at the Barzah and Jamrayah facilities.”

But the second problem you have is this: If the Russian MoD is wrong, or spreading false information, and the OPCW has now found evidence of chemical weapons at Barzah, this would only go to show that Theresa May, along with her US and French counterparts, recklessly bombed a chemical weapons facility, without any certainty that it would not result in catastrophic consequences for people in the neighbourhood.

Unless of course someone can come up with a scenario whereby cruise missiles can be dropped “safely” on a chemical weapons depot with a guarantee that the toxic substances held there would not become a danger to people in the surrounding neighbourhoods.

So its as simple as this: If the OPCW report of 23^rd March, and the Russian MoD claims made on 25^th April are true, then Theresa May misled the public when she claimed that the missiles she authorised had targeted and hit chemical weapons facilities. If the OPCW report of 23^rd March, and the Russian MoD claims made on 25^th April are false, then Theresa May knowingly authorised the targeting of chemical weapons storage facilities, which could have had catastrophic consequences for innocent people.

Here’s the question that someone in Parliament needs to ask her:

“Prime Minister, on April 14th you authorised the bombing of three sites in Syria, which you claimed were developing and storing chemical weapons. Had this action caused the release of toxic substances into the atmosphere, would you have taken full responsibility for any resulting fatalities in the area?”

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The rise of the machines has well and truly started.

Data from the International Federation of Roboticsreveals that the pace of industrial automation is accelerating across much of the developed world with 66 installed industrial robots per 10,000 employees globally in 2015.

A year later, Statista’s Niall McCarthy says that increased to 74. Europe has a robot density of 99 units per 10,000 workers and that number is 84 and 63 in the Americas and Asia respectively. China is one of the countries recording the highest growth levels in industrial automation but nowhere has a robot density like South Korea.

You will find more infographics at Statista

In 2016, South Korea had 631 installed industrial robots per 10,000 employees. That is mainly due to the continued installation of high volume robots in the electronics and manufacturing sectors. 90 percent of Singapore’s industrial robots are installed in its electronics industry and it comes second with a density of 488 per 10,000 employees. Germany and Japan are renowned for their automotive industries and they have density levels of just over 300 per 10,000 workers. Interestingly, Japan is one of the main players in industrial robotics, accounting for 52 percent of global supply.

In the United States, the pace of automation is slower with a density rate of 189. China is eager to expand its level of automation in the coming years, targeting a place in the world’s top-10 nations for robot density by 2020. It had a density rate of 25 units in 2013 and that grew to 68 by 2016. India is still lagging behind other countries in automation and it has only three industrial robots per 10,000 workers in 2016.

 

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Authored by Phillip Giraldi via The Strategic Culture Foundation,

False Flag is a concept that goes back centuries. It was considered to be a legitimate ploy by the Greeks and Romans, where a military force would pretend to be friendly to get close to an enemy before dropping the pretense and raising its banners to reveal its own affiliation just before launching an attack. In the sea battles of the eighteenth century among Spain, France and Britain hoisting an enemy flag instead of one’s own to confuse the opponent was considered to be a legitimate ruse de guerre, but it was only “honorable” if one reverted to one’s own flag before engaging in combat.

Today’s false flag operations are generally carried out by intelligence agencies and non-government actors including terrorist groups, but they are only considered successful if the true attribution of an action remains secret. There is nothing honorable about them as their intention is to blame an innocent party for something that it did not do. There has been a lot of such activity lately and it was interesting to learn by way of a leak that the Central Intelligence Agency (CIA) has developed a capability to mimic the internet fingerprints of other foreign intelligence services. That means that when the media is trumpeting news reports that the Russians or Chinese hacked into U.S. government websites or the sites of major corporations, it could actually have been the CIA carrying out the intrusion and making it look like it originated in Moscow or Beijing. Given that capability, there has been considerable speculation in the alternative media that it was actually the CIA that interfered in the 2016 national elections in the United States.

False flags can be involved in other sorts of activity as well. The past year’s two major alleged chemical attacks carried out against Syrian civilians that resulted in President Donald Trump and associates launching 160 cruise missiles are pretty clearly false flag operations carried out by the rebels and terrorist groups that controlled the affected areas at the time. The most recent reported attack on April 7th might not have occurred at all according to doctors and other witnesses who were actually in Douma. Because the rebels succeeded in convincing much of the world that the Syrian government had carried out the attacks, one might consider their false flag efforts to have been extremely successful.

The remedy against false flag operations such as the recent one in Syria is, of course, to avoid taking the bait and instead waiting until a thorough and objective inspection of the evidence has taken place. The United States, Britain and France did not do that, preferring instead to respond to hysterical press reports by “doing something.” If the U.N. investigation of the alleged attack turns up nothing, a distinct possibility, it is unlikely that they will apologize for having committed a war crime.

The other major false flag that has recently surfaced is the poisoning of Sergei Skripal and his daughter Yulia in Salisbury England on March 4th. Russia had no credible motive to carry out the attack and had, in fact, good reasons not to do so. The allegations made by British Prime Minister Theresa May about the claimed nerve agent being “very likely” Russian in origin have been debunked, in part through examination by the U.K.’s own chemical weapons lab. May, under attack even within her own party, needed a good story and a powerful enemy to solidify her own hold on power so false flagging something to Russia probably appeared to be just the ticket as Moscow would hardly be able to deny the “facts” being invented in London. Unfortunately, May proved wrong and the debate ignited over her actions, which included the expulsion of twenty-three Russian diplomats, has done her severe damage. Few now believe that Russia actually carried out the poisoning and there is a growing body of opinion suggesting that it was actually a false flag executed by the British government or even by the CIA.

The lesson that should be learned from Syria and Skripal is that if “an incident” looks like it has no obvious motive behind it, there is a high probability that it is a false flag. A bit of caution in assigning blame is appropriate given that the alternative would be a precipitate and likely disproportionate response that could easily escalate into a shooting war.  

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Authored by Arnold King via HackerNoon.com,

The 1990s Vision Failed…

It has been 25 years since I formed my first impressions of the Internet. I thought that it would shift the balance of power away from large organizations. I thought that individuals and smaller entities would gain more autonomy. What we see today is not what I hoped for back then.

In 1993, I did not picture people having their online experience being “fed” to them by large corporations using mysterious algorithms. Instead, I envisioned individuals in control, creating and exploring on their own.

In hindsight, I think that four developments took place that changed the direction of the Internet.

1. The masses came to the Internet. Many of the new arrivals were less technically savvy, were more interested in passively consuming entertainment than in contributing creatively, and were less able to handle uncensored content in a mature way. They have been willing to give up autonomy in exchange for convenience.

2. At the same time, the capability of artificial intelligence grew rapidly. Better artificial intelligence made corporate control over the user experience more cost-effective than had been the case earlier.

3. The winner-take-all mentality took over. Entrepreneurs and consultants were convinced that only one firm in each market segment would dominate. In recent years, this has become almost a self-fulfilling prophecy, as stock market investors poured money into leading firms, giving those firms the freedom to experiment with new business ventures, under-price competitors, and buy out rivals.

4. The peer-to-peer structure of the Internet and the services provided over it did not scale gracefully. The idea of a “dumb network” of fully distributed computing gave way to caching servers and server farms. The personal blog or web site gave way to Facebook and YouTube.

Blogs vs. Facebook

To me, blogs symbolize the “old vision” of the Internet, and Facebook epitomizes the new trend.

When you read blogs, you make your own deliberate choices about which writers to follow. With Facebook, you rely on the “feed” provided by the artificial intelligence algorithm.

Blog writers put effort into their work. They develop a distinctive style. In general, there are two types of blog posts. One type is a collection of links that the blogger believes will be interesting. The other type is a single reference, for which the blogger will provide a quote and additional commentary. On Facebook, many posts are just mindless “shares” where the person doing the sharing adds nothing to what he or she is sharing.

Bloggers create “metadata.” They put their posts into categories, and they add keyword tags. This allows readers to filter what they read. It has the potential to allow for sophisticated searching of blog posts by topic. On Facebook, the artificial intelligence tries to infer our interests from our behavior. We do not select topics ourselves.

The most popular environment for reading and writing blogs is the personal computer, which allows a reader time to think and gives a writer a tool for composing and editing several paragraphs. The most popular environment for reading and posting to Facebook is the smart phone, which favors rapid scrolling and photos with just a few words included.

Catering to the mass market

Before August of 1995, ordinary households were kept off the World Wide Web by significant technical barriers. Until Microsoft released Windows 95, people with Windows computers could not access the Internet without installing additional software. And until America Online provided Web access, the users of the most popular networking service were limited to email and other more primitive Internet protocols.

The fall of 1995 began the period of mass-market adoption of the Internet. Another important leap occurred early in 2007, when Apple’s iPhone spurred the use of Internet-enabled smart phones.

As the masses immigrated to the Internet, the average character of the users changed. Early settlers were very focused on preserving anonymity and privacy. Recent arrivals seem more concerned with getting noticed. Although early settlers were intrigued by entertainment on the Internet, for the most part they valued its practical uses more highly. Recent arrivals demand much more entertainment. Early settlers wanted to be active participants in building the World Wide Web and to explore its various strands. Recent arrivals are more passive users of sites like Google and Wikipedia.

Hal Varian, a keen observer of technology who became the chief economist at Google, once wrote a paper that contrasted software that is easy to learn with software that is easy to use. Sometimes, software that is a bit harder to learn can be more powerful. But catering to the mass market can lead software developers to focus on making the software easy to learn rather than easy to use. This distinction may be useful for understanding how Facebook triumphed over blogging.

Big Data and Big Organizations

Back in the 1990s, many of us thought that since everyone could have their own web site, all web sites were created approximately equal. In Free Agent Nation, Dan Pink exuberantly proclaimed that the Internet fulfilled Marx’s vision of workers owning the means of production. We thought that the “means of production” were computers connected to the Internet, and they were accessible to individuals.

Instead, enormous advantages accrued to large companies that could amass vast stores of user data and then mine that data using artificial intelligence. If the “means of production” today are Big Data and the algorithms to exploit it, then the means of production are much more accessible to Facebook, Apple, Amazon, and Google than they are to ordinary individuals.

Walled Gardens vs. the Jungle

Although America Online was a powerful franchise in the mid-1990s, its glory soon faded. We thought that the reason for this was that AOL was a “walled garden,” as opposed to the open Internet. The pattern that we noticed was that closed systems tended to lose out. This was the explanation for the near-demise of Apple Computer, which was much less friendly to outside developers than its competitor, Microsoft.

Today, the iPhone is much closer to a walled garden than smart phones that use the Android operating system. Yet the iPhone has maintained a powerful market position.

Facebook is much closer to a walled garden than is the world of blogs. But Facebook grew rapidly in recent years, and blogs are getting less attention.

Push vs. Pull

Traditional mass media was “pushed” to the users. If you wanted to watch a TV program in 1970, you could not record it or stream it. You had to turn your set to the right channel at the right time.

The World Wide Web was designed as a “pull” technology. You would make the choice to visit a web site, often by following links from other web sites.

Big corporations and advertisers are more comfortable with “push” than with “pull.” But in the 1990s, it looked like “pull” was going to win. One of the first efforts at “push technology,” Pointcast Network, famously flopped.

Today, “push technology” is everywhere, in the form of “notifications.” 21st-century consumers, especially smart phone owners, seem to welcome it.

Fraying at the Edge

The traditional telephone system put a lot of intelligence in the middle of the network. Central switchboards did a lot of the connecting work. Sound pulses traveled over wires, and your phone, sitting on the edge of the network, did not have to be intelligent to make sound pulses intelligible. But by the same token, your phone could only respond to sound pulses, not to text or video.

With the Internet, all forms of content are reduced to small digital packets, and the routers in the middle of the network do not know what is in those packets. Only when the packets reach their destination are they re-assembled and then converted to text, sound, or video by an intelligent device located on the edge.

Hence, the Internet was described as a dumb network with intelligence on the edge. One of the characteristics of such a network is that it is difficult to censor. If you do not know the content of packets until they reach the edge, by then it is too late to censor them.

Today, governments are better able to meet the challenge of censoring the Internet. Part of the reason is that the Internet is less de-centralized than it once was. It turns out that in order to process today’s volume of content efficiently, the Internet needs more intelligence in the network itself.

The advent of “cloud computing” also changes the relationship between the edge and the network. The “cloud” is an intelligent center, and the many devices that rely on the “cloud” are in that respect somewhat less intelligent than the computers that used the Internet in the 1990s.

Another factor is the importance of major service providers, such as Google and Facebook. These mega-sites give government officials targets to attack when they are not pleased with what they see.

Governance

One of the aspects of the Internet that intrigued me the most in 1993 was its governance mechanism. You can get the flavor of it by reading this brief history of the Internet, written twenty years ago. In particular, note the role of Requests for Comments (RFCs) and Internet Engineering Task Force Working Groups, which I will refer to as IETFs.

I compare IETFs with government agencies this way:

— IETFs are staffed by part-time or limited-term volunteers, whose compensation comes from their regular employers (universities, corporations, government agencies). Agencies are staffed by full-time permanent employees, using taxpayer dollars.

— IETFs solve the problems that they work on. Agencies perpetuate the problems that they work on.

— A particular group of engineers in an IETF disbands once it has solved its problem. An agency never disbands.

When I hear calls for government regulation of the Internet, to me that sounds like a step backward. The IETF approach to regulation seems much better than the agency approach.

Things Could Change

Call me a snob or an old fogy, but I am not happy with where the Internet is today. I believe that things could change. I think that a lot of people are unhappy with the current state of the Internet. But I suspect that the enemy is us.

I am not sure what the solution will look like. I don’t think that regulating Facebook is the answer, especially if the main driver of regulation is that people are upset that Donald Trump won the 2016 election.

I don’t think that blockchain is the answer, even though it has some of the characteristics of the 1990s Internet. I have little confidence that blockchain can scale gracefully, given what we have seen so far and given the way that the Internet has evolved. And even if blockchain is able to overcome scaling problems, I think that the lesson of the last 25 years is that culture pushes on technology harder than technology pushes on culture.

I think that the challenge that we face on the Internet is the challenge that we face in society in general. In our modern world, we thrive by doing less ourselves and getting more from the services provided by others. But we seem tempted to become passive and careless in ceding power to governments and other large organizations.

In short, how can we sustain an ethic of individual responsibility while enjoying the benefits of extreme interdependence?

via RSS https://ift.tt/2FkScSb Tyler Durden