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Six months ago the topic of click fraud at Facebook hit the headlines but was rapidly dismissed as the company’s share price rose implying that the world is great and we should not worry. With Facebook increasingly becoming the advertising outlet of choice for many of the world’s companies, MIT Technology Review reports on a study to dig deeper into just where the “likes” come from. As the authors note, recently, the number of likes of a Facebook page has become a measure of its popularity and profitability, and an underground market of services boosting page likes, aka “like farms,” has emerged. While careful to avoid pointing the finger too aggressively, the findings show that one “like” is not like another as the use of “honeypot” pages to generate “likes” attracts ‘users’ (bots) that are significantly different from typical Facebook users (i.e. non-human money-spending users).

 

 

As MIT Technology Review notes,

Whenever there is a new product to test, a service to announce or event to promote, many organisations turn to Facebook to post news of the development.

 

To enable this, Facebook allows users to create pages devoted to specific topics. Visitors can then “like” the page and then receive updates about the topic as well as connect with others with similar interest. The number of likes is therefore an important measure of the popularity of the page and there is considerable prestige in having many likes.

 

That is handy for Facebook which allows businesses to promote their pages using adverts targeted at certain groups of users who may be interested in the content. It is possible, for example, to target people with specific interests or those who live in the US and so on. These ads are a major source of income for Facebook.

 

However there is another way to promote Facebook pages.  In recent years, a secret industry has emerged that sells likes to anyone willing to pay. These paid services inflate the interest in a Facebook page using “like farms” that generate likes on demand. Little is known about these services or how they generate likes. In particular, nobody is quite sure whether the likes come from automated bots or from paid human workers.

 

Today, Emiliano De Cristofaro from University College London and a few pals around the world provide the first systematic investigation into the nature of like farms and how they operate.

As the authors conclude:

We stress that our findings do not necessarily imply that advertising on Facebook is ineffective, since our campaigns were specifically designed to avert real users.

 

However, our work provides strong evidence that likers attracted on our honeypot pages, even when using legitimate Facebook campaigns, are significantly different from typical Facebook users, which confirms the concerns about the genuineness of these likes.

 

We also show that most fake likes exhibit some peculiar characteristics – including demographics, likes, temporal and social graph patterns – that can and should be exploited by like fraud detection algorithms.

Full study here.

*  *  *

Allocate your Ad Spend accordingly…

via Zero Hedge http://ift.tt/ZE4lgk Tyler Durden

Six months ago the topic of click fraud at Facebook hit the headlines but was rapidly dismissed as the company’s share price rose implying that the world is great and we should not worry. With Facebook increasingly becoming the advertising outlet of choice for many of the world’s companies, MIT Technology Review reports on a study to dig deeper into just where the “likes” come from. As the authors note, recently, the number of likes of a Facebook page has become a measure of its popularity and profitability, and an underground market of services boosting page likes, aka “like farms,” has emerged. While careful to avoid pointing the finger too aggressively, the findings show that one “like” is not like another as the use of “honeypot” pages to generate “likes” attracts ‘users’ (bots) that are significantly different from typical Facebook users (i.e. non-human money-spending users).

 

 

As MIT Technology Review notes,

Whenever there is a new product to test, a service to announce or event to promote, many organisations turn to Facebook to post news of the development.

 

To enable this, Facebook allows users to create pages devoted to specific topics. Visitors can then “like” the page and then receive updates about the topic as well as connect with others with similar interest. The number of likes is therefore an important measure of the popularity of the page and there is considerable prestige in having many likes.

 

That is handy for Facebook which allows businesses to promote their pages using adverts targeted at certain groups of users who may be interested in the content. It is possible, for example, to target people with specific interests or those who live in the US and so on. These ads are a major source of income for Facebook.

 

However there is another way to promote Facebook pages.  In recent years, a secret industry has emerged that sells likes to anyone willing to pay. These paid services inflate the interest in a Facebook page using “like farms” that generate likes on demand. Little is known about these services or how they generate likes. In particular, nobody is quite sure whether the likes come from automated bots or from paid human workers.

 

Today, Emiliano De Cristofaro from University College London and a few pals around the world provide the first systematic investigation into the nature of like farms and how they operate.

As the authors conclude:

We stress that our findings do not necessarily imply that advertising on Facebook is ineffective, since our campaigns were specifically designed to avert real users.

 

However, our work provides strong evidence that likers attracted on our honeypot pages, even when using legitimate Facebook campaigns, are significantly different from typical Facebook users, which confirms the concerns about the genuineness of these likes.

 

We also show that most fake likes exhibit some peculiar characteristics – including demographics, likes, temporal and social graph patterns – that can and should be exploited by like fraud detection algorithms.

Full study here.

*  *  *

Allocate your Ad Spend accordingly…

via Zero Hedge http://ift.tt/ZE4lgk Tyler Durden

Submitted by Nomi Prins, author of All The Presidents' Bankers, via NomiPrins.com,

President Obama’s neo-Cold War is not about ideology or respect for borders. It is about money and global power. The current battle over control of gateway nations – strategic locations in which private firms can establish the equivalent of financial boots-on-the-ground – is being waged in the Middle East and Ukraine under the auspices of freedom and western capitalism (er, “democracy”). In these global gateways, private banks can infiltrate resource-rich locales fortified by political will, public aid and military support to garner lucrative market advantages. ISIS poses a threat to global gateway control that transcends any human casualties. That’s why Congress decided to authorize funds to fight ISIS despite the risk.

The common thread of today’s global gateway nations appears to be oil. But even more valuable are the multitude of financing deals that would accompany building new pipelines, arming allies, and reconstructing civil-war-torn countries. Indeed, hundreds of billions of dollars are at stake in America’s wars of  “principle.”

Middle-East Gateways: ISIS and Money

Obama’s recent public address on fighting ISIS  had a dash of economy sprinkled in. For him, US economic policy is foreign policy. It is also a product of an American political-financial expansionary land-and-resource grab that has been going on for decades. Obama’s execution may be far less authoritative than President Eisenhower’s. But his neo-financial Cold War has similar elements to those initiated by Eisenhower and the American banking elite in the 1950s when they collaborated to project American power into more countries, using the military and a combination of public and private capital, as tools.

The second World Bank President and 1950s Chairman of Chase Bank, John McCloy, and ascending and later Chase Chairman David Rockefeller both had aspirations to financially penetrate the Middle East. So did other major bankers. The US government and its banks first focused on Beirut as a gateway to the Middle East. Eisenhower dispatched military personnel to Beirut in 1958 not because he cared about the Lebanese, but because of the attractiveness of the country’s potential as a gateway to the region. By the 1970s, oil and money relationships between Chase and Saudi Arabia and Egypt grew, as they did with Iran and the Shah. Rockefeller's relationship with the Shah, who kept his family money with Chase, ignited the Iranian hostage crisis in 1979. Before that, the US government and its military contractors made billions of dollars from arms deals with Iran. 

Citigroup opened its first Iraq branch in September 2013, ten years after George W. Bush began his Iraq War while facing a recessed American economy. A decade ago, the Bush administration selected JPM Chase to manage billions of dollars of financing for Iraq imports and exports. JPM Chase also opened a branch in Iraq last year to compete with Citigroup for current gains. Billions of dollars in new pipeline funding and other projects are now up for grabs in Iraq. If the US supports the Iraqi government (against ISIS), these banks, as well as oil and infrastructure-building companies are poised to get more of a chunk of that money. Citigroup is already a forerunner for arranging a $2 billion loan for Boeing Jets to Iraq. As Iraq's Deputy Transport Minister Bangen Rekani said in April, “We need a lot of funds…we’re in a race to complete the maximum number of projects in a short time.” 

Regarding Syria, Obama’s plea for showing strength worked. Congress voted in rare bipartisan fashion to fund the moderate Syrian rebels or “free Syrian army rebels.” According to Defense Secretary Chuck Hagel, initial assistance would be “small arms, vehicles and basic equipment like communications, as well as tactical and strategic training.” That could just be the beginning. He also said, “as these forces prove their effectiveness on the battlefield, we would be prepared to provide increasingly sophisticated types of assistance."  We’ve been down this road before, positioning the military to gain financial access to an area relative to our competition. It’s lasted for years and killed thousands of people, while not accomplishing the stated goal of curtailing terrorist threats or activities.

It gets complicated from there. Moderate Syrian rebels have been fighting against Syrian President Bashar al-Assad, whom the US would support against ISIS. The US thinks these forces would cease fighting against al-Assad to fight ISIS instead, though the US claims it is not directly cooperating with  al-Assad. 

Despite this, the US financial hope is that once the dust clears from all these regime changes we support militarily, there will be demand for massive reconstruction and resource extraction projects that our private banks can take care of alongside the IMF and World Bank. At a press conference in Beirut in June, World Bank President Jim Yong Kim told the international community that the World Bank would help to rebuild Syria (at a cost of $150 billion after an “internationally recognized government” was put in place) as well as Jordan, Lebanon, Turkey and Iraq during their 'recovery' from years of war. Mega reconstruction profits are at stake for private firms in symbiotic partnerships  with these international entities. So too, are the requirements for austerity and loosely regulated financial markets as the Western “reform” bargains that accompany them. 

“Wars on terror” serve as a distraction in public and media discourse from a bipolar economy. The September releases of the US Census Report and the Federal Reserve Consumer Finance Survey revealed an ongoing trend toward greater income and wealth inequality. We remain 8 million jobs below pre-crisis levels, adjusted for population growth. Real wages have stagnated or declined. Employers have no incentive to provide well-paying jobs amidst ample desperation in the ranks of the unemployed. We are a mess at home.

Rather than deal with this, the US is trying to prevent terrorism from blocking private bank and corporate expansions and profit elsewhere. ISIS has already caused Iraq to delay its first mega project-finance deal. The $18 billion Basra-Aqaba oil pipeline would extend through Jordan to the Red Sea, pumping a million barrels of crude oil per day, as well as 258 million cubic feet of gas.  That’s a hefty financial incentive for which to use public funds.

Truth be told, the game of global gateway finance is a closed one. And there’s still Russia (and China) playing at the same table. In August 2014, Russia’s biggest oil company, Lukoil, estimated construction of the first branch of a pipeline to Iraq’s West Qurna-2 field at a cost of up to $1 billion. Lukoil holds a 75% stake in West Qurna-2 and has invested over $4 billion in the project, which is already producing more than 200,000 barrels of oil per day.

Cold-War Gateways: From Cuba to the Ukraine

The
narrative of Russia's aggression vs. America’s fight for freedom dovetails with the turmoil going on in the Middle East. Both situations deflect attention from our country, which has greater inequality today than before Obama took office, despite a soaring stock market buoyed by the Fed's stimulus policy of pumping zero-interest rate money into banks providing them capital for all of these international adventures.

After Ukrainian President Poroshenko, a former banker and chocolate mogul, proclaimed the situation with Russia was much improved following his truce with Vladimir Putin, President Obama ratcheted up sanctions against Russia and corralled the rest of the Euro-squad to join him. This action was not about saving Kiev from pro-Russian rebels, but to reinforce the notion that the US is in financial control of the country. Poroshenko is no financial dummy, which is why he threw Putin and any potential Russian economic support under the bus, and high-tailed it to Washington for photo-ops and handouts.

These will come in the form of US government aid, more loans from the IMF and World Bank, plus complex transactions with US banks seeking more areas in which to funnel foreign capital, finance projects, and down the line, maybe securitize the resources of a new corner of the world and sell them to a fresh bunch of hungry speculators. The US has already provided $60 million in aid including food, body armor and communications equipment to the Ukraine to secure its place at this gateway table later.

Stepping back in time, my book, All the Presidents' Bankers illustrates how President Eisenhower's 1950s doctrine promoted a combination of US military and economic support to its non-communist allies. Aid from the then-new World Bank and IMF was provided in return for their commitment to provide open trade relationships and adapt policies advantageous to private western banks and corporations. The US government could thus achieve a dual military and financial stronghold. One such country was Cuba, which under Fulgencio Batista became a favorite spot from which to access Latin and South America. National City Bank (now Citigroup) established 11 branches in Havana alone, becoming Cuba’s principle US depository for American companies involved in the sugar industry and other businesses there. That changed with the Cuban revolution and Fidel Castro, who, in 1960, nationalized foreign bank assets. Bankers looked elsewhere to expand, as did the US government.

In Obama’s political-financial strategy, similar gateway strategies are in play. Obama, like all US presidents since Castro came into power, did the communist-bravado thing and extended sanctions. US bankers will reenter Cuba when US policy changes after Castro is truly gone, as they have during several periods before, notably when National City Bank sent an entourage of bankers led by Chairman Charles Mitchell in the 1920s to explore sugar, nickel, and other deals that eventually soured in the 1929 Crash.

The Ukraine is a modern Cuba with more lucrative resources. As with other US financial gateways, Obama supported the Ukraine faction amenable to financial relationships with the US and Europe relative to Russia. Ten years ago, the Bush administration supported Ukrainian leaders sympathizing with the US vs. Russia as well.  None of this was because of any purported interest in dispersing democracy, but because the right leadership offers more capital market, foreign investment and resource control opportunities to private US firms.

The Ukraine signed a $10 billion shale gas deal with US oil giant Chevron to explore its Olesky gas deposit around the time it expressed a desire for closer partnerships with the EU. Its ousted ex-President Viktor Yanukovych's decision to subsequently shun an EU trade agreement in favor of  Putin's offer of cheaper gas and a $15 billion aid package provoked internal unrest, as did its weak economy. The US denounced Russian-backed President Yanukovych, until he left his post, for he represented a potential loss of money, power and more financial access. Ukraine stands between Russian oil producers and European and Asian consumers, and is poised to profit from any growing energy demands from Western Europe, as could Western private firms.  It also serves as a potential financial out-post for US banks hunting for the next hot resource-saturated capital market.

Ironically, on September 17, 2014, the National Bank of Ukraine did a 180 spin on its economic forecasts and promised positive growth of 1% next year. The government said this economic expansion would come through more favorable corporate and income tax laws that would attract outside investors along the lines of what the US and IMF and World Bank has wanted. (More private relationships of bankers with these entities are in All the Presidents’ Bankers.) The Ukraine received two parts of a $17 billion IMF bailout this year with the IMF saying it may need $19 billion more. This means a greater call on Ukraine’s future revenues in return for austerity measures and deregulated financial markets to private foreign interests.

The real battle between the US and Russia is over the gateway countries in political flux. The real winners will be the private banks and oil companies that will reap the strategic benefits from gateway control over related markets and resources, supported by military and political might, and augmented with speculative capital for years to come. American and global citizens, oblivious to all this, will be the losers in this global shell game.

via Zero Hedge http://ift.tt/1C7j9lC Tyler Durden

Tonight’s Kodiak Moment is brought to you courtesy of the NYPD and one protesting polar bear, which apparently did not get the memo that bears are, how should one say, not welcome on Wall Street…

h/t @jordanmammo

via Zero Hedge http://ift.tt/1C7jaWT Tyler Durden

One of the key drivers of the recent spike in M&A deals (and sellside advisory fees) has been the surge in tax inversion transactions, deals in which a U.S. company reincorporates for tax purposes in a tax-friendlier country such as the U.K. or Ireland, while maintaining its real headquarters in the U.S. Traditionally such deals have involved a merger between a U.S. firm and a smaller foreign firm. The reason for such deals is simple: to lower the corporate tax payments by avoiding the venue of the one country with the highest corporate tax rate in the world: USA, and leave more cash available for distribution to private shareholders. And since every such deal lowers the cumulative tax that the US collects from corporations, Obama, helpless to change the legislation that ushered in these deals in the first place, came out a few months ago, with a heartfelt appeal to corporate patriotism, calling inversions “wrong”, and demanding “corporate patriotism.” He failed. Which is why moments ago the Treasury released its new rules meant to “Reduce Tax Benefits of Corporate Inversions.”

Per the US Treasury: “Today, Treasury is taking action to reduce the tax benefits of — and when possible, stop — corporate tax inversions. This action will significantly diminish the ability of inverted companies to escape U.S. taxation.  For some companies considering mergers, today’s action will mean that inversions no longer make economic sense.“

As the WSJ explains, in a multipronged attack, the administration took action under five separate sections of the tax code to make so-called inversions harder to accomplish and less profitable.

Three of the moves are aimed at blocking inverted companies from using techniques—sometimes known as “hopscotching”—to get access to their offshore cash without paying U.S. tax on it. Those would apply to deals closed on or after Sept. 22.

 

Another move makes it more difficult for U.S. firms to skirt current ownership standards in inverting. Still another move would make it harder for U.S. firms to spin off subsidiaries overseas.

 

Taken together, the administration’s moves are likely to remove at least some of the economic appeal of inversions, which have become more common in recent years, particularly in the pharmaceutical industry. Noticeably absent, however, was a much-discussed idea to limit inverted companies’ ability to ship U.S. profits overseas tax free.

Will it work? Hardly. After all it is the same corporations that have lobbied their favorite puppet politicians over the years that made inversions possible in the first place, and absent a change in the law it is difficult to see what authority the US Treasury has to make up rules on the fly. The WSJ agrees: “some experts have questioned how much authority the Treasury Department actually has in the area, and legal challenges to Monday’s actions remain a possibility. The moves also seem unlikely to end inversions altogether, as even Treasury Secretary Jacob Lew has recently conceded, in part because the administration has little legal ability to block the most common type of inversion.” Just in case there was any doubt who really calls the shots in the America…

Nonetheless, the inversion free for all is now likely over: “Monday’s announcement was likely to chill many deals, at least for now. The Treasury Department also promised to continue looking for other regulatory steps to discourage inversions, and to review tax treaties.”

Yet to think: the US government would have spared itself so much jawboning effort and fake work if all the Treasury did was promise that the 10 largest shareholders of the “unpatriotic inversion offender” would get the “tea party” treatment by the IRS. Then watch as inversions end with a thud, never to be heard of again.

And should the US government be taken to task for yet another despotic, “executive action” tactic, well, there are so many backupless hard disks in the US government that can and will fail at just the right time, that one is assured no trace of any decision process will ever exist.

* * *

Below is the fact sheet on the specific actions the Treasury will take starting today:

Today, Treasury is taking action to reduce the tax benefits of — and when possible, stop — corporate tax inversions. This action will significantly diminish the ability of inverted companies to escape U.S. taxation.  For some companies considering mergers, today’s action will mean that inversions no longer make economic sense.
 
Specifically, the Notice eliminates certain techniques inverted companies currently use to access the overseas earnings of foreign subsidiaries of the U.S. company that inverts without paying U.S. tax.  Today’s actions apply to deals closed today or after today.
 
This notice is an important initial step in addressing inversions.  Treasury will continue to examine ways to reduce the tax benefits of inversions, including through additional regulatory guidance as well as by reviewing our tax treaties and other international commitments. Today’s Notice requests comments on additional ways that Treasury can make inversion deals less economically appealing.
 
Specifically, today’s Notice will:
 
Prevent inverted companies from accessing a foreign subsidiary’s earnings while deferring U.S. tax through the use of creative loans, which are known as “hopscotch” loans(Action under section 956(e) of the code)

• Under current law, U.S. multinationals owe U.S. tax on the profits of their controlled foreign corporations (CFCs) although they don’t usually have to pay this tax until those profits are repatriated (that is, paid to the U.S. parent firm as a dividend). Profits that have not yet been repatriated are known as deferred earnings.
• Under current law, if a CFC, tries to avoid this dividend tax by investing in certain U.S. property—such as by making a loan to, or investing in stock of its U.S. parent or one of its domestic affiliates—the U.S. parent is treated as if it received a taxable dividend from the CFC.
• However, some inverted companies get around this rule by having the CFC make the loan to the new foreign parent, instead of its U.S. parent. This “hopscotch” loan is not currently considered U.S. property and is therefore not taxed as a dividend.
• Today’s notice removes benefits of these “hopscotch” loans by providing that such loans are considered “U.S. property” for purposes of applying the anti-avoidance rule. The same dividend rules will now apply as if the CFC had made a loan to the U.S. parent prior to the inversion.

Prevent inverted companies from restructuring a foreign subsidiary in order to access the subsidiary’s earnings tax-free (Action under section 7701(l) of the tax code)

• After an inversion, some U.S. multinationals avoid ever paying U.S. tax on the deferred earnings of their CFC by having the new foreign parent buy enough stock to take control of the CFC away from the former U.S. parent. This “de-controlling” strategy is used to allow the new foreign parent to access the deferred earnings of the CFC without ever paying U.S. tax on them.
• Under today’s notice, the new foreign parent would be treated as owning stock in the former U.S. parent, rather than the CFC, to remove the benefits of the “de-controlling” strategy. The CFC would remain a CFC and would continue to be subject to U.S. tax on its profits and deferred earnings.

Close a loophole to prevent an inverted companies from transferring cash or property from a CFC to the new parent to completely avoid U.S. tax (Action under section 304(b)(5)(B) of the code)

• These transactions involve the new foreign parent selling its stock in the former U.S. parent to a CFC with deferred earnings in exchange for cash or property of the CFC, effectively resulting in a tax-free repatriation of cash or property bypassing the U.S. parent. Today’s action would eliminate the ability to use this strategy.

Make it more difficult for U.S. entities to invert by strengthening the requirement that the former owners of the U.S. entity own less than 80 percent of the new combined entity:

• Limit the ability of companies to count passive assets that are not part of the entity’s daily business functions in order to inflate the new foreign parent’s size and therefore evade the 80 percent rule – known as using a “cash box. (Action under section 7874 of the code) Companies can successfully invert when the U.S. entity has, for example, a value of 79 percent, and the foreign “acquirer” has a value of 21 percent of the combined entity.  However in some inversion transactions, the foreign acquirer’s size is inflated by passive assets, also known as “cash boxes,” such as cash or marketable securities. These assets are not used by the entity for daily business functions. Today’s notice would disregard stock of the foreign parent that is attributable to passive assets in the context of this 80 percent requirement. This would apply if at least 50 percent of the foreign corporation’s assets are passive. Banks and other financial services companies would be exempted.
• Prevent U.S. companies from reducing their size pre-inversion by making extraordinary dividends. (Action under section 7874 of the code) In some instances, a U.S. entity may pay out large dividends pre-inversion to reduce its size and meet the 80 percent threshold, also known as “skinny-down” dividends. Today’s notice would disregard these pre-inversion extraordinary dividends for purposes of the ownership requirement, thereby raising the U.S. entity’s ownership, possibly above the 80 percent threshold.
• Prevent a U.S. entity from inverting a portion of its operations by transferring assets to a newly formed foreign corporation that it spins off to its shareholders, thereby avoiding the associated U.S. tax liabilities, a practice known as “spinversion.” (Action under section 7874 of the code)  In some cases a U.S. entity may invert a portion of its operations by transferring a portion of its assets to a newly formed foreign corporation and then spinning-off that corporation to its public shareholders. This transaction takes advantage of a rule that was intended to permit purely internal restructurings by multinationals.  Under today’s action, the spun-off foreign corporation would not benefit from these internal restructuring rules with the result that the spun off company would be treated as a domestic corporation, eliminating the use of this technique for these transactions.

via Zero Hedge http://ift.tt/ZE4iRS Tyler Durden