Try As He Might, Mario Draghi’s Magic Levers Just Won’t Create Growth

Mario Draghi is unhappy with the EU.

 

He’s not unhappy with the concept of the union; rather, he’s unhappy with the fact that EU banks are not lending money into the EU economy.

 

In Draghi’s imaginary world, bank lending = “growth.”

 

The reasons for this are A) he’s a former Goldman Sachs banker and so associates any and all bank actions with profits (which contributed to his wealth and power) and B) he has no understanding of how the real world works.

 

Bank lending only contributes to growth in a meaningful way if the capital is deployed effectively. If a bank lends money to someone to start a business (using the guy’s house as collateral on the loan), significant growth only occurs if the guy’s successful in deploying the capital to bring in sales.

 

If you don’t have sales, you don’t have a business. Without sales, our imaginary entrepreneur simply has an increased debt load that, if he fails to pay it back, could result in him losing his house.

 

Sure, he might hire some people to work for him using the capital from the loan to meet payroll. But unless his idea brings actual money through the door, these jobs, and his business (along with his house) will soon be gone.

 

Moreover, it’s not like the bank does well from the deal either. If the economy is in the dumps (as it is in the EU today) and the entrepreneur’s new firm fails, the bank is left with a foreclosed home that it can’t sell. And God forbid that home prices are falling at the same time (which they are in much of the EU) because the bank will be sitting on a deflating, illiquid asset that produces no return.

 

Capitalism is a tough game and success has little to do with capital or bank loans. According to Harvard Business School, 75% of all startups with at least $1 million in funding DON’T even return investors’ capital.

 

Put another way, three out of every four startups that convinced investors to give them at least $1 million in backing fail to even pay back the initial investment.

 

We’ve barely scratched the surface of how start-ups and the global economy really work, but already we’ve come up with multiple issues that reveal just how misguided and overly-simplistic are Mario Draghi’s beliefs in the importance of bank lending.

 

And this is the biggest problem with all Centrally Planned economies and monetary policies: they all reduce the world to a control room with various levers titled, “interest rates” “inflation” “QE.” Central Bankers seem to believe that it they pull various levers, growth will magically occur.

 

It’s a vision of reality so simplistic, you’d think a 10-year came up with it.  Anyone who’s actually started a business or created jobs knows a bank loan isn’t the key to success. Moreover, it's not like all bank loans are the same… or that cutting interest rates will only produce one particular desired outcome and no unintended consequences.

 

A bank loan is just money (well, actually it’s just debt). And if you cannot deploy that money in such a way that your returns exceed your debt payments, then you’re in fact worse off than you were if you’d simply not taken out the loan to begin with.

 

Draghi’s solution to this problem? Cut interest rates to negative so that you have to pay to keep your deposits at a bank. He believes that if rates are negative banks will be forced to lend.

 

To return to our control room metaphor, Draghi believes that he simply hasn’t pulled the magic “interest rate” level far enough (even though it’s already at the floor). So he drilled a foot into the floor and pushed the lever down into the hole.

 

We do not mean to single out Draghi as uniquely misguided. His counterparts at the US Federal Reserv or the Bank of Japan are no more attuned to economic realities. At the end of the day, a handful of Central Bankers are betting the entire financial system on their misguided theories.

 

No one knows how this will play out. We all know on some level that it will not end well, but exactly how and when it will all backfire remains to be seen. We’ve already had two epic Crises in the last 15 years. By the look of things, we’re heading for a third one in the not to distant future.

 

This concludes this article. If you’re looking for the means of protecting your portfolio from the coming collapse, you can pick up a FREE investment report titled Protect Your Portfolio at http://ift.tt/170oFLH

 

This report outlines a number of strategies you can implement to prepare yourself and your loved ones from the coming market carnage.

 

Best Regards

 

Phoenix Capital Research

 

 

 

 

 

 

 




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The Largest Landfill On Earth: Plastic Garbage In The Oceans?

Submitted by Amy Gleich of OilPrice.com,

Think about the last time you got takeout or ate at a fast food restaurant. Or the last time you bought a pre-packaged food item from a store, or drank a bottle of water or soda. Chances are, plastic was involved in all those items — plastic that will still be around up to 1,000 years from now.  

Americans throw away over 30 million tons of plastic every year, of which only about 25 percent is recycled. The rest goes to landfills. Unfortunately, the largest “landfill” on Earth is actually in the North Pacific Ocean.

The “Great Pacific Garbage Patch” is estimated to be anywhere from 3,100 square miles to twice the size of Texas.

You may be wondering how garbage dumped on land can make it to the ocean. Well, first of all, some garbage is directly dumped into the ocean. Secondly, as Scripps Institution marine biologist Miriam Goldstein puts it, “the ocean is downhill from everywhere;” if someone in Iowa throws a bottle into a river, it will eventually end up in the ocean. Finally, about 20 percent of the debris in the garbage patch comes from sea-going vessels and oil platforms.

The Five Main Ocean Gyres
Caption: The Five Main Ocean Gyres
Credit: Wikipedia

The garbage patch forms in the North Pacific gyre, one of five main ocean gyres worldwide: North Pacific, South Pacific, North Atlantic, South Atlantic and Indian Ocean. These gyres are created when the jet stream goes one way and the trade winds go the opposite way – creating a huge, gently swirling circle. On the outside of the circle, the currents move around, but the inside remains calm, making it the perfect place for debris to accumulate.

In the case of the North Pacific gyre, pretty much everything that falls off the west coast of North America and the east coast of Asia will most likely end up in there. While the North Pacific garbage patch is the largest, each of the five gyres has its own accumulation. In fact, the trash from all five gyres put together covers 40 percent of the world’s oceans.

So what exactly are these oceanic garbage patches? Well, first let’s be clear as to what they’re not. Contrary to popular myth they are NOT huge floating trash islands. The patches are made up of millions of small and microscopic pieces of plastic. The patches won’t show up on satellite and if you were to take a boat through them, you might not even necessarily notice the plastic floating in them. So does that mean we don’t need to be concerned?  Nope. The fact that the debris is so small means that cleanup is nearly impossible. As Goldstein explains, you’d basically have to clear-cut the upper layer of the ocean to remove it all.

garbage patches 
Caption: Don’t be fooled. This photo often accompanies stories about the garbage patches, but it was actually taken at Manila Harbor. The real pieces of oceanic plastic garbage are typically smaller than your pinky fingernail.
Credit: i09.com

So the pieces are too small to easily clean up – that might make it seem as though they’re too small to do much damage, but that’s far from correct. Some of the plastic remains in large chunks and many animals and birds become entangled in them and die every year.

The plastic pellets are small enough that birds and fish mistake them for food. This is especially disastrous for birds – the plastic stays in their stomachs, keeping them from eating anything with nutritional value and causing them to slowly starve to death. For fish, whose digestive systems are much different, the effect of eating the plastic may not be so catastrophic, but scientists are still trying to understand the extent to which ingesting these plastic pellets is effecting marine life, but for some, like the albatross below, the deadly effects are clear.

Pelican  
Caption: Dead albatross with a stomach full of plastic debris
Credit: Smithsonian Museum of Natural History

Some creatures have actually been granted a boon by this massive plastic soup, but don’t feel too cheerful about that. The plastic has created a surface for small creatures like water insects, barnacles, small crustaceans and invertebrates called bryozoans. These creatures would normally not make it to the middle of the ocean, so their presence will change the ocean’s ecosystem. Especially in the case of barnacles and bryozoans – they have caused considerable damage to other ecosystems they’ve invaded.

And it’s not just about ecosystems in the middle of the ocean – the surface the plastic provides could enable these creatures to travel to places they’ve never been before, for example, their introduction to the Pacific Northwest islands’ coral reefs could be a real problem. 

So what can be done? The most important thing is for people to be aware. As biologist Goldstein puts it, “It really is an issue that effects everybody, but that’s great because that means that everybody can help.”

Using fewer plastic products would help, as would more recycling of what we already use. There are also scientists who are working to make plastic products from renewable products. According the Science channel, starches, cellulose, soy protein, vegetable oil, triglycerides and bacterial polyesters all contain polymers that can be processed to produce biodegradable plastics.

Even so, reducing the amount of new plastic dumped into the ocean won’t get rid of what’s already there. For that monumental task, The Ocean Cleanup – a group of oceanographers, marine biologists, recycling experts and engineers — is raising money through crowd funding to launch a massive cleanup effort.




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The Cost Of Downgrading The US: $1 Billion

Back in the summer of 2011 during the debt ceiling debacle, S&P did the unthinkable: it dared to speak the truth when it downgraded the US from its pristine AAA rating, setting off a stock market selloff and paradoxically sending bonds to record low yields. This resulted in a vindictive Tim Geithner promptly warning the Chairman of McGraw-Hill the US would retaliate (which it did), the termination of then CEO Devan Sharma (and his replacement with the all too friendly COO of Citibank), and most importantly, a still ongoing legal fight in which the DOJ sued S&P (and only S&P, not Moody’s, not Fitch) allegedly for rating improprieties during the first housing bubble, but even 5 year olds knew it was just to teach S&P a lesson.

Today we learn just what the cost is for anyone who dares to downgrade the US. The answer: $1,000,000,000. That is the amount that S&P has decided it will agree to pay in a settlement with the DOJ to put all this “truthiness” unpleasantness behind it.

From Reuters:

Standard & Poor’s Ratings Services decided to settle a pending lawsuit with the U.S. Department of Justice (DOJ) and is open to paying about $1 billion to settle it, the Wall Street Journal reported citing people familiar with the matter.

 

The DOJ filed a $5 billion lawsuit against S&P, a unit of McGraw Hill Financial Inc, in February 2013 accusing the agency of inflating ratings for mortgage bonds to boost fees from issuers.

 

While a settlement of $1 billion would fall short of the $5 billion sought by the Justice Department, the ratings agency does not want to admit wrongdoing, the Journal said citing the people.

 

S&P had earlier called the lawsuit “meritless” and said the DOJ was wrong in its claim that the ratings were “motivated by commercial considerations.”

 

Representatives of S&P and the DOJ were not immediately available for comment.

In light of this farce, perhaps it is time to amend the first amendment: all speech is free, except that which actually reveals the truth and/or that the emperor is naked. In that case, “speech” will cost you just about $1 billion. On the other hand, everyone else who is happy to perpetuate the lies this system is based on, those are and will remain perpetuity, free of charge.




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Beige Book Summary: “Optimism” – 24; “Pessimism” – 1

While in the “market”, in which both bad and good news once again send stocks to new ATH, newsflow no longer matters, the most irrelvant of all economic reports is the Fed’s beige book. It was thus not surprising to see stocks have absolutely zero reaction to a report which according to the Fed saw the US economy grow in every region of the US, bolstered by consumer spending, tourism, manufacturing and improving labor market. In fact: everything apparently is great. So great that one wonder why the Fed is still monetizing tens of billions every month and ZIRP is on the Fed’s calendar for at a year more.

Some of the highlights:

  • The pace of economic growth was characterized as moderate in New York, Chicago, Minneapolis, Dallas, and San Francisco, while the remaining Districts reported modest expansion.

The difference between modest and moderate is still unclear.

  • Overall consumer spending increased in every District. Retail sales grew modestly in most Districts, with increases that were generally similar to the previous reporting period. Vehicle sales remained stronger than non-auto retail sales, with Philadelphia, Richmond, Atlanta, and San Francisco indicating robust to very strong auto sales.
  • Hotel contacts described robust activity in the Boston, New York, Atlanta, and Minneapolis Districts, while Philadelphia and Richmond noted activity levels that were in line with seasonal norms.
  • Many Districts reported positive growth for professional and business services, including healthcare consulting, advertising, engineering, accounting, and technology.
  • Manufacturing activity expanded in all twelve Districts.
  • Reports on real estate activity varied across the Districts. Many Districts reported low inventories and increasing home prices, but demand was mixed. Boston, New York, and St. Louis reported home sales were below year-ago levels, while Chicago noted a decrease in home sales since the last survey period. Home sales in other Districts remained steady or increased.
  • Loan volumes rose across the nation, with slight to moderate increases reported in most Districts.
  • Most fall crops were reported in good or better condition, and expectations of higher production lowered crop prices. Profitability improved for livestock operators in the Atlanta, Minneapolis, and Kansas City Districts due to high cattle and hog prices. Oil production expanded in the Minneapolis, Kansas City, and Dallas Districts, while natural gas and coal production remained relatively steady in reporting Districts.
  • Labor market conditions improved, as all twelve Districts reported slight to moderate employment growth. Several Districts continued to report some difficulty finding workers for skilled positions.
  • Price pressures were generally contained, with most Districts reporting slight to modest price increases for both inputs and finished goods

And so on.

Perhaps the most informative data point however was that in counting instances of the following words:

  • “Optimistic” or “optimism”: 24
  • “Pessimism”: 1

… It appears Americans around the country took Obama’s advice to be less cynical and more full of hope.




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Druckenmiller: “Markets Are Spoiled, And Policy Makers Are Terrified”

Stanley Druckenmiller is no stranger to the pages of Zero Hedge as he appears immune to the herd-like status-quo-hugging nature of 99% of the financial markets lackeys that strut on TV. His comments today – lengthy, aggressive, and very worried about what the Fed has done – can be summed up in the following chart and his ominous conclusion, “when the Fed ends QE, there’ll be a bear market.”

 

 

Source: SocGen




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Big Corporations Have An Overwhelming Amount Of Power Over Our Food Supply

Submitted by Michael Snyder of The Economic Collapse blog,

From our fields to our forks, huge corporations have an overwhelming amount of power over our food supply every step of the way.  Right now there are more than 313 million people living in the United States, and the job of feeding all of those people is almost entirely in the hands of just a few dozen monolithic companies.  If you do not like how our food is produced or you don’t believe that it is healthy enough, it isn’t very hard to figure out who is to blame.  These mammoth corporations are not in business to look out for the best interests of the American people.  Rather, the purpose of these corporations is to maximize wealth for their shareholders.  So the American people end up eating billions of pounds of extremely unhealthy food that is loaded with chemicals and additives each year, and we just keep getting sicker and sicker as a society.  But these big corporations are raking in big profits, so they don’t really care.

If we did actually have a capitalist system in this country, we would have a high level of competition in the food industry.  But instead, the U.S. food industry has become increasingly concentrated with each passing year.  Just consider the following numbers about the U.S. agricultural sector…

The U.S. agricultural sector suffers from abnormally high levels of concentration. Most economic sectors have concentration ratios around 40%, meaning that the top four firms in the industry control 40% of the market. If the concentration ratio is above 40%, experts believe competition can be threatened and market abuses are more likely to occur: the higher the number, the bigger the threat.

 

The concentration ratios in the agricultural sector are shocking.

 

-Four companies own 83.5% of the beef market.

 

-The top four firms own 66% of the hog industry.

 

-The top four firms control 58.5% of the broiler chicken industry.

 

-In the seed industry, four companies control 50% of the proprietary seed market and 43% of the commercial seed market worldwide.

 

-When it comes to genetically engineered (GE) crops, just one company, Monsanto, boasts control of over 85% of U.S. corn acreage and 91% of U.S. soybean acreage.

When so much power is concentrated in so few hands, it creates some tremendous dangers.

And many of these giant corporations (such as Monsanto) are extremely ruthless.  Small farmers all over America are being wiped out and forced out of the business by the predatory business practices of these huge companies

Because farmers rely on both buyers and sellers for their business, concentrated markets squeeze them at both ends. Sellers with high market power can inflate the prices of machinery, seeds, fertilizers and other goods that farmers need for their farms, while powerful buyers, such as processors, suppress the prices farmers are paid. The razor-thin profit margins on which farmers are forced to operate often push them to “get big or get out”—expanding into mega-operations or exiting the business altogether.

Of course the control that big corporations have over our food supply does not end at the farms.

The distribution of our food is also very highly concentrated.  The graphic shared below was created by Oxfam International, and it shows how just 10 gigantic corporations control almost everything that we buy at the grocery store…

And these food distributors are often not very good citizens either.

For example, it was recently reported that Nestle is running a massive bottled water operation on a drought-stricken Indian reservation in California

Among the windmills and creosote bushes of San Gorgonio Pass, a nondescript beige building stands flanked by water tanks. A sign at the entrance displays the logo of Arrowhead 100% Mountain Spring Water, with water flowing from a snowy mountain. Semi-trucks rumble in and out through the gates, carrying load after load of bottled water.

 

The plant, located on the Morongo Band of Mission Indians’ reservation, has been drawing water from wells alongside a spring in Millard Canyon for more than a decade. But as California’s drought deepens, some people in the area question how much water the plant is bottling and whether it’s right to sell water for profit in a desert region where springs are rare and underground aquifers have been declining.

Nestle doesn’t stop to ask whether it is right or wrong to bottle water in the middle of the worst drought in the recorded history of the state of California.

They have the legal right to do it and they are making large profits doing it, and so they are just going to keep on doing it.

Perhaps you are thinking that you can avoid all of these corporations by eating organic and by shopping at natural food stores.

Well, it isn’t necessarily that easy.

According to author Wenonah Hauter, the “health food industry” is also extremely concentrated

Over the past 20 years, Whole Foods Market has acquired its competition, including Wellspring Grocery, Bread of Life, Bread & Circus, Food for Thought, Fresh Fields, Wild Oats Markets and others. Today the chain dominates the market because it has no national competitor. Over the past five years its gross sales have increased by half (47 percent) to $11.7 billion, and its net profit quadrupled to $465.6 million. One of the ways it has achieved this profitability is by selling conventional foods under the false illusion that they are better than products sold at a regular grocery store. Consumers falsely conclude that these products have been screened and are better, and they are willing to pay a higher price.

 

The distribution of organic foods is also extremely concentrated. A little-known company, United Natural Foods, Inc. (UNFI) now controls the distribution of organic and natural products. Publically traded, the company has a contract with Whole Foods and it is the major source of these products for the remaining independent natural food stores. This relationship has resulted in increasingly high prices for these foods. Small manufacturers are dependent on contracts with UNFI to get their products to market and conversely, small retailers often have to pay a premium price for products because of their dependence on this major distributor. Over the past five years, UNFI’s net sales increased by more than half (55.6 percent) $5.2. billion. Its net profit margin increased by 88 percent to $91 million.

Everywhere you look, the corporations are in control.

And this is especially true when you look at big food retailers such as Wal-Mart.

Right now, grocery sales account for about half of all business at Wal-Mart, and approximately one out of every three dollars spent on groceries in the United States is spent at Wal-Mart.

That is absolutely astounding, and it obviously gives Wal-Mart an immense amount of power.

In fact, if you can believe it, Wal-Mart actually purchases a billion pounds of beef every single year.

So the next time someone asks you where the beef is, you can tell them that it is at Wal-Mart.

On the restaurant side, the ten largest fast food corporations account for 47 percent of all fast food sales, and the love affair that Americans have with fast food does not appear to be in danger of ending any time soon.

Personally, if you do not like how these corporate giants are behaving, you can always complain.

But you are just one person among 313 million, and most of these big corporations are not going to consider the ramblings of one person to be of any significance whatsoever.

Collectively, however, we have great power.  And the way that we are going to get these big corporations to change is by voting with our wallets.

Unfortunately, the vast majority of Americans seem quite satisfied with the status quo.  So the population as a whole is likely going to continue to get sicker, fatter and less healthy with each passing year, and the big food corporations are going to keep becoming even more powerful.




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Video of the Day – Elizabeth Warren Torches Janet Yellen on TBTF

Screen Shot 2014-07-16 at 11.37.34 AMBefore you watch the video, I want to highlight an excellent article published this morning by Yves Smith over at Naked Capitalism titled, Yellen Tells Whoppers to the New Yorker. The title doesn’t do justice to the powerful and scathing critique of the fraud that is the current Federal Reserve Chairwoman. In a nutshell, the article exposes how Yellen’s acting routine is worthy of an Academy Award. In her role, she plays a caring, sweet, grandmotherly type figure all concerned about the poor and middle-class, when reality points to a career as a staunch, frontline protecter of the bankster oligarchy.

From Naked Capitalism (for background, much of the article is criticism of a propaganda piece on Yellen recently published by the New Yorker):

continue reading

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Fed’s Fisher Wants Some Steam Out Of The Market, But “No Popping The Bubble”

It appears the Federal Reserve is in full court press mode to jawbone the rational exuberance out of the stock markets… On the heels of Yellen’s largely ignored “stretched valuations” comments, Dallas Fed’s Fisher exclaims:

  • DALLAS FED PRESIDENT FISHER SAYS ‘MARKETS ARE OVERSHOOTING’
  • FISHER CONCERNED FED MAY ‘BE STAYING TOO LOOSE TOO LONG’
  • FISHER: I DON’T THINK YOU SHOULD ‘POP’ A BUBBLE, BUT SHOULD LET SOME SPECULATIVE STEAM OUT OF MARKETS

His plan for this “letting out of steam” is to start shrinking the Fed balance sheet in October and raising rates early in 2015. Of course, what does the Fed know about bubbles? We are sure the spin will come soon that this is bullish as ‘froth’ will be removed and then the secular bull can go on (aside from the total and utter lack of liquidity in markets, small doors and large crowds do not make for good endings).




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What Exactly Are the Spy Agencies Actually DOING with their Bag of Dirty Tricks?

Newly-released documents from Edward Snowden show that the British spy agency GCHQ has developed numerous offensive digital tools.

But what exactly are they doing with these dirty tricks?

We think it’s important to think through the specific possibilities, in order to gain an understanding of how pernicious these manipulations can be.

We quote verbatim (in black) the names and descriptions of some of these tools – some of which Glenn Greenwald didn’t highlight in his report.  We then provide descriptions in blue of potential misuses of such tools.

Then we discuss how likely such misuses really are.

TOOLS AND POTENTIAL MISUSES

Here are the actual dirty tricks in the British spy agencies toolkit, with hypothetical examples of potential misuses …

CHANGELING: Ability to spoof any email address and send email under that identity. Fake an email from a privacy advocate to make it look like he’s proposing terrorism.

SCRAPHEAP CHALLENGE: Perfect spoofing of emails from Blackberry targets. Fake an email from an opponent of  bailouts to the giant banks to make it look like she’s planning to bomb a bank.

BURLESQUE: The capacity to send spoofed SMS messages. Fake a message from an an anti-war writer to make it look like he’s planning to sabotage a military base.

IMPERIAL BARGE : For connecting two target phone together in a call. Fake a telephone connection to make it look like a critic of the president’s policies spoke with a leader of Al Qaeda.

BADGER : Mass delivery of email messaging to support an Information Operations campaign. Send out a fake, mass email pretending to be from a prominent whistleblower “admitting” that he’s mentally unstable, disgruntled, dishonest, vindictive and a Russian spy.

WARPATH: Mass delivery of SMS messages to support an Information Operations campaign.  Send out a fake, mass message from a targeted group calling for the murder of all Christians and Jews.

SPACE ROCKET: A programme covering insertion of media into target networks. Insert a video of underage girls on a whistleblower website. 

CLEAN SWEEP Masquerade Facebook Wall Posts for individuals or entire countries. Put up a bunch of fake wall posts calling for jihad on the Facebook page of a reporter giving first-hand reports of what’s really happening in a country that the U.S. has targeted for regime change.

HAVOK Real-time website cloning technique allowing on-the-fly alterations. Hack the website of a state politician who insists the government must respect the Constitution,  and post fake demands for a violent march on Washington, D.C.

SILVERLORD: Disruption of video-based websites hosting extremist content through concerted target discovery and content removal. Disrupt websites hosting videos espousing libertarian views.

SUNBLOCK: Ability to deny functionality to send/receive email or view material online. Block emails to reporters and the web functionality of a government insider who is about to go public on wrongdoing.

ANGRY PIRATE: A tool that will permanently disable a target’s account on their computer. Disable the accounts of a leading opponent of genetically modified foods.

PREDATORS FACE: Targeted Denial Of Service against Web Servers. Take down a website which is disclosing hard-hitting information on illegal government actions.

UNDERPASS: Change outcome of online polls. Change the results of an online poll from one showing that the American people overwhelmingly oppose a new war which is unnecessary for the defense of America’s national security to showing support for it.

GATEWAY: Ability to artificially increase traffic to a website. Make a website calling for more surveillance against the American people appear hugely popular.

BOMB BAY: The capacity to increase website hits, rankings. Make it look like a site praising praising Al Qaeda is popular among a targeted local population, when the locals actually despise violent Islamic fundamentalists.

SLIPSTREAM: Ability to inflate page views on websites. Make it appear that an article saying that the Constitution is “outdated” and “unrealistic in the post-9/11 world” is widely popular.

GESTATOR: Amplification of a given message, normally video, on popular multimedia websites (Youtube). Make a propaganda video – saying that Dear Leader will always help and protect us – go viral.

WHAT IS THE LIKELIHOOD OF MISUSE?

We don’t know which of the above hypothetically forms of misuse are actually occurring. However, as we wrote in February:

We’ve warned since 2009 (and see this) that the government could be launching cyber “false flag attacks” in order to justify a crackdown on the Internet and discredit web activists.

 

A new report from NBC News – based on documents leaked by Edward Snowden – appear to confirm our fears, documenting that Britain’s GCHQ spy agency has carried out cyber false flag attacks:

In another document taken from the NSA by Snowden and obtained by NBC News, a JTRIG official said the unit’s mission included computer network attacks, disruption, “Active Covert Internet Operations,” and “Covert Technical Operations.” Among the methods listed in the document were jamming phones, computers and email accounts and masquerading as an enemy in a “false flag” operation. The same document said GCHQ was increasing its emphasis on using cyber tools to attack adversaries.

Later that month, we noted:

A new report from NBC News shows that the British spy agency used “false flag attacks” and other dirty tricks:

British spies have developed “dirty tricks” for use against nations, hackers, terror groups, suspected criminals and arms dealers that include releasing computer viruses, spying on journalists and diplomats, jamming phones and computers, and using sex to lure targets into “honey traps.”

 

***

 

The agency’s goal was to “destroy, deny, degrade [and] disrupt” enemies by “discrediting” them, planting misinformation and shutting down their communications.

Sound familiar? It should:

Between 1956 and 1971, the FBI operated a program known as COINTELPRO, for Counter Intelligence Program. Its purpose was to interfere with the activities of the organizations and individuals who were its targets or, in the words of long-time FBI Director J. Edgar Hoover, to “expose, disrupt, misdirect, discredit or otherwise neutralize” them.

NBC continues:

[The agency] also uses “false flag” operations, in which British agents carry out online actions that are designed to look like they were performed by one of Britain’s adversaries.

 

***

 

JTRIG used negative information to attack private companies, sour business relationships and ruin deals.

 

***

 

Changing photos on social media sites and emailing and texting colleagues and neighbors unsavory information.

And reporter Glenn Greenwald noted that Snowden documents showed:

Western intelligence agencies are attempting to manipulate and control online discourse with extreme tactics of deception and reputation-destruction.

 

***

 

These agencies are attempting to control, infiltrate, manipulate, and warp online discourse …. Among the core self-identified purposes … are two tactics: (1) to inject all sorts of false material onto the internet in order to destroy the reputation of its targets; and (2) to use social sciences and other techniques to manipulate online discourse and activism to generate outcomes it considers desirable. To see how extremist these programs are, just consider the tactics they boast of using to achieve those ends: “false flag operations” (posting material to the internet and falsely attributing it to someone else), fake victim blog posts (pretending to be a victim of the individual whose reputation they want to destroy), and posting “negative information” on various forums.

 

***

 

The discussion of many of these techniques occurs in the context of using them in lieu of “traditional law enforcement” against people suspected (but not charged or convicted) of ordinary crimes or, more broadly still, “hacktivism”, meaning those who use online protest activity for political ends.

 

The title page of one of these documents reflects the agency’s own awareness that it is “pushing the boundaries” by using “cyber offensive” techniques against people who have nothing to do with terrorism or national security threats, and indeed, centrally involves law enforcement agents who investigate ordinary crimes…. no conceivable connection to terrorism or even national security threats.

 

***

 

Then there is the use of psychology and other social sciences to not only understand, but shape and control, how online activism and discourse unfolds. Today’s newly published document touts the work of GCHQ’s “Human Science Operations Cell”, devoted to “online human intelligence” and “strategic influence and disruption”….***

 

Under the title “Online Covert Action”, the document details a variety of means to engage in “influence and info ops” as well as “disruption and computer net attack”, while dissecting how human beings can be manipulated using “leaders”, “trust, “obedience” and “compliance”:

The U.S. government is also spending millions to figure out how to manipulate social media to promote propaganda and stifle dissenting opinions. And see this and this.

And any criticism of government policies is now considered “extremist” and potential terrorism. According to Department of Defense training manuals, all protest is now considered “low-level terrorism”. And see this, this and thisQuestioning war is considered extremism. The government also considers anyone who tries to protect himself from government oppression and to claim his Constitutional rights a "extremist". This is not entirely new … the CIA director in 1972. Indeed – for 5,000 years straight – mass surveillance of one's own people has always been used to crush dissent.

The NSA is now also collecting and retaining the most intimate personal details of Americans, including nude and suggestive pictures and medical and financial records … even though they admittedly have no conceivable security value.

You may think you have “nothing to hide”, but you’re breaking the law numerous times every day … without even knowing it (update).

Indeed, top NSA whistleblowers say that the NSA is blackmailing and harassing opponents with information that it has gathered – potentially even high-level politicians – just like FBI head J. Edgar Hoover blackmailed presidents and Congressmen.

Moreover, if the NSA takes a dislike to someone, it can frame them. This has been CONFIRMED by top NSA whistleblowers.

And the following facts make it likely that British and U.S. spy agencies are misusing their powers:

Postscript: We don’t know whether or not the spy agencies are misusing their bag of tricks in the specific ways discussed above (in blue).  The whole point is that they have been caught lying time and again about what they’re doing, they’re running amok with no oversight, and the fact that they could be targeting government critics in exactly these ways shows how bad things have become.




via Zero Hedge http://ift.tt/1wvrV8z George Washington