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Internet Privacy or (In)Security..a lesson in paranoia

7:41 pm in Uncategorized by cmaukonen

Secure Cloud Computing – FutUndBeidl / flickr creative commons

V.I. Kydor Kropotkin: Wel my phone isn’t tapped and I know yours isn’t tapped…

Don Masters, CEA Agent: But this phone booth was.

V.I. Kydor Kropotkin: Are you trying to tell me every phone in the country is tapped?

Don Masters, CEA Agent: That’s what’s in my head.

V.I. Kydor Kropotkin: Don, this is America, not Russia! – The President’s Analyst

Well it didn’t use to be. And according to this, nobody can expect any privacy over the Internet any more.

“Environmental advocates have the right to speak anonymously and travel without their every move and association being exposed to Chevron,” said Marcia Hofmann, Senior Staff Attorney with the Electronic Frontier Foundation, who—along with environmental rights group EarthRights International (ERI)—had filed a motion last fall to “quash” the subpoenas.

“These sweeping subpoenas create a chilling effect among those who have spoken out against the oil giant’s activities in Ecuador,” she added at the time.

According to ERI, the subpoena demands the personal information about each account holder as well as the IP addresses associated with every login to each account over a nine-year period. “This could allow Chevron to determine the countries, states, cities or even buildings where the account-holders were checking their email,” they write, “so as to ‘infer the movements of the users over the relevant period and might permit Chevron to makes inferences about some of the user’s professional and personal relationships.’”

First some background, so please excuse me as I get rather techy and geeky.

Right now we have the following four major operating systems to run on your PC, desktop or server machine:

Windows – Microsoft – the least secure.

OS X – Apple – more secure

Linux – the most secure for desktop use

BSD – the most secure of all but primarily for server applications.

BSD – (which stands for Berkeley Software Development) was originally developed at the University of California  Berkeley from work they did to expand the usefulness of ATT Unix. Now supported by the BSD Community. There are two main flavors. NET-BSD and Free-BSD.

Linux was developed by Linus Torvalds and contains all free software from the Free Software Foundation. It’s generally known as GNU/Linux.

OS X is built upon a BSD core using a MACK Kernel, but since the user interface IE windowing system is Apple Proprietary, there is no knowing what it may or may not have in it or how secure it actually is.

Windows is totally proprietary, though there has been pressure on Microsoft to release the source, or at least part of it.

Linux comes in a number of flavors.

RedHat – now know mostly as Fedora.

openSUSE – a distribution that was developed so that it could run on particular IBM Mainframe machines under their VM operating system but will also run on Intel and others.

Ubuntu – a distribution of the Debian/GNU flavor of Linux. There are various flavors of this as well, depending on the Window manager you happen to like. I use Xubuntu which uses the XFCE window manager. But all Ubuntus can run programs from the Ubuntu software library which is now very large. There are a very large number of Linux distributions as one can see from this list. And going into the differences of each would take a large book. The nice thing is that nearly all applications that will run on one version of Linux will run on the others. These days just about about anything one would want, from photo manipulation to web browsing to office products to audio and mp3 and videos, is available for Linux and even for BSD.

And with Wine, nearly all Windows apps will run on Linux. I am currently running a few myself. So there really is little reason not to switch these days.

So why am I going into all of this ? Because it should be evident to all that anything you type in the clear will be seen by the US Stasi. Count on it. And you can count on the fact that Microsoft and Apple will cooperate fully with them as well.

So first of all one needs to ditch the corporate software completely. Yes, it will take some getting used to. However the Widowing systems now available for Linux can give you the look and feel of Windows or OS X or even IBM’s OS2 – yech.

Use Firefox for browsing and an anonymous plugin for anything serious. Use Thunderbird for your mail app and a pgp encryption for your serious mail.  There are a number of plugins for both. DO NOT USE Gmail, Yahoomail or any of those free mailers for ANYTHING SERIOUS.  Use a secure mail service such as riseup or hushmail which will not divulge who you are.

Do NOT use Twitter or clear chat. Risup is starting a secure chat service.

But the biggest problem is how the government acquires and uses metadata.  From an email I received from Risup:

Metadata, i.e. all the information about who you communicate with, how
frequently, for how long, and from where, can be used to create a social
map. One way this social map can be used to determine who the bridge
people are within social movements and campaigns, i.e., which people are
the connectors.

Say that there is some really excellent, effective anti-coal organizing
going on — effective enough that the powers that be want to stop it.
Using the metadata to make a social map shows them who the handful of
people are that connect the green anarchists with the labor activists and
the climate change organizers. Even in really large campaigns, there are
often only a handful of people who are the connectors, and without them
communication, coalition, coordination, and solidarity will break down.
It’s not that it might break down, but it will. Corporations and
governments even know how many of these bridge people they need to take
out in order to disrupt a campaign. There are algorithms and academic
papers written about it. What they haven’t always known is who the heck
these bridge people are.

Enter the metadata’s social map, and they can easily and to an exacting
degree see who the bridge people are they need to target. Who to follow
and intimidate to stop their organizing. Who to have watched and legally
prosecuted via any small legal infraction. Who to illegally entrap. Who to
kidnap, torture, and kill. And let’s not be naive and imagine that hasn’t
happened before and will not happen again. The collection of this metadata
makes it all the easier.

Sound paranoid? Or are we at a point where nothing sounds paranoid anymore.

So, what can we do about it? For starters, get everyone you know to start
using an email provider that uses StartTLS. For email, this is the only
thing that can protect against the surveillance of our social networks.

What about phone calls, internet chat, and social networking sites? Riseup
birds don’t have all the answers, but we are working on it. One thing we
know, privacy and security are not solved by personal solutions. If we
want security, it will take a collective response and a collective
commitment to building alternative communication infrastructure.

In other words, just knowing who you are communicating with is important to the government these days. So to my mind what is necessary is this:

Someone is going to have come up with a secure communications scheme – probably cloud based – where you would not even know who was communicating with who, unless you had the key. And each person/communicator would have their own unique key to identify them.

Nothing – not even who you want to communicate with – would be in the clear. Everything encrypted so that when some kind of coordinated action is planned, at least knowing who is planning what with whom would be very difficult to discover.  We have entered the era of the American Stasi and KGB, people, and everything you say, email, tweet and chat will be used against you.

Business as usual or Who’s on American Idol…The Fantasy Bubble Connection

7:58 pm in Uncategorized by cmaukonen

Disney World - flickr creative commons

All righty now.  Two home made bombs go off at the finish line of the Boston Marathon, creating enough death, injury and destruction to occupy the news cycle for  at least 24 hours. Followed by the miraculous work of our law enforcement to correctly identify the culprits from some very out of focus stills  garnered from some security cameras. Thus triggering a manhunt in Boston the like of which Boston – or any where else – has not seen. To capture a 19 year old, screwed up kid. And the people of Boston rolled over and played dead through the whole affair.  Then cheering loudly when he was caught as if Hitler and Stalin both where apprehended in the middle of some torturous act.

Even Pepe Escobar at Asia Times thinks the whole theatre smells more than a little of 10 day old halibut.

In two previous articles, for RT RTand for Asia Times Online I have looked into the superimposed levels of blowback implied by the Boston bombing.

With still so many unanswered questions regarding what took place on the ground in Boston after the bombing, it’s time to look at an extra, possible Top Ten list of lingering absurdities. And this without sidestepping other unanswered crucial questions, such as why a bomb drill – organized by Craftwas going on during the marathon at which the bombing took place; and why it was vehemently denied that a bomb drill was going on. For this current set of questions, I’m grateful for the help of Asia Times Online’s Bostonian readers.

Orwellian indeed.  And Bush is opening a Library when he should be in a cell.

What amazes me is not that this happened or how it was handled or even the official story itself. These are all pretty much par for the course.   After all even Nixon though the white wash of the JFK assassination was a load of dingos kidneys.

No what amazes me is how gullible the public is and how easily it will swallow the stories force fed to them on this and every other matter.   Those that seem to be the least likely to question the official story seem to be those of the upper crust economically. The professionals engineers for Microsoft and Dell and Apple and IBM. The Doctors and specialists in the health car professions, especially those affiliated with big hospitals. Tenured professors and middle management types. The bourgeois for lack of a better term.

Nearly all of whom are doing quite nicely as the rest of the economy is slowly sinking.  They also are those who are buying into the “recovery” that isn’t.  Like the guest post by James H. Kunstler – at Tyler Durden’s Zerohedge explains.

It’s especially remarkable that a nation with fairly deep traditions of free thought and speech, with durable institutions for purveying them (a free press), should sleepwalk into a captivity of pervasive, systematic, institutionalized lying and fraud. The people of Nazi Germany and Stalinist Russia suffered under such regimes at gunpoint, with boots on their necks, but in the USA of Bush and now Obama, we have conveyed ourselves to very similar circumstances willingly, like little children skipping through the gates of Disney World, with gleeful disregard for the consequences.

James H. Kunstler in this post gives a good rundown of how we got here, will stay here and what the government has been doing ever since that untidy situation in 2008, to keep the Titanic from sinking.  That what we are seeing is a contraction fed to a large extent by what he calls then end of “peak-cheap-oil”.

These calamities of capital mis-management occurred in tandem with trouble in the energy sector of the economy. The shorthand for the trouble was encapsulated in the term “Peak Oil.” For practical purposes, it should have been called “Peak Cheap Oil,” because these years in the mid-2000s marked the end of oil that was affordable under the terms of how American society was set up to run.

At every level of American society – and for Europe and Japan as well – the end of cheap, affordable oil had rather dire implications for all the common operations of life in advanced societies: food production, transportation, commerce, and especially finance. Finance – the management of a society’s accumulated wealth – was the most abstract of these systems and the one most easily upset by the implications of Peak Cheap Oil. The reason was that oil happened to be the “master resource” for generating economic growth and Peak Cheap Oil provoked a particular problem with money: Without continued growth of 3 to 5 percent a year, not enough new wealth could be generated to cover the interest on loans in the financial system. In effect, the whole system of interest became impaired, and without interest you couldn’t have the normal operations of banking.

It was pretty elementary. But the American public was not disposed to understand it, because everything in the U.S. economy worked on revolving credit, including the issuance of money itself (which was loaned into existence by the banks), and the public was addicted to debt. Loaning money into existence, of course, implied the creation of ever more debt, which came burdened with interest payments.

The American public, the media and even Washington refuses to look at any of this. All still wanting to believe that this depression/recession is temporary and will right itself eventually.  The whole drive toward austerity is reliant of this fiction.  So the books and figures are manipulated to give it as much credence as possible.  The only reason the economy has not tanked is because the Federal Reserve keeps funneling money into the financial sector. Pay no attention to that bankrupt bank behind the FED, this is the great and powerful Wizard of OZ.  All making excuses and rationalizing the governments actions at every step.

So these bourgeois with their 401Ks and personal retirement accounts and investments are the ones that Washington is trying to protect from financial disaster.  Making sure the Stock Market does not take a nose dive and there by bursting the fantasy bubble.

And these same folks will keep watching  their cable TV shows  with the right convinced that the “market works damnit” and the center left pushing their green or what ever agenda and both rationalizing why no financier is in Jail.  All convinced that it’s back to business as usual. All gleefully and naively watching the first 10 min of CNN before turning on Here Comes Honey Boo Boo.

The theme park is open for business and the “help” gets the shaft.

 

The Way We Were….or….Talkn’ Bout My G Generation

7:13 pm in Uncategorized by cmaukonen

Banksy Foreclosed Dreams - flickr/Finger food

One of the main topics these days has been about how to “save the system”. Meaning our current political and economic system here and maybe elsewhere. Or the eventual collapse of same regardless of what anyone does or attempts to do.

And one of the main aspects of this is then context in which this is being done. As if the time after WWII and the depression of the 1930s is the way things have always been and the attitudes there in were the way people always were. The problem here is that anyone who has read any history should know – this is false. But most of us still alive think this way. Those of us born after WWII. The so called Baby Boomers and their off spring.

Before WWII unless you were born into a “Middle Class” family – and I am using the wikipedia definition here, the college educated professional class – your life would be pretty rough. Either working a farm or on one or working in some factory in some metro area for horrible pay and lousy working conditions and lousy housing. And that is if you were white. If you were a minority, it was even rougher.

There were no suburbs or interstate highways or big box discount stores. Health care was minimal, if at all. And the depression made this all much worse. For farmers thing were already getting rough with droughts that precede the dust bowl and the depression. Not to mention that just prior to this in the late 1800s, grain prices had gone down a black hole do to over production caused by the mechanization of farming.

And unless you were born into a very well off family, higher education was pretty much out of the question. There were few state universities and the private ones were beyond all but the very fortunate.

Babe boomers however had it much much better. Our parents got to go to college thanks to Uncle Sam if they were in the service. State Universities were being built along with community colleges. The war and what followed created a huge demand for workers not know before hand. There was a major building boom do to the lack of housing and suburbs popped up like weeds. Unemployment was low and wages were going up. If you were white, during this period, you future was a hell of lot more rosy than you parents was. And most kids then were expected to go to college if they had anything on the ball at all. A major change from previous generations.

Now here is the problem. We were all told – on the radio, television, by our parents and in school – this is the way things are and the ways things will always be. Maybe not on those words, but that was the message. We were not told that this was primarily because the US was the only show in town. That the rest of the world was in the stone age or had been bombed into the stone age. That a very large number of the jobs out there had to do with make weapons to fight those horrible communists. That the cheap gas and oil etc. were provided by US companies that used slave labor to steal it from other less developed nations.

And to tell you the truth few if any of us cared. We were too busy with rock and roll and the beat generation. Hot Rods and girls. The space race. A few of us became aware of racial bigotry and civil rights and began to come a bit more involved with this. Joining marches and protests and singing songs. But with the intention of returning to our nice comfortable lives.

The Vietnam war geared up and more of us get involved with protesting that – primarily to keep our heads from being blown off. And with the intention of returning to our nice comfortable lives. But along the way a lot of us became very disenchanted with our government and political system. We grew up idealistic and getting pretty much what we wanted. We expected to be treated well and listened to and when we were not… When we were treated like some kind of inconvenient pest, a large number developed a deep seated resentment. And far too often this was passed on to their children as well.

We were going to change the world…the system and when we could not, felt betrayed by the whole establishment. Government, education, corporate…you name it. But our expectations were unreal. We were unaware or refused to accept that the times and our it’s prosperity were one huge propaganda event. To show the world that our system was so much better that the “other” system. And as soon as this was no longer necessary, tossed aside like a used newspaper.

Because far too many of us – of my generation, the boomers – would not completely see that because we were white that others were not, was a big reason why our lives had been so comfortable. And that as soon as that was no longer necessary, we would become unnecessary as well.

We had the privilege to live a fantasy. A Disney kind of life for a while. But the fantasy is over. Time to get real.

The Decline and Fall of an American Empire

12:06 pm in Uncategorized by cmaukonen

Abandoned church - Lars K. Christensen/flickr creative commons

The American Empire was not like other historical empires, for from the very first it has been made up of various different ethnic and cultural groups. Initially French and Spanish. Then Dutch and British. With other nationalities coming later. Irish and German and Russian and (in my case) Finnish.

Like all other empires though it was doomed to fall at some point. History as well as statistics tell us so. As Chris Hedges points out here – citing such figures in the the field as anthropologist Joseph Tainter in “The Collapse of Complex Societies,” Charles L. Redman in “Human Impact on Ancient Environments” and Ronald Wright in “A Short History of Progress”.

“There is a pattern in the past of civilization after civilization wearing out its welcome from nature, overexploiting its environment, overexpanding, overpopulating,” Wright said when I reached him by phone at his home in British Columbia, Canada. “They tend to collapse quite soon after they reach their period of greatest magnificence and prosperity. That pattern holds good for a lot of societies, among them the Romans, the ancient Maya and the Sumerians of what is now southern Iraq. There are many other examples, including smaller-scale societies such as Easter Island. The very things that cause societies to prosper in the short run, especially new ways to exploit the environment such as the invention of irrigation, lead to disaster in the long run because of unforeseen complications. This is what I called in ‘A Short History of Progress’ the ‘progress trap.’ We have set in motion an industrial machine of such complexity and such dependence on expansion that we do not know how to make do with less or move to a steady state in terms of our demands on nature. We have failed to control human numbers. They have tripled in my lifetime. And the problem is made much worse by the widening gap between rich and poor, the upward concentration of wealth, which ensures there can never be enough to go around. The number of people in dire poverty today—about 2 billion—is greater than the world’s entire population in the early 1900s. That’s not progress.”

Hedges essay deals with what he calls the Myth of Human Progress but I see it as very key to empire itself. That the bigger myth is that of a single American culture. We see evidence of it especially today with the fracturing of even the right wing movement. That what has bound people together was not some American history but rather a myth of American history built around some mythical culture.

Dmitri Orlov brings this up in this interview he did lat last year on Businessmatters radio. You can download and listen to it here. One of the things he (Orlov) brings up is the lack of community and the collapse of community standard,s as it were, in especially those areas that were hit hardest by Sandy last year. This is not surprising since community was weak at best even in those more upscale areas that were hit and was organized almost entirely around economic status and materialistic values. So when those were destroyed, so were the symbols of the “community”.

Communities as we here knew them in the past were organized almost entirely around some ethnic or cultural group. Sometimes religious but mostly ethnicity and culture of those who live there. The Italian or German or Irish or Chinese or etc. sections of nearly every metro area. This was also the case in the rural areas. The farmers were of similar cultural groups.

But as these people had children, fewer and fewer of these children would cling onto the cultural heritage of the parents and grandparents. Because of this the sense of community began to be lost or at best was some superficial aspect, such as their financial status or the suburban area or car they drove. It has no real roots. It was manufactured and sold by the media. The generic white anglo saxon male dominated family. Leave it to Beaver. My Three Sons. The Brady Bunch. Etc. And it was based almost completely on some personal self-centered agenda rather than the greater good. A product of Madison Ave. and Hollywood.

Orlov in this interview and his previous entries on his blog likes to compare the ex-Soviet Union with the US but I think he misses a key point. That is that the Soviet Union was make up of ethnic and cultural Russians for a large part. It was Russians fighting for other Russians during WWII, which is why they won it. This deep clan or tribal bond. Very like a family bond that America really does not have.

Which is why nearly all the war propaganda was about either fighting against something or some one. IE Nazis or Japs or Commies. Or for some vague ideal. Freedom. liberty…etc. Rarely – if ever – for America. That attitude or belief in always helping your fellows has never really existed in this country outside of one’s ethnic/cultural enclave. The superficial suburban groups never had it since it was based almost entirely on material standing. And once one lost this, one was out, so by definition there would be no help.

So with this economic grouping quickly falling by the wayside as the downturn accelerates, what we are seeing with the gun nutz and tea party right wing is a last desperate attempt to maintain some kind of cultural identity where none actually exists.

It’s this lack of any real cultural identity that the Washington/Wall Street cartel is taking advantage of and to an extent trying desperately to preserve. It’s also why the coming collapse of the American Empire will not look like those in the past as there is little to bond us together in it except mutual hardship.

Whether this will eventually bring people together as a whole and when this will occur is anybody’s guess. I am sure there will be more and more communities formed on an isolated and small scale, but a larger unification is at this time doubtful. It would take a great deal of time. This culture of personal gain and benefit over the greater good will be difficult at best to overcome.

The Great American Reset

7:55 pm in Uncategorized by cmaukonen

Scrooge McDuck

There is a lot of talk of getting Paul Krugman as Treasury Secretary. As Dean Baker points out – ain’t gonna happen.

If Krugman were Treasury Secretary we could envision a policy that was focused on creating jobs rather than reducing a deficit that exists almost entirely because of the downturn in the economy.We could also envision a policy that sought to tame the bloated financial sector with a speculation tax that would make much of the creative finance on Wall Street unprofitable. And, we would not have to worry that cutting Social Security and Medicare is the top priority for the Obama administration.

But, Krugman is not on the short list for Treasury Secretary. This list has the names of people who are much more acceptable to Wall Street who, by the way, have been wrong on almost everything important about the economy in the last decade. As a result, we should be very very afraid.

And there is also talk of minting some damn coin to pay off the debt. That ain’t gonna happen either. Just like they keep hoping some bankers and Wall Street executives will do a perp walk. But liberals and progressives hold onto to such hopes like a late stage cancer patient does laetrile and massive doses of vitamin C.

You see none of this was the intention or agenda of Washington from the beginning. We can see that now with the re-inflating of the housing bubble. This time in the rental sector.

Some readers have been asking how one can reconcile positive signs in the housing market with declining rates of homeownership. Indeed, homeownership is falling at an even faster pace than during the 08-10 period….The explanation is that so far a great deal of net demand growth in housing has been in rental units. …This demand for rentals is in fact one of the factors supporting the housing market – for every renter there is a landlord who buys a home.

And as Matt Taibbi points out in his current column in Rolling Stone, it was all one gigantic scam. A lie of biblical proportions.

It was all a lie – one of the biggest and most elaborate falsehoods ever sold to the American people. We were told that the taxpayer was stepping in – only temporarily, mind you – to prop up the economy and save the world from financial catastrophe. What we actually ended up doing was the exact opposite: committing American taxpayers to permanent, blind support of an ungovernable, unregulatable, hyperconcentrated new financial system that exacerbates the greed and inequality that caused the crash, and forces Wall Street banks like Goldman Sachs and Citigroup to increase risk rather than reduce it. The result is one of those deals where one wrong decision early on blossoms into a lush nightmare of unintended consequences. We thought we were just letting a friend crash at the house for a few days; we ended up with a family of hillbillies who moved in forever, sleeping nine to a bed and building a meth lab on the front lawn.

It was never the intention of Washington to temporarily save the banks. The whole point was to continue on as if noting had happened. A giant reset button as it were. No fixes, no regulations, nothing. But everything back the way it was and continue this fascist, fraud that has been perpetrated on the American people. The whole thing was a scam. They lied about the health of the banks. They lied about the bail outs being temporary. They lied about the bonuses. Everything.

But this should not surprise anyone. As Oliver Stone points out in his series Untold History of the United States – and as anyone who has read anything by Howard Zinn would know – Washington has been lying to us all along. From the beginning of the industrial revolution at least.

All to keep Wall Street and corporate America in the green. The same fine folks who were supporting Nazi Germany, Fascist Italy and Franko’s Spanish armies with oil, weapons, steel and vehicles prior to and even after our entry into WWII.

There are those who think we have become fascist. Personally I think we always were. It’s just more obvious now and the propaganda more intense.

Someone we should all look up to. Uruguay’s President Jose Mujica

12:39 pm in Uncategorized by cmaukonen

He has been dubbed by the media as the “Poorest President in the World”. He lives a very austere life by comparison to other world leaders. On a farm outside the capital and his greatest possession is an old VW bug. He donates 90% of his salary as president to charity.

Can you imagine Obama or Romney or any of out past presidents choosing to live such a life ? Or the leaders of France or Great Briton or Germany or Russia or Iran or Greece or Spain ? And yet we look up to these folks who lead us.

“I’m called ‘the poorest president’, but I don’t feel poor. Poor people are those who only work to try to keep an expensive lifestyle, and always want more and more,” he says.

“This is a matter of freedom. If you don’t have many possessions then you don’t need to work all your life like a slave to sustain them, and therefore you have more time for yourself,” he says.

“I may appear to be an eccentric old man… But this is a free choice.”

The Uruguayan leader made a similar point when he addressed the Rio+20 summit in June this year: “We’ve been talking all afternoon about sustainable development. To get the masses out of poverty.

“But what are we thinking? Do we want the model of development and consumption of the rich countries? I ask you now: what would happen to this planet if Indians would have the same proportion of cars per household than Germans? How much oxygen would we have left?

“Does this planet have enough resources so seven or eight billion can have the same level of consumption and waste that today is seen in rich societies? It is this level of hyper-consumption that is harming our planet.”

Mujica accuses most world leaders of having a “blind obsession to achieve growth with consumption, as if the contrary would mean the end of the world”. – BBC

When this man truly lives a humble life. A life that we should want to emulate. A fellow who is very near Buddha-hood.

The American Fantasy Land

6:58 pm in Uncategorized by cmaukonen

Crossroads Fantasyland - dualdflipflop Flickr

One of the comments to a post by David Seaton was this quote by Bertrand Russell.

“In America everybody is of the opinion that he has no social superiors, since all men are equal, but he does not admit that he has no social inferiors, for, from the time of Jefferson onward, the doctrine that all men are equal applies only upwards, not downwards”.

We do not see ourselves in a realistic light but in the way we wish we were or hope to become.  This is true of racial relations, finances, politics…you name it. The so called American Exceptionalism.   This is evident int the tax proposal of the president to except the first $250,000.00 of income from the tax hike. To same the Middle Class. But as Ted Rall points out in this column,  this is hardly middle class. More like the top 2% of earners.  Especially since the median income is $49,000.00. Bit of a difference, wouldn’t you say.

The problem is that these people do not see themselves as rich or part of the top 2% partially because a good number of them live well above their means as was pointed out in a story a while back of a college professor who said he did not feel rich. Then is was pointed out that his expenses were well above his income.

There is also a kind of snobbery that plays here as well. My mother who was a teacher for many years would say how her fellow teachers would vote republican because they were “professionals” even though a teachers salary was well below that of a steel worker. But they were “professionals” and not blue collar.  Of course teacher’s unions have changed that at bit in recent years.

And as Chris Hedges says, Americans are notorious at turning a blind eye to uncomfortable truths.   Like our justification of military involvement in other countries and how they will love being liberated by us. That we live in some post racial society simply because you don’t here the “N” word much any more.

We try to hide all these uncomfortable realities, mostly from ourselves like the fake town in Blazing Saddles.   And worst of all a lot of Americans believe the town is real.  That we are what we tell ourselves we are.  Our politicians preach these illusions and the media and Madison Av. sell them.  We build freeways around the cities so you don’t have to see the decay and force the homeless out so we can tell ourselves how economically just we are. And we claim to have a free market economy even though companies get hand outs from government and go belly up the minute military contracts get cancelled.

But this is nothing really new. Europe believe the same caricature of themselves as well. It took a world war to change this view.

Economy on a precipice

1:21 pm in Uncategorized by cmaukonen

Train Wreck - Flickr Creative Commons

Train Wreck - Flickr Creative Commons

Editor’s Note: Please avoid using overly long excerpts in MyFDL posts, just a few paragraphs maximum from any source. The excerpts here are excessive. -MyFDL Editor

 

We’ve all seem them. The iconic scenes of the train wreck or car wreck with the cars hanging off a cliff. Nobody dares move else they cause the whole thing to plummet into the abyss below. This is where the economy stands today according to Dr. Paul Craig Roberts in his current analysis.

And why nobody dare change the equation lest the whole thing comes apart at the seams. Why the FED has kept interest rates at zero or near zero for so long and dares not change this any time soon.

US banks also have a strong interest in preserving the status quo. They are holders of US Treasuries and potentially even larger holders. They can borrow from the Federal Reserve at zero interest rates and purchase 10-year Treasuries at 2%, thus earning a nominal profit of 2% to offset derivative losses. The banks can borrow dollars from the Fed for free and leverage them in derivative transactions.

As Nomi Prins puts it, the US banks don’t want to trade against themselves and their free source of funding by selling their bond holdings. Moreover, in the event of foreign flight from dollars, the Fed could boost the foreign demand for dollars by requiring foreign banks that want to operate in the US to increase their reserve amounts, which are dollar based. . . . . .

The very process of slowly getting out can bring the American house down. The BRICS–Brazil, the largest economy in South America, Russia, the nuclear armed and energy independent economy on which Western Europe ( Washington’s NATO puppets) are dependent for energy, India, nuclear armed and one of Asia’s two rising giants, China, nuclear armed, Washington’s largest creditor (except for the Fed), supplier of America’s manufactured and advanced technology products, and the new bogyman for the military-security complex’s next profitable cold war, and South Africa, the largest economy in Africa–are in the process of forming a new bank.

The new bank will permit the five large economies to conduct their trade without use of the US dollar.

In addition, Japan, an American puppet state since WW II, is on the verge of entering into an agreement with China in which the Japanese yen and the Chinese yuan will be directly exchanged. The trade between the two Asian countries would be conducted in their own currencies without the use of the US dollar. This reduces the cost of foreign trade between the two countries, because it eliminates payments for foreign exchange commissions to convert from yen and yuan into dollars and back into yen and yuan.
Moreover, this official explanation for the new direct relationship avoiding the US dollar is simply diplomacy speaking. The Japanese are hoping, like the Chinese, to get out of the practice of accumulating ever more dollars by having to park their trade surpluses in US Treasuries. The Japanese US puppet government hopes that the Washington hegemon does not require the Japanese government to nix the deal with China.

Now we have arrived at the nitty and gritty.

The small percentage of Americans who are aware and informed are puzzled why the banksters have escaped with their financial crimes without prosecution. The answer might be that the banks “too big to fail” are adjuncts of Washington and the Federal Reserve in maintaining the stability of the dollar and Treasury bond markets in the face of an untenable Fed policy.

In other words they are all in it together. Yes I know this in not news to most here but this relationship has a lot to do with why there has been little if any movement to get to the heart of the matter.
Let us first look at how the big banks can keep the interest rates on Treasuries low, below the rate of inflation, despite the constant increase in US debt as a percent of GDP–thus preserving the Treasury’s ability to service the debt. The imperiled banks too big to fail have a huge stake in low interest rates and the success of the Fed’s policy.

The big banks are positioned to make the Fed’s policy a success. JPMorganChase and other giant-sized banks can drive down Treasury interest rates and, thereby, drive up the prices of bonds, producing a rally, by selling Interest Rate Swaps (IRSwaps). A financial company that sells IRSwaps is selling an agreement to pay floating interest rates for fixed interest rates. The buyer is purchasing an agreement that requires him to pay a fixed rate of interest in exchange for receiving a floating rate.

The reason for a seller to take the short side of the IRSwap, that is, to pay a floating rate for a fixed rate, is his belief that rates are going to fall. Short-selling can make the rates fall, and thus drive up the prices of Treasuries. When this happens, as the charts at
http://www.marketoracle.co.uk/Article34819.html illustrate, there is a rally in the Treasury bond market that the presstitute financial media attributes to “flight to the safe haven of the US dollar and Treasury bonds.” In fact, the circumstantial evidence (see the charts in the link above) is that the swaps are sold by Wall Street whenever the Federal Reserve needs to prevent a rise in interest rates in order to protect its otherwise untenable policy.

The swap sales create the impression of a flight to the dollar, but no actual flight occurs. As the IRSwaps require no exchange of any principal or real asset, and are only a bet on interest rate movements, there is no limit to the volume of IRSwaps.

So it is in the interest of the banks to keep the interest rates low. And Paul also shows how this also benefits the government by making servicing the debt a whole lot easier and can in fact hide – to an extent – how big it really is.
He also goes into how the banks do naked short sales on gold and silver to keep themselves afloat in all of this. There by manipulating that market as well. Good work if you can get it.
But like all good scams it can easily unravel.
How long can the manipulations continue? When will the proverbial hit the fan?

If we knew precisely the date, we would be the next mega-billionaires.

Here are some of the catalysts waiting to ignite the conflagration that burns up the Treasury bond market and the US dollar:

A war, demanded by the Israeli government, with Iran, beginning with Syria, that disrupts the oil flow and thereby the stability of the Western economies or brings the US and its weak NATO puppets into armed conflict with Russia and China.

The oil spikes would degrade further the US and EU economies, but Wall Street would make money on the trades.

An unfavorable economic statistic that wakes up investors as to the true state of the US economy, a statistic that the presstitute media cannot deflect.

An affront to China, whose government decides that knocking the US down a few pegs into third world status is worth a trillion dollars.

More derivate mistakes, such as JPMorganChase’s recent one, that send the US financial system again reeling and reminds us that nothing has changed.
The list is long. There is a limit to how many stupid mistakes and corrupt financial policies the rest of the world is willing to accept from the US. When that limit is reached, it is all over for “the world’s sole superpower” and for holders of dollar-denominated instruments.
. . . . .

Fed chairman Bernanke has spoken of an “exit strategy” and said that when inflation threatens, he can prevent the inflation by taking the money back out of the banking system. However, he can do that only by selling Treasury bonds, which means interest rates would rise. A rise in interest rates would threaten the derivative structure, cause bond losses, and raise the cost of both private and public debt service. In other words, to prevent inflation from debt monetization would bring on more immediate problems than inflation. Rather than collapse the system, wouldn’t the Fed be more likely to inflate away the massive debts?Eventually, inflation would erode the dollar’s purchasing power and use as the reserve currency, and the US government’s credit worthiness would waste away. However, the Fed, the politicians, and the financial gangsters would prefer a crisis later rather than sooner. Passing the sinking ship on to the next watch is preferable to going down with the ship oneself. As long as interest rate swaps can be used to boost Treasury bond prices, and as long as naked shorts of bullion can be used to keep silver and gold from rising in price, the false image of the US as a safe haven for investors can be perpetuated. 

However, the $230,000,000,000,000 in derivative bets by US banks might bring its own surprises. JPMorganChase has had to admit that its recently announced derivative loss of $2 billion is more than that. How much more remains to be seen. According to the Comptroller of the Currency the five largest banks hold 95.7% of all derivatives. The five banks holding $226 trillion in derivative bets are highly leveraged gamblers. For example, JPMorganChase has total assets of $1.8 trillion but holds $70 trillion in derivative bets, a ratio of $39 in derivative bets for every dollar of assets. Such a bank doesn’t have to lose very many bets before it is busted.

 

Assets, of course, are not risk-based capital. According to the Comptroller of the Currency report, as of December 31, 2011, JPMorganChase held $70.2 trillion in derivatives and only $136 billion in risk-based capital. In other words, the bank’s derivative bets are 516 times larger than the capital that covers the bets.

So if anyone moves, over the rocks she goes.Now for the sixty four dollar question ? How much does anyone know of this in Washington ? I’ll bet the next (secret) bail out that just about everyone knows. Even – and maybe especially – the tea party republicans. But no one is talking. Because if anyone lets the cat out of the bag, it tips over the train.

All this talk of austerity is simply a feeble attempt to keep the train from going over the side. And to make damn sure the dollar remains the reserve currency. So now we are at the point where we switch seats in the train every four years and try to make sure nobody goes forward or backward in the train.

 

Goverment explained….well almost.

2:34 pm in Uncategorized by cmaukonen

If your not totally confused after this little animated explanation……

 

Not in my life time….

3:10 pm in Uncategorized by cmaukonen

Storming of the Bastille (Duesseldorf version) -Flickr Creative Commons

Oh do I see so much rancor and vindictiveness here these days. Nearly as much for the current administration as the last. Ideologues and fanatics all in a tither with their tails in the air and oh so upset that their previous messiah has not turned out to be as they imagined.

Oh where have we seen this before. Historically in just about every chosen one.

With so many now convinced that if only they could get the right person elected or the citizens energized and as impassioned as they are, they can change the system instantly. Storm the gates of the Congress and demand…yes demand that they all resign and they WILL install a righteous and responsive government that WILL work for the people. And woo to he who says otherwise.

AIN’T GONNA HAPPEN.

Not until the engineers and middle management of places like IBM, DELL, Apple, Microsoft, Simmons,  Blue Cross, Motorola, Boeing, MacDonald Douglas, Lockheed Martin, Raytheon….- who are still doing very well thankyouverymuch – are in as bad a shape as the worst of the so called 99%.

Or the retirees in Florida and Arizona and California and Mississippi…..are about to lose the retirement and be out of their nice gated communities in the cold.

Or that you can get Blacks and Asians and Latinos and native Americans and Muslims….all rallying to you side.

These visions are just that. I think there are those who need to reexamine the history of previous revolutions. How long it took and how bad it had to get before the “masses” were willing to risk themselves and what they had to overturn the powers that be.

There is a saying we have in computerdom about systems and our current political and economic one is a perfect example.

Functions as designed.

So you can go and vote for who ever you want (or not) and be disappointed again (which you most assuredly will be) and pout and talk and and throw brick bats at the system which is corrupt and treacherous and duplicitous and all the rest or you can make things better for yourself and your neighbors. Having hissy fits over what you really have little control over does not help one bit.

As far as a revolution goes…forgetaboutit.