Wednesday, August 27, 2014

CFR Suggests That Central Banks Print Money and Hand It Out Directly to Consumers

By Staff News & Analysis - August 27, 2014

It Begins: Council On Foreign Relations Proposes That "Central Banks Should Hand Consumers Cash Directly" ... A year ago, when it became abundantly clear that all of the Fed's attempts to boost the economy have failed, leading instead to a record divergence between the "1%" who were benefiting from the Fed's artificial inflation of financial assets ... and everyone else, we wrote that "Bernanke's Helicopter Is Warming Up." ... It's well past time, then, for U.S. policymakers -- as well as their counterparts in other developed countries -- to consider a version of [these] helicopter drops. In the short term, such cash transfers could jump-start the economy. Over the long term, they could reduce dependence on the banking system for growth and reverse the trend of rising inequality. The transfers wouldn't cause damaging inflation, and few doubt that they would work. The only real question is why no government has tried them. – Foreign Affairs at ZeroHedge

Dominant Social Theme: Give them all a living wage and do it now!

Free-Market Analysis: The high-profile website ZeroHedge caused a stir yesterday by presenting an article (see above) that appeared in the CFR's Foreign Affairs magazine.

The article called for the Federal Reserve to hand out money directly to consumers.


The article was of interest to us because of the bluntness of the remedy and also because it further advanced several elite dominant social themes that we've been analyzing for months.

As predicted, there is a new strategy at work, one that has now predictably included Foreign Affairs. The strategy involves the propagation of two memes: "income inequality" and its putative solution, the "universal basic income."

These memes are being proposed in the top news media around the country, as we've already shown, and now they are growing closer to actionable events. Foreign Affairs is a policy-making facility. Next stop? Perhaps the legislature itself.

They're moving fast – faster and faster. Occupy Wall Street was an elite-controlled populist movement that has seemingly fizzled. But it hasn't taken long to reconstitute the desired memes and reposition them as high-row economic concepts endorsed by "Nobel" laureates among others.

What's the desired outcome of all this? As near as we can tell, one intention was to distract people's attention from the dysfunction of monopoly central banking by blaming economic difficulties on the "one percent." Call this the "French Revolution" gambit.

But now the top elites that organize these promotions seem to have reversed course. Instead of distracting people from central banking, the idea now seems to be to glorify the mechanism.

Here's more from ZeroHedge:
Moments ago a stunning article appearing in the "Foreign Affairs" publication of the influential and policy-setting Council of Foreign Relations, titled "Print Less but Transfer More: Why Central Banks Should Give Money Directly to the People."

In it we read the now conventional admission of failure by Keynesians, who however, unwilling to actually admit they have been wrong, urge the even more conventional solution: do more of the same that has lead to the current financial cataclysm, only in this case the authors advocate no longer pretending that the traditional monetary channels work but to, literally, paradrop money.

To wit:

"To some extent, low inflation reflects intense competition in an increasingly globalized economy. But it also occurs when people and businesses are too hesitant to spend their money, which keeps unemployment high and wage growth low. In the eurozone, inflation has recently dropped perilously close to zero. And some countries, such as Portugal and Spain, may already be experiencing deflation. At best, the current policies are not working; at worst, they will lead to further instability and prolonged stagnation.

"Governments must do better. Rather than trying to spur private-sector spending through asset purchases or interest-rate changes, central banks, such as the Fed, should hand consumers cash directly. In practice, this policy could take the form of giving central banks the ability to hand their countries' tax-paying households a certain amount of money. The government could distribute cash equally to all households or, even better, aim for the bottom 80 percent of households in terms of income. Targeting those who earn the least would have two primary benefits. For one thing, lower-income households are more prone to consume, so they would provide a greater boost to spending. For another, the policy would offset rising income inequality."

This is pretty incredible stuff. We've always maintained that central banks will NEVER print money directly for individual consumers because to do so would be to reveal the mysterious motor at the heart of the modern economy. So what gives the Big Brains behind this central banking paradigm the idea that handing out money directly to consumers will somehow stimulate stagnant economies while palliating the lower classes that are apparently to be targeted for such a giveaway?

It's kinda, well ... crazy.

Do those suggesting this actually think that people will be satisfied with a relative pittance (no matter how generous) once they realize that those in control of the money apparatus can basically print trillions for themselves and their friends?

And what about others who don't receive a similar stipend? These individuals would probably be irritated that they are not qualifying and also increasingly upset about the banking mechanism itself – as it went to work, handing out money to lucky recipients.

The article reads more like a satire or parody than a serious suggestion. But we live in incredible times. The globalist crowd seems increasingly panicked by the Internet and how it has exposed internationalism generally and specific promotions as well.

Whether it is economic stagnation or a widening of the war on terror, people are increasingly skeptical that disastrous economic and military events are either accidental or inevitable. Increasingly a connection is being made between elite internationalism and the themes (and events) intended to push middle classes into giving up power and authority to globalist facilities.

Put it bluntly: The idea that Foreign Affairs writers and editors believe that freely handing out currency is going to strengthen the economy and solidify good will for the current central banking system is either naïve or sinister.

We arrive at the possibility of "sinister" because it appears to us that the globalists have perhaps given up on arriving at a more structured and rationalized internationalism via stealth. Instead, they are apparently moving forward with the age-old tools of economic ruin and military engagement.

Giving away currency would surely be another step toward destroying the modern system and setting the stage for a new one, presumably even more internationalist. Either way, this "trial balloon," if that is what it is, is surely not intended to achieve the real-world results its proponents are arguing for. We can't see it ending well.

Apparently, the remnants of Occupy Wall Street may be gearing up to propose a "debt jubilee" and perhaps this idea of a currency giveaway is supposed to find a place within the larger promotion. 

But if this is to be one of the "solutions" to the "income inequality" meme, it strikes us that those producing these promotions have virtually lost the plot.


We'll see how all this plays out in autumn. Interesting times.

S​ource ​: TheDailyBell

Tuesday, August 26, 2014

How The Coming Silver Price Bubble Will Develop - Ted Butler

On the other hand, with or absent manipulation, silver will always be money. It has been a millennial refuge for those seeking a safe harbor for their dying fiat currencies. A panic along that plain, IMO, would ignite silver's price and reach a magnitude far greater than just a "shortage."

We reported this yesterday, but didn't see any mention by Mr. Butler: Gold and Silver Futures Margins Lowered by CME
In the "past" the lowering of margin requirements has given an immediate bullish blip to prices, but not yet it seems.

Commodities / Gold and Silver 2014 Aug 26, 2014 - 06:07 PM GMT
Ted Butler writes: What is an asset bubble? An asset bubble occurs when a large number of buyers, normally not usually prone to speculate in an asset, bid the price of that asset much higher than underlying valuations would support, most often fueled by leverage or borrowed money. 

Typically, towards the terminal phase of the bubble the most compelling reason for continuing to buy the asset is due to the rising price itself, as all caution is thrown to the wind amid the collective belief that prices can only move higher still. Then, when the last possible speculator has purchased the asset, the inevitable occurs and the price of the asset collapses as previous buyers turn into sellers and attempt to get out. Since the formation of the bubble and its inevitable collapse are driven by the collective emotions of greed and fear, it is generally impossible to predict how long an asset bubble will persist and how high the price can climb, as well as the timing and extent of the subsequent collapse.

How do asset bubbles develop? Most often, an asset bubble develops when an undervalued asset which has a compelling investment story and there exists an overall financial environment of sufficient buying power, catches the collective interest of the crowd. For example, by the mid-2000's and after years of steady appreciation, residential real estate developed into an asset bubble amid the self-fulfilling cycle of continued gains and the availability of easy credit.

As far as great stories go, silver has the best potential story to develop into a bubble. First, there is little argument that it is among the most, if not the most undervalued asset of all by objective relative historical price comparison. In addition, it is at or below its primary cost of production, as evidenced in recent quarterly earnings reports. Remember, most bubbles start out with an asset that is undervalued – on this score silver more than qualifies as being undervalued.

Aside from extreme undervaluation, the silver story is multi-faceted. Silver is both an industrial metal and a primary investment asset, the net effect being that very little newly-produced silver is available for investment, perhaps only 10% of the one billion oz produced yearly (mine plus recycling), or 100 million oz annually. In dollar terms, at current prices that comes to less than $2 billion per year. There are two ways to look at that; the observation that there are countless individuals and investment funds capable of ponying up that entire amount on their own and the fact that $2 billion amounts to less than 30 cents on a per capita basis for the world's 7 billion inhabitants. Simply put, there is no other asset class which would require less buying to develop into a bubble than silver.

Apart from newly-produced silver available for investment, the amount of previously produced metal available for investment, or world inventories, is also shockingly low. As a result of a 65 year deficit consumption pattern that ended in 2005, world silver inventories have been depleted by 90% from the levels existing at the start of World War II. Today, only a little over one billion oz of metal in accepted bullion industrial form exists with perhaps another billion oz existing in coins and bars. In dollar terms, that comes to $20 to $40 billion, where most other asset classes (stocks, bonds, real estate and even gold) are measured in the many trillions of dollars. And please, never confuse what exists with what's available for purchase – only the owners of the small amount of silver that exists will determine at what price it is available.

The conclusion is simple – the asset requiring the least amount of buying to create a bubble is, automatically, the best candidate for developing into the biggest bubble. The fuel for any bubble is total (world) buying power versus the actual amount of an asset available for purchase. Previous, as well as prospective, bubbles in stocks, bonds and real estate grew to many trillions of dollars of total valuation. At $200 an ounce, all the silver in the world (bullion plus coins) would "only" amount to $400 billion, not even a rounding error to the total valuation of stocks, bonds, real estate and, even, gold. In other words, due to silver's current undervaluation and its shockingly small amount in existence, it has more room to the upside than any other asset class.

But I'm not done. Silver's unique dual role as a vital industrial material and primary investment asset creates a setup for something happening that has never occurred in any previous bubble. As and when sufficient physical investment buying develops in silver to drive prices significantly higher, the industrial consumers of silver, in everything from electrical and solar applications to medical and chemical applications, will likely be subject to delays in the customary delivery timelines of the metal. As is almost always the case, whenever industrial consumers of a commodity are deprived of timely deliveries, they resort to stockpiling that commodity as a remedy, further exacerbating delivery delays to other users.

Thus, the stage is set for something the world has never experienced previously – an asset bubble accompanied with an industrial shortage. The two greatest upward price forces known to man, an asset bubble and a genuine commodity shortage, appear set to combine in silver. Either one, alone, would have a profound impact on the price, but the combination seems both inevitable and almost impossible to contemplate in terms of how high the price of silver could be driven. And it's hard to see how intense investment buying wouldn't trip off industrial user attempted inventory stockpiling or vice versa; it doesn't matter which comes first.

Tying everything together, there is one and only one explanation for why silver is so undervalued and the asset bubble/industrial shortage hasn't occurred yet – the ongoing price manipulation on the COMEX. Massive amounts of paper contracts traded between two groups of large speculators (technical funds and commercials), measuring in the hundreds of millions of ounces and completely unrelated to the supply/demand fundamentals have set the price of silver. This COMEX price control is both the curse and the promise in that it not only explains the undervaluation, it will explain why it seems inevitable for an asset bubble/user shortage to develop.

Think of it this way – the asset with the greatest potential for becoming the biggest bubble ever had better have the greatest story ever as well.  And that is what the COMEX silver manipulation is – the key ingredient in the greatest investment potential score ever.  If silver wasn't manipulated how good would the story be? Absent manipulation, I wouldn't buy or hold silver because that would mean that free market forces were setting the price all along. In other words, if silver wasn't manipulated there would be scant reason to buy it in my eyes. If I wasn't convinced silver was manipulated, I can't see how I would have ever written this or anything about it in the past or could have become interested in it in the first place.

As painful as recent prices have been to existing holders because of the manipulation, without it there would be little chance for a price explosion at some point. The easiest major potential change in the silver price equation is for the manipulation to end, one way or another. And if history and logic win out, the silver manipulation must end, not the least because of the coming clash between paper and physical silver. Some call it the disconnect between paper derivatives contract on the COMEX and actual physical silver, but in reality the story is that COMEX futures contracts are very much connected to each other via the delivery mechanism.

The connection between paper and physical has been forged because the main COMEX futures speculators are only interested in trading paper futures contracts and not in trading physical metal. Technical funds have no desire to buy and sell real metal for full cash payment when they can deal in paper contracts for only 10% cash down because they are trading, not investing. The problem is that the trading between the technical funds and the commercials has become so large that it dwarfs real world silver supply/demand fundamentals and ends up setting the price of silver in violation of commodity law. I know that this perversion of the price-discovery process has existed for a long time, but it would be wrong to confuse longevity with permanence.

The fact is that while the COMEX paper market dominance has lorded over the real supply and demand fundamentals, the stage has been set for a physical asset bubble/industrial user panic event. I've become convinced that any prospective bubble in silver won't be driven by the aggressive buying of COMEX futures contracts, but only by physical buying. For one thing, the crooked CME and CFTC would never allow any group of traders to drive silver prices sharply higher by buying unlimited amounts of COMEX futures contracts. If the technical funds do buy big amounts of COMEX silver futures contracts (as was the case from June to mid-July), you can almost be certain that the CME and CFTC knew that those funds would be soon forced to sell on lower prices.

As a result, any bubble in silver must and will develop from physical investment buying. Surely, any industrial user inventory buying panic must involve immediate physical delivery and not a paper futures contract in a time of delivery delays and uncertainty. In fact, it is hard to imagine, as a silver bubble begins to develop, a greater urgency for holding only physical metal to intensify, due to a growing recognition that the COMEX manipulation was responsible for the former low price.

Since I am speaking in terms of a potential historic asset bubble in silver, I am implying that the price of silver will far exceed its true value at some point before correcting sharply. It is before that collapse point, that God-willing, I intend to sell. I am not deluding myself that I will come close except hoping not to be terribly early or late. While I respect anyone's reasons for buying and holding silver, my mission has always been to help end the manipulation and be done with silver after that was accomplished and reflected in the price.

This article is based on a commentary of Ted Butler's premium service at which contains the highest quality of gold and silver market analysis. Ted Butler is specialized in precious metals market analysis for over four decades.

Source -

© 2014 Copyright goldsilverworlds - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Investor Net Worth Drops To New All Time Low, NYSE Reveals

Submitted by Tyler Durden on 08/26/2014 15:25 -0400

​O​ne can debate whether or not margin debt as reported by the NYSE has any relevance in a world in which the retail investor is long gone, and where the marginal buyer are hedge funds (and primary dealers who use excess reserves as collateral for marginable derivatives and futures) who fund themselves using far more arcane "shadow" repo conduits as we have explained previously, it is indisputable that the leverage statistics disclosed monthly by New York Stock Exchange provide a useful glimpse into how the broader market is obtaining "dry powder" to keep BTFATH.

And while in July margin debt did dip modestly from near all time highs hit back in June when total margin debt was virtually tied with the previous record, at $464 billion, it was that other metric tracked by the NYSE, namely Investor Net Worth, calculated by subtracting margin debt from the notional represented in free credit cash accounts and credit balances in margin accounts, that was the notable highlight in the July report: at a negative $182.1 billion, a decline of $6.3 billion from the prior month, investor Net Worth has never been lower.

This happens to be a deficit which is more than twice as large as the net worth shortfall reached during the last market bubble, which hit ($79) billion, peaking during the quant freakout in the summer of 2007 and subsequently surging to a record high of $184.6 billion in August 2008, as repo desks closed all margin positions with virtually any and every counterparty, leaving everyone in a position of record high "net worth."

Does this, or anything else, matter in a market that is exclusively centrally-planned by the central banks and various HFT algos? We urge you to direct your questions, rhetorical as they may be, on this topic to either the NY Fed or its oftentime execution trading arm, Citadel.
Source: NYSE
​Via Zero Hedge

New Jersey Funneling Pension Fund Cash to Wall Street Investment Managers

Are others finding it just as bewildering as we do how the politicians can keep on stealing when we've learned so much with the internet? They are an in-your-face gang, for sure. Will 'enough' ever be really enough?

We have become totally per-occupied and distracted by the street police focus that we no longer recognize law enforcement where there isn't any.

Posted on August 26, 2014 by
By David Dayen, a lapsed blogger, now a freelance writer based in Los Angeles, CA. Follow him on Twitter @ddayen

David Sirota has carved out a much-needed niche lately by poking around in the unseemly deals between public pension funds and Wall Street predators, and he brings yet another scoop, this time in New Jersey:

Gov. Chris Christie's administration openly acknowledged that more New Jersey taxpayer dollars were going to land in the coffers of major financial institutions. It was 2010, and Christie had just installed a longtime private equity executive, Robert Grady, to manage the state's pension money. Grady promoted a plan to put more of those funds into riskier investments managed by Wall Street firms. Though this would entail higher fees, Grady said the strategy would "maximize returns while appropriately managing risk."

Four years later, New Jersey has secured only half the promised results. The state has sent more pension money to big-name Wall Street firms like Blackstone, Third Point, Omega Advisors, Elliott Associates and Grady's old firm, The Carlyle Group. Additionally, the amount of fees the state pays financial managers has more than tripled since Christie assumed office. New Jersey is now one of America's largest investors in hedge funds.

The "maximized returns" have yet to materialize… Had New Jersey's pension system simply matched the median rate of return, the state would have reaped roughly $3.8 billion more than it did between fiscal years 2011 and 2014, says pension consultant Chris Tobe.

The $939.8 million million in Wall Street fees from 2010-2013 are bad enough, especially for below-market returns, but the sheer riskiness of these bets, essentially letting fund managers gamble with public money, is truly nauseating. As Sirota points out, New Jersey has authorized over one-third of its pension funds to alternative investments, from hedge funds to private equity firms to venture capital funds. That is alarmingly high. Calpers, the largest pension fund in the country, has dropped their alternative investment stake to less than half that. These investments don't outperform the market, but they're great to grease the palms of the managers with fees. In this case, those managers happen to be ket backers of Chris Christie:

The above-average costs for New Jersey are a direct result of Christie administration officials moving more pension money to Wall Street firms. The management fees those firms charge are far more expensive than the fees for passive index funds and the costs associated with equities being managed by in-house pension staff. Investments with Wall Street managers comprise less than half of New Jersey's pension portfolio — but those investments' attendant fees account for 96 percent of the pension system's total overhead expenses, according to State Investment Council documents [...]

As previously reported by IBTimes, campaign finance records show that employees and others affiliated with firms managing New Jersey pension money made $167,000 worth of donations to New Jersey Republicans since 2009. Employees of those firms have also donated more than $11 million to the Republican Governors Association and the Republican National Committee.

Christie is the chairman of the RGA and both organizations spent heavily to support his 2013 reelection campaign.

This amounts to Christie funding his presidential ambitions with New Jerseyite's taxpayer money. He funnels that money to Wall Street managers, and they recycle a chunk of it back to him and his causes. As Sirota points out, the donations line up with when the firms got the contracts to manage the pension money. In one case, a contract went to the venture capital firm General Catalyst Group right after one of their partners made a $10,000 donation to the state Republican Party.

It's more than amusing seeing Orin Kramer try to justify these practices to Sirota. Kramer, the hedgie and former chair of the State Investment Council, ran the pension fund into the ground by dumping money into Lehman-related assets, leading to $115 million in losses. (We got a very fun phone call from Kramer the last time we had the temerity to mention that on this site, so keep your line open, Yves!)

The amount of back-patting and favor-making in New Jersey, done with public money, which all then justifies cutting the meager pensions of state employees, deserves a ton more scrutiny. So it's good that Sirota's been on the case.

Source nakedcapitalism

One State Can Lead the Charge

Are we but a nation of legislatures without statesmen? Then, let them stand and be counted.

At times, the federal government seems overwhelming. Frankly, it sometimes appears as an unstoppable juggernaut without any obstacle in its path. Undoubtedly, the scale of power assumed by the federal government has been immense. It has morphed from the stated purpose of a "more perfect union" to an unconstrained nationalist state.

Despite this perception, Judge Andrew Napolitano recently suggested that if a single state acted to obstruct federal mandates, it would make new federal gun laws "nearly impossible to enforce" within that state.

Napolitano's words are not based on theory, they have been definitively proven.

​The State of ​
Washington recently stood up to the federal government's anti-marijuana mandates in a direct way. After gathering the requisite amount of signatures in 2011, Washington passed Initiative 502 after a successful referendum on the November 2012 general ballot. This initiative is credited with spurring an 81% electoral turnout in Washington, the highest in the union. While the state retained regulatory power over marijuana usage, it turned its back on and intentionally disregarded federal restrictions toward the substance.

After observing Washington gather enough signatures for its referendum, Colorado followed suit in opposing federal drug prohibitions. Once started as a proposal in January 2012, the state passed a constitutional amendment to legalize marijuana usage after its own referendum on November 6, 2012. As a consequence, another state stood firmly against federal policy and produced an intentionally conflicting license to possess and use a substance banned by the federal government.

The actions of Washington and Colorado seem to have forced the hand of the union's capitol. At this point, the White House has conceded the use of its power to prosecute marijuana usage in these states. This development can only be attributed to the amount of resources the government would have to devote to this enforcement strategy, and the cooperation needed from state officials to pursue and secure convictions.

This phenomenon of successful resistance is not restricted to substance control.

In 2007, immediate controversy arose over the federal government's desire to issue identification card standards for the states. In doing so, the federal government was interested in making identification data uniform, requiring the states to adopt the same process to obtain an identification card, and linking state information databases.

The REAL ID Act, as it would be called, imposed a national standard by forcing the states to adopt uniform standards for their identification cards – or did it?

Maine responded by passing a resolution in 2007 that refused any type of REAL ID adoption in the state. Surely, Maine's legislature was warned by opponents who dreaded the thought of opposing the federal juggernaut. Leading the charge, Maine showed that one state can stand up against the iron will of the federal state.

When Maine stood up, Utah took notice. Utah passed a similar bill a month later. The Utah law noted that REAL ID is "in opposition to the Jeffersonian principles of individual liberty, free markets, and limited government." Since that time, 22 states passed similar bills and resolutions, creating additional opposition toward the national standard. Similar resolutions are pending in over a dozen additional states.

As a result, the REAL ID Act has been effectively neutered in much of the country. The federal government has not elected to devote its resources to enforce the mandate, sue the participating states, or send in the tanks as a result.

From these two examples, we can observe that a large part of the federal government's contemporary supremacy is reliant on the cooperation it receives from the states. Absent this cooperation, the federal government is not as fierce and imposing as it may seem.

Political philosopher and economist Hans-Hermann Hoppe realized this, noting:

"Without local enforcement, by compliant local authorities, the will of the central government is not much more than hot air."

Surely, our contemporary perception toward the federal government is at least partially because of the "built in" state cooperation that contributes to its power apparatus.

In The Federalist #46, Madison suggested shattering this type of cooperation through state barricades, which could be utilized to block unconstitutional and unpopular federal law. He wrote that "refusal to cooperate with officers of the union" would be a viable strategy, and said multiple states taking this approach would create "obstructions which the federal government would hardly be willing to encounter."

Madison did not suggest waiting for the federal courts to weigh in on controversial policy, either as a final hope or last resort.

Recent history suggests that when states invoke Madison's advice and refuse to cooperative, the ambitions of the federal government can be rendered impotent and ineffectual. Federal authority is not infallible or impervious.

The next time the federal government seems too powerful for imposing, or naysayers doubt the anti-commandeering doctrine or nullification strategy, consider the alternative. In these two recent instances, states have proven that the federal government simply cannot enforce all it wants to in the face of blatant opposition. The states that stood up first on these matters began the charge toward liberty.

Marco Rubio has ties with George Soros

Be sure to read the embedded links in this Marco Rubio article.  You will come away with a different idea of who is on our side.

More evidence that Marco Rubio is a trojan horse plant.

FedGov Entrapping States' Rights with Taxpayer Baited "Gift" Traps

With the weasels representing us in our state legislatures and law enforcement no one can fault the fedgov for throwing baited hooks over the gunwale. As a people our representatives have violated, disregarded, ignored, or just plain don't give a darn for obedience to their constitutional oaths to support and uphold. 

And, we're no smarter a people for condoning this unlawfulness. Even a newspaper dishonestly reports the "gift" to the city as "Free"! Wanna bet most readers will believe it rather than accurately report that Peter was robbed to pay Paul because emperor on high favored Paul for forcible federalization.

Who says it's not their money to give? Davey Crockett? This behavior was not a joke back then:

Just so the people that still think for themselves will know.

from AllGov

Tanks on the Streets? Police Required to Use Military Equipment within a Year or Return It

Tuesday, August 26, 2014

Mine Resistant Ambush Protected vehicle
belonging to Willimantic, Conn.
(population-17,700) police (AP Photo)
The militarization of America's police forces has been the result of federal policy that not only provides the means to give men-in-blue the same tools as combat soldiers, but in fact requires law enforcement to "use it or lose it" when it comes to military equipment.

Specifically, the Department of Defense's 1033 program—which funnels all kinds of military surplus goods to police—has a provision that clearly says that any participating law enforcement agency must use its equipment within one year of receiving it. If they don't, they have to give it up.

This from the state of Missouri's "application to participate" in 1033: "Property obtained under this SPO must be placed into use within one (1) year of receipt, unless the condition of the property renders it unusable, in which case the property can be returned to the nearest DLA Disposition Services Site. If property is not put into use by the LEA (law enforcement agency) within one (1) year, the State/LEA must coordinate a transfer of property to another LEA or request a turn-in to return the property to the nearest DLA Disposition Services Site."

Another problem with the Pentagon's decision to shower police forces with military hardware is that it's not accompanied by training, Amanda Taub noted at Vox.

Kara Dansky, a senior counsel at the American Civil Liberties Union, who wrote the organization's report on police militarization, told Taub she was unaware "of any training that the government provides in terms of use of the equipment," or of  "any oversight in terms of safeguards regarding the use of the equipment by the Defense Department."

While SWAT teams from large police departments train with their equipment regularly, small-town forces often don't have the resources to spare officers for such exercises. Thus, often the only time they use the surplus equipment is during an emergency.

-Noel Brinkerhoff

To Learn More:

Application to Participate (Department of Defense) (pdf)

Militarization of the Police…Ferguson Edition (by Noel Brinkerhoff, AllGov)

Monday, August 25, 2014

China To Launch Its Own OS, Defying NSA Spying & Microsoft

Could the Reds be coming to rescue us from our own corporatism & government spying?
US control over world computer operating systems being called in question in wake of NSA spying initiatives 

The Chinese government has made it official: it is launching a computer operating system to replace the likes of Microsoft Corporation (NASDAQ:MSFT) Windows, a move that was first indicated in a May ValueWalk report.

china operating system

China to launch computer operating system by October

Reuters is reporting that China's state-run media, People's Post and Telecommunications News, an official trade paper run by the Ministry of Industry and Information Technology (MIIT), is reporting the official development.

"We hope to launch a Chinese-made desktop operating system by October supporting app stores," Ni Guangnan, who heads an official Chinese operating system development alliance, was quoted in press reports as saying.

As ValueWalk reported in May, China banned government use of Microsoft's Windows 8 operating system, a move construed as being due to US National Security Agency spying.  In addition to Windows 8 being banned, Microsoft is the subject of an anti-trust investigation in China.

China has long been a troubling market for Microsoft. In 2011, for instance, former chief executive officer Steve Ballmer reportedly told employees in that year Microsoft earned less revenue in China than in the Netherlands, even though China's computer sales matched those of the US.  The reason given was due to computer piracy.  The new Windows 8 operating system is said to have more sophisticated tools that identify and track individual users with one goal to reduce software piracy.  For its part, last may the official Xinhua news agency said the ba was to ensure computer security after Microsoft Corporation  ended support for its Windows XP.

Apple creating new server configuration for Chinese customers

The moves in China appear to have a "tit for tat" motivation to various degrees.  While security from prying NSA eyes is obviously a concern, recent moves on both sides of the Pacific Ocean underscore the increasing importance China is placing on data security.  Nearly ten days ago, for instance, ValueWalk reported on Apple Inc. (NASDAQ:AAPL) Computer creating a server configuration for Chinese customers that was located in China.  In May the US Justice Department indicted five Chinese military officers on counts of extensive industrial espionage, much of which took place via computers.

The storage would include datagathered from cell phone usage, a key source of US National Security Agency spying.  Instead of storing data in the US, Apple Inc. would store user data on servers provided by China Telecom Corporation Limited (ADR) (NYSE:CHA) (HKG:0728) , China's largest wireless carrier, according to a statement from Apple.

Although a report said Apple attributed the move to an effort to "improve speed and reliability of its iCloud service," it is well known, as previously reported in ValueWalk, that NSA spying is a significant issue being considered worldwide and impacting the bottom lines of many tech giants.

The Reuters report noted that "mutual suspicions between China and the United States over hacking have escalated over the past year following revelations by Edward Snowden that U.S. intelligence planted 'backdoor' surveillance tools on US-made hardware." Other sources have indicated that foreign spy services were broadly aware of US electronic spy capabilities before the release of information by Edward Snowden.

​via ValueWalk​