Aug 14

Today’s News 14th August 2018

  • Kim Dotcom Warns Of Economic Collapse – Says "Buy Gold And Bitcoin"

    Kim Dotcom (Kim Schmitz), a controversial internet pirate and cryptocurrency advocate, recently urged all 736k followers to immediately buy gold and Bitcoin because President Trump is sleepwalking into a tremendous fiscal collision.

    “1 TRILLION DOLLARS in additional US Govt debt PER YEAR!” warned Dotcom.

    “US spending is funded by lenders who will never get paid. US Empire will collapse followed by a worldwide economic collapse. http://usdebtclock.org,” he added.

    “Shift your USD into Gold & Bitcoin asap before USD becomes toilet paper.”

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    Dotcom began the warnings last week, which he said: “Trump was handed an Empire on life support,” and that “Top economists around the world agree that US debt is unsustainable. There is no sugar coating this. US Empire is broke. Prepare for collapse.”

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    On Sunday, Dotcom cited Russian Finance Minister Anton Siluanov in a recent interview who said the US Dollar is becoming an unreliable tool for payments in international trade. The minister did not rule out the possibility of using national currencies instead of the US Dollar in the oil trade.

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    About an hour later on Sunday morning, Dotcom tweeted again at his followers telling them about a simple hedging strategy (buy gold and bitcoin) against a potential economic crisis, which he believes could make the greenback worthless and result into a very “big crash” for markets.

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    While he did not reveal the reason(s) behind the economic collapse, his tweets are perhaps not out of line, given the fact that the federal government ran a monthly budget deficit of $77 billion in July, up 79 percent from prior year. For the first ten months of 2018, the shortfall totals $684 billion, according to the Treasury Department. That is about an increase of 21 percent compared to the same period in 2017.

    The exploding deficit has been primarily driven by Trump’s tax cuts, record military spending, and numerous other spending bills. Trump told the American people that tax cuts would lead to stronger economic growth, boost wages, deliver more tax revenue and reduce the deficit.

    While some of Trump’s statements could be true, real wage growth is being wiped out by inflation, and new evidence suggests that companies spent a majority of tax cuts on stock buybacks.

    The deficit is projected to hit $793 billion at the end of the year and approach $1 trillion in 2019. According to the latest Monthly Treasury Statement, interest payments to service the debt have hit a new high and are forecasted to become the fastest rising yearly expenditure.

    And lastly, we leave you with an excerpt from a recent note via Charles Gave of why the next economic crisis could already be here: 

    “So, if I take the US monetary base, and add to it the reserves deposited by foreign central banks at the Fed, I get my figure for the World Monetary Base. From this aggregate, I can get a rough idea of the pace of base money creation around the world, either through direct intervention by the Fed in the US banking system, or indirectly through US dollar accumulation by foreign central banks. When the WMB is growing, I can be relatively confident about the future nominal growth of the global economy. And when it’s contracting, it makes very good sense to worry about a recession.”

    As the chart above shows, the Monetary Base is now contracting. So based, on Gave’s four decades of experience in financial markets, it seems to him the world could be entering its “seventh international dollar liquidity crisis since 1973.” We took Gave’s research just one step further — and highlighted that the next crisis could have already started with Turkey’s Lira collapse.

  • UN Gives Unconditional 'Green Light' For Shifting "The Rescued" To Europe

    Via GEFIRA,

    The global establishment goes out of its way to increase the number of immigrants in Europe. If the governments of particular states such as Hungary, Poland or now Italy oppose these activities, they are internationally marginalized. And if an action goes counter to the plans of international organizations, they are trying to come up with new legal interpretations that will be binding on the parties concerned. All of which is only possible because the EU member countries have relinquished their sovereignty and transferred it to international institutions.

    The Italian authorities, which are increasingly strongly opposed to the pressure from the UN and non-governmental organizations, are effectively counteracting the stream of African immigrants. Thus Italy ceases to be the main migratory route to Europe, which is not accepted by the NGOs or international institutions. Still, events from the end of July related to the Italian ship Asseo Ventotto, as described below, make migration from Europe legal and even desirable.

    In recent years it was Italy that has accepted most of the refugees. The new government has decided to take more decisive steps to stop this process. The first measure was the gradual closure of ports to non-governmental organizations transporting “refugees”. The second is to send undocumented immigrants back to Africa.

    The resolve of the Italian authorities have triggered attacks by non-governmental organizations that have hailed the government’s representatives as fascists, simply because they want to pursue the will of voters and restrict immigration. 3)both the UN and the EU question the legality of Rome’s actions. The Italian-Libyan cooperation is also under international pressure because it aims to redirect the refugees heading for Italy to Libya. The European Court of Human Rights has submitted the procedures for the prevention of migration in the Mediterranean to scrutiny.

    The event from last month provides a precedent. On 30th of July, the Asso Ventotto, a ship owned by Augusta Offshore, the Italian oil and gas production company, picked up, only 6.4 km from Libyan territorial waters, a dinghy with more than a hundred immigrants, which was required by the maritime law. Acting on the advice of the Libyan Coast Guard, the Asso Ventotto crew transported the rescued to the nearest port, i.e. to Tripoli. It was like throwing down the gauntlet to non-governmental organizations such as Amnesty International, Sea-Watch or activists of Proactiva Open Arms, which suggested that the safest place for survivors would be Europe.

    UN diplomats couldn’t agree more. The United Nations High Commissioner for Refugees, Filippo Grandi, stated on Twitter that the transfer of survivors to countries where human rights might be violated may constitute a violation of international standards. Thus, according to Grandi, immigrants which were picked up near Libyan territorial waters should be transported to countries where they will find a safe haven, to Italy, Greece or Spain, rather than to Libya, which is recognized by both the UN and the EU as a country dangerous for the survivors.

    The government in Rome, however, indicates that Italy is not responsible for the fate of fleeing Africans who are not in Italian territorial waters. Such an attitude, however, does not appeal to world diplomats. Considering the fact that the UN and the EU single-handedly define a list of dangerous states, the above situation opens the ground for a new interpretation of international law. In the light of it, the UN agenda may give the green light to non-governmental organizations to pick up “refugees” from international waters and transport them to Europe as well as impose an obligation on all ships, including private ones, to transport immigrants not to the nearest but to the safest ports, never mind the cost of the shipment or the interrupted works. Closing ports to ships carrying immigrants will also be banned.

    The Gefira Foundation has already proven that international institutions are seeking to manage the migration flow and they maintain that this movement of people is “unavoidable, desirable and necessary”. We expect the Italian government to continue to oppose the recommendations of global organizations, which will probably entail its isolation on the European political stage. The steps taken by the authorities in Rome will cause African smugglers to move from Libya to Morocco. The short distance from the Black Continent and the moral support from the UN and the EU will turn Spain into an ideal destination instead of Italy. Thus, the Iberian Peninsula will become the largest window for immigrants who want to get to Europe.

  • China Steps Up Live-Fire Naval Exercises On "Enemy" Targets

    China has been stepping up its maritime combat readiness, according to analysts responding to official reports that the People’s Liberation Army (PLA) had staged at least three naval drills over the past week. 

    On Monday, the Southern Theatre Command acknowledged over social media that a frigate fleet had recently performed drills – including simulated anti-submarine attacks and live-fire exercises, aimed at putting PLA forces through increasingly complex and realistic training scenarios. 

    The command, which is one of five such units established by President Xi Jinping to represent China’s five strategic locations, did not disclose the locations of the exercises, but its area of responsibility encompasses the disputed South China Sea.

    The images published online appeared to show at least five frigates and two helicopters taking part in the drills. –SCMP

    Xinhua news reported on Saturday that over 10 warships from three theatre commands participated in a large-scale missile and air defense exercise in the East China Sea. Anti-air attack missiles were fired from two corvettes – the Meizhou and the Tongren, to intercept simulated “enemy” targets, while serving under the command of guided missile frigate Jingzhou – which observed and gathered data. 

    The third drill took place in the Yellow Sea between Friday and Monday, according to China’s Maritime Safety Administration – which did not release any more data than the location. 

    Some observers have speculated that the exercise may have included China’s first domestically produced aircraft carrier – the Type 001A, due to the drill’s proximity to Quingdao – the ship’s home port in the eastern China province of Shandong. 

    The exercises come amid a growing trade war between Washington and Beijing – as well as China’s turbulent relations with Taiwan. On Sunday, Taiwan President Stai Ing-wen embarked on a nine-day trip to Belize and Paraguay – two of just 18 nations which still maintain diplomatic ties with the island nation. 

    Military experts said that the PLA drills were intended as a show of strength to both the United States and pro-independence forces in Taiwan, which Beijing regards as a breakaway province. –SCMP

    “The anti-air and anti-missile exercises in the East China Sea are intended to ensure a safe environment for China’s aircraft carriers, which means an aircraft combat group is preparing to go further out to sea,” said military observer Song Zhongping, who added “It sends a very clear signal to Taiwan’s independence forces and deters any intervention into Taiwan affairs by the US or Japan.”

    Meanwhile, military commenter Li Jie said that in the event off armed conflict between Beijing and Taipei, the East China Sea would be a primary battleground. Jie said that Beijing would not sit idly if it thought it was being provoked in the region. 

    “Although Sino-Japanese relations have warmed recently, China is still very suspicious of Japan’s military development and needs to prepare,” he said.

    Japan’s defence ministry is reported to have requested US$160 million to pay for new long-range missiles in response to the growing military threat in East Asia. –SCMP

    Beijing military expert Zhou Chenming added that the three drills were designed to test China’s naval capabilities following a sweeping program of military restructuring and modernization. 

    “Through the drills that replicate war scenarios, military authorities can better understand whether the navy needs more equipment, and also test the compatibility of its old and new weapons,” he said, adding “Most importantly, it can see whether the [navy’s] combat capability has been strengthened or not.”

  • Washington's Rebuff Of Russia's Cooperation Request In Syria Shows Its Cynicism

    Authored by Andrew Korybko via Oriental Review,

    The head of the Russian Armed Forces General Staff Valery Gerasimov asked his closest American counterpart Joseph Dunford to assist his country in jointly stabilizing Syria.

    Gen. Joe Dunford (left) and Gen. Valery Gerasimov (right), Helsinki, Finland, June 8, 2018

    Reuters reported that the proposal to cooperate on the repatriation of refugees and reconstruction projects in the Arab Republic was met with an “icy reception” by US decision makers, though this could have been expected considering that Washington had previously said that any assistance that it might provide to the government-controlled areas of Syria would be tied to the implementation of UNSC 2254’s constitutional reform and new elections.

    Furthermore, President Assad declared in late June that his government wouldn’t accept reconstruction funds from the same countries that contributed to destroying his own, though if the leaked details of Gerasimov’s message to Dunford are to be believed, then Russia’s assessment is that Damascus “lacks the equipment, fuel, other material, and funding needed to rebuild the country in order to accept refugee returns”, hence the reason for reaching out to the US.

    While there were high hopes that Presidents Putin and Trump might have reached an understanding on Syria during last month’s Helsinki Summit, it appears as though expectations might be dashed after this latest setback.

    The US veritably has an interest in focusing its reconstruction efforts and post-war development projects on the Kurdish-controlled proxy state in the northeastern agriculturally and energy-rich corner of the country that it’s already deployed roughly two thousand troops to, so there’s a certain logic to rebuffing the latest Russian offer. Even though the Kurds and Damascus have reportedly entered into talks with one another, this is unlikely to lead to the dissolution of the US’ protectorate and will probably find a way to “formalize” it through mutually acceptable “compromises” that figure into the ongoing constitutional reform process.

    Although the leaking of Gerasimov’s proposal to Dunford was probably done by Trump’s “deep state” enemies in a desperate attempt to undermine what they may have feared was the President’s “secret deal” with Putin, it inadvertently harms the US’ soft power standing because it confirms that America doesn’t really care about the welfare of the Syrian people or the return of refugees from the region and beyond in spite of its repeated statements to the contrary over the years.

    Making humanitarian and developmental assistance conditional on political factors is Machiavellian to the core but unsurprising to those who have a solid understanding of the cynicism behind American strategic planning. It’s also proof that the US is indirectly weaponizing refugees and developmental assistance in order to advance its objectives, something that its supporters have always denied but which is now undebatable.

  • Russell Napier: "Turkey Will Be The Largest EM Default Of All Time"

    Submitted by Russell Napier of ERIC

    Regular readers of the Fortnightly will know that The Solid Ground has long forecast a major debt default in Turkey. More specifically, the forecast remains that the country will impose capital controls enforcing a near total loss of US$500bn of credit assets held by the global financial system. That is a large financial hole in a still highly leveraged system. That scale of loss will surpass the scale of loss suffered by the creditors of Bear Stearns and while Lehman’s did have liabilities of US$619bn, it has paid more than US$100bn to its unsecured creditors alone since its bankruptcy.

    It is the nature of EM lending that there is little in the way of liquid assets to realize; they are predominantly denominated in a currency different from the liability, and also title has to be pursued through the local legal system. Turkey will almost certainly be the largest EM default of all time, should it resort to capital controls as your analyst expects, but it could also be the largest bankruptcy of all time given the difficulty of its creditors in recovering any assets. So the events of last Friday represent only the end of the beginning for Turkey. The true nature of the scale of its default and the global impacts of that default are very much still to come.

    Strong form capital controls produce a de facto debt moratorium, and very rapidly investors realize just how little their credit assets are worth. A de jure debt moratorium at the outbreak of The Great War in 1914 bankrupted almost the entire European banking system – it was saved by mass government intervention. While the imposition of capital controls in recent years has hit selected investors hard, in Iceland, Cyprus, Greece and key emerging markets, there has been nothing of this size and it is to be fully borne by financial institutions who believe they hold not just valuable credit assets but actually liquid credit assets! The loss of hundreds of billions of assets recently considered liquid by global financial institutions, through the de facto debt moratorium of capital controls, will be a huge shock to the global financial system. This is a different type of default and its nature, as well as its magnitude, will blindside financial institutions.

    Be in no doubt that President Erdogan has more than something of the Chavez about him. Surely we have learned, through bitter experience, that relying on discounted cash flow calculations in Excel spreadsheets is a meaningless form of analysis when a Chavez stalks the land. It really is time to put aside the spreadsheet and start thinking. To those still clinging to the security blanket of the spreadsheet, I say yet again that there is more in heaven and earth than is thought of in such binary sophistry.

    History is full of those whose ability to pay is well measured, even to more than one decimal place, but who chose not to repay their obligations. To steal once again from Hamlet, ‘one may smile, and smile, and be a villain’, and you can’t capture that in a spreadsheet. Shakespeare understood and dramatized more about human behaviour than perhaps anyone who has ever lived and it is likely he did so without even realising that the decimal point existed. (John Napier had only recently introduced it to the British Isles).

    For many years your analyst has discussed the ability of Turkey and other emerging markets to service their debt obligations. In almost all cases I have simply agreed to differ with emerging market debt teams on this issue of the ability to pay. The scale of the foreign currency debt burdens and the history of default at such high levels indicates likely defaults while the spreadsheet for each individual issuer, apparently, indicates that risks of default are minimal.

    I see the wood and EM debt investors see the trees and time will tell which type of arboreal scrutiny is the correct approach on establishing the ability to pay. Then, after that full and frank exchange of views, I have sought to raise the issue of the willingness to pay. Few, if any, have been prepared to engage in such a discussion. In a world of discount rates and cash-flows, the ability to pay and the willingness to pay are the same thing and they are enshrined in the spreadsheet. These numbers gain a sanctity that flows naturally for those with a business school education. Yet history is littered with numerous examples of those who could pay but have chosen not to pay, and a historian who points out these facts commits apostasy in the eyes of the keepers of the spreadsheets.

    Historically many have chosen not to pay because the socio-economic pain of paying has been considered too great. For a country with large foreign currency debt, in particular, a mass sale of local assets to foreigners or a crushing recession delivering a major current account surplus are the only ways to repay excessive levels of such debt. These two options are rarely compatible with re-election for politicians and are seen by the populace as sacrificing local livelihoods for the benefit of foreign financial predators. There is a blind and not touching faith from analysts educated in a stable political regime with a long history of a strong rule of law to believe that the ability to pay and the willingness to pay are the same thing. This monoculture amongst professional investors is about to cost their clients dear.

    Throughout history default is often chosen as the least bad option, and indeed just such an option is recommended by Paul Krugman in the New York Times this Saturday. It’s not just a Noble Prize winning economist who is recommending the capital control/default option as the IMF followed a similar path in their Greek bailout programme. The Solid Ground has regularly drawn attention to a paper put before the board of the IMF in early 2016 recommending a return to ‘capital flow management’ as a legitimate policy tool for governments.

    One wonders why investors expect President Erdogan, a man who has referred to them as like the loan sharks who enslaved the Ottoman Empire, to choose to repay the foreigner and accept the crushing socio-political cost on the local population of doing so? Even if Turkish institutions have the ability to pay, something your analyst has long doubted, the President will forbid them from doing so. This is a large default and it will prove to be almost a total default.

    It matters and, of course, it may be politically expedient for others to follow the advice of Paul Krugman and the IMF and choose not to repay their debt obligations to foreigners. This is the new normal. In a world where ten years of extreme monetary policy has failed to inflate away debts, it will become increasingly common to repudiate those debts. Those under the most pressure will be those with the highest levels of foreign currency debt where inflation can play no role in reducing increasingly crushing debt burdens – almost exclusively emerging markets.

    For the past few years professional investors have fretted about the implications of something widely referred to as ‘populism’. This, it seems, is a developed world phenomenon. While others see populism, all your analyst sees are sovereign peoples trying to bring power back to their elected representatives. This is a movement to strip power from multi-national organisations (the EU, WTO), multi-national corporations, independent central banks and any other body that has stripped sovereignty from elected representatives over the past three decades. That is an exercise in democracy that may well be bad for returns on, and of, capital but it is a constitutional swing within the rule of law.

    It is difficult to define this shift back towards a more representative democracy as populism, whatever you many think of the repercussions for your portfolio. I realise that many readers will disagree, but in the developed world the barbarians are really not at the gate. Things are entirely different in emerging markets.

    True populism is when political representatives, elected or otherwise, subvert the rule of law. Investors, focused as they are on the sanctity of the spreadsheet, often forget that the sacred numbers have no meaning if there is a breakdown in the rule of law and thus your right to collect your coupons, dividends and ultimately your principal. So while the fretting about so-called ‘ populism’ in the developed world continues, investors choose to ignore the retreat of the rule of law and the rise of the rule of man across the emerging markets – Turkey, Romania, Hungary, Poland, China, the Philippines, Mexico – to name just a few of the countries where the laws that protect the cash flows in those spreadsheets are likely waning as rule by man waxes.

    The move by Turkey to repudiate de facto its debt obligations will reveal the truth about populism: it is red in tooth and claw in emerging markets because it is there that title to assets and their cash flows have limited constitutional protection. That is the existential risk to capital from true populism while, in the developed world, a much longer less dramatic tussle is fought by democratically elected institutions to reassert their power of influence and control. That will also have profound impacts upon returns for investors (see Capital Management in An Age of Repression, 3Q 2016) but those impacts are entirely different from the populism in emerging markets that will see the rule of law subverted by the strong men. Utilising the authority of the IMF and Paul Krugman to default on their debt obligations is one of the easiest ways in which the strong men defend their own positions, seemingly protect their peoples and show their independence from foreign influence.

    No developed country is likely to produce a Hugo Chavez, but investors in selected EMs will de dealing with Hugo’s ghost for many years to come. Events in Turkey in the days and weeks ahead will finally expose the nature of emerging market risks in jurisdictions where there is no strong protection from a constitution to protect either citizens or capital. A major and rapid re-evaluation of EM risk is now on the cards with negative impacts for EM exchange rates and asset prices and ultimately, through a higher cost of capital, global growth.

    As subscribers are aware, there are numerous much wider implications from the Turkish default. One of the most important is the pressure on the USD/RMB exchange rate that the Fortnightly has focused on for most of this summer. China has lowered its interest rates and permitted its exchange rate to decline in a way that any central banker would do; that is any central banker without an exchange rate target. If it looks like a duck and quacks like a duck then it is probably a duck, and the declining RMB, as a result of a decline in RMB interest rates, looks and quacks more like the duck of independent monetary policy every day.

    This managed exchange rate has been at the very core of global monetary policy for over two decades. It has produced an excessive growth in RMB and a matching excessive purchase of US treasuries by the PBOC. The impact has thus been to boost Chinese nominal GDP growth and also boost US and global growth by depressing the level of the global risk-free rate – the yield on US treasuries. Boosting growth and reducing discount rates is the double nirvana that produces higher equity prices. In the 3Q Quarterly Report, The Solid Ground will focus on the huge ramifications from the end of that relationship being probably the most important breakdown in the structure of the global monetary system.

    In the meantime, events in Turkey will send the USD ever higher, as EMs seek to repay their foreign currency debt and scramble to buy the USD to do so. In a very strong USD world the weakness of the RMB will be revealed as not just a temporary, perhaps cyclical, phenomenon but as the structural change that augurs a new global monetary system. As suggested in the last Fortnightly, investors should watch commodity prices in general and copper prices in particular to assess whether the net impact from the untethering of the RMB from the USD is reflationary or deflationary.

    Clearly in a world of growing EM default/repudiation and lower EM growth, China will have to pull the monetary levers even more dramatically if it is to reflate the world. China’s move looks increasingly like it has come too late to take the world smoothly to the much higher inflation that is necessary to reduce the world’s excessive debt burdens. For a time at least, repudiation and not inflation will dominate the outlook for investors, particularly those in emerging markets.

    For the past few years your analyst has focused on the structural changes to the global monetary system and warned that a focus on cyclical forces alone is an increasingly dangerous sport. As events in Turkey play out at a time of still incredibly low, developed-world interest rates, it is time to ask again how wise it is to pursue the returns of a normal cycle as the foundations of the global monetary system are shifting under your feet.

    For the first year of publication of The Solid Ground Fortnightly the prelude to each missive was a quote from the Nobel Laureate Bob Dylan. Finally your author bowed to public pressure and dropped the Dylan deluge, but the time has come again to plunder the great man’s work. Sometimes it’s not a cycle, it’s something more than that; as it was, at least socially, when Bob Dylan explained the consequences of ignoring structural shifts in January 1964:

    Come gather ’round people
    Wherever you roam
    And admit that the waters
    Around you have grown,
    And accept it that soon
    You’ll be drenched to the bone.
    If your time to you
    Is worth savin’,
    Then you better start swimmin’
    Or you’ll sink like a stone
    For the times they are a-changin’.

    The Times They Are A-Changin’ (Bob Dylan)

     

  • Google Is Constantly Tracking, Even If You Turn Off Device 'Location History'

    Perhaps it should come as no surprise that Google is actually tracking you even when you switch your device settings to Location History “off”. 

    As journalist Mark Ames comments in response to a new Associated Press story exposing Google’s ability to track people at all times even when they explicitly tell Google not to via iPhone and Android settings, “The Pentagon invented the internet to be the perfect global surveillance/counterinsurgency machine. Surveillance is baked into the internet’s DNA.”

    In but the latest in a continuing saga of big tech tracking and surveillance stories which should serve to convince us all we are living in the beginning phases of a Minority Report style tracking and pansophical “pre-crime” system, it’s now confirmed that the world’s most powerful tech company and search tool will always find a way to keep your location data.

    The Associated Press sought the help of Princeton researchers to prove that while Google is clear and upfront about giving App users the ability to turn off or “pause” Location History on their devices, there are other hidden means through which it retains the data.

    According to the AP report:

    Google says that will prevent the company from remembering where you’ve been. Google’s support page on the subject states: “You can turn off Location History at any time. With Location History off, the places you go are no longer stored.”

    That isn’t true. Even with Location History paused, some Google apps automatically store time-stamped location data without asking.

    For example, Google stores a snapshot of where you are when you merely open its Maps app. Automatic daily weather updates on Android phones pinpoint roughly where you are. And some searches that have nothing to do with location, like “chocolate chip cookies,” or “kids science kits,” pinpoint your precise latitude and longitude — accurate to the square foot — and save it to your Google account.

    The issue directly affects around two billion people using Google’s Android operating software and iPhone users relying on Google maps or a simple search.

    Among the computer science researchers at Princeton conducting the tests is Jonathan Mayer, who told the AP, “If you’re going to allow users to turn off something called ‘Location History,’ then all the places where you maintain location history should be turned off,” and added, “That seems like a pretty straightforward position to have.”

    Google, for its part, is defending the software and privacy tracking settings, saying the company has been perfectly clear and has not violated privacy ethics. 

    “There are a number of different ways that Google may use location to improve people’s experience, including: Location History, Web and App Activity, and through device-level Location Services,” a Google statement to the AP reads. “We provide clear descriptions of these tools, and robust controls so people can turn them on or off, and delete their histories at any time.”

    According to the AP, there is a way to prevent Google from storing the various location marker and metadata collection possibilities, but it’s somewhat hidden and painstaking.

    Google’s own description on how to do this as a result of the AP inquiry is as follows:

    To stop Google from saving these location markers, the company says, users can turn off another setting, one that does not specifically reference location information. Called “Web and App Activity” and enabled by default, that setting stores a variety of information from Google apps and websites to your Google account.

    When paused, it will prevent activity on any device from being saved to your account. But leaving “Web & App Activity” on and turning “Location History” off only prevents Google from adding your movements to the “timeline,” its visualization of your daily travels. It does not stop Google’s collection of other location markers.

    You can delete these location markers by hand, but it’s a painstaking process since you have to select them individually, unless you want to delete all of your stored activity.

    Of course, the more constant location data obviously means more advertising profits and further revenue possibilities for Google and its clients, so we fully expect future hidden tracking loopholes to possibly come to light. 

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    Beginning in 2014, Google has utilized user location histories to allow advertisers to track the effectiveness of online ads at driving foot traffic. With the continued possibility of real-time tracking to generate billions of dollars, it should come as no surprise that Google would seek to make it as difficult (or perhaps impossible?) as it can for users to ensure they aren’t tracked.

    As for the government, we can only imagine the creative surveillance “fun” Washington’s 16+ intelligence agencies are having with such a powerful tool right now. 

  • Robot Powered By Raspberry Pi Finds Waldo In 4.5 Seconds

    When the history books are written after the robot uprising, should we survive, a sad chapter will be devoted to the day humans were bested at yet another simple feat by one of our silicon overlords; finding Waldo.

    According to The Verge, creative agency Redpepper has created There’s Waldo – robotic metal arm made by Ufactory with a Vision Camera Kit and a floppy prosthetic hand attached to it, all powered by a tiny Raspberry Pi computer.

    The camera takes a photo of the page, which then uses OpenCV to find the possible Waldo faces in the photo. The faces are then sent to be analyzed by Google’s AutoML Vision service, which has been trained on photos of Waldo. If the robot determines a match with 95 percent confidence or higher, it’ll point to all the Waldos it can find on the page. –The Verge

    Google’s Cloud AutoML, available since January, allows users to train their own AI tools without prior coding knowledge using a drag-and-drop tool for image recognition purposes. The tool can be trained for a variety of cases, such as categorizing photos. 

    Redpepper creative technologist Matt Reed told The Verge via email: “I got all of the Waldo training images from Google Image Search; 62 distinct Waldo heads and 45 Waldo heads plus body. I thought that wouldn’t be enough data to build a strong model but it gives surprisingly good predictions on Waldos that weren’t in the original training set.”

    Reed was inspired by Amazon Rekognition’s ability to recognize celebrities, and wanted to experiment on a similar system which supported cartoons. He had no prior experience with AutoML, and it took him about a week to code the robot in Python. –The Verge

     What will robots take the fun out of next? 

  • Technocrats Rule: Democracy Is 'OK' As Long As The People Rubberstamp Our Leadership

    Authored by Charles Hugh Smith via OfTwoMinds blog,

    Technocrats rule the world, East and West alike.

    We are in a very peculiar ideological and political place in which Democracy (oh sainted Democracy) is a very good thing, unless the voters reject the technocrat class’s leadership. Then the velvet gloves come off. From the perspective of the elites and their technocrat apparatchiks, elections have only one purpose: to rubberstamp their leadership.

    As a general rule, this is easily managed by spending hundreds of millions of dollars on advertising and bribes to the cartels and insider fiefdoms who pony up most of the cash.

    This is why incumbents win the vast majority of elections. Once in power, they issue the bribes and payoffs needed to guarantee funding next election cycle.

    The occasional incumbent who is voted out of office made one of two mistakes:

    1. He/she showed a very troubling bit of independence from the technocrat status quo, so a more orthodox candidate is selected to eliminate him/her.

    2. The incumbent forgot to put on a charade of “listening to my constituency” etc.

    If restive voters can’t be bamboozled into passively supporting the technocrat status quo with the usual propaganda, divide and conquer is the preferred strategy. Only voting for the technocrat class (of any party, it doesn’t really matter) will save us from the evil Other: Deplorables, socialists, commies, fascists, etc.

    In extreme cases where the masses confound the status quo by voting against the technocrat class (i.e. against globalization, financialization, Empire), then the elites/technocrats will punish them with austerity or a managed recession.The technocrat’s core ideology boils down to this:

    1. The masses are dangerously incapable of making wise decisions about anything, so we have to persuade them to do our bidding. Any dissent will be punished, marginalized, censored or shut down under some pretext of “protecting the public” or violation of some open-ended statute.

    2. To insure this happy outcome, we must use all the powers of propaganda, up to and including rigged statistics, bogus “facts” (official fake news can’t be fake news, etc.), divide and conquer, fear-mongering, misdirection and so on.

    3. We must relentlessly centralize all power, wealth and authority so the masses have no escape or independence left to threaten us. We must control everything, for their own good of course.

    4. Globalization must be presented not as a gargantuan fraud that has stripmined the planet and its inhabitants, but as the sole wellspring of endless, permanent prosperity.

    5. If the masses refuse to rubberstamp our leadership, they will be punished and told the source of their punishment is their rejection of globalization, financialization and Empire.

    Technocrats rule the world, East and West alike. My two favorite charts of the outcome of technocrats running things to suit their elite masters are:

    The state-cartel-crony-capitalist version: the top .1% skim the vast majority of the gains in income and wealth. Globalization, financialization and Empire sure do rack up impressive gains. Too bad they’re concentrated in the top 1.%.

    The state-crony-socialist version: the currency is destroyed, impoverishing everyone but the top .1% who transferred their wealth to Miami, London and Zurich long ago. Hmm, do you discern a pattern here in the elite-technocrat regime?

    Ideology is just a cover you slip over the machine to mask what’s really going on.

    *  *  *

    My new book Money and Work Unchained is now $6.95 for the Kindle ebook and $15 for the print edition. Read the first section for free in PDF format. If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

  • "Cashout": FBI Warns Of Imminent Global ATM Hack

    The FBI is warning of an “imminent” global cyberattack on ATM machines that could result in millions of dollars withdrawn from bank accounts far and wide, in a similar “cash-out” attack to one in 2009 which hit ATMs worldwide to the tune of $9 million. 

    “The FBI has obtained unspecified reporting indicating cyber criminals are planning to conduct a global Automated Teller Machine (ATM) cash-out scheme in the coming days, likely associated with an unknown card issuer breach and commonly referred to as an ‘unlimited operation’,” according to an FBI alert to banks that was obtained by noted cybersecurity expert Brian Krebs. 

    Krebs describes it as a “highly choreographed, global fraud scheme known as an “ATM cash-out,” in which crooks hack a bank or payment card processor and use cloned cards at cash machines around the world to fraudulently withdraw millions of dollars in just a few hours.” 

    “Historic compromises have included small-to-medium size financial institutions, likely due to less robust implementation of cyber security controls, budgets, or third-party vendor vulnerabilities. The FBI expects the ubiquity of this activity to continue or possibly increase in the near future,” the FBI statement reads. 

    In other words, financial institutions which haven’t upgraded to the latest and greatest in security measures are vulnerable to attack. And since banks will likely reimburse anyone affected by the breach, the FBI’s warning should particularly interest small-to-mid sized banks using outdated technology. 

    In July, two similar “unlimited operation” attacks resulted in losses of $2.4 million from the National Bank of Blacksburg according to Krebs, who broke the story. 

    In both cases, the attackers managed to phish someone working at the Blacksburg, Virginia-based small bank. From there, the intruders compromised systems the bank used to manage credits and debits to customer accounts.

    The 2016 unlimited operation against National Bank began Saturday, May 28, 2016 and continued through the following Monday. That particular Monday was Memorial Day, a federal holiday in the United States, meaning bank branches were closed for more than two days after the heist began. All told, the attackers managed to siphon almost $570,000 in the 2016 attack.

    The Blacksburg bank hackers struck again on Saturday, January 7, and by Monday Jan 9 had succeeded in withdrawing almost $2 million in another unlimited ATM cashout operation. –Krebs On Security

    Meanwhile, the FBI is advising banks on best security practices, such as two-factor authentication using physical or digital tokens, as well as beefed up password requirements. 

    The FBI issued a similar alert in 2009, after a “wave of thieves fanned out across the globe nearly simultaneously. With cloned or stolen debit cards in hand—and the PINs to go with them—they hit more than 2,100 money machines in at least 280 cities on three continents, in such countries as the U.S., Canada, Italy, Hong Kong, Japan, Estonia, Russia, and the Ukraine.”

    When it was all over—incredibly within 12 hours—the thieves walked off with a total of more than $9 million in cash. And that figure would’ve been more had the targeted ATMs not been drained of all their money.

    The alleged masterminds of this slick scheme—prosecutors charged earlier this month following an extensive FBI investigation assisted by other federal agencies and our partners around the globe—were three 20-something Eastern Europeans and an unnamed person called simply “Hacker 3.” –FBI (via archive.is)

    We’re sure the establishment’s cashless society will fix all these annoying vulnerabilities. 

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