Dec 19

Today’s News 19th December 2018

  • US Navy Contractors Hacked by China "More Than A Handful Of Times"

    Over the last 18 months, Chinese hackers breached several unidentified Navy contractors, stealing large amounts of data related to undersea warfare, including top-secret programs to develop supersonic anti-ship missiles for submarines, officials and experts said, triggering top-to-bottom review of cyber vulnerabilities for the Navy.

    Navy Secretary Richard Spencer recently requested a review to examine why the service and its contractors are continuing to get hacked by China.

    Officials told The Wall Street Journal that a classified initial assessment of the problem was delivered to Navy Secretary Spencer last week and provides appropriate countermeasures to thwart future cyber attacks.

    Navy officials declined to say how many cyber attacks occurred during the 18 months except to say that there were “more than a handful,” calling some of the cyber attacks “troubling and unacceptable.”

    “Attacks on our networks are not new, but attempts to steal critical information are increasing in both severity and sophistication,” Spencer wrote in an internal memo in October reviewed by the Journal.

    “We must act decisively to fully understand both the nature of these attacks and how to prevent further loss of vital military information.”

    Spencer’s memo excluded explicitly mentioning China, but officials told WSJ that China mostly does the hacking.

    On Friday, the Navy said Spencer’s memo “reflects the seriousness to which the [Navy] prioritizes cybersecurity in this era of renewed great power competition so that our Navy and Marine Corps warfighting team can sustain and improve our military advantage over any peer or competitor.”

    Even though China would struggle in a conventional war with the US, Navy officials said Beijing had already shown its muscles on the modern battlefield as it continues to launch cyber attacks on the US.

    “They are looking for our weak underbelly,” said a defense official. “An asymmetric way to engage the United States without ever having to fire a round.”

    Officials told WSJ that “cyber fingerprints pointing to China include the remote administering of malware from a computer address accidentally exposed as located in the island province of Hainan.”

    US officials also say they have classified sources that have ample evidence the attacks are directly linked to China.

    Tom Bossert, an ex-homeland security adviser to President Trump, said the “Chinese hack the U.S. military and other organizations for various reasons—sometimes to sabotage American systems, sometimes to gather intelligence and other times to gain a competitive advantage by stealing intellectual property.”

    “It’s extremely hard for the Defense Department to secure its own systems,” Bossert said. “It’s a matter of trust and hope to secure the systems of their contractors and subcontractors.”

    An intelligence official told WSJ that subcontractors employed by the military are severely lagging in cybersecurity and have been targeted by the Chinese. 

    “Senior Pentagon leaders view the military’s acquisition process as inadequately structured to hold contractors and subcontractors accountable for their cybersecurity,” officials said.

    Spencer’s memo coincides with a broader strategy by the Trump administration to label China as a thief of American intellectual property. 

    WSJ indicates that Navy contractors and subcontractors that have been hacked, are generally targeted by one Chinese government hacking unit, known as Temp.Periscope or Leviathan, that often deploys email phishing schemes to break inside secured networks. 

    The hacking group has been active since at least 2013 and has focused mostly on targeting Western governments and their militaries. 

    Ben Read, senior manager for cyber espionage analysis at FireEye, said that Temp.Periscope has been one of the top hacking groups in China targeting American maritime interests. 

    The group has targeted ” entities that may be strategically significant to Chinese interests in the South China Sea, including Cambodian political organizations,” Read said.

    So, how many more hacks will Washington tolerate until President Trump snaps and punishes Beijing with even more tariffs while sending an even greater US military presence in the South China Sea?

    As a reminder, NATO recently declared that a major cyber attack on one of its members could be grounds for a declaration of war.

  • Why Did Google Choose Now To Remove "Don't Be Evil" Clause from Its Code Of Conduct?

    Authored by Meadow Clark via Daisy Luther’s Organic Prepper blog,

    Google used to have an iconic clause in its code of conduct that said, “Don’t be evil.” Yet the clause was recently and quietly sent down the memory hole…

    Given the recent House Judiciary Committee hearing involving Google CEO Sundar Pichai to testify on issues like the secretive Dragonfly project that would install a special censorship search engine for Chinese citizens…it’s a little creepy.

    Did Google symbolically peel off its last visage of propriety when it dropped its don’t-be-evil clause?

    Gizmodo reported in May that the “don’t be evil” concept went through a metamorphosis:

    Google’s unofficial motto has long been the simple phrase “don’t be evil.” But that’s over, according to the code of conduct that Google distributes to its employees. The phrase was removed sometime in late April or early May, archives hosted by the Wayback Machine show.

    “Don’t be evil” has been part of the company’s corporate code of conduct since 2000. When Google was reorganized under a new parent company, Alphabet, in 2015, Alphabet assumed a slightly adjusted version of the motto, “do the right thing.” However, Google retained its original “don’t be evil” language until the past several weeks. The phrase has been deeply incorporated into Google’s company culture—so much so that a version of the phrase has served as the wifi password on the shuttles that Google uses to ferry its employees to its Mountain View headquarters, sources told Gizmodo.

    Side Note: Alphabet Inc created a sister subsidiary to Google called Waymo that has launched its self-driving cars in Arizona as we speak.

    Here is what the old code of ethics looked like:

    “Don’t be evil.” Googlers generally apply those words to how we serve our users. But “Don’t be evil” is much more than that. Yes, it’s about providing our users unbiased access to information, focusing on their needs and giving them the best products and services that we can. But it’s also about doing the right thing more generally – following the law, acting honorably, and treating co-workers with courtesy and respect.

    The Google Code of Conduct is one of the ways we put “Don’t be evil” into practice. It’s built around the recognition that everything we do in connection with our work at Google will be, and should be, measured against the highest possible standards of ethical business conduct….

    The “don’t be evil” concept was one of the standards that appealed to potential employees. Yet, it was met with its own critics for being vague and hypocritical. Define evil, Google – define it!

    The updated version, however, is eerily sterile, and reads:

    The Google Code of Conduct is one of the ways we put Google’s values into practice.

    Not very inspiring. Evil dictators have values, too, what of it?

    The Google Monopoly

    Maybe it’s just too hard to stay clean when you’re the biggest search engine in the world, controlling 92% of global search traffic whereas the next two largest search engines, Bing and Yahoo, have only 2% each of traffic.

    Google owns 8 services that each have 1 billion users:

    • Google search engine
    • YouTube
    • Chrome browser
    • Google Maps
    • Drive
    • Android
    • Google Play

    The timing is Interesting

    The Independent UK reported in May:

    The updated code of conduct comes as artificial intelligence researchers call for Google to abandon a project developing AI technology for the military.

    Google’s refusal to cut ties with the US military led to the resignation of around a dozen employees from the company, who cited ethical concerns and warned that autonomous weapons directly contradicted the firm’s famous ‘Don’t be evil’ motto.

    In a letter signed by more than 3,100 Google employees last month, the workers stated: “We believe that Google should not be in the business of war… We cannot outsource the moral responsibility of our technologies to third parties,” referring to the company’s involvement in a controversial Pentagon program called Project Maven.

    Project Maven would use AI and machines to track and identify objects using drones for the Department of Defense.

    Ever since, Google has been embroiled in scandal after scandal and has had it has its hands in just about every pie imaginable.

    “In August, Google was reported to be tracking its users’ locations even when location services were switched off.,” reported BBC.

    Namely, Project Dragonfly, tracking users, data collection, security breaches and potentially biased filtering practices in its search engine.

    “Google collects an amount of info about its users that would make even the NSA blush,” said Chairman Bob Goodlatte at the recent congressional hearing. “I think it’s fair to say most Americans have no idea the sheer volume of data being collected.

    “It’s time to take back your data from Google and Facebook’s server farms”

    Giri Sreenivas wrote a compelling op-ed for The Guardian speaking out against the actions of Big Tech. He had hopes that Google CEO Sundar Pichai would at least be held to count for Project Dragonfly as much as Yahoo was for aiding and abetting the Chinese government with private data that led to the arrests of two journalists for dissent.

    Nope. Pichai was never lambasted even though Dragonfly’s completion would mean a similar imprisonment scenario except on a mass scale.

    Full disclosure: Sreenivas is the CEO of Helm which lets users host email and other data on a personal server. More on that below.

    Sreenivas reported some things I hadn’t previously known about Dragonfly:

    Codenamed Project Dragonfly, the search engine would come with a bevy of features attractive to any autocracy: specific keywords like “human rights” could be blocked, searches would be linked to personal phone numbers, data servers located in China would be open to inspection at any time. Dragonfly would even allow the government to change weather and air pollution data to downplay the toxicity in its cities.

    There would be no requirement to notify users of how their data is being used or by whom, nor any barrier to Google handing over personal data when requested, as Yahoo did more than a decade ago. In explaining the company’s motives, Pichai said Google had to explore China “given how important the market is and how many users there are”.

    “These tech companies have gone on long enough,” he said.

    Sreenivas wants a decentralized internet.

    By giving up that data when needed, Big Tech can continue amassing and monetizing it, he reasons. He argues for a decentralized Internet.

    Then he offers this gem:

    We’ve outsourced this moral decision-making to the companies themselves. It’s them that we trust to say “we’ll cooperate with this government but not with this one”[…]

    Yes, why is Big Tech thumbing their nose at the government of its home base but kowtowing to other governments who are actively violating the human rights of their people? Meanwhile, while our data is being siphoned off, there is talk about how Google deserves “free speech” to do as it will with its search engine algorithms. If Google is to be treated as a human being, then what other human beings could get away with these violations?

    *  *  *

    What can we do to protect our privacy from Big Tech?

    Sreenivas offers these more private options:

    Private Apps

    • Signal – an alternative to Facebook Messenger and Google Hangouts
    • Telegram – another messaging alternative

    Private Browsers

    Then he suggests that people can build their own email servers if they know how, in order to avoid Gmail or Yahoo. Of course, that’s exactly what his company, Helm, helps people do.

    In addition, be sure to check out Daisy’s list of alternative social media and video options.

  • The Latest Facebook Scandal: Netflix, Spotify Could Read Private Messages, Yandex Was Given IDs

    Facebook has been giving some of the world’s largest technology companies – more than 150 of them, far more intrusive access to users’ personal data than it has ever disclosed according to an investigation by the New York Times. The Times interviewed over 60 people including current and former employees of Facebook and its partners, former government officials and privacy advocates – and reviewed over 270 pages of Facebook’s internal documents while performing technical tests and analysis to monitor what data Facebook has been handing out like candy. 

    The records, generated in 2017 by the company’s internal system for tracking partnerships, provide the most complete picture yet of the social network’s data-sharing practices. They also underscore how personal data has become the most prized commodity of the digital age, traded on a vast scale by some of the most powerful companies in Silicon Valley and beyond. –NYT

    The discovery goes far beyond the Cambridge Analytica data harvesting scandal in which basic data was collected on up to 87 million users through a lifestyle survey app. Thanks to the United States having no general consumer privacy law, up to 400 million people’s private information was freely shared with the likes of Google, Microsoft, Netflix, Spotify and other partners – and they didn’t sell it; Facebook gave everyone’s information away for free throughout the tech community in order to foster industry relationships and advance their own interests. 

    The exchange was intended to benefit everyone. Pushing for explosive growth, Facebook got more users, lifting its advertising revenue. Partner companies acquired features to make their products more attractive. Facebook users connected with friends across different devices and websites. But Facebook also assumed extraordinary power over the personal information of its 2.2 billion users — control it has wielded with little transparency or outside oversight. –NYT

    The company allowed Microsoft’s Bing search engine to see the names of virtually all Facebook users’ friends without their consent. 

    Netflix and Spotify were given the ability to read and delete Facebook users’ private messages. 

    Facebook also allowed Spotify, Netflix and the Royal Bank of Canada to read, write and delete users’ private messages, and to see all participants on a thread — privileges that appeared to go beyond what the companies needed to integrate Facebook into their systems, the records show. –NYT

    Both Netflix and Spotify claim they had no idea they had such broad capabilities, while a Royal Bank of Canada spokesman denied that the bank had any such access. 

    Amazon was granted access to users’ names and contact information through their friends, while Yahoo! was able to view streams of friends’ posts as recently as this summer despite Facebook promising that it had stopped this type of sharing years earlier. 

    What’s more? China’s Huawei and Russian search giant Yandex – accused last year by Ukraine of funneling user data to the Kremlin – had access to Facebook’s unique user IDs.

    Facebook records show Yandex had access in 2017 to Facebook’s unique user IDs even after the social network stopped sharing them with other applications, citing privacy risks. A spokeswoman for Yandex, which was accused last year by Ukraine’s security service of funneling its user data to the Kremlin, said the company was unaware of the access and did not know why Facebook had allowed it to continue. She added that the Ukrainian allegations “have no merit.” –NYT

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    In April, reeling from the Cambridge Analytica scandal, Facebook CEO Mark Zuckerberg promised lawmakers that people “have complete control” over their information on Facebook. Except it looks like certain “partners” were able to access user data anyway. 

    In all, the deals described in the documents benefited more than 150 companies — most of them tech businesses, including online retailers and entertainment sites, but also automakers and media organizations. Their applications sought the data of hundreds of millions of people a month, the records show. The deals, the oldest of which date to 2010, were all active in 2017. Some were still in effect this year. –NYT

    Facebook was able to circumvent a 2011 consent agreement with the Federal Trade Commission (FTC) which barred the company from sharing user data without explicit permission, because Facebook considered the partners extensions of itself – “service providers that allowed users to interact with their Facebook friends.” This allowed the company to grant such unprecedented access to everyone’s information. The partners were reportedly prohibited from using the personal information from purposes outside the scope of their agreement, however there has been little to no oversight. 

    According to Facebook, most of its data partnerships fall under an exemption to the F.T.C. agreement. The company argues that the partner companies are service providers — companies that use the data only “for and at the direction of” Facebook and function as an extension of the social network.

    …

    Pam Dixon, executive director of the World Privacy Forum, a nonprofit privacy research group, said that Facebook would have little power over what happens to users’ information after sharing it broadly. “It travels,” Ms. Dixon said. “It could be customized. It could be fed into an algorithm and decisions could be made about you based on that data.” –NYT

    “This is just giving third parties permission to harvest data without you being informed of it or giving consent to it,” said former FTC consumer protection bureau chief David Vladeck. “I don’t understand how this unconsented-to data harvesting can at all be justified under the consent decree.”

    “I don’t believe it is legitimate to enter into data-sharing partnerships where there is not prior informed consent from the user,” said Roger McNamee, an early investor in Facebook. “No one should trust Facebook until they change their business model.” –NYT

    Facebook began forming data partnerships as a relatively young company, as Zuckerberg and crew sought to deeply integrate the social media network into other sites and platforms in order to stay relevant and stoke growth. Each corporate partner that used Facebook data helped drive the company’s expansion by onboarding new users, which drove up advertising revenue. At the same time, Facebook was collecting data from its partners on users as well. 

    According to two mid-level employees, Facebook had entered into so many partnerships by 2013 that it could hardly keep track of them. In order to manage the agreements, a tool was built which turned the special data access on and off, while also keeping records on what were internally referred to as “capabilities,” or the level of special privileges which allowed companies to obtain data.

    Among the revelations was that Facebook obtained data from multiple partners for a controversial friend-suggestion tool called “People You May Know.”

    The feature, introduced in 2008, continues even though some Facebook users have objected to it, unsettled by its knowledge of their real-world relationships. Gizmodo and other news outlets have reported cases of the tool’s recommending friend connections between patients of the same psychiatrist, estranged family members, and a harasser and his victim.

    Facebook, in turn, used contact lists from the partners, including Amazon, Yahoo and the Chinese company Huawei — which has been flagged as a security threat by American intelligence officials — to gain deeper insight into people’s relationships and suggest more connections, the records show. –NYT

    Some of the data shared was limited to non-identifying information with research firms, however agreements with around a dozen companies raised several privacy concerns – including companies which had the ability to see users’ contact information through their Facebook friends, even after the company said in 2014 that it had stripped all applications of that ability. 

    As of 2017, Sony, Microsoft, Amazon and others could obtain users’ email addresses through their friends. –NYT

    In 2011, Facebook was investigated by the FTC over what they called “instant personalization,” by which the company changed the privacy settings of their 400 million users in 2009 to make their information available to all of the internet, before sharing that information “including users’ locations and religious and political leanings with Microsoft and other partners.” 

    The FTC called the privacy changes a “deceptive practice,” after which Facebook stopped mentioning the instant personalization feature in public, and entered the consent agreement with the federal agency. 

    Under the decree, the social network introduced a “comprehensive privacy program” charged with reviewing new products and features. It was initially overseen by two chief privacy officers, their lofty title an apparent sign of Facebook’s commitment. The company also hired PricewaterhouseCoopers to assess its privacy practices every two years.

    But the privacy program faced some internal resistance from the start, according to four former Facebook employees with direct knowledge of the company’s efforts. Some engineers and executives, they said, considered the privacy reviews an impediment to quick innovation and growth. And the core team responsible for coordinating the reviews — numbering about a dozen people by 2016 — was moved around within Facebook’s sprawling organization, sending mixed signals about how seriously the company took it, the ex-employees said. –NYT

    Of note, many of Facebook’s data sharing partnerships were not subject to privacy program reviews according to two former employees. Executives simply trusted that their partners would adhere to Facebook’s data policies, while company officials say that the level of review “depended on the specific partnership and the time it was created.” 

    In 2014, Facebook ended instant personalization and walled off access to friends’ information. But in a previously unreported agreement, the social network’s engineers continued allowing Bing; Pandora, the music streaming service; and Rotten Tomatoes, the movie and television review site, access to much of the data they had gotten for the discontinued feature. Bing had access to the information through last year, the records show, and the two other companies did as of late summer, according to tests by The Times. –NYT

    Both Pandora and Rotten Tomatoes also claim they had no idea they had such vast information at their fingertips. Microsoft, meanwhile, says that Bing used the data to build profiles of Facebook users for “feature development” within Microsoft services, and not for advertising. The company says it has since deleted the data. 

    Facebook claims that the data sharing didn’t violate users’ privacy because it only allowed access to public data (including private messages?). Others have called into question whether or not the FTC is even doing its job. 

    “There has been an endless barrage of how Facebook has ignored users’ privacy settings, and we truly believed that in 2011 we had solved this problem,” said Marc Rotenberg – head of the Electronic Privacy Information Center which filed one of the first privacy complaints against Facebook. “We brought Facebook under the regulatory authority of the F.T.C. after a tremendous amount of work. The F.T.C. has failed to act.“

  • Japan Cites "Severity And Uncertainty" Of China Threat In Seeking Aircraft Carriers

    Japan has announced that for the first time since World War II it is seeking aircraft carriers as part of a massive 5-year $242-billion military overhaul, primarily to counter what it perceives as a growing China threat, which is about $17.8 billion more than in an earlier defense budget.

    Defense officials unveiled plans on Tuesday to refit its Izumo-class warships to carry US-designed F-35B fighter jets, an advanced stealth fighter it hopes to purchase over forty of within the next decade, which have short takeoff and vertical landing capabilities.

    Japan’s Izumo-class helicopter carrier, via Reuters

    The stealth fighters will be deployable aboard two of Japan’s largest ships, the JS Izumo and JS Kaga, which as flat-top ships more than 800 feet long and displacing 27,000 tons, can accommodate multiple fixed-wing aircraft and helicopters. The ambitious defense overhaul, called the National Defense Program Guideline, was approved by Japan’s parliament on Tuesday and cited the “severity and uncertainty” of challenges with regional great power China, which are “increasing with extremely high speed.”

    The approved defense guideline further emphasized close US-Japanese strategic relations, which it described as “more important than ever for our national security,” and authorized Japan to actively support American military operations in the region. Japanese law was recently updated to allow its military to give logistical aid to US forces, and is now expanded to protecting US vessels and aircraft.

    Readiness against the advancing technical capabilities of China were also noted in the defense guideline, which cited “Rapid expansion of new areas, such as space, cyber and electromagnetic waves, is fundamentally changing the ideal state of national security, which had placed importance on dealing with physical areas such as land, sea and air.”

    In media statements, Chief Cabinet Secretary Yoshihide Suga cited regional threats on Tuesday while outlining the plan: “Under the drastically changing security environment around Japan, the government will take all possible measures to protect the lives and assets of Japanese people.” 

    Defense officials also noted frequent foreign military activity in the East China Sea and western Pacific Ocean. And just this week Russia announced that it is continuing build-up on a series of islands claimed by Japan, which Moscow calls the Kuril Islands. 

    Japan is now ahead of the UK as the biggest non-US buyer of the stealth fighter F-35 jets produced by Lockheed Martin.

    Currently there are only two Japanese airbases which can be used by conventional fighter jets: Naha Air Base and the Maritime Self-Defense Force base on Iwo Jima. This has left Japanese military planners feeling unprepared as waters in the region grow hotter, especially in light of increased US-China confrontations and the potential for a wider confrontation. 

    A defense officials told the AFP that new ships and fighter jets are set to “increase operational flexibility” for the military in terms of protecting remote Japanese islands, specifically in the southern waters. “We have a very, very small [military] footprint” in the area between Okinawa and Taiwan, the official said. Japan has denied that it’s seeking “full-fledged aircraft carriers,” noting instead, “We are not creating carrier air wings or carrier air squadrons” like the US Navy, but that its future F-35B squadron would be primarily stationed on land.

    Meanwhile, Prime Minister Shinzo Abe has lately signaled Japan’s readiness to abandon its 20th pacifism which was part of the terms of its defeat after WWII, citing emerging “threats” from China and North Korea. This has new orientation has been manifest in the controversial procurement and testing of Tomahawk cruise missiles purchased from the US, which has angered nearby powers Russia and China. 

  • "Saudi Arabia Is Going Bankrupt" Taleb Exclaims After Seeing Kingdom's Latest Budget

    In all the noise surrounding the latest market moves, political news and frenzy over tomorrow’s Fed rate hike (or pause), an important development was missed by many when Saudi Arabia released its budget for 2019 earlier on Tuesday, which at 1.106 trillion riyals, or $295 billion – the largest in the kingdom’s on record – represents a 7% increase from 1.030 trillion in 2018.

    During the unveiling of the budget, Saudi King Salman said his country will continue paying public sector cost-of-living allowances for citizens and will boost spending to stimulate growth even as Saudi Arabia toils to close its deficit, which it won’t do yet again as the kingdom forecasts a 6th consecutive budget deficit in a row, estimated to hit $35 billion in 2019.

    “We are determined to go ahead with economic reform, achieving fiscal discipline, improving transparency and empowering private sector,” the King said.

    While state-funded Saudi “generosity” to keep its citizens happy – and not, say, thinking radical, revolutionary thoughts – is well known, analysts believe the continued cost-of-living allowances, first established in January 2018 and estimated by officials to cost more than $13 billion, are intended to stimulate sluggish growth but mostly shore up support for the royal family and Crown Prince Mohammed bin Salman after a controversy-ridden few months.

    The royal allowances of 1,000 riyals a month ($266) are paid to civil servants and military personnel, and other allowances will continue for pensioners and those living on social security. Riyadh will also increase student benefits by 10 percent for the next fiscal year, the king announced.

    There is just one problem: for Saudi Arabia to be able to meet its projected revenue and fund these generous payments it will need oil prices to rise higher. Much higher.

    Looking at the details of the budget, a few troubling details emerge: revenue is forecast to hit 975 billion riyals while total spending will rise 7% to 1.106 trillion riyals, resulting in a 131 budget deficit, or 4.2% of GDP (nearly double the size of Italy’s projected deficit, if still quite smaller than the US deficit) as GDP is expected to grow from 2.3% in 2018 to 2.6% in 2019.

    And while the government expects non-oil revenue to increase from 287 billion riyals in 2018 to 313 billion in 2019, the big question mark is what happens with oil revenue. According to the budget, Saudi Arabia expects oil revenues to grow nearly 10% from 607 billion riyals in 2018 to 662 billion in 2019, it is the assumptions embedded in this revenue forecast that are, well, concerning.

    To hit 662 billion riyals in oil revenue, or $177 billion, up from $162 billion in 2018, Saudi Arabia expects near record oil output of 10.2 mmb/d sold at a price of $80/barrel, while Saudi Aramco won’t increase its allocations to the government. For reference, Brent settled just above $56 today, which means that oil has to rise at least 40% for the Saudi budget revenue assumption to be hit. Brent would have to rise an additional $15 to $95 a barrel for the kingdom to balance its budget deficit according to Bloomberg chief Middle East economist Ziad Daoud.

    As a reference, analysts expect Brent in 2019 to trade around $73 a barrel, a number which may be rather aggressive considering the recent plunge in the commodity, largely the result of continued excess output coupled with declining demand from China and other key markets.

    Even with these aggressive assumptions, which see Saudi Arabia oil revenue rising to a five-year high, the Kingdom will still post its sixth-straight budget deficit.

    Last year, Saudi Arabia based its 2018 budget on crude averaging $63 a barrel, $17 below the latest forecast even as its OPEC-defecting neighbor, Qatar, assumed $55 per barrel in its budget forecast released last week.

    So what happens if oil refuses to levitate to the desired price? As Bloomberg’s Javier Blas notes, “Saudi Arabia will need to take on further debt, spend its petro-dollar reserves or, at some point, introduce again austerity (as it was forced to do in 2015-2016).”

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    It goes without saying that Saudi Arabia’s bullish call is the latest sign that the kingdom expects its efforts to corral OPEC members and its allies to cut production next year will support prices. On the other hand, any more Qatar-style defections, and the Saudi budget will not only be busted, but Saudi Arabia will end up taking on a lot more debt, which means it will be at the mercy of global creditors.

    And while one can see an optimistic scenario in which everything goes as Saudi Arabia has planned, Nassim Taleb is not so sure, with a rather simple assessment: “Saudi Arabia is going to go bankrupt.“

    Perhaps not just yet: according to the budget, public debt is expected to rise to 678 billion riyals or 21.7% of GDP, hardly an insurmountable number although, as noted above, it’s not the stock but the flow, and Taleb may well be right if Saudi Arabia’s traditional bankers decide to boycott the Kingdom, preventing it from gaining access to global capital markets, Taleb’s dour assessment may well be right.

  • Your Biometrics: Silent Witnesses Against You And Tools To Track You

    Jeremiah Johnson (nom de plume of a retired Green Beret of the United States Army Special Forces) via SHTFplan.com,

    Another week has gone by where we have seen a tremendous amount of activity around the world: the French, Belgians, and Dutch are engaged in protests labeled “yellow vest” protests. In actuality, the yellow vests are insignificant: these Euro-Socialist countries require citizens to wear yellow vests in public for protests…for “safety” reasons. Actually it is so that center mass is easier to acquire by their paramilitary police forces. There is a good possibility of a major war escalating from current problems between Ukraine and the separatist provinces of Luhansk and Donetsk. The U.S. phony economy is not doing well.

    Quietly and almost unnoticed by the beeves of the American populace are the biometric measures for surveillance and tracking being emplaced by the United States with the cooperation of major corporations. I have written articles on the biometric scanners being used in an Atlanta airport, and that Chicago is following suit, along with Delta using these biometric data collection scanners prior to boarding flights in Los Angeles.

    A new article surfaced this week that you need to read. Entitled “FBI plans ‘Rapid DNA’ network for quick database checks on arrestees,” by Tom Jackman on December 13, released by the Washington [Com]Post.

    This is very serious, indeed. Here’s an excerpt:

    Though DNA has revolutionized modern crime fighting, the clues it may hold are not revealed quickly. Samples of saliva, or skin, or semen are sent to a crime lab by car (or mail), and then chemists get to work. Detectives are accustomed to waiting days or weeks, or longer, for the results. Some labs are so backed up, they take only the most serious crimes. Some samples are never tested.  But a portable machine about the size of a large desktop printer is changing that. A “Rapid DNA” machine can analyze the DNA in a swab and produce a profile of 20 specific loci on the DNA strand in less than two hours. Some local police departments and prosecutors have been using Rapid DNA machines for about five years to solve crimes.

    How “procedurally harmless” this may sound on the surface, people, there is something that is not mentioned.

    With those machines, they will be able to stow them in vehicles… for use door-to-door.

    If you think for an instant the State is not going to clamp down on us, think again. What is the best way to deal with unfunded liabilities and the rising, unstoppable debt? Make it disappear (via an EMP…Electromagnetic Pulse…attack), and start a war (external, or internal, labeled “civil unrest”). Look at what just happened in New Jersey. They declared magazines with a capacity of more than 10 rounds illegal, and they just may search houses for them. Look what happened in Boulder, Colorado…where residents have until Dec. 27, 2018 to register their firearms with the Boulder Police Department.

    Registration is the preliminary step before confiscation: they need to know who owns the guns and where they are kept.

    This DNA and biometric-gathering apparatus that the government and its damnable agencies and bureaucracies are emplacing will enable the confiscation of firearms. It is coming. It is coming, as surely as I’m typing these words right now. The CCTV cameras, the cameras above the cash registers, in your bank. The banks themselves: now they are starting to take biometric IDs in the form of fingerprints and retinal scans. Guess what? Those records are also available to our friendly, smiling police departments.

    We are witnessing the marginalization of cash. That’s right! You pay for something in cash that is more than a hundred dollars or so, and they look at you as if you’re a criminal. Banks and their SARs (Suspicious Activity Reports), the banks and their “fractional reserve” policy, of loaning out more than five dollars on every dollar they hold. The banks, not allowing you to withdraw more than a couple thousand of your own dollars…not allowing you to use an ATM to withdraw more than a few hundred dollars. The banks: reporting on every dime you bring in and take out, copying your checks, even making a note of the distribution of the very bills you take out when you cash a check.

    You can see these idiots in convenience stores, using a “debit” card to buy a soda and a bag of chips…with a total of just a couple of dollars. Ten years ago, such small amounts for purchase would not have been permitted on the card: now, it is the new “norm.” Now the bank and the store will charge for every transaction…in addition to the profits that they make on the over-inflated-priced garbage they’ll sell you. Need a money order? Most places will (at the very least) make you give them a name. Yeah, Mr. Slick will give them a phony name, not paying attention to the little black “Legg’s Egg” dome camera behind the register. Mr. Slick just became guilty of fraud under the defacto laws and U.S.C. edicts. Plus they have the biometrics to boot…the photo, along with the receipt and the money order number.  Great job, “Ethan Hunt!”

    Every letter sent through the USPS (U.S. Postal Service) is photographed, with the origin and destination recorded in their little database. Every transaction you make, whether in cash or not, is recorded and stored for their little records.

    In this manner, all Fisher-Price People and Weebles are accounted for (and accountable) at all times, in the happy little Muppet system….so “ain’t that America…the home of the free,” to paraphrase John Cougar’s song?

    Here’s some more out of the article:

    However, the machines are not connected to CODIS, the FBI’s combined national DNA database. So the FBI is launching a Rapid DNA initiative to place the machines in police and sheriffs’ booking stations around the country, hoping to enable law enforcement to check arrestees against the CODIS database and, when matches are made to DNA from unsolved crimes, head off the release of the suspects.  In testifying to Congress about the Rapid DNA network in 2015, then-FBI Director James B. Comey said the technology “would help us change the world in a very, very exciting way.” Comey said it would allow “booking stations around the country, if someone’s arrested, to know instantly — or near instantly — whether that person is the rapist who’s been on the loose in a particular community before they’re released on bail and get away or to clear somebody, to show that they’re not the person.”

    Ahh, to be sure, Comey, it’s an excitin’ world yer leadin’ us into…well, led, anyway. “Evan McCone” is no longer one of the hunters, now, is he? As Bill Clinton appointed you, perhaps you should have begun looking for the rapists with a search on his DNA. Then again, those measures are only for the proletariat, never the Politburo. Changing the world in an exciting way, eh? This coming from the “E-mail Doctor” himself.  Those who are holding us accountable are beyond accountability themselves.

    The point: who is to stop these goons from taking a sample of anything in your house and affixing it to some piece of evidence linked to a [supposed] crime? Sound far-fetched? Think again. Recently in Baltimore, a cop and his buddies were indicted for fabricating evidence with their little “body cameras.” Unbeknownst to them, the cameras recorded 30 seconds prior to their pressing the button…and this “extra” footage showed them falsifying evidence and planting it on people to “expedite” their version of justice. They also were acquitted.

    These will be the ones coming for the firearms…yes, coming for the guns. They’re just taking their time and crafting their little laws and statutes, and when the time is right, they’ll go door to door. They already have the records of so many purchases, as Form 4473, a Firearm Transaction Record, is stored indefinitely in gun stores. They will utilize these records, as well as the “unofficial” ones…those gun shows have CCTV cameras, and that film is kept in their databases and fusion centers…forever.

    Since the feds infiltrate all of them, do you really believe they haven’t recorded everyone who walks in there, and picks up a weapon? That they haven’t recorded them leaving the parking lot?

    They have recorded all of it. Every time you buy ammo in a big-box or sporting goods store, it is recorded…amount, type, and for what caliber. Every accessory bought online is metadata that they will use against you. The investigation is the key for them: if it is under investigation, there is no limits to what they can do, or convince/coerce a court to enable them to do. Here are the stats, and another “kicker” for you from the article:

    Thirty states and the federal government allow DNA to be taken at the time of arrest. Sixteen states allow it to be analyzed immediately, and in the other 14 states, DNA may be taken at arrest but not analyzed until after arraignment on charges.

    Congress approved legislation last year authorizing the Rapid DNA network, and the FBI plans to roll it out slowly beginning next year. “Our goal in 2019,” said Thomas Callaghan, chief biometric scientist for the FBI Laboratory, “is to be able to have a pilot project done where we actually develop a DNA profile in a booking station, with no human review, and have it electronically enrolled and searched in the national database. We have to ensure that the quality that’s done in a lab can be done in a booking station,” which are often jails where fingerprints and mug shots are usually taken.”

    That last is telling: “the FBI plans to roll it out slowly beginning next year.”

    Why is that? Well, some reasons are that the technology is ahead of the laws…they need some time to craft some more laws that will enable them to be able to sample more than the current laws permit now. The biggest reason?  So that it will not be noticed by the Muppets in Fisher-Price Land. Out of sight, out of mind…until the bars are completely constructed and the cage is complete. Did you see what Callaghan said? Let’s embolden it, as it is critical to understand:

    “…a DNA profile in a booking station, with no human review, and have it electronically enrolled and searched in the national database.”

    No human review. Will there even be a hearing? Probably a robot judge, akin to the parole officer in the movie “Elysium.” Do you think arrests will be on the rise? Yeah, they’ll take you in, and you’ll have the DNA taken from you…regardless of whether the charges are pursued or not.

    Read the article. Read everything that you can on the tech they’re rolling out. Today’s police officer is tomorrow’s enforcer of a full-blown tyranny. We have reached a point where the vote is irrelevant. The vote is only meant to give the population the illusion that the choice is theirs. It never was. The media and the Democrats are all over the President akin to white on rice, and they’ll be on him relentlessly all the way up to and through the next election, if we make it that far as a nation.

    Right now we’re standing on the threshold of the abyss…a plunge into complete totalitarianism and surveillance on every citizen. People, they’re coming for the guns…in every way, shape, and form. They have to have them in order to finish off what is left of the U.S. and institute global governance. I recommend watching an older movie entitled “Gattaca,” for the types of measures they’ll eventually be using to collect DNA with or without our approval. It will happen: in public places, where you work, where you shop, and where you bank.

    By matching the CCTV cameras with the samples they take, they will positively identify you and get the DNA. Look what the NFL, what the military, and what law enforcement, as well as hospitals and others have gathered already. Your DNA is a mute witness that can testify against you where you have shopped, what you have eaten, and how you spend your time. They will use it to track you and find you when the time arrives. We have a little bit of time left, but not much before they close the cage on us…one that you cannot see, but is all around us and becoming stronger by the day.

  • Qatar Ambitions Soar After OPEC Exit With $20 Billion US Expansion

    After Qatar’s historic and unprecedented early December announcement that the small, gas-rich Gulf state will exit OPEC effective Jan. 1 following nearly 60 years of membership, Qatar Petroleum CEO Saad Sherida al-Kaabi announced over the weekend that the state-owned oil and gas company plans to invest more than $20bn in the US oil and gas sector. 

    As reported by Reuters on Sunday, al-Kaabi’s main concern appears to be over its long term plans in the United States, specifically its majority stake of the Golden Pass LNG terminal in Texas. He cited current proposed “NOPEC” legislation, or No Oil Producing and Exporting Cartels Act, which aims to enable the US to extra-territorially impose its domestic legislation on others by giving the government the right to sue OPEC and OPEC+ countries like Russia because of their coordinated efforts to control oil prices. A decision over staying the course for its Golden Pass LNG project expansion is expected “within weeks”.

    Docked LNG carriers, via Lloyd’s Maritime Intelligence

    And this comes at a time when President Trump has been unrelenting in his criticisms of OPEC, blaming the organization for increasing the price of oil while leaning on the Saudis to produce more to help him drive oil prices even lower.

    Qatar’s exit has been telegraphed as a huge blow to rival GCC state Saudi Arabia — de facto leader of the global oil cartel — after the kingdom led its GCC partners in waging economic and diplomatic warfare against Qatar (a complete blockade to be precise) since an open rift in June 2017, accusing it of supporting terrorism and boosting Iran.

    Especially since the Oct. 2 Saudi murder of journalist Jamal Khashoggi and slow drip of Turkish media leaks revealing the shocking details, the Qataris see Riyadh as unduly leveraged by the White House, accelerating production to appease Trump. However, we should note that Qatar has been spinning its exit from OPEC has having no political overtones.

    Additionally, al-Kaabi announced new foreign partners for the construction of liquefied natural gas (LNG) trains for its LNG expansion project, including with Italian oil giant Eni, among others operating in Qatar (Exxon Mobil, Total, Royal Dutch Shell). Plans to build four liquefaction trains for the LNG expansion is part of a broader goal of boosting capacity to 43 percent by 2023-2024, according to Reuters.

    Saad Sherida Al-Kaabi, President and CEO of Qatar Petroleum, via QP

    Concerning the newly announced $20 billion investment push in the US, QP is looking “at gas and oil, conventional and non-conventional,” according to Kaabi’s statements Sunday. “We are looking for a lot of things (in our partners) including asset swaps, things that will help me in my international expansion,” he said. “If I don’t get good deals, nobody will come.”

    And separately, QP will make its second foray in Mexican oil and gas, announcing it entered into an agreement with Eni to buy a 35% stake in three oilfields offshore Mexico, which include the Amoca, Mizton and Tecoalli offshore sites. Al-Kaabi said this “strengthens” Qatar Petroleum’s “international footprint” and “expands its presence in Mexico.”

    Last January QP secured exploration rights to five blocks off the coast of Mexico in the Campeche and Perdidio basins, along with Eni and Shell respectively. Al-Kaabi added of the project, “we look forward to collaborating with Eni to ramp up production to around 90,000 barrels of oil per day by 2021.”

    Previously Al-Kaabi summarized Qatar’s ambitions in leaving OPEC as follows:

    Achieving our ambitious strategy will undoubtedly require focused efforts, commitment and dedication to maintain and strengthen Qatar’s position as the leading LNG producer.

    I would like to reaffirm Qatar’s pride in its international standing at the forefront of natural gas producers, and as the biggest exporter of LNG.

    And as we explained previously this is no mere hyperbole or empty boasting as Qatar is already the world’s largest LNG producer, with some 77 million tons per annum of liquefaction capacity, though that lead is not being challenged by Australia as it finally completes its massive LNG project expansion boom.

    Yet, going forward, Qatar will far outpace any of its LNG exporting rivals, both Australia, Russia and even the U.S. as the country enters its so-called second phase of LNG project development. Last year, in a surprise statement, Qatar announced that it would boost LNG production to 100 mtpa within the next five or six years – a remarkable decision given LNG development in other parts of the world that will all be vying for the same market share. 

  • Here's What Newly-Diagnosed Amnesiac James Comey "Did Not Recall" On Day 2 Of Testimony

    Former FBI Director James Comey appeared December 17th, 2018, for a second round of questions by a joint House committee oversight probe into the DOJ and FBI conduct during the 2016 presidential election and incoming Trump administration.

    The Joint House Committee just released the transcript online (full pdf below).

    Director Blue blog’s Doug Ross read through most of the septic backflow so you don’t need to. You’re welcome:

    1. Double Standard: Obama vs. Trump

    Trey Gowdy grilled Comey on his vastly different handling of comments by Trump and Obama. When Trump asked Comey whether he could see his way clear to easing up on Flynn, Comey memorialized the conversation in a memo and distributed it to his leadership team, including Andrew McCabe and James Baker.

    However, when President Obama on 60 Minutes publicly exonerated Hillary Clinton’s mishandling of classified information — setting the stage for true obstruction of justice — Comey did nothing. He never talked to the president about potential obstruction, he never memorialized his observations, and he didn’t leak anything to the press. These were all things he did with Trump.

    He might call it a “higher loyalty”, but it looks to us peons like a true double-standard. Democrats get Wall Street Bankster treatment, while the rabble get tossed in the slammer.

    2. According to Comey, Flynn had no right to counsel

    This is interesting:

    Mr. Gowdy. Did Mr. Flynn have the right to have counsel present during that interview?

    Mr. Comey. No.

    Oooooooookay.

    3. Comey confirmed McCabe called Flynn to initiate “entrapment”; contradicts himself on counsel

    And:

    Mr. Gowdy. Why not advise General Flynn of the consequences of making false statements to the FBI?

    Mr. Comey. …the Deputy Director [McCabe] called him, told him what the subject matter was, told him he was welcome to have a representative from White House Counsel there…

    So Comey is saying that Flynn didn’t have the right to counsel (item 2), and then states that he does have the right to a White House counsel attending the meeting.

    The lies are getting harder and harder to keep straight with this egregious individual.

    4. Comey lied about McCabe’s conversation with Flynn

    When asked whether McCabe was trying to set Flynn up by asserting no counsel was needed in the interview, Comey claimed he was unaware of that critical fact. But McCabe, in a written memo, asserted that he told Flynn, “[i]f you have a lawyer present, we’ll need to involve the Department of Justice”.

    In other words, McCabe was trying to ensure Flynn had no counsel present during the interview.

    5. Comey still falls back on the Logan Act scam to justify his actions

    Yes, the Logan Act. When former secretary of state John Kerry meets with various Mullahs while President Trump is unwinding the disastrous Iran deal, there’s no crime there!

    But let Flynn, a member of the Trump transition team, have a perfectly legitimate conversation with a Russian diplomat, we get:

    Mr. Comey. And I hesitate only with “wrong.” I think a Department of Justice prosecutor might say, on its face, it was problematic under the Logan Act because of private citizens negotiating and all that business.

    What a lying sack of gumbo. At the time, Flynn was not a private citizen. He was a member of the incoming administration, and had anyone bothered to prosecute prior transitions for similar “crimes”, the entire Obama and Clinton posses would be breaking rocks at Leavenworth.

    6. Comey Throws James Clapper Under the Bus

    When asked by Jim Jordan about his private meeting with the President to brief him on a very tiny portion of the “salacious and unverified” (Comey’s words under oath) dossier, Comey claimed ODNI James Clapper had orchestrated the entire fiasco.

    Mr. Comey. …ultimately, it was Clapper’s call. I agreed — we agreed that it made sense for me to do it and to do it privately, separately. So I don’t want to make it sound like I was ordered to do it.

    He wasn’t ordered to do it, but it was Clapper’s call.

    Oooooooookay.

    7. Jordan Torches Comey Over His Dossier Comments

    I’ll just leave this here. Comey may need to put some ice on that.

    Mr. Jordan. So that’s what I’m not understanding, is you felt this was so important that it required a private session with you and the President-elect, you only spoke of the salacious part of the dossier, but yet you also say there’s no way any good reporter would print this. But you felt it was still critical that you had to talk to the President-elect about it. And I would argue you created the very news hook that you said you were concerned about…

    …it’s so inflammatory that reporters would ‘get killed’ for reporting it, why was it so important to tell the President? Particularly when you weren’t going to tell him the rest of the dossier — about the rest of the dossier?

    8. Comey Concealed Critical National Security Concerns About Flynn From the President

    This is quite unbelievable: in a private dinner with the president, Comey neglected to mention that just three days earlier he had directed the interview of Trump’s ostensible National Security Advisor.

    Mr. Comey. …at no time during the dinner was there a reference, allusion, mention by either of
    us about the FBI having contact with General Flynn or being interested in General Flynn investigatively.

    Mr. Jordan. That was what I wanted to know. So this is not just referring to the President didn’t bring it up. You didn’t bring it up either.

    Mr. Comey. Correct, neither of us brought it up or alluded to it.

    Mr. Jordan. Why not? He’s talking about General Flynn. You had just interviewed him 3 days earlier and discovered that he was lying to the Vice President, knew he was lying to the Vice President, and, based on what we’ve heard of late, that he lied tyour agents. Why not tell his boss, why not tell the head of the executive branch, why not tell the President of the United States, “Hey, your National Security Advisor just lied to us 3 days ago”?

    Mr. Comey. Because we had an open investigation, and there would be no reason or a need to tell the President about it.

    Mr. Jordan. Really?

    Mr. Comey. Really.

    Mr. Jordan. You wouldn’t tell the President of the United States that his National Security Advisor wasn’t being square with the FBI? … I mean, but this is not just any investigation, it seems to me, Director. This is a top advisor to the Commander in Chief. And you guys, based on what we’ve heard, felt that he wasn’t being honest with the Vice President and wasn’t honest with two of your agents. And just 3 days later, you’re meeting with the President, and, oh, by the way, the conversation is about General Flynn. And you don’t tell the President anything?

    Mr. Comey. I did not.

    Mr. Meadows. So, Director Comey, let me make sure I understand this. You were so concerned that Michael Flynn may have lied or did lie to the Vice President of the United States, but that once you got that confirmed, that he had told a falsehood, you didn’t believe that it was appropriate to tell the President of the United States that there was no national security risk where you would actually convey that to the President of the United States? Is that your testimony?

    Mr. Comey. That is correct. We had an —

    The more we learn, the dirtier a cop Comey ends up appearing.

    9. Gowdy Destroys the Double Standard of Clinton vs. Flynn

    Check this out:

    Mr. Gowdy. …we are going to contrast the decision to not allow Michael Flynn to have an attorney, or discourage him from having one, with allowing some other folks the Bureau interviewed to have multiple attorneys in the room, including fact witnesses. Can you see the dichotomy there, or is that an unreasonable comparison?

    Mr. Comey. I’m not going to comment on that. I remember you asking me questions about that last week. I’m happy to answer them again.

    Mr. Gowdy. You will not say whether or not it is an unreasonable comparison to compare allowing multiple attorneys, who are also fact witnesses, to be present during an interview but discouraging another person from having counsel present?

    Mr. Comey. I’m not going to answer that in a vacuum…

    10. Comey May Have Been Involved With the Infamous Tarmac Meeting

    Another interesting vignette, this time from John Ratcliffe:

    Mr. Ratcliffe. Okay. So it would appear from this that there had been some type of briefing the day before, with reference to yesterday, June 27, 2016, where you had requested a copy of emails between President Obama and Hillary Clinton.

    Mr. Comey. I see that it says that.

    Mr. Ratcliffe. …The significance of that is, as we talked about last time, June 27th of 2016 was also the date that Attorney General Lynch and former President Bill Clinton met on a tarmac in Phoenix, Arizona. Do you recall whether or not this briefing was held at the FBI because of that tarmac meeting, or was it just happened to be a coincidence that it was held on that day? Mr. Comey. It would have to have been a coincidence. I don’t remember a meeting in response to the tarmac meeting.

    Muh don’t know!

    11. Comey confirms Obama knew Hillary Clinton was using a compromised, insecure email server

    Well, spank me on the fanny and call me Nancy!

    Mr. Ratcliffe. …Hillary Rodham Clinton and President Obama were communicating via email through an unsecure, unclassified server?

    Mr. Comey. Yes, they were between her Clinton email.com account and his — I don’t know where his account, his unclassified account, was maintained. So I’m sorry. So, yes, here were communications unclassified between two accounts, hers and then his cover account.

    Mr. Ratcliffe. …Did your review of these emails or the content of these emails impact your decision to edit out a reference to President Obama in your July 5th, 2016, press conference remarks?

    If Trump had done 1/1,000,000th of this crap, he’d be — yes — breaking rocks in Leavenworth right now.

    But there’s no double-standard, rabble! Just keep buying iPhones and playing Call of Duty!

    …Aaaaaaaaand I’m spent.

    Okay, done for now.

    But let’s recap the activities of Dr. “Higher Loyalty” Comey:

    • Did not investigate the felony leak to the press of the conversation between the Russian Ambassador and Flynn.

    • Did not advise Congress of the “investigation” into Trump-Russia collusion as required by statute.

    • Lied to the FISA court — another felony — about Carter Page being “an agent of a foreign power”.

    • Wrote an exoneration memo for Hillary Clinton before more than a dozen witnesses, including Clinton herself, had been interviewed.

    But, no, there’s no double-standard for the aggressiveness of law enforcement when it comes to Democrats like Clinton and Obama.

    Hat tip: BadBlue Uncensored News.

    *  *  *

  • Blythe Masters Quits As CEO Of Fin Blockchain Startup

    A little over three years ago when bitcoin was trading in the low $200s, we first recommended purchasing the cryptocurrency for two main reasons: as we said at the time, it was only a matter of time before the Chinese started using it as a means to bypass China’s capital controls firewall (this took place less than a year later, launching Bitcoin’s stratospheric ascent which eventually culminated with Beijing’s crackdown on crypto and bitcoin hitting a price of $20,000); the second reason was the involvement of the notorious brain behind Credit Default Swaps then at JPMorgan, Blythe Masters, whose mere presence was – to us – assurance that with such a deep “institutional” backer, it was only a matter of time before bitcoin exploded, to wit:

    We bring all this up in case there is any confusion why Bloomberg just carried a huge centerfold piece explaining why CDS-inventor Blythe Masters has suddenly become the digital currency’s most vocal pitchman and is betting it all on bitcoin, in “Blythe Masters Tells Banks the Blockchain Changes Everything.”

    Yes, bitcoin may be slowly but surely leaving the domain of the libertarian fringe, but in exchange it is about to be embraced as the most lucrative and commercial “blockchained” way to capitalize on what may soon become the largest capital outflow in history, with “pioneers” such as Blythe front and center to capitalize on each and every outflowing Bityuan.

    And just like that, a little over three years later, the fairy tale is over, at least for the person who was meant to “tell the banks Blockchain changes everything“, because as Bloomberg reports, Blythe Masters is leaving her role as CEO of blockchain startup Digital Asset Holdings, slightly more than three years after arriving to run the financial technology firm and being on the cover of Bloomberg magazine to provoke curiosity in what at the time was a technology – and asset class- only a handful had previously heard of.

    Why is she leaving?

    According to a release, Masters asked to step down for personal reasons, which naturally means that the true reasons she is leaving are anything but personal and may have something to do with the unprecedented collapse in cryptocurrency from their all time highs exactly one year ago. AG Gangadhar, who joined the board this year, will become chairman and acting CEO until the New York- based company finds a permanent replacement for Masters who will remain a board member, strategic adviser and shareholder.

    Digital Asset was… all right, all right still is among a group of startups trying to apply blockchain to financial markets. Advocates say the system, already being used to simplify supply chains, could also streamline trade settlement and stock issuance. Alas, despite early enthusiasm for the technology’s promise, many corporate advocates of distributed ledger technology cooled off in direct correlation with the price of bitcoin.

    After joining Digital Asset in 2015, Masters – who previously worked at JPMorgan for two decades and conceived of credit-default swaps which nearly led to AIG’s extinction – became a high-profile advocate of blockchain for finance and a mainstay on the speaking circuit. During her brief tenure there, Digital Asset struck up several partnerships and earned a contract to supply Australia’s main  stock exchange, ASX Ltd., with blockchain technology for processing equity transactions. ASX Deputy CEO Peter Hiom said in a statement Tuesday that the program remains on pace. In October Hong Kong Exchanges & Clearing Ltd. said it will work with Digital Asset on building a blockchain settlement system for trading Chinese stocks.

    As for Masters’ replacement, Gangadhar joined the Digital Asset board in April, and earlier in his career he worked at technology  giants including Google and Uber. Prior to Digital Asset, he spent less than half a year as CTO of Cruise Automation, the self- driving arm of General Motors. Amusingly, in his time at Cruise he was the subject of public complaints about his role in allegedly
    fostering a work environment that was inhospitable to women when he worked at Uber.

    And speaking of women, keep a close eye on where Blythe ends up next: while it remains to be seen if bitcoin (and blockchain) can ever inspire the type of bubble mania that emerged in the 2016-2017 period (yes, eventually, once money laundering using crypto becomes fashionable again, especially in Asia), one thing is certain: whatever product or asset Blythe is involved with next, will likely be the next thousand-bagger investment.

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