Obama announces right-wing immigration “reform” in national address

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By Patrick Martin
21 November 2014

US President Barack Obama delivered a nationally televised address on Thursday night, giving a preview of an executive order on immigration to be signed and made public on Friday.

As with most speeches by Obama, Thursday’s remarks exuded hypocrisy and cynicism. The proposal that Obama is implementing is thoroughly right-wing. His comments combined empty homilies describing the United States as a “nation of immigrants” with proclamations that the estimated 11-12 million undocumented immigrant workers must “play by the rules” and be held “accountable.”

The program outlined by Obama would cover less than half of the 11-12 million undocumented immigrant workers and children now in the US, with the remainder subject to immediate detention and deportation as “illegals.” In its six years in office, the Obama administration has already deported more immigrants than any government in US history.

Despite the howls of “amnesty” from sections of the Republican Party, and praise for the White House from its media backers and Democratic Party-affiliated Latino groups, Obama’s executive order is anything but a green light for immigrant workers seeking legal status, economic security and recognition of their human rights.

As Obama explained in his speech, the bulk of the 5 million or so immigrants who qualify for non-deportation and work permits must have lived in the United States more than five years and have children who are American citizens or legal residents. They must register with Immigration and Customs Enforcement, part of the Department of Homeland Security (DHS), pass a criminal background check, and pay any back taxes. In return, they will “be able to stay temporarily,” Obama said.

Obama’s speech was entirely within the right-wing framework of official American politics, in which workers who come to the United States fleeing poverty and dictatorship—for which American imperialism is principally responsible—and take the hardest and worst-paid jobs are demonized as criminals who must be “held accountable.” Meanwhile, the true criminal class in America, the financial aristocracy that controls both the Democratic and Republican parties, amasses untold and unearned wealth.

Referring to immigrant workers, Obama said, “All of us take offense at anyone who reaps the rewards of living in America without taking on the responsibilities of living in America.” Who is he talking about? Who is reaping rewards without taking responsibility?

Such terms apply with much greater justice to the parasitic ruling elite that Obama and the congressional Republicans and Democrats represent. These gentlemen were bailed out to the tune of trillions following the 2008 financial crash. But no banker or hedge fund mogul has had to repay these infusions of taxpayers’ money or been held accountable for the financial manipulations and fraud that wiped out the jobs and living standards of tens of millions of working people.

“Undocumented workers broke our immigration laws, and I believe that they must be held accountable,” Obama declared. The Obama administration has refused to apply this standard to bankers and speculators who broke laws against swindling, or CIA agents who broke laws against torture, or top officials of the Bush administration who waged illegal wars and lied to the American people. And, of course, the Obama administration itself operates outside the law, trampling on the US constitution in its assertion of unlimited presidential powers to spy on, arrest, detain and even assassinate American citizens.

Under the Obama plan, the majority of workers who have entered the country without legal documents will still be treated as criminals, to be expelled from the country as soon as they are discovered. The four million to five million covered by the executive order will become a federally regimented cheap labor force. Those who register with the DHS will gain only temporary security, subject to the decisions of the next president—or Obama himself if circumstances change in the next two years—in which case the DHS database will become an invaluable resource for the resumption of mass roundups, detentions and deportations.

Obama hailed as a model the reactionary immigration bill passed last year by a bipartisan majority in the US Senate, while complaining that the Republican-controlled House of Representatives had refused to bring it to a vote. This bill placed its main emphasis on border security while establishing a draconian 17-year-long process through which some undocumented workers could gain citizenship.

The administration has already implemented many of the Senate bill’s border security measures. Obama boasted of the record number of federal agents, sensors and drones mobilized on the US-Mexico border and announced, as the first part of his executive order, even further militarization: “We’ll build on our progress at the border with additional resources for our law enforcement personnel so that they can stem the flow of illegal crossings, and speed the return of those who do cross over.”

White House officials said that some provisions of the Senate bill, such as the citizenship process and special provisions for temporary agricultural workers, were beyond the president’s legal authority to enact in an executive order. The immigration measure was drafted under the rubric of “prosecutorial discretion,” in which the president, as chief executive, can decide to prioritize enforcement of immigration laws against particular categories of immigrants, given that the federal government lacks the resources to immediately round up 12 million people.

Obama spent a considerable portion of his speech defining how narrow the executive order would be, including denying Medicaid, food stamps or other benefits to immigrants given work permits.

“This deal does not apply to anyone who has come to this country recently,” he said. “It does not apply to anyone who might come to America illegally in the future. It does not grant citizenship, or the right to stay here permanently, or offer the same benefits that citizens receive—only Congress can do that. All we’re saying is we’re not going to deport you.”

As in many of his policy statements, Obama sought to present his immigration order as a happy medium between two extremes. “Mass amnesty would be unfair,” he claimed. “Mass deportation would be both impossible and contrary to our character. What I’m describing is accountability—a commonsense, middle ground approach: If you meet the criteria, you can come out of the shadows and get right with the law.”

“Mass amnesty” is, in fact, the only policy compatible with democratic principles. All workers should have the right to live in whatever country they choose with full citizenship rights. But under the capitalist system, capital is globally mobile while the working class is imprisoned within the borders of the nation-state.

Obama’s claim that mass deportation is “contrary to our character” conceals a contradiction. Certainly, for the vast majority of working people, the police state measures that would be required to round up and deport 12 million people, ripping apart millions of families, would be abhorrent. (By one estimate, 13 percent of all school children in California and Texas have at least one undocumented parent).

But for the US ruling elite, and for the Obama administration in particular, “rounding up millions” is perfectly conceivable. In its six years in office, the Obama administration has rounded up nearly three million immigrants already. Large sections of the Republican Party advocate detention and expulsion of millions more.

The dispute between the parties, insofar as it exists, reflects divisions within the ruling elite over how politically explosive such an operation would be and how disruptive of the functioning of large sections of the US economy that depend on superexploited immigrant labor.

Sections of the Republican Party, particularly those linked to the ultra-right Tea Party groups, have long used demagogic attacks on immigrants as a political weapon. Republican Senator Tom Coburn of Oklahoma suggested that any action by Obama perceived as pro-immigrant could touch off vigilante-style actions.

“The country’s going to go nuts, because they’re going to see it as a move outside the authority of the president, and it’s going to be a very serious situation,” he told USA Today. “You’re going to see—hopefully not—but you could see instances of anarchy. You could see violence.”

Obama made repeated appeals to ultra-right sentiment in the course of his television speech, pleading with Republicans that disagreement over immigration should not prevent collaboration in other policy areas once they take full control of Congress in January.

There is particular concern in Corporate America that the immigration issue could disrupt passage of a federal budget for the remainder of the current fiscal year, which began October 1. A continuing resolution to fund the government expires December 11, and House and Senate Republican leaders have been at pains to reassure Wall Street that there will be no repetition of the 2013 temporary shutdown of the government and no default on federal debt payments.

The Los Angeles Times, in one of the few press commentaries that cut through the pretense of huge disagreements between the two parties, noted Thursday that “the strong reaction by Republican leaders has less to do with opposition to the nuts and bolts of the president’s immigration policy and more to do with fear and anger that the issue will derail the agenda of the new Republican majority before the next Congress even convenes.” This includes making deals with Obama over pro-business measures on taxes, trade and energy policy.

 

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US government, corporations preparing new offensive against workers’ pensions

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By Jerry White
20 November 2014

The release of the annual report of the US Pension Benefits Guaranty Corporation (PBGC) is being seized upon by the media and politicians of both parties to press for a new round of devastating cuts to pension benefits for tens of millions of retired industrial and other private-sector workers.

The PBGC is the government insurer for 24,000 defined benefit pension plans, which cover more than 41 million workers, retirees and their dependents. On Monday, the government-backed corporation released a report showing that the long-term projected deficit of its multiemployer program rose by $34 billion in fiscal year 2014 to a record $42 billion. This was largely due to potential losses from shoring up two large pension funds that could become insolvent in the next decade.

Although they were not named in the report, the two funds are reportedly the Teamsters Central States fund and the United Mine Workers fund, which together cover some 10 million current and retired workers. The precarious position of the funds, which are jointly administered by the two unions and trucking and mining companies, is due to the wiping out of hundreds of thousands of jobs, which has left many companies with more retirees than active workers. The pension funds were also hit by stock market losses.

The Washington Post and Wall Street Journal zeroed in on a single paragraph in the report warning that the PBGC could go broke over the next eight years if the current rate of premium payments from corporations continues. The “risk of insolvency” would rise over time, the report said, “exceeding 50 percent in 2022 and reaching 90 percent by 2025.” It added, “When the program becomes insolvent, PBGC will be unable to provide financial assistance to pay guaranteed benefits in insolvent plans.”

Nowhere in the media or political commentary on the report was there any suggestion that the government should carry out a Wall Street-style bailout of the pension insurer. The Post noted that that such a bailout was a “political non-starter” in Washington.

Nor was there any suggestion that Congress should mandate a major increase in contributions from the big corporations, which have extracted billions from the labor of workers while deliberately diverting funds from their pension plans and keeping them chronically underfunded.

Instead, in the name of “saving” the pensions, the capitalist media is demanding savage cuts in the workers’ benefits.

The Wall Street Journal wrote Tuesday that any solution to the agency’s “long-running problems” would likely include “sharp benefit cuts for the plans.” The Post concurred on the same day, saying, “Unless Congress makes changes, which could include raising insurance premiums for multiemployer plans or the controversial move of allowing for preemptive pension cuts in struggling plans,” the PBGC will go bankrupt.

One proposal, cited approvingly by the Wall Street Journal, came from the Center for Retirement Research at Boston College. A 30 percent benefit cut on average for current retirees, the report said, would allow the Teamsters plan “to remain solvent indefinitely and increase the aggregate welfare of plan participants.”

Leading Democrats and Republicans added their voices to the choir demanding action.

The annual report was “a sober reminder that time is running out” said Congressman John Kline (Republican from Minnesota), chairman of the House Committee on Education and the Workforce. The multiemployer pension system “is a ticking time bomb that will inflict a lot of pain on workers, employers, taxpayers and retirees if Congress fails to act,” he added.

Senate Finance Committee leaders Ron Wyden (Democrat from Oregon) and Orrin Hatch (Republican from Utah) issued a joint statement saying they remained “very concerned” about the multiemployer system.

As usual, the trade unions are willing accomplices in the crime being prepared against the working class. According to the Washington Post, “A coalition of unions and businesses has been pushing for reforms, including more flexible coverage structures and pension cuts in financially struggling plans.”

Last year, “a commission made up of representatives from employer and labor organizations,” the Wall Street Journal reported, issued a proposal “that would include the extreme step of cutting pension benefits for some current retirees in the most troubled plans.”

One such joint labor-management body is the National Coordinating Committee for Multiemployer Plans, which includes the presidents of the Teamsters, the AFL-CIO’s construction trades, the Service Employees International Union (SEIU), and the United Food and Commercial Workers (UFCW). It has called for congressional action, warning that employers planned to exit the system and “leave retirees behind.”

The union executives could care less about their retired members. These unions have spent decades collaborating in gutting pension benefits in order to boost the corporations’ profits. The threatened liquidation of multibillion-dollar pension investment funds, however, threatens the income and portfolios of the aspiring capitalists who control the unions.

There is an element of deliberate crisis mongering in the PBGC report. The shaky position of the agency has long been known and nothing has been done about it.

Over the last three decades, more and more corporations have jettisoned their employer-paid plans—one of the most important gains won by the working class in the mass industrial battles of the 1930s, 1940s and 1950s. All but a few have forced current workers onto employee-paid 401(K) plans subject to the vagaries of the stock market.

Earlier this year, aerospace and defense giant Boeing worked in tandem with the International Association of Machinists (IAM) to force 33,000 IAM workers onto 401 (K) plans. The company’s top executive, Jim McNerney, has a special retirement plan valued at $42 million, which will provide him with over $270,000 per month after he quits.

It has long been a standard business practice for American corporations to dump their pension obligations onto the PBGC through bankruptcy. Since Congress established the PBGC as part of the 1975 Employee Retirement Income Security Act (ERISA), the government-backed corporation has paid out billions to cover pension plans terminated by giant corporations, particularly in the steel and airline industries.

As millions of workers know through painful, first-hand experience, when the PBGC takes over an insolvent fund, the workers are hit with brutal benefit cuts. Congress limits the amount the agency can pay to retirees to less than $13,000 a year, effectively condemning the workers to poverty. A worker with a very modest annual pension of $20,000 after 30 years of labor stands to lose more than $7,000 a year—a cut of over 35 percent.

The decks are being cleared for the next stage in the relentless, bipartisan assault on the working class. Private-sector pensions will be targeted along with other supposed “ticking bombs” such as Social Security, Medicare and public-sector pensions.

The nationwide offensive against the pensions of state and municipal workers has already been launched with precedent-setting rulings by federal bankruptcy judges in Detroit and Stockton, California declaring null and void provisions of state constitutions guaranteeing the pension benefits of public employees.

Last week, a federal bankruptcy judge gave final approval to the Detroit bankruptcy settlement, which imposes huge cuts in the pensions and health benefits of retired city workers and imposes 401(k) plans on active workers. This week, the PBGC report has signaled the widening of the attack to include the private sector.

The official justification is the claim that society simply cannot afford to keep the “overgenerous promises” made to workers in an earlier, more prosperous period. The situation is supposedly made worse by the problem of workers living too long after retirement and imposing an unsustainable burden on the rest of the population.

These are self-serving lies pumped out by the ruling class through its political servants and media apologists. Since the financial crash of 2008, the Obama administration’s pro-business policies of bank bailouts, virtually free money for the banks from the Federal Reserve, wage and benefit cuts for auto workers, corporate tax cuts and deregulation have transferred trillions from the working class to the super-rich.

The share of the gross domestic product going to corporate profits is at the highest level since World War II, while the share going to workers’ wages is at the lowest. American corporations are sitting on an estimated cash hoard of $1.5 trillion and using it for stock buybacks, executive bonuses and mergers and acquisitions that are occurring at their most frenzied pace since 2007.

The total $60 billion deficit of the PGBC could be wiped out overnight by using only a portion of the $360 billion being hoarded by tech giants Google, Apple, Cisco and Microsoft, or employing one-tenth of the annual Pentagon budget.

Instead, the financial oligarchy that controls the economy and both big-business parties is determined to steal the pensions that tens of millions need to survive and return workers to the dark days when they labored without end until they died.

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DIGITAL MUSIC NEWS

Federal Judge Rejects Sirius XM’s Call

For Summary Judgment In Pre-1972 Case

 

     The Turtles keep on rolling to copyright victory, as a federal judge in New York has ruled against Sirius XM in the ongoing battle to collect royalties on recordings made before 1972. Last Friday (Nov. 14) Judge Colleen McMahon of United States District Court in Manhattan rejected Sirius XM’s motion for summary judgment, saying the Turtles have performing rights to their recordings under New York State law. She gave Sirius XM until Dec. 5 to dispute the remaining facts in the case; otherwise Sirius XM will be ruled liable for infringement.

“General principles of common copyright law dictate that public performance rights in pre-1972 sound recordings do exist,” Judge McMahon wrote in her decision. The ruling comes after a separate win for the Turtles in September, when a federal judge in California found Sirius XM liable for infringement under state laws there. According to The New York Times, that decision was viewed as a major victory for artists and record companies, although its wider impact was unclear because it applied only to that state.

Judge McMahon’s decision strengthened the music industry’s position that pre-1972 recordings are covered under state laws. Still, recording and broadcast industry executives say the potential for widespread confusion over music licensing – for example, it may mean that thousands of AM-FM radio stations, as well as restaurants or sports arenas where music is performed, may have been infringing on recording rights for decades - likely will require clarification from Congress. 

YouTube Launches Music Key In

Already-Crowded Streaming Field

 

     After years of false starts and seemingly endless label negotiations, YouTube’s Music Key launched earlier this week to the ultimate question: will users actually pay $9.99 for something  they previously received free of charge? That’s the monthly rate Google set for its ad-free service that also offers offline functionality, with a company spokesperson telling Billboard, “The goal is more ways to play music on YouTube, giving artists more ways to reach fans and make money.”

So why create a subscription service, especially given the competitive landscape? As Billboard notes, Apple is certain to grow its share of the streaming market, Amazon is going after middle-of-the-road listeners with Music Prime, and Spotify has a head start of 12.5 million U.S. subscribers (28 million worldwide in 2013, according to IFPI).

Still, many industry executives hope Music Key will help YouTube clean up the metadata that often gets lost in uploads of master recordings and drives users to the original composer and purchase links. This has been a core asset of YouTube’s Content ID system, which has disbursed more than $1 billion in revenue to labels and content creators since 2007. 

YouTube Refuses To Remove Songs

By Artists Represented By Azoff’s GMR

 

     YouTube apparently has refused to remove songs composed by artists represented by Irving Azoff’s Global Music Rights (GMR), forcing a showdown between the 42 artists the music icon represents and the Google-owned video site. The dispute stems from YouTube’s claim that it has licensing deals in place with the record labels, while Azoff contends that in order to publicly perform those 42 artists’ songs, the company also has to pay the songwriters, which Azoff says are “massively underpaid” when it comes to digital services.

According to The Hollywood Reporter, the primary question here is whether YouTube has a right to perform these songs until proven otherwise. GMR thinks the burden of proving a valid license is on YouTube, which reportedly says it has a multiyear license for the public performance of works represented by GMR. The licensors aren’t identified, but it’s possible that YouTube believes its covered by prior deals made with ASCAP, BMI, SESAC, or a foreign performing rights organization.

Howard King, an attorney representing GMR, says YouTube has failed to comply with demands to stop performing those 20,000 songs. “Obviously, if YouTube contends it has properly licensed any of the songs for public broadcast, a contention we believe to be untrue, demand is hereby made that we be furnished with documentation of such licenses,” he says.

By contrast, a spokesperson for YouTube told THR, “We’ve done deals with labels, publishers, collection societies, and more to bring artists’ music into YouTube Music Key. To achieve our goal of enabling this service’s features on all the music on YouTube, we’ll keep working with both the music community and with the music fans invited to our beta phase.” 

Music Key Could Thwart Apple’s Move

To Reduce Monthly Subscription Fee

 

     It’s no secret that Apple has been engaged in heated discussions with the major record labels to lower the price of on-demand music to $5 per month from the standard $9.99 currently charged by such subscription services as Spotify, Rhapsody, Google, Rdio, and its own Beats Music. According to Forbes, Apple is telling record labels that $5/month for all-you-can-hear on-demand music is the right price because the best iTunes customers spend about $60 per year on music downloads. The obvious thinking here is that this $60 annual revenue per user (ARPU) could be the best record companies can hope to get from those consumers who still actually pay for music.

This may be a convenient talking point for Apple’s negotiators, but – as Forbes points out – two important factors strongly counter that argument. First, for all the talk about monthly subscription fees (and Taylor Swift, below), the vast majority of users of on-demand music services don’t pay for them at all. Second, in 2011 Google introduced

a technology called Content ID that enables copyright owners to make money, if they choose, when users upload content to YouTube. The system detects users’ uploads of copyrighted works and gives copyright owners several options, including to block the uploads or monetize them through ad revenue sharing. By 2011, the major labels had opted to allow many user uploads of their content for monetization, and they also supply their own “official” music videos.

As a result, YouTube is a de facto on-demand music service and, as noted by Forbes, possibly is the biggest one in the game. Market research from Edison Research and Triton Digital suggests that, strictly as a music service, YouTube has about four times the U.S. user base of Spotify, Rhapsody, and Google Play Music All Access combined. No one pays for YouTube, although some may pay for its Music Key service, which will hit that same $10 monthly price point when it comes out of beta. 

Big Machine’s Scott Borchetta: Spotify

Paid Less Than $500,000 To TS Last Year

 

     The verbal fisticuffs between Spotify and Taylor Swift have not let up, with the streaming music service’s Daniel Ek insisting the pop music icon was on track to earn over $6 million in royalties this year. This claim came after a Spotify spokesperson said Swift had been paid a total of $2 million over the last 12 months for the global streaming of her songs. But Scott Borchetta (above left), CEO of Swift’s label Big Machine Records, says that’s nowhere near the truth, maintaining Swift earned less than $500,000 from Spotify streams over the last 12 months.

“The facts show that the music industry was much better off before Spotify hit these shores,” Borchetta told The New York Times. Noting that the amount Spotify paid out over the last year was “the equivalent of less than 50,000 albums sold, he said Swift actually earns more from her videos on Vevo than she did from having her music on Spotify.

While half a million dollars will cause few people to weep, it should be noted that Swift’s most recent album, 1989, became the first this year to sell more than a million copies in a week – a feat only equaled by 18 albums in history. Unlike most performers, she can make millions of dollars from traditional album sales, but by keeping her music away from Spotify even as it begs for her to come back, she and Borchetta say they’re trying to make the larger point that the service doesn’t pay its artists a reasonable fee. “[Taylor Swift] is the most successful artist in music today,” Borchetta says. “What about the rest of the artists out there struggling to make a career?” 

Sony Music Wary Of Ad-Supported

Streaming After Taylor Swift Move

 

     Taylor Swift’s claim that subscription streaming services hurt music sales has caused Sony Music to reconsider its own digital music plans. PC World reports that, during a recent company briefing, Sony Music CFO Kevin Kelleher questioned whether or not the free, ad-supported services are taking away from how quickly, and to what extent, the company can grow those paid services. “That’s something we’re paying attention to… It’s an area that’s gotten everyone’s attention,” he observed.

This is important because, as CD sales and digital music downloads continue to shrink, streaming services offer a potential ray of sunshine for the recorded music industry. Such companies as Pandora and Spotify routinely lose money due to a combination of high royalty fees and low revenue, an imbalance that appears to be due to poor ROI on ad-supported tiers and not enough premium subscribers to sustain a business model.

While Sony says the move by Taylor Swift (not a Sony artist) to pull her music from Spotify made the company sit up and take notice, it isn’t enough to make anyone want to change the dynamics of the digital music business. In fact, Sony says it’s “very encouraged with the pay streaming model.” Approximately 27 million people worldwide pay for streaming subscriptions, Sony says, and the company is focused on helping that number grow.

 

A publication of Bunzel Media Resources © 2014

Russia and China Are Teaming Up as the World’s New Power Elite

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If there were any remaining doubts about the unlimited stupidity Western corporate media is capable of dishing out, the highlight of the Asia-Pacific Economic Cooperation (APEC) summit in Beijing has been defined as Russian President Vladimir Putin supposedly “hitting” on Chinese President Xi Jinping’s wife – and the subsequent Chinese censoring of the moment when Putin draped a shawl over her shoulders in the cold air where the leaders were assembled. What next? Putin and Xi denounced as a gay couple?Let’s dump the clowns and get down to the serious business. Right at the start, President Xi urged APEC to “add firewood to the fire of the Asia-Pacific and world economy”. Two days later, China got what it wanted on all fronts.

1) Beijing had all 21 APEC member-nations endorsing the Free Trade Area of the Asia-Pacific (FTAAP) – the Chinese vision of an “all inclusive, all-win” trade deal capable of advancing Asia-Pacific cooperation – see South China Morning Post (paywall). The loser was the US-driven, corporate-redacted, fiercely opposed (especially by Japan and Malaysia) 12-nation Trans-Pacific Partnership (TPP). [See also here].

2) Beijing advanced its blueprint for “all-round connectivity” (in Xi’s words) across Asia-Pacific – which implies a multi-pronged strategy. One of its key features is the implementation of the Beijing-based US$50 billion Asian Infrastructure Investment Bank. That’s China’s response to Washington refusing to give it a more representative voice at the International Monetary Fund than the current, paltry 3.8% of votes (a smaller percentage than the 4.5% held by stagnated France).

3) Beijing and Moscow committed to a second gas mega-deal – this one through the Altai pipeline in Western Siberia – after the initial “Power of Siberia” mega-deal clinched last May.

4) Beijing announced the funneling of no less than US$40 billion to start building the Silk Road Economic Belt and the 21st Century Maritime Silk Road.

Predictably, once again, this vertiginous flurry of deals and investment had to converge towards the most spectacular, ambitious, wide-ranging plurinational infrastructure offensive ever attempted: the multiple New Silk Roads – that complex network of high-speed rail, pipelines, ports, fiber optic cables and state of the art telecom that China is already building across the Central Asian stans, linked to Russia, Iran, Turkey and the Indian Ocean, and branching out to Europe all the way to Venice, Rotterdam, Duisburg and Berlin.Now imagine the paralyzed terror of the Washington/Wall Street elites as they stare at Beijing interlinking Xi’s “Asia-Pacific Dream” way beyond East Asia towards all-out, pan-Eurasia trade – with the center being, what else, the Middle Kingdom; a near future Eurasia as a massive Chinese Silk Belt with, in selected latitudes, a sort of development condominium with Russia.Vlad doesn’t do stupid stuff

As for “Don Juan” Putin, everything one needs to know about Asia-Pacific as a Russian strategic/economic priority was distilled in his intervention at the APEC CEO summit.

This was in fact an economic update of his by now notorious speech at the Valdai Club meeting in Sochi in October, followed by a wide-ranging Q&A, which was also duly ignored by Western corporate media (or spun as yet more “aggression”).The Kremlin has conclusively established that Washington/Wall Street elites have absolutely no intention of allowing a minimum of multipolarity in international relations. What’s left is chaos.

There’s no question that Moscow pivoting away from the West and towards East Asia is a process directly influenced by President Barack Obama’s self-described “Don’t Do Stupid Stuff” foreign policy doctrine, a formula he came up with aboard Air Force One when coming back last April from a trip to – where else – Asia.

But the Russia-China symbiosis/strategic partnership is developing in multiple levels.

On energy, Russia is turning east because that’s where top demand is. On finance, Moscow ended the pegging of the rouble to the US dollar and euro; not surprisingly the US dollar instantly – if only briefly – dropped against the rouble. Russian bank VTB announced it may leave the London Stock Exchange for Shanghai’s – which is about to become directly linked to Hong Kong. And Hong Kong, for its part, is already  attracting Russian energy giants.

Now mix all these key developments with the massive yuan-rouble energy double deal, and the picture is clear; Russia is actively protecting itself from speculative/politically motivated Western attacks against its currency.

The Russia-China symbiosis/strategic partnership visibly expands on energy, finance and, also inevitably, on the military technology front. That includes, crucially, Moscow selling Beijing the S-400 air defense system and, in the future, the S-500 – against which the Americans are sitting ducks; and this while Beijing develops surface-to-ship missiles that can take out everything the US Navy can muster.

Anyway, at APEC, Xi and Obama at least agreed to establish a mutual reporting mechanism on major military operations. That might – and the operative word is “might” – prevent an East Asia replica of relentless NATO-style whining of the “Russia has invaded Ukraine!” kind.

Freak out, neo-cons

When Little Dubya Bush came to power in early 2001, the neo-cons were faced with a stark fact: it was just a matter of time before the US would irreversibly lose its global geopolitical and economic hegemony. So there were only two choices; either manage the decline, or bet the whole farm to consolidate global hegemony using – what else – war.We all know about the wishful thinking enveloping the “low-cost” war on Iraq – from Paul Wolfowitz’s “We are the new OPEC” to the fantasy of Washington being able to decisively intimidate all potential challengers, the EU, Russia and China.And we all know how it went spectacularly wrong. Even as that trillionaire adventure, as Minqi Li analyzed in The Rise of China and the Demise of the Capitalist World Economy, “has squandered US imperialism’s remaining space for strategic maneuver”, the humanitarian imperialists of the Obama administration still have not given up, refusing to admit the US has lost any ability to provide any meaningful solution to the current, as Immanuel Wallerstein would define it, world-system.

There are sporadic signs of intelligent geopolitical life in US academia, such as this at the Wilson Center website (although Russia and China are not a “challenge” to a supposed world “order”: their partnership is actually geared to create some order among the chaos.)

And yet this opinion piece at USNews is the kind of stuff passing for academic “analysis” in US media.

On top of it, Washington/Wall Street elites – through their myopic Think Tankland – still cling to mythical platitudes such as the “historical” US role as arbiter of modern Asia and key balancer of power.

So no wonder public opinion in the US – and Western Europe – cannot even imagine the earth-shattering impact the New Silk Roads will have in the geopolitics of the young 21st century.

Washington/Wall Street elites – talk about Cold War hubris – always took for granted that Beijing and Moscow would be totally apart. Now puzzlement prevails. Note how the Obama administration’s “pivoting to Asia” has been completely erased from the narrative – after Beijing identified it for what it is: a warlike provocation. The new meme is “rebalance”.

German businesses, for their part, are absolutely going bonkers with Xi’s New Silk Roads uniting Beijing to Berlin – crucially via Moscow. German politicians sooner rather than later will have to get the message.

All this will be discussed behind closed doors this weekend at key meetings on the sidelines of the Group of 20 in Australia. The Russia-China-Germany alliance-in-the-making will be there. The BRICS, crisis or no crisis, will be there. All the players in the G-20 actively working for a multipolar world will be there.

APEC once again has shown that the more geopolitics change, the more it won’t stay the same; as the exceptional dogs of war, inequality and divide and rule keep barking, the China-Russia pan-Eurasian caravan will keep going, going, going – further on down the (multipolar) road.

This essay originally appeared on Asia Times.

 

Pepe Escobar is the roving correspondent for Asia Times. His latest book is “Obama Does Globalistan (Nimble Books, 2009).” He may be reached at pepeasia@yahoo.com.

http://www.alternet.org/world/russia-and-china-are-teaming-worlds-new-power-elite?akid=12476.265072.cENggk&rd=1&src=newsletter1027278&t=27

Why America’s housing disaster is back and wreaking terror

“An ongoing criminal enterprise”:

Remember the housing nightmare that busted the economy? The crooks are back and here’s what they’re secretly up to

"An ongoing criminal enterprise": Why America's housing disaster is back and wreaking terror
(Credit: Reuters/Robert Galbraith)

According to housing analyst RealtyTrac, foreclosure filings shot up 15 percent last month, the largest increase in over four years. Almost 60,000 homes were newly scheduled for auction in October, a spike far beyond the usual seasonal rush to complete repossessions before the holidays. Auctions rose 53 percent in Nevada, 118 percent in New Jersey and an amazing 399 percent in Oregon.

Continued demand for foreclosed properties by institutional investors and increased sale prices finally make it cost-effective to sell these homes, after persistent delays. “Distressed properties that have been in a holding pattern for years are finally being cleared for landing at the foreclosure auction,” said Daren Blomquist, vice president at RealtyTrac.

If lenders have finally begun to finish their oldest foreclosure cases, you might assume that they have moved past their problems with processing foreclosures. After all, for years, mortgage servicing companies, who file foreclosures on behalf of the owners of the loans, presented millions of false documents to courts. They also engaged in “robo-signing,” where employees signed affidavits attesting to the validity of foreclosure actions, despite having no knowledge about the underlying cases. The five leading servicers agreed to a $25 billion settlement over these problems, vowing to reform their ways.

But you would be wrong to assume that anything has changed in our foreclosure courts.

New evidence over the last month shows that servicers employ virtually the same improper techniques when foreclosing. Instead of robo-signers, they use robo-witnesses, or robo-verifiers; more on them in a moment. Regardless, they are breaking laws and degrading the integrity of the courts to kick people out of their homes, a sad and enduring legacy of the destruction of the nation’s property system during the housing bubble years.

In 22 U.S. states, lenders must file foreclosure complaints with a court, and prove the facts of the case before a judge. But servicers have shown themselves largely unable to perform this seemingly simple task.



During the housing bubble, mortgages were traded so rapidly, with insufficient documentation, that true ownership has been confused on millions of loans. In addition, servicers operate with such thin profit margins and bare-bones staff that they don’t have the resources to retrace the steps of the mortgages, which may have gone through eight different companies or more. So they have resorted to a number of shortcuts to evict homeowners.

When servicers got caught robo-signing, they stopped. But they trained a new set of employees, best described as robo-witnesses. These low-level personnel work for the servicer’s litigation departments, and they fly around the country from courtroom to courtroom. Reading from a script, robo-witnesses claim to have personal knowledge of their employer’s practices, and that they can swear to the legitimacy of the foreclosures. “They’re trained to parrot a script, you could just bring a parrot in,” said Lisa Epstein, a foreclosure expert now working for a defense attorney.

But these robo-witnesses know pretty much nothing beyond the script; they have no insight into the individual cases in which they’re testifying. “They walk into court having read the documents of the case a moment before,” said Thomas Ice, a foreclosure defense attorney in Palm Beach, Florida. Ice argues that it’s no different than robo-signing, just moved into the courtroom. “They don’t give their signature now, they just perjure themselves in court.”

This has been a standard technique for several years; I first wrote about it in 2012. But now, defense attorneys have adjusted, cross-examining the robo-witnesses and appealing cases because of this mass perjury. And appeals courts in Florida have begun to agree.

In one case last month, the 1st District Court of Appeals reversed a case featuring robo-witness Andrew Benefield. The court found that Benefield “had no personal information” about the authenticity of the documents he testified about in the case.  In another case, the appeals court ruled that the robo-witness swore to the correct loan balance based only on the review of computer printouts, “and she had no information about how and when those records had been prepared or where the data came from.” Other appeals courts in Florida have ruled similarly, effectively making robo-witnesses a failed tactic.

Servicers have run into another problem in Florida, ground zero for the foreclosure crisis. Because of a series of state Supreme Court rulings after the robo-signing scandal, an employee affiliated with the servicer must sign a document that says, “Under penalty of perjury, I declare that I have read the foregoing, and the facts alleged therein are true and correct to the best of my knowledge and belief.”

Defense lawyer Evan Rosen of Fort Lauderdale, Florida, decided to depose one of the signers of these verification statements: Lona Hunt, foreclosure specialist for Seterus, servicer for the mortgage giant Fannie Mae. In the deposition, Hunt admitted twice that she never read the complaint at all before she signed the document swearing that the facts were correct.

Hunt testified that she only scanned the foreclosure complaint, checking that the defendant’s name and date of default matched what was on a computer screen.  She misidentified key documents in the case, did not know the meaning of basic legal terms in the complaint, and basically showed little expertise about anything related to mortgages and foreclosures. You can read the deposition here.

It’s impossible for someone with such a limited knowledge base about foreclosures to verify that the facts of an individual case are correct. And keep in mind that this verification process exists in Florida because servicers illegally robo-signed official documents and got caught. The courts decided to increase legal consequences by forcing servicers to verify the truthfulness of their claims. Yet they are robo-signing those verifications too.

So why is this important? If the verifiers cannot verify and the witnesses bear no witness to the facts, so what? Didn’t homeowners default on their loans? Why should they get a free pass? This is the familiar refrain of those who would minimize this misconduct. Some even blame the states for forcing the poor servicers to prove they own the homes they want to repossess.

Here’s the truth. False documents and mass perjury, both criminal violations, make a mockery of the judicial system. It means that the servicers have as much legal right to foreclose as I do. To say that the homeowner is guilty of not paying, so their lender can do whatever they want to force them out of the home, is like saying the murder suspect is obviously guilty, so the cops can plant false evidence. We have a system of law to defend the rights of everyone, and ensure equal treatment.

Moreover, as Jim Kowalski, executive director of Jacksonville Area Legal Aid and a longtime foreclosure attorney, told me, “when you have procedural defects in these cases, you will almost always have substantive defects.” Multiple reports and studies verify this. The inspector general for HUD, for example, took a sample of JPMorgan Chase loans and could not find documented proof for the amount owed on 35 out of 36 loans. This gets worse when servicing transfers between several companies; the amount owed becomes subject to a game of telephone, with dollar amounts effectively made up.

That means that the amounts servicers claim borrowers owe have no basis in fact. Multiply that by the tens of millions of outstanding mortgages, and you’re talking about tens if not hundreds of billions in questionable charges, from which nobody is safe. This makes defaults really educated guesses, often driven by the fake fees and incompetence. To compound this, servicers use bogus witnesses and perjured documents to “prove” the defaults are legitimate. The entire system is fraudulent and in need of overhaul.

This is where law enforcement should step in. The Justice Department settled with these same companies over robo-signing, and in the agreements demanded that they never do it again. Well, they’re doing it again; in fact, they never stopped. Bad documents have remained in the system, as Gretchen Morgenson explained over the weekend, being used to continue to punish borrowers. Nobody has rooted out this rot at the heart of our housing market. “It’s happening every day,” lawyer Tom Ice said. “And the world doesn’t care.”

Ninety-five percent of borrowers never show up to defend their foreclosures. Servicers get away with this because they can afford to lose one case if another 20 go through. The only way to fix this crisis on a thorough basis, instead of waiting for one-off judgments in individual cases, is for government officials to enforce the law. Otherwise, literally nobody is safe from the corrupt practices of a mortgage industry acting as an ongoing criminal enterprise.

Google’s secret NSA alliance: The terrifying deals between Silicon Valley and the security state

Inside the high-level, complicated deals — and the rise of a virtually unchecked surveillance power

Google's secret NSA alliance: The terrifying deals between Silicon Valley and the security state
Cover detail of “@War” by Shane Harris

In mid-December 2009, engineers at Google’s headquarters in Mountain View, California, began to suspect that hackers in China had obtained access to private Gmail accounts, including those used by Chinese human rights activists opposed to the government in Beijing.

 Like a lot of large, well-known Internet companies, Google and its users were frequently targeted by cyber spies and criminals. But when the engineers looked more closely, they discovered that this was no ordinary hacking campaign.

In what Google would later describe as “a highly sophisticated and targeted attack on our corporate infrastructure originating from China,” the thieves were able to get access to the password system that allowed Google’s users to sign in to many Google applications at once. This was some of the company’s most important intellectual property, considered among the “crown jewels” of its source code by its engineers. Google wanted concrete evidence of the break-in that it could share with U.S. law enforcement and intelligence authorities. So they traced the intrusion back to what they believed was its source — a server in Taiwan where data was sent after it was siphoned off Google’s systems, and that was presumably under the control of hackers in mainland China.

“Google broke in to the server,” says a former senior intelligence official who’s familiar with the company’s response. The decision wasn’t without legal risk, according to the official. Was this a case of hacking back? Just as there’s no law against a homeowner following a robber back to where he lives, Google didn’t violate any laws by tracing the source of the intrusion into its systems. It’s still unclear how the company’s investigators gained access to the server, but once inside, if they had removed or deleted data, that would cross a legal line. But Google didn’t destroy what it found. In fact, the company did something unexpected and unprecedented — it shared the information.

Google uncovered evidence of one of the most extensive and far-reaching campaigns of cyber espionage in U.S. history. Evidence suggested that Chinese hackers had penetrated the systems of nearly three dozen other companies, including technology mainstays such as Symantec, Yahoo, and Adobe, the defense contractor Northrop Grumman, and the equipment maker Juniper Networks. The breadth of the campaign made it hard to discern a single motive. Was this industrial espionage? Spying on human rights activists? Was China trying to gain espionage footholds in key sectors of the U.S. economy or, worse, implant malware in equipment used to regulate critical infrastructure?



The only things Google seemed certain of was that the campaign was massive and persistent, and that China was behind it. And not just individual hackers, but the Chinese government, which had the means and the motive to launch such a broad assault.

Google shared what it found with the other targeted companies, as well as U.S. law enforcement and intelligence agencies. For the past four years, corporate executives had been quietly pressing government officials to go public with information about Chinese spying, to shame the country into stopping its campaign. But for President Obama or Secretary of State Hillary Clinton to give a speech pointing the finger at China, they needed indisputable evidence that attributed the attacks to sources in China. And looking at what Google had provided it, government analysts were not sure they had it. American officials decided the relationship between the two economic superpowers was too fragile and the risk of conflict too high to go public with what Google knew.

Google disagreed.

Deputy Secretary of State James Steinberg was at a cocktail party in Washington when an aide delivered an urgent message: Google was going to issue a public statement about the Chinese spying campaign. Steinberg, the second-highest-ranking official in U.S. foreign policy, immediately grasped the significance of the company’s decision. Up to that moment, American corporations had been unwilling to publicly accuse the Chinese of spying on their networks or stealing their intellectual property. The companies feared losing the confidence of investors and customers, inviting other hackers to target their obviously weak defenses, and igniting the fury of Chinese government officials, who could easily revoke access to one of the biggest and fastest-growing markets for U.S. goods and services. For any company to come out against China would be momentous. But for Google, the most influential company of the Internet age, it was historic.

The next day, January 12, 2010, Google’s chief legal officer, David Drummond, posted a lengthy statement to the company’s blog, accusing hackers in China of attacking Google’s infrastructure and criticizing the government for censoring Internet content and suppressing human rights activists. “We have taken the unusual step of sharing information about these attacks with a broad audience not just because of the security and human rights implications of what we have unearthed, but also because this information goes to the heart of a much bigger global debate about freedom of speech,” said Drummond.

Back at the State Department, officials saw a rare opportunity to put pressure on China for spying. That night Hillary Clinton issued her own statement. “We have been briefed by Google on these allegations, which raise very serious concerns and questions. We look to the Chinese government for an explanation,” she said. “The ability to operate with confidence in cyberspace is critical in a modern society and economy.”

As diplomatic maneuvers go, this was pivotal. Google had just given the Obama administration an opening to accuse China of espionage without having to make the case itself. Officials could simply point to what Google had discovered as a result of its own investigation.

“It gave us an opportunity to discuss the issues without having to rely on classified sources or sensitive methods” of intelligence gathering, Steinberg says. The administration had had little warning about Google’s decision, and it was at odds with some officials’ reluctance to take the espionage debate public. But now that it was, no one complained.

“It was their decision. I certainly had no objection,” Steinberg says.

The Obama administration began to take a harsher tone with China, starting with a major address Clinton gave about her Internet Freedom initiative nine days later. She called on China to stop censoring Internet searches and blocking access to websites that printed criticism about the country’s leaders. Clinton likened such virtual barriers to the Berlin Wall.

For its part, Google said it would stop filtering search results for words and subjects banned by government censors. And if Beijing objected, Google was prepared to pull up stakes and leave the Chinese market entirely, losing out on billions of dollars in potential revenues. That put other U.S. technology companies in the hot seat. Were they willing to put up with government interference and suppression of free speech in order to keep doing business in China?

After Google’s declaration, it was easier for other companies to admit they’d been infiltrated by hackers. After all, if it happened to Google, it could happen to anyone. Being spied on by the Chinese might even be a mark of distinction, insofar as it showed that a company was important enough to merit the close attention of a superpower. With one blog post, Google had changed the global conversation about cyber defense.

The company had also shown that it knew a lot about Chinese spies. The NSA wanted to know how much.

Google had also alerted the NSA and the FBI that its networks were breached by hackers in China. As a law enforcement agency, the FBI could investigate the intrusion as a criminal matter. But the NSA needed Google’s permission to come in and help assess the breach.

On the day that Google’s lawyer wrote the blog post, the NSA’s general counsel began drafting a “cooperative research and development agreement,” a legal pact that was originally devised under a 1980 law to speed up the commercial development of new technologies that are of mutual interest to companies and the government. The agreement’s purpose is to build something — a device or a technique, for instance. The participating company isn’t paid, but it can rely on the government to front the research and development costs, and it can use government personnel and facilities for the research. Each side gets to keep the products of the collaboration private until they choose to disclose them. In the end, the company has the exclusive patent rights to build whatever was designed, and the government can use any information that was generated during the collaboration.

It’s not clear what the NSA and Google built after the China hack. But a spokeswoman at the agency gave hints at the time the agreement was written. “As a general matter, as part of its information-assurance mission, NSA works with a broad range of commercial partners and research associates to ensure the availability of secure tailored solutions for Department of Defense and national security systems customers,” she said. It was the phrase “tailored solutions” that was so intriguing. That implied something custom built for the agency, so that it could perform its intelligence-gathering mission. According to officials who were privy to the details of Google’s arrangements with the NSA, the company agreed to provide information about traffic on its networks in exchange for intelligence from the NSA about what it knew of foreign hackers. It was a quid pro quo, information for information.

And from the NSA’s perspective, information in exchange for protection.

The cooperative agreement and reference to a “tailored solution” strongly suggest that Google and the NSA built a device or a technique for monitoring intrusions into the company’s networks. That would give the NSA valuable information for its so-called active defense system, which uses a combination of automated sensors and algorithms to detect malware or signs of an imminent attack and take action against them. One system, called Turmoil, detects traffic that might pose a threat. Then, another automated system called Turbine decides whether to allow the traffic to pass or to block it. Turbine can also select from a number of offensive software programs and hacking techniques that a human operator can use to disable the source of the malicious traffic. He might reset the source’s Internet connection or redirect the traffic to a server under the NSA’s control. There the source can be injected with a virus or spyware, so the NSA can continue to monitor it.

For Turbine and Turmoil to work, the NSA needs information, particularly about the data flowing over a network. With its millions of customers around the world, Google is effectively a directory of people using the Internet. It has their e-mail addresses. It knows where they’re physically located when they log in. It knows what they search for on the web. The government could command the company to turn over that information, and it does as part of the NSA’s Prism program, which Google had been participating in for a year by the time it signed the cooperative agreement with the NSA. But that tool is used for investigating people whom the government suspects of terrorism or espionage.

The NSA’s cyber defense mission takes a broader view across networks for potential threats, sometimes before it knows who those threats are. Under Google’s terms of service, the company advises its users that it may share their “personal information” with outside organizations, including government agencies, in order to “detect, prevent, or otherwise address fraud, security or technical issues” and to “protect against harm to the rights, property or safety of Google.” According to people familiar with the NSA and Google’s arrangement, it does not give the government permission to read Google users’ e-mails.

They can do that under Prism. Rather, it lets the NSA evaluate Google hardware and software for vulnerabilities that hackers might exploit. Considering that the NSA is the single biggest collector of zero day vulnerabilities, that information would help make Google more secure than others that don’t get access to such prized secrets. The agreement also lets the agency analyze intrusions that have already occurred, so it can help trace them back to their source.

Google took a risk forming an alliance with the NSA. The company’s corporate motto, “Don’t be evil,” would seem at odds with the work of a covert surveillance and cyber warfare agency. But Google got useful information in return for its cooperation. Shortly after the China revelation, the government gave Sergey Brin, Google’s cofounder, a temporary security clearance that allowed him to attend a classified briefing about the campaign against his company. Government analysts had concluded that the intrusion was directed by a unit of the People’s Liberation Army. This was the most specific information Google could obtain about the source of the intrusion. It could help Google fortify its systems, block traffic from certain Internet addresses, and make a more informed decision about whether it wanted to do business in China at all. Google’s executives might pooh-pooh the NSA’s “secret sauce.” But when the company found itself under attack, it turned to Fort Meade for help.

In its blog post, Google said that more than twenty companies had been hit by the China hackers, in a campaign that was later dubbed Aurora after a file name on the attackers’ computer. A security research firm soon put the number of targets at around three dozen. Actually, the scope of Chinese spying was, and is, much larger.

Security experts in and outside of government have a name for the hackers behind campaigns such as Aurora and others targeting thousands of other companies in practically every sector of the U.S. economy: the advanced persistent threat. It’s an ominous-sounding title, and a euphemistic one. When government officials mention “APT” today, what they often mean is China, and more specifically, hackers working at the direction of Chinese military and intelligence officials or on their behalf.

The “advanced” part of the description refers in part to the hackers’ techniques, which are as effective as any the NSA employs. The Chinese cyber spies can use an infected computer’s own chat and instant-messenger applications to communicate with a command-and-control server. They can implant a piece of malware and then remotely customize it, adding new information-harvesting features. The government apparatus supporting all this espionage is also advanced, more so than the loose-knit groups of cyber vandals or activists such as Anonymous that spy on companies for political purposes, or even the sophisticated Russian criminal groups, who are more interested in stealing bank account and credit card data. China plays a longer game. Its leaders want the country to become a first-tier economic and industrial power in a single generation, and they are prepared to steal the knowledge they need to do it, U.S. officials say.

That’s where the “persistent” part comes into play. Gathering that much information, from so many sources, requires a relentless effort, and the will and financial resources to try many different kinds of intrusion techniques, including expensive zero day exploits. Once the spies find a foothold inside an organization’s networks, they don’t let go unless they’re forced out. And even then they quickly return. The “threat” such spying poses to the U.S. economy takes the form of lost revenue and strategic position. But also the risk that the Chinese military will gain hidden entry points into critical-infrastructure control systems in the United States. U.S. intelligence officials believe that the Chinese military has mapped out infrastructure control networks so that if the two nations ever went to war, the Chinese could hit American targets such as electrical grids or gas pipelines without having to launch a missile or send a fleet of bombers.

Operation Aurora was the first glimpse into the breadth of the ATP’s exploits. It was the first time that names of companies had been attached to Chinese espionage. “The scope of this is much larger than anybody has ever conveyed,” Kevin Mandia, CEO and president of Mandiant, a computer security and forensics company located outside Washington, said at the time of Operation Aurora. The APT represented hacking on a national, strategic level. “There [are] not 50 companies compromised. There are thousands of companies compromised. Actively, right now,” said Mandia, a veteran cyber investigator who began his career as a computer security officer in the air force and worked there on cybercrime cases. Mandiant was becoming a goto outfit that companies called whenever they discovered spies had penetrated their networks. Shortly after the Google breach, Mandiant disclosed the details of its investigations in a private meeting with Defense Department officials a few days before speaking publicly about it.

The APT is not one body but a collection of hacker groups that include teams working for the People’s Liberation Army, as well as so-called patriotic hackers, young, enterprising geeks who are willing to ply their trade in service of their country. Chinese universities are also stocked with computer science students who work for the military after graduation. The APT hackers put a premium on stealth and patience. They use zero days and install backdoors. They take time to identify employees in a targeted organization, and send them carefully crafted spear-phishing e-mails laden with spyware. They burrow into an organization, and they often stay there for months or years before anyone finds them, all the while siphoning off plans and designs, reading e-mails and their attachments, and keeping tabs on the comings and goings of employees — the hackers’ future targets. The Chinese spies behave, in other words, like their American counterparts.

No intelligence organization can survive if it doesn’t know its enemy. As expansive as the NSA’s network of sensors is, it’s sometimes easier to get precise intelligence about hacking campaigns from the targets themselves. That’s why the NSA partnered with Google. It’s why when Mandiant came calling with intelligence on the APT, officials listened to what the private sleuths had to say. Defending cyberspace is too big a job even for the world’s elite spy agency. Whether they like it or not, the NSA and corporations must fight this foe together.

Google’s Sergey Brin is just one of hundreds of CEOs who have been brought into the NSA’s circle of secrecy. Starting in 2008, the agency began offering executives temporary security clearances, some good for only one day, so they could sit in on classified threat briefings.

“They indoctrinate someone for a day, and show them lots of juicy intelligence about threats facing businesses in the United States,” says a telecommunications company executive who has attended several of the briefings, which are held about three times a year. The CEOs are required to sign an agreement pledging not to disclose anything they learn in the briefings. “They tell them, in so many words, if you violate this agreement, you will be tried, convicted, and spend the rest of your life in prison,” says the executive.

Why would anyone agree to such severe terms? “For one day, they get to be special and see things few others do,” says the telecom executive, who, thanks to having worked regularly on classified projects, holds high-level clearances and has been given access to some of the NSA’s most sensitive operations, including the warrantless surveillance program that began after the 9/11 attacks. “Alexander became personal friends with many CEOs” through these closed-door sessions, the executive adds. “I’ve sat through some of these and said, ‘General, you tell these guys things that could put our country in danger if they leak out.’ And he said, ‘I know. But that’s the risk we take. And if it does leak out, they know what the consequences will be.’ ”

But the NSA doesn’t have to threaten the executives to get their attention. The agency’s revelations about stolen data and hostile intrusions are frightening in their own right, and deliberately so. “We scare the bejeezus out of them,” a government official told National Public Radio in 2012. Some of those executives have stepped out of their threat briefings meeting feeling like the defense contractor CEOs who, back in the summer of 2007, left the Pentagon with “white hair.”

Unsure how to protect themselves, some CEOs will call private security companies such as Mandiant. “I personally know of one CEO for whom [a private NSA threat briefing] was a life-changing experience,” Richard Bejtlich, Mandiant’s chief security officer, told NPR. “General Alexander sat him down and told him what was going on. This particular CEO, in my opinion, should have known about [threats to his company] but did not, and now it has colored everything about the way he thinks about this problem.”

The NSA and private security companies have a symbiotic relationship. The government scares the CEOs and they run for help to experts such as Mandiant. Those companies, in turn, share what they learn during their investigations with the government, as Mandiant did after the Google breach in 2010. The NSA has also used the classified threat briefings to spur companies to strengthen their defenses.

In one 2010 session, agency officials said they’d discovered a flaw in personal computer firmware — the onboard memory and codes that tell the machine how to work — that could allow a hacker to turn the computer “into a brick,” rendering it useless. The CEOs of computer manufacturers who attended the meeting, and who were previously aware of the design flaw, ordered it fixed.

Private high-level meetings are just one way the NSA has forged alliances with corporations. Several classified programs allow companies to share the designs of their products with the agency so it can inspect them for flaws and, in some instances, install backdoors or other forms of privileged access. The types of companies that have shown the NSA their products include computer, server, and router manufacturers; makers of popular software products, including Microsoft; Internet and e-mail service providers; telecommunications companies; satellite manufacturers; antivirus and Internet security companies; and makers of encryption algorithms.

The NSA helps the companies find weaknesses in their products. But it also pays the companies not to fix some of them. Those weak spots give the agency an entry point for spying or attacking foreign governments that install the products in their intelligence agencies, their militaries, and their critical infrastructure. Microsoft, for instance, shares zero day vulnerabilities in its products with the NSA before releasing a public alert or a software patch, according to the company and U.S. officials. Cisco, one of the world’s top network equipment makers, leaves backdoors in its routers so they can be monitored by U.S. agencies, according to a cyber security professional who trains NSA employees in defensive techniques. And McAfee, the Internet security company, provides the NSA, the CIA, and the FBI with network traffic flows, analysis of malware, and information about hacking trends.

Companies that promise to disclose holes in their products only to the spy agencies are paid for their silence, say experts and officials who are familiar with the arrangements. To an extent, these openings for government surveillance are required by law. Telecommunications companies in particular must build their equipment in such a way that it can be tapped by a law enforcement agency presenting a court order, like for a wiretap. But when the NSA is gathering intelligence abroad, it is not bound by the same laws. Indeed, the surveillance it conducts via backdoors and secret flaws in hardware and software would be illegal in most of the countries where it occurs.

Of course, backdoors and unpatched flaws could also be used by hackers. In 2010 a researcher at IBM publicly revealed a flaw in a Cisco operating system that allows a hacker to use a backdoor that was supposed to be available only to law enforcement agencies. The intruder could hijack the Cisco device and use it to spy on all communications passing through it, including the content of e-mails. Leaving products vulnerable to attack, particularly ubiquitous software programs like those produced by Microsoft, puts millions of customers and their private information at risk and jeopardizes the security of electrical power facilities, public utilities, and transportation systems.

Under U.S. law, a company’s CEO is required to be notified whenever the government uses its products, services, or facilities for intelligence-gathering purposes. Some of these information-sharing arrangements are brokered by the CEOs themselves and may be reviewed only by a few lawyers. The benefits of such cooperation can be profound. John Chambers, the CEO of Cisco, became friends with George W. Bush when he was in office. In April 2006, Chambers and the president ate lunch together at the White House with Chinese president Hu Jintao, and the next day Bush gave Chambers a lift on Air Force One to San Jose, where the president joined the CEO at Cisco headquarters for a panel discussion on American business competitiveness. California governor Arnold Schwarzenegger also joined the conversation. Proximity to political power is its own reward. But preferred companies also sometimes receive early warnings from the government about threats against them.

The Homeland Security Department also conducts meetings with companies through its “cross sector working groups” initiative. These sessions are a chance for representatives from the universe of companies with which the government shares intelligence to meet with one another and hear from U.S. officials. The attendees at these meetings often have security clearances and have undergone background checks and interviews. The department has made the schedule and agendas of some of these meetings public, but it doesn’t disclose the names of companies that participated or many details about what they discussed.

Between January 2010 and October 2013, the period for which public records are available, the government held at least 168 meetings with companies just in the cross sector working group. There have been hundreds more meetings broken out by specific industry categories, such as energy, telecommunications, and transportation.

A typical meeting may include a “threat briefing” by a U.S. government official, usually from the NSA, the FBI, or the Homeland Security Department; updates on specific initiatives, such as enhancing bank website security, improving information sharing among utility companies, or countering malware; and discussion of security “tools” that have been developed by the government and industry, such as those used to detect intruders on a network. One meeting in April 2012 addressed “use cases for enabling information sharing for active cyber defense,” the NSA-pioneered process of disabling cyber threats before they can do damage. The information sharing in this case was not among government agencies but among corporations.

Most meetings have dealt with protecting industrial control systems, the Internet-connected devices that regulate electrical power equipment, nuclear reactors, banks, and other vital facilities. That’s the weakness in U.S. cyberspace that most worries intelligence officials. It was the subject that so animated George W. Bush in 2007 and that Barack Obama addressed publicly two years later. The declassified agendas for these meetings offer a glimpse at what companies and the government are building for domestic cyber defense.

On September 23, 2013, the Cross Sector Enduring Security Framework Operations Working Group discussed an update to an initiative described as “Connect Tier 1 and USG Operations Center.” “Tier 1” usually refers to a major Internet service provider or network operator. Some of the best-known Tier 1 companies in the United States are AT&T, Verizon, and CenturyLink. “USG” refers to the U.S. government. The initiative likely refers to a physical connection running from an NSA facility to those companies, as part of an expansion of the DIB pilot program. The expansion was authorized by a presidential executive order in February 2013 aimed at increasing security of critical-infrastructure sites around the country. The government, mainly through the NSA, gives threat intelligence to two Internet service providers, AT&T and CenturyLink. They, in turn, can sell “enhanced cybersecurity services,” as the program is known, to companies that the government deems vital to national and economic security. The program is nominally run by the Homeland Security Department, but the NSA provides the intelligence and the technical expertise.

Through this exchange of intelligence, the government has created a cyber security business. AT&T and CenturyLink are in effect its private sentries, selling protection to select corporations and industries. AT&T has one of the longest histories of any company participating in government surveillance. It was among the first firms that voluntarily handed over call records of its customers to the NSA following the 9/11 attacks, so the agency could mine them for potential connections to terrorists — a program that continues to this day. Most phone calls in the United States pass through AT&T equipment at some point, regardless of which carrier initiates them. The company’s infrastructure is one of the most important and frequently tapped repositories of electronic intelligence for the NSA and U.S. law enforcement agencies.

CenturyLink, which has its headquarters in Monroe, Louisiana, has been a less familiar name in intelligence circles over the years. But in 2011 the company acquired Qwest Communications, a telecommunications firm that is well known to the NSA. Before the 9/11 attacks, NSA officials approached Qwest executives and asked for access to its high-speed fiber-optic networks, in order to monitor them for potential cyber attacks. The company rebuffed the agency’s requests because officials hadn’t obtained a court order to get access to the company’s equipment. After the terrorist attacks, NSA officials again came calling, asking Qwest to hand over its customers’ phone records without a court-approved warrant, as AT&T had done. Again, the company refused. It took another ten years and the sale of the company, but Qwest’s networks are now a part of the NSA’s extended security apparatus.

The potential customer base for government-supplied cyber intelligence, sold through corporations, is as diverse as the U.S. economy itself. To obtain the information, a company must meet the government’s definition of a critical infrastructure: “assets, systems, and networks, whether physical or virtual, so vital to the United States that their incapacitation or destruction would have a debilitating effect on security, national economic security, national public health or safety, or any combination thereof.” That may seem like a narrow definition, but the categories of critical infrastructure are numerous and vast, encompassing thousands of businesses. Officially, there are sixteen sectors: chemical; commercial facilities, to include shopping centers, sports venues, casinos, and theme parks; communications; critical manufacturing; dams; the defense industrial base; emergency services, such as first responders and search and rescue; energy; financial services; food and agriculture; government facilities; health care and public health; information technology; nuclear reactors, materials, and waste; transportation systems; and water and wastewater systems.

It’s inconceivable that every company on such a list could be considered “so vital to the United States” that its damage or loss would harm national security and public safety. And yet, in the years since the 9/11 attacks, the government has cast such a wide protective net that practically any company could claim to be a critical infrastructure. The government doesn’t disclose which companies are receiving cyber threat intelligence. And as of now the program is voluntary. But lawmakers and some intelligence officials, including Keith Alexander and others at the NSA, have pressed Congress to regulate the cyber security standards of critical-infrastructure owners and operators. If that were to happen, then the government could require that any company, from Pacific Gas and Electric to Harrah’s Hotels and Casinos, take the government’s assistance, share information about its customers with the intelligence agencies, and build its cyber defenses according to government specifications.

In a speech in 2013 the Pentagon’s chief cyber security adviser, Major General John Davis, announced that Homeland Security and the Defense Department were working together on a plan to expand the original DIB program to more sectors. They would start with energy, transportation, and oil and natural gas, “things that are critical to DOD’s mission and the nation’s economic and national security that we do not directly control,” Davis said. The general called foreign hackers’ mapping of these systems and potential attacks “an imminent threat.” The government will never be able to manage such an extensive security regime on its own. It can’t now, which is why it relies on AT&T and CenturyLink. More companies will flock to this new mission as the government expands the cyber perimeter. The potential market for cyber security services is practically limitless.

Excerpted from “@WAR: The Rise of the Military-Internet Complex” by Shane Harris. Copyright © 2014 by Shane Harris. Used by permission of Houghton Mifflin Harcourt Publishing Company. All rights reserved.

Shane Harris is the author of The Watchers: The Rise of America’s Surveillance State, which won the New York Public Library’s Helen Bernstein Book Award for Excellence in Journalism and was named one of the best books of 2010 by the Economist. Harris won the 2010 Gerald R. Ford Prize for Distinguished Reporting on National Defense. He is currently senior writer at Foreign Policy magazine and an ASU fellow at the New America Foundation, where he researches the future of war.

http://www.salon.com/2014/11/16/googles_secret_nsa_alliance_the_terrifying_deals_between_silicon_valley_and_the_security_state/?source=newsletter

President of Iceland Ólafur Ragnar Grímsson: Social Welfare Benefits the Free Market

by Big Think Editors

November 13, 2014, 12:00 PM
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Icelandic President Ólafur Ragnar Grímsson recently visited Big Think to discuss a number of the successes and challenges relevant to his small island nation. These are issues both resonant in the present day as well as looking ahead toward the future. A few weeks ago, Grímsson tackled climate change, obviously a challenge moving forward rather than a success (at least, not yet). As for today, the topic is one that has contributed to the progress and prosperity of the Nordic countries: Denmark, Finland, Sweden, Norway, and Iceland.

Each of those nations, says Grímsson, has a competitive free market economy augmented by a robust social welfare system. These programs ensure that “everybody, irrespective of their income and class, gets the same right to education, to healthcare, and to equal treatment in an economic way.” In countries like the United States, social welfare and economic progress are sometimes seen as opposing goals. As Grímsson explains, social welfare in the Nordic states is integral to economic progress:

“This coexistence of a social welfare society, with a right to education and healthcare equally distributed throughout society, is one of the pillars of our economic and business success. So you cannot find any business organization in any of the Nordic countries, which is advocating that we should decrease this social welfare system. On the contrary, the prominent business leaders of our countries realize that the evolution of this social welfare system in terms of education and healthcare is one of the major reasons why the Nordic businesses have been globally so successful and why our market economies have grown so aggressively.”

Grímsson tells how an established system dedicated to caring for the sick and educating every child allows the business community to focus on what they do best — business.

“The Nordic formula, not just the Icelandic one, but also from Norway, Sweden, Finland and Denmark, has created what The Economist, the preeminent weekly economic newspaper in the world, deemed a few months ago perhaps the most successful economic model in the last few decades.”

Finally, Grímsson notes that his American friends who decry the Nordic system and employ words like “socialist” as pejorative terms are completely missing the point. All you have to do is look at Iceland’s economic record, as well as the economies of the other Nordic states, to realize that the rewards of this particular social framework transcend all outdated and myopic biases.

“The evidence is absolutely clear that to provide everybody with a right to education and healthcare is a formula for economic and business success.”

For more on social welfare’s role in the successful Nordic free market economy, watch the following clip from President Grímsson’s Big Think interview:

President Grímsson’s is co-founder of Arctic Circle, a non-profit, non-partisan open assembly focused on Arctic issues.

http://bigthink.com/think-tank/president-of-iceland-olafur-ragnar-grimsson-social-welfare-is-good-for-the-free-market