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It’s difficult to know what to say about the Serious Fraud Office in the wake of its acknowledgement that its officers simply didn’t understand documents that patently...

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Exhibit one, the Greek default. The European Central Bank will not take losses on Greece. It will not even have to do anything tricky with ‘purchase prices’ etc under...

The British bank reported a bigger than expected loss for last year after it took writedowns on the value of its Greek holdings and had to compensate some customers who were wrongly sold insurance

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ZeroHedge posted an interesting article called Europe Is Now China's Sweatshop As Great Wall Starts Building Cars In Bulgaria. Unfortunately the article contains many often repeated trade fallacies as well as numerous other errors. ZH: "With China Forecast To Reach Wage Parity With The US In Five Years, Is A New Manufacturing Golden Age Coming To The US?" Mish: China's wages are rising fast. Sometimes in leaps of 20%. From where? How sustainable is it? Please consider this snip from the Reuters article HP, Dell watch rising China labor costs for Apple written February 27, 2012: "Taiwan-based Foxconn said the pay of a junior level worker in Shenzhen, southern China, had risen to 1,800 yuan ($290) per month and could be further raised above 2,200 yuan if the worker passed a technical examination. It said that pay three years ago was 900 yuan a month." Let's do the math. $290 a month is $3,480 a year. Assume 20% annual wage hikes, once a year for 5 years. Should that happen, at the end of that time, the salary would be 8,659.35. US minimum wage is $7.25 an hour (not sure what it will be five years from now), but that is about $14,500 assuming a 40 hour work-week and 2 weeks unpaid vacation. It would take 33% raises every year for five years just to match US wages. Is that likely? Bear in mind that shipping costs and productivity issues are also in play. This is not simply a wage issue. ZH: As Spiegel reports, carmaker "Great Wall this week became the first Chinese automobile manufacturer to open an automobile assembly plant inside the European Union in the latest move suggesting the country's carmakers are seeking to establish a beachhead into the European market." Yes, that's right: it is now cheaper for China to make cars in the European Union: "It used to be that European carmakers opened plants to assemble their cars in China. Now the Chinese have turned the tables with the opening of their first factory in Bulgaria, an EU country with low labor costs and taxes. Mish: Is it really cheaper to build cars in Bulgaria, or is something fundamentally different happening? I suggest the latter, possibly both, but the latter point is critical. China is sitting on huge piles of forex resereves. Those reserves must return at some point. China can either buy goods from Europe, or it can invest in Europe. What better place to invest than in a country with low taxes and low labor costs? The Bulgarian Lev currency is pegged to the euro at €1 = BGN 1.95583. Bulgaria is expected to join the Eurozone by 2015. Whether joining makes sense is debatable, but China sees an opportunity. China also has a need to put euro reserves to work. That need is a mathematical identity. By the way, this is likely a good deal for Bulgaria. It gets badly needed jobs. ZH: Chinese carmakers are setting their sights on the European and American automobile markets." The ramifications of this landmark development are massive for virtually every aspect of the economy: for domestic labor migration, for inflation, for the trade balance, and certainly for US workers. Mish: Agreed but for different reasons. This is a necessary part of global rebalancing. ZH: Bulgaria, the EU's poorest country, is attractive as a labor market because it is an oasis of cheap wages and low taxes. Workers are considered well educated and the country is ideal as the site for a company like Great Wall to launch. Given that wages for factory workers have risen considerably in China in recent years, assembly sites abroad have become increasingly attractive for some manufacturers. Mish: Exactly. So just how likely are those 33% annual raises for Chinese workers if the trend catches on? How likely are those 33% annual raises regardless? ZH: So the real question is if Chinese wages can no longer compete with those in a poor EU member, just how high are they? Mish: $290 a month for junior level workers and I will take a stab at not much higher for senior level workers. ZH: And how long before China, for so many years a happy mercantilist importer of Bernanke's monetary inflation courtesy of its currency peg, is no longer competitive with ever growing parts of the EU, and then America? Does this mean that China's cheap labor force has pleateaued and the labor migration of peasants moving from the periphery to the cities no longer provides cheap labor? This was the topic of an extended analysis by SocGen from early January (posted here), of which the salient chart is presented below. Mish: Is that alleged shortage of labor due to inflation and monetary stimulus in China or the US? How much Chinese labor goes into totally unaffordable projects driving up the price of labor? How much of the worker stagnation is simply do to falling export demand? I do not have the answers to those questions but there are multiple explanations for the alleged "shortage of labor". The single most likely explanation however, is unsustainable stimulus and growth, in China. ZH: Aside from demographics, the macroeconomic implications on foreign trade and capital flows are monumental: most immediately for the US, it puts today's Wal Mart miss in a very different perspective, as it means that China is no longer the source of cheap commoditized produce, which in turn means that the entire discount retail vertical may have entered the secular sunsetting phase. Mish: For a completely different viewpoint, and a deflationary one at that, please consider Hugh Hendry of Eclectica Discusses Hyperdeflation, Europe, China, and Japan. ZH: Most importantly, it means that going forward China will have zero tolerance for Fed monetary expansion as any hot money will immediately set off an inflationary forest fire as China suddenly finds itself with absolutely no output gap slack (unlike America which allegedly has more than enough, even though it is really just a secular regression to the mean shift). Mish: Most importantly, such events are a necessary part of global rebalancing. As a mathematical identity, China's hoard of euros must eventually return to Europe just as China's hoard of dollars must eventually return to the US. The sooner this happens the better. The US and Europe should both embrace Chinese investment. Unfortunately, that is highly unlikely. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.comClick Here To Scroll Thru My Recent Post List

Elsewhere on Thursday, - US corporate tax cut proposed. But WHY?! - How not having a lab affects the economic debate. - Anglo Irish wasn’t like Greece at all. - US housing...

The German bank returned to profit as earnings from corporate clients compensated for losses from Greek government bonds.

Comment, analysis and other offerings from Thursday’s FT, John Gapper: Wynn raises the stakes in Las Vegas The Wynn-Okada tussle is an enthralling battle of wills between two...

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• APOCALYPSEFUCK is Tony Manero says: Cute. There is only one big thing to disclose, and everyone knows it already: It's about My commission and no crime, no perfidy is beyond Me in the cultivation of its maximal manifestation, fuck all and the camel's assholes the sellers and buyers crawled out of....

Breaking pre-market news on Thursday, - RBS posts £2bn loss, pays £390m in bonuses – statement. - Credit Agricole reports €3bn net loss, says does not foresee Greece...

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• bgamall4 says: Now all they have to get is the Basel 2 committee in 1998 allowing off balance sheet accounting of toxic loans that would enter the system circa 2003. Now that was the mother of all loan fraud....

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• iwog says: The person who created this graph put the question mark after Santorum in mid-January as sort of a comical "So when is it this guy's turn?" Truth is more bizarre than fiction....

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• Patrick says: ptiemann says the agent gets the commission only if he/she procured the sale No, I'm pretty sure that's not always true. For example, in California: Q 3. What is the "Buyer Broker Agreement -- Exclusive Right to Represent" (Form BRE) and what does it do? A The Buyer Broker Agreement -- Exclusive Right to Represent (Form BRE) is very similar to the other two agreements with a few important distinctions. Like the BRNE, it provides for compensation and is non-revocable. However, it is an exclusive agreement, meaning the buyer will be obligated to pay a commission, even if the buyer finds the property him or herself or uses another broker. From http://www.car.org/legal/contract-forms-folder/buyer-broker-qa-for-consumers/...
• APOCALYPSEFUCK is Tony Manero says: No jury would convict you if you snapped this piece of shit in half and stomped it to death. But just to be safe, stuff its head in your ass crack and shit down its throat....
• ptiemann says: Patrick says I think it depends on the exact verbiage in your contract. The fine print may say something like "if you buy any house anywhere within the next year, I, a sleazy realtor, get a cut." the agent gets the commission only if he/she procured the sale. That usually means, if that agent was the one who showed you the house first, or possibly emailed you about it first. So, if you work now with the listing agent and end up buying that property, then the first agent (the one whom you fire) still procured the sale and will get paid. Any new properties that you look at.. of course he/she won't get paid....

Facebook pays low-wage foreign workers to delete certain content based upon a censorship list. For example, Facebook deletes accounts created by Palestinian resistance groups.

Digg was caught censoring stories which were controversial or too critical of the government. See this and this.

Now, even social media site Reddit – which helped launch the anti-Sopa Internet blackout and publicize GoDaddy’s slimy Sopa support – is doing the same thing.

As just one example, posts from this website are being censored by Reddit. Specifically, a friend of this site who has submitted stories to Reddit has received the following messages of rejection from a Reddit moderator named davidreiss666:

from davidreiss666 via /r/worldnews/

WashingtonBlog is not something we consider a good source for r/Worldnews.

 

from davidreiss666 via /r/worldnews/

Please submit that story from an alternate domain. Thank you.

 

And another moderator named Maxion:

from Maxion via /r/worldnews/

I am sorry but this submission is not appropriate for this subreddit.

 

There are certainly also more open-minded moderators at Reddit. But a couple of censors can squash discussion on entire topics.

 

WHY ARE THEY CENSORING?

 

Why are they censoring?

Well, censorship is rampant in America … and social media has grown so big that it has become a target as well.

In addition, as I pointed out last year [for ease of reading, we'll skip indentation]:

Wired reported on Friday:

The Pentagon is looking to build a tool to sniff out social media propaganda campaigns and spit some counter-spin right back at it.

 

On Thursday, Defense Department extreme technology arm Darpa unveiled its Social Media in Strategic Communication (SMISC) program. It’s an attempt to get better at both detecting and conducting propaganda campaigns on social media. SMISC has two goals. First, the program needs to help the military better understand what’s going on in social media in real time — particularly in areas where troops are deployed. Second, Darpa wants SMISC to help the military play the social media propaganda game itself.

 

This is more than just checking the trending topics on Twitter. The Defense Department wants to deeply grok social media dynamics. So SMISC algorithms will be aimed at discovering and tracking the “formation, development and spread of ideas and concepts (memes)” on social media, according to Darpa’s announcement.

 

***

 

SMISC needs to be able to seek out “persuasion campaign structures and influence operations” developing across the social sphere. SMISC is supposed to quickly flag rumors and emerging themes on social media, figure out who’s behind it and what. Moreover, Darpa wants SMISC to be able to actually figure out whether this is a random product of the hivemind or a propaganda operation by an adversary nation or group.

 

Of course, SMISC won’t be content to just to hang back and monitor social media trends in strategic locations. It’s about building a better spin machine for Uncle Sam, too. Once SMISC’s latches on to an influence operation being launched, it’s supposed to help out in “countermessaging.”

 

***

 

SMISC is yet another example of how the military is becoming very interested in what’s going on in the social media sphere.

Indeed, as I wrote in February:

I noted in 2009, in an article entitled “Does The Government Manipulate Social Media?”:

The U.S. government long ago announced its intention to “fight the net”.

As revealed by an official Pentagon report signed by Rumsfeld called “Information Operations Roadmap”:

The roadmap [contains an] acknowledgement that information put out as part of the military’s psychological operations, or Psyops, is finding its way onto the computer and television screens of ordinary Americans.

 

“Information intended for foreign audiences, including public diplomacy and Psyops, is increasingly consumed by our domestic audience,” it reads.

 

“Psyops messages will often be replayed by the news media for much larger audiences, including the American public,” it goes on.

 

***

 

“Strategy should be based on the premise that the Department [of Defense] will ‘fight the net’ as it would an enemy weapons system”.

Indeed, the Pentagon publicly announced years ago that it was considering using “black propaganda” – in other words, knowing lies.

 

CENTCOM announced in 2008 that a team of employees would be “[engaging] bloggers who are posting inaccurate or untrue information, as well as bloggers who are posting incomplete information.”

 

The Air Force is now also engaging bloggers. Indeed, an Air Force spokesman said:

“We obviously have many more concerns regarding cyberspace than a typical Social Media user,” Capt. Faggard says. “I am concerned with how insurgents or potential enemies can use Social Media to their advantage. It’s our role to provide a clear and accurate, completely truthful and transparent picture for any audience.”

In other words, the government is targeting “social media”, including popular user-ranked news sites.

 

In addition, when you look at what the Israeli lobby has done with Megaphone software to automatically vote stories questioning Israel down and to send pro-Israel letters to politicians and media (see this, this and this), you can start to see how the U.S. military – an even larger and better-funded organization – could substantially influence voting on social news sites with very little effort.

 

Moreover,the military has outsourced many projects to private contractors. For example, in Iraq, much of the fighting has been outsourced to Blackwater. And governmental intelligence functions have largely been outsourced to private companies.

 

It is therefore not impossible that the government is hiring cheap labor to downvote stories on the social media sites which question the government, and to post pro-government comments.

(other governments and large companies “astroturf” online as well. See this, this and this.)

 

I pointed out the same month:

Government propagandists, their hired private contractors and useful idiots are creating “downvote bots” or scripts to bury stories which question the government.

 

***

 

One free, simple scripting program to create automatic downvotes of certain topics or news posters is called “Greasemonkey”, which is commonly used on large social news sites such as Reddit.

 

For example, there are some 2,480 hits … for the google search site:reddit.com greasemonkey downvote. This is some 2,480 times that Reddit users are publicly admitting to using greasemonkey (see also this).

 

Propaganda agents obviously aren’t going to publicly brag about what they are doing, and you can bet that their use of downvote bots is much greater. Moreover, they probably have more sophisticated software than Greasemonkey.

Today, Raw Story reports that the Air Force ordered software to manage army of fake virtual people:

Internet users would be well advised to ask another question entirely: Are my “friends” even real people?

 

In the continuing saga of data security firm HBGary, a new caveat has come to light: not only did they plot to help destroy secrets outlet WikiLeaks and discredit progressive bloggers, they also crafted detailed proposals for software that manages online “personas,” allowing a single human to assume the identities of as many fake people as they’d like.

 

The revelation was among those contained in the company’s emails, which were dumped onto bittorrent networks after hackers with cyber protest group “Anonymous” broke into their systems.

 

In another document unearthed by “Anonymous,” one of HBGary’s employees also mentioned gaming geolocation services to make it appear as though selected fake persons were at actual events.

 

“There are a variety of social media tricks we can use to add a level of realness to all fictitious personas,” it said.

 

Government involvement

 

Eerie as that may be, more perplexing, however, is a federal contract from the 6th Contracting Squadron at MacDill Air Force Base, located south of Tampa, Florida, that solicits providers of “persona management software.”

 

While there are certainly legitimate applications for such software, such as managing multiple “official” social media accounts from a single input, the more nefarious potential is clear.

 

Unfortunately, the Air Force’s contract description doesn’t help dispel their suspicions either. As the text explains, the software would require licenses for 50 users with 10 personas each, for a total of 500. These personas would have to be “replete with background , history, supporting details, and cyber presences that are technically, culturally and geographacilly consistent.”

 

It continues, noting the need for secure virtual private networks that randomize the operator’s Internet protocol (IP) address, making it impossible to detect that it’s a single person orchestrating all these posts. Another entry calls for static IP address management for each persona, making it appear as though each fake person was consistently accessing from the same computer each time.

 

The contract also sought methods to anonymously establish virtual private servers with private hosting firms in specific geographic locations. This would allow that server’s “geosite” to be integrated with their social media profiles, effectively gaming geolocation services.

 

The Air Force added that the “place of performance” for the contract would be at MacDill Air Force Base, along with Kabul, Afghanistan and Baghdad. The contract was offered on June 22, 2010.

 

It was not clear exactly what the Air Force was doing with this software, or even if it had been procured.

 

Manufacturing consent

 

Though many questions remain about how the military would apply such technology, the reasonable fear should be perfectly clear. “Persona management software” can be used to manipulate public opinion on key information, such as news reports. An unlimited number of virtual “people” could be marshaled by only a few real individuals, empowering them to create the illusion of consensus.

 

***

 

That’s precisely what got DailyKos blogger Happy Rockefeller in a snit: the potential for military-run armies of fake people manipulating and, in some cases, even manufacturing the appearance of public opinion.

 

“I don’t know about you, but it matters to me what fellow progressives think,” the blogger wrote. “I consider all views. And if there appears to be a consensus that some reporter isn’t credible, for example, or some candidate for congress in another state can’t be trusted, I won’t base my entire judgment on it, but it carries some weight.

 

“That’s me. I believe there are many people though who will base their judgment on rumors and mob attacks. And for those people, a fake mob can be really effective.”

 

***

 

“Team Themis” [tasked by the Chamber of Commerce to come up with strategies for responding to progressive bloggers and others] also included a proposal to use malware hacks against progressive organizations, and the submission of fake documents in an effort to discredit established groups.

 

HBGary was also behind a plot by Bank of America to destroy WikiLeaks’ technology platform, other emails revealed. The company was humiliated by members of “Anonymous” after CEO Aaron Barr bragged that he’d “infiltrated” the group.

And see this, this, this, this.

Postscript: Gaming social media is only one propaganda technique employed by the government:

• Famed Watergate reporter Carl Bernstein says the CIA has already bought and paid for many successful journalists

• The New York Times discusses in a matter-of-fact way the use of mainstream writers by the CIA to spread messages

• A 4-part BBC documentary called the “Century of the Self” shows that an American – Freud’s nephew, Edward Bernays – created the modern field of manipulation of public perceptions, and the U.S. government has extensively used his techniques

• The Independent discusses allegations of American propaganda

• And one of the premier writers on journalism says the U.S. has used widespread propaganda