Category Archives: Issues

How people are becoming the property of technology companies

o13-iconFollowing Facebook’s $19 billion dollar acquisition of WhatsApp, Reuven Cohen writes: In November 2013, a survey of smartphone owners found that WhatsApp was the leading social messaging app in countries including Spain, Switzerland, Germany and Japan. Yet at 450 million users and growing, there is a strong likelihood that both Facebook and WhatsApp share the majority of the same user base. So what’s driving the massive valuation? One answer might be users attention. Unlike many other mobile apps, WhatsApp users actually use this service on an ongoing daily or even hourly basis.

“Attention,” write Thomas Mandel and Gerard Van der Leun in their 1996 book Rules of the Net, ”is the hard currency of cyberspace.” This has never been truer.

WhatsApp’s value may not have much to do with the disruption of the telecom world as much as a looming battle for Internet users rapidly decreasing attention spans. A study back in 2011 uncovered the reality for most mobile apps. Most people never use an app more than once. According to the study, 26% of the time customers never give the app a second try. With an ever-increasing number of apps competing for users attention, the only real metric that matters is whether or not they actual use it. Your attention may very well be the fundamental value behind Facebook’s purchase.

In a 1997 Wired article, author Michael H. Goldhaber describes the shift towards the so called Attention Economy; “Attention has its own behavior, its own dynamics, its own consequences. An economy built on it will be different than the familiar material-based one.” writes Goldhaber.

His thesis is that as the Internet becomes an increasingly strong presence in the overall economy and our daily lives, the flow of attention will not only anticipate the flow of money, but also eventually replace it altogether. Fast-forward 17 years and his thesis has never been more true.

As we become ever more bombarded with information, the value of this information decreases. Just look at the improvements made to Facebook’s news feed over the years. In an attempt to make its news feed more useful, the company has implement-advanced algorithms that attempt to tailor the flow of information to your specific interests. The better Facebook gets at keeping your attention, the more valuable you become. Yes, you are the product. [Continue reading…]

To the extent that corporations are in the business of corralling, controlling, and effectively claiming ownership of people’s attention, the only way of finding freedom in such a world will derive from each individual’s effort to cultivate their own powers of autonomous attention.

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If it’s reported by Bild, is it worth repeating?

Reuters has a report which is really a repeat, which is to say, it elevates to the status of “news,” an item in the Sunday edition of Germany’s Bild — a newspaper which is not renowned for the quality of its reporting.

The National Security Agency (NSA) has stepped up its surveillance of senior German government officials since being ordered by Barack Obama to halt its spying on Chancellor Angela Merkel, Bild am Sonntag paper reported on Sunday.

Revelations last year about mass U.S. surveillance in Germany, in particular of Merkel’s mobile phone, shocked Germans and sparked the most serious dispute between the transatlantic allies in a decade.

Bild am Sonntag said its information stemmed from a high-ranking NSA employee in Germany and that those being spied on included Interior Minister Thomas de Maiziere, a close confidant of Merkel.

“We have had the order not to miss out on any information now that we are no longer able to monitor the chancellor’s communication directly,” it quoted the NSA employee as saying.

This is silly.

Firstly, how likely is it that a “high-ranking NSA employee in Germany” is going to talk to Bild? Not likely.

Secondly, how likely is it that surveillance of Angela Merkel’s phone was occurring in isolation and thus, having been curtailed, now needs to be supplemented by broader surveillance?

Assuming that the NSA’s bugging efforts are designed for gathering intelligence as opposed to irritating the people being bugged, it’s hard to imagine that an interest in Merkel’s communications would overshadow an interest in the communications of the officials who brief her. Indeed, it’s reasonable to assume that an intelligence agency conducting surveillance on any head of state will actually be more interested in the communications going on around that individual than those that directly involve the individual her or himself. That being the case, what the NSA is doing in Germany now is probably very close to what it was doing before — except they are now more nervous about getting caught.

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Lawyers, judge hold secret Guantánamo hearing on CIA black sites

n13-iconCarol Rosenberg reports: A military judge held a secret war court session Saturday on defense lawyers’ efforts to uncover evidence of what the CIA did to the alleged USS Cole bomber across years in the agency’s clandestine overseas prison network.

Both the public and the alleged terrorist were excluded from the 111-minute hearing in the case that seeks the execution of Abd al Rahim al Nashiri as mastermind of the Oct. 12, 2000 terror attack that killed 17 U.S. sailors off Aden, Yemen.

Only prosecutors and defense lawyers attended the hearing with the judge, Army Col. James L. Pohl, and a court recorder creating a classified transcript of the proceedings.

Nashiri, 49, spent four years in secret CIA prisons where, according to declassified reports, agents waterboarded him and interrogated him nude with a hood on his head and handcuffs on his wrists. One U.S. agent threatened to kill the Saudi with a power drill and handgun, and threatened to have his mother raped. [Continue reading…]

Meanwhile, AFP reports: Five former Guantanamo detainees are seeking damages for what they say were years of sexual, mental and physical abuse at the US detention center, where they were held without charge or trial.

The men from Turkey, Uzbekistan and Algeria, who are now settled in other countries, alleged Friday at a US appeals court that they were subjected to torture that included forced nudity, sexual harassment and beatings, first in Afghanistan and then at the military jail in Cuba.

Justices will make their ruling in several weeks, but one of them, Judge David Tatel, said military and civilian officials at the Pentagon had failed in their duty.

“Their job is to protect the detainees from abuse, they failed to do so,” he said.

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Anatomy of the Deep State

Rome lived upon its principal till ruin stared it in the face. Industry is the only true source of wealth, and there was no industry in Rome. By day the Ostia road was crowded with carts and muleteers, carrying to the great city the silks and spices of the East, the marble of Asia Minor, the timber of the Atlas, the grain of Africa and Egypt; and the carts brought out nothing but loads of dung. That was their return cargo.

– The Martyrdom of Man by Winwood Reade (1871)

f13-iconMike Lofgren writes: There is the visible government situated around the Mall in Washington, and then there is another, more shadowy, more indefinable government that is not explained in Civics 101 or observable to tourists at the White House or the Capitol. The former is traditional Washington partisan politics: the tip of the iceberg that a public watching C-SPAN sees daily and which is theoretically controllable via elections. The subsurface part of the iceberg I shall call the Deep State, which operates according to its own compass heading regardless of who is formally in power.

During the last five years, the news media has been flooded with pundits decrying the broken politics of Washington. The conventional wisdom has it that partisan gridlock and dysfunction have become the new normal. That is certainly the case, and I have been among the harshest critics of this development. But it is also imperative to acknowledge the limits of this critique as it applies to the American governmental system. On one level, the critique is self-evident: In the domain that the public can see, Congress is hopelessly deadlocked in the worst manner since the 1850s, the violently rancorous decade preceding the Civil War.

As I wrote in The Party is Over, the present objective of congressional Republicans is to render the executive branch powerless, at least until a Republican president is elected (a goal that voter suppression laws in GOP-controlled states are clearly intended to accomplish). President Obama cannot enact his domestic policies and budgets: Because of incessant GOP filibustering, not only could he not fill the large number of vacancies in the federal judiciary, he could not even get his most innocuous presidential appointees into office. Democrats controlling the Senate have responded by weakening the filibuster of nominations, but Republicans are sure to react with other parliamentary delaying tactics. This strategy amounts to congressional nullification of executive branch powers by a party that controls a majority in only one house of Congress.

Despite this apparent impotence, President Obama can liquidate American citizens without due processes, detain prisoners indefinitely without charge, conduct dragnet surveillance on the American people without judicial warrant and engage in unprecedented — at least since the McCarthy era — witch hunts against federal employees (the so-called “Insider Threat Program”). Within the United States, this power is characterized by massive displays of intimidating force by militarized federal, state and local law enforcement. Abroad, President Obama can start wars at will and engage in virtually any other activity whatsoever without so much as a by-your-leave from Congress, such as arranging the forced landing of a plane carrying a sovereign head of state over foreign territory. Despite the habitual cant of congressional Republicans about executive overreach by Obama, the would-be dictator, we have until recently heard very little from them about these actions — with the minor exception of comments from gadfly Senator Rand Paul of Kentucky. Democrats, save a few mavericks such as Ron Wyden of Oregon, are not unduly troubled, either — even to the extent of permitting seemingly perjured congressional testimony under oath by executive branch officials on the subject of illegal surveillance. [Continue reading…]

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It’s time to rethink our nightmares about surveillance

f13-iconThis is an excerpt from Zeynep Tufekci’s article at Matter — but don’t just read this, read her whole piece: I was in Philadelphia when the protests in Istanbul exploded, at a gathering called Data-Crunched Democracy, hosted by the Annenberg School for Communication at the University of Pennsylvania. It was supposed to be exciting, and a little contentious. But I’m also a scholar of social movements and new technologies. I’d visited Tahrir, the heart of the Egyptian uprising, and Zuccotti Square, the birthplace of the Occupy movement. And now new technology was helping to power protests in Istanbul, my hometown. The epicenter, Gezi Park, is just a few blocks from the hospital where I was born.

So there I was, at a conference I had been looking forward to for months, sitting in the back row, tweeting about tear gas in Istanbul.

A number of high-level staff from the data teams of the Obama and Romney campaigns were there, which meant that a lot of people who probably did not like me very much were in the room. A few months earlier, in an op-ed in the New York Times, I’d argued that richer data for the campaigns could mean poorer democracy for the rest of us. Political campaigns now know an awful lot about American voters, and they will use that to tailor the messages we see — to tell us the things we want to hear about their policies and politicians, while obscuring messages we may dislike.

Of course, these tactics are as old as politics. But the digital era has brought new ways of implementing them. Pointing this out had earned me little love from the campaigns. The former data director on the Obama campaign, writing later in the Times, caricatured and then dismissed my concerns. He claimed that people thought he was “sifting through their garbage for discarded pages from their diaries” — a notion he described as a “bunch of malarkey.” He’s right: Political campaigns don’t rummage through trashcans. They don’t have to. The information they want is online, and they most certainly sift through it.

What we do know about their use of “big data” — the common shorthand for the massive amounts of data now available on everyone — is worrisome. In 2012, again in the Times, reporter Charles Duhigg revealed that Target can often predict when a female customer is pregnant, often in the first 20 weeks of pregnancy, and sometimes even before she has told anyone. This is valuable information, because childbirth is a time of big change, including changes in consumption patterns. It’s an opportunity for brands to get a hook into you — a hook that may last decades, as over-worked parents tend to return to the same brands out of habit. Duhigg recounted how one outraged father, upset at the pregnancy- and baby-related coupons Target had mailed to his teenage daughter, visited his local store and demanded to see the manager. He got an apology, but later apologized himself: His daughter, it turned out, was pregnant. By analyzing changes in her shopping — which could be as subtle as changes in her choice in moisturizers, or the purchase of certain supplements — Target had learned that she was expecting before he did.

Personalized marketing is not new. But so much more can be done with the data now available to corporations and governments. In one recent study, published in the Proceedings of the National Academy of Sciences, researchers showed that mere knowledge of the things that a person has “liked” on Facebook can be used to build a highly accurate profile of the subject, including their “sexual orientation, ethnicity, religious and political views, personality traits, intelligence, happiness, use of addictive substances, parental separation, age, and gender.” In a separate study, another group of researchers were able to infer reasonably reliable scores on certain traits — psychopathy, narcissism, and Machiavellianism — from Facebook status updates. A third team showed that social media data, when analyzed the right way, contains evidence of the onset of depression.

Remember, these researchers did not ask the people they profiled a single question. It was all done by modeling. All they had to do was parse the crumbs of data that we drop during our online activities. And the studies that get published are likely the tip of the iceberg: The data is almost always proprietary, and the companies that hold it do not generally tell us what they do with it.

When the time for my panel arrived, I highlighted a recent study in Nature on voting behavior. By altering a message designed to encourage people to vote so that it came with affirmation from a person’s social network, rather than being impersonal, the researchers had shown that they could persuade more people to participate in an election. Combine such nudges with psychological profiles, drawn from our online data, and a political campaign could achieve a level of manipulation that exceeds that possible via blunt television adverts.

How might they do it in practice? Consider that some people are prone to voting conservative when confronted with fearful scenarios. If your psychological profile puts you in that group, a campaign could send you a message that ignites your fears in just the right way. And for your neighbor who gets mad at scaremongering? To her, they’ll present a commitment to a minor policy that the campaign knows she’s interested in — and make it sound like it’s a major commitment. It’s all individualized. It’s all opaque. You don’t see what she sees, and she doesn’t see what you see.

Given the small margins by which elections get decided — a fact well understood by the political operatives who filled the room — I argued that it was possible that minor adjustments to Facebook or Google’s algorithms could tilt an election. [Continue reading…]

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Half of U.S. farmland being eyed by private equity

a13-iconIPS reports: An estimated 400 million acres of farmland in the United States will likely change hands over the coming two decades as older farmers retire, even as new evidence indicates this land is being strongly pursued by private equity investors.

Mirroring a trend being experienced across the globe, this strengthening focus on agriculture-related investment by the private sector is already leading to a spike in U.S. farmland prices. Coupled with relatively weak federal policies, these rising prices are barring many young farmers from continuing or starting up small-scale agricultural operations of their own.

In the long term, critics say, this dynamic could speed up the already fast-consolidating U.S. food industry, with broad ramifications for both human and environmental health.

“When non-operators own farms, they tend to source out the oversight to management companies, leading in part to horrific conditions around labour and how we treat the land,” Anuradha Mittal, the executive director of the Oakland Institute, a U.S. watchdog group focusing on global large-scale land acquisitions, told IPS.

“They also reprioritise what commodities are grown on that land, based on what can yield the highest return. This is no longer necessarily about food at all, but rather is a way to reap financial profits. Unfortunately, that’s far removed from the central role that land ultimately plays in terms of climate change, growing hunger and the stability of the global economy.”

In a new report released Tuesday, the Oakland Institute tracks rising interest from some of the financial industry’s largest players. Citing information from Freedom of Information Act requests, the group says this includes bank subsidiaries (the Swiss UBS Agrivest), pension funds (the U.S. TIAA-CREF) and other private equity interests (such as HAIG, a subsidiary of Canada’s largest insurance group). [Continue reading…]

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Attorney General signs new rules to limit access to journalists’ records

n13-iconThe New York Times reports: Attorney General Eric H. Holder Jr., who drew fire last spring over the Justice Department’s aggressive tactics for secretly obtaining reporters’ phone logs and emails as part of leak investigations, on Friday signed new guidelines narrowing the circumstances in which law enforcement officials may obtain journalists’ records.

The rules, which will be published in the Federal Register next week, carry out a set of changes that Mr. Holder announced last July and described in a six-page report at the time. A preamble described the revisions as intended to ensure that the department “strikes the proper balance among several vital interests,” like protecting national security and “safeguarding the essential role of the free press in fostering government accountability and an open society.”

Among other things, the rules create a presumption that prosecutors generally will provide advance notice to the news media when seeking to obtain their communications records. [Continue reading…]

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Judge tosses Muslim spying suit against NYPD, says any damage was caused by reporters who exposed it

n13-iconDan Froomkin reports: A federal judge in Newark has thrown out a lawsuit against the New York Police Department for spying on New Jersey Muslims, saying if anyone was at fault, it was the Associated Press for telling people about it.

In his ruling Thursday, U.S. District Court Judge William J. Martini simultaneously demonstrated the willingness of the judiciary to give law enforcement alarming latitude in the name of fighting terror, greenlighted the targeting of Muslims based solely on their religious beliefs, and blamed the media for upsetting people by telling them what their government was doing.

The NYPD’s clandestine spying on daily life in Muslim communities in the region — with no probable cause, and nothing to show for it — was exposed in a Pulitzer-Prize winning series of stories by the AP. The stories described infiltration and surveillance of at least 20 mosques, 14 restaurants, 11 retail stores, two grade schools, and two Muslim student associations in New Jersey alone.

In a cursory, 10-page ruling issued before even hearing oral arguments, Martini essentially said that what the targets didn’t know didn’t hurt them: [Continue reading…]

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The math that predicted the revolutions sweeping the globe right now

f13-iconBrian Merchant writes: It’s happening in Ukraine, Venezuela, Thailand, Bosnia, Syria, and beyond. Revolutions, unrest, and riots are sweeping the globe. The near-simultaneous eruption of violent protest can seem random and chaotic; inevitable symptoms of an unstable world. But there’s at least one common thread between the disparate nations, cultures, and people in conflict, one element that has demonstrably proven to make these uprisings more likely: high global food prices.

Just over a year ago, complex systems theorists at the New England Complex Systems Institute warned us that if food prices continued to climb, so too would the likelihood that there would be riots across the globe. Sure enough, we’re seeing them now. The paper’s author, Yaneer Bar-Yam, charted the rise in the FAO food price index — a measure the UN uses to map the cost of food over time — and found that whenever it rose above 210, riots broke out worldwide. It happened in 2008 after the economic collapse, and again in 2011, when a Tunisian street vendor who could no longer feed his family set himself on fire in protest.

Bar-Yam built a model with the data, which then predicted that something like the Arab Spring would ensue just weeks before it did. Four days before Mohammed Bouazizi’s self-immolation helped ignite the revolution that would spread across the region, NECSI submitted a government report that highlighted the risk that rising food prices posed to global stability. Now, the model has once again proven prescient — 2013 saw the third-highest food prices on record, and that’s when the seeds for the conflicts across the world were sown. [Continue reading…]

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Egypt’s crackdown on journalism

a13-iconThe New York Times reports: The three men, wearing white prison scrubs in metal cages reserved for criminal suspects, listened to the list of explosive charges accusing them of aiding a plot to undermine Egypt’s national security.

They had links to terrorists, the prosecutors contended, and before their court appearance on Thursday, the men were detained for weeks among prisoners whom the government considers its most dangerous opponents. The charges could bring up to 15 years in prison.

But the three suspects are all seasoned journalists. Their crime was filing news reports for their employer, Al Jazeera English, before state security officers came to the hotel suite they used as a makeshift studio in December, ultimately rounding them up and throwing them in jail.

The charges against the men, branded the “the Marriott cell” by government-friendly news outlets, are the most serious against journalists here in recent memory, rights groups say, part of a widening crackdown by Egypt’s military-backed government that has ensnared scores of reporters, as well as filmmakers, bloggers and academics.

What began months ago with mass arrests and repression of the government’s opponents in the Muslim Brotherhood has steadily broadened into a campaign against perceived critics of all stripes. In all, thousands of people — mostly Islamists, but also some of the best-known activists from the uprising that toppled President Hosni Mubarak — have been put in jail, many of them still awaiting trial. [Continue reading…]

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Hoarding

David Wallis writes: Animals like to hoard. Christopher E. Overtree, director of the Psychological Services Center at the University of Massachusetts, Amherst and a specialist in treating hoarding, says that “the mechanisms triggering this kind of biological reflex are present in all of us.” A friend of his in Minnesota had an eagle’s nest on his property fall from a tree. This led to a surprising discovery: 23 dog and cat collars. “The eagle ate the animals but saved the collars,” says Overtree. His own cat, Gus, wasn’t much better. Overtree recently tailed his cat sneaking off with his wife’s costume jewelry, dragging the trinkets into the attic and stashing them in a hole in the floor. “I realized he must be saving it,” says Overtree. “I think it is interesting to see a behavior that has no practical value in an animal.”

Hoarding, some scientists suggest, is a sensible action to take in an uncertain world. “We have been shaped by evolutionary pressures in the past to deal with resource scarcity, and hoarding is one of those possible strategies,” says John L. Koprowski, professor of wildlife conservation and management at the University of Arizona and an authority on squirrels. He refutes the conventional wisdom that squirrels only gather what they need to survive winters. Studies of eastern gray squirrels, for instance, suggest that up to 74 percent of buried acorns are never recovered. They could be lost — or simply stored, just in case.

While saving up in this manner seems both sensible and prevalent among animals, it is a bona fide disease among humans. This year, for the first time, the fifth edition of the Diagnostic and Statistical Manual of Mental Disorders, or DSM — the bible of psychiatrists and insurers — listed it as a distinct disorder. It is also one with serious consequences, with the potential to ruin relationships, result in evictions, and fuel lethal fires. And according to the American Psychiatric Association, 2 to 5 percent of the United States population suffers from it. [Continue reading…]

Even though that’s a new diagnosis and its status as a disorder is no doubt subject to much debate, 2 to 5 percent sounds like a gross underestimate.

As for whether animals are hoarders too, I wonder whether a distinction needs to be made between hoarders and collectors?

Deprived of his collection of collars, would the eagle experience a sense of loss? “The eagle ate the animals but saved the collars.” Indeed. And better than eating the collars and saving the animals. But who’s to say what the collars thereafter represented? Fond memories? Nest decoration?

For human hoarders the accumulation of excess seems to be tied to a fear of insufficiency — that “de-acquisitioning” will cause a deficit rather than remove a surfeit.

In parallel or perhaps even driving this threat of insufficiency is the consumerist’s lack of resourcefulness and lack of self-sufficiency.

An inability to part with things can coincide with an inability to repair them.

For societies that produce mountains of waste, the things we call “waste” are the things in which we recognize no value. We fail to see how often that lack of value resides in the eye of the beholder, not the object.

In a consumer world where we have acquired the habit of replacing things that are in perfect working order simply because a better version is now available, the hoarder might feel less materialistic than his non-hoarding counterpart if not hoarding just means having little compunction about throwing things away.

In either case, each individual bears the same affliction: little sense of what it means to have enough.

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Google Plus works for Google

a13-iconThe New York Times reports: Google Plus, the company’s social network, is like a ghost town. Want to see your old roommate’s baby or post your vacation status? Chances are, you’ll use Facebook instead.

But Google isn’t worried. Google Plus may not be much of a competitor to Facebook as a social network, but it is central to Google’s future — a lens that allows the company to peer more broadly into people’s digital life, and to gather an ever-richer trove of the personal information that advertisers covet. Some analysts even say that Google understands more about people’s social activity than Facebook does.

The reason is that once you sign up for Plus, it becomes your account for all Google products, from Gmail to YouTube to maps, so Google sees who you are and what you do across its services, even if you never once return to the social network itself.

Before Google released Plus, the company might not have known that you were the same person when you searched, watched videos and used maps. With a single Plus account, the company can build a database of your affinities.

Google says Plus has 540 million monthly active users, but almost half do not visit the social network. [Continue reading…]

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Globally, January was the fourth warmest and fifth driest on record

n13-iconU.S. News and World Report: Believe it or not, last month was the warmest January since 2007 and the fourth warmest on record, the National Oceanic and Atmospheric Administration said Thursday.

It also marked the driest month for the contiguous United States since 2003, and the fifth driest since records started being kept in 1880.

The global average temperature for both land and ocean surfaces was 54.8 degrees last month, about 1.17 degrees above the 20th-century global average.

Notably, while “below-normal” and “much-below-normal” freezing temperatures swept across the eastern half of the United States, warm temperatures “engulfed” much of west, as well as Australia, Argentina, Austria, China, France, Spain and Switzerland, NOAA said.

California, Nevada and Arizona, in particular, also saw temperatures “much-above-normal.”

Precipitation, meanwhile, was below normal for more than 30 states, and at record lows for New Mexico, which received just 5 percent of its average January rainfall. The drought, overall, expanded to 37.4 percent of the contiguous United States, up from 31 percent at the beginning of the month.

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Yemen drone strike may violate Obama policy

f13-iconHuman Rights Watch: A deadly US drone strike on a December 2013 wedding procession in Yemen raises serious concerns about US forces’ compliance with President Barack Obama’s targeted killing policy, Human Rights Watch said in a report released today.

The 28-page report, “A Wedding That Became a Funeral: US Drone Attack on Marriage Procession in Yemen,” calls on the US government to investigate the strike, publish its findings, and act in the event of wrongdoing. The December 12 attack killed 12 men and wounded at least 15 other people, including the bride. US and Yemeni officials said the dead were members of the armed group Al-Qaeda in the Arabian Peninsula (AQAP), but witnesses and relatives told Human Rights Watch the casualties were civilians. Obama said in a major address in May that US policy requires “near-certainty” that no civilians will be harmed in targeted attacks.

“The US refusal to explain a deadly attack on a marriage procession raises critical questions about the administration’s compliance with its own targeted killing policy,” said Letta Tayler, senior terrorism and counterterrorism researcher at Human Rights Watch and author of the report. “All Yemenis, especially the families of the dead and wounded, deserve to know why this wedding procession became a funeral.” [Continue reading…]

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What I saw when I crashed a Wall Street secret-society party

f13-iconKevin Roose recounts what he witnessed when he sneaked into the annual black-tie induction ceremony of a secret Wall Street fraternity called Kappa Beta Phi — and then got caught: “Who the hell are you?” [billionaire Michael] Novogratz demanded.

I felt my pulse spike. I was tempted to make a run for it, but – due to the ethics code of the New York Times, my then-employer – I had no choice but to out myself.

“I’m a reporter,” I said.

Novogratz stood up from the table.

“You’re not allowed to be here,” he said.

I, too, stood, and tried to excuse myself, but he grabbed my arm and wouldn’t let go.

“Give me that or I’ll fucking break it!” Novogratz yelled, grabbing for my phone, which was filled with damning evidence. His eyes were bloodshot, and his neck veins were bulging. The song onstage was now over, and a number of prominent Kappas had rushed over to our table. Before the situation could escalate dangerously, a bond investor and former Grand Swipe named Alexandra Lebenthal stepped in between us. Wilbur Ross quickly followed, and the two of them led me out into the lobby, past a throng of Wall Street tycoons, some of whom seemed to be hyperventilating.

Once we made it to the lobby, Ross and Lebenthal reassured me that what I’d just seen wasn’t really a group of wealthy and powerful financiers making homophobic jokes, making light of the financial crisis, and bragging about their business conquests at Main Street’s expense. No, it was just a group of friends who came together to roast each other in a benign and self-deprecating manner. Nothing to see here.

But the extent of their worry wasn’t made clear until Ross offered himself up as a source for future stories in exchange for my cooperation.

“I’ll pick up the phone anytime, get you any help you need,” he said.

“Yeah, the people in this group could be very helpful,” Lebenthal chimed in. “If you could just keep their privacy in mind.”

I wasn’t going to be bribed off my story, but I understood their panic. Here, after all, was a group that included many of the executives whose firms had collectively wrecked the global economy in 2008 and 2009. And they were laughing off the entire disaster in private, as if it were a long-forgotten lark. (Or worse, sing about it — one of the last skits of the night was a self-congratulatory parody of ABBA’s “Dancing Queen,” called “Bailout King.”) These were activities that amounted to a gigantic middle finger to Main Street and that, if made public, could end careers and damage very public reputations.

After several more minutes spent trying to do damage control, Ross and Lebenthal escorted me out of the St. Regis.

As I walked through the streets of midtown in my ill-fitting tuxedo, I thought about the implications of what I’d just seen.

The first and most obvious conclusion was that the upper ranks of finance are composed of people who have completely divorced themselves from reality. [Continue reading…]

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New details emerge of Libya’s claim against Goldman Sachs

n13-iconEuromoney: A year ago, Euromoney reported that the Libyan Investment Authority was preparing litigation against Goldman Sachs for disastrous trades the US bank had put the Libyan sovereign wealth fund into in early 2008.

Nothing happens fast in Libya, and the top management of the fund has changed since our story. But on January 28, its lawyers lodged a claim at London’s High Court, accusing Goldman of “deliberately exploit[ing] the relationship of trust and confidence it has established with the LIA.”

Euromoney has seen the Particulars of Claim document lodged with the High Court by Simon Twigden, a partner and commercial dispute resolution expert at Enyo Law, on the LIA’s behalf. It makes savage reading for Goldman; it says that equity derivatives trades implemented by the bank lost the fund more than $1 billion while earning Goldman $350 million in profits.

After incurring these losses, Libya asked Goldman for a remedy. In May, 2009, the bank suggested that Libya recoup its losses by investing $3.7 billion in Goldman.

Matt Levine writes: You get the sneaking suspicion that there’s a terrible story here, that there’s a gambler’s-fallacy sense that, since you lost a lot of money on risky bets, the only thing to do is to put even more money on even riskier bets.
[…]
You see what’s going on there? Libya pays Goldman $3.7 billion and in return gets securities with “THESE SECURITIES ARE WORTH $5 BILLION” on the front of them. Guess how much those securities are worth? If you guessed $3.7 billion … there’s a decent chance that you’re too high? I dunno. If you guessed $5 billion you should be kept well away from money.

Libya said no; they “prodded Goldman to recoup their losses faster” and “also worried about whether it was wise to invest in Goldman given the collapse of Lehman.”

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Study: ‘Trolls’ online appear to be sadists in real life

n13-iconThe Register reports: A group of Canadian researchers has given the imprimatur of social-science recognition to a fact that many of us who spend time in internet comment forums have suspected: there’s a strong correlation between online trolling and sadism.

“Both trolls and sadists feel sadistic glee at the distress of others. Sadists just want to have fun … and the Internet is their playground!” write Erin Buckels, Paul Trapnell, and Delroy Paulhus of the Universities of Manitoba, Winnipeg, and British Columbia, respectively, in a paper to be published in the journal Personality and Individual Differences.

The researchers define trolling as “the practice of behaving in a deceptive, destructive, or disruptive manner in a social setting on the Internet with no apparent instrumental purpose,” referring to trolls as “agents of chaos on the Internet, exploiting ‘hot-button issues’ to make users appear overly emotional or foolish in some manner. If an unfortunate person falls into their trap, trolling intensifies for further, merciless amusement.”

The Canadian psychologists’ paper is entitled “Trolls just want to have fun”, which is not merely a bit of boffinary humor at the expense of Cyndi Lauper, but rather a reference to one of the researchers’ findings. “We found clear evidence,” they write, “that sadists tend to troll because they enjoy it.” [Continue reading…]

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