How a NeoCon-Backed “Fact Checker” Plans to Wage War on Independent Media

Newsguard Exposed

As Newsguard’s project advances, it will soon become almost impossible to avoid this neocon-approved news site’s ranking systems on any technological device sold in the United States.

Soon after the social media “purge” of independent media sites and pages this past October, a top neoconservative insider — Jamie Fly — was caught stating that the mass deletion of anti-establishment and anti-war pages on Facebook and Twitter was “just the beginning” of a concerted effort by the U.S. government and powerful corporations to silence online dissent within the United States and beyond.

While a few, relatively uneventful months in the online news sphere have come and gone since Fly made this ominous warning, it appears that the neoconservatives and other standard bearers of the military-industrial complex and the U.S. oligarchy are now poised to let loose their latest digital offensive against independent media outlets that seek to expose wrongdoing in both the private and public sectors.

As MintPress News Editor-in-Chief Mnar Muhawesh recently wrote, MintPress was informed that it was under review by an organization called Newsguard Technologies, which described itself to MintPress as simply a “news rating agency” and asked Muhawesh to comment on a series of allegations, several of which were blatantly untrue. However, further examination of this organization reveals that it is funded by and deeply connected to the U.S. government, neo-conservatives, and powerful monied interests, all of whom have been working overtime since the 2016 election to silence dissent to American forever-wars and corporate-led oligarchy.

More troubling still, Newsguard — by virtue of its deep connections to government and Silicon Valley — is lobbying to have its rankings of news sites installed by default on computers in U.S. public libraries, schools, and universities as well as on all smartphones and computers sold in the United States.

In other words, as Newsguard’s project advances, it will soon become almost impossible to avoid this neocon-approved news site’s ranking systems on any technological device sold in the United States. Worse still, if its efforts to quash dissenting voices in the U.S. are successful, Newsguard promises that its next move will be to take its system global.

Red light, green light . . .

Newsguard has received considerable attention in the mainstream media of late, having been the subject of a slew of articles in the Washington Post, the Hill, the Boston Globe, Politico, Bloomberg, Wired, and many others just over the past few months. Those articles portray Newsguard as using “old-school journalism” to fight “fake news” through its reliance on nine criteria allegedly intended to separate the wheat from the chaff when it comes to online news.

Newsguard separates sites it deems worthy and sites it considers unreliable by using a color-coded rating — green, yellow, or red — and more detailed “nutrition labels” regarding a site’s credibility or lack thereof. Rankings are created by Newsguard’s team of “trained analysts.” The color-coding system may remind some readers of the color-coded terror threat-level warning system that was created after 9/11, making it worth noting that Tom Ridge, the former secretary of Homeland Security who oversaw the implementation of that system under George W. Bush, is on Newsguard’s advisory board.

newsguard-foxnews_editedNewsguard gives Fox News high marks for accuracy.

As Newsguard releases a new rating of a site, that rating automatically spreads to all computers that have installed its news ranking browser plug-in. That plug-in is currently available for free for the most commonly used internet browsers. NewsGuard directly markets the browser plug-in to libraries, schools and internet users in general.

According to its website, Newsguard has rated more than 2,000 news and information sites. However, it plans to take its ranking efforts much farther by eventually reviewing “the 7,500 most-read news and information websites in the U.S.—about 98 percent of news and information people read and share online” in the United States in English.

A recent Gallup study, which was supported and funded by Newsguard as well as the Knight Foundation (itself a major investor in Newsguard), stated that a green rating increased users likelihood to share and read content while a red rating decreased that likelihood. Specifically, it found 63 percent would be less likely to share news stories from red-rated websites, and 56 percent would be more likely to share news from green-rated websites, though the fact that Newsguard and one of its top investors funded the poll makes it necessary to take these findings with a grain of salt.

However, some of the rankings Newsguard itself has publicized show that it is manifestly uninterested in fighting “misinformation.” How else to explain the fact that the Washington Post and CNN both received high scores even though both have written stories or made statements that later proved to be entirely false? For example, CNN falsely claimed in 2016 that it was illegal for Americans to read WikiLeaks releases and unethically colluded with the DNC to craft presidential debate questions to favor Hillary Clinton’s campaign that same year.

In addition, in 2017, CNN published a fake story that a Russian bank linked to a close ally of President Donald Trump was under Senate investigation. That same year, CNN was forced to retract a report that the Trump campaign had been tipped off early about WikiLeaks documents damaging to Hillary Clinton when it later learned the alert was about material already publicly available.

The Washington Post, whose $600 million conflict of interest with the CIA goes unnoted by Newsguard, has also published false stories since the 2016 election, including one article that falsely claimed that “Russian hackers” had tapped into Vermont’s electrical grid. It was later found that the grid itself was never breached and the “hack” was only an isolated laptop with a minor malware problem. Yet, such acts of journalistic malpractice are apparently of little concern to Newsguard when those committing such acts are big-name corporate media outlets.

Furthermore, Newsguard gives a high rating to Voice of America, the U.S. state-funded media outlet, even though its former acting associate director said that the outlet produces “fluff journalism” and despite the fact that it was recently reformed to “provide news that supports our [U.S.] national security objectives.” However, RT receives a low “red” rating for being funded by the Russian government and for “raising doubts about other countries and their institutions” (i.e., including reporting critical of the institutions and governments of the U.S. and its allies).

Keeping the conversation safe for the corporatocracy

Newsguard describes itself as an organization dedicated to “restoring trust and accountability” and using “journalism to fight false news, misinformation and disinformation.” While it repeatedly claims on its website that its employees “have no political axes to grind” and “care deeply about reliable journalism’s pivotal role in democracy,” a quick look at its co-founders, top funders and advisory board make it clear that Newsguard is aimed at curbing voices that hold the powerful — in both government and the private sector — to account.

Newsguard is the latest venture to result from the partnership between Steven Brill and Louis Gordon Crovitz, who currently serve as co-CEOs of the group. Brill is a long-time journalist —  published in TIME and The New Yorker, among others — who most recently founded the Yale Journalism Initiative, which aims to encourage Yale students who “aspire to contribute to democracy in the United States and around the world” to become journalists at top U.S. and international media organizations. He first teamed up with Crovitz in 2009 to create Journalism Online, which sought to make the online presence of top American newspapers and other publishers profitable, and was also the CEO of the company that partnered up with the TSA to offer “registered” travelers the ability to move more quickly through airport security — for a price, of course.

While Brill’s past does not in itself raise red flags, Crovitz — his partner in founding Journalism Online, then Press+, and now Newsguard — is the last person one would expect to find promoting any legitimate effort to “restore trust and accountability” in journalism. In the early 1980s. Crovitz held a number of positions at Dow Jones and at the Wall Street Journal, eventually becoming executive vice president of the former and the publisher of the latter before both were sold to Rupert Murdoch’s News Corp in 2007. He is also a board member of Business Insider, which has received over $30 million from Washington Post owner Jeff Bezos in recent years.

Gordon CrovitzGordon Crovitz, then-publisher of The Wall Street Journal, introduces the redesign of the newspaper, Dec. 4, 2006 in New York. Mark Lennihan | AP

In addition to being a member of the Council on Foreign Relations, Crovitz proudly notes in his bio, available on Newsguard’s website, that he has been an “editor or contributor to books published by the American Enterprise Institute and Heritage Foundation.” Though many MintPress readers are likely familiar with these two institutions, for those who are not, it is worth pointing out that the American Enterprise Institute (AEI) is one of the most influential neoconservative think tanks in the country and its “scholars,” directors and fellows have included neoconservative figures like Paul Wolfowitz, Richard Perle, John Bolton and Frederick Kagan.

During the George W. Bush administration, AEI was instrumental in promoting the invasion and subsequent occupation of Iraq and has since advocated for militaristic solutions to U.S. foreign policy objectives and the expansion of the U.S.’ military empire as well as the “War on Terror.” During the Bush years, AEI was also closely associated with the now defunct and controversial neoconservative organization known as the Project for a New American Century (PNAC), which presciently called, four years before 9/11, for a “new Pearl Harbor” as needed to rally support behind American military adventurism.

The Heritage Foundation, like AEI, was also supportive of the war in Iraq and has pushed for the expansion of the War on Terror and U.S. missile defense and military empire. Its corporate donors over the years have included Procter & Gamble, Chase Manhattan Bank, Dow Chemical, and Exxon Mobil, among others.

Crovitz’s associations with AEI and the Heritage Foundation, as well as his ties to Wall Street and the upper echelons of corporate media, are enough to make any thinking person question his commitment to being a fair watchdog of “legitimate journalism.” Yet, beyond his innumerable connections to neoconservatives and powerful monied interest, Crovitz has repeatedly been accused of inserting misinformation into his Wall Street Journal columns, with groups like the Electronic Frontier Foundation accusing him of “repeatedly getting his facts wrong” on NSA surveillance and other issues. Some of the blatant falsehoods that have appeared in Crovitz’s work have never been corrected, even when his own sources called him out for misinformation.

For example, in a WSJ opinion piece that was written by Crovitz in 2012, Crovitz was accused of making “fantastically false claims” about the history of the internet by the very people he had cited to support those claims.

As TechDirt wrote at the time:

“Almost everyone he [Crovitz] sourced or credited to support his argument that the internet was invented entirely privately at Xerox PARC and when Vint Cerf helped create TCP/IP, has spoken out to say he’s wrong. And that list includes both Vint Cerf, himself, and Xerox. Other sources, including Robert Taylor (who was there when the internet was invented) and Michael Hiltzik, have rejected Crovitz’s spinning of their own stories.”

The oligarch team’s deep bench

While Brill and Crovitz’s connections alone should be enough cause for alarm, a cursory examination of Newsguard’s advisory board makes it clear that Newsguard was created to serve the interests of American oligarchy. Chief among Newsguard’s advisors are Tom Ridge, the first Secretary of Homeland Security under George W. Bush and Ret. General Michael Hayden, a former CIA director, a former NSA director and principal at the Chertoff Group, a security consultancy seeking to “advise corporate clients and governments, including foreign governments” on security matters that was co-founded by former Homeland Security Secretary Michael Chertoff, who also currently serves as the board chairman of major weapons manufacturer BAE systems.

FireShot-Capture-025-Our-Advisory-Board-–-New_-https___www.newsguardtech.com_our-advisory-board_Another Newsguard advisor of note is Richard Stengel, former editor of Time magazine, a “distinguished fellow” at the Atlantic Council and Undersecretary of State for Public Diplomacy under President Barack Obama. At a panel discussion hosted last May by the Council on Foreign Relations, Stengel described his past position at the State Department as “chief propagandist” and also stated that he is “not against propaganda. Every country does it and they have to do it to their own population and I don’t necessarily think it’s that awful.”

Other Newsguard advisors include Don Baer, former White House communications director and advisor to Bill Clinton and current chairman of both PBS and the influential PR firm Burson Cohn & Wolfe as well as Elise Jordan, former communications director for the National Security Council and former speech-writer for Condoleezza Rice, as well as the widow of slain journalist Michael Hastings — who was writing an exposé on former CIA director John Brennan at the time of his suspicious death.

A look at Newguard’s investors further illustrates the multifarious connections between this organization and the American political and corporate elite. While Brill and Crovitz themselves are the company’s top investors, one of Newsguard’s most important investors is the Publicis Groupe. Publicis is the third largest global communications company in the world, with more than 80,000 employees in over 100 countries and an annual revenue of over €9.6 billion ($10.98 billion) in 2017. It is no stranger to controversy, as one of its subsidiaries, Qorvis, recently came under fire for exploiting U.S. veterans at the behest of the Saudi government and also helped the Saudi government to “whitewash” its human rights record and its genocidal war in Yemen after receiving $6 million from the Gulf Kingdom in 2017.

Furthermore, given its size and influence, it is unsurprising that the Publicis Groupe counts many powerful corporations and governments among its clientele. Some of its top clients in 2018 included pharmaceutical giants Eli Lilly, Merck, Pfizer and Bayer/Monsanto as well as Starbucks, Procter & Gamble, McDonalds, Kraft Heinz, Burger King, and the governments of Australia and Saudi Arabia. Given its influential role in funding Newsguard, it is reasonable to point out the potential conflict of interest posed by the fact that sites that accurately report on Publicis’ powerful clients — but generate bad publicity — could be targeted for such reports in Newsguard’s ranking.

Publicis GroupMaurice Lévy (center), the Chairman of the Supervisory Board of Publicis Groupe, appears with a cadre of high-level politicians and corporate executives at an event for Rabbi Arthur Schneier’s “Appeal of Conscience Foundation,” Sept. 26, 2018. Brian Ach | AP Images for Appeal of Conscience Foundation

In addition to the Publicis Groupe, another major investor in Newsguard is the Blue Haven Initiative, which is the venture capital “impact investment” fund of the wealthy Pritzker family — one of the top 10 wealthiest families in the U.S., best known as the owners of the Hyatt Hotel chain and for being the second largest financial contributors to Hillary Clinton’s 2016 presidential campaign.

Other top investors include John McCarter, a long-time executive at U.S. government contractor Booz Allen Hamilton, as well as Thomas Glocer, former CEO of Reuters and a member of the boards of pharmaceutical giant Merck & Co., financial behemoth Morgan Stanley, and the Council on Foreign Relations, as well as a member of the Atlantic Council’s International Advisory Board.

Through these investors, Newsguard managed to raise $6 million to begin its ranking efforts in March of 2018. Newsguard’s actual revenues and financing, however, have not been disclosed despite the fact that it requires the sites it ranks to disclose their funding. In a display of pure hypocrisy, Newsguard’s United States Securities and Exchange Commission Form D — which was filed March 5, 2018 — states that the company “declined to disclose” the size of its total revenue.

Why give folks a choice?

While even a quick glance at its advisory board alone would be enough for many Americans to decline to install Newsguard’s browser extension on their devices, the danger of Newsguard is the fact that it is diligently working to make the adoption of its app involuntary. Indeed, if voluntary adoption of Newsguard’s app were the case, there would likely be little cause for concern, given that its website attracts barely more than 300 visits per month and its social-media following is relatively small, with just over 2,000 Twitter followers and barely 500 Facebook likes at the time of this article’s publication.

To illustrate its slip-it-under-the-radar strategy, Newsguard has gone directly to state governments to push its browser extension onto entire state public library systems, even though its website suggests that individual public libraries are welcome to install the extension if they so choose. The first state to install Newsguard on all of its public library computers across its 51 branches was the state of Hawaii — which was the first to partner with Newsguard’s “news literacy initiative,” just last month.

According to local media, Newsguard “now works with library systems representing public libraries across the country, and is also partnering with middle schools, high schools, universities, and educational organizations to support their news literacy efforts,” suggesting that these Newsguard services targeting libraries and schools are soon to become a compulsory component of the American library and education system, despite Newsguard’s glaring conflicts of interest with massive multinational corporations and powerful government power-brokers.

Notably, Newsguard has a powerful partner that has allowed it to start finding its way into public library and school computers throughout the country. As part of its new “Defending Democracy” initiative, Microsoft announced last August that it would be partnering with Newsguard to actively market the company’s ranking app and other services to libraries and schools throughout the country. Microsoft’s press release regarding the partnership states that Newsguard “will empower voters by providing them with high-quality information about the integrity and transparency of online news sites.”

Since then, Microsoft has now added the Newsguard app as a built-in feature of Microsoft Edge, its browser for iOS and Android mobile devices, and is unlikely to stop there. Indeed, as a recent report in favor of Microsoft’s partnership with Newsguard noted, “we could hope that this new partnership will allow Microsoft to add NewsGuard to Edge on Windows 10 [operating system for computers] as well.”

Newsguard, for its part, seems confident that its app will soon be added by default to all mobile devices. On its website, the organization notes that “NewsGuard will be available on mobile devices when the digital platforms such as social media sites and search engines or mobile operating systems add our ratings and Nutrition Labels directly.” This shows that Newsguard isn’t expecting its rating systems to be offered as a downloadable application for mobile devices but something that social media sites like Facebook, search engines like Google, and mobile device operating systems that are dominated by Apple and Google will “directly” integrate into nearly every smartphone and tablet sold in the United States.

A Boston Globe article on Newsguard from this past October makes this plan even more clear. The Globe wrote at the time:

“Microsoft has already agreed to make NewsGuard a built-in feature in future products, and [Newsguard co-CEO] Brill said he’s in talks with other online titans. The goal is to have NewsGuard running by default on our computers and phones whenever we scan the Web for news.”

This eventuality is made all the more likely given the fact that, in addition to Microsoft, Newsguard is also closely connected to Google, as Google has been a partner of the Publicis Groupe since 2014, when the two massive companies joined Condé Nast to create a new marketing service called La Maison that is “focused on producing engaging content for marketers in the luxury space.” Given Google’s power in the digital sphere as the dominant search engine, the creator of the Android mobile operating system, and the owner of YouTube, its partnership with Publicis means that Newsguard’s rating system will soon see itself being promoted by yet another of Silicon Valley’s most powerful companies.

Furthermore, there is an effort underway to integrate Newsguard into social media sites like Facebook and Twitter. Indeed, as Newsguard was launched, co-CEO Brill stated that he planned to sell the company’s ratings of news sites to Facebook and Twitter. Last March, Brill told CNN that “We’re asking them [Facebook, Twitter, Microsoft and Google] to pay a fraction of what they pay their P.R. people and their lobbyists to talk about the problem.”

On Wednesday, Gallup released a poll that will likely be used as a major selling point to social media giants. The poll — funded by Newsguard and the Knight Foundation, which is a top investor in Newsguard and has recently funded a series of Gallup polls relating to online news — seems to have been created with the intention of manufacturing consent for the integration of Newsguard with top social media sites.

This is because the promoted findings from the study are as follows:“89% of users of social media sites and 83% overall want social media sites and search engines to integrate NewsGuard ratings and reviews into their news feeds and search results” and “69% would trust social media and search companies more if they took the simple step of including NewsGuard in their products.” However, a disclaimer at the end of the poll states that the results, which were based on the responses of 706 people each of whom received $2 to participate, “may not be reflective of attitudes of the broader U.S adult population.”

With trust at Facebook nose-diving and Facebook’s censorship of independent media already well underway, the findings of this poll could well be used to justify its integration into Facebook’s platform. The connections of both Newsguard and Facebook to the Atlantic Council make this seem a given.

Financial censorship

Another Newsguard service shows that this organization is also seeking to harm independent media financially by targeting online revenue. Through a service called “Brandguard,” which it describes as a “brand safety tool aimed at helping advertisers keep their brands off of unreliable news and information sites while giving them the assurance they need to support thousands of Green-rated [i.e., Newsguard-approved] news and information sites, big and small.”

At the time the service was announced last November, Newsguard co-CEO Brill stated that the company was “in discussions with the ad tech firms, leading agencies, and major advertisers” eager to adopt a blacklist of news sites deemed “unreliable” by Newsguard. This is unsurprising given the leading role of the Publicis Groupe, one of the world’s largest advertising and PR firms, has in funding Newsguard. As a consequence, it seems likely that many, if not all, of Publicis’ client companies will choose to adopt this blacklist to help crush many of the news sites that are unafraid to hold them accountable.

It is also important to note here that Google’s connection to Publicis and thus Newsguard could spell trouble for independent news pages that rely on Google Adsense for some or all of their ad-based revenue. Google Adsense has long been targeting sites like MintPress by demonetizing articles for information or photographs it deemed controversial, including demonetizing one article for including a photo showing U.S. soldiers involved in torturing Iraqi detainees at the infamous Abu Ghraib prison.

Since then, Google — a U.S. military contractor — has repeatedly tried to shutter ad access to MintPress articles that involve reporting that is critical of U.S. empire and military expansion. One article that has been repeatedly flagged by Google details how many African-Americans have questioned whether the Women’s March has aided or harmed the advancement of African-Americans in the United States. Google has repeatedly claimed that the article, which was written by African-American author and former Washington Post bureau chief Jon Jeter, contains “dangerous content.”

Given Google’s already established practice of targeting factual reporting it deemed controversial through Adsense, Brandguard will likely offer the tech giant just the excuse it needs to cut off sites like MintPress, and other pages equally critical of empire, altogether.

An action plan for the genuine protection of journalism

Though it is just getting started, Newsguard’s plan to insert its app into every device and major social-media network is a threat to any news site that regularly publishes information that rubs any of Newsguard’s investors, partners or advisors the wrong way. Given its plan to rank the English-language U.S. news sites that account for 98 percent of U.S. digital news consumption, Newsguard’s agenda is of the utmost concern to every independent media page active in the United States and beyond — given Newsguard’s promise to take its project global.

By linking up with former CIA and NSA directors, Silicon Valley Giants, and massive PR firms working for some of the most controversial governments and corporations in the world, Newsguard has betrayed the fact that it is not actually seeking to “restore trust and accountability” in journalism, but to “restore trust and accountability” in news outlets that protect the existing power structure and help shield the corporate-led oligarchy and military-industrial complex from criticism.

Not only is it trying to tank the reputations of independent media through its biased ranking system, Newsguard is also seeking to attack these alternative voices financially and by slipping its ranking system by default onto all computers and phones sold in the U.S.

However, Newsguard and it agenda of guarding the establishment from criticism can be stopped. By supporting independent media and unplugging from social media sites committed to censorship, like Facebook and Twitter, we can strengthen the independent media community and keep it afloat despite the unprecedented nature of these attacks on free speech and watchdog journalism.

Beyond that, a key way to keep Newsguard and those behind it on their toes is to hold them to account by pointing out their clear conflicts of interest and hypocrisy and by derailing the narrative they are carefully crafting that Newsguard is “non-partisan,” “trustworthy,” and true guardians against the scourge of “fake news.”

While this report has sought to be a starting point for such work, anyone concerned about Newsguard and its connections to the war machine and corrupt corporations should feel encouraged to point out the organization’s own conflicts of interests and shady connections via its Twitter and Facebook pages and the feedback section on Newsguard’s website. The best way to defeat this new tool of the neocons is to put them on notice and to continue to expose Newsguard as a guardian of empire, not a guardian of journalism.

Correction | An earlier version of this story wrote that CNN’s collusion with the Clinton campaign was illegal. However, upon further investigation, MintPress News could not corroborate that such a move was, in fact, illegal, though it is clearly in breach of journalistic ethics. As a consequence, the sentence in question was changed to say that CNN “unethically colluded” with the Clinton campaign. MintPress apologizes for the error and thanks its readers for bringing this oversight to our attention.

Whitney Webb is a staff writer for MintPress News and a contributor to Ben Swann’s Truth in Media. Her work has appeared on Global Research, the Ron Paul Institute and 21st Century Wire, among others. She has also made radio and TV appearances on RT and Sputnik. She currently lives with her family in southern Chile.

Republish! MintPress News is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 International License.

© 2019 Copyright Mint Press, LLC

Fake news front group “NewsGuard” exposed as a massive protection racket to promote fake narratives from official sources while censoring indy media

newsguard-microsoft-reporting-hoaxes-fake-news-credible-epic-fail-jennie-kamin-john-gregory-933x445

Image credit: Nowtheendbegins

Vicki Batts

NewsGuard Technologies promotes itself as a company bent on fighting “fake news” and allowing truth to prevail. The website claims the company will restore “trust and accountability” through its human-driven rating system. But as many critics have suspected, the onslaught of pro-NewsGuard propaganda is a ploy to deceive the public and normalize censorship. NewsGuard doesn’t care about the truthfulness of reporting; it is a shell company with the explicit purpose of silencing the independent media and securing the establishment’s place at the top of the journalism food chain.

In a new partnership with Microsoft, NewsGuard will be installed automatically with Microsoft’s web browser, Edge. And according to reports, NewsGuard wants to see its “technology” applied to every device sold in the United States. Mass censorship is on our doorsteps, and virtually every major news outlet in the U.S. is promoting it.

NewsGuard or NewsGoon?

NewsGuard is promoted as using “old school” journalism to fight fake news. The trained “analysts” who are also “experienced journalists” use a red light-green light rating system to flag news sites as “bad” or”good,” depending on the content. The “analysts” don’t just peruse web sites; NewsGuard, has reportedly contacted many sites for deeper conversation.

Steven Brill, NewsGuard co-founder, recently stated the U.K.’s Daily Mail, a well-known publication, received a “red” rating because an associate didn’t want to answer questions. This has prompted substantial concerns about NewsGuard’s integrity as a company.

NewsGuard can use all kinds of strong-arm tactics to attempt to silence their opposition. If a company tries to take a stand against censorship and refuses to cooperate with NewsGuard, they’ll simply be blacklisted themselves.

While NewsGuard has removed Daily Mail from the blacklist after much controversy, the company has made their position clear: Play ball, or kick rocks.

The NewsGuard system is patently flawed, being susceptible to both bias and corruption. For example, it was recently reported that a tee shirt sold by the Breitbart News Store was flagged as “fake news.”

Rating merchandise should be outside the scope of an organization that purportedly only targets news. But, perhaps that’s not really what NewsGuard is after.

News-Guard-Censorship
Image credit: 21stcenturywire.com

Suppress truth, promote propaganda

Writing for Breitbart, senior correspondent Allum Bokhari reports that NewsGuard has given all the major news agencies a “green rating,” — even in light of the reprehensible Covington Catholic incident, which saw dozens of innocent high school students victimized by the corrupt and deeply biased mainstream media.

In contrast, most of the independent media has received “red” ratings.

The “criteria” that NewsGuard reportedly uses to issue its rating are inherently weighed at the analyst’s discretion. For example, any one of the mainstream media’s headlines on the Covington Catholic case could be seen as “misleading,” — but if that headline conforms to your bias as an individual, you are probably less likely to perceive it as such.

This theory can be applied to the rating system across the board. Beauty may be in the eye of the beholder, but perception is in the mind of the reader. And under NewsGuard, the perceptions of the few will rule the many.

As Mint Press News reports, NewsGuard is already campaigning to ” have its rankings of news sites installed by default on computers in U.S. public libraries, schools, and universities as well as on all smartphones and computers sold in the United States.”

NewsGuard is not designed to protect the public from fake news, but rather, to instill obedience to the mainstream media propaganda machine and begin the normalization of censorship. This isn’t just a war on free speech, it is a war on your right to think for yourself.

See more coverage of the latest acts of censorship at Censored.news.

Sources for this article include:

Breitbart.com

MintPressNews.com

Researchers find that Facebook is actually run by the Deep State

A new report from The Free Thought Project exposes the truth about what many independent media outlets have been saying for years: The world’s most popular social media platform, Facebook, is a hotbed of deep state corruption and public manipulation.

While the baby of Mark Zuckerberg is often described as a “private company,” the fact of the matter is that Facebook is actually a massive government psy-op run by various deep state swamp creatures – many of whom previously worked within the Obama administration.

For instance, Facebook’s censorship head, also known as “Head of Cybersecurity Policy,” is a man named Nathaniel Gleicher who previously prosecuted cybercrimes at the U.S. Department of Justice (DOJ). Gleicher also worked as Director for Cybersecurity Policy at the National Security Council under Obama.

Joel Benenson, a former top adviser to Obama and chief strategist for failed presidential candidate Hillary Clinton, also now works at Facebook – as does Aneesh Raman, Obama’s former speechwriter who’s now in charge of Facebook’s “economic impact programming.”

There are many others as well, including:

• Joel Kaplan, Facebook’s Vice President of Public Policy, who worked for George W. Bush as the White House Deputy Chief of Staff for Policy

• Sheryl Sandberg, Facebook’s Chief Operations Officer, who used to work in the United States Treasury Department under Bill Clinton

• Kate Patchen, Facebook’s Litigation Counsel, who previously worked in the Department of Justice

• Meredith Carden, head of Facebook’s “News Integrity Team,” who worked in the Office of the First Lady under Obama

• Sarah Feinberg, head of Facebook’s Communication Team, who was Special Assistant to the President under Obama

• Joe Lockhart, Vice President of Global Communications at Facebook, who worked as Press Secretary under Bill Clinton

In essence, Facebook has become a who’s-who of government swamp creatures, most of whom were Obama’s cronies previously – and these are the people deciding what constitutes “real” versus “fake” news.

“It appears the government is using Facebook – the world’s largest social media company – to sway public opinion,” writes Jeff Charles for Liberty Nation.

“The company has employed a significant number of former officials in positions that grant them influence over what content is allowed on the platform.”

Facebook is also now run by “neocon” war hawks pushing a globalist agenda

In case you didn’t know, Facebook also recently formed a partnership with a neoconservative “think tank” known as the Atlantic Council, which is tied to the pharmaceutical industry, the military-industrial complex, and to the federal government itself.

The Atlantic Council, The Free Thought Project discovered, plays a major role in deciding what content is allowed to be published and shared on Facebook, and what content isn’t. And the Atlantic Council is funded in large part by the United States government, it’s important to note.

“It is a telltale sign of a corrupt industry or company when they create a revolving door between themselves and the state,” writes Matt Agorist for The Free Thought Project.

“Just like Monsanto has former employees on the Supreme Court and Pharmaceutical industry insiders move back and fourth from the FDA to their companies, we found that Facebook is doing the same thing.”

David Recordon has similarly reported on the revolving door between the federal government and Facebook, emphasizing the incredible amount of political influence that’s wrapped up into the day-to-day functionality of Facebook.

“… there are dozens of former Obama staffers, advisers, and campaign associates who quite literally fill Facebook’s ranks,” Agorist adds. “It is no wonder the platform has taken such a political shift over the past few years.”

For more news about deep state influence over social media, be sure to check out Corruption.news and MarkZuckerberg.news.

Sources for this article include:

TheFreeThoughtProject.com

LibertyNation.com

NaturalNews.com

Brazilian government sees Catholic Church as potential opposition

Heleno-BolsonaroLeft: Augusto Heleno, and right: President Bolsonaro

Estado de São Paulo Tânia Monteiro

The Planalto Palace wants to contain what it considers the advance of the Catholic Church in the leadership of the opposition to the Jair Bolsonaro government in the vacuum of the defeat and loss of space of the left-wing political parties. In the evaluation of the President’s team, the Catholic Church is a traditional ally of the PT (Worker’s Party) and is being articulated to influence debates previously carried out by the party in the interior of the country and in the urban peripheries. The alert to the government came from reports from the Brazilian Intelligence Agency (ABIN) and from the military high command. The reports tell of recent meetings of Brazilian cardinals with Pope Francisco in the Vatican to discuss the holding of the Synod on the Amazon, to be held in Rome in October, bringing together bishops from all the continents.

During the 23 day event, the Vatican will discuss the situation of the Amazon and cover topics considered by the Brazilian government as an “agenda of the left”. The debate will deal with the situation of indigenous peoples, climate change caused by deforestation and quilombolas (lands for ex-slave communities). “We are concerned and want to neutralize this”, said the chief minister of the Office for Institutional Security (GSI), Augusto Heleno, who is leading the counter-offensive.

On the basis of documents circulating in the Planalto, GSI officers have evaluated that sectors of the Catholic Church allied to social movements and parties of the left, members of the so-called “progressive clergy”, intend to take advantage of the Synod to criticise the Bolsonaro government and to have an international impact. “We think this is interference in the internal affairs of Brazil”, said Heleno. ABIN offices in Manaus, Belém, Maraba, in the south-east of Pará (the epicentre of land conflicts), and Boa Vista (which monitor the presence of foreigners in indigenous Yanomami lands and Raposa Serra do Sol) are being mobilized to accompany preparatory meetings for the Synod in parishes and dioceses. The GSI also obtained information from the Military Command in Amazonas, based in Manaus, and from the Northern Military Command in Belém. On the basis of intelligence reports, the Federal government will seek out state governors, mayors and even ecclesiastical authorities who have good relations with the military, especially in border regions, to strengthen their attempt to neutralize the Synod.

The Estado de São Paulo newspaper found that the GSI plans to involve the Itamaraty Foreign Office to monitor discussions abroad, and the Ministry of the Environment to detect any participation of NGOs and environmentalists. Asking to remain anonymous, another military officer from the Bolsonaro team said that the Synod is against “all” policies of the government for the Amazon; which seeks to defend the “sovereignty” of the region. “The meeting will serve to inflame the ideological discourse of the left”, he said.

As soon as the first reports from ABIN arrived at the Planalto Palace, the generals soon made a connection with the criticisms of the National Bishops Conference of Brazil (CNBB) towards Bolsonaro during the electoral campaign. Bodies linked to the CNBB, such as the Missionary Indigenous Council (CIMI) and the Pastoral Lands Commission (CPT), were not kind in their attacks, and continued after the election and swearing in of Bolsonaro to the Presidency. All of them are historical allies of the PT Worker’s Party. The Prisoner’s Pastoral, for example, issued a press release last week criticising the anti-crime package of the Minister of Justice, Sérgio Moro, who as a judge sentenced ex-President Luiz Inacio Lula da Silva in Lava Jato.

In the campaign, the Land Pastoral published a report from Bishop André de Witte of Bahia that indicated Bolsonaro as a “real danger”. The networks supporting Bolsonaro counter-attacked spreading word on the internet that Pope Francisco was a “communist”. As a result, Bolsonaro gave up on the CNBB and invested incessant support for the evangelical churches. At first, he wanted the ex-Senator and gospel singer Magno Malta (PR-ES) to run as his Vice-President. Once elected, he nominated the pastor Damares Alves, assistant to Malta for the Ministry of Women, Family and Human Rights.

History. The tense relationship between the military and the Catholic Church began back in 1964 and has remained even in the “de-tension” governments of Generals Ernesto Geisel and João Figueiredo, the last President of the military dictatorship. The CNBB maintained friendly relations with the democratic governments, but was classified as an arm of the PT Worker’s Party by Fernando Henrique Cardoso. The body criticised the agrarian policy of the FHC government and the decision of his PSDB party to end religious education in public schools.

The government of ex-President Lula, who was close to Don Claudio Hummes, ex-Cardinal of São Paulo, was surprised in 2005 by the hunger strike of the Bishop of Barra in Bahia, Don Luiz Cappio, who opposed the transposition of the São Francisco River.

With the arrival of Dilma Rousseff, the relationship between the CNBB and the PT Worker’s Party was damaged. The body held a series of events to criticise the President, especially on questions such as abortion and agrarian reform. However, the CNBB was opposed to the impeachment process, alleging that it “weakened” the institutions.

‘Let’s get right into this’, said Heleno

The Minister of the Office for Institutional Security (GSI), Augusto Heleno Ribeiro, said there was a “concern” in the Planalto about the meetings and preparatory meetings of the Synod on the Amazon, which were held in the Brazilian States. ”There has been influence from the Catholic Church and NGOs on the forest”, he said.

The closest adviser of President Jair Bolsonaro, Heleno criticised the activity of the Catholic Church, but said their capacity for causing problems for the government was not high. ”It will not be a problem. The work of the government of neutralizing impacts of the meeting will only strengthen Brazilian sovereignty and impede that foreign interests are able to prevail in the Amazon”, he said. “The question will be studied carefully by the GSI. Let’s get right into this.”

Both the Minister Augusto Heleno and the ex-commander of the Army, Eduardo Villas Boas, now assistant to the GSI and in charge of the monitoring of the Synod, were military commanders in Manaus. The Vice-President Hamilton Mourão also worked in the region, leading the 2nd Jungle Infantry Brigade in São Gabriel da Cachoeira.

What is the Synod? It is the global meeting of Vatican bishops to discuss the situation of indigenous tribes, riverside populations and other peoples of the Amazon, the development policies of governments of the region, climate change and land conflicts.

Participants 250 bishops.

Synod Calendar

19 January 2019: symbolic opening with the visit of Pope Francisco to Puerto Maldonado in the Peruvian jungle;

7 to 9 March: preparatory seminar in the Arch-Diocese of Manaus;

6 to 29 October: final phase in the Vatican, with Mass in the Basilica of Saint Peter celebrated by Pope Francisco.

Theme of the meeting

Amazon: new paths for the Catholic Church and for a whole ecology.

The three directives of the event

“To see” the clamour of the Amazonian peoples;

“To discern” the Gospel in the forest. The cries of the indigenous peoples is like the cries of the people of God in Egypt;

“To act” in the defence of a Church with an “Amazonian face”

Recipe for Disaster: The Formula That Killed Wall Street

robots quants
Image credit: zerohedge.com

Felix Salmon Wired

In the mid-’80s, Wall Street turned to the quants – brainy financial engineers – to invent new ways to boost profits. Their methods for minting money worked brilliantly… until one of them devastated the global economy.

A year ago [this was written in 2009], it was hardly unthinkable that a math wizard like David X. Li might someday earn a Nobel Prize. After all, financial economists—even Wall Street quants—have received the Nobel in economics before, and Li’s work on measuring risk has had more impact, more quickly, than previous Nobel Prize-winning contributions to the field. Today, though, as dazed bankers, politicians, regulators, and investors survey the wreckage of the biggest financial meltdown since the Great Depression, Li is probably thankful he still has a job in finance at all. Not that his achievement should be dismissed. He took a notoriously tough nut—determining correlation, or how seemingly disparate events are related—and cracked it wide open with a simple and elegant mathematical formula, one that would become ubiquitous in finance worldwide.

For five years, Li’s formula, known as a Gaussian copula function, looked like an unambiguously positive breakthrough, a piece of financial technology that allowed hugely complex risks to be modeled with more ease and accuracy than ever before. With his brilliant spark of mathematical legerdemain, Li made it possible for traders to sell vast quantities of new securities, expanding financial markets to unimaginable levels.

His method was adopted by everybody from bond investors and Wall Street banks to ratings agencies and regulators. And it became so deeply entrenched—and was making people so much money—that warnings about its limitations were largely ignored.

Then the model fell apart. Cracks started appearing early on, when financial markets began behaving in ways that users of Li’s formula hadn’t expected. The cracks became full-fledged canyons in 2008—when ruptures in the financial system’s foundation swallowed up trillions of dollars and put the survival of the global banking system in serious peril.

David X. Li, it’s safe to say, won’t be getting that Nobel anytime soon. One result of the collapse has been the end of financial economics as something to be celebrated rather than feared. And Li’s Gaussian copula formula will go down in history as instrumental in causing the unfathomable losses that brought the world financial system to its knees.

How could one formula pack such a devastating punch? The answer lies in the bond market, the multitrillion-dollar system that allows pension funds, insurance companies, and hedge funds to lend trillions of dollars to companies, countries, and home buyers.

A bond, of course, is just an IOU, a promise to pay back money with interest by certain dates. If a company—say, IBM—borrows money by issuing a bond, investors will look very closely over its accounts to make sure it has the wherewithal to repay them. The higher the perceived risk—and there’s always some risk—the higher the interest rate the bond must carry.

Bond investors are very comfortable with the concept of probability. If there’s a 1 percent chance of default but they get an extra two percentage points in interest, they’re ahead of the game overall—like a casino, which is happy to lose big sums every so often in return for profits most of the time.

Bond investors also invest in pools of hundreds or even thousands of mortgages. The potential sums involved are staggering: Americans now owe more than $11 trillion on their homes. But mortgage pools are messier than most bonds. There’s no guaranteed interest rate, since the amount of money homeowners collectively pay back every month is a function of how many have refinanced and how many have defaulted. There’s certainly no fixed maturity date: Money shows up in irregular chunks as people pay down their mortgages at unpredictable times—for instance, when they decide to sell their house. And most problematic, there’s no easy way to assign a single probability to the chance of default.

Wall Street solved many of these problems through a process called tranching, which divides a pool and allows for the creation of safe bonds with a risk-free triple-A credit rating. Investors in the first tranche, or slice, are first in line to be paid off. Those next in line might get only a double-A credit rating on their tranche of bonds but will be able to charge a higher interest rate for bearing the slightly higher chance of default. And so on.

“…correlation is charlatanism”

The reason that ratings agencies and investors felt so safe with the triple-A tranches was that they believed there was no way hundreds of homeowners would all default on their loans at the same time. One person might lose his job, another might fall ill. But those are individual calamities that don’t affect the mortgage pool much as a whole: Everybody else is still making their payments on time.

But not all calamities are individual, and tranching still hadn’t solved all the problems of mortgage-pool risk. Some things, like falling house prices, affect a large number of people at once. If home values in your neighborhood decline and you lose some of your equity, there’s a good chance your neighbors will lose theirs as well. If, as a result, you default on your mortgage, there’s a higher probability they will default, too. That’s called correlation—the degree to which one variable moves in line with another—and measuring it is an important part of determining how risky mortgage bonds are.

Investors like risk, as long as they can price it. What they hate is uncertainty—not knowing how big the risk is. As a result, bond investors and mortgage lenders desperately want to be able to measure, model, and price correlation. Before quantitative models came along, the only time investors were comfortable putting their money in mortgage pools was when there was no risk whatsoever—in other words, when the bonds were guaranteed implicitly by the federal government through Fannie Mae or Freddie Mac.

Yet during the ’90s, as global markets expanded, there were trillions of new dollars waiting to be put to use lending to borrowers around the world—not just mortgage seekers but also corporations and car buyers and anybody running a balance on their credit card—if only investors could put a number on the correlations between them. The problem is excruciatingly hard, especially when you’re talking about thousands of moving parts. Whoever solved it would earn the eternal gratitude of Wall Street and quite possibly the attention of the Nobel committee as well.

To understand the mathematics of correlation better, consider something simple, like a kid in an elementary school: Let’s call her Alice. The probability that her parents will get divorced this year is about 5 percent, the risk of her getting head lice is about 5 percent, the chance of her seeing a teacher slip on a banana peel is about 5 percent, and the likelihood of her winning the class spelling bee is about 5 percent. If investors were trading securities based on the chances of those things happening only to Alice, they would all trade at more or less the same price.

But something important happens when we start looking at two kids rather than one—not just Alice but also the girl she sits next to, Britney. If Britney’s parents get divorced, what are the chances that Alice’s parents will get divorced, too? Still about 5 percent: The correlation there is close to zero. But if Britney gets head lice, the chance that Alice will get head lice is much higher, about 50 percent—which means the correlation is probably up in the 0.5 range. If Britney sees a teacher slip on a banana peel, what is the chance that Alice will see it, too? Very high indeed, since they sit next to each other: It could be as much as 95 percent, which means the correlation is close to 1. And if Britney wins the class spelling bee, the chance of Alice winning it is zero, which means the correlation is negative: -1.

If investors were trading securities based on the chances of these things happening to both Alice and Britney, the prices would be all over the place, because the correlations vary so much.

But it’s a very inexact science. Just measuring those initial 5 percent probabilities involves collecting lots of disparate data points and subjecting them to all manner of statistical and error analysis. Trying to assess the conditional probabilities—the chance that Alice will get head lice if Britney gets head lice—is an order of magnitude harder, since those data points are much rarer. As a result of the scarcity of historical data, the errors there are likely to be much greater.

In the world of mortgages, it’s harder still. What is the chance that any given home will decline in value? You can look at the past history of housing prices to give you an idea, but surely the nation’s macroeconomic situation also plays an important role. And what is the chance that if a home in one state falls in value, a similar home in another state will fall in value as well?

wp_quant4_fHere’s what killed your 401(k) *

David X. Li’s Gaussian copula function as first published in 2000. Investors exploited it as a quick—and fatally flawed—way to assess risk. A shorter version appears on this month’s cover of* Wired.

Probability

Specifically, this is a joint default probability—the likelihood that any two members of the pool (A and B) will both default. It’s what investors are looking for, and the rest of the formula provides the answer.

Survival times

The amount of time between now and when A and B can be expected to default. Li took the idea from a concept in actuarial science that charts what happens to someone’s life expectancy when their spouse dies.

Equality

A dangerously precise concept, since it leaves no room for error. Clean equations help both quants and their managers forget that the real world contains a surprising amount of uncertainty, fuzziness, and precariousness.

Copula

This couples (hence the Latinate term copula) the individual probabilities associated with A and B to come up with a single number. Errors here massively increase the risk of the whole equation blowing up.

Distribution functions

The probabilities of how long A and B are likely to survive. Since these are not certainties, they can be dangerous: Small miscalculations may leave you facing much more risk than the formula indicates.

Gamma

The all-powerful correlation parameter, which reduces correlation to a single constant—something that should be highly improbable, if not impossible. This is the magic number that made Li’s copula function irresistible.

Enter Li, a star mathematician who grew up in rural China in the 1960s. He excelled in school and eventually got a master’s degree in economics from Nankai University before leaving the country to get an MBA from Laval University in Quebec. That was followed by two more degrees: a master’s in actuarial science and a PhD in statistics, both from Ontario’s University of Waterloo. In 1997 he landed at Canadian Imperial Bank of Commerce, where his financial career began in earnest; he later moved to Barclays Capital and by 2004 was charged with rebuilding its quantitative analytics team.

Li’s trajectory is typical of the quant era, which began in the mid-1980s. Academia could never compete with the enormous salaries that banks and hedge funds were offering. At the same time, legions of math and physics PhDs were required to create, price, and arbitrage Wall Street’s ever more complex investment structures.

In 2000, while working at JPMorgan Chase, Li published a paper in The Journal of Fixed Income titled “On Default Correlation: A Copula Function Approach.” (In statistics, a copula is used to couple the behavior of two or more variables.) Using some relatively simple math—by Wall Street standards, anyway—Li came up with an ingenious way to model default correlation without even looking at historical default data. Instead, he used market data about the prices of instruments known as credit default swaps.

If you’re an investor, you have a choice these days: You can either lend directly to borrowers or sell investors credit default swaps, insurance against those same borrowers defaulting. Either way, you get a regular income stream—interest payments or insurance payments—and either way, if the borrower defaults, you lose a lot of money. The returns on both strategies are nearly identical, but because an unlimited number of credit default swaps can be sold against each borrower, the supply of swaps isn’t constrained the way the supply of bonds is, so the CDS market managed to grow extremely rapidly. Though credit default swaps were relatively new when Li’s paper came out, they soon became a bigger and more liquid market than the bonds on which they were based.

When the price of a credit default swap goes up, that indicates that default risk has risen. Li’s breakthrough was that instead of waiting to assemble enough historical data about actual defaults, which are rare in the real world, he used historical prices from the CDS market. It’s hard to build a historical model to predict Alice’s or Britney’s behavior, but anybody could see whether the price of credit default swaps on Britney tended to move in the same direction as that on Alice. If it did, then there was a strong correlation between Alice’s and Britney’s default risks, as priced by the market. Li wrote a model that used price rather than real-world default data as a shortcut (making an implicit assumption that financial markets in general, and CDS markets in particular, can price default risk correctly).

It was a brilliant simplification of an intractable problem. And Li didn’t just radically dumb down the difficulty of working out correlations; he decided not to even bother trying to map and calculate all the nearly infinite relationships between the various loans that made up a pool. What happens when the number of pool members increases or when you mix negative correlations with positive ones? Never mind all that, he said. The only thing that matters is the final correlation number—one clean, simple, all-sufficient figure that sums up everything.

The effect on the securitization market was electric. Armed with Li’s formula, Wall Street’s quants saw a new world of possibilities. And the first thing they did was start creating a huge number of brand-new triple-A securities. Using Li’s copula approach meant that ratings agencies like Moody’s—or anybody wanting to model the risk of a tranche—no longer needed to puzzle over the underlying securities. All they needed was that correlation number, and out would come a rating telling them how safe or risky the tranche was.

As a result, just about anything could be bundled and turned into a triple-A bond—corporate bonds, bank loans, mortgage-backed securities, whatever you liked. The consequent pools were often known as collateralized debt obligations, or CDOs. You could tranche that pool and create a triple-A security even if none of the components were themselves triple-A. You could even take lower-rated tranches of other CDOs, put them in a pool, and tranche them—an instrument known as a CDO-squared, which at that point was so far removed from any actual underlying bond or loan or mortgage that no one really had a clue what it included. But it didn’t matter. All you needed was Li’s copula function.

The CDS and CDO markets grew together, feeding on each other. At the end of 2001, there was $920 billion in credit default swaps outstanding. By the end of 2007, that number had skyrocketed to more than $62 trillion. The CDO market, which stood at $275 billion in 2000, grew to $4.7 trillion by 2006.

At the heart of it all was Li’s formula. When you talk to market participants, they use words like beautiful, simple, and, most commonly, tractable. It could be applied anywhere, for anything, and was quickly adopted not only by banks packaging new bonds but also by traders and hedge funds dreaming up complex trades between those bonds.

“The corporate CDO world relied almost exclusively on this copula-based correlation model,” says Darrell Duffie, a Stanford University finance professor who served on Moody’s Academic Advisory Research Committee. The Gaussian copula soon became such a universally accepted part of the world’s financial vocabulary that brokers started quoting prices for bond tranches based on their correlations. “Correlation trading has spread through the psyche of the financial markets like a highly infectious thought virus,” wrote derivatives guru Janet Tavakoli in 2006.

The damage was foreseeable and, in fact, foreseen. In 1998, before Li had even invented his copula function, Paul Wilmott wrote that “the correlations between financial quantities are notoriously unstable.” Wilmott, a quantitative-finance consultant and lecturer, argued that no theory should be built on such unpredictable parameters. And he wasn’t alone. During the boom years, everybody could reel off reasons why the Gaussian copula function wasn’t perfect. Li’s approach made no allowance for unpredictability: It assumed that correlation was a constant rather than something mercurial. Investment banks would regularly phone Stanford’s Duffie and ask him to come in and talk to them about exactly what Li’s copula was. Every time, he would warn them that it was not suitable for use in risk management or valuation.

divid li
David X. Li

Illustration: David A. Johnson

In hindsight, ignoring those warnings looks foolhardy. But at the time, it was easy. Banks dismissed them, partly because the managers empowered to apply the brakes didn’t understand the arguments between various arms of the quant universe. Besides, they were making too much money to stop.

In finance, you can never reduce risk outright; you can only try to set up a market in which people who don’t want risk sell it to those who do. But in the CDO market, people used the Gaussian copula model to convince themselves they didn’t have any risk at all, when in fact they just didn’t have any risk 99 percent of the time. The other 1 percent of the time they blew up. Those explosions may have been rare, but they could destroy all previous gains, and then some.

Li’s copula function was used to price hundreds of billions of dollars’ worth of CDOs filled with mortgages. And because the copula function used CDS prices to calculate correlation, it was forced to confine itself to looking at the period of time when those credit default swaps had been in existence: less than a decade, a period when house prices soared. Naturally, default correlations were very low in those years. But when the mortgage boom ended abruptly and home values started falling across the country, correlations soared.

Bankers securitizing mortgages knew that their models were highly sensitive to house-price appreciation. If it ever turned negative on a national scale, a lot of bonds that had been rated triple-A, or risk-free, by copula-powered computer models would blow up. But no one was willing to stop the creation of CDOs, and the big investment banks happily kept on building more, drawing their correlation data from a period when real estate only went up.

“Everyone was pinning their hopes on house prices continuing to rise,” says Kai Gilkes of the credit research firm CreditSights, who spent 10 years working at ratings agencies. “When they stopped rising, pretty much everyone was caught on the wrong side, because the sensitivity to house prices was huge. And there was just no getting around it. Why didn’t rating agencies build in some cushion for this sensitivity to a house-price-depreciation scenario? Because if they had, they would have never rated a single mortgage-backed CDO.”

Bankers should have noted that very small changes in their underlying assumptions could result in very large changes in the correlation number. They also should have noticed that the results they were seeing were much less volatile than they should have been—which implied that the risk was being moved elsewhere. Where had the risk gone?

They didn’t know, or didn’t ask. One reason was that the outputs came from “black box” computer models and were hard to subject to a commonsense smell test. Another was that the quants, who should have been more aware of the copula’s weaknesses, weren’t the ones making the big asset-allocation decisions. Their managers, who made the actual calls, lacked the math skills to understand what the models were doing or how they worked. They could, however, understand something as simple as a single correlation number. That was the problem.

“The relationship between two assets can never be captured by a single scalar quantity,” Wilmott says. For instance, consider the share prices of two sneaker manufacturers: When the market for sneakers is growing, both companies do well and the correlation between them is high. But when one company gets a lot of celebrity endorsements and starts stealing market share from the other, the stock prices diverge and the correlation between them turns negative. And when the nation morphs into a land of flip-flop-wearing couch potatoes, both companies decline and the correlation becomes positive again. It’s impossible to sum up such a history in one correlation number, but CDOs were invariably sold on the premise that correlation was more of a constant than a variable.

No one knew all of this better than David X. Li: “Very few people understand the essence of the model,” he told The Wall Street Journal way back in fall 2005.

“Li can’t be blamed,” says Gilkes of CreditSights. After all, he just invented the model. Instead, we should blame the bankers who misinterpreted it. And even then, the real danger was created not because any given trader adopted it but because every trader did. In financial markets, everybody doing the same thing is the classic recipe for a bubble and inevitable bust.

Nassim Nicholas Taleb, hedge fund manager and author of The Black Swan, is particularly harsh when it comes to the copula. “People got very excited about the Gaussian copula because of its mathematical elegance, but the thing never worked,” he says. “Co-association between securities is not measurable using correlation,” because past history can never prepare you for that one day when everything goes south. “Anything that relies on correlation is charlatanism.”

Li has been notably absent from the current debate over the causes of the crash. In fact, he is no longer even in the US. Last year, he moved to Beijing to head up the risk-management department of China International Capital Corporation. In a recent conversation, he seemed reluctant to discuss his paper and said he couldn’t talk without permission from the PR department. In response to a subsequent request, CICC’s press office sent an email saying that Li was no longer doing the kind of work he did in his previous job and, therefore, would not be speaking to the media.

In the world of finance, too many quants see only the numbers before them and forget about the concrete reality the figures are supposed to represent. They think they can model just a few years’ worth of data and come up with probabilities for things that may happen only once every 10,000 years. Then people invest on the basis of those probabilities, without stopping to wonder whether the numbers make any sense at all.

As Li himself said of his own model: “The most dangerous part is when people believe everything coming out of it.”

Felix Salmon (felix@felixsalmon.com) writes the Market Movers financial blog at Portfolio.com.

© 2018 Condé Nast. All rights reserved.

Fake world – The era of ‘inversion’ arrives

fake world – the era of inversion

By TruePublica: Last November a scam was uncovered in the USA. The US Justice Department unsealed indictments against eight people accused of fleecing advertisers of $36 million in one of the largest digital ad-fraud operations ever uncovered. But it should be noted that this is just one internet scam of thousands that have become so ubiquitous to our world, that a global tech giant described it as a point of inversion. That inversion has just arrived.

  • YouTube algorithms for detecting bots overwhelmed and now confused with what is human activity
  • The Internet is now about 50 per cent non-human activity
  • Even artificial-intelligence personal assistants,” like Facebook’s “M,” to help tech companies appear to possess cutting-edge AI is fake.
  • Fake images now routinely believed to be real, but ‘real’ images routinely believed to be fake in the wake of the Inversion

Intelligencer reported the indictments by saying that:  “Hucksters infected 1.7 million computers with malware that remotely directed traffic to “spoofed” websites — “empty websites designed for bot traffic” that served up a video ad purchased from one of the internet’s vast programmatic ad-exchanges, but that were designed, according to the indictments, “to fool advertisers into thinking that an impression of their ad was served on a premium publisher site,” like that of Vogue or The Economist. Views, meanwhile, were faked by malware-infected computers with marvellously sophisticated techniques to imitate humans: bots “faked clicks, mouse movements, and social network login information to masquerade as engaged human consumers.” Some were sent to browse the internet to gather tracking cookies from other websites, just as a human visitor would have done through regular behaviour. Fake people with fake cookies and fake social-media accounts, fake-moving their fake cursors, fake-clicking on fake websites — the fraudsters had essentially created a simulacrum of the internet, where the only real things were the ads.”

If the general public thought the internet was full of fake news, now the corporations themselves have become victims too. So, just how bad are things getting for individuals when corporations themselves are being conned and fleeced?

The Times reported this year, a full half of YouTube traffic was “bots masquerading as people.”

This was so high that YouTube employees feared of having reached an inflection point after which YouTube’s systems for detecting fraudulent traffic would begin to regard bot traffic as real and human traffic as fake. They called this hypothetical event “the Inversion.”

Today, the point of ‘inversion’ seems to have arrived and is no longer hypothetical.

Some studies suggest there are over three billion social media users in the world, many of whom maintain accounts on multiple platforms. The total number of social media accounts may be several times that, making the task of sorting out people from commercial, political, and general trolling accounts an almost impossible task.

The CEO of TwitterAudit says – “we’ve analyzed tens of millions of Twitter users over the past six years. We’ve tuned our algorithm to recognize bot patterns distinguish fake accounts from real accounts. Based on our data we would estimate that 40-60% of Twitter accounts represent real people. About 50% are not real then. Twitter says it’s half that.

It is known from various studies that less than 60 per cent of web traffic on the internet is human – the point of inversion has almost arrived here as well.

Now that we know about half of what we see on the internet is no longer human generated, the entire world is now becoming so fake we’re finding it hard to work out what is right or real. That the internet itself has now reached this ‘inversion’ point and there seems no way of going back should be concerning.

As we are all well aware by now this fake world is now badly affecting society. According to figures published last July, those seeking help for conditions such as depression and anxiety showed a sharp increase and was a third up on two years before that. Now, nearly ten per cent of the entire youth population of Britain suffers from serious mental health conditions and a third of 15-18 years olds suffer mental health problems. The problem is the fake world we live in.

Facebook, the world’s biggest personal data-gathering organisation got caught out in a court case recently by overstating how much time users were spending on its adverts by up to 900 per cent. Facebook admitted it was between 25 and 60 per cent. It’s not surprising advertisers were angry.

The Times also reported that you can buy 5,000 YouTube views (30 seconds of a video counts as a view) for as low as $15, making us the viewers think everyone else was watching it, so, therefore, you should too. That’s 41 hours of views for a few bucks. The people who paid that $15 are led to believe that the views they purchase come from real people but they come from bots. So no-one wins. Except the scammers of course.

click farms
Click farms can have hundreds of mobile phones stacked in rows with
operators paid to click on paid for content to inflate views

On some platforms, video views and app downloads can be forged in lucrative industrial counterfeiting operations.

The Intelligencer report shows video of Chinese click farms with hundreds of mobile phones stacked in rows and desktop pc’s filling rooms with paid operators clicking away non-stop on content they are being paid to inflate. It’s really quite surreal, but that’s the ironic truth about it in the firat place.

However,  nowhere I’ve come across so far does it get as stupid as this though:

“Not only do we have bots masquerading as humans and humans masquerading as other humans, but also sometimes humans masquerading as bots, pretending to be “artificial-intelligence personal assistants,” like Facebook’s “M,” in order to help tech companies appear to possess cutting-edge AI.”

Then there’s another scam just to confuse us further. The Atlantic reports that non-CGI human influencers are posting fake sponsored content — that is, content meant to look like content that is meant to look authentic, for free — to attract attention from brand reps, who, they hope, will pay them real money.

Advertisers are now leaving these ‘influencers’ in droves because of this mindless scamming and looking to advertise on sites like TruePublica. We don’t have fake subscribers, fake views, news or propaganda and other nonsense. We don’t use cookies to track visitors and we don’t deploy the use of bots to create a false image of interest. That’s the point – it’s authentic. And now we get dozens of offers to add links into made up stories for money – all of which, we refuse because the advertisers will say anything to sell their stuff.

Again, Intelligencer reports that – “Earlier this year, the writer and artist Jenny Odell began to look into an Amazon reseller that had bought goods from other Amazon resellers and resold them, again on Amazon, at higher prices. Odell discovered an elaborate network of fake price-gouging and copyright-stealing businesses connected to the cultlike Evangelical church whose followers resurrected Newsweek in 2013 as a zombie search-engine-optimized spam farm. She also visited a strange bookstore operated by the resellers in San Francisco and found a stunted concrete reproduction of the dazzlingly phoney storefronts she’d encountered on Amazon, arranged haphazardly with best-selling books, plastic tchotchkes, and beauty products apparently bought from wholesalers. “At some point, I began to feel like I was in a dream,” she wrote. “Or that I was half-awake, unable to distinguish the virtual from the real, the local from the global, a product from a Photoshop image, the sincere from the insincere.”

And whilst many of us may have heard the term ‘deep-faking’ – even this has gone on another stage and is an invention that will further destroy what is left of reality or more importantly – trust. A recent academic paper from researchers at the graphics-card company Nvidia demonstrates a technique used to create images of computer-generated “human” faces that look shockingly like photographs of real people. Soon, you won’t be able to tell who is real at all.

What will happen is that ‘fake’ images will routinely be believed to be real, but ‘real’ images routinely believed to be fake — simply because, in the wake of the Inversion, who’ll be able to tell the difference?

The world’s biggest search engine itself has now inverted. Not only is a very large proportion of its traffic fake or non-human, but Google is also getting a reputation for being the worlds biggest censorship engine as well. It has recently confirmed it will start operations in China. That can only mean one thing. Censorship. So, if they are happy doing that in China why not at the behest of any other government.

Facebook has been found to have a meeting with just seven people every two weeks. Apparently, they decide what the narrative is and therefore what you will see through their algorithms. This is an organisation now fighting political fires with governments all over the world. It has lost complete control of itself.

At TruePublica our Facebook and Twitter pages rapidly grew to about 2,500. Then miraculously they stopped growing. We gain about 15 new likes a week and lose about 14 a week on each platform – every week. That is unless we pay to unlock the algorithm and allow more people to join us. Which we don’t.

Democracy has been inverted too. It has become corrupted by those with grossly outsized influence of narrow interests at the expense of everyone else. Less than a quarter of people believe that politicians work in the best interests of the nation in Britain and America. In Britain, it reached just 17 per cent in 2017 and still heading south. Voters have been so frustrated with their own lack of influence over political decisions made in their name that the public in Britain voted against the status quo. They did the same in America, Italy, Austria and other European countries. Now we have Brexit, Trump and the rise of the far right-wing all over the Western world. Social democracy is being unstitched by data-mining systems and shady companies like Cambridge Analytica. Social media, videos, memes, political campaigns using known military applications are being used on civilian populations – all these accusations are true – the information they delivered was not.

After a few years of these new manipulative social media systems that rely on dopamine driven loops, somehow, being fake online is better than being real. It’s depressing looking at social media or the internet today because about half, probably more, of the content is about misrepresentation and distortion, not the truth or reality.

In the Western world, the younger generations prefer to live as fake people in a fake world, with fake ‘friends’ accepting fake clicks and views as some sort of online proof of their existence. The internet creates a place where people use masks to disguise who they are and it is dangerous; they don’t merely hide but transform who they really are into something else. They become little more than who they wish to impersonate.

The authenticity of the world we live in is rapidly disappearing – the tipping point is here, right now. In reality, it is about staying true to what you believe, not about the image you want to project. This is how we form our closest personal relationships in real life and they are being dramatically eroded in favour of the phoney.

Not even the corporations who brought this fake world in the first place can work out who is fake any more and are now searching for ways to reach real people. Perhaps it is time for everyone else to do the same.

© 2010-2019 TruePublica

From the Barracks to the Courtroom: US ‘Lawfare’ in Action

bolsonaro

Wayne Madsen | 18.01.2019

Somewhere along the line in recent history, some US think tank in the employ of the Central Intelligence Agency must have come up with the idea that overthrowing governments in Latin America by military coups came with bad optics for the coup plotters. Often, democratically-elected Latin American leaders were demonized by a cabal of military officers who left their barracks and laid siege to the presidential palaces. After taking control of the national radio stations, these generals would announce they had seized control of the government to “protect” the people from “communism” or some other concocted bogeyman.

Beginning in the early 2000s, another plan was devised by US national security planners ensconced in their faux academia “think tanks.” Their plan was simple: overthrow anti-American elected leaders in Latin America through the courts. In effect, lawyers and judges, not generals, caudillos, or military juntas, would carry out coups by abusing constitutional provisions and laws as a clever ruse.

Under Allen Dulles and Richard Helms, the Central Intelligence Agency relied on the old tried and true method of promoting coups via the façade of a “popular” rebellion. After the 1973 CIA-directed coup in Chile, which saw Socialist president Salvador Allende die in a hail of bullets fired from aircraft and tanks at the La Moneda presidential palace, the CIA began to look at other avenues to overthrow presidents in the Western Hemisphere.

For decades, CIA-influenced media, including the dubious Wikipedia, have insisted Allende committed suicide with an AK-47 assault rifle presented to him by Cuban leader Fidel Castro. However, nature would later provide the evidence that Allende was assassinated. The proof came in a 300-page top secret report found in the debris of the house of a former military officer. The house had been destroyed in the 2011 Chilean earthquake. The story of Allende’s “suicide” was spread around CIA-friendly media to mask the agency’s role in yet another assassination of a foreign leader. The CIA’s media manipulation was honed during its pre-eminent role in covering up the assassinations of President John F. Kennedy, Senator Robert F. Kennedy, and Dr. Martin Luther King. For the CIA, however, assassinations were costly in terms of the agency’s public image, so some other method of dispatching targeted leaders was in order.

A formerly CONFIDENTIAL CIA “Intelligence Memorandum,” dated December 29, 1975, concluded that Latin America had to be weaned away from “Third Worldism.” The conclusion was based on the votes of certain Latin American countries that had voted in favor of a United Nations General Assembly resolution equating Zionism with racism. The countries were Brazil, Cuba, Grenada, Guyana, and Mexico. Eleven other countries in the Western Hemisphere abstained.

As the bloody coups in Chile, the Dominican Republic, and other countries showed, there had to be a simpler and less lethal way for the US to bring about undemocratic changes in governments in the hemisphere.

If the CIA were able to infiltrate a nation’s judiciary and law enforcement structures — the latter having already been thoroughly subsumed through CIA-financed “training programs” – it could bring spurious charges against targeted heads of state. This form of coup d’état would become known as “lawfare.”

The leader of the French left, Jean Luc Melenchon, recently condemned the use of lawfare against former Brazilian President Luiz Inacio Lula da Silva. Lula, as he is popularly known, has been imprisoned since April 2018 on trumped up charges of corruption. Melenchon told the Brazilian press that “lawfare is now used in all countries to get rid of progressive leaders. This is what they did with Lula.” Melenchon added, “the judge [Sergio Moro] who condemned Lula is now a minister [minister of justice and public security] of Jair Bolsonaro, the new president of Brazil.” Lula was sentenced to 12 years in prison on politically-motivated money-laundering charges ginned up by Moro and other neo-fascists in the Brazilian judiciary. Bolsonaro, a champion of Brazil’s former military dictatorship and an admirer of Adolf Hitler, Benito Mussolini, and Donald Trump, has vowed to keep Lula in prison. Lula would have defeated Bolsonaro for the presidency had he been released from prison and allowed to run for political office. However, Moro and his fellow lawfare practitioners ensured that appeals to the Brazilian Supreme Court for Lula’s release were all dead-on-arrival.

Melenchon also stated “Lula has been a direct victim of accusations to destroy his work and image, built in more than 40 years of public life.” British human rights attorney Geoffrey Robertson QC echoed Melenchon in comments made to the “New Internationalist” in January 2018. Robertson cited the “extraordinarily aggressive measures” taken to imprison Lula and prevent him from running for president. Robertson cited as Lula’s enemies the judiciary, media, and “the great sinews of wealth and power in Brazil.”

Lawfare coups have been embraced by both Republican and Democratic administrations over almost two decades. The first example of a coup by semi-constitutional fiat was the February 28, 2004 forced removal from office of Haitian President Jean-Bertrand Aristide. US Marines and American mercenaries escorted Aristide and his party from the presidential palace to a white plane with no other markings except for an American flag on the tail. The United States claimed Aristide voluntarily resigned his office, something that Aristide and his advisers vehemently denied. Aristide was literally tossed off the plane, along with his wife, in Bangui, Central African Republic. Through the abuse of “national emergency” provisions, the United States installed Haiti’s Supreme Court Chief Justice, Boniface Alexandre, in the presidential palace. The coup began after CIA-supported rebels and narcotics-gangs seized control of northern Haiti and marched to the capital of Port-au-Prince with the intention of ousting Aristide.

The second lawfare coup was against Honduras’s president, Manuel Zelaya. Staged on June 28, 2009, the coup was approved in advance by US Secretary of State Hillary Clinton, as leaked cables from the US embassy in Tegucigalpa attest. Coup leader Roberto Micheletti cited the Honduran Constitution and a decision by the Supreme Court as providing legitimacy for Zelaya being marched from his home in his pajamas to a waiting plane that flew him to Costa Rica. The military junta that replaced Zelaya said that his letter of resignation had been approved by the National Assembly. Zelaya declared the letter to be a forgery.

The third major lawfare coup came in 2012. Paraguay’s democratically-elected president, Fernando Lugo, was ousted in a political impeachment carried out by right-wing forces in the Paraguayan Congress and Senate, with the full support of the US-trained and equipped Paraguayan military. From Washington, Secretary Clinton moved hastily to recognize the right-wing vice president, Federico Franco, and his new right-wing government to replace the center-left government of Lugo. As with Haiti and Honduras, the Paraguayan coup was accomplished with the thin veneer of the constitution.

In 2016, it was Brazil’s turn in the lawfare arena. The impeachment of President Dilma Rousseff of the left-wing Workers’ Party ensured that Michel Temer, her right-wing vice president, assumed the presidency. Without Rousseff in the presidential palace, her predecessor, Lula, became fair game for the right-wing.

Next on the American hit list was Venezuela. On December 6, 2015, the US-backed rightist opposition won control over the National Assembly. The rightists immediately commenced procedures to remove progressive socialist President Nicolas Maduro from power through dubious “constitutional” means. However, the plan faltered in Venezuela. In reaction, Washington applied crippling economic sanctions on the country, something that was to be repeated by the Trump administration against both Venezuela and the democratically-elected government of President Daniel Ortega in Nicaragua.

Pro-democracy forces in Latin America and elsewhere no longer have to worry about sudden troop movements and tanks converging on presidential palaces, but armies of judges and lawyers armed with nothing more than constitutional provisions and criminal codes stretched to the point of incredulity.