COUNTIES use ‘LAND BANKS’ and EMINENT DOMAIN to FIGHT FORECLOSURE FRAUD
http://www.webofdebt.com/articles/north_dakota.php
http://www.webofdebt.com/articles/occupy.php
by Ellen Brown / January 12, 2012

An electronic database called MERS has created defects in the chain of title to over half the homes in America. Counties have been cheated out of millions of dollars in recording fees, and their title records are in hopeless disarray. Meanwhile, foreclosed and abandoned homes are blighting neighborhoods. Straightening out the records and restoring the homes to occupancy is clearly in the public interest, and the burden is on local government to do it. But how? New legal developments are presenting some innovative alternatives.

John O’Brien is Register of Deeds for Southern Essex County, Massachusetts. He calls his land registry a “crime scene.” A formal forensic audit of the properties for which he is responsible found that:

• Only 16% of the mortgage assignments were valid.
• 27% of the invalid assignments were fraudulent, 35% were “robo-signed,” and 10% violated the Massachusetts Mortgage Fraud Statute.
• The identity of financial institutions that are current owners of the mortgages could be determined for only 287 out of 473 (60%).
• There were 683 missing assignments for the 287 traced mortgages, representing approximately $180,000 in lost recording fees per 1,000 mortgages whose current ownership could be traced.

At the root of the problem is that title has been recorded in the name of a private entity called Mortgage Electronic Registration Systems (MERS). MERS is a mere place holder for the true owners, a faceless, changing pool of investors owning indeterminate portions of sliced and diced, securitized properties. Their identities have been so well hidden that their claims to title are now in doubt. According to the auditor: “What this means is that . . . the institutions, including many pension funds, that purchased these mortgages don’t actually own them”.

The March of the AGs
When Massachusetts Attorney General Martha Coakley went to court in December against MERS and five major banks—Bank of America Corp., JPMorgan Chase, Wells Fargo, Citigroup, and GMAC—John O’Brien said he was thrilled. Coakley says the banks have “undermined our public land record system through the use of MERS.” Other attorneys general are also bringing lawsuits. Delaware Attorney General Beau Biden is going after MERS in a suit seeking $10,000 per violation. “Since at least the 1600s,” he says, “real property rights have been a cornerstone of our society. MERS has raised serious questions about who owns what in America.”

Biden’s lawsuit alleges that MERS violated Delaware’s Deceptive Trade Practices Act by:
·         Hiding the true mortgage owner and removing that information from the public land records.
·         Creating a systemically important, yet inherently unreliable, mortgage database that created confusion and inappropriate assignments and foreclosures of mortgages.
·         Operating MERS through its members’ employees, whom MERS confusingly appoints as its corporate officers so that they may act on MERS’ behalf.
·         Failing to ensure the proper transfer of mortgage loan documentation to the securitization trusts, which may have resulted in the failure of securitizations to own the loans upon which they claimed to foreclose.

Legally, this last defect may be even more fatal than filing in the name of MERS in establishing a break in the chain of title to securitized properties. Mortgage-backed securities are sold to investors in packages representing interests in trusts called REMICs (Real Estate Mortgage Investment Conduits). REMICs are designed as tax shelters; but to qualify for that status, they must be “static.” Mortgages can’t be transferred in and out once the closing date has occurred. The REMIC Pooling and Servicing Agreement typically states that any transfer after the closing date is invalid. Yet few, if any, properties in foreclosure seem to have been assigned to these REMICs before the closing date, in blatant disregard of legal requirements. The whole business is quite complicated, but the bottom line is that title has been clouded not only by MERS but because the trusts purporting to foreclose do not own the properties by the terms of their own documents.

Courts Are Taking Notice
The title issues are so complicated that judges themselves have been slow to catch on, but they are increasingly waking up and taking notice. In some cases, the judge is not even waiting for the borrowers to raise lack of standing as a defense. In two cases decided in New York in December, the banks lost although their motions were either unopposed or the homeowner did not show up, and in one there was actually a default. No matter, said the court; the bank simply did not have standing to foreclose. Failure to comply with the terms of the loan documents can make an even stronger case for dismissal. InHorace vs. LaSalle, Circuit Court of Russell County, Alabama, 57-CV-2008-000362.00 (March 30, 2011), the court permanently enjoined the bank (now part of Bank of America) from foreclosing on the plaintiff’s home, stating:

[T]he court is surprised to the point of astonishment that the defendant trust (LaSalle Bank National Association) did not comply with New York Law in attempting to obtain assignment of plaintiff Horace’s note and mortgage. . . .

[P]laintiff’s motion for summary judgment is granted to the extent that defendant trust . . . is permanently enjoined from foreclosing on the property . . . .

Relief for Counties: Land Banks and Eminent Domain
The legal tide is turning against MERS and the banks, giving rise to some interesting possibilities for relief at the county level. Local governments have the power of eminent domain: they can seize real or personal property if (a) they can show that doing so is in the public interest, and (b) the owner is compensated at fair market value.

The public interest part is obvious enough. In a 20-page booklet titled “Revitalizing Foreclosed Properties with Land Banks,” the U.S. Department of Housing and Urban Development (HUD) observes: “The volume of foreclosures has become a significant problem, not only to local economies, but also to the aesthetics of neighborhoods and property values therein. At the same time, middle- to low income families continue to be priced out of the housing market while suitable housing units remain vacant.” The booklet goes on to describe an alternative being pursued by some communities: “To ameliorate the negative effects of foreclosures, some communities are creating public entities — known as land banks — to return these properties to productive reuse while simultaneously addressing the need for affordable housing.”

States named as adopting land bank legislation include Michigan, Ohio, Missouri, Georgia, Indiana, Texas, Kentucky, and Maryland. HUD notes that the federal government encourages and supports these efforts. But states can still face obstacles to acquiring and restoring the properties, including a lack of funds and difficulties clearing title. Both of these obstacles might be overcome by focusing on abandoned and foreclosed properties for which the chain of title has been broken, either by MERS or by failure to transfer the promissory note according to the terms of the trust indenture. These homes could be acquired by eminent domain both free of cost and free of adverse claims to title. The county would simply need to give notice in the local newspaper of an intent to exercise its right of eminent domain. The burden of proof would then transfer to the bank or trust claiming title. If the claimant could not prove title, the county would take the property, clear title, and either work out a fair settlement with the occupants or restore the home for rent or sale.

Even if the properties are acquired without charge, however, counties might lack the funds to restore them. Additional funds could be had by establishing a public bank that serves more functions than just those of a land bank. In a series titled “A Solution to the Foreclosure Crisis,” Michael Sauvante of the National Commonwealth Group suggests that properties obtained by eminent domain can be used as part of the capital base for a chartered, publicly-owned bank, on the model of the state-owned Bank of North Dakota. The county could deposit its revenues into this bank and use its capital and deposits to generate credit, as all chartered banks are empowered to do. This credit could then be used not just to finance property redevelopment but for other county needs, again on the model of the Bank of North Dakota. For a fuller discussion of publicly-owned banks, see http://PublicBankingInstitute.org.

Sauvante adds that the use of eminent domain is often viewed negatively by homeowners. To overcome this prejudice, the county could exercise eminent domain on the mortgage contract rather than on title to the property. (The power of eminent domain applies both to real and to personal property rights.) Title would then remain with the homeowner. The county would just have a secured interest in the property, putting it in the shoes of the bank. It could then renegotiate reasonable terms with the homeowner, something banks have been either unwilling or unable to do. They have to get all the investor-owners to agree, a difficult task; and they have little incentive to negotiate when they can make more money on fees and credit default swaps on contracts that go into default.

Settling with the Investors
What about the rights of the investors who bought the securities allegedly backed by the foreclosed homes? The banks selling these collateralized debt obligations represented that they were protected with credit default swaps. The investors’ remedy is against the counterparties to those bets—or against the banks that sold them a bill of goods. Foreclosure defense attorney Neil Garfield says the investors are unlikely to recover on abandoned and foreclosed properties in any case. Banks and servicers can earn more when the homes are bulldozed—something that is happening in some counties—than from a sale or workout at a loss. Not only is more earned on credit default swaps and fees, but bulldozed homes tell no tales. Garfield maintains that fully a third of the investors’ money has gone into middleman profits rather than into real estate purchases. “With a complete loss no one asks for an accounting.”

Not only homes and neighborhoods but 400 years of property law are being destroyed by banker and investor greed. As Barry Ritholtz observes, the ability of a property owner to confidently convey his property is a bedrock of our society. Bailing out reckless financiers and refusing to hold them accountable has led to a fundamental breakdown in the role of government and the court system. This can be righted only by holding the 1% to the same set of laws as are applied to the 99%. Those laws include that a contract for the sale of real estate must be in writing signed by seller and buyer; that an assignment must bear the signatures required by local law; and that forging signatures gives rise to an actionable claim for fraud.

The neoliberal model that says banks can govern themselves has failed. It is up to county governments to restore the rule of law and repair the economic distress wrought behind the smokescreen of MERS. New tools at the county’s disposal—including eminent domain, land banks, and publicly-owned banks—can facilitate this local rebirth.

Ellen Brown is an attorney and president of the Public Banking Institute, http://PublicBankingInstitute.org. In Web of Debt, her latest of eleven books, she shows how a private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Her websites arehttp://WebofDebt.com and http://EllenBrown.com.

STATE PUBLIC BANKS
http://www.yesmagazine.org/new-economy/how-wisconsin-could-turn-austerity-into-prosperity-own-a-bank
http://www.yesmagazine.org/new-economy/a-choice-for-states-banks-not-budget-crises
http://www.yesmagazine.org/new-economy/the-growing-movement-for-publicly-owned-banks

NY STATE ENACTS ‘LAND BANK’ LAW
http://www.housingwire.com/2011/07/29/new-york-state-enacts-land-bank-law
New York state enacts land bank law
by Kerry Curry / July 29, 2011

New York became the latest state Friday to enact land bank legislation to deal with the burgeoning problem of vacant and blighted properties — one of the aftereffects from the nation’s foreclosure crisis. New York Gov. Andrew Cuomo signed the law Friday in what was described as a bipartisan effort. Land banks are entities that take control of problem properties and either rehabilitate the property or bulldoze it to redevelop the land. The strategy has met with success in some of the nation’s inner cities that have been ravaged by the foreclosure crisis, such as Detroit and Cleveland. Land banks have assembled parcels for green space, urban farming, side lots, community amenities, commercial development and affordable housing, among other uses.

New York’s law will allow cities and counties across the state the ability to develop land banks, which would be tasked with converting vacant, abandoned or tax-delinquent properties into productive use. The issue is of particular importance in Western New York, where the volume of abandoned housing stock is overwhelming. Center for Community Progress President Dan Kildee, who wrote a piece on land banks for HousingWire’s August magazine, worked closely with the lawmakers who crafted the bills, which are modeled on the example of Flint, Mich., a city ravaged by the downturn in the American auto industry. The Genesee County Land Bank, created there in 1999, has been the primary vehicle for redeveloping the city’s vacant housing.

Kildee, the creator of that land bank, says he believes land banking can yield similar results for New York. He told HousingWire that the Flint land bank has acquired nearly 10,000 vacant homes since its inception, demolishing more than 1,300 of those. Its projects have included redevelopment or repurposing of 2,500 properties. Kildee said the land bank has attracted more than $60 million in new investment to Flint. “Around the country, as communities face the fallout of a changing economy and the foreclosure crisis, land banking is giving local governments the chance to help re-set the real estate market and promote sound development plans for the future,” he said. Similar legislation is up for consideration in Pennsylvania and Tennessee, while Georgia legislators are debating an update of a land banking law already on the books there, according to the Center for Community Progress.

LOCAL SOLUTIONS
http://www.mainstreetmatters.us/publicbanking
http://www.mainstreetmatters.us/solvingforeclosures
A Solution to the Foreclosure Crisis / by Michael Sauvante

Summary
Not since the Great Depression have so many homes been seized in foreclosure proceedings. With no end in sight, our country and local communities are faced with the realization that neither Washington nor Wall Street is willing or able to solve the problem. National Commonwealth Group has developed a set of solutions that can be initiated at the local level independent of outside help. They begin with actions that just take some political will on the part of local county officials, which “political backbone” they might conveniently find with the help of local citizens action groups, the small business community and local newspapers, TV & radio.

We have defined a 6 step program that communities can put in motion. The first 4 steps represent largely mitigation efforts that can dramatically reduce the negative impact that foreclosures have on homeowners, their neighbors, the banks and the community as a whole. In some cases those steps will translate into stopping certain foreclosures outright. However, if a community wants to step them entirely, then steps 5 and 6 provide them with the means to do that. We have detailed those 6 steps in the following downloadable document entitled “Stopping Foreclosures: A Local Action Plan“. It is our understanding that not all states and counties in the country, due to local and state laws, would be able to apply these recommendations as is. Nonetheless, a sufficiently large enough segment of the states and their counties could follow these guidelines that they should start to have impact on a large number of communities impacted by the foreclosure problem. We are working with some experts in those states that have a different foundation for how foreclosures are administered to develop an alternate plan for them as well.

In the meantime, we recommend you read the “Stopping Foreclosures: A Local Action Plan” document first and then proceed to read the balance of this section, as it drills deeper into our recommendations contained in Steps 5 & 6. Steps 5 & 6 entail local governments, in particular counties and larger cities, using two sets of laws that will allow them to seize control of their local foreclosure problem and bring about a halt to the devastation they cause to the community and all participants. The first set of laws related to the eminent domain powers of government bodies and the second set of laws relate to banking. Here is a brief synopsis of those two solutions. It is followed by a more in-depth exploration of the whole topic, including a downloadable .pdf document that can be read offline.

Let us begin with the eminent domain powers of these entities. We recommend this solution be pursued primarily at the county level. Here’s why: Counties are the government entity most concerned with foreclosures in their jurisdiction, in that legal proceedings occur at the county court level and county sheriffs are the law enforcement agency tasked with carrying out evictions. The first step we recommend is that a county issues a moratorium on foreclosures within the county, along with ordering the sheriffs to discontinue any evictions (of homeowners facing foreclosure or those who move back in post foreclosure as currently promoted by Occupy Our Homes et al.). Counties can take such actions under their mandate to promote the public good.

Next, they can address the problem of MERS, the principal perpetrators of foreclosure actions against homeowners. MERS was established to bypass the normal title transfer process and costs, resulting in purported title holders unable to prove clear title. Few homeowners have the financial resources to fight foreclosures on this basis, but counties clearly have the financial muscle, ability and motivation to challenge MERS on title questions. If MERS (or any other purported title holder) cannot prove clear title, then it is in the interests of the county and the homeowner for the county to step in and seize the mortgage contract for the property under its eminent domain authority. (Note – as explained here, eminent domain can be used to not only seize real property, but personal property like contract rights and other intangible property, including mortgage contracts.) Post seizure (which costs the county virtually nothing), the county is in a position to work out new terms with the homeowner, allowing them to remain in the home and make mutually agreed upon payments. In the process, the county and all other local constituents avoid the negative impact a foreclosure has on the community and the homeowner gets to stay in the home.

The above solution could address about 50% of the pending foreclosures in the community, corresponding to the percentage of all mortgages held by MERS. If that happens in enough counties, the magnitude of the losses to MERS may well force a national solution to the title issue, but in the meantime, counties could use the process to begin to address their local foreclosure problem. That begs the question of what can be done about the mortgages held by legitimate titleholders, such as community banks, that did not resell their mortgages? A county could still exercise its eminent domain rights and seize those mortgage contracts to those properties as well. In those circumstances, eminent domain rules dictate that the county need only pay a “fair market” value for the mortgage, just as it does with any other normal eminent domain purchase. This would actually currently yield more income to the selling bank than it would see through a foreclosure auction, a plus for the bank.

{Download the full article that explores the eminent domain and county bank solution here: http://www.mainstreetmatters.us/docs/No-more-foreclosures.pdf}

Ending Foreclosures With Local Solutions
Wall Street abuses! Inaction in Washington! Regardless of where one points the finger, the foreclosure crisis continues to devastate the American economy. Community banks are particularly hard hit, through no fault of their own, and many have failed, seized by regulators or snatched up by larger banks seemingly immune to regulatory heavy handedness. Collapsing real estate markets have a domino effect on institutions that are dependent on healthy real estate values, in particular local governments that rely on property taxes. The problem is that the players who might have a solution to the crisis are pressured in ways that exacerbate it. For example, community banks would be penalized by the FDIC and other regulators if they tried to help homeowners by renegotiating their loan payment amounts, providing them payment holidays or simply writing down the value of the loans. The federal government would have to initiate a massive new program to cover the costs to the banks that would produce, or require regulators to radically alter their rules to allow banks to take such actions without a negative impact on their own status. Neither is politically feasible. And Wall Street banks have no motivation to step in and solve the crisis that they helped to create. But there is a way out. Local governments, primarily at the county level, can exercise certain of their legal rights, including the right of eminent domain. And they can go much further if they also make creative use of existing banking laws.

Counties and Foreclosure
Most of the legal procedures associated with foreclosures occur at the county level, including legal filings, court hearings and the too familiar process of sheriffs evicting homeowners after foreclosure. This allows counties to begin implementing a solution in three simple steps:

Step 1: Counties can declare a moratorium on foreclosures on the grounds that they are economically harmful to all residents of the county, not just individual homeowners and mortgage holders. The decline in overall property values following foreclosures impacts the revenue of the county and other government entities that depend on property tax revenues. Reducing or stopping foreclosures is clearly in the public interest and is the first step in solving the problem locally.

Step 2: The county can order its sheriffs not to evict any property owner as a result of already instituted foreclosure proceedings or other parties that have moved into foreclosed homes as part of the Occupy Our Homes movement and other similar activities. That would prevent homeowners being thrown out on the street and provide homes for those already evicted.

Step 3: The county can begin working with homeowners who are under threat of foreclosure to distinguish which homeowners have mortgages primarily with local institutions versus those that have been re-sold and currently held by MERS (Mortgage Electronic Registration Systems, Inc.) or other non-local institutions. MERS is a private mortgage registry that Fannie Mae and Freddie Mac formed along with major banks to bypass public registration of deeds and facilitate the creation of mortgage-backed securities. MERS holds about half of the mortgages in the country.

The Problem with MERS
MERS was created to simplify the bundling of large numbers of individual mortgages into other financial instruments, which resulted in the breakdown of the normal process of title transfer. One reason for that was a desire by the owners of MERS to avoid title transfer costs and thus increase their profits on securitizing those mortgages. The result is that many homeowners are paying on mortgages for which no clearly defined mortgage holder can be identified.

The majority of state attorneys general are in battles with Fannie and Freddie over their unresponsiveness to homeowners’ need to reduce their debt and the imposition of foreclosures even when proper title cannot be presented. (See “Kamala Harris, California Attorney General, To Fannie And Freddie Head: ‘Step Aside’ Over Mortgage Crisis” and “Beau Biden, Delaware Attorney General, Sues Big Banks’ Mortgage Registry”) Yet in order to perfect a foreclosure claim, a mortgage holder is supposed to have clear title to the property, giving them the right to seize the property for non-performance on the part of the mortgagee (homeowner). Where clear title cannot be evidenced, the law should be on the side of the homeowner. But courts, banks and law enforcement have often run roughshod over homeowners who, without the financial resources to fight foreclosure proceedings, are often powerless to stop the juggernaut. If the purported mortgage holder cannot prove clear title, then the law is clear that the homeowner should be able to retain possession and control of their property. Yet many homeowners have been foreclosed improperly and forced out of their homes. Some homeowners have successfully prevailed in court by demanding that the foreclosing entity prove title, which in many cases they could not. Of course, such a legal battle requires financial resources that are usually missing because the homeowner is already in financial difficulties, causing the foreclosure proceedings in the first place.

Counties, MERS & Eminent Domain
This is where counties can come to the rescue. If the financial institution (typically downstream from the originating bank and rarely a community bank) cannot demonstrate clear title, the county can invoke its power of eminent domain to resolve the issue. Eminent domain allows a government entity to seize not just physical property but intangible property such as contract rights, patents, trade secrets and copyrights, provided that doing so is in the public interest and the owner is compensated at fair market value. Counties simply need to provide adequate public notice that the property is subject to eminent domain seizure. If the lender cannot provide proof of title by the end of the notice period, the county can proceed with the seizure uncontested. Since there is no identifiable party to compensate, this procedure costs the county next to nothing. Regardless of the cloud over the title prior to the seizure, clear title is once again established afterward. We have a long history of counties re-establishing clear title, as in cases where property is seized (e.g., for failure to pay taxes) and sold in what are often called “sheriff’s sales.” The title industry considers such sales to wipe out all previous title history, and any future title searches only go back to that date. As the title cost the county essentially nothing, it can negotiate terms with the homeowner that will redefine what portion of the property the homeowner is allowed to retain and also allow the homeowner to remain in the home. That could include a temporary moratorium on any payments pending improvement on the homeowner’s financial condition. At a very minimum the county can then rent the home to the (former) homeowner. (See ““Right-to-Rent”: A Simple, Sensible Idea That Dysfunctional Washington Is More Than Happy to Let Die”)

The net result of this process is:

  • Foreclosures and their negative ripple effect on the local economy are reduced.
  • More homeowners remain in their homes, helping to preserve neighborhoods.
  • The county receives new revenues.

The Moral Argument
In addition to the economic benefits of stopping foreclosures, this process addresses the fact that the MERS system was designed to skirt legal procedures in pursuit of profit. The foreclosure crisis stands at the very center of our economic woes, and since the federal government appears incapable or unwilling to address this problem, this solution lies with local communities. The nature of free market capitalism is that you risk losing your investment. If, like the owners of MERS, you do so because you played fast and loose with the rules, then taxpayers especially should not be required to bail you out, as MERS owners might demand if their system starts to significantly unravel.

What About Legitimate Mortgages?
What can the county do when the titleholder is a financial institution, like a community bank, that normally does not re-sell its mortgages? The county can still exercise eminent domain and seize the property, paying fair market price. Actually, were the bank to be paid the current appraised value for the property, it would in most cases come out financially ahead of what it could realize from a foreclosure sale. How does the county finance the eminent domain purchase of a property at fair market value? Currently, that means borrowing the funds from other institutions and repaying them out of tax revenues and/or the revenues realized from payments by the homeowners. One could argue that the revenue from all of the properties seized (both the MERS properties and those bought for full market value) should be adequate to service the debt. But the county has another tool that allows it to go far beyond financing seized properties and into facilitating the larger credit needs of the county and its residents. That solution is called Public Banking. See the section entitled Public Banking to see what it is and how we can use the concept to get credit flowing in our communities again and to free us up from the tyranny of the Wall Street banks.

Start Now
At the very least county administrators should be petitioned to place a moratorium on local foreclosures and exercise the eminent domain seizure of those foreclosure candidate properties for which no clear titleholder can be established. That will require no new systems at the county level and will go a long ways to ending the devastation of foreclosure.

LAND BANKS
http://planphilly.com/rda-farming
http://www.thelandbank.org/aboutus.asp
http://www.mslandbank.com/aboutus.html
http://www.communityprogress.net/around-the-states-pages-5.php

WHAT is a LAND BANK?
http://www.umich.edu/~econdev/landbank/
Revitalizing Blighted Communities with Land Banks / by Jessica de Wit

A land bank is a public authority created to efficiently hold, manage and develop tax-foreclosed property.(1) Land banks act as a legal and financial mechanism to transform vacant, abandoned and tax-foreclosed property back to productive use. Generally, land banks are funded by local governments’ budgets or the management and disposition of tax-foreclosed property.(2) In addition, a land bank is a powerful locational incentive, which encourages redevelopment in older communities that generally have little available land and neighborhoods that have been blighted by an out-migration of residents and businesses.(3) While a land bank provides short-term fiscal benefits, it can also act as a tool for planning long-term community development. Successful land bank programs revitalize blighted neighborhoods and direct reinvestment back into these neighborhoods to support their long-term community vision.

Why have a land bank?
Land is one of the most important factors in local economic development today and must be managed well to improve existing land use practices, enhance livability of communities, and support local community development.(4) In recent surveys, the Brookings Institute found that on average 15% of the land in major American cities is vacant.(5) Vacant and abandoned land does not produce sufficient property tax revenue for cities, which generally is their main revenue source. This lack of funds impedes a city’s ability to sustain its operations, programs, and services. In addition, vacant and abandoned land discourages property ownership, depresses property values, attracts crime and creates health hazards.

To understand why it is important to have a land bank, it is necessary to assess the costly impact of vacant and abandoned land in communities. When there are vacant and abandoned properties in communities, neighboring property owners and the municipalities incur significant costs. The U.S. Fire Administration reports that over 12,000 vacant structure fires are reported each year in the U.S., which results in $73 million in property damage annually.(6) In addition, abandoned properties tend to attract crime. A 1993 study of 59 abandoned properties in Austin, Texas, found that 34 percent were used for illegal activities and of the 41 percent that were unsecured, 83 percent were used for illegal activities.(7) This crime drains police department resources and leaves residents feeling unsafe in their own neighborhoods.

When property owners neglect and abandon their properties, the local municipality must use its own resources to clean and maintain the properties as part of their nuisance abatement responsibilities to protect the public health, safety and welfare of its community. For example, from 1999 to 2004, St. Louis spent $15.5 million, which equates to nearly $100 per household, to demolish vacant buildings.(8) Detroit spends roughly $800,000 per year to clean vacant lots.(9) Abandoned and vacant properties drive down the surrounding property values, which lowers the property taxes that most municipalities rely on as a primary source of revenue.

Property abandonment can destabilize a neighborhood by causing an out-migration of property owners, who are worried about losing value on their properties due to surrounding vacant and abandoned land. A Temple University study suggests that, all things being equal, the presence of an abandoned house on a block reduces the value of all the other property by an average of $6,720.(10) According to Emory University Professor Frank Alexander’s research, “failure of cities to collect even 2 to 4 percent of property taxes because of delinquencies and abandonment translates into $3 billion to $6 billion in lost revenues to local governments and school districts annually.”(11) While it is difficult to quantify all of the costs associated with vacant and abandoned properties, it is clear that they place a tremendous cost burden on communities.

Land Bank Benefits
While abandoned and vacant properties depress property values, discourage property ownership, and attract criminal activities in the surrounding area, a land bank provides tools to quickly turn these tax-reverted properties back into usable parcels that reinvest in the community’s long-term vision for its neighborhoods. Land bank programs act as an economic and community development tool to revitalize blighted neighborhoods and business districts. Land banks can benefit urban schools, improve tax revenues, expand housing opportunities, remove public nuisances, assist in crime prevention and promote economic development.(12)


Source: 2004 Kirwan Institute for Study of Race & Ethnicity, Ohio State University.

By transferring vacant and abandoned properties to responsible land owners through a land bank program, local governments benefit because they avoid the significant cost burden of property maintenance, like mowing and snow removal, as part of their nuisance abatement responsibilities. In addition, local governments benefit from increased revenue because the new property owners pay taxes on the property. Also, the local schools benefit because they receive more funding when there is an increase in property owners in their school districts. Land bank programs can increase the variety of mixed-income housing offered and provide more opportunities for affordable housing. Also, land bank properties, which become owner-occupied, discourage criminal activity thereby benefiting public safety and decreasing the cost burden on the local police and fire departments. Finally, the more residents and businesses that occupy property in a neighborhood, the more services and amenities will be needed, which boosts local economic activity. Many cities, like Atlanta, GA; St. Louis, MO; Genesee County, MI; and Cleveland, OH; have established land bank programs to redevelop vacant and abandoned land as a productive use for their communities. These communities are using land banks as a tool to reuse their urban land and stimulate economic development and neighborhood revitalization.

Land Bank Challenges
While there are many benefits to establishing land banks in communities, there are also many challenges in operating and maintaining them. Several U.S. municipalities have had challenges with running their land banks. Atlanta’s land bank has a lack of sufficient acquisition funds for both Community Development Corporations (CDC) and the land bank authority (LBA).(13) In addition, they have a need for ongoing improvement coordination among community development departments of local governments, the LBA and the Tax Commissioner.(14)

Cleveland’s land bank challenges are the capitalization of projects, the CDC’s limited capacity to take and rehab land acquired from the land bank and the time consuming administrative procedures, including the legislative process and aldermanic approvals.(15) CDCs want the City to go beyond supporting primarily tax-delinquent vacant properties and take the lead on tax-delinquent properties that have existing structures and the possibility of environmental contamination.(16)

Genesee County’s land bank challenges are whether urban tax-reverted properties have enough value to be purchased, even with the latest Land Bank Fast Track legislation.(17) In addition, there are concerns whether there will be enough revenue generated by the sale of these properties to pay the costs associated with administering a Redevelopment Fast Track Authority.(18)

Case Study: Michigan’s Land Banking Enabling Legislation
To better understand how land bank programs work, it is helpful to review a case study. Following is a case study of Michigan’s Land Bank Enabling Legislation and Michigan’s Genesee County land bank program. It is important to first review a State’s particular Land Bank Enabling Legislation because these laws provide land bank programs with the legal and financial tools needed to operate and maintain a land bank. Prior to January 2004, Michigan’s tax foreclosure laws on abandoned properties were ineffective because local governments did not have the authority to effectively manage tax-reverted land and prevent blight. Now, Michigan has one of the most progressive land banking laws in the nation.(19)

In January 2004, Governor Granholm signed into law the Land Bank Fast Track Legislation, Public Act (PA) 258, to provide communities with better legal and financial tools to put vacant and abandoned properties back into productive use.(20) This law establishes a state land bank authority while also enabling the establishment of city and county land bank authorities.(21) In addition, the law permits these authorities to expedite quiet title on properties, which it possesses, and make them available at nominal prices for productive reuse in the community.(22) The quiet title process is a legal action that eliminates all liens and past claims on a property and clears the title so a new owner may purchase the property without worrying about any unresolved claims.

In conjunction with PA 258, the Governor also signed into law four other related Public Acts:

PA 259 amends the Michigan Brownfield Redevelopment Act to allow any land bank authority owned property to be defined as “blighted property”, which enables a tax increment financing board to provide assistance to a land bank authority with clearing or quieting a title, and disposing of property owned or held by a land bank authority.(23)

PA 261 creates the Property Tax Exemption Act, which exempts property, with titles held by land bank authority, from taxes and exempts property sold by a land bank authority from general property taxes for five years.(24)

PA 260 creates the Tax Reverted Clean Title Act to impose a specific tax, which would have the same rate of general property taxes for five years, on property sold by a land bank fast track authority. While one half of the revenue from this specific tax funds an authority’s title clearance and land disposition costs, the remaining half is earmarked for local and state collecting units on a pro-rata basis.(25)

PA 263 amends the General Property Tax Act to permit a foreclosing governmental unit to request a title product other than an unreliable title search to identify the owners of tax delinquent properties at the time of foreclosure and describe a reasonable process for identifying these owners and providing public notice to them.(26)

Michigan’s Genesee County Land Bank
In Michigan, Genesee County has been a leader in creating a successful land banking program. Under the Genesee County Land Bank Authority, tax foreclosed properties are held for a period of time before being returned to the market. This allows for the grouping of parcels together to provide a more attractive resale opportunity and the assessment of potential property owners to ensure that they will contribute to the long-term vision of the community.

The Genesee County Land Bank Authority has acquired title to more than 3400 land parcels, including nearly 6% in the City of Flint in the first three years of the program.(27) They have successfully transferred 130 foreclosed tenant occupied properties to non-profit housing agencies, whose goal is to stabilize neighborhoods and encourage home ownership.(28) In addition, the LBA has redeveloped a 30,000 sq. ft. mixed use building in downtown Flint, which has been empty since 1980, and they have assembled hundreds of empty lots for city development projects and local non-profit and community organization projects.(29)

Land Banks as a Smart Growth Planning Tool
While other cities’ land bank programs, like St. Louis, have been used primarily as a fiscal tool to stimulate growth in their communities, Genesee County’s land bank program has been used as a planning tool to align with their communities’ long-term redevelopment plans that provide the greatest benefit. When Michigan’s Governor Granholm signed the latest land bank legislation in 2004, she said, “Together these new laws will help local planning officials to look at an entire area or region when developing land use plans.”(30) In addition, the Governor said, “To make headway against urban sprawl, we must think regionally and use new tools.”(31) Land bank programs are one of these smart growth tools that counter sprawl and revitalize the inner core of Michigan’s cities. Based on Governor Granholm’s state-wide smart growth goals, it is imperative that Michigan communities focus on city and region-wide planning instead of just fiscal objectives when implementing land bank programs.

References and related links
1) 2005. Smart Growth Tactics. Michigan Society of Planning, January.
2) Brooks, Amy; Collins, Demetria; Eichmuller, Barbara; Tintocalis, Melissa; van Leeuwen, Simon. 2004. Harnessing Community Assets: A Detroit Land Bank Authority. Taubman College of Architecture & Urban Planning, University of Michigan, April.
3) Blakely, Edward and Bradshaw, Ted. 2002. Planning Local Economic Development. California: Sage Publications.
4) Ibid.
5) Pagano, M. & Bowman, A. 2000. Vacant Land in Cities: An Urban Resource, Survey Series. The Brookings Institute.
6) 2004. Vacant Properties and Smart Growth: Creating Opportunity from Abandonment. Funder’s Network For Smart Growth and Livable Communities, September.
7) Ibid.
8) Ibid.
9) Ibid.
10) Ibid.
11) Ibid.
12) 2004. The Multiple Benefits of Land Banking and Comprehensive Land Bank Planning for Detroit. Kirwin Institute for the Study of Race & Ethnicity, Ohio State University, April.
13) Local Initiatives Support Corporation. 2005. Atlanta Case Study: Model Practices in Tax Foreclosure and Property Disposition. Retrieved from http://www.lisc.org/resources/vacant_abandoned.shtml?Affordable+Housing.
14) Ibid.
15) Local Initiatives Support Corporation. 2005. Cleveland Case Study: Model Practices in Tax Foreclosure and Property Disposition. Retrieved from http://www.lisc.org/resources/vacant_abandoned.shtml?Affordable+Housing
16) Ibid.
17) Wyckoff, Mark. 2003. All Communities to Benefit from New Land Use Legislation. Planning & Zoning News, December.
18) Ibid.
19) 2005. Smart Growth Tactics. Michigan Society of Planning, January.
20) Brooks, Amy; Collins, Demetria; Eichmuller, Barbara; Tintocalis, Melissa; van Leeuwen, Simon. 2004. Harnessing Community Assets: A Detroit Land Bank Authority. Taubman College of Architecture & Urban Planning, University of Michigan, April.
21) Ibid.
22) Ibid.
23) 2005. Smart Growth Tactics. Michigan Society of Planning, January.
24) Brooks, Amy; Collins, Demetria; Eichmuller, Barbara; Tintocalis, Melissa; van Leeuwen, Simon. 2004. Harnessing Community Assets: A Detroit Land Bank Authority. Taubman College of Architecture & Urban Planning, University of Michigan, April.
25) Wyckoff, Mark. 2003. All Communities to Benefit from New Land Use Legislation. Planning & Zoning News, December.
26) Ibid.
27) 2005. Smart Growth Tactics. Michigan Society of Planning, January.
28) Ibid.
29) Ibid.
30) Crowell, Charlene. 2004. In Lansing, A Legislative Breakthrough. Michigan Land Use Institute. Retrieved from http://www.mlui.org/growthmanagement/fullarticle.asp?fileid=16609.
31) Ibid.


‘LAND VALUE TAX’
http://en.wikipedia.org/wiki/Land_value_tax#References
http://www.newstatesman.com/200409200008
A revolutionary who won over Victorian liberals
by Tristram Hunt / 20 September 2004

While land reform has been alive in British radical thinking since 1066, it was an American who managed to craft the first credible programme for change. Medieval critics of the “Norman Yoke”, the Diggers and Levellers of the English civil war, and the 18th-century opponents of land enclosure had all longed without success for the return of a golden age in which land would be equitably distributed according to need. But the campaigning California journalist Henry George transformed nostalgia into public policy with a tour through 1880s Britain, energising public opinion and making land reform the foundation stone of progressive politics.

Late 19th-century Britain enjoyed a wealth of radical debate. New ideas, new movements and new leaders were systematically unpicking the intellectual hegemony of mid-Victorian laissez-faire. In the town halls of Birmingham, Glasgow and London, the coming creed of municipal socialism was displaying the practical benefits of an activist council; the works of Marx and Engels were being translated and distributed; even John Stuart Mill, the high priest of negative liberty, was turning his attention in “Chapters on Socialism” towards a future ideal of communal harmony. Mill showed that forms of property ownership, rather than being the sacrosanct foundations of modern society, simply reflected the cultural ethos of each civilisation. Private property had no unimpeachable status.

At the same time, there was a growing awareness that the wealth wrought by the industrial revolution and empire was not being evenly spread. The 1880s downturn witnessed the rediscovery of poverty as the dark continents of outcast London, Manchester and Liverpool were traversed by growing numbers of journalists and social investigators. While W T Stead exposed in the Pall Mall Gazette the immoral underbelly of the capital, Charles Booth walked the streets of the East End to discover rates of poverty far higher than even the socialists had predicted. As Beatrice Webb put it, there was “a growing uneasiness . . . that the industrial organisation, which had yielded rent, interest, and profits on a stupendous scale, had failed to provide a decent livelihood and tolerable conditions for a majority of the inhabitants of Great Britain”.

Into this fertile intellectual terrain stepped Henry George to deliver a series of lectures on his book, Progress and Poverty (1879). Initially employed in Ireland as an American correspondent for Irish World, he soon immersed himself in Irish politics and caught the nationalists’ attention with his case for land reform. He was arrested for speaking out against the British – a political coup which made his eventual entry into British public life all the more anticipated. Thousands turned up to hear his lectures; tens of thousands read his book.

After 80 years of economic growth, George considered that “the association of poverty with progress [is] the great enigma of the day”. Moreover, it was in the most highly developed capitalist economies such as the United States and Great Britain that were found “the deepest poverty, the sharpest struggle for existence, the most enforced idleness”. An Atlanticist radical in the vein of Paine and Cobbett, George identified the problem as one of monopoly. (Lizzie Magie, the future inventor of the board game Monopoly, was a keen follower of George.) Where the “natural” means of production had been privately appropriated, rent absorbed all increases in the nation’s wealth. The monopoly of land caused fundamental inequality and poverty, because whenever there was an increase in efficiency the profits would go not to the workers – or even to the capitalists – but to the landlords. Such a grotesque monopoly of wealth was clearly in opposition to natural law. No man made the land, and by ancient right and custom it should not be permanently alienated from the nation at large. As a monopoly, held in trust for the people, land must be made to bear its fair obligations to the public weal.

George’s solution was a land-value tax, a “single tax” that would both confiscate the rent from land and remove all other forms of taxation. This would enable progress to alleviate poverty, as economic growth would be distributed more widely and a land tax would also allow for the subsidy of a vast network of public services, from utilities and housing to culture. The clarity of George’s proposals and the power of his rhetoric pushed land reform to the top of political debate. J A Hobson declared that George “exercised a more directly powerful, formative and educative influence over English radicalism of the last 15 years than any other man”. Both liberals and socialists were drawn to his ideas. In the Fabian pamphlet Capital and Land, Sydney Olivier proposed that the landlords’ “unearned increment” ought to be confiscated through taxation. Reform movements such as the Land Nationalisation Society and the English Land Restoration League sprang up around George’s public meetings, while the Marxists of the Social Democratic Federation were clearly attracted to the nationalisation argument.

Yet George was ambivalent about full-blooded socialism. The management of land through market mechanisms such as taxation, rather than government control, was his favoured option for reform. This explains why so many liberals were equally drawn to Progress and Poverty. Joseph Chamberlain declared himself “electrified” by the book and the ensuing Radical Programme reflected this pressing concern with the land question. The liberal Winston Churchill argued that the land monopoly was detrimental to the public interest, while Herbert Asquith supported Lloyd George’s proposal “to free the land that from this very hour is shackled with the chains of feudalism”.

GEORGISTS
http://en.wikipedia.org/wiki/Georgism#Influence
http://econjwatch.org/articles/geo-rent-a-plea-to-public-economists
http://renegadeecologist.blogspot.com/2012/01/if-you-want-vision-of-future-imagine.html
Views from a Georgist Ecologist

Land Value Tax, which is in my opinion the Holy Grail of legislative changes to protect wildlife, is the simplest expression of the Economic theories of Henry George. This theory goes that if we abolish all harmful taxes on our hard work and trade and instead charge a rent for the use of natural resources such as Land we will not waste them or allow private interests to exploit the rest of humanities access to them.
Such a tax would not only stimulate jobs and enterprise but put a value on all of our natural resources and force us to look after them. If it was implemented for agricultural land, where the lower value of perpetually designated wilderness or natural grazing land is reflected in its land value taxation, it would be the surest way to save the wildlife of the UK and for the least cost to the taxpayer”.

This would mean hard to farm areas, steep banks, riverbanks, rocky outcrops and areas landowners want to designate a nature reserves, which must be legally binding, could be set aside for wildlife and as such attract no taxation. The result of this would be that unproductive and marginal land would become wildlife havens and receive long term protection for future generation to enjoy.

the SINGLE TAX
http://www.henrygeorgefoundation.org/links/
http://www.nytimes.com/2011/10/16/opinion/sunday/heres-the-guy-who-invented-populism.html
by Jill Lepore / October 15, 2011

Henry George, the most popular American economic thinker of the 19th century, was a populist before populism had a name. His economic plan was known as the Single Tax. George was born in Philadelphia in 1839. He left school at 14 to sail to India and Australia on board a ship called the Hindoo. At the time, a lot of people were writing about India as a place of jewels and romance; George was struck by its poverty. Returning to Philadelphia, he became a printer’s apprentice. He went to New York where he saw, for the first time, “the shocking contrast between monstrous wealth and debasing want.” In 1858, he joined the crew of a ship sailing around the Cape Horn because it was the only way he could afford to get to California. In San Francisco, he edited a newspaper; it soon failed. He spent most of his life editing newspapers, and, as with every other industry in the 19th century, many of them failed. In 1865, George was reduced to begging in the streets.

The 19th century was the Age of Progress: the steam engine, the power loom, the railroad. (Awestruck wonder at progress animated that era the way the obsession with innovation animates American politics today.) George believed that the other side of progress was poverty. The railroad crossed the continent in 1869. From the West, George wrote an essay called “What the Railroad Will Bring Us.” His answer: the rich will get richer and the poor will get poorer. In a Fourth of July oration in 1877, George declared, “no nation can be freer than its most oppressed, richer than its poorest, wiser than its most ignorant.” In 1879, George finished a draft of his most important book. “Discovery upon discovery, and invention after invention, have neither lessened the toil of those who most need respite, nor brought plenty to the poor,” George wrote. He thought the solution was to abolish all taxes on labor and instead impose a single tax, on land. He sent the manuscript to New York. When no one would publish it, he set the type himself and begged publishers simply to ink his plates. The book, “Progress and Poverty,” sold three million copies.

George was neither a socialist nor a communist; he influenced Tolstoy but he disagreed with Marx. He saw himself as defending “the Republicanism of Jefferson and the Democracy of Jackson.” He had a bit of Melville in him (the sailor) and some of Thoreau (“We do not ride on the railroad,” Thoreau wrote from Walden. “It rides upon us.”) But, really, he was a Tocquevillian. Tocqueville believed that democracy in America was made possible by economic equality: people with equal estates will eventually fight for, and win, equal political rights. George agreed. But he thought that speculative, industrial capitalism was destroying democracy by making economic equality impossible. A land tax would solve all.

In 1886, George decided to run for mayor of New York. Democrats urged him not to, telling him he had no chance and would only raise hell. “You have relieved me of embarrassment,” George answered. “I do not want the responsibility and the work of the office of the Mayor of New York, but I do want to raise hell.” The Democrat, Abram Hewitt, won, but George got more votes than the Republican, Theodore Roosevelt.

In the 1880s, George campaigned for the single tax, free trade and ballot reform. The last succeeded. George is why, on Election Day, your polling place supplies you with a ballot that you mark in secret. This is known as an Australian ballot, and George brought it back from his voyage halfway around the world. George ran for mayor of New York again in 1897 but died in his bed four days before the election. His body lay in state at Grand Central. More than 100,000 mourners came to pay their respects. The New York Times said, “Not even Lincoln had a more glorious death.” And then: he was left behind. Even Clarence Darrow, who admired him, recanted. “The error I found in the philosophy of Henry George,” Darrow wrote, “was its cocksureness, its simplicity, and the small value that it placed on the selfish motives of men.”


This image (from a Henry George Cigar box) reflects George’s fame at the time of his run for the Mayoralty of New York in 1886 (and later in 1897). George outpolled a young Theodore Roosevelt, but lost to machine Democrat Abraham Hewitt. The rooster was George’s campaign icon, and his slogan was “The democracy of Thomas Jefferson. And although the cigars were advertised “for men”, George was in fact an outspoken advocate for women’s suffrage.

HENRY GEORGE
http://renegadeecologist.blogspot.com/search?updated-max=2011-05-23T12:37:00%2B01:00&max-results=7
by Agnes George de Mille  /  January, 1979

A hundred years ago a young unknown printer in San Francisco wrote a book he calledProgress and Poverty. He wrote after his daily working hours, in the only leisure open to him for writing. He had no real training in political economy. Indeed he had stopped schooling in the seventh grade in his native Philadelphia, and shipped before the mast as a cabin boy, making a complete voyage around the world. Three years later, he was halfway through a second voyage as able seaman when he left the ship in San Francisco and went to work as a journeyman printer. After that he took whatever honest job came to hand. All he knew of economics were the basic rules of Adam Smith, David Ricardo, and other economists, and the new philosophies of Herbert Spencer and John Stuart Mill, much of which he gleaned from reading in public libraries and from his own painstakingly amassed library. Marx was yet to be translated into English.

George was endowed for his job. He was curious and he was alertly attentive to all that went on around him. He had that rarest of all attributes in the scholar and historian that gift without which all education is useless. He had mother wit. He read what he needed to read, and he understood what he read. And he was fortunate; he lived and worked in a rapidly developing society. George had the unique opportunity of studying the formation of a civilization — the change of an encampment into a thriving metropolis. He saw a city of tents and mud change into a fine town of paved streets and decent housing, with tramways and buses. And as he saw the beginning of wealth, he noted the first appearance of pauperism. He saw degradation forming as he saw the advent of leisure and affluence, and he felt compelled to discover why they arose concurrently. The result of his inquiry,Progress and Poverty, is written simply, but so beautifully that it has been compared to the very greatest works of the English language. But George was totally unknown, and so no one would print his book. He and his friends, also printers, set the type themselves and ran off an author’s edition which eventually found its way into the hands of a New York publisher, D. Appleton & Co. An English edition soon followed which aroused enormous interest. Alfred Russel Wallace, the English scientist and writer, pronounced it “the most remarkable and important book of the present century.” It was not long before George was known internationally.

During his lifetime, he became the third most famous man in the United States, only surpassed in public acclaim by Thomas Edison and Mark Twain. George was translated into almost every language that knew print, and some of the greatest, most influential thinkers of his time paid tribute. Leo Tolstoy’s appreciation stressed the logic of George’s exposition: “The chief weapon against the teaching of Henry George was that which is always used against irrefutable and self-evident truths. This method, which is still being applied in relation to George, was that of hushing up …. People do not argue with the teaching of George, they simply do not know it.” John Dewey fervently stressed the originality of George’s work, stating that, “Henry George is one of a small number of definitely original social philosophers that the world has produced,” and “It would require less than the fingers of the two hands to enumerate those who, from Plato down, rank with Henry George among the world’s social philosophers.” And Bernard Shaw, in a letter to my mother, Anna George, years later wrote, “Your father found me a literary dilettante and militant rationalist in religion, and a barren rascal at that. By turning my mind to economics he made a man of me….”Inevitably he was reviled as well as idolized. The men who believed in what he advocated called themselves disciples, and they were in fact nothing less: working to the death, proclaiming, advocating, haranguing, and proselytizing the idea. But it was not implemented by blood, as was communism, and so was not forced on people’s attention. Shortly after George’s death, it dropped out of the political field. Once a badge of honor, the title, “Single Taxer,” came into general disuse. Except in Australia and New Zealand, Taiwan and Hong Kong and scattered cities around the world, his plan of social action has been neglected while those of Marx, Keynes, Galbraith and Friedman have won great attention, and Marx’s has been given partial implementation, for a time, at least, in large areas of the globe. But nothing that has been tried satisfies. We, the people, are locked in a death grapple and nothing our leaders offer, or are willing to offer, mitigates our troubles. George said, “The people must think because the people alone can act.” We have reached the deplorable circumstance where in large measure a very powerful few are in possession of the earth’s resources, the land and its riches and all the franchises and other privileges that yield a return. These positions are maintained virtually without taxation; they are immune to the demands made on others. The very poor, who have nothing, are the object of compulsory charity. And the rest — the workers, the middle-class, the backbone of the country — are made to support the lot by their labor.

We are taxed at every point of our lives, on everything we earn, on everything we save, on much that we inherit, on much that we buy at every stage of the manufacture and on the final purchase. The taxes are punishing, crippling, demoralizing. Also they are, to a great extent, unnecessary. But our system, in which state and federal taxes are interlocked, is deeply entrenched and hard to correct. Moreover, it survives because it is based on bewilderment; it is maintained in a manner so bizarre and intricate that it is impossible for the ordinary citizen to know what he owes his government except with highly paid help. We support a large section of our government (the Internal Revenue Service) to prove that we are breaking our own laws. And we support a large profession (tax lawyers) to protect us from our own employees. College courses are given to explain the tax forms which would otherwise be quite unintelligible. All this is galling and destructive, but it is still, in a measure, superficial. The great sinister fact, the one that we must live with, is that we are yielding up sovereignty. The nation is no longer comprised of the thirteen original states, nor of the thirty-seven younger sister states, but of the real powers: the cartels, the corporations. Owning the bulk of our productive resources, they are the issue of that concentration of ownership that George saw evolving, and warned against. These multinationals are not American any more. Transcending nations, they serve not their country’s interests, but their own. They manipulate our tax policies to help themselves. They determine our statecraft. They are autonomous. They do not need to coin money or raise armies. They use ours. And in opposition rise up the great labor unions. In the meantime, the bureaucracy, both federal and local, supported by the deadly opposing factions, legislate themselves mounting power never originally intended for our government and exert a ubiquitous influence which can be, and often is, corrupt.

I do not wish to be misunderstood as falling into the trap of the socialists and communists who condemn all privately owned business, all factories, all machinery and organizations for producing wealth. There is nothing wrong with private corporations owning the means of producing wealth. Georgists believe in private enterprise, and in its virtues and incentives to produce at maximum efficiency. It is the insidious linking together of special privilege, the unjust outright private ownership of natural or public resources, monopolies, franchises, that produce unfair domination and autocracy. The means of producing wealth differ at the root: some is thieved from the people and some is honestly earned. George differentiated; Marx did not. The consequences of our failure to discern lie at the heart of our trouble. This clown civilization is ours. We chose this of our own free will, in our own free democracy, with all the means to legislate intelligently readily at hand. We chose this because it suited a few people to have us do so. They counted on our mental indolence and we freely and obediently conformed. We chose not to think.

Henry George was a lucid voice, direct and bold, that pointed out basic truths, that cut through the confusion which developed like rot. Each age has known such diseases and each age has gone down for lack of understanding. It is not valid to say that our times are more complex than ages past and therefore the solution must be more complex. The problems are, on the whole, the same. The fact that we now have electricity and computers does not in any way controvert the fact that we can succumb to the injustices that toppled Rome.To avert such a calamity, to eliminate involuntary poverty and unemployment, and to enable each individual to attain his maximum potential, George wrote his extraordinary treatise a hundred years ago. His ideas stand: he who makes should have; he who saves should enjoy; what the community produces belongs to the community for communal uses; and God’s earth, all of it, is the right of the people who inhabit the earth. In the words of Thomas Jefferson, “The earth belongs in usufruct to the living.” This is simple and this is unanswerable. The ramifications may not be simple but they do not alter the fundamental logic. There never has been a time in our history when we have needed so sorely to hear good sense, to learn to define terms exactly, to draw reasonable conclusions. As George said, “The truth that I have tried to make clear will not find easy acceptance. If that could be, it would have been accepted long ago. If that could be, it would never have been obscured.” We are on the brink. It is possible to have another Dark Ages. But in George there is a voice of hope.

The Darknet Project: netroots activists dream of global mesh network
A low-power, open source, open hardware mesh access point

the DARKNET PROJECT
http://arstechnica.com/open-source/news/2011/11/the-darknet-plan-netroots-activists-dream-of-global-mesh-network.ars
Netroots activists dream of global mesh network
by Ryan Paul

A group of Internet activists gathered last week in an Internet Relay Chat (IRC) channel to begin planning an ambitious project—they hope to overcome electronic surveillance and censorship by creating a whole new Internet. The group, which coordinates its efforts through the Reddit social networking site, calls its endeavor The Darknet Project (TDP). The goal behind the project is to create a global darknet, a decentralized web of interconnected wireless mesh networks that operate independently of each other and the conventional internet. In a wireless mesh network, individual nodes can relay data for other nodes, ensuring that the routing of data remains robust as nodes on the network are added and removed. The idea behind TDP is that such a network would be resistant to censorship and shutdown because there would be no central point of control over the infrastructure. “Basically, the goal of the darknet plan project is to create an alternative, more free internet through a global mesh network,” explained a TDP organizer who goes by the Internet handle ‘Wolfeater.’ “To accomplish this, we will establish local meshes and connect them via current infrastructure until our infrastructure begins to reach other meshes.”

TDP seems to have been influenced in part by an earlier unofficial effort launched by the Internet group Anonymous called Operation Mesh. The short-lived operation, which was conceived as a response to the Anti-Counterfeiting Trade Agreement (ACTA) and its potential impact on Internet infrastructure, called for supporters to create a parallel Internet of wireless mesh networks. The idea is intriguing, but it poses major technical and logistical challenges, and it’s hard to imagine that TDP will ever move beyond the conceptual stage. The group behind the effort is big on ideas but short on technical solutions for rolling out a practical implementation. During the IRC meeting, they struggled to coordinate a simple discussion about how to proceed with their agenda. Still, despite TDP’s dysfunctional organizational structure and lack of concrete strategy, their message seems to resonate with an audience on the Internet. And enthusiasm for mesh networks and decentralized Internet isn’t isolated to the tinfoil hat crowd; serious government programs aim at producing similar technology. Earlier this year, the New York Times reported on a US government-funded program to create wireless mesh networks that could help dissidents circumvent political censorship in authoritarian countries. As repressive governments continue to get better at thwarting circumvention of their censorship tools, dissidents will need more robust tools of their own to continue propagating information. The US State Department seems to view decentralized darknets as an important area of research for empowering free expression abroad.

A growing number of independent open source software projects have also emerged to fill the need for darknet technology. Many of these projects are backed by credible non-profit organizations and segments of the security research community. Such projects could find a useful ally in the TDP if they were to engage with the growing community and help mobilize its members in a constructive direction. Unlike TDP, the original Operation Mesh coordinators had specific technologies in mind: they highlighted the I2P anonymous network layer software and the BATMAN ad-hoc wireless routing protocol as the best prospective candidates. Both projects are actively maintained and have modest communities, though the I2P website is currently down. Promising projects like Freenet develop software for building darknets on top of existing Internet infrastructure. Another group that might benefit from broader community support is Serval, a project to create ad-hoc wireless mesh networks using regular smartphones. The group has recently developed a software prototype that runs on Android handsets. They are actively looking for volunteers to help test the software and participate in anumber of other ways. TDP members who are serious about fostering decentralized Internet infrastructure could meaningfully advance their goals by assisting any of the previously mentioned projects. The growing amount of popular grassroots support for Internet decentralization suggests that the momentum behind darknets is increasing.

DIMNETs
http://arstechnica.com/tech-policy/news/2011/11/anonymous-bit-dimnet-tries-to-be-a-hedge-against-dns-censorship.ars
Anonymous “dimnet” tries to create hedge against DNS censorship
by Sean Gallagher

With concern mounting over the potential impact of the Stop Online Piracy Act and claims that it could make the Domain Name Service more vulnerable, one group is looking to circumvent the threat of domain name blocking and censorship by essentially creating a new Internet top-level domain outside of ICANN control. Called Dot-BIT, the effort currently uses proxies, cryptography, and a small collection of DNS servers to create a section of the Internet’s domain address space where domains can be provisioned, moved, and traded anonymously. So far, over 4,000 domains have been registered within Dot-BIT’s .bit virtual top level domain (TLD). Those domains are visible only to people who use a proxy service that draws address information from the project’s distributed database, or to those using one of the project’s two public DNS servers. While it’s not exactly a “darknet” like the Tor anonymizing network’s .onion domain, .bit isn’t exactly part of the open Internet, either—call it a “dimnet.” Just how effective a virtual top-level domain will be in preventing censorship by ISPs and governments—or even handling a rapidly growing set of registered domains—is unclear at best.

How it works
Dot-BIT is derived from a peer-to-peer network technology called Namecoin, derived from the Bitcoin digital currency technology. Just as with Bitcoin, the system is driven by cryptographic tokens, called namecoins. Tobuy an address in that space, you either have to “mine” namecoins by providing compute time (running client software that uses the computer’s CPU or graphics processing unit) to handle the processing of transactions within the network, or buy them through an exchange with cash or Bitcoins. All of those approaches essentially provide support to the Namecoin distributed name system’s infrastructure. You can also get an initial payout of free namecoins from a “faucet” site designed to help bootstrap the network. The cost of entry is pretty low: currently, registering a new domain costs about 1.6 namecoins, which can be had for about five cents. Your registration isn’t associated with your name, address, and phone number—instead, it’s linked to your cryptographic identity, preserving anonymity. Once you’ve registered a domain, you can assign it by sending out a JSON-formatted update request, mapping the domain to a DNS or providing IP addresses and host names to be distributed through Dot-BIT’s proxies and public DNS servers. That information is then spread across all of the network’s peer systems.

Simple, right?
Namecoin’s approach heavily favors early adopters, since once you’ve registered a domain, you can transfer it to someone else—or squat on it until someone pays you for it. That seems to be what a lot of early .bit adopters are counting on. For example, using Firefox and the FoxyProxy add-on to surf .bit-land to audi.bit lands you on a “this domain for sale” page. But while Dot-BIT may allow for an anonymous and relatively secure exchange of DNS information, it won’t necessarily prevent censorship by ISPs. If the .bit top-level domain becomes the target of laws like SOPA, it can be shut down pretty quickly by cutting off the head—its own internal DNS—either through port blocking or other filtering. And since it lacks the anonymizing routing abilities of “hidden” networks like Tor’s .onion domain, it won’t protect the identities of publishers and users who visit sites that use a .bit name. At the moment, then, it’s not certain what purpose .bit will actually serve, other than as an experiment in novel ways to create a DNS—or someplace for hackers to spend their illicitly earned Bitcoins.

the ‘INFORMAL SECTOR’
http://globalguerrillas.typepad.com/globalguerrillas/2011/12/bitcoin-finds-its-intrinsic-value.html
http://globalguerrillas.typepad.com/globalguerrillas/2011/12/the-proliferation-of-darknets.html

It’s time to update/widen the term to accommodate a wider range of modern activity.  A darknet:

is a closed, private communications network that is used for purposes not sanctioned by the state (aka illegal).

Darknets can be built in the following ways:

  • Software.  A virtual, encrypted network that runs over public network infrastructure (most of the US government/economy uses this method).
  • Hardware.  A parallel physical infrastructure.  This hardware can be fiber optic cables or wireless.  Parallel wireless infrastructures (whether for cell phones or Internet access are fairly inexpensive to build and conceal).
  • In most cases, we see a mix of the two.

Examples of Darknets:

  • The Zetas have built a huge wireless darknet (a private, parallel communications network) that connects the majority of Mexico’s states.  Most of the other cartels also have wireless darknets and there are also lots of local darknets.
  • Hezbollah (in Lebanon) runs its own fiber optic network.
  • TOR.  A voluntary, decentralized ad hoc network that anonymizes network connections.
  • Botnets (up to 4 m computers strong) that can be used for global private communications.
  • Etc.  The list goes on  and on….

The future?  Darknets that power alternative economies.  A network layer for accelerating the dark globalization of the $10 Trillion System D.

SYSTEM D
http://www.foreignpolicy.com/articles/2011/10/28/black_market_global_economy
The Shadow Superpower
Forget China: the $10 trillion global black market is the world’s fastest growing economy — and its future.
by Robert Neuwirth / 10.28.2011

With only a mobile phone and a promise of money from his uncle, David Obi did something the Nigerian government has been trying to do for decades: He figured out how to bring electricity to the masses in Africa’s most populous country. It wasn’t a matter of technology. David is not an inventor or an engineer, and his insights into his country’s electrical problems had nothing to do with fancy photovoltaics or turbines to harness the harmattan or any other alternative sources of energy. Instead, 7,000 miles from home, using a language he could hardly speak, he did what traders have always done: made a deal. He contracted with a Chinese firm near Guangzhou to produce small diesel-powered generators under his uncle’s brand name, Aakoo, and shipped them home to Nigeria, where power is often scarce. David’s deal, struck four years ago, was not massive — but it made a solid profit and put him on a strong footing for success as a transnational merchant. Like almost all the transactions between Nigerian traders and Chinese manufacturers, it was also sub rosa: under the radar, outside of the view or control of government, part of the unheralded alternative economic universe of System D.

You probably have never heard of System D. Neither had I until I started visiting street markets and unlicensed bazaars around the globe. System D is a slang phrase pirated from French-speaking Africa and the Caribbean. The French have a word that they often use to describe particularly effective and motivated people. They call them débrouillards. To say a man is a débrouillard is to tell people how resourceful and ingenious he is. The former French colonies have sculpted this word to their own social and economic reality. They say that inventive, self-starting, entrepreneurial merchants who are doing business on their own, without registering or being regulated by the bureaucracy and, for the most part, without paying taxes, are part of “l’economie de la débrouillardise.” Or, sweetened for street use, “Systeme D.” This essentially translates as the ingenuity economy, the economy of improvisation and self-reliance, the do-it-yourself, or DIY, economy. A number of well-known chefs have also appropriated the term to describe the skill and sheer joy necessary to improvise a gourmet meal using only the mismatched ingredients that happen to be at hand in a kitchen. I like the phrase. It has a carefree lilt and some friendly resonances. At the same time, it asserts an important truth: What happens in all the unregistered markets and roadside kiosks of the world is not simply haphazard. It is a product of intelligence, resilience, self-organization, and group solidarity, and it follows a number of well-worn though unwritten rules. It is, in that sense, a system.

It used to be that System D was small — a handful of market women selling a handful of shriveled carrots to earn a handful of pennies. It was the economy of desperation. But as trade has expanded and globalized, System D has scaled up too. Today, System D is the economy of aspiration. It is where the jobs are. In 2009, the Organisation for Economic Co-operation and Development (OECD), a think tank sponsored by the governments of 30 of the most powerful capitalist countries and dedicated to promoting free-market institutions, concluded that half the workers of the world — close to 1.8 billion people — were working in System D: off the books, in jobs that were neither registered nor regulated, getting paid in cash, and, most often, avoiding income taxes.

Kids selling lemonade from the sidewalk in front of their houses are part of System D. So are many of the vendors at stoop sales, flea markets, and swap meets. So are the workers who look for employment in the parking lots of Home Depot and Lowe’s throughout the United States. And it’s not only cash-in-hand labor. As with David Obi’s deal to bring generators from China to Nigeria, System D is multinational, moving all sorts of products — machinery, mobile phones, computers, and more — around the globe and creating international industries that help billions of people find jobs and services. In many countries — particularly in the developing world — System D is growing faster than any other part of the economy, and it is an increasing force in world trade. But even in developed countries, after the financial crisis of 2008-09, System D was revealed to be an important financial coping mechanism. A 2009 study by Deutsche Bank, the huge German commercial lender, suggested that people in the European countries with the largest portions of their economies that were unlicensed and unregulated — in other words, citizens of the countries with the most robust System D — fared better in the economic meltdown of 2008 than folks living in centrally planned and tightly regulated nations. Studies of countries throughout Latin America have shown that desperate people turned to System D to survive during the most recent financial crisis. This spontaneous system, ruled by the spirit of organized improvisation, will be crucial for the development of cities in the 21st century. The 20th-century norm — the factory worker who nests at the same firm for his or her entire productive life — has become an endangered species. In China, the world’s current industrial behemoth, workers in the massive factories have low salaries and little job security. Even in Japan, where major corporations have long guaranteed lifetime employment to full-time workers, a consensus is emerging that this system is no longer sustainable in an increasingly mobile and entrepreneurial world.

So what kind of jobs will predominate? Part-time work, a variety of self-employment schemes, consulting, moonlighting, income patching. By 2020, the OECD projects, two-thirds of the workers of the world will be employed in System D. There’s no multinational, no Daddy Warbucks or Bill Gates, no government that can rival that level of job creation. Given its size, it makes no sense to talk of development, growth, sustainability, or globalization without reckoning with System D. The growth of System D presents a series of challenges to the norms of economics, business, and governance — for it has traditionally existed outside the framework of trade agreements, labor laws, copyright protections, product safety regulations, antipollution legislation, and a host of other political, social, and environmental policies. Yet there’s plenty that’s positive, too. In Africa, many cities — Lagos, Nigeria, is a good example — have been propelled into the modern era through System D, because legal businesses don’t find enough profit in bringing cutting- edge products to the third world. China has, in part, become the world’s manufacturing and trading center because it has been willing to engage System D trade. Paraguay, small, landlocked, and long dominated by larger and more prosperous neighbors, has engineered a decent balance of trade through judicious smuggling. The digital divide may be a concern, but System D is spreading technology around the world at prices even poor people can afford. Squatter communities may be growing, but the informal economy is bringing commerce and opportunity to these neighborhoods that are off the governmental grid. It distributes products more equitably and cheaply than any big company can. And, even as governments around the world are looking to privatize agencies and get out of the business of providing for people, System D is running public services — trash pickup, recycling, transportation, and even utilities.

Just how big is System D? Friedrich Schneider, chair of the economics department at Johannes Kepler University in Linz, Austria, has spent decades calculating the dollar value of what he calls the shadow economies of the world. He admits his projections are imprecise, in part because, like privately held businesses everywhere, businesspeople who engage in trade off the books don’t want to open their books (most successful System D merchants are obsessive about profit and loss and keep detailed accounts of their revenues and expenses in old-fashioned ledger books) to anyone who will write anything in a book. And there’s a definitional problem as well, because the border between the shadow and the legal economies is blurry. Does buying some of your supplies from an unlicensed dealer put you in the shadows, even if you report your profit and pay your taxes? How about hiding just $1 in income from the government, though the rest of your business is on the up-and-up? And how about selling through System D even if your business is in every other way in compliance with the law? Finding a firm dividing line is not easy, as Keith Hart, who was among the first academics toacknowledge the importance of street markets to the economies of the developing world, warned me in a recent conversation: “It’s very difficult to separate the nice African ladies selling oranges on the street and jiggling their babies on their backs from the Indian gangsters who control the fruit trade and who they have to pay rent to.” Schneider suggests, however, that, in making his estimates, he has this covered. He screens out all money made through “illegal actions that fit the characteristics of classical crimes like burglary, robbery, drug dealing, etc.” This means that the big-time criminals are likely out of his statistics, though those gangsters who control the fruit market are likely in, as long as they’re not involved in anything more nefarious than running a price-fixing cartel. Also, he says, his statistics do not count “the informal household economy.” This means that if you’re putting buckles on belts in your home for a bit of extra cash from a company owned by your cousin, you’re in, but if you’re babysitting your cousin’s kids while she’s off putting buckles on belts at her factory, you’re out.

Schneider presents his numbers as a percentage of the total market value of goods and services made in each country that same year — each nation’s gross domestic product. His data show that System D is on the rise. In the developing world, it’s been increasing every year since the 1990s, and in many countries it’s growing faster than the officially recognized gross domestic product (GDP). If you apply his percentages (Schneider’s most recent report, published in 2006, uses economic data from 2003) to the World Bank’s GDP estimates, it’s possible to make a back-of-the-envelope calculation of the approximate value of the billions of underground transactions around the world. And it comes to this: The total value of System D as a global phenomenon is close to $10 trillion. Which makes for another astonishing revelation. If System D were an independent nation, united in a single political structure — call it the United Street Sellers Republic (USSR) or, perhaps, Bazaaristan — it would be an economic superpower, the second-largest economy in the world (the United States, with a GDP of $14 trillion, is numero uno). The gap is narrowing, though, and if the United States doesn’t snap out of its current funk, the USSR/Bazaaristan could conceivably catch it sometime this century. In other words, System D looks a lot like the future of the global economy. All over the world — from San Francisco to São Paulo, from New York City to Lagos — people engaged in street selling and other forms of unlicensed trade told me that they could never have established their businesses in the legal economy. “I’m totally off the grid,” one unlicensed jewelry designer told me. “It was never an option to do it any other way. It never even crossed my mind. It was financially absolutely impossible.” The growth of System D opens the market to those who have traditionally been shut out.

This alternative economic system also offers the opportunity for large numbers of people to find work. No job-cutting or outsourcing is going on here. Rather, a street market boasts dozens of entrepreneurs selling similar products and scores of laborers doing essentially the same work. An economist would likely deride all this duplicated work as inefficient. But the level of competition on the street keeps huge numbers of people employed. It liberates their entrepreneurial energy. And it offers them the opportunity to move up in the world. In São Paulo, Édison Ramos Dattora, a migrant from the rural midlands, has succeeded in the nation’s commercial capital by working as a camelô — an unlicensed street vendor. He started out selling candies and chocolates on the trains, and is now in a more lucrative branch of the street trade — retailing pirate DVDs of first-run movies to commuters around downtown. His underground trade — he has to watch out for the cops wherever he goes — has given his family a standard of living he never dreamed possible: a bank account, a credit card, an apartment in the center of town, and enough money to take a trip to Europe. Even in the most difficult and degraded situations, System D merchants are seeking to better their lives. For instance, the garbage dump would be the last place you would expect to be a locus of hope and entrepreneurship. But Lagos scavenger Andrew Saboru has pulled himself out of the trash heap and established himself as a dealer in recycled materials. On his own, with no help from the government or any NGOs or any bank (Andrew has a bank account, but his bank will never loan him money — because his enterprise is unlicensed and unregistered and depends on the unpredictable labor of culling recyclable material from the megacity’s massive garbage pile), he has climbed the career ladder. “Lagos is a city for hustling,” he told me. “If you have an idea and you are serious and willing to work, you can make money here. I believe the future is bright.” It took Andrew 16 years to make his move, but he succeeded, and he’s proud of the business he has created. We should be too. As Joanne Saltzberg, who heads Women Entrepreneurs of Baltimore — a business development group — told me, we need to change our attitude and to salute the achievements of those who are engaged in this alternate economy. “We only revere success,” she said. “I don’t think we honor the struggle. People who have no access to business development resources. People who have to work two and three jobs just to survive. When you are struggling in this economy and still you commit yourself to having a better life, that’s really something to honor.”

RADIO ZETA
http://www.washingtonpost.com/world/americas/equipment-seizures-show-mexican-drug-cartels-operate-sophisticated-communications-networks/2011/12/26/gIQAjJu6IP_print.html
http://www.wired.com/dangerroom/2011/12/cartel-radio-mexico/
How Mexico’s Drug Cartels Stay Networked
by Spencer Ackerman / December 27, 2011

Arranging drug sales on a cellphone, cryptic email or even a pager? That’s strictly for the small-time dealer. If you’re a Mexican drug cartel, you have your own radio network. Since 2006, the cartels have maintained an encrypted DIY radio network that stretches across nearly all 31 Mexican states, even down south into Guatemala. The communications infrastructure of the narco-gangs that have turned Mexico into a gangster’s paradise consists of “professional-grade” radio antennas, signal relays and simple handheld radios that cost “millions of dollars” — and which the Mexican authorities haven’t been able to shut down. If it sounds like a military-grade communications apparatus, it should. The notorious Zetas, formerly the enforcers for the Gulf Cartel and now its chief rival, were born out of Mexican Special Forces. But the Zetas aren’t stupid enough to make big deals over a radio frequency, even an encrypted one. According to a picture of what you might call Radio Zeta that’s emerged after three raids by the Mexican authorities, the bosses only communicate through the Internet. The radio network is for lookouts and lower-level players.

Here’s how it works, according to a fascinating Associated Press piece. The cartels divide up territory into “plazas.” The plaza boss has the responsibility for establishing nodes on the network — getting the antennas in place, concealing them as necessary, making sure the signal-boosting repeaters extend the network’s reach, equipping cartel personnel with handheld radios, and replacing what the security forces destroy. The cartels have even gone green, with solar panels powering the radio towers. The network is primarily an early warning reconnaissance system. “Halcons,” or “hawks,” holler on the handhelds when the federal police or soldiers roll through cartel territory. But it’s also an occasional offensive tool to intimidate the security forces. The cartels have been known to hijack military radio networks to broadcast threats. That’s keeping in line with the Zetas’ alarming tactic of slaughtering people for allegedly talking openly about cartel activity over the Internet.

Since September, three large raids conducted by Mexico’s beleaguered security forces have attempted to disrupt the radio network by snatching up its hardware. But much of the infrastructure — the towers, the receivers — is cheap enough to be easily replaced. The network is “low-cost, highly extendable and maintainable,” a security consultant told the AP. But there’s an alternative for taking down the cartel broadcasts. Since the U.S. already provides intelligence and security assistance to Mexico’s drug war, maybe it’s time to think about providing somemilitary-grade jammers as well. Mexico doesn’t seem to have a better idea for taking Radio Zeta off the air.


{Freenet means controversial information does not need to be stored in physical data havens such as this one, Sealand. Photograph: Kim Gilmour/Alamy}

FREENET
http://www.guardian.co.uk/technology/2009/nov/26/dark-side-internet-freenet
The dark side of the internet
by Andy Beckett / 25 November 2009

Fourteen years ago, a pasty Irish teenager with a flair for inventions arrived at Edinburgh University to study artificial intelligence and computer science. For his thesis project, Ian Clarke created “a Distributed, Decentralised Information Storage and Retrieval System”, or, as a less precise person might put it, a revolutionary new way for people to use theinternet without detection. By downloading Clarke’s software, which he intended to distribute for free, anyone could chat online, or read or set up a website, or share files, with almost complete anonymity. “It seemed so obvious that that was what the net was supposed to be about – freedom to communicate,” Clarke says now. “But [back then] in the late 90s that simply wasn’t the case. The internet could be monitored more quickly, more comprehensively, more cheaply than more old-fashioned communications systems like the mail.” His pioneering software was intended to change that. His tutors were not bowled over. “I would say the response was a bit lukewarm. They gave me a B. They thought the project was a bit wacky … they said, ‘You didn’t cite enough prior work.'” Undaunted, in 2000 Clarke publicly released his software, now more appealingly called Freenet. Nine years on, he has lost count of how many people are using it: “At least 2m copies have been downloaded from the website, primarily in Europe and the US. The website is blocked in [authoritarian] countries like China so there, people tend to get Freenet from friends.” Last year Clarke produced an improved version: it hides not only the identities of Freenet users but also, in any online environment, the fact that someone is using Freenet at all.

Installing the software takes barely a couple of minutes and requires minimal computer skills. You find the Freenet website, read a few terse instructions, and answer a few questions (“How much security do you need?” … “NORMAL: I live in a relatively free country” or “MAXIMUM: I intend to access information that could get me arrested, imprisoned, or worse”). Then you enter a previously hidden online world. In utilitarian type and bald capsule descriptions, an official Freenet index lists the hundreds of “freesites” available: “Iran News”, “Horny Kate”, “The Terrorist’s Handbook: A practical guide to explosives and other things of interests to terrorists”, “How To Spot A Pedophile [sic]”, “Freenet Warez Portal: The source for pirate copies of books, games, movies, music, software, TV series and more”, “Arson Around With Auntie: A how-to guide on arson attacks for animal rights activists”. There is material written in Russian, Spanish, Dutch, Polish and Italian. There is English-language material from America and Thailand, from Argentina and Japan. There are disconcerting blogs (“Welcome to my first Freenet site. I’m not here because of kiddie porn … [but] I might post some images of naked women”) and legally dubious political revelations. There is all the teeming life of the everyday internet, but rendered a little stranger and more intense. One of the Freenet bloggers sums up the difference: “If you’re reading this now, then you’re on the darkweb.” The modern internet is often thought of as a miracle of openness – its global reach, its outflanking of censors, its seemingly all-seeing search engines. “Many many users think that when they search on Google they’re getting all the web pages,” says Anand Rajaraman, co-founder of Kosmix, one of a new generation of post-Google search engine companies. But Rajaraman knows different. “I think it’s a very small fraction of the deep web which search engines are bringing to the surface. I don’t know, to be honest, what fraction. No one has a really good estimate of how big the deep web is. Five hundred times as big as the surface web is the only estimate I know.”

Unfathomable and mysterious
“The darkweb”; “the deep web”; beneath “the surface web” – the metaphors alone make the internet feel suddenly more unfathomable and mysterious. Other terms circulate among those in the know: “darknet”, “invisible web”, “dark address space”, “murky address space”, “dirty address space”. Not all these phrases mean the same thing. While a “darknet” is an online network such as Freenet that is concealed from non-users, with all the potential for transgressive behaviour that implies, much of “the deep web”, spooky as it sounds, consists of unremarkable consumer and research data that is beyond the reach of search engines. “Dark address space” often refers to internet addresses that, for purely technical reasons, have simply stopped working. And yet, in a sense, they are all part of the same picture: beyond the confines of most people’s online lives, there is a vast other internet out there, used by millions but largely ignored by the media and properly understood by only a few computer scientists. How was it created? What exactly happens in it? And does it represent the future of life online or the past? Michael K Bergman, an American academic and entrepreneur, is one of the foremost authorities on this other internet. In the late 90s he undertook research to try to gauge its scale. “I remember saying to my staff, ‘It’s probably two or three times bigger than the regular web,”‘ he remembers. “But the vastness of the deep web . . . completely took my breath away. We kept turning over rocks and discovering things.” In 2001 he published a paper on the deep web that is still regularly cited today. “The deep web is currently 400 to 550 times larger than the commonly defined world wide web,” he wrote. “The deep web is the fastest growing category of new information on the internet … The value of deep web content is immeasurable … internet searches are searching only 0.03% … of the [total web] pages available.” In the eight years since, use of the internet has been utterly transformed in many ways, but improvements in search technology by Google, Kosmix and others have only begun to plumb the deep web. “A hidden web [search] engine that’s going to have everything – that’s not quite practical,” says Professor Juliana Freire of the University of Utah, who is leading a deep web search project called Deep Peep. “It’s not actually feasible to index the whole deep web. There’s just too much data.”

But sheer scale is not the only problem. “When we’ve crawled [searched] several sites, we’ve gotten blocked,” says Freire. “You can actually come up with ways that make it impossible for anyone [searching] to grab all your data.” Sometimes the motivation is commercial – “people have spent a lot of time and money building, say, a database of used cars for sale, and don’t want you to be able to copy their site”; and sometimes privacy is sought for other reasons. “There’s a well-known crime syndicate called the Russian Business Network (RBN),” says Craig Labovitz, chief scientist at Arbor Networks, a leading online security firm, “and they’re always jumping around the internet, grabbing bits of [disused] address space, sending out millions of spam emails from there, and then quickly disconnecting.” The RBN also rents temporary websites to other criminals for online identity theft, child pornography and releasing computer viruses. The internet has been infamous for such activities for decades; what has been less understood until recently was how the increasingly complex geography of the internet has aided them. “In 2000 dark and murky address space was a bit of a novelty,” says Labovitz. “This is now an entrenched part of the daily life of the internet.” Defunct online companies; technical errors and failures; disputes between internet service providers; abandoned addresses once used by the US military in the earliest days of the internet – all these have left the online landscape scattered with derelict or forgotten properties, perfect for illicit exploitation, sometimes for only a few seconds before they are returned to disuse. How easy is it to take over a dark address? “I don’t think my mother could do it,” says Labovitz. “But it just takes a PC and a connection. The internet has been largely built on trust.”

Open or closed?
In fact, the internet has always been driven as much by a desire for secrecy as a desire for transparency. The network was the joint creation of the US defence department and the American counterculture – the WELL, one of the first and most influential online communities, was a spinoff from hippy bible the Whole Earth Catalog – and both groups had reasons to build hidden or semi-hidden online environments as well as open ones. “Strong encryption developed in parallel with the internet,” says Danny O’Brien, an activist with the Electronic Frontier Foundation, a long-established pressure group for online privacy. There are still secretive parts of the internet where this unlikely alliance between hairy libertarians and the cloak-and-dagger military endures. The Onion Router, or Tor, is an American volunteer-run project that offers free software to those seeking anonymous online communication, like a more respectable version of Freenet. Tor’s users, according to its website, include US secret service “field agents” and “law enforcement officers . . . Tor allows officials to surf questionable websites and services without leaving tell-tale tracks,” but also “activists and whistleblowers”, for example “environmental groups [who] are increasingly falling under surveillance in the US under laws meant to protect against terrorism”. Tor, in short, is used both by the American state and by some of its fiercest opponents. On the hidden internet, political life can be as labyrinthine as in a novel by Thomas Pynchon.

The hollow legs of Sealand
The often furtive, anarchic quality of life online struck some observers decades ago. In 1975, only half a dozen years after the internet was created, the science-fiction author John Brunner wrote of “so many worms and counter-worms loose in the data-net” in his influential novel The Shockwave Rider. By the 80s “data havens”, at first physical then online locations where sensitive computerised information could be concealed, were established in discreet jurisdictions such as Caribbean tax havens. In 2000 an American internet startup called HavenCo set up a much more provocative data haven, in a former second world war sea fort just outside British territorial waters off the Suffolk coast, which since the 60s had housed an eccentric independent “principality” called Sealand. HavenCo announced that it would store any data unless it concerned terrorism or child pornography, on servers built into the hollow legs of Sealand as they extended beneath the waves. A better metaphor for the hidden depths of the internet was hard to imagine. In 2007 the highly successful Swedish filesharing website The Pirate Bay – the downloading of music and films for free being another booming darknet enterprise – announced its intention to buy Sealand. The plan has come to nothing so far, and last year it was reported that HavenCo had ceased operation, but in truth the need for physical data havens is probably diminishing. Services such as Tor and Freenet perform the same function electronically; and in a sense, even the “open” internet, as online privacy-seekers sometimes slightly contemptuously refer to it, has increasingly become a place for concealment: people posting and blogging under pseudonyms, people walling off their online lives from prying eyes on social networking websites. “The more people do everything online, the more there’s going to be bits of your life that you don’t want to be part of your public online persona,” says O’Brien. A spokesman for the Police Central e-crime Unit [PCeU] at the Metropolitan Police points out that many internet secrets hide in plain sight: “A lot of internet criminal activity is on online forums that are not hidden, you just have to know where to find them. Like paedophile websites: people who use them might go to an innocent-looking website with a picture of flowers, click on the 18th flower, arrive on another innocent-looking website, click something there, and so on.” The paedophile ring convicted this autumn and currently awaiting sentence for offences involving Little Ted’s nursery in Plymouth met on Facebook. Such secret criminal networks are not purely a product of the digital age: codes and slang and pathways known only to initiates were granting access to illicit worlds long before the internet. To libertarians such as O’Brien and Clarke the hidden internet, however you define it, is constantly under threat from restrictive governments and corporations. Its freedoms, they say, must be defended absolutely. “Child pornography does exist on Freenet,” says Clarke. “But it exists all over the web, in the post . . . At Freenet we could establish a virus to destroy any child pornography on Freenet – we could implement that technically. But then whoever has the key [to that filtering software] becomes a target. Suddenly we’d start getting served copyright notices; anything suspect on Freenet, we’d get pressure to shut it down. To modify Freenet would be the end of Freenet.”

Always recorded
According to the police, for criminal users of services such as Freenet, the end is coming anyway. The PCeU spokesman says, “The anonymity things, there are ways to get round them, and we do get round them. When you use the internet, something’s always recorded somewhere. It’s a question of identifying who is holding that information.” Don’t the police find their investigations obstructed by the libertarian culture of so much life online? “No, people tend to be co-operative.” The internet, for all its anarchy, is becoming steadily more commercialised; as internet service providers, for example, become larger and more profit-driven, the spokesman suggests, it is increasingly in their interests to accept a degree of policing. “There has been an increasing centralisation,” Ian Clarke acknowledges regretfully. Meanwhile the search engine companies are restlessly looking for paths into the deep web and the other sections of the internet currently denied to them. “There’s a deep implication for privacy,” says Anand Rajaraman of Kosmix. “Tonnes and tonnes of stuff out there on the deep web has what I call security through obscurity. But security through obscurity is actually a false security. You [the average internet user] can’t find something, but the bad guys can find it if they try hard enough.” As Kosmix and other search engines improve, he says, they will make the internet truly transparent: “You will be on the same level playing field as the bad guys.” The internet as a sort of electronic panopticon, everything on it unforgivingly visible and retrievable – suddenly its current murky depths seem in some ways preferable. Ten years ago Tim Berners-Lee, the British computer scientist credited with inventing the web, wrote: “I have a dream for the web in which computers become capable of analysing all the data on the web – the content, links, and transactions between people … A ‘Semantic Web’, which should make this possible, has yet to emerge, but when it does, the day-to-day mechanisms of trade, bureaucracy and our daily lives will be handled by machines talking to machines.” Yet this “semantic web” remains the stuff of knotty computer science papers rather than a reality. “It’s really been the holy grail for 30 years,” says Bergman. One obstacle, he continues, is that the internet continues to expand in unpredictable and messy surges. “The boundaries of what the web is have become much more blurred. Is Twitter part of the web or part of something else? Now the web, in a sense, is just everything. In 1998, the NEC laboratory at Princeton published a paper on the size of the internet. Who could get something like that published now? You can’t talk about how big the internet is. Because what is the metric?”

Gold Rush
It seems likely that the internet will remain in its Gold Rush phase for some time yet. And in the crevices and corners of its slightly thrown-together structures, darknets and other private online environments will continue to flourish. They can be inspiring places to spend time in, full of dissidents and eccentrics and the internet’s original freewheeling spirit. But a darknet is not always somewhere for the squeamish. On Freenet, there is a currently a “freesite” which makes allegations against supposed paedophiles, complete with names, photographs, extensive details of their lives online, and partial home addresses. In much smaller type underneath runs the disclaimer: “The material contained in this freesite is hearsay . . . It is not admissable in court proceedings and would certainly not reach the burden of proof requirement of a criminal trial.” For the time being, when I’m wandering around online, I may stick to Google.


Painting by Anthony Freda www.AnthonyFreda.com

a HOLIDAY OPPORTUNITY
http://moveyourmoneyproject.org/find-bankcredit-union
http://www.findacreditunion.org/
http://www.asmarterhoice.org/

BANK TRANSFER DAY
http://thinkprogress.org/special/2011/11/03/360804/650000-americans-credit-unions/
650,000 Americans Joined Credit Unions Last Month — More Than In All Of 2010 Combined
by Zaid Jilani on Nov 3, 2011

One of the tactics the 99 Percenters are using to take back the country from the 1 percent is to move their money from big banks to credit unions, community banks, and other smaller financial unions that aren’t gambling with our nation’s future. Now, the Credit Union National Association (CUNA) reports that a whopping 650,000 Americans have joined credit unions since Sept. 29 — the date that Bank of America announced it would start charging a $5 monthly debit fee, a move it backed down on this week. To put that in perspective, there were only 600,000 new members for credit unions in all of 2010. “These results indicate that consumers are clearly making a smarter choice by moving to credit unions where, on average, they will save about $70 a year in fewer or no fees, lower rates on loans and higher return on savings,” said CUNA President Bill Cheney. This Saturday, 99 Percenters are calling on Americans to move their money from big banks to credit unions and community banks on what is being called “Bank Transfer Day.” If you want to stand with the 99 Percent and take part in this action, use the Move Your Money project’s community bank and credit union finder tool to find out how.

http://www.cuna.org/public/press/press-release/issues/hundreds-thousands-of-consumers-billions-of-$$-move-credit-unions
http://www.americanbanker.com/issues/176_214/customers-flee-for-credit-unions-1043783-1.html
Bank Customers Flee to CUs
by Ed Roberts / 11.3.2011

An estimated 650,000 consumers have closed their bank accounts and opted for credit union membership over the past four weeks, according to CUNA, bringing the approach to Saturday’s Bank Transfer Day to a crescendo. In a survey of 5,000 of its credit union members CUNA estimates that at least 650,000 consumers across the nation have joined credit unions since Sept. 29, the day Bank of America unveiled its now-rescinded $5 monthly debit card fee. Also during that time, CUNA estimates that credit unions have added $4.5 billion in new savings accounts, likely from the new members and existing members shifting their funds. The survey results also show that more than four in every five credit unions experiencing member growth since Sept. 29 attributed the growth to consumer reaction to new fees imposed by banks, or a combination of consumer reactions to the new bank fees plus the social media-inspired “Bank Transfer Day,” Nov. 5. “These results indicate that consumers are clearly making a smarter choice by moving to credit unions where, on average, they will save about $70 a year in fewer or no fees, lower rates on loans and higher return on savings.” said CUNA President Bill Cheney. Cheney said the growth is particularly noticeable at larger credit unions (those with $100 million or more in assets, which account for about 20% of all credit unions – but count about 80% of all credit union members). The CUNA survey shows that more than 70% of these credit unions reported they have seen growth in memberships and deposits since Sept. 29.

HOW to JOIN a CREDIT UNION
http://motherjones.com/politics/2011/11/how-to-move-money-big-banks-credit
How Do I Move My Money Out of a Big Bank?
by Josh Harkinson / Nov. 3, 2011

Saturday is the deadline for Bank Transfer Day, the call for a mass money exodus from big banks to credit unions and small community banks. Over 80,000 have pledged online to punish “too big to fail” banks by withdrawing their funds. Still on the fence? Wondering where to start? We’ve got a handy primer below on how it works, and check out what happened when MoJo reporter Josh Harkinson tried moving his money out of Wells Fargo.

Why would I want to move my money out of my existing bank?
You’ll probably save money in the long run. According to a 2009 year study by the Filene Research Institute, the average credit union account holder paid $71.47 in annual fees, compared to $183.14 paid by the typical bank customer. And new restrictions on debit card fees imposed last month by the Dodd-Frank Act have sent banks scrambling for even more ways to nickel and dime their customers in pursuit of profits. Nonprofit credit unions, on the other hand, only need to break even. They also tend to plow their money into back into basic loans in their own communities, instead of dabbling in the kind of complex and risky securitized investments that caused large banks to go bust and drag down the economy. It’s important to note that credit unions and small local banks aren’t recession-proof: a striking 17 percent of Florida’s bank failures since 2008 were community banks.
What’s the process?
Don’t expect to be able to open a credit union account and close your old bank account in one day. You’ll need to receive new checks and a debit card in the mail, switch over any automated deposits and electronic bill paying services, and wait for pending financial transactions to clear. Only then should you give your old bank the boot. Here’s a searchable map that locates credit unions near you.
How long does it take?
You’ll probably need to wait one or two weeks to get a debit card and checks in the mail, though some credit unions will issue you temporary versions. Besides that, it’s just a matter of finding the time to switch over your bills.
Aren’t credit unions less convenient than big banks?
Not necessarily. While individual credit unions typically have fewer branches than corporate banks, many participate in “shared branching,” allowing customers to make a deposit or withdrawal at other participating credit unions. Also, many credit unions have implemented advanced online banking options including direct-deposit, online bill-pay, and mobile banking using your cell phone.
What about ATMs?
Ask your local credit union if it’s a member of the Co-op Network. Customers at credit unions in the network can use a smart phone app to find any one of 24,000 fee-free ATMs across the country. “You actually get access to more fee-free ATMs than if you were at Bank of America,” says Ben Rogers, research director for the Filene Research Institute, a think tank that studies Credit Unions. Some Credit Unions will even refund any fees that you rack up using other banks’ ATMs.
If everyone moves their money out of big banks, how much money do the banks stand to lose?
Currently, total deposits for all banks and savings and loans, including personal and business accounts, come to $7.5 trillion.
Are big banks freaking out over this?
Most big banks rely on their vast numbers of personal checking and savings accounts to shore up their cash reserves and make lucrative investments. “If everybody moved their money, it would make a huge difference,” Rogers says. Still, the nearly 80,000 people who’ve made online pledges to join Bank Transfer Day probably won’t cause bankers to break a sweat—at least not yet. Add another 400,000 of them, and “you’d get not just frowns, but maybe gasps in the board room.”
How are credit unions benefiting from this?
Credit unions across the country have added upwards of 650,000 new customers since September 29 (the day Bank of America unveiled its now-defunct $5 monthly fee for debit cards), according to a survey of 5,000 credit unions by the Credit Union National Association. The group also estimates that credit unions have added $4.5 billion in new savings since then, likely from these new members and transfers from other banks. But CUNA spokesman Patrick Keefe says these numbers barely move the needle for big banks: “It’s actually a drop in the ocean for them. They are huge.”
Is there any scenario in which my big bank actually benefits if I do this?
Yes and no. If you have about $400 in a savings account and average about $1000 in a checking account and have nothing else with your bank, then you’re probably what your bank would call an “unprofitable customer.” But most banks want to keep unprofitable customers onboard in hopes of later cross-selling them on credit cards and loans. “I don’t think that there’s a ton of banks actively smiling and smirking because they are scaring away all these unprofitable customers,” Rogers says. “Nobody really wants to lose customers.”



“EXODUS”
http://techpresident.com/blog-entry/mass-exodus-big-banks-organizing-online
Mass Exodus from Big Banks is Organizing Online
by Nick Judd / November 2, 2011

Over 35,000 people have indicated support on Facebook for a mass Nov. 5 exodus of personal bank accounts from big banks and into credit unions, called “Bank Transfer Day” — one of several online groups with the same basic message, popularized by Anonymous, Occupy Wall Street and others, and just the latest in a series of ground-up actions protesting the practices of big banks. These online efforts trace their origin back to news from September, in response to new provisions in the Dodd-Frank financial overhaul law that would limit the amounts that banks could charge merchants for the use of debit cards. News broke at the time that banks would seek instead to pass the fees along to customers in the form of monthly charges for the use of the cards. As anger at a new fee during tough economic times met the current direct-action national zeitgeist, fueled by Occupy Wall Street, initiatives began to spring up online.

The “Bank Transfer Day” Facebook page belongs to an L.A. gallery owner named Kristen Christian, but the idea might actually be the brainchild of Arianna Huffington, who floated the idea in 2009 as a response to financial institutions not lending much of the money they received from the federal bank bailout. That call to action didn’t make a lasting splash at the time, but has found new life. From Santa Cruz to New Mexico to Wisconsin, credit unions are reporting an uptick in new accounts. The Progressive Change Campaign Committee, on the occasion of Bank of America’s announcement yesterday that it would not impose a planned $5 monthly fee for debit card purchases, said that over 51,000 have pledged through their platform to move their money from big banks, including 21,500 from Bank of America. PCCC co-founder Adam Green also wrote in an email that the wired progressive group plans to release an online tool, “Banxodus,” that will help people find “good-guy” banks near them.

Yesterday was a big day for online organizing against big-bank behavior. Also on occasion of the Bank of America announcement, Change.org released an announcement pointing to a 300,000-signatory petition hosted on their online petitions platform. “Bank of America announced Tuesday that it will drop its $5 debit card fee after more than 300,000 people from all 50 states joined a viral campaign on Change.org started by 22-year-old Bank of America customer Molly Katchpole,” Change.org proclaimed in a press release sent yesterday. Katchpole is enjoying national media attention, but her online petition also came amid a nationwide upheaval against the current structure of the financial services industry — and with droves of people actually taking their money away from Bank of America.

Bank of America officials said in a statement that customer input was the reason they canceled their plans. Decisions by JP Morgan Chase & Co. and Wells Fargo to walk back their own debit card fees came last week. “We have listened to our customers very closely over the last few weeks and recognize their concern with our proposed debit usage fee,” David Darnell, Bank of America’s co-chief operating officer, said in a statement. “Our customers’ voices are most important to us. As a result, we are not currently charging the fee and will not be moving forward with any additional plans to do so.” The fee reversal may have come too late for Bank of America. Local newspapers across the country are full of stories like this one, from the Worcester (Mass.) Telegram & Gazette:

For many months, Sean J. McLoughlin considered leaving Bank of America and switching to a bank that didn’t charge him fees just for having checking accounts. When Bank of America said in September it would charge customers $5 a month for using debit cards, his decision to leave the big bank became easier. “I said ‘Forget it, I’m done,’ ” he said.

TOO BIG to JAIL?
http://www.zerohedge.com/contributed/only-way-save-economy-break-giant-insolvent-banks
The Government Created the Giant Banks

As MIT economics professor and former IMF chief economist Simon Johnson points out, the official White House position is that:

(1) The government created the mega-giants, and they are not the product of free market competition

(2) The White House needs to “regulate and oversee them”, even though it is clear that the government has no real plans to regulate or oversee the banking behemoths

(3) Giant banks are good for the economy

This is false … giant banks are incredibly destructive for the economy.

We Do NOT Need the Big Banks to Help the Economy Recover

Do we need the Too Big to Fails to help the economy recover?

No.

The following top economists and financial experts believe that the economy cannot recover unless the big, insolvent banks are broken up in an orderly fashion:

  • Dean and professor of finance and economics at Columbia Business School, and chairman of the Council of Economic Advisers under President George W. Bush, R. Glenn Hubbard
  • The leading monetary economist and co-author with Milton Friedman of the leading treatise on the Great Depression, Anna Schwartz
  • Economics professor and senior regulator during the S & L crisis, William K. Black
  • Professor of entrepreneurship and finance at the Chicago Booth School of Business, Luigi Zingales

Others, like Nobel prize-winning economist Paul Krugman, think that the giant insolvent banks may need to be temporarily nationalized.

In addition, many top economists and financial experts, including Bank of Israel Governor Stanley Fischer – who was Ben Bernanke’s thesis adviser at MIT – say that – at the very least – the size of the financial giants should be limited.

Even the Bank of International Settlements – the “Central Banks’ Central Bank” – has slammed too big to fail. As summarized by the Financial Times:

The report was particularly scathing in its assessment of governments’ attempts to clean up their banks. “The reluctance of officials to quickly clean up the banks, many of which are now owned in large part by governments, may well delay recovery,” it said, adding that government interventions had ingrained the belief that some banks were too big or too interconnected to fail.

This was dangerous because it reinforced the risks of moral hazard which might lead to an even bigger financial crisis in future.

And as I noted in December 2008, the big banks are the major reason why sovereign debt has become a crisis:

 BIS points out in a new report that the bank rescue packages have transferred significant risks onto government balance sheets, which is reflected in the corresponding widening of sovereign credit default swaps:

The scope and magnitude of the bank rescue packages also meant that significant risks had been transferred onto government balance sheets. This was particularly apparent in the market for CDS referencing sovereigns involved either in large individual bank rescues or in broad-based support packages for the financial sector, including the United States. While such CDS were thinly traded prior to the announced rescue packages, spreads widened suddenly on increased demand for credit protection, while corresponding financial sector spreads tightened.

In other words, by assuming huge portions of the risk from banks trading in toxic derivatives, and by spending trillions that they don’t have, central banks have put their countries at risk from default.

Similarly, a study of 124 banking crises by the International Monetary Fund found that propping banks which are only pretending to be solvent hurts the economy:

Existing empirical research has shown that providing assistance to banks and their borrowers can be counterproductive, resulting in increased losses to banks, which often abuse forbearance to take unproductive risks at government expense. The typical result of forbearance is a deeper hole in the net worth of banks, crippling tax burdens to finance bank bailouts, and even more severe credit supply contraction and economic decline than would have occurred in the absence of forbearance.

Cross-country analysis to date also shows that accommodative policy measures (such as substantial liquidity support, explicit government guarantee on financial institutions’ liabilities and forbearance from prudential regulations) tend to befiscally costly and that these particular policies do not necessarily accelerate the speed of economic recovery.

***

All too often, central banks privilege stability over cost in the heat of the containment phase: if so, they may too liberally extend loans to an illiquid bank which is almost certain to prove insolvent anyway. Also, closure of a nonviable bank is often delayed for too long, even when there are clear signs of insolvency (Lindgren, 2003). Since bank closures face many obstacles, there is a tendency to rely instead on blanket government guarantees which, if the government’s fiscal and political position makes them credible, can work albeit at the cost of placing the burden on the budget, typically squeezing future provision of needed public services.

The big banks have been bailed out to the tune of many trillions, dragging the economy down a bottomless pit from which we can’t escape. See thisthisthis and this. Unless we break them up, we will never escape.

If We Break Up the Giants, Smaller Banks Will Thrive … And Loan More to Main Street

Do we need to keep the TBTFs to make sure that loans are made?

Nope.

USA Today points out:

Banks that received federal assistance during the financial crisis reduced lending more aggressively and gave bigger pay raises to employees than institutions that didn’t get aid, a USA TODAY/American University review found.

***

The amount of loans outstanding to businesses and individuals fell 9.1% for the 12 months ending Sept. 30, 2009, at banks that participated in TARP compared with a 6.2% drop at banks that didn’t.

Dennis Santiago – CEO and Managing Director of Institutional Risk Analytics (Chris Whalen’s company) – notes:

The really shocking numbers are in the unused line of credit commitments of banks to U.S. business. This is the canary number I like to look at because it is a direct expression of banking and finance confidence in Main Street industry. It’s gone from $92 billion in Dec -2007 to just $24 billion as of Sep-2010. More importantly, the vast majority of this contraction of credit availability to American industry has been by the larger banks, C&I LOC from $87B down to $18.8B by the institutions with assets over $10B. Poof!

Fortune reports that smaller banks are stepping in to fill the lending void left by the giant banks’ current hesitancy to make loans. Indeed, the article points out that the only reason that smaller banks haven’t been able to expand and thrive is that the too-big-to-fails have decreased competition:

Growth for the nation’s smaller banks represents a reversal of trends from the last twenty years, when the biggest banks got much bigger and many of the smallest players were gobbled up or driven under…

As big banks struggle to find a way forward and rising loan losses threaten to punish poorly run banks of all sizes, smaller but well capitalized institutions have a long-awaited chance to expand.

BusinessWeek notes:

As big banks struggle, community banks are stepping in to offer loans and lines of credit to small business owners…

At a congressional hearing on small business and the economic recovery earlier this month, economist Paul Merski, of the Independent Community Bankers of America, a Washington (D.C.) trade group, told lawmakers that community banks make 20% of all small-business loans, even though they represent only about 12% of all bank assets. Furthermore, he said that about 50% of all small-business loans under $100,000 are made by community banks…

Indeed, for the past two years, small-business lending among community banks has grown at a faster rate than from larger institutions, according to Aite Group, a Boston banking consultancy. “Community banks are quickly taking on more market share not only from the top five banks but from some of the regional banks,” says Christine Barry, Aite’s research director. “They are focusing more attention on small businesses than before. They are seeing revenue opportunities and deploying the right solutions in place to serve these customers.”

Fed Governor Daniel K. Tarullo said:

The importance of traditional financial intermediation services, and hence of the smaller banks that typically specialize in providing those services, tends to increase during times of financial stress. Indeed, the crisis has highlighted the important continuing role of community banks…

For example, while the number of credit unions has declined by 42 percent since 1989, credit union deposits have more than quadrupled, and credit unions have increased their share of national deposits from 4.7 percent to 8.5 percent. In addition, some credit unions have shifted from the traditional membership based on a common interest to membership that encompasses anyone who lives or works within one or more local banking markets. In the last few years, some credit unions have also moved beyond their traditional focus on consumer services to provide services to small businesses, increasing the extent to which they compete with community banks.

Thomas M. Hoenig pointed out in a speech at a U.S. Chamber of Commerce summit in Washington:

During the recent financial crisis, losses quickly depleted the capital of these large, over-leveraged companies. As expected, these firms were rescued using government funds from the Troubled Asset Relief Program (TARP). The result was an immediate reduction in lending to Main Street, as the financial institutions tried to rebuild their capital. Although these institutions have raised substantial amounts of new capital, much of it has been used to repay the TARP funds instead of supporting new lending.

On the other hand, Hoenig pointed out:

In 2009, 45 percent of banks with assets under $1 billion increased their business lending.

45% is about 45% more  than the amount of increased lending by the too big to fails.

Indeed, some very smart people say that the big banks aren’t really focusing as much on the lending business as smaller banks.

Specifically since Glass-Steagall was repealed in 1999, the giant banks have made much of their money in trading assets, securities, derivatives and other speculative bets, the banks’ own paper and securities, and in other money-making activities which have nothing to do with traditional depository functions.

Now that the economy has crashed, the big banks are making very few loans to consumers or small businesses because theystill have trillions in bad derivatives gambling debts to pay off, and so they are only loaning to the biggest players and those who don’t really need credit in the first place. See this and this.

So we don’t really need these giant gamblers. We don’t reallyneed JP Morgan, Citi, Bank of America, Goldman Sachs or Morgan Stanley. What we need are dedicated lenders.

The Fortune article discussed above points out that the banking giants are not necessarily more efficient than smaller banks:

The largest banks often don’t show the greatest efficiency. This now seems unsurprising given the deep problems that the biggest institutions have faced over the past year.

“They actually experience diseconomies of scale,” Narter wrote of the biggest banks. “There are so many large autonomous divisions of the bank that the complexity of connecting them overwhelms the advantage of size.”

And Governor Tarullo points out some of the benefits of small community banks over the giant banks:

Many community banks have thrived, in large part because their local presence and personal interactions give them an advantage in meeting the financial needs of many households, small businesses, and agricultural firms. Their business model is based on an important economic explanation of the role of financial intermediaries–to develop and apply expertise that allows a lender to make better judgments about the creditworthiness of potential borrowers than could be made by a potential lender with less information about the borrowers.

A small, but growing, body of research suggests that the financial services provided by large banks are less-than-perfect substitutes for those provided by community banks.

It is simply not true that we need the mega-banks. In fact, as many top economists and financial analysts have said, the “too big to fails” are actually stifling competition from smaller lenders and credit unions, and dragging the entire economy down into a black hole.

The Failure to Break Up the Big Banks Is Causing Rampant Fraud


Top economists and experts on fraud say that fraud is not only widespread, it is actually the business model adopted by the giant banks. See thisthisthisthisthis and this.

In addition, Richard Alford – former New York Fed economist, trading floor economist and strategist – showed that banks that get too big benefit from “information asymmetry” which disrupts the free market.

Nobel prize winning economist Joseph Stiglitz noted in September that giants like Goldman are using their size to manipulate the market:

“The main problem that Goldman raises is a question of size: ‘too big to fail.’ In some markets, they have a significant fraction of trades. Why is that important? They trade both on their proprietary desk and on behalf of customers. When you do that and you have a significant fraction of all trades, you have a lot of information.”

Further, he says, “That raises the potential of conflicts of interest, problems of front-running, using that inside information for your proprietary desk. And that’s why the Volcker report came out and said that we need to restrict the kinds of activity that these large institutions have. If you’re going to trade on behalf of others, if you’re going to be a commercial bank, you can’t engage in certain kinds of risk-taking behavior.”

The giants (especially Goldman Sachs) have also used high-frequency program trading which not only distorted the markets– making up more than 70% of stock trades – but which also let the program trading giants take a sneak peak at what the real (aka “human”) traders are buying and selling, and then trade on the insider information. See thisthisthisthis and this. (This is frontrunning, which is illegal; but it is a lot bigger than garden variety frontrunning, because the program traders are not only trading based on inside knowledge of what their own clients are doing, they are also trading based on knowledge of what all other traders are doing).

Goldman also admitted that its proprietary trading program can “manipulate the markets in unfair ways”. The giant banks have also allegedly used their Counterparty Risk Management Policy Group (CRMPG) to exchange secret information and formulate coordinated mutually beneficial actions, all with thegovernment’s blessings.

In other words, a handful of giants doing it, it can manipulate the entire economy in ways which are not good for the American citizen.

The Failure to Break Up the Big Banks Is Dooming Us to a Derivatives Depression

All independent experts agree that unless we rein in derivatives, will have another – bigger – financial crisis.

But the big banks are preventing derivatives from being tamed.

We have also pointed out that derivatives are still very dangerous for the economy, that the derivatives “reform” legislation previously passed has probably actually weakenedexisting regulations, and the legislation was “probably written by JP Morgan and Goldman Sachs“.

As I noted last year

Harold Bradley – who oversees almost $2 billion in assets as chief investment officer at the Kauffman Foundation – told the Reuters Global Exchanges and Trading Summit in New York that a cabal is preventing swap derivatives from being forced onto clearing exchanges:

There is no incentive from the moneyed interests in either Washington or New York to change it…

I believe we are in a cabal. There are five or six players only who are engaged and dominant in this marketplace and apparently they own the regulatory apparatus. Everybody is afraid to regulate them.

That’s bad enough.

But Bob Litan of the Brookings Institute wrote a paper (here’s asummary) showing that – even if real derivatives legislation is ever passed – the 5 big derivatives players will still prevent any real change. James Kwak notes that Litan is no radical, but has previously written in defense in financial “innovation”.

Here’s a good summary from Rortybomb, showing that this is yet another reason to break up the too big to fails:

Litan is worried about the “Dealer’s Club” of the major derivatives players. I particularly like this paper as the best introduction to the current oligarchy that takes place in the very profitable over-the-counter derivatives trading market and credit default swap market. [Litton says]:

I have written this essay primarily to call attention to the main impediments to meaningful reform: the private actors who now control the trading of derivatives and all key elements of the infrastructure of derivatives trading, the major dealer banks. The importance of this “Derivatives Dealers’ Club” cannot be overstated. All end-users who want derivatives products, CDS in particular, must transact with dealer banks…I will argue that the major dealer banks have strong financial incentives and the ability to delay or impede changes from the status quo — even if the legislative reforms that are now being widely discussed are adopted — that would make the CDS and eventually other derivatives markets safer and more transparent for all concerned…

Here, of course, I refer to the major derivatives dealers – the top 5 dealer-banks that control virtually all of the dealer-to-dealer trades in CDS, together with a few others that participate with the top 5 in other institutions important to the derivatives market. Collectively, these institutions have the ability and incentive, if not counteracted by policy intervention, to delay, distort or impede clearing, exchange trading and transparency

Market-makers make the most profit, however, as long as they can operate as much in the dark as is possible – so that customers don’t know the true going prices, only the dealers do. This opacity allows the dealers to keep spreads high…

In combination, these various market institutions – relating to standardization, clearing and pricing – have incentives not to rock the boat, and not to accelerate the kinds of changes that would make the derivatives market safer and more transparent. The common element among all of these institutions is strong participation, if not significant ownership, by the major dealers.

So Bob Litan is waving a giant red flag that the top dealer-banks that control the CDS market can more or less, through a variety of means he lays out convincingly in the paper, derail or significantly slow down CDS reform after the fact if it passes.

***

If you thought we’d at least get our arms around credit default swap reform from a financial reform bill, you should read this report from Litan as a giant warning flag. In case you weren’t sure if you’ve heard anyone directly lay out the case on how the market and political concentration in the United States banking sector hurts consumers and increases systemic risk through both political pressures and anticompetitive levels of control of the institutions of the market, now you have. It’s not Matt Taibbi, but it’s much further away from a “everything is actually fine and the Treasury is in control of reform” reassurance. Which should scare you, and give you yet another good reason for size caps for the major banks.

53246864840716464 2380196514216991388?l=georgewashington2.blogspot The Only Way to Save the Economy:  Break Up the Giant, Insolvent BanksMoreover, the big banks are still dumping huge amounts of their toxic derivatives on the taxpayer. And see this.

Why Aren’t They Be Broken Up?

So what is the real reason that the TBTFs aren’t being broken up?

Certainly, there is regulatory capture, cowardice and corruption:

  • Joseph Stiglitz (the Nobel prize winning economist) said recently that the U.S. government is wary of challenging the financial industry because it is politically difficult, and that he hopes the Group of 20 leaders will cajole the U.S. into tougher action
  • Economic historian Niall Ferguson asks:

    Guess which institutions are among the biggest lobbyists and campaign-finance contributors? Surprise! None other than the TBTFs [too big to fails].

  • Manhattan Institute senior fellow Nicole Gelinas agrees:

    The too-big-to-fail financial industry has been good to elected officials and former elected officials of both parties over its 25-year life span

  • Investment analyst and financial writer Yves Smith says:

    Major financial players [have gained] control over the all-important over-the-counter debt markets…It is pretty hard to regulate someone who has a knife at your throat.

  • William K. Black says:

    There has been no honest examination of the crisis because it would embarrass C.E.O.s and politicians . . .Instead, the Treasury and the Fed are urging us not to examine the crisis and to believe that all will soon be well. There have been no prosecutions of the chief executives of the large nonprime lenders that would expose the “epidemic” of fraudulent mortgage lending that drove the crisis. There has been no accountability…

    The Obama administration and Fed Chairman Ben Bernanke have refused to investigate the nature and causes of the crisis. And the administration selected Timothy Geithner, who with then Treasury Secretary Paulson bungled the bailout of A.I.G. and other favored “too big to fail” institutions, to head up Treasury.

    Now Lawrence Summers, head of the White House National Economic Council, and Mr. Geithner argue that no fundamental change in finance is needed. They want to recreate a secondary market in the subprime mortgages that caused trillions of dollars of losses.

    Traditional neo-classical economic theory, particularly “modern finance theory,” has been proven false but economists have failed to replace it. No fundamental reform can be passed when the proponents are pretending that there really is no crisis or need for change.

  • Harvard professor of government Jeffry A. Frieden says:

    Regulatory agencies are often sympathetic to the industries they regulate. This pattern is so well known among scholars that it has a name: “regulatory capture.” This effect can be due to the political influence of the industry on its regulators; or to the fact that the regulators spend so much time with their charges that they come to accept their world view; or to the prospect of lucrative private-sector jobs when regulators retire or resign.

  • Economic consultant Edward Harrison agrees:Regulating Wall Street has become difficult in large part because of regulatory capture.

But there is an even more interesting reason . . .

The number one reason the TBTF’s aren’t being broken up is [drumroll] . . . the ‘ole 80?s playbook is being used.

As the New York Times wrote in February:

In the 1980s, during the height of the Latin American debt crisis, the total risk to the nine money-center banks in New York was estimated at more than three times the capital of those banks. The regulators, analysts say, did not force the banks to value those loans at the fire-sale prices of the moment, helping to avert a disaster in the banking system.

In other words, the nine biggest banks were all insolvent in the 1980s.

Indeed, Richard C. Koo – former economist at the Federal Reserve Bank of New York and doctoral fellow with the Fed’s Board of Governors, and now chief economist for Nomura –confirmed this fact last year in a speech to the Center for Strategic & International Studies. Specifically, Koo said that -after the Latin American crisis hit in 1982 – the New York Fed concluded that 7 out of 8 money center banks were actually “underwater” and “bankrupt”, but that the Fed hid that fact from the American people.

So the government’s failure to break up the insolvent giants – even though virtually all independent experts say that is the only way to save the economy, and even though there is no good reason not to break them up – is nothing new.

William K. Black’s statement that the government’s entire strategy now – as in the S&L crisis – is to cover up how bad things are (“the entire strategy is to keep people from getting the facts”) makes a lot more sense.

DIY MOBILE AD-HOC WIRELESS MESH NETWORKS (MANETs)
http://www.eetimes.com/electronics-news/4215577/Rutgers-team-proposes-Net-alternative
Rutgers team proposes Net alternative
by Rick Merritt / 4/28/2011

San Jose, Calif. – A team of researchers at Rutgers University have launched the latest of a group of wireless network initiatives aiming to create a more open alternative to the Internet. MondoNet aims to enable a mesh network that lets a hybrid collection of new and existing Wi-Fi, WiMax and other wireless devices connect to each other without going through a central carrier. A draft proposal for MondoNet describes its premise as well as how it will gather the best of existing technologies for mobile ad-hoc wireless mesh networks (MANETs). The project’s goal to create a system that provides both greater freedom and privacy for individual users than today’s Web. Aram Sinnreich, organizer of MondoNet and an associate professor at Rutgers, outlined the proposal in a recent video. Today’s Web is subject to censorship and manipulation due to close links between a handful of carriers and their governments, he said, citing examples in China, Egypt and the U.S. “All the information [on the Internet] has to go through the eye of the needle of a few companies beholden to their governments,” Sinnreich said. “What we need is a new network,” he said. MondoNet aims to be as fast and feature-rich as the Net while being more immune to censorship and spying. Researchers hope to get funding to create a prototype of their concept in the Rutgers area. Many legal and technical challenges remain open, the researchers said. For example, they propose use of tcpcrypt for security, although they admit it is not immune to malicious attacks. It’s also not clear how MANETs will get permission to let users act as broadcasters or what form of licensing MondoNet will use for its software.

The effort aims to adopt techniques from a number of other pioneering efforts in MANETs including:

  • BATMAN: A Better Approach to Mobile ad-hoc Networks launched earlier this year.
  • Babel: A distance vector routing protocol
  • Daihinia: A tool to turn Wi-Fi devices into a mesh network.
  • Freedom Box: A simplified Linux server for distributed networks
  • GNUnet: A software framework for secure peer-to-peer networking


CONTACT
Aram Sinnreich
http://comminfo.rutgers.edu/directory/sinn/index.html
email :sinn [at] rutgers [dot] edu

WEAVING a NEW NET: a MESH-BASED SOLUTION
http://www.mondonet.org/MondoNetNCApaper_draft.pdf
Weaving a New ‘Net: A Mesh-Based Solution
for Democratizing Networked Communications
by Aram Sinnreich, Nathan Graham, & Aaron Trammell / Rutgers University

Abstract
Recent developments, from the mass release of sensitive diplomatic cables by Wikileaks to the social media–fueled revolutions and protests currently gripping the Middle East and North Africa, have underscored the increasingly vital role of information and communication technologies (ICTs) in geopolitical affairs. Further, a wealth of recent research demonstrates the growing importance of digital networks in fostering cultural innovation and a vibrant public sphere, and the increasing centrality of these technologies to the daily lives of billions of individuals across the globe. Given the centrality of ICTs to these emerging changes in our social, cultural, and political landscapes, and the oft-invoked observation that “code is law,” it is essential that we develop and maintain a communications infrastructure that will enable individuals and communities (especially those in danger of political repression) to participate and contribute fully and actively to the public sphere, and to communicate confidently in private. Unfortunately, today’s infrastructure is not fully adequate to achieve this end. As U.S. Secretary of State Hillary Rodham Clinton recently observed, “the internet continues to be constricted in myriad ways worldwide.” While this is certainly the case in repressive political regimes from China to Iran, we face significant obstacles to “internet freedom” in America, as well. Although the internet is highly decentralized in its communication and social patterns, its technical and regulatory foundations are extremely hierarchical, due to centralized control by organizations like ICANN and oligopolistic ownership of network access. As a result of this centralization, digital communications are vulnerable to a degree of surveillance and censorship that would be unthinkable in traditional social arenas, threatening free speech and cyberliberties. Many laws and regulations exploit, rather than ameliorate this threat. Seemingly disparate factors like tiered access, intellectual property laws and national security measures, taken in combination, threaten to produce a communications environment in which cultural innovation is stifled, normative behaviors are criminalized, and political dissidence is dangerous or impossible. We believe that a new architecture is required in order to protect the continuance of civil liberties in networked society. In this article, we propose 10 “social specifications” describing the requirements of such an architecture, and outline a project called MondoNet designed to meet these specifications using ad hoc, wireless mesh networking technologies. We also address the legal and technical challenges facing the MondoNet project, and anticipate future developments in this field.

Weaving a New ‘Net: A Mesh-Based Solution
for Democratizing Networked Communications

Introduction
On February 15, 2011, U.S. Secretary of State Hillary Rodham Clinton gave a speech entitled “Internet Rights and Wrongs: Choices & Challenges in a Networked World,” in which she reaffirmed America’s commitment to “internet freedom” as an increasingly vital element of our foreign policy (Clinton, 2011). In her words, internet freedom is “about ensuring that the internet remains a space where activities of all kinds can take place, from grand, ground-breaking, historic campaigns to the small, ordinary acts that people engage in every day.” Or, to put it simply, the internet is essential to the exercise of free speech and civil liberties in networked society. Recent political developments around the world appear to support this argument. Although the internet has been a platform for political speech and social action virtually since its inception (Rheingold, 1993), digital communications platforms have become an increasingly central component of resistance movements and other organized social action over the past five years, and consequently an increasingly popular target for repression, censorship, and surveillance. As Secretary Clinton herself observed, social and mobile media were important tools for both organizing and publicizing the massive antiregime protests in Iran in 2009 and Egypt in 2011, leading to government-imposed internet shutdowns in both cases, and contributing to the eventual ouster of Egyptian President Hosni Mubarak. The complete list of relevant examples is far longer; in countries ranging from China to Tunisia to Myanmar, political resistance and repression have moved from streets and cafes to mobile phones and laptops, and governments have devoted an ever greater number of resources to controlling and policing the flow of digital communications within and without their borders. In addition to its role in political struggle and change, the internet has also become central to the social, economic, and creative lives of billions of people around the world. A wealth of recent research (e.g., Deuze, 2006; Benkler, 2006; Coté & Pybus, 2007; Sinnreich, 2010; Baym, 2010) illustrates the growing importance of information and communication technologies (ICTs) in fostering cultural innovation, emerging markets, and a vibrant public sphere. Unfortunately, the challenges posed to online political speech and cultural innovation don’t end at America’s borders. Despite Secretary Clinton’s assertion that “on the spectrum of internet freedom, we place ourselves on the side of openness,” American citizens face numerous threats to free speech and civil liberties online, from both governmental and commercial institutions.

Infrastructure, Access, and Speech
We cannot understand the operation of the internet without first understanding the commercial interests of the private companies that provide its infrastructure, and control access to that infrastructure (deNardis, 2010). There is almost a complete lack of competition between these companies; at present, 97 percent of American consumers are forced to chose between at most two broadband providers (Turner, 2009). As Lawrence E. Strickling (2010), administrator of the National Telecommunications and Information Administration (NTIA), recently argued, “Broadband service providers have an incentive to use their control . . . to advantage their value-added services or to disadvantage competitive alternatives. In the absence of robust broadband competition, those providers may be able profitably to act on those incentives to the detriment of consumers and competition.” Consumers face a similar lack of choice in the wireless data market, an arena in which federal regulators possess even less power to exercise oversight.1 This lack of competition and effective regulation gives broadband and wireless providers a great deal of unchecked market power, which they have used, and have an incentive to continue using, in ways that undermine the ability of their customers to freely exchange information. In practice, we have already seen several instances of service providers exploiting this power to block communications for ideological, rather than purely profit-driven, motives. AT&T, for instance, has been criticized for censoring speech critical of President Bush during a live webcast (Marra, 2007). Similarly, Verizon Wireless has blocked text messages from NARAL, a pro-choice political group (Liptak, 2007). The consolidation of the Internet access business raises political concerns beyond these anticompetitive implications. It also contributes to an environment in which free speech is constrained by the federal government itself. One notable example is the NSA electronic surveillance program, a massive federal initiative to eavesdrop on the private communications of American citizens in the wake of the September 11, 2001 terrorist attacks. This program, which violated federal laws (ACLU, 2008), was only possible because the NSA was able to monitor the majority of communications by compelling a relatively small number of oligopolists to participate, presumably using federal regulatory power as leverage.

1 At the time of writing, AT&T has just announced its plans to acquire T-Mobile, potentially bringing the number of major American wireless data service providers from 4 to 3.

Of course, most governmental threats to free speech online come from laws, treaties, and policies that have been introduced and/or ratified by Congress. Although this is not the place for an exhaustive survey, a short list of troubling examples includes the revised Foreign Intelligence Surveillance Act (FISA), the Stored Communications Act (SCA), the Anti-Counterfeiting Trade Agreement (ACTA), the Combating Online Trade Agreements and Copyrights Act (COICA), and the as-yet-unnamed “backdoor bill,” a law requested by the White House that would give the Department of Justice unilateral power to compel ISPs to censor entire domains from the American public. Understood collectively, these examples indicate that the emerging legislative consensus accords “e-speech” less protection than traditional channels and forums (Sinnreich & Zager, 2008). In addition to these concerns, Zittrain (2009) and Moglen (2010) have pointed to the ways in which the emerging “cloud” architecture also undermines democratic and participatory communications. The consolidation of capital and information within a set of centralized corporate servers leads to the complete disempowerment of the user, to a point where ownership of all networked data skews away from local computers toward a set of centralized, corporate-owned servers. In Moglen’s words, the “dis-empowered client [is] at the edge and the server in the middle. [Information was stored] far from the human beings who controlled, or thought they controlled, the operation of the computers that increasingly dominated their lives. This was a recipe for disaster.”

Resistance and Reinvention
The constraints on free speech and civil liberties we have mentioned have met with various forms of resistance over the years. From the beginning, as Turner (2006) relates, the internet’s military and hegemonic origins have been recast as an opportunity for democratic, or even utopian, sociopolitical action. From John Perry Barlow’s seminal 1996 manifesto, “A Declaration of the Independence of Cyberspace,” to today’s position papers and legal interventions by groups like Free Press, Electronic Privacy Information Center, and Electronic Frontier Foundation (a group Barlow cofounded), there has been a consistent effort to define and preserve online free speech and civil liberties, and to develop an ethical and legal framework surrounding these issues. Similarly, we may understand the emergence of networked participatory culture (Banks & Humphreys, 2008), convergence culture (Jenkins, 2006), and configurable culture (Sinnreich, 2010), and the mass adoption of alternative communication protocols like peer-to-peer file sharing, as a largely nonideological form of resistance against the monopolization and privatization of communication. Although an individual mash-up or remix may not be positioned as a challenge to copyright law (or even produced with effective understanding of such laws), for instance, the collective interest in producing and sharing these emerging cultural forms by the billions indicates an emerging set of norms at odds with the increasingly draconian conditions under which cultural expression may legally occur. However, despite the prevalence and effectiveness of these forms of resistance, which are positioned in opposition to cultural regulation through commercial and legal means, the threats to civil liberties and free speech we have identified can ultimately be attributed to a network architecture that lends itself to exploitative and hegemonic ends. As Lessig (1999) has written so concisely, “code is law.” And, despite our ambitions of “internet freedom,” and the wealth of democratized cultural forms and breadth of political opinions currently flowering online, we believe these freedoms will continue to be undermined by a network architecture that fundamentally privileges centralized control over collective deliberation. If power corrupts, as Lord Acton’s oft-quoted phrase suggests, then absolute power over global communications will inevitably corrupt the public sphere and undermine the democratic process. Thus, we propose that the best way to vouchsafe civil liberties in the networked age is through an architectural intervention. The internet’s infrastructure must be fundamentally reimagined if it is to serve as an effective platform for democracy. Though the benefits of hierarchical DNS regimes and long-distance terrestrial backbone infrastructure are clear from an engineering standpoint, they also may be at odds with the same political values they were ostensibly built to serve (Mueller, 2002). Not only does the current architecture place the United States in an exceptional and politically unsustainable role as global regulator, it also allows for the interests of consolidated capital to be furthered above all else. In the interest of promoting civil liberties in a democratic society, our network architecture must encourage free, unregulated speech (Balkin, 2004, p. 49). To guide ourselves and others in understanding what a reimagined networked architecture would require if free speech and civil liberties are to be prioritized above all other considerations, we have developed a set of 10 “social specifications.” Our hope is that these may be understood as fundamental principles informing the development and deployment of next-generation networking technologies. Below, we will describe our own solution to these challenges, in the form of an ad hoc, wireless mesh network called MondoNet.

10 Social Specifications for a Democratized Network

1. Decentralized
The network should not be operated, maintained, or in any way reliant upon a single or minimally differentiated set of entities or technologies. No individual, entity, or group should be central to the network to the extent that its absence would measurably impact the network’s functionality or scope. Network participation should not require access to fixed, physical infrastructure of any sort.

2. Universally Accessible
The requisite technology and expertise required to participate in the network should be available at minimal cost and effort to every human being on the planet. Furthermore, all users should be able to extend the network’s content and functionality to suit their own needs, or those of others. No aspect of the network’s functioning should be reliant upon proprietary technologies, information, or capital.

3. Censor-Proof
The network should be resistant to both regulatory and technical attempts to limit the nature of the information shared, restrict usage by given individuals or communities, or render the network, or any portion of it, inoperable or inaccessible.

4. Surveillance-Proof
The network should enable users to choose exactly what information they share with whom, and to participate anonymously if they so desire. Users should only have access to information if they are the designated recipients, or if it has been published openly.

5. Secure
The network should be organized in a way that minimizes the risk of malicious attacks or engineering failure. Information exchanged on the network should meet or exceed the delivery rate and reliability of information exchanged via the internet.

6. Scalable
The network should be organized with the expectation that its scale could reach or even exceed that of today’s internet. Special care should be taken to address to the challenge of maintaining efficiency without the presence of a centralized backbone.

7. Permanent
The network’s density and redundancy should be great enough that it will operate persistently on a broad scale, and be available in full to any user within range of another user.

8. Fast (Enough)
The network should always achieve whatever speed is required for a “bottom-line” level of social and cultural participation. At present, we assert that the network’s data transfer rate should, at a minimum, be enough for voice-over-IP (VoIP) communications, and low-bitrate streaming video.

9. Independent
While the network will have the capacity to exchange information with internet users and nodes, it should also be able to operate independently. A large-scale failure or closure of internet infrastructure and content should have minimal effect on the network’s operations.

10. Evolvable
The network should be built with future development in mind. The platform should be flexible enough to support technologies, protocols, and modes of usage that have not yet been developed.

Our Solution: MondoNet
There are undoubtedly several potential technological routes to address the social specifications outlined above, and as network technology continues to evolve, we are certain that additional solutions will arise. Given today’s technological and social landscape, we believe the most promising approach is the development of a mobile, ad hoc wireless mesh network (sometimes abbreviated MANET; Rheingold, 2002). In a MANET, users connect directly to one another via WiFi or a similar wireless networking protocol, and each device becomes client, server, and router at once, sharing bandwidth and information with other devices, and enabling users to relay third-party information on behalf of their indirectly connected peers. Such a network requires no centralized infrastructure or access service provider; to join the mesh, one simply logs on within range of another peer, and to exit the network, one simply logs off. Ideally, the number and density of peers should be great enough that the network persists despite the continuing entrance and exit of individual nodes.

MANET technology is not a silver bullet to address the challenges and specifications we outlined above, and none of the existing initiatives yet fit the bill (a subject we will address in greater depth below). In order to meet our social specifications, the network, which we call MondoNet, would need to be conscientiously designed and adapted with these challenges in mind. Given the limitations of today’s networking technologies, no MANET can be universally accessible or completely decentralized at launch. Because of the geographical proximity required for participation, MondoNet would need to develop first within local communities. Over time, those communities would themselves become regionally interconnected, and, ultimately, global (or at least intracontinental) networks could be established. (Other network-based technologies such as the telephone have grown in similar fashion [Wu, 2010]) The first phase of MondoNet’s rollout would require access to internet points-of-presence to bring users in contact with one another, and to provide them with access to content and services that are currently located exclusively on internet servers. This reliance on the internet as a prosthetic network undermines MondoNet’s independence and security by bringing network data back into the range of ISP and wireless carrier scrutiny and control. However, as MondoNet grows in size and coverage, we envision a greater number of content and service providers hosting their data on MondoNet peers, rendering traditional internet access increasingly unnecessary. Over the long term, MondoNet should operate as a completely detached network, independent of the internet. Security, censorship, and surveillance are additional challenges. In a normal ad hoc network, malicious peers can obtain sensitive information simply by joining the network and capturing the data they route on behalf of third parties. We envision MondoNet as a natively encrypted platform, in which security, rather than openness, is the default status of all data. By leveraging existing, open-source encryption protocols, all intrapersonal communications would be accessible only by intended participants. For communications and network publications intended to be globally accessible, we can encrypt information with “everybody” as a recipient and integrate the public key for decoding this data into the platform, so that the user experience will be identical to today’s experience of viewing unencrypted data via the internet. Another censorship threat comes in the form of locatability; in repressive regimes, the operation of a MondoNet peer may be seen as a punishable offense. Once the signal is traced to a given device, it may be deactivated, and the operator may be liable. Although there is an inherent risk in participating in any prohibited network, we believe there is greater safety in numbers. We hope to ameliorate the risk of participation, and boost the stability and efficiency of MondoNet, by introducing “repeater” peers into the network, which would function independently of human operators. Consisting of little more than a small antenna, a power supply, and a tiny flash memory chip, repeater peers could be produced cheaply in large quantity and distributed throughout MondoNet’s geographical coverage areas, hidden within public and private spaces (e.g., attached to street signs and automobiles with magnets, buried in trash cans, stashed behind inventory on store shelves). This would drastically decrease the ability of censors to identify human operators, and increase the density, speed, and permanence of network coverage. An additional challenge we must address is access. All formats, standards, and documentation associated with MondoNet must be freely licensed or in the public domain, to ensure that (1) the technology cannot be monopolized or rendered inoperable by any given party; (2) development of the platform is accessible to all users, and will remain so for perpetuity; and (3) the cost to gain access to MondoNet software and services is as close to zero as possible.

While open-source hardware will also help lower cost of access, we see an even greater opportunity in repurposing consumers’ existing mobile devices for inclusion in MondoNet. Throughout the developed world, it is common for consumers to upgrade their mobile phones and entertainment devices every 18–24 months, discarding previous-generation models or relegating them to a back closet. By downloading an easy-to-install firmware upgrade to devices such as smartphones, portable media players, and tablets, users should be able to access MondoNet with hardware they already own but have no current use for. The immediate incentive will be access to voice and video communications, peer-to-peer file sharing (P2P), and other valuable network services without the cost or liability associated with accessing the same services over the internet. What this means for MondoNet as a whole is potential installation on hundreds of millions of devices already in the hands or homes of users. There are further challenges to the successful deployment of MondoNet. The internet benefits immensely from a centralized governance and organizational structure, in terms of network efficiency, security, and operations. IP number assignment, DNS, and protocol compatibility are just a few of the issues that will be difficult to implement without a central authority. However, we do not view these challenges as insurmountable, and other interested parties are already working to address them. For instance, Pirate Bay developer Peter Sunde recently announced a P2P DNS initiative, which would theoretically address some of these challenges. Below, we will explore this and other platforms, technologies and initiatives that we believe MondoNet can emulate, partner with, adopt, or otherwise learn from.

Technical Considerations
A MANET that would conform to the social specifications outlined earlier faces numerous well-documented engineering challenges, but we are optimistic about its potential for success. In MondoNet, we are proposing a peer-based architecture for data transmission that breaks from the server/client model that has come to dominate popular conceptualizations of the internet (Moglen, 2010; Schollmeier, 2002). With current advances in battery life, mobile routing protocols, WiFi (802.11), WiMAX (802.16), encryption techniques, and human-centered design, MANETs could emerge as a viable alternative to current hierarchical systems. In addition, several high-profile projects, such as Freedom Box, Open Mesh, One Laptop Per Child (OLPC), the Serval Project, and a Better Approach to Mobile Ad Hoc Networking (B.A.T.M.A.N.), have proposals that could fortify the initiatives set forth by MondoNet by providing specialized routing protocols, persistent stationary nodes, and security measures, in addition to piquing user awareness of and interest in mesh networking. For security, overlay encryption built upon existing TCP/IP architecture is one popular and viable solution, although encryption and key verification introduce a heavy traffic load and bandwidth restraints to nodes that often have limited battery and computational power (Mamatha & Sharma, 2010, p. 276). Recent testing has demonstrated the success of a distributed security scheme, which utilizes multiple strategies at the network and link layers to efficiently reduce network security vulnerabilities (Gada et al., 2004; Khokhar, Ngadi & Mandala, 2008; Dhanalakshmi & Rajaram, 2008). A powerful layer-two encryption with a distributed scheme would put all users on the same broadcast domain while reducing traffic load. However, in order for anonymous users to connect and push data across heterogeneous networks, layer-two encryption may not be the best option. Instead, a solution such as tcpcrypt, which uses opportunistic encryption by adding TCP header options to encrypt all traffic, would provide greater security, backwards compatibility with legacy TCP stacks, and minimized strain from negotiations on the server (36 times more connections than SSL). Using this approach to encryption provides a fallback to standard encryption if the endpoint does not support the method, and tcpcrypt is capable of staggered deployment. Another important benefit is that tcpcrypt has no requirements for preshared keys (psk) or certificates. Tcpcrypt makes “end-to-end encryption of TCP traffic the default, not the exception” (Bittau, 2010). We face an additional major security challenge, as well: the current operating frequencies are known, limited, and therefore easily jammed. Although MANETs are capable of creating diverse communication paths across a network, allowing for versatile rerouting around localized interference and overcoming a common problem with radio-based technologies, broad-interference attempts could still cripple the network. MondoNet must address potential interference from the environment, and jamming attempts from totalitarian governments and other malicious actors because, as Frankel et al. (2007) establish, the current standard from the Institute of Electrical and Electronics Engineers (IEEE; 802.11) offers no defense against jamming or flooding (p. 39).

Fortunately, wireless bandwidth is becoming more difficult to disrupt. In 2008, the Federal Communications Commission (FCC) unanimously agreed to open a large portion of the unused wireless spectrum (frequencies previously reserved for analog television) for unlicensed use to white-spaces devices, or WSDs (Wu, Wang, Liu & Clancy, 2008, p. 9). In 2010, the FCC voted to distribute unlicensed spectrum for the first time in 25 years, setting two channels aside for wireless microphone use previously used by analog television (Kim, 2010). This newly available spectrum, with its longer wavelength and better penetration, will allow wireless broadband access as part of the FCC’s National Broadband Plan. The Office of Engineering and Technology (OET) has selected nine administrators to manage and maintain the white spaces database (FCC, 2011). WSDs are capable of detecting the local frequencies in use such as television stations and avoiding interference, which are outlined in proposals from IEEE 802.11, 802.22, and the White Spaces Coalition (IEEE, 2009; Stevenson, 2009; Bangeman, 2007). An opportunistic multihop ad hoc network would create intermediate nodes through distributed storage, which would alleviate some of the problems associated with a network where “user disconnection is a feature rather than an exception” (Conti, 2007). These intermediate nodes would store data when no nodes are prepared to receive it and then forward the data to other peers within transmission range. Conti notes that an opportunistic ad hoc multihop network is “well-suited for a world of pervasive devices equipped with various wireless networking technologies” such as WiFi, WiMAX, Bluetooth, ZigBee, and plug-in servers that are “frequently out of range from a global network but are in the range of other networked devices” (p. viii). It is now more realistic than ever to lay the groundwork for MondoNet. By employing some of the improvements outlined above, the B.A.T.M.A.N. project claims to have achieved a wireless mesh consisting of 4000. Other MANET routing protocol efforts include Babel, a distance vector routing protocol based on AODV, which utilizes a unique variation of the ETX link cost estimate instead of the hop metric used for most multihop ad hoc deliveries; WING, which provides added support for radio interfaces, uses Weighted Transmission Time (WCETT) routing metric, and allows automatic channel assignment; and Roofnet’s SrcRR, which also takes advantage of the ETX metric. Babel, WING, and Roofnet are useful because all are capable of eliminating transient routing loops commonly associated with MANETs, which helps reduce unnecessary route duplication.

Several individuals and organizations have proposed hardware to enable an effective MANET. These proposals include Freedom Boxes, which are “cheap, small, low-powered plug servers” (Dwyer, 2011) that run on Linux-based software; LANdroids, pocket-sized wireless network nodes that were created to travel autonomously with troops and disaster relief teams (Menke, 2010); OLPC XO, which is a Linux-based subcomputer built around an 802.11s WiFi mesh networking protocol; Roofnet, which, in addition to providing open source routing protocols, has set up 70 nodes in Portland, OR; and Solar Mesh, a solar-powered wireless mesh network developed by McMaster University, providing hotspot coverage and WiFi endstations. In addition to hardware and routing solutions, several other relevant projects and software frameworks are under development, such as GNUnet, a software framework allowing friend-to-friend (F2F) sharing; Daihinia, which transforms a common ad hoc WiFi network into an efficient multihop solution for communities; and SMesh, a hierarchical mesh network built upon Spines in which peers rely on the infrastructure to forward packets instead of relying on other peers. Finally, Open Mesh Project and Open Source Mesh are both recently launched projects that aim to establish effective mesh networks. Unlike MondoNet, these initiatives do not require network mobility, and have not presented a clearly delineated set of social specifications informing their technological development. However, we see these projects as valuable potential partners sharing a common set of goals and interests with MondoNet.

Pending Questions
An important set of remaining questions concerns the legal and regulatory environment for MondoNet. First, to ensure that the platform remains accessible to all potential users and available to current and future developers, we must undertake efforts to make sure that it is built on firm legal foundations. This means taking precautions not to violate any existing patents, as well as developing and sharing our own intellectual property under appropriate terms. Although we are already committed to an open license, there are dozens of free software licenses listed by the Open Source Initiative (n.d.), each offering a slightly different definition of openness and a slightly different solution for achieving it (Lamothe, 2006; Waugh & Metcalfe, 2008). Currently, our online documentation is licensed under a Creative Commons Attribution-Sharealike 3.0 license,2 but we have yet to establish which software licensing platform will be most effective in supporting our ambitions for MondoNet. Second, although we envision MondoNet as a tool made expressly for maintaining free communications in the face of institutional and governmental censorship, we will operate under the shelter of law to the greatest extent possible. This entails a number of concerns, the details of which may differ from region to region and from year to year. One example is the question of spectrum licensing; namely, what permission do individual citizens have to broadcast information at given energy levels within given frequency ranges? One of the benefits of using WiFi (specifically, IEEE 802.11) is its broad international recognition as a platform for consumer communications technologies. Of course, there are more powerful frequency ranges that may be available as well (e.g., lower frequency “white spaces” recently unlicensed in the U.S. by the FCC (FCC, 2011; IEEE, 2009; Wu, Wang, Liu, & Clancy, 2008). As we will discuss further below, a related question concerns the extent to which we can integrate these multiple networking standards into a single mesh framework.

2 Details about this license can be found at http://creativecommons.org/licenses/by-sa/3.0/

Finally, there are questions of legality surrounding the kinds of information that may be shared on MondoNet, and the treaties, laws, and precedents regarding the liability of network operators and technology providers who enable such sharing. Most sovereignties have taken pains to distinguish between permitted and unpermitted speech (e.g., intellectual property infringement, politically inflammatory messages, child pornography), and have developed systems to coerce platform providers to surveil and police their user bases. In the United States, for instance, the Digital Millennium Copyright Act (DMCA) makes it a felony to provide technology that is “designed or produced for the purpose of circumventing a technological measure that effectively controls access to a [copyrighted] work.” Even more to the point, President Obama in 2010 requested Congress to draft a new law that would require all communications technology providers to create a “back door” enabling wiretapping functionality for law enforcement (Savage, 2010; other nations, such as United Arab Emirates and Saudi Arabia, have made similar moves in recent years). Given that the previous administration illegally used its wiretapping powers to surveil American citizens without a court order (Savage & Risen, 2010), we consider such back door functionality to be anathema to the MondoNet project. We therefore anticipate that it is likely that developers, distributors and users of MondoNet will come into conflict with American and international laws, regardless of the content or legal status of their individual communications. There are also several pending questions related to technologies and platforms. Creating a system that conforms to MondoNet’s social specifications poses several hurdles. In order to establish the credibility necessary to encourage users to adopt a new conceptualization of the internet, it is essential that MondoNet adheres to human-centered design principles. Maguire (2001) identified five benefits of an effective, usable system: Increased productivity, reduced errors, reduced training and support, improved acceptance, and enhanced reputation (p. 587). For users under duress during disaster relief efforts, and for populations under oppressive government censorship, system usability, security, and interface simplicity are especially essential. To achieve this end, several key issues still must be addressed, such as determining the optimal routing protocol and encryption method. When designing any MANET, the main goal is to reliably transmit data from one node to another while still delivering a reasonable quality of service given the resource-limited environment. Although Transmission Control Protocol (TCP) is the common standard at the transport layer, it has the notable disadvantage of being slower than User Datagram Protocol (UDP). Future investigations will look at the potential benefits of traffic dispersion using multipath routing, which could improve performance and reduce the amount of energy consumed between nodes (Karygiannis, Antonakakis & Apostolopoulos, 2006; Nácher et al., 2007). Since energy consumption is always an important consideration with mobile devices, answering the design questions limiting battery life such as more routing and security power-aware protocols (Toh, 2001; Liang, & Yuansheng, 2004) are paramount but hardware remedies such as the recent three-fold improvement to the lithium-ion battery using solid state technology (Voith, 2010) are also being investigated.

Security is one of the primary obstacles to adoption in a MANET because the system is peer-based. Although opportunistic encryption through tcpcrypt provides many benefits, opportunistic encryption is inherently susceptible to active attacks. However, Bittau et al. (2010) describe an interesting approach using session IDs to prevent active attacks using tcpcrypt in MANETs (p. 7). Detecting malicious nodes in a MANET poses security problems because, unlike wired networks, anonymous, participatory MANETs are currently incapable of monitoring traffic and therefore lack an Intrusion Detection System (IDS; Karygiannis, Antonakakis & Apostolopoulos, 2006). Before MondoNet can be safely, effectively utilized by populations communicating under governments hostile to open information exchange, rigorous security protocols must be in place. Ensuring anonymity is also a complicated process that could be accomplished through tcpcrypt and by performing network address translation (NAT). Another major area of complication arises when attempting to connect networks. On top of every host running a MANET routing protocol (e.g., OSLR, B.A.T.M.A.N.), there will be a device bridging the two networks together. A very simple example would be the relationship between a wireless device and a conventional wireless router. When a wireless device is connected to the router, the devices communicate via 802.11 (WiFi) but then the router converts the transmission to 802.3 (Ethernet) via network cable. Basically, a smartphone cannot directly communicate with a network cable and needs another device such as a wireless router to allow the WiFi equipped smartphone to send and receive packets from the network. This would similarly work on 802.11s, which is the new routing protocol specifically being developed according to IEEE standards defining how interconnected wireless devices communicate. 802.11s also provides a security protocol, Simultaneous Authorization of Equals (SAE), which, although inflexible, provides protection against passive, active, and dictionary attack (Hartkins, 2008). Finally, determining an open source platform to use on repurposed mobile devices will be important to further development. One serious possibility could be a pared-down version of Fedora Linux, similar to the OS used in the OLPC XO-1. In keeping with MondoNet’s commitment to an open source environment, the repurposed devices will utilize IEEE standard compliant open firmware, and a variant of the Xfce GUI. Although there are many additional pending technical questions, previous efforts by MANET and open source developers and researchers have helped illuminate the path toward the comprehensive solution proposed here.

Conclusion
In this article, we have outlined the theoretical rationale, social specifications, and initial technical considerations for a large-scale, ad hoc wireless mesh network, which we call MondoNet. Although we feel this is a promising start, we hope to develop the network from an abstract idea to a concrete reality in the coming years. In the near term, this means addressing the pending questions we have outlined above, and sharing ideas, information and technology with like-minded individuals and initiatives. Over the longer term, we aim to develop and test a prototype, and to distribute the resulting technology to users and communities that may have a need for it. Ideally, this initiative, like many other open source projects, should develop a life of its own, adapting itself to uses we haven’t even considered at present, and evolving with the changing needs and technical capacities of connected individuals around the globe.

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City of Austin’s Wireless Mesh Network System

MORE MESH PROJECTS
http://www.readwriteweb.com/cloud/2011/01/3-projects-to-create-a-government-less-internet.php
by Klint Finley / January 28, 2011

In Cory Doctorow’s young adult novel Little Brother, the protagonist starts a wireless ad-hoc network, called X-Net, in response to a government crack-down on civil liberties. The characters use gaming systems with mesh networking equipment built-in to share files, exchange message and make plans.

The Internet blackout in Egypt, which we’ve been covering, touches on an issue we’ve raised occasionally here: the control of governments (and corporations) over the Internet (and by extension, the cloud). One possible solution, discussed by geeks for years, is the creation of wireless ad-hoc networks like the one in Little Brother to eliminate the need for centralized hardware and network connectivity. It’s the sort of technology that’s valuable not just for insuring both freedom of speech (not to mention freedom of commerce – Egypt’s Internet blackout can’t be good for business), but could be valuable in emergencies such as natural disasters as well.

Here are a few projects working to create such networks. Wireless ad-hoc networking has been limited in the past by a bottleneck problem. Researchers may have solved this issue for devices with enough computational power. The U.S. military is alsoinvesting in research in this area.

The OLPC’s XO has meshnetworking capabilities. And some gaming systems, such as the Nintendo DS, have mesh networking built in. But we want to look at projects that are specifically aimed at replacing or augmenting the public Internet.

Openet
Openet is a part of the open_sailing project. Openet’s goal is to create a civilian Internet outside of the control of governments and corporations. It aims to not only create local mesh networks, but to build a global mesh network of mesh networks stitched together by long range  packet radio. See our previous coverage here.

Netsukuku
Netsukuku is a project of the Italian group FreakNet MediaLab. Netsukuku is designed to be a distributed, anonymous mesh network that relies only on normal wireless network cards. FreakNet is even building its own domain name architecture. Unfortunately, there’s no stable release of the code and the web site was last updated in September 2009.

OPENMESH
Not to be confused with the mesh networking hardware vendor of the same name, OPENMESH is a forum created by venture captalist Shervin Pishevar for volunteers interested in building mesh networks for people living in conditions where Internet access may be limited or controlled.

Pishevar came up with the idea during the protests in Iran in 2009. “The last bastion of the dictatorship is the router,” he told us. The events in Egypt inspired him to get started.

It’s a younger project than Openet and Netsukuku, but it may have more mainstream appeal thanks to being backed by Pishevar. It’s not clear how far along Openet is, and Netsukuku’s seems to be completely stalled so a new project isn’t entirely unreasonable. Update: One commenter points out that Netsukuku’s developers have checked in code as recently as two weeks ago, so although the site hasn’t been updated the project isn’t stalled.

http://www.readwriteweb.com/cloud/2011/01/4-more-projects-to-create-a-go.php
by Klint Finley / January 31, 2011

Last week we told you about three projects to create a government-less Internet by taking advantage of wireless mesh networking. Wireless mesh networks are networks that don’t require a centralized authority to create networks. These can provide an alternative way to communicate and share information during a crisis such as a natural disaster or civic unrest.

Many of you followed-up by telling us about several other interesting projects, such as P2P DNS to Tonkia. Most importantly, there are at least four other projects that should have been on our original list.

Daihinia
Daihinia is a commercial project that provides software that essentially turns Windows PCs into wireless repeaters. The company’s software makes it possible to use a desktop or laptop with a normal wireless card to “hop” to a wireless access point while out of range of that access point. There’s no Macintosh version, but it’s being discussed.

Digitata
Digitata is a sub-project of open_sailing‘s Openet, which we mentioned in the previous installment. Digitata is focused on bringing wireless networks to rural areas of Africa. The group is creating open source hardware and software, including its own own IP layer for mesh networking called IPvPosition (IPvP).

Freifunk
Freifunk (German for “free radio”) is an organization dedicated to providing information and resources for mesh networking projects. Its website has a list of local mesh networks all over the world, from Afghanistan to Nepal to Seattle.

One of its main resources is the Freifunk firmware, a free router firmware optimized for wireless mesh networking. Users can replace the standard firmware on their routers with Frefunk’s firmware, enabling them to build mesh networks with cheap off the shelf hardware.

Freifunk also develops a protocol  Better Approach To Mobile Adhoc Networking, or B.A.T.M.A.N., an alternative to the older  Optimized Link State Routing Protocol (OLSR).

wlan ljubljana and nodewatcher
wlan ljubljana is a wireless mesh network in Ljubljana, Slovenia. In addition to providing its users with Internet access, it appears to also feature a local network.

wlan ljubljana is working with volunteers in other cities in Slovenia to create more local networks, and has created its own firmware package for routers called nodewatcher. Like Freifunk, nodewatcher is based on the embeddable Linux distribution OpenWrt. nodewatcher is designed to be easy to use for a non-technical user.

More Resources
Here are a few more resources:

http://www.ancienttreearchive.org


‘In this October 2010 photo provided by Archangel Ancient Tree Archive, group member Jake Milarch climbs the Waterfall Tree, a famed giant sequoia that measures 155 feet in circumference at bottom, near Camp Nelson, Calif. Milarch gathered cuttings from the tree to develop clones for Archangel’s project to restore ancient forests.’

OLDEST, LARGEST
http://matadornetwork.com/change//top-ten-national-parks-for-visiting-old-growth-forests/
http://www.landmarktrees.net/redwoods.html
http://www.npr.org/templates/story/story.php?storyId=134512634
Group Seeks Forest Restoration To Cleanse Planet / March 13, 2011

Redwoods and sequoias towering majestically over California’s northern coast. Oaks up to 1,000 years old nestled in a secluded corner of Ireland. The legendary cedars of Lebanon. They are among the most iconic trees on Earth, remnants of once-vast populations decimated by logging, development, pollution and disease. A nonprofit organization called Archangel Ancient Tree Archive is rushing to collect their genetic material and replant clones in an audacious plan to restore the world’s ancient forests and put them to work cleansing the environment and absorbing carbon dioxide, the greenhouse gas largely responsible for global warming. “In our infinite wisdom, we’ve destroyed 98 percent of the old growth forests that kept nature in balance for thousands of years,” said David Milarch, the group’s co-founder. “That’s what we intend to put back.”

Milarch, a tree nursery operator from the northern Michigan village of Copemish, and sons Jared and Jake have been producing genetic copies of ancient trees since the 1990s. They’ve now joined with Elk Rapids businesswoman Leslie Lee and a team of researchers to establish Archangel Archive, which has a staff of 17 and an indoor tree research and production complex. Its mission: Clone the oldest and largest individuals within the world’s most ecologically valuable tree species, and persuade people to buy and plant millions of copies — on factory grounds and college campuses; along riverbanks and city streets; in forests, farms, parks and back yards. “The number of these ancient survivors that go in the ground will be the ultimate measure of our success,” said Lee, who donated several million dollars to get the project off the ground and serves as board chairwoman. The group hopes donations and tree sales will raise enough money to keep it going. Scientific opinion varies on whether trees that survive for centuries have superior genes, like champion race horses, or simply have been in the right places at the right times to avoid fires, diseases and other misfortunes. But Archangel Archive is a true believer in the super-tree idea. The group has tracked down and cloned some of the biggest and oldest of more than 60 species and is developing inventories. The plan is eventually to produce copies of 200 varieties that are considered crucial. The trees preserve ecosystem diversity, soak up toxins from the ground and atmosphere, store carbon while emitting precious oxygen, and provide ingredients for medicines. Rebuilding forests with champion clones could “buy time for humanity” by mitigating centuries of environmental abuse, said Diana Beresford-Kroeger, an Ontario scientist who studies the roles of trees in protecting the environment.

California’s coastal redwoods and giant sequoias, the world’s largest trees, are best suited for sequestering carbon because of their size, rapid growth and durability, said Bill Libby, a retired University of California at Berkeley tree geneticist and consultant to Archangel Archive. The longer a tree lives, the longer its carbon remains bottled up instead of reaching the atmosphere. “They grow like crazy,” Libby said. “I have a clone of what used to be the world’s tallest redwood tree in my back yard. It’s still a baby, only 30 years old. It’s already taller than anything around it, probably 80 to 100 feet.” Archangel Archive crew members have taken cuttings from redwoods and sequoias between 2,000 and 3,000 years old. Among them: the Stagg tree, ranked the world’s sixth-largest sequoia by the U.S. Forest Service; and the Waterfall sequoia, considered the widest tree on Earth at ground level — 155 feet around. Three dozen coastal redwood clones and nine of the giant sequoias have taken root in the Copemish facility and another in Monterey, Calif., David Milarch said. The group also has successfully cloned sprouts from stumps of a dozen redwoods that were felled years ago, including one 35 feet in diameter.

The group uses several processes to develop clones. One is micropropagation, in which branch tips less than an inch long are planted for weeks in baby food jars containing gel-like mixtures of vitamins, fertilizers and hormones and placed on shelves under artificial lights. Eventually they are moved to pots of soil. Another method is to place tips up to 8 inches long in soil blends and grow them in mist chambers. Terry Root, a Stanford University climate change expert, said giant tree clones could help fight global warming if large numbers are planted where conditions favor their long-term survival. “You can’t put a redwood or giant sequoia just anywhere,” she said. Location is also an issue in cities. Big, shady trees could lower home energy costs in the summer but could shed limbs and cause damage to houses if planted too close. Finding genetically superior trees has been challenging, but group leaders acknowledge their biggest hurdle may be selling the public on the urgency of restoring the world’s ancient forests. David Milarch said he was aghast to learn that vast tree plantations were being cultivated in Ireland — not with native oaks, but with pine and cypress imports from California that would grow quickly and be harvested instead of helping cleanse and cool the planet as native champions would do. “It makes no sense to plant monocultures of exotic species while the last of your giant native trees are in danger of blinking off the earth,” he said.

http://www.ted.com/speakers/richard_preston.html

GROW YER OWN
http://www.redwoodworld.co.uk/growing.htm

Since planting out trees is now quite popular, why not grow yourself a Giant Redwood! You could grow from a sapling or from seed. As with most plants, the latter is best done in the Spring but I have had germination at other times of the year. There are several stories of people who are growing their own Redwoods on the Tall Tales page. Growing from seed presents a little more of a challenge and requires rather more patience, but need not be too daunting. Firstly you will need to obtain some seeds. The choice is either to buy a pack from a really good seed supplier such as Chiltern Seeds see their web site: www.chilternseeds.co.uk), or to find your own.

Foraging for Seeds
You will need to find a good-sized tree. Wellingtonia have not been in the UK long enough for there to be really mature trees; most are only just into their productive stage. The cones need to be around 2″ in length or more to have a reasonable chance of having viable seeds. Ideally you should hunt both for some brown, open cones that still contain some seed and also for some that are green and unopened. This will give you the best chance of success. You are not like to find viable Dawn Redwood cones, these trees have only been grown outside of China for the last 50 or so years and are generally too small and immature. As for Coast redwood, I have not experimented with foraged seeds yet so I would be pleased to hear from anyone with experience in this area.

Sowing your Seeds
Once you are home with your cones, place the green ones to one side somewhere warm but out of direct sunlight to give them time to dry and open. This will take some weeks. In the meantime, you will need to prise out the seeds from your brown cones. At this stage many people recommend treating them in a manner called “stratification” in order to improve the germination rate. This involves placing them in cold storage, such as a household refrigerator, for a period of time from several weeks to six months or so. This process is supposed to emulate the conditions that the seeds may encounter in nature, and is thought to encourage them to release chemicals that trigger germination once they are removed for sowing in warmer compost. A mixture of seed and damp sand tied in a muslin cloth may help. There is much debate as to whether this process is effective but the dedicated among you might like to experiment. When you are ready to sow your seeds spread them on a tray of moistened compost and cover with a quarter inch or so of drier compost. Cover with a clear lid and place somewhere warm but out of direct sunlight. Do not be disheartened if you experience difficulties with your Giant Redwood seedlings. I have grown hundreds so far yet I still have many that do not germinate, and have only just got to the stage of feeling confident about keeping alive those that have germinated through the first few months of their growth! I would also add that although I have grown hundreds of Giant Redwoods from seeds I have bought, I have found it extremely difficult to germinate seeds I have gathered from trees in England. In fact I have no more than five successes with my own foraged seeds. I am not sure of the reason for this, perhaps the U.K. trees are just a little too young to have a high proportion of viable seeds. Once the initial excitement of seeing your seedlings appear has passed, if you have sown into a tray of compost you will be faced with the need to prick them out into their own pots. The easiest way of doing this is with a desert spoon, but you will probably find that many (if not all) of your seedlings die soon afterward; they do not like having their root system disturbed. Because of this I no longer sow the seeds directly into trays of compost. I now use tray inserts that have fifteen sections to a standard tray size, or I use fifteen deep square shaped pots that just about fit into the same size tray. I very nearly fill each of the sections or pots with compost, into which I have mixed ten percent or so of horticultural sand. I then moisten the compost with water treated with cheshunt compound. I tend to water it fairly well as I believe it needs to be quite damp to encourage germination (once they’ve germinated I would not keep the compost so sodden). I then place two or three seeds into each section or pot rather than one each, as I have come to accept that the germination rate is quite low. In fact for seeds that I have gathered myself, rather than purchased, I might put dozens in each pot and will be grateful if I get just one to germinate out of the whole tray! I then cover half of them with an eighth inch layer of compost, the other sections or pots I cover with fine vermiculite. My theory with the vermiculite is that it does not suffer quite so much with green surface mould. My early conclusions are that germination might be a little better with the vermiculite, but I am hedging my bets by doing half of each. I sprinkle a little moisture on the vermiculite, very lightly, but none on the compost topped seeds. I then label the tray with the date and cover with a standard transparent tray cover that has no ventilation holes (although in the hot summer I might leave a slight ventilation gap). What happens next is quite variable. I find the trays that are in the lowest part of the greenhouse often seem to germinate a little more readily but this may just be chance. I may find that several germinate within a week or so, sometimes the whole tray will eventually germinate, sometimes a few more some months later, sometimes none will come out at all!

After germination
Once they germinate I will leave them in for a week or two, possibly longer, but at some stage I will take out the pots that have germinated and put them in a shaded area of the greenhouse to grow on and to be watered from the base of the pot or section. If they are left under the cover much after the first leaves appear I have found that they are likely to die – they need some air circulation. Where I have used sectioned tray inserts, (and here is the sneaky bit), I use a sharp craft knife to cut out the sprouted sections, and thus I am able return the as-yet unsprouted sections to the covered tray. I must say I prefer the individual pots, as they are a good deal deeper and therefore easier to keep at a reasonable dampness in the hot summer months, and they can be left to grow bigger before they need to be re-potted. Giant redwood seedlings are very unforgiving of being allowed to dry out completely so it is very tempting to over-water them. I was losing many seedlings to damping-off until I got the hang of stopping myself watering them as freely as one would water a leafy pot plant in the summer. I now leave it until the pot is feels very light and if possible I apply the water sparingly to the base (with the pot standing in a small saucer), allowing it to soak up. I tend to go by the weight of the pot rather than how damp it looks or feels at the top. If you are growing Coast or Dawn Redwood over-watering is not so great a concern as they will tolerate soggy conditions more readily. The first signs of your newly emerging tree will be a tiny loop of reddish stem, a few millimetres in size, poking out of the compost. When the tiny seedling manages to straighten out, it will be about 1″ high and will often still have its seed case attached at the top. This should dry and fall off naturally within a day or so but if it looks like this is not going to happen you can very carefully remove it. The next stage you will see is the top third or so splitting open, typically into four prongs (although I have had three or five appear on some). Within a week or so your little tree will have a dozen or more tiny green branches! I have occasionally had more than one seedling grow in an individual pot or section. Although it is heartbreaking to do so, I usually feel more inclined to snip off one of them rather than try to separate them. As tempting as the later may be I have found that an attempt to obtain two prized trees usually resulted in two dead seedlings and a sad Ron! You will probably find that Coast Redwood and Dawn Redwood seeds germinate far more readily than Giant Redwood. They are also far less fussy about being over-watered. They will take water-logging fairly well, although Coast Redwood are also quite unforgiving about being allowed to dry completely. They also both grow at a much faster rate as seedlings, in my experience, so you will see your results much sooner. Remember that they can take many months to germinate, so don’t give up hope too soon.

The first winter
Generally I will keep the seedlings in my greenhouse through the first winter and until they are at least four inches tall. I avoid exposing them to direct sunlight, and my greenhouse glass is sprayed with diffuser to stop the sun burning the delicate seedlings. As I said before, it is very important not to over-water them as this is how you are most likely to lose them. Winter is not really the best time to attempt to keep Redwood seedlings alive, you might find your spring sowings fare better. This may be because any instance of over-watering will fairly quickly dry out past the danger stage for the seedling during the warm summer days. By the second summer (around a year and a half old) I will place them outside and there they will stay through all weather. By this time they will be able to withstand, and probably enjoy, mid summer sun provided that the roots are not allowed to dry out completely. A larger sized pot will help provide reserve moisture for times when you forget or are not able to water. If you were to be away from home and unable to water them then it would be wise to move them to a shaded area. Good luck!


http://mvh.sr.unh.edu/mvhinvestigations/old_growth_forests.htm
Remaining Old Growth Forests: The shaded areas in these illustrations show the remaining old growth forests in the United States in 1620, 1850, 1926, and 1990. Each dot represents an area of 25,000 acres of old growth forest. Data are from Paullin, Charles Oscar, Atlas of the Historical Geography of the United States, Edited by John K. Wright, Greenwood Press, Westport, Connecticut, 1932, 1975; Findley, Rowe, and Blair, James Pl, “Will We Save Our Own?” National Geographic, vol. 178, no. 3, September 1990, page 120; and the Wilderness Society.

Main points to remember:
-If you are gathering seeds from trees yourself just take the larger cones, some brown, some green.
-Dry the green cones somewhere warm but out of direct sunlight.
-Use sectioned trays or individual pots; allows you to seperate out the germinated seedlings.
-Store the trays out of direct sunlight.
-Seperate out seedlings as they appear, store out of direct sunlight.
-Water sparingly.

Planting Out – Finding a Good Home
After you have nurtured your young Redwoods and re-potted them each year, they will eventually be too large to keep in a container and will need to be planted into the ground. The first problem is finding a suitable location. These are big trees and although they can grow well in a crowded area, they will not look their best. Also, they do not like shade, once again they will grow but will not produce branches in heavily shaded areas. Ideally, if you do not have a large garden yourself you could find someone who has. Failing that you could join the growing band of guerrilla gardeners and plant them out in an under-utilized public space. If you do this, then naturally you must take great care in choosing an appropriate location.

Digging-In
It seems unlikely that many people need instruction on digging a hole, so we shall not give any! It is possible to find many different forms of advice on digging in a tree from digging square holes (so the roots do not go round in circles) to teasing the roots out to encourage them to spread. You just have to decide what is sensible but we recommend at least loosening the soil a little around the hole and working in some compost if you have any available. In all probability it will be the environment, wildlife and how good a specimen the tree is itself that will determine its survival, rather than how nicely you dig your hole. A little luck will help too. During the first couple of years you can increase your sapling’s chances with the occasional visit with a plastic bottle of water and by clearing away any tall weeds.

Rogue Redwoods
One day when you are walking in a remote woodland and stumble across an unusual small pine tree, or perhaps you are driving along a dual carriageway and spot an unexpected young Redwood growing high up on the verge, you might well wonder if they were Redwood trees planted illicitly by a guerrilla gardener. The term “Guerrilla Gardening” originated in the U.S.A. in the 1970’s. Groups of people gather to place seeds and plants in neglected corners of public space. More recently Richard Reynolds has been doing a fine job of rallying willing troops to the cause in the U.K. See his web site www.guerrillagardening.org for more details. Would we encourage others to plant Rogue Redwoods? Certainly, just as long as you choose an appropriate location and obviously not on privately owned land unless you have permission. Always check for the closeness of electricity pylons, telephone wires or buildings and try to choose somewhere that will provide shelter and water. Also bear in mind that you will need to avoid underground services, i.e. gas, water or sewerage pipes. Avoid slopes if possible, as large trees will find it harder to keep stable in storms. If there is a choice, somewhere fairly close to a pond or lake would help see the tree through very dry summers. These trees may be planted in a place that some authority figures deem to be “wrong” but we hope they will eventually look upon them as legacies – a gift to future generations to gaze up in awe, just as many people do with the Giant Redwoods that were planted in the Victorian era. As soon as they are big enough to be in need of protection hopefully someone will place a tree preservation order on them to hold back greedy developers.

Tulips from Amsterdam
As to those xenophobes who would argue that Redwoods are not “indigenous” please read our Native Page. We have nothing against oak or ash or any other type of tree but there is room for other species too, especially one that was re-introduced 150 years ago. Before complaining, think about the diversity that we would be missing if we do not plant specimen trees. I wonder if those who do complain for reasons of non-nativeness have ever thought about sending the tulips in their garden back to Turkey, (no, they are not originally from Amsterdam) or their potatoes back to the Andes? In terms of the local ecology, there is no danger presented by Giant Redwoods. They are not at all invasive, and in fact outside of a huge forest environment they will only reproduce with a considerable amount of assistance.

Finally, one of the greatest reasons cited for growing a tree is that it will take carbon dioxide out of the atmosphere. If this is one’s motivation, then what better tree to plant than one that grows to immense size. Not only taking vast amounts carbon out of the atmosphere but also holding it there for thousands of years instead of dying and returning it after a hundred or so?


http://richardpreston.net/climbing-giant-trees

OLD GROWTH CARBON SINKS
http://www.nature.com/nature/journal/v455/n7210/abs/nature07276.html
http://www.scientificamerican.com/article.cfm?id=old-growth-forests-help-combat-climate-change
Old-Growth Forests Help Combat Climate Change
Mature forests in colder climes may continue to store more carbon than they emit, thereby helping to stave off global warming
by David Biello / September 11, 2008

Rare is the forest untouched by man. Whether logging or clearing land for agriculture, the bulk of the world’s forests have fallen to crops, cattle or younger trees. According to some estimates, less than 10 percent of forests worldwide can be considered old growth, or undisturbed for more than a century. And that is not just a tragedy for the plants and animals that require mature forests—it is also a tragedy for the world’s climate, according to a study published today in Nature. Laborious research in the 1960s by the late pioneering U.S. ecologist Eugene Odum seemed to indicate that forests achieve abalance between the amount of carbon dioxide (CO2) absorbed by growing trees and plants and the amount of CO2 released back into the atmosphere by the decomposition of dead plant matter. But it seems that old forests may be more efficient than previously believed. Biologist Sebastiaan Luyssaert of the University of Antwerp in Belgium and his colleagues surveyed all the existing measurements of how much carbon is absorbed and released from old-growth forests (exclusively in temperate and boreal forests due to a lack of extensive data on tropical forests). Their findings, Luyssaert says: “old-growth forests continued to accumulate carbon.” In fact, not only do old trees continue to store carbon in their wood, forest soils also appear to be actively capturing carbon over time, although direct observations of this process are lacking. All told, by Luyssaert’s calculations the relatively small remaining stands of old-growth forests in the U.S. Pacific Northwest as well as Canada and Russia consume “8 to 20 percent of the global terrestrial carbon sink,” or roughly 440.9 million tons (0.4 gigatonnes) of carbon per year.

That is not even close to enough to balance the 1.8 billion tons (1.6 gigatonnes) released into the atmosphere by deforestation or crop-clearing. But it remains important—if unrecognized—in the present battle to combat climate change. Luyssaert suggests that credit—and money—should be given to protect such old-growth forests under carbon trading schemes and other economic mechanisms to combat climate change. “Any kind of existing program that gives credit to reforestation could give credits to forest preservation,” such as the carbon offsets based on tree planting, he says. “Instead of investing the money in a new forest, it could as well be used to protect an old forest.” But the case for old forests as carbon sinks is not airtight. The measurements used by Luyssaert rely on the flux of CO2 levels over the forest, but this kind of metric can be skewed by young stands of trees within an old-growth forest or an increase in growth as a result of higher atmospheric carbon dioxide levels, according to forest ecologist Mark Harmon of Oregon State University in Corvallis, who was not involved in the study. “To really test this, one would need a far better data set that had different ages in the same system: that is very young, mature, old-growth and super old-growth in each system,” he says. But “older forests should not be written off as places to store more carbon. Even if they aren’t taking up more carbon, their harvest releases a great deal.” It remains unclear whether tropical forests, such as those of the Amazon or Congo, produce the same effect, due to much faster decomposition of dead plant matter in these climes. But preliminary results suggest they do. “The data that are available show that, like the boreal and temperate forests, tropical old-growth forests also continue to take up and sequester carbon,” says forest scientist Eugenie Euskirchen of the University of Alaska Fairbanks, who was not involved in this research. Protecting old-growth temperate and subpolar forests might prove a boon to thefight against global warming, also because of the soils they currently shade. “Many old boreal forests tend to be underlain by permafrost soils, which can contain many times more carbon than that stored in the vegetation,” Euskirchen notes. Melting those soils is an ongoing climate calamity.

Cloning Plants: Cuttings for Cloning a Plant

PLANT CLONING
http://www.buzzle.com/articles/cloning-plants-cuttings-for-cloning-a-plant.html
Cloning Plants: Cuttings for Cloning a Plant

Plants can reproduce both sexually and asexually. While sexual reproduction involves pollination and development of seeds, which in turn produces new plants, asexual reproduction is the development of a new plant from the cells of a single parent plant. Asexual reproduction does not involve pollination or seed formation, but a growing part (usually the stem) of the parent plant is used to develop a new plant by random mutation. Natural asexual reproduction is of many types. While some plants, like strawberries, develop new plants from its arching roots, which develop roots, others use the rhizomes, bulbs and tubers (like, in lilies and irises). In case of bryophyllum, an ornamental plant, new plantlets are developed throughout the margins of its leaves. These tiny plants fall off and develop as new plants. Some plants reproduce by budding whereas others reproduce by fragmentation. All these are nature’s techniques of asexual reproduction. Even humans have been using various methods of cloning plants, like developing new plants from stem cuttings. Plant tissue culture is one of the advanced techniques invented by humans for cloning plants from cuttings. {More on Plant Tissue Culture.}

What is Plant Cloning
In case of sexual reproduction, merging of two sets of DNA are involved and the resultant offspring is genetically different from the parents, wheres the offspring produced by asexual reproduction is genetically identical to the single parent. Cloning is a type of asexual reproduction which ensures that the offspring is genetically identical to the parent plant. You may wonder what is the benefit of a plant being genetically identical to its parent and how is it different from a plant developed from a seed? As the clones are taken from the strongest, healthiest and productive plants, there is a guarantee of the offspring being a genetic replica of the same characteristics. You can have a garden full of such strong and healthy plants. In case of seeds, there is no guarantee to this effect and the plants developed from the seeds of a single parent may show different characteristics. Cloning process is much faster than the natural sexual reproduction in plants. In case of grafting, a cloning technique, clones of two genetically different parents can be combined to form a new superior plant. Cloning plants for food is also beneficial, as it aids commercial farming and ensures good results. {More on grafting fruit trees.}

Cuttings for Cloning a Plant
Plant cutting is a method adopted for propagating plants through asexual reproduction. It involves using any part of the plant’s vegetation which contains at least one stem cell. Such parts are placed in a suitable medium and proper growth conditions are provided. These cuttings develop roots, stems, etc. and grow into new plants which are genetically identical to the parent plants. The term ‘plant cutting’ is often misunderstood for stem cuttings but it also includes any of the vegetative parts, like, roots, scion, eyes, leaves, leaf-bud and many other difficult cuttings. The type of cutting which is best suited for a particular plant is determined according to the plant species. Following are the different types of cuttings for cloning a plant:

  • In case of stem cuttings, a piece of stem with at least a single leaf node and a few leaves is used. This is the most popular type of plant cutting.
  • Even though the success rate is high in root cutting, it is not popular, as most people don’t want to harm the roots. In this method, a part of root is used to develop a new plant. It is better to take a healthy and thick root with a length of two to three inches, to be planted right side up in the growing medium.
  • A scion cutting is a shoot or sprout of a plant, used for vegetative propagation.
  • Eye cuttings denote pieces of plant stalk which are foliated or defoliated and are used to develop new plants by planting the cuttings in a growing medium.
  • Leaf cuttings are small parts of leaves which are used to produce new plants. Such cuttings are taken from thick leaves with veins. Take care to cut open the veins and plant it flat in the growing medium with the cut leaf exposed to light.
  • In case of leaf-bud cutting, you need that part of the plant which has a leaf blade, petiole and stem attached to it with a bud. This type of cutting is best suited for those healthy plants which have very few cloning material.

There are many other types of plant cuttings for cloning plants which are very complicated and are usually done by experts. Apart from cuttings, the most important factor for cloning plants is the proper conditions that can stimulate the growth of roots, shoots or both.

Cloning Plants from Cuttings
Now you know some of the common types of plant cuttings which are used for cloning. The following are some guidelines and tips about how to clone plants from stem cuttings:

  • You can start by selecting the right parent plant which has the desired characteristics. The plant should be healthy and at least two months old.
  • Next you have to collect the materials needed for cloning plant cuttings, like, sharp and sterile scissors for cutting the clone (i.e. plant cutting) and clipping excess leaves, a glass of fresh and tepid water, a container filler with the growing medium of your choice, rooting hormone, spray bottle with water, etc. It is very important to sterilize the tools and cutting blocks to prevent attacks of fungus, viruses and diseases in the cuttings.
  • You have to select the right rooting hormone and growing medium. Liquid rooting hormones are preferred to the powder ones as the former can easily penetrate the stem and are better for good results. You can also select from the different types of growing medium, like, rapid rooters, rock wool or oasis cubes, pro-mix, coconut fiber and many other materials. Among these, rapid rooters are very popular for being organic and are made of composted bark and latex. You must have heard of cloning plants in water and this means that the growing medium is nothing but water. It can be soil or sand too.
  • The next step is to remove the nitrogen from the parent plant by heavily watering these plants for three to four days prior to the date of cutting. The water should be pH adjusted, without any fertilizer content. This is done to minimize the amount of nitrogen stored in the plant, as it can retard the rooting process.
  • Now, you must select the plant cutting, usually a growing tip of a stem. The stem should have two to three sets of leaves and some leaf nodes. The large leaves must be cut off with scissors, leaving two to three small leaves. Now, cut the stem with scissors and the removed stem must contain at least two to three leaf nodes.
  • Place the stem on the sterile cutting block and slice it at an angle of 45°, around ¼ inch below the leaf nodes. Take care not to bruise or crush the stem while handling. The plant cutting for cloning must contain one or two leaf nodes and leaves and must be around two to four inches in length.
  • As soon as you prepare the plant cutting, dip the cut part of the stem in a good rooting hormone (for 30 to 60 seconds), to prevent the air from entering through the cut.
  • Take out the stem and wipe off the excess hormone, before planting it, at least ½ inch deep into the growing medium. Now place the container with the growing medium and cutting in a tray. Mist them with fresh water and cover with a dome. The inside of the tray should be misted with water and it must have some holes for ventilation.
  • The cuttings and the dome must be misted with water around three to four times a day. 72° and 80° Fahrenheit is the ideal temperature settings for these cuttings as too much cold or hot conditions curb root growth. For lighting, dappled sunlight is good and t5 fluorescent can be used indoors.
  • Now, you may use mild fertilizer, to be applied with water. Plain distilled water is good for the cuttings. Reduce the frequency of misting to once in every two days. The medium should not be allowed to dry out, but at the same time, excess watering should not be done.

After one week, remove the dome for about two hours, if the cutting has not wilted, and you can make sure that roots have developed to support the cutting. In case of wilting, place the dome back and continue the misting process. Don’t use the domes for those cuttings which have developed roots. The lower leaves may wilt, but don’t remove these yellow leaves as it may cause death of the plant. Once established, these plants can be removed from the growing medium and planted in soil or any other medium of your choice. {More on hydroponic soil-less gardening.}

Now, you know the basics of cloning plant cuttings. Cloning plants at home is not very difficult, once you become comfortable in this task. The above mentioned is one of the methods of cloning plants. Tissue culture is one popular practice of plant propagation, which uses various methods for cloning plants from cuttings. You can try this method and clone your favorite plant, so that you get an exact replica, which has the same desired characteristics of the parent plant.

http://www.ukuncut.org.uk/

Playcentre: In Camden, north London, demonstrators invaded a NatWest and set up a creche where children played, practiced musical instruments while parents caught up
Playcentre: In Camden, north London, demonstrators invaded a NatWest and set up a creche where children played, practiced musical instruments while parents caught up.

BANK BRANCH as COMMUNITY CENTER
http://www.dailymail.co.uk/news/article-1360925/Activists-turn-40-British-bank-branches-creches-classrooms-shelters-job-centres-protest-bonuses-cuts.html
Reclaiming the banks: Activists turn British banks into creches, classrooms and launderettes in protest over public service cuts  /  26th February 2011

Activists stormed more than 40 banks across Britain in protest over executive bonuses and public service cuts –  and turned them into a variety of ad hoc walk-in centres. UK Uncut said demonstrators set up creches, laundries, school classrooms, libraries, homeless shelters, drama clubs, walk-in clinics, youth centres, job centres and leisure centres at branches of RBS, NatWest and Lloyds. At 10am in Camden, north London, demonstrators invaded a NatWest and set up a creche where children played, practiced musical instruments while parents caught up. Meanwhile in nearby Islington 50 activists set up a laundry in an RBS branch in reaction to alleged council moves to cut services to the elderly, including a much-needed laundry service. They set up washing lines, clothes horses, buckets for handwashing and a team of window cleaners on the outside. The protest was attended by over 15 pensioners and local Labour MP Jeremy Corbyn. Banks were transformed into ‘hospitals’ in Liverpool and Redhill, a classroom in Cardiff, a leisure centre in Eastleigh, a job centre in Birmingham. Twenty people took tents and sleeping bags into NatWest in Brixton to create a homeless shelter.

Meanwhile in Islington 50 activists set up a laundry in an RBS branch in reaction to alleged council moves to cut services to the elderly, including a much-needed laundry serviceMeanwhile in Islington 50 activists set up a laundry in an RBS branch in reaction to alleged council moves to cut services to the elderly, including a much-needed laundry service

They set up washing lines, clothes horses, buckets for handwashing and a team of window cleaners on the outsideThey set up washing lines, clothes horses, buckets for handwashing and a team of window cleaners on the outside 

Aisha Atkins, 32, said: ‘There are alternatives to the cuts, for example, making the banks pay for a crisis they created or by stopping tax-dodging by big business and the super rich. ‘But the Government is making a political choice to reduce the deficit by making ordinary people pay with job losses and savaged services. We are transforming the banks into schools, leisure centres, laundry services and homeless shelters to show that it’s our society that’s too big to fail, not a broken banking system.’ An RBS spokeswoman said: ‘We fully respect the right to peaceful protest. Minimising disruption to our customers is our priority.’

PRO-TAX-PAYING
http://www.guardian.co.uk/uk/2011/feb/27/uk-uncut-stage-protests-banks
by Jonathan Paige / 27 February 2011

UK Uncut, the anti-cuts campaign group, staged protests at more than 40 bank branches throughout Britain on a day when the group’s American counterpart, US Uncut, staged at least 50 protests. The fast growing British group, still under six months old, staged the Big Society Bail In protests to show the range of services it says have had to be cut in order to support the financial sector. Last week the group focused on Barclays, which admitted it paid just £113m tax in the UK in 2009 on reported profits of £11.6bn. This week the protests were aimed at 84% state-owned RBS, which has revealed that more than 100 of their bankers were paid more than £1m last year, while total bonuses reached close to £1bn on the bailed-out bank’s reported losses of £1.1bn for 2010. Other banks’ branches, including NatWest and Lloyds, in which the Treasury holds 41% of shares, were also targeted. In Islington, protesters turned up at a branch of RBS with buckets of soapy water, washing lines and clothes pegs in to highlight claimed council cuts to services for the elderly. Supporters included the Labour MP for Islington North, Jeremy Corbyn and pensioners from the borough. Emma, speaking for the demonstrators, said: “The banks caused the financial crisis yet it’s ordinary people across the country having to pay for it, through cuts to vital public services. By propping up banks like RBS with billions of pounds of bailout money the government has forced cuts to services like laundry help for the elderly, which is why we’re here today. “The cuts are a political choice, not a necessity.”

In Brixton, 20 people brought tents and sleeping bags into NatWest to create a homeless shelter, while a branch of Lloyds in Oxford Street saw a teach-in featuring lecturers from other tax campaign groups including the Robin Hood Campaign and Tax Justice. A bank branch in Birmingham temporarily became a “job centre” while protesters in Nottingham set up a “big society reading room”. Many smaller towns also staged actions. Protesters in Redhill, Surrey set up a “hospital” in a branch of Natwest, while a bank branch in Eastleigh, Hampshire was turned into a “leisure centre” and one in Lewes became a drama club. Daniel Garvin, a spokesman for UK Uncut, said: “The day went extremely well. There 40 actions across the UK, which have hammered home the link between the crisis caused by the banks and the cuts to our essential services. The movement has gone international with the US staging 50 protests. It’s become a global issue, proving people can work across borders to tackle issues like corporate tax avoidance and cuts to services.”

US Uncut, despite being formed three weeks ago, has already come to the attention of the right-wing Fox News host Glenn Beck, who suggested the protests are part of a global conspiracy that includes anti-union law protests in Wisconsin and the revolts in the Middle East. In Washington DC, over 100 protesters temporarily closed down a branch of the Bank of America, which received and repaid $45 billion in the 2009 US federal bailout. US Uncut said it has exploited the tax code to pay no federal income taxes in 2009, while paying its top executives millions of dollars. “We were inspired by UK Uncut to stage a teach-in,” said Rizvi Qureshi, of US Uncut DC. “It went on for about half an hour, before people left of their own accord and carried on protesting outside. There was a very small police presence and the protest ended without any trouble. “This is just the beginning of a larger national campaign about tax avoidance in response to federal budget cuts. We hope to do something equally creative in the future.”

Protests have taken place in Boston, New York and the Midwest. Many actions are still underway on the west coast of the US, from Seattle in the north to San Diego in the south. A protest is also taking place in Nova Scotia, Canada, with more planned across the country. RBS said: “We fully respect the right to peaceful protest. Minimizing disruption to our customers is our priority.” The group’s chairman, Sir Philip Hampton, said the number of millionaires was lower than a year ago and that a quarter of the group’s 18,700 investment bankers would not receive a bonus from the £950m payout pool agreed with UK Financial Investments.

BANK of AMERICA PAYS NO U.S. TAXES
http://www.huffingtonpost.com/2011/02/27/us-uncut-bank-of-america-liberal-tea-party_n_828782.html

Demonstrators posing as a liberal Tea Party disrupted service at banks across the country on Saturday, in an effort to spotlight the gimmicks multi-billion dollar corporations use to avoid paying their fair share in taxes. Self-organized through anti-austerity movementU.S. Uncut, regional captains helped organize demonstrators at more than 40 different branchesof Bank of America. The newly-minted group was inspired by an article published recently in The Nation by Johann Hari: “How to Build a Progressive Tea Party.” Hari writes:

Imagine a parallel universe where the Great Crash of 2008 was followed by a Tea Party of a very different kind … Instead of the fake populism of the Tea Party, there is a movement based on real populism. It shows that there is an alternative to making the poor and the middle class pay for a crisis caused by the rich. It shifts the national conversation … This may sound like a fantasy–but it has all happened. The name of this parallel universe is Britain. As recently as this past fall, people here were asking the same questions liberal Americans have been glumly contemplating: Why is everyone being so passive? Why are we letting ourselves be ripped off? Why are people staying in their homes watching their flat-screens while our politicians strip away services so they can fatten the superrich even more?

Hari evokes the spirit of UK Uncut — a movement made up of British citizens, who, in the face of brutal budget cuts, have sought to shame corporate tax dodgers through public demonstrations — and suggests Americans follow suit. U.S. Uncut is doing just that; though many members of the group have disowned the title of Tea Party, telling HuffPost that while they were inspired by the article in The Nation, they do not want to be identified as an opposition group.

Saturday marked the group’s first coordinated event. “Billionaires got bonuses, bailouts and tax cuts, too — the least they can do is pay their fair share of taxes,” said Ryan Clay, a 28-year-old media analyst who helped organize the U.S. Uncut demonstration in Washington, DC. “I got inspired, other people got inspired, we met online, and we’re working through social media to really bring these abhorrent facts to the public.” A rally in San Francisco drew scores of protesters to a branch of Bank of America at Union Square; dressed in ordinary street clothes, they filed into the bank one by one, getting in line to speak with the tellers. Each of them carried a fake check from Bank of America made out to “The United States c/o Tax Paying Citizens,” for $1.5 billion. The sum would cover all the bank’s unpaid taxes on its 2009 earned income of $4.4 billion, demonstrators said.

Only a few people had presented their fake checks to the tellers before the bank temporarily closed for business; protesters were peacefully escorted out of the building by the police. Once on the street, however, they stayed put and kept handing out fake checks, which had facts about corporate tax avoidance written in fine print on the back, as fliers. “Two-thirds of all U.S. corporations do not pay federal income tax,” the fliers said. “BofA is the largest bank and the 5th largest corporation in America.”

“People seemed more eager to accept these fliers and actually read the information they contained than what one would usually expect from handouts with political messages,” said Leslie Dreyer, 32, a resident of Oakland, Calif., who came up with the idea of using checks as props. “When asked ‘would you like a check for 1.5 billion to cash at any BoA?’, they were amused and intrigued enough to ‘read the fine print.'” A Bank of America spokeswoman did not immediately return a request for comment. Many of the largest corporations in the country have mastered the art of evading taxes, booking expenses in the U.S. and profits in low-tax countries. A list compiled by Forbes shows that Bank of America was far from being the only multi-billion dollar corporation to avoid paying taxes on billions of dollars in earnings in 2009; it is also not the only bank to spark angry demonstrations this week.

On Wednesday morning, New York City Councilman Jumaane Williams marched into a Park Avenue Chase bank to denounce the bank’s failure to help homeowners avoid foreclosure. HuffPost’s Laura Basset reports:

“After denouncing the bank to a cheering crowd and calling its executives “bloodsuckers” for accepting bailout money and refusing to help the suffering homeowners they “preyed on,” Williams was stopped by security guards at the door and told the branch was closed. The mob then chanted “open the door” until Williams was let in, at which point he closed his account.Williams told HuffPost that when campaigning in New York City, he met at least two people on every block with mortgage troubles. He said he doesn’t want the bank to use his money to “further deteriorate the community” he represents, especially in light of chief executive Jamie Dimon’s recent $17 million bonus.”

“It’s incredible what these banks are making people go through,” he said. “It’s disgusting. They’re like bloodsuckers, just sucking the lifeblood out of communities and refusing to help out. I understand that people need to get paid to get the best and brightest and these bonuses help with that, but you can’t do that and then not assist the community and then get a taxpayer bailout to the tune of billions of dollars. That’s just greed at its worst.”

Several demonstrators crashed Bank or America’s Investor Conference Tuesday to make the point that when corporations don’t pay taxes, governments are forced to lay off public workers. A blog posting by the anti-austerity group U.S. Uncut called for protesters to gather Tuesday morning at what they called Bank of America’s “Tax Dodger Conference.” “Call your broker- if you have any shares in BofA, you’re free to come inside to the conference and tell everyone you see about BofA’s tax dodging,” the statement said. After the conference had gotten underway, demonstrators unfurled a banner reading “Tax Dodger.” “When corporations like Bank of America don’t pay their fair share of taxes, we have to ‘cut’ teachers, firefighters, and public servants,” one protester shouted. “Do you pay your taxes? So do we. Why don’t corporations pay their fair share, just like everyone else? Bank of America is Bad for America,” he added. “Bank of America pockets billions in profits and bailouts, but $0 in American taxes – that’s immoral and un-American.”

Last month, the same group organized demonstrations at 40 different Bank of America branches.
U.S. Uncut credited an article in The Nation by John Hari called “How to Build a Progressive Tea Party” with calling the group to action. “Imagine a parallel universe where the Great Crash of 2008 was followed by a Tea Party of a very different kind,” he wrote. “Instead of the fake populism of the Tea Party, there is a movement based on real populism.” The group takes their name from the British groupU.K. Uncut, which seeks to use public protests to shame corporations into paying taxes. A list compiled by Forbes showed that Bank of America paid no taxes on $4.4 billion in income in 2009.

UK UNCUT
http://www.thenation.com/article/158282/how-build-progressive-tea-party
How to Build a Progressive Tea Party
by Johann Hari | February 3, 2011

Imagine a parallel universe where the Great Crash of 2008 was followed by a Tea Party of a very different kind. Enraged citizens gather in every city, week after week—to demand the government finally regulate the behavior of corporations and the superrich, and force them to start paying taxes. The protesters shut down the shops and offices of the companies that have most aggressively ripped off the country. The swelling movement is made up of everyone from teenagers to pensioners. They surround branches of the banks that caused this crash and force them to close, with banners saying, You Caused This Crisis. Now YOU Pay. As people see their fellow citizens acting in self-defense, these tax-the-rich protests spread to even the most conservative parts of the country. It becomes the most-discussed subject on Twitter. Even right-wing media outlets, sensing a startling effect on the public mood, begin to praise the uprising, and dig up damning facts on the tax dodgers.

Instead of the fake populism of the Tea Party, there is a movement based on real populism. It shows that there is an alternative to making the poor and the middle class pay for a crisis caused by the rich. It shifts the national conversation. Instead of letting the government cut our services and increase our taxes, the people demand that it cut the endless and lavish aid for the rich and make them pay the massive sums they dodge in taxes. This may sound like a fantasy—but it has all happened. The name of this parallel universe is Britain. As recently as this past fall, people here were asking the same questions liberal Americans have been glumly contemplating: Why is everyone being so passive? Why are we letting ourselves be ripped off? Why are people staying in their homes watching their flat-screens while our politicians strip away services so they can fatten the superrich even more?

And then twelve ordinary citizens—a nurse, a firefighter, a student, a TV researcher and others—met in a pub in London one night and realized they were asking the wrong questions. “We had spent all this energy asking why it wasn’t happening,” says Tom Philips, a 23-year-old nurse who was there that night, “and then we suddenly said, That’s what everybody else is saying too. Why don’t we just do it? Why don’t we just start? If we do it, maybe everybody will stop asking why it isn’t happening and join in. It’s a bit like that Kevin Costner film Field of Dreams. We thought, If you build it, they will come.”

The new Conservative-led government in Britain is imposing the most extreme cuts to public spending the country has seen since the 1920s. The fees for going to university are set to triple. Children’s hospitals like Great Ormond Street are facing 20 percent cuts in their budgets. In London alone, more than 200,000 people are being forced out of their homes and out of the city as the government takes away their housing subsidies. Amid all these figures, this group of friends made some startling observations. Here’s one. All the cuts in housing subsidies, driving all those people out of their homes, are part of a package of cuts to the poor, adding up to £7 billion. Yet the magazine Private Eye reported that one company alone—Vodafone, one of Britain’s leading cellphone firms—owed an outstanding bill of £6 billion to the British taxpayers. According to Private Eye, Vodaphone had been refusing to pay for years, claiming that a crucial part of its business ran through a post office box in ultra-low-tax Luxembourg. The last Labour government, for all its many flaws, had insisted it pay up.

But when the Conservatives came to power, David Hartnett, head of the British equivalent of the Internal Revenue Service, apologized to rich people for being “too black and white about the law.” Soon after, Vodafone’s bill was reported to be largely canceled, with just over £1 billion paid in the end. Days later George Osborne, the finance minister, was urging people to invest in Vodafone by taking representatives of the company with him on a taxpayer-funded trip to India—a country where that company is also being pursued for unpaid taxes. Vodafone and Hartnett deny this account, claiming it was simply a longstanding “dispute” over fees that ended with the company paying the correct amount. The government has been forced under pressure to order the independent National Audit Office to investigate the affair and to pore over every detail of the corporation’s tax deal. “It was clear to us that if this one company had been made to pay its taxes, almost all these people could have been kept from being forced out of their homes,” says Sam Greene, another of the protesters. “We keep being told there’s no alternative to cutting services. This just showed it was rubbish. So we decided we had to do something.”

They resolved to set up an initial protest that would prick people’s attention. They called themselves UK Uncut and asked several liberal-left journalists, on Twitter (full disclosure: I was one of them), to announce a time and place where people could meet “to take direct action protest against the cuts and show there’s an alternative.” People were urged to gather at 9:30 am on a Wednesday morning outside the Ritz hotel in central London and look for an orange umbrella. More than sixty people arrived, and they went to one of the busiest Vodafone stores—on Oxford Street, the city’s biggest shopping area—and sat down in front of it so nobody could get in. “What really struck me is that when we explained our reasons, ordinary people walking down Oxford Street were incredibly supportive,” says Alex Miller, a 31-year-old nurse. “People would stop and tell us how they were terrified of losing their homes and their jobs—and when they heard that virtually none of it had to happen if only these massive companies paid their taxes, they were furious. Several people stopped what they were doing, sat down and joined us. I guess it’s at that point that I realized this was going to really take off.”

That first protest grabbed a little media attention—and then the next day, in a different city, three other Vodafone stores were shut down in the northern city of Leeds, by unconnected protests. UK Uncut realized this could be replicated across the country. So the group set up a Twitter account and a website, where members announced there would be a national day of protest the following Saturday. They urged anybody who wanted to organize a protest to e-mail them so it could be added to a Google map. Britain’s most prominent tweeters, such as actor Stephen Fry, joined in. That Saturday Vodafone’s stores were shut down across the country by peaceful sit-ins. The crowds sang songs and announced they had come as volunteer tax collectors. Prime Minister David Cameron wants axed government services to be replaced by a “Big Society,” in which volunteers do the jobs instead. So UK Uncut announced it was the Big Society Tax Collection Agency.

The mix of people who turned out was remarkable. There were 16-year-olds from the housing projects who had just had their £30-a-week subsidy for school taken away. There were 78-year-olds facing the closure of senior centers where they can meet their friends and socialize. A chuckling 64-year-old woman named Mary James said, “The scare stories will say this protest is being hijacked by anarchists. If anything, it’s being hijacked by pensioners!” They stopped passers-by to explain why they were protesting by asking, “Sir, do you pay your taxes? So do I. Did you know that Vodafone doesn’t?” The police looked on, bemused. There wasn’t much they could do: in a few places, they surrounded the Vodafone stores before the protesters arrived, stopping anyone from going in or out—in effect doing the protesters’ job for them. One police officer asked me how this tax dodge had been allowed to happen, and when I explained, he said, “So you mean I’m likely to lose my job because these people won’t pay up?”

UK Uncut organized entirely on Twitter, asking what it should do next and taking votes. There was an embarrassment of potential targets: the National Audit Office found in 2007 that a third of the country’s top 700 corporations paid no tax at all. UK Uncut decided to expose and protest one of the most egregious alleged tax dodgers: Sir Philip Green. He is the ninth-richest man in the country, running some of the leading High Street chain stores, including Topshop, Miss Selfridge and British Home Stores. Although he lives and works in Britain, and his companies all operate on British streets, he avoids British taxes by claiming his income is “really” earned by his wife, who lives in the tax haven of Monaco. In 2005 the BBC calculated that he earned £1.2 billion and paid nothing in taxes—dodging more than £300 million in taxes.

Far from objecting, Cameron’s government appointed Green as an official adviser, with special responsibility for “cutting waste.” So UK Uncut drew a direct line from Green’s tax exemption to the cuts in services for ordinary people. For example, Cameron had just announced the closure of the school sports partnership, which makes it possible for millions of schoolchildren to engage in healthy, competitive exercise. The protesters pointed out that if Green was made to pay taxes, the entire program could be saved, with more than £120 million left as small change. So they declared a day of action.

At the London protests against Green, everybody was asked to turn up at the largest branch of Topshop—again on Oxford Street—and mill around like ordinary shoppers. Once a whistle was blown, they were to start chanting, put on sports clothing to dramatize what was being taken away from schoolchildren and sit down by the counters to stop sales. It was the Saturday before Christmas. There was a strange frisson as everyone turned up and looked around. It was impossible to tell who was a shopper and who was a protester: they looked the same. The whistle blew—and they shut down one of the largest retail stores in Europe.

Across Britain, the same thing was happening. Even in Tunbridge Wells—a town synonymous with ultraconservatism—the Vodafone store was blockaded. Again, many people spontaneously joined in. The protests were all over that evening’s TV news. It was the most-read story on the websites of the BBC and the country’s most-read newspaper, the Daily Mail. The prime-time Channel 4 News reported, “A more eloquent and informed group of demonstrators would be hard to come across and one is struck by the wide appeal across ages and incomes, of what they had to say.” The uprisings in Tunisia and Egypt have shown how social media can be used to conduct the unfocused rage of a scattered population and harden it into a weapon. UK Uncut shows the same tactics can be used in a democracy—and there is the same need. Unemployment in the United States is at the same level as in Egypt before the uprising: 9 percent.

The UK Uncut message was simple: if you want to sell in our country, you pay our taxes. They are the membership fee for a civilized society. Most of the protesters I spoke with had never attended a demonstration before, but were driven to act by the rising unemployment, insecurity and austerity that are being outpaced only by rising rewards for the superrich. Ellie Mae O’Hagan, a 25-year-old office worker in Liverpool, one of the most economically depressed places in the country, said she was “absolutely outraged to discover that I was paying more than Philip Green in taxes.” She added, “I could see what all the cuts were doing. My brother had been made redundant, loads of my friends were unemployed and I could see it all getting worse, while these bankers get even bigger bonuses. And I thought, Right, you’ve got to do something. So I e-mailed UK Uncut to ask if there was a protest happening in Liverpool. They said, Not yet, so you organize one. So I spent forty-eight hours arranging one. And a hundred people turned up—an amazing mixture of people, who I had never met, and who didn’t know each other—and we shut down both Vodafone stores. Suddenly, it felt like we weren’t passive anymore. We were standing up for ourselves.”

At every protest, a clear and direct line was drawn from tax avoidance to real people’s lives. If they pay their bill, you won’t be forced out of your home. If they pay their bill, your grandmother won’t lose her government support. If they pay their bill, our children’s hospitals won’t be slashed. The protests began to influence the political debate. Public opinion had already been firmly for pursuing tax dodgers, with 77 percent telling YouGov pollsters there should be a crackdown. But by dramatizing and demonstrating this mood, the protesters forced it onto the agenda—and stripped away Cameron’s claims that there was no alternative to his cuts.

Polly Toynbee is one of Britain’s most influential columnists: imagine Maureen Dowd with principles instead of snark. Toynbee attended the London protests and was manhandled out of Topshop by security guards. She reported later that the protests were being watched very nervously on Downing Street. “It is no coincidence that the government immediately hurried out a ‘clampdown’ on tax avoidance, collecting £2 billion,” she tells me, “or that [its coalition partners] the Liberal Democrats suddenly remembered this was one of their big commitments. Of course, that sum is only a drop in the ocean. But this really was a jolt to the political system. It was hugely important.”

But perhaps the most striking response was from the right. One of Britain’s most famous businessmen, Duncan Bannatyne, came out in support of the protests, declaring, “We need to rebel against tax dodgers…as Government won’t.” The Financial Times conceded that “the protesters have a point” but then grumbled about them. Surprisingly, the Daily Mail, Britain’s most right-wing newspaper, became one of the movement’s most sympathetic allies. The editors could see that their Middle England readers were outraged to be paying more taxes than the superrich. So they ran their own exposé on Philip Green’s tax affairs, along with straightforward and detailed reporting of the protests.

The only part of the media that attacked UK Uncut outright was, predictably, Rupert Murdoch’s empire. This isn’t surprising given that his company, News International, is one of the world’s most egregious tax dodgers, contributing almost nothing to the US or UK treasuries. His tabloid the Sun accused UK Uncut of being a “group of up to 30,000 anarchists” scheming “to bring misery to millions of Christmas shoppers,” with plans to “set off stink bombs, leave mouldy cheese in clothes and rack up huge sales at tills and then refuse to pay.” After one of the people named in the article reported the Sun to the Press Complaints Commission, the newspaper was forced to retract the article by removing it from its website.

But these smear jobs were the best the right could muster. Conservatives ran into hiding, with almost nobody prepared to defend tax avoiders. Only a few stray voices emerged: ultraconservative blogger Tim Montgomerie, regarded as highly influential with Cameron; and Labour MP Tom Harris, our equivalent of a Blue Dog Democrat. They argued that tax avoidance is legal and therefore fine. The protesters responded that they were obviously arguing for a change in the law.

The tax-evasion defenders also tried to argue that a crackdown would “drive away” corporations, to the detriment of the nation. But the corporations are already, for all intents and purposes, “away.” They pay nothing to Britain. They have relocated everything they can. They can’t, however, physically relocate their British shops to Bangalore. It’s impossible. That remnant can certainly be taxed. What are they going to do?

Besides, the right’s claim that enforcing fair taxes drives away the rich was recently tested—and proved wrong. Toward the end of the last Labour government, officials increased the top tax rate to 50 percent. (This is still far short of the 90 percent levied on US taxpayers by President Eisenhower, during the biggest boom in American history.) Conservatives predicted disaster: London Mayor Boris Johnson said it would reduce the city to a ghost town as bankers fled to Switzerland. Yet after the taxes rose, the number of rich people applying for visas to leave Britain for Switzerland actually fell by 7 percent.

After the empirical argument collapsed, a few on the right tried to shift the argument to a moral one. They said that Green “earns all his money on his own,” so why should he have to pay any of it back to the rest of us? I responded on TV and in a blog post by suggesting a small experiment. Let’s take one branch of Topshop, and for twelve months we’ll deny any services funded by collective taxation to that store. When the rubbish piles up, we won’t send garbage men to collect it. When the rat outbreak begins, we won’t send pest control. When they catch a shoplifter, we won’t send the police. When there’s a fire, we won’t send the fire brigade. When suppliers want to get their goods to the store, there may be a problem: we won’t maintain the roads. When the employees get sick, we won’t treat them in the publicly funded hospitals. Then let Philip Green come back and tell us he does it all himself.

The last argument of the defenders has been to say it’s impossible to do anything about tax havens, so we’ll just have to accept them. But this is false. After the 9/11 attacks, the world—under US pressure—passed virtually universal laws to freeze Al Qaeda–related accounts and so prevent them from stashing or accessing money from tax havens. Where there is political will, they can be brought to heel rapidly. In the early 1960s Monaco was refusing to hand over details of French tax dodgers to the French authorities. President Charles de Gaulle surrounded the country with tanks and cut off its water supply until it relented. On a more prosaic level, many countries have integrated into their law something called a General Anti-Avoidance Principle, which stipulates that any act contrary to the spirit of the nation’s tax laws is illegal. It slams shut most loopholes overnight.

There has been an obsessive hunt by the media to discover who UK Uncut “really are.” They assume there must be secretive leaders pulling the strings somewhere. But the more I dug into the movement, the more I realized this is a misunderstanding. The old protest movements were modeled like businesses, with a CEO and a managing board. This protest movement, however, is shaped like a hive of bees, or like Twitter itself. There is no center. There is no leadership. There is just a shared determination not to be bilked, connected by tweets. Every decision made by UK Uncut is open and driven by the will of its participants. Alongside many people who had never protested, activists from across the spectrum have poured into the movement, from the students occupying their universities to protest the massive hike in fees, to antipoverty groups like War on Want, to trade unions. Indeed, even the trade union at Britain’s IRS came out in support, with ordinary tax collectors rebelling against their bosses for letting the rich wriggle out of taxes.

Think of it as an open-source protest, or wikiprotest. It uses Twitter as the basic software, but anyone can then mold the protest. The Western left has been proud of its use of social media and blogging, but all too often this hasn’t amounted to much more than clicktivism. By contrast, these protesters have tried at every turn to create a picture of George Osborne, Cameron’s finance minister, sitting in his office, about to sign off on another big tax break for a rich person, paid for by cuts to the rest of us. Is a big Facebook group going to stop him? No. Is an angry buzz on the blogosphere going to stop him? No. But what these protesters have done—putting all the online energy into the streets and straight into the national conversation—just might. And by creating a media buzz, it draws in people from far beyond the tech-savvy Twitterverse, with older activist groups—from trade unions to charities—clamoring to join.

As one UK Uncut participant, Becky Anadeche, explains, “So many campaigns rely on the premise that the less you ask somebody to do, the more likely they are to do it. This campaign has proved the opposite. People who have never even been on a protest before have been organizing them.”

British liberals and left-wingers have been holding marches and protests for years and been roundly ignored. So why did UK Uncut suddenly gain such traction? Alex Higgins, another protester, explains, “It’s because we broke the frame that people expect protest to be confined to. Suddenly, protesters were somewhere they weren’t supposed to be—they were not in the predictable place where they are tolerated and regarded as harmless by the authorities. If UK Uncut had just consisted of a march on Whitehall [where government departments are located], where we listened to a few speakers and went home, nobody would have heard of it. But this time we went somewhere unanticipated. We disrupted something they really value: trade.” A wave of bankers’ bonuses is due to be announced in February, and it would be surprising if UK Uncut did not respond with a similar program of direct action.

Can this model be transferred to the United States? Remember that a few months ago, Brits were as pessimistic about the possibility of a left-wing rival to the Tea Party as Americans are now. Of course, there are differences in political culture and tax law structure and enforcement, but there are also strong parallels. In the United States the same three crucial factors that created UK Uncut are in place. First, at the state level, Americans are facing severe budget cuts, causing the recession to worsen. Nobel Prize–winning economist Paul Krugman says state governors are acting like “50 Herbert Hoovers…slashing spending in a time of recession, often at the expense both of their most vulnerable constituents and of the nation’s economic future.”

Second, most of these cuts could be prevented simply by requiring superrich individuals and corporations to pay their taxes. The Government Accountability Office (GAO) calculated in 2008 that eighty-three of the 100 biggest US corporations hide fortunes in tax havens. And even without these shelters, the rich have been virtually exempted from taxes across America. Billionaire Warren Buffet recently conducted a straw poll in his office and found he paid a lower proportion of his income in taxes than anybody else there—and considerably less than his secretary. Indeed, tax expert Nicholas Shaxson says that in many ways “America itself is a tax haven for many rich people.” WikiLeaks is poised to release the details of a whole raft of corporations and banks using tax havens in the Cayman Islands, laying out the dodging for all to see. And third, public opinion is firmly behind going after the rich and corporations. A poll in January for 60 Minutes and Vanity Fair asked Americans which policy they would choose to reduce the deficit. By far the most popular, chosen by 61 percent of respondents, was to increase taxes on the rich. The next most popular, chosen by 20 percent, was to cut military spending. Other polls bear this out. So Americans are facing the same cuts as the Brits. They are being ripped off by corporations and rich people just like the Brits. And they are as angry as the Brits. “All it takes,” says Tom Philips, “is for a few people to do what we did in that pub that night and light the touch paper.”

During the 2008 presidential campaign, Barack Obama promised to go after tax havens. He pointed out that one building in the Cayman Islands claims to house 12,000 corporations, and said: “That’s either the biggest building or the biggest tax scam on record.” He promised he would “pay for every dime” of his spending and tax cut proposals “by closing corporate loopholes and tax havens.” Yet in office he hasn’t done this. In 2009 Congress passed the Foreign Accounts Tax Compliance Act, which shuffled a few inches forward but still doesn’t even require the automatic exchange of information from tax havens that EU law requires as a matter of right. So if a rich person opens a tax account in the Cayman Islands and hides his money there, the IRS isn’t told and doesn’t know. Yes, President Obama’s deficit commission made a few passing noises about closing tax loopholes, but the bulk of its recommendations and energy focused on going after benefits for the poor and middle class, like Social Security.

What should US Uncut target? “It’s important to go after brand names that exist in every city in America,” says Tom Purley, a UK Uncut participant. “The key to our success was that it was so easily replicated. People could do it anywhere. It took something that seems like a remote issue and connected it to a place they see every day.” Most of the companies that engage in the worst tax avoidance in the United States are Big Pharma and financial companies, which don’t have stores. But the GAO also named a number of major brands that are exploiting tax havens. They include Apple, Bank of America, Best Buy, ExxonMobil, FedEx (whose president, Frederick Smith, was named by Obama as the businessman he most admires), Kraft Foods, McDonald’s, Safeway and Target. That’s a wealth of potential targets. American citizens should ask themselves: I work hard and pay my taxes, so why don’t the richest people and the corporations? Why should I pick up the entire tab for keeping the nation running? Why should the people who can afford the most pay the least? If you’re happy with that situation, you can stay at home and leave the protesting to the Tea Party. For the rest, there’s an alternative. For too long, progressive Americans have been lulled into inactivity by Obama’s soaring promises, which come to little. As writer Rebecca Solnit says, “Hope is not a lottery ticket you can sit on the sofa and clutch, feeling lucky…. Hope is an ax you break down doors with in an emergency.” UK Uncut has just shown Americans how to express real hope—and build a left-wing Tea Party.

NOTE: “Participating in a botnet with the intention of shutting down a Web site violates the Computer Fraud and Abuse Act,” said Jennifer Granick, a lawyer at Zwillinger Genetski who specializes in Internet law and hacking cases. “The thing people need to understand is that even if you have a political motive, it doesn’t change the fact that the activity is unlawful.” Also, LOIC protesters’ IP addresses are not masked, so attacks can be traced back to the computers launching them.

ANONYMOUS ATTACKS
http://wlcentral.org/node/528
http://www.guardian.co.uk/world/2010/dec/08/wikileaks-visa-mastercard-operation-payback
WikiLeaks supporters disrupt Visa and MasterCard sites in ‘Operation Payback’
by Esther Addley and Josh Halliday / 9 December 2010

It is, according to one breathless blogger, “the first great cyber war”, or as those behind it put it more prosaically: “The major shitstorm has begun.” The technological and commercial skirmishes over WikiLeaks escalated into a full-blown online assault yesterday when, in a serious breach of internet security, a concerted online attack by activist supporters of WikiLeaks succeeded in disrupting MasterCard and Visa. The acts were explicitly in “revenge” for the credit card companies’ recent decisions to freeze all payments to the site, blaming illegal activity. Though it initially would acknowledge no more than “heavy traffic on its external corporate website”, MasterCard was forced to admit last night that it had experienced “a service disruption to the MasterCard directory server”, which banking sources said meant disruption throughout its global business. Later, Visa’s website was also inaccessible. A spokeswoman for Visa said the site was “experiencing heavier than normal traffic” and repeated attempts to load the Visa.com site was met without success. MasterCard said its systems had not been compromised by the “concentrated effort” to flood its corporate website with “traffic and slow access”. “We are working to restore normal service levels,” it said in a statement. “There is no impact on our cardholders’ ability to use their cards for secure transactions globally.”

In an attack referred to as Operation Payback, a group of online activists calling themselves Anonymous said they had orchestrated a DDoS (distributed denial of service) attack on the site, and issued threats against other businesses which have restricted WikiLeaks’ dealings. Also targeted in a dramatic day of internet activity was the website of the Swedish prosecution authority, which is currently seeking to extradite the WikiLeaks founder, Julian Assange, on sex assault charges, and that of the Stockholm lawyer who represents them. The sites of the US senator Joe Lieberman and the former Alaska governor Sarah Palin, both vocal critics of Assange, were also attacked and disrupted, according to observers. Palin last night told ABC news that her site had been hacked. “No wonder others are keeping silent about Assange’s antics,” Palin emailed ABC. “This is what happens when you exercise the First Amendment and speak against his sick, un-American espionage efforts.”

An online statement from activists said: “We will fire at anything or anyone that tries to censor WikiLeaks, including multibillion-dollar companies such as PayPal … Twitter, you’re next for censoring #WikiLeaks discussion. The major shitstorm has begun.” Twitter has denied censoring the hashtag, saying confusion had arisen over its “trending” facility. A Twitter account linked to the activists was later suspended after it claimed to have leaked credit card details online. Though DDoS attacks are not uncommon by groups of motivated activists, the scale and intensity of the online assault, and the powerful commercial and political critics of WikiLeaks ranged in opposition to the hackers, make this a high-stakes enterprise that could lead to uncharted territory in the internet age. A spokesman for the group, a 22-year-old from London who called himself Coldblood, told the Guardian it was acting for the “chaotic good” in defence of internet freedom of speech. It has been distributing software tools to allow anyone with a computer and an internet connection to join in the attacks. The group has already succeeded this week in bringing down the site of the Swiss bank PostFinance, which was successfully attacked on Monday after it shut down one of WikiLeaks’ key bank accounts, accusing Assange of lying. A PostFinance spokesman, Alex Josty, told Associated Press the website had buckled under a barrage of traffic. “It was very, very difficult, then things improved overnight, but it’s still not entirely back to normal.”

Other possible targets include Amazon, which removed WikiLeaks’ content from its EC2 cloud on 1 December, and EveryDNS.net, which suspended dealings with the site two days later. PayPal has also been the subject of a number of DDoS attacks – which often involve flooding the target site with requests so that it cannot cope with legitimate communication – since it suspended all payments to WikiLeaks last week. A PayPal spokesman told the Guardian that while a site called ThePayPalBlog.com had been successfully silenced for a few hours, attempts to crash its online payment facilities had been unsuccessful. The site suggested today its decision to freeze payments had been taken after it became aware of the US state department’s letter saying WikiLeaks’s activities were deemed illegal in the US. Tonight PayPal said that it was releasing the money held in the WikiLeaks account, although it said the account remains restricted to new payments. A statement from PayPal’s general counsel, John Muller, sought to “set the record straight”. He said that the company was required to comply with laws around the world and that the WikiLeaks account was reviewed after “the US department of state publicised a letter to WikiLeaks on November 27, stating that WikiLeaks may be in possession of documents that were provided in violation of US law. PayPal was not contacted by any government organisation in the US or abroad. We restricted the account based on our Acceptable Use Policy review. Ultimately, our difficult decision was based on a belief that the WikiLeaks website was encouraging sources to release classified material, which is likely a violation of law by the source. “While the account will remain restricted, PayPal will release all remaining funds in the account to the foundation that was raising funds for WikiLeaks. We understand that PayPal’s decision has become part of a broader story involving political, legal and free speech debates surrounding WikiLeaks’ activities. None of these concerns factored into our decision. Our only consideration was whether or not the account associated with WikiLeaks violated our Acceptable Use Policy and regulations required of us as a global payment company. Our actions in this matter are consistent with any account found to be in violation of our policies.” PayPal did not explain how WikiLeaks violated this policy in their statement and requests for further information went unanswered.

There have been accusations that WikiLeaks is being targeted for political reasons, a criticism repeated yesterday after it emerged that Visa had forced a small IT firm which facilitates transfers made by credit cards including Visa and MasterCard, and has processed payments to WikiLeaks, to suspend all of its transactions – even those involving other payees. Visa had already cut off all donations being made through the firm to WikiLeaks. DataCell, based in Iceland, said it would take “immediate legal action” and warned that the powerful “duopoly” of Visa and MasterCard could spell “the end of the credit card business worldwide”. Andreas Fink, its chief executive, said: “Putting all payments on hold for seven days or more is one thing, but rejecting all further attempts to donate is making the donations impossible. “This does clearly create massive financial losses to WikiLeaks, which seems to be the only purpose of this suspension. This is not about the brand of Visa, this is about politics and Visa should not be involved in this … It is obvious that Visa is under political pressure to close us down.”

Operation Payback, which refers to itself “an anonymous, decentralised movement that fights against censorship and copywrong”, argues that the actions taken by Visa, MasterCard and others “are long strides closer to a world where we cannot say what we think and are unable to express our opinions and ideas. We cannot let this happen. This is why our intention is to find out who is responsible for this failed attempt at censorship. This is why we intend to utilise our resources to raise awareness, attack those against and support those who are helping lead our world to freedom and democracy.” The MasterCard action was confirmed on Twitter at 9.39am by user @Anon_Operation, who later tweeted: “We are glad to tell you that http://www.mastercard.com/ is down and it’s confirmed! #ddos #WikiLeaks Operation: Payback (is a bitch!) #PAYBACK”. The group, Coldblood said, is about 1,000-strong. While most of its members are teenagers who are “trying to make an impact on what happens with the limited knowledge they have”, others include parents and IT professionals, he said. Anonymous was born out of the influential internet messageboard 4chan in 2003, a forum popular with hackers and gamers. The group’s name is a tribute to 4chan’s early days, when any posting to its forums where no name was given was ascribed to “Anonymous”. But the ephemeral group, which picks up causes “whenever it feels like it”, has now “gone beyond 4chan into something bigger”, its spokesman said. There is no real command structure; membership of the group has been described as being “like a flock of birds” – the only way you can identify members is by what they are doing together. Essentially, once enough people on the 4chan message boards decide some cause is worth pursuing in large enough numbers, it becomes an “Anonymous” cause. “We’re against corporations and government interfering on the internet,” Coldblood said. “We believe it should be open and free for everyone. Governments shouldn’t try to censor because they don’t agree with it. Anonymous is supporting WikiLeaks not because we agree or disagree with the data that is being sent out, but we disagree with any from of censorship on the internet.” Last night WikiLeaks spokesman Kristinn Hrafnsson said: “Anonymous … is not affiliated with WikiLeaks. There has been no contact between any WikiLeaks staffer and anyone at Anonymous. We neither condemn nor applaud these attacks. We believe they are a reflection of public opinion on the actions of the targets.”

LOIC
http://en.wikipedia.org/wiki/LOIC
http://mashable.com/2010/12/09/how-operation-payback-executes-its-attacks/
http://nakedsecurity.sophos.com/2010/12/09/low-orbit-ion-cannon-the-tool-used-in-anonops-ddos-attacks/
Hacker toolkits attracting volunteers to defend WikiLeaks
by Vanja Svajcer / December 9, 2010

The attacks are coordinated through the AnonOps webpages, IRC server infrastructure as well as several Twitter accounts. The operation of the voluntary botnet is very simple but it seems to be quite effective. Yesterday, Twitter decided to shut down some of the Twitter accounts inviting users to join the attacks. However, the attack on the main VISA website after the attacks on Mastercard, PayPal and Swiss Bank Post Finance was successfully launched. Following these initial attacks, which seriously influenced the operation of the sites under attack, another attack on Mastercard Securecode card verification program was launched. This attack seriously affected payment service providers and the financial damage for Mastercard still needs to be determined.

Immediately after the AnonOps attacks on the payment processing companies started, a retaliation DDoS attack on AnonOps hosting infrastructure has been launched. Their main site anonops.net is unresponsive at the time of writing this post. It looks like there is an outright war going on. However, contrary to many discussions following the discovery of Stuxnet, the sides in the conflict are not sovereign states but groups of internet users spread around the globe proving that warfare on internet brings out a whole new dimension to the term. Participation in DDoS attacks is illegal in many countries and users accepting the invite by AnonOps are under a serious risk of litigation. Many people believe that privacy on the internet can be somewhat protected, but beware, the source IP addresses of attackers, which will inevitably end up in the target’s website log files, can easily be matched with user’s accounts if ISPs decide to cooperate with the law enforcement agencies.

The workflow of an AnonOps attack is quite simple:
– Visit the AnonOps website to find out about the next target
– Decide you are willing to participate
– Download the required DDoS tool – LOIC
– Configure LOIC in Hive Mind mode to connect to an IRC server
– The attack starts simultaneously, when the nodes in the voluntary botnet receive the command from the IRC server

Since the principle of the operation is already well known I wanted to take a look at the main weapon used to conduct DDoS attacks – LOIC (Low Orbit Ion Cannon). LOIC is an open source tool, written in C# and the project is hosted on the major open source online repositories – Github and Sourceforge. The main purpose of the tool, allegedly, is to conduct stress tests of the web applications, so that the developers can see how a web application behaves under a heavier load. Of course, a stress application, which could be classified as a legitimate tool, can also be used in a DDoS attack. LOIC main component is a HTTP flooder module which is configured through the main application window. The user can specify several parameters such as host name, IP address and port as well as the URL which will be targeted. The URL can also be pseudo-randomly generated. This feature can be used to evade the attack detection by the target’s intrusion prevention systems. The Hive Mind option is responsible for connecting to the IRC server used for attack coordination. Using the Hive Mind mode, AnonOps can launch attacks on any site, not just the one you voluntarily agreed to target. The connection uses a standard HTTP GET request with a configurable timeout and a delay between the attempted connections. Most of the web servers will have a configurable limit on the number of connections they accept and when that limit is reached the server will stop serving all following request which has the same effect as the server being offline. The IRC communication protocol is implemented using the free C# IRC library SmartIRC4Net. There is a Java version of the tool – JavaLoic, which uses a Twitter account as the command and control channel. However, the Java version is much easier to detect using intrusion prevention systems as the attack uses fragmented HTTP requests forming a static string “hihihihihihihihihihihihihihihihihihihihihihi”. Sophos products have been detecting LOIC as a potentially unwanted application since 14 February 2008.

OPERATION PAYBACK
http://news.netcraft.com/archives/2010/12/08/mastercard-attacked-by-voluntary-botnet-after-wikileaks-decision.html

mastercard.com is currently under a distributed denial of service (DDoS) attack, making the site unavailable from some locations.

The attack is being orchestrated by Operation Payback and forms part of an ongoing campaign by Anonymous. They announced the attack’s success a short while ago on their Twitter stream:

Operation Payback is announcing targets via its website, Twitter stream and Internet Relay Chat (IRC) channels. To muster the necessary volume of traffic to take sites offline, they are inviting people to take part in a ‘voluntary’ botnet by installing a tool called LOIC (Low Orbit Ion Cannon – a fictional weapon of mass destruction popularised by computer games such as Command & Conquer). The LOIC tool connects to an IRC server and joins an invite-only ‘hive’ channel, where it can be updated with the current attack target. This allows Operation Payback to automatically reconfigure the entire botnet to switch to a different target at any time.

Yesterday, Operation Payback successfully brought down the PostFinance.ch website after the Swiss bank decided to close Julian Assange’s bank account. Later in the day, they also launched an attack against the Swedish prosecutor’s website, www.aklagare.se. The attack was successful for several hours, but now appears to have stopped. The Director of Prosecution, Ms. Marianne Ny, stated yesterday that Swedish prosecutors are completely independent in their decision making, and that there had been no political pressure. The same group also successfully took down the official PayPal blog last week, after WikiLeaks’ PayPal account was suspended. As more companies distance themselves from WikiLeaks, we would not be surprised to see additional attacks taking place over the coming days. Concurrent attacks against the online payment services of MasterCard, Visa and PayPal would have a significant impact on online retailers, particularly in the run up to Christmas. Although denial of service attacks are illegal in most countries, Operation Payback clearly has a sufficient supply of volunteers who are willing to take an active role in the attacks we have seen so far. They are a force to be reckoned with. A real-time performance graph for http://www.mastercard.com can be viewed here.”

‘DISORGANIZATION’
http://kimmons.tv/blahg/?p=102

“Because none of us are as cruel as all of us.” – Anonymous

One of the many side stories in the ongoing WikiLeaks media circus is that ofAnonymous. Trying to explain Anonymous to the general public is like trying to explain the actions of a schizophrenic sociopathic genius to the average Joe, and expecting him to empathize. Anonymous, and 4chan by extension, have been in the national and world news several times, but most recently due to their support of Julian Assange in the form of orchestrating DDoS attacks on PayPalVISA and MasterCard, who have all refused to process donations for his organization, WikiLeaks.

This article isn’t trying to make a moral judgment of their actions, but simply tries to explain what Anonymous is. Anonymous can’t be called an organization, because it isn’t organized. One could almost refer to it as a ‘disorganization’, if such a noun existed, due to its decentralized nature and lack of leadership. It’s more like a school of piranha which travel along with no leader or particular direction, until something attracts the school and they attack in unison. The first fish to see the target might momentarily lead the pack, but once the rest of the school becomes aware of the target, that leader becomes just another fish in the school. The concept of Anonymous is extremely difficult to explain, due to most people having a clear understanding of the usual structure of an organization. Companies have a CEO. Armies have generals. Countries have presidents or prime ministers or kings. In any case, there is always someone in charge; someone at the top with whom a face can be associated, and likewise credited or blamed.

Anonymous has no leader. It doesn’t even have sub-leaders. It has no face. It is an army comprised completely of foot soldiers, but each soldier knows the mission through a general pervasive awareness. It is also quite usual for not all of Anonymous to agree, and some members simply choose to not participate in whatever ongoing project the group is engaged in. There have even been times where Anonymous is split and attack both sides of an issue, and each other in the process. In his novel Prey, Michael Crichton wrote about the concept of decentralized groups, using nanobots as an example, and how they can be used to solve problems, or wreak havoc. It’s an entertaining and informative way to learn about decentralized systems. If you’re interested in understanding the concept, it’s a good place to start.

As for the motives of Anonymous, it is ostensibly for the laughs. Their targets range from Scientology to Iran to Habbo Hotel. They are just as likely to use their abilities to attack a children’s website as they are to help track down a pedophile. While it is tempting to attribute good intentions to the group, as most of their exploits are often on the side, or at least towards the side of what the majority considers ‘right’, if they had an alignment, it would be chaotic neutral. They usually don’t care if the end results are good or bad, they just care that there are results.

Their main Internet social site is the /b/ channel of 4chan. It is an imageboard where the posting of anything is permissible, aside from child pornography. However, that third rail of the site is regularly stepped on. If you go there, be prepared to see things you don’t want to see. Anonymous have been referred to as the “first Internet-based superconsciousness”, which is an apt description. Think of them as a brain, and the participating members as firing synapses. No one synapse controls the thought process, but when enough of a certain type fire in a particular pattern, the brain forms a thought, which is then acted on.

Anonymous have squarely come down on the side of WikiLeaks in their current dustup. While they can be a powerful ally or dreadful enemy, they generally lose interest when another topic which piques their interest comes along. It is hard to like or dislike them, since in a given year they are equally likely to do something which either outrages you, or makes you want to cheer them on. I view them as one would a coin toss; equally likely to elate or disappoint, and truly not caring about the outcome.

A very short list of some of Anonymous’ work:
– Hacking Sarah Palin’s Yahoo! account
– Trolling Fox News
– Disagreeing with Gene Simmons of KISS

SHIFTING TACTICS
http://www.wired.com/threatlevel/2010/12/wikileaks-attacks-sputter/
Pro-WikiLeaks Attacks Sputter After Counterattacks, Dissent Over Tactics
by Ryan Singe / December 10, 2010

The attacks by pro-WikiLeaks supporters against companies that cut off services to the secret-spilling website have fallen into disrepair Friday, as the attackers attempt to decide the future of the so-called “Operation Payback.” Much of the organization and communication among the group, which calls itself Anonymous, was taking place on chat rooms hosted on anonops.net. On Thursday, one room hosted more than 2,000 participants, while on Friday most of the rooms seem to have been shut down due to counterattacks. The few protestors able to connect — less than 100 on Friday – appear to be devoting their energies to combat a counter-protester who keeps blasting the message: “WHAT YOU’RE DOING IS ILLEGAL. STOP NOW AS YOU SUCK AT IT. WIKILEAKS SUCKS AS WELL.”

Adding to the confusion, the site anonops.info is reporting that their DNS provider ENOM has cut services to the domain hosting the chat channels, and that the operation is suffering from its own popularity and outside attacks. Still the group is struggling on, and in a chatroom that was still operable, one member requested that protesters register their vote for the next target, using an embeddable Google form to collect the info.

The group made headlines around the world Wednesday when the ragtag band of computer activists successfully overwhelmed both Visa.com and MasterCard.com, the homepages of the two giant payment processors. The attack cut off the ability to make donations to WikiLeaks using those companies’ cards. The companies said they made the decision after deciding that WikiLeaks’ publication of secret U.S. diplomatic cables provided to it by a whistleblower violated their terms of service, though the site has not been charged with a crime. The companies’ payment systems were not affected by the flood of traffic. Anonymous then shifted their focus to PayPal — which had also shut off the ability to donate to WikiLeaks — where they briefly disrupted the popular online payment firm by targeting the company’s payment system directly.

The attacks aren’t hacks in the real sense of the word, since they don’t penetrate the companies’ computer systems and leave no lasting damage. They simply overwhelm servers with web requests, in an attempt to make a site inaccessible to real users. The attacks on Visa.com and MasterCard.com were, in effect, an internet-age version of taking over a college campus building as a protest — potentially illegal, but leaving no lasting damage. That distinction was lost on many, and even the august New York Times used the word “cyberwar” in its lead sentence in its report on the attacks Thursday.

Parts of Anonymous seemed to realize that it was losing in the propaganda war, which was exacerbated by media reports that the group would be attacking Amazon.com, which cut off WikiLeaks from Amazon’s robust web-hosting service.  In a press release, someone purporting to speak for the group tried to explain that the purpose of the attacks were to raise awareness, not mess with Christmas shopping: “[T]he point of Operation: Payback was never to target critical infrastructure of any of the companies or organizations affected. Rather than doing that, we focused on their corporate websites, which is to say, their online public face’. It is a symbolic action — as blogger and academic Evgeny Morozov put it, a legitimate expression of dissent.”

As for the reported attacks on Amazon.com, the press release said the group refrained because they didn’t want to be seen as disrupting Christmas. (An attack would not likely have a chance against Amazon, whose infrastructure is so good that it rents it out to other companies.) “Simply put, attacking a major online retailer when people are buying presents for their loved ones, would be in bad taste. The continuing attacks on PayPal are already tested and preferable: while not damaging their ability to process payments, they are successful in slowing their network down just enough for people to notice and thus, we achieve our goal of raising awareness.”

While these are smart public relations sentiments, the Anonymous attacks on PayPal that started on Wednesday night and continue (albeit in much smaller volume) on Friday morning, went after PayPal’s payment infrastrucure (technically, its payment API, which merchants use to communicate with PayPal.com), not the website. Anonymous members made it clear in one heavily used chat room Thursday that they were gunning to shut PayPal down, not simply “slow down” the service.

Another communique, perhaps unofficial, re-published by BoingBoing Thursday night, announced that Anonymous would be halting the denial of service attacks and instead turning their attention to the leaked cables. The idea was for Anonymous to spend its time looking for little reported revelations in the cables, create videos and stories about them, and bombard sites, including YouTube, with links to them. The FBI has said they are looking into the attacks, and already Dutch police have arrested a 16 year-old boy in connection with the attacks. Two people involved in Anonymous’s previous attacks on Scientology were convicted on jailed on charges of violating federal computer crime statutes. Those who join in the attacks using their own computers and IP addresses that can be traced back to them are making themselves very vulnerable to similar prosecutions. Few who are part of Anonymous are actual “hackers,” and instead join in the attacks by running specialized software provided by more technically adept members. Instruction for which sites to target and when are passed around dedicated online chat channels and websites, creating a sort of online insurgency.

Anonymous’ DDoS tool has an unusual twist, according to 3Crowd CEO and DDOS expert Barrett Lyon, incorporating features that allow members to connect to the botnet voluntarily, rather than mobilizing hijacked zombie machines. It is called LOIC, which stands for “Low Orbit Ion Cannon,” and evolved from an open source website load-testing utility. A new feature called Hivemind was added, which connects LOIC to anonops for instructions, and allows members to add their machines to an attack at will. In a further development, Anonymous members have also created a JavaScript version of the tool, dubbed JS LOIC, which only requires someone to connect to a webpage and press a button to turn their computer into a dedicated attacking machine. However neither that site nor the downloaded software masks a user’s IP address, and the downloadable software has generated complaints from its users that it sucks up all their available bandwidth when it’s in attack mode.


Elizabeth Cook’s artist impression of WikiLeaks founder Julian Assange’s appearance at Westminster Magistrates Court in London, where he was denied bail after appearing on an extradition warrant.

‘INSURANCE’
http://en.wikipedia.org/wiki/Kompromat
http://en.wikipedia.org/wiki/Dead_man’s_switch
http://en.wikipedia.org/wiki/Rubber-hose_cryptanalysis
http://iq.org/~proff/marutukku.org/
http://caml.inria.fr/pub/ml-archives/caml-list/2000/08/6b8b195b3a25876e0789fe3db770db9f.en.html
http://www.bbc.co.uk/news/uk-11937110
http://wlcentral.org/node/505
http://www.theaustralian.com.au/in-depth/wikileaks/dont-shoot-messenger-for-revealing-uncomfortable-truths/story-fn775xjq-1225967241332
http://www.popsci.com/technology/article/2010-12/how-secure-julian-assanges-thermonuclear-insurance-file
How Secure Is Julian Assange’s Insurance File?
by Dan Nosowitz / 12.07.2010

Once your leader has been compared to a Bond villain, you might as well go all the way, right? A few months back, Wikileaks released a giant file that’s been referred to as the “thermonuclear” option, should the organization’s existence be threatened: A huge compendium of some of the most damaging secrets Wikileaks has collected, protected with an intense brand of secure encryption–for use as insurance. With Assange now in police custody on sex crimes charges, the “poison pill” is on everyone’s mind. The pill in question is a 1.4GB file, circulated by BitTorrent. It’s been downloaded tens of thousands of times, no mean feat for what, at the moment, is a giant file with absolutely no use whatsoever. It’s waiting on the hard drives of curious Torrenters, Wikileaks supporters, and (you can bet) government agents worldwide, awaiting the password that’ll open the file to all. Although no one is sure of its contents, the file is speculated to contain the full, un-redacted documents collected by the organization to date (including, some are guessing, new documents on Guantanamo Bay or regarding the financial crisis). It has yet to be cracked, at least not publicly, though there is a hefty amount of activity from those trying, at least a little, to break into it before Assange releases the key.

What makes this so pressing is Assange’s recent arrest in London, on, to say the least, somewhat controversial sex crimes charges in Sweden. There’s been speculation that this could be the lead-up to more severe prosecution–certain American politicians have called for prosecuting Assange for “treason,” apparently not realizing or caring that Assange is an Australian national–and could in turn lead to his releasing of the password for these documents. The file is titled “insurance.aes256,” implying that it’s protected with an AES 256-bit key, one of the strongest in the world. The thing is, there’s no actual way to figure out the type of encryption used. Though there’s no particular reason for Assange to lie about the security he used, it’s something to keep in mind. Let’s assume for the moment that it is indeed an AES-256 encryption, which begs the question: What is AES?

Advanced Encryption Standard
Advanced Encryption Standard, or AES, is a cipher standard which came into wide use in 2001. AES is a block cipher rather than a stream cipher, meaning “blocks” of data are converted into encrypted gibberish, 128 bits at a time. It’s perhaps the most-used block cipher in the world, used by, for example, the Wi-Fi protection known as WPA2. But it came to prominence in 2001 as a result of winning a contest held by the National Institute of Standards and Technology to find a new standard encryption. That led to its adoption by the NSA. That’s right, Assange’s “poison pill” is secured by the U.S. government’s own standard. Though AES is an open and public cipher, it’s the first to be approved by the NSA for “Top Secret” information, the term used for the most dangerous classified information. It is, in short, a tremendously badass form of protection. An AES encryption doesn’t work like, say, a login. The keys are just strings of binary (in the case of AES-256, 256 binary symbols) rather than words or characters, and entering the wrong key won’t simply disallow access — it’ll produce elaborately encoded gibberish. There are three variants of AES, which differ in the size of their keys (128, 192, or 256 bits), though they all use the same 128-bit block size. The size of the key has other implications within the algorithm itself (and slightly increases the encoding time), but mostly, it increases the amount of time needed to break it with what’s called a “brute force attack” (more on that in a bit). The three variants also carry different numbers of “rounds” protecting their keys. Each round is sort of like a layer of further obscurity, making the original data all the more disguised. AES-128 has ten rounds, AES-192 has twelve, and AES-256 has fourteen. Those rounds make it effectively impossible to compare the ciphered data with its key and divine any sort of pattern, since the data has been so thoroughly mangled by, in this case, 14 rounds of highly sophisticated manipulation that it’s unrecognizable. The rounds make an already secure algorithm that much more secure.

Possible Attacks
There are a few different ways of cracking a code like this. Many rely on some other information besides the code given. Side-channel attacks, for example, require an observation of the actual decoding: This might include data like the timing of deciphering, the power it takes to run the computer doing the deciphering, or even the noise a computer makes while deciphering. There are measures you can take to spoof this kind of thing, but even if Assange hasn’t, side-channel attacks won’t work in this case. Another kind of attack, the one that’s come closest, is the related-key attack. This method requires multiple keys, somehow related, working on the same cipher. Cryptographers have actually had some very limited success with related-key attacks, managing to greatly reduce the amount of possible correct passwords–but there are huge caveats to that. Related-key attacks require an advanced knowledge of the cipher and key that cryptographers never really have in the real world, like, say, a ciphered text and a deciphered text. Most modern key generation tools, like TrueCrypt and WPA2, have built-in protections against related-key attacks. And, worst of all, that success, which broke a 256-bit code, required a handicap: an altered encryption with less rounds. A related-key attack won’t work on Assange’s jacket-full-of-dynamite.

The time it takes to crack a code is thought of in terms of how many possible correct passwords there could be. If you’re looking at a 256-bit password with no knowledge of anything, trying to just enter every conceivable combination of 0s and 1s, you’d have a “time” of 2^256. Nobody measures the time it would take to crack one of these codes in hours, months, years, or centuries–it’s too big for all of that, so they just use combinations. Trying to crack all of those combinations manually is called, aptly, a brute force attack, and in a 256-bit instance like this one, it’d take, roughly, a bajillion years to succeed (that being the scientific estimation). Even with all the supercomputers in the world working in concert, with a flawless algorithm for trying the different combinations, it would take hundreds of thousands of years. Your average dude with an Alienware? Forget about it. In the case of the successfully cracked 256-bit code above, the cryptographers only managed to narrow it down to 2^70 possibilities–and they only got through the 11th round. Besides, 2^70 combinations is, in real world terms, not really much closer to cracked than 2^256. It’s still dramatically unfeasible.

The best possible method of cracking the code might be the simplest: Beat it out of him. This is, I swear to God, a real technique, called rubber-hose cryptanalysis. Assange is already in custody–the most efficient way to get his password is, by far, torture. It’s also authentic in that it’s the only type of cracking you’d actually see in a Bond movie. Sure as hell better than waiting several million years for a brute-force attack, right?

DUTCH TEEN ARRESTED for DDoS
http://www.wired.com/threatlevel/2010/12/wikileaks_anonymous_arrests/
http://www.theregister.co.uk/2010/12/09/wikileaks_ddos_arrest/
Dutch police arrest 16-year-old WikiLeaks avenger
by Dan Goodin / 9th December 2010

Dutch police said they have arrested a 16-year-old boy for participating in web attacks against MasterCard and Visa as part of a grassroots push to support WikiLeaks. A press release issued on Thursday (Google translation here) said the unnamed boy confessed to the distributed denial-of-service attacks after his computer gear was seized. He was arrested in The Hague, and is scheduled to be arraigned before a judge in Rotterdam on Friday. It is the first known report of an arrest in the ongoing attacks, which started earlier this week. The arrest came shortly after anonops.net, a Netherlands-hosted website used to coordinate attacks against companies perceived as harming WikiLeaks, was taken offline. A Panda Security researcher said the website was itself the victim of DDoS attacks, but the investigation by the Dutch High Tech Crime Team has also involved “digital data carriers,” according to the release. It didn’t specify the crimes the boy was charged with or say exactly what his involvement in the attacks was. According to researchers, the Low Orbit Ion Cannon tool, which thousands of WikiLeaks sympathizers are using to unleash the DDoS attacks, takes no steps to conceal their IP addresses. It wouldn’t be surprising if attackers who used the application from internet connections at their home or work also receive a call from local law enforcement agencies.

IMPACT ASSESSMENT
http://213.251.145.96/cablegate.html
http://edition.cnn.com/2010/OPINION/12/10/rushkoff.hacking.wikileaks/
Why WikiLeaks hackers are a glitch, not a cyberwar
by Douglas Rushkoff / December 10, 2010

Like a momentary glitch on a flat-panel display, the attacks by hackers calling themselves “Anonymous” came and went. Visa, PayPal, MasterCard and Amazon report no significant damage, and business goes on as usual. The corporations acting to cut off WikiLeaks remain safe. Although many are unsettled by the thought of a site such as WikiLeaks revealing state secrets or a group of anonymous hackers breaking the security of the banking system, events of the past week reveal that such threats are vastly overstated. If anything, the current debacle demonstrates just how tightly controlled the net remains in its current form, as well as just what would have to be done to create the sort of peer-to-peer network capable of upending corporate and government power over mass communication and society itself. While in the short term, WikiLeaks managed to create a public platform for a massive number of classified cables, the site itself was rather handily snuffed out by the people actually in charge of the internet. That’s because however decentralized the net might feel when we are posting to our blogs, it was actually designed around highly centralized indexes called domain name servers. Every time we instruct our browsers to find a web page, they ping one of these authorized master lists in order to know where to go. Removing WikiLeaks or any other site, group, top-level domain or entire nation is as easy as deleting it from that list.

The durability of WikiLeaks’ disclosures rests less in the willingness of many rogue websites to attempt to host them in WikiLeaks’ stead than in the sanctity of traditional news outlets such as The New York Times and Guardian of London, which were also sent the complete package of classified documents and can’t be turned off with the online equivalent of a light switch. Likewise, the server space on which our websites appear is owned by corporations that have the power — if not the true right — to cut anyone off for any reason they choose. It’s private property, after all. Similarly, our means of funding WikiLeaks is limited to companies such as Visa and PayPal, which immediately granted government requests to freeze payments and donations to WikiLeaks. It’s the same way a rogue nation’s assets can be frozen by the banks holding them.

Hackers, angered at this affront to the supposed openness of the internet, then went on the attack. They used their own computers — as well as servers they had been able to commandeer — to wage “denial of service” attacks on the websites of the offending companies. Most of those companies, already armed with defensive capabilities designed to fend off intrusions from the likes of the Russian mob or the Red Army, survived unscathed. Only MasterCard was noticeably, if only temporarily, disrupted. Meanwhile, Facebook and Twitter quickly disabled accounts traced to those using the services to organize their minions.
And all this tamping down occurred on today’s purportedly “net neutral” internet, which offers no real advantage to one corporate-owned server over any other. We can only imagine the effect of these events on those who will decide on whether to maintain net neutrality or give in to the corporations that argue the internet’s distributive capabilities should be reserved for those who can pay for such distribution, by the byte. No, the real lesson of the WikiLeaks affair and subsequent cyberattacks is not how unwieldy the net has become, but rather how its current architecture renders it so susceptible to control from above.

It was in one of the leaked cables that China’s State Council Information office delivered its confident assessment that thanks to “increased controls and surveillance, like real-name registration … The Web is fundamentally controllable.” The internet’s failings as a truly decentralized network, however, merely point the way toward what a decentralized network might actually look like. Instead of being administrated by central servers, it would operate through computers that pinged one another, instead of corporate-owned server farms, and deliver web pages from anywhere, even our own computers. The FCC and other governing bodies may attempt to defang the threat of the original internet by ending net neutrality. But if they did, such a new network — a second, “people’s internet” — would almost certainly rise in its place. In the meantime, the internet we know, love and occasionally fear today is more of a beta version of modeling platform than a revolutionary force. And like any new model, it changes the way we think of the way things work right now. What the internet lacks today indicates the possibilities for what can only be understood as a new operating system: a 21st century, decentralized way of conducting political, commercial and human affairs.

This new operating system, even in its current form, is slowly becoming incompatible with the great, highly centralized institutions of the 20th century, such as central banking and nation states, which still depend on top-down control and artificial monopolies on power to maintain their authority over business and governance. The ease with which PayPal or Visa can cut off the intended recipient of our funds, for example, points the way to peer-to-peer transactions and even currencies that allow for the creation and transmission of value outside the traditional banking system. The ease with which a senator’s phone call can shut down a web site leads network architects to evaluate new methods of information distribution that don’t depend on corporate or government domain management for their effectiveness.
Until then, at the very least, the institutions still wielding power over the way our networks work and don’t work have to exercise their power under a new constraint: They must do so in the light of day.

INSIDE the WIKILEAKS BUNKER
http://cryptome.org/0002/ja-conspiracies.pdf
http://blogs.nature.com/news/thegreatbeyond/2010/12/us_government_wikileaks_respon.html
http://www.bbc.co.uk/news/world-europe-11968386
Going underground at the Wikileaks nerve centre
by Stephen Evans / 10 December 2010

To enter the old nuclear bunker in Stockholm where the Wikileaks secrets are stored is like passing into another surreal world, half way between planet Earth and cyberspace. The entrance on the street is non-descript. It is just a door in a face of rock. Steam billows from pipes alongside into the bitterly cold Swedish air. If you press the bell and get invited in, glass doors open and you walk into a James Bond world of soft lighting. There is the high security of doors which only open when the door behind you has closed, and which need special passes for every few steps of the journey into the inner cavern. But there is also falling water in fountains and pot plants, because people work here, watching monitors from a control room. One of the carpets has the surface of the moon on it to give an added surreal effect.

And then there are the computer servers in a cave, with bare rock walls underneath the wooden houses of Stockholm. In the inner cavern are rows and rows of computer storage cases. And on one of them are the files of Wikileaks, only a fraction of which have so far been made public to the immense embarrassment of politicians who once said something indiscreet to an American diplomat, never dreaming the words would bite back in public. The data centre is owned by a company called Bahnhof, and its founder, Jon Karlung, gave the BBC a tour. Mr Karlung took over the remnant from the Cold War in 2007 and had to dynamite out a further 4,000 cubic metres of rock to make it big enough. It is ultra-secure and needs submarine turbines – just inside the entrance – to generate enough power to maintain a moderate temperature even in the vicious Swedish winter.

But the threat to data is not from physical theft – not from robbers with guns – though they would have a hard job – but from cyber attack. Mr Karlung said they monitored the traffic into and out of the centre. But he said he would be naive to think that people would not try so they had given Wikileaks a separate channel in – its own pipe for data as it were. Does he fear the wrath of the United States because his facility stores such embarrassing information? “Our role must be to keep this service up. We are in Sweden and this service is legal in Sweden and therefore we must stand up for our client,” he said. “We must do everything in our power to keep the service up. I believe in the freedom of speech”. He said his data centre was like the postal service. You do not blame the postman for the content of the letter – nor do you open the letter if you are a postal delivery person. So it is with servers, he thinks: “We should be able to help Wikileaks operate their servers as long as they are not violating any laws. “That principle is the most important thing to stand for”.

“At the moment, for example, we are sitting on 5GB from Bank of America, one of the executive’s hard drives…”

U.S. BANKERS NEXT?
http://www.computerworld.com/s/article/9139180/Wikileaks_plans_to_make_the_Web_a_leakier_place
http://news.cnet.com/8301-27080_3-10450552-245.html
http://news.cnet.com/8301-31921_3-20011106-281.html
http://www.wired.com/threatlevel/2010/09/wikileaks-revolt/
http://www.digitaltrends.com/computing/wikileaks-defectors-form-openleaks-org/
http://www.guardian.co.uk/world/blog/2010/dec/03/julian-assange-wikileaks
http://blogs.forbes.com/andygreenberg/2010/11/29/an-interview-with-wikileaks-julian-assange/
An Interview With WikiLeaks’ Julian Assange
by Andy Greenberg / Nov. 29 2010

Admire him or revile him, WikiLeaks’ Julian Assange is the prophet of a coming age of involuntary transparency, the leader of an organization devoted to divulging the world’s secrets using technology unimagined a generation ago. Over the last year his information insurgency has dumped 76,000 secret Afghan war documents and another trove of 392,000 files from the Iraq war into the public domain–the largest classified military security breaches in history. Sunday, WikiLeaks made the first of 250,000 classified U.S. State Department cables public, offering an unprecedented view of how America’s top diplomats view enemies and friends alike. But, as Assange explained to me earlier this month, the Pentagon and State Department leaks are just the start.

Forbes: To start, is it true you’re sitting on trove of unpublished documents?
Julian Assange: Sure. That’s usually the case. As we’ve gotten more successful, there’s a gap between the speed of our publishing pipeline and the speed of our receiving submissions pipeline. Our pipeline of leaks has been increasing exponentially as our profile rises, and our ability to publish is increasing linearly.

Q. You mean as your personal profile rises?
A. Yeah, the rising profile of the organization and my rising profile also. And there’s a network effect for anything to do with trust. Once something starts going around and being considered trustworthy in a particular arena, and you meet someone and they say “I heard this is trustworthy,” then all of a sudden it reconfirms your suspicion that the thing is trustworthy. So that’s why brand is so important, just as it is with anything you have to trust.

Q. And this gap between your publishing resources and your submissions is why the site’s submission function has been down since October?
A. We have too much.

Q. Before you turned off submissions, how many leaks were you getting a day?
A. As I said, it was increasing exponentially. When we get lots of press, we can get a spike of hundreds or thousands. The quality is sometimes not as high. If the front page of the Pirate Bay links to us, as they have done on occasion, we can get a lot of submissions, but the quality is not as high.

Q. How much of this trove of documents that you’re sitting on is related to the private sector?
A. About fifty percent.

Q. You’ve been focused on the U.S. military mostly in the last year. Does that mean you have private sector-focused leaks in the works?
A. Yes. If you think about it, we have a publishing pipeline that’s increasing linearly, and an exponential number of leaks, so we’re in a position where we have to prioritize our resources so that the biggest impact stuff gets released first.

Q. So do you have very high impact corporate stuff to release then?
A. Yes, but maybe not as high impact… I mean, it could take down a bank or two.

Q. That sounds like high impact.
A. But not as big an impact as the history of a whole war. But it depends on how you measure these things.

Q. When will WikiLeaks return to its older model of more frequent leaks of smaller amounts of material?
A. If you look at the average number of documents we’re releasing, we’re vastly exceeding what we did last year. These are huge datasets. So it’s actually very efficient for us to do that. If you look at the number of packages, the number of packages has decreased. But if you look at the average number of documents, that’s tremendously increased.

Q. So will you return to the model of higher number of targets and sources?
A. Yes. Though I do actually think… [pauses] These big package releases. There should be a cute name for them.

Q. Megaleaks?
A. Megaleaks. That’s good. These megaleaks… They’re an important phenomenon, and they’re only going to increase. When there’s a tremendous dataset, covering a whole period of history or affecting a whole group of people, that’s worth specializing on and doing a unique production for each one, which is what we’ve done. We’re totally source dependent. We get what we get. As our profile rises in a certain area, we get more in a particular area. People say, why don’t you release more leaks from the Taliban. So I say hey, help us, tell more Taliban dissidents about us.

Q. These megaleaks, as you call them, we haven’t seen any of those from the private sector.
A. No, not at the same scale as for the military.

Q. Will we?
A. Yes. We have one related to a bank coming up, that’s a megaleak. It’s not as big a scale as the Iraq material, but it’s either tens or hundreds of thousands of documents depending on how you define it.

Q. Is it a U.S. bank?
A. Yes, it’s a U.S. bank.

Q. One that still exists?
A. Yes, a big U.S. bank.

Q. The biggest U.S. bank?
A. No comment.

Q. When will it happen?
A. Early next year. I won’t say more.

Q. What do you want to be the result of this release?
A. [Pauses] I’m not sure. It will give a true and representative insight into how banks behave at the executive level in a way that will stimulate investigations and reforms, I presume. Usually when you get leaks at this level, it’s about one particular case or one particular violation. For this, there’s only one similar example. It’s like the Enron emails. Why were these so valuable? When Enron collapsed, through court processes, thousands and thousands of emails came out that were internal, and it provided a window into how the whole company was managed. It was all the little decisions that supported the flagrant violations. This will be like that. Yes, there will be some flagrant violations, unethical practices that will be revealed, but it will also be all the supporting decision-making structures and the internal executive ethos that cames out, and that’s tremendously valuable. Like the Iraq War Logs, yes there were mass casualty incidents that were very newsworthy, but the great value is seeing the full spectrum of the war. You could call it the ecosystem of corruption. But it’s also all the regular decision making that turns a blind eye to and supports unethical practices: the oversight that’s not done, the priorities of executives, how they think they’re fulfilling their own self-interest. The way they talk about it.

Q. How many dollars were at stake in this?
A. We’re still investigating. All I can say is it’s clear there were unethical practices, but it’s too early to suggest there’s criminality. We have to be careful about applying criminal labels to people until we’re very sure.

Q. Can you tell me anything about what kind of unethical behavior we’re talking about?
A. No.

Q. You once said to one of my colleagues that WikiLeaks has material on BP. What have you got?
A. We’ve got lots now, but we haven’t determined how much is original. There’s been a lot of press on the BP issue, and lawyers, and people are pulling out a lot of stuff. So I suspect the material we have on BP may not be that original. We’ll have to see whether our stuff is especially unique.

Q. The Russian press has reported that you plan to target Russian companies and politicians. I’ve heard from other WikiLeaks sources that this was blown out of proportion.
A. It was blown out of proportion when the FSB reportedly said not to worry, that they could take us down. But yes, we have material on many business and governments, including in Russia. It’s not right to say there’s going to be a particular focus on Russia.

Q. Let’s just walk through other industries. What about pharmaceutical companies?
A. Yes. To be clear, we have so much unprocessed stuff, I’m not even sure about all of it. These are just things I’ve briefly looked at or that one of our people have told me about.

Q. How much stuff do you have? How many gigs or terabytes?
A. I’m not sure. I haven’t had time to calculate.

Q. Continuing then: The tech industry?
A. We have some material on spying by a major government on the tech industry. Industrial espionage.

Q. U.S.? China?
A. The U.S. is one of the victims.

Q. What about the energy industry?
A. Yes.

Q. Aside from BP?
A. Yes.

Q. On environmental issues?
A. A whole range of issues.

Q. Can you give me some examples?
A. One example: It began with something we released last year, quite an interesting case that wasn’t really picked up by anyone. There’s a Texas Canadian oil company whose name escapes me. And they had these wells in Albania that had been blowing. Quite serious. We got this report from a consultant engineer into what was happening, saying vans were turning up in the middle of the night doing something to them. They were being sabotaged. The Albanian government was involved with another company; There were two rival producers and one was government-owned and the other was privately owned. So when we got this report; It didn’t have a header. It didn’t say the name of the firm, or even who the wells belonged to.

Q. So it wasn’t picked up because it was missing key data.
A. At the time, yeah. So I said, what the hell do we do with this thing? It’s impossible to verify if we don’t even know who it came from. It could have been one company trying to frame the other one. So we did something very unusual, and published it and said “We’ve got this thing, looks like it could have been written by a rival company aiming to defame the other, but we can’t verify it. We want more information.” Whether it’s a fake document or real one, something was going on. Either one company is trying to frame the other, which is interesting, or it’s true, which is also very interesting. That’s where the matter sat until we got a letter of inquiry from an engineering consulting company asking how to get rid of it. We demanded that they first prove that they were the owner.

Q. It sounds like when Apple confirmed that the lost iPhone 4 was real, by demanding that Gizmodo return it.
A. Yes, like Apple and the iPhone. They sent us a screen capture with the missing header and other information.

Q. What were they thinking?
A. I don’t know.

Q. So the full publication is coming up?
A. Yes.

Q. Do you have more on finance?
A. We have a lot of finance related things. Of the commercial sectors we’ve covered, finance is the most significant. Before the banks went bust in Dubai, we put out a number of leaks showing they were unhealthy. They threatened to send us to prison in Dubai, which is a little serious, if we went there.

Q. Just to review, what would you say are the biggest five private sector leaks in WikiLeaks’ history?
A. It depends on the importance of the material vs. the impact. Kaupthing was one of the most important, because of the chain of effects it set off, the scrutiny in Iceland and the rest of Scandinvia. The Bank Julius Baer case was also important. The Kaupthing leak was a very good leak. The loanbook described in very frank terms the credit worthiness of all these big companies and billionaires and borrowers, not just internal to the bank, but a broad spectrum all over the world, an assessment of a whole bunch of businesses around the world. It was quite an interesting leak. It didn’t just expose Kaupthing, it exposed many companies. The bank Julius Baer exposed high net worth individuals hiding assets in the Cayman Islands, and we went on to do a series that exposed bank Julius Baer’s own internal tax structure. It’s interesting that Swiss banks also hide their assets from the Swiss by using offshore bank structuring. We had some quite good stuff in there. It set off a chain of regulatory investigations, possibly resulting in some changes. It triggered a lot of interesting scrutiny.

Q. Regulation: Is that what you’re after?
A. I’m not a big fan of regulation: anyone who likes freedom of the press can’t be. But there are some abuses that should be regulated, and this is one. With regard to these corporate leaks, I should say: There’s an overlap between corporate and government leaks. When we released the Kroll report on three to four billion smuggled out by the former Kenyan president Daniel arap Moi and his cronies, where did the money go? There’s no megacorruption–as they call it in Africa, it’s a bit sensational but you’re talking about billions–without support from Western banks and companies. That money went into London properties, Swiss banks, property in New York, companies that had been set up to move this money. We had another interesting one from the pharmaceutical industry: It was quite self-referential. The lobbyists had been getting leaks from the WHO. They were getting their own internal intelligence report affecting investment regulation. We were leaked a copy. It was a meta-leak. That was quite influential, though it was a relatively small leak–it was published in Nature and other pharma journals.

Q. What do you think WikiLeaks mean for business? How do businesses need to adjust to a world where WikiLeaks exists?
A. WikiLeaks means it’s easier to run a good business and harder to run a bad business, and all CEOs should be encouraged by this. I think about the case in China where milk powder companies started cutting the protein in milk powder with plastics. That happened at a number of separate manufacturers. Let’s say you want to run a good company. It’s nice to have an ethical workplace. Your employees are much less likely to screw you over if they’re not screwing other people over. Then one company starts cutting their milk powder with melamine, and becomes more profitable. You can follow suit, or slowly go bankrupt and the one that’s cutting its milk powder will take you over. That’s the worst of all possible outcomes. The other possibility is that the first one to cut its milk powder is exposed. Then you don’t have to cut your milk powder. There’s a threat of regulation that produces self-regulation. It just means that it’s easier for honest CEOs to run an honest business, if the dishonest businesses are more effected negatively by leaks than honest businesses. That’s the whole idea. In the struggle between open and honest companies and dishonest and closed companies, we’re creating a tremendous reputational tax on the unethical companies. No one wants to have their own things leaked. It pains us when we have internal leaks. But across any given industry, it is both good for the whole industry to have those leaks and it’s especially good for the good players.

Q. But aside from the market as a whole, how should companies change their behavior understanding that leaks will increase?
A. Do things to encourage leaks from dishonest competitors. Be as open and honest as possible. Treat your employees well. I think it’s extremely positive. You end up with a situation where honest companies producing quality products are more competitive than dishonest companies producing bad products. And companies that treat their employees well do better than those that treat them badly.

Q. Would you call yourself a free market proponent?
A. Absolutely. I have mixed attitudes towards capitalism, but I love markets. Having lived and worked in many countries, I can see the tremendous vibrancy in, say, the Malaysian telecom sector compared to U.S. sector. In the U.S. everything is vertically integrated and sewn up, so you don’t have a free market. In Malaysia, you have a broad spectrum of players, and you can see the benefits for all as a result.

Q. How do your leaks fit into that?
A. To put it simply, in order for there to be a market, there has to be information. A perfect market requires perfect information. There’s the famous lemon example in the used car market. It’s hard for buyers to tell lemons from good cars, and sellers can’t get a good price, even when they have a good car. By making it easier to see where the problems are inside of companies, we identify the lemons. That means there’s a better market for good companies. For a market to be free, people have to know who they’re dealing with.

Q. You’ve developed a reputation as anti-establishment and anti-institution.
A. Not at all. Creating a well-run establishment is a difficult thing to do, and I’ve been in countries where institutions are in a state of collapse, so I understand the difficulty of running a company. Institutions don’t come from nowhere. It’s not correct to put me in any one philosophical or economic camp, because I’ve learned from many. But one is American libertarianism, market libertarianism. So as far as markets are concerned I’m a libertarian, but I have enough expertise in politics and history to understand that a free market ends up as monopoly unless you force them to be free. WikiLeaks is designed to make capitalism more free and ethical.

Q. But in the meantime, there could be a lot of pain from these scandals, obviously.
A. Pain for the guilty.

Q. Do you derive pleasure from these scandals that you expose and the companies you shame?
A. It’s tremendously satisfying work to see reforms being engaged in and stimulating those reforms. To see opportunists and abusers brought to account.

Q. You were a traditional computer hacker. How did you find this new model of getting information out of companies?
A. It’s a bit annoying, actually. Because I cowrote a book about [being a hacker], there are documentaries about that, people talk about that a lot. They can cut and paste. But that was 20 years ago. It’s very annoying to see modern day articles calling me a computer hacker. I’m not ashamed of it, I’m quite proud of it. But I understand the reason they suggest I’m a computer hacker now. There’s a very specific reason. I started one of the first ISPs in Australia, known as Suburbia, in 1993. Since that time, I’ve been a publisher, and at various moments a journalist. There’s a deliberate attempt to redefine what we’re doing not as publishing, which is protected in many countries, or the journalist activities, which is protected in other ways, as something which doesn’t have a protection, like computer hacking, and to therefore split us off from the rest of the press and from these legal protections. It’s done quite deliberately by some of our opponents. It’s also done because of fear, from publishers like The New York Times that they’ll be regulated and investigated if they include our activities in publishing and journalism.

Q. I’m not arguing you’re a hacker now. But if we say that both what you were doing then and now are both about gaining access to information, when did you change your strategy from going in and getting it to simply asking for it?
A. That hacker mindset was very valuable to me. But the insiders know where the bodies are. It’s much more efficient to have insiders. They know the problems, they understand how to expose them.

Q. How did you start to approach your leak strategy?
A. When we started Suburbia in 1993, I knew that bringing information to the people was very important. We facilitated many groups: We were the electronic printer if you like for many companies and individuals who were using us to publish information. They were bringing us information, and some of them were activist groups, lawyers. And some bringing forth information about companies, like Telstra, the Australian telecommunications giant. We published information on them. That’s something I was doing in the 1990s. We were the free speech ISP in Australia. An Australian Anti-church of Scientology website was hounded out of Victoria University by legal threats from California, and hounded out of a lot of places. Eventually they came to us. People were fleeing from ISPs that would fold under legal threats, even from a cult in the U.S. That’s something I saw early on, without realizing it: potentiating people to reveal their information, creating a conduit. Without having any other robust publisher in the market, people came to us.

Q. I wanted to ask you about [Peiter Zatko, a legendary hacker and security researcher who also goes by] “Mudge.”
A. Yeah, I know Mudge. He’s a very sharp guy.

Q. Mudge is now leading a project at the Pentagon’s Defense Advanced Research Projects Agency to find a technology that can stop leaks, which seems pretty relative to your organization. Can you tell me about your past relationship with Mudge?
A. Well, I…no comment.

Q. Were you part of the same scene of hackers? When you were a computer hacker, you must have known him well.
A. We were in the same milieu. I spoke with everyone in that milieu.

Q. What do you think of his current work to prevent digital leaks inside of organizations, a project called Cyber Insider Threat or Cinder?
A. I know nothing about it.

Q. But what do you of the potential of any technology designed to prevent leaks?
A. Marginal.

Q. What do you mean?
A. New formats and new ways of communicating are constantly cropping up. Stopping leaks is a new form of censorship. And in the same manner that very significant resources spent on China’s firewall, the result is that anyone who’s motivated can work around it. Not just the small fraction of users, but anyone who really wants to can work around it. Censorship circumvention tools [like the program Tor] also focus on leaks. They facilitate leaking. Airgapped networks are different. Where there’s literally no connection between the network and the internet. You may need a human being to carry something. But they don’t have to intentionally carry it. It could be a virus on a USB stick, as the Stuxnet worm showed, though it went in the other direction. You could pass the information out via someone who doesn’t know they’re a mule.

Q. Back to Mudge and Cinder: Do you think, knowing his intelligence personally, that he can solve the problem of leaks?
A. No, but that doesn’t mean that the difficulty can’t be increased. But I think it’s a very difficult case, and the reason I suggest it’s an impossible case to solve completely is that most people do not leak. And the various threats and penalties already mean they have to be highly motivated to deal with those threats and penalties. These are highly motivated people. Censoring might work for the average person, but not for highly motivated people. And our people are highly motivated. Mudge is a clever guy, and he’s also highly ethical. I suspect he would have concerns about creating a system to conceal genuine abuses.

Q. But his goal of preventing leaks doesn’t differentiate among different types of content. It would stop whistleblowers just as much as it stops exfiltration of data by foreign hackers.
A. I’m sure he’ll tell you China spies on the U.S., Russia, France. There are genuine concerns about those powers exfiltrating data. And it’s possibly ethical to combat that process. But spying is also stabilizing to relationships. Your fears about where a country is or is not are always worse than the reality. If you only have a black box, you can put all your fears into it, particularly opportunists in government or private industry who want to address a problem that may not exist. If you know what a government is doing, that can reduce tensions.

Q. There have been reports that Daniel Domscheit-Berg, a German who used to work with WikiLeaks, has left to create his own WikiLeaks-type organization. The Wall Street Journal described him as a “competitor” to WikiLeaks. Do you see him as competition?
A. The supply of leaks is very large. It’s helpful for us to have more people in this industry. It’s protective to us.

Q. What do you think of the idea of WikiLeaks copycats and spinoffs?
A. There have been a few over time, and they’ve been very dangerous. It’s not something that’s easy to do right. That’s the problem. Recently we saw a Chinese WikiLeaks. We encouraged them to come to us to work with us. It would be nice to have more Chinese speakers working with us in a dedicated way. But what they’d set up had no meaningful security. They have no reputation you can trust. It’s very easy and very dangerous to do it wrong.

Q. Do you think that the Icelandic Modern Media Initiative [a series of bills to make Iceland the most free-speech and whistleblower-protective country in the world] would make it easier to do this right if it passes?
A. Not at the highest level. We deal with organizations that do not obey the rule of law. So laws don’t matter. Intelligence agencies keep things secret because they often violate the rule of law or of good behavior.

Q. What about corporate leaks?
A. For corporate leaks, yes, free speech laws could make things easier. Not for military contractors, because they’re in bed with intelligence agencies. If a spy agency’s involved, IMMI won’t help you. Except it may increase the diplomatic cost a little, if they’re caught. That’s why our primary defense isn’t law, but technology.

Q. Are there any other leaking organizations that you do endorse?
A. No, there are none.

Q. Do you hope that IMMI will foster a new generation of WikiLeaks-type organizations?
A. More than WikiLeaks: general publishing. We’re the canary in the coalmine. We’re at the vanguard. But the attacks against publishers in general are severe.

Q. If you had a wishlist of what industries or governments, what are you looking for from leakers?
A. All governments, all industries. We accept all material of diplomatic, historical or ethical significance that hasn’t been released before and is under active suppression. There’s a question about which industries have the greatest potential for reform. Those may be the ones we haven’t heard about yet. So what’s the big thing around the corner? The real answer is I don’t know. No one in the public knows. But someone on the inside does know.

Q. But there are also industries that just have more secrecy, so you must know there are things you want that you haven’t gotten.
A. That’s right. Within the intelligence industry is one example. They have a higher level of secrecy. And that’s also true of the banking industry. Other industries that are extremely well paid, say Goldman Sachs, might have higher incentives not to lose their jobs. So it’s only the obvious things that we want: Things concerning intelligence and war, and mass financial fraud. Because they affect so many people so severely.

Q. And they’re harder leaks to get.
A. Intelligence particularly, because the penalties are so severe. Although very few people have been caught, it’s worth noting. The penalties may be severe, but nearly everyone gets away with it. To keep people in control, you only need to make them scared. The CIA is not scared as an institution of people leaking. It’s scared that people will know that people are leaking and getting away with it. If that happens, the management loses control.

Q. And WikiLeaks has the opposite strategy?
A. That’s right. It’s summed up by the phrase “courage is contagious.” If you demonstrate that individuals can leak something and go on to live a good life, it’s tremendously incentivizing to people.