Sunday, June 11, 2017

EU wants to centralize its capital markets even further

EU Observer brings the new that EU wants to fast-track the capital markets union. The reason is Brexit that places the main capital market of the EU (London) outside its borders.

Some quotes:

The UK's exit from the EU makes a union of the 27 national capital markets more urgent, the European Commission said on Thursday (8 June).
"As we face the departure of the largest EU financial centre, we are committed to step-ping up our efforts to further strengthen and integrate the EU capital markets", said commission vice-president Valdis Dombrovskis, who is in charge of financial services.

Dombrovskis presented a mid-term review of the Capital Markets Union (CMU), a plan launched in 2015 to increase links between EU markets and develop financial tools in order to facilitate investments and boost the economy.
Most of the proposals presented so far deal with specific financial products, such as venture capital or insurances.

"The EU needs CMU today more than ever," said the review unveiled on Thursday. It insists that Brexit "reinforces the urgent need to further strengthen and integrate the EU capital market framework”.

With 751,000 financial sector employees and the industry's gross added value of £80.935 billion (around €93 billion), the City of London has been one of the main actors and beneficiaries of the CMU so far.

The City has been necessary to provide services for the rest of the EU, such as ensuring risk-management services and providing the necessary amount of liquid cash for transactions, notes the commission's review.


I would think that the Brexit is an argument for the opposite policy. Venture capital or insurance have been around for centuries. We don't need integration for that. What Brexit shows is that centralization of such an important sector of the economy puts us all at risk. We need a spread of risk, not putting all our bets on one pony.

Saturday, June 10, 2017

The Comey show: the FBI director and the pea

Yesterday was Comey's day at the Senate. I listened to a part of it but I was not impressed.

First of all there is that ridiculous anti-Russia hysteria - including senators who lie that we here in Europe are even more obsessed about it. We have trust in our elections. It is the Americans - who allow their oligarchs to buy elections - who are worried about manipulations.

Russiagate reminds me of Monicagate. In both cases the real facts are maybe a bit embarrassing but certainly not a big deal. There are only two reasons for this circus. One is that it keeps the president for a long time negative in the news. The other is the hope that the president will somewhere during this judicial circus make a misstep and then you can persecute him for obstruction of justice or something similar.

It seemed to me that Comey was playing "The Princess and the Pea" with Trump as the bully who hurt his tender judicial aura. My impression is that something rather different was playing in their interaction. Trump was annoyed that those endless Russia investigations made it impossible for him to have a sound foreign policy. Newspapers judged everything as possible evidence that he was favoring Russia and that made it hard to make decisions based on their merits. So Trump first asked Comey whether it was possible to end this circus. Comey was non-committal. But Trump - for all his defects - is a good judge of character: he has built a television career on it with his The Apprentice show. And Trump very likely concluded that Comey was a "showboat" who liked the spectacle and would keep the issue in the news as long as possible.

Who wouldn't have fired Comey if that was the conclusion?

PS
Here is a critical article about Comey from 2013 - when he became FBI director. According to the article While Comey deserves credit for stopping an illegal spying program in dramatic fashion, he also approved or defended some of the worst abuses of the Bush administration during his time as deputy attorney general. Those included torture, warrantless wiretapping, and indefinite detention.

Friday, May 12, 2017

Was the Macron email leak a false flag?

When there is a political scandal one should always ask the question "Cui bono": who benefited? In the case of the Macron email leaks it most likely was Macron. The newspaper reports about the leaks basically said that nothing harmful could be found - and that Macron thus was clean. And it helped the Macron campaign to paint Le Pen as an agent of Putin. Of course there is always a possibility that the Russians "got sloppy" as the pro-Macron press wants us to believe, but there are a lot of red flags that point the other way:

- The (pro-)Russian press had been negative about Macron for months. So why were the leaks published at the last moment? Information needs time to sink in. Journalists and Le Pen supporters would need time to study the mails for interesting/harmful information. And if they found something Macron would need time to react: with leaks it is often the inadequate or lacking reaction that converts believers.

- The last emails in the leak are from 24 April. The leak was published on 5 May. So it seems like the data thief wasted eleven days. Even worse: the mails were published just before a no-election news period in the French media. As a consequence their influence on the election was very low. And French journalists had very little incentive to investigate the emails.

- Organisations like Wikileaks publish the information in trenches. This has two advantages: it keeps the leaks in the news and it offers the opportunity to stress different aspects at a different time. The Macron failed to do this.

- By now leaking has become a science and organizations like Wikileaks have shown us what works and what doesn't. Dumping a big amount of mails or other documents does not work: it causes a short stir and after that it is old news. Journalists don't have the time to find the real hot items and when they find something a week later it may be old news that someone else revealed before. So typically the trove is revealed in tranches and each tranche is accompanied by a press release that tells what emails to look for and what they tell. In contrast there was no press release accompanying the Macron leaks.

- We saw almost immediately news articles that there was nothing interesting to see and that there were fake mails between the real ones. One has to admire those superhuman journalists who managed to study 7 gigabytes of emails within a day and who even found time in the process to conclude that some of those mails were fake.

- Later on we saw news articles that the CIA had been monitoring the attack and that the French had prepared themselves by adding fake mails - what seems to be a common tactic in businesses. If the American secret services were so close to the fire they might as well have been a bit closer than they admit.

- Even after the mails were released I haven't seen one good article discussing their content. The claim that nothing harmful can be found sounds shallow to me. When a team of journalists digs through the emails they will find something interesting. It doesn't have to be harmful to Macron's campaign. But there might be information on how Macron saw his adversaries and what kind of tactics he used against them. Or how he intends to operate in the coming elections for the parliament. Either this information isn't there - what would suggest that the mails have been filtered - or the press has been rather sloppy.

- we hear the usual talk about shady Russian hacker organizations who did it and traces of Russian editing software - that point to modifications - in the leaks. But by now we know from Wikileaks that creating false traces is an accepted tactic within the US security services.

Dividing the mails in tranches and publishing each trench with a press release takes a lot of work. It may have been that the hacker didn't have those resources. There have already been suggestions that American neo-nazis were involved.

It seems to me that either the hackers were extremely incompetent or this was a false flag. Of course a combination is also possible.

Sunday, February 19, 2017

The departure of Flynn

Flynn didn't make much friends during his short term. He repeatedly lied on two issues (his talks with the Russian ambassador and the security clearance for his son) to Pence and others and it has been claimed that his management style was chaotic. The lie about his son was very likely the most harmful as it was such a a black and white issue and so sure to be found out.

But what has been very little discussed until now is the role of the security services. We do not know what exactly happened but I am afraid it happened the following way:
The security services had his conversations with the Russian ambassador on tape. They invited Flynn for a discussion about something general like his "Russian contacts". They did not tell him they had his conversations on tape. They did tell him that they knew about his contacts with the ambassador and they told him that that would have violated some very old law that forbids citizens to do diplomacy. They did not tell him nobody has ever been convicted on basis of that law and that prosecution on basis of it likely wouldn't hold. They didn't provide him time to rethink his conversation with the ambassador in the light of this information - that must have been new to Flynn. Neither did they tell him that lying to the FBI can be heavily punished. So they had an "interrogation" where they only asked what they already knew and where they deliberately brought Flynn in a position where many people would lie.

In my opinion this should have consequences - for all the intelligence officers involved. Intelligence officers are there to serve the government - not to set boobytraps for it.