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Daily Archives: December 13, 2013

Russia’s Largest Bank Proposes Bitcoin Alternative | Zero Hedge

Russia’s Largest Bank Proposes Bitcoin Alternative | Zero Hedge.

Hot on the heels of JPMorgan’s “web cash” developments in the virtual currency arena, the CEO of Russia largest bank – Sberbank – appears to be looking for alternatives…

  • *SBERBANK CEO GREF SAYS FUTURE BELONGS TO VIRTUAL CURRENCIES
  • *GREF SAYS DEVELOPMENT OF VIRTUAL CURRENCIES ‘CAN’T BE STOPPED’
  • *SBERBANK CEO CALLS FOR GREATER REGULATION OF VIRTUAL CURRENCIES
  • *SBERBANK MAY FORM OWN VIRTUAL CURRENCY ON BASIS OF YANDEX MONEY

When a pseudonymous ‘Japanese’ coder creates a crypto-currency that gains acceptance among thousands of vendors, it’s dismissed by the powers-that-be and called a ponzi scheme by the MSM. One wonders what happens when the largest banks of the US and Russia sanction the ‘idea’ of a decentralized, unregulated, ‘money’ transfer system.

Via Bloomberg,

“We are at a new stage of technological development. I can’t imagine how it can be stopped,” Sberbank CEO Herman Gref tells reporters in Moscow.

 

Gref says virtual currencies need greater regulation

 

“These experiments must end in one or two crashes” before virtual currencies become firmly established, Gref says

 

Says Yandex Money isn’t “a currency but it’s a first step in that direction”

 

Of course, the difference is – the banks want to own it…

 

Peak Oil Barrel: OPEC Oil Production

Peak Oil Barrel.

OPEC just published their latest Monthly Oil Market Report with crude only production data through November 2013. Their October numbers were revised downward by 67,000 barrels per day to 29,827 kb/d. Their November production was 29,633 /b/d. That was 261 kb/d below their unrevised October production and 194 kb/d below their revised October production numbers.

OPEC 12

OPEC production at 29,633,000 bp/d is at their lowest point since June 2011. As you can see from the chart OPEC has hat two peaks since 2005. Actually these are the two highest peaks ever for OPEC if the EIA data is correct. I only have MOMR data going back to January 2005.

The July 2008 peak was 31,672,000 bp/d and the April 12 peak was 31,619,000 bp/d. I thought it might be interesting to plot who was up and who was down since those two peaks. The Gainers were Ecuador, Iraq, Kuwait, Saudi Arabia, UAE and Venezuela. Ecuador and Venezuela were up only slightly however. Here is a chart of the six gainers.

Gainers

In July 2008 the combined Gainers production stood at 19,976,000 bp/d. In November their combined production stood at 21,769,000 bp/d, up 1,793,000 bp/d since that point

The losers were Algeria, Angola, Iran, Libya, Nigeria and Qatar.

Losers

The Losers peaked in December 2007 at 11,870,000 bp/d. In November 2013 their combined production stood at 8,498,000 bp/d, down 3,372,000 since their peak. Libya and Iran account for 2 million bp/d of this. So even if both were producing flat out the losers would still be down almost 1.4 mb/d.

However even before the sanctions Iran was in serious decline. If sanctions were lifted tomorrow they would be lucky to get back to half a million barrels per day below their 2005 level of about 3.9 million barrels per day. Their November production stood at 2.7 mb/d.

Libya, after the revolution could only get up to within 200,000 barrels per day of their pre-revolution production numbers. They will likely not ever get that close again however.

But something is always happening somewhere. One can say, “if there were no sanctions, no revolutions, no terrorists attacks and no other political problems then they could produce a lot more”. But there has never been a such a time in recorded history and it is not likely there will ever be such a time. So we can only measure what each country is producing today and go with that.

One person has posted me and seems very concerned over the sudden rise in US consumption. It also caught OPEC’s attention. From the latest MOMR, link up top, page 32:

US Demand

Economic Collapse Ahead – Monty Pelerin’s World : Monty Pelerin’s World

Economic Collapse Ahead – Monty Pelerin’s World : Monty Pelerin’s World.

collapse11ages (2)

An inevitable economic collapse has been warned about since this website began over four years ago. This forecast never pretended to be able to predict its timing.

Over its existence, the website has dealt with many topics non-economic. Let me remind readers of the three key economic points that have been consistent since its beginning:

  • There is no recovery nor can there be a recovery without a massive economic reset, a collapse.
  • Government interventions over the last several decades have put us into this position.
  • Government is now trapped and, like a wounded animal, will do anything to survive including harming the economy and those dependent on it.

The bias that we all carry is that assuming people who agree with us are smart. That is an indirect form of reinforcement and self-aggrandizement that can be dangerous. It is a cousin of Mark Twain’s warning that it is what you know that ain’t true that is most damaging. At the risk of committing this error, I recommend an article by Captain Hook who expresses sentiments in line with my own. Here are some excerpts which are perilously close to what I have expressed:

  • inflationprinting-moneyWe are getting close to the day of reckoning this fiat currency economy suicide mission the Fed(s) has engineered for us. So you better get ready, because they will not ring a bell at the top of the stock market to warn the party is over –

  • … the end of the line in QE debt monetization related economic growth is almost here – with diminishing returns in money printing and central bank balance sheet growth re-accelerating. And while it’s true central authorities can still increase QE to offset diminishing returns, and in fact have stated they intend to do just that in Europe and Japan early next year … the effects of all this money printing will be negligible. And before it’s all over don’t be surprised to see QE in the States moving from $1 Trillion per year (where we are now) to $1 Trillion per month, and to infinity essentially. [ I think a collapse will occur before they get close to Captain Hook’s monthly projection.]

  • …  it will never stop until the system blows-up…

  • Add to this picture a new and naive Fed chair, with visions of sugar cookies in her head, and one does need wonder how US Treasury yields remain sanguine in coming years. Because once confidence is lost a negative spiral can grip macro-conditions quickly given the hollow nature of the much talked about ‘economic recovery’…

  • … it’s not just the bubble in Treasuries one should be worried about, which up until this point has been no trouble at all with the QE backstop. There are also stocks and real estate to worry about as well, where you know a problem exists when the speculators are speculating on the degree of speculation. Because there’s no free lunch despite what lying bureaucrats would like you to believe, given

  • … this lunacy can obviously continue for longer than anybody with a whisper of common sense could conceive. The sad part of this entire mess is the crazier it gets, the more anxiety is created, the more people will hold back, the more the Fed will have to print money, the more stocks will go up – until we reach the point of ‘heart attack’ for the over-drugged junkie. Then, the bond market is going to blow up, and it’s all over.

  • We are caught in a liquidity trap that demands the Fed monetize some 70% of all net bond supply; meaning rates would be considerably higher if they were not doing so. So, don’t fall for any of the BS ‘taper talk’. This is just Kabuki Theater for fools because key debt markets are becoming increasingly stressed.

  • … the Fed(s) have no choice but to keep accelerating the craziness, which will become a problem for the bond market once rigging efforts on the part of the bureaucracy’s price managers begin to fail noticeably. You will know this is the case when they can’t keep credit markets supported anymore, which will tip diminishing returns into freefall. (i.e. and in turn re-accelerate the need for more money printing as things spiral out of control.)

  • … don’t be fooled by taper talk, which has the effect of catching offside short sellers when weak data points come out, causing a short squeeze. (i.e. that’s what happened last week post the Fed minutes release.) What market participants don’t realize yet is such talk is just expectation management on the part of the Fed so that people are not surprised when it happens…

  • Who needs gold when the ‘traditional’ stock market is going up – right – especially when Da Boyz are making copious amounts of fiat currency underwriting the tech fads of the day. And with stocks still under-owned on some measuresQE set to spread to Europe (and increase in Japan), and the average hedge fund managerstruggling to play catch up, which means stocks are likely going much higher, gold could remain in the doghouse for some time yet, well into next year.

  • Gold will of course be the place to be in the end, when all the Ponzi finance has collapsed… Better buy some gold so you can eat when inflation goes through the roof bailing out this ship of fools.

I disagree somewhat on the margins with a few of the comments presented above, but this disagreement is minor and could be seen as nitpicking. In general, the statements presented are very much in line with my thinking.

As always, the critical question is how long the economic fraud can continue.

 

JW Gets Docs: State Dept. Ordered Benghazi Security Co. to Dodge Media | Judicial Watch

JW Gets Docs: State Dept. Ordered Benghazi Security Co. to Dodge Media | Judicial Watch.

Days after terrorists attacked the U.S. mission in Benghazi, a State Department official ordered an executive at the security company charged with protecting the special compound not to respond to media inquiries, according to documents obtained by Judicial Watch.

The order was delivered via electronic mail and it’s part of a new batch of State Department documents obtained by JW in an ongoing investigation of the September 11, 2012 Benghazi attack and subsequent cover-up by the Obama administration. Islamic jihadists raided the U.S. Special Mission Compound in Benghazi, Libya and murdered Ambassador Christopher Stevens—the first diplomat to be killed overseas in decades—and three other Americans.

The Obama administration has worked hard to keep details of the attack—and the negligence that led to it—from the American public, but JW has gone to court and filed a number of public records requests to expose the truth. JW has also published two in-depth special reports on Benghazi, the last one on the first anniversary of the terrorist attack. Read the special reports here and here.

The latest batch of documents obtained by JW include a scandalous email from a State Department contracting officer named Jan Visintainer to an unidentified executive at Blue Mountain Group (BMG), the inexperienced foreign company hired to protect the U.S. mission in Benghazi. In the email, dated September 26, 2012, Visintainer writes: “Thank you so much for informing us about the media inquiries. We notified our public affairs personnel that they too may receive some questions. We concur with you that at the moment the best way to deal with the inquiries is to either be silent or provide no comments.”

Some of the records were redacted or simply not included. For instance Visintainer received a cryptic email from a redacted source with an attachment that was not provided to JW by the State Department. The exchange, just two days before the attack, received a lot of attention from both the State Department and BMG, which could indicate that perhaps it contained a more specific concern or warning about the U.S. mission’s vulnerability.

Last month JW released the Benghazi security contract that paid BMG, a virtually unknown and untested British company, $794,264 for nearly 50,000 guard hours. The Benghazi security deal had not been available to the public because it was not listed as part of the large master State Department contract that covers protection for overseas embassies. JW had to take legal action to get it.

The deal is for one year and includes very specific requirements for things like foot patrols, package inspection, contingency and mobilization planning. The total guard force was 45,880 with an additional 1,376 guards for “emergency services,” the contract shows. It also includes one vehicle and 12 radio networks. The guards were responsible for protecting the U.S. government personnel, facilities and equipment from damage or loss, the contract states. “The local guard force shall prevent unauthorized access; protect life; maintain order; deter criminal attacks against employees; dependents and property terrorist acts against all U.S. assets and prevent damage to government property.” Clearly the firm failed miserably to fulfill its contractual obligation.

 

Powerdown: Let’s talk about it

Powerdown: Let’s talk about it.

We’re caught in the squeeze right now.

Climate change is advancing at an incredible speed. We know we should do something, but we lack the political will to do what it takes to hold it to 2°C. UN committees are now being counseled to prepare for 4°C of warming. To keep it survivable, there’s got to be a powerdown — starting today.

Meanwhile green-tech enthusiasts cheer the rapid rate at which certain countries are installing renewable energy infrastructure. But reports are now surfacing of shortages in the rare earth ingredients needed to make that renewable infrastructure. We don’t have enough rare earth materials to replace the whole fossil infrastructure and continue on our current level of consumption. No one dares speak the little secret: Even with renewables, there’s got be a powerdown.

Shale oil is environmental desecration. But people are willing to consider it because there is potentially vast amounts of money in it because the easier-to-get-to oil is running out. Along with stopping fracking, there’s going to be a powerdown. But no one is talking about that part.

We should “keep the coal in the ground” scientists are telling us, and activists have (rightfully) picked up the cry. But no one never mentions the other side of the Stop Coal equation: the powerdown. We have to start talking about what we are willing to give up.

Industry charges forward: expand-expand-expand the airports, the freeways, heedless of the need for powerdown. New extractive drugs, new processed foods, new fashions and ways to consume, more-more-more energy consumption. And consumers and the market applaud it all. They’re inventing new biotech, new robotics, new high tech — all inextricably dependent on energy. Powerdown is such a big secret, that it can’t even be a talking point; it draws a blank stare.

But powerdown has got to happen. And really, really soon.

Powerdown means shifting to tools, techniques, lifestyle habits which use LESS power. It means reducing our energy consumption overall. Across the board. In totality.

Powerdown doesn’t mean convincing ourselves we’re going to convert our entire fleet of fossil automobiles over to an all-electric fleet, because about half of the fossil energy and greenhouse gasses embodied in each vehicle is spent in manufacturing it. Rather, powerdown means shifting to bicycles and human-powered transportation and reorienting our lives and our cities to need LESS transportation.

Powerdown doesn’t mean “more efficient” aircraft. Powerdown means no-fly pledges and stay-cations and moving closer to family. It means foregoing taking the kids abroad; and when your friends mention they’re thinking of doing so, it means responding in a way that makes it clear that it’s socially UNcool.

Powerdown doesn’t mean higher tech, because that requires vast high-powered labs and vast globalized supply chains and more-more-more rare earth materials behind the scenes to manufacture all that stuff. Stuff which will so quickly be outmoded.

Powerdown means inventing tools that run on zero energy, tools made from repurposed materials that humans already have extracted, tools that are durable and repairable because this isn’t a short-term fix. Rather, humanity is in this powerdown game for the long haul.

On a more intangible level, powerdown brings with it inevitable shifts in our economy. We can no longer have economic structures be dependent on more-more-more volume and more-more-more profits. Powerdown means a re-evaluation of what is important: Sufficiency. Basic needs met. Peace and harmony. (The biggest challenge is that last one.)

Powerdown means shifts in other systems too. It means parents and school officials becoming far less enchanted with the glossy hollow call of more-more-more high tech, and much more realistic about teaching the skills of powerdown. Right now we call it “green” to teach tiny kids to plant seeds in recycled plastic bottles, lessons that are completely disconnected from the reality of ecosystems, because it’s so cute. That’s much easier than making part of the high school curriculum the deep skills necessary to pump organic yield, like soil building, crop rotation, intensive urban ag spacing, season stretching, and food preservation. But we’ve got to do it.

Powerdown means our schools Just Saying No to corporate “donations” which strong-arm administrators and parents, and influence students, to place false hopes in the Big Corporate Way. It means teaching Local Foods and Buy Local, not as a “pretty-and-greener it-would-be-nice” feature, but as the core reality of our children’s future. Powerdown means shifting direction today.

Powerdown means political officials finding the backbone to turn away from big corporate dollars, to turn instead toward serious preparation for the realities of our future. Rather than trying to help disadvantaged communities climb on board old-fashioned energy-intense ways, powerdown means publicly and openly declaring that was a false mirage. Powerdown means acknowledging the folly and backing away from the cliff. It means helping all citizens make a direct shift into a more appropriate future.

Powerdown means faith communities embracing their role of cultivating peace and healing the world. It means preaching that large SUVs and use-it-once consumerism and large families are unholy, socially unjust, and sacrilegious. Faith communities can help us acknowledge that the false mirage wasn’t satisfying; that pursuit of it has made us less than who we are meant to be. Powerdown means Practice — as a community — of the lifestyle habits which lead to a peaceful shift: reusable dishes, onsite composting, food not lawns, bike/walk to gatherings, local food potlucks, simple living, connection.

It’s much easier to talk about shiny new stuff like the latest electric car model, or whether bullet trains are a good idea. It’s much easier to chat up the fantasy of high-rise hydroponic food towers, oblivious to their energy demands. But powerdown is here. Powerdown is now. We need to use the term widely.

It’s time to have the tough conversations. Time to get the wider public familiar with the concept. The writing is on the wall: Powerdown is inevitable. If we want any hope of achieving it peacefully, we’ve got to start shifting — minds and physical infrastructure — today.  Powerdown: Say it. Begin it.

 

Dent, Faber, Celente, Maloney, Rogers – What Do They Say Is Coming In 2014?

Dent, Faber, Celente, Maloney, Rogers – What Do They Say Is Coming In 2014?.

Earth From Space

Some of the most respected prognosticators in the financial world are warning that what is coming in 2014 and beyond is going to shake America to the core.  Many of the quotes that you are about to read are from individuals that actually predicted the subprime mortgage meltdown and the financial crisis of 2008 ahead of time.  So they have a track record of being right.  Does that guarantee that they will be right about what is coming in 2014?  Of course not.  In fact, as you will see below, not all of them agree about exactly what is coming next.  But without a doubt, all of their forecasts are quite ominous.  The following are quotes from Harry Dent, Marc Faber, Gerald Celente, Mike Maloney, Jim Rogers and nine other respected economic experts about what they believe is coming in 2014 and beyond…

Harry Dent, author of The Great Depression Ahead: “Our best long-term and intermediate cycles suggest another slowdown and stock crash accelerating between very early 2014 and early 2015, and possibly lasting well into 2015 or even 2016. The worst economic trends due to demographics will hit between 2014 and 2019. The U.S. economy is likely to suffer a minor or major crash by early 2015 and another between late 2017 and late 2019 or early 2020 at the latest.”

Marc Faber, editor and publisher of the Gloom, Boom & Doom Report: “You have to say that we are again in a massive financial bubble in bonds, in equities, in [other] asset prices that have gone up dramatically.”

Gerald Celente: “Any self-respecting adult that hears McConnell, Reid, Boehner, Ryan, one after another, and buys this baloney… they deserve what they get.

And as for the international scene… the whole thing is collapsing.

That’s our forecast.

We are saying that by the second quarter of 2014, we expect the bottom to fall out… or something to divert our attention as it falls out.”

Mike Maloney, host of Hidden Secrets of Money: “I think the crash of 2008 was just a speed bump on the way to the main event… the consequences are gonna be horrific… the rest of the decade will bring us the greatest financial calamity in history.”

Jim Rogers: “You saw what happened in 2008-2009, which was worse than the previous economic setback because the debt was so much higher. Well now the debt is staggeringly much higher, and so the next economic problem, whenever it happens and whatever causes it, is going to be worse than in the past, because we have these unbelievable levels of debt, and unbelievable levels of money printing all over the world. Be worried and get prepared. Now it [a collapse] may not happen until 2016 or something, I have no idea when it’s going to happen, but when it comes, be careful.”

Lindsey Williams: “There is going to be a global currency reset.”

CLSA’s Russell Napier: “We are on the eve of a deflationary shock which will likely reduce equity valuations from very high to very low levels.”

Oaktree Capital’s Howard Marks: “Certainly risk tolerance has been increasing of late; high returns on risky assets have encouraged more of the same; and the markets are becoming more heated. The bottom line varies from sector to sector, but I have no doubt that markets are riskier than at any other time since the depths of the crisis in late 2008 (for credit) or early 2009 (for equities), and they are becoming more so.”

Financial editor Jeff Berwick: “If they allow interest rates to rise, it will effectively make the U.S. government bankrupt and insolvent, and it would make the U.S. government collapse. . . . They are preparing for a major societal collapse.  It is obvious and it will happen, and it will be very scary and very dangerous.”

Michael Pento, founder of Pento Portfolio Strategies: “Disappointingly, it is much more probable that the government has brought us out of the Great Recession, only to set us up for the Greater Depression, which lies just on the other side of interest rate normalization.”

Boston University Economics Professor Laurence Kotlikoff:”Eventually somebody recognizes this and starts dumping the bonds, and interest rates go up, and inflation takes off, and were off to the races.”

Mexican Billionaire Hugo Salinas Price: “I think we are going to see a series of bankruptcies.  I think the rise in interest rates is the fatal sign which is going to ignite a derivatives crisis.   This is going to bring down the derivatives system (and the financial system).

There are (over) one quadrillion dollars of derivatives and most of them are related to interest rates.  The spiking of interest rates in the United States may set that off.  What is going to happen in the world is eventually we are going to come to a moment where there is going to be massive bankruptcies around the globe.”

Robert Shiller, one of the winners of the 2013 Nobel prize for economics: “I’m not sounding the alarm yet.  But in many countries the stock price levels are high, and in many real estate markets prices have risen sharply…that could end badly.”

David Stockman, former Director of the Office of Management and Budget under President Ronald Reagan: “We have a massive bubble everywhere, from Japan, to China, Europe, to the UK.  As a result of this, I think world financial markets are extremely dangerous, unstable, and subject to serious trouble and dislocation in the future.”

And certainly there are already signs that the U.S. economy is slowing down as we head into the final weeks of 2013.  For example, on Thursday we learned that the number of initial claims for unemployment benefits increased by 68,000 last week to a disturbingly high total of368,000.  That was the largest increase that we have seen in more than a year.

In addition, as I wrote about the other day, rail traffic is way down right now.  In fact, for the week ending November 30th, U.S. rail traffic wasdown 16.3 percent from the same week one year earlier.  That is a very important indicator that economic activity is getting slower.

And we continue to get more evidence that the middle class is being steadily eroded and that poverty in America is rapidly growing.  For example, a survey that was just released found that requests for food assistance and the level of homelessness have both risen significantly in major U.S. cities over the past year…

A survey of 25 American cities, including many of the nation’s largest, showed yearly increases in food aid and homelessness.

The cities, located throughout 18 states, saw requests for emergency food aid rise by an average of seven percent compared with the previous period a year earlier, according to the US Conference of Mayors study, published Wednesday.

All but four cities reported an increase in demand for assistance between the period of September 2012 through August 2013.

Unfortunately, if the economic experts quoted above are correct, this is just the beginning of our problems.

The next wave of the economic collapse is rapidly approaching, and things are going to get much worse than this.

So what do you think?

Which of the individuals quoted above do you think are right on the money and which ones do you think are way off base?

 

Not much oversight for Canada’s electronic spies – Politics – CBC News

Not much oversight for Canada’s electronic spies – Politics – CBC News.

One-quarter of CSEC's analysts have an advanced degree -- half in technical subjects, especially computer science, software engineering or digital cartography. On the oversight side, there are 11 investigators to keep tabs on over 2,000 people.One-quarter of CSEC’s analysts have an advanced degree — half in technical subjects, especially computer science, software engineering or digital cartography. On the oversight side, there are 11 investigators to keep tabs on over 2,000 people. (iStock)

National Affairs Specialist

Greg Weston is an investigative reporter and a regular political commentator on CBC Radio and Television. Based in Ottawa, he has afflicted governments of all stripes for over three decades. His investigative work has won awards including the coveted Michener Award for Meritorious Public Service in Journalism. He is also the author of two best-selling books, Reign of Error and The Stopwatch Gang.

The revelation that a little-known Canadian intelligence operation has been electronically spying on trading partners and other nations around the world, at the request of the U.S. National Security Agency, has critics wondering who’s keeping an eye on our spies.

 

The answer is a watchdog, mostly muzzled and defanged, whose reports to Parliament are first censored by the intelligence agency he is watching, then cleared by the minister politically responsible for any problems in the first place.

 

By the time the reports reach the public, they are rarely newsworthy.

 

The Harper government recently appointed a new oversight commissioner for Canada’s electronic spy agency, the Communications Security Establishment Canada. But he will be only part-time until next April.

 

Even then, Senator Hugh Segal, the chief of staff to former Conservative prime minister Brian Mulroney and someone with a long involvement in security intelligence issues, says any notion of effective public oversight of Canada’s electronic spying agency is “more like a prayer” than fact.

 

The debate over who’s keeping tabs on our spies has heightened in recent days following a CBC News report detailing a top secret document retrieved by American whistleblower Edward Snowden.

 

The document shows that the agency known as CSEC set up covert spying posts around the world at the request of the giant NSA.

 

Both agencies gather intelligence by intercepting mostly foreign phone calls and hacking into computer systems around the world.

snowden-852-04628014Whistleblower or government leaker, Edward Snowden and his revelations this past year have rocked the spy world on at least five continents. (Associated Press)

 

U.S. President Barack Obama has ordered a widespread investigation of the NSA after leaked Snowden documents revealed the agency was gathering massive amounts of information on millions of American citizens.

 

In this country, the Harper government simply keeps pointing to CSEC’s oversight commissioner as proof that Canadians have nothing to worry about.

 

As Defence Minister Rob Nicholson told the Commons this week: “There is a commissioner that looks into CSEC [and] every year for 16 years has confirmed that they’ve acted within lawful activities.”

 

Well, not exactly.

 

‘Contrary to law’

 

Only months ago, the recently retired CSEC commissioner, Justice Robert Decary, stated in his final report that he had uncovered records suggesting some of CSEC’s spying activities “may have been directed at Canadians, contrary to law.”

 

The retired justice said the CSEC records were so unclear or incomplete that he was unable to determine whether the agency had been operating legally.

 

Decary’s predecessor, Justice Charles Gonthier, filed the same complaint about incomplete or missing records in his day, which forced him to report in a similar fashion that he could not determine if CSEC had been breaking the law.

 

Gonthier also alluded to a CSEC operation in 2006 that he suggested may have been illegal.

 

The head of CSEC at the time, John Adams, recently told CBC News that, as a result of that discovery, “I shut the place down for a while.”

 

However, intelligence experts have told CBC News that the oversight problems at CSEC are much deeper than poor record-keeping.

 

They say successive commissioners have simply lacked both the resources and the legal mandate to conduct meaningful oversight.

 

The current commissioner, Judge Jean-Pierre Plouffe, operates with a staff of 11, about half of whom actually work on investigations, largely to ensure CSEC isn’t abusing its powers by spying on Canadians.

hugh-segal-250-rtris7fConservative Senator Hugh Segal: “The notion that a group of 11 might be able to provide proper oversight is more like a prayer than any kind of constructive statement of fact.” (Reuters)

 

But CSEC employs over 2,000 people who covertly collect masses of information recently described as more data per day than all the country’s banking transactions combined.

 

As Segal says, the result is obvious: “When there are thousands of people at CSEC processing millions of messages every day of all kinds, the notion that a group of 11 might be able to provide proper oversight is more like a prayer than any kind of constructive statement of fact.”

 

Not exactly as written

 

Of course, even if a commissioner did discover something seriously amiss at the electronic eavesdropping agency, there is a chance Canadians would never know.

 

Here’s how the system works:

 

Suppose the commissioner’s oversight sleuths discover that CSEC is illegally intercepting phone calls and hacking into the computers of certain Canadians.

 

The oversight commissioner is required to report his discovery in a top secret report to the defence minister.

 

That happens to be the same minister responsible for CSEC, and from whom the agency gets its government direction.

 

It is also the minister who would be at the centre of any CSEC scandal if news of this breach leaked out.

 

If the minister refuses to expose his own agency’s wrongdoing, the oversight commissioner can try to use his annual report to Parliament to do that.

 

But a funny thing happens on the way to Parliament.

 

First, CSEC gets to censor the entire report. Then it goes back to the same defence minister.

 

The minister is required to present the sanitized version of the report to Parliament, but has no obligation to mention it is not exactly as originally written.

 

Former CSEC chief Adams admits the agency is “very, very biased towards the less the public knows the better.”

 

He points out that in the spying business, opening an agency’s operations to full public scrutiny “would be kind of like unilateral disarmament, because if Canadians know everything CSEC can and can’t do, then everyone else will too.”

 

But as the leaked Snowden documents continue to force back the curtains at CSEC, Adams says it is time to find a better way to reassure Canadians about what they are doing.

 

“I think a knowledgeable Canadian is going to be much easier to deal with,” he says.

If the public reaction to the Snowden revelations is any indication, Canadians are all ears.

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