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Daily Archives: December 24, 2013

100 Years Ago: Why Bankers Created the Fed :: The Circle Bastiat

100 Years Ago: Why Bankers Created the Fed :: The Circle Bastiat.

Christopher Westley writes in today’s Mises Daily, on the Fed’s 100th birthday:

The boom and bust cycle, explained by the Austrian School in such detail, became worse and worse in the period leading up to 1913. And with the rise of Progressive Era spending on war and welfare, and with the pressure on banks to inflate to finance this activity, the boom and bust cycles worsened even more. If there was one saving grace about this period it would be that banks were forced to internalize their losses. When banks faced runs on their currencies, private financiers would bail them out. But this arrangement didn’t last, so when the losses grew, those financiers would secretly organize to reintroduce central banking to America, thus engineering an urgent need for a new “lender of last resort.” The result was the Federal Reserve.

This was the implicit socialization of the banking industry in the United States. People called the Federal Reserve Act the Currency Bill, because it was to create a bureaucracy that would assume the currency-creating duties of member banks.

It was like the Patriot Act, in that both were centralizing bills that were written years in advance by people who were waiting for the appropriate political environment in which to introduce them. It was like our current health care bills, in which cartelized firms in private industry wrote chunks of the legislation behind closed doors long before they were introduced in Congress.

 

The New Paradigm of Financial Media | Zero Hedge

The New Paradigm of Financial Media | Zero Hedge.

What would we do without Zero Hedge?  Does anyone else notice the rapid deterioration of financial news media, especially in the US?  OK, we are not naive, there are biases in the media, traders from big ibanks talking up their positions, and trading is all about information arbitrage.  But financial news used to be really serious.  Traders could turn on a TV to see what the markets were doing.  Bloomberg being the last financial channel broadcast on TV to avoid the “CNBC Phenomenon” or more specifically the “Cramer Phenomenon.”  But now, even Bloomberg TV has become a financial version of The View, with the occasional serious guest, and the occasional well researched article.

This is not meant to be a praise-all for ZH, but seriously, what other site has a continual flow of objective analysis, and breaking news that’s not visible elsewhere on the net?  Ok, traders don’t really need news they just need data, so in today’s electronic market financial journalism may be less valuable for traders.  But that doesn’t mean the quality of financial journalism should be allowed to deteriorate to an entertainment level.  Trading is often compared to gambling, Wall St. being the ‘big casino’ – but most involved take it very seriously, and the markets can make or break families, companies, and countries.  In most Vegas casinos, you will find all sorts of cheap tricks to overwhelm your visual cortex such as scantily clad ladies, loud bells and whistles, lots of flashing lights, free drinks and food spiked with salt and sugar, and well dressed managers waiting to be so polite and charming should they see you drop a load.  See any similarities?

There is another interesting parallel with ZH, it was founded in 2009, before Wikileaks became popular, and before the NSA scandal.  Starting with Wikileaks exposing Swiss banking activities, and other significant financial infos, traders and investors have started changing the way they obtain and process information on the internets.  This was more solidified with the NSA scandal, although much infos released by Snowden are not of a financial nature.  Many of the policies now being implemented by a global community of concerned internet users were running on ZH before all of this happened.  Again, not an all-praise for ZH, but what value do many mainstream financial networks have, with all their biases, agreements with partners, and guests from large houses talking up their positions.  It was a shocking for many to learn that all it takes to get on CNBC is $2,500 (probably policy changed now, but it used to be like this).  Stock traders from the late 90’s remember the ‘Power Lunch Bump’ where it was almost guaranteed that the guest, whoever he was or whatever he said, was good for at least a few points of their stock to jump while talking.  A new group of retail traders flush with cash from the 90’s boom were anxious to get in on the action but didn’t know anything other than to turn on the TV and watch CNBC.  Professional traders took it with a grain of salt, but it sure was a great way to pay for lunch.  What a different world we live in.

So what’s the new financial media all about?  It’s outlined well in the ZH Manifesto:

our mission:

  • to widen the scope of financial, economic and political information available to the professional investing public.
  • to skeptically examine and, where necessary, attack the flaccid institution that financial journalism has become.
  • to liberate oppressed knowledge.
  • to provide analysis uninhibited by political constraint.
  • to facilitate information’s unending quest for freedom.

our method: pseudonymous speech…

anonymity is a shield from the tyranny of the majority. it thus exemplifies the purpose behind the bill of rights, and of the first amendment in particular: to protect unpopular individuals from retaliation– and their ideas from suppression– at the hand of an intolerant society.

   …responsibly used.

the right to remain anonymous may be abused when it shields fraudulent conduct. but political speech by its nature will sometimes have unpalatable consequences, and, in general, our society accords greater weight to the value of free speech than to the dangers of its misuse.

– mcintyre v. ohio elections commission 514 u.s. 334 (1995) justice stevens writing for the majority

What ZH represents most importantly, an anonymous network of financial professionals which is extremely diverse, some are from the mainstream, some from the fringes.  It’s a bastion of internet freedom, representing free speech as it was intended.  Of course that’s just the platform, it doesn’t guarantee high quality of information, but somehow, it is the only source where information is almost all quality.

Aside from retail investors, what’s to keep traditional financial media alive at all?  In the case of something like Bloomberg, their public media is almost irrelevant.  The BB team is supporting their clients for the terminal, and so having their own network of analysts, journalists, and other types of agents makes sense to support data provided through the terminal.  But what about others?

There are other exceptions such as Reuters, not a unique financial media, but they are backed by the trading element of their business.  But unless you are a customer of Reuters, such as the new product giving their clients a nanosecond edge “Ultra Low Latency Data” their reporting on general news and especially financial events is suspect.

Or maybe, the only thing keeping such mainstream institutions alive, are a secret group of corporate clients, that can use such outlets for their own information campaign purposes.  In any event, as the markets evolve, and the internet evolves, the new paradigm in financial media is the “Bitcoin” model, not the USD model:

“The advantage for Chinese users to use Bitcoin is freedom, people can do something without any official authority,” said Patrick Lin, system administrator of Erights.net and owner of about 1,500 Bitcoins. Lin said he’s sticking to the currency itself, rather than IPOs, in part because of weak regulation. “The Bitcoin world is just like the Wild West — no law, but opportunity and risk,” he said.

ZH is a public site, but represents the gateway into the ‘dark’ internet, at least as it’s concerning financial media.  Of course, there wasn’t technology 50 years ago to support such a network, so it was easy for certain powerful media companies to dominate the sphere.  Now, anyone with a computer and internet access, can learn as much about the markets as you can at Wharton (if they learn anything there is questionable).  With that knowledge, that person can open a blog, and become their own independent financial media agent.  The standing argument that bloggers are unprofessional because they don’t have journalistic credentials, has been disproved in the last years, since it was sites like ZH that broke the flash trading scandal, and Wikileaks, that broke the story about Julius Baer.

The new paradigm of financial media is a decentralized, global network of well informed uber-agents, who proliferate their information privately through their own information portals, and through public networks, such as Zero Hedge (currently, ZH the only one).

 

Education protests challenge the market – which makes them a target | Michael Chessum | Comment is free | theguardian.com

Education protests challenge the market – which makes them a target | Michael Chessum | Comment is free | theguardian.com.

A 'Cops Off Campus' protest – Dec 2013

‘The demand that police get off campuses is not just about defending civil liberties. It is also about what kind of education system we want.’ Photograph: Gail Orenstein/Corbis

Three years on from the threefold increase in tuition fees in 2010, opposition to the government’s marketisation of university education is regenerating, with protests and occupations across the UK. Both the demands of this emerging movement, and the policing measures it has faced, are a sign of things to come in 2014 and may well mark a broader shift in how we challenge austerity.

Since October, the higher education sector has co-ordinated national pay strikes by all three major trade unions, widespread picketing and a number of student occupations. The political basis of this movement has centred around opposition to privatisation – from the outsourcing of services to the sell-off of student debt.

On 4 December, police raided the University of London’s management offices, where a student occupation was taking place, to demandpensions for outsourced cleaning staff and a reversal of the university’s decision to abolish its student union. The eviction took place without court proceedings, and in the following 48 hours, 40 students werearrested and others were assaulted by the Metropolitan police. Some were placed on bail conditions banning them from congregating in public in groups of more than four. It marked a low point in a series of police intrusion on to the campus, including an activist arrested for allegedlychalking slogans in support of cleaners’ strikes, and my own arrest.

In the same period, the University of Sussex suspended five studentsfrom their studies, and the University of Birmingham threatened to hit two students with tens of thousands in court costs for occupying. At the University of Ulster last week, management has been accused of cutting off occupiers’ water and electricity as they protested against plans toturn their common room into a corporate dining facility.

Commentators have been right to point towards the problem that demonstrations and strikes pose for university managers who seem to regard themselves as executives of large corporations selling education and employability. As our institutions are run more like businesses, with academia reduced to research competition and democratic processes such as elected academic boards eroded, the people who run universities are becoming unaccountable to those who make them function. That is why the most recent wave of protest has sprung to life not only under the banner of support for strikes, but that of “cops off campus“. The demand that police get off campuses is not just about defending civil liberties; it is also about what kind of education system we want – one in which disputes are resolved collectively, rather than with court injunctions and police batons.

What is happening in education matters, and not just because it is the place where many people first come into contact with political ideas. The higher and further education sectors have for years been at the forefront of opposing austerity – from the walkouts that followed the Millbank Tower occupation in 2010 and triggered action from the unions, to what seems to many like a renewal of dissent now.

The education sector is not yet comparable, either in its disruptive capacity or the level of repression it has faced, to those who carried out mass industrial disputes of the 1970s and 80s. But like other social movements, its experience fits a historical pattern of political policing being deployed against sectors of society that most resist the interests of the market. If students and workers in education can build a concerted revolt over privatisation and repression, we may well expose the contradictions in the government’s attempts to marketise universities and colleges, and push it back.

 

Get Ready for Confiscation – International Man

Get Ready for Confiscation – International Man.

By Jeff Thomas

This 1901 photo shows what appears to be a group of respectable businessmen.

Some, however, may recognise this group as Butch Cassidy’s Wild Bunch, who, although by all accounts were gentlemanly in their escapades, were highly successful robbers. It may well be that their success was attributable to the fact that they were quite business-like in their approach to robbery.

Today, we have a clear parallel in the central bankers of the world. Through a close marriage to the governments of the countries in which they operate, the central bankers of today have been elevated to a position in which, if they are not actually above the law, laws are rewritten to legalise their exceedingly unethical objectives.

In early 2013, when Cyprus announced that it had executed a “bail-in” of depositors’ funds, we predicted that the Cyprus bail-in, far from being an isolated case, was intended as a trial balloon, that bail-ins would later be imposed in Europe, then the US.

Now, the EU has proudly announced its plan for an EU bail-in, which will come into force in one year and take effect in two years. Gunnar Hökmark, who steered the legislation through Parliament, proudly stated, We now have a strong bail-in system which sends a clear message that bank shareholders and creditors will be the ones to bear the losses on rainy days, not taxpayers.”

So, there’s clearly nothing to worry about. The problem is solved and only the shareholders, bond holders, and depositors will lose… all of their deposits over €100,000 (US$138,000.) Those who do not possess savings of over €100,000 will lose absolutely nothing.

Quite a relief.

Unfortunately, there are two niggling problems with this wondrous “solution.” First, it assumes that it’s perfectly all right for the bankers of the world, who were largely responsible for the current economic disaster, to steal the savings of its depositors. Second, it sets a date of implementation at two years away—hardly the sort of date that would be set to solve an emergency, which is why the banks claim the theft is necessary.

Essentially, what this says to the public is that, henceforth, no one in the EU will be allowed to keep more than €100,000 in the bank, another way of saying that “wealth” will not be tolerated. “There’s no hurry, folks, we’re just putting you on notice that the middle and upper classes are to be eliminated.”

As we advised earlier this year, Canada has passed similar legislation, but they chose to hide it in their 2013 budget. The news was never reported in the media.

However, US citizens who are reading this may wipe their collective brow and say, “Thank God, it doesn’t include us.”

But, again, as we postulated earlier, the bail-in is intended for the US as well. Once it has sunk in that such a move is perfectly acceptable in Europe, the US will declare its own bail-in policy.

Those who still cling to some hope that there may be some good news here, may say, “Well, at least if I have less than €100,000 on deposit, I can still call that my own.”

These folks will be the same ones who are relieved that they are likely to be left out of a “one-time” wealth tax that is currently being floated as another solution to the exorbitant operating costs of governments.

However, any government that steals your money once is likely to have another go at a later date. And another and another.

“One time only” taxes have a way of repeating again and again.

Once they are accepted at all—for any reason—governments tend to repeat them. They eventually become the norm. Even the income tax in the US started as a “temporary” tax.

Further, governments have a way of lowering the bar as to who is affected. For both the bail-in and the one-time wealth tax, once governments have blown through the public’s savings, they will need another injection of monetary heroin soon enough.

Of one thing we can be assured: Governments will not, under any circumstances, decide to decrease the size of government. Nor will the legislators decrease the emoluments and benefits they receive. Once the people of the European and North American countries have been downgraded to a single class of serfs, they will not be allowed to rise up again to the point that they have the economic power to be self-determining in their lives.

Regular readers of this publication will be very familiar with the many responses from their peers who write in, saying, “This internationalisation idea is fine for those who have wealth, but what about me? I don’t have enough to finance my relocation. I’m stuck here, no matter how bad it gets.”

Quite so. For those who are already in the serf class, an exit from the system may well be economically impossible. Once the middle and upper classes are eliminated, the collectivist pen will be complete, and the sheep that are captive within will be ready for the shearing.

The bank robbers of a century ago have been replaced by the robber banks. And their partners, the governments, have unquestionably rolled out the red carpet for them to steal your wealth with impunity.

For those who still reside in such countries, there are essentially three choices:

  1. Accept your fate in the new collectivist state
  1. Imagine that some sort of citizens outcry or revolt will dissuade the robbers
  1. Opt out of the system for greener pastures elsewhere

This is a “limited time offer” as the old television adverts used to say. Once the laws are in, the offer will end.

 

U.A.E. convicts group over spoof documentary – World – CBC News

U.A.E. convicts group over spoof documentary – World – CBC News.

American convictedShezanne Cassim of Woodbury, Minn., was among eight people convicted under tougher measures governing internet use in the United Arab Emirates. (Associated Press/Courtesy Shervon Cassim) (The Associated Press)

A court in the United Arab Emirates sentenced eight people, including an unidentified Canadian, to up to a year in prison Monday after being convicted in connection to a satirical video about youth culture in Dubai.

The video they produced and uploaded to the internet — a spoof documentary of would-be “gangsta” youth in the Gulf Arab city-state.called Ultimate Combat System: The Deadly Satwa Gs — is set in the Satwa district of Dubai. It pokes fun at Dubai youth who styled themselves “gangstas” but are not particularly thuggish, and shows fictional “combat” training that includes throwing a sandal and using a mobile phone to call for help.

It opens with text saying the video is fictional and is not meant to offend.

The state-owned daily The National said they were accused of “defaming the image of United Arab Emirates society abroad.”

Supporters of the defendants reported that they were charged under a 2012 cyber-crimes law that tightened penalties for challenging authorities.

Shezanne Cassim, 29, from Woodbury, Minn., became the public face of the defendants after his family launched an effort to publicize his months-long incarceration following his arrest in April. Cassim, who was born in Sri Lanka and moved to Dubai for work after graduating from the University of Minnesota in 2006, was sentenced Monday to a year in prison followed by deportation and received a 10,000 dirham ($2,725 US) fine, according to family spokeswoman Jennifer Gore.

Cassim’s brother, Shervon, called the ruling “painful and unfair.”

“Shez is coming up on nine months incarceration for making a parody. This isn’t justice,” he said in a statement.

Canadian only identified by initials

Two Indian defendants received similar sentences, while two Emirati brothers were sentenced to eight months behind bars and received 5,000 dirham fines, according to The National. A third brother was pardoned.

Three other defendants — a Canadian, a Briton and an American — were convicted and sentenced in absentia to the penalties given to the other foreigners. They have never been detained by authorities and so are unlikely to serve their sentences. The paper identified the defendants only by their initials, which is common in the Emirati media.

Gulf Arab authorities have been cracking down on social media use over the past two years, with dozens of people arrested across the region for Twitter posts deemed offensive to leaders or for social media campaigns urging more political openness.

 

If Mexico is the next Brazil in oil production, brace for disappointment

If Mexico is the next Brazil in oil production, brace for disappointment.

by Kurt Cobb, originally published by Resource Insights  | DEC 22, 2013

Recent reforms that would open oil exploration and development in Mexico to major oil companies for the first time in decades has the media all atwitter about the prospects of a reversal in declining Mexican oil output and a possible doubling of production. The reforms have brought out comparisons with Brazil which has a similar arrangement in which the country’s state-owned oil company works with major international oil giants to develop Brazil’s petroleum resources. Adding to the frothy atmosphere, former Brazilian President Luiz Inacio Lula da Silvaproposed a partnership between Mexico and Brazil to develop oil resources in both countries.

Mexico regional map http://commons.wikimedia.org/wiki/File:Mexico_regional_map.pngIn a world with daily average oil prices hovering near record levels, such news might be welcome if only we could actually count on the accompanying optimistic production forecasts. But, it’s instructive to look at what actually happened in Brazil since the time its potential as a major new oil producer was touted several years ago.

Brazil had discovered large oil deposits in ultradeep (30,000 feet down) reservoirs far offshore. In 2009, Petroleo Brasileiro SA (Petrobras), Brazil’s state-owned oil company, announced that it would invest approxmately $175 billion in oil exploration over several years to boost Brazilian liquid fuel production from 2.4 million barrels per day (mbpd) in 2008 of oil, biofuels and other liquids to 4.6 mbpd in 2015, a move that would make the country a major oil exporter.

Let’s see what kind of progress Brazil has made so far. In 2012 the country produced 2.65 mbpd of liquid fuels, making hardly any progress toward the goal announced for 2015. (The figures for oil proper, that is crude oil plus lease condensate which is the definition of oil, were 1.81 mbpd in 2008 and 2.06 mbpd in 2012.) In fact, instead of contributing to the worldwide supply of exports, Brazil remains a net importer of oil according to the U.S. Energy Information Administration (EIA), and those imports grew from 36,470 barrels per day in 2011 to 155,040 barrels per day in 2012.

The large Brazilian oil company OGX Petróleo e Gas Participações SA filed for bankruptcy recently “after disappointing output from offshore OGX wells set off a crisis of investor confidence,” according to Reuters. It’s no surprise that state-owned Petrobras is also finding it far more difficult to exploit its deep sea oil resources than originally anticipated. Admittedly, there are other problems at Petrobras. It has become a tool of economic policy for keeping unemployment low, saddling it with investments that it might not otherwise have made as a private company. But that doesn’t change the fact that exploiting oil far offshore at extreme depths is difficult.

Mexico’s state-run oil monopoly, Petroleos Mexicanos (Pemex), has seen its production drop from 3.45 mbpd of crude oil proper in 2004 to just 2.59 mbpd in 2012 according the EIA. Reforms that will give international oil companies new access to Mexican oil fields are supposed to change that trend. It’s one thing to let private companies drill previously monopolized fields. It’s another to raise overall nationwide production significantly as a result. Just ask the Brazilians. The easy-to-get oil has already been harvested in Mexico and Brazil. The hard-to-get oil comes next, and well…it’s proving hard to get.

Will Mexico fare better than Brazil? Art Berman, a petroleum geologist and consultant who accurately forecast the bust for shale gas investors, offered this analysis in a recent email:

 I have worked in Mexico since the early 1990s inside Pemex. There is a reason that no significant discoveries have been made since the 1970s–no reservoirs.

 The Campeche Sound [in the Bay of Campeche] has reservoirs thanks to the biggest frack job ever, the Chicxulub meteor impact. The Golden Lane reef trend, discovered much earlier, has been fully explored with no new discoveries. Beyond that, almost nada.

 The Eagle Ford Shale play [in Texas] extends into Mexico and, so far, all tests have yielded [natural] gas. There is a potential oil play in theTampico area from the El Abra Shale that sourced the Golden Lane. The Chicontepec tight calcarenite play contains huge oil [resources] that no one has figured out how to exploit commercially as recently as in the last few years. The deep-water Gulf of Mexico has serious reservoir problems in Mexico.

 Add it all up and we are left with the same sense that there should be huge remaining undiscovered reserves in Mexico that an awful lot of smart foreign companies (Amoco, BP, Chevron, Exxon, Shell, etc.) have been unable to discover working closely [through service contracts] with Pemex since the 1980s.

 As far as the Citi [Citigroup Inc.] estimates go [projecting a doubling of Mexican production which is mentioned and linked above], mucho ruido, pocos nueces (much ado about nothing; literally, lots of noise, no nuts).

Jeffrey Brown, an independent petroleum geologist best known for his Export Land Model weighed in as well on Mexico’s oil future. Brown’s model, first released publicly in 2006, correctly forecast shrinking global net exports of oil in recent years. He believes that any effect of the Mexican reforms will be relatively small and delayed several years. He related his views in a recent email:

 Regarding their [Mexico’s] offshore potential, it’s going to take a long time to work out the agreements, drill some wells and put the wells on line. I wouldn’t expect to see any meaningful contributions from joint venture offshore projects until some time after 2020. Regarding onshore, [that] production could come on line sooner, but the agreements have to be made, and the per-well production rates are vastly lower than offshore. Also, I suspect that the production sharing agreements are going to be something more or less equivalent to a 50% royalty (or worse), versus much more favorable terms in Texas [which would make investment in Texas more attractive to major oil companies versus investment in Mexico].

Brown, who manages a joint venture exploration program based in Ft. Worth, also noted that “Mexico is on track to approach zero net oil exports in about six years (around 2019).” He continually reminds those making rosy predictions about oil exports for any exporting country that those countries tend to grow as oil revenues increase which means their thirst for oil also grows. That can leave less and less oil available over time for export. If the country’s production is in decline, as has been the case with Mexico, exports decrease much faster than production on a percentage basis if domestic consumption grows in the face of declining production–a sort of pincer movement on oil exports.

It’s possible that Mexico’s production may grow somewhat as a result of the country’s reforms. But, it is foolish to expect too much given what we’ve seen in Brazil to date. And, it is important to remember that production from currently producing Mexican wells is declining continuously making it necessary to drill a lot of wells just to maintain current production let alone increase it.

Anyone looking for oil exports or production from Mexico to reach their previous high marks would be wise to plan for a less than salutary result.

 

Egypt bombing at police station kills 12 – World – CBC News

Egypt bombing at police station kills 12 – World – CBC News.

The interim govenrment blamed the explosion in Egypt's Nile Delta town of Dakahlyia on the Muslim Brotherhood, but the Brotherhood condemned the attack.The interim govenrment blamed the explosion in Egypt’s Nile Delta town of Dakahlyia on the Muslim Brotherhood, but the Brotherhood condemned the attack. (Mohamed Abd El Ghany/Reuters)
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A powerful explosion believed to be caused by a car bomb ripped through a police headquarters in a Nile Delta city north of Cairo early on Tuesday, killing 12 people and wounding more than 100, leaving scores buried under the rubble.

The country’s interim government accused the Muslim Brotherhood of orchestrating the attack, branding it a “terrorist organization.” But the Islamist group condemned the bombing, describing it in a statement as a “direct attack on the unity of the Egyptian people” and demanding that the perpetrators be found and brought to justice.

It was the first major bombing in the Nile Delta, spreading the carnage that has marked Egypt’s turmoil over the past months to a new area and bringing it closer to Cairo. Previous deadly violence has mostly taken place in the volatile Sinai Peninsula and in Suez Canal-area cities east of the Egyptian capital.

The blast at 1:10 a.m. local time struck at the security headquarters in the city of Mansoura, 110 kilometres north of Cairo in the Nile Delta province of Daqahliya, collapsing an entire section and side wall of the five-floor building, incinerating dozens of cars outside and damaging several nearby buildings.

8 police officers killed

The state news agency MENA said 12 people were killed, including eight police officers, and that 134 were wounded, among them the city’s security chief and his assistant. Most of the victims were policemen, many of whom were buried beneath the debris.

Associated Press video from the scene showed bulldozers clearing the rubble outside the security headquarters, as charred and wrecked cars littered the street.

Egypt’s Interior Minister Mohammed Ibrahim toured the scene of the explosion at daybreak, pledging that the police will “continue their battle against the dark terrorist forces that tried to tamper with the country’s security,” then went to hospital to visit the wounded.

MENA quoted Cabinet spokesman Sherif Shawki as saying that the Brotherhood showed its “ugly face as a terrorist organization, shedding blood and messing with Egypt’s security.”

Prime Minister Hazem el-Beblawi described the attack as a “terrorist incident,” expressed condolences to the families of the victims and vowed that the perpetrators “will not escape justice.”

A security official, speaking on condition of anonymity because he was not authorized to talk to the media, said the preliminary investigation indicated a car bomb caused the explosion, which also damaged a nearby bank and a theatre.

Security forces cordoned off the whole area around the bombing site, closed major entrances and exits to Mansoura and set up checkpoints to search for perpetrators. State TV called on residents to rush to hospitals to donate blood.

No one claims responsibility

No one immediately claimed responsibility for the bombing, which came a day after an al-Qaeda-inspired group called on police and army personnel to desert or face death at the hands of its fighters.

The militant group based in Sinai and several others have claimed responsibility for a surge of attacks on security forces since a popularly-backed coup in July toppled the country’s former Islamist president, Mohammed Morsi, who hails from the Brotherhood.

In response, Egypt’s armed forces launched an offensive against militants in the northern part of Sinai in August. Coupled with the offensive and with Morsi ousted and imprisoned, Egyptian investigators have moved to put him on trial for links to militants, accusing him and the Brotherhood of being behind the wave of violence in Sinai.

Tuesday’s bombing was not the first time that the security headquarters in Mansoura was targeted. Weeks ago, an explosion went off in front of the building but caused no casualties. Since the summer coup that ousted Morsi, militant Islamists have attacked several security headquarters with car bombs or by suicide bombers.

The Mansoura attack came shortly after the Islamic militant group Ansar Beit al-Maqdis, or the Champions of Jerusalem, threatened more attacks on the military and police, saying it considers Egyptian troops to be infidels because they answer to the secular-leaning military-backed government.

‘Repent’

The group — which gained notoriety after expanding its operations outside of the restive northern Sinai province — has claimed responsibility for a number of suicide car bombings and deadly attacks, including a failed assassination attempt on Egypt’s Interior Minister in September. The minister escaped unharmed.

Ansar Beit al-Maqdis is believed to have ties with Palestinian militants in the neighbouring Gaza Strip, and officials have said other foreign militants have found refuge in Sinai during the ongoing turmoil.

In its message, which appeared on militant websites Monday, the group said it “will be more determined to fight” the military and police if its warning is ignored. It urged them to “repent” from participating in “this infidel bastion that is at war with God and his Prophet, and stop serving in its ranks.”

But MENA quoted Shawki, the Cabinet spokesman as saying that “such terrorist operations will not prevent us from moving forward with the road map.”

He was referring to the upcoming referendum on a draft constitution Jan. 14-15, a key step in a military-backed transition plan aimed at holding presidential and parliamentarian elections later next year.

 

Brent Crude Rises on Escalating Violence in South Sudan – Bloomberg

Brent Crude Rises on Escalating Violence in South Sudan – Bloomberg.

Brent crude advanced to near its highest level in three weeks as violence in South Sudan forced a partial shutdown of oil production facilities.

Futures were up as much as 0.3 percent and are poised to end the year higher for the fifth time. Fighting in South Sudan, which exports about 220,000 barrels a day, has killed at least 500 people and led to the evacuation of employees from India’s Oil & Natural Gas Corp. There will be no floor or electronic trading tomorrow due to the Christmas holiday.

“There is thin holiday trading today and Brent prices are being sustained by political concerns surrounding South Sudan,” Andrey Kryuchenkov, an analyst VTB Capital in London, said by phone. “We’ll wait and see how the broader market reacts to the instability there as more news trickles out.”

Brent for February settlement rose as much as 34 cents to $111.90 on the London-based ICE Futures Europe exchange and was at $111.87 as of 12:02 p.m. in London. The contract closed at $111.77 on Dec. 20, the highest in more than two weeks. The volume of all futures traded was about 74 percent below the 100-day average. Prices have increased 0.7 percent this year.

West Texas Intermediate for February delivery was up 25 cents at $99.16 in electronic trading on the New York Mercantile Exchange. Brent was at a premium of $12.73 to WTI. The spread widened yesterday for a fourth day to close at $13.

UN Peacekeepers

UN Secretary General Ban Ki-moon asked the Security Council for 5,500 soldiers to add to the peacekeeping mission of 7,000 already in South Sudan. The U.S. is positioning troops in the Horn of Africa region to assist in any additional evacuations, Pentagon spokesman Colonel Steve Warren said yesterday.

“As the year comes to a close, the risk of an all out civil war that could stymie the country’s production of around 250,000 barrels a day is growing,” Vienna-based researcher JBC Energy GmbH said today in a note.

South Sudan has sub-Saharan Africa’s biggest oil reserves after Nigeria and Angola, according to BP Plc data.

WTI’s 200-day moving average is $98.88 today, according to data compiled by Bloomberg. Futures also halted a rally near this indicator two weeks ago. Sell orders tend to be clustered around technical-resistance levels.

Just Wait

“Crude is seeing some resistance around the 200-day moving average, and that’s giving traders a reason not to move too far away from this level,” Ric Spooner, a chief analyst at CMC Markets in Sydney, said today. “After recent gains, we are at a level where traders might be comfortable to just wait and see if the news can catch up to the prices. People in the market would want to square these long positions.”

Gasoline stockpiles stockpiles in the U.S., the world’s largest oil consumer, probably rose by 1.1 million barrels in the week ended Dec. 20, according to the median estimate of seven analysts surveyed by Bloomberg before Energy Information Administration data on Dec. 27. Supplies have climbed the previous four weeks to 220.5 million, said the EIA, the Energy Department’s statistical arm.

Crude inventories are projected to have decreased by 3 million barrels, the survey shows.

 

N Korea ‘restarting nuclear programme’ – Asia-Pacific – Al Jazeera English

N Korea ‘restarting nuclear programme’ – Asia-Pacific – Al Jazeera English.

A cooling tower at Yongbyon was destroyed in June 2008, but the plant now seems to be reactivating [Reuters]
Satellite imagery suggests North Korea is making “wide-ranging, extensive” efforts to fully reactivate its main nuclear complex, a US think-tank has said, in line with Pyongyang’s vows to strengthen its weapons programme.Recent images show work at the Yongbyon nuclear compound, apparently aimed at producing fuel rods to be used in a plutonium reactor, Johns Hopkins University’s US-Korea Institute said.

Analysis of the imagery identified one “probable fuel fabrication plant” for the 5-megawatt plutonium reactor that reopened earlier this year, researcher Nick Hansen wrote on the institute’s blog, 38 North.

The isolated communist state staged its third nuclear test in February, its most powerful to date, after two previous tests in 2006 and 2009.

Two months later, it said it would reopen the Yongbyon nuclear compound in the northwest that had been shut since 2007, in order to bolster its atomic arsenal.

“The soot on the new roof shows that a heating process had occurred, such as the use of metal casting furnaces necessary to complete the heat treatment during the fuel rod assembly,” Hansen wrote.

Nuclear stockpile

A nearby venue that appears to be a dumping site showed a large amount of “grey materials” suspected to be ash from the fuel rod production process, he added.

“The identification of these facilities indicates a more wide-ranging, extensive effort by North Korea to modernise and restart the Yongbyon complex… than previously understood,” he wrote.

Pyongyang’s current stockpile of nuclear materials, mostly plutonium, is variously estimated as being enough for six to 10 bombs.

Nam Jae-Joon, chief of the South’s intelligence agency, told politicians on Monday that the North was capable of staging another atomic test anytime but had so far showed no signs of doing so.

 

Edward Snowden: ‘The Mission’s Already Accomplished… I Already Won’

Edward Snowden: ‘The Mission’s Already Accomplished… I Already Won’.

During more than 14 hours of interviews, the first he has conducted in person since arriving here in June, Snowden did not part the curtains or step outside. Russia granted him temporary asylum on Aug. 1, but Snowden remains a target of surpassing interest to the intelligence services whose secrets he spilled on an epic scale.

Read the whole story at The Washington Post

MOSCOW — The familiar voice on the hotel room phone did not waste words.“What time does your clock say, exactly?” he asked.

2013 NSA recap

He checked the reply against his watch and described a place to meet.“I’ll see you there,” he said.Edward Joseph Snowden emerged at the appointed hour, alone, blending into a light crowd of locals and tourists. He cocked his arm for a handshake, then turned his shoulder to indicate a path. Before long he had guided his visitor to a secure space out of public view.

During more than 14 hours of interviews, the first he has conducted in person sincearriving here in June, Snowden did not part the curtains or step outside. Russia granted him temporary asylum on Aug. 1, but Snowden remains a target of surpassing interest to the intelligence services whose secrets he spilled on an epic scale.

Late this spring, Snowden supplied three journalists, including this one, with caches of top-secret documents from the National Security Agency, where he worked as a contractor. Dozens of revelations followed, and then hundreds, as news organizations around the world picked up the story. Congress pressed for explanations, new evidence revived old lawsuits and the Obama administration was obliged to declassify thousands of pages it had fought for years to conceal.

Taken together, the revelations have brought to light a global surveillance system that cast off many of its historical restraints after the attacks of Sept. 11, 2001. Secret legal authorities empowered the NSA to sweep in the telephone, Internet and location records of whole populations. One of the leaked presentation slides described the agency’s “collection philosophy” as “Order one of everything off the menu.”

Six months after the first revelations appeared in The Washington Post and Britain’s Guardian newspaper, Snowden agreed to reflect at length on the roots and repercussions of his choice. He was relaxed and animated over two days of nearly unbroken conversation, fueled by burgers, pasta, ice cream and Russian pastry.

Snowden offered vignettes from his intelligence career and from his recent life as “an indoor cat” in Russia. But he consistently steered the conversation back to surveillance, democracy and the meaning of the documents he exposed.

“For me, in terms of personal satisfaction, the mission’s already accomplished,” he said. “I already won. As soon as the journalists were able to work, everything that I had been trying to do was validated. Because, remember, I didn’t want to change society. I wanted to give society a chance to determine if it should change itself.”

“All I wanted was for the public to be able to have a say in how they are governed,” he said. “That is a milestone we left a long time ago. Right now, all we are looking at are stretch goals.”

‘Going in blind’

Snowden is an orderly thinker, with an engineer’s approach to problem-solving. He had come to believe that a dangerous machine of mass surveillance was growing unchecked. Closed-door oversight by Congress and the Foreign Intelligence Surveillance Court was a “graveyard of judgment,” he said, manipulated by the agency it was supposed to keep in check. Classification rules erected walls to prevent public debate.

Toppling those walls would be a spectacular act of transgression against the norms that prevailed inside them. Someone would have to bypass security, extract the secrets, make undetected contact with journalists and provide them with enough proof to tell the stories.

The NSA’s business is “information dominance,” the use of other people’s secrets to shape events. At 29, Snowden upended the agency on its own turf.

“You recognize that you’re going in blind, that there’s no model,” Snowden said, acknowledging that he had no way to know whether the public would share his views.

“But when you weigh that against the alternative, which is not to act,” he said, “you realize that some analysis is better than no analysis. Because even if your analysis proves to be wrong, the marketplace of ideas will bear that out. If you look at it from an engineering perspective, an iterative perspective, it’s clear that you have to try something rather than do nothing.”

By his own terms, Snowden succeeded beyond plausible ambition. The NSA, accustomed to watching without being watched, faces scrutiny it has not endured since the 1970s, or perhaps ever.

The cascading effects have made themselves felt in Congress, the courts, popular culture, Silicon Valley and world capitals. The basic structure of the Internet itself is now in question, as Brazil and members of the European Union consider measures to keep their data away from U.S. territory and U.S. technology giants including Google, Microsoft and Yahoo take extraordinary steps to block the collection of data by their government.

For months, Obama administration officials attacked Snowden’s motives and said the work of the NSA was distorted by selective leaks and misinterpretations.

On Dec. 16, in a lawsuit that could not have gone forward without the disclosures made possible by Snowden, U.S. District Judge Richard J. Leon described the NSA’s capabilities as “almost Orwellian” and said its bulk collection of U.S. domestic telephone records was probably unconstitutional.

The next day, in the Roosevelt Room, an unusual delegation of executives from old telephone companies and young Internet firms told President Obama that the NSA’s intrusion into their networks was a threat to the U.S. information economy. The following day, an advisory panel appointed by Obama recommended substantial new restrictions on the NSA, including an end to the domestic call-records program.

“This week is a turning point,” said the Government Accountability Project’s Jesselyn Radack, who is one of Snowden’s legal advisers. “It has been just a cascade.”

‘They elected me’

On June 22, the Justice Department unsealed a criminal complaint charging Snowden with espionage and felony theft of government property. It was a dry enumeration of statutes, without a trace of the anger pulsing through Snowden’s former precincts.

In the intelligence and national security establishments, Snowden is widely viewed as a reckless saboteur, and journalists abetting him little less so.

At the Aspen Security Forum in July, a four-star military officer known for his even keel seethed through one meeting alongside a reporter he knew to be in contact with Snowden. Before walking away, he turned and pointed a finger.

“We didn’t have another 9/11,” he said angrily, because intelligence enabled warfighters to find the enemy first. “Until you’ve got to pull the trigger, until you’ve had to bury your people, you don’t have a clue.”

It is commonly said of Snowden that he broke an oath of secrecy, a turn of phrase that captures a sense of betrayal. NSA Director Keith B. Alexander and Director of National Intelligence James R. Clapper Jr., among many others, have used that formula.

In his interview with The Post, Snowden noted matter-of-factly that Standard Form 312, the classified-information nondisclosure agreement, is a civil contract. He signed it, but he pledged his fealty elsewhere.

“The oath of allegiance is not an oath of secrecy,” he said. “That is an oath to the Constitution. That is the oath that I kept that Keith Alexander and James Clapper did not.”

People who accuse him of disloyalty, he said, mistake his purpose.

“I am not trying to bring down the NSA, I am working to improve the NSA,” he said. “I am still working for the NSA right now. They are the only ones who don’t realize it.”

What entitled Snowden, now 30, to take on that responsibility?

“That whole question — who elected you? — inverts the model,” he said. “They elected me. The overseers.”

He named the chairmen of the Senate and House intelligence committees.

Dianne Feinstein elected me when she asked softball questions” in committee hearings, he said. “Mike Rogers elected me when he kept these programs hidden. . . . The FISA court elected me when they decided to legislate from the bench on things that were far beyond the mandate of what that court was ever intended to do. The system failed comprehensively, and each level of oversight, each level of responsibility that should have addressed this, abdicated their responsibility.”

“It wasn’t that they put it on me as an individual — that I’m uniquely qualified, an angel descending from the heavens — as that they put it on someone, somewhere,” he said. “You have the capability, and you realize every other [person] sitting around the table has the same capability but they don’t do it. So somebody has to be the first.”

‘Front-page test’

Snowden grants that NSA employees by and large believe in their mission and trust the agency to handle the secrets it takes from ordinary people — deliberately, in the case of bulk records collection, and “incidentally,” when the content of American phone calls and e-mails are swept into NSA systems along with foreign targets.

But Snowden also said acceptance of the agency’s operations was not universal. He began to test that proposition more than a year ago, he said, in periodic conversations with co-workers and superiors that foreshadowed his emerging plan.

Beginning in October 2012, he said, he brought his misgivings to two superiors in the NSA’s Technology Directorate and two more in the NSA Threat Operations Center’s regional base in Hawaii. For each of them, and 15 other co-workers, Snowden said he opened a data query tool called BOUNDLESSINFORMANT, which used color-coded “heat maps” to depict the volume of data ingested by NSA taps.

His colleagues were often “astonished to learn we are collecting more in the United States on Americans than we are on Russians in Russia,” he said. Many of them were troubled, he said, and several said they did not want to know any more.

“I asked these people, ‘What do you think the public would do if this was on the front page?’ ” he said. He noted that critics have accused him of bypassing internal channels of dissent. “How is that not reporting it? How is that not raising it?” he said.

By last December, Snowden was contacting reporters, although he had not yet passed along any classified information. He continued to give his colleagues the “front-page test,” he said, until April.

Asked about those conversations, NSA spokeswoman Vanee Vines sent a prepared statement to The Post: “After extensive investigation, including interviews with his former NSA supervisors and co-workers, we have not found any evidence to support Mr. Snowden’s contention that he brought these matters to anyone’s attention.”

Snowden recounted another set of conversations that he said took place three years earlier, when he was sent by the NSA’s Technology Directorate to support operations at a listening post in Japan. As a system administrator, he had full access to security and auditing controls. He said he saw serious flaws with information security.

“I actually recommended they move to two-man control for administrative access back in 2009,” he said, first to his supervisor in Japan and then to the directorate’s chief of operations in the Pacific. “Sure, a whistleblower could use these things, but so could a spy.”

That precaution, which requires a second set of credentials to perform risky operations such as copying files onto a removable drive, has been among the principal security responses to the Snowden affair.

Vines, the NSA spokeswoman, said there was no record of those conversations, either.

U.S. ‘would cease to exist’

Just before releasing the documents this spring, Snowden made a final review of the risks. He had overcome what he described at the time as a “selfish fear” of the consequences for himself.

“I said to you the only fear [left] is apathy — that people won’t care, that they won’t want change,” he recalled this month.

The documents leaked by Snowden compelled attention because they revealed to Americans a history they did not know they had.

Internal briefing documents reveled in the “Golden Age of Electronic Surveillance.” Brawny cover names such as MUSCULAR, TUMULT and TURMOIL boasted of the agency’s prowess.

With assistance from private communications firms, the NSA had learned to capture enormous flows of data at the speed of light from fiber-optic cables that carried Internet and telephone traffic over continents and under seas. According to one document in Snowden’s cache, the agency’s Special Source Operations group, which as early as 2006 was said to be ingesting “one Library of Congress every 14.4 seconds,” had an official seal that might have been parody: an eagle with all the world’s cables in its grasp.

Each year, NSA systems collected hundreds of millions of e-mail address books, hundreds of billions of cellphone location records and trillions of domestic call logs.

Most of that data, by definition and intent, belonged to ordinary people suspected of nothing. But vast new storage capacity and processing tools enabled the NSA to use the information to map human relationships on a planetary scale. Only this way, its leadership believed, could the NSA reach beyond its universe of known intelligence targets.

In the view of the NSA, signals intelligence, or electronic eavesdropping, was a matter of life and death, “without which America would cease to exist as we know it,” according to an internal presentation in the first week of October 2001 as the agency ramped up its response to the al-Qaeda attacks on the World Trade Center and the Pentagon.

With stakes such as those, there was no capability the NSA believed it should leave on the table. The agency followed orders from President George W. Bush to begin domestic collection without authority from Congress and the courts. When the NSA won those authorities later, some of them under secret interpretations of laws passed by Congress between 2007 and 2012, the Obama administration went further still.

Using PRISM, the cover name for collection of user data from Google, Yahoo, Microsoft, Apple and five other U.S.-based companies, the NSA could obtain all communications to or from any specified target. The companies had no choice but to comply with the government’s request for data.

But the NSA could not use PRISM, which was overseen once a year by the surveillance court, for the collection of virtually all data handled by those companies. To widen its access, it teamed up with its British counterpart, Government Communications Headquarters, or GCHQ, to break into the private fiber-optic links that connected Google and Yahoo data centers around the world.

That operation, which used the cover name MUSCULAR, tapped into U.S. company data from outside U.S. territory. The NSA, therefore, believed it did not need permission from Congress or judicial oversight. Data from hundreds of millions of U.S. accounts flowed over those Google and Yahoo links, but classified rules allowed the NSA to presume that data ingested overseas belonged to foreigners.

‘Persistent threat’

Disclosure of the MUSCULAR project enraged and galvanized U.S. technology executives. They believed the NSA had lawful access to their front doors — and had broken down the back doors anyway.

Microsoft general counsel Brad Smith took to his company’s blog and called the NSA an “advanced persistent threat” — the worst of all fighting words in U.S. cybersecurity circles, generally reserved for Chinese state-sponsored hackers and sophisticated criminal enterprises.

“For the industry as a whole, it caused everyone to ask whether we knew as much as we thought,” Smith recalled in an interview. “It underscored the fact that while people were confident that the U.S. government was complying with U.S. laws for activity within U.S. territory, perhaps there were things going on outside the United States . . . that made this bigger and more complicated and more disconcerting than we knew.”

They wondered, he said, whether the NSA was “collecting proprietary information from the companies themselves.”

Led by Google and then Yahoo, one company after another announced expensive plans to encrypt its data traffic over tens of thousands of miles of cable. It was a direct — in some cases, explicit — blow to NSA collection of user data in bulk. If the NSA wanted the information, it would have to request it or circumvent the encryption one target at a time.

As these projects are completed, the Internet will become a less friendly place for the NSA to work. The agency can still collect data from virtually anyone, but collecting from everyone will be harder.

The industry’s response, Smith acknowledged, was driven by a business threat. U.S. companies could not afford to be seen as candy stores for U.S. intelligence. But the principle of the thing, Smith said, “is fundamentally about ensuring that customer data is turned over to governments pursuant to valid legal orders and in accordance with constitutional principles.”

‘Warheads on foreheads’

Snowden has focused on much the same point from the beginning: Individual targeting would cure most of what he believes is wrong with the NSA.

Six months ago, a reporter asked him by encrypted e-mail why Americans would want the NSA to give up bulk data collection if that would limit a useful intelligence tool.

“I believe the cost of frank public debate about the powers of our government is less than the danger posed by allowing these powers to continue growing in secret,” he replied, calling them “a direct threat to democratic governance.”

In the Moscow interview, Snowden said, “What the government wants is something they never had before,” adding: “They want total awareness. The question is, is that something we should be allowing?”

Snowden likened the NSA’s powers to those used by British authorities in Colonial America, when “general warrants” allowed for anyone to be searched. The FISA court, Snowden said, “is authorizing general warrants for the entire country’s metadata.”

“The last time that happened, we fought a war over it,” he said.

Technology, of course, has enabled a great deal of consumer surveillance by private companies, as well. The difference with the NSA’s possession of the data, Snowden said, is that government has the power to take away life or freedom.

At the NSA, he said, “there are people in the office who joke about, ‘We put warheads on foreheads.’ Twitter doesn’t put warheads on foreheads.”

Privacy, as Snowden sees it, is a universal right, applicable to American and foreign surveillance alike.

“I don’t care whether you’re the pope or Osama bin Laden,” he said. “As long as there’s an individualized, articulable, probable cause for targeting these people as legitimate foreign intelligence, that’s fine. I don’t think it’s imposing a ridiculous burden by asking for probable cause. Because, you have to understand, when you have access to the tools the NSA does, probable cause falls out of trees.”

‘Everybody knows’

On June 29, Gilles de Kerchove, the European Union’s counter­terrorism coordinator, awoke to a report in Der Spiegel that U.S. intelligence had broken into E.U. offices, including his, to implant surveillance devices.

The 56-year-old Belgian, whose work is often classified, did not consider himself naive. But he took the news personally, and more so when he heard unofficial explanations from Washington.

“ ‘Everybody knows. Everybody does’ — Keith Alexander said that,” de Kerchove said in an interview. “I don’t like the idea that the NSA will put bugs in my office. No. I don’t like it. No. Between allies? No. I’m surprised that people find that noble.”

Comparable reactions, expressed less politely in private, accompanied revelations that the NSA had tapped the cellphones of German Chancellor Angela Merkel and Brazilian President Dilma Rousseff. The blowback roiled relations with both allies, among others. Rousseff canceled a state dinner with Obama in September.

When it comes to spying on allies, by Snowden’s lights, the news is not always about the target.

“It’s the deception of the government that’s revealed,” Snowden said, noting that the Obama administration offered false public assurances after the initial reports about NSA surveillance in Germany “The U.S. government said: ‘We follow German laws in Germany. We never target German citizens.’ And then the story comes out and it’s: ‘What are you talking about? You’re spying on the chancellor.’ You just lied to the entire country, in front of Congress.”

In private, U.S. intelligence officials still maintain that spying among friends is routine for all concerned, but they are giving greater weight to the risk of getting caught.

“There are many things we do in intelligence that, if revealed, would have the potential for all kinds of blowback,” Clapper told a House panel in October.

‘They will make mistakes’

U.S. officials say it is obvious that Snowden’s disclosures will do grave harm to intelligence gathering, exposing methods that adversaries will learn to avoid.

“We’re seeing al-Qaeda and related groups start to look for ways to adjust how they communicate,” said Matthew Olsen, director of the National Counterterrorism Center and a former general counsel at the NSA.

Other officials, who declined to speak on the record about particulars, said they had watched some of their surveillance targets, in effect, changing channels. That evidence can be read another way, they acknowledged, given that the NSA managed to monitor the shift.

Clapper has said repeatedly in public that the leaks did great damage, but in private he has taken a more nuanced stance. A review of early damage assessments in previous espionage cases, he said in one closed-door briefing this fall, found that dire forecasts of harm were seldom borne out.

“People must communicate,” he said, according to one participant who described the confidential meeting on the condition of anonymity. “They will make mistakes, and we will exploit them.”

According to senior intelligence officials, two uncertainties feed their greatest concerns. One is whether Russia or China managed to take the Snowden archive from his computer, a worst-case assumption for which three officials acknowledged there is no evidence.

In a previous assignment, Snowden taught U.S. intelligence personnel how to operate securely in a “high-threat digital environment,” using a training scenario in which China was the designated threat. He declined to discuss the whereabouts of the files, but he said that he is confident he did not expose them to Chinese intelligence in Hong Kong. And he said he did not bring them to Russia.

“There’s nothing on it,” he said, turning his laptop screen toward his visitor. “My hard drive is completely blank.”

The other big question is how many documents Snowden took. The NSA’s incoming deputy director, Rick Ledgett, said on CBS’s “60 Minutes” recently that the number may approach 1.7 million, a huge and unexplained spike over previous estimates. Ledgett said he wouldfavor trying to negotiate an amnesty with Snowden in exchange for “assurances that the remainder of the data could be secured.”

Obama’s national security adviser, Susan E. Rice, later dismissed the possibility.

“The government knows where to find us if they want to have a productive conversation about resolutions that don’t involve Edward Snowden behind bars,” said the American Civil Liberties Union’s Ben Wizner, the central figure on Snowden’s legal team.

Some news accounts have quoted U.S. government officials as saying Snowden has arranged for the automated release of sensitive documents if he is arrested or harmed. There are strong reasons to doubt that, beginning with Snowden’s insistence, to this reporter and others, that he does not want the documents published in bulk.

If Snowden were fool enough to rig a “dead man’s switch,” confidants said, he would be inviting anyone who wants the documents to kill him.

Asked about such a mechanism in the Moscow interview, Snowden made a face and declined to reply. Later, he sent an encrypted message. “That sounds more like a suicide switch,” he wrote. “It wouldn’t make sense.”

‘It’s not about me’

By temperament and circumstance, Snowden is a reticent man, reluctant to discuss details about his personal life.

Over two days his guard never dropped, but he allowed a few fragments to emerge. He is an “ascetic,” he said. He lives off ramen noodles and chips. He has visitors, and many of them bring books. The books pile up, unread. The Internet is an endless library and a window on the progress of his cause.

“It has always been really difficult to get me to leave the house,” he said. “I just don’t have a lot of needs. . . . Occasionally there’s things to go do, things to go see, people to meet, tasks to accomplish. But it’s really got to be goal-oriented, you know. Otherwise, as long as I can sit down and think and write and talk to somebody, that’s more meaningful to me than going out and looking at landmarks.”

In hope of keeping focus on the NSA, Snowden has ignored attacks on himself.

“Let them say what they want,” he said. “It’s not about me.”

Former NSA and CIA director Michael V. Hayden predicted that Snowden will waste away in Moscow as an alcoholic, like other “defectors.” To this, Snowden shrugged. He does not drink at all. Never has.

But Snowden knows his presence here is easy ammunition for critics. He did not choose refuge in Moscow as a final destination. He said that once the U.S. government voided his passport as he tried to change planes en route to Latin America, he had no other choice.

It would be odd if Russian authorities did not keep an eye on him, but no retinue accompanied Snowden and his visitor saw no one else nearby. Snowden neither tried to communicate furtively nor asked that his visitor do so. He has had continuous Internet access and has talked to his attorneys and to journalists daily, from his first day in the transit lounge at Sheremetyevo airport.

“There is no evidence at all for the claim that I have loyalties to Russia or China or any country other than the United States,” he said. “I have no relationship with the Russian government. I have not entered into any agreements with them.”

“If I defected at all,” Snowden said, “I defected from the government to the public.”

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