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Is Mass Spying Being Used to Make Some People Rich?

George Washington's picture





 

We’ve previously documented that the government has been giving our private information to big companies so they can make money. And see this.

The Wall Street Journal reported that the NSA spies on Americans’ credit card transactions.  Many other agencies are doing the same. In fact, virtually all U.S. intelligence agencies – including the CIA and NSA – are going to spy on Americans’ finances. The IRS will also be spying on Americans’ shopping records, travel, social interactions, health records and files from other government investigators.

Not only can the NSA intercept and store virtually all digital communications on the Internet, but private contractors can also view all of your data (and the government isn’t keeping track of which contractors see your data and which don’t). And because background checks regarding some contractors are falsified, it is hard to know the types of people that might have your information.

In an articled entitled “How Much Are the NSA and CIA Front Running Markets?”, Naked Capitalism reports:

A 2008 paper [which was subsequently published in the prestigious Oxford Quarterly Journal of Economics] by Arindrajit Dube, Ethan Kaplan, and Suresh Naidu  ...  found evidence that the CIA and/or members of the Executive branch either disclosed or acted on information about top-secret authorizations of coups. Stocks in “highly exposed” firms rose more in the pre-coup authorization phase than they did when the coup was actually launched.

 

Here’s how the dataset was developed:

We selected our sample of coups on the following basis: (1.) a CIA timeline of events or a secondary timeline based upon an original CIA document existed, (2.) the coup contained secret planning events including at least one covert authorization of a coup attempt by a national intelligence agency and/or a head of state, and (3.) the coup authorization was against a government which nationalized property of at least one sufficiently exposed multinational firm with publicly traded shares.

Out of this, the authors found four coup attempts that met their criteria: the ouster of Muhammed Mossadegh in Iran in 1953, two programs in Guatemala in 1952 and 1954 that eventually removed Jacobo Arbenz Guzman; the unsuccessful effort to topple Castro in 1961, and an operation that began in Chile in 1970 and culminated in overthrow of Salvador Allende. Then they chose companies:

We apply 3 criteria to select our sample of companies. First, a company must be publicly traded, so that we can observe a stock price. Secondly, the company must be “well-connected”, in terms of being linked to the CIA. Finally, the company should be highly exposed to political changes in the affected country, in the sense that a large fraction of a company’s assets are in that country.

They used these criteria to devise two samples (based on different definitions of “highly exposed”) and tested both.

 

Their conclusions:

Covert operations organized and abetted by foreign governments have played a sub- stantial role in the political and economic development of poorer countries around the world. We look at CIA-backed coups against governments which had nationalized a considerable amount of foreign investment. Using an event-study methodology, we find that private information regarding coup authorizations and planning by the U.S. government increased the stock prices of expropriated multinationals that stood to benefit from the regime change. The presence of these abnormal returns suggests that there were leaks from the CIA or others in the executive branch of government to asset traders or that government officials with access to this information themselves traded upon it. Consistent with theories of asset price determination under private information, this information took some time to be fully reflected in the stock price. Moreover, the evidence we find suggests that coup authorization information was only present in large, politically connected companies which were also highly exposed.

 

We find that coup authorizations, on net, contributed more to stock price rises of highly exposed and well connected companies than the coup events themselves. These price changes reflect sizeable shifts in beliefs about the probability of coup occurrence.

 

Our results are robust across countries, except Cuba, as well as to a variety of controls for alternate sources of information, including public events and newspaper articles. The anomalous results for Cuba are consistent with the information leaks and inad- equate organization that surrounded that particular coup attempt.

Now sports fans, given the fact that there’s reason to believe that people in the intelligence with access to privileged information weren’t above leaking it to people who could take advantage of it, why should we expect things to be different now? And given what has already been revealed about the NSA’s data gathering, if you were a clever trader and had access to this information, how would you mine it? How would you go about finding patterns or events to exploit?

Given that the U.S. has been recently been involved in military actions and/or training exercises in Iraq, Afghanistan, Libya, Syria, Yemen, Pakistan and up to 35 African nations (and see this), there is  opportunity for people who know what military forces will be deployed where to make money.

And because companies will pay a lot of money to get financial data early, information gleaned through spying could be very valuable.

And someone who knew (one way or another) what the Federal Reserve was going to do could make a bundle. Indeed, even knowing what powerful government officials are reading could be valuable.

And since data on consumers is worth a lot of money, someone who had access to consumers’ spending patterns, habits, preferences and other private data could sell the information.

And due to the fact that large companies spend huge sums of money to conduct industrial espionage on their rivals, information gained through spying could be invaluable. Especially since the NSA closely spies on  the European Union, the European Parliament, Germany,  the G20 summit and Chinese universities.

And several financial and economic experts – such as Jim Rickards, Max Keiser, German central bank president Ernst Welteke, Swiss economists Remo Crameri, Marc Chesney, Loriano Mancini and Bill Bergman (senior financial markets policy analyst for the Federal Reserve Bank of Chicago for 13 years) – also say that there were insider trades right before 9/11 by people who knew the attacks were coming … people  with “no conceivable ties to al-Qaeda” according to the 9/11 Commission.

You don’t have to believe that 9/11 was an inside job to believe that this theory is at least possible. After all, 9/11 was foreseeable to people in intelligence services worldwide … as was Al Qaeda flying planes into the World Trade Center and Pentagon.

 


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Mon, 07/01/2013 - 22:25 | Link to Comment failsafe
failsafe's picture

GW did you see post# 3711082 re hacking zero hedge re gray zeros blocking chunks of your text? Not sure how legit hacking concern is but the blocked chunks of text is correct... Not enough that I couldn't read through, just saying ...

Mon, 07/01/2013 - 16:25 | Link to Comment CH1
CH1's picture

No - our loverlords are purely benevolent and righteous - they never do anything that is not clean and perfect!

 

(And if you can't tell that that was sarcasm, take a freeking pill.)

Mon, 07/01/2013 - 16:12 | Link to Comment Lmo Mutton
Lmo Mutton's picture

Well lets test this.  Everyone text your buddies that xyz is about to move and you are going long big time.

BTFD and crash NSA.

Mon, 07/01/2013 - 16:05 | Link to Comment CustomersMan
CustomersMan's picture

 

Good article, but you're late to the game:

Back in the early 1980's Henry Kaufman at Solomon Brothers was the interest rate, treasury and other bond "GURU" who would predict what FED Chairman Volcker would say each week about money supply and the Fed's pending actions.

Each week Kaufman would make a statement, most certainly after he had pre-positioned the bond holdings of the firm, his friends and colleagues, and then move the markets with billions to be made, when he made his predictions, which were usualy accurate.

In my view it was a total scam. Yet it worked for quite some time.

Mon, 07/01/2013 - 16:01 | Link to Comment f16hoser
f16hoser's picture

I don't know about Mass Spying but airport X-ray machines made Michael Chertoff richer than a mother-fucker!

Mon, 07/01/2013 - 15:56 | Link to Comment supermaxedout
supermaxedout's picture

Think about the damage done to companies and inventors in Europe and Asia (Japan especially). All their trade secrets and industrial know how is an open book for the USSA. And there is made use of this illegally purchased know how in the US and Britain. High Tech made in the US was often first developed at other places and then stolen.

The only good thing is, that the USSA knows it all but they can make little use out of it. They are lacking the industrial backbone. More or less only the military and aviation complex is capable to make use out of some of this stolen know how.

Not to mention the US front running in patent applications, or when its too late its going to be blocked. European Patent are sometimes declared as "secret" in the national interest (of the USA of course, but that means also in Germany for example) - thus having the effect to hinder or stop mayor break through technologies which make it never to the markets.  These kind of patents never make it to the public and the inventor just gets nothing at all - even his method might be used in secret by the US military complex and makes a lot of money overthere. And the inventor can not even speak about it even he goes bankrupt. Its a US secret and thats it.

Mon, 07/01/2013 - 15:51 | Link to Comment CustomersMan
CustomersMan's picture

 

It seems you're trying to prove individual cases. what we've learned is that if there is a way to take advantage of information, and use it without getting caught, those with connections will find a way to take advantage. 9/11/01 is a perfect example, even with a paper trail WHO GOT CAUGHT, WHO WAS BROUGHT UP ON CHARGES? The action in the "put" options market is just one example. What about the GOLD being moved out of the building that morning? Or how about the FED closing down tracking of the "LAUNDERING" or securities including U.S. Treasuries that day to facilitate criminal "CLEARING" without records, an EMERGENCY ACTION?

It's clear some people at the top were covering for others, to our DETRIMENT.

Why try to prove other examples, when the information is hidden by the money stolen and shared between the "Conspirators" ? These ALL QUALIFY UNDER RICO. Where is the action?

I don't need to be convinced, if these other cases take years and years to prove, it's a joke, mean-while they steal the fillings from our teeth, and laugh about it. 9/11/01 should be more than enough to bring the principals to the gallows.

Mon, 07/01/2013 - 15:33 | Link to Comment kurt
kurt's picture

Zero Hedge being hacked. The first few words of several paragraphs are overlaid with grey zeros. You can copy over the blanked out words and past them to a text page to "repair" the text.

Our government is OUT of control. I suspect they are preparing a false flag. This would distract us and seem to justify all the police state tactics. I suspect also that this site will be shut down. Citizens, It is our country.

Mon, 07/01/2013 - 15:32 | Link to Comment billsbest
billsbest's picture
Making others poor or just DEAD?? Americans Get Away with Murder and Torture in Iraq
Mon, 07/01/2013 - 15:13 | Link to Comment TrustbutVerify
TrustbutVerify's picture

You mean the government is rigging the game against private and unconnected citizens?  "I'm shock! Shocked, I tell you."  

Mon, 07/01/2013 - 13:44 | Link to Comment failsafe
failsafe's picture

Thank you for insight GW. BUT HOLY crap....holy holy crap. I have got to get off the grid but sloooowwwwwwly with replacements of me eased in so that in itself won't be the give away. Like slipping paper under a pressure-sensitive kill switch while you sit up and dive for cover from your own exploding car.

Mon, 07/01/2013 - 13:52 | Link to Comment espirit
espirit's picture

We take a few of your stem cells and clone you.  It'll take some time and lots of money, but the ROI is worth it.

Mon, 07/01/2013 - 17:40 | Link to Comment failsafe
failsafe's picture

lol but sort of a grim lol which is better than just grim ... They probably have our stem cells from when they whisked our umbilical cords and placentas away and sent our moms home still woozy from the epidural... "but I'm not bitter." lol just that hey, government, not everybody wants to join in the reindeer games.

Mon, 07/01/2013 - 13:49 | Link to Comment espirit
espirit's picture

So if Snowden had utilized insider info that Google, Facepalm, etc would be essential to Prizm, and had subsequently and privately invested in such companies and become wealthy without revealing the national treasure, would that have been OK?

Just saying that it's more than probable insiders with access to the cookie jar have crumbs on their hands.

Edit: Maybe Faceplant isn't a good example of a money maker, but somebody thought so... and got burned (maybe on purpose?).

Hmmm... deep, deep, rabbit hole.

Mon, 07/01/2013 - 13:41 | Link to Comment SmittyinLA
SmittyinLA's picture

What about the private industry partner's of our govt's intelligence services?

 

 

Mon, 07/01/2013 - 13:34 | Link to Comment sgt_doom
sgt_doom's picture

Finally, you are hitting the target, GW!

Yup, the Financial-Intelligence-Complex, Tier One above that so-called military-industrial-congressional-complex (Tier Two), has been ALL about financial intelligence and command and control of the populace.

It is no "coincidence" that Gen. Clapper, the Obama-appointed Director of National Intelligence (DNI) is the same dood from Bush's fabricated WMDs-in-Iraq intelligence team, and was the same dood at the Pentagon who authored that report claiming that the intelligence establishment should be privatized as much as possible!

Just as it was no coincidence when Reagan-appointed CIA director, Casey, immediately privatized the earth resources data acquired by American spy satellites, data which had been previously available to the general American public, but was now only made available to Casey's cronies on Wall Street!

This stuff about NSA spying, credit card transaction data accumulation is nothing new, it's been goin on since early Bush, if not before.  Around 2000-2001, First Data (the major processor of credit card and check transactions) handed said data over to the intel agencies, and they certainly continued to do so after their purchase by the Carlyle Group (believed they've since been sold off?), all part and parcel of the renamed Total Information Awareness project:  they monitor everyone at every point ---

(1) cams at toll booths,

(2) cams throughout the chain retail stores and cities

(3) pay-per-view at hotel/motel (they know exactly what place you signed into, and what you are viewing)

(4) even cash transactions, they can monitor the cams at retail chain stores (and some independent high-end stores) while simultaneously tracking you via your cell phone GPS circuit, to identify who you are and what you are spending said cash on (some chain stores do this themselves at the store level),

(5) they track your travels with auto/GPS and subscriber systems,

And on and on and on, all part of the renamed Total Information Awareness project, promoted by Cheney, Poindexter and Clapper, et al.!

 

Mon, 07/01/2013 - 17:19 | Link to Comment IdiocracyIsAlre...
IdiocracyIsAlreadyHere's picture

You got it.  Corporatism (aka fascism) in a nutshell.  The merger of corporate and state power with a defined amount of quid pro quo on each side.

Mon, 07/01/2013 - 13:26 | Link to Comment A. Magnus
A. Magnus's picture

Let's get this straight for all the newbies: GOVERNMENT IS A CORRUPT PIECE OF SHIT. Always has been, always will be. It only exists, like all organized crime, to steal from the productive members of society using brute force and a HUGE amount of financial propaganda.

Now that we have THAT out of the way, it should be fucking OBVIOUS to anyone with half a fucking functional brain that government uses spy technology to hand out favors to insiders at the expense of everybody else. That's why congress can legally do insider trading and members of the financial aristocracy - a.k.a. the inbred banker cocksuckers - NEVER suffer for the crimes they commit.

"TELL ME SOMETHING I DON'T KNOW! CONNECT THE GODDAMNED DOTS!!!"   -Ministry

Mon, 07/01/2013 - 14:10 | Link to Comment kchrisc
kchrisc's picture

Absolutely!

All of it is just stink from the shit that is government.

A rogue and criminal US government is the shit. Their spying, etc. is just the stink.

Concentrate on finding and removing the shit not the stink.

The Four Rs
Rejection: Quit paying, quit obeying.
Revolution: Be prepared.
Retribution: Is there really any place for these sociopaths and criminals in a restored civil and Constitutional society?!
Restoration: Restore the Constitutional republic.

Mon, 07/01/2013 - 13:18 | Link to Comment Joebloinvestor
Joebloinvestor's picture

The people making stuff to defeat the spying must be:

http://dailycaller.com/2013/06/29/report-federal-wiretaps-foiled-by-encr...

I expect a boost in companies who offer "data and content security".

Mon, 07/01/2013 - 13:31 | Link to Comment espirit
espirit's picture

How convenient and coincidental are "records" lost on laptops, disks, hard copy, etc?

Quite the probable reasoning for coverups where conspiracy theory = conspiracy fact.

Twisted minds create twisted plots. 

Mon, 07/01/2013 - 13:07 | Link to Comment eddiebe
eddiebe's picture

Bet on it!

Mon, 07/01/2013 - 13:04 | Link to Comment Umh
Umh's picture

If the information exist it will be used. It will be used by those who otherwise have access in ways that they are not suppose to use it and by those who should have no access such as hackers.

Mon, 07/01/2013 - 12:58 | Link to Comment the grateful un...
the grateful unemployed's picture

to me the problem is more likely big companies giving information to the government, whether its data on its consumers, or material information on its balance sheet. 2008 was a preemptive government intervention. the gtovernment had significant information about companies like Lehman, or the whole thing would have gone into bankruptcy court before they could do anything about it. of course the preemptive knowledge about wmds in iraq misled the bush admin (or did it?) so if you could prove anything, its that some guys behind the firewall at langely are using their inside knowledge to dump stocks ahead, or buy them ahead of the news. poor martha stewart, with a security clearance she never would have gone to jail.

Mon, 07/01/2013 - 15:40 | Link to Comment Winston Smith 2009
Winston Smith 2009's picture

"to me the problem is more likely big companies giving information to the government"

Intercepting and then storing the audio from private phone calls en masse is not something private industry does unless you want them to (ex., voice mail).  That's the latest bit of NSA info released in the latest Greenwald video I linked to above.

Mon, 07/01/2013 - 12:48 | Link to Comment Winston Smith 2009
Winston Smith 2009's picture

Glenn Greenwald gives a public talk, for the first time since NSA leak story
Reveals info not yet released through The Guardian

http://www.youtube.com/watch?feature=player_embedded&v=Uulv4ve6RJ8#at=620

Mon, 07/01/2013 - 13:18 | Link to Comment Bindar Dundat
Bindar Dundat's picture

Kind of a joke since every telephone and computer switch since Mitel's in 1974 has a back door for spying purposes. Nothing here is new!   I can not believe people get so upset about this privacy thing since virtually nobody in our society has any valid ideas or insights worth protecting.  Get with nthe program and covet thy neighbours wife for God sake.  Just don't expect it to be a secret.

Mon, 07/01/2013 - 15:36 | Link to Comment Winston Smith 2009
Winston Smith 2009's picture

"I can not believe people get so upset about this privacy thing since virtually nobody in our society has any valid ideas or insights worth protecting."

As long as you keep a low profile and never make any waves of any kind, you should be OK. However, should you for some reason attract their attention, a fear Greenwald said resulted in most other journalists refusing to talk with him via any electronic means, it's a different story. That becomes a virtual panopticon which crushes dissent before it even starts. That was definitely not what the founders of this country wanted and were trying to prevent via something called The Bill of Rights:

Three Felonies a Day: How the Feds Target the Innocent

http://www.amazon.com/Three-Felonies-Day-Target-Innocent/dp/1594032556/r...

"The average professional in this country wakes up in the morning, goes to work, comes home, eats dinner, and then goes to sleep, unaware that he or she has likely committed several federal crimes that day. Why? The answer lies in the very nature of modern federal criminal laws, which have not only exploded in number, but, along with countless regulatory provisions, have also become impossibly broad and vague. In Three Felonies a Day, Harvey A. Silverglate reveals how the federal criminal justice system has become dangerously disconnected from common law traditions of due process and fair notice of the law's expectations, enabling prosecutors to pin arguable federal crimes on any one of us, for even the most seemingly innocuous behavior.The dangers spelled out in Three Felonies a Day do not apply solely to''white collar criminals,'' state and local politicians, and professionals. No social class or profession is safe from this troubling form of social control by the executive branch, and nothing less than the continued functioning and integrity of our constitutional democracy hang in the balance."

Mon, 07/01/2013 - 13:33 | Link to Comment sgt_doom
sgt_doom's picture

And the Infinity Transmitter (connects to any phone when dailed, silencing the phone's ring, while causing the phone to go "off hook" the same as if you had answered it, and super-increases the carbon transmitter's effective listening range, picking up everything in the room or area) has been around since 1973, when it was either developed within or for the NSA, etc., and since ported to cell phone usage.

 

Mon, 07/01/2013 - 15:35 | Link to Comment Winston Smith 2009
Winston Smith 2009's picture

That required specific targeting.  The problem now is a lack of specific targeting and a vacuum cleaner effort that makes the Infinity Transmitter look like the horrendously antiquated relic that it is.

Mon, 07/01/2013 - 13:31 | Link to Comment A. Magnus
A. Magnus's picture

" I can not believe people get so upset about this privacy thing since virtually nobody in our society has any valid ideas or insights worth protecting. "

Please tell me you were being sarcastic...it would take a hell of a lot of time to add another person to the list of 'Collaborators Who Desperately Need a Kick to the Nuts.'

Mon, 07/01/2013 - 12:26 | Link to Comment disabledvet
disabledvet's picture

"long the dollar." move along. "nothing that can be traded on even if this is true" (and it probably is.)

Mon, 07/01/2013 - 12:41 | Link to Comment disabledvet
disabledvet's picture

actually let me take a time out here and explain this. trading and economics are NUMBERS games. you can't just "overthrow Governments" and cause the stock market to rise. you have to have an understanding of how interest rates, growth, incomes, information, trade, prices, intelligence, technology, balance sheets, human error, human success...i mean the list of what needs to be quanitified here is truly endless. hence "the need for all those computers" (which by the way have been around since the 1920's.) there is a philosphical problem here folks of trying to "impose math" on the numbers okay! simply put "it can't be done." here is a classic real world example: http://en.wikipedia.org/wiki/MCI_Inc. the chief financial officer attempted to "save" the company by putting "the debit side of the ledger into the credit." http://en.wikipedia.org/wiki/Double-entry_bookkeeping_system this physical impossibility (that such a business model could be sustained...and no there were no whistleblowers...just...ahem..."Wall Street") finally "found it's reality" namely "disintermediation" and the end of the business. QE has been VERY friendly to traders because the information flow has been so good. i find it beyond ironic that so many conservatives are extolling the "virtue" of "higher rates for all" since now the information flow will clearly become more opaque and "prone to error."

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