Firewall Needed: Google and the NSA

The Washington Post reports that Google and the National Security Agency are teaming up to identify the hackers who penetrated Google's China system. The article points out the need to balance privacy and security. That is a key libertarian problem that has become increasingly intricate with the advance of technology. Phone tapping posed issues that were unknown when the founding fathers wrote the Constitution, and now Internet technology poses ever more complex privacy problems. Here in the eastern Catskills, "hippies" will not get onto a computer because of fear of government. I'm not sure if this correlates with illegal behavior, but I know two people with good educations who will not get on any computer and never have. The article says that:

"collaboration is not easy, in part because private companies do not trust the government to keep their secrets and in part because of concerns that collaboration can lead to continuous government monitoring of private communications. Privacy advocates, concerned about a repeat of the NSA's warrantless interception of Americans' phone calls and e-mails after the Sept. 11, 2001, terrorist attacks, say information-sharing must be limited and closely overseen."

Another aspect of an arrangement between US spook agencies and information services is the potential for international tension. It is likely that agents of the communist government were in involved in the hacking. Might pressure from the NSA create tensions with China?

The article quotes Matthew Aid, author of "The Secret Sentry":

"I'm a little uncomfortable with Google cooperating this closely with the nation's largest intelligence agency, even if it's strictly for defensive purposes."

Given that the collaboration between Google and NSA is primarily one involving sharing of information about the hackers' techniques and code, it would seem that the collaboration maximizes freedom. But given that Google has a lot of potentially embarrassing information about a large swathe of the American public, it needs to have NSA-proof systems philosophies in place to ensure a firewall between its data and the potentially suppressive activities of the government.

Blood in the Streets

Kitco reports that gold prices have fallen 4 percent today to 1066, nearing the 1030 mark that Jon Nadler mentioned as a near term support several days ago. Morgan Stanley Smith Barney's ticker says that the Dow is down nearly 200 points and the S&P 500 is about 1074, a 23 point drop. These declines are related to a strengthening dollar.

How far will the Fed allow markets to fall before it prints more money? Like an obsese food addict, the Fed reaches into its candy bag at the slightest impulse. Bernanke and his associates like to see gold fall. But the effects of a stronger dollar and weaker gold include bankruptcies and unemployment. More importantly to the Fed, hedge funds' carry trade and the hundreds of billions loaned to Wall Street each week will be threatened by higher interest rates.

Based on my coin flip test, I am betting $950 gold. Unless the Fed decides to change its philosophy, I doubt the S&P will go below 850. But when inflation kicks in, then the Fed will need to tighten. At that point we could see more dramatic stock market declines. Gold would continue to be fueled by speculation for a while, until raising interest rates mutes the price increase trend. Then gold will fall again.

Confiscation of Pensions Would End the Democratic Party

A number of people are concerned about the nationalization of pensions. Americans will not accept direct confiscation of that sort. The Tea Party suggests that the tension has begun. If the Democrats proceed with health demolition and cap and trade, the public sentiment will be intense. Nationalization of pensions, well, I think we can say that could finally result in a long overdue libertarian revolution. The stripping of the federal government of most of the powers it has accrued since 1930 will be a painful process but one that will repay the American people a thousandfold. I do not think its occurrence is improbable. But I'm not convinced that the Democrats are going ahead with their program. They're first and foremost selfish politicians.

Aristotle on the Limitations of Rationality in Ethics

"Our discussion will be adequate if its clarity matches the subject matter. For we should not seek exactness in all accounts alike...And fine and just actions, which political theory investigates, exhibit difference and fluctuation, so that it seems they exist only by convention, and not by nature. And goods also exhibit a similar sort of fluctuation because they cause harm to many people. For it has happened that some have been destroyed because of their wealth, and others because of their bravery. Thus we must be content, in speaking about and from such things, to indicate the truth roughly and in outline, and we must be content in speaking about things that hold for the most part and in drawing conclusions of the same sort from such things."

---Aristotle, circa 325 BC, Nicomachean Ethics. Translated by N. Sherman in N. Sherman "Making a Necessity of Virtue: Aristotle and Kant on Virtue", p.268.