Morgan Day blogging II: work in progress

I thought it might be interesting to establish some timeline information about News International e-mail disclosures and deletions, in the light of this piece in the Torygraph. As we know, the Telegraph is now opposed to the Osborne/Gove Murdoch group in the Tories, so it has no reason to carry water for Murdoch.

31st September 2004 - According to News International Chief Information Officer Paul Cheesborough, NI archived e-mail up to this date was deleted.

2005 - NI solicitor Julian Pike will later say that e-mail exists up to 2005. See 23rd March 2011.

Kickoff - 2006. 1st police inquiry into Glenn Mulcaire and Clive Goodman. Police raid Wapping, only search Goodman's desk, by agreement with NI management.

29th November 2006 - Goodman and Mulcaire convicted.

"Early" 2007 - 2,500 e-mails disclosed to Harbottle & Lewis in parallel litigation (Goodman's employment tribunal).

29th May, 2007 - Harbottle & Lewis write to NI, saying they reviewed them and found nothing.

31st September 2007 - E-mail from before this date was meant to be deleted (see January, 2011). NI operates a policy of flushing e-mail every three years, clearly.

December, 2007 - James Murdoch becomes the boss.

2008 - First civil litigation against NI, NI becomes bound to preserve evidence.

April, 2008 - James Murdoch authorises Gordon Taylor's payoff.

November, 2009 - E-Mail Deletion Policy announced internally.

eliminate in a consistent manner across News International (subject to compliance with legal and regulatory requirements) emails that could be unhelpful in the context of future litigation in which an NI company is a defendant

November, 2009 - reports of frequent outages in the e-mail archive system.

January, 2010 - It is decided to destroy all archive e-mail before this point.

April, 2010 - HCL deletes three data sets. One is a public folder on a production (rather than archive) server "owned by a user who no longer needed the emails".

May, 2010 - NI exec demands to know if e-mails destroyed.

May, 2010 - 200,000 delivery status notification messages deleted, plus 21,000 messages in an outbox, during recovery from system failure.

June, 2010 - NI solicitor, Julian Pike, will claim, falsely, that all e-mail before this point has been destroyed. See December 2010.

29th July, 2010 - "How come we still haven't done the e-mail policy?" i.e. the deletion has not yet happened.

July 2010 - William Lewis joins NI.

4th August, 2010 - "Everyone needs to know e-mail before January 2010 will not be kept" i.e. still not deleted.

6th September, 2010 - Sienna Miller's lawyers demand that e-mail be preserved.

9th September, 2010 - IT employee says "there is a senior management requirement to delete this data as quickly as possible but it need to be done in commercial boundaries". i.e. data still there, and contractual issues with the IT outsourcers holding up the process.

September, 2010 - unspecified deletions of "historic" e-mail in connection with system stability problem.

October 2010 - News International papers move. Hard disk drives in NI workstations (not just the NOTW) are replaced and destroyed, but serverside e-mail is backed up at least in part.

December, 2010 - NOTW Scottish Editor Bob Bird tells Sheridan trial that the archived e-mail has been lost en route to HCL in Mumbai. This is entirely false.

December, 2010 - Julian Pike, solicitor for NI from Farrar & Co., tells the High Court that no e-mail exists beyond six months ago. This is also false.

January, 2011 - Paul Cheesbrough, News International IT chief, says archived e-mail back to 31st September 2007 has been destroyed. This is false.

January, 2011 - HCL are asked to destroy a particular database, refer NI to system vendor.

January, 2011 - NI executives demand destruction of 500GB of e-mail held at Essential Computing, Bristol. See 8th July 2011.

January 7th, 2011 - Miller's lawyers release information about their case to NI in discovery.

January 12th, 2011 - NI managers order a halt to deletion, and give instructions to preserve e-mail.

Later in January, 2011 - 3 e-mails given to police. New police inquiry begins.

February, 2011 - some e-mail is lost in a software upgrade.

March 23, 2011 - "Don't tell him!" Pike apologises to the High Court, admits that no e-mail has gone missing in India, admits that archives exist back to 2005. Pike blames Tom Crone, who claims that he was misled by another, unnamed NI executive.

June, 2011 - Information Commissioner abandons inquiry into e-mails disappearing from NI. NI had claimed that the data had disappeared en route to India.

July, 2011 - (i.e. in full crisis mode) an NI exec travels to "the company storage facility" and removes 6 boxes of unspecified records regarding themselves (possibly same person who spoke to Crone).

7th July, 2011 - Evening Strangler first reports NI bribes to police.

8th July, 2011 - Key Guardian story. An NI executive, not named but apparently identified by police, demanded the destruction of 500GB of archive e-mail in January 2011, around the time of the resumed police inquiry. First mention of another IT outsourcing company, Essential Computing, in the UK.

Police believe they have identified the executive responsible by following an electronic audit trail. They have also attempted to retrieve the lost data. The Crown Prosecution Service is believed to have been asked whether the executive can be charged with perverting the course of justice.

At the heart of the affair is a data company, Essential Computing, based near Bristol. Staff there have been interviewed by Operation Weeting. One source speculated that this company had compelled NI to admit that the archive existed.

The Guardian understands that Essential Computing has co-operated with police and provided evidence about an alleged attempt by the NI executive to destroy part of the archive while they were working with it. This is said to have happened after the executive discovered that the company retained material of which NI was unaware.

This seems to be a critical moment

10th July, 2011 - William Lewis of NI discovers 2007 e-mail dump to Harbottle & Lewis, finds evidence. Only finds 300 out of 2,500 messages - rest still unaccounted for.

July, 2011 - Management & Standards Committee starts functioning with managers from News Corp outside the UK, cooperating with police.

July, 2011 - New York Post staffers ordered to preserve documents. Probably reflects News Corp strategic decision to cooperate

July, 2011 - some e-mail is deleted by HCL due to inconsistency between systems after a migration.

September 7th, 2011 - HCL representatives tell House of Commons that NI demanded deletion of e-mail on 9 occasions starting in April, 2010.

September 13th, 2011 - A large quantity of e-mail is discovered at News International.

October, 2011 - Computer forensics work begins on supposedly deleted e-mail archives.

December, 2011 - "Data Pool 3" e-mail archive is successfully restored from backup.

Morgan Day blogging: 1

Yesterday was Morgan Day, the 25th anniversary of Daniel Morgan's murder. So, some Leveson blogging.

Way back way back when the MacPherson inquiry was big news, one of the things that was fairly well-known but not in the headlines was that it wasn't just the racism - it was also the corruption. Specifically, suspect (and now convict) David Norris's dad, Clifford Norris, was a gangster who was believed to be paying policemen involved in the case for protection. This recent piece in the Indy explains the whole thing in some detail. The key player was one John Davidson, a detective on the South-East Regional Crime Squad based in East Dulwich, who was apparently the point-of-contact between Norris and the Met, as well as being a major figure in a network of corrupt detectives. Anyway, you really ought to go and read the whole thing, as it covers how the Met hierarchy kept the explosive details about Davidson out of the inquiry.

Clearly, it was considered better to be institutionally racist than it was to be institutionally corrupt. And, if you think back to the original (and very controversial at the time) definition Sir William Macpherson used, I think it's more than fair to describe the Met as being institutionally corrupt. As with racism, some elements of the force were especially bad and some were much better, but in general, the institution as a whole put up with the problem.

Now, something interesting. The officer who investigated Davidson, and who seems to have been very keen to prosecute him, was none other than John Yates, in a very different role to the one he played in the whole News International affair.

Then-Detective Superintendent John Yates, a senior CIB3 officer, targeted Davidson as one of 14 "core nominals" – detectives whose "criminality is extensive and, in essence, amounts to police officers operating as a professional organised crime syndicate", he explained in the case file.

Yates wrote to his superiors in blunt terms in October that year about the evidence he had found against Davidson: "It is now apparent that during his time at East Dulwich Davidson developed a corrupt informant/handler relationship. Their main commodity was Class A drugs, predominantly cocaine, however, Davidson and his informant would deal in all aspects of criminality when the opportunities presented themselves."

However, not very much of the information ever got to Macpherson, and Davidson was eventually allowed to take the traditional police escape hatch, retiring on grounds of ill-health and heading for the costas (he owns a bar on Menorca).

This is interesting, because I'm beginning to think that the response to Macpherson is a big part of the story. A really penetrating review of the Lawrence case would have turned up all sorts of dirt on the Met in South-East London, and specifically on the SERCS (which was already being investigated by Yates' internal-affairs group). That in turn would have caused all kinds of inconvenience. As a result, it was necessary to push back on the whole project of reforming the Met.

In the triangular relationship between the police, the press, and the politicians, this could be understood as an attempt by the politicians, using the press, to impose change on the police. The police seem to have responded by upgrading the police-News International relationship in order to pressure the politicians. Hence the campaigns that so-and-so wasn't "a copper's copper".

Interestingly, John Stevens seems to have been a special fascination for people like Alex Marunchak - News International kept spying on him after he was sent to Northern Ireland, and hired Philip Campbell Smith to target the only intelligence agent cooperating with the Stevens inquiry (who seems to have been Ian Hurst, to fill in the blank). Obviously, there was a direct journalistic interest in information about Freddie "Stakeknife" Scappaticci, but it's always struck me as weird that Hurst was able to identify that it was Smith specifically who got into his computer. Perhaps he's just good, or lucky, but I wonder whether the surveillance was meant to be discovered in the hope of intimidating him.

Making more of an effort on race didn't challenge how the police ran their business, and indeed created new opportunities for promotion and budget acquisition. It seems depressingly clear that doing more on corruption would have meant changing how a great chunk of London was policed and offending all kinds of powerful interests. So that's the one they picked. Getting there meant getting the support of News International to turn the politicians' attention, which meant running up obligations that would be called in later.

A corrupt informant/handler relationship, you might call it. Of course, the police and the politicians were still operating in the transactional or bargaining mode I described as The Project 1.0. But what was going to change between the late 1990s corruption inquiry and the 2006-onwards phone-hacking inquiry was the level of ambition involved. Murdoch, and the recovering Tory party, were looking at The Project 2.0, integrating News International people into the government spin machine, Conservative Central Office, and into the police press office directly.

Well, that's my mental model of the whole thing. It doesn't cover the 80s origins of the whole thing - Daniel Morgan's story, whatever it was, police-News International relations during Wapping (six months before the Morgan murder, and did you know the cop in charge was disgraced on theft charges?) - but for what it covers I think it's pretty clear.

from hell

You might not want to credit it, but exposing the Daily Hell's output to the Web is pretty useful. Horsegate hunting herogram for you. Elsewhere, and more importantly, Steve Hilton's ousting is explained - Mr Google Pants was apparently intriguing to get control of the No.10 Policy Unit, a horrible thought and one which was intolerable to the cabinet secretary, Jeremy Heywood. As the prime minister has already broken up the job of cabinet secretary into three chunks (cabinet secretary, No.10 permanent secretary, and head of the home civil service), there was no way Heywood was going to let that happen.

However, the Indy chooses to focus on his recommendation of Hidden Jobs Harrison. Of course, making good appointments is exactly the sort of thing the civil service values, and a Cameron weakness. How many times has this tendency to ask a mate for a recommendation and get the name of a good crook/nutter/bungler back bitten him now?

Liiinks

After the wave of links posts, here's a links post with no particular theme.

Fantastic new civil servant blog has some interesting thoughts on Trident replacement and the interactions with US defence cuts. Specifically, as the Americans reduce their nuclear arsenal, will they still want an Atlantic and a Pacific SSBN fleet, and in the case that they close Kings Bay naval base, is it practical for the RN boats to sail to the West Coast to pick up new rockets?

Jeffrey Lewis at Arms Control Wonk discusses whether the US might be thinking about a minimal-deterrent option, in which case it might paradoxically be less of a problem for the UK as submarines would be relatively more important.

The best paper map. I was really pleased to see a demo at Mobile World Congress in which the radio coverage footprint was overlaid in Openlayers onto the OpenStreetMap.

UKBA stops signing up new users for the IRIS biometric identifier. Thank God we spent all that money issuing new passports! Passing through Gatwick North on Thursday night, I noticed that, as usual, it took several times as long for IRIS to deal with a passenger as it did for a human.

A history of Sharjah Airport...but only up to 1952.

General Washington’s compliments to General Howe. He does himself the pleasure to return him a dog, which accidentally fell into his hands, and by the inscription on the Collar, appears to belong to General Howe. He does this in the context of an exchange of compliments between armies arguing over who torched the mill to deny the other grain, and what this would do to the civilian population. Kings of War has been excellent recently after an influx of new bloggers.

Hopi Sen's grandad and the propaganda film.

There's a trio of kittens tucked into a tiny bed,

and what looks like a Golden Retriever in a shirt and tie, holding a long-stemmed rose between its teeth. At the bottom of the image it says, "PUPPIES & FRIENDS." "One deity rules over all the other spirits," Henry tells me as the sacrificial chickens are plucked and tossed into a hot caldero. "He is the Godfather.

We saw this one coming, and here it comes. Katharine Birbalsingh's academy (that's the one with the "private school ethos" right down to "I don't need to know Ohm's law, I read Greats") won't be opening due to a lack of buildings, money, and indeed anything.

Voidy contributes to King Mob vs. IDS, demonstrating that the DWP has been very keen to get rid of embarrassing facts from its web site.

slow-motion procurement failure

Quietly, the Eurofighter project seems to be running into trouble. First of all, Dassault got the Indian contract and the Indians claim that Rafale is dramatically cheaper. Further, they weren't impressed by the amount of stuff that is planned to come in future upgrades, whose delivery is still not certain. These upgrades are becoming a problem, as the UK, Germany, and Italy aren't in agreement about their schedule or about which ones they want. Also, a Swiss evaluation report was leaked that is extremely damning towards the Gripen and somewhat less so to Eurofighter.

This is going to have big consequences for European military-industrial politics. So is the latest wobble on F-35.

Quality control

Suzanne Moore decides the House of Lords is great. I think this graf. is missing something:

What sounds like a broken alarm clock goes off to call a vote. They all creep out of their warrens and file in, and I manage to find Baroness Shirley Williams. "This place swallows legislation like other people swallow martinis," she tells me. I want to buy Shirley a martini but, at 81, she is indefatigable, and has work to do. She is not so keen on Lords reform (which was in all three parties' manifestos). "I'm cynical, having seen three attempts in 15 years."

Something like the fact that she has done everything to stop the NHS Bill in her power except for voting against it.

Recommended

Think Defence has been having a very good discussion (practically a CT-style blog seminar) about the Falklands. Which reminds me...I note that Bob Howard has yet to visit, despite the eldritch conjunction of an implausibly massive geostrategic commitment, the deep links between right-wing political Catholicism and the sinister occult, the Antarctic (and you know what happens down there - giant mountains embedded in ancient ice, eccentric British scientists with hovercraft, Russians drilling into lakes sealed off from the world for millions of years), and, eh, a fast-growing economy based entirely on squid.

Bradford Links

If the last post scared you rigid, what about some more Bradford-related links? Alternate headline for this probably Predictable Twat Has Good Time Despite Self. Stupid TV show, meet much better writing. Scenarios for a better future, and a worse future. Mind you, the better future includes Westfield building a giant shopping centre in the Rubblezone, and the worse future includes the end of the Interchange and the completion of the M606. And Bradford's Bouncing Back. There's one from the past.

Do this help?

In a perfectly normal Jamie Kenny comments thread, weird machines are seen, circling the skies of West Yorkshire. What's up is that someone has been reading Richard Aldrich's book on GCHQ (my five-part unread series of posts starts here and refers here).

Basically, the intelligence services maintain various capabilities to acquire electronic intelligence. As well as ground-based and maritime systems, these include the (temporarily reprieved) Nimrod R1s, the Shadow R1 based on the Beechcraft King Air, and a group of three Islander planes which seem to be based in the UK permanently. Aldrich describes these as being used to hoover up mobile phone traffic, and claims that voiceprint data collected in Afghanistan from Taliban radio intercepts is compared to the take in an effort to identify returnees.

However, he also suggests that the interception is of backhaul, rather than access, traffic. This is unlikely to yield much in the UK, as typical cell sites here were originally set up with between a pair and a dozen of E-1 (2Mbps) leased lines depending on planned capacity. For many years, Vodafone was BT's single biggest customer. More recently, a lot of these have been replaced with fibre-optic cable, usually Gigabit Ethernet, quite often owned by the mobile operator. O2 got some microwave assets in the demerger from BT, so they may have used more. But in general, 3G operators have been pulling fibre since 2005 or thereabouts.

I would therefore tend to guess that it's the access side. There are good reasons to do it this way - notably, requesting surveillance of someone's phone via the Regulation of Investigatory Powers Act or alternatively via the alternative Dodgy Ex-Copper Down the Pub route usually requires that you know who you're looking for quite specifically. That is to say, you need to know an identity that is likely to be in a given phone company's database. Also, in some use-cases you might want imperfect but live coverage rather than a giant pile of data weeks later.

Listening in to radio doesn't work like that, and could be done more secretly as well. I'm not particularly convinced by the idea of trying to match "voiceprints" - it sounds a bit Nemesysco, and in this case, the sampled voice would have first gone through whatever radio system the Taliban were using (which will have filtered out or just lost some information, and also added some noise and artefacts) and the target would have been filtered by the voice codec used on their phone, which throws away quite a bit, as well as by the network's acoustic echo cancellation if the call is inbound. Also, they might be speaking a different language, which may or may not make a difference but won't help.

Perhaps they have some magic, or perhaps this is a cover story. This happens to be the most difficult case of a speaker identification system - it's identification rather than verification (so the number of possible alternatives scales with the size of the population), it's an open set process (no bounds on who could be in either group), and it's wholly text independent in both samples (no way of knowing what they are going to say, and no reason to think they will say it twice). There are methodologies based on high-level statistical analysis, but these require long-term sampling of a speaker to train the algorithm, which gives you a chicken-and-egg problem - you need to know that you're listening to the same speaker before you can train the identification system. Of course, other sources of information could be used to achieve that, but this makes it progressively harder to operationalise.

Anyway, doing some background reading, it turns out that a) speech perception is a really interesting topic and b) the problem isn't so much the quality of the intercept (because speech information is very robust to even deliberate interference) as just the concept of voiceprint identification in general. Out of Google-inspired serendipity, it turns out Language Log has covered this.

In lab conditions with realistic set-ups (i.e. different microphones etc. but not tactical conditions and not primarily with multiple languages), it looks like you could expect an equal-error rate, that is to say the point where the false-negative and false-positive rates are equal, of between 3% and 10%. However, the confidence intervals are sizeable (10 percentage points on an axis of 0-40 for the best performing cross-channel case). Obviously, a 3% false positive rate in an environment where there are very few terrorists is not that useful.

Pirate Links

A couple of piracy links. Thomas Wiegold (German link) reports that India is very angry indeed about a group of Italian security men protecting a ship who fired on a fishing boat, thinking she was a pirate skiff, killing several people. Of course, the Indian Navy has form here, having destroyed a Thai trawler in error with the loss of dozens of lives not so long ago.

Wiegold's blog is usually worth watching (for example, this story), and I'd also recommend this piece, especially as a conference on piracy is coming up in London. It's been suggested that the EU naval force off Somalia would be allowed to carry out raids against pirates on shore, probably with ship's light helicopters - here Wiegold quizzes the German foreign ministry spokesman and discovers that the wording in question means "between the high and low water mark", which is suspiciously specific.

Middle Eastern Links

Back from MWC. Heavy cold. Browser queue jammed with stuff. I'm going to do a brief succession of link posts to clear up. (Happenings last week; huge Leveson revelations, James Murdoch out, King Mob abolished workfare, horse, Borisbus fiasco, debate on Daniel Morgan, even more Leveson..)

This one deals with everyone's favourite global geo-political region, the Middle East. Anthony Shadid died, and Angry Arab thinks the obits weren't tough enough on the Israelis. Alyssa at ThinkProgress has a list of 20 of his best dispatches and only one covers the Palestinians and tangentially at that. Really?

Foreign Policy's David Kenner provides some history of the 1982 Muslim Brotherhood revolt in Syria and its repression by President Assad's dad President Assad. Worth noting that by the time the Syrian army began its infamous destruction of Hama in '82, the struggle had been going on since 1976. Just because the rebels have kept it up so long - which is astonishing and a demonstration of extreme courage - shouldn't be taken to mean that they are going to win in the end.

Colin Kahl, writing in the Washington Post, points out that the Osirak raid in 1981 didn't slow down Saddam Hussein's effort to build the Bomb, in part because it hadn't really started before the raid. However, the attack convinced him to make a concerted effort, and also caused Iraq to abandon the power reactor-reprocessing-plutonium route in favour of the highly-enriched uranium route, which is much easier to conceal and also to distribute among multiple facilities and which turned out to have a entire black market supply chain.

He also links to this piece on planning considerations for Israel, which highlights their air-to-air refuelling tankers as a key constraint. Kahl also points out that in the event of an Israeli raid, their air force would probably be needed at home immediately afterwards.

The Americans, for what it's worth, don't think a strategic decision has been taken to get the Bomb.

Bizarrely, the IAEA inspectors have discovered that the fortified enrichment plant at Fordow in Iran contains 2,000 empty centrifuge cases but not the centrifuges themselves. Is it a bluff of some sort? Is it a decoy target? Is it just a very odd way of going about building an enrichment plant?

Binyamin Netanyahu memorably described as "carrying both Anne Frank and the entire IDF around in his head", presumably in between the bees in his bonnet and the bats in his belfry. It is argued that he won't attack Iran because the settlers won't like it, or possibly that he's bluffing about Iran to draw attention away from them.

Ultima Ratio is down, but you can read their excellent (French) review of Syed Saleem Shahbaz's posthumous book Inside Al-Qa'ida and the Taliban in the Google cache. Fans of "Kashmir is still the issue" will be interested by the argument that Muhammad Ilyas Kashmiri and ex-Pakistani officer Haroon Ashik introduced a new strategy aiming to bring about more conflict between Pakistan and India, in the hope of alienating Pakistani leaders from the alliance with the US. Apparently they were planning something against an Indian nuclear site when Kashmiri was droned in June 2011.

If I were you I’d do X. But obviously I don’t feel responsible for the consequences

I just got an e-mail from my MP, Lynne Featherstone, regarding publishing the NHS Risk Register. Here's the important bit.

Risk registers are used by government departments and more generally by private companies to plan for worst-case scenarios. They range on everything from flu epidemics to terrorist attacks. As you can imagine, publishing these documents could cause unnecessary alarm and compromise sensitive information and investigations.

If the Government publishes the NHS risk register, it would then set a precedent to publish all registers. An unintended but dangerous consequence would be that government officials hold back vital information for fear of being connected with bad news. The most significant risks would therefore no longer be recorded, and no contingency plans would be identified.

This is a common argument used by the government against transparency. It is formidably stupid. In what universe is it a good idea to specifically protect the practice of giving advice you are not willing to explain, defend, or take responsibility for? I mean, this is cracksmokingly insane. Let's work through the process.

So I'm a civil servant, and am responsible for working up policy options on some issue. I have a brilliant idea that will solve the problem at a stroke. But for some reason, it is so politically unpopular, embarrassing, or evil in an ethical sense that I would be afraid or ashamed to put my name to it. Further, even if it works, it is still so awful that neither me nor my Minister would want to be associated with it. Not just that, it's so clever that despite being conspicuously weird, violently anathema to some major section of public opinion, or monstrous, and capable of resolving a major issue of public concern, nobody will notice it when it happens.

This last is required, because if they did notice it, it would surely not take too long to head over to data.gov.uk and look up the Department's organisation chart.

How likely is this? How likely is it that politicians would refuse to take credit, deserved credit, for something successful?

On the other hand, how likely is it that policy advice whose author is unwilling to take responsibility for it is bad advice? If you give people an out like this, you're likely to get more ideas that are evil, politically impossible, or simply idiotic. These classes of ideas will always be out there, and one of the reasons why we have things like public records and select committees is to act as a restraining influence on their production. "What would the papers say?" is not a stupid or cowardly statement. The constraint that your ideas should be defensible is a useful discipline, and one that may even be an aid to creativity, like the rules of a sonnet.

As far as I know, this argument was originally aired during the Franks report inquest into the Falklands War. On that occasion, the policy recommendation was "well, sort of vaguely wave our hands, and hope the fascist dictator eats Benny quietly and nobody notices. Let the file mature a bit". I think it is obvious that this was not the civil service's finest hour, and the prospect of public scrutiny might have induced someone to come up with a better plan and perhaps be more honest about it.

A further problem is that what the quote is describing is essentially the Noble Lie so dear to Leo Strauss. This is what designers and computer scientists call an anti-pattern - a common example of indefensibly awful practice. It is not actually impossible that the situation above might arise. Perhaps we do need to introduce an alien DNA virus into the school milk to induce immunity against Case NIGHTMARE GREEN. However, it is far more likely that the civil servant involved is actually doing just what it looks like, proposing a horrifically dangerous, stupid, irresponsible, and evil plan that ought never to have been thought for more than seconds. In fact, fundamental cognitive biases mean that someone whose idea is stupid, evil, or impossible and they know it, or whose motives are corrupt, is very likely to make use of such an argument to protect themselves.

I think of this as a She Was Asking For It argument - it isn't impossible that she was, but it is infinitely more likely that you are just trying to wriggle out of the consequences of your own behaviour, and therefore it is a safe aim-off to treat all such arguments as being dishonest. Once you admit the possibility, you're going to get a lot of shit in the meat.

Beyond that, we can knock off the other arguments quickly. Civil servants might be afraid of punishment for airing ideas considered weird. Well that's why we have a professional civil service with independent line management. The problem isn't the idea, it's the practice of punishing people for thinking. The public might be alarmed. Bullshit! Blah blah politically embarrassing. Grow up. The register might contain secret information. Well that's what the complex disclosure machinery in the Freedom of Information Act is for. We already fixed it.

Advice of the form "If I were you, I'd do X. But don't tell anyone I told you, and I don't want to take any responsibility for this." is probably bad advice.

more nonprofit profit

I don't often link to the Daily Hell but this is a special occasion. A4E in police fraud inquiry.

On a similar theme, here's a piece on Tory discontent with the NHS bill that names names. Specifically, Gove, IDS, Osborne, NI Secretary Owen Paterson, and horrible old thatcherite gargoyle Sir George Young. That sounds like a nice roundup of the hard right/neocon stahlhelm fraktion, so why are they unhappy? Apparently they don't think it's extreme enough now, but then that might be just pushing the blame on the Lib Dems.

contacting the Government's media-buying function

Back in the summer, as the News International scandal (well, beyond the scandal of its very existence) cranked up, we had a look at how the government buys newspaper display advertising and made an effort to reach out and touch the people in charge of it. I see no reason not to go round the buoy with this for another try. Back then, the Central Office of Information still existed, with a sword hanging over it. Now, we have Novated Frameworks. What?

Well, rather than having its own media-buying desk, the government has contracted the job out, via the Government Procurement Service. Some details about novatin' a framework are here. Although it does seem that the end of COI is sliding right, there is a contact for the supplier here. Presumably, though, every agency now contracts with them on a per-project basis, thus saving literally thousands of pennies.

non-profit, but nonprofit for who?

This Afghan news item is telling.

Mr. Hasas' seven-mile road construction project went so awry that his security guards opened fire on some of the very villagers he was trying to woo on behalf of his American funders.

Mr. Hasas was a point man in a $400 million U.S. Agency for International Development campaign to build as much as 1,200 miles of roads in some of the Afghanistan's most remote and turbulent places.

Three years and nearly $270 million later, less than 100 miles of gravel road have been completed, according to American officials. More than 125 people were killed and 250 others were wounded in insurgent attacks aimed at derailing the project, USAID said. The agency shut down the road-building effort in December..

The project was managed by an NGO, IRD, which managed to set a record for the price of road construction per mile, cause serious political tension, hire its own militia, fire with live ammunition into a protesting crowd, fund an Afghan flower-arranging project, and pay its executives one-quarter of the $269 million funding provided by USAID. Like our own dear A4E, it was mostly a "non-profit" organisation by virtue of considering the money its founders got paid to be salary rather than a dividend.

This is important. As the piece points out further on:

Officials at USAID and IRD say that the Afghanistan Strategic Roads Project wasn't a roads program in the usual sense. They said building roads was, in many ways, a secondary goal; the main objective was spreading jobs and money to win over rural communities that harbor insurgents.

"As a grant, this was never intended to be a major road construction project," says Jeff Grieco, a former USAID official who now serves as communications director at IRD. "It was intended to be a capacity building program. We have dramatically improved Afghan capacity to build roads and to do community development work."

This now sounds like whistling past the flowers, abandoned building materials, and of course the graveyard. However, it was a genuinely important idea - David Kilcullen's Accidental Guerrilla is full of roads, notably in eastern Afghanistan. Armies have always tried to control the landscapes they operate in, and in this case road-building was meant to alter the terrain in several different ways.

Hard surfaces and wide cleared shoulders would make it harder to place (respectively) on-route and off-route IEDs, and easier to find them if they were placed. Better roads would change the economy of mobility, letting Afghan troops and police in light vehicles move around quickly where before, coalition forces had to use helicopters and medium armour the Afghans would never be able to afford.

It was hoped that better transport would lead to economic growth, of course. And the process was meant to be important. Beyond just spending money, it was hoped that the negotiations regarding road projects would be an opportunity for traditional leaders and Afghan officials to demonstrate that they had influence, a way of improving the government side's mobility in social terms.

All this activity though, was embedded in a wider context - the economy of the Afghan & Iraq wars, a huge and dubiously policed zone of opportunity on the borders of the US government, its contractors, and the NGO world. Fertilised with money, this swamp blossomed all kinds of strange flowers, and in this case, IRD seems to have recapped the Iraq war on a small scale.

Ajab Noor Mangal, a local construction-company owner hired to work on the project, said Mr. Hasas alienated the community by only hiring workers from two of the five local clans.

Afghans excluded from the project looted Mr. Hasas's construction sites and stripped them bare. At one point, Mr. Hasas said, four men affiliated with the project were kidnapped, killed and dumped in public with a warning note signed by insurgents. The deaths brought construction to a halt. "We couldn't find a single person to work on the road," Mr. Hasas recalls.

Under the IRD contract, Mr. Hasas and the other Afghan firms working on their roads were responsible for providing their own security. So Mr. Hasas said he cobbled together nearly 100 gunmen and armed them with rented rocket-propelled grenades and heavy machine guns.

Things reached a nadir in the fall of 2010, when around 100 angry Afghans, including a small number of suspected insurgents, tried to storm the construction site, according to Messrs. Hasas and Mangal. Mr. Mangal, who was in Kabul at the time, says he ordered the contractor's gunmen to open fire on the demonstrators, including some armed protesters who he said shot at the security team. Mr. Mangal says he is still paying for the wounded villagers' medical treatment.

Villagers who took part in the demonstration told a different story. Two men involved in the protest said IRD security sparked a larger confrontation after opening fire on a dozen unarmed men protesting IRD's refusal to move staff from an office overlooking homes where outsiders could see into private family compounds—a major slight in the conservative culture.

Not particularly hidden persuaders

While we're back on the Murdoch trail, readers have probably seen this story, in which the police have taken steps to keep Rebekah Brooks' personal assistant from fleeing the country. And of course this bit:

Ms Carter was also a beauty editor for The Sun and is a partner in a cosmetics business with former model and celebrity make-up artist Sue Moxley, and has also offered beauty tips on the website Thinkingslimmer.com.

That's putting it mildly - the website mostly exists to sell something called a "Slimpod" described as follows:

A Slimpod is a 10-minute recording of the voice of Trevor Silvester, creator of a technique known as WordWeaving which uses language in a special way to gently retune your unconscious mind to think differently about food and exercise and the way you feel about yourself. For many people it is having a remarkable effect on their eating habits and their confidence and self-esteem.

Why is the unconscious mind important? Because it is responsible for most of what you do and feel every day. Listening to a Slimpod works like a guidance mechanism, retuning your unconscious mind to change your habits....It’s a bit like retuning a TV so that it no longer picks up the fat channel because it’s tuned to “slim” TV.

A lot of money has been spent on discovering how to influence our unconscious – mainly by advertisers wanting you to buy things. Now Thinking Slimmer’s experts have taken their specialist knowledge of the science of unconscious persuasion and are using it for your benefit.

Rated by the Sun as a Top Weight Loss Trend for 2012, apparently. Fuck the unconscious, it's the cross-promotion that does it, to say nothing of the ferocious devotion to looking after your pals.

Thinkingslimmer.com's WHOIS record lists one Sandra Roycroft-Davis as its administrative contact, who is none other than Chris Roycroft-Davis's wife. Chris Roycroft-Davis? Who he? The former executive editor of the Sun, seen excelling in the aspirational job dismissal industry here, who also acted as its chief leader writer ('cos words of one syllabub take the cake) and David Cameron's speech writer, as well as being an editor of the Daily Diana Tits and a contributor to The Times's Thunderer column, and playing some part in the launch of Sky TV.

He's now available for media training, consultancies, and as an after-dinner speaker. No word on weddings or barmitzvahs, but if you're really unlucky he might be on the same bill as Smash It! That's if he's not editing his own wikipedia article. Someone who only ever edits his page, in a favourable sense, and uses the word "insuperior" to boot is still at it.

Chris, having been sued by the queen at least 3 times, being one of the co-owners of sky and being on first name terms with several prime ministers, has now settled down in Pinner with his family. Perhaps most notably his son, James, a notorious womanizer, much like his father, who prides himself to be a saracens-level rugby player who's rugby skill, until fairly recently, was insuperior to that of his 9 year old brother.

Meanwhile, who is this Silvester character? He turns out to be a former Metropolitan policeman according to his website.

We were Police Officers for many years before finding a fascinating new way of helping people. While trainers at the Metropolitan Police Training School in Hendon, we pioneered the use of NLP and hypnosis in a unit dedicated to improving the performance of students who were failing their training. Over a three year period we developed a learning system based on NLP principles that could guarantee an improvement of 10-30% with only two and a half hours of coaching. Simultaneously I (Trevor) was establishing a hypnotherapy clinic that I ran in the evenings and weekends – a busy three years!

Scroll down to the dog, it's worth it in a vomity sort of way. And what is it with News International and moonlighting coppers? Anyway, apparently Carole Caplin's phone was tapped, but in the light of all this one can only conclude they were after some kind of trade secret in the crystals-and-guff game, perhaps the patent formula for Peter Foster's famous slimming tea. That's cheap snark, of course, but it is telling that the Blair-Caplin-Foster pattern was closely mirrored among News International types.

End note: The company, Thinkingslimmer Ltd., changed its name from Jenstar UK Ltd in 2010. The trademarks are registered to this company, but Sandra Roycroft-Davis's Linkedin profile describes it as a "celebrity management" company.

A slight return to 2004. Wasn't that fun.

Tom Watson runs for the gap, specifically yet another ugly little employment law story at the Sun. Readers will know that they're like that among themselves and there's something of a press tradition of not mentioning the names. On this occasion it's Our Boys Go In Editor "Tom" "Newton" "Dunn" vs. their Whitehall editor Clodagh Hartley.

The other story is that Watson is suggesting that Trevor Kavanagh took the credit for publishing the Hutton whitewash ahead of time when Hartley was in fact responsible.

Sadly this just recalls Labour's relationship with the Sun. A close reading of this explains all:

Kavanagh, who claimed he had been read the contents of the report over the telephone by an “impartial” source went on to tell the BBC “the source had nothing to gain financially or politically, no axe to grind, no vested interest"

Access to the document, no financial or political interest, someone who had Kavanagh (or Hartley)'s direct phone number = i.e. they were a civil servant operating with permission from their boss who was in contact with them, or to put it another way, a government press officer.

As is fairly well known, Alistair Campbell got powers to give the career COI officials orders in May 1997. His departure didn't end that. The source was probably Godric Smith or Tom "Walter Mitty figure" Kelly. Kavanagh was lionised by the media establishment for having what was, in fact, the government's line-to-take read out into his ear by a government press officer. It wasn't as if the Blair governments were averse to racking up brownie points with Murdoch where possible, was it?

On the other hand, perhaps the most repellent of the Murdoch/Met cases was the Forest Gate raid of 2006, when the police launched a miniature Operation OVERLORD (or rather, MOTORMAN - I don't think they used a boat) in Walthamstow in pursuit of a "chemical dirty bomb suicide vest" which was capable of attacking aircraft up to 5,000 feet overhead in their opinion, accidentally shot someone because their hand slipped, tore the building apart, found nothing, and satisfied themselves by having the News of the World smear the suspects as paedophiles, before spending ages trying to seize their savings. It wasn't so much a police operation as a sort of wildly overdone high-camp mashup of 2000s tropes. News International columnist Andy Hayman was in charge, but perhaps we were spared worse:

The police always argue that (many things they do) are a matter of operations and politicians should not be involved. Well, I'm afraid I have a big argument with that."

Citing the 2006 raid on a street in Forest Gate, he added: "At one stage the police were going to turn out all the residents of the street at 2am in the morning. John Reid was the home secretary and I was working with him.

"Andy Hayman, who was in charge, wanted to turn them out and I said to John Reid - no, you can't do that. He said 'John, it's operational'. I said 'S** operational, there are political considerations here' - turning out a street of Asians at 2am with the allegations of a gas plot and we don't know what the evidence is for that."

So when did they start tapping Prescott's phone?

It remains the case that Labour's half of the twisted relationship with Murdoch was very different to the Tories'. It was transactional and contingent and that's one of the reasons why it was so horrible at the time, but that also made it possible to leave. When you are one entity you cannot cooperate, said Montgomery. It's also very hard to stop.

Production note: part of this post was originally a comment on Tom Watson's blog and was never released from moderation. I might have been nice about this, but you know.

How to control the newspapers (aka. Explicit is better than implicit)

Ho hum, a spun day at the Guardian with this piece covering a double page spread on 8-9. Amelia Hill interviews a panel of prominent feminists about the Prime Minister's new "women's advisor". You may have already guessed that they aren't particularly impressed (an accurate headline might have been Thinking Individuals Find Sop Unsatisfying, Faintly Offensive), but the problem is not the content of the story, but its existence.

A quick search on Journalisted shows what's actually going on here. Ever since the first weekend in October, roughly twice a month, the Government has been briefing the media that it's doing something "to listen to women voters".

Women as a demographic have turned sharply against the Tories quite some time ago. In fact, the polling shows a dramatic shift over Christmas, 2010, for reasons I've wondered about but never been able to make any conclusions on. See this chart of Anthony Wells's.



But this got very little press right up to September. A decision was taken at some point in early September to spin the issue in the run-up to the Conservative conference, and on the 13th, the story was trailed by leaking it to the Daily Mail (i.e. to the intended target audience).

The 2nd of October saw the full-scale launch, with the local press being especially targeted (load the search - they hit syndication like a hammer and pretty much every local rag got it). Bypassing the nationals and briefing the local papers is an old Alistair Campbell trick you may remember from the Iraq war spin campaign, of course.

Since then, it's been regularly re-announced, about twice a month. One can presume that there is a recurring item on the No.10 media grid for it.

So far, the sum total of actual action on this front consists of double-hatting the head of Francis Maude's office, a bit of title inflation that the Guardian interviewees were rightly scornful of. But the real point here is that hours of work and a hugely prominent chunk of a national newspaper were dedicated to discussing this utterly content-free paper shuffle. And this has been going on for months, needing only a one-line e-mail to the cabinet secretary to support it in reality.

The return on investment is enormous. Great chunks of media space, time, and effort have been essentially neutralised, man-marked out of the game, all with a few press releases. This is the point of the exercise. If you are discussing the latest eye-catching initiative you are by definition not discussing anything else. Your eye has been caught. It's why they're called that.

Meanwhile, the latest on the Sun. Note this bit:

The source said that the investigation is not to do with "sources or expenses" claims by journalists.

Well, no, why would it be? Operation ELVEDEN is explicitly an investigation into bribes paid to police officers. What has it got to do with journalistic expenses, a private and trivial matter internal to News International? The answer is almost certainly that during Trevor Kavanagh's comedy Ardennes Offensive earlier this week, it was privately briefed to the media that the police were arresting people over "£50 dinners for sources" (the figure actually appears in another Guardian story). This is clearly guff. But it achieved its purpose; in terms of cognitive anchoring, putting the notion out there sets the limits of what is expected. Even without its being mentioned explicitly, it controlled the content of this story!

It would obviously have been better if the Guardian had stated in so many words that "Representatives of News International [ideally NAMES TO GO HERE] have repeatedly suggested that journalists were arrested over expenses. The police source denied that this was the case and specifically said that the investigation has nothing to do with expenses". Then we could, at least, make up our minds.

non-Thursday music link

Music!



Bonus extra:



If I scripted something to chuck random music links into a G+ hangout, would anyone listen?

we know where your dog goes to school

A while ago I noticed that a detailed story in Le Monde about their telecoms-interception-scandal-of-the-week had bizarrely vanished from their archives. It is baaack and I can share it with you! So if you read French and want to know what happens, in operational detail, when a prosecutor orders an illegal trawl of call-detail records to find out if a journalist has spoken to another prosecutor, there you go.

Actually, there is no dog, but they did track down his daughter's pony.

nonlinear response to interest rates

Just to recover something from my twitter feed, last Friday, BT announced its Q4 results and (among other things) its management said that they were scaling down their capital investment plans, and that one of the reasons was low interest rates. What? Well, as a UK company BT has to capitalise the net surplus or deficit in its pension fund every year and take a charge to profits for it. As pension funds have to hold a lot of bonds, low interest rates mean a bigger notional pension deficit. Whether or not BT has to put more cash into it, or whether it might just be more expensive to raise money, doesn't really matter. The impact is the same, completely counter-intuitively. Lower interest rates shouldn't discourage economic actors from undertaking capital projects.

A couple of things as a result. One, this tends to support the idea that there is no such thing as an economy-wide (Wicksellian) interest rate. If BT's pension fund were big enough, lower interest rates on its bonds might actually drive up rates on BT's own borrowings. Two, what about other companies? US firms often have big health insurance liabilities, and insurers typically have to own lots of bonds (and it wasn't the insurers that blew up, now was it, so best not fiddle). Do they experience this? Three, this may not be a thing as it may just be management spinning a pretty dreadful quarter, and Verizon in the US, a very similar business, decided to go ahead and lay a lot more fibre.

Churchill was wrong for most of his career, you know...

This Ha'aretz piece is interesting for the insight it gives into Israeli policy and especially into process, but also for a couple of other things. Notably, it's remarkably frank about the Obama administration deliberately trying to stop Netanyahu going to war, and the role of dodgy casino guy Sheldon Adelson in both US and Israeli right-wing politics, and it provides the new information that the Americans have given up on the formal diplomatic channel and concentrated on influencing the Israeli military directly, on a brasshat to brasshat basis. The implied conclusion is that the IDF leadership are interested in external reality while Bibi is too busy being Winston Churchill, and further that they are interested in getting information from the Americans about what their own prime minister is thinking.

Also, Netanyahu considers himself an expert on US politics. The danger here is that the America he is an expert on may not be the same America everyone else is dealing with. If, as I suspect, he is getting a lot of his information from his Republican contacts, he's living in an alternate universe. In so far as people like Sheldon Adelson are impressed by US politicians who know Bibi Netanyahu personally, his contacts are literally being paid to tell him what he wants to hear. It's ironically similar to Bush before the Iraq war, just with the stove-pipe reversed.

However, I was astonished by this quote:

While the Fifth Fleet of the U.S. Navy is operating in the Straits of Hormuz, just as the Pacific Fleet was anchored at its home base near Honolulu on the fateful morning of December 7, 1941, the two instances are not really comparable.

Well, no, they're not, are they? Some tabloid journalists keep a few paragraphs of general-purposes "sexy" in a file they can drop into a story as required and just change a couple of parameters to fit. This sounds like the same thing, but with Churchill!

Meanwhile, Colin Kahl, and this. It does look like there's a coordinated push-back against the bullshit, which is good news for those of us who remember 2002. The US Navy bombs Iran...with love. Of a purely Platonic form between comrades of the sea. Oops. while also bringing the carrier back.

US policy does look like it's trying to achieve three goals - 1) no war with Iran, 2) reassure the GCC countries (so they don't start one), 3) restrain the Israelis (without pressing so hard they freak and start one). These are partly contradictory, but then what isn't? Certainly, the combination of being ostentatiously nice to Iranian sailors while also sailing a giant carrier up and down the Gulf does fit the needs of 1) and 2).

fighting the real enemy

Con "WMD" Coughlin's piece in the Torygraph is worthy of close reading. You'll note that this:

Whitehall was caught off guard by the seriousness of the situation in Helmand province, where British troops were deployed in Nato’s reconstruction programme. Most Labour ministers supported the view of John Reid, the defence secretary at the time, that “we would be perfectly happy to leave in three years’ time without firing one shot because our mission is to protect the reconstruction”.

Intelligence assessments conducted in southern Afghanistan concluded that they would receive a hostile reception.

isn't actually sourced to either General Richards, who is the ostensible subject of the piece, or to Sandy Gall's book mentioned later in it. Also, the piece contains extensive quotes from Richards that turn out to have been dug out of Gall's book, when a over-rapid look at the piece might give you the impression Coughlin spoke to Richards.

Reid's remark has gone down in the annals of stupidity, but the notion that "most Labour ministers" agreed with him isn't sourced to anyone at all. In fact, the policy was repeatedly re-debated and altered, as I blogged here over the winter of 2005-2006, which doesn't suggest everyone agreed on it. Further, it's news that "intelligence assessments" accurately forecast what would happen - especially as any assessment carried out before the deployment would have been an assessment of the original plan, not the plan as it was radically altered in the field.

I suspect Coughlin is talking the secret services' book here, and they are fighting the real enemy - the uniformed services' Defence Intelligence Staff, which would have been responsible for such an assessment. Further, DIS was notoriously right about Iraq (if you believe Brian Jones' telling) and this is inexcusable to the spooks (who weren't) or Coughlin (who wasn't, and who culpably published their nonsense).

Further, does this quote sound convincing to you? For an American general, he sounds a lot like a British journalist trying to sound tough.

Sir David also recounts a heated argument between Brigadier Ed Butler, the first British commander in Helmand, and an US general who took exception to him. “I nearly punched that damn Limey’s [Butler’s] lights out, he was so arrogant,” the US general said.

This is not a mafia business. This relies on credit!

Via Jamie Kenny, a must-read translation of a Chinese investigative report into the case of Wu Ying, a Chinese businesswoman who is in deep trouble with the law. What's interesting here is that the report provides a deep view into some of the most important interfaces in the political economy of China - between the official and shadow banking sectors, between both and the Party, and between the Party and organised crime. It's been suggested by quite a few people, notably Ken Livingstone's economic advisor John Ross, that Chinese macro-economic policy is basically all about investment - whereas other countries might target inflation, the money supply, nominal or real GDP, an exchange-rate peg, or full employment with a range of fiscal or monetary tools, Chinese policy makers have a primary policy target of maintaining sufficient employment growth to keep up with the growth of the urban workforce, and a primary policy tool of controlling the rate of capital investment. This is achieved through a combination of fiscal policy through the government budget, both formal regulation and informal influence over the banking sector, and monetary policy, specifically the management of the RMB exchange rate and the terms on which central bank intervention is sterilised or not.

An investment-centric view of the economy could be characterised as both palaeo-Keynesian - investment, driven by animal spirits and radical uncertainty, is the swing item in the national accounting identity and therefore the driver of the business cycle, and should be managed by government in order to maintain a stable growth path - and also Marxist, in that it puts the accumulation of capital and its allocation between sectors centre-stage and suggests that it's too important to be left to capitalists.

An alternative view, which we might pin on Patrick Chovanec, is that investment is the driver of the Chinese economy but that nobody's in anything that could be described as control. In this view, Chinese economic policy is more orthodox, leaning against the world recession in 2009 with a major stimulus plan and a monetary expansion, but its impact is very noisy. Much of the stimulus money went into an unsustainable property bubble, which is now deflating messily.

In a sense, these arguments are not all that different. The major differences are the degree of agency the central government is perceived to have, and the underlying call on the future of the economy. John Ross would argue that the surge in investment is creating the capital goods needed for future growth and removing inflationary constraints. Some Americans wonder at the system's capacity to pour money into a massive windpower infrastructure. On the other hand, the San Francisco Fed reckons that a very large proportion of Chinese goods exported to the US consists of imports to China, notably from the US - it's been estimated that out of the production cost of an iPhone, more of the value-added represents US than Chinese production. Isn't this strong evidence that there has been huge overinvestment in a very particular kind of low-margin export processing, plus property?

Now, back to Wu Ying's cell. This story is all about how the system tries to control investment, how Chinese entrepreneurs and officials try to subvert this control, what happens when it breaks down, and how it is then restored. It's fairly typical of economies with strong official controls on bank balance sheets that a big market in direct inter-company lending develops (it happened in post-war Britain). If you can't get a loan from the bank, perhaps you could arrange something with a business that happens to be awash with cash. Obviously, this is a lot easier if there is some sort of intermediary who can make the deal. And in China there are specific, geographically linked networks of entrepreneurs who have become specialised in this unofficial shadow-banking sector. Technically it is entirely illegal, so it's up to the intermediary to enforce the terms of the contract in their own sweet way. Which of course brings in another actor, organised crime or privatised protection.

This being China, though, it's more complicated than that. Wu Ying's creditor, Lin Weiping, was a former Cultural Bureau official turned moneylender or rather "funding coordinator", who acted as a sort of broker between savers and borrowers. Well, it started off like that but the business prospered and pretty soon people were depositing spare cash with him overnight. This is an important moment - he wasn't just introducing the two parties to a private arrangement any more, but rather, he was now operating a bank. The demand for credit outside the official system, and for high-yielding (2-5% monthly interest) deposits, was enormous. Fascinatingly, it turned out that the official banks were also keen to find sources of wholesale funding that let them get around the People's Bank of China's monetary policy - they started borrowing from him on overnight terms. This was implemented by sending a straw-man to open an account and deposit the cash. Lin, having turned himself into a bank, now went a step further and became a central bank. You might wonder how long it would have taken him to start issuing his own currency.

But Wu Xing would bring him down. He very rarely extended credit outside his home province, but made an exception for two of her projects, a tourist resort and another unofficial banking operation (which he may have thought of as being a branch of his own). It turned out, though, that she actually had an entirely different project in mind, in real estate. She justified this as necessary to influence important officials. In fact, the story was about to become a classic case of an entrepreneur who over-does the leverage and eventually runs out of credit, with the twist that one lot of creditors had her kidnapped by thugs in an effort to collect payment. However, Wu had become too big to fail, and eventually there was something like a race between Lin's shadow-banking empire and the very official Agricultural Bank of China to put together a lifeboat package, which Lin eventually won. A syndicate of unofficial lenders bought out the loan portfolio at 70% of its face value.

It seems that this was intolerable to the authorities, as Wu and Lin and many others were then arrested. Lin got six years and is now back on the out and apparently dedicated to studying Chinese culture, specifically the bits relating to keeping his mouth shut. Wu is still in the court system, facing charges of running an illegal bank.

Chinese regulators quoted seem to be more interested in the sources of capital going into the shadow-banking system, on the grounds that quite a lot of it is deeply illegal in nature, and also that concentrated rather than diversified sources of funding tend to cause systemic risks. In so far as it's the marginal transaction that matters, if this was to work it would represent an effort to make sure that it's the official financial sector that represents the marginal lender and that state control of investment continues.

But that's going to be very difficult in an environment where the central bank might be you.