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China’s new development bank is becoming a massive embarrassment for Obama

Obama Chinese flag USREUTERS/Kevin Lamarque

China’s new development bank, which was announced just five months ago, is becoming a massive headache for the US. Try as it might, the US government can’t persuade its allies to stop joining the Asian Infrastructure Investment Bank (AIIB).

The bank will be a bit like the World Bank, providing loans to developing countries in Asia for infrastructure projects.

Unlike the World Bank, China will hold the reins of the AIIB. The US administration is publicly worried that the institution will not meet high governance standards, but it really seems opposed to the move because it signals a growing Chinese influence in the region and in global politics.

The US has already endured a series of embarrassments over the bank. It might have been expected that some European countries with a cooler relationship with the US would join, which they did. India and Singapore, however, were quick to sign up despite having decent relationships with the US. And several other countries have started joining, leaving the US almost completely isolated in its position.

Britain is one of the US’ closest allies, but the government has been pursuing an unashamedly warmer relationship with China for several years and was one of the first countries to say it wanted a role in the AIIB.

The front page of the Financial Times the next day, in which anonymous White House sources attacked the British government for “constant accommodation” of China, might have been intended as a warning to others, but it doesn’t seem to have worked.

South Korea has applied, and America’s other major allies in the region, Japan and Australia, have been warming to the idea of joining.

Tuesday, however, brought the most embarrassing event of all. Taiwan, which has no formal relationship with mainland China, is a former enemy of China, and basically survived the 20th century with its independence only through assistance from the United States, applied to join the AIIB.

The infrastructure bank isn’t going to be a massive boom for the UK economy, or even for nearer nations like Japan, and the US will not retaliate. The point is that the UK is willing to take a very modest improvement in economic and political ties with China in exchange for a small deterioration in ties with the US. Pretty much every country has decided that this is the right move.

The AIIB is a part of the wider “new Silk Road” initiative by China to deepen trade and investment both in the rest of Asia and the wider world. According to Barclays, it could actually be a positive thing for the region’s stability:

We believe through the building of interdependent relationships based on shared economic interests, this New Silk Road plan should deepen political linkages, improve mutual understanding and foster long-term stability in the region. The agreement to set up the AIIB by countries that have territorial disputes with China suggests potentially lower geopolitical risks and lower probability for military conflicts, in our view.

But the move goes beyond that — it’s a major PR push for China, which the American administration has positioned itself opposite from. So far, that strategy is failing spectacularly for the US.

Researchers Claim Facebook Tracks You Even If You Opt Out

If you’ve visited a Facebook page—even if you don’t have an account, and even if you’ve opted out of tracking—the social network drops a long-lasting cookie onto your computer, and follows you everywhere you go.

That’s according to an in-depth ​report from a pair of Belgian universities, who were commissioned to investigate the issue by​ their local data protection agency. (Asked for a response, the UK’s own Information Commissioner Office directed us to Ireland’s data protection watchdogs, saying it wasn’t their remit as Facebook is based in Ireland.)

The report found that Facebook tracks users even if they’re logged out, have deactivated their account, or have opted out of behavioural advertising. The problem centres on Facebook’s social plugins, those widgets that people install on their sites with the Like button.

The researchers suggested that Facebook sets a tracking cookie that can last for two years on your PC or device in three​ instances. First, when you visit a Facebook page—whether it’s your own profile or a company page when you’re not signed in; second, if you visit specific third-party websites (including mtv.com and, rather oddly, myspace.com); and third, rather ironically, if you go to the European D​igital Advertising Alliance website to opt out of tracking.

From then on, every time you visit a page with a Like button or other social plugin, it sees the cookie and sends the tracking details back to Facebook. That happens even if you don’t click Like, login to Facebook, or interact in any other way with the site.

Image: ​Adam Fagen/Flickr

If all this sounds exactly what you’d expect from Facebook, you’re not alone. Paul Bernal, a lecturer at the University of East Anglia’s law school, wasn’t surprised by the report, though he said the extent of the tracking goes further than he would have thought. “Facebook has a record of pushing the boundaries, and for finding new ways to invade privacy, which is one reason that people like me, who understand at least part of how they work, are not generally on Facebook,” he told me. “So it’s not a surprise that they’re doing whatever they can to track us, but this looks a bit more brazen than I suspected. They’ve had their fingers burnt in this field before, and I thought they might be a bit more circumspect.”

Facebook said the report contained “factual inaccuracies” but did not detail them; the authors didn’t speak to the social network “to clarify any assumptions” before it was published.

“We have explained in detail the inaccuracies in the earlier draft report (after it was published) directly to the Belgian DPA, who we understand commissioned it, and have offered to meet with them to explain why it is incorrect, but they have declined to meet or engage with us,” Facebook told Motherboard. “However, we remain willing to engage with them and hope they will be prepared to update their work in due course.” We asked for details of these inaccuracies, and have not yet received a response.

Facebook said it was confident its systems comply with applicable laws, and said the use of cookies to track logged out users is standard, acceptable and lawful practice.

Under EU privacy law, websites need to get your consent before dropping cookies on your computer, with a few exceptions around site functionality such as e-commerce shopping carts, which wouldn’t work otherwise. The UK’s implementation of that law settles for so-called implied consent, which is why many websites show a banner warning you they use cookies if you continue browsing.

“I suspect there will be people licking their lips at another opportunity to go for Facebook.”

Facebook doesn’t appear to ask for consent, though it does warn users in its recently updated terms that it collects information about the websites and apps you visit. Users can opt out of the behavioural ad tracking, but not only do exp​erts say that’s not enough to meet EU laws, they suggest that Facebook is flouting wider opt-out systems, notably the European Digital Advertising Alliance.

“If people who are not being tracked by Facebook use the ‘opt out’ mechanism proposed for the EU, Facebook places a long-term, uniquely identifying cookie, which can be used to track them for the next two years,” report co-author Günes Acar told the Gu​ardian. “What’s more, we found that Facebook does not place any long-term identifying cookie on the opt-out sites suggested by Facebook for US and Canadian users.”

The report authors said they “have no idea” why North American and European users are treated differently.

Facebook claimed it recognises the unique opt out of a user, and applies it across all browsers and devices; we’ve asked the social network to explain why the researchers are seeing a cookie dropped on visitors of the European Digital Advertising Alliance site and are awaiting its response.​

The report follows a ruling in UK courts regarding​ Google ignoring “do not follow” settings in Safari, that will let British users take legal action here rather than take the fight to the US as Google requested. That precedent may make it easier to take action against Facebook, Bernal suggested.

Facebook already faces regular audits from the US FTC following an investigati​on into privacy settings, and Bernal predicted that if Facebook doesn’t drop the tracking system, it could face legal action on both sides of the Atlantic—particularly in Europe where the EU has shown an “increasing willingness” to take on US tech giants, highlighted by the Spanish right-to-be-forgotten ruling. “I suspect there will be people licking their lips at another opportunity to go for Facebook,” Bernal said.

Want to protect yourself? Facebook pointed users to its privacy hel​p page here. Alternatively, you can compartmentalise Facebook, using it only in a separate browser from your other activities, or you can install browser add-ons such as Privacy Badger from the EFF, which will let you use social tools without being tracked.

There’s another obvious route, which Bernal advises: “I still think the best thing to do is to leave Facebook.”

The Kid Who Will Clean Up The Ocean

Boyan Slat’s story is not quite that of a 20-year-old Wunderkind who magically found a potential fix to a longstanding problem. It’s perhaps more accurately described as a combination of personal dedication and trial and error. When going through his old prototypes for a technology that would passively scrub oceans of plastic, he’s almost embarrassed of his early concepts.

“But that’s what science is really,” Slat told me. “It’s a work in progress.”

The crowdfunding campaign behind Slat’s Ocean Cleanup Project was announced with strong bidding, no matter: “With two million dollars we can make a theoretical concept come true.” With just two days left in his campaign, Slat successfully collected the funding for his project, bringing him one step closer to realizing a vision of plastic-free oceans.

Boyan Slat at a plastic heap. Photo: Manuel Freudt / VICE Media

Plastic is the enduring residue of consumer society. A plastic shopping bag corrodes in approximately 20 years; a plastic bottle decays in something like 450 years. Cheap and universally applicable, 225 million tons of it are produced every year, made from a resource that is not quite as interminable as it used to be: oil.

Plastic clouds our oceans as floating particulate, sometimes forming entire islands. It is estimated that there are 150 million tons of plastic in the oceans, with 100,000 tons in the North Pacific garbage patch alone. This means that plastic is responsible for about 70 percent of all oceanic pollution. If those numbers fail to illustrate the sheer scope of the problem, just look at these people posing in the middle of their weekly production of household rubbish.

It was while diving through Greece that Slat, then 17, grasped the gravity of the problem. Ever since, the Dutch teenager, who just turned 20, has put his energy into developing a technique of harnessing the power of gyres to round up plastic.

Today, he leads a team of 100 scientists, students, and supporters. And with his latest crowdfunding success, Slat’s workload shows no sign of slowing down. He explained that he next plans to build upscaled prototypes of his floating, 100-kilometer long collectors, before anchoring the systems in polluted waters within the next three to five years.

“We don’t do free days, that’s really part of the ocean clean up,“ said Slat, who juggled a steady stream of phone calls and emails during a recent visit to his Delft workshop. Occasionally, he’d study readouts from an app that tracks donations to his project; at the time, he was nearing $2 million in crowdfunding.

“Germany is actually at the moment our second largest giver,” he said in a more relaxed moment. “Without the internet, this project wouldn’t have been here.”

Of course, the Ocean Cleanup Project is not the first concept of collecting trash from the oceans. There is the Munich-based One Earth — One Ocean project, aimed at actively collecting rubbish with its custom build ship, Seekuh. There are network-based projects like The Clean Oceans Project, which seek to educate on a global level. And of course there is the lovely Mr. Trash Wheel: A cartoon-style mill wheel rambling its way through Baltimore harbor.

What makes Slat’s project unique is that it’s premised on the idea of letting ocean currents do the heavy lifting, effectively funneling plastic into the middle of a V-shaped structure, where the trash will be collected and regularly shipped to land in larger batches. The anchored 100-kilometer barrier, Slat added, would be the largest structure ever built on the oceans.

The costs will be tremendous, but Slat still claims that the actual project would run a calculated 33 times cheaper than conventional, active collecting projects.

Rendering courtesy Ocean Cleanup Project

Not everyone is completely sold on his idea. Stiv Wilson from the 5Gyres project famously called it a fail and nothing more than an illusion. In response, Slat released a long feasibility study, in which he demonstrates, among other things, how sea life will not be affected, floating underneath the barrier.

In a recent article in the Süddeutsche Zeitung, German scientists warned that the Ocean Cleanup Project would cause more harm than good. They claimed that the power of the currents has not been estimated correctly, and that Slat’s plan could be affected by microbiological growth on the barrier.

Rendering courtesy Ocean Cleanup Project

If anything, Slat is thankful that the scientific community has criticized his idea; he plans to continue working on future feasibility studies and prototypes.

“What we want to do, has never been done,” he admitted. “It is probable that we will encounter several uncertainties.“

Slat tests a prototype. Photo: Ocean Cleanup Project

In the end, fishing plastic out of the high seas is only one part of the solution. The end goal is to shut off, once and for all, the flow of trash from our consumer society into the oceans. That’s not to mention the Herculean task that would be recycling and repurposing all that plastic after it’s back on land.

Bitcoin for Prison

WRITTEN BY CHARLIE SHREM

Illustration: Lia Kantrowitz

In January 2014 I was coming home from a speech in Amsterdam when I was arrested at Kennedy Airport by federal agents and transported to solitary confinement in the Metropolitan Detention Center in lower Manhattan.

The charges were related to my role as CEO of BitInstant, an early Bitcoin startup that allowed users to buy the digital currency quickly and easily.

I knew of—and to some extent enabled—a single customer buying Bitcoin in order to procure illegal drugs on the digital black market Silk Road.

It had finally caught up with me.

A few months ago, I pleaded guilty to “aiding and abetting an unlicensed money transmitting business” and was sentenced to two years. Today I’ll be self-surrendering to Lewisburg Federal Prison Camp in Pennsylvania.

I’m obsessed with Bitcoin, and I’m going to prison. So of course I wanted to know if I could continue to use it on the inside

Bitcoin may have indirectly landed me in prison, but it’s still my passion. An alternative global transaction network would give people more control over their finances, allowing them to send money with greater privacy and without having to trust (or pay) a middleman. It would also reduce the time it takes to move money by days. If we could do that, we would be another step closer to bringing millions of people out of poverty by allowing people in local economies to buy and sell to the rest of the world.

I’m obsessed with Bitcoin, and I’m going to prison. So of course I wanted to know if I could continue to use Bitcoin on the inside.

Many different types of prison currency, from stamps to cigarettes, have existed over the years. After prisons began banning smoking a decade ago—it was banned in all federal prisons in 2014—prisoners started exchanging tins of mackerel due to their long shelf live and high protein, which is lacking in prison. Laundry may cost 1 mack, a haircut 2 mack, and a personal trainer can run you 25 mack a month. So why not Bitcoin?

As it turns out, running a Bitcoin system in prison is illegal—the Bureau of Prisonsstrictly forbids “possession of money or currency, unless specifically authorized”—but it’s still a fun thought experiment. Bitcoin is primarily used over the internet, but does it need to be?

By understanding how feasible this is, I can see what, if any, infrastructure is needed to connect local communities to the global financial system, even if they don’t have computers or an internet connection.

GUESS WHAT? YOU DON’T NEED THE INTERNET TO USE BITCOIN

You’ve probably heard people talking about how Bitcoin is revolutionary. While Bitcoin may be the first all-digital currency that is feasible on a global scale, the fact that it is digital isn’t why it’s revolutionary.

The current financial system relies on banks to move money around and make sure it gets where it’s going. Bitcoin’s real innovation was engineering a system that does not require banks in order to keep money flowing. Instead, tens of thousands of independent volunteers share the work of tracking transactions and preventing fraud.

These volunteers maintain what are called the nodes of the Bitcoin network. Nodes are computers that keep track of all the Bitcoin transactions and update users’ account balances accordingly. Instead of tracking this information internally, as a bank might, Bitcoin’s nodes broadcast these transactions as they happen. All the nodes talk to each other in real time and update the blockchain, which is a shared history or ledger of all Bitcoin transactions ever.

Shrem in 2013. Photo: Derek Mead

This transparency keeps everyone honest and the ledger decentralized.

This information can be transmitted over the internet, local LAN networks, TV andradio signals, even Morse code. A farmer in Kenya can connect to the network with only a cell phone and local SMS capability.

But what if technology was even more limited, or virtually non existent? Without computers or cellphones, could Bitcoin still work?

ENTER THE MAK

The answer is yes. All you really need for a Bitcoin-like currency to work is the ability to keep track of transactions in a central ledger, which is double-checked frequently by users.

Without a computer or cell phone, prisoners would need to run a ledger completely offline from behind the prison walls. In other words, we’d need a physical notebook to keep track of all the transactions. Instead of swapping physical cans of mackerel, we’d simply write down the amounts in the notebook.

Let’s call our prison-version of Bitcoin Mackerelcoin, or MAK.

Say I’m working out in the gym, and Dave needs to pay John 25 MAK for his monthly workout training. Instead of having to fill his pockets with 25 tins of fish, he’d simply ask me to move the funds from his account to John’s. I’d open the ledger and write down “Dave paid John 25 MAK,” and the date. Then I’d subtract 25 MAK from Dave’s balance and add 25 MAK to John’s.

(This isn’t quite the same as Bitcoin, because as the single node, I’m acting similar to a banker. If we really wanted to imitate Bitcoin perfectly, many inmates throughout the prison would be keeping track of these transactions and then synchronizing them together, just like nodes in the Bitcoin network. When Dave paid John 25 MAK for a workout, every inmate in the yard would take out their notebook and jot down the transaction. Later, when John pays Tim 2 MAK for a haircut, all the other inmates in the salon would take out their notebooks and each record the transaction. Then at the end of the day, all the inmates would meet together and enter all the transactions into the main ledger. It’s sort of like the Island of Yap, where the residents used enormous stone coins that were too heavy to move—when money changed hands, everyone in the village simply spread the word of its new owner.)

Taking the experiment further, think of a prison bookie. Bookies need to be able to make dozens of transactions a day, from betting on a game of Monopoly to guessing whether dinner rolls or cornbread will be served with dinner.

Illustration: Lia Kantrowitz

Bookies maintain ledgers themselves but have to struggle with collecting and dispersing funds. If the inmate making the bet had a MAK balance, the funds for the bet could be frozen until the outcome. If he wins, I move funds from the bookie’s account to his, and if he loses, vice versa. This way, he does not have to trust that the bookie will honor the agreement. Meanwhile, the bookie doesn’t have to break any noses to collect.

Somehow, at various points of the day I broadcast my ledger including balances and transactions to the outside world—say, by standing up in the cafeteria and shouting out the day’s transactions.

I would pin the value of 1 MAK to the price of a tin of Mackerel in the commissary, $1.50 USD. Meanwhile, I’d charge a fee—say 1 MAK—to cash in and out of the system with physical Mackerel, just like Bitcoin exchanges do with the US dollar and other currencies. Ideally, the MAK, which could be exchanged for Bitcoin once the balance holder leaves prison.

The ledger is the most important component to the theory. I’d need to keep real-time books of everyone’s balance and transactions, all without technology. In order for me to maintain my own honesty and the integrity of the system, I would mail a copy of the books every day to at least two other parties outside the prison who act as external nodes. These parties will publish copies of the past ledgers, and also confirm that each transaction is valid—that John actually had 2 MAK to send to Tim.

I would mail a copy of the books every day to at least two other parties outside the prison

This gives the system a block time—the amount of time it takes a transaction to be confirmed and published—of about three days, the amount of time you’d expect it to take for the books to reach the external nodes. (For larger transactions, you might want to wait until the external nodes confirmed payment before exchanging goods or services, but for smaller transactions, you’re probably fine taking the risk.)

The external nodes double-check my math and confirm the transactions. The mail postage acts as a timestamp. My external nodes on the outside publishes the daily ledger to a website or blog, where any inmate can call or email a friend or family member to verify transactions. This helps prevent me from arbitrarily debiting or crediting from someone’s balance.

But the real check on integrity is that everyone, including me, has an economic incentive to keep the system honest. If anyone thinks the system is corrupt, the whole experiment collapses. This is what would (hopefully) prevent someone from cornering me in the bathroom and forcing me to change a balance.

IMPLICATIONS BEYOND THE PRISON WALLS

In my personal trainer example, carrying around 25 tins of Mackerel to pay a personal trainer is somewhat cumbersome, and inmates are only given a small locker for all personal items. With MAK, an inmate can simply ask me to move a balance of 25 MAK from his account to his trainers.

Of course, this is an experiment and can easily be shut down. Since I am the only node or access point, I can be shut down and sent to a higher security prison. This problem could be solved by recruiting more inmates to be nodes—and prisons, by design, make it difficult for inmates to organize.

But what about the real world outside prison walls? There are tens of millions of underbanked people in the world. They are slowly being brought online, but in places where the internet is not available, the offline blockchain could be a stepping stone to onboarding them into the global financial system. And even if not, it’s still an interesting way to explain how Bitcoin actually works.​

Charlie Shrem is a Bitcoin pioneer and founder of the Bitcoin Foundation. Once he’s out of prison, you can find him ​on Twitter or at ​CharlieShrem.com.

How a Two-Timing DEA Agent Got Busted for Making Money off the Silk Road

Two former investigators into the Silk Road dark web market have been arrested for money laundering and fraud charges directly related to their investigation.

Both Shaun Bridges, a former US Secret Service (USSS) Special Agent, and Carl Mark Force IV from the Drug Enforcement Administration (DEA) were members of the Baltimore Silk Road Task Force. But in particular, Force’s story provides a textbook lesson in exactly not what to do if you want to maintain multiple identities on the dark web without getting caught.

Force allegedly acted as a double agent: simultaneously being part of a plot to capture the site’s leader, known as Dread Pirate Roberts (DPR), while siphoning snippets of sensitive information to DPR.

But as alleged in a criminal complaint released today, Force made a series of critical mistakes that would eventually identify him as the source of DPR’s tip-offs, and as the profiteer of hundreds of thousands of dollars.

The complaint alleges that Force was known as “Nob” on the Silk Road while carrying out sanctioned DEA work, and presented himself as a bulk cocaine dealer. With this identity, Force facilitated a drug deal with a Silk Road employee, Curtis Green, who gave the DEA agent his home address, and was subsequently raided. This would culminate in an elaborate, and fabricated, murder-for-hire, with fake photos of Curtis Green being sent to DPR as “evidence” that the deed had been done.

“Hundreds of thousands of dollars” worth of bitcoin were then funnelled into Force’s personal checking account

The US Attorney’s office contends that Force also maintained a number of other identities that were not approved by the DEA, the first being “French Maid.”

After the Silk Road server was seized in October 2013, law enforcement gained access to all of the private messages sent between users of the site. Amongst these were the communications of French Maid and DPR. In his first message to DPR, French Maid signed off with the name Carl, and didn’t encrypt the message, meaning that it could be read by investigators after the fact.

“I have received important information that you need to know asap. Please provide me with your public key for PGP. Carl.” [Emphasis in the criminal complaint.]

It appears that French Maid quickly realised his mistake, and sent another message to DPR four hours later. With the subject header of “Whoops!” French Maid then claimed that he was actually a female called “Carla Sophia,” and that she had “many boyfriends and girlfriends on the market place. DPR will want to hear what I have to say 🙂 xoxoxo.”

Irrespective of whether DPR bought the bluff or not, the damage was done, and this nugget would eventually be one of the pieces of evidence linking Carl Mark Force IV to the French Maid moniker.

Investigators also found that Nob and French Maid used the same, outdated piece of encryption software, according to the complaint. “This is not akin, for example to two people using the same model of mobile phone but both having software that is out of date,” the complaint reads. “Rather, the outdated version that both French Maid and FORCE (as Nob) used is more of a ‘signature’ given the greater number of versions available.”

Arguably the strongest clues tying Force to French Maid involved investigators following the money. As revealed by Silk Road server data, on September 15, 2013 DPR made a 770 bitcoin payment to French Maid, which was worth around $98,000 at the time. According to the complaint, this was in the same period that Ulbricht wrote in his journal “paid French Maid $100k for the name that [K]arpeles provided to DHLS [likely a typo for DHS].” French Maid had told DPR that Mark Karpeles, the owner of the now defunct Bitcoin exchange, had provided the identity of the Silk Road owner to the authorities.

From the government’s complaint.

Although those 770 bitcoins were broken up into four separate Bitcoin addresses, presumably in an attempt to obfuscate their destination, investigators were able to trace their movements through blockchain analysis, and they all eventually landed in one account between September 23 and September 29.

The account, run by Bitcoin trading platform CampBX, in fact belonged to Force, the government contends. “Records obtained from CampBX demonstrate that this was an account held in FORCE’s personal capacity,” according to the complaint.

On top of this, at least 600 bitcoins were moved from that account to another at Bitstamp. This account, again according to records obtained by investigators, was allegedly owned by Force, and was registered with his “home address, date of birth, personal bank account, and personal email address,” the complaint reads.

In the last step, “hundreds of thousands of dollars” worth of bitcoin were then funnelled into Force’s personal checking account, cementing the flow of cash from DPR’s payment to French Maid, right to Force’s own pocket.

But the agent is accused of also using another identity in an attempt to earn more money, and in turn investigators found evidence of blackmail.

The user “Death From Above” messaged DPR in April 2013, claiming to know all about the murder-for-hire plot that had targeted Curtis Green—the very plot that Force, in his DEA work, had been a part of—as well as DPR’s identity.

Days later, and after an exchange of messages, Death From Above wrote to DPR, “So, $250,000 in U.S. cash/bank transfer and I won’t give your identity to law enforcement.”

However, upon review of the screen recordings that were taken as part of Force’s official undercover work on Silk Road, investigators noticed that he had been logged into the “Death From Above” account from his DEA-issued laptop.

“At some point in that several hours’ worth of video footage there is a clip of a message being typed on the Silk Road using the ‘Death From Above’ account,” according to the complaint.

If the government’s allegations are found to be true, Force made several mistakes. He leaked his real name in an unencrypted message, he connected his identity to the cash he was making illicitly, and he failed to separate his official DEA identity from one that he was attempting to make money with, by using them both on the same agency-provided computer.

Since the Silk Road was shut down in October 2013, we’ve learned that everybody from drug dealers to site administrators to blackmailing double agents all make mistakes. Even years after, people are still getting busted, and more are probably to come.

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