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Russell Might Divest From Northwestern Mutual

In Financial Engeneering, Law & Regulations, Quantitative Finance on 31.08.10 at 00:29

Northwestern Mutual Life Insurance bought Russell in 1999 for a variety of reasons.  Now there are rumors that the mega life insurance company might be selling it to raise cash and focus on their core business.

Now that times are difficult for many investment management service firms, industry sources say the divestiture of Russell could occur, gfinancenews.com reports.

After it was acquired the subsidiary went on an acquisition binge buying Pantheon Ventures, a private equity fund of funds, and the Australian HR division of Towers Perrin.

This was the strategy of the firm, early on in the 2000’s, to be the go-to for institutional investors.

The Russell Building

Now that times are difficult for many investment management service firms, industry sources say the divestiture of Russell could occur, gfinancenews.com reports.

Russell recently sold Pantheon Ventures, to Affiliated Managers Group for $775 million.

Both, spokespeople for Russell and Northwestern will not comment, with Northwestern spokesman, Darryll Fortune saying Russell is not for sale.

Russell’s recent setbacks

  1. CEO, Craig Ueland resigns with a large number of executives
  2. CFO, Frank Ryan announces departure
  3. 2008, Shut down Fund of Funds business
  4. Business affected from financial crisis from 2007-2009, continues today

Russell would be an attractive company for potential suitors.

Many pension funds and other investors heavily use their products and services.

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Stanley’s Angles

In Financial Engeneering, Quantitative Finance on 31.08.10 at 00:14

Zoe Cruz, the former investment banker at Morgan Stanley – nicknamed “Cruz Missile” – has launched her own hedge fund called Vorás Capital Management, together with former colleague Ellen Brunberg. The firm will be split in two; one global macro fund and one credit opportunities fund.

I guess one will be buying, while the other is selling.

Zoe "Cruz Missile" Cruz

After spending nearly a quarter of a century at Morgan Stanley, reaching Co-President in 2006, she was ousted from the firm for numerous reasons.   One key being, a unit that reported to Cruz losing around US$ 3,7 billion in sub-prime real estate investments.

In 2006, she was on the Forbes 100 list of the most powerful women in the world, ranked number 10.

As being one of the most influential women on Wall Street, she was able to recruit many former Morgan Stanley employees, like Philip Newcomb, who was co-head of interest rates and currencies.

Mr. Newcomb is now chief operating officer at Voras Capital Management and is based in New York, off Park Avenue.

Why Voras?  Voras is a Greek word for “north” which is the name of the area where Zoe Cruz was born, gfinancenews.com writes.

Voras Capital Management has opened up offices in New York and Hong Kong. The fund is incorporated in the United Kingdom.

Fundraising has been challenging post-crisis, however Cruz managed to raise a decent amount.

Many pension funds have programs aimed at investing in emerging minority-female managers, and the Harvard business school graduate has been actively fundraising for the past few months and raised around US$ 200 million.

Two funds with unique strategies will be created, a global macro fund, which will be managed by Zoe Cruz.

The other fund is a credit opportunities fund run by Ellen Brunberg, who previously ran Morgan Stanley’s European securitized products group.

Credit opportunity funds are particular attractive to institutional investors, especially ones flush with cash.

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Overdose – The Next Financial Crisis

In Financial Markets, Health and Environment, International Econnomic Politics, National Economic Politics, Views, commentaries and opinions on 30.08.10 at 20:19

Overdose: Peter Schiff Gerald Celente, ABC Four Corners Crisis, 2010 Dollar Collapse, Gold. Silver, 911, AIG, Fannie,  Freddie, Deficit, Inflation, Bailout…..

Part 1 of an ABC series- four Corners documentary about the coming economic crisis, featuring Gerald Celente and Peter Schiff. Original air date: 23rd August, 2010.

Vodpod videos no longer available.

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AVA FX: Download MetaTrader 4.0 for free.

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Cyber Criminals Attack Critical Water, Oil and Gas Systems

In Financial Engeneering, Law & Regulations, Learning, Trading software on 30.08.10 at 17:48

For the first time, Norwegian companies are being targeted by a new kind of computer attacks, aimed at critical social management systems, like water oil and gas supply systems. The attacks was first discovered in Germany and Belarus in June. Since then, at least 6000 infected computers have been confirmed.

“A malicious foreign power  – given €86 million, 750 people and two years to prepare – could launch a devastating cyber attack on the EU.”

Charlie Miller

This summer the Norwegian National Security Authority (NSM) discovered for the first time targeted computer attacks directed against internal process and control systems to ensure supply of electricity and water. Similar attacks was discovered in Germany and Belarus. EU’s cyber-security unit, ENISA, will in late October or early November carry out the first ever pan-European cyber security exercise.

According to the Norwegian newspaper, Aftenposten, the National Security Authority confirms that Norwegian companies have been attacked, but will not say which.

“It’s the first time we see this Trojans, specifically designed to take control of the process and control systems. We know that other companies are affected, besides the Norwegians,” Christophe Birkeland at the NSM says.

Malicious software that comes into these systems, stealing business critical information, and in worst cases, destroy or take over control of the systems. We know Norwegian companies have gotten this Trojan into some of their systems,” he says.

NSM emphasizes that it is not reported any injuries at the moment.

However, NSM are now sending out a new warning against what they perceive as a serious threat to a number of critical social actors in Norway:

* Government and the national institutions.

* Power producers and suppliers.

* The oil companies.

* Water supply and treatment plants.

* Transport companies.

Going For The Most Advanced

In the operational center of Hafslund in Oslo,  computers provide electric power for about 1.4 million people in the area.

The Hafslund central is one of the world’s most advanced power systems.

“We have also experienced attempts to hack into our office support systems. We are fully focused on this, and it is a very familiar problem,” information officer, Morten Schau, at Hafslund says.

Faximile: Aftenposten, paper edition, 08292010.

Customized Trojan

Behind the seemingly innocent file name “% System% \ drivers \ mrxnet” is the malicious, and highly sophisticated,  computer virus “Stuxnet,” which this summer has been a hot topic amongst computer security experts.

The attacks may have been going on for many months before it was discovered in Germany and Belarus in June.

One of the many technical features is the fact that the Trojan hides itself very well. Since June, at least 6.000 computers have been confirmed infected by “Stuxnet”.

The cyber criminals have exploited vulnerabilities in Windows, but first in early August did Microsoft create a security update that plugged the hole.

Siemens System Infected

The attack has been directed towards a management system supplied by Siemens – Simatic WinCC.

WinCC is used to control everything from pizza ovens to oil platforms.

In Norway, the system is in use in at least 200 oil companies, power suppliers, and metal and food industries.

Siemens admits that 12 companies have been affected, but stresses that this is not its Norwegian customers.

“Those customers who were infected was quickly helped, and the problem is now fixed,” information officer, Christian Jahr, at Siemens says.

“What happened was that an employee has used a USB stick outside the office, or in other private places. This became infected with the virus, which is activated when used on a PC with WinCC installed. This goes to show that you have to be awake and updated to ensure the best security facilities possible,” Jahr says.

Who’s Fighting Who?

No one knows who is behind the attacks, or what country they come from.

Worldwide companies in Indonesia, India, Iran and the US are being hit the hardest.

There are also several different theories about what the goal is:

* Industrial Espionage.

* Blackmail.

* Sabotage attempts.

The most important way to protect themselves is to make absolutely watertight bulkhead between the data networks used to control machines, and computer systems used for communication with the outside world, according to the experts.

One must also prevent careless use of memory sticks and other USB devices.

Previously, both the police, governments, health institutions, banks and industrial companies have been hit by computer criminals.

Able To Crash The Whole EU

A malicious foreign power – given €86 million, 750 people and two years to prepare – could launch a devastating cyber attack on the EU, a US security expert says.

Charlie Miller, a mathematician who served for five years at the US’ National Security Agency stress-testing foreign targets’ computer systems and designing network intrusion detection tools,” calculated the EU scenario on the basis of a more detailed study of US vulnerability.

This is how it can be done:

Got 100 Million Dollar?

The assault would begin with a member of staff at, say, the London Stock Exchange or the French electricity grid operator, RTE, opening a PDF attachment in an email which looks as if it had been sent by a colleague.

Take down the EU, or buy a famous piece of art? (The price tag is about the same).

The PDF would contain software enabling a hacker on a different continent to silently take over his computer.

Over time, the hacker would monitor the employees’ keystrokes, sniff out passwords, and use the information to take over computers higher up the command chain, eventually putting him in a position to switch off the target’s firewalls, leaving it open to DOS (Denial of Service) attacks, and to install RATs (Remote Administration Tools), which control its hardware.

Around 18 to 21 months down the line, with enough targets compromised, the assault could take place, the EUobserver.com writes.

The EU 27 countries would wake up to find electricity power stations shut down; communication by phone and Internet disabled; air, rail and road transport impossible; stock exchanges and day-to-day bank transactions frozen.

Crucial data in governments and financial institutions are scrambled and military units at home and abroad cut off from central command or sent fake orders.

Normal life could be restarted in a few days’ time. But the damage done to administrative capacity, consumer confidence and the economy by loss of vital data would last for years.

Mr Miller says the bulk of the money –  €83 million ($105 million) would be used to pay an army of 750 hackers, with just €3 million spent on hardware – a testing lab with 50 computers, another two computers each per hacker and assorted smart-phones and network equipment.

* 100 million dollar are just small change for some of our current dictators and drug barons.

* You can win a 100 million dollar at one single game of poker in Las Vegas.

* You can earn 100 million dollars in one year as a  commodities trader at Citigroup.

* 100 million dollar is what Tiger Woods paid for his divorce settlement.

Money won’t be a problem, but organizing the the right people for the operation might be.

Army Of Hackers

An elite corps would consist of 20 world class experts whose main job would be to find “0-day exploits” – previously undetected security gaps in popular software such as Windows, Java or Adobe.

The experts would have to be paid a small fortune –  over €200.000 ($250.000) – each a year.

Or extorted, Dr. Miller adds.

Another 40 people, drawn from the enemy country’s secret services or recruited inside EU member states, would get inside “air-gapped” facilities – the most secure targets, such as military command structures or air traffic control bodies, which are physically cut-off from the Internet in order to prevent cyber attacks.

When the time came, the agents would un-airgap targets by connecting them to the Internet via 3G modems and satellite phones.

The rest of the cyber army, 690 people, mostly computer science graduates and post-graduates from inside the hostile state, would use the 0-day exploits to take over target networks.

They would also collect, maintain, create and test “bots” – software which secretly uses computers in ordinary people’s homes to run automated tasks, such as DOS attacks, which bombard target systems with overwhelming amounts of data.

The final assault would require 500 million bots in diverse locations, according to the calculations.

Dr. Miller, who currently works for the Baltimore, an US-based company, Independent Security Evaluators, admits that internet scare stories like this helps his firm to get business.

But he also underlines that classic intelligence gathering is the best line of defense, rather than hiring IT experts.

“It’s really hard to defend against an attack that’s well equipped and carried out by smart people. But you do have years to detect it before it happens. If you have an elaborate intelligence gathering network you could detect it, not technically because you can see it, but because you have human intel,” he says.

“If you want to spend your money well, spend it on your intelligence services.”

Here’s a copy of  the US National Security Agency stress testing of US and foreign computer systems.

EU’s First Cyber War Exercise

The threat of cyber war against EU targets became clear on 27 April 2007 when hackers crashed Estonian online news agencies with DOS attacks in the middle of an Estonia-Russia political dispute.

The assault gathered pace over the next three weeks disrupting online banking services and government communications.

Three and a half years down the line there is no hard evidence linking the attack to a foreign power, although activists in the pro-Kremlin youth group, Nashi, claim to have taken part.

“If these cyber attacks were used to test the Estonian cyber defense capabilities, much more sophisticated attacks could possibly follow, based on the knowledge acquired during the attacks,” a report on the 2007 events by the Estonian government’s Computer Emergency Response Team says.

NATO and EU countries are now putting more resources than ever into joint cyber-security projects.

EU’s cyber-security unit, the Crete-based European Network and Information Security Agency (ENISA), will in late October or early November carry out the first ever pan-EU cyber security exercise.

ENISA spokesman, Ulf Bergstrom, says the exercise will look at disrupting normal internet operations in the EU’s internal market and the way EU member states’ authorities co-operate across the union’s internal borders.

Mr Bergstrom notes that ENISA’s initial mandate, which covers security of e-commerce, online banking and mobile phones, is being expanded to cover cyber criminality.

“We have been given political signals, for example by information society commissioner Neelie Kroes, to work more closely with agencies like Europol and Interpol,” he says.

“Cyber security is vital for the economy of Europe, to protect the businesses and operations of ordinary citizens. This is the digital society that we take for granted, like water out of the tap, which we need to defend.”

Related by The Swapper:

Hackers Steal CO2-emission Permits Worth $4bn

Another Carbon Fraud Raid Reveals Firearms, Piles Of Cash

Most Polluting Companies Makes Billions On Carbon Trade

Julian Assange: Journalist, Activist or Informant?

We Give You Merkel – You Give Us Batman


China To Invest In Nassim Taleb's Bear Fund

In Financial Markets, Health and Environment, International Econnomic Politics, National Economic Politics, Views, commentaries and opinions on 30.08.10 at 14:53

It’s a pretty strong signal: China’s Sovereign-Wealth Fund is in talks with Black-Swan-author Nassim Taleb’s Hedge Fund, Universa’s Bearish Wagers, The Wall Street Journal reports. China is said to be willing to invest between 6 and 10 billion dollar in the fund that gives a payout of  60% if the market drops 20%. Some of the world’s biggest investors are planning to do the same.

“Stocks are not a robust investment. Make sure you have a garden that bears fruits.”

Nassim Nicolas Taleb


The famous author, philosopher and Wall Street trader, professor Nassim Nicholas Taleb was in his native northern Lebanon last week, thinking about instability in the pricing of goods and services. He suggests that investors around the world strap in for a wild ride of deflation and inflation. And says it therefore makes sense for him to pour money into farming, especially olives, which are indispensable to the Mediterranean world.

The mathematical finance scholar who lectures at New York University and wrote the 2007 book “The Black Swan” says he is as pessimistic as ever about the prospects for sustained global economic recovery.

He suggests that investors around the world strap in for a wild ride of deflation and inflation. And, therefore, he said, it makes sense for him to pour money into farming, especially olives, which are indispensable to the Mediterranean world, The Wall Street Journal writes.

“Healthy investments are those that produce goods that humans need to consume, not flat-screen TVs,” Mr. Taleb says over the phone from near his family’s ancestral home in Amioun.

“Stocks are not a robust investment. Make sure you have a garden that bears fruits.”

In For A Wild Ride

Nassim Nicholas Taleb also says investors around the world should strap in for a wild ride of deflation and inflation.

Some of the world’s biggest investors are planting the same seeds, according to WSJ.com.

The Santa Monica, Calif., investment firm Mr. Taleb helped start and still advises, Universa Investments LP, is in talks with China’s $300 billion sovereign-wealth fund, China Investment Corp., and Middle East government funds about investing in Universa, according to a person familiar with the matter.

Specifically, sovereign-wealth funds are willing to pay the firm in the hopes that if the market dives, at least some part of their portfolio will profit.

Panic is a profit-driver for Mr. Taleb, who has gained renown for his pessimism, a viewpoint that proved prescient in the market collapse of 2008.

The interest from the likes of the Chinese and Middle East funds, which control some of the world’s biggest pools of money, suggests more mainstream adoption of Universa’s bearish conviction.

The outcome of the talks isn’t certain, according to a person familiar with the matter.

But if the investments materialize, they likely would boost the Universa fund’s client assets from $6 billion to about $10 billion, two people familiar with the matter says.

CIC didn’t respond to a request for comment by the WSJ.

“Healthy investments are those that produce goods that humans need to consume, not flat-screen TVs. … Stocks are not a robust investment. Make sure you have a garden that bears fruits.”

Nassim Nicholas Taleb, author of ‘The Black Swan’

Read the full post at The Swapper.

Related by the Econotwist:

Espen Haug: “Strategic Reserves”

Welcome To The Double-Dip!

A Report To Make You Go “Hmmm…”

Investors; Fasten Your Seatbelts!

So, You Thought BP Was An OIL Company?

2010 Analysis: “11 Black Swans”

China: “Mother of All Black Swans”

New Testimony From Taleb

Nassim Taleb’s Favorite Books

2010 Analysis: The Road to Disaster

Paul Tudor Jones Swings Sword And Use The “F-Word”

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China’s SWF To Invest In Nassim Taleb’s Bear Fund

In Learning, Natural science, Philosophy, Quantitative Finance on 30.08.10 at 14:48

It’s a pretty strong signal: China’s Sovereign-Wealth Fund is in talks with Black-Swan-author Nassim Taleb’s Hedge Fund, Universa’s Bearish Wagers, The Wall Street Journal reports. China is said to be willing to invest between 6 and 10 billion dollar in the fund that gives a payout of  60% if the market drops 20%. Some of the world’s biggest investors are planning to do the same.

“Stocks are not a robust investment. Make sure you have a garden that bears fruits.”

Nassim Nicolas Taleb


The famous author, philosopher and Wall Street trader, professor Nassim Nicholas Taleb was in his native northern Lebanon last week, thinking about instability in the pricing of goods and services. He suggests that investors around the world strap in for a wild ride of deflation and inflation. And says it therefore makes sense for him to pour money into farming, especially olives, which are indispensable to the Mediterranean world.


The mathematical finance scholar who lectures at New York University and wrote the 2007 book The Black Swansays he is as pessimistic as ever about the prospects for sustained global economic recovery.

He suggests that investors around the world strap in for a wild ride of deflation and inflation. And, therefore, he said, it makes sense for him to pour money into farming, especially olives, which are indispensable to the Mediterranean world, The Wall Street Journal writes.

“Healthy investments are those that produce goods that humans need to consume, not flat-screen TVs,” Mr. Taleb says over the phone from near his family’s ancestral home in Amioun.

“Stocks are not a robust investment. Make sure you have a garden that bears fruits.”

In For A Wild Ride

Nassim Nicholas Taleb also says investors around the world should strap in for a wild ride of deflation and inflation.

Some of the world’s biggest investors are planting the same seeds, according to WSJ.com.

The Santa Monica, Calif., investment firm Mr. Taleb helped start and still advises, Universa Investments LP, is in talks with China’s $300 billion sovereign-wealth fund, China Investment Corp., and Middle East government funds about investing in Universa, according to a person familiar with the matter.

Specifically, sovereign-wealth funds are willing to pay the firm in the hopes that if the market dives, at least some part of their portfolio will profit.

Panic is a profit-driver for Mr. Taleb, who has gained renown for his pessimism, a viewpoint that proved prescient in the market collapse of 2008.

The interest from the likes of the Chinese and Middle East funds, which control some of the world’s biggest pools of money, suggests more mainstream adoption of Universa’s bearish conviction.

The outcome of the talks isn’t certain, according to a person familiar with the matter.

But if the investments materialize, they likely would boost the Universa fund’s client assets from $6 billion to about $10 billion, two people familiar with the matter says.

CIC didn’t respond to a request for comment.

“Healthy investments are those that produce goods that humans need to consume, not flat-screen TVs. … Stocks are not a robust investment. Make sure you have a garden that bears fruits.”

Nassim Nicholas Taleb, author of  “The Black Swan”

The Black Swan Strategy

Mr. Taleb said he couldn’t discuss Universa client talks. But he has consulted with several sovereign-wealth funds about his “black swan” philosophy in recent years.

Such an approach represents an extreme downside hedge for China, whose export-heavy economy depends on global growth.

The term “black swan” refers to a long-held belief that all swans were white.

Explorers then discovered black swans in Australia.

The image came to reflect the occurrence of something highly unexpected, including events that could make markets nose-dive.

For investors wanting to guard against such events, Universa started the Black Swan Protection Protocol, a vehicle different from a typical hedge fund in that clients don’t hand over their entire account for the firm directly to manage.

Instead, clients designate a certain pool of assets, a notional value, that they seek to hedge, or protect against extreme losses.

For example, a client with a $100 million account with Universa would pay the firm a flat annual fee of 1.5% on that amount, or $1.5 million.

The client would transfer to Universa typically less than 10% to fund its account in the strategy.

Triple Profit If Market Drops

Universa is run by 39-year-old Mark Spitznagel, a former Chicago Board of Trade pit trader and longtime collaborator with Mr. Taleb.

His five traders buy put options on specific stocks and stock indexes.

The goal is for the value of the puts to pay off 60% if the market drops by 20% or more in a month. A put conveys the right to sell a security at a specified price.

This year, Universa clients on average have lost about 2% of their notional account value, one person familiar with the matter said.

This year’s volatility hasn’t been extreme enough, or its losses steep and sudden enough, for Universa’s strategy to pay off.

Universa’s clients also lost money last year, when the Standard & Poor’s 500-stock index gained 23%.

At year-end, client portfolios were down an average of about 4%, one person close to the matter says.

Mark Spitznagel, president and chief investment officer, Universa Investments.

But 2008 was different. That year, extreme market losses helped many Universa clients profit more than 100%.

Universa’s marketing pitch continues to be that something like 2008, or worse, will happen again.

Could Not Be More Negative

“We break even, or lose tiny amounts or have tiny returns, for a very long time, but we know it’s going to come,” Mr. Spitznagel says.

Mark Spitznagel

“I couldn’t possibly be more negative on the markets.”

Late last year, Mr. Spitznagel also launched a fund betting on a steep rise in inflation.

That fund, which has remained flat this year, suffered losses in recent months betting against Treasurys.

Government-bond returns are up about 8% since the start of the year, according to Bank of America Merrill Lynch Indexes.

“The biggest home run would be if we went into ’70s-style or worse inflation,” Mr. Spitznagel says.

“If I had a gun to my head, right now I’d fall on the deflation side, but that’s going to flip at some point.”

The Black Swan inflation strategy has less than $1 billion in client assets.

Clients might have to tolerate steady losses in order to reach a hoped-for bonanza.

In 2004, Messrs. Taleb and Spitznagel closed a previous fund, Empirica Capital, after two years of mediocre returns.

If the Black Swan Protection Protocol reaches $10 billion, Universa would make $150 million in management fees alone.

The firm also is entitled to 20% of profits, according to fund documents.

Meanwhile, Mr. Spitznagel has jumped into the farming life as well, buying a few hundred acres near Lake Michigan, where he has a vacation home. He is growing cherries and apples, and planning to raise goats.

Mr. Spitznagel calls it self-sustainability, which, he says, is another good hedge.

h/t: The Collector

Related by The Swapper:

Espen Haug: “Strategic Reserves”

Welcome To The Double-Dip!

A Report To Make You Go “Hmmm…”

Investors; Fasten Your Seatbelts!

So, You Thought BP Was An OIL Company?

2010 Analysis: “11 Black Swans”

China: “Mother of All Black Swans”

New Testimony From Taleb

Nassim Taleb’s Favorite Books

2010 Analysis: The Road to Disaster

Paul Tudor Jones Swings Sword And Use The “F-Word”

*

Select Your Language:

Français * Italiano * Deutsch * Português * Español* Русский * العربية * Svenska* 中文 * 日本語

Expert: Sun Storm To Hit With Force Of 100 million H-Bombs

In Health and Environment, International Econnomic Politics, National Economic Politics on 30.08.10 at 00:50

As reported earlier here at the Econotwist’s Blog; after 10 years of comparative slumber, the sun is waking up and astronomers are on full alert. This week several US media outlets reported that scientists once again are warning about a massive solar storm building that has the potential to wipe out the entire planet’s power grid – and possible even worse.

“The super storm will hit like a bolt of lightning, causing catastrophic consequences for the world’s health, emergency services and national security unless precautions are taken.”

Richard Fisher


NASA scientists have tried to pinpoint the time of impact, and has in earlier statements set the date to late 2011, or early 2012. NASA have later withdraw their time estimates, saying the storm could be 100 years away – or just 100 days. However, an Australian astronomer says the space community is betting on the sooner scenario, rather than the later.

The massive solar flare that caused spectacular light shows on Earth earlier this month was just a precursor to what is about to unfold.

The question right now is when.

Here is the facts:

NASA is now saying the Solar Max storm could be “100 years away or just 100 days.”
However, an Australian astronomer says the space community is betting on the sooner scenario, rather than the later, the Australian news.com.au reports.

NASA has been watching out for this storm since 2006 and reports from the US this week claim the storms could hit on that most “Hollywood” of disaster dates; 2012.

Similar storms back in 1859 and 1921 caused worldwide chaos, wiping out telegraph wires on a massive scale.

The 2012 storm has the potential to be even more disruptive.

The Most Violent In 100 Years

“The general consensus among general astronomers – and certainly solar astronomers – is that this coming Solar maximum will be the most violent in 100 years,” astronomy lecturer and columnist Dave Reneke says.

Reneke predicts the solar storm to hit the Earth in 2012, or possibly later into 2013.

A bold statement and one taken seriously by those it will affect most, namely airline companies, communications companies and anyone working with modern GPS systems, news.com.au writes.

“They can even trip circuit breakers and knock out orbiting satellites, as has already been done this year,” Dave Reneke says.

Regardless, the point astronomers are making is it doesn’t matter if the next Solar Max isn’t the worst in history, or even as bad as the 1859 storms.

It’s the fact that there hasn’t been one since the mid-80s. Commodore had just launched the Amiga and the only digital storm making the news was Tetris.

No one really knows what effect the 2012-2013 Solar Max will have on today’s digital-reliant society.

In an interview, Dr Richard Fisher, director of NASA’s Heliophysics division, told Mr Reneke the super storm would hit like “a bolt of lightning”, causing catastrophic consequences for the world’s health, emergency services and national security unless precautions are taken.

Trillion Dollar Disaster

US government officials earlier this year took part in a “tabletop exercise” in Boulder, Colorado, to map out what might happen if the Earth was hit with a storm as intense as the 1859 and 1921 storms.

The 1859 storm was of a similar size to that predicted by NASA to hit within the next three years – one of decreased activity, but more powerful eruptions.

NASA says that a recent report by the National Academy of Sciences found that if a similar storm occurred today, it could cause $1 to 2 trillion in damages to society’s high-tech infrastructure and require four to 10 years for complete recovery.

Staff at the Space Weather Prediction Center in Colorado, which hosted the exercise, said with our reliance on satellite technology, such an event could hit the Earth with the magnitude of a global hurricane or earthquake.

The reason for the concern comes as the sun enters a phase known as Solar Cycle 24.

100 Million Hydrogen Bombs

All the alarming news building around the event is being fueled by two things.

The first is a book by disaster expert Lawrence E. Joseph, Guilty of Apocalypse; “The Case Against 2012,” in which he claims the hurricane Katrina for the Earth may cause unprecedented planet-wide upheaval.

The second is a theory that claims sunspots travel through the sun on a conveyor belt similar to the Great Ocean Conveyor Belt which controls weather on Earth.

The belt carries magnetic fields through the sun. When they hit the surface, they explode as sunspots. Weakened, they then travel back through the sun’s core to recharge.

It all happens on a rough 40-50-year cycle, according to solar physicist David Hathaway of the National Space Science and Technology Center in the US.

He says when the belt speeds up, lots of magnetic fields are collected, which points to more intense future activity.

“The belt was turning fast in 1986-1996,” Professor Hathaway says.

“Old magnetic fields swept up then should reappear as big sunspots in 2010-2011.”

Most experts agree, although those who put the date of Solar Max in 2012 are getting the most press.

They claim satellites will be aged by 50 years, rendering GPS even more useless than ever, and the blast will have the equivalent energy of 100 million hydrogen bombs.

“We know it is coming but we don’t know how bad it is going to be,” Dr Fisher told Mr Reneke in the recent issue of Australasian Science.

“Systems will just not work. The flares change the magnetic field on the Earth and it’s rapid, just like a lightning bolt. That’s the solar effect,” Fisher says.

Related by the Econotwist:

NASA Prepares For Impact – Nasty Space Weather Ahead

NASA: Solar Tsunami To Hit Earth, Tuesday

Siberian Shaman: 2012 Solar Storms Will Trigger Collapse Of The West

When Will God Destroy Our Money?

The Sun Is Speaking!

NASA Discover New Form Of Space Weather; Has Power Of Earthquake

The Earth: A Danger Zone

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Europe: Cyber Criminals Attack Critical Water, Oil and Gas Systems

In Financial Markets, Health and Environment, International Econnomic Politics, National Economic Politics on 29.08.10 at 21:34

For the first time, Norwegian companies are being targeted by a new kind of computer attacks, aimed at critical social management systems, like water oil and gas supply systems. The attacks was first discovered in Germany and Belarus in June. Since then, at least 6000 infected computers have been confirmed.

“A malicious foreign power  – given €86 million, 750 people and two years to prepare – could launch a devastating cyber attack on the EU.”

Charlie Miller


This summer the Norwegian National Security Authority (NSM) discovered for the first time targeted computer attacks directed against internal process and control systems to ensure supply of electricity and water. Similar attacks was discovered in Germany and Belarus. EU’s cyber-security unit, ENISA, will in late October or early November carry out the first ever pan-European cyber security exercise.

According to the Norwegian newspaper, Aftenposten, the National Security Authority confirms that Norwegian companies have been attacked, but will not say which.

“It’s the first time we see this Trojans, specifically designed to take control of the process and control systems. We know that other companies are affected, besides the Norwegians,” Christophe Birkeland at the NSM says.

Malicious software that comes into these systems, stealing business critical information, and in worst cases, destroy or take over control of the systems. We know Norwegian companies have gotten this Trojan into some of their systems,” he says.

NSM emphasizes that it is not reported any injuries at the moment.

However, NSM are now sending out a new warning against what they perceive as a serious threat to a number of critical social actors in Norway:

* Government and the national institutions.

* Power producers and suppliers.

* The oil companies.

* Water supply and treatment plants.

* Transport companies.

Going For The Most Advanced

In the operational center of Hafslund in Oslo,  computers provide electric power for about 1.4 million people in the area.

The Hafslund central is one of the world’s most advanced power systems.

“We have also experienced attempts to hack into our office support systems. We are fully focused on this, and it is a very familiar problem,” information officer, Morten Schau, at Hafslund says.

Faximile: Aftenposten, paper edition 08292010.

Customized Trojan

Behind the seemingly innocent file name “% System% \ drivers \ mrxnet” is the malicious, and highly sophisticated,  computer virus “Stuxnet,” which this summer has been a hot topic amongst computer security experts.

The attacks may have been going on for many months before it was discovered in Germany and Belarus in June.

One of the many technical features is the fact that the Trojan hides itself very well. Since June, at least 6.000 computers have been confirmed infected by “Stuxnet”.

The cyber criminals have exploited vulnerabilities in Windows, but first in early August did Microsoft create a security update that plugged the hole.

Siemens System Infected

The attack has been directed towards a management system supplied by Siemens – Simatic WinCC.

WinCC is used to control everything from pizza ovens to oil platforms.

In Norway, the system is in use in at least 200 oil companies, power suppliers, and metal and food industries.

Siemens admits that 12 companies have been affected, but stresses that this is not its Norwegian customers.

“Those customers who were infected was quickly helped, and the problem is now fixed,” information officer, Christian Jahr, at Siemens says.

“What happened was that an employee has used a USB stick outside the office, or in other private places. This became infected with the virus, which is activated when used on a PC with WinCC installed. This goes to show that you have to be awake and updated to ensure the best security facilities possible,” Jahr says.

Who’s Fighting Who?

No one knows who is behind the attacks, or what country they come from.

Worldwide companies in Indonesia, India, Iran and the US are being hit the hardest.

There are also several different theories about what the goal is:

* Industrial Espionage.

* Blackmail.

* Sabotage attempts.

The most important way to protect themselves is to make absolutely watertight bulkhead between the data networks used to control machines, and computer systems used for communication with the outside world, according to the experts.

One must also prevent careless use of memory sticks and other USB devices.

Previously, both the police, governments, health institutions, banks and industrial companies have been hit by computer criminals.

Able To Crash The Whole EU

A malicious foreign power – given €86 million, 750 people and two years to prepare – could launch a devastating cyber attack on the EU, a US security expert says.

Charlie Miller, a mathematician who served for five years at the US’ National Security Agency stress-testing foreign targets’ computer systems and designing network intrusion detection tools,” calculated the EU scenario on the basis of a more detailed study of US vulnerability.

This is how it can be done:

Got 100 Million Dollar?

The assault would begin with a member of staff at, say, the London Stock Exchange or the French electricity grid operator, RTE, opening a PDF attachment in an email which looks as if it had been sent by a colleague.

Take down the EU, or buy a famous piece of art? (The price tag is about the same).

The PDF would contain software enabling a hacker on a different continent to silently take over his computer.

Over time, the hacker would monitor the employees’ keystrokes, sniff out passwords, and use the information to take over computers higher up the command chain, eventually putting him in a position to switch off the target’s firewalls, leaving it open to DOS (Denial of Service) attacks, and to install RATs (Remote Administration Tools), which control its hardware.

Around 18 to 21 months down the line, with enough targets compromised, the assault could take place, the EUobserver.com writes.

The EU 27 countries would wake up to find electricity power stations shut down; communication by phone and Internet disabled; air, rail and road transport impossible; stock exchanges and day-to-day bank transactions frozen.

Crucial data in governments and financial institutions are scrambled and military units at home and abroad cut off from central command or sent fake orders.

Normal life could be restarted in a few days’ time. But the damage done to administrative capacity, consumer confidence and the economy by loss of vital data would last for years.

Mr Miller says the bulk of the money –  €83 million ($105 million) would be used to pay an army of 750 hackers, with just €3 million spent on hardware – a testing lab with 50 computers, another two computers each per hacker and assorted smart-phones and network equipment.

* 100 million dollar are just small change for some of our current dictators and drug barons.

* You can win a 100 million dollar at one single game of poker in Las Vegas.

* You can earn 100 million dollars in one year as a  commodities trader at Citigroup.

* 100 million dollar is what Tiger Woods paid for his divorce settlement.

Money won’t be a problem, but organizing the the right people for the operation might be.

Army Of Hackers

An elite corps would consist of 20 world class experts whose main job would be to find “0-day exploits” – previously undetected security gaps in popular software such as Windows, Java or Adobe.

The experts would have to be paid a small fortune –  over €200.000 ($250.000) – each a year.

Or extorted, Dr. Miller adds.

Another 40 people, drawn from the enemy country’s secret services or recruited inside EU member states, would get inside “air-gapped” facilities – the most secure targets, such as military command structures or air traffic control bodies, which are physically cut-off from the Internet in order to prevent cyber attacks.

When the time came, the agents would un-airgap targets by connecting them to the Internet via 3G modems and satellite phones.

The rest of the cyber army, 690 people, mostly computer science graduates and post-graduates from inside the hostile state, would use the 0-day exploits to take over target networks.

They would also collect, maintain, create and test “bots” – software which secretly uses computers in ordinary people’s homes to run automated tasks, such as DOS attacks, which bombard target systems with overwhelming amounts of data.

The final assault would require 500 million bots in diverse locations, according to the calculations.

Dr. Miller, who currently works for the Baltimore, an US-based company, Independent Security Evaluators, admits that internet scare stories like this helps his firm to get business.

But he also underlines that classic intelligence gathering is the best line of defense, rather than hiring IT experts.

“It’s really hard to defend against an attack that’s well equipped and carried out by smart people. But you do have years to detect it before it happens. If you have an elaborate intelligence gathering network you could detect it, not technically because you can see it, but because you have human intel,” he says.

“If you want to spend your money well, spend it on your intelligence services.”

Here’s a copy of  the US National Security Agency stress testing of US and foreign computer systems.

EU’s First Cyber War Exercise

The threat of cyber war against EU targets became clear on 27 April 2007 when hackers crashed Estonian online news agencies with DOS attacks in the middle of an Estonia-Russia political dispute.

The assault gathered pace over the next three weeks disrupting online banking services and government communications.

Three and a half years down the line there is no hard evidence linking the attack to a foreign power, although activists in the pro-Kremlin youth group, Nashi, claim to have taken part.

“If these cyber attacks were used to test the Estonian cyber defense capabilities, much more sophisticated attacks could possibly follow, based on the knowledge acquired during the attacks,” a report on the 2007 events by the Estonian government’s Computer Emergency Response Team says.

NATO and EU countries are now putting more resources than ever into joint cyber-security projects.

EU’s cyber-security unit, the Crete-based European Network and Information Security Agency (ENISA), will in late October or early November carry out the first ever pan-EU cyber security exercise.

ENISA spokesman, Ulf Bergstrom, says the exercise will look at disrupting normal internet operations in the EU’s internal market and the way EU member states’ authorities co-operate across the union’s internal borders.

Mr Bergstrom notes that ENISA’s initial mandate, which covers security of e-commerce, online banking and mobile phones, is being expanded to cover cyber criminality.

“We have been given political signals, for example by information society commissioner Neelie Kroes, to work more closely with agencies like Europol and Interpol,” he says.

“Cyber security is vital for the economy of Europe, to protect the businesses and operations of ordinary citizens. This is the digital society that we take for granted, like water out of the tap, which we need to defend.”

Related by the Econotwist:

Hackers Steal CO2-emission Permits Worth $4bn

Another Carbon Fraud Raid Reveals Firearms, Piles Of Cash

Most Polluting Companies Makes Billions On Carbon Trade

Julian Assange: Journalist, Activist or Informant?

We Give You Merkel – You Give Us Batman

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