There’s a lot serious stuff going on in the world at the moment. But somehow the center of attention is a young man who has managed to piss of some politicians and generals by publishing documents that proves what most people already know – or at least suspected. The WikiLeaks founder Julian Assange is now subject to the most intense manhunt by international authorities since Osama bin-Laden for having sex without a condom. The fact that a stack of reports have been issued, warning about further deterioration of the global economy, currency wars, political instability and exploding social unrest, seems to be mostly overlooked. Am I the only one to think it’s a little peculiar?
“The WikiLeaks saga is trying its best to offer distraction, but the crisis in the euro zone remains impossible to ignore.”
Robin Bew
It’s been a strange, almost surreal, weekend. Personally I’ve been fighting off a couple of attempts to hack into my computer system, and never in the 15 years I’ve been online have I ran into so many error messages when trying to load pages on the internet. What makes it even more strange is that the WikiLeaks frenzy is happening at the same time as EU and NATO is conducting its first ever cyber war exercise, the US launch a massive operation to seize close to hundred file-sharing web sites and thousands of hackers all over the world gathered at an event organized by Google, Microsoft, NASA and the World Bank.
And all this have been planned long time ahead. The latest release of documents from WikiLeaks was also notified months in advance.
So was the scheduled release of several economic forecasts for 2011 last week. However, these have more or less been drowned in the avalanche of more or less (un)important Wiki-stories filling up both mainstream and alternative medias.
So, I think it’s time to get the focus back where it belongs; on the developments of our global economy, as the Eurogroup meet for another crisis meeting this Monday and Bloomberg reports that the euro’s worst is yet to come.
“The WikiLeaks saga is trying its best to offer distraction, but the crisis in the euro zone remains impossible to ignore. With fears of contagion increasing, our ViewsWire service examines scenarios under which countries might exit the single currency,” chief economist Robin Bew at The Economist Intelligence Unit writes in an email to subscribers. Adding: “We think the euro will ultimately survive, but significant political and economic hurdles will have to be overcome, with Portugal now likely to follow Ireland and Greece in requesting emergency EU/IMF funding.”
Last week EIU released a bunch of reports, based on separate analysis on each topic.
You have to look very hard to find something positive to hold on to. In fact, I can’t remember having read anything like this from The Economist in a very long time.
This is the headlines:
- Sovereigns default as public debt spirals out of control
- New asset bubbles burst, creating renewed financial turbulence
- Tensions over currency manipulation lead to a rise in protectionism
- Developed economies fall into a deflationary spiral
- Economic upheaval leads to widespread social and political unrest
- The global economy experiences a double-dip recession as stimulus fades
The EIU label the three first predictions with “High Probability,” the next three as “Moderate Probability” and the two last are seen as “Low Probability”.
As I’ve been pointing out since the financial crisis became visible to most people, we are in fact dealing with a three-part crisis; the financial, the environmental and the social.
There three problems are connected, they interact with each other, feeds on each other, making each other stronger – and it’s impossible to solve one without solving the others.
Robin Bew writes:
“The UN climate summit under way in Cancún, Mexico is highly unlikely to produce a global accord on emissions cuts, though modest gains, such as on forest protection, remain possible.”
Well, the possibility of rescuing a few trees is not gonna make much difference.
As for the social (poverty) crisis, Economist Intelligence Unit concludes:
“The risk is that instability becomes systemic, with political crises in certain countries affecting others through contagion or through the actions of populist new regimes seeking to assert themselves. Potential widespread disruption poses a considerable downside risk to the Economist Intelligence Unit’s global economic forecasts.”
That’s right. Sovereign debt problems isn’t the only thing that is contagious.
“The Economist Intelligence Unit‘s baseline global forecast assumes some increase in social and political unrest, but with serious fallout largely avoided. If economic circumstances were to worsen again, however, there is a danger though that incidents of unrest turn into far more intense and long-lasting events: armed rebellions, military coups, civil conflicts and perhaps even wars between states. In such circumstances, a repetition of the pressures that transformed global politics in the 1930s, though a far-removed worst-case scenario, could not be dismissed.”
In other words: If the economy gets worse, we may face a World War II scenario.
Now, take a look at the top three scenarios again…
First: Sovereign debt
“There are considerable concerns about the sustainability of public debt positions in a number of countries. Heavily indebted sovereigns – including developed economies, notably in the euro zone – could struggle to raise private financing even at higher interest rates, and some could default.”
“The US and the UK also face drastically increased fiscal deficits. They could moderate their debt burdens through inflation and devaluation but this risks undermining their bond markets, and the resultant spike in bond yields could force an acceleration of fiscal tightening, with highly negative implications for economic recovery.”
“Emerging-market defaults would create some ructions more widely, but as developed-country sovereign bonds have traditionally been considered risk-free, developed-country defaults in particular would wreak havoc on investor psychology. Banks would face write-downs on their government debt portfolios, and financial-sector guarantees by governments that default would be exposed as worthless.”
(Forecast: High probability, high impact, risk level 16)
Second: New Asset Bubble
“A flood of cheap money from stimulus measures, in particular carry trades drawing on record-low interest rates in the US, prompted a strong rally in a range of assets in the second half of 2009 and in 2010, particularly emerging-market stocks and bonds, but also in risky asset classes such as equities, high-yield bonds and commodities more broadly.”
“New bubbles could continue to grow for a considerable period of time, potentially several years, during which they will help to boost growth in the economies concerned. But they would burst suddenly, and still-fragile risk appetite could be a factor in this – a decline in risk tolerance could see investors pull their money out of emerging-market assets. Indeed, the rally in asset markets has been subject to periodic reversals in 2010 as concerns about the outlook for the global economy have re-emerged.”
“New asset bubbles may be vulnerable to painful corrections as central banks in emerging markets tighten monetary policy, fiscal stimulus is withdrawn, and the weak foundations of recovery become apparent. The resultant dislocations, including a shock to banks and a renewed rise in risk aversion, would reinforce and deepen a new economic slowdown.”
(Forecast: High probability, high impact, risk level 16)
Third: Currency Manipulation
“Tensions are rising over attempts by some countries to weaken their currencies, and the US and China remain at odds over the value of the renminbi. A global “currency war” would raise the danger of protectionist responses.”
“Tensions over exchange-rates have risen in recent months. The US Congress has been holding hearings on China’s exchange-rate policy, with a view to potential legislation to punish China for what the US regards as a mercantilist strategy of keeping the renminbi artificially low. A growing cohort of other countries are also worried about the strength of their currencies, including Brazil, Switzerland, Japan and South Korea. Market interventions by policymakers in some countries to weaken their currencies prompted Brazil’s finance minister, Guido Mantega, to warn of an “international currency war”.”
“Given the closely integrated nature of the global economy, governments will find it difficult to close off many aspects of trade, even if they want to. But trade disputes are likely to increase as populist policies clash with countries’ international obligations.”
(Forecast: High probability, high impact, risk level 16)
All eight summaries are uploaded on Scribd.
By the way – here’s the latest WikiLeaks stories:
WikiLeaks founder Julian Assange arrested in UK (BBC)
Feds block workers from WikiLeaks (CNET.com)
MasterCard pulls plug on WikiLeaks payments (CNET.com)
Swiss Bank Closes WikiLeaks Founder’s Bank Accounts (RadioFreeEurope)
WikiLeaks‘ Swedish servers come under attack again (The Herald Tribue)
Barack Omama Is More Dangerous Than WikiLeaks (American Enterprise Institute for Public Policy Research)
WikiLeaks Releases List of “Vital” US Facilities (Slate.com)
Google refuses to disclose whether they’d allow users to repost Wikileaks‘ State Department cables (The Atlantic)
Related by The Swapper:
- The Guardian Site Crashed During Assange Chat, WikiLeaks Removed From The Internet
- Here’s What You Get For Blogging About Chinese Banks
- US Governor, Canadian Official, Sarah Palin; Call For Assassination Of Julian Assange
- WikiLeaks With 5 GB File On Bank of America
- WikiLeaks Under Massive Cyber Attack
- Julian Assange: Journalist, Activist or Informant?
- Swedish Police Drop Rape Charges Against Julian Assange
- US Credit Card User Under Surveilance Without Court Approval
- The REAL Weapon of Mass Destruction
Related Articles:
- WikiLeaks’ Minimal Impact (realclearpolitics.com)
- WikiLeaks stirs debate on info revolution (theglobeandmail.com)
- WikiLeaks whistle blows time on the old game (newstatesman.com)
- You: WikiLeaks all over (nation.com.pk)
- WikiLeaks Founder Continues Morphing Into Movie Villain (politics.usnews.com)
- WikiLeaks: Pakistan Establishment A US Puppet (themoderatevoice.com)
- WikiLeaks summary: Monday, December 6 (telegraph.co.uk)
- Clinton uses WikiLeaks disclosures to draw a laugh (sfgate.com)
Crime, Cyberwarfare, Gerald Celente, Hachette Book Group USA, Iain Lobban, Iran, Java, List of experiments from Lilo & Stitch, McAfee, National security, National Security Agency, New York Times, Pentagon, Trends 2000: How to Prepare for and Profit from the Changes of the 21st Century, Trends Research Institute, United States, War on Terrorism, Warfare and Conflict, Wikileaks
Internet Nuke Bomb Ready To Blow (Update)
In Financial Engeneering, Financial Markets, Health and Environment, High Frequency Trading, International Econnomic Politics, Law & Regulations, Learning, National Economic Politics, Quantitative Finance, Technology, Trading software, Uncategorized, Views, commentaries and opinions on 16.01.11 at 20:29The Swapper have been warning about this since last summer when the mysterious Stuxnet worm was discovered at several critical energy and water supply facilities around the world. However, research by Symantec have later reveled that 60% of the infections are found inside Iranian borders. The threat from cyber space has risen to the top of the list over potential global risks in 2011, alongside pandemic diseases and terrorism. The internet, once seen as the solution to all of mans problems, have instead become one of the most severe threats to all of us.
“The primary involvement of states in cyber security, as both protagonists and principal targets, fundamentally changes the nature of the risk.”
Eurasia Group
By the end of 2010 McAfee Security counted 60.000 new pieces of malicious software being released on the internet every day, the hacker attacks on Java platforms (used in practically every security system, including online banks and the Pentagon) rose by 1.200% last year, and for the first time ever the value of theft of digital assets exceeded the theft of physical assets. And for Stuxnet; that’s only the beginning.
More than 100 foreign intelligence organizations are trying to break into US networks, Deputy Defense Secretary William Lynn wrote in the September/October issue of the journal Foreign Affairs. Some already have the capacity to disrupt U.S. information infrastructure, he says.
“There’s no such thing as ‘secure’ any more,” Debora Plunkett of the National Security Agency said last month, amid US anger and embarrassment over disclosure of sensitive diplomatic cables by the web site WikiLeaks.
“The most sophisticated adversaries are going to go unnoticed on our networks,” she said.
Plunkett heads the NSA’s Information Assurance Directorate, which is responsible for protecting national security information and networks from the foxhole to the White House.
“We have to build our systems on the assumption that adversaries will get in,” she told a cyber security forum sponsored by the Atlantic and Government Executive media organizations.
The United States can’t put its trust “in different components of the system that might have already been violated,” Plunkett added in a rare public airing of NSA’s view on the issue.
“We have to, again, assume that all the components of our system are not safe, and make sure we’re adjusting accordingly.”
The NSA must constantly fine tune its approach, she said, adding that there was no such thing as a “static state of security.”
And the US is not the only nation struggling to keep its sensitive data safe.
According to Iain Lobban, head of GCHQ, the UK’s core infrastructure is under constant attack. He says thousands of targeted emails are hitting the systems every month, planting worms that cause “significant disruptions.”
Mr. Lobban’s claims are supported in a national security report, naming cyber attacks as a top threat to the UK, alongside pandemic diseases and terrorism, according to the PC Pro Magazine.
A Global Threat
“Cyberspace is contested every day, every hour, every minute and every second,” the British security expert says.
The international risk analysis company Eurasia Group put cyber security at number 3 amongst the top 10 risks of 2011.
“For the past decade, increasingly technologically capable hackers and organized crime organizations have elevated cyber security as a business risk, but not as a political risk. The centralization of data networks, both in energy distribution (the move to the smart grid) and information technology more broadly (the shift to cloud computing) are now metastasizing the cyber risk, and governments are becoming more directly and actively involved in playing both offense and defense in cyberspace. The primary involvement of states in cyber security, as both protagonists and principal targets, fundamentally changes the nature of the risk. The new roles of governments and their antagonists bring geopolitics and cyber security together in three different ways,” Eurasia writes.
(Link to full report below).
Java Systems Under Heavy Fire
One of the main components in practically every security system today is the Java platform, produced by Oracle.
So it’s no wonder that attacks on the Java system increased by more than thousand percent in 2010.
“The number of attacks against flaws in Java has jumped by 1.000% – even outstripping attacks against vulnerabilities in Adobe PDF’s,” Microsoft says.
The attacks against Java code – not the Java script – rose from 500.000 at the beginning of last year to about 6 million in the last quarter of 2010.
Even if Oracle have manged to patch the vulnerabilities in Java, the have the same problem as Adobe – people forget to update their software.
And on top of that; Java is a piece of software that’s used in almost everything, it runs in the background, making more visible components work, PC Pro Magazine points out.
“How do you know if you have Java installed, or if it is running?” researcher at Microsoft Malware Protection, Holly Stewart rightfully asks.
(If you want to know more about Java, click the link below.)
1 in 3 Companies Exposed To Data Theft
According to the latest issue of Kroll Annual Global Fraud Report, suggest that the theft of digital assets has overtaken that of physical stock for the first time ever in 2010.
A Survey, conducted in cooperation with the Economist Intelligence Unit, indicates that the numbers of companies reporting theft of information has risen sharply – from 18% to 27,3% – in 2010.
“There’s a growing awareness among thieves of the intrinsic value of intellectual property,” Kroll vice president, Robert Brenner explains.
The survey also suggest that 88% of the participating companies had been victim of some kind of fraud over the past year, nearly half of them are now fearful of expanding globally because of the cyber threat.
The experts emphasize that the numbers probably not are 100% accurate.
However, the message is pretty clear.
(Download the report below)
The Most Scary Thing
I guess most of you have heard about the Stuxnet worm/virus/malware in the news by now, and are familiar with the speculations that the extremely sophisticated malware might be some kind of cyber weapon, developed by government related scientists somewhere.
I sounds like a plot in James Bond movie – but the truth might be even more vicious.
Davey Winder
According to experts is not unlikely to be a prototype of the first ever cyber-weapon-of-mass-destruction.
Davey Winder, award-winning journalist, business consultant and security expert, explains:
“So what do we know about Stuxnet and the SCADA (Supervisory Control and Data Acquisition) systems? Well, we know that Stuxnet is designed to be disseminated via USB sticks, and that it was developed to exploit specific zero-day vulnerabilities in the Windows operating system. To expand on that a little, Stuxnet actually exploits no fewer than four zero-day Windows vulnerabilities, a statement that alone should set the hair on the back of any security analyst’s neck prickling. Zero-day vulnerabilities are extremely valuable to the shady world of both hackers – where a zero-day is a kudos-generating device – and to criminals where zero-day equals pay-day. It’s relatively rare to see a single exploit being used in a piece of malware, and totally unheard of to see four expended in such a way.”
“Ask yourself, why would anyone waste three highly valuable zero-day exploits in a single piece of code when one would most likely do the job? Security experts recognize that this isn’t the modus operandi of the average hacker, nor the average criminal,” Winder writes in a recent article.
Personally, I believe that Stuxnet 2.0 is already out there – it just hasn’t been discovered yet.
The Internet Nuke Bomb
According to trend analyst, Gerald Celente, CEO and founder of Trends Research Institute, will cyber wars cause stir and come to fore in 2011.
And. as Eurasia, he is concerned about the government’s involvement.
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Here are some of the other highlights in Mr. Celente’s predictions for the year to come:
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You may not take all of Gerald Celente’s forecasts equally serious, but many of the situations he describes is. in fact, common human behavior, observed in times of crisis since the collapse of the Roman empire thousands of years ago and up to our time.
At the latest count by McAfee Security Lab, about 60.000 pieces of malicious software is released on the internet every day.
And here’s how the last six months of 2010 looked like from the security software producer Kaspersky‘s point of view:
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Perhaps it’s time to upgrade?
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