by Gerald Posner
A classified FBI report indicates that China has secretly developed an army of 180,000 cyberspies that “poses the largest single threat to the United States for cyberterrorism and has the potential to destroy vital infrastructure, interrupt banking and commerce, and compromise sensitive military and defense databases."
These spies are already launching 90,000 attacks a year just against U.S. Defense Department computers, according to a senior FBI analyst familiar with the contents of the report, making news Tuesday that the Chinese government may have hacked the email accountings of human-rights activists, prompting Google to consider withdrawing from that country, seem like child’s play.
The FBI report estimates that the Chinese Army has developed a network of over 30,000 Chinese military cyberspies, plus 150,000 private-sector computer experts, whose mission is to steal American military and technological secrets.
Cyber warfare is part of every developed country's 21st century arsenal. Although no U.S. official will admit it, the Pentagon, CIA, and NSA regularly probe and try to hack into China's military and industrial computer networks to obtain the information that years ago were brought back by the James Bonds of spy services. The U.S., and many of our European allies, try to find ways to wreck some havoc in the Chinese computer grid if a conflict ever takes place. The difference is that the Chinese are better than anyone else and lead the way in technological breakthroughs for the cyber battlefield. The FBI report concludes that a massive Chinese cyberattack could “be in the magnitude of a weapon of mass destruction," says the analyst, who requested anonymity because he was not authorized to speak about it, adding that it would do substantial damage to the American economy, telecommunications, electric power grid, and military preparedness.
The FBI report estimates that since 2003, the Chinese Army has specifically developed a network of over 30,000 Chinese military cyberspies, plus more than 150,000 private-sector computer experts, whose mission is to steal American military and technological secrets and cause mischief in government and financial services. China’s goal, says the FBI report, is to have the world’s premier “informationized armed forces” by 2020. According to the bureau’s classified information, the Chinese hackers are adept at implanting malicious computer code, and in 2009 companies in diverse industries such as oil and gas, banking, aerospace, and telecommunications encountered costly and at times debilitating problems with Chinese-implanted “malware.” The FBI analyst would not name the affected companies.
One of China’s most effective weapons, according to the FBI report, is a continuation of what Pentagon security investigators originally dubbed Titan Rain; it is a Chinese scanner program that probes national defense and high-tech industrial computer networks thousands of times a minute looking for vulnerabilities. The Chinese military hackers, the FBI analyst told me, enter without any keystroke errors, leave no digital fingerprints, and create a clean backdoor exit in under 20 minutes, feats considered capable only for a military or civilian spy agency of only a few governments.
These attacks are proliferating. The FBI report lays out the identifiable attacks originating from China just on the Defense Department computers; they increased from 44,000 in 2007 to 55,000 in 2008, and topped 90,000 last year. “They probe, they test our responses, as quick as we make changes and fix vulnerabilities, they are moving a step ahead,” the analyst told me.
The Chinese hackers aren’t after credit-card numbers or bank accounts or looking to steal private identities. Instead, they are hunting for information. Although the barrage of attacks may at times appear random, the FBI report concludes that it is part of a strategy to fully flush out U.S. military telecommunications and to better understand—and to attempt to intercept—intelligence being gathered by American spy agencies, particularly the National Security Agency.
“It’s the great irony of the Information Age that the very technologies that empower us to create and to build also empower those who would disrupt and destroy,” President Obama said last May when he announced a new White House office dedicated to protecting the nation’s computer systems. The Pentagon followed shortly after with a new military cyberspace command. In his remarks, the president said that, “In today’s world, acts of terror could come not only from a few extremists in suicide vests but from a few keystrokes of a computer.” And he admitted, “We’re not as prepared as we should be, as a government or as a country.”
China’s Ministry of Public Security has thousands of so-called Information Warfare Militia Units that effectively monitor all domestic Internet traffic of the country’s 140 million 'Net users. It’s this internal program that may have affected Google. On Tuesday, Google said it had detected a “highly sophisticated and targeted attack on our corporate infrastructure originating from China.” While Google did not specifically accuse the Chinese government, it said it was “no longer willing to continue censoring our results” on its Chinese search engine, as the government requires. Thus, it may need to withdraw from its largest potential market.
The private-sector issues affect government security. As a precondition to doing business in China, several years ago Microsoft was required to provide the government the source codes for the company’s Office software. The Chinese State Planning Commission contended that Microsoft's Windows operating system was a secret tool of the U.S. government and demanded Microsoft instruct Chinese software engineers on inserting their own software into Window's applications.
That gave the Chinese Army’s cyberwarfare department what computer hackers dub a “skeleton key,” allowing them access to almost every networked private business, military, and government computer in the U.S. Among the Chinese Army-backed Microsoft attacks, the FBI report includes successful forays against computer systems at the State Department, Commerce Department, the FBI, and the Naval War College, among others.
Some Chinese attacks plant embedded covert programs into government networks, searching for classified files and then automatically forwarding them by email to China. Using sophisticated “rootkit” programs to hide their presence, China’s hackers are “simply the most sophisticated,” says the senior FBI analyst. Homeland Security’s $1.8 billion computer network was penetrated by Chinese cyberwarriors in 2007, and an unknown amount of information was copied to a secure Chinese Web site. Even the Pentagon was breached in 2007 and again in early 2009, despite what it considered foolproof Titan Rain security patches. The 2009 intrusion was particularly worrisome since the Chinese managed to get inside the Pentagon's $300 billion Joint Strike Fighter project—the Defense Department's costliest weapons program ever—according to a government official familiar with the attack who spoke to The Daily Beast on the condition of anonymity. The cyber intruders copied several terabytes of data about the design and electronics systems, information that might make it easier to defend against the craft.
The FBI report concludes that many of the attacks identified as being from China might be part of Beijing’s plan to occasionally let its cyberspies be unmasked in order to give American and other Western counties a false sense of security. “There is no telling how many breaches there are that we haven’t yet picked up,” the FBI analyst told me. Most American government agencies have stopped buying Chinese hardware from Lenovo (the Chinese firm that acquired IBM's personal-computer division in 2005) and any software from the mainland.
But China is manufacturing microchips for dozens of major international companies, and those chips could hold viruses set to activate when used in a computer network. Chips employed in military applications could be designed to reverse engineer the weapon’s design and provide the information to Chinese spies. China’s microchip output is almost doubling every two years, and chip giant Intel has opened a multibillion-dollar plant in Dalian, China.
The FBI report’s grim conclusion: China sees its cyberwarriors as a critical component of its asymmetric warfare capability and the U.S. government should publicly identify China as an “ongoing intelligence risk.” The Chinese Embassy says that the country "opposes and forbids all forms of cyber crimes" and that charges of its cyber warrior program are remnants of “a Cold War mentality" and intended only “to fan up China threat sensations."
“Without confronting it as a major threat,” the FBI analyst told me, “companies like Google go to do business there incorrectly assuming they face no greater risk from Chinese penetrations than they face from any other country. It’s just not true. There’s no more imminent cyberthreat than the one posed by China.”
Gerald Posner is The Daily Beast's chief investigative reporter. He's the award-winning author of 10 investigative nonfiction bestsellers, on topics ranging from political assassinations, to Nazi war criminals, to 9/11, to terrorism. His latest book, Miami Babylon: Crime, Wealth and Power—A Dispatch from the Beach, was published in October. He lives in Miami Beach with his wife, the author Trisha Posner.
Thursday, January 14, 2010
Tuesday, January 5, 2010
17,000 potentially harmful chemicals kept secret under obscure law
By Raw Story
Monday, January 4th, 2010 -- 11:37 am
Of some 84,000 chemicals being used commercially in the United States, some 20 percent -- or 17,000 -- are kept secret not only from the public, but from medical professionals, state regulators and even emergency responders, according to a report at the Washington Post.
And the reason for this potentially harmful lack of openness? Profit.
A 1976 law, the Toxic Substances Control Act, mandates that manufacturers report to the Environmental Protection Agency any new chemicals they intend to market, but manufacturers can request that a chemical be kept secret if disclosure "could harm their bottom line," the Washington Post reports.
Because they are secret, it's impossible to tell how many of the 17,000 chemicals are potentially harmful to people. But the Post notes that, in March of last year, more than half of the "substantial risk" reports filed with the EPA involved secret chemicals.
And chemical makers may be abusing their privilege under the law. According to the EPA, in recent years 95 percent of manufacturers' reports of new chemicals have made some request for secrecy. Ten of the secret chemicals are used in children's products
.
The Post reports that Congress this year will tackle reform of the 1976 law.
EPA head Lisa Jackson has begun an effort to increase transparency in commercial chemicals. The EPA recently announced it is creating a "Chemicals of Concern" list, which will detail substances that "may present an unreasonable risk of injury to health and the environment." The power to do that was granted to the EPA under the 1976 law, but has never been used before.
Environment News Service reports:
Jackson says the 1976 law is both outdated and in need of reform. The decision to list the chemicals further signals "this administration's commitment to aggressively use the tools at its disposal under TSCA," she said.
"At the same time," Jackson said, "I will continue to fight for comprehensive reform of the nation's outdated chemical management laws that ensures a full assessment of the safety of chemicals on the market today and effective actions to reduce risks where chemicals do not meet the safety standard."
"Chemical safety is an issue of utmost importance, especially for children, and this will remain a top priority for me and our agency going forward," said Jackson, who is a mother.
In a press release, the EPA noted that, since the 1976 law was put on the books, the number of listed chemicals used in the US has increased from 60,000 to more than 80,000, but the EPA "has only successfully restricted or banned five existing chemicals and has only required testing on another two hundred existing chemicals."
Monday, January 4th, 2010 -- 11:37 am
Of some 84,000 chemicals being used commercially in the United States, some 20 percent -- or 17,000 -- are kept secret not only from the public, but from medical professionals, state regulators and even emergency responders, according to a report at the Washington Post.
And the reason for this potentially harmful lack of openness? Profit.
A 1976 law, the Toxic Substances Control Act, mandates that manufacturers report to the Environmental Protection Agency any new chemicals they intend to market, but manufacturers can request that a chemical be kept secret if disclosure "could harm their bottom line," the Washington Post reports.
Because they are secret, it's impossible to tell how many of the 17,000 chemicals are potentially harmful to people. But the Post notes that, in March of last year, more than half of the "substantial risk" reports filed with the EPA involved secret chemicals.
And chemical makers may be abusing their privilege under the law. According to the EPA, in recent years 95 percent of manufacturers' reports of new chemicals have made some request for secrecy. Ten of the secret chemicals are used in children's products
.
The Post reports that Congress this year will tackle reform of the 1976 law.
EPA head Lisa Jackson has begun an effort to increase transparency in commercial chemicals. The EPA recently announced it is creating a "Chemicals of Concern" list, which will detail substances that "may present an unreasonable risk of injury to health and the environment." The power to do that was granted to the EPA under the 1976 law, but has never been used before.
Environment News Service reports:
Jackson says the 1976 law is both outdated and in need of reform. The decision to list the chemicals further signals "this administration's commitment to aggressively use the tools at its disposal under TSCA," she said.
"At the same time," Jackson said, "I will continue to fight for comprehensive reform of the nation's outdated chemical management laws that ensures a full assessment of the safety of chemicals on the market today and effective actions to reduce risks where chemicals do not meet the safety standard."
"Chemical safety is an issue of utmost importance, especially for children, and this will remain a top priority for me and our agency going forward," said Jackson, who is a mother.
In a press release, the EPA noted that, since the 1976 law was put on the books, the number of listed chemicals used in the US has increased from 60,000 to more than 80,000, but the EPA "has only successfully restricted or banned five existing chemicals and has only required testing on another two hundred existing chemicals."
Is the Fed Juicing the Stock Market?
By Mike Whitney
Global Research, January 2, 2010
Is the Fed manipulating the stock market? TrimTabs CEO Charles Biderman seems to think so, and he makes a strong case for his theory in an article at zerohedge.com.
Biderman focuses his attention on the mystery surrounding the stock market's 9-month rally and asks, "Where is the money coming from?" After all, the market cap has increased by more than $6 trillion since March 9. That amount of money should be fairly easy to trace; right?
Wrong.
Biderman: "The most positive economic development in 2009 was the stock market rally. (But) We cannot identify the source of the new money that pushed stock prices up so far so fast. For the most part, the money did not from the traditional players that provided money in the past."
Huh? So, this vast infusion of liquidity--which helped the banks to avoid painful deleveraging--did not come from the usual suspects?
That's right. According to Biderman, the money did not come from (a) companies ("which were a huge net seller") (b) retail investor funds, (c) retail investors, (d) foreign investors, or (e) pension funds.
What about the hedge funds?
Biderman: "We have no way to track in real time what hedge funds do, and they may well have shifted some assets into U.S. equities. But we doubt their buying power was enormous because they posted an outflow of $12 billion from April through November."
Okay; so we're back to Square One. Where did the money come from?
Biderman again: "As far as we know, it is not illegal for the Federal Reserve or the U.S. Treasury to buy S&P 500 futures. Moreover, several officials have suggested the government should support stock prices. For example, former Fed board member Robert Heller opined in the Wall Street Journal in 1989, “Instead of flooding the entire economy with liquidity, and thereby increasing the danger of inflation, the Fed could support the stock market directly by buying market averages in the futures market, thereby stabilizing the market as a whole.” In a Financial Times article in 2002, an unidentified Fed official was quoted as acknowledging that policymakers had considered buying U.S. equities directly, not just futures. The official mentioned that the Fed could “theoretically buy anything to pump money into the system.”
Biderman is referring to the Plunge Protection Team. Here's a clip from an article I wrote in 2007 which helps to clarify the PPT's origins:
"The Working Group on Financial Markets, also know as the Plunge Protection Team, was created by Ronald Reagan to prevent a repeat of the Wall Street meltdown of October 1987. Its members include the Secretary of the Treasury, the Chairman of the Federal Reserve, the Chairman of the SEC and the Chairman of the Commodity Futures Trading Commission. Recently, (2007) the team has been put on high alert because of increased market volatility and, what Hank Paulson calls, the systemic risk posed by hedge funds and derivatives....
Ambrose Evans-Pritchard of the UK Telegraph notes, "Secretary of the Treasury Hank Paulson has called for the PPT to meet with greater frequency and set up a command centre at the US Treasury that will track global markets and serve as an operations base in the next crisis. The top brass will meet every six weeks, combining the heads of Treasury, Federal Reserve, Securities and Exchange Commission (SEC), and key exchanges."
This suggests that the PPT could, in fact, be the driving-force behind the ongoing stock market rally.
Biderman: "This type of intervention could explain some of the unusual market action in recent months, with stock prices grinding higher on low volume even as companies sold huge amounts of new shares and retail investors stayed on the sidelines. For example, Tyler Durden of ZeroHedge has pointed out that virtually all of the market’s upside since mid-September has come from after-hours S&P 500 futures activity."
True. The market has been behaving erratically for some time now. Could it be the "invisible hand" of Fed chair Ben Bernanke nudging equities ever-higher?
Consider the comments of former Clinton advisor George Stephanopoulos who verified the existence of the PPT in an appearance on Good Morning America on Sept 17, 2000. He said:
"What I wanted to talk about for a few minutes is the various efforts that are going on in public and behind the scenes by the Fed and other government officials to guard against a free-fall in the markets . . . perhaps the most important the Fed in 1989 created what is called the Plunge Protection Team, which is the Federal Reserve, big major banks, representatives of the New York Stock Exchange and the other exchanges and they have been meeting informally so far, and they have a kind of an informal agreement among major banks to come in and start to buy stock if there appears to be a problem. They have in the past acted more formally . . . I don't know if you remember but in 1998, there was a crisis called the Long term Capital Crisis. It was a major currency trader and there was a global currency crisis. And they, with the guidance of the Fed, all of the banks got together when it started to collapse and propped up the currency markets. And, they have plans in place to consider that if the markets start to fall."
If there was ever a time that warranted government intervention, it was right after Lehman Bros blew up and global markets went into freefall. The whole system was teetering and about to collapse. It's likely that the Fed recognized the danger and made a last-ditch effort to avoid another Great Depression. That means that Bernanke probably used his surrogates at the banks and brokerages to strategically purchase futures and equities that had the best chance of reversing the downward trend. What else could he do---sit on his hands and wait for Armageddon?
The problem is, no steps have been taken to prevent a similar catastrophe from occurring in the future. The same lethal debt-instruments that triggered the crisis are in play today; over $1 trillion in toxic assets still remain on the banks balance sheets, and nothing has been done to reduce financial sector debt. In fact, according to the Fed, total debt for the financial sector was $16.5 trillion in the second quarter 2009, the same as it was a year earlier. Nothing has changed.
Financial institutions are re-levering and taking on greater risks knowing that the government will bail them out if they get into trouble. At the same time, the Fed's lending programs have kept markets from fully-correcting by keeping asset prices artificially high. This has helped the banks to conceal their losses and appear healthier than they really are. The question is; how long can the charade go on before something gives?
Policymakers seem to believe that blanket government guarantees and stock market manipulation are enough to forestall another disaster. But critics think that a day of reckoning is fast approaching.
Global Research, January 2, 2010
Is the Fed manipulating the stock market? TrimTabs CEO Charles Biderman seems to think so, and he makes a strong case for his theory in an article at zerohedge.com.
Biderman focuses his attention on the mystery surrounding the stock market's 9-month rally and asks, "Where is the money coming from?" After all, the market cap has increased by more than $6 trillion since March 9. That amount of money should be fairly easy to trace; right?
Wrong.
Biderman: "The most positive economic development in 2009 was the stock market rally. (But) We cannot identify the source of the new money that pushed stock prices up so far so fast. For the most part, the money did not from the traditional players that provided money in the past."
Huh? So, this vast infusion of liquidity--which helped the banks to avoid painful deleveraging--did not come from the usual suspects?
That's right. According to Biderman, the money did not come from (a) companies ("which were a huge net seller") (b) retail investor funds, (c) retail investors, (d) foreign investors, or (e) pension funds.
What about the hedge funds?
Biderman: "We have no way to track in real time what hedge funds do, and they may well have shifted some assets into U.S. equities. But we doubt their buying power was enormous because they posted an outflow of $12 billion from April through November."
Okay; so we're back to Square One. Where did the money come from?
Biderman again: "As far as we know, it is not illegal for the Federal Reserve or the U.S. Treasury to buy S&P 500 futures. Moreover, several officials have suggested the government should support stock prices. For example, former Fed board member Robert Heller opined in the Wall Street Journal in 1989, “Instead of flooding the entire economy with liquidity, and thereby increasing the danger of inflation, the Fed could support the stock market directly by buying market averages in the futures market, thereby stabilizing the market as a whole.” In a Financial Times article in 2002, an unidentified Fed official was quoted as acknowledging that policymakers had considered buying U.S. equities directly, not just futures. The official mentioned that the Fed could “theoretically buy anything to pump money into the system.”
Biderman is referring to the Plunge Protection Team. Here's a clip from an article I wrote in 2007 which helps to clarify the PPT's origins:
"The Working Group on Financial Markets, also know as the Plunge Protection Team, was created by Ronald Reagan to prevent a repeat of the Wall Street meltdown of October 1987. Its members include the Secretary of the Treasury, the Chairman of the Federal Reserve, the Chairman of the SEC and the Chairman of the Commodity Futures Trading Commission. Recently, (2007) the team has been put on high alert because of increased market volatility and, what Hank Paulson calls, the systemic risk posed by hedge funds and derivatives....
Ambrose Evans-Pritchard of the UK Telegraph notes, "Secretary of the Treasury Hank Paulson has called for the PPT to meet with greater frequency and set up a command centre at the US Treasury that will track global markets and serve as an operations base in the next crisis. The top brass will meet every six weeks, combining the heads of Treasury, Federal Reserve, Securities and Exchange Commission (SEC), and key exchanges."
This suggests that the PPT could, in fact, be the driving-force behind the ongoing stock market rally.
Biderman: "This type of intervention could explain some of the unusual market action in recent months, with stock prices grinding higher on low volume even as companies sold huge amounts of new shares and retail investors stayed on the sidelines. For example, Tyler Durden of ZeroHedge has pointed out that virtually all of the market’s upside since mid-September has come from after-hours S&P 500 futures activity."
True. The market has been behaving erratically for some time now. Could it be the "invisible hand" of Fed chair Ben Bernanke nudging equities ever-higher?
Consider the comments of former Clinton advisor George Stephanopoulos who verified the existence of the PPT in an appearance on Good Morning America on Sept 17, 2000. He said:
"What I wanted to talk about for a few minutes is the various efforts that are going on in public and behind the scenes by the Fed and other government officials to guard against a free-fall in the markets . . . perhaps the most important the Fed in 1989 created what is called the Plunge Protection Team, which is the Federal Reserve, big major banks, representatives of the New York Stock Exchange and the other exchanges and they have been meeting informally so far, and they have a kind of an informal agreement among major banks to come in and start to buy stock if there appears to be a problem. They have in the past acted more formally . . . I don't know if you remember but in 1998, there was a crisis called the Long term Capital Crisis. It was a major currency trader and there was a global currency crisis. And they, with the guidance of the Fed, all of the banks got together when it started to collapse and propped up the currency markets. And, they have plans in place to consider that if the markets start to fall."
If there was ever a time that warranted government intervention, it was right after Lehman Bros blew up and global markets went into freefall. The whole system was teetering and about to collapse. It's likely that the Fed recognized the danger and made a last-ditch effort to avoid another Great Depression. That means that Bernanke probably used his surrogates at the banks and brokerages to strategically purchase futures and equities that had the best chance of reversing the downward trend. What else could he do---sit on his hands and wait for Armageddon?
The problem is, no steps have been taken to prevent a similar catastrophe from occurring in the future. The same lethal debt-instruments that triggered the crisis are in play today; over $1 trillion in toxic assets still remain on the banks balance sheets, and nothing has been done to reduce financial sector debt. In fact, according to the Fed, total debt for the financial sector was $16.5 trillion in the second quarter 2009, the same as it was a year earlier. Nothing has changed.
Financial institutions are re-levering and taking on greater risks knowing that the government will bail them out if they get into trouble. At the same time, the Fed's lending programs have kept markets from fully-correcting by keeping asset prices artificially high. This has helped the banks to conceal their losses and appear healthier than they really are. The question is; how long can the charade go on before something gives?
Policymakers seem to believe that blanket government guarantees and stock market manipulation are enough to forestall another disaster. But critics think that a day of reckoning is fast approaching.
Subscribe to:
Posts (Atom)