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Generational Dynamics Web Log for 23-Jan-2010
23-Jan-10 News - US vs China cyberwar, and Bernanke in trouble

Web Log - January, 2010

23-Jan-10 News - US vs China cyberwar, and Bernanke in trouble

News summary is New! Improved! with 'Additional Links.'

Google vs China is turning into US vs China

Detailed technical information about the announcement by Google last week that China had hacked its servers is coming out slowly but surely, but very slowly. The Dark Reading newsletter reports that the attack took advantage of a flaw in Internet Explorer that permits an attacker to install malware that takes control of the user's computer if the user visits an infected web site. Reverse engineering of the attack malware reveals that it contains code that can be traced back to Chinese programmers, although China's government claims that it had nothing to do with the attack.

The flaw in Internet Explorer is a serious one. Microsoft issued a "critical" patch to fix the flaw a couple of days ago. You should make sure that your version of the Internet Explorer is updated to include that patch. The Microsoft support site has further information.

However, the Google attack is metamorphosing from a tech story to a geopolitical story. The Obama administration has taken up Google's case, and demanded that China investigate the attack and provide some answers.

In a speech on Thursday, US Secretary of State Hilary Clinton said:

"In the last year, we’ve seen a spike in threats to the free flow of information. China, Tunisia, and Uzbekistan have stepped up their censorship of the internet. In Vietnam, access to popular social networking sites has suddenly disappeared. ...

States, terrorists, and those who would act as their proxies must know that the United States will protect our networks. Those who disrupt the free flow of information in our society or any other pose a threat to our economy, our government, and our civil society. Countries or individuals that engage in cyber attacks should face consequences and international condemnation. In an internet-connected world, an attack on one nation’s networks can be an attack on all. And by reinforcing that message, we can create norms of behavior among states and encourage respect for the global networked commons. ...

The most recent situation involving Google has attracted a great deal of interest. And we look to the Chinese authorities to conduct a thorough review of the cyber intrusions that led Google to make its announcement. And we also look for that investigation and its results to be transparent."

Clinton's remarks were pretty threatening, and the Chinese are apparently infuriated by these remarks.

Here's the response from China's Foreign Ministry:

"The US attacks China's internet policy, indicating that China has been restricting internet freedom. We resolutely oppose such remarks and practices that contravene facts and undermine China-US relations. ...

Hacking in whatever form and offence of others' privacy is prohibited by law in China. As a major victim of hacking in the world, China believes that the international community should intensify the cooperaion in jointly combating internet hacking so as to safeguard internet security and protect the privacy of citizens in accordance with law.

We urge the US to respect facts and stop attacking China under the excuse of the so-called freedom of internet. We hope that the US side can work with China to earnestly implement the consensus between leaders of both countries on developing bilateral relationship in the new era by strengthening dialogue, exchanges and cooperation, respecting each other's core interest and major concerns and properly handling differences and sensitive issues so as to ensure the healthy and stable development of China-US relationship."

The Foreign Ministry spokesman does make one very good point: Chinese web sites are as much victims of hacking as American web sites. As we described last week, there is a particularly vicious cyberwar between Iran and China.

Beyond that, the Chinese statement is about as weaselly as you can get. Note that:

It doesn't deny that the China was behind the attack on Google; and
It doesn't offer to investigate the hacking incident.

From the point of view of Generational Dynamics, we're headed for a Clash of Civilizations world war with China and the US on opposite sides. It's becoming increasingly clear that a "cyber war" is going to be an important component of this real war.

Ben Bernanke's reconfirmation as Fed Chairman goes to the wire

The White House is still predicting that Ben Bernanke will be confirmed for a second term as Chairman of the Federal Reserve, according to the Baltimore Sun.

This is true even though four Senate Democrats have indicated that they will vote against confirmation. "It is time for a change," said California Democratic Senator Barbara Boxer.

However, a WSJ Blog says that the vote tally as of Friday evening is close:

    Voting “Yes”: 26 (18 Democrats, 8 Republicans)
    Voting “No”: 15 (4 Democrats, 10 Republicans, 1 Independent)
    Officially Undecided: 21 (13 Democrats, 7 Republicans, 1 Independent)
    The remainder of the senators haven’t officially commented.

60 "Yes" votes are required for confirmation.

Both supporters and opponents of confirmation are pointing to the aggressive actions that Bernanke took in implementing various monetary programs like quantitative easing, and advocating fiscal stimulus programs. Supporters say that he prevented a worse financial crisis, and opponents claim that he made things worse.

Actually, none of these politicians really has any idea whether Bernanke has made things better or worse. After this past Tuesday's election, these guys are just trying to decide which vote will make them more likely to get reelected next time.

I personally like Bernanke, even though I've been bitingly critical of his thinking. I think he's a decent honest guy. (See "The 'culture of complicity' continues with Tim Geithner's new toxic asset plan.")

If Bernanke's not confirmed for a second term at the Fed, then someone else will be chosen. And that someone else will be someone like Larry Summers or Hank Paulsen or Robert Rubin. These people are far less capable than Bernanke, and they're all sleazy, having made millions of dollars participating in the fraudulent creation and sale of toxic assets.

On the other hand, long time readers of this web site are well aware that we're headed for a major financial panic and crash. I believe that by this time Bernanke is aware of it as well. It's quite possible that Bernanke is HOPING that he won't be confirmed. That way, someone else will be blamed for what's coming.

Additional Links

The Times of India reports that India has gone on high alert based on intelligence that the Pakistan-based terror group Lashkar-e-Taiba (LeT) has acquired more than 50 para-gliders. These can be loaded with explosives and launched from unused airstrips to attack jetliners.

On Friday evening, the UK raised its terror threat level to "Severe," according to The Guardian. This means that the probability of a terror attack has gone from "substantial" to "highly likely."

European investors are beginning to talk about openly about a Greek default, according to Euro Intelligence, quoting FT Deutschland.

Another scandal involving global warming scientists: UN climate report riddled with errors on glaciers.

From web site reader Eric, a fascinating account by historian Sir John Glubb relating generations to empires. Glubb finds that an empire generally lasts for about ten generations.

News you can use: Too Much Sex Can Cause Wrist Pain.

(Comments: For reader comments, questions and discussion, see the 23-Jan-10 News - US vs China cyberwar, and Bernanke in trouble thread of the Generational Dynamics forum. Comments may be posted anonymously.) (23-Jan-2010) Permanent Link
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Generational Dynamics Web Log for 23-Jan-2010 23-Jan-10 News - US vs China cyberwar, and Bernanke in trouble

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Ben Bernanke's reconfirmation as Fed Chairman goes to the wire

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Generational Dynamics Web Log for 23-Jan-2010
23-Jan-10 News - US vs China cyberwar, and Bernanke in trouble