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Mike Holt is a Senior VP, Wealth Management Strategist with The MDE Group, an innovative Wealth Management Firm located in Morristown, NJ that manages over $1 billion for corporate executives and other high net worth individuals located across the US. Mike's diverse background includes auditing... More
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  • Epilogue To TREM '11 -- Cyberspace, The Friend Or Foe Of Technology And Western Civilization? 24 comments
    Oct 13, 2012 12:09 PM

    The purpose of this article is to research and compile information related to the topic of cyberspace as a battlefield for insidious new forms of economic warfare in which Last Mover Advantage could usurp First Mover Advantage.

    Although originally inspired by the memory of Thomas Jefferson's reason and imagination, and by the main reading room of the Library of Congress, it follows the ideas contained within that cave of knowledge to a vast new world of ideas depicted below in which connecting the dots can reveal important new patterns. It is as if the cupola at the center of the LOC's main reading room has been penetrated from both within and without, and this allows our ideas to both soar and escape.

    (click to enlarge)Cyberspace

    To what end will this knowledge be used? Previously, Edwin Blashfield's painting of a female figure in the cupola representing Human Understanding was visible only to those in the LOC Reading Room below. Immediately surrounding her is a mural consisting of a dozen 10-foot high figures representing the countries or epochs that contributed to the development of Western Civilization. These include:

    • Egypt: Written Record
    • Judea: Religion
    • Greece: Philosophy
    • Rome: Administration
    • Islam: Physics
    • The Middle Ages: Modern Languages
    • Italy: Fine Arts
    • Germany: The Art of Printing
    • Spain: Discovery
    • England: Literature
    • France: Emancipation
    • America: Science

    If abandoned or violated, what is to become of Western Civilization, and the democratic principles of liberty and justice for all? Unfortunately, to many it may seem more pragmatic to simply ask how to invest at the peak of Western Civilization, but those motivated by this line of thinking may not truly understand the big picture as well as they believe.

    The LOC Main Reading Room is also encircled by bronze portrait statues paying tribute to great thinkers on various topics. Let's call them the smartest guys in the room, who were very influential in their fields. This article is intended to serve as a virtual reading room that likewise seeks inspiration from great thinkers, but rather than relying upon statues accompanied by inscriptions on plaques, this virtual reading room will draw upon the knowledge of credible experts in fields related to the topic of this article.

    Comments posted to this article should therefore include links or references to primary sources of information, and the comments themselves should consist only of brief descriptions of the source material or its author accompanied by a key quote or passage capturing the essence of the main point(s) deemed to be of greatest interest or importance. If it is believed that personal knowledge or interpretations might be helpful, they should be clearly identified as being your own thoughts or opinions, so that the integrity of information compiled in this virtual reading room is preserved to the greatest extent possible.

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Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

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  • Mike Holt
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    Author’s reply » Elsewhere on my Seeking Alpha Instablog, I have described the importance of technology to economic growth and development, and I have cited numerous examples of surges in economic growth following important technological developments. This relationship should be somewhat intuitive given that economic growth and development can be greatly facilitated by increases in productivity, and technology is an obvious source of productivity increases.


    I have also described efforts by the Chinese Communist Party to achieve their objective, as stated in their Five-Year Growth Plans, of transforming the Chinese economy into a technology-driven economy, through a "no holds barred" approach to appropriating intellectual property and technological "know how" from more developed countries with whom it may now engage in "free trade" as a result of its ascension to membership in the World Trade Organization shortly after the terrorist attacks on the World Trade Center and US Pentagon in 2001.


    Many of the questionable means employed by Chinese state owned enterprises and other CCP-backed state champions to acquire the technology it hopes will launch its economy on an even more rapid trajectory are described in an article in the December 2010 issue of the Harvard Business Review titled "China vs. the World: Whose Technology Is It?" authored by Thomas M. Hout and Pankaj Ghemawat. I have expanded upon, in particular, China's efforts to exploit their near monopoly on the mining and processing of rare earths critical to so many important high-tech applications by coercing companies to locate their most technologically advanced and strategically important manufacturing operations within China in order to gain access to critically important rare earth based components on the same terms that are made available to domestic Chinese enterprises.


    But, in a pincer movement reminiscent of German efforts to control Soviet oil fields by attacking from both the north and south during WWII, China also relies upon another means of gaining access to the sensitive technology it desires, namely cyber-theft. In his book titled "America The Vulnerable: Inside the New Threat Matrix of Digital Espionage, Crime, and Warfare," Joel Brenner, former chief of counterintelligence for the US director of National Intelligence, states that,


    "Technologies that cost millions or billions to develop are being bled out of our corporate laboratories via the Internet; or they're slipping out after hours on thumb drives, walking onto airplanes bound for foreign ports, and reentering the country as finished products developed by foreign entrepeneurs. In effect, we're buying back our own technology."


    And this technology is not limited to that developed in the private sector. Joel Brenner goes on to say that "...we're losing strategically sensitive data about aircraft and ship design, radars, and other defense technology, as well as information about auto manufacturing, engineering designs, and other commercial innovations."


    He adds, "The U.S. Navy spent about $5 billion to develop a quiet electric drive for its submarines and ships so they'd be silent and hard to track. Chinese spies stole it. The navy spent billions more to develop new radar for their top-of-the-line Aegis Cruiser. Chinese spies stole that, too. ...The PRC now has warships that look remarkably like ours. Their new ships also have radars as good as those on the DDX [the next generation of U.S. Navy destroyers], but with one difference" They know the characteristics of our radars, but they have modified their own in ways we must guess at."


    "Pentagon information systems have been under attack since at least 1998. In August 2006, Major General William Lord of the air force let the public in on the secret when he mentioned that massive heist of up to twenty terabytes. To carry this volume of documents in paper form, you'd need a line of moving vans stretching from the Pentagon to the Chinese freighters docked in Baltimore harbor fifty miles away. If the Chinese tried to do that, we'd have the National Guard out in fifteen minutes. But when they did it electronically, hardly anyone noticed."
    13 Oct 2012, 04:20 PM Reply Like
  • Mike Holt
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    Author’s reply » What other technologies are the Chinese pursuing? According to this February 2011 article in Wired Magazine, thorium based nuclear energy, which was researched and developed at the Oak Ridge National Laboratories, is near the top of their list.




    After Admiral Hyman Rickover made the decision to use a certain type of nuclear energy technology to power the first generation of nuclear submarines in the 1950's (the first is on display in Groton, CT), this type of nuclear energy technology has generally remained in use today, and the safer and more economical thorium based nuclear energy that was developed at the ORNL in the 1950's and 1960's has largely been abandoned by the US, until recently. The high degree of interest demonstrated by China (as well as Japan and India) may have something to do with this. Regardless, it is clear that the US is not too happy about the thought of falling behind in the race to develop safer, more reliable, and lower cost sources of energy after being the first to develop thorium based nuclear energy about 50 years ago!






    But, this is an example where cyber-theft is no longer required in order for foreign interests to gain access to what could perhaps be one of the most important technological developments in our lifetimes. When Kirk Sorensen, a whiz kid nuclear energy PhD from the University of Tennesee, Knoxville (not far from the ORNL) first heard about thorium based nuclear energy many years ago, he was surprised to learn that the research was readily accessible and had already been accessed by the Chinese. So, he had the information digitized and shared it with a number of US government leaders in the hope that he might garner their interest as well. So far, it hasn't seemed to work. But the Chinese continue to enjoy learning about our technology, as this tally of visitors to the ORNL reveals -- almost one-fifth of the visitors were from China.




    Since thorium is normally associated with the heavier rare earths that are most critical to many high tech applications, and China may have as many commercially exploitable heavy rare earths / thorium deposits as the US, our gift of this technology to China may truly epitomize the gift that keeps on giving.


    Additional irony can be found in the fact that the US may also remain heavily dependent upon oil for its critical transportation needs, that access to this oil could be jeopardized if Iran misuses the outdated nuclear energy technology that Admiral Rickover insisted upon because it was more conducive to the development of nuclear weapons than the thorium based nuclear energy developed and advocated by Alvin Weinberg, and Iran now poses a growing threat of cyber-espionage that can diminish the benefits that could be derived from broad and open access to the Internet by society at large.
    13 Oct 2012, 05:58 PM Reply Like
  • Mike Holt
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    Author’s reply » Figuratively, penetrating the cupola atop the domed roof of the Main Reading Room at the Library of Congress is akin to attaching a computer containing vast reams of data to the internet. This portal allows information to flow more freely, and by facilitating more rapid transmission of this information, the lightning fast computing speeds of computers can be leveraged even further. Unfortunately, efforts to secure access to this flow of information have not developed as quickly. This creates a seeming paradox whereby securing sensitive information could necessitate the imposition of restrictions on internet access, but users generally want broader and more convenient access to the internet via their computers, laptops, cell phones and tablets in order to enhance its potential benefits. And, now that the genie’s bottle has been uncorked, it would be extremely difficult to put it back in the bottle.


    Most Americans are now familiar with the many benefits to be derived from the internet, but may not have an equal appreciation for the tremendous risks to which it exposes us as well. The following excerpt from Joel Brenner’s book “America the Vulnerable” may help to put this into better perspective.


    “Our adversaries understand that the strategic security of the West is bound up with our economic security. Our science, technology, and ability to rapidly turn ideas to commercial use are what generate our wealth, fund our defense, and make us powerful. A strong military is only one of the elements of national power. …Today a postindustrial world order is being created—not by ships and tanks and airplanes but by a changing economic dynamic. This order depends heavily on the balance of trade, which in turn depends on a nation’s ability to nurture science, to turn that science into applied technology, and to quickly turn that technology into products that people want to buy—products that may or may not have military applications. On the whole the United States has done this better than any other nation in history.”


    The free flow of information over the internet obviously facilitates this, but the irony is that it also jeopardizes our First Mover Advantage. As Joel Brenner concludes his remarks expressed above,


    “The day when virtually all advanced technology resides in the United States may be over, but it is still the case that more of the world’s advanced technology resides here than anywhere else. And it’s worth stealing.”


    It should therefore come as no surprise that instances of cyber-theft and cyber-espionage have been growing rapidly since the 1990's, as Joel Brenner further explains below.


    "Western companies as well as governments are high priority targets of foreign intelligence operations, especially companies that know how to create and market advanced technologies, pharmaceuticals, and industrial designs. These firms export to the world. They take brainpower and raw inputs and create value, jobs, and a standard of living that the rest of the world envies. Advanced industrial designs, business plans, and test data are called intellectual property, and they are the private sector’s equivalent of top secret. Like secret State Department cables and the PIN for your bank account, corporate secrets no longer exist on a few pieces of paper locked in safe. They’re arrangements of 1s and 0s that live in vast electronic databases, and they move at the speed of light over electronic networks. We are losing these secrets over the same vulnerable networks that threaten your personal privacy.”
    14 Oct 2012, 11:48 AM Reply Like
  • Mike Holt
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    Author’s reply » Although cyber-theft by any foreign country should be a concern, the record shows that restrictions against unauthorized access to our technology and other intellectual property of greatest economic and military importance have been most frequently violated by China in the form of both cyber-theft and cyber-espionage. These passages from Joel Brenner's book "America the Vulnerable" should help make this clear.


    “About 108 foreign intelligence services target the United States, and many of them collect information against economic targets. Collection by Russia and Cuba is back up to cold war levels. Against economic targets, however, the heaviest foreign human spying comes from Iran and China. The 2008 Economic Espionage Report examined twenty-three such cases: nine involved Iran (which chiefly targets nuclear technology), eight involved China, and two involved India. No other nation was involved in more than one case.”


    “According to press reports, a classified FBI account states that the People’s Liberation Army [PLA] of China has developed a cadre of 30,000 cyberspies, who are supplemented by more than 150,000 ‘private sector’ cyberexperts ‘whose mission is to steal American military and technological secrets and cause mischief in government and financial services.’ In effect, China has fostered a vast electronic militia, a sort of cyber National Guard on virtual active duty every day of the year. …In China, cyber-privateers are heroes. In this respect China enjoys a benefit long lost to Western governments: The educated elite in China are nationalistic and have high confidence in their government.”


    “Foreign intelligence services are not only pilfering intelligence from our military and our government; they’re robbing us of the technology that creates jobs, wealth, and power. China is not the world’s most skillful cyberoperator—at least, not yet. The Russians, the French, the British, and the Israelis have more advanced cybercapabilities, at least in some respects. So does the United States. But the Chinese are catching up quickly, and their attacks are relentless, determined, and persistent. Chinese attackers are not smash-and-grab criminals, pilfering personal bank accounts and running up fraudulent credit card charges. Their line of work is hard-core cyberespionage, and their targets are the technology, designs, and trade secrets of private companies, many of which have no direct connection to traditional notions of national security. Who’s winning this battle? They are. And that has profound implications for your children and grandchildren, and the world they will inherit, and for the place of the United States in the world.”
    14 Oct 2012, 12:13 PM Reply Like
  • Mike Holt
    , contributor
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    Author’s reply » Given the significance of concerns regarding growing instances of cyber-theft and cyber-espionage, preserving the integrity of the telecommunications infrastructure itself should obviously be a high priority, as Joel Brenner explains in his book, “America the Vulnerable.”


    “Another reason foreign intelligence services target our private sector is that many of our classified military secrets also reside there. …Today we rely heavily on private companies because they are agile and creative, and they attract much of our most experienced and well-educated talent, because they pay well. …This means that ever more national defense secrets can be stolen from the private sector. Government communications live on a privately owned telecommunications backbone. …If you can penetrate our telecommunications carriers or the companies that make their equipment, you may be able to penetrate government and other private systems, too.”


    So, it should be no surprise that an article in the August 4th – 10th, 2012 issue of the Economist titled, “The Company that Spooked the World” contains this ominous subtitle.


    “The success of China’s telecoms-equipment behemoth [Huawei] makes spies and politicians elsewhere nervous.”


    The article goes on to say,


    “Over the past ten years or so, Chinese telecoms firms such as Huawei and ZTE, another telecoms-equipment provider, have expanded from their vast home markets to become global players. This is a worry not just for the rich-world incumbents under threat but also for those responsible for the integrity of critical infrastructure such as phone systems. They fear that the companies’ networking gear and software could be used by China’s spooks to eavesdrop on sensitive communications, or that it might contain “kill switches” which would allow China to disable the systems involved in the event of a conflict. “I think it’s ridiculous to allow a Chinese company with connections to the Chinese government and the People’s Liberation Army [PLA] to have access to a network,” says Dmitri Alperovitch of CrowdStrike, a web-security outfit.”


    However, according to the Economist,


    “Huawei’s customers now serve several billion people in over 140 countries. …It is involved in over half the rollouts of super-fast 4G mobile networks so far announced in Europe. In the past few years, the firm has consistently been one of the world’s leading generators of intellectual property, and has filed for some 47,000 patents.”


    Yet, “critics are convinced that there is more to Huawei’s rise than strategy, guts and Mr. Ren’s [the founder and CEO] devotion to innovation. They think it has stolen vast amounts of intellectual property and that it has been heavily subsidized in its expansion by the Chinese government, eager to use it as a Trojan horse with which to infiltrate itself into more and more foreign networks. Huawei rejects all these allegations.”


    “Greater international co-operation in another area could help to defuse the tension. One reason that Huawei and other Chinese firms are being scrutinized so closely is that study after study has shown that many of the cyber-attacks mounted on Western companies and government departments originated in Chin. If China’s government were to commit itself to identifying the perpetrators, and to confound skeptics by actually shutting hacking operations down, American attitudes towards firms such as Huawei might improve."
    14 Oct 2012, 12:47 PM Reply Like
  • Mike Holt
    , contributor
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    Author’s reply » Concerns about our vulnerability to cyber-attacks must be weighed against the potential benefits to be derived from free and open access to the internet. For example, some believe that the Arab Spring, a grass roots movement to weaken or eliminate the shackles of autocratic governments in North Africa and the Middle East, was greatly facilitated by mobile communications and social media sites on the internet. Ironically, this is an instance in which the Chinese Communist Party rulers would prefer the internet to be not so freely accessible, as this passage from Joel Brenner’s book “America the Vulnerable” illustrates.


    “Foreign Intelligence Agencies have been penetrating American corporate networks and stealing technology electronically since the 1990’s, but we have been slow to catch on. That began to change in January 2010, when Google went public with news of massive attacks on its networks and blamed the Chinese government. In retaliation, Google announced that it would stop filtering and blocking searches that the Chinese government deemed politically sensitive. This kind of censorship was a condition for allowing the company to conduct business there. …Freedom of expression is a bedrock issue in our relations with China, which would like nothing better than to lock down the Internet and regain government control over what people can know and write. …All this business about a free Internet, said a prominent academic at Beijing’s Tsinghua University, was nothing but a calculated ‘U.S. tactic to preserve its hegemonic domination.’”
    14 Oct 2012, 01:04 PM Reply Like
  • Mike Holt
    , contributor
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    Author’s reply » Over the past few weeks, hackers employing DDoS attacks, or Distributed Denial of Service attacks, shut down a number of websites hosted by major US banks. The NY Times reports today that,


    "...there was something disturbingly different about the wave of online attacks on American banks in recent weeks. Security researchers say that instead of exploiting individual computers, the attackers engineered networks of computers in data centers.... The skill required to carry out attacks on this scale has convinced United States government officials and security researchers that they are the work of Iran, most likely in retaliation for economic sanctions and online attacks by the United States. ...American officials have not offered any technical evidence to back up their claims, but computer security experts say the recent attacks showed a level of sophistication far beyond that of amateur hackers. Also, the hackers chose to pursue disruption, not money: another earmark of state-sponsored attacks, the experts said."


    It goes on to explain that "In the last three years, three sophisticated computer viruses--called Flame, Duqu and Stuxnet--have hit computers in Iran. The New York Times reported last year that the United States, together with Israel, was responsible for Stuxnet, the virus used to destroy centrifuges in an Iranian nuclear facility in 2010."
    9 Jan 2013, 08:16 AM Reply Like
  • Mike Holt
    , contributor
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    Author’s reply » Yesterday, The NY Times published an article titled "A New Cold War, in Cyberspace, Tests US Ties to China." Here is a link to the article featured on the CNBC website.




    This article does a good job of touching upon many issues that should be of concern to all of us. Unfortunately, these concerns so far seem to have captured very little attention, and when an awareness is raised, very little is done about it. As the article points out:


    "The problem so far is that we have rhetoric and we have Cyber Command, and not much in between," said Chris Johnson, a 20-year veteran of the C.I.A. team that analyzed the Chinese leadership. "That's what makes this so difficult. It's easy for the Chinese to deny it's happening, to say it's someone else, and no one wants the U.S. government launching counterattacks."


    That may be why these efforts apparently sponsored by The Chinese Communist Party have been referred to as the "Cool War" rather than a new "Cold War." During the Cold War, both sides had to live with the fear that one false move on their part and they could be obliterated.


    The risks associated with the "Cool War" are much more asymmetrical because China recognizes that it is not in a position to challenge the US through traditional military means. But they are not afraid to quietly, and sometimes not so quietly, steal our valuable intellectual property rights to fuel their economic growth and power. And, whether they recognize it or not, there is less of an incentive for us to retaliate with cyber attacks because they have much less intellectual property to offer--although this is sometimes drastically underappreciated, especially with respect to the processing of rare earths.


    Furthermore, China owns much of our debt, we have become increasingly reliant upon China as a potential engine of much needed global economic growth, and the American public would probably view any efforts by the government to make the internet more secure as an effort by "Big Government" to strip them of their inalienable rights to internet access. So, in the name of countering Big Government, we continue to allow an even bigger government that is much less supportive of "liberty and justice for all" to thrive. How cool is that?
    26 Feb 2013, 05:04 PM Reply Like
  • Mike Holt
    , contributor
    Comments (1863) | Send Message
    Author’s reply » The US Dept of Defense issued its Annual Report to Congress yesterday titled, "Military and Security Developments involving the People's Republic of China 2013.




    The following excerpt from page 36 of the Report is of particular interest:


    Cyber Activities Directed Against the Department of Defense.


    In 2012, numerous computer systems around the world, including those owned by the U.S. government, continued to be targeted for intrusions, some of which appear to be attributable directly to the Chinese government and military. These intrusions were focused on exfiltrating information. China is using its computer network exploitation [CNE] capability to support intelligence collection against the U.S. diplomatic, economic, and defense industrial base sectors that support U.S. national defense programs. The information targeted could potentially be used to benefit China's defense industry, high technology industries, policymaker interest in US leadership thinking on key China issues, and military planners building a picture of U.S. network defense networks, logistics, and related military capabilities that could be exploited during a crisis.


    In the following section on that same page, the report goes on to explain:


    Cyberwarfare in China's Military.


    Cyberwarfare capabilities could serve Chinese military operations in three key areas. First and foremost, they allow data collection for intelligence and computer network attack purposes.


    Second, they can be employed to constrain an adversary's actions or slow response time by targeting network-based logistics, communications, and commercial activities.


    Third, they can serve as a force multiplier when coupled with kinetic attacks during times of crisis or conflict.


    A callout section on Page 37 further explains:


    Role of Electronic Warfare [EW] in Future Conflict


    An integral component of warfare, the PLA identifies EW as a way to reduce or eliminate US technological advantages. Chinese EW doctrine emphasizes using electromagnetic spectrum weapons to suppress or deceive enemy electronic equipment. PLA EW strategy focuses on radio, radar, optical, infrared, and microwave frequencies, in addition to adversarial computer and information systems.


    Chinese EW strategy stresses that it is a vital fourth dimension to combat and should be considered equally and traditionally with traditional ground, sea, and air forces. Effective EW is seen as a decisive aid during military operations and consequently the key to determining the outcome of war. The Chinese see EW as an important force multiplier and would likely employ it in support of all combat arms and services during a conflict.


    The report drew some controversy as well as criticism by certain Chinese Communist Party representatives, as described in this article in CIO magazine:


    7 May 2013, 11:28 PM Reply Like
  • Mike Holt
    , contributor
    Comments (1863) | Send Message
    Author’s reply » Although I've focused on global macro risks associated with cyberspace, there are also opportunities to Seek Alpha in this space, so let's let Mr. Market into the room to learn what he has to say.


    The following article is now dated, but may be a good place to start for purposes of "catching up" with these investment opportunities.




    One company that is not referenced in the article linked above is Finjan (OTCQB:FNJN) whose stock has been quite volatile lately and is now trading at the lower end of its wide tranding range. For more on this company, refer to this Seeking Alpha article by John H. Ford titled "Why Finjan Could Go From $6 to $15."


    26 Jan 2014, 10:14 AM Reply Like
  • Mike Holt
    , contributor
    Comments (1863) | Send Message
    Author’s reply » For a more comprehensive listing of cybersecurity stocks, check out this Cyber Security motif that can also be customized to include, exclude, or simply adjust the weightings of various cybersecurity stocks that may be of interest.


    26 Jan 2014, 12:11 PM Reply Like
  • Mike Holt
    , contributor
    Comments (1863) | Send Message
    Author’s reply » At long last, the US Justice Department has initiated measures to address China's rampant cybertheft. As indicated in this Reuters newswire, the US Justice Department indicted five Chinese military officers, alleging they hacked US companies' computers to steal trade secrets.




    John Carlin, head of the Justice agency's national security division said there has been a "sea change" in the past year among fed-up firms willing to be identified as victims.


    The WSJ also reported today that "The Justice Department spent six to eight months assembling the hacking cases, which were chosen because the companies allowed themselves to be named, a notable shift, and because prosecutors felt they had assembled strong evidence for their opening case, said people familiar with the probe."
    20 May 2014, 07:34 AM Reply Like
  • Mike Holt
    , contributor
    Comments (1863) | Send Message
    Author’s reply » The US DOJ website features this summary of its indictment of five Chinese military officers for their illegal activities including cybertheft.




    And, there is a link at the bottom of the summary to a copy of the indictment itself.
    20 May 2014, 11:34 AM Reply Like
  • Shaduc
    , contributor
    Comments (2984) | Send Message
    Is this just a motion


    Or can the USA govt actually do something about its announcement?
    20 May 2014, 12:45 PM Reply Like
  • Mike Holt
    , contributor
    Comments (1863) | Send Message
    Author’s reply » Unlike the US pharmaceutical executive who voluntarily returned to China to face charges that he authorized bribes [commonly known as gifts in China] to be paid to doctors, I doubt that the five Chinese military officers involved in these documented cybertheft activities will come to the US, voluntarily or otherwise, to face charges.


    However, its my understanding that the CCP had requested evidence of Chinese cyber-theft before it would be willing to crack down on this internally as part of its anti-corruption campaign, and that the US Dept. of Justice also cleared the announcement of the indictment with the CCP beforehand.


    But, given the reaction by the Chinese Foreign Ministry within 90 minutes of the announcement asking for the indictment to be rescinded, as well as a decision to bar Chinese companies from installing Microsoft Windows 8 on their computers, my guess is that this announcement will simply lead to a greater awareness of the problem, and only time will tell if this eventually leads to more of the same -- allegations and denials--or long overdue substantive actions being taken to curtail the rampant theft of intellectual property and trade secrets developed by American companies.
    20 May 2014, 01:22 PM Reply Like
  • Mike Holt
    , contributor
    Comments (1863) | Send Message
    Author’s reply » In testimony at a House Intelligence Committee hearing on Thursday, Adm. Michael Rogers, the director of the NSA, said he expects a major cyberattack against the U.S. in the next decade. "It's only a matter of the 'when,' not the 'if,' that we are going to see something dramatic," he said.


    Rather than simply questioning the impact that this may have on the stock prices for cybersecurity companies such as FireEye (FEYE) and Palo Alto Networks (PANW), investors should consider the broader implications that this may have.


    U.S. officials maintain that nation-states, including China and "one or two others" are infiltrating the networks of industrial-control systems, the electronic brains behind infrastructure like the electrical grid, nuclear power plants, air traffic control and subway systems.


    Adm. Rogers also warned of increasing cyberattacks on mobile devices as "a coming trend," because they are difficult to secure and may serve as entry points into larger central government or corporate networks.


    For years, this has also been a concern to Brad Rotter, CEO of the privately held AirPatrol Corporation whose indoor positioning systems can identify and track mobile phones, laptop or tablet computers and portable Wi-Fi access points.
    21 Nov 2014, 08:43 AM Reply Like
  • Mike Holt
    , contributor
    Comments (1863) | Send Message
    Author’s reply » It is widely understood that the military capability of the US far exceeds that of any other country, and that those contemplating adversarial relationships are more likely to seek asymmetrical weaknesses that can be exploited in order to gain an upper hand through non-military means.


    Cyber theft and the development of cyber espionage capabilities are commonly cited examples of such means, with the former sometimes being used to access info on valuable technology to obtain economic benefits at the expense of competitors who incurred their development costs.


    Although it could be argued that this cyber theft is effectively a form of economic warfare that substitutes for direct military engagement, the lines may be blurred further when the technology stolen relates to our advanced weapons systems.


    For example, according to Reuters, the president of Aviation Industry Corp. of China recently boasted on China Central Television that China's J-31 stealth fighter, that some officials believe was built with stolen design plans for the US F-35 stealth fighter under development by Lockheed Martin, can outfly the F-35. In his words, "When it takes to the sky, it can definitely take it down."


    This is an interesting perspective given China's repeated assurances that China's "rising" is intended to be entirely peaceful in nature.


    15 Dec 2014, 06:06 PM Reply Like
  • Shaduc
    , contributor
    Comments (2984) | Send Message
    15 years ago, HK's South China Morning Post was citing the future threat of cyber-terrorism. Disappointedly, the USA ignored that, China did not ...
    15 Dec 2014, 09:45 PM Reply Like
  • Mike Holt
    , contributor
    Comments (1863) | Send Message
    Author’s reply » Although North Korea reportedly has no internet,




    that still would not preclude North Korea from ordering a cyberattack on Sony, as American officials claim per this article in the NY Times today.




    Yet, some argue that this had to involve insiders at Sony coordinated over a number of years, and may have been motivated by reasons other than the pending release of "The Interview" a dark comedy about an assassination attempt against North Korea's dictator.


    Regardless of who is responsible, this should serve as another wake-up call to the risks associated with cyber theft and cyber espionage since the internet is now relied upon so pervasively. It is almost everywhere, and provides access to almost everything. And, to ban unauthorized access to the internet would require governments to relinquish their ability to do so under a variety of circumstances in which they may believe it would be necessary for national security reasons.


    Understandably, internet security stocks such as FireEye (FEYE) and Palo Alto Networks (PANW) have surged on the news of this latest cyber attack against the Japanese company Sony Corporation (SNE).
    18 Dec 2014, 01:38 PM Reply Like
  • Mike Holt
    , contributor
    Comments (1863) | Send Message
    Author’s reply » Against the backdrop of headlines regarding the Sony Cyberattack, China is aiming to purge most foreign technology from banks, the military, state-owned enterprises and key government agencies by 2020, stepping up efforts to shift to Chinese suppliers, according to people who, per this Bloomberg article, are familiar with the effort but asked not to be named because the details have not yet been made public.




    Foreign suppliers may be able to avoid replacement if they share their core technology or give China's security inspectors access to their products, the people said.


    These requirements are eerily reminiscent of similar requirements that have been imposed in the past, such as local content requirements, that many believe are intended to facilitate the copycat of technology developed at great expense by the foreign corporations being "allowed" to set up operations within China.


    Reinforcing this notion, "A key government motivation is to bring China up from low-end manufacturing to the high end," said Kitty Fok, China managing director for IDC.
    18 Dec 2014, 01:59 PM Reply Like
  • Mike Holt
    , contributor
    Comments (1863) | Send Message
    Author’s reply » Shane Harris, senior writer for Foreign Policy magazine has just "entered the room" with a new book under his arm titled "@ War: The Rise of the Military Internet Complex."


    This description of his book speaks for itself:


    "The United States military currently views cyberspace as the “fifth domain” of warfare (alongside land, air, sea, and space), and the Department of Defense, the National Security Agency, and the CIA all field teams of hackers who can, and do, launch computer virus strikes against enemy targets. In fact, as @WAR shows, U.S. hackers were crucial to our victory in Iraq.


    Shane Harris delves into the frontlines of America’s new cyber war. As recent revelations have shown, government agencies are joining with tech giants like Google and Facebook to collect vast amounts of information.


    The military has also formed a new alliance with tech and finance companies to patrol cyberspace, and Harris offers a deeper glimpse into this partnership than we have ever seen before.


    Finally, Harris explains what the new cybersecurity regime means for all of us, who spend our daily lives bound to the Internet — and are vulnerable to its dangers."
    25 Jan 2015, 11:06 AM Reply Like
  • Mike Holt
    , contributor
    Comments (1863) | Send Message
    Author’s reply » In the 2014 update to Mandiant’s controversial 2013 APT1 Report that exposed the Chinese actors behind the Advanced Persistent Threat that US defense and intelligence agencies--and now, an increasing number of private enterprises-- have been trying to guard against, Mandiant warns that:


    "...recent observations of China-based APT activity
    indicate that the PRC has no intention of abandoning its cyber campaigns, despite the Obama administration’s specific warnings that China’s continued cyber espionage
    “was going to be [a] very difficult problem in the economic relationship” between the two countries."




    Mandiant's 2014 report goes on to conclude that:


    "...this evolving threat landscape, while complicated, need not be discouraging. To attack the security gap, organizations need smart people, visibility into their networks, endpoints, and logs. Organizations also need actionable threat intelligence that identifies malicious activity faster. When the inevitable happens, the speed and manner in which you respond is critical. Breaches are inevitable — how will you respond?"


    Unfortunately, the greatest obstacle seems to be one of ideology and principles rather than smarter people equipped with better technology and processes as illustrated by this remark by Apple CEO Tim Cook at the White House sponsored Summit on Cybersecurity and Consumer Protections held yesterday in Stanford, CA:


    "If those of us in positions of responsibility fail to do everything in our power to protect the right of privacy, we risk something far more valuable than money. We risk our way of life."


    There is considerable irony in the notion that protecting America, a country founded on the principles of individual liberty and justice, may require compromising these same principles in order to safeguard them. We are, indeed, at a crossroad.
    15 Feb 2015, 03:00 PM Reply Like
  • Mike Holt
    , contributor
    Comments (1863) | Send Message
    Author’s reply » An interesting question to ask is whether Tim Cook would change his itune if the Chinese mobile phone maker Xiaomi gains further ground in its efforts to take market share away from Apple by doing more than just cloning its products.






    Until investors see a direct and immediate relationship between their portfolios and the future of the principles of individual liberty and justice that once defined what it means to be an American, concerns about someone else's grandchildren will likely seem irrelevant to most.
    15 Feb 2015, 03:14 PM Reply Like
  • Shaduc
    , contributor
    Comments (2984) | Send Message
    'Xiaomi gains further ground in its efforts to take market share away from Apple'


    It's actually interesting that Apple's core customers are the older, while Xiaomi's are [sorry stealing it from Samsung] wannabe's.
    15 Feb 2015, 10:18 PM Reply Like
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