Tuesday, March 1, 2011

So it wasn't Bush's fault?

Just sayin'...

Evidence outlined in a Pentagon contractor report suggests that financial subversion carried out by unknown parties, such as terrorists or hostile nations, contributed to the 2008 economic crash by covertly using vulnerabilities in the U.S. financial system.

The unclassified 2009 report “Economic Warfare: Risks and Responses” by financial analyst Kevin D. Freeman, a copy of which was obtained by The Washington Times, states that “a three-phased attack was planned and is in the process against the United States economy.”

While economic analysts and a final report from the federal government's Financial Crisis Inquiry Commission blame the crash on such economic factors as high-risk mortgage lending practices and poor federal regulation and supervision, the Pentagon contractor adds a new element: “outside forces,” a factor the commission did not examine.

“There is sufficient justification to question whether outside forces triggered, capitalized upon or magnified the economic difficulties of 2008,” the report says, explaining that those domestic economic factors would have caused a “normal downturn” but not the “near collapse” of the global economic system that took place.

Suspects include financial enemies in Middle Eastern states, Islamic terrorists, hostile members of the Chinese military, or government and organized crime groups in Russia, Venezuela or Iran. Chinese military officials publicly have suggested using economic warfare against the U.S.

In an interview with The Times, Mr. Freeman said his report provided enough theoretical evidence for an economic warfare attack that further forensic study was warranted.


Paul Bracken, a Yale University professor who has studied economic warfare, said he saw “no convincing evidence that ‘outside forces’ colluded to bring about the 2008 crisis.”

“There were outside players in the market” for unregulated credit default swaps, Mr. Bracken said in an e-mail. “Foreign banks and hedge funds play the shorts all the time too. But suggestions of an organized targeted attack for strategic reasons don’t seem to me to be plausible.”

And check this out:

Regardless of the report’s findings, U.S. officials and outside analysts said the Pentagon, the Treasury Department and U.S. intelligence agencies are not aggressively studying the threats to the United States posed by economic warfare and financial terrorism.

“Nobody wants to go there,” one official said.

A copy of the report also was provided to the recently concluded Financial Crisis Inquiry Commission, but the commission also declined to address the possibility of economic warfare in its final report.

Officials, who spoke on the condition of anonymity, said senior Pentagon policymakers, including Michael Vickers, an assistant defense secretary in charge of special operations, blocked further study, saying the Pentagon was not the appropriate agency to assess economic warfare and financial terrorism risks.

Mr. Vickers declined to be interviewed but, through a spokesman, said he did not say economic warfare was not an area for the Pentagon to study, and that he did not block further study.

Mr. Vickers is awaiting Senate confirmation on his promotion to be undersecretary of defense for intelligence.
(italics, ours)

Yeah, it may be a thorny issue and inconvenience some people but someone ought to be checking into this, no?

So, what do you all think?

We anxiously await feedback from commenters who have much more experience than we do in IT and cyber-security.


B-Daddy said...

I wouldn't be shocked if we didn't find the hand of Soros behind some of our recent economic problems. Admittedly, it was our own failures and the structure of our financial systems that yields this opportunity, but Soros is a guy who has made billions betting against governments; he knows where the weak points are.

I recall a representative saying that we were under financial attack in early fall of 2008. There is video of Rep. Paul Kanjorski talking about Paulson and Bernanke testifying to this. I also recall Soros cryptically stating that the financial crisis was the culmination of his life's work.

If someone had accumulated positions in critical banking stocks and Treasuries and waited for an opportune time to start dumping them, this could be the trigger that causes a collapse. Further, a campaign of disinformation or even of information that alerted others to the fundamental weakness of the entire financial sector could conceivably cause a panic. The only real solution is ending too big to fail by requiring higher capital reserves for higher market capitalization.

steve said...

"I wouldn't be shocked if we didn't find the hand of Soros behind some of our recent economic problems."

Sigh. I guess everyone needs a bogeyman. Neither Soros nor the Kochs have quite that much money and influence. However, the financial sector as a whole does. Follow the money trail. Look at who made money in the run up to the crash.

As to It and security, the Pentagon has opened a new cyber-security section. Reading through Army War College literature and Schneier, it is a lot easier to attack than defend it looks like. Will try to get to the contractor's paper to see what he says, but I always remember that contractor's primary goal is to make money for the contractor.

Bin Laden's goal was to financially destroy the US by dragging us into a protracted war. Does that count?


B-Daddy said...

Ultimately, whether or not spooky dude was involved, it was the weaknesses in our capitalization requirements in the financial sector that made us vulnerable. In military terms, we had a weakness that was exploited. The right response isn't to focus on the exploiter, but to close the gap.
My purpose in posting those links is that they weren't widely reported upon and showed the vulnerability of our system to various manipulations, including electoral.