The National Intelligence Bulletin is a weekly look at national security, domestic systems disruption, the risk of failing critical infrastructure, and threats to social, political, economic, and financial stability in the United States. This report is available each week for Intelligence subscribers.
In this National Intelligence Bulletin…
- InFocus: ‘Back to the 1600s’
- Chinese military researchers exploit western universities
- Hackers can take down our critical energy systems through the Internet
- Armed migrants in caravan opened fire on Mexican cops
- Militia offers to help stop caravan
- Sen. Nelson: USA like Rwanda before genocide
- Forbes: Trump’s psychology of hate unleashed the MAGABomber
- CNN Host: ‘the biggest terror threat in this country is white men’
- DOE conducts cyber-attack exercise
- Protecting critical infrastructure in remote locations with a digital wall
- US to deploy 5,200 additional troops to Mexican border
- And more…
InFocus: On Tuesday night, I sat down and turned on YouTube on my television. It’s replaced cable because of the wealth of information available on the platform. Marketing guru Seth Godin was interviewed on a channel called Impact Theory to discuss how to be a linchpin, which I’ll get to in a bit. After some light conversation in the interview, Godin says that although he’s not a conspiracy theorist, he does know how public school in America came to be:
“Public school was invented by factory owners who didn’t have enough compliant factory workers. And it worked great. For a hundred years, we had this wonderful system. Do what you’re told, go to the placement office, you’ll get a job for 50 years. You won’t like the job but you’ll be able to go home and watch tv, buy enough stuff you’ll need a storage unit, and then you’ll die. And the deal was straightforward and kept on both sides. And during our lifetime, in the last 20 years, the deal’s off… [P]eople are starting to feel broken and bitter because the promise isn’t being kept.”
This is a result of globalization and outsourcing jobs, but Godin says the trend is going to get worse. In the year 1600, Godin says, the unemployment rate was zero because the concept of employment hadn’t yet been invented. And he continues to say that due to technological advancements and worker displacement, our society will be going backwards toward that era of no jobs and less opportunity. He gives the example of radiologists, who have to train for years to be good at their jobs. After x-rays were digitized, the reading of x-rays could be outsourced overseas for reading at a cheaper rate. “[Hospitals] don’t have to do that anymore because a computer can do it. And a computer can do it better than an average radiologist.”
And this was the crux of Godin’s talk: the future of job holders and occupations with staying power have to become linchpins — people who can’t be replaced by cheaper, outsourced workers or automation.
I started thinking about the linchpins of being prepared for the future. Hands down, without a doubt, the ability to gather information, assess it, and get a better picture of how current trends will impact the future is the linchpin of situational awareness and security. And that’s my goal with this report. Later this month, we’ll introduce some indicators to provide an overall context on just where we are and where we’re headed as a country and society. I have some more work to do on setting up the system, but I do believe that it will improve the value of this report considerably. – S.C.
Priority Intelligence Requirements
PIR1: What are the new significant indicators of systems disruption and threats to critical infrastructure?
PIR2: What are the new significant indicators of potentially disruptive social, cultural or political conditions or events?
PIR3: How are state and federal agencies preparing for domestic conflict, emergencies, or other instability?
PIR4: What are the new significant indicators of systems disruption and threats to the economic or financial industry?
PIR1: What are the new indicators of systems disruption and threats to critical infrastructure?
Major Trends
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- Nation-state and criminal hacking groups pose persistent threat to critical infrastructure
- Natural disasters pose sporadic but enduring threat to critical infrastructure
Sessions: Chinese espionage against U.S. rising rapidly
Attorney General Jeff Sessions announced on Thursday a new Justice Department initiative to crack down on Chinese espionage. “Chinese economic espionage against the United States has been increasing—and it has been increasing rapidly. We are here today to say: enough is enough. We’re not going to take it anymore. It is unacceptable,” Sessions said. [source] (Analyst Comment: One of the most important and overlooked aspects of President Trump’s trade war against China is that it’s aimed at moderating China’s behavior towards the U.S.; not only ending their economic cold war, but also their industrial and economic espionage campaigns. The Chinese are responsible for an estimated $200-300 billion in intellectual property theft from U.S. corporations each year, only to reverse engineer the technology and begin offering similar products to global markets at a cheaper price. Part of China’s cold war against the United States is to make American companies less competitive against Chinese companies. A new report out shows that, despite their 2015 pledge to then-president Obama to stop hacking, the Chinese have actually redoubled their efforts and increased cyber exploitation against the United States. [source] Later this month, President Trump is scheduled to meet with Chinese president Xi at the G20 conference in Argentina. It sounds like both Trump and Sessions are serious, so we might look at further escalation after the mid-terms. And on the topic of mid-terms, after President Trump tweeted out on Thursday that he had productive talks with the Chinese president, the Dow bounced up a couple hundred points. We might consider that the president is just painting a rosy picture beore the mid-terms, and then turns up the heat later this month.)
Chinese military researchers exploit western universities
A new report by the Australian Strategic Policy Institute (ASPI) states that around 2,500 researchers from the Chinese military have spent time at Western universities in the past ten years. (Analyst Comment: ASPI is a think-tank funded by the Australian Department of Defense.) According to ASPI, the researchers are a part of the People Liberation Army’s International Research Collaboration and attend universities in Western countries such as the Unites States, the UK and Australia, where they focus on “hard sciences, especially emerging and dual-use technologies” and “collecting knowledge to power China’s military technological progress.” An interdisciplinary project between the University of Cambridge and the People’s Liberation Army’s National University of Defense Technology published in 2015 states that Chinese military researchers attended Western universities would “produce the next generation of supercomputer experts for China” and “greatly enhance [China’s] power in the areas of defence, communications, anti-jamming for imaging and high-precision navigation.” [source]
Hackers can take down our critical energy systems through the Internet
A report published by researchers from the cybersecurity firm Trend Micro states that utilities across the U.S. with Human Interface Systems are at risk of being “exploited.” According to the report,human operators are required to “interact with supervisory control and data acquisition (SCADA) system,” and that if a human-machine interface is compromised, SCADA systems may be exposed, which can “give attackers access to the heart of industrial operations.” The research also revealed that a “vast array of water and energy based assets” are publicly exposed on the Internet via virtual networking systems, protocol software, and remote desktops. [source]
Armed migrants in caravan opened fire on Mexican police
PIR2: What are the new indicators of potentially disruptive social, cultural or political conditions or events?
Major Trends
- Ongoing political instability due to the Russia collusion investigation
- Simmering social grievances based on race, class, and political ideology
- Sporadic political violence
- Ongoing culture war featuring information operations and expanding to economic warfare
Sen. Nelson: USA like Rwanda before genocide
During a campaign rally, Florida Governor candidate Senator Bill Nelson (D-FL) warned that the current U.S. political climate is reminiscent of Rwanda’s before the Rwandan Genocide, and stated that the genocide, which took he lives of nearly a million Rwandans in the 1990’s, should be “instructive” to Americans. Senator Nelson stated during the rally that, “tribalism is sweeping through U.S. politics to a dangerous degree,” which is often a precursor to civil war. Nelson believes that Rwanda is a prime example of how antipathy created by years of tribalism eventually results in violence:
“When a place gets so tribal that the two tribes won’t have anything to do with each other … that jealousy turns into hate … And we saw what happened to the Hutus and the Tutsis in Rwanda, it turned into a genocide. A million-people hacked to death within a few months. And we have got to watch what’s happening here.” [source]
“Trans people deserve to live” banner dropped at World Series game
“I keep trying to point out to people not to demonize any one group or any one ethnicity, but we keep thinking that the biggest terror threat is something else … So we have to stop demonizing people and realize the biggest terror threat in this country is white men, most of them radicalized to the right, and we have to start doing something about them.”
Lemon has come under fire for the comments, which were made while discussing the shooting of two black men in Kentucky with “Cuomo Prime Time” host Chris Cuomo, who agreed, saying that Lemon was “making the right point.” [source]
Americans trust government more than tech companies to combat election influence
Results from a Pew Research Center survey show that U.S. citizens are not confident that the government is prepared to protect the midterm elections from foreign hackers, however, citizens are even less confident that tech companies will be able to prevent election influence via their platforms. The research also found that about two-thirds of US citizens believe that it is likely that Russia or another foreign state will attempt to influence the outcome of the elections. [source]
Americans: Media has done more to divide than Trump
According to a new Morning Consult/Politico survey, Americans believe the media has done more to divide America than who say President Trump has. Among registered voters, 64 percent say the national media has done more to divide the country than President Trump. 17 percent feel that the national media has united the country. As for President Trump, 30 percent believe he has done more to unite the country while 56 percent believe he has done more to divide the country. Additionally, among registered voters, 58 percent believe that political violence is widespread, compared to 28 percent who do not. For political violence, registered voters assign more blame to President Trump (36 percent) than Democrats in Congress (31 percent) and Republicans in Congress (9 percent). [source] (Analyst Comment: I bring this up because in our new indicator system, we’ll track the national media’s role in contributing to political and social instability. As for political violence, 61 percent of liberals, 57 percent of moderates, and 59 percent of conservatives view political violence as widespread. There’s a 20 point gap between how rural and urban Americans view political violence: rural Americans tend to blame Democrats, while urban Americans tend to blame the President. It’s good to see that everyone recognizes that political violence is a problem, but problematic that both sides are more likely to view the other as the primary driver. I don’t expect that to change.)
WSJ: Two factors driving the political gap
According to a new survey from the Wall Street Journal and NBC, gender and education are two factors driving the political gap this election season. Coming off a near-even preference in 2010 and 2014, white women with bachelor’s degrees now favor Democrats by 33 points, while white men without bachelor’s degrees are up 42 points for the GOP. [source] [Analyst Comment: As I’ve pointed out numerous times in this report, there’s empirical evidence piling up that Americans haven’t been this politically polarized in decades. First it was the Pew Research survey in 2017 showing that those on the Left were moving further left, and those on the Right were moving further right. That was the first poll I saw that actually quantified the political divide. This poll is one in a long line since, that shows the political divide is much larger than just political, it’s cultural. Andrew Breitbart used to say that politics is downstream of culture. He would likely point to the growing culture war, perfectly exhibited in this chart, to explain our political polarization. What this chart really reminds me of is a book I recently finished, called The Populist Explosion. The author, John B. Judis, talks about the culture war in terms of ‘Somewheres’ and ‘Anywheres’. ‘Somewheres’ have roots. They grew up some place and they probably still live there. They’re tied to their home town, they’re not upwardly or geographically mobile; they have well-established roots. ‘Anywheres’, on the other hand, have college degrees, they’re cosmopolitan and their politics reflect that. They can get a job in any major city, and they likely feel just as ‘at home’ in Chicago as they would in New York, Miami, Dallas, or Los Angeles. Their roots aren’t tied to ‘somewhere’ — they make their home ‘anywhere’. There’s a cultural shift taking place, and we know that political movements are becoming more powerful at the extremes of the political spectrum. Globalization and the internationalist policies that trashed the working class for the past decade are to blame. Since 1945, the pendulum has swung in favor of internationalist and elitist governments, but the success of nationalist populist candidates in the U.S., Europe, and now South America (Bolsonaro in Brazil, and Duque who won this summer in Colombia) show the pendulum is starting to swing back.]
PIR3: How are state and federal agencies preparing for domestic conflict, emergencies, or other instability?
Major Trends
- Large scale efforts to increase election security
- Large scale efforts to increase national cyber security
DOE conducts cyber-attack exercise
As a part of the final theme of National Cybersecurity Awareness Month, the Department of Energy (DOE) focused on ways to strengthen the defense of US energy infrastructure against cyber attacks. According to the DOE, one way they are strengthening the sector is by “conducting exercises with our private sector partners to help strengthen energy sector cybersecurity preparedness.”
In October 2018, the new Office of Cybersecurity, Energy Security, and Emergency Response (CESER) conducted a new exercise called Liberty Eclipse 2018, which is broken up into two phases and exercises, which are intended to “demonstrate the interdependencies within our nation’s energy infrastructure” and “allow public and private sector partners to examine their respective roles and responsibilities in a controlled, secured environment.”
The first phase was a tabletop exercise that “focused on a national cyber incident impacting multiple electric power entities and oil and natural gas resources” and included participants from “federal agencies; energy trade associations; and investor-owned utilities, and municipalities.”
The second phase is a more technical exercise, which is scheduled to take place from 01-07 November, 2018 and will be conducted by the DOE and the Defense Advanced Research Projects Agency (DARPA). According to the DOE, Phase 2 will “test and evaluate DARPA research technologies that could enable black start recovery of the power grid during a cyber-attack.” [source]
Protecting critical infrastructure in remote locations with a digital wall
The Technical Director at software company Digital Barriers, Neil Hendry, wrote in an article recently published on IFSECGlobal that our critical national infrastructure are the “veins that pump power around the nation and need protection at all costs against theft and sabotage.” According to Hendry, ensuring the protection of critical infrastructure can be difficult in remote areas for security teams because “monitoring equipment will often only alert them to a breach during or after an attack.” In the article, Hendry writes that a “digital wall” would provide the “earliest possible intrusion detection” and “optimal situational awareness;” and would be “impossible for intruders to detect or circumnavigate.” Hendry claims that these digital walls serve as intrusion detection systems and are now commercially available after being developed in war zones in Afghanistan. The systems are described by Hendry in the article as the following:
“These intrusion detection systems feature autonomous and wireless ground sensor networks that detect seismic activity, such as vehicle or human activity, and automatically alert security personnel via a self-forming network … The sensors’ unique low profile design and minimal spoil (no digging-in required) makes them lightweight and quick to deploy with a long service life. They’ve also been specially designed to filter out false alarms … This network can then be supported by a series of video cameras that are awakened when a potential intrusion is detected, relaying a controllable, real-time HD video stream from the remote location to security operators … Developed for war zone deployment, this video capability can stream from anywhere, to anywhere, regardless of infrastructure.” [source]
U.S. Cyber Command targeted Russian operatives to deter election meddling
The New York Times stated in an article that U.S. Cyber Command has been “conducting operations against Russian operatives suspected of interfering in U.S. elections” and is attempting to deter the operatives from “spreading disinformation” by identifying and tracking them. According to the Council of Foreign Relations, “Direct messages were apparently sent to these individuals to erase doubt about who attacked them and why.” U.S. intelligence officials have “concluded that Russia is unlikely to try to hack into voting machines or directly manipulate voting results this year,” and that Russian efforts are:
“[B]ecoming more refined, targeting specific groups of Americans. Almost all of the Russian disinformation efforts, according to current and former officials, are aimed at sowing dissent, polarizing the political parties and setting the stage for the 2020 presidential election.” [source] [source]
PIR4: What are the new indicators of systems disruption and threats to the economic or financial industry?
Major Trends
- Trade war with China poses risk to U.S. farmers and manufacturers, emerging markets
- Unsustainable national debt to increase due to trillion dollar budget deficits in 2019+
- High potential for an economic recession around 2019-2020 that causes significant financial disruption
Bolton: National debt is a ‘threat to society’
In a speech this week, national security advisor John Bolton said that the national debt was a problem for U.S. sustainability. “It is a fact that when your national debt gets to the level that ours is, that it constitutes an existential threat to the society. And that kind of threat ultimately has a national security consequence for it,” Bolton said. The Office of Management and Budget is preparing government-wide budget cuts of five percent for fiscal year 2020, which resulted in “howls of outrage … from various parts of the government,” according to Bolton. Bolton also hinted that entitlement spending will be a pressing issue “[in a] few years,” and that budget cuts would be prudent right now. [source] (Analyst Comment: Several years ago, when Dan Coats was still a senator from Indiana, he was the chair of the Joint Economic Committee. He had similar warnings about U.S. national debt and how it was a national security threat. The problem is that the United States under the Trump administration now faces trillion dollar deficits for the next four years, and possibly longer than that. During the 2008 and 2009 recession, the federal government nearly had a fiscal reckoning. We’ll likely be in similar territory during the next recession, whether it’s in 2019, 2020, or 2021.)
Economic/Financial Roll-Up
The Wall Street Journal ran an article this morning entitled, “U.S. Economy Flashes Signs It’s All Downhill From Here”. The economy expanded by 4.2 percent in the second quarter of this year. Last quarter’s numbers came in at 3.5 percent, annually. While those are great numbers, a WSJ survey of economists found that expectations of future growth will decline further. The chief economist of Barclays Capital reportedly said that U.S. economic growth peaked this year. Analysts are concerned that the effects of the Trump Bump and tax cuts are fading, which leaves the U.S. economy without its primary growth drivers. As interest rates rise — if the Fed continues that policy — we could see a sustained slow down, which will ultimately lead to a recession. None of the economists surveyed expect an imminent recession, however. [source] [29 Oct]
Analysts at Discover and Capital One say they’re becoming more cautious about credit limits as expectations of slower growth and recession loom. “It really is about reducing risk. By traditional measures we’re pretty late into an economic cycle,” said Discover CEO Roger Hochschild. [source] [29 Oct]
Bloomberg reports this morning that the Trump administration will announce tariffs on all Chinese imports in December unless trade negotiations begin to progress in November. President Trump said he wants to strike a deal with the Chinese, but “it has to be a great deal as they have drained our country.” China’s Yuan has depreciated against the U.S. Dollar to its lowest level in a decade. [30 Oct]
The Treasury Department reports that the estimated $1.38 trillion necessary to fund the federal government will be the highest annual debt issuance since 2010. The Congressional Budget Office reported earlier this year that the federal government will run trillion-dollar budget deficits for each of the next four years, and possibly beyond. That’s very bad news considering that a recession is likely within a few years. [30 Oct]
Latest numbers from ADP’s private employment report show that job growth is still booming. Month over month payrolls show an added 207,000 jobs for October, beating the forecast of 187,000. The biggest gains were in (1) trade, transportation, and utility, (2) leisure and hospitality, and (3) professional and business sectors. [source] [01 Nov]
Morgan Stanley reports that 2018’s income tax refunds could be 26 percent higher by next spring due to withholding and the tax breaks. Could this extend Trump’s economic bump? [01 Nov]
Yesterday, President Trump tweeted that he had a positive conversation with Chinese president Xi Jinping regarding the future of trade. That may be, but yesterday indictments against a Chinese company and several other individuals were unsealed in California. A state-owned Chinese tech company is being accused of conspiring to steal microchip technology from U.S. firm Micron. [02 Nov]
I look back on all the gold and silver cheerleading that still goes on today, and note that the price of an ounce of silver this morning sits at $14.75. That’s about where it was in the latter half of 2009, for a grand total return on investment of zero percent. It’s actually a negative return once you factor in inflation. Yesterday, JP Morgan advised investors to avoid gold if they want to hedge against geopolitical instability. [02 Nov]
These economic/financial briefs appear each morning in the Early Warning intelligence report. You can sign up for this email on your My Account page.
// END REPORT
S.C.
