National Intelligence Bulletin for 23 February 2018

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 National Intelligence subscribers.

In this National Intelligence Bulletin… (3,000 words)

  • InFocus: What kind of gun laws can we expect and will they make an impact?
  • CBP can’t detect fraudulent passport chips
  • 80 percent of security experts: ‘catastrophic’ data breach is inevitable within three years
  • CNN town hall on guns shows hated for gun owners
  • Banks roll over on NRA, gun companies
  • Conservatives increasingly call for social media to be regulated
  • DOJ charges and sentences two Islamic State-affiliated U.S. citizens
  • DOJ announces ‘cyber-digital task force’
  • DOI flew nearly 5,000 drone missions last year
  • New cloud-based tool improves firefighting coordination
  • Florida AG proposes threat reporting smart phone app
  • Financial considerations before the next recession
  • And more…

In Focus: This week, Vice President Mike Pence warned that Democrats are “motivated” to take back the House and Senate in November. Speaking at the Conservative Political Action Conference (CPAC), Pence said: “It would be a disaster for our cause if Nancy Pelosi became speaker of the House again… This movement should know it’s a very real threat. … They’re doing everything they can to try to win back the Congress next November.” [source]

Our chief concern, of course, is the potential for an “assault” weapons ban and other restrictions on gun ownership. But what are the chances? For now, it doesn’t look like President Trump is seriously considering it, however, he is supportive of banning bump stocks. That’s a bit of political give and take, and it also removes the issue from the Democrats’ campaign platform in November. But Trump does run the risk of alienating his base if he gives too much on guns. Case in point: the president wants to raise the minimum age for buying “military-style” rifles from 18 to 21, which would have prevented the Florida shooter from purchasing an AR-15 from the gun store, but he’s getting a lot of push back from veterans and other gun rights activists. According to available data, only 15 of the 91 mass shooters since 1982 have been below the age of 21. [source] The average age of a mass shooter in the U.S. is 34, so while the law may make an impact on school shootings, it’s unlikely to have an impact on mass shootings in general. And this law would do virtually nothing to stop a potential shooter who’s determined to carry out a mass shooting.

As for other Americans, a new Quinnipiac Poll finds that 66 percent of those polled favor stronger gun laws, the highest in the history of the poll. And 67 percent of Americans, according to those polled, favor a “nationwide ban on the sale of assault weapons”. The same poll says that Americans favor a Democrat-held House starting in 2019, 53 percent to 38 percent. [source] As Nancy Pelosi back as the Speaker of the House, we’re very likely to see a fast-moving attempt to enact another “assault” weapons ban.

I don’t put too much stock in this poll, and it also doesn’t provide its methodology. As is the case with many polls, Democrat voters are over represented because, as pollsters say, there are more Democrats in America. Concerns over its accuracy aside, the poll as a bellwether is not looking great.

Also of interest: an article entitled, “I used to think gun control was the answer. My research told me otherwise,” published at the Washington Post, points out why proposed gun control laws are unlikely to solve a lot of gun crime. Here are some takeaways from the article and the research:

  • Two-thirds of all gun deaths in the U.S. are suicides. Few gun laws would prevent these deaths.
  • There are around 8,000 gun murders each year; a small fraction of those deaths are mass shootings.
  • The second-leading cause of gun deaths (about 20%) are homicides of men aged 15 to 34; most of which are due to gang violence. (Most violent crimes are attributable to a very small percentage of the population of the U.S.)
  • There is no evidence that Great Britain’s gun ban and buyback programs saved any lives. In fact, the number of crimes involving guns continued to rise after the gun ban.
  • Researchers found that those who committed homicide and suicide in Australia, following the country’s gun ban, simply substituted guns for other weapons.
  • Despite what appears in the U.S. headlines, there is no clear evidence from Australia or Great Britain that gun bans actually prevented or reduced mass shootings. [source]

I don’t expect any significant gun legislation before 2019, and it’s possible that no significant gun legislation (i.e., the “assault” weapons ban) will occur under the Trump administration. The president has expressed support for a number of actions — raising the age limit to purchase rifles, fixing the National Instant Criminal Background Check system, and banning bump stocks — and we could absolutely see some fast movement on these. Despite a very strong mainstream media narrative, which more resembles propaganda than news, it’s very unlikely that we’ll see the renewal of the “assault” weapons ban any time soon. – MS

Priority Intelligence Requirements

PIR1: What are new the indicators of systems disruption and threats to critical infrastructure?
PIR2: What are the new 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 indicators of systems disruption and threats to the economic or financial industry?

PIR1: What are new the indicators of systems disruption and threats to critical infrastructure?

CBP can’t detect fraudulent passport chips

According to two U.S. Senators, Customs and Border Patrol aren’t able to test the radio-frequency identification (RFID) chips in passports for authenticity. The chips contain digital signatures that could potentially be manipulated to circumvent security measures. [source]

80 percent of security experts: ‘catastrophic’ data breach is inevitable within three years

As if we needed more confirmation that catastrophic cyber attacks were possible, researchers at Raytheon report that 80 percent of cybersecurity and IT experts believe that the internet of things (IOT) will lead to a potentially ‘catastrophic’ data breach by 2021. And 60 percent of them believe an increase in nation-state cyber attacks will increase, potentially leading to an all-out cyber war. [source] (Analyst Comment: After following these types of reports for years, the consensus is that a ‘cyber 9/11’ is inevitable. Last year I sat through a briefing at Black Hat, a hacker/information security conference, in Las Vegas. The CEO of a cybersecurity firm spoke for nearly an hour on how hackers could penetrate U.S. critical infrastructure. Similarly, in a Forward Observer Radio interview, Adrian Sanabria, Director of Research at Threatcare, is also pessimistic about the state of U.S. cybersecurity.)

PIR2: What are the new indicators of potentially disruptive social, cultural or political conditions or events?

CNN town hall on guns shows hated for gun owners

Speaking on a platform surrounded by thousands of attendees, CNN moderators held discussions between shooting survivors, family members of those killed at the Florida shooting, Florida politicians, and defendants of gun rights during Wednesday night’s CNN town hall meeting. As audience members screamed and jeered at Senator Marco Rubio (R-FL) and NRA spokeswoman Dana Loesch, the feeling of hatred was palpable. Audience members accused both of being murderers, and for what? Mere support of gun rights? The audacity to confirm that the civil rights of Americans include the right to bear arms?  This is an issue that’s again fast sweeping the nation, and it’s energizing and motivating the Left who believe they finally have another opportunity to chisel away a significant portion of America’s gun culture.

My particular concern is what happens when their anger doesn’t result in the gun reforms they want. Significant gun laws are unlikely to be enacted this year, and unless the laws that do pass the Congress can alleviate the anger, it’s going to carry over to future elections. The Democrats will almost certainly run heavily on a platform of gun reform. And they’ll work hard to bring an assault weapons ban to Congress, but it’s unlikely to pass — it may not even come up for a vote. Inaction on gun reform is going to make Democrats rabid if they take back the House and/or the Senate in 2019, and we should be prepared for more political dysfunction and instability. The mid-term elections are little more than eight months away, and the new Congress is less than ten months away.

One more concerning point: Senator Rubio plainly stated that he doesn’t believe that 18-year old Americans should be able to purchase a rifle and, he included, “I will support a law that takes that right away”. The audience cheered. In other words, the audience here — which was not likely full of moderate and independent voters — believes that government can take away the right of gun ownership by passing laws. And eventually, the Democrats are going to have the opportunity to take away the rights of American citizens, and that’s why I’m overall pessimistic about future peace in this country. [source]

Banks roll over on NRA, gun companies

As we’ve seen in previous years, parts of the financial sector are starting to get involved in limiting gun sales. Previously, numerous banks cut ties and cancelled accounts with gun stores and gun manufacturers. Now, after the hashtag #BoycottNRA became popular on Twitter, numerous companies began ending their support for the NRA overnight. The First National Bank of Omaha, which has carried the “Official Credit Card of the NRA”, stated that they’d stop doing business with the NRA. Enterprise Rent-A-Car (along with Alamo and National), cybersecurity giant Symantec, and home security monitoring company SimpliSafe also signaled that they’d stop giving discounts to NRA members.

The CEO of financial firm BlackRock, which manages $7.5 trillion in assets, said that he plans on speaking with gun companies to “understand” their perspectives. The CEO also said that he’d heard complaints from BlackRock clients who expressed their displeasure that the the firm owns, albeit indirectly, stock in gun manufacturing companies through exchange traded funds. BlackRock plans to work with clients who want to exclude stocks of gun companies from their portfolio. [source]

Conservatives increasingly call for social media to be regulated

After another round of purges on Twitter and Facebook, an increasing number of conservatives are calling for social media platforms to be regulated like utilities. Twitter, of course, is infamous for de-verifying right wing activists (removing their blue check mark), shadow banning conservative and far right accounts, and banning outright the accounts which it accuses of violating the terms of service. In the most recent round of account deletions, Twitter targeted what it called bot accounts but it apparently also deleted accounts which were not run by bots. Many conservative figures reported that their number of followers declined significantly, and some complained that their accounts were unfairly suspended. A Twitter spokeswoman said that those accounts can be turned back on if users provide a phone number to prove its operated by a human being.

Jared Taylor, who runs the ethno-nationalist website American Renaissance, filed a lawsuit against Twitter after his account was permanently banned last year because it was affiliated with an organization that promotes violence. Taylor denies the claim and accuses Twitter of violating his free speech, specifically protected under the state laws of California. There are several other cases either planned or ongoing against, filed on behalf of mostly conservative or right-wing voices. [source]

DOJ charges and sentences two Islamic State-affiliated U.S. citizens

This week, a New York man, 24, plead guilty to attempting to provide material support to the Islamic State and “committing passport fraud in order to facilitate an act of international terrorism”. The man, Sajmir Alimehmeti, aka Abdul Qawii, is awaiting sentencing. [source] And a former police officer from Virginia, 38-year old Nicholas Young, was sentenced to 15 years in prison, also for attempting to provide material support to the Islamic State. [source]

PIR3: How are state and federal agencies preparing for domestic conflict, emergencies, or other instability?

DOJ announces ‘cyber-digital task force’

Attorney General Jeff Sessions announced a department-wide task force to study how criminals could use the internet interfere in elections or disrupt critical infrastructure. On a memo published this week, Sessions writes: “These threats include: efforts to interfere with, or disable, our critical infrastructure; efforts to interfere with our elections; use of the internet to spread violent ideologies and to recruit followers; theft of corporate, governmental and private information on a mass scale; use of technology to avoid of frustrate law enforcement, or to mask criminal activity; and the mass exploitation of computers, along with the weaponizing of everyday consumer devices.” [source]

DOI flew nearly 5,000 drone missions last year

The Department of the Interior increasingly relies on drones to collect information, especially about wildfires. Its drone pilots flew nearly 5,000 missions last year to carry out its tasks, which include tracking wildlife, inspecting critical infrastructure, and fighting wildfires. Most of these flights occurred under the Bureau of Land Management, and most did not involve fighting wildfires. (Analyst Comment: The linked source document has a breakdown of states and regions where drone flights are most prevalent. Oregon surprisingly tops the list; page 7) [source (PDF)]

New cloud-based tool improves firefighting coordination

After complaints that fire fighters could have responded more quickly and effectively to fires if they’d had more information about local resources, the International Association of Fire Chiefs (IAFC) deployed the cloud-based National Mutual Aid System (NMAS), which combines maps and data with the ArcGIS platform. In addition, it makes available for users the data published by FEMA, Homeland Security, and the U.S. Forest Service. The new system is expected to enable both local and out-of-area fire commanders to understand the operating environment more quickly and provide a more robust response to massive wildfires. [source] (Analyst Comment: This database will probably yield very good information for emergency preparedness and community security, as well. Here are some resources that may provide valuable information:

Florida AG proposes threat reporting smart phone app

Florida Attorney General Pam Bondi told the president on Thursday that she’s developing a smart phone application that will allow students to report suspicious activity and potentially dangerous classmates. Bondi also pledge to rewrite a law that would allow law enforcement to “temporarily” seize firearms from those suspected of being mentally ill. [source]

PIR4: What are the new indicators of systems disruption and threats to the economic or financial industry?

Financial considerations before the next recession

An International Monetary Fund working paper published last month focuses on the risk of financial crashes caused by financial deregulation. The paper examines “ten of the most infamous financial booms and busts since the 18th century,” and purports to show a consistent correlation between deregulation and eventual crashes. The author states that banks and financial firms take larger risks without oversight, and that the South Sea Bubble, the British financial crisis of 1825, the Great Depression, the Japanese and Korean financial crises of the 1990s, the Swedish Banking Crisis, the Dot-Com Bubble, the Irish Financial Crisis of 2008, the Great Recession, and Spain’s Housing Boom and Bust were all promulgated by loose regulations, spurring undue risk that lead to bubbles and crashes. We need to look no further for proof that banks take undue risks, than the Great Recession of 2008, where the financial sector CEOs felt confident that their firms would be bailed out by the federal government in case of a collapse. The author shows that the phenomena is consistently cyclical: accelerating deregulation that causes a boom leads to a bust in roughly five years, in nine out of the 10 examples. If we want to consider this as one potential indicator, then our next bust could follow sometime before 2022.  [source (PDF)]

If we can agree that lack of oversight encourages undue financial risk, then we have to stop and consider the potential effects of the Financial CHOICE Act, introduced by the Republican House in 2017. This Act removes the high capital requirements imposed on financial institutions to ensure that these institutions have enough capital to afford potential losses. And new Federal Reserve Chairman Jerome Powell supports removing these requirements, which in theory could allow financial firms to take large bets that it can’t afford to lose. This is exactly what happened during the financial crisis of 2008; several financial firms no longer exist as a result and well-connected firms had to be bailed out by taxpayers.

According to U.S. banking data, U.S. financial firms appear to be healthier than they were in 2008. The Tier 1 Leverage Ratio is a measurement of how much capital a financial institution has, as compared to how much it has in assets, like loans. For instance, a ratio of 1 would mean that a financial institution has one dollar in capital for every $100 in loans. At the worst of the 2008 financial crisis, U.S. financial institutions had a ratio of 7.45; or, on average, $7.45 on-hand for every $100 it had loaned out. Today that number is slightly better. The top four financial institutions have a ratio of 8.96, and the national average is 9.62 — or $9.62 for every $100 loaned out. [source]

The risk here is that banks could become again over leveraged. A recession could easily cause another round of debt defaults, which is going to leave banks on the hook for losses. With enough losses, banks could go under or require bail outs. (Analyst Comment: This is not a statement of support for any specific policy, it’s merely a warning that — if lack of oversight on financial institutions does historically lead to booms and busts, then withdrawing the capital requirement could lead financial firms to take undue risks, which could cause financial instability. The Financial CHOICE Act has failed to pass the Senate, although it appears that there may be enough support to pass a modified version of it.)

What may be more concerning is the federal debt. During the start of the financial crisis of 2008, the federal debt to Gross Domestic Product (GDP) ratio was 62. As of Q3 2017, the ratio is nearly 104 — a 67 percent increase in the past 10 years that ultimately means that there’s now more federal debt than annual GDP. That’s practically nothing new, but it’s a big deal especially considering that unfunded liabilities aren’t included. [source] Privately-held debt — include home debt and non-housing debt — has been growing consistently for five years. [source] There’s now more public and private debt in 2018 than during the 2008 financial crisis, and presumably more in 2019, 2020, and on until the next recession.

(Analyst Comment: I’m not losing sleep over this largely because it’s nothing new. But there’s enough smoke here to indicate that the fire could be really bad, as I believe the next recession will be. As of yesterday, we’re nowhere close to hitting the 11-week or the 20-week recession indicators, meaning that recession is unlikely within the next 20 weeks. Pending a black swan event, a recession is not on the horizon.)

Samuel Culper is a former military intelligence NCO and contract Intelligence analyst. He spent three years in Iraq and Afghanistan and is now the intelligence and warfare researcher at Forward Observer.

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