National Intelligence Bulletin for 30 March 2018 – Forward Observer Shop

National Intelligence Bulletin for 30 March 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… (3,078 words)

  • InFocus: Are we getting closer to a domestic conflict?
  • U.S. power grid vulnerable to unprecedented waves of attack
  • FBI investigating fiery crash, death at front gate of Travis Air Force Base
  • Baltimore 911 dispatch system hacked
  • Trump Census carries significant political risks
  • Long-term: 42 percent of Americans have basically nothing saved for retirement
  • North Carolina sheriff candidate says he’d kill citizens over banned guns
  • Economic risk of trade tariffs
  • Have fears of a trade war subsided?
  • Low volatility may be early warning indicator of financial crisis
  • And more…

In Focus: Are we getting closer to a domestic conflict? From time to time, like this morning, I see friends on social media post something that goes like this: “The more time I spend on the internet, the more I’m convinced we’re about to have a race war or a civil war. But when I go outside and talk to people, I find that Americans are more agreeable than we think.” There’s some truth to that, because social media is likely causing much of the polarization in America.

I’m reminded of a great quote from Oscar Wilde: “Man is least himself when he talks in his own person. Give him a mask, and he will tell you the truth.” Social media is a mask for our true feelings. We’re most honest when wearing a mask because there’s little or no fear of repercussion. We can type out exactly how we feel and largely hide our identities online, if we so choose (many do). Chances are very small that you’ll encounter negative consequences for your online speech, although it does happen infrequently. All social media does is allow us an outlet to share things we wouldn’t share with strangers face to face. Additionally, the weak associations of like-minded people on social media (the people we don’t know in real life) who think and say similar things give us the appearance that our speech is more acceptable and mainstream than it may be outside of social media. Therefore, radical speech and opinions are reinforced, and what happens is we tend to form online tribes. Chances are very good that you can tell who’s going to like a political Facebook post before you post it, and who’s going to try to argue with you. The battle lines are already being drawn online, and we can draw more lines faster because social media is so efficient. And given that the use of social media is so ubiquitous in American culture, nearly everyone is in some way affected. As we know from dozens of case studies on radicalization, what happens in the digital space tends to have a radicalizing effect in the physical space.

So while I appreciate the sentiment that if we just go and talk with our neighbors about the weather, or Opening Day of Major League Baseball, or a handful of other innocuous topics, America is still just as split on key issues like politics, gun ownership, and Trump in real life as we are online. And fundamentally, politics is about control. We don’t want to be controlled by people with whom we don’t agree, and because government has grown so large, virtually every action effects some level of control. This is exploited on social media especially, it builds resentment that spills over into the physical world, and we can see that all over American society, even if only viewed through a computer screen. Most often, it happens in the form of losing friends. Occasionally, it causes arguments and fist fights. But no matter how it manifests, the resentment is being built up to be let out at some point in the future. For most Americans, social media and the news media is a constant reminder that you have enemies.

So, the answer to the question is, yes, I do believe we’re headed towards a domestic conflict. We already have one, albeit a low grade conflict, but technological and economic conditions will greatly speed up what social media is already doing. The growth of left wing populism in the form of anti-capitalist and social justice movements, and right wing populism in the form America First policies and anti-globalization, is likely to speed up. How do we know? Because artificial intelligence, machine learning, and robotics are going to put millions of Americans out of work, even after the new jobs those technologies create. The next recession, probably less than three years away now, is going to put people out of work. What will largely drive this next round of boiling resentment? Incendiary rhetoric on social media.

Can we find areas with which we agree with our neighbors? Certainly. But while you’re talking about spring weather, try bringing up politics with one of the growing millions of our neighbors who are radicalized on the opposite end of the spectrum. Defend the NRA. Say Trump is doing good things as president. Tell them we need closed borders and strict immigration. Tell them that capitalism has effected more positive change for the world than any other ideology. Tell them the way to heal societal ills and historical scars is for Americans to get back in church. You’re going to sound just as extreme to them as they sound to you.

Politics has always been contentious. Politics has always been dirty, and politics has always created fights. But America has rarely been this polarized, social media is driving that polarization faster than before, and what’s missing is a spark or a series of events that justifies violence against proponents of opposing ideologies. A large scale domestic conflict isn’t imminent, it may not be inevitable, but there’s one in the making.

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?

U.S. power grid vulnerable to unprecedented waves of attack

We’ve discussed this issue before, but it appears as though the U.S. power grid faces dangers from more than just cyber threats. A new, little-circulated report outside of related infrastructure circles warns that the power grid is increasingly vulnerable to what federal officials say are unprecedented attacks that threaten to cripple the country. The new investigative report by the North American Electric Reliability Corporation, or NERC, also warned that the energy industry is lagging behind with plans to improve the physical security of many critical sites. As attacks rise across the country against key power stations, NERC has had difficulty convincing the power industry to adopt several security improvements that are designed to thwart would-be attackers and terrorists before they can cripple the national electric infrastructure.Since 2014, “security risks to the power grid have become an even greater concern in the electric utility industry,” according to a new Congressional Research Service report which also warns that the power industry “has not necessarily reached the level of physical security needed based on the sector’s own assessments of risk.” The report notes that some improvements have been made in physical security to sites over the past three years, but much more needs to be done. “There is widespread belief that bulk power critical assets are vulnerable to physical attack, that such an attack potentially could have catastrophic consequences, and that the risks of such attacks are growing,” according to the report. “But the exact nature of such potential attacks and the capability of perpetrators to successfully execute them are uncertain.” [source]

FBI investigating fiery crash, death at front gate of Travis Air Force Base

FBI agents are investigating a crash at the front gate of California’s Travis Air Force Base that resulted in the death of the driver. In a press release, the Air Force said the driver of a minivan “gained unauthorized access” to the base via the main gate shortly before 7 p.m. last Wednesday. The crash occurred a short time later after the minivan became engulfed in flames. The driver, Hafiz Kazi, a 51-year-old Indian man who has had permanent legal resident status in the United States since 1993, was pronounced dead at the scene. The FBI has said it hasn’t found any links to any terrorist groups, but the vehicle was filled with propane tanks and gasoline cans, plus three cell phones and a handful of lighters. [Source]

Baltimore 911 dispatch system hacked

Baltimore Mayor Catherine Pugh confirmed that the Baltimore 911 dispatch system was hacked on Sunday by an unknown actor, and that an investigation is currently underway. According to top Baltimore officials the hack affected the messaging functions within the computer-aided dispatch (CAD) system. Frank Johnson, the chief information officer in the Mayor’s Office of Information Technology, said in a statement that the 911 and 311 systems were transitioned to a manual mode that relays details about incoming callers manually via the call center support staff, instead of automatic electronic messages. The attack was countered by city personnel who were able to isolate and take the affected server offline, which led to the CAD system being fully restored by 2 a.m. Monday morning.

Brian Fontes, the CEO of the National Emergency Numbers Association, said in a statement that if bad actors want to do real harm that one of the main things that they would want to do is to bring down the 911 center. Fontes also stated that 911 centers around the country are beginning to become aware of their systems’ vulnerabilities to cyberattacks due to their recent transition to internet-based systems. According to Fontes, in response to this threat, many dispatch centers are updating their dispatch systems to “next generation” technologies that allow them to operate via back-up systems, thus preventing the hacks from affecting the emergency dispatch systems. [Source]

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

Trump Census carries significant political risks

Last week, the Trump campaign sent out an email asking recipients whether or not they supported asking about citizenship on the 2020 Census. Then this week, officials announced that the 2020 Census would have a question about citizenship, which alarmed and angered Democrats. For their part, Democrats say asking that question may cause fear in households filling out the Census, if those households have illegal immigrants. Democrats say that respondents are less likely to fill out the Census form, which will corrupt the integrity of census data and cause all sorts of federal funding havoc. But the greatest reason they’re concerned is that they might actually lose political power.

Federal law requires every individual living in the United States to be counted in the Census, including citizens, permanent residents, and illegal immigrants. From 1820 to 1950, citizenship was a standard question on the Census, and it allowed Congressional districts to be apportioned according to the number of American citizens living in each district. If the Census finds that there are fewer citizens living in a district than in the 2010 Census, which did not ask about citizenship, then the district will likely be redrawn because non-citizens shouldn’t be included in representation. And that’s going to greatly reduce the Democrats’ power in the House and in the Electoral College, and also negatively affect each district’s federal funding.

Some 13 states have said they’d file a lawsuit against the federal government. Several Democratic senators wrote a letter to the chairman of the Senate Homeland Security and Government Affairs Committee, asking the committee to hold a hearing. “Together, these problems risk a substantial undercount of persons in the 2020 Census with wide ranging implications for proportional representation in Congress, state government share of federal dollars, the accuracy of information businesses use to decide where to locate, the availability of affordable broadband service, and natural disaster funding,” the letter reads.

This is likely to become an issue settled in the court system, and given the number of states filing suit, there stands a good chance that a judge will issue an injunction until the matter can be deliberated. Consider this: if the question is allowed and it results in the loss of Demcratic power, then the GOP will have a significant advantage for roughly ten years.

Long-term: 42 percent of Americans have basically nothing saved for retirement

One long-term trend I’m just following up on is that fewer Americans are saving for retirement, aside from mandatory social security. According to recent survey data, 42 percent of Americans have less than $10,000 saved for retirement, and the number one reason (reported by some 40 percent of respondents) is because they didn’t make enough money to save for retirement. Another 25 percent said they were already struggling to pay bills as it was. [source] (Analyst Comment: This looks like a socioeconomic avalanche. The generation of the student debt crisis — the students who took out the equivalent of a small home loan to finance a college education that hasn’t been the return on investment for which they’d hoped — is also going to be the generation of the retirement crisis. This is one of the reasons why I have a bleak outlook for America: there are underlying social and financial conditions that will likely lead to a massive increase in support for left wing populism. In short, a much more socialist America is perhaps one generation away.)

North Carolina sheriff candidate says he’d kill citizens over banned guns

A Democratic candidate for sheriff in North Carolina was caught on video telling supporters that he would use lethal force against citizens who refused to turn over banned firearms. The candidate, R. Daryl Fisher referenced a popular pro-gun slogan in making his threat. “Any weapon that is designed for use by the military I think we should ban. You’ve heard people say you have to pry my gun from my cold dead hands. (shrugs) OK,” he said. Fisher made his comments in the context of favoring a complete ban on so-called “assault weapons,” which he likened to weapons of war. He also is running on a platform of banning high-capacity magazines and all high-powered semi-automatic guns. [source] (Analyst Comment: His campaign has since reported that he was only making a joke. Joke or not, this is polarizing behavior, it’s unhelpful in public discourse, and it certainly should raise an alarm with county citizens.)

Economic risk of trade tariffs

As is covered under PIR4, we’ve staved off a global trade war, at least for now and maybe for the foreseeable future. Still, industry leaders are warning that the tariffs could have negative economic consequences. The American Enterprise Institute published these two maps below, showing where steel- and aluminum-producers and steel- and aluminum-using industries are located. The AEI uses data from the New York Times to argue that because there are 38 workers in industries who use steel and aluminum for every worker directly producing steel and aluminum, that the tariffs could actually backfire. If workers lose jobs due to climbing steel and aluminum prices, here’s where Americans will feel it the most. [source]


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

Training and planning for November’s mid-terms continue to dominate news for this PIR. Table top exercises and other trainings are happening at Harvard University as a part of the “Defending Digital Democracy” (D3P) initiative. Despite all the news about funding and training for election security, not everyone is convinced. Each week we see a number of elections officials who express doubt over whether or not vulnerabilities have been adequately addressed.

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

Have fears of a trade war subsided?

Over the past couple of months, we’ve both seen and heard economists and titans of industry warn that Trump’s stance on trade tariffs were going to spark a trade war. Last week, we covered that Trump used tariffs on steel and aluminum as a negotiating tactic, and then ended up peeling back tariffs on U.S. allies for more favorable trade deals, such as with South Korea. And speaking of South Korea, don’t forget that after Trump introduced tariffs on solar panels, a South Korea manufacturer decided it was cheaper to open up a U.S. factory than to pay the added tariffs. As of this week, China’s response to Trump’s additional tariffs has been very muted. There is no trade war. I’ve read varying reports about why China opted for a muted response; the most plausible being that China decided to take a more “strategic” approach and avoid escalating trade issues for now.

Still, trade is big business and we’re talking about billions of dollars worth of tariffs. In last week’s InFocus, I wrote a bit about the history of trade relations with China and why the Obama administration, even in the face of outright economic war against the United States, did nothing to stop Chinese “economic aggression”, as President Trump calls it. Be sure to read that section if you haven’t already. The point I want to make this week is that President Trump is now being more deliberate in targeting China, even going so far as to replace cabinet positions with economic and national security warhawks like Pompeo and Bolton. That’s a serious shift, and it’s perhaps why China hasn’t responded with escalation. (On the other hand, Trump may be a former president within three years, replaced with someone who pursues a soft approach against China. It’s probably worth it for China to pursue a ‘wait and see’ approach.) President Trump is sending a strong message to China (and also to Russia, this week reportedly telling Putin that if he wanted an arms race, then the United States would win), opening up a new chapter in U.S.-Chinese relations. If you want to follow the logical conclusions of the Thucydides Trap, which says that 70 percent of the time a revisionist power seeks to disrupt a status quo power, it ends in war, then we’re getting closer to a military confrontation with China, which will have very profound and negative economic and financial consequences.

Low volatility may be early warning indicator of financial crisis

Some economists in Europe recently published a white paper that rethinks indicators of financial crises. They arrived at a conclusion: low volatility actually creates a higher risk for a financial crisis. When there’s low volatility, investors have to take a greater risk to get a higher rate of return, which increases the risk of loan defaults; and if loan defaults occur, they could cause a banking crisis. In 2014, former Fed Chair Janet Yellen said, “Volatility in markets is at low levels…to the extent that low levels of volatility may induce risk-taking behavior…is a concern to me and to the Committee.” Turbulent times tend to increase market volatility, so it doesn’t appear that there’s any immediate risk right now that low volatility could be creating a financial crisis. [source]

Mike Shelby 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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