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Reducing Your Risk To A Grid-Down Event

Small steps today can make a huge difference tomorrow
Wednesday, July 16, 2014, 11:38 PM

Executive Summary

  • The most likely forms of cyber attack the national grid is vulnerable to
  • The evidence that shows malicious attacks on the US grid have been attempted multiple times
  • The low level of integrity in the current grid's defenses
  • A checklist of backup systems at the home level every concerned citizen should work to have in place

If you have not yet read Part 1: The Electrical Grid May Well Be The Next War's Battlefield available free to all readers, please click here to read it first.

Cyber Attacks, Hacking, and Malware

The other main threat we should concern ourselves with centers on the highly automated nature of the electricity grid combined with the human propensity for mischief. As with everything these days, computer-controlled devices are at the heart of the entire electrical generation and distribution system.

Again from the same Peak Prosperity member quoted earlier:

Combine this with the known vulnerabilities of the SCADA [Supervisory Control And Data Acquisition] systems controlling the power grid and you have the recipe for a real coordinated and manufactured disaster.

US researchers have identified 25 zero-day vulnerabilities in industrial control SCADA software from 20 suppliers that are used to control critical infrastructure systems. Attackers could exploit some of these vulnerabilities to gain control of electrical power and water systems, according to Wired.com.

Nine of these potential exploits have so far been reported to the suppliers concerned and the US Department of Homeland Security.

In theory, an intruder could exploit the vulnerabilities simply by breaching the wireless radio network over which the communication passes to the server.

Unlike the "heartbleed" zero-day bug that could be more or less addressed by software server patches, the SCADA systems are hardware boxes sitting out in the field. It's quite possible they are not upgradeable, or they were made by companies no longer in business, or whose programmers no longer support the system any more. "Uh, you want me to come up with a patch for THAT old system? Really? The guy who knew that code retired 10 years ago. I'm not even sure we have the source code anymore - or if it compiles - or if our build system can even compile for that CPU-type. And then we have to test it. We don't have any of those boxes to test it on anymore. And once tested, how exactly do we deploy this patch?"

If you've ever worked in a software organization, you'll know what I'm talking about.

No need to launch any supersonic missiles. If the US power grid is down, the US Navy won't be projecting power anywhere, since we'll be so busy trying to keep our people alive (and/or deploying what forces we have available into our own cities to prevent all those people who can't use their EBT cards anymore from tearing the place apart) to worry about what Russia is doing in their own backyard.

So - yes, asymmetric warfare. A coordinated cyber-assault supported with a kinetic attack on a select group of substations will...

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On Creating a World Worth Inheriting

Our current actions will define our future
Monday, July 14, 2014, 3:52 PM

We all know that the current paradigm is unsustainable over longer time frames. Here are a few of the ways in which we can express that concept more specifically: » Read more

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Off the Cuff: To The Moon And Back

They higher we go, the farther the fall
Thursday, July 10, 2014, 2:51 PM

In this week's Off the Cuff podcast, Chris and Mish discuss:

  • Highs And Lows
    • How high will the markets climb? And how fast/far will they fall?
  • The Magic Fed
    • The backstop of last resort. But what will happen when it fails?
  • It's Net Energy, Stupid
    • The measurements for our economic decisions are all wrong
  • Prostitutes & Drugs
    • The lengths we go to fool ourselves
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On The Fast Track to Crisis

Until we prioritize truth over comfort
Wednesday, July 9, 2014, 1:08 PM

Executive Summary

  • Understanding the broken narratives we are telling ourselves about:
    • Energy
    • The Economy
    • Our Education system
    • Financial markets
    • Western exceptionalism
  • And why we will continue to hurdle farther off course until we decide to look at our situation truthfully

If you have not yet read Part 1: Reality-Optional Economics available free to all readers, please click here to read it first.

It is in the interest of healthy adults to remain sane, even when the powerful matrix of society is going crazy around them. I don’t think you can overstate the capacity of societies to go crazy. We still marvel at the murderous cruelty of Germany and Russia in the mid-20th century, the sickening slide into industrial barbarism, and the technical proficiency they achieved in pursuit of their lunatic ends. And what provoked those terrible journeys into collective madness? Isn’t it part of the horror that no explanation seems to suffice. They were both losers in the First World War. Boo hoo. Many societies sober up when they lose a war. Both opted for organized mass murder instead. Joseph Stalin summed up Russia’s collective psyche in that period when he said, “One death is a tragedy; a million deaths is a statistic.” The regime that promoted that particular view of the human condition lasted seventy years and then dissipated like a mere bad dream, an extremely fortunate outcome for Russia, and not so easy to account for, either.

And so what of us in this new century, faced with the gravely serious problems of resource scarcity, ecocide, climate uncertainty, demographic stress, cultural breakdown, and financial bedlam? How do we... » Read more

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Las Vegas In Dusty Trouble

Humans, shortsightedness, and useless optimism
Monday, July 7, 2014, 10:16 PM

One thing that is certain to trip up the human race is its tendency to pursue short term goals and solutions without any weighty regard for the long-term consequences of those actions.

We routinely learn that unintended consequences are the norm, not the exception, and yet that rarely stops us from boldly interfering with complex processes. » Read more

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Off the Cuff: When??

How will we know when the market reversal has started?
Thursday, July 3, 2014, 11:13 AM

In this week's Off the Cuff podcast, Chris and Charles discuss:

  • Time To Short This Market?
    • Chris is very close to making that call
  • Replacing Energy With Debt
    • A short-term fiction that's quickly coming to an end
  • 2015: Bonanza or Bust?
    • Lots of voices on either side
  • The Impact If Oil Goes Higher
    • Get ready for Global Recession 2.0
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The Signals That Will Tell Us A Stock Market Reversal Is Imminent

The "Get out now!" warning signs
Tuesday, July 1, 2014, 10:38 AM

Executive Summary

  • Understanding the importance of the 'Smith Market Uncertainty Principle'
  • Technical analysis techniques for identifying the arrival of a market reversal
    • Bollinger bands
    • volatility
    • moving averages
  • Using the above indicators to know when to sell

If you have not yet read The Approaching Inevitable Market Reversal, available free to all readers, please click here to read it first.

In Part 1, we reviewed the case for the Fed-enforced New Normal of “no more downturns” and the case for a trend reversal in the stock market.

In this Part 2, we consider signs that a trend reversal has taken hold.

The Mechanics of Manipulation

Let’s briefly review the mechanics of stock market manipulation.  It’s easiest to manipulate a low-volatility, low-volume market, as low volatility (i.e. complacency) lowers the risk premium in index options, and a low-volume market is influenced by the purchase of relatively modest blocks of index options.  As a result, the Fed or its proxies can prop up the markets with large purchases of index options that cost very little in comparison to the overall size of the market.  (Recall each option leverages 100 shares of the index or stock.)

The other way to manipulate the market is to intervene at the critical technical levels that money managers and trading computers are watching.  Every well-known technical system has been programmed into the trading bots, the majority of which appear to be trend-followers: if the market reverses at key technical levels (due to massive blocks of index options buying, for example), then the bots start buying the uptrend.

Since the vast majority of trading is now done by machines, this greatly simplifies the process of manipulation:  the manipulator need only defend key technical levels with mass purchases of leveraged index options and the trading bots will jump in and buy the uptick.

Experienced traders have seen this sort of activity countless times in the past five years. It has become predictable that... » Read more

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The Banker's Bank Warns of Dangerous Bubbles

The Bank of International Settlements gets nervous
Monday, June 30, 2014, 6:31 PM

Recently the Bank of International Settlements (BIS) quite bluntly stated that central banks had, once again, gone too far and blown gigantic bubbles. Of course, they used less direct language -- but you don't need a secret central bank decoder ring to know what they're really saying.

We'll get to that very interesting bit of reporting shortly. First, let's look at what they're talking about. » Read more

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Off the Cuff: Anything Goes, But Nothing Matters

That's the sorry state of today's "markets"
Thursday, June 26, 2014, 1:04 PM

In this week's Off the Cuff podcast, Chris and James Howard Kunstler discuss:

  • Engineered Interference
    • Prices have no bearing on real market forces right now
  • Strange Bedfellows
    • Iraq's woes are creating all sorts of unnatural alliances
  • The End of Wishful Thinking?
    • We're losing hold of our happy delusions
  • The Resilient Living Learning Curve
    • Building skills often means failing a lot on the way
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Picking Up Speed

Important updates on GDP, Iraq, Ukraine & Oil
Wednesday, June 25, 2014, 4:55 PM

There's been so much happening across the world lately that it's time for a global update on a variety of subjects.

Yet, these developments stand in stark contrast to the US equity markets, where there's virtually nothing worthwhile to report on.  Our "markets" no longer resemble anything that might provide useful, actionable information. » Read more