Recruiters said falling short often generates a barrage of angry correspondence, formal reprimands, threats or even demotion.

"The recruiter is stuck in the situation where you're not going to make mission, it just won't happen," the New York recruiter said. "And you're getting chewed out every day for it. It's horrible." He said the assignment was more strenuous than the time he was shot at while deployed in Africa.

At least 37 members of the Army Recruiting Command, which oversees enlistment, have gone AWOL since October 2002, Army figures show. And, in what recruiters consider another sign of stress, the number of improprieties committed - signing up unqualified people to meet quotas or giving bonuses or other enlistment benefits to recruits not eligible for them - has increased, Army documents show.

"They don't necessarily have real bullets flying at them," said Major Nagler. "But there are different kind of bullets they need to contend with - the bullets of not producing numbers, of having a station commander shoot them down."
posted by Kevin at 10:52 PM

Don't mess with... uh:

Sec. 601.507. SPECIAL INSPECTION CERTIFICATES.

(a) Commencing not later than January 1, 2006, the department shall issue or contract for the issuance of special inspection certificates to be affixed to motor vehicles that are inspected and found to be in proper and safe condition under Chapter 548.

(b) An inspection certificate under this section must contain a tamper-resistant transponder, and at a minimum, be capable of storing:
(1) the transponder's unique identification number; and
(2) the make, model, and vehicle identification number of the vehicle to which the certificate is affixed.

(c) In addition, the transponder must be compatible with:
(1) the automated vehicle registration and certificate of title system established by the Texas Department of Transportation; and
(2) interoperability standards established by the Texas Department of Transportation and other entities for use of the system of toll roads and toll facilities in this state.

Related: Slashdotted

Related: Google Cache of Texas H.B. No. 2893
posted by Kevin at 5:10 PM

The word ECHELON isn't mentioned once in this article:

Somewhere in a vast jumble of documents in a Baghdad warehouse or in the constant buzz of electronic signals in the sky, a few ominous words or phrases may be hidden: "Explosives." "Nerve gas." "Convoy." "Airport arrival." "The president."

The words, however, are in Arabic, Farsi, Pashto or some other language that few Americans understand. The messages urgently need to be translated, but there aren't enough expert linguists to handle the flood.

The time for robot translators has arrived, according to a panel of language specialists at a meeting of the American Association for the Advancement of Science in Washington last month.

Related: Generate your own, "ominous words or phrases" automatically with the handy ECHELON bullsh*t generator.
posted by Kevin at 2:34 PM

Oh sure, why not?

A new report by the Government Accountability Office warned yesterday that the costs of the Pentagon's arsenal could soar by hundreds of billions of dollars over the next decade.

The Pentagon has said it is building more than 70 major weapons systems at a cost of at least $1.3 trillion. But the Pentagon generally understates the time and money spent on weapons programs by 20 to 50 percent, the new report said.

Related: Dollar Headed for Collapse: Mahathir

Related: It Can't Go Down: General Motors' Pause on Way to Junk Is Troubling

Research Credit: JS
posted by Kevin at 2:00 PM

Conspiracy? What conspiracy? Who said anything about a conspiracy? This is just a little mom-and-pop operation. Everything above board:

For the moment at least, Washington-based Carlyle Group -- whose extensive political connections have made it a bête noir for conspiracy theorists -- has emerged as the hottest player in fiercely competitive private equity world.

This week, Carlyle Group announced it had raised $10-billion (U.S.) from institutional investors eager to profit from its consistent rates of return in the hotly contested North American and European buyout markets.

The investment fundraising is a new record in an industry where clout and prestige aren't measured by the political pedigree of your associates, but by the size of your capital base and the rates of return you can provide.

For years, Carlyle employed former politicians -- including former U.S. president George H.W. Bush; former secretary of state James Baker; and former British prime minister John Major -- to woo investors and advise on investment prospects.

Until this year, that roster included former New Brunswick premier Frank McKenna, who has since been appointed Canadian Ambassador to the United States.

Headquartered on Pennsylvania Ave., midway between the White House and Capitol Hill, it thrived in the early days under the chairmanship of former defence secretary Frank Carlucci by investing in defence and aerospace companies that had major contracts with the Pentagon.

Carlyle now employs more than 300 investment professionals in 14 countries. It has made 377 investments worth more than $13-billion (U.S.), and has broadened its focus to include telecommunications, health care, energy, real estate and retail.

In the past, Carlyle has been portrayed in the American press -- from right-wing Barron's to the left-of-centre Nation -- as a powerful cabal of ex-politicians and former government employees. Britain's Guardian newspaper once called it the "club of ex-Presidents."In an interview this week, Carlyle co-founder David Rubenstein -- who was an adviser in former president Jimmy Carter's White House -- sought to minimize the contribution of the firms' heavyweights from the public sector.

"We have gotten attention because we have brought in some former government officials, but they really were speakers at fundraising lunches and dinners. They were not doing deals, they were not calling government people," he said.

"Nobody would give us money automatically because we had Jim Baker speaking, but it was not harmful. It was certainly helpful in giving us visibility, but our track record now is long enough and good enough to stand on its own."

Mr. Carlucci, who was replaced as chairman in 2003 by former IBM chairman Louis Gerstner, concluded his term as chairman-emeritus this week. Mr. Bush ended his ties to the company in October, 2003; Mr. Baker retires as senior counsellor this spring, and Mr. McKenna ended his affiliation when Carlyle's Canadian advisory committee -- which included luminaries such as former Alberta premier Peter Lougheed and Power Corp. chairman Paul Desmarais -- was disbanded last year.Critics have latched on to the fact that Carlyle once accepted investments from members of the extended the family of Osama bin Laden, even though the terrorist leader has been estranged from his relatives for years. In fact, members of the bin Laden family were attending a Carlyle function in Washington on the day of the Sept. 11, 2001, terrorist attacks.

While the funds still attract some high-net-worth investors, its typical client these days is Canada's CPP Investment Board, which has authorized $60-million (U.S.) for a Carlyle venture fund, $30-million of which has been drawn down. The California Public Employees Retirement System (Calpers) is one of the largest Carlyle investors.

With the additional capital from this week's fundraising, Carlyle will have about $25-billion in assets under management, putting it in a league with the largest private equity outfits such as Blackstone Group, Kohlbert Kravis Roberts & Co., and Texas Pacific Group.

Mr. Rubenstein said Carlyle was so successful in raising capital because it has established an enviable track record in the private equity world. It boasts a 29-per-cent annual gross internal rate of return on its family of funds and every buyout fund it has managed has had a rate of return in the top 25 per cent of the industry.

However, Mr. Rubenstein said investors are going to have to lower their sights somewhat as they anticipate returns from the next round of buyouts.

He said Carlyle is telling investors to expect a rate of return in the low 20-per-cent range, as the flood of capital in the market has bid up asset prices and made it more difficult to find attractive deals.

In fact, Carlyle had intended to join with a consortium of private equity firms that this week announced a deal to buy SunGard Data Systems Inc. for $11-billion, but backed out at the last minute because the price became too high.

Pantheon of stars

Frank Carlucci: Secretary of Defence under former U.S. president Ronald Reagan: Carlyle chairman emeritus from January, 2003, to March 31, 2005. Carlyle managing director from 1993 to 2003.

Louis Gerstner: Chairman of IBM from 1993 to 2002: Carlyle chairman from January, 2003, to present.

James A. Baker III: Secretary of state under former U.S. president George H.W. Bush; Treasury secretary under former U.S. president Ronald Reagan. Carlyle senior counsellor from 1993, scheduled to retired in April, 2005.

Thomas (Mack) McLarty: Former U.S. president Bill Clinton's chief of staff: Carlyle senior adviser of Mexico.

Some other Carlyle advisers: Former president George H.W. Bush, senior adviser, retired in October, 2003; former British prime minister John Major, chairman of Carlyle Europe until May, 2004, now special adviser; Former Philippines president Fidel Ramos, special adviser, retired in February, 2004; Canadian Ambassador to the United States and former New Brunswick premier Frank McKenna, special adviser, retired in 2004.
posted by Kevin at 1:44 PM

JS has contributed several times. Thanks JS!
posted by Kevin at 6:55 PM

The US dollar is facing an imminent collapse and the global economy will suffer a "catastrophe" when it is rejected as the currency for trade, former Malaysian prime minister Mahathir Mohamad said in remarks published yesterday.

Mahathir, who famously ignored International Monetary Fund (IMF) advice and instead chose to peg his country's ringgit to the US dollar during the Asian financial crisis, said a standard gold currency was now the best alternative for world trade. The dollar was retaining some value because of fears of a global economic catastrophe if it was rejected, he told a conference of some 650 chief executives from 30 countries at a conference in Kota Kinabalu on Borneo island on Tuesday, The Star newspaper reported.

"But the catastrophe will come one day because even the most powerful country in the world cannot repay loans amounting to US$7 trillion," Mahathir said.

Related: It Can't Go Down: General Motors' Pause on Way to Junk Is Troubling
posted by Kevin at 3:39 PM

New record...

DISCLAIMER: The following is not a recommendation to buy, sell or hold any financial instrument.

Short term, I'd expect people who chased this to get annihilated. This thing is a blood sport. Look for a shakeout period. The goal of the big money players is to accumulate as many long contracts as they can, at the lowest price. The easiest way to accomplish this would be to try to rattle the small time speculators out of their long positions, maybe even convince them to short. Prices will fall. Weak longs will get destroyed. The big fish will be accumulating as the panicked longs get out or reverse short. After a sufficient number of decapitations have occurred (the technical term for this is 'consolidation'), the thing will probably gap up to new highs.

And now, dear readers, it's story time on Cryptogon:

TR and I tried to devise a "black box" system that scanned the market, looking for moves like this. I understood technical analysis. TR was doing the programming. TR named the system, "The Magic Mystery Dot" because Trade Station would indicate the trigger by placing a dot on the chart when it occurred. Why am I still asking for donations on Cryptogon if we had the Magic Mystery Dot to do our bidding? Key word: Mystery.

It didn't work. Not really. We were never able to quantify the drawdown period that usually occurs after the new high (we watched multiple periods) on momentum. We tried to devise a strategy for taking a long position at some point after this move was in. Not chasing it, mind you, but waiting for the inevitable shakeout to occur, and then getting in long. It was impossible for us to determine the extent of the shakeout/drawdown, but, I'll be damned if the thing wouldn't almost always work out.... eventually. The problem was with enduring the terrifying drawdown.

One time, we got a Magic Mystery Dot signal. I waited for the drawdown. Minutes passed. Yep. There's the drawdown. I bought the thing. Minutes passed.

Gap down. Block sales. A long red candle formed on my 1-minute chart. A red (down) volume bar grew ominously.

I'm an experienced trader. Sh*t happens. No problem. Get out.

But not this time.

This was a Magic Mystery Dot move.

My heart started beating irregularly. My pupils dilated. I started taking deep, panicked breaths. I grabbed hold of the desk to steady my shaking hands...

Remember that scene in Fight Club when Ed Norton gets the acid poured on his hand and he goes to his happy place? I closed my eyes, clasped my hands behind my head and leaned back in the chair. There were green rolling hills, a lake, singing birds. A little voice inside my head said, "Have faith in the Magic Mystery Dot."

Some number of seconds---maybe a couple of minutes---passed. When I opened my eyes again, it was gapping up! Up. Up. Up. Volume pouring on.

I managed to steady my hands long enough to manipulate the mouse and key-in the order. I read the sell order out to myself and pulled the trigger. When it was over, I was up about $500. I calculated the potential loss during the drawdown. It could have been as bad as $1000, if I had panicked and sold.

I didn't feel like I'd actually made the money. Have you ever narrowly avoided a terrible car crash? That's how I felt. TR wondered if my life flashed in front of my eyes. By luck, or the sheer grace of the Demiurge, I emerged, unharmed.

I didn't trade the Magic Mystery Dot signal again, but TR and I both watched it "work" a few more times.

We were poor, and the tools were very expensive. We tried all kinds of things, not just the MMD. We couldn't find anything that worked, but I continue to wonder if we could have figured it out, you know, given enough time with the tools and someone sliding the food and coffee under the door. We weren't trying to get rich. We just wanted to escape the clutches of the PHB.

We knew that black box systems were real. Any market observer can see institutional black box trading ("program trading" in polite circles) all the time. It accounts for nearly 55% of the volume on the NYSE. The trick is to make money off of it, not sit there pointing at the screen, shaking your head, after the fact. Like Icarus, TR and I thought, "We can we have God-like powers." Why couldn't a couple of guys in wrinkled t-shirts and jeans slap Goldman Sachs around?

The results were predictable... Our glue and feathers didn't hold:

Oil prices surged to a record near $58 a barrel on Friday, powered by a forecast the market could spike above $100 due to robust global demand and tight spare capacity.

Prices have climbed around 30 percent this year, with big-money speculative funds buying heavily on signs that rapid demand growth in Asia's emerging economies and the United States would strain world supply.

U.S. light crude (CLc1) rose $2.40 to $57.70 a barrel, breaking the previous peak of $57.60 hit March 17. London's Brent crude (LCOc1) climbed $2.22 to $56.51.

U.S. gasoline futures (HUc1) for May hit a record $1.7360 a gallon on worries that a national stockpile surplus could dwindle ahead of driving season, while heating oil futures struck a peak of $1.6750 a gallon.

Top energy derivatives trader Goldman Sachs (GS) said in a report on Thursday the oil markets might have entered a "super-spike" period, which could eventually drive prices toward $105.
posted by Kevin at 12:50 PM

HA! Nice one.

Since you won't ever hear about this one again, I'll post the full text:

Last Update: Friday, April 1, 2005. 10:44am (AEST)
US soldiers accused of cocaine smuggling

Five US Army personnel were arrested this week for allegedly trying to smuggle 16 kilograms of cocaine from Colombia into the United States aboard a US military aircraft.

The five were detained on Tuesday as a result of an ongoing investigation by US and Colombian authorities, the US Southern Command said in a statement from its headquarters in Miami, Florida.

"They are under investigation for allegedly attempting to transport approximately 16 kilograms of cocaine aboard a US military aircraft," the command said.

The five were not identified, and the command said it would release no further information on the case to protect the investigation.

The arrests come as analysts claim a $US3 billion US-backed "war" on Colombia's huge cocaine industry has failed over the last year to make inroads into destroying coca crops.

The amount of land planted with coca, which is used to make cocaine, stayed stable in Colombia in 2004 despite massive aerial crop spraying in the fourth year of a program which has absorbed over $US3 billion in US aid.

Satellite data showed there was 114,000 hectares of coca planted at the end of 2004, down a third from 2001 but unchanged from 2003.

The White House Office of National Drug Control Policy announced the data on Good Friday and it went almost unnoticed.

"I don't think it was something they especially wanted to advertise. It's a major disappointment from their point of view," said Michael Shifter of Washington think-tank Inter-American Dialogue.

The figures supported analysts' statements that cocaine exports to the United States have fallen very little.

Colombia is the world's largest producer of cocaine, and the United States the largest consumer.

- AFP/Reuters

Related: MadCowProd.com

Research Credit: AL
posted by Kevin at 5:41 PM

MO nearly broke the tip jar with his $150 donation! This is astonishing, unprecedented and much appreciated! MO contributes regularly. He is the number one financial supporter of Cryptogon.

Immediate contributions of $20 went to Ran Prieur and Jeff Wells. Thanks, MO, for allowing me to give a little support to these extremely important writers, while also helping me to put gas in my car and buy vegetables from the local farmers market.
posted by Kevin at 2:24 PM

* yawn *

If oil were to hit $105 per barrel, as suggested by a leading broker, it would spread ruin through the stock market and could spell disaster for everything from airlines to retailers to mining companies, analysts said on Thursday.

"If prices stayed north of $75 per barrel for more than a few months, the U.S. economy would likely slide into recession, which actually would make it unlikely it would get over $100," said Mark Zandi, chief economist for Economy.com. "I think the economy would break before we got to $100 oil."

Those oil levels could also spell trouble for the overheated housing markets and, to a lesser degree, the commercial real estate market, where prices have been escalating by double digits.

At the end of the scale, higher oil costs would also limit the amount consumers spend on everything else.

"It would have a disastrous impact on consumer spending. (People) would not be able to spend as freely as they like," said Kurt Barnard, president of Barnard's Retail Consulting Group. "Unless your salary is increased commensurately, you certainly will have a lot less money left in your pocket after you fill the tank."
posted by Kevin at 1:22 PM

News like this is designed to slaughter retail/inexperienced traders. In the short term, I'd wait for the next pullback (to the moving average of your choice, take your pick) before getting long. Mad men and institutions will be shorting here. You want to think about going long when the media starts talking about "Falling Oil Prices." <---This is not a recommendation to buy, sell or hold any financial instrument.

Make your time:

Oil prices have entered the early stages of trading that could lead to a 'super spike' with the potential to move prices to $105 per barrel, enough to meaningfully reduce energy consumption, according to a Goldman Sachs analysis.
posted by Kevin at 1:10 PM

"Deja vu is usually a glitch in the Matrix. It happens when they change something."
---Trinity, The Matrix

I didn't cover the GM story mostly because you couldn't avoid it, no matter where you looked. The story was everywhere.

I immediately wrote it off.

Why?

GM can't go down. It's that simple. The system can't let it go down. If GM dies, the system dies.

Overall, this system is very robust, but when something threatens it, REALLY THREATENS ITS EXISTENCE, the rulebook goes right out the window and things get weird quickly. These are times when glitches in the Matrix become very apparent.

The routine, internally consistent rules that apply most of the time, are temporarily suspended, until "normal" operations can be resumed. GM will be saved because it must be saved.

Rather than endure the emails from idiots who say things like, "You're nuts," and "Your information isn't peer reviewed," I've been waiting for a mainstream journalist to say it. So, here it is from Mark Gilbert over at Bloomberg:

When General Motors Corp. tore up this year's financial projections on March 16, credit rating companies should have responded by instantly slashing the automaker's debt to junk. Their failure to pull the trigger is both puzzling and troubling.

It's puzzling because lesser financial crimes have prompted cuts in the past. And it's troubling because it's hard to shake the feeling that the reluctance to kick General Motors out of the investment-grade category has more to do with the size of its debts than any lingering faith in its creditworthiness.

Furthermore, I wouldn't be surprised if GM was to "invent" some kind of miraculous technology that will turn its financial picture around. In other words, wait for .mil to leak something to GM that was invented in an underground crypt 20 years ago with our tax money.
posted by Kevin at 3:03 PM

Nice one!

American International Group Inc., the world's largest insurer, said an array of accounting errors over 14 years may have inflated its net worth by as much as $1.7 billion.

AIG, which ousted Chief Executive Officer Maurice Greenberg earlier this month, said in a statement today that transactions with reinsurers, including Warren Buffett's Berkshire Hathaway Inc., were structured to manipulate the company's accounting. AIG delayed filing its annual report for a second time and said correcting the mistakes may result in an earnings restatement or a cumulative expense booked in last year's fourth quarter.

"When you get into something like this, you begin to wonder if the intrinsic value of the company will be changed," said James Huguet, a fund manager at Great Companies LLC in Clearwater, Florida, before today's announcement. Great Companies oversees $1.3 billion and holds 280,000 shares of AIG.

AIG is working to restore credibility with investors after probes of potentially deceptive accounting pushed its stock down 21 percent in the past six weeks. The U.S. Securities and Exchange Commission and New York Attorney General Eliot Spitzer are probing whether companies including AIG used coverage from other insurers to distort their finances.

Contracts set up four years ago with Berkshire's General Re Corp. were "improper," AIG said. The company also said it inappropriately used offshore reinsurance companies to take advantage of accounting benefits. Reinsurance deals with Barbados- based Union Excess Reinsurance Co. inflated net worth by $1.1 billion since 1991, the company said in the statement.

Other problematic transactions masked $200 million of insurance underwriting losses and inflated $300 million of investment income, such as interest and dividends, AIG said.
posted by Kevin at 2:56 PM

IRS employees read Cryptogon everyday. They might find this interesting.

As they're busy busting bums for hiding some cigarette butts and bottle caps, corporations and billionaires are giving them the bird:

The world's richest individuals have placed $11.5 trillion of assets in offshore havens, mainly as a tax avoidance measure. The shock new figure - 10 times Britain's GDP - is contained in the most authoritative study of the wealth held in offshore accounts ever conducted.

The $11.5trn does not include the vast amount of money stashed in tax havens by multinational corporations, which are using increasingly sophisticated techniques to run rings round the authorities.
posted by Kevin at 1:37 PM

The hike in oil prices is beginning to ripple through the economy, pinching consumers at places far beyond the gas pump.
posted by Kevin at 7:17 PM

The problems with strong encryption schemes don't involve the underlying algorithms, but rather the systems that run them and the passphrases that users select. The easiest way to determine a passphrase for a strong crypto system is, of course, to capture the keystrokes that the user enters into the computer. If the passphrase data from a keylogger isn't available, things get a bit more difficult for investigators/spooks/phbs/etc. who are trying to read encrypted stuff. However, as anyone involved with computer security will tell you: Passwords are easy to guess for most users. The U.S. Secret Service is aware of that fact and has developed a distributed system for attacking strong encryption that takes details about the suspect into consideration. Rather than an open-ended brute force attack, that, for all intents and purposes, would never work, the cryptanalysts focus their attack using information about the suspect. This technique results in an orders of magnitude decrease in compute cycles required to determine a valid passphrase.

Keep in mind that these attacks assume the attacker IS IN POSSESSION of the suspect's private key. If you need to make sure that data is NOT recoverable, in addition to selecting a REALLY STRONG PASSPHRASE, devise a contingency plan that involves the decisive elimination of your private key. (Hint: Dragging it to the trashcan is not decisive elimination.) Obviously, if you destroy the private key, you won't be able to recover the data---even though you know the passphrase---but neither will anyone else.

Now, here's where some .01%-chance-of-being-right speculation comes in: The feds don't need to use this distributed system to recover passphrases, but they had the Washington Post publish a story about it anyway.

In fact, when the feds need cleartext, they send the encrypted data over to the NSA where it is immediately decrypted by some unimaginable process. Perhaps there are several, underground, football field sized compute centers packed floor to ceiling with quantum computers. Maybe prime number factorization isn't a problem for NSA.

Question: If you had a way of rendering---what are thought to be---"strong" encryption methods useless, what would you do to make people believe their data was secure?

Answer: You'd do all kinds of crazy sh*t!

You might even fabricate stories about the Secret Service needing to build a distributed system in order to recover passphrases... Based on what we know governments have done in the past, this would be nothing, in terms of disinfo.

Read about encryption during WWII. It could easily be argued that the Allies won the war because of sloppy Nazi key management. But when UK/USA broke those systems, did they announce it? Did they swoop down and bomb the hell out of things immediately upon gleaning the intelligence from intercepts? Nope. They made sure the Axis believed their crypto systems were intact.... Get it?

Yeah, yeah, maybe encryption really is secure against an attacker like the U.S. NSA. Ask yourself, though, what did they buy with $2.3 trillion dollars?

A little voice inside my head tells me that desktop crypto isn't a big concern for people with God-like powers. Actually, it's probably about as significant as a fly farting in the wind. But hey, this is the .01%-chance-of-being-right speculation section:

DNA Key to Decoding Human Factor
Secret Service's Distributed Computing Project Aimed at Decoding Encrypted Evidence

By Brian Krebs
washingtonpost.com Staff Writer
Monday, March 28, 2005; 6:48 AM

For law enforcement officials charged with busting sophisticated financial crime and hacker rings, making arrests and seizing computers used in the criminal activity is often the easy part.

More difficult can be making the case in court, where getting a conviction often hinges on whether investigators can glean evidence off of the seized computer equipment and connect that information to specific crimes.

The wide availability of powerful encryption software has made evidence gathering a significant challenge for investigators. Criminals can use the software to scramble evidence of their activities so thoroughly that even the most powerful supercomputers in the world would never be able to break into their codes. But the U.S. Secret Service believes that combining computing power with gumshoe detective skills can help crack criminals' encrypted data caches.

Taking a cue from scientists searching for signs of extraterrestrial life and mathematicians trying to identify very large prime numbers, the agency best known for protecting presidents and other high officials is tying together its employees' desktop computers in a network designed to crack passwords that alleged criminals have used to scramble evidence of their crimes -- everything from lists of stolen credit card numbers and Social Security numbers to records of bank transfers and e-mail communications with victims and accomplices.

To date, the Secret Service has linked 4,000 of its employees' computers into the "Distributed Networking Attack" program. The effort started nearly three years ago to battle a surge in the number of cases in which savvy computer criminals have used commercial or free encryption software to safeguard stolen financial information, according to DNA program manager Al Lewis.

"We're seeing more and more cases coming in where we have to break encryption," Lewis said. "What we're finding is that criminals who use encryption usually are higher profile and higher value targets for us because it means from an evidentiary standpoint they have more to hide."

Each computer in the DNA network contributes a sliver of its processing power to the effort, allowing the entire system to continuously hammer away at numerous encryption keys at a rate of more than a million password combinations per second.

The strength of any encryption scheme is based largely on the complexity of its algorithm -- the mathematical formula used to scramble the data -- and the length of the "key" required to encode and unscramble the information. Keys consist of long strings of binary numbers or "bits," and generally the greater number of bits in a key, the more secure the encryption.

Many of the encryption programs used widely by corporations and individuals provide up to 128- or 256-bit keys. Breaking a 256-bit key would likely take eons using today's conventional "dictionary" and "brute force" decryption methods -- that is, trying word-based, random or sequential combinations of letters and numbers -- even on a distributed network many times the size of the Secret Service's DNA.

"In most cases, there's a greater probability that the sun will burn out before all the computers in the world could factor in all of the information needed to brute force a 256-bit key," said Jon Hansen, vice president of marketing for AccessData Corp, the Lindon, Utah, company that built the software that powers DNA.

Yet, like most security systems, encryption has an Achilles' heel -- the user. That's because some of today's most common encryption applications protect keys using a password supplied by the user. Most encryption programs urge users to pick strong, alphanumeric passwords, but far too often people ignore that critical piece of advice, said Bruce Schneier, an encryption expert and chief technology officer at Counterpane Internet Security Inc. in Mountain View, Calif.

"Most people don't pick a random password even though they should, and that's why projects like this work against a lot of keys," Schneier said. "Lots of people -- even the bad guys -- are really sloppy about choosing good passwords."

Armed with the computing power provided by DNA and a treasure trove of data about a suspect's personal life and interests collected by field agents, Secret Service computer forensics experts often can discover encryption key passwords.

In each case in which DNA is used, the Secret Service has plenty of "plaintext" or unencrypted data resident on the suspect's computer hard drive that can provide important clues to that person's password. When that data is fed into DNA, the system can create lists of words and phrases specific to the individual who owned the computer, lists that are used to try to crack the suspect's password. DNA can glean word lists from documents and e-mails on the suspect's PC, and can scour the suspect's Web browser cache and extract words from Web sites that the individual may have frequented.

"If we've got a suspect and we know from looking at his computer that he likes motorcycle Web sites, for example, we can pull words down off of those sites and create a unique dictionary of passwords of motorcycle terms," the Secret Service's Lewis said.

DNA was developed under a program funded by the Technical Support Working Group -- a federal office that coordinates research on technologies to combat terrorism. AccessData's various offerings are currently used by nearly every federal agency that does computer forensics work, according to Hansen and executives at Pasadena, Calif.-based Guidance Software, another major player in the government market for forensics technology.

Hansen said AccessData has learned through feedback with its customers in law enforcement that between 40 and 50 percent of the time investigators can crack an encryption key by creating word lists from content at sites listed in the suspect's Internet browser log or Web site bookmarks.

"Most of the time this happens the password is some quirky word related to the suspect's area of interests or hobbies," Hansen said.

Hansen recalled one case several years ago in which police in the United Kingdom used AccessData's technology to crack the encryption key of a suspect who frequently worked with horses. Using custom lists of words associated with all things equine, investigators quickly zeroed in on his password, which Hansen says was some obscure word used to describe one component of a stirrup.

Having the ability to craft custom dictionaries for each suspect's computer makes it exponentially more likely that investigators can crack a given encryption code within a timeframe that would be useful in prosecuting a case, said David McNett, president of Distributed.net, created in 1997 as the world's first general-purpose distributed computing project.

"If you have a whole hard drive of materials that could be related to the encryption key you're trying to crack, that is extremely beneficial," McNett said. "In the world of encrypted [Microsoft Windows] drives and encrypted zip files, four thousand machines is a sizable force to bring to bear."

It took DNA just under three hours to crack one file encrypted with WinZip -- a popular file compression and encryption utility that offers 128-bit and 256-bit key encryption. That attack was successful mainly because investigators were able to build highly targeted word lists about the suspect who owned the seized hard drive.

Other encrypted files, however, are proving far more stubborn.

In a high-profile investigation last fall, code-named "Operation Firewall," Secret Service agents infiltrated an Internet crime ring used to buy and sell stolen credit cards, a case that yielded more than 30 arrests but also huge amounts of encrypted data. DNA is still toiling to crack most of those codes, many of which were created with a formidable grade of 256-bit encryption.

Relying on a word-list approach to crack keys becomes far more complex when dealing with suspects who communicate using a mix of languages and alphabets. In Operation Firewall, for example, several of the suspects routinely communicated online in English, Russian and Ukrainian, as well as a mishmash of the Cyrillic and Roman alphabets.

The Secret Service also is working on adapting DNA to cope with emergent data secrecy threats, such as an increased criminal use of "steganography," which involves hiding information by embedding messages inside other, seemingly innocuous messages, music files or images.

The Secret Service has deployed DNA to 40 percent of its internal computers at a rate of a few PCs per week and plans to expand the program to all 10,000 of its systems by the end of this summer. Ultimately, the agency hopes to build the network out across all 22 federal agencies that comprise the Department of Homeland Security: It currently holds a license to deploy the network out to 100,000 systems.

Unlike other distributed networking programs, such as the Search for Extra Terrestrial Intelligence Project -- which graphically display their number-crunching progress when a host computer's screen saver is activated -- DNA works silently in the background, completely hidden from the user. Lewis said the Secret Service chose not to call attention to the program, concerned that employees might remove it.

"Computer users often experience system lockups that are often inexplicable, and many users will uninstall programs they don't understand," Lewis said. "As the user base becomes more educated with the program and how it functions, we certainly retain the ability to make it more visible."

In the meantime, the agency is looking to partner with companies in the private sector that may have computer-processing power to spare, though Lewis declined to say which companies the Secret Service was approaching. Such a partnership would not endanger the secrecy of their operations, Lewis said, because any one partner would be given only tiny snippets of an entire encrypted message or file.

Distributed.net's McNett said he understands all too well the agency's desire for additional computing power.

"There will be such a thing as 'too much computing power' as soon as you can crack a key 'too quickly,' which is to say 'never' in the Secret Service's case."

How DNA Works
From washingtonpost.com at 6:57 AM

The Secret Service's "Distributed Networking Attack" program consists of 4,000 computers linked together and configured to try different password combinations against a series of encryption keys.

The network is organized hierarchically, according to each computer's processing power and function, with each segment of the network named with a decidedly equine theme.

The machine that tells each segment of the network what to work on is called "Shadowfax," named after the horse in J.R.R. Tolkien's "Lord of the Rings" series.

Underneath Shadowfax are several "Blackhorse" machines that assign jobs to DNA computers in Secret Service-field offices around the country. The computers that actually do most of the computations are called "packhorses."

DNA scours a suspect's hard drive for words and phrases located in plaintext and fetches words from Internet sites listed in the computer's Web browser logs. DNA technicians then load the suspect's encrypted data into the system, while Shadowfax tells the Blackhorse computers how to distribute the workload of testing the keys against the word lists and execute any subsequent brute-force attacks against the targeted encryption keys.

-- Brian Krebs

Related: The Password Paradox: Insecure Security
posted by Kevin at 9:54 AM

Another retail order from Canada! Thanks JR!

Related: My Limu Story

Related: You Guys Really Want the Three Pack
posted by Kevin at 12:15 PM

I feel like I should say something like, "I will continue to broadcast for as long as possible. Know that there will be pockets of survivors. Hope that they will not make the same mistakes that we did. Good luck and God speed."

Has a nuclear bomb exploded in a major Western city? Has the Ras Tanura oil terminal gone up in flames? Has the U.S. suspended the trade of dollars in international currency markets?

No.

This bee story is much more serious than any of the potential crises above. As a society, we're just too ignorant to understand the implications.

In all of my meditation on TEOTWAWKI, the only thing that truly disturbs me is the potential for collapse of the physical underpinnings of the natural world. While it's entirely possible that the point of no return has already been crossed, I am, at the core, an optimist. As such, I'd like to believe that society will collapse without a catastrophic release of chemical, biological and/or nuclear weapons. Granted, this is an unlikely, best-case scenario; but here's to hoping, wishing and wanting...

Forget about WMDs for a moment. Assume they don't even exist.

One of the most likely nightmare scenarios, in my opinion, is that the system remains functional long enough to destroy the environment to the point where human survival ISN'T possible without increasingly heroic uses of high technology. Regardless of what you think about my religious/spiritual belief system, I do pray that TEOTWAWKI occurs before human survival on this planet is inextricably linked to high technology.

What does, "inextricably linked to high technology" mean? Aren't we already dependent on high technology for survival? I know, it's easy to argue that we're long past that point already. (Yesterday, I received junk mail for a mobile phone service that included television!) No, brother, think again. I mean that living outside of a domed city would be impossible because natural photosynthesis stopped working, organisms at the base of aquatic food chains died off, or _____ <--- fill in the blank with some other unthinkable ecological cataclysim. Oh yeah, how about: Honey bees became extinct? Human survival would depend on nuclear power, genetic engineering and nanotechnology. Atmosphere scrubbers, nano-assemblers, pHarmed pHood, etc. You're either inside the domed city, or you're outside, which means you're dead.

Get it? That's where this system winds up, if it somehow manages to limp onward for the next couple of decades.

I rarely use my fire-and-brimstone tone on this site, but stories about bees dying off in large numbers are about as serious as it gets. If you don't understand the implications of this, you need to start reading about bees and how they relate to the survival of humans on this planet:

Devastation could have broad effect on agriculture.

The buzz from honeybees has been zapped in Marin and across the state because of the resurgence of a pesky mite, which is killing off the insects in large numbers.

"We first started to see it last spring," said Spencer Marshall, co-owner of Marshall's Farm Honey, who has about 100 hives spread across Marin. "It can wipe out up to 50 percent of hives. Imagine a farmer seeing 50 percent of his cows go down."

Experts believe Varroa mites might have arrived in the mid-1980s from Asia, where they coexisted with local honeybees.

In their years in North America, the eight-legged pests have devastated wild bee colonies and radically altered beekeeping. The pinhead-sized mite feeds on honeybees and their larvae.

The mites also have developed a resistance to pesticides - a trait they've been able to spread to their progeny faster than scientists have been able to develop new compounds to fight them off.

Marshall said some beekeepers were lazy and would hang pesticide strips near hives, giving long term exposure to mites, allowing them to build resistance.

More: North Carolina Giving Hives Away to Individuals :.

All Things Considered, March 22, 2005
A new North Carolina government program subsidizes people who want to become beekeepers. The initiative is an attempt to address a nationwide bee shortage that threatens the future of American agriculture. NPR's Adam Hochberg reports.
posted by Kevin at 3:27 PM

The International Energy Agency has released a draft version of a document called, "Saving Oil in a Hurry: Measures for Rapid Demand Restraint in Transport." Police enforced driving bans are considered.

Interesting.

I live in Southern California and I wonder if the state has a few hundred thousand extra cops hidden somewhere that could be used to enforce driving bans... Maybe someone with more of a feel for the tactical nature of capital flows could come up with an estimate as to how long a driving ban would have to be in effect in Los Angeles before a global economic crises developed? (Never mind. I think I want to watch the new Battlestar Galactica miniseries DVD again.)

This document is a study in how a bureaucracy gazes into the face of chaos. There is talk of statistics. Orderly procedures. Planning. It goes something like this: "We're going to have to piss out a forest fire pretty soon. Let's wait until we smell smoke and then take a sip of water. This is a reasonable plan, according to our advanced statistical model."

If you haven't made plans to live at or about an Iron Age type of existence, you might as well sit your fat ass down on the couch and polish off your 50 inch plasma screen. It's going to be a good show:

These types of policies, requiring a measure of coercion or restriction on behaviour, may be more acceptable to the public during crisis situations than otherwise, if a sense of the need for common sacrifice is prevalent. In any case, popularity is likely to be fairly low and, thus, political costs may be relatively high.

Related: Energy Body Wants Brakes on Fuel Consumption :.

The International Energy Agency is to propose drastic cutbacks in car use to halt continuing oil-supply problems. Those cutbacks include anything from car-pooling to outright police-enforced driving bans for citizens.

Fuel "emergency supply disruptions and price shocks" - in other words, shortages - could be met by governments. Not only can governments save fuel by implementing some of the measures suggested, but in doing so they can also shortcut market economics.

An advance briefing of the report, titled Saving Oil in a Hurry: Measures for Rapid Demand Restraint in Transport, states this succinctly.

"Why should governments intervene to cut oil demand during a supply disruption or price surge? One obvious reason is to conserve fuel that might be in short supply.

"But perhaps more importantly, a rapid demand response (especially if coordinated across IEA countries) can send a strong market signal."

The report goes on to suggest a whole series of measures that could be used to cut back on fuel consumption. They are cutting public-transport costs by a certain amount to increase its usage while simultaneously dissuading car use.
posted by Kevin at 1:43 PM

This goes wide and deep, all the way back to the BNL days. Must read:

High-level European intelligence sources report that the 51-year old slain Italian SISMI military intelligence agent, Dr. Nicola Calipari, killed by U.S. sharpshooters while accompanying the freed Italian hostage—Il Manifesto journalist Giuliana Sgrena—to Baghdad International Airport, was a prized target of opportunity for American assassins because of his knowledge about past Republican White House ties to Saddam Hussein's nuclear program.

Calipari was also reportedly privy to information about illegal U.S. covert operations in Iraq from his sources within the bloc of Iraqi resistance fighters led by former Republican Guards. Moreover, European intelligence sources report that Calipari was not the first Italian intelligence agent with expertise on Iraq to be killed by U.S. covert "wet affairs" operatives.
posted by Kevin at 12:28 PM

From the International Herald Tribune:

Is the writing on the wall for the U.S. dollar? Researchers at one big fund manager say it is, but the markets haven't read along just yet.

Since the start of March, Bridgewater Associates, a manager of more than $100 billion of institutional and hedge fund money based in Westport, Connecticut, has been issuing warnings in its daily reports. One on March 11, titled "The Breakdown of the Dollar System," said, "As we often say, we've seen this movie many times, and we know the ending."

There is indeed a volatile blend of risks surrounding the dollar.

President George W. Bush's new budget proposal would substantially expand the government's debt burden in the next decade, potentially raising doubts about the desirability of its IOUs. Some Asian central banks have declared that they will diversify their reserves away from dollar-denominated assets. If China decouples the yuan from the dollar, it will not need as many dollar-denominated assets to keep its currency from gaining value, nor will its competitors for export markets. In recent times, long-term interest rates have stayed stubbornly low, making it difficult for American companies to attract new investment from abroad.

These ingredients may just be waiting for the right catalyst. If enough people start thinking like those at Bridgewater Associates, the dollar will lose value rapidly. There is no point in buying dollars today, after all, if everyone thinks that they will be worth less in the near future. Fundamental economic factors need not worsen any further; in currency crises, perception very quickly becomes reality.

Bridgewater says it believes that the dollar is already beyond the point of no return. To keep the currency at its current value, private investors will have to buy more American securities as central banks desert them, said Robert Prince, the firm's co-chief investment officer. Before private investors will act, they need to see a higher return from American assets, relative to assets carrying similar risks abroad.
posted by Kevin at 12:21 PM