The Slamlander

As most of you who have been reading SG and I know, we are getting married on 12Aug08. Yes, that’s in 13 days. This is something that we’ve been working on for over 6 months, starting with finalizing the divorce from my last marriage.

With the various uncertainties¹ , we couldn’t even set a date until 4Jul08² , when I got the Final Decree.  After that, we had until 31Aug to complete things. No problem, I thought.

Hooray, I thought, now we can bring my daughter out for the Wedding. Well, I thought too soon. There weren’t even any expensive flights that would get her here on that week. I went through all the gyrations with Orbitz, only to find out that Orbitz will not do business with anyone having a Swiss address and, looking at their Website, I can understand why. They do not comply with Swiss laws. This is sad to state but, as an American, I’ve gotten so used to having to wade through false and misleading pricing that I didn’t really notice how bad the Orbitz site really is. Compare them to Travelocity and you’ll see the difference.

In any case, we are still having the Wedding on 12Aug08 but I can’t bring my daughter out until 12Sep08, sending her back on 20Sep08.

ORBITZ SUX!

Notes:

1. Mostly, a Texas judge that couldn’t make up his mind [↩]
2. Yes, Independence Day now has a whole new meaning for me [↩]

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If for no other reason than to showcase to others that this activity is NOT innocent or legal.

The US government alleges that between February 2001 and March 2002, the 40-year-old computer enthusiast from north London hacked into dozens of US Army, Navy, Air Force, and Department of Defense computers, as well as 16 Nasa computers.

This guy is real scum!

For his part Gary McKinnon, or Solo as he was known online, paints a very different picture of himself, and his motivation. In a BBC interview in 2005, Mr McKinnon said that he was not a malicious hacker bent on bringing down US military systems, but rather more of a “bumbling computer nerd”.

He said he’s no web vandal, or virus writer, and that he never acted with malicious intent.

Yes, he claims this but at the same time, he does not deny what he is accused of doing.

It says his hacking caused some $700,000 dollars damage to government systems.

What’s more, they allege that Mr McKinnon altered and deleted files at a US Naval Air Station not long after the terrorist attacks on September 11, 2001 and that the attack rendered critical systems inoperable.

The US government also says Mr McKinnon once took down an entire network of 2,000 US Army computers. His goal, they claim, was to access classified information.

Considering what he did, the US Gov’s damage estimate is faulty. Once a machine has been hacked it has to be scrubbed and re-certified. This involves saving only the data, wiping the drives clean, and reinstalling the operating system and applications. Only then can you scrub and clean the data. Ergo, the damage estimate is extremely low. The US Gov is being nice to him.

There is no way that anyone can convince me that cracking into systems and networks that do NOT belong to you is anything other than the purist of evil. His fellow crackers need to be made painfully aware of this, as painful as possible. His counter arguments have been heard before, every one of these scum claim them. He doesn’t deny what he did. They should lock him up and melt down the keys.

More info can be had here. His friends can provide even more evidence against him.

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Deep Packet Inspection is a potentially serious issue. It gets us one step closer to Big Brother Amerika and the International Police State. The potential has always been there. It’s in the way that packets are constructed. So, this isn’t exactly new. What is new are hardware devices that can interpret these packets, at full wire-speed, and at reasonable cost.

However, this isn’t quite as bad as it sounds¹ . The statements made are from a naive assessment of the technology, in the original article. It also misleads one into believing that this technology can penetrate encrypted streams, Short answer: it can’t.

What are Packets? or How this works.

In order to send data², the file is broken up into uniform data chunks (about 1024 bytes) and wrapped with an envelope³ . This is called a network data packet. Each time this packet goes through an intermediate processor, like a switch or router, another envelope gets wrapped around it. Once at the destination, each envelope is carefully unpacked, and the data chunks are carefully reassembled.

A data packet can have many envelopes wrapped around it and usually has at least three. I won’t bore you with the details. Just know that there are multiple concentric layers of these envelopes on each packet and that they have to be there. It is these layers of envelopes that  get the packets to where they have to go. On normal Internet packets, DPI can inspect, they claim, down to the MAC layer. The MAC (Media Access Control) layer is the lowest level of envelope and after that it is a pure data chunk. They can then reassemble these chunks themselves, effectively reconstructing a clean copy of the message.

Deployment; Where can they use it?

In order for this to be effective, the DPI device must be placed on a choke-point, to make sure that it captures 100% of your traffic. An ISP would probably want to place DPI devices on your upstream gateway, as well as their outbound gateway. Attaching one of these devices to just a switch in the LAN wouldn’t work because it will not see all the traffic, it has to be on a router.

Impact Analysis: Threat assessment

If you are not using any encryption or obfuscation mechanisms, this will let any ISP in the connection decode and assemble all your data packets, as claimed. The possibility for doing this has always been there but the devices for doing this, at Internet scales, are only now becoming available. Where it is less of a threat is when trivial encryption technologies are used, like SSL or SSH. However, because it enables them to positively identify such packets, it still let’s them kill such packets, even if they are securely encrypted. This threatens to make your connection less reliable but it will not give them the access credentials for your online bank or PayPal account. Neither will it let them tap into an encrypted VPN pipe. However, this does get them uncomfortably closer to that goal.

With DPI, they can now identify your secure traffic, as secure traffic, at least well enough to block it or re-prioritize it, if they so chose. They can also copy your encrypted stream for later decoding. This is undetectable and  you will never know unless they tell you. This satisfies CALEA.

Countermeasures

I’ve been saying this for over ten years; encrypt everything! If possible, always use a VPN pipe to access your Enterprise systems, from outside of the Enterprise.

Conclusion

From an encryption standpoint, DPI isn’t much more of a threat than is already assumed by modern encryption protocols. However, your personal emails are not safe, if they ever were. Your SSL protected accounts are still relatively safe, even if slightly less robust.

From an ISP standpoint; DPI let’s them claim CALEA compliance without opening them up to the legal liabilities arising from actually penetrating sensitive data streams⁴ .

From a law enforcement standpoint; This has to be frustrating because, all well known criminal organizations access and use the same encryption technologies that banks and Enterprises use.

From an Internet user’s standpoint; If you didn’t know that your privacy was in the state of burnt toast, know it now.

This is yet another chip in the fortress of your private data and can provide the basis of a full attack but it does not constitute, by itself, a successful attack. It is more of an annoyance.

 Article Reference

Notes:

1. What got my initial attention was the claims about supporting CALEA, the legislation from fascist heaven. [↩]
2. A file, for example [↩]
3. Containing source and destination addresses, protocol information, etc [↩]
4. Enterprise VPNs and online banking transactions [↩]

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Supply Constraints is the phrase that the talking heads are beginning to use, to describe the current oil price crisis¹ . The important part to remember is that this does not refer to the current supply/demand ratio, which is still good with supply exceeding current demand. Instead, it refers to near-future supply constraints and capacity caps, going-forward.

As I mentioned, on 30Jun2008, the globe is very close to maximum capacity for oil production. The limits are not caused by the available oil reserves² . The processing capacity for getting the oil out of the ground and refined into usable products remains constrained. Existing infrastructure is simply not up to the task. Add to that, the political instability with some of the major oil producing nations and you have a troubling future scenario. One war in the wrong place³  and we can actually lose up to 20% of current capacity, virtually overnight. This is what’s reflected in the current price of oil.

The chief causes are the major oil companies, like BP, who haven’t been expanding their infrastructure in order to boost their profit picture. Oil infrastructure takes a large and continuous capital investment, which they haven’t been making. From the beginning, it takes 5-10 years to get a network of pipes planned and approved and then you still need to build it, taking another 5-10 years. Because they had overbuilt their existing infrastructure, over 15-20 years ago, when the demand was much less than the supply, the current management stopped infrastructure expansion to rake back the capital as extra profits instead. It didn’t help that they were encouraged to do so by the ecology movement. This made both the stockholders and the eco-freaks happy. The stockholders have since gotten used to the fat checks and the eco-freaks want nothing less than to reduce processing even more.

The problem with this is that current demand isn’t expected to stay at the current levels. At best, demand growth will reduce to 1-2%, as soon as next year. We then have the year after and the year after that. Yet, the current production is at near maximum capacity with a forecasted loss of capacity, due to political instability. This is on the near horizon, less that 5 years. Yet, if they start to increase capacity now, we won’t even see usable plans for another 5 years and nothing at all built for another 5-10 years after that. This means shortages within three years, carrying forward for another 10-15 years, at least. Once we start to actually see shortfalls, 150USD per barrel oil will seem dead cheap.

Notes:

1. I wrote about this a month ago [↩]
2. Oil in the ground is still, in the ground. [↩]
3. Iran, Nigeria, et alia [↩]

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Good lord, is this the same twit?

The US House of Representatives has passed a massive housing rescue bill that could help struggling homeowners get cheaper loans.

Something needs to be done but I’m not 100% sure that this is it. The need is not for cheaper loans but to adjust existing loans to current market reality. Someone is going to have to take a loss and it looks like the US Gov is stepping up to the plate.

Under the rescue plan, hundreds of thousands¹ of homeowners trapped in mortgages they cannot afford on homes that have fallen in value would be able to refinance their mortgages with more affordable, fixed-rate loans backed by the Federal Housing Administration.

Nice summary but overly simplified. Every homeowner has taken the hit in house value. The government needs to step in because they can’t raise the Fed rate until they get all those sorry sods, with ARMs, into fixed-rate mortgages. They have to do that to fight inflation, which is pushing towards 5%. Currently, pushing up the Fed rate directly results in more bankruptcies, as an unavoidable consequence.

Many congressional Republicans are angry about the legislation, which they say bails out irresponsible homeowners and unscrupulous lenders.

This is definitely not accurate. A ignorant few grandstanding Republicans say this. Most realize the source of the problem, just like the Democrats. Like the Democrats, they don’t have any better ideas on how to fix it. Although, it could have been prevented, post facto repairs are all problematic. The bottom-line is that someone has to take huge losses, somewhere. This represents a huge wealth reduction, in the US.

Some home buyers were indeed irresponsible in paying more for their house than they should have, because ARMs were too easy to get. Lenders simply followed the market. The ones being unscrupulous were all those loan agents that signed all those Prime qualified customers up to ARMs, because ARMs paid better commissions. However, the real problem is that ARMs should never have been allowed as a debt instrument and that’s a failure of government regulation and the Federal Reserve Board² .

However, I might point out a conspicuous absence; There is no current language directly prohibiting ARMs, as a debt instrument, that I can see.

Edit: VAR is Variable Adjusted Rate and ARM is Adjustable Rate Mortgage. They are the same thing.

Notes:

1. Not hundreds of thousands but millions [↩]
2. Goes back to Greenspan’s time [↩]

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What the hell is Barack Obama doing on an International tour?!?!? I hate to break it to him but he hasn’t been elected US President yet and this move is most presumptuous.

The Senator from Illinois could be on a tour with a group of his fellow Senators, from both sides of the aisle, where he is only a part of some US Congressional mission. In which case, he could be forgiven for this. But he is using his own campaign funds for a personal tour and acting like he is elected already¹ .

John McCain, where is your howitzer? You’ve just been handed a golden opportunity to swat the upstart.

This underscores Obama’s inexperience like nothing else does. He is not going to meet many constituents in Kabul or anywhere else on his tour. This definitely puts the nail in his coffin, as far as I’m concerned. He has now confirmed that he is as big a megalomaniacal twit as Geo. W. Bush. I’ll go with McCain after this.

Notes:

1. Actually, I know what he is doing; If you start acting as if the deal is done then, come the election, many people will vote as if the deal is done. However, it is definitely high-risk because it is too easy to sink a torpedo into that tactic. [↩]

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I just saw his speech about the economy. The man is a bald-faced liar and anyone who believes him is dumber than stink. He blames so much on the current administration yet the administration could not spend the money without the approval of the DEMOCRATICALLY DOMINATED Congress¹ . He himself, as a sitting Senator, knows this and approved the tax rebate measure. Now he is pretending that it’s all Bush’s fault. Well, it’s Congress’ fault for going along with it, Obama knows this, and that makes him a bald-faced liar!

I was willing to cut Barack Obama some slack but this just convinced me that I can’t trust him, EVER! I’ve been on record here for years, wondering where the hell the Democrats have been while the Religious Right² have been trampling all over our Constitutional Rights. Now I know, they are as large a problem as the Religious Right.

Notes:

1. By Constitutional law, all appropriations MUST originate in the House, get filtered by the Senate, and get delivered to the President, who then executes the orders Congress gave him. Bush may have requested it but without the Democrats, he wouldn’t have gotten it. [↩]
2. The Religious Rights had hijacked the Republican Party from us real Republicans, back in the days of Pat Buchanan. [↩]

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Some of you may not know it but I started these Econ posts in an attempt to figure out where my Industry was going. The theory is that good economic time create jobs and bad time destroy jobs. Ergo, to predict what jobs are doing one must watch what the economy is doing.

I was only partly correct. Ever since the dot-com and telecom crashes, the technology sector has been lackluster, at best. This was even in the face of the so-called Business Recovery of 2004-2006. Greenspan called it a Jobless Recovery. In part, it was supported by the business infrastructure overbuild we did during the dot-com and telecom boom days. There was enough spare capacity to support growth rates of factors of five to ten, with existing staff. During that time, the technology sector experienced unemployment rates greater than15%¹ .

Well, during this process I learned that economic systems are not closed and isolated. One part effects other parts to varying degrees and all industries are somewhat inter-related and inter-dependent. In an effort to glean some positive tech sector data, I became obsessed with the various business channels. I learned to reach beyond the economics that a normal MBA gives you² . I tried to use this to predict the market, all the while hoping that I would see signs of revival in my Industry. I’ve been doing this for almost seven years³  and I learned a lot. I learned that technical market analysts are not any better than any other numerologist or shaman and that you’re just as well off consulting the I Ching. That the only thing to pay strict attention to was market and economic fundamentals.

In doing this, I actually predicted the sub-prime problems, as a direct result of the Feds raising the interest rates. I also predicted the consequential current down-turn, not to mention problems with the Falling Buck. I knew, beyond doubt, that the jobless recovery was not a real recovery and that it wasn’t sustainable. Current events prove me correct.

The US and UK have persistent structural problems in their economic infrastructure. The sub-prime crisis is only a symptom of this. The problems in the UK are caused by similar fundamental problems. Continental Europe, on the whole, doesn’t have the same problems because they are much more heavily regulated. Banks here aren’t allowed to make 125% mortgage loans or charge variable interest rates. Contracts are required to be of fixed rate, term, and value. The borrower is also required to bring in a certain amount of equity so that they have a share in the risk and a vested interest in making sure that they are not paying more than they should for their house.

The US economy was poisoned by variable rate mortgages while the UK economy was poisoned by no-equity home buyers. Both suffer massively inflated housing bubbles as a direct result. These are bubbles that are going to take years to deflate/write-down. The deflation issues represent a massive destruction of wealth and they are largely being absorbed by the consumers.

Fundamental economic issues for the US

1. A multi-trillion dollar trade deficit and running current account deficit.
2. A multi-trillion dollar war that the chief twit is refusing to carry on the books⁴ .
3. A multi-Trillion dollar wealth destruction, due to the sub-prime crisis.
4. A devastated financial infrastructure with Trillions of dollars yet to be accounted for.

79% of US GDP is created by consumers yet all the above effects the consumer directly. Add to this, a long period where salaries have not gone up and have even deflated and jobs are harder to find. The consumer-driven jobless recovery was fueled by the inflating property bubble and not by real production⁵ . Now that the property bubble is deflating, consumers no longer have the cash to support the economy. As we know from the US Jobs Report⁶ , many don’t even have the jobs they once had either. Of course, consumer sentiment is down!

Conclusion

The thing that started me on this track was the attempt at predicting when work would be available, in the technology sector, again. The short answer, seven years on in the US, is that there are still less jobs than there are people to fill them. This means that wages are going down as profits rise, especially in the new bear market. I don’t blame the large corps, I blame the US Federal government for not making jobs a part of the recovery, like Reagan did.

Notes:

1. as opposed to 6-9% for everyone else [↩]
2. As the former Managing Director (CEO) of a Silicon Valley consultancy, this is already considerable [↩]
3. the same length of time that my company flourished [↩]
4. US balance sheet [↩]
5. Don’t forget the minor detail that most production has been off-shored [↩]
6. released yesterday: 65K jobs lost last month and 65Kjobs lost in May. [↩]

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My lawyer in Houston just informed me that the major obstacle to SG and I getting married has now been removed. My marriage to my second wife is now legally done and I am now divorced from her. I still have a lot of paperwork to do, in two other countries, but they are only a minor detail of processing. The essential problem, my prior marriage, has now been removed. The final decree is expected here on Monday, via FedEx.

We are planning a strictly secular wedding, for the middle of August, and hope to have my daughter here by then as well.

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Some would say not. In yesterday’s post, I made a reference to Abiotic Oil, a Russian-Ukrainian theory. Need I state that the US isn’t prone to accept any theories from the former USSR, even if the Cold War is long over¹ .

The best argument for the veracity of the theory is as follows:

The modern Russian-Ukrainian theory of deep, abiotic petroleum origins is by no means simply an academic proposition. After its first enunciation by N. A. Kudryavtsev in 1951, the modern theory was extensively debated and exhaustively tested. Significantly, the modern theory not only withstood all tests put to it, but also it settled many previously unresolved problems in petroleum science, such as that of the intrinsic component of optical activity observed in natural petroleum, and also it has demonstrated new patterns in petroleum, previously unrecognized, such as the paleontological and trace-element characteristics of reservoirs at different depths. Most importantly, the modern Russian-Ukrainian theory of deep, abiotic petroleum origins has played a central role in the transformation of Russia (then the U.S.S.R.) from being a “petroleum poor” entity in 1951 to the largest petroleum producing and exporting nation on Earth.²

The paper goes on to state;

In this article is described a project for exploration and production of petroleum in an area which had been previously condemned, according to the perspectives and reasoning of the old “biological-origin” hypothesis: the northern flank of the Dnieper-Donets Basin. This specific project has been chosen because it is a "pure" modern project: the geological area explored is one which had been extensively studied in the past and had been previously condemned as possessing no potential for petroleum production; the exploration techniques applied, from the initial work-up, through the well planning, to the production tests have been carried out in ways peculiar to such for abiogenic hydrocarbons in crystalline environments; and the scientific tests upon the petroleum produced were specifically designed to test the assumption that the oil and gas originated at great depth in the Earth.³

So, while they were developing the fields, they were also testing the theory. Note that, all the test wells were down at 3800-4400 meters, much deeper than normal wells.

The best validation of any theory is empirical success.

While I am more of a businessman/engineer than a scientist, a theory stops being only a theory when there is a wealth of empirical evidence to back it up.

During the first five years of exploration, in the early 1990’s, of the northern flank of the Dnieper-Donets Basin, a total number of 61 wells were drilled, of which 37 are commercially productive, an exploration success rate of 57%.²

Without the Abiotic theory and these fields, Russia would not be the top oil producer in the world.

PARIS: Russia is the biggest oil producer in the world, extracting 10.08 million barrels per day last year ahead of Saudi Arabia pumping 8.48 million barrels, IEA data published on Tuesday showed⁴.

I’d say that the jury is back, with a unanimous verdict for the abiotic theory of oil.⁵ .

Notes:

1. In spite of Bush’s admiration of Putkin (hint: They’re both fascists) [↩]
2. The Drilling & Development of the Oil & Gas Fields in the Dnieper-Donetsk Basin [↩] [↩]
3. Emphasis, mine [↩]
4. IEA Data published in the Economic Times and more links available here [↩]
5. Note that all of this is consistent with a 20 year development timeline [↩]

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