The Next Crash
by KEVIN D. FREEMAN on SEPTEMBER 15, 2018
It’s officially been ten years since the Lehman Brothers collapse ushered in a wave of panic and a stock market crash. The Dow was wobbling but really took a dive in that fateful week of September 11-15, 2008. Readers of this blog are aware of all of the suspicious activity that took place including very unusual trading out of the Middle East on the seventh anniversary of the 9/11 attacks. All of this was connected to a couple of Sovereign Wealth Funds, one of which was under the influence of a truly anti-American Muslim Brotherhood leader. Frank Gaffney referenced this in his Secure Freedom Minute this past week:
Are We Ready for Lehman Brothers 2.0?by Frank Gaffney, September 14, 2018
Ten years ago today, the global economy was rocked by the virtually overnight collapse of the major U.S. investment bank Lehman Brothers. The cost was measured not only in terms of the massive economic damage done. Arguably, the attendant political turmoil propelled Barack Obama to the presidency, enabling his stated ambition to “fundamentally transform” this country.
Veteran financial analyst and best-selling author Kevin Freeman contends that Lehman was subjected to a type of bear-market attack known as “naked short-selling.” His forensic investigation suggests it was engineered by Middle Eastern sovereign wealth funds of Qatar and the UAE. Worse yet, Mr. Freeman warns that the United States is dangerously vulnerable to economic warfare today. That’s particularly concerning at a time when another, potentially decisive election looms in which the strength of our economy is an even more important factor than usual.
The fact is that there was substantive financial terrorism and economic warfare underway in the last crash, including by Russia. It was never fully investigated and the findings of my reports to the Pentagon were swept under the rug for political narrative sake. The Obama team said then that it would look bad if anyone thought that a foreign nation would undermine our economy before an election as it might look like they were election tampering. Of course now we know that claiming election tampering is all the rage of the Deep State, RESIST movement, and the mainstream media. Ten years ago the weapon was crashing our economy. Today, it seems the weapon is buying a few Facebook ads.
The current question, however, is “What is next?” What will trigger the next meltdown? In my suppressed Pentagon report, the answer I gave was a massive buildup in Federal government debt combined with a big push to remove the dollar as the world’s reserve currency. We called that “Phase 3.” Of course, we have seen our total outstanding debt double in just 10 years from around $11 trillion to almost $22 trillion. And, the attacks on the dollar have become increasingly common. Ten years ago, there were more than a few raised eyebrows and quiet snickers among the elite. It is impossible to dismiss this threat today.
We also warned about cyber attacks and how they might threaten a new crash. Few paid much attention until recently. Harvard Business Review has an important article this week that makes the very points we have covered for a decade. It’s about time. I say “welcome to the party!”
Here is a brief excerpt:
How a Cyber Attack Could Cause the Next Financial CrisisPaul Mee and Til Schuermann September 14, 2018Ever since the forced bankruptcy of the investment bank Lehman Brothers triggered the financial crisis 10 years ago, regulators, risk managers, and central bankers around the globe have focused on shoring up banks’ ability to withstand financial shocks.
But the next crisis might not come from a financial shock at all. The more likely culprit: a cyber attack that causes disruptions to financial services capabilities, especially payments systems, around the world.
You can read the full article at this link: HBR: Cyber Attack Could Cause Next Financial Crisis.
There are several realities to keep in mind:
I had the opportunity to visit with several colleagues from the work done in 2008-09 this past week in Washington. The good news is that some of them are in very important positions and they are willing to listen. That was encouraging because there is always another crisis coming. Hopefully we can get better prepared this time.
The Looming Debt and Pension Crisis: An Introduction
by KEVIN D. FREEMAN on MARCH 8, 2018
As I write this, I’m tempted to do a “Winds of War (Part Five)” blog in continuation of the series begun ia little over a month ago (Part Four of Winds of War available HERE). The reason is that in the past week, there have been so many data points affirming everything we have been saying. To make things efficient, I’m just going to provide a brief recap by providing the headline and a link to the article followed by one of the links to when we initially shared the information with you. After that recap, I’ll start a new but related topic of extreme importance. The recap will share what our adversaries and enemies are doing while the new topic will highlight what may be our greatest vulnerability and what we can and should do about it.
WINDS of WAR RECAP (from just the past week)Regarding the Winds of War, here are just a few of the most significant headlines (with links to articles) from the past week that validate our concerns:
Freeman Gaffney March 5, 2018 Podcast: Play in new window Freeman Gaffney Podcast (part 2): Play in new window
We could go on but I think you get the point. We are seeing rapid-fire reporting of things we have told you about for years. And that is just reports from the last week. Of course, they come out in puzzle pieces while we endeavor to put the pieces together and show you the whole picture. The bottom line of all of this is that the Winds of War ARE Blowing Hard.
Facing The Big Vulnerability That No One Wants to DiscussBefore we delve deeply into a truly dire threat, let’s make it clear that there are solutions IF we are willing to face the problem. It is NOT too late if we take courage. But we cannot continue to ignore our vulnerability hoping it will go away. If you want some hope, make certain you see Darkest Hour and the performance of Academy Award winning Best Actor Gary Oldman as Winston Churchill. This will remind you that there is always hope IF we have the courage to do the hard things.
Of course, there are many who want to appease away the threat, hoping that if we allow the Chinese to continue to steal us blind via intellectual property theft on the hope that they might be benevolent enough to continue buying our debt allowing us to avoid the hard issue of addressing it. For those, I recommend a viewing of Oldman’s Oscar-winning effort in this clip.
So, do not despair. Just realize the importance of facing the brutal truth in ultimately solving the problem.
Here’s the deal. We owe more money than any nation in history ever has. We are on an unsustainable fiscal path. Rising interest rates threaten to swamp our revenue potential. Our politicians have been unwilling to address the problem. The Federal government is joined by state and local governments in being overwhelmed by a debt bomb. Our adversaries and enemies have been looking for ways to exploit this debt to our demise. The pensions and savings we think we have are at risk. Corporate and personal debt are also at unsustainable levels. Student debt is at all-time records. And all of this has happened with a decent economy. Just imagine what happens in the next recession. The derivatives we have allowed the financial system to create are a force-multiplying monster that can swallow whole our entire economy if things go really bad. The dollar will be attacked with the intention of making it as worthless as the Venezuelan Bolivar.
That’s probably a good enough start with all the depressing reality. In coming blogs we will take more bite-sized chunks of understanding. But do not fear. There is genuine hope if we take steps now. We just can’t continue to ignore the threat.
So, just to get the discussion started, let’s begin with the non-partisan Congressional Budget Office (CBO) long-term outlook on government spending and revenues. This doesn’t take into account corporate or personal debt. It also ignore municipalities and state governments. And, it doesn’t account for unfunded Federal promises. But it is a starting point that is really not debatable.
Here are some excerpts from a report that came out last year about this time:
At 77 percent of gross domestic product (GDP), federal debt held by the public is now at its highest level since shortly after World War II. If current laws generally remained unchanged, the Congressional Budget Office projects, growing budget deficits would boost that debt sharply over the next 30 years; it would reach 150 percent of GDP in 2047. The prospect of such large and growing debt poses substantial risks for the nation and presents policymakers with significant challenges.
Seeing this is akin to watching a counter slowly click down while attached to a nuclear bomb. Many people might see a digital clock hooked up to a nice briefcase. But for those in the know, it is a very frightening sight. Without a serious change in course, our nation will exceed the amount of debt we had at the peak of the Second World War despite the assumption of continuing economic growth and global peace. In other words, even if you are very sanguine in your outlook regarding peace and growth, there is plenty of reason to worry. Major economies have collapsed and nations ended with a smaller debt burden (relative to their economy) than the CBO projects for us over the next 20 years.
When you combine this sad reality with the fact that our adversaries are preparing for a financial war against us, you can see why we are concerned. The Russians, for example, believe that our debt could end America as we know it.
Rather than go any further, I think we should let this reality set in first. So take some time to read the 2017 CBO report and realize that it was BEFORE the recent tax cuts. There will be a new report soon and we will have comments on it. But for now just realize the main point. The path is unsustainable.
When Chinese Investment is Unrestricted Warfare
by KEVIN D. FREEMAN on MAY 28, 2018
Last week, I had the opportunity to join Gordon Chang and Phillip Le Corre in addressing a Congressional subcommittee hearing of the House Foreign Affairs Committee. The topic was Chinese Investment and Influence broadly but also the impact in Europe specifically. The Chairman was Congressman Dana Rohrabacher who offered the following statement describing the purpose:
Chairman Rohrabacher on the hearing: “For some time, communist China has manipulated its trade arrangements with the West. Additionally, China steals American intellectual property, manipulates currency, and influences our information environment. China’s ‘One Belt, One Road,’ which projects China’s activity into Europe, is part of a greater grand strategic plan to become dominant by conducting economic warfare against the West. This hearing will expose hostile Chinese tactics and intentions as it becomes an ever-larger investor inside Europe as part of this overall strategy.”
A video of the hearing can be seen here:
I provided a formal written statement, which can be viewed at this link: Kevin Freeman written statement.
Gordon Chang also provided written testimony and it is important reading: Gordon Chang written statement.
There wasn’t a lot of press coverage other than Chinese language outlets such as The Epoch Times and New Tang Dynasty Television (NTD).
The bottom line is that China is rapidly deploying investments around the world for geostrategic reasons. Chinese money cannot be viewed as pure investment. There are always strings. In fact, over the past couple of days, we have seen press reports that demonstrate this fact.
Here are a few examples from around the world. First, Australia…
US secret report: China ‘debt trap’ on Australia’s doorstepMay 13 2018 at 11:45 PMChinese loans worth hundreds of billions of dollars are saddling Australia’s smaller regional neighbours with unsustainable debts and giving Beijing crucial economic leverage to gain strategic and military power, warns a new independent report written for the US State Department.
The US report identifies 16 states vulnerable to China’s so-called “debtbook diplomacy” and economic coercion, including Vanuatu, the Philippines, Cambodia, Laos, Thailand, Malaysia, Sri Lanka, Tonga and Micronesia.
The paper, obtained by The Australian Financial Review, says Papua New Guinea has “historically been in Australia’s orbit” but there is alarm that PNG has been “rapidly taking on Chinese loans it can’t afford to pay and offers a strategic location in addition to significant LNG and resource deposits”.
Former foreign minister Gareth Evans is quoted in the 40-page paper as characterising Laos and Cambodia as “wholly owned subsidiaries of China.” [CONTINUE READING at AFR…]
China could be using ‘divide and rule’ tactics to gain influence in EuropeWendy Wu, South China Morning Post Mar. 2, 2018, 12:14 PMThe EU is on alert for Chinese attempts to drive a wedge through the bloc as more states on the periphery line up to join the European fold, diplomatic observers and sources said.
Diplomatic observers said the European Union was wary of China’s growing investment in the Balkans, central and eastern European countries and poorer EU members – which Beijing sees as gateways into the more developed European market – as it threatened unity and solidarity.
In her second warning in a fortnight against China’s interference in Europe, German Chancellor Angela Merkel said on Tuesday that EU member states involved in Chinese infrastructure projects should maintain the bloc’s foreign policy stand on China. [CONTINUE READING at Business Insider.]
Chinese investment in Africa could create national economies ‘entirely dependent on China’, say experts SWNS reporter Tuesday 15 May 2018 18:05 BST Chinese investment in Africa could be accelerating debt on the continent and creating economies which are “entirely dependent on China”, according to financial experts.
Around $86bn (£64bn) in loans were issued by China between 2000 and 2014 to finance over 3,000 infrastructure projects in Africa.
But as leaders gather in Beijing for China’s Belt and Road Summit this week, under the banner of President Xi Jinping’s flagship policy, experts have warned that this level of investment may not be as rosy at it appears. [CONTINUE READING at the Independent…]
Even Silicon Valley feels a threat as China narrows the technology gap through investments, R&D, and Intellectual Property (IP) theft:
China’s secret goal is to crush Silicon Valley By Rebecca Fannin, special to CNBC.com Updated 4:59 PM ET Sat, 26 May 2018 America’s wide lead in venture capital is fading, threatened by Asia and its rising brain center: China.
A surge of new money from China and the rest of Asia helped drive funding totals to the stratosphere and transformed the venture landscape. Last year Asia directed 40 percent of the global total versus 44 percent from the United States.
China’s share was 24 percent, according to Dow Jones VentureSource. Just a decade ago China’s share of VC spending in start-ups globally was less than 5 percent. [CONTINUE READING at CNBC…]
The point is this: What we see as a marketplace, our enemies view as a battle space.We must wake up to the fact that we are in a global economic war. This is a war that will determine who controls the rest of this century. As I pointed out in my testimony, the next decade will be critical.
Death to the Dictator
by KEVIN D. FREEMAN on AUGUST 7, 2018
We are seeing an uprising in Iran. The regime burned through all the cash of the Obama deal. Even with the relief from sanctions, the economy is failing. The bottom line is that Iran has operated a collectivist economy (socialism) under dictatorial theocratic rule. It isn’t working despite enormous resources and a historically high oil price. The crowds that once shouted “Death to America” now shout “Death to the Dictator.”
There are two things to understand. First, as we shared in the last blog, the socialist system employed in Iran was doomed to fail just as Venezuelan socialism has failed. The Trump team reversed the Obama agreement and is reapplying sanctions. The Iranian people sense they have support from America for liberty. We may be witnessing a tremendous reversal from one of America’s worst enemies. This is historic but barely covered by the mainstream media fearful of any credit going to President Trump. The truth is, however, that he has made progress first with North Korea and now with Iran.
The Iranian people are smart, well-educated, and impressive. They have been under the iron fist of a backwards regime since the revolution that began 40 years ago. Now, they have an amazing opportunity to return their nation to a success path. With the right system and economic freedom, Iranians can and will succeed.
Remember that we sternly warned against the Obama Iran deal. It was the wrong approach, incentivized the wrong behavior, and put the world at risk. We warned that the Obama administration was trying to give Iran access to our financial markets, which would have been tragic. The Obama team denied it but the truth has come out. They lied. Just recently, President Obama told us to not exit the deal he had arranged. He was wrong.
Only time will tell if the Trump approach will flip Iran from one of our worst threats to a land of opportunity for the people there. But there is clearly reason for hope. If it works out, it will be due to sound policies by the Trump team. And, the failing Iranian government will blame our nation’s Economic War Room. The truth is that they only have themselves to blame. And now, the Iranian people have hope.
If This Isn’t the Trump Doctrine, It Should Be
by KEVIN D. FREEMAN on JULY 22, 2018
The media and political pundits have been going bonkers over President Trump and Russia ever since the Helsinki Summit with Vladimir Putin. It has been entertaining to say the least. Of course, the underlying issues are quite serious, just not in the way the ruling class wants you to believe. What we believe, however, is that China, not Russia is the primary concern. China and Russia together become an even more serious problem.
We have warned for years regarding how Putin was attempting to persuade China to join him in a plot to threaten, if not topple American global economic leadership in this Blog, in articles, media interviews, and even books. We have been quite clear in our continuing concerns about Putin.
Kevin Freeman on Fox and Friends from Seed Studios on Vimeo.
We have extensively documented Russian economic interference prior to the 2008 election that put Barack Obama into the White House. There can be no doubt that the Russian’s, from the highest levels, did manipulate our economy fully aware that this would impact the Presidential election. And, there is no doubt that the crashing stock market, as they were expecting, changed the election dramatically. These are facts that not only remain overlooked by the media but were actively covered up by the Obama Administration’s intelligence community (IC). And, we have repeatedly warned about the politicization of the IC.
After the Obama team was put in place, we saw a big push to “reset” relations with Russia emerging from the new President and his Secretary of State Hillary Clinton. This manifested in multiple ways that could clearly be viewed as evidence of collusion although no one was allowed to fully explore it. In fact, there were clear signs of a cover up. Just as a sampler of the critical facts:
Before accepting the media narrative that Trump conspired with Russia to steal the election, however, you should take a step back and look at all the facts. We are not certain that the DNC “hack” was exactly that. There is a good deal of evidence that this was an inside job in some way, although it might have been Russian sponsored. The fact is that the transfer rate on the emails was too fast to make a traditional hack possible. For a good explanation from a former NSA official, view this video or read this report. In regard to Secretary Clinton’s emails, their release was clearly from hacking, but also the result of gross negligence on her part. According to Congressional testimony, 30,000 Clinton emails were sent to an unauthorized foreign entity NOT related to Russia. This information was presented to the FBI during the email investigation but Peter Strzok did nothing with it according to the Intelligence Committee Inspector General. This is the same Peter Strzok that gave such a bizarre performance when questioned by Congress. And, he’s the same FBI agent who privately texted that he didn’t think there was anything substantive to the Russian collusion narrative despite a willingness to push it forward presumably for partisan political reasons.
Please understand that unlike the partisan left (which ignored Russian malfeasance for 90 years), we have been on Putin’s case for a decade and are unwilling to excuse him from clearly bad activity in 2016 and for a decade prior. We have documented his serious and ongoing efforts to undermine the United States in general and our economy in specific. We have called him out time and again. But, what we are seeing from President Trump may actually be a brilliant effort to secure America.
Basically, the truth is that China is the much larger threat, economically and militarily. With Putin and Russia on the side of China, the threat is infinitely worse. Forty years ago, the situation was pretty much the opposite. Russia had the bigger economy and dominant military. Richard Nixon pulled off a coup by going to China and sowing sufficient distrust to break the Chinese from the Russian orbit. This was a masterstroke and paved the way for Reagan’s Cold War victory.
Hopefully, President Trump’s recent efforts underscore an awareness of the current Economic Warfare threat coming from China. Yes, Russia is a serious threat as well, having recently dumped a majority of her Treasury Bond holdings and making direct threats against our currency. But China is the much larger threat. If China dumped 85% of her holdings in two months (as Russia has just done), the implications would be far more serious.
The idea that China is the larger threat is clearly supported by the evidence. Here’s a quote from Daily Caller on July 19:
China is a greater security threat than Russia according to many experts — but you won’t hear that from liberals or never-Trumpers who are going after President Trump over his response to Russian meddling while in Helsinki, Finland.
John Bambenek, a cybersecurity expert who worked on the Democratic National Committee hack, sat down with the Daily Caller to discuss the threat China poses to the U.S. He also went into detail about his cybersecurity firm’s role in confirming the source of the DNC breach early in the summer of 2016 — before the public even knew about the leaked emails.
Bambenek worked for Fidelis Cybersecurity in 2016. He now serves as the Vice President of ThreatStopand as a part-time lecturer at the University of Illinois.
Even former Secretary of State to President Clinton, Madeleine Albright, recognizes China as the bigger threat.
China is currently running spy operations in all 50 states in America. This is a part of their ongoing Unrestricted Warfare campaign against our nation as documented by Epoch Times (graphic used with permission).
Even the FBI Director admits that the China threat is the greatest espionage threat we face today. China always has been a communist nation. While Russia may be run like a criminal organization in many ways, it can be bargained with. China is committed to a hundred-year marathon to rule the world. China is already beginning to pursue conflict to assert her position. For years, Putin pursued China’s support in attacking American finance. He has even recently ramped up the effort to displace the dollar.
Now, however, Putin should be as concerned about China’s future plans as we are. This may be the ideal time for President Trump to separate Russia from China. China is, without question, using her influence to undermine the United States and the Western order in general. They are using any and all means possible including hacking, trade wars, intellectual property theft, undermining our alliances, direct subversion, manipulating our education system, and using culture warfare via Hollywood. They know that a war is underway and they have been fighting us for years. We’ve just been too blinded to see it.
This is not to say that we should tolerate Russian aggression or interference in our democracy. But we must be realistic about global threats rather than looking for partisan advantage from them. The President should make every effort to negotiate better behaviour from Russia and at the same time create a wedge that would derail or at least slow China’s global aggressiveness. If that’s what he is doing, and he succeeds, the Trump doctrine will be proclaimed as brilliant. This is a global economic war and we must do everything necessary to win it. When the threat is grave, Winston Churchill would advise that we pursue “victory at all costs.” The hope is that with strategists like John Bolton, we can both tame the Russians and also win the economic war with China.
The Move Against the Dollar is a Globalist Attack on America
by KEVIN D. FREEMAN on AUGUST 24, 2018
John Kerry predicted it. He said that if we ever attempted to reimpose sanctions on Iran, our allies would work to ditch the dollar.
The truth is that the dollar has strengthened, not weakened, as President Trump has gone on an all-out, pro-America, economic offensive. This chart shows the trade-weighted dollar over the past year. President Trump decided in May to exit the Iran deal and the dollar has strengthened since.
We see socialist economies crashing in Venezuela, Turkey, and Iran. We see China punched in the mouth over trade. It is about time as they had been robbing us blind with IP theft and unfair trade practices.
We absolutely should expect to see a blowback. And, we are beginning to see it. While the Trump White House is under assault politically from all directions (Trump lawyer, Trump Inc. employees, Trump supporters in Congress), we are also witnessing an orchestrated plan to take away his strength–the economic expansion. On the domestic side, conservative voices are being silenced by the social media giants and conservative causes are being de-funded by the globalist banking cartels.
The domestic moves are one thing but the push by Europe in favor of a failing Iranian regime and against America is simply amazing. But remember, John Kerry predicted for it. And, there is some evidence that John Kerry has been lobbying for it.
So, while extraordinary that Germany threatens to exit a U.S.-led global payments system, it should not come as a surprise. From CNBC this week:
Defending Iran deal, Germany looks to bypass US payment channelsCNBC, August 22, 2018 Europe should look to bypass U.S. payment systems by creating its own financial channels, a European monetary fund and international bank transfer system like SWIFT, Germany’s foreign minister has said.
Writing in the German Handelsblatt newspaper, Foreign Minister Heiko Maas called for the setting up of independent payment channels, largely as a way for European businesses to avoid U.S. sanctions targeting any firms — whether inside or outside the U.S. – that do business with Iran.
“As Europeans, we have clearly told the Americans that we consider phasing out the nuclear deal with Iran a mistake.,” Maas said in an op-ed for Handelsblatt on Wednesday . . .
“It is therefore essential that we strengthen European autonomy by setting up payment channels independent of the U.S., creating a European Monetary Fund and building an independent SWIFT system. The devil is in a thousand details,” he added. “But every day that the (Iran) agreement continues to exist is better than the highly explosive crisis that otherwise looms in the Middle East.”
While the SWIFT system oversees international bank transfers, the creation of a European monetary fund would solidify the bloc’s ability to assist countries hit with economic crisis. The creation of independent financial channels would allow it and its businesses to avoid prohibitive sanctions but would likely deepen an ideological schism between the U.S. and Europe that has grown during Trump’s presidency. [TO CONTINUE READING at CNBC…]
The Chinese appear gleeful at the prospect:
Germany to explore creation of alternative to SWIFT payment systemBERLIN, Aug. 22 (Xinhua) — Chancellor Angela Merkel’s CDU/CSU conservative alliance has welcomed proposals by Foreign Minister Heiko Maas (SPD) on Wednesday to shield German companies from the impact of U.S. financial sanctions by creating a European alternative to the SWIFT payment system.
“I think that the proposal is worth exploring,” Juergen Hardt, the CDU/CSU foreign policy spokesperson told press in Berlin.
What the Chinese really want is for Europe to join their anti-American alternative known as CIPS. And they have been pushing for European support for Chinese-based alternatives to the IMF and the World Bank as well.
Of course, exiting the terrible Iran Nuclear Deal was the right choice. And the pressure is working. We may see a free Iran, which would be wonderful for the world. So why would Germany want to interfere and move the world away from the Western financial system we have built up over the past 75 years? The EU is filled with globalists who prefer a weak America.
The reality is that the protests at home, the social media censorship, the political and legal tactics unleashed, and the global denunciations are all tied to the RESIST movement. George Soros is connected to much of this. It is globalist vs. American individualism. It is Global Economic War.
Yes, the dollar’s reserve currency status is under attack. But that has been true for quite a while. The difference now, however, is that the attack is now in the open. The good news, though, is that if we make the right moves, the dollar can not only survive but also prosper.
What We See as a Marketplace, Our Enemies View as a Battle Space
by KEVIN D. FREEMAN on JUNE 21, 2018
Share this...One of the most serious challenges of the global economic war is America’s unwillingness to face reality. We have very real enemies and adversaries who know they are at war with us. We, however, seem to have no clue regarding that fact. As a result, we see trading partners and globalization very optimistically without any regard to the possible motive behind other nation’s actions. For some, this is simply being naive. For others, however, greed overcomes their better judgment as they sell out our future. Either way, most of America has been blind to the very real risks that exist.
Case in point. Google is reaching out to China even as China is demonstrating belligerence.
From The New York Times on June 18:
Google, Rebuilding Its Presence in China, Invests in Retailer JD.comJune 18, 2018BEIJING — Google’s best-known products have been blocked by the authorities in mainland China for years. If the American internet giant wants that to change someday, then half a billion dollars’ worth of good will couldn’t hurt.
Google will invest $550 million in the Chinese online retailer JD.com, the two companies said on Monday. In return, JD.com will join the Google Shopping advertising platform, and will work with the Silicon Valley company on other e-commerce projects in Europe, Southeast Asia and the United States.
The companies did not provide details of the projects. According to a JD.com spokesman, the deal will give Google less than 1 percent of the Chinese retailer’s shares, which trade on the Nasdaq.
Google pulled its search engine out of China in 2010, deciding that it would no longer censor its own search results as required by Beijing. But lately, the company has been looking for other ways to serve the planet’s largest population of internet users. [To CONTINUE READING at The New York Times…]
In other words, Google took a principled stand against China in 2010 when some could still argue that China was going to be a friend and positive trading partner. Since then, however, we’ve seen massive crackdowns in China on free speech, church growth, and human rights while increasing hacking, surveillance, and establishing Xi as defacto President for Life. And yet, Google is willing to work with China. On June 18, The Daily Beast noted the serious issue of “Exit Bans” that can even deny US citizens from leaving China if the government want to keep them as leverage against the USA.
One very recent example of Chinese aggressiveness is a massive hack into our satellite and defense companies. From CNBC on June 19:
China-based hacking campaign is said to have breached satellite, defense companiesReuters via CNBC June 19, 2018
A sophisticated hacking campaign launched from computers in China burrowed deeply into satellite operators, defense contractors and telecommunications companies in the United States and southeast Asia, security researchers at Symantec Corp said on Tuesday.
Symantec said the effort appeared to be driven by national espionage goals, such as the interception of military and civilian communications.
Such interception capabilities are rare but not unheard of, and the researchers could not say what communications, if any, were taken. More disturbingly in this case, the hackers infected computers that controlled the satellites, so that they could have changed the positions of the orbiting devices and disrupted data traffic, Symantec said. [To CONTINUE READING at CNBC…]
This is not an isolated incident. In fact, over just the past few weeks we have learned of multiple hacking efforts targeting our nation’s security including our ships and submarines as well as fighter jets. These are not the actions of a friend.
So, has China loosened up on the Internet rules that caused Google to pull out in 2010? Absolutely not. In fact, things have gotten much. much worse. From The Atlantic on June 18:
Beijing Wants to Rewrite the Rules of the InternetXi Jinping wants to wrest control of global cyber governance from the market economies of the west.Samm Sacks is a senior fellow at the Center for Strategic and International Studies. June 18, 2018…. In late April, just days after the Commerce Department announced the denial order against ZTE, Xi Jinping, the president of China, gave a major speech laying out his vision to turn his country into a “cyber superpower.” His speech, along with other statements and policies he has made since assuming power, outlines his government’s ambition not just for independence from foreign technology, but its mission to write the rules for global cyber governance—rules that look very different from those of market economies of the West. This alternative would include technical standards requiring foreign companies to build versions of their products compliant with Chinese standards, and pressure to comply with government surveillance policies. It would require data to be stored on servers in-country and restrict transfer of data outside China without government permission. It would also permit government agencies and critical infrastructure systems to source only from local suppliers.
China, in other words, appears to be floating the first competitive alternative to the open internet—a model that it is steadily proliferating around the world. As that model spreads, whether through Beijing’s own efforts or through the model’s inherent appeal for certain developing countries with more similarities to China than the West, we cannot take for granted that the internet will remain a place of free expression where open markets can flourish. [To CONTINUE READING at The Atlantic…]
Does this mean that Google is willing to conform to China’s demands? That is a very frightening proposition given all of the sway that Google has over American thought. Google search results can literally determine what a large segment of our population thinks on a given subject. And we know that the Chinese use every means of propaganda including education and entertainment to influence America.
Many see the Google investment as simply another sign of good global cooperation. In other words, it is a marketplace. Unfortunately, the Chinese likely view this as a battlespace opportunity.
Even more concerning than Google’s investment in JD.com is the recently revealed ties Google is developing with Huawei Technologies. Huawei has ties to the People’s Liberation Army according to our intelligence community and some industry experts. They are a major maker of global smartphones. And now, Google has chosen to work with them even as Google has stopped working with the United States government on a sensitive project. From CNBC on June 21:
Lawmakers accuse Google of supporting China’s Communist Party over the US with Huawei tiesArjun Kharpal, CNBC, June 21, 2018Lawmakers have urged Alphabet’s Google to reconsider its ties with Chinese technology giant Huawei because it “could pose a serious risk to U.S. national security” and American consumers.
In a letter to the search giant’s CEO Sundar Pichai on Wednesday, both Republican and Democrat lawmakers said they were concerned about Google’s “strategic partnership” with Huawei. The two have a long-standing relationship. Huawei, which is now the third-largest smartphone maker in the world by market share, runs a version of Google’s Android mobile operating system on its devices. And in January, they formed a partnership to work on a new standard of mobile phone messaging.
Huawei is one of China’s largest technology companies producing consumer electronics alongside its core telecommunications equipment business.
What appeared to annoy lawmakers was the fact that Google continued to work with Huawei when earlier this month it had stopped working with the U.S. government on a scheme called Project Maven. The project used Google’s artificial intelligence (AI) technology to analyze drone footage and images to improve the targeting of drone strikes. Many employees were angry at the fact Google was working with the military. [To CONTINUE READING at CNBC…]
Let’s face facts. China is at best a competitor and more than likely views us as an enemy. Yet American industry continues to be blinded by the potential of accessing Chinese markets. Here is a White House report covered by CNBC on June 19:
White House says China’s ‘economic aggression’ is a global threatHuileng Tan 11:09 PM ET Tue, 19 June 2018 | 02:20The Trump administration ratcheted up its criticism of China in a report released by the White House on Tuesday detailing its claims of “economic aggression” by the Asian giant.
The 35-page report titled “How China’s Economic Aggression Threatens the Technologies and Intellectual Property of the United States and the World” came a day after President Donald Trump threatened to slap additional tariffs on goods from China, setting off market turmoil.
China “has experienced rapid economic growth to become the world’s second largest economy while modernizing its industrial base and moving up the global value chain. However, much of this growth has been achieved in significant part through aggressive acts, policies, and practices that fall outside of global norms and rules (collectively, ‘economic aggression’),” the White House report said in its opening.
It goes on to describe practices through which China “seeks to access the crown jewels of American technology and intellectual property.”
Chinese acts of “economic aggression,” according to the report, include physical and cyber-enabled theft of technologies and intellectual property, evading U.S. export control laws, counterfeiting, piracy and reverse engineering. [To CONTINUE READING at CNBC…]
It’s not just our government feeling the economic coercion. The IMF and others are very concerned that China is using its “Belt and Road” initiative to get countries in a debt trap and then exercise undue leverage over policies. Several nations have expressed concern about China attempting to influence their governments and decision making. Influencing Google and infiltrating American smartphones would seem like an ideal way to continue that effort.
Despite these truths, most corporations blindly continue on seeing only globalization and a marketplace while China clearly is attacking a battle space. You know better. This is a global economic war. The sooner we acknowledge that fact the sooner we can address the threat.