Links: 2013-09-08
Events disrupt the Fed’s timetable | Gavyn Davies
“A week ago, the immediate path ahead for the Fed seemed to be well mapped out for the financial markets. There was a clear consensus that the FOMC would taper its asset purchases in its 17-18 September meeting, and would completely end its asset purchases in mid 2014. Furthermore, it seemed increasingly certain that Lawrence Summers would be nominated by the President to be the next Fed Chairman sometime in October, and that the ratification process would end in time for him to take office on 1 February. Now this timetable has been thrown into much greater doubt.”
Fed Officials Face Cliffhanger September Meeting After Mixed Jobs Report – Real Time Economics – WSJ
“Fed officials want to start scaling back their $85 billion-per-month bond-buying program this year and could take a small step in that direction at their policy meeting Sept. 17-18. But the economic data in recent months have been ambiguous and new threats to the economy and markets loom, which could prompt officials to wait longer before acting.”
Spain industrial output falls for 23rd month in July | Reuters
“Calendar-adjusted output fell 1.4 percent year-on-year in July, data from the National Statistics Institute showed on Friday after a drop of 2.2 percent in June, which was revised down from a preliminary reading for a 1.9 percent contraction.
“The figure shows that the adjustment in production continues, but in reality this monthly figure … indicates that you can’t rule out slight economic growth in the third quarter,” said Jose Luis Martinez, economist at Citi in Madrid.”
Slovenia to liquidate two small banks as bailout looms | Reuters
“Slovenia – struggling to avoid an economic bailout – will liquidate two small banks, Factor Banka and Probanka, to ensure the financial stability of its banking system, the country’s officials said on Friday.”
“For me, there’s no good day. I’m a part-time employee, although I often work close to 40 hours a week and don’t get benefits”
German Industrial Output Dropped in July After June Surge – Bloomberg
“German industrial production fell more than expected in July after surging in June, adding to signs that growth in Europe’s biggest economy is moderating.
Output, adjusted for seasonal swings, fell 1.7 percent from June, when it jumped a revised 2 percent, the Economy Ministry in Berlin said today. Economists forecast a decline of 0.5 percent, according to the median of 41 estimates in a Bloomberg News survey. Production slid 2.2 percent from a year earlier when adjusted for working days. “
Ireland to seek 10 billion euro post-bailout backstop | Reuters
“f the rest of its 85 billion euro international bailout program goes according to plan, Ireland will in a few months become the first euro zone country to exit an aid scheme.
That would provide a much-needed success story for the troika of lenders – the European Commission, European Central Bank and International Monetary Fund – which has tied aid to Ireland and four other euro zone states to tough austerity programs.
Dublin’s euro zone partners would have to sign off on any precautionary credit, which Noonan told the newspaper would only be drawn on if needed and would act as reassurance for markets that its position was solid.”
House prices rise by 5.4% over 12 months, says Halifax | Money | theguardian.com
“Prices in the three months to August show the highest annual increase since June 2010, lender says”
Goldman’s Hatzius: Fed will taper, but it will ‘lean’ dovish
“He said the number could be “$20 billion or a little less” but said the dovish lean could include a reinforcement of forward guidance, a lowering of the unemployment threshold or introducing additional conditions that need to be met before hiking rates.
Those additional conditions could potentially include placing more weight on inflation targeting and employment-to-population ratios such as labor force participation. “
Turkey’s Economy Suffers Blows from Inside and Out – WSJ.com
“the benchmark Istanbul stock index has lost one-third of its value since hitting a record high in mid-May, the lira has plummeted to record lows and bond yields have doubled to 10%. Turkey’s central bank has failed to stem the declines despite spending more than 15% of its net reserves as billions of dollars exited the country.”
Battle of the Clipper Chip – New York Times
From 1994: “cryptography shields the law abiding and the lawless equally. Law-enforcement and intelligence agencies contend that if strong codes are widely available, their efforts to protect the public would be paralyzed. So they have come up with a compromise, a way to neutralize such encryption. That’s the Clipper chip and that compromise is what the war is about.
The idea is to give the Government means to override other people’s codes, according to a concept called “key escrow.” Employing normal cryptography, two parties can communicate in total privacy, with both of them using a digital “key” to encrypt and decipher the conversation or message. A potential eavesdropper has no key and therefore cannot understand the conversation or read the data transmission. But with Clipper, an additional key — created at the time the equipment is manufactured — is held by the Government in escrow. With a court-approved wiretap, an agency like the F.B.I. could listen in. By adding Clipper chips to telephones, we could have a system that assures communications will be private — from everybody but the Government.”
Here is the crux of the problem from the government’s perspective: “All communications on the information highway would be immune from lawful interception. In a world threatened by international organized crime, terrorism and rogue governments, this would be folly.”
Raghuram Rajan joins the RBI: Into the pressure cooker | The Economist
Good data dump on Rajan here
Chinese Yuan Enters Top 10 Most-Traded Currencies – WSJ.com
“China for the first time joined the ranks of the most-traded international currencies, underscoring the rise of the world’s second-largest economy and the growth of the global foreign-exchange market.
The Chinese yuan vaulted to ninth in the Bank for International Settlements’ latest report on foreign-exchange turnover, surpassing the Swedish krona and New Zealand dollar, among other widely used currencies.”
Why President Obama needs Congress on Syria — in 3 poll numbers
“Add it all up and here’s what you have: A President with a weakened hand on foreign policy matters and a public that badly wants Congress to give its ok on the strike. The real question now is what President Obama does if Congress doesn’t sign off on a military strike.”
Japan’s shrinking shinkin Small banks left behind by Abenomics | South China Morning Post
“The policy mix of massive monetary easing, fiscal stimulus and growth-orientated reforms pursued by Prime Minister Shinzo Abe has helped revive the banking system, but smaller players in more remote parts of the country say they have yet to benefit. “
G-20 Summit: Obama’s Syria Efforts Take a Hit as Putin Gains Support | TIME.com
“The clearest blow to U.S. coalition-building at the summit came from the leaders of the E.U. In a briefing on Thursday afternoon, European Commission President José Manuel Barroso said the Syrian conflict was a “stain on the world’s conscience,” but stressed that the E.U. believes in a “political solution” to the crisis. Standing beside him, E.U. President Herman van Rompuy drove this point home. “There is no military solution to the Syrian conflict. Only a political solution can end the terrible bloodshed,” he said. Of all E.U. members, he added, “only France is ready to cooperate” with the U.S. on a military strike. So Europe’s joint statement at the G-20 would urge the U.N. Security Council to deal with the crisis politically, he said, echoing a point that Putin has long been making. (The U.S. insists that its proposed military action is not aimed at ending the war, but, rather, aimed at undermining Assad’s ability to deploy chemical weapons.)”
Summers Faces Key ‘No’ Votes if Picked for Fed – WSJ.com
“The committee Democrats expected to oppose Mr. Summers are Jeff Merkley of Oregon, Sherrod Brown of Ohio, and Elizabeth Warren of Massachusetts, according to congressional aides. The banking committee is the panel that will hold confirmation hearings on the nominee and vote on whether to send him or her to face a final vote in the 100-member Senate.”
Shiller Warns of Housing Bubble After 225% Surge: Brazil Credit – Bloomberg
“Robert Shiller, who predicted the collapse of the U.S. housing market, is warning that a bubble is emerging in Brazil at a time when a sluggish economy and persistent inflation are eroding investor confidence.
Since January 2008, home prices in Sao Paulo have soared 181 percent and jumped 225 percent in Rio de Janeiro, according to the FIPE Zap index.”
German Green Party Plummets in Poll Before Election – SPIEGEL ONLINE
“Just two years ago, it looked like Germany’s Green Party was going to challenge the Social Democrats for the honor of being the country’s second largest party. Now, poll numbers suggest only one in 10 voters will support them. What went wrong?”
Alternative for Germany: Anti-Euro Party Could Upset German Election – SPIEGEL ONLINE
“Should the AfD be able to jump the five percent hurdle, it could upset the current power dynamic in the Bundestag. The CDU’s coalition with the business-friendly Free Democrats would no longer be an option — because opposition seats would then outnumber those held by the CDU and FDP — nor would a center-left coalition between the Social Democrats, the Greens and the Left Party. Such a scenario would point to the formation of a grand coalition.”
Color Photos of Adolf Hitler, His Inner Circle and Hangers-On | LIFE.com
Hitler Bodyguard Rochus Misch Dies at the Age of 96 – SPIEGEL ONLINE
Microsoft Is Getting Nokia’s Phone Business For A Song – Arik Hesseldahl – News – AllThingsD
“Shares of Nokia peaked in late 2007 at $40.59, when its wireless phone division still ruled the world and its share of the world’s market for smartphones, then based primarily on its since-abandoned Symbian operating system. Since then, it has all been downhill. The shares never traded higher than that price; they’ve fallen by more than 90 percent. Prior to the announcement of today’s news, American Depository Receipts of Nokia closed at $3.90. And while Microsoft is not getting the whole company, it’s certainly paying a lot less for the piece it’s getting than it would have.”
Privacy Scandal: NSA Can Spy on Smart Phone Data – SPIEGEL ONLINE
“SPIEGEL has learned from internal NSA documents that the US intelligence agency has the capability of tapping user data from the iPhone, devices using Android as well as BlackBerry, a system previously believed to be highly secure. “
NSA Revelations Cast Doubt on the Entire Tech Industry | Threat Level | Wired.com
“The reports talk about the NSA’s attempts to exploit software bugs, break codes and accumulate encryption keys — this is all stuff that most security experts expected the surveillance agency to be doing. But here’s the most unsettling part: A leaked excerpt from the agency’s 2013 budget request talks about the NSA working with “US and foreign IT industries to covertly influence and/or overtly leverage their commercial products designs.” The document explicitly says: “These design changes make the systems in question exploitable.””
Majority of Tor crypto keys could be broken by NSA, researcher says | Ars Technica
“”Everyone seems to agree that if anything, the NSA can break 1024 RSA/DH keys,” Graham wrote in a blog post published Friday. “Assuming no ‘breakthroughs,’ the NSA can spend $1 billion on custom chips that can break such a key in a few hours. We know the NSA builds custom chips, they’ve got fairly public deals with IBM foundries to build chips.”
He went on to cite official Tor statistics to observe that only 10 percent of Tor servers are using version 2.4 of the software.”
Google encrypts data amid backlash against NSA spying – The Washington Post
“Google is racing to encrypt the torrents of information that flow among its data centers around the world in a bid to thwart snooping by the NSA and the intelligence agencies of foreign governments, company officials said Friday.
The move by Google is among the most concrete signs yet that recent revelations about the National Security Agency’s sweeping surveillance efforts have provoked significant backlash within an American technology industry that U.S. government officials long courted as a potential partner in spying programs.”
Yahoo: US wanted data on 40,000 accounts in first half of 2013 | Ars Technica
“Yahoo has now joined the transparency party, disclosing for the first time on Friday the number of requests (PDF) for user data that it received from law enforcement and other government agencies worldwide. Facebook shared its figures for the first time late last month, following other companies like Twitter, Google, and Microsoft.”
US government says Android is a malware magnet thanks to OS fragmentation | The Verge
This is a big problem for Android:
“Of the malicious attacks documented in the study, 79 percent took place on an Android device. Meanwhile, Apple’s iOS received just 0.7 percent of the recorded malware threats.”
This can’t be good for Dropbox for Business — Tech News and Analysis
“A TechRepublic story about the encryption issue used the same Dropbox statement to which the researchers replied that the Dropbox statement was correct:
“We have no problems with it. Reversing the Dropbox client was the main focus of our paper (the attacks are just ‘side-effects’). In order to hijack Dropbox accounts, you will need to leverage an existing vulnerability on the target user’s machine. Overall, Dropbox is just fine. There is nothing to worry about. We are still using and loving it.””
Cyberspying: Government may ban Gmail for official communication – The Times of India
“The government will soon ask all its employees to stop using Google’s Gmail for official communication, a move intended to increase security of confidential government information after revelations of widespread cyberspying by the US. “
U.S. government spied on Brazil’s Petrobras oil firm: Globo TV | Reuters
“The U.S. government allegedly spied on Brazilian state-run oil company Petroleo Brasileiro SA, known as Petrobras, according to the web site of Globo, Brazil’s biggest television network.”
Obama administration had restrictions on NSA reversed in 2011 – The Washington Post
“The Obama administration secretly won permission from a surveillance court in 2011 to reverse restrictions on the National Security Agency’s use of intercepted phone calls and e-mails, permitting the agency to search deliberately for Americans’ communications in its massive databases, according to interviews with government officials and recently declassified material.”
Obama’s Limited Strikes Plan Faces Risks of Escalation – Bloomberg
G20 shows that world no longer trusts Obama: Walkom | Toronto Star
“America’s allies used to give the U.S. the benefit of the doubt. Now, even Canada is skeptical.”
“I have resisted saying this up to now, and I am saddened to say it, but the US has proved to be an unethical steward of the internet. The UK is no better. The NSA’s actions are legitimizing the internet abuses by China, Russia, Iran and others. We need to figure out new means of internet governance, ones that makes it harder for powerful tech countries to monitor everything. For example, we need to demand transparency, oversight, and accountability from our governments and corporations.”
Shazam clocks ten billion tags, powers 10% of all digital music sales — Tech News and Analysis
By the way, this also supports my contention that the Internet is first and foremost about search. And this is why Google won over Yahoo, because they understood that search is the core to databases and that the Internet is a giant database.
“it helps to generate $300 million in digital music sales every year, thanks to users who identify a track and then click through to a digital retailer to buy it. This means that the company now initiates 10 percent of all digital music sales.”
A Few Thoughts on Cryptographic Engineering: On the NSA
“How to break a cryptographic system
There’s almost too much here for a short blog post, so I’m going to start with a few general thoughts. Readers of this blog should know that there are basically three ways to break a cryptographic system. In no particular order, they are:
Attack the cryptography. This is difficult and unlikely to work against the standard algorithms we use (though there are exceptions like RC4.) However there are many complex protocols in cryptography, and sometimes they are vulnerable.
Go after the implementation. Cryptography is almost always implemented in software — and software is a disaster. Hardware isn’t that much better. Unfortunately active software exploits only work if you have a target in mind. If your goal is mass surveillance, you need to build insecurity in from the start. That means working with vendors to add backdoors.
Access the human side. Why hack someone’s computer if you can get them to give you the key?
Bruce Schneier, who has seen the documents, says that ‘math is good’, but that ‘code has been subverted’. He also says that the NSA is ‘cheating’. Which, assuming we can trust these documents, is a huge sigh of relief. But it also means we’re seeing a lot of (2) and (3) here.”
This is yet another reason why I see Android remaining dominant. Although Apple has recently struck deals in Asia, Android is the dominant player in the Chinese market – and the price beats Apple easily.
Privacy Scandal: NSA Can Spy on Smart Phone Data – SPIEGEL ONLINE
Is Gmail secure enough for my private emails? | Technology | theguardian.com
“In view of recent privacy concerns, Vicaro wants to know if I’ve changed my mind about recommending Gmail, and if there are any more secure alternatives.”
The Only Way to Restore Trust in the NSA – Bruce Schneier – The Atlantic
“The public has no faith left in the intelligence community or what the president says about it. A strong, independent special prosecutor needs to clean up the mess. “
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