| August 29, 2013 | | | | |  | | | Bomb Syria, Get Cyberattacked | | | - 15 reasons proving the U.S. government is stupid...
- The Syrian blowback that has American business worried...
- Plus, Byron King on a massive disaster that could soon come to a locale near you, an urgent three-day countdown and plenty more!
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| | | | | | | On Sept. 1, the Pentagon Is Set to Unleash Plan X...
It could send this small group of stocks through the roof. Best of all, the last time the Pentagon doled out cash like this, similar stocks soared by as much as 12,428%… 20,381%… AND EVEN 55,000%! But time is short. Click here now for this declassified brief on how you could see a similar opportunity to grab triple-digit, quadruple-digit… and even quintuple-digit gains from this extraordinary event. | | | | | | | | Peter Coyne, recalling how well past U.S. airstrikes have turned out...
 | | Peter Coyne | The comic playwright Aristophanes said, "Youth ages, immaturity is outgrown, ignorance can be educated and drunkenness sobered, but stupid lasts forever."
Cue President Obama's interview yesterday with PBS NewsHour.
"Hardly anybody disputes that chemical weapons were used on a large scale in Syria against civilian populations," he said. "If we are saying in a clear and decisive, but very limited way, we send a shot across the bow saying, 'Stop doing this,' this can have a positive impact on our national security over the long term."
We assume he means airstrikes. And in that case, we see what he means. The U.S. bombings of Guatemala, Laos and Cambodia positively impacted our national security over the long term.
Not to mention the bombings in Vietnam.
And Lebanon.
And Libya. Oh, and Iran… and Iraq… and Sudan… and Afghanistan… ermm, Pakistan, Somalia...
Oh, right, and Afghanistan, Iraq and Libya again, decades later.
Yeah. All those countries love us.
If the president gives the green light for military action, he'll go it alone. Perhaps England or France will tag along. But the U.N. won't. China and Russia will tie the Security Council's hands.
Then there's the issue of blowback. The Age's Michael Riley and Chris Strohm report that the U.S. is preparing for a series of cyberattacks from Syria or Iran. The strikes would be in response to U.S. military action against Syria's Assad regime.
The NSA is still trying to gauge the full capabilities of hacker units like the Syrian Electronic Army, especially after they hacked The New York Times last week. The SEA is the same pro-Assad group that tweeted there was an explosion at the White House through the Associated Press' account. That incident alone erased $136 billion from the S&P 500.
Iranian hackers have been poking for holes in the U.S. cyberinfrastructure. If they ally with the Syrian Electronic Army, they could launch several cyberattacks -- many of which would affect private businesses -- particularly banks.
Currently, JP Morgan spends $200 million on cybersecurity every year. And the bank's CEO, Jamie Dimon, told shareholders that number "will grow dramatically over the next three years." It's indicative of the new correlation between U.S. involvement overseas and the consequences businesses face for it back home.
The U.S. used to parade around the world, and life would go on as usual back home. But American military muscle isn't the be all and end all anymore. Land, sea, air and space superiority are so 20th century.
Cyberstrike capabilities have leveled the battlefield. And the scrappy countries are holding more bargaining chips. "One of the risks is that you've got Iran talking to Russia," says James Lewis, a fellow at the Center for Strategic and International Studies. "You have Iran talking to North Korea; you've got the Syrians talking to Iran."
But the Pentagon is far from licked. They realize the catastrophic damage that cyberattacks pose. And they want to be able to cause that damage just as much as they want to prevent it here at home. "The Department of Defense has gotten the message loud and clear." writes Byron King in today's episode of The Daily Reckoning.
"They're not going to wait around for a catastrophe like the Sayano-Shushenskaya disaster to happen to them." That was the devastating result of a cyberattack in Serbia. A whole turbine with enough electricity to light up a city of more than half a million people simply exploded. Bryon details in its entirety below…
Read on…
[Ed Note: Byron's research on cybersecurity has taken him far down the rabbit hole -- through reams of declassified government paper. His objective? Identify the defense contractors that will receive Pentagon money through "Project X." (That's the uber-secret-sounding spending spree Byron's been cataloging. It's about to take place in the cyberdefense community.)
The Pentagon will spend $16.1 billion in contracts retrofitting its cyberwarfare capabilities. Through declassified documents, Byron's whittled down the list of companies to a handful. These are small firms… and a $16.1 billion injection could catapult them to the big leagues. We're talking about the Boeings and Northrop Grummans. But this is urgent… the Pentagon assigns these contracts this Sunday. That's when we're pulling our information offline.
We've made the details available for free for Daily Reckoning readers. But because this is sensitive information, we'd like to keep it between us. So we ask you to simply initial this confidentiality agreement. There's no purchase necessary and you don't need to give any personal info. Simply click here, initial the form to say "my lips are sealed" and we'll send you straight to our research, free of charge.]
| | | | | | | "The Anguish on Bill Bonner's Face When I Told Him Was Horrifying…"
Find out the full story behind this quote in a special presentation you don't want to miss from Addison Wiggin, co-founder of The Daily Reckoning, when you CLICK HERE. | | | | | | | | The Daily Reckoning Presents
| | | | Deadly Cyberattacks Highlight the Need for a Cybersecurity Upgrade | | | | by Byron King | | | Here's what an eyewitness -- one of the few survivors -- stated in the official report of the catastrophe:
"I was standing upstairs when I heard some sort of growing noise. Then I saw the corrugated turbine cover rise and stand on end. I saw the rotor rising from underneath it. It was spinning. I could not believe my eyes. It rose about three meters. Rocks and pieces of metal went flying... [I] looked down, and saw everything getting destroyed, water coming in, people trying to swim... I thought someone must urgently shut the gates to stop the water, manually. ... Manually, because there was no power, none of the protection systems had worked."
It was Aug. 17, 2009 -- just over four years ago. The location was Siberia, at the sixth largest hydro-dam in the world. It's a place called Sayano-Shushenskaya.
The tips of the turbine that the witness saw spinning moved at near-supersonic speed, generating 475 megawatts of power. That's enough electricity to light up a city of more than half a million people. And then the entire device blew straight up, right out of its housing.
This particular liftoff was no small act of physics, either. The spinning turbine weighed over 1,100 tonnes (metric tons). The energy and mass balance was such that centrifugal forces literally tore the steel of the turbine to shreds. It was as if a large bomb went off inside the gigantic industrial complex. Here's what the main turbine hall looked like before the disaster…
 Sayano-Shushenskaya main turbine hall (before). RusHydro/IEEE Photo
Here's a shot of the same room taken a few days later from about the same angle:
 Sayano-Shushenskaya main turbine hall (after). Reuters/IEEE Photo.
From the lake behind the dam, water raged in and flooded the turbine hall and engine room. The ceiling collapsed, wrecking or badly damaging nine out of 10 turbine systems. Here's another shot of the aftermath:
 Generator rotor housing and upper bearings, post-disaster. Reuters/IEEE Photo.
Within moments, the death toll at Sayano-Shushenskaya was 75. The entire hydro-dam electrical output, totaling 6,400 megawatts -- about the equivalent of three nuclear power plants -- went offline, representing an immediate loss of over 10% of the power in the Russian Far East.
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The cost to repair the damage is over $3 billion, and still rising. Even now, four years later, this hydro-dam is not back up and running. So... what happened?
According to an official Russian report -- which is now unavailable to all but those with special access -- the hydro-dam calamity was primarily caused by turbine vibrations that led to "fatigue damage" to the mountings of Turbine No. 2, including its cover. In fact, per the Russian report, at the moment of failure at least six nuts were missing from the hold-down bolts securing the turbine cover.
Of interest, however, about two weeks after the event, terrorists in Chechnya took credit for sabotaging the Sayano-Shushenskaya power complex. The Russians immediately branded this as a flat-out lie.
Still, there's more to the story. According to Gen. Keith Alexander, head of the U.S. National Security Agency, a power grid operator nearly 500 miles away sent a rogue command to the Sayano-Shushenskaya hydro-dam control complex. Basically, the grid managers who control the Siberian region wanted more electricity in the wires to meet the load.
Evidently, the distant signal caused floodgates to open. This allowed more water to pass through to Turbine No. 2. But the increased water flow caused a "hammer" effect on the spinning machinery, which exceeded the design parameters for this particular element of the complex. Turbine No. 2 accelerated too fast. It rose out of its housing and tore itself apart. Here's an illustration from Russian state television:
 Increased water flow knocked the hydro-turbine
from its mountings. TV.Ru/IEEE Photo.
The point to keep in mind is that the Sayano-Shushenskaya hydro-dam disaster was a cyberattack. You can characterize it as an accident in the nature of "friendly fire." But overall, this cascading wave of destruction was triggered by a bad computer command.
According to Gen. Alexander, Sayano-Shushenskaya demonstrates the immense scope of destruction that can come from cyberattacks. Indeed, per Gen. Alexander, only nuclear bombs and other weapons of mass destruction can cause more damage, faster, over wider areas.
It's worth recalling Sayano-Shushenskaya because it -- or something like it -- may soon come to a location near you. In fact, this week, the departing secretary of Homeland Security, Janet Napolitano, issued a stark warning. The U.S. must move quickly and prepare for an inevitable large-scale cyberattack.
In a speech at the National Press Club, Napolitano stated that the U.S. "will, at some point, face a major cyber event that will have a serious effect on our lives, our economy and the everyday functioning of our society."
Napolitano expanded on the point, saying, "While we have built systems, protections and a framework to identify attacks and intrusions; share information with the private sector and across government; and develop plans and capabilities to mitigate the damage, more must be done, and quickly."
Napolitano said that the U.S. possesses the ability to thwart cyberattacks. However, our enemies are also evolving, and the day-to-day threat is far from eliminated.
With all this in mind, it's fair to say that cyberdefense is a growing arena for investment, at every level of government as well as across entire sectors of critical infrastructure. The Russian example above is just one illustration of the scope of disaster that can come from even an inadvertent bad signal.
The Department of Defense has gotten the message loud and clear. They're not going to wait around for a catastrophe like the Sayano-Shushenskaya disaster to happen to them. So what's their game plan? If you've been following our coverage of it -- you know they've initiated a cybersecurity overhaul called "Plan X."
It sounds like a plot to take over the world... tell me about it. But the Pentagon named it… not us.
Plan X is simply a massive defense spending program -- $16.1 billion in contracts. That money will shower down on a handful of small cybersecurity firms. In recently declassified documents, I discovered information that's allowed me to create a shortlist of companies that are positioned to win these contracts.
I've outlined them for you. But if you haven't seen the details on the firms and how to invest in them, you should look now. We're pulling the information down this Sunday. Why?
Because that's when the first contracts are being issued, Sept. 1. Needless to say, this opportunity is urgent. According to months of research and closed-door meetings, the Pentagon's about to shower a few private contractors in a way that has turned every $1 invested into $550 or more in similar scenarios.
I'm talking about the birth of defense giants like Boeing, Raytheon and Lockheed Martin. But because of the sensitive nature of this information, I have to ask you to sign a confidentiality agreement before I let you access it.
The agreement doesn't obligate you to open your wallet or give me any personal information. It's just your agreement that you won't announce this hypersensitive information to the whole world.
Simply click here to initial the confidentiality agreement and then you'll be redirected to the details on my shortlist of companies, free of charge. They're the handful of firms that will start receiving the Pentagon's $16.1 billion starting Sept.1.
Have a good holiday weekend. Best wishes...
Regards,
Byron King
for The Daily Reckoning
| | | | | | |  Byron King is the managing editor of Outstanding Investments and Energy & Scarcity Investor. He is a Harvard-trained geologist who has traveled to every U.S. state and territory and six of the seven continents. | | | | | | | | | BE SURE TO ADD dr@dailyreckoning.com to your address book.
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