THE CONTINUING BLOWBACK: CHINA AND GERMANY IMPOSE ...June 7, 2014
What goes up must inevitably come down(unless, of course, it's Malaysia Air Flight 370), and over the past week I've been continuing to blog about the increasingly bizarre space news that seems to have begun in April and continued throughout May and on into this month. And as usual, I've indulged in my trademark high octane speculation and, as evident yesterday, abandoned petrochemical speculation(with apologies to commodities traders) for some really bizarre dot-connecting concerning deflector shields, plasmas, ion drives, and ionospheric heaters, bypassing the subject of Nazi Bells and mad scientists completely.
But today we have to come back down to Earth and the muddle that modern geopolitics has become. Regular readers of this website know that I've also been watching the emergence of what I've been calling Cold War Act Two, for want of a better term, as the blowback and fallout of American unipolarism, most recently evident in the Ukraine and the revelations of vast NSA spying has gathered both in pace and intensity. For example, like former Assistant Secretary of Housing and Urban Development Catherine Austin Fitts, I tend to view the electronic surveillance capabilities of the USA not so much in terms of a national security measure and capability, which it certainly is, but also as "the ultimate insider trading mechanism," the ultimate ability to snoop on, model, and predict electronic financial clearing and hence to predict coming financial activity. Such a capability is a huge financial advantage, and as a result, I have also argued that systems of clearing such as SWIFT and CHIPS are vulnerable. In this respect, I have argued that the BRICS nations, or as I like to call them, the BRICSA nations, will inevitably, as a matter of their own financial and national security, to deploy their own systems of domestic and international clearing. The initial components of these steps, I have already argued, have been taken by Russia in the wake of the ongoing Ukrainian fiasco.
But there is another aspect of this story that goes back, somewhat, in the annals of alternative community "conspiracy theory," to the late 1980s and early 1990s, and that is the story of the so-called "clipper chip" that was rumored to be covertly installed on American made computers, from desktops to mainframes, in the wake of the notorious INSLAW scandal and the alleged theft of PROMIS database management software from the INSLAW company by the Reagan era Department of Justice. This device, it was alleged, was a secret hardware "backdoor" into every American made computer, vastly expanding the surveillance capabilties of the American national security apparatus. In my opinion, the current NSA surveillance scandal is intimately, deeply, and directly related to the INSLAW-PROMIS scandal of that era. I strongly suspect, for example, that whatever architecture made the PROMIS software so flexible and such a valuable prize to the Reagan administration is the same conceptual architecture - with appropriate updates - at work today. (For the story of the Clipper chip, see A basic history of the legislation surrounding the Clipper Chip. For the INSLAW-PROMIS story, the best source remains, in my opinion, Mr. Bill Hamilton, CEO of INSLAW, himself. But there is a decent review here from Wired magazine: The INSLAW Octopus. I have written about the matter here: A LITTLE UPDATE ON THE INSLAW MATTER, here: DAVE MARTIN AND THE MYSTERIOUS DEATH OF GUS WEISS and here[for starters]: SOME MORE THINGS TO MAKE YOU GO HMMM: INSLAW AND THE FAREWELL DOSSIER)
As I documented in the last of my own blogs linked above(SOME MORE THINGS TO MAKE YOU GO HMMM: INSLAW AND THE FAREWELL DOSSIER), there is a plausible case that some of the "accidents" befalling the Soviet Union were not accidents at all, but the result of corrupted software "smuggled" into that country from the USA. This historical perspective, in other words, is bound to have other nations reassessing their exposure to American electronic surveillance, and China, for one, appears to have sounded up the clarion call, effectively ordering its financial institutions and international businesses to cease buying and operating with American hardware and software, in this case, IBM and Microsoft products:
Now as the Zero Hedge article makes clear, in a wry and apt bit of humor, none of this will be reflected in the actual "market" performance of IBM or MSFT:
"That's ok though: since news and fundamentals don't matter, we fully expect IBM stock to also be up several percent on what now appears to be the terminal loss of one of the company's largest export markets. And not only IBM: other stocks set to surge on this bad news are MSFT and, of course, Cisco, whose CEO was recently crying about Obama's NSA policies, and whose sales in China are once again assured to crater. But as they say in the movies: tis but a scratch - who needs top line growth when a company can issue debt to buy back its share and pretend all is well?" (My thanks to Mr. J.K. for bringing this article to my attention.)
We'll get back to that market performance stuff, and its evident disconnect from news that, under normal circumstances, should affect it, in a moment. Presently, however, consider the following news from Germany, one of China's biggest trading partners:
One can speculate here that perhaps there were discrete talks between Chancellorin Merkel's government and Beijing over this step, with both countries expressing concerns over their international trade and NSA snooping upon it. Given that Frankfurt has also recently become a bond market for Chinese bonds denominated in reminbi, the concern of the two countries is understandable. Here one may make some predictions: if the trend continues, then the European basis of the concern will spread from Germany to other countries, and the target of the concern will also reach out to embrace the British Commonwealth nations, including Australia, Canada, and the UK itself, which have electronic surveillance swap agreements with the USA, And eventually, we can expect to see Germany taking similar steps with regard to its computer hardware, by promoting regulations favorable to non-American computer building companies.
What I suspect all this heralds as a long term game which has only just begun, is that the BRICSA nations will make the type of action signaled by China a part of their agenda in coming years, and that agenda will include an inevitable insistence, in my opinion, that sensitive trade between that bloc and any non-member nation such as Germany, be conducted by "secure servers". And that will mean, no clearing through SWIFT, CHIPS, and no clearing on American-made computers. Of course, Germany, Russia, India, China and so on, are just as capable of their own electronic mischief, but so long as the heavy hand of Washington's drone-imposed will continues to be exercised in the fashion it has, the blowback will continue.
See you on the flip side.