Operation Last Resort

February 4, 2013

• Super Bowl sub rosa: “Hacktivists” attack while America was distracted…
• The “Cyber Wars” heat up… China denies allegations… Japan irritation makes matters worse…
• “Bunga Bunga” makes waves in Italy… Spain takes the hit…
• Skip the gun shows, Byron suggests… Samsung “Next Big Thing” disappoints… celebrities bank on the end of the world… and more!

  “There’s a war going on,” Bob Violino of InfoWorld.com writes, “and it’s raging here at home — not in the streets or the fields, but on the Internet.”

While everyone was watching the Super Bowl yesterday, our favorite “hacktivist” group Anonymous was carrying out its latest project: “Operation Last Resort.”

  “Anonymous,” tech website, ZDNet reports, “appears to have published login and private information from over 4,000 American bank executive accounts in the name of its new Operation Last Resort campaign, demanding U.S. computer crime law reform.”

Heh. These guys are amusing, at the very least.

The group published a spreadsheet “allegedly containing login information and credentials, IP addresses and contact information of American bank executives,” according to ZDNet.

In a YouTube video released during the attack, Anonymous are miffed at the recent suicide of Reddit co-founder Aaron Swartz.

“Aaron was facing a trial this coming April,” our Laissez Faire editor Jeffrey Tucker wrote mid-January, “with him on one side and the full power of the world’s most heavily armed government on the other. The prosecution wanted him fined more than a million dollars and jailed for possibly 30-plus years.

“And what had he done? He hid a laptop in a closet at MIT and downloaded academic papers that are already available to millions around the world, with the apparent attempt to make them available even more broadly. That’s all he did. For this, he was charged with wire fraud and computer fraud.”

“This time there will be change, or there will be chaos…”

“With Aaron’s death, we can wait no longer,” the Anonymous film states. “The time has come to show the United States Department of Justice and its affiliates the true meaning of infiltration. The time has come to give this system a taste of its own medicine. The time has come for them to feel the helplessness and fear that comes with being forced into a game where the odds are stacked against them.”

The new video has over a million views since last night.

“We note that the Federal Reserve minidrop [of bank executive names and addresses] was just a counter-distraction to the superbowl distraction,” a follow-up tweet reads. “We await the DOJ’s statement.” More to come…

  “This attack was not the work of amateurs,” Twitter announced regarding another recent attack in which 250,000 account passwords were taken, “and we do not believe it was an isolated incident.

“The attackers were extremely sophisticated, and we believe other companies and organizations have also been recently similarly attacked.”

Twitter’s statements immediately follow reports from media outlets like The New York Times and The Wall Street Journal and the U.S. Department of Energy announcing cyberattacks on their systems.

  According to The New York Times, Chinese hackers have been busy. “For the last four months,” the Times reports, “Chinese hackers have persistently attacked The New York Times, infiltrating its computer systems and getting passwords for its reporters and other employees.”

And former Energy Department security official Ed McCallum suspects the same for the Department of Energy attacks, claiming that China and Iran have been after Energy Department secrets.

“It’s a continuing story of negligence,” told Free Beacon, despite the Energy Department’s control of the most “sophisticated military and intelligence technology the country owns.”

The Chinese response? “According to some investigative results,” foreign ministry spokesman Hong Lei announced, “which showed no proof and had uncertain evidence and a baseless conclusion, China had participated in online attacks. That is a totally irresponsible conclusion.”

Easy for him to say.

“China is also a victim of online attacks. China’s laws clearly ban online attacks.”

   We expect these jabs between the U.S. and China to heat up as 2013 progresses. In fact, our latest research — published in the January 2013 issue of Apogee — tracks early warnings of a hot war brewing in Asia.

“This is how wars usually start,” wrote strategic studies professor Hugh White of Australian National University in the waning days of 2012: “with a steadily escalating standoff over something intrinsically worthless.

“So don’t be too surprised if the U.S. and Japan go to war with China next year over the uninhabited rocks that Japan calls the Senkakus and China calls the Diaoyu islands. And don’t assume the war would be contained and short.”

  “China is our neighbor,” Japanese citizen Takaharu Abiko tells AFP, “and all sorts of problems happen between us all the time.”

In addition to their beef over the Senkakus/Diaoyu Islands, the Japanese are increasingly agitated by China’s smog… now making its way over the China Sea to Japan.

“It is very worrying,” Mr. Abiko goes on. “This is dangerous pollution, like poison, and we can’t protect ourselves. It’s scary.”

“Air pollution over the west of Japan has exceeded government limits over the last few days,” Atsushi Shimizu of the National Institute for Environmental Studies (NIES) told AFP, “with tiny particulate matter a problem.”

Just a few minor tensions, worth keeping an eye on. We’ll keep you posted should anything really develop.

[Ed Note. See also: Invest... Not Invade, in which we compare and contrast China's global economic domination strategy versus that of the U.S.]

  Meanwhile, seven time zones to the west, former Italian prime minister Berlusconi (“Bunga Bunga”) is making political hay with the accounting and bribery scandal at Banca Monte dei Paschi di Siena (“MPS”), founded in 1472, the oldest surviving bank in the world. The anti-euro comedian Beppe Grillo — and now candidate for prime minister again — joked about giving al-Qaida coordinates to bomb parliament.

Nice.

That juicy nugget and political troubles in Spain helped nudge stocks down from the five-year highs they hit last week. All three indexes dropped as the market opened this morning, due to uncertainty in Europe.

The Dow fell over 106 points, ending the “14,000 Dow” party, while the S&P retreated 19 points. The Nasdaq slid down 16 points, too.

Investors looking for the “safety” of government bonds over stocks piled into Treasuries — pushing yields on 10-year notes down by 2 basis points, to 1.99%. Rising yields on Spanish bonds have helped the dollar strengthen against the euro, causing gold futures contracts to fall by $6, to $1,664.

  “Bailouts are not free,” our Dan Amoss writes, commenting on the entertainment in Italy. “Early on, the costs are hard to detect. But in time, they become obvious. Here is one big cost: In order to feed the financial system’s rotten, unreformed core, bureaucrats starve the rest of the economy.

“In a financial crisis,” he goes on, “using public resources to defend private wealth seems like a good idea. But when budget cuts start depressing the economy, voters rethink the wisdom of bailouts. Recent Italian political polls show that corruption, long tolerated, is starting to matter.”

Taking a very wide view of the markets this morning, Mr. Amoss suggests a few ways to play current strife in the Italian markets in today’s 5 PRO… below.

  Despite the news on the dollar, gold is up on the day, currently sitting at $1,675.

A barrel of Brent Crude oil is going for $116.18. West Texas Intermediate sits just below $100, at $96.72

  “Through the ups and downs,” Byron King writes, “I see basic support for precious metal prices — gold, silver, platinum and palladium. They’ve found a floor. Prices are holding, with plenty of inflation built into the dollar supply, courtesy of the Federal Reserve and its $85 billion per month of bond buying. There’s just a lot of Keynesian thinking at work. Too much, some might say.

“Platinum and palladium (PGMs), as I told you about last week, are a solid buy. I see limited downside with this one, because the supply deficit in the PGM metals is here and not going away. The demand side is primed to explode.”

  “If you want to accumulate a stash of something else,” Mr. King suggests, “skip the gun shows, where AR-style weaps are about triple the recent price. Instead, go for physical silver just now. Of course, don’t turn down the chance to buy physical gold, either, if you can get it without too much in the way of markup. If you do NOT hold any physical metal? Get some. Gold. Silver. (Don’t forget brass, if you know what I mean.)

“On the merely valuable side — but not quite as precious — copper prices are firm too. The recent price for copper has been solid, within a dime or so of $3.70 per pound. There’s no apparent demand weakness, what with globally active construction and industrial activity.”

[Ed. Note: You can review Byron's precious metals recommendations in this month's copy of Outstanding Investments. If you're not currently a subscriber, we recommend you become on here.]

  Although Samsung’s “Next Big Thing” Super Bowl announcement wasn’t what we were hoping, it was announced today another company has stepped up to the plate in the graphene race.

“The company behind one of the world’s very first mobile phones,” Australia’s News.com reports, “has been approved for a $1.35 billion grant to develop ‘the world’s strongest material,’ known as graphene.”

  Last week, we observed the latest of developments in the graphene world, including Britain’s efforts to catch up. Apparently, the billion-dollar “flagship” grant to develop graphene has been awarded to longtime mobile developer Nokia.

“Current methods of growing flakes of graphene often suffer from graphene domains not lining up,” said project leader professor Nicole Grobert, of Oxford University’s Department of Materials. “Our discovery shows that it is possible to produce large sheets of graphene where these flakes, called domains, are well aligned, which will create a neater, stronger, and more ‘electron-friendly’ material.”

  In December 2012, Nokia announced a new partnership with the world’s largest cellular operator, China Mobile, to offer Nokia’s new Lumia 920 phone as Lumia 920T, an exclusive Chinese variant.

Nokia hopes to tap China Mobile’s 700 million customer base… and could further increase demand for graphene…. and interest in Byron’s “pickaxe and shovel” play in the space. If you’re interested in learning more, you can do so here.

  “We made and spent at least $10 million,” reality TV star Spencer Pratt told Britain’s OK! magazine. “The thing is, we heard that the planet was going to end in 2012. We thought, We have got to spend this money before the asteroid hits.”

Problem: The world didn’t end.

In 2010, according to SFGate, Pratt and his girlfriend, Heidi Montag, revealed they were on the verge of bankruptcy. To save money, they moved in with his father and gave up their luxury home in Beverley Hills.

It was later revealed the couple deliberately spent all of the money on things like an armored truck and designer handbags because they believed the world was coming to an end.

“I would give my friends $15,000 for their birthday,” Pratt told OK! “Just cash. I would buy people cars. Every valet I met got a couple of hundred pounds tip. I would pay people $200 just to open doors for us.

“Here’s some advice,” Pratt concludes, “definitely do not spend your money thinking asteroids are coming.”

  “I am a 66-year-old American and have lived in Germany 20 years,” writes a reader with a personal response to our expatriation thread. “My sons renounced their U.S. citizenship last year, as they have German kids and wives and jobs and will remain here.

“One of my sons with his wife attempted to buy a type of condominium. They were refused because he was BORN in America! I have two combat tours in the bank for American foreign policy misadventures. The day is drawing much closer when I renounce my U.S. indebted servitude!”

The 5: How the tables turn.

Addison Wiggin
The 5 Min. Forecast

P.S. Although Samsung’s Super Bowl commercial was a dud, the word is Samsung “unofficially” set a date when they will announce the release date: March 22, at their Mobile Unpacked event. If that is indeed the case, we could see Byron’s graphene pick skyrocket long before word is official. Click here to get in before the news hits.