by David Steven | Apr 11, 2008 | Conflict and security
It’s been a long day, so excuse the bad mood. But, really: is it possible to read an article like this without falling further into deep despair?
Ira Winkler has the delightful job title of ‘penetration-testing consultant’. Hired by a US power utility, his task was to see how hard it was to take over their systems.
The answer? Not very.
The power company, it turns out, takes security so seriously that it runs the electricity grid on PCs that can also be used for buying marshmallows, watching teen-on-teen violence, or any of the other joys offered on these here internets (if it took you less than half an hour to read that sentence, then you’re not clicking on the links).
All Ira had to do was to (i) hang around on a few forums and harvest email addresses for people working at the power company; (ii) email the suckers employees and tell them that their benefits were about to be cut and that they needed to click a link RIGHT NOW to find out more; and (iii) use the website to infect, and take control, of their machines. Within minutes, apparently, he had ‘full system control’.
The experiment was shut down as soon as the company realized, in Wikler’s words, that it was ‘royally screwed.’ He notes: ‘The power grid is so poorly maintained that it is easier to attack than most other systems and networks. They hope for the best and make the risk-avoidance excuse if something goes wrong.’
Oh yes, and: ‘The real bad guys already know what I’m saying. There is the potential for serious damage.’
Feeling safer now?
by Charlie Edwards | Apr 11, 2008 | Off topic
Currently zipping round cyber space is this picture of Dick Cheney: Vice President of the US of A, keen fisherman and a man who clearly enjoys the finer things in life…
by Jules Evans | Apr 10, 2008 | Middle East and North Africa
I’ve started writing about Islamic finance as of a few months ago. It’s a fascinating, bizarre market, fusing as it does the world of ancient religious law with the world of international finance. And it’s an increasingly important market, because the Middle East is suddenly where all the capital is, so companies, banks, funds and even governments are scrambling for their Koran to work out how to attract this capital.
Particularly interesting to me is the world of Islamic debt. The market for Islamic bonds, or sukuks, has grown from almost nothing in 2000, to $60 billion last year, and is forecast to pass the $100 billion mark in the next few years. The UK is expected to issue its first sovereign sukuk later this year.
Each deal that gets arranged has to get a fatwa approving it from an Islamic scholar. In practice, bankers say that there are only 10 or so Islamic scholars who are well-known and credible enough for their ruling to have weight. So you have this handful of elderly scholars in Dubai, Bahrain and Riyadh giving their scholarly okay to tens of billions of dollars worth of deals.
Their rulings are very important because the whole idea of Islamic debt is a bit shaky. Islam forbids usury, or the earning of interest on loans. Investors have to be equal partners in economic projects, sharing in profits and losses, with aligned incentives. Otherwise lenders might have an incentive to profit from a borrower’s misery, like UK banks profit from credit card borrowers’ misery.
So the structure that has been invented in the last few years backs the sukuk with assets, which the investor ‘buys’ from the borrower, and then the borrower ‘buys’ them back at face value when the bond matures. It’s a bit of a fiddle, in effect.
Now, however, just as the sukuk market is getting really big, one of the leading scholars who cover the market has ruled that 85% of sukuk are haraam, or non-compliant with Shariah. (more…)
by David Steven | Apr 10, 2008 | Climate and resource scarcity, Conflict and security, Europe and Central Asia, Global system, Middle East and North Africa, Off topic
Below the jump, Alex and my talk at last weekend’s Progressive Governance summit – it’s a four minute summary of our paper on multilateralism and global risks. (more…)
by Alex Evans | Apr 9, 2008 | Climate and resource scarcity, Economics and development, Global system
I’m a big fan of Foreign Policy editor Moises Naim – he was the first person to spot the potential for China’s Olympics to become a debacle, for instance – but I was left a bit cold by his LA Times article yesterday on the pressures that accompany the emergence of a truly global middle class. As he observes, the global middle class is growing at an explosive rate:
Homi Kharas, a researcher at the Brookings Institution, estimates that by 2020, the world’s middle class will grow to include a staggering 52% of the total population, up from 30% now. The middle class will almost double in the poor countries where sustained economic growth is fast lifting people above the poverty line.
For Naim, the central question is, ‘can the world afford a middle class?’. As he points out “the lifestyle of the existing middle class will probably have to drastically change as the new middle class emerges. The consumption patterns that an American, French or Swedish family took for granted will inevitably become more expensive…” This is above all because of the intensifying resource pressures that come with a growing middle class, especially on food (which Naim discusses at length) and energy. Naim’s conclusion is that,
The debate about the Earth’s “limits to growth” is as old as Thomas Malthus’ alarm about a world in which the population outstrips its ability to feed itself. In the past, pessimists have been proved wrong. Higher prices and new technologies that boosted supplies, like the green revolution, always came to the rescue. That may happen again.
But the adjustment to a middle class greater than what the world has ever known is just beginning. As the Indonesian and Mexican protesters can attest, it won’t be cheap. And it won’t be quiet.
But what’s missing for me in Naim’s article is what the emergence of a global middle class means for the poor: the ‘billion at the bottom’ (who may be more like the two to three billion as we get closer to 2050). Yes, there’s a question about how to increase supply (of food, energy and other key resources). But there’s also a demand side – which is all about fair shares.
Take food prices as an illustration. In his book Development as Freedom, Amartya Sen observes that in some cases, famines happen because of relative inequality rather than because of an absolute shortage of food:
“…[some people] who buy food may be ruined because the real purchasing power of their money incomes may have shrunk sharply. Such a famine may occur without any decline in food output, resulting as it does from a rise in competing demand rather than a fall in total supply…”
So what happens if we start to see this globally – whereby a burgeoning global middle class inadvertently takes food beyond the purchasing power of the world’s poorest people?
All of us can see the two megatrends of (a) the increasing tightness of food supply – likely to grow further as population, affluence and scarcity continue to rise – and (b) the growing gulf between the haves and the have-nots. In combination, those trends have the potential to multiply each other’s impact as far as the poorest are concerned. What we’re only just beginning to realise is this: in a world of limits, relative inequality can have absolute implications for the world’s poor.
