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The Biggest Risk To The US Financial System

It’s not portfolio heat, nor hedge funds and their alleged manipulation of natural gas, nor is it the current, nearly 1:1 correlation between commodities and equities.

It’s sovereign espionage and hackers as described in this great article called Researchers Trace Data Theft to Intruders in China from the NYT.

The Toronto spy hunters not only learned what kinds of material had been stolen, but were able to see some of the documents, including classified assessments about security in several Indian states, and confidential embassy documents about India’s relationships in West Africa, Russia and the Middle East. The intruders breached the systems of independent analysts, taking reports on several Indian missile systems. They also obtained a year’s worth of the Dalai Lama’s personal e-mail messages.

My guess is that if they can hack into email accounts, and take over PC’s (not Macs) and turn them into zombies, why couldn’t they zombie a Windows-based computer with:

1) a keylogger to capture your orders;

2) malware that will send all your orders to the spy thereby disclosing all your trades and account balances;

3) software that will enact wire-transfers (probably harder to do); or

4) intercept your orders and modify them so that your “new orders” tank the market, your equity, and possibly your firm.

As one blogger puts it, What say ye?

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  • Harold L. Katz

    Hi Michael,

    This country faces so many dangers I need multiple sets of fingers to keep track of them. Skipping all the obvious ones, like Washington D. C. and those that live within its boundaries, all of them would sell their mothers for a contribution, the danger from without, the enemy nobody will name due to political correctness, the failure to regulate Wall Street, there is the subject you speak of, the impossibility of securing our computers at all levels. How can a civilization that is based on the use of its computers operate if not one system is safe from hacking and with each passing day the problem gets worse.
    Four more days and tax season is over for six months and I will go back to doing the only thing that makes sense in this crazy world, dancing to good music.
    Your buddy,
    Harold

  • Harold L. Katz

    Hi Michael,

    This country faces so many dangers I need multiple sets of fingers to keep track of them. Skipping all the obvious ones, like Washington D. C. and those that live within its boundaries, all of them would sell their mothers for a contribution, the danger from without, the enemy nobody will name due to political correctness, the failure to regulate Wall Street, there is the subject you speak of, the impossibility of securing our computers at all levels. How can a civilization that is based on the use of its computers operate if not one system is safe from hacking and with each passing day the problem gets worse.
    Four more days and tax season is over for six months and I will go back to doing the only thing that makes sense in this crazy world, dancing to good music.
    Your buddy,
    Harold