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Title: Blog by Novelist William S. Frankl, MD

Archive for December, 2014

North Korea And Cyber War

Friday, December 19th, 2014

NEWT GINGRICH on CNN 12/9/2104

No one should underestimate the historic importance of the North Korean cyberwar against America and the collapse of American defenses in the Sony Pictures attack.

This was not some amusing pop culture event in which a few “hackers” played games with celebrities.

This was not an entertaining series of embarrassing leaks that allowed us to learn how viciously and nastily some senior Hollywood bosses write about famous movie stars in internal emails.
Sony’s finances take hit after cyber hack

This was a deliberate assault on sovereign American soil against an American company, costing it millions of dollars in direct damages and hundreds of millions in reputational damages while blocking most of its employees from using their internal systems to get routine work done.

This was a threatened physical assault against moviegoers and movie theaters nationwide if they ignored the cyberattack and dared to laugh at the North Korean dictator Kim Jong Un.

Some commentators criticized the movie theaters for their “cowardice” in not standing up to the threats. Others criticized the rest of the movie industry for not coming to the defense of Sony.

Both critiques miss the core reality.

Private companies can’t fight sovereign nations.

Private companies cannot be asked to risk the lives of their employees and their customers because of an unanswered foreign threat of violence.

Defending America against foreign enemies is the duty of the United States government. To “provide for the common defense” is one of the reasons given in the preamble to the Constitution for forming a government.

This attack on American interests began on November 24 when there was a massive hacking assault on Sony. After 24 days of government passivity and ineffectiveness, the theaters caved to the threat of terrorist attacks.

Thus with more than three weeks to find and defeat the attackers, the American government proved to be impotent.

This attack is pure cyberwarfare.

There is a big difference between hacking for intellectual property theft and hacking to coerce a change in behavior.

The former is a crime. The second is an act of war.

The real danger is that this incident will become a precedent. Other countries and other terrorist groups will conclude that it is open season on American interests and even American lives. American companies will begin (in fact have already begun) self-censoring to avoid offending dictators and terrorists. The enemies of our freedoms will have won.

We need three decisive steps to react to this defeat in a cyberwar.

First, we have to go on the offense in this campaign and refuse to accept that the fight is over. North Korea must be made to pay an extraordinary price for this attack. One step might be to simply confiscate North Korean ships until the dictatorship pays triple damages to Sony and the theaters for the cost of its attack. What must not happen is for the American people to be told it is too hard or too dangerous to defend America against an out-of-control dictatorship. That could lead to anarchy and chaos, with every predator on the planet feeling they have the right to wage cyberwar against Americans.

Second, we should develop an immediate response capability to defend American interests and crush cyberopponents immediately. The time to hit back hardest was November 24, the day the attack began. We need protocols to enable companies and the federal government to spot an assault, report it and respond to it in virtually real time. This will require the creation of a command center — comparable to the air traffic control system in its speed of response — for the government and private companies to cooperate on cyberattacks

Third, we must develop vastly better defensive and offensive capabilities. This will require considerable congressional involvement in thinking through the realities of the emerging permanent cyberdangers and the patterns of cyberwar.

No one should kid themselves.

We have now entered the age of cyberwar and we lost a major round in that war. The longer it takes us to confront this fact and take the necessary corrective actions, the greater our vulnerability to another defeat will be.

Oil Prices Plummet

Friday, December 19th, 2014

Karim Rahemtulla
Wall Street Daily

The oil price saga continues with the oil minister of the UAE firmly stating that it won’t cut back production, even if oil prices are at $60 or even $40 per barrel.

The oil markets are taking this threat seriously, and prices are continuing to plunge – reaching depths not seen since the Great Recession of 2008 and 2009. Oil-related shares are getting pummeled daily.

All the predictions of peril and doom are taking their toll on investors. More and more people are scared to touch anything remotely associated with oil or gas. Many are equating the situation to catching a falling knife.

But OPEC’s efforts to drive U.S. energy companies out of business may actually be a boon for the long-term survival of the industry.
The Cost of Doing Business

OPEC seems to be betting that the U.S. energy industry will come to a screeching halt and wells will shut down overnight.

It’s a shortsighted play, at best.

Yes, global energy players will cut back production and exploration. That’s a mathematical certainty, and it’s already happening.

You see, there are several costs involved with the production of energy, specifically fracking. These include land, labor, energy, chemicals, and water. Throw in the cost of leasing equipment and transportation, and you basically have the entire mix.

At $60 per barrel, most fracking companies are marginally profitable, depending on their location. For example, the fields in the Mid Bakken, Woodbine, and Mississippian Lime regions can make money below $60, while areas like the Delaware Permian are losing money at $60 per barrel.

However, as production and exploration begin to slow, each of the variable costs mentioned above becomes cheaper. Wages fall as demand for workers dries up and layoffs begin. Land costs tumble as marginal players begin to sell assets to raise capital, and the underlying value of the oil is reduced due to market prices. Transportation costs fall as energy costs and supplies shrink. Equipment and servicing costs decline. In fact, the entire cost structure drops as a result of a recession in the oil patch.

Granted, dropping production costs alone won’t save the oil players. But the advent of new technology could…
Survival of the Fittest

You see, some companies will innovate in order to undercut OPEC’s strategy now and in the future.

As prices stay low, marginal players will begin to disappear, and the stronger players will take hold.

These resilient companies will invest in better fracking methods, reusing chemicals, and waterless fracking to reduce the cost of production.

The wells that are unprofitable will be shut down until prices recover. But I stand firm in my belief that oil prices are much closer to finding a bottom than most think.

The timing of the OPEC announcement couldn’t have been better in terms of its effect. Year-end selling of oil “names” is exacerbating the fall as many fund managers get rid of (or pare down) holdings before portfolios are published for customers at the end of the year.

No one wants to be seen with a big position in an industry that’s perceived to be collapsing.

Yet, energy company insiders continue to buy the shares of their own companies – knowing full well that the industry is both cyclical and prone to massive panic selling. It’s happened before, and it’s happening again.

The long-term outcome is clear. The world needs energy to function. More energy usage in the future is inevitable, and this correction – like all those in the past – will prove to be a massive opportunity to buy at bargain levels.

And “the chase” continues,

ALAN GROSS IS FREE; CUBA IS NOT Republican Jewish Coalition 12/18/2014

Friday, December 19th, 2014

American aid contractor Alan Gross is free after being held hostage for five years in Cuba. The “humanitarian” release of Gross from prison came along with a spy exchange. Cuba released one American intelligence operative it had held for two decades and also pledged to release 53 of its own political prisoners. In exchange, the U.S. returned three convicted Cuban spies in American prisons.

But President Obama wants to give the Cuban government considerably more. In In his statement regarding the release of Alan Gross, President Obama stated that the U.S. would move to normalize relations with Cuba after nearly 54 years. This includes the re-establishment of full diplomatic relations, relaxing restrictions on Americans’ travel to Cuba, increased trade, and removing Cuba from the U.S. government list of state sponsors of terrorism.

There was strong bipartisan opposition to the President’s plan. Senate Foreign Relations Committee Chairman Robert Menendez (D-NJ) objected to the dangerous precedent set by trading an innocent American, Alan Gross, for convicted spies. He also expressed concern that:

This asymmetrical trade will invite further belligerence toward Cuba’s opposition movement and the hardening of the government’s dictatorial hold on its people. Let us all remind ourselves that an untold number of ordinary people yearning for democracy remain imprisoned by the exact same tormentors that have punished Alan Gross and they, along with all Cubans, deserve a free and liberated Cuba.

Senator Marco Rubio (R-FL) pointed out the unchanged reality that the Castro family controls and oppresses Cuba today, as it has for decades, and that Cuba remains a state sponsor of terrorism:

Cuba, like Syria, Iran, and Sudan, remains a state sponsor of terrorism. It continues to actively work with regimes like North Korea to illegally traffic weapons in our hemisphere in violation of several United Nations Security Council Resolutions. It colludes with America’s enemies, near and far, to threaten us and everything we hold dear. But most importantly, the regime’s brutal treatment of the Cuban people has continued unabated.

Rubio promised to use his role as incoming chairman of the Senate Foreign Relations Committee’s Western Hemisphere subcommittee to try to block the President’s plan to normalize relations with Cuba and said:

Appeasing the Castro brothers will only cause other tyrants from Caracas to Tehran to Pyongyang to see that they can take advantage of President Obama’s naiveté during his final two years in office. As a result, America will be less safe as a result of the President’s change in policy. When America is unwilling to advocate for individual liberty and freedom of political expression 90 miles from our shores, it represents a terrible setback for the hopes of all oppressed people around the globe.

The RJC issued a statement expressing relief that Gross has been freed, but cautioning that normalizing relations with Cuba is unwise:

The people of Cuba are still in prison – many literally so. American steps to open diplomatic and trade relations with Cuba while the government continues to oppress its own people and to support terrorism around the world is unwise. We call on Congress will look into this matter when they reconvene.

Elliott Abrams carries those concerns one step further, writing at The Weekly Standard:

The American collapse with respect to Cuba will have repercussions in the Middle East and elsewhere-in Asia, for the nations facing a rising China, and in Europe, for those near Putin’s newly aggressive Russia.  What are American guarantees and promises worth if a fifty-year-old policy followed by Democrats like Johnson, Carter, and Clinton can be discarded overnight? In more than a few chanceries the question that will be asked as this year ends is “who is next to find that America is today more interested in propitiating its enemies than in protecting its allies?”

Obama to Lift Cuba Embargo and Normalize Relations FOX NEWS 12/19/14

Friday, December 19th, 2014

The historic plan announced by President Obama on Wednesday to normalize relations with Cuba was met with heavy bipartisan resistance on Capitol Hill, raising questions of whether Congress will even consider easing a more than 50-year trade embargo against the communist state — let alone end it.

Obama said the United States will cease what he called an “outdated approach” with Cuba, and take steps to normalize diplomatic relations — including opening an embassy in Havana — after American Alan Gross was released from the country following five years in prison as part of an agreement that also included the release of three Cubans jailed in the U.S.

Obama also called on Congress to have an “honest and serious debate” about lifting the trade embargo, which has been in place since 1962.

But Republicans, and even some Democrats, pushed back strongly, with some GOP heavy hitters calling Obama’s plan “another concession to tyranny.”

“These changes will lead to legitimacy for a government that shamelessly continuously abuses human rights but it will not lead to assistance for those whose rights are being abused,” Sen. Marco Rubio, R-Fla., said Wednesday.

“It’s absurd and it’s part of a long record of coddling dictators and tyrants,” Rubio told Fox News, claiming the administration is “constantly giving away unilateral concessions … in exchange for nothing.” Rubio called Obama the “worst negotiator” the U.S. has had as president “since at least Jimmy Carter.” He also said Congress would not support lifting the embargo.

Incoming Senate Majority Leader Mitch McConnell also criticized the administration’s plan to change the current U.S. relationship with Cuba. McConnell said he defers to Rubio on the matter.

Sen. Bob Menendez, D-N.J., who, like Rubio, is a Cuban-American lawmaker, said this is a moment of “profound relief” for Gross and his family. But he voiced concerns that this constituted a “swap of convicted spies for an innocent American.”

“President Obama’s actions have vindicated the brutal behavior of the Cuban government,” he said in a statement. “Trading Mr. Gross for three convicted criminals sets an extremely dangerous precedent. It invites dictatorial and rogue regimes to use Americans serving overseas as bargaining chips.”

Sens. Lindsey Graham, R-S.C., and John McCain, R-Ariz., said in a joint statement that the move damages American values.

“Unfortunately, we fear the most damaging chapter to America’s national security is still being written. We dread the day President Obama takes to the podium to announce a nuclear deal with the Iranian ayatollahs which does little, if anything, to deter their nuclear ambitions, placing our nation and our closest allies in even deeper peril,” the said in a joint written statement.

Other U.S. lawmakers hailed the agreement, and some even joined Gross on the plane ride to the U.S. — Rep. Chris Van Hollen, D-Md.; Sen. Patrick Leahy, D-Vt.; and Sen. Jeff Flake, R-Ariz., were on that flight.

U.S. officials said Pope Francis was personally engaged in the process as well and sent separate letters to Obama and Castro this summer urging them to restart relations.

Senior administration officials said Obama spoke with Cuban leader Raul Castro for more than 45 minutes on Tuesday, the first substantive presidential-level discussion between the U.S. and Cuba since 1961.

Obama also plans to take several executive actions, including expanding travel and economic ties to the island. According to a White House document, the U.S. government would raise remittance levels and authorize certain travel to Cuba, as well as start a review of Cuba’s designation as a state sponsor of terrorism.

Obama also has formally directed the State Department to launch talks with Cuba to re-establish diplomatic relations, which were cut in 1961. The embassy in Havana would be opened “in the coming months,” according to the White House.

Officials said the Cuban government was releasing 53 political prisoners. The announcement comes after Gross was freed, as part of an agreement that included the release of three Cubans jailed in the U.S.

Gross landed in the U.S. shortly before noon on Wednesday.

A senior Obama administration official told Fox News that Gross left Cuba on a U.S. government plane Wednesday morning, and was “released on humanitarian grounds by the Cuban government at the request of the United States.”

The three Cubans released are part of the so-called Cuban Five — a group of men who were part of the “Wasp Network” sent by Cuba’s then-President Fidel Castro to spy in South Florida. The men, who are hailed as heroes in Cuba, were convicted in 2001 in Miami on charges including conspiracy and failure to register as foreign agents in the U.S.

Two of the Cuban Five were previously released after finishing their sentences.

Cuba was also releasing a non-American intelligence “asset” along with Gross, according to a U.S. official. Administration officials claimed that Gross was not technically traded for the three Cubans, and that his release was humanitarian.

Obama administration officials had considered Gross’ imprisonment an impediment to improving relations with Cuba, and the surprise deal was quickly making way for rapid changes in U.S. policy.

The president has taken some steps to ease U.S. restrictions on Cuba after Raul Castro took over as president in 2010 from his ailing brother. He has sought to ease travel and financial restrictions on Americans with family in Cuba, but had resisted calls to drop the embargo. Obama raised eyebrows when he shook hands with Raul Castro at Nelson Mandela’s memorial service last year.

Gross was detained in December 2009 while working to set up Internet access as a subcontractor for the U.S. government’s U.S. Agency for International Development, which does work promoting democracy in the communist country. It was his fifth trip to Cuba to work with Jewish communities on setting up Internet access that bypassed local censorship.

The December, 2014 Follies

Friday, December 19th, 2014


December has been a turbulent month. After the landslide victory of Republicans in the 2014 midyear elections (42 new House seats and 9 new Senate seats) the Republicans are fighting among themselves (the budget to fund the government until next September and Obama’s dreadful flouting of the Constitution by offering amnesty to 5 million illegal aliens –– by executive action ––– basically telling the Congress to “go to hell.”).

Now comes collapsing oil prices engineered by Middle East oil producers threatening the future of oil production in the United States; Obama’s unilateral efforts to end the embargo on Cuba and reestablish diplomatic relations with the communist government of Cuba; and the development of a cyber war with North Korea.

The world, including our poor, benighted government, is clearly batty. If you read further, you’ll find that I’ve included a few snippets from the Internet news for anyone interested in a fuller account.

William S. Frankl, MD, All Rights Reserved