Perspective Intelligence

Two events centered on New York City separated by five days demonstrated the end of one phase of terrorism and the pending arrival of the next. The failed car-bombing in Times square and the dizzying stock market crash less than a week later mark the book ends of terrorist eras.

The attempt by Faisal Shahzad to detonate a car bomb in Times Square was notable not just for its failure but also the severely limited systemic impact a car-bomb could have, even when exploding in crowded urban center. Car-bombs or Vehicle-Borne IED’s have a long history (incidentally one of the first was the 1920 ‘cart and horse bomb’ in Wall Street, which killed 38 people). VBIED’s remain deadly as a tactic within an insurgency or warfare setting but with regard to modern urban terrorism the world has moved on. We are now living within a highly virtualized system and the dizzying stock-market crash on the 6th May 2010 shows how vulnerable this system is to digital failure. While the NYSE building probably remains a symbolic target for some terrorists a deadly and capable adversary would ignore this physical manifestation of the financial system and disrupt the data-centers, software and routers that make the global financial system tick.  Shahzad’s attempted car-bomb was from another age and posed no overarching risk to western societies. The same cannot be said of the vulnerable and highly unstable financial system.

Computer aided crash (proof of concept for future cyber-attack)

There has yet to be a definitive explanation of how stocks such as Proctor and Gamble plunged 47% and the normally solid Accenture plunged from a value of roughly $40 to one cent, based on no external input of information into the financial system. The SEC has issued directives in recent years boosting competition and lowering commissions, which has had the effect of fragmenting equity trading around the US and making it highly automated. This has created four leading exchanges, NYSE Euronext, Nasdaq OMX Group, Bats Global Market and Direct Edge and secondary exchanges include International Securities Exchange, Chicago Board Options Exchange, the CME Group and the Intercontinental Exchange. There are also broker-run matching systems like those run by Knight and ITG and so called ‘dark-pools’ where trades are matched privately with prices posted publicly only after trades are done. As similar picture has emerged in Europe, where rules allowing competition with established exchanges and known by the acronym “Mifid” have led to a similar explosion of types and venues. Read the rest of this entry »

“The principal characteristic of twenty-first-century international relations is turning out to be nonpolarity: a world dominated not by one or two or even several states but rather by dozens of actors possessing and exercising various kinds of power. This represents a tectonic shift from the past.”

“Today’s world differs in a fundamental way from one of classic multipolarity: there are many more power centers, and quite a few of these poles are not nation-states. Indeed, one of the cardinal features of the contemporary international system is that nation-states have lost their monopoly on power and in some domains their preeminence as well.”

-Richard Hass, Head of the Council on Foreign Relations and former head of Policy Planning at the U.S. Department of State, writing in 2008.

Google’s rise over the past ten years has coincided with and arguably assisted in the creation of extra-state entities, which can project enormous power globally. The equation can be simplistically stated: in an information economy, control of information equates to raw power. The Industrial Revolution fueled the British Empire, control of markets fueled the American Empire, control of information is fueling the Google empire. In the space of ten years, the Internet has gone from supporting pets.com to being the pre-eminent vehicle for projecting power. However, the continuation of the open Eco-system of information, innovation and development, which has provided the platform for this success is not assured (as has been highlighted by a variety of Internet scholars and strategic thinkers). Open systems are messy, and therefore, closed wall Internet systems may grow in popularity as consumers seek protection from some of the anarchy that reigns online. This scenario is not new. The United States is the original messy open political system and by managing to control this method of organizing society it became a super-power. China offers an alternative: a closed wall system to protect its citizens from the anarchy of open society. Google has been the champion of the open Internet. Just as American exceptionalism has driven the United States to intervene globally to uphold Jeffersonian values, Google intervenes in FCC auctions to ensure the open access to information. Of course the commercial imperative cannot be denied – the United States has financially benefited from promoting the market state, and Google financially benefits wherever there is an open (uncensored) Internet. It has been unclear whether Google would ever seek alliances with nation-states given its extra-territorial virtual nature, but that time appears to have arrived.  Read the rest of this entry »

Spin

Destroying or attacking brands isn’t a new idea, however it is acquiring more potency with the ubiquitous use of social media and the ability to seed negative themes about brands now massively distributed — rather than concentrated in the hands of a top down media system. The company Interbrand produces an annual list of the most valuable brands and goes so far as to ascribe a dollar figure to the brand itself.  Examining the methodology for ascribing a dollar figure to the brand also illustrates how the brands are more vulnerable than ever before to being disrupted at critical points in their value chain particularly where the brand connects with the customer or potential customer.  Disconnecting customers from the brand can clearly be achieved by a targeted use of disinformation emanating from the lower reaches of the world’s wired social networks.  Most companies have experienced some version of this, one of the most long-standing examples is the disinformation campaign mounted against Starbucks, which in its various iterations claims the company refused to ‘give free coffee to western troops fighting in [insert name of war]’.  Starbucks have used the web to deny this but still the message continues to be re-worked and re-used.  It has become clear that the only way to fight an online crowd is with another online crowd but those cannot be simply manufactured but building up online supporters is as important as building loyal customers.

Much of this isn’t news but the ability to apply these principles at an individual level within any given society is becoming more pronounced.  Attacking an individual’s reputation by either hijacking their online identity or surrounding their virtual identity with damaging information is currently a relatively easy proposition.  Anyone savvy enough to know how a search engine is powered, how to manipulate social networks and how to sign-up for the myriad of free online networks and services can launch devastating reputation attacks against individuals by hijacking or smearing their personal brand.  Very little technical knowledge is required to be effective.  This is likely to become a significant trend in the near-term as digital natives play out rivalries in virtual spaces leaving employers, credit agencies and any other outside assessor bemused by how to assess the human sitting in front of them.

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