David Kernell could have gotten away with hacking into Sarah Palin’s email.

20 year old David Kernell hacked into Gov. Palin’s Yahoo email account and has now been indicted on federal charges.  He got in by answering a string of security questions to reset her account password using answers he researched on the Internet.  This was what’s known as a “socially engineered” security breach verses what’s called a “brute force” attack which requires more technical savvy to pull off.  David, aka Rubico10, could have gotten away with his attack.  Here’s how:

David was smart enough to know to use a service called cTunnel to mask his public assigned IP address.  This service (actually a server) is available on the Internet to mask the Internet address assigned by the users Internet Service Provider to a specific account (the account you pay for monthly).  What David wasn’t smart enough to do was use an internet connection that could not be tied back to him.  He performed the hack from his own apartment.

If a breach on the Internet is serious enough, liking hacking a VP candidates personal email account, the FBI or other law enforcement agencies can retrieve the IP address used to connect to the breached site (in this case Yahoo).  David thought that by using cTunnel to mask his IP address (by going through the cTunnel servers) he might not be tracked down because the address in the Yahoo logs would resolve to cTunnel and not his ISP.  Well, unfortunately for David the owner of the cTunnel service, Gabriel Ramuglia, cooperated with the FBI and provided his user and/or connection logs that lead straight to David’s apartment complex.

So there’s a moral to this story:  If your going to hack into a government officials private email account by all means use the open, public, wireless Internet connection at the nearest coffee shop.   By using a service like cTunnel, combined with the anonymity of an open wireless Internet connection it would be near impossible for any law enforcement agency to track back through the IP addresses to the offenders origin PC.

I’ve often thought that public wireless Internet connections are the single greatest on-line security threats.  They provide the cover of anonymity.  If the offenders connection was tracked by law enforcement to a local Starbucks the very most the IT staff supporting that point of connection could provide would be the MAC address (hardware address of the computers network adapter) used to connect to the wireless network at the time the attack occurred.  And I doubt that most would be able to pull the MAC off a cheap Linksys router most of these restaurants, bars and coffee shops use.  Should law enforcement actually get the MAC address of the PC used in the attack, trying to locate who bought that PC which was delivered through the retail chain would be virtually impossible.

So hack away from the Carolina Ale House or nearest hotel lobby.  Just don’t do it from your bedroom.  I just realized something. It’s pretty rare that I get to categorize a post in both Technology and Politics. Cool.

The Dow’s below 10,000 and falling. Enjoy.

20070928-bush-burn-dollar2.jpgThe fundamental question has not been answered.  This doesn’t take rocket surgery or complex micro-economic theory:

Investors realize that even if the banks started lending right now, today, who among us can afford to borrow?  The majority of American’s cannot afford to pay the bills they have.

Deal with it banks.  Your days of profiteering on ridiculous interest rates and terms are done.  Citi Group and Wells Fargo are fighting over the Wachovia carcass.  By the time the run on deposits is over the only thing left will be the skeleton.

What’s the difference between today and Friday?  Friday the country was $700 billion richer.  Thank you sir may I have another!  And this time kiss us first.

Welcome to the United Socialist States of America.

Socialists Flag of AmericaCongratulations Congress. We are on our way to government foreclosures, richer tycoons and a mafia style, government run economy where your credit score is officially more valuable than the amount of money you have in the bank.

The most important thing to remember in all of this is that Congress decided debt is good for America. I suppose we shall now be scorned for paying cash. It has officially been declared that the US economy cannot operate without debt. It’s only a matter of time before foreign investors own all this debt through the international banking cartels and ultimately they will own the majority of US assets. What are we going to do when they decide to foreclose?

Now, sit back and watch the economy slide. The legislators will proclaim that they did all they could. Banks will continue to fail, loans will continue to default and jobs will continue to be lost. Why? Because today we sold the first pieces of the free market to the government and there has never been any clear correlation as to how this action will effect the micro economy.

The US House of Representatives and US Senate just decided a debt driven economy is the best thing for America. You will all soon learn how bad debt is. The depression accelerator switch has just been flipped. It won’t be a physically strenuous ride. It’s all down hill.

And uh Congress, thanks again for looking out for the will of the people.

10 ways to help the overall economy that don’t cost $700 billion:

  1. Repeal NAFTA
  2. Remove unreasonable excise taxes
  3. Regulate THE HELL out of the banks and financial services sector (not own them – regulate them)
  4. Reduce the cost of health care by implementing price caps on certain goods and services, possibly remove them from public ownership. I don’t want my health care decided on in a board room any more than I do in Washington.
  5. Stop importing so much food. That will help American farmers more than all the loans and subsidies we can give them (even though it may cost more for us at Food Lion).
  6. Increase the minimum wage again – it’s wayyyy below the poverty level.
  7. Put some of that $700 billion into education. The US education system sucks right now and our kids will have it worse than us. Pay teachers more and you’ll get better teachers.
  8. Attack, yes attack with the full force of the law the illegal aliens who are employed in the US and flat out SHUT DOWN the employers that hire them.
  9. Stop using bank credit cards. Burn them. Join a credit union and use a debit card if you must swipe plastic.
  10. Get over yourselves. Americans have got to stop feeling such an accelerated and “deserving” sense of self-worth. Be prepared to hunker down and do with less (live within your means). The new $30K car you insist upon every three to five years and all your other bling-bling status symbols are going to have to wait.

Fox News Reporter: Living in Denial

This is the funniest video I’ve seen in a while.  Notice the old lady who smacks her husbands hand down when he tries to raise it for McCain.  This leaves the Fox reporter as the only one with his hand raised for McCain then he calls the room “split”.  The people in the diner start laughing at him.

If this is “split” to Fox News what does a landslide look like?  It must be so hard to admit the failures that they’ve chosen to live in complete denial.  In this election I’d be embarrassed to be a Republican.  All you have left is hate for those damned “left wing liberals” and no hope.

http://www.youtube.com/watch?v=KTkqosRiyYo

Stocks rallied despite the bailout failure.

This morning CNN lead with “Stocks rallied Tuesday, with the Dow jumping 485 points on bets that Congress will pass a version of the government’s $700 billion package”.  No they didn’t.  Stocks rallied despite the bailouts defeat because investors got good deals on stock in companies that never should have been effected by this fear mongering administration.

Pundits supporting this bill don’t seem to realize this economy will keep running despite the “credit freeze” they explain as the end of the world.  If banks aren’t making money off loans then tough patooty.  I could care less.  And so could many Americans and businesses that don’t want the debt they’re hocking anyway.  To date I have not heard one solid explanation from all of these economic pundits or analysts detailing exactly how this “credit freeze” is going to hurt main street as badly as they hope to make you think.  People won’t be able to run up credit cards this Christmas?  Oh no, that will certainly be the end of us all.  And what about all those companies they say need small business loans to make payroll?  Say goodbye.  If you can’t make payroll without a loan the going out of business sign needs to be out front.  I certainly don’t want my children paying off this bailout so you can make payroll for your failing endeavor.

And then there’s the suggestion that giving banks this money will make them lend again.  News flash: people don’t have money to pay off debt.  They certainly don’t need any new debt they can’t pay.  So most banks will get rid of dirty assets in the bailout and use this cushion to bolster their spread sheets to tantalize new wealthy investors towards their share value.  A lot of us on Main Street don’t have these precious portfolios to worry about that your pinpointing as a concern for us.  We just need bigger paychecks damn it.

Banks are starting to realize that without interest revenue they are little more than a storage vault for our money and even Anna, a banker who comments on this site, said they are a “necessary evil”.  So far we’ve decided not to give this necessary evil a blank check and let them deal with their own demise.  And believe it or not the bread lines have not started forming.

A Day of Reckoning

The House of Representatives just defeated the biggest bank bail out attempt in history.  Now comes the uncertainty.  Will there be a self-fulfilling prophecy of continued enterprise economic failures?  Or will the market correct itself allowing those who voted against the bail out claim a free market victory?  This this the day creative capitalism and those greedy enough to manipulate the system face the reckoning.  Today congress spoke to Wall Street and told them “We have determined your system sucks” – Rage Against the Machine.

This is going to get good in a hurry now.  And by good I mean increased gas shortages, layoffs, hyper-inflation, a rush on non-durable goods.  Soon it will be down to Skeeter and his shotgun to protecting the family pickle jar full of cash.  Who’s ready?

Actually it’s a very good thing this may not pass regardless of the outcome.  The underlying problem, according to Bernanke and Paulson, is that there’s no lending going on between banks or consumers.  Even after they’ve injected hundreds of millions into the markets since 2007 the banks still won’t lend.  Well I wonder why not?

Why do banks lend money?  So that people pay it back with interest and they make a profit.  If people and companies can’t pay them back then why are they going to lend commercially or privately?  The inability to pay back loans is a reflection on the micro economy.  If is no money in the hands of the consumer, they can’t pay their bills.  If they can’t pay their bills then their credit score goes down.  Low credit scores don’t get loans.  Pretty simple.  And right now the banks are saying not many people or companies are credit worthy.  How is removing hundreds of billions off the financial institutions books going to make them lend again when the bad debt purchased by the US government will just be replaced with brand new bad debt?

To fix this problem people need the money necessary to pay their bills.  With the rising cost of goods people have less disposable income.  Wages must increase and prices must fall.  We are currently experiencing the reverse and yet arguing over why banks are failing.  Pay raises do not occur because of banks lending money.  When was the last time you heard of a business owner taking out a loan to give their employees a raise?  The banks are losing their ass because of their own greedy, bad practices and I for one am glad to see them pay the price.

If banks would stop increasing interest rates because someone sneezes and creating new fees every time a fresh loophole is located they might not be in this situation.  And if everyone with a credit score lower than 720 is considered a risk then that includes the majority of America.  Banks will have to be more forgiving regarding their credit standards and repayment periods (like net 60 instead of 30) or job growth and real wages need to rise to meet the demand for repayment being issued by the banks.  If neither of these two occur we’re in for a long winter full of foreclosures, repossessions and job losses.  This fundamental principal holds true whether we give Wall Street $700 billion or not.

And the bank investors who chose to decline the option to modify thousands of mortgages to freeze adjustable rates are now feeling the repercussions of their greed.   They gambled to the last minute that a few foreclosures was better than modification that would keep people in their homes.  Never mind that most fixed to variable rate mortgages were paying more in interest than any 30-year prime rate fixed.  Investors bet that people would struggle to meet the adjustable rate increases to keep their home and they (the investors) could reap the rewards.  Well, you lost your ass now didn’t you Mr. Sub Prime securities investor?  And it isn’t looking like the Feds are going to give you the bail out you were counting on.

Today is synonymous with revenge for any homeowner who experienced a foreclosure in the last couple of years because their mortgage investors decided not to modify their loan and instead ballooned the payment to the stratosphere to wager a greater return.  The homeowners lost and now, without this bailout, the mortgage investors lost.  Sure home buyers speculated that they would be able to refinance.  And the banks did too.  And they figured if they did have to foreclose the house would have gained equity.  Then when the micro economy went to hell home prices fell and the banks wouldn’t pull back their wager on adjustable rate increases.  Now it’s come full circle.  If you’re a mortgage backed securities investor put out your hand, Congress is handing you back your burnt ass.

The Micro is sucking…

While we’re all consumed with the dynamics of the global economy this week the US micro economy is going down the toilet.  When we all wake up from this $700 billion dollar discussion next week we’re going to realize that we’ve lost more jobs last quarter than any other period since 1999.  The GDP is set to deflate to a record low and wages aren’t just stagnant anymore, they’re going down with the value of the dollar.

So is $700 billion gonna help?  The short answer depends on who you think it will help.  Will it help international foreign investors?  Yes.  Will it help Wall Street tycoons?  Yes.  Will it help banks?  Absolutely.  Will it help the majority of Americans who don’t care about accumulating anymore debt and just want their paycheck to cover their current bills?  Not just no, hell no.

The coming agreement between Congress and Sec. Paulson has pretty much been stripped of anything that will help the middle class.  I mean hell thier trying desperately to come up with some way to illustrate how this package does anything at all for working Americans.  It’s hard for them to do because their argument is that we need lending to keep the economy going.  In their words: banks need to be making money on interest or they will fail.

Well aside from my mortgage I’m glad I can say that I’m a banks worst nightmare.  I hate loans and the use of credit and I avoid it like the plague.  If all American’s and businesses adopted this policy America would go bankrupt according the administration.  Is this true?  Are we truely an interest revenue driven economy that cannot stand on it’s own without everyone carrying a burden of debt?  If so, that’s a damned shame and we should all be ashamed that we let it come to this.

The Chinese don’t use credit cards.  They don’t even use debit cards.  To this end they may own America one day if they own our debts.  Let’s play it out.  We sell our bad debts to the US government (our mortgages).  The US government runs a huge trade deficit to China using mortgage backed securities as collateral.  China calls the note due.

There you have it, a scenario where a foreign government can own our property because we could not pay our debts as a country.  It may be far fetched but 10 years ago so was the notion that the US government could foreclose on a home loan.  Government foreclosures are coming to a neighborhood near you soon.  Let’s just hope foreign foreclosures don’t follow in the next decade.  China could be putting Americans out on the street so the Hsui Huie family can move in.  Nice.