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Despite "smoking gun" U.S. is unlikely to act as it has a long history of tolerating China's abuse

It seemed like just another Chinese propaganda video, designed to promote the fighting spirit of soldiers in China's People's Liberation Army and rouse anti-American sentiments.  The Chinese narrator boldly proclaimed, "America is the first country to propose the concept of a cyberwar, and the first country to implement it in a real war."

I. Proof of Chinese Government Cyber-Attacks

But, as first noted by TheEpochTimes, the Chinese government unwittingly dropped a bomb shell when it used a clip of what it must have thought was stock footage.

Between 12:57 and 13:05 in the video, the B-roll clip rolled, revealing what is most westerners' first glimpse at a live Chinese cyber-attack on the U.S.  Videographic proof that recent cyber-attacks were indeed the work of the Chinese government had never been found -- until now.

At the start of the clip the reflection of a PLA officer in uniform can be seen.  We're not sure what the text up top or below says, but if you speak Chinese please let us know...

The officer quickly leaves that screen, using a keyboard shortcut....

...and fires up an application whose creator is identified in GUI text as the Electrical Engineering University of China's People's Liberation Army.  The GUI panel contains the text "Choose Attack Target" and offers the user a choice of what reportedly are multiple Falun Gong websites (a forbidden Chinese spirtual movement) (feel free to chime in if you can read this...).

...more targets....

The text selected reads "" -- a major Falun Gong homepage -- and the IP address selected is a 138.26.x address, an IP block that belongs to the University of Alabama.  The particular IP in question, according to The Epoch Times has not been used since 2010, with IP staff recalling it may have been used to host the homepage of a Falun Gong practitioner, who hosted meetings on campus.

The "attack" button is pressed in the lower left-hand corner, and the video fades out, as presumably a distributed denial of service attack (possibly botnet assisted) is carried out.

So there it is -- straight from the horse's mouth, as they say, proof that China is indeed attacking entities in the U.S. online.

The video is available here, beware the rewind capability seems to be messed up, so just skip to around 10 minutes if you want to see the good part.

II. U.S. is Too Afraid to Stand up For Itself

We're guessing President Barack Obama's (D) response to this video will fall somewhere between "silence" and  "sweeping it under the rug".  After all, while the U.S. talked tough of physical retaliation for cyberattacks, it continues to let China bully it online.

China controls a great deal of U.S. debt and rare earth metals -- a critical component to high-performance electronic devices.  The U.S. also deeply depends on China for its manufacturing needs, having done away with its own capacity to produce most products decades ago.

Likewise there's a sort of grim complacency in the corporate world.  Google, Inc. (GOOG) claims to have its source code stolen by Chinese hackers, but has been forced into silence by the Chinese government.  The message is clear -- put up with abuse, or get out of the world's biggest market.

Similarly, antivirus firm McAfee last month aired a report on the world's largest series of cyber-attacks dubbed "ShadyRAT", which it said were perpetrated by a nation state.  However, when faced with the overwhelming public assumption that the attacker was China, McAfee equivocated refusing to confirm that the attacks came from China.

What reason would McAfee have for keeping the identity of the attacker in history's most financially damaging cyberattack a secret?  Well, its parent company, Intel Corp. (INTC) has invested much in research and development and production facilities in China -- facilities it doesn't want to lose by alienating the local government.

The few people and organizations who do speak out are largely ignored.  

Recent attacks on American advocacy site, who launched a campaign to free imprisoned Chinese artist Ai Weiwei, led to Secretary of State Hillary Clinton admonishing China.  But at the end of the day no decisive action was taken by the executive branch or Congress.

In short, China is reportedly gaining advanced intelligence on the U.S. military and its technological secrets; is infiltrating U.S. utilities; and stealing hundreds of millions of dollars of corporate secrets, but the U.S. has thus far kept its mouth shut.

For that reason we don't hold much hope that this "smoking gun" will change much of anything in the way U.S. business and the U.S. government bow down to their Chinese abusers.

Comments     Threshold

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By ipay on 8/23/2011 10:34:42 AM , Rating: -1
This seems like the big fat kid in town is getting bullied by the richest kid, because the first wants to play with his fancy toys.

Your looking good, rich kid. As long as you have toys...

RE: Bullying
By kattanna on 8/23/2011 10:38:34 AM , Rating: 2
is it time for us to use this link yet?


RE: Bullying
By Dr of crap on 8/23/2011 10:56:14 AM , Rating: 2
We could make some noise with China.

The problem - we owe to much cash. So until we get our govt right and our financials in order we really can't do anything.

But we also could do the cyber war thing against them. The problem - we're to goody-goody to do that. "it wouldn't be right" But it's OK for them to to it to us!

Why don't we ever do what should be done and ALWAYS bend over to please the " do the right thing" crowd.

RE: Bullying
By kleinma on 8/23/2011 11:36:22 AM , Rating: 5
When you owe as much cash as the US does to China, one could argue it is China that is in trouble if we don't pay them.

RE: Bullying
By heffeque on 8/23/2011 12:44:22 PM , Rating: 2
Yeah, try doing that and tell me how that works out. LOL!

RE: Bullying
By 91TTZ on 8/23/2011 1:17:21 PM , Rating: 4
We bought a bunch of weapons with that money. Also, China doesn't own that much US debt. They hold less than 7%.

RE: Bullying
By TSS on 8/24/2011 7:33:26 AM , Rating: 2
Weapons you cannot afford to maintain if the chinese stop lending you money. This discussion always goes like this.

Invading a country to get your money back is an stupid idea to begin with. Even if they conquer you, you're broke. Exactly where are they gonna get their money from?

I'll tell you, they already have gotten their money back. That $3 trillion in government debt they own is their surplus money they couldn't store anywhere else, and it's a hit they can most certainly take. How did they get their money back?

Because you used the lent money to pay for social programs that put that money in the USA's consumers pockets. And what did the USA consumer then do with that money? They bought all kinds of chinese crap.

Seriously they spent a trillion on high speed rail just so they could store their money in another place other then treasuries. They already started buying alot less treasuries at the beginning of this year. Once they've stimulated domestic demand enough, they won't need the american consumer.

Damnit why won't you idiots get it. You will destroy yourselves, the chinese don't have to lift a finger. If they want your land all they have to do is stop lending now, wait 20 years, then half a million soldiers should do. Nukes won't even be a problem since there will hardly be a central government to autherize launching them. There is still room to fix the problem but that calls for some serious action. Or shall we debate republicans vs democrats, AGAIN?

RE: Bullying
By Iaiken on 8/23/2011 11:37:16 AM , Rating: 5
The problem - we owe to much cash.

Which is funny because the idea behind the federal reserve system is what allowed America to accumulate much of this fictitious debt in the first place. The United States simply cannot repay it's debt so long as it is not in control of it's currency. So long as money that the United States needs to create for it's continued operation bears a burden of interest, whether borrowed from China or the Federal Reserve, then it is practically impossible to repay.

The debt created by Chinese/FRB interest must be serviced, so it must either be:

1. Borrowed from the system that created it
2. Extracted from the public as taxes/revenues.

The first option is a no-brainer since you cannot repay even a $1 interest burden on $100 borrowed by taking out a further $1 loan at 1%. A simple recursive function can show just how out of control such a system can get in a short period of time when using realistic interest rates. The interest eventually compounds radically and you wind up in deep trouble.

That means that the ONLY place that the money for servicing this interest can logically come from is from government revenues/taxes. Just one look at that sentence and you can tell it's just not going to happen. Doesn't matter if you're looking at class or corporations; nobody wants to be the ones to buck up and pay off these burdens that America has been saddled with. The most shameless thing about it is that the people who benefited the most (corporations and the rich) from the monetary system that got America into this mess, are the most unwilling to pay.

C'est la vie...

RE: Bullying
By FITCamaro on 8/23/2011 12:54:44 PM , Rating: 1
Nobody wants to "buck up" and pay it off because if you confiscated every privately held dime in the US, you still wouldn't have the money.

RE: Bullying
By mcnabney on 8/23/2011 1:44:17 PM , Rating: 2
My daughter, who is in kindergarten, knows more about economics than you do. You are talking cash, specifically M0, which is a tiny component of existing wealth.

Right now:
M0 is around $1T
M2 is around $9T
Total US 'wealth' is between $50-55T

RE: Bullying
By Reclaimer77 on 8/23/11, Rating: -1
RE: Bullying
By torpor on 8/23/11, Rating: 0
RE: Bullying
By Iaiken on 8/23/2011 1:47:58 PM , Rating: 2
-Have the agency that prints money buy lots of your own debt. (for the US, that's the Federal Reserve)

Apparently somebody doesn't know how the Federal Reserve Bank works. Money is created in exchange for treasury bonds and the money, not the bond, bears the burden of interest. So long as the printed money comes with that interest burden, you cannot simply devalue your currency to lessen the load because the load is proportional.

For this to work, the United States would have to either nationalize the Federal Reserve Bank (yeah right!), or amend/repeal the Federal Reserve Act and put the power to print money back in the hands of Congress and spin the Fed off as just another private bank up to it's neck in US Treasury bonds.

-Cut interest rates on intrabank loans (the cost of getting money, aka the fed funds rate) as low as it can go

The rate is effectively zero and since it cannot go negative, the FRB is at the limit of it's monetary control and has nowhere to go as far as interest rates are concerned. It cannot print additional funds without taking on Treasury Notes and it cannot get those notes without an order from Congress. Congress cannot print additional notes without taking on additional/future interest burdens and everyone is left praying that the problem fixes itself.

RE: Bullying
By torpor on 8/23/2011 2:58:50 PM , Rating: 2
The fed is currently buying bonds with their unlimited checkbook.

So if the fed both holds the bond and pays the interest due, where does the actual money come from?

Before telling someone they don't know what they're talking about, maybe you should read some news somewhere and check your poor assumptions.

RE: Bullying
By Iaiken on 8/23/2011 4:23:36 PM , Rating: 2
So if the fed both holds the bond and pays the interest due, where does the actual money come from?

Uh, that's not what happening.

These are bonds that the federal government sold to banks in exchange for money that was already in the market and has likely since re-entered the market via government spending.

The government still owes both principle + interest on them. The only difference is that now the government now owes those moneys to the Federal Reserve Bank instead of whomever previously owned the bond. The previous bond holder now sits on however so many newly created, interest-free, dollars and the government is still on the hook.

Meanwhile, the money that the federal reserve printed and lent itself, carries no appreciable interest today (0.25%) compared to the anywhere from 2.7-8% interest that the bond itself yields. Not only that, but it hasn't done accomplished anything as from all appearances the banks are simply sitting on the money or investing it themselves. Credit is still restricted, interest rates are going up and the dollar is not devaluing in any appreciable way. Instead, the Fed takes on risk to make more money, the banks make more money and the government still owes what it owed in the first place.

RE: Bullying
By torpor on 8/23/2011 5:20:49 PM , Rating: 2
I understand that the expectation is that the Fed is independent of the federal government/treasury. But, much like with Fannie and Freddie, that's not really the case. I don't find the distincition particularly useful or honest, especially considering the unprecedented level of deficit we've got now. It doesn't matter that the bonds purchased are on the open market; by artifically reducing supply they prop up demand for the next issue.

The market should be spanking US bonds for this kind of spending, but the Fed is preventing it, frankly, by printing money to cover the new debt. I can't consider that the reasonable action of an independent agent.

It's impossible to get around the simple fact that, by buying Federal debt notes with created money, there has been over 1 trillion in new money issued, which would not otherwise be there.

To expect this injection of money supply to have no affect on the value of money is silly. The dollar has not yet devalued much, but it is beginning to do so. (12 month PPI is moving up, but agg. saving is increasing too, sucking some of it up). We're building up enough pressure to create quite a whipsaw if things ever get moving...I know some people have enough faith in Bernanke et. al. to expect them to let off the steam when needed, but then again, all the people who make their living in this racket are pushing gold towards $2000....

RE: Bullying
By Reclaimer77 on 8/23/11, Rating: 0
RE: Bullying
By Iaiken on 8/23/2011 1:34:34 PM , Rating: 4
3. Massively cut the size and budget AND spending power of the Federal Government/Federal Reserve. And this time actually use the surplus on spending down the debt.

A rose by another name... Here you are simply taking option 2 and choosen to spend taxes and revenues on servicing the debt instead of other programs. The public still winds up paying via cessation of services and the people this will hurt the most are the poor and middle classes. Seeing that they make up the majority of the country so you'll have a fun time trying to force it upon them under the current democratic system.

4. Exporting and selling off (like China does) our abundant natural resources for a short time. Lots of countries would pay top dollar for our coil, as an example, which we use little of ourselves. We also have vast untapped natural gas reserves.

Revenues from resources for sale is included under the revenue aspect of number 2 that I already listed. However, to derive any meaningful revenue from this, you would need to cut out intermediary corporations (and I know how against that you would be) or add levies that would render the resource uncompetitive on the global market in the face of the glut it would produce. Not realistic, sorry.

I also find it humorous that you see things in such a mutually exclusive light. That you must cut spending OR raise taxes. Yet economists around the world advocate that the two should be done in conjunction to varying degrees and at different levels. How novel!

RE: Bullying
By Reclaimer77 on 8/23/11, Rating: 0
RE: Bullying
By Iaiken on 8/23/2011 2:40:54 PM , Rating: 1
I also find it humorous that you never even suggested cuts.

Actually, there are quite a few things regularly suggest cutting and other things I would suggest cutting in the absence of sweeping changes.

A key example has been my argument that socialized medicine cannot work in the US so long as patented drug costs remain unchecked. If this isn't changed, federal prescription drug programs like Medicare simply aren't feasible. It's one thing to help your citizens, but it's silly to help them by essentially subsidizing gigantic profit margins on patented drugs.

RE: Bullying
By Reclaimer77 on 8/23/2011 3:08:33 PM , Rating: 2
You say that now, but you only had two items on your list. Borrowing and taxation, correct? And you clearly said "the only ways".

But thank you for clearing that up. Bah who are we kidding anyway? There's no hope really. None at all.

RE: Bullying
By Iaiken on 8/23/2011 4:01:26 PM , Rating: 2
You say that now, but you only had two items on your list. Borrowing and taxation, correct?

If I wasn't clear enough, then I am sorry. But when I said taxes\revenues I meant exactly that and putting tax money towards debt instead of a program that it previously funded doesn't change the fact that it was tax money in the first place.

RE: Bullying
By NellyFromMA on 8/23/2011 4:04:39 PM , Rating: 2
Actually, people aren't exactly talking about raising taxes. If you want to get huffy about accuracy, strive for it yourself.

What is being proposed, again, isn't a tax hike. It's actually allowing a tax BREAK to expire so that the level of taxation goes back to where it had been originally. BIG DIFFERENCE, even if you simplistically want to look at it as tax @ 2013 > 2011

And please, before you get into that whole 'rationale' (term used LOOSELY) you might want to be amply prepared because that's an excrutiatingly uphill battle. Since tax breaks have been in effect, private sector is responsible for virtually NO growth. They have no proportionately invested in US economies while they do so for other nations with their savings directly or indirectly.

It's important to note that taxing the rich 'just cuz' IS stupid. But it's not 'just cuz'. It's because it makes sense and there aren't enough lobby dollars in the world a company can throw at the general population to make me change my mind, and then I'd have another point... why are you spending millions trying to sway public opinion that the top echelon of America's fiscal elite don't 'deserve' to have their tax break taken away instead of investing it in jobs? K thanks!

RE: Bullying
By NellyFromMA on 8/23/2011 4:08:10 PM , Rating: 2
It's also equally important to realize letting the tax cuts expire doesn't even come close to addressing the problem at large. It's a huge ammount without respect to the debt, and certainly is a necessary (IMO) source to contribute towards balancing the budget, but it is nowhere near the be all end all solutions I think some people may be thinking. Still, the Tea Party and, maybe, Republicans as a whole would have you think you could cut the budget and not effectively raise their taxes a penny, and that's just about as out of touch as it gets. They ought not to whine about entitlement programs lest they get off the feeling of entitlement themselves.

RE: Bullying
By Reclaimer77 on 8/23/2011 6:52:15 PM , Rating: 2
The fact that Obama himself actually extended the cuts should clue you in at how disastrous it would be if they were to expire at this time. You clearly are one of those who believe all the cuts did were help the rich, but the list of what the Bush tax cuts did is far greater than that if you would choose to view them.

Since tax breaks have been in effect, private sector is responsible for virtually NO growth.

The 4 year period after the tax cuts, the IRS set all time records in revenue tax collection. Disproving the myth that the Bush tax cuts "cost" us money and that them expiring would only increase tax revenue. Now while it's true the cuts did not stop the recession, it's inversely true they did not cause it as well. But to say there was "no" growth isn't factual.

You are trying to put the tax breaks into a vacuum. Wars, recession, a housing/banking collapse, and Bush increasing the Federal Government by about 20% are all relevant factors that greatly impacted our economy and growth rates. We simply cannot deny this.

We have an over accumulation of capital and a massive debt problem. And I fail to see how that can ever be fixed via tax policy. In a three year span under Obama, our national debt has grown beyond the already outrageous debt level set under Bush's eight years. And it's growing daily at a frightening pace.

You post eloquently (besides that train wreck last paragraph), but ultimately I sense the same Progressive class warfare motivations behind your reasoning. We're in trouble so tax the rich until nobody is rich anymore, then we'll be saved.

RE: Bullying
By KoS on 8/23/2011 3:06:41 PM , Rating: 2
IIRR, the top 1% of income earners pays about 40% of the taxes. While the bottom 49% of income earners pays nothing.

I think the rich(income earners) does pays and pays well.

As for paying China. If we don't pay...they won't cut off the hand that feeds them. If their domestic economy tanks, which it would if they got into a conflict with us. They would have more problems internally than externally to deal with.

China couldn't invade us, all they can do is lop missiles and play cyber games. The lopping missiles option is becoming less and less viable. All is left is cyber.

RE: Bullying
By Uncle on 8/23/2011 1:18:25 PM , Rating: 1
The west is always forgiving the loans of third world countries. Now that the US is becoming a banana republic, its time for the US to ask China on bended knees to forgive it loans. Pay back time for all the years of goodness the us has done.

RE: Bullying
By bigdawg1988 on 8/23/2011 2:32:28 PM , Rating: 3
But we also could do the cyber war thing against them. The problem - we're to goody-goody to do that.

I think you forgot to add the j/k to that statement. The U.S. AFRAID to spy?!? Hell, we're not afraid to spy on our own darn people. You just don't hear about our spies getting caught. What's funny is how much we spy on everybody else, and nobody says anything about it.

RE: Bullying
By NellyFromMA on 8/23/2011 4:12:50 PM , Rating: 2
Correction: We dont HEAR about anyone else complaining. That is, unless you look exceptionally deep. You get a small peice of a perpective of world events in your news.

RE: Bullying
By mrkun on 8/23/2011 11:22:02 PM , Rating: 2
China has to hold large volumes of US debt in order to maintain their exchange rate peg, so it's not really an option for them to dump it. Not to mention their debt purchases keep treasury rates low which allows foreign companies to invest more money in China (foreign companies own most of China's production capacity).

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