The Daily Reckoning Presents

The Consequences of Yesterday’s Pipeline Attack [The Daily Reckoning] September 28, 2022 [WEBSITE]( | [UNSUBSCRIBE]( Pandora’s Box, Opened? - Who attacked the pipeline? Readers weigh in… - Did whoever attacked the pipeline open Pandora’s Box?... - Then Jim Rickards shows you the threat cyberwarfare poses to your money… [Urgent Message From The Director Of Customer Experience]( Over the past few days we’ve reached out regarding [an important change]( we could make to your account. But so far… You haven’t responded. And that’s not good… Because Friday, September 30th is your last chance to take advantage of this opportunity. [Please click here now for more information.]( [LEARN MORE]( Annapolis, Maryland September 28, 2022 [Brian Maher] BRIAN MAHER Dear Reader, “No doubt the U.S. government is behind it; if not, the English on behalf of the U.S.” “It doesn’t make sense for Russia to sabotage their pipeline. Follow the money and the conspicuous timing with the other Poland-Norway pipeline… Coordinating such an adventure is difficult and expensive. It would need submarines and logistics. Who has the money and the motive? NATO and their billionaire banking friends. Act of war for sure.” “My first thought was that either Ukraine or the U.S. was responsible. Their motivation would be to ensure that, when winter hits, the Europeans don't succumb to the pressure of energy shortages and lift sanctions on Russia to save them from backlash from their constituents. I think either of these parties would be capable enough and devious enough to undertake this sabotage - even more likely, the U.S. and Ukraine coordinated this sabotage. And the CIA warning to Germany could easily have been a false flag to belay suspicion.” “I do not believe Russia would damage the golden goose that's paying for its war in Ukraine, nor would it damage its leverage against Europe. “China, however, has nothing to lose by the sabotage of Nord Stream. It gains more Russian dependence on China's purchase of Russian energy resources. Also, it strikes a blow against Europe and the West at an opportune time, with winter coming. “Lastly, China has new submarines that can deliver an explosive package in the deep. I believe China did it.” “Shouldn't rule out the eco-terrorists! They got the Democrats to kill the XL pipeline, why not the Nord Stream pipelines?” “In a word: Israel.” Yesterday we solicited your opinion on who dynamited the Nord Stream pipelines. Here you have but a sample of the answers we received. The United States, Russia, Great Britain, Ukraine, China, Israel, eco-terrorists… readers have placed each under suspicion’s cloud for one reason or other. While we cannot publish or acknowledge the entire run of responses, be assured that we looked each one over. The bulking majority were thoughtful and insightful. We thank you for your participation. Whoever has the true answer is keeping it dark. In the meantime we expect rumors will swirl and swirl and swirl yet more. Yesterday we expressed nagging doubts about Russia’s supposed guilt. Revenues from pipelined natural gas exports keep Russia in funds. These exports likewise cede Russia fantastic leverage over energy-needy Europe. Why would Russia shoot a bullet through its perfectly good foot? We concede the possibility of Russian guilt. The foot-shooting may serve some high statecraft of which we are ignorant. Yet we incline away from the Russian theory — and for the reasons just listed. The pipelines represent a grand strategic asset. Let us assume for the moment that Russia is free of guilt. Another party… or parties… dynamited the pipes. Is it not a war act against Russia, as one reader claims? If a foreign actor blasted holes in an American-run pipeline, how would the United States take it? As a war act in all likelihood. Let us assume, further, that the Russian intelligence agencies pinpoint the culprit. They acquire the red-handed evidence, the recently fired handgun oozing smoke from the barrel. Will Russia simply let the war act go? Or will it seek its fracture for fracture, its eye for lost eye, its tooth for lost tooth? We bet high it would pursue the path of vengeance. Let us assume, lastly, that the responsible party is a Western power. Perhaps that power conspired and leagued with others to wreck the Nord Stream pipelines. What would prevent Russia from playing the devil with Western energy pipelines? The Russian Navy boasts substantial submarine capabilities and the frogmen for the job. Another possibility to consider: The global internet depends upon undersea communications cables to very high degrees — some 380 in all. Here are those joining the United States to Europe: [map] What if Russia chooses to scissor many of them in a coordinated caper… and knock down the internet in selected locations? British lawmaker Rishi Sunak: Funneled through exposed choke points (often with minimal protection) and their isolated deep-sea locations entirely public, the arteries upon which the internet and our modern world depends have been left highly vulnerable. The threat of these vulnerabilities being exploited is growing. A successful attack would deal a crippling blow to Britain’s [and America’s] security and prosperity. Meantime, Russia knows how to play with computers. What if yesterday’s pipeline assault unleashes their hacking talents against critical U.S. and European infrastructure? Here we merely speculate. Nothing at all may come to pass from yesterday’s aggressions. And we concede — again — the possibility of Russian self-sabotage, however unlikely in our estimate. Yet perhaps… just perhaps… yesterday’s pipeline explosions blasted the lid clear off Pandora’s box… Below, Jim Rickards shows you the threat that cyberwarfare in particular poses to your personal wealth. How can you protect yourself? Read on. Regards, [Brian Maher] Brian Maher Managing Editor, The Daily Reckoning Editor’s note: In Jim Rickards’ 2011 book Currency Wars, Jim warned that the U.S. was engaged in a special type of economic war. He said that these wars would: Degenerate into sequential bouts of inflation, recession, retaliation and actual violence as the scramble for resources leads to invasion and war. The historical precedents are sobering… Some version of the worst-case scenario is almost inevitable. Now with Putin invading Ukraine, rising tensions with China, inflation, recession, supply chain issues and the potential for greater violence breaking out all over the world… Jim’s worst fears are coming true. [That’s why he recorded this short video message.]( Jim wants to help you prepare for what he fears is coming next. Because if history is any indicator, there could be real trouble ahead. [Click here to view Jim’s urgent video message.]( [Urgent: Currency Wars Alert]( “Worst case scenario is almost inevitable” -Former Pentagon Insider Jim Rickards [Click here to learn more]( In my 2011 book, I warned that the U.S. was engaged in a currency war. And that these wars: “Degenerate into sequential bouts of inflation, recession, retaliation and actual violence as the scramble for resources leads to invasion and war. ” Now with Putin invading Ukraine…Rising tensions with China… Inflation, recession, and supply chain issues all hitting the U.S. economy at the same time. It seems as if some of my worst fears have finally come true. [That’s why I’ve recorded an urgent video message.]( To update you on exactly what you need to be doing to protect yourself. Because if history is any indicator, this will not end well. [Click here to view my urgent video message.]( [LEARN MORE]( The Daily Reckoning Presents: “Financial warfare is not the warfare of the future — it is already here”... ****************************** Financial Warfare Is Real By Jim Rickards [Jim Rickards] JIM RICKARDS Dear Reader, There are many bad actors out there who are preparing to inflict as much damage as possible to the power grid and other critical infrastructure, including the stock market. I would put Russia, China, Iran, North Korea and a few others at the top of the list. Russia and China are at the top of the list but Iran certainly has good cyberwarfare capability. They employ what they call cyber brigades that spend all their time basically hacking into the critical infrastructure systems I described above. It’s a good bet that all of these systems have already been penetrated to one extent or another. No one can beat the U.S. in a conventional war right now. China, especially, is catching up fast, but it’s not ready at this time. That’s why they’re focusing on attacking America’s critical infrastructure vulnerabilities. This is called an asymmetric response. They want to fight in the area where they can win or at least inflict enormous damage. Look at all the crisis spots around the world, or potential crisis spots. Ukraine, the South China Sea, North Korea and the Persian Gulf. If any of them starts to escalate (Ukraine obviously has), you’re going to get an asymmetric response function. For example, if Joe Biden sends the Seventh Fleet into the South China Sea or escalates in Ukraine in a way that’s unacceptable to Russia, each could unleash an attack on the U.S. power grid, creating chaos in the United States. Or they could launch an attack on the stock market or conduct other forms of financial warfare. Financial warfare is not the warfare of the future — it is already here. It’s going to become a bigger threat as time goes on, too. Financial warfare is actual warfare conducted through banking and capital markets channels. It’s not mere economic policy as in the case of so-called currency wars, trade wars or embargoes. When nations engage in financial warfare, individual investors can be collateral damage. If China tries to attack the U.S. by closing the New York Stock Exchange, for example, it will be tens of millions of Americans who will suffer an immediate loss of wealth as prices plunge and accounts are locked down or frozen. Financial warfare attacks vary in their degree of sophistication and impact. At the low end of the spectrum is a distributed denial-of-service, DDoS, attack. This is done by flooding a target server with an overwhelming volume of message traffic so that either the server shuts down or legitimate users cannot gain access. In such attacks, the target is not actually penetrated, but it is disabled by the message traffic jam. The next level of sophistication is a cyberhack in which the target, say a bank account record file or a stock exchange order system, is actually penetrated. Once inside, the attacking cyber brigade can either steal information, shut down the system or plant sleeper attack viruses that can be activated at a later date. In 2010, the FBI and Department of Homeland Security located such an attack virus planted by Russian security services inside the Nasdaq stock market system. The most dangerous attacks of all are those in which the enemy penetrates a bank or stock exchange not to disable it or steal information but to turn it into an enemy drone. Such a market drone can be used by attackers for maximum market disruption and the mass destruction of Americans’ wealth including your stocks and savings. In this scenario, an attacker could penetrate the order entry system of a major stock exchange such as the New York Stock Exchange. Once inside the order entry system, the attacker would place large sell orders on highly liquid stocks such as Apple or Facebook. Other system participants would then automatically match these orders in the mistaken belief that they were real trades. The sell orders would keep flooding the market and the selling pressure would feed on itself. An attack of this type would be launched on a day when the market was already down 3% or more on the Dow Jones index. The result could be a market decline of 20% or more in a single day, comparable to the stock market crash of October 1987 or the crash of 1929. You would not have to trade anything or be in the market during the attack; you would be wiped out based on the market decline even if you did nothing. [Crypto millionaire James Altucher just revealed the cryptocurrency he’s piling into now… and it’s NOT Bitcoin…]( [Click here to learn more]( He reveals exactly what it is [on this page]( 8,788% returns. However, events are happening RIGHT NOW in the cryptocurrency space that could swallow up this opportunity forever. If you missed the first crypto boom… do NOT miss this one. This could be your last chance for easy profits. [Click here to find out what James is recommending now](. [LEARN MORE]( Another type of highly malicious attack is to penetrate the account records system of a major bank and then systematically erase account balances in customers’ deposit accounts and 401(k)s. If the attack extended to backup databases, you or other customers might have no way of proving you ever owned the deleted accounts. During a financial war game exercise at the Pentagon a few years back, I recommended that the SEC and New York Stock Exchange buy a warehouse in New York and equip it with copper wire hardline phones, handheld battery-powered calculators and other pre-internet equipment. This facility would serve as a nondigital stock exchange with trading posts. Orders would be phoned in on the hardwire analogue phone system. This is exactly how stocks were traded until recently. Computerized and algorithmic trading would be banned as nonessential. In the event of a shutdown of the New York Stock Exchange by digital attack, the nondigital exchange would be activated. The U.S. would let China and Russia know this facility existed as a deterrent to a digital attack in the first place. If our rivals knew we had a robust nondigital Plan B, they might not bother to conduct a digital attack in the first place. Some analysts respond to such scenarios by saying that the U.S. has cyberwarfare attack capabilities that are just as effective as our enemies’. If Iran, China or Russia ever launched a cyberfinancial attack on the U.S., we could retaliate. The threat of retaliation, they claim, would act as a deterrent and prevent the enemy attack in the first place. This is similar to the doctrine of “mutually assured destruction,” or MAD, that prevented nuclear conflict between the U.S. and Russia during the Cold War. This analysis is highly flawed and gives false comfort. MAD worked during the Cold War because both sides wanted to avoid existential losses. In financial warfare, the losses may be existential for the U.S., but this is not true for Russia, China and Iran. Because they are far less developed than the U.S., their markets could be destroyed and it would have little impact on their overall economy or national security. The technological warfare capabilities may be symmetric, but the potential damage is asymmetric, so the deterrent effect on China and Russia is low. There is essentially nothing stopping Russia, Iran or China from launching a “first strike” financial warfare attack if it serves some other national strategic purpose. What can you do to preserve wealth if these cyberfinancial wars break out? The key is to have some portion of your total assets invested in nondigital assets that cannot be hacked, wiped out or disrupted in financial warfare. Such assets include gold, silver, land, fine art and private equity represented by a paper contract and doesn’t rely on electronic exchange trading for liquidity. For gold, I recommend you have a 10% allocation to physical gold if you don’t already. As an investor, you have enough to be concerned about just taking into account factors like inflation, Fed policy and the overall state of the economy. These days you have another major threat looming — financial warfare, enabled by cyberattacks and force multipliers. Regards, [James Altucher] Jim Rickards for The Daily Reckoning P.S. In my 2011 book Currency Wars, I warned that the U.S. was engaged in a special type of economic war. I said that these wars would: Degenerate into sequential bouts of inflation, recession, retaliation and actual violence as the scramble for resources leads to invasion and war. The historical precedents are sobering… Some version of the worst-case scenario is almost inevitable. Now with Putin invading Ukraine, rising tensions with China, inflation, recession, supply chain issues and the potential for greater violence breaking out all over the world… I’m afraid my worst fears are coming true, or at least some of them. [That’s why I recorded this short video message.]( I want to help you prepare for what I fear is coming next. Because if history is any indicator, there could be real trouble ahead. [Click here to view my urgent video message.]( Thank you for reading The Daily Reckoning! We greatly value your questions and comments. Please send all feedback to [feedback@dailyreckoning.com.](mailto:dr@dailyreckoning.com) [Brian Maher] [James G. Rickards]( is the editor of Strategic Intelligence. He is an American lawyer, economist, and investment banker with 35 years of experience working in capital markets on Wall Street. He is the author of The New York Times bestsellers Currency Wars and The Death of Money. [Paradigm]( ☰ ⊗ [ARCHIVE]( [ABOUT]( [Contact Us]( The Daily Reckoning is committed to protecting and respecting your privacy. We do not rent or share your email address. By submitting your email address, you consent to Paradigm Press, LLC. delivering daily email issues and advertisements. 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