Author Archives: James Yardley

US Loses Triple AAA Credit Rating

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One of the world’s three leading credit agencies has downgraded US debt. Standard and Poors cut the US credit rating one notch to AA+ with a negative outlook.

The agency argues that the deficit reduction plan passed by congress didn’t go far enough in addressing the US deficit. Whilst the US debt to GDP ratio is already high at 65.2% of GDP, total government liability is actually far greater when including government agencies such as Medicare and Fannie Mae and Freddie Mac.

The two main other credit agencies said last night that they had no plans to downgrade US debt in the near future.
Officials in Washington were furious with the decision and claimed to have uncovered a two trillion dollar error in the agencies analysis. The impact on the markets remains to be seen. Given the panic of the last week investors have been piling into US government bonds pushing yields to record lows despite the US government debt problems. This latest downgrade couldn’t have come at a worse time but we will have to wait until Monday to see the impact it has on the markets.

Investors will be worried that the downgrade may impact the wider economy, president Obama has already warned of the impact a downgrade would have. The downgrade threatens the dollars status as the world’s reserve currency. The instability could have severe consequences for the world as a whole.

Debt Talks Collapse as Republicans Walk Away

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Debt talks in Washington reached a crisis point today as negotiations collapsed ahead of the August 2nd deadline. House speaker Republican John Boehner walked out of negotiations accusing president Obama of moving the goal posts by demanding bigger tax increases.

An angry Obama has said he and other Republicans are puzzled as to why a deal couldn’t get done. The president was offering to slash a $1 trillion in discretionary spending as well as cutting $650bn from Medicare and other entitlements.

People will be disappointed to hear Boehner just walked away at this time of crisis. Walking out at this stage cannot be constructive. It’s also extremely irresponsible with the spectre of a potentially disastrous US debt downgrade looming, to say nothing of a possible default. Republicans generally are starting to look increasingly rash as they unrealistically refuse to except tax increases.

If US debt were to be downgraded, even slightly, this in itself could have huge consequences. Many pension funds worldwide are required to only hold AAA securities and many currently hold large amounts of US government debt. In the event of a downgrade they would all have to sell this debt which could have a huge impact on the US dollar and the price of US debt, possibly causing a downward spiral, as yields rise and the US has to pay more interest on its debt in the future. The effects on the global economy and jobs could be huge.

A default is of course unthinkable and would lead to a worldwide financial meltdown.

It’s time for the politicians to stop thinking about themselves for once and to start thinking about the man in the street. It’s time to get this thing sorted. Each US taxpayer now owes almost $130,000

 

Hacking Latest: Sunday Times targeted Brown

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According to the BBC, the Sunday Times illegally targeted private personal information of former British Prime Minister Gordon Brown. The Sunday Times is also a member of Rupert Murdoch’s News International.

BBC documents suggest ‘blagging’ was used to obtain private medical and financial information. ‘Blagging’ was made illegal in 1994 and involves, ‘knowingly or recklessly obtaining or disclosing personal data without consent’. News international private investigators are thought to have targeted Brown’s police and tax records.

In one incident, someone said to be acting for the Sunday Times is accused of impersonating Mr Brown and obtaining details from his building society.

The BBC says, the Browns also fear another News International paper, the Sun, may have obtained medical records about their son Fraser. The Sun revealed Fraser had cystic fibrosis in 2006.

According to the Financial Times Gordon Brown is said to be very angry at News International, particularly for the incident relating to his son. He is expected to make a statement accusing other News International corporations of hacking.

Many are now asking how far the scandal goes? Have we only seen the tip of the iceberg so far.

In related news News Corporations bid for BskyB looked all but dead in the water as culture secretary Jeremy Hunt referred the bid to the regulator. Deputy PM Nick Clegg also urged Murdoch to abandon the takeover.

 

US Pakistan Relations Collapse; The US Suspends $800 Million of Military Aid

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The US is withholding $800 million in military aid to Pakistan. White house chief of staff Bill Daley told ABC television that Pakistan had, ‘taken some steps that have given us reason to pause on some of the aid’.

Relations between the US and Pakistan have deteriorated ever since the US killed Osama bin Laden in Pakistan earlier this year.

The $800 million dollars is about the third of the annual US security aid to Pakistan. The New York Times has said the move is retaliation against the expulsion of US military trainers. It is also supposed to encourage Pakistan to step up its fight against militants.

The suspension of aid may also be a reaction to American anger that Osama bin Laden was living so comfortably and close to the Pakistani military academy in Pakistan. The US government has found it increasingly difficult to justify funding Pakistan with US tax payer’s money following the bin Laden raid.

The suspension of aid will worry many. The situation in Pakistan has always been extremely delicate and complex. The vast sums the US has paid in aid in the past allows them to have a semblance of control over the situation. It is especially important given Pakistan’s ownership of nuclear weapons. Let’s hope this decision doesn’t come back to haunt us in the future.

 

Blair Accused of Hushing up News of the World Hacking Scandal by Brown's Friends; Meanwhile Blair Slams Brown's Record in Office

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According to friends of Gordon Brown, Tony Blair urged Brown to put pressure on his fellow Labour MP and friend Tom Watson to back off the News of the World. A spokesman for Mr Blair has said, ‘The allegation is categorically untrue’.

Watson has played a major role in uncovering the hacking scandal. His two year campaign was a major reason for the closure of the News of the World. Watson used commons legal protection to make damning allegations against the News of the World and News International executive chief Rebekah Brooks. According to the dailymail.co.uk Watson was threatened by NI in the early stages of the investigation. He was said to have been told by someone in the company, ‘Rebekah Brooks will pursue you for the rest of her life’.

But Watson carried on regardless. He successfully called for, former news of the world editor Andy Coulson, to resign as prime minster David Cameron’s communications director. He has subsequently said in the commons that, ‘Rebekah Brooks was not only responsible for wrong doing, but knew about it’.

Tony Blair became a long-time friend of Mr Murdoch after they made a famous alliance in 1994. Ever since that point News Internationals papers supported Blair until he left office. The support was pulled from Labour when Gordon Brown took over the party, with Murdoch’s papers switching support to the rival conservative party. Whilst Mr Blair has denied the allegations a friend of Mr Brown said, ‘There is no doubt about it, Tony wanted Gordon to intervene’.

Mr Brown himself has refused to comment.

In a remarkable coincidence two days ago Tony Blair came out and attacked Gordon Brown’s record in office. Blair warned Labour against returning to its traditional left wing support. According to the independent.co.uk Blair tore into Brown’s time in office during an address to a progress campaign group. Blair said, ‘We lost the driving rhythm which made us so successful’. He accused the party of no longer being New Labour.

 

Djokovic Wins First Wimbledon Title

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Novak Djokovic won his first Wimbledon championship in a thrilling 4 set match against former champion Rafael Nadal.

On a packed centre court Djokovic won the match, 6-4 6-1 1-6 6-3. His win ended a twenty match winning streak for Nadal at Wimbledon.

Djokovic surprisingly dominated the first two sets, winning them 6-4 6-1. He played phenomenal tennis. Fans and pundits were left stunned at his early dominance over Nadal, often cited as one of the greatest players ever.

But those who then wrote Nadal off, did so far too quickly. The third set saw a complete reverse. Djokovic’s level dropped and Nadal capitalised, winning the set easily 6-1.

At this stage many thought Nadal might go on to win the match. Nadal had an early opportunity in the fourth set to break Djokovic but he failed to take advantage. With that Nadal’s momentum was lost and Djokovic managed to sneak a break.  All of a sudden he found himself serving for the match. He managed to hold his nerve in a tricky final game.

This was the first time Djokovic has won Wimbledon; his previous best effort was the semi-finals. Nadal was typically sporting after his defeat and promised to be back next year. Djokovic was unsurprisingly overjoyed with his win.

 

Outrage as UK student faces Extradition to US over Alleged Copyright Breaches

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British student Richard Oliver faces extradition to the US for his website TV Shack, which offered links to films. He could face up to five years in a US jail.

Commentators have demanded an explanation as to how there can be any justification to extradite a UK national, with a UK based website and server, with no connection to the US at all.

The controversial 2003 US-UK extradition treaty has been heavily criticised for working one way only, there is no reciprocal agreement. Is it a threat to British sovereignty, particularly when used for such minor offences?

It is very questionable whether Mr Oliver has committed any offence at all. In fact some have speculated the attempt at extradition is precisely because Mr Oliver hasn’t actually committed an offence under UK law. His website doesn’t actually contain any copyrighted material itself, it only links to other sites.

In a very similar preceding case brought against Alan Ellis (Accused of Conspiracy to Defraud the music industry – note not a copyright offence) the prosecution’s case collapsed. It is likely that any case brought against Mr Oliver in the UK would have a similar result. http://blogs.computerworlduk.com/open-enterprise/2011/06/us-abuses-copyright-and-extradition-law-uk-acquiesces/

The case is particularly worrying given the recent e-G8 summit where governments discussed the possibility of regulating the internet. This despite the recent UN report which argued access to the internet was a basic right of expression. http://frostmagazine.com/2011/06/cutting-off-your-internet-could-breach-human-rights-says-un/

 

IMF Becomes Latest Hacking Victim

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The IMF has become the latest major organisation to be targeted by a sophisticated cyber-attack.  The attack which started earlier this year was designed to install software creating a, ‘digital insider presence’. An internal IMF email revealed that, ‘suspicious file transfers had been detected’. According to the New York Times emails and other sensitive documents were hacked into.

The attack is believed to have taken place over several months. The IMF was reluctant to give details about the attack but they did confirm an incident was being investigated. They also said the fund remained fully active. However, according to the Metro, one unnamed IT official at the organisation described the attack as a ‘very major breach’. Cyber security experts have speculated that a foreign government is behind the attack.

The attack follows similar incidents at Sony, Google and Citigroup during the last few months. The FBI has said it is planning a major step up in efforts to combat cyber-attacks. CIA director Leon Panetta told the US congress earlier this week that he fears a major cyber-attack which cuts off power, security and government systems.