Three Months to Save the Euro: George Soros

By Catherine Boyle / CNBC

Euro-zone governments have around three months to ensure the survival of the single currency, billionaire investor George Soros said in a speech on Saturday.

“We are at an inflection point. After the expiration of the three months’ window, the markets will continue to demand more but the authorities will not be able to meet their demands,” he warned in a speech at the Festival of Economics in Trento, Italy. (Read the text of his speech.) 

The European Union is “like a bubble” – not a financial bubble but a political bubble -- that could pop as a result of the euro -zone crisis, Soros said.

“In the boom phase, the EU was what the psychoanalyst David Tuckett calls a ‘fantastic object’ – unreal but immensely attractive,” he said.

“In retrospect, it is now clear that the main source of trouble is that the member states of the euro have surrendered to the European Central Bank (ECB)  their rights to create fiat money. They did not realize what that entails – and neither did the European authorities,” he said.

The euro zone needs a European deposit insurance scheme for banks, Soros said, as well as direct financing by the European Stability Mechanism (ESM) for banks, which “must go hand-in-hand with euro-zone-wide supervision and regulation.”

The “blockage” at the moment is coming from the Bundesbank and the German government, he said. German Chancellor Angela Merkel has been cautious about increasing Germany’s support for the rest of the euro zone.

Soros believes Germany will eventually do what it takes to keep the euro zone going because of the large losses German banks would suffer if it broke up and the damage to exports which could be caused by a return to the Deutschmark, which would likely be substantially stronger than the euro.
“A German empire with the periphery as the hinterland,” could be the result of the current predicament, he warned.

The ECB has been instrumental throughout the crisis and its liquidity injection via a long-term refinancing operation helped boost European markets earlier this year, giving policy makers some much-needed breathing space.

Soros said that too much blame had been placed on peripheral euro-zone countries such as heavily indebted Greece and Spain, and that creditors like Germany had to share responsibility.

“The “center” is responsible for designing a flawed system, enacting flawed treaties, pursuing flawed policies and always doing too little too late.

“In the 1980s, Latin America suffered a lost decade -- a similar fate now awaits Europe,” he said. “That is the responsibility that Germany and the other creditor countries need to acknowledge.”
Soros argued that the focus on austerity instead of growth had been a mistake by the European authorities.

“The authorities didn’t understand the nature of the euro crisis; they thought it was a fiscal problem, while it is more of a banking problem and a problem of competitiveness. And they applied the wrong remedy: You cannot reduce the debt burden by shrinking the economy -- only by growing your way out of it,” he said.

“The crisis is still growing because of a failure to understand the dynamics of social change; policy measures that could have worked at one point in time were no longer sufficient by the time they were applied,” he said.

These views are echoed by well-known economists including Paul Krugman. An increasing number of politicians in the euro zone are also arguing for less austerity and more promotion of growth. The debate has come to prominence during both the Greek election campaign and the Irish referendum on the EU fiscal pact for euro-zone-wide austerity measures.

Putin warns of worsening Syria conflict

By Anna Smolchenko / AFP

Russian President Vladimir Putin warned Friday of an "extremely dangerous" situation in Syria and emerging signs of a civil war but rejected a military intervention as he met with European leaders.

Amid mounting pressure for Moscow to drop its resistance to tougher UN action on Syria, Putin met with German Chancellor Angela Merkel and had arrived in Paris for talks with newly elected French President Francois Hollande.

In Berlin, Putin appeared to strike a more conciliatory tone, warning of the escalating danger from the Syrian conflict and refraining from openly backing President Bashar al-Assad's regime.

"Today we are seeing emerging elements of civil war," Putin said after arriving in Berlin from Belarus. "It is extremely dangerous."

But he also continued to defy calls for tougher UN action to stop the violence, warning at a joint press conference with Merkel: "You cannot do anything by force and expect an immediate effect."

And he hit back at suggestions Moscow was supplying weapons for use in the internal conflict, after the United States condemned Russian arms deliveries to Syria as "reprehensible".

"As far as arms supplies are concerned, Russia does not supply the weapons that could be used in a civil conflict," Putin told reporters, as he continued his first foreign tour since returning to the Kremlin.

Putin's brief trips to Berlin and Paris came amid mounting outrage in the West against Assad's regime after a massacre of 108 people, including women and children, in the town of Houla last week.

UN rights chief Navi Pillay said the massacre could be a crime against humanity.

In Moscow the foreign ministry blamed the Houla massacre on foreign assistance to Syrian rebels, including arms deliveries and mercenary training.

"The tragedy in Houla showed what can be the outcome of financial aid and smuggling of modern weapons to rebels, recruitment of foreign mercenaries and flirting with various sorts of extremists," the ministry said in a statement.

Putin said Russia, Germany and their partners would do their utmost to stop the violence from escalating and help UN-Arab League envoy Kofi Annan, who has brokered a peace plan for Syria, achieve "positive results".

"We both made clear that we are pushing for a political solution, that the Annan plan can be a starting point but that everything must be done in the United Nations Security Council to implement this plan," Merkel said.

Putin said Moscow was not taking sides in the deadly strife rocking Syria, where the Britain-based Syrian Observatory for Human Rights says 13,000 people have been killed since Assad's regime launched a brutal crackdown on the opposition in March last year.

"There is a need to find a convergence of these interests and have them sit down at a negotiating table. That's the direction we are going to work in."

Merkel earlier greeted Putin with military honours as demonstrators waving Syrian flags shouted and whistled outside.

Putin was to hold a one-on-one meeting and dinner with Hollande, who has refused to rule out foreign military intervention as long as it is carried out with UN backing, followed by a press conference.

British Foreign Secretary William Hague also said Syria was on the verge of a civil war and risked collapsing into sectarian strife after meeting members of the Syrian opposition based in Istanbul.

Germany, France, Britain, the United States and other Western nations expelled Syrian diplomats in protest at the slaughter in Houla.

Syria allies China and Russia, which have both blocked previous attempts at the UN Security Council to condemn Damascus, joined other council members on Sunday in backing a statement condemning the Houla killings.

But US Secretary of State Hillary Clinton on Thursday warned that Russia's policy of propping up the Assad regime could contribute to a civil war and even lead to a wider proxy war because of Iran's support for Damascus.

And she claimed Friday that Russia had continued to supply arms to the Assad regime, raising "serious concerns" in the United States.

"We know there has been a very consistent arms trade, even during the past year, coming from Russia to Syria. We also believe the continuous supply of arms from Russia has strengthened the Assad regime," Clinton told a news conference in Oslo.

Amnesty International demanded that Putin immediately stop Russian weapons deliveries to Syria, while Human Rights Watch called on Putin to make human rights a priority at home and abroad.

‘Cop of the future’ technologies being developed in Israel

‘First responders’ dealing with emergencies – and especially police and homeland security officers – are about to move into the 21st century and beyond, using tools being developed by Israeli researchers at Motorola Solutuons

Once public safety officials such as police, emergency medical technicians, and firefighters had two things they could rely on in the field – their intuition, and the radio they used to contact headquarters. Once in awhile an emergency vehicle would come equipped with a video camera, but that was used mostly to record incidents for evidence purposes, or to ensure that public safety workers (and the authorities that employed them) were “covered” in the case of a lawsuit, complaint, etc.

LMR (land-mobile radio), as that communications technology is known, is fine as far as it goes – which in today’s world is not too far, according to Paul Steinberg, vice president and chief technology officer of Motorola Solutions. “Today, users have the ability to send images, video, social media messages, and much more. Now every civilian with a smartphone is a source of information for public safety workers.”

Implementation of those technologies for use by the professionals has been much slower, though, and Motorola Solutions, said Steinberg, intends to change that.

Steinberg was speaking in Israel at a recent event sponsored by Motorola Solutions on the technological future of homeland security. While the event was aimed at “first responders” of all types, “homeland security” is, of course, the domain of police and other security agencies, and the presentation was clearly geared to law enforcement and homeland security teams, both of which were well represented in the audience of about 1,000.

And police certainly have something to look forward to. From mere voice communications with base, cops and security personnel of the future will have access to the most up to date technologies in their equipment. Sensors, video cameras built into sunglasses, GPS and dead reckoning technology, wifi and 4G+ communication systems, extra bandwidth reserved specifically for law enforcement and homeland security, augmented reality– all this will become standard equipment in a short time.

In a typical scenario, an officer will pull over an individual for a traffic infraction and beam an image of the vehicle’s license plate or registration using a camera built into his sunglasses back to headquarters, where it will be looked up (the camera, of course, allows for a 360 degree view, giving officers “eyes in the back of their heads”). If the driver has any outstanding infractions, the officer will let him or her know, and with a mini-printer in the officer’s vehicle, a ticket will be printed out on the spot.

If the individual is wanted for other, more serious things, headquarters will let the officer know as well, and will also automatically alert other police in the area to arrive for backup. Using augmented reality software, a video image of the suspect is analyzed, and if s/he begins to make any suspicious moves, the officer will be alerted in advance. If the suspect tries to escape, the officer will be able to track him or her with his video camera, with location chips in the equipment letting headquarters, and backup, know the officer’s location at all times.

The same technologies will be included in vehicles, said Steinberg. “The driver’s seat will have a lot more tools, with voice activated controls to bring up video recording, tracking, augmented reality, location services, and even an on the road workstation. We call it the integrated cockpit.” The hardware to run this system will be built into the vehicle, with much of it deployed in the trunk. In addition, much work is being done to improve networks, and the recent allocation of cellular network bandwidth in the U.S. specifically to public safety needs will enable officers to use the technologies being developed much more efficiently.

While all these technologies exist and are used every day, few have been used in law enforcement and homeland security, Steinberg said, partially because arranging all the necessary tools in a package that is easy, convenient, and reliable has been a challenge, and the company has developed a number of solutions to enable officers to get the tool they need when they need it. “The more tools, the more effort we have to put in to use them. Individuals can manage, but for a cop or a fireman in the field, accessing these tools has to be second nature.” Part of the development of these systems involves enhancing voice command technology, letting officers activate the tool they need while keeping their hands free.

Much of the work Motorola Solutions is doing in this area is being conducted at the company’s large research and development center in Airport City. On display at the show were a number of devices and systems that Motorola plans to sell in the new future, much of them based on made in Israel technology – with some, such as the company’s LEX 700 Mission Critical Handheld fully developed here.

“As we develop and build systems we will be rolling them out here in Israel, where they will be tweaked and then implemented elsewhere,” said Steinberg. “Israel is the example for others when it comes to homeland security.” Israel has the trained personnel and the unfortunate experience of having to deal with homeland security issues in a much more intensive way than any other country, he added, and the confluence of trained personnel and experience in dealing with security issues makes Israel the best place to develop homeland security technologies.

And for those who think that his description of the “cop of the future” sounds a bit 1984-ish, Steinberg reminds us that law enforcement and homeland security officers are really only playing catch-up. “The bad guys already have, and use, these tools,” he said. “We have to make sure the good guys get them, so they can get ahead and stay there, in order to ensure the safety of the public.”

The FED is talking about more quantitative easing

By Bob Chapman

Well, we had an $868 billion stimulus package. The Federal Reserve then created enough money and credit to bring that package assistance up to somewhere between $2.3 and $2.5 trillion. For that, we had approximately 16 months of attempted recovery. During that period of time, five quarters averaged growth between 3% and 3.25%. I feel that was a very, very high price to pay for a relatively sideways movement in the economy. Now we're back to square one. The recovery is not continuing. The Federal Reserve is talking about more quantitative easing. They're talking about buying back the toxic securities they bought from banks at a price they won't disclose. That move essentially cleared up the banks' books but at the same time encumbered the Fed's books, which they're now going to unburden by selling the bonds back to the same people they bought them from. Now, we don't know what the loss factor is because they won't tell us, so we have to ballpark it. Out of this money that's coming and going they have to come up with a figure somewhere in the vicinity of $1.2 trillion. That's what they're going to use for this quantitative easing.

Powerful ‘Flame’ cyberweapon tied to popular Angry Birds game

By Catherine Herridge

The most sophisticated and powerful cyberweapon uncovered to date was written in the LUA computer language, cyber security experts tell Fox News -- the same one used to make the incredibly popular Angry Birds game.

LUA is favored by game programmers because it’s easy to use and easy to embed.  Flame is described as enormously powerful and large, containing some 250,000 lines of code, making it far larger than other such cyberweapons. Yet it was built with gamer code, said Cedric Leighton, a retired Air Force Intelligence officer who now consults in the national security arena.

“The people who developed the malware … found an ingenious way to use a code not part and parcel of a hacker’s normal arsenal, and that made it harder to detect,” he told Fox News.

But this new weapon is twenty times the size of earlier cyberbombs and far more powerful, making it practically an army on its own, said Roel Schouwenberg, a senior security researcher with Kaspersky Labs.

“Flame is a cyberespionage operation,” he told FoxNews.com.

The reconnaissance virus variously called “Worm.Win32.Flame” or simply “Flame” resembles some of its predecessors, notably DUQU. DUQU was like a computer advance team for the Stuxnet virus that ravaged the Iranian nuclear program at Natanz in 2009. Flame is likewise a form of spyware that enters a computer system, though exactly how is unclear.

“A thumb drive is one way of introducing Flame,” Leighton told Fox News. “But once you know the email address or computer IP address … they can introduce Flame remotely.”

Cyber experts tell Fox News that once in a computer network, Flame is powerful enough to initiate webcams, microphones, and Bluetooth connections in order to extract contact lists, record conversations and more.

It was likely built by the same nation-state responsible for the Stuxnet virus that targeted Iran’s nuclear power plant. One of the leading candidates, is Israel, because Flame has been found in Saudi Arabia, Palestinian territories, Syria, Iran and Hungary.

Israeli Vice Premier Moshe Ya'alon on Tuesday hinted to a local radio station that his country was indeed responsible for it.

"Whoever sees the Iranian threat as a serious threat would be likely to take different steps, including these, in order to hurt them," Ya’alon said.

The spyware has been seen in Israel as well – something that could be a red herring, Leighton said.

Flame came to light when the U.N. International Telecommunications Union (which oversees cyberactivities for the body) received reports of unusual activity.  A Russian security firm first identified it, noting that the virus has apparently existed in these networks for several years undetected.

The U.N. body is expected to release a warning Wednesday that Flame is a significant threat.