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Another Attack, On Law Firm Suing China 131

Posted by timothy
from the in-for-a-penny-in-for-a-pounding dept.
An anonymous reader writes "In the wake of the attack on Google, another company claims to be the victim of a similar attack. Gipson Hoffman & Pancione is a Los Angeles law firm whose client, CYBERsitter, is suing the government of China and several Chinese companies for using their intellectual property in the infamous Green Dam censorship filter. According to the firm, they have been targeted by a spear phishing attack from China." Relatedly, smartaleckkill writes with news that the US state department is to formally protest to China over the alleged cyber-attacks on Google, "likely early next week."
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Another Attack, On Law Firm Suing China

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  • by Itninja (937614) on Sunday January 17, 2010 @05:37AM (#30796970) Homepage
    ...we are gonna open a big ol' can o' formal protest on all y'all! Take that beeotch!
    • by Anonymous Coward on Sunday January 17, 2010 @05:46AM (#30796998)

      Yeah. We have seen how much china cares about UN's protests. Why would they care the slightest when only a single nation of UN protests? A nation that is very much in debt to them at that. Not only does USA have a massive debt but even the soldiers' helmets have been made in China... As long as USA needs more money from there each year, all these protests are simply for the show and both nations know it.

      • Sigh. This again (Score:5, Insightful)

        by Sycraft-fu (314770) on Sunday January 17, 2010 @07:08AM (#30797270)

        This "Oh China owns all the US's debt, the US has to do whatever they want!!" stuff is silly. It shows a lack of understanding of how money and debt work at an international level.

        So, what China owns are US securities. These are promises to pay a certain amount of US dollars on a certain date from the US government. How long that time frame is depends on the type of security. Also if they pay interest periodically or if it is a lump sum also depends. The treasury sells securities as short as a few days, to as long as 30 years. Now there's a couple important things to understand about these securities:

        1) They are payable in US dollars. What that means is that they are susceptible to devaluation by large amounts of inflation. If they US wanted to it could simply print the money to pay them and devalue the dollar. That has consequences for the US, but also for the holders of the securities. If the dollars your securities are paid in suddenly worth 10% of what they were when you bought them, your investment goes in the crapper.

        2) The securities are the equivalents of IOUs. There's no international agency that enforces their repayment or worth. The US just says that their full faith and credit backs them. This means the US could default on payment. That of course has serious consequences for the US, but again for the holder. Suddenly your notes are worth nothing. Countries have defaulted before, though it is rare (the US has never defaulted on payment).

        What this means is that you China can't simply call the debt due. They can't say "We want all our money now." It is paid out when it is paid out. Also, taking any drastic action with regards to their notes could lead to the notes losing a lot or all of their value. For example they could potentially try and dump the notes, sell them to other people. Doing so would undermine fail in US securities and make it extremely difficult for the US to sell new ones. However, it would also mean that because people were so worried, China would have to take a massive loss on the notes they sell.

        Further, something like that might even lead to a situation where they lose all their value and the US keeps its credit. Remember the credit of the US is all in what people believe. So suppose the US convinces its allies, particularly the European and Asian nations, that China is waging economic war. As such the US has to null all of China's treasury holdings. Not to worry, the US will still honour notes issued to all other countries, just not China. They pull that off, suddenly China is left with a bunch of worthless notes (well nothing actually, they are just accounting entries at the Department of Treasury) and they are in a world of hurt.

        What we really have with the US and China, and indeed much of the global economy, is an intertwined system of economic mutually assured destruction. China could create problems for the US economy because of the large amount of US debt they hold, but to do so would create massive problems for their economy.

        It is not at all a situation like a person faces, where you owe money in a currency you don't control, and they can come and take the items secured by the loan (like your house) if you fail to pay. Treasury notes are paid in US dollars, whatever a US dollar happens to be worth at that time, and only have value because the US says they do, there's no assets that can be seized in the event of non-payment.

        • Re: (Score:1, Offtopic)

          by TapeCutter (624760) *
          Great post! I would just like to add that Point #1 has already happened to some extent.
        • Re: (Score:3, Insightful)

          by Anonymous Coward

          Your post fails to mention one important aspect of the in debt to China argument, which is that the US runs at a deficit and needs to continuously issue securities to cover the shortfall. These securities are purchased by China.

          If China stopped purchasing these securities then there would be a serious financial issue for the US. So the issue of being in debt to China is not due to China owing many securities already, it is with requiring them to continue purchasing more.

          • by wtbname (926051)

            So we might be forced to balance our budget?

            Wow, you are right, that would be terrible.

          • Re: (Score:3, Insightful)

            by Ihmhi (1206036)

            I'm sure if China didn't buy them, someone else would.

            I wonder, are securities issued in a limited lot or something? Like, "500 30-year securities at $10,000 apiece are available, first come, first served" or can someone just buy 'em anytime they want?

            If it's the former situation, then if China doesn't snap 'em up I'm sure someone else will. If it's the latter situation, then I suppose we'd have to tighten our belts (perhaps around our necks..).

            • Re:Sigh. This again (Score:5, Informative)

              by QuoteMstr (55051) <dan.colascione@gmail.com> on Sunday January 17, 2010 @11:58AM (#30798788)

              Yes, T-bills [wikipedia.org] are auctioned off in lots. That's how their price is set, actually: the US government actions off a batch of notes to paid off at a particular price after a particular time, (say, $1,000,000 after 30 years). Investors bid against each other, and the one willing to pay the highest price for the note wins.

              Of course, the price paid for a treasury ends up being slightly below the face value of the note. That's mathematically equivalent to the government paying interest on the loan when it's repaid. (Of course, individual investors usually don't hold treasuries to term themselves, but instead sell them to others.)

              That's where the interest rate on the US debt comes from: the higher the demand for US treasury securities, the higher the price, and the lower the government's effective interest rate.

              Since US treasuries are considered the safest securities around, because the US has never defaulted, demand for treasuries is usually high, and especially high in times of economic sluggishness like the present. During the worst of the financial crisis, the prices paid for treasuries exceeded their face value, which meant investors were literally paying the US government to hold onto their money.

              All this means that the US government can borrow very cheaply and in massive quantities. If China were to stop participating in treasury auctions, there are plenty of investors who would sake up the slack. The only effect would be that due to a reduction in competition, the bid price would be slightly lower, which would correspond to a slightly higher interest rate.

              No big deal.

              • by Ihmhi (1206036)

                Thank you. That's actually quite relieving to hear. I was never really worried about China bankrupting us, but I was rather worried about hearing people keep repeating that same inane argument. Many thanks for the knowledge!

              • Investors bid against each other

                Thank heavens for the taxpayers' sakes that - given the historical lack of examples of collusion or insider trading among those who dabble in high finance in America - it is safe to assume the word "against", eh?

          • No, the US would have multiple options. It could exercise one of them, or more likely a combination of them:

            1) As I mentioned, they can simply print money to cover their obligations. They devalue their currency and cover their debt that way, since their debt is all payable in US dollars.

            2) As others mentioned, they increase the interest rates on their securities. For some this is done directly (the rate is set and you buy them at that rate) for others it is by auction and so happens automatically. The US is

        • by WindBourne (631190) on Sunday January 17, 2010 @09:44AM (#30797830) Journal
          with the money. THey invest it in Western companies, but they are using multiple proxies. What is interesting is that a number of the investment companies are actually quiet fronts for China money. Then the VCs INSIST that the production moves to china saying that it is the lowest costs. It is thought that many more of the investment companies are owned by CHina, even though they are suppose to declare it as such.
        • by m0s3m8n (1335861) on Sunday January 17, 2010 @10:08AM (#30798016)
          Owe the back $100,000 and the Bank OWNS YOU owe the bank $8,000,000,000,000 and YOU OWN THE BANK.
          • by Spatial (1235392)
            Pretty sure he addressed your analogy in the final paragraph. Valid in dealing with people. Not valid in dealing with countries.
        • Re:Sigh. This again (Score:4, Interesting)

          by Johnny Mnemonic (176043) <mdinsmore&gmail,com> on Sunday January 17, 2010 @01:29PM (#30799426) Homepage Journal

          It's worth pointing out specifically that our debt wih China is one of the largest weapons in our peace arsenal. If China takes a warlike action (ie invades Taiwan) one of the first things we would do is cancel our debt obligations.

          It is at least partially due to this fear that China has not yet declared open hostilities. When they start selling that debt, or stop taking on new debt, watch out.

          I do not think that the current issue with Google rises to the level that we could do that and preserve our credibility. But it does start painting a picture, and combined with the jailing of those steel execs last summer its not going in a positive direction.

          I'd love to know the other 20 companies that were hacked at the same time as Google. We'd have a clearer knowledge of China's intentions and the threat she poses. But you can believe that the State Department knows.

          When does China come up for the MFN vote again? Expect to hear this then again, and maybe more details too.

        • I'm not a Constitutional scholar by any means, but I am curious how you think the U.S. could unilaterally cancel a debt, considering Amendment 14, Article 4.

          Joe.

          • by winwar (114053)

            "...but I am curious how you think the U.S. could unilaterally cancel a debt, considering Amendment 14, Article 4."

            For the same reason we could ignore any other part of the Constitution: Because we WANT to. Ultimately the Constitution (or any other set of laws/values/etc) has power because we give it power. If we are not willing to enforce the provisions in the document it doesn't matter what they are, it becomes just a piece of paper. Two data points (among many): 1. The Soviet Constitution provided

            • I suspect that in a dispute over such things, the US Supreme Court would have original jurisdiction.

              In the matter of a war, all bets are off, because there is no way SCOTUS would hear a case from an active enemy, and as the winner we would dictate terms as pert the armistice, and as the loser, vice versa.

              If the matter weren't a war, SCOTUS might not hear just based on their whim.

              • by ifwm (687373)

                Hey, you're that loser who was completely wrong about Article 14, 4 and got pissed at me when I pointed out your ignorance.

                Why are you at it again when it's been proven to you that you don't know a fucking thing about the Constitution and cry like a bitch when it's pointed out to you?

                I mean seriously, I've proven yourself a total ignoramus on the subject, why are you embarrassing yourself by pretending your opinion on the subject isn't worthless?

          • by bartwol (117819)

            While some of the points are informative, your question (and intimation) is a good one. While it is plausible that the U.S. can summon the political will and make some excuse to "cancel" its debt to China, there's a foolishly idealistic assumption that we could do so while containing the devaluation to only "Chinese-held" securities. There are a lot of reasons why that is implausible. First, I defy people to sufficiently define a "China-owned T-Bill" such that, when said T-Bill is submitted for redemption,

      • Re: (Score:2, Informative)

        by Anonymous Coward

        I've always wondered why people think the US is so indebted to China. Of the US debt, only 28% is held by foreigners, and only 23% of that is held by the Chinese (so 6% total). It's about $800 Billion, which is quit a bit, but only about 5% of the US's yearly GDP.

        Beyond that, why does it even matter? China would be hurt far, far worse than the US if there was a political breakdown between the two. 40% of the Chinese GDP comes from exports, so they'd suffer tremendously. The US imports the equivalent of

      • Re:That's right.... (Score:4, Informative)

        by Solandri (704621) on Sunday January 17, 2010 @01:04PM (#30799252)
        China only holds about $800 billion in U.S. Treasury Securities [treas.gov]. U.S. GDP was about $14.2 trillion in 2008. U.S.imports from China were $338 billion in 2008 [census.gov]. Exports around $70 billion, so trade with China accounted for 2.9% of U.S. GDP. If China were to exercise the "nuclear option" and suddenly dump all the U.S. treasury securities it owns onto the market, and stopped all trade with the U.S., its financial impact would be about 8.5% of U.S. GDP.

        China's 2008 GDP was about $4.4 trillion. Their trade with the U.S.at $338+$70 billion accounted for 9.3% of their GDP. So if China were to dump all the U.S. securities and stop all trade with the U.S., they would be hurting their economy more than they would be hurting the U.S. economy.

        China needs the U.S. more than the U.S. needs China.
      • by jandersen (462034)

        We have seen how much china cares about UN's protests

        About as much as anybody else, I'd say. Hasn't the US regularly ignored this kind of things in the past? The UN is not a global government or a police force, it is only a forum where national governments can go and rant about things; 'cause that's got to be better than starting a war.

  • the ensuing protests will be worth a laugh or two.

    • Re: (Score:2, Interesting)

      by AHuxley (892839)
      The NSA does not run MS, they just know how to use it ;)
      Lots of countries run mini Echelon like systems.
      "The message, a fax sent by satellite transmission from Egypt's foreign ministry to its embassy in London, was intercepted on November 15 by Swiss intelligence, the newspaper reported. The Swiss defence ministry said it was investigating the leak of the document."
      fromhttp://www.guardian.co.uk/world/2006/jan/10/usa.mainsection
      China has in inward looking system, built by US/EU corps and telcos.
      What w
  • um... (Score:3, Interesting)

    by TakeoffZebra (1651327) on Sunday January 17, 2010 @05:50AM (#30797004)
    what the hell does China care about a protest in California?
    • Re:um... (Score:5, Interesting)

      by NonSequor (230139) on Sunday January 17, 2010 @07:44AM (#30797400) Journal

      It's probably these guys. [wikipedia.org]

      Kind of a weird phenomenon. Makes me wonder if youthful rebellion manifests itself in a society like that.

      • by NonSequor (230139)

        It's probably these guys. [wikipedia.org]

        Kind of a weird phenomenon. Makes me wonder if youthful rebellion manifests itself oddly in a society like that.

        oops

      • Makes me wonder if youthful rebellion manifests itself in a society like that.

        When it does, the Chinese government simply machine guns the trouble makers [wikipedia.org] and the rest fall into line. After all, they have millions of other youths (life is cheap in China) who will tow the party line; especially after the trouble makers, who conveniently gathered themselves together at the same place and time for a protest, are shot.

        • by NonSequor (230139)

          Makes me wonder if youthful rebellion manifests itself in a society like that.

          When it does, the Chinese government simply machine guns the trouble makers [wikipedia.org] and the rest fall into line. After all, they have millions of other youths (life is cheap in China) who will tow the party line; especially after the trouble makers, who conveniently gathered themselves together at the same place and time for a protest, are shot.

          I agree although I had meant to make a slightly different point. In the US, young people get angry and they tend to express it mostly with things like petty vandalism. It's a nuisance, but it isn't a huge problem. In China, there's this huge social pressure to not step out of line like that, so I'm wondering if ordinary youthful anger gets channeled into the more socially accepted statism. They feel the need to be aggressive toward something so they accuse their state of being too soft and lash out at count

  • by Dunbal (464142)

    China now owns the US dollar, thanks to the Fed. But don't take my [theglobeandmail.com] word for it. If I were the US I would invest in some lube and bend over quietly.

    • Re:Tread softly (Score:4, Informative)

      by TapeCutter (624760) * on Sunday January 17, 2010 @09:45AM (#30797834) Journal
      ."China now owns the US dollar

      You don't need to understand anything about the global economy [slashdot.org] to realise that's bullshit. All you need to do is ask yourself if China could gain an advantage by using it's holdings to manipulate the value of the dollar then why has it not done so already? Surely your not suggesting that China is currently propping up the US out of the goodness of it's heart?

      The fact is that the Chinese and US economys are like two drunks leaning on each other, if one stumbles they both fall. I put it to you that your link is little more than an advert for something called "China Investment Corp".
  • by Anonymous Coward on Sunday January 17, 2010 @06:36AM (#30797138)

    What, is "targeted" too many letters for you?

  • 1. Set up honeypot and bogus law firm.
    2. File big lawsuit against China.
    3. Log sources and vectors during ensuing cyberattack.
    4. Sell results to DoD.
    5. Profit!!

  • export 'em (Score:5, Funny)

    by mt1955 (698912) <mt1955@gma i l .com> on Sunday January 17, 2010 @06:54AM (#30797214) Homepage Journal

    Q: what do you call 80 tons of lawyers on a slow boat to China?

    A: a good start.

    Seriously though, if we really could figure out to export lawyers; it would balance the trade deficit, and just think what it would do for the quality of life domestically.

    • Seriously though, if we really could figure out to export lawyers; it would balance the trade deficit, and just think what it would do for the quality of life domestically.

      Sorry, but I'm pretty sure that would constitute an "Act of War".

      Besides - you really think someone would be stupid enough to *pay* us for them?

    • by lag10 (667114)

      Q: what do you call 80 tons of lawyers on a slow boat to China?

      A: a good start.

      Seriously though, if we really could figure out to export lawyers; it would balance the trade deficit, and just think what it would do for the quality of life domestically.

      Wouldn't the idea of exporting lawyers for the purpose of balancing the trade deficit imply that such lawyers actually have value?

    • I want them there. Fast. Now.
  • I'm so excited the US DoS is going to protest. That's gotta go down in history as the most effective...

    Who am I kidding.

    E

  • by Anonymous Coward

    Can Airbus Sue the US now? After all, if hacking into communications is now a lawsuit offence that can be persued against a government, the US interception of Airbus negotiations to land a sale so that this could be leaked to Boeing and then let Boeing win the contract should likewise be open to lawsuit.

    Will the US agree?

    Or is it only bad when China does it?

  • .... the communication media of the internet.

    I discovered I had a whole and large website installed within my own web site a couple years ago and from this I was able to determine that many otehr sites including many found on sourceforge to as well have had such hidden websites installed.

    I was able to determine it was from china that this was happening.

    Many of these hidden site installations are probably still existing today. I'd advize everyone with a site, individual to corporate to government to do a ful

  • by Anonymous Coward on Sunday January 17, 2010 @10:10AM (#30798018)
    Are all of these attacks really a surprise? Remember that Microsoft gave China access to the Windows source code years ago. http://solarislackware.blogspot.com/2010/01/china-microsoft-and-why-you-should-be.html [blogspot.com]
  • by EvilRyry (1025309) on Sunday January 17, 2010 @10:54AM (#30798288) Journal

    "There are attacks every day. I don't think there was anything unusual," Mr Ballmer added.

    Seriously, Ballmer? Have you read the part where the Chinese government has been labelled as the attacker of over 30 international companies by Verisign? Not just some guy in China, but the Chinese government. I would consider that pretty damn unusual.

  • If China invaded Hawaii, California or Alaska, but did not kill any US citizens we would treat this very differently as the Fed would take this very seriously rather than saying, Yeah, cyber attacks, they happen every day, nobody got hurt etc etc.. Maybe if the Fed realized that when China steals intellectual property, it might not hurt the US today, but it enables China to get a free pass on research for which we had to invest our own time and money into.

    During WWII there were many Germans immigrants that

    • Re: (Score:3, Insightful)

      by Courageous (228506)

      What precisely do propose we actually do about it?

      Spying has not traditionally been accepted as casus belli in the historical record, and there's the little matter of the fact that escalated military engagements with China are just a bad idea.

      C//

    • Re: (Score:3, Insightful)

      by kevinNCSU (1531307)
      Because looking a nineteen year old kid in the eye and asking him to go kill and die for his country because some malicious packets got through a routers firewall at a private company and now China might be able build a better search engine is different then asking him to do it because foreigners with guns just landed on the beach where he played as a kid and claimed it as their own. Any more ridiculous questions?
  • and they will send you a spam.

    Give China your entire manufacturing base
    and they will crush your entire empty shell of a country.

  • It's time for Congress to exercise one of their little known powers and issue a letter of marque to Google, authorizing them to take action against Chinese nationals via the internet. We are effectively in a state of conflict with China, with them attacking US interests via "private" proxies. Google and other organizations could be allowed to exercise some self help and go on the offensive.

    And it would make "Talk like a Pirate Day" really mean something.

  • Are they drunk? How do you sue a country??

    Which common law do they think both entities (China and CyberSitter) exist in and are forced to adhere to?
    I don’t see any multinational organization with the power of enforcing shit on China.
    But I can see China’s agents shooting the CyberSitter boss in the head on his next voyage to some small/shady country.

    Dumb move. It’s like taunting the USA to “come get me, suckers”! Basically, you’re fucked. ;)

    There should be a Bad Idea Jeans [youtube.com]

  • Would be Google dropping all Chinese and China-related websites from their search results (including AdSense if they really want to talk the talk). They could easily justify such actions by pointing to the attacks they suffered from China and declare it a lawless no-commerce zone where no one can be trusted.

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