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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 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.

  • by Anonymous Coward on Sunday January 17, 2010 @06:36AM (#30797138)

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

  • 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.

  • by jlar (584848) on Sunday January 17, 2010 @07:39AM (#30797388)

    And because it has been going on for years it is okay? No, USA and allies needs to retaliate and take the battle to China. Or to put it plainly wage a cyberwar against China until they understand that this kind of behaviour is not tolerable. Otherwise we are just asking for more.

    And of course USA and allies need to be careful to contain the conflict. And no, I am no war monger. But I do not believe that weakness is the path to lasting peace.

  • by Anonymous Coward on Sunday January 17, 2010 @08:29AM (#30797510)

    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 140Mandak262Jamuna (970587) on Sunday January 17, 2010 @09:51AM (#30797882) Journal
    To do that other countries must trust China. Despite all the hatred for the Great Satan vocalized by the Arab nations and leaders, they know USA has played by a strict set of rules and has never defaulted on its loans. The track record of China is short, and its political leaders and its system does not have the credibility yet. With its huge army and an overland connection to their oil fields to China, these oil produces are scared of China. They won't switch to renmembi anytime soon. Euro? May be. There is a growing islamic population in Europe and they might think, demographically they might be in charge of Euro in some 30 years.
  • 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 Ihmhi (1206036) <i_have_mental_health_issues@yahoo.com> on Sunday January 17, 2010 @11:43AM (#30798698)

    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..).

  • by Courageous (228506) on Sunday January 17, 2010 @03:01PM (#30800148)

    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//

  • by kevinNCSU (1531307) on Sunday January 17, 2010 @05:40PM (#30801472)
    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?

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