Yields on Japan’s benchmark 10-year government bond fall below zero — global market rout

February 9, 2016


Yields on Japan’s benchmark 10-year government bond fell below zero for the first time, as investors clamored for safe-haven assets in the wake of a global market rout.

The yield on the 10-year Japan government bond (JGB) dropped as low as negative 0.007 percent. The fall came on the heels of a global stock market sell-off overnight that likely spurred safe haven flows back into Japan. Bond prices move inversely to yields.

The U.S. five-year Treasury yield also fell to around 1.1112 percent in Asia trading hours, its lowest since June 2013, when markets convulsed during the taper tantrum after the U.S. Federal Reserve first broached the idea that it would taper its quantitative easing program. The U.S. 10-year Treasury yield fell as low as levels around 1.6947 percent, a more than one-year low, on Tuesday.

The 10-year JGB’s move to negative territory yield also follows the Bank of Japan’s (BOJ) move to a negative interest rate policy, which can make the return on JGBs, even at a negative yields, as well as the possibility of further price rises, comparatively more attractive.

Bank of Japan

Amid a surge in market volatility, “people want to hold government bonds” for the safe-haven play, said Chris Weston, chief market strategist at spreadbettor IG. “It’s not a nice time to be in risk assets at the moment.”

But he added that the rush into JGBs wasn’t just about seeking safe havens.

“(Japan policymakers) have been aggressive on the wires, jawboning the currency and giving the impression there’ll be more (easing) coming from the BOJ,” he said. “There’s a large consensus for further action.”

Japan’s Finance Minister Taro Aso said Tuesday that the yen’s moves were “rough,” adding that he was watching it closely, Reuters reported. The dollar was fetching as few as 114.22 yen in Asia trade on Tuesday, dropping sharply — and quickly — from levels over 120 yen early last week. The yen is seeing inflows as it’s considered a safe-haven currency.

A stronger yen is a concern for Japan Inc., because it makes the country’s exports less competitive and dents company earnings when overseas revenue is translated back into the home currency.

The 10-year JGB’s move into negative yields had been widely expected since the BOJ adopted a negative rate policy on January 29.

Deutsche Bank last week forecast 10-year JGB to trade in a range of negative 0.05 to positive 0.15 percent for the time being. Capital Economics tips the bond yield to fall to negative 0.25 percent by the end of 2016.

“Markets are pricing that the BOJ will cut interest rates to negative 0.3 percent by the end of the year,” said Takuji Okubo, managing director and chief economist at Japan Macro Advisors. The current JGB yields also are implying that markets expect the U.S. Federal Reserve won’t hike interest rates this year, he added.

Yields on shorter-dated bonds were already negative in Japan, as well as in many countries in the euro zone, where the European Central Bank has flooded financial markets with cash. Nearly 70 percent of the JGBs in the market already offer negative yields, the Nikkei Asian Review reported last week.

However, a yield below zero on 10-year bonds is rare. Switzerland 10-year bonds currently yield around negative 0.335 percent, although the country’s bond market is smaller than Japan’s.

A negative yield on a bond – which means investors are effectively paying for the privilege of lending Japan’s government money – suggests continued strong demand for JGBs.

The latest driver for the rally in bond prices (and the decline in yields) was the January 29 move by the BOJ to adopt negative interest rates for the first time. The central bank said it would apply a rate of negative 0.1 percent to excess reserves that financial institutional held with it, effective February 16.

That non-traditional policy change may also be unsettling markets.

“I think that central banks are re-writing the Econ textbook. The problem is its unclear how this story ends, but history would suggest this is not a sustainable trend,” said hedge fund manager Brian Kelly of BKCM LLC.

—By CNBC.Com’s Leslie Shaffer; Follow her on Twitter @LeslieShaffer1



A share price board in Tokyo. The Nikkei index lost 5.4 percent on Tuesday, its biggest fall since 2013.CreditToru Yamanaka/Agence France-Presse — Getty Images

TOKYO — Given Japan’s outsize public debt, holding an i.o.u. from its government might seem like a risky proposition that would require the promise of a substantial reward.

But this week, as global economic fears drove money into safer assets, investors in Japanese debt began essentially performing that service for free.

On Tuesday, the yield on Japanese 10-year bonds, the benchmark of government borrowing, dropped to zero for the first time. They quickly fell into negative territory, meaning some investors were buying bonds despite knowing that if they held them until maturity, they would come away with less money than they paid.

And on top of that, a strong yen dragged Japanese stocks down more than 5 percent in the worst trading day this year.

The reversal of bond-investor logic flows from the introduction of negative interest rates by the central bank, the Bank of Japan, experts say. The bank’s governor, Haruhiko Kuroda, surprised markets on Jan. 29 by announcing that it would start charging private-sector lenders a penalty of 0.1 percent to hold onto their excess cash, or reserves.

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Latest North Korean missile launch appears to have greater range than previous efforts, underscoring push for tougher sanctions against Pyongyang

February 9, 2016


South Korean President Park Geun-hye agreed cooperation with US counterpart Barack Obama as part of a flurry of diplomatic activity aimed at agreeing on how best to censure the North.

The rocket launched by North Korea at the weekend seemed more powerful than its 2012 predecessor, but Pyongyang still lacks the expertise to transform it into a ballistic missile capable of reaching the US mainland, South Korean officials said on Tuesday.

The comments came as leaders of South Korea, the United States and Japan discussed how to punish the North for its latest defiant launch and nuclear test, eyeing “strong and effective” UN sanctions.

The rocket, carrying an Earth observation satellite, blasted off on Sunday morning and, according to North Korean state TV, achieved orbit within 10 minutes.

The launch, which violated multiple UN resolutions, was widely seen as an act of open defiance just weeks after Pyongyang carried out its fourth nuclear test.

It sparked strong international condemnations and resulted in an agreement at the UN Security Council to move quickly to impose new sanctions.

The Pentagon said it wanted to send a sophisticated missile defence system to South Korea and that the two sides would start formal discussions on placing the Terminal High Altitude Area Defence System (THAAD) on the North’s doorstep.

“Without getting into a timeline, we’d like to see this move as quickly as possible,” Pentagon spokesman Peter Cook said.

A South Korean defence ministry official said on condition of anonymity that the latest rocket was similar to the Unha-3 launched in December 2012 but was believed to have an enhanced range of some 12,000km.

The older version of the rocket had an estimated range of some 10,000km. He was quick to emphasise, however, that the North has yet to master key technology needed to turn the rocket into an inter-continental ballistic missile, which would require a re-entry vehicle to protect the warhead from heat.

He added that the three-stage rocket was confirmed to have put an object into orbit but officials had yet to verify whether the purported satellite was functioning.

South Korean President Park Geun-hye meanwhile spoke to US counterpart Barack Obama as part of a flurry of diplomatic activity aimed at agreeing on how best to censure the North.

Park and Obama agreed to cooperate “to make sure that the UN Security Council can adopt a resolution for strong and effective sanctions”, the presidential Blue House said.

In addition to the UN measures, they agreed to hit the North with “various sanctions and pressure”.

Park held a similar conversation with Japanese Prime Minister Shinzo Abe, who also spoke to Obama, telling him that Tokyo was considering its own sanctions against the North, Jiji Press said.

North Korean leader Kim Jong-un. Photo: Reuters

A draft sanctions resolution prepared by Japan, South Korea and the United States has been in negotiations for weeks, but veto-wielding China, the North’s key ally, has been reluctant to back measures that would take aim at North Korea’s already weak economy.

China fears that pushing Pyongyang too far could trigger instability that unleashes a wave of refugees flooding across its border.

Beijing also worries that a wholesale collapse of the regime in Pyongyang could lead to a US-allied unified Korea right on its doorstep.

The flight path of Sunday’s rocket was similar to the 2012 launch vehicle, whose first stage debris was recovered by South Korea off its western coast, the defence ministry official said. However, North Korea this time is believed to have had the first stage of Sunday’s rocket blow up into around 270 pieces to cover up its technical footprint, he said.

The North is already subject to numerous UN sanctions over previous rocket launches and three nuclear tests in 2006, 2009 and 2013.

It routinely insists the launches are part of a legitimate space exploration programme but the United States and its allies view them as disguised ballistic missile tests.

Nine dead, more than 100 hurt in train crash near Bavarian spa town

February 9, 2016

World | Tue Feb 9, 2016 7:13am EST

Members of emergency services prepare an injured person for transportation by helicopter from the site of the two crashed trains near Bad Aibling in southwestern Germany, February 9, 2016.
Nine people were killed and more than 100 were injured when two passenger trains collided head-on near a Bavarian spa town about 60 km (37 miles) southeast of Munich on Tuesday, German police said.

Among the 108 people injured, 18 were in a serious condition, after the crash at a peak commuter time of 6.48 a.m. (0548 GMT) near Bad Aibling in the southern state of Bavaria near the border with Austria. One of the trains was derailed.

Dozens of rescue teams were on site and helicopters took some of the casualties to nearby hospitals. The area was sealed off and alongside the rescue effort, a crash investigation had begun, police said.

The trains’ operator, Meridian, is part of French passenger transport firm Transdev, which is jointly owned by state-owned bank CDC and water and waste firm Veolia (VIE.PA).

Transdev said in a statement that management and staff were terribly shocked by the “exceptionally serious accident” and that Chief Executive Jean-Marc Janaillac was at the scene.

German Transport Minister Alexander Dobrindt, also at the site of the crash, said it was unclear whether it had been due to a technical failure or human error.

State-owned Deutsche Bahn is responsible for the track. The line has a system that makes a train brake automatically if it goes through a red light.

Police will hold a news conference but it was delayed from the planned 12.00 local time (1100 GMT).

Meridian runs train, tram and bus networks in 19 countries and had revenues of 6.6 billion euros ($7.4 billion) in 2014.

(Additional reporting by Rene Wagner, Thomas Seythal, Michael Dalder and Geert de Clercq in Paris; Writing by Madeline Chambers; Editing by Louise Ireland)


Brexit? France ‘very likely’ to rethink border arrangement if Britain votes to leave the European Union

February 9, 2016

The UK’s former ambassador to Paris warned the French authorities are under pressure and would be ‘very likely’ to rethink border arrangements if the UK left the EU

David Cameron has been accused of “scaremongering” over claims the Jungle camp in Calais could move the Britain if the UK votes to leave the EU

David Cameron is not “scaremongering” by warning thousands of migrants could move from the Jungle camp in Calais to British soil because a rethink of border arrangements would be “very likely” if the UK votes to leave the EU, a former national security advisor has warned.

Sir Peter Ricketts, the UK’s former ambassador to Paris, said France is taking “a lot of political flak” for policing the border in Calais and could scrap the deal it has with Britain if the country votes for Brexit.

Downing Street prompted a furious backlash from pro-Brexit campaigners by claiming a “leave” vote in the referendum could free thousands of migrants in the Calais “Jungle” to travel to the UK and potentially create tent cities in Kent.

The prime minister raised the prospect that EU withdrawal would jeopardise not only the 2003 Le Touquet agreement requiring checks on lorries and trains on French soil, but also other cross-border co-operation on terrorism and organised crime.

Senior Conservatives including ex-defence secretary Liam Fox accused the Prime Minister of misleading voters, pointing out that the agreement was between the two countries and not an EU measure.

But Sir Peter warned there is “a lot of humanitarian pressure” on the French because of the camp, situated just outside Calais, and backed Mr Cameron by saying a rethink of the agreement would be “very likely”.

Migrants in 'The Jungle' camp in Calais, FranceMigrants like in squalid conditions inside the camp in Calais  Photo: Christopehr Pledger/The Telegraph

He told the BBC Radio 4 Today programme: “This is a bilateral treaty but it was made in a multilateral context where Britain and France are working very closely together across a whole range of issues in the interior, justice area, police cooperation and so on.

“If the context changed, and Britain made a major decision to leave the EU, then I think it is very likely that the French would review its position as well.

“If the context changed, and Britain made a major decision to leave the EU, then I think it is very likely that the French would review its position as well”
Sir Peter Ricketts, the UK’s former ambassador to Paris

“It has 1,000 of its crack riot police deployed in Calais, far more than in Marseille. They are bottling up effectively 7,000 or more migrants in the camps.

“They are taking a lot of political flak for that, there is a lot of humanitarian pressure on them.

“They are doing it effectively to protect our border. We get a secure border; the French carry a lot of the load.

“They are doing it because they see us as a very important ally in the EU on a whole range of areas of cooperation on police and crime. If that stopped, then the incentives change for France.”

British Prime Minister David Cameron speaks during a media conference after an EU Summit in Brussels. Senior British lawmakers warned Monday, July 2, 2012 that Britain must consider a future outside the European Union as the 17 members of Europeís currency union, which the UK has stayed out of, develop closer fiscal and political ties. But Cameron told lawmakers that Britainís priority must be to ìdeal with the instability and chaos,î sweeping the Eurozone, before considering its relationship with its neighbors

David Cameron wants to negotiate a new deal to encourage voters to remain in the EU  Photo: AP

Raising the prospect of the Calais Jungle moving to the South East, a spokesman for the Prime Minister said earlier this week: “It’s our position that we have a positive and strong working relationship with the French at the moment, but clearly the point that is being made here is that should we leave the EU then some of these other arrangements that we may have with other countries, for example the juxtaposed controls we have with France, could be called into question.

“The point here is that if that’s called into question and those controls cease to exist, then you have potentially thousands of asylum seekers camped out in Northern France who could be here almost over night. ”


Malaysia: Human Rights Watch Urges President Obama To Speak in Support of Human Rights, Problems of Corruption

February 9, 2016


Former opposition leader Datuk Seri Anwar Ibrahim is in prison after he was convicted of sodomising his former aide. – The Malaysian Insider file pic, February 9, 2016. US President Barack Obama must urge Malaysian counterpart Datuk Seri Najib Razak to release Datuk Seri Anwar Ibrahim from prison and drop all politically motivated charges, says a global human rights body ahead of the US-Asean Summit.

Human Rights Watch (HRW) said Najib’s invitation to the summit, which will be held in the US in five days, had provoked outrage among Malaysian activists.

“Obama should not conduct business as usual at the US-Asean summit with Najib,” said Phil Robertson, the deputy Asia director at Human Rights Watch, in a press release to commemorate the first anniversary of Anwar’s imprisonment.

“It would be a betrayal of the people of Malaysia if Obama does not publicly call for Anwar’s release, and the dismissal of politically motivated charges for sedition and other crimes that so many activists in Malaysia face today.” HRW said Putrajaya should “unconditionally release” Anwar because his incarceration was on “politically motivated charges”. Robertson said confidence in the Malaysian justice system eroded each day the former opposition leader was kept behind bars.

“Anwar’s conviction and imprisonment removed a major political threat to the government of Najib,” said Robertson. HRW said Putrajaya should also ensure the former opposition leader had access to appropriate medical services while imprisoned and that it facilitated necessary overseas travel to treat his ailments.

The Federal Court last year upheld a Court of Appeal verdict that Anwar was guilty of sodomising his aide, Mohd Saiful Bukhari Azlan, and sentenced him to five years in prison. The US had said it was “deeply disappointed and concerned” by the outcome of the trial. – February 9, 2016.

– See more at: http://www.themalaysianinsider.com/malaysia/article/no-business-as-usual-with-najib-press-for-anwars-release-obama-told#sthash.V1zy5OL7.dpuf

Swedish police arrest 14 for planning asylum centre attack

February 9, 2016


Swedish police stand by police cars outside a house used as a temporary shelter for asylum seekers in Boliden in northeastern Sweden on November 19, 2015. TT News Agency/AFP/File

STOCKHOLM (AFP) – Swedish police said Tuesday they had arrested 14 men for allegedly planning to attack an asylum centre after finding axes, knives and iron pipes in their cars.Authorities said they detained the men on Monday after being tipped off about a planned attack against a migrant centre in Nynashamn, some 60 kilometres (37 miles) south of Stockholm.

The suspects were all carrying foreign ID papers, the daily Aftonbladet quoted police as saying, adding some of them were Polish nationals living and working in Sweden.

“We believe that the migrant centre was the target of the attack,” police spokesman Hesam Akbari told AFP.

He would not however be drawn on the suspects’ nationalities.

Last month, dozens of masked men believed to belong to hooligan or neo-Nazi gangs gathered in central Stockholm and distributed leaflets calling for attacks on young migrants.

Sweden, a country of 9.8 million, took in about 163,000 asylum seekers in 2015, putting it among the European Union states with the highest proportion of refugees per capita.

More than one million people travelled to Europe last year — the majority of them refugees fleeing conflict in Syria, Iraq and Afghanistan — triggering the continent’s worst migration crisis since World War II.

With the influx showing little sign of abating, many countries, including Austria, Germany, Denmark, Sweden, France, have tightened their asylum rules in a bid to discourage new arrivals.

In Sweden, the tougher rules comes against the backdrop of rising concern over conditions in the country’s overcrowded asylum facilities.

Swedish officials have called for stepped-up security after an employee at a centre for unaccompanied child refugees was fatally stabbed in January.

Sweden expects to receive up to 140,000 additional asylum seekers this year.

Global stocks hit the rocks after Asian markets slump

February 9, 2016

A drop in bank shares kept European shares under pressure on Tuesday, after losses in Asian markets sent investors scurrying for safe havens.

LONDON: A drop in bank shares kept European shares under pressure on Tuesday, after losses in Asian markets sent investors scurrying for safe havens.

After a choppy morning, the pan-European  FTSEurofirst 300 flattened out, having touched its lowest levels since October 2014 in early trade. It remained near its Monday close, the lowest since 2013.

Bank stocks reversed early gains, leaving the STOXX Europe 600 bank sector down 6 percent so far this week. Shares in several Italian banks were suspended from trading after dropping sharply. Other growth-sensitive sectors, such as basic resources , also came under pressure.

In all, world stocks fell 0.4 percent, although S&P 500 e-mini futures were flat.

The search for shelter pushed up the Japanese yen, long considered a safe-haven asset, and drove the yield on Japan’s benchmark government bond into negative territory for the first time ever.

Many investors believed that signs of stress in the market for credit default swaps pointed to further declines ahead.

“There is a high probability of a further correction in equity prices, led by banking and energy stocks. There could be a wave of defaults in the energy sector and that will damage the balance sheet of the banking sector,” said Lorne Baring, managing director of B Capital Wealth Management. Slowing global growth was clouding the outlook further, he added.

“We are advising our investors to drastically reduce risk and build protection.”

However, there were some signs of stabilization. Deutsche Bank rose 1.4 percent after sinking 9.5 percent on Monday. Late Monday, the German bank said it has “sufficient” reserves to make payments due this year on AT1 securities, after concern had mounted about its ability to maintain bond payments.

Strategists at Goldman Sachs said banks had enough liquidity and that recent capital hikes should reduce the risk of a financial crisis re-run.

On Tuesday, Asian shares saw the biggest losses, tracking the declines in European and U.S. shares on Monday. Japanese Finance Minister Taro Aso warned the yen’s rise was “rough”, something of an understatement as the Nikkei nosedived 5.4 percent.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 1.1 percent. Australian shares hit a 2 1/2-year closing low and would have been lower if not for holidays in many centers.

All of which raises the stakes for U.S. Federal Reserve Chair Janet Yellen when she gives her semi-annual testimony before Congress this week.

“She needs to come across as optimistic without being too hawkish and cautious without being negative,” said Jo Masters, a senior economist at ANZ. “Hawkishness or dovishness could easily exacerbate the current sell-off, tightening financial conditions further.”

U.S. crude oil rose 2.7 percent to US$30.49 and Brent crude rose 1.5 percent. Copper edged higher in quiet trade, with top consumer China on holiday. Gold benefited from the risk-off sentiment and reached a seven-month high, then edged lower as stocks stabilized and looked set to end a seven-day winning run.


The Bank of Japan’s recent shift to negative rates has raised concern that exotic monetary policy is reaching the point of diminishing returns. But talk about a possible recession in the United States has also led to speculation the Federal Reserve will have to slow or suspend plans to normalize rates.

That has pulled 10-year Treasury yields to their lowest since early 2015 and weakened the U.S. dollar, which touched a six-week trough against the Swiss franc as the euro hit a two-week low against the franc. Against a basket of currencies, the dollar edged down 0.1 percent to at 96.494 .

While the euro was flat against the dollar, bets on volatility ahead for euro-dollar exchange rates surged to a two-month high of 11 percent, as traders bet more on the dollar. That flipped most derivatives pricing in favor of a weaker euro over the next few months.

By the far the biggest mover was the yen, long considered a safe haven given Japan’s position as the world’s top creditor nation. The dollar dived as low as 114.22 yen from above 121 a week ago. The euro fell as much as one percent to 128.24 yen .

The yield on Japan’s benchmark 10-year government bond touched minus 0.010 percent as the Nikkei stock index tumbled. It was the first time a G7 nation’s 10-year government bond yield reached minus numbers, although yields on German bunds have come close.

Southern European bond yields pulled back from multi-month highs on Tuesday, showing some signs of stabilization a day after concerns about global growth and the health of Europe’s banks triggered heavy selling.

Such concerns have also seen one market measure of long-term euro zone inflation expectations fall to a record low.

(Additional reporting by Atul Prakash, editing by Larry King)

Syria: Suicide car bomber blew himself up at a police officers’ club in a residential district of Damascus — several people killed

February 9, 2016
World | Tue Feb 9, 2016 6:31am EST

A suicide car bomber blew himself up at a police officers’ club in a residential district of Damascus on Tuesday, killing several people, Syria’s interior ministry said.

It said a number of people were also wounded in the blast in Masaken Barza, a middle class district where several major government buildings are located.

The Syrian Observatory for Human Rights, which tracks violence across the country, said eight police officers were killed in the blast and at least 20 wounded after a vehicle was detonated in a parking lot in the police officers’ club.

The interior ministry said in a statement that security forces prevented the suicide bomber from entering the heavily patrolled complex and that the blast took place at its gates.

Syrian state television earlier reported that the blast took place in a busy market place in that area. It later retracted the news.

The last major blast in the Syrian capital took place on January 31 in a district of Damascus where Syria’s holiest Shi’ite shrine is located. The blast which killed over 70 people, including at least 25 Shi’ite fighters, was claimed by Islamic State militants.

Suicide bombings in the heart of the Syrian capital have generally subsided in the last two years. Insurgents however continue to frequently rain mortars from rebel held eastern suburbs of the capital

(Reporting by Suleiman Al-Khalidi; editing by Dominic Evans)

Obama’s New Cybersecurity Plan Sticks to the Most Basic Basics — And it is not a law

February 9, 2016

Obama’s New Cybersecurity Plan Sticks to the Most Basic Basics


ENABLE TWO-FACTOR AUTHENTICATION. Update your systems. Maybe get someone who knows what they’re doing to handle your security needs. It’s all the standard advice you’d give a tech novice. It also happens to be the foundation of President Obama’s new Cybersecurity National Action Plan, a long-overdue, comprehensive approach to keeping our country’s digital corridors safe.

CNAP encompasses a number of measures, which vary by degrees in financial backing and plausibility. Even if all of the proposal’s planks come to pass—it is, after all, a proposal, not a law—it’s less an encouraging glimpse of our ironclad future than it is a reminder of just how insecure our government’s information highways and byways are today. Still, at least the administration is addressing the basics.

U.S. President Barack Obama answers a reporter’s question after delivering a statement on the economy in the press briefing room at the White House in Washington February 5, 2016. REUTERS/Jonathan Ernst

Step 1: Stay Up to Date

One of the most expensive parts of the CNAP proposal may also prove to be the most effective. At the very least, it’s the most overdue: The administration wants to dedicate $3.1 billion to modernizing its legacy software and equipment. It will also create the role of Chief Information Security officer to oversee those changes. This person will report to Tony Scott, the government’s appointed Chief Information Officer, and be responsible for “developing, managing, and coordinating cybersecurity strategy, policy, and operations across the entire Federal domain,” according to a fact sheet sent out by the White House’s Office of the Press Secretary.

“We have a broad surface area of old, outdated technology that’s hard to secure, expensive to operate, and on top of all that the skill sets needed to maintain those systems are disappearing rather rapidly,” says Scott.

Scott wasn’t specific on the exact types of legacy systems that will be upgraded, but it’s reasonable to assume that the program includes finally ditching Windows XP, a zombie operating system that Microsoft stopped officially supporting in April of 2014. The US Navy paid $9.1 million last year to continue to receive security patches from Microsoft, and it’s not the only arm of the government still dependent on an operating system that’s several generations out of date. (In this, the US government is no different from over 11 percent of total PC users who are stalled out on a very vulnerable Windows XP).

The government is essentially taking it upon itself to be the nation’s nagging, tech-savvy friend.

The fund will be meted out to agencies in increments, says Scott, to encourage incremental development. That’s to ensure that they continue to hit key milestones, rather than simply throwing a lump sum at their problems without knowing if and when they’ll see results.

Step 2: Go Beyond the Password

Another common sense initiative? Two-factor authentication, both for government employees and for citizens. Scott says that over 80 percent of government employees currently use two-factor, and that the extra security layer will be extended to Americans who interact with the government’s digital services. Part of CNAP will also include a campaign to increase awareness of two-factor authentication in the private sector, whether it’s through your Google account or your Venmo payment.

In this, the government is essentially taking it upon itself to be the nation’s nagging, tech-savvy friend, beating the authentication drums as so many pundits and publications have before them. What’s less clear is why anyone would listen to Uncle Sam if they weren’t already listening to their actual uncle, but at the very least government involvement may normalize two-factor to the point that has a shot of becoming mainstream.

Step 3: Be Competent, Generally

The last significant plank in the CNAP platform? To make sure cybersecurity is being handled by with competence at every level, in case you were under the assumption that it already is.

“Today our model is, every agency, and in fact in some cases, sub-agency, is building their cyber defenses pretty much on their own. What that really means is there’s varying levels of expertise, varying levels of capability,” says Scott. “A small agency with limited resources, frankly, has the same challenges as a very large agency that might have significantly more resources. That’s just a bad model for trying to defend against these critical adversaries.”

Friends don’t let friends set up their own firewalls, as true in the government as it is in everyday life. To that end, CNAP proposes not just to invest in scalable security architecture but to create a new generation of cybersecurity professionals. It’s going to put $62 million toward programs, grants, and scholarships to make sure that enough people have learned the requisite skills to become a cybersecurity expert. It would introduce a loan forgiveness program for students with the right abilities who join the federal workforce.

Just Common-Sense Advice

What’s striking about all of these measures is that they’re not much different than the advice you’d give your neighbor, or any acquaintance with a casual interest in keeping themselves just a little bit safer. That’s encouraging, in that we’re finally getting the basics right. It’s also a little bit sobering, because it—along with yesterday’s leak of nearly 30,000 FBI and DHS employees’ contact information—is a reminder that no matter how many systems are in place, the government, just like a company or a household, is never more than one poorly placed click from being compromised.

“We know that in many instances there are vulnerabilities that are inherent in our system,” says cybersecurity coordinator Michael Daniel. “There are also vulnerabilities due to the users of those systems and the way that they operate. Daniel also, though, sees CNAP as being able to at least mitigate the problem in critical ways–if not solve it.

Go Beyond the Password

. “There are also vulnerabilities due to the users of those systems and the way that they operate. Daniel also, though, sees CNAP as being able to at least mitigate the problem in critical ways–if not solve it.

“I think if you look, holistically, at what CNAP is trying to do, it’s trying to reduce the risk of all of those vectors across the board, and enable us to deploy better technologies to reduce the risk of spear-phishing, to better architect our systems so that the networks are more segmented, so that if somebody does get in they don’t get as far,” says Daniel. “It’s going to place better protections on our high-value assets, so that if they do get into something they can’t do as much with it.”

That sounds grand in theory, but until any of it gets put into practice it’s hard to get too enthusiastic. This is a president nearing the end of his second term, after all, with a Congress that delights in opposition. It’s an initiative that has noble ambitions but few details attached, especially when it comes to cyberattack response.

Maybe that, then, is why it’s not as discouraging as it should be just what kind of shape our cybersecurity is in. Hopefully it’s about to get better. It almost certainly can’t get any worse.



Obama unveils national cybersecurity action plan and budget

February 9, 2016

President Barack Obama’s administration is using a mix of budget proposals, executive orders and appointments to new positions to ramp up the country’s cybersecurity footprint.

By Greg Otto

President Barack Obama announced a national cybersecurity action plan Tuesday, substantially increasing the requested amount of federal funding dedicated to cybersecurity, creating a new federal information security chief and proposing a significant increase in efforts to expand the nation’s cybersecurity workforce.

The administration is proposing a 35 percent increase in cybersecurity funding in its budget proposal, up to $19 billion from last year’s allocation of $14 billion.

The budget request is part of a cybersecurity plan that will have short- and long-term goals aimed at strengthening networks inside and outside government against hackers, protecting privacy, and raising Americans’ awareness of digital security measures.

“The cyberthreat continues to outpace our current efforts,” said Michael Daniel, White House cybersecurity coordinator, during a call with reporters Monday.  “As we continue to hook more and more of our critical infrastructure up to the Internet and as we build out the Internet of Things, cyberthreats only become more frequent and more serious. If we do not begin to address the fundamental cybersecurity challenges we face effectively, we risk cybersecurity and the Internet becoming a strategic liability for the U.S.”

Officials said a big portion of the expanded budget request is aimed at further modernizing federal IT systems, building off last year’s Cybersecurity Implementation Plan.

Obama is proposing a $3.1 billion Information Technology Modernization Fund that will be used to expedite the replacement of antiquated federal systems that are costly to maintain and a growing cybersecurity liability.

“Over the last year, I have directly observed the need to modernize our information systems across the federal government,” said Tony Scott, federal chief information officer, during the media call. “We have a broad surface area of old, outdated technology that’s hard to secure, expensive to operate and on top of all of that, the skill sets need to maintain those systems are disappearing rather rapidly.”

The fund would operate out of the General Services Administration, with agencies needing to hit certain modernization benchmarks to continue receiving funds. Scott said the fund will also encourage agencies to use governmentwide shared services instead of building their own solutions from scratch.

Scott also announced the administration will be hiring a chief information security official within the next 60 to 90 days. The new CISO, who will report to Scott, will be responsible for overseeing cybersecurity policies within all federal civilian agencies, while working in collaboration with top-level Defense Department and intelligence agency counterparts.

“In reality, the CISO role is a policy coordinating role across the federal government,” Scott said Monday. “One of the things that’s unique about OMB, given the name, is that it has management and budget responsibilities. Those are two powerful things that can shape and influence practice in each agency.”

Outside of the federal government, Obama established a Commission on Enhancing National Cybersecurity, which will be made up of private sector cybersecurity experts who will make recommendations on how the public and private sector can better use and promote worthwhile cybersecurity practices.

A new cybersecurity awareness campaign aimed at increasing the use of multifactor authentication will also launch, with help from the National Cyber Security Alliance, Dropbox, Google, Facebook and Microsoft.

A fact sheet issued by the White House also focused on improving cybersecurity education and training nationwide, highlighting the budget’s $62 million plan to establish a cybersecurity corps reserve, core curriculum and student loan forgiveness programs for those who work in cybersecurity for the federal government. The proposal is in addition to the $4 billion that has been attached to the president’s Computer Science for All plan.

Additionally, Obama is signing an executive order Tuesday creating a Federal Privacy Council, bringing together privacy officials from across the federal government to ensure agencies are meeting federal privacy guidelines.

Scott compares it to the federal CIO Council, which offers a forum where agency tech execs can share ideas and best practices, and agree common standards. “I expect the privacy council will do the same thing,” he said. “It’s building on many things that have already gone on to make sure there is consistency policy and application across the federal government.”

The considerable increase in cybersecurity funding comes after a year that saw a number of government agencies, offices and officials fall victim to breaches and federal watchdog reports deem tools already in place aswoefully behind the times.

As the conclusion of the call, Daniel said this plan will “measurably and demonstrably improve” the country’s cybersecurity footing but warned it will not completely stop attacks from occurring.

“This is a continuing threat of varying degree,” he said. “I think no matter how good we get, we will never stop all intrusions.”

Contact the reporter on this story via email at greg.otto@fedscoop.com, or follow him on Twitter at @gregotto. His OTR and PGP info can be found hereSubscribe to the Daily Scoop for stories like this in your inbox every morning by signing up here: fdscp.com/sign-me-on..



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