The Voice of the White House

Washington , D.C. , April 12, 2008 :”Much ado in the papers about the major drug companies. We note that certain very popular drugs made and sold by major drug companies kill or disable too many people. Much shock and horror. Why, I do not know. These people are friends of George W. Bush and he has made it very plain to the Federal regulatory agencies that interfering with his friends is not to be done.

The drug companies can absolutely count on being supported by the Bush-appointed judges and left alone by the regulatory people. Any Federal employee who dares to contradict Bush is immediately fired, as have been a number of high-ranking military leaders who won’t put up with his puerile lies.

The Chinese, who have no problem bribing people, have whined that their lead-tainted toys are quite safe and that their medicines, heavily contaminated with dangerous chemical residues, are even more safe. And because Bush is known to take bribes, they get away with it.

Woodrow Wilson was a Democrat, a prig and an asshole but he never took bribes. U.S. Grant had a very corrupt administration but Grant never took a dime. Bush has been on the take since he used his family influence to get various oil industry jobs.

The whole family is as crooked as a Swiss mountain road and George is no exception. Also, Georgie is a vicious little rat who loves to torment people and if he can do this and get bribe money for it, so much the better.

George W. Bush is a drunk, a liar and a thief and the sooner he leaves office, the better off for every man, woman and child in the United States .

Boycott the Olympics? When he can stuff mattress covers full of hundred dollar bills safely on Air Force One? Not bloody likely. Well, for the trailer park trash and the Jesus freak idiots who voted for him, I hope you swallow the wrong pill and turn a delicate shade of blue.”

Editorial

All the Time He Needs

April 13, 2008

New York Times

President Bush said last week that he told his Iraq war commander, Gen. David Petraeus, that “he’ll have all the time he needs.” We know what that means. It means that the general, like the Iraqi government, should feel no pressure to figure a way out of this disastrous war. It means that even after 20,000 troops come home there will be nearly 140,000 American troops still fighting there — with no plan for further withdrawals and no plan for leading them to victory. It means, as we’ve always suspected, that Mr. Bush’s only real strategy for Iraq has been to hand the mess off to his successor. Mr. Bush gave himself all the time he needs to walk away from one of the biggest strategic failures in American history.

General Petraeus and Ryan Crocker, the American ambassador to Baghdad , did not try to hide any of that in their Stay-the-Course 2008 Tour. There were the obligatory claims of military and political progress, but with a lot less specificity than during Stay-the-Course 2007. Mr. Crocker did not even bother to bring charts assessing Iraqi performance on political benchmarks. General Petraeus’s charts showed that American troop numbers would come down to around 140,000 this summer — but showed nothing beyond that.

When members of Congress pressed him to explain what would have to change on the ground for him to agree to further withdrawals, the general did not have an answer. He certainly is not getting any pressure from the White House to come up with one. As they say in the military, Mr. Bush is a short-timer, so why should he worry?

Whoever wins the presidency will not have the same luxury. He or she will have to start quickly planning for an orderly withdrawal. Even Senator John McCain will have to realize that America ’s forces cannot sustain this pace for much longer. Earlier this month, The Times reported that repeated battlefield tours have so debilitated American troops that Army leaders fear for their mental health. Last week, Gen. Richard A. Cody, the Army vice chief of staff, warned Congress that the demand for troops in Iraq and Afghanistan “exceeds the sustainable supply.”

Mr. Bush cut Army combat tours in Iraq from 15 months to 12, but the Pentagon said that will not relieve the strains on troops and their families or allow the United States to send the reinforcements it desperately needs to Afghanistan .

The faltering American economy also cannot afford this never-ending war. Mr. Bush’s description of his latest emergency spending request as a “reasonable $108 billion” proves just how out of touch he is with fiscal reality. His attempt to justify the overall $600 billion cost so far by comparing his war to the cold war and the need to stop “Soviet expansion” shows that he is even more out of touch with strategic reality.

We believe that the fight against Al Qaeda is the central battle for this generation, but Mr. Bush’s claim that Iraq is the main front is wrong. That is Afghanistan , and the United States is in real danger of losing because Mr. Bush’s failed adventure in Iraq is eating up the Pentagon’s resources and attention.

It is clear that Mr. Bush has no intention of coming up with an exit strategy, but even now there are things he could be doing to give his successor a better shot at containing the chaos after American troops leave.

·                     Press for Real Political Reforms The surge was supposed to give Iraqi politicians breathing room to make necessary political reforms. They still have not agreed on a law to equitably divide the country’s oil wealth, or rules for this fall’s provincial elections.

The performances in Washington last week merely confirmed what the Iraqis knew: the president is just playing out his string. Mr. Bush might have more luck telling Prime Minister Nuri Kamal al-Maliki the truth: if the Democrats win in November, the days of enabling will certainly be over, and that is likely to happen even if the Republicans hold the White House. If they know the Americans will not be there to guarantee their survival, Iraq ’s leaders might be more open to compromise.

·                     Make the Iraqis Pick Up the Check Even some of the war’s most enthusiastic G.O.P. backers on Capitol Hill are joining the Democrats to demand that the Iraqis start paying for military training and the fuel bill for American soldiers. We suspect that has a lot to do with voters’ fury over high gasoline prices, the mortgage crisis and the lagging economy.

The Iraqi government is estimated to keep $27 billion in reserves in its central bank, $30 billion more in American banks and tens of billions of dollars elsewhere. If they have to pick up more of the check, Iraqi leaders may be more eager to focus on political reform and improved military training.

·                     Really Talk to the Neighbors Mr. Bush announced that he is dispatching senior American diplomats to the region to urge Arab states to do more to help Iraq , starting with reopening their embassies in Baghdad . Secretary of State Condoleezza Rice will also attend a conference of neighboring states and another aid-pledging meeting.

The problem goes far beyond embassies and aid. Foreign fighters are not the war’s main driver but they are a lethal problem. And once American troops withdraw, the temptation to meddle — by Iran and Syria but also by Turkey and Saudi Arabia — will be immense.

All these countries need to understand that chaos in Iraq is a threat to everyone, and there is no guarantee that it will not spill over Iraq ’s borders. More bullying and bluster from the president is not likely to get that message across. Nor are canned speeches at conferences. Mr. Bush needs to send his top officials for serious one-on-one discussions with all of Iraq ’s neighbors, including Iran and Syria .

·                     Refugees There are now an estimated 2.4 million Iraqi refugees — mostly in Syria and Jordan — and 2.7 million more Iraqis displaced within their own country. The United States bears direct responsibility, and it needs to do a lot more to help these people survive and find safe refuge, back in Iraq or in other countries. It also needs to — humbly and urgently — ask its allies in Europe , Asia and the region for help.

Beyond the intolerable human suffering, huge flows of refugees could spread Iraq ’s conflict far beyond its own borders. This is not a problem that can continue to be ignored.

·                     An Honest Assessment of Iraq ’s Army This White House has been spinning on Iraq for so long that we suppose we should thank Mr. Maliki for his recent reality check: his decision to send Iraqi forces into Basra to oust militias loyal to the radical cleric Moktada al-Sadr.

It was not a pretty sight. One thousand Iraqi soldiers and police officers refused to fight or deserted their posts. The battle ended with no winner and only after the Iranians helped broker a cease-fire. President Bush and General Petraeus owe the country a rigorous and honest assessment of the American training program, starting with what went wrong in Basra . What needs to be changed now to increase the chances that the Iraqi Army will eventually be able to fight its own battles? How long, realistically, will it take for that to happen?

Mr. Bush’s capacity for denial is limitless. Perhaps he believes that the next president will continue this misadventure without any end in mind, let alone in sight. Even then he owes it to his successor to use his remaining nine months in office to try to address Iraq ’s myriad problems. That will not excuse Mr. Bush’s serial failures. But it may increase the chances for the inevitable withdrawal to be as orderly as possible.

Mr. Bush has all the time he needs, but Iraq ’s suffering civilians do not, and neither do its masses of refugees, the bloodied and strained United States armed forces, or the American public.

US GIs in Iraq Suffer Worst Week of '08

April 12, 2008

by Robert H. Reid

Associated Press

BAGHDAD - A roadside bomb killed an American soldier in Baghdad on Saturday, capping the bloodiest week for U.S. troops in Iraq this year. Clashes persisted in Shiite areas, even as the biggest Shiite militia sought to rein in its fighters.

At least 13 Shiite militants were killed in the latest clashes in Baghdad 's militia stronghold of Sadr City , the U.S. military said. Iraqi police said seven civilians also died in fighting, which erupted Friday night and tapered off Saturday.

The U.S. military said the American soldier was killed in a blast Saturday morning in northwestern Baghdad but did not say whether Shiite militiamen were responsible.

The death raised to at least 19 the number of American troopers killed in Iraq since last Sunday.

American casualties have risen with an outbreak of fighting in Baghdad between U.S. and Iraqi forces and the largest Shiite militia - the Mahdi Army of anti-American cleric Muqtada al-Sadr.

Al-Sadr, who is believed to be in Iran, repeated on Saturday his demand for American soldiers to leave the country and urged his fighters not to target fellow Iraqis "unless they are helping the (U.S.) occupation."

Al-Sadr also blamed the Americans and their Iraqi allies for the assassination Friday of one of his top aides, Riyadh al-Nouri, director of his office in the Shiite holy city of Najaf .

Gunmen ambushed al-Nouri as he was returning home from Friday prayers, and al-Sadr followers shouted anti-American slogans at his funeral in Najaf.

Despite the strident rhetoric, however, there were signs that al-Sadr was trying to calm his militia to avoid all-out war with the Americans. Al-Sadr is also under pressure from Prime Minister Nouri al-Maliki, also a Shiite, to disband the Mahdi Army or face a ban from politics.

Sadrist officials told The Associated Press they had received orders from their headquarters in Najaf to avoid confrontations with Iraqi and U.S. forces unless the Americans try to move deep into Sadr City , which has been under siege for two weeks.

The officials said the Sadrist leadership was concerned that the ongoing clashes were turning into a war of attrition that was weakening the movement and undermining support within its Shiite power base.

The officials spoke on condition of anonymity because they were not supposed to discuss policy with outsiders.

In a move to bolster its image among Sadr City residents, the government Saturday lifted a ban on entering and leaving the district, home to some 2.5 million people. Police announced that one of the entrances had been opened to motor traffic.

Army patrols warned residents through loudspeakers to keep off the streets, saying the rebels had planted roadside bombs which needed to be cleared by the security forces.

Elsewhere, Iraqi soldiers acting on tips from detained Shiite militiamen found 14 bodies that had been buried in a field south of Baghdad , officials said Saturday. It was the second discovery this week of mass graves in the area, raising to 45 the number of bodies located there.

The victims are believed to have been killed more than a year ago as part of a cycle of retaliatory violence between Shiites and Sunnis that has since ebbed.

Recent clashes in the Baghdad area have severely strained a unilateral truce which al-Sadr imposed on the Mahdi Army last August. He ordered the standdown to allow time to reorganize the force and purge criminal factions that had tarnished the image of his movement.

U.S. officials have acknowledged that al-Sadr's truce, along with the Sunni Arab revolt against al-Qaida, had played a major role in reducing American and Iraqi deaths, especially in the Baghdad area.

With renewed Shiite militia fighting, Baghdad is now accounting for a growing number of American casualties.

Last month, 61 percent of the U.S. military deaths occurred in Baghdad , compared with 28 percent in February and 47 percent in April, 2007, according to figures compiled by The Associated Press.

Fighting in Baghdad broke out following last month's ill-prepared Iraqi government offensive against Shiite militias and criminal gangs in the southern city of Basra .

The offensive stalled in the face of fierce resistance by the militias, whose allies in the capital showered rockets and mortars on the U.S.-controlled Green Zone.

Although fighting has eased in Basra , U.S. and Iraqi troops have been pressing militias in Baghdad 's Sadr City to drive them beyond rocket range to the Green Zone.

Associated Press reporter Sameer N. Yacoub in Baghdad and the AP's News Research Center in New York contributed to this report.

Military Personnel Account for 20% of U.S. Suicides

April 10, 2008

by Tom Randall and Rob Waters

Bloomberg

Current and former military personnel accounted for about 20 percent of U.S. suicides in 2005, according to a government study.

About 1,821 current or former soldiers committed suicide in 16 states in 2005, the most recent year of available data, according to the report published today by the U.S. Centers for Disease Control and Prevention. Almost half were diagnosed with depression and a third left suicide notes.

A rise in suicides among soldiers serving in the military has alarmed Pentagon planners and members of Congress as the war in Iraq enters its sixth year. An Army report produced last year found the rate of suicides among soldiers deployed in Iraq from 2003 to 2006 was almost 40 percent higher than the military's average suicide rate. An update of the Army's Mental Health Advisory Team report released in March found suicide rates for soldiers in 2007 remained ``above normal Army rates.''

`The frequency and the length of deployments are stretching people to the limit and they can't tolerate it, Charles Figley, a psychologist who directs the Traumatology Institute at Florida State University , said in a telephone interview today. ``They're taking risks, taking alcohol and taking their own lives because they want to extinguish their pain.

While 38 percent of the soldiers who took their own lives had a diagnosed mental health condition, only 27 percent were receiving mental health care, according to the CDC report.

30,000 Suicides

Each year 30,000 Americans commit suicide, according to the CDC. Suicide is the second-leading cause of death for people ages 25 to 34, after accidental injury, according to today's report, the first from an electronic tracking system meant to help researchers better understand and prevent violent death. The U.S. plans to expand the system to all states, the CDC said.

Suicide accounted for about 56.1 percent of the 15,495 reported violent deaths in the 16 states. Fewer military suicide victims were receiving mental health care than non-military victims, the report said. Violent deaths in the report were caused by intentional use of force or unintended use of a gun.

About three-quarters of all suicides recorded by the CDC took place in a house or apartment. Most victims killed themselves with a gun, followed by poisoning and strangulation, according to the study. About 62 percent had alcohol in their blood.

Men were 3.4 times more likely than women to die violently. American Indians and blacks had the highest rates among ethnicities, the CDC said.

A separate study last year found that combat veterans were twice as likely to take their own lives as people who hadn't been in battle. That study, published in the Journal of Epidemiology and Community Health, looked at 320,000 men who had served in the military from 1917 to 1994.

To contact the reporters on this story: Tom Randall in New York at trandall6@bloomberg.net; Rob Waters in San Francisco at rwaters5@bloomberg.net.

The Collapsing U.S. Economy

You Thought You Had an Equity Line

April 13, 2008

by Gretchen Morgenson

New York Times

It was the nation’s lending institutions and mortgage originators that got us into this credit mess, but it is consumers, taxpayers and those companies’ shareholders who will end up shouldering most of the costs.

The latest example of this is in the mass freezing of home equity lines of credit going on across the country. Reeling from losses on their wretched loan decisions of recent years, lenders are preventing borrowers with pristine credit and significant equity in their homes from tapping into credit lines that they paid dearly to secure.

In the last 30 days, lenders have sent several hundred thousand letters advising borrowers that their home equity lines of credit are frozen, estimated Michael A. Kratzer, president of FeeDisclosure.com, a Web site intended to help consumers reduce fees on home loans.

Major lenders — including Washington Mutual, IndyMac Bank and the Greenpoint Mortgage Unit of Capital One — say that declining property values are prompting the decisions to cut off credit.

Banks have the right, of course, to rescind these credit lines at any time under the terms of the contracts they struck with borrowers. And as home prices have tumbled in many parts of the country, banks are undoubtedly trying to protect themselves from exposure to additional losses.

But these actions are being taken even in areas where property prices are rising, Mr. Kratzer said. What’s worse, the letters provide no explanation for how the lenders determined that the property values underlying the equity lines had fallen.

Frozen home equity lines will surely intensify the consumer spending downturn and put added pressure on an already weak economy. Indeed, on Friday, consumer confidence as measured by the University of Michigan plummeted to its lowest level since 1982. The drop was attributed mostly to higher fuel and food costs, but consumers’ views on their current and expected personal financial situations dropped to their lowest readings since November 1982 and April 1980, respectively.

One especially exasperating aspect of now-you-see-them, now-you-don’t equity lines is that borrowers are not receiving refunds for fees they paid to secure the credit in the first place.

These fees can be significant, Mr. Kratzer said: on a $50,000 line, for example, fees of $1,500 are common. If the line is being frozen at, say, $25,000, why shouldn’t the borrower be entitled to receive a refund of $750?

Borrowers who have an excellent credit score may also find that status hurt when a home equity line is frozen. That is because when a lender suddenly caps a $50,000 line at $25,000, the borrower will appear to have tapped the entire amount of the loan, a factor that can reduce a person’s credit score. Never mind that, based on the original amount of the credit line, the borrower is using only half of it.

Ronald Martin, 31, a United States naval aviator deployed in Iraq , received one of these letters recently from IndyMac Bank. “We regret to inform you that your IndyMac Bank Home Equity account has been temporarily frozen,” the letter began.

Mr. Martin’s wife, Leigh Anne, a substitute teacher who lives in their Camarillo , Calif. , home, said the notice surprised her because she and her husband have excellent credit scores and have not even tapped the IndyMac line. While home values in the Martins’ neighborhood have fallen, the couple are not underwater on their mortgage, which was taken out in spring 2005.

“You paid to use that equity line and now they are saying you can’t use it,” Mrs. Martin said. “We’ve never been late on our mortgage. We have a good savings account. We pay every bill we ever had on time — what did we do wrong?”

The IndyMac letter said the Martins’ credit was being suspended because “the value of the dwelling has declined significantly below its appraised value used at origination.” IndyMac said it would re-evaluate the property value each quarter and, if it improved, the freeze would be lifted.

Officials representing IndyMac declined to comment.

Sara Gaugl, a Washington Mutual spokeswoman, said the bank actively manages the amount of credit it extends to customers. “We have a process in place for customers who wish to appeal a credit line decrease decision,” she said. “We also will continue to assist homeowners who may have unique or special situations.”

Mr. Kratzer, who has recently fielded calls and e-mail messages from more than 500 borrowers in straits similar to the Martins’, said lenders who were reining in credit should provide an explanation of how they determined that property values associated with the lines had declined sharply.

“How are lenders arriving at the new loan-to-value ratios?” Mr. Kratzer asked. “When you secure a loan or home equity line, a full appraisal is generally required. But these processes aren’t being used when the lender calculates a new value to reduce an existing credit line.”

Mr. Kratzer said he had heard from frozen-out borrowers in 11 metropolitan areas where the median home price actually increased in the last quarter of 2007, the most recent figures available from the National Association of Realtors. They include Yakima , Wash. ; Appleton , Wis. ; Raleigh-Cary , N.C. ; and Champaign-Urbana , Ill. Borrowers in areas where prices remained flat have also contacted him.

“Are they applying blanket values to ZIP codes, neighborhoods or entire regions?” Mr. Kratzer said. “We’re all left to wonder about the process.”

Luckily for the Martins, they are not in need of additional credit on their IndyMac line. But other borrowers who have contacted Mr. Kratzer say they are in the middle of home improvement projects that they can no longer finance, or have college tuition bills that they were going to pay using the credit lines. Now they can’t.

Medical expenses, another reason that borrowers tap their equity lines, are also posing problems for some homeowners.

And small-business owners who use home equity lines to bridge cash-flow gaps throughout the year are also being stricken by these curbs, Mr. Kratzer said. He has also heard from people who paid down some of their home equity lines, expecting to be able to draw on them again. Now they are out of luck.

“In a perfect world, lenders would fully disclose the process and criteria used to make these valuations and decisions,” Mr. Kratzer said. “These borrowers have a solid payment history, good credit scores and plenty of equity to satisfy most of the lenders’ loan-to-value formulas. Instead, the banks are just shutting them off.”

China vs. US

The New Chinese E-spionage Threat

April 10, 2008

by Brian Grow, Keith Epstein and Chi-Chu Tschang

BusinessWeek

A BusinessWeek probe of rising attacks on America 's most sensitive computer networks uncovers startling security gaps

The e-mail message addressed to a Booz Allen Hamilton executive was mundane- a shopping list sent over by the Pentagon of weaponry India wanted to buy. But the missive turned out to be a brilliant fake. Lurking beneath the description of aircraft, engines, and radar equipment was an insidious piece of computer code known as "Poison Ivy" designed to suck sensitive data out of the $4 billion consulting firm's computer network.

The Pentagon hadn't sent the e-mail at all. Its origin is unknown, but the message traveled through Korea on its way to Booz Allen. Its authors knew enough about the "sender" and "recipient" to craft a message unlikely to arouse suspicion. Had the Booz Allen executive clicked on the attachment, his every keystroke would have been reported back to a mysterious master at the Internet address cybersyndrome.3322.org, which is registered through an obscure company headquartered on the banks of China 's Yangtze River .

The U.S. government, and its sprawl of defense contractors, have been the victims of an unprecedented rash of similar cyber attacks over the last two years, say current and former U.S. government officials. "It's espionage on a massive scale," says Paul B. Kurtz, a former high-ranking national security official. Government agencies reported 12,986 cyber security incidents to the U.S. Homeland Security Dept. last fiscal year, triple the number from two years earlier. Incursions on the military's networks were up 55% last year, says Lieutenant General Charles E. Croom, head of the Pentagon's Joint Task Force for Global Network Operations. Private targets like Booz Allen are just as vulnerable and pose just as much potential security risk. "They have our information on their networks. They're building our weapon systems. You wouldn't want that in enemy hands," Croom says. Cyber attackers "are not denying, disrupting, or destroying operations-yet. But that doesn’t mean they don’t have the capability.”

A MONSTER

When the deluge began in 2006, officials scurried to come up with software "patches," "wraps," and other bits of triage. The effort got serious last summer when top military brass discreetly summoned the chief executives or their representatives from the 20 largest U.S. defense contractors to the Pentagon for a "threat briefing." BusinessWeek has learned the U.S. government has launched a classified operation called Byzantine Foothold to detect, track, and disarm intrusions on the government's most critical networks. And President George W. Bush on Jan. 8 quietly signed an order known as the Cyber Initiative to overhaul U.S. cyber defenses, at an eventual cost in the tens of billions of dollars, and establishing 12 distinct goals, according to people briefed on its contents. One goal in particular illustrates the urgency and scope of the problem: By June all government agencies must cut the number of communication channels, or ports, through which their networks connect to the Internet from more than 4,000 to fewer than 100. On Apr. 8, Homeland Security Dept. Secretary Michael Chertoff called the President's order a cyber security "Manhattan Project."

But many security experts worry the Internet has become too unwieldy to be tamed. New exploits appear every day, each seemingly more sophisticated than the previous one. The Defense Dept., whose Advanced Research Projects Agency (DARPA) developed the Internet in the 1960s, is beginning to think it created a monster. "You don't need an Army, a Navy, an Air Force to beat the U.S. ," says General William T. Lord, commander of the Air Force Cyber Command, a unit formed in November, 2006, to upgrade Air Force computer defenses. "You can be a peer force for the price of the PC on my desk." Military officials have long believed that "it's cheaper, and we kill stuff faster, when we use the Internet to enable high-tech warfare," says a top adviser to the U.S. military on the overhaul of its computer security strategy. "Now they're saying, Oh, shit.'"

Adding to Washington 's anxiety, current and former U.S. government officials say many of the new attackers are trained professionals backed by foreign governments. "The new breed of threat that has evolved is nation-state-sponsored stuff," says Amit Yoran, a former director of Homeland Security's National Cyber Security Div. Adds one of the nation's most senior military officers: "We've got to figure out how to get at it before our regrets exceed our ability to react."

The military and intelligence communities have alleged that the People's Republic of China is the U.S. 's biggest cyber menace. "In the past year, numerous computer networks around the world, including those owned by the U.S. government, were subject to intrusions that appear to have originated within the PRC," reads the Pentagon's annual report to Congress on Chinese military power, released on Mar. 3. The preamble of Bush's Cyber Initiative focuses attention on China as well.

Wang Baodong, a spokesman for the Chinese government at its embassy in Washington , says "anti-China forces" are behind the allegations. Assertions by U.S. officials and others of cyber intrusions sponsored or encouraged by China are unwarranted, he wrote in an Apr. 9 e-mail response to questions from BusinessWeek. "The Chinese government always opposes and forbids any cyber crimes including hacking' that undermine the security of computer networks," says Wang. China itself, he adds, is a victim, "frequently intruded and attacked by hackers from certain countries."

Because the Web allows digital spies and thieves to mask their identities, conceal their physical locations, and bounce malicious code to and fro, it's frequently impossible to pinpoint specific attackers. Network security professionals call this digital masquerade ball "the attribution problem."

A CREDIBLE MESSAGE

In written responses to questions from BusinessWeek, officials in the office of National Intelligence Director J. Michael McConnell, a leading proponent of boosting government cyber security, would not comment "on specific code-word programs" such as Byzantine Foothold, nor on "specific intrusions or possible victims." But the department says that "computer intrusions have been successful against a wide range of government and corporate networks across the critical infrastructure and defense industrial base." The White House declined to address the contents of the Cyber Initiative, citing its classified nature.

The e-mail aimed at Booz Allen, obtained by BusinessWeek and traced back to an Internet address in China , paints a vivid picture of the alarming new capabilities of America 's cyber enemies. On Sept. 5, 2007 , at 08:22:21 Eastern time, an e-mail message appeared to be sent to John F. "Jack" Mulhern, vice-president for international military assistance programs at Booz Allen. In the high-tech world of weapons sales, Mulhern's specialty, the e-mail looked authentic enough. "Integrate U.S. , Russian, and Indian weapons and avionics," the e-mail noted, describing the Indian government's expectations for its fighter jets. "Source code given to India for indigenous computer upgrade capability." Such lingo could easily be understood by Mulhern. The 62-year-old former U.S. Naval officer and 33-year veteran of Booz Allen's military consulting business is an expert in helping to sell U.S. weapons to foreign governments.

The e-mail was more convincing because of its apparent sender: Stephen J. Moree, a civilian who works for a group that reports to the office of Air Force Secretary Michael W. Wynne. Among its duties, Moree's unit evaluates the security of selling U.S. military aircraft to other countries. There would be little reason to suspect anything seriously amiss in Moree's passing along the highly technical document with "India MRCA Request for Proposal" in the subject line. The Indian government had just released the request a week earlier, on Aug. 28, and the language in the e-mail closely tracked the request. Making the message appear more credible still: It referred to upcoming Air Force communiqués and a "Teaming Meeting" to discuss the deal.

But the missive from Moree to Jack Mulhern was a fake. An analysis of the e-mail's path and attachment, conducted for BusinessWeek by three cyber security specialists, shows it was sent by an unknown attacker, bounced through an Internet address in South Korea , was relayed through a Yahoo! (YHOO) server in New York , and finally made its way toward Mulhern’s Booz Allen in-box. The analysis also shows the code- known as “malware,” for malicious software- tracks keystrokes on the computers of people who open it. A separate program disables security measures such as password protection on Microsoft (MSFT) Access database files, a program often used by large organizations such as the U.S. defense industry to manage big batches of data.

AN E-MAIL'S JOURNEY

While hardly the most sophisticated technique used by electronic thieves these days, "if you have any kind of sensitive documents on Access databases, this code is getting in there and getting them out," says a senior executive at a leading cyber security firm that analyzed the e-mail. (The person requested anonymity because his firm provides security consulting to U.S. military departments, defense contractors, and financial institutions.) Commercial computer security firms have dubbed the malicious code "Poison Ivy."

But the malware attached to the fake Air Force e-mail has a more devious- and worrisome- capability. Known as a remote administration tool, or RAT, it gives the attacker control over the "host" PC, capturing screen shots and perusing files. It lurks in the background of Microsoft Internet Explorer browsers while users surf the Web. Then it phones home to its "master" at an Internet address currently registered under the name cybersyndrome.3322.org.

The digital trail to cybersyndrome.3322.org, followed by analysts at BusinessWeek's request, leads to one of China 's largest free domain-name-registration and e-mail services. Called 3322.org, it is registered to a company called Bentium in the city of Changzhou , an industry hub outside Shanghai