The U.S. government, and its sprawl of defense contractors, have been the victims of an unprecedented rash of 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. 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. http://www.businessweek.com/magazine/content/08_16/b4080031217154.htm?campaign _id=pr_newswire
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THE SPENDING MIRAGE
By Michael Mandel
If you are an investor, this is the moment in the business cycle when fortunes can be won or lost. The U.S. economy is in recession, for the fourth time in the past quarter century. Will the stock market soon take off with a whoosh, as it did during the downturns of 1981-82 and 1990-91? Or will stocks continue to slump, like they did during the 2001 recession and beyond? Forecasting the stock market is a fool's game -- but there are grounds to believe there's another drop in the market yet to come. The reason: a broad decline in consumer spending, which so far has been masked by a quirk in the government's statistics. Combine that with a rapidly unraveling job market, high energy prices, and the continuing credit crunch, and you have the recipe for a drop in consumer stocks. A big decline there could take the rest of the market down with it. http://www.businessweek.com/magazine/content/08_16/b4080000602263.htm?campaign _id=pr_newswire
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BAILING OUT OF BEAR
By Michael Orey
As chaos rocked Bear Stearns during the weekend of Mar. 15-16 , one of the
investment bank's star brokers prepared to bolt from its Boston office. The
Federal Reserve and JPMorgan Chase were rushing to rescue Bear. But Douglas A.
Sharon didn't wait around to see how it all came out. Surveillance cameras
captured the 50-year-old veteran and an assistant toting two boxes out of
Bear's downtown building. Earlier, Sharon had frantically called dozens of
skittish clients and tried to sort through the mess with other executives at
the branch. The company alleged in a lawsuit that amid the mayhem, Sharon
committed an unlawful act of disloyalty, stealing copies of confidential
account documents and, more important, the lucrative clients who went with
that paperwork. Sharon denied any wrongdoing, countering that his actions
amounted to client triage, not treachery. A judge found no merit to Bear's
claims. The two sides continue to duke it out in arbitration, but the blow to
Bear has already been dealt. With Bear and JPMorgan trying to prevent a mass
client exodus, almost all of Sharon's 90 or so customers -- and their roughly
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YOU'VE BEEN PRE-REJECTED
By Aili McConnon
Two courtside tickets to an NBA game:
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A SPINMEISTER IN NEED OF SPIN
By Burt Helm , with David Kiley and Steve Hamm
From the start, some of Mark J. Penn's colleagues had qualms about his dual roles as CEO of Burson-Marsteller, the public-relations giant, and chief strategist for the Presidential campaign of New York Senator Hillary Clinton . Maybe they shouldn't have. On Apr. 6 , Penn gave up his role as strategic chief with the campaign, though he continues to advise the candidate. The move followed revelations, first reported in The Wall Street Journal, that Penn met in late March with officials of the Colombian government, which had hired Burson to help pass a proposed free-trade pact with the U.S. that Clinton happens to oppose. L'Affaire Penn was yet another blow to the Clinton campaign. But it was also embarrassing for Burson, which is supposed to get good headlines for its clients, not bad ones for itself. As BusinessWeek went to press, Penn's job seemed secure, and none of the firm's clients, which include BP, Accenture, SAP, and Intel, had yanked their business (apart from the Colombian government, which fired the firm). Still, Penn & Co. are in full damage control mode. Penn plans to visit regional offices in the coming days and confer with his executives. "I'll be talking one-on-one," Penn told BusinessWeek, "and making sure that this is resolved, behind us, and the company moves on." http://www.businessweek.com/magazine/content/08_16/b4080000363255.htm?campaign _id=pr_newswire
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AMAZON TAKES ON IBM, ORACLE, AND HP
By Peter Burrows
Jeff Bezos made a fortune building Amazon.com into one of the top players
in online retailing. Now he's looking for new ways to cash in on the company's
capabilities. One of the most intriguing, he thinks, is to move into the
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FLYING IN FOR A TUNE-UP OVERSEAS
By Geri Smith and Justin Bachman
Hangar No.1 at San Salvador's airport is hopping. Technicians employed by
jet maintenance contractor Aeroman swarm over Airbus planes belonging to
JetBlue, US Airways, and Ukraine's Donbassaero, checking electrical systems,
replacing carpets, and examining engines and flaps for corrosion or defects.
Outside, jets from US Airways and Air Tanzania wait their turn. Why the rush
to this tiny Central American country? Starting pay at Aeroman in El Salvador
is around
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