Hackers May Be Deeply Embedded In DoD: Former CIA Ops Chief

and on Bloomberg dot com. Well. A huge number of investigations are underway inside federal agencies and private sector companies trying to determine the extent of the cyber attack and massive cyber attack. Of course, Russian hackers are suspected. Let's bring in somebody who may be able to tell us a little bit more. At least we'll be able to tell us what the process is right now for going

about trying to solve this problem. Jack Divine is former chief of c i A Worldwide Operations and its founding partner and president of the ark And Group, which is a risk consultancy and an intelligence firm. Jack, have you ever seen anything of this scope and scale? Um? No, I think this is really a critical uh point in the cyber war that's taking place. It should be a

real wake up call. The dimension, the aggressiveness the the collecting intelligence around the world is a common, common event, but the magnitude of going into our health units and into every aspect of of our defense system is really over over the top, an extremely aggressive thing. There's one

other point I'd make. I think we're only looking at the tip of the iceberg here, Jack, give us a sense of kind of how this has progressed, this being kind of Russian state sponsored hacking of US government operations. Give us just maybe the history of this and and where are we right now in that compendium. We talked Paul on the show before about the fact that you know, there has been a continuous um continuous intelligence activities by

the Russians over the last twenty five years. When the wall fell down, there was a temper every break, but there has been an aggressive operational activity. Was particularly brought the light in which we could touch on. So the Russians are still using the Cold War strategy of trying to keep the United States off balance and the collect

information inside of our our system. The difference today as exemplified by they are so aggressive that they are now going beyond the collection to putting themselves in the position where they can act on it. And that is something that I think people have missed this point, not only during the election and shrugged at the fact that they

were a collection, but they used it. And I'm afraid here what we're looking at through these trap doors that we are now only getting a handle on partially there will be in a position to actually make things happen beyond collecting bringing down our utility system, our communication system. And I believe they're much more deeply embedded in our defense contracting world than it's even represented by this most

recent attack. You made a chilling comment a moment ago saying we're only looking at the tip of the iceberg. But before we get to that, I want to ask you what exactly are they planning on doing If they're you know, standing around in all of our systems in the Defense Department and you know, all of the agencies and in private companies, what are they waiting for? Well, I think not to go to television shows and drama

and so on. But you know, they have sleepers, and they build, and we build as well, capabilities to be used in a crisis. So when you use it as part of a weapon, it's like having your nuclear weapons are all sitting there, And the question is when you use them. You use them when there's a conference, Asian or you want to exercise, um, exercise capabilities. They used

it in the election. That was the That's where there was such a break in the rules that I operated and we had an understanding we weren't going to score around in each other's internal systems, and they did. That was the and I think we just didn't spend enough time analyzing that. So today they're in our systems. And when I say the defense contracting or when you look

at the way they approached it, it's just classic. I mean they go through an outside contractor they get into the software system which then allows them windows in the other other other areas. So um, you know, that's to my way of thinking, that's that's actually so their preposition. Those trap doors were not meant for a one time collection, and that's been said by many many commentators on this. This was for persistent collection and for use in the

time of crisis. Check. What should the US response be? Now? This is this is one of the trickiest questions I think of all that you know, the new administration has to deal with it. Um. I think there's been as I said, an awareness of this threat, but not the full dimensions of it, and there needs to be a strategy and an organizational effort to build to build a capability.

We need to plus up and make additional expenditures and looking at the Russian threat, the Chinese threat, we need to give it the right priority and UH and develop the capabilities. Having said that, it's like the mutual destruction It's like the nucletor UH armament race. Eventually we could destroy each other and we sat down and started disarmament and basically not proliferation efforts. This is even more difficult because of the case of the missiles you could see it.

We need to have new ground rule. New ground knows we can start threatening each other and responding and that becomes a really dangerou this world. That becomes the Cold War two UH area. We need. There needs to be a break in this and so far the Russians have not seen that. They've seen no indication that they're willing

to sit down. But there needs to be a This is a subterranneal weapon system, so you need a subterraneal agreement that there was no one's going to be able to get out there and talk about what are the parameters of cyber warfare among among ourselves, But there should be a diplomatic and intelligence effort to open a dialogue about what where are the rules? What are the rules

of the game. We did have them during the Cold War, and we're we don't have them, and we're looking at the same type of dynamic that we had with the juncular weapons. Other than cyber is not connectic, it's not going to not directly going to kill people. But we need a new we need a new approach, and we need to put this right at the top of our agenda. You mentioned that this is only the tip of the iceberg.

Give us some idea of where you think this goals. Well, I think what's missing here is these are a lot of the systems. You see the sophistication, you see the approach, but what you don't see is how deep into our most sensitive secrets are they. And you don't really see a lot in this one about what are our defense systems that have been compromised. Nobody wants to talk about that, but I can assure you that the same techniques that are used here against the Energy and Commerce and Treasury

and so I've been used for years. This is why when they talk about March, we're missing the point. This particular attack is a March attack. But I tried to issue since since cyber became an operational backage, you know, the turn of this decade. You know, there has been a unceasing effort. That's my point. This battle with Russia and what has shown up here, it's a texture of the relationship that someone was thinking that Russia it's not

in an adversarial mode. This really should be a wake up call because they have been doing this for the past years. Yeah, so I think we need to sharpen our attention. Hey, Jack, we're gonna have to leave it there, just out of time. Jack Divine, founding partner of the ark And Group, also author of a new book entitled Spymaster's Prison. Well, the scientists have done their job delivering that one, but two and likely at least three in

the near term possible vaccines for the marketplace. Now it's up to the supply chain to get those vaccines out to consumers. UH to get a sense of kind of where we are in that process and how this whole process may play out. We welcome Craig Garthwaite, director of the Program on Healthcare and a professor in Hospital and Health Services at the Kellogg School of Management at Northwestern University based in Evanston, Illinois. Craig, thanks so much for

joining us here. You know, so again, the way I like to frame is, the scientists have just done a fabulous job of coming up with multiple vaccines and record time. Now the question is how do we get them distributed efficiently and timely to the marketplace. What are your thoughts as to how the US is doing on this front. Yeah, thank thanks for having me. I would expand a bit on not just it's not just distribution, it's also manufacturing. Unlike sort of a treatment for when people get sick.

We have to vaccinate everyone in the United States. So we're looking at needing, you know, three hundred million people to get vaccinated. And if it's a two shot process like the Fiser and the Madurna vaccines that we have approved now for emergency use, right, that's six hundred million doses that we're going to need. Um And I think

the US is, you know, initially doing well. What I mean by that is that we we placed orders to get up a lot of vaccine for our healthcare workers in December and early JUNI worry, and we're doing a good job rolling those out. My real con learned is that we seem to be are unwilling to really spend what's necessary to make sure that in the second and third quarter of one that we're getting all of the vaccine supplies that we need. And what I mean by

that is we should be over investing here. We should buy, if we can, enough of the Moderna vaccine and enough of the Fiser vaccine so that either one of those will be able to treat as many Americans as possible, because you know, the supply chain could break down, there could be a manufacturing problem, uh, there could be any number of things that happened with one of the two manufacturers. And so this is this is when it's time for

sort of a belt and suspenders approached to this. Is there any indication, Dr Garthwaite that we're not doing that or that there there would be the ability to do that and somebody decided not to UH for the Fiser vaccine, it appears that Fiser had asked us to exercise an option that we have in our initial contract to buy more vaccine, and for reasons that have yet to be explained by the administration, we we have not done that.

Um from the reporting in the news and conversations of how people involved, it seems like Fiser asked to do that, to do that several times, we did not, and so instead Fiser then gave the option to the European governments that also had a similar options, who might have moved ahead of us in line. And I just can't understand any reason why we would not be trying to exercise every option we can to get access to as much

vaccine as we can as fast as possible. There's given the amount of economic and sort of public health destruction that the pandemic is causing, there's just no rationale, particularly at the prices that are being talked about, why we wouldn't be trying to buy literally every dose we can get our hands on, because the worst cases will over buy and then we can give it to other countries when we don't need it. So, Craig, you say we

we should buy, I'm not sure who we is? Is it the federal government we've because we really haven't had a federal government presence during this whole endemic. To begin with, it's really been left up to UH states, who is the we that goes out and you know, acquires the stock of vaccines, so that we is the federal government

in this case. And this I agree with you that overall the federal government has really fallen down on the job yet, except when it comes to the focus on developing vaccines, where there has been there's been a lot of funding given. So the Maderna vaccine was was funded entirely by the US government. Feiser did not accept money for research and development, but did accept what we referred

to as an advanced market commitment. And all that means is that we agree that if your vaccine works, if you get to prove, we're going to buy it, guarantee we will buy it. And we said we would buy a hundred million doses with an option for five million more. And that's what that's what we didn't exercise. But this is all being organized by the federal government. So if you were designing how to go about this, because certainly that the PPE rollout and that's a light chain never worked,

still isn't working, apparently, how would you design this? I mean, I think think you run into some difficulties when it comes to the vaccine. That the public health authorities in every state have a lot of power as how things get distributed, and so the state of the government is really working with the state government. I don't think to date what we're seeing though, is a problem on the

distribution of the vaccine to the states. But I think you know, we're we're getting it the people, We're getting it out relatively quickly. What we really need to be focusing on is making sure that we have the commitment from the manufacturers that we get the vaccine as fast as possible, and that that's it gets into what we sometimes referred to as vaccine nationalism, where you know, this

is a global problem. I understand, but the federal government is supposed to be looking out for the United States citizens first. That's what we elected with them to do. Um And once we get the vaccine sort of pandemic under control here, then we can think a bit more magnantiously about the rest of the world. Alright, So, professor, if I'm a viser or Moderna or you know, Astrosencare Johnson and Johnson, if the US government comes knocking on my door and says I want everything yet, got I mean,

how do I say? No? Yeah, I mean they do have contractual obligations, right, they did sign things with the European Union. But I'm very sympathetic in your position. No. Um, we've been debating why the United States pays high drug prices and higher drug prices and the rest of the world for over decades now. Um, I would hope that one thing we've gotten for being such good customers now and I promise to be good customers in the future, is a little bit of preference when it comes to

getting access to things like the vaccine. UM. And so I do think that the door is not shut, probably on those visor doses. I think there's more negotiation that will happen. And I really just want to implore policymakers to not be pennywise poundful. Is here right that you pay extra for the vaccine. I don't care pay sixty dollars a dose, given what it can do for the economy for of a country. Thinking about we're passing a nearly one trillion dollar stimulus again to try and keep

the economy limping along. Right, if we just get all of the vaccine we need, we don't have to worry about today. Most we can get people back to work, we can open back up businesses, and so they're really at the prices we're talking about, it is almost impossible to overpay for the vaccine. And we should make that clear to manufacturers that our checkbook is open if you

will give us the supplies. How do you price this if you're a fiser or a cover or or or a Maderna or somebody with a vaccine that's maybe a little less desirable. So so for the fiser over there, they've actually I think shown remarkable restraint in terms of the amount of value of their vaccine capture or creates

that they're trying to capture with their price. So we're looking at about four dollars for the two dose vaccine for fiser um and that's, you know, given what that vaccine is doing for someone that that's a pretty low price and well below a lot of you know, food vaccines and other things that people take that off far

less efficacious um. And so I do think that they're going to earn a lot of money, Let's be clear, right, because forty times a billion doses is you know a lot that that that no one's gonna be upset about that, but I don't think that the pharmaceutical companies are trying to take too much value. Yeah, it really is a phenomenal thing to watch playoffs from a safe distance. Of course,

our thanks to you, Professor Craig garth Waite. He's director of the Program and Healthcare at Northwestern University's Kellogg School of Management. It is time for Bloomberg Opinion were joined this morning by Bloomberg Opinion columns Brian Schapatta. He covers all things on the fixed income site and fascinating column out Brian has uh Jamie Diamond gets his thirty billion dollar buy back wish. Brian, thanks so much for joining us here. Boy, Jamie Diamond wasted no time in announcing

this significant buyback program. Give us the background of what's happening here with the big banks. Yeah, it was pretty incredible. Just ten minutes after the Federal Reserve released its second round of bank stress tests, they decided to do another round because of the coronavirus pandemic and obviously it's impact

wouldn't be clear for many months to come. So the Fed released its stress tests and basically said all the banks passed with flying colors UM, which was which was a clear bill of health, and as a result, they sort of loosened the restrictions on whether banks could buy back stock. And so within ten minutes of that announcement, Jamie Diamond and and uh JP Morgan came out late Friday after markets closed and said we're starting a thirty

billion dollars buyback program. Overall, eleven billion dollars among the sixth largest US banks uh could potentially be bought back UM. So it's a it's a big win for the banks, a pretty decent win for the bank shareholders, and for Jamie Diamond, who has been counting the table wanting to buy back his stock when it's been so low over the past year. It's a big win as well. What were the assumptions made presume They were pretty harsh to

allow for the pandemic, But were they harsh enough? By yeah, I mean one of the things that I looked at most closely was the unemployment rate that was assumed. And so there were a couple of assumptions with the unemployment rate would spike to twelve percent and either come back pretty quickly, or with spike into the double digits and recover more slowly, and in both of those scenarios, UM

the banks did find. It was always going to be a question of whether UM the sides looking at slightly the right metrics, whether uh it's it was harsh enough. But I think what we learned over the course of this year especially is the SET itself can step in and and do a lot to uh stymy any um, any major crisis. UM. I won't expected that it could be a potentially for a long recession when we were staring at the worst of it in March and April,

and it turned out to be to be pretty short lived. UM. Congress came through with obviously with a fiscal package on the SET as well on the market side. So, Brian, how do how do we characterize the I guess the financial health of some of these big banks here as they think about you know, buy backs and and things like that. Are they in I guess the FED feels

pretty comfortable at this stage. Yeah, only little BRAINERD potential candidates to be the next SET chair actually just sensed and said that she would prefer that they don't do that and and hold on to more of their cash

and their capital. UM. But I mean I think the moral of the story is that it was such a sharp snapback that even though you saw these massive loan lost provisions from the banks earlier this year, UM, a lot of those loans are performing now and it's not necessarily going to be as bad as initially feared, in part because there was a tremendous fiscal stimulus package. I mean, make no mistake, there's still a lot of pain out there, but it's not quite as widespread and potentially systemic as

I think a lot of people feared. There are pockets and weakness as opposed to put all over the board. On the face of it, I can understand how the FED would give the go ahead. Right we're hearing a lot about how markets are at all time highs. The Khad recovery means that affluent people are not really experiencing a recession, and of course it's affluent people that are invested in the stock market and in banks. At the same time, the FED itself has suggested that it doesn't

know what's going to happen next year. We don't know how much of this unemployment is going to be structural unemployment, and we don't know if there's going to be more pain when we expect demand to return, Will that demand return or will have habits have changed forever? Is that taken into account at old Bryan, Yeah, I think that the real thing that's going to be an issue for the FED going forward, all of your you know, like you said, they don't have a clear sense of what's

going to happen with the economy. But even still, I think they have to be started starting to be looking at financial conditions today, notwithstanding um and just thinking, wow, the markets are wide open. People are people are happy, people are seeing their stock work ohios go up. Anybody who wants to borrow, whether it's a large corporation or a small municipality, is able to do so pretty easily at record low interest rates, And so I think they're

trying to balance that that. There is still a lot of pain out there. The labor market is very uncertain, and inflation outlook looks better than it has been but still kind of dicey. On the other hand, financial markets, which they have a large hand in, are doing incredibly well, so that I think they're trying to balance both of those. Alright, we will see certainly the banks are performing just find day daping Morgan itself of three even as this market decreases.

So we'll see how long that good feeling lasts. Daping Morgan itself with a thirty billion dollar buy back. Brian Chapatta, thank you very much. Brian is Bloomberg opinion columnist and has written a great column today on this stress test results, which children banks are weathering the pandemic and can actually give it's some dividend payments and also start buying back their own shares about six months earlier than people have

been forecasting. So a little bit of a surprise after the close on Friday, very excited to talk to our next guest, who is the CEO of Wild Alaskan. It's exactly what it says on the tin, literally, Aaron Callenberg, Thank you so much for joining us on the seafood industry, on its supply chain and on business. You say, it's up four times from the start of explained to us how that manifested itself. Thanks for having me. Uh yeah, just a little bit of background. You know, Wild Alaskan

Company is a monthly seafood membership service. We said, ship a curated box of wild Cot Sustainable seafood two members all across the country. And it's true, you know, UM, we have grown about four x this year over a hundred yeah, over a hundred and forty thousand members. UM. You know, obviously the pandemic has been a global tragedy, but Wild Alaskan is very grateful to be part of the solution of bringing sustainable seafood to members across the country.

So Aaron, give us a sense of just kind of take us back to maybe pre pandemic kind of how your business was trending, and then you know how it's evolved over the last you know, nine to ten months. Yeah, you know, the business was doing quite well prior to the pandemic. UM. I would say that we are now in a position we had planned and projected to be three years from now. So really, you know, we've stayed the course. It's just been accelerated into a shorter amount

of time. UM. And you know, nothing has really changed, you know in terms of our our targeting, you know, our ability to scale and accommodate UM. You know, the subscribers is really a tribute to uh, the Alaskan seafood industry, right. UM. This the fully domesticated product UM caught and processed in the United States, so we weren't dependent on any foreign supply chains for the seafood or for our packaging material, and so we didn't really have any supply disruptions. It

was business as usual, just accelerated. So, Aaron, I'm curious, has Breggsit presented any opportunities for you or is that something you stay away from entirely? Is there is there a way for you guys to help out with the fisheries problem, let's say by providing your fish. We don't currently ship outside of the U s um It's something that's on our long term mid the long term, uh you know roadmap, you know, to part to start uh booting up for filming centers in other countries. But right now,

you know, we're servicing the American domestic market. I will say that, you know, Alaska seafood in general is consumed primarily abroad. It's kind of ironic, you know, Americans don't actually eat their own seafood, the seafood from their own backyard. Most Alaskan seafood is exported already. So Wild Alaskan Company is an attempt to get Americans to eat as beautiful, sustainable seafood that that by and large they're ignoring in favor of farm farm fish. You know, that's being imported now,

so so so quite the opposite from our perspective. Alright, So Aaron, I'm I'm you know, what I know about Alaskan seafood and fishing is kind of when I watch on TV with the Wildest Catch or whatever it's called, these crazy people going out and is just incredible rough seas of the Alaskan waters. There. Talked just about sustainable fishing market or the sustainable fishing business in Alaska. Yeah, I mean, Alaska is the seafood industry is really the

global gold standard for sustainable management of seafood. Um. And you know, my family, you know, had a lot to do with that. Actually, my my grandfather was born in Manhattan, but he moved to rural Alaska. He began fishing in a wooden sailboat, and um, you know, he actually went back in nineteen fifty two to the East Coast and received a master's degree from Cornell University. He wrote his thesis a study of the Red Zamin of Bristol Bay,

with particular reference to teaching its conservation. He eventually went on to serve to serve as the chairman of the Territory Border Fisheries. A lot of folks don't know, but Alaska actually incorporated as a state in large part to gain control of the fisheries over the federal government. And by doing that they put a mandate into the state constitution which mandates sustainable yield and that has over the years produced um the global gold standard for sustainable fisheries. Wow,

that is really fascinating. There is a book in there, I think and Paul, deadliest catch is what you're thinking of. Yes, it's it really is. It can be a deadly profession. Aaron, what were the types of things that people ordered most this year? And I'm also desperate to know if you've been approached by people that are looking to take you public through his back. So, our most popular species is definitely the sack salmon. Um. There's five commercially harvested species

in Alaska, soak salmon is the most popular. Most folks like to get some salmon in combination with whitefish, plibate cod, sable fish, rockfish, uh wild a last capolic, But the salmon is really that you know that the cornerstone of the Alaska sea food industry. In terms of going public, you know, we we look at you know, capitalizing the company UM in conjunction with our mission based approach to accelerate humanities transition to sustainable food systems. To that end,

you know, we are a private company. UM, We're focused on stewardship. You know, I often say Wild Alaskan is a three generation overnight success. Obviously it takes capital to grow the company, but you know, I think down the road, the public markets would be a great place because a lot of the public is really ultimately aligned with our mission. You know, makes maybe more so than private private institutions.

But right now, we're really just focused on stewarding that mission and uh right, you know, building the best business we can. That's really fascinating story. Aaron Collinberg, thank you so much for joining the CEO of the Wild Alaskan Company based in Get This Homer, Alaska in Brooklyn, New York. Thanks for listening to the Boomberg Markets podcast. You can subscribe and listen to interviews at Apple Podcasts or whatever podcast platform you prefer. I'm Bonnie Quinn, I'm on Twitter

at Bonnie Quinn, and I'm Paul Sweeney. I'm on Twitter at pt Sweeney Before the podcast, you can always catch us worldwide at Bloomberg Radio