As we kick off the final week of trading in 2016, China, Israel and Russia are dominating key areas.

Stephen Leeb:  “The Twitter-sent message last week from President-elect Trump suggesting he may pursue a sharp U.S. nuclear arms build-up, while alarming (not to mention confusing) on many grounds, does raise an important issue, even while missing a more important point…

The issue is America’s military might. It should be an essential goal to ensure that when it comes to military capabilities, the U.S. is second to none. Beyond the obvious reasons of safety and security, it’s important on economic grounds. The nation that dominates militarily is the one that will have the most desired reserve currency. If China, for instance, can demonstrate that in some critical military areas it has surpassed the U.S., it would be a further tailwind for the yuan – and gold – at the expense of the dollar. 

But what the tweet misses is that when it comes to overall military dominance, where we are most vulnerable – dangerously so – is in the ever more vital area of cybersecurity. However strenuously Trump dismisses the claims that the Russians were the ones behind the hacking into the Democratic National Committee and other forays, it’s indisputable that massive hacking occurred. And this highlights how lacking the U.S. is in meaningful cyber defenses or the ability to respond to cyber incursions.

In today’s world, protecting cyberspace is on a par with, and perhaps even more critical than, any other military requirement. The Internet is the world’s main channel for communications. Soon it may become the basis for monetary exchanges among countries as cyber money takes hold. It’s the major way we store information critical to national security and to the workings of major corporations. Cyberspace plays a central role in our infrastructure, including our electric grid.

We’re lagging not just Russia in this critical area, but China as well. Chinese operatives allegedly spent a year rummaging in the cyber files of our Office of Personnel Management, gaining access to the most private and sensitive information about virtually every government employee, past and current. We even lag Israel, which a while back was able to unlock an iPhone belonging to terrorists, a feat the best and brightest in our own government couldn’t pull off.

You don’t have to be paranoid to envision all sorts of catastrophic events, ranging from the shutdown of our electric grid to the blackmailing of individuals with access to the highest classified information. The question our leaders should be tackling is why the U.S. has fallen so far behind in an area so essential to both our national security and the seamless functioning of our information-intensive society – and what we can do about it.

I would argue an enormous factor is the absence in the U.S. of any concerted effort to find, nurture, and develop the most gifted young individuals from an early age. Becoming and remaining first in the cyber realm can’t be done by throwing money at the problem. It depends on brainpower, and not just raw brainpower but brainpower that has been carefully nourished. And in the U.S., while at least some attention is paid, and rightfully so, to children with learning disabilities or other problems, the most intellectually gifted children are often ignored or discouraged. This may reflect some anti-elitist bias; it may even in some cases reflect the low status of the teaching profession, making teachers less responsive to children whose gifts clearly outshine their own.….more here