> somebody should tell Obama

Oh he knows. Lip service to the public about terrorism is just that.

> Is anyone going to attempt to argue that encryption facilitates more fraud than it prevents?

No idea.

Keeping things on topic financial fraud, insider trading, etc is an example where strong encryption does complicate the state's ability to enforce and investigate illegal activity. The purpose here is to draw from a well of motivation other than oft cited but never seen use of encryption in 'terrorism'.

The government's fear is that ubiquitous access to these tools will deprecate the executive branch. All tools from nuclear enrichment to hammers to animal husbandry have noble and malicious potential. Encryption is no different. The executive branch's job is to allow the noble purposes and to discourage, prevent, investigate and indict the malicious.

From the perspective of the executive, encryption presents a serious hurtle to the pursuit of the malicious.

Yet disagreements between the public and the executive about the the scope and breath of executive practices along with the US incarceration rate, of legal exceptionality of the rich and powerful, and general unease with current power structure coupled with traditional mythical US values means that the public would like guarantees about their ability to communicate without being searched.

The US public wants its cake and to eat it too. Secure and private communication for the masses that can not be intercepted. But it wants the executive branch to be able to enforce the law and to investigate broadly.

The executive branch has made many proposals to this middle ground: the clipper chip and key escrow, proliferation of weak cryptography and the use of third party doctrine as a buffer zone mechanism all represent compromises the executive branch has made.

What it comes down to is that the US public does not trust the executive branch not to abuse a middle ground - it points to historical and current examples of extralegal abuse - and in general feels that its government represents their interests but only after compromises with other 'more important' interests (international and domestic elite).

That is to say that the current state of "front door" encryption is a compromise made by the executive but one that the public does not trust.

Yet the public still wants law enforcement to be able to investigate insider trading.

So the government is in a bind. The government is justified to the people by its ability to enforce the laws of the land - if it can't, even for technical reasons - it will have difficulty seeming justified. The government's solution is to invoke the boogieman. 'Terrorists' will get you if we don't compromise. 'Pedophiles' will get your kids if we don't compromise.

But no, it's not about terrorism - it's that the government does not know how it will be able to stand up to proper strong cryptography in the case of true and perceived malicious use.

Freedom is like a dove, yadda yadda.

Encryption is like osteoporosis.

> Right. I find it hard to believe that Obama and Cameron are going to take away our encryption and someone convince our adversaries to abide by those rules.

Entirely. Historically this has been achieved by subversion of cryptographic methods, consumer products and standards and misinformation about security margins. It has made legitimate strong cryptography hard to come by but not specifically illegal. It is likely to become more and more difficult to perform this sort of influence now that the cat is out of the bag.