- Gold, Diamonds Used To Bribe Banker In Sprawling $2 Billion Indian Fraud Scandal
It has been more than two weeks since Punjab National Bank – one of India’s largest state-owned financial institutions – informed the public about a nearly $2 billion lending fraud allegedly masterminded by Nirav Modi, a famous celebrity jeweler and one of India’s richest men. And still, investigators are just beginning to piece together the exact mechanics that allowed a celebrity jeweler, working with a handful of rogue bank employees at PNB’s Mumbai branch (the bank is based in New Delhi) to pull off the largest financial fraud in modern Indian history.
In their latest update, federal investigators told Reuters and a host of other media organizations that Modi and his uncle Mehul Choksi – who played an integral role in the fraud – successfully bribed bank employee with gold coins and diamonds to help coax them to look the other way when signing off on fraudulent letters vouching for the shell companies receiving the loans.
Authorities have apprehended a retired PNB manager named Gokulnath Shetty, pictured below, who was essentially Modi and Choksi’s inside man at the bank.
Last week, we pointed out a disturbing trend whereby large multinational financial institutions were backing away from Indian banks, setting the stage for a painful credit crunch that could potentially destabilize the Indian economy.
The Central Bureau of Investigation (CBI), which has arrested 14 people in the case, on Saturday for the first time said bribes were paid to at least one Punjab National Bank (PNB)official by Modi.
The agency told the court that Yashwant Joshi, who worked as a manager in the forex department of the Mumbai branch that is at the center of the fraud, admitted to having received two gold coins weighing 60 grams and a pair of gold and diamond earrings from Modi.
The articles have been recovered from Joshi’s house in the presence of independent witnesses, the CBI said.
Police have also arrested two low level employees from the Brady House branch of PNB for helping ferry the fraudulent guarantee letters past the bank’s internal controls. The two men allegedly helped produce some of the letters of understanding, then recorded them in the bank’s internal system, effectively leaving its stewards in the dark. As any expert on India’s state-run banks would tell you, the fact that most Indian banks haven’t integrated their internal controls with the Society for Woldwide Interbank Telecommunication (SWIFT) leaves them incredibly vulnerable to fraud, particularly when bank employees who have nearly unfettered access decide to take advantage of their position.
In its latest story, Reuters provided a detailed graphic explaining exactly how Modi and his crew managed to secure the fraudulent loans. The fake letters of undertaking that were so vital to the scheme allowed shell companies controlled by the fraudsters to receive loans mostly from foreign branches of Indian banks.
Over the weekend, an Indian federal judge issued a warrant for Choksi’s arrest. Both Choksi and his nephew Modi have fled the country, and are believed to be in Hong Kong. Prosecutors are also zeroing in on Modi, who is believed to be the ringleader of the whole scheme.
“Modi appears to be the prima donna in the whole saga of the fraud perpetrated on the PNB,” the directorate said in a filing to the court seen by Reuters.
But perhaps even more embarrassing – and ultimately more problematic – than the authorities’ inability to apprehend the ringleaders of the fraud (though they have arrested a total of 14 people over their suspected involvement in aiding or abetting it) is the fact that nothing is being done to strengthen oversight of Indian banks.
Without that, the damage to the credibility to the state-run banking system may never be repaired – and if that happens, it’s the small business owners of India who will suffer as credit conditions are rapidly tightened.
- An Anarchist Explains How Hackers Could Cause Global Chaos
Authored by Laura Sydell via NPR.org,
Artists and criminals are often the first to push the boundaries of technology. Barrett Brown is a criminal who has actually helped inspire art – the TV show Mr. Robot. Its protagonist is a hacktivist – a hacker who breaks into computer systems to promote a cause.
Brown was connected to Anonymous, a group that hacked a private security firm to reveal secrets. He is now out and living in a halfway house in Dallas.
He had spent years in a prison cell thinking about what he might do when he got out. And he says he is ready to change, so next time he gets involved in hacking a corporation he is able to inflict maximum damage.
“Certainly, I haven’t gotten any less militant in the course of having these things done to me,” Brown says.
Barrett Brown served time for being part of Anonymous, a group that hacked a private security firm to reveal secrets.
Courtesy of Barrett Brown
Since most hacktivists operate in the shadows, Brown offers the best look at these cyber-revolutionaries and their motivations.
The 36-year-old Brown was born in Dallas. His father was a wealthy real estate investor, until he was investigated by the FBI for fraud. Brown’s father was never charged, but the family lost all its money and his parents divorced.
“It was something that I’m sure instilled in me the idea that there was a degree of arbitrary power out there that could come down at any time and disrupt your life, as it did to me when I was a child,” Brown says.
He hates arbitrary power and always has. He is an anarchist who believes the U.S. government is fundamentally corrupt. And he says most Americans are too complacent to do anything about it.
“That’s what … in part brings me to contempt for the American citizenry,” he says. “Obviously, I have no respect for the laws, for the government or for the voters.”
Instead, he says, his own code of values drives him.
He became a radical intellectual — more interested in spreading revolutionary ideas than in protesting in the streets. But in 2006, Brown saw a potential outlet for his anarchist dreams — the hacktivist group Anonymous. It was leaderless, crowdsourced and militant.
Anonymous managed to organize a massive attack on Scientology, even taking down its website. Brown started covering Anonymous as a journalist but soon became deeply involved.
“I saw this as the very first ripples in something that would grow to be one of the great dynamics of the 21st century, that we would see more of this emergence [of] online warfare essentially against institutions including nation-states,” he says.
For many years, Brown was a sort of unofficial spokesman for Anonymous, appearing in interviews dressed in a beige corduroy or navy blue jacket and dress shirt, a cigarette dangling from his hand. He looked more like a preppy than a revolutionary.
In 2011, the group began targeting companies that contracted with the U.S. government. One of them was Stratfor — a global intelligence firm. Emails released after an Anonymous hack included sensitive information on top-secret government missions like the killing of Osama bin Laden. The emails also show Dow Chemical hired Stratfor to spy on activists trying to get money for families who suffered during the Bhopal disaster.
Brown viewed this as a private corporate version of COINTELPRO — the FBI’s effort in the 1960s to discredit activists like Martin Luther King Jr.
Brown created Project PM, an online chatroom where participants looked through thousands of hacked emails to find the most incriminating. One email contained thousands of credit card numbers — and stealing credit cards is a crime.
In September 2012, Brown was at home talking online with members of Project PM. “I heard a rustling at my door and I walked over to the door. I was holding a beer in my hand,” he says. “[I] thought it was another friend of mine.”
But when he opened the door there was a SWAT team equipped with shields and helmets. Brown says they were yelling, “Put your hands up buddy.” Brown says they had him on the floor and put a boot on his back. The audio of the arrest was recorded by someone in the Project PM chatroom.
Brown faced up to 100 years in prison. His mother was charged with hiding his laptops.
Brown admits he went a bit off the rails. He posted a video on YouTube attacking an FBI agent.
“I was a former heroin addict,” Brown says. “I was getting off Suboxone at the time, which is a synthetic opiate. And I was sort of suddenly feeling emotions again that have been kind of bottled, kept down a few months. I was very upset about my mother being threatened with indictment.”
Still, Brown was a cause célèbre among certain activists and journalists. Many felt he was being put away for simply looking through hacked emails — something any journalist would do.
Brown eventually pleaded guilty to threatening a federal officer and to two other charges. The government imprisoned other members of Anonymous. The group kind of faded away, but its tactics did not.
During the 2016 election, Russian state-supported hackers used some of the same tools as Anonymous — hacking emails from the Democratic National Committee and posting them on WikiLeaks to embarrass Hillary Clinton.
I wondered, is there really any difference between a foreign agent trying to undermine our democracy and hacktivists like Anonymous? Is Brown a hero or a villain?
I turned to an unlikely expert to help me figure that out — Sam Esmail, the creator of the TV show Mr. Robot. “Their spirit is in activism,” Esmail says. “Their spirit is in exposing these frauds and abuses by people in power. And that’s just something on a human level I respect.”
But Mr. Robot is hardly a glowing portrait of hacktivists. Its hero, Elliot, is a drug addict who can’t access his own emotions. Sound familiar? Elliot leads a group called fsociety that takes down the world’s largest corporation — erasing everyone’s debt. Chaos erupts.
Mr. Robot actor Rami Malek (from left), writer/producer Sam Esmail and actor Christian Slater, at the Critics’ Choice Awards in Santa Monica, Calif., in 2016. “Their spirit’s in exposing these frauds and abuses by people in power,” Esmail says of hacktivists. “And that’s just something on a human level I respect.”
Jason Merritt/Getty Images
Esmail says he is looking at an age-old dilemma. “Do we commit a criminal act for something that we feel is just, even though the consequences could be great?” he says. “That’s such a kind of loaded, huge, but very relevant question today.”
Brown doesn’t seem interested in examining the moral ambiguity of hacktivist crimes. But he says he is learning from past mistakes. Ultimately, Brown feels that Anonymous was disorganized and lacked leadership.
So he is designing a software program called Pursuance, which he says will take hacktivism into the future. It will be fully encrypted, anyone could use it to sort through a trove of hacked documents, and it could even be used to recruit a team of hackers.
Brown says when people tweet and post their opinions on social media it’s just “slactivism.” “The next great act of hacktivism, if it really is going to be great, it has to be an act of reaffirming the idea of civic duty,” he says. He says he wants to provide a mechanism for people who do feel that sense of civic duty to really have impact.
Brown is ready to be a martyr for the cause if he has to be. He would even go back to prison.
“I want to be in a position to defeat my powerful adversaries in public,” he says, “where everyone could admire the pluck in which I did it.”
Brown is casting himself in a starring role in the new world. And in his mind Mr. Robot is no fantasy. It’s what the future really looks like.
- St.Cyr: "We're Not Starting A 'Trade War' – We're Revoking Prior Agreements Of Preordained Surrender"
When it comes to business there’s one group that believes they, above all else, know how business should be conducted at all levels. The problem is most, if not all, have never run a business in their careers. If they have, it’s quite common that it never rose beyond the equivalent of a lemonade stand.
And yet, it is this very same group that will/have imposed regulations so egregious, that even that simple lemonade stand, that fixture of years past, enabling many a kid their first brush with business – to be nearly regulated out of existence. You know – for the safety of the children and public at large.
Lord knows how many unsuspecting patrons consumed lemonade over the years and fell dead, or were hospitalized needing to undergo tests as to find out what contaminants may have been present, because there were no warning labels, or listed ingredients affixed to the plastic cups. And to top it off: No license!
What other possible offense could these business malcontents be involved in that would demand political intervention? Brace yourselves: They actually dealt in an all-cash business model. Obviously those 6 year-olds were just posing as neighborhood children, raising money for a local cause or charity.
No, what was obvious (via the political eye) was they must be underworld kingpins, extorting unsuspecting passer-byes of their hard-earned money to funnel back into their ill-gotten coffers. Need I say it again? They. Only. Accepted. Cash. (or pocket change) Obviously they must be criminals. So, therefore, they must be stopped! And sadly, for many, they have.
And who gets the credit for all this “brilliance?” Hint: Politicians, of all stripes.
The reason for the above is this: That’s about the level of business understanding that many, if not most, of today’s politicians have that negotiated the multi-national, multi-$Trillions of trade deals we are now, supposedly, bound by.
I know it’s seems over-the-top, however, let me assure you – it is not. For if you think I’m off base? Need I remind you of the most egregious statement made directly to business people which demonstrated today’s political leaders understanding of business; its fundamental relevance to a nation, its economy, as well as its working public. e.g, “You didn’t build that.”
Sorry, that’s not a capitalist infused statement of argument. That’s a defensive communist infused statement. Period. If you take offense to my statement? I’ll assume you are not, nor have ever, built a business. And you should probably stop reading here. Consider that your, “trigger alert.”
Over the last few decades politicians of all stripes (e.g., Left, Right, and everyone in-between) have entered the U.S. and its business sovereignty into trade deals that have done more damage to the U.S. and its middle class than anything before it.
“Free-Trade,” as it is bandied about, is great in theory. However, most “Free-Trade” agreements prior were nothing more than simple documents with general outlines that set a framework that was easily understandable, as well as administered. (i.e., Trade agreements used to be some 20 or 50 pages long. Now, their 2000 to near infinitum. And that’s just for, “Lemonade!”)
If you look at the results of all the trade agreements over the last few years, one thing is glaringly obvious: The U.S. rarely breaks even.
In most cases (Hint: See China for one) the counter-party to all U.S. trade agreements usually not only gets the oversized proportions of the deal, but are seemingly inoculated from any violations they commit. i.e., Dumping products into U.S. markets? Complain all you want. Just don’t “rock the boat.” Or should I say, “shipping container ship?”
Again, one (as in the U.S.) can complain all they want. Does anything ever come of it?
No. All you’ll hear is some form of “Well, we brought this up to the ___________(insert political body of you choice) and the needed recommendations are a process and will take time, and blah, blah, blah. But we’ll keep up the good fight to get those jobs back, just remember to donate to __________” (fill in part affiliation here.)
Remember – To a politician: “Talking business, is doing business.” To a business person: “Talking is one thing – bona fide sales, are quite another.”
Regardless how one feels politically about the current stance being initiated by the administration, what is abundantly clear is the following:
This is what business looks like when you’re trying to turn around, or right past mistakes, in the midst of a “turn around operation.”
For those unfamiliar with the term, “turn around operation.” This is what is used to describe the process that a failing business adopts when there’s only two options: (1) Go out-of-business, now. (2) Try to save it.
Being a former successful “turnaround specialist.” This is precisely (i.e., what everyone is currently mislabeled a “trade-war”) what you do (and need to do) when you’re engaged in the latter. (I’ve expressed a similar point before in an article titled “The media is perplexed because this is what business looks like and they don’t get it.”)
All prior negotiations are simply either curtailed, rewritten, or thrown into the scrap-heap. Nothing is sacred. Repeat: Nothing.
Again, we are currently engaged in the latter. And the ones that have benefited in prior agreements, at the expense of the U.S. and its industrial backbone, are naturally going to wail like spoiled children.
“Free Trade” agreements were meant to be reciprocal, honest, sharing of markets. Otherwise, there is no “Free” anything.
What’s been taking place for decades is nothing more than a business bloodletting, being forced via a legion of leeches that have done nothing more than negotiate away a nations most fundamental asset. i.e., Its business and industrial might. It’s been a deplorable, disgusting display of nothing more than the equivalent of a bastion of rentier’s greed. This has not been about capitalism, business principles, or ideals at all.
It’s been nothing more than pure “Wall Street” incentivized greed. The greatest bastion for capital formation is now, nothing more, than a shell game. Literally.
Most, if not all, of the past agreements have been nothing more than structures of one form or another to fuel the insatiable thirst of what “Wall Street” has now become. i.e., It’s no longer the greatest capital formation vehicle the world has ever known. No, now it’s nothing more than a front running, parasitical infested, algorithmic, headline reading, High-Frequency-Trading, casino. My apologies to casinos everywhere.
Do not get me wrong, I’m not making any argument in favor of any administration, or politician. That is not what I’m discussing here.
What I am making clear is this: There’s a difference between opening up a “Trade War” and – just ending prior egregious trade agreements.
That’s not “War.” That’s called defending oneself. And just as in life at the schoolyard level – The bully doesn’t like when they suddenly find their “bullying” not only unheeded, but rather, they now find the once “bullied” has decided to fight back.
Again, all we are now engaging is – defending ourselves. That’s a distinction with a mighty big difference. And most of the mainstream business/financial media hasn’t the slightest clue of the differences.
Wall Street objectives (i.e., wringing every last cent, regardless of the human toll or national cost to its business sovereignty) have done nothing more than incentivize businesses to move operations offshore using the “wage gap,” “regulation gap,” and “environmental gap,” as an incentive to jettison any and all morals of capitalistic fundamentals, and replaced it with some form of grotesque hodgepodge of business maxims which are entirely specious when used improperly.
All hyperbole? Fair point. So, let’s use another example for comparisons, shall we?
This time let’s use the media’s go-to patriarch of U.S. business: “Ole Uncle Warren.” Far too many hold this man up as “The Face of what U.S. Business should look like.” Here’s a hint: Here’s what you get with that “face” and a trade deal such as NAFTA.
I made this point originally back in May of 2014 in the article, “Moving The US Economy Forward By Reversing Its Tax Policies” when it originally took place. To wit:
“We hear many on the taxation issue regurgitate so-called “wisdom” or arguments for higher levels of taxes using opinions from academia such as the Krugman-ites, or axioms by none other than Uncle Warren (aka Warren Buffett) as to buttress their claims or stance why they’re unquestionably correct.
Remember when we were told ad nauseam Mr. Buffett believed in higher taxes? We heard: “Oh his secretary pays more in taxes than he does, blah, blah, blah.” And if Uncle Warren says it, well it must be so. After all, he throws great shareholder parties and plays the ukulele. He’s for the little guy. Yeah, right. Until you actually try to touch his money. For no matter what they say, one needs to watch what they do.
A little event took place last month that for all intents and purposes resembled a tree falling in the forest for today’s financial media. Fruit Of The Loom™ is closing its plant which employs some 600 U.S. workers in Kentucky and moving the operation to (wait for it….) Honduras. I guess those 600 U.S. workers were doing jobs that people paying lower wages, taxes, and more won’t do. Oh wait, they will. And now Honduras can claim family ties to Uncle Warren. I wonder if Mr. Buffett broke out into a rendition of Cinco de Mayo when he played his annual ukulele solo surrounded by the Fruit Of The Loom quartet?”
Sure, Mr. Buffet bought FOTL in the early 2000’s when it was in bankruptcy. Nothing wrong there. What’s wrong is his implied song and dance across the media in a willing to pay up, or call for higher taxes in some “good steward of business ” tone. i.e., “I don’t pay enough in taxes, blah, blah, blah.” or some other such drivel.
The fact of the matter is: If there’s a tax break or incentive that he or his businesses can take advantage of? They’re going to take it, regardless of the economical costs to the people he employed, or the community that was built around it.
Welcome to, “Uncle Wall Street” priorities, first, via the cover provided by prior trade deals negotiated by “lemonade stand” politicians. Great for them – not so good for the U.S.
Here’s a question: Do you think those 600 jobs would be gone today (and the devastation to the community that was built around it for years) had the prior “trade agreements” to incentivize such were not implemented? Imagine if “Ole Uncle Warren” didn’t have NAFTA as a useful argument to jettison all those U.S. jobs. Truly contemplate it, for this is just one example that demonstrates what has been taking place across the entire U.S.
Also contemplate: This was prior (e.g. 2014) to all the tax reversals, incentives, and more coming out today. Think KY would still lose to Honduras in 2018 vs 2014 tax policies, or recent NAFTA calls for renegotiating? Maybe, but then again, they’re already gone so why bother, right?
Is trying to make those once “Free Trade” incentives or conditions less favorable now entering some part of a “Trade War?” And if it is, why so? Is a country dumping products (Steel is just one) on a market subsidized by its government, flooding its trading “partner” and businesses with unsustainable pricing parameters, with no toleration (actually more like laughing in the face) for trying to protect oneself from such practices “Free Trade?”
As far as the Ivory-towered academia cabal is concerned that answer is: Yes, yes it is.
But if you’re an American citizen or business owner? I would garner to assume your view is a little bit different, is it not? (not to mention if you are one of those 600 that were jettisoned.)
So now – it’s China’s turn, along with a growing list of others. (E.U. springs to mind)
Will there be fallout? Economic upheavals? Financial chaos? Wall Street bedlam?
The answer is more than likely, Yes, too all, and then some.
But what’s the alternative? Here’s one:
Further bloodletting of U.S. industrial and business might – and a further – if not complete – obliteration of its workforce. All at the expense of remaining in prior “trade agreements” made by politicians that don’t possess even a “lemonade stand” understanding of business. Agreements that did nothing more than gut the U.S. of its once ingrained competitive advantages, enabling a cabal of international pols and business leaders to become rich beyond compare.
That’s not capitalism – that’s oligarchy. Pure and simple.
But there is an alternative, which is this:
Simply rip up all prior agreements – and start anew the best we can. Even if it means, yes, I’ll dare say it: Tariffs. Then, suffer through the healing process best we can as we rebuild.
That’s the two decisions at the core of any turn around plan. Hint:
Only the latter has a chance of working. It’s not easy, and at times feels utterly frightening, but that’s the cost. You either pay it now, or slowly bleed away into oblivion. And if that means we’re going to enter a trade war as most Ph.D’s argue? Then I say…
“Let’s Roll!”
- Jetsonian Era Looms: Boeing Is Preparing To Launch Flying Taxis
It is hard to believe the Jetsons, an American animated sitcom produced by Hanna-Barbera, originally airing in 1962, portrayed the life of a space-age family living in 2062 in a futuristic wonderland of elaborate robotic contraptions and whimsical inventions.
It is now 2018, and the year 2062 is less than 44-years away, but already a handful of the Jetsons’ contraptions exist including smartwatches, smart shoes, drones, 3-D printed items, holograms, robotic help, jetpacks, and even flying automobiles.
In particular, the fantasy of flying automobiles zipping around the skies of America could be taking flight within the next ten years.
That is according to Boeing CEO Dennis Muilenberg, who said, “it will happen faster than any of us understand,” in a Bloomberg interview.
“Real prototype vehicles are being built right now. So the technology is very doable,” he added.
Muilenberg said Boeing has been preparing for the new era of flying urban vehicles, and his company has been designing what would be the “rules of the road for three-dimensional highways” that carry autonomous flying taxis.
Bloomberg claims autonomous air taxis and parcel-hauling drones have the potential to disrupt the transportation industry as we know it, with Boeing and Airbus SE already situating themselves for an era of flying automobiles. Muilenburg claims the window to reshape the transportation industry is now. “Fleets of self-piloted craft could be hovering above city streets and dodging skyscrapers within a decade,” he exclaimed.
According to the latest research by Deloitte, more than a dozen drone and flying automobile manufacturers have already passed conceptualization/design phase, and a majority of the manufacturers are currently exiting the prototype stage into the testing phase, with most manufactures targeting launch/delivery by 2020.
“If safety and regulatory hurdles are cleared, passenger drones are expected to get wings by 2018–2020, and traditional flying cars by 2020–2022, while revolutionary vehicles could be a reality only by 2025,” Deloitte reported.
In the second half of 2017, NASA’s Aeronautics Research Mission Directorate (ARMD) started examining the feasibility of what the government space agency calls “Urban Air Mobility.”
Here is how NASA defines Urban Air Mobility:
Our definition for UAM is a safe and efficient system for air passenger and cargo transportation within an urban area, inclusive of small package delivery and other urban Unmanned Aerial Systems (UAS) services, which supports a mix of onboard/ground-piloted and increasingly autonomous operations.
“NASA has the knowledge and the expertise to help make urban air mobility happen,” said Jaiwon Shin, NASA’s associate administrator for aeronautics. “We plan to conduct the research and development, and test the concepts and technologies that establish feasibility and help set the requirements. Those requirements then serve to make using autonomous vehicles, electric propulsion, and high density airspace operations in the urban environment safe, efficient and economically viable.”
Boeing signaled that it was serious about flying taxis last year by acquiring Aurora Flight Sciences, whose projects include a new flying taxi it is developing with Uber Technologies Inc, said Bloomberg. Other partners on the project include Textron Inc.’s Bell Helicopter and Embraer SA, a Brazilian aerospace company.
Bloomberg details the major players who are becoming more visible on the playing field of developing urban flying taxis:
Aurora has been inventing autonomous vehicles since the late 1980s, and its portfolio of novel flying machines includes a two-seat robotic copter known as an eVTOL (an abbreviation for electric vertical take-off and landing). For its rideshare of the not-too-distant future, Aurora plans to whisk passengers between rooftop “vertiports.” Test flights could begin as soon as 2020 in Dallas and Dubai, according to the company.
Others are also rushing rotorcraft concepts to market. Vahana, the self-piloting air taxi developed by A3, Airbus’s tech-centric Silicon Valley outpost, completed its first test flight on Jan. 31. Intel Corp. and EHang Inc. are also testing their flying vehicles.
But the next generation of Uber and Lyft Inc. vehicles can’t arrive by air until manufacturers and regulators figure out how to keep them from bumping into buildings, commercial planes, personal drones and each other. That requires leaps in artificial intelligence and sensor technology from today’s personal drones, which mostly fly within sight of operators.
“Right now, what we’re transitioning from is a hobbyist industry to a commercial industry,” said Darryl Jenkins, an aerospace consultant specializing in autonomous vehicles.
Deloitte explains there are numerous potential applications for these new forms of urban mobility vehicles:
Bloomberg mentions U.S. and foreign drone manufactures must demonstrate that catastrophic failures are so remote that they will not happen in a billion flights. Unless if Congress or the FAA eases regulations on standards for autonomous flying vehicles. Boeing and other manufacturers would have to show regulators that their high-tech flying taxis are incredibly reliable.
“It’s extremely costly to certify new aircraft, even when you’re certifying it for a well-established use and with well-established rules,” said Steve Wallace, a former FAA official who oversaw accident investigations and also worked in the agency’s certification branch. “Here we’re trying to open up a whole new use where there aren’t any rules. That’s an enormous task.”
Muilenburg said Boeing is heavily investing in sense-and-avoid systems and other technologies to prevent airborne disaster. “We are making investments there,” he said. “The autonomous car ecosystem is making investments there.”
Since Muilenburg took control of Boeing in 2015, he has expanded investment dollars into futuristic aircraft and created a venture capital arm called HorizonX to further the development of hybrid-electric propulsion.
As Boeing and other major corporations usher in a Jetsonian era of flying automobiles starting in 2020 and beyond. Nearly every automaker and major technology companies are pouring billions into the development of flying automobiles. Will this trend be another bubble, as we have seen many in this Central-Bank-free-money-anything-goes-induced environment, or is there something legitimate here?
- "Sex Sells Cigarettes, But Fear Sells Government"
Authored by Robert Gore via Straight Line Logic blog,
Reality doesn’t give a damn how you feel.
A long time ago, I was talking with a woman and the discussion turned to abortion. I don’t remember our exact words, but she said something to the effect that she was viscerally opposed to anything that curtailed women’s right to abortions. I do remember her use of the words “visceral” and “viscerally” because she used them repeatedly, emphasizing her stance.
I asked if the right to control one’s body implied a right to control one’s mind, and the right to control the products of one’s body and mind. Should freedom be general, or does it apply only to the specific case of freedom to abort a fetus? I didn’t get a response, other than one last exclamation that she was viscerally opposed to anything that curtailed women’s right to abortions.
The dictionary defines “visceral” as: “Relating to deep inward feelings rather than to the intellect.” I was trying to get the woman to define the principle supporting her assertion and perhaps extend it to other issues. She had a deep inward feeling, that’s all, no principle, a product of the intellect.
It was some years before I realized that “visceral” was a key to understanding the world. Its definition is not just a definition, it’s a description of how most people perceive and interpret reality most of the time—with their emotions rather than their intellects.
That isn’t an original insight, it’s been around for centuries (most of my “original” insights have been around for centuries). Aristotle defined rhetoric’s three persuasive appeals as logos, pathos, and ethos: the mind, the emotions, and the conscience.
The leaders throughout history who incited their followers to storm ramparts, mount invasions, or march on crusades appealed to pathos—emotions—hatred of the enemy and love of family, clan, country, or God. The led only encountered the often-grim realities after they’d signed up.
Emotional appeals kicked into high gear with the development of mass markets and advertising. The first tenet of marketing copywriting is you sell to emotions, not reason. Reasons come later, after you’ve emotionally hooked the
markprospect and he is rationalizing his decision.List a car’s many fine features and make bullet-proof logical arguments that they’re better than anybody else’s and you might sell a few. Show the car in front of a high-class hotel, the owner holding the door for a smoking hot babe, her breathtaking legs emerging seductively from the car as he takes her hand, and you’ll sell a lot more.
Naturally this primacy of emotion became part of politics, which has become a playpen of intellectual infants demanding the world take note of their visceral emotions and respond to them…now! The playpen hosts much of the media, especially social media. In education, children can progress from preschool to graduate programs without ever leaving the playpen, and without ever leaving childhood.
Only by completely isolating one’s self can one escape the “demands” of those who perceive reality through the lens of their oh-so-precious feelings. Their paramount demand: the world acknowledge and kowtow to those unique and special feelings. Primacy of emotion is their privilege, and anyone who questions it (questions being the weapon of the rational) is subject to scathing attack. They are viscerally visceral.
There’s one obvious problem. If everyone’s feelings are uniquely special and the object of justifiable self-absorption, who’s left to acknowledge and kowtow to everyone else’s unique and special feelings? The answer is straight from Animal Farm: some feelings are more special than others.
The feelings on display during CNN’s Parkland shooting town hall were extra special. The feelings (and thoughts) of those who oppose gun control were shouted down. The “gun control debate” is a phrase much in the media recently. As the town hall demonstrated, there’s no “debate.” It’s passion for the “right” side uber alles, and the other side had best just shut up and kowtow.
It’s not clear what the implicit “or else” is, maybe a collective holding of breaths until everyone’s blue, but there’s no mistaking the snarling anger. The more cowardly captains of corporate America caved.
However, there’s a much bigger problem with self-centered primacy of emotion: while other people may respond to your emotions, reality doesn’t give a damn. A strong desire for food, even if fervently expressed, won’t make a garden grow. Hoping for a windfall doesn’t prevent poverty. Cursing blizzards or droughts doesn’t change the weather. Wishing doesn’t make it so.
It would be instructive to check the majors of students drawn to today’s fashionable campus demonstrations. Engineering, chemistry, biology, physics and the other hard sciences are undoubtedly underrepresented. Students in those fields must apply rigorous and unremitting logic to unlock reality’s mysteries—hard and demanding work—or they drift to other disciplines. Those who succeed learn to check their feelings at the door. If they think at all about their epistemological opposites raising a ruckus across campus, it’s probably with a mixture of wonder and contempt.
Abandon reason and one emotion dominates: fear. Scared people are not rational, they’ll buy virtually anything that promises to alleviate their fear. Every totalitarian, every proponent of curtailing freedom, knows this. It’s the equivalent of the smoking hot babe: fear sells government.
How will gun control or confiscation stop criminals, who by definition don’t observe laws, from shooting up schools, churches, movie theaters, and other places where people peaceably assemble? Those places are generally gun-free zones, wouldn’t it be better if the shooters weren’t assured that nobody would fire back, so that maybe they’d think twice? The gun controllers ignore such questions. Something must be done now, they screech. Pass more laws so we’ll all “feel” safer. (Anytime someone sells a law touting its benefits for “all,” it’s a rock-solid bet the only beneficiary will be the government.)
Fear is not confined to one part of the political spectrum. It sold the Patriot Act and the like, gargantuan defense budgets, global military intervention, the surveillance state, the militarization of local police departments, and all manner of regulatory intrusion and extortion. Tell people you’re protecting them and you can do damn well whatever you want to them. It’s doubtful Americans will figure it out even as they’re herded into protective and preventative detention facilities, aka concentration camps. You can’t be too safe.
Reason is the toughest sell out there. As the advertisers know, what passes for reason is usually emotion-based rationalization. Yet, reason always wins. It has an unbeatable ally, reality, the anchor for those who live their lives guided by their intellects rather than their emotions.
Remember the tears, screaming, and general hysteria after Trump won the election? Imagine when our system, built as it is on wishful thinking, finally collapses. Imagine confronting these hysterical creatures. You, your family, and friends saw what was coming and are riding out the storm. They are screaming, demanding that you take care of them. However, you have the firearms they eschewed, so demand is all they can do. “Imagine how we feel!” they scream. You stare at them with complete indifference.
“Nobody gives a shit how you feel.”
Collapse will have its compensations.
- China Confirms Further Economic Slowdown: Highlights From 2018 Government Work Report
In the latest confirmation that as part of its grand deleveraging campaign, China’s economy is set to slow further in the current year, Beijing has set a 2018 growth target of around 6.5%, omitting an intention to hit “a faster pace if possible”, as the world’s largest nation continues its push to ensure financial stability. While the target of 6.5% is the same as last year, Bloomberg notes that the statement excludes an objective for output growth to be “higher if possible in practice” as it did in 2017.
“The omission from the GDP growth target of ‘higher if possible’ and the new lower budget deficit target suggest slower growth and a fiscal drag,” said Eurasia’s Callum Henderson. “This makes sense for China in the context of the new focus on financial de-risking, poverty alleviation and environment clean-up, but is less good news at the margin for those economies that have high export exposure to China.”
China’s newly downgraded growth target was released Monday ahead of Premier Li Keqiang’s report to the National People’s Congress gathering in Beijing.
While China’s GDP surpassed 2017’s target with 6.9% growth, the first acceleration since 2010, economists forecast a moderation to 6.5% this year amid the ongoing deleveraging drive and trade tensions with the Trump administration. To be sure President – or rather Emperor – Xi Jinping has made it clear he will accept slower growth in his push to curb pollution, poverty and debt risk at a time when the world’s second-largest economy is on a long-term growth slowdown. As a result, numerical GDP targets have been de-emphasized in favor of higher-quality expansion since last year, according to Bloomberg.
The government also signaled its intent to continue efforts to slow debt growth, and set the budget deficit target markedly lower, at 2.6% of GDP, down from 3% in the past two years; news of the proposed reduction in borrowing sent 10-year sovereign bonds futures higher last week after Bloomberg reported the plan to reduce the budget deficit target.
Commenting on the proposal, Bloomberg’s Asia economist Tom Orlik said that “Li’s plan for the year is consistent with a moderate slowdown in real growth,” noting that “there were signals of significantly reduced fiscal support for growth, and lower ambitions on capacity closures in the industrial sector.“
Furthermore, authorities reiterated their prior language saying prudent monetary policy will remain neutral this year and that they’ll ensure liquidity at a reasonable and stable level. The report said broad M2 money-supply growth would remain moderate, without including a numerical target as had been previously the case. M2 growth slowed to a record low 8.2 percent in December, down from more than 11 percent a year earlier. A separate report from the National Development and Reform Commission said M2 growth would remain roughly in line with last year’s real growth rates.
“We will improve the transmission mechanism of monetary policy, make better use of differentiated reserve ratio and credit policies, and encourage more funds to flow toward small and micro businesses, agriculture, rural areas, and rural residents, and poor areas, and to better serve the real economy,” state media reported, citing the work report. The report also said that an increase in the thresholds for personal income taxes was planned.
Below courtesy of Bloomberg are the other key highlights from China’s government work report released today in Beijing.
Import tariff cut (or did Trump win the trade war already?):
- China to lower import tariffs for vehicles and some consumer goods
Internet/Telecom:
- China to cancel domestic Internet data roaming fees in 2018
- China to cut rates for mobile Internet services by at least 30% this year
- China to expand free wifi spots in public areas
- China to lower broadband charges for families and enterprises
Opening up:
- China to expand opening to foreign investment in telecom, new energy vehicle, healthcare and education
Tax and wages:
- China to cut taxes for enterprises, individuals by 800b yuan this year
- China to lift thresholds for for levying personal income taxes, without elaborating
- China to adjust level of minimum wages reasonably this year
Property:
- Govt reiterates that housing is not for speculation and aims to develop housing rental market
- China to steadily push forward legislation of property tax, without elaborating
Capacity Cut:
- China to cut steel capacity by 30m tons this year; to remove 150m coal capacity
Financial regulations:
- China’s overall economic, financial risks controllable
- China to boost coordination among financial regulators
- China totally able to prevent systemic risks
- China to improve regulation for shadow banking, Internet financing
Source: Bloomberg
- Visualizing How Money Is Spent By Different Income Groups
If you started making twice the amount of money that you do today, how would your spending habits change?
Consider if the tables were turned, and you instead were reduced to half of your current income. Where would you likely make cuts to spending?
As Visual Capitalist’s Jeff Desjardins points out, the reality is that the money you have coming in has big implications on how expenses get prioritized – and so it’s interesting to see how people in different income brackets allocate what they have.
Courtesy of: Visual Capitalist
Visualizing Spending
Today’s series of graphics come to us from data visualization expert Nathan Yau at FlowingData, and they show how money is being spent by different income groups.
It uses data from the 2016 Consumer Expenditure Survey, an annual survey by the Bureau of Labor Statistics. Meanwhile, embedded words in the graphics come from Yau, as he makes observations on the data.
To Buy or Rent a House?
How do income groups differ in spending for housing?
Housing Expenses
How is money spent on utilities, furniture, and other household expenses?
Food Expenses
Do income groups spend more eating at home, or eating out?
Travel and Transportation
The cost of vehicles, gas, and other travel expenses.
Health Expenditures
What about money spent on health insurance, services, or drugs?
Pensions and Social Security
Lastly, the money going to retirement, pension, social security, and insurance plans.
For more data analysis, as well as many other great visualizations on income, we highly recommend checking out FlowingData.
- Iran Says It Will Give Up Its Missiles When The US Gives Up Its Nukes
Iran’s armed forces spokesman said on Saturday that there can be no talks on the country’s missile program without the West’s destruction of its nuclear weapons and long-range missiles.
“What Americans say out of desperation with regards to limiting the Islamic republic of Iran’s missile capability is an unattainable dream,” Brigadier General Masoud Jazayeri told the official IRNA news agency.
“The condition for negotiations on Iran’s missiles is the destruction of America’s and Europe’s nuclear weapons and long-range missiles.“
Jazayeri said US criticism of Iran’s missile program was driven by “their failures and defeats in the region”.
US President Donald Trump has threatened to tear up a 2015 nuclear deal between Iran and world powers unless more is done to curb Iran’s missile program.
European governments have been scrambling to appease Trump and keep the deal intact, and have voiced increasing concern over Iran’s missile program.
French Foreign Minister Jean-Yves Le Drian, who is due to visit Iran on Monday, said last month that Iran’s missile program and involvement in regional conflicts needed to be addressed if it “wants to return to the family of nations”.
Ali Akbar Velayati, foreign policy adviser to Supreme Leader Ayatollah Ali Khamenei, criticized Le Drian’s position on Saturday, just two days before they are expected to meet.
“Iran’s defence program is not the concern of other countries such as France, that they should come and tell us what missiles we can have. Do we tell France how it should defend itself?” he told the semi-official ISNA news agency.
“If Le Drian’s visit is aimed at reinforcing our relations, he would do well to avoid negative positions,” Velayati added.
- It's Not A "Conspiracy Theory": Here's How Central Banks Actively Suppress The Price Of Gold
Alhambra Investment Partners CIO Jeffrey Snider returned to Erik Townsend’s MacroVoices podcast this week to discuss one of his favorite topics: How central banks’ use gold lending to manipulate their balance sheets, and also to manipulate the broader market for precious metals by sheer dint of their size, and willingness to buy and sell without any consideration for the price.
Their conversation begins with Snider explaining the history of “gold swaps” between central banks that helped birth the concept of fractional reserve lending.
The first “gold swap” conducted between the Federal Reserve and the Bank of England: The Fed handed the BOE $200 million in bullion through the New York Fed; in exchange, the BOE gave the Fed a “gold receivables” in the same amount. This is essentially an IOU that could (in theory, at least) be cashed in for gold, but allowed the Fed to keep the gold deep in its vaults. As Townsend explains, the gold is being taken out of the accounting for the balance sheet, but it’s not being removed from the accounting.
Again, in theory, one could argue that these gold receivables were, in fact, “as good as gold” because the default risk from a counter party central bank is, effectively, zero.
Essentially, what happened was the Federal Reserve Bank of New York on behalf of the Federal Reserve system made $200 million of gold bullion available to the Bank of England for its disposal in whatever transactions it might take in defending sterling at that pre-war parity price. What’s important about that is that it aids both sides of the equation.
Because the way a gold swap works is that, essentially, the central bank agent that is providing the gold exchanges it for what’s called a gold receivable.
If you look at Slide 5, for example, I’ve sketched out roughly what this gold swap meant. $200 million in gold was made available to the Bank of England, which it would then sell in the market for sterling at the price that it wished to defend. They put the sterling currency into an account in London on behalf of the Federal Reserve Bank of New York.
So what really happened was gold disappeared from New York and ended up as cash in the UK denomination in London. But, for accounting purposes, the Federal Reserve Bank of New York showed a gold receivable where gold used to be.
…
Because if (for whatever reason) the Federal Reserve Bank of New York needed its gold back, there was sterling in an account where it could theoretically buy it back. So the gold receivable was taken as equivalent to actually having bullion on hand in a vault in New York City.
So both parties were satisfied. The Federal Reserve Bank of New York got to continue reporting the same amount in its possession, while the Bank of England was supplied additional metal in order to help defend the sterling at pre-war parity.
As anybody who lived through the financial crisis would remember sometimes credit-risk analysts ignore have a tendency to ignore black-swan tail risks like the prospect of a central bank default. We delved into this topic in greater detail about a year-and-a-half ago when Carmot Capital’s George Sokoloff explained why even the most sophisticated hedge funds tend to get slaughtered during market shocks.
The way that the accounting works in the gold swap scenario outlined above is the central banks are basically pretending the Fed didn’t give its gold to the BOE…yet, there is still only the one $200 million slug of gold…it didn’t just magically double. In a way, this feat of financial engineering echoes China’s massive “rehypothecation” fraud which we’ve critiqued time and time again…
It’s also important to remember, too, that all of this was done for political purposes: In the aftermath of World War II, Winston Churchill briefly brought the UK back to the gold standard. But to prevent a destabilizing spike in volatility, the central bank needed the gold reserves to defend the peg in the open market.
Knowing the roots of fractional reserve lending will help reframe like our stories about the missing gold at the Fed. Even Snider admits there’s ample room for these so-called “conspiracies” to flourish…
…Because, as he admits, we don’t know the difference between gold and gold receivables – though that is something that could be determined via a simple audit..
That’s the way this works. And of course it opens the door to all sorts of conspiracy theories. Because, obviously, people have argued, and do argue still, that if there’s more receivables than gold, then there’s no gold left. And how would anybody know the difference?
And the point of fact is we don’t know the difference. We don’t know how much gold has ever been swapped out. And how much gold remains. Because nobody has ever been required to make a distinction there.
Our interest here is defining why that would be. Why are central banks interested in doing this kind of transaction? Other than the fact that they are intentionally trying to mislead the public, which I don’t think is the case.
Again, there are legitimate reasons for all of these things to happen. You may not agree with why they’re being done, or the times of when they’re being done, but there are legitimate reasons for this.
Snider goes on to explain how these gold swaps led to the creation of the gold forward rate, a strategy that many smaller central banks employ to turn their gold reserves into a profit engine. Essentially, central banks allow gold miners to hedge their exposure by fronting them the gold to sell short before they ever pull the metal out of the ground.
The central bank receives a small interest rate, the miners are hedged and capitalized – everybody is happy – or at least that’s what one might suspect at first brush.
In reality, the central banks’ involvement in the gold market is considerably more fraught – in ways that many mainstream analysts aren’t yet ready to consider.
For instance, as Townsend points out, gold bugs have for years expounded to anybody who would listen their theory about how central banks surreptitiously intervene in the gold market to suppress the price of the precious metal. As anybody who trades gold has also undoubtedly noticed that often we get what traders call “gold pukes” – sudden, sharp declines in the price of gold – often around 8 am.
Because central banks are the largest logical price-insensitive participants, many have blamed them for this phenomenon.
Snider said that, while he agrees that central banks are, in effect, manipulating the price of gold when they intervene in the market, there are more plausible explanations for why central banks might do this – aside from being motivated to manipulate the price of gold.
And there’s no legitimate reason for them to actually take an interest in price, because the gold leasing arrangement is, by its very nature, negative in price. For reasons that have nothing to do with monetary policy of any central bank around the world. Because it’s dislodging previously off-market stored gold onto the marketplace. That’s a key point to remember moving forward.
When this stuff happens, when there’s an uptick in lending and leasing for whatever reason, it is price negative. It has nothing to do with manipulation. It’s just the natural supply and demand mechanics of the way these things are set up.
In short, central banks are doing this not because they’re intentionally manipulating the price of gold. Rather, the manipulation is an unavoidable side effect of their gold leasing arrangements…
Finally, Townsend and Snider discuss the latter’s theory about how major turning points in gold’s long-term price trajectory have been influenced by anomalies in the eurodollar market, as depicted in the chart above…
There are a couple of anomalies – or aberrations, whatever you want to call them – in
the gold market that popped up in especially 2010. Remember, 2010 is supposed to be a year of recovery. Not just in the economy, but in the financial markets. We had ZIRP (zero interest rate policy) in the US, we had ZIRP in Europe. We had QE in the US. We had all of these positive monetary factors.And yet, in the middle of 2017, it came to light that the Bank For International Settlement, which is the central bankers’ central bank, had swapped 346 tons of gold with ten European banks in December of 2009 and January of 2010. And people couldn’t figure out why that was.
Because, again, things are supposed to be recovering. Why the hell are they taking gold out of the hands of European banks? And the reason was, of course, continued funding anomalies in dollar markets. What was reported along the way, as these things became more and more investigated, was: What had happened during the bull market in the 2000s was that people – European customers in particular – who were interested in buying gold because gold was in a bull market, may not have intentionally been buying gold for gold property. They had been buying gold – physical metal – and depositing it with their local bank for custody.
…
But an unallocated account was a very big difference in terms of legalities and who actually owns the metal. An unallocated account means that you’re just depositing the gold with the bank. The gold then becomes a liability with the bank. And what they give you back in return is essentially a warehouse receipt. Not actual title to the metal.
All the bank is saying is that if you ever ask for your metal, we’ll give you metal back. Not necessarily the specific bars or the specific whatever that you deposited.
And what that allowed was, in times of stress and strain, because that metal became a liability at the bank and not a separate constructive bailment as an allocated account would be, these European banks, including Swiss banks, found that they had a deep pool of unallocated gold that was their own liability that they couldn’t realize.
Again, their only liability was that they would have to put the same kind of metal or the same amount of metal back if their customers ever asked for it back.
What happened in 2010, as the European crisis wore on and got worse, was that these
European banks started to appeal to those stores of unallocated gold. They started to motivate them into the lending and leasing arrangements, which tended to be negative in price the more that happened.Where that really broke out was in later 2011 as the dollar crisis worsened that year.
September 6, 2011, the Swiss National Bank shocked the markets by pegging the franc to the Euro, essentially trying to get away from the dollar balance. Which triggered all sorts of responses across US dollar funding markets.And you could see, once again, another big, massive gold puke.
In summary, once again, bank’s forward-lending agreements had a massive impact on the gold market because of the price insensitive nature of the transactions…
…But, of course, that’s totally different from banks “intentionally” dumping on the price of gold.
Listen to the whole interview below:
Digest powered by RSS Digest
Saving...