Month: November 2019

Hong Kong Protests Go Global: China Demands Investigation After Lam’s Justice Minister Wounded In London

Hong Kong Protests Go Global: China Demands Investigation After Lam’s Justice Minister Wounded In London

Chinese officials slammed American lawmakers who are advancing a bill designed to protest Hong Kong’s quasi-independent status guaranteed by the legal handover agreement between the British and the Chinese, but the US isn’t the only major western power that’s creating problems with the increasing dangerous situation in Hong Kong.

Hong Kong’s Justice Minister Teresa Cheng took a nasty tumble last night during a confrontation with pro-democracy sympathizers who came out to protest her presence in London.

Teresa Cheng

Late on Thursday, Cheng, who was in the UK to promote Hong Kong as a ‘cener of dispute resolution’ (ironic, we know), was suddenly surrounded by at least 30 protesters angry about her government’s handling of the protests, which have devolved into violent confrontations with the police.

In a video of her minutes-long confrontation with the protesters obtained by SCMP, the demonstrators can be heard shouting “shame on you”, “murderer” and protest slogans like “five demands, not one less.”

It’s not clear whether she was pushed, or fell over, but all of a sudden, the minister is seen writhing on the ground, clutching her arm. She was taken to a local hospital after her fall.

Afterwards, Cheng made a complaint to the Metropolitan Police and asked that they “take the case seriously and put the culprits to justice,” according to a statement from her office. She also took a minute to shame the members of the mob that overwhelmed her in London: “The secretary for justice castigates the violent mob in London today causing her serious bodily harm on her way to an event venue.”

The secretary also used the statement to denounce “all forms of violence”.

“The secretary denounces all forms of violence and radicalism depriving others’ legitimate rights in the pretext of pursuing their political ideals, which would never be in the interest of Hong Kong and any civilised society.”

Meanwhile, in a terse statement about the incident, the Metropolitan police said “a woman was taken to hospital by London Ambulance Service suffering an injury to her arm.” They added that “inquiries are ongoing to establish the full circumstances. There has been no arrest at this stage.”

Which is unfortunate, because Beijing is demanding a full investigation.

Chinese Foreign Ministry Spokesman Geng Shuang said Friday that China’s envoy to Britain, Liu Xiaoming, will visit Cheng. But Geng also warned British politicians not to make “wrong remarks” by expressing support for the protesters.

“China demands an investigation into the incident,” Geng said. “[Britain] should also protect the safety and integrity of all Chinese people in the nation.”

Meanwhile, Hong Kong’s “Week of Rage” continued Thursday, with more white-collar workers who have been let off work opting to join the protests, after several police shootings and the second protester death in a week has inspired more support for the protesters.

Campuses had been transformed into citadels, reinforced positions where young protesters prepared to battle with the Hong Kong police or whatever government-backed goons may come.

In one video, explosions can be heard on the campus of Chinese University of Hong Kong, with video capturing a car on fire.

A government worker died this week after being caught in a brick-hurling fight between protesters and police. The death has been ruled a murder by the police. The incident has caused sympathy for an investigation into police conduct to soar: some 80% of Hong Kong adults want the government to set up an independent commission of inquiry to examine the use of force by police throughout the nearly six-month long period of unrest.

As Bloomberg reported, a campaign to disrupt traffic has led to the shooting of a protester and citywide school cancellations, while Hong Kong Chief Executive Carrie Lam’s government has denied reports of a plan for an unprecedented curfew that would almost certainly stoke the protesters’ rage.


Tyler Durden

Fri, 11/15/2019 – 10:20

Tags
Politics

via ZeroHedge News https://ift.tt/32Oud9Q Tyler Durden

Repocalypse & The CLO Boom-Bust – Is The Fed Bailing Out More Toxic Waste?

Repocalypse & The CLO Boom-Bust – Is The Fed Bailing Out More Toxic Waste?

Authored by Jeffrey Snider via Alhambra Investment Partners,

There’s trouble brewing in a particular sector of the corporate bond market. It’s not really new trouble, merely the continuation of doubts and angst that have existed for more than a year already. What’s different now is that it is finally causing more open disruptions, and thus sparking our interest as to what it might mean well beyond this specific market or corporate finance.

Including and especially what it could do to repo.

What I’m writing about is CLO’s, or collateralized loan obligations. It’s a fancy term for securitized corporate loans. A bunch of these are pooled together in the same way mortgage loans used to be more than a decade ago. Particular tranches are assigned cash flow and loss priorities, rendering the lower parts of the structure as solid near risk-free securities.

Source: Bloomberg

And, in fact, they are. Even among the worst junk of the housing bubble era, the senior and super senior tranches performed admirably – just as they were designed. I’m still not aware of any that caused actual cash losses, meaning credit. “Thickness”, or the amount of loss protection provided by the tranches above them, was never the issue.

The whole point of securitization was and remains one goal. As I wrote a few months ago on the topic of repo:

We can spend an awful lot of time diagramming and detailing these instruments [ABS CDO’s; another form of securitized financial structures] and those like them, what they were used for and why banks seemed so enamored with the type. In fact, I’ve already done so elsewhere (Eurodollar University). ABS CDO’s can be of a couple different kinds but what they all have in common is that they make what is erstwhile illiquid assets into a liquid security.

What’s so important about that? In a word: repo.

You can’t show up at JP Morgan’s repo desk with a lot of papers holding title to thousands of mortgages and expect to fund them on the basis of those individual loans. That doesn’t work. For one, the cash owner, the interbank repo lender, wants collateral that is highly liquid because that way the cash owner knows the collateral being received isn’t going to move much while in his possession.

Though the senior and super senior mortgage bond tranches weren’t realistically exposed to credit losses, they were exposed to illiquid markets and pricing schemes that were unrealistic. The repo market doesn’t care, however, an unforgiving and brutal place where all that matters to the counterparty on the other side is that pricing scheme.

If an asset’s price can move quite a lot in a very little amount of time, then the repo market won’t like that asset regardless of any other characteristic; credit and otherwise.

And the reason you pool together corporate loans, like mortgage bonds, is because you want a securitized package tailormade for repo funding.

Source: Bloomberg

Whereas MBS and the like found their way into the repo collateral chains before 2007, CLO’s (and Eurobonds, and Eurobond CLO’s) have done something similar particularly since 2012 and 2013 (like stocks, the CLO market was really enthusiastic about the prospects for QE3). But not in a straightforward way, more likely as the initiating link in a collateral transformation chain that in its most vanilla form gives a simple repo transaction a couple of additional (and concealed) legs.

I gave an example of this in the most recent edition of my new Follow The Money series (registration required) which dealt specifically with CLOs’ offshore cousin, the Eurobond binge. The diagram below is taken from that other work but applies all the same – just swap the Argentine government for a risky corporate lender, Bank A for some domestic non-bank, and the orange arrow Eurobond for most varieties of CLO’s.

The problem, again, with how MBS was used in the same way a decade ago was uncertainty about pricing – the thing that kills collateral potential in repo and repo transformation. In our example above, neither the repo market nor Bank B has any interest in being a part of using an increasingly risky and therefore potentially illiquid asset in the chain.

And what we are seeing recently are more and more indications of risky and irregularly priced CLO’s and corporate junk more generally. From the WSJ a few days ago:

Some securities in the $680 billion market for collateralized loan obligations, or CLOs, lost about 5% in October, reflecting worries about rising risk in the complex investment vehicles. The declines were a rare stumble for the CLO market, which has grown by about $350 billion in the past three years, according to data from S&P Global Market Intelligence, fueled by demand from government pensions, hedge funds and other yield-hungry investors.

I think that estimate of $350 billion understates the level by quite a bit; likely just a domestic snapshot of the more visible parts. How many more CLO’s are out there offshore in Eurobond-land? If you ask the Treasury Department, it “found” about $280 billion more in June 2018 alone.

In other words, there are tons and tons of these things floating around the offshore financial world. And a lot of those that are out there have wound up one way or another as the originating entry into a collateral chain; there is likely to be widespread repo market, collateral exposure.

If concerns about this persist and even grow no matter what the Fed or any other central bank does, no matter how many times Jay Powell says the words “repo” and “operation” (which aren’t actually repo operations in the respect they have nothing directly to do with the repo market itself), there’s going to be doubts about provenance across the collateral landscape.

Global collateral landscape.

What we’ve seen in 2019 is just that. After 2018’s broader landmine, it seems to have initiated a different look at especially the high yield corporate market. A more durable re-thinking from the bottom ends. The higher rated stuff has been bid back to lower spreads. The lower rated potentially more illiquid tiers, have not.

If it seems like the bond market is just waiting for the other shoe to drop, it’s likely to be CLO’s that everyone is waiting on; especially those that have made such a huge if obscured splash outside the United States. And the more doubts about the viability of the global economy continue to seep into the mix, the more those on the inside can see how potentially explosive the possible repo unwind could become.

Liquidity risks.

Risky corporate bond products, suspect repo collateral chains, global downturn, and the growing prospects for illiquid pricing. A bad combination. Even if an especially vigilant forest ranger can’t predict exactly when or where a wildfire might start, they can recognize the right mix of of ingredients which make one more likely. In global repo, money dealers are the forest rangers.


Tyler Durden

Fri, 11/15/2019 – 10:07

Tags
Business Finance

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California School Shooting Leads to Renewed Demands for Assault Weapons Ban

On Thursday, two students were killed and another three injured, in a shooting at Saugus High School in Santa Clarita, California. The gunman has yet to be identified, but police say he was another student at the school and that he has been hospitalized after shooting himself in the head.

The shooting is shocking and tragic. The response from politicians is depressingly predictable: They claim that such shootings are common, they declare that new firearms laws are needed to prevent them from happening, and they don’t spend much time considering whether the laws they’re proposing would actually have prevented the crime. Former President Bill Clinton and current presidential candidate Kamala Harris both went on CNN to call for a ban on “assault weapons.” But the shooter used a .45 semi-automatic pistol, a weapon unlikely to be covered by even the broadest assault weapons ban.

A Los Angles Times editorial noted that the killer is 16 and then declared that “it’s not a leap to say that no 16-year-old should have ready access to a firearm outside the immediate supervision of an adult.” The fact that the minimum age to purchase a handgun in California is 21 didn’t warrant a mention.

Others said that “common sense” gun control legislation shouldn’t be a contentious political issue and ripped into Republicans, the National Rifle Association (NRA), and Senate Leader Mitch McConnell (R–Ky.) for making it one.

Others noted that some schools have reacted to mass shootings by performing traumatizing shooter drills—and cited that bad policy to justify yet more bad policies. “Every politician paid to defend the status quo by the gun lobby needs to answer whether they are comfortable with live shooter drills becoming routine, students running terrified from their classrooms, and entire communities being locked down,” former Rep. Gabrielle Giffords told The New York Times.

It needn’t be repeated that school shootings are a terrible and tragic thing. It does need to be repeated that these are also rare, and that the long-term trend has been for them to happen less often, not more often.

Rare or not, we obviously should do what we can to stop such shootings from happening. But you can’t do that without being aware of the nature of the problem, the trade-offs of the solutions, and—above all—whether the policies you’re proposing would even have stopped the crime being discussed.

FREE MARKETS

Uber is fighting for its right to keep deploying dockless for-hire electric scooters in Los Angeles, now that city officials have issued a temporary suspension of the company’s permit.

The Wall Street Journal reports that Uber has requested a hearing with L.A.’s transit regulators to discuss the suspension of its permit. The move will allow the company to keep operating while they wait for that hearing.

The dispute comes down to the data. The Los Angeles Department of Transportation (LADOT) requires all dockless scooter companies to share real-time trip data with the city, something Uber has said is a massive violation of their users’ privacy.

“By demanding real-time information about people’s movements, LADOT is an outlier among hundreds of cities around the world—and independent privacy experts and advocates raised the alarm more than a year ago that LADOT’s misguided technique poses serious risks to consumer privacy,” an Uber spokesperson told the Journal.

The company has threatened legal action against LADOT if it continues with its demands for real-time data—demands that are likely illegal under state law.

FREE MINDS

Brooke Nelson, a graduate of Northern State University in South Dakota, told the local paper that she opposed efforts to make a young adult novel by Sarah Dessen the required Common Read book for incoming freshmen.

“She’s fine for teen girls,” Nelson told Aberdeen News. “But definitely not up to the level of Common Read. So I became involved simply so I could stop them from ever choosing Sarah Dessen.”

This has since blown up into a major controversy, with Dessen and other popular authors ripping into Nelson on Twitter. By suggesting that college students shouldn’t be being assigned young adult fiction, Nelson was allegedly disparaging already-marginalized teen girls.

Washington Post writer Elizabeth Bruening has a good thread on what this says about the state of woke culture:

QUICK HITS

  • A Texas state lawmaker has resigned after police found a sealed envelope, bearing official letterhead, that was full of cocaine.
  • A police officer in Arizona was filmed tackling an armless, legless 15-year-old.
  • The Economist has an interesting article on how people’s music preferences match to how they vote.
  • Squad member Rep. Ayanna Pressley (D–Mass.) has introduced an ambitious criminal justice reform bill.

from Latest – Reason.com https://ift.tt/2NNzNVv
via IFTTT

California School Shooting Leads to Renewed Demands for Assault Weapons Ban

On Thursday, two students were killed and another three injured, in a shooting at Saugus High School in Santa Clarita, California. The gunman has yet to be identified, but police say he was another student at the school and that he has been hospitalized after shooting himself in the head.

The shooting is shocking and tragic. The response from politicians is depressingly predictable: They claim that such shootings are common, they declare that new firearms laws are needed to prevent them from happening, and they don’t spend much time considering whether the laws they’re proposing would actually have prevented the crime. Former President Bill Clinton and current presidential candidate Kamala Harris both went on CNN to call for a ban on “assault weapons.” But the shooter used a .45 semi-automatic pistol, a weapon unlikely to be covered by even the broadest assault weapons ban.

A Los Angles Times editorial noted that the killer is 16 and then declared that “it’s not a leap to say that no 16-year-old should have ready access to a firearm outside the immediate supervision of an adult.” The fact that the minimum age to purchase a handgun in California is 21 didn’t warrant a mention.

Others said that “common sense” gun control legislation shouldn’t be a contentious political issue and ripped into Republicans, the National Rifle Association (NRA), and Senate Leader Mitch McConnell (R–Ky.) for making it one.

Others noted that some schools have reacted to mass shootings by performing traumatizing shooter drills—and cited that bad policy to justify yet more bad policies. “Every politician paid to defend the status quo by the gun lobby needs to answer whether they are comfortable with live shooter drills becoming routine, students running terrified from their classrooms, and entire communities being locked down,” former Rep. Gabrielle Giffords told The New York Times.

It needn’t be repeated that school shootings are a terrible and tragic thing. It does need to be repeated that these are also rare, and that the long-term trend has been for them to happen less often, not more often.

Rare or not, we obviously should do what we can to stop such shootings from happening. But you can’t do that without being aware of the nature of the problem, the trade-offs of the solutions, and—above all—whether the policies you’re proposing would even have stopped the crime being discussed.

FREE MARKETS

Uber is fighting for its right to keep deploying dockless for-hire electric scooters in Los Angeles, now that city officials have issued a temporary suspension of the company’s permit.

The Wall Street Journal reports that Uber has requested a hearing with L.A.’s transit regulators to discuss the suspension of its permit. The move will allow the company to keep operating while they wait for that hearing.

The dispute comes down to the data. The Los Angeles Department of Transportation (LADOT) requires all dockless scooter companies to share real-time trip data with the city, something Uber has said is a massive violation of their users’ privacy.

“By demanding real-time information about people’s movements, LADOT is an outlier among hundreds of cities around the world—and independent privacy experts and advocates raised the alarm more than a year ago that LADOT’s misguided technique poses serious risks to consumer privacy,” an Uber spokesperson told the Journal.

The company has threatened legal action against LADOT if it continues with its demands for real-time data—demands that are likely illegal under state law.

FREE MINDS

Brooke Nelson, a graduate of Northern State University in South Dakota, told the local paper that she opposed efforts to make a young adult novel by Sarah Dessen the required Common Read book for incoming freshmen.

“She’s fine for teen girls,” Nelson told Aberdeen News. “But definitely not up to the level of Common Read. So I became involved simply so I could stop them from ever choosing Sarah Dessen.”

This has since blown up into a major controversy, with Dessen and other popular authors ripping into Nelson on Twitter. By suggesting that college students shouldn’t be being assigned young adult fiction, Nelson was allegedly disparaging already-marginalized teen girls.

Washington Post writer Elizabeth Bruening has a good thread on what this says about the state of woke culture:

QUICK HITS

  • A Texas state lawmaker has resigned after police found a sealed envelope, bearing official letterhead, that was full of cocaine.
  • A police officer in Arizona was filmed tackling an armless, legless 15-year-old.
  • The Economist has an interesting article on how people’s music preferences match to how they vote.

  • Squad member Rep. Ayanna Pressley (D–Mass.) has introduced an ambitious criminal justice reform bill.

from Latest – Reason.com https://ift.tt/2NNzNVv
via IFTTT

In Shock To $3.5 Trillion Healthcare Industry, Trump Admin Will Force Hospitals To Disclose “Secret” Insurance Rates

In Shock To $3.5 Trillion Healthcare Industry, Trump Admin Will Force Hospitals To Disclose “Secret” Insurance Rates

In a move that will send shockwaves across the $3.5 trillion US healthcare industry, on Friday the Trump administration unveiled a plan that would – for the first time – force hospitals and insurers to disclose their secret negotiated rates, the WSJ reported.

In hopes of bringing some transparency and openness to a pathologically opaque industry, one which many have blamed for being behind the explosion in US underfunded liabilities to more than $100 trillion, administration officials said the final rule will compel hospitals in 2021 to publicize the rates they negotiate with individual insurers for all services, including drugs, supplies, facility fees and care by doctors who work for the facility. The White House would also propose extending the disclosure requirement to the $670 billion health-insurance industry. Insurance companies and group health plans that cover employees would have to disclose negotiated rates, as well as previously paid rates for out-of-network treatment, in computer-searchable file formats.

As the WSJ notes, the proposal covering insurers is the newest part of the price-disclosure initiative, and would include the private-employer market, where about 158 million people get their health insurance. Insurers and group health plans would have to put the negotiated rates into a file that third-party developers could incorporate into shopping tools. As with hospitals, insurers will have to create a web-based tool for beneficiaries that discloses the list price, the negotiated rate, cost sharing, and the amount left on a plan deductible, as well as allowable out-of-network rates.

The requirements, which are more far-reaching than industry leaders had expected, could upend commercial health-care markets, which are rife with purposefully complex systems of hidden charges and secret discounts which enable the fleecing of either end users or chronically  underfunded government healthcare programs. The price-disclosure initiative has become a cornerstone of the president’s 2020 re-election health strategy, despite threats of legal action from industry.

“Right now there is too much arbitrage in the system,” a senior administration official said in an interview Thursday with The Wall Street Journal. “There are a ton of vested interests who will oppose this. We expect to get sued. We’re really goring people’s oxes.”

Hospitals and insurers typically treat specific prices for medical services as closely held secrets, with contracts between the insurers and hospital systems generally bound by confidentiality agreements. Policy makers, employers and patients are often unable to see clearly which hospital systems and doctor practices are driving high costs.

Ironically just a few days ago we showed why “US Healthcare Costs Are Exploding“, and the primary culprit was soaring insurance and medical care service fees. If there is one thing that could potentially put a dent in this exponential surge, it is the elimination of all the various secret price deals and arrangements.

Why is transaprency good? Because as studies have shown, consumers are often required to pay more out of pocket when they don’t have the price information they need to comparison shop. Employer health-plan deductibles are outpacing wage growth and have risen to an average $1,655 for a single plan, according to a September survey by the Kaiser Family Foundation. Workers on average pay $6,015 toward the cost of their coverage.

Taken together, the WSJ notes, “the price-disclosure initiatives could reshape the $3.5 trillion health-care industry.”

The good news: the much needed transparency finally may bring some – literal – price discovery to what has traditionally been the most opaque, and lucrative, sector for the aging and chronically obese US population. The bad news: as Trump is going against trillions in vested interests, expect even more “whistleblowers” to emerge from the sector that has chronically been the biggest lobbyist of Washington…

… doing their best to bring the president down.

Meanwhile, as Americans lament soaring prices of, well, everything, after shelter and rent costs, the second biggest drain of US household income and savings is insurance premiums.


Tyler Durden

Fri, 11/15/2019 – 09:43

Tags
Health Medical Pharma
Labor

via ZeroHedge News https://ift.tt/2XhU9Jw Tyler Durden

US Industrial Production Plunges Most Since March 2009

US Industrial Production Plunges Most Since March 2009

After contracting YoY in September for the first time since President Trump was elected, analysts expected a further decline but October’s 0.8% collapse in Industrial Production is the worst since March 2009…

Additionally, the year-over-year decline accelerated to -1.13%, the worst since Oct 2016…

Source: Bloomberg

Manufacturing output fell 0.6 percent in October to a level 1.5 percent lower than its year-earlier reading – the weakest since Dec 2015…

Source: Bloomberg

Mining output moved down 0.7 percent in October following a similarly sized decline in September, but the index for mining was still 2.7 percent higher than its year-earlier level. The output of utilities fell 2.6 percent in October; a decrease in the output of electricity more than offset an increase in the index for natural gas utilities.

And finally, The Dow INDUSTRIALS has entirely decoupled from INDUSTRIAL production in America…

Source: Bloomberg

Thank you Fed.


Tyler Durden

Fri, 11/15/2019 – 09:22

Tags
Business Finance

via ZeroHedge News https://ift.tt/33RBKpF Tyler Durden

Trump Releases Transcript Of First Ukraine Call, Congratulates Zelensky On ‘Incredible Election’

Trump Releases Transcript Of First Ukraine Call, Congratulates Zelensky On ‘Incredible Election’

As the House kicks off public testimony from recalled US Ambassador to Ukraine Marie Yovanovitch as part of impeachment hearings sparked by a July 25 phone call between President Trump and Ukrainian President Volodomyr Zelensky, Trump has released a transcript of their first phone call.

The conversation took place on April 21 after Zelensky won Ukraine’s election in an upset victory, and essentially consists of congratulations and a benign exchange of pleasantries.

“I’d like to congratulate you on a job well done, and congratulations on a fantastic election,” says Trump.

“Good to hear from you. Thank you so very much. It’s very nice to hear from you, and I appreciate the congratulations,” replied Zelensky.

“I have many friends from Ukraine and they think – frankly – expected you to win. And it’s really an amazing thing that you’re done,” says Trump. “I guess, in a way, I did something similar. We’re making tremendous progress in the US – we have the most tremendous economy ever. I just wanted to congratulate you. I have no doubt you will be a fantastic president.”

To which Zelensky thanks Trump and says “You will always, also, be a great example for many.”

Zelensky then invites Trump to his inauguration, and says he’s looking forward to a visit from the president or a “high-level delegation.”

Trump complimented Ukraine, saying “When I owned Miss Universe, they always had great people. Ukraine was always very well represented. When you’re settled in and ready, I’d like to invite you to the White House. We’ll have a lot of things to talk about, but we’re with you all the way.”

Read:

 


Tyler Durden

Fri, 11/15/2019 – 08:25

Tags
Human Interest

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Rand Paul To Initiate Senate Vote To Force Hunter Biden Impeachment Testimony

Rand Paul To Initiate Senate Vote To Force Hunter Biden Impeachment Testimony

Authored by Steve Watson via Summit News,

Senator Rand Paul threatened Thursday to trigger a vote that would force Joe Biden’s son, Hunter Biden, to testify as a witness to the impeachment trial against President Trump.

“I believe very strongly the president should be able to call his own witnesses,” Paul told reporters.

“The rules that are put forward will be amendable, so yes I will consider strongly that the president should get his full due process, which to me means bringing in his own witnesses.” the Senator added.

Paul made the comments despite Senate Majority Leader Mitch McConnell calling for Republicans to avoid asking for testimony that could trigger a clash with Senate Democrats.

Hunter Biden would be made to provide details of his time working at a Ukrainian energy company, should Paul go ahead with the process and it succeed with a majority in the Senate.

According to reports, the younger Biden was paid $83,333 monthly as a board member of Burisma Holdings, a prominent Ukrainian gas firm marked by allegations of corruption, while his father was vice president.

Joe Biden was a leading figure in forcing out former Ukrainian prosecutor Viktor Shokin as he was investigating Burisma. Biden bragged at a Council on Foreign Relations meeting last year that he had threatened to withhold $1 billion in aid unless the prosecutor was fired.

Paul has routinely defended Trump on the impeachment front, noting that the President “has every right to withhold aid” to Ukraine if he believes there is corruption at play in the country.

Paul also named the so called ‘whistleblower’ this week, saying that CIA officer Eric Ciamerella is a “person of interest” who should be brought before Congress as a “material witness” in the impeachment inquiry.

“I think he is a person of interest in the sense that he was at the Ukraine desk when Joe Biden was there, when Hunter Biden was working for the Ukrainian oligarch. So simply for that alone, I think he’s a material witness that needs to be brought in.” Paul said.


Tyler Durden

Fri, 11/15/2019 – 09:08

Tags
Politics

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Andrew Yang Proposes Making Social Media Algorithms Subject to Federal Approval

Entrepreneur Andrew Yang has run a tech-centered campaign for the Democratic presidential nomination, positioning his Universal Basic Income proposal as a solution to rapid technological change and increasing automation. On Thursday, he released a broad plan to constrain the power tech companies supposedly wield over the American economy and society at large.

“Digital giants such as Facebook, Amazon, Google, and Apple have scale and power that renders them more quasi-sovereign states than conventional companies,” the plan reads. “They’re making decisions on rights that government usually makes, like speech and safety.”

Yang has now joined the growing cacophony of Democrats and Republicans who wish to amend Section 230 of the Communications Decency Act; the landmark legislation protects social media companies from facing certain liabilities for third-party content posted by users online. As Reason‘s Elizabeth Nolan Brown writes, it’s essentially “the Internet’s First Amendment.”

The algorithms developed by tech companies are the root of the problem, Yang says, as they “push negative, polarizing, and false content to maximize engagement.”

That’s true, to an extent. Just like with any company or industry, social media firms are incentivized to keep consumers hooked as long as possible. But it’s also true that social media does more to boost already popular content than it does to amplify content nobody likes or wants to engage with. And in an age of polarization, it appears that negative content can be quite popular.

To counter the proliferation of content he does not like, Yang would require tech companies to work alongside the federal government in order to “create algorithms that minimize the spread of mis/disinformation,” as well as “information that’s specifically designed to polarize or incite individuals.” Leaving aside the constitutional question, who in government gets to make these decisions? And what would prevent future administrations from using Yang’s censorious architecture to label and suppress speech they find polarizing merely because they disagree with it politically?

Yang’s push to amend 230 is similarly misguided, as he seems to think that removing liabilities would somehow end only bad online content. We should “amend the Communications Decency Act to reflect the reality of the 21st century,” he writes, which tech giants are using “to act as publishers without any of the responsibility.”

Yet social media sites are already working to police content they deem harmful—something that should be clear in the many Republican complaints of overzealous and biased content removal efforts. Section 230 expressly allows those tech companies to scrub “objectionable” posts “in good faith,” allowing them to self-regulate.

It goes without saying that social media companies haven’t done a perfect job with screening content, but their failure says more about the task than their effort. User-uploaded content is essentially an infinite stream. The algorithms that tech companies use to weed out content that comports with their terms of service regularly fail. Human screens also fail. Even if Facebook or Twitter or Youtube could create an algorithm that only deleted the content those companies intended for it to delete, they would still come under fire for what content they find acceptable and what content they don’t. Dismantling Section 230 would probably discourage efforts to fine-tune the content vetting process and instead lead to broad, inflexible content restrictions.

Or, it could lead to platforms refusing to make any decisions about what they allow users to post.

“Social media services moderate content to reduce the presence of hate speech, scams, and spam,” Carl Szabo, Vice President and General Counsel at the trade organization NetChoice, said in a statement. “Yang’s proposal to amend Section 230 would likely increase the amount of hate speech and terrorist content online.”

It’s possible that Yang misunderstands the very core of the law. “We must address once and for all the publisher vs. platform grey area that tech companies have lived in for years,” he writes. But that dichotomy is a fiction.

“Yang incorrectly claims a ‘publisher vs. platform grey area.’ Section 230 of the Communications Decency Act does not categorize online services,” Szabo says. “Section 230 enables services that host user-created content to remove content without assuming liability.”

Where the distinction came from is somewhat of a mystery, as that language is absent from the law. Section 230 protects sites from certain civil and criminal liabilities if those companies are not explicitly editing the content; content removal does not qualify as such. A newspaper, for instance, can be held accountable for libelous statements that a reporter and editor publish, but their comment section is exempt from such liabilities. That’s because they aren’t editing the content—but they can safely remove it if they deem it objectionable.

Likewise, Facebook does not become a “publisher” when it designates a piece of content to the trash chute, any more than a coffee house would suddenly become a “publisher” if it decided to remove an offensive flier from its bulletin board.

Yang’s mistaken interpretation of Section 230 is likely a result of the “dis/misinformation” around the law promoted by his fellow presidential candidates and in congressional hearings. There’s something deeply ironic about that.

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Andrew Yang Proposes Making Social Media Algorithms Subject to Federal Approval

Entrepreneur Andrew Yang has run a tech-centered campaign for the Democratic presidential nomination, positioning his Universal Basic Income proposal as a solution to rapid technological change and increasing automation. On Thursday, he released a broad plan to constrain the power tech companies supposedly wield over the American economy and society at large.

“Digital giants such as Facebook, Amazon, Google, and Apple have scale and power that renders them more quasi-sovereign states than conventional companies,” the plan reads. “They’re making decisions on rights that government usually makes, like speech and safety.”

Yang has now joined the growing cacophony of Democrats and Republicans who wish to amend Section 230 of the Communications Decency Act; the landmark legislation protects social media companies from facing certain liabilities for third-party content posted by users online. As Reason‘s Elizabeth Nolan Brown writes, it’s essentially “the Internet’s First Amendment.”

The algorithms developed by tech companies are the root of the problem, Yang says, as they “push negative, polarizing, and false content to maximize engagement.”

That’s true, to an extent. Just like with any company or industry, social media firms are incentivized to keep consumers hooked as long as possible. But it’s also true that social media does more to boost already popular content than it does to amplify content nobody likes or wants to engage with. And in an age of polarization, it appears that negative content can be quite popular.

To counter the proliferation of content he does not like, Yang would require tech companies to work alongside the federal government in order to “create algorithms that minimize the spread of mis/disinformation,” as well as “information that’s specifically designed to polarize or incite individuals.” Leaving aside the constitutional question, who in government gets to make these decisions? And what would prevent future administrations from using Yang’s censorious architecture to label and suppress speech that they find polarizing merely because they disagree with it politically?

Yang’s push to amend 230 is similarly misguided, as he seems to think that removing liabilities would somehow end only bad online content. We should “amend the Communications Decency Act to reflect the reality of the 21st century,” he writes, which tech giants are using “to act as publishers without any of the responsibility.”

Yet social media sites are already working to police content they deem harmful—something that should be clear in the many Republican complaints of overzealous and biased content removal efforts. Section 230 expressly allows those tech companies to scrub “objectionable” posts “in good faith,” allowing them to self-regulate.

It goes without saying that social media companies haven’t done a perfect job with screening content, but their failure says more about the task than their effort. User-uploaded content is essentially an infinite stream. The algorithms that tech companies use to weed out content that comports with their terms of service regularly fail. Human screens also fail. Even if Facebook or Twitter or Youtube could create an algorithm that only deleted the content those companies intended for it to delete, they would still come under fire for what content they find acceptable and what content they don’t. Dismantling Section 230 would probably discourage efforts to fine-tune the content vetting process and instead lead to broad, inflexible content restrictions.

Or, it could lead to platforms refusing to make any decisions about what they allow users to post.

“Social media services moderate content to reduce the presence of hate speech, scams, and spam,” Carl Szabo, Vice President and General Counsel at the trade organization NetChoice, said in a statement. “Yang’s proposal to amend Section 230 would likely increase the amount of hate speech and terrorist content online.”

It’s possible that Yang misunderstands the very core of the law. “We must address once and for all the publisher vs. platform grey area that tech companies have lived in for years,” he writes. But that dichotomy is a fiction.

“Yang incorrectly claims a ‘publisher vs. platform grey area.’ Section 230 of the Communications Decency Act does not categorize online services,” Szabo says. “Section 230 enables services that host user-created content to remove content without assuming liability.”

Where the distinction came from is somewhat of a mystery, as that language is absent from the law. Section 230 protects sites from certain civil and criminal liabilities if those companies are not explicitly editing the content; content removal does not qualify as such. A newspaper, for instance, can be held accountable for libelous statements that a reporter and editor publish, but their comment section is exempt from such liabilities. That’s because they aren’t editing the content—but they can safely remove it if they deem it objectionable.

Likewise, Facebook does not become a “publisher” when it designates a piece of content to the trash chute, any more than a coffee house would suddenly become a “publisher” if it decided to remove an offensive flier from its bulletin board.

Yang’s mistaken interpretation of Section 230 is likely a result of the “dis/misinformation” around the law promoted by his fellow presidential candidates and in congressional hearings. There’s something deeply ironic about that.

from Latest – Reason.com https://ift.tt/2CKJde7
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