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Rising Energy Prices Will Hit Poorest Households Hardest

Rising Energy Prices Will Hit Poorest Households Hardest

By Reuters energy reporter and columnist John Kemp

Rising energy prices come at an awkward time for governments and central banks trying to support the recovery and wanting to run a high-pressure economy to boost jobs and wages for lower-income groups.  Policymakers will try to “look-through” the acceleration in inflation caused by rapidly rising energy and food prices, arguing policy should not respond to idiosyncratic rises likely to be “temporary” and quickly reversed.

But households and businesses have no such option: their spending will be directly hit by the increase in fuel and food costs unless they can secure offsetting increases in wages and revenues.

In the United States, energy prices increased at a compound annual rate of almost 7% per year over the two years to August…

… while food prices had risen almost 4% per year, according to the U.S. Bureau of Labor Statistics.


 
Rising energy and food prices will hit lower income households hardest because they spend a much higher proportion of their income on these items (“Consumer expenditure survey”, BLS, September 2021).

In 2019, before the pandemic, U.S. households in the second-lowest income decile spent 27% of their post-tax income on food and 14% on energy, compared with 10% and 5% respectively for households in the second-highest decile (https://tmsnrt.rs/398MSml).

The same problem will hit lower-income households across Europe and Asia because they also spend a much higher share of their incomes on food and fuel, ensuring the price increases have a regressive impact.

Not everyone experiences price rises in the same way. Households in lower-income deciles are currently experiencing much faster inflation rates than those in higher deciles because of their different spending patterns.

Squeezed Hard

Rapidly escalating food and fuel prices have microeconomic, macroeconomic and political implications which make them impossible for policymakers to ignore.

At a microeconomic level, they will intensify financial pressure on poorer and lower middle-income households, which are least able to absorb the cost increases and experience deteriorating living standards.

In England, there were already 3.2 million households (13.4% of all households) struggling with fuel poverty, as defined by the government, before the pandemic (“Fuel poverty statistics in England”, BEIS, March 2021).

At the macroeconomic level, lower income households will be forced to reduce spending on other items, which will act as a drag on other economic activity, creating headwinds for growth and employment. 

Politically, the concentrated impact on lower-income households, which contain lots of swing voters, will ensure rising food and fuel prices are impossible for politicians to ignore.

In the United States, the Biden administration has opposed tax increases that would raise the cost of gasoline and accelerating inflation has become a sensitive congressional issue.

In Europe, governments in Spain, Greece and Italy have begun to respond to the upward pressure on gas and electricity prices by considering rebates and tax changes designed to keep overall bills down.

Political attempts to limit food and energy price rises are often derided as “interference” with price signals, but they are rational for policymakers who must worry about being re-elected.

Squeezed Hard

Rising food and especially energy prices also push up the cost of other goods and services because they are among the most widespread input costs for nearly all manufacturers, distributors, retailers and service providers.

In the United States, consumer prices for items other than food and energy increased at a compound annual rate of more than 2.8% in the two years to August, the fastest for almost a quarter of a century.

In the short term, non-food and non-fuel inflation may have peaked as the re-opening of the economy was largely completed by early summer, and a resurgence of coronavirus cases has induced more caution about travel. U.S. core consumer prices excluding food and energy increased at an annualized rate of 5% in the three months to August, down from almost 11% in the three months to June, the fastest for nearly 40 years.

But renewed increases in the cost of food and fuels could filter through into another round of broader price increases later this year and into 2022 as households and businesses try to offset the impact.

There is still a lot of inflationary pressure still in the pipeline in terms of raw materials, shipping and logistics costs, which will continue filtering through into consumer prices over the next twelve months.

If households and businesses succeed in pushing for wage and revenue increases to offset rising input costs, faster inflation will become more entrenched, becoming harder for policymakers to ignore. If they don’t succeed in forcing through wage and price increases, inflationary pressures will burn out, but output and employment growth will likely slow as a result as real incomes fall.

Tyler Durden
Thu, 09/16/2021 – 12:20

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The $700 Billion Gimmick at the Center of Biden’s Tax Plan


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Central to President Joe Biden’s plan to hike federal spending by $3.5 trillion is a promise that middle-class Americans won’t face a tax increase.

That’s a claim that is looking less and less true with each passing day. The bill Congress is drafting to pay for all that new spending includes tax hikes on tobacco products, electronic cigarettes, and cryptocurrencies—taxes that will apply to the rich and poor alike. And while the bill does not raise income taxes on anyone earning less than $200,000 annually in the immediate future, Americans earning as little as $30,000 could face a tax hike by 2027 under Biden’s plan, according to an analysis published Tuesday by the Joint Committee on Taxation (JCT), a nonpartisan number-crunching agency housed inside Congress.

The culprit for that future tax increase is the expanded child tax credit, which the House tax plan would extend through 2025 (the JCT’s report only provides estimates for every other year, so 2027 is the first child tax credit–less year included in its analysis). More accurately, the culprit is Congress’ unwillingness to address the full cost of that tax credit in this bill. By promising to raise taxes later, Democrats are able to manufacture about $700 billion in “savings” that will likely never materialize.

Let’s back up a little. The new JCT report shows that taxpayers earning less than $200,000 annually would see a net tax cut in 2023 under the changes that the House Ways and Means Committee unveiled earlier this week. The House Democrats’ plan would shift the tax burden toward wealthier Americans next year, largely because of how Biden’s proposal relies on hiking income tax rates for high earners and raising the capital gains tax rate, which is applied to investment earnings.

Skip ahead to 2027, however, and things look quite a bit different. By then, the changes House Democrats are now proposing would result in higher taxes for nearly all taxpayers—even those making as little as $30,000 per year. Middle-class Americans earning between $50,000 and $100,000 would owe, on average, several hundred dollars in additional taxes, according to the National Taxpayers Union Foundation’s breakdown of the JCT’s analysis.

That sudden shift in the tax burden is caused by the expiration of the newly expanded child tax credit. As part of the COVID-19 relief bill passed in March, Congress approved a one-year increase in the child tax credit from $2,000 per child annually to $3,600 per child under the age of 6 and $3,000 for those ages 6 to 17—delivered as monthly payments of $300 per child under age 6 and $250 for older kids. In the reconciliation bill, Democrats are proposing to maintain the expanded tax credit through 2025.

Why 2025? Because the tax credit—which isn’t really a tax credit at all, but rather a direct subsidy since it is paid out even if recipients have no income and owe no federal taxes—is expensive. The Committee for a Responsible Federal Budget estimates that the child tax credit will cost about $110 billion annually, and extending the tax credit through 2025 will cost $450 billion. Making it permanent would cost $1.1 trillion over the next 10 years.

Those amounts could make a big difference in the ultimate fate of Biden’s plan. Democrats need to use the reconciliation process to bypass the filibuster in the Senate, but the rules governing the reconciliation process forbid legislation that expands the federal budget deficit over the next decade. That means every dollar of new spending has to be offset somehow. And $1.1 trillion is a lot more than $450 billion.

Most Democrats would probably love to extend the expanded child tax credit permanently. At least a few Republicans would probably agree to that too. But by setting the expanded tax credit to expire four years from now, Democrats are able to ignore roughly $700 billion in future costs that have to be offset in order to use the reconciliation process.

“Democrats have no intention of taking away the child credit expansion after 2025—it is both popular and central to their poverty-reduction strategy,” says Brian Riedl, a senior fellow at the Manhattan Institute, a conservative think tank, and former Senate Republican staffer. “But sunsetting the policy after 2025 in this bill provides $700 billion in fake savings over the decade, as future Congresses will surely extend the policy.”

In other words, it’s a gimmick. A gimmick that, yes, Republicans have also used when trying to route major tax policy changes through the reconciliation system, but a gimmick nonetheless.

As a result of that gimmick, the JCT’s estimates for fiscal year 2027 do not include the child tax credit. And that’s why it looks like taxes will go up for a lot of middle-income families a few years from now.

This sets up a clever game. Democrats will be able to wave away objections about those future tax increases because of course Congress will extend the child tax credit beyond 2025…eventually. But they don’t have to account for the future cost of that inevitable extension in the bill they want to pass within the next few weeks.

Compared to what experts say are the other likely long-term consequences of passing this $3.5 trillion reconciliation bill—including slower economic growth, more debt, and lower wages—the gimmickry involved in gaming the reconciliation process over the child tax credit is relatively small potatoes. But make no mistake: The child tax credit is adding to the future size of government, even if that amount doesn’t show up on a balance sheet past 2025 yet.

These cynical maneuvers are one of the main reasons why it is so hard for Congress to get its hands around America’s long-term debt problem. Lawmakers are quite literally crafting legislation not in pursuit of the best policy, but in order to avoid the very barriers that have been put in place, within the reconciliation process, to limit deficit spending.

Gaming the system is no way to produce the best outcomes—and that’s especially true for today’s kids, ostensibly the beneficiaries of this policy, who are going to have to pay for it in the long run.

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Beijing Fumes Over New US-Led Arms Pact: Australia Aspiring To Be “Enemy Of China” & “Anti-China Superpower”

Beijing Fumes Over New US-Led Arms Pact: Australia Aspiring To Be “Enemy Of China” & “Anti-China Superpower”

Following Wednesday night’s major announcement by President Joe Biden, Australian Prime Minister Scott Morrison and UK Prime Minister Boris Johnson unveiling a new strategic security partnership among the three countries focused on defense technology sharing, particularly which will allow Australia to develop nuclear submarines, China was quick to blast the pact as an assault on regional peace and stability which will unleash a dangerous new “arms race”.

China wasn’t specifically invoked in any of the leaders’ remarks, but the pact known as AUKUS, (an acronym for Australia, United Kingdom and the US) is being widely interpreted as part of Washington efforts to thwart China and its influence in the Indo-Pacific region. Beijing certainly sees it this way, given on Thursday Chinese Foreign Ministry spokesman Zhao Lijian condemned the partnership as it “greatly undermines regional peace and stability, aggravates the arms race and hurts the international non-proliferation efforts.”

Further questioning past Australian statements on nuclear nonproliferation and its longtime commitment to not acquire any nuclear arms, the foreign ministry spokesman charged the US and UK with “using nuclear exports as geopolitical gaming tool and applying double standards.” He also echoed prior accusations that the US is fueling an “arms race” amid heightened tensions in the Asian-Pacific region.

In addition to nuclear-power submarine development, other key sharing areas are to include artificial intelligence, cyber, underwater systems and long-range strike capabilities. Again this is being widely interpreted as a move to keep regional US ally Australia from falling significantly behind China’s huge recent leaps in military technology, which has included hypersonic missile development of late. 

One Biden administration official told reporters at a briefing on Wednesday: “This partnership is not aimed, or about any one country, it’s about advancing our strategic interests, upholding the international rules based order and promoting peace and stability in the Indo-Pacific.” The official added: “This is about a larger effort to sustain the fabric of engagement and deterrence in the Indo-Pacific.” This is as close as the administration has come to offering a ‘counter-China’ rationale behind the pact.

But Chinese state media is also alongside officials in Beijing interpreting the AUKUS as aimed precisely at China and its security interests in the region, which has included expansive claims in the East and South China Seas.

The outspoken editor of the Communist Party mouthpiece publication Global Times Hu Xijin bluntly stated that Australia is fast moving in the direction of becoming an official “enemy of China”…

Congratulations Australia, you are becoming an “anti-China superpower,” the state media pundit said.

Meanwhile, the deal will eventually allow Australia to become one of the very few countries in the world to operate nuclear submarines. One a former Australian intelligence officer who is now a defense analyst at Australian National University told Bloomberg, “This is the biggest surprise in Australian geopolitics in decades.” 

The security analyst John Blaxland, said additionally that “The subs deal shows the US now sees the utility of bolstering Australia’s capabilities to complement its own in a way it never did before.”

Likely not wishing to join Australia in coming to within Beijing’s crosshairs over the provocative and controversial deal, New Zealand has reiterated its longtime police of banning nuclear-powered vessels from its waters. 

France is also not happy with the deal among the trio of countries, saying it’s been “stabbed in the back”…

“Certainly they couldn’t come into our internal waters. No vessels that are partially or fully powered by nuclear energy is able to enter our internal borders,” New Zealand Prime Minister Jacinda Ardern said Thursday in reference to the country’s 1984 “nuclear-free zone policy”.

Tyler Durden
Thu, 09/16/2021 – 12:00

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Record Shattered: 61 Container Ships Stuck Waiting Off California

Record Shattered: 61 Container Ships Stuck Waiting Off California

By Greg Miller of FreightWaves,

The number of container ships at anchor or drifting in San Pedro Bay off the ports of Los Angeles and Long Beach has now blown through all previous records and is rising by the day.

There were an all-time-high 61 container ships in the queue in San Pedro Bay on Wednesday, according to the Marine Exchange of Southern California. Of those, a record 21 were forced to drift because anchorages were full.

Theoretically, the numbers — already surreally high — could go a lot higher than this. While designated anchorages are limited, the space for ships to safely drift offshore is not.

“There’s lots of ocean for drifting — there’s no limit,” Capt. Kip Loutit, executive director of the Marine Exchange of Southern California, told American Shipper.

“Our usual VTS [Vessel Traffic Service] area is a 25-mile radius from Point Fermin by the entrance to Los Angeles, which gives a 50-mile diameter to drift ships. We could easily expand to a 40-mile radius, because we track them within that radius for air-quality reasons. That would give us an 80-mile diameter to drift ships,” said Loutit.

Limits on land

The Southern California gateway is acting like the narrow tube on a funnel: Ocean volumes pour in from Asia and can only flow out at a certain velocity due to terminal limitations as well as limitations of warehouses, trucking and rail beyond the terminal. When the flow into the top of the funnel is too great, as it is now, it creates an overflow in the form of ships at anchor or adrift. This offshore ship queue is equivalent to a massive floating warehouse for containerized imports whose size is only limited by liner shipping capacity and U.S. consumer demand.

How constrained is the flow? Port of Los Angeles Executive Director Gene Seroka said during a press conference on Wednesday that container dwell time in the terminal “has reached its peak since the surge began” and is now six days, worsening from 5.3 days last month. On-dock rail dwell time is 11.7 days, not far below the peak of 13.4. Street dwell time (outside the terminal) “is 8.5 days, nearing the all-time high” of 8.8 days, said Seroka. It has worsened from 8.3 days a month ago.

Marine Exchange data reveals the constraints of the Los Angeles/Long Beach port complex. Since congestion began, the total number of ships either at anchor or at berth has risen and fallen — it was an all-time-high 92 on Wednesday, more than five times pre-COVID levels. But one stat has remained remarkably consistent: The number of ships at Los Angeles/Long Beach berths has remained in a tight band of around 27-31 per day — that is what the land side can handle, the tube of the metaphorical funnel. Throughout 2021, all ship arrivals over that threshold have overflowed into the anchorages and drift areas.

Chart: American Shipper based on data from Marine Exchange of Southern California. Data bi-monthly Jan 2019-Nov 2020; daily Dec 2020-present

More ships deployed in trans-Pacific

Meanwhile, at the wider open end at the top of the funnel — the drift area radius outside the port — a much higher number of ships is flooding into Southern California than ever before. Seroka noted that of the 84 ships his port handled in August, 11 were “extra loaders” — ships that are not part of a scheduled service. “And in addition to the extra loaders we’ve seen from incumbent carriers, there are no less than 10 newcomers [new services] to the trade,” he added. According to Alphaliner, deployed trans-Pacific capacity is up 30% year on year.

Asked by American Shipper whether ports or terminals could proactively stem inbound flows to provide more breathing room, Seroka replied: “Slowing down these ships is something we thought about in the early days of the surge, to try to give us a little bit more time in between to get ready for the next ships. But if you start looking at slowing down these ships, it’s going to back up the vessel supply chain even further and make schedules an even deeper concern for liner companies.” In other words, no.

Imports down year on year

The higher the number of ships waiting offshore, the bigger the queue and the longer it takes for a vessel to get a berth. The average wait time to reach a berth in Los Angeles has now risen to an all-time high of 8.5 days.

That, in turn, delays imports. Back in August 2020, when import demand surged post-lockdowns, there were almost no ships at anchor off Southern California. This August, there was an average of 36 ships at anchor per day, according to Marine Exchange data. The port of Los Angeles handled 485,672 twenty-foot equivalent units of imports in August — down 5.9% year on year.

Chart: American Shipper based on data from Port of Los Angeles

As Seroka pointed out, on the last day of August, 26 ships were at anchor waiting for berths in Los Angeles. These ships had 205,000 TEUs of cargo on board, which was pushed into this month (just as delayed cargo from this month will be pushed into October).

Total throughput for the port was 954,377 TEUs in August, down 0.8% year on year due to the decline in imports and a 23% plunge in loaded exports, offset by a 17% surge in outbound empty containers.

The port expects volumes to pull back from August’s level over the next two months, to 930,000 TEUs in September and 950,000 TEUs in October. It expects full-year throughput of 10.8 million TEUs.

More blank sailings ahead

What could stem the tide of cargo arriving in Southern California and cap the size of the floating warehouse?

When congestion peaked earlier this year, in the first quarter, it led to a large number of “blanked” (canceled) sailings in the second quarter. Ships stuck at anchor in San Pedro Bay could not get back to Asia in time, forcing carriers to cancel voyages. Those cancellations helped pare California anchorage totals in May and early June.

Carriers are yet again blanking sailings as a result of escalating congestion in Southern California. But this time, the number of ships at anchor and drifting has much more room to run before the network reaches its limit. Not only are there more services and extra loaders, but carriers also have an incentive to blank sailings in other markets instead and redeploy ships into the trans-Pacific, where they can earn more money by topping off rates with premium charges.

According to Lars Jensen, CEO of consultancy Vespucci Maritime, “If we continue to see extremely strong demand specifically on the trans-Pacific, carriers may elect to blank a few Asia-Europe sailings and instead temporarily let a few of those vessels make a trip across the Pacific before coming back to Asia and re-phasing into the Asia-Europe network.”

According to Alphaliner, ships are already being pulled from the Asia-Middle East and Asia-Red Sea lanes to make more money elsewhere. Alphaliner reported that up to 50% of Asia-Middle East services are now being blanked because vessels have been redeployed to trades like the trans-Pacific “where spot freight rates are at historic highs.”

Tyler Durden
Thu, 09/16/2021 – 11:40

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World Bank Abandons ‘Doing Business’ Report After Probe Finds IMF Boss Cheated China’s Ranking Higher

World Bank Abandons ‘Doing Business’ Report After Probe Finds IMF Boss Cheated China’s Ranking Higher

The World Bank Group today released the findings of its probe into data irregularities discovered in 2018 and 2020 reports; and along with those findings, it confirmed that it will be discontinuing ‘Doing Business’ reports.

Specifically, Bloomberg reports that International Monetary Fund Managing Director Kristalina Georgieva was cited by the World Bank in the probe….

“The changes to China’s data in Doing Business 2018 appear to be the product of two distinct types of pressure applied by bank leadership on the Doing Business team,” the World Bank said in a report Thursday.

The bank cited “pressure applied by CEO Georgieva and her advisor, Mr. Djankov, to make specific changes to China’s data points in an effort to increase its ranking at precisely the same time the country was expected to play a key role in the bank’s capital increase campaign.”

Georgieva served as chief executive officer of the World Bank prior to moving to head the IMF.

As is usual, Georgieva issued a statement of denial…

“I disagree fundamentally with the findings and interpretations of the Investigation of Data Irregularities as it relates to my role in the World Bank’s Doing Business report of 2018,” Georgieva said in a statement.

“I have already had an initial briefing with the IMF’s Executive Board on this matter.”

How does she keep her job after this?

Read World Bank’s full statement here:

“Trust in the research of the World Bank Group is vital. World Bank Group research informs the actions of policymakers, helps countries make better-informed decisions, and allows stakeholders to measure economic and social improvements more accurately. Such research has also been a valuable tool for the private sector, civil society, academia, journalists, and others, broadening understanding of global issues.

After data irregularities on Doing Business 2018 and 2020 were reported internally in June 2020, World Bank management paused the next Doing Business report and initiated a series of reviews and audits of the report and its methodology. In addition, because the internal reports raised ethical matters, including the conduct of former Board officials as well as current and/or former Bank staff, management reported the allegations to the Bank’s appropriate internal accountability mechanisms.

After reviewing all the information available to date on Doing Business, including the findings of past reviews, audits, and the report the Bank released today on behalf of the Board of Executive Directors, World Bank Group management has taken the decision to discontinue the Doing Business report. The World Bank Group remains firmly committed to advancing the role of the private sector in development and providing support to governments to design the regulatory environment that supports this. Going forward, we will be working on a new approach to assessing the business and investment climate. We are deeply grateful to the efforts of the many staff members who have worked diligently to advance the business climate agenda, and we look forward to harnessing their energies and abilities in new ways.”

Which leave us with just one question… is there any institution left that is not corrupt? (ok, and one more question: is every elite in China’s pocket?)

Read the full Ethics Probe findings here.

 

Tyler Durden
Thu, 09/16/2021 – 11:24

via ZeroHedge News https://ift.tt/3tTOrhy Tyler Durden

Capitol Police Ask National Guard For Support At “Justice For J6” Rally, Roger Stone Fears ‘False Flag’

Capitol Police Ask National Guard For Support At “Justice For J6” Rally, Roger Stone Fears ‘False Flag’

Update (1055ET): Amid all the Washington fearmongering over this weekend’ s rally, Roger Stone made an appearance on RT last night to warn that “it’s a setup,” advising protesters to “stay away.”

“This is called agitprop. I don’t know a single person in the MAGA movement who is going. It’s a setup.

Here’s my suggestion.

The people who will be there, will all be working for the government.

Nice try. I’m not going.

The danger is obvious. There’s so many unanswered questions about January 6th. Now they’re trying to recreate it.”

*  *  *

As The Epoch Times’ Katabella Roberts detailed earlier, the U.S. Capitol Police (USCP) have asked the Department of Defense (DOD) to provide support from the National Guard ahead of a demonstration planned for Sept. 18, USCP said on Wednesday.

Officials did not provide details on the potential number of National Guard troops that could be deployed, however Pentagon press secretary John Kirby told reporters Wednesday that “it is not an exorbitant ask,” adding that “it’s not of a particularly large size or major capability. I think it’s more in the form of some manpower support.”

“We have received a request from Capitol Police for some assistance for this weekend’s protests, scheduled protests. I’m not going to detail the specific request,” Kirby said.

“We’re doing the analysis, we are in receipt of it, we’re analyzing it, and if it can be validated and supported, we’ll do that and we’ll look at the sourcing inside the department as to what’s most appropriate.”

It comes as organizers expect hundreds of people to attend the “Justice for J6” event on Saturday, which is expected to take place in Union Square between 1st and 3rd streets at 12 p.m., according to the group’s website.

The rally is being organized by Look Ahead America, a nonprofit group that is seeking to release hundreds of people who were charged in the Jan. 6 Capitol incident. 

It could prove to be the largest gathering since then.

Over 600 people have been charged with a range of crimes, from misdemeanors to serious felony charges including assault, obstruction of an official proceeding, or conspiracy, for their alleged actions in early January at the U.S. Capitol, when protesters and rioters breached the building, interrupting a joint session of Congress.

Protesters walk around in the Rotunda after breaching the U.S. Capitol in Washington on Jan. 6, 2021. (Saul Loeb/AFP via Getty Images)

Many of those charged remain in jail pending trial, including those who aren’t accused of carrying out acts of violence.

Douglas Jensen (C) speaks to U.S. Capitol Police officers inside the building in Washington on Jan. 6, 2021. (Saul Loeb/AFP via Getty Images)

Five people eventually died while several police officers later took their own lives.

Look Ahead America, which says it advocates for disaffected Americans who are ignored by both political parties and the government, noted Saturday’s protests would be peaceful.

The group’s Executive Director Matt Braynard said the purpose of the protests is “for patriotic Americans to educate their state legislators on the power they have to give instructions to their state’s federal legislators.”

“We have composed a draft resolution a state legislature can pass to inform US Senators and Representative [sic] to oppose the tyrannical and inhumane treatment of the January 6 political prisoners who have been targeted by the Department of Justice and the FBI,”  Braynard, a former Trump campaign operative, said in a statement on the group’s website.

Earlier this week, Capitol Police Chief Tom Manger announced that protective fencing will be put back up ahead of the rally.

“The fence will go up a day or two before, and if everything goes well, it will come down very soon after,” he said on Sept. 13. Workers began installing the fence late on Wednesday.

Manger told The Epoch Times in an email that his agency is “closely monitoring” the planned event but that he’s confident, given the changes in intelligence-gathering and sharing made after Jan. 6, that “the work we are doing now will make sure our officers have what they need to keep everyone safe.”

However, some suspect that the upcoming rally has a “very high probability of becoming a false flag event.”

“Do yourself a favor and stay away from DC on September 18,” Ron Watkins, former administrator of the imageboard website 8kun, stated in a recent post on Telegram.

Watkins, who is a strong advocate for election integrity and previously encouraged people to gather in D.C. on Jan. 6 to peacefully protest, said in a separate post, “Everyone who attends the event should be fully aware of the potential risks of their participation at this time.”

Tyler Durden
Thu, 09/16/2021 – 11:05

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The New York Times Is Wrong About the ‘Myth of Big Tech Competence’


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Facebook has long claimed its standards of conduct apply equally to all users. Documents that surfaced earlier this week, first reported by The Wall Street Journal, indicate otherwise. They show that the social media company has long maintained an “XCheck” (“cross-check”) program in which high-profile accounts representing celebrities, journalists, and politicians are exempt from normal enforcement measures, with different rules applying to them than to everyday users.

About 5.8 million out of 2.9 billion monthly active Facebook users have this status, which allows them to sometimes post violating content without receiving sanctions. The types of things that normally get flagged when other users post them—bullying and harassment, revenge porn, so-called hate speech—get more lenient treatment by moderators. Worried about P.R. backlash, Facebook is more choosy with which policies to enforce for VIPs, allowing them to get away with much more, and for much longer, than typical users.

Internal documents showed that many violations by VIP accounts never received review at all, an issue that was noted to the company’s Oversight Board, formed to serve as a 20-person accountability body to oversee content moderation decisions and appeals processes. Earlier this year, the Oversight Board made recommendations to the company that it disclose “relative error rates” and “thematic consistency of determinations” between XCheck accounts and typical user accounts. Facebook rejected this suggestion.

“[The documents] show that Facebook knows, in acute detail, that its platforms are riddled with flaws that cause harm, often in ways only the company fully understands,” but the company “often lacks the will or the ability to address them,” notes the Journal. “Facebook appeared more concerned with avoiding gaffes than mitigating high-profile abuse.”

The New York Times‘ Shira Ovide seized on this in a piece entitled “The Myth of Big Tech Competence.” In it, she writes that “V.I.P.s were exempt from the company’s rules less out of malicious intent than neglect,” and that The Wall Street Journal‘s “reporting ultimately points to a more fundamental error: A large organization displayed stunning mismanagement, and could not or would not fully fix its problems.” She concludes:

“It’s not shocking when Congress or the cable company act incompetently. But we see tech giants with gazillion dollars and big brains as special and all-seeing and as being smarter than everyone else. That makes it feel more surprising when tech giants mess up worker pay and won’t admit it, as Google did, or fumble for years trying to sell groceries, as Amazon has done.

Tech companies including Google, Facebook and Amazon have seemingly invincible power, but their growing wealth is not stopping these giants from also, at times, being ridiculously inept.”

Ovide’s critique misses a lot. First, people always have the ability to opt out of Facebook usage—and Amazon, Google, and Twitter usage, too. Some companies have long tentacles that are hard to free yourself from; it would be hard to fully avoid every website that uses Amazon Web Services as a host, but it would not be hard at all to give up your Prime membership and two-day shipping in favor of halcyon jaunts to Target. It would not be hard to default to Bing, which is used for a little more than 4.5 percent of the world’s search queries (China’s Baidu stands at a little under 15 percent, for contrast) instead of Google. You can have a perfectly rich social life without the use of Facebook, or even Instagram (which is owned by the former); you can choose Twitter, Snapchat, TikTok, or Reddit to interact with friends and strangers alike online. You can even try old-fashioned meatspace if you dare.

People do not, however, have the ability to opt out of being governed, to decide they don’t like the rules Congress imposes on them, and to say “enough.”

Second, Facebook has really strong incentives to self-correct. It may not always choose to do so—for reasons that are often obscured to us—but static, unwieldy bureaucracies rarely feel these same incentives and, even if they did, they would have a much harder time acting on them. The Oversight Board, which admittedly failed in this instance to compel the company to pursue a more transparent approach, was created as a means of revisiting questionable content moderation calls and what precedent gets set. Facebook has shown that it doesn’t want to be arbitrary or fickle, but is currently experiencing the fallout from its public struggle to align actions with intent.

Third, Ovide muddles the problems of Facebook malfeasance and Amazon experimenting with different grocery-selling models. The latter isn’t an example of wrongdoing or stupidity, it’s an example of the process that pretty much every company goes through while trying to innovate: attempting to figure out exactly what consumers need and how to give it to them. Amazon struggling with grocery delivery models—and then beginning to figure it out in impressive ways, including debuting a new checkout-free supermarket in Seattle and checkout-free convenience stores in four major American cities, all while grocery delivery choked a bit at the onset of the pandemic before later steadying (nuggets absent from the Times‘ analysis)—is not an example of Big Tech incompetence, just as Apple struggling for years with figuring out what niche the tablet serves, or how to use multitouch technology for iPhones, is not an example of its incompetence. These are examples of companies learning what works and what doesn’t.

Worse still, the New York Times piece fundamentally excuses government incompetence, accepting it as a given, while skewering tech companies for sometimes making the wrong calls. Why do we write off incompetence on the part of Congress? They’re the ones who spend colossal amounts of our money year after year with little eye toward results.

It’s not tech companies that have “seemingly invincible power,” it’s the government that does—the entity that has a monopoly on force and wields it with no real opt-out mechanism for those of us who object.

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“Russiagate In A Nutshell”: Glenn Greenwald Breaks Down Significance Of Expected Indictment Against Hillary Clinton Lawyer

“Russiagate In A Nutshell”: Glenn Greenwald Breaks Down Significance Of Expected Indictment Against Hillary Clinton Lawyer

Special counsel John Durham is reportedly seeking a grand jury indictment against to indict an attorney representing Hillary Clinton’s presidential campaign after he allegedly peddled a fake story in 2016 that the Trump campaign was using a secret server to communicate with a Russian bank – a lie promoted by Hillary Clinton herself.

According to the Washington Post, Michael Sussmann, a cybersecurity lawyer and partner at Perkins Coie, pushed the theory that computer scientists had discovered secret server connections between Trump and Alfa Bank – an allegation which was then amplified through left-wing media chambers as part of their ongoing full-court press against Trump.

Breaking down the indictment is journalist and attorney Glenn Greenwald.

And as attorney Nicholas Devyatkin notes, “Elias has completely reinvented himself as some voting rights advocate. See how MSNBC covers him without disclosing his very recent role as general counsel to the Clinton Campaign and his role in commissioning the Steele Dossier.”

Tyler Durden
Thu, 09/16/2021 – 10:48

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The New York Times Is Wrong About the ‘Myth of Big Tech Competence’


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Facebook has long claimed its standards of conduct apply equally to all users. Documents that surfaced earlier this week, first reported by The Wall Street Journal, indicate otherwise. They show that the social media company has long maintained an “XCheck” (“cross-check”) program in which high-profile accounts representing celebrities, journalists, and politicians are exempt from normal enforcement measures, with different rules applying to them than to everyday users.

About 5.8 million out of 2.9 billion monthly active Facebook users have this status, which allows them to sometimes post violating content without receiving sanctions. The types of things that normally get flagged when other users post them—bullying and harassment, revenge porn, so-called hate speech—get more lenient treatment by moderators. Worried about P.R. backlash, Facebook is more choosy with which policies to enforce for VIPs, allowing them to get away with much more, and for much longer, than typical users.

Internal documents showed that many violations by VIP accounts never received review at all, an issue that was noted to the company’s Oversight Board, formed to serve as a 20-person accountability body to oversee content moderation decisions and appeals processes. Earlier this year, the Oversight Board made recommendations to the company that it disclose “relative error rates” and “thematic consistency of determinations” between XCheck accounts and typical user accounts. Facebook rejected this suggestion.

“[The documents] show that Facebook knows, in acute detail, that its platforms are riddled with flaws that cause harm, often in ways only the company fully understands,” but the company “often lacks the will or the ability to address them,” notes the Journal. “Facebook appeared more concerned with avoiding gaffes than mitigating high-profile abuse.”

The New York Times‘ Shira Ovide seized on this in a piece entitled “The Myth of Big Tech Competence.” In it, she writes that “V.I.P.s were exempt from the company’s rules less out of malicious intent than neglect,” and that The Wall Street Journal‘s “reporting ultimately points to a more fundamental error: A large organization displayed stunning mismanagement, and could not or would not fully fix its problems.” She concludes:

“It’s not shocking when Congress or the cable company act incompetently. But we see tech giants with gazillion dollars and big brains as special and all-seeing and as being smarter than everyone else. That makes it feel more surprising when tech giants mess up worker pay and won’t admit it, as Google did, or fumble for years trying to sell groceries, as Amazon has done.

Tech companies including Google, Facebook and Amazon have seemingly invincible power, but their growing wealth is not stopping these giants from also, at times, being ridiculously inept.”

Ovide’s critique misses a lot. First, people always have the ability to opt out of Facebook usage—and Amazon, Google, and Twitter usage, too. Some companies have long tentacles that are hard to free yourself from; it would be hard to fully avoid every website that uses Amazon Web Services as a host, but it would not be hard at all to give up your Prime membership and two-day shipping in favor of halcyon jaunts to Target. It would not be hard to default to Bing, which is used for a little more than 4.5 percent of the world’s search queries (China’s Baidu stands at a little under 15 percent, for contrast) instead of Google. You can have a perfectly rich social life without the use of Facebook, or even Instagram (which is owned by the former); you can choose Twitter, Snapchat, TikTok, or Reddit to interact with friends and strangers alike online. You can even try old-fashioned meatspace if you dare.

People do not, however, have the ability to opt out of being governed, to decide they don’t like the rules Congress imposes on them, and to say “enough.”

Second, Facebook has really strong incentives to self-correct. It may not always choose to do so—for reasons that are often obscured to us—but static, unwieldy bureaucracies rarely feel these same incentives and, even if they did, they would have a much harder time acting on them. The Oversight Board, which admittedly failed in this instance to compel the company to pursue a more transparent approach, was created as a means of revisiting questionable content moderation calls and what precedent gets set. Facebook has shown that it doesn’t want to be arbitrary or fickle, but is currently experiencing the fallout from its public struggle to align actions with intent.

Third, Ovide muddles the problems of Facebook malfeasance and Amazon experimenting with different grocery-selling models. The latter isn’t an example of wrongdoing or stupidity, it’s an example of the process that pretty much every company goes through while trying to innovate: attempting to figure out exactly what consumers need and how to give it to them. Amazon struggling with grocery delivery models—and then beginning to figure it out in impressive ways, including debuting a new checkout-free supermarket in Seattle and checkout-free convenience stores in four major American cities, all while grocery delivery choked a bit at the onset of the pandemic before later steadying (nuggets absent from the Times‘ analysis)—is not an example of Big Tech incompetence, just as Apple struggling for years with figuring out what niche the tablet serves, or how to use multitouch technology for iPhones, is not an example of its incompetence. These are examples of companies learning what works and what doesn’t.

Worse still, the New York Times piece fundamentally excuses government incompetence, accepting it as a given, while skewering tech companies for sometimes making the wrong calls. Why do we write off incompetence on the part of Congress? They’re the ones who spend colossal amounts of our money year after year with little eye toward results.

It’s not tech companies that have “seemingly invincible power,” it’s the government that does—the entity that has a monopoly on force and wields it with no real opt-out mechanism for those of us who object.

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Gordon Johnson: Tesla’s China Sales Numbers From August Are More Than 4x Higher Than Official Insurance Data Suggests

Gordon Johnson: Tesla’s China Sales Numbers From August Are More Than 4x Higher Than Official Insurance Data Suggests

Perpetual Tesla skeptic and sell-side researcher Gordon Johnson of GLJ Research pointed out something odd this week: Tesla’s local sales numbers reported for August don’t seem to match that of official insurance data from the country. In fact, the number being reported by media appears to be more than 5x higher than what insurance data out of the country is showing.

“Based on official insurance data provided by CATARC (no one can buy a car in China without insurance, so insured figures are [very] precise), TSLA sold a total of 2.815K cars in China in Aug. 2021. Yet, when compared to CPAC data (i.e., sales data provided by TSLA’s marketing division to the Chinese government), which shows 12.885K TSLA cars sold in China in Aug. 2021, there seems to be a MAJOR problem in TSLA’s reported Aug. 2021 China sales figures,” Johnson wrote.

“Not until Aug. 2021 did the numbers TSLA reported to CPCA differ, materially, from the actual insurance sales numbers provided by the Chinese government to CATARC,” his noted continued.

From there, Johnson says his contacts in China are leading him to believe that Tesla’s local sales in China could have been 2,815 instead of 12,855, writing:

“Contacts in China are saying that the domestic China sales numbers TSLA’s marketing department reported to the CPCA,  last week, were later switched to exports to the EU after the numbers were published in media outlets (the reason given is this was done to tackle the IC shortage issues in the EU). Yet, if true, this means TSLA’s actual sales in China in Aug. 2021 were a DISMAL 2.815K cars, not the 12.885K cars currently being reported by pretty much the entire global media.”

Johnson continues: “In short, there’s a word for providing data to government agencies that does not match up with officially reported government insurance data.”

He suggested that the number discrepancy, if it turns out to be accurate and meaningful, could signal that Tesla has a “real demand problem” inside of China. Johnson also questioned whether or not CPCA data could be trusted in the future. 

“If Tesla is overstating domestic Chinese sales, this suggests risks to its 3Q21 reported delivery figures,” he concluded.

Tyler Durden
Thu, 09/16/2021 – 10:30

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