Month: May 2019

Just days after Elon Musk postured as if Tesla didn’t really need the cash that it was raising, a new lawsuit has been filed against the company, by a French metal supplier, alleging that Tesla owes them $1.77 million. The suit was filed in California’s Northern District.

Lebronze Alloys has provided a metal part for Tesla’s electric motor since 2016, but is having difficulty collecting on the $1.77 million (€1.55 million) that it is owed by Tesla.

Their lawsuit against Tesla states:

 “LBA made numerous efforts to get Tesla to pay the amounts Tesla owed to LBA. LBA convened meetings, sent e-mails and letters, and initiated numerous telephone calls in an effort to get Tesla to pay what it owed, to answer any questions Tesla may have had, and to resolve any issues. In addition, LBA demanded reasonable assurances of performance by Tesla.”

Another interesting aspect of the lawsuit is that it also may have also inadvertently offered a nod to lower guidance from Tesla. The original 2016 agreement had Tesla agreeing to buy parts for up to 1.5 million vehicles. But that agreement was amended in February 2019, with the forecast changed to just 250,000 vehicles. Whether this is a result of new lowered guidance, or Tesla taking receipt of orders between 2016 to 2019, remains to be seen. 

The lawsuit continues:

 “On April 17, 2019, Tesla, without notice, requested an immediate telephone conference call, during which Tesla purported to give verbal notice of termination of the Agreement and the Amended Agreement, without advance notice and contrary to the terms of the Agreement and the Amended Agreement. This constituted a breach, repudiation and anticipatory breach of the Agreement and the Amended Agreement.”

Tesla’s relationship with suppliers continues to look volatile. After asking, in July 2018, for concessions by its suppliers, 18 of 22 executives surveyed at automotive supply companies said that Tesla was “a financial risk to their business”. More than a third of those surveyed said they were worried about a Tesla bankruptcy.

PlainSite has provided a link to all Tesla vendor non-payment lawsuits outstanding. As of now, there appears to be 22 cases outstanding.

Here is a look at the full lawsuit.

Lebronze Alloys vs Tesla by on Scribd

via ZeroHedge News http://bit.ly/2MeuS1b Tyler Durden

Authored by Michael Pettis via Carnegie Endowment for International Peace,

A number of recent articles suggest that Chinese officials may reduce their purchases of U.S. government bonds. It is very unlikely that China can do so in any meaningful way because doing so would almost certainly be costly for Beijing. And even if China took this step, it would have either no impact or a positive impact on the U.S. economy.

Note: This is an updated version of a previously published January 2018 blog post. The original version can be accessed here.

Suggestions by some Chinese officials that they may reduce their purchases of U.S. Treasury bonds show just how poorly the world understands the balance of payments. Here is what a recent Financial Times article had to say:

It was an unnerving piece of data for investors last week, buried halfway down an esoteric spreadsheet released by the US government that tracks how many Treasuries foreign investors buy and sell. China, the largest foreign creditor to the US government with total Treasury holdings in excess of $1.2tn, sold $20bn of securities with a maturity exceeding one year in March, according to US government data. The sales amounted to China’s largest retreat from the market in more than two years.

The article then goes on to suggest that China’s reduced holdings of U.S. Treasury bonds may reflect a strategic response to the escalating trade conflict between Beijing and Washington:

The data reignited fears that Beijing may weaponise its holdings as part of the trade war, wreaking havoc with the biggest bond market in the world, pushing interest rates higher and increasing the US government’s cost of borrowing.

“If China starts dumping its Treasuries, it would cause huge financial instability,” said Mark Sobel, a former Treasury department official who spent nearly four decades at the agency, adding that he considered this an unlikely scenario.

In January 2018, I explained on this blog why China cannot “weaponize” its holdings of U.S. government bonds. It is not because, as many observers seem to think, that selling off the bonds would cause havoc in the market and in doing so would undermine the value of China’s own holdings. This is very unlikely. First of all, the Federal Reserve could easily act to overcome any temporary volatility. Second, as another article in the same issue of the Financial Times points out, rising uncertainty is causing investors to increase their purchases of U.S. government bonds:

US Treasury yields plunged to their lowest level since 2017 and shares fell more than 1 per cent on Thursday as the deepening trade dispute between the US and China raised concerns about global economic growth.

The rush to the relative safety of government debt pushed the yield on 10-year US Treasury bonds to roughly the same level as when the Federal Reserve began raising interest rates in 2015. Longer-term rates fell below shorter-term ones, a yield curve inversion that is seen by many traders as an indication of an impending economic downturn.

I thought it would make sense to revisit and update my January 2018 post. As I explained in that entry, the real reason China cannot sell off its holdings of U.S. government bonds is because Chinese purchases were not made to accommodate U.S. needs. Rather, China made these purchases to accommodate a domestic demand deficiency in China: Chinese capital exports are simply the flip side of the country’s current account surplus, and without the former, they could not hold down the currency enough to permit the latter.

To see why any Chinese threat to retaliate against U.S. trade intervention would actually undermine China’s own position in the trade negotiations, consider all the ways in which Beijing can reduce its purchases of U.S. government bonds:

1. Beijing could buy fewer U.S. government bonds and more other U.S. assets, so that net capital flows from China to the United States would remain unchanged.

2. Beijing could buy fewer U.S. government and other U.S. assets, but other Chinese entities could then in turn buy more U.S. assets, so that net capital flows from China to the United States would stay unchanged.

3. Beijing and other Chinese entities could buy fewer U.S. assets and replace them with an equivalently larger amount of assets from other developed countries, so that net capital flows from China to the United States would be reduced, and net capital flows from China to other developed countries would increase by the same amount.

4. Beijing and other Chinese entities could buy fewer U.S. assets and replace them with an equivalently larger amount of assets from other developing countries, so that net capital flows from China to the United States would be reduced, and net capital flows from China to other developing countries would increase by the same amount.

5. Beijing and other Chinese entities could buy fewer U.S. assets and not replace them by purchasing an equivalently larger amount of assets from other countries, so that net capital flows from China to the United States and to the world would be reduced.

These five paths cover every possible way Beijing can reduce official purchases of U.S. government bonds: China can buy other U.S. assets, other developed-country assets, other developing-country assets, or domestic assets. No other option is possible.

• The first two ways would change nothing for either China or the United States.

• The second two ways would change nothing for China but would cause the U.S. trade deficit to decline, either in ways that would reduce U.S. unemployment or in ways that would reduce U.S. debt.

• Finally, the fifth way would also cause the U.S. trade deficit to decline in ways that would likely either reduce U.S. unemployment or reduce U.S. debt; but this would come at the expense of causing the Chinese trade surplus to decline in ways that would either increase Chinese unemployment or increase Chinese debt.

By purchasing fewer U.S. government bonds, in other words, Beijing would leave the United States either unchanged or better off, while doing so would also leave China either unchanged or worse off. This doesn’t strike me as a policy Beijing is likely to pursue hotly, and Washington would certainly not be opposed to it. Let’s consider each possibility in turn.

1) Beijing could buy fewer U.S. government bonds and more other U.S. assets, so that net capital flows from China to the United States would remain unchanged.

This would be a non-event. Beijing would in effect simply redirect its purchases from U.S. government bonds to other U.S. assets. Of course, the seller of those other assets would then be forced to deploy the proceeds of the sales elsewhere, so that directly or eventually the proceeds would be used to buy the U.S. government bonds that Beijing sold. The only thing that would change, in this case, is that Beijing would have swapped riskless U.S. assets for risky U.S. assets.

In that case, there would be no net impact on overall U.S. interest rates and a very small impact on relative interest rates. Because this outcome represents nothing more than a swap by Beijing out of lower-risk assets into higher-risk assets, with no net change in demand for U.S. assets, the result might be at most a small rise in yields on riskless assets matched by an equivalent tightening of credit spreads.

There would be no change in overall U.S. investment except to the extent that tightening credit spreads would cause a small rise in risky U.S. investments. What is more, Beijing’s decision would leave the U.S. capital account surplus unchanged, so it could not have an impact on the U.S. current account or trade deficits. Finally, Beijing’s decision would leave the Chinese capital account deficit unchanged, so it could not have an impact on the Chinese current account or trade surpluses.

2) Beijing could buy fewer U.S. government and other U.S. assets, but other Chinese entities could then in turn buy more U.S. assets, so that net capital flows from China to the United States would stay unchanged.

Again, this would largely be a non-event. The volume of Chinese capital flows to the United States would be unaffected, but there would be minor changes in the composition of assets to which the flows are directed. As in the previous case, there would be no net impact on overall U.S. interest rates and a very small impact on relative interest rates. Again, the result might be at most a small rise in yields on riskless assets matched by an equivalent tightening of credit spreads.

Again, as in the previous case, there would be no change in overall U.S. investment, except to the extent that tightening credit spreads cause a small rise in risky U.S. investments. Beijing’s decision would also leave the U.S. capital account surplus unchanged, so it could not have any impact on the U.S. current account or trade deficits. Finally, Beijing’s decision would leave the Chinese capital account deficit unchanged, so it could not have any impact on the Chinese current account or trade surpluses.

3) Beijing and other Chinese entities could buy fewer U.S. assets and replace them with an equivalently larger amount of assets from other developed countries, so that net capital flows from China to the United States would be reduced, and net capital flows from China to other developed countries would increase by the same amount.

In this case, China’s overall capital account deficit and current account surplus would remain unchanged, but there would be a reduction in its bilateral capital account deficit and current account surplus with the United States, and an increase in its capital account deficits and current account surpluses with the rest of the developed world. The reduction in the U.S. current account deficit would mean a reduction in the excess of U.S. investment over U.S. savings. If U.S. investment were constrained by an inability to access savings, this reduction would occur in the form of lower U.S. investment. Because this is not the case. Given that U.S. businesses have easy access to as much capital as they need to fund investment, the adjustment would occur in the form of higher U.S. savings.

Savings can be forced up in many different ways, almost always involving either less debt or lower unemployment. For example, a reduction in capital inflows can deflate asset bubbles and so discourage consumption through wealth effects, such a reduction can lower consumption by raising interest rates on consumer credit, or this reduction could even take place by encouraging stronger consumer lending standards. A reduction in capital inflows can also increase savings by reducing unemployment. One way or another, in economies like the United States that do not suffer from weak access to capital, a reduction in foreign capital inflows will automatically increase domestic savings.

It may be harder than we think for China to redirect capital flows from the United States to other developed economies. Continental Europe, Japan, and the UK are the only developed economies large enough to absorb a significant change in the volume of capital inflows, but none of them are eager to absorb the current account implications. Some economists, misunderstanding the nature of the account identity that ties net capital inflows to the gap between investment and savings, will undoubtedly argue that these inflows would cause investment in Europe, Japan, and the UK to rise, but this is wrong. It would only be true if investment in these economies had previously been constrained by scarce savings, but because this is clearly not the case in today’s environment, the impact of higher capital inflows into developed economies could only be to reduce domestic savings.

For developed economies, in other words, significantly higher capital inflows from abroad would either cause savings to decline as the inflows strengthen their currencies and reduce exports—causing either unemployment or consumption to rise—or, if their central banks act to sterilize the inflows, to increase imports by increasing consumer debt. If continental Europe, Japan, and the UK are unwilling to accept higher unemployment or higher debt, they would be unwilling to allow unlimited Chinese access to domestic investment and may quickly take steps either to retaliate or to redirect the flows to the United States.

In the latter case, of course, it would again be a non-event. To the extent that developed countries do not redirect Chinese capital inflows to the United States, however, Chinese sales of U.S. government bonds would affect the U.S. economy, but largely in positive ways. First of all, and contrary to popular perception, a reduction of Chinese capital flows to the United States would not cause U.S. interest rates to rise except to the extent that it would cause U.S. economic growth to pick up. Because the reduction of the U.S. capital account surplus would result in an increase in U.S. savings, this would fully match the reduction in Chinese savings that had previously been imported by the United States. This is just the logical consequence of the balance of payments constraints.

There would be no direct change in overall U.S. investment, and there would be an increase in U.S. savings, driven by either lower unemployment or a reduction in consumer debt. There might be an indirect change in U.S. investment eventually as the American trade deficit declines. Remember that because Beijing’s decision would reduce the overall U.S. capital account surplus, it would also automatically reduce the U.S. current account and trade deficits, for reasons that I discuss in an earlier blog entry. Finally, because Beijing’s decision would leave the Chinese capital account deficit unchanged, it would have no impact on the Chinese current account or trade surpluses.

4) Beijing and other Chinese entities could buy fewer U.S. assets and replace them with an equivalently larger amount of assets from other developing countries, so that net capital flows from China to the United States would be reduced, and net capital flows from China to other developing countries would increase by the same amount.

In this case, as in the previous, China’s overall capital account deficit and current account surplus would remain unchanged, but there would be a reduction in its bilateral capital account deficit and current account surplus with the United States, and an increase in its capital account deficits and current account surpluses with the developing world. As explained above, the reduction in the U.S. current account deficit would occur through an increase in U.S. savings.

There is no difference between this case and the previous one as far as its impact on the United States or on China. Interest rates in either country would remain unchanged, the U.S. trade deficit would decline, and China’s trade surplus would remain unchanged.

There is one important difference to the global economy, however. Because investment in developing countries is often constrained by difficulty accessing global savings, a redirection of Chinese capital from the United States to developing countries would boost investment in those countries. This would increase global growth and would benefit both developed economies and developing economies, including the United States. But the reason this is unlikely to happen to any large extent is that China has had a very bad experience with its investments in developing countries and may not be eager to raise them significantly more than it has already planned.

5) Beijing and other Chinese entities could buy fewer U.S. assets and not replace them by purchasing an equivalently larger amount of assets from other countries, so that net capital flows from China to the United States and to the world would be reduced.

Finally, China could reduce its overall capital account deficit by reducing the amount of capital directed to the United States and not replacing it with capital directed elsewhere. China, in other words, would export less capital abroad. This would mean, by definition, that China must either reduce domestic savings or increase domestic investment. This would also mean, of course, that Beijing must run lower current account and trade surpluses.

One way savings can decline quickly is if a drop in exports causes unemployment to rise. The only other way is if there is a surge in consumer debt. For investment to rise quickly, there almost certainly has to be either a rise in unsold inventory as exports drop or a rise in nonproductive investment in infrastructure. In either case, this would mean a rising debt burden.

As in the previous two cases, there would be no direct change in overall U.S. investment, and there would be an increase in U.S. savings, the latter driven either by lower unemployment or a reduction in consumer debt. There might be an indirect change in U.S. investment eventually as the American trade deficit declines. This is because as Beijing’s decision reduces the overall U.S. capital account surplus, it also would automatically reduce the U.S. current account and trade deficits. Most importantly for China, Beijing’s decision would reduce the Chinese capital account deficit and so it would necessarily also result in a reduction in the Chinese current account or trade surpluses.

CONCLUSION

Even if Beijing forced institutions like the People’s Bank of China to purchase fewer U.S. government bonds, such a step cannot credibly be seen as meaningful retaliation against rising trade protectionism in the United States. As I have showed, Beijing’s decision would have no impact at all on the U.S. balance of payments, or it would have a positive impact. It would have almost no impact on U.S. interest rates, except to the extent perhaps of a slight narrowing of credit spreads to balance a slight increase in riskless rates.

It would also have no impact on the Chinese balance of payments in the case that it leaves the U.S. balance of payments unaffected. To the extent that it would result in a narrower U.S. trade deficit, there are only three possible ways this might affect the Chinese balance.

• First, China could export more capital to developed countries, in which case the decision would have no immediate impact on China’s overall balance of payments, but it would run the risk of angering its trade partners and inviting retaliation.

• Second, China could export more capital to developing countries, in which case the decision would have no immediate impact on China’s overall balance of payments, but it would run the very high risk of increasing its investment losses abroad.

• Or third, China could simply reduce its capital exports abroad, in which case it would be forced into running a lower trade surplus, which could only be countered, in China’s case, with higher unemployment or a much faster increase in debt.

via ZeroHedge News http://bit.ly/2WbX9tZ Tyler Durden

Former President Barack Obama was paid nearly $600,000 to speak at a Tuesday marketing conference in Bogota, Colombia, according to Colombian news outlet El Tiempo. For those keeping track, that’s $100,000 more than Bill Clinton made for a single speech in Moscow (during a 2010 trip where he hung out with Vladimir Putin at his house). 

According to the report, Obama earned “2 billion Colombian pesos,” or $591,000 USD speaking at the EXMA conference, held Monday and Tuesday. Conference attendees could also snap a photo with the former president for just 11 million Colombian pesos, or around $3,200. 

And according to the Bogotá Post – Obama’s talk, “A conversation with President Barack Obama,” was focused on influential growth strategies. “It will be a talk about business that is based on the positive influence Obama puts out. We have to take advantage of this to build de country, entrepreneurship and innovation,” said the organizers, who added that Obama will “set the condition that he won’t talk about current politics.” 

 

via ZeroHedge News http://bit.ly/2IaJauk Tyler Durden

Via MassPrivateI blog,

It has been nearly two years, since I reported on the dangers of creating a law enforcement run Mental Health Assessment (MHA) program. In Texas, police use MHA’s to “screen” every person they have arrested for mental illness.

But the TAPS Act, first introduced in January, would take law enforcement screenings to a whole new level. It would create a national threat assessment of children and adults.

In the course of six months the Threat Assessment, Prevention and Safety (TAPS) Act (H.R. 838) has seen support of the bill grow to nearly 80 Congress members.

National Threat Assessment Program announced during National Police Week

Politicians are master manipulators. What better way to garner public support for a national threat assessment program than to introduce it during National Police Week.

And who better to pick than Congresswoman Katie Hill who laid it on thick, as a KHTS article revealed.

“We do this first to honor the sacrifice of these men and women in blue, who put their life on the line every single day to protect us in the vital role that law enforcement plays in the safety and well-being of our communities and our districts,” said Babin in his opening statement.

“And secondly to highlight a bipartisan solution — that we all are working on — to protect our communities and schools from the terrible acts of violence that we have seen, and are getting to be almost routine.”

Taken at face value, the TAPS Act sounds like a noble attempt to stop school shootings but not all is as it seems.

Crystal ball reading police to predict if you pose a future threat

credit: LAAPOA

The TAPS Act would encourage law enforcement to give everyone a personal threat assessment (kids and adults) and single out those that they deem as future threats. (Click here to see how our homes a given threat assessments.)

“By bringing threat assessment experts together, and utilizing evidence-based behavioral threat assessment and management processes, we can bolster public safety by implementing strategies to identify and stop dangerous individuals before they can commit an act of violence. We have the expertise to combat the targeted violence plaguing our schools, places of worship, and public spaces, but we have yet to fully implement it to prevent attacks.”

The TAPS Act has all the earmarks of a paranoid police state that considers everyone a potential threat.

The TAPS Act will create a “Joint Behavioral Threat Assessment and Management Task Force to identify individuals that exhibit patterns of dangerous behavior that MAY precede an act of targeted violence.”

According to Senators Marco Rubio, Kyrsten Sinemea and Thom Tillis, the TAPS Act will create a national behavioral threat assessment and management process for everyone.

Requires the Task Force’s recommendations for the development of the National Strategy to:

• Ensure consideration of the different needs and resources of communities across the country, and will not be construed as a national standard. 

• Include recommendations for the most effective leveraging of existing Federal, State, local, and Tribal infrastructure, workforce, and experience. 

• Include recommendations to increase collaboration between government agencies and private entities that focus on public safety responsibilities. 

• Include recommendations on training programs to disseminate to State and Local entities.

• Include recommendations for a Behavioral Threat Assessment and Management School Violence Prevention Program to train and support a multi-disciplinary and multi-jurisdictional behavioral threat assessment and management process for educational entities.

Bills like this means, America has joined paranoid government’s like China and Switzerland who consider kids to be potential threats.

“Last Wednesday the Swiss government proposed new laws aimed at preventing extremist violence and forcing people including children deemed a threat to be registered with authorities, with house arrest a last resort in some cases.”

Didn’t we learn anything from incarcerating Japanese Americans and the war against Communism?

The never-ending war on terror and the TAPS Act should not be used as an excuse to destroy our Bill of Rights.

via ZeroHedge News http://bit.ly/2KckFzz Tyler Durden

Google Assistant – the company’s ‘AI’ equivalent to Siri or Alexa – can make life easier in all sorts of ways, including setting reminders, controlling smart home devices, booking rental cars and more. 

And the service – which Google says is on at least a billion devices, is powered by a giant apparatus of underpaid, overworked human subcontractors who manage the entire operation, according to The Guardian‘s Julia Wong.  This ‘army’ of contractors often work massive amounts of overtime for free in the hopes of becoming a full-time Google employee with all the perks and benefits that come with it.

“It’s smoke and mirrors if anything,” said one current Google employee – who spoke on condition of anonymity. “Artificial intelligence is not that artificial; it’s human beings that are doing the work.” 

The Google employee works on Pygmalion, the team responsible for producing linguistic data sets that make the Assistant work. And although he is employed directly by Google, most of his Pygmalion coworkers are subcontracted temps who have for years been routinely pressured to work unpaid overtime, according to seven current and former members of the team.

These employees, some of whom spoke to the Guardian because they said efforts to raise concerns internally were ignored, alleged that the unpaid work was a symptom of the workplace culture put in place by the executive who founded Pygmalion. That executive was fired by Google in March following an internal investigation. –The Guardian

Current and former employees noted Google’s reliance on around 100,000 temporary workers, vendors and contractors (known internally as TVCs), who produce a large amount of the company’s work. Those who collect or create data for much of its technology are not directly employed by Google; from the drivers who roam around the earth for Google Maps, or YouTube’s content moderators who train the company’s filters to catch banned content, to people who endlessly flip pages of physical books to scan into the Google Books libraries. 

This has created two tiers of workers at Google; highly compensated, full-time employees, vs. low-wage contract workers who are found using staffing firms. The employees said this dichotomy is “corrosive” , “highly problematic” and “permissive of exploitation.” 

“It’s like a white-collar sweatshop,” said one Google employee. “If it’s not illegal, it’s definitely exploitative. It’s to the point where I don’t use the Google Assistant, because I know how it’s made, and I can’t support it.“

The disparity in wages and benefits between Google employees and contract workers is stark. Alphabet recently reported median pay of $246,804, and employees enjoy perks such as free meals, on-site yoga classes, free massages and generous benefits.

Amid increasing activism by Googlers and contract workers, Google recently announced improved minimum standards for US-based contract workers, including a minimum of eight paid sick days, “comprehensive” health insurance, and a minimum wage of at least $15 an hour by 2020. (A full-time job at that wage pays $31,200 a year; by comparison, Google charges its own employees $38,808 a year to place an infant in its onsite daycare facilities.) –The Guardian

On Tuesday, the New York Times noted that Google’s use of underpaid contractors extends far beyond just the Google Assistant team. 

As of March, Google worked with roughly 121,000 temps and contractors around the world, compared with 102,000 full-time employees, according to an internal document obtained by The New York Times. 

It’s time to end the two-tier system that treats some workers as expendable. From rideshare drivers, to cafeteria workers, to the many contractors who build and maintain tech products: we all contribute, and we all deserve a share. (4/4)

— Google Walkout For Real Change (@GoogleWalkout) March 27, 2019

An ‘army’ of cunning linguists are teaching their replacements

Much of what is driving modern advancements in computing and user experiences involves the study of language. As the Guardian notes, it’s taken decades to go from monotonously programming a clunky VCR – to simply telling your digital assistant what you want, when you want it. In short, Silicon Valley has gone to great lengths to understand natural human speech, in all its variations. 

And all of this has been developed using a combination of humans feeding massive data sets into machine learning systems. 

Take, for example, the straightforward task of asking the Assistant to set a timer to go off in five minutes, a former employee on Pygmalion explained. There are infinite ways that users could phrase that request, such as “Set a timer for five minutes”; “Can you ring the buzzer in five minutes?”; or “Configurar una alarma para cinco minutos.” The Assistant has to be able to convert the spoken request into text, then interpret the user’s intended meaning to produce the desired outcome, all practically instantaneously.

The technology that makes this possible is a form of machine learning. For a machine learning model to “understand” a language, it needs vast amounts of text that has been annotated by linguists to teach it the building blocks of human language, from parts of speech to syntactic relationships. –The Guardian

In order to feed the systems, Pygmalion was created in 2014. The brainchild of longitme Google executive Linne Ha, the division was tasked with creating linguistic data sets required for Google’s neural networks to adapt to dozens of languages. Programming is a “painstaking” and labor-intensive process, requiring the careful creation of “handcrafted” data sets in order for the digital systems to function properly. 

As originally planned, Google employs just a handful of full-time employees in Pygmalion – while outsourcing an “army” of subcontracted linguists around the world, according to documents reviewed by The Guardian. At present, there are 40-50 full time Googlers and around 200 temporary workers contracted through global staffing firms such as Adecco. The workers include associate linguists who annotate data sets, and project managers who oversee that work. 

All of the contract workers have at least a bachelor’s degree in linguistics, though many have master’s degrees and some have doctorates. In addition to annotating data, the temp workers write “grammars” for the Assistant, complex and technical work that requires considerable expertise and involves Google’s code base. Their situation is comparable to adjunct professors on US college campuses: they are highly educated and highly skilled, performing work crucial to the company’s mission, and shut out of the benefits and security that come with a tenured position. –The Guardian

“Imagine going from producing PhD level research and pushing forward the state of knowledge in the world to going to an annotation type job, where all you’re doing all day is annotating data; it’s very click, click, click,” said one former Pygmalion project manager. “Everyone was trying to prove themselves because everyone was trying to work for Google. The competitive edge that happened among colleagues as TVCs was severe.”

Wages for contract workers on the Pygmalion team are well above the new minimum standard, usually starting around $25 an hour for associate linguists and going up to $35 an hour for project managers. But contractors complain about subpar benefits and other indignities.

The former project manager described Adecco’s benefits plan as “the worst health insurance I have ever had”. A current contract worker earning less than $60,000 annually said they were paying $180 each month in premiums for an individual plan with a $6,000 deductible. For families, the deductible is $12,000, according to documents reviewed by the Guardian. Google declined to comment on Adecco’s pay and benefits. 

Googlers earn significantly more, and those on individual plans contribute between $0 and $53 for their health insurance and have a much lower deductible ($1,350), according to documents reviewed by the Guardian. Googlers with families pay up to $199 every two weeks, with a $2,700 deductible. –The Guardian

Accusations of wage theft

The high-pressure, labor-intensive work being done to program Google’s machine learning systems “created the incentive for temps to perform unpaid work,” according to the report, while managers took advantage of this by making clear that overtime would not be approved while at the same time assigning “unrealistic amounts of work” to employees. 

The pressure to complete assignments was “immense”, said one Googler. “In this mixed stream of messages, I think a lot of people had to make their own calls, and given the pressure, I think people made different calls.”

The Googler described the overall effect as “gaslighting”, and recalled receiving messages from management such as, “If the TVCs want to work more, let them work more.” All seven current and former employees interviewed by the Guardian said they had either experienced or witnessed contract workers performing unpaid overtime. –The Guardian

“To my knowledge, no one ever said, you need to work TVCs above their contracts, but it was set up so that it was the only way to get the expected work done, and if anyone raised concerns they would be openly mocked and belittled,” said one Google employee. 

“The 40-hour thing was just not respected,” said one former associate linguist. “It was made clear to us that we were never to log more than 40 hours, but we were never told not to work more than 40 hours.”

“The work that they assign often takes more than 8 hours,” they added. “Every week you fill out a timesheet. One person one time did submit overtime, and they were chastised. No punishment, but definitely told not to work overtime.“

“Working off the clock is the very definition of wage theft,” said seasoned labor and employment attorney, Beth Ross, who said that both Google and Adecco could face liability for unpaid wages and damages under both state and federal laws. 

According to one associate linguist, “People did [unpaid overtime] because they were dangled the opportunity of becoming a full-time employee, which is against company policy,” adding “There’s a particular leveraging of people’s desire to become full time.” 

“When I was hired, I was very explicitly told that there is no ladder,” said one current contractor. “This is not a temp-to-hire position. There is no moving up’ … But the reality on the team is very much one where there is clearly a ladder. A certain percentage of the associate linguists will get project manager. A certain percentage of project managers get converted to full time. We watch it happen, and they dangle that carrot.“

via ZeroHedge News http://bit.ly/2VVcSIM Tyler Durden

Authored by Tim Daiss via OilPrice.com,

By now, after two-and-a-half years in office, it’s obvious that President Trump’s relations with Riyadh are dictating his foreign policy, even at the expense of further enraging a Democratic-controlled Congress intent on removing him from office.

Trump’s last pro-Saudi move came on Friday week the fire-brand president declared a national emergency because of tensions with Iran and swept aside objections from lawmakers to complete the sale of over $8 billion worth of weapons to Saudi Arabia, the United Arab Emirates (UAE) and Jordan. The Trump administration informed congressional committees that it would push ahead with 22 military sales to the three Middle Eastern countries, drawing rebuke from both sides of the aisle for circumventing a long-standing precedent for congressional review of major military weapons sales.

Not only has the move infuriated Congress over what they see as presidential abuse of power, but it comes as Congress grows increasingly agitated over human rights abuses in Saudi Arabia. Riyadh has been implicated in the controversial killing of Saudi dissident journalist and U.S. resident Jamal Khashoggi in the Saudi consulate in Istanbul last October. The paper trail for the crime was traced all the way back to Saudi Crown Prince Mohammed bin Salman. Even then, Trump stood by his Saudi allies and the Royal family though it created a considerable backlash from both Democrats and Republicans and even internationally.

The Trump administration is also being called on the carpet for continued U.S. support for Saudi Arabia’s military actions in neighboring Yemen which has resulted in a large number of civilian casualties. The Royal family has also strengthened its grip domestically with a top-down authoritative rule over any hint of dissent. Last month, Saudi Arabia put to death 37 so-called terrorists, most of them Saudi citizens, for what they said were terror-related crimes. CNN reported that one was even crucified – a troubling prospect from Western and U.S. lawmakers that tie any kind of political and military support to a country’s human rights record.

Congressional angst

All of these developments have led to Congressional angst over Saudi Arabia and the president’s incessant support for the kingdom. However, Trump’s playbook sees Saudi Arabia not only as a key ally in the Middle East but as internal in helping keep global oil prices in check. Perhaps more importantly, Riyadh is key in Trump’s policy to drive Iran to its knees economically and force it to the bargaining table over its nuclear, ballistic missile and Middle Eastern hegemony purists. Yet, looking at the past 40-year record from Iran, it’s a gambit that could backfire and lead to a U.S.-Saudi military confrontation with Iran – a prospect that would roil global oil markets and hit economic growth at the same time it’s slowing due to ongoing U.S.-China trade tensions.

Moreover, Trump’s move on Friday effectively snubbed Congress which has recently blocked military arms sales to Saudi Arabia and the UAE.

Connecticut Senator Chris Murphy, a Democrat, said “President Trump is only using this loophole because he knows Congress would disapprove … There is no new ‘emergency’ reason to sell bombs to the Saudis to drop in Yemen and doing so only perpetuates the humanitarian crisis there.”

So great is the angst in Congress over Trumps’ Saudi weapons sales move that ardent Trump supporter Republican South Carolina Senator Lindsey Graham even criticized it. “I’ve got a real problem with going back to doing business as usual with Saudi Arabia,” Graham said on “Fox News Sunday.”

“Jordan is a great ally. The [United Arab Emirates] has been problematic in Yemen but are a good ally. Saudi Arabia is a strategic ally, but [Saudi Crown Prince Mohammed bin Salman] was, in my opinion, involved in the murder of Mr. Khashoggi, and he’s done a lot of other disruptive things, so I don’t support the arms sales now,” he continued.

Trump’s end game (peace and oil)

Yet, amid criticism from both sides of the aisle, Trump’s end game may at the end of the day justify its means. The president sees Iran as a major threat to not only Middle Eastern security but its nuclear development is a systemic global threat. Trump sees a strong Saudi Arabia, even with its obvious and multiple imperfections and problems, as a counterweight in the region. Without a strong Saudi Arabia, or even worse if there was regime change in the kingdom, the prospect for peace in the Middle East and the impact on global oil markets would be unprecedented in its damage. Trump may be unorthodox in how he governs, and no doubt creates considerable and seemingly never-ending blunders, but his end game should be kept in mind by both U.S. lawmakers and a watching global audience.

via ZeroHedge News http://bit.ly/2W4KtAc Tyler Durden

While the 2019 IPO market, until recently red hot and on pace for a record year…

… only to suffer the dismal initial offerings from cash furnaces Lyft and Uber which crippled investor demand for massively overvalued Silicon Valley unicorns, may soon suffer a knockout blow after WeCommunityAdjustEBITDA WeWork goes public in the near future, the whimsical provider of disruptively money-losing office space is taking a look at Plan B should its shares sink, and according to Bloomberg, is in talks with banks about arranging a $2.75 billion credit line ahead of its planned IPO, with JPMorgan as lead arranger.

In April, WeWork said it had filed paperwork confidentially with for an IPO, with its upcoming offering expected to be the biggest of the year after Uber. And yet, red flags emerged earlier this year when WeWork’s largest backers, include SoftBank, earlier this year decided against taking a controlling stake.

While securing a revolving line of credit from Wall Street often precedes an IPO as companies going public “reward banks that make big credit commitments with roles in their IPOs, with lenders sometimes offering better terms on the financing in return” according to Bloomberg, considering the size of the upcoming IPO one wonders if this is not a precaution in case of some unexpected adverse developments in the coming weeks – i.e., a market crash – crushes sentiment for new offerings (thanks Uber) and forces WeWork to WeMakeDue with what liquidity the company manages to raise post haste.

As Bloomberg REIT analyst Jeffrey Langbaym writes, “WeWork needs access to cash to secure, design and lease office space to sustain robust revenue growth. The company had $6 billion in cash as of early 2019 after burning through $2.3 billion in 2018.”

There is another problem: WeWork has a profit margin that is less than 100%, or as we noted in March, “WeWork Made $1.8 Billion In Revenue Last Year; It Lost $1.9 Billion.“

Still, a successful IPO should suffice to provide a cash buffer for the next few years. However, if that is unsuccessful… well that’s where the lending syndicate comes in.

To be sure, it won’t be WeWork first secured credit facility: in 2014 the company obtained a $650 million revolver also led by JPMorgan, which is set to expire in late 2020.

What makes the IPO even more unusual is that last year, WeWork sold 7 year junk bonds, which today closed at $93.50 , a decline from a peak of $99.63 earlier this month, and yielding a whopping 9.5% in a time when junk bonds above 6% are seen as especially risky.

And yet despite the credit market voting with its feet on a company which is expected to keep burning cash for the foreseeable future, equity investors have no problem with being part of a cap structure where not only is unlimited debt likely to be layered – we expect the new loan to be covenant “non-existant” – but where institutional investors already see substantial viability risk.

WeWork, which has ambitions to go beyond the office with businesses in apartment rentals and elementary schools and recently rebranded itself to just We Co., said in early May that its loss narrowed slightly to $264 million in the first quarter. As Bloomberg concludes, “its IPO will test public investors’ appetite for another tech-infused, cash-burning business after Uber’s disappointing debut.”

Or it may not: the probability of the IPO getting pulled is inversely proportional to where the S&P is at any given moment, and if Beijing wishes to force WeWork to pull the “market conditions” card, it just has to keep escalating the trade war with the US. Either that, or a critical mass of non-algo investors finally asks how a company that reported an actual EBITDA loss $193 million had the temerity to convert this number into a profit of $233 million just using non-GAAP adjustments to reach a “Community Adjusted EBITDA.”

 

via ZeroHedge News http://bit.ly/2wtr15w Tyler Durden

Expanding on his recent threads discussing the somewhat ominous endgame of the US-China tensions, Bridgewater CEO Ray Dalio explains in his latest note that this conflict is much more extensive than a “trade war.”

Via LinkedIn,

It is an ideological conflict of comparable powers in a small world.

It’s about:

1) China emerging to challenge the power of the U.S. in many areas and

2) these two countries having two different approaches to life­—one that’s top down and one that’s bottom up.

These conflicts extend to American and Chinese businesses, technologies, capital markets, influences over other countries, militaries, ideologies, and most everything else. They are made especially difficult because the Chinese, the Americans, and those who deal with them both are now so interdependent, with the interdependencies being both vulnerabilities of each and weapons that each can use to hurt the other. 

As someone in these negotiations wisely said, history shows that countries in conflict have seen that such conflicts can easily slip beyond their control and become terrible wars that all parties, including the leaders who got their countries into them, deeply regretted, so the parties in the negotiations should be careful that that doesn’t happen. Right now we are seeing brinksmanship negotiations, so it is a risky time.

It is widely believed that time is on China’s side so that it is in the U.S. interest to have any fight that’s going to occur happen earlier and in China’s interest to have it later. This is leading to the Trump administration’s pushing the limits. Worth keeping in mind is how Chinese and Americans fight wars differently (the Chinese more strategically by gaining relative strength and the Americans more by exchanging blows until one side gives up). While all of this enters into my thinking, what is now most important at this time of brinksmanship is seeing what actually happens next – i.e. whether we see the “tariff war” slip into an “export embargo war” intended to shut parts of the other country down. 

As explained last week in the “Beyond the Trade War: The Huawei Step,” the U.S. shutting off supplies to Huawei appears to be a step forward by the United States in weaponizing export controls.

Notably, soon after that announcement, President Xi visited the largest rare metals mine in China and a top planning organization suggested that China might reciprocate such moves by the U.S. by not selling rare metals to the U.S. Refined rare metals are a critical import that American companies don’t produce and need to get from China to produce many needed products in the U.S. such as mobile phones, magnets, night vision glasses, gyroscopes in jets, LED lights, glass, and ceramics.

I would view an increasing of export controls that are intended to shut down key areas as a major escalation of the “war.”

Building independence will happen regardless of what is negotiated because both sides have learned that they need to be protected against being squeezed in the years of increasing tensions ahead. That is a big deal because it is a major, multi-year undertaking that will take resources away from other development. Uncertainties over tariffs and future developments are causing many businesses who produce in China to export to the U.S. (or who might be affected by the fight between the U.S. and China) to rethink whether they would be better off producing in another country. These forces will be major disruptors to the specific people, companies, and governments affected by them. 

via ZeroHedge News http://bit.ly/2KivRuq Tyler Durden

House Speaker Nancy Pelosi (D-CA) claimed on Wednesday that Facebook’s refusal to remove an altered video of her proves that company was actively contributing to Kremlin interference in the 2016 US election. 

Facebook announced this week its refusal to remove a video of Pelosi which was intentionally slowed down to make her sound drunk. 

Facebook told CNN that they wouldn’t remove the manipulated video because they don’t have a policy that content must be accurate. Facebook did, however, downgrade the video’s status – slowing it’s spread after fact-check partner LeadStories published an opinion. 

Of note, this is a completely different video than the edited montage of Pelosi stammering her way through a news conference which President Trump tweeted last Friday. 

“PELOSI STAMMERS THROUGH NEWS CONFERENCE” pic.twitter.com/1OyCyqRTuk

— Donald J. Trump (@realDonaldTrump) May 24, 2019

In comments to KQED News, Pelosi slammed Facebook for refusing to remove the ‘drunk’ video of her. 

“We have said all along, poor Facebook, they were unwittingly exploited by the Russians. I think wittingly, because right now they are putting up something that they know is false. I think it’s wrong,” she said. “I can take it … But [Facebook is] lying to the public,” said Pelosi, adding “I think they have proven — by not taking down something they know is false — that they were willing enablers of the Russian interference in our election.“

Who knew President Trump and Mark Zuckerberg were Kremlin agents! 

via ZeroHedge News http://bit.ly/2JL5bDq Tyler Durden