Month: December 2019

A couple of minutes after polls closed in Easton, Pennsylvania on Election Day, the chairwoman of the county Republicans, Lee Snover, realized something had gone horribly wrong. 

When vote totals began to come in for the Northampton County judge’s race, it was obvious there was a problem. The Democratic candidate, Abe Kassis, only had 164 votes out of 55,000 ballots across 100 precincts. In an area where you can vote for a straight party ticket, it was near a “statistical impossibility”, according to the New York Times. 

When paper backup ballots were recounted, they showed Kassis winning narrowly, 26,142 to 25,137, over his opponent, the Republican Victor Scomillio. Snover said at about 9:30PM on November 5, her “anxiety began to pick up”. 

“I’m coming down there and you better let me in,” she told someone at the election office after eventually getting through to them on the phone.

Matthew Munsey, the chairman of the Northampton County Democrats who helped with the paper ballot recount said: “People were questioning, and even I questioned, that if some of the numbers are wrong, how do we know that there aren’t mistakes with anything else?”

The issue in Northampton County continues to highlight fears and mistrust over election security that the nation is feeling on a broader scale heading into 2020. The machines used in Northampton County were also used in Philadelphia and surrounding suburbs, crucial areas for next year’s Presidential election. 

Calibration of the voting ecosystem is often invoked by those who lose by a small margin. 

Snover echoed voter concerns: “There are concerns for 2020. Nothing went right on Election Day. Everything went wrong. That’s a problem.”

Voters around the country say that machines exacerbate an already grueling voting process that is replete with long lines and frustrated poll workers. 

Michelle Broadhecke of Easton, like many others who watched their Democratic candidate go down in flames in 2016, said her anxiety about elections began after Trump won. 

She said: “It made me sad because with everything that’s going on, you kind of worry about: Was something tampered with, or was it just a mistake. There’s just too much going on that you worry about those things. And you don’t want the wrong people in the wrong places.”

No study has been conducted to determine why the machines malfunctioned in Northampton County. The machines stay locked away for 20 days after the election, per state law. The prevailing theory has been a bug in the software and there have been no visible signs of outside meddling, according to a senior intelligence official. 

Or as Democrats call it, “Russian interference”. 

County officials say the machines worked as they should have, with the paper ballot backup process working as advertised. 

Katina Granger, a spokeswoman for Election Systems & Software, the manufacturer of the machines said: “We also need to focus on the outcome, which is that voter-verified paper ballots provided fair, accurate and legal election results, as indicated by the county’s official results reporting and successful postelection risk-limiting audit. The election was legal and fair.”

The automatic tests in Northampton proved to be problematic in that they didn’t even cast votes for every candidate.

The machines were rolled out and used anyway. 

 

Authored by John Mauldin via MauldinEconomics.com,

Should just being “employed” make people/workers happy?

On one level, any job is better than no job. But we also derive much of our identities and self-esteem from our work.

If you aren’t happy with it, you’re probably not happy generally.

Unhappy people can still vote and are often easy marks for shameless politicians to manipulate. Their spending patterns change, too.

So it ends up affecting everyone and everything.

Unhappy Employment

There’s this plight of people who, while not necessarily poor, aren’t where they think they should be—and perhaps once were.

This disappointment isn’t just in their minds; the economy really has changed. Yes, you can probably get a job if you are physically able, but the odds it will support you and a family, if you have one, are lower than they once were.

The US Private Sector Job Quality Index aims to give data on this… distinguishing between low-wage, often part-time service jobs and higher-wage career positions.

What they have found so far isn’t encouraging.

Looking at “Production & Non-Supervisory” positions (essentially middle-class jobs), the inflation-adjusted wage gap between low-wage/low-hours jobs and high-wage/high-hours jobs widened almost fourfold between 1990 and 2018.

Worse, the good jobs are shrinking in number. In 1990, almost half (47%) were in the “high-wage” category. In 2018, it was only 37%.

Work More, Earn Less

Much of the wage gap came not from the hourly rates, but from the number of hours worked.

The labor market has basically split in two categories with little in between.

There are low-wage service jobs in which you get paid only when the employer really needs you, and higher-wage jobs that pay steady wages.

The number of young people working in the so-called gig economy, working multiple part-time jobs, is growing. And part-time jobs generally are not high-paying jobs.

This also helps explain why so many relatively well-off people feel like they are always working and have no free time. They aren’t imagining it. Their employers really do keep them busy.

So we really have two generally unhappy groups: people who want to work more and raise their income, and people who want to work less but keep their income.

What’s the answer? We need to find one, and to do so we must talk about it. And that is possibly an even bigger problem.

Broken Politics

The national anxiety level got where it is for many different reasons. Some are largely outside our control, like the technological advances that have replaced some human jobs.

Hence political decisions need to be made.

The problem is that the ideological gap between the median Democrat and the median Republican has widened into a huge chasm in this century.

What as recently as 2004 was a mountain-shaped distribution with a small dip in between now looks more like a volcanic crater.

The simple fact is that the “center” is shrinking. It is hard to consider compromises when positions are so hardened that no compromise is allowable.

Whatever the reason for this (which is another debate), it prevents our political system from addressing important issues. This leaves an anxious population to feel either completely abandoned, or thinking it must align with one side or the other just to survive.

*  *  *

I predict an unprecedented crisis that will lead to the biggest wipeout of wealth in history. And most investors are completely unaware of the pressure building right now. Learn more here.

One week ago, we discussed  the ongoing conundrum which has stumped Wall Street strategists, namely the record outflows from equity funds, surpassing even the year of the global financial crisis…

… as stocks hit all time highs, not on earnings growth but entirely due to PE multiple expansion…

… which Goldman summarized by saying that “with S&P 500 earnings on track for  roughly zero growth from this time last year, solid returns likely would not have been possible without central bank support.”

We also discussed what JPMorgan thought would finally resolve this conundrum: in his weekly Flows and Liquidity report, JPMorgan quant Nikolas Panigirtzoglou wrote that as a result of the tremendous market performance in 2019 which would finally sucker retail investors in, he expects a “Great Rotation II” as investors finally flee bonds funds and rush to allocate money to equities:

If this view proves correct and the overall cyclical picture looks better over the coming months and quarters, retail investors are more likely to shift from a risk-off mode to a risk-on mode next year, by reversing this year’s equity fund selling and by reducing drastically this year’s extreme bond fund buying. Such a dramatic flow shift would be equivalent to another Great Rotation, i.e. a repeat of the abrupt shift away from retail investors accumulating bond funds to buying equity funds seen previously in 2013. In other words, 2020 would be the year of Great Rotation II, in a repeat of 2013 the year of Great Rotation I. – JPMorgan

Whether or not JPM’s thesis for a great flow of funds from bonds to stocks will finally come true – recall, this is the base case assumption at the start of every year, and so far it has proven wrong for 6 years in a row – remains to be seen, it led to an interesting tangent: if investors dump bonds in a year when the US budget deficit is expected to be well over $1 trillion and when foreign buyers have been increasingly shrinking their purchases of US bonds…

… just who will buy all those Treasurys the US plans to sell in 2020 if retail says no?

That just also happens to be the topic of Panigirtzoglou’s latest note, in which he looks at the consequences of his prior Great Rotation call, and concludes that if he is right, that would be particularly bad news for US Treasurys, which could find themselves with a supply/demand shortfall as high as $460 billion in 2020, a sharp reversal to this year’s $400 billion improvement.

Starting with the supply picture, JPM observes that on bond supply, 2019 saw the fourth consecutive year of increases in bond supply, rising to $3.13tr, the highest level since 2009.

Some more details: over the past four years, annual global bond supply has gone up by almost $1tr driven by both government bond and spread product supply. This $1tr increase over the past four years reflects both an increase in  government deficits led by the US, but also an increase in corporate bond supply as companies took advantage of lower bond yields globally to pre-finance their needs and increase their leverage.

The good news here is that JPMorgan forecasts that 2020 will see a significant reversal in recent years’ bond supply trend with a $375bn decrease, bringing the global annual bond supply to $2.76tr in 2020, its lowest level since 2016. This forecast of a $375bn decline in global bond supply next year is driven by an expected reduction in both government  (-$211bn) and spread product (-$164bn) supply.

The expected  reduction in government bond supply reflects a decline in net supply in the US as the Fed is no longer contracting its balance sheet and as maturing MBS are re-invested into USTs (up to a monthly cap of $20bn), which is only partially offset by a higher government deficit in the UK and Eurozone. The expected reduction in spread bond supply next year is driven by lower corporate bond issuance across the US, Europe and EM, as corporates globally appear to have pre-financed some of their needs in previous years and as they try to rein in their leverage globally. The decline in corporate bond supply globally is only partially offset by higher supply in US mortgages (MBS) next year as the Fed reinvests a portion of MBS prepayments and maturities into Treasuries and the US economy improves, and by higher supply in US Munis, leaving our total spread product supply estimate for 2020 lower by $164bn relative to 2019.

What about notable demand changes?

Here, the two biggest surprises of this year have been in bond fund demand by retail investors and in bond purchases by G4 (US, Eurozone, Japan, UK) commercial banks. The former saw close to a record high annualized pace of $850bn this year, while the latter at $640bn saw its highest level since 2009 (this surge in bond purchases may also be behind the September repo market fireworks as banks found themselves holding on to too much TSYs at the expense of cash).

For JPM both of these levels are unsustainable and the bank expects some normalization in 2020. In terms of the arguments for an expected normalization in the bond fund flow next year, JPM reminds us of the three reasons listed in last week’s  publication, based on the historical pattern following extreme bond fund flows in a calendar year, based on the response of bond fund flows to previous year’s returns and based on our expectation that retail investors will adopt more of a risk-on behavior next year in response to an improvement in the cyclical picture. As a result, the biggest US bank pencils in a deterioration in bond demand of around $600bn next year.

In listing its arguments for a “normalization” in bond purchases by G4 commercial banks in 2020, Panigirtzoglou sees three reasons:

1) Bond purchases by G4 commercial banks in 2019 were around $300bn higher than the level that would be justified by the reduction in the QE impulse between 2018 and 2019. This QE impulse was reduced by close to $760bn between 2018 and 2019, and applying a historical beta of around -0.5 would justify an increase in bond purchases by around $380bn, i.e. from -$30bn in 2018 to $350bn in 2019. Instead, we got $640bn for 2019 which is almost $300bn higher.

2) One reason for this $300bn of “excess “ bond purchases has been a bigger than in previous years expansion of G4 commercial bank balance sheets, by $4tr this year i.e. from a total size of $85tr in 2018 to $89tr to 2019. This $4tr balance sheet expansion is more than double the average pace of the previous five years. A potential normalization in commercial bank balance sheet expansion pace from $4tr this year to $1.5tr-$2tr next year should be accompanied by a normalization in bond purchases also. This implies that much of this $300bn of “excess” bond purchases should be unwound next year.

3) Commercial banks were also caught up with short duration stance at the end of last year relative to historical averages, and since then they have been struggling to move back to average by raising their bond purchases. This short duration stance is indicated by Figure 3, which measures the sensitivity of US banks’ weekly changes in net unrealized gains in their available-for-sale portfolios to changes in UST yields.

When this metric is very negative or below average it implies a long duration stance by US commercial banks and when this metric is above its historical average it implies a short duration stance. As can be seen in Figure 3 US banks appear to have shifted to short duration stance during 2018 and as a result they were caught wrong-footed this year. This short duration stance has yet to normalize according to Figure 3, something that creates upside risk to commercial bank bond purchases in 2020.

So what does this all mean for next year?

If one excludes the Fed’s T-bill purchases which – for now – do not entail duration (although they will in 2020), the increase in the QE impulse between 2019 and 2020 is $460bn. Applying a historical beta of around -0.5 would justify a decrease in G4 commercial bank bond purchases by around $230bn, i.e. from $640bn in 2019 to $410bn in 2020. Point 2) suggests that $300bn of “excess” bond purchases by commercial banks should be largely unwound next year as the pace of commercial bank balance sheet expansion normalizes. But the point on current short duration stance provides an offset as it creates upside risk to commercial bank bond purchases into 2020. As a result, JPM assumes that half of this $300bn of “excess” bond purchases by commercial banks should be unwound next year. In turn this implies a forecast of G4 commercial bank bond purchases for 2020 of $410-$150bn=$260bn, or a deterioration in bond demand of around $380bn.

Then there are the G4 central banks which saw a second year of significant downshifting in bond demand in 2019, with the 2018 reduction in bond demand of $1.1tr relative to 2017 followed by a further $750bn reduction in 2019, largely on the back of the BOJ slowdown in QE. This year’s negative impulse came as a result of the Fed continuing its balance sheet contraction up to 1 August, which saw around a $300bn decline in Treasury and MBS holdings, as well as the BoJ continuing its stealth taper and the ECB having ended its net purchases in end-2018 before re-starting purchases in November. A year ago JPM had expected around a $550bn reduction, and the majority of this year’s negative surprise came from the BoJ’s more aggressive slowing of net purchases. Moreover, when the Fed shifted back to balance sheet expansion to accommodate for the greater demand for its liabilities, it chose to do so via T-bills which is excluded for now from JPM’s supply and demand analysis.

For next year, the Fed is set to continue reinvesting maturing MBS securities up to a monthly cap of $20bn into Treasuries, which represents a re-allocation rather than a net change in aggregate bond demand. And while T-bills are excluded from a net coupon analysis, the fact that JPM’s rates researchers expect T-bill supply to be negative next year means we see a portion of the Fed’s balance sheet expansion next year likely to be conducted via Treasury purchases. For the ECB, we expect it to continue buying bonds at a €20bn/m pace for the course of 2020. Finally, the BoJ’s stealth taper process is expected to continue, with the net purchase amounts likely approaching zero. With the BoE on hold in terms of balance sheet policy, overall for the G4 central banks JPMorgan expect an improvement in bond demand of around $460bn.

Other sources of demand include official demand, such as EM reserve managers, whose net bond purchases in 2019 amount to only $20bn, which is weaker than JPM’s projection from a year ago of $130bn. For next year, JPM see essentially flat bond demand from reserve managers, as the modestly positive current account balances for EM economies have offsets from depreciation pressures on EM currencies over the balance of the year and the prospect of weaker oil price.

Then there are pension funds and insurance companies. For these buyers of bonds, JPM estimates that net bond demand for 2020 will remain at an above average pace consistent with this year’s pace of around $620bn.

Putting it all together, the combination of a $840bn deterioration in bond demand and a $375bn decrease in bond supply results in a net deterioration in the bond supply/demand balance of around $460bn in 2020, reversing this year’s $400bn improvement

In turn this implies potentially substantial upward pressure on bond yields next year particularly if JPM’s bond fund and G4 commercial bank bond purchases estimates for 2020 prove correct; this is because of all the different  components of demand or supply, these two are the ones that have exhibited the highest correlation with annual bond yield changes.

Three days after the latest terrorist attack in England on the capital’s London Bridge, a man, 51, was arrested on suspicion of murder and attempted murder after a car he allegedly drove plowed into pedestrians outside Debden Park High School in Essex, killing a 12-year-old boy and injuring five others before the driver fled the scene.

The police said two 15-year-old boys, a 13-year-old boy, a girl of 16 and a 53-year-old woman were either treated at the scene or rushed to hospital following the ordeal.

The incident happened at about 3:20 p.m. on Monday when police were called to reports that a number of pedestrians had been struck by a silver Ford KA near Debden Park High School in Loughton, a town about 21 kilometers (13 miles) northeast of London.

#BREAKING: major story developing:
A car drove in a number of children killing 1 and injuring many others outside a school in #Essex England.
Driver drove off, police are searching for the vehicle. pic.twitter.com/hWv6syxUfA

— News flash (@BRNewsFlash) December 2, 2019

“A 12-year-old local boy was taken to hospital, where he sadly died,” Essex Police said in a statement. Five others suffered non-life threatening injuries: two 15-year-old boys, one 13-year-old boy, one 16-year-old girl, and a 53-year-old woman.

“We believe that the collision was deliberate and as such we have launched a murder investigation,” Police Chief Superintendent Tracey Harman said on late Monday night.

“We are investigating whether or not this incident may be connected to another incident nearby.”

Police also revealed checks are being made to see if there is a connection to a similar incident, reported to be at Roding Valley High School, earlier in the day.

Before the arrest, Harman said police had launched a search for a local man, 51-year-old Terry Glover, in connection with the attack. “We’ve searched a number of addresses this evening in an attempt to find him and the searches for him [and the vehicle] are continuing,” she said. A possible motive was not immediately known.

Helen Gascoyne, the school’s head, said the community is ‘devastated’ by the death of one of its students.

Submitted by Gordon Johnson of GLJ Research

A few things we think are worth considering when it comes to TSLA – out of the 9 products they’ve announced and sell, they only actively make 3 of them (and demand for those three products appear to have peaked) while the other 6 products they sell are vaporware, i.e., products that do not exist – yes, you heard that right:

TSLA’s current cars in production include:

• Model 3 (ASPs and units are in severe decline, and sales were down -49% y/y in Oct. in its biggest market, the USA)
• Model X (sales have collapsed in both the US and globally)
• Model S (same as Model X)

Meanwhile, here are TSLA’s current cars/products not in production:

• Roadster (unveil was 2yrs ago)
• Semi (unveil was 2yrs ago)
• Model Y (TSLA refuses to mention how many pre-orders they’ve received here)
• Cybertruck ($100 fully-refundable deposits on a car that will likely cost $60K, or  0.167%, is the equivalent of someone putting $1.67 toward an $1,000 i-Phone & apple calling it an order)
• ATV
• FSD (to be FSD, TSLA would have had to achieve level 5 autonomy… they’re at level 2)

So… TSLA has more vaporware products (i.e., stuff that doesn’t exist) than real products for sale; and, it’s real products are seeing large negative y/y growth currently.

Oh… and what about E. Musk’s promise that:

• TSLA would have flying cars (he made this claim 322 days ago),
• TSLA would create break pads that never need to be replaced (he made this claim 336 days ago),
• TSLA would have a base on Mars in 2028 (he made this claim 432 days ago),
• TSLA would have a one hour body shop (this claim happened 437 days ago),
• he would fix the water in all Flint houses above FDA levels (he made this claim 504 days ago),
• there would be no more mass layoffs (533 days, and multiple layoffs, ago), etc.?

The point is… each claim he makes is picked up by every media site and taken as “gospel”; so, maybe the media should go to this website (link) and start holding him to some of these claims?

 

China’s Foreign Ministry said Monday that it had suspended all US warships and military aircraft from visiting Hong Kong, and also declared sanctions against several US non-government organizations (NGOs) for their support of pro-democracy protesters, reported Bloomberg.

“In response to the unreasonable behaviors of the US side, the Chinese government decides to suspend the review of requests by US military ships and aircraft to visit Hong Kong as of today,” Chinese Foreign Ministry spokeswoman Hua Chunying said.

Beijing has suspended requests by US military ships and aircraft to visit #HongKong. MOFA Spokeswoman Hua Chunying said that a number of US-based non-governmental organizations, including NED, will be subjected to sanctions from China, in today’s press briefing. pic.twitter.com/LvknrixIrD

— China Daily (@ChinaDaily) December 2, 2019

China last week announced that it would make firm countermeasures to President Trump’s signed Hong Kong Human Rights and Democracy Act that went into law.

The new law permits Washington to impose new sanctions or revoke Hong Kong’s special trading status over China’s human rights violations.

The Foreign Ministry’s response to the signing of the bill last week accused Washington of “bullying behavior,” “disregarding the facts,” and “publicly supporting violent criminals.”

Chunying said that “we urge the US to correct the mistakes and stop interfering in our internal affairs. China will take further steps if necessary to uphold Hong Kong’s stability and prosperity and China’s sovereignty.”

About a year ago, on positive signs that a deal was likely at the 2018 G20 Buenos Aires summit, China allowed the USS Ronald Reagan and other ships in its strike group to dock in Hong kong. Now it seems that China will force Hong Kong to deny port calls attempted by the US.

Chunying also said the sanctioned NGOs include the National Endowment for Democracy, the National Democratic Institute for International Affairs, the International Republican Institute, Human Rights Watch, and Freedom House.

“They shoulder some responsibility for the chaos in Hong Kong, and they should be sanctioned and pay the price,” said added.

China’s yuan weakened to 7.04 per dollar, the lowest level in at least a week, following the statement from the Foreign Ministry on Monday morning.

China Central Television reported that Beijing could take further actions on the US if there’s more interference.

Global Times editor noted that Beijing would come up with additional sanctions against the US if the Trump administration continues to interfere in Hong Kong.

These measures will have actual impact on related organizations and departments of the US side. It shows China will not allow the US to wantonly make waves on Hong Kong issue. If the US side continues to provoke over Hong Kong, China will come up with follow-up action. pic.twitter.com/e8H946fVL9

— Hu Xijin 胡锡进 (@HuXijin_GT) December 2, 2019

And as we noted last week, China spares trade in the first and second retaliations to the Hong Kong bill. Though that might not be the case in upcoming retaliations as the trade war is likely to deepen. 

The Trump administration has threatened to impose 100% tariffs on up to $2.4 billion of French imports, including champagne, after concluding that the country’s tax on digital revenues that hits large American tech companies including Google, Apple, Facebook and Amazon.com unfairly discriminated against US tech companies.

The plan was announced by the US trade representative, Robert Lighthizer, on Monday at the conclusion of an investigation into the French digital services tax, which has pitted Donald Trump against Emmanuel Macron, the French president, for months. The action is designed to pressure France to reach a new agreement on taxing digital services that doesn’t disadvantage American companies according to the WSJ. Under the process outlined by the USTR, the tariffs wouldn’t take effect until January at the earliest, giving the two sides a window to continue negotiations.

“USTR’s decision today sends a clear signal that the United States will take action against digital tax regimes that discriminate or otherwise impose undue burdens on U.S. companies,” Lighthizer said in a statement. “The USTR is focused on countering the growing protectionism of EU member states, which unfairly targets U.S. companies, whether through digital services taxes or other efforts that target leading U.S. digital services companies.”

The USTR also said that the French tax “discriminates against U.S. digital companies, such as Google, Apple, Facebook and Amazon. ”

The USTR also threatened that such tariffs could be enacted against Austria, Italy and Turkey, all of which also have digital-services taxes. The tariff action against France uses the same broad law that the U.S. has used to impose tariffs against China.

France’s digital-tax measure is the first in a series of proposed national taxes on digital services being debated across Europe.

As a reminder, French lawmakers approved the new tax in July, just hours after Lighthizer said his office would investigate the tax. The French tax, which is retroactive to the beginning of 2019, applies a 3% tax on revenue that companies reap in France from such activities as undertaking targeted advertising or running a digital marketplace.

Meanwhile, on Monday French Finance Minister Bruno Le Maire said that after asking for an international solution at the OECD level, the U.S. was backtracking. “They are now telling us that they don’t want this solution and are simply going to impose new sanctions on France,” Mr. Le Maire said, speaking on the radio. “My message is clear: We will never, never, never abandon our will to tax fairly tech giants.”

The USTR said it would hold public hearings on January 7 of 2020 and wait to receive public comments through at least January 14, giving France and the other members of the OECD more time to negotiate.

Authored by Mac Slavo via SHTFplan.com,

Technology has advanced to the point that many Americans have artificial intelligence devices in their homes. But what the majority of the sleeping masses don’t realize, is that AI is watching us and judging us.

This should concern everyone because it isn’t just tyrannies like China that are employing AI as a way to control and further enslave the population.  The United States government is doing it also – and for the same reasons – complete domination over everyone.

Artificial intelligence has tremendous power to enhance spying, and both authoritarian governments and democracies are adopting the technology as a tool of political and social control.

The potential of AI surveillance is the subject of the third installment of the Sleepwalkers podcast. The episode examines how AI consolidates power and control and asks if we can limit this troubling trend.

Data collected from apps and websites already help optimize ads and social feeds. The same data can also reveal someone’s personal life and political leanings to the authorities. The trend is advancing thanks to smartphones, smart cameras, and more advanced AI. -Wired

In fact, a 2017 algorithm developed at Stanford claimed to be able to tell if a person was gay. Even if it’s inaccurate, it will eventually be used by governments as a tool of persecution. Imagine being told AI could tell you political affiliation and whether or not you approve of the current or future regime. The outcome would be complete authoritarianism and enslavement regardless of which government chooses to use it.  And we are NOT safe from it here in the U.S. Sadly, most Americans are embracing AI with open arms.

“Take this type of technology, feed it to a citywide CCTV surveillance system, and go to a place like Saudi Arabia where being gay is considered a crime,” says Lisa Talia Moretti, a digital sociologist.

“Suddenly you’re pulling people off the street and arresting them because you’re gay because the computer said so.”

China has also embraced facial recognition and AI surveillance. The AI industry there has flourished thanks to fierce competition and unrivaled access to personal data. The rise of AI is enabling tighter government control of information, speech, and freedoms. The U.S. isn’t far behind. In some Chinese cities, facial recognition is used to catch criminals in surveillance footage, and to publicly shame those who commit minor offenses. Most troubling, AI is being used in Xinjiang, a province in Western China, to persecute Muslims. China is now exporting the technology, along with the principles of techno-repression, to countries including Pakistan, Cambodia, and Laos, through its Belt and Road Initiative.

Even if China’s AI capabilities are exaggerated, the AI boom there is having a chilling effect on personal freedom, says Ian Bremmer, an expert on global political risk and founder of the Eurasia Group. “You just need a government that is starting to get that capacity and make it known, and have a few people that are sort of strung up as examples, and suddenly everyone is scared,” he says. -Wired

Law enforcement in the U.S. is embracing AI. The podcast concludes with the New York Police Department testing technologies including facial recognition. Although AI promises to make the department more effective and even more accountable, whether we accept this troubling trend may determine whether the West sleepwalks towards its own form of technological tyranny, reported Wired. “In America, the liberty we take for granted is hard-won and fragile,” says Oz Woloshyn, the host of Sleepwalkers. “So much hangs in the balance, and the decisions we take will affect our lives profoundly, and echo through the lives of our children.”

Hillary Clinton distanced herself from Ronan Farrow when she found out the Pulitzer Prize-winning journalist was investigating friend, megadonor, and serial sexual predator Harvey Weinstein.

The 31-year-old Farrow, who served as a special adviser to Clinton on global youth issues from 2011 – 2012, told the Financial Times that he and the former Secretary of State were close until 2017, when word leaked of his investigation that would ultimately bring down the movie mogul.

“It’s remarkable how quickly even people with a long relationship with you will turn if you threaten the centers of power or sources of funding around them,” Farrow told the Times. “Ultimately, there are a lot of people out there who operate in that way. They’re beholden to powerful interests, you become radioactive very quickly.”

Farrow’s reporting via the New Yorker in October 2017 won him a Pulitzer Prize and led to Weinstein’s fall from grace, as reported by the Daily Mail.

The findings of his investigation into Weinstein, published in The New Yorker in October 2017, won him a Pulitzer Prize and led to the movie mogul’s downfall while sparking the #MeToo movement. 

Clinton reportedly accepted more than $40,000 in direct political contributions from Weinstein dating back to when she ran for senator in 1999. He also encouraged others in Hollywood to contribute to her various campaigns.

The former secretary of state took five days to respond to the reports of Weinstein’s alleged abuses – eventually saying that she was ‘shocked and appalled’ by the revelations.

‘The behavior described by women coming forward cannot be tolerated,’ she said in a statement. ‘Their courage and the support of others is critical in helping to stop this kind of behavior.’  –Daily Mail

Farrow notes in his book, Catch and Kill: Lies, Spies and a Conspiracy to Protect Predators, Clinton publicist Nick Merrill told him the Weinstein story was a ‘concern for us’ during Hillary’s 2016 run for office – and that the campaign withheld access to Clinton for an interview on an unrelated foreign policy book he was working on.

In Catch and Kill, Farrow recounted receiving a phone call from Weinstein directly, which he described in further detail to the Financial Times.

He said that Weinstein ‘went as below the belt as possible in terms of trying to dig up anything personal that he could to shake me in those moments’. 

The producer even referenced Farrow’s sister Dylan’s accusations against their father, telling him: ‘You couldn’t save someone you love, and now you think you can save everyone.’ 

Farrow said: ‘Every story I work on, there is an effort to weaponize anything and everything.’ –Daily Mail

While Weinstein has settled with many of his victims, he goes to trial in January on five charges related to two incidents from two different accusers. One says the movie mogul raped her in March 2013, and another says he forced her into giving him a blowjob in 2006. He has pleaded not guilty.

Last month Farrow took a swing at the Clintons when he said Bill Clinton was ‘credibly accused of rape’ by Juanita Broaddrick, who last year emanded an FBI investigation into her claim that the former President committed a “forcible, brutal rape” in a Little Rock, Arkansas hotel room on April 25, 1978 in which she says Clinton nearly bit her lip off. 

Broaddrick described the incident in a 2016 interview: 

And he grabbed me again, very forcefully. And started biting on my top lip. And this was extremely painful. I thought he was going to bite my lip off. And that’s when he pushed me back onto the bed.

…

I was completely dressed. I had a skirt and a blouse. He tore the waist of my skirt. And then he ripped my pantyhose. And he raped me. It was very vicious. I was just pinned down… I did not know what to do. I was so frightened. -Juanita Broaddrick, 2016

“Could Bill Clinton, if he had done what he did in 1998, survive today – or would his own party have thrown him under the bus?” asked Maher, to which Farrow replied: “I think that it is very important to interject that Bill Clinton is a different conversation,” adding “He has been credibly accused of rape. That has nothing to do with gray areas. I think that the Juanita Broaddrick claim has been overdue for revisiting.”