Tag: news

It’s Not Just Blue-Collar Jobs – Insurance Claim Adjusters Replaced By “IBM Watson Explorer”

Submitted by Mike Shedlock via MishTalk.com,

Manufacturing jobs have already been decimated by robots. White collar workers are next in line.

Fukoku Mutual Life Insurance in Japan is about to replace claim adjusters with a software robot from IBM.
 

insurance-adjustor

Most of the attention around automation focuses on how factory robots and self-driving cars may fundamentally change our workforce, potentially eliminating millions of jobs. But AI that can handle knowledge-based, white-collar work are also becoming increasingly competent.

 

One Japanese insurance company, Fukoku Mutual Life Insurance, is reportedly replacing 34 human insurance claim workers with “IBM Watson Explorer,” starting by January 2017.

 

The AI will scan hospital records and other documents to determine insurance payouts, according to a company press release, factoring injuries, patient medical histories, and procedures administered. Automation of these research and data gathering tasks will help the remaining human workers process the final payout faster, the release says.

 

Fukoku Mutual will spend $1.7 million (200 million yen) to install the AI system, and $128,000 per year for maintenance, according to Japan’s The Mainichi. The company saves roughly $1.1 million per year on employee salaries by using the IBM software, meaning it hopes to see a return on the investment in less than two years.

 

Watson AI is expected to improve productivity by 30%, Fukoku Mutual says. The company was encouraged by its use of similar IBM technology to analyze customer’s voices during complaints. The software typically takes the customer’s words, converts them to text, and analyzes whether those words are positive or negative. Similar sentiment analysis software is also being used by a range of US companies for customer service; incidentally, a large benefit of the software is understanding when customers get frustrated with automated systems.

 

The Mainichi reports that three other Japanese insurance companies are testing or implementing AI systems to automate work such as finding ideal plans for customers. An Israeli insurance startup, Lemonade, has raised $60 million on the idea of “replacing brokers and paperwork with bots and machine learning,” says CEO Daniel Schreiber.

This trend will accelerate at a rapid pace once its proven. If it works in Japan, it will work here.

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US national debt soars by $100 billion. . . in just 8 hours

According to the latest statement issued yesterday afternoon by the Department of Treasury, the US national debt has reached $19,976,826,951,047.80.

That’s $19.976 trillion, as of the close of business on Friday December 30, 2016.

(The government is typically a day or two behind when it sends out these reports.)

balance

That number itself is obviously remarkable, just shy of $20 trillion.

But what’s even more astounding is that, according to the Treasury Department’s own figures, they STARTED the day with a debt level of ‘just’ $19.879 trillion.

So literally in the span of a single 8-hour workday, the US government amassed an astonishing $97 billion in debt.

That’s simply incredible– $97 billion is larger than the entire GDP of New Mexico or Luxembourg. In 8 hours.

I review these reports every single day. Needless to say, an increase of this magnitude occurs… almost never.

And when I saw it yesterday afternoon, the “Holy Shit!” that came out of my mouth caused a rush of staff into my office asking “What happened?!?”

As I recovered from my shock, I explained that the US federal government had increased its debt by nearly $100 billion in a single day, to which one of them asked,

“What did they buy?”

I thought it a brilliant question, almost child-like in its simplicity. Indeed. What did they buy?

How many aircraft carriers did they purchase?

How many colonies on Mars did they build?

Did President $20,000,000,000,000BAMA acquire a controlling stake in the Walt Disney corporation on behalf of the taxpayers of the United States?

Did Congress suddenly recapitalize the FDIC, or any one of the half-dozen insolvent US trust funds?

Perhaps they fixed a decent portion of the nation’s crumbling infrastructure.

Or maybe they just decided to send a check for almost $1,000 to every household in America.

Nope. None of the above.

The reality is that these people indebted every single taxpayer, including future generations of taxpayers who won’t even be born for decades, with a massive bill that has almost no mathematical probability of ever being paid down.

And despite this prodigious debt, the government has absolutely nothing to show for it.

What’s really amazing is that this isn’t even unusual anymore.

The national debt in the United States is already much larger, and is growing much more quickly, than the US economy.

Plus, interest rates are rising from their historic lows.

In fiscal year 2016 (which ran from October 1, 2015 through September 30, 2016), the government’s total interest bill was $432,649,652,901.12.

This works out to be an average interest rate of 2.204%, according to the Treasury Department’s most recent data from November 2016.

But it wasn’t that long ago that interest rates were MUCH higher.

Back in January 2008, for example, the average interest rate on US government debt was 4.785%.

And even that was considered quite low by historical standards.

Today’s rates are less than half that level. And it’s reasonable to expect rates to increase. In fact, that’s already happening.

In late December, the Treasury Department sold $28 billion worth of 7-year Treasury notes at a yield of 2.24%.

2.24% is still pretty cheap. But it’s nearly double the rate from just six months ago.

Back in July, the 3-month T-bill rate was just 0.02%. Now it’s more than 25 TIMES greater at 0.51%.

This is a significant increase in a short period of time.

If the government’s average interest rate returned to 2007 levels, they would be spending nearly $1 trillion each year just to pay interest.

That’s more than they currently spend on Medicare or the US military.

So as you can see, the US government is not only increasing the debt level at an astonishing rate (with absolutely nothing to show for it), but they’re going to have to start paying a LOT more interest.

Remember that they already borrow money just to pay interest on the money they’ve already borrowed.

So higher interest rates mean that they’ll have to borrow even more money to pay interest, which will cause the debt to go up even higher, requiring them to borrow even more money to pay interest.

It’s a never-ending cycle that only ends one way: default.

The idea of ‘growing their way out’ of debt is a total fantasy.

The debt level is growing much faster than the economy, so each year the hole becomes even deeper.

They’ll either have to default on their creditors, causing a massive catastrophe across the global financial system…

… or they’ll have to default on the promises they’ve made to taxpayers.

You might be thinking– “Can’t they just cut government spending?”

No. Again, not without defaulting on taxpayers.

The three biggest line items in the budget that mop up almost ALL government spending are:

– Debt interest
– Social Security & Medicare
– Military

Everything else COMBINED is trivial by comparison.

So cutting spending quite literally requires a default on the promises they’ve made to taxpayers.

This includes everything from Social Security to maintaining a stable financial system without resorting to major inflation or capital controls.

None of this means there’s going to be some spectacular collapse tomorrow morning.

The sky is not falling.

In fact, despite this debt madness, we’re living in a world full of incredible business, investment, technological, and lifestyle opportunities.

It’s truly an incredible time to be alive.

But the rapid rise in interest rates coupled with an astonishing increase in the debt creates an obvious long-term trend with major consequences that anyone would be foolish to ignore.

What’s your Plan B?

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Art Cashin On The “Multiple Personalities” Of 2017’s First Market Session

There was some confusion for those trading yesterday’s first session of the year, which started off in euphoric fashion with the Dow Jones printing once again just shy of 20,000, then slumped after crude inexplicably tumbled, prompting even JPMorgan to chime in with the following snyde commentary: “the question isn’t why stocks have come in from their highs but instead why they were so strong to begin with.”

An even better question then, is not why stocks were strong to begin with, but why did they surge in the last hour of trading, closing near session highs as they tend to “mysteriously” do so very often in past few years.

While few know the specific reasons behind yesterday’s odd market moves, here is everyone’s favorite market commentator, UBS’ Art Cashin, sharing his take on the “multiple personalities” of stocks in the first session of 2017.

From today’s Cashin’s Comments:

Stocks Show Multiple Personalities In First Session Of 2017 – As anticipated, stocks spiked sharply on the opening and held those gains for nearly an hour. Then crude suddenly began to reverse and reverse sharply. Bids in stocks began to disappear as I noted in an email to some friends:

 

“The equity rally seems to fade in reaction to a similar fade in the crude rally. Volume shrinks on the equity fade.”

 

Then, shortly after 11:00, the other shoe fell. Ford announced that they were canceling a planned factory in Mexico. This appeared to be a response to a critical tweet from Mr. Trump, issued a few days ago.

 

The Transports suddenly turned negative, led by Norfolk-Southern on the assumption of less cargo to and from Mexico. A protectionist chill swept through other stocks.

 

Equities managed to stabilize near the day’s lows just as the European markets were closing. It was a bit of a shaky stabilization; however, as further weakening in the transports looked like they might pull the Dow Industrials into negative territory.

 

That tenuous trading continued into the final two hours of trading when the market on close indications became a factor.

 

The early indications were not a factor but around 2:45, the early mild sell indications began to pair off. In reaction, the stock averages began to inch higher.

 

By 3:40, it was clear that the market on close had shifted to the buy side and markedly so.

 

With 15 minutes to go, there were 1.4 billion dollars to buy with some estimates as high as 2 billion. That seemed to spark a quick round of short covering, which helped to spike the Dow up to the +119 level by the closing bell.

 

The buying was reasonably broad with advances beating declines by 3 to 1. The multiple shifts also served to lift the volume to just under a billion shares. A rather nifty final hour rescue.

 

* * *

Consensus – Keep your eye on oil. Yesterday’s sharp reversal may signal that the OPEC rally is over. Next two weeks could be key.

 

FOMC Minutes will be interesting but most traders think the Fed is sidetracked for the next several months as they monitor the progress of the Trump initiatives.

 

Stick with the drill – stay wary, alert and very, very nimble

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‘Election Hacking’ or Voter Education? New at Reason

Last week President Obama announced sanctions against Russia in retaliation for “data theft and disclosure activities” that were intended to “interfere with the U.S. election process.” Hillary Clinton calls those activities, which revealed purloined emails that made her look bad during her unsuccessful presidential campaign, “an attack against our country” and “our electoral system” that undermined “the integrity of our democracy.”

But these overheated descriptions misleadingly equate information that guides voters’ choices with nullification of those choices, Jacob Sullum writes. A calmer, less partisan perspective suggests that what Clinton and Obama view as interference with the election process might more accurately be described as voter education, which strengthens democracy by helping its participants make better-informed choices.

View this article.

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Trump Slams “Schumer Clowns” – “Dems Own Failed Obamacare Disaster”

In an effort to front-run any plans to suggest further problems in US healthcare are due to Republican/Trump meddling, the president-elect tweeted the narrative that should be well understood when it comes to President Obama’s legacy…

This follows yesterday’s initiation of the process to repeal Obamacare and Chuck Schumer’s comments that “GOP will regret making Obamacare repeal the opening issues.”

 

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LIRR Train Derails In Brooklyn; 32 People Injured – Live Feed

A LIRR train has derailed in the Atlantic and Flatbush Avenue area of Brooklyn, with initial reports suggesting 32 people were being treated for injuries. The derailment happened at the Atlantic Terminal according to NBC and WPIX11.

Pictures on twitter showed the derailment took place on track 6, and that the train was tipped slightly at an angle.

The platform also appeared to be smoky.

As of 8:50 a.m. the MTA did not have any information on its website, NBC reported.

“I don’t know, all I remember is being on the floor,” one visibly shaken woman who had been on the train told NBC 4 New York between tears. Several people complained of neck and back injuries, though overall most wounds appeared minor.

Passengers described the train pulling into the station, followed by a crash and a loud boom, after which the train’s doors opened.

Live feed from NBC below

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Prosperity = Abundant Work + Low Cost Of Living

Submitted by Charles Hugh-Smith via OfTwoMinds blog,

An economy that only serves the prosperity of the protected top 5% is an economy doomed to rising inequality, stagnation and widespread social discontent.

If we seek a coherent context for the new year, we would do well to start with the foundations of widespread prosperity. While the economy is a vast, complex machine, the sources of widespread prosperity are not that complicated: abundant work and a low cost of living.

When work is abundant, there are opportunities for many skill levels, and employers must bid for the most productive, reliable workers. This supports wages and widespread employment.

When the cost of living is low, even low-wage households can not only get by but put a little aside if they are prudent and thrifty.

This may seem obvious, but the conditions required for work to be abundant and the cost of living to be low are not so obvious. For work to be abundant, it must be easy to start a business, easy to operate the new business, easy to make a profit so the business can survive the first few years and easy to hire employees.

All these factors require an environment of low-cost compliance with regulations, low tax rates, low costs of transactions, reasonable transport costs, reasonable cost of money (but not near-zero), reasonable availability of capital for small enterprises, local and national governments that actively seek to smooth the path of new enterprises and existing enterprises seeking to expand, and a transparent marketplace that isn't dominated by politically dominant cartels and subservient-to-cartels government agencies.

This matters because the number one cause of the high cost of living is artificial scarcity created and maintained by monopolies, cartels, and the government that serves their interests. Artificial scarcity imposed by cartels and a servile state is the primary cause of soaring costs in a variety of sectors.

There are many factors that generate artificial scarcity: regulatory capture/ regulatory moats designed to protect cartels and monopolies from competition, a lack of affordable capital available to small enterprises, thickets of regulations that don't really serve the public interest, educational institutions that don't teach the fundamentals of entrepreneurism and how to start and operate a small business, and so on.

Real-world limits also impose costs. Energy costs are rising for a variety of structural reasons; the easy-to-extract oil has been extracted, the full lifecycle costs of alternative energy sources remain substantial (maintenance is not free for the 20 year lifespan of the windmill/solar array, for example) and so on.

Land for new housing is scarce in many cities, and that imposes scarcity costs as various entities compete for the scarce resource (land).

If we look at eras of widespread prosperity, we find that work is abundant, private enterprises and trade are vibrant, the currency is stable, the cost of doing business is low, inflation and the cost of living are low, so even low-wage households can slowly improve their lot.

This doesn't just describe America in the 1950s and 1960s–it also describes the Tang Dynasty in 700 A.D. China and the Byzantine Empire in its heyday. These are the core dynamics of economies throughout history that generate and distribute widespread prosperity and opportunity.

Prosperity is limited to the few at the top when the cost of living soars. When wages for the bottom 95% stagnate while the cost of living (housing, healthcare, college, taxes, etc.) soars, the bottom 95% become poorer–though borrowing money masks this reality for a time.

Economies stagnate when the few at the top limit competition, not just for customers but for capital and political power. Economies designed to maintain an exploitive elite and its servile class of technocrat factotums become sclerotic and unproductive, as the unearned privileges of the few act as a crippling tax on the entire economy. (See Inequality and the Collapse of Privilege and Why Our Status Quo Failed and Is Beyond Reform for more on this.)

No wonder inequality is rising: the only possible output of an economy devoted to artificial scarcity and maintaining the privileges of the few at the expense of the many is rising inequality and stagnation.

We can do better, but only if we discern the systemic reasons why wages are stagnating, small business is in decline and the rich get richer while everyone else gets poorer.

An economy that only serves the prosperity of the protected top 5% is an economy doomed to rising inequality, stagnation and widespread social discontent:

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Trump Believes Assange, Schumer Promises Payback Over SCOTUS Pick, Huckabee Doesn’t Think Israel is Occupying the West Bank: A.M. Links

  • I believe Julian.President-elect Donald Trump says he believes WikiLeaks’ Julian Assange’s claim that the Russian government was not the source of the leaked DNC emails.
  • Sen. Charles Schumer (D-N.Y.) has promised to make things difficult for any Supreme Court nominee Trump puts forth.
  • Fmr. Gov. Mike Huckabee (R-Ak.) rejects the idea that Israel is occupying the West Bank, saying “There is no such thing as a West Bank…There’s no such thing as an occupation.”
  • A North Carolina female high school student was brutally slammed to the ground by a school resource officer. The incident was captured on video, the girl was reportedly trying to break up a fight between two other girls.
  • Mariah Carey is blaming Dick Clark Productions for her disastrous New Year’s Eve performance, even though Carey reportedly declined to do a soundcheck beforehand.
  • Notorious mass murderer and erstwhile cult leader Charles Manson is “seriously ill.”

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Wikileaks Offers $20,000 Reward For Info On Obama Admin Destroying Records

WikiLeaks is offering a $20,000 reward to anyone who exposes the destruction of “significant records” by a member of the Obama administration. In a tweet on Tuesday evening, Wikileaks said “We are issuing a US$20,000 reward for information leading to the arrest or exposure of any Obama admin agent destroying significant records,” however, it has not explicitly alleged that the administration is suspected of inappropriately eradicating material.

 

The surprising announcement may have been provoked by a previous tweeted in which Wikileaks hinted that the US government is quietly eradicating mentions of the organization from official statements: “‘WikiLeaks’ disappears from US govt statements. Compare 7 Oct  2016, vs 16 December, 2016 & December 29, 2016 JAR”

 

Ten minutes prior to offering the reward, WikiLeaks urged any system administrator working under Obama to become whistleblowers: “System admins: Don’t let the White House destroy US history again! Copy now, then send to WikiLeaks at your leisure.”

Embedded in the tweet was a screenshot of a 2009 email sent from Principal Deputy Counsel for the Obama administration Daniel Meltzer to James Messina, then-White House deputy chief of staff. The mail discusses a query from the National Archives as to the whereabouts of a missing and believed stolen two terabyte drive containing electronic records from the Bill Clinton administration. The email was forwarded to Hillary Clinton by aide Cheryl Mills.

As RT adds, Republicans have also run into trouble over their lack of preservation of administration emails. The George W Bush administration lost millions of emails in the lead-up to the war in Iraq, claiming they had been accidentally mislabeled. The messages were later recovered. Federal Law calls for the preservation of presidential records, however personal records are exempt.

The tweets were issued just hours before the airing of the full Sean Hannity interview with Julian Assange, which is already the topic of at least two Trump tweets, as noted earlier. In the first tweet, Trump sided with Assange’s side of the story that Russia was not involved in the hacking of the DNC, as follows “Julian Assange said “a 14 year old could have hacked Podesta” – why was DNC so careless? Also said Russians did not give him the info!” In a follow up tweet, Trump quoted Assange in bashing the US press: “Julian Assange on U.S. media coverage: “It’s very dishonest.” http://pic.twitter.com/ADcPRQifH9” More dishonest than anyone knows.”

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Goldman-Affiliated Wall Street Lawyer Is Trump’s Top Candidate For SEC Chair

Donald Trump is preparing to appoint another Wall Street proxy to the top Wall Street regulation, supervision and enforcement post. 

According to the WSJ, Wall Street M&A and IPO lawyer, Jay Clayton, is Trump’s leading candidate to become chairman of the Securities and Exchange Commission and could be announced as the nominee as soon as Wednesday.

Clayton, who met with Mr. Trump on Dec. 22, is a partner at Sullivan & Cromwell LLP, where he also worked on the 2014 IPO of Alibaba Group. His clients have included Goldman Sachs and Barclays Capital; he would succeed SEC Chairman Mary Jo White, another lawyer with a history of representing Wall Street banks before becoming a regulator. Clayton has spent his career working on the kinds of securities deals that the SEC has a hand in regulating.

Among his various listed deals are the following:

  • Ally Financial Inc. in the $4.2 billion sale of its operations in Europe and Latin America to General Motors (GM), as well as in the $4.1 billion sale of its Canadian auto finance business to the Royal Bank of
  • Barclays Capital in connection with its purchase of assets of Lehman Brothers out of bankruptcy
  • Goldman Sachs in connection with the investment of $5 billion by Berkshire Hathaway and the U.S. Treasury’s TARP Investment
  • Bear Stearns in connection with the sale of Bear Stearns to JPMorgan Chase and related matters
  • Goldman Sachs and affiliated funds in connection with various acquisitions and investments in companies involved in financial services, banking, telecom and other industries
  • Initial public offering of $25 billion by Alibaba Group Holding Limited
  • Initial public offering of $190 million by Moelis & Company
  • Initial public offering of $2.375 billion by Ally Financial and private placements of $3 billion and $1.3 billion of common stock in Ally Financial
  • Initial public offering of $230 million by Blackhawk Network Holdings
  • Initial public offering and multiple public and private offerings of equity, preferred and debt securities of Capital Product Partners L.P.
  • Initial public offering of $380 million by Oaktree Capital Group

As noted in the list above, Clayton represented Goldman when it received a $5 billion investment from billionaire Warren Buffett’s company during the peak of the credit crisis in September 2008. He’s also represented Goldman in connection with other investments and acquisitions, according to the law firm. Sullivan is a key outside legal adviser for Goldman and is more closely associated with Wall Street than perhaps any other law firm.

Clayton has a wide-ranging corporate practice spanning mergers and acquisitions, IPOs, corporate governance, and investment advice for high-net-worth families. Other matters that Mr. Clayton has worked on include advising Morgan Stanley on the sale of its physical oil-trading division and Bear Stearns on its sale to J.P. Morgan Chase & Co.—two deals shaped heavily by the financial crisis and its aftermath—and the 2014 IPO of Moelis & Co., a boutique advisory firm. He’s also represented an ownership group for the Atlanta Hawks and British Airways in its 2010 merger with Iberia.

Clayton would become the latest Trump appointee with longstanding Wall Street ties, joining former Goldman executive Steven Mnuchin, Mr. Trump’s choice for Treasury secretary; former Goldman President Gary Cohn, who will run the National Economic Council; and private-equity investor Wilbur Ross, the pick to head the Commerce Department.

As the WSJ notes, Clayton would take over the SEC at a time when congressional Republicans are pressuring the agency to loosen fundraising rules for smaller public companies, lighten its oversight of private-equity firms, and repeal executive-compensation rules opposed by corporations. He would be one of at least three new members to join the SEC this year. The agency has two unfilled commissioner posts in addition to the chairman’s role, which Ms. White will give up on Jan. 20.

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