Facebook may get even creepier The joke that’s no laughing matter What we said to a group of DC elite
By Selva Freigedo in Albert Park Have you ever gotten a creepy Facebook friend suggestion? What I mean is, a suggestion to become (virtually) friends with someone who you have had no interaction with on Facebook…and you have no friends in common. So you think: how the heck could Facebook tell I know this person? Well, now we know. And let me tell you Facebook is in hot water for it…again. Apparently, Facebook has been collecting users’ call histories from their phones for years now. As Gizmodo reported: ‘[L]ast week, an internal Facebook email from 2015 came to light in which Facebook employees discussed the decision to add the “call and SMS history” permission on Android, saying the “growth team [would use it] for improving things like PYMK,” Facebook’s shorthand for “People You May Know.” One of the Facebookers, a product manager not on the growth team, said this was a “pretty high risk thing to do from a PR perspective” and could lead to headlines about Facebook trying to “pry into your private life in even more terrifying ways.” ‘Regardless, Facebook decided to go ahead with those permission requests and apparently no one noticed… that is until a user saw his call history with his potential mother-in-law in his Facebook folder. The internal email from 2015 documents something pretty disturbing: a scheme by Facebook to make the data grab less noticeable.’ Facebook has been involved in a lot of controversies this year, and this has taken a toll on their stock price. As you can see below, the company’s stock price has dropped 33% from its 52-week high. ..............................Advertisement.............................. | Greg Canavan here…can we speak frankly? If you value liberty, believe in small government and lament at how hard it is to steer a steady course for your wealth in such an uncertain world…then this is for you. I’m starting a new e-letter. It’s free. It’s called The Rum Rebellion. Do you crave more meaningfulness and less marketing? Then you will want to join my rebellion by clicking here. If you do, you won’t be hit with multiple emails asking you to sign up to this newsletter or that trading service. All you’ll get is our message. And our message is perhaps the most important one we could possibly spread going into 2019. The Rum Rebellion will be a uniquely Australian voice, commenting on the nexus between money, stocks, politics and economics. If you share with me a libertarian view of the world, and believe in free speech, individual freedom and personal responsibility, it is the e-letter for you. And it is free. PROVIDED you opt in by midnight this Saturday. All you need to do to be one of the first subscribers of The Rum Rebellion is click on this link. You’ll automatically start receiving it for free. | .......................................................................... |
Some are now saying that Facebook’s drop is a buying opportunity. But, before you go off buying Facebook shares, consider this. Yes, Facebook has created a service like no other, one that people want. The problem is that it can’t monetize it without using users as the commodity. Advertisers may think it’s a gold mine, but Facebook users are feeling betrayed. According to a survey from Pew Research from June this year, 74% of users have either taken a break, adjusted privacy setting or deleted the app from their phone altogether. That is, people aren’t engaging as much or as often with it. In recent years Facebook has gone on to buy Instagram and Whatsapp. While we aren’t sure how much money Facebook makes from Instagram — Facebook doesn’t break it down in their financials — the social app is becoming quite popular. Instagram could become their cash cow in the next few years. But we see some problems. For one, Facebook has already 2.27 billion active users, Instagram a billion…can they keep the same growth going? We also don’t think that Facebook’s privacy woes are over…and they could spill onto Instagram. Facebook just patented a technology that allows them to predict where you will go next. Yep, they not only want to keep tabs on where you are, but to foresee your next stop…to target you with marketing. As reported by Buzzfeed: ‘A May 30, 2017, Facebook application titled “Offline Trajectories” describes a method to predict where you’ll go next based on your location data. The technology described in the patent would calculate a “transition probability based at least in part on previously logged location data associated with a plurality of users who were at the current location.” In other words, the technology could also use the data of other people you know, as well as that of strangers, to make predictions. ‘If the company could predict when you are about to be in an offline area, Facebook content “may be prefetched so that the user may have access to content during the period where there is a lack of connectivity.”’ And while Facebook says they may never use it…then again, they might. Things could get even creepier for users in the future. Regulators are also increasingly looking into big tech. As you can see below, Facebook and Google have become the lion’s share of digital advertising here in Australia. The ACCC recently released a report on how these tech giants are taking on so much market share. And, as the report noted, it has been mostly by buying up the competition. As the ACCC wrote on the report: ‘Facebook has undertaken a considerable number of strategic acquisitions that may have served to entrench its market power. This strategy increases the probability that Facebook’s market power will persist.’ According to the report, Facebook and Instagram get about 46% of Australian display advertising revenue. The ACCC has vowed to look at both Google and Facebook more closely. And, it is no secret that US government also has big tech on their sights. As Bloomberg recently reported, US President Donald Trump has said that technology firms are in a ‘very antitrust situation’. And the US Justice Department has said that social media platforms are ‘intentionally stifling the free exchange of ideas.’ Calls for breaking up big tech are increasing. There is the risk that Facebook could be facing an antitrust break up. Or at the least, more scrutiny, fines and regulation from governments, which could also affect its share price negatively. Best, Selva Freigedo, Editor, Markets & Money ..............................Advertisement.............................. | Be one of the first in Australia to get a hold of Sam Volkering’s… In it you’ll discover: How to BUY, SELL and SECURE your cryptocurrency… How to set up your own personal crypto wallet… And the details of a brand new crypto king that could soon overtake the $112 billion behemoth that is bitcoin. To get all of this and much, much more, click here… | .......................................................................... |
The Joke That’s No Laughing Matter By Vern Gowdie in Gold Coast, Australia If the consequences were not so serious, the irony in these press releases would be funny. From Reuters on June 28, 2017… This is what Janet Yellen was telling us in June last year… ‘U.S. Federal Reserve Chair Janet Yellen said on Tuesday that she does not believe that there will be another financial crisis for at least as long as she lives, thanks largely to reforms of the banking system since the 2007-09 crash. ‘“You know probably that would be going too far but I do think we’re much safer and I hope that it will not be in our lifetimes and I don’t believe it will be,” she said.’ And this is from NBC News…just three days ago… So what’s Janet saying now (emphasis is mine)… ‘“There could be another financial crisis on the horizon, warned former Federal Reserve Chair Janet Yellen in a speech Monday night. ‘The former Fed chair, now a scholar at the Brookings Institute, said there remains an agenda of unfinished regulation. “I’m not sure we’re working on those things in the way we should, and then there remain holes, and then there’s regulatory pushback. So I do worry that we could have another financial crisis.″’ Central bankers have played the sickest of jokes on a (largely) unsuspecting public…they tricked people into believing you could cure a debt crisis with more debt. Even up to 18 months ago — while she was still Fed Chair — Janet Yellen was reassuring us the banking system was safe and we had nothing to fear in our lifetimes. So what’s changed between then and now? Have our lifespans suddenly shortened or is it time for this cruel hoax to expire? The recent volatility on Wall Street and the growing public unrest is, I suspect, the beginning of the end of the greatest fraud in history. Deflation is coming and that’s bad news for an economic engine that only runs on high octane inflation. The game of continually bringing forward future consumption (by borrowing today and repaying tomorrow) has (finally) reached its use by date. The debt stresses in the system are starting to show. All scams eventually come to an end…some just last much longer than others. Queenslanders learnt this lesson thirty years ago. The Fitzgerald Inquiry — officially titled ‘The Commission of Inquiry into Possible Illegal Activities and Associated Police Misconduct’ — was formally sanctioned in 1987 after police and political corruption in Queensland had, after so many decades, become so blatantly obvious. The corruption began in the 1940s when police protection was afforded — for a price — to SP bookmakers and prostitution. It all started out with a few dollars here and few dollars there. But as usual, people get greedy. The nickname ‘The Joke’ was given to the collection and distribution of police graft. The longer ‘The Joke’ went on, the more brazen the corrupt coppers became. Complacency breeds contempt. The tentacles of corruption spread beyond the bookies and the ladies of the night to include hard drugs and illicit gambling. Millions of dollars in dirty money were being paid annually to the bent boys in blue. The corruption went on for decades. Over the years, decent coppers tried to expose the corruption. But to no avail. Their careers were crushed by the forces of evil. Others, outside the police force, who tried to expose the fraud ended up as unsolved murder cases or imprisoned on trumped up charges. The grand finale to this whole sorry saga was the appointment of one of the corrupt ringleaders, Terry Lewis, to the position of Police Commissioner. In the end, Lewis was stripped of his knighthood (shows you what one of those titles is worth if someone of Lewis’ calibre can buy one) and he spent more than a decade in jail. The Fitzgerald Inquiry also resulted in three former Government Ministers being jailed and former Premier, the late Sir Joh Bjelke-Petersen, almost joined them in a matching set of striped pyjamas. A number of corrupt police officers turned State evidence for immunity from prosecution. There’s a correlation between the corruption that played out in Queensland over the decades and ‘The Joke’ being played out on the global economy and financial markets since the 1970s. It all started out ‘innocently' enough with the abolition of the gold standard. The period of credit expansion did not begin in earnest until after the 1980s — when interest rates began the descent from their nearly 20% highs and baby boomers started to hit their peak consumption years. Banking deregulation in the 1980s heralded in an era of lax lending standards. All forms of credit started to be peddled to consumers and businesses. Technology and globalisation (manufacturing bases being moved to low cost Asian countries) kept a lid on inflation, which in turn maintained downward pressure on interest rates. Everyone was addicted to this credit fuelled economic growth model. Wages increased, house values increased, share markets rose, government giveaways increased. There were those who questioned the sustainability of this model. But they were in the minority and easily drowned out. The longer the model kept delivering on the upside, the more discredited the voices of dissent became. An army of PhD economists (brainwashed by tertiary institutions devoted to the Keynesian model) were employed to spread the message of ‘the more the merrier’. Not enough growth? Print, borrow and spend more. Simple. Easy money was on offer and we took it without really thinking about the consequences of our actions. The subprime debacle in 2008 should have heralded in a Fitzgerald-type Inquiry into the actions of Central Bankers and their role in perpetrating this growth fraud on the global economy. But far too many high-ranking people were in on ‘The Joke’ — Wall Street CEOs, politicians of all stripes, bank executives and senior bureaucrats. There was no way they wanted a spotlight shone on their activities…they had way too much to lose. Instead, the bagmen on Wall Street were bailed out. Greater quantities of even cheaper money were released into the economy by every major central bank. Asset prices took off — the ‘everything bubble’ was created and attention was once again diverted from ‘The Joke’. But this Joke is not funny. It has serious repercussions for anyone living in a modern society. The smoke and mirrors stimulus of the past decade is being found out…this is why share markets are getting nervous. As more cracks start to appear — mortgage stress in Australia; yellow vests in Paris; Brexit uncertainty; the viability of Italian banks; trade wars; US corporate debt — the more the sustainability of this model will be questioned. The national media attention on the rampant corruption in Queensland is what brought the whole house of cards falling down. With regards to ‘The Joke’ being played on the global economy and financial markets, it’ll be the reverse. The whole house of cards will fall down first and then media scrutiny will turn on Bernanke, Yellen, ECB and RBA officials. They’ll all be hauled before nationally convened Commissions to account for their actions. The distilled version of their long winded responses will be along the lines of…‘no one saw this coming…it was the perfect storm.’ Rubbish. It was their policy responses that sanctioned the continuation of this fraudulent growth model. As with the Fitzgerald Inquiry and other judicial sideshows put on to quell public disquiet, we might see a token few sacrificed to appease the crowd. The rest will skulk off somewhere and be looked after by those who reaped significant rewards from ‘The Joke’. As for the crowd, well, ‘The Joke’ is on us. ‘The Joke’ provided plenty of good and profitable times while it lasted. However, as ‘The Joke’ unravels, it’ll have devastating consequences…destined to reverberate for decades to come. This Joke is no laughing matter. Regards Vern Gowdie, Editor, The Gowdie Letter ..............................Advertisement.............................. | Introducing: The most compelling Canadian pot play for 2019 (that you’ve almost certainly never heard of) |
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What We Said to a Group of DC Elite By Bill Bonner in Delray Beach, Florida First, Bloomberg reports that: ‘US government debt is on track this year to rise at the fastest pace since 2012, as a stronger economy fails to keep pace with the wave of red ink that’s rising under the Trump administration. ‘Total public debt outstanding has jumped by $1.36 trillion, or 6.6 percent, since the start of 2018, and by $1.9 trillion since President Donald Trump took office, according to the latest Treasury Department figures. The latter figure is roughly the size of Brazil’s gross domestic product.’ Still, the Dow rose yesterday, as the papers reported ‘hints of progress’ in the China/US trade war. But wars are easier to start than to stop. Stuff happens that neither party anticipated…which leads to other stuff…which, typically, leads to regrettable conclusions. In the present case, we expect the Trump team is looking for a way to quietly drop the war and turn to other headline-making spats. But now, with a high-level Chinese technology executive behind bars, China’s hackles are up…and it is likely looking for ways to retaliate, while keeping its merchandise flowing to the US. Shutdown war Meanwhile, Republicans are looking for a way to drop the ‘shutdown’ war with the Democrats. They’re afraid a real shutdown would hurt them worse than their adversaries. But who can back down without looking like a chump? And as we’ve seen over the last few days, nobody wants to look like a chump even if it is the best thing to do; chumps have fewer mating opportunities. For our part, here at the Diary, we would encourage the president to stick with his shutdown plan. Not because we’d like to see the wall go up — it is a waste of money — but simply because we’d like to see the government shut down. It would be a good reminder to people that they can’t trust the feds or depend on them for their support. And it would be a good rehearsal for when the feds finally run out of money and can’t keep the jig up any longer. We were describing this grim future to a group in Washington on Monday night. ‘Tax cuts can give you a short-term boost,’ we explained. ‘But the deficits are almost permanent. And they get worse as more people retire…and the wars continue. And now, mathematically and politically, there is no way to turn around. The election of Donald J Trump was probably the nation’s last chance to avoid disaster.’ ‘Well then…how will this all end up?’ came the softball question. It was a meeting with a group of insiders…the DC elite…only two blocks from the White House. We had given them our view — without much time to explain it in detail — that the money was fake, the interest rates were fake, the news was fake, the statistics were fake…and the boom, too, was largely fake. We have a bubble economy, not an economy on a solid footing of rising wages, productivity, sales, and profits. This was a Washington crowd, however. They guffawed and protested; they couldn’t imagine a problem that couldn’t be solved by federal ‘policy.’ They couldn’t conceive of a disaster that couldn’t be averted by the smart people in the nation’s capital. And they couldn’t believe that there was any facet of life that couldn’t be bent to suit them. ‘Government built the interstate highway system,’ they said, holding out Eisenhower’s program from 50 years ago — perhaps the last successful US infrastructure program — as proof that the feds know what they are doing. They proposed another big infrastructure ‘investment’ to get the economy back on track, in case of another crisis. We ignored their protests. Instead, we answered their question. How it will end ‘I’ll tell you how it will end,’ we began. ‘The last crisis never corrected the mistakes of the previous boom; it wasn’t allowed to. Instead, the feds cut it off with their TARP program and ZIRP (zero interest rate policy). ‘They poured about $5 trillion — fiscal and monetary stimulus — into the economy. Of course, they didn’t have $5 trillion, so they had to borrow the money. Or invent it out of thin air. ‘The super-low interest rates they pushed onto the economy encouraged everyone to borrow rather than save. And so now, the debt problem is worse than ever. ‘So the end will begin with another debt crisis. Most likely, businesses won’t be able to refinance their loans. The stock market will fall about 50% or more. ‘Bonds will go up…in the short run…as investors try to save themselves from stocks. Real estate and other assets will fall. ‘We know what will happen next. Donald Trump and the Fed will panic. Both will react to a downturn by trying to restore the bubble economy. ‘The Fed will cut rates. But it only has 225 basis points worth of rates to cut. So, in order to make a cut equal to the last one it made in 2008-2009, it will have to go about 2.5% into negative territory. And it will buy stocks as well as bonds — just like the Japanese have done. ‘And the Trump team won’t sit idly by, either. That’s when you’ll get your big infrastructure program. We’ll see a trillion-dollar boondoggle. And then the deficits will really explode.’ ‘And then what?’ asked one of the group, sceptically. ‘Then, we enter the gates of Hell. Merry Christmas.’ We do not expect to be invited back. Regards, Bill Bonner ..............................Advertisement.............................. | PROJECT: U On 2 July, a world-class energy initiative kicked-off in the South Australian outback. And it has the potential to send three ASX listed miners sky-high by up to 1,750% starting today. Click here for everything you need to know. |
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From the Archives... More Fear Creeping into the MarketBy Selva Freigedo | December 13, 2018 What the Year-End Close Means for Crude Oil… By Jason Stevenson | December 12, 2018 ‘Prepare for a Severe Collapse in the Housing Market’ — OECDBy Selva Freigedo | December 11, 2018 Surviving a Weakening Australia By Selva Freigedo | December 10, 2018 What Can You Learn From Airbnb’s Newest Venture?By Selva Freigedo | December 7, 2018 |