The Market Ticker
Commentary on The Capital Markets- Category [Corruption]
2018-01-16 11:21 by Karl Denninger
in Corruption , 222 references
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Oh rotten (or, more-likely, mythical) heart of Jesus for not striking the Googleplex with an asteroid...

Google's Arts & Culture app was first launched in 2016, offering "virtual access" to some of the most famous art collections in the world, and many stories about arts and culture from around the world. The latest update of the app, however, makes use of Google's extensive knowledge of machine-learning-based facial recognition, and the front camera of your smartphone, to find your fine art doppelganger... just 'cause.

The new feature lets you record a selfie and receive a list of portrait artworks your self-portrait resembles. While the user interface is extremely simple, Google is using highly sophisticated facial recognition algorithms to compare your facial characteristics to the portraits among the 70,000+ works of art in its Google Art Project database.

Uh huh.  Note that this is not available in many other nations.

Why not in, for example, the EU?

Because the EU now has a data protection law that prohibits retention and abuse of personal information and thus such an "app" unless it protects your private data such as your face, while it has it, and then deletes it, is illegal.

So do you really think this is about the virally-taken up "purpose" allegedly put forward -- to be the "fun source" of comparing your mug to that of portrait artworks?  Google is really going to expend the storage, transmission and compute resources to do this "for you" for no revenue-generating purpose for them whatsoever?

BULL****!

The most-likely and obvious actual purpose to build a facial recognition database of everyone in the country both for Google's and the government's use for whatever the hell they want so that they can sell that to anyone with a camera pointing anywhere, instantly identifying you no matter where you go anywhere in public or, for that matter, in private homes and businesses.

Google claims it won't store or use the photo for any other purpose but what recourse will you have if it is later discovered they're lying?  Let's remember that Google has recently been caught lying when it comes to Android location data; even though you had it shut off they were collecting your location through both visible WiFi networks and cell location data and using it.

Did they face any sanction whatsoever for being caught in that lie?  Did anyone go to prison for lying, or was the company even fined and forced to disgorge any (say much less all) of the value they obtained therein back to the consumers who had their location data collected while they had it explicitly turned off on their phone?

NO.

Everyone involved in that company -- just like the rest of so-called "big tech" -- needs to go to prison -- right now.

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2018-01-11 13:06 by Karl Denninger
in Corruption , 155 references
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Since the 1990s the Internet sales tax issue has revolved around an older USSC decision known colloquially as Quill.

Quill was a mail-order office products company and states came after them for sales tax in their jurisdictions.  The Supreme Court ruled that absent nexus, that is, a significant connection to the state, the firm had no obligation to collect or remit nor could it be sued as there was no jurisdiction.

Amazon tried this crap for years by putting their warehouse operations under separate "captive" LLCs and similar in an attempt to try to claim they had no nexus.  This slowly collapsed on them as states threatened to sue (suits Amazon knew damn well they'd lose too); the bad news is that there was no retroactive payment and nobody went to jail for what was a pretty-blatant act of tax evasion (which is illegal.)

However, Amazon only did a part of it.  They now compute, collect and remit for items they sell themselves but do not do so for "third party" listings on their site -- which is an ever-increasing percentage of their "retail" business.

Here's the problem: Their argument of not having nexus since they're just "listing" someone else's product is demonstrably false and trivially shown to be so.

Why?

Because the money paid by the customer is forced through Amazon's remittance channels.

Consider the case of a company in Alabama that happens to have product displayed in Florida via some means.  Maybe it's on a computer server in Florida or on a banner, or somewhere else.  Doesn't matter.

If the Alabama business takes the order over the phone and processes it on their own payment system -- that is, neither the money or the product's warehousing and shipment implicate nexus, then the Alabama business can refuse to collect and pay Florida sales tax.  That's what Quill held.

However, if to find, examine and buy the product the money must pass through a firm with Florida nexus then you have nexus and tax is due!  Period.

Well Jeff nozzleface Bezos?

All of these Amazon "marketplace" orders in fact pass directly through Amazon's payment system which is how they deduct their commission and, if they provide fulfillment service then the product passes through Amazon's product handling system too.

Amazon has nexus in essentially every State.

Therefore Amazon has a legal duty to assess, collect and remit sales tax on every sale made on their site no matter whether it's "Shipped and sold by" or is a third-party seller listing because they are not just providing an advertising medium (which would not implicate nexus) for a fee but instead are actually handling the money at minimum (and frequently the packaging and shipping too) and that is the definition of nexus.

This applies to eBAY too if the payment goes through PayPal or other "linked" payment system. Only if none of fulfillment and the handling of the money are not done by eBAY can it claim to be merely an "advertising medium" and thus avoid nexus.

Oh, and Bezos and his ilk need to all go to prison for tax evasion at the same time.

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2018-01-09 12:10 by Karl Denninger
in Corruption , 217 references
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Were there anything approaching the Rule of Law in this country Intel would be bankrupt by now.

Let's leave aside their claim, made publicly, that their chips were operating "as designed."  Maybe so, but the question then becomes did you know they were vulnerable and yet proclaimed on a continued basis that the ring design you used was secure?

See, the problem isn't that Intel made a mistake.  We know they did.  There are two different attack vectors involved here and Meltdown doesn't impact anyone but Intel (AMD and ARM are not vulnerable) and the Meltdown bug, which Intel is vulnerable to, is the far-more serious problem because it allows cross-protection boundary access to data.  In other words the allegedly-secure encryption keys in said protected parts of the environment are not secure.

Companies make mistakes all the time.  But what we now know is that Intel knew of the problem six months or so ago and yet continued to manufacture and ship chips that they knew were vulnerable in this manner.

Worse, their CEO sold a huge amount of stock -- all but the board-required minimum holding -- after the company became aware of the flaw.

Why did not Intel shut down the production line and recall everything in the pipeline until they could get a new photomask and start producing chips with the issue mitigated once they became aware of the problem?

Because Intel would have taken a huge financial hit, that's why; it would have cost them billions in sales.

Instead Intel sold into the market chips they knew were insecure and the operating system changes required to work around the flaw, which at the time did not existwould materially impact performance.

Where are the damned indictments?

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2018-01-08 10:07 by Karl Denninger
in Corruption , 227 references
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Let's start with Cuomo and others, and make clear to both state governors and their legislatures that introducing, passing or signing a bill that constitutes a fraud upon the federal government by its very nature will be met with an immediate criminal felony indictment.

The Federal Government needs to make clear that this sort of game won't just be taken to court; the people who attempt same will be arrested and prosecuted for felony tax evasion.

 by tickerguy

Folks, the law is clear and that there are already schemes out there that arguably meet the same sort of criminal standard doesn't mean we should look the other way.  To the contrary.

To be a charitable contribution you cannot receive anything of value in return for the alleged donation.  If you do then you must take off the entirety of the received value from the alleged charitable contribution you deduct.

For example, let's say I make a $500 donation to my church.  As the church is a 501c(3) I can deduct that.  However, if the church as a consequence of my donation invites me to a $200-a-plate dinner (it's free market value) then I can only deduct $300 of the $500, because I received something worth $200 as a consequence of my "contribution."

This is long-standing federal law.

So were a state to, for example, set up a scheme where you could "donate" to your district school and take that off your taxes in an attempt to game the SALT change that's disallowed because you received something of value (the state tax reduction) for the alleged "donation."  If you then allegedly take the so-called "charitable" deduction you have committed the federal offense of tax evasion because your so-called "charitable deduction" is false; you claimed it on something you got value for and as such it's already disallowed.

In past years when I was running MCSNet I basically always itemized (because it was the better choice) and thus took charitable deduction for those contributions I made to charities of various sorts.  However, in some cases I got something of value back, such as a set of tickets to a show or similar, and the value of same had to be taken off the deduction.  In this case the value of same is dollar-for-dollar determinable since it would result in a dollar-for-dollar deduction from the state or local (property, usually) tax owed and thus same is disallowed.

This requires no new laws or interpretations -- the federal tax code has been this way since I have been earning money and paying taxes!

This is not a mistake or an interpretation; the state and local authorities are well-aware of the fact that any value received for a charitable donation must be subtracted dollar-for-dollar from the alleged deduction and as such attempting such in state law is a knowing ruse and thus a federal, and felony-level at that, criminal act.

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2018-01-04 07:00 by Karl Denninger
in Corruption , 230 references
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Now this is amusing...

Hinting there's a "there" there: Per the Guardian: “ 'You realise where this is going,' [Bannon] is quoted as saying. 'This is all about money laundering. Mueller chose [senior prosecutor Andrew] Weissmann first and he is a money-laundering guy. Their path to f---ing Trump goes right through Paul Manafort, Don Jr and Jared Kushner … It's as plain as a hair on your face.' "

Uh, probably right.  And probably ugly too.

Never mind that if true this isn't "Russian Election Interference" either; it's violations of sanctions that have been out there for a long time and money laundering to cover it up.  There's nothing generally illegal about engaging in transactions with foreign entities unless you try to either evade taxes on the gains or are engaging in transactions with a sanctioned entity.

Then it's big trouble.

It also becomes a charge that would be nearly-impossible to justify a pardon over, since you cannot argue that the sanctions are "improper" or otherwise indefensible.  In other words you cannot raise a "process" argument; sanctions against individuals and foreign firms/governments are something we claim to honor all the time including right now with North Korea.  As such pardoning anyone for an offense of that sort is exactly the kind of act that could give rise to an impeachment bid within the Republican party.

Nobody is, of course, paying any attention to this as a "risk" but that IMHO is idiotic.

The risk is real and so will be the consequences if it plays out that way.

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