economics

Business as usual. In. Out. Hello. Goodbye.

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Profits from organized crime are typically passed through legitimate businesses, often exchanging hands several times and crossing borders, until there is no clear trail back to its source—a process known as money laundering.

But with many businesses closed, or seeing smaller revenue streams than usual, hiding money in plain sight by mimicking everyday financial activity became harder. “The money is still coming in but there’s nowhere to put it,” says Isabella Chase, who works on financial crime at RUSI, a UK-based defense and security think tank.

The pandemic has forced criminal gangs to come up with new ways to move money around. In turn, this has upped the stakes for anti-money laundering (AML) teams tasked with detecting suspicious financial transactions and following them back to their source. […]

According to the United Nations Office on Drugs and Crime, between 2% and 5% of global GDP—between $800 billion and $2 trillion at current figures—is laundered every year. Most goes undetected. Estimates suggest that only around 1% of profits earned by criminals is seized. […] The problem for criminals is that many of the best businesses for laundering money were also those hit hardest by the pandemic. Small shops, restaurants, bars, and clubs are favored because they are cash-heavy, which makes it easier to mix up ill-gotten gains with legal income. […]

Older systems rely on hand-crafted rules, such as that transactions over a certain amount should raise an alert. But these rules lead to many false flags and real criminal transactions get lost in the noise. More recently, machine-learning based approaches try to identify patterns of normal activity and raise flags only when outliers are detected. These are then assessed by humans, who reject or approve the alert.

This feedback can be used to tweak the AI model so that it adjusts itself over time. Some firms, including Featurespace, a firm based in the US and UK that uses machine learning to detect suspicious financial activity, and Napier, another firm that builds machine learning tools for AML, are developing hybrid approaches in which correct alerts generated by an AI can be turned into new rules that shape the overall model.  

{ Technology Review | Continue reading }

Originally created from chickens too old to lay eggs, McNuggets are now created from chickens with unusually large breasts. They are stripped to the bone, and ground up into a sort of chicken mash, which is then combined with all sorts of additives and preservatives, pressed into familiar shapes, breaded and deep-fryed, freeze-dried, and then shipped to a McDonald’s near you.

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{ In many states, especially in the South and Midwest, traffic at fast-food restaurants is now higher than it was before the restrictions | Washington Post | Continue reading }

C’est la vie, say the old folks

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{ While the Great Recession in 2007–2009 reduced wealth in all age groups, the broader long-term trend has been that the wealth of older age groups (65-75+) has increased, while the wealth of successive cross-sections of younger age groups (25-54) has fallen. | Brookings Economic Studies | PDF }

All the leaves are brown, and the sky is grey

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In Germany and China, they already reopened all the stores a month ago. You look at any survey, the restaurants are totally empty. Almost nobody’s buying anything. Everybody’s worried and cautious. And this is in Germany, where unemployment is up by only one percent. Forty percent of Americans have less than $400 in liquid cash saved for an emergency. You think they are going to spend? You’re going to start having food riots soon enough. Look at the luxury stores in New York. They’ve either boarded them up or emptied their shelves, because they’re worried people are going to steal the Chanel bags. The few stores that are open, like my Whole Foods, have security guards both inside and outside. We are one step away from food riots. There are lines three miles long at food banks. That’s what’s happening in America. You’re telling me everything’s going to become normal in three months? That’s lunacy. […]

They just decided Huawei isn’t going to have any access to U.S. semiconductors and technology. We’re imposing total restrictions on the transfer of technology from the U.S. to China and China to the U.S. And if the United States argues that 5G or Huawei is a backdoor to the Chinese government, the tech war will become a trade war. Because tomorrow, every piece of consumer electronics, even your lowly coffee machine or microwave or toaster, is going to have a 5G chip. That’s what the internet of things is about. If the Chinese can listen to you through your smartphone, they can listen to you through your toaster. Once we declare that 5G is going to allow China to listen to our communication, we will also have to ban all household electronics made in China. So, the decoupling is happening. We’re going to have a “splinternet.” It’s only a matter of how much and how fast. […]

I was recently in South Korea. I met the head of Hyundai, the third-largest automaker in the world. He told me that tomorrow, they could convert their factories to run with all robots and no workers. Why don’t they do it? Because they have unions that are powerful. In Korea, you cannot fire these workers, they have lifetime employment. But suppose you take production from a labor-intensive factory in China — in any industry — and move it into a brand-new factory in the United States. You don’t have any legacy workers, any entrenched union. You are going to design that factory to use as few workers as you can. […] But you’re not going to get many jobs. The factory of the future is going to be one person manning 1,000 robots and a second person cleaning the floor. And eventually the guy cleaning the floor is going to be replaced by a Roomba because a Roomba doesn’t ask for benefits or bathroom breaks or get sick and can work 24-7. […]

There’s a conflict between workers and capital. For a decade, workers have been screwed. Now, they’re going to be screwed more. […]

Millions of these small businesses are going to go bankrupt. Half of the restaurants in New York are never going to reopen. How can they survive? They have such tiny margins. Who’s going to survive? The big chains. Retailers. Fast food. The small businesses are going to disappear in the post-coronavirus economy. So there is a fundamental conflict between Wall Street (big banks and big firms) and Main Street (workers and small businesses). And Wall Street is going to win.

{ Nouriel Roubini | NY Mag | Continue reading }

photo { Susan Meiselas, Soldiers search bus passengers along the Northern Highway, El Salvador, 1980 }

Neighbors from Hell

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related { Spite fence | Fontainebleau Hotel Corp. v. Forty-Five Twenty-Five, Inc }

Rock, get up, get down, miuzi weighs a ton

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Enter Spotify, a platform that is definitely not the answer. In fact, it only exacerbates such conundrums. Yet for now it has manipulated the vast majority of music industry “players” into regarding it as a saving grace. As the world’s largest streaming music company, its network of paying subscribers has risen sharply in recent years, from five million paid subscribers in 2012 to more than sixty million in 2017. Indeed, the platform has now convinced a critical mass that paying $9.99 per month for access to thirty million songs is a solid, even virtuous idea. Every song in the world for less than your shitty airport meal. What could go wrong? […]

Indeed, Spotify’s obsession with mood and activity-based playlists has contributed to all music becoming more like Muzak, a brand that created, programmed, and licensed songs for retail stores throughout the twentieth century. In the 1930s, the company prioritized workplace soundtracks that were meant to heighten productivity, using research to evaluate what listeners responded to most. […]

Spotify playlists work to attract brands and advertisers of all types to the platform. […] We should call this what it is: the automation of selling out. Only it subtracts the part where artists get paid.

{ The Baffler (2017) | Continue reading | Thanks Tim }

I want to grow my own food but I can’t find bacon seeds

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ExxonMobil, Shell, and Saudi Aramco are ramping up output of plastic—which is made from oil and gas, and their byproducts—to hedge against the possibility that a serious global response to climate change might reduce demand for their fuels, analysts say. Petrochemicals, the category that includes plastic, now account for 14 percent of oil use and are expected to drive half of oil demand growth between now and 2050, the International Energy Agency (IEA) says. The World Economic Forum predicts plastic production will double in the next 20 years.

{ Wired | Continue reading | Thanks Tim }

previously { The missing 99%: why can’t we find the vast majority of ocean plastic? }

photo { Kate Ballis }

Is there ever a day that mattresses are not on sale?

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The prospect of data-driven ads, linked to expressed preferences by identifiable people, proved in this past decade to be irresistible. From 2010 through 2019, revenue for Facebook has gone from just under $2 billion to $66.5 billion per year, almost all from advertising. Google’s revenue rose from just under $25 billion in 2010 to just over $155 billion in 2019. Neither company’s growth seems in danger of abating.

The damage to a healthy public sphere has been devastating. All that ad money now going to Facebook and Google once found its way to, say, Conde Nast, News Corporation, the Sydney Morning Herald, NBC, the Washington Post, El País, or the Buffalo Evening News. In 2019, more ad revenue flowed to targeted digital ads in the U.S. than radio, television, cable, magazine, and newspaper ads combined for the first time. It won’t be the last time. Not coincidentally, journalists are losing their jobs at a rate not seen since the Great Recession.

Meanwhile, there is growing concern that this sort of precise ad targeting might not work as well as advertisers have assumed. Right now my Facebook page has ads for some products I would not possibly ever desire.

{ Slate | Continue reading | Thanks Tim }

related { Amazon CEO Jeff Bezos says his company is developing a set of laws to regulate facial recognition technology that it plans to share with federal lawmakers. }

Three metamorphoses of the spirit do I designate to you: how the spirit becometh a camel, the camel a lion, and the lion at last a child.

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Some examples of people quickly accomplishing ambitious things together.

Dee Hock was given 90 days to launch the BankAmericard card (which became the Visa card), starting from scratch. He did. In that period, he signed up more than 100,000 customers.

[…]

On August 9 1968, NASA decided that Apollo 8 should go to the moon. It launched on December 21 1968, 134 days later.

[…]

The Empire State Building. Construction was started and finished in 410 days.

{ Patrick Collison | Continue reading }

Three quarks for Muster Mark!

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In 2016, London-based DeepMind Technologies, a subsidiary of Alphabet (which is also the parent company of Google), startled industry watchers when it reported that the application of artificial intelligence had reduced the cooling bill at a Google data center by a whopping 40 percent. What’s more, we learned that year, DeepMind was starting to work with the National Grid in the United Kingdom to save energy throughout the country using deep learning to optimize the flow of electricity.

Could AI really slash energy usage so profoundly? In the three years that have passed, I’ve searched for articles on the application of AI to other data centers but find no evidence of important gains. What’s more, DeepMind’s talks with the National Grid about energy have broken down. And the financial results for DeepMind certainly don’t suggest that customers are lining up for its services: For 2018, the company reported losses of US $571 million on revenues of $125 million, up from losses of $366 million in 2017. Last April, The Economist characterized DeepMind’s 2016 announcement as a publicity stunt, quoting one inside source as saying, “[DeepMind just wants] to have some PR so they can claim some value added within Alphabet.” […]

Many of McKinsey’s estimates were made by extrapolating from claims made by various startups. For instance, its prediction of a 10 percent improvement in energy efficiency in the U.K. and elsewhere was based on the purported success of DeepMind and also of Nest Labs, which became part of Google’s hardware division in 2018. In 2017, Nest, which makes a smart thermostat and other intelligent products for the home, lost $621 million on revenues of $726 million. That fact doesn’t mesh with the notion that Nest and similar companies are contributing, or are poised to contribute, hugely to the world economy.

{ IEEE Spectrum | Continue reading }

‘But as the power of Hellas grew, and the acquisition of wealth became more an objective, the revenues of the states increasing, tyrannies were established almost everywhere.’ –Thucydides

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“Financial machine learning creates a number of challenges for the 6.14 million people employed in the finance and insurance industry, many of whom will lose their jobs — not necessarily because they are replaced by machines, but because they are not trained to work alongside algorithms,” said Marcos Lopez de Prado, a Cornell University professor. […]

Nasdaq runs more than 40 different algorithms, using about 35,000 parameters, to look for market abuse and manipulation in real time.

{ Bloomberg | Continue reading }

related { 90% of high-tech job growth concentrated in just 5 cities: Boston, San Francisco, San Jose, Seattle and San Diego }

photo { Matthew Reamer }

We are advised the waxy is at the present in the Sweeps hospital and that he may never come out!

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Ethos Capital, a new commercial investment firm founded in the past few months in Boston, has 2 staff and only one major investment: a deal to acquire the 501c3 non-profit [Public Interest Registry] that currently runs the .org domain (valued at a few $B), for an undisclosed sum.

This was initiated immediately after ICANN decided in May, over almost universal opposition, to remove the price cap on .org registrations with no meaningful price protections for existing or future registrants.

{ The Longest Now | Continue reading }

Internet Society (ISOC) has sold the .org registry Public Interest Registry (PIR) to private equity company Ethos Capital. […] PIR generated $101 million in revenue in 2018 and contributed nearly $50 million to Internet Society. […]

Ethos Capital is a new private equity firm lead by Erik Brooks. Brooks was at Abry Partners until earlier this year. Abry Partners acquired Donuts and installed former ICANN President of Global Domains Akram Atallah in the top spot there. […] The other person at Ethos is former ICANN Senior Vice President Abusitta-Ouri.

{ Domain Name Wire | Continue reading }