Friday Morning: All That Jazz

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If you have to ask what jazz is, you’ll never know. — Louis Armstrong

It’s Friday. Don’t ask, just play.

If you thought FBI vs Apple was part of a plan to break Silicon Valley on encryption, it was
This will be the big buzz today: a secret “decision memo” reveals the government set out to access encrypted user data while putting on a good front about its relations with software companies. No information available about the source (or timing) of the memo; wouldn’t it be ironic if this secret memo had been hacked from a smartphone user’s data?

The Atlantic looks at the government’s attempt to force Apple to write code for their purposes as conscription. The secret memo bolsters this argument.

Looks like Apple may also claim the government is compelling speech. They’ve pulled out the big guns by hiring lawyers Ted Olson and Theodore Boutrous to work on this case.

Whiny telcos upset with Facebook eating their lunch with WhatsApp messaging
Like they couldn’t have seen this coming? Telcos in parts of the world like Central America and Europe have long charged uncompetitive rates for poor messaging service. Enter Facebook, which snapped up WhatsApp and integrated the messaging app in its social media platform. Facebook members now have a free messaging platform that works almost globally. The telcos are now upset that Facebook has eaten their text messaging profits. ¡Qué lástima! Though I admit I wonder if part if this grousing is really a front for governments who don’t like WhatsApp’s threat to intelligence access via telcos’ messaging services.

Citigroup’s Corbat gets a 27% pay increase
Too Big to Fail pays very well, for a very few. For Citigroup’s CEO Michael Corbat, it pays roughly $16.5 million this past year, up from $13 million the previous year. Corbat’s raise rewards him for Citibank’s improved fortunes, based in part on cutting less profitable businesses — like exiting retail banking in Argentina and Brazil.

Mercedes sued for not-so-clean diesel emissions
In a slightly different situation than with automaker VW, Daimler’s Mercedes is accused of selling diesel powered vehicles that do not meet emissions standards at low temperatures. The lawsuit was filed yesterday in New Jersey by a vehicle owner in Illinois, based on information published in Der Spiegel and the results of a study conducted by independent testing agency TNO for the Dutch Ministry of Infrastructure and the Environment. The problem at the heart of the suit:

“…the device in Mercedes’s diesel models turns off pollution controls at temperatures below 50 degrees Fahrenheit (10 Celsius), allowing the autos to violate emissions standards, according to the complaint.”

Mercedes did not disclose to buyers that its BlueTec technology, a system relying on use of urea-based NOX reduction, emitted NOX levels well above emissions standards at low temperatures. I would not be surprised to see more cases soon against Daimler and its Mercedes brand as BlueTec technology has been used in both passenger vehicles and commercial trucks for most of the last ten years.

On our mind: SKYNET
We haven’t forgotten the issue of U.S. military killing innocents *Oops!* from the sky based on metadata. Worth reading:

A “machine learning algorithm”? Imagine this in self-driving cars, hijacked via backdoors by hackers and governments. The ethics behind this technology must be widely debated in public now, before it moves beyond its already-abused role in drone-based warfare.

Should be an entertaining Friday; watch for government spokespersons to indulge in a lot of fancy-footwork jazz today.

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38 replies
  1. bevin says:

    Has any of the candidates for the party nominations expressed an opinion on the Apple case ?
    My guess is that they would all be in favour of Obama’s characteristic authoritarianism, (lbeing brought up in Suharto’s shadow left its mark) with the Repubs urging that Tim Cook’s fingernails be torn out while he is being waterboarded in a fiery furnace.

  2. Rayne says:

    bevin (9:56) — The Intercept posted about Sanders and Clinton responses to FBI vs Apple. IMO, Sanders may grok less about the issue than Clinton, who’s surely wanted more communications data as former SecState — hence Clinton’s happy-happy “magic pony” response.

  3. bloopie2 says:

    The Citigroup move to cut Brazil and Argentina, and the CEO compensation, both look like good moves, to me. As the linked article notes, “Citigroup has always struggled to compete with bigger Brazilian banks in the retail business, but things got worse in 2013 when the U.S. bank sold its profitable credit-card unit Credicard SA.” I see no reason why any company that at one time enters a market must, forever, stay in that market. I note also that the CEO’s pay increased some 27%, while the company’s net income more than doubled. His Total pay amounts to about two tenths of one percent of the company’s Increase in income. What’s wrong with that?

    • wayoutwest says:

      As usual another CEO gets a reward for destroying jobs after massive wealth extraction and when lower returns can be used as an excuse along with Free Trade protections to cut and run with their capital from a targeted and penetrated country such as Brazil.

      • bloopie2 says:

        The jobs in Brazil. Were they destroyed? Or sold to another bank? And who started them, anyhow? If I start a bank and open branches and hire people and all, am I obligated to keep them employed forever? If I build an auto plant in Tennessee or a chip manufacturing plant in Texas or hire a kid to cut my lawn in the summer, am I on the hook with them forever? Or if I buy one of those from someone else who started it? No. I don’t know who created the jobs, whether they were lost or renamed, etc. My comment was based on the facts given. It was not a comment on big banking or Wall Street in general. That’s a different discussion. Unless rayne did intend that to be the discussion, in which case she chose a poor opening gambit.

  4. Rayne says:

    bloopie (11:59) — First, TBTF companies are too big. What Corbat earned as CEO should really be split up across several CEOs of smaller companies, reducing risks and potentially increasing ROI to shareholders. His earnings have been bolstered by taxpayers assuming risks for which we are under-compensated and over-exposed. Second, even as a TBTF firm Corbat has been lackluster; ROI on his last year’s compensation was 3.9%. That’s completely unacceptable when the market outperformed his work because he had capital and influence TBTF had that smaller, non-TBTF don’t have.

    And as for pulling out of retail in Brazil and Argentina: where do you think growth markets are for retail banking? They aren’t in the U.S. when we overpay executives who cannot consume enough to make a market while underpaying lowest paid workers who turn income immediately around into consumption. IMO, leaving Brazil and Argentina retail is a bad move, ESPECIALLY when Apple Pay and other electronic pay systems are going to bite hard into U.S. bank payment revenues.

    • jo6pac says:

      Rayne do you think this will leave an opening for Russia and China banks since both countries are members of BRICS?

    • bloopie2 says:

      What is the evidence that pulling out of Brazil is bad for the little people? Why was that fact in the original post? That’s my only point.

  5. Rayne says:

    jo6pac (4:59) — Not really. More likely a South American bank will simply expand or a European bank will step in to fill the gap. Banco Santander is an obvious expansion opportunity given its existing presence in Spain, Portugal, South America, and ease of expansion in Spanish/Portuguese. Chinese might want to do so, but I’ll bet they are discouraged, might take an investment stake in an expansion. Not Russian unless investing. Wouldn’t be surprised if a South African like Standard Bank saw this as an opportunity to expand to new retail markets they are not in already.

    • bloopie2 says:

      Brazil economy sucks, I thought. Why would anyone want to expand there now? And hurt local banks, is that good? We seem to have a lot of international banking experts online today! Anyone?

      • wayoutwest says:

        Whatever these usurious Banksters do, stay or leave, is usually bad for the People including the Little People. Restructuring, to pad the bottom line, always means job loss and disruption even when other Banksters buy these assets.

        There may be more to this move by Citi than just reorganizing and selling their large loan portfolio, 10% of retail loans in Brazil, may be a legal looking bribe to open the door to the more lucrative institutional finance market.

  6. bevin says:

    Here’s some good news. I hope it doesn’t frighten any of Hillary’s supporters:

    “Albert Woodfox, the last imprisoned “Angola Three” inmate, who has spent over four decades in solitary confinement, was released from a Louisiana prison Friday, on his 69th birthday.”

    • orionATL says:

      re bevin @ #9

      bevin-

      yours is a truely ignorant (of american politics), inane, and vicious comment.

      you’ll discover why in about a week.

      what a slavering dog of a pack member you are.

      • bevin says:

        I take it that your comment was prompted by the hint that Mrs Clinton-who must bear a considerable responsibility for the expansion of incarceration that took place in the period between 1992 and 2000- might not be happy about the release of the last member of the Angola Three.
        Let me go further: like her husband she has made a career out of vicious bullying showcased for a racist constituency. Her record at the State Department of conspiring against democrats, assisting murderous authoritarians and organising massacres in countries such as Libya and Syria was appalling.
        It surprises me that you, a supporter of the lady’s campaign, draw attention to her character by charging a critic with inanity, ignorance and vice. Hillary is running on her record and the record is crystal clear.

        http://www.independent.co.uk/news/world/americas/us-elections/chelsea-clinton-bernie-sanders-plan-to-end-mass-incarceration-is-worrying-a6875986.html

        • orionATL says:

          bevin –

          you really need to go back to discussing academic economics. you are good there.

          your ideologically based “analysis” of american politics is as fatuous as any i have seen anywhere. you really are becoming a characture of the goofy english socialist.

          • orionATL says:

            bevin –

            here are some photos from the cleveland plain dealer, a paper actually in cleveland, ohio, where chelsea clinton spoke at a community center on feb 15, 2016.

            view the photos, bevin. i suspect that audience knows one hell of a lot more about rampant incarceration and its effects on families than you and your fatuous economic-based anaysis ever will.

            http://photos.cleveland.com/4501/gallery/chelsea_clinton_speaks_in_clev/index.html#/13

            instead of preaching to the choir here at the emptywheel site, i think you need to hustle over to cleveland, or maybe down to south carolina, and spread your insights on american politics to american voters in those places.

            i would love to be present when you tell some of those who attended (see pix) what you just wrote here at #23.

            you’d be lucky to get out with your coat :).

    • lefty665 says:

      bevin @9 Pay no attention to orion. The less of a leg he has to stand on the more hysterical and ad hominem his comments get.
      .
      Thanks Rayne for another good week. Django still astonishes and Grappelli is still awesome.

  8. martin says:

    quote”Should be an entertaining Friday; watch for government spokespersons to indulge in a lot of fancy-footwork jazz today.”unquote

    Rayne, please never use the word “jazz” in the same sentence with the word “government”. It is heresy. Fancy-footwork indeed. Politicians don’t exist on the same plane of reality as those who dedicate their entire existence to a plane of reality to which most human beings can never attain or relate…

    https://www.youtube.com/watch?v=DaUTKKD5NDg

  9. P J Evans says:

    It will surprise no one who’s been here long that DiFi is on the side of the FBI in the phone matter.

  10. Rayne says:

    martin (6:37) — LOL Jazz is improvisation, musical art based on “making sh*t up as one goes along.” Pretty sure after revelation this evening that FBI’s case was f*cked up by San Bernardino County that government has been attempting its hand at jazz. Sadly, no guarantee that trying results in art.

    Thanks for the Biréli Lagrène link, long time since I listened to his work. Sucker for guitar jazz, though I admit my faves have always been Django Reinhardt and George Benson.

    bloopie2 (7:18) — Back the truck up. Revisit my point in my post: Citigroup, a TBTF company, paid out a wickedly huge compensation package to a guy with mediocre performance. That mediocre performance included killing retail banking in two South American countries.

    TBTF corps are bad for the little people because they concentrate too much risk; it’s the little people (by way of taxes paying for insurance and bailout) who carry a disproportionate burden without any return. In the meantime, the top dog pulls down excessive compensation compared to company and industry performance.

    There are NO economies doing gangbusters right now if they relied on China’s consumers or petroleum production. However Brazil is 2/3 the size of the U.S., 7th largest economy in the world, right between France and Italy in GDP. Not exactly small potatoes, far less risky than smaller Russia, more stable based on its protectionist business policies. If Brazil’s economy is sooo bad right now, why did Citigroup kill retail banking, but retain investment banking there?

    As for the sass about international banking experts: I worked for Fortune 100 transnational corporations much of my career, about half of that time directly related to handling exports. My minor was transnational management. It’s not finance, but I do understand international business.

    • martin says:

      quote”LOL Jazz is improvisation, musical art based on “making sh*t up as one goes along.”

      Hahaha! I see your point now. The difference is ..politicians make SHIT up..musicians make up music.

      quote”Sucker for guitar jazz, though I admit my faves have always been Django Reinhardt and George Benson.”

      Indeed. As for Reinhardt, Berelli is THE guitarist for not only carrying on the gypsy tradition but expanding the genre repertoire. Here is the best example I’ve ever heard.

      https://www.youtube.com/watch?v=Ohe7bktsF8I

      As for Benson…meh. He’s an egoist. The only cut I’ve ever liked is his rendition of Miles Davis’ So “What”

  11. pdaly says:

    This quote from the article “NSA’s SKYNET Program…” had me thinking about Condi Rice being associated with a Chinese spy ring via LIWA’s or Able Danger’s computer algorithms to find al Qaeda and other spies.

    “The program, the slides tell us, is based on the assumption that the behaviour of terrorists differs significantly from that of ordinary citizens with respect to some of these properties. However, as The Intercept’s exposé last year made clear, the highest rated target according to this machine learning program was Ahmad Zaidan, Al-Jazeera’s long-time bureau chief in Islamabad.”

    • bloopie2 says:

      But your post didn’t say any of that. Go back and read. It didn’t say that Citi “killed retail banking in Brazil”, only that Citi pulled out (presumably leaving others to handle that activity.). It didn’t say that Citi was “TBTF”, and didn’t explicitly raise that argument as a point to be commented upon. And your post did not include evidence that Citi had “mediocre” performance. (If it did any of those, please point that out to me and I will apologize, absolutely.) Maybe you were implying all that, assuming that everyone who would read your post would infer that, but, I didn’t infer that. I still don’t see how Citi pulling out of Brazil is relevant. Why is it relevant? Will it hurt Brazil or its people? Will it hurt local banking? That’s my ONLY point. PLEASE understand that. I do happen to agree with you on TBTF. I just don’t understand the Brazil issue.
      .
      PS: I really like your daily posts, in case you didn’t realize that. It’s just that I have a tendency to pick at anything that’s not literally on point. My wife hates that.

  13. Ian says:

    As an addendum to Raynes “heads up” of the press reports of Friday Feb 19,2016 covering the arguments between US Magistrate Sheri Pym & her command to enforce her All Writs Act(1789) order against Apple—- we have the FINANCIAL TIMES (ft.com) reports of 0116hrs GMT Saturday Feb 20,2016/1716hrs PST Friday Feb 19,2016 under the headline:
    *
    “Argentine victory against ‘holdout’ funds” New York judge will remove financial blockade, under conditions.
    .
    Just as US Magistrate Sheri Pym could find nothing unreasonable or extraordinary in ordering Apple to write code & create a new operating systems-something Apple is advising even the Chinese government hasn’t asked Apple to do, US Judge Thomas P. Griesa in the case NML v ARGENTINA could find nothing unusual or extraordinary in ordering the entire world to obey his order, on behalf of NML,(a NYC outfit practicing the financing of lawsuits as a gambling venture [the old English legal practice outlawed by 1500 of CHAMPERTY)] , to hand over any sums of money they had passing to & from the Republic of Argentina in whatever currency they had such sums of money to his court, because he was a US Judge—& they were not.[the “blockade” referred to in the headline]
    .
    Interestingly, even though both the US State Dept & the US Treasury asked all the senior levels of the US Judiciary to correct the prima facie error, no corrective action was taken within the US Judiciary-even at the Supreme Court level.
    .
    As a direct result, with the head of the IMF (International Monetary Fund) herself having to make quite public comments of concern about the chaos-inducing actions of the US Judiciary, the IMF “invited” the US Treasury to “co-sponsor” a conference in Washington DC to arrange for all US-based financing institutions seeking to participate in the “Sovereign”(Countries & their Governments) financing marketplace to CHANGE their supervisory & dispute-settling bodies [their government agencies & courts] from the instruments of the United States of America to the International Capital Markets Association[the ICMA—www.icmagroup.org] Organized: Zurich– Offices: the City of London [thecityUK.com]. Latest figures (Sept 2015) presented before the IMF suggest that whereas in 2000—70% of all “Sovereign” debt borrowings were occurring in NYC,20% in London,10% elsewhere—– by Sept 2015, the figures were 45%:NYC 46% London:9% elsewhere(*)—-& of that 45% still in NYC— 92% of it is contractually submitting itself to the City Of London’s Court system (i.e 95+% of the world’s Sovereign’s borrowers avoid the US Judiciary like the plague)
    *
    Hopefully, Apple will prevail in its dispute with Washington DC— & if it doesn’t—can I suggest they advise all customers to “Buy Samsung-it is foreign & therefore better” & publicly explain in this country “Washington & the US electorate made me do it”?
    *
    Reference:
    (*) https://www.imf.org/external/np/pp/eng/2015/091715.pdf

  14. P J Evans says:

    Headline, LA Times business page:
    Apple and feds reveal San Bernardino shooter’s iCloud password was reset hours after attack

    Also, the feds are now saying they’d let Apple keep the hacking software the feds want them to create. (What isn’t in the headlines: that the feds would expect Apple to use it whenever the feds want.)

  15. Rayne says:

    bloopie (3:24) — When I write these short bits, I provide links to stories so people can flesh out the rest of the situation. I’m not going to dot all the Is and cross all the Ts because that’s done in the source material. Your wife probably sounds like I do when my teen starts with, “But Mom…” ~sigh~

  16. lefty665 says:

    bloopie2 @33 Have you been living under a rock since 2008? Citi is second in the list of US TBTF banks. It is behind JP Morgan Chase and ahead of Bank of America. If Rayne talked about the sky would you complain if she failed to tell you it was blue?

  17. Stephen says:

    Rayne wrote: “The NSA’s SKYNET program may be killing thousands of innocent people (Ars Technica)”
    .
    Huh? You mean SKYNET actually **exists**?
    .
    Someone in the NSA has a scary sense of humour!

  18. Rayne says:

    Stephen (7:37) — Either a scary sense of humor or a complete indifference to what it says about our foreign policy and national ethics, bordering on dickish arrogance.

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