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Story 1: President Trump Closing Press Conference At G-7 Summit Meeting in Biarritz, France — Unity — Videos —

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Kyle Bass

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Kyle Bass
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J. Kyle Bass
Born September 7, 1969 (age 49)

Residence Dallas, TexasUnited States
Nationality American
Alma mater Texas Christian University (B.B.A.)
Occupation Founder & Chief Investment Officer,
Hayman Capital Management

J. Kyle Bass (born September 7, 1969) is an American hedge fund manager. He is the founder and principal of Hayman Capital Management, L.P., a Dallas-based hedge fund focused on global events.[1]

In 2008, Bass successfully predicted and effectively bet against the U.S. subprime mortgage crisis by purchasing credit default swaps on subprime securities which, in turn, increased in value when the real estate bubble burst.[2]

Despite his early success in predicting subprime mortgages, he has received criticism for subsequent poor performance of investments.[3] Bass has made prominent bets based on predictions of debt crisis in Japan and European sovereign debt, and shorted the Chinese yuan premised on a predicted collapse in the Chinese banking system. His fund has also challenged patents held by drug companies and shorted their stocks. His Japanese and European strategies have not been major successes and the Chinese yuan short led to severe losses for his fund in 2017.[4][5] The drug patent challenge campaign fizzled after several legal setbacks.[6]

Contents

Early life

Bass was born on September 7, 1969, in Miami, Florida, where his father managed the Fontainebleau Hotel. His father later moved the family to Dallas, Texas where he managed the Dallas Convention and Visitors Bureau.[7] Bass attended Texas Christian University on an academic and Division I diving scholarship. In 1992, Bass graduated with honors, earning a B.B.A. in finance with a concentration in real estate.[8]

Career

Before founding Hayman Capital Management in 2005, Bass briefly worked at Prudential Securities from 1992-1994 before joining Bear Stearns in 1994.[9] At Bear Stearns, he rose through the ranks rapidly, becoming a senior managing director at the age of 28 – among the youngest in the firm’s history to carry such a title.[2][8]

In 2001, he joined Legg Mason, signing a five-year deal to form the firm’s first institutional equity office in Texas. Bass told his hiring managers, “In five years and one day, I [will] be launching my own firm.”[9] While at Legg Mason, Bass advised hedge funds and other institutional clients on special situation investment strategies.[2]

In December 2005, when Legg Mason sold the portion of the business where he worked, Bass left Legg Mason and started Hayman Capital Management to serve as the investment manager to a “global special situations” hedge fund that he planned to launch. Bass launched Hayman Capital Management, L.P. with $33 million in assets under management – $5 million he had saved on his own and the balance he had raised from outside investors.[9] Shortly after launching the hedge fund in February 2006, Bass became convinced that there was a residential real-estate bubble in the United States one of the few investors to successfully predict and benefit from the subprime mortgage crisis, bringing him notoriety in the financial services industry.

In 2007, Bass testified as an expert witness before the U.S. House Financial Services Subcommittee on Capital Markets and Government-Sponsored Enterprises. During his testimony, he addressed: i) the role of credit rating agencies in the structured finance market and ii) policy measures that could be taken to minimize inherent conflicts of interest between rating agencies and issuers.[10]

In 2010, Bass testified before the Financial Crisis Inquiry Commission. During his testimony, he addressed his analysis of the factors that caused the crisis.

After enjoying success in predicting the subprime mortgage crisis and moderate success with debt in Greece and Japan, Bass would make a string of poor bets, leading to a dramatic downsizing of his fund. In April 2014, Bass was among a very few defenders of GM for its failure to address a defect that had been tied to 13 deaths. Hayman at the time owned eight million shares of G.M., making it Hayman’s single biggest holding,[11] Coming to the defense of GM, Bass said on CNBC that of the 13 passengers who had died owing to the defect, 12 “either weren’t wearing their seatbelt or were under the influence of alcohol.” [12] Bass admitted in a late 2014 interview that it had been “a tough year” for Hayman due to owning a lot of GM stock, which was the fund’s biggest position in 2014.[13]

After the losing year in 2014, investor’s pulled out nearly a quarter of Hayman’s capital and the firm was forced to liquidate most of its stock holdings.[14] Bass called 2015 one of his fund’s worst years.[15] By early 2019, Hayman had $423.6 million in discretionary assets under management, down from $2.3 billion at the end of 2014.[16]

Fund performance

The long term performance of Hayman Capital’s flagship fund is described by the New York Post as “small caliber”.[14] In the period from 2008 to mid-2015, the flagship fund experienced a very modest annualized performance of 1.56%.[14] The flagship fund had a tremendously successful year in 2007, having gained 212%, based on the subprime mortgage meltdown bet that brought fame to Bass.[14] The fund also gained 16% in 2012 based on bets on Greek debt. The fund lost 1.4% in 2014 and suffered its worst year in 2017 with a 19% loss (in contrast to a 19% surge of the S&P 500) due to Hayman’s misplaced short on a collapse in the Chinese yuan.[14][5]

Investment positions

Subprime mortgages

Bass first began formulating his subprime strategy after he met with an investment banker from New York while attending a wedding in Spain where they discussed how and why the Subprime Mezzanine CDO business existed.[17][18] After returning to the US, Bass hired several private investigators to determine the ease of obtaining a mortgage. Bass spent a significant amount of time studying the residential mortgage market and performed research to identify which residential mortgage backed securities (RMBS) composed of low-quality mortgages were most likely to default. This investment thesis was expressed by purchasing credit default swaps against the securitizations he deemed to be most unstable, which essentially was a manner of shorting the bonds using synthetic instruments. After purchasing the positions for his flagship fund in 2006, Bass raised additional capital for a special fund dedicated exclusively to capitalizing on the opportunity that existed in the market place. Bass managed or advised over $4 billion of positions in subprime RMBS.

In December 2007, after a wave of foreclosures had swept across the US, Bass was featured on Bloomberg TV as making a fortune betting against these subprime securities.

Europe and Japanese debt “doomsday”

After the subprime debt crisis occurred, Bass decided that it was the symptom of a more significant problem with debt and made predictions about debt “doomsday” in Europe and Japan. In 2009 he warned about the possibility of defaults by major countries over the next 3 years.[19] As of 2010, 10-15% of his portfolio was involved in bets against European and Japanese sovereign debts.[20] He went as far predicted that 2012 would be a “doomsday year” for Europe and spoke of a looming breakup of the Eurozone, which, he declared, would lead to defaults in Japan and the United States. He stated in June 2012, “Europe goes first, then Japan and finally the United States.”[21]

Bass has since 2012 also predicted a “full blown crisis” in Japan describing its approach to financing debt as a Ponzi scheme similar to Bernie Madoff‘s investment scam. Most experts have disagreed with his analysis.[22][23] Cullen Roche criticized Bass’s Japan analysis in August 2010, noting that Bass comparing Japan to the EU was an error, since their monetary systems are wildly different. Roche stated “people still fail to understand that a nation with monetary sovereignty that is the supplier of currency in a floating exchange rate system never has a problem funding itself.”[24] In May 2012, Business Insider agreed, faulting Bass’s analysis, since debt-to-GDP ratios do not reflect the interest rate or credit risk of a nation. The Business Insider noted that in a nation that borrows its own currency, public spending finances borrowing.[25]

He has been vocal in public appearances about future calamities stemming from financial meltdown. September 14, 2011, Bass maintained on CNBC that Greece’s only way out of its debt mess was a restructuring. Bass noted that despite the strife it would bring to Greece it was the only measure the nation could take. He added that within a year all of Europe would be in default as well.[26] In a speech reported on January 1, 2014, he assured the audience of his confidence that the next few years would be rife with turmoil, including the eruption of major wars. In his speech, he claimed that with the growing debt and inability to pay it off, eventually social unrest will lead to violent outbreaks. Bass finished his speech stating “War is coming – just as it has throughout history.” [27]

Chinese banking collapse

Starting in July 2015, Bass made a multiyear bet against the Chinese yuan based on a predicted banking collapse in China.[28] Bass would close out his position against the Chinese currency in early 2019 when the predicted devaluation of the currency didn’t occur.[28]

Bass argued in 2015 that the Chinese banking system was undercapitalized and its foreign reserves would be insufficient in a crisis. Bass predicted a hard landing for the Chinese economy following a bank crisis and a severe devaluation of the Chinese currency, variously given as “somewhere between 15%-20%” and “30 to 40 percent”.[29][30]

Hayman suffered its worst year in 2017 with a loss of 19% due to the strengthening of the Chinese yuan.[5]

Drug patent challenge campaign

Bass has attempted to profit from filing and publicizing patent challenges against pharmaceutical companies while also betting against their shares.[31][32] After 2 years of setbacks in his effort, Bass by 2017 ended his patent challenges.[6]

In 2015, Bass organized the Coalition For Affordable Drugs (CFAD) to use the inter partes review (IPR) process to challenge patent validity.[33][34] When he initiated this practice in January 2015, he claimed that his motive was to encourage competition in the manufacture of pharmaceuticals and thus bring down prices.[35]

Bass filed a total of 35 patent challenges, in collaboration with Erich Spangenberg who has been called “the world’s most notorious patent troll”,[3] including 33 filed by CFAD and two filed by Bass personally on a not-for-profit basis.[36]

In June 2015, Celgene received permission from the U.S. Patent and Trademark Office to file a motion seeking sanctions against the CFAD for allegedly abusing the patent-review process. The Wall Street Journal noted that this development was “being closely watched because it raises the possibility that patent officials may put an end” to Bass’s patent-challenge scheme. Celgene also told the patent office, through counsel, that CFAD had threatened to challenge its patents unless Celgene met CFAD’s demands.[37]

In October 2016, Bass prevailed in the case, with USPTO invalidating the two Celgene Corp patents related to its cancer drugs Revlimid, Pomalyst, and Thalomid at issue.[38] However, one year later Celgene was able to convince the Patent Trial and Appeal Board to re-hear the case.[39]

Political relationships

Trump administration

Bass is described by a ProPublica story as a friend of Tommy Hicks Jr, a private investor, who was a hunting buddy to Donald Trump Jr. and had further ties to the Trump administration.[40] According to the investigative story on improper links between Hicks and the Trump administration, Hicks had obtained a hearing for Bass with high level officials at an interagency meeting at the Treasury Department to air views on China.[40] This meeting was at the time Bass held a large short position counting on the fall of the Chinese currency.[40]

Cristina Fernandez de Kirchner

The BBC has described Bass as having a “good relationship” with Argentina’s president Cristina Fernandez de Kirchner.[41] In February 2014, Bass said that Argentinian bonds represented a profitable opportunity and called Argentina most “interesting” nation for investments. He was virtually alone in this assessment, with one observer noting the poor state of the Argentine economy. The IB Times noted that the country had “cheated creditors seven times since it gained independence from Spain in 1816,” most recently defaulting on its debt in 1989.[42] When the Argentine government defaulted on its debt in July 2014, Bass supported the move and criticized the bondholders, notably Elliott Management and Aurelius Capital, that, with the support of U.S. federal judge Thomas Griesa, had held out for full payment. Echoing Argentine President Cristina Fernandez de Kirchner, he called these creditors “vultures,” said that they were “holding up 42 million people from progress,” and were holding Argentina for “ransom”.[43] On August 27, 2014, Bass accused Elliott’s Paul Singer of “holding poor countries as hostages,” prompting The New York Post to comment in an editorial the next day that Bass had “sounded more like Argentina’s leftist economy minister Axel Kicillof than a US hedge-fund manager.” [44]

Philanthropy

Bass serves on the board or in an advisory role for a number of charities and organizations.

He has advised the University of Texas System Investment Management Company (UTIMCO), a public university endowment since 2010.

He also current serves or has served on the board of a number of organizations including the University of Virginia Darden School of Business Advisory Group for the Richard A. Mayo Center for Asset Management, Texas Department of Public Safety Foundation, Business Executives for National Security, Comeback America Initiative, Troops First Foundation and Capital for Kids.[45][46][47][48][49][50]

References …

External links

https://en.wikipedia.org/wiki/Kyle_Bass


China has been seeking to turn American spies for decades. But the rules of the game have changed. About 10 years ago, Charity Wright was a young U.S. military linguist training at the elite Defense Language Institute Foreign Language Center at a base called the Presidio in Monterey, California. Like many of her peers, Wright relied on taxis to visit the city. There were usually a few waiting outside the base’s gate. She’d been assigned to the institute’s Mandarin program, so she felt lucky to frequently find herself in the cab of an old man who told her he’d emigrated from China years ago. He was inquisitive in a way she found charming at first, letting her practice her new language skills as he asked about her background and family. After several months, though, she grew suspicious. The old man seemed to have an unusually good memory, and his questions were becoming more specific: Where is it that your father works? What will you be doing for the military once you graduate?Wright had been briefed on the possibility of foreign intelligence operatives collecting information on the institute’s trainees, building profiles for potential recruitment, given that many of them would move on to careers in intelligence. She reported the man to an officer at the base. Not long after, she heard that he’d been arrested and that there had been a crackdown in Monterey on a suspected Chinese spy ring.

Wright went on to spend five years as a cryptologic language analyst with the National Security Agency, assessing communications intercepts from China. Now she works in private-sector cybersecurity. As a reservist, she still holds a U.S. government clearance that allows her access to classified secrets. And she’s still the target of what she suspects are Chinese espionage efforts. Only these days, the agents don’t approach her in person. They get in touch the same way they reached Kevin Mallory: online. She gets messages through LinkedIn and other social-media sites proposing various opportunities in China: a contract with a consulting firm, a trip to speak at a conference for a generous stipend. The offers seem tempting, but this type of outreach comes straight from the Chinese-spy playbook. “I’ve heard that they can be very convincing, and by the time you fly over, they’ve got you in their lair,” Wright told me.

The tactics she saw from the old man in Monterey were “cut and dry HUMINT,” or human intelligence, she said. They were old school. But those tactics have been amplified by the tools of the social-media age, which allow intelligence officers to reach out to their targets en masse from China, where there’s no risk of getting caught. Meanwhile, intelligence experts tell me, Chinese intelligence officers have only been getting better at the traditional skills involved in persuading a target to turn on his or her country.

Donald Trump has made getting tough on China a central aspect of his foreign policy. He has focused on a trade war and tariffs aimed at rectifying what he portrays as an unfair economic playing field—earlier this month, the U.S. designated China as a currency manipulator—while holding onto the idea that China’s powerful leader, Xi Jinping, can be an ally and a friend. U.S. political and business leaders for decades pushed the idea that embracing trade with China would help to normalize its behavior, but Beijing’s aggressive espionage efforts have fueled an emerging bipartisan consensus in Washington that the hope was misplaced. Since 2017, the DOJ has brought at least a dozen cases against alleged agents and spies for conducting cyber- and economic espionage on behalf of China. “The hope was, as they develop, as they become more wealthy, as they start being a part of the club of developed nations, they’re going to change their behavior—once they get closer to the top, they’re going to operate by our rules,” John Demers told me. “What we’ve seen instead is [China] becoming better resourced and more methodical about the theft of information.”

For the past 20 years, America’s intelligence community’s top priority has been counterterrorism. A generation of operations officers and analysts has been geared more toward finding and killing America’s enemies and preventing extremist attacks than toward the more patient and strategic work that comes with peer competition and counterintelligence. If America is indeed entering an era of “great power” conflict with China, then the crux of the struggle will likely take place not on a battlefield, but in the race for information, at least for now. And here China is using an age-old human frailty to gain advantage in the competition with its more powerful adversary: greed. U.S. officials have been warning companies and research institutions not just of the strings that might be attached to Chinese money, but of the danger of corrupted employees turned spies. They are also worried about current and former U.S. officials who have been entrusted with protecting the nation’s secrets.


When I told William Evanina, America’s top counterintelligence official, Wright’s story about the cab driver in Monterey, he replied: “Of course.”

Spy rings operating out of taxis are relatively unoriginal, he told me, and have long been an issue around U.S. military and intelligence installations. An FBI and CIA veteran who is now the director of the National Counterintelligence and Security Center, Evanina has a suspicious mind—and perhaps one of the country’s worst Uber ratings. He sees the risk of intelligence collection and hidden cameras in any hired car, he told me, and if a driver ever tries to make small talk, he immediately shuts it down.

Knowing someone’s background can help an intelligence agency build a profile for potential recruitment. The person might have medical bills piling up, a parent in debt, a sibling in jail, or an infidelity that exposes him or her to blackmail. What really worries Evanina is that so much of this information can now be obtained online, legally and illegally. People can ignore Uber drivers all they want, but a good hacker or even someone savvy at mining social media might be able to track down targets’ financial records, their political views, profiles of their family members, and their upcoming travel plans. “It makes it so damn easy,” he said.

Security breaches happen with alarming regularity. Capital One announced in July that a data breach had exposed about 100 million people in America. During one of my conversations with Wright, she mused that whatever information the old man in the taxi might have wanted to glean from her, all that and much more may have been revealed in the 2015 breach of the U.S. Office of Personnel Management. In that sophisticated attack, widely believed to have been carried out by state-sponsored Chinese hackers, an enormous batch of data was stolen, including detailed information the government collects as part of the process of approving security clearances. The stolen information contained “probing questions about an applicant’s personal finances, past substance abuse, and psychiatric care,” according to Wired, as well as “everything from lie detector results to notes about whether an applicant engages in risky sexual behavior.”

Russia, the U.S. adversary that is often included with China in discussions of “near peer” conflict, has a modus operandi when it comes to recruiting spies that is similar to America’s, Evanina said. While some of their intelligence efforts, such as election interference, are loud and aggressive and seemingly unconcerned with being discovered, Russians are careful and targeted when trying to turn a well-placed asset. Russia tends to have veteran intelligence operatives make contact in person and proceed with care and patience. “Their worst-case scenario is getting caught,” Evanina told me. “They take pride in their HUMINT operations. They’re very targeted. They take extra time to increase the percentage of success. Whereas the Chinese don’t care.” (This doesn’t mean that the Chinese can’t also be targeted and discreet when needed, he added.)

“What you have is an intelligence officer sitting in Beijing,” he said. “And he can send out 30,000 emails a day. And if he gets 300 replies, that’s a high-yield, low-risk intelligence operation.” Concerning those who have left government for the private sector—and who sometimes keep their clearance to continue doing sensitive government work—it can be hard to know where to draw the line. Evanina said China will sometimes wait years to target former officials: “Your Spidey sense goes down.” But “your memory is not erased”—that is, they’ve still got the information the Chinese want.

(Alicia Tatone)

Often, Chinese spies don’t even have to look too hard. Many of those who have left U.S. intelligence jobs reveal on their LinkedIn profiles which agencies they worked for and the countries and topics on which they focused. If they still have a government clearance, they might advertise that too. Buried in the questionnaire Evanina filled out for his Senate confirmation is a question asking whether he had any plans for a career after government. “I currently have no plans subsequent to completing government service,” he wrote. When I asked him about this, he admitted that this is becoming less common among intelligence officials his age. (He’s 52.) “All of my friends are leaving like crazy now because they have kids in college,” he said. “The money is [better]. It’s hard to say no.”

If a former intelligence officer lands a job at a prominent government contractor, such as Booz Allen Hamilton or DynCorp International, he or she can expect to be well compensated. But others find themselves in less lucrative posts, or try to strike out on their own. Evanina told me that Chinese intelligence operatives pose online as Chinese professors, think-tank experts, or executives. They usually propose a trip to China as a business opportunity. “Especially the ones who have retired from the CIA, DIA, and are now contractors—they have to make the bucks,” Evanina said. “And a lot of times that’s in China. And they get compromised.”

Once a target is in China, Chinese operatives might try to get the person to start passing over sensitive information in degrees. The first request could be for information that doesn’t seem like a big deal. But by then the trap is set. “When they get that [first] envelope, it’s being photographed. And then they can blackmail you. And then you’re being sucked in,” Evanina said. “One document becomes 10 documents becomes 15 documents. And then you have to rationalize that in your mind: I am not a spy, because they’re forcing me to do this.”

In the cases of Mallory, Hansen, and Lee, Evanina said, the lure wasn’t ideology. It was money. Money was also the lure in two similar cases, in which suspects were convicted of lesser charges than espionage. Both apparently began their relationship with Chinese intelligence officers while still employed in sensitive U.S. government jobs.

In 2016, Kun Shan Chun, a veteran FBI employee who had a top-secret security clearance, pleaded guilty to acting as an agent of China. Prosecutors said that while working for the agency in New York he sent his Chinese handler, “at minimum, information regarding the FBI’s personnel, structure, technological capabilities, general information regarding the FBI’s surveillance strategies, and certain categories of surveillance targets.” And in April, Candace Claiborne, a former State Department employee, pleaded guilty to conspiracy to defraud the United States. According to the criminal complaint, Claiborne, who had served in a number of posts overseas including China, and held a top-secret security clearance, did not report her contacts with suspected Chinese agents, who provided her and a co-conspirator with “tens of thousands of dollars in gifts and benefits,” including New Year’s gifts, international travel and vacations, fashion-school tuition, rent, and cash payments. In exchange, Claiborne provided copies of State Department documents and analysis, prosecutors said.

Evanina’s office in Bethesda, Maryland, features a so-called Wall of Shame, on which hang the photographs of dozens of convicted American traitors—a testament to the struggles that have always plagued the U.S. intelligence community. The Cold War, for example, was marked by disastrous leaks from people such as the CIA officer Aldrich Ames and the FBI agent Robert Hanssen. Larry Chin, a CIA translator, was arrested in 1985 on charges of selling classified information to China over the course of three decades. That came during the so-called Year of the Spy, as the FBI made a series of high-profile arrests of U.S. government officials spying for the Soviet Union, Israel, and even Ghana. The Wall of Shame is currently being renovated, and when it’s unveiled in the fall, it will feature several new faces.Whenever a current or former U.S. intelligence officer has been turned, it takes years to assess the full repercussions. “We have to mitigate that damage for sometimes a decade,” Evanina said.


Two decades ago, Chinese intelligence officers were largely seen as relatively amateurish, even sloppy, a former U.S. intelligence official who spent years focusing on China told me. Usually, their English was poor. They were clumsy. They used predictable covers. Chinese military intelligence officers masquerading as civilians often failed to hide a military bearing and could come across as almost laughably uptight. Typically their main targets tended to be of Chinese descent. In recent years, however, Chinese intelligence officers have become more sophisticated—they can come across as suave, personable, even genteel. Their manners can be fluid. Their English is usually good. “Now this is the norm,” the former official said, speaking with me on condition of anonymity due to security concerns. “They really have learned quite a bit and grown up.”

Rodney Faraon, a former senior analyst at the CIA, told me that the Mallory and Hansen cases show just how far China’s espionage services have come. “They’ve broadened their tactics to go beyond relatively easy targets, from recruiting among the ethnically Chinese community to a much more diverse set of human assets,” he said. “In a sense, they’ve become more traditional.”

In his recently published bookTo Catch a Spy: The Art of Counterintelligence, James Olson, a veteran of the CIA’s clandestine service and its former chief of counterintelligence, breaks down the basics of China’s espionage services and how they operate. The Ministry of State Security (MSS), its main service, focuses on overseas intelligence. The Ministry of Public Security focuses on domestic intelligence, but also has agents abroad. The People’s Liberation Army, which focuses on military intelligence, “has defined its role broadly and has competed with the MSS in a widerange of economic, political, and technological intelligence collection operations overseas, in addition to its more traditional military targeting.” Olson adds that “the PLA has been responsible for the bulk” of China’s cyberespionage, though the MSS may also be expanding in this realm. Both the MSS and PLA, meanwhile, “make regular use of diplomatic, commercial, journalistic, and student covers for their operations in the United States. They aggressively use Chinese travelers to the US, especially business representatives, academics, scientists, students, and tourists, to supplement their intelligence collection. US intelligence experts have been amazed at how voracious the Chinese have been in their collection activity.”

If veteran American spies are vulnerable to Chinese espionage, U.S. companies may be faring even worse. In some cases, targeting the private sector and targeting U.S. national security can mix. A former U.S. security official, who now works for a prominent American aviation company that is involved in highly sensitive U.S. government projects, told me that the company had a suspected intelligence collector linked to China in its midst. “I would say that he’s had tradecraft training,” this person said, speaking anonymously due to an ongoing law-enforcement investigation.The former security official was hired by the company to monitor such threats, and initially found the lack of effective prevention measures and training at the company jarring. “When I walked in and got the briefing here, I thought it was a joke … Now we do take some measures to protect against [insider threats], but in a sense it’s fox in a henhouse,” this person said. “We as an industry are woefully inadequate at protecting ourselves from a foreign-intelligence threat.”

In a sense, going after American spies and government officials is fair game in the intelligence world. The U.S. does the same against the Chinese. “Intelligence operations are universal, with every country—other than a few isolated island-states who are concerned mainly with the danger of approaching cyclones—engaging in them, to one degree or another,” Loch K. Johnson, a professor emeritus at the University of Georgia, the author of Spy Watching: Intelligence Accountability in the United States, and one of America’s foremost intelligence scholars, told me in an email. He added that while almost every nation fields capabilities to both collect information about its adversaries and defend itself against espionage, a much smaller number have meaningful networks for covert action, which he described as “secret propaganda; political and economic manipulation; even paramilitary activities.” Both America and China count themselves among this group.

“The United States used propaganda, political, and economic ops during the Cold War and (somewhat less aggressively) since. China returns [the] favor,” Johnson said. “Both are major powers and have a full complement of intelligence capabilities, aimed at each other and other significant targets around the world. This means that the United States (like China in reverse) is constantly trying to learn what China is doing when it comes to military, economic, political, and cultural activities, since they may impinge upon U.S. interests in Asia and elsewhere.” To that end, the U.S. uses signals intelligence, geospatial intelligence, and HUMINT, Johnson said, “all aided by a diligent searching through the available (and voluminous) [open-source intelligence] materials for background.”

But he noted a key difference between the two countries: China’s aggressive approach to economic espionage. These Chinese efforts are partly what have prompted U.S. officials and politicians to turn to a newly popular refrain that China’s not playing by the rules. U.S. officials insist that American intelligence agencies do not target foreign companies with the aim of helping domestic ones. (The line between American spying on foreign companies to advance the country’s economic and strategic interests and whether that spying helps U.S. companies can be blurry.) “What we do not do, as we have said many times, is use our foreign intelligence capabilities to steal the trade secrets of foreign companies on behalf of—or give intelligence we collect to—U.S. companies to enhance their international competitiveness or increase their bottom line,” James Clapper, then the director of national intelligence, said in 2013, amid revelations that the NSA had spied on foreign companies.Dennis Wilder, who retired as the CIA’s deputy assistant director for East Asia and the Pacific in 2016, told me that the Chinese approach to espionage is defined by the fact that its leaders have long seen America as an existential threat. “This is a constant theme in Chinese intelligence—that we’re not just out to steal secrets, we’re not just out to protect ourselves, that the real American goal is the end of Chinese Communism, just as that was the goal with the Soviet Union,” he said.
Wilder, who still travels to the country as the director of an initiative for U.S.-China dialogue at Georgetown University, told me that Chinese officials regularly bring up past American covert action such as the CIA’s ill-fated support for the independence movement in Tibet beginning in the 1950s, and its infiltration of agents into China via Taiwan. And they still see an American hand in events such as the protests in Hong Kong today. “So we’re all sitting here scratching our heads and saying, ‘Do they really believe we’re behind Hong Kong? And the answer is, yes they do. They really believe that the fundamental American goal is the destruction and demise of Chinese Communism,” he said. “Now, if you believe that the other guy is bent on your destruction, then it’s kind of anything goes. So for the Chinese, stealing, espionage, cyberespionage against American corporations for the good of the Chinese state, are just part and parcel of the need for survival against this very formidable enemy.”China denies that it is spying against the U.S.  on the scale alleged by American officials. When presented with the details of this story, a spokesperson for the Chinese embassy in Washington, D.C., Fang Hong, said via email that she had no knowledge of the cases involving Mallory, Hansen, Lee, and others. “China has always fully respected the sovereignty of all countries and does not interfere in the internal affairs of other countries,” she said. Fang also disparaged U.S. attempts to root out Chinese spies, citing a quote commonly attributed to a great American writer. U.S. views on Chinese espionage, she remarked, “remind me of what Mark Twain said: ‘To a man with a hammer, everything looks like a nail.’”
Fang continued, “U.S. officials’ accusations against Chinese students and researchers are groundless. Guided by the zero-sum-game mentality and ill intentions to contain China, people and institutions in the U.S. have been fabricating such absurd pretexts as ‘espionage’ as an excuse to harass them and make groundless allegations.”

She added that innocent people had been framed in some cases and that “such false accusations severely undermine China-U.S. people-to-people exchanges, and scientific and technological cooperation.”

The litany of cases the DOJ has brought over the past year or so underscores the comprehensive quality of China’s espionage efforts: a former General Electric engineer charged with theft of trade secrets related to gas and steam turbines (he has pleaded not guilty); an American and a Chinese citizen charged with attempting to steal trade secrets related to plastics (the American has pleaded not guilty and the Chinese defendant, as of March 2019, had yet to appear in a U.S. court); a state-owned Chinese chip-making company and a Taiwanese company that makes semiconductors charged with stealing from an American competitor(the chipmaker has pleaded not guilty); two Chinese hackers charged with targeting intellectual property (China denied the “slanderous” economic espionage charges). In Senate testimony in July, FBI Director Christopher Wray said that the agency has “probably about 1,000 plus investigations all across the country involving attempted theft of U.S. intellectual property … almost all leading back to China.”

Demers, the national-security official at the Justice Department, told me that China uses the same tactics and even some of the same intelligence officers in its espionage efforts against America’s private sector. “What it shows is how seriously the Chinese government takes their intellectual-property-theft efforts, because they’re really using the crown jewels of their intelligence community and their most sophisticated and well-honed tradecraft,” he said.Some of the trade secrets China is accused of stealing seem simply aimed to help a specific company or industry. Often, however, the distinction between a Chinese company and the Chinese state is not clear-cut. Chinese law mandates that all corporations cooperate with the government on national security. This was one concern U.S. officials cited after announcing indictments against the Chinese telecommunications giant Huawei earlier this year; the Trump administration has banned U.S. companies from doing business with it. (Huawei has pleaded not guilty to attempted U.S. trade-theft allegations.)Demers told me that China uses economic espionage as a form of “R&D,” or research and development. “They also have very talented, smart people who are using their resources in legitimate ways, which is, I think, some of the frustration that folks have right now—that you could do this differently. You could fight fair, right? You’re not the 80-pound weakling who has to throw dirt in somebody’s eye to get ahead.”
The open business climate between America and China—the sort of climate that did not exist between America and the Soviet Union during the Cold War—makes addressing Chinese espionage trickier: China is both a rival and a top trade partner. The economic and research relationship between the two countries benefits them both. At the same time, Chinese immigrants and visitors to America risk being unfairly targeted if U.S. officials fail to find the right balance, which would cast a chill on legitimate exchange between the two countries while raising the specter of American overreactions during past struggles, from the Cold War to the War on Terror. As U.S. officials warn about the Chinese espionage threat and the U.S. intelligence community reorients to face it, they must be careful not to undermine the American values—openness, civil liberty, enterprise—that remain perhaps the country’s greatest advantage over China.Rodney Faraon, who worked on the President’s Daily Briefing team at the CIA during the Bill Clinton and George W. Bush administrations and is now a partner at Crumpton Group, a business intelligence firm, told me that it will take a major push not just from America’s intelligence agencies but from the U.S. government overall to find the right strategy. And despite the Trump administration’s combative stance on trade negotiations and other issues, this has yet to happen. “The approach must be whole of government and must involve the private sector,” Faraon said. “The Chinese use and value intelligence better than we do, seeing its applicability in nearly every aspect of private and public life—military, social, commercial. We have been slow to recognize this for ourselves.
https://www.theatlantic.com/politics/archive/2019/08/inside-us-china-espionage-war/595747/

Story 3: Big Brother Is Watching Every Move You Make With Social Credit System — Chinese Communist Control  Digital Dictatorship Surveillance State — From Authoritarian to Totalitarian State — Socialist Serfs —   Videos

The Police – Every Breath You Take (Official Music Video)

The Police – Every breath you take lyrics

Social surveillance in China – Credit or control? | DW Documentary

China’s Secret File on Everyone

Big Brother is watching you: How China is ranking its citizens

Exposing China’s Digital Dystopian Dictatorship | Foreign Correspondent

A Look Inside China’s Social Credit System | NBC News Now

Hong Kong police fire live round warning shot and use water cannon on protesters

China ranks ‘good’ and ‘bad’ citizens with ‘social credit’ system

China Expert Gordon Chang On Its Social Credit Rating System & Surveillance State

China’s TERRIFYING Social Credit System

Inside China’s High-Tech Dystopia

China Social Credit System: Beijing plans to go full on Big Brother in 2020 – TomoNews

China’s “Social Credit System” Has Caused More Than Just Public Shaming (HBO)

Chinese “Social Credit System” rewards Obedient Citizens – Infowars News 12/24

China’s Secret Plan to Control the Internet | China Uncensored

20 Years Ago, This Changed China Forever: Here Are 5 Ways | China Uncensored

Big Brother: China Edition!

1984 Introduction

What is 1984?

 

Uh-oh: Silicon Valley is building a Chinese-style social credit system

In China, scoring citizens’ behavior is official government policy. U.S. companies are increasingly doing something similar, outside the law.

Uh-oh: Silicon Valley is building a Chinese-style social credit system
[Images: Rawf8/iStock; zhudifeng/iStock]

Have you heard about China’s social credit system? It’s a technology-enabled, surveillance-based nationwide program designed to nudge citizens toward better behavior. The ultimate goal is to “allow the trustworthy to roam everywhere under heaven while making it hard for the discredited to take a single step,” according to the Chinese government.

In place since 2014, the social credit system is a work in progress that could evolve by next year into a single, nationwide point system for all Chinese citizens, akin to a financial credit score. It aims to punish for transgressions that can include membership in or support for the Falun Gong or Tibetan Buddhism, failure to pay debts, excessive video gaming, criticizing the government, late payments, failing to sweep the sidewalk in front of your store or house, smoking or playing loud music on trains, jaywalking, and other actions deemed illegal or unacceptable by the Chinese government.

It can also award points for charitable donations or even taking one’s own parents to the doctor.

Punishments can be harsh, including bans on leaving the country, using public transportation, checking into hotels, hiring for high-visibility jobs, or acceptance of children to private schools. It can also result in slower internet connections and social stigmatization in the form of registration on a public blacklist.

China’s social credit system has been characterized in one pithy tweet as “authoritarianism, gamified.”

Authoritarianism, gamified. https://www.privateinternetaccess.com/blog/2015/10/in-china-your-credit-score-is-now-affected-by-your-political-opinions-and-your-friends-political-opinions/  ht @VitalikButerin @FrankPasquale

In China, Your Credit Score Is Now Affected By Your Political Opinions – And Your Friends’ Politi…

China just introduced a universal credit score, where everybody is measured as a number between 350 and 950. But this credit score isn’t just affected by how well you manage credit – it also reflects…

privateinternetaccess.com

At present, some parts of the social credit system are in force nationwide and others are local and limited (there are 40 or so pilot projects operated by local governments and at least six run by tech giants like Alibaba and Tencent).

Beijing maintains two nationwide lists, called the blacklist and the red list—the former consisting of people who have transgressed, and the latter people who have stayed out of trouble (a “red list” is the Communist version of a white list.) These lists are publicly searchable on a government website called China Credit.

The Chinese government also shares lists with technology platforms. So, for example, if someone criticizes the government on Weibo, their kids might be ineligible for acceptance to an elite school.

Public shaming is also part of China’s social credit system. Pictures of blacklisted people in one city were shown between videos on TikTok in a trial, and the addresses of blacklisted citizens were shown on a map on WeChat.

Some Western press reports imply that the Chinese populace is suffocating in a nationwide Skinner box of oppressive behavioral modification. But some Chinese are unaware that it even exists. And many others actually like the idea. One survey found that 80% of Chinese citizens surveyed either somewhat or strongly approve of social credit system.

IT CAN HAPPEN HERE

Many Westerners are disturbed by what they read about China’s social credit system. But such systems, it turns out, are not unique to China. A parallel system is developing in the United States, in part as the result of Silicon Valley and technology-industry user policies, and in part by surveillance of social media activity by private companies.

Here are some of the elements of America’s growing social credit system.

INSURANCE COMPANIES

The New York State Department of Financial Services announced earlier this year that life insurance companies can base premiums on what they find in your social media posts. That Instagram pic showing you teasing a grizzly bear at Yellowstone with a martini in one hand, a bucket of cheese fries in the other, and a cigarette in your mouth, could cost you. On the other hand, a Facebook post showing you doing yoga might save you money. (Insurance companies have to demonstrate that social media evidence points to risk, and not be based on discrimination of any kind—they can’t use social posts to alter premiums based on race or disability, for example.)

The use of social media is an extension of the lifestyle questions typically asked when applying for life insurance, such as questions about whether you engage in rock climbing or other adventure sports. Saying “no,” but then posting pictures of yourself free-soloing El Capitan, could count as a “yes.”

PATRONSCAN

A company called PatronScan sells three products—kiosk, desktop, and handheld systems—designed to help bar and restaurant owners manage customers. PatronScan is a subsidiary of the Canadian software company Servall Biometrics, and its products are now on sale in the United States, Canada, Australia, and the United Kingdom.

PatronScan helps spot fake IDs—and troublemakers. When customers arrive at a PatronScan-using bar, their ID is scanned. The company maintains a list of objectionable customers designed to protect venues from people previously removed for “fighting, sexual assault, drugs, theft, and other bad behavior,” according to its website. A “public” list is shared among all PatronScan customers. So someone who’s banned by one bar in the U.S. is potentially banned by all the bars in the U.S., the U.K., and Canada that use the PatronScan system for up to a year. (PatronScan Australia keeps a separate system.)

Judgment about what kind of behavior qualifies for inclusion on a PatronScan list is up to the bar owners and managers. Individual bar owners can ignore the ban, if they like. Data on non-offending customers is deleted in 90 days or less. Also: PatronScan enables bars to keep a “private” list that is not shared with other bars, but on which bad customers can be kept for up to five years.

PatronScan does have an “appeals” process, but it’s up to the company to grant or deny those appeals.

UBER AND AIRBNB

Thanks to the sharing economy, the options for travel have been extended far beyond taxis and hotels. Uber and Airbnb are leaders in providing transportation and accommodation for travelers. But there are many similar ride-sharing and peer-to-peer accommodations companies providing similar services.

Airbnb—a major provider of travel accommodation and tourist activities—bragged in March that it now has more than 6 million listings in its system. That’s why a ban from Airbnb can limit travel options.

Airbnb can disable your account for life for any reason it chooses, and it reserves the right to not tell you the reason. The company’s canned message includes the assertion that “This decision is irreversible and will affect any duplicated or future accounts. Please understand that we are not obligated to provide an explanation for the action taken against your account.” The ban can be based on something the host privately tells Airbnb about something they believe you did while staying at their property. Airbnb’s competitors have similar policies.

It’s now easy to get banned by Uber, too. Whenever you get out of the car after an Uber ride, the app invites you to rate the driver. What many passengers don’t know is that the driver now also gets an invitation to rate you. Under a new policy announced in May: If your average rating is “significantly below average,” Uber will ban you from the service.

WHATSAPP

You can be banned from communications apps, too. For example, you can be banned on WhatsApp if too many other users block you. You can also get banned for sending spam, threatening messages, trying to hack or reverse-engineer the WhatsApp app, or using the service with an unauthorized app.

WhatsApp is small potatoes in the United States. But in much of the world, it’s the main form of electronic communication. Not being allowed to use WhatsApp in some countries is as punishing as not being allowed to use the telephone system in America.

WHAT’S WRONG WITH SOCIAL CREDIT, ANYWAY?

Nobody likes antisocial, violent, rude, unhealthy, reckless, selfish, or deadbeat behavior. What’s wrong with using new technology to encourage everyone to behave?

The most disturbing attribute of a social credit system is not that it’s invasive, but that it’s extralegal. Crimes are punished outside the legal system, which means no presumption of innocence, no legal representation, no judge, no jury, and often no appeal. In other words, it’s an alternative legal system where the accused have fewer rights.

Social credit systems are an end-run around the pesky complications of the legal system. Unlike China’s government policy, the social credit system emerging in the U.S. is enforced by private companies. If the public objects to how these laws are enforced, it can’t elect new rule-makers.

An increasing number of societal “privileges” related to transportation, accommodations, communications, and the rates we pay for services (like insurance) are either controlled by technology companies or affected by how we use technology services. And Silicon Valley’s rules for being allowed to use their services are getting stricter.

If current trends hold, it’s possible that in the future a majority of misdemeanors and even some felonies will be punished not by Washington, D.C., but by Silicon Valley. It’s a slippery slope away from democracy and toward corporatocracy.

In other words, in the future, law enforcement may be determined less by the Constitution and legal code, and more by end-user license agreements.

 

Story 4: Live Fire Used in Hong Kong Protest —  Videos —

Pence urges China to respect HK laws amid protest | The Straits Times

The many faces of the Hong Kong protests

Hong Kong protests turn violent as police fire live ammunition

Hong Kong protests turn violent as police use water cannons

Violence escalates on the streets of Hong Kong | DW News

Hong Kong: Police fire live round for first time as violence intensifies

Facts tell: Did Hong Kong police point guns at civilian? 香港警察槍指平民?

Hong Kong protesters throw bricks and petrol bombs at riot police

Hong Kong police arrest 29 after clashes, more protests planned

Hong Kong conflict causing schisms within families

Steve Bannon: If There Is Another Tiananmen in Hong Kong, the CCP Will Collapse | Zooming I

The messages behind Hong Kong’s foreign flags

Hong Kong protesters fight back with TENNIS RACQUETS to volley back tear gas after police opened fire with live bullets for the first time during weeks of demonstrations

  • Pro-democracy protesters were seen armed with metal poles and sports equipment to protect themselves 
  • An afternoon rally in the district of Tsuen Wan spiralled into violent clashes between police and proteters
  • Police fired live bullets for the first time in the weeks-long demonstrations which have rocked Hong Kong 

Protesters in Hong Kong are using tennis racquets to fend off tear gas while police fired live bullets for the first time in the weeks-long demonstrations.

Pro-democracy protesters were seen armed with metal poles and sports equipment to protect themselves from a police crackdown amid escalating tensions in the city.

An afternoon rally in the district of Tsuen Wan spiralled into violent clashes on Sunday with officers caught isolated by masked youths wielding sticks and throwing rocks.

Tensions escalated when police began hoisting warning flags before firing tear gas in an attempt to disperse the crowd, who reacted angrily by throwing bricks and molotov cocktails.

In one instance, several police officers drew their sidearms. ‘According to my understanding, just now a gunshot was fired by a colleague,’ Superintendent Leung Kwok Win told the press.

‘My initial understanding was that it was a uniformed policeman who fired his gun.’

Scroll down for video

Protesters in Hong Kong are using tennis racquets to fend off tear gas after police fired live bullets for the first time in the weeks-long demonstration

Protesters in Hong Kong are using tennis racquets to fend off tear gas after police fired live bullets for the first time in the weeks-long demonstration

Pro-democracy protesters were seen armed with sports equipment to protect themselves from a police crackdown amid escalating tensions in the city

Pro-democracy protesters were seen armed with sports equipment to protect themselves from a police crackdown amid escalating tensions in the city

A Hong Kong police officer fired at least one gunshot Sunday, the first time a live round has been used during three months of protests. Above: Officers point their guns at protesters on the streets of Tsuen Wan, Hong Kong

A Hong Kong police officer fired at least one gunshot Sunday, the first time a live round has been used during three months of protests. Above: Officers point their guns at protesters on the streets of Tsuen Wan, Hong Kong

There has been a worrying change in the methods being used by city police to break up the crowds, with one instance where several police officers drew their sidearms, an AFP reporter at the scene said

There has been a worrying change in the methods being used by city police to break up the crowds, with one instance where several police officers drew their sidearms, an AFP reporter at the scene said

A protester clad in a gas mask and other protective gear throws a brick at police during a clash at an anti-government rally in Tsuen Wan district to the north of the Hong Kong's Victoria Harbour on Sunday

Another protestor, wearing the symbolic yellow helmet, is held down by two officers in riot gear as the police force clears out a street previously held by protestors

Another protestor, wearing the symbolic yellow helmet, is held down by two officers in riot gear as the police force clears out a street previously held by protestors

Tens of thousands of protesters skirmished with police in Hong Kong for a second straight day on Sunday following a pro-democracy march in an outlying district. After hoisting warning flags, police used tear gas to try to disperse the crowd. Above: A protester throws a Molotov cocktail at police

Tens of thousands of protesters skirmished with police in Hong Kong for a second straight day on Sunday following a pro-democracy march in an outlying district. After hoisting warning flags, police used tear gas to try to disperse the crowd. Above: A protester throws a Molotov cocktail at police

Flames from molotov cocktails and petrol bombs linger on the road and pavement after anti-extradition bill protesters clashed with riot police during a protest to demand democracy and political reforms, at Tsuen Wan, in Hong Kong this evening

Flames from molotov cocktails and petrol bombs linger on the road and pavement after anti-extradition bill protesters clashed with riot police during a protest to demand democracy and political reforms, at Tsuen Wan, in Hong Kong this evening

A makeshift barricade of bollards and railings separates protestors from police officers as night falls across Hong Kong

A makeshift barricade of bollards and railings separates protestors from police officers as night falls across Hong Kong

It was unclear where the shot was aimed, but it was the first live round fired since the protests started three months ago.

The Hong Kong Free Press reported that three officers drew pistols in Tsuen Wan, a built up north of the main city, as two ‘got on their knees’ to beg the officers not to fire any shots.

There was a sense of chaos across swathes of the Kowloon peninsula, over the harbour from the main island of Hong Kong, with police sirens blaring, tear gas wafting throughout densely populated areas and running clashes on the streets.

The skirmishes between police and tens of thousands of protesters occurred for a second straight day yesterday following a pro-democracy march from a sports stadium in Kwai Fong to Tsuen Wan.

While a large crowd rallied in a nearby park, another group of protesters took over a main street, strewing bamboo poles on the pavement and lining up orange and white traffic barriers and cones to try to obstruct the police.

One woman looked undeterred by a police officer clutching a baton as she faced him while holding a purple umbrella above her head

One woman looked undeterred by a police officer clutching a baton as she faced him while holding a purple umbrella above her head

While a large crowd rallied in a nearby park, another group of protesters took over a main street, strewing bamboo poles on the pavement and lining up orange and white traffic barriers and cones to try to obstruct the police. Above: Police fire tear gas at protesters

While a large crowd rallied in a nearby park, another group of protesters took over a main street, strewing bamboo poles on the pavement and lining up orange and white traffic barriers and cones to try to obstruct the police. Above: Police fire tear gas at protesters

After hoisting warning flags, police used tear gas to try to disperse the crowd. Protesters responded by throwing bricks and gasoline bombs toward the police

After hoisting warning flags, police used tear gas to try to disperse the crowd. Protesters responded by throwing bricks and gasoline bombs toward the police 

The result was a surreal scene of small fires and scattered paving bricks on the street between the two, rising clouds of tear gas and green and blue laser lights pointed by the protesters at the police. Above: Riot police aim their guns at protesters

The result was a surreal scene of small fires and scattered paving bricks on the street between the two, rising clouds of tear gas and green and blue laser lights pointed by the protesters at the police. Above: Riot police aim their guns at protesters

Police also carried riot shields and wore body armour, helmets and gas masks to defend against projectiles which were hurled at them in response to their tear gas

Some protesters wore protective gear including helmets and gas masks to guard against tear gas volleys by police. One mn (right) appeared to be holding his own weapon

Some protesters wore protective gear including helmets and gas masks to guard against tear gas volleys by police. One mn (right) appeared to be holding his own weapon

The demonstrators were not deterred by police as they charged towards them. Their defiance was despite multiple warnings by the Chinese government that the protests must stop

The demonstrators were not deterred by police as they charged towards them. Their defiance was despite multiple warnings by the Chinese government that the protests must stop

Some police drew their weapons as the clashes with protesters escalated. Sunday's reported gunshots were the first in the three months of pro-democracy protests

Some police drew their weapons as the clashes with protesters escalated. Sunday’s reported gunshots were the first in the three months of pro-democracy protests

Multiple photographers surrounded one officer with clutching his gun as they looked to record what was going on

After hoisting warning flags, police used tear gas to try to disperse the crowd. Protesters responded by throwing bricks and gasoline bombs toward the police.

The result was a surreal scene of small fires and scattered paving bricks on the street between the two, rising clouds of tear gas and green and blue laser lights pointed by the protesters at the police.

Prior to the skirmishes, tens of thousands of umbrella-carrying protesters marched in the rain in Hong Kong’s latest pro-democracy demonstration.

Many filled Tsuen Wan Park, the endpoint of the rally, chanting, ‘Fight for freedom, stand with Hong Kong,’ the South China Morning Post newspaper said.

What do Hong Kong protesters want?

Apart from the resignation of Chief Executive Carrie Lam, Hong Kong demonstrators have listed five demands and have continued to urge the government to respond to them.

These five demands are:

1. A complete withdrawal of the extradition bill

2. A retraction from the government to its characterisation that the protesters were ‘rioters’

3. Unconditional and immediate release of protesters who were arrested and charges against them dropped

4. Establishment of an independent enquiry to investigate police violence during clashes

5. Genuine universal suffrage

The protests began with people gathering at a sports stadium in Kwai Fong, western Hong Kong, where they then marched to nearby Tsuen Wan and clashed with police. 

The Chinese-ruled city’s rail operator, MTR Corp, had suspended some services to try to prevent people gathering.

M. Sung, a 53-year-old software engineer in a black mask emblematic of the many older, middle-class citizens at the march, said he had been at almost every protest and would keep coming.

‘We know this is the last chance to fight for ‘one country, two systems’, otherwise the Chinese Communist Party will penetrate our home city and control everything,’ he said.

‘If we keep a strong mind, we can sustain this movement for justice and democracy. It won’t die,’ Sung said.

Hong Kong has been gripped by three months of street demonstrations that started against a proposed extradition bill to China, but have spun out into a wider pro-democracy movement.

Protesters say they are fighting the erosion of the ‘one country, two systems’ arrangement under which the former British colony returned to China in 1997 with the promise of continued freedoms not enjoyed on the mainland. 

The protests pose a direct challenge for Communist Party leaders in Beijing, who are eager to quell the unrest ahead of the 70th anniversary of the founding of the People’s Republic of China on Oct. 1.

Beijing has sent a clear warning that forceful intervention is possible, with paramilitary forces holding drills just over the border.

The Chinese Government has used a mix of intimidation, propaganda and economic muscle to constrict the protests in a strategy dubbed ‘white terror’ by the movement.

The MTR – the city’s metro – is the latest Hong Kong business to be rebuked by the public, after appearing to bend to Chinese state-media attacks accusing the transport system of being an ‘exclusive’ service to ferry protesters to rallies.

Yesterday, the MTR shut stations near the main demonstration area in Tsuen Wan, the second day of station closures in a row

As photographers took pictures, a Hong Kong officers were seen with their guns out as they clashed with protesters againAs photographers took pictures, a Hong Kong officers were seen with their guns out as they clashed with protesters again

Demonstrators also carried lasers which they shined into the eyes of police in an effort to hit back against their volleys of tear gas

One protester who was caught by police looked up fearfully at an officer as they tended to injuries he had suffered in clashes

The officer appeared to shine a light into the man's eyes while others stood guard around him as others continued to protest

The officer appeared to shine a light into the man’s eyes while others stood guard around him as others continued to protest

Riot police successfully detain one protester who is seen lying on their stomach with their hands on the wet road as officers talk to each other

Riot police successfully detain one protester who is seen lying on their stomach with their hands on the wet road as officers talk to each other

Hong Kong was filled with clouds of tear gas as the sun began to go down in the region and protesters stayed on the streets

Hong Kong was filled with clouds of tear gas as the sun began to go down in the region and protesters stayed on the streets

Some were armed with metal bars and wore helmets, goggles and gas masks for protection. Others wore body armour, including one man whose arms and chest were covered in protective gear

Some were armed with metal bars and wore helmets, goggles and gas masks for protection. Others wore body armour, including one man whose arms and chest were covered in protective gear

Lines of police were matched by masses of protesters who stood behind makeshift barriers. Many of those protesting wore yellow helmets and held umbrellas aloft

Lines of police were matched by masses of protesters who stood behind makeshift barriers. Many of those protesting wore yellow helmets and held umbrellas aloft

Bamboo poles were left strewn over the street as protesters tried to build barricades to push back the police in Tsuen Wan

Bamboo poles were left strewn over the street as protesters tried to build barricades to push back the police in Tsuen Wan 

Many protesters filled Tsuen Wan Park, the endpoint of the rally, chanting, 'Fight for freedom, stand with Hong Kong,' the South China Morning Post newspaper said

Some protesters, undeterred by the robust police response, threw projectiles including Molotov cocktails at police

Some protesters, undeterred by the robust police response, threw projectiles including Molotov cocktails at police

Other protesters were seen cowering in the streets of Tsuen Wan while wearing gas masks and helmets and holding umbrellas

Other protesters were seen cowering in the streets of Tsuen Wan while wearing gas masks and helmets and holding umbrellas

Some rioters were detained by police, including one woman who cowered on the floor with her head bowed as two officers with shields and batons stood over her

Some rioters were detained by police, including one woman who cowered on the floor with her head bowed as two officers with shields and batons stood over her

The protesters filled Hong Kong's streets, with thousands holding umbrellas over their heads both as protection against the rain and as a reference to the original 'Umbrella Movement' in 2014

The protesters filled Hong Kong’s streets, with thousands holding umbrellas over their heads both as protection against the rain and as a reference to the original ‘Umbrella Movement’ in 2014 

The protests began with people gathering at a sports stadium in Kwai Fong, western Hong Kong, where they then marched to nearby Tsuen Wan and clashed with police. The Chinese-ruled city's rail operator, MTR Corp, had suspended some services to try to prevent people gathering

The protests began with people gathering at a sports stadium in Kwai Fong, western Hong Kong, where they then marched to nearby Tsuen Wan and clashed with police. The Chinese-ruled city’s rail operator, MTR Corp, had suspended some services to try to prevent people gathering

Protesters were not afraid to have physical clashes with police as they were seen fighting with officers. Above: One policeman crouches on the floor as a protester stands over him with a metal bar

Protesters were not afraid to have physical clashes with police as they were seen fighting with officers. Above: One policeman crouches on the floor as a protester stands over him with a metal bar

Despite the defiance of protesters, a seemingly-endless stream of police filled the streets to deal with demonstrations

Despite the defiance of protesters, a seemingly-endless stream of police filled the streets to deal with demonstrations

Many of those clashes with officers were dressed in helmets and face coverings and some had makeshift weapons

Many of those clashes with officers were dressed in helmets and face coverings and some had makeshift weapons

As well as clashing with police, a hoard of protesters were seen breaking into and trashing a restaurant in Tsuen Wan

As well as clashing with police, a hoard of protesters were seen breaking into and trashing a restaurant in Tsuen Wan

After smashing windows, protesters were seen standing amid upturned tables and chairs and shards of broken glass

After smashing windows, protesters were seen standing amid upturned tables and chairs and shards of broken glass

Some protesters used metal poles to smash the window of a shop run by mainland Chinese people where Mahjong - a traditional Chinese domino-like tile game - can be played. The tactics are likely to further anger the Chinese government

Some protesters used metal poles to smash the window of a shop run by mainland Chinese people where Mahjong – a traditional Chinese domino-like tile game – can be played. The tactics are likely to further anger the Chinese government

After the windows were smashed, people inside huddled in a doorway while one man sitting at a table appeared to be crying

After the windows were smashed, people inside huddled in a doorway while one man sitting at a table appeared to be crying

Worried-looking Hong Kong residents stood and watched the protesters break into the shop. The residents have witnessed three months of ongoing protests

Worried-looking Hong Kong residents stood and watched the protesters break into the shop. The residents have witnessed three months of ongoing protests

In another Mahjong venue, broken glass was pictured scattered over the floor while a man peered through a doorway at the back of the room

Police facing protesters were backed up by trucks firing water cannon which helped to knock down makeshift barricades

Police facing protesters were backed up by trucks firing water cannon which helped to knock down makeshift barricades

Officers were seen walking through the streets behind and  head of police vans as protesters massed up ahead of them

Officers were seen walking through the streets behind and  head of police vans as protesters massed up ahead of them

A petrol bomb thrown on the road  by a protester lands next to police officers who keep a safe distance from leaping flames

A petrol bomb thrown on the road  by a protester lands next to police officers who keep a safe distance from leaping flames

Bricks thrown by protesters are seen near tear gas fired by the police during violent clashes between officers and those on the streets

Bricks thrown by protesters are seen near tear gas fired by the police during violent clashes between officers and those on the streets

One protester holds an umbrella as they react to the haze of tear gas which hung over the streets of Hong Kong for much of the day

One protester holds an umbrella as they react to the haze of tear gas which hung over the streets of Hong Kong for much of the day

A second rally of a few hundred, some of them family members of police, was also held on Sunday afternoon.

One relative, who said she was the wife of an officer, said they had received enough criticism. ‘I believe within these two months, police have got enough opprobrium.’

‘I really want you to know even if the whole world spits on you, we as family members will not,’ she said, giving her surname only as Si.

Police said they would launch a ‘dispersal operation’ soon.

‘Some radical protesters have removed railings … and set up barricades with water-filled barriers, bamboo sticks, traffic cones and other objects,’ they said in a statement. ‘Such acts neglect the safety of citizens and road users, paralysing traffic in the vicinity.

‘Remember, your job is to serve Hong Kong residents, not be the enemies of Hong Kong.’

The city’s officers are often the focus of protesters’ anger because of their perceived heavy-handling of the rallies.

The neighbouring gambling territory of Macau, a former Portuguese colony that returned to Chinese rule in 1999, elected former legislature head Ho Iat Seng as its leader on Sunday – the sole approved candidate.

One defiant-looking man is detained by officers as they continue to try to deal with the ongoing protests which have rocked Hong Kong

One defiant-looking man is detained by officers as they continue to try to deal with the ongoing protests which have rocked Hong Kong

One protester held an egg above his head as he prepares to launch it at police while others cower behind him

One protester held an egg above his head as he prepares to launch it at police while others cower behind him

One protester held a tennis racket as he and others fled from a tear gas canister. Yesterday, the MTR shut stations near the main demonstration area in Tsuen Wan, the second day of station closures in a row

One protester held a tennis racket as he and others fled from a tear gas canister. Yesterday, the MTR shut stations near the main demonstration area in Tsuen Wan, the second day of station closures in a row

A demonstrator uses a slingshot as they clash with riot police during Sunday's protest in Tsuen Wan in Hong Kong

A demonstrator uses a slingshot as they clash with riot police during Sunday’s protest in Tsuen Wan in Hong Kong

Protesters who were not cowed by tear gas from police used slingshots to fire bricks back at them. Many wore gas masks to guard against tear gas

Protesters who were not cowed by tear gas from police used slingshots to fire bricks back at them. Many wore gas masks to guard against tear gas

This man wearing a gas mask had a closed umbrella in one hand and some kind of inflatable in the other as he faced the police

This man wearing a gas mask had a closed umbrella in one hand and some kind of inflatable in the other as he faced the police

Protesters constructed barricades from road barriers and wooden pallets as they faced police amid a cloud of tear gas which had been fired by officers

Protesters constructed barricades from road barriers and wooden pallets as they faced police amid a cloud of tear gas which had been fired by officers

An anti-riot police vehicle equipped with a water cannon clears the road from a barricade set up by protesters during an anti-government rally in Kwai Fung and Tsuen Wan, Hong Kong

An anti-riot police vehicle equipped with a water cannon clears the road from a barricade set up by protesters during an anti-government rally in Kwai Fung and Tsuen Wan, Hong Kong

Some protesters wore gas masks to protect against a barrage of tear gas from police in Tsuen Wan, Hong Kong

Some protesters wore gas masks to protect against a barrage of tear gas from police in Tsuen Wan, Hong Kong

Many crouched behind makeshift barriers while others watched the clashes from inside a glass-panelled walkway above

Many crouched behind makeshift barriers while others watched the clashes from inside a glass-panelled walkway above

Riot police wearing gas masks and armed with batons walked in front of a water cannon truck as they continued to respond to the ongoing protests

Riot police wearing gas masks and armed with batons walked in front of a water cannon truck as they continued to respond to the ongoing protests

Some protesters threw slightly less dangerous projectiles at police, in the form of eggs. One man (above) was pictured throwing an egg and he had a plentiful supply behind him

Some protesters threw slightly less dangerous projectiles at police, in the form of eggs. One man (above) was pictured throwing an egg and he had a plentiful supply behind him

Even though most protesters engaging in clashes with police were wearing as masks, officers continued to fire volleys of tear gas at them

Even though most protesters engaging in clashes with police were wearing as masks, officers continued to fire volleys of tear gas at them

Battle lines drawn: protesters and police faced each other in the street in Tsuen Wan in Hong Kong. Demonstrators stood behind makeshift barricades while officers held up riot shields

Battle lines drawn: protesters and police faced each other in the street in Tsuen Wan in Hong Kong. Demonstrators stood behind makeshift barricades while officers held up riot shields

One protester used spray paint to scrawl on the wall 'Absolute power corrupts absolutely' - a chilling hint that the Chinese government may impose a further crackdown on protesters

The city had earlier appeared to have pulled back from a sharp nosedive into violence, with the last serious confrontation taking place more than a week ago, shortly after protests paralysed the financial hub's airport. But Sunday's clashes again brought more violence. Above: A man helps a fellow protester as he falls to the floor amid the heavy use of tear gas by police

The city had earlier appeared to have pulled back from a sharp nosedive into violence, with the last serious confrontation taking place more than a week ago, shortly after protests paralysed the financial hub’s airport. But Sunday’s clashes again brought more violence. Above: A man helps a fellow protester as he falls to the floor amid the heavy use of tear gas by police

One man defiantly waved his middle finger at police as he stood behind makeshift barricades and others cowered in the face of tear gas

One man defiantly waved his middle finger at police as he stood behind makeshift barricades and others cowered in the face of tear gas

Some officers appeared to be in plain clothes as they clashed with protesters for the second straight day in what has been three months of ongoing protests

Some officers appeared to be in plain clothes as they clashed with protesters for the second straight day in what has been three months of ongoing protests

Amid the use of tear gas by police, protesters were pictured running away while wearing gas masks and holding umbrellas

Amid the use of tear gas by police, protesters were pictured running away while wearing gas masks and holding umbrellas

Children were pictured with their parents during some of yesterday's protests as thousands of people took to the streets

Children were pictured with their parents during some of yesterday’s protests as thousands of people took to the streets

Protesters were armed with metal poles and even tennis rackets as dozens of people watched the clashes with police from a walkway above the street

Protesters were armed with metal poles and even tennis rackets as dozens of people watched the clashes with police from a walkway above the street

Protesters broke into restaurants during clashes. Above: A group of six men use metal poles to smash the glass of one venue

Protesters broke into restaurants during clashes. Above: A group of six men use metal poles to smash the glass of one venue

One protester reaches out at what appears to be a tear gas canister as it sprays out gas intended to subdue protesters

One protester reaches out at what appears to be a tear gas canister as it sprays out gas intended to subdue protesters

Ho, who has deep ties to China, is expected to cement Beijing’s control over the ‘special administrative region’, the same status given to Hong Kong, and distance it from the unrest there.

Ten people were left in hospital after Saturday’s clashes in Hong Kong – two in a serious condition – staff said, without detailing if they were police or protesters.

Saturday’s clashes saw police baton-charge protesters and fire tear gas, while demonstrators threw rocks and bottles later into the night in a working-class neighbourhood.

The city had earlier appeared to have pulled back from a sharp nosedive into violence, with the last serious confrontation taking place more than a week ago, shortly after protests paralysed the financial hub’s airport.

Demonstrations started against a bill that would have allowed extradition to China, but have bled into wider calls for democracy and police accountability in the semi-autonomous city.

Protesters say Hong Kong’s unique freedoms are in jeopardy as Beijing tightens its political choke hold on the city.

Police fired volleys of tear gas throughout clashes with demonstrators as they attempted to quell the ongoing protests

Police fired volleys of tear gas throughout clashes with demonstrators as they attempted to quell the ongoing protests

Protesters wearing helmets, gas masks and gloves wield makeshift weapons. Others hold lasers and shine them at police

Protesters wearing helmets, gas masks and gloves wield makeshift weapons. Others hold lasers and shine them at police

Violent clashes between police and protesters saw officers wielding their batons and riot shields as their opponents held makeshift weapons

Violent clashes between police and protesters saw officers wielding their batons and riot shields as their opponents held makeshift weapons

A protester holds his arm out as a policeman prepares to hit him with his baton. The protests have seen further violence descend onto the streets of Hong Kong

A protester holds his arm out as a policeman prepares to hit him with his baton. The protests have seen further violence descend onto the streets of Hong Kong

Some police were dressed in plain clothes as they clashed with demonstrators. Above: An officer cries out as a protester smashes a metal bar against his shield

Some police were dressed in plain clothes as they clashed with demonstrators. Above: An officer cries out as a protester smashes a metal bar against his shield

Some protesters directed laser pens towards police as the streets were filled with thousands of people in Hong Kong

Some protesters directed laser pens towards police as the streets were filled with thousands of people in Hong Kong

M. Sung, a 53-year-old software engineer in a black mask emblematic of the many older, middle-class citizens at the march, said he had been at almost every protest and would keep coming. 'We know this is the last chance to fight for 'one country, two systems', otherwise the Chinese Communist Party will penetrate our home city and control everything,' he said. Above: A protester holds up a sign reading 'corrupt police return eyes to victims' as demonstrators march in the rain

M. Sung, a 53-year-old software engineer in a black mask emblematic of the many older, middle-class citizens at the march, said he had been at almost every protest and would keep coming. ‘We know this is the last chance to fight for ‘one country, two systems’, otherwise the Chinese Communist Party will penetrate our home city and control everything,’ he said. Above: A protester holds up a sign reading ‘corrupt police return eyes to victims’ as demonstrators march in the rain

Hong Kong has been gripped by three months of street demonstrations that started against a proposed extradition bill to China , but have spun out into a wider pro-democracy movement. Above: Protesters also carried bamboo sticks to block a road during the protests. Yesterday, riot police fired tear gas and baton-charged protesters who retaliated with a barrage of the bamboo poles, stones and bottles

Hong Kong has been gripped by three months of street demonstrations that started against a proposed extradition bill to China , but have spun out into a wider pro-democracy movement. Above: Protesters also carried bamboo sticks to block a road during the protests. Yesterday, riot police fired tear gas and baton-charged protesters who retaliated with a barrage of the bamboo poles, stones and bottles

Demonstrators used the poles to block a road. The MTR - the city's metro - is the latest Hong Kong business to be rebuked by the public, after appearing to bend to Chinese state-media attacks accusing the transport system of being an 'exclusive' service to ferry protesters to rallies

Demonstrators used the poles to block a road. The MTR – the city’s metro – is the latest Hong Kong business to be rebuked by the public, after appearing to bend to Chinese state-media attacks accusing the transport system of being an ‘exclusive’ service to ferry protesters to rallies

The protests pose a direct challenge for Communist Party leaders in Beijing, who are eager to quell the unrest ahead of the 70th anniversary of the founding of the People's Republic of China on Oct. 1. Above: Protesters march from Kwai Fung to Tsuen Wan in Hong Kong

 The protests pose a direct challenge for Communist Party leaders in Beijing, who are eager to quell the unrest ahead of the 70th anniversary of the founding of the People’s Republic of China on Oct. 1. Above: Protesters march from Kwai Fung to Tsuen Wan in Hong Kong

Some protesters were seen holding U.S. flags as they join marchers heading from Kwai Fung to Tsuen Wan, further north

Some protesters were seen holding U.S. flags as they join marchers heading from Kwai Fung to Tsuen Wan, further north

One woman, who said she was the wife of an officer, said the police had received enough criticism. 'I believe within these two months, police have got enough opprobrium'. Above: Riot police officers stand guard as protesters march in Tsuen Wan

One woman, who said she was the wife of an officer, said the police had received enough criticism. ‘I believe within these two months, police have got enough opprobrium’. Above: Riot police officers stand guard as protesters march in Tsuen Wan

In Tsuen Wan, demonstrators marched through the area, including one man who was seen in a yellow helmet and military vest

In Tsuen Wan, demonstrators marched through the area, including one man who was seen in a yellow helmet and military vest

Yesterday, the MTR shut stations near the main demonstration area in Tsuen Wan in western Hong Kong, it was the second day of station closures in a row. Above: Protesters march past rows of police

Yesterday, the MTR shut stations near the main demonstration area in Tsuen Wan in western Hong Kong, it was the second day of station closures in a row. Above: Protesters march past rows of police

Beijing has used a mix of intimidation, propaganda and economic muscle to constrict the protests in a strategy dubbed 'white terror' by the movement, but that has not stopped hundreds of thousands of protesters from gathering on their streets. Above: Protesters clutching umbrellas gather yesterday in Hong Kong

Beijing has used a mix of intimidation, propaganda and economic muscle to constrict the protests in a strategy dubbed ‘white terror’ by the movement, but that has not stopped hundreds of thousands of protesters from gathering on their streets. Above: Protesters clutching umbrellas gather yesterday in Hong Kong 

Demonstrators also removed road barriers during their march during through Kwai Fong, in Hong Kong yesterday

Ten people were left in hospital after Saturday’s clashes – two in a serious condition – staff said, without detailing if they were police or protesters

Saturday's clashes saw police baton-charge protesters and fire tear gas, while demonstrators threw rocks and bottles later into the night in a working-class neighbourhood

Saturday’s clashes saw police baton-charge protesters and fire tear gas, while demonstrators threw rocks and bottles later into the night in a working-class neighbourhood

On Friday, tens of thousands of people had held hands across Hong Kong in a dazzling, neon-framed recreation of a pro-democracy ‘Baltic Way’ protest against Soviet rule three decades ago.

The city’s skyscraper-studded harbour-front as well as several busy shopping districts were lined with peaceful protesters, many wearing surgical masks to hide their identity and holding Hong Kong flags or mobile phones with lights shining.

The human chain was another creative demonstration in the rolling protests which have tipped Hong Kong into an unprecedented political crisis.

Chinese state media says Hong Kong’s ‘toxic’ textbooks lead to protests

Chinese state newspaper has suggested that the cause of the anti-government protests in Hong Kong is the city’s education system, particularly its textbooks.

Tung Chee-hwa, the city’s first Chief Executive, has confessed that the General Education system in Hong Kong was a failure and the young generations became ‘problematic’ as a result, claimed People’s Daily in a column today.

The op-ed, penned by Professor Gu Minggang, said Hong Kong needed to reflect on its entire education system.

Protesters hold hands to form a human chain during a rally to call for political reforms in Hong Kong on August 23. Chinese media accused that the city's 'biased' and 'erroneous' textbooks had brought up a generation of 'useless youngsters'

The author said: ‘After Hong Kong returned to the arms of the motherland, the first and foremost issue to resolve should be to establish the concept of the country. The problem is, how many educators in Hong Kong have this notion?’

On Wednesday, China’s Guancha.cn called the General Education textbook in Hong Kong ‘toxic’, ‘biased’ and ‘erroneous’.

Citing Hong Kong’s pro-Beijing newspaper Wenweipo, Guancha.cn accused the textbook of encouraging pupils to hate police, promoting Occupy Central campaign and twisting facts.

The article said that the textbook had become a political propaganda and brought up a generation of ‘useless youngsters’.

https://www.dailymail.co.uk/news/article-7394069/Hong-Kong-protesters-fight-tennis-racquets.html

Story 5: Three Way Tie In Race For 2020 Democratic Presidential Canidate — Biden, Sander and Warren — Videos

Biden plunges, tied with Warren and Sanders in new national poll

Joe Biden Doesn’t Know What State He Is In

Published on Aug 24, 2019
In Keene, N.H., former Vice President Joe Biden told a press gaggle that he loves being in Vermont when asked about his time in Keene on 8/24/19. Be sure to like, subscribe, and comment below to share your thoughts on the video.

3-Way Lead as Dem 2020 Picture Shifts

Today

Sanders and Warren rise; Biden drops

West Long Branch, NJ – Vermont Sen. Bernie Sanders, Massachusetts Sen. Elizabeth Warren, and former Vice President Joe Biden are currently bunched together in the national Democratic presidential preference contest. Movement in the latest Monmouth University Poll – positive for Warren and Sanders, negative for Biden – suggests the 2020 presidential nomination process may be entering a volatile stage.  The poll results also suggest that liberal voters are starting to take a closer look at a wider range of candidates, while moderates are focusing on those with the highest name recognition.  Another key finding that could contribute to growing volatility in the race is confusion over “Medicare for All.” Most say support for this policy is an important factor in choosing a Democratic nominee, but voters actually prefer a public option over a single payer plan.

The poll finds a virtual three-way tie among Sanders (20%), Warren (20%), and Biden (19%) in the presidential nomination preferences of registered Democrats and Democratic-leaning voters across the country. Compared to Monmouth’s June poll, these results represent an increase in support for both Sanders (up from 14%) and Warren (up from 15%), and a significant drop for Biden (down from 32%).

Results for the rest of the field are fairly stable compared to two months ago. These candidates include California Sen. Kamala Harris at 8% support (identical to 8% in June), New Jersey Sen. Cory Booker at 4% (2% in June), South Bend Mayor Pete Buttigieg at 4% (5% in June), entrepreneur Andrew Yang at 3% (2% in June), former cabinet secretary Julián Castro at 2% (<1% in June), former Texas Rep. Beto O’Rourke at 2% (3% in June), and author Marianne Williamson at 2% (1% in June). Support for the remaining 13 candidates included in the preference poll registered only 1% or less.

Biden has suffered an across the board decline in his support since June.  He lost ground with white Democrats (from 32% to 18%) and voters of color (from 33% to 19%), among voters without a college degree (from 35% to 18%) and college graduates (from 28% to 20%), with both men (from 38% to 24%) and women (from 29% to 16%), and among voters under 50 years old (from 21% to 6%) as well as voters aged 50 and over (from 42% to 33%).  Most of Biden’s lost support in these groups shifted almost equally toward Sanders and Warren.

“The main takeaway from this poll is that the Democratic race has become volatile.  Liberal voters are starting to cast about for a candidate they can identify with.  Moderate voters, who have been paying less attention, seem to be expressing doubts about Biden. But they are swinging more toward one of the left-leaning contenders with high name recognition rather than toward a lesser known candidate who might be more in line with them politically,” said Patrick Murray, director of the independent Monmouth University Polling Institute.  He added, “It’s important to keep in mind this is just one snapshot from one poll.  But it does raise warning signs of increased churning in the Democratic nomination contest now that voters are starting to pay closer attention.”

Biden lost support over the past two months among Democrats who call themselves moderate or conservative (from 40% to 22%) with the shift among these voters accruing to both Sanders (from 10% to 20%) and Warren (from 6% to 16%).  Biden also lost support among liberals (from 24% to 15%), but this group’s backing has scattered to a variety of other candidates. Sanders has picked up a few points among liberal voters (from 17% to 21%) while Warren has held fairly steady (from 25% to 24%).  Also, Harris has not budged with this group (from 10% to 11%) and Buttigieg has slipped slightly (from 8% to 5%).  However, the aggregate support for four other candidates – namely Booker, Castro, Williamson and Yang – has gone up a total of 8 points among liberal Democrats (from 8% to 16% for the four combined).

The Monmouth poll also finds that Biden has lost his small edge in the early states where Democrats will cast ballots from February through Super Tuesday. His even larger lead in the later states has vanished as well.  Biden (20%), Warren (20%), Sanders (16%), and Harris (12%) are all in the top tier among voters in the early states. Biden has slipped by 6 points since June and Warren has gained 5 points over the same time span.  Early state support for Sanders and Harris has not changed much.  In the later states, Biden’s support has plummeted from 38% in June to 17% now, while both Warren (from 16% to 20%) and Sanders (from 13% to 23%) have made gains.

“Biden’s drop in support is coming disproportionately from later states that have less impact on the process. But if this trend continues it could spell trouble for him in the early states if it undermines his claim to being the most electable candidate.  This could benefit someone like Harris, who remains competitive in the early states and could use a strong showing there to propel her into the top tier.  Based on the current data, though, Warren looks like the candidate with the greatest momentum right now,” said Murray.

2020 DEMOCRATIC SUPPORT by state primary schedule *
EARLY STATES OTHER STATES
Aug‘19 Jun‘19 May‘19 Aug‘19 Jun‘19 May‘19
Elizabeth Warren 20% 15% 9% 20% 16% 11%
Joe Biden 20% 26% 26% 17% 38% 38%
Bernie Sanders 16% 15% 14% 23% 13% 16%
Kamala Harris 12% 11% 14% 5% 5% 8%
Cory Booker 2% 3% <1% 5% 1% 1%
Pete Buttigieg 4% 4% 6% 4% 6% 6%
Andrew Yang 5% 3% 2% 2% 1% 0%
Julián Castro 2% 1% 1% 2% <1% 0%
Beto O’Rourke 3% 6% 3% 1% 1% 4%
Marianne Williamson 1% 1% 1% 3% 1% 1%
  * Early states include those scheduled to or likely to hold a 
primary/caucus event in February 2020 or on Super Tuesday (March 3rd).

Warren has seen her personal ratings improve steadily over the past few months.  She currently earns a 65% favorable and 13% unfavorable rating, up from 60%-14% in May, the last time Monmouth tracked the 2020 candidate ratings.  At the same, time Biden has seen his ratings drop to 66% favorable and 25% unfavorable, from 74%-17% three months ago. The ratings for Sanders have been comparatively more stable at 64% favorable and 24% unfavorable compared with 65%-21% in Monmouth’s May poll.

At least 2-in-3 Democratic voters can now recognize the names of 11 candidates Monmouth has been tracking in terms of voter favorability since January.  Most have seen a small uptick in basic name recognition over the past three months of between 5 and 13 percentage points. The exceptions are Biden and Sanders on one hand, both of whom have been universally familiar to Democratic voters since the beginning of the campaign, and Williamson on the other hand, whose name recognition shot up 19 points from 48% in May to 67% in the current poll.  In Williamson’s case, though, the increased notoriety has led to a rise in negative views, currently earning her a 14% favorable and 25% unfavorable rating, which is down from an evenly divided 10%-10% rating in May.

Other candidates who have seen a downturn in their ratings are Harris at 56% favorable and 17% unfavorable (from 58%-9% in May) and Minnesota Sen. Amy Klobuchar at 27% favorable and 18% unfavorable (from 32%-10% in May).  Those who have seen a slight improvement in their ratings are Booker at 49% favorable and 14% unfavorable (from 41%-13% in May), Buttigieg at 43% favorable and 14% unfavorable (from 35%-11% in May), and Yang at 24% favorable and 12% unfavorable (from 12%-13% in May).  Candidates who are holding relatively steady are Castro at 35% favorable and 13% unfavorable (from 28%-10% in May) and O’Rourke at 39% favorable and 20% unfavorable (from 40%-19% in May).

2020 CANDIDATE OPINION AMONG DEMOCRATIC VOTERS
Net favorability rating: Aug ‘19 May ‘19 Apr ‘19 Mar ‘19 Jan ‘19
Elizabeth Warren +52 +46 +32 +30 +40
Joe Biden +41 +57 +56 +63 +71
Bernie Sanders +40 +44 +44 +53 +49
Kamala Harris +39 +49 +40 +42 +33
Cory Booker +35 +28 +24 +31 +33
Pete Buttigieg +29 +24 +29 n/a +2
Julián Castro +22 +18 n/a n/a +15
Beto O’Rourke +19 +21 +31 +26 +32
Andrew Yang +12 –1 n/a n/a 0
Amy Klobuchar +9 +22 +14 +13 +15
Marianne Williamson –11 0 n/a +4 n/a
     

The two most recent entrants in the crowded field earn net negative ratings. Former naval officer and Pennsylvania Rep. Joe Sestak has a negative 5% favorable and 11% unfavorable rating with 53% name recognition.  Former hedge fund manager Tom Steyer, who has spent heavily on advertising since getting into the race, earns a 9% favorable and 25% unfavorable rating with 70% name recognition.

On the issue of health care, 58% of party voters say it is very important to them that the Democrats nominate someone who supports “Medicare for All.”  Another 23% say it is somewhat important, 10% say it is not important, and 9% are unsure. However, it is not clear that Medicare for All means the same thing to all voters.  When asked specifically about what type of health insurance system they prefer, 53% of Democratic voters say they want a system that offers an opt in to Medicare while retaining the private insurance market. Just 22% say they want to move to a system where Medicare for All replaces private insurance. Another 7% prefer to keep insurance private for people under 65 but regulate the costs and 11% want to leave the system basically as it is now.

Those who prefer a public option are divided into two camps that include 18% who would like to move to a universal public insurance system eventually and 33% who say that there should always be the choice of private coverage.  In other words, only 4-in-10 Democrats want to get rid of the private insurance market when the 22% who want Medicare for All now are combined with the 18% who would like to move to a universal public system at some point in the future.

“We asked the public option question in our Iowa poll earlier this month and got a lot of flak from Medicare for All advocates who claim that polls show widespread support for their idea.  It seems from these results, though, the term has a wide range of meanings among Democratic voters. Many conflate the public-only program name with a public option.  There is a lot more nuance in public opinion on this issue that could become problematic for proponents as voters become more familiar with what Medicare for All actually entails,” said Murray.

The Monmouth University Poll was conducted by telephone from August 16 to 20, 2019 with 800 adults in the United States. Results in this release are based on 298 registered voters who identify as Democrats or lean toward the Democratic Party, which has a +/- 5.7 percentage point sampling margin of error.  The poll was conducted by the Monmouth University Polling Institute in West Long Branch, NJ.

QUESTIONS AND RESULTS     

(* Some columns may not add to 100% due to rounding.)

[Q1-13 previously released.]

14.I know the 2020 election is far away, but who would you support for the Democratic nomination for president if the candidates were the following? [INCLUDES LEANERS] [NAMES WERE ROTATED]

  TREND:
(with leaners)
Aug.
2019
June
2019
May
2019
April
2019
March
2019
Jan.
2019
Bernie Sanders 20% 14% 15% 20% 25% 16%
Elizabeth Warren 20% 15% 10% 6% 8% 8%
Joe Biden 19% 32% 33% 27% 28% 29%
Kamala Harris 8% 8% 11% 8% 10% 11%
Cory Booker 4% 2% 1% 2% 5% 4%
Pete Buttigieg 4% 5% 6% 8% <1% 0%
Andrew Yang 3% 2% 1% <1% 1% 1%
Julián Castro 2% <1% 1% <1% 1% 1%
Beto O’Rourke 2% 3% 4% 4% 6% 7%
Marianne Williamson 2% 1% 1% <1% <1% n/a
Bill de Blasio 1% 1% 1% 1% 1% n/a
Tulsi Gabbard 1% 1% 1% 0% <1% 1%
Amy Klobuchar 1% 1% 3% 1% 3% 2%
Michael Bennet <1% 0% <1% 0% <1% n/a
Steve Bullock <1% 0% 0% 0% 0% n/a
Kirsten Gillibrand <1% <1% <1% <1% <1% 1%
Joe Sestak <1% n/a n/a n/a n/a n/a
Tom Steyer <1% n/a n/a n/a n/a n/a
John Delaney 0% 0% <1% 0% 0% <1%
Jay Inslee * 0% 1% <1% <1% <1% <1%
Wayne Messam 0% 0% 0% <1% n/a n/a
Seth Moulton * 0% 0% 0% <1% n/a n/a
Tim Ryan 0% <1% <1% 0% n/a n/a
(VOL) Other 1% 0% <1% 3% 5% 8%
(VOL) No one <1% 1% 2% 3% <1% 3%
(VOL) Undecided 10% 11% 9% 14% 8% 9%
 (n) (298) (306) (334) (330) (310) (313)

* The poll was conducted before Inslee and Moulton dropped out of the race.

15.I’m going to read you the names of some people who are running for president in 2020.  Please tell me if your general impression of each is favorable or unfavorable, or if you don’t really have an opinion. If you have not heard of the person, just let me know. [NAMES WERE ROTATED]

  TREND: Favorable Unfavorable No
opinion
Not
heard of
(n)
Former Vice President Joe Biden 66% 25% 8% 1% (298)
   — May 2019 74% 17% 7% 1% (334)
   — April  2019 72% 16% 12% 1% (330)
   — March  2019 76% 13% 9% 2% (310)
   — January  2019 80% 9% 8% 3% (313)
           
Vermont Senator Bernie Sanders 64% 24% 10% 2% (298)
   — May 2019 65% 21% 12% 2% (334)
   — April  2019 65% 21% 13% 1% (330)
   — March  2019 70% 17% 10% 3% (310)
   — January  2019 68% 19% 9% 4% (313)
           
Massachusetts Senator Elizabeth Warren 65% 13% 16% 7% (298)
   — May 2019 60% 14% 14% 12% (334)
   — April  2019 51% 19% 18% 12% (330)
   — March  2019 49% 19% 15% 17% (310)
   — January  2019 57% 17% 16% 11% (313)
           
Former Texas Congressman Beto O’Rourke 39% 20% 26% 15% (298)
   — May 2019 40% 19% 20% 22% (334)
   — April  2019 43% 12% 22% 23% (330)
   — March  2019 38% 12% 21% 29% (310)
   — January  2019 41% 9% 23% 27% (313)
           
California Senator Kamala Harris 56% 17% 16% 11% (298)
   — May 2019 58% 9% 15% 18% (334)
   — April  2019 50% 10% 19% 21% (330)
   — March  2019 53% 11% 16% 20% (310)
   — January  2019 46% 13% 21% 20% (313)
           
Minnesota Senator Amy Klobuchar 27% 18% 34% 20% (298)
   — May 2019 32% 10% 28% 30% (334)
   — April  2019 27% 13% 28% 32% (330)
   — March  2019 26% 13% 29% 33% (310)
   — January  2019 23% 8% 30% 39% (313)
           
South Bend, Indiana Mayor Pete Buttigieg 43% 14% 20% 23% (298)
   — May 2019 35% 11% 24% 30% (334)
   — April  2019 35% 6% 25% 34% (330)
   — March  2019
   — January  2019 8% 6% 27% 58% (313)
           
New Jersey Senator Cory Booker 49% 14% 25% 13% (298)
   — May 2019 41% 13% 26% 19% (334)
   — April  2019 40% 16% 24% 20% (330)
   — March  2019 43% 12% 20% 25% (310)
   — January  2019 44% 11% 20% 25% (313)
           
 Former cabinet secretary Julián Castro 35% 13% 32% 20% (298)
   — May 2019 28% 10% 31% 31% (334)
   — April  2019
   — March  2019
   — January  2019 24% 9% 32% 35% (313)
           
Entrepreneur Andrew Yang 24% 12% 36% 29% (298)
   — May 2019 12% 13% 33% 42% (334)
   — April  2019
   — March  2019
   — January  2019 10% 10% 26% 53% (313)
         
Author Marianne Williamson 14% 25% 28% 33% (298)
   — May 2019 10% 10% 28% 52% (334)
   — April  2019
   — March  2019 8% 4% 21% 67% (310)
   — January  2019
         
Former Pennsylvania Congressman Joe Sestak 5% 11% 37% 47% (298)
   — May 2019
   — April  2019
   — March  2019
   — January  2019
         
Former hedge fund manager Tom Steyer 9% 25% 37% 30% (298)
   — May 2019
   — April  2019
   — March  2019
   — January  2019
           

16.How important is it to you that the Democrats nominate someone who supports Medicare for All – very important, somewhat important, not important, or are you not sure?

Aug.
2019
Very important 58%
Somewhat important 23%
Not important 10%
Not sure 9%
(n) (298)

17.Which of the following comes closest to how you would like to see health care handled:  A. get rid of all private insurance coverage in favor of having everyone on a single public plan like Medicare for All, B. allow people to either opt into Medicare or keep their private coverage, C. keep health insurance private for people under age 65 but regulate the costs, or D. keep the health insurance system basically as it is?

Aug.
2019
A. Get rid of all private insurance coverage in favor of … Medicare for All 22%
B. Allow people to either opt into Medicare or keep their private coverage 53%
C. Keep health insurance private for people under age 65 but regulate the costs 7%
D. Keep the health insurance system basically as it is 11%
(VOL) Other 2%
(VOL) Don’t know 4%
(n) (298)

17A.[If “B. ALLOW PEOPLE TO OPT INTO MEDICARE OR KEEP THEIR PRIVATE COVERAGE” in Q17, ASK:]  Would you eventually like to see the nation’s health care coverage move to a universal public system like Medicare for All or do you think there should always be a choice to keep your private coverage?  [Percentages are based on the total sample of Democrats.]

Aug.
2019
Medicare for All now (from Q17) 22%
Public option:  Eventually move to a universal public system like Medicare for All 18%
Public option:  Should always be a choice to keep your private coverage 33%
Public option:  Don’t know what should eventually happen 2%
Minor, none, other changes to health insurance (from Q17) 21%
(VOL) Don’t know (from Q17) 4%
(n) (298)

[Q18-26 held for future release.]

METHODOLOGY

The Monmouth University Poll was sponsored and conducted by the Monmouth University Polling Institute from August 16 to 20, 2019 with a national random sample of 800 adults age 18 and older, in English. This includes 314 contacted by a live interviewer on a landline telephone and 486 contacted by a live interviewer on a cell phone. The results in this poll release are based on a subsample of 298 registered voters who identify themselves as Democrats or lean toward the Democratic Party. Telephone numbers were selected through random digit dialing and landline respondents were selected with a modified Troldahl-Carter youngest adult household screen. Monmouth is responsible for all aspects of the survey design, data weighting and analysis. Final sample is weighted for region, age, education, gender and race based on US Census information. Data collection support provided by Braun Research (field) and Dynata (RDD sample). For results based on the Democratic voter sample, one can say with 95% confidence that the error attributable to sampling has a maximum margin of plus or minus 5.7 percentage points (unadjusted for sample design). Sampling error can be larger for sub-groups (see table below). In addition to sampling error, one should bear in mind that question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of opinion polls.

DEMOGRAPHICS (weighted)
DEMOCRATIC VOTERS
 
38% Male
62% Female
 
31% 18-34
31% 35-54
38% 55+
 
53% White
18% Black
20% Hispanic
  9% Asian/Other
 
59% No degree
41% 4 year degree
  

Click on pdf file link below for full methodology and crosstabs by key demographic groups.

3-Way Lead as Dem 2020 Picture Shifts

Joe Biden: ‘I want to be clear, I’m not going nuts’

9:24 a.m.

Joe Biden.

Joshua Lott/Getty Images

Former Vice President Joe Biden is hopping on the defensive.

After months of gaffes on the 2020 campaign trail prompting even his brain surgeon to chime in and defend his mind, Biden made a pointed comment about the state of his brain over the weekend. “I want to be clear, I’m not going nuts,” Biden said during a campaign rally in New Hampshire — a comment that surely extended beyond the confusion he was trying to clear up at the time, theLos Angeles Times reports.

Biden made the declaration while speaking to supporters at New Hampshire’s Loon Lake, defending his inability to remember just where he’d spoken at Dartmouth College a few hours earlier. “I’m not sure whether it was the medical school or where the hell I spoke. But it was on the campus,” he said, looking at the gathered reporters as he did it, per the Times.

The obviously defensive comment comes after months of Biden stumbling over some pretty important details at campaign rallies, namely the locations of two mass shootings earlier this month. There’s also the time Biden said “poor kids are just as bright and just as talented as white kids” in front of the the Asian & Latino Coalition in Iowa. Yet the man who performed surgery on Biden three decades ago following two brain aneurysms agrees with the 76-year-old’s weekend comment, saying that he’s clearly “as sharp as he was 31 years ago.” Kathryn Krawczyk

GOP primary challenger Joe Walsh says the racist things he’s said on Twitter don’t necessarily make him a racist
5:26 p.m.

The presidential campaign freshly launched by former Rep. Joe Walsh (R-Ill.) also appears to be doubling as some kind of an apology — or at least personal accountability — tour.

Walsh, who on Sunday officially announced that he was challenging President Trump in the Republican primary, has routinely come under fire for his own controversial remarks, including a plethora of racist and insensitive tweets over the years. Walsh acknowledged his Twitter feed on Monday in an appearance on MSNBC, and concurred that some of what he said is, indeed, racist. But, as Walsh sees it, that doesn’t influence whether he’s actually a racist offline, or, as the youth say, “IRL.”

Aaron Blake

@AaronBlake

Joe Walsh on MSNBC: “I wouldn’t call myself a racist, but I’ve said racist things on Twitter.”

2,031 people are talking about this

When he made his announcement on Sunday, Walsh said he regretted helping “create” Trump by playing into divisive, personal politics, so it seems he’s trying to rip off the Band-Aid at the beginning of his campaign and address criticism that was sure to arise otherwise. Read more about Walsh’s presidential campaign here at The WeekTim O’Donnell

Your favorite vintage of French wine likely won’t get much more expensive in the near future.

Officials from France and the United States reportedly reached a compromise on Monday following the Group of Seven summit in Biarritz, France, on a new French tax passed last month on digital services provided by large internet companies, like Google and Amazon.

The new agreement stipulates that France would repay companies the difference between its digital tax and whatever taxes come from the agreed-upon Organization for Economic Cooperation and Development’s planned mechanism. The threshold for the French tax to be applicable for a company is annual revenues of more than $830 million — including $27 million generated in France — from “digital activities,” like collection of user data and selling targeted advertising.

French President Emmanuel Macron praised the compromise, while maintaining that France will nix its national tax if and when his preferred method of an international system for digital taxation is implemented. German Chancellor Angela Merkel said OECD nations want a solution on that by next year.

President Trump had previously threatened to tax French wine if Paris moved forward with its approved three percent tax on digital services. Tim O’Donnell

https://theweek.com/speedreads/861285/french-wine-might-safe-from-tariffs-after-france-strike-compromise-digital-tax

 

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The Pronk Pops Show 1288, July 11, 2019, Part 2: Story 1: Federal Reserve Will Cut the Federal Funds Target Rate Range in July By .25% or 25 Basis Points If Second Quarter Real Gross Domestic Product Rate of Growth Falls Below 3% — Otherwise No Change in Federal Funds Rate Target Range — Huge Uncertainty Generated By Rapidly Growing Annual Deficits in Federal Government Spending Resulting in Rising National Debt Approaching $23,000,000,000,000 and Unfunded Liabilities and and Obligations Over $230,000,000,000,000! — Bubbles Bubbles Everywhere — Beyond Bubbles — U.S. Government Bankrupt Now! — Make It Rain on The Blockchain — Trust and Truth — Videos

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The Pronk Pops Show Podcasts

Pronk Pops Show 1288 July 11, 2019

Pronk Pops Show 1287 July 10, 2019

Pronk Pops Show 1286 July 9, 2019

Pronk Pops Show 1285 July 8, 2019

Pronk Pops Show 1284 July 2, 2019

Pronk Pops Show 1283 July 1, 2019

Pronk Pops Show 1282 June 27, 2019

Pronk Pops Show 1281 June 26, 2019

Pronk Pops Show 1280 June 25, 2019

Pronk Pops Show 1279 June 24, 2019

Pronk Pops Show 1278 June 20, 2019 

Pronk Pops Show 1277 June 19, 2019

Pronk Pops Show 1276 June 18, 2019

Pronk Pops Show 1275 June 17, 2019

Pronk Pops Show 1274 June 13, 2019

Pronk Pops Show 1273 June 12, 2019

Pronk Pops Show 1272 June 11, 2019

Pronk Pops Show 1271 June 10, 2019

Pronk Pops Show 1270 June 6, 2019

Pronk Pops Show 1269 June 5, 2019

Pronk Pops Show 1268 June 3, 2019

Pronk Pops Show 1267 May 30, 2019

Pronk Pops Show 1266 May 29, 2019

Pronk Pops Show 1265 May 28, 2019

Pronk Pops Show 1264 May 24, 2019

Pronk Pops Show 1263 May 23, 2019

Pronk Pops Show 1262 May 22, 2019

Pronk Pops Show 1261 May 21, 2019

Pronk Pops Show 1260 May 20, 2019

Pronk Pops Show 1259 May 16, 2019

Pronk Pops Show 1258 May 15, 2019

Pronk Pops Show 1257 May 14, 2019

Pronk Pops Show 1256 May 13, 2019

Pronk Pops Show 1255 May 10, 2019

Pronk Pops Show 1254 May 9, 2019

Pronk Pops Show 1253 May 8, 2019

Pronk Pops Show 1252 May 7, 2019

Pronk Pops Show 1251 May 6, 2019

Pronk Pops Show 1250 May 3, 2019

Pronk Pops Show 1249 May 2, 2019

Pronk Pops Show 1248 May 1, 2019

Pronk Pops Show 1247 April 30, 2019

Pronk Pops Show 1246 April 29, 2019

Pronk Pops Show 1245 April 26, 2019

Pronk Pops Show 1244 April 25, 2019

Pronk Pops Show 1243 April 24, 2019

Pronk Pops Show 1242 April 23, 2019

Pronk Pops Show 1241 April 18, 2019

Pronk Pops Show 1240 April 16, 2019

Pronk Pops Show 1239 April 15, 2019

Pronk Pops Show 1238 April 11, 2019

Pronk Pops Show 1237 April 10, 2019

Pronk Pops Show 1236 April 9, 2019

Pronk Pops Show 1235 April 8, 2019

Pronk Pops Show 1234 April 5, 2019

Pronk Pops Show 1233 April 4, 2019

Pronk Pops Show 1232 April 1, 2019 Part 2

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Part 2: Story 1: Federal Reserve Will Cut the Federal Funds Target Rate Range in July By .25% or 25 Basis Points If Second Quarter Real Gross Domestic Product Rate of Growth Falls Below 3% — Otherwise No Change in Federal Funds Rate Target Range — Huge Uncertainty Generated By Rapidly Growing Annual Deficits in Federal Government Spending Resulting in Rising National Debt Approaching $23,000,000,000,000 and Unfunded Liabilities and and Obligations Over $230,000,000,000,000! — Bubbles Bubbles Everywhere — Beyond Bubbles — Make It Rain on The Blockchain — Trust and Truth — Videos

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Fed Chair Jerome Powell testifies before Congress

Streamed live on Jul 10, 2019

House Financial Services Committee holds hearing on “Monetary Policy & the State of the Economy.” Fed Chair Powell testifies. All eyes will be on Powell when he testifies before a House panel on monetary policy in the first of his 2-day semiannual testimony to Congress. Investors are looking to Powell for what to expect at the next policy meeting at the end of July. FOX Business Network (FBN) is a financial news channel delivering real-time information across all platforms that impact both Main Street and Wall Street. Headquartered in New York — the business capital of the world — FBN launched in October 2007 and is the leading business network on television, topping CNBC in Business Day viewers for the second consecutive year. T he network is available in more than 80 million homes in all markets across the United States. Owned by FOX, FBN has bureaus in Chicago, Los Angeles, Washington, D.C. and London.

 

Fed Chair Jerome Powell’s Senate testimony on monetary policy – 07/11/2019

Streamed live on Jul 11, 2019

Federal Reserve Chairman Jerome Powell testifies before Senate Committee on Banking, Housing and Urban Affairs on the monetary policy and the U.S. economy.

Fed Chair Jerome Powell’s House testimony: The big takeaways

Economy can sustain lower jobless rate than we thought, says Fed’s Powell

Larry Kudlow: AOC ‘nailed it’ with questions to Fed chair

Cryptocurrencies rally despite Trump’s rebuke | Money Talks

Fed keeps interest rates steady, signals possible cuts in 2019

Streamed live on Jun 19, 2019

Federal Open Market Cmte announces Fed Funds Interest Rates will remain unchanged.

The Pension Bomb

10 Myths About Government Debt

What Will Cause The Next Recession – Robert Shiller On Human Behavior

Economic Collapse Warning! $222 Trillion Dollar True Size Of Government Debt & Stock Market CRASH!

Dr. Laurence Kotlikoff on the Implications of Rising National Debt

Public Choice Theory: Why Government Often Fails

Howard Marks | The Impact of Debt, Demographics, and Unfunded Liabilities

Santelli Exchange: Underfunded pension liabilities

Bill Bonner Interview: hold on to your cash, the real financial crisis is yet to come

Published on Sep 16, 2015

MoneyWeek’s editor in chief Merryn Somerset Webb talks to Bill Bonner about economic cycles and the ‘cashless society’. Click here to find out how it could affect you: http://pro1.moneyweek.com/434014/

The Upcoming Financial Crisis That Will Dwarf That of 2008 – Expect Civil Unrest

Best Documentary of the Housing Market Crash (of 2019?) | Inside the Meltdown | Behind the Big Short

Exodus out of high tax states with unfunded pensions?

N.J. pension crisis explained with popsicle sticks

A Misalignment of Interests: The Politics of Pension Funding (Pension Pursuit)

A Thunderhead: Pensions and Unfunded Liabilities

Deficits, Debts and Unfunded Liabilities: The Consequences of Excessive Government Spending

Published on May 10, 2010

Huge budget deficits and record levels of national debt are getting a lot of attention, but this video explains that unfunded liabilities for entitlement programs are Americas real red-ink challenge. More important, this CF&P mini-documentary reveals that deficits and debt are symptoms of the real problem of an excessive burden of government spending. http://www.freedomandprosperity.org

Facebook’s Libra Cryptocurrency

Facebook’s plan to control the global financial system

Bitcoin vs. Gold Peter Schiff debates Max Keiser

Keiser Report: #DropGold: Peter Schiff Responds (E1381)

Digital Currency’s Role in the Future of Central Banks

Christine Lagarde: ‘Central Bank digital currency is coming alive’

Digital Currency Has Real Value — Here’s Why | CNBC

Japan made bitcoin a legal currency – now it’s more popular than ever | CNBC Reports

the graduate one word plastics

There is a great future in blockchain?

Blockchain and Crypto: Past, Present, and Future | Douglas Pepe | TEDxRanneySchool

Mr Bitcoin: “I don’t want money, I don’t want fame!” BBC News

Is This Man the Inventor of Bitcoin?

Blockchain Expert Explains One Concept in 5 Levels of Difficulty | WIRED

How does a blockchain work – Simply Explained

Bitcoin: Beyond The Bubble – Full Documentary

Scott Adams’ Guide To Blockchain: The Technology That Will Change Everything

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How the blockchain is changing money and business | Don Tapscott

TED

Published on Sep 16, 2016

What is the blockchain? If you don’t know, you should; if you do, chances are you still need some clarification on how it actually works. Don Tapscott is here to help, demystifying this world-changing, trust-building technology which, he says, represents nothing less than the second generation of the internet and holds the potential to transform money, business, government and society. TEDTalks is a daily video podcast of the best talks and performances from the TED Conference, where the world’s leading thinkers and doers give the talk of their lives in 18 minutes (or less). Look for talks on Technology, Entertainment and Design — plus science, business, global issues, the arts and much more. Find closed captions and translated subtitles in many languages at http://www.ted.com/translate

The Graduate and the Perpetuation of Loneliness

Understanding The Graduate 50 Years Later

What is Blockchain

Published on Jun 9, 2016

Blockchain explained. Shai Rubin, CTO of Citi Innovation Lab, explains in an easy and simple way the basics of blockchain.

Blockchains: how can they be used?

19 Industries The Blockchain Will Disrupt

How the blockchain will radically transform the economy | Bettina Warburg

Blockchain is Eating Wall Street | Alex Tapscott | TEDxSanFrancisco

How to Use Blockchain to Create a Better Future | Brian Condenanza | TEDxHautLacSchool

Our Lives in a Blockchain-Powered Smart Economy | Eddy Travia | TEDxINSEAD

Is Bitcoin the Future of Money? Peter Schiff vs. Erik Voorhees

The Convergence of Blockchain, Machine Learning, and the Cloud | Steve Lund | TEDxBYU

The Value Revolution: How Blockchain Will Change Money & the World | Galia Benartzi | TEDxWhiteCity

Blockchain Technology Explained (2 Hour Course)

How Bitcoin Works in 5 Minutes (Technical)

How Bitcoin Works Under the Hood

Why crypto regulation is doomed to fail | Marit Hansen | TEDxKielUniversity

Bitcoin scares central banks. Here’s why

George Gilder: Forget Cloud Computing, Blockchain is the Future

Why central banks are experimenting with blockchain

GREAT SCENE – The Graduate (finale)

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Why Public Policy Always Ends in Disaster

It’s Hormeggedon! What Happens When Public Policy Passes the Point of No Return

Bill Bonner Interview: hold on to your cash, the real financial crisis is yet to come

Bill Bonner on the financial markets WORLD.MINDS INTERVIEW

Jim Simons on His Formula for Improving Math Education

Billionaire James Simons: Quantitative Investment Strategy, Career and Trading (2019)

Renaissance Man — Jim Simons

Billionaire Mathematician – Numberphile

The mathematician who cracked Wall Street | Jim Simons

James H. Simons: Mathematics, Common Sense and Good Luck

By appearing to buckle to Trump on rates, is the Fed chief creating problems down the road?

By appearing to buckle to Trump on rates, is the Fed chief creating problems down the road?
Federal Reserve Board Chairman Jerome Powell speaks at a news conference in Washington on June 19. (Nicholas Kamm / AFP/Getty Images)

In signaling that the Federal Reserve is almost certain to cut interest rates at the end of this month, Fed Chairman Jerome H. Powell may have given President Trump what he wants.

But the central bank now looks more vulnerable to criticism that it is caving to political pressures that will only grow as the election cycle heats up.

Powell, in testimony to lawmakers Wednesday, essentially argued that heightened uncertainty, from trade tensions and slowing global economic growth, along with low inflation, was enough to justify a cut in interest rates.

Historically, the Fed has lowered rates to ward off recession or when it sees substantial risks of a downturn.

The U.S. economy expanded at a nearly 3% pace last year and, although it has slowed in recent months, the Fed and most private forecasters see growth continuing at a decent rate. The latest jobs report for June showed hiring remains strong, and Trump recently agreed to a ceasefire in the trade war with China, tenuous as it may be.For those reasons, Powell’s remarks Wednesday came as a pleasant surprise to financial markets. Stocks rose to record highs.

Lowering the rate by a quarter point later this month may help borrowers a little. The Fed’s main rate is a benchmark for credit cards, auto loans and other short-term consumer lending, but long-term rates such as mortgages already have dropped in anticipation of a Fed rate cut, meaning it’s unlikely to provide much of a boost to the housing market or the broader economy.

“We’ve already gotten 90% of the benefit; it’s already priced into the market,” said Dean Baker, senior economist at the Center for Economic and Policy Research.

Investors are expecting at least one more quarter-point rate cut after July, and some even two. Powell and his colleagues at the Fed will have their hands full managing investors’ expectations on future rate reductions, so they don’t set themselves up for a sharp fall.

“The issue that the Fed is going to run into … is just like parenting,” said Ryan Sweet, an economist at Moody’s Analytics. “They can’t bend every time the markets throw a tantrum. At some point, you’ve got to put your foot down.”

Market expectations aside, Powell’s bigger challenge is likely to come from Trump. The president has been publicly hammering Powell to lower interest rates. Trump has criticized the Fed for raising rates four times last year, and no one thinks he will be satisfied if the Fed drops its benchmark rate by a quarter point on July 31, as it’s now expected to do.

Trump and his economic team have pressed the Fed to slash rates by a full point, and Trump isn’t likely to stop jawboning the Fed in the coming months.

Some economic experts say Trump already has succeeded in getting into the heads of Fed decision makers.

“Powell does seem to be going a little bit out of his way to reverse the rate hikes made last year,” said Chris Rupkey, managing director and chief economist at MUFG Union Bank in New York. “The president’s like another active member of the Fed board in the room. I wouldn’t tell him no, would you?”

Rupkey and some other Fed watchers say Powell is moving a bit too early in readying rate cuts, especially with job growth still running very strong. Only a few months ago, the Fed’s stance on interest rates was to wait and see.

“Should they cut rates at this time? Absolutely not!” said Bernard Baumohl, chief global economist at Economic Outlook Group. “There is no economic justification to take that step now.

“For one, there is little to suggest this business cycle [is] struggling. The softness we see in some data points have little to do with economic fundamentals. The trade war with China and the havoc it has caused to global supply chain are the primary reasons those sectors have weakened.”

But other analysts argue that there’s good reason for the shift in the Fed’s posture. According to minutes from their last meeting in June, released Wednesday, Fed policymakers were feeling that the downside risks to the economy “had increased significantly over recent weeks.”

And in his testimony Wednesday to the House Financial Services Committee, Powell said that since May, crosscurrents that seemed to moderate earlier in the year “have reemerged, creating greater uncertainty.” Among other concerns, he said, business spending, trade and manufacturing activity have slowed.

“The issue really is more now on the business side where we see business confidence and business investment weakening a bit,” he told lawmakers, adding that there’s rising risk as well to consumer spending, which accounts for 70% of U.S. economic activity. “Household confidence has remained high, but over time uncertainty can cause households to hold back as well.”

Powell, sensitive to the political pressures bearing on the Fed, took pains in his prepared remarks to defend the integrity of the central bank and the basis for its policymaking.

“Congress has given us an important degree of independence so that we can effectively pursue our statutory goals based on objective analysis and data,” Powell said as he began his testimony.

Trump has reportedly considered firing Powell or demoting him, although it’s not clear whether the president has the legal authority to do so. Powell reiterated Wednesday that the law is on his side and that he intends to serve the full four-year term as Fed chair, which he assumed in February 2018.

Lawmakers on both sides of the aisle have cautioned Trump against taking steps to remove Powell as Fed leader. And on Wednesday, Democratic lawmakers sought to drive home that point.

“Mr. Chairman, if you got a call from the president today or tomorrow, and he said, ‘I’m firing you. Pack up. It’s time to go,’ what would you do?” asked Rep. Maxine Waters (D-Los Angeles), chair of the Financial Services Committee.

“Well, of course I would not do that,” Powell responded, to which Waters added, “I can’t hear you,” eliciting laughter.

But the president’s unusually persistent and heavy pressure on the Fed is anything but a laughing matter.

Alan Blinder, a Fed vice chairman in the mid-1990s, said the concern about the bank’s independence stemming from the president’s attacks was such that it could legitimately be a factor in a Fed decision not to raise rates.

Apart from the potential harm to its credibility, a more immediate risk for the Fed in cutting rates is that it could limit the central bank’s arsenal in fighting the next recession. The Fed’s main benchmark rate is less than 2.5%, low by historical standards.

In response to lawmakers’ questioning, Powell said the resumption of trade talks between the United States and China was a “constructive step” but that doesn’t really change the outlook.

“I would say that the bottom line for me is that the uncertainties around global growth and trade continue to weigh on the outlook.”

https://www.latimes.com/business/la-fi-jerome-powell-interest-rates-20190710-story.html

July 10, 2019

Semiannual Monetary Policy Report to the Congress

Chair Jerome H. Powell

Before the Committee on Financial Services, U.S. House of Representatives, Washington, D.C.

 

Chair Powell submitted identical remarks to the Committee on Banking, Housing, and Urban Affairs, U.S. Senate, on July 11, 2019.

Chairwoman Waters, Ranking Member McHenry, and other members of the Committee, I am pleased to present the Federal Reserve’s semiannual Monetary Policy Report to Congress.

Let me start by saying that my colleagues and I strongly support the goals of maximum employment and price stability that Congress has set for monetary policy. We are committed to providing clear explanations about our policies and activities. Congress has given us an important degree of independence so that we can effectively pursue our statutory goals based on objective analysis and data. We appreciate that our independence brings with it an obligation for transparency so that you and the public can hold us accountable.

Today I will review the current economic situation and outlook before turning to monetary policy. I will also provide an update of our ongoing public review of our framework for setting monetary policy.

Current Economic Situation and Outlook 
The economy performed reasonably well over the first half of 2019, and the current expansion is now in its 11th year. However, inflation has been running below the Federal Open Market Committee’s (FOMC) symmetric 2 percent objective, and crosscurrents, such as trade tensions and concerns about global growth, have been weighing on economic activity and the outlook.

The labor market remains healthy. Job gains averaged 172,000 per month from January through June. This number is lower than the average of 223,000 a month last year but above the pace needed to provide jobs for new workers entering the labor force. Consequently, the unemployment rate moved down from 3.9 percent in December to 3.7 percent in June, close to its lowest level in 50 years. Job openings remain plentiful, and employers are increasingly willing to hire workers with fewer skills and train them. As a result, the benefits of a strong job market have been more widely shared in recent years. Indeed, wage gains have been greater for lower-skilled workers. That said, individuals in some demographic groups and in certain parts of the country continue to face challenges. For example, unemployment rates for African Americans and Hispanics remain well above the rates for whites and Asians. Likewise, the share of the population with a job is higher in urban areas than in rural communities, and this gap widened over the past decade. A box in the July Monetary Policy Report provides a comparison of employment and wage gains over the current expansion for individuals with different levels of education.

Gross domestic product increased at an annual rate of 3.1 percent in the first quarter of 2019, similar to last year’s pace. This strong reading was driven largely by net exports and inventories—components that are not generally reliable indicators of ongoing momentum. The more reliable drivers of growth in the economy are consumer spending and business investment. While growth in consumer spending was weak in the first quarter, incoming data show that it has bounced back and is now running at a solid pace. However, growth in business investment seems to have slowed notably, and overall growth in the second quarter appears to have moderated. The slowdown in business fixed investment may reflect concerns about trade tensions and slower growth in the global economy. In addition, housing investment and manufacturing output declined in the first quarter and appear to have decreased again in the second quarter.

After running close to our 2 percent objective over much of last year, overall consumer price inflation, measured by the 12-month change in the price index for personal consumption expenditures (PCE), declined earlier this year and stood at 1.5 percent in May. The 12-month change in core PCE inflation, which excludes food and energy prices and tends to be a better indicator of future inflation, has also come down this year and was 1.6 percent in May.

Our baseline outlook is for economic growth to remain solid, labor markets to stay strong, and inflation to move back up over time to the Committee’s 2 percent objective. However, uncertainties about the outlook have increased in recent months. In particular, economic momentum appears to have slowed in some major foreign economies, and that weakness could affect the U.S. economy. Moreover, a number of government policy issues have yet to be resolved, including trade developments, the federal debt ceiling, and Brexit. And there is a risk that weak inflation will be even more persistent than we currently anticipate. We are carefully monitoring these developments, and we will continue to assess their implications for the U.S economic outlook and inflation.

The nation also continues to confront important longer-run challenges. Labor force participation by those in their prime working years is now lower in the United States than in most other nations with comparable economies. As I mentioned, there are troubling labor market disparities across demographic groups and different parts of the country. The relative stagnation of middle and lower incomes and low levels of upward mobility for lower-income families are also ongoing concerns. In addition, finding ways to boost productivity growth, which leads to rising wages and living standards over the longer term, should remain a high national priority. And I remain concerned about the longer-term effects of high and rising federal debt, which can restrain private investment and, in turn, reduce productivity and overall economic growth. The longer-run vitality of the U.S. economy would benefit from efforts to address these issues.

Monetary Policy 
Against this backdrop, the FOMC maintained the target range for the federal funds rate at 2‑1/4 to 2-1/2 percent in the first half of this year. At our January, March, and May meetings, we stated that we would be patient as we determined what future adjustments to the federal funds rate might be appropriate to support our goals of maximum employment and price stability.

At the time of our May meeting, we were mindful of the ongoing crosscurrents from global growth and trade, but there was tentative evidence that these crosscurrents were moderating. The latest data from China and Europe were encouraging, and there were reports of progress in trade negotiations with China. Our continued patient stance seemed appropriate, and the Committee saw no strong case for adjusting our policy rate.

Since our May meeting, however, these crosscurrents have reemerged, creating greater uncertainty. Apparent progress on trade turned to greater uncertainty, and our contacts in business and agriculture report heightened concerns over trade developments. Growth indicators from around the world have disappointed on net, raising concerns that weakness in the global economy will continue to affect the U.S. economy. These concerns may have contributed to the drop in business confidence in some recent surveys and may have started to show through to incoming data.

In our June meeting statement, we indicated that, in light of increased uncertainties about the economic outlook and muted inflation pressures, we would closely monitor the implications of incoming information for the economic outlook and would act as appropriate to sustain the expansion. Many FOMC participants saw that the case for a somewhat more accommodative monetary policy had strengthened. Since then, based on incoming data and other developments, it appears that uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook. Inflation pressures remain muted.

The FOMC has made a number of important decisions this year about our framework for implementing monetary policy and our plans for completing the reduction of the Fed’s securities holdings. At our January meeting, we decided to continue to implement monetary policy using our current policy regime with ample reserves, and emphasized that we are prepared to adjust any of the details for completing balance sheet normalization in light of economic and financial developments. At our March meeting, we communicated our intention to slow, starting in May, the decline in the Fed’s aggregate securities holdings and to end the reduction in these holdings in September. The July Monetary Policy Report provides details on these decisions.

The July Monetary Policy Report also includes an update on monetary policy rules. The FOMC routinely looks at monetary policy rules that recommend a level for the federal funds rate based on inflation and unemployment rates. I continue to find these rules helpful, although using these rules requires careful judgment.

We are conducting a public review of our monetary policy strategy, tools, and communications—the first review of its kind for the FOMC. Our motivation is to consider ways to improve the Committee’s current policy framework and to best position the Fed to achieve maximum employment and price stability. The review has started with outreach to and consultation with a broad range of people and groups through a series of Fed Listens events. The FOMC will consider questions related to the review at upcoming meetings. We will publicly report the outcome of our discussions.

Thank you. I am happy to respond to your questions.

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Last Update: July 10, 2019

Financial Stability Oversight Council

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Financial Stability Oversight Council
FSOC Meeting.jpg
3rd FSOC Meeting (January 18, 2011)
Agency overview
Formed July 21, 2010
Jurisdiction United States Government
Website Treasury.gov/FSOC

The Financial Stability Oversight Council (FSOC) is a United States federal government organization, established by Title I of the Dodd–Frank Wall Street Reform and Consumer Protection Act, which was signed into law by President Barack Obama on July 21, 2010.[1] The Office of Financial Research is intended to provide support to the council.

The Dodd-Frank Act provides the Council with broad authorities to identify and monitor excessive risks to the U.S. financial system arising from the distress or failure of large, interconnected bank holding companies or non-bank financial companies, or from risks that could arise outside the financial system; to eliminate expectations that any American financial firm is “too big to fail“; and to respond to emerging threats to U.S. financial stability.[2]

The Act also designates the Secretary of the Treasury as Chairperson. Inherent to the FSOC’s role as a consultative council is facilitation of communication among financial regulators. The FSOC has the authority to set aside certain financial regulations published by the Consumer Financial Protection Bureau if those rules would threaten financial stability.

Contents

Purpose and duties

At minimum, it must meet quarterly.

Specifically, there are three purposes assigned to the Council:[3]

  1. identify the risks to the financial stability of the United States from both financial and non-financial organizations
  2. promote market discipline, by eliminating expectations that the Government will shield them from losses in the event of failure
  3. respond to emerging threats to the stability of the US financial system

Activities

On July 26, 2011, the First Annual Financial Stability Oversight Council Report [4] was issued by the Council fulfilling the Congressional mandate to report on the activities of the Council. The Report is intended to describe significant financial market and regulatory developments, analyze potential emerging threats, and make certain recommendations. The July 26, 2011 report warned that the United States faces potential losses connected with the European debt crisis.[5]

In September 2014, a group of Republican lawmakers accused U.S. regulators of “disparate treatment” of nonbank financial firms currently considered for tougher oversight. The lawmakers stated that the regulators should conduct the same level of analysis and due diligence for the insurance industry as it has for the asset management industry before formally considering whether to designate another insurance company.[6]

After much anticipation and debate about whether FSOC would and should designate individual asset managers (a nonbank financial firm) as systemically important financial institutions (SIFIs) which would subject them to greater oversight, FSOC announced in August, 2014, that rather than designating individual asset managers as SIFIs, it would focus on examining systemic risk posed by asset managers’ products, and activities. As a result of FSOC’s announcement the Securities and Exchange Commission is now expected and assumed to take a prudential supervisory role of individual asset managers, in addition to exercising its traditional mandate of investor protection.[7]

Since the inception of FSOC, the Council has designated select financial market utilities (FMUs) as “systemically important.” The designation of systemically important subjects the FMU to enhanced regulatory oversight. The three supervisory agencies charged with regulating systemically important FMUs are: the Federal Reserve Board, Securities and Exchange Commission, and Commodity Futures Trading Commission.[8]

Resources

The Federal Advisory Committee Act, which limits the powers of advisory committees, does not apply to the council. The council has an almost unlimited budget in that the Council may draw on virtually any resource of any department or agency of the federal government. Any employee of the federal government may be detailed to the Council without reimbursement and without interruption or loss of civil service status or privilege. Any member of the Council who is an employee of the federal government serves without additional compensation. In addition, “An employee of the Federal Government detailed to the Council shall report to and be subject to oversight by the Council during the assignment to the Council, and shall be compensated by the department or agency from which the employee was detailed.”[9] Additionally, “Any expenses of the Council shall be treated as expenses of, and paid by, the Office of Financial Research”.[10]

Authority

The Council has very broad powers to monitor, investigate and assess any risks to the US financial system. The Council has the authority to collect information from any state or federal financial regulatory agency, and may direct the Office of Financial Research, which supports the work of the Council, “to collect information from bank holding companies and nonbank financial companies”.[11] The Council monitors domestic and international regulatory proposals, including insurance and accounting issues, and advises Congress and the Federal Reserve on ways to enhance the integrity, efficiency, competitiveness and stability of the US financial markets. On a regular basis, the Council is required to make a report to Congress describing the state of the U.S. financial system. Each voting member of the Council is required to either affirm that the federal government is taking all reasonable steps to assure financial stability and mitigate systemic risk, or describe additional steps that need to be taken.[12] Under specific circumstances, the Chairman of the Council (who is also the Secretary of the Treasury), with the concurrence of 2/3 voting members, may place nonbank financial companies or domestic subsidiaries of international banks under the supervision of the Federal Reserve if it appears that these companies could pose a threat to the financial stability of the US.[13] The Federal Reserve may promulgate safe harbor regulations to exempt certain types of foreign banks from regulation, with approval of the Council.[14] Under certain circumstances, the Council may provide for more stringent regulation of a financial activity by issuing recommendations to the primary financial regulatory agency, which the primary financial agency is obliged to implement – the Council reports to Congress on the implementation or failure to implement such recommendations.[15]

Financial reporting to the Council

The Council may require any bank or non-bank financial institution with assets over $50 billion to submit certified reports as to the company’s:[16]

  • financial condition
  • systems in place to monitor and control any risks
  • transactions with subsidiaries that are regulated banks
  • the extent to which any of the company’s activities could have a potential disruptive impact on financial markets or the overall financial stability of the country

The Comptroller General of the United States may audit the Council or anyone working for the Council, and may have access to any information under the control of or used by the Council.[17]

Review 2017

On April 21, 2017, President Donald Trump signed one Executive Order13789;[18][19][20] and two Presidential memorandaOrderly Liquidation Authority Review and Financial Stability Oversight Council[21][22][23] to review the Council and parts of the Dodd–Frank Wall Street Reform and Consumer Protection Act.

Organization

Voting members

The Financial Stability Oversight Council has ten voting members:[24]

  1. Secretary of the Treasury (chairs the Council)
  2. Chairman of the Federal Reserve
  3. Comptroller of the Currency
  4. Director of the Consumer Financial Protection Bureau
  5. Chairman of the U.S. Securities and Exchange Commission
  6. Chairman of the Federal Deposit Insurance Corporation
  7. Chairman of the Commodity Futures Trading Commission
  8. Director of the Federal Housing Finance Agency
  9. the Chairman of the National Credit Union Administration Board
  10. an independent member (with insurance expertise), appointed by the President

Current voters[edit]

Current Voters (sortable)
Agency Currently Party Appointed Removable Notes
Treasury Steven Mnuchin Republican Directly Any time
SEC Jay Clayton Independent From 5 Board Members After 5-year term
CFTC J. Christopher Giancarlo Republican From 5 Board Members After 5-year term
Fed Jerome Powell From 7 Board Members After 4-year term
OCC Joseph Otting Directly After 5-year term
CFPB Kathleen Kraninger Directly After 5 year term
FDIC Jelena McWilliams From 3 Board Members After 5-year term
FHFA Mel Watt Democratic Directly After 5-year term
NCUA J. Mark McWatters Republican From 3 Board Members After 6-year term
Insurance Thomas E. Workman Directly After 6-year term

Non-voting Members

There are five non-voting members:

  1. Director of the Office of Financial Research (an independent agency within the Treasury Department and established by the Dodd-Frank Act): Richard Berner
  2. Director of the Federal Insurance Office (part of the Treasury Department and established in this Act): Steven E. Seitz
  3. a state insurance commissioner, to be designated by a selection process determined by the state insurance commissioners (2-year term): Maine Superintendent Eric Cioppa web|url=http://naic.org/members_bios/missouri.htm%7Ctitle=Commissioner Bio – Missouri|publisher=}}</ref> delegate to the FSOC.[25]
  4. a state banking supervisor, to be designated by a selection process determined by the state banking supervisors (2-year term): John P. Ducrest, Commissioner of the Louisiana Office of Financial Institutions
  5. a state securities commissioner (or officer performing like function) to be designated by a selection process determined by such state security commissioners (2-year term): Melanie Senter Lubin, Maryland Securities Commissioner.

See also

References

  1. ^ “Bill Summary & Status – 111th Congress (2009–2010) – H.R.4173 – All Information – THOMAS (Library of Congress)”. Library of Congress. Retrieved July 22, 2010.
  2. ^ Stupak, Jeffrey M. (February 12, 2018). Financial Stability Oversight Council (FSOC): Structure and Activities(PDF). Washington, DC: Congressional Research Service. Retrieved 27 February 2018.
  3. ^ H.R. 4173, § 112(a)(1)
  4. ^ “2011 Annual Report”. U.S. Department of the Treasury. Retrieved August 8, 2011.
  5. ^ The Center for Public Integrity. “U.S. Stock Market Plunge Followed Financial Stability Oversight Council Warning”. The National Law Review. Retrieved August 8, 2011.
  6. ^ Stephenson, Emily. “U.S. Republican lawmakers say regulators treat insurers unfairly”Reuters.
  7. ^ “Asset managers: FSOC stands down, SEC stands up”(PDF). PwC Financial Services Regulatory Practice. December 2014.
  8. ^ “A closer look: Financial market utilities: Is the system safer?”(PDF). PwC Financial Services Regulatory Practice. February 2015.
  9. ^ H.R. 4173 § 111(j)
  10. ^ H.R. 4173 § 118
  11. ^ H.R. 4173 § 112(a)(2)
  12. ^ H.R. 4173 § 112(b)
  13. ^ H.R. 4173 § 113
  14. ^ H.R. 4173 § 170
  15. ^ H.R. 4173 § 120
  16. ^ H.R. 4173, § 116
  17. ^ H.R. 4173 § 122
  18. ^ Office of the Press Secretary (April 21, 2017). “Presidential Memorandum on Orderly Liquidation Authority Review”whitehouse.govWashington, D.C.White House. Retrieved May 3, 2017.
  19. ^ Tausche, Kayla; Javers, Eamon (April 20, 2017). “Trump to sign ‘financial-related’ executive actions on Friday”CNBCEnglewood Cliffs, New JerseyNBCUniversal (CNBC LLC). Retrieved May 3, 2017.
  20. ^ Boyd, Brecke (April 21, 2017). “POTUS Memo on Orderly Liquidation Review May Clear Path for Legislation Amending Bankruptcy Code”Baker BottsHouston: Baker Botts L.L.P. Retrieved May 3, 2017.
  21. ^ Office of the Press Secretary (April 21, 2017). “Presidential Memorandum on the Financial Stability Oversight Council”whitehouse.govWashington, D.C.White House. Retrieved May 3, 2017.
  22. ^ Lane, Sylvan (April 20, 2017). “Trump to sign executive order, memoranda on financial regulation at Treasury”The HillWashington, D.C.: Capitol Hill Publishing Corp. Retrieved May 3,2017.
  23. ^ Puzzanghera, Jim (April 21, 2017). “Trump targets Dodd-Frank rules designed to wall off risky banks”Los Angeles TimesTromc Inc. Retrieved May 3, 2017.
  24. ^ H.R. 4173, § 111
  25. ^ “SPECIAL SECTION: Financial Stability Oversight Council”.

Further reading

External links

https://en.wikipedia.org/wiki/Financial_Stability_Oversight_Council

The shift away from LIBOR: implications for retail lenders

OUT-LAW ANALYSIS | 28 Mar 2019 | 9:30 am | 4 min. read

ANALYSIS: Use of the London Interbank Offered Rate (LIBOR) as a benchmark interest rate is likely to come to an end in 2021 or shortly afterwards, with implications for millions of pounds-worth of retail banking contracts.

Financial services regulators and central banks around the world have been pushing for a transition away from the use of interbank offered rates (IBORs), given the previous attempted market manipulation, false reporting and the decline in liquidity in interbank unsecured funding markets. They include the New York Federal Reserve Bank, the Bank of England and the Financial Conduct Authority (FCA), whose director of markets and wholesale policy made the comments above in an industry speech in January 2019.

Whilst there has been understandable focus on the impact of LIBOR transition on the wholesale banking industry and especially on the £30 trillion global derivatives market, the impact of LIBOR transition on other parts of financial markets should not be forgotten. A variety of loan products reference LIBOR, such as auto finance, personal loans and credit cards, while loans and mortgages that reference LIBOR are still being issued in some parts of the market.

Those lending to consumers will have to consider how the transition affects their legacy contracts, as well as any new business still being written that still references LIBOR. There may also be other ways in which LIBOR is referenced in retail lending contracts, for example in relation to penalty rates or default rates. Retail lenders will need to consider how LIBOR transition affects funding models and risk mitigation techniques. The transition may also give rise to regulatory conduct risk and litigation risk. It is not inconceivable that more mis-selling cases connected to LIBOR could arise in the retail space.

What practical preparations can retail lenders make?

The first step is to identify contracts which are LIBOR-linked as well as any other contractual references to LIBOR, such as penalty rates. Firms should then plan their transition, taking appropriate steps from a legal, regulatory and operational perspective to transition legacy contracts and future business not only from LIBOR, but also from other IBORs, such as Euribor and the Tokyo Interbank Offered Rate (TIBOR).

Firms looking to replace LIBOR rates in legacy contracts should not underestimate the task ahead. The journey to an IBOR replacement begins with a detailed review of loan portfolios. It will be necessary to identify the relevant IBOR reference rate used and whether a fall-back position has been catered for in the contract if the reference rate ceases to be published. An assessment of whether the fall-back rate can be relied on for the remainder of the term would then need to be undertaken.

If no fall-back has been catered for, or the proposed fall-back cannot be used long term, firms are going to have to start looking to the variation terms in their contracts. Contractual variation rights will not be the end of the problem, as firms will then need to identify a risk-free rate (RFR) that is a suitable replacement (see below).

If variation terms need to be relied on, the FCA’s finalised guidance on the fairness of variation terms in financial services consumer contracts will be relevant for firms. If firms have not already done so, they should consider whether their existing variation terms are fair and if the firm has the power to unilaterally vary the contract terms in the way they need. Any suggestion of unfair variation terms and consequent unfair treatment of customers will certainly attract the attention of the regulator.

What alternative reference rates are available?

Global regulators have taken steps to adopt RFRs in place of IBORs. However, these rates do not provide an exact replacement for IBORs, while there has been little uniformity in the adoption of RFRs in relation to the different IBORs, jurisdictions and markets.

The panel banks whose submissions currently inform the LIBOR rate have voluntarily agreed to continue to support it until the end of 2021, although other IBORs are likely to continue beyond this date. The Financial Stability Board, in its November 2018 progress report, said that “it is recognised that transition to RFRs may take longer and therefore maintaining IBORs is still necessary”. This may present a challenge not only in relation to fall-back triggers or fall-back rates in legacy retail lending contracts, but also as regards the most appropriate alternative rates for these contracts.

RFRs such as SONIA, an overnight rate administered by the Bank of England, are not an exact replacement for LIBOR – particularly three-month and six-month LIBOR. This is likely to present challenges for lenders requiring a term rate going forward, and where they seek to replace three and six-month LIBOR in legacy contracts.

For firms, participation in relevant consultations issued by industry-led bodies such as the Bank of England’s Working Group on Sterling Risk Free Reference Rates to assist in shaping transition away from IBORs in a way which is beneficial to your part of the market will be important.

What positions have the UK regulators taken?

The FCA and the Prudential Regulation Authority (PRA) set out their position on LIBOR transition in a joint ‘Dear CEO’ letter of 19 September 2018 (2-page / 277KB PDF). In that letter, to the largest UK banks and insurers, the regulators highlighted that insufficient preparation for LIBOR transition could negatively impact the safety and soundness of firms, their clients and the markets in which they operate. The letter sought assurances from those firms’ senior managers and boards that they were making suitable preparations for LIBOR transition.

Although this letter focused on the largest firms – the so-called ‘category 1’ firms – lenders outside of that group may still wish to reflect not only on their own preparations for LIBOR transition, but also any related conduct risk. Areas of focus should include risks in relation to the Senior Managers and Certification Regime (SMCR) and treating customers fairly, against a backdrop where mortgage debt accounts for over 80% of total UK household liabilities and the FCA has been undertaking a mortgage market review.

There is potential for consumer detriment in relation to mortgages or loans which reference LIBOR, where LIBOR transition has been handled poorly. Firm strategies for communicating their planned changes with consumers, clients, regulators and other stakeholders should be carefully considered and planned.

Charlotte Pope-Williams is a financial regulation expert at Pinsent Masons, the law firm behind Out-Law.com.

https://www.pinsentmasons.com/out-law/analysis/shift-away-from-libor-implications-for-retail-lenders

Blockchain

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Blockchain formation. The main chain (black) consists of the longest series of blocks from the genesis block (green) to the current block. Orphan blocks (purple) exist outside of the main chain.

blockchain,[1][2][3] originally block chain,[4][5] is a growing list of records, called blocks, that are linked using cryptography.[1][6] Each block contains a cryptographic hash of the previous block,[6] a timestamp, and transaction data (generally represented as a Merkle tree).

By design, a blockchain is resistant to modification of the data. It is “an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way”.[7] For use as a distributed ledger, a blockchain is typically managed by a peer-to-peer network collectively adhering to a protocol for inter-node communication and validating new blocks. Once recorded, the data in any given block cannot be altered retroactively without alteration of all subsequent blocks, which requires consensus of the network majority. Although blockchain records are not unalterable, blockchains may be considered secure by design and exemplify a distributed computing system with high Byzantine fault toleranceDecentralized consensus has therefore been claimed with a blockchain.[8]

Blockchain was invented by a person (or group of people) using the name Satoshi Nakamoto in 2008 to serve as the public transaction ledger of the cryptocurrency bitcoin.[1] The identity of Satoshi Nakamoto is unknown. The invention of the blockchain for bitcoin made it the first digital currency to solve the double-spending problem without the need of a trusted authority or central server. The bitcoin design has inspired other applications,[1][3] and blockchains that are readable by the public are widely used by cryptocurrencies. Blockchain is considered a type of payment rail.[9] Private blockchains have been proposed for business use. Sources such as Computerworld called the marketing of such blockchains without a proper security model “snake oil“.[10]

Contents

History

Bitcoin transactions (January 2009 – September 2017)

The first work on a cryptographically secured chain of blocks was described in 1991 by Stuart Haber and W. Scott Stornetta.[6][11] They wanted to implement a system where document timestamps could not be tampered with. In 1992, Bayer, Haber and Stornetta incorporated Merkle trees to the design, which improved its efficiency by allowing several document certificates to be collected into one block.[6][12]

The first blockchain was conceptualized by a person (or group of people) known as Satoshi Nakamoto in 2008. Nakamoto improved the design in an important way using a Hashcash-like method to add blocks to the chain without requiring them to be signed by a trusted party.[6] The design was implemented the following year by Nakamoto as a core component of the cryptocurrency bitcoin, where it serves as the public ledger for all transactions on the network.[1]

In August 2014, the bitcoin blockchain file size, containing records of all transactions that have occurred on the network, reached 20 GB (gigabytes).[13] In January 2015, the size had grown to almost 30 GB, and from January 2016 to January 2017, the bitcoin blockchain grew from 50 GB to 100 GB in size.

The words block and chain were used separately in Satoshi Nakamoto’s original paper, but were eventually popularized as a single word, blockchain, by 2016.

Smart contracts that run on a blockchain, for example ones that “creat[e] invoices that pay themselves when a shipment arrives or share certificates that automatically send their owners dividends if profits reach a certain level.”[1] require an off-chain oracle to access any “external data or events based on time or market conditions [that need] to interact with the blockchain.”[14]

According to Accenture, an application of the diffusion of innovations theory suggests that blockchains attained a 13.5% adoption rate within financial services in 2016, therefore reaching the early adopters phase.[15] Industry trade groups joined to create the Global Blockchain Forum in 2016, an initiative of the Chamber of Digital Commerce.

In May 2018, Gartner found that only 1% of CIOs indicated any kind of blockchain adoption within their organisations, and only 8% of CIOs were in the short-term ‘planning or [looking at] active experimentation with blockchain’.[16]

Structure

A blockchain is a decentralizeddistributed and public digital ledger that is used to record transactions across many computers so that any involved record cannot be altered retroactively, without the alteration of all subsequent blocks.[1][17] This allows the participants to verify and audit transactions independently and relatively inexpensively.[18] A blockchain database is managed autonomously using a peer-to-peer network and a distributed timestamping server. They are authenticated by mass collaboration powered by collective self-interests.[19] Such a design facilitates robust workflow where participants’ uncertainty regarding data security is marginal. The use of a blockchain removes the characteristic of infinite reproducibility from a digital asset. It confirms that each unit of value was transferred only once, solving the long-standing problem of double spending. A blockchain has been described as a value-exchange protocol.[20] A blockchain can maintain title rights because, when properly set up to detail the exchange agreement, it provides a record that compels offer and acceptance.

Blocks

Blocks hold batches of valid transactions that are hashed and encoded into a Merkle tree.[1] Each block includes the cryptographic hash of the prior block in the blockchain, linking the two. The linked blocks form a chain.[1] This iterative process confirms the integrity of the previous block, all the way back to the original genesis block.[21]

Sometimes separate blocks can be produced concurrently, creating a temporary fork. In addition to a secure hash-based history, any blockchain has a specified algorithm for scoring different versions of the history so that one with a higher score can be selected over others. Blocks not selected for inclusion in the chain are called orphan blocks.[21] Peers supporting the database have different versions of the history from time to time. They keep only the highest-scoring version of the database known to them. Whenever a peer receives a higher-scoring version (usually the old version with a single new block added) they extend or overwrite their own database and retransmit the improvement to their peers. There is never an absolute guarantee that any particular entry will remain in the best version of the history forever. Blockchains are typically built to add the score of new blocks onto old blocks and are given incentives to extend with new blocks rather than overwrite old blocks. Therefore, the probability of an entry becoming superseded decreases exponentially[22] as more blocks are built on top of it, eventually becoming very low.[1][23]:ch. 08[24] For example, bitcoin uses a proof-of-work system, where the chain with the most cumulative proof-of-work is considered the valid one by the network. There are a number of methods that can be used to demonstrate a sufficient level of computation. Within a blockchain the computation is carried out redundantly rather than in the traditional segregated and parallel manner.[25]

Block time

The block time is the average time it takes for the network to generate one extra block in the blockchain. Some blockchains create a new block as frequently as every five seconds. By the time of block completion, the included data becomes verifiable. In cryptocurrency, this is practically when the transaction takes place, so a shorter block time means faster transactions. The block time for Ethereum is set to between 14 and 15 seconds, while for bitcoin it is 10 minutes.[citation needed]

Hard forks

hard fork is a rule change such that the software validating according to the old rules will see the blocks produced according to the new rules as invalid. In case of a hard fork, all nodes meant to work in accordance with the new rules need to upgrade their software.

If one group of nodes continues to use the old software while the other nodes use the new software, a split can occur. For example, Ethereum has hard-forked to “make whole” the investors in The DAO, which had been hacked by exploiting a vulnerability in its code. In this case, the fork resulted in a split creating Ethereum and Ethereum Classic chains. In 2014 the Nxt community was asked to consider a hard fork that would have led to a rollback of the blockchain records to mitigate the effects of a theft of 50 million NXT from a major cryptocurrency exchange. The hard fork proposal was rejected, and some of the funds were recovered after negotiations and ransom payment. Alternatively, to prevent a permanent split, a majority of nodes using the new software may return to the old rules, as was the case of bitcoin split on 12 March 2013.[26]

Decentralization

By storing data across its peer-to-peer network, the blockchain eliminates a number of risks that come with data being held centrally.[1] The decentralized blockchain may use ad-hoc message passing and distributed networking.

Peer-to-peer blockchain networks lack centralized points of vulnerability that computer crackers can exploit; likewise, it has no central point of failure. Blockchain security methods include the use of public-key cryptography.[4]:5 A public key (a long, random-looking string of numbers) is an address on the blockchain. Value tokens sent across the network are recorded as belonging to that address. A private key is like a password that gives its owner access to their digital assets or the means to otherwise interact with the various capabilities that blockchains now support. Data stored on the blockchain is generally considered incorruptible.[1]

Every node in a decentralized system has a copy of the blockchain. Data quality is maintained by massive database replication[8] and computational trust. No centralized “official” copy exists and no user is “trusted” more than any other.[4] Transactions are broadcast to the network using software. Messages are delivered on a best-effort basis. Mining nodes validate transactions,[21] add them to the block they are building, and then broadcast the completed block to other nodes.[23]:ch. 08 Blockchains use various time-stamping schemes, such as proof-of-work, to serialize changes.[27] Alternative consensus methods include proof-of-stake.[21] Growth of a decentralized blockchain is accompanied by the risk of centralization because the computer resources required to process larger amounts of data become more expensive.[28]

Openness

Open blockchains are more user-friendly than some traditional ownership records, which, while open to the public, still require physical access to view. Because all early blockchains were permissionless, controversy has arisen over the blockchain definition. An issue in this ongoing debate is whether a private system with verifiers tasked and authorized (permissioned) by a central authority should be considered a blockchain.[29][30][31][32][33] Proponents of permissioned or private chains argue that the term “blockchain” may be applied to any data structure that batches data into time-stamped blocks. These blockchains serve as a distributed version of multiversion concurrency control (MVCC) in databases.[34] Just as MVCC prevents two transactions from concurrently modifying a single object in a database, blockchains prevent two transactions from spending the same single output in a blockchain.[35]:30–31 Opponents say that permissioned systems resemble traditional corporate databases, not supporting decentralized data verification, and that such systems are not hardened against operator tampering and revision.[29][31] Nikolai Hampton of Computerworld said that “many in-house blockchain solutions will be nothing more than cumbersome databases,” and “without a clear security model, proprietary blockchains should be eyed with suspicion.”[10][36]

Permissionless

The great advantage to an open, permissionless, or public, blockchain network is that guarding against bad actors is not required and no access control is needed.[22] This means that applications can be added to the network without the approval or trust of others, using the blockchain as a transport layer.[22]

Bitcoin and other cryptocurrencies currently secure their blockchain by requiring new entries to include a proof of work. To prolong the blockchain, bitcoin uses Hashcash puzzles. While Hashcash was designed in 1997 by Adam Back, the original idea was first proposed by Cynthia Dwork and Moni Naor and Eli Ponyatovski in their 1992 paper “Pricing via Processing or Combatting Junk Mail”.

Financial companies have not prioritised decentralized blockchains.[citation needed]

In 2016, venture capital investment for blockchain-related projects was weakening in the USA but increasing in China.[37] Bitcoin and many other cryptocurrencies use open (public) blockchains. As of April 2018, bitcoin has the highest market capitalization.

Permissioned (private) blockchain

Permissioned blockchains use an access control layer to govern who has access to the network.[38] In contrast to public blockchain networks, validators on private blockchain networks are vetted by the network owner. They do not rely on anonymous nodes to validate transactions nor do they benefit from the network effect.[citation needed] Permissioned blockchains can also go by the name of ‘consortium’ blockchains.[39][better source needed]

Disadvantages of private blockchain

Nikolai Hampton pointed out in Computerworld that “There is also no need for a ’51 percent’ attack on a private blockchain, as the private blockchain (most likely) already controls 100 percent of all block creation resources. If you could attack or damage the blockchain creation tools on a private corporate server, you could effectively control 100 percent of their network and alter transactions however you wished.”[10] This has a set of particularly profound adverse implications during a financial crisis or debt crisis like the financial crisis of 2007–08, where politically powerful actors may make decisions that favor some groups at the expense of others,[40][41] and “the bitcoin blockchain is protected by the massive group mining effort. It’s unlikely that any private blockchain will try to protect records using gigawatts of computing power — it’s time consuming and expensive.”[10] He also said, “Within a private blockchain there is also no ‘race’; there’s no incentive to use more power or discover blocks faster than competitors. This means that many in-house blockchain solutions will be nothing more than cumbersome databases.”[10]

Blockchain analysis

The analysis of public blockchains has become increasingly important with the popularity of bitcoinEthereumlitecoin and other cryptocurrencies.[42] A blockchain, if it is public, provides anyone who wants access to observe and analyse the chain data, given one has the know-how. The process of understanding and accessing the flow of crypto has been an issue for many cryptocurrencies, crypto-exchanges and banks.[43][44] The reason for this is accusations of blockchain enabled cryptocurrencies enabling illicit dark market trade of drugs, weapons, money laundering etc.[45] A common belief has been that cryptocurrency is private and untraceable, thus leading many actors to use it for illegal purposes. This is changing and now specialised tech-companies provide blockchain tracking services, making crypto exchanges, law-enforcement and banks more aware of what is happening with crypto funds and fiat crypto exchanges. The development, some argue, has led criminals to prioritise use of new cryptos such as Monero.[46][47][48] The question is about public accessibility of blockchain data and the personal privacy of the very same data. It is a key debate in cryptocurrency and ultimately in blockchain.[49]

Uses

Blockchain technology can be integrated into multiple areas. The primary use of blockchains today is as a distributed ledger for cryptocurrencies, most notably bitcoin. There are a few operational products maturing from proof of concept by late 2016.[37] Businesses have been thus far reluctant to place blockchain at the core of the business structure.[50]

Cryptocurrencies

Most cryptocurrencies use blockchain technology to record transactions. For example, the bitcoin network and Ethereum network are both based on blockchain. On 8 May 2018 Facebook confirmed that it is opening a new blockchain group[51] which will be headed by David Marcus who previously was in charge of Messenger. According to The Verge Facebook is planning to launch its own cryptocurrency for facilitating payments on the platform.[52]

Smart contracts

Blockchain-based smart contracts are proposed contracts that could be partially or fully executed or enforced without human interaction.[53] One of the main objectives of a smart contract is automated escrow. An IMF staff discussion reported that smart contracts based on blockchain technology might reduce moral hazards and optimize the use of contracts in general. But “no viable smart contract systems have yet emerged.” Due to the lack of widespread use their legal status is unclear.[54]

Financial services

Major portions of the financial industry are implementing distributed ledgers for use in banking,[55][56][57] and according to a September 2016 IBM study, this is occurring faster than expected.[58]

Banks are interested in this technology because it has potential to speed up back office settlement systems.[59]

Banks such as UBS are opening new research labs dedicated to blockchain technology in order to explore how blockchain can be used in financial services to increase efficiency and reduce costs.[60][61]

Berenberg, a German bank, believes that blockchain is an “overhyped technology” that has had a large number of “proofs of concept”, but still has major challenges, and very few success stories.[62]

Video games

A blockchain game CryptoKitties, launched in November 2017.[63] The game made headlines in December 2017 when a cryptokitty character – an in-game virtual pet – was sold for more than US$100,000.[64] CryptoKitties illustrated scalability problems for games on Ethereum when it created significant congestion on the Ethereum network with about 30% of all Ethereum transactions being for the game.[65]

Cryptokitties also demonstrated how blockchains can be used to catalog game assets (digital assets).[66]

Supply chain

There are a number of efforts and industry organizations working to employ blockchains in supply chain logistics and supply chain management.

The Blockchain in Transport Alliance (BiTA) works to develop open standards for supply chains.[citation needed]

Everledger is one of the inaugural clients of IBM’s blockchain-based tracking service.[67]

Walmart and IBM are running a trial to use a blockchain-backed system for supply chain monitoring — all nodes of the blockchain are administered by Walmart and are located on the IBM cloud.[68]

Hyperledger Grid develops open components for blockchain supply chain solutions.[69][70]

Other uses

Blockchain technology can be used to create a permanent, public, transparent ledger system for compiling data on sales, tracking digital use and payments to content creators, such as wireless users[71] or musicians.[72] In 2017, IBM partnered with ASCAP and PRS for Music to adopt blockchain technology in music distribution.[73] Imogen Heap‘s Mycelia service has also been proposed as blockchain-based alternative “that gives artists more control over how their songs and associated data circulate among fans and other musicians.”[74][75]

New distribution methods are available for the insurance industry such as peer-to-peer insuranceparametric insurance and microinsurance following the adoption of blockchain.[76][77] The sharing economy and IoT are also set to benefit from blockchains because they involve many collaborating peers.[78] Online voting is another application of the blockchain.[79][80]

Other designs include:

  • Hyperledger is a cross-industry collaborative effort from the Linux Foundation to support blockchain-based distributed ledgers, with projects under this initiative including Hyperledger Burrow (by Monax) and Hyperledger Fabric (spearheaded by IBM)[81]
  • Quorum – a permissionable private blockchain by JPMorgan Chase with private storage, used for contract applications[82]
  • Tezos, decentralized voting.[35]:94
  • Proof of Existence is an online service that verifies the existence of computer files as of a specific time[83]

Types

Currently, there are at least four types of blockchain networks — public blockchains, private blockchains, consortium blockchains and hybrid blockchains.

Public blockchains

A public blockchain has absolutely no access restrictions. Anyone with an Internet connection can send transactions to it as well as become a validator (i.e., participate in the execution of a consensus protocol).[84][self-published source?] Usually, such networks offer economic incentives for those who secure them and utilize some type of a Proof of Stake or Proof of Work algorithm.

Some of the largest, most known public blockchains are the bitcoin blockchain and the Ethereum blockchain.

Private blockchains

A private blockchain is permissioned.[38] One cannot join it unless invited by the network administrators. Participant and validator access is restricted.

This type of blockchains can be considered a middle-ground for companies that are interested in the blockchain technology in general but are not comfortable with a level of control offered by public networks. Typically, they seek to incorporate blockchain into their accounting and record-keeping procedures without sacrificing autonomy and running the risk of exposing sensitive data to the public internet.[citation needed]

Hybrid blockchains

A hybrid blockchain[85] simply explained is a combination between different characteristics both public and private blockchains have by design. It allows to determine what information stays private and what information is made public. Further decentralization in relation to primarily centralized private blockchains can be achieved in various ways. Instead of keeping transactions inside their own network of community run or private nodes, the hash (with or without payload) can be posted on completely decentralized blockchains such as bitcoin. Dragonchain uses Interchain[86] to host transactions on other blockchains. This allows users to operate on different blockchains, where they can selectively share data or business logic. Other blockchains like Wanchain use interoperability mechanisms such as bridges.[87][88] By submitting the hash of a transaction (with or without the sensitive business logic) on public blockchains like bitcoin or Ethereum, some of the privacy and blockchain concerns are resolved, as no personal identifiable information is stored on a public blockchain. Depending on the hybrid blockchain its architecture, multicloud solutions allow to store data in compliance with General Data Protection Regulation and other geographical limitations while also leveraging bitcoin’s global hashpower to decentralize transactions.

Academic research

Blockchain panel discussion at the first IEEE Computer Society TechIgnite conference

In October 2014, the MIT Bitcoin Club, with funding from MIT alumni, provided undergraduate students at the Massachusetts Institute of Technology access to $100 of bitcoin. The adoption rates, as studied by Catalini and Tucker (2016), revealed that when people who typically adopt technologies early are given delayed access, they tend to reject the technology.[89]

Energy use of proof-of-work blockchains

External video
 Cryptocurrencies: looking beyond the hypeHyun Song ShinBank for International Settlements, 2:48[90]
 Blockchains and Cryptocurrencies: Burn It With Fire, Nicholas Weaver, Berkeley School of Information, 49:47, lecture begins at 3:05[91]

The Bank for International Settlements has criticized the public proof-of-work blockchains for high energy consumption.[92][90][93]

Nicholas Weaver, of the International Computer Science Institute at the University of California, Berkeley examines blockchain’s online security, and the energy efficiency of proof-of-work public blockchains, and in both cases finds it grossly inadequate.[91][94]

Journals

In September 2015, the first peer-reviewed academic journal dedicated to cryptocurrency and blockchain technology research, Ledger, was announced. The inaugural issue was published in December 2016.[95] The journal covers aspects of mathematicscomputer scienceengineeringlaweconomics and philosophy that relate to cryptocurrencies such as bitcoin.[96][97]

The journal encourages authors to digitally sign a file hash of submitted papers, which will then be timestamped into the bitcoin blockchain. Authors are also asked to include a personal bitcoin address in the first page of their papers.[98]

See also

References …

Further reading

  •  Media related to Blockchain at Wikimedia Commons

https://en.wikipedia.org/wiki/Blockchain

What is Blockchain Technology? A Step-by-Step Guide For Beginners

Ameer Rosic

3 years ago
Was ist Blockchain-Technologie

What is Blockchain Technology? A Step-by-Step Guide For Beginners

[Updated – Mar 01 2019]

Is Blockchain Technology the New Internet?

The blockchain is an undeniably ingenious invention – the brainchild of a person or group of people known by the pseudonym, Satoshi Nakamoto. But since then, it has evolved into something greater, and the main question every single person is asking is: What is Blockchain?

By allowing digital information to be distributed but not copied, blockchain technology created the backbone of a new type of internet. Originally devised for the digital currencyBitcoin, (Buy Bitcoin) the tech community has now found other potential uses for the technology.

In thisguide, we are going to explain to you what the blockchain technology is, and what its properties are that make it so unique. So, we hope you enjoy this, What Is Blockchain Guide. And if you already know what blockchain is and want to become a blockchain developer please check out our in-depth blockchain tutorial and create your very first blockchain.

What is Blockchain Technology?

What is Blockchain Technology? A step-by-step guide than anyone can understand“The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value.” – Don & Alex Tapscott, authors Blockchain Revolution (2016).

A blockchain is, in the simplest of terms, a time-stamped series of immutable record of data that is managed by cluster of computers not owned by any single entity. Each of these blocks of data (i.e. block) are secured and bound to each other using cryptographic principles (i.e. chain).

So, what is so special about it and why are we saying that it has industry disrupting capabilities?

The blockchain network has no central authority — it is the very definition of a democratized system. Since it is a shared and immutable ledger, the information in it is open for anyone and everyone to see. Hence, anything that is built on the blockchain is by its very nature transparent and everyone involved is accountable for their actions.

Blockchain Explained

A blockchain carries no transaction cost. (An infrastructure cost yes, but no transaction cost.) The blockchain is a simple yet ingenious way of passing information from A to B in a fully automated and safe manner. One party to a transaction initiates the process by creating a block. This block is verified by thousands, perhaps millions of computers distributed around the net. The verified block is added to a chain, which is stored across the net, creating not just a unique record, but a unique record with a unique history. Falsifying a single record would mean falsifying the entire chain in millions of instances. That is virtually impossible. Bitcoin uses this model for monetary transactions, but it can be deployed in many others ways.

Blockchain is the most disruptive invention since the Internet itself

Think of a railway company. We buy tickets on an app or the web. The credit card company takes a cut for processing the transaction. With blockchain, not only can the railway operator save on credit card processing fees, it can move the entire ticketing process to the blockchain. The two parties in the transaction are the railway company and the passenger. The ticket is a block, which will be added to a ticket blockchain. Just as a monetary transaction on blockchain is a unique, independently verifiable and unfalsifiable record (like Bitcoin), so can your ticket be. Incidentally, the final ticket blockchain is also a record of all transactions for, say, a certain train route, or even the entire train network, comprising every ticket ever sold, every journey ever taken.

But the key here is this: it’s free. Not only can the blockchain transfer and store money, but it can also replace all processes and business models which rely on charging a small fee for a transaction. Or any other transaction between two parties.

Here is another example. The gig economy hub Fivver charges 0.5 dollars on a 5 transaction between individuals buying and selling services. Using blockchain technology the transaction is free. Ergo, Fivver will cease to exist. So will auction houses and any other business entity based on the market-maker principle.

Even recent entrants like Uber and AirBnB are threatened by blockchain technology. All you need to do is encode the transactional information for a car ride or an overnight stay, and again you have a perfectly safe way that disrupts the business model of the companies which have just begun to challenge the traditional economy. We are not just cutting out the fee-processing middle man, we are also eliminating the need for the match-making platform.

Because blockchain transactions are free, you can charge minuscule amounts, say 1/100 of a cent for a video view or article read. Why should I pay The Economist or National Geographic an annual subscription fee if I can pay per article on Facebook or my favorite chat app. Again, remember that blockchain transactions carry no transaction cost. You can charge for anything in any amount without worrying about third parties cutting into your profits.

Blockchain may make selling recorded music profitable again for artists by cutting out music companies and distributors like Apple or Spotify. The music you buy could even be encoded in the blockchain itself, making it a cloud archive for any song purchased. Because the amounts charged can be so small, subscription and streaming services will become irrelevant.

It goes further. Ebooks could be fitted with blockchain code. Instead of Amazon taking a cut, and the credit card company earning money on the sale, the books would circulate in encoded form and a successful blockchain transaction would transfer money to the author and unlock the book. Transfer ALL the money to the author, not just meager royalties. You could do this on a book review website like Goodreads, or on your own website. The marketplace Amazon is then unnecessary. Successful iterations could even include reviews and other third-party information about the book.

In the financial world the applications are more obvious and the revolutionary changes more imminent. Blockchains will change the way stock exchanges work, loans are bundled, and insurances contracted. They will eliminate bank accounts and practically all services offered by banks. Almost every financial institution will go bankrupt or be forced to change fundamentally, once the advantages of a safe ledger without transaction fees is widely understood and implemented. After all, the financial system is built on taking a small cut of your money for the privilege of facilitating a transaction. Bankers will become mere advisers, not gatekeepers of money. Stockbrokers will no longer be able to earn commissions and the buy/sell spread will disappear.

How Does Blockchain Work?

Picture a spreadsheet that is duplicated thousands of times across a network of computers. Then imagine that this network is designed to regularly update this spreadsheet and you have a basic understanding of the blockchain.

Information held on a blockchain exists as a shared — and continually reconciled — database. This is a way of using the network that has obvious benefits. The blockchain database isn’t stored in any single location, meaning the records it keeps are truly public and easily verifiable. No centralized version of this information exists for a hacker to corrupt. Hosted by millions of computers simultaneously, its data is accessible to anyone on the internet.

To go in deeper with the Google spreadsheet analogy, I would like you to read this piece from a blockchain specialist.


What is Blockchain Technology? A step-by-step guide than anyone can understand“The traditional way of sharing documents with collaboration is to send a Microsoft Word document to another recipient, and ask them to make revisions to it. The problem with that scenario is that you need to wait until receiving a return copy before you can see or make other changes because you are locked out of editing it until the other person is done with it. That’s how databases work today. Two owners can’t be messing with the same record at once.That’s how banks maintain money balances and transfers; they briefly lock access (or decrease the balance) while they make a transfer, then update the other side, then re-open access (or update again).With Google Docs (or Google Sheets), both parties have access to the same document at the same time, and the single version of that document is always visible to both of them. It is like a shared ledger, but it is a shared document. The distributed part comes into play when sharing involves a number of people.

Imagine the number of legal documents that should be used that way. Instead of passing them to each other, losing track of versions, and not being in sync with the other version, why can’t *all* business documents become shared instead of transferred back and forth? So many types of legal contracts would be ideal for that kind of workflow. You don’t need a blockchain to share documents, but the shared documents analogy is a powerful one.” – William Mougayar, Venture advisor, 4x entrepreneur, marketer, strategist and blockchain specialist

The reason why the blockchain has gained so much admiration is that:

  • It is not owned by a single entity, hence it is decentralized
  • The data is cryptographically stored inside
  • The blockchain is immutable, so no one can tamper with the data that is inside the blockchain
  • The blockchain is transparent so one can track the data if they want to

The Three Pillars of Blockchain Technology

The three main properties of Blockchain Technology which has helped it gain widespread acclaim are as follows:

  • Decentralization
  • Transparency
  • Immutability

Pillar #1: Decentralization

Before Bitcoin and BitTorrent came along, we were more used to centralized services. The idea is very simple. You have a centralized entity which stored all the data and you’d have to interact solely with this entity to get whatever information you required.

Another example of a centralized system is banks. They store all your money, and the only way that you can pay someone is by going through the bank.

The traditional client-server model is a perfect example of this:

What is Blockchain

When you google search for something, you send a query to the server who then gets back at you with the relevant information. That is simple client-server.

Now, centralized systems have treated us well for many years, however, they have several vulnerabilities.

  • Firstly, because they are centralized, all the data is stored in one spot. This makes them easy target spots for potential hackers.
  • If the centralized system were to go through a software upgrade, it would halt the entire system
  • What if the centralized entity somehow shut down for whatever reason? That way nobody will be able to access the information that it possesses
  • Worst case scenario, what if this entity gets corrupted and malicious? If that happens then all the data that is inside the blockchain will be compromised.

So, what happens if we just take this centralized entity away?

In a decentralized system, the information is not stored by one single entity. In fact, everyone in the network owns the information.

In a decentralized network, if you wanted to interact with your friend then you can do so directly without going through a third party. That was the main ideology behind Bitcoins. You and only you alone are in charge of your money. You can send your money to anyone you want without having to go through a bank.

blockchain

Pillar #2: Transparency

One of the most interesting and misunderstood concepts in blockchain technology is “transparency.” Some people say that blockchain gives you privacy while some say that it is transparent. Why do you think that happens?

Well… a person’s identity is hidden via complex cryptography and represented only by their public address. So, if you were to look up a person’s transaction history, you will not see “Bob sent 1 BTC” instead you will see “1MF1bhsFLkBzzz9vpFYEmvwT2TbyCt7NZJ sent 1 BTC”.

The following snapshot of Ethereum transactions will show you what we mean:

Ethereum transactions

So, while the person’s real identity is secure, you will still see all the transactions that were done by their public address. This level of transparency has never existed before within a financial system. It adds that extra, and much needed, level of accountability which is required by some of these biggest institutions.

Speaking purely from the point of view of cryptocurrency, if you know the public address of one of these big companies, you can simply pop it in an explorer and look at all the transactions that they have engaged in. This forces them to be honest, something that they have never had to deal with before.

However, that’s not the best use-case. We are pretty sure that most of these companies won’t transact using cryptocurrencies, and even if they do, they won’t do ALL their transactions using cryptocurrencies. However, what if the blockchain technology was integrated…say in their supply chain?

You can see why something like this can be very helpful for the finance industry right?

Pillar #3: Immutability

Immutability, in the context of the blockchain, means that once something has been entered into the blockchain, it cannot be tampered with.

Can you imagine how valuable this will be for financial institutes?

Imagine how many embezzlement cases can be nipped in the bud if people know that they can’t “work the books” and fiddle around with company accounts.

The reason why the blockchain gets this property is that of cryptographic hash function.

In simple terms, hashing means taking an input string of any length and giving out an output of a fixed length. In the context of cryptocurrencies like bitcoin, the transactions are taken as an input and run through a hashing algorithm (bitcoin uses SHA-256) which gives an output of a fixed length.

Let’s see how the hashing process works. We are going to put in certain inputs. For this exercise, we are going to use the SHA-256 (Secure Hashing Algorithm 256).

hashing

As you can see, in the case of SHA-256, no matter how big or small your input is, the output will always have a fixed 256-bits length. This becomes critical when you are dealing with a huge amount of data and transactions. So basically, instead of remembering the input data which could be huge, you can just remember the hash and keep track.

A cryptographic hash function is a special class of hash functions which has various properties making it ideal for cryptography. There are certain properties that a cryptographic hash function needs to have in order to be considered secure. You can read about those in detail in our guide on hashing.

There is just one property that we want you to focus on today. It is called the “Avalanche Effect.”

What does that mean?

Even if you make a small change in your input, the changes that will be reflected in the hash will be huge. Let’s test it out using SHA-256:

blockchain hashing

You see that? Even though you just changed the case of the first alphabet of the input, look at how much that has affected the output hash. Now, let’s go back to our previous point when we were looking at blockchain architecture. What we said was:

The blockchain is a linked list which contains data and a hash pointer which points to its previous block, hence creating the chain. What is a hash pointer? A hash pointer is similar to a pointer, but instead of just containing the address of the previous block it also contains the hash of the data inside the previous block.

This one small tweak is what makes blockchains so amazingly reliable and trailblazing.

Imagine this for a second, a hacker attacks block 3 and tries to change the data. Because of the properties of hash functions, a slight change in data will change the hash drastically. This means that any slight changes made in block 3, will change the hash which is stored in block 2, now that in turn will change the data and the hash of block 2 which will result in changes in block 1 and so on and so forth. This will completely change the chain, which is impossible. This is exactly how blockchains attain immutability.

Maintaining the Blockchain – Network and Nodes

The blockchain is maintained by a peer-to-peer network. The network is a collection of nodes which are interconnected to one another. Nodes are individual computers which take in input and performs a function on them and gives an output. The blockchain uses a special kind of network called “peer-to-peer network” which partitions its entire workload between participants, who are all equally privileged, called “peers”. There is no longer one central server, now there are several distributed and decentralized peers.

Why do people use the peer-to-peer network?

One of the main uses of the peer-to-peer network is file sharing, also called torrenting. If you are to use a client-server model for downloading, then it is usually extremely slow and entirely dependent on the health of the server. Plus, like we said, it is prone to censorship.

However, in a peer-to-peer system, there is no central authority, and hence if even one of the peers in the network goes out of the race, you still have more peers to download from. Plus, it is not subject to the idealistic standards of a central system, hence it is not prone to censorship.

If we were to compare the two:

Image courtesy: Quora

The decentralized nature of a peer-to-peer system becomes critical as we move on to the next section. How critical? Well, the simple (at least on paper) idea of combining this peer-to-peer network with a payment system has completely revolutionized the finance industry by giving birth to cryptocurrency.

The use of networks and nodes in cryptocurrencies.

The peer-to-peer network structure in cryptocurrencies is structured according to the consensus mechanism that they are utilizing. For cryptos like Bitcoin and Ethereum which uses a normal proof-of-work consensus mechanism (Ethereum will eventually move on to Proof of Stake), all the nodes have the same privilege. The idea is to create an egalitarian network. The nodes are not given any special privileges, however, their functions and degree of participation may differ. There is no centralized server/entity, nor is there any hierarchy. It is a flat topology.

These decentralized cryptocurrencies are structured like that is because of a simple reason, to stay true to their philosophy. The idea is to have a currency system, where everyone is treated as an equal and there is no governing body, which can determine the value of the currency based on a whim. This is true for both bitcoin and Ethereum.

Now, if there is no central system, how would everyone in the system get to know that a certain transaction has happened? The network follows the gossip protocol. Think of how gossip spreads. Suppose Alice sent 3 ETH to Bob. The nodes nearest to her will get to know of this, and then they will tell the nodes closest to them, and then they will tell their neighbors, and this will keep on spreading out until everyone knows. Nodes are basically your nosy, annoying relatives.

What is Blockchain Technology? A step-by-step guide than anyone can understand
So, what is a node in the context of Ethereum? A node is simply a computer that participates in the Ethereum network. This participation can be in three ways

  • By keeping a shallow-copy of the blockchain aka a Light Client
  • By keeping a full-copy of the blockchain aka a Full Node
  • By verifying the transactions aka Mining

 

However, the problem with this design is that it is not really that scalable. Which is why, a lot of new generation cryptocurrencies adopt a leader-based consensus mechanism. In EOS, Cardano, Neo etc. the nodes elect leader nodes or “super nodes” who are in charge of the consensus and overall network health. These cryptos are a lot faster but they are not the most decentralized of systems.

So, in a way, cryptos have to make the trade-off between speed and decentralization.

Who Will Use The Blockchain?

As web infrastructure, you don’t need to know about the blockchain for it to be useful in your life.

Currently, finance offers the strongest use cases for the technology. International remittances, for instance. The World Bank estimates that over $430 billion US in money transfers were sent in 2015. And at the moment there is a high demand for blockchain developers.

The blockchain potentially cuts out the middleman for these types of transactions. Personal computing became accessible to the general public with the invention of the Graphical User Interface (GUI), which took the form of a “desktop”. Similarly, the most common GUI devised for the blockchain are the so-called “wallet” applications, which people use to buy things with Bitcoin, and store it along with other cryptocurrencies.

Transactions online are closely connected to the processes of identity verification. It is easy to imagine that wallet apps will transform in the coming years to include other types of identity management.

What is Blockchain? And What New Applications Will It Bring Us?

The blockchain gives internet users the ability to create value and authenticates digital information. What new business applications will result from this?

#1 Smart contracts

Distributed ledgers enable the coding of simple contracts that will execute when specified conditions are met. Ethereum is an open source blockchain project that was built specifically to realize this possibility. Still, in its early stages, Ethereum has the potential to leverage the usefulness of blockchains on a truly world-changing scale.

At the technology’s current level of development, smart contracts can be programmed to perform simple functions. For instance, a derivative could be paid out when a financial instrument meets certain benchmark, with the use of blockchain technology and Bitcoin enabling the payout to be automated.

#2 The sharing economy

With companies like Uber and Airbnb flourishing, the sharing economy is already a proven success. Currently, however, users who want to hail a ride-sharing service have to rely on an intermediary like Uber. By enabling peer-to-peer payments, the blockchain opens the door to direct interaction between parties — a truly decentralized sharing economy results.

An early example, OpenBazaar uses the blockchain to create a peer-to-peer eBay. Download the app onto your computing device, and you can transact with OpenBazzar vendors without paying transaction fees. The “no rules” ethos of the protocol means that personal reputation will be even more important to business interactions than it currently is on eBay.

#3 Crowdfunding

Crowdfunding initiatives like Kickstarter and Gofundme are doing the advance work for the emerging peer-to-peer economy. The popularity of these sites suggests people want to have a direct say in product development. Blockchains take this interest to the next level, potentially creating crowd-sourced venture capital funds.

In 2016, one such experiment, the Ethereum-based DAO (Decentralized Autonomous Organization), raised an astonishing $200 million USD in just over two months. Participants purchased “DAO tokens” allowing them to vote on smart contract venture capital investments (voting power was proportionate to the number of DAO they were holding). A subsequent hack of project funds proved that the project was launched without proper due diligence, with disastrous consequences. Regardless, the DAO experiment suggests the blockchain has the potential to usher in “a new paradigm of economic cooperation.”

#4 Governance

By making the results fully transparent and publicly accessible, distributed database technology could bring full transparency to elections or any other kind of poll taking. Ethereum-based smart contracts help to automate the process.

The app, Boardroom, enables organizational decision-making to happen on the blockchain. In practice, this means company governance becomes fully transparent and verifiable when managing digital assets, equity or information.

#5 Supply chain auditing

Consumers increasingly want to know that the ethical claims companies make about their products are real. Distributed ledgers provide an easy way to certify that the backstories of the things we buy are genuine. Transparency comes with blockchain-based timestamping of a date and location — on ethical diamonds, for instance — that corresponds to a product number.

The UK-based Provenance offers supply chain auditing for a range of consumer goods. Making use of the Ethereum blockchain, a Provenance pilot project ensures that fish sold in Sushi restaurants in Japan has been sustainably harvested by its suppliers in Indonesia.

#6 File storage

Decentralizing file storage on the internet brings clear benefits. Distributing data throughout the network protects files from getting hacked or lost.

Inter Planetary File System (IPFS) makes it easy to conceptualize how a distributed web might operate. Similar to the way a BitTorrent moves data around the internet, IPFS gets rid of the need for centralized client-server relationships (i.e., the current web). An internet made up of completely decentralized websites has the potential to speed up file transfer and streaming times. Such an improvement is not only convenient. It’s a necessary upgrade to the web’s currently overloaded content-delivery systems.

#7 Prediction markets

The crowdsourcing of predictions on event probability is proven to have a high degree of accuracy. Averaging opinions cancels out the unexamined biases that distort judgment. Prediction markets that payout according to event outcomes are already active. Blockchains are a “wisdom of the crowd” technology that will no doubt find other applications in the years to come.

The prediction market application Augur makes share offerings on the outcome of real-world events. Participants can earn money by buying into the correct prediction. The more shares purchased in the correct outcome, the higher the payout will be. With a small commitment of funds (less than a dollar), anyone can ask a question, create a market based on a predicted outcome, and collect half of all transaction fees the market generates.

#8 Protection of intellectual property

As is well known, digital information can be infinitely reproduced — and distributed widely thanks to the internet. This has given web users globally a goldmine of free content. However, copyright holders have not been so lucky, losing control over their intellectual property and suffering financially as a consequence. Smart contracts can protect copyright and automate the sale of creative works online, eliminating the risk of file copying and redistribution.

Mycelia uses the blockchain to create a peer-to-peer music distribution system. Founded by the UK singer-songwriter Imogen Heap, Mycelia enables musicians to sell songs directly to audiences, as well as license samples to producers and divvy up royalties to songwriters and musicians — all of these functions being automated by smart contracts. The capacity of blockchains to issue payments in fractional cryptocurrency amounts (micropayments) suggests this use case for the blockchain has a strong chance of success.

#9 Internet of Things (IoT)

What is the IoT? The network-controlled management of certain types of electronic devices — for instance, the monitoring of air temperature in a storage facility. Smart contracts make the automation of remote systems management possible. A combination of software, sensors, and the network facilitates an exchange of data between objects and mechanisms. The result increases system efficiency and improves cost monitoring.

The biggest players in manufacturing, tech and telecommunications are all vying for IoT dominance. Think Samsung, IBM and AT&T. A natural extension of existing infrastructure controlled by incumbents, IoT applications will run the gamut from predictive maintenance of mechanical parts to data analytics, and mass-scale automated systems management.

#10 Neighbourhood Microgrids

Blockchain technology enables the buying and selling of the renewable energy generated by neighborhood microgrids. When solar panels make excess energy, Ethereum-based smart contracts automatically redistribute it. Similar types of smart contract automation will have many other applications as the IoT becomes a reality.

Located in Brooklyn, Consensys is one of the foremost companies globally that is developing a range of applications for Ethereum. One project they are partnering on is Transactive Grid, working with the distributed energy outfit, LO3. A prototype project currently up and running uses Ethereum smart contracts to automate the monitoring and redistribution of microgrid energy. This so-called “intelligent grid” is an early example of IoT functionality.

#11 Identity management

There is a definite need for better identity management on the web. The ability to verify your identity is the lynchpin of financial transactions that happen online. However, remedies for the security risks that come with web commerce are imperfect at best. Distributed ledgers offer enhanced methods for proving who you are, along with the possibility to digitize personal documents. Having a secure identity will also be important for online interactions — for instance, in the sharing economy. A good reputation, after all, is the most important condition for conducting transactions online.

Developing digital identity standards is proving to be a highly complex process. Technical challenges aside, a universal online identity solution requires cooperation between private entities and government. Add to that the need to navigate legal systems in different countries and the problem becomes exponentially difficult. E-Commerce on the internet currently relies on the SSL certificate (the little green lock) for secure transactions on the web. Netki is a startup that aspires to create an SSL standard for the blockchain. Having recently announced a $3.5 million seed round, Netki expects a product launch in early 2017.

#12 AML and KYC

Anti-money laundering (AML) and know your customer (KYC) practices have a strong potential for being adapted to the blockchain. Currently, financial institutions must perform a labour intensive multi-step process for each new customer. KYC costs could be reduced through cross-institution client verification, and at the same time increase monitoring and analysis effectiveness.

Startup Polycoin has an AML/KYC solution that involves analysing transactions. Those transactions identified as being suspicious are forwarded on to compliance officers. Another startup Tradle is developing an application called Trust in Motion (TiM). Characterized as an “Instagram for KYC”, TiM allows customers to take a snapshot of key documents (passport, utility bill, etc.). Once verified by the bank, this data is cryptographically stored on the blockchain.

#13 Data management

Today, in exchange for their personal data people can use social media platforms like Facebook for free. In future, users will have the ability to manage and sell the data their online activity generates. Because it can be easily distributed in small fractional amounts, Bitcoin — or something like it — will most likely be the currency that gets used for this type of transaction.

The MIT project Enigma understands that user privacy is the key precondition for creating of a personal data marketplace. Enigma uses cryptographic techniques to allow individual data sets to be split between nodes, and at the same time run bulk computations over the data group as a whole. Fragmenting the data also makes Enigma scalable (unlike those blockchain solutions where data gets replicated on every node). A Beta launch is promised within the next six months.

#14 Land title registration

As Publicly-accessible ledgers, blockchains can make all kinds of record-keeping more efficient. Property titles are a case in point. They tend to be susceptible to fraud, as well as costly and labour intensive to administer.

A number of countries are undertaking blockchain-based land registry projects. Honduras was the first government to announce such an initiative in 2015, although the current status of that project is unclear. This year, the Republic of Georgia cemented a deal with the Bitfury Group to develop a blockchain system for property titles. Reportedly, Hernando de Soto, the high-profile economist and property rights advocate, will be advising on the project. Most recently, Sweden announced it was experimenting with a blockchain application for property titles.

#15 Stock trading

The potential for added efficiency in share settlement makes a strong use case for blockchains in stock trading. When executed peer-to-peer, trade confirmations become almost instantaneous (as opposed to taking three days for clearance). Potentially, this means intermediaries — such as the clearing house, auditors and custodians — get removed from the process.

Numerous stock and commodities exchanges are prototyping blockchain applications for the services they offer, including the ASX (Australian Securities Exchange), the Deutsche Börse (Frankfurt’s stock exchange) and the JPX (Japan Exchange Group). Most high profile because the acknowledged first mover in the area, is the Nasdaq’s Linq, a platform for private market trading (typically between pre-IPO startups and investors). A partnership with the blockchain tech company Chain, Linq announced the completion of it its first share trade in 2015. More recently, Nasdaq announced the development of a trial blockchain project for proxy voting on the Estonian Stock Market.

Ian Khan, TEDx SpeakerAs revolutionary as it sounds, Blockchain truly is a mechanism to bring everyone to the highest degree of accountability. No more missed transactions, human or machine errors, or even an exchange that was not done with the consent of the parties involved. Above anything else, the most critical area where Blockchain helps is to guarantee the validity of a transaction by recording it not only on a main register but a connected distributed system of registers, all of which are connected through a secure validation mechanism.” – Ian Khan, TEDx Speaker | Author | Technology Futurist

https://blockgeeks.com/guides/what-is-blockchain-technology/

Making sense of bitcoin, cryptocurrency and blockchain

Bitcoin, cryptocurrency, blockchain… So what does it all mean?

Some of the noise is hype, but some of it points to important forces in the financial services industry. To help you make sense of it, we’ve pulled together content explaining why a lot of industry observers are paying close attention.

Let’s start with some quick definitions. Blockchain is the technology that enables the existence of cryptocurrency (among other things). Bitcoin is the name of the best-known cryptocurrency, the one for which blockchain technology was invented. A cryptocurrency is a medium of exchange, such as the US dollar, but is digital and uses encryption techniques to control the creation of monetary units and to verify the transfer of funds.

A look at blockchain technology

What is it?

The blockchain is a decentralized ledger of all transactions across a peer-to-peer network. Using this technology, participants can confirm transactions without a need for a central clearing authority. Potential applications can include fund transfers, settling trades, voting and many other issues.

blockchain how it works
blockchain cyrptocurrency
blockchain benefits

 

Blockchain also has potential applications far beyond bitcoin and cryptocurrency.

Blockchain is, quite simply, a digital, decentralized ledger that keeps a record of all transactions that take place across a peer-to-peer network. The major innovation is that the technology allows market participants to transfer assets across the internet without the need for a centralized third party.

From a business perspective, it’s helpful to think of blockchain technology as a type of next-generation business process improvement software. Collaborative technology, such as blockchain, promises the ability to improve the business processes that occur between companies, radically lowering the “cost of trust.” For this reason, it may offer significantly higher returns for each investment dollar spent than most traditional internal investments.

Financial institutions are exploring how they could also use blockchain technology to upend everything from clearing and settlement to insurance.

For an overview of cryptocurrency, start with “Money is no object.” This paper, from PwC’s Financial Services Institute, focuses on cryptocurrency. We explain where it came from, how much consumers know about it and use it, what it will take for the market to grow and what the regulators think. We also look at how market participants, such as investors, technology providers and financial institutions, will be affected.

For some quick background on blockchain, take a look at our Top Trends in Financial Services page on Blockchain, where we discuss some of the ways FS firms are using blockchain, and how we expect the blockchain technology to develop in the future.

For a deeper dive into blockchain’s implications, read “A strategist’s guide to blockchain.” This article, from strategy+business, examines the potential benefits of this important innovation—and also suggests a way forward for financial institutions. Put simply, proceed deliberately. Explore how others might try to disrupt your business with blockchain technology and how your company could use it to leap ahead instead. In all cases, link your investments to your value proposition and give your business partners and your customers what they want most: speed, convenience and control over their transactions.

For a peek into the application of blockchains for smart contracts, check out “Blockchain and smart contract automation”. This short series of articles explore how blockchains, both public and private, have triggered a global hunt for ways to remove friction from transaction-related processes, including the process of reaching contractual agreements. Learn about the precursors, challenges and future outlook of implementing smart contracts. We also chat with Gideon Greenspan of Coin Sciences to learn about his views on the legal ramifications of public blockchains and why companies are seeking alternatives.

When a technology moves so quickly, it’s dangerous to sit on the sidelines. We’re watching blockchain move from a startup idea to an established technology in a tiny fraction of the time it took for the internet or even the PC to be accepted as a standard tool. Blockchain technology could result in a radically different competitive future for the financial services industry. These articles will help you understand these changes—and what you should do about them.

https://www.pwc.com/us/en/industries/financial-services/fintech/bitcoin-blockchain-cryptocurrency.html

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The Pronk Pops Show 1287, July 10, 2019, Part 1: Story 1: Federal Reserve Will Cut the Federal Funds Target Rate Range in July By .25% or 25 Basis Points If Second Quarter Real Gross Domestic Product Rate of Growth Falls Below 3% — Otherwise No Change in Federal Funds Rate Target Range — Huge Uncertainty Generated By Rapidly Growing Annual Deficits in Federal Government Spending Resulting in Rising National Debt Approaching $23,000,000,000,000 and Unfunded Liabilities and and Obligations Over $230,000,000,000,000! — Bubbles Bubbles Everywhere — Beyond Bubbles — U.S. Government Bankrupt Now! — Make It Rain on The Blockchain — Trust and Truth — Videos

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Story 1: Federal Reserve Will Cut the Federal Funds Target Rate Range in July By .25% or 25 Basis Points If Second Quarter Real Gross Domestic Product Rate of Growth Falls Below 3% — Otherwise No Change in Federal Funds Rate Target Range — Huge Uncertainty Generated By Rapidly Growing Annual Deficits in Federal Government Spending Resulting in Rising National Debt Approaching $23,000,000,000,000 and Unfunded Liabilities and and Obligations Over $230,000,000,000,000! — Bubbles Bubbles Everywhere — Beyond Bubbles — Make It Rain on The Blockchain — Trust and Truth — Videos

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Fed Chair Jerome Powell testifies before Congress

Streamed live on Jul 10, 2019

House Financial Services Committee holds hearing on “Monetary Policy & the State of the Economy.” Fed Chair Powell testifies. All eyes will be on Powell when he testifies before a House panel on monetary policy in the first of his 2-day semiannual testimony to Congress. Investors are looking to Powell for what to expect at the next policy meeting at the end of July. FOX Business Network (FBN) is a financial news channel delivering real-time information across all platforms that impact both Main Street and Wall Street. Headquartered in New York — the business capital of the world — FBN launched in October 2007 and is the leading business network on television, topping CNBC in Business Day viewers for the second consecutive year. T he network is available in more than 80 million homes in all markets across the United States. Owned by FOX, FBN has bureaus in Chicago, Los Angeles, Washington, D.C. and London.

 

Fed Chair Jerome Powell’s Senate testimony on monetary policy – 07/11/2019

Streamed live on Jul 11, 2019

Federal Reserve Chairman Jerome Powell testifies before Senate Committee on Banking, Housing and Urban Affairs on the monetary policy and the U.S. economy.

Economy can sustain lower jobless rate than we thought, says Fed’s Powell

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Fed keeps interest rates steady, signals possible cuts in 2019

Streamed live on Jun 19, 2019

Federal Open Market Cmte announces Fed Funds Interest Rates will remain unchanged.

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Bill Bonner Interview: hold on to your cash, the real financial crisis is yet to come

Published on Sep 16, 2015

MoneyWeek’s editor in chief Merryn Somerset Webb talks to Bill Bonner about economic cycles and the ‘cashless society’. Click here to find out how it could affect you: http://pro1.moneyweek.com/434014/

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N.J. pension crisis explained with popsicle sticks

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A Thunderhead: Pensions and Unfunded Liabilities

Deficits, Debts and Unfunded Liabilities: The Consequences of Excessive Government Spending

Published on May 10, 2010

Huge budget deficits and record levels of national debt are getting a lot of attention, but this video explains that unfunded liabilities for entitlement programs are Americas real red-ink challenge. More important, this CF&P mini-documentary reveals that deficits and debt are symptoms of the real problem of an excessive burden of government spending. http://www.freedomandprosperity.org

Facebook’s Libra Cryptocurrency

Facebook’s plan to control the global financial system

Bitcoin vs. Gold Peter Schiff debates Max Keiser

Keiser Report: #DropGold: Peter Schiff Responds (E1381)

Digital Currency’s Role in the Future of Central Banks

Christine Lagarde: ‘Central Bank digital currency is coming alive’

Digital Currency Has Real Value — Here’s Why | CNBC

Japan made bitcoin a legal currency – now it’s more popular than ever | CNBC Reports

Blockchain and Crypto: Past, Present, and Future | Douglas Pepe | TEDxRanneySchool

Mr Bitcoin: “I don’t want money, I don’t want fame!” BBC News

Is This Man the Inventor of Bitcoin?

Blockchain Expert Explains One Concept in 5 Levels of Difficulty | WIRED

How does a blockchain work – Simply Explained

Bitcoin: Beyond The Bubble – Full Documentary

Scott Adams’ Guide To Blockchain: The Technology That Will Change Everything

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How the blockchain is changing money and business | Don Tapscott

TED

Published on Sep 16, 2016

What is the blockchain? If you don’t know, you should; if you do, chances are you still need some clarification on how it actually works. Don Tapscott is here to help, demystifying this world-changing, trust-building technology which, he says, represents nothing less than the second generation of the internet and holds the potential to transform money, business, government and society. TEDTalks is a daily video podcast of the best talks and performances from the TED Conference, where the world’s leading thinkers and doers give the talk of their lives in 18 minutes (or less). Look for talks on Technology, Entertainment and Design — plus science, business, global issues, the arts and much more. Find closed captions and translated subtitles in many languages at http://www.ted.com/translate

What is Blockchain

Published on Jun 9, 2016

Blockchain explained. Shai Rubin, CTO of Citi Innovation Lab, explains in an easy and simple way the basics of blockchain.

Blockchains: how can they be used?

19 Industries The Blockchain Will Disrupt

How the blockchain will radically transform the economy | Bettina Warburg

Blockchain is Eating Wall Street | Alex Tapscott | TEDxSanFrancisco

How to Use Blockchain to Create a Better Future | Brian Condenanza | TEDxHautLacSchool

Our Lives in a Blockchain-Powered Smart Economy | Eddy Travia | TEDxINSEAD

Is Bitcoin the Future of Money? Peter Schiff vs. Erik Voorhees

The Convergence of Blockchain, Machine Learning, and the Cloud | Steve Lund | TEDxBYU

The Value Revolution: How Blockchain Will Change Money & the World | Galia Benartzi | TEDxWhiteCity

Blockchain Technology Explained (2 Hour Course)

How Bitcoin Works in 5 Minutes (Technical)

How Bitcoin Works Under the Hood

Why crypto regulation is doomed to fail | Marit Hansen | TEDxKielUniversity

Bitcoin scares central banks. Here’s why

George Gilder: Forget Cloud Computing, Blockchain is the Future

Why central banks are experimenting with blockchain

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Why Public Policy Always Ends in Disaster

It’s Hormeggedon! What Happens When Public Policy Passes the Point of No Return

Bill Bonner Interview: hold on to your cash, the real financial crisis is yet to come

Bill Bonner on the financial markets WORLD.MINDS INTERVIEW

Jim Simons on His Formula for Improving Math Education

Billionaire James Simons: Quantitative Investment Strategy, Career and Trading (2019)

Renaissance Man — Jim Simons

Billionaire Mathematician – Numberphile

The mathematician who cracked Wall Street | Jim Simons

James H. Simons: Mathematics, Common Sense and Good Luck

By appearing to buckle to Trump on rates, is the Fed chief creating problems down the road?

By appearing to buckle to Trump on rates, is the Fed chief creating problems down the road?
Federal Reserve Board Chairman Jerome Powell speaks at a news conference in Washington on June 19. (Nicholas Kamm / AFP/Getty Images)

In signaling that the Federal Reserve is almost certain to cut interest rates at the end of this month, Fed Chairman Jerome H. Powell may have given President Trump what he wants.

But the central bank now looks more vulnerable to criticism that it is caving to political pressures that will only grow as the election cycle heats up.

Powell, in testimony to lawmakers Wednesday, essentially argued that heightened uncertainty, from trade tensions and slowing global economic growth, along with low inflation, was enough to justify a cut in interest rates.

Historically, the Fed has lowered rates to ward off recession or when it sees substantial risks of a downturn.

The U.S. economy expanded at a nearly 3% pace last year and, although it has slowed in recent months, the Fed and most private forecasters see growth continuing at a decent rate. The latest jobs report for June showed hiring remains strong, and Trump recently agreed to a ceasefire in the trade war with China, tenuous as it may be.For those reasons, Powell’s remarks Wednesday came as a pleasant surprise to financial markets. Stocks rose to record highs.

Lowering the rate by a quarter point later this month may help borrowers a little. The Fed’s main rate is a benchmark for credit cards, auto loans and other short-term consumer lending, but long-term rates such as mortgages already have dropped in anticipation of a Fed rate cut, meaning it’s unlikely to provide much of a boost to the housing market or the broader economy.

“We’ve already gotten 90% of the benefit; it’s already priced into the market,” said Dean Baker, senior economist at the Center for Economic and Policy Research.

Investors are expecting at least one more quarter-point rate cut after July, and some even two. Powell and his colleagues at the Fed will have their hands full managing investors’ expectations on future rate reductions, so they don’t set themselves up for a sharp fall.

“The issue that the Fed is going to run into … is just like parenting,” said Ryan Sweet, an economist at Moody’s Analytics. “They can’t bend every time the markets throw a tantrum. At some point, you’ve got to put your foot down.”

Market expectations aside, Powell’s bigger challenge is likely to come from Trump. The president has been publicly hammering Powell to lower interest rates. Trump has criticized the Fed for raising rates four times last year, and no one thinks he will be satisfied if the Fed drops its benchmark rate by a quarter point on July 31, as it’s now expected to do.

Trump and his economic team have pressed the Fed to slash rates by a full point, and Trump isn’t likely to stop jawboning the Fed in the coming months.

Some economic experts say Trump already has succeeded in getting into the heads of Fed decision makers.

“Powell does seem to be going a little bit out of his way to reverse the rate hikes made last year,” said Chris Rupkey, managing director and chief economist at MUFG Union Bank in New York. “The president’s like another active member of the Fed board in the room. I wouldn’t tell him no, would you?”

Rupkey and some other Fed watchers say Powell is moving a bit too early in readying rate cuts, especially with job growth still running very strong. Only a few months ago, the Fed’s stance on interest rates was to wait and see.

“Should they cut rates at this time? Absolutely not!” said Bernard Baumohl, chief global economist at Economic Outlook Group. “There is no economic justification to take that step now.

“For one, there is little to suggest this business cycle [is] struggling. The softness we see in some data points have little to do with economic fundamentals. The trade war with China and the havoc it has caused to global supply chain are the primary reasons those sectors have weakened.”

But other analysts argue that there’s good reason for the shift in the Fed’s posture. According to minutes from their last meeting in June, released Wednesday, Fed policymakers were feeling that the downside risks to the economy “had increased significantly over recent weeks.”

And in his testimony Wednesday to the House Financial Services Committee, Powell said that since May, crosscurrents that seemed to moderate earlier in the year “have reemerged, creating greater uncertainty.” Among other concerns, he said, business spending, trade and manufacturing activity have slowed.

“The issue really is more now on the business side where we see business confidence and business investment weakening a bit,” he told lawmakers, adding that there’s rising risk as well to consumer spending, which accounts for 70% of U.S. economic activity. “Household confidence has remained high, but over time uncertainty can cause households to hold back as well.”

Powell, sensitive to the political pressures bearing on the Fed, took pains in his prepared remarks to defend the integrity of the central bank and the basis for its policymaking.

“Congress has given us an important degree of independence so that we can effectively pursue our statutory goals based on objective analysis and data,” Powell said as he began his testimony.

Trump has reportedly considered firing Powell or demoting him, although it’s not clear whether the president has the legal authority to do so. Powell reiterated Wednesday that the law is on his side and that he intends to serve the full four-year term as Fed chair, which he assumed in February 2018.

Lawmakers on both sides of the aisle have cautioned Trump against taking steps to remove Powell as Fed leader. And on Wednesday, Democratic lawmakers sought to drive home that point.

“Mr. Chairman, if you got a call from the president today or tomorrow, and he said, ‘I’m firing you. Pack up. It’s time to go,’ what would you do?” asked Rep. Maxine Waters (D-Los Angeles), chair of the Financial Services Committee.

“Well, of course I would not do that,” Powell responded, to which Waters added, “I can’t hear you,” eliciting laughter.

But the president’s unusually persistent and heavy pressure on the Fed is anything but a laughing matter.

Alan Blinder, a Fed vice chairman in the mid-1990s, said the concern about the bank’s independence stemming from the president’s attacks was such that it could legitimately be a factor in a Fed decision not to raise rates.

Apart from the potential harm to its credibility, a more immediate risk for the Fed in cutting rates is that it could limit the central bank’s arsenal in fighting the next recession. The Fed’s main benchmark rate is less than 2.5%, low by historical standards.

In response to lawmakers’ questioning, Powell said the resumption of trade talks between the United States and China was a “constructive step” but that doesn’t really change the outlook.

“I would say that the bottom line for me is that the uncertainties around global growth and trade continue to weigh on the outlook.”

https://www.latimes.com/business/la-fi-jerome-powell-interest-rates-20190710-story.html

July 10, 2019

Semiannual Monetary Policy Report to the Congress

Chair Jerome H. Powell

Before the Committee on Financial Services, U.S. House of Representatives, Washington, D.C.

 

Chair Powell submitted identical remarks to the Committee on Banking, Housing, and Urban Affairs, U.S. Senate, on July 11, 2019.

Chairwoman Waters, Ranking Member McHenry, and other members of the Committee, I am pleased to present the Federal Reserve’s semiannual Monetary Policy Report to Congress.

Let me start by saying that my colleagues and I strongly support the goals of maximum employment and price stability that Congress has set for monetary policy. We are committed to providing clear explanations about our policies and activities. Congress has given us an important degree of independence so that we can effectively pursue our statutory goals based on objective analysis and data. We appreciate that our independence brings with it an obligation for transparency so that you and the public can hold us accountable.

Today I will review the current economic situation and outlook before turning to monetary policy. I will also provide an update of our ongoing public review of our framework for setting monetary policy.

Current Economic Situation and Outlook 
The economy performed reasonably well over the first half of 2019, and the current expansion is now in its 11th year. However, inflation has been running below the Federal Open Market Committee’s (FOMC) symmetric 2 percent objective, and crosscurrents, such as trade tensions and concerns about global growth, have been weighing on economic activity and the outlook.

The labor market remains healthy. Job gains averaged 172,000 per month from January through June. This number is lower than the average of 223,000 a month last year but above the pace needed to provide jobs for new workers entering the labor force. Consequently, the unemployment rate moved down from 3.9 percent in December to 3.7 percent in June, close to its lowest level in 50 years. Job openings remain plentiful, and employers are increasingly willing to hire workers with fewer skills and train them. As a result, the benefits of a strong job market have been more widely shared in recent years. Indeed, wage gains have been greater for lower-skilled workers. That said, individuals in some demographic groups and in certain parts of the country continue to face challenges. For example, unemployment rates for African Americans and Hispanics remain well above the rates for whites and Asians. Likewise, the share of the population with a job is higher in urban areas than in rural communities, and this gap widened over the past decade. A box in the July Monetary Policy Report provides a comparison of employment and wage gains over the current expansion for individuals with different levels of education.

Gross domestic product increased at an annual rate of 3.1 percent in the first quarter of 2019, similar to last year’s pace. This strong reading was driven largely by net exports and inventories—components that are not generally reliable indicators of ongoing momentum. The more reliable drivers of growth in the economy are consumer spending and business investment. While growth in consumer spending was weak in the first quarter, incoming data show that it has bounced back and is now running at a solid pace. However, growth in business investment seems to have slowed notably, and overall growth in the second quarter appears to have moderated. The slowdown in business fixed investment may reflect concerns about trade tensions and slower growth in the global economy. In addition, housing investment and manufacturing output declined in the first quarter and appear to have decreased again in the second quarter.

After running close to our 2 percent objective over much of last year, overall consumer price inflation, measured by the 12-month change in the price index for personal consumption expenditures (PCE), declined earlier this year and stood at 1.5 percent in May. The 12-month change in core PCE inflation, which excludes food and energy prices and tends to be a better indicator of future inflation, has also come down this year and was 1.6 percent in May.

Our baseline outlook is for economic growth to remain solid, labor markets to stay strong, and inflation to move back up over time to the Committee’s 2 percent objective. However, uncertainties about the outlook have increased in recent months. In particular, economic momentum appears to have slowed in some major foreign economies, and that weakness could affect the U.S. economy. Moreover, a number of government policy issues have yet to be resolved, including trade developments, the federal debt ceiling, and Brexit. And there is a risk that weak inflation will be even more persistent than we currently anticipate. We are carefully monitoring these developments, and we will continue to assess their implications for the U.S economic outlook and inflation.

The nation also continues to confront important longer-run challenges. Labor force participation by those in their prime working years is now lower in the United States than in most other nations with comparable economies. As I mentioned, there are troubling labor market disparities across demographic groups and different parts of the country. The relative stagnation of middle and lower incomes and low levels of upward mobility for lower-income families are also ongoing concerns. In addition, finding ways to boost productivity growth, which leads to rising wages and living standards over the longer term, should remain a high national priority. And I remain concerned about the longer-term effects of high and rising federal debt, which can restrain private investment and, in turn, reduce productivity and overall economic growth. The longer-run vitality of the U.S. economy would benefit from efforts to address these issues.

Monetary Policy 
Against this backdrop, the FOMC maintained the target range for the federal funds rate at 2‑1/4 to 2-1/2 percent in the first half of this year. At our January, March, and May meetings, we stated that we would be patient as we determined what future adjustments to the federal funds rate might be appropriate to support our goals of maximum employment and price stability.

At the time of our May meeting, we were mindful of the ongoing crosscurrents from global growth and trade, but there was tentative evidence that these crosscurrents were moderating. The latest data from China and Europe were encouraging, and there were reports of progress in trade negotiations with China. Our continued patient stance seemed appropriate, and the Committee saw no strong case for adjusting our policy rate.

Since our May meeting, however, these crosscurrents have reemerged, creating greater uncertainty. Apparent progress on trade turned to greater uncertainty, and our contacts in business and agriculture report heightened concerns over trade developments. Growth indicators from around the world have disappointed on net, raising concerns that weakness in the global economy will continue to affect the U.S. economy. These concerns may have contributed to the drop in business confidence in some recent surveys and may have started to show through to incoming data.

In our June meeting statement, we indicated that, in light of increased uncertainties about the economic outlook and muted inflation pressures, we would closely monitor the implications of incoming information for the economic outlook and would act as appropriate to sustain the expansion. Many FOMC participants saw that the case for a somewhat more accommodative monetary policy had strengthened. Since then, based on incoming data and other developments, it appears that uncertainties around trade tensions and concerns about the strength of the global economy continue to weigh on the U.S. economic outlook. Inflation pressures remain muted.

The FOMC has made a number of important decisions this year about our framework for implementing monetary policy and our plans for completing the reduction of the Fed’s securities holdings. At our January meeting, we decided to continue to implement monetary policy using our current policy regime with ample reserves, and emphasized that we are prepared to adjust any of the details for completing balance sheet normalization in light of economic and financial developments. At our March meeting, we communicated our intention to slow, starting in May, the decline in the Fed’s aggregate securities holdings and to end the reduction in these holdings in September. The July Monetary Policy Report provides details on these decisions.

The July Monetary Policy Report also includes an update on monetary policy rules. The FOMC routinely looks at monetary policy rules that recommend a level for the federal funds rate based on inflation and unemployment rates. I continue to find these rules helpful, although using these rules requires careful judgment.

We are conducting a public review of our monetary policy strategy, tools, and communications—the first review of its kind for the FOMC. Our motivation is to consider ways to improve the Committee’s current policy framework and to best position the Fed to achieve maximum employment and price stability. The review has started with outreach to and consultation with a broad range of people and groups through a series of Fed Listens events. The FOMC will consider questions related to the review at upcoming meetings. We will publicly report the outcome of our discussions.

Thank you. I am happy to respond to your questions.

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Last Update: July 10, 2019

Blockchain

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Blockchain formation. The main chain (black) consists of the longest series of blocks from the genesis block (green) to the current block. Orphan blocks (purple) exist outside of the main chain.

blockchain,[1][2][3] originally block chain,[4][5] is a growing list of records, called blocks, that are linked using cryptography.[1][6] Each block contains a cryptographic hash of the previous block,[6] a timestamp, and transaction data (generally represented as a Merkle tree).

By design, a blockchain is resistant to modification of the data. It is “an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way”.[7] For use as a distributed ledger, a blockchain is typically managed by a peer-to-peer network collectively adhering to a protocol for inter-node communication and validating new blocks. Once recorded, the data in any given block cannot be altered retroactively without alteration of all subsequent blocks, which requires consensus of the network majority. Although blockchain records are not unalterable, blockchains may be considered secure by design and exemplify a distributed computing system with high Byzantine fault toleranceDecentralized consensus has therefore been claimed with a blockchain.[8]

Blockchain was invented by a person (or group of people) using the name Satoshi Nakamoto in 2008 to serve as the public transaction ledger of the cryptocurrency bitcoin.[1] The identity of Satoshi Nakamoto is unknown. The invention of the blockchain for bitcoin made it the first digital currency to solve the double-spending problem without the need of a trusted authority or central server. The bitcoin design has inspired other applications,[1][3] and blockchains that are readable by the public are widely used by cryptocurrencies. Blockchain is considered a type of payment rail.[9] Private blockchains have been proposed for business use. Sources such as Computerworld called the marketing of such blockchains without a proper security model “snake oil“.[10]

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