Bank of International Settlements warns against Bitcoin Hype

Hyun Song Shin, head of research for the Bank of International Settlements, provided some insights on the BIS’ discussion of Bitcoin found in BIS’ annual report released earlier today.  Mr. Hyun described the cryptocurrency as a poor medium of exchange, questioning the cryptocurrency’s low use.  Transactions are “slow and costly”, according to Mr. Hyun.  From the BIS website:

“Cryptocurrencies promise to replace trusted institutions with distributed ledger technology. Yet, looking beyond the hype, it is hard to identify a specific economic problem which they currently solve. Transactions are slow and costly, prone to congestion, and cannot scale with demand. The decentralised consensus behind the technology is also fragile and consumes vast amounts of energy. Still, distributed ledger technology could have promise in other applications. Policy responses need to prevent abuses while allowing further experimentation.”

In his brief description of the Bitcoin production process, Mr. Hyun warned that the ability of miners to choose which transactions to process may result in users paying a higher price to get their transactions onto the cryptocurrency’s distributed ledger.  The process is a congested one, but as production capacity lessens, so to does a miner’s incentive to extract Bitcoin.

Would independence make the U.S. Virgin Islands more Caribbean? Yes, I think so.

One evening after finishing a jog, I spied a young lady walking through the graduate residence I lived at during grad school. I walked up to her and introduced myself. Upon hearing her accent, I asked her where she was from. She told me Guyana. I responded enthusiastically and by saying that I was from the U.S. Virgin Islands. A sour look came across her face. She went on to tell me that I was American and not Caribbean.  I became indignant, wondering why she would draw that conclusion and told her that I was just as Caribbean as anyone from the region. She walked off with a look on her face as if she had stepped into a hornet’s nest.

I entered my apartment still pissed at what I perceived as an insult, but as I calmed down and started to process her observation, I saw, reluctantly, where she was coming from. Independence, it sounded like, was prerequisite for claims to being from the Caribbean region. Whether you came from an independent nation determined where you stood on the region’s totem pole.

For a number of reasons, I may have put this consideration out of my head. At the time of my encounter with the young Guyanese woman I had been on the U.S. mainland for roughly 15 years. I had become increasingly immersed in American, especially Black American, culture.  One of my saving graces had been the remnants of my accent. The other, closely related now I realize, was the company I kept while in Tallahassee. Most of my friends were either West Indian, descendants of West Indians, or preferred the company of West Indians. The few Black Americans I hung out with were some of the most open-minded people you could meet. Although I had received that type of treatment, albeit a lot less subtle, from the time I moved to the mainland, it had via that encounter become more pronounced.

Island nations had been going their own way since the early 1960s. The British Empire was in decolonization mode after the end of the second world war and the Caribbean was benefiting from it. Great Britain and Europe determined to take another route that would see them still exercise economic influence while dumping political responsibility on to their former colonies.  The United States got into the colonizer game pretty late in the Caribbean.

In 1898 the United States put the island of Puerto Rico into their portfolio. In August 1916, the U.S. entered an agreement to purchase the Danish West Indies from Denmark for a cool $25 million and renamed the territory the Virgin Islands of the United States. The purchase and eventual transfer in March 1917 were just in time for the territory to play a role in the protection of the Panama Canal via the establishment of a submarine base and other military facilities.

I will have to post on the legal uncertainty surrounding citizenship for the descendants of slaves in the territory but for now bear in mind that American citizenship became a crown for jewel for islanders and through the years, especially post World War II, the United States Virgin Islands (less of a mouthful nomenclature) would attract Caribbean people especially from the other islands in the Lesser Antilles.  Among those people would be my parents who met and married in St. Kitts and moved to St. Thomas in 1962.  I would enter this physical realm a year later, one foot in a Caribbean still under the direct rule of Great Britain, the other foot in a culture increasingly tainted in Americanism.

From childhood especially when traveling “home” to St Kitts, I was conscious of being in two different Caribbean realities. One night I am sitting in my great aunt’s house listening to the BBC. The next night I am in my living room in St. Thomas watching a one-week delayed television broadcast of “Mannix.”  Visiting cousins in New York, yes, I was from “the islands”, speaking with the funny accent, but I would have no qualms slipping into my best version of a Brooklyn accent just to fit in.  I was an American after all, wasn’t I?

And it is this attitude, that we are Americans versus Caribbean, that pervades the Virgin Islands’ culture.  The separateness from the rest of the Caribbean because of American citizenship is expressed with pride, so much pride that for the native-born Virgin Islanders, they look down on immigrants from St.  Kitts and other islands.  When I look back at my family’s network back in the USVI, it was primarily made up of people from St Kitts, Nevis, Anguilla, and Antigua. Even today the Virgin Islanders I socialize with are either from St Kitts-Nevis or, as in my case, our parents were from St Kitts-Nevis. But whether you were born in St Thomas or an immigrant who became a naturalized citizen, your Americanism was viewed as a sign of superiority over the other island nations.

The irony, for it is for that reason that island nations look down on us and it is not coming from a place of jealousy.  I believe that they view a people who exercise little self-determination as second rate.  While I disagree with the description of my homies from the USVI as second-rate, I would agree that given our brain power and deep-water port, if we leveraged today’s technology to create our own economy, an independent Virgin Islands could be a force to reckon with in a Caribbean that needs to be led by a example of a dynamic fellow island nation. I would like to see that happen.

Caribbean media producers need paid prioritization

In his 2015 open internet order, former Federal Communications Commission chairman Tom Wheeler argued for a seamless internet that promotes a virtuous cycle of innovation.  This seamless internet ecosystem would include every point on the internet between the end user sitting at his laptop or on his smartphone and the website from whence the end user is attempting to download information. To ensure this seamless experience, Mr Wheeler invoked the four open internet principles of transparency; no paid prioritization; no throttling of a website’s traffic; and no blocking an end user’s attempt to access the website of her choosing.

As of 11 June 2018, Mr Wheeler’s rules are no more, repealed and replaced by the Restoring Internet Freedom order issued by the Commission in December 2017.  While the Restoring Internet Freedom order kept language from the open internet order that addressed transparency i.e. the public disclosure of accurate information regarding network management practices, performance characteristics, and terms and conditions of service, etc., it repealed language addressing throttling of traffic from website, paid prioritization creating faster lanes for content providers, and blocking consumer access to legal websites.

The 2017 order addresses throttling, blocking, and paid prioritization concerns by providing language defining reasonable network practices. A network management practice is reasonable if it takes into account a legitimate business goal, the network’s architecture, and the technology of the broadband service. But critics of the Restoring Internet Freedom order are interpreting the repeal as authorizing ISPs to block or throttle internet traffic or allow large content providers to pay ISPS for the privilege of faster data lanes to their subscribers.

Critics can also be found in state legislatures where, according to data compiled by the National Conference of State Legislatures, 65 pieces of legislation were offered in state legislatures that put the FCC’s 2015 rules on net neutrality into state law. Eight of these states (California, Georgia, Maryland, Massachusetts, New Jersey, New York, Pennsylvania, and Virginia have metropolitan areas where significant Caribbean populations are located.  None of these states have enacted net neutrality legislation yet. Net neutrality legislation has already failed to pass in three of these states: Georgia, Maryland, and Virginia.

I understand the idea of transparency because of the importance it plays in negotiating for broadband access services. I never understood, however, why so-called proponents of net neutrality rules were against voluntary strategic partnerships between ISPs and content providers.  For example, the Caribbean has an emerging entertainment industry, one that recognizes the benefits of digitization. In the 21st century artists have to leverage the internet to get to an audience that is viewing more video traffic via mobile. Getting in front of a sizeable Caribbean immigrant audience in the United States may mean leveraging paid prioritization in order to ensure the availability of bandwidth necessary to stream video and music.

The FCC’s decision to repeal paid prioritization may benefit entertainment producers from the Caribbean in the long run.  Attempts by the states to balkanize communications regulation should not be allowed.

Immigrants coming from the Caribbean and Latin America to the United States over the next two years should prepare for a rough patch thereafter.

The International Monetary Fund today released a report describing a robust 2017 and 2018 U.S. economy, but 2019 and 2020 may be brutal for Americans as the economy is expected to taper off during those two years.

First the good news. Growth in gross domestic product was 2.3% in 2017 and is expected to climb by 2.9% in 2018. In 2019, the United States will see a slight tapering off in GDP growth at a growth rate of 2.7%.

Now, the bad news.  By 2020, the next presidential election year, growth will fall off almost abysmally when Americans see a GDP growth rate of 1.9%. It won’t get better in 2021, 2022, or 2023 as the growth rate continues to decline with growth rates projected at 1.7%, 1.5%, and 1.4% respectively.

At first blush the unemployment rates may look good during those periods. For example, by the end of 2017, the unemployment rate was 4.1% which is considered an indicator of an economy at full employment. The numbers, at least on the surface get better. In 2018, unemployment is expected to be at 3.5%, under the historical full employment mark. The U.S. will continue to see low unemployment in 2019(3.5%), 2020(3.4%), 2021(3.5%), 2022(3.7%), and 2023(3.8%); all figures again reflecting full employment.

Now we have to reconcile the low unemployment rate with low GDP growth. I suspect that more members of the tail end of the Baby Boom will contemplate retirement and may opt for leaving the workforce. As more people leave the workforce, all other things remaining equal, the number treated as unemployed also falls. Also, as the population ages, people on fixed incomes will adjust their budgets to reflect their new spending realities. Reduced spending by Baby Boomers will contribute will contribute to the slowdown in growth.

Also constraining spending will be the rise in interest rates as the Federal Reserve exceeds its targeted 2% federal funds rate goal. America runs on credit and the more expensive is to purchase, the less of it Americans have to spend.  According to IMF data, the ten-year bond rate ended at 2.4% in 2017. The rate on a ten-year note sets the interest rates for lending in the United States. By the end of 2018, the rate on the ten year is expected to climb to 3.2%; in 2019, 3.7%; and in 2020, 3.8%.  The rate will then level off to 3.6% in 2021 and 2022; and hit 3.7% in 2023.

Inflation is expected to peak at 2.8% in 2018 but fall to 2.4% and 2.0% in 2019 and 2020, respectively. The years 2021 and 2022 will see inflation at 1.9% climbing slightly to 2.0% in 2023.

While the economy will be in a sluggish mode, immigrants should be mindful of the social mood. A lot of the animosity toward undocumented immigrants has been tossed at immigrants from Mexico and Central America. Today, media is honing in on the Trump administration’s preferred policy to separate parents attempting to enter the U.S. across its border with Mexico without visas from their children.  I suspect this treatment will be carried out at all points and ports of entry. But given the animosity hurled at immigrants during booming years of an American economy, the social fabric may be a bit worn and the welcome less warm during a sluggish one.

The court in AT&T-Time Warner produces a rule that is overall positive for Caribbean media consumers

Tom Wheeler, former chairman of the Federal Communications Commission, told C-SPAN’s Peter Slen on last Monday’s segment of The Communicators that the absence of open internet rules tells content providing internet service providers that they can discriminate and favor their own content.  Mr Wheeler also opined that on 11 June 2018, major local monopolies will be told that it is fair to discriminate. Over time we will see internet services discriminate in a way that benefits their bottom line. Mr Wheeler believed that an AT&T-Time Warner tie-up would present consumers that type of anti-competitive dilemma.

The United States District Court for the District of Columbia disagreed with the former Commission chairman, issuing an opinion yesterday in United States of America v. AT&T, Inc., that says that AT&T Inc.’s acquisition of the media giant did not violate anti-trust law.  Vertical mergers rarely get denied by the courts. Given that AT&T and Time Warner do not play in each other’s space, in my opinion, finding the acquisition to be harmful to consumers would have been a bit much. What I always find fascinating is the expression of entitlement by consumers of media services; as if media consumption and the digital means by which content is consumed is a right.

Take for example the reaction to the merger by a leading member of the Fake Left, Senator Ed Markey, Democrat of Massachusetts:

“This ruling is an assault on consumers, choice, and innovation,” said Senator Markey.  “The telecommunications market needs more competition, not more consolidation. We need a telecommunications market where pay-TV gatekeepers don’t favor their own content providers, but allow minority, diverse, and independent programmers to reach Americans’ screens. I fear this decision will only further fuel merger mania in the telecommunications and other markets.” 

“Today’s decision underscores the need to restore robust net neutrality rules, so broadband providers like AT&T cannot use their gatekeeper role to harm competing services and content. Without net neutrality protections in place, AT&T will be free to block, slowdown, or charge fees to competitors like Netflix and Hulu to favor their own DirecTV Now streaming service and HBO content. Speaker Ryan should schedule an immediate vote on my CRA resolution to restore the FCC’s net neutrality rules.”

Both Mr Wheeler and Mr Markey come around and paint yesterday’s court ruling with the net neutrality brush while at the same time, unwittingly, making the court’s argument: that there should be a showing that this vertical merger would substantially erode competition. Bear in mind that United States of America v. AT&T, Inc. has nothing to do with net neutrality per se, but Mr Wheeler and Mr Markey have opened the conflation door by arguing that application of Title II-based net neutrality rules would mitigate AT&T’s gatekeeper role. This is speculation and fades further when you compare their speculation with the court’s description of how the industry works.

While I found the first 30 or so pages of the opinion to read like a script proposal for a Netflix docu-drama, the court’s description of how the video distribution industry works makes Mr Wheeler and Mr Markey’s assessments sound like paranoia. AT&T has no incentive to hoard content. On the contrary, part of the company’s reason for acquiring Time Warner is to create another stream of revenue: advertising fees. As more consumers cut or shave the cord at home and go mobile, AT&T’s lost subscriber fees must be recovered from other sources. AT&T decided to chase advertisement revenue. Time Warner’s content is traction for advertisement revenue. It is more efficient to get this new content on to as many distributor platforms as possible in order to maximize revenues. This means licensing content to a Netflix or Hulu or even using Time Warner’s production capacity to create content for these other platforms. Blocking or slowing down access to Netflix or Hulu would make no sense because AT&T would risk degrading the value of the content it provides to these platforms as a result of licensing or sales agreements.

Would Title II-based net neutrality rules increase competition in the production and delivery of content? No. Netflix and Hulu were spawned in a light touch, Title II free regulatory zone. They didn’t need permission to create the applications necessary for accessing content. They didn’t need permission to place those applications on the internet. The demand for content comes from consumers and the data on consumer tastes allows Netflix and Hulu to create even better more engaging content. A socialist-style, government approach to dictating how consumers access content and transmit their preferences about content is not what the consumer needs.

This is why the decision in United States of America v. AT&T, Inc., costs me nothing. I am not being compelled to buy content I don’t need because the light touch environment that went back into effect on Monday means that over the top platforms like Hulu and Netflix and the new AT&T will provide me with even more enticing offers to view the edgier content I suspect that will be spawned from competition. Consumers have put content providers and distribution platforms on notice that they can choose providers and distributors at the swipe of a smart phone screen and by allowing vertical mergers and the convergence it spawns, those screens will carry more interesting and diverse content.

Dear United States. Get Out of the Korean Peninsular. You Lost the War

Watching the press conference being held by President Trump regarding his summit with Chairman Kim. The questions from the press corp are pretty empty. Questions like, “Can we trust North Korea?” “How can you call Mr Kim a talented leader given North Korea’s human rights abuses?” “How will you verify that North Korea has completely denuclearized?” The usual, arrogant blah, blah from empty headed journalists chasing ratings, Emmys, and Peabody awards.

From my view, the real issue is why has the United States not reconciled the current scenario with the fact that its reason for inserting itself into a civil war was bogus? None of these reporters has posed the question, “Why are we here in the first place?” Statists on the left have lobbed criticism at Mr Trump, either in traditional or social media, but none have educated the American public on the underlying flawed philosophy of American faux imperialism. To do so would require Americans to take another look at themselves in the mirror and come to grips with a the idea of taking a foreign policy path that says, “America will keep its nose out of another country’s business.”

The United States lost the Korean War. Let me repeat that. The United States lost the Korean War. It failed at its objective. It should not now be in any position to dictate terms to the winner. It should leave … now. The premise that intervening in the war between North and South Korea was necessary in order to stop the domino effect of communism throughout Asia was bogus to begin with. As your own Robert F. Kennedy surmised, communism eventually feeds on itself. Time proved him right.

Today, you have a state-based capitalist political economy in China poised to take over the space held by the market-based capitalist political economy of the United States. Soon, a number of you will be holding yuan as your own personal reserve currency because Asia and Africa would have switched to it.

America looks like a sleeping drunk old man who has been startled to consciousness. Its influence in Asia is slipping away. It can only buy influence in Africa by selling weapons. Europe laughs at it and is resolved to go its own way. America’s self-righteous sounding commentary on human rights abuses is empty rhetoric given its level of police brutality toward blacks. As we say in the Virgin Islands, “Ah you need to go sid down and shut up.”

Bottom line, America. You lost. Unless you are selling goods and services to a country, you shouldn’t be there. Get out of the Korean peninsular….

If you needed the internet that bad, you would have created it yourself

Monday 11 June 2018. We will see a repeat of the weeping and wailing that Hillary Clinton’s supporters did as they witnessed what they thought was impossible: an electoral loss to Donald Trump. Advocates for the treatment of broadband access as a telecommunications service will weep and wail not because of the loss of internet service, but because they will be out of bullets when the scare tactics imposed on millions of consumers do not come to fruition. As June goes into July into August into election season into Kwanzaa, another argument for attracting anti-Trump voters will fade away.  As the tyrannical Fake Left jump onto social media and create new forums and hashtags for the next rally, they will soon take for granted that the internet still works after all.

What I find disconcerting is the emotion attached to internet access. “If everyone is not connected, we will all sink into the pits of Hades.” “If I am not online, I am inconsequential.” “The internet is crucial to our daily living and well-being.”  None of this is true. Unlike water and energy, internet access is not a necessity for the continuation of life. Approximately 11% of Americans do not use the internet, according to data from Pew Research. More than likely, these individuals are getting information they determine as pertinent to their lives from old tried and true sources: first hand observation, published news sources, direct contact with government agencies, family and friends. These data sources are not as fast or as glitzy, but they have worked for centuries and more than likely were used by the individuals who built this digital world.

I expect the percentage of Americans not using the internet to fall over time when you consider that in 2000 approximately 48% of Americans were not online.  Our children are already internet savvy and this use of online services will only continue as they get older. As we on the tail end of the Baby Boom enter retirement, we may find ourselves using it more to connect with fellow Boomers who, unfortunately, may not be up to travel for various reasons.

What we need to avoid is allowing political factions such as the Fake Left to play on the emotions stemming from the belief that without net neutrality rules, consumers won’t be able to get to the websites of their choice, see speeds from their favorite websites slow down, or have their data sold to third parties they did not approve.  This narrative should be seen for what it is; another way to get votes.

If the Fake Left were really concerned about protecting your privacy and the speed at which you access data, they would tell you that you are responsible for reading the fine print of every service agreement for every information service provider you access. Arguing that terms and conditions are written in “legalese” is no excuse for skipping over disclosures and subjecting your privacy to abuse.  If, as the Fake Left argues, the internet is that crucial to everyday living, so crucial that it should be treated like a utility, then equal fervor should be applied to the consumer who decides to use online services.  In other words, the Fake Left should stop encouraging people who can’t fly to buy an airplane and attempt to fly it without bearing the consequences.

If you can’t get what your want from an information service provider in terms of privacy or speed, then maybe you should invest in consumer encryption services such as a virtual private network, or using a heavily encrypted network or browser such as TOR.

There are also the old methods of information gathering: a telephone (landline) and a newspaper, from which you can access by paying cash, the ultimate form of encrypted currency. Bottom line, there are ways to protect your individual privacy without implementing more onerous rules on society.