“This is a bill to reduce gas prices and hold Big Oil accountable,” said Rep. Ro Khanna, who led the measure in the U.S. House.
Congressional Democrats on Thursday introduced the bicameral Big Oil Windfall Profits Tax to target price gouging by profit-gorging fossil fuel companies amid Russian President Vladimir Putin’s invasion of Ukraine.
“We need to curb profiteering by Big Oil and provide relief to Americans at the gas pump—that starts with ensuring these corporations pay a price when they price gouge.”
“This is a bill to reduce gas prices and hold Big Oil accountable,” declared Rep. Ro Khanna (D-Calif.), who’s leading the measure in the U.S. House.
“As Russia’s invasion of Ukraine sends gas prices soaring,” said Khanna, “fossil fuel companies are raking in record profits. These companies have made billions and used the profits to enrich their own shareholders while average Americans are hurting at the pump.”
Sen. Sheldon Whitehouse (D-R.I.) introduced the legislation in the upper chamber along with co-sponsors including Sens. Jeff Merkley (D-Ore.), Elizabeth Warren (D-Mass.), and Bernie Sanders (I-Vt.).
The proposal followed President Joe Biden’s announcement earlier this week of a ban on U.S. imports of Russian fuels and amid swelling accusations that Big Oil has been taking advantage of the crisis in Ukraine to “pad their bottom line with war-fueled profits.”
The Democrats’ proposal aims to get some relief for Americans, who are facing average gas prices of $4.31 a gallon.
Big oil companies, specifically those that produce or import at least 300,000 barrels of oil per day, are targeted under the measure. They would face a per-barrel tax—whether the oil is domestically produced or imported—equal to 50% of the difference between the current price of a barrel of oil and the average price per barrel between 2015 and 2019.
The measure exempts smaller companies, which, according to a statement from the lawmakers, account for roughly 70% of the domestic production. This approach is meant to deter the larger multinational producers from simply raising prices.
The tax imposed on the energy firms would be quarterly. Consumers would receive quarterly rebates, with the relief phasing out for single filers earning more than $75,000 annually and joint filers earning more than $150,000 annually. The lawmakers project the tax to raise $45 billion per year at $120 per barrel of oil, delivering to single filers $240 annually and joint filers $360 annually.
Last year, oil & gas companies made $174 billion in profits. This year they're on track to make more. We cannot allow big oil to use Ukraine & "inflation" as an excuse to rip-off Americans. I'm proud to join @SenWhitehouse to introduce a windfall profits tax. Let's get it done.
“While Putin’s war is causing gas prices to go up, Big Oil companies are raking in record profits,” Warren said in a statement. “We need to curb profiteering by Big Oil and provide relief to Americans at the gas pump—that starts with ensuring these corporations pay a price when they price gouge, and using the revenue to help American families,” she said.
A number of social justice and climate groups heaped praise on the legislative proposal.
According to Richard Wiles, president of the Center for Climate Integrity, “The oil and gas industry got the world into this mess by lobbying and lying to keep us hooked on fossil fuels. Now they’re using the war in Ukraine to distract us from the fact that they are ripping off hard working Americans with high gas prices as they reap record earnings.”
“It’s time we stop allowing Big Oil to use its record profits, earned on the backs of hard-working American families, to reward wealthy shareholders and CEOs, and instead make them pay a fair share to lower the cost for consumers,” he added.
Collin Rees, U.S. program director at Oil Change International, welcomed the proposal as precisely the opposite of what the fossil fuel lobby has called for to counter Putin’s power, namely expanded domestic fossil fuel production.
“The so-called ‘solutions’ to the energy crisis being put forward by Big Oil companies and the American Petroleum Institute would do nothing but further line their own pockets and lock in a climate-wrecking, fossil-fueled future,” he said. “What’s needed now is immediate relief for American consumers, which is what this commonsense windfall profits tax bill would provide.”
The bill also drew plaudits from Lukas Ross, program manager at Friends of the Earth, which released an analysis Thursday along with BailoutWatch finding that Big Oil CEOs have “absolutely” used the spiked in fuel prices triggered by Russia’s invasion of Ukraine to “price-gouge and profiteer.”
In a statement responding to the new legislation, Ross said: “All-American oil oligarchs are profiteering off the war in Ukraine while sacrificing our communities and climate. The windfall profits tax will require Big Oil to pay their fair share while putting billions of dollars back into the pockets of taxpayers.”
Originally published on Common Dreams by ANDREA GERMANOS and republished under a Creative Commons license (CC BY-NC-ND 3.0)
Experts say the privacy promise—ubiquitous in online services and apps—obscures the truth about how companies use personal data
You’ve likely run into this claim from tech giants before: “We do not sell your personal data.”
Companies from Facebook to Google to Twitter repeat versions of this statement in their privacy policies, public statements, and congressional testimony. And when taken very literally, the promise is true: Despite gathering masses of personal data on their users and converting that data into billions of dollars in profits, these tech giants do not directly sell their users’ information the same way data brokers directly sell data in bulk to advertisers.
But the disclaimers are also a distraction from all the other ways tech giants use personal data for profit and, in the process, put users’ privacy at risk, experts say.
Lawmakers, watchdog organizations, and privacy advocates have all pointed out ways that advertisers can still pay for access to data from companies like Facebook, Google, and Twitter without directly purchasing it. (Facebook spokesperson Emil Vazquez declined to comment and Twitter spokesperson Laura Pacas referred us to Twitter’s privacy policy. Google did not respond to requests for comment.)
And focusing on the term “sell” is essentially a sleight of hand by tech giants, said Ari Ezra Waldman, a professor of law and computer science at Northeastern University.
“[Their] saying that they don’t sell data to third parties is like a yogurt company saying they’re gluten-free. Yogurt is naturally gluten-free,” Waldman said. “It’s a misdirection from all the other ways that may be more subtle but still are deep and profound invasions of privacy.”
Those other ways include everything from data collected from real-time bidding streams (more on that later), to targeted ads directing traffic to websites that collect data, to companies using the data internally.
How Is My Data at Risk if It’s Not Being Sold?
Even though companies like Facebook and Google aren’t directly selling your data, they are using it for targeted advertising, which creates plenty of opportunities for advertisers to pay and get your personal information in return.
The simplest way is through an ad that links to a website with its own trackers embedded, which can gather information on visitors including their IP address and their device IDs.
Advertising companies are quick to point out that they sell ads, not data, but don’t disclose that clicking on these ads often results in a website collecting personal data. In other words, you can easily give away your information to companies that have paid to get an ad in front of you.
If the ad is targeted toward a certain demographic, then advertisers would also be able to infer personal information about visitors who came from that ad, Bennett Cyphers, a staff technologist at the Electronic Frontier Foundation, said.
For example, if there’s an ad targeted at expectant mothers on Facebook, the advertiser can infer that everyone who came from that link is someone Facebook believes is expecting a child. Once a person clicks on that link, the website could collect device IDs and an IP address, which can be used to identify a person. Personal information like “expecting parent” could become associated with that IP address.
“You can say, ‘Hey, Google, I want a list of people ages 18–35 who watched the Super Bowl last year.’ They won’t give you that list, but they will let you serve ads to all those people,” Cyphers said. “Some of those people will click on those ads, and you can pretty easily figure out who those people are. You can buy data, in a sense, that way.”
Then there’s the complicated but much more common way that advertisers can pay for data without it being considered a sale, through a process known as “real-time bidding.”
Often, when an ad appears on your screen, it wasn’t already there waiting for you to show up. Digital auctions are happening in milliseconds before the ads load, where websites are selling screen real estate to the highest bidder in an automated process.
Visiting a page kicks off a bidding process where hundreds of advertisers are simultaneously sent data like an IP address, a device ID, the visitor’s interests, demographics, and location. The advertisers use this data to determine how much they’d like to pay to show an ad to that visitor, but even if they don’t make the winning bid, they have already captured what may be a lot of personal information.
With Google ads, for instance, the Google Ad Exchange sends data associated with your Google account during this ad auction process, which can include information like your age, location, and interests.
The advertisers aren’t paying for that data, per se; they’re paying for the right to show an advertisement on a page you visited. But they still get the data as part of the bidding process, and some advertisers compile that information and sell it, privacy advocates said.
In May, a group of Google users filed a federal class action lawsuit against Google in the U.S. District Court for the Northern District of California alleging the company is violating its claims to not sell personal information by operating its real-time bidding service.
The lawsuit argues that even though Google wasn’t directly handing over your personal data in exchange for money, its advertising services allowed hundreds of third parties to essentially pay and get access to information on millions of people. The case is ongoing.
“We never sell people’s personal information and we have strict policies specifically prohibiting personalized ads based on sensitive categories,” Google spokesperson José Castañeda told the San Francisco Chronicle in May.
Real-time bidding has also drawn scrutiny from lawmakers and watchdog organizations for its privacy implications.
In January, Simon McDougall, deputy commissioner of the United Kingdom’s Information Commissioner’s Office, announced in a statement that the agency was continuing its investigation of real-time bidding (RTB), which if not properly disclosed, may violate the European Union’s General Data Protection Regulation.
“The complex system of RTB can use people’s sensitive personal data to serve adverts and requires people’s explicit consent, which is not happening right now,” McDougall said. “Sharing people’s data with potentially hundreds of companies, without properly assessing and addressing the risk of these counterparties, also raises questions around the security and retention of this data.”
And in April, a bipartisan group of U.S. senators sent a letter to ad tech companies involved in real-time bidding, including Google. Their main concern: foreign companies and governments potentially capturing massive amounts of personal data about Americans.
“Few Americans realize that some auction participants are siphoning off and storing ‘bidstream’ data to compile exhaustive dossiers about them,” the letter said. “In turn, these dossiers are being openly sold to anyone with a credit card, including to hedge funds, political campaigns, and even to governments.”
On May 4, Google responded to the letter, telling lawmakers that it doesn’t share personally identifiable information in bid requests and doesn’t share demographic information during the process.
“We never sell people’s personal information and all ad buyers using our systems are subject to stringent policies and standards, including restrictions on the use and retention of information they receive,” Mark Isakowitz, Google’s vice president of government affairs and public policy, said in the letter.
What Does It Mean to “Sell” Data?
Advocates have been trying to expand the definition of “sell” beyond a straightforward transaction.
The California Consumer Privacy Act, which went into effect in January 2020, attempted to cast a wide net when defining “sale,” beyond just exchanging data for money. The law considers it a sale if personal information is sold, rented, released, shared, transferred, or communicated (either orally or in writing) from one business to another for “monetary or other valuable consideration.”
And companies that sell such data are required to disclose that they’re doing so and allow consumers to opt out.
“We wrote the law trying to reflect how the data economy actually works, where most of the time, unless you’re a data broker, you’re not actually selling a person’s personal information,” said Mary Stone Ross, chief privacy officer at OSOM Products and a co-author of the law. “But you essentially are. If you are a social media company and you’re providing advertising and people pay you a lot of money, you are selling access to them.”
But that doesn’t mean it’s always obvious what sorts of personal data a company collects and sells.
In T-Mobile’s privacy policy, for instance, the company says it sells compiled data in bulk, which it calls “audience segments.” The policy states that audience segment data for sale doesn’t contain identifiers like your name and address but does include your mobile advertising ID.
Nevertheless, T-Mobile’s privacy policy says the company does “not sell information that directly identifies customers.”
T-Mobile spokesperson Taylor Prewitt didn’t provide an answer to why the company doesn’t consider advertising IDs to be personal information but said customers have the right to opt out of that data being sold.
So What Should I Be Looking for in a Privacy Policy?
The next time you look at a privacy policy, which few people ever really do, don’t just focus on whether or not the company says it sells your data. That’s not necessarily the best way to assess how your information is traveling and being used.
And even if a privacy policy says that it doesn’t share private information beyond company walls, the data collected can still be used for purposes you might feel uncomfortable with, like training internal algorithms and machine learning models. (See Facebook’s use of one billion pictures from Instagram, which it owns, to improve its image recognition capability.)
Consumers should look for deletion and retention policies instead, said Lindsey Barrett, a privacy expert and until recently a fellow at Georgetown Law. These are policies that spell out how long companies keep data, and how to get it removed.
She noted that these statements hold a lot more weight than companies promising not to sell your data.
“People don’t have any meaningful transparency into what companies are doing with their data, and too often, there are too few limits on what they can do with it,” Barrett said. “The whole ‘We don’t sell your data’ doesn’t say anything about what the company is doing behind closed doors.”
Senate Finance Committee Chairman Ron Wyden said on Thursday he is revisiting proposed legislation that would crack down on the giant tax-free retirement accounts amassed by the ultrawealthy after a ProPublica story exposed that billionaires were shielding fortunes inside them.
“I feel very strongly that the IRA was designed to provide retirement security to working people and their families, and not be yet another tax dodge that allows mega millionaires and billionaires to avoid paying taxes,” Wyden said in an interview.
ProPublica reported Thursday that the Roth IRA, a retirement vehicle originally intended to spur middle-class savings, was being hijacked by the ultrawealthy and used to create giant onshore tax shelters. Tax records obtained by ProPublica revealed that Peter Thiel, a co-founder of PayPal and an investor in Facebook, had a Roth IRA worth $5 billion as of 2019. Under the rules for the accounts, if he waits till he turns 59 and a half, he can withdraw money from the account tax-free.
The story is part of ProPublica’s ongoing series on how the country’s richest citizens sidestep the nation’s income tax system. ProPublica has obtained a trove of IRS tax return data on thousands of the wealthiest people in the U.S., covering more than 15 years. The records have allowed ProPublica to begin, this month, an unprecedented exploration of the tax-avoidance strategies available to the ultrawealthy, allowing them to avoid taxes in ways most Americans can’t.
Wyden said ProPublica’s stories have shifted the debate about taxes at the grassroots level, underscoring a “double standard” that would have a nurse in Medford, Oregon, dutifully paying taxes “with every single paycheck” while the wealthiest Americans “just defer, defer, defer paying their taxes almost until perpetuity.”
Wyden said, “Now, the American people are with us on the proposition that everybody ought to pay their fair share, and in that sense, the debate about taxes has really changed a lot.”
The focus on recouping lost tax revenue comes at a critical time, Wyden and others say, as lawmakers look for ways to fund President Joe Biden’s infrastructure plan and other domestic spending.
Wyden had worried for years that Roth IRAs were being abused by the ultrawealthy. In 2016, he put forth a proposal that would have reined in the amount of money that could be stowed inside them.
“If I had my way back in 2016, my bill would have passed, there would have been a crackdown on these massive Roth IRA accounts built on assets from sweetheart deals,” Wyden said.
The proposal was known as the Retirement Improvements and Savings Enhancements Act. It would have required owners of Roth accounts worth more than $5 million to take out money over time, capping the accounts’ growth. It also would have slammed shut a back door that allowed the wealthy to move fortunes into Roths from less favorable retirement accounts. This maneuver, known as a conversion, allows a taxpayer to transform a traditional IRA into a Roth after paying a one-time tax.
Ted Weschler, a deputy of Warren Buffett at Berkshire Hathaway, told ProPublica he supported reforms to rein in giant Roth IRAs like his. Weschler’s account hit the $264.4 million mark in 2018 after he converted a whopping $130 million and paid a one-time tax years earlier, according to tax records obtained by ProPublica.
In a statement to ProPublica earlier this week, Weschler didn’t address any specific reform plan but said: “Although I have been an enormous beneficiary of the IRA mechanism, I personally do not feel the tax shield afforded me by my IRA is necessarily good tax policy. To this end, I am openly supportive of modifying the benefit afforded to retirement accounts once they exceed a certain threshold.”
Wyden’s proposal also targeted the stuffing of undervalued assets into Roths, which congressional investigators had flagged as the foundation of many large accounts. Under the Wyden draft bill, purchasing an asset for less than fair market value would strip the tax benefits from the entire IRA.
ProPublica’s investigation showed that Thiel purchased founder’s shares of the company that would become PayPal at $0.001 per share in 1999. At that price, he was able to buy 1.7 million shares and still fall below the $2,000 maximum contribution limit Congress had set at the time for Roth IRAs. PayPal later disclosed in an SEC filing that those shares, and others issued that year, were sold at “below fair value.”
A spokesperson for Thiel accepted detailed questions on Thiel’s behalf last week, then never responded to phone calls or emails.
The RISE Act was never introduced because, Wyden said, Republicans controlled the Senate at the time and made clear they opposed the effort. The proposal was also heartily opposed by promoters of nontraditional retirement investments. One of them wrote, at the time: “Everything about the RISE Act Proposal is opposed to capitalism and economic freedom.”
Following ProPublica’s story on Roths, Sen. Elizabeth Warren, D-Mass., said the way to address the gargantuan accounts would be a wealth tax, which would impose an annual levy on households with a net worth over $50 million.
Warren tweeted a link to the story and wrote: “Yes, our tax system is rigged with loopholes and tax shelters for billionaires like Peter Thiel. And stories like this will keep popping up until we pass a simple #WealthTax on assets over $50 million to make these guys pay their fair share.”
Yes, our tax system is rigged with loopholes and tax shelters for billionaires like Peter Thiel. And stories like this will keep popping up until we pass a simple #WealthTax on assets over $50 million to make these guys pay their fair share. https://t.co/6aP6l8tG3A
Daniel Hemel, a tax law professor at the University of Chicago who has been researching large Roths, said that Congress should simply prohibit IRAs from purchasing assets that are not bought and sold on the public market.
“There’s no reason people should be able to be gambling their retirement assets on pre-IPO stocks,” Hemel said.
He added that lawmakers should go beyond reforms targeting the accounts directly and address a potential estate tax dodge related to Roths.
If the holder of a large Roth dies, the retirement account is considered part of the taxable estate, and a significant tax is due. But, Hemel said, there’s nothing to stop an American who has amassed a giant Roth from renouncing their citizenship and moving abroad to a country with no estate taxes. It’s rare, but not unheard of, for the ultrawealthy to renounce their U.S. citizenship to avoid taxes.
Under federal law, U.S. citizens who renounce their citizenship are taxed that day on assets that have risen in value but are not yet sold. But there’s an exception for certain kinds of assets, Hemel said, including Roth retirement accounts.
Thiel acquired citizenship in New Zealand in 2011. Unlike the United States, New Zealand has no estate tax. It’s not clear whether estate taxes figured into Thiel’s decision.
A spokesperson for Thiel did not immediately respond to questions on Friday about whether estate taxes factored into Thiel’s decision to become a New Zealand citizen.
In his application for citizenship, Thiel wrote to a government minister: “I have long admired the people, culture, business environment and government of New Zealand, as well as the encouragement which is given to investment, business and trade in New Zealand.”
Patching the hole in the expatriation law, Hemel said, “should be a top policy priority because we’re talking about, with Thiel alone, billions of dollars of taxes.”
by Justin Elliott, Patricia Callahan and James Bandler for ProPublica via Creative Commons.
The number of multimillion-dollar individual retirement accounts has soared in the past decade, as more wealthy Americans use the tax-advantaged vehicles to shield fortunes from income taxes, according to new data released by Congress today.
The data reveals for the first time the staggering amount of money socked away in tax-free mega Roth accounts: more than $15 billion held by just 156 Americans.
The new data also shows that the number of Americans with traditional and Roth IRAs worth over $5 million tripled, to more than 28,000, between 2011 and 2019.
The data was requested by Senate Finance Chairman Ron Wyden, D-Ore., and House Ways and Means Chairman Richard Neal, D-Mass., following ProPublica’s story last month exploring the rise of mega Roth IRAs. The story, based on confidential IRS data obtained by ProPublica, revealed that tech mogul Peter Thiel has the largest known Roth IRA, worth $5 billion as of 2019.
In a Senate Finance hearing on retirement on Wednesday, Wyden said such massive accounts underscore the country’s inequalities. “Individuals at the very top — at the very, very top — are able to game the rules to get ahead and basically abuse taxpayer-subsidized accounts with pricey accountants and lawyers,” Wyden said. “This increases the already existing retirement inequality between retirement haves and have-nots to an extreme level.”
Roth IRAs were established in 1997 to incentivize middle-class Americans to save for retirement. Congress imposed strict limits, including a cap on how much can be contributed to the accounts each year, which today stands at $6,000 for most Americans. The average Roth account was worth $39,108 at the end of 2018.
But a select set of the ultrawealthy have managed to get around limits set by Congress and transformed the vehicle into a powerful onshore tax shelter. One way they’ve done that is by buying nonpublic shares of companies with extremely low valuations. That allows them to tuck a huge volume of shares into a retirement account. Congressional investigators have previously found that the IRS has struggled to enforce rules around these investments, including whether the valuations are legitimate.
Once money is deposited into a Roth account, any proceeds from investment gains are tax free. So, for example, a Roth owner who sells a successful tech investment for a $1 million profit gets to keep all of the money, saving a potential $200,000 in federal taxes. The savings can then be reinvested, tax free, as long as the Roth holder waits till he or she is at least 59 and a half before withdrawing the money. Owners of traditional IRAs, by contrast, enjoy tax-free growth but must pay income tax on withdrawals. The Roth is considered the more powerful tax-avoidance tool for the wealthy.
The latest numbers come from analysts at Congress’ nonpartisan Joint Committee on Taxation. They update a widely cited study from the Government Accountability Office that released figures on large IRAs in 2011.
The new figures show that, as of 2019, nearly 3,000 taxpayers held Roth IRAs worth at least $5 million. (The total of more than 28,000 people holding IRAs of that size includes both traditional and Roth IRAs.) The aggregate value of those Roth IRAs was more than $40 billion.
Both Wyden and Neal said in statements that the new figures show the need for reform. Neal said that “IRAs are intended to help Americans achieve long-term financial security, not to enable those who already have extraordinary wealth to avoid paying their fair share in taxes and deepen existing inequalities in our nation.” Neal said earlier this month, in the wake of the ProPublica article, that the Ways and Means Committee would draft a bill to “stop IRAs from being exploited.”
For his part, Wyden said, “As the Finance Committee continues to develop proposals to make the tax code more fair, closing these loopholes will be a top priority.” Wyden first proposed an overhaul of IRA rules to prevent the accounts from being used as large tax shelters several years ago. One reform that is being discussed would prohibit investors from putting assets that are not available to ordinary Americans, such as shares of startup companies, into retirement accounts.
Wyden and Neal’s push for reforms comes as Congress is considering bipartisan retirement legislation. The bills are being pitched as helping ordinary Americans save for retirement, including by proposing to automatically enroll workers in employer-sponsored retirement plans. But they also include perks for the retirement and financial industries, such as relaxing rules in ways that are seen as a boon for insurers. And buried deep inside the two complex bills are provisions that could make it harder for the IRS to crack down on the ultrawealthy who dodge tax rules.
by Justin Elliott, James Bandler and Patricia Callahan for ProPublica and published via Creative Commons License
Above: Photo by Michael Krahn on Unsplash with elements added by Lynxotic
Coming after a frenzied run-up the hand wringing is no surprise
I many ways it seems as if Bitcoin and Cryptocurrencies appeared suddenly in 2021 out of the head of Zeus. Protean and fully formed, with billions and trillions in market caps, and all your sisters, brothers, cousins and even the Uber driver climbing aboard.
And the FOMO blog posts, where every hour an innocent reader is assaulted by a story, perhaps true, perhaps exaggerated and certainly foolhardy in retrospect, of an innocent putting their life savings into Dogecoin and suddenly having, theoretically, huge gains at their disposal.
Meanwhile, craggy faced, ancient stock market mavens would interject famous last words that now appear to be wise. However, all that notwithstanding, this week’s crash is nothing new or unexpected.
In reality, as can be seen from the graphic below, provided by Visual Capitalist, there have been so may crashes / corrections and doomsday prognostications since 2012 in Bitcoin that it seems like a miracle the there’s any thing such as Crypto at all.
There’s a reason it’s not dead and it’s in the DNA
The resiliency, far from a shock to those that have been around more than a fortnight, is kinda the point. When Satoshi Nakamoto built the system architecture of Bitcoin and since then inspired the over 8000 new crypto entities that have been developed, it was, just like the internet itself that was build to survive WWIII, supposed to be as indestructible as possible.
Like physical gold, which is considered have been adopted as a store of value partly due to its indestructibility and immutability (alchemy notwithstanding) the volatility and sometimes violent-seeming life story of Bitcoin is a necessary adjust to its role in finance, commerce and even individual monetary survival.
Not for the faint of heart, perhaps
While the mainstream and those forces opposed to the adoption or survival of Bitcoin and Crypto are out in force pointing to the “unsuitability” of Bitcoin and other cryptocurrencies for any “legitimate” use as a trade or savings vehicle, the progress so far, in spite of the obvious fact that volatility has always been baked in to the situation, is an obvious refutation of that viewpoint.
Will the current drop in dollar values relative to Bitcoin end it’s popularity and strip it of the respect it has thusfrar earned among many? In a word, no. In essence what is happening is, as many have foretold, what happens often and repeatedly, the excess attention and dollars that were pumped into crypto by you brother, sister, cousin and Uber driver are now getting blown out, since those were more speculation and psychosis than any kind of vote for viability or permanency.
And, why not? Where was to concern, shock and hesitation by the masses when the prices seemed to only rise for weeks and even months across so many products and coins it was impossible to keep count? Why was to feeding frenzy and the mania-like piling on not ignored as an anomaly?
The herd does as the herd will do. Diamond hands and Paper hands will ebb and flow as long as the rivers flow to the sea and humans herd like buffalo. And, in all likelihood, dollars and euros and yen will be long forgotten when the last bitcoin is transferred to the final wallet in the sky.
Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Lynxotic does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.
Looking like a slowdown and shift to new sponsors for 2021
Super Bowl LV airs live on CBS and CBS All Access on Sunday, February 7th kicking off at 6:30 p.m. Before you see one of the biggest sporting events of the year when the Chiefs and Buccaneers (with Tom Brady) take the field, below are sneak peaks of some of the ads set to air during the big game.
With a few exceptions many of the usual sponsors are back. Tide, Pringles, Amazon, Cheetos, Doritos, Frito Lay, M & M’s and, of course, Bud Light. But a few notable newcomers include Square Space, Rockstar Energy and the ad that already has people cringing, Robinhood.
After the incredible backlash against the app restricting trading in GameStop, AMC, BlackBerry and others, for many the ad falls flat, crashes you might say. Probably a great test of the theory that any publicity is good publicity. They have seen a surge in signups. Go figure. Check the ad below and then take a look at the 16 we collected as a preview to the big day.
Right now, the best movies on the financial crises of 2008 and 2000 and stock trading in general are all trending on the streaming rental market, since they are nearly impossible to find on subscription based platforms such as Netflix, HBO Max, Disney +, etc.
As a result, paid views have skyrocketed, for example, on iTunes, where “The Big Short” is #3 and “Wolf on Wall Street” is #4
This surge applies to other films such as the excellent ‘Boiler Room” with Giovanni Ribisi. The films are all excellent and worth paying for if the chaotic craze with huge money gained and lost with GameStop, AMC and the whole Reddit, Robinhood brouhaha has you curious to learn more about the financial markets.
Click to buy “The Big Short” and help Lynxotic and all Independent Local Bookstores. Also available on Amazon.
The reality is sinking in, slowly, that the future is truly unknowable and that big changes and even bigger challenges are looming. Twin shocks of a health emergency and a financial crisis, intertwined and yet with separate trajectories, are still to be resolved in our near future.
And then there’s the myriad of other challenges that were already acute, such as global warming and the “other” epidemic; corruption and greed. It’s almost too much to face up to, and no one can be blamed for wanting to just turn away.
Too much has been glossed over. After the 2008 crisis we all just wanted to put that ugly mess behind us and get on with our lives. I suppose the criminals that netted billions as a “reward” for almost destroying the entire global economy were also eager to just move on.
All that as it may be, perhaps, a way to begin the process of regaining our courage and looking into the future with some kind of hope, or at least a deeper understanding of the human dilemma and historical precedents, might be to enjoy films about small moments of triumph before great adversity. Here are a few recent options:
Barely 12 years ago, the financial collapse and ensuing “Great Recession” was a nightmare scenario. The aftermath of that debacle is also a contributor to the economic dangers we see before us in 2020. This film, likely the best based on that era, highlights how outsiders and misfits were able to prosper, even as they witnessed the corruption, failure and systemic injustice that brought the world to the brink of total economic chaos.
Starring: Christian Bale, Steve Carell, Ryan Gosling and Brad Pitt.
Want know more about shorting? About the shady and complicated scams? And also see an incredible film?
‘Wolf of Wall Street’:
The Wolf of wall street is simply a great movie. It’s even better though if you watch it in the context of stock market mania. Just like the one that’s happening now.
Beyond the fact that the story is incredibly entertaining it does also get into the heart of the “pump & dump” boiler room mentality. While the so called ‘retail investors” who are riding the Robinhood stock purchasing app to what they see as well deserved revenge on Wall Street, and Belfort who was the real life “Wolf of Wall Street” was more of a wannabe that couldn’t get into the establishment.
He then set forth, with chutzpa and insanity and some drugs, built his own criminal empire, there are some very clear correlations between his tricks that made him rich and what the short-squeezing Reddit & Wall Street Bets chat room vigilantes are doing right now.
Can we all be like the guys, Jordan Belfort or Michael Burry, who was played by Christian Bale in the movie, and even though it was about going short, it’s sill ok, cause, Christian Bale?
History does exist, even if it happened before your uncle was born
Up until 1934 many things were legal and rampant that today, technically, are not allowed. Insider Trading is the most obvious and best defined, look up Martha Stewart and jail time if you want to know more about that.
Collusion in the market is another less well known practice, also known as “pump & dump” that has as many variations as Ponzi schemes and, though illegal, will never be stamped out. The technical terms for Colluding in relation to stock trading are “securities fraud” or “market manipulation.”
Not to get technical but here’s an partial excerpt of the legal specifics:
15 U.S. Code § 78i – Manipulation of security prices
(a) – (2 To effect, alone or with 1 or more other persons, a series of transactions in any security registered on a national securities exchange, any security not so registered, or in connection with any security-based swap or security-based swap agreement with respect to such security creating actual or apparent active trading in such security, or raising or depressing the price of such security, for the purpose of inducing the purchase or sale of such security by others.
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For a bird’s-eye overview and scientific perspective – Athropocene is a film for those ready to think deeply on how, once beyond the immediate danger, we would want to emerge into a new era as a species. A positive reaction to the current crisis, worldwide, has been a series of ideas and proposals that show a willingness to confront the challenges from an entirely new perspective. Maybe new leadership can mean starting over and making a pledge to try a new approach to literally everything.
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Cinderella Man
This Depression era feel-good story takes on new meaning as we see a “Great Depression II” potentially looming. Looking for strength and courage facing forces that threaten our survival, and coming out at the end in a better place, that’s a synopsis and blueprint we can all benefit from observing, even if it’s packaged as a Hollywood vehicle. Russel Crowe at his best. Maybe worth a second look.
Lots of confusion on all sides. There’s an internet storm brewing over the “injustice” of various entities – a ridiculous “free” trading app called, of all things “Robinhood”, the hedge funds who shorted an obviously overvalued stock. The army of short-squeezers who are screaming bloody murder that they were not able to cash in at the top (or commit Hari-kari by buying more the higher it goes).
And then every pundit in the world sounding off – all the outrage and chaos with Ted Cruz & AOC & Elon Musk & Chris Cuomo & Mark Cuban and probably every celebrity in the world going nuts all at once by tomorrow and all sounding off like crazy over the “injustice”. Shake it up and shake in down.
The sheer volume of confusion over the “Robinhood Revolution” is staggering. Just wait it will be much, much worse. The depth of the ignorance is truly monumental.
Interactive Brokers has put AMC, BB, EXPR, GME, and KOSS option trading into liquidation only due to the extraordinary volatility in the markets. In addition, long stock positions will require 100% margin and short stock positions will require 300% margin until further notice.
Are there bad guys on “Wall Street”? Plenty. Are the google guys day traders that bid up a worthless stock to “burn” hedge funds and get rich quick heroes? Please.
And an App hilariously named “Robinhood” that charge phantom fees rather than stated charges (low, high or whatever) does no “stealing from the rich” and sure as hell no “giving to the poor”.
They told me that the we live in free market capitalist society
They told me:
– Markets are free – Healthy competition is promoted – The same rules apply to everyone – Deck is not stacked against the little guy
Traders and “Wall Street Insiders” know that danger is real. The idea of protecting “retail traders” from risk? As they tap into credit cards to buy worthless stocks that they believe they have a right to pump & dump?
I'm sorry, but if you're gonna freak out when your users start robbing the rich, you can't call yourself "Robin Hood." pic.twitter.com/WwPkO6qdDt
And are they good guys cause they should be able to push the price of a stock endlessly higher for no reason whatsoever except that they get off on the letters from the ticker symbols that happen to sound similar to the ticker for a stock that Elon Musk did a two word tweet about (Signal, etc)?
I accidentally bought 13000 shares of #dogecoin while I was at the gym cause Robinhood froze on me so I didn’t think the order went through. Doubled my money in an hour. First good thing Robinhood ever did for me.
Collusion and getting rich for doing basically nothing should be something that is available to everyone because criminals have gotten away with it left right and center?
Probably best not to name your company or organization or non-profit some form of Robin Hood
The story that won’t stop and the very fine people on all sides
No heroes, plenty of villains and lots and lots of nonsense and stupidity. But before getting into the nuts and bolts of this tragic “new” phenomena, take a second and think about all those media stories, in nearly every online media outlet, even hitting local news.
Each “take” on the story has a different slant and spin and almost none go into the boring and complex technical details of stock trading schemes. Most, it appears, are cheering on, implicitly, the “main street” buyers in an imaginary “war” on Wall Street.
[Disclaimer: Nothing in this article should be construed as legal or financial advice.]
That will get you more clicks.
A few will point out that GameStop, the company that is, which has no real prospect to rise from its comatose state into a Tesla-like world beater, regardless of how high the stock climbs for a few weeks or so.
And they will, rightly, warn that in this game, the “innocent” main street “investor” will lose in the end. Those are the boring stories. Not as many clicks for them.
The longer more accurate story of what is going on touches on the Great Depression, the Dot-com bubble, the financial crisis of 2008 and an understanding of stock trading that goes beyond the patience threshold of the general public and the media, even beyond most so-called Wall Street Insiders.
History does exist, even if it happened before your uncle was born
Up until 1934 many things were legal and rampant that today, technically, are not allowed. Insider Trading is the most obvious and best defined, look up Martha Stewart and jail time if you want to know more about that.
Collusion in the market is another less well known practice, also known as “pump & dump” that has as many variations as Ponzi schemes and, though illegal, will never be stamped out. The technical terms for Colluding in relation to stock trading are “securities fraud” or “market manipulation.”
Not to get technical but here’s an partial excerpt of the legal specifics:
15 U.S. Code § 78i – Manipulation of security prices
(a) – (2 To effect, alone or with 1 or more other persons, a series of transactions in any security registered on a national securities exchange, any security not so registered, or in connection with any security-based swap or security-based swap agreement with respect to such security creating actual or apparent active trading in such security, or raising or depressing the price of such security, for the purpose of inducing the purchase or sale of such security by others.
Enter Reddit’s r/wallstreetbets forum. Not saying that there is anything illegal about “loving” a company as a group and choosing to “support” it by buying its shares.
Even if the motivation (false and imagined) is to “hurt” the short sellers in some kind of Robin Hood attack, that’s probably not something the SEC would care about. Short selling professionals can take care of themselves.
Enter another part of history: the allegedly overvalued company effect
Attacking short sellers has become a kind of sport, particularly when it’s about an emotional connection that was partly responsible for a company’s shares being “overvalued” by traditional metrics in the first place. Once “overvalued” therefore, a target to be sold short by traders and hedge funds that believe in quaint things like profit to earnings ratios and the like.
While company’s share prices being “overvalued” is based on opinion and often wrong, there have been recent cases, since the NASDAQ bubble burst in 2000, that have added a somewhat new, larger, twist on the typical understanding of these types of situations.
Bubble is as bubble does
To take the biggest example, there is Amazon (AMZN) which would take a thousand page book to accurately and fully elaborate on, but for the sake of brevity a couple of points could be made.
It is well known that Amazon posted substantial losses for many years while the stock price generally continued to rise. This was attributed to shareholders’ willingness to forgo proof of financial success within the company and persisted in buying & holding in the hope that share prices would continue to rise and that the company eventually would show profits and more success.
All of that seemed to happen, in the case of Amazon, when viewed casually, and now there is a sense, among some, that overvaluation, in “outlier” cases, is no longer a valid reason to sell (or short) a stock. Everybody’s happy right?
The uses of inflated value is a sticky-wicket if you are the loser
Not everybody. Naturally there are many “bad” short sellers who likely lost by shorting Amazon during it’s unrelenting rise since 2000. They are unlikely happy.
But also, and here’s the rub, there were whole industries crushed by the power that came with that “over-valued” stock price that seems, from looking at reams of data, to have been used to finance the selling of goods at substantial losses for “as long as it takes” to damage competitors.
Ultimately, for Amazon, creating a possibly dangerous monopoly (or monopsony, as it were) position with the potential for further damage to not just competition, and the overall marketplace, but to society as a whole.
Tesla is a whole other story, but a completely unique one
However, the situation is clearly not black and white. An alternate opinion could be held regarding the similar, yet very different, situation at Tesla (TSLA). Short interest throughout the rise? Absolutely. Overvaluation by traditional metrics, yup.
But in this case there is both a technological argument to be made, as well as a geopolitical / moral one, that the company’s wider mission: “Tesla’s mission is to accelerate the world’s transition to sustainable energy” is a more than validjustification for wanting to support the company, in any way possible, including through the purchase of it’s purportedly overvalued shares.
That kind of goodwill is the x-factor that is now being twisted into a justification for pumping GameStop (GME) into the stratosphere, beyond the kind of overvaluations that either Amazon or Tesla ever enjoyed (and that’s saying a lot!) while downplaying the “dump” part of the “pump & dump” scenario.
Of course here’s the tragic part; the dump phase always comes, and in reality, is the whole point. Next… ooopsy, while writing this the dump started with GME in the form of a drop from around $500 per share to $226.
For a sub-$20 stock, of course, that’s still extremely high and there will no doubt be gyrations in both directions before the final drop back to obscurity.
Twas ever thus, but still not nice
But the tragedy is in the idea, bandied about in the media and amplified in social media infinitely, that there are “Robin Hood” actors in this game (not the company but the dude in the forest in the movie).
In the end there may be a few that knew all along that “dump” was an integral and necessary part of pump & dump and I am sure there will be plenty of celebration of their “genius” exploits.
But the focus from any of us in the media should be at the tragedy of those that got lost in the hype and stupidity and chose to offer themselves up to the gods of GameStop, the market and Reddit’s r/wallstreetbets as cannon fodder:
”I was in my early teens during the ’08 crisis. I vividly remember the enormous repercussions that the reckless actions by those on Wall Street had in my personal life, and the lives of those close to me. I was fortunate – my parents were prudent and a little paranoid, and they had some food storage saved up. When that crisis hit our family, we were able to keep our little house, but we lived off of pancake mix, and powdered milk, and beans and rice for a year. Ever since then, my parents have kept a food storage, and they keep it updated and fresh.”
”I bought shares a few days ago. I dumped my savings into GME, paid my rent for this month with my credit card, and dumped my rent money into more GME (which for the people here at WSB, I would not recommend). And I’m holding. This is personal for me, and millions of others.”
”You can drop the price of GME after hours $120, I’m not going anywhere. You can pay for thousands of reddit bots, I’m holding. You can get every mainstream media outlet to demonize us, I don’t care. I’m making this as painful as I can for you”.
Google was fined 1.7 billion dollars (1.5 Billion Euros) for online advertising antitrust violations. This is the third fine from European authorities since 2017. The fines, along with those against other big tech firms, have established the European Union as the most consequential oversight body in policing internet tech firms that are seen as having too much power.
Europe is a leader in taking a stronger approach to reigning in firms such as Amazon, Facebook and Google (Alphabet). A broad consensus holds that these huge tech behemoths represent a danger to fair competition.
“Google has cemented its dominance in online search adverts and shielded itself from competitive pressure by imposing anticompetitive contractual restrictions on third-party websites, this is illegal under E.U. antitrust rules.”
Margrethe Vestager, Europe’s top antitrust watchdog
A variety of infractions have been committed by Google in the past couple years. They were fined for misusing their Android ownership to undercut rivals. Google was also fined for attaching an increased amount of text ads to third party companies who used the Google search bar.
The internet search leader bundled its ad platform within the third party custom search engines. This practice undercut Microsoft, Yahoo, and other digital advertising companies.
European authorities have been more aggressive with tech companies, demanding improved privacy, transparency, and even copyright regulations. Competition Commissioner Margrethe Vestager has fined Google over 3 billion dollars since 2017. Alphabet/Google owes a total of 8.2 Euros (9.3 billion dollars). Google hasn’t paid the fines yet, and plans to appeal. Google stock is up 17 percent in 2019.
In the U.S., Senator Elizabeth Warren, Democratic candidate for President in 2020 said that Facebook, Google, Amazon and Apple should be broken up due to various antitrust issues.
