He Said That 2/26/17

Ron Rash (born 1953), American poet, short story writer and novelist, Serena (2008):

A small profit it better than a big loss.

Maybe they should put this over the entrance at Uber headquarters.

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Does Uber Know it Can’t Make Money Unless it Uses Self-Driving Cars and Gets Rid of Human Drivers? by Wolf Richter

SLL has always had a tough time figuring out business models where losing money is an integral and continuing  part of the strategy. It must take an MBA from an elite business school to understand it. From Wolf Richter at wolfstreet.com:

Something is out of whack on the expense side.

Waymo, the self-driving car unit of Google’s parent company, filed a lawsuit on Thursday in federal court against Uber and its recently acquired startup Otto, accusing Uber and Otto’s founder Anthony Levandowski, who’d been a project leader at Google’s self-driving-cars project since 2009, of stealing a huge pile of trade secrets.

The New York Times:

In a federal court filing in San Francisco, Waymo said Anthony Levandowski, who runs Uber’s autonomous car division, downloaded 14,000 files from Google a month before leaving to start his own self-driving car company, Otto. Uber acquired Otto in August for $680 million, about seven months after Mr. Levandowski left Google.

“Otto and Uber have taken Waymo’s intellectual property so that they could avoid incurring the risk, time, and expense of independently developing their own technology,” the company said in the filing. “Ultimately, this calculated theft reportedly netted Otto employees over half a billion dollars and allowed Uber to revive a stalled program, all at Waymo’s expense.”

This lawsuit sheds new light on a problem Uber has, a problem that transcends all other problems, of which Uber has plenty: In 2015, Uber lost $2.2 billion; in 2016, the losses are said to have jumped to $3 billion.

Net revenue – the amount left over after it pays its drivers – was expected to exceed $5.5 billion for 2016. In the third quarter alone, it lost $800 million on $1.7 billion in net revenue.

But it’s even worse; these figures are based on sources cited by Bloomberg in late December:

Those are rough figures that may underestimate how much money Uber is losing and don’t include interest, taxes or stock-based compensation.

But it doesn’t seem to matter to investors who’ve been eager to throw vast sums of money at it. Uber has received a total of $12.9 billion in funding, according to the Wall Street Journal. The last round of funding valued the company at $68 billion, which is 37% higher than Ford’s market capitalization of $49.6 billion, though Ford generated $152 billion in revenues, a net income (GAAP) of $4.6 billion in 2016, and an “adjusted” (non-GAAP) income of $10.4 billion.

To continue reading: Does Uber Know it Can’t Make Money Unless it Uses Self-Driving Cars and Gets Rid of Human Drivers?

Hypocritical Hollywood Elite, by The Burning Platform

https://www.theburningplatform.com/2017/02/26/hypocritical-hollywood-elite/

Chatham NJ public school teaches Islam — but no other religions, by EAG News

In Chatham, New Jersey, 7th graders are taught extensively about Islam and learn next to nothing about any of the world’s other major religions. Why? From EAG News via theburningplatform.com:

CHATHAM, N.J. – Parents of students at Chatham Middle School are calling on the board of education to eliminate lessons on Islam from the 7th grade social studies curriculum they believe proselytizes the religion.

Several parents attended a board meeting Monday to take aim at materials distributed to students through a “World Cultures and Geography” class they believe cross the line, Tap into Chatham reports.

The parents emailed board members copies of the lessons they believe violate the district’s policy that “no religious beliefs be promoted or disparaged” and handed copies to others in attendance at the meeting, as well.

“In the Middle East and North Africa unit of the class students are taught about the five pillars of Islam in great detail, there are two videos on it, a 20-page PowerPoint presentation, class work, homework, and testing,” parent Libby Hilsenrath told the board. “In this unit, there is no mention of any other religion or teaching of it.

“… When it comes to teaching other religions at this level, it’s not done,” she said.

Hilsenrath went over many of the objectionable homework assignments with board members in detail, including lessons that require students to memorize and write the Islamic conversion prayer.

Another parent, Nancy Gayer, also addressed the board about the in-depth study of Islam. Videos of both women’s comments were posted to YouTube, and they appeared together on Fox News’ “Tucker Carlson Tonight” to air their grievances.

“I think it crosses the line because it teaches one religion and not all others,” Hilsenrath told Carlson. “It’s in a world culture and geography course and no other religion is taught. And to me, that’s not education, because in order to educate you need to teach all.”

To continue reading: Chatham NJ public school teaches Islam — but no other religions

 

Is that Desperation Hanging Over Europe’s Banking System? by Don Quinones

It’s impossible to say whether the European banking system will be the first, second, or third dominoe to fall, but it will definitely be one of the falling dominoes when the massively over-indebted world financial system goes. From Don Quinjones at wolfstreet.com:

Many of Europe’s and America’s biggest banks have begun begging, cap in hand, for a new, innovative way of raising vast sums of dirt-cheap debt on Europe’s financial markets.

The Association for Financial Markets in Europe (AFMA), an organization that prides itself on serving as “the voice of Europe’s wholesale financial markets,” just sent a strongly worded letter to the European Central Bank, urging for the prompt creation of EU-wide regulation allowing banks to sell a newfangled class of bail-in-able debt called “senior non-preferred bonds.”

“A swift agreement is essential to enable banks to continue increasing their loss-absorbing cushions and improve their resolution capacity,” says the letter (translated from Spanish).

In its own words, the AFMA represents “leading global and European banks and other significant capital market players.” Its board includes representatives of the biggest banks, from US megabanks like Citi, Goldman, JP Morgan Chase, Morgan Stanley, Bank of America Merrill Lynch and BNY Mellon to European behemoths like Deutsche Bank, HSBC, Lloyds TSB, Barclays, Unicredit, ING, BNP Paribas, Credit Agrcole, Crédit Agircole, and Credit Suisse.

Many of these banks and a few others not directly represented on AFMA’s board (such as Spain’s Santander) are facing heightened regulatory pressure, both at the regional and global level, to issue increasingly more bail-in-able debt so as to ensure that the next time a banking disaster strikes, part or all of the debt can be used to “bail in” those investors before taxpayers are called upon to cough up the rest.

It’s the way it should have been from the very inception of this global banking crisis. Instead, governments and central banks have injected trillions of dollars, euros, pounds, yen, and yuan of public funds into banks to keep the banks upright and make most bondholders whole, including those holding subordinated, or junior, debt, which is theoretically designed to bear losses in times of stress.

To continue reading: Is that Desperation Hanging Over Europe’s Banking System?

Plot Holes, by Robert Gore

The Michael Flynn Affair is one of those movies where you figure out a jumble of things that don’t make sense as you walk out of the theater.

There has been a deluge of articles about the Michael Flynn affair from an array of political and ideological vantage points, and SLL has reposted some of them. What’s lacking are coherent and cohesive explanations for what would be, if this were a novel or movie, gaping plot holes. The upshot of many commentators is that Trump has underestimated the Deep State, he’s floundering, and so on. This article takes the opposite tack, out of innate contrariness and because President Trump has been so consistently underestimated by both friends and foes.

Why was Michael Flynn cashiered? The administration’s story is that he talked with a Russian diplomat and mentioned lifting sanctions, then lied about his conversations to Vice President Pence. What’s become the conventional subtext is that the intelligence agencies have launched a “soft coup” against Trump, he has been significantly weakened, and the Deep State has scored a major victory.

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Plot hole: if Trump had wanted to keep Flynn, he could have kept him and rode out the media firestorm. Blogger The_Real_Fly has suggested there was either a prearranged plan for Flynn to make an early exit, or Trump did an about-face, determined Flynn was not a good fit, and decided to get rid of him. A subplot hole: Flynn, an intelligence veteran, undoubtedly knew his phone was tapped. Either he knowingly said what he said to set a trap, or when the Washington Post story surfaced, Trump saw his chance and got rid of Flynn. He has demonstrated a cold-blooded capacity to quickly cut his losses: “Your fired!” It’s telling that Flynn’s replacement, H.R. McMaster, authored Dereliction of Duty: Lyndon Johnson, Robert McNamara, The Joint Chiefs of Staff, and the Lies that Led to Vietnam. This looks like a classic Trump double down, replacing a maverick the Deep State didn’t like with a bigger one they’ll like even less.

Whatever the real story, Trump has gained valuable leverage on the intelligence agencies. Somebody leaked an intelligence agency transcript of Flynn’s call to the Washington Post, and that’s illegal. Just before he left office, President Obama relaxed limits on the NSA’s dissemination of its information to other intelligence agencies, the FBI, and the Drug Enforcement Administration. Obama probably thought he’d be turning those agencies into a collective sieve of untraceable leaks that would plague Trump, but this may backfire spectacularly. With the new rules, the illegal leak could conceivably come from any agency that has access to NSA data. The Trump Justice Department now has carte blanche to investigate them all, unless the agency responsible coughs up the leaker to protect itself and the other agencies.

A gaping plot hole: the Deep State’s stratagems scream weakness, not the strength so many are attributing to it. The Deep State likes to stay in the shadows, zealously protecting its power by shielding it from public view. Trump has forced it into the open, and it doesn’t adjust well to the light. It has resorted to tissue-thin stories planted in the captive media that speak of assessments and opinions, but don’t offer source material that’s supposedly the basis of those subjective judgments.

The Flynn disclosure was in the same vein; the original transcript on which the Post’s story was based has not been made public. This tees it up for Trump to lambaste the mainstream media and intelligence agencies, which he has done repeatedly and to great effect. He was in rare form at his recent press conference. You only plant stories in media organs nobody trusts, sourced to anonymous operatives within an intelligence community nobody trusts, obviously breaking the law, and setting yourself up for abuse from the president, because that’s all you’ve got.

The whole Russian story reeks of “Desperation.” It is flimsy and flimsier still is the rationale offered for the Deep State’s dogged loyalty to this concoction. Any rapprochement with Russia supposedly threatens the empire and must be quashed, even if that entails ham-handed efforts to depose an elected president. However, it’s child’s play for Trump to beat a tactical retreat, talk out of the other side of his mouth, and take the wind out of his enemies’ sails.

To counter the Putin puppet fairy tale, he could have his ambassador to the UN condemn Russia’s annexation of Crimea. He could continue Obama’s military build up on Russia’s western border. Trump and team could tweet and talk tough about Russia and its allies China and Iran, and reject any joint military operations with Russia in Syria. Oh wait, all this has already happened. So why has the Deep State resorted to repeatedly discredited tactics to propagate its concocted story, ultimately helping the president in his battles with it and its captive press, supposedly in service of a foreign policy criticism of the president that he easily undercuts by adjusting his rhetoric and moving toward their position? What’s going on?

The real story isn’t Russia. Do you mount a “soft coup” over policy differences when, after all the Washington give and take, those policies will, at worst, marginally affect your influence, power, and payola? Doubtful. (Keep in mind Trump wants to increase military budgets.) If, on the other hand, you’re facing complete disgrace and ruin, including a long stretch in a penal institution, there’s nothing you won’t do to save yourself.

It’s not what politicians and bureaucrats do sub rosa that poses the biggest danger to the country and the world, but what they do in broad daylight. However, there’s no denying that Washington is the world capital of sub rosa—the unethical, immoral, and illegal. To use a favorite Trump adjective, it’s a crooked place. Trump knows or suspects where some of the bodies are buried, and the powers that be fear he’ll go after them for everything from garden-variety graft, bribery, theft, and influence peddling to crimes as sordid as child molestation and murder.

He can’t know exactly what he’ll find, but he can turn on the light and watch the cockroaches scuttle. Fishing expeditions for leaks of classified material; a crack team of auditors rooting through accounts and contracts, especially those of the military, the intelligence agencies, and their legions of subcontractors; vigorous prosecution of child pornography and molestation, making deals with small fry in exchange for testimony against bigger fry; Jeffrey Epstein and his Caribbean island; disclosures from intelligence agency archives of deception and illegality stretching back to the Kennedy assassination and Vietnam; disclosure of those 650,000 emails on Anthony Weiner’s laptop; pay to play at the Clinton foundation—the list is endless and who knows what they’ll find. This, not the fear that Trump will revise US policy towards Russia, is behind the Deep State’s cold sweat, motivating its hysterical—comical if wasn’t so serious—campaign to depose him. This is the first time it has faced an unfriendly in the White House, with presidential powers to investigate, expose, prosecute, scandalize, and ruin.

Greene shook his head. “The Corleone Family don’t have that much muscle anymore. The Godfather is sick. You’re getting chased out of New York by the other Families and you think you can find easier pickings here. I’ll give you some advice, Mike, don’t try.”

The Godfather, Mario Puzo

Trump may be weak like Michael Corleone was weak, just before he wiped out his enemies, including Moe Greene. Like Corleone, Trump may be trying to further an impression of feebleness and for the same reasons: to make his enemies overconfident and to flush out traitors.

Until the swamp is drained, there is no prospect of making America great again.

Feared, Not Loved.” SLL

The Deep State is trying to kill Trump with a thousand paper cuts. Trump has bazookas, howitzers, and tanks. Don’t bet he won’t use them.

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He Said That? 2/25/17

From Juvenal (55-140), Roman satiric poet, Satire 1:

Honesty is praised and starves.