Subprime Rises: Credit Card Delinquencies Blow Through Financial-Crisis Peak at the 4,705 Smaller US Banks

In the third quarter, the “delinquency rate” on credit-card loan balances at commercial banks other than the largest 100 banks – so the delinquency rate at the 4,705 smaller banks in the US – spiked to 6.2%. This exceeds the peak during the Financial Crisis for these banks (5.9%).

The credit-card “charge-off rate” at these banks, at 7.4% in the third quarter, has now been above 7% for five quarters in a row. During the peak of the Financial Crisis, the charge-off rate for these banks was above 7% four quarters, and not in a row, with a peak of 8.9%

These numbers that the Federal Reserve Board of Governors reportedMonday afternoon are like a cold shower in consumer land where debt levels are considered to be in good shape. But wait… it gets complicated.

The credit-card delinquency rate at the largest 100 commercial banks was 2.48% (not seasonally adjusted). These 100 banks, due to their sheer size, carry the lion’s share of credit card loans, and this caused the overall credit-card delinquency rate for all commercial banks combined to tick up to a still soothing 2.54%.

In other words, the overall banking system is not at risk, the megabanks are not at risk, and no bailouts are needed. But the most vulnerable consumers – we’ll get to why they may end up at smaller banks – are falling apart:

Credit card balances are deemed “delinquent” when they’re 30 days or more past due. Balances are removed from the delinquency basket when the customer cures the delinquency, or when the bank charges off the delinquent balance. The rate is figured as a percent of total credit card balances. In other words, among the smaller banks in Q3, 6.2% of the outstanding credit card balances were delinquent.

So what’s going on here?

The credit card business is immensely profitable, and so banks are willing to take some risks. It’s immensely profitable for three reasons:

• The fee the bank extracts from every transaction undertaken with its credit cards (merchant pays), even if the credit-card holder pays off the balance every month and never incurs any interest expense.
• The fees the bank extracts from credit card holders, such as annual fees, late fees, etc.
• The huge spread between the banks’ cost of funding and the interest rates banks charge on credit cards.

So how low is the banks’ cost of funding? For example, in its third-quarter regulatory filing with the SEC (10-Q), Wells Fargo disclosed that it had $1.73 trillion in total “funding sources.” This amount was used to fund $1.73 trillion in “earning assets,” such as loans to its customers or securities it had invested in.

This $1.73 trillion in funding was provided mostly by deposits: $465 billion in non-interest-bearing deposits (free money), and $907 billion in interest bearing deposits; for a total of $1.37 billion of ultra-cheap funding from deposits.

In addition to its deposits, Wells Fargo lists $353 billion in other sources of funding – “short-term and long-term borrowing” – such as bonds it issued.

For all sources of funding combined, so on the $1.73 trillion, the “total funding cost” was 0.87%. Nearly free money. Rate hikes no problem.

In Q3, Wells Fargo’s credit-card balances outstanding carried an average interest rate of 12.77%!

So, with its cost of funding at 0.87%, and the average interest rate of 12.77% on its credit card balances, Wells Fargo is making an interest margin on credit cards of 11.9 percentage points. In other words, this is an immensely profitable business – hence the incessant credit-card promos.

With credit cards, the US banking system has split in two.

The largest banks can offer the most attractive incentives on their credit cards (cash-back, miles, etc.) and thus attract the largest pool of applicants. Then they can reject those with higher credit risks – having not yet forgotten the lesson from the last debacle.

The thousands of smaller banks cannot offer the same incentives and lack the marketing clout to attract this large pool of customers with good credit. So they market to customers with less stellar credit, or with subprime-rated credit — and charge higher interest rates. 30% sounds like a deal, even if the customer will eventually buckle under that interest rate and will have to default.

That’s why banks take the risks of higher charge-offs: They’re getting paid for them! But at some point, it gets expensive. And if it takes a smaller bank to the brink, the FDIC might swoop in on a Friday evening and shut it down. No biggie. Happens routinely.

The real problem with credit cards isn’t the banks – credit card debt is not big enough to topple the US banking system. It’s the consumers, and what it says about the health of consumers.

The overall numbers give a falsely calming impression. Credit card debt and other revolving credit has reached $1.0 trillion (not seasonally adjusted). This is about flat with the prior peak a decade ago.

Since the prior peak of credit-card debt in 2008, the US population has grown by 20 million people, and there has been a decade of inflation and nominal wage increases, and so the overall credit card burden per capita is far lower today than it was in 2008 (though student loans and auto loans have shot through the roof). So no problem?

But this overall data hides the extent to which the most vulnerable consumers are getting into trouble with their credit cards, having borrowed too much at usurious rates. They’ll never be able to pay off or even just service those balances. For them, there is only one way out – to default.

The fact that this process is now taking on real momentum — as demonstrated by delinquency rates spiking at smaller banks — shows that the group of consumers that are falling apart is expanding. And these are still the good times, of low unemployment in a growing economy.

by Wolf Richter, Wolf Street |  Read more:
Image: Wolf Street

Open-Ended New Bill Criminalizes Whatever Black People Are Up To Right Now

WASHINGTON—Saying the measure would provide a substantial boon to police departments nationwide, members of the House Republican caucus introduced a bill Tuesday containing open-ended language that would criminalize whatever it is black people are up to right now. “This is a long-overdue piece of legislation that will help defend our country against the scourge of black people being in places and doing things,” said Rep. Steve King (R-IA) of H.R. 8164, which would penalize black Americans with a minimum of five years in prison and fines of up to $750,000 for any activity they happen to be engaged in whenever law enforcement arrives. “This measure seeks to bring an end to overly permissive laws that, by allowing black people to simply hang around and do different stuff at will, places an undue burden on the police officers who want to arrest them and throw them in jail. While I believe this bill represents a good first step, we of course also need to enact legislation that outlaws anything Hispanics and Muslims might be doing at the moment.” At press time, sources confirmed House GOP leaders had called Capitol Police to report several African American representatives engaged in the suspicious activity of voting against the bill.

by The Onion |  Read more:
Image: uncredited

Ajejandro De La Garza

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The Decline and Fall of the Zuckerberg Empire

"It’s the public outrage that should be most worrying to Facebook. Other tech giants have managed to escape the opprobrium directed at Facebook because they have obviously useful services. Amazon delivers things to your house. Google helps you find things online. Apple sells actual objects. Facebook … helps you get into fights? Delivers your old classmates’ political opinions to your brain?"

by Max Read, Intelligencer |  Read more:

Image: David Paul Morris/Bloomberg via Getty Images

How To Sound Like Tom Petty Using Pedals and Guitars
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The Japanese Chain That Wants You to Fish for Your Dinner

According to a philosophy known as “compassionate carnivorism,” the most ethical way to eat animals is to kill them yourself, as humanely as possible, thereby fully acknowledging their sacrifice for your sustenance. Does shooting fish in a barrel count? There aren’t barrels, per se, at the first U.S. outpost of Zauo, a novelty restaurant chain with thirteen locations in Japan, and there certainly aren’t guns, but there are open tanks crowded with live fish, and dinky little rods with which you, the diner, are meant to catch them. (...)

No matter how you feel about eating fish, eating at Zauo is a disaster. Where to begin? The endearing Japanese ritual of restaurant staff emphatically greeting all customers feels perverted here: every time someone catches a fish, employees are required to cheer, chant, and strike a taiko drum, resulting in an endless dystopian cacophony. “It’s so extra, but it’s cute!” a hostess said unconvincingly, as she led me to my table on the second floor, which is designed to look like a Japanese fishing boat, suspended in air over the first floor. In order to fish, you have to “apply for a license,” which turns out to mean signing a liability waiver, releasing Zauo Inc. from responsibility if you lose an eye to an errant hook, or drop your phone into a tank. This is not to say that phone use is discouraged at this Instagrammers’ Atlantis. “It’s like Color Factory with murder,” quipped one diner. A selfie-happy gentleman succumbed to the fantasy, hook, line, and sinker. “If this were the fourteen-hundreds, I’d be a hero!” he crowed to his companion. “I’d feed our whole village on a single fish.”

But the restaurant’s greatest offense, to both predator and prey, is the food. In an episode of the Japanese reality show “Terrace House,” a group of characters visit a Zauo in Japan, in search of lobster and mackerel, and make it look almost like eating at a hip, charming fish market. In New York, it feels like getting fleeced on whatever was left over when the market closed. Tables are set with stacks of cards offering descriptions of each ordinary-sounding yet steeply priced fish and crustacean, along with options for how they can be served; once you’ve made your catch, it’s whisked away to the kitchen to be prepared to your specifications.

The card for the rainbow trout—the cheapest fish on the menu, at thirty-eight dollars (forty-five if you opt not to catch it yourself)—reported that such a creature inhabits “rivers with low temperatures, high speeds, and high levels of oxygen”; the one I was about to eat, a server admitted, came from a farm in Pennsylvania. Did it have “a simple flavor with a touch of sweetness”? It was hard to say after half of it had been simmered in soy sauce to a bony mush, the other half grilled in salt until chewy and served with its head still on, propped up with a wooden stake like a Big Mouth Billy Bass about to sing. Muddy-tasting flounder sashimi had a texture that might be best described as “rigor mortis.” And pity the lobster whose succulent flesh is smothered in half an inch of puffy tempura batter.

by Hannah Goldfield, New Yorker | Read more:
Image: David Williams

ContraPoints: What's Wrong With Capitalism (Part 1)

[ed. See also: What's Wrong with Capitalism (Part 2)]

Ping An Good Doctor: Unstaffed, AI-assisted clinics in China

Japanese billionaire Masayoshi Son, the founder and chief executive of technology conglomerate SoftBank Group Corp, is known for making solid bets in China’s hi-tech sector. Around 18 years ago, Son’s company invested US$20 million in a small Chinese online retail platform that rapidly grew to become e-commerce giant Alibaba Group Holding.

Son in July invited the heads of fast-rising Chinese companies Ping An Good Doctor and Didi Chuxing to a party he hosted in Tokyo, in a testament to how far these two firms have grown since SoftBank invested in them.

Wang Tao, the founder, chairman and chief executive of Ping An Good Doctor, acknowledged Son’s contribution amid the Hong Kong-listed online health care provider’s efforts to innovate and extend its operations outside the mainland.

“Mr Son helped us a lot in our international expansion,” said Wang in an interview with the South China Morning Post on the sidelines of the fifth World Internet Conference held earlier this month in Wuzhen, a town in China’s eastern coastal province of Zhejiang.

The overseas foray by Ping An Good Doctor, which is formally known as Ping An Healthcare and Technology Co, is part of its major expansion programme after raising US$8.5 billion in proceeds from its initial public offering in Hong Kong in May.

That programme is led by the development of an extensive network of unstaffed, artificial intelligence-powered clinics on the mainland. The capabilities of this clinic were shown at the conference in Wuzheng.

“We plan to build hundreds of thousands of these unstaffed clinics across the country in three years,” Wang said.

Each clinic, which is about the size of a traditional telephone booth, enables users to consult a virtual “AI doctor” that collects health-related data through text and voice interactions. After the AI consultation, the information gathered is reviewed by a human doctor who then provides the relevant diagnosis and prescription online. Customers can buy their medicine from the smart drug-vending machine inside the clinic.

Ping An Good Doctor’s AI clinic expansion has come amid Beijing’s commitment to drive its “Healthy China” strategy. In April, China’s State Council issued a statement to accelerate the country’s online health care market by establishing proper service systems, a support network and regulatory framework.

That domestic market is expected to reach 100 billion yuan (US$14.4 billion) by 2025, up from 15 billion yuan last year, according to estimates by Frost & Sullivan.

Founded in 2014, Ping An Good Doctor was spun off from the Ping An Insurance Group and operates the biggest online health care platform on the mainland, with 228 million registered users and 48.6 million monthly active users as of June 30.

Its Good Doctor smartphone app, which was launched in 2015, provides diagnosis, treatment and online appointment booking. It also enables users to communicate with health care professionals through text, photos, and video. The app has a database of articles on health care and supports a microblog-style discussion forum on health-related topics. There is also an online store that sells medicine, health care products, cosmetics and gift vouchers for medical services.

The company has described its operations as a “closed loop health care ecosystem”, which enables users to conveniently get medical consultations and drug purchases online, as well as offline follow-up medical treatment.

The planned AI-enabled clinics, each of which costs 30,000 yuan to build, would help further expand Ping An Good Doctor’s reach in the mainland’s growing internet health care market.

by Yingzhi Yang, South China Morning Post |  Read more:

Image: Reuters

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Well Played

Video games have been around as a form of mass culture for just over 40 years, but only recently have they become so prevalent and so embedded in our lives — socially, politically, economically — that they could be fully taken for granted. In spring 2018, Fortnite reached a level of total cultural saturation in the U.S. that’s usually reserved for TV shows, movies, or Harry Potter. The game appears in virtually every classroom, bus stop, and teenage bedroom in the country and has achieved a level of ubiquity that sees professional athletes and pop stars appear on livestreams with star gamers, and teens doing the floss while they wait at crosswalks.

In the past, even as video games steadily wove their way deeper into the fabric of American culture, they tended to breach the national consciousness only as crazes (Pac-Man Fever) or controversies (the graphic violence of Doom or Grand Theft Auto). Video games were covered as a specialist hobby, and when a game would spark a moral panic, people in gaming circles would more or less accurately point out that the vast majority of people talking about games had never played any and had no idea what they were about. In other words, the rare moments when games become noteworthy also reinforced their marginality — and the subcultural prestige of gamers.

But lately the grounds have shifted. It’s becoming increasingly indisputable that video games are just a part of mainstream American life, an established cultural medium in their own right, as central as any of the other major entertainment industries. The money doesn’t lie: In 2014, the video game industry was making more money annually than the film and music industries combined. Last year the industry was valued at $116 billion, putting it in the same ballpark as global sports revenue, which is estimated between $130 billion and $150 billion. If growth patterns continue, video games will eclipse that by 2020.

Video games are often seen as a subdevelopment in the broader revolutions in information and communications technology that have marked the “digital age.” And while games have played a crucial role in driving mass adoption and affection for phones and techno-culture more generally, they have also superseded cinema and TV to be the dominant visual medium of our time.

And so games are increasingly breaking through into mainstream discourse. The rise of Fortnite is illustrative: It has become massively popular without controversy or even much moral panic beyond some pro forma “this new thing teens like, surely it’s bad?!?” coverage. The fact of Fortnite’s game-ness is rarely mentioned: that there would be such a hubbub over a video game is not considered a story. With Fortnite, video games have achieved one form of full cultural maturity, namely, ubiquity to the point where mainstream media explanation is beside the point. Fortnite is not marginal nor is it being marginalized. It’s just a megahit cultural product, like a blockbuster movie or hit single.

Given video games’ newly taken for granted prominence, it’s imperative to analyze how they fit into the mainstream of contemporary economic practices and ideology. Why have video games emerged in this moment, growing as the earlier visual media forms have stagnated, losing audiences and drifting toward the margins of culture? What has the medium’s material role been under capitalism? How has it reflected or shaped the specific ways capitalism has developed since 1973, when the series of crises that would lead to the neoliberal era began? (Incidentally, the first mass-market video game, Pong, was released in 1972.)

by Vicky Osterweil, Real Life |  Read more:

Image: Viktor Timofeev

Rinzing Kelsang
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Opioid Nation

The National Institute on Drug Abuse estimates that 72,000 Americans died from drug overdoses in 2017, up from some 64,000 the previous year and 52,000 the year before that—a staggering increase with no end in sight. Most involved opioids.

A few definitions are in order. The term opioid is now used to include opiates, which are derivatives of the opium poppy, and opioids, which originally referred only to synthesized drugs that act in the same way as opiates do. Opium, the sap from the poppy, has been used throughout the world for thousands of years to treat pain and shortness of breath, suppress cough and diarrhea, and, maybe most often, simply for its tranquilizing effect. The active constituent of opium, morphine, was not identified until 1806. Soon a variety of morphine tinctures became readily available without any social opprobrium, used, in some accounts, to combat the travails and boredom of Victorian women. (Thomas Jefferson was also an enthusiast of laudanum, one of the morphine tinctures.) Heroin, a stronger opiate made from morphine, entered the market later in the nineteenth century. It wasn’t until the twentieth century that synthetic or partially synthetic opioids, including fentanyl, methadone, oxycodone (Percocet), hydrocodone (Vicodin), and hydromorphone (Dilaudid), were developed.

In 1996 a new form of oxycodone called OxyContin came on the market, and three recent books—Beth Macy’s Dopesick, Chris McGreal’s American Overdose, and Barry Meier’s Pain Killer—blame the opioid epidemic almost entirely on its maker, Purdue Pharma. OxyContin is formulated to be released more slowly and therefore lasts longer. The company claimed that the drug’s slow release would make it less addictive than ordinary oxycodone, since the initial euphoria—the high—would be muted. Based on this theory and little else, the FDA permitted OxyContin to contain twice the usual dose of oxycodone and carry on the label this statement: “Delayed absorption, as provided by OxyContin tablets, is believed to reduce the abuse liability of a drug.” (The FDA official who oversaw OxyContin’s approval later got a plum job at Purdue Pharma.)

The company launched an extraordinarily aggressive and successful marketing campaign to convince physicians that they had the holy grail of a nonaddictive opioid. It sent hundreds of sales representatives to doctors’ offices to tout OxyContin, and offered doctors dinners and trips to meetings at luxury resorts. And it paid more than five thousand doctors, pharmacists, and nurses to train as speakers to tour the country promoting OxyContin. But like all opioids, OxyContin is addictive. And soon enough, users found that they could crush the pills or dissolve the coating, then snort the drug like cocaine or inject it like heroin. Each pill would then become essentially an instantaneous double dose of oxycodone. (...)

The problem with these three books, and it’s a big one, is that they treat the Purdue story as though it were the whole story of the opioid epidemic. But OxyContin did not give rise to opioid addiction, although it jump-started the current epidemic. Heroin has been a common street drug ever since it was banned in 1924. Morphine has also been widely abused.

Nor would taking OxyContin off the market end the epidemic. The overwhelming majority of opioid deaths are caused not by OxyContin but by combinations of fentanyl, heroin, and cocaine, often brought in from China via Mexican cartels, and frequently taken along with benzodiazepines (such as Valium or Xanax) and alcohol. These drugs are cheaper and stronger, particularly fentanyl. Fentanyl was first synthesized in 1960, and soon became widely used as an anesthetic and powerful painkiller. It is legally manufactured and highly effective when used appropriately, often for short medical procedures such as colonoscopies. The illicit production and street use is relatively new, but it is now the main cause of most opioid-related deaths (nearly 90 percent in Massachusetts).

The steady increase in opioid deaths after OxyContin came on the market has been supplanted by a much faster increase starting around 2013, when heroin and fentanyl use increased dramatically. We now have two epidemics—the overuse of prescription drugs and the much more deadly and now largely unrelated epidemic of street drugs. By concentrating on the first, we are closing the barn door after the horse is long gone. (...)

The opioid epidemic, while horrifying, is still outweighed by alcohol deaths, which are also increasing, according to the Centers for Disease Control. Hampton writes, “If my first drug of choice came with a prescription, the second one, alcohol, was culturally embedded and used to celebrate at every turn of events.” In 2016, when there were 64,000 deaths in the US from the drug epidemic, there were 90,000 from alcohol (including accidents and homicides caused by inebriated people, as well as direct effects, mainly cirrhosis of the liver). Cigarette smoking is estimated to cause 480,000 deaths a year. I do not intend to minimize the opioid epidemic. Far from it. What I want to underscore is the differences in these three epidemics. Alcohol and cigarettes have no medical or practical uses of any kind. Yet we permit their use if regulated. In contrast, opioids do have medical uses, and they are important.

The opioid epidemic is usually seen as a supply problem. If we can interdict the supply of prescription opioids, the thinking goes, we can stanch the epidemic. But that is unlikely to work for two reasons. First, as I pointed out, this is no longer mainly an epidemic of prescription drugs but of street drugs. And second, it creates an onerous obstacle for doctors and outpatients who require pain treatment. More and more, they have to satisfy regulations expressly designed to restrict access to prescription opioids. Some make sense. For example, it’s reasonable to monitor opioid prescriptions to detect pill mills. It’s also reasonable to flag users who “doctor-shop,” that is, see several doctors at once to try to get multiple doses of opioids.

But other requirements are meant simply to inconvenience both doctors and patients until they give up. For example, in Massachusetts doctors must limit their first-time opioid prescriptions to seven days. That can be more than an inconvenience for ill patients in pain. Macy quotes a letter from a friend with severe back pain from scoliosis. “‘My life is not less important than that of an addict,’ my friend wrote,…explaining that her new practitioner requires her to submit to pill counts, lower-dose prescriptions, and more frequent visits for refills, which increase her out-of-pocket expense.” Even more serious is a new shortage of opioids for injection in cancer centers.

For physicians, who are already weighed down by innumerable bureaucratic requirements, these restrictions present one more hoop to jump through, and many simply won’t do it. Instead, they’ll send the patient away with some Advil and hope it does the trick, even though they know it probably won’t. The regulations are having their intended effect. In Massachusetts, opioid prescribing has decreased by 30 percent. Meanwhile, the epidemic of street drugs continues apace. McGreal raises the possibility that reducing access to prescription opioids might feed the demand for heroin. Macy quotes an addiction specialist who laments that “our wacky culture can’t seem to do anything in a nuanced way.”

by Marcia Angell, NY Review of Books |  Read more:

Image: Jerome Sessini/Magnum Photos

Porch Pirates

A PEMCO Insurance poll claims that roughly half of all Washington and Oregon residents have had a delivery stolen from their home.

Combined across Oregon and Washington, 48 percent of over 1,100 people polled said they’d had a package of some kind swiped from their residence.

This data seems to fall in line with a rash of package thefts that hit Seattle.

“There is an epidemic right now in our town of petty thievery, where people are emboldened,” said KIRO Radio’s Ron Upshaw back in October. “It’s a brazenness now that I have never seen.”

Additionally, Seattle and Portland are second and fifth respectively in Googles searches for “Amazon package stolen,” weighted by population and searches per capita by a packaging company known as Shorr.

Even with that being so, PEMCO’s poll also noted that 28 percent of respondents don’t do anything to protect against package theft. The most common measure taken by those who do came from the 38 percent of people who make sure someone is always home to receive deliveries.

For the rest, just 18 percent of people installed security technology, 15 percent “allocated a space for packages that is hidden or hard to see,” 14 percent use a neighbor or their workplace for deliveries, and 12 percent signed up for a “safe delivery service” that allows authorized shippers access inside of homes.

Known colloquially as “porch pirates,” many of these thieves have even been known to follow delivery trucks and grab a package shortly after it reaches its destination.

by My Northwest |  Read more:

Image: My Northwest

Sole and Despotic Dominion

> Thank you for contacting Disher technical support. My name is May and I am pleased to help you with your Disher Experience!

Are you human?

> That's a rather personal question!

Let me talk to a human

> I'd be happy to help you make your Disher Experience the very best one possible

Human

> One moment please! Have a great day!

> Thank you for contacting Disher technical support. My name is May and I am pleased to help you with your Disher Experience!

Are you human?

> Yes sir. I am a live human operator. I am based in Charlestown, Nevis, at Disher's own in-house support center. How may I help you?

My dishwasher won't wash my dishes

> Sir are you using Disher approved products from the Kitchen Store?

Yes

> Sir I show that you have purchased a family starter set of Burberry Gentility dishes with the optional entertaining expansion pack and a cocktail party upgrade from the Disher Dubai store in June 2024. Are these the dishes you are using in your Disher Speckless?

Yes. I left my parents' wedding china in storage because my last dishwasher wouldn't wash them

> Sir yes that is correct. To ensure food safety and the proper delivery of your Disher experience, your Speckless will not switch on if it detects unknown objects; only authorized Disher Kitchen Store products are certified for use with your Disher Speckless

I am using Disher dishes. The ones I bought in Dubai.

> Sir yes thank you. Please stand by while I investigate your account.

> THANK YOU FOR STANDING BY. WE AT DISHER VALUE YOUR TRUST AND STRIVE TO EARN IT EVERY DAY. IF YOU HAVE ANY COMMENTS, CONCERNS OR COMPLIMENTS ABOUT YOUR DISHER EXPERIENCE PLEASE LET US KNOW

> Sir thank you I am back. I see from your IP address and other telemetry that you are in Melstone, Montana. Is that correct?

Yes. I took a new job and got relocated here.

> Sir thank you I see your problem. Your dishes were sold for use within Shia territories in the Middle East and Asian regions. They are not authorized for use in the USA.

What? Are you crazy? They're Disher dishes, this is a Disher dishwasher!

> Sir I am sorry you are unhappy. However, I must correct you. Please allow me to offer this frequently asked question:

Q. ARE PRODUCTS BOUGHT IN FOREIGN KITCHEN STORES USABLE WITH MY DISHER SPECKLESS? 

A. NO. 

The trademarks and other intellectual property in the products sold by different Disher affiliated companies through the regional Kitchen Stores are licensed for use on a territory-by-territory basis. In many cases, different territorial licensors own the exclusive right to manufacture and distribute different brands in the Kitchen Store, and part of Disher's commitment to respecting international laws and intellectual property is our use of the sensors in Disher Speckless systems to optimize your Disher experience by ensuring that our devices do not violate these important contractual arrangements.

You're joking.

> Sir I'm afraid it's not a joke. Please allow me to offer this frequently asked question:

Q. MAY I BRING MY DISHER PRODUCTS FROM ONE TERRITORY TO ANOTHER? 

A. NO. 

Because the trademarks in Kitchen Store products are licensed on a territory-by-territory basis, you may not export them beyond their licensed territories. Taking Kitchen Store products across national borders may create criminal and civil liability for you, under global anti-counterfeiting treaties and national laws. Disher takes no responsibility for any legal problems you may incur as a consequence of exporting products from the Kitchen Store. At Disher, we have zero tolerance for counterfeiting.

Wait wait wait. WHAT? Counterfeits? I bought these in a Disher store! They're licensed product from your own store.

> Sir, I'm very sorry but Disher Dubai and Disher USA are separate firms with their own licensing agreements with Disher Worldwide. You should not have brought these products across an international border. Had they been detected at the customs checkpoint, you could have faced severe penalties.

What was I supposed to do? Sell them before leaving Dubai and buy another set in Montana?

> Sir your license agreement is nontransferable. Sale or other transfer of your Disher Kitchen Store purchases will result in their use in all Disher products being terminated. If you leave a territory, we recommend contacting an appropriate recycling center for safe disposal of your Kitchen Store purchases.

Look, May. I took this job in Montana. I work in shale gas and the company is providing my housing. I'm in the ass-end of nowhere here. Even if I could buy a new dishwasher without this crap in it, they wouldn't let me install it. I've just spent everything relocating halfway around the planet and now you're telling me to throw away my dishes and buy another set?

> Sir may I refer you to a frequently asked question?

by Cory Doctorow, Reason |  Read more:
Image: Shutterstock

Prince

The Paranoid Fantasy Behind Brexit

Before the narrative of Len Deighton’s bestselling thriller SS-GB begins, there is a “reproduction” of an authentic-looking rubber-stamped document: “Instrument of Surrender – English Text. Of all British armed forces in United Kingdom of Great Britain and Northern Ireland including all islands.” It is dated 18 February 1941. After ordering the cessation of all hostilities by British forces, it sets down further conditions, including “the British Command to carry out at once, without argument or comment, all further orders that will be issued by the German Command on any subject. Disobedience of orders, or failure to comply with them, will be regarded as a breach of these surrender terms and will be dealt with by the German Command in accordance with the laws and usages of war.”

Written amid the anxieties of Britain’s early membership of the European Communities and published in 1978, Deighton’s thriller sets up two ideas that will become important in the rhetoric of Brexit. Since there is no sense that Deighton has a conscious anti-EU agenda, the idea seems to arise from a deeper structure of feeling in England. One is the fear of the Englishman turning into the “new European”, fitting himself into the structures of German domination. His central character is a harbinger of the “rootless cosmopolitan” who cannot be trusted to uphold English independence and English values, and who therefore functions as the enemy within, the quisling class of pro-Europeans. This is the treason of the elite, the puppet politicians and sleek mandarins who quickly accommodate themselves to the new regime.

Deighton was building on real historical memories of the appeasers whose prewar conduct makes the notion that they would have quickly become collaborators in the event of a defeat to the Nazis highly credible. This idea of a treacherous elite would later ferment into a heady and intoxicating brew of suspicion that the Brexiteers would both dispense to the masses and consume themselves.

The other crucial idea here is the vertiginous fall from “heart of Empire” to “occupied colony”. In the imperial imagination, there are only two states: dominant and submissive, coloniser and colonised. This dualism lingers. If England is not an imperial power, it must be the only other thing it can be: a colony. And, as Deighton successfully demonstrated, this logic can be founded in an alternative English history. The moment of greatest triumph – the defeat of the Nazis – can be reimagined as the moment of greatest humiliation – defeat by the Nazis. The pain of colonisation and defeat can, in the context of uneasy membership of the EU, be imaginatively appropriated. (Boris Johnson, in the Telegraph of 12 November, claimed that “we are on the verge of signing up for something even worse than the current constitutional position. These are the terms that might be enforced on a colony.”)

SS-GB was in part the inspiration for an even more successful English thriller, Robert Harris’s multimillion-selling Fatherland, published in 1992 and filmed for television in 1994. Harris had begun the novel in the mid-1980s but abandoned it. He revived and finished it explicitly in the context of German reunification in 1990 and of fears that the enemy Britain had defeated twice in the 20th century would end the century by dominating it: “If,” Harris wrote in the introduction to the 20th anniversary edition in 2012, “there was one factor that suddenly gave my fantasy of a united Germany a harder edge, it was the news that exactly such an entity was unexpectedly returning to the heart of Europe.”

In retrospect, German reunification is perhaps the greatest missed opportunity for the English finally to have done with the war. Had there been a capacity to generate new narratives of Europe, this could have been shaped as a moment of British vindication – the final working-out of the consequences of nazism. As Anthony Barnett puts it, “the triumph and relief of the unification of Germany could and should have belonged to us in Britain, as well as to Germany itself. It was the final liberation from nazism, the end of that country’s punishment, a time to welcome a great culture back into our arms.”

Why, then, were there no photographs of Margaret Thatcher and Helmut Kohl holding hands at the Brandenburg Gate to match the pictures of Kohl and François Mitterrand at Verdun in 1984? Because Thatcher literally carried in her handbag maps showing German expansion under the Nazis. This was a mental cartography that English conservatism could not transcend – the map of a Europe that may no longer exist in reality, but within which its imagination remains imprisoned. “Europe,” Barnett writes, “moved on from the second world war and Britain didn’t.” One might go so far as to say that England never got over winning the war.

In fact, Britain not only did not move on in 1990 – with the resurrection of a united Germany, it moved back. Harris is no anti-European reactionary and would become one of the most furious critics of Brexit. Yet, like Deighton, he was tapping into profound national anxieties.

The real twist of the knife in Harris’s story is that the novel is set in Germany and the main characters are German. There is nothing of significance to say about England 20 years after its surrender. Except, that is, that is part of a European Union: “In the west, 12 nations – Portugal, Spain, France, Ireland, Great Britain, Belgium, Holland, Italy, Denmark, Norway, Sweden and Finland – had been corralled by Germany, under the Treaty of Rome, into a European trading bloc. German was the official second language in all schools. People drove German cars, listened to German radios, watched German televisions, worked in German-owned factories, moaned about the behaviour of German tourists in German-dominated holiday resorts, while German teams won every international sporting competition except cricket, which only the English played.”

A dystopian fantasy this may be, but in the English reactionary imagination, dystopian fantasy was and is indistinguishable from reality. Rhetorically, it was commonplace among British anti-Europeans that the EU was a continuation in another, more insidious form, of previous attempts at domination from the continent. In 1989, for example, the Bruges Group of anti-European Tories heard Prof Kenneth Minogue of the London School of Economics tell them that “the European institutions were attempting to create a European Union, in the tradition of the mediaeval popes, Charlemagne, Napoleon, the Kaiser and Adolf Hitler”.

The sleight of hand was not subtle: Hitler tried to unite Europe, so does the EU, therefore the EU is a Hitlerian project. But the lack of subtlety did not stop the trope from being used in the Brexit campaign: “Napoleon, Hitler, various people tried this [unifying Europe], and it ends tragically. The EU is an attempt to do this by different methods,” Boris Johnson told the Telegraph on 14 May 2016, a month before the referendum. That Napoleon and “various people” were not the point of the argument became clear in Johnson’s reiteration of the real point: that the EU was “pursuing a similar goal to Hitler in trying to create a powerful superstate”. While Harris was writing Fatherland in 1990, the British secretary of state for trade and industry, Nicholas Ridley, a close friend and ally of the prime minister, Margaret Thatcher, told the Spectator that the European monetary system being introduced by the EU was “all a German racket designed to take over the whole of Europe … I’m not against giving up sovereignty in principle, but not to this lot. You might as well give it to Adolf Hitler, frankly … I’m not sure I wouldn’t rather have the shelters and the chance to fight back than simply being taken over by economics.”

The cover of that issue of the Spectator’s bore the headline “Speaking for England” – a conscious reference to one of the moments of high drama in September 1939 when Leo Amery in the House of Commons invited Labour’s Arthur Greenwood to “Speak for England!”, implying that the appeasing prime minister Neville Chamberlain did not do so.

Ridley’s remarks were dismissed by Lutz Stavenhagen, minister of state in the German foreign office, as the sort of thing that might be heard “in the pub after a football match”. And Ridley himself had to resign. But these were not the mere rantings of a marginal crank. As Peter Jenkins wrote in the Independent at the time, “it is widely supposed that Mrs Thatcher’s heart is with him, if not her head … It is no secret that she, like him, fears that monetary and economic union in Europe will become the tool of German domination rather than the means of containing a united Germany. She too instinctively mistrusts the Germans and finds it impossible to forget the experiences of the second world war.

The sheer volatility of public opinion in Britain was clear in the 1975 referendum on whether or not to stay in the common market: between January and June 1975, Harold Wilson’s government managed to turn a 57% leave preference in polls to a 67% remain vote on the day. The referendum was “the only really sustained debate the British had ever had on their role in the world” and, as the Daily Express put it, in a jubilant editorial: “Britain’s Yes to Europe” had rung “louder, clearer and more unanimous than any decision in peacetime history”.

Yet a result that seemed both decisive and conclusive proved to be neither – Europe continued to poison British politics. And perhaps one of the reasons it did so is that, as the 1975 referendum campaign showed, there was a very deep underlying division about the meaning of the second world war. The war was – and remains – crucial in structuring English feeling about the European Union. In 1975, many of the leading advocates on both sides were veterans, as were many voters. But instead of this common experience creating a common emotional ideal of Britain’s relationship to Europe, it fed two completely opposite stories, each very deeply felt.

by Fintan O'Toole, The Guardian | Read more:
Image: Francesco Ciccolella
[ed. I have exactly zero experience with travel, history or politics on the old continent and am just baffled by the undercurrents swirling around Brexit. Make of this what you will.]

Dark Store Theory

Kraig Sadownikow doesn’t look like an anti-corporate crusader. The mayor of West Bend, Wisconsin, stickers his pickup with a “Don’t Tread on Me” snake on the back window, a GOP elephant on the hitch, and the stars-and-stripes logo of his construction company across the bumper.

His fiscal conservatism is equally well billboarded: In the two hours we spent at City Hall and cruising West Bend in his plush truck, Sadownikow twice mentioned the 6 percent he has shaved off the Wisconsin city’s operating budget since becoming mayor in 2011, and stressed its efforts to bring more business to town.

So you might be surprised to learn that Sadownikow (he instructed me to pronounce his name like sat-on-a-cow) is personally boycotting two of the biggest big-box retailers in his town, Walmart and Menards, the Midwestern home improvement chain. He’s avoiding shopping at these companies’ stores until they cease what he sees as a flagrant exploitation of West Bend’s property tax system: repeat tax appeals that, added up, could undermine the town’s hard-won fiscal health.

Sadownikow is one of many unlikely combatants who have lined up against “dark store theory.” That’s the ominous-sounding term that administrators have given to a head-spinning legal argument taking cities across the U.S. by storm. Big-box retailers such as Walmart, Target, Meijer, Menards, and others are trimming their expenses in a forum where few residents are looking: the property tax assessment process. With one property tax appeal after another, they are compelling small-town assessors and high-court judges to accept the novel argument that their bustling big boxes should be valued like vacant “dark” stores—i.e., the near-worthless properties now peppering America’s shopping plazas.

To hear it from opponents, this emerging legal phenomenon essentially weaponizes an already grim retail landscape. But it’s not always clear who’s right and wrong—dark store theory is a battlefield muddied in the cryptic laws and upside-down logic of commercial property valuation. The potential slam to vulnerable tax bases is tangible, however. If the stores prevail in West Bend, for example, it would reduce property values by millions of dollars, force the city to refund hundreds of thousands of dollars in back taxes, and set back payments on the public infrastructure that the town built to lure these retailers in the first place. That could result in higher taxes for residents, fewer police officers, firefighters, and teachers, and potentially, a mess of public debt. (...)

Born of the post-recession retail apocalypse and spread by a cottage industry of “no-win, no-fee” tax consultants, dark store theory could foreshadow an even larger threat to local finances—a weakening of the basic social contract underpinning the property-tax apparatus that keeps cities and towns afloat. And here’s the rub: The ruthless logic helping these brick-and-mortar giants dodge their taxes might make a lot of sense. (...)

It might seem absurd that a corporation can insist that a bustling big box is worth little more than a worn-out husk many miles away. Yet this theory is winning over courts. Though most appeals are settled informally by assessors, a small and growing portion are getting kicked up to local tax boards, circuit courts, and in a few states, state supreme courts. In about half of these cases, justices are siding with big box proponents. Dark store theory has “largely withstood judicial scrutiny, leading to hundreds of store devaluations and to hundreds of millions of dollars in estimated lost tax revenue to local governments,” according to a January 2018 report by S&P Global Ratings, which warned investors of the risk the issue poses to municipal budgets.

There’s a good reason why dark store theory emerged in the wake of the Great Recession, as empty “ghost boxes” pockmarked the suburbs and exurbs of the upper Midwest. After the economic shock of 2008, consumer spending tanked, sending business on Main Streets and shopping plazas alike into the red. Today, combined with the rise of Amazon and web-based shopping, once-mighty retail giants keep tumbling. In October, 125-year-old Sears filed for bankruptcy, with plans to close 46 stores by Christmas; Toys ‘R’ Us shuttered more than 700 locations around the country earlier this year. According to Bloomberg, from the beginning of 2018 through April, U.S. store closures had hit 77 million square feet. (...)

When you zoom out from these byzantine quarrels, the woes of the taxman look even grimmer. Property assessments are but a small and emerging frontier for creative tax workarounds among large U.S. corporations. Thanks to offshore tax havens and other breaks and loopholes, many names in the Dow 30 have for years enjoyed a shrinking tax burden as a share of their profits. A 2013 Washington Post analysis found that the share of income Walmart paid in taxes dropped by 24.3 percentage points between 1971 and 2012. Home Depot’s fell by 12.5 points between 1971 and 2012. Today, President Trump’s $1.5 trillion tax code overhaul has boosted GDP and economic growth, at least temporarily. But one year in, corporate tax revenues have also dropped by one-third. And the new cap on state and local tax deductions threatens to further pressure city and school budgets.

Historically speaking, brick-and-mortar retailers haven’t had as much luck in lobbying for federal tax breaks compared to peers in tech and manufacturing, such as Amazon, Facebook, and Boeing. But at the state and local level, they’ve scored generous incentives. Hungry for development, many communities go to great lengths to lure mega-retailers in with public subsidies and tax benefits. For example, West Bend spent nearly $16 million to build infrastructure on once-vacant farmland solely to attract Menards and Walmart, Sadownikow told me, with the plan to finance that with the future growth in property taxes. Now, if the stores successfully slash their payments, the city would be forced to drag out its timeline for paying off that investment. This also raises the specter of debt.

It’s like a betrayal, Krause told me. “They come in promising jobs and to add to the tax base—more development, more tourism, more people coming in,” she said. “Now look at what they’re doing.”

In so many ways, it seems the tax code no longer fits the players, and that may include property assessment. And dark store theory may be bigger than big boxes: As challenges spread geographically, city administrators fear the tactic will catch on among other property classes, with fast food outlets, banks, grocery stores, and office buildings deploying similar arguments in an effort to slash their tax obligations. Indeed, legal records show that this is happening: Two Hy-Vee supermarkets in Iowa have asked for write-downs using vacant properties. A Steak ‘n Shake in Warren County, Ohio, has made a similar argument about the value of its lease.

by Laura Bliss, CityLab |  Read more:

Image: Madison McVeigh/CityLab
[ed. See also: Amazon’s Long Game Is Clearer Than Ever: Amazon last year effectively paid nothing in federal tax. Worse, thanks to the tax cut approved by Donald Trump, who ironically has ripped Amazon for not paying taxes, the company will reportedly receive a one-time $789 million windfall for last year — in addition to the goodies it just received this week. (Rolling Stone)]

via:
[ed. See also: this]

Remote Workers Can Get a Cushy Apartment, Free Office Space, and $10,000—If they Move to Tulsa

If you’re a full-time remote worker in the U.S. and are looking for a change, Tulsa, Oklahoma has a deal for you.

It’ll give you a free shared-office space, a subsidized furnished apartment in the city’s Arts District, and $10,000 cash. All you have to do is pack up and move—for at least one year—to Tulsa, a city of just over 400,000 people in the near dead-center of the continental U.S.

The last few years have seen the rise of start-ups catering to so-called “digital nomads,” people whose mobile, flexible jobs give them the freedom to live and work wherever they choose.

Now cities, states, and even countries are exploring ways to attract these workers—who would, presumably, start paying taxes, launch businesses, and otherwise contribute to the economy of wherever they’re drawn to.

Tulsa Remote is one of several revitalization projects in the region funded by the George Kaiser Family Foundation. The Tulsa-based philanthropic organization was started by George B. Kaiser, an oil and banking billionaire who has signed on to Warren Buffett and Bill and Melinda Gates’ “Giving Pledge,” whose wealthy signees promise to give away at least half their fortunes to charity.

The organization has budgeted for 20 new remote workers in the program’s first year, says Ken Levit, GKFF’s executive director. Applicants must be at least 18, eligible to work in the U.S., already working full-time for an employer based outside the boundaries of Tulsa County, and prepared to move to Tulsa within six months. Applications opened Tuesday at the website TulsaRemote.com; the city hopes to settle the first new residents within the next three months, Levit said.

Tulsa’s economy had been heavily dependent on energy, and the slump in oil prices at the end of late 2015 hit Tulsa hard. By January 2016, Oklahoma lost 13,000 energy jobs statewide. In September the city’s unemployment rate was 3 percent, below the U.S. national rate of 3.7 percent, but the area still struggles with pockets of poverty and an underfunded public-education system. Tulsa Remote is an attempt to attract talent to a small city that might otherwise go overlooked by educated new graduates or entrepreneurs looking for an affordable home base, Levit says.

“You roll the dice a little bit and you get the right person whose going to start a company, create beautiful works of art, or run for office in a few years,” Levit says. “We’re looking for combination of wanderlust and roots.”

by Corinne Purtill, Nextgov | Read more:
Image: Sean Pavone/Shutterstock

Spinning Wind Turbine Wins James Dyson Award

A spinning turbine that can capture wind travelling in any direction and could transform how consumers generate electricity in cities has won its inventors a prestigious international award and £30,000 prize.

Nicolas Orellana, 36, and Yaseen Noorani, 24, MSc students at Lancaster University, scooped the James Dyson award for their O-Wind Turbine, which – in a technological first – takes advantage of both horizontal and vertical winds without requiring steering.

Conventional wind turbines capture wind travelling only in one direction, and are notoriously inefficient in cities where wind trapped between buildings becomes unpredictable. (...)

The annual award scheme is run by the James Dyson Foundation, designer Sir James Dyson’s charitable trust. It challenges young people to “design something that solves a problem” and is open to university students and recent graduates in product design, industrial design and engineering.

O-Wind Turbine is a 25cm sphere with geometric vents that sits on a fixed axis and spins when wind hits it from any direction. When wind energy turns the device, gears drive a generator that converts the power of the wind into electricity. The students believe the device, which could take at least five years to be put into commercial production, could be installed on large structures such as the side of a building or balcony, where wind speeds are highest.

Dyson, who chose the winners, hailed it as “an ingenious concept”. He continued: “Designing something that solves a problem is an intentionally broad brief. It invites talented, young inventors to do more than just identify real problems. It empowers them to use their ingenuity to develop inventive solutions. O-Wind Turbine does exactly that. It takes the enormous challenge of producing renewable energy and using geometry it can harness energy in places where we’ve scarcely been looking – cities.”

by Rebecca Smithers, The Guardian |  Read more:

Image: James Dyson Awards