Sports … hedging?

If you want to bet that oil prices will go up, you can buy oil futures. In the U.S., oil futures are legal and popular and exchange-traded and regulated by the Commodity Futures Trading Commission, and have been for a long time. You can use them for various purposes, but one purpose is just to make a bet on oil prices, which is generally called “speculation.”

If you want to bet that the Bucs will beat the Chiefs in the big football game, you can go to a casino or a sports book and make a bet. In the U.S., sports betting is popular, but its legality is more complicated. It is legal in some states but not others; it was illegal almost everywhere not that long ago; there is no simple national exchange to make sports bets, and in fact interstate sports gambling is illegal under federal law. If you are just making a bet on football scores, that is generally called “gambling.”

What is the difference between these two things? Well, traditionally, one big difference is that oil futures could be used to hedge real business risk. 1  You might use them for pure speculation, just to bet on oil prices, but an oil company might use them to lock in a selling price for its future oil production, or an airline might use them to lock in a purchase price for its future fuel consumption. This sort of real-business rationale meant that commodity futures were legal and accepted business tools even while regular gambling was illegal and immoral. And, sure, some people would use commodity futures just to speculate — to gamble — but those speculators were helpful participants in a broader, socially useful market; they made the market more liquid and more useful for real businesses that wanted to hedge real risks.

Over time, the CFTC allowed more and more futures contracts, and the rationale was less “this is a commodity that someone can deliver in the future” and more “this is a financial contract that can hedge a real business risk.” So futures on volatility and interest rates are not like oil futures, in the sense that you can’t load an interest rate on a tanker ship and deliver it to a customer, but they are like oil futures in the sense that interest rates and volatility are important risks for real businesses and those businesses might want to hedge them. So they are traded on exchanges and regulated by the CFTC, and if you want to bet on interest rates you can do that legally and transparently and as part of standard financial markets.

Meanwhile real normal businesses don’t have costs or revenues that fluctuate based on football scores. 2 So football betting is just gambling; there is no business purpose to it. Some states allow it and some don’t, but financial contracts on football scores are not traded on exchanges or allowed by the CFTC or part of standard financial markets.

Well, but, one kind of business has a real business need to hedge against football scores: sports books! If you are in the (legal in your state) business of taking bets from customers on football games, and all your customers want to bet on the Chiefs, you might want to hedge your risk by buying some financial contracts that pay off if the Chiefs win. Could you go to the CFTC and say “hey, I have a legitimate business purpose to hedge my real risk by buying football-score futures,” and convince them to allow trading of those futures?

No, absolutely not, that is way too cute, but nice idea, good effort. Here is a Wall Street Journal story about Eris Exchange LLC, a cryptocurrency exchange that tried to slip this one past the CFTC:

ErisX’s plan was to list three kinds of futures contracts, with payouts based on the outcomes of individual NFL games, the point spreads in those games, and what bettors call the over/under—bets based on the total number of points scored in a game. …

ErisX’s contracts wouldn’t have been open to small individual investors. ErisX said they were designed to fill the hedging needs of businesses such as sportsbook operators that let bettors wager on games, stadium owners and food and beverage vendors.

For instance, a sportsbook licensed to operate in one state could have used the ErisX futures contracts to address a common problem where its local customers tend to bet on the home team, resulting in an imbalance in the firm’s books. Potentially, stadium operators could have used the futures to hedge against the risk of reduced revenue in case their local team didn’t make the playoffs, ErisX said.

But ErisX’s proposal faced a legal hurdle: Federal law gives the CFTC the authority to prohibit event contracts linked to gaming. The law doesn’t define gaming, leaving it up to the CFTC to determine whether the contracts’ underlying activity fits the classification. Historically, the regulator has been wary of proposals that blur the line between betting and financial derivatives trading.

Yeah … I … I just think that a contract that lets a sports book lay off its sports gambling risk in a sports gambling derivatives market is pretty obviously sports gambling? Here are the skeptical questions that the CFTC sent to ErisX about this plan (“Do any of these contracts involve, relate to, or reference gaming,” etc.), and the Journal notes that ErisX “withdrew its proposal” as “the CFTC had been poised to reject ErisX’s proposal on the grounds that it was contrary to the public interest.” I don’t know if that’s right as an intuitive matter — maybe sports betting is great and in the public interest? — but as a matter of CFTC rules it is obviously right. The CFTC does not allow futures contracts that are “gaming.” It is clever to argue “no no no, this is not a gaming contract, this is a contract to hedge gaming risk,” and I applaud the ingenuity, but of course it didn’t work.

https://www.bloomberg.com/opinion/articles/2021-03-24/nfl-futures-betting-you-can-t-trade-on-pro-football-odds

If they could impose an internet blackout, don't you think that they have the capability to trace and seize all the satellite phones?

AFAIK the same satellite phones still use service providers to be able to make calls or connect to the internet. So In case the government decided to shut the internet service. They would of course command the service providers to switch off their services and there will be no internet connection. That's what's happening in Myanmar. The only way it would be possible is If the government had no control over private owners of the satellites and the network through Laws just like they have no control over the Bitcoin network.

As the Covid-19 pandemic wreaks havoc on economic growth, concerns about hunger and malnutrition are rising around the world

Global food prices are going up, and the timing couldn’t be worse.

In Indonesia, tofu is 30% more expensive than it was in December. In Brazil, the price of local mainstay turtle beans is up 54% compared to last January. In Russia, consumers are paying 61% more for sugar than a year ago.

Emerging markets are feeling the pain of a blistering surge in raw material costs, as commodities from oil to copper and grains are driven higher by expectations for a “roaring 20s” post-pandemic economic recovery as well as ultra-loose monetary policies.

Consumers in the U.S., Canada and Europe won’t be immune either as companies — already under pressure from pandemic-related disruptions and rising transport and packaging costs — run out of ways to absorb the surge.

“People will have to get used to paying more for food,” said Sylvain Charlebois, director of the Agri-Food Analytics Lab at Dalhousie University in Canada. “It’s only going to get worse.”

While never welcome, the coming round of food inflation will be especially tough. As the pandemic wrought havoc on the global economy, it ushered in new concerns about hunger and malnutrition, even in the world’s wealthiest countries. In the U.K., the Trussell Trust gave out a record 2,600 food parcels a day to children in the first six months of the pandemic. In the U.S., the Covid-19 crisis pushed an additional 13.2 million people into food insecurity, a 35% jump from 2018, according to estimates from Feeding America, the nation’s largest hunger-relief organization.

In the U.S., prices rose close to 3% in the year ending Jan. 2, according to NielsenIQ, roughly double the overall rate of inflation. That small jump adds up, particularly for families already near the edge. The poorest Americans already spend 36% of their income on food, according to the U.S. Department of Agriculture, and mass layoffs in lower-wage work like retail and transportation have increased the strain on household budgets.

Meanwhile, the price of staples like grains, sunflower seeds, soybeans and sugar have soared, pushing global food prices to a fresh six-year high in January. They’re not likely to fall any time soon, thanks to a combination of poor weather, increased demand and virus-mangled global supply chains.

Cost Spike
The prices of key food commodities are at multi-year hights

Developed markets tend to be insulated from short-term price spikes, because food is more processed and the food chain is more elaborate. In the process of turning a bushel of corn into a bag of Tostitos, food companies have a lot of room to absorb incremental costs, said David Ubilava, a senior lecturer at the University of Sydney who specializes in agricultural economics. But when costs stay high for a sustained period of time, companies start thinking about how to pass them on.

“We are experiencing inflation right now as is everybody else," Conagra Brands Inc. Chief Executive Officer Sean Connolly said in an interview. Costs are up for oils, pork and eggs, plus packaging materials like cardboard and steel. The company, parent to more than 70 brands including Birds Eye, Chef Boyardee, and Udi’s Gluten-Free, says raising prices is one of the levers it could pull this year to counter rising costs.

General Mills, the maker of Cheerios, Yoplait and and Blue Buffalo pet food, is also looking at price increases, said Jon Nudi, who leads the North American retail division, at least “in the areas we see significant inflation.” Dave Ciesinski, Chief Executive Officer of Lancaster Colony Corp., which makes the Marzetti brand and others, said they anticipate a sustained period of rising costs. The company is going to have to figure out how to “justifiably or appropriately pass on these costs,” he told analysts in an earnings call.

Even the cost of white label goods — also known as house brands — is likely to go up, notably in the second half of the year, said Steven Oakland, CEO of Treehouse Foods, which makes products for grocery stores to sell under their own brand names. “We're working very closely to decide what can we mitigate,” he said. “What do we need to pass on? What's the right movement with the consumer?”

Inflation on the Mind
Inflation and how to price for it is increasingly a hot topic in the food industry

The increases might not be immediately obvious to shoppers. Instead of raising the sticker price, retailers may cut back on multi-buy deals or special promotions. Last year, the number of grocery items sold on promotion in the U.S. dropped by 20 percentage points, according to NielsenIQ data, partly because pandemic-driven logistical challenges squeezed supply.

There may also be another round of so-called shrinkflation, where the price stays the same but the product size shrinks. That’s long been a popular tactic in the U.K., where a decade long supermarket price war has kept prices low.

A study by the Office for National Statistics found between Jan. 2012 and June 2017 — a period when food companies faced rising costs, plus a weakening pound — as many as 2,529 products were made smaller, more than four times the number that increased in size. British shoppers took special exception to the shrinking of Mars’ Maltesers by 15% and Birds Eye dropping from 12 to 10 fish fingers in a packet.

“I expect it to be a continued feature of the way that food is sold in the U.K. going forward,” Richard Lim, CEO of consultancy Retail Economics said. “I don’t think we’ll see a stop to this.”

Right now, food prices in the U.K. are flat or declining but Liliana Danila, economist at the British Retail Consortium, says she expects that to change, and it could come as a bit of a shock. A decade-long supermarket price war has accustomed British consumers to the cheapest prices in Europe. “They are maybe a bit more likely to be less prepared than consumers in other places,” Danila said.

Adding to the pressure in the U.K. is the impact of Brexit, which is adding complications and delays to previously frictionless trade. The U.K.’s Food and Drink Federation estimates that red tape and new border checks could add 3 billion pounds ($4.1 billion) in costs per year for food importers.

The food industry in North America has its own expensive challenges. In particular, a shortage of both shipping containers and truck drivers has made it more costly to transport food, and the rising price of oil has raised packaging costs.

In emerging markets, where people typically eat food closer to its natural state and prices change quickly, families are having to confront the issue right now.

Read More: The Five Hotspots Where Food Prices Are Getting People Worried

“I got smaller piece of tempeh and tofu now, with the same price as last week,” said Rahayu, who goes by one name as many in Indonesia do, a 64-year-old grandmother in West Java province, noting that in recent weeks, the price of chili had more than doubled to 70,000 rupiah ($4.97) per kilogram. “I’m going to need to use less.”

With these pressures building, Russia and Argentina have put price curbs on certain staples and slapped tariffs on exports in an attempt to contain domestic food prices.

In some richer countries, governments are focusing more on self-sufficiency than price controls. France is planning to boost its output of high-protein crops to cut reliance on soybean imports, while Singapore recently became the first country to approve sales of lab-created meat as it pushes to boost its domestic food capacity.

Others are looking to broad stimulus measures. Testifying before the U.S. House Financial Services Committee last week, Federal Reserve Chair Jerome Powell pointed to food insecurity as one example of how the pandemic has strained poorer communities, and as another impetus to get the economy moving again.

“I think we’ve all been struck — how could you not be struck — by the uptake in the food area,” Powell said. “It’s a sign that support is needed and we really need to get the economy recovered as soon as possible.”

https://www.bloomberg.com/news/articles/2021-03-01/inflation-2021-malnutrition-and-hunger-fears-rise-as-food-prices-soar-globally

Synaptics driver puts a keylogger on HP laptops

For the second time this year, HP Inc has had to patch its laptops after a security researcher found a driver-level keylogger – and this time, other laptop-makers might have to check their own products.

The debug trace was in the Synaptics Touchpad driver used almost across-the-board in HP laptops, and while it is turned off by default, a registry entry could turn it on. While few home users would be likely to turn it on, it would be a tasty exploit for RAT (remote access trojan) herders.

https://www.theregister.com/2017/12/11/hp_synaptics_keylogger/

China economy: Beijing unveils $298bn tax cuts to boost growth

March 2019

Opening the annual session of China's parliament, he forecast slower growth of 6% - 6.5% this year, down from a target of around 6.5% in 2018.

China has struggled with a slowing economy and a US-led trade war.

It plans to boost spending, increase foreign firms' access to its markets, and cut billions of dollars in taxes.

https://www.bbc.com/news/business-47450223

Artificial intelligence will create so much wealth that every adult in the United States could be paid $13,500 per year from its windfall as soon as 10 years from now.

So says Sam Altman, co-founder and president of San Francisco-headquartered, artificial intelligence-focused nonprofit OpenAI.

“My work at OpenAI reminds me every day about the magnitude of the socioeconomic change that is coming sooner than most people believe,” Altman, who posted Tuesday. “Software that can think and learn will do more and more of the work that people now do.”

Altman calls it an “AI revolution,” and compares it in magnitude to the agricultural, industrial and computational technological revolutions. “The technological progress we make in the next 100 years will be far larger than all we’ve made since we first controlled fire and invented the wheel,” he wrote.

The government needs to respond accordingly. “If public policy doesn’t adapt accordingly, most people will end up worse off than they are today,” Altman said.

However, if the government collects and redistributes the wealth that AI will generate, AI’s exponential productivity gains could “make the society of the future much less divisive and enable everyone to participate in its gains,” Altman says.

AI will enable computer programs to “read legal documents” and “give medical advice” in the next five years; in the next 10 computers will “do assembly-line work” and “maybe even become companions,” Altman wrote. “And in the decades after that, [AI] will do almost everything, including making new scientific discoveries that will expand our concept of ‘everything.’”

As the pace of development accelerates, AI “will create phenomenal wealth” but at the same time the price of labor “will fall towards zero,” Altman said.

“It sounds utopian, but it’s something technology can deliver (and in some cases already has). Imagine a world where, for decades, everything – housing, education, food, clothing, etc.– became half as expensive every two years.”

In this future, where wealth will come from companies and land, governments should tax capital, not labor, and those taxes should be distributed to citizens, Altman said.

In his post, Altman proposed an American Equity Fund that taxes sufficiently large companies 2.5% of their market value in the form of company shares, and 2.5% of the value of all land in the form of dollars. Private companies with annual revenue of $1 billion or more would also be taxed and pay in cash, Altman said.

All citizens over 18 would receive payment in both dollars and company shares. People could do as they see fit with that money, Altman said.

By giving every citizen ownership in the country, society would improve for everyone. “Everyone who owns a share in Amazon wants the share price to rise. As people’s individual assets rise in tandem with the country’s, they have a literal stake in seeing their country do well,” Altman said.

With this system in mind, in 10 years, the 250 million adults living in America would get $13,500 per year, Altman said. To get this number, Altman estimated that the $50 trillion worth of value in US companies as calculated by market capitalization and the $30 trillion worth of privately held land in the US both “roughly double” over the coming decade.

“That dividend could be much higher if AI accelerates growth, but even if it’s not, $13,500 will have much greater purchasing power than it does now because technology will have greatly reduced the cost of goods and services,” Altman wrote. “And that effective purchasing power will go up dramatically every year.”

Elon Musk has hinted at a similar future. “There is a pretty good chance we end up with a universal basic income, or something like that, due to automation,” Musk told CNBC in 2016. “Yeah, I am not sure what else one would do. I think that is what would happen.”

Musk is also a co-founder of OpenAI but left the board in 2018 citing the fact that Tesla was becoming an AI company as it developed self-driving capabilities.

Such a system is “both pro-business and pro-people,” Altman said, and would therefore bring together “a remarkably broad constituency.”

However, it’s worth noting that whether or not that is true, with the current climate of political acrimony, it is certainly debatable whether lawmakers would bring such a plan to fruition, especially within a decade.

If government policy were to adapt as it needs to, though, how people spend their time would also look radically different, said Altman.

“As AI produces most of the world’s basic goods and services, people will be freed up to spend more time with people they care about, care for people, appreciate art and nature, or work toward social good,” Altman wrote.

“The changes coming are unstoppable,” Altman said. “If we embrace them and plan for them, we can use them to create a much fairer, happier, and more prosperous society. The future can be almost unimaginably great.”

https://www.cnbc.com/2021/03/17/openais-altman-ai-will-make-wealth-to-pay-all-adults-13500-a-year.html

Visa seemingly plans to follow in PayPal's fresh footsteps as it works to adopt Bitcoin.

The firm's CEO Alfred Kelly said on Fortune’s Leadership Next podcast on Tuesday that the payment processing behemoth is willing to facilitate not only bitcoin purchases, but also spending functionalities, and in a big way:


According to Kelly, Visa is working hard to earn its role as an intermediary in financial transactions even after Bitcoin sees mainstream adoption. Other than Bitcoin, the payment processor also plans to allow for the use of stablecoins. He admitted that the company recognizes “a strong potential for those to become a new payment vehicle.” Kelly said Visa is collaborating with about 35 partners involved with stablecoins, explaining that "these are currencies that are fiat-backed, but we’re allowing this translation, if you will, into a fiat currency and in a wallet where there’s a Visa card and again that Visa card can be used with the translated digital currency over to the fiat currency to purchase at any one of our 70 million locations."

This is seemingly referring to Visa's partnership with Circle, the firm behind the USDC stablecoin. According to a report released by Forbes at the end of 2020, the payment processing giant partnered with Circle to integrate USDC into its infrastructure and allow credit card issuers to use USD Coin on their platforms and send and receive USDC payments. Visa's head of crypto Cuy Sheffield said at the time:


Last month, Visa also launched the pilot test of its API meant to allow banks to offer services revolving around Bitcoin and other digital assets. As the BTC Times reported at the time, neobankFirst Boulevard will be the first to use it to purchase, custody, and trade digital assets such as Bitcoin.

https://www.btctimes.com/news/visa-plans-to-enable-bitcoin-purchases

https://www.youtube.com/watch?v=xLYYh4aPXAM

Bitcoin has won over some of America's best-known billionaires, and institutions worldwide are treating it as a serious financial asset. But bitcoin's rising price is only one part of the story.

Whether they know it or not, people who buy bitcoin are strengthening a tool for protecting human rights. This still relatively new form of electronic money is censorship-resistant, seizure-resistant, borderless, permissionless, pseudonymous, programmable, and peer-to-peer.

In bitcoin, transactions don't go through banks or financial intermediaries. They travel directly from one person to another.

Payment processing is done not by a regulated company such as Visa or Mastercard but by a decentralized global software network. Storage is handled not by a bank but by the users themselves.

Bitcoin issuance isn't determined by central bankers. The currency's creator, Satoshi Nakamoto, set it to have an ultimate limit of 21 million. No one can ever print more.

Bitcoin transactions can't be stopped, and you don't need to reveal your name or address or telephone number to participate. You just need internet access.

In 2017, the economist Paul Krugman described bitcoin as "some fancy technological thing that nobody really understands. There's been no demonstration yet that it actually is helpful in conducting economic transactions. There's no anchor for its value."

Krugman lives in a sheltered environment in a liberal democracy with constitutional protections. His native currency is globally dominant and relatively stable. It's easy for him to open a bank account, to use a mobile app to pay bills, or to grow his wealth by investing in real estate or stocks.

But not everyone has that level of privilege. Around 4.2 billion people live under authoritarian regimes that use money as a tool for surveillance and state control. Their currency is often debased, and they are, for the most part, cut off from the international system that Krugman enjoys. For them, saving and transacting outside the government's purview isn't shady business. It's a way to preserve their freedoms.

In China, if you type or utter one wrong word, the Communist Party might eliminate your financial services. This devastating outcome creates a chilling effect for dissidents and creative minds, who are forced to use the country's increasingly centralized digital economy.

In Hong Kong or Russia, donors to human rights organizations can see their bank accounts suspended and funds seized.

Over the past few months in Belarus and Nigeria, nationwide protests have broken out against tyranny and corruption. In both places, activists raising money to support the democracy movement have had their bank accounts frozen.

Just a few days ago, in Burma's latest coup, the military shut down the banking system and turned off the ATMs.

For activists living under state repression, bitcoin provides a way to preserve their money in cyberspace, locked away by encryption, safe from devaluation, in a network that has never been hacked. For them, it's digital cash and digital gold rolled into one.

And in Cuba, Nigeria, China, Pakistan, Venezuela, Russia, Turkey, Argentina, Palestine, Zimbabwe, and elsewhere, bitcoin is catching on and helping people escape tyranny and currency collapse.

In the past few months, Belarusian activists have used bitcoin to defy the regime by sending more than 3 million dollars of unstoppable money directly to striking workers, who then convert it locally to rubles in peer-to-peer marketplaces to feed their families as they protest the country's dictatorship.

In October, a feminist coalition in Nigeria raised the equivalent of tens of thousands of dollars in bitcoin to buy gas masks and protest equipment as activist bank accounts were being turned on and off.

In Russia, the opposition politician Alexei Navalny has raised millions in bitcoin as Vladimir Putin maintains strict control over the traditional financial system. Putin can do a lot of things, but he can't freeze a bitcoin account.

In Iran and Palestine and Cuba, individuals face sanctions or embargoes because of the misdeeds of their corrupt rulers. Bitcoin gives them a lifeline for earning income or receiving remittances from abroad.

Some Venezuelans, having watched their country's currency evaporate due to hyperinflation, are converting their resources to bitcoin's digital format and then escaping. With their savings secured by a password that can be stored on a flash drive, phone, or even memorized, they've started new lives in other countries, taking advantage of a technology that refugees throughout history could only dream about.

The citizens of democracies also face financial controls, deplatforming, and an ever-expanding surveillance state. But those lucky enough to live in open societies can vote, sue, protest, and write, and those methods might allow them to protect their financial freedom and privacy. The billions who live under authoritarian governments don't have the same options.

Unlike democracy, bitcoin is universally available. You don't need to have a particular passport or bank card or voting status to use it. No government can turn off your bitcoin if it's threatened by your ideas.

We are in the middle of a great digital transformation, a time when cash, one of the last bastions of privacy and freedom, is disappearing. People rely increasingly on easily surveilled apps such as Apple Pay and AliPay—and, perhaps soon, central bank–issued digital currencies as their primary medium of exchange.

Bitcoin provides an alternative to our increasingly centralized financial system. It gives any activist or journalist a way to raise funds without censorship, a way to save despite the corrosive impact of excessive money printing, and a way to teleport value without permission.

Bitcoin wasn't as powerful five years ago, before it had global liquidity. But today, exchanges have popped up in every region, daily trading volume exceeds that of Apple and other popular stocks, and peer-to-peer marketplaces such as Paxful and LocalBitcoins have extended their reach, enabling users to sell bitcoin for local currency almost anywhere in the world.

Maybe you don't need bitcoin. Maybe you don't understand bitcoin. Maybe PayPal, Venmo, or your bank account serves your needs just fine.

But don't write off bitcoin as simply a vehicle for financial speculation. For millions of people around the world, it's an escape hatch from tyranny—nothing less than freedom money.

https://reason.com/video/2021/02/05/bitcoin-is-protecting-human-rights-around-the-world/

Just a few days ago, in Burma's latest coup, the military shut down the banking system and turned off the ATMs.

https://www.newindianexpress.com/world/2021/feb/01/banks-closed-atms-shut-down-in-myanmar-following-military-coup-2258129.html