Saturday, June 23, 2018

A Brief History of Asylum in America


In 1620, a small group of religious refugees from England, called Pilgrims, landed on Cape Cod in Massachusetts.  Facing persecution, imprisonment, fines and even execution in their native land, they had fled to the New World to find a better life.  Their early years were hard, but they persisted and eventually prospered.

The Pilgrims were soon joined by other refugees from England--the Puritans--who had also fled persecution in order to improve their lives.  The Puritans established the Massachusetts Bay Colony, a beacon of liberty from whence the American Revolution sprang.  Many of the colonial men who assembled in the early hours of April 19, 1775 at Lexington and Concord to await the British Redcoats descended from the Pilgrims and Puritans.  The refusal of these offspring of 17th Century refugees to submit to tyranny remains the foundation of American liberty today.

Other religious refugees from England and elsewhere in Europe found asylum in America.  Rhode Island, Pennsylvania and Maryland all provided asylum to the persecuted and endangered.  They, too, prospered.

In the 1840's and 1850's, a flood of refugees from Germany and other parts of Europe arrived in America, fleeing the Revolutions of 1848, a largely failed group of democratic uprisings. These refugees found in America the freedom that they had been denied in Europe.  Many of the German refugees were instrumental in establishing heavy industry in America, particularly a robust machine tool industry that powered America's victory in World War II.   During the war, America produced some 295,000 aircraft, 88,000 tanks and other armored vehicles, and some 6,000 ships.  Refugees helped to make America the Arsenal of Democracy.  Even to this day, America has substantial manufacturing prowess, employing over 12 million people and producing over $2 trillion worth of goods.

During the first half of the 1860's, a large number of refugees of African descent fled bondage in the Confederate States of America and found asylum from the blue-coated Union Army.  Some 200,000  African-Americans enlisted in the Union Army and bolstered the ranks of the Army of the Potomac that Ulysses S. Grant led to victory over Robert E. Lee.  These refugees, too, fought and sometimes died for the liberty we now enjoy.

In the late 19th and early 20th Centuries, many Jewish inhabitants of Eastern Europe and the Russian Empire fled pogroms--persecutions that featured mass murders, pillaging and destruction of property.  Many and perhaps most were penniless and not well educated when they arrived.   But they and their offspring prospered in the warmth of American freedom and can now be counted among the most successful of Americans.

In 1949, a small group of Chinese college and graduate students studying at American universities, around 3,000, were stranded by the Communist victory in China.  These students were largely from well-educated and well-to-do backgrounds, which made them enemies of the people from the Communist perspective.  Many of their family members remaining in China were treated harshly by the Communists, up to the point of execution in some cases, and suffered the loss of their jobs and property.  These students faced the same if they returned to China.  But they were given asylum in America.  Many found jobs in the high tech industries, and played important roles in developing modern electronics, including the integrated circuits that are at the heart of modern computers. 

When we look at photographs of those seeking asylum today, we should see not just what they are at the moment, but the potential they offer.  Refugees have powerful reasons to work and succeed, more so than those who ensconced in comfortable suburbs or upscale urban neighborhoods.  Providing asylum is an act of compassion and mercy (witness the sanctuary offered by Christian churches since ancient times).  It also brings social and economic benefits that have powered America to its status as the world's sole superpower.  The energy and motivation of asylum seekers and other immigrants can bolster America's safety nets--Social Security, Medicare and Medicaid--with the employment taxes they will pay at a time when native-born Americans have falling birth rates, lower employment force participation, and aging demographics.  Countries in Europe and Asia face the same and more severe demographic problems. But their tightfisted attitudes toward immigration and asylum will force them gradually to cut back on social safety nets, which will likely lead to ugly political maelstroms. America is vibrant and flexible enough to avoid that outcome. 

So, when you hear the cry of an asylum seeking child, think about what asylum has done for America.  Those who know history may sometimes want to repeat it.

Friday, June 1, 2018

Will Trump Help Us Profit From the Jobs Numbers?


Today, President Trump tweeted around 7:24 am that he was "looking forward" to the jobs numbers.  Some traders in the financial markets apparently saw this, sold Treasuries, and bought stocks.  When the jobs numbers came out at 8:30 am, they were better than expected.  Jobs increased by 223,000, about 33,000 more than economists had estimated.  https://nypost.com/2018/06/01/how-trumps-pre-jobs-report-tweet-moved-the-market/. The stock market rose more than 250 points in morning trading.  Whoever bought stocks before the jobs report made money--good money.

It turns out the President learned the jobs numbers last night.  The federal government, including the White House, has historically refrained from any comment on the jobs numbers until they are officially released at 8:30 am.  The President broke with tradition.  Whoever among financial markets aficionados were monitoring the President's Twitter address got an advance hint about the jobs numbers.  It's implausible to think the President would have tweeted if the jobs numbers had been tepid or discouraging.  His "looking forward" comment could only mean the numbers would be good.

 Trump shouldn't have tweeted about the jobs numbers before they were officially released.  But it's just in his nature to keep his mouth moving and the Tweeter going.  So maybe this gives us a way to make money from the jobs numbers.  If the President tweets about jobs before the official release, invest in a way that would profit from good numbers.  If the President is silent before the official release, invest in a way that would profit from tepid or bad numbers.  Will this work?  No guarantees, but you never know.  Maybe you could make a nickel or two.

Saturday, April 7, 2018

How to Make A Big Tax-Free Gift to Your Child or Grandchild


Anyone who has considered giving a substantial gift to a child or grandchild has to think about the potential consequences under federal law.  These could include the federal gift tax, estate tax and generation skipping transfer tax.  And we haven't gotten to potential state taxes yet, which don't necessarily work the same way as federal taxes.

But there's a simple workaround to all these taxes:  pay for your child's or grandchild's college education.  The burden of college loans is well-known.  If a student borrows $100,000 for college and/or medical, law, or other graduate school, and pays 8% per year over a 20-year repayment process, the interest costs actually exceed the $100,000 principal amount of the loan (by about $750).  If you contribute $100,000 to that student's education, you just in effect transferred over $200,000 to that student, all without any consequences under federal or state estate, gift or similar laws.  If the student potentially has to borrow larger amounts ($200,000 of educational debt is hardly unusual these days), the amount you can give tax-free to your child or grandchild increases proportionately.

Some parents think it's better to make kids bear the costs of college in order to teach them responsibility.  There are many ways to teach responsibility, and they should begin well before the child reaches college age.  If a kid isn't responsible by age 18, dumping a truckload of student debt on him or her isn't likely to improve the situation. 

If you can't pay the full cost of a kid's education, consider how much you can pay.  Whatever you provide reduces the potential need for loans, and the tax-free gift you give confers lifetime benefits on the kid.  And if you're not wealthy enough to face liability for gift, estate or similar taxes, remember that whatever amount of educational costs you cover still provides a large gift because the child might otherwise have to borrow the money and pay a lot of interest.  Even if you don't get to thumb your nose at the tax man, you give your kid a big lifelong hug and kiss. 

Wednesday, March 28, 2018

Your Facebook Data Can Be Used Against You


It turns out that Facebook keeps a shipload of data about you.  That stands to reason, since Facebook's business model is to snarf up as much data as possible so you can be targeted for ads that Facebook and its real customers (i.e., the advertisers) hope you click on.  And Facebook would want to keep every scrap of data it has about you (subject to your ability to delete it under Facebook's terms and conditions), no matter how old or seemingly trivial it may be because the more Facebook knows, the greater its ability to target you.  So the information it keeps is pretty extensive, including among other things your facial image (kept through its facial recognition software), all contacts in your phone book, all your Facebook friends (including those that were unfriended), location data (as in where you were at a particular time on a particular day), all the videos you watched, your timeline, all photos you uploaded to Facebook, message traffic, and life events (such as your birth date, graduations, marriages, and so on).  (See https://www.cnbc.com/2018/03/27/facebook-knows-a-lot-about-me.html.)

But all that information can be used against you.  There are probably quite a few possible ways.  Here are a few.  Let's say you have a job that doesn't require you to show up at the office all the time.  Your employer thinks you haven't been putting in a full 40 hours a week and demands that you download and hand over a copy of your Facebook data, so they can check up on what you've doing during the workweek.  You refuse, saying that would be an outrageous invasion of your privacy.  Your employer then tells you to pursue your career elsewhere.  And if you sue?  Your employer might try to use court rules called "discovery" to get a copy of your Facebook data to prove you were goofing off.

So you lost your job and apply for another.  Your prospective new employer says, "we really like you but we'd like to see a copy of your Facebook data, just as part of our due diligence on job applicants."  You suddenly remember all those videos you watched ten years ago, when you were younger and more impulsive and watched a lot of weird stuff, which you wouldn't want a future employer to know about.  You decline to provide your Facebook data, and all of a sudden the prospective job evaporates.  

So you try again with another potential employer, this time a contractor for the federal government.  But this job requires a security clearance, and you are asked to provide a copy of your Facebook data so the contractor can evaluate whether or not you'd get a clearance.  You then recall those stupid videos that you uploaded in college during Spring Break--you know, the ones in which you and your pals were rip-roaring drunk and . . .  well, the streaking was the least of it.  WTF do you do now?  How do you respond to this request?

Let's say you're involved in a divorce--half of all married people get divorced, so this sadly is a pretty common event.  Your spouse suspects you've cheated and tries to use those court discovery rules to get a copy of your Facebook data to see where you've been and who you were with.  What if your spouse succeeds?  What will he or she find out?

Perhaps you're a stock market aficionado, and want to get as much information about a company as you can.  You have a friend who works at the company and you traded the company's stock very profitably.  A government official investigating whether or not you got illegal inside information could subpoena your Facebook data to see if you met with or communicated with your friend who works at the company at a time when your friend might have tipped you off.

Let's assume you've been lucky in life and make a gratifying income.   But you find the demands of the IRS insufferable.  So you take a flight to Panama or some other place that has banking secrecy laws you think might keep the Feds at bay.  The IRS gets nosy and subpoenas your Facebook data.  Would they find out you were in Panama or some other place not mentioned in your tax returns?

There are some people who have lived entirely blameless lives--they hewed to the straight and narrow, never told a lie, never smoked, drank, or took illegal drugs, never had dinner alone with anyone other than their spouses, always helped old ladies across the street, and never said a cuss word.   All three of these people have nothing to worry about.  As for the rest of us, that vast pool of data Facebook may have on you is something to bear in mind.  It ain't going nowhere, and you'll have to live with its consequences.

Sunday, March 25, 2018

Your Facebook Data Will Never Be Safe


Unless you've been locked into a backyard bunker waiting for President Trump to start a nuclear war, you know that Facebook is having some rather serious problems with the confidentiality of its users' data.  Data for some 50 million users somehow wound up in the hands of a UK data analysis firm called Cambridge Analytica, which then reportedly used it to assist Donald Trump get elected President of the United States.  Needless to say, the 50 or so million users weren't aware this happened.  Government investigations have started.  A search warrant was executed at Cambridge Analytica and calls have been made for Mark Zuckerberg, Facebook's CEO, to testify before Congress.  But, no matter what happens--Facebook takes more protective measures, government regulation increases, people are tossed in jail--your Facebook data will never be safe.

According to an apocryphal story, bank robber Willie Sutton was asked why he robbed banks and replied, "Because that's where the money is." Facebook's problem is it is where the data is.  Facebook has the best data on the Internet.  It insists on users using their true identities, and it operates a social forum, where it learns who is in a user's social circles, what they think, what they like, what they do, what they want, what they own, where they live, where they work, where they play, with whom they play, what illness and injuries they have, what medications they take, what treatments they get, what music they like, what television and video entertainment they like, where they go on vacation and with whom, what they eat, where they eat, who they like, who they dislike, who they date, who they want to date, who they marry, who they divorce, maybe even who they cheat on their spouses with, how they vote, who they vote for, why they vote a particular way, what their political views are, what their cultural values are, what their religious views are, where they worship, what prejudices and biases they have, what ethnic and racial groups they like or dislike, how they feel about gays, lesbians, transgender people or anyone else, how they feel about this sexual activity or that, etc., etc., etc., so on and so forth.  In other words, Facebook knows AN AWFUL LOT about its users, more than any other website or Internet company. 

Facebook is where the data is--the absolutely best data.  That's why hackers, unscrupulous foreign governments, shady political operators, and all manner of scoundrels and riff raff will continue to swarm around Facebook like a pack of hyenas, snatching whatever data they can get.  As we repeatedly learn just about every week, no repository of data is safe.  Neither governments, military or intelligence organizations, the most sophisticated Internet companies, nor anyone else can keep data safe.  Everyone who has valuable data has been hacked or probably will be hacked some day.  The architecture of the Internet is open, not closed, and true security is simply impossible.  Because Facebook has the crown jewels when it comes to data, the wolves will perennially attack and hack.  And even as Facebook puts up more defenses, the jackals will relentlessly prowl and find new ways to slip through and feed. 

Don't be naive when Facebook tells you they'll find ways to fix the problem.  They've been hoodwinked before, and, being human, they'll be hoodwinked again.  If you're on Facebook, you have a choice to make--have no expectation of privacy at all, or get the hell off of Facebook.

Saturday, March 17, 2018

Donald Trump's Great Weakness


Under pressure from President Trump, Attorney General Jeff Sessions just fired former FBI Deputy Director Andrew McCabe.  On the heels of this announcement, Trump's attorney, John Dowd, called on the Justice Department's Deputy Attorney General, Rod Rosenstein, to close Special Counsel Robert Mueller's investigation into Donald Trump's potential collusion with Russia during and after the 2016 Presidential campaign.  (See https://www.cnn.com/2018/03/17/politics/john-dowd-mueller-russia-investigation/index.html.)  This seemingly heavy-handed announcement could be read to imply that if Rosenstein doesn't close the investigation, he'll be fired. 

But so what?  What if Trump fires Rosenstein, and later engineers the firing of Mueller?  Rosenstein and Mueller could easily become martyrs in the eyes of large numbers of people, and end up making big money at prestigious law firms.  They might also get lucrative book deals and become featured commentators on network television.  Look at what happened when Trump fired FBI Director James Comey:  Comey got a multi-million dollar book deal and a position teaching law (which probably would give him time to write the book). 

But what would happen to Trump if he fired Rosenstein and Mueller?  He would look like a demagogue trying to undermine the rule of law.  He could easily trigger a constitutional crisis, in which there would be considerable pressure on members of his own party to impeach him.  If the Republicans in Congress failed to impeach Trump, they would look weak and ineffectual--just as they usually appear.  Thus weakened, their ability to deliver further on the Republican agenda would diminish.  Trump and his Republican cohorts in Congress would end up flailing around futilely even more than they do now.

Donald Trump's great weakness is he doesn't understand people like Rosenstein and Mueller.  They proceed on the basis of law, truth, principle and integrity.  These concepts are utterly foreign to Trump, who seems to believe that he can use money to solve any problem he has (although the Stormy Daniels contract doesn't seem to be working out so well).  Trump can't effectively deal with Mueller's investigation because he doesn't even begin to understand the rules--in this case, the rule of law.  He threatens, like a fascist dictator, to fire anyone who gets in his way.  But in a nation of law, as America is, Trump can't win because he doesn't want to comply with the law.   He's like a player in a basketball game who wants to move the ball without dribbling and tackle opposing players without being called for a foul.  That's not the way to win the game, and Trump won't win, either.


Sunday, March 4, 2018

Russia's Nuclear Missile Defeat


When Vladimir Putin, Russia's President, recently announced an array of new Russian nuclear weapons (see https://www.cnn.com/2018/03/02/europe/putin-russia-weapons-analysis-intl/index.html), he unwittingly acknowledged another strategic defeat for Russia.  To be an effective threat, these weapons will have to produced in significant numbers.  Russia is relatively poor nation with a falling life expectancy.  The price of petroleum, its primary export, has fallen sharply in recent years, causing economic contraction.  It has massive environmental problems and a slow birth rate that will lead to the same demographic time bomb that bedevils many nations today. By any reasonable estimation, Russia doesn't have the money for these new weapons.

Putin, like a bad general, is fighting the last war.  For understandable reasons, Russians are paranoid about being attacked militarily by other nations.  They suffered terribly at the hands of the Nazis during World War II, losing 20 million or more people.  But generals who prepare for the next war, not the last one, are the ones headed for victory.  Whether or not Putin believes it, America won't attack Russia militarily.  It will only defend itself, as it did recently when Russian mercenaries attacked U.S. troops in Syria.  The lopsided American victory in that instance should give Putin pause about further military engagement with the United States.  But who knows what goes on in his head.

By diverting large sums of money into weapons technology and the building of a new, large nuclear arsenal, Putin guarantees that his nation will be economically crippled for decades.  The United States won the Cold War because its economy vastly outgrew the Soviet economy, and the Soviet Union no longer had the wealth to maintain its Eurasian empire.  It had to break up and it did.  China is far more powerful than Russia today, not because it has better weapons but because it has a far stronger economy.  America, too, is far more powerful because it is economically way ahead of Russia and widening the gap.  By designing and building more nuclear weapons, Putin has put Russia on the path to another defeat.

Monday, February 26, 2018

Are Conservatives More Gullible Than Liberals?

A recently released study from researchers at the University of Southern California found that, during the 2016 Presidential election, conservatives were about 31 times more likely to retweet Russian trolls than liberals.  See https://www.vox.com/policy-and-politics/2018/2/24/17047880/conservatives-amplified-russian-trolls-more-often-than-liberals.  Thus, Russian tweets favoring Donald Trump were far more likely to be amplified by retweeting than Russian tweets favor Hillary Clinton.  Conservatives, the data shows, were more likely to be taken in by Russian fake news than liberals.

It's unclear why.  Perhaps conservatives are more likely to be alarmed by the fear-inducing messages that the trolls tended to send.  Or, liberals may tend to think more critically of what they read before accepting it.  Perhaps both tendencies are factors, or maybe something else is operative.  Whatever the case, anyone who participates in social media (i.e., all two billion or so of you) need to be cautious about accepting what you read.  Facebook, Twitter, Google and other social media websites don't ensure you're reading the truth or anything even remotely close to the truth.  They're starting to understand that acting as conduits for messages, however false, isn't a great business strategy because people will eventually tire of being fed falsehoods.  And social media today is way too heavily laden with falsehoods.  People will eventually go to other websites that more rigorously screen the information they display.  Traditional news services may win in the end.

 By all indications, the measures being taken by Facebook, Twitter, Google and other social media websites to combat fake news are inadequate.  Russian bots flooded Twitter with pro-gun messages after the recent shootings at Marjorie Douglas Stoneham High School in Broward County, Florida.  See https://www.cnn.com/2018/02/16/us/russian-bots-florida-shooting-intl/index.html.  No doubt they tried similar measures in other social media sites.  Don't rely on social media for the truth.  Be cautious.  Be skeptical.  You won't win a political debate by pushing messages from Russian trolls.  Truth will prevail in the end---and that means if you buy into messages from Russian trolls, you'll lose.

Monday, February 5, 2018

Where Is the Stock Market Headed?


With the Dow Jones Industrial Average having dropped over 2,000 points since its peak a week and a half ago, this is the $64,000 (or more) question.  The recent market surge resulted to a large degree from too much optimism.  Market players have selectively focused on the good news (strengthening economy, big corporate tax cut, rising employment levels), while shrugging off the bad news (growing signs of inflation, rising interest rates, and increasing political discord).  Life is like a rose--pretty petals, but thorns as well.  If you ignore the thorns, you'll get an ouchie sooner or later.

So what happens after today's ouchie (1175 points off the Dow)?  The recent market surge seems similar to the valuation-driven bull markets of 1987 and 2000, which resulted in sizable drops of 25% to 30% in the Dow followed by gradual recoveries that took two to three years.  But we should bear in mind an earlier drop off. In 1973, the stock market (measured by the S&P 500) peaked after a long run up, not unlike the one we've had since 2009.  Then, it declined some 40% or more and didn't recover until some seven years later.  The 1970s were also a time of rising inflation and political scandal (Watergate), with the only resignation of a President.  Political turmoil affects economies and stock markets (look at Venezuela, where a lot of folks can't even get a square meal because of political strife).

Expect more market turmoil tomorrow, the next week, the next month, and maybe the next year.  The market could easily drop some more.  We're running out of good news.  There may be little major legislation coming out of Washington, given the political quagmire.  The Fed may go easy on the tightening, but it's not going to cut interest rates simply to support stock prices.  It's already done that, perhaps too much--and today's drop was likely a consequence.  The economy seems to be slowly gaining altitude.  But there's nothing going on that will provide it a quick major boost.  The federal government can't increase the deficit, given its recent deficit-funded splurge with the tax cut bill.  Corporations seem not to be rushing to increase reinvestment of their tax savings.  The Trump administration may spark a trade war with China and other nations.  And the stability of the federal government cannot, in these times that try our souls, be taken for granted.

History teaches that it's not a great idea to sell your stocks in an effort to staunch losses.  People who try to time the market generally fail to get back in and enjoy the resurge that will likely come (although the resurge could be a long time coming). Instead, try to spend less and save more.  Keep your investments diversified.  And don't stop knocking on wood.

Wednesday, January 10, 2018

How to Cash In on Cryptocurrencies


Nowadays, it seems that anything connected to a cryptocurrency or a blockchain is bounding upward in value.  Companies that claim to have something to do with either are seeing huge leaps in market valuation.  People who were worth next to nothing a year or two ago now claim to be millionaires or maybe even billionaires.  There are lots of Cassandras out there warning against this latest fad, including, among others, Warren Buffett (https://www.cnbc.com/2018/01/10/buffett-says-cyrptocurrencies-will-almost-certainly-end-badly.html).  Buying a crypocurrency can be difficult because the markets for these things can be murky.  You may feel like you're getting a pig in a poke.  So how do you profit?

Well, I'm changing my name to CryptoLeo.  I expect my income and net worth to instantly increase by zillions.  Maybe cryptocurrencies are a bubble and will soon become a crisis.  But, as they say, never let a crisis go to waste.  Instead, cash in.