Three Things: Day 1 – Tax Day, Ballmer’s Gift, Microsoft

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Day 1: Tax Day
You have today until midnight local time today to file your federal income taxes or file for an extension. As of midnight, Trump owes us yet another federal tax return.

And no, Trump’s federal income tax return for 2016 is NOT under audit as the deadline hasn’t even passed. Even if an audit of Trump’s 2016 filing began tomorrow there’s no excuse for not disclosing what has been filed with the IRS regardless of audit status.

What made America great has been its lower rate of corruption and clear expectations of oversight and governance. What makes America less than great is a failure of governance, lack of transparency, and increasing corruption. Why would any foreign individual, or company, or country invest in the U.S. when they can no longer reasonably expect fairness and security from our government? Trump’s behavior (and that of his family and his corporate holding structure) placing himself beyond the law undermines our strength. This cannot continue.

Steve Ballmer’s gift: USAFacts
Admittedly, I was never very crazy about Ballmer as CEO of Microsoft. He continued Bill Gates’ flawed ideology after Windows reached near-ubiquity, suppressing Microsoft’s value and negatively influencing the tech industry for too long. What a pleasant surprise, though, to learn about his retirement hobby: USAFacts, a Big Data initiative tracing the flow of tax dollars using government data.

The project began after Ballmer’s spouse prodded him to do more philanthropically. He resisted because he paid a lot of taxes; weren’t his tax dollars enough? Mm-hmm.

He learned a lot, and I expect we will be, too, as USAFacts matures. Some ugly truths have already been exposed to people like Ballmer who might not otherwise have looked — like the power of the gun lobby to suppress government reporting, or the inability of children to rise from poverty.

Ballmer’s redeeming himself. I only hope his project can get out in front of the Trump administration’s rapid decimation of government reporting.

Microsoft: a very different gift
Systems administrators who manage Windows-based enterprises aren’t very happy with a change Microsoft made to its security bulletins — they’re gone, replaced by a searchable database.

Which sounds all fine and dandy in theory until reality meets the road. Just read users’ feedback and you’ll quickly grasp additional workload has been pushed off onto administrators who already have quite enough to do. SANS Internet Storm Center looked swamped by the change.

Elimination of the security bulletin format had been expected since last November and anticipated for February. It’s not clear if there is a relationship between the unusual patch pushes February and March and this new security updates database.

One meager upside: malicious hackers will have just as much difficulty (or more) determining what was patched as will Windows administrators.

Speaking of hackers, I should note here I may be a minority report on The Shadow Brokers (TSB). The manner in which the last three months of Windows’ security fixes have been handled — which included many key vulnerabilities in advance of TSB’s latest NSA toolkit dump — suggests somebody inside Microsoft already knew what to patch months ago. Perhaps even last year when the change to security bulletins was announced given the amount of lead time needed to fix complex vulnerabilities.

Further, Microsoft had been compromised once some years ago that we know of by a Russian spy. Recall the roundup of the Illegals Program by FBI in late June 2010 when ten Russian sleeper agents including Anna Chapman were taken into custody and deported less than two weeks later in a spy swap. An eleventh agent had been picked up in Seattle where he worked for Microsoft. Reports said he was a only entry-level software tester who had established employment under his real name, Alexey Karetnikov. He first worked as an intern for Microsoft in the summer of 2008, then hired on full time in October 2009 after a gap year in Russia. (Karetnikov wasn’t the only Illegal Program spy in the Seattle area; a spy using the name ‘Tracey Foley‘ had been hired to work for a real estate company’s Seattle branch but had not fully established a presence in the northwest by the time she was arrested. There didn’t appear to be an immediate link between Foley and Microsoft or any Seattle-area technology company.)

What did Microsoft do after they learned about Karetnikov’s presence? When did they learn about him — before his arrest, or only when the arrest took place? How did MSFT mitigate risks, including the possibility there were other undisclosed spies in their ranks? Is TSB really a means by which now-useless or exposed tools are rolled up while being used as a honeypot? Could explain why linguists say TSB is likely English-speaking masquerading as non-English speaker.

We’ll probably never know for sure.

A little less than seven hours until tax filing deadline here in Eastern Daylight timezone. Tick-tock.

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Three Things: Not-So-Neutral, Day 2 and Reading

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This house was occupied by outside forces this long holiday weekend, obstructing output. Hope your weekend was similarly occupied by loved ones. Here’s three things for today.

It’s Day 2, Donald
At least 150 Tax March rallies across the country on Saturday reflected the public’s opinion about Trump’s tax returns — he must disclose them. Predictable locations participated, like New York City, but when red state cities and towns like Florida’s West Palm Beach have marches it’s an indicator.

Where are your tax returns, Trump? And don’t give us the “under audit” excuse yet again like you did through Spicer this afternoon. All previous presidents have been automatically audited while in office and still disclosed their returns. Nor are we going to buy your administration’s trash talk about the Tax Marches; we know what’s up with organized white supremacist provokatsiya.

Projection, much?

Net-not-so-Neutral
The big guys in technology — Apple, Facebook, Google, Microsoft, Netflix, Twitter, more — are slowly stirring from their post-inauguration torpor on net neutrality and the threat to their businesses non-neutrality poses. Their industry group, the Internet Association, expressed their concerns last week to the Federal Communications Commission about the FCC Chair Ajit Pai’s intent to kill net neutrality regulations established under the Obama administration.

Kind of slow on the uptake, dudes. Could have seen this coming based on Pai’s anti-neutrality stance when he served as an FCC commissioner. Also could have easily predicted Pai’s position based on the current administration’s drive against regulations.

And Pai’s move to reduce FCC oversight of the internet by shifting it to the Federal Trade Commission is a blowjob gift for the telcos — in spite of the fact more communications travel over the internet, a move to the FTC reduces exposure of communications to existing communications regulations. This does not serve the public’s interest.

There’s an alternate tack members of the Internet Association could take, if a little pricey and radical: they could simply buy the telcos. Google could acquire AT&T which has been a major PITA obstructing competition from Google Fiber. Apple could just buy Verizon for iPhone service and Facebook could snap up CenturyLink. The Internet Association could take on a role as mediator addressing traffic issues between them.

And then let’s see what happens to reducing regulation and net neutrality. Of course this creates an entirely new set of challenges with regard to privacy, but I’d rather move toward regulations to address them under FCC. (And I’d really rather digital morons like Rep. Jim Sensenbrenner (R-WI) had nothing to do with the intersection of privacy and technology when he clearly doesn’t grasp the internet is telecommunications deserving the same privacy as landlines.)

Speaking of acquisitions, there’s speculation Apple could buy Disney which includes ABC and other content subsidiaries like ESPN. Looks like wishful thinking right now on part of analysts, but if FCC’s Pai continues shredding net neutrality, it makes more sense for Apple (and other internet companies) to snap up companies which make content, cutting out carriers or forcing them to pay for Apple’s content.

Longreads
Here’s a few things worth your time during a commute or lunch hour this week:

A look at the end of Gaullism as France approaches its election.

Essay: Friendship as a Civic Democratic Practice — that’s little d democratic here; Ivy Schweitzer asks if we can’t look to our friendships to fix our national political schism. (Me? On a limited basis; I can’t be friends with Nazis.)

Marc Ambinder on U.S. government continuity — worth a read, but I’ve long had a nasty feeling continuity plans were changed because of 9/11 and they’re in a classified executive order if I’m right.

Interesting look at impact of open-source citizen investigations on Russian disinformation — focal point of this analysis is the doomed 2014 Malaysian Air flight MH17.

Those should keep you busy. Day 1 ahead — last day to file income taxes without penalty or file for an extension. Time, tide, and taxes wait for no man, Trump.

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Day 33: Happy Some Saint’s Day

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I know, it’s St. Patrick’s Day, not just any saint but the patron saint of Ireland. It’s certainly not St. Trump’s Day, that’s for sure.

Trump’s budget proposal is the furthest thing from saintly — cutting federal funding to the Community Development Block Grant (CDBG) is just one disgusting example. CDBG provides grants to the Meals on Wheels (MoW) program, which feeds the home-ridden elderly and disabled as well as kids in after-school programs. Office of Management and Budget Director Mick Mulvaney says MoW is “not showing any results.” No more fishes and loaves for you, sickly/old/poor people, if Congress goes along with this nonsense. I guess your desiccated, malnourished corpses are the kind of results this administration wants to see.

According to St. Patrick’s ‘Confessio‘ — an autobiography-cum-confession — he overcame kidnapping from Scotland, enslavement by the Irish, and eventually converted Irish to Catholicism. In contrast, Trump was born with a silver spoon and treated his fellow man (and some family) like crap throughout his lifetime. Definitely not saintly. And definitely not up to converting those who aren’t already his hardcore faithful adherents.

Stuff of the Irish:

Irish PM Enda Kenny visits Trump and asks for leniency for illegal Irish aliens — Let’s be frank about this issue: Trump’s probably fine with them (meaning Bannon is fine with them, too) because these aliens are probably white and Christian. Got to give it to PM Kenny, though, for this nice bit of snark:

“They say the Irish have the capacity to change everything…I just saw the president of the United States read from his script, entirely.”

Wonder if Trump was ballsy enough to go for an other conflict of interest and complain about the sea wall he wants for his Doobeg golf course resort.

British Brexit secretary David Davis says border checks between North Ireland and Ireland possible post-Brexit — He did qualify them as “light” customs checks, saying,

“There are already customs checks between Northern Ireland and the Republic of Ireland because there are excise differences, but they are done in a very light way. … There would be customs checks, [but] that does not mean we demur from our position of wanting to have a very light border, no hard border.”

But wait…what do the Irish think of this?

Sinn Féin MEP tells Theresa May Brexit border checks in Ireland can go ‘where the sun don’t shine’ — And there it is. I didn’t even paraphrase that hed, that’s exactly what The Irish Post wrote. Here’s exactly what MEP Martina Anderson said:

“Theresa, your notion of a border, hard and soft, stick it where the sun doesn’t shine ‘cos you’re not putting it in Ireland.”

Ouch. No mincing words there.

Women won largest number of seats ever in North Ireland’s assembly election — Sinn Féin leads in gender parity as women represent 41% of its Member of the Legislative Assembly. Between the surge of women in NI’s National Assembly and the increased weighting of representation by Sinn Féin in both NI and Ireland’s National Parliament, the reaction toward the UK and Brexit will be quite different from expectations nine months ago.

Banks may be moving to Dublin from London because of Brexit — This report says Ireland is surprised; I don’t know why, given the amount of business conducted in English language in Dublin as compared to any other location like Paris, Brussels, or Frankfurt. Ireland has been a tax haven and a center for both insurance and technology for a couple decades, too. Perhaps Ireland ought to be more lenient toward educated illegal aliens from the U.S. if it’s looking to staff up its financial sector quickly.

Op-ed: ‘Another day, another Brexit lie exposed’ — Theresa May has only increased Irish sympathies for Scotland with her rejection of a second independence referendum, as if all the other Brexit fail wasn’t enough. Could this animus be enough to unite Ireland, but against Britain and its “Tory public schoolboys”?

That’s a wrap on this work week and Day 33 in our countdown to Tax Day. Don’t drink green beer. Just don’t.

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Stephen Miller’s and Trump’s Gross Re-Politicization of DOJ

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There was some legitimate concern about inappropriate machination of the Department of Justice when Trump named and confirmed Jeff Sessions as his Attorney General. Typical discussion followed this by Isaac Arnsdorf at Politico:

Donald Trump suggested on the campaign trail that he could use the Justice Department to fulfill his political agenda, taunting Hillary Clinton by threatening to throw her in jail over her email scandal.

Now, Sen. Jeff Sessions, Trump’s pick for attorney general, will have to decide whether to follow his predecessors by vowing to not let politics drive the DOJ’s decision-making.

That was one, and a serious, level of concern. Today we find said concern not close to being deep enough as to how the Trump White House would try to run Justice as merely a lever of their extreme politics.

But, via the New York Daily News, comes a little noticed, and truly frightening report of just how renegade and ridiculous the “fine tuned machine” the Trump White House is determined to be in politicizing the DOJ. In an article captioned “Stephen Miller called Brooklyn U.S. Attorney at home and told him how to defend travel ban in court”, comes the stunning news that:

In the chaotic hours after President Trump signed on a Friday afternoon the sloppily written executive order meant to fulfill his Muslim ban campaign promise, Stephen Miller called the home of Robert Capers to dictate to the U.S. Attorney for the Eastern District how he should defend that order at a Saturday emergency federal court hearing.

That’s according to a federal law enforcement official with knowledge of the call, which happened as Department of Justice attorneys cancelled plans, found babysitters and rushed back to their Brooklyn office to try and find out what exactly it was they were defending and who was being affected by it — how many people were already being held in America, how many were being barred from arriving here and the exact status of each person.

The full article at the NYDN is mandatory reading, but let that sink in for a second. 31 year old Stephen Miller, a wet behind the ears extreme right wing ideologue with white nationalist leanings and NO, repeat NO legal training, much less law degree, called up a United States Attorney – at home! – to “dictate” how the DOJ would operate in an emergency litigation situation in an United States District Court.

Stunning is too weak of a response. Shocking is insufficient. It is actually hard to know what the proper words for this are.

I asked Matthew A. Miller, former OPA head under the Obama DOJ for a thought on the implications of Stephen Miller’s hubris in this instance. His reply was:

The last time a White House started dictating demands to U.S. attorneys, the sitting Attorney General had to resign in disgrace. This raises yet another in a series of questions about whether the Sessions Justice Department will be independent from the Trump White House.

Exactly. I would have said “unprecedented” above along with “stunning” and “shocking”, but for what occurred during a period of the Bush/Cheney regime when the interaction and control of the DOJ from the White House was extreme. And, ultimately, blown up as beyond unacceptable and appropriate by more reasoned minds and authorities. And, I might add, substantially due to the Fourth Estate of the press, that Trump blithely and ignorantly describes as “enemies of the American people”.

Yes, it is really that important of a moment now with Stephen Miller (note: NO relation to Matthew A. Miller) and the extreme hubris and lack of institutional awareness, competence or control, and obvious disdain for any, by the Trump Administration.

Back in 2007 Senator Sheldon Whitehouse created, and displayed at a Senate hearing, a stunning graphic displaying the shocking difference between communication between the Clinton White House and DOJ, and the ridiculous political input that the Bush Cheney White House had to DOJ.

With the grossly inappropriate statements of President Donald Trump as to how “he” will direct prosecutions of political enemies and other criminal and military defendants, leakers and others, to the literally insane conduct of Stephen Miller here, it is time to remember Senator Whitehouse’s chart.

It is also time to wonder if Sheldon Whitehouse and other members of the Senate Judiciary Committee have the cojones to take the fight for the Constitution and integrity of the justice system once again to a renegade White House. And the Trump White House has quickly made the Bush/Cheney White house look better in the rear view mirror, as truly craven as they were.

And, yes, the situation is exactly that dire if you recall the same Stephen Miller, being sent out and directed to all the Sunday political shows to declare and mandate that:

“…our opponents, the media and the whole world will soon see as we begin to take further actions, that the powers of the president to protect our country are very substantial and will not be questioned.”

This is straight up an Article II Branch declaration of pure tyranny by Stephen Miller and Trump. This is a serious problem, and this is an Administration making good on its promise and determination in that regard.

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Wednesday: Tick-Tock Stock

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In this post: A short film depicts a failed/successful love story found in electronic debris and the tick-tock behind yesterday’s stock market’s scramble.

Short film for this week by Victoria Mapplebeck examines personal technology detritus. Some of us have been through many generations of electronic devices used for communications, in which highly intimate details may be found. In Mapplebeck’s case, a failed love story followed by a lifelong relationship are bounded by text messages. What’s in your digital scrap heap? What would pixels you’ve left behind tell about you? Will you decode them as Mapplebeck has, or will they be decrypted by others in this life or after you’ve left it? Food for thought.

Tick-tock stock
Something doesn’t sit right about the brief tanking of Boeing’s stock yesterday, besides the absurdity of a president-elect rage-tweeting about the company just before the stock market opened. Let’s take a look at how events unfolded.

FRI 02-DEC-2016 12:00-14:00 CST — Aircraft manufacturer Boeing CEO Dennis Muilenburg gave a keynote speech to Illinois Manufacturers Association’s annual luncheon in Chicago. He advocated the incoming Trump administration to keep and reopen the Export-Import Bank (Ex-Im Bank) as it has aided U.S. manufacturers like Boeing to do more business overseas when other forms of financing are unavailable.

FRI 02-DEC-2016 17:58 EST — Bloomberg published a report on Muilenburg’s keynote, with an unspecified update at 19:29 EST.

SAT 03-DEC-2016

SUN 04-DEC-2016

MON 05-DEC-2016 15:24 EST — Washington Post reported, As Trump vows to stop flow of jobs overseas, U.S. plans to make fighter jets in India

TUE 06-DEC-2016 6:40 EST — According to a summary, Fox & Friends cited the Washington Post report that Boeing is building F-16 and F-18 jets in India instead of in the U.S.

TUE 06-DEC-2016 8:30 EST — Chicago Tribune published a story on Muilenburg’s remarks on Trump’s trade policies. The piece does not mention Ex-Im Bank or alternate financing to encourage trade but focuses more closely on Trump’s approach to China and free trade agreements.

TUE 06-DEC-2016 8:52 EST — Trump tweeted, “Boeing is building a brand new 747 Air Force One for future presidents, but costs are out of control, more than $4 billion. Cancel order!”, apparently misunderstanding the costs in the contract and the nature of the aircraft specifications, which must include the ability withstand certain military threats, unlike any aircraft Trump has purchased for himself or his businesses.

TUE 06-DEC-2016 — 10 seconds later, the market began to sell off of Boeing stock. (In comparison, average human response time required for braking while driving is +3 seconds)

TUE 06-DEC-2016 9:30 EST — New York Stock Exchange opened and the sell-off continued (Note that 9:30 EST = 14:30 London (LSE) = 15:30 Frankfurt (FWB) = 17:30 Moscow (RTS) and all these markets were also open at the same time.)

TUE 06-DEC-2016 ~15:30 EST — A CNBC report asked if algorithms traded on Trump’s tweet.

TUE 06-DEC-2016 12:50 EST — The Atlantic’s David Frum tweeted, asking if “we are to accept [Trump’s] unverified word that he sold all his stocks in June?” Frum linked to The Hill’s report, Boeing Responds to Trump: Air Force One deal is for $170 Million, not $4 Billon.

TUE 06-DEC-2016 18:45 EST — Senator Ron Wyden replied, “.@davidfrum @RealDonaldTrump: I look forward to seeing proof of these stock sales as required by law: https://www2.oge.gov/Web/278eGuide.nsf/Content/Chapter~OGE+Form+278e“, referring to U.S. Office of Government Ethics’ OGE Form 278e.

The timeline spawns questions:

— What’s in Trump’s current investment portfolio besides real estate? It’s alleged Trump sold his stocks in June this year, but there is no evidence to that effect. (Timing of such sales is also interesting based on the outcome of the Brexit referendum and Trump’s relationship with pro-Brexit Ukip front man Nigel Farage, but that’s another story.) Will Trump comply with U.S. law and inform the government of his investments? Or will he be as opaque and difficult as he has been so far about his tax returns?

— Trump has been in trouble with the Federal Trade Commission and the Securities and Exchange Commission before, paying $750,000 in fines back in 1988 without admitting “any violation of the law” after he had purchased large quantities of casino company stock in 1986 without proper notice under the Hart-Scott-Rodino Act. The transactions then had been masked as “put-call option agreements.” Is it possible Trump or someone close to him has done the same with Boeing stock, avoiding high-frequency trading but operating within a tight time frame?

— When exactly did Trump hear about Muilenburg’s comments; are we to believe he didn’t see the Bloomberg report and relied on the Chicago tribune piece as some suggest? Or instead was he riled up by Fox & Friends’ second-hand report, or by the original Washington Post article on Monday afternoon? It seems odd that two to three entire days went by after Muilenburg’s keynote without reaction until Tuesday morning.

— Was Trump’s real problem with Boeing the creation of jobs in the U.S., continuing the craptastic narrative behind the Carrier Corporation jobs story last week? Was the rage-tweet Tuesday morning about a perceived attack on Trump’s China policy? Or was it really about Trump’s position on Ex-Im Bank, masked by the three-plus day delay in response and two other news pegs (Fox & Friends and Chicago Tribune)?

— If Trump’s real problem with Boeing is Muilenburg’s protective stance on Ex-Im Bank which Trump wants to eliminate, why is Trump so adamant that the U.S. can’t provide alternative financing to encourage purchasing of U.S. goods and services? Why would he refer to Ex-Im Bank as “featherbedding”?

— If Trump has a problem with Muilenburg’s position on trade policy, why is Boeing’s former CEO Jim McInerney meeting with Trump during the first week of the administration as part of the “kitchen cabinet”? Especially since McInerney derided Trump’s trade policies earlier this year?

The timing and tone of Trump’s tweet just don’t make sense given the complexity of Boeing’s situation. How are we supposed to believe his rage-tweet was only about the (misunderstood) cost of the next Air Force One aircraft — the guy who’s going to cost us more than a billion dollars during his term for Secret Service at Trump Towers in NYC?

Especially since Boeing is a client renting office space from a Trump building in Turkey.

Especially since Boeing’s contract to build fighter jets in India maintains a relationship with a potential partner against the spread of radical Islamic fundamentalism.

Especially since Boeing’s relationship with Chinese companies aided by Ex-Im Bank financing creates jobs here in the U.S. (though at a possible loss to Russian competitor United Aircraft Corporation).

Longread: Iceland’s Birgitta Jónsdóttir on reforming democracy
This piece was written nearly two years ago by Jónsdóttir who had been elected an MP in 2013 and co-founded the country’s Pirate Party in 2012. Her concerns then about of the rise of totalitarianism, fascism, and populism, appear prescient now. Worth the time to read what Iceland was doing to address these threats as we may need to do the same here in a hurry. Bonus: she’s a reminder of what WikiLeaks once was for comparison against the organization we see today.

À demain, mes copains!

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Thursday: Science Fair

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In this roundup: Google’s Science Fair, keeping one eye peeled, and odd news.

Featured video here profiles the grand prize winner of Google’s sixth annual science fair. The caliber of work this program yields every year is pretty amazing. I hope Google or its parent Alphabet helps these contestants protect their work from corporate poaching while encouraging them to continue their research. This soil moistener, for example, is something a few companies would like to get their hands on, as orange peels and avocados are surely less expensive than existing superabsorbent polymers (SAPs) currently used as soil moisteners.

What this youngster may not have thought about as she focused on drought-stricken farms, is that SAPs are used in other non-farming products. Diapers in particular use SAPs — and that’s a massive market dwarfing the demand for soil moisteners. Let’s hope this teen’s work does what she wants it to do rather than getting snapped up by mega-corps with other uses for her research.

What I’m watching

Strange/odd news

  • FCC wants search history under your control (Bloomberg) — Big social media firms’ use of your search history is regulated by the FTC. As more telecom/ISPs provide broadband internet services, their access to your search history has not been safe from predatory resale. The FCC wants to protect search history, ensuring it cannot be used by telecom/ISPs and third parties without subscribers’ permission. A vote on this rule is scheduled October 27th. Keep in mind the data from Yahoo’s subscribers is what made it such an appealing buy-out target for telecom Verizon.
  • ‘Fusion’ RNA may not indicate cancer but chimeric tissue (ScienceDaily) — In spite of the way we rely on what we do know, we still don’t know a lot about genetics. This particular study suggests cancer tests relying on detection of ‘fusion’ RNA may not find cancer but chimeric tissue. (This is why I worry about CRISPR technology, but that’s another story.)
  • New study says Tabby’s Star even stranger (Carnegie) — Two researchers from Carnegie Institution and Caltech analyzed data on star KIC 8462852, also known as Tabby’s Star, named for Yale University researcher Tabetha Boyajian. They found the star had indeed dimmed by 14 percent between 1890 and 1989, confirming work by another Louisiana State researcher. The pattern of dimming — slow at first and now rapidly increasing — doesn’t match theories the star has been obstructed by orbiting planets or by a comet swarm. The pattern may support the theory that an advanced life form has built a Dyson sphere to harvest the star’s energy.

Longread: Surprisingly, Max Boot
Boot’s not on my usual list of reads, but this article spells out one of the biggest problems with this election: America is turning into a confederacy of dunces. Having just finished putting my oldest through college and launched my youngest in his freshman year at university, I can agree wholeheartedly that our education system is utterly jacked up. I can tell you from experience that my kids visited state and/or U.S. government three times during their K-12 public schooling, but I know the majority of their cohort did not retain what they learned in a way which will encourage civic understanding and participation. Add a complete lack of statewide and nationwide computer education and our youth are not prepared to make informed decisions about governance using technology to aid their choices. And the GOP, having undermined education for decades with its whining about taxes and spending and teaching to standards, is reaping the harvest of its refusal to do more than the minimum. They’ve insured indoctrination instead of real knowledge. Enjoy your party’s death at Trump’s hands.

¡Ya basta! Hope you are all someplace snug and safe this evening.

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Is Trump’s $915 Million Tax Loss Connected to an Exotic Tax Shelter?

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293015Guest Post by Robert J. Lord

The news is out about Donald Trump’s $915 million of tax losses.

The real question is whether those losses were real economic losses, or just a tax artifice created by a clever planner.

Real estate developers like Trump benefit tax-wise from provisions that allow them to claim losses attributable to borrowed money. But those provisions are not a complete giveaway if the borrowing ultimately is repaid.

If the borrowing is not repaid, as we know to be the case of Trump’s casino debt, the tax law generally requires the person whose debt is forgiven to recognize income, which typically erases the tax benefit of those earlier losses. Even in those situations where debt forgiveness does not result in income, the borrower’s tax attributes are reduced by the amount of debt forgiven, and unused losses are at the top of the list of those tax attributes to be trimmed.

Could Trump have figured out how to have his cake and eat it too – that is, keep his losses for tax purposes, even while being excused from having to repay the borrowed money on which those losses were based? Yes, it is possible!

One possibility is that Trump’s lenders agreed not to expressly forgive Trump’s debt, but instead to sell their rights as lender for pennies on the dollar to an individual or entity close to Trump, such that it would never be enforced. This strategy is referred to as “parking” the debt. Some tax professionals like John Hempton at Bronte Capital and commentators like Josh Marshall at TPM have speculated this is the artifice Trump and his advisors engineered to preserve Trump’s huge losses and thus shelter close to a billion of future income from tax.

Does the tax law permit the parking of debt that effectively has been forgiven? Certainly not by design. If Trump parked the debt with a close relative, the tax code would have treated it as if the debt was forgiven.

Trump could have parked the debt with someone not so closely related or with a friend, but not if had an agreement that said person would not enforce the debt. Which means he’d be at severe risk, as the person could turn on him and enforce the debt. That would have been almost a billion dollar risk. It is hard to imagine Trump, his accountants and attorneys permitting that.

Could Trump have parked the debt with a corporation, trust or partnership he controlled? In a word, yes. Congress tried to prevent debtors from circumventing the law this way as well, but they inadvertently created a small crack in the law, which Trump just may have been able to squeeze through.

The tax code expressly identifies corporations, partnerships and trusts deemed too close to a debtor to purchase his debt without causing the debt to be deemed forgiven for tax purposes. Those rules were well written. After they were written, however, and not long before Trump faced his financial difficulties, Congress created a new type of entity for tax purposes only, the “real estate mortgage investment conduit,” or REMIC. Those rules state, in no uncertain terms, that certain partnerships, corporations and trusts become something else for tax purposes. They are expressly NOT to be treated as partnerships, corporations or trusts. Thus, unwittingly, Congress created a gaping yet little noticed hole in the rules that prevent parking debt with a controlled corporation, trust or partnership.

And Trump may have seized on Congress’ mistake.

The REMIC rules were enacted in 1986 to facilitate investment in mortgage-backed securities (yes, those securities that crashed the economy in 2008). A REMIC is a partnership, corporation or trust under the law of the state in which it is formed (usually, Delaware) that holds almost exclusively interests in mortgage debt, and satisfies a few additional statutory requirements related to the type of ownership interests (for example, corporate stock, partnership interests, or beneficial interests in a trust) it issues.

Congress anticipated that REMICs would hold entire pools of mortgage interests, but never specified a minimum number, which means a REMIC might hold only one mortgage – for example, the mortgage on a Trump casino – and still qualify. Or it could be multiple similar obligations.

A few clever tax lawyers realized that by qualifying a partnership, corporation or trust as a bastardized form of REMIC, they could circumvent the rules that prevent the parking of debt with a controlled entity to avoid debt forgiveness income.

Trump’s situation quite clearly lent itself to this exotic strategy. If he used a REMIC he controlled to purchase the mortgage debt on one or more of his casinos (and/or other properties) at a deep discount, the rules that prevent debt parking would not have applied to him.

The bottom line: Trump indeed could have used a debt parking strategy to preserve close to a billion dollars in losses for tax purposes even though he avoided the economic loss on which those tax losses were based.

Did Trump employ this strategy? Nobody knows yet, but it would explain why those losses still showed up on his tax return in 1995 and how he gamed the system for an enormous tax windfall.

The secretive and shady nature of whatever avoidance scheme Trump has used, which would clearly be on the edge of legality, even if putatively legal as Trump claims, would also very easily explain why Trump steadfastly refuses to make public any more of his tax return information.

It is also exactly why the public is entitled to see his convoluted machinations and judge for themselves his honesty. And, remember, all statutes of limitation, both criminal and civil, have long ago expired as to the 1995 and surrounding years tax returns. There is no legitimate reason whatsoever Trump cannot release them. Other than fear that what he is hiding is exposed.

Robert J. Lord, a tax lawyer and former Congressional candidate, is an associate fellow at the Institute for Policy Studies. Bob previously served as an adjunct faculty member at the Arizona State University School of Law. Bob’s work focuses on the relationship of tax law to inequality. He contributes to both the Inequality.org website and to OtherWords, the Institute’s national syndicated editorial service. Bob also is a staff member at Blog For Arizona, the leading political blog in Arizona.

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Friday: Fusion

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In this roundup: Dakota Access Pipeline news, Hawaiian sovereignty and other indigenous peoples news, the death of space art, and fusion jazz.

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Thursday: Another Grungey Anniversary Observed

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In this roundup: Recalling 25 years of Nirvana’s Nevermind, petro-pipeline-economic challenges, lead poisoning, anthrax, and cops gone wild. Read more →

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Wednesday: Big Wheels Turning

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Hard to believe this was made in 1982. Yeah, the production quality doesn’t match today’s digital capabilities, but the story itself seems really prescient. How can an ethically-compromised bloviating bigot manage to fumble his way into office?

Now you know. Bet you can even offer constructive feedback on how director Danny DeVito could update this script for today’s social media-enhanced election cycle.

Self-Driving Vehicles

  • NHTSA issues guidelines for self-driving cars (Detroit Free Press) — FINALLY. But is it a bit too late now that Uber already has a fleet on the streets of Pittsburgh and Tesla has been running beta cars? Let’s face it: the federal government has been very slow to acknowledge the rise of artificial intelligence in any field, let alone the risks inherent in computer programming used in vehicles. We’re literally at the end of a two-term presidency, on the cusp of entirely new policies toward transportation, and NOW the NHTSA steps in? We need to demand better and faster rather than this future-shocked laggy response from government — and that goes for Congress as well as the White House. Congress fails to see the importance of early regulation in spite of adequate warning:

    Legislators warned automakers at the 15 March Senate hearing that the governing body took a dim view of the industry’s ability to self-regulate. “Someone is going to die in this technology,” Duke University roboticist Missy Cummings told the US Senate during a tense hearing where she testified alongside representatives from General Motors and Delphi Automotive, among others.

    Senators Ed Markey and Richard Blumenthal, who questioned car executives at the hearing, had cosponsored a 2015 bill to regulate self-driving automobiles. The bill was referred to committee and never returned to the floor. [source: Guardian]

    In the mean time, we have an initial 15-point guideline the NHTSA wants to address; are they enough? Is a guideline enough? Witness Volkswagen’s years-long fraud, flouting laws; without more serious consequences, would a company with Volkswagen’s ethics pay any heed at all to mere guidelines? Are you ready to drive on the road with nothing but non-binding guidelines to hold makers of autonomous cars accountable?

  • Multiple Tesla car models hackable (Keen Security Lab) — Check this video on YouTube. At first this seems like an innocuous problem, just lights, mirrors, door locks…and then * boom * the brakes while driving. These same functions would also be controlled by AI in a self-driving car, by the way, and they’re already on the road. This is exactly what I mean by the feds being slow to acknowledge AI’s rise.
  • ‘OMG COOL’-like impressions from early self-driving Uber passengers (Pittsburgh Post-Gazette) — Criminy. The naïveté is astonishing. Of course this technology seems so safe and techno-cool when you have an Uber engineer and programmer along for the ride, offering the illusion of safety. Like having a seasoned, licensed taxi driver. Why not just pay for an actual human to drive?
  • Tesla caught in back-and-forth with Mobileye (multiple sources) — After analyzing the May 2016 fatal accident in Florida involving Tesla’s semi-autonomous driving system, Tesla tweaked the system. The gist of the fatal accident appears to have been a false-positive misinterpretation of the semi-trailer as an overhead road sign, for which a vehicle would not slow down. But this particular accident alone didn’t set off a dispute between Tesla and the vendor for its Autopilot system, Mobileye. Another fatal accident in China which occurred in January was blamed on Tesla’s Autopilot — but that, too, was not the point of conflict between Tesla and its vendor. Mobileye apparently took issue with Tesla over “hands on” versus “hands-free” operation; the computer vision manufacturer’s 16-SEP press release claims Tesla said the Autopilot system would be hands on but was rolled out in 2015 as hands-free. Mobileye may also have taken issue with how aggressively Tesla was pursuing its own computer vision technology even before the two companies agreed to end their relationship this past July.  A volley of news stories over the last two weeks suggest there’s more going on than the hands on versus hands-free issue. Interestingly enough, the burst of stories began just after a hacker discovered there’s a previously undisclosed dash cam capturing shots of Tesla vehicle operations — and yet only a very small number of the flurry of stories mentioned this development. Hmm. Unfortunately, the dash cam feature would not have captured snaps for the two known fatal accidents because the nature of the accidents prevented the camera from sending images to Tesla servers.

Artificial Intelligence

  • The fall of humans is upon us with our help (Forbes) — this article asks what happens when white collar jobs are replaced by artificial intelligence. Oh, how nice, Forbes, that you worry about the white collar dudes like yourselves but not the blue collar workers already being replaced.How about discussing alternative employment for 3.5 million truck drivers?
    Or the approximately 230,000 taxi drivers?
    How about subway, streetcar, and tram operators (number of which I don’t currently have a number)?
    How about the administrative jobs supporting these workers?This is just a portion of transportation alone which will be affected by the introduction of AI in self-driving/autonomous vehicles. What about other blue collar jobs at risk — like fast food workers, of which there are 3.5 million? And we wonder why Trump appeals to a certain portion of the working class. He won’t be informed at all about this, will not have a solution except to remove persons of color as competition for employment. But the left must develop a cogent response to this risk immediately. It’s already here, the rise of machines as AI and algorithmic replacements for humans. Let’s not wait for the next Luddite rebellion V.2.0 — or is Trump’s current support the rebellion’s inception?
  • But every business needs AI! (Forbes) — Uh…no conflict here at all with the previous article. Nope. Just playing the refs. Save America, people, just keep buying!(By the way, note how this contributor touts Hello Barbie chatbot as a positive sign, though Mattel’s internet-enabled Barbie products have had some serious problems with security.)
  • The meta-threat of artificial intelligence (MIT Technology Review) — Doubt my opinion? Don’t take it from me, then, take it from experts including one who plans to make a fortune from AI — like Elon Musk.

Longread: Academia becomes the new white collar underclass
You may have noted Long Island University-Brooklyn’s 12-day lockout which was not really resolved last week but deferred by a contract extension. The dispute originated over a pay gap between Brooklyn and two other better paid LIU campuses. Ridiculous sticking point, given the small distance between these campuses LIU barred instructors from campus and halted their benefits during the lockout. Students walked out, infuriated by the temps who subbed in for the locked-out instructors — a cafeteria worker in one case filled in for an English instructor. LIU’s walkout won’t be the only such conflict over academic wages. To understand the scale of the problem, you’ll want to read this piece at Guernica, which explains how academia is being shaken down across the U.S., not just in Brooklyn. I remember asking an academic administrator back in 2006 what would happen when secondary education was commodified; they couldn’t imagine it ever happening. And now the future has arrived. What are we going to do about this while retaining U.S. standard in education?

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