Issue 51

The Libra witch trials

We're back! For those who wondered where the newsletter went, I was off in Japan watching the Wallabies crash and burn out of the Rugby World Cup. Rugby  Australia needs a complete overhaul and while the coach has gone, the  rot runs far deeper. Unfortunately, I'm not sure anyone with sufficient  influence has the backbone to mess with the New South Wales old boys'  club and push for what's required.

Speaking of lacking a backbone,  during a six hour Congressional hearing last week Mark Zuckerberg  basically conceded that his cryptocurrency Libra, as originally defined  in the white paper, is no more. A shame, really, as Libra executed  properly by a company with the resources of Facebook really could have  caused some of the welfare-boosting financial sector disruption that the  world desperately needs.

But the assault on Facebook, the Zuck  and Libra by the House Financial Services Committee, of which Libra was  the centrepiece, makes me certain he doesn't have the stomach to pull it off:

The  roughly six-hour hearing saw Zuckerberg fumble questions from the House  Financial Services Committee about how the external Libra Association  will be funded, what kinds of regulations should apply to Libra, how  Facebook plans to make money from Libra, and how policies like refunding  fraudulent transactions will work.

“Frankly, I’m not sure we  learned anything new here as policy makers,” the ranking Republican on  the committee, Rep. Patrick McHenry, said in a closing statement.

What  Zuckerberg did make clear is that Facebook won't launch Libra without  proper regulatory approval in the U.S., and that Facebook would withdraw  from the Libra Association if the group eventually decided to move  forward on its own without the approval of U.S. regulators. But  Zuckerberg's testimony didn't shed any light on what specific laws  Facebook thinks should govern Libra.

Zuckerberg is  distraught and at this point will clearly do anything to appease the  political class and maintain his 'woke' status. It was, after all, only a  couple of years and several scandals ago that he was travelling around the country,  presumably to boost his profile as 'one of the common people' prior to a  possible 2020 run at the Presidency. He will fold at every opportunity  and waiting for "regulatory approval", for a supposedly disruptive  cryptocurrency, essentially spells the end for what Libra was supposed to be.

Worse, it seems further concessions have already been suggested, with David Marcus - head of Facebook's Libra project contribution - "open to looking at alternative approaches".

Facebook's lack of gumption aside, some of the questioning at the hearing titled "An Examination of Facebook and Its Impact on the Financial Services and Housing Sectors", was disgracefully outlandish:

How  many companies in the Libra association are headed by LGBTQ people?  Isn't it true that Libra is a project of white men? What are you doing  for African Americans whose lives you have ruined? Do you discuss white  supremacy at your far right dinner parties?

Six hours of democracy at its finest. As a recent OpEd in the Wall Street Journal aptly stated, "Facebook is hardly  problem-free (though its effect on elections is grossly exaggerated). In  the annals of mankind, permission-denying politicians are likely to  remain the bigger problem".

RIP Libra and potentially the United  States as disruptor in chief, if the openly anti-innovation House  Financial Services Committee is any representation of the country as a  whole.

Enjoy the rest of this week's issue. Cheers,

— Justin


The bits

Good news from Australia, bad news from India

The  safety / privacy trade-off is one of the more important debates in  which most governments are unwilling to engage (their incentives align  them to a strong security bias). But in Australia at least there is some  limit to the seemingly never-ending erosion of digital privacy:

"An  ambitious but controversial plan for a central identity database of  Australians has been rejected by the Federal Parliament's security and  intelligence committee. The bill [would have allowed] the Department of  Home Affairs to collect, verify and share identity information across  Commonwealth and state and territory governments and included plans for a  face verification service that would make it easier for documents  containing photos of people to be verified online."

Elsewhere, India has copied the EU and dived right into the rabbit hole of worldwide content removal,  attempting to impose its local laws on companies and people in other  countries. I'm not sure how this will play out but it's not good if you  like having a free and open internet.

Learn more:

How to lose billions

Ask  SoftBank, which is playing fast and loose with Japanese pensions by  throwing good money after bad at the Ponzi scheme that is WeWork:

"SoftBank  first committed $3.1 billion in new funding in 2017. Mr. Neumann has  told others that Mr. Son appreciated how he was crazy—but thought that  he needed to be crazier.

Despite We’s growing size, its losses  have been increasing at the same rate as revenue, creating a constant  need for fresh investments.

Meanwhile, numerous other business  lines, including a residential arm, a gym and an office design and  management arm, have all been scaled back or failed to deliver the high  profit margins once expected, people familiar with the businesses said."

Learn more:


Other bits of interest


Image of the week

Don't trust bank valuations:

"With  access to all the same information that public investors saw in the  S-1, Morgan Stanley and Goldman Sachs bankers valued WeWork at $80-100  billion.

Months later, the company's latest valuation is under $8 billion."

This week's data breaches

Remember  the Equifax data breach? All the dirt is being dug up at the  class-action lawsuit against the company and it shows some appalling  data protection practices. For example, both the username and password  for the portal used to managed credit disputes were simply "admin". And  the data it stored? All unencrypted and available through a  "public-facing, widely used website".

The breaches:

That's all for now. If you enjoyed this issue, feel free to share it via email


Issue 51: The Libra witch trials was compiled by Justin Pyvis and delivered on 29 October 2019. Join the conversation on the fediverse at Detrended.net.