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Ann Coulter may be one of the most-hated women in America (by half the country, anyway) but that doesn't change what happened with her and Delta.

She paid for an assigned and premium seat.  She was assigned that seat.  The airline then moved her to give that seat to someone else.

Folks, this isn't "overbooking", but it is fraud.

Contract of carriage or no, the facts are simple in this sort of situation.  Today airlines do not give you assigned seats until you get to the airport unless you pay an extra fee.  That is, an assigned seat is no longer part of your "base fare", it is an explicit service for which you pay.

Once you've paid you've had offer, acceptance and an act in furtherance of performance has taken place.

That's a binding contract -- period.

Now the airlines claim there's an "overriding" contract of carriage, but there's a common-law fraud problem with their claim since (1) you can't negotiate that contract; it is a contract of adhesion and (2) the airlines own actions contravened their boilerplate language when they took additional money for said assigned, specific and "premium" seat.

If the airlines want to act like a bus line where there are no assigned seats (ala the now-extinct People's Express) that's fine.  But they want it both ways: They want to charge you for an assigned and selected seat and then refuse to honor the deal on the terms they designed and offered when convenient for them.

That's fraud; knowingly and intentionally inducing you to pay money for something they do not intend to deliver all of the time is in fact fraud.

The argument of exigence (e.g. a legitimate emergency) doesn't apply in this case; that, of course, is a legitimate point if it exists but in this specific case there was no emergency.

Just a desire to screw someone -- and whether it was intentionally aimed at her or not does not matter.

These companies all need to have their executives face criminal prison time for this crap.  They're fully able to stop it and the bottom line is this: If you sell something and collect a fee for it then you're obligated to deliver it absent some legitimate exigent circumstance, not choose randomly to screw the person who paid you and give what that person paid for to someone else.

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2017-07-22 07:00 by Karl Denninger
in Technology , 198 references
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As is allegedly claimed you can buy nearly anything on the so-called "Darknet", a network of web sites linked by Tor that supposedly makes you "anonymous."

Well, not really anonymous -- if you want to transact anyway.

Two "newer" sites for drugs were recently shut down.  That's not all that new; the infamous Silk Road went down a good time back and the operator got busted.

But this time the cops did it differently.  They took over the site and ran it for long enough to finger a bunch of people on both the supplier and buyer sides of transactions.

There's no defense against that, of course.  And not only will there be some prison sentences coming from this latest little escapade but more to the point, this probably marks the end of that particular area of "commerce."

There's literally no way for a buyer or seller to know if the "intermediary" is really some random person running the site and making a commission or the cops, who are simply collecting all the information in the middle, waiting until they get plenty of it to identify the people on both ends (in order to transact in something, of course, you have to send it from somewhere to somewhere in meatspaceand then bust everyone on both sides.

I don't see how you defend against this one.... and sowing the fear that the next site you try to use if your favorite just "disappeared" might in fact be run by the cops is probably enough to destroy the attraction for this particular little path for "illicit commerce" -- at least where physical goods have to change hands.

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2017-07-21 18:05 by Karl Denninger
in Editorial , 288 references
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The cat dragged this in..

"The ObamaCare reform fiasco looks like a tipping point toward a strain of toxic political paralysis that might literally kill the government as we’ve known it. Over the many months of debate, congress never even got around to raising the salient issue: that the 18-or-so-percent of the economy “health care” represents consists largely of outright racketeering."


Oh, and I believe it's now up to 19% and change, soon be 20.

And somewhere not far from there the entire mess comes apart.

3+% real GDP expansion cannot be achieved when one dollar in five is literally stolen for an alleged "service" that is worthless at best and kills you at worst.

Let us not forget that to consume you must first produce, or convince someone you will in the future (he then lends you what you spend, of course.)  The latter has been made easy over the last 30 or so years (since the early 1980s) by a generally-declining interest rate environment.

You take a million dollar loan @15% interest and you have to come up with $150,000 a year or they come take your property.

But when the rate falls to 10%, you can borrow a million and a half, spending the other $500 large.

Then the rate progressively falls to 1% and that original million dollars is suddenly $15 million, all of which you blow because you no longer feel any need to produce anything.

The problem is visible to anyone who thinks, but nobody ever does.  What happens when the rates stop going down -- or God forbid, go up?

Well, if they go up to a mere 2% then you suddenly have to come up with $7.5 million when the best you can manage is a $150,000 a year coupon payment!

If you don't get this then you don't understand how bad it's going to get.

2008 was a Girl Scout Picnic by comparison since the interest rates on short-term paper have plummeted by some 70% or more since then.  The Federal Government alone has more than doubled its indebtedness.

The racketeering in the health system must be stopped here and now.

Yeah, I know that will get bad.

But it won't be anywhere near what comes in the next few months and years if we don't do it.

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2017-07-21 15:20 by Karl Denninger
in Technology , 192 references
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Good God, this is the dumbest and most dangerous - thing I've seen yet.

A Facebook message pops up on my phone screen. “What’s going on in your world?”

It’s from a robot named Woebot, the brainchild of Stanford University psychologist Alison Darcy.


This "bot" looks at what you do and then decides it thinks you're depressed.

Ok, who owns that "deduction" and what happens when it's wrong?

See, here's the problem -- this doesn't require an "app" that you load.  Facebook looks at everything you do that it can link back to your id on their site now.

Is the company doing this now -- and selling it to whoever wishes to buy, such as, for example, your health insurance company?  Your employer?  A recruiting company (that in turn has quite a bit of influence over whether you find future employment)?  A prospective landlord?  Never mind the government.

Look folks, you have some deep thinking to do.  It is exactly this sort of "app" that leads me to say "Advertise on Facebook or any other Zuckerberg property and I will never buy from you again."

The simple fact of the matter is that today this sort of privacy invasion is legion.  Simply loading Facebook Messenger on your phone immediately correlates with ads that Facebook could only know you're interested in by mining what you do on said phone and sending it back to Facebook.  Note that nowhere did you consent to the app snooping around in your process list, yet what happens could only be determined in that way.

Therefore you must assume it does.

Then there are the myriad reports of people who suddenly start seeing ads for something they discussed orally with someone while their phone was on but idle and locked.  Again -- they had a conversation, not a text message exchange or an email, but a verbal conversation with someone, and suddenly.... "it knows."  How does it know other than by snooping using the microphone in the device in your pocket or on the table?

It doesn't even have to be your device, since nowdays people are "voiceprinting" folks -- if you friend manages to "donate" your conversation because his device is on and snooping you get tagged automatically.

Folks, you can't sit for this sort of ****.  Not only is this "AI" unreliable and nothing more than a pattern match it is a fact that you are disadvantaged financially by it in an amount sufficient to pay for all of it and whatever someone pays to "advertise" using it otherwise there would be no market for it and it would disappear.

So it is a fact that you are being screwed.  You probably can't identify exactly how and when you are being screwed but that you are is a fact.

You either put a stop to this or we will quite-soon find the nightmare scenario happening all too often -- you don't get the job, you don't get the loan, your auto insurance is suddenly canceled because "you're just not a good risk" (but they won't tell you why) and more.

The EU has figured out that this is a severe and unconscionable intrusion into your life.  That is, you can't possibly give informed consent because you have no idea what sort of "out of scope" use the people who collect the data will put it to and thus a huge amount of this sort of crap there will be banned as of the first of next year.

We had better ban it here and the market way to do it is that for every organization you see that advertises on these "platforms" boycott them immediately, permanently and tell them why.

Further, if you want to have a conversation with someone -- an actual conversation where you can speak freely and roll things around between you -- then you need to first insure that all electronic devices within range of your voices are turned off.  If you can't do that and prove it up then worthless platitudes are all that remain safe to discuss, and this in turn means that your real interactions with other people in real life have just become entirely worthless as well.

Think about that folks -- are you willing to sacrifice all of the value of your personal interactions with others so you can have "Face****er" in your pocket -- or any of your "friends" can and do?

Stop it now -- by market power if you can and by force if you must -- or lose what's left of the value in human interaction.

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2017-07-21 06:55 by Karl Denninger
in Monetary , 539 references
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No, the "risk" from "quantitative tightening" is not The Fed.

Yes, the reduction of their balance sheet will be a tightening.

But you're a fool if you think this is the only -- or even the largest source of such tightening over the next number of years -- 10 to 15 years from now, in fact and starting effectively now.

There is in fact, as of right now, $5.486 trillion worth of "tightening" that will take place between now and 2034 and it will probably start in permanent form within the next two years.

Where is it?

Social Security and Medicare.

The system holds bonds as a buffer between demographics.  This is a good thing, by the way, because there are baby booms and baby busts in any economy.  By holding bonds during "boom" times the system has the assets to pay liabilities during busts.

When it acquires said Treasuries it is effectively bidding for said assets, driving prices higher and yields lower than they would otherwise be.  This has the same monetary effect as "Quantitative Easing" if the banks do not lend the 'money' they acquire by such sales to The Fed, and in the current cycle they have not.

But when Social Security and Medicare sell said bonds it effectively offers them into the market which drives prices lower and yields higher.  This is exactly the same monetary effect as a Fed balance sheet reduction - - that is, "Quantitative Tightening"!

There is nothing that can be done about this; it is going to happen.  If you try to raise taxes so the system doesn't have to sell its cache of bonds then you withdraw money from the system exactly as you do if you sell the bonds, so trying to mitigate the effect with a tax increase won't work either.

This isn't "bad" or "good" -- it just is, and is a function of the boomers going through the system.  It cannot be avoided no matter what political or monetary decisions are made.

But this, along with The Fed being at or near zero, is why the 30+ year trend of ever-lower interest rates has ended and cannot extend.

Folks, virtually everything you know about financial leverage and how business works -- especially public firms that have been issuing debt like crazy to buy back stock (they're the only net buyers over the last five years, in fact) along with municipalities and the federal government to fund this and that are all predicated on ever-lower rates which allows you have more "money" outstanding for the same interest payment every time you refinance.

That is over.

It is mathematically over and inescapable.

I've written on this for years but nobody wants to hear it.  Well, it's here folks.  It's starting now.  We had a couple of years where very small amounts of these trust funds were redeemed during the '09 timeframe but the fact that a steady and unrelenting drawdown was going to take place over the space of more than a decade was known then and in fact was known all the way back to the 1990s.

Yet companies continue to buy back stock with debt (which eventually must be rolled) and both the federal and state governmental units continue to issue more and more debt with no plan to ever pay it off which also must be rolled.  This continual roll will run smack into the demographically-caused Quantitative Tightening starting now and accelerating through the next decade and there is exactly nothing that anyone can do to stop it from happening.

Why Wall Street continues to "reward" companies that pull this crap (such as Tesla) rather than drive them into the ground is beyond me -- but down this road lies bankruptcy for all of the firms that engaged in this tactic -- and that's most public companies.  At the same time bankruptcy also lies ahead for both the Federal and State governments unless they can run permanent surpluses sufficient to pay not just coupon expense today but also the maturity of bonds so they do not have to roll them.

There is exactly one way to do that: Defang the medical monopolies and cut the cost of medical care by 80% now.  We have less than four years to do it and have it all take effect and play out before the mathematics overtake us and the spiral gets to the point that it will be virtually impossible to change the outcome without basically zeroing all discretionary spending at both Federal and State levels.

We are out of time.

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