- New fallout from the Equifax hack, two years later!
- How the internet became a playground for thieves…
- … and the new technology that will change everything
- Market rallies on trade war “progress” (again?!)
- Self-employment tax and health insurance: Barriers to innovation?
- Manufacturing slumps… crude approaches $60… Google Maps strand dozens in mud… and more!
The Equifax hack is the gift that keeps on giving.
It’s been two years since hackers got their hands on the personal information of 146 million Americans via Equifax, one of the big three credit reporting agencies.
Last month the Government Accountability Office revealed something shocking. It turns out four federal agencies — including the ones in charge of Social Security, Medicare and veterans’ benefits — still rely on data that were breached in the Equifax hack to verify people’s identity when they apply for benefits online. We’re talking basic stuff like date of birth and Social Security numbers.
Result? “Potential attackers could use the stolen information to apply for benefits and get replacement Social Security cards,” according to Cnet.
The agencies defend themselves by saying there’s no viable alternative to the current arrangement. Which is probably true.
But not for long…
The problem is that no one has skin in the game when it comes to the security of your personal information.
Certainly the government doesn’t care. As we learned in 2017… for every dollar the feds spend on cyberdefense, they spend $9 on cyberoffense — figuring out how to muck around with the Chinese and the Russians and the Iranians.
Equifax sure as heck doesn’t care. As we pointed out at the time of the hack, you and I aren’t Equifax’s customers. The customers are the lenders and others who eagerly buy all the data Equifax et al. gather on us.
And as we said last week… Google and Facebook don’t care about the security of the information you give up to them. After all, you and I aren’t their customers either. And if you’re not the customer, you’re the product.
The internet wasn’t supposed to be like this. And it’s Google that shoulders a large part of the blame, according to our new contributor and veteran futurist George Gilder.
“Today’s internet is based on advertising,” he explains. “However, that was never the plan or the intention. It’s just something we’ve all sort of ‘stumbled’ into. And so, from its decentralized, cypherpunk origins, the internet evolved into what we’re all now familiar with: a centralized, corporatized, top-down system.
“And at the helm are behemoths like Google and Facebook, who receive the bulk of the advertising revenue. This allows them to offer their products for ‘free’… However, this has come at a cost. Perhaps the most important is our privacy.
“So what’s needed is a new security model for the internet,” Mr. Gilder continues. “A new security architecture. Because what we have now is a porous, perforated internet stack.
“The ideal would be one that keeps information, data and ID at the bottom of the stack, such that everyday users own their own data and their own identities. That kind of a decentralized vision — where we have each reclaimed our digital lives and are no longer at the mercy of third parties — would be a major breakthrough.”
If you were with us last week, you know George believes that clever applications of blockchain technology will bring about this breakthrough — and sooner than you think. No longer would you have to memorize a dozen username-password combinations. And rather than suffer through ads for “free” content, you could get paid for your time and trouble watching advertising.
And George says now’s the time to invest in the early-stage public companies that will make this future happen… for blockbuster gains down the road. Perhaps as much as $1 million if you play it right, he believes.
There’s an undeniable appeal to this notion — profiting from the tiny companies that are poised to knock down Big Tech a peg or two. Talk about doing well by doing good!
George is hosting a FREE event for Agora Financial readers on this very topic tomorrow at 1:00 p.m. EDT. Early feedback has been, to say the least, enthusiastic.
“The leftist-leaning tech giants need to be reined in for their invasion of privacy and attacks on those of conservative values,” writes a reader named Colin. “$1 million from Gilder’s tech prophecies would rocket me into the stratosphere of smart investing.”
“I hate how the internet has become a weapon for control in my life,” adds a reader named Sean. “Whether it’s corrupt government or corrupt corporations, I’m made to feel powerless! George Gilder was the first person I’ve read who gave me a true vision of what the future might be, and how it might lead to MORE freedom and wealth. Not less!”
You get the idea. This is George’s biggest tech prophecy yet — so big he’s coming out of retirement after more than a decade, to make it accessible to people like you.
During a storied career, George was a trusted adviser to President Reagan — even handing the president a microchip one day and telling him it would change the world. And George’s 1990 book Life After Television nailed the advent of the modern-day smartphone.
Along the way, he delivered gains for readers such as 355% on Intel… 632% on Texas Instruments… even 3,453% on the telecom hardware firm Ciena.
But if George is right — and we have every reason to believe he is — far bigger gains are in store starting tomorrow at 1:00 p.m. EDT when he clues you in to the possibilities during our live event. We still have a few spots available, but we expect them to be snapped up at any moment. Secure your spot right here, right now.
This is getting old: It’s a “risk on” day in the markets thanks to “renewed optimism” about U.S.-China trade relations.
Over the weekend, President Trump and Chinese President Xi Jinping agreed to restart the stalled trade talks. Trump also bent a little on Huawei — agreeing to let U.S. tech firms sell their gear to Huawei as long as that gear doesn’t have “national security” uses.
We suspect that caveat will be the subject of much disagreement in future weeks and months — this is, after all, an administration that thinks auto production is a matter of “national security.”
Jim Rickards’ outlook: “More of the same until the 2020 election,” he says. “This confrontation has a long way to run.”
But the markets have the attention span of a gnat. Thus, the S&P 500 has raced into record territory at 2,968. The Dow and the Nasdaq still have some work to do to reach new highs, but they’re both solidly in the green.
Treasuries are selling off modestly, the yield on the 10-year note a whisker over 2%. Gold is selling off hard, the bid now $8 below the $1,400 level.
The big economic number of the day is the ISM manufacturing index. At 51.7, the number still indicates a growing factory sector — 50 is the dividing line — but it’s the slowest growth in nearly three years.
Crude is pushing $60 for the first time in six weeks in light of two headlines from overseas.
First there’s news ahead of the twice-yearly OPEC meeting in Vienna that Saudi Arabia and Russia have agreed to extend current production levels by another six months.
Meanwhile, the Iranian government has breached the limits on its uranium stockpile as set out in the 2015 Iran nuclear deal. Washington is now in the ridiculous position of insisting Tehran abide by the terms of a deal Washington withdrew from last year. You can’t make this stuff up.
As long as we’re on a Google-bashing kick, did you hear about how Google Maps ended up stranding dozens of people trying to get to the Denver airport?
It happened Sunday after a car crash in the area. Google Maps suggested a detour. Unfortunately the detour led more than 100 drivers down a dirt road… that became a mud road thanks to recent rain… that became an impassable road.
“There were a bunch of other cars going down [the dirt road],” driver Connie Monsees told CNN, “so I said, ‘I guess it’s OK.’ It was not OK.” At least she had all-wheel drive.
For its part, Google says weather can sometimes foul up the GPS directions. “While we always work to provide the best directions, issues can arise due to unforeseen circumstances such as weather.”
To be sure, another contributing factor has to be the — ahem — remote location of Denver International. It isn’t near anything. No wonder it’s the subject of speculation about underground bunkers for the elites in the event of a doomsday scenario! (Your editor lived in Denver when Stapleton airport was still around. Wow, that was easy to get to…)
“Dave, self-employment tax and health care costs are not the barriers to entrepreneurship,” a reader writes after we said they were last week.
“Why? Because in truth you are paying the same in a W-2 job, but you just don’t see it. In fact, you even pay an additional payroll tax for unemployment insurance and SDI, but not in self-employment.
“Your W-2 Form, Box 12 DD shows your insurance premium paid by your employer along with the other half of FICA taxes. You must add these amounts to your wages for a fair comparison to self-employment gross income.
“But just like your former employer, you can deduct health care premiums and half of SE tax from your income along with a range of other business expenses. And the Trump tax act lets you deduct 20% of your income, to boot. So if you got the stuff for self-employment, you got plenty of incentives.”
The 5: Yes, we get it. The employer counts the “employer portion” of Social Security and Medicare taxes when calculating the cost of keeping a W-2 employee on the payroll. But that process is largely invisible to the employee — by design.
Even after deductions, an employee striking out on his own has to generate more income the first year just to stay even. That’s a steep disincentive to entrepreneurship — to say nothing of fending for oneself in the individual health insurance market.
And yes, we’re aware of the advantages for pass-through businesses under the new tax law. Unfortunately the Treasury Department still hasn’t finalized the rules so that people would know whether their sole proprietorship or other small business qualifies or not.
Remarkably, we got still more pushback on this matter…
“Last time the self-employment tax/higher health insurance costs problems associated with the (ahem) gig economy showed up in The 5,” a reader writes, “I pointed out that James Altucher was your supposed in-house expert and proponent of said ‘gig economy’ and the published response was a link to a previous interview/contribution by James.
“The link, while providing some nice general information, contained no information about either taxes or health insurance.
“Now the issue of obtaining rental housing as a ‘gig’ worker (i.e., no steady W-2) has come up in The 5, and I again point out that Mr. Altucher has been declared to be the resident expert in such matters.
“Would it be possible to provide more relevant, albeit necessarily ‘general,’ information this time?”
The 5: Lucky you, this time I was able to dig up a two-year-old email correspondence I had with James that tackles the topic more directly.
“When starting a business,” he told me, “there are many things to think about: employee taxes, sales taxes, where do I work, should I be a C-corp or an LLC and on and on.
“None of these things is important.
“The most important thing is having a vision of a service or product that people desperately need. Feeling excited about providing that service, finding clients who are excited to receive that service and making those first few dollars.
“That’s like a massive focus group that tells you you are on to something. That your idea might eventually be a good business.
“When I first started out, I outsourced everything I was doing. Before I knew I had a viable and growing business, I simply provided a service to clients and outsourced all the work I couldn’t do. No employees, no quick incorporation, no lawyers or accountants.
“Focus on the work first, focus on the vision first, focus on getting customers first and the rest comes later.”
Meanwhile, James acknowledges that “health insurance is scary.
“When I first went on my own and left my full-time job I no longer had the amazing benefits that my job provided.
“But when I looked at it, I never even made use of those benefits.
“I am risk averse, so the main thing I care about is catastrophic insurance (something bad that leaves me out of action with huge bills for years).
“When you are charging customers on your own, almost by definition, you are charging more than you would have made at a full-time job.
“At a full-time job, for every dollar of value you provide, your boss takes a piece of that, his boss, his boss, his boss, the shareholders, etc.
“When you are running your own side hustle, you get 100% of the value you provide. So you can undercut the bigger guys (fewer bosses) and still make more.
“Some of that will naturally go into satisfying needs that bigger corporations would’ve paid for, like insurance. And some of that can go toward catastrophic insurance.
“But in general, you will have fewer financial worries and will be able to handle your benefits in a more flexible manner than a corporation would have anyway.”
So there you have it. The only thing I would say in counterpoint is this: Absent the obstacles of self-employment tax and health insurance, a lot more people would feel comfortable “choosing themselves” and taking on the risk-reward proposition of ditching their wage-slave existence.
The 5 Min. Forecast
P.S. Happy Canada Day to our Canadian readers.
P.P.S. There’s a reason former presidents, former presidential candidates, technology magnates and media personalities all listen to George Gilder.
Legend has it Gilder handed Ronald Reagan the first microchip the former president had ever seen. He told Reagan this chip would change the world.
Since his prophecy, the stocks of companies that manufactured or used these chips went up more than 3,700%… 4,200%… even close to 20,000% over the long run.
Gilder also predicted the smartphone years in advance, and it’s possible his work helped inspire Steve Jobs to create the iPhone.
But today Gilder is coming out of retirement to make his most surprising prediction yet. When this new prediction comes to pass, it will be revolutionary.
And his prophecy has a very good chance to make early investors incredibly rich.
He’s announcing this ground-shaking announcement tomorrow at 1 p.m. EDT. And as an Agora Financial reader, you can get access for FREE. But don’t delay, spots continue filling up quickly… and we can’t guarantee they’ll still be open the day of the event. So go here to sign up right away.
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