- PayPal’s major “acceptable use” gaffe (or hand tilt?)
- Europe stealthily backs away from new oil projects
- A supply-chain shortage turns into a glut
- Bernanke wins Nobel Prize: “Send us thine asteroid, O Lord”
- Pro athletes and a window into tax competitiveness.
Scenario: It’s early morning. You log into your checking account. To your considerable shock, you’re overdrawn.
Yeah, you were cutting it a little close this week, but you figured you had more than enough — by a couple of thousand, in fact — before your next direct deposit hit.
Digging into the most recent transactions, you immediately spot the culprit: PayPal dinged your account for $2,234.79. Which is even more shocking because your PayPal balance was only $265.21 and you hadn’t bought anything using PayPal for weeks.
So you log into your PayPal account and discover you’ve been penalized $2,500 — your entire $265.21 balance plus another $2,234.79 — because you supposedly violated PayPal’s “acceptable use policy.”
How you ran afoul of the AUP, you’re not told. So while you wait on the phone or perhaps the online chat with someone from PayPal customer service, you do a web search and soon find out you’re hardly alone.
At issue is a recent change to the AUP: “You may not use the PayPal service for activities that:
Violations “may subject you to damages, including liquidated damages of $2,500.00 U.S. dollars per violation, which may be debited directly from your PayPal account(s) as outlined in the User Agreement…”
PayPal indeed posted this change to its AUP on Friday. In particular, the part about promoting “misinformation” touched off an instant uproar, including from two ex-PayPal executives…
… and a near-instant walkback from PayPal’s current leadership.
The notice “went out in error that included incorrect information,” said a PayPal flack to the Axios website. “PayPal is not fining people for misinformation and this language was never intended to be inserted in our policy. Our teams are working to correct our policy pages. We’re sorry for the confusion this has caused.”
Seriously?
PayPal is a $100 billion-plus market cap company with legions of lawyers on its payroll. We’re really to believe this was a rough draft that hadn’t been vetted and it went live on PayPal’s website because of someone’s fat-finger goof?
A few people like entrepreneur and podcaster Patrick Bet-David see PayPal’s climb-down as a sign that “capitalism works.” Wrong.
“The issue is not the ‘misinformation’ clause,” writes “Tickerguy” Karl Denninger on his blog; “it is the combination of their demand that (1) they can fine you $2,500 for each infraction, which they then have the capability and right to extract not just from your PayPal balance [but] from any linked financial institution including a credit card or bank accountand (2) they have 100% discretion to determine whether a violation occurred with no recourse or objective criteria for same.” [Emphasis his]
Yep. Depending on how you read the legalese, your offending speech need not even involve the use of PayPal services. A random Facebook post could put you in the crosshairs of PayPal’s thought police. And once PayPal decides you’re in violation, you get squat for due process.
None of these developments should be a surprise if you’ve been reading The 5 for more than a few months.
In August of 2021, we took note when PayPal joined forces with the Anti-Defamation League on a research project looking into “how extremist or hate movements use financial platforms to fund their activities,” as a USA Today story put it. The results of the project were to be sent on to law enforcement.
This year, we mentioned how PayPal and Venmo cancelled the accounts of Jackson Hinkle, a Los Angeles-based video streamer who’d been called out by a billionaire-funded nonprofit for “actively fueling Russian propaganda” — that is, not toeing the Washington line on the Ukraine war.
PayPal dealt the same treatment to Consortium News, an alt-news website that’s been around since the web’s earliest days — and evidently for the same reason.
The fact it’s PayPal taking this latest step — and not some obscure payment service only the cool kids use? It gives this situation an extra dimension of menace.
Lots of us have PayPal accounts — some of them 20 years old, maybe longer. And now we each face a decision.
Do we feel comfortable running the risk of continuing to use PayPal and potentially getting dinged $2,500 per violation with zero recourse?
More to the point, do we feel comfortable continuing to do business with PayPal at all — and by default giving our assent to these sorts of business practices?
No judgment here; the choice is yours…
But from where we sit at The 5, PayPal’s gambit looks like a trial run for the worst surveillance-state features of a CBDC, a central bank digital currency.
“In a world of CBDCs,” Paradigm’s Jim Rickards has warned for months now, “the government will know every purchase you make, every transaction you conduct and even your physical whereabouts at the point of purchase.”
From there, it’s a very small step toward “account freezes… and even putting you under FBI investigation if you vote for the wrong candidate or give donations to the wrong political party.”
Jim has developed a financial plan of defense — what he calls “Asset Emancipation.” It’s been available to our readers for the last four months. And every month that goes by is one month less that you have to prepare for the day when “Biden Bucks” go live.
You can keep waiting for the next alarming headline… or you can click here and start taking first steps to protect yourself.
The new week has begun with stocks sinking further into the red.
After Friday’s wicked sell-off, the Nasdaq is down another 0.8% to 10,567… the S&P 500 is off a half percent to 3,623… and the Dow is off less than a quarter percent at 29,242. (PayPal, you ask? Down 5.5%.)
The S&P remains above its year-to-date lows set 10 days ago. But that’s cold comfort.
We pass along the following as a public service. Take it for whatever it’s worth…
Alas, 3,500 on the S&P 500 probably means sub-$1,600 gold. That’s just the way it goes in a liquidity squeeze. Big-money investors have to sell their most liquid assets to meet their margin calls. Gold got clobbered in the autumn of 2008 before an epic three-year climb.
Speaking of gold, it too is down today — by over $27 to $1,667. Silver has sunk 50 cents, back below $20.
The only saving grace to today’s market action is that bonds aren’t selling off. But that’s because the bond markets are closed for Columbus Day, along with the banks and federal government offices.
Crude? Not much movement there — a barrel of West Texas Intermediate still well above $92.
Scariest energy headline of recent days: “The World’s Biggest Reinsurer Munich Re Has Cut Back Its Coverage of Oil and Gas Projects,” says the Financial Times.
Reinsurance is, essentially, insurance for insurance companies. So when the world’s biggest reinsurer says NOPE to new oil projects, that’s a big freaking deal.
“The German reinsurance group said on Thursday that from April next year, it would no longer invest in or insure the planning, financing, construction or operation of new oil and gas fields, new oil-fired power plants or developments in ‘midstream’ oil infrastructure like storage and transport.”
Not because oil development suddenly became dangerously uninsurable — but because it’s out of step with the “climate change” agenda.
“Following Munich Re’s decision, 43% of the global reinsurance market by premiums has restricted cover for oil, according to analysis of industry data by campaign group Insure Our Future. Munich Re’s global premium share is 13%.”
At least most reinsurers are still covering natural gas projects. For the moment…
Prophetic: “Yesterday’s [semiconductor] shortage is about to be transformed into tomorrow’s glut,” wrote our resident futurist George Gilder last July.
Sure enough, late last week flagging chip demand prompted Samsung to issue an earnings warning… and AMD to slash its sales forecast.
And of course it’s happening at a time the CHIPS Act will shovel another $52 billion in subsidies toward the chip industry for domestic production.
Look for the recipient companies — some of which might be foreign, by the way — to stash those funds for the time being, says Mr. Gilder. “They might just sit on them, rather than rush to construct new fabs. With semiconductor demand beginning to falter, that would indeed be a prudent thing to do.”
A few days ago, the industry association SEMI published a forecast that global fab equipment spending will grow 9% year over year to a record $99 billion this year. “That’s great,” says George, “until you learn that this forecast represents a 10% trimming from the same report last quarter!
“In other words, while things look pretty good, the shine is definitely coming off the CHIPS Act apple.”
From the stuff-you-can’t-make-up department: Former Fed chair Ben Bernanke is sharing the Nobel Prize in economics “for research on banks and financial crises.”
The only reaction we can summon is this…
It’s true that Bernanke knows a thing or two about “banks and financial crises” — seeing how he helped precipitate the crisis that beset the globe from 2007–09.
If you’re a newer reader, you can reacquaint yourself with Bernanke’s stupendous contributions in our 10th anniversary retrospective on the collapse of Lehman Bros.
Are we being too harsh? No, but we might be several decades behind the times. As the satirist Tom Lehrer quipped nearly 50 years ago, “Political satire became obsolete when Henry Kissinger was awarded the Nobel Peace Prize.”
(Lehrer turned 94 this year, by the way…)
To the mailbag, and a reader who takes exception to our choice of subject matter to lead off last Friday’s edition…
“Highly paid athletes and their tax issues hardly deserve the space given to them in this issue. It is an individual problem that many people could [not] care less about.”
The 5: You don’t think it offers a window into the competitiveness of different states?
No insight into why California is losing population relative to the country at large for the first time since statehood in 1850? Or why Texas and Florida are gaining like gangbusters?
All the same, you don’t want to draw simplistic red-state, blue-state conclusions about state-to-state migration, either. Texans don’t pay an income tax… but they do pay some of the highest property taxes in the country, and a sales tax rate not much lower than New Yorkers’. Caveat movens…
Best regards,
Dave Gonigam
The 5 Min. Forecast
