- The attack against free speech…
- … And Congress leads the charge
- TikTok: A moral panic sweeping the nation
- Authoritarianism or benign law and order?
- Ray Blanco on TikTok’s U.S. rivals
- The trouble with First Republic Bank (it ain’t over)… In defense of stablecoin USDC… The Fed’s questionable “malice aforethought”… And more!
“Right now China, the government, can disconnect parts of its Internet in case of war and we need to have that here too,” said Sen. Joe Lieberman (D-Connecticut) in 2010.
Yes, the chair of the Senate Homeland Security Committee was citing China as a model for America to follow. Lieberman advocated an “internet kill switch” to be activated in case of “emergency.” Fortunately, his legislation that would have codified this horrible idea never got out of committee.
(We’ll spare you the trouble of looking it up. Lieberman retired from office a decade ago; he’s 81 now).
Fast-forward 13 years, and Congress is much more determined to graft the Chinese model onto the alleged land of the free.
“China is run by a government that denies its citizens fundamental free speech rights,” Reason writer Robby Soave reminds us. “It denies them full political rights. It is complicit in genocide. Its COVID-19 lockdowns were among the most repressive in the world. And it has covered up information about the pandemic’s origin.
“The CCP’s habit of restricting kids’ access to uncensored content and propagandizing them into ‘good citizenship’ is authoritarian; American lovers of freedom should recoil, not seek to emulate this.
“We should be especially wary of equipping our own government with similar tools. Today, TikTok — tomorrow, who knows?”
TikTok: As irony would have it, a Chinese smartphone app is the impetus for a moral panic taking American leaders down a very dark road.
If you didn’t read about it here, you likely heard elsewhere: Last week during a hearing, members of Congress subjected Shou Zi Chew, the CEO of TikTok, to a nonstop scolding.
On Friday I said it was as if all the congresscritters’ accumulated China frustrations — lost jobs, the lab leak, Taiwan — all got heaped on Chew’s shoulders. It was Orwell’s “Two Minutes Hate” stretched out to five hours, although it did have at least one comic moment courtesy of Rep. Dan Crenshaw (R-Texas)…
The reality is that the “national security” concerns about TikTok are so much hot air.
“I’ve been trying for years to find any links to the Chinese state,” writes journalist Chris Stokel-Walker — who’s done plenty of reporting that’s critical of TikTok. “I’ve spoken to scores of TikTok employees, past and present, in pursuit of such a connection. But I haven’t discovered it,” he writes at BuzzFeed.
“Yet to hear politicians on both sides of the aisle talk about it, it’s verifiable fact. And they want the app banned because of it.”
“If the U.S. government tries to shut down this major communications platform, the First Amendment will certainly have something to say about it,” writes Jameel Jaffer, director of Columbia University’s Knight First Amendment Institute.
Well, one would hope, anyway.
TikTok’s Chinese ownership notwithstanding, “TikTok’s American users are indisputably exercising First Amendment rights when they post and consume content on the platform,” Jaffer writes in The New York Times.
The Foundation for Individual Rights and Expression says a TikTok ban would ultimately “shut down an immensely popular means of communication for the tens of millions of Americans who use the app every day to share and consume information, news, ideas, political advocacy and creative content.”
There’s a strange disconnect at work here: The disdain the Beltway class has for TikTok is at odds with its popularity among 150 million American users.
“Biden Stuck Between China Hawks, Young Voters as TikTok Pressure Mounts,” says a Washington Post headline alluding to the tension.
The tension is not new. Donald Trump wanted to ban TikTok in 2020… but it’s not as if he tried to rally people behind the cause.
As I wrote at the time while discussing Chinese social media stocks in The Profit Wire, “If there were a genuine threat from the Chinese Communist Party, the president could use his bully pulpit and rally young Americans around the necessary sacrifice of their silly dance videos, right?”
But Trump made no effort then, and neither Joe Biden nor anyone in Congress is making an effort now. Strange…
Then there’s the whole shoe-on-the-other-foot thing: Washington accuses Beijing of the same acts Washington has carried out in other countries for years.
“Though it is common for governments to spy abroad,” writes Erin Hale of Al Jazeera, “Washington enjoys an advantage not shared by other countries: jurisdiction over the handful of companies that effectively run the modern internet, including Google, Meta, Amazon and Microsoft.
“For billions of internet users outside the U.S., the lack of privacy mirrors the alleged threat that U.S. officials say TikTok, owned by Chinese company ByteDance, poses to Americans.”
And the complaint that Beijing might use TikTok to spread “disinformation” to an American audience? Isn’t that the reason Beijing either banned or severely limited Google and Facebook within China’s borders?
Oh, that’s right: When they do it, it’s authoritarianism but when we do it it’s preserving the “liberal international order.” Got it.
And like China, “the U.S. government has also shown great interest in controlling what information its citizens consume online,” Reason’s Robby Soave reminds us.
“Both the Twitter Files and the Facebook Files have shown that American social media companies have faced relentless pressure to restrict speech on controversial subjects like COVID-19 vaccines, Hunter Biden and the 2020 election.
“Federal agencies including the State Department, Department of Homeland Security, Centers for Disease Control and Prevention (CDC), the FBI and even the White House have all communicated with moderators at social media companies, urging them to take action against legal speech.
“The U.S. government’s behavior on this front has been so disreputable — so thoroughly at odds with the principles of the First Amendment — that all Americans should be deeply skeptical of efforts by federal lawmakers and bureaucrats to claim for themselves even more power over tech platforms.
“But that’s precisely the point of the TikTok hearings: to give Congress a pretext to unilaterally ban TikTok.”
Yes, there’s an investment angle — unsavory as it might be.
“No matter how you feel about social media, apps or content creators, nobody can deny the benefits that an engaged user base can bring to businesses both small and large,” says Paradigm’s technology pro Ray Blanco.
“With TikTok on the chopping block, there are a handful of rivals that could capitalize on users looking for a similar experience… Nearly every big social media company has tried to copy TikTok’s format.
“Alphabet’s (GOOG) YouTube has a service called Shorts, Meta Platforms’ (META) Instagram has Reels and Snap Inc. (SNAP) has Snapchat Spotlight.”
If TikTok really is banned, all three could “jump on the opportunity to capture the attention of newfound users,” Ray says. “Whoever comes out on top would likely be able to generate large amounts of revenue from advertisers, the lifeblood of social media companies.”
Final thought on the subject today: What starts with TikTok absolutely will not end with TikTok.
Soave poses a rhetorical question…
“Should we expect the veritable army of federal bureaucrats obsessed with policing speech on social media platforms to narrowly utilize this new mandate to deter foreign threats and focus solely on the CCP? Or should we anticipate that every weapon added to their arsenal is a threat to the free speech rights of everyday Americans?”
Which brings us to an alarming piece of legislation we mentioned last week that’s already lined up 22 sponsors in the U.S. Senate, evenly split among the two major parties.
Alas, the constraints of our 5 Mins. are such that Emily will have to take that up tomorrow. We welcome your thoughts on the subject in the meantime — whether you agree or whether you wish to accuse me of being a traitorous commie pinko: feedback@5minforecast.com. For now, however, we move on to other matters…
“Dow Jumps 200 Points as Investors Bet Worst of Regional Bank Crisis Is Over,” says a CNBC headline.
Jim Rickards begs to differ, and we’ll get to his thoughts shortly. First, the numbers: At last check the Dow is up 259 points or 0.8% to 32,653.47… the S&P 500 is up 1.1% and back above 4,000… while the Nasdaq is up 1.4% to 11,878.
Precious metals languish — gold at $1,964, silver at $23.34. Crude is up modestly to $73.45 after the Energy Department’s weekly inventory numbers. The major cryptos are powering back to their recent highs, Bitcoin over $28,000 and Ethereum over $1,800.
The trouble at San Francisco-based First Republic Bank (FRC) is not over, says Paradigm’s macro maven Jim Rickards.
Back on March 16, the Treasury and the Federal Reserve knocked heads with the leaders of 11 banks — including all of the biggest ones — to engineer a $30 billion rescue of FRC.
“Although the Fed was overseeing this rescue, all of the funds were from private banks,” Jim says. “So technically it was not a government bailout.”
In that regard, it’s like the rescue of the Long Term Capital Management hedge fund in 1998 — a deal Jim negotiated.
“That rescue was also encouraged by the Fed but was actually conducted with private funds,” he explains. “The money came from a consortium of 14 banks, including at least seven of the banks in the First Republic rescue.
“Both the First Republic rescue and the Long Term Capital rescue were based on John Pierpont Morgan’s rescue plan devised during the Panic of 1907. To this day, that’s still the best playbook if you want to end a financial panic without using government money.
“Still, there’s one critical difference between Long Term Capital and First Republic when it comes to rescues. The Long Term Capital rescue was all capital, no debt. The First Republic rescue is all debt and no capital. That means it’s not really a rescue; it’s just a cash bandage.
“That can buy time, but it’s not the end of the crisis. You’ll be hearing more about a real First Republic bailout in the days ahead.”
To the mailbag, and a reader who wishes to chide Jim Rickards’ claim that “The USDC sponsors promise that the price will not fall below $1.00.”
“You have a white lie dressed as a half-truth,” the reader says.
“No, Circle has never promised that the price of USDC will not fall below $1.00. Indeed, there is no way any single party can promise anything on behalf of an open market.
“What they did promise is to honor all proper requests for redemption of USDC at a valuation of US$1.00 per.
“As far as I have seen, at no point during the recent turmoil did Circle refuse to honor a redemption request of USD for USDC at par.
“Some people panicked and sold their USDC cheap. Others bought those USDC at a discount, making a rather quick profit on the hours-long arbitrage opportunity. All a natural consequence of a fully functioning market.
“To try to malign true (i.e., verifiably asset-backed) stablecoins such as USDC using this example of aberrant market behavior is beyond the pale.”
The 5: I can’t quite decide if you’re quibbling over semantics or drawing an important distinction. So I leave it to our informed and engaged readership to judge…
On the subject of the Fed’s failures to halt the shady practices at Silicon Valley Bank when they were obvious to all, one of our regulars writes…
“Dave, I wonder why anyone attributes the central banksters’ actions to failure or incompetence — or expects resignations or firings.
“The creatures running the Fed know what they’re doing. Their frontline actors might be useful idiots. Some of them probably even believe their own bull****.
“But the producers behind the curtain? No way.
“IMHO it’s not possible to explain the ongoing abrogation of their mandate (which was always a crock), the currency debasement, the boom-bust cycles, the mind-numbing lies and the apparent lack of accountability. Neither failure nor incompetence can explain any of that; although malevolence can.
“Where is the evidence that the Fed’s goals have something to do with ‘price stability’ and ‘low unemployment’? Those are secondary concerns/talking points.
“Instead it’s all about wealth transfer, bank bailouts, big gubment and war. Based on these criteria, they are very competent and successful.”
The 5: Yes, but all the same they have to be careful not to press their luck.
That’s why Jerome Powell was so keen to get inflation back under control last year. Runaway inflation can easily lead to civil unrest. Civil unrest can break out and spread in unpredictable ways… and putting it down gets in the way of all those other priorities.
Also, be wary about giving any of these people too much credit for planning and forethought. That’s the problem I have when people say things like They’re deliberately engineering a collapse to bring about total control!
Aren’t the documented facts bad enough without jumping to that sort of conclusion?
Best regards,
Dave Gonigam
The 5 Min. Forecast
