Some demographics FYI:
-
COMING OF AGE (Infographic from Goldman Sachs) -
Investing in the Rise of the New Spending Class
Epsilon Theory: The Silver Age of the Central Banker
Today’s note, “The Silver Age of the Central Banker”, is the first in a series of Epsilon Theory notes designed to answer three questions for investors: Where are we? What’s next? What do we do about it?
Where are we? We have devolved from the Golden Age of the Central Banker into the Silver Age, a new era of policy-driven markets where monetary policy is no longer the surefire tonic for investors it used to be. In less poetic terms, the Coordination game that dominated the strategic interactions of central banks from March 2009 to June 2014 is now well and fully replaced by a Prisoner’s Dilemma game in the long run and a game of Chicken in the short run. As a result, monetary policy is now firmly a creature of each nation’s domestic politics, and the Narrative of Central Bank Omnipotence is in turn devolving into a Narrative of Central Bank Competition.
FBI vs. Apple: a summary and the weekly roundup in tech and retail by Leah Grace
- From the WSJ editorial The FBI vs. Apple
(…) Yet the reality seems to be more complicated than either Mr. Cook or the FBI allow. The encryption debate began in 2014 when Apple released a feature that generates random security “keys” that are unknown to Apple and in combination with the user’s passcode to decrypt the device’s data. Without such mathematical formulas, the data are unreadable.
This two-step “full disk” encryption process makes iPhones more secure, but it also means Apple can’t unlock its own products. Neither can Google after adopting the same practice. Encrypted communication platforms have been available since the early 1990s, but Apple and Google have now made them the default for the 96% of global customers who use their operating systems.
The fear among law enforcement and the national-security agencies is that jihadists and criminals are going dark. FBI chief James Comey and Manhattan District Attorney Cy Vance warn they are losing the capacity to execute bona fide search warrants granted under the Fourth Amendment. So they support a mandate that the U.S. tech industry install a master security key—the “backdoor” Mr. Cook invokes—to unlock any device.
The CEO has a strong case when he says that backdoors create more problems than they solve. Introducing security vulnerabilities that third parties like cops and spooks can use as needed can also be exploited by hackers, crooks and spies. Nations can mandate backdoors, but there will always be some encrypted channels outside of their jurisdiction where the likes of ISIS can plot. The result would be weaker products for law-abiding consumers that leave U.S. companies less competitive with little security benefit.
Stronger cybersecurity is more important than ever in a world of corporate espionage, millions of compromised credit-card numbers and the stolen identities at the Office of Personnel Management. Encryption may lead to fewer antiterror intercepts, though the universe of signals that can be tapped has expanded radically and on balance more secure phones are a major advance for human freedom. Ask the Chinese pastors or Russian dissidents who are targeted by authoritarian regimes and want encrypted iPhones.
(…) Apple believes that if it caves even once, every prosecutor in America will be lining up for forensic help with misdemeanors. A supposedly one-time emergency fix in an antiterror case could well become a de facto backdoor in practice over time.
There’s also the question of whether the government currently has the legal authority to force Apple to become the government’s agent. Safe manufacturers are not obligated to crack their own locks when the FBI calls. Apple contends the All Writs Act has never been used to compel what the government now wants from Apple, and the question is far from clear-cut. The litigation to settle this could take months or years. (…)
So a word on behalf of Michael McCaul, the Chairman of the House Homeland Security Committee, who has proposed convening an expert panel on technology and security in the modern era. Blue-ribbon commissions are usually a form of Beltway escapism, but in this case a detailed report and recommendations from leading minds in technology, law, computer science, police and intelligence could help shape a rough consensus—or at least establish a common set of facts. Such a halfway house might also help calm political tempers and marginalize the absolutists.
A mature democracy—if America still is one—ought to be able to work out these crucial matters of national security through legislative deliberation. The public interest on encryption is best served with a rational debate, not the ad hoc nuclear legal exchange that the Administration is inviting.